HAVAS : 2013 H1 Results, Record profitability in H1 2013 Income from operations margin: 13.0%, up from 11.9% (H1 2012) Yannick Bolloré, replaces Vincent Bolloré and is appointed Chairman of Havas

Puteaux, August 30, 2013 - 5.45 pm

2013 First Half Results

Record profitability in H1 2013
Income from operations margin: 13.0%, up from 11.9% (H1 2012)

Yannick Bolloré, replaces Vincent Bolloré and is appointed Chairman of Havas

Q2 2013

First Half 2013

David Jones, Global CEO Havas, said: "In the first half of 2013 we drove strong margin improvement, reaching a record 13%.
From a growth perspective the Group made good progress in France and in the United Kingdom. North America returned to positive growth in Q2 and Latin America to double-digit growth.  
It was also a good 6 months in terms of new business wins at a global, regional and local level, with significant wins including Total, Dove and LG Electronics.
We have continued our strategy of creating the most agile, entrepreneurial and integrated communications group. Following the rebranding of Euro RSCG Worldwide to Havas Worldwide last year we rebranded our main media network to Havas Media and moved our creative, media and digital teams together under one roof in our new building in New York as we did in Paris - giving us a unique competitive advantage within our industry".

1. General comments 

The Board of Directors, meeting on August 30, 2013, approved the consolidated financial statements for the interim period ended June 30, 2013. These statements were the subject of limited examination by the Group's statutory auditors, whose report can be found in the half-yearly financial report available on the Group's website: http://www.havas.com

- The Group's organic growth (excluding exchange rate variations and changes in the scope of consolidation) was +1.7% for Q2 2013 and +0.5% for H1 2013.

- Group revenue was ?451 million for Q2 2013 and ?837 million for the first half of 2013, an increase of 1% on an unadjusted basis.

A stronger euro had a negative exchange rate impact of ?11 million over the first half of the year.

Revenue and organic growth by region:

Europe: Europe reported Q2 2013 growth of +0.8%. France delivered a strong performance with growth of +3.3% compared to +0.5% for the same period in 2012 and +1.2% over Q1 2013. In the United Kingdom, Q2 2013 was up on Q1 2013 with growth of +2.0%, driven largely by digital, advertising and healthcare communications. Performance across the rest of Europe was mixed, with countries like Germany, Italy, Poland and Turkey reporting growth and others, such as Spain and Portugal, reporting a slight decline.

North America: Q2 2013 saw a return to growth for the region after the negative growth of Q1. The loss of Sprint and Exxon accounts no longer impacts year-over-year comparisons. Healthcare communications, digital, media and corporate communications made positive contributions to the progress in North America, where Canada posted double-digit growth.

Rest of world: Latin America enjoyed an excellent H1 2013, with growth of 15.1% in Q2 2013 and 12.3% in the first half. All the countries and businesses contributed towards this strong performance.

In Asia-Pacific the effects of the loss of Vodafone will no longer be felt in H2. China was adversely affected in Q2 by the cancellation of a major media contract, but other businesses performed well. Hong Kong, Taiwan, Japan and Indonesia all posted double-digit growth.

- Results 

Income from operations for H1 2013 was ?109 million, compared to ?99 million for H1 2012, an increase of 10%. Income from operations margin for H1 2013 was a record 13.0%, up from 11.9% for the same period in 2012.  

Operating income grew by 8% to ?100 million compared to ?93 million for the same period in 2012.

Net financial expense remained steady despite the disbursements arising from the OPRA and OPAS tender offers made in May and June 2012.

The effective tax rate was 29% compared to 26% for the same period in 2012.

At ?58 million, Net income, Group share for H1 2013 was up 3% on H1 2012, representing 6.9% of H1 2013 revenue. Net earnings per share (basic and diluted) were 0.15 cents (?) compared to 0.13 cents (?) for H1 2012.

- Financial Structure

Net financial debt stood at ?372 million at June 30, 2013, representing gearing of 32%, compared to net financial debt of ?444 million at June 30, 2012 (gearing of 41%).  

