Earnings Call: H2 2011

Feb 9, 2012

Ladies and gentlemen, it is a pleasure to be able to open this presentation, and God, it's cold outside. We're going to try to cut the heating. It seems that fuel savings are the order of the day. You will remember that this time last year we presented the 2010 results, emphasizing our feeling that the crisis was essentially behind us and that the only real cause of concern to us moving forward, the only real challenge that the world economy was likely to find itself facing, was sovereign debt. Unfortunately, we didn't realize just how right we were. The problems raised by sovereign debt, particularly in Euroland, have been far more acute and far-reaching than we ever imagined. We found ourselves facing a rather interesting context in 2011. Our position at the outset was that we were looking forward to a relatively satisfactory year in terms of growth. It got off to a very good start. H1 as a whole was reasonably good news. Then came the turmoil of debt and the financial crisis starting in March, April, with the first doubts about Ireland, Greece. Then August with a fully blown crisis and the downgrading of the U.S., and then a number of other consequences, and the resulting uncertainty, which is still with us today. Over that period, at the same time, there was a drop in forecasts, not just for ZenithOptimedia, but for all forecasters of ad spending worldwide. We thought we were heading into a year of about 4%-5% growth, and here we are with a range of 3%-5% in the most recent forecasts. During the presentation of the financials for Q3, I indicated that Q4 was expected to be difficult and that our growth would be within the range of 2% low end and maximum 3%, and that if we achieved 3%, then we would be justified in feeling we'd done a pretty good job because the comparative effect with the previous year was unfavorable. We had a very favorable year before that. We managed to deliver 2.9% growth. Others would have perhaps announced 3%. We are careful about such things. So 2.9% growth as of Q4 on a very high comparative basis. Let me now propose the figures for 2011. Revenue EUR 5,816 million, which is a record for us. This is an increase of 7.3% year-on-year, organic growth of 5.7%. The interesting thing is how this fits with operating margin. This year at 9.31%, and those who follow us know that H1 2011 recorded a drop in margin, and so we have tried to reassure those who are interested in Publicis with an indication that we expected to catch up by the end of the year, and that our objective, and one that we had been announcing for one year already, was to remain at a level of 15.8%, which was the level of the previous business year. In view of an end of year, which was rather better than expected, in view of also the measures we took without sacrificing our CapEx, we ended up with a percentage of 16%, which puts us at the very top end of the market. This is an increase of 8.8% year-on-year. Then two records for Publicis. First is net income, EUR 600 million plus 14.1%. EPS, fully diluted, €2.64, up 12.3%, and a free cash flow of 704 million, up 9%. Despite a less than favorable context, all of our targets were either met or exceeded. All of our geographies, Jean-Michel will be presenting this later on, are up by at least 5% or near 5%. Operating margin, I said, stood at 16%. It includes investments in talent, which we are going to continue moving into 2012, and also in technology. in 2011, we were once again number one ranker in new business. It was a record year, which I will be showing you in a few minutes. We continued our focused acquisition strategy with digital and the high growth markets with Rosetta, Big Fuel in the U.S. in digital, Talent and DPZ in Brazil, and a number of acquisitions, in particular, Genedigi in China. Being number one, being above the market, outgrowing the market is obviously no coincidence. Our organic growth has been confirmed year after year. This is simply because there are two things underlying this. The first is what we do in the name of creativity. I showed you some examples over the intermediary period. When you look at the ranking, the creativity ranking, the Gunn Report, we are still number one as a group and considering our size. The second is new budgets. 7.9 billion, and according to the JP Morgan and Nomura classification, we are there again, number one. These then are extremely positive elements. I am now going to hand over to Jean-Michel for a detailed view of the financials. Thank you, Maurice, and good morning to all. Let us take a look at a breakdown of revenue, looking at geographical areas. We will look at organic growth in the various regions. There was organic growth of around or more than 5% in all regions. You can see it on the pie chart, and you can see, by the way, that in the appendices that you have with your files, on page 57, there is a detailed calculation of organic growth, and on page 56, there is a description of growth in some of the more relevant countries. Europe on the first line, you can see stands at 4.8% in organic growth, with a contrasting picture because France and Germany have been delivering high growth, 8% and 7% respectively. Of course, these are good numbers. Southern Europe, by contrast, has lower growth, has growth nonetheless. In spite of Greece and Portugal, which obviously and expectedly are in the red as could well be expected. Eastern Europe in this context is, as part of Europe, is doing perfectly well at 9%, essentially due to Russia. North America is looking at a strong level of organic growth, 7.9%, and throughout the year, 5.9% indeed. The performance was good throughout the year. As you know, for Publicis, North America accounts for 46% of income in digital, which of course, has been helping the growth rates. Asia Pacific, 5.7%. We would have liked to see more than that, but of course, this takes on board a rather low rate of growth in Q1. On quarter by quarter, we were able to catch up, and in the end, we end up with 5.7%. All in all, that is pretty good. Latin America. By the way, what about China? Obviously, looking at Asia Pacific, China, needless to say, has generated 8.5%, and this does not include organic growth with acquisitions in 2011. I mean, there were acquisitions in 2011 and 2012. Growth there, of course, will be organic, in 2012. Latin America, 8.8% with significant acquisitions in Brazil, of course, that is not included. We will have to wait till 2012 before this becomes organic growth. At this stage, this is still external growth. Middle East and Africa stands at a very comfortable 6.1%. You can see on the right-hand side, North America accounts for 47% of our revenue, which of course, shields us from the vicissitudes of the European economy. Now, let's take a look at organic growth in Q4. We told you, and of course, Maurice reminded you of the underlying effect, because in Q4 2010, we had a completely outstanding growth level of 12.5%, and that was most unusual. In the October conference call, we said that actual growth might be anywhere between 2% and 3%. We ended up at 2.9% on the high end of that guidance. So thanks to a positive December performance. But Europe still stands at a negative number in Q4. Of course, we had, in previous quarters, 11.3%, so even at +2, this is all in all, a decrease of two. Organic growth, a negative 2.5%, a decrease of 1.3% compared to 2010. North America, 5%. Asia Pacific, more in line with what we were looking at, the numbers of India, China, Malaysia. Less so in Korea and Thailand, but still very satisfactory growth at 7.6% in Asia Pacific. Latin America, doing well, 9.4%, in spite of the difficulties we encountered with one of our agencies in Brazil. We mentioned this on several occasions in our conference calls. Now, let us look at the consolidated income statement. Of course, this is a summary version, and in the following slides, I will look in the details of operating margin. Let's look at amortization of intangibles arising in acquisitions. EUR 38, up compared to 2010. Of course, we recognized a number of intangible assets that have come to add to this additional depreciation. There's no impairment in 2011, and that's good news. The other non-current income or expenses are up 21% compared to 14% the previous year. We have a few capital gains on disposals to the tune of about EUR 10 million. There's a non-cash income, which was due to the taking over of a Swiss agency called Spillmann/Felser, which became 100% subsidiary in the second half. This is one of the little things of IFRS. That means that we have to recognize that income, and we first have to recognize the sale of our stake, and then the fact that we have 100% subsidiary. It looks good on paper, but in fact, there's no cash income as such. We can look at interest income and expenditure. If we look at companies on an equity basis, there are 17 compared to eight last year. This is because we have increased our stake in BBH, a well-known London-based agency. The group net income stands at EUR 600 million. It's the first time we've reached the EUR 600 million mark, up 14.1% compared to 2010. Now, looking at the details of the operating margin. Of course, this is a very significant indicator. It stands at 16% in 2011, compared to 