M&C SAATCHI PLC
FINAL RESULTS
YEAR ENDED
31 DECEMBER 2012
18 March 2013
M&C Saatchi PLC
Final Results for the year ended 31 December 2012
18 March 2013
Strong results, with continued revenue momentum and earnings growth
|
|
|||
Financial Highlights 2012 |
Growth versus 2011 |
|||
Revenue |
£169.5m |
+11% (2011: £153.1m) |
|
|
Operating Profit |
£17.1m |
+11% (2011: £15.4m) |
|
|
Profit Before Tax |
£17.2m |
+10% (2011: £15.6m) |
|
|
EPS |
15.10p |
+6% (2011: 14.30p) |
|
|
Dividend |
4.95p |
+10% (2011: 4.50p) |
|
|
The highlights are headline results, see note on next page for definition.
Operational Highlights
· Further strong growth in both revenue and earnings, driven by new business wins and new businesses
· Global Network performed well across all geographies:
° UK: revenues up 13%, with CRM and mobile performing particularly well, operating profit up 17%
° Europe: revenues up 11%, operating profit up 14%, in spite of macro-economic challenges
° Middle East and Africa: revenues up 121%, well positioned to take advantage of growing African market
° Asia and Australasia: revenues up 8%, operating profit up 46%
° Americas: revenues up 19% with our New York agency relaunched in Q4
° Clear had a disappointing year and have restructured (resulting in a good start to the year)
· We continue to invest and build for the future: three offices added (Abu Dhabi, Singapore and Stockholm) together with a relaunch of New York
· Strong balance sheet maintained, focus on cash control with net cash of £17.9m
· Final dividend increased 10% to 3.85p, which takes the full-year dividend up 10% to 4.95p
Commenting on the results, David Kershaw, Chief Executive, said:
"M&C Saatchi has made very good progress in 2012. The Group returned double digit revenue and operating profit growth. This arose from new business success, increasingly international and integrated, the profitable growth of new businesses in the mature markets and the rolling out of proven models across the network. This was whilst continuing to invest in further new offices and businesses.
"Looking ahead, we are confident that we will continue to make progress in 2013 and beyond. The strategy continues to deliver. "
For further information please call:
M&C Saatchi +44 (0)20-7543-4500
David Kershaw
Tulchan Communications +44 (0)20-7353-4200
Lucy Legh
Susanna Voyle
Numis Securities +44 (0)20-7260-1000
Nick Westlake, NOMAD
Charles Farquhar, Corporate Broking
Notes to Editors
Headline results
The term headline is not a defined term in IFRS. The items that are excluded from headline results are the amortisation or impairment of intangible assets (including goodwill, but excluding software) acquired in business combinations, changes to contingent and deferred consideration taken to the income statement; impairment of investment in associate; and fair value gains and losses on liabilities caused by our put and call option agreements (note 11).
SUMMARY OF RESULTS
2012 saw another good performance with further revenue momentum and earnings growth. Revenues increased 11% and we maintained a double digit headline operating margin of 10.1% (post central costs), notwithstanding an investment in the year of just under £1.5m in three offices (Abu Dhabi, Singapore and Stockholm) and the relaunch of our New York office. Excluding this investment, the like-for-like margin increased from 10.1% to 10.9%. These impressive results were despite a previously flagged disappointing performance from Clear whose PBT fell from £2m to £0.3m. We have restructured Clear, redefined their offer and taken out significant cost so that they are trading more buoyantly in 2013. The overall Group headline profit before tax advanced 10% to £17.2m. Headline net earnings rose 7% to £9.6m suppressed by an increased corporation tax rate (32.4% in 2012, compared with 31.0% in 2011), a function of non-deductible losses from the new office investments.
UK
Revenue in the UK was up 13% from £67.0m to £75.4m, with our CRM and Mobile businesses performing strongly. We also had a strong run of wins across all of our businesses, including Ballantine's, Center Parcs, National Trust, Harveys, Peroni, Intercontinental Hotels, Viking and Virgin Holidays. Importantly, we are seeing an increasing number of integrated wins across communication channels. We continue to roll out proven new channel models across the network. We are now exporting CRM and PR to our overseas offices, alongside Sport & Entertainment and Mobile. We are making further investment in new businesses. In January 2013, we acquired 60% of a UK-based talent management agency Merlin Elite. This will become part of the Group's successful Sport & Entertainment division. We maintain a tight control on costs and margins. This resulted in the headline operating margin increasing to 20.2% (2011: 19.5%, both margins exclude the impact of Group recharges). The UK headline operating profit improved a positive 17% on 2011.
Europe
Despite the economic backdrop, positive progress was made in Europe with revenues up 11% and headline operating profit up 14%. Germany, Italy and Switzerland all performed well. Sport & Entertainment, launched in Germany and Switzerland, won some new business from Nestlé. In France, whilst advertising remains slow, we are benefiting from our diversification and were pleased to retain La Banque Postale, a major client. The headline operating margin was up from 14.1% to 14.4%, with some drag from our investment in Stockholm. Spain continued to underperform in a very difficult market but as an associate, our investment there is just 25%.
Middle East and Africa
We experienced further good growth in Cape Town and Johannesburg. Revenues more than doubled from £3.0m to £6.6m and key wins in the period were Edgars Department Stores and Nedbank's promotional account. Additionally, Sport & Entertainment and Mobile were both launched in Johannesburg in the second half. There was also some infrastructure investment needed in our offices to enhance systems and support for the larger clients we have been winning recently. Elsewhere in the region, we opened an Abu Dhabi office on the back of our Etihad win. With the investment in the new office and the new businesses, the headline operating margin consequently fell from 9.2% to 2.1% but will rebuild as these operations come on tap in profit terms.
