Ipsos: First-half 2016
(Thomson Reuters ONE) -
First-half 2016
Ipsos on the move
***
Revenue: ?833.6 million
Organic growth +3.3%
New Services +24%
Increased generation of cash flows and net profit
Paris, 26 July 2016 - In the first half of 2016, Ipsos' revenue amounted to
?833.6 million, almost stable compared with the first half of 2015. Exchange
rate effects were negative, at 4.5% over the half-year, slightly more than
offset by scope effects at 1.3% (attributed to the integration of RDA in Detroit
on 1 July 2015) and in particular by organic growth of 3.3%.
Results for the second quarter alone (3% of organic growth) confirm the
observation made at the end of the preceding quarter: in 2016, Ipsos is seeing
organic growth in its revenue that is significant, both in terms of its size and
duration, satisfactory in terms of content ("New Services" represent 2/3 of
total growth) and healthy, since it has been accompanied also by an improvement
in more strictly financial indicators such as generation of free cash flows.
Performance by region and business line
+------------------------+----------+----------+----------------+--------------+
|Consolidated revenues |1(st) half|1(st) half| | |
|by geographical area | 2016 | 2015 |Change 2016/2015|Organic growth|
|(in millions of euros) | | | | |
+------------------------+----------+----------+----------------+--------------+
|Europe, Middle East and | 360.0 | 369.7 | -2.6% | 1.5% |
|Africa | | | | |
+------------------------+----------+----------+----------------+--------------+
|Americas | 330.4 | 326.2 | 1.3% | 3% |
+------------------------+----------+----------+----------------+--------------+
|Asia-Pacific | 143.1 | 137.0 | 4.5% | 8% |
+------------------------+----------+----------+----------------+--------------+
|First-half Revenues | 833.6 | 832.9 | 0.1% | 3.3% |
+------------------------+----------+----------+----------------+--------------+
In 2016, all geographic regions are experiencing growth. Performance in the
regions has been satisfactory (EMEA), good (Americas), and even excellent (Asia-
Pacific). This is also the case by market type: the most developed markets have
grown by 2.8% at constant scope and exchange rates, buoyed by the United States,
Japan and Australia, among others.
This also applies to emerging markets, which, in 2015, due to the effects of
downturns in certain crisis-hit markets, particularly Russia, Brazil and the
Middle East, impacted Ipsos' results. However, in the first half of 2016, the
emerging markets have grown by 4.4% on average, seeing better growth than in the
developed markets, as expected, and much better than the previous year, as was
hoped.
+------------------------+----------+----------+----------------+--------------+
|Consolidated revenues by|1(st) half|1(st) half| | |
|business line | 2016 | 2015 |Change 2016/2015|Organic growth|
|(in millions of euros) | | | | |
+------------------------+----------+----------+----------------+--------------+
|Media and Advertising | 182.7 | 193.3 | -5.5% | -1% |
|Research | | | | |
+------------------------+----------+----------+----------------+--------------+
|Marketing Research | 447.8 | 446.5 | 0.3% | 4% |
+------------------------+----------+----------+----------------+--------------+
|Opinion & Social | 85.8 | 86.6 | -0.8% | 4% |
|Research | | | | |
+------------------------+----------+----------+----------------+--------------+
|Client and employee | 117.2 | 106.5 | 10.0% | 7% |
|relationship management | | | | |
+------------------------+----------+----------+----------------+--------------+
|First-half Revenues | 833.6 | 832.9 | 0.1% | 3.3% |
+------------------------+----------+----------+----------------+--------------+
Similarly, all business lines have improved their performance compared with the
previous period. Those that grew in 2015, have seen their growth improve further
in 2016. This is the case for marketing research, from +0.5% to +4%, opinion
research, from +2% to +4%, and services dedicated to Customer Relationship
Management (from +0.5% to +7%: a record half-year improvement for a business
line since 2011!). Ipsos Connect, which manages since 2015 in a single
organisation advertising content and digital and traditional media channels
related research, had a difficult start its first year of existence, with a
6.5% fall in business at constant scope and exchange rates. 2016 will be a year
of stabilisation. In the first half of 2016, its business is almost stable with
organic growth of -1%, the low point of the expected change.
