Final Results - 2008 Prelimin

RNS Number : 5006P
M&C Saatchi PLC
26 March 2009
 




M&C SAATCHI PLC


PRELIMINARY RESULTS


YEAR ENDED

31 DECEMBER 2008












26 MARCH 2009



 

 

 

 

 

 

GROUP HIGHLIGHTS


  • Revenues up 19% to £104.4m (2007: £87.6m)

  • Like-for-like revenue growth of 11%

  • Headline operating profit up by 34% to £13.7m (2007: £10.2m)

  • Headline operating margin increased to 13.2% (2007: 11.7%)

  • Headline profit before tax up by 18% to £14.1m (2007: £11.9m)

  • Headline basic EPS up 20% to 15.05p (2007: 12.55p)

  • Proposed full year dividend held at 3.62p

The headline results referred to above are stated before accounting for the following items:

  • Amortisation and impairment of acquired intangibles (including  goodwill)

  • Fair value adjustments to minority put option liabilities

  • Notional interest on deferred consideration

The reconciliation of the difference between the headline results and the statutory results is shown in note 3. Like-for-like revenue is stated after excluding the impact of foreign exchange, acquisitions in 2007 or 2008 and discontinued operations. 


Commenting on the results, David Kershaw, Chief Executive, said:


'M&C Saatchi delivered a solid performance in 2008, in spite of the difficult economic environment. We enjoyed significant revenue growth in most regions with good new business momentum and the extension of assignments with existing clients. After a particularly strong first half, market conditions became increasingly challenging through the year. In overall terms, however, our global network remains strong and we continued to win new business.


'Looking ahead we are confident that the business is in good shape. The on-going economic uncertainty and limited visibility mean we remain cautious. Against that backdrop we will keep a tight focus on controlling costs. We continue to believe in the underlying business model and our balance sheet remains strong. We will, therefore, invest more in our organic growth strategy. We have announced openings in Switzerland and Brazil and we will look for further opportunities to expand our network and enhance our capability to service global accounts. This approach will ensure that we are well positioned to capitalise on opportunities for growth when markets pick up.


'The year has started well with some good new business wins. Overall trading for the first three months of 2009 is in line with management expectations.'



For further information please call:


M&C Saatchi                            020-7543-4500
David Kershaw


Tulchan Communications        020-7353-4200

Susanna Voyle

Tom Ryner


Numis Securities                      020-7260-1000  

Lee Aston, NOMAD

Charles Farquhar, Corporate Broking

 

 SUMMARY OF RESULTS



Overview


The Board of M&C Saatchi plc announces the unaudited results for the year ended 31 December 2008. It was a good year for the Group. It is 14 years since M&C Saatchi was founded - and 2008 represented our fourteenth year of successive like-for-like revenue growth. We recorded significant revenue growth in all regions, with the exception of America. The growth came from good new business momentum and from additional assignments from current clients. Overall operating margins improved.


A deteriorating economic climate made the second half of the year increasingly challenging, especially in Spain, the USA and for our strategic consulting business Clear Ideas with revenue and margins coming under pressure.


Group reported revenue grew by 19% to £104.4m (2007: £87.6m), with like-for-like revenue up 11%. This significant growth was achieved in spite of the worsening economic environment in the second half of the year.  


The headline operating profit grew by 34% to £13.7m (2007: £10.2m), with the headline operating margin increased to 13.2% (2007: 11.7%).


The contribution from the Group's associates reduced from a headline profit of £334,000 in 2007 to a loss of £81,000 in 2008. This reflects the difficult trading conditions being experienced by our partners in Spain. Net interest earned reduced to £0.4m (2007: £1.4m) as a result of higher average Group debt.  


In spite of the loss from our associates and the reduced net interest, we are reporting headline profit before tax up 18% at £14.1m (2007: £11.9m).


The Group's tax rate was 31.8%, marginally lower than last year's rate of 32.0%.


The profits attributable to the Group's minorities reduced to £0.6m (2007: £1.2m), due primarily to the acquisition of the remaining 5.5% minority interest in Walker Media made in April 2008.


The weighted average number of shares increased to 60.0m (2007: 56.2m) as a result of the shares issued to satisfy the acquisition of the minority in Walker Media and the acquisition of Clear Ideas last year.


The net result of all of the above is that headline basic earnings per share increased by 20% to 15.05p (2007: 12.55p).


