MULTIPLE NON MATERIAL TEXT AMENDMENTS
A number of non material typographical changes have been made to the Final Results 2014 announcement released on
26 March 2015 at 07:00 under RNS No 4886I.
The changes made are the removal of references to notes that will exist in Annual Report (due to be issued mid April 2015), but do not exist in this audited preliminary statement.
The full amended text is shown below.
M&C SAATCHI PLC
FINAL RESULTS
YEAR ENDED
31 DECEMBER 2014
26 March 2015
M&C Saatchi PLC
Final Results for the year ended 31 December 2014
26 March 2015 |
|
Financial Highlights 2014 |
Growth versus 2013 |
Revenue Revenue in constant currencies |
£169.4m |
+ 5% (2013: £162.0m) + 10% (2013: £154.0m) |
|
Operating Profit |
£16.0m |
+ 17% (2013: £13.7m) |
|
Profit Before Tax |
£17.2m |
+ 17% (2013: £14.6m) |
|
Profit After Tax and MI EPS |
£10.4m 15.88p |
+ 27% (2013: £8.2m) + 28% (2013: 12.39p) |
|
Dividend |
6.27p |
+ 15% (2013: 5.45p) |
|
|
|
|
|
|
|
|
|
|
The highlights are pro forma headline results, see note on next page for definition.
Operational Highlights
· Strong results with good revenue momentum and a substantial increase in earnings growth
The global network performed well across all geographies:
· UK: revenues up 9%, with CRM and Mobile continuing to excel; operating profit up 1%
· Europe: like-for-like revenues up 15%, operating profit increased 54%
· Middle East and Africa: like-for-like revenues up 14%, operating profit up 173%
· Asia and Australasia: like-for-like revenues down 1%, operating profit increased 10%
· Americas: like-for-like revenues up 51%, operating profit of £0.4m
· Acquired 33% of SS+K in New York
· Robust balance sheet maintained with net year-end cash of £5m
· Final dividend increased 15% to 4.87p, full-year dividend up 15% to 6.27p
David Kershaw, Chief Executive, said:
"2014 was another year of excellent progress for M&C Saatchi. Our strategy of consistent growth through winning new business and starting new businesses continues to deliver good results.
"We have invested and upgraded and now feel we have the network span and depth of capabilities with which we can significantly develop our international client portfolio.
"We are confident we will continue to make good progress in 2015 and beyond."
For further information please call:
M&C Saatchi +44 (0)20-7543-4500
David Kershaw
Tulchan Communications +44 (0)20-7353-4200
Andrew Grant
Louise Högberg
Numis Securities +44 (0)20-7260-1000
Nick Westlake, NOMAD
Charles Farquhar, Corporate Broking
Notes to Editors
Pro forma 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 deferred and contingent consideration and other acquisition related charges 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. Pro-forma headline treats the 2013 discontinued operations as if they had been disposed at the beginning of the period.
Like-for-like
Are the results expressed at constant exchange rates.
SUMMARY OF RESULTS
2014 saw another year of very good results with continued strong momentum and good revenue and earnings growth.
UK
Revenue in the UK was up 9%, with both CRM and Mobile continuing to do well. UK headline operating profit improved 1% on 2013. We experienced a positive run of account wins across our group of businesses, including Land Rover, John Lewis, Oxfam, Sky Bet, Ballantine's, Foot Locker, Doddle and the global business of Douwe Egberts. In April, we strengthened our digital offering by acquiring Lean Mean Fighting Machine, a highly respected and much awarded online agency. Our CRM offering through LIDA remains outstanding and they deservedly again won Customer Engagement Agency of the year. In addition, M&C Saatchi Mobile was awarded Mobile Agency of the Year EMEA. We are now exporting CRM and PR to our overseas offices, alongside Sport & Entertainment and Mobile. Our disciplined approach to cost and margins ensured a healthy headline operating margin of 14.9% (2013: 16.0%).
Europe
European like-for-like revenues increased 15% year on year. Stockholm has maintained its vigorous revenue momentum with further good new business wins across the year. Both Germany and Italy produced remarkable performances, with Italy winning BMW in the second half. In spite of a slow advertising market, the French office successfully won McCain and Thomas Cook as well as a place on the EDF roster. Additionally, our associate in Spain won the state train operator RENFE at the end of the year. Regionally, operating profit increased 54%, with a headline operating margin of 13.7% (2013: 9.7%).
Middle East and Africa
Like-for-like revenues increased 14% with substantial contributions from both Cape Town and Johannesburg. Key new business wins in South Africa were Pepsico and Deloitte Consulting. Abu Dhabi continues to build revenues beyond the Etihad account and won the account of TwoFour54, a government backed tax-free media and entertainment centre. In January 2015, we announced we were acquiring a majority stake in Ben-Natan Golan Advertising in Tel Aviv, Israel, forming a new agency M&C Saatchi Tel Aviv. Israel has the largest tech sector per capita in the world, often referred to as the second Silicon Valley. With our associate in Beirut and our office in Abu Dhabi, we now have a potent presence in the region. Overall, headline operating profit was up an exceptional 173%, with a headline operating margin of 12.8% (2013: 4.7%).
Asia and Australasia
In Asia and Australasia, like-for-like revenue was down 1% year on year. Australian revenues decreased without the David Jones account in 2014. However, our Australian offices have had an outstanding new business run in 2014, winning IAG, Lexus, A2 and Cricket Australia. With this performance and some very good work; they were rightly awarded Australian Agency of the Year. Regional revenues were also hit by account losses in New Zealand, which meant we took the strategic decision to close the office. Otherwise, the relationship with our associate in China, aeiou, progresses well with the win of some Microsoft business. Malaysia made a terrific contribution, maintaining their exceptional performance. In India, we reproduced our Chinese model acquiring 20% of February, a Delhi based agency. Singapore was appointed on an Asian regional basis for Jaguar and continues to win government assignments. The headline regional operating margin was up 2.3% from 9.2% to 11.5%, with the headline operating profit increasing 10%.