Asia and Australasia
In Asia and Australasia, revenue increased 8% year-on-year and headline operating profit was up a very favourable 46%. The key driver for this was Australia. We won Commonwealth Bank early in the year and also retained Optus after a lengthy repitch; both are Group top ten accounts. New Zealand was impacted by two of their main clients suspending media spends for most of the year. There was another excellent performance from Malaysia. China underperformed but we have now agreed heads of terms and are already working with a respected partner, which will provide a more sustainable presence. Japan and India were both profitable, albeit relatively small. We reopened our Singapore office in February 2012 and they have achieved good new business momentum. The regional headline operating margin was 6.4%, compared with 2011's 4.7%.
Americas
In New York, we completed our executive management team line up in September and relaunched the operation in the fourth quarter. The office is now busy pitching and building relationships with new business intermediaries. Revenues were up 19% to £8.0m and the region overall broke even in profit terms, with our offices in Los Angeles and Sao Paulo and our other New York businesses (Mobile and PR), covering the advertising investment in New York.
Clear
Clear had a very tough year, with revenues slowing as nine of their top ten clients cut spending by 50% mainly due to budget cuts or restructuring programmes. Clear's headline operating profit reduced from £2m to £0.3m. We have significantly downsized Clear's New York and Asian operations, as well as undertaking some extensive cost cutting across the board, yielding a 31% cost saving. Clear's offering has been simplified and the new business programme boosted. New business wins came through in the fourth quarter including Bacardi, Novartis, Samsung and Pepsico and subsequently we expect the 2013 first quarter profitability to be much improved.
Outlook
M&C Saatchi has made very good progress in 2012. The Group returned double digit revenue and operating profit growth. This arose from new business success, increasingly international and integrated, the profitable growth of new businesses in the mature markets and the rolling out of proven models across the network. This was whilst continuing to invest in further new offices and businesses.
Looking ahead, we are confident that we will continue to make progress in 2013 and beyond. The strategy continues to deliver.
M&C SAATCHI PLC
AUDITED CONSOLIDATED INCOME STATEMENT
Year ended 31 December |
|
|
|
|
|
|
2012 |
|
2011 |
|
Note |
|
|
|
|
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
Billings |
|
|
|
|
|
|
502,738 |
|
520,017 |
|
|
|
|
|
|
|
|
|
|
Revenue |
3 |
|
|
|
|
|
169,486 |
|
153,133 |
|
|
|
|
|
|
|
|
|
|
Operating costs |
3 |
|
|
|
|
|
(153,731) |
|
(139,040) |
|
|
|
|
|
|
|
|
|
|
Operating profit |
3 |
|
|
|
|
|
15,755 |
|
14,093 |
|
|
|
|
|
|
|
|
|
|
Share of results of associates |
5 |
|
|
|
|
|
91 |
|
115 |
Impairment of associate |
|
|
|
|
|
|
(1,552) |
|
- |
Finance income |
6 |
|
|
|
|
|
422 |
|
2,199 |
Finance costs |
7 |
|
|
|
|
|
(4,835) |
|
(370) |
|
|
|
|
|
|
|
|
|
|
Profit before taxation |
3 |
|
|
|
|
|
9,881 |
|
16,037 |
|
|
|
|
|
|
|
|
|
|
Taxation |
8 |
|
|
|
|
|
(5,357) |
|
(4,589) |
|
|
|
|
|
|
|
|
|
|
Profit for the year |
|
|
|
|
|
|
4,524 |
|
11,448 |
Profit attributable to: |
|
|
|
|
|
|
|
|
|
Equity shareholders of the Group |
3 |
|
|
|
|
|
2,463 |
|
9,599 |
Non controlling interests |
|
|
|
|
|
|
2,061 |
|
1,849 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,524 |
|
11,448 |
|
|
|
|
|
|
|
|
|
|
Earnings per share |
3 |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
3.89p |
|
15.39p |
Diluted |
|
|
|
|
|
|
3.59p |
|
15.07p |
|
|
|
|
|
|
|
|
|
|
Headline results |
3 |
|
|
|
|
|
|
|
|
Operating profit |
|
|
|
|
|
|
17,068 |
|
15,399 |
Profit before tax |
|
|
|
|
|
|
17,182 |
|
15,562 |
Profit after tax attributable to equity shareholders |
|
|
|
|
|
|
9,560 |
|
8,918 |
Headline basic earnings per share (pence) |
|
|
|
|
|
|
15.10p |
|
14.30p |
M&C SAATCHI PLC
AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 31 December |
|
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
|
|
£000 |
|
£000 |
|
Profit for the year |
|
|
|
|
|
|
4,524 |
|
11,448 |
|
Other comprehensive income: |
|
|
|
|
|
|
|
|
|
|
Exchange differences on translating foreign operations before tax |
|
(518) |
|
(189) |
||||||
Tax benefit / (expense) |
|
|
|
|
|
|
56 |
|
(40) |
|
Other comprehensive income for the year net of tax |
|
|
|
(462) |
|
