31 december 2000
TRANSCRIPT
singleton group limited 2000annual report[
creativity excellence professionalism leadership effectiveness
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No. 08 H i s t o r y a n d F i n a n c i a l P e r f o r m a n c e
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C o r p o r a t e D i r e c t o r y
C h a i r m a n ’ s R e p o r t
G r o u p M a n a g i n g D i r e c t o r ’ s R e p o r t
J o h n S i n g l e t o n ’ s R e p o r t
S i n g l e t o n G r o u p M e m b e r C o m p a n i e s
F i n a n c i a l R e 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 R e p o r t
annual report 2000
2[ two
[ directorycorporate
Directors
Mark Carnegie (Chairman)
John Singleton
Russell Tate
William Currie
Geoff Levy
Anne Keating
Paul Richardson
Company Secretary
Alex Walker
Auditors
Horwath Sydney Partnership
Solicitors
Freehills
Registered Office
Level 18, Darling Park
201 Sussex Street, Sydney NSW 2000
Telephone: (02) 9373 6333
Website: www.singo.com.au
ABN: 84 001 657 370
Share Register
Computershare Investor Services Pty Limited
Level 3, 60 Carrington Street, Sydney NSW 2000
Telephone: (02) 8234 5000.
Annual General Meeting
The Annual General Meeting will be held at 10:00am
on Friday, 4 May 2001 at the Company’s office,
Level 18, 201 Sussex Street, Sydney NSW 2000.
Dividend
Directors have recommended a final dividend of
4.2 cents per share, fully franked, payable on
11 May 2001. Transfers close at 5:00pm on
Friday, 4 May 2001.
3]three
I am pleased again to have to eat humble pie. The performance
of the many people who work in the Singleton Ogilvy & Mather
Group proved that I should not make forecasts especially about the
future performance of this company. We had an outstanding last
year and all shareholders owe a debt of gratitude to those who made
it happen. On your behalf, I want to thank all those involved in
producing the great result.
I especially want to thank Russell for an incredible job in a year
when he had open-heart surgery. It is a pleasure to serve with him.
Again, I issue my warning that any expectation that the business
can continue to grow as it has in the past defy the laws of economic
gravity. For anyone reading this annual report with a view to buying
shares, I urge you to moderate your expectations of what SGL
shares can produce as a return over the next five years.
In a country like Australia where long term real GDP growth is
likely to be less than 3%, the mathematics of all listed companies
telling you they can grow earnings at 15% is an absurdity. Profits
will not exceed GDP and they will be hard pressed to materially
exceed the GDP growth rate over the long-term. You may hope for
more in an individual case but you can’t expect it in the aggregate.
I recognise media does continue to grow as a share of GDP.
However, a realistic expectation would be for it to grow nominally
at 6%-9% over the next five years. In addition, you have to factor
in the real chance of a recession where it will shrink. If we can grow
earnings in the double digits over the next five years, the
management will have done a fantastic job.
By contrast, the background for our investment in Indonesia is
much brighter. Trend media growth rates could easily be in the 20%
range for the next 20 years and we would still have advertising
spending be less than US$25 per capita. All the reasons the Asian
growth miracle attracted the investing hordes in the 1990s remain;
it’s just that the short-term outlook is so uncertain and the risks that
were there all along have tripped some people up. We reiterate our
view that this investment should provide very attractive returns but
that there is a not insignificant risk that political instability will
prevent the economic characteristics of the business being reflected
in our investment returns.
From investments to paying for them. We made two issues of
shares during the year and the second one seemed to create some
amount of friction with the investment community. We informed
those taking the shares that in addition to the share issue some
insiders were selling simultaneously. We felt that in contrast to the
majority of people who only notify of sales by insiders after they
have been completed advising purchasers in advance was a step
forward for the share market in terms of disclosure. Taking flack
for trying to improve standards of disclosure showed us again why
we take the view we do about not ever relying on our institutional
owners to do the rational thing when asked to make a decision
which will affect the company.
As in the past we will try to act in a way that maximises the
long-term shareholder value we can create and be true to ourselves
in our ethical standards. For you as a shareholder it is important to
understand that we run the business and our collective capital
account on the basis that we are reporting to a permanent
conservative owner of an existing share in the company who is
focussed on absolute rather than relative returns on investment.
We avail ourselves of financing windows as they appear in order to
create incremental value for that shareholder whilst retaining a
conservative capital structure.
We have all done well in a growing economy. Now, our challenge
is to do so in a stalled or shrinking one. Hopefully, we will be able
to perform as we did in the last recession due to the fact that when
the economy gets tough the artistic aspirations of the medium are
de-emphasised and the effectiveness of the ads seem to matter again.
chairman’s[ report
ear shareholders,D
Mark Carnegie
In last year’s Annual Report I said that as a company we were
only just beginning to realise our true potential. Twelve months
later and after another growth in profits of over 50%, I am more
convinced than ever that our ability to continue to develop and
grow this company is going to be limited only by how far and how
wide we wish to aim.
Success is addictive. The spectacular growth we have enjoyed
in the last few years does not lead us to think we should now settle
for consolidating our position. On the contrary, it means that
we shall be content with nothing less than continued and
comparable success, relative to general economic and specific
market conditions, in the years ahead.
Success is also contagious and attracts people who want to
be winners. We already have a wonderfully talented management
team and staff who both thrive on, and understand how we have
achieved, our success. Provided we can maintain our unique culture
and as we grow pass it on to every new generation of staff, I can
see no boundaries to our potential.
I cannot promise our shareholders continued operating profit
growth of 50% plus. I can promise them a company which will
not be satisfied with its performance unless its Australian and
NZ operations are continuing to set international standards
in terms of financial returns and marketplace effectiveness. And
a company with which our staff, our clients, our suppliers and our
shareholders are proud to be associated.
group managing director’s
Russell Tate
4[ four
[ report
5]five
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.
I have actually done it.
Perhaps the task was considerably easier for me than most but
nevertheless it has been achieved and because of that the
achievements of our Group have been made possible.
I met our Chairman, Mark Carnegie, when he was a very junior
player in the Conrad Black takeover of Fairfax a bit over 10 years
ago.
I realised then the superiority of his intellect and his integrity in
the midst of other supposed international business gurus and was
quick to harness it to the group’s advantage.