Average net debt² for H1 2013 was ?239 million compared to ?80 million for H1 2012, an increase of ?159 million. This was mainly due to the impact of a ?249 million differential on the seasonal average caused by disbursements arising from the OPRA and OPAS offers at the end of H1 2012.

The maturity of the net financial debt has been extended namely through the issuance of a ? 100 million Euro Private Placement on July 11, 2013 which will mature on July 11, 2018 and also the signing on August 28, 2013 of a new confirmed credit facility of ? 100 million which has a five year maturity.

2. Net New Business¹

Net new business¹ in the first half of 2013 was ?838 million (in terms of billings - the benchmark used by the market).  

Among the most significant account wins:

Dove (Unilever):  EHS Havas is now global lead digital agency

Total: BETC Paris won the global account

Seagate: Havas Worldwide San Francisco won global digital duties

LG Electronics: Arena Media will handle global media planning and buying duties (except for the US) for the home appliances and high-tech electronics manufacturer

Bacardi: BETC London and Camp & King will handle the global advertising account

LVMH: Havas Media US won digital media duties for the US

Del Monte: Arnold New York will now handle communications strategy for three brands (Milk Bone, Pupperoni, Milo's Kitchen) in the US

Avocados from Mexico: Arnold Boston won the rebranding and communications strategy for the US market

SONY and SONY Mobile: Havas Worldwide Buenos Aires will now handle the advertising account in Argentina

Heineken: Havas Worldwide Spain won the Data and CRM duties for the Spanish market

General Mills - Häagen Dazs, Old El Paso and Géant Vert: Havas Media France won media strategy duties for these three new brands in France.

3. Highlights of H1 2013 

Havas continued to deploy its strategy of creating the most agile, entrepreneurial and integrated communications group. Following the rebranding of Euro RSCG Worldwide to Havas Worldwide in 2012, the Group rebranded its major media network to Havas Media and moved the creative, media and digital teams together the new HQ in New York (Tribeca), following the example of regrouping Paris based teams last year.

Creation/acquisitions and specialist digital startups

Socialistic china

Havas launched Socialistic China, a subsidiary of Havas Worldwide Digital specializing in digital work in the Chinese market. The new agency will add to Havas Worldwide's digital offer in the region by creating digital dialogue and meaningful social engagement between brands and consumers.

MFG Labs

Havas Media Group acquired MFG Labs, a highly respected think tank of mathematicians specializing in digital strategy, Big Data, digital science and mathematical research.

The acquisition secures Havas the services of a team of experts to support its data infrastructure, via Artemis, its specialist global data management platform, and Affiperf, its global trading desk.

Havas Media Group's main digital hubs (US, UK, Latin America and Asia-Pacific) will also be able to call on the services of MFG Labs as and when the capacities of the MFG teams are integrated into the Group network.

Socialyse

Havas Media launched Socialyse to keep pace with the growing wave of media innovation on social networks.

Socialyse is a pure player consisting of a dedicated staff of over 50 social media specialists offering clients a broad spectrum of skills from devising social strategies to analyzing social media campaigns.

Rooster

Rooster Worldwide LLC is a creative, digital, content and production company hybrid based in New York that will enable Havas Worldwide to develop in-house video content production and consulting capacity.

Mediamax

After nine years of fruitful collaboration, Havas Media has acquired a majority stake in Turkish agency Mediamax, based in Istanbul. The main clients on its roster include Reckitt Benckiser, Danone, Hyundai, Kia, Air France, KLM, Sigortacilar Birligi (insurance) and D-Smart (digital platform).

Havas Sports & Entertainment Russia and Havas Digital Russia

Havas Media continued its expansion in Russia with the acquisition of a 50% stake in Havas Sports & Entertainment Russia and a minority stake in Havas Digital Russia, two joint ventures started up with Russian partner ADV.

Elisa Group

Havas Media acquired a 51% stake in Elisa Interactive SL, based in Spain, and in UK-based Elisa Interactive Ltd., two agencies specializing in data analytics and optimization.

Talent

Following the simplification of its global network and its successful rebranding at the start of the year, Havas Media Group also made a number of senior management appointments: Dominique Delport was appointed Global Managing Director of Havas Media, Michel Sibony was appointed Global Head of Middle Office and Raphaël de Andréis joined Havas Media France as CEO.

