FORM 6 - K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the Month of April 2002
CORDIANT COMMUNICATIONS GROUP PLC
----------------------------------
(Translation of registrant's name into English)
121-141 Westbourne Terrace
London W2 6JR
England
--------------------------------------
(Address of principal executive offices)
FORWARD LOOKING AND CAUTIONARY STATEMENTS
This report contains certain "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Generally, the
words "believe," "may," "will," "estimate," "continue," "anticipate," "intend,"
"expect" and similar expressions identify forward looking statements. The
Registrant has based these forward looking statements largely on its current
expectations and projections about future events and financial trends affecting
its business. These forward looking statements include statements relating to
trends in the advertising and marketing services industry, particularly with
respect to anticipated advertising expenditures in the world's advertising
markets. Actual advertising expenditures may differ materially from the
estimates contained therein depending on, among other things, regional, national
and international political and economic conditions, technological changes, the
availability of media and regulatory regimes in the world's advertising markets.
Additionally, this report contains a number of "forward looking statements"
relating to the Registrant's performance. The Registrant's actual results could
differ materially from those anticipated, depending on, among other things,
gains to or losses from its client base, the amount of revenue derived from
clients, the Registrant's exposure to changes in the exchange rates of major
currencies against the pound sterling (because a substantial portion of its
revenues are derived and costs incurred outside of the United Kingdom), the
general level of advertising expenditures in the Registrant's markets referred
to above and the overall level of economic activity in the Registrant's major
markets as discussed above. The Registrant's ability to reduce its fixed cost
base in the short term is limited and therefore its trading performance can be
significantly affected by variations in the level of its revenues.
INCORPORATION BY REFERENCE
This report shall be deemed to be incorporated by reference into the
prospectus forming a part of the Registrant's Registration Statement on Form F-3
(No. 333-46570) and to be a part of such prospectus from the date on which this
report is furnished, to the extent not superseded by documents or reports
subsequently filed or furnished.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CORDIANT COMMUNICATIONS GROUP PLC
(Registrant)
By: /s/Michael Bungey
--------------------------------------------
Title: Director and Chief Executive Officer
Date: April 22, 2002
Exhibit 1
Cordiant Communications Group plc
Preliminary audited results for the year ended 31 December 2001
Cordiant Communications Group plc ("Cordiant") is the world's eighth largest
global marketing communications group with over 10,000 employees in more than
216 offices spanning 80 countries (including affiliates).
o Revenues up 17.9% to Pounds Sterling 605.0 million (2000: Pounds Sterling
513.0 million). Revenues decreased by 8.0% on an underlying basis.
o Operating profit (pre-exceptional items and goodwill) Pounds Sterling 36.5
million (2000: Pounds Sterling 61.4 million).
o Operating margin (pre-exceptional items and goodwill) at 6.0% (2000:
12.0%).
o Pre tax profit (pre-exceptional items and goodwill) Pounds Sterling 25.7
million (2000: Pounds Sterling 57.5 million).
o Exceptional operating charge of Pounds Sterling 27.6 million. The Group is
targeting incremental cost savings in excess of Pounds Sterling 30.0
million in 2002.
o Exceptional goodwill impairment of Pounds Sterling 224.8 million.
o Adjusted diluted headline earnings per share down to 3.6p (ADS 25.9 cents)
from 11.4p (restated) (ADS 86.6 cents).
o Agreement with lenders to amend terms of the Group's financing arrangements
now finalised.
o The Board does not propose to pay a dividend in respect of 2001 (2000: 2.1p
per Ordinary share).
Michael Bungey, Chief Executive of Cordiant, commented
"Whilst previous rates of revenue decline have abated, and we are seeing early
signs of business activity emerge, we forecast no revenue growth this year. The
measures we have taken to reduce our cost base are targeted to deliver a 50%
improvement in margin. The mix of businesses we have assembled, coupled with a
maintained focus on cost, positions us well to profit quickly from any sustained
upturn."
22 April 2002
Enquiries:
Cordiant
Michael Bungey, Chief Executive Officer Tel: +44 (0) 20 7262 4343
Art D'Angelo, Finance Director
Nathan Runnicles, Investor Relations
College Hill Tel: +44 (0) 20 7457 2020
Alex Sandberg
Dick Millard
Presentation: The Preliminary Results presentation is available on the Cordiant
website, http://www.cordiantww.com, from 0800hrs UK time (0300hrs NY time). A
presentation to analysts will be held at 1130hrs UK time at College Hill
Associates, 78 Cannon Street, London, EC4.
Conference Call: There will be a telephone conference call with Michael Bungey,
CEO and Art D'Angelo, CFO at 1500hrs UK time (1000hrs NY time). To participate
please dial the following number in London, +44 (0) 20 8515 2342. A replay
facility is in place for 24 hours immediately following the conference call. To
activate, dial the following number in London, +44 (0) 20 8797 2499, using the
PIN number 117217#.
Forward-looking statements: This press release contains certain "forward-looking
statements" and information that are based on the current expectations,
estimates and projections of Cordiant's management and information currently
available to Cordiant. These statements are not guarantees of future performance
and involve certain risks and uncertainties that are difficult to predict. In
addition, some forward-looking statements are based upon assumptions as to
future events that may not prove to be accurate. These statements typically
contain words such as "intends", "expects", "anticipates", "estimates" and words
of similar import and, in this release, include statements relating to
Cordiant's revenues, profitability and cost reduction programme. Cordiant's
actual performance could differ materially from that anticipated depending on,
among other things, gains to or losses from its client base, the amount of
revenue derived from clients, Cordiant's exposure to changes in the exchange
rates of major currencies against the pound sterling, the general level of
advertising expenditures in Cordiant's markets, the overall level of economic
activity in Cordiant's major markets, employee costs, future interest rates,
changes in tax rates and other factors discussed from time to time in Cordiant's
public filings with the U.S. Securities and Exchange Commission, including
Cordiant's Annual Report on Form 20-F. Many of the factors named above are
macroeconomic in nature and are, therefore, beyond the control of Cordiant's
management. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual performance may vary
materially from those described herein as anticipated, believed, estimated,
expected, intended, planned or projected. Cordiant does not intend, and does not
assume any obligation, to update the forward-looking statements contained in
this document.
