Ipsos: First-half 2017
(Thomson Reuters ONE) -
First-half 2017
An apparently uneventful six months
***
Revenue: ?833.8 million
Organic growth: +0.1%
New Services: +18%
Adjusted net profit: +9.0%
Paris, 26 July 2017 - Ipsos' revenue for first-half 2017 was ?833.8 million,
almost equivalent to that published for first-half 2016 (?833.6 million).
Slightly positive currency effects (+0.5%) and negative scope effects (-0.6%)
broadly cancelled one another out. Ipsos recorded organic growth of +0.1% for
the period in question. All of these data illustrate the perception of stable
activity, with no clear trend.
This being so, significant changes are under way and can be analysed from four
different angles.
1. The "New Services" component, comprising new business rolled out by Ipsos in
2014 that reflects the innovative approaches used to measure better and
faster and thereby to help its clients gain a better understanding of
markets, continue to progress at a fast pace. With organic growth of 18%,
they account for more than 12% of revenue, compared to 7% in 2014. In
comparison, the more traditional approaches are seeing the results of
efforts to increase productivity, linked, among others, to the continued
transition to greater digitisation of data collection systems and also
further simplification of research protocols.
2. Certain emerging markets, notably in Asia-Pacific and Eastern Europe, are
driving growth, in contrast to more difficult areas such as the Middle East
or Brazil. Likewise, within the developed markets, certain countries, such
as the United Kingdom, maintained a high growth rate while other countries,
such as France, were affected by specific events. The business in Paris
hasn't being good in the first-half of the year: very long electoral
processes and related uncertainties made market research on products, brands
or commercial communications more difficult in the same period. Overall, the
gap in growth between developed countries and emerging countries became
significant again (5%). Turnover declined by 1.3% in developed countries and
grew by 3.3% in emerging countries.
3. Certain markets have been particularly affected by the lag between sales
volumes recorded at a given moment and the rate of progress in carrying out
the programmes that allow these sales to be recorded in revenue recognised.
The transformation in the mix of services sold by Ipsos, already observed at
the end of the first quarter, and reflected in the increased weight of
bigger programmes with longer execution times rather than shorter and more
ad-hoc interventions, has its advantages, in particular in facilitating the
optimisation of the teams' work. A negative consequence is that it delays
the alignment of revenue with the level of sales. At the end of June, Ipsos'
order book overall remained positive, not very far from the annual objective
of 3%, at constant scope and exchange rates. The difference with the
published revenue growth (+0.1%) is significant and similar to the one
recorded at the end of the first quarter. We anticipate a significant
increase in Ipsos' revenue for the second half of the year, especially where
the difference is significant, for example, in North America and in
activities linked to media measurement and advertising communication.
4. Our clients' circumstances are also changing. Companies involved in the CPG
sector were, until recently, the biggest, most global and, in certain
respects, the most innovative users of market research companies' services.
Their ability to grow and at the same time improve their financial
performance is now being called into question. They have been affected by
strong competition from local or more specific players and have of course
had to mobilise resources for their own digitisation processes. Under such
conditions, their real concern is to improve while reducing costs. On the
one hand, CPG companies, particularly the largest ones, are excellent
candidates for systematic use of the new research approaches developed by
Ipsos and others. At the same time, the resources that they are allocating
to marketing expenditures have decreased, sometimes significantly. In total,
in the first half of 2017, Ipsos' activity with these clients decreased by
5%, while it increased significantly for clients from other sectors such as
pharmaceutical companies or financial institutions.