The Board is recommending a final dividend of 2.75p per share, which, together with the interim dividend of 0.87p per share, takes the total for the year to 3.62p per share (2007: 3.62p). The recommended dividend is 4.1 times covered by headline earnings and represents a 10% yield on yesterday's share price of 35.0p.  The 2008 final dividend will be paid to shareholders on 10 July 2009 who are on the register at 12 June 2009.



Cash Flow, Group Debt and Deferred consideration

 

As at 31 December 2008 the Group's net cash position was £2.5m (2007: £8.3m). Cash balances across the Group stood at £9.3m (2007: £16.9m) and we were utilising £6.7m (2007: £8.5m) of the three-year facility provided by RBS, which continues until March 2011.


The Group generated an inflow of cash from normal trading activities (before the payment of dividends, acquisitions and the repayment of debt) of £10.2m, which represents 106% of headline profit after tax for 2008.


During the year the Group acquired the remaining 5.5% minority in Walker Media for £3.9m in cash and 0.9m shares. Cash of £10.2was utilised and 0.5m shares issued completing the acquisitions made in 2007 of Walker Media, Zapping and Clear Ideas.


The amount of deferred consideration payable at 31 December 2008 was £0.1m (2007: £18.1m). The reduction follows the liabilities being settled during 2008 and from lower valuations where liabilities still remain.  


  

REVIEW OF OPERATIONS BY REGION


UK


Overall revenue grew by 14% to £60.3m (2007: £52.8m). Excluding the annualised impact of the Clear acquisition the like-for-like revenue growth was 8.4%. There were good new business successes, notably the Department of Health's Change 4 Life anti-obesity campaign along with important assignments from Hyundai and East Midland Trains. We have also been extending relationships with current clients. 


While the majority of our remuneration agreements are resource-based fees agreed on an annual basis we saw increasing pressure on fees and margins in the final quarter but no significant reductions. Clients were however prepared to sacrifice longer term marketing investment projects and new product development work to reduce costs. This trend had a significant impact on consultancy and strategy assignments in the fourth quarter.


Overall, headline operating margins increased to 16.5(2007: 15.9%), but were under pressure in the 4th quarter.



Europe


Overall our European businesses performed very well. Revenue increased by 70% to £10.3m (2007: £6.1m). The Paris office produced excellent results, the revenue increased by 68% supported by its successful new service offerings in digital and corporate PR. The Berlin office also had a good year from its smaller base, with revenue up 25%.  


The reported operating margin increased to 13.2% (2007: 11.9%)


The office in Madrid, which is reported in the associate line, had a very difficult year as the economy declined sharply. We remain committed to this market, but we have agreed not to extend our ownership beyond the current 25%. We may revisit this position in the future.


We are continuing to seek opportunities to extend our European footprint and in February we announced our entry into the Swiss market.  


  Asia & Australia


The region delivered an improved set of results. Reported revenue increased by 20% to £29.7m (2007: £24.7m). Like-for-like revenue increased by 14.1%.


Headline operating profit increased to £2.1m (2007: £0.6m) and the margin increased to 7.1% (2007: 2.2%).


Australia, our largest office in the region, contributing 66% of revenue and 73% of profit, had an excellent year. Revenue increased by 28%, largely through the extension of relationships with existing clients. The office re-pitched, won and extended its relationship with Optus, one of Australia's largest telecommunications operators. This compensated for the loss of the Tourism Australia account. 


Malaysia, our second biggest market in terms of contribution to earnings, had another successful year, increasing reported revenue by 31%.  


Our offices in India and China, while less significant in terms of contribution, continued to show promising new business wins in spite of the difficult economic headwinds. We believe these markets, while relatively young, are very important for future growth.

As part of the regional strategic review which we undertook early in 2008, we closed the loss-making offices in Singapore and Thailand. The combined operating losses and closure costs totalled £0.3m in the year.



America


Our US business, based in LA, had a second difficult year as the economic downturn persisted. Reported revenue declined marginally to £4.0m (2007: £4.1m) and the operating margin declined to 7.3% (2007: 14.1%). We have experienced continued decline in client budgets and a trend for clients to take work in house.


In spite of the tough conditions, the US remains an important market and we will continue to look for strategic ways to develop our presence in the longer term.

