Earnings Call: H2 2014

Feb 12, 2015

Everyone. Good morning to one and all, and thank you for being with us for the presentation of our results, and above all, to look back over 2014. I have Jean-Michel Etienne with me, CFO, and I am very pleased to be able not only to share our results with you, but also to field your questions with Jean-Michel afterwards. We have a few journalists with us, more on the phone. Welcome to all of you. These meetings, as you know, are transparent, and we would be grateful if you would allow us to prioritize questions from analysts or advisors who have decided to take part in the meeting. We are on webcast and the presentation is already on our website, and it can be accessed by one and all. A word on 2014. It was a year which brought with it a raft of changes and news and new developments in all fields, macro, economic, and politics. The first event, of course, was what happened in and around China with the switch from an economy based on investment in infrastructure towards an economy which is driven far more by consumer investments. With two major events that affected this year and which will probably continue to impact 2015. That is the attempt to curb corruption and also to fight poverty. Somewhat less than successful to date, unfortunately. India and Brazil have had a patchy year, not only because Brazil was not the Cup winner, but also the fact that in the implementation of their strategies. The difficulty is perhaps not all behind us yet. Russia is hurting from the sanctions. Price of oil has done. Ruble and its economy by and large have had a tough time. Europe also patchy. The southern countries desperately fighting their deficits and debt, and are having great difficulty generating the type of growth that generates jobs. Whereas in the north, rather better with not only balance of payment surpluses for some countries, but also highly satisfactory growth and job-generating growth with extremely low unemployment rates. Looking now towards North America, we have a pocket of growth. My reaction is to think that we talk a lot about emerging economies, but the real emerging economy today, if you look at the nature of its growth, and particularly in terms of absolute value, the real emerging economy is that of the U.S. There are several positive and reassuring indicators showing us that construction, innovation, CapEx and practically full employment. Looking now at our industry and looking slightly more closely at what happened over the year. Our forecasts in October or November of last year have had to be adjusted downwards two or three times. Our industry has been severely impacted, but this was not really a surprise by developments in digital. This has led to major changes both in marketing, in communication, and also corporate business models are increasingly being challenged. Publicis had a patchy year, and I am putting this in charitable terms, but I was entirely transparent on the subject. I shall remain so. I think it is the only way to go. The first part of the year up till, say, September, was a year in which, frankly, we were not particularly good. In fact, we were not very good at all. Insufficient growth. Our growth was weak. It was not a reflection of our capabilities. It was not either a reflection of your expectations. There aren't many reasons for this, but the single most significant reason is that our managerial teams since fall of 2013, who have been reduced to skeleton levels, were perhaps overstretched by other projects which did not come to fruition. Q4 turned out far better than the aggregate for the year and also far better than our own expectations. Growth was solid, 3.2%, nothing miraculous, but solid. This is a good sign because it reflects the good health of our customers. In all fields of industry, they have increased their level of investment towards the end of the year. But also it means that projects were being successfully completed, and the emerging markets contributed to the movement. Our performance there was a satisfactory one. As we'll be seeing in the financials and as the presentation proceeds, the Publicis model is doing well. It is robust. Our strategy choices over the past few years are the right choices. Sometimes choices are a gamble. Here, we have clear evidence that strategy options, first of all, during the beginnings of globalization, then during digitalization, were the right choices, which have stood the test of time and have turned out to be the right decisions. This has taken us outside our core business, and this is the main take-home today. Communication has always been our core business. But today, we're extending beyond communication into marketing, omni-channel communication, and consulting. So as to be able to support our customers in their efforts to resist uberization and help them transform their business model to adapt to a market which is now driven by innovation and by the disruption of existing models. We are aware of the requirements of our clients who are not entirely happy with the solutions offered by the market, and this was behind the acquisition of Sapient. Sapient is a gem. When I called it the crown jewel, I think the expression was appropriate. They're an omni-channel leader. 32% of what is sold via internet in the U.S. goes through platforms owned by or developed by Sapient. So they're a major player in electronic trade and trading in the U.S. They're also a technology leader. They were founded in 1990. It was their core business and also consulting. This transaction will bring us into a world much closer to internet, we're on the first step toward or into internet. There is no equivalent. It's not just a matter of superiority. The fact is that there is no other offering besides Sapient's, which combines creativeness, knowledge of brands, of consumers, of technology, and the new world of internet. We are now the only ones who can do that. Our competitors do not in any field. So to face that new environment, we have brought on board a new and talented generation of leaders. The management board now has Anne-Gabrielle Heilbronner as a member. We now have our Directoire+ with Laura Desmond, Steve King. Laura Desmond, CEO of Starcom. Steve King, CEO of Zenith. Arthur Sadoun and Rishad Tobaccowala, Chief Strategist. Now, since the signing of the agreement, also Alan Herrick, the CEO of Sapient. The group is strongly cash positive, which has allowed us to increase our dividend by 9.1% and to pay back the ORANEs, our ORANEs, substantially before maturity. We are sanguine for 2015, and we consider that Publicis will resume a more normal, quote unquote, growth rate or level. The first quarter will be slow, perhaps even negative. The pace will gradually quicken after that, and we will hit cruising speed as of H2. More than 50% of our revenue will come from digital in 2015, and we shall be enjoying Forex effects because 50% of our business is on the American market. This introductory statement was a bit lengthy, I realize, but I am sure you will agree that it was relevant. With your permission, I shall now go to the financials. I shall take the first part, then Jean-Michel Etienne will be giving you the glamorous, the sexy part, the results, properly speaking. Then I shall come back to talk about outlook and where we are going. You have the disclaimer. I forgot to point out that as always, this will be in French. There is simultaneous interpretation available. I am sorry, we have to do it this way. That is custom. You are invited to read the disclaimer. It is on site. I am not going to spend any further time on this. Revenue. Let us focus on Q4, up 11.5% to EUR 149. Setting aside exchange effects up 7.5%, 4% of the increase is due to Forex and organic growth 3.2%. So EUR 7.255 billion, up 4.3%, 5.6 not counting Forex. Organic growth 2% for the entire year. 1.5% at the end of H1. Now, an overview of the highlights. Revenue up 4.3% posted, organic 2% versus 2013. Operating margin EUR 1.182 billion, up 6.8% over last year. It is 6.8 versus 4.3 increase in revenue is a significant figure. An operating margin 16.3 reported versus 15.9 for the previous year. However, like last year, we announced the result after eliminating one-offs, and we decided to do the same thing in 2014. EUR 1.189 million, up 3.8%, versus 16.5% in 2013 and 16.4% in 2014. Jean-Michel Etienne will be dwelling on these figures at some length. The percentage of revenue group share EUR 829 million, up 4.7%. Headline EPS diluted EUR 3.64. I was about to say 800. No. Up 2.8%. Free cash flow, regularly improving. 