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M&C Saatchi PLC  -  SAA   

Final Results

Released 07:00 22-Mar-2018

RNS Number : 5203I
M&C Saatchi PLC
22 March 2018
 

 

 

 

 

M&C SAATCHI PLC

 

 

FINAL RESULTS

 

 

YEAR ENDED

31 DECEMBER 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22 March 2018

 

M&C Saatchi PLC - Preliminary Statement

Final Results for the year ended 31 December 2017

 

 

22 March 2018

 

Financial Highlights 2017

 Growth versus 2016

Revenue

Revenue in constant currencies

£251.5m £240.9m

+ 12% (2016: £225.4m)

+ 7%

 

Operating Profit

£26.7m

+ 16% (2016: £23.0m)

 

Profit Before Tax

£27.7m

+ 16% (2016: £23.7m)

 

Profit After Tax and MI

EPS

£18.0m

23.04p

+ 17% (2016: £15.4m)

+ 9% (2016: 21.07p)

 

Full-Year Dividend

  9.53p

+ 15% (2016: 8.29p)

 

 

 

 

 

         

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

 

Operational Highlights

·    Record results in terms of both revenue and earnings

·    The Global network performed well:

·    UK: revenues up 6%, with Sport & Entertainment, PR and Mobile continuing to perform particularly positively; operating profit was up 46% without last year's restructuring costs

·    Europe: revenues up 26%, operating profit increased 30%

·    Middle East and Africa: revenues up 26%, operating profit up 45%

·    Asia and Australia: revenues up 23%, operating profit up 37%

·    Americas: revenues were down 3% following a second half slowdown in New York advertising revenues, operating profit was down 53%. A major restructuring was undertaken, and the agency is profitable in Q1 2018

·    Final dividend increased 15% to 7.40p, full-year dividend up 15% to 9.53p

 

 

 

 

David Kershaw, Chief Executive, said:

 

"2017 was another record year for M&C Saatchi in terms of both revenue and earnings. Our established strategy of winning new business and starting new businesses continues to deliver.

 

This year has begun well, and we are confident that we will continue to make good progress in 2018 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 associates; profit/loss on disposal of associates; and income statement impact of put option accounting (whether accounted under IFRS2 or IAS39). See note 3 for reconciliation between the Group's statutory results and the headline results.

 

 

 

 

 

SUMMARY OF RESULTS

2017 saw record results in terms of both revenue and earnings. Revenues grew by 12%, with constant currency revenues increasing 7%. Excluding the costs of businesses started in the year, we returned a headline operating margin of 11.3%, up from 10.2% in 2016. The headline profit before tax advanced 16% to £27.7m and headline net earnings also rose 17%. Statutory profit before tax was up 37% from £6.8m to £9.3m.

 

Our competitive advantages continue to deliver market-beating growth. We have an entrepreneurial culture and ownership structure that motivates our people to deliver exceptional performance. We have a genuine integrated offering that delivers greater effectiveness and efficiency to our clients. We are not dependent upon multinational packaged goods clients, media buying or M&A. We are of a scale and nimbleness where the birth, growth and success of our businesses can mitigate against macro headwinds. Lastly, we start companies with the best talent in attractive geographies and in new growth channels, with 16 new businesses started in 2017.  

 

UK

Revenue in the UK was up 6%, with Sport & Entertainment, PR and Mobile continuing to trade particularly positively. New business wins included Dreams, Visit Britain, Little Dish, Lipton, The Body Shop, Costa Coffee and Clinique.

 

M&C Saatchi Sport & Entertainment won Large Sponsorship Consultancy of the year, M&C Saatchi PR was awarded Mid-sized PR Agency of the year and M&C Saatchi Mobile won Most Effective Mobile Agency.

 

Our London advertising agency management team is now complete, incentivised with shares and building good new business momentum.

 

M&C Saatchi Merlin, our talent management agency, launched a social influencer division in May which has very positive growth potential. We started Re, our successful Australian brand identity unit, in the UK in June.

 

The UK headline operating profit was up 46% on 2016 without last year's one-off restructuring costs in the London advertising agency. The headline operating margin also benefited from this, increasing to 16.1% compared with 2016's 11.7%.  These margins exclude the impact of Group recharges.

 

 

Europe

European revenues increased 26% year on year. Headline operating profit was up 30%, with a headline operating margin of 15.3% (2016: 15.1%).