Americas
Like-for-like revenues increased 51% with a small operating profit of £0.4m, with our offices in Los Angeles and Sao Paulo together with our US Mobile operation more than covering our organic investment in our New York office. The conversion of new business proved slow in New York, which led us to implement a management restructure. In November, we acquired 33% of SS+K, a much respected award winning agency that will significantly enhance our presence and accelerate our growth in New York. Already the model is working well, winning the international account of J W Marriott with our London office. Our office in Los Angeles maintained their good progress, winning UGG's social media business across the US. In February of this year, we upgraded our Sao Paulo presence, replicating the investment approach we took in China. We made a 25% investment in Santa Clara, a high quality independent agency who will be a powerful addition to our network.
Outlook
2014 was another year of excellent progress for M&C Saatchi. Our strategy of consistent growth through winning new business and starting new businesses continues to deliver good results.
We have invested and upgraded and now feel we have the network span and depth of capabilities with which we can significantly develop our international client portfolio.
We are confident we will continue to make good progress in 2015 and beyond.
AUDITED CONSOLIDATED INCOME STATEMENT
Year ended 31 December |
Note |
|
2014
£000
|
|
Continuing operations
2013
£000 |
Discontinued operations*
2013
£000 |
Total
2013
£000 |
Billings |
|
|
333,302 |
|
320,288 |
198,618 |
518,906 |
Revenue |
3 |
|
169,373 |
|
162,039 |
13,562 |
175,601 |
Operating costs |
3 |
|
(163,720) |
|
(149,282) |
(9,588) |
(158,870) |
Operating profit |
3 |
|
5,653 |
|
12,757 |
3,974 |
16,731 |
Share of results of associates and joint ventures |
5 |
|
1,350 |
|
163 |
- |
163 |
Gain on disposal of discontinued operations |
|
|
- |
|
- |
7,048 |
7,048 |
Finance income |
6 |
|
316 |
|
376 |
117 |
493 |
Finance costs |
7 |
|
(1,087) |
|
(15,852) |
- |
(15,852) |
Profit / (loss) before taxation |
3 |
|
6,232 |
|
(2,556) |
11,139 |
8,583 |
Taxation |
8 |
|
(4,293) |
|
(4,207) |
(1,046) |
(5,253) |
Profit / (loss) for the year |
|
|
1,939 |
|
(6,763) |
10,093 |
3,330 |
Attributable to: |
|
|
|
|
|
|
|
Equity shareholders of the Group |
3 |
|
(155) |
|
(8,610) |
10,093 |
1,483 |
Non controlling interests |
3 |
|
2,094 |
|
1,847 |
- |
1,847 |
Profit / (loss) for the year |
3 |
|
1,939 |
|
(6,763) |
10,093 |
3,330 |
Earnings per share |
|
|
|
|
|
|
|
Basic (pence) |
3 |
|
(0.24)p |
|
(13.03)p |
15.27p |
2.24p |
Diluted (pence) |
3 |
|
(0.24)p |
|
(13.03)p |
14.38p |
2.11p |
|
|
|
Headline results** |
|
|
Operating profit |
16,025 |
13,657*** |
Profit before tax |
17,143 |
14,605*** |
Profit after tax attributable to equity
shareholders of the Group |
10,365 |
8,187*** |
Basic earnings per share (pence) |
15.88p |
12.39p*** |
* The results of Walker Media up to the sale of 75.1% on 28 November 2013 were presented as a discontinued operation in 2013.
**The reconciliation of headline to statutory results above can be found in note 3.
***On a pro forma basis (note 3).
The notes on pages 11 to 21 form part of these consolidated financial statements.
AUDITED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
Year ended 31 December |
|
2014
£000
|
|
Continuing operations
2013
£000 |
Discontinued operations
2013
£000 |
Total
2013
£000 |
Profit / (loss) for the year |
|
1,939 |
|
(6,763) |
10,093 |
3,330 |
Other comprehensive income*: |
|
|
|
|
|
|
Exchange differences on translating foreign operations before tax |
|
(1,212) |
|
(1,302) |
- |
(1,302) |
Other comprehensive income for the year net of tax |
|
(1,212) |
|
(1,302) |
- |
(1,302) |
|
|
|
|
|
|
|
Total comprehensive income for the year |
|
727 |
|
(8,065) |
10,093 |
2,028 |
Total comprehensive income attributable to: |
|
|
|
|
|
|
Equity shareholders of the Group |
|
(1,367) |
|
(9,912) |
10,093 |
181 |
Non controlling interests |
|
2,094 |
|
1,847 |
- |
1,847 |
Total comprehensive income / (loss) for the year |
|
727 |
|
(8,065) |
10,093 |
2,028 |
* All items in consolidated statement of comprehensive income will be reclassified to the income statement.
The notes on pages 11 to 21 form part of these consolidated financial statements.