2013 enjoyed one exceptional event. The dividend, which we submitted to the board yesterday, and which will be EUR 1.20. This will be put to the AGM at the end of May, up 9.1%. Let us now have a quick look at the geographies and the geographical breakdown. Here you see that Europe is still in a bad position, even in Q4. In Europe, we have a negative organic growth of -1%. This clearly indicates that the quarter was not an end to the difficulties we experience in Europe, despite the generally good results. North America up 2.4% to EUR 986 million. We will shortly see that without the Razorfish impact, the numbers would have been even better. Obviously, the good news come from the emerging markets and the rest of the world with a two-digit growth. Look at the full year revenue by geography, and you see that Europe is still slightly negative at -0.6%. North America posts 2.3% increase over the full year. If you exclude the Razorfish effect, the numbers would actually be +4%, which is much more satisfactory. BRIC and MISSAT 3.5%. Rest of the world, 6.7%, which all in all brings us to a 2% in organic growth over the full year. Not anything to write home about, but a significant improvement compared to what we posted over the first 9 months of the year. I decided to identify a few countries like that. It's not extensive, it's not a full list, but they may be the more symbolic or important countries. We've identified three growth bands above 5%, less than 5% and negative growth. South Africa is negative because there was a budget lost in such and such. Otherwise, the business is actually quite good. As for Canada, we're only just negative. Colombia, Korea too. Then we have the usual string of countries in Southern Europe, Spain, Greece, Italy, Portugal, and a handful of others who are unfortunately in that category. United Kingdom, for instance. In the U.K. we have the Razorfish issue, which basically lost half its business with most of our international customers, such as BlackBerry and Motorola, were being managed from the U.K. and other blips in the business at Publicis Worldwide. From 0 to 5% increase, we have significant players here, Germany, Brazil. Brazil is important for us. China, France, India, which has picked up nicely. Japan, Poland, Switzerland, and the U.S. obviously. Then above 5%, then we have Saudi Arabia, Argentina, Australia, Costa Rica, Mexico, and that's significant. The United Arab Emirates, which is also important and significant for us. We're leaders in the region. Netherlands, Russia, despite the current circumstances, and Singapore too, which is also important. Now if we posted our numbers in dollars, we'd have a Q4 increase worth 11.4% and a full year increase of our revenue worth 4.3%. Now a quick focus on digital. You know we've done a lot on digital over the last few years. It is a great priority and zooming in on digital I think makes a lot of sense. Digital represented 38.4% of group revenue, in 2013. Let me say that again. Almost 40% of our revenue was derived from digital in 2013. In 2014, despite the Razorfish issue, we have almost reached 42%. Excluding the Razorfish impact, we would be toying with the 44%. Clearly this illustrates the significant improvement. This in the field. This leads to a 7.3% organic growth and excluding Razorfish, the organic growth would have been 10.8%. That in fact excludes the actual growth that the brand should have produced also. Just to say that our digital business is doing well, thank you. Fast growth markets, and I'm not sure that the label is actually still relevant nowadays given the situation of emerging markets. All in all, the impact is pretty much the same. The optical illusion here, it relates to a posting issue in 2014 on investments and our CapEx focused mainly on mature markets and more specifically in digital than in the emerging markets. Yet these emerging markets do still post some almost 5% organic growth. When you compare that to the 2% growth for the whole group, you realize clearly that the two strategic pillars of the group have brought a significant contribution to the group's business. Now look at the geography and activity matrix. I think if you look at this like this, you can identify a number of things to say. First of all, digital in emerging markets experiences 29.4% growth for the rest of the world, 33% for BRIC and MISSAT. That clearly shows that the business is growing nicely on these markets and that these markets are catching up with Europe and the U.S. In Europe you still have some 9% of growth for digital and 3.2% in North America. If you discount the Razorfish impact, in fact, North America would almost reach the 7% mark, which would be significant. We therefore can see something that we're familiar with for some time and which has helped us guide our strategy, and that is that analog has been negatively impacted across the board. Growth is either negative or very sluggish. I think that's pretty self-explanatory. Again, discounting Razorfish, the North America organic growth would be 4%. Right. So there you have it. I think I'm done with my introduction. I'll now give the floor to Jean-Michel Etienne, who will give you a detailed presentation. Jean-Michel, you have the floor. Good morning, everyone. Let's have a quick look at our relatively detailed view of our numbers. If you look at page 13, look at the consolidated income statement. First of all, revenue, EUR 7.255 billion, so up compared to the consolidated income statement for 2013 by 4.3%. As Maurice Lévy has said, EBITDA and the operating margin have both increased by rates that are above the rate of increase of the revenue, which clearly means that we have improved our management of cost. Operating margin has gone up 40 basis points to 16.3% as a percentage of revenue. But the operating margin included EUR 38 million related to the merger with Omnicom, and in 2014, there was the Sapient expenses and also the reprocessing of expenses related to Omnicom. All in all, these expenses for mergers and acquisition are worth some EUR 7 million. So the operating margin was calculated by discounting these acquisition and expenses, and the reworked or reprocessed organic operating margin posted 16.4%. Now, we also see that there's an impairment loss, a one-off impairment loss of EUR 72 million. EUR 24 million, I think had already been explained relating to BBH when we met in June. And now, another EUR 40 million for MSLGROUP. Last year, we had a non-recurring income worth EUR 69 million, as you can see. This was mainly due to the sale of our Interpublic shares that we had held since the FCB operation in 1998. So reprocessing these numbers was included in the net result, EUR 829 million in the headline group net income, up 4.7% on 2013. On the next page, you have the headline group net income, and you'll find on page 57 in the annexes, the way in which we get from the headline group net income to the headline group net income. This is something that we've been doing for years. We never introduced it previously, but the headline income is worth mentioning this year given the circumstances. Page 15, you'll have a presentation of the operation margin. Staff cost, 61% of revenue, down from 62% last year, an improvement of 20 basis points. Last quarter enabled us to make up for the lagging behind that we'd seen in the beginning of the year. Special measures, including the slowdown of new hires in some entities. So the operating margin for 2014 is 16.4%, down 10 basis points on the previous year. But given the sluggish growth of 2014, I think we can say that this is actually quite a good result. How do you go from 16.5% in 2013 to 16.4% in 2014? Well, there's nothing major for this year, but we probably need to discuss these things all the same. Staff costs were kept in check nicely over the course of the year, as you can see. Client costs have negatively impacted the results worth 10 basis points. New business costs are non-chargeable to our customers. Then in 2014, we still had a positive contribution of the shared services and the occupancy costs. So our real estate policy, that's another 10 basis points on the margin. On G&A, well, there are all sorts of things that come into factor and come into play, and all in all, it's almost a neutral contribution. So our margin for 2014 could have been, should have been 16.6%, but then we suffered the Forex impact, which took it down 10 basis points and another 10 basis points related to acquisition, which brings us to 16.4% in the so-called waterfall. Page 17. Let us look at the net financial cost. Increased expenditure worth EUR 7 million, all in all. This is particularly due to the fact that in 2013, we'd had Forex gains worth EUR 7 million, which we didn't secure in 2014. In a way, they were opportunistic Forex gains that we didn't enjoy in 2014, and I think this is the main explanation. Then cost of net financial debt is down EUR 3 million. The reevaluation of earn-outs is less positive in 2014 than 2013, but still is positive. And this clearly gives some positive outlook on the entities that we acquired under earn-out. So every cloud does have a silver lining. Then all in all, net financial expense is EUR 28 million compared to EUR 21 million for 2013. Effective tax rate now. It has improved slightly and now reaches 28%, a 40 basis points improvement. This is mainly due to the fact that we have been using previous tax losses. Page 19, earnings per share. Diluted, it's worth EUR 30.16, down a bit compared to 2013 because of the non-recurring non-cash events. But once you reprocess them, you see that the headline EPS diluted actually increases by 3.8% and reaches EUR 3.64. Now, the balance sheet to be found on page 20. Here we have a very positive situation. Year end 2014, the working capital requirement, which is negative, remember, in our business, is actually improving by another EUR 300 million. Our net cash position is improved EUR 985 million at year end 2014, and a EUR 392 million improvement on the previous year. Total equity reaches EUR 6,115,000,000, up some EUR 900 million. This was prior to the Sapient deal. The situation has in fact improved further following the payment of Sapient on February 6th. Cash net position. We are improving our position for the first time for a long time. And net cash is positive, and average net cash is also positive. You know that we pay great attention to the average figures