Good morning, and welcome to the Dentsu Group 2021 fourth quarter earnings call. My name is Kate Stewart from the Dentsu Group Investor Relations team. Please be aware that today's call is being recorded. The call is simultaneously held in Japanese and English, and you can choose the language you listen to by selecting from the interpretation key at the bottom of the Zoom screen as shown, choosing Japanese or English. Please make sure the original voice is always on, otherwise the sound could be disconnected. For those joining on the telephone line, you can listen to the original voice only. Today's presentation is provided on our website, named 2021 Q4 Earnings Call Presentation Materials, and will be displayed on the screen during the call. Joining me today are from Tokyo, Hiroshi Igarashi, CEO, Dentsu Group. Yushin Soga, CFO, Dentsu Group. Norihiro Kuretani, CEO, Dentsu Japan Network.
From London, Wendy Clark, CEO Dentsu International.
Hello, this is Wendy Clark.
Nick Priday, CFO Dentsu International.
Hi, everyone. This is Nick Priday.
The agenda for today will start with a business update from Hiroshi Igarashi and a financial update from Yushin Soga, followed by the strategic update from Hiroshi Igarashi, Norihiro Kuretani, and Wendy Clark. After that, we will invite you to ask questions. Mr. Igarashi, please go ahead.
Thank you. This is Igarashi. Thank you for attending Dentsu Group's fiscal year 2021 Q4 earnings call. In 2021, our top line performance has maintained momentum throughout the year to achieve record high revenue, less cost of sales and underlying operating profit. Under the leadership of Yamamoto-san, our former President and CEO, we completed the accelerated transformation program, transformed our cost structure, which resulted in a significant improvement in the operating margin. Based on these efforts, and given our confidence in the outlook for our business and industry, we today upgrade the targets of the medium-term management plan, upgrading the organic growth CAGR to 4%-5% from 3%-4% previously, and the operating margin target is raised to 18% by 2024.
To achieve these targets, we will continue our investment in the high-growth area of customer transformation and technology with an M&A fund of JPY 250 billion-JPY 300 billion through 2024. The details will be presented later from Soga-san. In keeping with our commitment to improve shareholder value, we today announce a record-high dividend of JPY 117.5 per share and a new share buyback plan of JPY 40 billion. I acknowledge that it is my responsibility to carry forward the business transformation and achieve sustainable growth. Moving to the highlights of 2021. To enhance our customer transformation and technology capabilities, we made a number of acquisitions through the year. Dentsu International strengthened its commerce capabilities through the acquisition of LiveArea. In Japan, Septeni Holdings is now consolidated, meaning Dentsu is the market leader in digital advertising share in Japan.
In addition, Dream Incubator has joined the Dentsu Group to further raise our capabilities in business consulting. Next, about recent wins at Dentsu International. iProspect won the global media account of Kering. The network earned KLM's integrated creative and media services. Merkle has won the account of BioNTech, a healthcare sector client based in Europe. For sustainability and ESG, Dentsu Group announced its participation in World Business Council for Sustainable Development last year. In Dentsu International, we have started to disclose information such as CO2 emissions and renewable energy emissions rate in line with the evaluation criteria of the international NPO CDP. We have participated in ActNow, a campaign led by the United Nations calling for climate change countermeasures.
In Japan, we were awarded the JIPDEC certification for developing the digital advertising market with compliance and trust. Dentsu Group has been selected as a constituent of Dow Jones Sustainability Index Asia Pacific for the sixth consecutive year. Dentsu International in the Corporate Equality Index 2022 of the Human Rights Campaign Foundation earned the highest score and was selected as one of the best places to work for LGBTQ+ equality. In addition, iProspect, a brand under Dentsu International, was nominated as one of the three most sustainable suppliers for its client Cox. Now handing over to Soga-san to go over the financial update.
Thank you Igarashi-san. I would now like to take you through the financial results for Q4 and full- year 2021. Starting with our headline Q4 results, we reported organic growth of 14.2% with an operating margin of 16.8%.