  

New Markets


In spite of the difficult trading environment we have been pursuing opportunities to expand into new markets through organic start-ups. This is part of our strategy to create an efficient and effective international network that will provide comprehensive coverage in key regions for our clients who need a global focus on their accounts. With new offices opened in Geneva and Sao Paulo we believe the main planks are now in place; but we will continue to look at other opportunities. Our model of organically building new businesses is well proven. While slower to develop than acquisitions, this approach can be financed out of operating cash flows and allows us to keep Group overheads low, enabling us to remain competitive with our peers. We strongly believe that in the current environment it also offers a better return for investors at significantly lower risk. This organic approach requires investment and will negatively impact earnings in the short term. We expect these operations to be trading profitability in their second year. 


We will report the performance of these offices separately from the current business.  


Outlook  


In the current environment forecasting is especially difficult. Economic conditions are tough throughout our markets. But in spite of the economic headwinds, we believe the business is in good shape as we head into 2009. We are focused on the fundamentals of managing the current business, servicing our current clients and winning new business whilst keeping our cost base under tight control. We have also been actively looking for opportunities that will provide future growth for the business. In the wake of the new offices opened in Switzerland and Brazil we will continue to seek further opportunities.


We have great confidence in our people and believe that in the current market our philosophy of Brutal Simplicity is even more relevant to clients.  


The year has started well with some good new business wins. Overall trading for the first three months of 2009 is in line with management expectations.





M&C SAATCHI PLC

UNAUDITED CONSOLIDATED INCOME STATEMENT

Year ended 31 December




 



2008

 

2007


Note



 



£'000

 

£'000











Billings







436,506


412,746











Revenue

4






104,383


87,620











Operating costs

5






(93,617)


(78,006)











Operating profit

4






10,766


9,614











Share of results of associates

6






(81)


281

Impairment of associate 







(2,400)


Finance income

7






3,350


1,809

Finance costs

8






(1,142)


(3,748)











Profit before taxation

4






10,493


7,956











Taxation 

9






(3,904)


(3,530)











Profit for the financial period







6,589


4,426











Attributable to:










Equity shareholders of the Group

3






6,021


3,258

Minority interests







568


1,168


















6,589


4,426











Earnings per share

3









Basic







10.04p


5.80p

Diluted







9.75p


5.59p











Headline results

3









Operating profit







13,739


10,222

Profit before tax







14,095


11,926

Headline profit attributable to equity shareholders







9,024


7,046










































M&C SAATCHI PLC

UNAUDITED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE


Year ended 31 December




 



2008

 

2007





 



£'000

 

£'000

Profit for year







6,589


4,426

Currency translation differences







2,403


834

Tax on items taken directly to equity







(311)


(145)

Total recognised income and expenses for the period







8,681


5,115


Attributable to:










Equity shareholders of the Group







7,952


3,947

Minority interests







729


1,168








8,681


5,115



M&C SAATCHI PLC

UNAUDITED CONSOLIDATED BALANCE SHEET

At 31 December







2008


2007








£'000


£'000

NON CURRENT ASSETS










Intangible assets







58,114


61,409

Investments in associates







1,711


4,086

Plant and equipment 







4,239


3,954

Deferred tax assets







1,924


2,034

Other non current assets







707


565








66,695


72,048











CURRENT ASSETS




















Trade and other receivables







60,784


74,872

Current tax assets







649


519

Cash and cash equivalents 







9,271


16,895








70,704


92,286











CURRENT LIABILITIES










Trade and other payables







(73,583)


(86,850)

Current tax liabilities







(3,030)


(1,610)

Other financial liabilities







(37)


(18)

Deferred and contingent consideration







(116)


(9,811)

Minority shareholder put options liabilities







(1,881)


(6,854)








(78,647)


(105,143)











Net current liabilities







(7,943)


(12,857)











Total assets less current liabilities







58,752


59,191











Non current liabilities










Deferred tax liabilities







(928)


(1,604)

Other financial liabilities







(6,702)


(8,531)

Deferred and contingent consideration







-


(8,325)

Minority shareholder put options liabilities







(1,816)


(3,691)

Other non current liabilities







(483)


(1,142)








(9,929)


(23,293)











Total Net assets







48,823


35,898












  M&C SAATCHI PLC

UNAUDITED CONSOLIDATED BALANCE SHEET (CONTINUED)

At 31 December







2008


2007


Note






£'000


£'000

Equity

10









Equity attributable to shareholders of the group




















Share capital







615


597

Share premium







12,758


12,758

Merger reserve







21,777


20,285

Treasury reserve







(792)


(792)

Minority interest put option reserve







(4,463)


(6,876)