over the whole year because of the seasonality of our business, and this is actually very new. We have EUR 93 million worth of average cash net over the course of the year. The numbers will be changed following the Sapient purchase. Free cash flow on page 22. Free cash flow is worth EUR 836 million. It is all in all on an upward trend. Yes, the numbers are down compared to 2013, but there was a tax rebate and reimbursement in the U.S., which brought our taxes paid over there down quite significantly. If you discount that, you see that there's a significant and constant improvement over the last three years. Use of cash now, page 23. Free cash flow before changes in working capital requirement is important. You see that the changes in working capital requirement has been worth a contribution for EUR 66 million. We thought that EUR 355 million in 2013 was a high water mark. We, however, still managed to improve the situation in 2014, which is cause for satisfaction. Acquisitions, net of disposition, EUR 400 million earn-outs, and buyouts worth EUR 159 million in cash payouts. Dividend paid, EUR 126 million, mainly because of the scrip dividend payment and the popularity of that since it's been established two years ago, if I'm not mistaken. Page 24, financial ratio is difficult to, well, impossible to calculate them this year because of the net cash position. These will, however, be relevant once again when we give you the numbers following the Sapient acquisition. The dividend now. The dividend suggested to the 27th of May AGM will be EUR 1.20, up 9.1%. Given the scrip dividend option, and its success in the previous years, we will make this possible once again, and our shareholders will be able either to get their payment in kind or in cash. As for the payout ratio, we've decided to go beyond our 35% commitment for 2014. The proposed payout ratio actually is 37.3%. Liquidity at year's end is EUR 6.6 billion, an exceptionally high number. Simulations with Sapient would bring it down to years end 2013 levels, somewhere around EUR 3.3 billion. It's worth remembering that. Finally, before I conclude, let me give you a quick presentation on the return on capital employed. This ratio is to be found on page 28. It now stands at 13.4% for 2014. Since 2011, we've been constantly above 13% and actually above the average over the last eight years, which stands at 12.7%. It's also beyond the group's WACC, somewhere around 7.67% if I'm not mistaken. The difference between ROCE and WACC is in fact an acknowledgment of the value creation. I think that's it for me. I'll give the floor back to Maurice Lévy. Thank you, Jean-Michel. Let me start with a focus on Sapient, and then after that, a word on the outlook for 2015. Sapient then. Let me try to describe our reasons for entering into this transaction. We are already fairly strong in digital with Razorfish, which despite its difficulties in 2014, is a very high quality agency with DigitasLBi, with Rosetta. So why was it necessary to invest so strongly in Sapient? Well, the answer lies in what is going to happen to our economies over the next few years and the type of problems that as a result our customers are going to be facing. There are two major trends. Firstly, the trend towards convergence, whether physical, virtual, connected objects, everything is converging towards a digital environment without borders. Secondly, the age of empowerment of consumers, whereby consumers can do their own thing. They can become joint authors of or issuers of messages. This is a highly different way of doing things from what it was only recently. This all means that our customers find themselves facing a world entirely different from their experience to date. Make no mistake about this, it is not just a minor adjustment. It is not just a matter of moving forward fumble, adding a bit more or less digital or organizing a campaign. It is something far more profound than that. I mentioned the risk of Uberization before. When Uber set up its operations, its value skyrocketed very quickly, and at the same time, it made business models as ubiquitous as that of taxi drivers completely outdated. Imagine applying the same impact to a company with major logistics assets, with plants and so forth. For our customers, it is vital to at least think about where they are going and what this means for them in terms of marketing, in terms of communication, in terms of their underlying business model. This is the real reason why we felt that this investment was appropriate. Sapient operates on three markets: consulting, marketing, storytelling, and content. Omni-channel, obviously, and technology and services. 33% of their revenue comes from consulting and marketing, new storytelling and content or omni-channel, which obviously blends into technologies and services, 67%. Dollar 1, 2, 3 through 6 and so forth. This means that for $1 in ad spend, $1 spent in consulting generates between $3 to $6 in technology and services in a recurrent fashion. This is also worth noting, and it is important to remember as we move forward. I am not going to go back over the details. You have all this. All of this was abundantly posted. This is Sapient and what the three divisions respectively represent. Firstly, SapientNitro, two-thirds of the aggregate. Then firstly, the global markets, 20%, and government services representing 5%. Government services and global markets are going to be merged to form Sapient Consulting. So global markets plus government services. The timing. On November 3rd, we announced the proposed acquisition. This was done pretty promptly, but the approach was very gradual. It was not an overnight operation. It was a process which started back in 2011 with regular contacts with Alan Herrick. In early 2015, we secured all of the regulatory approvals required to complete the transaction. This regularly meant that we had to postpone the operation, but it was because of the need to wait for CFIUS approvals in the U.S. Same thing for antitrust clearance in the U.S. and the equivalent in Germany. February 6th, closing, and we wrote a fat check, an experience Jean-Michel Etienne did not really enjoy. Then we got into the integration process, which is on track. The contacts were conducted on both sides, and the group is run by Anne-Gabrielle Heilbronner and Jean-Michel Etienne on our side. On their side, the main corporate leaders. All of this was extremely encouraging, and the first indications are positive. You know all about the acquisition financing. Bankers have done a remarkable job implementing all this with a bond issue on the Eurobond market in two tranches swapped into dollars. $700 million at 2.92% due December 2021. $600 million, 2.9% due December 2024. $1.6 billion syndicated loan, LIBOR plus 60 basis points, due in 2018, 2019, and 2020. Part of the group's liquidities were used to complete this. If we were to go through the 2014 exercise to determine the digital proportion, in 2014, analog would be a little over 50%, 50.7%, and digital 49.3%. Clearly, we are a very strongly balanced organization between analog and digital. Projecting into 2015, we know that we're going to be well above 50% digital. This chart, you can read through. It may prompt you to ask questions. It is based upon the figures posted as of June 30, 2014, and for the past 12 months since then. These were figures that are accessible, visible at end of September, end of Q3. We don't post all our figures, so this is a pro forma, if you will. It's not intended to be a precise reflection of the situation, but it gives you a pretty good overview. The conclusions are that Sapient's growth was 14%, while for Publicis, growth was 1.2%, so really substantially lower. The combination, when you combine the two, aggregate growth is almost 3%. EBITDA 17.2% for Publicis. That the same level applies after synergy on run rate. In other words, after it's been fully applied and discounting cost of synergy. 15.5% margin and 10.5% for the two organizations, respectively, over the past 12 months. This gives us an average of 14.9% operating margin. With run rate synergy, the figure is the equivalent 15.5% Publicis figure for the period. 