Financial performance
Summarized income statement
+-------------------------------+----------+----------+------------------------+
| |1(st) half|1(st) half| Change |
|In millions of euros | 2016 | 2015 | 1(st) half 2016 / |
| | | | 1(st) half 2015 |
+-------------------------------+----------+----------+------------------------+
|Revenue | 833.6 | 832.9 | 0.1% |
+-------------------------------+----------+----------+------------------------+
|Gross profit | 545.0 | 536.4 | 1.6% |
+-------------------------------+----------+----------+------------------------+
|Gross margin | 65.4% | 64.4% | - |
+-------------------------------+----------+----------+------------------------+
|Operating profit | 53.8 | 46.8 | 14.9% |
+-------------------------------+----------+----------+------------------------+
|Operating margin | 6.5% | 5.6% | - |
+-------------------------------+----------+----------+------------------------+
|Total of exceptional, non- | 8.7 | (11.2) | - |
|recurring items | | | |
+-------------------------------+----------+----------+------------------------+
|Finance charge | (10.2) | (12.1) | - |
+-------------------------------+----------+----------+------------------------+
|Tax | (12.4) | (4.5) | - |
+-------------------------------+----------+----------+------------------------+
|Adjusted net profit* | 33.0 | 30.5 | 8.2% |
|(attributable to the Group) | | | |
+-------------------------------+----------+----------+------------------------+
*Adjusted net profit is calculated before non-cash items linked to IFRS 2
(share-based payments), amortisation of acquisition-related intangible assets
(client relationships), deferred tax liabilities related to goodwill on which
amortisation is tax-deductible in certain countries and the impact net of tax
of other non-recurring income and expenses.
Gross profit, which is calculated by deducting external direct variable costs
attributable to contracts from revenues, grew by 1.6%. This continued growth
(65.4%, versus 64.4% in the first half of 2015) is due to both the
digitalisation of data collection and growth in New Services, where gross
margins are often higher. It is also the sign of the ability to maintain prices
in all countries.
As regards operating costs, payroll expenses are up 1.0% and decreased slightly
as a percentage of revenue and gross profit.
The cost of variable share-based compensation went from ?5.9 million to ?5.0
million. As expected, since the programme reached its peak in 2014, it no longer
has an effect on the change in operating margin.
Overhead costs are under control and fell 2.4%.
In the second half of the year, some additional expenses are expected to appear
in operating costs in relation to the "New Way" programme, for which Ipsos
earmarked ?10 million in additional current investments in 2016, of which ?4.4
million was spent in the first half of 2016 (45% for payroll expenses and 55%
for overheads).
Other operating income and expenses consist mainly of the impact of exchange
rate transactions on operating account items, which were a negative ?0.2 million
over the half-year period, whereas they were a positive ?1.3 million in the
first half of 2015.
In total, the Group's operating margin was ?53.8 million euros, or 6.5% of
revenue, for an increase of
80 basis points over the same period last year, thanks to the re-establishment
of strong organic growth for revenue and good gross profit.
Below the operating margin, the amortisation of intangibles identified on
acquisitions concern the portion of goodwill allocated to client relationships
during the 12-month period following an acquisition, recognised in the income
statement over several years, in accordance with IFRS. This charge came to
?2.5 million, compared with ?2.6 million the previous year.
The balance of other non-operating, non-recurring income and expense was +?8.7
million, compared with a net expense of ?11.2 million in the previous year. It
comprises unusual items not related to operations, and includes acquisition
costs, as well as the costs of the restructuring plans.
It includes in particular, in the first half of 2016, a net gain of ?15.4
million in relation to the repayment from Aegis in February 2016 bringing an end
to all claims and legal proceedings regarding the dispute arising from the
acquisition of Synovate in 2011. In addition, a total of ?6 million in
restructuring and streamlining expenses were recognised, some of which are
related to the "New Way" programme.