 

The Stockholm office maintained its dynamic new business performance, winning the property company AMFF, the engineering client PE Consulting and the political party Centerpartiet.

 

Both Germany and Italy continue to excel. Mobile opened in Berlin whilst Italy was appointed by Sisal, a gaming company, in addition to being reappointed by Unicredit. 

 

France remains challenging but in the second half the Paris office won projects from Casino Supermarkets, the sugar free children's fruit snacks provider Charles & Alice and Bonduelle, the processed vegetable producer.

 

The Madrid office is much improved, and we started a sponsorship operation there in April.

 

Middle East and Africa

Revenues in the Middle East and Africa were up 26%.

 

South Africa converted Windhoek, Heineken Export and the South African Reserve Bank. In January 2018, they picked up Lexus and the second-hand car retailer Automark. We also acquired Johannesburg based sport and entertainment company Levergy.

 

UAE won the accounts of Aldar Properties, UAE Banks Federation and Unilever's Lipton account. M&C Saatchi PR opened in the UAE and won the Abu Dhabi Motors Rolls Royce account. 

 

Operating profit in the region was up 45% and the headline operating margin increased to 10.7% from 9.3% in 2016.

 

Asia and Australia

In Asia and Australia, revenues were up 23% year on year.

 

Australia performed well, benefiting from a full-year of Woolworths. They won some projects from Pfizer, Prudential and Jack Daniels, although one significant account in the year was lost, IAG. In February 2017, we acquired 51% of Bohemia, a media buying and planning operation. This wider offer is

 

important in this market, where clients are increasingly looking for a tighter relationship between the creative providers and media buying and planning. In March, we launched The Source, our successful UK research operation, in Melbourne.

 

We opened a new office in Jakarta in January 2018.

 

The headline regional operating margin was 11.4% (2016: 11.0%), with the headline operating profit ahead 37% on 2016. 

 

Americas

Revenues decreased 3% and headline operating profit was down 53% with a headline operating margin of 7.4% (2016: 15.5%).

 

Our Mobile operations continue to perform well and are building a potent network across the US.

 

There was a drag in New York with a slowdown in advertising revenues, which dented the overall region's performance. SS+K 's political and charitable project revenues were particularly hard hit in the second half. A major restructuring was undertaken, and the agency is profitable in the first quarter of 2018. LIDA New York opened for business and was appointed by Aston Martin.

 

Our Los Angeles office had a better year and was appointed by Pacific Life. We unveiled both Clear and Sport & Entertainment there in the first half and our Mexico City office opened its doors in September. This year we launched Majority in Los Angeles, a production company with an initially all-women Director roster.

 

Outlook

2017 was another record year for M&C Saatchi in terms of both revenue and headline earnings. Our established strategy of winning new business and starting new businesses continues to deliver.

 

This year has begun well, and we are confident that we will continue to make good progress in 2018 and beyond.

 

 

Consolidated income statement

 

Year ended 31 December

Note

 2017

£000

2016

£000

Billings

 

535,964

458,180

Revenue

 

251,481

225,387

Operating costs

 

(246,146)

(218,738)

Operating profit

 

5,335

6,649

Share of results of associates and joint ventures

 

1,987

1,530

Finance income

 

3,326

440

Finance costs

 

(1,346)

(1,828)

Profit before taxation

 

9,302

6,791

Taxation

 

(4,736)

(3,451)

Profit for the year

 

4,566

3,340

Attributable to:

 

 

 

Equity shareholders of the Group

 

2,672

144

Non-controlling interests

 

1,894

3,196

Profit for the year

 

4,566

3,340

Earnings per share

 

 

 

Basic (pence)

 

3.43p

0.20p

Diluted (pence)

 

3.31p

0.19p

 

 

 

 

Headline results*

 

 

 

Operating profit

 

26,725

23,037

Profit before tax

 

27,655

23,776

Profit after tax attributable to equity shareholders of the Group

 

17,971

15,423

Basic earnings per share (pence)

 

23.04p

21.07p

Diluted earnings per share (pence)

 

21.22p

20.55p

 

 

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

 

The notes on pages 13 to 22 form part of these preliminary statements.

