2012 Preliminary Results - Part 2
Appendix 1: Preliminary results for the year ended 31 December 2012
Unaudited preliminary consolidated income statement for the year ended
31 December 2012
|
£ million |
Notes |
2012 |
2011 |
+/(-)% |
Constant Currency1 +/(-)% |
|
Billings |
|
44,405.3 |
44,791.8 |
(0.9) |
1.6 |
|
|
|
|
|
|
|
|
Revenue |
6 |
10,373.1 |
10,021.8 |
3.5 |
5.8 |
|
Direct costs |
|
(858.3) |
(783.3) |
(9.6) |
(13.0) |
|
Gross profit |
|
9,514.8 |
9,238.5 |
3.0 |
5.2 |
|
Operating costs |
4 |
(8,273.7) |
(8,046.3) |
(2.8) |
(4.7) |
|
Operating profit |
|
1,241.1 |
1,192.2 |
4.1 |
8.4 |
|
Share of results of associates |
4 |
69.4 |
66.1 |
5.0 |
10.7 |
|
Profit before interest and taxation |
|
1,310.5 |
1,258.3 |
4.1 |
8.5 |
|
Finance income |
5 |
85.9 |
97.3 |
(11.7) |
(4.0) |
|
Finance costs |
5 |
(299.8) |
(297.2) |
(0.9) |
(1.4) |
|
Revaluation of financial instruments |
5 |
(4.7) |
(50.0) |
- |
- |
|
Profit before taxation |
|
1,091.9 |
1,008.4 |
8.3 |
14.6 |
|
Taxation |
7 |
(197.2) |
(91.9) |
(114.6) |
(141.0) |
|
Profit for the year |
|
894.7 |
916.5 |
(2.4) |
2.4 |
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
Equity holders of the parent |
|
822.7 |
840.1 |
(2.1) |
2.7 |
|
Non-controlling interests |
|
72.0 |
76.4 |
5.8 |
1.2 |
|
|
|
894.7 |
916.5 |
(2.4) |
2.4 |
|
|
|
|
|
|
|
|
Headline PBIT |
6,19 |
1,531.0 |
1,429.0 |
7.1 |
11.1 |
|
Headline PBIT margin |
6,19 |
14.8% |
14.3% |
|
|
|
Headline PBT |
19 |
1,317.1 |
1,229.1 |
7.2 |
12.3 |
|
|
|
|
|
|
|
|
Earnings per share2 |
|
|
|
|
|
|
Basic earnings per ordinary share |
9 |
66.2p |
67.6p |
(2.1) |
2.7 |
|
Diluted earnings per ordinary share |
9 |
62.8p |
64.5p |
(2.6) |
1.9 |
1 The basis for calculating the constant currency percentage changes shown above and in the notes to this appendix are described in the glossary attached to this appendix.
2 The calculations of the Group's earnings per share and headline earnings per share are set out in note 9.
Unaudited preliminary consolidated statement of comprehensive income for the year ended 31 December 2012
|
£ million |
|
2012 |
2011 |
|
Profit for the year |
|
894.7 |
916.5 |
|
Exchange adjustments on foreign currency net investments |
|
(305.2) |
(256.3) |
|
(Loss)/gain on revaluation of available for sale investments |
|
(3.5) |
11.3 |
|
Actuarial loss on defined benefit pension plans |
|
(83.9) |
(72.0) |
|
Deferred tax on defined benefit pension plans |
|
7.3 |
0.1 |
|
Other comprehensive loss relating to the year |
|
(385.3) |
(316.9) |
|
Total comprehensive income relating to the year |
|
509.4 |
599.6 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity holders of the parent |
|
444.2 |
529.5 |
|
Non-controlling interests |
|
65.2 |
70.1 |
|
|
|
509.4 |
599.6 |
Unaudited preliminary consolidated cash flow statement for the year ended
31 December 2012
|
£ million |
Notes |
|
2012 |
2011 |
|
Net cash inflow from operating activities |
10 |
|
908.3 |
665.2 |
|
Investing activities |
|
|
|
|
|
Acquisitions and disposals |
10 |
|
(566.5) |
(469.8) |
|
Purchase of property, plant and equipment |
|
|
(290.3) |
(216.1) |
|
Purchase of other intangible assets (including capitalised computer software) |
|
|
(39.8) |
(37.1) |
|
Proceeds on disposal of property, plant and equipment |
|
|
123.5 |
13.2 |
|
Net cash outflow from investing activities |
|
|
(773.1) |
(709.8) |
|
Financing activities |
|
|
|
|
|
Share option proceeds |
|
|
56.0 |
28.8 |
|
Cash consideration for non-controlling interests |
10 |
|
(20.1) |
(62.6) |
|
Share repurchases and buybacks |
10 |
|
(134.5) |
(182.2) |
|
Net increase in borrowings |
10 |
|
380.5 |
301.4 |
|
Financing and share issue costs |
|
|
(8.2) |
(11.9) |
|
Equity dividends paid |
|
|
(306.6) |
(218.4) |
|
Dividends paid to non-controlling interests in subsidiary undertakings |
|
|
(51.9) |
(62.2) |
|
Net cash outflow from financing activities |
|
|
(84.8) |
(207.1) |
|
Net increase/(decrease) in cash and cash equivalents |
|
|
50.4 |
(251.7) |
|
Translation differences |
|
|
(119.3) |
(29.9) |
|
Cash and cash equivalents at beginning of year |
|
|
1,428.2 |
1,709.8 |
|
Cash and cash equivalents at end of year |
10 |
|
1,359.3 |
1,428.2 |
|
|
|
|
|
|
|
Reconciliation of net cash flow to movement in net debt: |
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
50.4 |
(251.7) |
|
Cash inflow from increase in debt financing |
|
|
(372.5) |
(289.5) |
|
Debt acquired |
|
|
(20.0) |
(17.5) |
|
Other movements |
|
|
3.4 |
(16.4) |
|
Translation differences |
|
|
(17.7) |
(1.3) |
|
Movement of net debt in the year |
|
|
(356.4) |
(576.4) |
|
Net debt at beginning of year |
|
|
(2,464.8) |
(1,888.4) |
|
Net debt at end of year |
11 |
|
(2,821.2) |
(2,464.8) |
Unaudited preliminary consolidated balance sheet as at 31 December 2012
|
£ million |
Notes |
|
2012 |
2011 |
|
Non-current assets |
|
|
|
|
|
Intangible assets: |
|
|
|
|
|
Goodwill |
12 |
|
9,457.2 |
9,430.8 |
|
Other |
13 |
|
1,827.4 |
1,859.9 |
|
Property, plant and equipment |
|
|
768.3 |
728.3 |
|
Interests in associates and joint ventures |
|
|
887.2 |
801.3 |
|
Other investments |
|
|
176.5 |
190.8 |
|
Deferred tax assets |
|
|
91.2 |
86.0 |
|
Trade and other receivables |
14 |
|
245.1 |
309.1 |
|
|
|
|
13,452.9 |
13,406.2 |
|
Current assets |
|
|
|
|
|
Inventory and work in progress |
|
|
348.2 |
333.9 |
|
Corporate income tax recoverable |
|
|
124.2 |
88.5 |
|
Trade and other receivables |
14 |
|
9,007.0 |
8,919.7 |
|
Cash and short-term deposits |
|
|
1,945.3 |
1,946.6 |
|
|
|
|
11,424.7 |
11,288.7 |
|
Current liabilities |
|
|
|
|
|
Trade and other payables |
15 |
|
(10,907.8) |
