Cordiant Communications Group Plc; Acquisition of Healthworld Corporation.LONDON--(BUSINESS WIRE)--November 9, 1999-- Cordiant Communications Group Cordiant Communications Group was an advertising agency conglomerate in business from 1995 to 2003. In 2001 Cordiant was the eighth largest advertising group worldwide, with an estimated gross income of US$1.2 billion and billings of around US$13.4 billion. plc ('CCG') (London Stock Exchange London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. : CRI CRI constant-rate infusion. ) (NYSE NYSE See: New York Stock Exchange :CDA (1) (Compact Disc Audio) The compact disc file extension that is seen on the computer in Explorer or some other file manager. CDA files are actually pointers to the locations of the individual tracks on the CD medium. See CD-DA. ), a global marketing communications Marketing communications (or marcom) are messages and related media used to communicate with a market. Those who practice advertising, branding, direct marketing, graphic design, marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales group, and Healthworld Corporation ('Healthworld') (Nasdaq:HWLD), an international marketing communications and contract sales marketing organisation specialising in the healthcare sector, today announce a definitive agreement under which CCG CCG Chicago CCG Collectible Card Game CCG Canadian Coast Guard CCG Country Commercial Guide CCG Children's Cancer Group CCG Commission Canadienne des Grains (Canadian Grain Commission) will acquire Healthworld in a tax-free exchange tax-free exchange An exchange of assets between taxpayers in which any gain or loss is not recognized in the period during which the exchange takes place. Rather, taxpayers are required to adjust the basis of assets exchanged. for CCG shares. -0-
-- 6.602 CCG shares will be offered for each Healthworld share
(subject to adjustment)
-- values Healthworld at Pounds Sterling 113 million (US Dollar
185 million) or US Dollar 22.86 per Healthworld Share
-- opportunity to become the market leader in the high growth
healthcare marketing sector
-- enhances CCG's multinational client base
-- significantly increases CCG's business in the important North
American market
CCG has obtained irrevocable Unable to cancel or recall; that which is unalterable or irreversible. IRREVOCABLE. That which cannot be revoked. 2. A will may at all times be revoked by the same person who made it, he having a disposing mind; but the moment the testator is commitments from all of Healthworld's directors and executive officers to vote in favour Favor or favour (see spelling differences) may be
Commenting on today's announcement, Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Bungey, Chief Executive of CCG said, "We already work for some of the world's leading healthcare companies through Bates Bates , Katherine Lee 1859-1929. American educator and writer best known for her poem "America the Beautiful," written in 1893 and revised in 1904 and 1911. Worldwide. Joining up with the Healthworld team gives us an outstanding opportunity to become the leading global healthcare marketing business. This acquisition is in line with our aim of accelerating growth through focused acquisitions and also accelerates progress towards achieving our strategic objectives." Steven Ste´ven n. 1. Voice; speech; language. Ye have as merry a steven As any angel hath that is in heaven. - Chaucer. 2. An outcry; a loud call; a clamor. To set steven to make an appointment. Girgenti Girgenti: see Agrigento, Italy. , Chairman and Chief Executive of Healthworld added, "The combination of our expertise and track record in professional and consumer channels with CCG's multinational multinational Of, relating to, or being a company with subsidiaries or other operations in a number of countries. The diversity of operations of such companies subjects them to unique risks (for example, exchange rate changes or government nationalization) pharmaceutical experience and global reach has enormous potential." This summary should be read in conjunction conjunction, in astronomy conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the full text of the following announcement. -0-
CORDIANT COMMUNICATIONS GROUP PLC - ACQUISITION OF
HEALTHWORLD CORPORATION
LONDON AND NEW YORK - 9 NOVEMBER 1999
1. INTRODUCTION
Cordiant Communications Group plc ('CCG') (London Stock Exchange:
CRI; New York Stock Exchange: CDA), a global marketing communications
group, and Healthworld Corporation ('Healthworld') (Nasdaq:HWLD), an
international marketing communications and contract sales marketing
organisation specialising in the healthcare sector, today announce a
definitive agreement under which CCG will acquire Healthworld in a
tax-free exchange for CCG shares.
Under the terms of the Merger Agreement, each share of
Healthworld common stock will be exchanged for a certain number of CCG
shares, based on an Exchange Ratio as set out in section 5 below. If
the Exchange Ratio were to be based on the closing price per CCG Share
on the London Stock Exchange of 211.5p on 8 November 1999 and a US
Dollars/Pounds Sterling exchange rate of 1.6375, each share of
Healthworld common stock would be exchanged for 6.602 New CCG Shares,
valuing each share of Healthworld common stock at approximately
Dollars 22.86 and the whole of the outstanding share capital of
Healthworld at approximately Dollars 185.4 million (Pounds 113.2
million). This represents a premium of approximately 30.6% over the
closing price of Healthworld Shares on NASDAQ on 8 November 1999.