 

CONSOLIDATED STATEMENT OF other COMPREHENSIVE INCOME

 

 

Year ended 31 December

2017

£000

2016

£000

Profit for the year

4,566

3,340

Other comprehensive income*

 

 

Exchange differences on translating foreign operations before tax

(1,177)

6,754

Other comprehensive income for the year net of tax

(1,177)

6,754

 

 

Total comprehensive income for the year

3,389

10,094

Total comprehensive income attributable to:

 

 

1,495

6,898

1,894

3,196

Total comprehensive income for the year

3,389

10,094

 

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

 

The notes on pages 13 to 22 form part of these preliminary statements.

 

CONSOLIDATED balance sheet

 

 

 

At 31 December

 

2017

£000

2016

£000

Non-current assets

 

 

 

Intangible assets

 

48,515

51,004

Investments in associates

 

19,725

19,277

Plant and equipment

 

12,269

10,619

Deferred tax assets

 

4,797

3,112

Other non-current assets

 

9,325

7,455

 

 

94,631

91,467

Current assets

 

 

 

Trade and other receivables

 

120,096

109,824

Current tax assets

 

945

1,057

Cash and cash equivalents

 

48,957

32,222

 

 

169,998

143,103

Current liabilities

 

 

 

Trade and other payables

 

(128,256)

(115,886)

Current tax liabilities

 

(1,221)

(1,186)

Borrowings

 

(3,731)

(3,670)

Deferred and contingent consideration

 

(377)

-

Minority shareholder put option liabilities

 

(14,813)

(20,216)

 

 

(148,398)

(140,958)

Net current assets

 

21,600

2,145

Total assets less current liabilities

 

116,231

93,612

Non-current liabilities

 

 

 

Deferred tax liabilities

 

(761)

(380)

Borrowings

 

(37,764)

(28,277)

Contingent consideration

 

(833)

-

Minority shareholder put option liabilities

 

(10,316)

(12,950)

Other non-current liabilities

 

(2,487)

(2,608)

 

 

(52,161)

(44,215)

Total net assets

 

64,070

49,397

 

 

At 31 December

 

2017

£000

2016

£000

Equity

 

 

 

Share capital

 

813

749

Share premium

 

32,095

24,099

Merger reserve

 

31,592

31,592

Treasury reserve

 

(792)

(792)

Minority interest put option reserve

 

(13,958)

(20,598)

Non-controlling interest acquired

 

(21,040)

(13,122)

Foreign exchange reserve

 

3,593

4,770

Retained earnings

 

25,235

15,871

Equity attributable to shareholders of the Group

 

57,538

42,569

Non-controlling interest

 

6,532

6,828

Total equity

 

64,070

49,397

 

 

The notes on pages 13 to 22 form part of these preliminary statements.

 

 

 

 

CONSOLIDATED STATEMENT OF changes in equity

 

 

 

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 2016

 

727

17,338

31,592

(792)

(12,595)

(9,233)

(1,984)

12,673

37,726

4,295

42,021

Acquisitions

 

-

-

-

-

(10,249)

-

-

-

(10,249)

1,919

(8,330)

Acquisitions of minority interest

 

4

1,364

-

-

-

(1,222)

-

-

146

-

146

Exercise of put options

 

18

5,397

-

-

2,366

(2,366)

-

-

5,415

(47)

5,368

Disposals

 

-

-

-

-

-

-

-

-

-

(10)

(10)

Exchange rate movements

 

-

-

-

-

(120)

(301)

-

-

(421)

627

206

Issue of shares to minorities

 

-

-

-

-

-

-

-

-

-

14

14

Issue of options

 

-

-

-

-

-

-

-

515

515

-

515

Share option charge

 

-

-

-

-

-

-

-

7,997

7,997

-

7,997

Dividends

 

-

-

-

-

-

-

-

(5,458)

(5,458)

(3,166)

(8,624)

Total transactions with owners

 

22

6,761

-

-

(8,003)

(3,889)

-

3,054

(2,055)

(663)

(2,718)

Total comprehensive income
for the year

 

-

-

-

-

-

-

6,754

144

6,898

3,196

10,094

At 31 December 2016

 

749

24,099

31,592

(792)

(20,598)

(13,122)

4,770

15,871

42,569

6,828

49,397

Acquisitions

 

4

1,498

-

-

-

-

-

-

1,502

235

1,737

Acquisitions of minority interest

 

5

1,587

-

-

-

(1,390)

-

-

202

310

512

Exercise of put options

 

55

4,911

-

-

6,640

(6,640)

-

(61)

4,905

-

4,905

Exchange rate movements

 

-

-

-

-

-

112

-

-

112

(252)

(140)

Share option charge

 

-

-

-

-

-

-

-

13,501

13,501

-

13,501

Dividends

 

-

-

-

-

-

-

-

(6,748)

(6,748)

(2,483)

(9,231)

Total transactions with owners

 

64

7,996

-

-

6,640

(7,918)

-

6,692

13,474

(2,190)

11,284

Total comprehensive income for the year

 

-

-

-

-

-

-

(1,177)

2,672

1,495

1,894

3,389

At 31 December 2017

 

813

32,095

31,592

(792)

(13,958)

(21,040)

3,593

25,235

57,538

6,532

64,070

                           

 

The notes on pages 13 to 22 form part of these preliminary statements.