75,000 headcount. Looking now at how we deliver synergy. Delivering synergy involves a cost. Restructuring, reorganizing, reallocating. All of this job is going to cost something like EUR 50 million. EUR 15 million in 2015, EUR 25 million in 2016, EUR 10 million in 2027. Probably rather less overall, but we prefer to avoid unpleasant surprises. So it's going to be one-off year by year. However, the synergy, of course, is not one-off. It's cumulative. It is recurrent, and it will reach EUR 10 million after Y1. A little below corresponding cost. EUR 30 million, which is substantially above cost for 2016, and then EUR 50 million on a run rate basis. It is there that the effects of synergy will be fully visible. Obviously, we're going to try to accelerate the process as far as possible. Given the spirit of the group working on it, we are not worried at all about the chances of the odds in favor of success. This then is an acquisition which was actively sought by ourselves, but also by management. They are behind the project. They can see why it's an attractive project. Since the original announcement, we've had a number of requests from our customers to meet our colleagues in Sapient. Which brings me to 2015 and the outlook as we see it today. Let me start with something rather important, which is the fact that thus far, we were viewed as a communications leader and the leader in digital in our field of endeavor. Let's be modest. From that level, we are going to progress to being an organization which is going to do its core job as a communicator. Obviously, we're going to be sharing creativeness. We're going to be working on brands, helping our customers to break new ground, but also help them transform their communications, their marketing models, their access to omni-channel, but also their business model itself. So we will be a leader in that field of transformation. Not all that difficult because we are actually the only ones who have a capability to do that. We shall be the unchallenged leader in a category in which there are no other contenders. Let's try and help you re-rate Publicis. There is one very important thing, which is the market we are going to find ourselves working. What will be the market share? This will no longer be the EUR 400 billion, but more like EUR 500 million, including marketing, new storytelling, content, creativity. It's not just that. That's the market on which we are already working with most of or against most of our competitors. There is another market now opening up, which is the consulting market. The roughly $130 billion market, and then the tech and services market, EUR 900 billion in all. We're talking about over EUR 1 trillion, in other words. Simply because both in consulting and in technologies and services, it is not our intention to become the competitors of Accenture or other high-quality organizations who are already providing services in fields in which we do not intend to venture. We will stay where we feel we have expertise. We will help our customers reposition themselves on their markets. In summary, we'll have a little over 50% revenue digital as of 2015. Creating a platform, Publicis.Sapient, 22,000 people, is a major stride. Having all that talent in a world where talent is so rare. Having a new capability in consulting, e-commerce, in production platforms. We shall have a very robust home base in India. In other words, a market which by 2015 will be number 2 world market on networks and mobile, and unique expertise in global distribution campaigns out of India. Also an enhanced ability to commit to strategic partners with players such as Google, Facebook, Adobe, Microsoft, and so many others. This is a strategy which we were the first to initiate. Back in 2017, we started developing strategic relationships and alliances with those platforms. Today, we are quite incontrovertibly the player having the greatest clout in that field and above all, the strongest alliances. Alliances matter. There can be no question of Publicis trying to transmogrify into a tech company. In tomorrow's world, the spirit of collaboration will prevail. The major operations in the future will entail a number of partners. There will be very few organizations that can do it all alone. Now objectives. Priority is organic growth. Let me be very clear about this because I don't want you to go thinking that we are naively considering that having posted growth of 3.2% for Q4 in 2014, we are quite simply going to coast on into a rosy future with all the effort behind us. No, the effort is out there waiting for us. But we know that, and that's a good thing. Our teams also are aware of that fact, and I must express my gratitude to them for their commitment. It is most impressive to see how not just the executives and the teams running our various associates throughout the world are so highly motivated and are out there busy demonstrating that Publicis is back and that we will be back in growth. We now have a year in the course of which we're going to outperform the market sustainably and strongly starting in 2016. That 2015 is going to be a slightly slack year. It's going to descend and then pick up. It's not really a dip with the shape of a V, but more like a hollow. We're going to have to build the P.S platform, develop the new consulting offering, the new marketing strategy, and how we go to market, how we present ourselves, and then the implementation of the synergies plan. That is the process of integration. Another important point for our shareholders is the early redemption of the ORANEs, which is to be approved by the AGM in May 2015 to be executed probably in July 2015. The reimbursement will be either in the form of treasury shares, 50%, or share buyback, 50%. In other words, we're not going to be creating new shares to pay back the issue. This should have a positive impact on dilution. Looking now at the growth numbers. This was what I was trying to describe in sign language a couple of minutes ago. The forecasts by Zenith are roughly 4.9%. We know that ZenithOptimedia's forecasts are the most reliable forecasts on the market. It's the most solid indicator. 3.5% in 2015. This will still be our reference because Sapient's growth is not being factored in in 2015. So we're looking forward to a dip in Q1 and then a gradual rise giving us this Nike-like swoosh you have on the screen here. Then organic growth achieving cruising speed by early 2016, by which point we should be regularly outperforming the market. We don't intend to rest on our laurels and consider that the hard work is behind us, nor do we think that growth in line with the market growth would be satisfactory. I think the next thing is worth reminding, remembering rather, and that is to quickly have a look at how we're going to manage all this in 2015. We have a new board. The official board, and I still chairman, includes Jean-Michel Etienne and Anne-Gabrielle Heilbronner and Kevin Roberts, who'll be doing two things actually, two very important things. First of all, he will be head coach. So he will coach the teams, and that's a great talent, something that he really can do. At the same time, he'll also be the Executive chairman of Saatchi & Saatchi Fallon. Then we have the Directoire+, so to speak, which will include the leading operational managers, Laura Desmond, who's Global CEO of Starcom MediaVest Group. Alan Herrick, who's CEO of Publicis.Sapient. Steve King, CEO of ZenithOptimedia. Arthur Sadoun, CEO of Publicis Worldwide. And Rishad Tobaccowala, who I know you know is and will remain our Chief Strategist. Then we have our P12 executive board will meet next week. You can see the names up there. I don't want to read them out for you. 2018 briefly. After all, that is our focus. Our work for 2015, '16, '17 will be precisely to reach the goals that we have set for us in 2018. The first one Given the Sapient acquisition, we will be even more active and involved in digital and internet business. More than 60% of our revenue will be drawn from digital business. We expect that we should get a faster organic growth, probably outperform the current statement by 200 basis points, and we will do what it takes to do that. We expect an improvement of our operating margin somewhere between 200 and 400 basis points. Now that we include Sapient, we have an operating margin somewhere around 15.3. The target for 2018 is to reach anywhere between 17.3 and 19.3 operating margin. Obviously, by 2018, we will revisit the payout rate. Remember that we have said that we would be within the market average. The current average in our market is 42%, and that is the goal we have set, as you have seen. We have now reached the 37.5 payout rate, and we should be able to get there. If the margin has changed by then, we will adjust our position accordingly. Thank you very much for your kind attention and my apologies for taking a little too much time, but I think that you really needed to get a full and comprehensive view of things. Jean-Michel and I are available to answer your questions, so questions either put to us here in the room or over the webcast. Yes, question one. Good morning. Connor Archer, Kepler Cheuvreux. Three questions. You said, sir, that you expect a slight slowdown on organic growth early in 2015 and that you expect to reach your cruise speed early in 2016. I think that you had previously expected to reach your cruise speed in Q3 of 2015. Have you changed your mind? No. Let me just say this again. In a way, there are two cruise speeds. There is, first of all, the 2015 cruise speed, which is not what we feel is the right level. But in Q3, we should reach the right level that will help us get to the right growth, the growth we expect for the whole year. Our goal is obviously not to be part of the market and to get the growth that we will get for 2015, but on the contrary, to overperform that, and we should see the impact of that in 2016. That is what I meant. You may have misunderstood me, or I may have misspoken. Does that mean that the sequential improvement we have seen in emerging countries can be extrapolated for 2015, or was there a baseline impact? Basically, could we get a breakdown of what you have done to significantly get an increase of organic growth in emerging countries? Well, on the emerging countries, we will focus on savings, we have said that, but we will focus on hard work in the emerging countries, and our position should be much improved in emerging countries. Now, again, there is no reason to expect things to happen overnight over Q1, but there will be a significant and visible improvement over the course of the year. Secondly, on digital, even though you have a good organic growth level for the whole group on Q4, I think I understand that the organic growth on the first nine