(229) |
||||
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
|
|
|
|
|
4,062 |
|
11,219 |
|
Total comprehensive income attributable to: |
|
|
|
|
|
|
|
|
|
|
Equity shareholders' of the Group |
|
|
|
|
|
|
2,001 |
|
9,370 |
|
Non controlling interests |
|
|
|
|
|
|
2,061 |
|
1,849 |
|
|
|
|
|
|
|
|
4,062 |
|
11,219 |
|
M&C SAATCHI PLC
AUDITED CONSOLIDATED BALANCE SHEET
At 31 December |
|
|
|
|
|
|
2012 |
|
2011 |
|||
|
Note |
|
|
|
|
|
£000 |
|
£000 |
|||
NON CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|||
Intangible assets |
|
|
|
|
|
|
60,540 |
|
60,229 |
|||
Investments in associates |
|
|
|
|
|
|
756 |
|
2,226 |
|||
Plant and equipment |
|
|
|
|
|
|
7,237 |
|
6,941 |
|||
Deferred tax assets |
|
|
|
|
|
|
1,612 |
|
1,098 |
|||
Other non current assets |
|
|
|
|
|
|
5,041 |
|
4,987 |
|||
|
|
|
|
|
|
|
75,186 |
|
75,481 |
|||
|
|
|
|
|
|
|
|
|
|
|||
CURRENT ASSETS |
|
|
|
|
|
|
|
|
|
|||
Trade and other receivables |
|
|
|
|
|
|
95,248 |
|
89,585 |
|||
Current tax assets |
|
|
|
|
|
|
881 |
|
322 |
|||
Cash and cash equivalents |
|
|
|
|
|
|
22,332 |
|
18,779 |
|||
|
|
|
|
|
|
|
118,461 |
|
108,686 |
|||
|
|
|
|
|
|
|
|
|
|
|||
CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
|
|||
Bank overdraft |
|
|
|
|
|
|
(84) |
|
- |
|||
Trade and other payables |
|
|
|
|
|
|
(106,872) |
|
(103,406) |
|||
Current tax liabilities |
|
|
|
|
|
|
(3,809) |
|
(2,270) |
|||
Other financial liabilities |
|
|
|
|
|
|
(131) |
|
(126) |
|||
Deferred and contingent consideration |
|
|
|
|
|
|
- |
|
(128) |
|||
Minority shareholder put option liabilities |
11 |
|
|
|
|
|
(2,549) |
|
(1,682) |
|||
|
|
|
|
|
|
|
(113,445) |
|
(107,612) |
|||
|
|
|
|
|
|
|
|
|
|
|||
Net currenT Assets (liabilities) |
|
|
|
|
|
|
5,016 |
|
1,074 |
|||
|
|
|
|
|
|
|
|
|
|
|||
Total assets less current liabilities |
|
|
|
|
|
|
80,202 |
|
76,555 |
|||
|
|
|
|
|
|
|
|
|
|
|||
Non current liabilities |
|
|
|
|
|
|
|
|
|
|||
Deferred tax liabilities |
|
|
|
|
|
|
(669) |
|
(813) |
|||
Other financial liabilities |
|
|
|
|
|
|
(4,322) |
|
(3,890) |
|||
Minority shareholder put options liabilities |
11 |
|
|
|
|
|
(17,933) |
|
(15,410) |
|||
Other non current liabilities |
|
|
|
|
|
|
(1,092) |
|
(396) |
|||
|
|
|
|
|
|
|
(24,016) |
|
(20,509) |
|||
|
|
|
|
|
|
|
|
|
|
|||
Total Net assets |
|
|
|
|
|
|
56,186 |
|
56,046 |
|||
|
|
|
|
|
|
|
|
|
|
|||
M&C SAATCHI PLC
AUDITED CONSOLIDATED BALANCE SHEET (CONTINUED)
At 31 December |
|
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
|
£000 |
|
£000 |
Equity |
|
|
|
|
|
|
|
|
|
Equity attributable to shareholders of the Group |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
|
|
|
641 |
|
635 |
Share premium |
|
|
|
|
|
|
14,625 |
|
13,832 |
Merger reserve |
|
|
|
|
|
|
20,669 |
|
21,194 |
Treasury reserve |
|
|
|
|
|
|
(792) |
|
(792) |
Minority interest put option reserve |
|
|
|
|
|
|
(13,675) |
|
(14,305) |
Non controlling interest acquired |
|
|
|
|
|
|
(1,085) |
|
(297) |
Foreign exchange reserve |
|
|
|
|
|
|
1,846 |
|
2,308 |
Retained earnings |
|
|
|
|
|
|
31,373 |
|
30,808 |
|
|
|
|
|
|
|
53,602 |
|
53,383 |
|
|
|
|
|
|
|
|
|
|
Non controlling interest |
|
|
|
|
|
|
2,584 |
|
2,663 |
|
|
|
|
|
|
|
|
|
|
TOTAL EQUITY |
|
|
|
|
|
|
56,186 |
|
56,046 |
M&C SAATCHI PLC
AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Share |
Share |
Merger |
Treasury |
MI put option |
Non controlling |
Foreign |
Retained |
Subtotal |
Non controlling |
Total |
At 1 January 2011 |
625 |
12,822 |
21,922 |
(792) |
(10,466) |
(130) |
2,662 |
23,053 |
49,696 |
1,375 |
51,071 |
Acquired non controlling interest |
2 |
262 |
- |
- |
158 |
(166) |
- |
- |
256 |
- |
256 |
Issues of shares to minorities |
- |
- |
- |
- |
- |
- |
- |
- |
- |
166 |
166 |
Impairment of M&C Saatchi (Hong Kong) Ltd* |
- |
- |
(728) |
- |
- |
- |
- |
728 |
- |
- |
- |
Exchange rate movements |
- |
- |
- |
- |
- |
(1) |
- |
- |
(1) |
87 |
86 |
Release on company deletion |
- |
- |
- |
- |
- |
- |
(125) |
125 |
- |
- |
- |
Issue of minority put options |
- |
- |
- |
- |
(4,186) |
- |
- |
- |
(4,186) |
- |
(4,186) |
Cancellation of minority put options |
- |
- |
- |
- |
189 |
- |
- |
(133) |
56 |
- |
56 |
Option exercise |
8 |
748 |
- |
- |
- |
- |
- |
(756) |
- |
- |
- |
Reclassification of share to cash based option |
- |
- |
- |
- |
- |
- |
- |
(372) |
(372) |
- |
(372) |
Share option charge |
- |
- |
- |
- |
- |
- |
- |
1,087 |
1,087 |
- |
1,087 |
Dividends |
- |
- |
- |
- |
- |
- |
- |
(2,523) |
(2,523) |
(814) |
(3,337) |
Total transactions with owners |
10 |
1,010 |
(728) |
- |
(3,839) |
(167) |
(125) |
(1,844) |
(5,683) |
