single ton group limited
[ annual report2000
excellence
professionalism
leadership
. . . . . . . . . . . . . . . . . . . . . . . . . .
creativity
effectiveness
]
contents
]
No.
02
Corporate Directory
No.
03
C h a i r m a n ’s Re p o r t
No.
04
G ro u p M a n a g i n g D i re c t o r ’s Re p o r t
No.
05
Jo h n S i n g l e t o n ’s Re p o r t
No.
06
Singleton Group Member Companies
No.
08
H i s t o r y a n d F i n a n c i a l Pe r fo r m a n c e
No.
10
F i n a n c i a l Re p o r t
No.
39
S i n g l e t o n O g i l v y & M a t h e r Re p o r t
annual report 2000
1]
one
[ corporate directory
Directors
Mark Carnegie (Chairman)
John Singleton
Russell Tate
William Currie
Share Register
Geoff Levy
Computershare Investor Services Pty Limited
Anne Keating
Level 3, 60 Carrington Street, Sydney NSW 2000
Paul Richardson
Telephone: (02) 8234 5000.
Company Secretary
Annual General Meeting
Alex Walker
The Annual General Meeting will be held at 10:00am
on Friday, 4 May 2001 at the Company’s office,
Auditors
Level 18, 201 Sussex Street, Sydney NSW 2000.
Horwath Sydney Partnership
Dividend
Solicitors
Directors have recommended a final dividend of
Freehills
4.2 cents per share, fully franked, payable on
11 May 2001. Transfers close at 5:00pm on
Registered Office
Friday, 4 May 2001.
Level 18, Darling Park
201 Sussex Street, Sydney NSW 2000
Telephone: (02) 9373 6333
Website: www.singo.com.au
ABN: 84 001 657 370
two
[2
[
chairman’s
report
Mark Carnegie
D ear shareholders,
I am pleased again to have to eat humble pie. The performance
were there all along have tripped some people up. We reiterate our
of the many people who work in the Singleton Ogilvy & Mather
view that this investment should provide very attractive returns but
Group proved that I should not make forecasts especially about the
that there is a not insignificant risk that political instability will
future performance of this company. We had an outstanding last
prevent the economic characteristics of the business being reflected
year and all shareholders owe a debt of gratitude to those who made
in our investment returns.
it happen. On your behalf, I want to thank all those involved in
producing the great result.
From investments to paying for them. We made two issues of
shares during the year and the second one seemed to create some
I especially want to thank Russell for an incredible job in a year
amount of friction with the investment community. We informed
when he had open-heart surgery. It is a pleasure to serve with him.
those taking the shares that in addition to the share issue some
Again, I issue my warning that any expectation that the business
insiders were selling simultaneously. We felt that in contrast to the
can continue to grow as it has in the past defy the laws of economic
majority of people who only notify of sales by insiders after they
gravity. For anyone reading this annual report with a view to buying
have been completed advising purchasers in advance was a step
shares, I urge you to moderate your expectations of what SGL
forward for the share market in terms of disclosure. Taking flack
shares can produce as a return over the next five years.
for trying to improve standards of disclosure showed us again why
In a country like Australia where long term real GDP growth is
we take the view we do about not ever relying on our institutional
likely to be less than 3%, the mathematics of all listed companies
owners to do the rational thing when asked to make a decision
telling you they can grow earnings at 15% is an absurdity. Profits
which will affect the company.
will not exceed GDP and they will be hard pressed to materially
As in the past we will try to act in a way that maximises the
exceed the GDP growth rate over the long-term. You may hope for
long-term shareholder value we can create and be true to ourselves
more in an individual case but you can’t expect it in the aggregate.
in our ethical standards. For you as a shareholder it is important to
I recognise media does continue to grow as a share of GDP.
understand that we run the business and our collective capital
However, a realistic expectation would be for it to grow nominally
account on the basis that we are reporting to a permanent
at 6%-9% over the next five years. In addition, you have to factor
conservative owner of an existing share in the company who is
in the real chance of a recession where it will shrink. If we can grow
focussed on absolute rather than relative returns on investment.
earnings in the double digits over the next five years, the
We avail ourselves of financing windows as they appear in order to
management will have done a fantastic job.
create incremental value for that shareholder whilst retaining a
By contrast, the background for our investment in Indonesia is
conservative capital structure.
much brighter. Trend media growth rates could easily be in the 20%
We have all done well in a growing economy. Now, our challenge
range for the next 20 years and we would still have advertising
is to do so in a stalled or shrinking one. Hopefully, we will be able
spending be less than US$25 per capita. All the reasons the Asian
to perform as we did in the last recession due to the fact that when
growth miracle attracted the investing hordes in the 1990s remain;
the economy gets tough the artistic aspirations of the medium are
it’s just that the short-term outlook is so uncertain and the risks that
de-emphasised and the effectiveness of the ads seem to matter again.
3]
three
[
group managing director’s
report
Russell Tate
In last year’s Annual Report I said that as a company we were
be winners. We already have a wonderfully talented management
only just beginning to realise our true potential. Twelve months
team and staff who both thrive on, and understand how we have
later and after another growth in profits of over 50%, I am more
achieved, our success. Provided we can maintain our unique culture
convinced than ever that our ability to continue to develop and
and as we grow pass it on to every new generation of staff, I can
grow this company is going to be limited only by how far and how
see no boundaries to our potential.
wide we wish to aim.
Success is addictive. The spectacular growth we have enjoyed
growth of 50% plus. I can promise them a company which will
in the last few years does not lead us to think we should now settle
not be satisfied with its performance unless its Australian and
for consolidating our position. On the contrary, it means that
NZ operations are continuing to set international standards
we shall be content with nothing less than continued and
in terms of financial returns and marketplace effectiveness. And
comparable success, relative to general economic and specific
a company with which our staff, our clients, our suppliers and our
market conditions, in the years ahead.
shareholders are proud to be associated.
Success is also contagious and attracts people who want to
four
[4
I cannot promise our shareholders continued operating profit
[
john singleton’s
report
John Singleton
It’s probably about time I let you in on the secret herbs & spices
of our Group.
A lot of people talk about surrounding themselves with people
better than themselves.
back and enjoy the fruits of his intellectual
superiority. labours.
On the
the other
otherhand,
hand,nonoone
one
is less
is less
aware
personally
of their highly
aware superior
of their
ability superior
highly
than our ability
CEO, than
Russell
ourTate.
CEO, Russell Tate.
He has
andrun
he this
alone
company
has runsince
this we
company
went public
sinceinwe1994.
went public
I have actually done it.
in 1994.
He is a natural leader in that he was both given and assumed
Perhaps the task has
was been
considerably
considerably
easiereasier
for me
for than
me than
mostmost
but
responsibility
He is a natural
for the
leader
Group
in without
that he awas
discussion.
both given and assumed
nevertheless
but
nevertheless
it has
it has
been
beenachieved
achievedand
andbecause
because ofof that
that the
responsibility
It just happened.
for the Group without any kind of discussion I can
achievements of
extraordinary
success
our Group
of ourhave
Group
been
hasmade
beenpossible.
made possible.
everAnd
recall.
all the good things for our company have just kept
I met our Chairman, Mark Carnegie, when he was a very junior
player in theduring
ankle-biter
Conrad
theBlack
Conrad
takeover
Black of
takeover
Fairfaxofa Fairfax
bit overa10
bityears
over
ago.years ago.
10
happening
It just happened.
ever since.
Among
And
allthe
theCEO’s
good ofthings
other major
for our
public
company
companies
have ofjust
the kept
past
decade no one,
happening
ever not
since.
even my dear old friend Gerry Harvey, is more
I realised
quicklythen
realised
the superiority
the superiority
of his intellect
of his and
intellect
his integrity
and his
in
deserving
Amongof
theour
CEOs
respect.
of other
In every
majorfield
public
of companies
business and
of the
human
past
the midst in
integrity
of the
other
midst
supposed
of allinternational
the other supposed
businessadvisory
gurus andgurus
was
decency.no one, not even my dear and very, very old friend Gerry
decade,
quick to
(local
andharness
international).
it to the group’s
I was quick
advantage.
to harness his abilities to our
Harvey,
I would
is more
trust deserving
Russell with
of our
my life
respect.
- come to think of it, I have.
Group’s
Unfortunately,
advantage. no one is more aware of his intellectual
IRussell’s
would trust
greatest
Russell
problem
with my
in life
this–next
comedecade
to think
willofbe
it, to
I have.
find
superiority
Unfortunately,
than Mark.
no one is more aware of his intellectual
people
Russell’s
bettergreatest
than him
problem
to surround
in thishimself
next decade
with. will be to find
superiority
Fortunately,
thanyou
Mark.
don’t have to suffer the arrogance but just sit
people
We had
better
allthan
betterhim
wish
to him
surround
well. himself with.
Fortunately, you don’t have to suffer the arrogance but just sit
We had all better wish him well.