There also was a number of key appointments at Havas Worldwide and Arnold:

In January, Andrew Benett, formerly Arnold Worldwide Global CEO, was appointed to the new role of Global President at Havas Worldwide, reporting to David Jones, who remains Global CEO of the Havas Worldwide network. Robert LePlae, previously Arnold Worldwide's Global President, was promoted to the role of Global CEO, replacing Andrew Benett.

Matt Weiss joined Havas Worldwide as Global CMO and Matt Howell, Global Chief Digital Officer at Arnold Worldwide, assumed additional responsibility as Chief Digital Officer for Havas Creative Group, extending his responsibilities across the Havas Worldwide and Arnold networks. Patti Clifford took on the role of Global Chief Talent Officer, Angela Wei was appointed Chief Digital Officer for Arnold and Drake Pusey took on the role of VP, Director of Digital Platforms. Elliot Seaborn is now Executive Director at Arnold.

Havas Worldwide hired Sean Lyons, formerly with R/GA, as Global Chief Digital Officer and Vin Farrell, also from R/GA, to take on the new role of Global Chief Content Officer. Laura Maness joined the Chicago agency as Development Officer for the agency and Chief Growth Officer for the US as a whole. In Brazil, Marcus Tavares was appointed Managing Director of Havas Worldwide Digital. Dorothy Gemmell is now President of Havas Life in New York.

Brendan Tansey, digital pioneer and former CEO of Wunderman UK, was named CEO of Socialistic China, part of Havas Worldwide Digital. 

Social responsibility

• Havas Media Group published its 4^th Meaningful Brands study, a global barometer that measures the value of brand meaning and identifies a link between perceived impact on consumer wellbeing and the business performance of the brands concerned. The study involved 134,000 interviews on 700 brands analyzed across 23 countries. The results confirmed the need for brands to restore meaning in the eyes of their consumers.  

• The next One Young World summit will be held in Johannesburg from October 2 - 5, 2013. The third annual One Young World summit was held in Pittsburgh in October 2012 and was attended by 1,200 delegates, all aged under 25, from 183 countries.  

More information: http://www.oneyoungworld.com

Living up to its strategy and commitment, Havas has followed through on its CSR initiatives:

• Having already achieved its previous target for reducing greenhouse gas (GHG) emissions last year, the Group this year set itself a still more ambitious target of a 20% reduction in emissions per employee by 2015, working from the baseline of the 2011 results (i.e. the lowest since the annual calculation of the Group's carbon balance was introduced).  

• In 2012, the Group's GHG emissions represented 94,520 metric tonnes of CO2 equivalent, or 6.1 metric tonnes of CO2 equivalent per employee. These results reflect a 3% reduction in overall emissions and a reduction of 6% per employee, offering encouraging prospects for achieving the overall target of a 20% reduction by 2015. 

For more information about the Group's CSR approach:
http://www.havas.com/havas-dyn/fr/engagements-responsabilitesociale.1.html

4. Havas corporate governance

At the meeting of the Board of Directors on August 30, 2013, Vincent Bolloré announced his resignation as Chairman and director of the Group and proposed the appointment of Yannick Bolloré as Chairman.

The Board confirmed David Jones in his role as Global CEO Havas and Hervé Philippe as Directeur Général Délégué.

At the next Shareholders' Meeting, the Board will propose that Vincent Bolloré be replaced by an independent director.

The Board decided to extend the scope of the Compensation Committee to include the selection and appointment of directors and corporate officers.

The Board appointed Delphine Arnault to the Compensation and Selection Committee.

At the close of the Board meeting, Yannick Bolloré said: "I am extremely proud to guide a Group like Havas as it squares up to the major changes taking place in our sector. The world of communications is in upheaval and it is our task to create the best possible tools to tackle the increasingly complex issues facing our clients.
Havas is unique in the communications industry by virtue of its agile, integrated structure, its entrepreneurial spirit and its wonderful talent. I am delighted to be working with Havas employees and clients to preserve what has already been achieved and build on it for the future of the Group."