(561) |
(6,244) |
Total comprehensive income for the year |
- |
- |
- |
- |
- |
- |
(229) |
9,599 |
9,370 |
1,849 |
11,219 |
At 1 January 2012 |
635 |
13,832 |
21,194 |
(792) |
(14,305) |
(297) |
2,308 |
30,808 |
53,383 |
2,663 |
56,046 |
At 1 January 2012 |
635 |
13,832 |
21,194 |
(792) |
(14,305) |
(297) |
2,308 |
30,808 |
53,383 |
2,663 |
56,046 |
Acquisitions |
- |
- |
- |
- |
- |
- |
- |
- |
- |
71 |
71 |
Acquired non controlling interest |
1 |
115 |
- |
- |
73 |
(120) |
- |
- |
69 |
(18) |
51 |
Issues of shares to minorities |
- |
- |
- |
- |
- |
- |
- |
(11) |
(11) |
26 |
15 |
Impairment of New Zealand* |
- |
- |
(525) |
- |
- |
- |
- |
525 |
- |
- |
- |
Subsidiary Share buyback of own equity from a non controlling shareholder |
- |
- |
- |
- |
- |
(668) |
- |
- |
(668) |
(632) |
(1,300) |
Exchange rate movements |
- |
- |
- |
- |
- |
- |
- |
- |
- |
(61) |
(61) |
Issue of minority put options |
- |
- |
- |
- |
(480) |
- |
- |
- |
(480) |
- |
(480) |
Cancellation of minority put options |
- |
- |
- |
- |
1,037 |
- |
- |
329 |
1,366 |
- |
1,366 |
Option exercise |
5 |
678 |
- |
- |
- |
- |
- |
(686) |
(3) |
- |
(3) |
Share option charge |
- |
- |
- |
- |
- |
- |
- |
855 |
855 |
- |
855 |
Dividends |
- |
- |
- |
- |
- |
- |
- |
(2,910) |
(2,910) |
(1,526) |
(4,436) |
Total transactions with owners |
6 |
793 |
(525) |
- |
630 |
(788) |
- |
(1,898) |
(1,782) |
(2,140) |
(3,922) |
Total comprehensive income for the year |
- |
- |
- |
- |
- |
- |
(462) |
2,463 |
2,001 |
2,061 |
4,062 |
At 1 December 2012 |
641 |
14,625 |
20,669 |
(792) |
(13,675) |
(1,085) |
1,846 |
31,373 |
53,602 |
2,584 |
56,186 |
* Amounts were released from merger reserve to retained earnings as an impairment charge was posted in respect of the investments that create the related merger reserve.
M&C SAATCHI PLC
AUDITED CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December |
Note |
2012 £000 |
2011 £000 |
|
||||
|
|
|
|
|
||||
|
Revenue |
|
169,486 |
153,133 |
||||
|
Operating expenses |
|
(153,731) |
(139,040) |
||||
|
OPERATING PROFIT |
|
15,755 |
14,093 |
||||
|
ADJUSTMENTS FOR: |
|
2,289 |
1,929 |
||||
|
Loss on sale of plant and equipment |
|
99 |
38 |
||||
|
Loss on sale of software intangibles |
|
35 |
- |
||||
|
Amortisation of acquired intangible assets |
|
705 |
714 |
||||
|
Impairment of goodwill |
|
608 |
902 |
||||
|
Amortisation of capitalised software intangible assets |
|
141 |
188 |
||||
|
Non cash share based incentive plans |
|
855 |
1,087 |
||||
|
OPERATING CASH FLOW BEFORE MOVEMENTS IN WORKING CAPITAL |
|
20,487 |
18,951 |
||||
|
Increase in debtors |
|
(5,717) |
(10,250) |
||||
|
Increases / (decrease) in creditors |
|
4,194 |
(9,775) |
||||
|
Cash generated / (consumed) from operations |
|
18,964 |
(1,074) |
||||
|
Tax paid |
|
(5,178) |
(4,159) |
||||
|
Net cash flow from operating activities |
|
13,786 |
(5,233) |
||||
|
Investing activities |
|
|
|
||||
|
Acquisitions net of cash acquired |
10 |
(3,199) |
(1,773) |
||||
|
Proceeds from sale of plant and equipment |
|
28 |
9 |
||||
|
Purchase of plant and equipment |
|
(2,652) |
(3,389) |
||||
|
Purchase of capitalised software |
|
(163) |
(173) |
||||
|
Dividends from associate |
|
- |
- |
||||
|
Interest earned |
|
422 |
345 |
||||
|
Net cash consumed by investing activities |
|
(5,564) |
(4,981) |
||||
|
Net cash generated / (consumed) by Operating and Investing activities |
|
8,222 |
(10,214) |
||||
AUDITED CONSOLIDATED CASH FLOW STATEMENT CONTINUED
Year ended 31 December |
|
2012 |
2011 |
|
|||
|
Net cash consumed by Operating and investing activities |
|
8,222 |
(10,214) |
|||
|
Financing activities |
|
|
|
|||
|
Dividends paid to equity holders of the Company |
|
(2,910) |
(2,523) |
|||
|
Dividends paid to non controlling interest |
|
(1,526) |
(814) |
|||
|
Subsidiaries sale of own shares to non controlling interest |
|
30 |
58 |
|||
|
Repayment of finance leases |
|
(214) |
(62) |
|||
|
Inception of bank loans |
|
5,416 |
2,117 |
|||
|
Repayment of bank loans |
|
(4,755) |
(786) |
|||
|
Interest paid |
|
(390) |
(297) |
|||
|
Net cash Consumed by financing activities |
|
(4,349) |
(2,307) |
|||
|
Net (decrease) / Increase in cash and cash equivalents |
|
3,873 |
(12,521) |
|||
|
Cash and cash equivalents at the beginning of the year |
|
18,779 |
31,388 |
|||
|
Effect of exchange rate changes |
|
(404) |
(88) |
|||
|
Cash and cash equivalents at the end of the year |
|
22,248 |
18,779 |
|||
M&C SAATCHI PLC
NOTES TO THE PRELIMINARY STATEMENTS
YEAR ENDED 31 DECEMBER 2012
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 Square, London W1F 9EE.