Foreign exchange reserve







2,249


318

Retained earnings







15,869


9,053

Total shareholders' equity







48,013


35,343











Minority interestS







810


555











TOTAL EQUITY

10






48,823


35,898



M&C SAATCHI PLC

UNAUDITED CONSOLIDATED CASH FLOW STATEMENT


Year ended 31 December




 



2008

 

2007


Note



 



£'000

 

£'000











Cash generated from operations

11






15,050


8,991

Tax paid







(3,592)


(4,092)

Net cash flow from operating activities







11,458


4,899











Acquisitions

12






(14,156)


(24,602)

Proceeds from sale of plant and equipment







5


23

Purchases of plant and equipment







(1,634)


(1,401)

Purchases of capitalised software







(100)


(107)

Dividends from associate







125


-

Interest earned from cash held by trading entities







1,401


1,553

Interest received on centrally held cash







10


256

Net cash consumed by investing activities







(14,349)


(24,278)











Dividends paid to equity holders of the Company







(2,187)


(1,813)

Dividends paid to minority interests







(648)


(1,404)

Subsidiaries purchase of own shares from minorities







(19)


-

Inception of finance leases







29


-

Repayment of finance leases







(12)


(39)

Inception of bank loans







12,620


13,000

Repayment of bank loans







(14,703)


(4,514)

Interest paid







(974)


(437)

Interest on finance leases







(1)


(2)

Net cash (consumed) / Generated by financing activities







(5,895)


4,791











Net decrease in cash and cash equivalents







(8,786)


(14,588)











Cash and cash equivalents at the beginning of the year







16,895


31,284

Effect of exchange rate changes







1,162


199

Cash and cash equivalents at the end of the year







9,271


16,895













M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

1. GENERAL INFORMATION


The Company is a public limited company incorporated and domiciled in the UK. The address of its registered office is 36 Golden SquareLondon W1F 9EE.


The Company has its primary listing on the AiM market of the London Stock Exchange. 


The 2008 unaudited preliminary financial statements were approved for issue on 25 March 2009.


The financial information for the years ended 31 December 2008 and 2007 included in this report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985, and is unaudited. The comparative figures for the year ended 31 December 2007 do not constitute the Group's statutory accounts for that financial year. The 31 December 2007 statutory accounts, have been reported on by the Company's auditors and delivered to the Registrar of Companies. The auditor's report on those statutory accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.


Headline results

The directors believe that the headline results and headline earnings per share provide additional useful information on the underlying performance trends of business. In addition the headline result is used for internal performance management and the calculation of rewards in the Group's Long Term Incentive Plan (LTIP) scheme. The term headline is not a defined term in IFRS. 


The items that are excluded from headline results are the fair value gains and losses on liabilities caused by our put option agreements, amortisation of intangible assets created in business combinations and charges as a result of goodwill impairment.

 

2. Accounting policies


The unaudited preliminary consolidated financial statements comply with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union, and are consistent with the accounting policies of the Group which were set out in the 2007 Annual Report and Accounts. 


Whilst the financial information included in this preliminary announcement has been prepared in accordance with IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Group's 2008 Annual Report and Accounts will be prepared in compliance with IFRS.


The Group has adopted all of the standards and interpretations that were mandatory for accounting periods beginning on or after 1 January 2008 that are relevant to the operations of the Group.


 

 

M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

3. headline Results and Earnings per share 

YEAR ENDED 

31 DECEMBER 2008

Reported results

Amortisation of acquired intangibles 

Impairment

 of acquired intangibles 

including goodwill

Fair value adjustments to minority put option liabilities

Notional interest on deferred consideration

Headline results


£000

£000

£000

£000

£000

£000

Revenue

104,383

-

-

-

-

104,383








Operating profit

10,766

575

2,398

-

-

13,739

Impairment of associate

(2,400)

- 

2,400

-

-

-

Share of results of associates

(81)

- 

-

-

-

(81)

Net interest

2,208

-

-

(1,940)

169

437

Profit before taxation

10,493

575

4,798

(1,940)

169

14,095

Taxation

(3,904)

(164)

(435)

-

-

(4,503)

Profit AFTER taxation

6,589

411

4,363

(1,940)

169

9,592

Minority interests

568

-

-

-

-

568

Profit attributable to equity holders of the Group


6,021

411

4,363

(1,940)

169

9,024








BASIC EARNINGS PER SHARE








Weighted average number of shares (thousands)

