Earnings Release • Mar 3, 2016
Earnings Release
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Paris, 3rd March, 2016 – JCDecaux SA (Euronext Paris: DEC), the number one outdoor advertising company worldwide, announced today its results for the year ended 31st December, 2015. The accounts are audited and certified.
Following the adoption of IFRS 11 from 1 st January, 2014, the operating data presented below is adjusted to include our prorata share in companies under joint control, and therefore is comparable with historical data. Please refer to the paragraph "Adjusted data" on page 5 of this release for the definition of adjusted data and reconciliation with IFRS.
The 2014 comparative figures are restated from the retrospective application of IFRIC 21 "Levies", applicable from 1st January, 2015. The application of IFRIC 21 leads to the recognition in full of the levies immediately when the obligation event arises in accordance with the legislation. There is no impact on the annual P&L figures, as well as the Cash Flow statement figures.
Commenting on the 2015 results, Jean-François Decaux, Chairman of the Executive Board and Co-CEO of JCDecaux, said:
"2015 was for JCDecaux another year of record revenue and profitability. All key financial metrics including operating margin, EBIT, net income and free cash flow are up double-digits. This strong set of results reflects both a solid revenue growth in Asia, Europe, North America and the Rest of the World as well as a growing contribution from our premium digital portfolio which now represents more than 10% of our total revenue. Our main client categories increased their spend reflecting market share gains thanks to JCDecaux's strategy to develop the best OOH media assets in the biggest cities, retail zones, urban transit systems as well as airports around the world reaching growing audiences.
2015 was also a historic year both in organic growth with the win of the world's largest bus-shelter contract in London and with the expansion of our metro advertising network in China including in the third largest Chinese city Guangzhou as well as strategic regional acquisitions such as Continental Outdoor Media creating a leading platform for growth in Africa and CEMUSA with the landmark street furniture contract in New York City.
The strength of our balance sheet remains a key competitive advantage that will allow JCDecaux to continue the consolidation of the OOH sector through external growth opportunities such as the
pending acquisitions of OUTFRONT Media in Latin America and Metrobus in France. Both regional acquisitions are subject to customary closing conditions, including antitrust regulatory approval.
Consequently, at the Annual General Meeting, the company is recommending the payment of a dividend of €0.56, representing a 12.0% increase.
As we begin 2016 with the world's largest OOH digital street furniture roll-out in London starting next week with other large cities including New York, Berlin, Sydney, Stockholm, … to follow later in the year, we continue the strong growth momentum of Q4 2015 across all segments and regions with an expected organic revenue growth rate at around 9% in Q1 2016.
Looking forward, we remain convinced that out-of-home retains its strength and attractiveness in an increasingly fragmented media landscape. With our accelerating exposure to faster-growth markets, our growing premium digital portfolio combined with a new data-led audience targeting platform, our ability to win new contracts and the high quality of our teams across the world, we believe we are well positioned to outperform the advertising market and increase our leadership position in the outdoor advertising industry through profitable market share gains."
As reported on 28th January, 2016, consolidated adjusted revenue increased by +14.0% to €3,207.6 million in 2015. Adjusted organic revenue growth of +4.2% was driven by Asia-Pacific, the Rest of Europe and North America which delivered good growth offsetting the softness of France and the UK. Street Furniture was mainly led by the good performance of the Rest of Europe. Transport continued to deliver strong growth with China being resilient. Billboard continued to remain challenging throughout the year.
In 2015, adjusted operating margin increased by +10.3% to €695.2 million from €630.0 million in 2014. The adjusted operating margin as a percentage of revenue was 21.7%, -70bp below prior year.
| 2015 | 2014 | Change 15/14 | ||||
|---|---|---|---|---|---|---|
| €m | % of revenue |
€m | % of revenue |
Change (%) |
Margin rate (bp) |
|
| Street Furniture | 441.6 | 31.7% | 408.0 | 32.0% | +8.2% | -30bp |
| Transport | 201.5 | 14.9% | 175.7 | 16.3% | +14.7% | -140bp |
| Billboard | 52.1 | 11.4% | 46.3 | 10.1% | +12.5% | +130bp |
| Total | 695.2 | 21.7% | 630.0 | 22.4% | +10.3% | -70bp |
Street Furniture: In 2015, adjusted operating margin increased by +8.2% to €441.6 million. As a percentage of revenue, the adjusted operating margin decreased by -30bp to 31.7%, compared to 2014, mainly due to a different geographical mix in revenue growth and to a lesser extent to the integration of CEMUSA.
