Final Results

RNS Number : 5001S
M&C Saatchi PLC
18 March 2016
 

 

 

 

 

 

M&C SAATCHI PLC

 

 

FINAL RESULTS

 

 

YEAR ENDED

31 DECEMBER 2015

 

 

 

 

 

 

18 March 2016

 

 

 

 

 

 

 

 

M&C Saatchi PLC

Final Results for the year ended 31 December 2015

 

 

 

18 March 2016

 

Financial Highlights 2015

Growth versus 2014

Revenue

Revenue in constant currencies

£178.9m

 

Operating Profit

£18.6m

 

Profit Before Tax

£20.1m

 

Profit After Tax and MI

EPS

£13.2m

18.57p

 

Dividend

  7.21p

 

 

 

 

         

The highlights are headline results, see note on next page for definition.

 

Operational Highlights

·      Record results with very good revenue momentum and earnings growth

The Global network performed well across all geographies:

·      UK: revenues up 6%, with CRM and Mobile continuing to excel; operating profit was flat, suppressed by a restructuring cost in the advertising agency

·      Europe: like-for-like revenues up 19%, operating profit increased 27%

·      Middle East and Africa: like-for-like revenues up 11%, operating profit up 2%

·      Asia and Australasia: like-for-like revenues up 5% , operating profit was down 17% with a drag from strong foreign currency headwinds

·      Americas: like-for-like revenues up 27%, operating profit of £3.3m

·      Enhanced US position: just acquired 51% of MCD Partners in New York to develop our US CRM offer and increased our holding in SS+K from 33% to 51%

·      Robust balance sheet maintained with net year-end cash of £8.6m

·      Final dividend increased 15% to 5.60p, full-year dividend up 15% to 7.21p

 

 

David Kershaw, Chief Executive, said:

 

"2015 was another year of outstanding progress for M&C Saatchi. Our proven strategy of winning new business and starting new businesses continues to deliver with the Group producing record revenue and profits.

 

"The current strong performance across the Global network positions us well for the future.

We are confident we will continue to make good progress in 2016 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

Tom Murray

 

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 and acquired intangibles, 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; profit /loss on disposal of associates; income statement impact of put option accounting (whether accounted under IFRS2 or IAS39).

 

 

 

 

 

 

 

SUMMARY OF RESULTS

2015 saw record results with very good revenue momentum and earnings growth.

 

UK

Revenue in the UK was up 6%, with CRM and Mobile continuing to perform particularly positively. We experienced a strong run of account wins across our group of businesses, including Airbus, BNY Mellon, Carnival, PHE (adult health), Royal Mail, Samsung, Pernod Ricard's Passport Scotch and Unilever's Toni & Guy and Cornetto.

 

M&C Saatchi Mobile was again awarded Mobile Agency of the Year. We are rolling out LIDA, our CRM agency together with M&C Saatchi PR internationally, which follows successful roll-outs in recent years of our Mobile and Sport & Entertainment operations. In addition, we have launched M&C Saatchi Shop to help clients drive purchase conversion.

 

As ever, we retained a careful watch on costs to support margins, resulting in a headline operating margin of 14.0% (2014: 14.9%). Both margins exclude the impact of Group recharges. The UK headline operating profit was flat on 2014 but included restructuring costs of £900k in the advertising agency unit, which if discounted meant operating profit actually grew 8% on 2014 and a restated 2015 operating margin of 15.1%.  We are also now selling 30% of the advertising agency to management following our proven owner driver model.

 

Europe

European like-for-like revenues increased 19% year on year. Stockholm has maintained its very good new business performance, winning E.ON and the TV and broadband supplier Com Hem. Both Germany and Italy continue to shine, with Italy winning Becks, ING and Unicredit. In spite of a slow advertising market, the French office is benefitting from PR and digital diversification.

 

In July, we acquired a minority stake in INSPI(RED) and formed M&C Saatchi Istanbul. Our associate in Spain fared better compared with recent years, winning the state train operator RENFE as well as some assignments from Google, Jacobs Douwe Egberts' Saimaza and the utility provider Endesa. Regionally, operating profit increased 27%, with a headline operating margin of 16.1% (2014: 13.7%).

