Earnings Call: H2 2015

Feb 11, 2016

Bonjour, everyone. Thank you, Jillian, for being with us today. I would like to thank all the participants. I am with Jean-Michel Etienne, and we will take you through our presentation. As always, I have been told to call your attention on the disclaimer. I wish to say a few words before we start the presentation. The global economy started out 2015 with great hopes. We were pretty sure that the economy will go pretty well because we were facing lower raw material prices, higher dollar versus the euro, and a very aggressive monetary policy from the ECB. Therefore, Europe was due for a good recovery. At the same time, the U.S. would confirm its status of a strong emerging market, while the other true emerging market, particularly in Asia, would remain relatively solid. The only areas of concern in those days would have been Brazil and Russia. Then the world economy suffered two major events, the never-ending Greek crisis and the unexpected slowdown of the Chinese economy. For China, we are facing the challenge of a switch from an economy based on infrastructure investment towards an economy driven far more by consumer investment. This shift is taking much, much more time than anticipated by both Chinese authorities and economists around the world. Brazil is facing, in fact, three different crisis: social unrest, and moreover, if you prefer, a corruption issue with political crisis and an economic crisis. On Russia, which is one of the BRIC market, Russia is hurt by the sanction and low price of oil. The ruble and the Russian economy have had a tough time by and large. Only part of the BRIC market is India, which went quite well. Moreover, Europe didn't grow as fast as we had hoped. Emerging markets, which were once called fast-growing economies, no longer played out as a growth engine for the world. As I said, only the U.S. seemed to remain unaffected by this turmoil. In this context, our clients are becoming more and more cautious given the greater challenge they are facing, the consumer pressure, the new competitors coming from the digital space and the risk of uberization, and the need for business transformation in order to adapt to this new world. Clearly, when focus is on the short term with greater appetite for cost reduction than investment and product launches as a result of growing uncertainties, our industry has to adapt by being more creative, more innovative, and more efficient. Mediapalooza, which has been this incredible festival of pitches for media, reflect this trend. According to RECMA, more than $20 billion of billing have been put under review, and the drivers are clear from an advertiser standpoint. Use digital to be more effective and to reduce costs. Overall, our performance has been mixed. We lost a few U.S. accounts, General Mills, P&G, and Coke. On the other hand, we were able to win from our existing clients, such as Coty or Citi, their media account, and a few others. We have been starting with a new relationship with, among other clients, Visa, Etihad, Sears, Taco Bell, and VF, the home of The North Face, Timberland, and Eastpak. We were able to retain Bank of America. Even if we will be showing very solid numbers in a few minute with all our indicators on green, there is one area where our performance was negatively impacted by numerous factors, and that is organic growth. As some of our very large clients cut their investment massively for each one specific reason, this has been the accident of Q3. Following the Sapient acquisition that we are very proud of and happy to have concluded, we have embarked our core teams on a journey for the group transformation. Redefine our purpose to fit the future, reorganize our operation to best serve our client, build new platform such as Publicis.Sapient. I believe very few companies in the world would have been able to handle such a transformation and still deliver great results. We are now better suited for the new digital world than any one of our competitors, even though we know that we still have a long way to go before we arrive at our destination. Our teams everywhere have done an extraordinary job, and I am both grateful and proud. They are great. Merci to all of them. I touch upon our 2015 performance, and I will go into more detail in a few minutes. You will see that we have achieved very significant increases in revenue, operating margin, headline EPS, and free cash flow. We have certainly been helped by acquisition and Forex, but it proves how resilient our model is and how powerful it is when it comes to cash flow generation. I leave it to your imagination what it will produce when we will be firing on all cylinders from 2017 onwards. After those word of introduction and the fact that you have now been able to read the disclaimer in detail, let's get into the numbers. As I said, we are posting very solid numbers for 2015. Revenue is at EUR 9.6 billion, up by 32.3%, 18.9% at constant exchange rates. Organic growth is not a huge number, and this is something I already mentioned, 1.5%. But worth noting that Q4 is at 2.8% Q4 2015. Operating margin is shy of EUR 1.5 billion. It is EUR 1,487,000,000, up by 25.8%, which leads to 15.5% operating margin rate. This includes a big raise in restructuring costs, which are reaching EUR 118 million compared to EUR 69 million in 2014. Group net income is at EUR 901 million, up by 25.1%. Headline earning per share diluted is at €4.39, up by close to 21%. Free cash flow before change in working capital is EUR 1,097,000,000, up by 31.2%. Jean-Michel will come back to all these numbers in detail. I will be covering a few slides on revenue. So we are on slide number four. Revenue for Q4 is at EUR 2,734,000,000 compared to EUR 2,149,000,000, up by 27.2%. Growth, if we exclude the Forex, is at 18.3% and organic growth 2.8%. For the full year, we have, as I said already, EUR 9.6 billion, compared to EUR 7.255 billion. The reported growth is 32.3%. Growth excluding Forex, 18.9%, slightly the same than the fourth quarter. Organic growth, as I said already, 1.5%. Let's look at the revenue breakdown by geography Q4 2015, and this is slide five. Europe has been negative on organic growth at minus 1.7%, and this is a relatively bad news. Obviously, there is the issue of France, where investment has been stalled from the time of the Paris event. North America is up by 6.3%, Asia-Pacific 5.1%, Latin America negative 3.7%, Middle East Africa negative 4.4%. If we look for the full year, there is not much news. I will not insist on the numbers. I will pinpoint Latin America, which is negative by 5.3%. The rest is mainly positive. On slide number 7, I think it's interesting to have a small look at a few countries. We have made a selection. Obviously, there are much more countries in each category, and particularly in the first one. But they are small countries, and it makes no big sense to insist on. The countries which are up by more than 5%, it's Australia, China, Germany, India, Japan, Poland, South Africa, Taiwan. Between 0 and 5, France, Israel, Singapore, South Korea, Spain, Turkey, United Arab Emirates, U.S.A. One word on Spain. Spain has been negative since 2008. Spain has been facing a huge reduction of their investment, and we were asking ourselves, is one day Spain will be back? I'm very pleased to say that not only it's back, it's on the positive side, but it's showing nice improvement, and the forecast for next year is relatively good. So it looks like the return of Spain on the positive side is sustainable. Regarding the freezing zone, the one below zero, we have Brazil, which unfortunately is expected to continue on the negative side. Canada and Malaysia, this is accidental, and I don't believe that they will last in this area. Italy is improving. While negative, the situation is improving. Mexico is improving. Russia, we know the story about it, and U.K. is improving. As you know, since 2006, we have decided to invest massively on digital. And obviously, one of the key questions that everyone has is, are we going to be successful or not in this field? The story is quite good, and the story is becoming more and more interesting. And I believe that this story is something which will take us to new heights in the future. We are at 52% of our revenue derived from digital, close to EUR 5 billion. This is a critical mass, which is quite significant and which can give you some comfort on the fact that we have now operations which are extremely solid and which can take us to the next level. The good news is also the fact that when you look at Q4, we had a growth of 8.8%, while the growth for the full year is at 5.4%. If we look at the breakdown by geography, and I'm not going to insist between digital and analog, we see that there is only one region where analog is positive, which is North America. All the other regions are negative, with Latin America, -9.3%. All the regions are positive on digital. Europe, 7.5%. North America, 2.3%, and we know that we can do much better. Asia Pac, 23.8%. Latin America, 12.2%, and Middle East, Africa, 8.8%. So we see that this is coming together quite nicely, and we can have some interesting hope. Now that I have exhausted the presentation, and I hope that I have not exhausted you, I'm handing