Statutory results /
Reconciliation of underlying operating profit to statutory operating profit /
| £m | 2011 | 2010 | Change % |
Constant currency % |
|---|---|---|---|---|
| Underlying operating profit | 197.4 | 151.1 | 30.6 | 29.4 |
| Less: | ||||
| Amortisation of purchased intangible assets | (34.7) | (21.3) | ||
| Disposals of subsidiaries & associates | (10.8) | (13.6) | ||
| Acquisition costs | (3.3) | (4.5) | ||
| Exceptional debtor impairment | – | (37.0) | ||
| UK property move costs | (2.8) | (8.8) | ||
| Total adjustments | (51.6) | (85.2) | ||
| Statutory operating profit | 145.8 | 65.9 | 121.2 | 118.9 |
Reconciling items between underlying and statutory operating profit include the amortisation of purchased intangible assets and the impact of disposals of subsidiaries and associates. The amortisation charge increased to £34.7m in the year, reflecting the impact of additional purchased intangibles recognised in respect of the acquisitions made in 2011. The Group recorded a £10.8m loss on disposal and deemed disposal of stakes in operations in the UK and France.
As expected, the UK office re-location resulted in one-off accounting charges of £2.8m in 2011, following a £8.8m charge taken in 2010. This combined charge of £11.6m was well within our initially anticipated range of £10m to £15m, as announced at our 2010 Half Year Results in August 2010. The main element of the 2011 charge relates to double rent. The charges taken in 2010 and 2011 will be broadly cash neutral over the next two years, before the positive impact of long term efficiency savings relating to the re-location.
The £3.3m of acquisition costs taken in 2011 relates to transactions made during the year, but excludes costs relating to the sale of Synovate.
In February 2011, we announced that a former Spanish client and certain affiliated companies had filed for pre-insolvency protection under section 5.3 of Spanish Insolvency Law. As these companies had outstanding liabilities owing to an Aegis subsidiary in Spain, we said at the time that it was likely that a provision would be made against our net exposure. A provision is held against our exposure, of which £25.9m was taken in the 2010 accounts as a post-tax exceptional charge. No further charge was taken in 2011.
Operating profit /
Statutory operating profit was up 121.2% to £145.8m (2010: £65.9m).
Reconciliation of underlying profit before tax to statutory profit before tax /
| £m | 2011 | 2010 | Change % |
Constant currency % |
|---|---|---|---|---|
| Underlying profit before tax | 161.8 | 122.3 | 32.3 | 30.7 |
| Less: | ||||
| Adjustments to operating profit | (51.6) | (85.2) | ||
| Fair value adjustments | (1.8) | (3.1) | ||
| Disposal of JV and associate | – | 1.5 | ||
| Amortisation of purchased intangible assets within associates |
(2.0) | (2.0) | ||
| Total adjustments | (55.4) | (88.8) | ||
| Statutory profit before tax | 106.4 | 33.5 | 217.6 | 211.7 |
Profit before tax /
Statutory profit before tax is stated after the adjustments made in arriving at statutory operating profit and certain other items recorded within net financial items. These other items include fair value adjustments relating to derivatives and movements in put option liabilities, an IAS 39 impairment charge relating to assets classified as available for sale and the amortisation of purchased intangibles in an associate in China (Charm).
Statutory profit before tax was up 217.6% at £106.4m (2010: £33.5m). Our statutory tax charge was £25.3m (2010: £13.5m), equivalent to a tax rate of 23.8% (2010: 40.3%). Basic and diluted earnings per share were 6.5p (2010: 1.6p).
Discontinued operations /
Included in the Total Group profit for the year of £165.3m was a profit of £84.2m from discontinued operations:
| £m | 2011 | 2010 |
|---|---|---|
| (Loss) / profit for the period from discontinued operations | (4.0) | 23.0 |
| Gain on disposal of discontinued operations after tax | 88.2 | – |
| Total profit from discontinued operations for the financial year | 84.2 | 23.0 |
As disclosed in note 10 to the consolidated financial statements, the financial performance of Synovate after tax for the nine months to the disposal date was a loss of £(4.0)m on a statutory basis. The group also recorded an exceptional gain on the disposal of Synovate of £88.2m after receiving consideration based on an enterprise value of £525m.
On an underlying basis, after adjusting for the amortisation of purchased intangibles, Synovate reported operating profit of £3.3m and a profit before tax of £2.8m.
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