(11,165.5) |
|
Corporate income tax payable |
|
|
(102.9) |
(113.4) |
|
Bank overdrafts and loans |
|
|
(1,085.9) |
(518.4) |
|
|
|
|
(12,096.6) |
(11,797.3) |
|
Net current liabilities |
|
|
(671.9) |
(508.6) |
|
Total assets less current liabilities |
|
|
12,781.0 |
12,897.6 |
|
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Bonds and bank loans |
|
|
(3,680.6) |
(3,893.0) |
|
Trade and other payables |
16 |
|
(512.0) |
(553.1) |
|
Corporate income tax payable |
|
|
(375.3) |
(379.5) |
|
Deferred tax liabilities |
|
|
(680.3) |
(741.4) |
|
Provisions for post-employment benefits |
|
|
(335.6) |
(282.3) |
|
Provisions for liabilities and charges |
|
|
(136.6) |
(154.0) |
|
|
|
|
(5,720.4) |
(6,003.3) |
|
Net assets |
|
|
7,060.6 |
6,894.3 |
|
Equity |
|
|
|
|
|
Called-up share capital |
17 |
|
126.5 |
126.6 |
|
Share premium account |
|
|
175.9 |
105.7 |
|
Shares to be issued |
|
|
1.8 |
2.4 |
|
Other reserves |
|
|
(4,513.0) |
(4,197.3) |
|
Own shares |
|
|
(166.5) |
(177.6) |
|
Retained earnings |
|
|
11,186.3 |
10,803.5 |
|
Equity share owners' funds |
|
|
6,811.0 |
6,663.3 |
|
Non-controlling interests |
|
|
249.6 |
231.0 |
|
Total equity |
|
|
7,060.6 |
6,894.3 |
Unaudited preliminary consolidated statement of changes in equity for the year ended
31 December 2012
|
£ million |
Called-up |
Share |
Shares to be issued |
Other |
Own shares |
Retained |
Total equity share owners' funds |
Non-controlling interests |
Total |
|
Balance at 1 January 2011 |
126.4 |
54.5 |
3.1 |
(3,954.0) |
(144.8) |
10,361.4 |
6,446.6 |
201.3 |
6,647.9 |
|
Ordinary shares issued |
0.6 |
30.4 |
(0.7) |
0.6 |
- |
- |
30.9 |
- |
30.9 |
|
Share cancellations |
(0.7) |
- |
- |
0.7 |
- |
(45.9) |
(45.9) |
- |
(45.9) |
|
Treasury share additions |
- |
- |
- |
- |
(29.8) |
- |
(29.8) |
- |
(29.8) |
|
Treasury share allocations |
- |
- |
- |
- |
0.8 |
(0.8) |
- |
- |
- |
|
Exchange adjustments on foreign currency net investments |
- |
- |
- |
(250.0) |
- |
- |
(250.0) |
(6.3) |
(256.3) |
|
Net profit for the year |
- |
- |
- |
- |
- |
840.1 |
840.1 |
76.4 |
916.5 |
|
Dividends paid |
- |
- |
- |
- |
- |
(218.4) |
(218.4) |
(62.2) |
(280.6) |
|
Scrip dividend |
0.3 |
20.8 |
- |
- |
- |
(21.1) |
- |
- |
- |
|
Non-cash share-based incentive plans (including share options) |
- |
- |
- |
- |
- |
78.8 |
78.8 |
- |
78.8 |
|
Tax adjustment on share-based payments |
- |
- |
- |
- |
- |
(11.7) |
(11.7) |
- |
(11.7) |
|
Net movement in own shares held by ESOP Trusts |
- |
- |
- |
- |
(3.8) |
(102.7) |
(106.5) |
- |
(106.5) |
|
Actuarial loss on defined benefit pension plans |
- |
- |
- |
- |
- |
(72.0) |
(72.0) |
- |
(72.0) |
|
Deferred tax on defined benefit pension plans |
- |
- |
- |
- |
- |
0.1 |
0.1 |
- |
0.1 |
|
Gain on revaluation of available for sale investments |
- |
- |
- |
11.3 |
- |
- |
11.3 |
- |
11.3 |
|
Recognition/remeasurement of financial instruments |
- |
- |
- |
(5.9) |
- |
33.8 |
27.9 |
- |
27.9 |
|
Acquisition of subsidiaries1 |
- |
- |
- |
- |
- |
(38.1) |
(38.1) |
21.8 |
(16.3) |
|
Balance at 31 December 2011 |
126.6 |
105.7 |
2.4 |
(4,197.3) |
(177.6) |
10,803.5 |
6,663.3 |
231.0 |
6,894.3 |
|
Ordinary shares issued |
1.0 |
55.0 |
(0.6) |
0.5 |
- |
- |
55.9 |
- |
55.9 |
|
Share issue/cancellation costs |
- |
(0.2) |
- |
- |
- |
- |
(0.2) |
- |
(0.2) |
|
Share cancellations |
(0.7) |
- |
- |
0.7 |
- |
(55.1) |
(55.1) |
- |
(55.1) |
|
Treasury share additions |
- |
- |
- |
- |
(0.6) |
- |
(0.6) |
- |
(0.6) |
|
Treasury share allocations |
- |
- |
- |
- |
0.9 |
(0.9) |
- |
- |
- |
|
Treasury share cancellations |
(0.6) |
- |
- |
0.6 |
37.2 |
(37.2) |
- |
- |
- |
|
Exchange adjustments on foreign currency net investments |
- |
- |
- |
(298.4) |
- |
- |
(298.4) |
(6.8) |
(305.2) |
|
Net profit for the year |
- |
- |
- |
- |
- |
822.7 |
822.7 |
72.0 |
894.7 |
|
Dividends paid |
- |
- |
- |
- |
- |
(306.6) |
(306.6) |
(51.9) |
(358.5) |
|
Scrip dividend |
0.2 |
15.4 |
- |
- |
- |
(15.6) |
- |
- |
- |
|
Non-cash share-based incentive plans (including share options) |
- |
- |
- |
- |
- |
92.8 |
92.8 |
- |
92.8 |
|
Tax adjustment on share-based payments |
- |
- |
- |
- |
- |
18.3 |
18.3 |
- |
18.3 |
|
Net movement in own shares held by ESOP Trusts |
- |
- |
- |
- |
(26.4) |
(52.4) |
(78.8) |
- |
(78.8) |
|
Actuarial loss on defined benefit pension plans |
- |
- |
- |
- |
- |
(83.9) |
(83.9) |
- |
(83.9) |
|
Deferred tax on defined benefit pension plans |
- |
- |
- |
- |
- |
7.3 |
7.3 |
- |
7.3 |
|
Loss on revaluation of available for sale investments |
- |
- |
- |
(3.5) |
- |
- |
(3.5) |
- |
(3.5) |
|
Recognition/remeasurement of financial instruments |
- |
- |
- |
2.7 |
- |
14.8 |
17.5 |
- |
17.5 |
|
Share purchases - close period commitments |
- |
- |
- |
(18.3) |
- |
- |
(18.3) |
- |
(18.3) |
|
Acquisition of subsidiaries1 |
- |
- |
- |
- |
- |
(21.4) |
(21.4) |
5.3 |
(16.1) |
|
Balance at 31 December 2012 |
126.5 |
175.9 |
1.8 |
(4,513.0) |
(166.5) |
11,186.3 |
6,811.0 |
249.6 |
7,060.6 |
Total comprehensive income relating to the year ended 31 December 2012 was £509.4 million (2011: £599.6 million)
1 Acquisition of subsidiaries represents movements in retained earnings and non-controlling interests arising from increases in ownership of existing subsidiaries and recognition of non-controlling interests on new acquisitions
Notes to the unaudited preliminary consolidated financial statements
1. Basis of accounting
The unaudited preliminary consolidated financial statements are prepared under the historical cost convention, except for the revaluation of certain financial instruments as disclosed in our accounting policies.