PRELIMINARY STATEMENT
2001 REVIEW
2001 was an extremely difficult year. Revenues declined 8.0% on an underlying
basis and operating profit before exceptionals and goodwill fell 40.6%. Good
performances were in the minority as the downturn impacted operations across
different geographies and sectors. The margin halved to 6.0% reflecting the
Group's limited ability to mitigate the impact of declining revenues in the
short term.
Cordiant's response to the downturn was widespread with action taken to
streamline, refocus and strengthen operations, and eliminate loss-makers.
Implementation resulted in an exceptional operating charge of Pounds Sterling
27.6 million which is expected to realise incremental cost savings in excess of
Pounds Sterling 30.0 million in 2002. The cost base for 2002 has been set to
reflect the Group's conservative revenue expectations, restoring the margin
potential of many operations.
Central to the Group's strategy, set out over four years ago, was to extend
beyond advertising into the higher margin, higher growth areas of marketing
services and specialist communications. As primarily an advertising group, new
disciplines were required to build a broadly based communications group. This
strategy has been pursued through both organic development as well as
acquisition. The Group has significantly strengthened its marketing services
capabilities in the United States and created leading networks in business
communications and branding and design. Whilst difficult trading conditions have
slowed progress, one difficult year does not change the fact that the Group has
built some excellent operations that have been integrated to form leading
networks in their respective markets. Cordiant is now able to connect branding
and design to advertising and marketing services, and in turn connect each to
the specialist services of healthcare and business communications.
Allied Domecq, the Group's largest new business win for a number of years, is
testament to this strategy. Firstly, Allied Domecq consolidated its marketing
services account at 141 Worldwide. 141 Worldwide is now present in 56 countries
and has been built principally through organic development. With the
consolidation trend in marketing services still in its infancy, but gaining
momentum, there are few networks in a position to benefit from global account
consolidation. 141 Worldwide is one of them. Secondly, Allied Domecq appointed
Fitch Worldwide for all new product design and innovation. Previously this
opportunity would have gone to a third party. The broader range of disciplines
within the Group will enable it to achieve growth through both existing client
budgets and from being able to sell integrated client solutions where
appropriate to new clients. The integrated model that the Group can now offer
clients - particularly combining Bates and 141 to deliver marketing services
solutions on a global basis - provides an important distinction from many of the
Group's competitors and one that is to be capitalised on, in order to win
further international business.
Steps were also taken in 2001 to create shareholder value from core assets. The
public listing of Scholz & Friends has empowered a strong management team and
provided the agency with a new beginning, new positioning and new opportunities.
Leveraging its highly regarded franchise and status as Germany's No.1 creative
agency, Scholz & Friends has had an excellent start to life as a public company,
and is currently enjoying a strong new business start to the year. The merger of
Zenith Media and Publicis' Optimedia crystallized a minimum valuation with
significant upside potential for the Group. In an industry where size matters,
Cordiant has turned a 50% stake in the world's no.10 into a 25% stake in the
world's no.4 media agency.
The Group has made a number of important management changes in 2002. The
appointment of David Hearn as Chairman and CEO of Bates Worldwide is a major
positive for the Group. David has vast experience of running a global business
and has proven ability in delivering results. With Cordiant's margin reliant on
progress in its core-advertising network, David's experience will prove
invaluable. The new CEO will be supported by three Regional Presidents all
appointed from within, and the CEO of 141 Worldwide. Bill Whitehead and Ian
Smith are the new Regional Presidents for Bates Americas and Bates Asia-Pacific
respectively, whilst Toby Hoare has been appointed Regional President, Bates
Europe.
FINANCIAL REVIEW
Revenue growth, where appropriate, has been disclosed on both a reported and an
underlying basis, meaning at constant exchange rates and after taking the 2000
comparative revenues from acquisitions into account. In the sections that follow
operating profit, operating margin and earnings have been disclosed before
goodwill amortisation, exceptional goodwill impairment charges and exceptional
operating expenses, to highlight the underlying performance of the Group's
operations.
Operating performance
Group revenues increased by 17.9% to Pounds Sterling 605.0 million ($871.2
million). However, revenues decreased by 8.0% on an underlying basis.
Second-half revenue declines had a significant impact on profitability, with
operating profit (before exceptional items and goodwill charges) falling by
40.6% to Pounds Sterling 36.5 million ($52.6 million). The Group achieved an
operating margin of 6.0% down from 12.0% in 2000.
Geographical analysis
United Kingdom
Reported revenues increased by 41.0% to Pounds Sterling 118.6 million ($170.8
million). On an underlying basis revenues decreased by 3.3%. Operating profits
totalled Pounds Sterling 13.7 million ($19.7 million), with operating margins
increasing to 11.5% from 9.4% in 2000, principally due to the margin
contribution from the acquired Specialist Communications operations and improved
profitability in the Group's advertising business.
North America
North American revenues increased by 28.1% to Pounds Sterling 190.3 million
($274.0 million). Revenues declined by 14.5% on an underlying basis. Operating
profits totalled Pounds Sterling 12.3 million ($17.7 million) with operating
margins decreasing to 6.5% from 10.7% in 2000. Significant declines were
experienced in Specialist Communications, especially in project based areas and
in servicing technology related clients in North America. The Group's principal
Advertising and Integrated Marketing businesses showed greater resilience,
experiencing a more modest decline overall.
The recent loss of the Hyundai National media account has resulted in a review
of the Hyundai National creative account. This review is in process and Bates
North America is one of the remaining finalists.
Continental Europe
Revenues in Continental Europe increased by 7.9% to Pounds Sterling 143.6
million ($206.8 million). Revenues declined by 1.9% on an underlying basis.
Operating profits totalled Pounds Sterling 5.8 million ($8.4 million), with
operating margins down to 4.0% from 12.0% in 2000. Underlying revenue growth in
the first six months of 2001 was offset by a rapid deterioration in media
spending across the region in the second half of the year, which had a
significant impact on operating margins.
Asia Pacific and Latin America
Asia Pacific and Latin American revenues increased by 3.5% to Pounds Sterling
152.5 million ($219.6 million). On an underlying basis revenues decreased by
8.2%. Growth in Bates Asia, from multinational clients, particularly in Greater
China, was offset by the difficult trading conditions in Korea and Australia,
with both markets experiencing substantial cutbacks in client spending.
Operating profits totalled Pounds Sterling 4.7 million ($6.8 million), with
operating margins declining to 3.1% from 14.7% in 2000.