months was somewhere around 9%, 7% on average over the course of the year. We could have expected the Razorfish impact to be less burdensome. Well, it is less burdensome, and it will be less felt significantly, actually will disappear from Q2. A third question for Jean-Michel Etienne, if you will allow me. There is a significant amount of dollar-denominated debt. Can you tell us a bit more about the financial expenditure for 2015, maybe give us a bracket? Well, on financial expenses, as you have seen, our debt was either, yes, issued in dollars, or it is true that we had a Eurobond that was then swapped into dollars. So I think you have to take into account, in that case, that is a reference exchange rate. 50% of our debt is fixed rate and 50% is variable rate under the variant deal. So we are still crunching numbers, but I think we can expect somewhere around EUR 80 million of additional financial costs. But fear not, we shall tell you more about it when we have got the numbers. We are working on it. Obviously, sir, as Monsieur Lévy, we will work on bringing these costs down. Question under placard number 2. Good morning. Jérôme Bodin, Natixis. Two questions. First of all, on the emerging countries, you had, I think it was in Q2 or Q3, you gave us a focus on China. Can you tell us more about the trend there? I know that India had been difficult, but I think that there has been a very significant upswing. Maybe you can tell us more about that. Second question, you have told us that customers have been very pleased and making good noises following the Sapient deal. What about your technology suppliers? What are they saying? What about Adobe, for instance, what are they saying? What about your strategic partnership with Adobe? Are you going to expand it across the perimeter? Well, on emergings, maybe we need to zoom in on 3 countries. I will throw in Brazil, so to speak, as a bonus. On China first. The impacts and effect we experienced at the end of 2013 with a drop in significant investments in luxury, for instance, for the reasons we know then, there were difficulties in the automobile industry and other sectors in Q1. We really felt that there were delays and things like that. This being said, we felt that the economy was improving, but was not ticking nicely yet. In China, there is still significant improvement to be made, and we do expect quite a few new deals and new opportunities. We feel, therefore, that most of the market problems and operating problems we had are a thing of the past. It does not mean that it will be simply a walk down the garden path. There may be a few hiccups on the way, but we can expect decent growth. India now. Q4 was exceptionally good, particularly so in digital. We saw there, for instance, that we got a very big boost on our digital business through a number of Indian customers and also through significant partnerships with a number of international entities. So things are going nicely in India. It does seem that Prime Minister Modi's strategy is working. A number of companies want to go into India, and things do seem to be going in the right direction. On the Brazilian market, the situation is more varied. There is, for instance, the fallout of what is happening surrounding the major corruption scandals. This is obviously disruptive. The Brazilian press is printing many column inches on these corruption scandals, and you can't really feel a great popular support following Dilma Rousseff's re-election. The upswing may take a little longer to materialize, and the economy does seem to be dragging its feet, and we expect the growth to resume in Q2. On Sapient now. I think there are a number of comments I want to make. First of all, there is very real enthusiasm, or at least interest, on the part of our customers. When I informed them of the closing, basically telling them that the deal was done, I got all sorts of emails over the weekend congratulating me on the deal, but also inquiring as to when they might be able to meet with people from Sapient. Appointments are being made, presentations are being drafted, and we do intend, even though we haven't yet got a date, intend to organize an event here in Paris and present Sapient to analysts, investors, and also potential customers. After all, in the U.S., they are very well-known. In the U.K., they're pretty well-known. They have a handful of very large customers. But here, these people are not well-known at all. A handful of companies do know them, but I really want to make them better known. What I'm saying is that there does seem to be a very real appetite and interest here. On the technology side of things, yes, there are also many requests. We also have a variety of agreements. We will have to work over the course of the year in a sensible, harmonious way, to pick the right one deals and make the right choices. Sapient had a number of agreements with technology companies. They're interested in what we're doing. But realize also that the major operators in e-commerce, SAP, IBM, and others, are obviously very much interested in what we're doing. There are all sorts of talks underway, and this should lead to something positive. But for the moment, we haven't made any choices. These are difficult choices to make, and we wouldn't want to rush into them. Yes, here. On Q1 and a slight dip in growth. If you look at the Q4 2013 figures, we're talking about a variance of about 2.6% on a comparable basis. There is apparently a slight slowdown underlying this. Could you expand on why you're expecting a growth dip? Are you being conservative because you said 1.5 for Q1, that turned out to be a little over 3. Second question to Jean-Michel Etienne. On the negative Forex impact of 1.3, you had a 10 basis points impact. If you look at the spot today, you should have +5% impact on growth. So 50 basis points on the margin. Jean-Michel Etienne could enlighten us. On Sapient, since you closed the transaction last week, it's now yours. Could you talk about the Q4 performance? There was a slight slowdown in growth in Q4. At Investor Day, there was a figure indicating even less growth in Q4. Could you fill us in a little on Q4? I'll take the first question and part of the last one. Jean-Michel Etienne will field the second question and part of the last one. The first question, the answer is, well, a bit of both. We were, to some extent, being conservative. We always prefer to step forward cautiously. There was also a timing effect, a timeline effect. In the ad spend market, an enormous amount of business is dependent on product launches and activity levels in H2. There were far more launches in H2 than in H1, quite simply. This applies to a lot of consumer products. For instance, in the auto market, there's an enormous number of new product launches or things that are about to emerge. I wouldn't want to say any more about them here and now. If you've been following events in the U.S., the motor show in the U.S., there are going to be 60 launches in the U.S.A. alone, just to give you an idea. Many of these launches will be in H2. Which leaves us with a schedule which is not particularly good news in terms of the balance between H1 and H2. There is no real issue here. In our overall business, there is not one particular entity that is hurting or that is in difficulty. Healthcare, we think is going to have a very good year. It had a very good year last year. We're very satisfied with the results. We feel that there's probably going to be a PR improvement. This will be gradual, and we feel that the forecasts of our creative agencies are pretty solid. The prospects are good, but there is a seasonal effect, which is not really helping us very much. Now on your last question, we don't yet have the final figures. Sapient hasn't closed its year. They close a little later than we do here, and generally, they bring their figures out in March. For the moment, what we can conclude is that we're on track with the plan. We expect Q4 to be what it was predicted to be, that there'll be a slight dip and that 2015 will be in line with the business plan that, as you know, shows very strong growth. Jean-Michel Etienne, on that one, and also the other question which was on the 50 basis points. He wants to produce a variance of 50 bps only with Forex. Brilliant. Well, yes, as was just stated, the timeline is not entirely within our hands. But we're trying to bring them around to our methods and principles, and avoid having major changes in the way in which we announce our results and always have done. I can confirm what Moiz Lamy just said. The figures have not yet been entirely finalized. Everything is very much in line with the figures that were presented in the due diligence. It's in line with the business plan. No surprises thus far. Now, answering the question on the 10 basis points. Let's start with the 10 before we discuss the 50. The downturn due to 2014 exchange rates. I have the impacts per currency here. Now, we're very strongly represented in the U.S., as you know, but also in Great Britain. Dollar and sterling were favorable. But of course, these are not the only currencies out there. Unfortunately, there are lots of others. It's a very long list that is of the countries in which the monetary impact was unfavorable, and which explain the 10-point drop. Now, what happens in 2015, all things remaining equal? We shall have a favorable effect. I'm not sure to the tune of 50. This was just provocation, says Moiz Lamy. Yes, we know him. As we