59,972






59,972









BASIC EPS

10.04p





15.05p








Diluted earnings per share








Weighted average number of shares (thousands) as above

59,972






59,972


Add







 - Float options

411





411

 - LTIP options

1,151





1,151

 - Contingent consideration

205





205

Total

61,739





61,739

DILUTED EARNINGS PER SHARE

9.75p





14.62p


M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS
YEAR ENDED 31 DECEMBER 2008

YEAR ENDED 

31 DECEMBER 2007


Reported results

Amortisation of acquired intangibles

Fair value adjustments to minority put option liabilities

Notional interest on deferred consideration

Headline results



£000

£000

£000

£000

£000

Revenue

 

87,620

-

-

-

87,620








Operating profit

 

9,614

608

-

-

10,222

Share of results of associates


281

53

-

-

334

Net interest


(1,939)

-

3,052

257

1,370

Profit before taxation

 

7,956

661

3,052

257

11,926

Taxation


(3,530)

(182)

-

-

(3,712)

Profit after taxation

 

4,426

479

3,052

257

8,214

Minority interests


1,168

-

-

-

1,168

Profit attributable to equity holders of the Group



3,258

479

3,052

257

7,046








BASIC EARNINGS PER SHARE








Weighted average number of shares (thousands)


56,163




56,163








BASIC EPS


5.80p




12.55p








Diluted earnings per share








Weighted average number of shares (thousands) as above


56,163




56,163

Add







 - Sharesave options


159




159

 - Float options


411




411

 - LTIP options


975




975

 - Contingent consideration


595




595

Total


58,303




58,303

DILUTED EARNINGS PER SHARE


5.59p




12.09p


M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

4. SEGMENTAL INFORMATION

 

Segmental analysis is provided by reference to the geographical origin of business.

Year ended 
31 December 2008


UK


Asia & Australia


America


Europe


Total



£000


£000


£000


£000


£000

REVENUE


60,349


29,677


4,028


10,329


104,383












OPERATING PROFIT


7,851


1,258


295


1,362


10,766

Add











Amortisation of intangibles


575


-


-


-


575

Impairment  of intangibles


1,552


846


-


-


2,398

HEADLINE OPERATING PROFIT


9,978


2,104


295


1,362


13,739

Share of result of associates


-


-


-


(81)


(81)

Net interest


528


118


2


(211)


437

Headline profit before Taxation


10,506


2,222


297


1,070


14,095

Less











Impairment and amortisation of intangibles


(2,127)


(846)


-


-


(2,973)

Impairment of associate


-


-


-


(2,400)


(2,400)

- Fair value adjustments to minority put option liabilities


1,940


-


-


-


1,940

- Notional interest on deferred consideration


(169)


-


-


-


(169)

Total of statutory adjustments


(356)


(846)


-


(2,400)


(3,602)

Profit before Taxation


10,150


1,376


297


(1,330)


10,493

Taxation


(2,692)


(872)


(104)


(236)


(3,904)

Profit for the year


7,458


504


193


(1,566)


6,589

Minority interests


241


112


32


183


568

Profit attributable to Equity holders of the Group


7,217


392


161


(1,749)


6,021

Add











Statutory adjustments above


356


846


-


2,400


3,602

- Deferred tax on impairment and amortisation of acquired intangibles


(599)


-


-


-


(599)












Headline profit attributable to Equity holders of the Group


6,974


1,238


161


651


9,024












Headline BASIC EPS










15.05p













M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS
YEAR ENDED 31 DECEMBER 2008



Year ended 
31 December 2007


UK


Asia & Australia


America


Europe


Total



£000


£000


£000


£000


£000

Revenue


52,765


24,663


4,132


6,060


87,620












OPERATING PROFIT


7,761


550


581


722


9,614

Add











- Amortisation of intangibles


608


-


-


-


608

Headline Operating Profit


8,369


550


581


722


10,222

Share of result of associates


25


-


-


309


334

Net interest


1,448


10


2


(90)


1,370

Headline profit before Taxation


9,842


560


583


941


11,926

Less











- Amortisation of intangibles


(608)


-


-


(53)


(661)

- Fair value adjustments to minority put option liabilities


(3,052)


-


-


-


(3,052)

- Notional interest on deferred consideration


(257)


-


-


-


(257)

Total of statutory adjustments


(3,917)


-


-


(53)


(3,970)

Profit before Taxation


5,925


560


583


888


7,956

Taxation


(2,833)