AUDITED CONSOLIDATED BALANCE SHEET
At 31 December |
Note |
2014
£000 |
2013
£000 |
Non current assets |
|
|
|
Intangible assets |
|
29,142 |
35,269 |
Investments in associates |
|
18,731 |
13,099 |
Plant and equipment |
|
8,409 |
7,310 |
Deferred tax assets |
|
1,515 |
1,313 |
Other non current assets |
|
5,899 |
5,316 |
|
|
63,696 |
62,307 |
Current assets |
|
|
|
Trade and other receivables |
|
71,043 |
61,478 |
Current tax assets |
|
318 |
1,355 |
Cash and cash equivalents |
|
23,446 |
33,702 |
|
|
94,807 |
96,535 |
Current liabilities |
|
|
|
Bank overdraft |
|
(125) |
(115) |
Trade and other payables |
|
(75,995) |
(64,004) |
Current tax liabilities |
|
(1,995) |
(3,552) |
Other financial liabilities |
|
(22) |
(20) |
Deferred and contingent consideration |
|
- |
(420) |
Minority shareholder put option liabilities |
10 |
(15,835) |
(21,844) |
|
|
(93,972) |
(89,955) |
Net current assets |
|
835 |
6,580 |
Total assets less current liabilities |
|
64,531 |
68,887 |
Non current liabilities |
|
|
|
Deferred tax liabilities |
|
(422) |
(486) |
Other financial liabilities |
|
(18,226) |
(356) |
Minority shareholder put option liabilities |
10 |
(8,708) |
(16,325) |
Other non current liabilities |
|
(1,303) |
(896) |
|
|
(28,659) |
(18,063) |
Total net assets |
|
35,872 |
50,824 |
Equity |
|
|
|
Share capital |
|
683 |
690 |
Share premium |
|
16,807 |
16,402 |
Merger reserve |
|
27,689 |
16,736 |
Treasury reserve |
|
(792) |
(792) |
Minority interest put option reserve |
|
(13,070) |
(16,587) |
Non controlling interest acquired |
|
(7,882) |
(1,532) |
Foreign exchange reserve |
|
(668) |
544 |
Retained earnings |
|
9,639 |
33,070 |
Equity attributable to shareholders of the Group |
|
32,406 |
48,531 |
Non controlling interest |
|
3,466 |
2,293 |
Total equity |
|
35,872 |
50,824 |
The notes on pages 11 to 21 form part of these consolidated financial statements.
AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
Note |
Share
capital
£000 |
Share
premium
£000 |
Merger
reserve
£000 |
Treasury
reserve
£000 |
MI put option
reserve
£000 |
Non controlling
interest
acquired
£000 |
Foreign
exchange
reserves
£000 |
Retained
earnings
£000 |
Subtotal
£000 |
Non controlling
interest
in equity
£000 |
Total
£000 |
At 1 January 2013 |
|
641 |
14,625 |
20,669 |
(792) |
(13,675) |
(1,085) |
1,846 |
31,373 |
53,602 |
2,584 |
56,186 |
Acquisitions |
|
- |
- |
- |
- |
(1,661) |
- |
- |
- |
(1,661) |
321 |
(1,340) |
Disposals* |
|
- |
- |
(3,933) |
- |
- |
- |
- |
3,933 |
- |
(100) |
(100) |
Exercise of put options |
10 |
5 |
1,281 |
- |
- |
447 |
(447) |
- |
- |
1,286 |
- |
1,286 |
Issues of shares to minorities |
10 |
- |
- |
- |
- |
(484) |
- |
- |
(170) |
(654) |
417 |
(237) |
Exchange rate movements |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
(77) |
(77) |
Issue of minority put options |
10 |
- |
- |
- |
- |
(1,214) |
- |
- |
- |
(1,214) |
- |
(1,214) |
Option exercise |
|
44 |
496 |
- |
- |
- |
- |
- |
(418) |
122 |
(155) |
(33) |
Share option charge |
|
- |
- |
- |
- |
- |
- |
- |
290 |
290 |
- |
290 |
Dividends |
9 |
- |
- |
- |
- |
- |
- |
- |
(3,421) |
(3,421) |
(2,544) |
(5,965) |
Total transactions with owners |
|
49 |
1,777 |
(3,933) |
- |
(2,912) |
(447) |
- |
214 |
(5,252) |
(2,138) |
(7,390) |
Total comprehensive income for the year |
|
- |
- |
- |
- |
- |
- |
(1,302) |
1,483 |
181 |
1,847 |
2,028 |
At 1 January 2014 |
|
690 |
16,402 |
16,736 |
(792) |
(16,587) |
(1,532) |
544 |
33,070 |
48,531 |
2,293 |
50,824 |
Acquisitions |
|
- |
- |
- |
- |
(1,653) |
- |
- |
- |
(1,653) |
5 |
(1,648) |
Exercise of put options |
10 |
48 |
- |
13,011 |
- |
5,151 |
(4,791) |
- |
- |
13,419 |
(429) |
12,990 |
Deletion of right to equity |
|
- |
- |
- |
- |
- |
(1,559) |
- |
- |
(1,559) |
1,559 |
- |
Exchange rate movements |
|
- |
- |
- |
- |
19 |
- |
- |
- |
19 |
(121) |
(102) |
Tender offer |
|
(63) |
- |
- |
- |
- |
- |
- |
(21,451) |
(21,514) |
- |
(21,514) |
Merger reserve release on impairments* |
|
- |
- |
(2,058) |
- |
- |
- |
- |
2,058 |
- |
- |
- |
Option exercise |
|
8 |
405 |
- |
- |
- |
- |
- |
(413) |
- |
- |
- |
Share option charge |
|
- |
- |
- |
- |
- |
- |
- |
200 |
200 |
- |
200 |
Dividends |
9 |
- |
- |
- |
- |
- |
- |
- |
(3,670) |
(3,670) |
(1,935) |
(5,605) |
Total transactions with owners |
|
(7) |
405 |
10,953 |
- |
3,517 |
(6,350) |
- |
(23,276) |
(14,758) |
(921) |
(15,679) |
Total comprehensive income for the year |
|
- |
- |
- |
- |
- |
- |
(1,212) |
(155) |
(1,367) |
2,094 |
727 |
At 31 December 2014 |
|
683 |
16,807 |
27,689 |
(792) |
(13,070) |
(7,882) |
(668) |
9,639 |
32,406 |
3,466 |
35,872 |
The notes on pages 11 to 21 form part of these consolidated financial statements.