stand, it can only be good news. Have we any further questions from the floor here in the room? We have two. Good morning. Senti Leva, Morgan Stanley. A few questions. Could you give us the headline Razorfish impact for 2014? You talked about 2 basis points. Could you give us the group-wide effect on an annual basis? You gave it to us for the U.S. Second question, in your discussions with the consumer clients, was it your feeling that the drop in commodities was going to be potentially good news for their ad spend? And the third question, could you give us average net debt you forecast for 2015? Well, the figure hasn't really changed. We haven't worked it out precisely, but there's no major change. On commodities, raw materials, some of our customers are very happy people. They've suffered greatly over the past few years because of the increase in commodity prices, and there are two probable spinoffs to be expected from this. First of all, they're going to become more competitive, and they're going to be able to come up with offerings that consumers will want to accept. Now, this applies to consumer products. There, there is definitely a commodity effect. But the second effect is they're going to be more aggressive. As soon as they become more competitive, they want to gain more market share. And in view of all of these different pros and cons, we're going to end up with a probably slightly stronger market. And this makes us confident. We felt this in Q4 because, incidentally, far more interesting than the upticks in the previous quarters, the major good news was that there were far fewer cuts. We were accustomed to a situation in which our customers saw Q4 as a way to make up at the end of the year, or to catch up or make up their profitability results. They use Q4 as an adjustment in such a way to come up with the overall P&L results they're expecting for the year. And there are some of them who did this, unfortunately. But it wasn't the sort of landslide that we got at the end of 2013, where we were really surprised by the extent of the phenomenon. Here, it was very minor. Jean-Michel. Well, another nice question. Thank you. For 2014, EUR 93 million is our average net cash level. On February 6th, we had the acquisition debt for Sapient coming in. You know the acquisition price. So we're going to have average debt, which will be very high throughout the year. Now, when you say average debt, well, we're working on our cash objectives, including all transactions. We haven't entirely worked this out, and we'll only be announcing them once we've closed our end-of-year accounts, because there's still a lot of volatility because of the seasonal nature of our business. So as not to make sure we're heading in the wrong direction. We prefer to close our accounts first and then determine our cash objectives, which have not yet been determined, in other words. Meaning that I cannot give Adrien the information he would like me to, but I will be able to. So watch this slot. Any further questions from the room? Otherwise, we will take one over the phone. Have we another question out there? Thank you. A more philosophical one, Monsieur Lévy. When you look at the two most aggressive groups in digital, it was you and WPP, and our American friends probably less in terms of M&As. However, what now seems to be happening is that the most acquisitive groups are not necessarily those with the strongest organic group, whereas one would have thought there would be a structural effect. But you have better margins. So the question is, to what extent would you say that the M&A margin focus is detrimental to structural organic growth in your group or the agencies most strongly involved in M&A? And where does the gap come from relative to the Americans? Ignoring geography alone. But this growth gap between Omnicom and Publicis on the other side of the pond seems strange. Well, that is a truly remarkable question. The only possible answer is dynamic. I cannot give you a spot answer to a spot question, because a spot view in 2014 would clearly show that Omnicom's figures, and I do not know the others, but we have the first 9 months show that growth was stronger, whereas we were hurting. If we take a dynamic view of the same, it is rather different. A major part of some of our competitors' growth is driven by markets where we are not represented. Field marketing, for instance, was behind very much of the growth registered, recorded by Omnicom. On programmatic markets, we do not use the same methods as WPP and Omnicom. We do it on a net basis, and this makes a fairly substantial difference. So there are differences in working methods, and what really matters is not so much what happened as what is about to happen. The writing is already on the wall. When I read your reports, your analysis, you immediately refer to the fact that there is a new category here. There is a very interesting article which came out a few days ago, CMTO. In other words, CMO plus tech. Chief Marketing Technology Officer. This is a very interesting development. But digital officers, and this is fascinating, are now a dime a dozen in many organizations. L'Oréal, Nestlé, Unilever. There are many corporations out there creating a post for someone who has a very high executive level of responsibility and whose job is digital. This is going to affect their strategies. It is going to affect their working methods also. We are also observing that the trend we have observed thus far, more internet communication to the detriment of other media, is continuing strongly. Referring, for instance, to the prediction we were hearing 3 years ago. It was our hope that by 2014, we would have something like 15% media spending on internet. It is now 21% as we speak. 2014, 21%. Mobile taking over an enormous share. All of this generates ways of collaborating, generates investment patterns in digital, which are going to be very different from what we have experienced thus far. Blur. I'm not talking about Amazon. Is Amazon a logistics company? Is it a catalog sales via internet? Is it a service provider, cloud-based, or is it a manufacturer of, say, cell phones and digital readers. No one really will even tell us that. No one really knows precisely what the beast is. But as an organization, within the organization, functions are changing, responsibilities are changing, and the very clear lines of demarcation between marketing, sales, and tech, in other words, IT, all of this is dissolving. You can't get into marketing without thinking about e-commerce. It's simply impossible. Or you would have to be blindly confident in your business model. But any company today, large, small, or in the middle, everybody is developing models to be able to sell stuff via internet, including luxury products, luxury goods, and with major investments. No one ever thought that those people who have their address on the Avenue Montaigne would advertise over internet one day. But we're not all just out there on internet looking for the lowest selling price. There are changes in business models of major significance. You can't have a concept of marketing without having an underlying tech concept, meaning you have to think about tech tools. Let me give you an interesting example. Sales reps. Those people, these guys who go out there, knock on doors, walk the streets. Sales reps, for instance, pharma. Now, in the not so distant past, to know where they were to get their reports in, you needed quite a lot of work to be done, and it was no easy task to manage the sales force and the results they were achieving. Now, today, take someone who goes to see a doctor. He has it all. A sales rep who goes to see a doctor has his tablet, he can make a presentation, and he immediately has his report, plus the GPS effect, and we know exactly whether he's actually visited the physician or whether he's making it up. We also know whether he perhaps made a mistake in terms of business ethics. But even these little so-called easy jobs are becoming much more sophisticated, and they're changing considerably. For instance, the people who take orders in the local drugstore. We're having a transformation of all functions without exception. Who in this room or over the phone is not, as we speak, in the process of consulting a screen to change their cars or make a trip or borrow this or buy that? Everybody's doing it all the time. Simply because we have this extraordinary source of information at our fingertips. For instance, sometimes I have a short sleep after consulting internet. The very first thing I do is go onto the web and see what's being offered and see what's new. There's this extraordinary source of information. At a given point in time, you may be tempted to think that when you stand back and take a look at all this, margin rate is perhaps better, but organic growth is lower, which happens to be a fact. But if you look at it dynamically, and if you look to the future, then you find yourself with this image that we all are familiar with in the Tex Avery comics where you see the fox running after the squirrel, chasing the squirrel. Squirrel has run off the top of the cliff, but he keeps on running. He doesn't immediately realize that he's running in thin air, and then he drops, and there are lots of people running in thin air. They think they haven't yet reached the edge of the cliff. But by the time it happens, there'll be no more terra firma under their feet. Charles, thank you for allowing me to tell that