The Transaction is subject to approval by shareholders of both
companies and satisfaction of certain other customary conditions and
is expected to be completed in the first quarter of 2000. CCG has
obtained irrevocable commitments to vote in favour of the Transaction
from certain Healthworld directors and executive officers in respect
of 5,093,977 Healthworld Shares, representing 62.8% of the outstanding
Healthworld share capital. The boards of directors of both Healthworld
and CCG will be unanimously recommending shareholders of their
respective companies to vote in favour of the Transaction.
2. ABOUT HEALTHWORLD
Healthworld is an international marketing communications and
contract sales marketing organisation specialising in the healthcare
sector. Healthworld provides multinational pharmaceutical and
healthcare companies with a comprehensive range of integrated
marketing services including advertising and promotion, contract
sales, consulting, medical education, public relations, marketing
research, publishing, interactive multimedia and database marketing
services. Healthworld offers its clients expertise through its
operations in the United States, France, Spain and the United Kingdom,
and through Healthworld BV, a worldwide network of affiliated
marketing and communications companies. Healthworld has affiliates
and/or marketing relationships in Canada, Colombia, Denmark, Finland,
Germany, Holland, Hungary, Italy, Japan, Norway, and Sweden. Since its
initial public offering in 1997, Healthworld has demonstrated strong
growth, such that it is now the third largest specialist healthcare
marketing agency worldwide according to Med Ad News.
Healthworld designs marketing programmes targeted at physicians,
nurses and other healthcare professionals that accelerate the
acceptance of new products and sustain their growth through the
product life cycle. Medical education programmes are undertaken to
create awareness and generate interest in new treatments among the
healthcare community prior to regulatory approval. Advertising and
promotion campaigns, along with continuing medical education, seek to
maximise product utilisation by healthcare professionals once the
treatment has come to market.
Healthworld is one of the industry leaders in the development of
direct-to-consumer ('DTC') advertising campaigns for prescription
drugs. These advertisements are designed to stimulate patients to
request particular branded drugs from physicians. Healthworld, which
established its contract sales operation in the US in 1998, also
provides contract sales forces to pharmaceutical companies and
consumer products clients.
Healthworld is based at 100 Avenue of the Americas, New York, New
York 10013, USA.
3. ABOUT CCG
CCG is a global marketing communications group. The Group
comprises Bates Worldwide, one of the largest advertising and
integrated communications networks in the world; Scholz & Friends, the
largest multinational advertising network headquartered in Germany; a
50% shareholding in Zenith Media Worldwide, a global specialist media
services and planning agency; HP:ICM, event, conference and exhibition
management; and a 30% shareholding in The Facilities Group, a
print-production agency.
CCG has continued to perform well during 1999, with net new
billings in the first 10 months of US Dollar 350 million. The company
remains committed to its financial objectives for 1999, including its
objective to achieve a 10% operating margin. The Company continues to
evaluate other acquisition opportunities.
CCG's principal corporate offices are located at 121-141
Westbourne Terrace, London W2 6JR, United Kingdom.
4. REASONS FOR THE TRANSACTION
The Transaction provides CCG with the following benefits:
-- an opportunity to build the leading global healthcare
marketing network
-- acceleration in meeting CCG's strategic objectives
-- increased participation in the high growth healthcare
marketing sector
-- greater exposure to marketing services
-- further opportunities to grow revenues from multinational
clients
-- a larger revenue base in the North American market; and
-- earnings enhancement in the first full year of ownership
Opportunity to become the leading global healthcare marketing
network
CCG currently operates healthcare marketing agencies in the
United States, the United Kingdom, Italy and Australia under the
Healthcom brand. Healthcom focuses on marketing products to healthcare
professionals. CCG also services some of the world's largest
healthcare companies through Bates Worldwide, its global advertising
network. Bates Worldwide provides expertise in DTC advertising for
prescription drugs in the United States and marketing over-the-counter
products to consumers internationally. During the year ended 31
December 1998, CCG generated revenues relating to healthcare marketing
of Pounds Sterling 19 million.
CCG will align its existing healthcare operations under
Healthworld in a new division of Bates Worldwide. Steve Girgenti,
Chairman and CEO of Healthworld, and the other senior members of the
Healthworld management team will continue to manage the Healthworld
business. Following the transaction, Healthworld's senior management
will be significant shareholders in CCG and have agreed to retain
their shares for certain minimum periods.