Transport: In 2015, adjusted operating margin increased by +14.7% to €201.5 million. As a percentage of revenue, the adjusted operating margin decreased by -140bp to 14.9%, compared to 2014, mainly due to a different revenue mix in China, the temporary sales agent contract of the Guangzhou metro and the ramp up of new contracts including Hong Kong island buses and airports in Latin America.
Billboard: In 2015, adjusted operating margin increased by +12.5% to €52.1 million. As a percentage of revenue, adjusted operating margin increased by +130bp to 11.4% compared to 2014, benefitting from the contribution of Continental Outdoor Media since June 2015, partially offset by a challenging market environment in Europe (mainly France and the UK). As far as Russia is concerned, the market conditions remain difficult.
In 2015, adjusted EBIT before impairment charge increased by +10.9% to €371.4 million compared to €334.9 million in 2014. As a percentage of revenue, this represented a -30bp decrease to 11.6%, from 11.9% in 2014. The consumption of maintenance spare parts was slightly up in 2015 compared to 2014. Net amortization and provisions were up compared to 2014. Other operating income and expenses impacted the P&L negatively.
The €13.9 million impairment charge, resulting from the impairment test conducted for tangible and intangible assets, are related to a €11.2 million net provisions for onerous contracts and to a €2.7 million impairment charge on tangible and intangible assets.
Adjusted EBIT after impairment charge increased by +17.9% to €357.5 million compared to €303.1 million in 2014.
In 2015, net financial income was -€28.2 million compared to -€26.2 million in 2014, mainly due to the negative impact from foreign exchange variations on some borrowings in faster-growth markets.
In 2015, the share of net profit from equity affiliates was €81.4 million, higher compared to 2014 (€70.3 million), largely attributed to the negative impact of the impairment of Ukraine, in 2014.
In 2015, net income Group share before impairment charge increased by 12.0% to €241.4 million compared to €215.6 million in 2014.
Taking into account the impact from the impairment charge, net income Group share increased by 20.4% to €233.9 million compared to €194.3 million in 2014.
In 2015, adjusted net capex (acquisition of property, plant and equipment and intangible assets, net of disposals of assets) was at €229.4 million compared to €200.2 million in 2014, with higher renewal capex due to the new Paris bus shelters.
In 2015, adjusted free cash flow was €333.4 million compared to €297.9 million in 2014. This increase is due to a higher operating margin and an improvement in change in working capital requirements, partially offset by higher capex.
Net debt as of 31 st December 2015 amounted to €400.5 million compared to a net cash position of €83.5 million as of 31 st December 2014, mainly due to the execution of the simplified public tender offer ("offre publique d'achat simplifiée", OPAS).
At the next Annual General Meeting of Shareholders on 19th May, 2016, the Supervisory Board will recommend the payment of a dividend of €0.56 per share for the 2015 financial year, which represents a +12.0% increase compared to the previous year.
We have renegotiated the syndicated credit facility in July 2015. We increased the amount from €600 million to €825 million and the tenor of the credit facility is now for 5 years with 2 one-year extensions. In addition, we improved the margins.
Given a strong operating and financial performance, resulting in a net positive cash position of €83.5 million for the Group as at 31st December, 2014, the Executive Board of Directors decided to optimize the Group's financial structure via a simplified public tender offer ("offre publique d'achat simplifiée", OPAS) to buy back 12,500,000 of its own shares at a price per share of €40, which ended on 9th July 2015.
194,419,422 shares, accounting for 87% of the share capital, were tendered to the offer. Out of these, 61% of the free float were tendered to the offer. The success of the OPAS is reflected in the total number of shares tendered, which exceeds the 12,500,000 shares subject to the offer. As a consequence and in accordance with article 233-5 of the general regulations of the AMF, the buyback allocation was determined through a pro rata reduction on an equal basis between all shareholders based on the number of shares tendered to the offer. In line with the maximum size announced for the offer, JCDecaux bought back a total of 12,500,000 shares, for a consideration of €500 million.
The Decaux Family (including JCDecaux Holding SAS) tendered all its shares to the share buyback. The Family now holds 65.0% of JCDecaux SA.
Under IFRS 11, applicable from 1 st January, 2014, companies under joint control are accounted for using the equity method.
However in order to reflect the business reality of the Group, operating data of the companies under joint control will continue to be proportionately integrated in the operating management reports used to monitor the activity, allocate resources and measure performance.