 

 

Middle East and Africa

Like-for-like revenues increased 11% with increased second half contributions from both Cape Town and Johannesburg. Key new business wins in South Africa were Continental Tyres projects, Lancewood (a cheese brand), Twinsaver (tissues) and significantly Nando's. They also picked up Agency of the Year.

 

Our Abu Dhabi office is steadily building revenues beyond Etihad including Abu Dhabi Tourism and also opened in Dubai last month. In January 2015, we acquired a majority stake in Ben-Natan Golan Advertising in Tel Aviv, Israel, forming a new agency M&C Saatchi Tel Aviv. With our associate in Beirut and our offices in Abu Dhabi and Dubai, we now have a strong presence in the region. Overall, headline operating profit was up 2%, with a headline operating margin of 12.3% (2014: 12.8%).

 

Asia and Australasia

In Asia and Australasia, like-for-like revenue was up 5% year on year. Australia is doing very well and in the first quarter of this year won Woolworths, the second largest account in Australia without a pitch. They were deservedly again awarded Agency of the Year.

 

Otherwise, our associate in China, aeiou, continues to build its presence and impress network clients.  Malaysia thrives and won Mitsubishi, Wonda coffee and the Global relaunch of Malaysian Airlines. Singapore is developing positively and has been steadily picking up more Government assignments. Japan proved challenging with the loss of some clients and the business is now under review.

 

The headline regional operating margin was down from 11.5% to 9.9%, with the headline operating profit falling 17% hit by currency headwinds and the drag from Japan. 

 

 

Americas

Like-for-like revenues increased 27% with an excellent 631% increase in operating profit to £3.3m. The SS+K relationship in New York is flourishing. Their new business wins included: the lawyers Baker & McKenzie, the spa group Canyon Ranch, Delta, NCAA, The New Yorker and Planned Parenthood. In the light of this outstanding growth, this month we increased our shareholding in SS+K from 33% to 51%. We have also just acquired 51% of MCD Partners in New York and Chicago, which gives us a significant foothold in the US to develop our CRM offer and to export our LIDA skills.

 

Our office in Los Angeles performed impressively and acquired Heavenspot, a small social media and digital agency last June, which will enhance our LA online capabilities. We completed our Sao Paulo upgrade in February 2015, acquiring 25% of Santa Clara following the Chinese associate model. It is a high quality independent agency which will add further to the network's creative capability.

 

 

Outlook

2015 was another year of outstanding progress for M&C Saatchi. Our proven strategy of winning new business and starting new businesses continues to deliver with the Group producing record revenue and profits.

 

The current strong performance across the Global network positions us well for the future.

We are confident we will continue to make good progress in 2016 and beyond.

 

 

 

Audited Consolidated income statement

 

Year ended 31 December

Note

 

 


2015
£000

Total
2014
£000

Billings

 

 

 

375,107

333,302

Revenue

3

 

 

178,928

169,373

Operating costs

3

 

 

(164,221)

(163,720)

Operating profit

3

 

 

14,707

5,653

Share of results of associates and joint ventures

5

 

 

2,017

1,350

Finance income

6

 

 

299

316

Finance costs

7

 

 

(4,477)

(1,087)

Profit/(loss) before taxation

3

 

 

12,546

6,232

Taxation

8

 

 

(3,386)

(4,293)

Profit/(loss) for the year

 

 

 

9,160

1,939

Attributable to:

 

 

 

 

 

Equity shareholders of the Group

3

 

 

6,474

(155)

Non controlling interests

3

 

 

2,686

2,094

Profit/(loss) for the year

3

 

 

9,160

1,939

Earnings per share

 

 

 

 

 

Basic (pence)

3

 

 

9.08p

(0.24)p

Diluted (pence)

3

 

 

9.04p

(0.24)p

 

 

Headline results*

 

 

 

 

 

Operating profit

 

 

 

18,578

16,025

Profit before tax

 

 

 

20,123

17,143

Profit after tax attributable to equity
shareholders of the Group

 

 

 

13,241

10,365

Basic earnings per share (pence)

 

 

 

18.57p

15.88p

Diluted earnings per share (pence)

 

 

 

18.49p

15.17p

 

 

* The reconciliation of headline to statutory results above can be found in note 3.

 

The notes on pages 12 to 22 form part of these consolidated financial statements.

