Final Results
M&C Saatchi PLC
23 March 2006
M&C Saatchi plc
Preliminary Results for the Year Ended
31st December 2005
M&C Saatchi plc
2005 Preliminary Results
M&C Saatchi plc, the international marketing communications Group today
announces its preliminary results for the year ended 31st December 2005.
Financial Highlights
•Revenues (gross profit) up 9.4% to £68.0 million (2004: £62.2 million)
•Underlying operating profit (before the impact of the European expansion)
up 7.5% to £7.8 million (2004: £7.2 million).
•Underlying operating margin (before the impact of the European expansion)
broadly flat at 11.5% (2004: 11.6%).
•Underlying profit before taxation (before the impact of the European
expansion) up 11.3% to £9.1 million (2004: £8.1 million).
•Cost of European Expansion £1.4 million.
•Reported Profit before tax (before the share based payment charge of £0.2
million) of £7.5 million (2004: £8.1 million).
•Reported earnings per share (including share based payment charge in
2005) of 7.57p (2004: 9.28p).
•Dividend per share up 10% to 2.55p.
Note: The above figures (except where stated) are reported before the
amortisation of goodwill and share based payment charge
Operational Highlights
•Strong new business performance, particularly in the second half.
Significant new business wins included: Australian Tourism, ITV, Ribena,
Cadbury Muller, Direct Line Insurance (M&C Saatchi), Weetabix and
Independent News and Media (Walker Media) Nat West Mortgages and Mini
(LIDA), Twinings, Perrier Jouet, Orange, Ovaltine and Disney (Talk PR),
Carslberg (Sports and Entertainment) , PODS (USA), City National Bank
(California), eBay (Asia) and Wyeth (China).
•Successful launch of our first European office in Paris in September
2005. Plans are well advanced for Germany and Spain.
•Further expansion in Asia adding offices in Bangkok and New Delhi.
•New complementary businesses developed: Provenance (luxury brand
specialists) and Walker-i (digital media).
Commenting on the results, David Kershaw, Chief Executive, said:
'I am pleased to report another strong underlying performance across the Group.
We have made good progress with our strategy of expansion into new geographies
and new businesses, which is the foundation of our future growth. Our new
business performance has also been strong across the Group, which has helped to
offset the financial impact of losing the BA account.'
For further information please contact
M&C Saatchi plc 020 7543 4500
David Kershaw, Chief Executive
Tulchan Communications 020 7353 4200
Miranda Acland
Peter Hewer
Financial Review
Reported revenues (gross profit) increased by 9.4% to £68.0 million. This is our
11th successive year of organic revenue growth. On a constant currency basis
revenues grew by 7.9%.
While all areas of the business performed well, the key driver of growth has
been the UK with revenues up 8.1%, a strong performance given the loss of the BA
account. Although small in absolute terms, revenue growth was also strong in the
USA at 26.7% .
The table below gives details of the revenue and revenue growth by region.
2005 2005
Constant V's 04 Reported Vs 04 2004
Rates Rates
-------- ------ -------- ------ --------
£'000 % £'000 % £'000
-------- ------ -------- ------ --------
UK 39,470 8.1 39,470 8.1 36,518
Asia 24,187 4.6 25,084 8.5 23,126
Pacific
USA 3,189 25.8 3,211 26.7 2,534
Europe 236 - 236 - -
-------- ------ -------- ------ --------
Total 67,082 7.9 68,001 9.4 62,178
The underlying performance (which excludes the impact of the European expansion,
the amortisation of goodwill and the share based payment charge) shows operating
profit increased by 7.5% to £7.8 million (2004: £7.2 million). The underlying
operating margin dropped marginally to 11.5% (2004: 11.6%). This was due to the
loss of BA revenues in the fourth quarter and the associated pitch costs.
The Groups net interest increased 50% to £1.4 million (2004: £0.9 million) due
principally to interest earned on the net proceeds from the float.
