The acquisition of Synovate resulted in a disbursement on 12 October 2011 corresponding to an enterprise value of 525 million pounds (599.7 million euros – cost at 12 October 2011 based on an exchange rate of 1 euro = 0.87535 pounds), one third of which was financed by means of a capital increase and two thirds by debt.
There is a disagreement with Aegis over contractual price adjustments, and the independent expert who was appointed in July 2012 has not yet submitted his conclusions.
Ipsos also invested a total of 28 million euros over the full year in its acquisition programme, in part to buy out minority interests in some emerging countries (Turkey, India, Saudi Arabia, Morocco, South Africa, Peru, Hungary and Thailand) but also for the 8.5 million euro deferred payment on the acquisition price of OTX, the American leader in digital research purchased in 2010.
Finally, Ipsos invested 6.7 million euros in its share buyback programme to limit the impact of dilution on its free share attribution plans.
Shareholders’ equity now stands at 927.6 million euros, compared with 891.6 million euros at 31 December 2011.
Net debt came to 623.5 million euros at 31 December 2012, representing gearing of 67.2%, compared to 680 million euros at 30 June 2012 and 585.9 million euros at 31 December 2011.
Results
and financial
situation
of the Ipsos group
Cash and cash equivalents stood at 131.3 million euros at 31 December 2012. A dividend of 0.64 euros per share will be proposed at the Annual General Meeting, representing an increase of 1.6% relative to the previous dividend.
9.2.2 Presentation of Ipsos SA Parent Company financial statements
Ipsos SA is the Ipsos group’s holding company. It has no commercial activity. It owns the Ipsos trademark and receives royalties from subsidiaries for the use of the trademark.
The financial statements have been drawn up in accordance with generally accepted rules in France and are consistent with the statements of the previous year. These rules are principally set out in Articles L.123-12 to L.123-28 and R.123-172 to R.123-208 of the French Commercial Code and CRC Regulation 99-03 of 29 April 1999 relating to the General Chart of Accounts.
Ipsos SA’s net profit for the year ended 31 December 2012 was of 25,253,034 euros.
The aggregate operating income, financial income and exceptional income of Ipsos SA was 211,471,502 euros, compared to 140,017,381 euros in the previous year.
The aggregate operating expenses, financing expenses and exceptional expenses (before income tax on profits) came to 184,476,147 euros, compared to 95,554,697 euros in the previous year. Ipsos SA, which forms a tax consolidation group with its subsidiary Ipsos (France) SAS and various other sub-subsidiaries in France, recorded a tax debt of 1,742,321 euros. (No expense recorded by Ipsos SA is non-deductible for tax purposes under paragraph 4 of Article 39 of the General Revenue Code).
As a result, after deduction of all expenses, taxes, depreciation and amortisation, Ipsos SA recorded a profit of 25,253,034 euros.
The table below shows the financial results for Ipsos SA over the last five years:
Year ended 31/12/12 31/12/11 31/12/10 31/12/09 31/12/08
Duration of accounting period (months) 12 12 12 12 12
Capital a the end of the financial year
Share capital* 11,331,646 11,310,717 8,532,572 8,465,535 8,443,385 Number of ordinary shares 45,326,587 45,242,869 34,130,287 33,862,140 33,773,540
Operations and results
Revenue excl. taxes 416,771 497,324 372,165 377,658 1,044,038 Profit before tax, profit sharing,
depreciation, amortisation and provisions 27,101,253 30,432,731 43,106,046 19,733,197 18,829,826 Income tax 1,742,321 1,764,479 (358,952) 658,077 (814,086) Amortisation and provisions 10,536,950 34,401,905 1,176,445 2,152,943 (155,476) Net profit 25,253,034 42,698,206 42,288,553 16,922,177 19,488,436 Distributed profit 29,009,016 28,503,007 20,478,172 17,269,691 16,886,770
Earnings per share
Earning after tax and profit and before
amortisation and provisions 0.56 0.63 1.27 1 0.58
Net profit 0.56 0.94 1.24 0 0.58
Dividend paid 0.64 0.63 0.6 0.51 0.50
Head count
Average headcount 3 3 3 3 3
Wage costs 1,853,000 1,128,390 1,617,719 1,188,618 1,220,667 Social benefits paid (social security
Results
and financial
situation
of the Ipsos group
10. Cash and capital resources
Information about cash and capital resources for 2011 and 2010 can be found in Chapter 10 of the 2011 reference document, filed with the Autorité des Marchés Financiers on 14th of March 2012
under number D.12-0158, and paragraph 4.2 of Chapter 4 of the 2010 reference document filed on 16th of March 2011 under number D.11-0137.