The Company has its primary listing on the AIM market of the London Stock Exchange.
These 2012 audited preliminary financial statements were approved for issue on 15 March 2013.
The financial information set out below does not constitute the company's statutory accounts for 2011 or 2012. Statutory accounts for the years ended 31 December 2011 and 31 December 2012 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2011 and 2012 were unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 31 December 2011 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2012 will be delivered to the Registrar in due course.
Headline results
The directors believe that the headline results and headline earnings per share provide additional useful information on the underlying performance of the business. In addition, the headline results are used for internal performance management, the calculation of rewards in the Group's Long Term Incentive Plan (LTIP) schemes and minority shareholder put option liabilities. The term headline is not a defined term in IFRS.
Our segmental reporting reflects our headline results in accordance with IFRS 8.
The items that are excluded from headline results are the amortisation or impairment of intangible assets (including goodwill, but excluding software) acquired in business combinations, changes to contingent and deferred consideration taken to the income statement; impairment of investment in associate; and fair value gains and losses on liabilities caused by our put and call option agreements.
2. Accounting policies
The financial information set out in these final results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The accounting policies adopted in these final results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the period ended 31 December 2012. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 December 2011.
3. Earnings per share and reconciliation between headline and statutory results
Year ended |
|
Reported results £000 |
Amortisation of acquired intangibles £000 |
Impairment of Goodwill £000 |
Impairment of associate £000 |
Fair value adjustments to minority £000 |
Headline & segmental results £000 |
Revenue |
|
169,486 |
- |
- |
- |
- |
169,486 |
Operating profit |
|
15,755 |
705 |
608 |
- |
- |
17,068 |
Share of results of associates |
|
91 |
- |
- |
- |
- |
91 |
Impairment of associate |
|
(1,552) |
- |
- |
1,552 |
- |
- |
Finance income |
|
422 |
- |
- |
- |
- |
422 |
Finance cost |
|
(4,835) |
- |
- |
- |
4,436 |
(399) |
Profit before taxation |
|
9,881 |
705 |
608 |
1,552 |
4,436 |
17,182 |
Taxation |
|
(5,357) |
(185) |
- |
- |
- |
(5,542) |
Profit after taxation |
|
4,524 |
520 |
608 |
1,552 |
4,436 |
11,640 |
Non controlling interests |
|
(2,061) |
(19) |
- |
- |
- |
(2,080) |
Profit attributable to equity holders of the Group |
2,463 |
501 |
608 |
1,552 |
4,436 |
9,560 |
|
Basic earnings per share |
|
|
|
|
|
|
|
Weighted average number of shares (thousands) |
|
63,317 |
- |
- |
- |
- |
63,317 |
Basic EPS |
|
3.89p |
- |
- |
- |
- |
15.10p |
Diluted earnings per share |
|
|
|
|
|
|
|
Weighted average number of shares (thousands) as above |
|
63,317 |
- |
- |
- |
- |
63,317 |
Add |
|
|
|
|
|
|
|
- UK growth shares |
|
1,581 |
- |
- |
- |
- |
1,581 |
- Options |
|
128 |
- |
- |
- |
- |
128 |
- LTIP |
|
111 |
- |
- |
- |
- |
111 |
- New LTIP |
|
3,547 |
- |
- |
- |
- |
3,547 |
Total |
|
68,684 |
|
|
|
|
68,684 |
Diluted earnings per share |
|
3.59p |
|
|
|
|
13.92p |
Year ended |
|
Reported results £000 |
Amortisation of acquired intangibles £000 |
Impairment of Goodwill £000 |
Contingent liability revaluation £000 |
Fair value adjustments to minority £000 |
Headline & segmental results £000 |
Revenue |
|
153,133 |
- |
- |
- |
- |
153,133 |
Operating profit |
|
14,093 |
714 |
902 |
(310) |
- |
15,399 |
Share of results of associates |
|
115 |
- |
- |
- |
- |
115 |
Impairment of associate |
|
- |
- |
- |
- |
- |
- |
Finance income |
|
2,199 |
- |
- |
- |
(1,781) |
418 |
Finance cost |
|
(370) |
- |
- |
- |
- |
(370) |
Profit before taxation |
|
16,037 |
714 |
902 |
(310) |
(1,781) |
15,562 |
Taxation |
|
(4,589) |
(206) |
- |
- |
- |
(4,795) |
Profit after taxation |
|
11,448 |
508 |
902 |
(310) |
(1,781) |
10,767 |
Non controlling interests |
|
(1,849) |
- |
- |
- |
- |
(1,849) |
Profit attributable to equity holders of the Group |
9,599 |
508 |
902 |
(310) |
(1,781) |
8,918 |
|
Basic earnings per share |
|
|
|
|
|
|
|
Weighted average number of shares (thousands) |
|
62,355 |
- |
- |
- |
- |
62,355 |
Basic EPS |
|
15.39p |
- |
- |
- |
- |
14.30p |
Diluted earnings per share |
|
|
|
|
|
|
|
Weighted average number of shares (thousands) as above |
|
62,355 |
- |
- |
- |
- |
62,355 |
Add |
|
|
|
|
|
|
|
- UK growth shares |
|
1,102 |
- |
- |
- |
- |
1,102 |
- Options |
|
128 |
- |
- |
- |
- |
128 |
- LTIP |
|
111 |
- |
- |
- |
- |
111 |
- New LTIP |
|
- |
- |
- |
- |
- |
- |
Total |
|
63,696 |
|
|
|
|
63,696 |
Diluted earnings per share |
|
15.07p |
|
|
|
|
14.00p |
4. SEGMENTAL INFORMATION
This segmental information is reconciled to the statutory results in Note 3.
