Havas 2006 Results

For the First Time Since 2001, Annual Revenue Was Up in 2006 (+0.6% Organic

Growth and +0.8% Actual Growth)

Net Income Before Tax Remained Virtually Stable at 83 Million EUR, Marked

by Recruitment in H1 and a More Positive Performance in H2

Apr 05, 2007, 01:00 ET from Havas

    SURESNES, France, April 5 /PRNewswire-FirstCall/ -- This result breaks
 down as follows:
     - Operating income of 121 million EUR in 2006, versus 128 million EUR
 in 2005
     - Net financial expense reduced by 5 million EUR
     Taking into account an Income tax expense up from 14 to 25 million EUR,
 the net income, group share was 46 million EUR in 2006, after 59 million
 EUR in 2005.
     - Sharp rise in Net New Business[1] in 2006, up to 1.931 billion EUR
 from 1.055 billion EUR in 2005. Havas ranked No. 1 by Lehman Brothers for
     - Net debt stood at 382 million EUR at December 31, 2006, down from 417
 million EUR at year-end 2005 and from 648 million EUR at June 30, 2006
     - 2006 dividend unchanged
     Main features of 2006:
     - For the first time in five years, Havas experienced actual growth in
 its annual revenue in 2006.
     - Excellent performance in net new business combined with acclaimed
     - Euro RSCG Worldwide was elected "Global Network of the Year" by
 Campaign, and "Global Agency of the Year" by Advertising Age
     - BETC Euro RSCG elected best agency of the year by CB News.
     - MPG France ranked top media agency in the French market by the Recma
     - Optimised international organisation: a solid worldwide Integrated
 Communications network with EURO RSCG and a global media expertise network
 in Havas Media. In 2006, Havas brought all the MPG media agencies together
 under "Havas Media" brand. Arnold focused on its North American clients and
 market (USA and Canada).
     - Proposed launch of a new communications agency in France around Scher
 Lafarge and Devarrieux Villaret.
     - Delisting from the NASDAQ and deregistration from the SEC. The NASDAQ
 delisting came into effect on July 7, 2006. Furthermore, on October 10,
 2006, Havas filed notice with the SEC to deregister its shares with
 immediate effect under the 1934 Securities and Exchange Act.
     - Great success of the Redeemable equity warrant issue:
     - In December 2006, the banks (Banque Federative du Credit Mutuel,
 Natixis, and HSBC France) subscribed a 270 million EUR bond issue with
 redeemable equity warrants attached.
     - In early 2007, the redeemable equity warrants were then
 oversubscribed 1.35 times by the Havas group's managers, i.e. some 42
 million redeemable equity warrants, which will only be listed in late 2010,
 for a total of nearly 15 million EUR.
     1. Increase in annual revenue and 2006 results performance marked by
 recruitment in H1 and a more positive performance in H2
     Under the chairmanship of Vincent Bollore, the Havas Board of Directors
 approved the 2006 accounts at its meeting of April 5. These accounts are in
 compliance with IFRS, the standards that have been in force as of December
 31, 2006.
     - 2006 revenue totalled 1.472 billion EUR, up 0.8% from 1.461 billion
 EUR for the previous period. At constant exchange rates, revenue growth was
 1% for the year. On a like-for-like basis, organic growth was 0.6% in 2006.
     Foreign exchange rates in the fourth quarter of the year, especially
 the weakening of the US dollar, had a 13 million EUR negative impact on the
 group (at September 30, 2006 the currency impact was still positive).
     - Income from Operations totalled 140 million EUR in 2006, compared
 with 152 million EUR in 2005, i.e. a 2006 margin of 9.5% versus 10.4% in
 2005 as a result of the talent recruitment campaign and reinforcing of New
 Business staff.
     - Operating Income stood at 121 million EUR in 2006, but was adversely
 affected an 11 million EUR goodwill impairment and 8 million EUR in special
 restructuring costs.
     - The Net financial expense of 38 million EUR was nonetheless a 5
 million EUR improvement on 2005.
     - The tax burden rose from 14 to 25 million EUR, thus reducing Net