 

CONSOLIDATED CASH FLOW

 

 

 

 

 

Year ended 31 December

 

 

2017

£000

2016

£000

Revenue

 

251,481

225,387

Operating expenses

 

(246,146)

(218,738)

Operating profit

 

5,335

6,649

Adjustments for:

 

 

 

Depreciation of plant and equipment

 

3,079

2,668

Loss on sale of plant and equipment

 

57

542

Loss on sale of software intangibles

 

4

10

Fair value revaluation of associate on step acquisition

 

-

859

Impairment and amortisation of acquired intangible assets

 

2,021

2,324

Impairment of associate and investments

 

-

4,389

Impairment of goodwill

 

5,214

-

Amortisation of capitalised software intangible assets

 

211

354

Equity settled share based payment expenses

 

13,501

7,997

Operating cash before movements in working capital

 

29,422

25,792

Increase in trade and other receivables

 

(10,806)

(22,334)

increases in trade and other payables

 

11,665

19,342

Cash generated from operations

 

30,281

22,800

Tax paid

 

(6,727)

(4,073)

Net cash from operating activities

 

23,554

18,727

Investing activities

 

 

 

Acquisitions of subsidiaries net of cash acquired

 

(951)

(12,822)

Disposal of subsidiaries net of cash divested

 

-

(263)

Acquisitions of investments

 

(2,024)

(1,056)

Proceeds from sale of plant and equipment

 

77

32

Purchase of plant and equipment

 

(3,451)

(3,873)

Purchase of capitalised software

 

(385)

(34)

Dividends received from associates

 

1,806

177

Interest received

 

288

440

Net cash consumed investing activities

 

(4,640)

(17,399)

Net cash from operating and investing activities

 

18,914

1,328

 

 

The notes on pages 13 to 22 form part of these preliminary statements.

 

 

 

Year ended 31 December

 

2017

£000

2016

£000

Net cash from operating and investing activities

 

18,914

1,328

Financing activities

 

 

 

Dividends paid to equity holders of the Company

 

(6,748)

(5,458)

Dividends paid to non-controlling interest

 

(2,484)

(3,166)

Issue of shares to minorities

 

-

514

Repayment of finance leases

 

(28)

(36)

Inception of invoice discounting

 

-

4,455

Repayment of invoice discounting

 

(730)

(3,943)

Inception of bank loans

 

10,240

11,433

Repayment of bank loans

 

(359)

(7,191)

Interest paid

 

(1,275)

(1,230)

Net cash consumed by financing activities

 

(1,384)

(4,622)

Net (decrease)/increase in cash and cash equivalents

 

17,530

(3,294)

Effect of exchange rate fluctuations on cash held

 

(795)

3,270

Cash and cash equivalents at the beginning of the year

 

32,222

32,246

Cash and cash equivalents at the end of the year

 

48,957

32,222

 

 

 

 

Bank loans and borrowings*

 

(38,675)

(28,582)

Net cash

 

10,282

3,640

 

* Bank loans and borrowings excludes £2,915k (2016: £3,645k) of invoice discounting.

 

The notes on pages 13 to 22 form part of these preliminary statements.

 

 

Notes to the preliminary statements

Year ended 31 December 2017

 

 

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 is listed on the AIM market of the London Stock Exchange.

These 2017 preliminary statements were approved for issue on 21 March 2018.

The financial information set out below does not constitute the company's statutory accounts for 2016 or 2017. Statutory accounts for the years ended 31 December 2016 and 31 December 2017 have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Report and Financial Statements for 2016 and 2017 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 2016 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 December 2017 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.

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 associates and investments; profit and loss on disposal of associates; and the income statement impact of put option accounting and share based payment charges. See note 3 for a reconciliation between the Group's statutory results and the headline results.