15.8% the previous year. Over the year, we committed to a stable margin. We communicated a lot about this. In 2010, we stood already at 15.8%, and needless to say, this was clearly reiterated. We didn't have to sacrifice any of the significant CapEx that we had planned and indeed conducted throughout the year in terms also of recruitment of new talent and technology. But also in view of the cost control in the second half of the year. Because of all this, we managed to generate a 16% margin, up 20 basis points compared to 2010. Now, if we take a look at the details of the labor cost, the personnel cost, and of course, that is a significant part of our expenses. The key aspect, of course, is how we manage that. The ratio of wage bill to revenue is a significant number. It's 40 basis points. From 61.8%, we moved on to 62.2%, and you have the details of how it went up. The fixed personal cost up 80 basis points because of two factors. First, we had additional recruitment, mostly in the high growth segments, simply to prepare for the future. The second aspect is that we had tendering of freelancers becoming permanent members of the staff, especially in digital, simply as to be able to have a stronger base of services for our customers. Of course, this was well under control throughout the year, but still cost us 80 basis points. Freelancers compared to revenue was down 20 basis points because of the fact that a number of freelancers became permanent staff members. Bonuses or incentives were consistent with what we announced and also in keeping with the good performance, so an additional 30 basis point. Severance costs were down 30 basis points, and that was good. Of course, acquisitions brought about a 20 basis points reduction on the overall costs when all is said and done. Let's take a look at headcount. On 31 December 2011, staff headcount stood at 53,800 compared to 48,500 at the end of 2010. In France, we have 5,100 people, up 600 compared to 2010. So in this respect, Publicis was a good employer in France. 53% of all headcount increase globally stems from acquisitions. Of course, not including disposals. Or at least, no, rather including disposals, net of disposals. Recruitment is up in the digital area, but of course, together with growth. And growth was up 13.7% was in organic growth. It's a very significant number. There was a freeze on recruitment in 2010. Now, of course, in the first half of 2011, we had a large rise in recruitment, but then, of course, in the second half of 2011, there was another slam on the brakes. Now, let's look at the financial costs. Interest expenditure is down EUR 20 million. That's because the income is up because we have a better interest on our investment, and we have a better cash management, so that we have a EUR 17 million improvement. There is an interesting swing on the exchange performance. Well, we don't want to lose or make money on exchange rates, but we try to have it neutral. The purpose is not to make money on this. That's why we have some hedging there. But if we look at assessments, we included the earn-outs led to a EUR 4 million increase, earn-out revaluation. This is due to an IFRS idiosyncrasy. All in all, it means that the net financial costs are down considerably to EUR 54 million compared to EUR 76 million the previous year. The tax rate, the effective tax rate, this has been going down year on year. It used to be the case, not this time around. This time around, the effective tax rate was up 30 basis points to 28.8% compared to 28.5%. This is because of the new tax rules in France, which means that we had an additional EUR 15 million to pay in taxes. So welcome to the new tax world. The earnings per share, fully diluted, is up 10.9%. Headline diluted, it is up 10.9%, and diluted is 12.2%. Of course, if you have questions about this technical point, we can address this after the meeting. Dividends. On the 29 May general annual meeting, we will be offering EUR 0.70 per share, which is the same as 2010, but this time we are looking at a 23.6% payout ratio. Let us take a look at free cash flow, and look at the next slide. Regarding free cash flow variation, you have to know that in this calculation, we try to neutralize variation in working capital requirements, so it has to be working on a stable comparison basis. You can see that, well, before change in working capital requirement, free cash flow is up 9% to EUR 704 million. The first time it has passed the EUR 700 million mark. In spite of CapEx up EUR 112 million, nonetheless, we are able to generate all that free cash flow. In line with what we said about investment and so on, this is to be expected. Now, if we look at the way in which we spent that cash in 2011, cash outflow was EUR 599 million in acquisitions, earn-outs and buy-outs to the tune of EUR 99 million, and dividends, EUR 143 million. We also received cash with the exercise of stock options to the tune of EUR 51 million. To explain the EUR 203 million on the bottom line, we have to look at the variation in net debt. There is a non-monetary variation in earn-outs and buy-outs, EUR 164 million, and also have to include a foreign exchange effect to the tune of EUR 31 million, and that is because there were, of course, variations in exchange rates were impacted on closing the books on the amount of the net debt. 2011 was a year where M&A, mergers and acquisitions, were sustained. You can see the list of acquisitions on the slide. Most of the acquisitions were performed in two key sectors, namely digital and fast-growing countries. You have a list of everything that was performed in 2011, digital, fast-growing countries, and then you have others also listed on the slide. The full-year income due to acquisitions is about EUR 400 million, all in all. But if you look to page 57, which works out the details of organic growth, you can see the acquisitions over the year, over 2011 contribute to the tune of EUR 221 million for 2011. So it is a EUR 400 million full-year, and we are looking for the half year at about EUR 220 million. Of course, North America was the one area that benefited the most from these acquisitions, mostly with Rosetta, because, of course, the chunk was EUR 206 million, with EUR 160 million from Rosetta, followed by South America, mostly Brazil, with three acquisitions. There were 10 acquisitions in Europe, bringing in about EUR 57 million. We're looking, again, this is revenue, not the cost of these acquisitions. Then there were acquisitions in Asia, mostly in China, and we'll tell you more about this. This, again, is exactly in line with our development strategy in the digital area and in fast-growing countries, of course. It is pretty much self-explanatory. Let's take a look now at the balance sheet. A few bits and pieces of information. The main aspect, of course, equity is almost EUR 4 billion. The group equity is EUR 3.898 billion. Net debt is only EUR 110 million in spite of acquisitions in 2011. The working capital, we were negative to the tune of EUR 2.038 billion at the end of December. This is EUR 140-some million improvement net. Debt to equity ratio is almost nil, which means that gives us great flexibility for at least plenty of leeway for future development if any cash were needed. If we look at the net debt, it stands at EUR 465 million in 2011, down 24% compared to 2010. Net debt at 31 December stood at EUR 110 million, as we said earlier. Let me also point out that if we leave out the effects of buyouts and earn-outs, we would be standing, in fact, at a cash positive position, EUR 359 million, not very different from the position at the end of December 2010. The reason I mention this is that some of our competitors include the earn-outs and buyouts to be paid, but they do not include this in the financial debt like we do. We're being more transparent, and we have to take that on board when we're comparing apples and oranges. Of course, we have to make sure we are, in fact, comparing the same thing. If we're looking at cash, liquidity at 31 December was extremely high because we're above, as I said, EUR 4 billion. No need to dwell on that. Of course, it's almost the same amount as last year in spite of the acquisitions of 2011. There was a repayment of the Eurobond on 31 December, on the January, so EUR 506 million. That is, of course, the principal amount. This was made with the available cash, and we do not propose to have any new debt financing. Ladies and gentlemen from the banks, we do not propose to issue another bond. We improved the ratios this year, especially the average net debt over EBITDA down to 0.045, I think. Pardon. You may remember the optimum ratio had to be below 1.5. We're below one. We're below 0.5 indeed. Likewise, for the net debt over equity. That, of course, is a result of hard work on streamlining our balance sheet. This pretty much covers it, but I would like to give you one last table, which shows the return on capital employed, the ROCE. In 2011, we broke our own record. The rate of return was 13.2%. This, of course, is significant. It means that our acquisitions were made at reasonable prices at reasonable costs. We hear all sorts of things about what we've been spending on acquisitions. But when we are able to improve return on capital employed to