AUDITED CONSOLIDATED CASH FLOW STATEMENT AND ANALYSIS OF NET DEBT
Year ended 31 December |
|
2014 £000 |
2013* £000 |
Revenue |
|
169,373 |
162,039 |
Operating expenses |
|
(163,720) |
(149,282) |
Operating profit (continuing) |
|
5,653 |
12,757 |
Adjustments for: |
|
|
|
Operating profit from discontinued operations |
|
- |
3,974 |
Depreciation of plant and equipment |
|
2,055 |
2,233 |
Loss on sale of plant and equipment |
|
198 |
23 |
Loss on disposal of a subsidiary |
|
76 |
|
Loss on acquisition of a subsidiary |
|
813 |
- |
Amortisation of acquired intangible assets |
|
1,445 |
900 |
Impairment of goodwill |
|
5,573 |
- |
Amortisation of capitalised software intangible assets |
|
120 |
143 |
Equity settled share based payment expenses |
|
200 |
290 |
Operating cash before movements in working capital |
|
16,133 |
20,320 |
(Increase) / decrease in trade and other receivables |
|
(8,690) |
5,464 |
Increases / (decrease) in trade and other payables |
|
8,676 |
(6,743) |
Cash generated from operations |
|
16,119 |
19,041 |
Tax paid |
|
(5,332) |
(5,080) |
Net cash from operating activities |
|
10,787 |
13,961 |
Investing activities |
|
|
|
Acquisitions of subsidiaries net of cash acquired |
|
(2,244) |
(512) |
Acquisitions of associates |
|
(5,084) |
(2,589) |
Disposal of discontinued operations, net of cash disposed of |
|
- |
15,082 |
Acquisitions of investments |
|
(1,187) |
(800) |
Proceeds from sale of plant and equipment |
|
70 |
20 |
Purchase of plant and equipment |
|
(3,350) |
(2,771) |
Purchase of capitalised software |
|
(77) |
(90) |
Dividends received from associates |
|
660 |
73 |
Interest received |
|
307 |
473 |
Net cash (consumed) / from investing activities |
|
(10,905) |
8,886 |
Net cash (consumed) / from operating and investing activities |
|
(118) |
22,847 |
*The cash flows for 2013 represent only cash flows from continuing operations.
The notes on pages 11 to 21 form part of these consolidated financial statements.
Year ended 31 December |
Note |
2014 £000 |
2013 £000 |
Net cash (consumed) / from operating and investing activities |
|
(118) |
22,847 |
Financing activities |
|
|
|
Dividends paid to equity holders of the Company |
9 |
(3,670) |
(3,421) |
Dividends paid to non controlling interest |
|
(1,935) |
(2,544) |
tender offer |
|
(21,514) |
- |
Issue of own shares |
|
1 |
- |
Subsidiaries sale of own shares to non controlling interest |
|
- |
1 |
Repayment of finance leases |
|
(61) |
(42) |
Inception of bank loans |
|
17,913 |
4,261 |
Repayment of bank loans |
|
- |
(8,200) |
Interest paid |
|
(532) |
(321) |
Net cash consumed by financing activities |
|
(9,798) |
(10,266) |
Net (decrease) / increase in cash and cash equivalents |
|
(9,916) |
12,581 |
Cash and cash equivalents at the beginning of the year |
|
33,587 |
22,248 |
Effect of exchange rate fluctuations on cash held |
|
(350) |
(1,242) |
Cash and cash equivalents at the end of the year |
|
23,321 |
33,587 |
|
|
|
|
Bank loans and borrowings |
|
(18,462) |
(356) |
NET CASH* |
|
4,859 |
33,231 |
CAPITAL |
|
|
|
TOTAL CAPITALISATION (at 31 December: 330.00p; 333.25p) |
|
223,339 |
227,740 |
TOTAL CAPITAL |
|
223,339 |
227,740 |
GEARING RATIO |
|
nil |
nil |
NOTES TO THE PRELIMINARY STATEMENTS
YEAR ENDED 31 DECEMBER 2014
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 2014 audited preliminary financial statements were approved for issue on 25 March 2015.
The financial information set out below does not constitute the company's statutory accounts for 2013 or 2014. Statutory accounts for the years ended 31 December 2013 and 31 December 2014 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2013 and 2014 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 2013 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2014 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) scheme and minority shareholder put option liabilities. The term headline is not a defined term in IFRS. Note 3 reconciles reported to headline results.
Our segmental reporting (note 4) reflects our headline results in accordance with IFRS 8, and aggregation of similar activities by geography in accordance with IFRS12.
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 deferred and contingent consideration and other acquisition related charges 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. Pro-forma headline treats discontinued operations as if they had been disposed at the beginning of the period.
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 2014. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 December 2013
NOTES TO THE PRELIMINARY STATEMENTS
continued
3. Headline results and earnings per share
The analysis below provides a reconciliation between the Group's statutory results and the headline results.