Finance costs. The net cost of interest amounted to ?10.2 million, compared with
?12.1 million, down 15.4%, due to the drop in Group net debt and to a fall in
its credit conditions.
Taxes. The effective tax rate on the IFRS income statement was 25.6%, compared
with 25.2% for the previous year. As in the past, it includes a deferred tax
liability of ?2.2 million (compared with a deferred tax liability of ?2.4
million in the first half of 2015), cancelling out the tax saving achieved
through the tax deductibility of goodwill amortisation in certain countries,
even though this deferred tax charge would fall due only if the activities
concerned were sold, and which is restated accordingly in adjusted net profit.
Net profit attributable to the Group, totalled ?35.2 million, an increase of
173.5% from the first half of 2015.
Adjusted net profit attributable to the Group, which is the relevant indicator
used to measure performance, came to ?33.0 million, up 8.2% compared with the
first half of 2015.
Financial structure
Net free cash flow. Cash flow generated by operations, net of current
investments, rose 3.3% to
?55.5 million, against ?53.7 million in the first half of 2015. This was due to
careful management of the change in working capital requirement, at a new record
level since the Ipsos IPO some 17 years ago on
1 July 1999.
In detail:
- Operating cash flow stood at ?62.4 million, against ?55.4 million, up 12.6% in
line with the rise in operating profit;
- The working capital requirement improved by ?26.2 million;
- Current investments in property, plant and equipment and intangible assets,
primarily consisting of IT investments, are ?7.7 million, versus ?12.2 million
in the first half of 2015.
Concerning non-current net investments, Ipsos invested ?36 million over the half
year in acquisitions, primarily through the buyback of non-controlling interests
in a US company and in certain emerging countries (including Russia and
Indonesia).
Ipsos also invested ?6.2 million in a share buyback programme in order to limit
the dilution effects of its bonus share allocation plans.
Finally, the repayment from Aegis of £20 million (?26.2 million) in February
2016 was classified as a decrease in non-current investments in the cash flow
table.
Shareholders' equity totalled ?932 million as at 30 June 2016, compared with
?945 million published as at 31 December 2015, after deduction of the ?34
million in dividends paid on 5 July 2016.
Net financial debt totalled ?503 million at 30 June 2016, compared with ?552
million at 31 December 2015, thanks to the strong operating cash flows mentioned
above.
The net gearing was 53.9%, compared with 59.8% at 31 December 2015.
Liquidity position. Net cash at the end of the half-year period was ?126.7
million, compared with
?151.6 million at 31 December 2015, giving Ipsos a good liquidity position. The
Company also has over ?300 million available through credit facilities.
OUTLOOK FOR 2016
China seems to be able to manage its progress on the difficult path from one
economic model to another. It will be in India where FoxCOM will build its next
eight factories and provide another million low-skilled jobs. China will be
developing a 150-200-seat plane that will be a real competitor to single-aisle
Boeing and Airbus aircraft.
Brazil is still facing a difficult situation but the Olympic Games will be
happening as planned next month in Rio, with the Russian flag present among many
others. It is hoped that they will be a success, and will prove that a great
country, like a great team, is always very resilient.
The "United" Kingdom will leave the European Union, but will be more European
than ever. Late night negotiations in Brussels will once again be on the agenda.
These constitute three of the main markets where Ipsos deploys significant
resources, generates a large volume of business and grows with its clients
thanks to New Services that are more immersive, more analytical, more connected,
new relationships that are closer, more useful and easier to promote.
These three markets are symbols of a paradoxical time that presents immense
challenges and extraordinary opportunities. There is no way to assert that all
will go well, everywhere, all the time. There is however no reason for us to
describe a world only in black terms, even if it has rarely been so anxiety-
provoking, uncertain, dispersed even divided by emotions often understandable
but sometimes dangerous. This is the paradox of a civilisation where information
which is not always right and relevant is nevertheless, immediate, shared and
omnipresent.