Consequently, pursuant to IFRS 8, Segment Reporting presented in the financial statements shall comply with the Group's internal information, and the Group's external financial communication will therefore rely on this operating financial information. Financial information and comments will therefore be based on "adjusted" data, consistent with historical data, which will be reconciled with IFRS financial statements. As regards the P&L, it concerns all aggregates down to the EBIT. As regards the cash flow statement, it concerns all aggregates down to the free cash flow.
In 2015, the impact of IFRS 11 on our adjusted aggregates is:
The full reconciliation between IFRS figures and adjusted figures is provided on page 7 of this release.
Q1 2016 revenue: 10th May, 2016 (after market) Annual General Meeting of Shareholders: 19th May, 2016
This news release may contain some forward-looking statements. These statements are not undertakings as to the future performance of the Company. Although the Company considers that such statements are based on reasonable expectations and assumptions on the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual performance to differ from those indicated or implied in such statements.
These risks and uncertainties include without limitation the risk factors that are described in the annual report registered in France with the French Autorité des Marchés Financiers.
Investors and holders of shares of the Company may obtain copy of such annual report by contacting the Autorité des Marchés Financiers on its website www.amf-france.org or directly on the Company website www.jcdecaux.com.
The Company does not have the obligation and undertakes no obligation to update or revise any of the forward-looking statements.
+33 (0) 1 30 79 34 99 – [email protected] Investor Relations: Arnaud Courtial +33 (0) 1 30 79 79 93 – [email protected]
| Profit & Loss | 2015 | 2014 | ||||
|---|---|---|---|---|---|---|
| €m | Adjusted | Impact of companies under joint control |
IFRS | Adjusted | Impact of companies under joint control |
IFRS |
| Revenue | 3,207.6 | (400.5) | 2,807.1 | 2,813.3 | (331.1) | 2,482.2 |
| Operating costs | (2,512.4) | 288.0 | (2,224.4) | (2,183.3) | 232.1 | (1,951.2) |
| Operating margin | 695.2 | (112.5) | 582.7 | 630.0 | (99.0) | 531.0 |
| Maintenance spare parts | (46.8) | 1.4 | (45.4) | (42.1) | 1.2 | (40.9) |
| Amortization and provisions (net) | (261.4) | 22.9 | (238.5) | (254.2) | 19.0 | (235.2) |
| Other operating income/ expenses | (15.6) | 0.8 | (14.8) | 1.2 | 0.9 | 2.1 |
| EBIT before impairment charge | 371.4 | (87.4) | 284.0 | 334.9 | (77.9) | 257.0 |
| Net impairment charge (1) | (13.9) | - | (13.9) | (31.8) | 7.1 | (24.7) |
| EBIT after impairment charge | 357.5 | (87.4) | 270.1 | 303.1 | (70.8) | 232.3 |
(1) Including impairment charge on net assets of companies under joint control.
| Cash-flow Statement | 2015 | 2014 | ||||
|---|---|---|---|---|---|---|
| €m | Adjusted | Impact of companies under joint control |
IFRS | Adjusted | Impact of companies under joint control |
IFRS |
| Funds from operations net of maintenance costs |
536.6 | (21.6) | 515.0 | 494.6 | (20.8) | 473.8 |
| Change in working capital requirement |
26.2 | (4.4) | 21.8 | 3.5 | 3.4 | 6.9 |
| Net cash flow from operating activities |
562.8 | (26.0) | 536.8 | 498.1 | (17.4) | 480.7 |
| Capital expenditure | (229.4) | 27.5 | (201.9) | (200.2) | 32.1 | (168.1) |
| Free cash flow | 333.4 | 1.5 | 334.9 | 297.9 | 14.7 | 312.6 |
| In million euros | 31/12/2015 | 31/12/2014 |
|---|---|---|
| Goodwill | 1,271.6 | 1,170.8 |
| Other intangible assets | 300.2 | 299.6 |
| Property, plant and equipment | 1,173.1 | 1,022.6 |
| Investments under the equity method | 489.3 | 475.2 |
| Financial investments | 0.8 | 0.8 |
| Other financial assets | 108.5 | 75.4 |
| Deferred tax assets | 48.6 | 31.1 |
| Current tax assets | 1.2 | 1.3 |
| Other receivables | 32.9 | 31.7 |
| NON-CURRENT ASSETS | 3,426.2 | 3,108.5 |
| Other financial assets | 10.3 | 5.5 |
| Inventories | 99.9 | 92.5 |
| Financial derivatives | 3.4 | 2.0 |
| Trade and other receivables | 887.1 | 787.2 |
| Current tax assets | 17.0 | 6.2 |
| Treasury financial assets | 77.7 | 41.8 |