2. Accounting policies
The unaudited preliminary consolidated financial statements comply with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union and as issued by the International Accounting Standards Board (IASB), and with the accounting policies of the Group which were set out on pages 145 to 151 of the 2011 Annual Report and Accounts. No changes have been made to the Group's accounting policies in the year ended 31 December 2012.
Whilst the financial information included in this preliminary announcement has been computed in accordance with IFRS, this announcement does not itself contain sufficient information to comply with all IFRS disclosure requirements. The Company's 2012 Annual Report and Accounts will be prepared in compliance with IFRS. The unaudited preliminary announcement does not constitute a dissemination of the annual financial report and does not therefore need to meet the dissemination requirements for annual financial reports. A separate dissemination announcement in accordance with Disclosure and Transparency Rules (DTR) 6.3 will be made when the annual report and audited financial statements are available on the Company's website.
Statutory Information
The financial information included in this preliminary announcement does not constitute statutory accounts. The statutory accounts for the year ended 31 December 2011 have been delivered to the Jersey Registrar and received an unqualified auditors' report. The statutory accounts for the year ended 31 December 2012 will be finalised on the basis of the financial information presented by the directors in this unaudited preliminary announcement and will be delivered to the Jersey Registrar following the Company's General Meeting. The audit report for the year ended 31 December 2012 has yet to be signed.
The announcement of the preliminary results was approved by the board of directors on 1 March 2013.
Notes to the unaudited preliminary consolidated financial statements (continued)
3. Currency conversion
The reporting currency of the Group is pound sterling and the unaudited consolidated financial statements have been prepared on this basis.
The 2012 unaudited preliminary consolidated income statement is prepared using, among other currencies, average exchange rates of US$1.5852 to the pound (2011: US$1.6032) and €1.2336 to the pound (2011: €1.1526). The unaudited preliminary consolidated balance sheet as at 31 December 2012 has been prepared using the exchange rates on that day of US$1.6242 to the pound (2011: US$1.5509) and €1.2307 to the pound (2011: €1.1967).
The basis for calculating the constant currency percentage changes, shown on the face of the unaudited preliminary consolidated income statement, is described in the glossary attached to this appendix.
4. Operating costs and share of results of associates
|
£ million |
2012 |
2011 |
|
Staff costs |
6,106.1 |
5,872.5 |
|
Establishment costs |
690.6 |
674.1 |
|
Other operating costs |
1,477.0 |
1,499.7 |
|
Total operating costs |
8,273.7 |
8,046.3 |
Staff costs include:
|
£ million |
2012 |
2011 |
|
Wages and salaries |
4,289.7 |
4,079.4 |
|
Cash-based incentive plans |
198.1 |
259.4 |
|
Share-based incentive plans |
92.8 |
78.8 |
|
Social security costs |
524.7 |
499.3 |
|
Pension costs |
148.7 |
135.4 |
|
Severance |
50.8 |
53.9 |
|
Other staff costs |
801.3 |
766.3 |
|
|
6,106.1 |
5,872.5 |
|
Staff cost to revenue ratio |
58.9% |
58.6% |
Other operating costs include:
|
£ million |
2012 |
2011 |
|
Amortisation and impairment of acquired intangible assets |
171.9 |
172.0 |
|
Goodwill impairment |
32.0 |
- |
|
Gains on disposal of investments |
(26.8) |
(0.4) |
|
Gains on remeasurement of equity interest on acquisition of controlling interest |
(5.3) |
(31.6) |
|
Investment write-downs |
19.6 |
32.8 |
|
Gain on sale of freehold property in New York |
(71.4) |
- |
|
Cost of changes to corporate structure |
4.1 |
- |
|
Restructuring costs |
93.4 |
- |
Notes to the unaudited preliminary consolidated financial statements (continued)
4. Operating costs and share of results of associates (continued)
The goodwill impairment charge of £32.0 million relates to a number of under-performing businesses in the Group. In certain markets, the impact of current, local economic conditions and trading circumstances on these businesses is sufficiently severe to indicate impairment to the carrying value of goodwill. Investment write-downs of £19.6 million (2011: £32.8 million) relate to certain non-core minority investments in Continental Europe and the US where forecast financial performance and/or liquidity issues indicate a permanent decline in the recoverability of the Group's investment.
Restructuring costs of £93.4 million include £62.9 million of severance costs arising from a structural reassessment of certain of the Group's operations, primarily in Western Continental Europe; and £30.5 million of other costs, primarily accelerated depreciation of IT assets in the US and Europe, arising from an overhaul of its centralised IT infrastructure.
Operating profit includes credits totalling £19.8 million (2011: £14.0 million) relating to the release of excess provisions and other balances established in respect of acquisitions completed prior to 2011.
Share of results of associates include:
|
£ million |
|
2012 |
2011 |
|
Share of profit before interest and taxation |
105.1 |
99.9 |
|
|
Share of exceptional (losses)/gains |
(3.0) |
2.1 |
|
|
Share of interest and non-controlling interests |
(1.6) |
(2.5) |
|
|
Share of taxation |
|
(31.1) |
(33.4) |
|
|
|
69.4 |
66.1 |
5. Finance income, finance costs and revaluation of financial instruments
Finance income includes:
|
£ million |
|
2012 |
2011 |
|
Expected return on pension plan assets |
30.0 |
32.6 |
|
|
Income from available for sale investments |
1.2 |
0.6 |
|
|
Interest income |
|
54.7 |
64.1 |
|
|
|
85.9 |
97.3 |
Finance costs include:
|
£ million |
|
2012 |
2011 |
|
Interest on pension plan liabilities |
41.3 |
43.8 |
|
|
Interest on other long-term employee benefits |
1.7 |
1.8 |
|
|
Interest payable and similar charges |
256.8 |
251.6 |
|
|
|
|
299.8 |
297.2 |
Notes to the unaudited preliminary consolidated financial statements (continued)
5. Finance income, finance costs and revaluation of financial instruments (continued)
Revaluation of financial instruments include:
|
£ million |
|
2012 |
2011 |
|
Movements in fair value of treasury instruments |
(14.8) |
(12.7) |
|
|
Revaluation of put options over non-controlling interests |
(5.1) |
(30.9) |
|
|
Revaluation of payments due to vendors (earnout agreements) |
15.2 |
(6.4) |
|
|
|
|
(4.7) |
(50.0) |
6. Segmental analysis
Reported contributions by operating sector were as follows:
|
£ million |
2012 |
2011 |
|
|
Revenue |
|
|
|
|
Advertising and Media Investment Management |
4,273.2 |
4,157.2 |
|
|
Consumer Insight |
|
2,460.2 |
2,458.0 |
|
Public Relations & Public Affairs |
917.1 |
885.4 |
|
|
Branding & Identity, Healthcare and Specialist Communications |
2,722.6 |
2,521.2 |
|
|
|
|
10,373.1 |
10,021.8 |
|
Headline PBIT1 |
|
|
|
|
Advertising and Media Investment Management |
754.5 |
667.9 |
|
|
Consumer Insight |
|
246.9 |
258.7 |
|
Public Relations & Public Affairs |
136.4 |
142.9 |
|
|
Branding & Identity, Healthcare and Specialist Communications |
393.2 |
359.5 |
|
|
|
|
1,531.0 |
1,429.0 |
|
Headline PBIT margin |
|
|
|
|
Advertising and Media Investment Management |
17.7% |
16.1% |
|
|
Consumer Insight |
|
10.0% |
10.5% |
|
Public Relations & Public Affairs |
14.9% |
16.1% |
|
|
Branding & Identity, Healthcare and Specialist Communications |
14.4% |
14.3% |
|
|
|
|
14.8% |
14.3% |
1 Headline PBIT is defined in note 19.
Notes to the unaudited preliminary consolidated financial statements (continued)
6. Segmental analysis (continued)
Reported contributions by geographical area were as follows:
|
£ million |
2012 |
2011 |
|
Revenue |
|
|
|
North America2 |
3,546.5 |
3,388.2 |
|
United Kingdom |
1,275.2 |
1,183.5 |
|
Western Continental Europe3 |
2,439.2 |
2,505.1 |
|
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe |
3,112.2 |
2,945.0 |
|
|
10,373.1 |
10,021.8 |
|
Headline PBIT1 |
|
|
|
North America2 |
578.6 |
525.6 |
|
United Kingdom |
173.3 |
165.3 |
|
Western Continental Europe3 |
252.9 |
284.0 |
|
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe |
526.2 |
454.1 |
|
|
1,531.0 |
1,429.0 |
|
Headline PBIT margin |
|
|
|
North America2 |
16.3% |
15.5% |
|
United Kingdom |
13.6% |
14.0% |
|
Western Continental Europe3 |
10.4% |
11.3% |
|
Asia Pacific, Latin America, Africa & Middle East and Central & Eastern Europe |
16.9% |
15.4% |
|
|
14.8% |
14.3% |
1 Headline PBIT is defined in note 19.
2 North America includes the US with revenue of £3,309.4 million (2011: £3,149.9 million) and headline PBIT of £547.8 million (2011: £490.2 million).
3 Western Continental Europe includes Ireland with revenue of £36.6 million (2011: £40.3 million) and headline PBIT of £0.7 million (2011: £1.1 million).
Notes to the unaudited preliminary consolidated financial statements (continued)
7. Taxation
The headline tax rate was 21.2% (2011: 22.0%). The tax rate on reported PBT was 18.1% (2011: 9.1%). The cash tax rate on headline PBT1 was 19.5% (2011: 20.2%).
The tax charge comprises:
|
£ million |
2012 |
2011 |
|
Corporation tax |
|
|
|
Current year |
335.5 |
310.3 |
|
Prior years |
(41.7) |
(47.7) |
|
Exceptional release of prior year provisions |
- |
(106.1) |
|
Tax credit relating to restructuring costs |
(15.7) |
- |
|
|
278.1 |
156.5 |
|
Deferred tax |
|
|
|
Current year |
(14.4) |
4.5 |
|
Net credit in relation to the amortisation of acquired intangible assets and other goodwill items |
(86.0) |
(72.4) |
|
Deferred tax on gain on sale of freehold property in New York |
20.0 |
- |
|
|
(80.4) |
(67.9) |
|
Prior years |
(0.5) |
3.3 |
|
|
(80.9) |
(64.6) |
|
|
|
|
|
Tax charge |
197.2 |
91.9 |
The calculation of the headline tax rate is as follows:
|
£ million |
2012 |
2011 |
|
Headline PBT1 |
1,317.1 |
1,229.1 |
|
Tax charge |
197.2 |
91.9 |
|
Deferred tax on gain on sale of freehold property in New York |
(20.0) |
- |
|
Tax credit relating to restructuring costs |
15.7 |
- |
|
Net credit in relation to the amortisation of acquired intangible assets and other goodwill items |
86.0 |
72.4 |
|
Exceptional release of prior year provisions |
- |
106.1 |
|
Headline tax charge |
278.9 |
270.4 |
|
Headline tax rate |
21.2% |
22.0% |
8. Ordinary dividends
The Board has recommended a final dividend of 19.71p (2011: 17.14p) per ordinary share in addition to the interim dividend of 8.80p (2011: 7.46p) per share. This makes a total for the year of 28.51p (2011: 24.60p). Payment of the final dividend of 19.71p per ordinary share will be made on 8 July 2013 to holders of ordinary shares in the Company on 7 June 2013.
1 Headline PBT is defined in note 19.
Notes to the unaudited preliminary consolidated financial statements (continued)
9. Earnings per share
Basic EPS
The calculation of basic reported and headline EPS is as follows:
|
|
2012 |
2011 |
+/(-)% |
Constant Currency +/(-)% |
|
Reported earnings1 (£ million) |
822.7 |
840.1 |
|
|
|
Headline earnings (£ million) (note 19) |
966.2 |
882.3 |
|
|
|
Average shares used in basic EPS calculation (million) |
1,243.4 |
1,242.7 |
|
|
|
Reported EPS |
66.2p |
67.6p |
(2.1) |
2.7 |
|
Headline EPS |
77.7p |
71.0p |
9.4 |
14.4 |
Diluted EPS
The calculation of diluted reported and headline EPS is as follows:
|
|
2012 |
2011 |
+/(-)% |
Constant Currency +/(-)% |
|
Diluted reported earnings (£ million) |
848.8 |
866.2 |
|
|
|
Diluted headline earnings (£ million) |
992.3 |
908.4 |
|
|
|
Shares used in diluted EPS calculation (million) |
1,352.6 |
1,342.2 |
|
|
|
Diluted reported EPS |
62.8p |
64.5p |
(2.6) |
1.9 |
|
Diluted headline EPS |
73.4p |
67.7p |
8.4 |
13.1 |
Diluted EPS has been calculated based on the reported and headline earnings amounts above. On 19 May 2009 the Group issued £450 million 5.75% convertible bonds due in 2014. For the year ended 31 December 2012 these convertible bonds were dilutive and earnings were consequently increased by £26.1 million (2011: £26.1 million) for the purpose of the calculation of diluted earnings.
A reconciliation between the shares used in calculating basic and diluted EPS is as follows:
|
Million |
2012 |
2011 |
|
Average shares used in basic EPS calculation |
1,243.4 |
1,242.7 |
|
Dilutive share options outstanding |
4.9 |
4.5 |
|
Other potentially issuable shares |
27.8 |
18.5 |
|
£450 million 5.75% convertible bonds |
76.5 |
76.5 |
|
Shares used in diluted EPS calculation |
1,352.6 |
1,342.2 |
At 31 December 2012 there were 1,265,407,107 (2011: 1,266,373,821) ordinary shares in issue.