(368)


(207)


(122)


(3,530)

Profit for the year


3,092


192


376


766


4,426

Minority interests


997


59


67


45


1,168

Profit attributable to Equity holders of the Group


2,095


133


309


721


3,258

Add











Statutory adjustments above


3,917


-


-


53


3,970

- Deferred tax on amortisation of acquired intangibles


(182)


-


-


-


(182)












Headline profit attributable to Equity holders of the Group


5,830


133


309


774


7,046












Headline BASIC EPS










12.55p













M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

5. Operating costs

Year ended 31 December






2008


2007







£'000


£'000


Total staff costs






61,913


53,763

Other costs






31,704


24,243

Total operating costs






93,617


78,006










Other costs include:









Goodwill impairment






846


-

Acquired intangibles impairment






1,552


-

Amortisation of intangibles









Acquired intangibles






575


608

Capitalised software






75


106

Depreciation of plant and equipment






1,631


1,463

Losses on disposal of fixed assets






15


36


6. Share of associates

Year ended 31 December






2008


2007







£'000


£'000


Share of associates' (loss) / profit before taxation






(20)


491

Share of associates' taxation






(61)


(157)

Amortisation of intangibles






-


(53)







(81)


281

During the year £2,400k of our investment in the associate was impaired (2007: Nil).


  M&C SAATCHI PLC

NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

7. FINANCE INCOME

Year ended 31 December






2008


2007







£'000


£'000


Bank interest receivable






1,247


1,771

Other interest receivable






163


38

Total interest receivable






1,410


1,809










Fair value adjustments to minority shareholder put option liabilities






1,940



-

Total






3,350


1,809

 

8. Finance Expense

Year ended 31 December






2008


2007







£'000


£'000


Bank interest chargeable 






(925)


(403)

Interest payable on finance leases






(1)


(2)

Other interest payable






(47)


(34)

Total interest payable






(973)


(439)










Notional interest on contingent consideration






(169)


(257)

Fair value adjustments to minority shareholder put option liabilities






-


(3,052)

Total






(1,142)


(3,748)


M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

9. Taxation

Year ended 31 December






2008


2007







£'000


£'000


Current taxation









Taxation in the year









UK 






2,990


3,223

- Overseas






1,768


1,119

Withholding taxes payable






12


7

Utilisation of previously unrecognised tax losses






(182)


(128)

Adjustment for over provisions in prior periods






(144)


(138)

Total 






4,444


4,083










Deferred taxation









Origination and reversal of temporary differences






(596)


(606)

Effect of changes in tax rates






56


53

Total






(540)


(553)

Total taxation






3,904


3,530


The difference between the actual tax and the standard rate of corporation tax in the UK applied to profits for the year are as follows:


Year ended 31 December






2008


2007







£'000


£'000


Profit before taxation






10,493


7,956










Taxation at UK Corporation tax rate of 28.5% (2007: 30%)






(2,991)


(2,387)

Tax effect of associates






(23)


93

Expenses not deductible for tax






(250)


(212)

Different tax rates applicable in overseas jurisdictions






(89)


(93)

Effect of changes in tax rates on deferred tax






(56)


(53)

Withholding taxes






(12)


(7)

Utilisation of previously unrecognised tax losses






182


128

Adjustment for over provisions in prior periods






144


138

Tax losses for which no deferred tax asset was recognised






(222)


(145)

Share based incentive charge greater than value of shares






(167)


-

Fair value adjustments on minority shareholder put options






553


(915)

Notional interest of deferred consideration






(48)


(77)

Impairment of goodwill






(925)


-

Total taxation






3,904


3,530

  M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

9. Dividends


Year ended 31 December






2008


2007







£'000


£'000











2007 final dividend 2.75p (2006 2.43p)






1,658


1,300

2008 interim dividend 0.87p (2007 0.87p)






529


513
















2,187


1,813


The directors propose a final dividend of 2.75 pence per share (20072.75  pence per share) payable on 10 July 2009 to shareholders who are on the register at 12 June 2009. This final dividend, amounting to £1,672k (2007: £1,658k) has not been recognised as a liability in these preliminary statements.