over to Jean-Michel Etienne, who will give you the detail on the good news and the numbers. Jean-Michel, the floor is yours. Thank you, Maurice. I will try not to exhaust you too much. Good morning. I will go now through a few slides detailing our 2015 results. If we start now with the P&L on page 11, the 2015 P&L includes Sapient from the acquisition date on February 6, 2015. Our revenue reached EUR 9,601 million, growing year-on-year by 32.2%. The operating margin is at EUR 1,487 million, growing by 25.8%. The increase in the operating margin in absolute value is lower than the increase of revenue due to the margin dilution coming from the consolidation of Sapient in our numbers. Consequently, the margin rate is at 15.5%, which compares to 16.3% delivered in 2014. We will come back on this in a minute at time of the analysis of the source of change to operating margin. The amortization of intangible arising from acquisitions is increasing versus last year at EUR 89 million, entirely due to the Sapient purchase price allocation. We have an impairment charge this year at EUR 28 million due to the write-down of a trade name and a reduction in value of a client list for one of our Brazilian entity. This impairment charge is lower than the one we had in 2014. We cover separately the financial expenses and the income taxes. Our group net income is increasing by 25.1% versus last year and exceeded for the first time EUR 900 million. The headline group net income is at EUR 992 million, increasing by 19.7% versus last year. On page 12, we are analyzing more in detail the operating margin. We have an improvement on the personnel cost line, which is growing by 30.3%, a percentage lower than the growth of revenue at 32.2%. Personnel cost before restructuring costs represent 61.1% in 2015 versus 61.2% in 2014. Restructuring costs are at EUR 180 million, a significant level, which reflects the first step to adapt our cost bases to our new organization. The operating expenses at EUR 1,952 million represent 20.3%, which is exactly at the same level we had at the end of H1, but which is 40 basis points higher than last year for various reasons that I will explain in the next slide. All these changes versus last year are impacted by foreign exchange rates and the effects of acquisitions. All in all, the margin at 15.5% reflects already a part of the efforts launched to deliver our cost reduction program. For instance, when we presented in February 2015, our 2014 numbers, we calculated what would have been the margin of the combined group, adding Sapient numbers to those of Publicis Groupe. We presented a margin at 14.9% based on last 12 months as of June 2014. With a 15.5% delivered in 2015, we are confirming that the integration of Sapient is already a success. On page 13, we are detailing now a simplified source of change to operating margin rate. To start with the first column, due to the effect of foreign exchange, if we had translated the 2014 margin using 2015 exchange rates, our 2014 margin would have increased, and this, combined with the effect of the acquisition made in 2015, would have given a basis to compare with this year margin at 16.1%. As mentioned in the previous slide, the personnel costs have been reasonably controlled, contributing to an improvement of the margin, sorry, by 20 basis points at same exchange rates and excluding acquisitions. The increase in restructuring costs have lowered the margin by 40 basis points. Next column, the real estate costs have also increased, and as a result, are lowering the margin by 10 basis point versus last year. This is due to several new leases which have been contracted at new market conditions. Also, operating expenses contribute to lowering the margin by 40 basis point versus last year, and this is mostly due to an increase of the depreciation charge following investment in CapEx, the effect of the rollout of the ERP, non-billable cost to the clients, and also some non-repeatable improvements which happened in 2014. We keep for the end the effect of the synergies coming from the building of Publicis.Sapient platform, which is a major event of 2015, which is as planned, improving the change in margin year on year by 10 basis points. As a result, the 2015 margin is at 15.5%, and we analyze this rate as a good performance after the dilutive effect of the integration of Sapient in our accounts, and also in the context of low organic growth, as you noticed. If we move now to the next financial expenses on page 14, you can see that this line has been simplified and include mostly Sapient financing cost for EUR 61 million on a total of EUR 89 million. This line of EUR 61 million includes the cost of the Eurobond 2021, the cost of the Eurobond 2024, and the cost of the term loan dedicated to this acquisition. The earn out revaluation is a charge at EUR 12 million, indicating better perspective of profitability for the entities under earn out. We have also a profit of EUR 8 million coming from foreign exchange, and all in all, the net financial expense for 2015 is a charge of EUR 89 million. Regarding taxes on page 15 now. The tax rate at 29.9% is increasing versus 2014. This was expected and is due to Sapient as well as the increased weight of the U.S. and the profit before tax of the group. You will notice that at the end of June, we were expecting a tax rate at 30.5%, 3-0, 30.5%, so we have a slight improvement versus the estimation made at time of the first half. The headline earnings per share fully diluted is growing year-on-year by 20.6% and reach €4.39. We will propose also to the next general meeting on the 25th of May, a dividend at €1.60, increasing by 33.3%. The payout ratio will be at 39.5%, increasing versus 2014, and in line with our goal to reach 42% in 2018. Shareholders will have the option to receive cash or shares again this year. Let's move to the balance sheet on page 18. This balance sheet includes Sapient for the first time at year-end. And this year, as you can see, we have again an improvement in our working capital by €255 million. Total shareholder equity is at €6.6 billion. And you will notice that our net debt has already digested a significant part of the new debt coming from the acquisition of Sapient. On page 19, the 2015 average net debt is at EUR 2.4 billion, and the net debt at December 31, 2015 is below EUR 1.9 billion, which represent, as I said before, already a significant reduction since the date of acquisition of Sapient. Our key financial ratios are below our internal objectives, mostly with the average net debt on EBITDA ratio at 1.46 and the net debt on equity at 0.28. On page 21, we are presenting our liquidity at EUR 4.4 billion. We have already commented at H1 in July the increase of our revolving credit facility, our club deal, from EUR 1.2 billion to EUR 2 billion to reflect the new size of our group. On page 22 now, we are confirming our promise to deliver more than EUR 1 billion of free cash flow before change in working capital. This improvement is due firstly to a significant increase of the EBITDA by 27% at EUR 1,661 million. The cash tax is lower than last year, mostly due to few tax refunds on previous overpayments in various countries. CapEx are increasing significantly in 2015 versus 2014 due to the integration of Sapient, some real estate projects, and the ERP implementation. In total, the free cash flow before change in working capital is at EUR 1,097 million, increasing by 31.2%, and for the first time we are exceeding EUR 1 billion of free cash flow. Regarding the use of cash on page 23. We have again this year a change in working capital, which is a cash inflow of EUR 79 million. This includes Sapient and a little help of change in currencies, of course. Acquisition are at EUR 3,130 million, which includes mostly Sapient, as you can imagine. Earn out and buy out are slightly up compared to last year at EUR 203 million. The dividends paid to our shareholders and to our minority interests are at EUR 258 million. The share buyback, which is indicated on this slide, at EUR 470 million, relates mostly to the early repayment of the ORANE. To conclude my presentation on page 24, we are showing a graph indicating that from 2008 to 2015, the operating margin has almost doubled from EUR 0.8 billion to EUR 1.5 billion. During that period, we have been able to maintain the return on capital employed ratio, in average, close to 13%, despite the significant acquisition we made. This is clearly above the WACC of our group, which is at 7.5%, indicating a significant value creation for our shareholders. For 2015, the return on capital employed ratio is at 10.8% after the impact of the first year of consolidation of Sapient and also the extra restructuring costs that we have seen before. Excluding these two elements, the ratio will have been at 13.5%, slightly above the average of the past years. This is the end of my presentation. Maurice, we continue on our strategy. Merci, Jean-Michel. We are going now to speak about the Power of One strategy. We already touched upon during our last conversations. I believe it is interesting to look at what we are trying to do and why we are making such a great and important transformation of the group. Why did we need to change? I think there