Performance by region and business line
+------------------------+----------+----------+----------------+--------------+
|Consolidated revenues |1(st) half|1(st) half| | |
|by geographical area | 2017 | 2016 |Change 2017/2016|Organic growth|
|(in millions of euros) | | | | |
+------------------------+----------+----------+----------------+--------------+
|Europe, Middle East and | 360.4 | 360.0 | 0.1% | 3% |
|Africa | | | | |
+------------------------+----------+----------+----------------+--------------+
|Americas | 318.5 | 330.4 | -3.6% | -5% |
+------------------------+----------+----------+----------------+--------------+
|Asia-Pacific | 154.9 | 143.1 | 8.2% | 6% |
+------------------------+----------+----------+----------------+--------------+
|First-half Revenues | 833.8 | 833.6 | 0.0% | 0.1% |
+------------------------+----------+----------+----------------+--------------+
+------------------------+----------+----------+----------------+--------------+
|Consolidated revenues by|1(st) half|1(st) half| | |
|business line | 2017 | 2016 |Change 2017/2016|Organic growth|
|(in millions of euros) | | | | |
+------------------------+----------+----------+----------------+--------------+
|Media and Advertising | 177.7 | 182.7 | -2.8% | -3% |
|Research | | | | |
+------------------------+----------+----------+----------------+--------------+
|Marketing Research | 444.0 | 447.8 | -0.9% | -0.5% |
+------------------------+----------+----------+----------------+--------------+
|Opinion & Social | 92.5 | 85.8 | 7.8% | 9% |
|Research | | | | |
+------------------------+----------+----------+----------------+--------------+
|Client and employee | 119.7 | 117.2 | 2.1% | 1% |
|relationship management | | | | |
+------------------------+----------+----------+----------------+--------------+
|First-half Revenues | 833.8 | 833.6 | 0.0% | 0.1% |
+------------------------+----------+----------+----------------+--------------+
Financial performance
Summarized income statement
+-------------------------------+----------+----------+------------------------+
| |1(st) half|1(st) half| Change |
|In millions of euros | 2017 | 2016 | 1(st) half 2017 / |
| | | | 1(st) half 2016 |
+-------------------------------+----------+----------+------------------------+
|Revenue | 833.8 | 833.6 | 0.0% |
+-------------------------------+----------+----------+------------------------+
|Gross profit | 544.2 | 545.0 | -0.1% |
+-------------------------------+----------+----------+------------------------+
|Gross margin | 65.3% | 65.4% | - |
+-------------------------------+----------+----------+------------------------+
|Operating profit | 50.7 | 53.8 | -5.7% |
+-------------------------------+----------+----------+------------------------+
|Operating margin | 6.1% | 6.5% | - |
+-------------------------------+----------+----------+------------------------+
|Total of exceptional, non- | (7.9) | 8.7 | - |
|recurring items | | | |
+-------------------------------+----------+----------+------------------------+
|Finance charge | (9.7) | (10.2) | -5.2% |
+-------------------------------+----------+----------+------------------------+
|Tax | (7.9) | (12.4) | -36.3% |
+-------------------------------+----------+----------+------------------------+
|Adjusted net profit* | 36.0 | 33.0 | 9.0% |
|(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 (calculated by deducting from revenue the variable and external
direct costs related to contract execution) amounted to 65.3% compared with
65.4% in the first-half of 2016 (and 65.1% for full year 2016). Its change is
related to the weight of major contracts, which is higher in this half and for
which gross profit is often lower (which does not say anything about the
operating margin on these contracts). The continuation of digitisation of data
collection and growth in New Services generates higher gross profit otherwise.
Concerning operating costs, payroll expenses are up 0.6%, with Group headcount
rising 1.5%, mainly in emerging countries, to give a permanent headcount of
16,845 at 30 June 2017.
The cost of variable share-based payments was stable at ?5.1 million.
Overhead costs are under control and fell 1.9%, notably due to savings in rental
costs.
Overall operating costs, recorded additional expenses related to the New Way
programme, for which Ipsos forecast ?5 million in additional investment in
2017: ?2.3 million was spent in the first-half of 2017.
Other operating income and expenses consist mainly of the impact of exchange
rate transactions on operating account items, which were a negative ?2 million
over the half-year period, whereas they were a positive ?1.3 million in the
first half of 2016.
Group operating margin amounted to ?50.7 million, or 6.1% of revenue, a drop of
40 basis points compared to the same period in the previous year, due to stable
revenue volume and the investment in the New Way programme. To be noted: due to
the seasonality of the market research activity, the operating margin of the
first-half is not an indicator of the one of the full year.
Below the operating margin, the amortisation of intangibles identified on
acquisitions concerns 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 allocation amounted
to ?2.4 million compared with ?2.5 million the previous year.
The balance of other non-operating, non-recurring income and expense was -?7.9
million, compared with net income of ?8.7 million in the previous year. It
comprises unusual items not related to operations, and includes acquisition
costs as well as the costs of the current restructuring plans.
It included in particular, in the first half of 2016, a net gain of ?15.4
million in relation to the repayment received 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 ?6.7
million in restructuring and streamlining expenses was recognised, some of which
are related to the New Way programme.
Finance costs. The net cost of interest amounted to ?9.7 million, compared with
?10.2 million, down 5.2%, due to a fall in its credit conditions.
Taxes. The effective tax rate on the IFRS income statement was 26.8%, compared
with 25.6% for the previous year. As in the past, it includes a deferred tax
liability of ?1.3 million (compared with a deferred tax liability of ?2.1
million in the first half of 2016), 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.