story. I'm not sure if we have another question. It'd be nice if we could have one for Jean-Michel Etienne over the phone. He's twiddling his thumbs. Any other questions? Next question, Olivier Moral, HSBC. Good morning, and thank you for giving me the floor. I think all my questions have been addressed, but I think somebody else had a question for Jean-Michel Etienne. Okay, next question then. Our next question comes from Brian Wieser from Pivotal Research. Please go ahead. Bonjour. I'll ask my question in English. For you. Were there any business units that were specifically behind the BRIC and rest of world growth figures, or was it broadly based? A separate question, given that more of your exposure is now to the consulting business, do you think that your M&A priorities will change to include more activities that are adjacent to Sapient's global markets and government services businesses? Or do you think the focus would remain more on areas that are more directly related with marketing activities? Okay. Jean-Michel. Jean-Michel, would you address the first question? Can you repeat the first question in order to make it clear for Jean-Michel? Yes. Were there any business units that were specifically behind the growth figures you saw in BRIC and rest of world, or was it really broadly based across all of your businesses? Also, were there any surprises? I'll answer in French, if you'll allow me. Maybe so that everyone can understand here in the room. I don't think there were any real surprises. In India, for instance, however, I think businesses had factored that in already. Q4 2013 was very sluggish in India. I think we'd said that when we looked at it then. There were questions as to whether they would manage to do what they said they would be doing, and Q4 was actually very good. Yes, it's true that the numbers look even better because the comparables or the baselines are very low. In China, you have a similar situation in a way, and there was a good result, ever so slightly unexpected in Mexico, even though the results were, and the performance was very good over the course of the year. Obviously, I, too, will answer in French, Brian, if that's all right. I heard you say bonjour in French. Brownie points for that one. On consulting then. We do not intend to start competing with the major consultancy firms. We do, however, want to make sure we have the right makeup to enable our customers to manage their transformation. We won't go into supply chain or anything related to manufacturing processes or modeling. We'll stay focused on what we know and what we can do on these things where our skills actually make a significant contribution. Yes, we may, in due course, hire people or make smallish acquisitions in consulting, but this would really be on the margins of our business. Once again, our goal, our purpose is not so much to turn the group into a consultancy group or into an IT services group. No, we will not start competing with Capgemini, Accenture, and others. That is not what destiny holds for us. Occasionally, yes, we may have to deal with them. After all, they have sort of made inroads into our markets, too. Accenture, for instance, acquired digital agencies. So I don't suppose they're really surprised to see us be active. But on their core business, we won't go and challenge them. Definitely not. We do not intend to do a job that isn't ours. Yes, there will be some things happening, but really not much, and that won't happen in 2015. I think we'll have a low M&A activity level for 2015. We will, on the contrary, focus on integrating the new teams, and we won't waste our resources and energy over the course of 2015. Thank you, Brian, for that one. I'll give the floor to our operator so that she can tell us whether we have any other questions. Yes. Our next question comes from Sarah Simon from Berenberg. Please go ahead. Yes. Good morning. I've got two questions, one for each of you. For Jean-Michel, just in terms of factoring in Sapient to our models, is there any particular seasonality that we should think about in terms of, obviously, you'd known it for January, is there anything funny there? And a more broad question. Given what's happening with TV advertising in the U.S. and the shift to online video, do you think it's fair to assume that the rate of analog decline for you, but also for agencies more generally, is going to accelerate over the next couple of years? Thanks. Jean-Michel? Jean-Michel, would you take that one? We will. Well, on your first question, we will integrate Sapient as at the date of acquisition, that is February 6th. We will have an initial set of numbers as we usually do, and we will have accounts and financial statements for 2014 at year end 2014, which will be audited but not reported. The regular auditors haven't quite finished, so I don't think there's anything special to mention here yet. It's fairly standard and the usual integration process, really. This being said, we do hope to take this rather swiftly and make sure that we have a regular reporting of Sapient data and figures. This is obviously going to be very important for full and proper integration to make sure that we get the numbers on time every month like everyone else in Publicis. Thank you, César Molina Slive. On your second question, I think, yes, we can expect a speeding up of the drop in analog and the decline in analog. Let me come back to the video, for instance, and this is quite big and growing. The market share of television, generally speaking, is pretty stable at a global level. Overall, somewhere around 40%, anywhere between 39% or 40%. We expect that to remain stable. What will change is the way in which people consume television. Television is no longer being watched in front of the box at home, in the family setting, and nibbling crisps or nuts. No. Things have changed. People now drink beer. Anyway. You watch TV on your tablet, on your mobile, and on your computers. The mobility is now a crucial means of accessing information. 24-hour news channels are picking up significantly on mobile means. There are new product offerings that have really completely changed the consumption and the way people consume. So this 40% doesn't quite describe the same thing nowadays as it used to. On the media or press side of things, we expect that to grow on dropping. We've seen, and that's rather interesting, I suppose, to see that the pie chart that covers the market shares has changed significantly over the period 2004 to 2014. We looked at that during the supervisory board yesterday. We looked at what the various means and media for advertising were in 2014 compared to 2004. You see, in fact, the printed media has gone down about 50% over those 10 years. I'm talking about here about dailies and magazines. We sort of expect that downward trend to be sustained, but not quite at the same pace. In market share, there will be a drop, but maybe not a drop in volumes. It's true that over the last 10 years, volumes had also gone down significantly. But in the future, I think we can expect joint or combined solutions where we will actually be able to value and monetize the internet and mobile platform side of things. We know that the printed press nowadays doesn't really know how to do that. So models are emerging, and they're starting to be reliable. What we will see, however, as I said, is a drop in the market share for almost everyone, except from television, which will probably go on growing in line with market growth. Internet growth will outperform the average. Cinema, radio, and print will see their market shares go down, even though there may be an increase in volume on radio, for instance. Billboards and posters will probably increase their market share ever so slightly. I expect that this will be the or one of the mass market media. That's something I mentioned quite some years ago now. This will probably be the one for umbrella communication, which brands need. I think that covers your question. Are there any other further questions? Our next question comes from Tim Nollen from Macquarie. Please go ahead. Hi, thanks for taking the question. Hope you can hear me okay. Two questions on costs, actually. Perhaps a bit more for Jean-Michel Etienne. Firstly, clearly everything is combined with Sapient now, but I wonder if you could discuss what the Publicis underlying cost progression for 2015 may be, i.e., if you can separate out ex Sapient, what to expect in terms of margins. Separately then, actually very much more including the Sapient situation, what should we think about costs, given that it's a much more IT heavy business, both in terms of CapEx types of costs and also staff types of costs, which I assume, given your comments on the talent shortage and obviously the rising presence of digital media, how should we think about costs in general, given the IT heavy presence of Sapient? Thank you. Well, to address this question, I can say that over FY 2015, we will try to make sure that 2015 brings us closer and puts us in a position to deliver on the goals we have set for ourselves for 2018. That's the main purpose. We've always said that 2018 or the results for 2018 will not be reached in a linear fashion. We've said that any number of times. So any cost management issues that are covered by Publicis as such are groundwork for 2018. Now, it might be a bit early to discuss this now. We really need to look into the numbers of Sapient more specifically. We closed the deal on Friday