such a With the kind of acquisitions we made in 2011, well, I think the results speak for themselves. If we look at the improvement over the period 2007 to 2011, there were a good number of acquisitions, especially in the digital area. We have a pretty high and constant ratio, which confirms the quality of our integration. That is the way in which we are able to incorporate, as it were, our acquisitions. That pretty much completes the financial presentation. I will give the floor back to Maurice. Thank you. Jan. Thank you, Jean-Michel. All of those who are faithful to us over the years would have observed that Publicis Groupe has constantly been changing in line with the changes in the market and the business. There are lots of things going on. Geographically, there is a very obvious change towards Asia and the emerging countries. There is a lot going on there, and it is not just growth. At the heart of our business is digital. To address this change and our response to it, I thought it would be a good idea to ask Jean-Yves Naouri to tell you about our approach to the emerging markets. This is a responsibility he has taken over, and he is now going to tell you about the efforts and commitments that we have made and our results to date. Jean-Yves. Thank you, Maurice. Good morning, one and all. I am sorry about this hoarseness. But I keep on changing climate zones and time zones, and my voice has not caught up with me yet. We are going to look at the performance of the Groupe and how the Groupe has changed as it moves into the fast-growing countries, as opposed to the expression emerging. Most of those countries have long since emerged and cannot rightfully be considered as emerging countries anymore. Our strategic objective for these markets, you will remember, was to earn in excess of 25% of our revenue in these countries. However, we were not yet aware of the extraordinary growth that was going to appear on other markets because of our acquisitions in the digital field. So the increment to move up to 25% turned out to be rather bigger than expected. Because instead of a revenue of 900-odd million, it was to be predicated on virtually EUR 1.5 billion. 24.3% of our revenue for 2011. But this is only a mean figure. If you look at this graph, you will see that we did actually achieve the 25% in Q4 2011 with a very spectacular breakthrough between Q1 22.3% and Q4 25.9%. We view as particularly important growth based on a strong balance between organic growth with our existing clients, plus the winning of new business that Maurice referred to, before we start talking about acquisitions, either to beef up some businesses or existing units, entities. Looking now on a country-by-country basis, starting with Brazil, world's sixth-ranking market. That was our number 9 market in 2009, and our campaign there has brought us up to speed, and it is now our sixth-ranking market in 2011. We have 1,500 people there, 12 agencies. Organic growth has been impressive. You are aware of the accident with Leo Burnett. Without that, we would be into double-digit growth. We have been able to attract two leading creative agencies, Talent and DPZ. Wonderful agencies. We have beefed up Leo Burnett by adding Tailor Made, Publicis adding GP7, Andreoli going into MSL, and AG2, which is now our digital platform for the market as a whole. China. We are still working on it. Our ambition was to double size between 2010, 2013. It is the third largest global ad market, number four for Publicis. We have 5,500 people, over 60 agencies spread over something like 45 cities. We do not just have a footing in the big cities, Beijing, Canton, Shanghai, Chengdu, and so forth, that everybody knows. We are now moving down into the middle-sized cities with a network which can attract both our global and our Chinese clients. New business. Today we have three creative agencies. They are all frontline Publicis, Saatchi, Leo Burnett. Our media business there is market leader in size and performance. We have stepped up our capacities in press relations. Maurice mentioned synergy, but also healthcare. Our strategic plan is based on two points, essentially. Accelerating organic growth over 8.5% in 2011, greater than scheduled, and the reinforcing of our expertise. We have just had the new business results for 2011. As you will see here, Saatchi and Publicis are second and third performers. Starcom being number one for media. Publicis Groupe, number one on the market with a very sharp upturn in performance, up 57.5% over the previous year. Obviously, it is going to continue as we move into 2012. This is intended simply as a reminder of our acquisitions over the past 18 months. Digital, Wangfan in Shanghai, Gomye in Beijing, Chongqing, and Chengdu. In PR, Eastwei. ICL in Taiwan, and Genedigi all over China. In healthcare, Dreams Creative G4 and others are the subject of talks, but it would be premature to discuss them now. Russia is the third market we are following with considerable interest. It is the 13th ad market worldwide, 14th largest for Publicis. 900 people. We are number one there in media with VivaKi. In creative business with Leo Burnett being the leading agency, and Publicis Worldwide is in the top five agencies between three and six. Very close to one another, and it is sometimes difficult to determine the exact ranking. All agencies have done very well. Jean-Yves talked about double-digit organic growth, and we do not expect that to change substantially in 2012. Those are the acquisition of The Creative Factory, reinforcing Saatchi & Saatchi. Last of the new markets, India, which is for us, looking forward, undoubtedly a strong growth driver. It is only the 16th ad market globally for the moment. We are well-positioned on that market. It is our 15th largest market. I am convinced we can do far better than that. So we are going to endeavor to use the same strategy and the same energy that we have used in China. The objective is to double our size over the next three years. Good performance in 2011. VivaKi being new business number one for media. Leo Burnett number two for creative new business. Strong positions in PR and healthcare, which have become stronger over the year. Several acquisitions in digital and healthcare. Watermelon in 2011. Looking beyond the BRICS. We have identified ambitious objectives for a number of new markets. South Africa, Turkey, Israel, Mexico. All of these being markets that we are monitoring very attentively. It will come as no surprise to learn that our ambition is to step up the pace of our growth, improving our performance in organic growth, but also by means of targeted acquisitions. Maurice? Thank you, Jean-Yves. Well, the second part of the change that we started in 2010 is, of course, digital. We stepped up our new transformation. Every step of the way, there's something new. Not just something new, every step of the way, new opportunities open up. Opportunities that we would not have even dreamt of only a few months before. Every time we make a new step, you could expect new avenues to open up, new opportunities, especially opportunities for growth. A few words. Digital at Publicis Groupe accounted for about 7% and about EUR 300 million at the end of 2006. Since then, that number was multiplied six-fold, and at the end of 2011, we were looking at more than 30% and almost EUR 1.8 billion in revenue. This has become our core business. We'll get back to this in a moment. This is going to be at the very heart of our business. This is why we committed, and indeed, it's not a matter of having standalone networks, as some might think. Not only that, we also have fully integrated departments in our agencies with a view specifically to address all the concerns, all the needs of our requirements. So many growth areas. Of course, content is the main thing. Creativity is, of course, our strong point. Exclusive tools that we developed within the Nerve Center. Of course, partnerships with Googles and Facebooks and the rest of them. Of course, everybody has partnerships of some kind. It's not just a matter of having partnerships for the sake of partnerships. When we started them, very few people at the time were willing to rub shoulders with these huge platforms because they felt that this intermediation was what awaited them around the corner. Not only did we do the industry a big service because, of course, we were able to take on board all our people who are willing to embrace the view. Of course, we were able to take with us all these platforms, Google, Facebook, Microsoft, and AOL, because we just have an agreement with them. That meant we have strong partnerships, but of course, our technological expertise is second to none. At the Nerve Center, we have something which is rather unique, not just in terms of Audience on Demand. As early as 2008, we had something which was right at the heart of our activity, whereas others were only just starting in. So that applied to video, mobile, cloud, or e-commerce. Audience on Demand is prevalent. Of course, it takes some time for things to go through the social networks. But one thing, we certainly did not expect the social networks to deliver to the tune of the numbers found with Facebook. More than 800 million people connected. This is almost beyond