5. Awards

The Gunn Report 2012 (published in January 2013) named "The Bear" campaign by BETC for Canal+ the most awarded TV commercial not just of the year but in the report's entire history. The Big Won Creative Rankings 2012 followed suit, naming it top TV/Film campaign and top campaign across all media channels.

Cannes Lions 2013
Havas Group agencies were awarded a total of 24 Lions - 4 Gold, 11 Silver and 9 Bronze (plus a Silver at the Cannes Young Lions for two BETC creatives).
The "Baby & Me" campaign by BETC Paris for Evian/Danone took a total of 4 Lions, including a Gold in Outdoor. Havas Sports &Entertainment Spain won Gold in Direct for its "Enter the Game" campaign for Konami. Havas Worldwide London and Havas Worldwide Amsterdam each took home a Gold Lion, the former in Film Craft for "Metamorphosis" for Credit Suisse, and the latter in Public Relations for the "Metropole Tweetphony" campaign for the Metropole Orchestra.

The other winners:

• 11 Silver Lions: 2 for BETC Paris for its "Baby & Me" campaign for Evian; 4 for Havas Worldwide Sydney including 3 for its "Fair Go Bro" campaign and 1 for the "Durexperiment Fundawear" campaign; 1 for Host Sydney and its "Share a Coke and a Song" campaign for Coca-Cola; 1 for Havas Worldwide South Africa for Reckitt Benckiser with "Girl/Guy"; 1 for the "Enter the Game" campaign by Havas Sports & Entertainment Spain for Konami. Havas Worldwide Amsterdam also took Silver for "Metropole Tweetphony" and Red Agency Australia for the "The most powerful arm ever invented" campaign for Save Our Sons & Duchenne Foundation. 

• 9 Bronze Lions: 2 for Arnold Boston, one in Radio with the "Christine's Flavor Tip" campaign for CDC and the second in Print for its campaign for Brown-Forman/Jack Daniels; 5 in PR for Havas Worldwide Australia and the "Fair Go Bro", Red Agency for "The most powerful arm ever invented", Havas PR North America with its campaign for the United Nations Foundation, Havas Worldwide Paris for "The Airfood Project" for Les Restaurants du Coeur, and Havas Worldwide Italy for "Loveville" for Reckitt Benckiser. The Evian "Baby & Me" campaign was awarded a Bronze Lion in Film and "Shooout 2:Underwater Diver" by Havas Worldwide Spain for Reckitt Benckiser took a Bronze in Outdoor.    

At the Clio Awards, the Group took a total of 9 awards, 3 of them Gold, including 1 for BETC London in Film Craft for its "Supergroup" campaign for Danone/Cow & Gate, 1 for Havas Worldwide London in Film Craft for "Vinyl", made for Reckitt Benckiser/Durex, and 1 for Havas Worldwide Sydney in the Mixed Campaign category with "Fair Go Bro" for Virgin Mobile. Havas Worldwide New York took Silver in Radio for the Heineken/DosXX campaign, "The Most Interesting Man in the World".  Host Sydney, Leg Paris, BETC London and Arnold Amsterdam also took home a Bronze apiece.

At the Internationalist Awards for Innovation in Media, Group agencies won 9 awards, including 3 Gold. Havas Sports & Entertainment Spain took Gold for its "Enter the Game" campaign for Konami, as did Havas Sports & Entertainment Mexico for "Mexico del futuro" for its client GNP.  Havas Media UK also won Gold for its "Social Media Light Show" campaign for EDF Energy. 5 Silver awards went to AIS London, Arena Media UK, Havas Media Colombia and Havas Media Mexico in the Local Campaign category, and to Ignition in the Global Campaign category for "Olympic Torch" for Coca-Cola.