 

 

 

 

AUDITED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

 

 

 

 

 

Year ended 31 December

 

 

Total
2015
£000

Total
2014
£000

Profit / (loss) for the year

 

 

9,160

1,939

Other comprehensive income*:

 

 

 

 

Exchange differences on translating foreign operations before tax

 

 

(1,316)

(1,212)

Other comprehensive income for the year net of tax

 

 

(1,316)

(1,212)

 

 

 

 

 

Total comprehensive income for the year

 

 

7,844

727

Total comprehensive income attributable to:

 

 

 

 

Equity shareholders of the Group

 

 

5,158

(1,367)

Non controlling interests

 

 

2,686

2,094

Total comprehensive income/(loss) for the year

 

 

7,844

727

 

* All items in consolidated statement of comprehensive income will be reclassified to the income statement.

 

The notes on pages 12 to 22 form part of these consolidated financial statements.

 

 

AUDITED CONSOLIDATED BALANCE SHEET

 

 

 

 

 

At 31 December

Note

2015
£000

2014
£000

Non current assets

 

 

 

Intangible assets

 

28,286

29,142

Investments in associates

 

24,811

18,731

Plant and equipment

 

8,197

8,409

Deferred tax assets

 

1,476

1,515

Other non current assets

 

8,349

5,899

 

 

71,119

63,696

Current assets

 

 

 

Trade and other receivables

 

87,692

71,043

Current tax assets

 

844

318

Cash and cash equivalents

 

32,344

23,446

 

 

120,880

94,807

Current liabilities

 

 

 

Bank overdraft

 

(98)

(125)

Trade and other payables

 

(94,533)

(75,995)

Current tax liabilities

 

(1,204)

(1,995)

Other financial liabilities

 

(3,155)

(22)

Deferred and contingent consideration

 

(1,792)

-

Minority shareholder put option liabilities

10

(16,738)

(15,835)

 

 

(117,520)

(93,972)

Net current assets

 

3,360

835

Total assets less current liabilities

 

74,479

64,531

Non current liabilities

 

 

 

Deferred tax liabilities

 

(30)

(422)

Other financial liabilities

 

(23,594)

(18,226)

Minority shareholder put option liabilities

10

(7,626)

(8,708)

Other non current liabilities

 

(1,208)

(1,303)

 

 

(32,458)

(28,659)

Total net assets

 

42,021

35,872

 

 

The notes on pages 12 to 22 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 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 1 January 2015

 

683

16,807

27,689

(792)

(13,070)

(7,882)

(668)

9,639

32,406

3,466

35,872

Acquisitions

 

-

-

-

-

-

-

-

-

-

161

161

Exercise of put options

10

13

224

3,903

-

1,274

(1,274)

-

(48)

4,092

24

4,116

Office closure

 

-

-

-

-

-

-

-

(158)

(158)

158

-

Exchange rate movements

 

-

-

-

-

39

(77)

-

-

(38)

(121)

(159)

Issue of shares to minorities

 

-

-

-

-

-

-

-

-

-

1,850

1,850

Issue of minority put options

 

-

-

-

-

(2,190)

-

-

-

(2,190)

-

(2,190)

Reclassification of minority put

 

-

-

-

-

1,352

-

-

306

1,658

-

1,658

Option exercise

 

31

307

-

-

-

-

-

(3)

335

(338)

(3)

Share option charge

 

-

-

-

-

-

-

-

1,125

1,125

-

1,125

Dividends

9

-

-

-

-

-

-

-

(4,662)

(4,662)

(3,591)

(8,253)

Total transactions with owners

 

44

531

3,903

-

475

(1,351)

-

(3,440)

162

(1,857)

(1,695)

Total comprehensive income for the year

 

-

-

-

-

-

-

(1,316)

6,474

5,158

2,686

7,844

At 31 December 2015

 

727

17,338

31,592

(792)

(12,595)

(9,233)

(1,984)

12,673

37,726

4,295

42,021

 

The notes on pages 12 to 22 form part of these consolidated financial statements.