is a new trend that everyone is fully aware of, and we should not be mistaken about what is happening. It is not a fashion trend. It is something which is heavy, which is massive, and which will have an impact on all the industries of the world. No matter what, no matter which industry, which sector, we will see massive changes. There is two giant forces. One is the acceleration of the convergence, the innovation, what we call the era of convergence, and we see that there is a lot of new players which are coming. This is seamless value-added services focused on access, mobility, and we have a few names that you can see. The unprecedented speed of change, heedless of old boundaries. This is something which is extremely important on the one hand. On the other hand, you have the acceleration of the consumer empowerment. This is something that we have seen in many areas, and we see the change in the behavior of those consumer. I'm not going to go into all the details. One of the results of this is that it's a reshaping of all industries. We can go and look at what's happening between Walmart and Amazon or Hilton and Airbnb, or many other companies. We see that the newcomers are having a much higher value with much less investment and much less people, workforce in their industry. This is leading to a business transformation, which is, for us, a massive opportunity. When we look at the market we are now operating in, it's not only the marketing and new storytelling and content that we have always been part of with a pie of EUR 500 billion, but there is a slice of consulting at a market of more than EUR 100 billion, and technology services, a market of EUR 900 billion, much larger than our own market. This give a pie of EUR 1.5 trillion. We don't pretend, and we don't aim at being one of the key player in each of these pies. What we expect to do is to be at the convergence of all these pies and have a much broader business where we can express ourselves. When you look at what's happening, I'm not going into the detail of all the presentation, but we see that for retail banking, they are moving to the bank of the future with a lot of banks which are investing in internet or digital bank. Retailers which are moving from the solid outlets to omni-channel. The automotive companies with the connected car and maybe tomorrow, the driverless car. For taking that opportunity and making it real, we thought of enriching our palette of services with a formidable operation, which is Sapient. This is the reason why we acquired Sapient, which is a crown jewel, which has been acquired in 2014, closed February 6, 2015, and already a newly created Publicis.Sapient platform. If we look at what it is today, one year after the acquisition, Jean-Michel has insisted, and I think he has demonstrated that this has worked beautifully financially, but I would like to insist on some other aspect. From an operational standpoint, the implementation of the Publicis.Sapient platform is now finalized. We have four companies, Razorfish, DigitasLBi, SapientNitro, Sapient Consulting, all working under the Publicis.Sapient and the leadership of Alan Herrick. This is working well. We have not seen loss of client and exodus of people or whatever some people have predicted. On the contrary, we see something which is working formidably well, and we have something like 20,000 people, including more than 8,000 people in India at a formidable operation that many of us have visited, including myself, and we have been struck by the quality of that operation in Gurgaon and in Bangalore. The platform has been already presented to several of our key clients, and the feedback has been unanimously positive. The good news is that we see more and more collaboration, cooperation between the old Publicis organization and the Sapient teams. So now it's working extremely well all together. When we look at what this acquisition is delivering from a finance standpoint, there is clearly an improvement of Sapient margin, excluding synergies. The first synergies in 2015 are at EUR 15 million, when we were expecting EUR 10 million. As Jean-Michel has explained, when we are looking at the last 12 months, as of June 2014, the margin combined on a pro forma basis was 14.9%, and the new margin that we are reporting today is at 15.5%, which is in line with our 2018 objectives. I'm coming back to why do we need to change and what has driven the change. I think that we are all our competitors and ourselves, all the industry is clearly focusing on clients. There is no news under the sun. But what we should look at and what we should hear loud and clear is that our clients want us to be a trusted and strategic business partner to help them transform their own business. That is something which is a driving force for the future. That is a driving change in the behavior of all our clients. It's not by chance that you see many large companies from all the world, going to Silicon Valley and trying to learn from there. So clearly we are there to help them, and they believe that based on what we can see, we are the only one capable of doing it. They want more for less. That is true for all the players. We have to leverage the power of integration and to learn how to work at the cheapest price and to deliver more with less in order to protect our margin and our ability to invest. They want to access to the best group assets simply and seamlessly. That is the reason for Publicis One, the Power of One as you see it. This slide 34, you can go to all our colleagues, and you will see that we are all presenting roughly the same slide. This has been our life. We have all acquired, created, developed a lot of operations, which is nice. By the way, when you look at this from a graphic standpoint, it is a nice picture. The reality that this is leading to a collection of assets which have had their own reason for being, but which is now a little bit anachronistic. [Foreign language] for the new world. This is something which is not working very well. We have to be honest, all of us, and we have to tear down our silos and to simplify our organization. This has led to the organization that we are putting in place. We always had client at the core. This is not new. There is no one of our competitors who is not thinking client first, and we are like everyone, thinking client first. Obviously, we are there and we exist to best serve our clients. What we are doing differently with this new organization is that when a client is coming to us, it is not only because he want to have a partnership with us. He is coming with a problem, and he is expecting that we will bring a solution. We have organized our operation as solutions. We have the creative communication solution, which encompasses Publicis Worldwide, Leo Burnett, Saatchi & Saatchi, BBH, and the production facility, Prodigious. They come to us because they have a connecting problem with the consumer, which target, how to reach them, how to make sure that they can get the precision in the targeting. This is Publicis Media. We start with MediaVest Group, ZenithOptimedia, VivaKi, Performics, and a few other assets. They come because they want transformation. They want digital world. They want technology. They want consulting. This is Publicis.Sapient. They come because they have a huge issue on how to address the issue of healthcare, how to present the prescription. This is Publicis Health, which is the only operation in the world which is covering the whole spectrum of services that our clients need in this area. We have put the client at core, and we have created Publicis One in order to put under one roof all our operation in some smaller countries with an entrepreneur spirit of startup, and we have boosted resource. If we look at our organization today, we have a new organization which is working very well, which is in course of implementation. We still have work to be done, and we believe that the work will be finalized by the end of the first half of the year. Publicis.Sapient, Publicis Health, this is fully completed and up and running. Publicis Communications, under the leadership of Arthur Sadoun, is already well organized, and they are moving to the next level of the implementation. I believe that this will be completed by the end of the first quarter. Publicis Media, under the leadership of Steve King, is in progress. I think he will be announcing before the end of February his new organization with the people in charge, and I consider that this will take just a few months, and before the end of the first half will be up and running. Publicis One under the leadership of Jarek Ziębiński is in progress. As soon as next Monday, he will have his first seminar, and I believe that everything will be up and running within only a few weeks. Regarding the Chief Client Officer who are under the responsibility of Laura Desmond, this is being implemented and we will see the nomination of the first one pretty soon. Some have been already identified, and we are moving something at the speed which have been barely seen in other organizations. So the benefit, the full benefit of this operation will be on growth and margin as early as 2017. Now, let's go back to the pie, this EUR 1.5 trillion pie. Huge, huge. Again, this