The underlying profit before tax (excluding the impact of the European expansion
of £1.4 million, the amortisation of goodwill of £1.7 million and before the
share based payment charge of £0.2 million) increased by 11.3% to £9.1 million
(2004: £8.1 million). The cost of the European expansion reduced the underlying
profit before tax to £7.6 million.
2005 has been the first year that our operating performance has been
significantly impacted by our expansion strategy in Europe. We opened our first
office in continental Europe in Paris in September 2005 and it has had a
successful first six months. The initial losses of the Paris office plus the
ongoing development costs associated with the further European expansion
totalled £1.4 million and reduced the operating margin by 2.1pts. This is in
line with the strategy set out prior to the float in 2004 and consistent with
expectations.
The Group's tax rate, before taking account of the items listed below, increased
by 0.2pts to 33.0%. The impact of the non deductible losses incurred by our
associate in the UK (0.6pts) and the European start up (2.5pts) increased the
reported tax rate to 36.1%. These losses will be carried forward to offset
future taxable profits.
The profits attributable to the minorities increased to £0.7million (2004: £0.4
million). The percentage of the group's profits contributed by profits with new
or remaining minorities increased to 11.2% (2004: 8.0%) (before the impact of
the European expansion). The growth in profits from Walker Media was the
principle cause.
The reported earnings per share decreased due the European expansion to 4.46p
(2004: 6.19p)
The Board is recommending a final dividend of 1.78p per share making a total of
2.55p per share for 2005. This represents an increase of 10% on the equivalent
annualised dividend for 2004. The final dividend of 1.78p is payable on the 12th
June 2006 to shareholders on the register as at 12th May 2006.
2004 unaudited proforma accounts
Except where otherwise stated the report refers to the 2004 proforma profit and
loss account. This has been prepared to show the Group's results as if the
reorganisation placing and admission to AIM had effect from 1st January 2004 and
excludes exceptional costs.
Review of Operations
The UK
The UK region covers our marketing communications operations, comprising M&C
Saatchi (advertising), LIDA (direct marketing), Talk PR (public relations),
Immediate Sales (integrated marketing), M&C Saatchi Sports and Entertainment,
Influence (issue marketing), Play (digital marketing), Provenance (luxury brand
specialists) and our media planning and buying operation Walker Media.
Our UK business performed well in 2005 with revenue up by 8.1%. The growth was
led by Walker Media but with all our UK businesses showed good growth.
The new business performance in the UK was strong, with the contributions more
significant in the second half. The new accounts include; ITV, Ribena, Cadbury
Muller, Direct Line Insurance (M&C Saatchi) Weetabix and Independent News and
Media (Walker Media), NatWest mortgages and Mini (LIDA), Twinings, Perrier
Jouet, Orange, Ovaltine and Disney (Talk PR) and Carslberg (Sports and
Entertainment).
An important part of our organic growth strategy in the UK is the ongoing
development of complementary businesses which expand our offering to existing
and potential clients. Last year saw the launch of Provenance (luxury brand
specialists) and Walker-i, a subsidiary of Walker Media specialising in digital
media.
Asia Pacific and Australia
On a constant currency basis revenue grew by 4.6% to £24.2 million (2004: £23.1
million). This was principally driven by a strong performance from Australia
which accounts for 66% of the region. There was also a strong performance from
our Malaysian business and contribution from our acquisitions in Thailand and
India.
The most notable new business win was Australian Tourism, but this came at the
expense of the New Zealand Tourism business. There was a small net contribution
to revenue this year; the impact will be more significant in 2006.
Other wins in the region were: eBay (Asia regional), Spirit of Tasmania Ferry
Service (Australia), Alliance Bank (Malaysia) and Wyeth (China).
America
On a constant currency basis revenue grew by 25.8% to £3.2 million (2004: £2.5
million). This was principally driven by the LA office which posted revenues
over 50% higher than 2004.
Our American activities were reorganised in 2005. New management was put into
New York and the office had a successful start winning PODS (Portable on Demand
Storage) in June.
Other new business wins included; Ghirardelli chocolates, City National Bank and
assignments from RBS and Travelex.