5]
five
[
singleton group
member companies
SINGLETON OGILVY & MATHER
PROMOTIONAL CAMPAIGNS GROUP
Singleton Ogilvy & Mather operates full
Promotional Campaigns Group is a
service advertising agencies in Sydney,
promotional marketing consultancy. With
Melbourne and Auckland. With access
an international network of 18 offices,
to Singleton Group members and the
PCG offers a combination of promotional
Ogilvy & Mather Worldwide network,
disciplines including sales promotion,
SOM has the resources to meet, and to
retail consultancy, trade marketing, design,
surpass, client’s expectations. SOM
packaging and sponsorship.
provides sales-focused advertising,
communication, creative and production
ETHNIC COMMUNICATIONS
services, across all media.
Etcom is the only fully integrated
multicultural marketing agency in
SINGLETON OGILVYONE
Australia. Etcom is committed to
As
specialists,
understanding cultural diversity and its
works
to
relevance in communication. Etcom
guarantee that every idea translates to
targets the 20% of the Australian
creative brand-true communications.
community who speak a language other
This knowledge is acquired from data
than English at home.
direct
Singleton
mining
marketing
OgilvyOne
and
analysis,
interactive
technology and media teleservices.
MINDSHARE
Singleton OgilvyOne ensures more
MindShare is the world's first true media
loyal customers to some of the world’s
investment
most recognised brands.
MindShare sees a clients’ media budget as
management
company.
an investment to be carefully managed, to
SINGLETON OGILVYINTERACTIVE
build the value of their clients’ brands and
Member of one of the top 10 interactive
the growth of their business.
agencies in the world, Singleton
OgilvyInteractive is ideally placed to
DESIGN DIRECT
offer advice and solutions to any
As a fast track art studio, Design Direct
organisation’s interactive requirements.
provides their clients with cost effective,
SOI
unique
time critical marketing solutions.
combination of brand awareness,
Design Direct is one-stop shopping for
marketing and technical skills.
fully
brings
together
a
integrated
direct
response
assignments offering services like
concepts, copywriting, typography and
project management.
six
[6
[
singleton group
member companies
WEBSITE DEVELOPMENT GROUP
OGILVY PUBLIC RELATIONS
Web Development Group (WDG) is one
Ogilvy PR is one of the world’s largest
of the largest and most successful
strategic communications firms. Through
internet development operations in
senior-level counsel and hands-on
Australia. WDG's core business is web
implementation Ogilvy PR helps solve
development, planning and implementation.
client challenges through spirited
WDG’s size and background in a range
partnership, innovative programs and
of diverse projects positions it as a
a thorough understanding of business
supplier of choice for internet projects
and public affairs.
for the largest organisations in Australia.
IMPACT
FAME ADVERTISING
Impact Employee Communications is a
Fame Advertising believes you need to
specialist in communicating important
be famous for something. Even if that
strategic initiatives with employees to
something is emotional or intangible.
win their support. Impact Employee
That’s why Fame concentrates on
Communications provides a full service
creating strategies and campaigns to
solution to clients - from research and
make their clients famous. The fact that
strategic development through to the
these advertisements may appear on a
complete implementation of employee
pavement, a TV set, poster or website
communication programs.
does not change the objective. It simply
changes the media.
STAR ADVERTISING
Star is a purpose-built advertising agency
IGNITE PRODUCTIONS
in Sydney and Auckland with a difference.
Ignite Productions offers TV, radio and
Seasoned industry professionals work
cinema production capabilities on any
only on their designated business with no
scale. From advice to development and
sharing of clients to ensure focus,
completion of initial creative ideas,
commitment and results.
Ignite can manage every facet of their
client’s audio/visual requirements.
COMMONHEALTH AUSTRALIA
CommonHealth Australia is a healthcare
ANOP RESEARCH SERVICES
marketing and advertising agency.
ANOP Research Services became a group
CommonHealth Australia covers the
member in January 2000. Founded in
entire spectrum of healthcare marketing
1971 by Rod Cameron, ANOP is one of
from ethical and direct-to-consumer
Australia's foremost strategic marketing
advertising to professional and patient
research consultancies, offering a full suite
education to strategic planning and
of qualitative and quantitative solutions.
relationship marketing.
7]
seven
[
history and financial performance
advertising and communications
1985
• John Singleton Advertising commences business
A dv e r t i s i n g E a r n i n g s P e r S h a r e
vs Dividends Per Share
12.0
10.0
1994
• John Singleton Advertising Limited is admitted to the
8.0
official list of the Australian Stock Exchange, at an
6.0
initial share price of 38 cents ($1.90 pre adjustment
4.0
for the 2000 4:1 bonus issue)
2.0
1997
0.0
1994
• The Singleton Direct and Genesis Advertising
businesses are established
1995
1996
1997
1998
1999
2000
Dividends per Share (¢)
Earnings per Share (¢)
1998
• John Singleton Advertising merges with the Australian
and New Zealand operations of Ogilvy & Mather
O p e r at i n g P r o f i t B e f o r e Ta x v s
O p e r at i n g P r o f i t A f t e r Ta x
($millions)
Worldwide to form Singleton Ogilvy & Mather (SOM)
• Singleton OgilvyOne, Ethnic Communications,
20
18
Promotional Campaigns and CommonHealth also
16
join the Group as a result of the merger
14
• SOM establishes Ignite Productions
12
10
8
1999
• SOM establishes the Singleton OgilvyInteractive
business
6
4
2
0
1994
1995
1996
2000
Operating Profit after tax
• SGL acquires interests in ANOP Research Services,
Impact Employee Communications, and Web
Development Group
• SOM acquires interests in Mindshare, Star
Advertising and Fame Advertising
• SGL & WPP establish the Ogilvy Public Relations
business in Australia
eight
[8
Operating Profit before tax
1997
1998
1999
2000
[
history and financial performance
media
Media
With a wealth of experience and industry knowledge at a senior
T h e I n v e s t m e n t i n C h a n n e l Te n
level, Singleton Group is uniquely positioned to make strategic
media investments which add to shareholder value. The board has
($ m il l ion s )
50
45
experience across the media spectrum, encompassing TV, radio,
40
film, cinema, publishing, outdoor, media buying, media selling,
35
media programming, and of course, advertising.
30
In the past, Singleton Group and its shareholders have enjoyed
25
20
the outstanding investment returns from the investment in
15
Channel TEN. The current investment in SCTV has tremendous
10
potential, to which Singleton Group can contribute some of its
5
0
experience. In the future, Singleton Group will continue to
Investment
by SGL
examine potential media investments, and provided they are
Total after
tax return
Dividend
Income
Profit
on Sale
Interest on
Sale Proceeds
1999
2000
financially accretive, may make further investments.
SCTV Net Revenue
($ A m il l ion s )
Channel Ten
Singleton Group is proud of the returns achieved on its investment
120
in Channel TEN. With an original investment of $4.5 M made in
100
November 1993, SGL received the equivalent of $9.4 M in fully
80
franked dividend income in the three years to November 1996. The
60
investment was sold in November 1996 realising an after tax profit
on sale of $34.6 M. SGL also received $1.5 M in interest income
(after tax) on investing the sale proceeds, before they were ultimately
returned to shareholders, together with a capital return of $5.2M.
40
20
0
1996
1997
1998
SCTV
PT Surya Citra Televisi is the third largest television network in
Indonesia with an audience reach of approximately 123 million
people. In a market where per capita TV advertising spend is $US1
compared to $US75 in Australia, Singleton Group is confident
that SCTV will be able to grasp the opportunities available to it,
through a growing TV advertising market, deregulation of
Indonesian industry, and increased sophistication in marketing
and programming techniques.
Singleton Group has examined the potential risks, including
political and currency risk, and decided, based on the economics of
the transaction, that the risk is affordable, and the upside exciting.
9]
nine
contents ]
financial report
No.
11
D i re c t o r ’s Re p o r t
No.
17
Profit and Loss Statements
No.
18
Balance Sheets
No.
19
Statements of Cash Flows
No.
20
Notes to the Financial Statements
No.
35
Director’s Declaration
No.
36
I n d e p e n d e n t Au d i t Re p o r t
No.
37
Additional Information
annual report 2000
ten
[10
[ directors’ report Singleton Group Limited and Controlled Entities
The Directors of Singleton Group Limited present their report
REVIEW OF OPERATIONS
The Chairman’s Report and the Group Managing Director’s
and the financial statements of the company and consolidated
entity for the financial year ended 31 December 2000.