Year ended
31 December 2014 |
Note |
2014
£000
|
Amortisation
of acquired intangibles £000 |
Acquisition of remaining shares in loss making associate £000 |
Impairment of Goodwill
£000 |
Contingent acquisition cost classified as expense
£000 |
Fair value adjustments to minority put option liabilities
£000 |
Headline
results £000 |
Revenue |
4 |
169,373 |
- |
- |
- |
- |
- |
169,373 |
Operating profit |
4 |
5,653 |
1,445 |
813 |
5,649* |
2,465 |
- |
16,025 |
Share of results of associates & JV |
5 |
1,350 |
- |
- |
- |
- |
- |
1,350 |
Finance income |
6 |
316 |
- |
- |
- |
- |
- |
316 |
Finance cost |
7 |
(1,087) |
- |
- |
- |
- |
539 |
(548) |
Profit before taxation |
4 |
6,232 |
1,445 |
813 |
5,649 |
2,465 |
539 |
17,143 |
Taxation |
8 |
(4,293) |
(391) |
- |
- |
- |
- |
(4,684) |
Profit for the year |
|
1,939 |
1,054 |
813 |
5,649 |
2,465 |
539 |
12,459 |
Non controlling interests |
|
(2,094) |
- |
- |
- |
- |
- |
(2,094) |
(Loss) / profit attributable to equity holders of the Group |
|
(155) |
1,054 |
813 |
5,649 |
2,465 |
539 |
10,365 |
*Of the £5,649k, £76k relates to a loss on disposal of an Indian subsidiary and £5,573k relates to impairment of goodwill .
The Directors believe that the headline results and headline earnings per share provide additional useful information
on the underlying performance. The headline result is used for internal performance management, calculating the value
of subsidiary convertible shares and minority interest put options. 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 deferred and contingent consideration and other acquisition related charges 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.
Year ended
31 December 2013 |
Note |
Continuing operations
2013
£000 |
Amortisation
of acquired intangibles £000 |
Fair value adjustments to minority
put option liabilities £000 |
Full year effect of discontinued
operations**
£000 |
Pro forma headline
results** £000 |
Revenue |
4 |
162,039 |
- |
- |
- |
162,039 |
Operating profit |
4 |
12,757 |
900 |
- |
- |
13,657 |
Share of results of associates & JV |
5 |
163 |
- |
- |
758 |
921 |
Finance income |
6 |
376 |
- |
- |
- |
376 |
Finance cost |
7 |
(15,852) |
- |
15,503 |
- |
(349) |
Profit before taxation |
4 |
(2,556) |
900 |
15,503 |
758 |
14,605 |
Taxation |
8 |
(4,207) |
(230) |
- |
- |
(4,437) |
Profit for the year |
|
(6,763) |
670 |
15,503 |
758 |
10,168 |
Profit from discontinued operations, net of tax |
|
10,093 |
- |
- |
(10,093) |
- |
Non controlling interests |
|
(1,847) |
(134) |
- |
- |
(1,981) |
Profit attributable to
equity holders of the Group |
|
1,483 |
536 |
15,503 |
(9,335) |
8,187 |
This analysis provides a reconciliation between the Group's statutory continuing results and the pro forma headline results. The pro forma headline results, treats the discontinued operations as if they had been disposed of at the beginning of the year. The pro forma headline results with full year treatment of Walker Media as a 24.9% associate have been what management have used for decision making and control. The term pro forma headline is not a defined term in IFRS
**75.1% of Walker Media was sold on 28 November 2013. This adjustment reverses out the profit from discontinued operations, net of tax for the period to 28 November 2013 which including the profit on disposal, and puts in equivalent 24.9% associates profit for the period.
NOTES TO THE PRELIMINARY STATEMENTS
Continued
3. Headline results and earnings per share continued
Basic and diluted earnings per share is calculated by dividing profit attributable to equity holders of the Group by the weighted average number of shares in issue during the year.
Year ended
31 December 2014 |
|
|
|
2014
£000
|
Headline
2014 £000 |
(Loss) / profit attributable to equity shareholders of the Group |
|
|
(155) |
10,365 |
Basic earnings per share |
|
|
|
|
|
Weighted average number of shares (thousands) |
|
|
|
65,285 |
65,285 |
Basic EPS |
|
|
|
(0.24)p |
15.88p |
Diluted earnings per share |
|
|
|
|
|
Weighted average number of shares (thousands) as above |
|
|
|
65,285 |
65,285 |
Add |
|
|
|
|
|
- LTIP |
|
|
|
55 |
55 |
- 2012 LTIP |
|
|
|
230 |
230 |
- New LTIP |
|
|
|
2,772 |
2,772 |
Total |
|
|
|
68,342 |
68,342 |
Diluted earnings per share*** |
|
|
|
(0.24)p |
15.17p |
Year ended
31 December 2013 |
|
Continuing operations
2013
£000 |
Discontinued operations
2013
£000 |
Total
2013
£000 |
Pro forma headline
2013 £000 |
Profit attributable to equity shareholders of the Group |
|
(8,610) |
10,093 |
1,483 |
8,187 |
Basic earnings per share |
|
|
|
|
|
Weighted average number of shares (thousands) |
|
66,094 |
66,094 |
66,094 |
66,094 |
Basic EPS |
|
(13.03)p |
15.27p |
2.24p |
12.39p |
Diluted earnings per share |
|
|
|
|
|
Weighted average number of shares (thousands) as above |
|
66,094 |
66,094 |
66,094 |
66,094 |
Add |
|
|
|
|
|
- UK growth shares |
|
631 |
631 |
631 |
631 |
- Options |
|
128 |
128 |
128 |
128 |
- LTIP |
|
102 |
102 |
102 |
102 |
- 2012 LTIP |
|
230 |
230 |
230 |
230 |
- New LTIP |
|
2,751 |
2,751 |
2,751 |
2,751 |
- Dilutive put options** |
|
359 |
359 |
359 |
359 |
Total |
|
70,295 |
70,295 |
70,295 |
70,295 |
Diluted earnings per share*** |
|
(13.03)p |
14.38p |
2.11p |
11.65p |
**Apart from one entity, in 2013, all the other put options detailed in note 10 are non dilutive as the exercise price approximates fair value of the underlying non controlling interest.