1 Reported earnings is equivalent to profit for the year attributable to equity holders of the parent.
Notes to the unaudited preliminary consolidated financial statements (continued)
10. Analysis of cash flows
The following tables analyse the items included within the main cash flow headings on page 18:
Net cash inflow from operating activities:
|
£ million |
2012 |
2011 |
|
Profit for the year |
894.7 |
916.5 |
|
Taxation |
197.2 |
91.9 |
|
Revaluation of financial instruments |
4.7 |
50.0 |
|
Finance costs |
299.8 |
297.2 |
|
Finance income |
(85.9) |
(97.3) |
|
Share of results of associates |
(69.4) |
(66.1) |
|
Operating profit |
1,241.1 |
1,192.2 |
|
Adjustments for: |
|
|
|
Non-cash share-based incentive plans (including share options) |
92.8 |
78.8 |
|
Depreciation of property, plant and equipment |
191.0 |
185.8 |
|
Goodwill impairment |
32.0 |
- |
|
Amortisation and impairment of acquired intangible assets |
171.9 |
172.0 |
|
Amortisation of other intangible assets |
33.7 |
25.7 |
|
Investment write-downs |
19.6 |
32.8 |
|
Gains on disposal of investments |
(26.8) |
(0.4) |
|
Gains on remeasurement of equity interest on acquisition of controlling interest |
(5.3) |
(31.6) |
|
Gain on sale of freehold property in New York |
(71.4) |
- |
|
Losses/(gains) on sale of property, plant and equipment |
0.7 |
(0.9) |
|
Operating cash flow before movements in working capital and provisions |
1,679.3 |
1,654.4 |
|
Movements in working capital and provisions |
(388.2) |
(620.9) |
|
Cash generated by operations |
1,291.1 |
1,033.5 |
|
Corporation and overseas tax paid |
(257.0) |
(247.9) |
|
Interest and similar charges paid |
(228.3) |
(241.4) |
|
Interest received |
56.6 |
63.2 |
|
Investment income |
1.2 |
0.6 |
|
Dividends from associates |
44.7 |
57.2 |
|
|
908.3 |
665.2 |
Acquisitions and disposals:
|
£ million |
2012 |
2011 |
|
Initial cash consideration |
(462.0) |
(352.3) |
|
Cash and cash equivalents acquired (net) |
46.6 |
98.8 |
|
Earnout payments |
(85.7) |
(150.0) |
|
Loan note redemptions |
(1.0) |
(0.8) |
|
Purchase of other investments (including associates) |
(111.4) |
(68.1) |
|
Proceeds on disposal of investments |
47.0 |
2.6 |
|
Acquisitions and disposals |
(566.5) |
(469.8) |
|
Cash consideration for non-controlling interests |
(20.1) |
(62.6) |
|
Net acquisition payments and investments |
(586.6) |
(532.4) |
Notes to the unaudited preliminary consolidated financial statements (continued)
10. Analysis of cash flows (continued)
Share repurchases and buybacks:
|
£ million |
2012 |
2011 |
|
Purchase of own shares by ESOP Trusts |
(78.8) |
(106.5) |
|
Share cancellations |
(55.1) |
(45.9) |
|
Shares purchased into treasury |
(0.6) |
(29.8) |
|
|
(134.5) |
(182.2) |
Net increase in borrowings:
|
£ million |
2012 |
2011 |
|
Proceeds from issue of $500 million bonds |
312.1 |
319.5 |
|
Proceeds from issue of $300 million bonds |
187.3 |
- |
|
Decrease in drawings on bank loans |
(79.7) |
- |
|
Repayment of debt acquired |
(20.0) |
(18.1) |
|
Repayment of $30 million TNS private placements |
(19.2) |
- |
|
|
380.5 |
301.4 |
Cash and cash equivalents:
|
£ million |
2012 |
2011 |
|
Cash at bank and in hand |
1,721.4 |
1,833.5 |
|
Short-term bank deposits |
223.9 |
113.1 |
|
Overdrafts1 |
(586.0) |
(518.4) |
|
|
1,359.3 |
1,428.2 |
11. Net debt
|
£ million |
2012 |
2011 |
|
Cash and short-term deposits |
1,945.3 |
1,946.6 |
|
Bank overdrafts and loans due within one year |
(1,085.9) |
(518.4) |
|
Bonds and bank loans due after one year |
(3,680.6) |
(3,893.0) |
|
|
(2,821.2) |
(2,464.8) |
1 Bank overdrafts are included in cash and cash equivalents because they form an integral part of the Group's cash management.
Notes to the unaudited preliminary consolidated financial statements (continued)
12. Goodwill and acquisitions
Goodwill in relation to subsidiary undertakings increased by £26.4 million (2011: £324.5 million) in the year. This movement includes both goodwill arising on acquisitions completed in the year and adjustments to goodwill relating to acquisitions completed in prior years, net of impairment charges and the effect of currency translation. Goodwill in relation to associate undertakings decreased by £0.5 million (2011: £10.5 million) in the year.
Future anticipated payments to vendors in respect of both deferred and earnout obligations totalled £194.0 million (2011: £234.1 million). Earnouts are based on the directors' best estimates of future obligations, which are dependent on the future performance of the interests acquired and assume the operating companies improve profits in line with directors' estimates. An analysis of movements on deferred and earnout obligations is shown in note 16.
The contribution to revenue and operating profit of acquisitions completed in the year was not material. There were no material acquisitions completed during the year or between 31 December 2012 and the date these preliminary financial statements were approved.
13. Other intangible assets
The following are included in other intangibles:
|
£ million |
2012 |
2011 |
|
Brands with an indefinite useful life |
993.1 |
1,036.4 |
|
Acquired intangibles |
746.0 |
741.4 |
|
Other (including capitalised computer software) |
88.3 |
82.1 |
|
|
1,827.4 |
1,859.9 |
14. Trade and other receivables
Amounts falling due within one year:
|
£ million |
2012 |
2011 |
|
Trade receivables |
6,204.2 |
6,305.1 |
|
VAT and sales taxes recoverable |
75.6 |
76.2 |
|
Prepayments and accrued income |
2,232.2 |
2,044.0 |
|
Other debtors |
495.0 |
494.4 |
|
|
9,007.0 |
8,919.7 |
Notes to the unaudited preliminary consolidated financial statements (continued)
14. Trade and other receivables (continued)
Amounts falling due after more than one year:
|
£ million |
2012 |
2011 |
|
Prepayments and accrued income1 |
29.5 |
36.6 |
|
Other debtors1 |
73.9 |
87.6 |
|
Fair value of derivatives |
141.7 |
184.9 |
|
|
245.1 |
309.1 |
15. Trade and other payables: amounts falling due within one year
|
£ million |
2012 |
2011 |
|
Trade payables |
7,227.5 |
7,292.7 |
|
Deferred income |
880.2 |
1,002.3 |
|
Payments due to vendors (earnout agreements) |
33.4 |
96.8 |
|
Liabilities in respect of put option agreements with vendors |
64.3 |
79.2 |
|
Fair value of derivatives |
31.6 |
0.5 |
|
Share purchases - close period commitments |
18.2 |
- |
|
Other creditors and accruals |
2,652.6 |
2,694.0 |
|
|
10,907.8 |
11,165.5 |
16. Trade and other payables: amounts falling due after more than one year
|
£ million |
2012 |
2011 |
|
Payments due to vendors (earnout agreements) |
160.6 |
137.3 |
|
Liabilities in respect of put option agreements with vendors |
80.0 |
89.1 |
|
Fair value of derivatives |
79.7 |
139.9 |
|
Other creditors and accruals |
191.7 |
186.8 |
|
|
512.0 |
553.1 |
The following table sets out payments due to vendors, comprising deferred consideration and the directors' best estimates of future earnout related obligations:
|
£ million |
2012 |
2011 |
|
Within one year |
33.4 |
96.8 |
|
Between 1 and 2 years |
35.7 |
31.6 |
|
Between 2 and 3 years |
28.7 |
25.2 |
|
Between 3 and 4 years |
30.4 |
18.6 |
|
Between 4 and 5 years |
63.8 |
28.9 |
|
Over 5 years |
2.0 |
33.0 |
|
|
194.0 |
234.1 |
1 Comparative figures have been restated to be consistent with current year presentation.
Notes to the unaudited preliminary consolidated financial statements (continued)
16. Trade and other payables: amounts falling due after more than one year (continued)
The following table sets out the movements of deferred and earnout related obligations during the year:
|
£ million |
2012 |
2011 |
|
At the beginning of the year |
234.1 |
275.3 |
|
Earnouts paid |
(85.7) |
(150.0) |
|
New acquisitions |
61.5 |
80.4 |
|
Revision of estimates taken to goodwill |
8.6 |
25.9 |
|
Revaluation of payments due to vendors (note 5) |
(15.2)) |
6.4 |
|
Exchange adjustments |
(9.3) |
(3.9) |
|
At the end of the year |
194.0 |
234.1 |
The Group does not consider there to be any material contingent liabilities as at 31 December 2012.
17. Issued share capital - movement in the year
|
Number of equity ordinary shares (million) |
2012 |
2011 |
|
At the beginning of the year |
1,266.4 |
1,264.4 |
|
Exercise of share options |
10.0 |
5.9 |
|
Share cancellations |
(6.7) |
(7.0) |
|
Scrip dividend |
2.0 |
3.1 |
|
Treasury share cancellations |
(6.3) |
- |
|
At the end of the year |
1,265.4 |
1,266.4 |
18. Related party transactions
From time to time the Group enters into transactions with its associate undertakings. These transactions were not material for either year presented.
Notes to the unaudited preliminary consolidated financial statements (continued)
19. Non-GAAP measures of performance
Reconciliation of profit before interest and taxation to headline PBIT for the year ended 31 December 2012:
|
£ million |
2012 |
2011 |
|
Profit before interest and taxation |
1,310.5 |
1,258.3 |
|
Amortisation and impairment of acquired intangible assets |
171.9 |
172.0 |
|
Goodwill impairment |
32.0 |
- |
|
Gains on disposal of investments |
(26.8) |
(0.4) |
|
Gains on remeasurement of equity interest on acquisition of controlling interest |
(5.3) |
(31.6) |
|
Investment write-downs |
19.6 |
32.8 |
|
Cost of changes to corporate structure |
4.1 |
- |
|
Gain on sale of freehold property in New York |
(71.4) |
- |
|
Restructuring costs |
93.4 |
- |
|
Share of exceptional losses/(gains) of associates |
3.0 |
(2.1) |
|
Headline PBIT |
1,531.0 |
1,429.0 |
|
|
|
|
|
Finance income |
85.9 |
97.3 |
|
Finance costs |
(299.8) |
(297.2) |
|
|
(213.9) |
(199.9) |
|
|
|
|
|
Interest cover on headline PBIT |
7.2 times |
7.1 times |
Calculation of headline EBITDA:
|
£ million |
2012 |
2011 |
|
Headline PBIT (as above) |
1,531.0 |
1,429.0 |
|
Depreciation of property, plant and equipment |
191.0 |
185.8 |
|
Amortisation of other intangible assets |
33.7 |
25.7 |
|
Headline EBITDA |
1,755.7 |
1,640.5 |
Headline PBIT margins before and after share of results of associates:
|
£ million |
Margin |
2012 |
Margin |
2011 |
|
Revenue |
|
10,373.1 |
|
10,021.8 |
|
Headline PBIT |
14.8% |
1,531.0 |
14.3% |
1,429.0 |
|
Share of results of associates (excluding exceptional gains/losses) |
|
72.4 |
|
64.0 |
|
Headline PBIT excluding share of results of associates |
14.1% |
1,458.6 |
13.6% |
1,365.0 |
Notes to the unaudited preliminary consolidated financial statements (continued)
19. Non-GAAP measures of performance (continued)
Reconciliation of profit before taxation to headline PBT and headline earnings for the year ended 31 December 2012:
|
£ million |
2012 |
2011 |
|
Profit before taxation |
1,091.9 |
1,008.4 |
|
Amortisation and impairment of acquired intangible assets |
171.9 |
172.0 |
|
Goodwill impairment |
32.0 |
- |
|
Gains on disposal of investments |
(26.8) |
(0.4) |
|
Gains on remeasurement of equity interest on acquisition of controlling interest |
(5.3) |
(31.6) |
|
Investment write-downs |
19.6 |
32.8 |
|
Cost of changes to corporate structure |
4.1 |
- |
|
Gain on sale of freehold property in New York |
(71.4) |
- |
|
Restructuring costs |
93.4 |
- |
|
Share of exceptional losses/(gains) of associates |
3.0 |
(2.1) |
|
Revaluation of financial instruments |
4.7 |
50.0 |
|
Headline PBT |
1,317.1 |
1,229.1 |
|
Headline tax charge (note 7) |
(278.9) |
(270.4) |
|
Non-controlling interests |
(72.0) |
(76.4) |
|
Headline earnings |
966.2 |
882.3 |
|
Ordinary dividends |
322.2 |
239.5 |
|
Dividend cover on headline earnings |
3.0 times |
3.7 times |
Reconciliation of free cash flow for the year ended 31 December 2012:
|
£ million |
2012 |
2011 |
|
Cash generated by operations |
1,291.1 |
1,033.5 |
|
Plus: |
|
|
|
Interest received |
56.6 |
63.2 |
|
Investment income |
1.2 |
0.6 |
|
Dividends from associates |
44.7 |
57.2 |
|
Share option proceeds |
56.0 |
28.8 |
|
Proceeds on disposal of property, plant and equipment |
123.5 |
13.2 |
|
Movements in working capital and provisions |
388.2 |
620.9 |
|
Less: |
|
|
|
Interest and similar charges paid |
(228.3) |
(241.4) |
|
Purchase of property, plant and equipment |
(290.3) |
(216.1) |
|
Purchase of other intangible assets (including capitalised computer software) |
(39.8) |
(37.1) |
|
Corporation and overseas tax paid |
(257.0) |
(247.9) |
|
Dividends paid to non-controlling interests in subsidiary undertakings |
(51.9) |
(62.2) |
|
Free cash flow |
1,094.0 |
1,012.7 |
Notes to the unaudited preliminary consolidated financial statements (continued)
20. Going concern and liquidity risk
In considering going concern and liquidity risk, the directors have reviewed the Group's future cash requirements and earnings projections. The directors believe these forecasts have been prepared on a prudent basis and have also considered the impact of a range of potential changes to trading performance. The directors have concluded that the Group should be able to operate within its current facilities and comply with its banking covenants for the foreseeable future and therefore believe it is appropriate to prepare the financial statements of the Group on a going concern basis.