belief. Indeed, beyond what I had possibly imagined myself. Of course, I am no expert myself. But there is another thing. It is not enough to have the talent. It is not enough to have the know-how and technology. That is all very well. But there is another thing we need to have, is concurrent movements between an understanding about the universe of advertising, but also an understanding of the universe of the Internet. And that is not just a few startups that can have a go at these new technologies. We are looking at fundamental strategies for the big brands who know that the future lies there and they have to go through people who have the wherewithal. Now, the interesting indication here is that the reason we are enjoying this 13.5% or indeed 13.7% growth in the digital area in 2011, this growth nonetheless is uneven because the first half was 12.2%, which was pretty good. But the second half of 2011 was up 15.1%. That made us even happier, and we do not know why that is. But when some numbers are up, it puts a smile on our faces. And so, of course, this growth was pretty much to be expected. But the main thing was that we implemented the right strategy to make the most of that potential. And, well, not only did we devise the right strategy, but we implemented it. So that is how we got to these numbers. But let us look at these numbers looking across geographical regions. We cannot go through all 104 countries. The list might be lengthy. But let us look at North America as a whole. 46.4% of our revenue, looking at an average growth level of 11.5%. Not bad considering this is a mature market. Europe is lagging behind, but still 20.8% comes from the digital sector with a 20.7% growth level, which is pretty dramatic. Asia Pacific only accounts for 13.5% of the digital revenue. It is a bit uneven. Some countries have quite a bit to catch up. India is a case in point, and the organic growth there is 11.3%. Likewise, Latin America. Of course, Latin America is lagging significantly behind. But of course, in a way, this is pretty good news because it shows there is a huge potential. I am one of those who believe that when you have gaps to fill, well, that means there is an opportunity to fill that gap. Likewise, growth indeed in Latin America was 39.7%, and the others account for just under 7% with the rest of the world almost up 24% in organic growth. Now, if we look at the main challenges and we line up all the main players and indeed all the opportunities afforded by digital technologies or the digital world. Digital world is not one spot with one opportunity. When we talk about the digital universe, we are looking at all sorts of things. Of course, content is developing considerably, and indeed, video content is going to develop exponentially. Of course, e-commerce is growing even faster. We would have thought, we would normally expect Groupon to take on such a huge share of e-commerce advertising through the internet. Groupon has taken pride of place. If we look at the various forms of entertainment are developing at a rate of nought, as they say, at extremely sustained pace of growth. We have strong assets in advertising, and advertising is riding that wave and indeed on all communication platforms. We're not looking at one segment, but indeed across all segments, there are developments and indeed the growth potential is as yet untapped. If we look at the cloud everybody's been talking about, we find that we have all sorts of users using mobile devices, social networks with mobile video devices. Anything to do with consumers can be managed through the cloud. As was found in Forrester's survey that was published only yesterday, we find that basically there are three or four major platforms that are going to dominate the market. Well, we knew it all along. You knew it all along. Needless to say, you can see this here. There's a clean relationship between the main platforms and the types of people communicating through these platforms. Of course, the main thing is these platforms basically survive on advertising. You can say anything you like except for Amazon and Apple, because they sell their own thing. Of course, Apple also wants to live on advertising, and the other platforms only live on advertising. Our role, instead of being disintermediated, in fact, our role has become central because these platforms rely on advertising revenue. We have people to deal with, and of course, whether you like it or not, even if people are rational when they make decisions, rational thinking is not the only thing. Indeed, it's not the essential thing. What gets people going, what moves people, and the reason indeed why Facebook has been growing exponentially, has been growing its number of users, it's not because it's a rational decision, is because it's an emotional decision. That is what gets people going. Of course, you have on the other side of that, you have intelligence, you have technology, and as it were, the intersection between emotional EQ and IQ. You have this human emotional agency, the agency that recognized the need to be right. The human digital agency, I beg your pardon, that has recognized the need to be at the heart of things and to understand that universe where emotional content meets intellectual content, IQ meets EQ. Of course, the reason why we believed in that sector and why we believe in that opening, that's because, A, we have the brands that we know, and we are experts. We know exactly what the strategy of these brands is, and we know how to implement it. We also understand and control the technology. The data have become, of course, a crucial element if we are to target the users, of course, data management, because, of course, data leads us to our customers, and customers are our users. Of course, at the interface of these worlds, you have one leader that has taken a position of strength, indeed an incontrovertible position, and that is Publicis Groupe. If we look at the position where we stand now and where we will stand tomorrow, it is pretty straightforward because we were able to take that spot, to take a central role in what is the way of the future, in what is a globalized world. Of course, there are all sorts of shortcomings, and indeed some countries are struggling through this globalized world. But this globalized world is a digitalized world. It is an interconnected world, and it has become a highly competitive world. We are not talking about a competitive world. It has become what I would call a hyper-competitive world. If we look at the way in which things are showing up, are developing, of course, there is an upgrade, a stepping up of digital, both in consumption and retail. It means that new businesses are only just emerging. When you talk about social networks and e-commerce, this is only the tip of the iceberg. This is the very beginning of the digital era, of the digital phenomenon. This is going to be the fundamental revolution of our globalized world. Eric has talked about the fast-growing world, and of course, we want to be incontrovertible there again on these markets because of the talent, but also with acquisitions, that is inevitable, but also organic growth, and you have seen our performances. We are not just buyers of revenue. We are developers. We are conquering these markets. We are conquering these segments with a strong determination, and that determination is shared by all our people. On the technological front, of course, there is lots to be said, and I can sum it up in just a few words. We want to be at the heart of what will happen tomorrow. We will not be turned into a technological company, a technological organization. We are not a high-tech company, but we have to master and control the technology. We have to be perfectly comfortable. Indeed, we are developing technological solutions, sometimes working with the big platforms, or sometimes we do it alone in video or audio or any other area. The Nerve Center has all sorts of plans, especially as regards audio, Audience on Demand and mobile. But of course, all these technological solutions will be made available to our customers so as to provide exclusive service. Of course, our company thrives on talent. There is no question of getting away from that, and our intention is to attract new talent and over and beyond, of course, providing better pay or compensation packages than our competitors. We believe that our values are likely to attract a better talent because we have values that we want to defend in what is trying to become a more ethical and more human world. Of course, we are preparing to develop or to train tomorrow's leaders. If we look at the numbers I will give you, and this is something I normally do not do, but I will give you some guidance for tomorrow. Somebody said, "When you said tomorrow, when is tomorrow?" Well, tomorrow is tomorrow. Let us start with yesterday. 