Business Segment analysis
Advertising and Integrated Marketing
Advertising and Integrated Marketing revenues increased by 1.5% to Pounds
Sterling 447.9 million ($645.0 million), but declined by 7.3% on an underlying
basis. Operating profits totalled Pounds Sterling 21.3 million ($30.7 million)
with operating margins declining to 4.8% from 10.3% in 2000, as significant
revenue reductions in the second half impacted profitability.
Advertising and Integrated Marketing includes the results of the Group's
advertising networks and 141 Worldwide, its global marketing services network.
Specialist Communications
Specialist Communications revenues increased by 119.7% to Pounds Sterling 157.1
million ($226.2 million). Revenues decreased by 10.2% on an underlying basis.
Operating profits totalled Pounds Sterling 15.2 million ($21.9 million) with
operating margins of 9.7% in 2001, down from 22.5% in 2000. Underlying revenue
declines were most pronounced in the Group's North American Specialist
Communications operations, due to the deferral and cancellation of project based
assignments.
The Group's interactive operation, CCG.XM, incurred an operating loss of Pounds
Sterling 4.0 million ($5.8 million) in 2001. Losses in 2000 amounted to Pounds
Sterling 5.7 million ($8.7 million). CCG.XM has been retrenched and now forms
part of the operations of 141 Worldwide.
Specialist Communications includes the results of the Group's healthcare
marketing, business communications, branding and design and interactive
operations. In future, the results of CCG.XM will be included in Advertising and
Integrated Marketing.
Exceptional operating expenses
During 2001, Cordiant announced a wide ranging programme to reduce the Group's
cost base. Headcount reductions and other cost-related initiatives including the
merger or consolidation of a number of the Group's operating units and the
closure or re-organisation of certain loss-making operations, resulted in a
total exceptional operating charge of Pounds Sterling 27.6 million ($39.7
million) in 2001.
The exceptional operating charge included severance costs of Pounds Sterling
20.9 million ($30.1 million), and Pounds Sterling 6.7 million ($9.6 million)
attributable to property provisions and asset write-downs. As a result of the
action taken in 2001 the Group is targeting further cost savings in excess of
Pounds Sterling 30.0 million ($43.2 million) in 2002.
Operating costs
The number of staff employed by the Group as at 31 December 2001 was 9,099,
compared to 9,518 at the start of the year, showing a net decrease of 4.4% and
9.9% on an underlying basis taking acquisitions into account. During the year,
gross headcount reductions through severance were 1,594, which represented 16.7%
of opening headcount. Revenue per head was Pounds Sterling 64,200 in 2001, a
decrease of 1.2% at constant exchange rates. Total staff cost per head
(excluding severance) was Pounds Sterling 42,100 in 2001, an increase of 3.7% on
the same basis.
The Group's total staff cost to revenue ratio, excluding severance, increased in
2001 to 65.6%, an increase of 3.1% as a percentage of revenue. Fixed staff costs
as a proportion of revenue increased in 2001 to 60.3%, from 54.3% in 2000.
Variable staff costs as a proportion of revenue decreased from 7.9% in 2000, to
5.3% in 2001. These trends reflect the lag between a decline in revenue and
reduced fixed staff costs from headcount reductions and the benefits of
flexibility afforded by the variable element of total staff costs.
Joint ventures and associates
In September 2001, Cordiant and Publicis Groupe SA created the world's
fourth-largest media communications group by the transfer of units of Optimedia
and Zenith Media into the Zenith Optimedia Group, a new UK based holding
company. Cordiant holds 25% and Publicis Groupe SA 75% of the Zenith Optimedia
Group.
The Group's share of operating profits, after goodwill amortisation in 2001 of
Pounds Sterling 0.4 million ($0.6 million), primarily from Zenith and since 28
September 2001, the Zenith Optimedia Group, increased to Pounds Sterling 6.1
million ($8.7 million) from Pounds Sterling 5.6 million ($8.5 million) in 2000.
Financial items, taxation and returns attributable to shareholders
Net finance costs totalled Pounds Sterling 16.9 million ($24.3 million), which
includes the Group's share of joint venture and associated undertakings interest
income and imputed interest charged in accordance with FRS 12.
The tax charge for the year was Pounds Sterling 4.5 million ($6.5 million).
Equity minority interests totalled Pounds Sterling 2.3 million ($3.3 million), a
decrease of 60.3% on last year due principally to weaker trading in Korea.
The 2000 results have been restated to reflect the adoption of FRS 19 "Deferred
Tax". This has led to a prior year adjustment to reserves of Pounds Sterling 4.1
million. Of this amount, Pounds Sterling 2.5 million ($3.8 million) has resulted
in the reduction in the tax charge shown in the 2000 profit and loss account,
with the remaining Pounds Sterling 1.6 million ($2.4 million) recorded in the
year ended 31 December 1999. The balance sheet as at 31 December 2000 has also
been restated to show the creation of a deferred tax asset of Pounds Sterling
4.1 million.
Earnings attributable to Ordinary shareholders before goodwill amortisation,
exceptional goodwill impairment charges and exceptional operating expenses were
Pounds Sterling 14.1 million ($20.3 million). Adjusted diluted headline earnings
per share was 3.6p (ADS 25.9 cents) compared to 11.4p (restated) (ADS 86.6
cents) in 2000. The reported loss, after goodwill amortisation, exceptional
goodwill impairment charges and exceptional operating expenses, attributable to
Ordinary shareholders was Pounds Sterling 277.6 million ($399.7 million).
Cash flow and funding
As at 31 December 2001 the Group had a net debt balance of Pounds Sterling 143.0
million ($208.8 million) and average net debt for the year was Pounds Sterling
171.0 million ($246.2 million). In 2000 average net debt was Pounds Sterling
68.7 million ($104.4 million). The increase in average net debt is principally
due to the deferred consideration paid in respect of Diamond Ad and the
acquisition funding of the Lighthouse transaction, both in September 2000, and
the impact of reduced profitability and exceptional cash operating expenses in
the second half of 2001, offsetting the underlying cash generation of the Group.
Net operating cash outflow for the Group (defined as operating profit
pre-exceptional charges plus depreciation, goodwill amortisation and impairment,
less returns on investment and servicing of finance and taxation paid) totalled
Pounds Sterling 23.8 million ($34.3 million). Capital expenditure and financial
investment totalled Pounds Sterling 24.7 million ($35.6 million). Net cash
outflow from acquisitions and disposals was Pounds Sterling 13.6 million ($19.6
million). Utilisation of property provisions totalled Pounds Sterling 3.3
million ($4.8 million).