Report forming part of the Annual Report deal with the operations
and results of the consolidated entity for the financial year ended
31 December 2000. The Directors have adopted these sections of
DIRECTORS
The names of the Directors in office during the financial year
the Annual Report as part of the Directors’ Report.
and up to the date of this report are as follows:
Mark Carnegie
William Currie
Anne Keating
John Singleton
Geoff Levy
Paul Richardson
Russell Tate
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
In the opinion of the Directors there were no significant
changes in the state of affairs of the consolidated entity that
occurred during the financial year under review other than those
PRINCIPAL ACTIVITIES
The consolidated entity’s principal activity during the financial
issues noted below:
•
In November 2000, a controlled entity invested
year was holding a 66.67% investment in Singleton Ogilvy &
$48,184,000 in PT Abhimata Mediatama, an Indonesian
Mather (Holdings) Pty Limited, whose principal activity is
company with an indirect beneficial interest in PT Surya
advertising and communications.
Citra Televisi (SCTV). SCTV is the third largest television
network in Indonesia.
PROFIT
The operating profit after income tax of the consolidated entity
for the financial year was $12,741,000.
EVENTS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
No matters or circumstances have arisen since the end of the
DIVIDENDS
Dividends paid or declared by the company since the end of the
financial year which have significantly affected or may
significantly affect the operations of the consolidated entity, the
previous financial year were:
results of those operations or the state of affairs of the
•
consolidated entity in subsequent financial years.
As proposed and provided for in the prior period’s annual
report:
A final ordinary dividend of 16 cents per (equivalent to
•
LIKELY DEVELOPMENTS
3.2 cents post bonus issue) share amounting to $3,733,000
No information is included on the likely developments in the
in respect of the period ended 31 December 1999, paid on
operations of the consolidated entity and the expected results of
12 May 2000.
those operations as it is the opinion of the Directors that this
In respect of the current financial year:
information would prejudice the interests of the consolidated
An interim dividend of 2.8 cents per share amounting to
entity if included in this report.
$3,642,000 paid on 13 October 2000.
A final ordinary dividend of 4.2 cents per share
recommended for payment amounting to $5,496,000.
11 ]
eleven
[ directors’ report Singleton Group Limited and Controlled Entities
INFORMATION ON DIRECTORS
M ARK CARNEGIE
W ILLIAM C URRIE
(Chairman, Non-Executive Director)
(Non-Executive Director)
Aged 38 years, Mr Carnegie is a consultant. He previously
Aged 63 years, Mr Currie has spent over 40 years in advertising
worked for Hudson Conway Limited in London and for James D
in management roles. As Managing Director of his agency Berry
Wolfensohn, Inc in New York. He is a Director of Neverfail
Currie he first teamed up with John Singleton. Mr Currie was
Springwater Limited, Biotech International Limited, Carnegie
Deputy Chairman of DDB Berry Currie Advertising until he
Foundation Limited, Easycall Asia Limited and Easycall
joined John Singleton Advertising in 1986. He was Managing
International Limited.
Director until 1992 and then Chairman until June 1998.
Mr Carnegie holds a Masters degree in Jurisprudence from
Mr Currie is a past committee member of the Advertising
Oxford University and a Bachelor of Science (Hons) from
Federation of Australia, past president of the Advertising Club of
Melbourne University.
Sydney and currently Patron of Gordon Rugby Union Football Club.
J OHN S INGLETON
G EOFF L EVY
(Chief Executive Officer)
(Non-Executive Director)
Aged 59 years, Mr Singleton started the John Singleton
Aged 41 years, Mr Levy is a Director and shareholder in
Advertising business in April 1985. Mr Singleton has been
Wentworth Associates Pty Limited and was formerly a partner in the
Creative Director and Director of major Australian advertising
leading law firm, Freehills. Mr Levy has over 15 years experience in
agencies since age 20. He founded the SPASM advertising agency
the corporate advisory environment where he is regarded as an expert
and the Communications Supermarket in 1968. He was Chairman
in mergers and acquisitions, capital raisings and general corporate
and CEO of Doyle Dane Bernbach upon its acquisition of SPASM.
commercial law. He advises several well known Australian and
Mr Singleton has also been a Director of The Sydney Opera
international entities and his other directorships include Rebel Sport
House, John Fairfax Holdings Limited and TEN Group Limited.
Limited, Freedom Group Limited, Mirvac Limited, Mirvac Funds
Mr Singleton has absolutely zero tertiary qualifications.
Limited, Capital Property Management Limited, Australian Film
Finance Corporation Limited, Ten Network Holdings Limited and
RUSSELL TATE
(Group Managing Director)
Mr Levy has degrees in Commerce and Law from the University
Aged 52 years, Mr Tate joined the John Singleton Advertising
of Witwatersrand (South Africa) and The University of New South
business in November 1987. Mr Tate spent 10 years in sales and
Wales, respectively. He also has a diploma from and is an Associate
marketing for various companies, including CSR, Ampol and
of the Securities Institute of Australia.
Rheem, and was Executive Director of the Dairy Promotion
Council in 1978. Mr Tate formed his own marketing consultancy
in 1981. The consulting operation evolved into a full service
agency in 1985.
Mr Tate holds a Bachelor of Commerce (Econ) from The
University of New South Wales.
twelve
[12
Esign Australia Limited.
[ directors’ report Singleton Group Limited and Controlled Entities
INFORMATION ON DIRECTORS (CONTINUED)
A NNE K EATING
(Non-Executive Director)
Aged 47 years, Miss Keating spent four years as a high school
teacher before joining the airline industry. She has held various
positions in most areas of the business and is currently General
Manager, Australia for United Airlines.
She is a Director of WorkCover Authority, Tourism Task
Force, American Chamber of Commerce, Board of Airline
Representatives of Australia, Victor Chang Cardiac Research
Institute Limited, Ausflag Limited, NRMA Limited, NRMA
Insurance Limited, NRMA Insurance Group Limited, and
Macquarie Leisure Management Limited
PAUL R ICHARDSON
(Non-Executive Director)
Aged 43 years, Paul Richardson became group finance
director of WPP Plc in December 1996 after four years with
the Company as director of treasury. He is responsible for the
group's worldwide finance function, including external reporting,
taxation, procurement, property, treasury and internal audit.
Previously he spent six years with the central team of Hanson Plc
financing major acquisitions and disposals. He is a chartered
accountant and member of the Association of Corporate
Treasurers.
He is a Director of Chime Communications Plc, Grass Roots
Group Plc and The Farm Post Production Company Limited.
13 ]
thirteen
[ directors’ report Singleton Group Limited and Controlled Entities
CORPORATE GOVERNANCE STATEMENT
COMPENSATION COMMITTEE
The Board of Directors of Singleton Group Limited is
The Board is responsible for determining and reviewing
responsible for the corporate governance of the consolidated
compensation arrangements for the Directors themselves and the
entity. The Board guides and monitors the business and affairs of
executive team. The Board has established a compensation
the consolidated entity on behalf of the shareholders by whom they
committee, comprising three Non-Executive Directors and one
are elected and to whom they are accountable.
Executive Director. Members of the compensation committee
throughout the year were;
AUDIT COMMITTEE
Mark Carnegie
The Board has established an audit committee. The Board has
Geoff Levy
delegated the responsibility for the establishment and maintenance
Anne Keating
of a framework of internal control and ethical standards for the
John Singleton (Executive Director)
management of the consolidated entity to the audit committee.
The members of the audit committee during the year were:
Mark Carnegie
(Chairman and Non-Executive Director)
MONITORING OF THE BOARD’S PERFORMANCE AND
COMMUNICATION TO SHAREHOLDERS
Russell Tate
(Executive Director)
The Board aims to ensure that the shareholders, on behalf of
Alex Walker
(Company Secretary)
whom they act, are informed of all information necessary to assess
the performance of the Directors. Information is communicated
The audit committee also:
• provides the Board with additional assurance regarding the
• the annual report which is distributed to all shareholders;
reliability of financial information for inclusion in the
• the half-yearly report;
financial statements; and
• the annual general meeting and other meetings called to
• is responsible for the external auditors and reviewing the
adequacy of the scope and quality of the annual statutory
audit and half-yearly statutory review.
fourteen
[14
through:
obtain approval for Board action as appropriate; and
• announcements to the Australian Stock Exchange.
[ directors’ report Singleton Group Limited and Controlled Entities
MEETINGS OF DIRECTORS
During the financial year, seven meetings of Directors including committees were held. Attendances were:
directors meetings
audit committee meetings
number eligible
to attend
number
attended
number eligible
to attend
number
attended
Mark Carnegie
5
5
2
2
John Singleton
5
5
-
-
Russell Tate
5
5
2
2
William Currie
5
5
-
-
Geoff Levy
5
5
-
-
Anne Keating
5
5
-
-
Paul Richardson
5
1
-
-
directors
There were no formal meetings of the Compensation Committee.
DIRECTORS’ INTERESTS
Directors’ interests in shares and options over shares of the parent entity are as shown in note 21 to the financial statements. There has been
no change in those interests between 31 December 2000 and the date of this report.