In summary, invention, diffusion, activation and fragmentation are the key
themes of the times and they justify the maintain of marketing spending at a
high level. Those who manage these budgets know that they will be efficient only
if they understand the market well, know consumers and clients well, understand
socially responsible approaches and their increasing influence on consumer
behaviour, to better assess and anticipate how existing or new competition is
behaving, as well as the likely consequences.
The research industry, in all its dimensions, is supported by the need to
measure well, to better understand, and even to better anticipate what our
reasoning, our experience, our emotions or our networks are going to make us do
(or not). This industry, of which Ipsos is a proud member, has many assets. It
is essential to its clients - businesses both large and small, institutions and
organisations of all types - that operate and are willing to build their
successes in those markets that are open, connected, volatile and competitive.
Thanks to its knowledge, its skills, its resources, including and above all
thanks to its teams in 87 countries and 250 cities, Ipsos brings to its clients:
its multiculturalism, its experience of working closely with its clients, its
capacity to develop new services and make them accessible, created from a strong
command of today's technology and sciences.
Moreover, Ipsos holds firm to its status - and its reality - as a business that
is independent and neutral. At a time when everything becomes more fluid,
competitive, and demanding, being a global business that is specialised and
independent is it's a source of pride and its competitive edge.
Ipsos' outlook must be seen in the context of a complex "macro" environment in
which companies operate won't deteriorate more. If this is the case, 2016 will
be a good year, the best since 2011 for Ipsos. It will be marked by several
achievements in terms of market gains, an upswing from New Services,
strengthening the teams and a good cash flow generation. Lastly, the operating
margin will be stable, at the same level as in 2015, after an additional ?10
million in operating costs for the "New Way" programme and a more aggressive
variable compensation scheme.
Appendix
* Consolidated income statement
* Statement of financial position
* Consolidated cash flow statement
A full set of consolidated financial statements
is available at www.ipsos.com
The 2016 performance and results presentation
will be available from 27 July on the www.ipsos.com
About Ipsos
Ipsos is an independent market research company controlled and managed by
research professionals, with offices in 87 countries. Founded in France in
1975, Ipsos ranks third in the global research industry. Ipsos has been listed
on the Paris Stock Exchange since 1999.
GAME CHANGERS
« Game Changers » is the Ipsos signature.
At Ipsos we are passionately curious about people, markets, brands and society.
We make our changing world easier and faster to navigate and inspire clients to
make smarter decisions.
We deliver with security, simplicity, speed and substance.
We are Game Changers.
Ipsos is listed on Eurolist - NYSE-Euronext.
The company is part of the SBF 120 and the Mid-60 index
and is eligible for the Deferred Settlement Service (SRD).