In April 2001, the Group issued $175.0 million of Guaranteed Senior Notes
("Notes") via a private placement with institutional lenders. The proceeds of
this issue were used to repay and cancel committed bank facilities of $175.0
million maturing in November 2001, leaving in place committed syndicated bank
facilities of up to $225.0 million with a final maturity date of 8 November
2004.
The Company has now agreed definitive documentation with its banks and the
holders of the Notes amending the terms of the Group's principal financing
arrangements. New financial covenants have been set to reflect the change in
operating performance of the Group following the industry downturn in 2001. As a
result of the requirement to amend the financial covenants, the Group will incur
increased financing costs, further details of which are given in Note 13. The
Group expects to incur incremental financing costs of approximately Pounds
Sterling 5.0-Pounds Sterling 6.0 million per annum as a result of the
renegotiation of the facilities, based on current debt levels. In addition, the
Group is also subject to certain restrictions on its uses of cash flow,
including acquisition payments, dividends and the use of disposal proceeds, and
the holders of the Notes will be entitled to require the Company to repay them
in November 2004 (or the date of any refinancing of the bank facilities if
earlier) with a "make-whole" premium for prepayment, unless the Group meets
certain financial tests at that time.
Goodwill amortisation and impairment
In accordance with FRS10, purchased goodwill arising from acquisitions on and
after 1 January 1998 had previously been capitalised as an intangible fixed
asset and assigned an indefinite useful economic life. In light of developing
best practice, the Directors have taken the opportunity to re-evaluate the
anticipated economic life of the goodwill arising on acquisitions made
subsequent to 1 January 1998 and have revised their opinion that this has an
indefinite life. From 1 January 2001, goodwill is amortised on a straight line
basis over useful economic lives of up to 20 years from the date of acquisition.
The full year goodwill amortisation charge in 2001 was Pounds Sterling 44.1
million ($63.5 million).
In addition to an annual amortisation charge, goodwill is reviewed for
impairment at the end of the first full financial year following acquisition,
and in other periods if events or changes in circumstance indicate that the
carrying value may not be fully recoverable. The impact of the economic slowdown
on the marketing communications sector has resulted in the carrying value of
goodwill capitalised in respect of certain acquisitions being impaired. The
goodwill impairment charge for 2001 was Pounds Sterling 224.8 million ($323.7
million).
Dividend
In view of the Group's requirements to preserve cash resources to support its
operations and the restrictions agreed with the Group's principal lenders, the
Board does not recommend the payment of a dividend in respect of 2001.
Corporate Development
In November 2001 Cordiant completed the merger of Scholz & Friends with United
Visions Entertainment (UVE). UVE specialises in the production of live
entertainment programs for television and the internet. The merged operation,
Scholz & Friends AG, is listed on the Geregelter Markt, the main German
regulated market of the Frankfurt Stock Exchange. Scholz & Friends AG is the
first publicly quoted advertising and marketing communications group in Germany,
the world's third largest communications market. Cordiant owns 77% of Scholz &
Friends AG.
During 2001 the Group made a number of strategic acquisitions to further enhance
its position in key market segments. The acquisitions of Gallagher & Kelly,
Bulletin International and IBI significantly augmented the Group's business
communications capabilities. In July 2001, Cordiant acquired PCI, a leading live
communications agency based in London.
Outlook
Trading conditions are likely to remain difficult in 2002 and the Group is not
budgeting for a return to underlying revenue growth in the current year. Whilst
revenues have declined during the first quarter on a year on year basis, there
are signs that the market is stabilising. The Group's profitability targets for
the first quarter have been met.
Management is focused on delivering a recovery in earnings through stringent
cost control that is targeted to improve operating margins by 50% in 2002, as
the Group benefits from last year's cost reduction initiatives. The Group
remains firmly committed to the medium-term strategy of growing the proportion
of higher margin non-advertising revenues, but is focused in the short-term on
improving the operating performance of the core advertising business, which
remains key to the Group's margin prospects.
CORDIANT COMMUNICATIONS GROUP PLC
CONSOLIDATED PROFIT & LOSS ACCOUNT
Continuing Operations
----------------------------
Acquisi-
tions 2000
Total Restated
2001 2001 2001 (see note 1)
Note Pounds Pounds Pounds Pounds
Sterling m Sterling m Sterling m Sterling m
-------------------------------------------------------------------
Group revenue 2 584.6 20.4 605.0 513.0
Operating expenses before goodwill amortisation, (552.4) (16.1) (568.5) (451.6)
exceptional goodwill impairment charges and exceptional
operating expenses
------------------------------------------------------------
Group operating profit before goodwill amortisation, 32.2 4.3 36.5 61.4
exceptional goodwill impairment charges and exceptional
operating expenses
Goodwill amortisation (38.0) (6.1) (44.1) -
Exceptional goodwill impairment charges (196.6) (28.2) (224.8) -
Exceptional operating expenses 3 (26.9) (0.7) (27.6) -
------------------------------------------------------------
Group operating (loss)/ profit 2 (229.3) (30.7) (260.0) 61.4
------------------------------------------------------------
Share of operating profits:
Joint ventures 4.7 3.4
Associated undertakings 1.4 2.2
-------------------------------
(Loss)/ profit on ordinary activities before interest and
tax (253.9) 67.0
- -------------------------------------------------------------------------------------------------------------------------------
Net interest payable and similar items 4 (16.0) (8.4)
FRS 12 - finance charge (0.9) (1.1)
- -------------------------------------------------------------------------------------------------------------------------------
Net finance costs (16.9) (9.5)
-------------------------------
(Loss)/ profit on ordinary activities before tax (270.8) 57.5
Tax on ordinary activities 5 (4.5) (15.6)
-------------------------------
(Loss)/ profit on ordinary activities after tax (275.3) 41.9
Equity minority interests (2.3) (5.8)
-------------------------------
(Loss)/ profit attributable to Ordinary shareholders (277.6) 36.1
Dividends 6 - (8.4)
-------------------------------
Retained (loss)/ profit for the financial year 15 (277.6) 27.7
===============================
- -------------------------------------------------------------------------------------------------------------------------------
Basic (loss)/ earnings per Ordinary share 7 (71.3)p 12.3p
Diluted (loss)/ earnings per Ordinary share 7 (71.3)p 11.4p
Basic headline (loss)/ earnings per Ordinary share 7 (2.1)p 12.3p
Diluted headline (loss)/ earnings per Ordinary share 7 (2.1)p 11.4p
Adjusted basic headline earnings per Ordinary share 7 3.6p 12.3p
Adjusted diluted headline earnings per Ordinary share 7 3.6p 11.4p
Ordinary dividend per share 6 - 2.1p
- -------------------------------------------------------------------------------------------------------------------------------
CORDIANT COMMUNICATIONS GROUP PLC
CONSOLIDATED PROFIT & LOSS ACCOUNT
Continuing Operations
-----------------------------
Acquisi-
tions 2000
(Figures in US$ millions)* Total Restated
2001 2001 2001 (see note 1)
US$ m US$ m US$ m US$ m
---------------------------------------------------------------