EMOLUMENTS OF DIRECTORS
The remuneration of the Directors for the year ended 31 December 2000 was;
directors
base salary
$
other benefits
$
directors’ fees
$
total
$
no of options (i)
Mark Carnegie
-
5,000
60,000
65,000
1,300,000
John Singleton
367,000
8,000
-
375,000 (ii)
-
Russell Tate
467,000
8,000
-
475,000 (ii)
4,500,000
William Currie
-
2,000
23,000
25,000
-
Geoff Levy
-
3,000
40,000
43,000
-
Anne Keating
-
3,000
40,000
43,000
-
Paul Richardson
-
-
-
-
-
$834,000
$29,000
$163,000
$1,026,000
5,800,000
total
(i) Following approval at the extraordinary general meeting on 4 November 1999, Mark Carnegie and Russell Tate were issued options of
1,300,000 and 4,500,000 respectively, in the shares of the company. In respect to Mr Tate, WPP Holdings (Australia) Pty Limited has agreed
to contribute 1,354,500 shares it already owns upon exercise of these options. The options are exercisable after the date of the Board approval
of the consolidated audited profit and loss statement of Singleton Ogilvy & Mather (Holdings) Pty Limited for the year ending 31 December
2003. The options issued to Messrs Carnegie and Tate were valued using the Black-Scholes option pricing model at the date of issue. The
estimated value per option is 65.0 cents and 56.0 cents respectively.
(ii) The remuneration of these two executive Directors represents the amount paid by an associate, Singleton Ogilvy & Mather (Holdings) Pty Limited.
15 ]
fifteen
[ directors’ report Singleton Group Limited and Controlled Entities
COMPENSATION POLICY
Directors are remunerated at market rates for their services to
the company. Other than the share options issued to Mark
During the financial year, the parent entity paid a premium for
an insurance policy insuring each of the persons noted below
against certain liabilities:
Carnegie and Russell Tate, refer prior paragraph, there is no link
Mark Carnegie
Geoff Levy
between the basic fees paid to retain their services and the
John Singleton
Anne Keating
performance of the company. From time to time, shareholders may
Russell Tate
Paul Richardson
be requested to approve performance incentives for services above
William Currie
Alex Walker
the normal level.
In accordance with common commercial practice, the insurance
SHARE OPTIONS
Options over 4,445,500 unissued shares and options over
policy prohibits disclosure of the nature of the liability insured
against and the amount of the premium.
1,354,500 issued shares, held by a shareholder of the company,
have been issued during the financial year.
ROUNDING OF AMOUNTS
No shares have been issued by virtue of the exercise of an option
The consolidated and parent entities are entities to which Class
during the year and to the date of this report. At the date of this
Order 98/100 issued by the Australian Securities & Investments
report, there are 4,445,500 unissued shares for which options
Commission applies and accordingly, amounts in the financial
are outstanding.
report and in the Directors’ Report have been rounded off to the
nearest thousand dollars in accordance with that class order.
INDEMNIFICATION OF OFFICERS OR AUDITORS
Signed in accordance with a resolution of the Directors:
The consolidated entity has not, during or since the financial
year, in respect of any person who is or has been an officer or
auditor of the parent entity or a related body corporate,
sixteen
[16
indemnified or made any relevant agreement for indemnifying
Mark Carnegie
them against a liability incurred as an officer or auditor, including
Director
costs and expenses in successfully defending legal proceedings.
(Sydney, 9 March 2001)
[ profit and loss statements
for the year ended 31 December 2000
pa r e n t e n t i t y
c o n s o l i d at e d e n t i t y
2000
1999
2000
1999
dollars in thousands
note
Operating profit before income tax
Income tax attributable to operating profit
2, 3
4
OPERATING PROFIT AFTER INCOME TAX
Retained profits/(accumulated losses)
at the beginning of the financial year
Total available for appropriation
Dividends provided for or paid
RETAINED PROFITS AT THE END OF THE
FINANCIAL YEAR
5
12,723
8,308
9,076
6,243
(18)
25
(7)
22
12,741
8,283
9,083
6,221
1,197
(1,016)
42,023
41,872
13,938
7,267
51,106
48,093
(9,138)
(6,070)
(9,138)
(6,070)
4,800
1,197
41,968
42,023
The accompanying notes form part of and are to be read in conjunction with these financial statements.
17 ]
seventeen
[ balance sheets
as at 31 December 2000
pa r e n t e n t i t y
c o n s o l i d at e d e n t i t y
2000
1999
2000
1999
dollars in thousands
note
CURRENT ASSETS
Cash
Receivables
Other
145
5,662
189
3,136
6,798
54
145
46,281
64
3,136
8,773
54
5,996
9,988
46,490
11,963
550
82,843
47
23,830
7
65,323
12
64,795
7
TOTAL NON-CURRENT ASSETS
83,440
23,837
65,335
64,802
TOTAL ASSETS
89,436
33,825
111,825
76,765
1,653
8,926
5,524
27
682
3,736
434
6,016
5,500
27
2,763
3,733
16,103
4,445
11,950
6,523
10,000
3
601
10
-
3
-
10
-
TOTAL NON-CURRENT LIABILITIES
10,604
10
3
10
TOTAL LIABILITIES
26,707
4,455
11,953
6,533
NET ASSETS
62,729
29,370
99,872
70,232
6
7
8
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Receivables
Investments
Other
7
9
8
CURRENT LIABILITIES
Accounts payable
Borrowings
Provisions
10
11
12
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Borrowings
Provisions
Other
11
12
13
EQUITY
Issued capital
Reserves
Retained profits
14
15
57,904
25
4,800
28,209
(36)
1,197
57,904
41,968
28,209
42,023
TOTAL EQUITY
16
62,729
29,370
99,872
70,232
The accompanying notes form part of and are to be read in conjunction with these financial statements.
eighteen
[18
[ statements of cash flows
for the year ended 31 December 2000
pa r e n t e n t i t y
c o n s o l i d at e d e n t i t y
2000
1999
2000
1999
dollars in thousands
note
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers
Payments to suppliers and employees
Interest received
Interest and other costs of finance paid
Dividends received
Income tax paid
146
(462)
480
(129)
9,740
(5)
(540)
199
1,167
(130)
138
(334)
418
9,878
1
(538)
196
1,165
(127)
9,770
696
10,101
696
Payments for business acquired
Loans to associated entities – receipts from
Loans to associated entities – payments made
Loan to controlled entity – payments made
Investments in associated entities
3,247
(550)
(52,778)
(100)
2,340
(1,312)
(38)
3,244
(50)
(38,606)
-
2,217
(1,099)
-
NET CASH PROVIDED BY/(USED IN)
INVESTING ACTIVITIES
(50,081)
890
(35,412)
1,118
Issue of shares
Share issue costs
Proceeds from borrowings
Dividends paid
30,239
(544)
15,000
(7,375)
1
(3,493)
30,239
(544)
(7,375)
1
(3,493)
NET CASH PROVIDED BY/(USED IN)
FINANCING ACTIVITIES
37,320
(3,492)
22,320
(3,492)
Net increase/(decrease) in cash held
(2,991)
(1,906)
(2,991)
(1,678)
Cash at beginning of the financial year
3,136
5,042
3,136
4,814
145
3,136
145
3,136
NET CASH PROVIDED BY/(USED IN)
OPERATING ACTIVITIES
19(b)
CASH FLOW FROM INVESTING ACTIVITIES
CASH FLOW FROM FINANCING ACTIVITIES
CASH AT THE END OF THE FINANCIAL YEAR
19(a)
The accompanying notes form part of and are to be read in conjunction with these financial statements.
19 ]
nineteen
notes to the financial statements
]
No.
21
1 S t a t e m e n t o f S i g n i f i c a n t Ac c o u n t i n g Po l i c i e s
No.
22
2 Reve n u e
No.
22
3 O p e ra t i n g P ro f i t
No.
23
4 I n c o m e Ta x
No.
23
5 D i v i d e n d s P rov i d e d fo r o r Pa i d
No.
24
6 Cash
No.
24
7 Re c e i va b l e s
No.
24
8 Other Assets
No.
24
9 I n ve s t m e n t s
No.
28
10 Ac c o u n t s Pa y a b l e
No.
28
11 B o r row i n g s
No.
28
1 2 P rov i s i o n s
No.
28
13 Other Liabilities
No.
29
14 Issued Capital
No.
29
1 5 Re s e r ve s
No.
29
16 Equity
No.
30
1 7 Re m u n e ra t i o n o f D i re c t o rs a n d E x e c u t i ve s
No.
31
1 8 Au d i t o rs ’ Re m u n e ra t i o n
No.
31
1 9 N o t e s t o S t a t e m e n t o f C a s h F l ows
No.
32
20 E a r n i n g s p e r S h a re
No.
32
21 Re l a t e d Pa r t y Tra n s a c t i o n s
No.
33
2 2 S t a t e m e n t o f O p e ra t i o n s b y S e g m e n t s
No.