 

 

 

 

AUDITED CONSOLIDATED CASH FLOW STATEMENT

AND ANALYSIS OF NET DEBT

 

 

 

Year ended 31 December

 

2015

£000

2014

£000

Revenue

 

178,928

169,373

Operating expenses

 

(164,221)

(163,720)

Operating profit

 

14,707

5,653

Adjustments for:

 

 

 

Depreciation of plant and equipment

 

2,128

2,055

Loss on sale of plant and equipment

 

36

198

Loss on sale of software intangibles

 

12

-

Profit on disposal associate

 

(217)

-

Loss on disposal of a subsidiary

 

 -

76

Loss on acquisition of a subsidiary

 

-

813

Impairment and Amortisation of acquired intangible assets

 

1,940

1,445

Impairment of goodwill

 

889

5,573

Amortisation of capitalised software intangible assets

 

98

120

Equity settled share based payment expenses

 

1,125

200

Operating cash before movements in working capital

 

20,718

16,133

Increase in trade and other receivables

 

(17,192)

(8,690)

Increases in trade and other payables

 

18,018

8,676

Cash generated from operations

 

21,544

16,119

Tax paid

 

(5,326)

(5,332)

Net cash from operating activities

 

16,218

10,787

Investing activities

 

 

 

Acquisitions of subsidiaries net of cash acquired

 

(79)

(2,244)

Acquisitions of associates

 

(3,765)

(5,084)

Disposal of associates

 

325

-

Acquisitions of investments

 

(1,366)

(1,187)

Proceeds from sale of plant and equipment

 

7

70

Purchase of intangibles

 

(327)

-

Purchase of plant and equipment

 

(1,970)

(3,350)

Purchase of capitalised software

 

(158)

(77)

Dividends received from associates

 

1,173

660

Interest received

 

299

307

Net cash consumed investing activities

 

(5,861)

(10,905)

Net cash from/(consumed) operating and investing activities

 

10,357

(118)

 

 

The notes on pages 12 to 22 form part of these consolidated financial statements.

 

 

 

 

 

 

 

 

 

 


Year ended 31 December

Note

2015

£000

2014

£000

Net cash from/(consumed) operating and investing activities

 

10,357

(118)

Financing activities

 

 

 

Dividends paid to equity holders of the Company

9

(4,662)

(3,670)

Dividends paid to non controlling interest

 

(3,591)

(1,935)

Issue of shares to minorities

 

15

-

Tender offer

 

-

(21,514)

Issue of own shares

 

-

1

Repayment of finance leases

 

(31)

(61)

Inception of invoice discounting

 

3,130

-

Inception of bank loans

 

6,349

17,913

Repayment of bank loans

 

(968)

-

Interest paid

 

(771)

(532)

Net cash consumed by financing activities

 

(529)

(9,798)

Net increase /(decrease) in cash and cash equivalents

 

9,828

(9,916)

Effect of exchange rate fluctuations on cash held

 

(903)

(350)

Cash and cash equivalents at the beginning of the year

 

23,321

33,587

Cash and cash equivalents at the end of the year

 

32,246

23,321

 

 

 

 

Bank loans and borrowings

 

(23,800)

(18,462)

NET CASH*

 

8,446

4,859

CAPITAL

 

 

 

TOTAL MARKET CAPITALISATION (at 31 December: 326.50p; 330.0p)

 

237,414

223,339

GEARING RATIO*

 

nil

nil

 

The notes on pages 12 to 22 form part of these consolidated financial statements.

 

 

 

 

 

 

 

 

 

 

 

NOTES TO THE PRELIMINARY STATEMENTS

YEAR ENDED 31 DECEMBER 2015

 

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 2015 audited preliminary financial statements were approved for issue on 18 March 2016.

The financial information set out below does not constitute the company's statutory accounts for 2014 or 2015. Statutory accounts for the years ended 31 December 2014 and 31 December 2015 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2014 and 2015 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 2014 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2015 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. 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. 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 and acquired intangibles, 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; profit /loss on disposal of associates; income statement impact of put option accounting (whether accounted under IFRS2 or IAS39).

 

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 2015. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 December 2014.