2006 was only yesterday, and looking at digital and fast-growing countries, we had about 28% of our revenue right there. That share stands at 52.4%. If we leave out, as it were, the overlapping part, which is the intersection between digital and fast-growing, i.e., the digital sector in fast-growing countries, because it stands at 52.4, it would be 55. Tomorrow we expect that 75% of our income will derive from our digital business. It's an ambitious but reasonably ambitious expectation. If we look at fast-growing countries, we have 35%. We would have 50% in digital, 35% in fast-growing, a 10% overlap. Overall, we're looking at 75% of our revenue generated there. We're talking about the medium term. When we say tomorrow, it's not exactly the day around the corner, but it is, we're talking about a pretty near future. But what about the immediate future? 2012. I'm confident. The reason I'm confident is that we have significant resources, and the momentum that we have is such that we are being carried through. Of course, these are difficult times, and we're well aware of that. There are headwinds. Of course, sovereign debt, the economic and financial crisis. There are a number of problems in a number of countries, and needless to say, these are factors that are driving us, are dragging us down. This is true across the world, across industries. As regards our industry, there are a few favorable factors, and there are ways in which to make the most of these favorable developments. Of course, the quadrennial effect is looking at lining up the World Cup, the Olympics, and the presidential elections in the U.S. I don't know why people think this is going to be favorable to agencies, but the momentum is there. Then, of course, we have to remember that decisions were made by companies, by the corporate sector in 2008 and 2009, because back then there was a time when they had to cut back on CapEx. In doing that, some companies lost market shares, though there were more reasonable, were able to preserve their market shares. Indeed, sometimes they were able to gain market shares rather than axing them out like their competitors did in times of acute savings. If we look at the situation as it stood at the end of 2011, we found that the budget cuts were rather moderate. Of course, the digital sector is a growth driver. For us, we have a magnifying mirror, as it were, because we're looking at growth numbers there being twice of that of our other markets. If we look at NISAD and BRICS, all these countries that are looking at higher growth levels. We, of course, are making the most of that. But that is true for the population at large. What is our own competitive advantage? Our main competitive advantages are our people. Let me assure you that when we are running such a group as ours, it's a pretty easy thing because we have great people, and we have great teams around the world working their heads off. Of course, we are looking at the vast majority of people working very hard indeed. That is our main asset, our main competitive advantage. The other thing, and this is something you have been able to see and verify again and again, whenever there's a crisis, we have shown great resilience in challenging times. I'm not saying that a challenging time or challenge in itself is particularly invigorating. But we are doing better than our competitors, and this has been in the genes of this company, maybe not in my own DNA. But there is a culture of performance. That's the way we like to be. We like to do better. We like to compare ourselves with the competition and to fare better than the competition. The way we run our people, we want to be both agile and mobile. Of course, in terms of our balance sheet. Our balance sheet is very sturdy. We have strong financial flexibility. We've made digital strides, and of course, I told you the story in a few words. I'll be able to tell you more in other occasions. Of course, we're expanding tremendously in high growth countries. These are the developments that mean that I personally feel comfortable to face the new world. The new year, I beg your pardon. Of course, I'm fully confident in Publicis' ability to meet the challenges that lie ahead. I am not deluding myself. We do not expect this to be a breeze, but it is precisely because I can see the challenges squarely in the eyes, and I'm well aware of Publicis' means to address these challenges. For all these reasons, I will see in 2012 more opportunities than reasons to be worried. Well, thank you so much. Now, together with Jean-Michel and possibly with others in the room, we are at your disposal to take your questions. Thank you. Kepler Capital Markets, I have three questions. One question for Jean-Michel. You have CapEx high in 2011. Why do you have less impairment on intangible assets? Maybe ask- Then the second question on the dividends policies. You decided not to increase dividends in 2011, even though earnings per share were up 14%. Is it the case that the Sarkozy bonuses were canceled? Was that a reason not to increase dividends in the future? Then there's another question. Can we have an idea of the geographical breakdown of new businesses compared to your global revenue? Are there disparities from one region to another? Yes. Let me take the first of your questions. I must say I had exactly the same reaction as yourself. For taking 2012, I imagine we can look forward to a slight increase in impairments. Naturally, we've been looking at the details of the investments and- They're being amortized over a longer period. It's no longer three, four years, but now more like five years. This, to some extent, explains the bottom line you commented on. There's no change in policy. It's simply the structure of outgoings of investments that has led to this change. On the dividend, no, it was not the bonus dividend thing that caused us not to want to increase the dividend. When you look forward to 2012 and look at the cash outgoings, we have, first of all, the payback of our debt maturing at January 31st, which is now behind us. We don't know if there's going to be a Dentsu operation. If it is to materialize, we want to make sure we're ready to go. Third is simply foresight and prudence. But in view of the valuation of the share, we think our shareholders on the whole are pretty well treated. We would like them to feel even more so, which is why we have taken the measures you mentioned in the balance sheet. On your third question, nothing available now, but we're going to put it on the site, and we trust that the difficulty we had on the site this morning will soon be behind us. Number 4? From Batiste Capital. Three questions. At the beginning of the year, it looks as though January was a good month, but could we have details about January? The second question is about your forecasts on markets. In the press release, you said that you would like to do better than the market, but the question is, do you expect when Zenith works out a number of 4.7, are they on the money, or are you looking at developments not quite as smooth, starting at 1.7 and ending at 3.7? I'll wait for your answers on the first two questions before I take to the third question. They need new book. Well, Zenith, they're right. They have to be. They do an interesting job. Look, why don't you one day take a look ex post at their predictions right from the beginnings of the indicator at a time when we were not directly involved? You'll see that on the whole, over time, they're the ones who had the clearest view and made the fewest mistakes. Market forecasts obviously fluctuate. No one can say as a matter of certainty what the market is going to look like in 2012. Greece. We hope Greece will be resolved over the weeks coming. But if it's not, then who knows what this could generate in terms of anguish and disquiet. The ECB, I think, is doing a good job and going in the right direction. It may be that there are still a few ups and downs coming. For the time being, it seems to me that the level considered for 6, 4, 7 is reasonable. I think that there's every chance of achieving it. As to the beginning of the year, it is, as you say, good, but that's about all you can say about it for the moment, because it's after all, I mean, it's only January. Would you allow me to be a little prudent in advancing figures? But I could say that we have a beginning, which is reassuring. I believe you had a third question. Well, as you say, by the look of things, roughly 5% growth. I cannot see how with so much organic growth, you're saying that you're going to consolidate margins at 16%, because that would mean Publicis' worst margin performance in decades versus against the background of such strong organic growth. Are you just being excessively careful? Our worst margin performance. Come on. This is very refreshing. Obviously it's chilly outside, and perhaps this is reflected in our forecasts. I emphasized on many occasions that we're continuing to invest, and this is not just acquisitions. Were it to be wholly and solely external growth acquisitions, then it would be simpler. We just put it in the balance sheet, and off you go. But many of our outgoings are going into people. We have to build entities. Let me give you an example in France, Webformance. Webformance is anything but an easy operation. We're investing a lot of money. The results to date are very encouraging, and once we've got through the investment stage, then we'll start to tap the revenue. But 16% margin, I could understand your surprise if you were to get me to say not three, not two, even one of our competitors who's getting anywhere near that figure, then we'd have something to talk