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2012 First Half Results

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2012 First Half Results PRESS RELEASE Puteaux, Friday, August 31, 2012 – 5.45pm 2012 First Half Results Revenue growth of 8.4% +2.7% organic growth in H1 2012 vs H1 2011 9.4% increase in income from operations Income from operations margin of 11.9% 20% increase in net earnings per share to 0.15 cents (€)* in H1 2012 compared with 0.12 cents (€) in H1 2011 1 Net New Business strengthened to €1,266 million in H1 2012 versus €940 million for H1 2011 David Jones, CEO Havas, said: “All our regions continued to deliver growth in the first half led by Asia, Latin America, digital, media and healthcare. New Business performance strengthened in H1 2012, delivering one of the best half-year new business results in recent years with major wins including Novartis, GSK, Hershey’s (digital), Intel Asus, (global), Sony Playstation, New York Life, Atlantic City, Lycra (USA), Yili in Asia, Nokia in India and Volvo in China, to name but a few. We made a number of targeted acquisitions during the first half of 2012, bringing into the group innovative agencies and talent adept at using digital technology and creativity to meet the future needs of our clients.” *Based on the number of shares in circulation at June 30, 2012 1 1. KEY FIGURES Variance In € M H1 2010 H1 2011 H1 2012 H1 2012 / S1 2011 Revenue 729 765 829 +8.4% Organic Growth +1.8% +5.6% +2.7% Income from operations 84 95 99 +4.2% Income from operations margin 11.5% 12.4% 11.9% +9.4% Operating income 81 85 93 Operating income margin 11.1% 11.2% 11.2% Net income, Group share 49 53 56 +5.7% Net income, Group share in % of 6.7% 6.9% 6.8% revenue Net financial debt 129 105 510 Earnings per share (in €) 0.11 0.12 0.15* +20% 81 22 156 Average net financial debt ² * Adjusted net earnings per share 2. GENERAL COMMENTS The Board of Directors, meeting on Friday, August 31, 2012, approved the consolidated financial statements for the interim period ended June 30, 2012. In accordance with current regulations governing interim financial statements, these were the subject of limited examination by the Group's statutory auditors. Their report is included in the half-yearly financial report available on the Group website: http://www.havas.com. → Group revenue of €829 million for H1 2012 was up by +8.4% on a reported basis over H1 2011, with Q2 revenue of €442 million. → Organic growth (excluding exchange rate variations and changes in the scope of consolidation) was up by +2.7% for H1 2012 (+3.5% in Q1 and +2.1% in Q2). A stronger euro had a positive exchange rate impact of €26 million for H1 overall. 2 Revenue and organic growth by region: Q1 Q2 H1 Q1 Q2 H1 Revenue (in €M) Organic Growth 2012 2012 2012 2012 2012 2012 EUROPE 193 224 417 EUROPE 1.1% 1.9% 1.5% of whic h of whic h France 80 88 168 France 5.1% 0.5% 2.6% UK 44 48 92 UK -0.2% 2.3% 1.1% Rest of Europe 69 88 157 Rest of Europe -2.4% 3.1% 0.6% NORTH AMERICA 136 146 282 NORTH AMERICA 3.6% 0.5% 2.0% REST OF WORLD 58 72 130 REST OF WORLD 12.3% 6.7% 9.1% of whic h of whic h Asia Pacific & Africa 27 33 60 Asia Pacific & Africa 12.2% 9.0% 10.5% Latin America 31 39 70 Latin America 12.4% 4.8% 8.0% TOTAL 387 442 829 TOTAL 3.5% 2.1% 2.7% Europe: Europe reported growth of +1.5% for the first half of 2012. France delivered H1 growth of +2.6% compared to growth of +1.7% for the same period of 2011, largely thanks to strong performances in media, advertising and healthcare communications. The UK also reported growth in Q2, driven by digital, advertising and healthcare communications, producing an H1 2012 performance slightly higher than that of H1 2011. The rest of Europe reported growth of +3.1% for Q2 2012 after a downturn of -2.4% in the first quarter of the year. North America: the region delivered positive growth in H1 2012, led by strong performances from media, healthcare and advertising. The second quarter was affected by a strong basis of comparison (+9% in Q2 2011); H1 wins, such as Hershey’s (digital), Sony Playstation, Disney ESPN, Phoenix University, American Eagle Outfitters, New York Life, Atlantic City, Intel Asus and Lycra reflect the recent positive momentum for this region. Rest of world: Asia-Pacific delivered an excellent first half driven by China and Australia, on the strength of new account wins and sustained ongoing development of existing clients. Latin America performed well over the period, but experienced a slowdown in the second quarter. Mexico, Argentina, Colombia and Peru reported double-digit growth. → Results Income from operations for H1 2012 increased 4.2% to €99 million, compared to €95 