34
23 Financial Instruments
annual report 2000
twenty
[20
[ notes
1.
to the financial statements
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
The financial report is a general purpose financial report that has
been prepared in accordance with applicable Accounting Standards,
other authoritative pronouncements of the Australian Accounting
Standards Board, Urgent Issues Group Consensus Views, and the
Corporations Law. The financial report has been prepared on an
accruals basis and is based on historical costs and does not take into
account changing money values or, except where stated, current
valuations of non-current assets. The accounting policies have been
consistently applied, unless otherwise stated.
The following is a summary of the significant accounting
policies adopted by the consolidated entity in the preparation of
the financial report.
PRINCIPLES OF CONSOLIDATION
The financial statements of the consolidated entity comprise
the financial statements of the parent entity and its controlled
entities. All inter-entity balances and transactions between
entities, including any unrealised profits or losses, have been
eliminated on consolidation.
Investments in associates are accounted for in the consolidated
financial statements using the equity method. Under this method,
the consolidated entity’s share of the profits or losses of associates
is recognised as revenue in the consolidated profit and loss
statement, and its share of movements in reserves is recognised in
consolidated reserves. Associates are those entities over which the
consolidated entity exercises significant influence, but not control.
INCOME TAX
The principles of the liability method of tax-effect accounting
have been applied whereby the income tax expense shown in the
profit and loss statements is based on the pre-tax operating profit
adjusted for any permanent differences.
Timing differences which arise due to the different accounting
periods in which items of revenue and expense are included in the
determination of pre-tax operating profit and taxable income, are
brought to account as either provision for deferred income tax or
an asset described as future income tax benefit at the rate of
income tax applicable to the financial year in which the liability
will become payable or the benefit will be received.
Future income tax benefits in relation to timing differences are
not brought to account unless realisation of the asset is assured
beyond any reasonable doubt.
The amount of these benefits is based on the assumption that
no adverse change will occur in income tax legislation and the
anticipation that sufficient future assessable income shall be
derived and there will be compliance with the conditions of
deductibility imposed by the law to permit a future income tax
benefit to be obtained.
NON-CURRENT ASSETS
The carrying amounts of non-current assets are reviewed
annually to determine whether they are in excess of their
recoverable amount at balance date. If the carrying amount of a
non-current asset exceeds the recoverable amount, the asset is
written down to the lower amount. In assessing recoverable
amounts, the relevant cash flows have not been discounted to their
present value.
INVESTMENTS
Investments in controlled entities are carried in the parent
entity’s financial statements at cost or Directors’ valuation, less any
amounts written off for diminution in the value of the investments.
Dividends are brought to account in the profit and loss statements
when they are proposed or paid by the controlled entities.
Other investments are carried at cost less any amounts written
off for diminution in value of the investments. Dividends are
brought to account when received.
CASH
For the purpose of the statements of cash flows, cash includes
cash on hand and on deposit at call with banks or financial
institutions, net of bank overdrafts.
COMPARATIVE FIGURES
Where required by Accounting Standards or for correct
disclosure, comparative figures have been adjusted to conform with
changes in presentation for the current financial year.
ROUNDING OF AMOUNTS
The consolidated and parent entities are entities to which Class
Order 98/100 issued by the Australian Securities & Investments
Commission applies and accordingly, amounts in the financial
report and in the Directors’ Report have been rounded off to the
nearest thousand dollars in accordance with that class order.
21 ]
twenty one
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
2. REVENUE
OTHER INCOME
Share of net profit of associates before amortisation
Goodwill amortisation
12,960
(213)
8,296
-
-
-
Share of net profit of associates
12,747
8,296
-
-
Dividends received
Interest received
Other
480
146
217
138
9,167
418
138
6,239
214
138
TOTAL REVENUE
13,373
8,651
9,723
6,591
Share of net profit of associates before amortisation
Goodwill amortisation
12,960
(213)
8,296
-
-
-
Share of net profit of associates
12,747
8,296
-
-
-
-
9,167
157
6,082
-
-
9,167
6,239
480
217
418
214
129
-
-
-
3. OPERATING PROFIT
The operating profit before income tax has
been determined after:
CREDITING AS REVENUE
Dividends received:
Controlled entities
Associates
Interest received:
Other persons
CHARGING AS EXPENSE
Borrowing costs:
Interest expense
twenty two
[22
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
4. INCOME TAX
The prima facie income tax payable on the operating
profit is reconciled to the income tax provided in the
financial statements as follows:
12,723
8,308
9,076
6,243
4,326
2,991
3,086
2,248
(4,334)
(15)
5
(2,987)
21
-
24
(3,117)
-
19
(2,245)
-
(18)
25
(7)
22
(1999: 2.0 cents – bonus adjusted)
per share fully franked at 34% (1999: 36%)
3,642
2,332
3,642
2,332
Underprovision on prior period final dividend
-
5
-
5
5,496
3,733
5,496
3,733
9,138
6,070
9,138
6,070
5,557
5,104
5,551
5,104
OPERATING PROFIT BEFORE INCOME TAX
Prima facie tax payable at 34% (1999: 36%)
TAX EFFECT OF PERMANENT DIFFERENCES:
Share of net profit of associates
Other
Rebateable dividends
Change in tax rate
INCOME TAX EXPENSE
5. DIVIDENDS PROVIDED FOR OR PAID
INTERIM ORDINARY DIVIDEND OF 2.8 CENTS
PROPOSED FINAL ORDINARY DIVIDEND OF 4.2 CENTS
(1999: 3.2 cents – bonus adjusted)
per share fully franked at 34% (1999: 36%)
Balance of the franking account as at the end of the financial
year, adjusted for franking credits that will arise from the
payment of income tax payable, franking debits that will arise
from the payment of dividends proposed, and franking credits
not represented by distributable profit:
Franked at 34% (1999: 36%)
23 ]
twenty three
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
6. CASH
CASH AT BANK
145
3,136
145
3,136
103
5,559
-
19
6,251
-
102
50
46,488
(359)
19
8,585
(359)
5,662
6,270
46,281
8,245
-
186
342
-
186
342
5,662
6,798
46,281
8,773
550
-
-
-
189
54
64
54
47
7
12
7
82,159
684
23,674
156
64,639
684
64,639
156
82,843
23,830
65,323
64,795
7. RECEIVABLES
CURRENT
Other debtors
Amounts receivable from associated entities
Amounts receivable from controlled entities
Provision for doubtful debts
Loans to Directors (refer note 21(c))
Loans to former executives
NON-CURRENT
Amounts receivable from associated entities
8. OTHER ASSETS
CURRENT
Prepayments
NON-CURRENT
Future income tax benefit
9. INVESTMENTS
NON-CURRENT
Shares in controlled entities
Shares in associated entities
Shares in Director-related entity
twenty four
[24
[ notes
to the financial statements
name
country of
i n c o r p o r at i o n
a m o u n t o f pa r e n t
entities investment
ownership interest
2000
1999
2000
%
1999
dollars in thousands
9. INVESTMENTS (CONTINUED)
CONTROLLED ENTITIES
Singleton Holdings Pty Limited
Belshaw Pty Limited
TheMissingLink Pty Limited
Singleton Direct Pty Limited
SGL Media Services Pty Limited and
its controlled entity
– SGL TV Holdings Limited
name
Australia
Australia
Australia
Australia
Australia
100
100
100
100
100
100
100
100
100
100
63,437
1,202
-
63,437
1,202
-
Mauritius
100
-
-
-
64,639
64,639
p r i n c i pa l
activity
c o n s o l i d at e d
carrying amount
ownership interest
2000
1999
2000
%
1999
dollars in thousands
ASSOCIATED ENTITIES
Singleton Ogilvy & Mather
(Holdings) Pty Limited
Advertising &
Communications
66.67
66.67
27,067
23,674
ANOP Research Services Pty Limited
(acquired 4 January 2000)
Market
Research
50.00
-
1,938
-
Ogilvy Public Relations Pty Limited
(acquired 24 August 2000)
Public
Relations
49.00
-
-
-
Web Development Group Pty Limited
(acquired 14 August 2000)*
Web Site
Design
40.00
-
4,172
-
Impact Employee Communications
Internal
Pty Limited (acquired 1 November 2000)* Communications
30.00
-
798
-
PT Abhimata Mediatama
(acquired 22 November 2000)
51.64
-
48,184
-
82,159
23,674
TV Holding
Company
The company has a majority interest in the issued capital of Singleton Ogilvy & Mather (SOM) and PT Abhimata Mediatama.
However, in accordance with the requirements of Accounting Standard AASB 1024 “Consolidated Accounts”, their financial
statements have not been included in the consolidated financial statements of Singleton Group Limited. This is because the
respective shareholders’ agreements detail certain matters which, under AASB 1024, constitute joint control. The company
is required by law to accept AASB 1024.
As required by AASB 1016 “Accounting for Investments in Associates”, detailed below are disclosures and financial
information on the associates.