about. We'd have a subject to a conversation, and you might well ask, "But why is it that you're so far behind your competitors at the top of the charts?" It happens that over the years, and in fact, ever since we've been presenting these results to you on a regular basis, the fact is that the top step of the podium has been virtually our exclusive property. Now, do we leverage all of our growth in a market where there is a lot of price pressure? I'm not going to pretend to deny that. It is an obvious fact. But do we leverage all of this to try to milk? Of course, I don't have a salary package anymore. I'm entirely performance-based. Do we continue to invest? Our policy is to continue to invest. Have any further questions? Number 2 then. Charles Bedwin for BNP Paribas. Because the questions were interesting and your answers were as well, let me just say, if you invest more and you increase your margins, is this to say that digital is growing even more? Is it to say that your over-performance is going to be even greater? If you had 5.7, when Zenith announced 4.7, do you propose to have 6.7? What is the over-performance compared to the market? What do you expect? Do you expect that to step up? Two things, if I may. At another meeting, I said something I would like to repeat here. I do not think that today's margins are over the top. Let me say that again. I think that with the development of new tools, new business techniques, what we are doing in the digital field, I think we can reasonably look forward to improved margins. Attractively, not to say spectacularly so. I would not want you to construe this as meaning that we feel comfortable where we are. I am indeed saying that we are very comfortable where we are, but precisely because we are continuing to invest. I want that to be very clear to everyone. The second thing, and this is difficult, if 16% were a picnic, then everybody would be posting 16%. The second important thing is what you said about the market outperformance differential. We are working on it, and the objective is quite clearly for that gap to remain a big gap. As of today, in view of the uncertainty affecting business 2012, precisely if or what that gap is going to look like in 2012. If we smooth successive years and we take a midterm prospect, would we be able to live with a gap of about 200 or 300 bits? I would say yes. I am not saying this as a matter of certainty for 2012, because it is not going to be an easy task in 2012. We will do it. Number 3. Hello, I am with Cogefi, and I have two questions about tomorrow, and these are not questions on the numbers. You used the word emotion, emotional, and the word DNA and performance culture. The first question is, with the digital, the younger generation is very much digitally oriented because they are very much attuned to the Internet and they like the social networks, but they are not prepared to pay for the services. How does this emotion trend? That emotion is going to peter out in the end. How are you going to make money out of that? You talked about performance and your corporate DNA. Of course, Publicis is made up of a constellation of small companies. How are you going to generate a corporate-wide culture with all these small companies? Let me start with number 2. Publicis has always been what I used to call a federation of small and middle-sized companies. That is just what this business is about. That is the way it is. We have entities there. Even when I joined the group in 1971, there were a number of entities that were different and were atypical and had little in common except for values. Values are what keeps a group afloat. It is the backbone. It is what makes us strong. It happens that our values are very strong values. Integrity, innovation, passion, ethics, performance, are very strongly defended values. When I joined the group, we had something about 15-odd entities. I remember Marcel a few years down the road saying, "But there are 50 of us. This is far too many." Now it is more like 1,000. Some of them are dormant, but I couldn't give an exact figure. We've been able to maintain the same approach to values. Ask Joël Robuchon, and he'll say, "Well, there's a knack to it." I'm not the only one with the knack. It's shared by a whole group, a whole team of people, and this trickles down throughout the group from top to bottom. This is something which is what we are all about. When we had the fire in the building, we thought we'd lost an awful lot of stuff. But values don't burn, and that is why we were able to get back on the road. We experienced great difficulty. There were times in our history when we were about to have what we had created stolen from us. There is no other term. We bounced back. We've been through a lot of tough times, and those values are spread company-wide, and it is a challenge to maintain them. On digital, as you say, the world is going to continue to change. It happens that I was recently honored to organize the G8 and present the results to an audience that a modest corporate leader does not often have a chance to address. Finding yourself at the same table as Mr. Sarkozy, Mr. Obama, Madame Merkel, Mr. Cameron, Mr. Medvedev, Mr. Mori, and so on. I was about to forget Silvio Berlusconi. A very impressive moment. It's a fact that there is an enormous issue out there. How can we compensate creators if everyone wants everything free? How can this free culture continue without advertising? It's a bit like radio and telly. Facebook, Google, basically are media. We consider them as media. Because we view them as media, we felt that they were on the other side of the road. They couldn't disintermediate because they would no longer be able to serve our customers. When you look at things bluntly and simply, you realize that the potential for further development in the digital field is still enormous. There is scope for advertising to play a more and more important role and therefore for Publicis. No, I think it was the lady who was there. Oh, okay. Hello, Monsieur. Hello. Blanca Remel from Market to Market. Last year, you generated EUR 3 billion, sorry, in acquisitions. You spent EUR 3 billion in acquisitions. Do you have an order of magnitude for 2012? Will you be looking at the small or medium-sized acquisitions? Will there be some bigger ones? Will you be looking at the digital companies in growing countries, or will there be surprises? Just how do you propose to finance all these acquisitions, Monsieur? EUR 3 billion? Are you sure? We didn't realize that we were spending. Our figures say more like EUR 600 million. I'm sorry if we goofed on the figures or if we did not do a good job with communicating the figures. EUR 3 billion is what I would like my competitors to spend on an operation. I would refuse to, in fact, even more than EUR 3 billion. The real figure is EUR 600 million. We're not getting into operations of transactions of that size. No surprises coming. Our objectives are still the same. We're going to invest in digital, and we're going to invest in the fast-growing countries, and we're also going to invest in business sectors to beef up our own business on certain markets, period. Obviously, there can be surprises as was the case last year when Rosetta cropped up, or two or three years ago, when we had the Razorfish opportunity. These are transactions that were not on the market. We were not interested. They were not scheduled. But they turned out to be opportunities, and we've been more than happy with the result of all of those opportunities. No, we have no plans to invest EUR 3 billion or EUR 2 billion. The figure is still about half a billion. The Rosetta operation was a bit less than EUR 300 million. That's where we stand, and that continues to be our objective moving forward. Financing, you saw the charts. EUR 4 billion available liquidity. We have plenty of liquidity. We have no particular anguish on that score. EUR 700 million cash flow generated in 2011. No particular problem in that respect. Number one, then after that, over here. Bruno. Hello, Bruno Arnaud. Could you give us some guidance about the margins generated in the digital industry and in the fast-growing countries specifically? Fast-growing countries first. The ballpark figure is roughly in line, if you aggregate them, with the average of our margins overall. On digital, we're starting to be in line. The problem with margin, to put it bluntly, is the old continent. With countries experiencing major difficulty and tremendous drops in ad spend budgets, as recently happened in Greece, Italy, and Spain. Then obviously we hurt, and so do our margins. If we could achieve stability in that part of the world, then it seems to me that automatically margins would pick up. One follow-up question on the digital. Can you give us examples of advertising campaigns that you're very proud of to let us understand how you can make a difference, how you can do better than your competitors? Don't you have the There were a number of campaigns that were quoted, and that were mentioned. What we shall try and do in here, I'll turn with Curt Hecht, who is with us. What we are going to do is we'll produce a DVD. We'll send it out, and that will include about a dozen examples, interesting examples. They will be available