Unfortunately, no one is more aware of his intellectual
superiority than Mark.
Fortunately, you don’t have to suffer the arrogance but just sit
back and enjoy the fruits of his superiority.
On the other hand, no one is less aware of their highly superior
ability than our CEO, Russell Tate.
He has run this company since we went public in 1994.
He is a natural leader in that he was both given and assumed
responsibility for the Group without a discussion.
It just happened.
And all the good things for our company have just kept
happening ever since.
Among the CEO’s of other major public companies of the past
decade no one, not even my dear old friend Gerry Harvey, is more
deserving of our respect. In every field of business and human
decency.
I would trust Russell with my life - come to think of it, I have.
Russell’s greatest problem in this next decade will be to find
people better than him to surround himself with.
We had all better wish him well.
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.
I have actually done it.
Perhaps the task has been considerably easier for me than most
but nevertheless it has been achieved and because of that the
extraordinary success of our Group has been made possible.
I met our Chairman, Mark Carnegie, when he was a very junior
ankle-biter during the Conrad Black takeover of Fairfax a bit over
10 years ago.
I quickly realised the superiority of his intellect and his
integrity in the midst of all the other supposed advisory gurus
(local and international). I was quick to harness his abilities to our
Group’s advantage.
Unfortunately, no one is more aware of his intellectual
superiority than Mark.
Fortunately, you don’t have to suffer the arrogance but just sit
back and enjoy the fruits of his intellectual labours.
On the other hand, no one is less personally aware of their
highly superior ability than our CEO, Russell Tate.
He and he alone has run this company since we went public
in 1994.
He is a natural leader in that he was both given and assumed
responsibility for the Group without any kind of discussion I can
ever recall.
It just happened.
And all the good things for our company have just kept
happening ever since.
Among the CEOs of other major public companies of the past
decade, no one, not even my dear and very, very old friend Gerry
Harvey, is more deserving of our respect.
I would trust Russell with my life – come to think of it, I have.
Russell’s greatest problem in this next decade will be to find
people better than him to surround himself with.
We had all better wish him well.
john singleton’s
John Singleton
[ report
SINGLETON OGILVY & MATHER
Singleton Ogilvy & Mather operates full
service advertising agencies in Sydney,
Melbourne and Auckland. With access
to Singleton Group members and the
Ogilvy & Mather Worldwide network,
SOM has the resources to meet, and to
surpass, client’s expectations. SOM
provides sales-focused advertising,
communication, creative and production
services, across all media.
SINGLETON OGILVYONE
As direct marketing specialists,
Singleton OgilvyOne works to
guarantee that every idea translates to
creative brand-true communications.
This knowledge is acquired from data
mining and analysis, interactive
technology and media teleservices.
Singleton OgilvyOne ensures more
loyal customers to some of the world’s
most recognised brands.
SINGLETON OGILVYINTERACTIVE
Member of one of the top 10 interactive
agencies in the world, Singleton
OgilvyInteractive is ideally placed to
offer advice and solutions to any
organisation’s interactive requirements.
SOI brings together a unique
combination of brand awareness,
marketing and technical skills.
PROMOTIONAL CAMPAIGNS GROUP
Promotional Campaigns Group is a
promotional marketing consultancy. With
an international network of 18 offices,
PCG offers a combination of promotional
disciplines including sales promotion,
retail consultancy, trade marketing, design,
packaging and sponsorship.
ETHNIC COMMUNICATIONS
Etcom is the only fully integrated
multicultural marketing agency in
Australia. Etcom is committed to
understanding cultural diversity and its
relevance in communication. Etcom
targets the 20% of the Australian
community who speak a language other
than English at home.
MINDSHARE
MindShare is the world's first true media
investment management company.
MindShare sees a clients’ media budget as
an investment to be carefully managed, to
build the value of their clients’ brands and
the growth of their business.
DESIGN DIRECT
As a fast track art studio, Design Direct
provides their clients with cost effective,
time critical marketing solutions.
Design Direct is one-stop shopping for
fully integrated direct response
assignments offering services like
concepts, copywriting, typography and
project management.
singleton group[ member companies
6[ six
OGILVY PUBLIC RELATIONS
Ogilvy PR is one of the world’s largest
strategic communications firms. Through
senior-level counsel and hands-on
implementation Ogilvy PR helps solve
client challenges through spirited
partnership, innovative programs and
a thorough understanding of business
and public affairs.
IMPACT
Impact Employee Communications is a
specialist in communicating important
strategic initiatives with employees to
win their support. Impact Employee
Communications provides a full service
solution to clients - from research and
strategic development through to the
complete implementation of employee
communication programs.
STAR ADVERTISING
Star is a purpose-built advertising agency
in Sydney and Auckland with a difference.
Seasoned industry professionals work
only on their designated business with no
sharing of clients to ensure focus,
commitment and results.
COMMONHEALTH AUSTRALIA
CommonHealth Australia is a healthcare
marketing and advertising agency.
CommonHealth Australia covers the
entire spectrum of healthcare marketing
from ethical and direct-to-consumer
advertising to professional and patient
education to strategic planning and
relationship marketing.
WEBSITE DEVELOPMENT GROUP
Web Development Group (WDG) is one
of the largest and most successful
internet development operations in
Australia. WDG's core business is web
development, planning and implementation.
WDG’s size and background in a range
of diverse projects positions it as a
supplier of choice for internet projects
for the largest organisations in Australia.
FAME ADVERTISING
Fame Advertising believes you need to
be famous for something. Even if that
something is emotional or intangible.
That’s why Fame concentrates on
creating strategies and campaigns to
make their clients famous. The fact that
these advertisements may appear on a
pavement, a TV set, poster or website
does not change the objective. It simply
changes the media.
IGNITE PRODUCTIONS
Ignite Productions offers TV, radio and
cinema production capabilities on any
scale. From advice to development and
completion of initial creative ideas,
Ignite can manage every facet of their
client’s audio/visual requirements.