Group revenue 841.8 29.4 871.2 779.7
Operating expenses before goodwill amortisation, exceptional (795.4) (23.2) (818.6) (686.4)
goodwill impairment charges and exceptional operating expenses
---------------------------------------------------------------
Group operating profit before goodwill
amortisation, exceptional goodwill impairment charges and
exceptional operating expenses 46.4 6.2 52.6 93.3
Goodwill amortisation (54.7) (8.8) (63.5) -
Exceptional goodwill impairment charges (283.1) (40.6) (323.7) -
Exceptional operating expenses (38.7) (1.0) (39.7) -
---------------------------------------------------------------
Group operating (loss)/ profit (330.1) (44.2) (374.3) 93.3
---------------------------------------------------------------
Share of operating profits:
Joint ventures 6.7 5.2
Associated undertakings 2.0 3.3
---------------------------------
(Loss)/ profit on ordinary activities before interest and tax (365.6) 101.8
- ---------------------------------------------------------------------------------------------------------------------------------
Net interest payable and similar items (23.0) (12.7)
FRS 12 - finance charge (1.3) (1.7)
- ---------------------------------------------------------------------------------------------------------------------------------
Net finance costs (24.3) (14.4)
---------------------------------
(Loss)/profit on ordinary activities before tax (389.9) 87.4
Tax on ordinary activities (6.5) (23.7)
---------------------------------
(Loss)/profit on ordinary activities after tax (396.4) 63.7
Equity minority interests (3.3) (8.7)
---------------------------------
(Loss)/profit attributable to Ordinary shareholders (399.7) 55.0
Dividends - (12.8)
---------------------------------
Retained (loss)/profit for the financial year (399.7) 42.2
=================================
- --------------------------------------------------------------------------------------------------------------------------------
Basic (loss)/earnings per ADS (513.4) cents 93.5 cents
Diluted (loss)/earnings per ADS (513.4) cents 86.6 cents
Basic headline (loss)/earnings per ADS (15.1) cents 93.5 cents
Diluted headline (loss)/earnings per ADS (15.1) cents 86.6 cents
Adjusted basic headline earnings per ADS 25.9 cents 93.5 cents
Adjusted diluted headline earnings per ADS 25.9 cents 86.6 cents
Ordinary dividend per ADS - 16.0 cents
Average rate of exchange 1.44 1.52
Closing rate of exchange 1.46 1.49
- ---------------------------------------------------------------------------------------------------------------------------------
* The US$ figures are presented for convenience purposes only, according to UK GAAP, and are translated at the average rate
shown above.
** One American Depository Share (ADS) is equivalent to five Ordinary shares.
CORDIANT COMMUNICATIONS GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
2001 2000
Note Pounds Pounds
Sterling m Sterling m
- -----------------------------------------------------------------------------------------------------------------------------
Net cash inflow from operating activities 8 43.4 45.3
Dividends from associated undertakings and joint ventures 5.3 1.6
Returns on investments and servicing of finance 9 (17.2) (11.5)
Taxation 9 (13.4) (11.3)
Capital expenditure and financial investment 9 (24.7) (23.5)
Acquisitions and disposals 9 (13.6) (46.8)
Equity dividends paid (8.1) (5.1)
-------------------------------
Cash outflow before financing (28.3) (51.3)
-------------------------------
Management of liquid resources 9 0.6 5.2
Issues of ordinary share capital 4.1 8.3
External loans drawn less repaid (70.1) 53.4
Guaranteed senior notes due after one year 119.9 -
Other movements (1.7) 0.5
-------------------------------
Net cash inflow from financing 52.8 67.4
-------------------------------
Increase in cash for the year 24.5 16.1
===============================
Reconciliation of net cash flow to movement in net funds:
Increase in cash for the year 24.5 16.1
Cash inflow from debt financing (48.7) (56.3)
Cash inflow from cash deposits (0.6) (5.2)
Loans acquired with subsidiaries (6.8) (66.2)
Translation difference and non-cash movements 0.5 (2.7)
-------------------------------
Movement in net funds in the year (31.1) (114.3)
Net (debt)/ funds at beginning of year 10 (111.9) 2.4
-------------------------------
Net debt at end of year 10 (143.0) (111.9)
===============================
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2000
Restated
2001 (see note 1)
Note Pounds Pounds
Sterling m Sterling m
- -----------------------------------------------------------------------------------------------------------------------------
(Loss)/ profit attributable to Ordinary shareholders (277.6) 36.1
Translation adjustment 3.7 (1.3)
Unrealised gain on disposal of joint venture and subsidiary undertaking 15 44.4 -
- ------------------------------------------------------------------------------------------------------------------------------
Total recognised (losses)/ gains relating to the year (229.5) 34.8
================
Prior year adjustment (as explained in note 1) 4.1
--------------
Total recognised losses since last annual report (225.4)
==============
CORDIANT COMMUNICATIONS GROUP PLC
CONSOLIDATED BALANCE SHEET
2000
Restated
2001 (see note 1)
Note Pounds Pounds
Sterling m Sterling m
- ------------------------------------------------------------------------------------------------------------------------------
Fixed assets
Intangible assets - goodwill 11 478.3 711.8
Tangible assets 60.6 59.6
Investments 17.9 11.8
Investments in joint ventures
- ------------------------------------------------------------------------------------------------------------------------------
Share of gross assets 152.9 -
Goodwill 38.2 -
Share of gross liabilities (164.9) -
- ------------------------------------------------------------------------------------------------------------------------------
26.2 -
-------------------------------
583.0 783.2
Current assets
Work in progress 24.8 33.6
Debtors - due within one year 418.3 456.8
Debtors - due after one year 27.4 25.5
Investments 0.9 2.4
Cash at bank and in hand 123.5 99.8
-------------------------------
594.9 618.1
Creditors - due within one year 13 (556.3) (741.7)
-------------------------------
Net current assets/ (liabilities) 38.6 (123.6)
-------------------------------
Total assets less current liabilities 621.6 659.6
Creditors - due after one year 13 (264.0) (130.7)
Provision for joint venture deficit
- ------------------------------------------------------------------------------------------------------------------------------
Share of gross assets - 130.6
Share of gross liabilities - (142.7)
- ------------------------------------------------------------------------------------------------------------------------------
- (12.1)
Provisions for liabilities and charges 14 (40.5) (40.6)
-------------------------------
Net assets 317.1 476.2
===============================
Capital and reserves
Called up share capital 15 200.4 182.3
Share premium account 15 178.4 137.2
Other reserves 15 214.4 311.5
Profit and loss account 15 (286.4) (163.6)
-------------------------------
Equity shareholders' funds 306.8 467.4
Equity minority interests 10.3 8.8
-------------------------------
Total capital employed 317.1 476.2
===============================
CORDIANT COMMUNICATIONS GROUP PLC
Notes
Accounting policies and presentation
The financial information set out does not constitute the statutory accounts for
Cordiant Communications Group plc for the years ended 31 December 2001 or 2000
but is derived from those accounts. Statutory accounts for 2000 have been
delivered to the registrar of companies, and those for 2001 will be delivered
following Cordiant's annual general meeting. The auditors have reported on those
accounts; their reports were unqualified and did not contain a statement under
Section 237 (2) or (3) of the Companies Act 1985.