is not something on which we expect to be a player on each field as we are in the field of communication. We are extremely reasonable in our ambition, but this will give us, simply by the fact, the highest growth potential of what we have called the overlapping industries. There are new competitors, and the competitive landscape has changed quite dramatically because we see that IBM is acquiring agencies. We see that Deloitte or Accenture are doing the same. So they are coming in our field, on the fringes, as we are going in their field on the fringes. We are not the competitors, and we will not be the competitors of IBM, Accenture, or Deloitte. But we will serve our client on a much broader aspect, and we will cover all the communication aspect, creation, media buying, media planning, and we will develop the platforms as we already do, but we will go into some other aspect, such as technology, consulting and content. When you look at the arrows that we have shown regarding the growth potential, I am not going to insist, but clearly we have a better chance, and it is ours to make it a success or not, to grow faster than the competition. So this is what has led to a huge change in our organization. As a conclusion, I would like to insist on a few things. The first one is that I know that some of you, and you have been blunt, and you are right. It is normal that you put some question, and particularly in Q3 where we had that accident. It was absolutely normal that you say, "Okay, is the Publicis model broken or not?" The good news is that our business has demonstrated its resilience across economic and technology cycles strongly. We have been delivering 9% CAGR on revenue, 9% CAGR on margin. If you look at the journey that we have had, I think that you can feel more confident. What happened in Q4 is a demonstration that we are there for playing our game fully. When we look at the result, we have been able to deliver steady headline diluted EPS and free cash flow growth. Again, on EPS, it has been 10% CAGR during 10 years. On free cash flow, 8% CAGR with the number that Jean-Michel Etienne insisted on, which is the first time that we passed the bar of EUR 1 billion. We have been cautious, at the same time, reasonable in the allocation between investment and cash return. I believe it has been done in the interest of our shareholders. We have been investing reasonably, and this has helped us to become who we are today. We have also increased our dividend by 16% CAGR, which is much higher than the 9% for our margin. For the payout ratio, we moved from roughly 20% in 2005 to the double in 2015, with 40%, 39.5, with the objective of reaching 42% in 2018. I think it was quite good. If now we look at what would be the outlook. Let's have a small look on the environment we work in. We know, and we have to face it, we will have a year on 2016, which will be a year of low growth and low inflation. We know that the macroeconomic uncertainties are there, which will be there for at least the full year. It shows clearly that people are uncertain in the way they are looking at the future. IMF has reduced the growth forecast. As a consequence, our clients are quite cautious, and they are focusing on the short term, and this is leading to cost reductions. With the consequence on their media investment and their marketing expenditures. At the same time, we see that there is low investment on production, high volatility in the market, and this is happening even today, and some geopolitical risks. All this is leading us to be extremely cautious. Our priorities for 2016 is, first and foremost, the implementation of Publicis Groupe's transformation. We will go faster than any of our competitors, as we have always done, because we know that when we are going to a reorganization, we must move fast, and we have always been in that mood and that mode. We have our clients at the core. The client transformation will lead us to help them on consulting and technology, and this is something that we are determined to offer, and we believe that it is something that we will develop as a specific offering and integrated services, which is the alchemy of creativity and technology that we are the best at delivering. 2016 is seen by us as a transition year. We came from a low growth in 2015, 1.5%, so we have to be cautious and not to promise that it is the paradise and everything will be rosy next year. We know what are the difficulties of next year. We want to be cautious, and we have decided internally to have modest internal growth objectives. The reason for that is that we cannot ask our teams to focus first on building our new organization and at the same time to grow faster. We want to move progressively, and we are seeing this as a transition year. But at the same time, we want to increase all our financial indicators, and we will. Revenue, operating margin, headline diluted EPS, dividend payout, and we will reap the fruits of the group transformation when we will be firing on all cylinders in 2017. This concludes my presentation. Jillian, we are opening the floor to you. For the Q&A session, please direct your question to Jean-Michel, as I have coffee to drink. Jean-Michel. Yeah. Jillian, the floor is yours. Of course. To ask a question today, please press *1 on your telephone keypad. We will now take our first question from Brian Wieser from Pivotal Research Group. Please go ahead. Thank you for taking the question. First thing, I was curious if you could talk about how Sapient, the acquired businesses, exited the year last year, what the growth pace was, and how that might carry on inside of the new Publicis.Sapient. Separately, I was curious to hear your thoughts on the latest back and forth between the ANA and the 4A's. Certainly, we've heard a lot of mistrust from marketers, more so than was the case a year ago, let's just say. And with the ANA publishing their hotline number, it was clearly a bit of an escalation between the trade groups, of which you're certainly a part. Just curious to hear your take on what's going on, and how things might resolve. Good. Thank you, Brian. Sapient has delivered a good growth in line with Q3 in the second half. The full second half of the year is in the region of 5% growth. As you remember, the market has been disappointed by the adjustment of Sapient in the first half, where we faced a few issues. They are back on their track, and they will be delivering nice growth in the future, in line with what they have been delivering all the time. We feel very good, and we feel extremely confident. Regarding the ANA and 4A's, obviously, one can be only disappointed that there is such a situation and mistrust. The rumors, the declaration of one or the other, probably the behavior of some. The issue also of some programmatic players who have been non-transparent, and maybe also the fact that there has been some engines which are frauded, and we see some fraud on the programmatic aspect. All this has led to a mistrust and the investigation. What I can say is only regarding how Publicis is acting. We have extremely strict rules, and we have clearly audited numbers, and all this is leading us to a great confidence on how we are behaving, how our operations are led, and I have no doubt regarding the way we are acting. For me, it's not an issue for the industry. It's not an issue for us. I don't believe that the big players are playing with this kind of thing. I think that there are maybe some limited issues which have been probably creating more damage than the reality of the problem. That's too bad, and I hope that this investigation. I'm not happy that the investigation is happening, but I'm happy that at the end of the day, we will have something which will be quite clear and will put this problem behind us. Because it's an overhang on the industry. It's too bad. As I said- Practically, though, do you see marketers negotiating differently? To the extent that there is mistrust for a number of reasons, are they negotiating differently or pursuing more aggressive cost goals or fees with you more generally because of the overall environment? The aggressiveness of advertisers has been, I think, always there, probably more in phases in 2015 with the Mediapalooza. I think it has been triggered by two or three factors, of which the ANA issue is a limited one. I think that more importantly than the ANA issue is the fact that many of our clients have been facing some tough moments, and they are looking for reducing their costs. They have been always looking for reducing the cost, but much more aggressively, and probably that what's happening with some private equity firms and the way they are handling some large acquisition with zero base and with the fact that they are aggressively pursuing a dramatic shift in the way they are managing the operation. This has probably led to more aggressive cuts, as well as the activists. I think the importance of activists and the 3G example is much more important than what the ANA investigation is. Thank you, Brian. We move to the next one. I'll take our next question from Tim Nollen from Macquarie. Please go ahead. Hi. Thank you very much. Could I follow up on Sapient again, please, and ask if you could give some kind of evidence of what is working. I saw the synergy figure, which looks good. I wonder if you could speak about any success in business pitches, for example with Publicis Sapient together, or anything else to demonstrate how Sapient is working for you thus far. Secondly, Maurice, I wonder if you could expand a bit on your degree of confidence in the ad markets in 2016, following what you prefaced with your 2015 observations. Just why should we be confident that advertising will be solid this year? Bonjour, Tim, these are two very good questions. On Sapient, I do not wish to be open with the name of the clients, but I believe it is important that I give you some example. Forgive me if I am not going through the detail of the name of the clients. I need to get their permission, and I must say that we have not asked for. We have been in at least 10 presentation in common from one Publicis unit and Sapient. Out of the 10 success. 