Ipsos In The First Half Of 2005: Margins Improve In A Solid Market
Growth Expected To Gather Pace Over The Rest Of 2005 And In 2006 Operating margin: up 18.0% to e 24.8 million Profit before tax: up 31.4% to e 20.5 million Profit (group share): up 19.6% to e 10.4 million
Revenue for the first half was e 321.8 million, an increase of 12.5% on the first half of 2004. Currency effects remained negative, although to a lesser extent than in the last three years, at 1.4%. Organic growth of 7.8% was ahead of the market average and above the rates seen at the group's main competitors. This growth figure was all the more satisfactory because the first half of 2004 had also seen a strong performance. The picture remains mixed from one region to the next. There was very strong growth in the Asia/Pacific region, the Middle East and Latin America, whilst figures in Europe were no better than average.
The integration of new companies, particularly in Asia, contributed 6.1% to revenue growth.
Profitability - Gross margin, which is equivalent to revenue less direct external costs, most notably the cost of data collection, grew faster than revenue, reflecting resilient prices and the benefits of the shift to on-line data collection systems.
Operating margin, calculated under IFRS, came to 7.7% of consolidated revenue and 13% of gross margin, a 30 basis point improvement on the first half of 2004. It grew by 18% compared to the first half of 2004. In keeping with the pattern of past years, operating margin will improve over the second half as contracts are completed.
Profit before tax was e 20.5 million, a 31% increase on the first half of 2004. The effective tax rate under IFRS was 35%, corresponding to the global average tax rate of general taxation regimes. The tax charge now includes a charge to deferred tax liabilities which cancels out tax savings resulting from the tax deductibility of goodwill amortisation in certain countries, although such deferred liabilities will only fall due in the event of the businesses concerned being sold. The actual tax rate paid by Ipsos was 25% in 2004 and will remain below 30% over the next few years.
Profit (group share) rose 19.6% from e 8.7 million in the first half of 2004 to e 10.4 million this year. Here too, seasonal effects suggest that profit will be higher still in the second half. In 2004 the first half contributed less than 40% of total net profit for the year.
Financial position - Equity was increased to e 261 million at 30 June 2005, thanks in part to the absence of goodwill amortisation. Net financial debt stood at e 198 million, from e 159 million at 31December 2004, due partly to the traditionally higher level of Working Capital Requirement at the midpoint of the year, and partly to financing of e 26 million for acquisitions. Gearing was stable at 75%.
Markets and Ipsos outlook - The market research market has seen a resumption of strong growth. According to the latest data from ESOMAR, the market was worth a total of USD 21.5 billion in 2004, an increase of 7.5% at constant exchange rates. This growth is being driven by the growing need for companies and institutions better to understand and anticipate the behaviour of individuals as citizens, consumers and clients. Market expansion also reflects recognition that market research companies make a valuable contribution to enhancing the marketing and advertising campaigns of their clients and ensuring their effectiveness.
Market growth has come against a background of concentration of expenditure on international companies that can work on any geographical scale - be it a country, a region or the whole world - and also offer reliable operational resources, respond quickly, control costs and offer services using the latest techniques. Such companies are also in a position to bring together expert teams and thus offer clients the methodologies and skills they need to improve their market intelligence and optimise their decisions.
In terms of business volumes, Ipsos is the world's third largest survey-based market research company. It is making a positive contribution to the development of the industry. Ipsos' management team is convinced that the company's growth will not only continue but that it will gather pace. To achieve this Ipsos can draw on the density of its geographical coverage, the quality and commitment of its staff, its presence in promising specialities and sectors and the loyalty of its clients. Ipsos is now in a position to raise its medium-term growth targets.
In 2005, on the basis of information available, and assuming that the euro's exchange rate against other major currencies will remain at around its August levels for the period from September to December, the company expects full year revenue of e 700 million, with an operating margin of 9% under IFRS rules.
By 2007, and using current exchange rates (1 euro = 1.25 USD), Ipsos now expects to have revenue of at least e 1 billion, with operating margin of over 10%. This will represent revenue growth of more than 40% and profit growth of more than 50% over two years. All other things being equal, these latest targets are between 10% and 15% higher than the previous targets, which assumed parity between the euro and the dollar.
Achieving these targets will require unchanged economic and financial conditions. They will be made possible by organic growth that will remain strong and the consolidation of new companies, particularly in countries and regions that Ipsos views as high priority (USA, UK, Asia - Pacific) and in the specialist areas where Ipsos plans to establish itself as a market leader.
Appendices: Consolidated accounts at June 30, 2005
Balance sheet Income statement Cash flow statement
A presentation of first half business levels and results together with full details of consolidated half-yearly accounts will be available on the company's website www.ipsos.com from 21 September.
NB: Ipsos is today also announcing the opening of a new office in Bangkok.
For more information on this press release, please contact: Dan Maceluch Vice President, Corporate Communications & Marketing Ipsos 604.893.1635
About Ipsos Ipsos is one of the fastest growing market research companies in the U.S., market leader in Canada, and among the most trusted research brands in North America. With more than 1,300 professionals and support staff in the U.S. and Canada, Ipsos offers a suite of survey-based services--guided by industry experts and bolstered by advanced analytics and methodologies--in advertising, customer loyalty, marketing, and public affairs research, as well as forecasting, modeling, and consulting. Ipsos companies offer a complete line of custom, syndicated, omnibus, panel, and online research products and services.
Ipsos conducts polling on behalf of the Associated Press, the world's oldest and largest news organization. In 2004, Ipsos generated e605.6 million ($752.8 million U.S.) in total revenues, of which 35% came from its North American operations. The Paris-based company was founded in 1975 and has been listed on the Paris Stock Exchange since 1999.
To learn more, visit: www.ipsos.com
Ipsos is listed on the Euronext Paris Premier Marchй, and is part of the SBF 120 and Next Prime Indices as well as eligible to the Deferred Settlement System (SRD). Euroclear code 7329, Reuters ISOS.LN, Bloomberg IPS