| Cash and cash equivalents | 233.2 | 794.8 |
| CURRENT ASSETS | 1,328.6 | 1,730.0 |
| TOTAL ASSETS | 4,754.8 | 4,838.5 |
| In million euros | 31/12/2015 | 31/12/2014 |
|---|---|---|
| Restated (1) | ||
| Share capital | 3.2 | 3.4 |
| Additional paid-in capital | 587.0 | 1,064.7 |
| Consolidated reserves | 1,492.6 | 1,414.6 |
| Consolidated net income (Group share) | 233.9 | 194.3 |
| Other components of equity | 25.7 | (14.0) |
| EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT COMPANY |
2,342.4 | 2,663.0 |
| Non-controlling interests | (18.2) | (23.6) |
| TOTAL EQUITY | 2,324.2 | 2,639.4 |
| Provisions | 302.4 | 265.8 |
| Deferred tax liabilities | 80.0 | 82.0 |
| Financial debt | 524.3 | 544.8 |
| Debt on commitments to purchase non-controlling interests | 86.9 | 92.0 |
| Other payables | 9.9 | 14.8 |
| Financial derivatives | 0.0 | 0.0 |
| NON-CURRENT LIABILITIES | 1,003.5 | 999.4 |
| Provisions | 41.2 | 37.1 |
| Financial debt | 175.5 | 193.1 |
| Debt on commitments to purchase non-controlling interests | 33.8 | 26.4 |
| Financial derivatives | 0.2 | 5.6 |
| Trade and other payables | 1,118.8 | 890.6 |
| Income tax payable | 42.8 | 35.3 |
| Bank overdrafts | 14.8 | 11.6 |
| CURRENT LIABILITIES | 1,427.1 | 1,199.7 |
| TOTAL LIABILITIES | 2,430.6 | 2,199.1 |
| TOTAL EQUITY AND LIABILITIES | 4,754.8 | 4,838.5 |
(1) The figures were restated by the retrospective application of IFRIC 21.
| In million euros | 2015 | 2014 |
|---|---|---|
| REVENUE | 2,807.1 | 2,482.2 |
| Direct operating expenses | (1,768.2) | (1,550.9) |
| Selling, general and administrative expenses | (456.2) | (400.3) |
| OPERATING MARGIN | 582.7 | 531.0 |
| Depreciation, amortisation and provisions (net) | (252.4) | (259.9) |
| Impairment of goodwill | 0.0 | 0.0 |
| Maintenance spare parts | (45.4) | (40.9) |
| Other operating income | 8.9 | 12.7 |
| Other operating expenses | (23.7) | (10.6) |
| EBIT | 270.1 | 232.3 |
| Financial income | 7.8 | 9.8 |
| Financial expenses | (41.5) | (42.3) |
| NET FINANCIAL INCOME (LOSS) | (33.7) | (32.5) |
| Income tax | (72.9) | (69.8) |
| Share of net profit of companies under the equity method | 81.4 | 70.3 |
| PROFIT OF THE YEAR FROM CONTINUING OPERATIONS | 244.9 | 200.3 |
| Gain or loss on discontinued operations | ||
| CONSOLIDATED NET INCOME | 244.9 | 200.3 |
| - Including non-controlling interests | 11.0 | 6.0 |
| CONSOLIDATED NET INCOME (GROUP SHARE) | 233.9 | 194.3 |
| Earnings per share (in euros) | 1.071 | 0.868 |
| Diluted earnings per share (in euros) | 1.069 | 0.866 |
| Weighted average number of shares | 218,317,778 | 223,845,979 |
| Weighted average number of shares (diluted) | 218,862,616 | 224,355,679 |
| In million euros | 2015 | 2014 |
|---|---|---|
| CONSOLIDATED NET INCOME | 244.9 | 200.3 |
| Translation reserve adjustments on foreign transactions (1) | 50.4 | 71.8 |
| Translation reserve adjustments on net foreign investments (2) | (8.4) | 1.6 |
| Cash flow hedges | (0.6) | 1.2 |
| Tax on the other comprehensive income subsequently released to net income | 0.2 | (0.2) |
| Share of other comprehensive income of companies under the equity method (after tax) | 0.4 | (18.5) |
| Other comprehensive income subsequently released to net income | 42.0 | 55.9 |
| Change in actuarial gains and losses on post-employment benefit plans and assets ceiling | 1.8 | (9.8) |
| Tax on the other comprehensive income not subsequently released to net income | (0.7) | 2.9 |
| Share of other comprehensive income of companies under the equity method (after tax) | (2.9) | (3.5) |
| Other comprehensive income not subsequently released to net income | (1.8) | (10.4) |
| Total other comprehensive income | 40.2 | 45.5 |
| TOTAL COMPREHENSIVE INCOME | 285.1 | 245.8 |
| - Including non-controlling interests | 11.2 | 8.5 |
| TOTAL COMPREHENSIVE INCOME - GROUP SHARE | 273.9 | 237.3 |
(1) In 2015, the translation reserve adjustments on foreign transactions were related to changes in foreign exchange rates, of which €36.6 million in Hong Kong, €14.5 million in the United Kingdom, €(12.3) million in Brazil and €11.3 million in Belgium. The item also included a €0.1 million transfer in the income statement related to the changes in scope.