The Net profit (attributable to the Group), stands at ?21.6 million versus ?35.2
million in first half 2016, the change being mainly related to the exceptional
profit of ?15.4 million recorded under "other non-operating and non-recurring
income and expenses".
Adjusted net profit attributable to the Group, which is the relevant and
constant indicator used to measure performance, came to ?36.0 million, up 9.0%
compared with the first half of 2016.
Financial structure
Free cash flow. Operating cash flow stands at ?56.6 million in line with changes
in income from operating activities.
- The working capital requirement improved by ?7.4 million.
- Current investments in property, plant and equipment and intangible assets,
consisting mainly of IT investments, were stable at ?7.7 million.
Concerning non-current investments, Ipsos invested ?5.4 million over the half
year in acquisitions, proceeding in particular with the buyback of non-
controlling interests in a US company and in certain emerging countries (notably
Central America).
In addition, Ipsos received ?3.8 million from funds raised from its IPF 2020
stock option plan. The potential dilution of the 156,344 shares subscribed was
offset by the cancellation of the same number of its own shares from among those
bought back in November 2016.
As a reminder, Ipsos invested in its share buyback programme in 2016, including
?65 million in November 2016 for the purchase of Ipsos shares from LT
Participations, its holding company, prior to the merger between Ipsos and LT
Participations on 29 December 2016.
At 30 June 2017, Ipsos holds 1,580,596 of own shares (3.6% of its share capital)
allocated to the involvement plans of its employees.
Shareholders' equity totalled ?892 million as at 30 June 2017, compared with
?939 million published as at 31 December 2016, after deduction of the ?36.4
million in dividends paid on 5 July 2017.
Net financial debt totalled ?494 million at 30 June 2017, compared with ?544
million at 31 December 2016, thanks to the strong operating cash flows mentioned
above.
The net gearing was 55.4%, compared with 58.0% at 31 December 2016.
Liquidity position. Net cash at the end of the half-year period was ?123
million, compared with ?127 million at 31 December 2016, giving Ipsos a good
liquidity position. Ipsos also has over ?300 million available through credit
facilities.
OUTLOOK FOR 2017
Ipsos operates in a growing market: the demand for information and analysis from
companies and public institutions for better measurement and understanding of
Society, markets and ultimately people, remains strong. It is also undergoing
transformation as today, the combined use of new progress in human sciences,
data sciences, technologies and know-how make it possible to better exploit
information. It is by using the power of these sciences and technologies, but
also the skills of its teams, that Ipsos is entering a new phase full of
confidence: one where it can legitimately support its clients to achieve fair,
clear, accessible and full understanding of their own markets.
Thanks to the New Way programme, which will be completed, as planned, at the end
of this year, Ipsos has demonstrated that, with the aid of innovation and, in
this case, the implementation of New Services, a large, established company can
hold its position and retain the confidence of its clients.
The "Total Understanding" programme, whose principle and existence were made
public a few months ago, will now take over. It will build on the lessons learnt
from New Way. It is also more ambitious. Its aim is for Ipsos to eventually be
able to offer its clients all the resources required to better understand the
behaviour, reactions and aspirations of their environment, the market where they
operate and the people they target. This approach will enable a company to build
winning competitive positions and also ensure that the resources that they have
decided to allocate, are effective.
It is by having the ability to deploy a sufficient diversity of investigation,
analysis and reporting solutions that Ipsos will confirm its position not only
as a supplier of reliable and relevant information, but also as a partner in the
management of information which is essential to the success of the most
innovative ideas and to the implementation of the most ambitious plans.
The precise details of the "Total Understanding" plan will be communicated when
Ipsos presents its annual results in February 2018. In the meantime, Ipsos'
teams will continue to work on completing financial year 2017 successfully.
To achieve the 3% target for organic growth in 2017 as published at the start of
the year, the international CPG companies, which are among Ipsos' longest-
standing and largest clients, need to regain their average historical levels of
activity in the second-half 2017.
Another scenario would be that the activity of these same companies (along with
Ipsos) declines further and Ipsos' growth would fall to between 1% and 2%.
The first scenario (the most optimistic) is not very likely, since it assumes
that these companies have already subscribed to the new approach, to these new
more fragmented and volatile markets, and that Ipsos has also had the time to
adapt its services to their new requirements.
The second scenario (the most pessimistic) is also unlikely, in that it assumes
an additional decline in sales in the second half of the year plus the
persistence of certain lags between the sales level and the level of revenue
actually recognised.