ANOP RESEARCH SERVICES
ANOP Research Services became a group
member in January 2000. Founded in
1971 by Rod Cameron, ANOP is one of
Australia's foremost strategic marketing
research consultancies, offering a full suite
of qualitative and quantitative solutions.
member companiessingleton group[
7 ]seven
history and financial performance[
1985
• John Singleton Advertising commences business
1994
• John Singleton Advertising Limited is admitted to the
official list of the Australian Stock Exchange, at an
initial share price of 38 cents ($1.90 pre adjustment
for the 2000 4:1 bonus issue)
1997
• The Singleton Direct and Genesis Advertising
businesses are established
1998
• John Singleton Advertising merges with the Australian
and New Zealand operations of Ogilvy & Mather
Worldwide to form Singleton Ogilvy & Mather (SOM)
• Singleton OgilvyOne, Ethnic Communications,
Promotional Campaigns and CommonHealth also
join the Group as a result of the merger
• SOM establishes Ignite Productions
1999
• SOM establishes the Singleton OgilvyInteractive
business
2000
• SGL acquires interests in ANOP Research Services,
Impact Employee Communications, and Web
Development Group
• SOM acquires interests in Mindshare, Star
Advertising and Fame Advertising
• SGL & WPP establish the Ogilvy Public Relations
business in Australia
1994 1995 1996 1997 1998 1999 2000
Advertising Earnings Per Share
vs Dividends Per Share
0.0
2.0
4.0
Dividends per Share (¢)
6.0
8.0
10.0
12.0
Earnings per Share (¢)
1994 1995 1996 1997 1998 1999 2000
Operating Profit Before Tax vs
Operating Profit After Tax
($millions)
Operating Profit after tax
Operating Profit before tax
0
2
4
6
8
10
12
14
16
18
20
8[ eight
advertising and communications
history and financial performance[
9 ]nine
Media
With a wealth of experience and industry knowledge at a senior
level, Singleton Group is uniquely positioned to make strategic
media investments which add to shareholder value. The board has
experience across the media spectrum, encompassing TV, radio,
film, cinema, publishing, outdoor, media buying, media selling,
media programming, and of course, advertising.
In the past, Singleton Group and its shareholders have enjoyed
the outstanding investment returns from the investment in
Channel TEN. The current investment in SCTV has tremendous
potential, to which Singleton Group can contribute some of its
experience. In the future, Singleton Group will continue to
examine potential media investments, and provided they are
financially accretive, may make further investments.
Channel Ten
Singleton Group is proud of the returns achieved on its investment
in Channel TEN. With an original investment of $4.5 M made in
November 1993, SGL received the equivalent of $9.4 M in fully
franked dividend income in the three years to November 1996. The
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.
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 $US75 in Australia, Singleton Group is confident
that SCTV will be able to grasp the opportunities available to it,
through a growing TV advertising market, deregulation of
Indonesian industry, and increased sophistication in marketing
and programming techniques.
Singleton Group has examined the potential risks, including
political and currency risk, and decided, based on the economics of
the transaction, that the risk is affordable, and the upside exciting.
Investmentby SGL
Total aftertax return
DividendIncome
Profiton Sale
Interest onSale Proceeds
The Investment in Channel Ten($millions)
0
5
10
15
20
25
30
35
40
45
50
1996 1997 1998 1999 2000
SCTV Net Revenue($A millions)
0
20
40
60
80
100
120
media
11
17
18No.
No.
No.
No.
No.
No.
19
20
35
]contentsfinancial report
D i r e c t o r ’ s R e p o r t
P r o f i t a n d L o s s S t a t e m e n t s
B a l a n c e S h e e t s
S t a t e m e n t s o f C a s h F l o w s
N o t e s t o t h e F i n a n c i a l S t a t e m e n t s
D i r e c t o r ’ s D e c l a r a t i o n
No. 36 I n d e p e n d e n t A u d i t R e p o r t
No. 37 A d d i t i o n a l I n f o r m a t i o n
annual report 2000
10[ ten
[ Singleton Group Limited and Controlled Entitiesdirectors’ report
The Directors of Singleton Group Limited present their report
and the financial statements of the company and consolidated
entity for the financial year ended 31 December 2000.
DIRECTORS
The names of the Directors in office during the financial year
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
PRINCIPAL ACTIVITIES
The consolidated entity’s principal activity during the financial
year was holding a 66.67% investment in Singleton Ogilvy &
Mather (Holdings) Pty Limited, whose principal activity is
advertising and communications.
PROFIT
The operating profit after income tax of the consolidated entity
for the financial year was $12,741,000.
DIVIDENDS
Dividends paid or declared by the company since the end of the
previous financial year were:
• As proposed and provided for in the prior period’s annual
report:
A final ordinary dividend of 16 cents per (equivalent to
3.2 cents post bonus issue) share amounting to $3,733,000
in respect of the period ended 31 December 1999, paid on
12 May 2000.
• In respect of the current financial year:
An interim dividend of 2.8 cents per share amounting to
$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.
REVIEW OF OPERATIONS
The Chairman’s Report and the Group Managing Director’s
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
the Annual Report as part of the Directors’ Report.
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
issues noted below:
• In November 2000, a controlled entity invested
$48,184,000 in PT Abhimata Mediatama, an Indonesian
company with an indirect beneficial interest in PT Surya
Citra Televisi (SCTV). SCTV is the third largest television
network in Indonesia.
EVENTS SUBSEQUENT TO THE END OF THE
FINANCIAL YEAR
No matters or circumstances have arisen since the end of the
financial year which have significantly affected or may
significantly affect the operations of the consolidated entity, the
results of those operations or the state of affairs of the
consolidated entity in subsequent financial years.
LIKELY DEVELOPMENTS
No information is included on the likely developments in the
operations of the consolidated entity and the expected results of
those operations as it is the opinion of the Directors that this
information would prejudice the interests of the consolidated
entity if included in this report.
11]eleven
INFORMATION ON DIRECTORS
MARK CARNEGIE
(Chairman, Non-Executive Director)
Aged 38 years, Mr Carnegie is a consultant. He previously
worked for Hudson Conway Limited in London and for James D
Wolfensohn, Inc in New York. He is a Director of Neverfail
Springwater Limited, Biotech International Limited, Carnegie
Foundation Limited, Easycall Asia Limited and Easycall
International Limited.
Mr Carnegie holds a Masters degree in Jurisprudence from
Oxford University and a Bachelor of Science (Hons) from
Melbourne University.