6. Calendar

Q3 2013 revenue will be published in mid-November 2013.
ANNEX 1: Financial information

CONSOLIDATED INCOME STATEMENT AT JUNE 30, 2013

CONSOLIDATED BALANCE SHEET AT JUNE 30, 2013

H1 2012 REVENUE AND ORGANIC GROWTH

About Havas
Havas (Euronext Paris SA: HAV.PA) is one of the world's largest global advertising, digital and communications groups. Headquartered in Paris, Havas operates through its two Business Units: Havas Creative Group and Havas Media Group.
Havas Creative Group incorporates the Havas Worldwide (www.havasworldwide.com:
http://www.havasworldwide.com/) network - formerly Euro RSCG Worldwide - (316 offices in 75 countries), the Arnold (www.arn.com:
http://www.arn.com/) micro-network (16 agencies in 15 countries on 5 continents) as well as several other strong agencies.
Havas Media Group (www.havasmedia.com:
http://www.havasmedia.com/), is the world's fastest growing media group, operating in over 100 countries, and incorporates two major commercial brands: Havas Media (ex MPG) and Arena.
A multicultural and decentralized Group, Havas is present in more than 100 countries through its networks of agencies and contractual affiliations. The Group offers a broad range of communications services, including digital, advertising, direct marketing, media planning and buying, corporate communications, sales promotion, design, human resources, sports marketing, multimedia interactive communications and public relations. Havas employs approximately 15,000 people. Further information about Havas is available on the company's website: www.havas.com:
http://www.havas.com/

Forward-Looking Information
This document contains certain forward-looking statements which speak only as of the date on which they are made. Forward looking statements relate to projections, anticipated events or trends, future plans and strategies, and reflect Havas' current views about future events. They are therefore subject to inherent risks and uncertainties that may cause Havas' actual results to differ materially from those expressed in any forward-looking statement. Factors that could cause actual results to differ materially from expected results include changes in the global economic environment or in the business environment, and in factors such as competition and market regulation. For more information regarding risk factors relevant to Havas, please see Havas' filings with the AMF (Autorité des Marchés Financiers) (documents in French) and, up to October 2006, with the U.S. Securities and Exchange Commission (documents in English only). Havas does not intend, and disclaims any duty or obligation, to update or revise any forward-looking statements contained in this document to reflect new information, future events or otherwise.

(1): Net New Business
Net new business represents the estimated annual advertising budgets for new business wins (which includes new clients, clients retained after a competitive review, and new product or brand expansions for existing clients) less the estimated annual advertising budgets for lost accounts. Havas' management uses net new business as a measurement of the effectiveness of its client development and retention efforts. Net new business is not an accurate predictor of future revenues, since what constitutes new business or lost business is subject to differing judgments, the amounts associated with individual business wins and losses depend on estimated client budgets, clients may not spend as much as they budget, the timing of budgeted expenditures is uncertain, and the amount of budgeted expenditures that translates into revenues depends on the nature of the expenditures and the applicable fee structures. In addition, Havas' guidelines for determining the amount of new business wins and lost business may differ from those employed by other companies.

(2):Average Net Debt is calculated as the difference between the structured gross debt under IFRS (OBSAAR, Eurobond, used credit lines, etc.) and the cash & cash equivalent measured on a daily basis for the main countries integrated in the International cashpool ; for the other countries, the average net debt taken into account is the monthly average net debt. The average net debt also includes  E/O and B/O debts which are re-evaluated at June 30 and December 31, and adjusted according to actual payments. The new definition excludes earn-out and buy-out obligations and includes blocked current accounts relating to employee profit-sharing.

Other definitions:

Organic growth is calculated by comparing revenue for the current financial period against revenue for the previous financial period adjusted as follows:
- revenue for the previous financial period is recalculated using the exchange rates for the current financial period;
- to this resulting revenue is added the revenue of companies acquired between January 1 of the previous financial period and the acquisition date for the period in which these companies were not as yet consolidated;
- revenue for the previous financial period is also adjusted for the consolidated revenue of companies disposed of or closed down between January 1 of the previous financial period and the date of disposal or closure.
Organic growth calculated by this method is therefore adjusted for variations in exchange rate against the euro, and for variations in the scope of consolidation.

Income from operations corresponds to revenue after deduction of compensation and other operating income and expenses from operations.  
Operating income is equivalent to income from operations after deduction of individually significant items of "other operating expenses and income" of an unusual or infrequent nature.

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