Europe
Our first European office opened in Paris in September last year. M&C
Saatchi.GAD, led by Giles Masson, Antoine Barthuel and Daniel Fohr, has had a
very successful start and has already won assignments from: Pernod Ricard
(Havana Club & Olmeca), S'Miles Loyalty scheme, Branly Museum.
Plans are well progressed for further openings in the key markets in Germany and
Spain. We expect to be able to make announcements shortly.
Outlook
We expect the year ahead to be one of further progress and growth across all of
our businesses.
The loss of BA will be more significantly felt in 2006 and we see an environment
that will limit the opportunity for margin growth.
From a new business perspective the year has started well. Important new
accounts include Kingsmill (Allied Bakeries) and RBS Retail. Our Paris office
has maintained its excellent progress winning Bordeaux Wines and is currently
pitching for other significant accounts. Walker Media has had an outstanding
start to the year and the New York office has also made good progress recently
winning AIG insurance.
Our investment programme in new offices, through organic start ups or small
acquisitions and new businesses streams, will continue into 2006 and this
strategy remains the foundation for the company's growth going forward.
M&C SAATCHI PLC
PRELIMINARY CONSOLIDATED PROFIT AND LOSS ACCOUNT
Note Unaudited Unaudited Audited
year ended proforma year ended
31-Dec 31-Dec 31-Dec
2005 2004 2004
£000 £000 £000
----------------------- ------ -------- -------- -------
Turnover
- Continuing operations 297,688 106,884 106,884
- Acquisitions 596 180,864 108,300
----------------------- ------ -------- -------- -------
Turnover 2 298,284 287,748 215,184
Cost of sales 3 (230,283) (225,570) (155,807)
----------------------- ------ -------- -------- -------
Gross profit 68,001 62,178 59,377
Administrative expenses
- Ordinary (61,639) (54,944) (52,907)
- Exceptional - - (2,795)
- Options & long term bonus (185) - -
- Amortisation of goodwill (1,688) (1,672) (777)
----------------------- ------ -------- -------- -------
Administrative expenses 3 (63,512) (56,616) (56,479)
Operating profit
- Continuing operations 4,480 4,157 2,257
- Acquisitions 9 1,405 641
----------------------- ------ -------- -------- -------
Operating profit 4,489 5,562 2,898
Share of operating profit /(loss)
of associates (75) - 352
Interest receivable 1,384 931 800
Interest payable (29) (30) (30)
Profit on ordinary activities
before taxation 5,769 6,463 4,020
----------------------- ------ -------- -------- -------
Taxation on profits on ordinary
activities 4 (2,690) (2,666) (2,033)
----------------------- ------ -------- -------- -------
Profit on ordinary activities after
taxation 3,079 3,797 1,987
----------------------- ------ -------- -------- -------
Minority interests (663) (441) (531)
----------------------- ------ -------- -------- -------
Profit for the financial year 2,416 3,356 1,456
----------------------- ------ -------- -------- -------
Earnings per share
- Basic 6 4.46p 6.19p 3.42p
- Diluted 6 4.41p 6.14p 3.41p
All amounts relate to continuing activities.
The reconciliation of movements in shareholders' funds is shown in note 8 to the
financial statements.
Except where otherwise stated this report comments on the unaudited profit and
loss account of M&C Saatchi plc (the 'Group') for the year to 31st December 2005
compared with the unaudited pro forma profit and loss account for the same
period in 2004. The report also comments on the numbers before the impact of the
amortisation of goodwill. The pro forma report has been prepared to show for
illustrative purposes only, the results as if the reorganisation which occurred
immediately prior to its admission to trading on AIM on 14th July 2004, had
occurred on 1st January 2004. The reorganisation included the acquisition of M&C
Saatchi Worldwide Ltd by M&C Saatchi plc and the acquisition of a further 29% of
Walker Media Holdings share capital resulting in a 75% holding. At the same time
a number of key executives who held shares in their operating companies had
their interest acquired by M&C Saatchi plc. Full details were set out in the
admission document. The directors believe that the presentation of the financial
highlights and the financial report on this basis provide a clearer
understanding of the Group's results.