JOHN SINGLETON
(Chief Executive Officer)
Aged 59 years, Mr Singleton started the John Singleton
Advertising business in April 1985. Mr Singleton has been
Creative Director and Director of major Australian advertising
agencies since age 20. He founded the SPASM advertising agency
and the Communications Supermarket in 1968. He was Chairman
and CEO of Doyle Dane Bernbach upon its acquisition of SPASM.
Mr Singleton has also been a Director of The Sydney Opera
House, John Fairfax Holdings Limited and TEN Group Limited.
Mr Singleton has absolutely zero tertiary qualifications.
RUSSELL TATE
(Group Managing Director)
Aged 52 years, Mr Tate joined the John Singleton Advertising
business in November 1987. Mr Tate spent 10 years in sales and
marketing for various companies, including CSR, Ampol and
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.
WILLIAM CURRIE
(Non-Executive Director)
Aged 63 years, Mr Currie has spent over 40 years in advertising
in management roles. As Managing Director of his agency Berry
Currie he first teamed up with John Singleton. Mr Currie was
Deputy Chairman of DDB Berry Currie Advertising until he
joined John Singleton Advertising in 1986. He was Managing
Director until 1992 and then Chairman until June 1998.
Mr Currie is a past committee member of the Advertising
Federation of Australia, past president of the Advertising Club of
Sydney and currently Patron of Gordon Rugby Union Football Club.
GEOFF LEVY
(Non-Executive Director)
Aged 41 years, Mr Levy is a Director and shareholder in
Wentworth Associates Pty Limited and was formerly a partner in the
leading law firm, Freehills. Mr Levy has over 15 years experience in
the corporate advisory environment where he is regarded as an expert
in mergers and acquisitions, capital raisings and general corporate
commercial law. He advises several well known Australian and
international entities and his other directorships include Rebel Sport
Limited, Freedom Group Limited, Mirvac Limited, Mirvac Funds
Limited, Capital Property Management Limited, Australian Film
Finance Corporation Limited, Ten Network Holdings Limited and
Esign Australia Limited.
Mr Levy has degrees in Commerce and Law from the University
of Witwatersrand (South Africa) and The University of New South
Wales, respectively. He also has a diploma from and is an Associate
of the Securities Institute of Australia.
[ Singleton Group Limited and Controlled Entitiesdirectors’ report
12[ twelve
[ Singleton Group Limited and Controlled Entitiesdirectors’ report
INFORMATION ON DIRECTORS (CONTINUED)
ANNE KEATING
(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 RICHARDSON
(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
[ Singleton Group Limited and Controlled Entitiesdirectors’ report
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Singleton Group Limited is
responsible for the corporate governance of the consolidated
entity. The Board guides and monitors the business and affairs of
the consolidated entity on behalf of the shareholders by whom they
are elected and to whom they are accountable.
AUDIT COMMITTEE
The Board has established an audit committee. The Board has
delegated the responsibility for the establishment and maintenance
of a framework of internal control and ethical standards for the
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)
Russell Tate (Executive Director)
Alex Walker (Company Secretary)
The audit committee also:
• provides the Board with additional assurance regarding the
reliability of financial information for inclusion in the
financial statements; and
• 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.
COMPENSATION COMMITTEE
The Board is responsible for determining and reviewing
compensation arrangements for the Directors themselves and the
executive team. The Board has established a compensation
committee, comprising three Non-Executive Directors and one
Executive Director. Members of the compensation committee
throughout the year were;
Mark Carnegie
Geoff Levy
Anne Keating
John Singleton (Executive Director)
MONITORING OF THE BOARD’S PERFORMANCE AND
COMMUNICATION TO SHAREHOLDERS
The Board aims to ensure that the shareholders, on behalf of
whom they act, are informed of all information necessary to assess
the performance of the Directors. Information is communicated
through:
• the annual report which is distributed to all shareholders;
• the half-yearly report;
• the annual general meeting and other meetings called to
obtain approval for Board action as appropriate; and
• announcements to the Australian Stock Exchange.
14[ fourteen
[ Singleton Group Limited and Controlled Entitiesdirectors’ report
MEETINGS OF DIRECTORS
During the financial year, seven meetings of Directors including committees were held. Attendances were:
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;
(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.
directors meetings audit committee meetings
number eligible number number eligible number
directors to attend attended to attend 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 - -
There were no formal meetings of the Compensation Committee.
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 - - - - -
total $834,000 $29,000 $163,000 $1,026,000 5,800,000
15]fifteen
[ Singleton Group Limited and Controlled Entitiesdirectors’ report
COMPENSATION POLICY
Directors are remunerated at market rates for their services to
the company. Other than the share options issued to Mark
Carnegie and Russell Tate, refer prior paragraph, there is no link
between the basic fees paid to retain their services and the
performance of the company. From time to time, shareholders may
be requested to approve performance incentives for services above
the normal level.
SHARE OPTIONS
Options over 4,445,500 unissued shares and options over
1,354,500 issued shares, held by a shareholder of the company,
have been issued during the financial year.
No shares have been issued by virtue of the exercise of an option
during the year and to the date of this report. At the date of this
report, there are 4,445,500 unissued shares for which options
are outstanding.
INDEMNIFICATION OF OFFICERS OR AUDITORS
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,
indemnified or made any relevant agreement for indemnifying
them against a liability incurred as an officer or auditor, including
costs and expenses in successfully defending legal proceedings.
During the financial year, the parent entity paid a premium for
an insurance policy insuring each of the persons noted below
against certain liabilities:
Mark Carnegie Geoff Levy
John Singleton Anne Keating
Russell Tate Paul Richardson
William Currie Alex Walker
In accordance with common commercial practice, the insurance
policy prohibits disclosure of the nature of the liability insured
against and the amount of the premium.
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.
Signed in accordance with a resolution of the Directors:
Mark Carnegie
Director
(Sydney, 9 March 2001)
16[ sixteen
Operating profit before income tax 2, 3 12,723 8,308 9,076 6,243
Income tax attributable to operating profit 4 (18) 25 (7) 22
OPERATING PROFIT AFTER INCOME TAX 12,741 8,283 9,083 6,221
Retained profits/(accumulated losses)at the beginning of the financial year 1,197 (1,016) 42,023 41,872
Total available for appropriation 13,938 7,267 51,106 48,093
Dividends provided for or paid 5 (9,138) (6,070) (9,138) (6,070)
RETAINED PROFITS AT THE END OF THE
FINANCIAL YEAR 4,800 1,197 41,968 42,023
note
consol idated ent i ty parent ent i ty
profit and loss statementsfor the year ended 31 December 2000[
2000 1999 2000 1999
doll ars in thousands
The accompanying notes form part of and are to be read in conjunction with these financial statements.