 Income (group share) from 59 million EUR in 2005 to 46 million EUR in 2006.
     - Earnings Per Share, whether basic or diluted, were 0.11 EUR in 2006
 (0.14 EUR in 2005).
     2. Improved Net debt
     Net debt stood at 382 million EUR at December 31, 2006, down from 417
 million EUR at year-end 2005 and from 648 million EUR at June 30, 2006.
     It should be noted that the average net debt[2] for the year was 522
 million EUR in 2006, compared with 543 million EUR in 2005.
     The debt repayment schedule was considerably lengthened by the bond
 issue with redeemable equity warrants attached, the total amount of this
 270 million EUR issue being repayable in thirds maturing at the end of
 2011, 2012 and 2013.
     3. 2006 dividend unchanged
     The Board of Directors will propose that the Annual Shareholders'
 Meeting, on June 11, approve a dividend of 0.03 EUR per share, i.e. exactly
 the same amount as for 2005.
     4. Sharp rise in Net New Business1 in 2006
     Net New Business reached 1.931 billion EUR in 2006.
     Havas was ranked No. 1 in New Business by Lehman Brothers for the full
     In 2006, Net New Business was 30% higher than the average over the last
 four years.
     The main accounts won in 2006 were:
     Euro RSCG Worldwide : Sanofi-Aventis (global), Reckitt Benckiser
 (global), Boehringer Ingelheim (global), ExxonMobil (USA), Veolia (France),
 LG Electronics (11 countries of Latin America), EDF, RATP et Natixis
 (France), Orange (B2B) worldwide, Sixt (pan-European), Barclays
     - Disneyland Resort Paris (France, Spain, Great Britain, Belgium,
 Germany, Italy, the Netherlands and Scandinavia) ;
     - Vinci (pan-European)
     - Breathe Right(R) (Canada, Japan, Mexico, Great Britain, France,
 Spain, Italy, Germany and Poland) ;
     - Pierre & Vacances, Groupe Caisse d'Epargne, NYSE (France) ;
     - News Magazine, Weight Watchers Meetings et Staples UK Retail
 (Great-Britain) ;
     - Culligan Water, Assurant Health, Barilla, Cabot Wood Stain, Bombay,
 Boniva de GlaxoSmithKline & Roche et Circuit City (USA)
     - Marriott Hotels, Bausch & Lomb, Concern Worldwide, Maison de France
 et Practical Action (Great-Britain) ;
     - Iveco et Seb (Spain) ;
     - Hotel Sheraton (Mexico)
     Havas Media : Danone (USA and Canada), GoodYear Dunlop (France, Spain,
 Italy, Portugal, Greece, Belgium, the Netherlands and Luxembourg),
 Peugeot-Citroen (France), Agencia Tributaria (Spain), ExxonMobil (USA),
 Almacenes Paris (Chile), Telefonica (Brazil), LG Electronics (Latin
     - Veolia Environnement (pan-European) ;
     - Eidos (Great Britain, France and Germany) ;
     - De Agostini, Hotel.com et Garlik (Great Britain) ;
     - Forte Pharma, Schmidt/Cuisinella, Cdiscount et M6 chaines thematiques
 (France) ;
     - Osborne, Fnac, Viajar.com, Fagor, Mango, Correos y Telegrafos,
 Ministerio de Sanidad Y Consumo, Guerlain, Skoda, BNP Paribas et Orange
 (Spain) ;
     - La Redoute, Bwin, Correios de Portugal et Bwin (Portugal) ;
     - Dialog (Poland) ;
     - Celebrity Cruises (USA) ;
     - Casa Pedro Domecq (Mexico) ;
     - Transantiago (Chile)
     Arnold : Progressive Direct, Lee Jeans, Pearle Vision, Trex Company,
 Life Time
     Fitness, Select Comfort, USA Today (USA)
     5. Creativity as strong as ever in 2006
     At the 53rd Cannes International Advertising Festival, the Havas Group
 carried off 18 Lions including three Gold Lions: one in the film category
 for "La Marche de l'Empereur" (The March of the Emperor) produced by BETC
 Euro RSCG for Canal+, another in the cyber category awarded to Euro RSCG 4D
 Sao Paulo for the "Oops" campaign it produced for Reckitt Benckiser, and a
 third to Havas Sports in the media category for the design and organisation
 of a one-day event on the Champs Elysees entitled "Embracing the Olympic
 Spirit" in support of the Paris 2012 Olympic bid. Other award-winning
 agencies included Arnold Boston, McKinney & Silver, EHS Brann, Euro RSGG 4D
 Amsterdam and Euro RSCG Amsterdam, Euro RSCG Buenos Aires, Euro RSCG Vale,
 and Euro RSCG 4D in France.