 

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 2015

Note


2015
£000

Amortisation
of acquired intangibles

£000

Sale of associate

£000

Impairment of Goodwill

£000

Contingent acquisition cost classified as expense

£000

Put option accounting*

£000

Headline
results

£000

Revenue

4

178,928

-

-

-

-

-

178,928

Operating profit

4

14,707

1,940

(217)

889

134

1,125

18,578

Share of results of associates and JV

5

2,017

-

-

-

-

-

2,017

Finance income

6

299

-

-

-

-

-

299

Finance cost

7

(4,477)

-

-

-

-

3,706

(771)

Profit before taxation

4

12,546

1,940

(217)

889

134

4,831

20,123

Taxation

8

(3,386)

(541)

71

-

-

-

(3,856)

Profit for the year

 

9,160

1,399

(146)

889

134

4,831

16,267

Non controlling interests

 

(2,686)

(162)

-

(178)

-

-

(3,026)

(Loss)/profit attributable to equity holders of the Group

 

6,474

1,237

(146)

711

134

4,831

13,241

 

* These values represent put options accounted for under IFRS2 (£1,125k) and fair value adjustments to minority put
   option liabilities (£3,706k) (note 10).

 

 

 

 

 

 

 

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

Put option accounting*

£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 and 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.

 

 

 

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 2015

 

 

 


2015
£000

Headline
2015

£000

 

 

6,474

13,241

Basic earnings per share

 

 

 

 

 

Weighted average number of shares (thousands)

 

 

 

71,319

71,319

Basic EPS

 

 

 

9.08p

18.57p

Diluted earnings per share*

 

 

 

 

 

Weighted average number of shares (thousands) as above

 

 

 

71,319

71,319

Add

 

 

 

 

 

- Conditional shares

 

 

 

300

300

Total

 

 

 

71,619

71,619

Diluted earnings per share

 

 

 

9.04p

18.49p

 

 

 

 

 

Year ended
31 December 2014

 

 

 


2014
£000

Headline
2014

£000

 

 

(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

 

* All the 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 2015

 

UK

£000

Europe

£000

Middle East and Africa
£000

Asia and Australasia

£000

Americas

£000

               

Total

£000

Revenue

 

84,159

22,745

8,549

42,103

21,372

 

178,928

Operating profit excluding Group costs

 

11,782

3,668

1,049

4,187

3,253

 

23,939

Group costs

 

(4,970)

(83)

-

(308)

-

 

(5,361)

Operating profit

 

6,812

3,585

1,049

3,879

3,253

 

18,578

Share of results of associates and JV

 

809

25

-

325

858

-

2,017

Financial income and cost

 

(527)

(60)

(17)

69

63

-

(472)

Profit before taxation

 

7,094

3,550

1,032

4,273

4,174

 

20,123

Taxation

 

(506)

(1,190)

(268)

(1,209)

(683)

-

(3,856)

Profit for the year

 

6,588

2,360

764

3,064

3,491

 

16,267

Non controlling interests

 

(1,169)

(658)

(372)

(477)

(350)

-

(3,026)

Profit attributable to equity shareholders of the Group

 

5,419

1,702

392

2,587

3,141

 

13,241

Headline basic EPS

 

 

 

 

 

 

 

18.57p

 

Non cash costs included in headline operating profit:

 

 

 

 

 

 

Depreciation

 

(1,269)

(208)

(145)

(242)

(267)

 

(2,131)

Amortisation of software

 

(9)

(51)

(16)

(18)

(4)

 

(98)

Share option charges

 

(5)

-

-

-

-

 

(5)

Office location

 

London

Paris

Milan

Berlin

Madrid

Geneva

Stockholm

Moscow

Johannesburg

Cape Town

Abu Dhabi

Istanbul

Beirut

Tel Aviv

Sydney

Melbourne

New Delhi

Hong Kong

Shanghai

Tokyo

Kuala Lumpur

Bangkok

Singapore

New York

Los Angeles

San Francisco

São Paulo

 

 

 

                     

 

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.

                                            

 

 

 

 

 

Segmental and headline pro-forma 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 and 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 headline 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

Milan

Berlin

Madrid

Geneva

Stockholm

Moscow

Johannesburg

Cape Town

Abu Dhabi

Beirut

 

Sydney

Melbourne

New Delhi

Hong Kong

Shanghai

Beijing

Tokyo

Kuala Lumpur

Singapore

New York

Los Angeles

San Francisco

São Paulo

 

 

 

 

 

 

 

 

 

 

 

Notes to the preliminary statements

Continued

 

4. Segmental information continued

 

Segmental income statement translated at 2014 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 2015 results been translated at 2014 exchange rates then our results would have been:

 

Year ended
31 December 2015

UK

£000

Europe

£000

Middle East and Africa
£000

Asia and Australasia

£000

Americas

£000

 