The Transaction will enable the Enlarged Group to:
-- combine Healthworld's expertise in professional and consumer
channels with CCG's multinational pharmaceutical experience
-- offer a wider range of services to clients of the Enlarged
Group
-- utilise CCG's global network to enhance Healthworld's
geographic presence
-- provide Healthworld with the resources to expand its
specialist healthcare network
CCG intends to leverage its enlarged base of healthcare clients
by creating a global healthcare marketing network. CCG currently
operates in over 70 countries and will utilise this global platform
and office infrastructure to develop Healthworld internationally.
Acceleration in meeting CCG's strategic objectives
CCG has set itself three strategic objectives designed to
position its business for profitable growth. By the end of 2000, it
aims to have grown:
-- diversified marketing services to 30% of total revenues
-- multinational clients to 40% of total revenues; and
-- North American revenues to 30% of its business.
The acquisition of Healthworld is expected to accelerate the
achievement of these objectives.
Increased participation in the high growth healthcare marketing
sector
The Transaction will increase CCG's exposure to the specialist
market for healthcare marketing and promotional services, the growth
rate of which has outstripped the advertising market as a whole over
the last three years. This growth is being driven by three principal
factors; the growth in new products coming to market, increased drug
usage and the increasing focus of pharmaceutical companies to maximise
return on investment.
Greater exposure to marketing services
The acquisition of Healthworld will increase CCG's business in
marketing services in both the healthcare sector and in consumer
product markets. Marketing services are growing at a faster rate than
traditional major media advertising, driven by clients' needs to
target specific market segments, to measure returns more effectively
and to obtain an integrated marketing solution.
Healthworld's wholly owned subsidiary, Headcount, is the fifth
largest field marketing company in the United Kingdom, providing major
consumer product clients with strategic and tactical field marketing,
merchandising, in-store training, audits and database management. 141
Worldwide, CCG's marketing service network, has been built over the
last three years into a global business with offices in over 40
countries, representing 22% of CCG's total revenues in the year ended
31 December 1998. The combination of Headcount's expertise in consumer
field marketing with 141 Worldwide's direct marketing and promotion
capabilities will allow CCG to offer an enhanced range of marketing
services to clients.
Further opportunities to grow revenues from multi-national
clients
The Transaction will enhance CCG's multinational client base, and
provide opportunities to offer a wider range of services to clients of
the Enlarged Group. Healthcare marketing is becoming an increasingly
global business as pharmaceutical companies seek to maximise returns
on research by marketing on a worldwide basis. CCG intends to create a
global healthcare marketing network to exploit this trend.
Larger revenue base in the North American market
CCG is currently under-represented in the important North
American market, which represented 24% of CCG's revenues during the
year ended 31 December 1998, compared to a total industry weighting of
39%. The Transaction will significantly increase CCG's business in
North America. Healthworld generated revenues in North America of US
Dollar 28 million during the 12 months ended 30 September 1999.
Earnings enhancement
The acquisition of Healthworld is expected to be earnings
enhancing in the first full year of ownership by CCG.
CCG expects to achieve annual pre-tax cost savings of at least
Pounds Sterling 1.5 million by combining the Healthworld and existing
CCG healthcare agency operations and by eliminating costs associated
with operating Healthworld as a public company.
5. TERMS OF THE TRANSACTION
The number of New CCG ADSs or New CCG Shares issued in exchange
for each Healthworld Share will be calculated using a US Dollar
reference share price (the 'Reference Price') equal to the average
value of the closing middle market quotation for a CCG Share, derived
from the London Stock Exchange Official List, over the 10 consecutive
dealing days ending on the third dealing day prior to the date of the
Healthworld Stockholders meeting to approve the Transaction multiplied
by the average US Dollars/Pounds Sterling rate of exchange during the
same period.
The Exchange Ratio will be determined as set out in the table below.