     Moreover, the Havas Group was awarded the Young Creatives Prize, thus
 emphasising the permanent influx of new talent at the group.
     According to the Gunn Report, the official international ranking of
 creativity, two campaigns produced by Euro RSCG Flagship for 11 News
 Channel 1 and BETC Euro RSCG for Canal+ are in the Top 10 campaigns in
 terms of awards received in 2006.
     The Arnold Boston agency came No. 3 in the USA and is one of the very
 select club of agencies to have figured in the Gunn Report every year since
 it was created.
     The CyberWon report (interactive advertising's equivalent of the Gunn
 Report) was published in February 2007. Its worldwide Top 10 digital
 campaigns in terms of awards received includes one produced by Arnold
 Boston and two more by Euro RSCG 4D Amsterdam. In addition, the Arnold
 Boston and McKinney agencies are respectively rated 4th and 7th in the Top
 10 digital agencies in the USA. Finally, Euro RSCG 4D Amsterdam is No. 10
 in the Top 50 digital agencies worldwide on the basis of awards received.
     For the very first time, a French interactive production company
 (Streampower / MPG) received the prestigious Emmy award for "Best
 interactive TV program of the year" for its co-production of "CULT"
 alongside PPROD for TV channel France 5.
     About Havas
     Havas (Euronext Paris: HAV.PA) is a global advertising and
 communications services group. Headquartered in Paris, Havas operates
 through its two worldwide networks, Euro RSCG Worldwide headquartered in
 New York and Havas Media in Barcelona, and through Arnold Worldwide
 Partners. A multicultural and decentralized Group, Havas is present in more
 than 75 countries through its networks of agencies and contractual
 affiliations. The Group offers a broad range of communications services,
 including traditional 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 14,400 people.
     Further information about Havas is available on the company's website:
     Forward-Looking Information
     This document contains certain "forward-looking statements" within the
 meaning of the U.S. Private Securities Litigation Reform Act of 1995.
 Forward-looking statements relate to expectations, beliefs, projections,
 future plans and strategies, anticipated events or trends and similar
 expressions, concerning matters that are not historical facts. These
 forward-looking statements reflect Havas' current views about future events
 and are subject to risks, uncertainties, assumptions and changes in
 circumstances that may cause Havas' actual results to differ significantly
 from those expressed in any forward-looking statement. Certain factors that
 could cause actual results to differ materially from expected results
 include changes in global economic, business, competitive market and
 regulatory factors. For more information regarding risk factors relevant to
 Havas, please see Havas' filings with the U.S. Securities and Exchange
 Commission. 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 translate 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.
     Contacts :
     Communications : Anne Marsan
     Tel: +33-(0)1-58-47-90-33
     Solenne Anthonioz
     Tel: +33-(0)1-58-47-90-27
     Investor Relations: Herve Philippe
     Directeur Financier du Groupe Havas
     Tel: +33-(0)1-58-47-91-23
     2 allee de Longchamp 92281 Suresnes Cedex, France Tel +33 (0) 1 58 47
 90 00 Fax +33 (0) 1 58 47 99 99 www.havas.com
     SA au capital de 171 179 760,80 euros - 335 480 265 RCS Nanterre - APE
 744 B
     [1] Net account gains expressed in estimated annual billings. The
 complete definition can be found at the end of this release.
     [2] Average net debt (quarterly and annual) is calculated, in the case
 of the four main countries (France, USA, UK and Spain), as the difference
 between the gross structured debt (convertible bonds, facilities drawn
 down, etc.) and cash in the bank measured daily. For all other countries,
 the average net debt is the net debt carried in the accounts at the end of
 each quarter.