*** There is no dilutive effect on losses.
NOTES TO THE PRELIMINARY STATEMENTS
continued
4. Segmental information
Segmental and headline income statement
Year ended
31 December 2014 |
|
UK £000 |
Europe £000 |
Middle East and Africa
£000 |
Asia and Australasia £000 |
Americas £000 |
|
Total £000 |
Revenue |
|
79,144 |
21,092 |
8,004 |
44,173 |
16,960 |
|
169,373 |
Operating profit excluding Group costs |
|
11,757 |
2,892 |
1,027 |
5,064 |
445 |
|
21,185 |
Group costs |
|
(4,710) |
(72) |
- |
(331) |
(47) |
|
(5,160) |
Operating profit |
|
7,047 |
2,820 |
1,027 |
4,733 |
398 |
|
16,025 |
Share of results of associates &JV |
|
1,074 |
(19) |
- |
224 |
71 |
|
1,350 |
Financial income and cost |
|
(146) |
(54) |
(11) |
58 |
(79) |
|
(232) |
Profit before taxation |
|
7,975 |
2,747 |
1,016 |
5,015 |
390 |
|
17,143 |
Taxation |
|
(1,593) |
(954) |
(271) |
(1,652) |
(214) |
|
(4,684) |
Profit for the year |
|
6,382 |
1,793 |
745 |
3,363 |
176 |
|
12,459 |
Non controlling interests |
|
(1,276) |
(406) |
(354) |
(533) |
475 |
|
(2,094) |
Profit attributable to equity shareholders
of the Group |
|
5,106 |
1,387 |
391 |
2,830 |
651 |
|
10,365 |
Headline basic EPS |
|
|
|
|
|
|
|
15.88p |
Non cash costs included in operating profit: |
|
|
|
|
|
|
Depreciation |
|
(1,126) |
(239) |
(185) |
(264) |
(241) |
|
(2,055) |
Amortisation of software |
|
(2) |
(47) |
(25) |
(33) |
(13) |
|
(120) |
Share option charges |
|
(200) |
- |
- |
- |
- |
|
(200) |
Office location |
|
London |
Paris Berlin Madrid Geneva Milan
Moscow Stockholm |
Beirut Cape Town Johannesburg Abu Dhabi |
Sydney Melbourne New Delhi Kuala Lumpur Hong Kong Beijing Shanghai Tokyo Singapore |
Los Angeles São Paulo New York San Francisco |
|
|
Segmental results are reconciled to the income statement in note 3. Our segmental and headline results are one and the same.
The above segments reflect the fact that our business is run on an operating unit basis. In accordance with IFRS 8 paragraph 12
we have aggregated our operating units into regional segments. During the year Clear was integrated into the Groups regional reporting, and was reported to the board as a component of the regions, 2013 has been restated to reflect this.
Segmental and headline pro-forma income statement
Year ended
31 December 2013* |
|
UK £000 |
Europe £000 |
Middle East and Africa
£000 |
Asia and Australasia £000 |
Americas £000 |
|
Total £000 |
Revenue |
|
72,681 |
19,434 |
8,055 |
49,961 |
11,908 |
|
162,039 |
Operating profit excluding Group costs |
|
11,642 |
1,881 |
376 |
4,621 |
79 |
|
18,599 |
Group costs |
|
(4,546) |
(71) |
- |
(234) |
(91) |
|
(4,942) |
Operating profit |
|
7,096 |
1,810 |
376 |
4,387 |
(12) |
|
13,657 |
Share of results of associates & JV |
|
983 |
23 |
(152) |
67 |
- |
|
921 |
Financial income and cost |
|
(44) |
(55) |
104 |
37 |
(15) |
|
27 |
Profit before taxation |
|
8,035 |
1,778 |
328 |
4,491 |
(27) |
|
14,605 |
Taxation |
|
(1,706) |
(666) |
(186) |
(1,701) |
(178) |
|
(4,437) |
Profit for the year |
|
6,329 |
1,112 |
142 |
2,790 |
(205) |
|
10,168 |
Non controlling interests |
|
(1,232) |
(208) |
(214) |
(822) |
495 |
|
(1,981) |
Profit attributable to equity shareholders
of the Group |
|
5,097 |
904 |
(72) |
1,968 |
290 |
|
8,187 |
Headline basic EPS |
|
|
|
|
|
|
|
12.39p |
Non cash costs included in operating profit: |
Depreciation** |
|
(1,033) |
(232) |
(172) |
(462) |
(158) |
|
(2,057) |
Amortisation of software |
|
(38) |
(39) |
(29) |
(14) |
(23) |
|
(143) |
Share option charges |
|
(290) |
- |
- |
- |
- |
|
(290) |
Office location |
|
London |
Paris Berlin Madrid Geneva Milan
Moscow
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 |
|
|
*These numbers have been restated to allocate Clear into its regional segments, reflecting how it is now reported to the Board, and to treat
Walker Media as if it was an associate for the full year.