Furthermore, the 2016/2017 comparison base will be more favourable in the second
half of the year, particularly towards the end of the year.
This being so, regardless of the scenario, whether growth is below 2% or above
2%, operating margin will be slightly up in comparison with 2016, as
announced.
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/en/investors
The 2016 performance and results presentation
will be available from 27 July on the www.ipsos.com/en/investors
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 2017
-------------------------------------------------------------------------------
In thousand euros 30 June 2017 30 June 2016 31 December 2016
-------------------------------------------------------------------------------
Revenue 833,794 833,599 1,782,691
Direct costs (289,583) (288,589) (622,244)
-------------------------------------------------------------------------------
Gross profit 544,211 545 010 1,160,446
-------------------------------------------------------------------------------
Payroll - excluding share-based (374,309) (372,135) (751,754)
payments
Payroll - share-based payments* (5,104) (5,039) (9,991)
General operating expenses (111,727) (113,873) (220,646)
Other operating income and expenses (2,355) (180) 2,026
-------------------------------------------------------------------------------
Operating margin 50,716 53,784 180,080
-------------------------------------------------------------------------------
Amortisation of intangibles (2,405) (2,451) (4,786)
identified on acquisitions*
Other non-operating income and (7,973) 8,742 143
expense
Income from associates 69 (48) (46)
-------------------------------------------------------------------------------
Operating profit 40,407 60,026 175,391
-------------------------------------------------------------------------------
Finance costs (9,682) (10,217) (20,811)
Other financial income and expense* (1,134) (1,188) (475)
-------------------------------------------------------------------------------
Profit before tax 29,591 48,621 154,105
-------------------------------------------------------------------------------
Income tax - excluding deferred tax (6,622) (10,286) (37,765)
on goodwill
Income tax - deferred tax on (1,308) (2,162) (6,582)
goodwill *
-------------------------------------------------------------------------------
Income tax (7,930) (12,447) (44,347)
-------------------------------------------------------------------------------
Net profit 21,660 36,174 109,758
-------------------------------------------------------------------------------
Attributable to the Group 21,558 35,179 106,897
Attributable to Minority interests 103 995 2,861
-------------------------------------------------------------------------------
Earnings per share (in euros) - 0.50 0.78 2.40
Basic
Earnings per share (in euros) - 0.50 0.77 2.36
Diluted
-------------------------------------------------------------------------------
+------------------------------------------------------------------------------+
| Adjusted net profit* 36,380 34,260 124,945 |
| |
| Attributable to the Group 36,031 33,047 121,657 |
| |
| Attributable to Minority interests 349 1,213 3,288 |
| |
| Adjusted earnings per share (in euros) - Basic 0.84 0.73 2.73 |
| |
| Adjusted earnings per share (in euros) - Diluted 0.83 0.72 2.69 |
+------------------------------------------------------------------------------+
*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.
Consolidated balance sheet
First half to 30 June 2017
------------------------------------------------------------------------------
In thousands of euros 30 June 2017 30 June 2016 31 December 2016
------------------------------------------------------------------------------
ASSETS
Goodwill 1,198,102 1,241,637 1,259,193
Other intangible assets 64,624 74,455 71,489
Property, plant and equipment 32,834 34,225 35,517
Investments in associates 557 206 207
Other non-current financial 20,001 16,938 22,547
assets
Deferred tax assets 18,724 13,884 18,184
------------------------------------------------------------------------------
Total non-current assets 1,334,842 1,381,345 1,407,138
------------------------------------------------------------------------------
Trade receivables 524,548 552,754 624,406
Current income tax 26,670 21,442 15,204
Other current assets 87,408 88,286 78,677
Derivative financial 2,898 6,804 3,399
instruments
Cash and cash equivalents 123,082 126,686 164,892
------------------------------------------------------------------------------
Total current assets 764,606 795,972 886,579
------------------------------------------------------------------------------
TOTAL ASSETS 2,099,448 2,177,318 2,293,717
------------------------------------------------------------------------------
------------------------------------------------------------------------------
In thousands of euros 30 June 2017 30 June 2016 31 December 2016
------------------------------------------------------------------------------
LIABILITIES
Share capital 11,109 11,334 11,109
Share premium 516,275 540,201 516,489
Own shares (41,547) (808) (55,905)
Other reserves 472,063 417,092 492,737