Dividends relate to the profit of the following years:


Year ended 31 December






2008


2007







£'000


£'000











Interim dividends






529


513

Final dividends






1,672


1,658










Total dividend that relates to the year






2,201


2,171










The headline dividend cover is:


















Headline profit after tax attributable to equity shareholders






9,024


7,046

Total dividend that relates to the year






2,201


2,171

Headline dividend cover






4.1


3.2





















M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

10. RESERVES



Share capital

Share premium

Merger reserve

Treasury reserve

Minority interest put option reserve

Foreign exchange reserve

Retained earnings

Subtotal

Minority interests

Total

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

1 January 2007

542

9,618

14,756

(792)

(13,318)

(371)

(1,261)

9,174

576

9,750


Issue of shares for











- acquisitions

55

3,118

5,529

-

-

-

-

8,702

-

8,702

- share save

-

22

-

-

-

-

-

22

-

22

Exchange rate movements

-

-

-

-

-

834

-

834

(1)

833

Tax on items taken directly to equity

-

-

-

-

-

(145)

-

(145)

-

(145)

Exercise of minority put options

-

-

-

-

8,741

-

8,353

17,094

-

17,094

New minority shareholder put options

-

-

-

-

(2,299)

-

-

(2,299)

-

(2,299)

Transfer to minority reserves

-

-

-

-

-

-

(191)

(191)

191

-

Other

-

-

-

-

-

-

275

275

25

300

Equity settled share based payments

-

-

-

-

-

-

432

432

-

432

Dividends

-

-

-

-

-

-

(1,813)

(1,813)

(1,404)

(3,217)

Profit for the year

-

-

-

-

-

-

3,258

3,258

1,168

4,426

31 December 2007

597

12,758

20,285

(792)

(6,876)

318

9,053

35,343

555

35,898



Issue of shares for acquisitions

18

-

1,925

-

-

-

-

1,943

-

1,943

Repayment of minority share capital

-

-

-

-

-

-

-

-

(38)

(38)

Exchange rate movements

-

-

-

-

-

2,242

-

2,242

161

2,403

Tax on items taken directly to equity

-

-

-

-

-

(311)

-

(311)

-

(311)

Exercise of minority put options

-

-

-

-

2,413

-

2,657

5,070

-

5,070

Transfer to minority reserves

-

-

-

-

-

-

(212)

(212)

212

-

Transfer of reserves

-

-

(433)

-

-

-

433

-

-

-

Equity settled share based payments

-

-

-

-

-

-

104

104

-

104

Dividends

-

-

-

-

-

-

(2,187)

(2,187)

(648)

(2,835)

Profit for the year

-

-

-

-

-

-

6,021

6,021

568

6,589

31 December 2008

615

12,758

21,777

(792)

(4,463)

2,249

15,869

48,013

810

48,823


  

M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

11. Cash generated from operations


Year ended







2008


2007








£'000


£'000











Revenue







104,383


87,620

Operating expenses 







(93,617)


(78,006)

Operating Profit







10,766


9,614











Adjustments for:










Depreciation of plant and equipment







1,631


1,463

Loss / (profit) on sale of plant and equipment







15


(36)

Loss / (profit) on sale of intangible assets







5


(2)

Impairment and amortisation on acquired intangible assets







2,127


608

Impairment of goodwill







846


-

Amortisation of capitalised software intangible assets







75


106

Non-cash share based incentive plans







133


432

Operating cash flow before movements in working capital and provisions







15,598


12,185

Decrease / (increase) in trade and other receivables







17,615


(22,064)

(Decrease) / increase in trade and other payables







(18,163)


18,870











Net cash inflow from operating activities 







15,050


8,991












M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2008

 

12. Cash consumed by acquisitions 


Year ended







2008


2007








£'000


£'000











Cash consideration including capitalised acquisition costs











 2007 Acquisitions:










 - M&C Saatchi Berlin Gmbh







-


(358)

 - Talk PR Ltd







-


(3)

 - Clear Ideas Ltd







(2,405)


(14,508)

 - Walker Media Holdings Ltd (acquisition of 19.5%)







(5,369)


(8,922)











 2008 Acquisitions:










 - Walker Media Holdings Ltd (acquisition of 5.5%)







(3,889)


-

 - The Immediate Sales Company Ltd







(3)


-

 - Play London Ltd







(43)


-

 - F5







(71)


-


















(11,780)


(23,791)


Less cash and cash equivalents acquired 









-



776








(11,780)


(23,015)











Purchase of associate (ZappingSpain, 2007 acquisition)







(2,376)


(1,587)











Total payments made in the year relating to acquisitions




(14,156)


(24,602)





This information is provided by RNS
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