 

Notes to the preliminary statements

Continued

 

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 2017. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 December 2016.

 

 

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 2017

 2017

£000

Amortisation of acquired intangibles

£000

Impairment of acquired intangibles

£000

Deferred tax on acquired intangible US tax rate change

£000

Deferred tax on put options US tax rate change

£000

Revaluation of contingent consideration £000

Acquisition related

Remuneration*

£000

Put option

Accounting**

£000

Headline
results

£000

Billings

535,964

-

-

-

-

-

-

-

535,964

Revenue

251,481

-

-

-

-

-

-

-

251,481

Operating profit

5,335

2,021

5,214

-

-

40

614

13,501

26,725

Share of results of associates and JV

1,987

-

-

-

-

-

-

-

1,987

Finance income

3,326

-

-

-

-

-

-

(3,037)

289

Finance cost

(1,346)

-

-

-

-

-

-

-

(1,346)

Profit before taxation

9,302

2,021

5,214

-

-

40

614

10,464

27,655

Taxation

(4,736)

(671)

(1,804)

981

392

-

-

(996)

(6,834)

Profit for the year

4,566

1,350

3,410

981

392

40

614

9,468

20,821

Non-controlling interests

(1,894)

(365)

-

-

-

-

(591)

-

(2,850)

Profit attributable to equity holders of the Group***

2,672

985

3,410

981

392

40

23

9,468

17,971

 

*   The non-controlling interest charge is moved to operating profit due to underlying equity being defined as a conditional share award.

** These values represent put options accounted for as conditional share awards (£13,501k) and fair value adjustments to minority put option liabilities (£3,037k).

*** Headline earnings are profit attributable to equity holders of the Group after adding back the adjustments noted above. The increase is calculated as the difference between 2016 and 2017 measures. Headline operating margin is calculated as: Headline operating profit divided by revenue. Headline operating margin excluding new businesses is calculated as: Headline operating profit after adding back the cost of businesses started divided by revenue.  This cost of business started during the year has been calculated as £1.6m (2016: £0.1m).

 

Notes to the preliminary statements

Continued

 

3. Headline results and earnings per share continued

 

Year ended 31 December 2016

 2016

£000

Amortisation of acquired intangibles

£000

Impairment of associate

£000

Provision against investments

£000

Revaluation of an associate on acquisition

£000

Acquisition related

remuneration

£000

Put option

accounting

£000

Headline
results

£000

Billings

458,180

-

-

-

-

 

-

458,180

Revenue

225,387

-

-

-

-

 

-

225,387

Operating profit

6,649

2,324

3,738

651

859

819

7,997

23,037

Share of results of associates and JV

1,530

-

-

-

-

-

-

1,530

Finance income

440

-

-

-

-

-

-

440

Finance cost

(1,828)

-

-

-

-

-

597

(1,231)

Profit before taxation

6,791

2,324

3,738

651

859

819

8,594

23,776

Taxation

(3,451)

(659)

-

-

-

 

-

(4,110)

Profit for the year

3,340

1,665

3,738

651

859

819

8,594

19,666

Non-controlling interests

(3,196)

(256)

-

-

-

(540)

(251)

(4,243)

Profit attributable to equity holders of the Group

144

1,409

3,738

651

859

279

8,343

15,423

 

 

 

Notes to the preliminary statements

Continued

 

3. Headline results and earnings per share continued

Basic and diluted earnings per share are 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 2017

2017

£000

Headline

2017

£000

Profit attributable to equity shareholders of the Group

2,672

17,971            

Basic earnings per share

 

 

Weighted average number of shares (thousands)

77,999

77,999

Basic EPS

3.43p

23.04p

Diluted earnings per share*

 

 

Weighted average number of shares (thousands) as above

77,999

77,999

Add

 

 

- Conditional shares without dividend rights

2,763

2,763

- Conditional shares with dividend rights**

3,829

3,829

- Contingent consideration

108

108

Total

84,699

84,699

Diluted earnings per share

3.16p

21.22p

 

* All the minority interest put options are non-dilutive as the exercise price approximates fair value of the underlying non-controlling interest.

** Conditional share with dividend rights are excluded from any calculation of conditional share awards that uses diluted EPS growth as a measure.