At 31 December 2012, the Group has access to £5.2 billion of committed bank facilities with maturity dates spread over the years 2013 to 2042 as illustrated below:
|
£ million |
Maturity by Year |
||||||
|
|
|
2013 |
2014 |
2015 |
2016 |
2017 |
2018+ |
|
US bond $300m (5.125% '42) |
184.7 |
|
|
|
|
|
184.7 |
|
US bond $500m (3.625% '22) |
307.8 |
|
|
|
|
|
307.8 |
|
US bond $812m (4.75% '21) |
500.2 |
|
|
|
|
|
500.2 |
|
£ bonds £200m (6.375% '20) |
200.0 |
|
|
|
|
|
200.0 |
|
£ bonds £400m (6.0% '17) |
400.0 |
|
|
|
|
400.0 |
|
|
Bank revolver ($1,050m and £375m) |
1,021.5 |
|
|
|
1,021.5 |
|
|
|
Eurobonds €750m (6.625% '16) |
609.4 |
|
|
|
609.4 |
|
|
|
Eurobonds €500m (5.25% '15) |
406.3 |
|
|
406.3 |
|
|
|
|
£450m convertible bonds (5.75% '14) |
450.0 |
|
450.0 |
|
|
|
|
|
US bond $600m (8.0% '14) |
369.4 |
|
369.4 |
|
|
|
|
|
US bond $369m (5.875% '14) |
227.0 |
|
227.0 |
|
|
|
|
|
TNS private placements $25m |
15.4 |
|
15.4 |
|
|
|
|
|
Eurobonds €600m (4.375% '13) |
487.5 |
487.5 |
|
|
|
|
|
|
Total committed facilities available |
5,179.2 |
487.5 |
1,061.8 |
406.3 |
1,630.9 |
400.0 |
1,192.7 |
|
Drawn down facilities at 31 December 2012 |
4,157.7 |
487.5 |
1,061.8 |
406.3 |
609.4 |
400.0 |
1,192.7 |
|
Undrawn committed credit facilities |
1,021.5 |
|
|
|
|
|
|
|
Drawn down facilities at 31 December 2012 |
4,157.7 |
|
|
|
|
|
|
|
Net cash at 31 December 2012 |
(1,359.3) |
|
|
|
|
|
|
|
Other adjustments |
22.8 |
|
|
|
|
|
|
|
Net debt at 31 December 2012 |
2,821.2 |
|
|
|
|
|
|
The Group's borrowings are evenly distributed between fixed and floating rate debt. Given the strong cash generation of the business, its debt maturity profile and available facilities, the directors believe the Group has sufficient liquidity to match its requirements for the foreseeable future.
Treasury management
The Group's treasury activities are principally concerned with monitoring of working capital, managing external and internal funding requirements and monitoring and managing financial market risks, in particular risks from movements in interest and foreign exchange rates.
The Group's risk management policies relating to foreign currency risk, interest rate risk, liquidity risk, capital risk and credit risk are presented in the notes to the consolidated financial statements of the 2011 Annual Report and Accounts and in the opinion of the Board remain relevant at 31 December 2012.
Notes to the unaudited preliminary consolidated financial statements (continued)
21. Principal risks and uncertainties
The directors have considered the principal risks and uncertainties affecting the Group for the year and determined that these are as published in the Prospectus relating to the admission of WPP plc to the Official List and trading on the London Stock Exchange plc dated 13 November 2012 (the "Prospectus"). The Prospectus is published in the Investor Relations section of the Group website (www.wpp.com) and copies are available from the Group on request.
WPP plc has specific policies in place to ensure that risks are properly evaluated and managed at the appropriate level within the business. These are presented on pages 110 to 114 of the published 2011 Annual Report and Accounts. Pages 16 to 19 of the Prospectus contain a detailed explanation of the risk factors identified by the Group and these are summarised below:
Clients
n The Group competes for clients in a highly competitive industry.
n The Group receives a significant portion of its revenues from a limited number of large clients.
Economic
n The Group is subject to recessionary economic cycles.
Financial
n The Group is subject to currency exchange rate fluctuations.
n The Group's cost of capital is influenced by the ratings issued by the international debt rating agencies.
n The Group is subject to credit risk through the default of a client or other counterparty.
Mergers & Acquisitions
n The Group may be unsuccessful in evaluating material risks involved in completed and future acquisitions, and may be unsuccessful in integrating any acquired operations with its existing businesses.
n Goodwill and other intangible assets recorded on the Group's balance sheet with respect to acquired companies may become impaired.
Operational
n The Group operates in 110 countries and is exposed to the risks of doing business internationally.
People
n The Group is highly dependent on the talent, creative abilities and technical skills of its senior management and other key personnel.
Notes to the unaudited preliminary consolidated financial statements (continued)
21. Principal risks and uncertainties (continued)
Regulatory/Legal
n The Group may be subject to regulations restricting its activities or effecting changes in taxation.
n The Group may be exposed to liabilities from allegations that certain of its clients' advertising claims may be false or misleading or that its clients' products may be defective or harmful.
n The Group is subject to strict anti-corruption and anti-bribery legislation and enforcement in the countries in which it operates.
n The Group is subject to strict data protection and privacy legislation in the various jurisdictions in which it operates and relies extensively on information technology systems.
Appendix 2: Preliminary results for the year ended 31 December 2012 in reportable US Dollars1
Unaudited illustrative preliminary consolidated income statement for the year ended
31 December 2012
|
$ million |
2012 |
2011 |
+/(-)% |
|
Billings |
70,459.1 |
71,749.2 |
(1.8) |
|
|
|
|
|
|
Revenue |
16,459.3 |
16,053.4 |
2.5 |
|
Direct costs |
(1,361.9) |
(1,253.7) |
(8.6) |
|
Gross profit |
15,097.4 |
14,799.7 |
2.0 |
|
Operating costs |
(13,120.8) |
(12,896.3) |
(1.7) |
|
Operating profit |
1,976.6 |
1,903.4 |
3.8 |
|
Share of results of associates |
110.3 |
105.8 |
4.3 |
|
Profit before interest and taxation |
2,086.9 |
2,009.2 |
3.9 |
|
Finance income |
136.3 |
155.3 |
(12.2) |
|
Finance costs |
(475.3) |
(475.9) |
0.1 |
|
Revaluation of financial instruments |
(6.5) |
(79.2) |
- |
|
Profit before taxation |
1,741.4 |
1,609.4 |
8.2 |
|
Taxation |
(315.4) |
(151.1) |
(108.7) |
|
Profit for the year |
1,426.0 |
1,458.3 |
(2.2) |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity holders of the parent |
1,311.5 |
1,335.7 |
(1.8) |
|
Non-controlling interests |
114.5 |
122.6 |
6.6 |
|
|
1,426.0 |
1,458.3 |
(2.2) |
|
|
|
|
|
|
Headline PBIT |
2,439.3 |
2,281.5 |
6.9 |
|
Headline PBIT margin |
14.8% |
14.2% |
|
|
Headline PBT |
2,100.3 |
1,960.9 |
7.1 |
|
|
|
|
|
|
Reported earnings per share2 |
|
|
|
|
Basic earnings per ordinary share |
105.5¢ |
107.5¢ |
(1.9) |
|
Diluted earnings per ordinary share |
100.0¢ |
102.6¢ |
(2.5) |
|
|
|
|
|
|
Headline earnings per share2 |
|
|
|
|
Basic earnings per ordinary share |
123.9¢ |
112.7¢ |
9.9 |
|
Diluted earnings per ordinary share |
117.0¢ |
107.5¢ |
8.8 |
1 The unaudited consolidated income statement above is presented in reportable US Dollars for information purposes only and has been prepared assuming the US Dollar is the reporting currency of the Group, whereby local currency results are translated into US Dollars at actual monthly average exchange rates in the periods presented. Among other currencies, this includes an average exchange rate of US$1.5852 to the pound for the year ended 31 December 2012 (2011: US$1.6032).