Q4 trading was ahead of expectation as consumer confidence grew as the effects of the pandemic eased. The results in the fourth quarter in Japan and international demonstrates the cyclical recovery in advertising, as well as the continued investment clients are making in commerce and experience. Our structural growth area of consumer-customer transformation and technology reported double-digit growth. Now fiscal year highlights. In 2021, Dentsu Group reported record high revenue less cost of sales, as well as underlying and statutory operating profits. Fiscal year 2021 revenues less cost of sales are above those reported in fiscal year 2019, with underlying operating profit 27% higher versus 2019. Slide 8 shows the organic growth broken down across our four regions. Japan reported 17.9% organic growth, driven by strong demand for digital solutions and recovery in advertising, both digital and television.
The Americas region reported strong growth in Q4, 15.4% organic growth led by U.S. and Canada with full- year growth rate at 10.6%. December was ahead of expectations, reporting over 20% organic growth with increased spend from a number of clients across luxury, tech, and finance. CXM, led by Merkle, finished the year with a strong performance despite more challenging comparables in the fourth quarter. In EMEA, organic revenue growth was 11.1% in fiscal 2021, and 12.6% in Q4, led by Denmark, France, Germany, Italy, Poland, Sweden, and Switzerland all reporting double-digit organic growth. All three service lines reported double-digit organic growth in the fourth quarter. In APAC, excluding Japan, organic revenue growth was 4.7% in 2021, and 3.8% in Q4.
The Australian market saw a good growth across all three service lines as the impact from the refreshed management team is beginning to show with Q4 growing over 20%. India reported revenue declines in the fourth quarter due to some disruption in the local market clients. In China, the creative shortfall was largely offset by stronger than expected performance from CXM and media in the final months of the year. In DJN, Dentsu Inc. continued to benefit from the pickup in advertising across the Japanese market. Dentsu Digital grew over 31% in 2021, demonstrating the strength of demand for digital advertising and services. Consolidation of Septeni cements our position as the leader in the digital advertising industry in Japan.
We continue to make progress as we shift our business towards the fast growth customer transformation and technology area with the ratio of revenues in Japan reaching 24.4% in the full- year and 25.7% in Q4. Pitch activity as we enter 2022 remains high, with our win rate high in large-scale projects. In Dentsu International, Media was the standout segment, up 12.6% with particular strength in the U.S. market. The Creative business reported continued acceleration in performance through the second half with strong momentum in the U.S. and U.K. Weakness in China and India pulled the overall growth rate lower. CXM grew 8.9% in 2021, but on a two-year basis grew by 6% versus 2019. Merkle finished the year with a strong performance in the fourth quarter and outlook remains buoyant.
This slide covers the movement of revenue less cost of sales on a year-over-year basis. Adding to the currency benefit, organic growth is the main driver of the revenue increase, but acquisitions also contributed. LiveArea, the acquisition announced in Q3, delivered organic growth of over 30% in the fourth quarter, demonstrating the demand for differentiated and connected commerce experience across the entire customer journey. Integration with Merkle is progressing well with LiveArea already rebranded as Merkle.
Slide 12 shows us the operating margin on an upward trend over the past two years, demonstrating the impact of our transformation efforts to lower our cost base, as well as the operating leverage from a strong top-line performance due to the market recovery. Slide 13 shows the movement of underlying operating profit year-on-year, demonstrating the scale and impact of the transformation the group has undertaken over the past 12 months, and the reduction in costs at both Dentsu Japan and International. Now I'd like to explain the reconciliation of operating profit. There are two points to be emphasized. The sale of property assets in Japan, such as the Tokyo headquarters building, and reduction in transformation costs. The next slide is a reconciliation of net profit to statutory net profit. Better-than-expected performance of acquired businesses.