Total

£000

Revenue

84,159

25,135

8,906

46,505

21,602

 

186,307

Operating profit excluding Group costs

11,782

4,068

1,132

4,660

3,314

 

24,956

Group costs

(4,970)

(92)

-

(345)

-

 

(5,407)

Operating profit

6,812

3,976

1,132

4,315

3,314

 

19,549

Share of results of associates and JV

809

39

-

309

802

 

1,959

Financial income and cost

(527)

(62)

(18)

77

53

 

(477)

Profit before taxation

7,094

3,953

1,114

4,701

4,169

 

21,031

Taxation

(506)

(1,319)

(292)

(1,349)

(623)

 

(4,089)

Profit for the year

6,588

2,634

822

3,352

3,546

 

16,942

Increase/(decrease) in 2015 results caused by translation differences

-

(274)

(58)

(288)

(55)

 

(675)

 

The key currencies that affect us and the average exchange rates used were:

 

 

2015

2014

US dollar

1.5282

1.6478

Malaysian ringgit

5.9695

5.3883

Australian dollar

2.0354

1.8264

South African rand

19.5022

17.8639

Brazilian real

5.0952

3.8717

Euro

1.3780

1.2406

 

 

 

 

 

Notes to the preliminary statements

Continued

 

5. Share of associates and joint ventures

 

Year ended 31 December

2015

£000

2014

£000

Share of associates' profit before taxation

2,386

1,723

Share of associates' taxation

(369)

(373)

 

2,017

1,350

 

 

6. Finance income

 

Year ended 31 December

2015

£000

2014

£000

Bank interest receivable

181

256

Other interest receivable

118

60

Total finance income

299

316

 

 

7. Finance costs

 

Year ended 31 December

2015

£000

2014

£000

Bank interest payable

(766)

(541)

Interest payable on finance leases

(5)

(7)

Total interest payable

(771)

(548)

Fair value adjustments to minority shareholder put option liabilities (note 10)

(3,706)

(539)

Total finance costs

(4,477)

(1,087)

 

 

8. Taxation

 

Year ended 31 December

 

 

 


2015
£000

 

Total
2014
£000

Current taxation

 

 

 

 

 

 

Taxation in the year

 

 

 

 

 

 

- UK

 

 

 

817

 

1,373

- Overseas

 

 

 

3,919

 

3,292

Withholding taxes payable

 

 

 

5

 

6

Utilisation of previously unrecognised tax losses

 

 

 

-

 

(108)

Adjustment for under provision in prior periods

 

 

 

(526)

 

168

Total

 

 

 

4,215

 

4,731

 

 

 

 

 

 

 

Deferred taxation

 

 

 

 

 

 

Origination and reversal of temporary differences

 

 

 

(46)

 

(218)

Recognition of previously unrecognised
tax losses

 

 

 

(788)

 

(220)

Effect of changes in tax rates

 

 

 

5

 

-

Total

 

 

 

(829)

 

(438)

Total taxation

 

 

 

3,386

 

4,293

 

 

Notes to the preliminary statements

Continued

 

9. Dividends

 

Year ended 31 December

2015
£000

2014
£000

2014 final dividend paid 4.87p on 10 July 2015 (2013: 4.24p)*

3,504

2,723

2015 interim dividend paid 1.61p on 13 November 2015 (2013: 1.40p)

1,158

947

 

4,662

3,670

 

Proposed final dividend of 5.60p totalling £4,033k. Subject to shareholders approval at 8 June 2016 AGM, the dividend is payable on 8 July 2016 to shareholders on the register 10 June 2016.

 

Dividends relate to the profit of the following years:

 

Year ended 31 December

2015
£000

2014
£000

Interim dividend paid 1.61p on 15 November 2015 (2014: 1.40p)

1,158

947

Final dividends payable 5.60p on 8 July 2016 (2014: 4.87p)

4,033

3,442

 

5,191

4,389

Headline dividend cover

2.6

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.

 

* 2014 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 2014.

 

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).