For 2012, information concerning cash and capital resources is provided below.
10.1 Issuer’s capital resources (short term and long term)
Information relating to Ipsos SA’s capital resources over the last two years is provided in Note 4.7.2 « Equity » of the annex to the parent company financial statements, provided in section 20.4. For more detailed information, please refer to point 5 « Statement of changes in consolidated shareholders’ equity » and Note 5.8 « Equity » of the consolidated financial statements provided in section 20.2 of this reference document.
10.2 Source and amount of issuer’s cash flows and
description of these cash flows
The amount of cash flows for the last two years is summarised in point 3 « Cash flow statement » of the parent company financial statements in section 20.4 of the present reference document. For more detailed information, please refer to point 4 « Statement of consolidated cash flows » and note 6.1 « Note to the statement of consolidated cash flows » of the consolidated financial statements provided in section 20.2 of this reference document.
10.3 Issuer’s borrowing requirements and funding structure
For more detailed information, please refer to notes 5.9 « Net debt » and 6.4.2 « Finance lease commitments » of the consolidated financial statements provided in section 20.2, as well as section 22 « Important contracts » of this reference document.
10.4 Restriction on the use of capital resources that have
materially affected or could materially affect, directly
or indirectly, the issuer’s operations
N/A.
10.5 Sources of expected financing to honor our
engagements relating to investment decisions
For more details, refer to note 6.2.5 « Liquidity risk » of the consolidated financial statements in section 20.2 of this reference document.
Results
and financial
situation
of the Ipsos group
11. Research and development
In order to optimize its cost structure for the long term, Ipsos invests in finding the best research solutions. The use of the new survey techniques with strong technological components improves the quality of our services. It also improves profitability.
For more information on Research and Development, please refer to sections 5.2 “Investments” and 6.1.7 “Innovation and new products” of this reference document and to note 5.2 “Other intangible fixed assets” of the consolidated financial statement in the section 20.2 of the present reference document.
12. Informations on trends
Europe is sick – economic actors are struggling, unemployment and austerity policies affect the populations’ morale -with the risk to drag other economies down with it. The USA, the world’s biggest economic power, is on the verge to introduce excessively restrictive policies, the only clear outcome of which is a collapse in final demand.
Against this background it would be highly surprising if companies broke in 2013 with the caution they have demonstrated since 2008. Granted, the M&A market has been a little more active but in most cases deals are about rationalising a market – as in the case of Ipsos’ acquisition of Synovate – or taking advantage of very favourable funding conditions. However, when it comes to organic growth, companies in most cases are concentrating on protecting margins and generating cash rather than on potential expansion.
Thus the growth in the market for information on citizens / consumers / clients has slowed down. Fewer marketing initiatives mean less need for information. Since 2008 marketing expenditure has grown more slowly than the economy as a whole, a clear sign that this area is no longer sheltered from the productivity efforts of companies who no longer want to give up in this area the benefits they have generated elsewhere by improving the performance of their factories, their networks or the structure of their relationships with suppliers.
Ipsos, along with the other members of the ‘Big 4’ (Nielsen, Kantar, Ipsos and GfK) is in a privileged position: They are all major leading Groups on their market which have been able to build platforms capable of producing and exploiting the same information flows around the world. Whilst they must, at the very least, to keep their promises on the operational efficiency and consistency of their services from one period to the next and one region to another, prerequisite to benefit from their institutional and corporate clients’ wish to get the most out of the consolidation of their partnerships. This will be enough to underpin the business base for the ‘Big 4’ and should, gradually, help them improve margins. But it will not be enough for those who want to develop a policy of profitable growth. It is in this perspective that, once the combination of Ipsos and Synovate has been completed, Ipsos intends to develop new services to meet the new needs of its clients.