M&C SAATCHI PLC
PRELIMINARY CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Unaudited Audited
Year ended Year ended
31-Dec 31-Dec
2005 2004
£000 £000
----------------------- -------- -------
Profit for the financial year
- Group 2,497 1,140
- Associates (81) 316
----------------------- -------- -------
2,416 1,456
Exchange differences on retranslation of opening
reserves (50) 260
----------------------- -------- -------
Total recognised gains and losses for the financial
year 2,366 1,716
----------------------- -------- -------
M&C SAATCHI PLC
PRELIMINARY CONSOLIDATED BALANCE SHEET
Note Unaudited Unaudited Audited Audited
At At At At
31-Dec 31-Dec 31-Dec 31-Dec
2005 2005 2004 2004
£000 £000 £000 £000
----------------------- ------ -------- -------- ------- -------
Fixed assets
Intangible assets 14,592 16,158
Tangible assets 3,194 3,047
Investments 100 15
----------------------- ------ -------- -------- ------- -------
17,886 19,220
Current assets
Work in progress 3,277 3,368
Debtors
- Due within one year 50,552 46,374
- Due after more than one
year 578 731
Cash at bank and in hand 20,486 17,323
----------------------- ------ -------- -------- ------- -------
74,893 67,796
Creditors
- Amounts falling due
within one year 58,969 55,351
----------------------- ------ -------- -------- ------- -------
Net current assets 15,924 12,445
----------------------- ------ -------- -------- ------- -------
Total assets less current
liabilities 33,810 31,665
Creditors
- Amounts falling due after
more than one year 868 774
Provisions for liabilities
and charges 404 218
----------------------- ------ -------- -------- ------- -------
32,538 30,673
----------------------- ------ -------- -------- ------- -------
Capital and reserves
Share capital 7 542 542
Share premium account 7 9,618 9,618
Merger reserve 7 14,756 15,959
Share option reserve 7 599 514
Profit and loss account 7 6,101 3,577
----------------------- ------ -------- -------- ------- -------
Shareholders' funds -
equity 7 31,616 30,210
Minority interests - equity 922 463
----------------------- ------ -------- -------- ------- -------
32,538 30,673
----------------------- ------ -------- -------- ------- -------
M&C SAATCHI PLC
PRELIMINARY CONSOLIDATED CASH FLOW STATEMENT
Note Unaudited Unaudited Audited Audited
Year ended Year ended Year ended Year ended
31-Dec 31-Dec 31-Dec 31-Dec
2005 2005 2004 2004
£000 £000 £000 £000
----------------------- ------ -------- -------- ------- -------
Cash inflow from
operating activities 9 6,596 4,953
Dividend received
from associates - 728
Returns on investments and
servicing of finance
Interest received 1,384 687
Interest paid (8) (3)
Interest element of
finance lease
rental payments (15) (27)
Minority interest
dividend paid (428) (1,296)
----------------------- ------ -------- -------- ------- -------
Net cash outflow
from return on
investment and
servicing of finance 933 (639)
Taxation
UK taxation paid (1,498) (1,136)
Overseas taxation
paid (567) (664)
----------------------- ------ -------- -------- ------- -------
(2,065) (1,800)
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (1,289) (922)
Sale of tangible
fixed assets 37 417
Sale of a part share of
a subsidiary
undertakings - 527
----------------------- ------ -------- -------- ------- -------
Net cash
inflow/(outflow)
from capital
expenditure and
financial investment (1,252) 22
Acquisitions and
disposals
Investment in
subsidiary (369) (382)
Cash acquired with
subsidiary
undertakings 187 2,243
Investment in - -
associate
----------------------- ------ -------- -------- ------- -------
(182) 1,861
Equity dividends
paid (1,045) (2,313)
----------------------- ------ -------- -------- ------- -------
Net cash
inflow/(outflow)
before financing 2,985 2,812
Financing
Share placement - 10,537
Share placement
costs - (835)
Shares issued to
minorities in
subsidiaries 124 107
Repayment of bank
loans - (21)
Capital element of
finance lease rental
payments (142) (225)
--------------------------- -------- -------- ------- -------
Net cash
inflow/(outflow)
from financing (18) 9,563
----------------------- ------ -------- -------- ------- -------
Increase/(decrease)
in cash in the year 11 2,967 12,375
----------------------- ------ -------- -------- ------- -------
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005
1. Statutory information
The financial information contained in this announcement, for the years ended
31st December 2005 or 2004, does not constitute statutory financial statements
within the meaning of section 240 of the Companies act 1985. The financial
information for the year ended 31st December 2004 is derived from the statutory
accounts for that year which have been delivered to the Registrar of Companies.