In 2014, the translation reserve adjustments on foreign transactions were related to changes in foreign exchange rates, of which €39.0 million in Hong Kong, €16.8 million in the United Kingdom, €6.3 million in the United States and €6.0 million in the United Arab Emirates. The item also included a €0.2 million transfer in the income statement related to the changes in scope.
(2) In 2015, the translation reserve adjustments on net foreign investments included a €(5.8) million transfer in the income statement related to loans previously qualified as net foreign investments.
| In million euros | 2015 | 2014 |
|---|---|---|
| NET INCOME BEFORE TAX | 317.8 | 270.1 |
| Share of net profit of companies under the equity method | (81.4) | (70.3) |
| Dividends received from companies under the equity method | 84.8 | 63.0 |
| Expenses related to share-based payments | 2.9 | 3.0 |
| Depreciation, amortisation and provisions (net) | 251.1 | 263.5 |
| Capital gains and losses and net income (loss) on changes in scope | (3.4) | (5.0) |
| Net discounting expenses | 12.9 | 13.4 |
| Net interest expense | 12.1 | 11.8 |
| Financial derivatives, translation adjustments and other | 28.2 | 19.4 |
| Change in working capital | 21.8 | 6.9 |
| Change in inventories | 8.6 | (0.1) |
| Change in trade and other receivables | (6.1) | (47.0) |
| Change in trade and other payables | 19.3 | 54.0 |
| CASH PROVIDED BY OPERATING ACTIVITIES | 646.8 | 575.8 |
| Interest paid | (20.3) | (20.8) |
| Interest received | 7.8 | 7.8 |
| Income taxes paid | (97.5) | (82.1) |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | 536.8 | 480.7 |
| Cash payments on acquisitions of intangible assets and property, plant and equipment | (209.0) | (172.5) |
| Cash payments on acquisitions of financial assets (long-term investments) net of cash acquired | (99.2) | (52.8) |
| Acquisitions of other financial assets | (45.9) | (42.0) |
| Total investments | (354.1) | (267.3) |
| Cash receipts on proceeds on disposal of intangible assets and property, plant and equipment | 7.1 | 4.4 |
| Cash receipts on proceeds on disposal of financial assets (long-term investments) net of cash sold | 5.6 | 0.0 |
| Proceeds on disposal of other financial assets | 5.3 | 6.7 |
| Total asset disposals | 18.0 | 11.1 |
| NET CASH USED IN INVESTING ACTIVITIES | (336.1) | (256.2) |
| Dividends paid | (124.7) | (119.6) |
| Cash payments on acquisitions of non-controlling interests | (3.2) | (0.7) |
| Purchase of treasury shares | (502.8) | - |
| Repayment of long-term borrowings | (175.7) | (24.8) |
| Repayment of finance lease debt | (8.3) | (6.4) |
| Cash outflow from financing activities | (814.7) | (151.5) |
| Cash receipts on proceeds on disposal of interests without loss of control | 0.0 | 0.1 |
| Capital increase | 19.5 | 10.4 |
| Increase in long-term borrowings | 18.2 | 19.4 |
| Cash inflow from financing activities | 37.7 | 29.9 |
| NET CASH USED IN FINANCING ACTIVITIES CHANGE IN NET CASH POSITION |
(777.0) (576.3) |
(121.6) 102.9 |
| Net cash position beginning of period | 783.2 | 672.1 |
| Effect of exchange rate fluctuations and other movements | 11.5 | 8.2 |
| Net cash position end of period (1) | 218.4 | 783.2 |
(1) Including €233.2 million in cash and cash equivalents and €(14.8) million in bank overdrafts as of 31 December 2015, compared to €794.8 million and €(11.6) million, respectively, as of 31 December 2014.
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