online as well. So you'll have a dozen or so examples. Just one small example, which I thought was rather spectacular, and indeed, it amused both girls and boys. The campaign against Excelsia. Of course, there was the event part, but there was also the advertising and the digital dimensions. The performances on YouTube, I don't think this was unprecedented. I don't think anybody did as good as that in France, at least so quickly. But on Contrex, we were able to. That ad on that mineral water was something that was. I think Richard wants to say something. Richard raised his hand. Hello. Yeah. Well, Mr. Lévy, I have a question. Jean-Michel. Yeah, Jean-Michel was falling. Well, give him a chance to wake up. A question about China. An independent institute said that you have $200 million in revenue in China. That is only 3% of your revenue. Is that the order of magnitude that you are looking at today? And where did you start from? And where would you be happy to stand? Now, the two questions for Jean-Michel. You incurred a double cost when you moved your back office from the U.S. to Latin America. How much did it take away from profitability in 2011? And then how much savings can you expect to generate next year? And then regarding your debt ratio, how much savings are you looking on your interest expense because of the reduction of the debt? Jean-Michel. Yes, let me start. The dual cost were not less significant for 2011. Most of the processes we wanted to transfer to Costa Rica were transferred in 2010. We have a new wave, a new series coming up in 2012. But for business 2011, it is not a humongous figure. What I wanted to say in addition to that is that the organization of the department is such that in most years we save something like EUR 20 million, EUR 22 million. And that is roughly the figure we are looking forward to in 2012 to answer your question on potential savings. The next question was on debt structure. Yes. We paid back the 2012 EUR 500 million bond, EUR 506 million. This will generate savings on a full year basis of between EUR 7 million and EUR 8 million. But, we said that we would look at market conditions. If the market picked up, we might consider repaying with a simple, single issue. On China, perhaps I could ask Jean-Yves to take that question. Yes, the $200 million figure for China is below today's level, so it is an old figure. But that was the figure on which the doubling of size was predicated. So that is a 2010 figure. 2010, it was a bit dicey. 2011, not at all. Okay, perhaps we could suspend questions here and take questions over the line. And we will take our next question from Patrick Kirby of Deutsche Bank. Please go ahead. Hi. Good morning. I had three questions, please. Firstly, in terms of the outlook for Europe, I think you said in an interview recently that you expected growth in Europe this year on revenues. You are negative in the fourth quarter, I think even allowing for the tough comparatives. Are you still confident that you will have revenue growth in Europe this year? Second question is, do you have any guidance on restructuring expense this year? Down EUR 10 million in Q4 last year. Can you give us any comment on what that will be for this year? Are there any restructuring costs associated with losing GM? Then thirdly, just to ask the dividend question in a different way, or think about cash capacity within the business. What do you see as the appropriate level of gearing or net debt EBITDA for Publicis right now? Or where would you be comfortable for that ratio to be at the end of this year? Thanks. I will start with the last one. Sorry, I have to answer in French. [Foreign language] Regarding the last aspect, the right ratio, what ratio we would be happy with. In the present state of affairs, where money is cheap, the temptation would be to say, "Well, look, since money is cheap, let us take out debt and issue bonds." The thing is that there is some financial fragility, and we should not be too dependent on such financial fragility. What we advocate is rather a cautious management of the debt to EBITDA ratio. Of course, the idea is to be below 0.5. Of course, in periods of growth, we might have decided to go to 0.2 or 0.3. I think it is good to be where we stand. We do not propose to increase the debt in what is a vulnerable period. But of course, we have to gain visibility before we decide to increase our debt levels. Regarding the restructuring costs, I am not satisfied that regarding the loss of GM, we would be looking at significant restructuring costs. I do not believe we will remain without car count. You have a remarkable agency, Starcom, indeed one of the best in the world, if not indefinitely, the best in the U.S. I do not think for one moment that Starcom would remain much longer without another big automotive account, if not GM. So no big shake here. As things stand today, we do not have any significant plans to restructure anything. Well, there may be a few specific one-off situations, but we would expect restructuring costs to come down. Regarding Europe, we do expect positive growth. This has been the sentiment, even though Europe, as regards to advertising alone, might be looking at negative numbers. If we look at the budgets last year, if we look at the performances of the various agencies, what we find is that the confidence level is good as regards our ability to generate growth in Europe if it is low. Let us move on to the second question. Please give the third question. Tim Nollen, Macquarie, please go ahead. Hi. I've got two questions, please. One is again on the numbers, and one is a little bit broader. I just wanted to touch base again on the operating margin expectation for 2012, please. There was an earlier question saying, basically, why wouldn't you grow from this level? Could you just please break down one more time for us, understanding the growth expectation on the top line, what are the elements on the cost that would keep margins flat-ish on your conservative or your cautious guidance? Secondly, more broadly, you talked about social media. I wonder if you could talk a bit about what happens with pricing across the internet as so much inventory is released on social media. Assuming that obviously brings pricing down on the internet, what happens with your revenues? Are you paid, I guess, on a fee basis? Is there an incentive component for performance? How does the spread of social media impact your revenues in digital? Thanks. Okay. Tim, on the first question, good morning. Jean-Michel will second to answer. Regarding the operating margin in 2012, we said, I think fairly clearly, that we intend to maintain our investment policy, which starts with hiring people to support our digital transformation. There's going to be a major effort in the fast-growing countries, but the real core is digital, so we shall continue. We shall be careful not to go too far, too fast. But for the year as a whole, we're going to maintain the policy you are familiar with. This obviously is going to involve a little extra spending in the P&L. Now, obviously, there's going to be growth. But part of this growth will obviously impact the operating margin. So margin, flat-ish, you said. It could well be flat-ish over 2012. But it's going to contain a number of investments, meaning that we're going to have to achieve similar performance levels to those we had in 2011. In other words, contain certain costs of other categories so as to be able to fund the one-offs and the transformation effort. More liquidity in the market. Kurt, you can do it in French if you like. That wouldn't be very good. So we're seeing more liquidity in the marketplace, more inventory coming through the exchanges. So if there's more supply, obviously that's downward pressure on media pricing in the digital environment. What's interesting about that is we can actually charge more because our ability to be more precise in finding the right audiences for clients leads to us delivering better outcomes for them. Which means that on the digital side, they'll actually pay more for better performance on a yield basis. So it's actually a weird effect that you have going on with that, but a good one for us. And what we're seeing with automation in the social marketplace and being hooked into that growth of Google on the exchanges and the Facebook marketplace, which is driving their growth, it offers us more things to sell to our clients in terms of services and products. It is actually a very good thing for us with the amount of inventory that we are finding available. Another question over the phone. Ian Whittaker, please go ahead. Thanks very much. A few questions, please. First of all, can you just say what would be the full-year contribution of the 2011 acquisitions in 2012? Just on the top line. Second of all, if you could just perhaps talk a little bit about property costs as a percentage of revenues, and whether you are taking any further steps to rationalize your property costs and what that would mean in terms of margin expansion. Then the third thing is more of a longer-term question. You talked in the statement, about the ERP, and also mentioned it on the conference call. When you look out at consensus forecasts for longer-term margins, do you think that