The auditors reported on those accounts was unqualified. The statutory accounts
for the year ended 31st December 2004 will be finalised on the basis of the
financial information presented by the directors in this unaudited preliminary
announcement and will be delivered to the Registrar of Companies following the
company's annual general meeting. The audit report for the year ended 31st
December 2005 has yet to be signed.
The preliminary announcement was approved by the board of directors on 22nd
March 2006.
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
2. Turnover, profit and net assets
Turnover and profit before taxation are attributable to the provision of
advertising and marketing services.
Unaudited Unaudited Audited
pro forma
2005 2004 2004
£000 £000 £000
----------------------- -------- --- -------- --- -------
Turnover
Analysis by geographical market:
By origin and destination
UK 245,926 241,373 168,809
Asia and Australia 45,636 41,736 41,736
America 6,417 4,639 4,639
Europe 305 - -
----------------------- -------- --- -------- --- -------
298,284 287,748 215,184
----------------------- -------- --- -------- --- -------
Gross profit
Analysis by geographical market:
By origin
UK 39,470 36,518 33,717
Asia and Australia 25,084 23,126 23,126
America 3,211 2,534 2,534
Europe 236 - -
----------------------- -------- --- -------- --- -------
68,001 62,178 59,377
----------------------- -------- --- -------- --- -------
Operating profit/(loss) - excluding amortisation of goodwill
Analysis by geographical market:
By origin
UK 5,811 4,348 789
Asia and Australia 2,117 2,686 2,686
America (322) 200 200
Europe (1,429) - -
----------------------- -------- --- -------- --- -------
6,177 7,234 3,675
----------------------- -------- --- -------- --- -------
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
2. Turnover, profit and net assets CONTINUED
Unaudited Unaudited Audited
pro forma
2005 2004 2004
£000 £000 £000
---------------------- -------- --- -------- --- -------
Operating profit/(loss)
Analysis by geographical market:
By origin
UK 4,123 2,676 12
Asia and Australia 2,117 2,686 2,686
America (322) 200 200
Europe (1,429) - -
---------------------- -------- --- -------- --- -------
4,489 5,562 2,898
----------------------- -------- --- -------- --- -------
Profit/(loss) before taxation
Analysis by geographical market:
By origin
UK 5,318 3,528 1,085
Asia and Australia 2,202 2,736 2,736
America (319) 199 199
Europe (1,432) - -
---------------------- -------- --- -------- --- -------
5,769 6,463 4,020
----------------------- -------- --- -------- --- -------
Unaudited Audited
2005 2004
£000 £000
----------------------- -------- --- -------- --- -------
Net assets/(liabilities)
Analysis by geographical market:
By origin
UK 32,008 30,574
Asia and Australia 3,646 2,466
America (1,950) (2,367)
Europe (1,166) -
----------------------- -------- --- -------- --- -------
32,538 30,673
----------------------- -------- --- -------- --- -------
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
3. Cost of sales and administrative expenses
Unaudited Unaudited Audited
proforma
2005 2004 2004
£000 £000 £000
----------------------- -------- --- -------- --- -------
Cost of sales
Continuing operations 229,869 50,554 50,554
Acquisitions 414 175,016 105,253
----------------------- -------- --- -------- --- -------
230,283 225,570 155,807
----------------------- -------- --- -------- --- -------
Administrative expenses
Continuing operations 63,339 54,210 54,073
Acquisitions 173 2,406 2,406
----------------------- -------- --- -------- --- -------
63,512 56,616 56,479
----------------------- -------- --- -------- --- -------
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
4. TAXATION ON PROFITS FROM ORDINARY ACTIVITIES