ISIN code FR0000073298, Reuters ISOS.PA, Bloomberg IPS:FP
www.ipsos.com
Consolidated income statement
First-half to 30 June 2016
-------------------------------------------------------------------------------
In thousand euros 30 June 2016 30 June 2015 31 December 2015
-------------------------------------------------------------------------------
Revenue 833,599 832,925 1,785,275
Direct costs (288,589) (296,570) (635,538)
-------------------------------------------------------------------------------
Gross profit 545,010 536,355 1,149,736
-------------------------------------------------------------------------------
Payroll - excluding share-based (372,135) (368,313) (733,656)
payments
Payroll - share-based payments* (5,039) (5,888) (10,812)
General operating expenses (113,873) (116,626) (227,999)
Other operating income and expenses ( 180) 1,281 946
-------------------------------------------------------------------------------
Operating margin 53,784 46,809 178,215
-------------------------------------------------------------------------------
Amortisation of intangibles (2,451) (2,572) (5,097)
identified on acquisitions*
Other non-operating income and 8,742 (11,203) (17,302)
expense* ((1))
Income from associates (48) (89) (95)
-------------------------------------------------------------------------------
Operating profit 60,026 32,945 155,721
-------------------------------------------------------------------------------
Finance costs (10,217) (12,078) (23,849)
Other financial income and expense* (1,188) (2,987) (2,131)
-------------------------------------------------------------------------------
Profit before tax 48,621 17,879 129,741
-------------------------------------------------------------------------------
Income tax - excluding deferred tax (10,286) (2,061) (29,353)
on goodwill
Income tax - deferred tax on (2,162) (2,444) (4,465)
goodwill *
-------------------------------------------------------------------------------
Income tax (12,447) (4,505) (33,818)
-------------------------------------------------------------------------------
Net profit 36,174 13,374 95,924
-------------------------------------------------------------------------------
Attributable to the Group 35 179 12,864 92,993
Attributable to Minority interests 995 510 2,930
-------------------------------------------------------------------------------
Earnings per share (in euros) - 0.78 0.28 2.05
Basic
Earnings per share (in euros) - 0.77 0.28 2.03
Diluted
-------------------------------------------------------------------------------
+----------------------------------------------------------------------------+
| Adjusted net profit* 34,260 31,340 129,792 |
| |
| Attributable to the Group 33,047 30,540 126,548 |
| |
| Attributable to Minority interests 1,213 800 3,244 |
| |
| Adjusted earnings per share (in euros) - Basic 0.73 0.67 2.80 |
| |
| Adjusted earnings per share (in euros) - Diluted 0.72 0.66 2.76 |
+----------------------------------------------------------------------------+
*Adjusted net profit is calculated before non-cash items linked to IFRS 2
(share-based payments), amortisation of acquisition-related intangible assets
(client relationships), deferred tax liabilities related to goodwill on which
amortisation is tax-deductible in certain countries and the impact net of tax of
other non-recurring income and expenses and the non-monetary impact of changes
in puts in other financial income and expense.
1. The other non-current income and expense line includes as of June 2016 the
positive net impact of Aegis refund amounting to 15 390 thousands of euros
and which is described in the note 4.3 to the consolidated financial
statements.
Consolidated balance sheet
First-half to 30 June 2016
------------------------------------------------------------------------------
In thousands of euros 30 June 2016 30 June 2015 31 December 2015
------------------------------------------------------------------------------
ASSETS
Goodwill 1,241,637 1,268,089 1,264,920
Other intangible assets 74,455 86,585 80,469
Property, plant and equipment 34,225 34,068 37,209
Investments in associates 206 268 262
Other non-current financial 16,938 19,950 17,305
assets
Deferred tax assets 13,884 37,477 14,983
------------------------------------------------------------------------------
Total non-current assets 1,381,345 1,446,437 1,415,149
------------------------------------------------------------------------------
Trade receivables 552,754 563,767 627,282
Current income tax 21,442 21,661 12,237
Other current assets 88,286 95,362 72,596
Derivative financial instruments 6,804 4,442 4,589
Cash and cash equivalents 126,686 169,932 151,576
------------------------------------------------------------------------------
Total current assets 795,972 855,163 868,280
------------------------------------------------------------------------------
TOTAL ASSETS 2,177,318 2,301,600 2,283,430
------------------------------------------------------------------------------
------------------------------------------------------------------------------
In thousands of euros 30 June 2016 30 June 2015 31 December 2015
------------------------------------------------------------------------------