CCG Reference CCG Share Price Exchange Ratio for Exchange Ratio for
Price (in pence for New CCG Shares New CCG ADS's
(US Dollars) illustrative
purposes
only(1))
______________________________________________________________________
Less than Less than USD 17 divided by USD 17 divided by
USD 2.5054 153.00p the CCG Reference 5x the CCG
Share Price Reference Share
Price
______________________________________________________________________
Greater than Greater than 6.7854 New CCG 1.3571 new CCG
or equal to or equal to Shares for each ADSs for each
USD 2.5054 153.00p Healthworld Share Healthworld Share
but less than but less than
USD 2.9475 180.00p
______________________________________________________________________
Greater than Greater than USD 20 divided by USD 20 divided by
or equal to or equal to the CCG Reference 5x the CCG
USD 2.9475 180.00p Share Price Reference Share
Price
but less than but less than
or equal to or equal to
USD 3.0294 185.00p
______________________________________________________________________
Greater than Greater than 6.602 New CCG 1.3204 new CCG
USD 3.0294 185.00p Shares for each ADSs for each
Healthworld Share Healthworld Share
but less than but less than
or equal to or equal to
USD 3.4838 212.75p
______________________________________________________________________
Greater than Greater than USD 23 divided by USD 23 divided by
USD 3.4838 212.75p the CCG Reference 5x the CCG
Share Price Reference Share
Price
______________________________________________________________________
(1) A US Dollars/Pounds Sterling exchange rate of 1.6375 has been
used in the table above for illustrative purposes only. The Reference
Share Price levels are defined in the Merger Agreement in US Dollars,
and the Sterling equivalents are therefore subject to change.
If the Reference Price is equal to or less than US Dollars
2.2106, CCG will have the option to terminate the Merger Agreement
unless the Board of Directors of Healthworld elects to fix the
Exchange Ratio at 7.6902 CCG Shares for each Healthworld Share.
Unless otherwise specified, all calculations of entitlements to
New CCG Shares and percentages of the enlarged issued capital of CCG
contained in this announcement are based on the assumption that no
further CCG or Healthworld Shares will be issued on exercise of
options or otherwise prior to the Effective Time, that the Reference
Price for CCG Shares is US Dollars 3.4633 (211.5p) and that the
exchange rate of US Dollars/Pounds Sterling is 1.6375. Based on these
assumptions, on completion of the Transaction Healthworld Stockholders
will receive New CCG ADSs (or, at their election, New CCG Shares) on
the basis of the following Exchange Ratio:
for each Healthworld Share 1.3204 New CCG ADSs
or
for each Healthworld Share 6.6020 New CCG Shares
No fractional New CCG Shares or ADSs will be issued in connection
with the Transaction. Healthworld Stockholders who would otherwise
have been entitled to receive a fraction of a New CCG Share or ADS
will receive, in lieu of such fraction, cash, without interest, in an
amount based on the average closing price of a CCG Share as recorded
by the Official List of the London Stock Exchange over a specified
period.
The Transaction will result in the issue of approximately 53.5
million New CCG Shares representing approximately 19.1% of the issued
share capital of CCG as enlarged by the Transaction excluding any
shares issued pursuant to share option plans (subject to adjustment
based upon the applicable Exchange Ratio at the Effective Time).
The New CCG Shares and ADSs to be issued as consideration to
Healthworld Stockholders are intended to be issued free of all taxes
and will rank pari passu in all respects with the CCG Shares in issue
at the Effective Time.
6. HEALTHWORLD STOCK OPTIONS, LOCK-UPS AND DEFERRED SHARE
CONSIDERATION
Under the terms of the Merger Agreement, following the
Transaction Healthworld stock options will be replaced by immediately
exercisable equivalent options over CCG Shares. These will represent
options over up to approximately 10.1 million CCG shares in aggregate.
Taking into account the issue of these shares, Healthworld
stockholders will own approximately 21.9% of the issued share capital
of CCG, as enlarged by the Transaction.
Healthworld's directors and executive officers will own in
aggregate approximately 13.0% of the issued share capital of CCG as
enlarged by the Transaction, taking into account shares which may be
issued as a result of exercising stock options. These individuals have
entered into lock up arrangements under which the aggregate holdings
that they will be entitled to sell will be 22% of these holdings on
closing, a further 16% after six months, 30% after one year and 32%
after two years.
Healthworld has a contingent obligation to issue additional
Healthworld Shares to satisfy deferred consideration of up to US
Dollar 20.0 million in aggregate in connection with its acquisition of
Falk Communications, Inc. earlier this year ("Falk"). This will be
payable by reference to the results of Falk for each of the years
ending 31 December 1999 to 2003, and will be satisfied by a mixture of
CCG shares and cash.
7. NEW COMMITTED BANK FACILITIES
CCG is pleased to announce that it is refinancing and increasing
its core banking facilities, on terms which are reflective of the
improvement in its credit standing in the two years since demerger.
Accordingly, CCG will shortly give notice of cancellation of its
existing core facilities and it has entered into an agreement for a
new facility which has been arranged and underwritten by HSBC
Investment Bank PLC and The Bank of New York. The facility is for up
to US Dollar 250 million, comprising a US Dollar 125 million five year
revolving credit tranche and a US Dollar 125 million 364 day revolving
credit with one year term loan option. The initial margin under both
tranches is 1.0% over LIBOR. The facility is unsecured.