10 times we went together, 10 times that we got an assignment from the client. This is just the beginning. We see that on many areas, be it e-commerce, transformation, platforms, consulting, there is always something which a client is interested, data, and hopefully tomorrow, artificial intelligence, where we have made a very interesting investment. On all this, every time that we are going with Sapient, we are coming out with a new assignment. It takes some time, a few minutes, it is immediately during the meeting, or it takes a few weeks or months, but what we have seen so far is that it is working. The good news also is that when you look at the difference of culture of Sapient and Publicis operation, you find that normally it is very difficult to work together because they are coming from a very different planet where rational is key, with the exception of SapientNitro, and where technology is the king. Despite the difference of culture, or maybe because of the difference of culture, we have been surprised by the very nice chemistry between the teams and the fact that everyone see the interest of the complementary aspect of the two operations. This is working really, really well. Regarding now the second question, how confident I am. We are in this world which is volatile, which is uncertain, and there is a lot of uncertainties here and there. However, there are a few trends which are relatively solid, and when we look at the plans for some of our clients, 2016 looks much better than 2015. When we look at the result of the ZenithOptimedia forecast, which we know is the most solid of the industry and the one which is working extremely well and which has been always correlated pretty well with the reality. When you look at, on 20 years, what they have been delivering is something which is working extremely well. We see that the market above 4% in media expenditure or advertising or marketing expenditure is something which look rather solid in a year of Olympic Games. There is the U.S. election, but we are not involved in any election in the world. When we go into the detail, even if we know that 4.5% or 4.6% for the media industry will translate into maybe 3% for the advertising industry, we feel pretty good and pretty solid on this. As I said, we have given to our teams objectives which are below the level of the industry because we want to move progressively and solidly and on solid ground. I am not very much concerned by the current volatility of the market, and I believe that they will find a solid ground pretty quickly. Thank you, Tim, we move to the next question. I'll take our next question from Lisa Yang from Goldman Sachs. Please go ahead. Good morning. I have a couple of questions, please. Firstly, I understand markets are very volatile, but just wondering, given the account wins and losses, how do you see the phasing of organic growth in 2016? Just wondering if you have any view on Q1 in particular. In Q4, we see North American growth was very strong. I was also wondering how much of that was driven by clients having to spend more in Q4, having held back a lot their spend in Q3. The third question is on the competition from the IT services guys and consultants. Clearly, they're investing much more aggressively. What percentage of, I would say, agency's current business do you really see at threat? Clearly when we look at the major reviews, it doesn't look like there's been any kind of leakage to new entrants. Over time, do you feel you're just better placed than any other agency to compete as you have Sapient? Thank you very much. Great questions. Okay, I will try to answer those question. Please, for the future questions, don't hesitate to put some question to Jean-Michel. I am very pleased like that. He feels frustrated. Please continue like that. It is perfect for me. On the phasing, we believe that we will be slightly impacted in Q1 with the loss of Coca-Cola, Mondelēz U.S., and General Mills. This is something which will have a small negative impact Q1 and slightly less in Q2. We believe that regarding P&G, the loss of media, which will be probably compensated by some wins that we already have had, notably on PR, will be noticed on the second half of the year as we are servicing P&G on media until the end of June. More impact on the second half than on first, but a little impact on both. We have to be pretty cautious on the numbers. On Q4, there is some investment which came on top of what was forecasted. As I said, I am saying and repeating every year, Q4 is what we call in French, "Qui trop embrasse, mal étreint." It is a client adjusting their profit based on their marketing expenditures according to how they are having the top line and their margin, and they are adjusting. So it is difficult to predict, always. We had a fantastic Q4 in 2014, and this has led us to believe that it would have been very difficult to grow faster. We had two good news. One is the fact that we won some project-based contract, which we have been able to deliver. This is in the digital space, which explained, by the way, that we have digital by 8.8%. The second is that we had some clients who have put more money simply because the cuts that they have done on Q3 have given them headroom, and they have been able to invest. Regarding 2016, for the vast majority of our clients, it is a new fiscal year. They have their own plans, and they have their launches. They have also their issues. We see a lot of positive news with one constraint, either they are making the best use of the investment and another thing that we should not discount, which is the deflationary aspect of digital. So the forecasting nowadays is always more complicated to do than what we had in the previous years, where it was relatively easy. Clients were saying, "Okay, I am going to invest so much," and it was relatively easy to see what would have been the impact for us as an advertising company. Today, it is much more complicated. My belief is that there is a good level of confidence with the CEOs. The meetings in Davos were pretty encouraging. Despite the gloomy environment and the fact that Davos opened with the news coming from China and the stock going down sharply, the mood was positive of CEO. The business meetings were extremely constructive, and I believe that this is going to be much better. With all this, I forgot your third question. So maybe you can say it again. We lost you. So somebody will come back with your third question, and we move to the next. Can you hear me now? Yes, I am hearing you. Sorry, my question was just about how do you see the competition from the IT services guys and consultants? Sure. Yes. What proportion of your business do you actually see at risk at the moment? Over time, do you think you are just better placed to compete against them, given you have Sapient compared to the other agencies? Yeah. Let's be clear. We are not a competitor on IT for the bulk of IT services. We will never have managed services of their management thing. We are not competing with Salesforce, we are not competing with Microsoft, with IBM, with SAP, with Oracle, with Capgemini, with Accenture, et cetera. Atos, we are not in that field. We are only in the fringe, which is about consulting and platforms, which is about digital and technology, which is about how to help our client to take maximum advantage of the knowledge that we have of their business, of the consumer, of the brand, and how we can best help them to transform their marketing approach and their sales transaction in order to take advantage of the new world. That is where we are. We will not be competing on price. We will not be competing on this area. We will be competing on what is at the core of the transformation, which is helping them to shape differently their approach, their organization, and the connection between IT and marketing. This is where we believe we should play. If we look at what this represent of the whole business, out of the $1 trillion pie on top of what we already have, it's probably in the region of 200. If you look at what happened in Davos, there has been a very interesting meeting regarding the future economy and the impact of digital on transformation of the economy. It has been said, based on study, that it will add between now and 2025, $100 trillion to the global economy, three quarter to society, one