* Reporting date is 30 June.
25 ]
twenty five
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
dollars in thousands
9. INVESTMENTS (CONTINUED)
EQUITY ACCOUNTED AMOUNTS FOR
THE INVESTMENTS WERE:
(a)
(b)
(c)
MOVEMENTS IN CARRYING AMOUNT OF
INVESTMENT IN ASSOCIATES
Balance of equity accounted investment
at the beginning of the financial year
Additional investments during the year
Share of operating profit after income tax
Share of movement in reserves
Dividends received/receivable
23,674
54,894
12,747
61
(9,217)
21,455
39
8,296
(34)
(6,082)
CARRYING AMOUNT AT THE END
OF THE FINANCIAL YEAR
82,159
23,674
Operating profit before income tax
Income tax expense
21,081
(7,076)
13,887
(5,053)
Operating profit after income tax
Outside equity interests
14,005
(1,258)
8,834
(538)
OPERATING PROFIT ATTRIBUTABLE TO ASSOCIATES
12,747
8,296
4,100
12,747
(9,217)
1,886
8,296
(6,082)
7,630
4,100
(36)
61
(2)
(34)
25
(36)
RESULTS ATTRIBUTABLE TO ASSOCIATES
RETAINED PROFITS ATTRIBUTABLE TO ASSOCIATES
Opening balance
Share of profit during the year
Dividends received
CLOSING BALANCE
(d)
R E S E RV E S AT T R I B U TA B L E TO A S S O C I AT E S
Foreign currency translation reserve:
Opening balance
Movement during the year
CLOSING BALANCE
twenty six
[26
1999
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
9. INVESTMENTS (CONTINUED)
(e)
S H A R E O F C O M M I T M E N TS
Hire purchase:
Not later than one year
Later than one year and not later than five years
Operating leases:
Not later than one year
Later than one year and not later than five years
(f)
58
369
-
427
-
2,174
3,327
1,302
2,870
5,501
4,172
SHARE OF CAPITAL COMMITMENTS
An associate has contracted to purchase an additional 49% equity interest in one of the associate’s controlled entities.
The associate currently owns 51% of this entity. The contracted purchase commitment is payable in March 2003 and is
based on future profitability. As such, the amount payable cannot be determined at the present time.
(g)
SUMMARY OF PERFORMANCE AND
FINANCIAL POSITION OF ASSOCIATES
BILLINGS AND REVENUE
Advertising billings
Total revenue
545,821
82,444
457,584
61,301
19,396
12,443
Current Assets
Non-Current Assets
56,387
101,770
50,547
41,038
TOTAL ASSETS
158,157
91,585
Current Liabilities
Non-Current Liabilities
50,011
16,504
46,697
8,514
TOTAL LIABILITIES
66,515
55,211
NET ASSETS
91,642
36,374
OPERATING PROFIT
Operating profit after income tax
SUMMARISED BALANCE SHEET
27 ]
twenty seven
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
10.ACCOUNTS PAYABLE
CURRENT
Sundry creditors
1,653
27
434
27
5,000
682
3,244
-
682
-
682
5,334
682
2,081
8,926
682
6,016
2,763
10,000
-
-
-
28
5,496
3
3,733
4
5,496
3,733
5,524
3,736
5,500
3,733
3
10
3
10
601
-
-
-
11.BORROWINGS
CURRENT
Bank loan – secured (a)
Amounts payable to Director-related entity
Amounts payable to associated entities
Amounts payable to controlled entities
NON-CURRENT
Bank loan – secured (a)
(a) Security is provided by a fixed and floating charge over
the assets of the parent entity and an associate entity,
Singleton Ogilvy & Mather (Holdings) Pty Limited.
12.PROVISIONS
CURRENT
Income tax
Dividends
NON-CURRENT
Deferred income tax
13.OTHER LIABILITIES
NON-CURRENT
Deferred acquisition consideration
twenty eight
[28
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
14.ISSUED CAPITAL
ORDINARY SHARES
At the beginning of the financial year:
28,209
28,208
28,209
28,208
Shares issued during the year
13,000 on 24 March 2000
321,116 on 25 August 2000
2,365,078 on 30 August 2000
Transaction costs relating to share issues
3,041
27,198
(544)
-
3,041
27,198
(544)
-
57,904
28,208
57,904
28,208
-
1
-
-
1
-
57,904
28,209
57,904
28,209
Shares issued in 1999:
100,000 on 1 March 1999
24,182 on 7 April 1999
130,079,295 ORDINARY SHARES
(1999: 23,316,665)
(a) On 7 September 2000, the company issued 104,063,436 shares at nil consideration to existing shareholders on the basis
of 4 shares for every 1 share held.
(b) At the date of this report, options have been granted over 4,445,500 unissued shares. The exercise price is 4 cents per share.
The options can be exercised during the period between February 2004 and February 2005.
15.RESERVES
Foreign currency translation reserve:
Opening balance
Share of associate’s foreign currency translation
reserve increment
CLOSING BALANCE
(36)
(2)
-
-
61
(34)
-
-
25
(36)
-
-
16.EQUITY
The balance sheet discloses that total equity in the parent entity exceeds the total in the consolidated entity by $37,143,000
(1999: $40,862,000). This is primarily a result of the realisation, in a prior year, by the parent entity of a profit of
$37,344,000, on sale of the its shares in a controlled entity to another controlled entity. As it has not been realised by
external sale, the profit has been eliminated in the consolidated entity financial statements.
On the basis set out above, the Directors believe that the carrying amount of the investments in the parent entity’s operating
controlled entities is appropriate.
29 ]
twenty nine
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
17.REMUNERATION OF DIRECTORS AND EXECUTIVES
(a)
DIRECTORS’ REMUNERATION
Income paid or payable or otherwise made available to:
Directors of all entities in the consolidated entity
Directors of the parent entity
4,386
-
1,159
-
4,386
1,159
4,386
1,159
4,386
1,159
Directors of the parent entity in office during the year:
Mark Carnegie
Geoff Levy
John Singleton
Anne Keating
Russell Tate
Paul Richardson
William Currie
The number of Directors whose total remuneration
fell within the following income bands:
Income range $
0 - 9,999
20,000 - 29,999
40,000 - 49,999
60,000 - 69,999
370,000 - 379,999
460,000 - 469,999
520,000 - 529,999
900,000 - 909,999
(c)
2,990,000 - 2,999,999 (c)
(b)
1
1
2
1
1
1
-
EXECUTIVES’ REMUNERATION
Remuneration received by executives for management
of affairs, where income is $100,000 or more.
The number of executives where remuneration fell
in the following income bands:
Income range $
370,000 - 379,999
460,000 - 469,999
520,000 - 529,999
2,990,000 - 2,999,999 (c)
(c)
Number
1
1
2
1
1
1
3,368
Number
1
1
988
1
1
-
3,368
Number
1
1
988
1
1
-
VALUE OF OPTIONS GRANTED
Following approval at the extraordinary general meeting on 4 November 1999, Mark Carnegie and Russell Tate were issued
options of 1,300,000 and 4,500,000 respectively, in the shares of the company. In respect to Mr Tate, WPP Holdings
(Australia) Pty Limited has agreed to contribute 1,354,500 shares it already owns upon exercise of these options. The
options are exercisable after the date of the Board approval of the consolidated audited profit and loss statement of Singleton
Ogilvy & Mather (Holdings) Pty Limited for the year ending 31 December 2003. The options issued to Messrs Carnegie and
Tate were valued using the Black-Scholes option pricing model at the date of issue. The estimated value per option is
65.0 cents and 56.0 cents respectively. The value of the options has been included in the income bands.
thirty
[30
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
dollars in thousands
18.AUDITORS’ REMUNERATION
Amounts receivable or due and receivable
by parent entity auditors for:
Auditing and reviewing financial statements
Other services
17
184
17
100
17
184
17
100
201
117
201
117
145
3,136
145
3,136
12,741
8,283
9,083
6,221
(3,008)
-
(8,296)
(137)
-
(133)
(84)
(135)
(40)
278
25
(7)
(19)
(54)
12
1,166
(143)
(126)
10
(83)
(10)
(5)
711
407
5
(7)
(19)
(54)
12
(5,073)
(142)
(126)
10
9,770
696
10,101
696
19. NOTES TO STATEMENTS OF CASH FLOWS
(a)
RECONCILIATION OF CASH
Cash at the end of the financial year is shown in the
balance sheet as:
CASH AT BANK
(b) RECONCILIATION OF CASH FLOW FROM
OPERATING ACTIVITIES WITH OPERATING
PROFIT AFTER INCOME TAX
Operating profit after income tax
NON-CASH ITEMS IN OPERATING PROFIT
Share of associates’ profit net of dividends received
Other income
CHANGES IN ASSETS AND LIABILITIES
(Increase)/decrease in trade and other debtors
(Increase)/decrease in prepayments
(Increase)/decrease in future income tax benefit
(Increase)/decrease in dividends receivable
Increase/(decrease) in sundry creditors
Increase/(decrease) in income tax payable
Increase/(decrease) in deferred tax payable
CASH FLOW FROM OPERATING ACTIVITIES
31 ]
thirty one
[ notes
to the financial statements
c o n s o l i d at e d e n t i t y
2000
1999
pa r e n t e n t i t y
2000
1999
cents per share
20.EARNINGS PER SHARE
Basic EPS (cents per share)
10.51
7.11
Diluted EPS (cents per share)
10.24
7.11
Weighted average number of ordinary shares outstanding
during the year used in calculation of basic EPS
121,169,205 116,583,325
To make the comparative meaningful, the prior period calculation and weighted average number of shares have been adjusted
to reflect the 4 for 1 bonus share issue during the year.