8. SHAREHOLDER DOCUMENTS, MEETINGS AND LISTINGS
In view of the time required by US SEC registration procedures,
definitive documents are not expected to be posted to shareholders
until early 2000, followed by meetings of shareholders of both
companies and completion of the Transaction in the first quarter of
2000. Application will be made for the New CCG Shares to be admitted
to the Official List of the London Stock Exchange and for the New CCG
ADSs to be admitted to listing on the New York Stock Exchange. Details
on settlement, listing and dealings will be included in the documents
posted to shareholders.
Warburg Dillon Read is the investment banking division of UBS AG,
regulated in the UK by the Securities and Futures Authority Limited.
Warburg Dillon Read LLC, a subsidiary of UBS AG, is a US-registered
broker dealer. Warburg Dillon Read, is acting for CCG and no one else
in connection with the Merger and will not be responsible to anyone
other than CCG for providing the protections afforded to customers of
Warburg Dillon Read nor for providing advice in relation to the
Merger. This announcement has been approved by Warburg Dillon Read
solely for the purposes of Section 57 of the United Kingdom Financial
Services Act 1986.
This announcement does not constitute an offer or invitation to
purchase any securities. The offering of New CCG Shares will be made
only by means of a Prospectus / Proxy Statement which is anticipated
to be distributed to Healthworld Stockholders in early 2000. The
documents to be reviewed by the US Securities and Exchange Commission
and the London Stock Exchange, will include, among other things, pro
forma combined financial information.
The financial information contained in this announcement does not
constitute statutory accounts of CCG as defined in section 240 of the
UK companies Act 1985. Statutory Accounts for the financial years
ended 31 December 1997 and 1998 have been lodged with the Registrar of
Companies. KPMG Audit plc, CCG's auditors have made a report under
Section 235 of the Companies Act 1985 on such statutory accounts for
each such yea r, which reports were unqualified and did not contain a
statement under Section 237(2) or (3) of the Companies Act 1985.
Statutory accounts of CCG for the financial year ending 31 December
1999 will be lodged with the Registrar of Companies in due course.
This press release, including its Appendices, contains
forward-looking statements concerning future matters, such as the
features and functions of, and markets for, products and services
offered by CCG and Healthworld, and CCG's business plans and
strategies. These forward-looking statements also include statements
concerning the advantages of the proposed Transaction; the products
and services to be offered by the combined company; the benefits of
the Transaction with regard to leveraging the client bases of the
respective companies; and other statements regarding matters that are
not historical. Forward-looking statements are subject to risks and
uncertainties, and actual results might differ materially from the
results discussed in the forward-looking statements. For example,
there can be no assurance that any of the expected advantages of the
Transaction will be realised. Factors that could cause or contribute
to differences in results include risks associated with integration of
the operations of CCG and Healthworld; the effect on the combined
company of the failure to realise the anticipated benefits of the
Merger; general conditions in the businesses of the companies;
competitive factors in the industry; and the risk factors discussed in
CCG's Form 20-F for the year ended 31 December 1998, and in
Healthworld's Form 10-K for the year ended 31 December 1998, each of
which have been filed with the US Securities and Exchange Commission.
Appendix I
FINANCIAL INFORMATION ON CCG
Consolidated and pro forma
Profit & loss accounts
Six months ended
30 June Year ended 31 December
1999 1998 1997
Group Group Pro forma
Pounds Pounds Pounds
Sterling m Sterling m Sterling m
(unaudited) (audited) (unaudited)
(restated) (restated)
Turnover
Group and share of
joint ventures 966.5 1,847.4 1,793.3
Less: Share of joint
ventures (201.4) (281.8) (190.0)
Group turnover 765.1 1,565.6 1,603.3
Cost of sales (606.5) (1,263.8) (1,295.7)
Revenue
Group and share of
joint ventures 168.6 316.0 319.1
Less: Share of joint
ventures (10.0) (14.2) (11.5)
Group Revenue 158.6 301.8 307.6
Net operating expenses (147.9) (275.8) (285.8)
Operating profit
Trading profit 10.7 26.0 24.0
Exceptional operating
expenses - - (2.2)