quarter to business. Let's imagine that it's only half of it. This mean that it will be something like $12.5 trillion, which will be added to business in those 10 years. What we expect is that on the fees and investment that they will have to do, which we believe will be in the region of, let's say 2%-3%, which is between $250 billion and $400 billion, we will have a nice share of it because we are well-positioned. It's simply a macro calculation, which give us a good confidence on the fact that we are in an area where we can have something which is ours and ours only. This is forward-looking. By the way, when you look at the strategy of Publicis, we have been, most of the time, forward-looking. If I'm going only back to 2006, when we decided to shift to digital, many people were considering that we were making a big mistake. It was a huge undertaking. It will be extremely difficult, et cetera. You have seen the slides regarding what happened in the period and where we have outperformed on the competition, and we believe that it will be the same for the future, and the combination is working pretty well. Voilà, what I can say on this, and we are moving to the next question. Okay. Thank you very much. We will now take our next question from Adrien de Saint Hilaire from Morgan Stanley. Please go ahead. Hello. Good morning, Maurice. Good morning, Jean-Michel. A few questions on my side. Maurice, it feels a bit like last year. You did a better than expected Q4, and then you said the start of 2015 would be soft, and then it would accelerate in 2015, and I feel like it's a bit the same. Why would this year be different in terms of acceleration in organic growth? I mean, do you have a better visibility on that than you had last year? That's the first question. Second question is, I'm just wondering how much of your top manager time is actually dedicated to the group reorganization. The last question for Jean-Michel, how much restructuring should we have in for 2016? Compared to 2015. Jean-Michel is starting. Okay. It's an easy one, Adrien. You have seen 2015, with this huge amount of EUR 118 million. This year, we have a beginning of the year where we are implementing the new organization. We're trying to simplify the organization. We expect some benefit, of course, on the margin, but we will have to spend some money on restructuring again. So, what we have in mind, bucket we have in mind is roughly around EUR 100 million for 2016. Regarding the other question, Adrien. The visibility that we had last year was pretty good. We have been surprised, shocked, almost demoralized by what happened in Q3. It was something which never happened to us before, when almost every call was about cutting. I know that when I explained that my credibility was at the lowest, and the people were thinking that I was making this up, and that the reality was probably very different. In fact, it has been a bad conjunction of various elements. If we look at 2016, we are extremely cautious. We are not telling you that we have objectives which are not even in line with the market average. We have said our internal objectives are below market average. We do not want to surprise you. We have a French expression which says and I invite you to take some French lessons. We are confident that we will be delivering on our objectives. We have a pretty good visibility. We have some hurdles to go. We have also some pitches to win. We believe that we have the right organization, we have the right people, and we should deliver. We feel confident, and again, we are not inviting you to think that we will grow faster or in line with the market. What I am telling you is that we are building the foundation to go in 2017 much faster, and to beat all the competition. Now, we are building, and this is leading to your second question. Why have we decided to not go very aggressively against growth? Simply because, again, a French expression, which is "Qui trop embrasse, mal étreint." If you go after too many things, you miss almost all. We have decided that priority is on building the new organization. The day job of our CEOs is to manage the operation. The night job is to reorganize the operation. We are all hard workers. We are all working long hours, and I cannot say which percentage we are devoting to reorganization, because time is extensible. I see that most of our CEOs are with clients, are traveling, going from a client to another, et cetera. At the same time, they are running their new organization. I would not give a percentage. What I will give is a feeling and a determination. The feeling is very good, and they are all determined to make it happen very quickly. Thank you, Adrien, and we are moving to the next one. Merci. [Foreign language] We will now take our next question from Julien Roch from Barclays. Please go ahead. Oui, bonjour, Maurice. Bonjour, Jean-Michel. Yes. First question is on the margin. Can you give us an idea of the impact of the Sapient synergies in 2016? It was 10 basis points in 2015. Ex Sapient and ex restructuring, based on your expected low growth, what do you expect the margin to do on an organic basis? Flat or still going up a bit? That is my first question. My second question, coming back on Lisa about the phasing of growth, could Q1 be negative? That is my second question. My third question is on the succession. Maurice, do you still intend to retire at the 2017 AGM, at the end of May? Or as you are having too much fun, you might want to stay a bit longer? I will kill that question immediately, and I will hand over to Jean-Michel. I am having a lot of fun. I am enjoying enormously what I am doing, and I am confirming that in May 2017, I will hand over to my successor. Jean-Michel? Okay, Julian Roch. We have a plan. We are not changing the plan regarding the synergies coming from Sapient and the integration, as well as the building of Publicis.Sapient, which is where things are coming mostly. We are sticking to the plan, the same one that has been communicated before. Of course, the target we have is to improve, as we said, the target is to improve the margin organically as much as we can in each year after year, of course. Okay. Moving now to your question, which is Lisa Hai's question also. As I said, we will be slightly impacted by some losses. We will be of a slow start. Can we expect it to be negative? It will be either stable or slightly negative. We don't plan and based on what we have currently in hand, we don't plan any strong negative aspect. We believe that we will be, at worst, slightly negative, at best, slightly positive. We will then move on with some nice growth. Q3, after what we have seen last year, which will give us a good comparable basis. We will see something which has to be included is Sapient, which will contribute to the growth. We feel quite good, and we don't believe that there will be surprises on that front. We move to the- Just to come back on my Sapient question. You've done EUR 10 million in 2015. The plan is to do 60 of synergies. How much synergies you think you'll deliver in You've done 15- Yes in 2015. How much of the remaining 45 do you expect to do in 2016? Jean-Michel? You will have the full effect of the synergies of 2015 already in 2016. So without doing nothing, I will say that you will get a bigger number in 2016. We have the new saving coming from new actions, in 2016. All in all, cumulatively, we will get EUR 30 million. Cumulatively. This is half of the EUR 60 million which are planned for the total plan. The total plan will be- Very clear. It is full- 2018. Exactly. At the end of 2018. Okay. Very clear. Merci. Thank you. Julian, we move to the next one. We will now take our next question from Jérôme Bodin from Natixis. Please go ahead. Yes. Good morning. A few questions from me. First of all, digital has been very good in Q4, so I was wondering which branch did so well in Q4. Just to make sure that Sapient is not included in that number. I know that it is not at the global level, but I was wondering if it is not in the Q4 number. Secondly, just maybe if you can give us an update on your acquisition pipeline for this year, maybe just in terms of amounts and in terms of strategic fit. Lastly, yes, I was wondering if you could maybe elaborate a bit on the fact that you have been appointed recently Adobe preferred partner, which I think it is something very new for an agency. So I was wondering what could be the impact for you, in the midterm and what does it demonstrate, regarding your strategy and positioning. Thank you. Thank you. Henri? I will start for the first one. For sure, Sapient growth is not part of the calculation of organic growth in Q4. We stick to our rules, which are still the same since years and years. You have the answer on that question, and it's coming from all our digital operation with no exception. On M&A, we have a few operation which are under discussion, nothing major. And we look at either complementing our geographical footprint or our expertises. So when we are acquiring, it's an expertise that we are missing or that we need to strengthen, or it is a geography that we need to complement. Regarding Adobe, nice that you have noticed. Very few have noticed this aspect. It is linked to what we are doing with Sapient