21. RELATED PARTY TRANSACTIONS
(a)
TRANSACTIONS WITH RELATED PARTIES
Controlled entities
Information relating to controlled entities is set out in note 9. The parent entity and its controlled entities maintain loan
accounts between themselves which can fluctuate throughout the year. There are no fixed terms of repayment of these
amounts, which are interest free. Amounts owing by and to controlled entities are set out in notes 7 and 11.
Associate entities
During the year, the parent entity received management fees of $138,000 (1999: $138,000) from Singleton Ogilvy &
Mather (Holdings) Pty Limited on commercial terms and conditions. The consolidated entity and associated entities maintain
loan accounts between themselves which can fluctuate throughout the year. There are no fixed terms of repayment of these
amounts which are interest free. The amount owing by and to associates are set out in notes 7 and 11.
(b)
TRANSACTIONS WITH DIRECTOR-RELATED ENTITIES
The consolidated entity engaged the services of Wentworth and Associates Pty Limited, an entity in which Geoff Levy, a
Director of the company, has an interest. The fees charged during the year were $245,000 (1999: $90,000). The amount
payable at 31 December 2000 was $200,000 (1999: Nil).
(c)
L OA N S TO D I R E C TO R S
Aggregate of loans at the beginning of the financial year
Loans advanced during the financial year
Loans repaid during the financial year
AGGREGATE OF LOANS AT THE END
OF THE FINANCIAL YEAR
186
(186)
186
-
-
186
These loans were to assist two Directors of the parent entity, Russell Tate and William Currie, to finance the issue of shares under
the Executive Incentive Scheme (“EIS”). The loans had been advanced on a non-recourse basis against the security of the shares.
The loans were discharged as a consequence of the transfer of the shares under the EIS, from the Directors to the parent entity.
thirty two
[32
[ notes
to the financial statements
To ta l S h a r e s
2000
(d)
t o ta l o p t i o n s
1999
2000
1999
3,750,000
37,500,000
1,465,000
300,000
550,000
750,000
7,500,000
293,000
60,000
110,000
1,300,000
3,145,500
-
-
43,565,000
8,713,000
4,445,500
-
DIRECTORS’ SHAREHOLDINGS AND OPTIONS
As at 31 December 2000, the interests of the Directors
in the shares and options of the parent entity were:
Mark Carnegie
John Singleton
Russell Tate
William Currie
Geoff Levy
On 7 September 2000, the company issued 4 bonus shares for each share held.
As a result, the total number of shares issued to Directors during the year was 34,852,000 (1999: Nil).
The total number of options issued to Directors during the year was 4,445,500 (1999: Nil).
To ta l r e v e n u e
2000
1999
operating profit
af ter income tax
2000
1999
t o ta l a s s e t s
2000
1999
dollars in thousands
22. STATEMENT OF
OPERATIONS BY SEGMENTS
(a)
INDUSTRIAL SEGMENTS
Advertising & Communications
Media
(b)
13,054
319
8,651
-
12,422
319
8,283
-
41,252
48,184
33,825
-
13,373
8,651
12,741
8,283
89,436
33,825
13,054
319
8,651
-
12,422
319
8,283
-
41,252
48,184
33,825
-
13,373
8,651
12,741
8,283
89,436
33,825
GEOGRAPHIC SEGMENTS
Australasia
Asia
33 ]
thirty three
[ notes
to the financial statements
f l o at i n g
i n t e r e s t r at e
non interest
bearing
t o ta l
dollars in thousands
23. FINANCIAL INSTRUMENTS
(a) Interest rate risk
The consolidated entity’s exposure to interest rate risk,
which is the risk that a financial instrument’s value will
fluctuate as a result of changes in market interest rates,
and the effective weighted average interest rates on classes
of financial assets and financial liabilities, are as follows:
as at 31 december 2000
FINANCIAL INSTRUMENT
Cash
Other debtors
Investments
145
-
103
684
145
103
684
TOTAL FINANCIAL ASSETS
145
787
932
Weighted average interest rate (pa)
5.6 %
Sundry creditors
Loans
15,000
1,653
3,926
1,653
18,926
TOTAL FINANCIAL LIABILITIES
15,000
5,579
20,579
Weighted average interest rate pa
7.6%
as at 31 december 1999
FINANCIAL INSTRUMENT
Cash
Other debtors
Loans
Investments
3,136
-
19
528
156
3,136
19
528
156
TOTAL FINANCIAL ASSETS
3,136
703
3,839
Weighted average interest rate (pa)
4.4%
Sundry creditors
Loans
-
27
682
27
682
TOTAL FINANCIAL LIABILITIES
-
709
709
(b) The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised
financial assets is the carrying amount, net of any provisions for doubtful debts, as disclosed in the balance sheet and notes
to the financial statements. The consolidated entity does not have any material credit risk exposure to any single debtor.
(c) Net fair values
The net fair values of the consolidated entity’s financial assets and liabilities are equal to their carrying value as disclosed in (a) above.
thirty four
[34
[ directors’ declaration
singleton group limited
The Directors of Singleton Group Limited declare that:
(a) the financial statements and notes comply with Accounting Standards and give a true and fair view of the financial position
and performance of the company and the consolidated entity for the financial year ended 31 December 2000; and
(b) in the Directors’ opinion, there are reasonable grounds to believe that the company will be able to pay its debts as and when
they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and on behalf of the
Directors by:
Mark Carnegie
Director
(Sydney, 9 March 2001)
35 ]
thirty five
[ independent audit report
singleton group limited
HORWATH
Sydney Partnership
Chartered Accountants
A member of Horwath International
1 Market Street Sydney NSW 2000
GPO Box 1455 Sydney NSW 1041
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF SINGLETON GROUP LIMITED
SCOPE
We have audited the financial report of Singleton Group Limited for the financial year ended 31 December 2000 as set out on pages 17
to 35. The financial report includes the consolidated financial statements of the consolidated entity comprising the company and the
entities it controlled at the year’s end or from time to time during the financial year. The company’s directors are responsible for the
financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of
the company.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial
report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other
disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have
been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting
Standards, other mandatory professional reporting requirements and the Corporations Law in Australia, so as to present a view which is
consistent with our understanding of the company’s and the consolidated entity’s financial position, and performance as represented by the
results of their operations and their cash flows.
The audit opinion expressed in this report has been formed on the above basis.
AUDIT OPINION
In our opinion, the financial report of Singleton Group Limited is in accordance with:
(a) the Corporations Law, including:
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 31 December 2000 and of their
performance for the year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations; and
(b) other mandatory professional reporting requirements.
HORWATH
Sydney Partnership
Chartered Accountants
David Green
Partner
(Sydney, 9 March 2001)
thirty six
[36
[ additional information
to the financial report
1. SHAREHOLDER INFORMATION – AS AT 9 MARCH 2001
(a) Distribution of shareholdings
number of shares held
number of
holders
ordinary
shares
1 - 1,000
360
211,107
1,001 - 5,000
558
1,701,285
5,001 - 10,000
234
1,904,286
10,001 - 100,000
209
5,845,057
100,001 and over
43
121,170,230
1,404
130,831,965
(b) The number of shareholdings held in less than marketable parcels is 129.