10.7 26.0 21.8
Share of operating profits
Joint ventures 1.4 1.4 1.5
Associated undertakings 0.8 1.2 0.4
Profit on ordinary
activities before interest
and taxation 12.9 28.6 23.7
Net interest payable
and similar items (1.2) (2.7) (0.7)
FRS 12 - finance charge (0.6) (1.2) (1.4)
Profit on ordinary activities
before taxation 11.1 24.7 21.6
Tax on ordinary activities (3.9) (9.2) (10.2)
Profit on ordinary activities
after taxation 7.2 15.5 11.4
Equity minority interests (0.8) (1.7) (1.8)
Profit attributable to
Ordinary shareholders 6.4 13.8 9.6
Dividends - cash - (3.1)
Retained profit 6.4 10.7
Basic earnings per
Ordinary share 2.8p 6.2p 4.3p
Diluted earnings per
Ordinary share 2.7p 6.2p 4.3p
Headline earnings per
Ordinary share 2.7p 6.3p 5.3p
Dividend per Ordinary share - 1.4p -
Consolidated cashflow statement
Six months Year ended 31
ended 30 June December
1999 1998
Pounds Pounds
Sterling m Sterling m
(unaudited) (audited)
Net cash inflow from
operating activities 0.8 19.8
Net cash outflow arising
from external demerger costs - (8.2)
Dividends from associated
undertakings 0.6 0.2
Dividends from joint ventures 1.3 -
Returns on investment and
servicing of finance (2.8) (4.9)
Taxation paid (2.1) (8.3)
Capital expenditure and
financial investment (7.0) (7.4)
Acquisitions and disposals (6.9) (7.4)
Equity dividends paid - (2.7)
Cash outflow before financing (16.1) (18.9)
Issue of ordinary share
capital 1.1 0.5
Capital subscibed by minorities - -
External loans drawn less repaid 3.4 8.6
Other movements - (0.2)
Net cash inflow from financing 4.5 8.9
Decrease in cash and overdrafts
for the year (11.6) (10.0)
Reconciliation of net cash
flow to movement in net funds:
Decrease in cash and overdrafts
for the year (11.6) (10.0)
Cash inflow from debt (3.3) (8.4)
Loans in companies
acquired/disposed - 0.6
Translation difference and
non-cash movements 1.6 (2.3)
Movement in net funds
in the year (13.3) (20.1)
Net funds at beginning of year 4.6 24.7
Net funds at end of year (8.7) 4.6
Consolidated balance sheet
30 June 31 December
1999 1998
Group Group
Pounds Sterling m Pounds Sterling m
(unaudited) (audited)
(restated)
Fixed assets
Goodwill 20.3 16.2
Tangible assets 26.1 22.7
Investments 9.1 4.0
55.5 42.9
Current assets
Work in progress 17.5 15.4
Debtors - due within one year 241.9 246.3
Debtors - due after one year 22.8 18.3
Investments 0.8 1.5
Cash at bank and in hand 64.8 62.3
347.8 343.8
Creditors amounts falling
due within one year (323.7) (313.7)
Net current assets 24.1 30.1
Total assets less
current liabilities 79.6 73.0
Creditors amounts falling
due after more than one year (72.8) (73.8)
Provision for joint
venture deficit
Share of gross assets 76.3 83.6
Share of gross liabilities (90.9) (98.3)
(14.6) (14.7)
Provisions for liabilities
and charges (45.9) (45.8)
Net liabilities (53.7) (61.3)
Capital and reserves
Called up share capital 113.3 112.7
Share premium account 2.8 2.3
Shares to be issued 1.3 1.3
Special reserve 25.7 25.7
Profit and loss account (200.2) (205.9)
Equity shareholders' deficit (57.1) (63.9)
Equity minority interests 3.4 2.6
Total capital employed (53.7) (61.3)
US GAAP reconciliation
Year ended
31 December
1998
Effects on net earnings of Pounds
differences between US and UK GAAP Sterling m
Profit for the period in conformity with
UK GAAP - restated 13.8
UK GAAP restatement - FRS 12 - Discounted
property provisions 1.2
Profit for the period in conformity with
UK GAAP 15.0
US GAAP adjustments:
Amortization of goodwill and other intangibles (6.3)
Compensation costs (1.7)
Change in long-term property provisions (2.2)
Net profit applicable to Ordinary shareholders
in conformity with US GAAP 4.8
Net profit per Ordinary Share - basic 2.2p
Average number of Ordinary Shares (in millions) 222.4
Net profit per Ordinary Share - diluted 2.2p
Average number of Ordinary Shares - diluted
(in millions) 223.3
Period to date average dollar exchange rate
of Pound Sterling 1:US Dollar 1.62.
31 December
Cumulative effect on shareholders' 1998
funds (deficit) of differences Pounds
between US and UK GAAP Sterling m
Equity shareholders' deficiency in
conformity with UK GAAP - restated (63.9)
UK GAAP restatement - FRS 12 - Discounted
property provisions (7.6)
Equity shareholders' deficiency in
conformity with UK GAAP (71.5)
US GAAP adjustments:
Dividends 3.1
Goodwill and US purchase accounting in respect
of acquisitions 64.0
Discount on property provisions 7.6
Contingent capital payments 7.4
Equity shareholders' funds (deficiency) in
conformity with US GAAP 10.6
Period end dollar exchange rate of Pounds
Sterling 1:US Dollar 1.58.