the potential margin expansion of Publicis has been underappreciated by the Street, and that you can do better than the consensus forecasts? Okay. Jean-Michel, [Foreign language]? Jean-Michel, you first. On a full year basis, as we said, acquisitions generated EUR 400 million additional top line. This, in 2012. These entities, obviously, in 2012, are going to generate growth. As you observed, they tend to be in digital and fast-growing countries, which by rights, should lead to pretty satisfactory revenue levels generated by those entities in 2012. We are placing considerable expectations on the growth of those entities. As regards the margin contributions, the entities acquired in 2011 had pretty high operating margin as a whole. It was not diluted for the group margin. Far from it. There were some years when our acquisitions were margin diluters. That was certainly not the case for business 2011. Once again, by rights, we should be in a pretty good position as we integrate those into the group through 2012. Then came the question about the ERP impact. I would like to hear Jean-Yves say a word about how ERP is to be ramped up, and then I will say a word about margin today and tomorrow in response to the ideas we have heard here this morning. Thank you, Maurice. Just a word about rollout of the ERP. The policy started several years back. We started by consolidating agencies on a country basis or a region basis to come up with sole ERPs. Setting up an SAP operation is above and beyond consolidation. It goes even further. Here, it is not region, but one for an entire process group wide. It is a very ambitious process. We are moving forward on eggs and certainly trying to avoid being excessively hasty. This is very much a matter of prototyping, and there is no player on the market having developed a tool of this type. As of today, looking at the initial pilot phases on small operations, we are making sure that everything is running as scheduled. Once we have validated the proper functioning of the first operations, then we can start to roll out for the main markets. We shall do that once again on eggs, where we are not in a situation where we have to migrate. We consider the migration will generate additional synergy because it will both reduce the number of tools required, but also will make available to us more harmonious processes. Once again, we are going to move forward very cautiously. Maurice, is that a fair way of saying things? No, Jean-Yves, it is not. No. Cautious management is a contradiction in terms. I said I would wind up with a forward-looking view of margins and what we think about the consensus. Let me remind you that there was some pretty big acquisitions, Digitas, Razorfish, Saatchi a long time ago, Bcom3 more recently. In all of these cases, the margins were far lower than ours. We gradually dragged them up to our level. Those operations were most felicitously achieved, thanks to a number of things, and in particular, our shared resources methods and our working methods, generally speaking. Our acquisitions over the years have not been dilutive. That is a very interesting point. It is the first time that we find ourselves in this particular situation. Thus far, our acquisitions had always been dilutive, but barely so. Here we have something rather interesting. The second thing is that the emerging markets are pretty much on the same basis in terms of profitability as ourselves. Some a tad higher, others a bit lower, but nothing really spectacularly different. We have a very substantial potential improvement to look forward to in view of the situation in Europe and its continuing difficulty. Once the crisis is behind us, then we shall have a considerable potential for further strides forward. We are doing a number of things practically. We mentioned ERP. We talked about AOD. Curt told you about digital, where we are looking forward to improving our own performance. There are a number of things which are positive drivers for us. All of this simply, I think, adds up to the fact that for us, there is no reason to consider that where we are and where the market sees us is necessarily the be-all and the end-all of our ambitions. This is not a climax. I do not want to put a figure on it because, unlike others, when I give figures, I like to walk the talk and not offer figments. But our margins will improve. Have we any further questions over the phone? In that case, it is fine. Lisa Yang, please go ahead. Hi, it is Richard Jones at Goldman. I just wanted to clarify the first thing. Just on the top line outlook that you are thinking about. We know the Zenith forecast is 4.7%. Are we right in understanding that you think that your organic growth for 2012 should be ahead of that? Secondly, I just wanted to come back to the dividend point a little bit, and if you could just flesh out why you are not increasing that. I had in mind that you had suggested that you would be increasing your payout ratio to 40% over time, and yet it has gone down to something in the mid-20s. Yet the net debt to EBITDA is lower than it has been in years. The cash generation is obviously pretty good. So if you could just give us a bit more color on that again, that would be great. Thanks. Okay. First, pardon. Right. The first question. Of course, we propose to do better than the industry. If the industry stands at 4.7%, we expect to outperform that. We certainly expect to outperform the market. Regarding the second question on the payout, there are several aspects to this. Number one. Well, one maybe not the most important item is we on January 31, of course, we redeemed the 2012 Eurobond, that's cash out. That's one thing. The other thing is we, should Dentsu decide to sell its shares, of course we said that we'd be prepared to buy them up and then cancel them. We need to have the cash ready for that. That's also the reason why we can't spend too much on dividends. These are the two basic reasons. Other than that, it's not as though we didn't want to follow up on the French President's project of a bonus versus the premium on dividends. There will be a premium on dividends. That will take place. We don't want to make our shareholders unhappy. In fact, no, we want to treat them very well. There's no question of depriving our shareholders, but in the payout schedule that we have, we certainly propose to keep them happy. Maybe one last question on the phone, that pretty much will wind up. One last question. Can you hear me? Yes. I have three questions. First, Mr. Lévy, you gave us a very exciting roadmap for the implementation of ERP, but do you have a timetable? Do you have targets in terms of to improve the group margin? A second question for Mr. Lévy. When we look at the developments in the digital market, I assume you'll be looking at new markets. Do you think it is not necessary to look out for new markets? Then on the fish rule. Are you in a position to say that on Razorfish? On Razorfish, can you stick to the numbers that you have or First question, Jean, maybe you can take that one. Regarding the implementation of ERP, we have a timetable for the rollout of ERP, and we certainly propose to roll it out over a 2 or 3-year period, depending on what hiccups we might come across. As Jean-Michel was saying earlier on, what synergies can be generated through our shared services center includes a number of provisions, in particular, new working methods, outsourcing to regional platforms. We started this already in the Americas. We are doing this in Asia as well, and at some point, we will have the same in Europe. But of course, in Europe, we need to have fully rolled out ERP before we can start having these platforms set up. I will tell you, sir, I do not want to give you a date, but we have to see how ERP is performing before we can promise synergies and the numbers on savings. But as Jean-Michel was saying, we are looking at about EUR 20 million in savings every year, 20 to 22. Now, as regards the last two questions, and I will go over them quickly. Regarding Razorfish, there is significant improvement, and we have reason to be very pleased and satisfied with the performance, and we have every confidence in the soundness of the team and indeed in the loyalty of the people at Razorfish. Of course, we cannot take that for granted, and it would be indeed unwise to take things for granted in general. When you are working with a partner, you cannot take loyalty for granted. You are working on that assumption. We have reason to believe everything will go according to plan, but we always have to stay on our toes and not take final results for granted. Regarding our developments, of course, what system or what organization we have is very satisfactory. Having said that, we are undergoing strategic thinking, and this is an intense work of the soul searching. We may well come up with new tactical orientations once the new strategy has been worked out. Well, thank you for your time. I do thank all those of you who kindly enough followed us online or on the telephone. Once again, let me reiterate loud and clear the confidence I have, not just in our growth numbers, but our margin numbers for 2012, and I certainly think we will have other opportunities to meet. Thank you, and we will see you soon again.