(c) 20 largest shareholders
number of
ordinary
fully paid
shares held
% held
of issued
ordinary
capital
1. The John Singleton Limited Partnership
37,500,000
28.66
2. Chase Manhattan Nominees Limited
16,469,666
12.59
3. WPP Holdings (Australia) Pty Limited
15,063,980
11.51
4. Caledonia Investments Limited
8,372,555
6.40
5. Permanent Trustee Australia Limited (FIR0023 A/C)
6,503,915
4.97
6. National Nominees Limited
4,571,135
3.49
7. Perpetual Nominees Limited (PMISF A/C)
3,938,055
3.01
8. Perpetual Trustees Nominees Limited
3,090,595
2.36
9. Citicorp Nominees Pty Limited
2,904,472
2.22
10. AMP Life Limited
2,351,390
1.80
11. Brislan Nominees Pty Limited
2,350,000
1.80
12. Perpetual Nominees Limited (PCEF A/C)
2,135,648
1.63
13. Commonwealth Custodial Services Limited (No 100 Account)
1,965,000
1.50
1,811,611
1.38
15. Perpetual Nominees Limited (PWSCF A/C)
1,625,607
1.24
16. Mr. Russell Tate
1,465,000
1.12
17. Justamo Pty Limited (Alan Morris Family A/C)
800,000
0.61
18. Government Superannuation Office (A/C State Super Fund)
706,800
0.54
19. Perpetual Nominees Limited (ICIS A/C)
661,000
0.51
20. Perpetual Nominees Limited (ICSC A/C)
626,585
0.48
114,913,014
87.82
name of shareholder
14. Colonial Investment Services Limited (Pet One Account)
37 ]
thirty seven
[ additional information
to the financial report
1. SHAREHOLDER INFORMATION – AS AT 9 MARCH 2001 (CONTINUED)
(d) Substantial shareholders listed in the company’s register are:
shareholder
number of
shares
The John Singleton Limited Partnership
37,500,000
Chase Manhattan Nominees Limited
16,469,666
WPP Holdings (Australia) Pty Limited
15,063,980
Perpetual Trustees Australia Limited
10,073,505
Commonwealth Bank of Australia and Colonial Limited
9,133,490
Caledonia Investments Limited
8,372,555
(e) Voting rights
At a general meeting, every shareholder present in person or by proxy, representative or attorney will have one vote on
a show of hands and, on a poll, one vote for each share.
2. THE NAME OF THE COMPANY SECRETARY IS:
Mr Alex Walker
3. THE REGISTERED OFFICE ADDRESS IN AUSTRALIA IS:
Level 18
Darling Park
201 Sussex Street
Sydney NSW 2000
Telephone: (02) 9373 6333
4. THE REGISTER OF SECURITIES IS HELD AT:
Computershare Investor Services Pty Limited
Level 3
60 Carrington Street
Sydney NSW 2000
Telephone: (02) 8234 5000
5. STOCK EXCHANGE LISTING
Quotation has been granted for all the ordinary shares of the company on all Member Exchanges of the Australian Stock
Exchange Limited.
thirty eight
[38
If you’ve read any of our previous annual
reports, we apologise if we are starting to
sound repetitive, but our credo is still, ‘We
sell, or else’. It always will be. That’s why our
clients are our clients. In our business, it is
paramount to differentiate our clients from
their competitors. The same is also true for
ourselves. What separates Singleton Ogilvy &
Mather from the herd is our results-focussed
attitude. Singleton Ogilvy & Mather is about
selling ideas that sell. And while our clients
are advertisers from many different categories,
there is one thing they all have in common.
They are all brand leaders in their own
category. It is our job to keep them there.
ADVERTISING IS ABOUT
IDEAS
THAT DO NOTHING BUT
SELL
“The only reason advertising exists is to sell products”
Jo h n S i n g l e t o n ( a l i ve a n d we l l )
“The purpose of everything we do shall be this: to sell our clients’ products”
D av i d O g i l v y ( 1 911 - 1 9 9 9 )
Ask anyone in advertising and they’ll tell
you, it’s the hardest business to break
into. Ask anyone at Singleton Ogilvy &
Mather and they’ll tell you, it’s the
hardest advertising agency in the
business to break into. Many have tried
and many have failed. And those who
are here and think they have made it
don’t last long.
You never actually make it at Singleton
Ogilvy & Mather. You have to continue
to keep on making it. Singleton Ogilvy
& Mather is the hardest working
advertising in Australia, if not the
world. The pace is faster than any other
advertising agency and the expectations
are higher. So it takes a certain kind
of person to succeed here and to keep
on succeeding.
We don’t hire people we think will ever
be as good as we are. We hire people we
think will be better than us. We don’t
find many of these people. They find us.
Singleton Ogilvy & Mather currently
employees 320 people. Or, more
correctly, Singleton Ogilvy & Mather
employs 320 individuals. So how do we
harness 320 brains and bring them
around to our way of thinking? We
don’t. We recognise and promote
individuality. And we only employ
people who already believe that
advertising is about selling.
forty four
[44
SOM FINANCIALS
[
profit and loss statement
for the year ended 31 December 2000
S I N G L E T O N O G I LV Y & M A T H E R
c o n s o l i d at e d e n t i t y
2000
1999
dollars in thousands
Operating profit before income tax
31,119
20,830
Income tax attributable to operating profit
10,483
7,579
OPERATING PROFIT AFTER INCOME TAX
20,636
13,251
Outside equity interests in operating profit after income tax
(1,887)
(808)
Operating profit after income tax attributable
to members of the parent entity
18,749
12,443
5,205
1,885
TOTAL AVAILABLE FOR APPROPRIATION
23,954
14,328
Dividends provided for or paid
(13,750)
(9,123)
10,204
5,205
Retained profits at the beginning
of the financial year
RETAINED PROFITS AT THE
END OF THE FINANCIAL YEAR
This financial disclosure is in respect of 100% of Singleton Ogilvy & Mather’s results and has been extracted from the audited financial
report of Singleton Ogilvy & Mather (Holdings) Pty Limited. Financial disclosure regarding Singleton Ogilvy & Mather (Holdings)
Pty Limited as it affects shareholders of Singleton Group Limited is found in note 9 of the Singleton Group Limited financial report.
forty six
[46
[
bal ance sheet
as at 31 December 2000
S I N G L E T O N O G I LV Y & M A T H E R
c o n s o l i d at e d e n t i t y
2000
1999
dollars in thousands
CURRENT ASSETS
Cash
Receivables
Other
23,494
23,574
4,348
22,639
23,904
4,004
TOTAL CURRENT ASSETS
51,416
50,547
Intangibles
5,249
3,452
3,631
1,856
38,126
3,849
1,453
3,733
2,176
29,827
TOTAL NON-CURRENT ASSETS
52,314
41,038
103,730
91,585
Accounts payable
Provisions
29,347
16,758
29,024
17,673
TOTAL CURRENT LIABILITIES
46,105
46,697
Other
2,011
12,576
2,011
6,503
TOTAL NON-CURRENT LIABILITIES
14,587
8,514
TOTAL LIABILITIES
60,692
55,211
NET ASSETS
43,038
36,374
Reserves
Retained profits
29,445
999
37
10,204
27,372
2,937
(52)
5,205
Equity attributable to members of the parent entity
40,685
35,462
2,353
912
43,038
36,374
NON-CURRENT ASSETS
Receivables
Investments
Property, plant and equipment
Other
TOTAL ASSETS
CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Provisions
EQUITY
Issued capital
Capital contribution obligation
Outside equity interests in controlled entities
TOTAL EQUITY
This financial disclosure is in respect of 100% of Singleton Ogilvy & Mather’s results and has been extracted from the audited financial
report of Singleton Ogilvy & Mather (Holdings) Pty Limited. Financial disclosure regarding Singleton Ogilvy & Mather (Holdings)
Pty Limited as it affects shareholders of Singleton Group Limited is found in note 9 of the Singleton Group Limited financial report.
47 ]
forty seven
[
statement of cash flows
for the year ended 31 December 2000
S I N G L E T O N O G I LV Y & M A T H E R
c o n s o l i d at e d e n t i t y
2000
1999
dollars in thousands
CASH FLOW FROM OPERATING ACTIVITIES
Fees received
261,678
238,941
Payments to suppliers and employees
(231,065)
(215,296)
1,199
510
(4)
(10)
(9,488)
(930)
22,320
23,215
Payment for property, plant and equipment
(1,286)
(2,112)
Investment in controlled entities
(1,937)
(1,394)
Investments in associates
(1,186)
(1,646)
Loans with associated entities - payments made
(3,397)
(2,208)
-
1,442
Restructure costs
(1,076)
(2,053)
Net cash used in investing activities
(8,882)
(7,971)
2,073
1,394
Dividends paid
(14,610)
(1,752)
Net cash used in financing activities
(12,537)
(358)
901
14,886
22,639
7,888
(46)
(135)
23,494
22,639
Interest received
Interest and other costs of finance paid
Income tax paid
Net cash provided by operating activities
CASH FLOW FROM INVESTING ACTIVITIES
Loans with associated entities - receipts from
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution
Net increase (decrease) in cash held
Cash at the beginning of the financial year
Effect of exchange rates on cash holdings
Cash at the end of the financial year
This financial disclosure is in respect of 100% of Singleton Ogilvy & Mather’s results and has been extracted from the audited financial
report of Singleton Ogilvy & Mather (Holdings) Pty Limited. Financial disclosure regarding Singleton Ogilvy & Mather (Holdings)
Pty Limited as it affects shareholders of Singleton Group Limited is found in note 9 of the Singleton Group Limited financial report.
forty eight
[48