17]seventeen
CURRENT ASSETS
Cash 6 145 3,136 145 3,136Receivables 7 5,662 6,798 46,281 8,773Other 8 189 54 64 54
TOTAL CURRENT ASSETS 5,996 9,988 46,490 11,963
NON-CURRENT ASSETS
Receivables 7 550 - - -Investments 9 82,843 23,830 65,323 64,795Other 8 47 7 12 7
TOTAL NON-CURRENT ASSETS 83,440 23,837 65,335 64,802
TOTAL ASSETS 89,436 33,825 111,825 76,765
CURRENT LIABILITIES
Accounts payable 10 1,653 27 434 27Borrowings 11 8,926 682 6,016 2,763Provisions 12 5,524 3,736 5,500 3,733
TOTAL CURRENT LIABILITIES 16,103 4,445 11,950 6,523
NON-CURRENT LIABILITIES
Borrowings 11 10,000 - - -Provisions 12 3 10 3 10Other 13 601 - - -
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
EQUITY
Issued capital 14 57,904 28,209 57,904 28,209Reserves 15 25 (36) - -Retained profits 4,800 1,197 41,968 42,023
TOTAL EQUITY 16 62,729 29,370 99,872 70,232
note
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
balance sheetsas at 31 December 2000[
The accompanying notes form part of and are to be read in conjunction with these financial statements.
18[ eighteen
CASH FLOW FROM OPERATING ACTIVITIES
Receipts from customers 146 - 138 -Payments to suppliers and employees (462) (540) (334) (538)Interest received 480 199 418 196Interest and other costs of finance paid (129) - - -Dividends received 9,740 1,167 9,878 1,165Income tax paid (5) (130) 1 (127)
NET CASH PROVIDED BY/(USED IN)
OPERATING ACTIVITIES 19(b) 9,770 696 10,101 696
CASH FLOW FROM INVESTING ACTIVITIES
Payments for business acquired - (100) - -Loans to associated entities – receipts from 3,247 2,340 3,244 2,217Loans to associated entities – payments made (550) (1,312) (50) (1,099)Loan to controlled entity – payments made - - (38,606) -Investments in associated entities (52,778) (38) - -
NET CASH PROVIDED BY/(USED IN)
INVESTING ACTIVITIES (50,081) 890 (35,412) 1,118
CASH FLOW FROM FINANCING ACTIVITIES
Issue of shares 30,239 1 30,239 1Share issue costs (544) - (544) -Proceeds from borrowings 15,000 - - -Dividends paid (7,375) (3,493) (7,375) (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
CASH AT THE END OF THE FINANCIAL YEAR 19(a) 145 3,136 145 3,136
note
consol idated ent i ty parent ent i ty
statements of cash flowsfor the year ended 31 December 2000[
2000 1999 2000 1999
doll ars in thousands
The accompanying notes form part of and are to be read in conjunction with these financial statements.
19]nineteen
21No.
22No.
22No.
23No.
23No.
24No.
24No.
24No.
24No.
28No.
28No.
28No.
28No.
29No.
29No.
29No.
30No.
31No.
31No.
32No.
32No.
33No.
34No.
]n o t e s t o t h e f i n a n c i a l s t a t e m e n t s
annual report 2000
1 Sta t ement o f S i gn i f i can t Accoun t ing Po l i c i e s
2 Revenue
3 Opera t ing Pro f i t
4 Income Tax
5 Div idends Prov ided fo r o r Pa id
6 Cash
7 Rece i vab l e s
8 Othe r Asse t s
9 Inves tmen t s
10 Accoun t s Payab l e
11 Bor row ings
12 Prov i s i ons
13 Othe r L iab i l i t i e s
14 Issued Cap i ta l
15 Rese rve s
16 Equ i t y
17 Remunera t i on o f D i re c t o rs and Execu t i ve s
18 Aud i t o rs ’ Remunera t i on
19 Notes t o S ta t emen t o f Cash F lows
20 Earn ings pe r Share
21 Re la t ed Par ty Transac t i ons
22 Sta t emen t o f Opera t i ons by Segment s
23 Financ ia l Ins t rument s
20[ twenty
notes[
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.
1.
to the financial statements
21]twenty one
22[ twenty two
2. REVENUE
OTHER INCOME
Share of net profit of associates before amortisation 12,960 8,296 - -Goodwill amortisation (213) - - -
Share of net profit of associates 12,747 8,296 - -
Dividends received - - 9,167 6,239Interest received 480 217 418 214Other 146 138 138 138
TOTAL REVENUE 13,373 8,651 9,723 6,591
3. OPERATING PROFIT
The operating profit before income tax has been determined after:
CREDITING AS REVENUE
Share of net profit of associates before amortisation 12,960 8,296 - -Goodwill amortisation (213) - - -
Share of net profit of associates 12,747 8,296 - -
Dividends received:Controlled entities - - - 157Associates - - 9,167 6,082
- - 9,167 6,239
Interest received:Other persons 480 217 418 214
CHARGING AS EXPENSE
Borrowing costs:Interest expense 129 - - -
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
notes[ to the financial statements
4. INCOME TAX
The prima facie income tax payable on the operatingprofit is reconciled to the income tax provided in the financial statements as follows:
OPERATING PROFIT BEFORE INCOME TAX 12,723 8,308 9,076 6,243
Prima facie tax payable at 34% (1999: 36%) 4,326 2,991 3,086 2,248
TAX EFFECT OF PERMANENT DIFFERENCES:
Share of net profit of associates (4,334) (2,987) - -Other (15) 21 24 19Rebateable dividends - - (3,117) (2,245)Change in tax rate 5 - - -
INCOME TAX EXPENSE (18) 25 (7) 22
5. DIVIDENDS PROVIDED FOR OR PAID
INTERIM ORDINARY DIVIDEND OF 2.8 CENTS
(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
PROPOSED FINAL ORDINARY DIVIDEND OF 4.2 CENTS
(1999: 3.2 cents – bonus adjusted)per share fully franked at 34% (1999: 36%) 5,496 3,733 5,496 3,733
9,138 6,070 9,138 6,070
Balance of the franking account as at the end of the financialyear, 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 creditsnot represented by distributable profit:
Franked at 34% (1999: 36%) 5,557 5,104 5,551 5,104
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