LIABILITIES
Share capital 11,334 11,334 11,334
Share premium 540,201 540,201 540,201
Own shares ( 808) (1,241) (1,220)
Currency translation differences ( 56,785) (322) (48,110)
Other reserves 417,092 344,829 423,190
------------------------------------------------------------------------------
Shareholders' equity - 911,034 894,802 925,395
attributable to the Group
------------------------------------------------------------------------------
Minority interests 20,569 19,593 19,889
------------------------------------------------------------------------------
Total shareholders' equity 931,603 914,395 945,284
------------------------------------------------------------------------------
Borrowings and other long-term 582,792 577,253 635,868
financial liabilities
Non-current provisions 7,465 5,545 5,157
Retirement benefit obligations 25,592 25,238 25,030
Deferred tax liabilities 97,897 120,593 100,015
Other non-current liabilities 40,291 48,767 37,024
------------------------------------------------------------------------------
Total non-current liabilities 754,037 777,397 803,094
------------------------------------------------------------------------------
Trade payables 230,578 248,157 263,492
Short-term portion of borrowings 53,230 144,292 72,694
and other financial liabilities
Current income tax liabilities 6,059 3,226 6,781
Current provisions 10,147 3,784 5,121
Other current liabilities 191,663 210,349 186,965
------------------------------------------------------------------------------
Total current liabilities 491,677 609,808 535,052
------------------------------------------------------------------------------
TOTAL LIABILITIES 2,177,318 2,301,600 2,283,430
------------------------------------------------------------------------------
Consolidated cash flow statement
First-half to 30 June 2016
-------------------------------------------------------------------------------
In thousands of euros 30 June 2016 30 June 2015 31 December 2015
-------------------------------------------------------------------------------
OPERATING ACTIVITIES
NET PROFIT 36,174 13,374 95,924
Adjustments to reconcile net profit
to cash flow
Amortisation and depreciation of 12,754 13,535 27,525
fixed assets
Net profit of equity associated
companies - net of dividends 48 89 95
received
Losses/(gains) on asset disposals 203 18 161
Movement in provisions (15,537) 629 (3,385)
Share-based payment expense 4,893 5,294 10,189
Other non cash income/(expenses) 14 3,794 4,478
Acquisitions costs of consolidated 1,184 2,112 5,412
companies
Finance costs 10,217 12,078 23,849
Income tax expense 12 447 4,505 33,818
-------------------------------------------------------------------------------
OPERATING CASH FLOW BEFORE WORKING 62,398 55,429 198,064
CAPITAL. FINANCING AND TAX PAID
-------------------------------------------------------------------------------
Change in working capital 26,191 36,952 18,432
requirement
Interest paid (9,623) (10,458) (22,004)
Income tax paid (15,838) (15,947) (26,510)
-------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES 63,128 65,976 167,982
-------------------------------------------------------------------------------
INVESTMENT ACTIVITIES
Acquisitions of property. plant. (8,136) (11,705) (23,579)
equipment and intangible assets
Proceeds from disposals of
property. plant. equipment and 879 389 454
intangible assets
Acquisition of financial assets ( 374) (932) 1,343
Acquisition of consolidated 22,425 (1,446) (37,778)
companies and business goodwill
-------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENT 14,794 (13,695) (59,560)
ACTIVITIES
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase/(decrease) in capital 0 0 0
(Purchase)/proceeds of own shares (6,163) (9,492) (9,499)
Increase/(decrease) in long-term (63,561) (22,158) (46,604)
borrowings
Increase/(decrease) in bank 1,672 (1,065) (1,262)
overdrafts and short-term debt
Acquisition of minority interests (32,283) (3,928) (12,546)
Dividends paid to parent-company 0 0 (34,071)
shareholders
Dividends paid to minority
shareholders of consolidated (465) (1,869) (3,428)
companies
-------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES (100,801) (38,511) (107,410)
-------------------------------------------------------------------------------
NET CASH FLOW (22,879) 13,769 1,012
-------------------------------------------------------------------------------
Impact of foreign exchange rate (2,010) 6,905 1,306
movements
-------------------------------------------------------------------------------
CASH AT BEGINNING OF PERIOD 151,576 149,258 149,258
-------------------------------------------------------------------------------
CASH AT END OF PERIOD 126,686 169,932 151,576
-------------------------------------------------------------------------------
Ipsos First-half 2016:
http://hugin.info/143536/R/2030843/755495.pdf
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(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: IPSOS via GlobeNewswire
[HUG#2030843]
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Datum: 26.07.2016 - 18:14 Uhr
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News-ID 485466
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