The consolidated financial statements comply with applicable accounting
standards (UK GAAP) and have been prepared on the basis of accounting policies
set out on pages 53 to 55 of Cordiant's 2000 Report and Accounts, with the
exception that the Group has adopted the following:
FRS 17 "Retirement Benefits" has been introduced during the year. The
transitional rule contained in the standard has been applied resulting in some
extra disclosures in the notes to the balance sheet. Otherwise, there has been
no material impact on the Group's financial statements.
FRS 18 "Accounting Policies" has been adopted during the year. This has had no
material impact on the Group's financial statements.
FRS 19 "Deferred Tax" has been adopted during the year which has resulted in a
prior year adjustment. The impact in 2000 was to increase profit after tax and
retained profits by Pounds Sterling 2.5 million. Shareholders' funds prior to
2000 have been increased by Pounds Sterling 1.6 million.
Segmental information
Revenue by geographical area
2001 2000 Change Change
Pounds Pounds Reported Underlying
Sterling m Sterling m % %
- -----------------------------------------------------------------------------------------------------------------------
United Kingdom 118.6 84.1 41.0 (3.3)
North America 190.3 148.5 28.1 (14.5)
Continental Europe 143.6 133.1 7.9 (1.9)
Asia Pacific and Latin America 152.5 147.3 3.5 (8.2)
----------------------------------------------------------------------
Total 605.0 513.0 17.9 (8.0)
======================================================================
Margin
Operating profit by geographical area 2001 2000 2001 2000
Pounds Pounds
Sterling m Sterling m % %
- -----------------------------------------------------------------------------------------------------------------------
United Kingdom 13.7 7.9 11.5 9.4
North America 12.3 15.9 6.5 10.7
Continental Europe 5.8 16.0 4.0 12.0
Asia Pacific and Latin America 4.7 21.6 3.1 14.7
----------------------------------------------------------------------
Group operating profit before goodwill 36.5 61.4 6.0 12.0
amortisation, exceptional goodwill impairment
charges and exceptional operating expenses
Goodwill amortisation and exceptional (268.9) -
goodwill impairment charges
Exceptional operating expenses (27.6) -
----------------------------------
Total operating (loss)/ profit (260.0) 61.4
==================================
Revenue by business segment
2001 2000 Change Change
Pounds Pounds Reported Underlying
Sterling m Sterling m % %
- -----------------------------------------------------------------------------------------------------------------------
Advertising and Integrated Marketing 447.9 441.5 1.5 (7.3)
Specialist Communications 157.1 71.5 119.7 (10.2)
----------------------------------------------------------------------
Total 605.0 513.0 17.9 (8.0)
======================================================================
Margin
Operating profit by business segment 2001 2000 2001 2000
Pounds Pounds
Sterling m Sterling m % %
- -----------------------------------------------------------------------------------------------------------------------
Advertising and Integrated Marketing 21.3 45.3 4.8 10.3
Specialist Communications 15.2 16.1 9.7 22.5
----------------------------------------------------------------------
Operating profit before goodwill amortisation, 36.5 61.4 6.0 12.0
exceptional goodwill impairment charges and
exceptional operating expenses
Goodwill amortisation and exceptional (268.9) -
goodwill impairment charges
Exceptional operating expenses (27.6) -
----------------------------------
Total operating (loss)/ profit (260.0) 61.4
==================================
Exceptional operating expenses
2001
Pounds Sterling m
- --------------------------------------------------------------------------
Severance 20.9
Property provisions 2.9
Asset write-downs 3.6
Other 0.2
----------------
Total 27.6
================
The tax effect of the exceptional operating items is an estimated credit of
Pounds Sterling 5.2 million.
Net interest payable and similar items
2001 2000
Pounds Sterling m Pounds Sterling m
- --------------------------------------------------------------------------------
Group 18.3 10.0
Joint ventures (2.2) (1.7)
Associated undertakings (0.1) 0.1
-------------------------------------------
Total 16.0 8.4
===========================================
Taxation
2000
2001 Restated
Pounds Sterling m Pounds Sterling m
- --------------------------------------------------------------------------------
Group 1.0 13.1
Joint ventures 3.0 2.0
Associated undertakings 0.5 0.5
-------------------------------------------
Total 4.5 15.6
===========================================
Dividends
The Board does not recommend the payment of a dividend in respect of 2001. The
dividend for the year ended 31 December 2000 was 2.1p per Ordinary share at a
cost of Pounds Sterling 8.4 million.