23]twenty three
notes[ to the financial statements
24[ twenty four
6. CASH
CASH AT BANK 145 3,136 145 3,136
7. RECEIVABLES
CURRENT
Other debtors 103 19 102 19Amounts receivable from associated entities 5,559 6,251 50 -Amounts receivable from controlled entities - - 46,488 8,585Provision for doubtful debts - - (359) (359)
5,662 6,270 46,281 8,245
Loans to Directors (refer note 21(c)) - 186 - 186Loans to former executives - 342 - 342
5,662 6,798 46,281 8,773
NON-CURRENT
Amounts receivable from associated entities 550 - - -
8. OTHER ASSETS
CURRENT
Prepayments 189 54 64 54
NON-CURRENT
Future income tax benefit 47 7 12 7
9. INVESTMENTS
NON-CURRENT
Shares in controlled entities - - 64,639 64,639Shares in associated entities 82,159 23,674 - -Shares in Director-related entity 684 156 684 156
82,843 23,830 65,323 64,795
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
notes[ to the financial statements
ownersh ip interest
country of
incorporationnameamount of parent
ent i t i es investment
2000 1999 2000 1999
% doll ars in thousands
9. INVESTMENTS (CONTINUED)
CONTROLLED ENTITIES
Singleton Holdings Pty Limited Australia 100 100 63,437 63,437Belshaw Pty Limited Australia 100 100 1,202 1,202TheMissingLink Pty Limited Australia 100 100 - -Singleton Direct Pty Limited Australia 100 100 - -SGL Media Services Pty Limited and Australia 100 100 - -its controlled entity– SGL TV Holdings Limited Mauritius 100 - - -
64,639 64,639
ownersh ip interest
pr inc ipal
act i v i tynameconsol idated
carry ing amount
2000 1999 2000 1999
% doll ars in thousands
ASSOCIATED ENTITIES
Singleton Ogilvy & Mather Advertising &(Holdings) Pty Limited Communications 66.67 66.67 27,067 23,674
ANOP Research Services Pty Limited Market(acquired 4 January 2000) Research 50.00 - 1,938 -
Ogilvy Public Relations Pty Limited Public(acquired 24 August 2000) Relations 49.00 - - -
Web Development Group Pty Limited Web Site(acquired 14 August 2000)* Design 40.00 - 4,172 -
Impact Employee Communications InternalPty Limited (acquired 1 November 2000)* Communications 30.00 - 798 -
PT Abhimata Mediatama TV Holding(acquired 22 November 2000) Company 51.64 - 48,184 -
82,159 23,674
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 financialstatements have not been included in the consolidated financial statements of Singleton Group Limited. This is because therespective shareholders’ agreements detail certain matters which, under AASB 1024, constitute joint control. The companyis required by law to accept AASB 1024.
As required by AASB 1016 “Accounting for Investments in Associates”, detailed below are disclosures and financialinformation on the associates.
* Reporting date is 30 June.
25]twenty five
notes[ to the financial statements
26[ twenty six
9. INVESTMENTS (CONTINUED)
EQUITY ACCOUNTED AMOUNTS FOR
THE INVESTMENTS WERE:
(a) MOVEMENTS IN CARRYING AMOUNT OF
INVESTMENT IN ASSOCIATES
Balance of equity accounted investmentat the beginning of the financial year 23,674 21,455Additional investments during the year 54,894 39Share of operating profit after income tax 12,747 8,296Share of movement in reserves 61 (34)Dividends received/receivable (9,217) (6,082)
CARRYING AMOUNT AT THE END
OF THE FINANCIAL YEAR 82,159 23,674
(b) RESULTS ATTRIBUTABLE TO ASSOCIATES
Operating profit before income tax 21,081 13,887Income tax expense (7,076) (5,053)
Operating profit after income tax 14,005 8,834Outside equity interests (1,258) (538)
OPERATING PROFIT ATTRIBUTABLE TO ASSOCIATES 12,747 8,296
(c) RETAINED PROFITS ATTRIBUTABLE TO ASSOCIATES
Opening balance 4,100 1,886Share of profit during the year 12,747 8,296Dividends received (9,217) (6,082)
CLOSING BALANCE 7,630 4,100
(d) RESERVES ATTRIBUTABLE TO ASSOCIATES
Foreign currency translation reserve:Opening balance (36) (2)Movement during the year 61 (34)
CLOSING BALANCE 25 (36)
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
notesto the financial statements[
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 58 -Later than one year and not later than five years 369 -
427 -
Operating leases:Not later than one year 2,174 1,302Later than one year and not later than five years 3,327 2,870
5,501 4,172
(f) 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 isbased 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 545,821 457,584Total revenue 82,444 61,301
OPERATING PROFIT
Operating profit after income tax 19,396 12,443
SUMMARISED BALANCE SHEET
Current Assets 56,387 50,547Non-Current Assets 101,770 41,038
TOTAL ASSETS 158,157 91,585
Current Liabilities 50,011 46,697Non-Current Liabilities 16,504 8,514
TOTAL LIABILITIES 66,515 55,211
NET ASSETS 91,642 36,374
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
27]twenty seven
notesto the financial statements[
10.ACCOUNTS PAYABLE
CURRENT
Sundry creditors 1,653 27 434 27
11.BORROWINGS
CURRENT
Bank loan – secured (a) 5,000 - - -Amounts payable to Director-related entity 682 682 682 682Amounts payable to associated entities 3,244 - - -Amounts payable to controlled entities - - 5,334 2,081
8,926 682 6,016 2,763
NON-CURRENT
Bank loan – secured (a) 10,000 - - -
(a) Security is provided by a fixed and floating charge overthe assets of the parent entity and an associate entity,Singleton Ogilvy & Mather (Holdings) Pty Limited.