**These figures have been restated removing £176k of Walker Media depreciation.
NOTES TO THE PRELIMINARY STATEMENTS
continued
4. Segmental information continued
Segmental income statement translated at 2013 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 2014 results been translated at 2013 exchange rates then our results would have been:
Year ended
31 December 2014 |
UK £000 |
Europe £000 |
Middle East and Africa
£000 |
Asia and Australasia £000 |
Americas £000 |
|
Total £000 |
Revenue |
79,144 |
22,344 |
9,204 |
49,408 |
17,974 |
|
178,074 |
Operating profit excluding Group costs |
11,757 |
3,061 |
1,204 |
5,746 |
437 |
|
22,205 |
Group costs |
(4,710) |
(76) |
- |
(372) |
(49) |
|
(5,207) |
Operating profit |
7,047 |
2,985 |
1,204 |
5,374 |
388 |
|
16,998 |
Share of results of associates & JV |
1,074 |
(20) |
- |
237 |
75 |
|
1,366 |
Financial income and cost |
(146) |
(54) |
(13) |
65 |
(92) |
|
(240) |
Profit before taxation |
7,975 |
2,911 |
1,191 |
5,676 |
371 |
|
18,124 |
Taxation |
(1,593) |
(1,009) |
(321) |
(1,841) |
(216) |
|
(4,980) |
Profit for the year |
6,382 |
1,902 |
870 |
3,835 |
155 |
|
13,144 |
Increase / (decrease) in 2014 results caused by translation differences |
- |
(110) |
(125) |
(471) |
21 |
|
(685) |
The key currencies that affect us and the average exchange rates used were:
|
2014 |
2013 |
US dollar |
1.6478 |
1.5643 |
Malaysian ringgit |
5.3883 |
4.9279 |
Australian dollar |
1.8264 |
1.6212 |
South African rand |
17.8639 |
15.0952 |
Brazilian real |
3.8717 |
3.3772 |
Euro |
1.2406 |
1.1776 |
NOTES TO THE PRELIMINARY STATEMENTS
continued
5. Share of associates and joint ventures
Year ended 31 December |
2014 £000 |
2013 £000 |
Share of associates' profit before taxation |
1,723 |
195 |
Share of associates' taxation |
(373) |
(32) |
|
1,350 |
163 |
6. Finance income
Year ended 31 December |
2014 £000 |
2013 £000 |
Bank interest receivable |
256 |
173 |
Other interest receivable |
60 |
203 |
Total interest receivable |
316 |
376 |
In respect of discontinued operations |
- |
117 |
Total finance income |
316 |
493 |
7. Finance costs
Year ended 31 December |
2014 £000 |
2013 £000 |
Bank interest payable |
(541) |
(342) |
Interest payable on finance leases |
(7) |
(7) |
Total interest payable |
(548) |
(349) |
Fair value adjustments to minority shareholder put option liabilities (note 10) |
(539) |
(15,503) |
Total finance costs |
(1,087) |
(15,852) |
8. Taxation
Year ended 31 December |
|
2014
£000
|
|
Continuing operations
2013
£000 |
Discontinued operations
2013
£000 |
Total
2013
£000 |
Current taxation |
|
|
|
|
|
|
Taxation in the year |
|
|
|
|
|
|
- UK |
|
1,373 |
|
1,945 |
1,046 |
2,991 |
- Overseas |
|
3,292 |
|
2,756 |
- |
2,756 |
Withholding taxes payable |
|
6 |
|
9 |
- |
9 |
Utilisation of previously unrecognised tax losses |
|
(108) |
|
- |
- |
- |
Adjustment for under provision in prior periods |
|
168 |
|
72 |
- |
72 |
Total |
|
4,731 |
|
4,782 |
1,046 |
5,828 |
|
|
|
|
|
|
|
Deferred taxation |
|
|
|
|
|
|
Origination and reversal of temporary differences |
|
(658) |
|
(658) |
- |
(658) |
Recognition of previously unrecognised
tax losses |
|
220 |
|
83 |
- |
83 |
Effect of changes in tax rates |
|
- |
|
- |
- |
- |
Total |
|
(438) |
|
(575) |
- |
(575) |
Total taxation |
|
4,293 |
|
4,207 |
1,046 |
5,253 |
NOTES TO THE PRELIMINARY STATEMENTS
continued
9. Dividends
Year ended 31 December |
2014
£000 |
2013
£000 |
2013 final dividend paid 4.24p on 4 July 2014 (2012: 3.85p)* |
2,723 |
2,596 |
2014 interim dividend paid 1.40p on 14 November 2014 (2013: 1.21p) |
947 |
825 |
|
3,670 |
3,421 |
Proposed final dividend of 4.87p totalling £3,442k. Subject to shareholders approval at 10 June 2015 AGM, the dividend is payable on 10 July 2015 to shareholders on the register 12 June 2015.
Dividends relate to the profit of the following years:
Year ended 31 December |
2014
£000 |
2013
£000 |
First interim dividend paid 1.40p on 14 November 2014 (2013: 1.21p) |
947 |
825 |
Final dividends payable 4.87p on 10 July 2015 (2013:4.24p) |
3,442 |
2,629 |
|
4,389 |
3,454 |
Headline dividend cover |
2.4 |
2.4 |
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 2 and 3.
* 2013 dividend has been restated to reflect the number of shares in issue when the dividend was paid, as opposed to the number of shares in existence at 31 December 2013.