Year ended |
UK £000 |
Europe £000 |
Middle East & Africa |
Asia and Australasia £000 |
Americas £000 |
Clear £000 |
Total £000 |
Revenue |
75,401 |
16,164 |
6,604 |
53,798 |
8,031 |
9,488 |
169,486 |
Operating profit excluding Group costs |
15,252 |
2,331 |
237 |
3,443 |
66 |
276 |
21,605 |
Group costs |
4,269 |
71 |
- |
110 |
87 |
- |
4,537 |
Operating profit |
10,983 |
2,260 |
237 |
3,333 |
(21) |
276 |
17,068 |
Share of results of associates |
77 |
(88) |
102 |
- |
- |
- |
91 |
Financial income & cost |
75 |
(45) |
15 |
14 |
(38) |
2 |
23 |
Profit before taxation |
11,135 |
2,127 |
354 |
3,347 |
(59) |
278 |
17,182 |
Taxation |
(2,956) |
(743) |
(167) |
(1,566) |
(52) |
(58) |
(5,542) |
Profit for the year |
8,179 |
1,384 |
187 |
1,781 |
(111) |
220 |
11,640 |
Non controlling interests |
(1,231) |
(435) |
(98) |
(565) |
255 |
(6) |
(2,080) |
Profit attributable to equity shareholders of the Group |
6,948 |
949 |
89 |
1,216 |
144 |
214 |
9,560 |
|
|
|
|
|
|
|
|
Headline basic EPS |
|
|
|
|
|
|
15.10p |
|
|
|
|
|
|
|
|
Non cash costs included in operating profit: |
|
|
|
|
|
||
Depreciation |
(1,118) |
(250) |
(144) |
(527) |
(79) |
(171) |
(2,289) |
Amortisation of software |
(1) |
(30) |
(25) |
(61) |
(24) |
- |
(141) |
Share option charges |
(855) |
- |
- |
- |
- |
- |
(855) |
Office location
|
London
|
Paris Berlin Madrid Geneva Milan Stockholm
|
Beirut Cape Town Johannesburg Abu Dhabi
|
Sydney Melbourne Auckland Wellington New Delhi Mumbai Kuala Lumpur Hong Kong Beijing Shanghai Tokyo Singapore |
Los Angeles São Paulo New York
|
London Hong Kong New York Sydney Singapore
|
|
Year ended |
UK £000 |
Europe £000 |
Middle East & Africa |
Asia and Australasia £000 |
Americas £000 |
Clear £000 |
Total £000 |
Revenue |
66,974 |
14,540 |
2,987 |
49,700 |
6,736 |
12,196 |
153,133 |
Operating profit excluding Group costs |
13,031 |
2,053 |
276 |
2,358 |
77 |
2,016 |
19,811 |
Group costs |
4,175 |
70 |
- |
79 |
88 |
- |
4,412 |
Operating profit |
8,856 |
1,983 |
276 |
2,279 |
(11) |
2,016 |
15,399 |
Share of results of associates |
(13) |
93 |
35 |
- |
- |
- |
115 |
Financial income & cost |
(31) |
(46) |
1 |
124 |
(4) |
4 |
48 |
Profit before taxation |
8,812 |
2,030 |
312 |
2,403 |
(15) |
2,020 |
15,562 |
Taxation |
(2,768) |
(706) |
118 |
(883) |
29 |
(585) |
(4,795) |
Profit for the year |
6,044 |
1,324 |
430 |
1,520 |
14 |
1,435 |
10,767 |
Non controlling interests |
(618) |
(443) |
(113) |
(541) |
(4) |
(130) |
(1,849) |
Profit attributable to equity shareholders of the Group |
5,426 |
881 |
317 |
979 |
10 |
1,305 |
8,918 |
|
|
|
|
|
|
|
|
Headline basic EPS |
|
|
|
|
|
|
14.30p |
|
|
|
|
|
|
|
|
Non cash costs included in operating profit: |
|
|
|
|
|
||
Depreciation |
(882) |
(215) |
(69) |
(584) |
(57) |
(122) |
(1,929) |
Amortisation of software |
(56) |
(48) |
(8) |
(56) |
(20) |
- |
(188) |
Share option charges |
(1,048) |
- |
- |
(37) |
(2) |
- |
(1,087) |
Office location
|
London
|
Paris Berlin Madrid Geneva Milan
|
Beirut Cape Town Johannesburg
|
Sydney Melbourne Auckland Wellington New Delhi Mumbai Kuala Lumpur Hong Kong Beijing Shanghai Tokyo |
Los Angeles São Paulo New York
|
London Hong Kong New York Amsterdam Singapore
|
|
Segmental income statement translated at 2011 exchange rates
It is normal practice in our industry to provide like-for-like results. In the year we had not acquired any significant new businesses therefore the only difference in our like-for-like results is the impact from movements in exchange rates. Had our 2012 results been translated at 2011 exchange rate then our results would have been:
Year ended |
UK £000 |
Europe £000 |
Middle East & Africa |
Asia and Australasia £000 |
Americas £000 |
Clear £000 |
Total £000 |
Revenue |
75,401 |
17,278 |
7,290 |
53,129 |
8,508 |
9,426 |
171,032 |
Operating profit excluding Group costs |
15,252 |
2,506 |
296 |
3,427 |
65 |
275 |
21,821 |
Group costs |
4,269 |
76 |
- |
110 |
100 |
- |
4,555 |
Operating profit |
10,983 |
2,430 |
296 |
3,317 |
(35) |
275 |
17,266 |
Share of results of associates |
77 |
(96) |
100 |
- |
- |
- |
81 |
Financial income & cost |
75 |
(45) |
16 |
10 |
(44) |
2 |
14 |
Profit before taxation |
11,135 |
2,289 |
412 |
3,327 |
(79) |
277 |
17,361 |
Taxation |
(2,956) |
(800) |
(185) |
(1,546) |
(49) |
(60) |
(5,596) |
Profit for the year |
8,179 |
1,489 |
227 |
1,781 |
(128) |
217 |
11,765 |
Increase/(decrease) in 2012 results caused by translation differences |
- |
(105) |
(40) |