12.PROVISIONS
CURRENT
Income tax 28 3 4 -Dividends 5,496 3,733 5,496 3,733
5,524 3,736 5,500 3,733
NON-CURRENT
Deferred income tax 3 10 3 10
13.OTHER LIABILITIES
NON-CURRENT
Deferred acquisition consideration 601 - - -
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
notes[ to the financial statements
28[ twenty eight
14.ISSUED CAPITAL
ORDINARY SHARES
At the beginning of the financial year: 28,209 28,208 28,209 28,208
Shares issued during the year13,000 on 24 March 2000 - - - -321,116 on 25 August 2000 3,041 - 3,041 -2,365,078 on 30 August 2000 27,198 - 27,198 -Transaction costs relating to share issues (544) - (544) -
57,904 28,208 57,904 28,208
Shares issued in 1999:100,000 on 1 March 1999 - 1 - 124,182 on 7 April 1999 - - - -
130,079,295 ORDINARY SHARES
(1999: 23,316,665) 57,904 28,209 57,904 28,209
(a) On 7 September 2000, the company issued 104,063,436 shares at nil consideration to existing shareholders on the basisof 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 (36) (2) - -Share of associate’s foreign currency translation reserve increment 61 (34) - -
CLOSING BALANCE 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 byexternal 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 operatingcontrolled entities is appropriate.
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
29]twenty nine
notes[ to the financial statements
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 4,386 1,159 - -Directors of the parent entity - - 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 LevyJohn Singleton Anne KeatingRussell Tate Paul RichardsonWilliam Currie
The number of Directors whose total remuneration fell within the following income bands:
Income range $ Number0 - 9,999 1 120,000 - 29,999 1 140,000 - 49,999 2 260,000 - 69,999 - 1370,000 - 379,999 1 -460,000 - 469,999 - 1520,000 - 529,999 - 1900,000 - 909,999 (c) 1 -2,990,000 - 2,999,999 (c) 1 -
(b) EXECUTIVES’ REMUNERATION
Remuneration received by executives for managementof affairs, where income is $100,000 or more. 3,368 988 3,368 988
The number of executives where remuneration fellin the following income bands:
Income range $ Number Number370,000 - 379,999 1 - 1 -460,000 - 469,999 - 1 - 1520,000 - 529,999 - 1 - 12,990,000 - 2,999,999 (c) 1 - 1 -
(c) VALUE OF OPTIONS GRANTED
Following approval at the extraordinary general meeting on 4 November 1999, Mark Carnegie and Russell Tate were issuedoptions 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. Theoptions are exercisable after the date of the Board approval of the consolidated audited profit and loss statement of SingletonOgilvy & Mather (Holdings) Pty Limited for the year ending 31 December 2003. The options issued to Messrs Carnegie andTate 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.
30[ thirty
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
notes[ to the financial statements
18.AUDITORS’ REMUNERATION
Amounts receivable or due and receivableby parent entity auditors for:
Auditing and reviewing financial statements 17 17 17 17Other services 184 100 184 100
201 117 201 117
19. NOTES TO STATEMENTS OF CASH FLOWS
(a) RECONCILIATION OF CASH
Cash at the end of the financial year is shown in thebalance sheet as:
CASH AT BANK 145 3,136 145 3,136
(b) RECONCILIATION OF CASH FLOW FROM
OPERATING ACTIVITIES WITH OPERATING
PROFIT AFTER INCOME TAX
Operating profit after income tax 12,741 8,283 9,083 6,221
NON-CASH ITEMS IN OPERATING PROFIT
Share of associates’ profit net of dividends received (3,008) (8,296) - -Other income - (137) - (133)
CHANGES IN ASSETS AND LIABILITIES
(Increase)/decrease in trade and other debtors (84) (19) (83) (19)(Increase)/decrease in prepayments (135) (54) (10) (54)(Increase)/decrease in future income tax benefit (40) 12 (5) 12(Increase)/decrease in dividends receivable - 1,166 711 (5,073)Increase/(decrease) in sundry creditors 278 (143) 407 (142)Increase/(decrease) in income tax payable 25 (126) 5 (126)Increase/(decrease) in deferred tax payable (7) 10 (7) 10
CASH FLOW FROM OPERATING ACTIVITIES 9,770 696 10,101 696
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
doll ars in thousands
31]thirty one
notes[ to the financial statements
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 121,169,205 116,583,325during the year used in calculation of basic EPS
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 entitiesInformation relating to controlled entities is set out in note 9. The parent entity and its controlled entities maintain loanaccounts between themselves which can fluctuate throughout the year. There are no fixed terms of repayment of theseamounts, which are interest free. Amounts owing by and to controlled entities are set out in notes 7 and 11.
Associate entitiesDuring 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 maintainloan accounts between themselves which can fluctuate throughout the year. There are no fixed terms of repayment of theseamounts 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, aDirector of the company, has an interest. The fees charged during the year were $245,000 (1999: $90,000). The amountpayable at 31 December 2000 was $200,000 (1999: Nil).
(c) LOANS TO DIRECTORS
Aggregate of loans at the beginning of the financial year 186 186Loans advanced during the financial year - -Loans repaid during the financial year (186) -
AGGREGATE OF LOANS AT THE END
OF THE FINANCIAL YEAR - 186
These loans were to assist two Directors of the parent entity, Russell Tate and William Currie, to finance the issue of shares underthe 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.
32[ thirty two
consol idated ent i ty parent ent i ty
2000 1999 2000 1999
cents per share
notes[ to the financial statements
(d) DIRECTORS’ SHAREHOLDINGS AND OPTIONS
As at 31 December 2000, the interests of the Directorsin the shares and options of the parent entity were:
Mark Carnegie 3,750,000 750,000 1,300,000 -John Singleton 37,500,000 7,500,000 - -Russell Tate 1,465,000 293,000 3,145,500 -William Currie 300,000 60,000 - -Geoff Levy 550,000 110,000 - -
43,565,000 8,713,000 4,445,500 -
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).