Unaudited Unaudited Audited Audited
Year ended Year ended Year ended Year ended
2005 2005 2004 2004
£000 £000 £000 £000
----------------------- -------- -------- -------- -------
Current tax
UK corporation tax on
profits for the year 1,991 1,204
Overseas tax payable 605 1,024
Adjustment in respect
of previous years 53 15
Associates - 148
----------------------- -------- -------- -------- -------
Total current tax 2,649 2,391
Deferred tax
Origination and
reversal of timing
differences 41 (358)
Movement in deferred
tax provision 41 (358)
----------------------- -------- -------- -------- -------
Taxation on profit on
ordinary activities 2,690 2,033
----------------------- -------- -------- -------- -------
The tax assessed for the year differs from that obtained by using the standard
rate of corporation tax in the UK. The differences are explained below:
Unaudited Audited
Year ended Year ended
2005 2004
£000 £000
----------------------- -------- ------- -------- -------
Profit on ordinary
activities before tax 5,769 4,020
Profit on ordinary activities at the standard
rate of corporation
tax in the UK of 30%
(2003: 30%) 1,731 1,206
Effects of:
Expenses not deductible
for tax 258 150
Float expenses not
deductible for tax - 379
Goodwill amortisation 506 233
Exchange adjustment
taken to reserves
subject to tax - 81
Tax losses Carried
forward 204 31
Differences between
capital allowances and
depreciation 30 (25)
Short term timing
differences (163) 175
Short term timing differences due to provision on
options
and phantom bonus
accruals 49 214
Adjustment to tax
charge in respect of
previous years 53 15
Tax rate differences (19) (68)
----------------------- -------- ------- -------- -------
Current tax charge for
year 2,649 2,391
----------------------- -------- ------- -------- -------
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
5. Dividends
Unaudited Audited
Year ended Year ended
2005 2004
£000 £000
-------- -------
Paid prior to reorganisation and flotation(1)
Ordinary shares of £1:
£0 per share (2004: £144) - 1,800
Ordinary shares of £1:
£0 per share(2004: £135(2)) - 338
'B' shares of £1:
£0per share (2004: £41,100) - 164
'C' shares of £1:
£0 er share (2004: £10,924) - 11
----------------------- -------- -------
- 2,313
Interim dividend of
M&C Saatchi plc
Interim dividend of 0.77p per share (2004: Nil) 416 -
M&C Saatchi plc (3) (2004: 1.16p) 629 -
----------------------- -------- -------
1,045 2,313
-------- -------
(1) These 2004 dividends were paid by M&C Saatchi Worldwide Limited (the
previous ultimate holding company of the M&C Saatchi Group). Its share capital
before reorganisation consisted of 12,500 ordinary shares of £1, 4 B shares of
£1 and 1 C share of £1.
(2) This 2004 Dividend waived by all the ordinary £1 shareholders with the
exception of Charles Saatchi, who held 2,500 shares.
(3) In line with FRS 21, dividends agreed after balance sheet date are not
accrued in the accounts. The proposed final 2005 dividend is 1.78p per share,
making a total dividend per share of 2.55p (£1,382k) for the year.
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
6. Earnings per share
Basic and diluted earnings per share are calculated by dividing profit after tax
and minority interest by the number of shares in issue during the year.
Earnings per share are calculated as follows:
Unaudited Audited
Year ended Year ended
2005 2004
£000 £000
- -------- --------
Basic
Profit for the year £2,416,000 £1,456,000
Weighted average number of ordinary shares 54,206,799 42,542,000
Basic earnings per share 4.46p 3.42p
Diluted
Profit for the year £2,416,000 £1,456,000
Weighted average number of ordinary shares 54,747,997 42,732,000
Basic earnings per share 4.41p 3.41p
On 31st December 2005 there were 670,634 (2004: 411,050) outstanding options.