2 The basis of the calculations of the Group's earnings per share and headline earnings per share are set out in note 9 of Appendix 1.
Appendix 3: Preliminary resultsfor the year ended 31 December 2012
in reportable Euros1
Unaudited illustrative preliminary consolidated income statement for the year ended
31 December 2012
|
€ million |
2012 |
2011 |
+/(-)% |
|
Billings |
54,765.7 |
51,632.1 |
6.1 |
|
|
|
|
|
|
Revenue |
12,796.3 |
11,553.8 |
10.8 |
|
Direct costs |
(1,059.5) |
(903.6) |
(17.3) |
|
Gross profit |
11,736.8 |
10,650.2 |
10.2 |
|
Operating costs |
(10,200.9) |
(9,276.1) |
(10.0) |
|
Operating profit |
1,535.9 |
1,374.1 |
11.8 |
|
Share of results of associates |
85.7 |
76.1 |
12.6 |
|
Profit before interest and taxation |
1,621.6 |
1,450.2 |
11.8 |
|
Finance income |
106.0 |
112.3 |
(5.6) |
|
Finance costs |
(369.6) |
(342.7) |
(7.8) |
|
Revaluation of financial instruments |
(6.1) |
(58.0) |
- |
|
Profit before taxation |
1,351.9 |
1,161.8 |
16.4 |
|
Taxation |
(243.9) |
(102.6) |
(137.7) |
|
Profit for the year |
1,108.0 |
1,059.2 |
4.6 |
|
|
|
|
|
|
Attributable to: |
|
|
|
|
Equity holders of the parent |
1,018.8 |
971.5 |
4.9 |
|
Non-controlling interests |
89.2 |
87.7 |
(1.7) |
|
|
1,108.0 |
1,059.2 |
4.6 |
|
|
|
|
|
|
Headline PBIT |
1,892.4 |
1,648.1 |
14.8 |
|
Headline PBIT margin |
14.8% |
14.3% |
|
|
Headline PBT |
1,628.7 |
1,417.7 |
14.9 |
|
|
|
|
|
|
Reported earnings per share2 |
|
|
|
|
Basic earnings per ordinary share |
81.9¢ |
78.2¢ |
4.7 |
|
Diluted earnings per ordinary share |
77.7¢ |
74.6¢ |
4.2 |
|
|
|
|
|
|
Headline earnings per share2 |
|
|
|
|
Basic earnings per ordinary share |
96.1¢ |
82.2¢ |
16.9 |
|
Diluted earnings per ordinary share |
90.7¢ |
78.4¢ |
15.7 |
1 The unaudited consolidated income statement above is presented in reportable Euros for information purposes only and has been prepared assuming the Euro is the reporting currency of the Group, whereby local currency results are translated into Euros at actual monthly average exchange rates in the periods presented. Among other currencies, this includes an average exchange rate of €1.2336 to the pound for the year ended 31 December 2012 (2011: €1.1526).
2 The basis of the calculations of the Group's earnings per share and headline earnings per share are set out in note 9 of Appendix 1.
Glossary and basis of preparation
Average net debt
Average net debt is calculated as the average daily net bank borrowings of the Group, derived from the Group's automated banking system. Net debt at a period end is calculated as the sum of the net bank borrowings of the Group, derived from the cash ledgers and accounts in the balance sheet.
Billings and estimated net new billings
Billings comprise the gross amounts billed to clients in respect of commission-based/fee-based income together with the total of other fees earned. Net new billings represent the estimated annualised impact on billings of new business gained from both existing and new clients, net of existing client business lost. The estimated impact is based upon initial assessments of the clients' media budgets, which may not necessarily result in actual billings of the same amount.
Constant currency
The Group uses US dollar-based, constant currency models to measure performance. These are calculated by applying budgeted 2012 exchange rates to local currency reported results for the current and prior year. This gives a US dollar - denominated income statement which excludes any variances attributable to foreign exchange rate movements.
Free cash flow
Free cash flow is calculated as headline operating profit before non cash charges for share-based incentive plans, depreciation of property, plant and equipment and amortisation of other intangible assets, including dividends received from associates, interest received, investment income received, proceeds from the issue of shares, and proceeds from the disposal of property, plant and equipment, less corporation and overseas tax paid, interest and similar charges paid, dividends paid to non-controlling interests in subsidiary undertakings, purchases of property, plant and equipment and purchases of other intangible assets.
Gross margin/gross profit
The Group uses the terms gross margin and gross profit interchangeably. Headline gross margin is calculated as Headline PBIT (defined below) as a percentage of gross profit.
Headline earnings
Headline PBT less taxation (excluding exceptional release of prior year tax provisions, net deferred tax credit in relation to the amortisation of acquired intangible assets and other goodwill items, deferred tax on gain on sale of freehold property in New York and tax credit relating to restructuring costs) and non-controlling interests.
Headline operating profit/Headline PBIT
Profit before finance income/costs and revaluation of financial instruments, taxation, investment gains/losses and write-downs, goodwill impairment and other goodwill write-downs, amortisation and impairment of acquired intangible assets, share of exceptional gains/losses of associates and gains/losses on remeasurement of equity interest on acquisition of controlling interest; and, in 2012, the gain on sale of freehold property in New York, Group restructuring costs and costs incurred in changing the corporate structure of the Group.
Headline PBT
Profit before taxation, investment gains/losses and write-downs, goodwill impairment and other goodwill write-downs, amortisation and impairment of acquired intangible assets, share of exceptional gains/losses of associates, gains/losses arising from the revaluation of financial instruments, and gains/losses on remeasurement of equity interest on acquisition of controlling interest; and, in 2012, the gain on sale of freehold property in New York, Group restructuring costs and costs incurred in changing the corporate structure of the Group.
Operating margin
Headline operating profit as a percentage of revenue.
Pro forma ('like-for-like')
Pro forma comparisons are calculated as follows: current year, constant currency actual results (which include acquisitions from the relevant date of completion) are compared with prior year, constant currency actual results, adjusted to include the results of acquisitions for the commensurate period in the prior year. The Group uses the terms 'pro forma' and 'like-for-like' interchangeably.
This information is provided by RNS
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