Appendix II
FINANCIAL INFORMATION ON HEALTHWORLD UNDER US GAAP
Consolidated statements of income Year ended Year ended
December 31 December 31
1998 1997
US Dollar m US Dollar m
Revenues 63.7 35.3
Operating expenses:
Salaries and related costs (47.3) (24.2)
General and office expenses (8.5) (5.4)
Depreciation and amortization (1.1) (0.9)
Income from operations 6.8 4.8
Net interest (expense) income 0.6 0.1
Profit before taxation 7.4 4.9
Taxation (3.0) (0.7)
Profit after taxation 4.4 4.2
Minority interests - (0.2)
Net Income 4.4 4.0
- Basic net earnings per
Ordinary Share $0.60 $0.80
- Diluted net earnings per
Ordinary Share $0.58 $0.79
Consolidated statements of cashflow
Year ended Year ended
December 31 December 31
1998 1997
US Dollar m US Dollar m
Cash flows from operating
activities:
Net income 4.4 4.0
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 1.1 0.8
Deferred rent 0.1 0.1
Deferred income 0.2 (0.7)
Transition loss - -
Minority interests in net
earnings of subsidiaries - 0.2
Changes in operating assets and
liabilities, net of effects from
acquisitions of businesses:
Accounts receivable (2.0) (2.5)
Unbilled production charges (1.4) -
Other current assets (0.1) (0.4)
Other assets 0.3 0.1
Accounts payable 0.5 (0.6)
Advance billings 0.9 0.2
Accrued expenses 0.5 4.1
Net cash provided by operating
activities 4.5 5.3
Cash flows from investing activities:
Capital expenditures, net (1.0) (1.1)
Proceeds from the sale of
fixed assets 0.1 0.1
Businesses acquired, net of
cash received (12.3) -
Restricted cash, net (1.5) -
Net cash (used in) investing
activities (14.7) (1.0)
Cash flows from financing
activities:
Net proceeds from initial
public offering - 16.4
Payment of majority stockholder
dividends - (0.1)
Net proceeds from (repayment of)
line of credit (0.6) (0.4)
Distributions to stockholders - (4.2)
Proceeds from bank loans - 0.3
Issuance of bank loans and
long-term debt - -
Repayment of bank loans and
long-term debt (0.7) (0.3)
Capital lease repayments (0.1) (0.1)
Net cash (used in) provided by
financing activities (1.4) 11.6
Net increase (decrease) in cash
and cash equivalents (11.6) 15.9
Cash and cash equivalents
at beginning of year 18.1 2.2
Cash and cash equivalents at
end of year 6.5 18.1
Supplemental disclosure of
cash flow information:
Cash paid for:
Taxes 2.4 0.9
Interest 0.1 0.1
Supplemental schedule of non cash
investing activities:
Issuance of stock for acquisition of
minority interests - 2.3
Consolidated balance sheet
December 31
1998
US Dollar m
ASSETS
Current assets:
Cash and short-term deposits 6.5
Accounts and other receivables,
prepayments and accrued income 20.3
Billable production 3.2
----
Total current assets 30.0
Restricted cash 1.9
Property and equipment, net 4.4
Goodwill, net 14.3
Other assets 0.3
====
Total assets 50.9
====
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank loans, overdrafts and other loans 0.1
Accounts payable 4.2
Accrued expenses 8.2
Advanced billings 8.0
----
Total current liabilities 20.5
----
Long-term liabilities:
Long-term debt 0.1
Capitalised lease obligations 0.1
Minority interests 0.1
Deferred rent 0.9
Other liabilities --
----
Total long-term liabilities 1.2
----
Total liabilities 21.7
----
Shareholders' equity:
Stockholders' Equity
Allotted, called up and fully paid:
Common stock, $.01 par
value; 20,000,000 shares
authorized; and 7,415,000
shares outstanding 0.1
Additional paid-in capital 22.8
Retained earnings 6.3
----
Total stockholders' equity 29.2
====
Total liabilities and
stockholders' equity 50.9
====
APPENDIX III
HEALTHWORLD 3rd quarter results
(in thousands, except per share data)
Summary Statements of Operations
(unaudited)
Three Months ended Nine Months ended
30 September 30 September
1998 1999 1998 1999
Revenues $16,919 $21,748 $45,784 $54,815
------- ------- ------- -------
Operating expenses:
Salaries and related costs 12,282 15,482 34,747 39,973
General and office expenses 2,389 5,702 7,398
Depreciation and amortization 469 769 1,247
------- ------- ------- -------
14,408 18,340 41,218 48,618
------- ------- ------- -------
Income from operations 1,800 3,408 4,566 6,197
Interest income 326 175 551 452
------- ------- ------- -------
Income before provision for
income taxes and minority
interests 2,659 3,583 5,117 6,649
Provision for income taxes 1,133 1,526 2,156 2,875
Minority interests in net
earnings of subsidiaries 32 15 32 18
------- ------- ------- -------
Net income $ 1,494 $ 2,042 $ 2,929 $ 3,756
======= ======= ======= =======
Basic net income per
common share $ 0.20 $ 0.26 $ 0.40 $ 0.50
======= ======= ======= =======
Diluted net income per
common share $ 0.20 $ 0.26 $ 0.39 $ 0.49
======= ======= ======= =======
Shares used in basic
net income per share 7,415 7,851 7,415 7,568
Shares used in diluted
net income per share 7,589 7,992 7,607 7,729
(1) Certain amounts have been reclassified to conform to the current
year presentation.