 

 

2015

£000

2014

£000

Amounts falling due within one year

 

 

- Cash

(1,136)

(1,031)

- Equity

(15,602)

(14,804)

 

(16,738)

(15,835)

Amounts falling due after one year

 

 

- Cash

(1,805)

(178)

- Equity

(5,821)

(8,530)

 

(7,626)

(8,708)

 

 

(24,364)

(24,543)

 

 

2015

£000

2014

£000

At 1 January

(24,543)

(38,169)

Exchange difference

(138)

1

Additions

(2,190)

(1,653)

Exercises

4,555

15,817

Reclassification**

1,658

-

Income statement charge due to

 

 

- Change in estimates

(3,907)

(886)

- Change in share price

194

442

- Time

7

(95)

Total income statement charge

(3,706)

(539)

 

At 31 December

(24,364)

(24,543)

 

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

2015

£000

2014

£000

At 1 January

(1,209)

(4,326)

Exchange difference

(138)

-

Reclassified to /(from) share based

385

(291)

Additions*

(2,190)

-

Exercises

-

2,553

Income statement charge due to

 

 

- Change in estimates

201

841

- Change in share price

10

9

- Time

-

5

At 31 December

(2,941)

(1,209)

*Relating to Creative Spark Interactive (PTY) LTD and M&C Saatchi Agency Pty Ltd.

 

 

 

 

 

Equity based

2015

Equity*

2015

£000

2014

£000

At 1 January

(7,071)

(23,334)

(33,843)

Exchange difference

-

-

1

Additions

-

-

(1,653)

Exercises

1,279

4,555

13,264

Reclassified (from)/to cash based

(118)

(385)

291

Reclassification**

502

1,658

-

Income statement charge due to

 

 

 

- Change in estimates

(1,156)

(4,108)

(1,727)

- Change in share price

-

184

433

- Time

2

7

(100)

At 31 December

(6,562)

(21,423)

(23,334)

 

* The estimated number of M&C Saatchi plc shares that will be issued,
   in thousands, to fulfil.

** The reclassification relate to M&C Saatchi LA Inc. and M&C Saatchi
    (S) Pte Ltd where due to changes in shareholder agreements the put
    options are now accounted for as conditional share awards under
    IFRS2.

 

Put options are exercisable from:

 

Subsidiary

Year

% of subsidiaries' shares

exchangeable

M&C Saatchi Marketing Arts Ltd

2016

50.0

M&C Saatchi (M) SDN BHD

2016

20.0

M&C Saatchi Sports & Entertainment Ltd

2016

2.8

Influence Communications Ltd

2016

5.0

M&C Saatchi Europe Holdings Ltd

2016

4.0

M&C Saatchi German Holdings Ltd

2016

4.0

M&C Saatchi Communications Pty Ltd

2016

13.0

M&C Saatchi Berlin GmbH

2016

15.0

Talk PR Audience Ltd

2016

17.0

FCINQ SAS

2016

15.0

Clear Ideas Consulting LLP

2016

12.5

M&C Saatchi PR LLP (US)

2016

35.0

Clear Ideas Consulting LLP

2016

12.5

M&C Saatchi Sport & Entertainment
Pty Ltd

2016

49.0

Talk PR Ltd

2016

49.0

M&C Saatchi UK PR LLP

2016

35.0

M&C Saatchi Corporate SAS

2016

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

24.0

M&C Saatchi Berlin GmbH

2017

5.0

M&C Saatchi Brazil Comunicação 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

Lean Mean Fighting Machine LTD

2019

13.3

Creative Spark Interactive (PTY) LTD*

2020

10.0

M&C Saatchi Agency Pty LTD*

2020

20.0

 

* New put options in 2015.

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 (2015: 326.5p, 2014: 330.0).

 

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 2015 results of the companies who can exercise in 2016. Non current liabilities are determined by our year end share price and the projected results of the companies who can exercise after 2016. The projected results show management's best estimate of the growth rates and margin of the companies who can exercise after 2016. 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 326.5p (2014: 330.0p). The 2015 charges would have changed as follows, had the share price been:
 

Share price

Movement
%

Increase/
(decrease) in profit before and after tax £000

391.8p

+20%

£(3,253)

346.5p

+6%

£(1,175)

326.5p

-

-

306.5p

(6)%

£1,208

261.2p

(20)%

£3,945

 

 

Forecast accuracy

Difference in actual and projected results of the companies could have an impact on the fair value adjustments as follows (assuming no change in Group's forecast):

 

 

Result

 

Increase/
(decrease) in profit before and after tax £000

+10%

 

£(1,171)

(10)%

 

£1,079

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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