and the fact that we are offering to our client solutions which are very different from our classic competitors. And this is leading to a new trend of business, and clearly, it's part of the Sapient acquisition and what Sapient is providing to us. By the way, what we will be showing shortly is how Sapient will be taking advantage of the new organization and what will be the Publicis.Sapient platform, with very clear positioning of each of the brands, Sapient Consulting, SapientNitro, Razorfish, DigitasLBi. And there will be a clear focus for each of the brands in order to make sure that we are well-positioned to take maximum advantage of what the market can offer to us as opportunity of growth. And I think, Jérôme, that we have completed the question. Jillian, we move to the next question. I'll take our next question from Conor O'Shea from Kepler Cheuvreux. Please go ahead. Yes, thank you. Morning, everybody. A couple of questions from my side as well. Just to come back on the much better growth numbers in the fourth quarter, specifically relating to the U.S., it seems that the digital part overall accelerated a lot, but only, I would say, slightly in the U.S. So were there other elements on the U.S. non-digital side that actually had an impact? I think we saw some data coming through on the U.S. TV market being very strong at the end of the year. Perhaps you benefited from that. That is the first question. Then second question related to that, in terms of the digital acceleration, I think I am right in saying that the most noticeable acceleration in the digital was in Asia Pacific. Reading between the lines of some of the other data, it did not seem to be the BRIC and miss that part of Asia. Just wondering if you could add a little bit of color as to why that growth in Asia accelerated so much in digital in Q4. Then final question on margins, I guess maybe for Jean-Michel. Obviously, we have had some information on the restructuring costs and also the Sapient synergies, but just wondering, another maybe moving part is, I guess if account reviews are less intense in 2016, there will be less non-billables and costs of defending against that. There has been a lot of client rotation in 2015, so potentially lower margins on some accounts in 2016. Just wondering how you see those two inverse elements playing off against each other in 2016 on the margins. Okay. You want to start, Jean-Michel? I will start. If you remember what we said in last July, we said that we had some extra cost on non-billable cost to the clients, which are part of other operating expenses, as I said during my presentation. We had those few amounts. It was significant for H1, but they are less significant on a full-year basis. So this is not the most significant part of the weight of the other operating expenses line that you can see in the source of change. In 2016, we will have a reduction, but this will not be extremely significant year-on-year. This is the way we are approaching that. I have not all the details of all the countries regarding Q4, but I will give you a flavor. Conor, probably you can have an offline conversation with Jean-Michel maybe tomorrow or Monday, and he will give you more details. And obviously, if he gives you more detail on these numbers, they will be posted on our website in order that everyone can benefit from your questions. What we have seen now in the U.S., clearly the strengths of TV. And by the way, TV is no longer as simple as it was, and we will see TV resisting quite well. The share of TV in the years to come will remain relatively stable. Maybe there will be 1 or 200 basis point going down, and I'm not even sure. The market share of TV is rather solid. We are seeing, on the other media, some situation which are interesting to watch. We are seeing also the rise of the audience of internet, of the newspaper. I believe that there will be a time where they will be able to monetize this more interestingly. Finally, a big trend which we have to take into account, which will be massive, is mobile. That's the reason probably why Verizon has bought AOL, and it's also the reason why many of the mobile operators, the carriers, are thinking about getting a share of that business, which is becoming more and more important. If we look at ourselves and what happened. In the U.S., we have a situation with our clients and whatever it is, digital or analog, which has not been great in 2015 because with a full year with just above 2% of growth, we cannot say that we can dance on the tables and celebrate. Clearly, we can do much better. There are a lot of reason why this happened and very disappointing numbers of Q3. If we now look at Asia-Pacific, interesting. On digital, all the markets have been up markedly. China, Australia, India, to take the most important ones. The trend seem to be relatively solid. In China, there are today solutions which are extremely sophisticated. The way we are operating in China and the way Tencent or WeChat or obviously Alibaba and all these operations are working are far more sophisticated than what we are used to see on a Western world. There is a combination between social and commerce, which have to be noticed. There is some clever way of doing commerce at interesting moment. So it's a market which has to be watched because they are inventing new approaches which are good for their market and which, by the way, is fueling good growth for us. That is also the reason why you see that China in Q4 is at above 5% for the full year, above 5% for the group. So that is what I can say. I'm looking at all the number. We have also Latin America, which has been rather good in this field, but which is well below what they can deliver. Jillian, we move to the next question, if you would like to. As we have a number of questions in the queue, can you please limit yourself to one question per person? We will now take our next question from Chris Buxton from JPMorgan. Please go ahead. Yes. Good morning, gentlemen. Thank you for taking my question. Just a follow-up on you mentioning Tencent there. I read in December that Tencent had actually opened its data archives and was allowing a couple of your competitors to use their data. Do you see that as more of a trend in the sort of walled gardens and what that impact might be? Many thanks. This is something that we are asking for. We are already working. We have not made a lot of noise on this, but we are already working with Tencent on their data. We are asking also to work on the data of some of our partners in the world. This is a trend, and I think that the data will be an issue that will be tackled extremely seriously by governments. We have to be extremely cautious on the way we are handling this, because I would not be surprised to see the EU taking decision quite tough if there is not an agreement amongst the players to respect privacy and to make sure that we are not making a wrong use of the data. Jillian? We will now take our next question from William Morris from Nomura. Please go ahead. Great. Thank you. In terms of the internal restructuring, it is clearly quite a big change happening internally, and I am just wondering what gives you confidence that it can be completed by the first half. Also, I guess I am just looking in terms of the payback from that. You are mentioning growth should improve in 2017. But if you have a look at previous reorganizations at other agencies, actually other smaller agencies, it has tended to take maybe 18 months before we see the benefit come through, which would actually imply growth not improving at Publicis until the end of 2017. So perhaps your views on that. Just being a little bit cheeky, second question, quite a quick one, and it is for Jean-Michel. But what is the FX impact on revenues if you take the current exchange rates for 2016? Thanks. Jean-Michel? Effects on 2016, we do not have that information. We are building our budget using the current exchange rate. We are not planning for a change in exchange rates. I know that when you are building your models, you need to do that. But management-wise, to control what we are doing here, we are not doing that. We are not planning for a change in exchange rates. I am sorry to tell you that. You are right. When you look at a lot of restructuring that has been made in some of our competitors, it took a few years. When you say 18 months, I am struggling to see this happening in 18 months. Most of the time it happens three, four, five years after. I believe that this has to do probably with the way they were operating. Do not forget that when it comes to Publicis, we are, for management, on the low tech aspect. We are still acting like a family business. So we are acting like very poor people, managing fast, moving fast, and getting the result fast. We are very nervous when it comes to restructuring, and we do not like the plans which give us the result in 12 years or in 18 months, as you said. No, we move fast. This is our signature. When you look at everything that we have done in the past, you have a proof of this. This is proven. This is certified. This is something that you can see in our numbers every time. So we plan to do it fast. Hopefully, we will do it faster. I would be surprised that we are not doing it on