The weighted average for the year was 541,198 (2004:190,322).
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
7. Reserves
Ordinary Share Share Profit
share premium Merger option and loss
capital account reserve reserve account Total
group £000 £000 £000 £000 £000 £000
------------------ ------- ------- ------- ------- ------- -------
At 1 January 2005
(audited) 542 9,618 15,959 514 3,577 30,210
Exchange differences - - - - (50) (50)
Issue of options - - - 85 - 85
Merger reserve
release on goodwill
amortisation - - (1,203) - 1,203 -
Dividends - - - - (1,045) (1,045)
Retained profit for
the year - - - - 2,416 2,416
------------------ ------- ------- ------- ------- ------- -------
At 31 December 2005
(unaudited) 542 9,618 14,756 599 6,101 31,616
------------------ ------- ------- ------- ------- ------- -------
8. Reconciliation of movement in shareholders' funds
Unaudited Audited
Year ended Year ended
2005 2004
group group
£000 £000
----------------------- -------- -------
Profit for the financial year
- Group 2,497 1,140
- Associates (81) 316
Dividend (1,045) (2,313)
----------------------- -------- -------
1,371 (857)
Exchange differences (50) 260
Issue of shares - 27,155
Share issue cost - (835)
Issue of options 85 514
----------------------- -------- -------
Net addition/(reduction) to
shareholders' funds 1,406 26,237
Opening shareholders' funds 30,210 3,973
----------------------- -------- -------
Closing shareholders' funds 31,616 30,210
----------------------- -------- -------
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
9. NET CASH INFLOW FROM OPERATING ACTIVITIES
Unaudited Audited
Year ended Year ended
2005 2004
£000 £000
----------------------- -------- -------
Operating profit 4,489 2,898
Amortisation of intangible fixed assets 1,688 777
Non cash flow expenses associated with
reorganisation - 460
Depreciation 1,183 1,167
(Loss)/ (profit) on sale of tangible fixed assets 59 (34)
Decrease / (increase) in work in progress 224 (2,062)
(Increase) in debtors (3,482) (16,233)
Increase in creditors 2,428 17,902
Option charge 85 -
Exchange differences (78) 78
----------------------- -------- -------
6,596 4,953
----------------------- -------- -------
10. ANALYSIS OF CHANGES IN NET FUNDS
Balance at Balance at
01-Jan Cash Finance Exchange 31-Dec
2005 inflow leases movements 2005
(Audited) (Unaudited)
£000 £000 £000 £000 £000
--------------- -------- ------- ------- --------- ---------
Cash at bank and in hand 17,323 2,967 - 196 20,486
Overdrafts - (29) - - (29)
--------------- -------- ------- ------- --------- ---------
17,323 2,938 - 196 20,457
Finance leases (244) 142 (14) (12) (128)
--------------- -------- ------- ------- --------- ---------
Total 17,079 3,080 (14) 184 20,329
--------------- -------- ------- ------- --------- ---------
M&C SAATCHI PLC
NOTES FORMING PART OF THE PRELIMINARY FINANCIAL STATEMENTS FOR THE YEAR ENDED
31st DECEMBER 2005 (Continued)
11. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Unaudited Unaudited Audited Audited
Year ended Year ended Year ended Year ended
2005 2005 2004 2004
£000 £000 £000 £000
----------------------- -------- -------- ------- -------
Increase in cash in the
year 2,967 12,375
Cash outflow from decrease
In lease financing 142 225
Inception of finance
leases (14) (31)
Exchange differences 184 (87)
Overdraft (29) -
Cash outflow from
repayment of bank loan - 21
----------------------- -------- -------- ------- -------
Movement in net funds in
the year 3,250 12,503
Net funds at start of year 17,079 4,576
----------------------- -------- -------- ------- -------
Net funds at end of year 20,329 17,079
----------------------- -------- -------- ------- -------
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