last, less than a week ago, so we haven't yet been able to look at this and see what improvements we may get on the cost side of things there. Obviously, there are things that need to be done. I think that when we spoke about acquiring Sapient, we identified a number of fairly obvious things to do that would improve the cost basis. Quite simply, delisting the company will improve the cost base in and of itself. All right. Next question comes from Adrian van Arterloo from Eve. Please go ahead. Yes, good morning. I have three questions. One is related to Sapient, two is about the performance in Europe in 2014, and three on digital. On Sapient, you say that you are not competing against Accenture, but on the other hand, your business model of Sapient is relatively similar, meaning lots of employees in India, who are doing all the fantastic work on the technology side. But both of them have about 67% of their employees in India. Do you think you can manage your margins up to Accenture's margin of about 15%, irrespective of the integration with Publicis? The second question is on Europe. Why has the margin actually declined in Europe in 2014? On digital, where do you see your clients spend most of your money in digital? Is that mobile or which services are they most interested in? Thank you. Jean-Michel, you take number 2? Yes. The limited reduction in European margins. Obviously, there is a connection with the overall growth situation in Europe, which, as you noted, is really not what we would like it to be. We have negative growth in Europe. There are complex issues out there, which are in the process of being resolved. The process began several years back. We streamlined the organization and obviously, major restructuring costs being engaged in Europe. The program is ongoing year after year, and obviously, we're not yet achieving the margins in Europe we hope for. With a bit of growth, it would have been much easier. In that respect, let me add, Maurice Lévy, that in Europe, restructuring is more complex. It's more costly. It's slower in Europe. In fact, you pay twice over, in a sense. Everybody, I'm sure, understands that. Accenture and Sapient and Publicis. When I say that we're not in the business of competing with Accenture, let me make it clear that there is one area of business in which they have come to compete with us. Digital dimension of brand management. In fact, they have bought up digital agencies in that field, as I hinted at earlier on. So there is a slight amount of friction there. But at the same time, they're a partner. Accenture help us set up SAP in our group, and we have no intention of becoming their competitors on their turf. It's something like 90% of their business, which stems from consulting and implementing IT tools, corporate IT tools. We're not going to get into that. Don't intend to. The point is worth making. As soon as technology is involved, the talk is of India. In other words, India has succeeded in doing something quite extraordinary, and China has succeeded in becoming the blue-collar place where it's all about. India is the place where they're churning out students, very high-level students and engineers in this much-coveted field of endeavor. Even Publicis has agencies working out of India. I don't really have a detailed view of Accenture. I'm starting to become quite familiar with what Sapient is doing. What Sapient does is develop a service delivery system worldwide based in India. So the idea is not just to have a rare base for the purposes of production, but they also have local engineers there. They're very strong in recruiting entry-level people who can help customers, our customers, go omni-channel or transform. In other words, engineers trained in consulting. That dual capability is what you find in Sapient. You mentioned margins. Will we hit 15%? Adrian, I'm surprised at your lack of ambition. I mean 15% would be okay, but nothing to write home about. Initially, precisely, we are going to try and make sure we achieve 15%, which will not be an easy task. There are a lot of things that Sapient is very, very, very good at. Improving what is already being done remarkably well is difficult. But we have the people, the methods, and the tools required to help Sapient succeed. There is also the question of business volumes, which will facilitate improving margins. Your last question goes to digital, the breakdown between digital, analog. Well, digital involves an enormous number of different pockets, and there is one of these, data, which is growing at exponential rates and also multichannel commerce. This is something which is progressing, which is soaring. The other field that is going up at growth rates above 30% is mobile. Mobile includes so much scope, so much opportunity. Not just because of the new applications, but also because of some very interesting tech solutions that would take implementations that we're working on. So there are lots of communications and marketing solutions out there potentially. It is those three fields that are progressing faster than the others. The one that is lagging behind is display. Perhaps one last question over the phone. Our final question over the telephone comes from William Mairs from Nomura. Please go ahead. Thank you. Just a couple of questions. The first one for Jean-Michel Etienne regarding working capital. If I have a look at the level of benefit this year, it's the lowest for around five years. So I'm just wondering, what do you think the working capital benefit could be for 2015? Do you think it could actually be negative given perhaps clients pushing back on terms and maybe programmatic also having an impact as well? That's the first question. The second question is, I'm sure you've already touched on it, but it's a bit difficult with the translation. But I think you mentioned before that in terms of your guidance for the fourth quarter, is a bit impacted by the difficulty in forecasting the second half for growth, given a lot of product launches coming in the second half. So I guess my question there is, given that you're looking for an acceleration in second half growth in 2015, how comfortable can you be of this improvement in growth given some of the issues around forecasting second half growth? Thanks. Okay. I will answer the second question, and Jean-Michel will start with the first one. Yes, on working capital requirements for 2015. The picture is quite simple. We now have some experience in this matter, and we have never made forecasts of cash generation by WCR, by working capital. Obviously, we're working on this month in, month out. And every single month, we spend a lot of time, particularly in the second half of the year, because that is where you get the cash fluctuations. But our forecasting process, this was the case in 2014, it was also the case in 2013 and 2012, even though the ultimate result was better than expected, was zero change in working capital and cash flow forecast. We know that there can be difficulties arising with clients or people putting pressure on us to extend payment periods. But thus far, with our country mix, we've always been successful, and we've been working exactly the same way for years now. Now to your second and most important question, which concerns the degree of comfort that can be derived from our 2015 guidance. There is clearly a misunderstanding. I don't think I said that H2 was difficult to forecast. What is difficult is what happens in November and December, because these are months that are fraught with uncertainty. And they have to be, because depending on where companies stand, depending on their results, they will decide to hold back or to boost investments. So here we're talking about a hardy perennial. It comes back every year, and there is always a risk of end-of-year variation. On H2 what we have is what is already in the forecast. And I mentioned this in automotive. I quoted the example of the U.S. which is, everybody knows since the motor show that there are now 60 new models that are going to be launched in the course of 2015 in the U.S. with a considerable majority in the second part of the year after July. There are years in which H2 is much stronger than the first. This is only normal. In our clients' marketing plans, what we're seeing, both in terms of consumer goods, financial products, but also automotive, what we're saying is these seasonal phenomena. The result is that we sometimes have these very strong H2s. I'm sure that our competitors are very much in the same position. In any case, in view of our client portfolio, that is where we stand. We have a fairly high degree of comfort as regards our forecast for 2015. Last year, we made no secret about our difficulties in forecasting. The result is that as of today, when we look back, we feel, once again, quite a lot of comfort. The figures that were quoted did not have to be stretched to achieve the growth objectives. We're still facing quite a lot of work to achieve our normal management missions. As regards growth, we all know that if we want to revert to the rate of growth that we are seeking, in other words, go back to a regular basis on which we outperform the market, we need to win back a lot of business. That's precisely what we're about to do. The take-home is that we are strongly confident in our guidance. Thank you to those here. Thank you to those who have spoken via the telephone. Thank you for being with us. We're now going to close this session. Thank you, one and all.