Currency translation (82,611) (56,785) (44,819)
differences
------------------------------------------------------------------------------
Shareholders' equity - 875,289 911,034 919,612
attributable to the Group
------------------------------------------------------------------------------
Minority interests 17,412 20,569 19,805
------------------------------------------------------------------------------
Total shareholders' equity 892,701 931,603 939,417
------------------------------------------------------------------------------
Borrowings and other long-term 540,539 582,792 626,152
financial liabilities
Non-current provisions 9,150 7,465 9,230
Retirement benefit obligations 28,154 25,592 28,029
Deferred tax liabilities 97,122 97,897 100,432
Other non-current liabilities 21,663 40,291 21,159
------------------------------------------------------------------------------
Total non-current liabilities 696,629 754,037 785,002
------------------------------------------------------------------------------
Trade payables 226,417 230,578 262,865
Short-term portion of
borrowings and other financial 79,717 53,230 86,662
liabilities
Current income tax liabilities 4,586 6,059 11,104
Current provisions 8,685 10,147 9,664
Other current liabilities 190,713 191,663 199,005
------------------------------------------------------------------------------
Total current liabilities 510,118 491,677 569,300
------------------------------------------------------------------------------
TOTAL LIABILITIES 2,099,448 2,177,318 2,293,717
------------------------------------------------------------------------------
Consolidated cash flow statement
First half to 30 June 2017
-------------------------------------------------------------------------------
In thousands of euros 30 June 2017 30 June 2016 31 December 2016
-------------------------------------------------------------------------------
OPERATING ACTIVITIES
NET PROFIT 21,660 36,174 109,758
Adjustments to reconcile net profit
to cash flow
Amortisation and depreciation of 12,796 12,754 25,970
fixed assets
Net profit of equity associated 46
companies - net of dividends (69) 48
received
Losses/(gains) on asset disposals (118) 203 2,481
Movement in provisions 25 (15,537) (12,702)
Share-based payment expense 4,747 4,893 9,737
Other non cash income/(expenses) (109) 14 978
Acquisitions costs of consolidated 132 1,184 1,325
companies
Finance costs 9,682 10,217 20,811
Income tax expense 7,930 12,447 44,347
-------------------------------------------------------------------------------
OPERATING CASH FLOW BEFORE WORKING 56,676 62,398 202,752
CAPITAL. FINANCING AND TAX PAID
-------------------------------------------------------------------------------
Change in working capital 7,383 26,191 22,819
requirement
Interest paid (9,715) (9,623) (20,351)
Income tax paid (24,707) (15,838)
(38,046)
-------------------------------------------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES 29,637 63,128 167,174
-------------------------------------------------------------------------------
INVESTMENT ACTIVITIES
Acquisitions of property. plant. (7,850) (8,136) (17,631)
equipment and intangible assets
Proceeds from disposals of
property. plant. equipment and 200 879 133
intangible assets
Acquisition of financial assets 1,024 (374) (1,070)
Acquisition of consolidated 0 22,425 23,900
companies and business goodwill
-------------------------------------------------------------------------------
CASH FLOW FROM INVESTMENT (6,627) 14,794 5,332
ACTIVITIES
-------------------------------------------------------------------------------
FINANCING ACTIVITIES
Increase/(decrease) in capital 0 0 (225)
(Purchase)/proceeds of own shares 3,790 (6,163) (85,050)
Increase/(decrease) in long-term (57,170) (63,561) (1,688)
borrowings
Increase/(decrease) in bank (338) 1,672 491
overdrafts and short-term debt
Acquisition of minority interests (5,441) (32,283) (33,312)
Dividends paid to parent-company 0 0 (36,358)
shareholders
Dividends paid to minority
shareholders of consolidated 0 (465) (431)
companies
-------------------------------------------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES (59,159) (100,801) (156,575)
-------------------------------------------------------------------------------
NET CASH FLOW (36,149) (22,879) 15,932
-------------------------------------------------------------------------------
Impact of foreign exchange rate (5,662) (2,010) (2,615)
movements
-------------------------------------------------------------------------------
CASH AT BEGINNING OF PERIOD 164,892 151,576 151,576
-------------------------------------------------------------------------------
CASH AT END OF PERIOD 123,082 126,686 164,892
-------------------------------------------------------------------------------
Ipsos - First-half 2017:
http://hugin.info/143536/R/2123079/809815.pdf
This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: IPSOS via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 26.07.2017 - 18:22 Uhr
Sprache: Deutsch
News-ID 554026
Anzahl Zeichen: 38712
contact information:
Town:
Paris
Kategorie:
Business News
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