Earnings per share
2000
2001 Restated
Pounds Pounds
Sterling m Sterling m
- ------------------------------------------------------------------------------------------------------------------------------
(Losses)/earnings attributable to Ordinary shareholders (277.6) 36.1
Goodwill amortisation and impairment* 269.3 -
----------------------------------
Headline (losses)/earnings** (8.3) 36.1
Exceptional operating items (tax effected) 22.4 -
----------------------------------
Adjusted earnings*** 14.1 36.1
==================================
Shares Shares
m m
- ------------------------------------------------------------------------------------------------------------------------------
Weighted average number of shares 389.2 294.0
Dilutive effect of options and contingent consideration - 24.0
----------------------------------
Diluted weighted average number of shares 389.2 318.0
==================================
Basic earnings per share is calculated using profits attributable to Ordinary
shareholders and weighted average number of shares. Diluted earnings per share
is calculated using profits attributable to Ordinary shareholders and diluted
weighted average number of shares.
Basic headline earnings per share is calculated using headline earnings and
weighted average number of shares. Diluted headline earnings per share is
calculated using headline earnings and diluted weighted average number of
shares.
As there is a basic loss per share, options and contingent consideration have no
dilutive effect.
* Includes Pounds Sterling 0.4 million amortisation of goodwill on the joint
venture.
** The definition of headline earnings is given in the Statement of Investment
Practice No.1 published by the United Kingdom Society of Investment
Professionals. Amongst other items, Headline earnings excludes items
relating to the amortisation and impairment of goodwill capitalised on the
balance sheet, and has been disclosed to assist the reader's understanding
of the Group's underlying performance.
*** Adjusted earnings per share is based on continuing operating profits before
goodwill charges and exceptional operating items and is presented to show a
clearer representation of the underlying results of the business going
forward. Basic adjusted earnings per share is calculated using adjusted
earnings and weighted average number of shares. Diluted adjusted earnings
per share is calculated using adjusted earnings and weighted average number
of shares.
Reconciliation of Group operating (loss)/ profit to net cash inflow from operating activities
2001 2000
Pounds Pounds
Sterling m Sterling m
- ------------------------------------------------------------------------------------------------------------------------------
Group operating (loss)/ profit (260.0) 61.4
Depreciation, amortisation - ongoing 62.0 13.6
Depreciation and impairment - exceptional 228.4 -
Loss on sale of tangible fixed assets 0.9 -
Prepaid property lease (1.1) (8.3)
Decrease in work in progress 10.6 1.4
Decrease/ (increase) in debtors 52.6 (1.8)
Decrease in creditors (46.7) (17.0)
Utilisation of property provisions (3.3) (4.0)
----------------------------------
Net cash inflow from operating activities 43.4 45.3
==================================
Analysis of cash flow items
2001 2000
Pounds Pounds
Sterling m Sterling m
- ------------------------------------------------------------------------------------------------------------------------------
Returns on investments and servicing of finance
Interest received 2.7 3.7
Interest paid (16.8) (10.7)
Interest element of finance lease rental payments (0.1) (0.1)
Bank fees (1.5) (2.3)
Dividends paid to minorities (1.5) (2.1)
----------------------------------
Net cash outflow from returns on investments and servicing of finance (17.2) (11.5)
==================================
Taxation paid
UK corporation tax paid (3.2) (1.3)
Overseas tax paid (10.2) (10.0)
----------------------------------
Net tax paid (13.4) (11.3)
==================================
Capital expenditure and financial investment
Purchase of tangible fixed assets (21.5) (19.6)
Sale of tangible fixed assets 1.5 1.5
Purchase of other fixed asset investments (4.9) (5.6)
Sale of other fixed asset investments 0.2 0.2
----------------------------------
Net cash outflow from capital expenditure and financial investment (24.7) (23.5)
==================================
Acquisitions and disposals
Purchase of subsidiary undertakings (23.0) (70.2)
Purchase of joint venture and associated undertakings (0.7) (1.0)
Sale of joint venture (0.6) -
Net cash acquired with subsidiaries 10.7 24.4
----------------------------------
Net cash outflow from acquisitions and disposals (13.6) (46.8)
==================================
Management of liquid resources
Cash deposits 0.6 5.2
----------------------------------
Net cash outflow from management of liquid resources 0.6 5.2
==================================
Analysis of net debt
Exchange
At 1 and At
January Cash non-cash 31 December
2001 flows Acquisitions* Movements 2001
Pounds Pounds Pounds Pounds Pounds
Sterling m Sterling m Sterling m Sterling m Sterling m
- -----------------------------------------------------------------------------------------------------------------------------
Cash at bank and in hand 99.8 26.0 - (2.3) 123.5
Bank overdrafts (9.0) (1.5) - 0.1 (10.4)
-------------------------------------------------------------------------------
90.8 24.5 - (2.2) 113.1
-------------------------------------------------------------------------------
External debt due within one year (127.3) 114.4 (6.8) 0.8 (18.9)
External debt due after one year (73.0) (164.2) - 1.9 (235.3)
Finance leases (3.7) 1.1 - 0.1 (2.5)
-------------------------------------------------------------------------------
(204.0) (48.7) (6.8) 2.8 (256.7)
-------------------------------------------------------------------------------
Cash deposits - current asset investments 1.3 (0.6) - (0.1) 0.6
-------------------------------------------------------------------------------
Net debt (111.9) (24.8) (6.8) 0.5 (143.0)
===============================================================================
* Excluding cash and overdrafts.
Intangible assets - goodwill
2001 2000
Pounds Pounds
Sterling m Sterling m
- -----------------------------------------------------------------------------
Cost
At beginning of year 711.8 79.2
Additions 27.3 625.7
Translation adjustment 4.3 6.9
----------------------------------
At end of year 743.4 711.8
==================================
Amortisation
At beginning of year - -
Amortisation (44.1) -
Impairment (224.8) -
Translation adjustment 3.8 -
----------------------------------
At end of year (265.1) -
==================================
Net book value
At beginning of year 711.8 79.2
----------------------------------
At end of year 478.3 711.8
==================================
The Pounds Sterling 31.6 million increase in cost during the year ended 31
December 2001 (including translation adjustments) consists of Pounds Sterling
80.3 million relating to acquisitions in the year less Pounds Sterling 48.7
million relating to movements in contingent consideration, other accruals and
translation differences.
The effects of the acquisition of subsidiaries in 2001.
During the year the Group acquired the following subsidiaries.
Date of
Acquisition
- -------------------------------------------------------------------------
Microarts Corporation Inc. 5 January 2001
Gallagher & Kelly Public Relations Limited 3 April 2001
Bulletin International Limited 3 May 2001
International Business Information Inc. 16 July 2001
Presentation Communications International Limited 26 July 2001
It is not considered that these are individually material acquisitions to the
Group and therefore, in accordance with the prescribed accounting standards,
they have been aggregated in the tables below.