 

Year ended 31 December 2016

 2016

£000

Headline

2016

£000

Profit attributable to equity shareholders of the Group

144

15,423

Basic earnings per share

 

 

Weighted average number of shares (thousands)

73,193

73,193

Basic EPS

0.20p

21.07p

Diluted earnings per share*

 

 

Weighted average number of shares (thousands) as above

73,193

73,193

Add

 

 

- Conditional shares

1,867

1,867

Total

75,060

75,060

Diluted earnings per share

0.19p

20.55p

 

* All the minority interest put options are non-dilutive as the exercise price approximates fair value of the underlying non-controlling interest.

 

 

 

Notes to the preliminary statements

Continued

 

4. Segmental information

 

Segmental and headline income statement 2017

 

Year ended 31 December 2017

UK

£000

Europe

£000

Middle East
and Africa

£000

Asia and
Australia

£000

Americas

£000

Total

£000

Billings

169,299

59,037

27,207

132,007

148,414

535,964

Revenue

94,013

33,492

14,650

64,703

44,623

251,481

Operating profit excluding Group costs

15,149

5,187

1,568

7,733

3,385

33,022

Group costs

(5,821)

(71)

-

(339)

(66)

(6,297)

Operating profit

9,328

5,116

1,568

7,394

3,319

26,725

Share of results of associates and JV

1,633

3

-

351

-

1,987

Financial income and cost

(437)

(69)

11

48

(610)

(1,057)

Profit before taxation

10,524

5,050

1,579

7,793

2,709

27,655

Taxation

(1,478)

(1,604)

(421)

(2,110)

(1,221)

(6,834)

Profit for the year

9,046

3,446

1,158

5,683

1,488

20,821

Non-controlling interests

(813)

(721)

(534)

(1,189)

407

(2,850)

Profit attributable to equity shareholders of the Group

8,233

2,725

624

4,494

1,895

17,971

Headline basic EPS

 

 

 

 

 

23.04p

 

Non-cash costs included in headline operating profit:

 

 

 

 

 

 

Depreciation

1,386

357

371

576

389

3,079

Amortisation of software

70

37

11

93

-

211

Office locations

London

Paris

Milan

Berlin

Madrid

Geneva

Stockholm

Moscow

Istanbul

 

Johannesburg

Cape Town

Abu Dhabi

Dubai

Beirut

Tel Aviv

Sydney

Melbourne

New Delhi

Bangalore

Islamabad

Hong Kong

Shanghai

Tokyo

Kuala Lumpur

Bangkok

Singapore

New York

Chicago

Los Angeles

San Francisco

Mexico City

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.

 

 

Notes to the preliminary statements

Continued

 

4. Segmental information continued

 

Segmental and headline income statement 2016

 

Year ended 31 December 2016

UK

£000

Europe

£000

Middle East

and Africa

£000

Asia and

Australia

£000

Americas

£000

Total

£000

Billings

154,844

38,504

22,810

88,665

153,357

458,180

Revenue

88,504

26,685

11,673

52,531

45,994

225,387

Operating profit excluding Group costs

10,398

4,028

1,085

5,754

7,119

28,384

Group costs

(4,879)

(87)

-

(343)

(38)

(5,347)

Operating profit

5,519

3,941

1,085

5,411

7,081

23,037

Share of results of associates and JV

1,323

(3)

-

290

(80)

1,530

Financial income and cost

(343)

(43)

43

124

(572)

(791)

Profit before taxation

6,499

3,895

1,128

5,825

6,429

23,776

Taxation

(811)

(1,350)

(362)

(1,458)

(129)

(4,110)

Profit for the year

5,688

2,545

766

4,367

6,300

19,666

Non-controlling interests

(1,320)

(494)

(326)

(844)

(1,259)

(4,243)

Profit attributable to equity shareholders of the Group

4,368

2,051

440

3,523

5,041

15,423

Headline basic EPS

 

 

 

 

 

21.07p

 

Non-cash costs included in headline operating profit:

 

 

 

 

 

 

Depreciation

(1,364)

(242)

(185)

(329)

(548)

(2,668)

Amortisation of software

(268)

(62)

(9)

(13)

(2)

(354)

Office locations

London

Paris

Milan

Berlin

Madrid

Geneva

Stockholm

Moscow

Istanbul

 

Johannesburg

Cape Town

Abu Dhabi

Dubai

Beirut

Tel Aviv

Sydney

Melbourne

New Delhi

Bangalore

Islamabad

Hong Kong

Shanghai

Tokyo

Kuala Lumpur

Bangkok

Singapore

New York

Chicago

Los Angeles

San Francisco

São Paulo

 

 

 

 

 

 

Notes to the preliminary statements

Continued

 

4. Segmental information continued

 

Segmental income statement translated at 2016 exchange rates

It is normal practice in our industry to provide constant currency results.