(unaudited)
Segment Data
1. Revenues
Communications $ 8,230 $11,449 $20,788 $28,617
Contract Sales 8,689 10,299 24,996 26,198
2. Income From Operations
Communications $ 2,417 $ 2,691 $ 3,839 $ 4,945
Contract Sales 94 717 727 1,252
Balance Sheet
(unaudited)
At 31 December At 30 September
1998 1999
Assets
Cash and cash equivalents $ 6,472 $ 6,851
Accounts receivable, net 18,889 30,298
Other current assets 4,652 4,164
------- -------
Total current assets 30,013 41,313
Property and equipment, net 4,443 5,146
Goodwill, net 14,266 30,407
Other assets 2,149 2,673
======= =======
Total assets $50,871 $79,539
======= =======
Liabilities and stockholders' equity
Current liabilities $20,479 $37,009
Long-term obligations 1,191 1,309
Stockholders' equity 29,201 41,221
======= =======
Total liabilities and
stockholders' equity $50,871 $79,539
======= =======
Appendix IV
DEFINITIONS
CCG or Company Cordiant Communications Group plc
CCG ADS an American Depositary Share of CCG,
representing 5 CCG Shares
CCG Group or Group CCG and its subsidiary undertakings
CCG Shares ordinary shares of 50 pence each in the
capital of CCG
CCG Shareholders holders of CCG Shares
DTC advertising direct-to-consumer advertising
Effective Time the time the Transaction is completed
by the merger of Healthworld Acquisition
Corp into Healthworld becoming effective
pursuant to the Merger Agreement
Enlarged Group the CCG Group as enlarged by the Transaction
Exchange Ratio the number of New CCG ADSs (or, at
their election, New CCG Shares) to which
Healthworld Stockholders will be entitled
for each Healthworld Share held by them at
the Effective Time, determined as described
in section 5 of this announcement
Healthworld Healthworld Corporation and its subsidiary
undertakings
Healthworld Shares shares of common stock, par value US Dollar
0.01 per share, in Healthworld
Healthworld Stockholders holders of Healthworld Shares
Healthworld Stock Options options outstanding at the Effective Time
under Healthworld's 1997 Stock Option Plan
London Stock Exchange London Stock Exchange Limited
Merger Agreement the Agreement and Plan of Merger dated as of
9 November, 1999 between CCG, Healthworld
Acquisition Corp. (a wholly owned subsidiary
of CCG) and Healthworld which contains the
terms and conditions of the Transaction
New CCG ADSs new CCG ADSs proposed to be issued to
Healthworld Stockholders pursuant to the
Merger Agreement
New CCG Shares new CCG Shares credited as fully
paid, to be issued at the election of
Healthworld Stockholders in respect of their
entitlements under the Merger Agreement
NYSE or New York Stock The New York Stock Exchange, Inc.
Exchange
Official List the Official List of the London Stock
Exchange
Reference Price a share price in US Dollars equal to the
average value of the closing middle market
quotations for a CCG Share, derived from the
London Stock Exchange Official List, over
the 10 consecutive dealing days ending on
the third dealing day prior to the date of
the Healthworld Stockholders meeting to
approve the Transaction, converted into US
Dollars at the average of the US
Dollars/Pounds Sterling rate of exchange
during the same period
Securities Act the US Securities Act of 1933, as amended
Transaction the proposed acquisition of Healthworld by
CCG pursuant to the Merger Agreement; as
described in this announcement
US GAAP generally accepted accounting principles in
the United States
US SEC the United States Securities & Exchange
Commission
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