The table below summarises the aggregate of subsidiaries acquired by the Group
during 2001:
Pounds
Sterling m
----------
Goodwill capitalised 80.3
Tangible fixed assets 3.4
Work in progress 1.6
Debtors 14.3
Current investments 0.1
-----------
99.7
===========
Pounds
Sterling m
-----------
Loans and finance leases 6.8
Creditors 20.8
Cost of acquisitions:
Acquisition costs less cash acquired (2.0)
Ordinary shares issued 62.5
Contingent earnout accruals 11.6
-----------
99.7
===========
The following table sets out the book values of the identifiable assets and
liabilities of all acquisitions made in 2001 and their value to the Group:
Book and
Fair value
To Group
Pounds
Sterling m
-----------
Fixed assets 3.4
Current assets 27.2
-----------
Total assets 30.6
-----------
Creditors (28.1)
-----------
Net assets 2.5
-----------
Goodwill 80.3
-----------
82.8
===========
Satisfied by:
Shares issued 62.5
Acquisition costs and cash consideration 8.7
Contingent earnout accruals 11.6
-----------
Total consideration 82.8
===========
No provisional material fair value adjustments were made to the book value of
the identifiable assets and liabilities acquired.
The contingent earnout accruals are based on management's forecasts of the
earnings of various underlying units.
2001
Net cash inflows in respect of the acquisitions comprised: Pounds
Sterling m
------------
Acquisition costs and cash consideration 8.7
Cash at bank and in hand (11.2)
Bank overdrafts acquired 0.5
------------
Total (2.0)
============
Creditors
Due within one year Due after one year
2001 2000 2001 2000
Pounds Pounds Pounds Pounds
Sterling m Sterling m Sterling m Sterling m
- ------------------------------------------------------------------------------------------------------------------------------
Bank loans, overdrafts and senior notes 29.3 136.3 235.3 73.0
Trade creditors 325.4 342.2 - -
Taxation and social security 39.2 39.7 18.8 26.2
Other creditors 27.0 41.3 6.2 10.9
Accruals and deferred income 135.4 182.2 3.7 20.6
---------------------------------------------------------------------
Total 556.3 741.7 264.0 130.7
=====================================================================
In April 2002, the Group completed the re-negotiation of certain terms of its
syndicated revolving credit facility and Guaranteed Senior Notes. The coupon
payable on the Guaranteed Senior Notes was increased to 9.25% per annum from
7.61%. Interest payable on each advance under the syndicated credit facility is
now LIBOR plus a margin of 3.25% per annum. Certain other deferred fees are
payable depending on financial performance. The syndicated bank facilities and
notes are secured by guarantees from certain subsidiaries, a general debenture
over assets in the United Kingdom and pledges of shares of certain subsidiaries.
In addition, the Group is also subject to certain restrictions on its use of
cash flow, including acquisition payments, dividends and the use of disposal
proceeds. The holders of the Guaranteed Senior Notes will be entitled to require
the Company to pre-pay the notes in November 2004 (or upon any refinancing of
the Group's syndicated bank facilities if earlier) with a 'make-whole' penalty,
unless the Group meets certain financial tests at that time.
Provisions for liabilities and charges
These include property provisions of Pounds Sterling 20.0m (2000: Pounds
Sterling 19.6m).
Movement in shareholders' funds
Profit
& Loss
Share Share Other Account Total
Capital Premium Reserves Restated Restated
- -------------------------------------------------------------------------------------------------------------------------------
Pounds Pounds Pounds Pounds Pounds
Sterling m Sterling m Sterling m Sterling m Sterling m
- -------------------------------------------------------------------------------------------------------------------------------
At beginning of the year 182.3 137.2 311.5 (167.7) 463.3
Prior year adjustment - deferred tax - - - 4.1 4.1
---------------------------------------------------------------
At beginning of the year - restated 182.3 137.2 311.5 (163.6) 467.4
Consideration for acquisitions in the year 13.6 33.4 15.5 - 62.5
Adjustments to contingent consideration 1.8 1.7 (1.0) - 2.5
Exercising of employee share schemes 2.7 6.1 (0.2) (4.5) 4.1
Release of reserves against investment and loan provisions - - (155.4) 155.4 -
Loss retained for the year - - - (277.6) (277.6)
Gain on sale of joint venture and subsidiary undertaking - - - 44.4 - 44.4
unrealised
Realisation of gain on sale of joint venture and subsidiary - - (0.4) 0.4 -
undertaking
Translation adjustment - - - 3.7 3.7
Other movements - - - (0.2) (0.2)
---------------------------------------------------------------
At end of the year 200.4 178.4 214.4 (286.4) 306.8
===============================================================
Other reserves at 31 December 2001 comprise merger reserve Pounds Sterling 29.8
million (2000: Pounds Sterling 250.7 million), shares to be issued Pounds
Sterling 13.1 million (2000: Pounds Sterling 35.1 million), special reserve
Pounds Sterling 25.7 million (2000: Pounds Sterling 25.7 million), warrant
reserve Pounds Sterling 20.8 million (2000: Pounds Sterling nil), an unrealised
gain on the sale of joint venture and subsidiary undertaking of Pounds Sterling
44.0 million (2000: Pounds Sterling nil) and other reserves of Pounds Sterling
81.0 million (2000: Pounds Sterling nil).
The total movement in the merger reserve of Pounds Sterling 220.9 million arose
following the acquisition, by issue of the Company's shares, of the Group's 100%
interest in Bulletin International Limited, Gallagher & Kelly Public Relations
Limited and Presentation Communications International Limited which increased
the merger reserve by Pounds Sterling 15.5 million, the transfer of Pounds
Sterling 5.4 million to the profit and loss reserve following the provision made
against investments from prior years and also the redesignation of Pounds
Sterling 231.0 million of the merger reserve to other reserves following Group
restructuring.
As at 31 December 2001 the cumulative goodwill written off on acquisitions prior
to 1 January 1998 amounted to Pounds Sterling 115.5 million (2000: Pounds
Sterling 118.7 million). Of this movement, Pounds Sterling 3.4 million
represented the recycling of goodwill included in the unrealised gain on the
disposal of the subsidiary undertaking.
- --------------------------------------------------------------------------------
Cordiant Communications Group plc is registered in England and Wales (Number
1320869) and its registered office is: 121 - 141 Westbourne Terrace, London, W2
6JR.