 

Had our 2017 results been translated at 2016 exchange rates then our constant currency results would have been:

Year ended 31 December 2017

UK

£000

Europe

£000

Middle East
and Africa
£000

Asia and
Australia

£000

Americas

£000

Total

£000

Revenue

94,013

31,307

12,649

60,308

42,582

240,859

Operating profit excluding Group costs

15,150

4,833

1,258

7,335

3,381

31,957

Group costs

(5,819)

(66)

-

(315)

(65)

(6,265)

Operating profit

9,331

4,767

1,258

7,020

3,316

25,692

Share of results of associates and JV

1,633

4

-

340

-

1,977

Financial income and cost

(458)

(68)

8

46

(579)

(1,051)

Profit before taxation

10,506

4,703

1,266

7,406

2,737

26,618

Taxation

(1,474)

(1,494)

(322)

(1,987)

(1,162)

(6,439)

Profit for the year

9,032

3,209

944

5,419

1,575

20,179

Increase/(decrease) in 2017 results caused by translation differences

(14)

(237)

(214)

(264)

87

(642)

 

 

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

 

2017

2016

US dollar

1.2884

1.3558

Malaysian ringgit

5.5370

5.6104

Australian dollar

1.6808

1.8247

South African rand

17.1503

19.9843

Brazilian real

4.1129

4.7442

Euro

1.1417

1.2244

 

 

 

Notes to the preliminary statements

Continued

 

 

5. Share of associates and joint ventures

Year ended 31 December

2017

£000

2016

£000

Share of associates' profit before taxation

2,598

1,981

Share of associates' taxation

(611)

(451)

 

1,987

1,530

 

 

6. Finance income

Year ended 31 December

2017

£000

2016

£000

Bank interest receivable

200

338

Other interest receivable

89

102

Total interest receivable

289

440

Fair value adjustments to minority shareholder put option liabilities

3,037

-

Total finance income

3,326

440

 

 

7. Finance costs

 

Year ended 31 December

2017

£000

2016

£000

Bank interest payable

(1,344)

(1,227)

Interest payable on finance leases

(2)

(4)

Total interest payable

(1,346)

(1,231)

Fair value adjustments to minority shareholder put option liabilities

-

(597)

Total finance costs

(1,346)

(1,828)

 

8. Taxation

 

Year ended 31 December

2017

£000

2016

£000

Current taxation

 

 

Taxation in the year

 

 

- UK

1,689

891

- Overseas

5,286

3,700

Withholding taxes payable

21

(49)

Utilisation of previously unrecognised tax losses*

(817)

-

Adjustment for Under (over) provision in prior periods*

625

(104)

Total

6,804

4,438

 

 

 

Deferred taxation

 

 

Origination and reversal of temporary differences

(3,612)

106

Recognition of previously unrecognised tax losses**

(121)

(1,093)

Effect of changes in tax rates

1,665

-

Total

(2,068)

(987)

Total taxation

4,736

3,451

 

* In the most part this relates to our US offices.

** Recognised to reflect the probable future corporation tax that we can reclaim.

 

 

Notes to the preliminary statements

Continued

 

 

9. Dividends

 

Year ended 31 December

2017

£000

2016

£000

2016 final dividend paid 6.44p on 7 July 2017 (2015: 5.60p)

5,032

4,084

2017 interim dividend paid 2.13p on 10 November 2017 (2016: 1.85p)

1,716

1,374

 

6,748

5,458

 

The 2017 proposed final dividend of 7.40p, totalling £5,996,827. Subject to shareholders approval at 8 June 2018 AGM, the dividend is payable on 6 July 2018 to shareholders on the register 8 June 2018.

 

The dividends relate to the profit of the following years:

 

Year ended 31 December

2017

£000

2016

£000

Interim dividend paid 2.13p on 10 November 2017 (2016: 1.85p)

1,716

1,374

Final dividends payable 7.40p on 6 July 2018 (2016: 6.44p)

5,997

4,876

 

7,713

6,250

Headline dividend cover

2.3

2.5

 

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. Retained profits are used to reinvest in the long term growth of the Group through funding working capital and Investing activities; and to repaying bank debt.

 

 

 

 

 

 


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