time. This is what I can say. But we plan to do it fast. We move now to the next question. We will now take our next question from Lisa Hai from Jefferies. Please go ahead. Hi. Good morning. Good morning, Lisa. I just have one question, and it's on Publicis One. For the markets outside of the top 20, will there be cost savings from the reorganization, such as real estate? Definitely, yes. This will take time because when it comes to real estate, you need to bring all the people together. You need to come to the end of the leases or to subcontract. This is something that we have absolutely not taken into account in our books. In our forecast, this is something which will be coming on top. There will be more than this because the biggest advantage is that by putting everything under one roof with one clear leadership, we will be more competitive than any of our competitors, because we will be able to tap into all our resources, and we will be able to position ourselves as a very specific operation in a given country. This is where you should expect the biggest benefit. Obviously, there will be cost saving, and cost saving will be coming on top. As it is said in This is something which will be In French, we say, [Foreign language]. Again, you will go to French lesson to get it. Next. We will now take our next question from Dan Salmon from BMO Capital Markets. Please go ahead. Good morning, everyone. Maurice, I wanted to return to Sapient's IT services for a moment. First, just a big picture question. With the business now having been in the family for over a year, what have you learned about it that you didn't expect otherwise? Maybe in particular, what managing an employee base that's often working on more discretionary work is like, maybe Indian base of operations and what you've learned about there. Then just on the short-term trends, that business traditionally had a big exposure to two sectors that are under a little pressure right now in finance and energy, and I'm just wondering if we should have some muted expectations for that early in the year here, as in the past, we've seen that business go negative in cases like that. Thank you. We learned a lot. Thank you for your question. We learn a lot. We learn a lot on the way they are operating, the way they are structuring, which is extremely different from our own organization. The distribution system that they have, which is much better than offshoring or outsourcing. It's something which is a very sophisticated system by which they are using India as a global distribution system. It is not only the factory, it is also where they have some great consultant, and they have great engineers who are developing the whole concept. It's a system which will be applied, by the way, to some other operations such as DigitasLBi, so we will benefit from, and hopefully also Razorfish. As we can see, we are learning how to optimize our resources and how to take maximum benefit from. We also have learned a lot in the way they are managing their people, which is very different from ours. Obviously, it's a different kind of company, and it was seen as a startup. The system is quite different, and we are trying to see what can be applied on a broader basis and what we can also have, because we have a few good things at Publicis, can be applied to them. It's something which is extremely interesting. What is also interesting is that it's a purpose-led company with a high focus on the delivery and a system which is extremely disciplined, much more disciplined than what we see in the advertising world. Obviously, that aspect will be more complicated to apply to our world. Regarding the exposure on the two sectors, yes, there is a high exposure because they have these two verticals. For the time being, what we see that the possibilities for 2016 and the potential growth for 2016 is very good, and the possibilities are very good, and the potential is very positive. Because it's not only the fact that they are exposed with the current system, but they are developing new tools, they are developing a new solution, they are bringing something which is badly needed in those days by the financial sector or the oil sector. It's something for which we feel good, and we want to apply this to other sectors where we, Publicis, are extremely strong. We have many players in the automotive industry, so can we apply the same system to the automotive industry? The health sector, the consumer goods. We are working on this, and we believe that there is great opportunities which will probably be very good for all of us. I hope I have answered your question, and we move to the next one. We will now take our next question from Anne Kummer from Liberum. Please go ahead. Good morning. I was just wondering, when you guide to modest growth, what are the assumptions under that in terms of media reviews? How many media reviews do you expect next year? Do we expect same level than this year or less? How much of that is included in the modest growth guidance? Thank you. It's difficult to speculate on the media review, so I will give you my own feelings. I believe that we will not have a return of Mediapalooza, but we will have Mediapalooza part two, which will be probably less important than part one. If part one was at EUR 20 billion, maybe part two will be at EUR 15 billion. I don't know. I don't know the numbers. By the way, no one know the numbers. This is just speculation, calculation, which are rough. We have been enormously exposed, last year. If the wheel of fortune goes in the right direction, we will see some of our competitors more exposed because it's like the song, "Armstrong Gum," et cetera, and it will go to somebody else. I guess that somebody else will have the short straw. In that case, we will benefit from. This is what I can tell you. We have not made speculation on our growth number on this aspect because it would be far too speculative. We move to maybe the last question. Now take our last question from Claudio Aspesi from Bernstein. Please go ahead. Good morning. Two very quick questions. The first one is about the pricing environment. If you think back about the media reviews of 2015, and you think about the ones which you saw at the beginning, and the ones which you saw at the end of the year, have you seen any changes in the pricing environment? There is a lot of anecdotes about deteriorating pricing during the year. Do you feel the same way? Do you think we are getting to the end of the deterioration, or are you afraid of further worsening of trading conditions? My second question is about your 2018 targets. You confirmed earlier that you plan to retire in spring of 2017. Should we think of those targets as something that the new CEO could change, or should we think of those targets as one of the prerequisites for the choice of the CEO and therefore something that she or he will have to adhere to? For the last question, this is a question for he or she. This is a question for which I have not a clear answer. The only thing I can say is that obviously, everyone in the current team has been involved in what we have done. It is not something that has been decided on my desk and by myself. But we shall see. I think we have time for seeing what will happen. Regarding the change in the environment, Claudio, you are 100% right. You cannot have such a turmoil in the media reviews and all the noise which is made around without consequences on the pricing. The pricing is on twofold. On the one hand, you have the price of media space. Clearly, this is going down and there is some competitors who have made bet on the price that they can get, that maybe they have also been able to get some very good price, I don't know. But there are some interesting aspects which may lead to an interesting situation when they will look at the numbers promised and the numbers delivered. But clearly, there is a huge fight. I will not go into the details. We have been involved in many pitches. We know exactly what happened, and we know that in some cases, it was about the performance and quality of the services. in some cases, whatever the client was saying, at the end of the day, was making the decision on the numbers and only the numbers. So it's a situation which is putting pressure on the price, and the media are under huge pressure. That is one aspect. But there is the other aspect, which is the fees. Clearly, the client want more for less. Part of the restructuring that we are doing, or the reorganization or the transformation, we can call it the way we want, is also to come to a situation where we can deliver more with less. We have to. We have to create an organization, and that is what we are trying to do, in order to deliver more to our client, with less cost to us, not only to protect our margin, it is also to protect the possibility of investing, to stay competitive and to continue to grow. So we have to do it, and this is one of the purpose of what we are doing. So thank you, Claudio, for your last question. I would like to thank everyone on behalf of Jean-Michel and myself for your participation to this presentation, the Q&A session. We look forward to speaking to you again with the numbers that we will be posting in April regarding Q1. So thank you and Merci.