Total Shares total opt ions
2000 1999 2000 1999
33]thirty three
22. STATEMENT OF
OPERATIONS BY SEGMENTS
(a) INDUSTRIAL SEGMENTS
Advertising & Communications 13,054 8,651 12,422 8,283 41,252 33,825Media 319 - 319 - 48,184 -
13,373 8,651 12,741 8,283 89,436 33,825
(b) GEOGRAPHIC SEGMENTS
Australasia 13,054 8,651 12,422 8,283 41,252 33,825Asia 319 - 319 - 48,184 -
13,373 8,651 12,741 8,283 89,436 33,825
operating profit
after income taxTotal revenue total assets
2000 1999 2000 1999 2000 1999
doll ars in thousands
notes[ to the financial statements
23. FINANCIAL INSTRUMENTS
(a) Interest rate riskThe consolidated entity’s exposure to interest rate risk,which is the risk that a financial instrument’s value willfluctuate 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 145 - 145Other debtors - 103 103Investments - 684 684
TOTAL FINANCIAL ASSETS 145 787 932
Weighted average interest rate (pa) 5.6 %
Sundry creditors - 1,653 1,653Loans 15,000 3,926 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 3,136 - 3,136Other debtors - 19 19Loans - 528 528Investments - 156 156
TOTAL FINANCIAL ASSETS 3,136 703 3,839
Weighted average interest rate (pa) 4.4%
Sundry creditors - 27 27Loans - 682 682
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 notesto the financial statements. The consolidated entity does not have any material credit risk exposure to any single debtor.
(c) Net fair valuesThe net fair values of the consolidated entity’s financial assets and liabilities are equal to their carrying value as disclosed in (a) above.
34[ thirty four
float ing
interest rate
non interest
bear ing total
doll ars in thousands
notes[ to the financial statements
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 whenthey 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 theDirectors by:
Mark Carnegie
Director
(Sydney, 9 March 2001)
directors’ declaration[ singleton group limited
35]thirty five
HORWATHSydney PartnershipChartered AccountantsA member of Horwath International
1 Market Street Sydney NSW 2000GPO 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 17to 35. The financial report includes the consolidated financial statements of the consolidated entity comprising the company and theentities it controlled at the year’s end or from time to time during the financial year. The company’s directors are responsible for thefinancial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members ofthe company.
Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financialreport is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and otherdisclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures havebeen undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with AccountingStandards, other mandatory professional reporting requirements and the Corporations Law in Australia, so as to present a view which isconsistent with our understanding of the company’s and the consolidated entity’s financial position, and performance as represented by theresults 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 theirperformance for the year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations; and
(b) other mandatory professional reporting requirements.
HORWATHSydney PartnershipChartered Accountants
David Green
Partner
(Sydney, 9 March 2001)
independent audit report[
36[ thirty six
singleton group limited
37]thirty seven
additional information[ to the financial report
1. SHAREHOLDER INFORMATION – AS AT 9 MARCH 2001
(a) Distribution of shareholdings
(b) The number of shareholdings held in less than marketable parcels is 129.
(c) 20 largest shareholders
number of ordinarynumber of shares held holders 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
number of % heldordinary of issuedfully paid ordinary
name of shareholder shares held 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
14. Colonial Investment Services Limited (Pet One Account) 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
38[ thirty eight
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:
number ofshareholder 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.
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.
SELLIDEASADVERTISING IS ABOUT
THAT DO NOTHING BUT
“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.
44[ forty four
SOM FINANCIALS
c o n s o l i d a t e d e n t i t y
S I N G L E T O N O G I LV Y & M AT H E R
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
Retained profits at the beginningof the financial year 5,205 1,885
TOTAL AVAILABLE FOR APPROPRIATION 23,954 14,328
Dividends provided for or paid (13,750) (9,123)
RETAINED PROFITS AT THE
END OF THE FINANCIAL YEAR 10,204 5,205
2000 1999
profit and loss statement[
doll ars in thousands
This financial disclosure is in respect of 100% of Singleton Ogilvy & Mather’s results and has been extracted from the audited financialreport 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.
46[ forty six
for the year ended 31 December 2000
balance sheetas at 31 December 2000[
c o n s o l i d a t e d e n t i t y
S I N G L E T O N O G I LV Y & M AT H E R
CURRENT ASSETS
Cash 23,494 22,639Receivables 23,574 23,904Other 4,348 4,004
TOTAL CURRENT ASSETS 51,416 50,547
NON-CURRENT ASSETS
Receivables 5,249 3,849Investments 3,452 1,453Property, plant and equipment 3,631 3,733Other 1,856 2,176Intangibles 38,126 29,827
TOTAL NON-CURRENT ASSETS 52,314 41,038
TOTAL ASSETS 103,730 91,585
CURRENT LIABILITIES
Accounts payable 29,347 29,024Provisions 16,758 17,673
TOTAL CURRENT LIABILITIES 46,105 46,697
NON-CURRENT LIABILITIES
Provisions 2,011 2,011Other 12,576 6,503
TOTAL NON-CURRENT LIABILITIES 14,587 8,514
TOTAL LIABILITIES 60,692 55,211
NET ASSETS 43,038 36,374
EQUITY
Issued capital 29,445 27,372Capital contribution obligation 999 2,937Reserves 37 (52)Retained profits 10,204 5,205
Equity attributable to members of the parent entity 40,685 35,462
Outside equity interests in controlled entities 2,353 912
TOTAL EQUITY 43,038 36,374
2000 1999
This financial disclosure is in respect of 100% of Singleton Ogilvy & Mather’s results and has been extracted from the audited financialreport 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.
doll ars in thousands
47]forty seven
c o n s o l i d a t e d e n t i t y
This financial disclosure is in respect of 100% of Singleton Ogilvy & Mather’s results and has been extracted from the audited financialreport 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.
S I N G L E T O N O G I LV Y & M AT H E R
CASH FLOW FROM OPERATING ACTIVITIES
Fees received 261,678 238,941
Payments to suppliers and employees (231,065) (215,296)
Interest received 1,199 510
Interest and other costs of finance paid (4) (10)
Income tax paid (9,488) (930)
Net cash provided by operating activities 22,320 23,215
CASH FLOW FROM INVESTING ACTIVITIES
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)
Loans with associated entities - receipts from - 1,442
Restructure costs (1,076) (2,053)
Net cash used in investing activities (8,882) (7,971)
CASH FLOW FROM FINANCING ACTIVITIES
Capital contribution 2,073 1,394
Dividends paid (14,610) (1,752)
Net cash used in financing activities (12,537) (358)
Net increase (decrease) in cash held 901 14,886
Cash at the beginning of the financial year 22,639 7,888
Effect of exchange rates on cash holdings (46) (135)
Cash at the end of the financial year 23,494 22,639
2000 1999
statement of cash flowsfor the year ended 31 December 2000[
doll ars in thousands
48[ forty eight