- |
17 |
3 |
(125) |
5. Share of associates
Year ended 31 December |
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
£000 |
|
£000 |
|
||||||||
Share of associates' profit before taxation |
|
|
|
|
|
120 |
|
133 |
Share of associates' taxation |
|
|
|
|
|
(29) |
|
(18) |
|
|
|
|
|
|
91 |
|
115 |
6. Finance Income
Year ended 31 December |
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
£000 |
|
£000 |
|
||||||||
|
|
|
|
|
|
|
|
|
Bank interest receivable |
|
|
|
|
|
398 |
|
401 |
Other interest receivable |
|
|
|
|
|
24 |
|
17 |
Total interest receivable |
|
|
|
|
|
422 |
|
418 |
|
|
|
|
|
|
|
|
|
Fair value adjustments to minority shareholder put option liabilities |
|
|
|
|
|
- |
|
1,781 |
Total finance income |
|
|
|
|
|
422 |
|
2,199 |
7. Finance costs
Year ended 31 December |
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
£000 |
|
£000 |
Finance costs |
||||||||
|
|
|
|
|
|
|
|
|
Bank interest payable |
|
|
|
|
|
(390) |
|
(369) |
Other interest payable |
|
|
|
|
|
(9) |
|
(1) |
Total interest payable |
|
|
|
|
|
(399) |
|
(370) |
|
|
|
|
|
|
|
|
|
Fair value adjustments to minority shareholder put option liabilities |
|
|
|
|
|
(4,436) |
|
- |
Total finance costs |
|
|
|
|
|
(4,835) |
|
(370) |
8. Taxation
Year ended 31 December |
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
£000 |
|
£000 |
|
||||||||
Current taxation |
|
|
|
|
|
|
|
|
Taxation in the year |
|
|
|
|
|
|
|
|
- UK |
|
|
|
|
|
3,123 |
|
2,858 |
- Overseas |
|
|
|
|
|
2,916 |
|
2,308 |
Utilisation of previously unrecognised tax losses |
|
|
|
|
|
(147) |
|
(141) |
Adjustment for over / (under) provisions in prior periods |
|
|
|
354 |
|
(10) |
||
|
|
|
|
|
|
6,246 |
|
5,015 |
|
|
|
|
|
|
|
|
|
Deferred taxation |
|
|
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
|
|
|
|
(877) |
|
(571) |
Recognition of previously unrecognised tax losses |
|
|
|
|
|
(11) |
|
145 |
Effect of changes in tax rates |
|
|
|
|
|
(1) |
|
- |
|
|
|
|
|
|
(889) |
|
(426) |
Total taxation |
|
|
|
|
|
5,357 |
|
4,589 |
9. Dividends
Year ended 31 December |
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
£000 |
|
£000 |
|
||||||||
|
|
|
|
|
|
|
|
|
2011 final dividend 3.50p (2010: 3.03p) |
|
|
|
|
|
2,213 |
|
1,895 |
2012 interim dividend 1.10p (2011: 1.00p) |
|
|
|
|
|
697 |
|
628 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,910 |
|
2,523 |
Proposed final dividend of 3.85p totalling £2,577k. Subject to shareholders approval on 12 June 2013,
the dividend is payable on 5 July 2013 to shareholders on the register 7 June 2013.
The dividend relates to the following years:
Year ended 31 December |
|
|
|
|
|
2012 |
|
2011 |
||
|
|
|
|
|
|
£000 |
|
£000 |
||
|
||||||||||
|
|
|
|
|
|
|
|
|
||
First interim dividend |
|
|
|
|
|
697 |
|
628 |
||
Final dividends |
|
|
|
|
|
2,577 |
|
2,313 |
||
|
|
|
|
|
|
|
|
|
||
Total dividend that relates to the year |
|
|
|
|
|
3,274 |
|
2,841 |
||
|
|
|
|
|
|
|
|
|
||
The headline dividend cover is: |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||
Headline profit after tax attributable to equity shareholders |
|
|
|
|
|
9,560 |
|
8,918 |
||
Total dividend that relates to the year |
|
|
|
|
|
3,274 |
|
2,841 |
||
Headline dividend cover |
|
|
|
|
|
2.9 |
|
3.1 |
||
|
|
|
|
|
|
|
|
|
||
Headline dividend cover is calculated by taking headline profit after tax attributable to equity shareholders and dividing it by the total dividends that relate to that year's profits. The Group seeks to maintain a long term headline dividend cover of between 3 and 4.
10. Cash consumed by acquisitions
|
2012 £000 |
2011 £000 |
Cash consideration |
|
|
- M&C Saatchi Mobile Ltd |
(1,300) |
- |
- M&C Saatchi GAD SAS (Part of 4% put) |
(45) |
- |
- Clear USA LLC (20%) |
(64) |
- |
- Bang Pty Ltd (85%) |
(1,666) |
- |
- Direct One SAS (final payments for 70%) |
(126) |
(283) |
- Brazilian Client list |
- |
(912) |
- M&C Saatchi Communications Pvt Ltd (2012: 5%, 2011: 20%) |
(5) |
(17) |
- M&C Saatchi Export Ltd (2011: Part of 2.8% put) |
- |
(27) |
|
(3,206) |
(1,239) |
Less cash and cash equivalents acquired |
7 |
- |
|
(3,199) |
(1,239) |
Purchase of associates |
- |
(534) |
|
(3,199) |
(1,773) |
11. Minority shareholder put option liabilities
Some of our subsidiaries' minorities have the right to a put option. The put options give the minorities a right
to exchange their minority holdings in the subsidiary into shares in M&C Saatchi plc or cash (as per the agreement).