million reported for H1 2011. Income from operations margin for H1 2012 was 11.9%. Operating income was up by +9.4% at €93 million, compared to €85 million for the equivalent period in 2011. Net financial expense held steady, despite the acquisition of the new HQ building in Puteaux at the end of 2011. The effective tax rate was 26.5%. Net income, Group share of €56 million for H1 2012 was up +5.7% over H1 2011 and represented 6.8% of H1 2012 revenue. Net earnings per share (basic and diluted) were 13 cents (€) in H1 2012 and 15 cents (€) based on the number of shares in circulation at June 30, 2012, an increase of 20% due largely to the accretive effect of the share repurchase tender offer (OPRA) completed in the second quarter. 3 → Financial structure The success of the share repurchase tender offer (OPRA) had a significant impact on the Group's financial structure at June 30, 2012, with share capital standing at €1,079 million following the capital reduction. Net financial debt stood at €510 million at June 30, 2012, for gearing of 47%. Given the seasonal pattern of the Group's activity, net financial debt should improve significantly by December 31, 2012, and is expected to be the equivalent of approximately one year of EBITDA. Average net debt2 for H1 2012 was €156 million, reflecting the real estate investment made in the last quarter of 2011. 1 3. NET NEW BUSINESS Net new business1 in the first half of 2012 strengthened (in terms of billings – the market reference - rising to €1,266 million compared to €940 million for the same period in 2011 – one of the best half-yearly new business performances in recent years). Global wins included: Intel ASUS, Novartis, GSK and Giorgio Armani Parfums. In addition, Sephora for internal communications and Net-A-Porter.com for Europe and APAC. North America major new account wins: Sony Playstation, American Eagle Outfitters, Atlantic City, New York Life, Lycra, Bel Brands, Phoenix University, Hershey’s, Claire's, Nature's Bounty and Center for Disease Control and Prevention. In Europe, the Group won the pan- european Heinz Ketchup brand digital strategy and campaign, four new Kraft brands in Italy, AXA in France, Ideal Standard in the UK, Dr Theiss Naturwaren in Germany and Hyundai France. Asia-Pacific kept up its momentum, winning Volvo and six new Yili dairy brands in China, Carlsberg, Nokia in India, Indonesia's biggest telephone operator XL Indonesia and Virgin Mobile in Australia. Latin American wins included BBVA, Bavaria, Santander, DHL and Hyundai Motors Brazil. (See Annex 2 for a detailed list of main new accounts won). 4. HIGHLIGHTS OF H1 2012 OPRA/OPAS The share repurchase tender offer (OPRA) targeting almost 12% of the Havas share capital proved highly successful, boosting net earnings per share by 20%. The simplified offer (OPAS) targeting all outstanding 2006/2013 redeemable warrants to subscribe to and/or acquire shares (BSAAR) was also very well received. The warrants purchased, representing some 8% of potential capital, were then canceled. Havas Village: an unparalleled client proposition in Europe Havas is the most integrated of all the major holding companies with a simple, clear and agile structure placing digital at the core of all its activities and agencies. In line with its strategy, Havas moved, in January 2012, into new headquarters in Puteaux, now home to over 2,200 communications professionals. 4 Assembled under one roof, they have merged to form a totally new value proposition that involves a cross-disciplinary blend of strategic expertise and creative excellence, known as the Havas Village. The objective is to offer our clients the absolute highest standard of creativity and innovation with digital at the core. Following the regrouping of the Parisian teams, the Group’s New York based media, creative and digital agencies will be moving into a new building together in Tribeca in March 2013. Acquisitions Over the first half of 2012, Havas made a number of acquisitions of agencies representing a total investment of approximately €35 million (excluding EO/BO). These targeted acquisitions were chosen specifically to reinforce the Group's digital, technology and creative resources and are in line with the Group’ strategy. Boondoggle At end June 2012, Havas acquired a majority stake in Boondoggle, the largest independent, fully-integrated digital agency in Benelux. The acquisition reinforces Havas' digital lead in Europe and makes the Group one of the top 3 agencies in the Benelux region. Boondoggle was created in 2007 and now employs over 120 digital and creative experts in its offices in Amsterdam and Leuven.
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