NOTES TO THE PRELIMINARY STATEMENTS
continued
10. 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).
|
2014 £000 |
2013 £000 |
Amounts falling due within one year |
|
|
- Cash |
(1,031) |
(3,642) |
- Equity |
(14,804) |
(18,202) |
|
(15,835) |
(21,844) |
Amounts falling due after one year |
|
|
- Cash |
(178) |
(684) |
- Equity |
(8,530) |
(15,641) |
|
(8,708) |
(16,325) |
|
|
(24,543) |
(38,169) |
|
2014 £000 |
2013 £000 |
At 1 January |
(38,169) |
(20,482) |
Exchange difference |
1 |
4 |
Additions |
(1,653) |
(3,359) |
Exercises |
15,817 |
1,171 |
Termination |
- |
- |
Income statement charge due to |
|
|
- Change in estimates |
(886) |
1,333 |
- Change in share price |
442 |
(16,760) |
- Time |
(95) |
(76) |
Total income statement charge |
(539) |
(15,503) |
|
At 31 December |
(24,543) |
(38,169) |
The movements in the year relating to the minority interest put options that are payable in cash and in equity are as follows:
Cash based |
2014 £000 |
2013 £000 |
At 1 January |
(4,326) |
(3,297) |
Exchange difference |
- |
158 |
Reclassified from share based |
(291) |
- |
Additions |
- |
(684) |
Exercises |
2,553 |
- |
Income statement charge due to |
|
|
- Change in estimates |
841 |
(136) |
- Change in share price |
9 |
|
- Time |
5 |
(367) |
At 31 December |
(1,209) |
(4,326) |
Equity based |
2014 Equity* |
2014 £000 |
2013 £000 |
At 1 January |
(10,156) |
(33,843) |
(17,185) |
Exchange difference |
|
1 |
(154) |
Additions |
(589) |
(1,653) |
(2,675) |
Exercises |
4,852 |
13,264 |
1,171 |
Reclassified to cash based |
33 |
291 |
- |
Terminations |
- |
- |
- |
Income statement charge due to |
|
|
|
- Change in estimates |
(1,301) |
(1,727) |
1,469 |
- Change in share price |
120 |
433 |
(16,393) |
- Time |
(30) |
(100) |
(76) |
At 31 December |
(7,071) |
(23,334) |
(33,843) |
* 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** |
2015 |
6.0 |
M&C Saatchi Marketing Arts Ltd |
2015 |
50.0 |
M&C Saatchi (M) SDN BHD |
2015 |
20.0 |
M&C Saatchi Sports & Entertainment Ltd |
2015 |
2.8 |
Influence Communications Ltd |
2015 |
5.0 |
M&C Saatchi Europe Holdings Ltd |
2015 |
4.0 |
M&C Saatchi German Holdings Ltd |
2015 |
4.0 |
M&C Saatchi Communications Pty Ltd |
2015 |
13.0 |
M&C Saatchi Berlin GmbH |
2015 |
15.0 |
Talk PR Audience Ltd |
2015 |
17.0 |
FCINQ SAS |
2015 |
15.0 |
Clear Ideas Consulting LLP |
2015 |
12.5 |
M&C Saatchi PR LLP (US) |
2015 |
35.0 |
Clear Ideas Consulting LLP |
2015 |
12.5 |
M&C Saatchi Mobile Ltd* |
2015 |
10.0 |
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 |
Samuelson Talbot and Partners Pty Ltd |
2016 |
31.2 |
M&C Saatchi Merlin Ltd |
2016 |
22.5 |
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 |
40.0 |
Lean Mean Fighting Machine LTD* |
2017 |
13.3 |
Lean Mean Fighting Machine LTD* |
2018 |
13.3 |
Samuelson Talbot and Partners Pty Ltd |
2018 |
8.8 |
M&C Saatchi Merlin Ltd |
2018 |
22.5 |
Direct One SAS |
2018 |
10.0 |
Lean Mean Fighting Machine LTD* |
2019 |
13.3 |
* New or amended options in 2014.
** Holding changed or shares put in 2014.
NOTES TO THE PRELIMINARY STATEMENTS
continued
10. Minority shareholder put option liabilities continued
At each period end the fair value of the put option liability is calculated in accordance with the shareholders' agreement, and any movement is charged to the income statement. Where the agreement gives a right to convert to a variable number of shares (rather than a value), the number of shares is converted to a value by using the period end share price (2014: 330.0p, 2013: 333.3p).
The liability will vary with our share price and with the results of the subsidiary companies. Current liabilities are determined by our year end share price and the 2013 results of the companies who can exercise in 2014. Non current liabilities are determined by our year end share price and the projected results of the companies who can exercise after 2014. The projected results show management's best estimate of the growth rates and margin of the companies who can exercise after 2014 Given that these companies are small, single account wins / losses can have a significant effect on their results. Such account wins are far more significant than changes to exchange rates and underlying economic growth rates.
The fair value of minority shareholder put option liabilities is measured using some inputs that are not based on observable market data (i.e. IFRS13, Level 3 fair value measurement).
Share price risk
Changes in our year end share price will impact the fair value adjustment to minority shareholder put options. The year end share price was 330.0p (2013: 333.3p). The 2014 charges would have changed as follows, had the share price been:
Share price |
Movement
% |
Increase /
(decrease) in profit before and after tax £000 |
396.0p |
+20% |
£(4,939) |
363.0p |
+10% |
£(2,803) |
330.0p |
- |
- |
297.0p |
(10)% |
£2,886 |
264.0p |
(20)% |
£5,776 |
Forecast accuracy
Difference in actual and projected results of the companies could have an impact on the fair value adjustments as follows:
Result |
|
Increase /
(decrease) in profit before and after tax £000 |
+10% |
|
£(992) |
(10)% |
|
£992 |