Year ended 31 December |
|
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
Amounts falling within one year |
|
|
|
|
|
|
|
|
|
- Cash |
|
|
|
|
|
|
(847) |
|
(234) |
- Equity |
|
|
|
|
|
|
(1,702) |
|
(1,448) |
|
|
|
|
|
|
|
(2,549) |
|
(1,682) |
Amounts falling after one year |
|
|
|
|
|
|
|
|
|
- Cash |
|
|
|
|
|
|
(2,450) |
|
- |
- Equity |
|
|
|
|
|
|
(15,483) |
|
(15,410) |
|
|
|
|
|
|
|
(17,933) |
|
(17,092) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(20,482) |
|
(17,092) |
Year ended 31 December |
|
|
|
|
|
|
2012 |
|
2011 |
|
|
|
|
|
|
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
At 1 January |
|
|
|
|
|
|
(17,092) |
|
(15,035) |
Exchange difference |
|
|
|
|
|
|
(1) |
|
- |
Additions |
|
|
|
|
|
|
(480) |
|
(4,133) |
Exercises |
|
|
|
|
|
|
161 |
|
295 |
Termination |
|
|
|
|
|
|
1,366 |
|
- |
Income statement charge due to |
|
|
|
|
|
|
|
|
|
- Change in estimates |
|
|
|
|
|
|
2,627 |
|
517 |
- Change in share price |
|
|
|
|
|
|
(6,932) |
|
1,979 |
- Time |
|
|
|
|
|
|
(131) |
|
(715) |
Total income statement charge |
|
|
|
|
|
|
(4,436) |
|
1,781 |
At 31 December |
|
|
|
|
|
|
(20,482) |
|
(17,092) |
|
|
|
|
|
|
|
|
|
|
The movements in the year relating to the minority interest put options that are payable in cash and in equity are as follows:
|
|
|
|
|
|
|
2012 |
|
2011 |
Cash Based |
|
|
|
|
|
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
At 1 January |
|
|
|
|
|
|
(234) |
|
(216) |
Reclassified from share based |
|
|
|
|
|
|
(2,863) |
|
- |
Income statement charge due to |
|
|
|
|
|
|
|
|
|
- Change in estimates |
|
|
|
|
|
|
(71) |
|
(44) |
- Change in share price |
|
|
|
|
|
|
(129) |
|
26 |
At 31 December |
|
|
|
|
|
|
(3,297) |
|
(234) |
|
|
|
|
|
2012 |
|
2012 |
|
2011 |
Equity Based |
|
|
|
|
Equity* |
|
£000 |
|
£000 |
|
|
|
|
|
|
|
|
|
|
At 1 January |
|
|
|
|
(14,471) |
|
(16,858) |
|
(14,819) |
Exchange difference |
|
|
|
|
- |
|
(1) |
|
- |
Additions |
|
|
|
|
(266) |
|
(480) |
|
(4,134) |
Exercises |
|
|
|
|
107 |
|
161 |
|
295 |
Reclassified to cash based |
|
|
|
|
2,458 |
|
2,863 |
|
|
Terminations |
|
|
|
|
1,173 |
|
1,366 |
|
|
Income statement charge due to |
|
|
|
|
|
|
|
|
|
- Change in estimates |
|
|
|
|
1,495 |
|
2,698 |
|
561 |
- Change in share price |
|
|
|
|
59 |
|
(6,803) |
|
1,953 |
- Time |
|
|
|
|
(72) |
|
(131) |
|
(715) |
At 31 December |
|
|
|
|
(9,517) |
|
(17,185) |
|
(16,858) |
* The estimated number of M&C Saatchi plc shares that will be issued, in thousands, to fulfil.
Put options are exercisable from:
Subsidiary |
Year |
% of Subsidiaries shares exchangeable |
M&C Saatchi LA Inc |
2013 |
16.0 |
M&C Saatchi Marketing Arts Ltd |
2013 |
50.0 |
M&C Saatchi (M) SDN BHD |
2013 |
20.0 |
M&C Saatchi Sports and Entertainment Ltd |
2013 |
2.8 |
Influence Communications Ltd |
2013 |
5.0 |
M&C Saatchi Europe Holdings Ltd |
2013 |
4.0 |
M&C Saatchi German Holdings Ltd |
2013 |
4.0 |
M&C Saatchi Communications Pty Ltd |
2013 |
13.0 |
M&C Saatchi Berlin GmbH |
2013 |
10.0 |
Talk PR Audience Ltd |
2013 |
17.0 |
M&C Saatchi GAD SAS** |
2013 |
39.0 |
FCINQ SAS |
2013 |
18.0 |
M&C Saatchi PR LLP (US) |
2014 |
35.0 |
M&C Saatchi Berlin GmbH |
2014 |
5.0 |
Clear Ideas Consulting LLP |
2014 |
12.5 |
Clear Ideas Consulting LLP |
2015 |
12.5 |
M&C Saatchi Agency Pty Ltd |
2015 |
20.0 |
M&C Saatchi Sport & Entertainment Pty Ltd |
2015 |
49.0 |
Talk PR Ltd |
2015 |
49.0 |
M&C Saatchi UK PR LLP |
2015 |
35.0 |
M&C Saatchi Corporate SAS* |
2015 |
29.8 |
M&C Saatchi (Switzerland) SA |
2016 |
40.0 |
M&C Saatchi Mobile Ltd** |
2016 |
25.0 |
The Source (London) Ltd |
2016 |
30.0 |
Direct One SAS* |
2016 |
10.0 |
Direct One SAS* |
2017 |
10.0 |
M&C Saatchi Berlin GmbH* |
2017 |
5.0 |
M&C Saatchi Brazil Cominicação LTDA |
2017 |
49.9 |
Direct One SAS* |
2018 |
10.0 |
*New or amended options in 2012.
** Holding changed or shares put in 2012.