It means, we revalue these businesses at a higher level, which is then recognized as a loss on the P&L. Second, with respect to related tax expense, this is due to the sale and leaseback of the headquarters building as disclosed in the third quarter. Looking ahead, I am pleased to share our updated capital allocation framework going forward. Over the past 18 months, we have secured the balance sheet through the sales of a number of non-trading assets. Along with the recovery in business performance in fiscal year 2021, we end the year in a net cash position. The focus for the group going forward is to invest for growth, as the next phase after structural transformation. Our CapEx investment over the coming three years will total JPY 70 billion, in line with previous years.
The acquisition fund we announced today is JPY 250 billion-JPY 300 billion over the next three years, to be spent across Japan and the International business. We will focus our spend on the fast growth areas of the customer transformation technology and growing our exposure to the structural growth area of our industry. Finally, shareholder returns. We are pleased to announce a further JPY 40 billion in buyback in this year, today, and a record dividend of JPY 117.5. We maintain our dividend policy of reaching 35% payout by 2024, the final year of the medium-term management plan. Our investments will be supported by a healthy and flexible balance sheet operating in our indicative medium-term range of 1x-1.5x . Moving to our guidance of fiscal year 2022.
We expect our revenue less cost of sales to be exceeding JPY 1 trillion for the first time at JPY 1,059.2 billion, the highest in our history. We look for 4% organic growth rate at group level, and 2%-3% for DJN, and 4%-5% for Dentsu International. Operating margin is expected to be marginally lower year-on-year at 17.7%, due to investment in Japan for future growth after 490 basis points improvement in fiscal year 2021. Dentsu International is expected to be at the same level as fiscal year 2021. Next, shareholder return policy. Based on the underlying basic EPS payout ratio, 30% this year, we reached a record level of JPY 117 per share for fiscal year 2021.
Initial forecast for dividend of fiscal year 2022 is JPY 130 per share with a 32% payout ratio. Let me conclude my part. Our 2021 results show the group's full recovery. We transformed our cost base, delivering underlying operating profit up over 40% year-on-year, leading to record dividend and additional shareholder returns through the buyback announced today. In 2021, the first year of our midterm management plan, we transformed our operations and simplified our business. In 2022 and beyond, we will focus on the growth, in particular growing areas. In terms of exposure to the fast-growing area of our industry, both organically and through acquisition. We enter 2022 with optimism, a guidance of 4% organic growth.
This optimism leads to the upgrading of our mid-term targets to 4%-5% growth rate from the 3%-4%, and operating margin from 17%- 18%. Thank you. I will pass the microphone to Igarashi-san.
Thank you, Soga-san. I now would like to give an update on our medium-term management plan. 2021 was the first year of the mid-term management plan, and we have made significant progress. We have simplified the business and reduced the cost base. In addition, we were able to grow the top line with the tailwind from the advertising market recovering at a faster pace than we expected at the beginning of the year. The group enters 2022 with a focus on growth. Next, I would like to explain our view on the macro trends and market context that support our confidence in our upgraded mid-term targets. We recognize that people are redefining their lifestyles post COVID-19.
As new technologies become more widespread in our lives, people's digital attitudes and behavioral changes are accelerating, while values that emphasize sustainability and community orientation seen in the pandemic are expected to remain. I believe that these changes in values will continue to increase social demands on companies in such areas as climate issues, DE&I, economic gaps, and human rights, especially among the younger generation. According to Merkle's proprietary research, 83% of Gen Z and 76% of Millennials said companies should address social issues. Many industries and corporations are redefining their brands through the use of technology and digital transformation. The speed of this change is increasing. Under such circumstances, only 14% of consumers feel that the brands understand them. This creates a huge opportunity for investment, and this is where we will see the structural growth for our company.
Given this business environment, we recognize that Dentsu Group's purpose is becoming more and more important. We exist to realize a better society by contributing to the growth of our clients, partners, people, and all consumers. I would like to propose our new management policy to achieve this purpose. The Dentsu Group had previously viewed ourselves as a B2B company that faced its clients. From now on, we go one step up ahead to business to business to society, B- to- B-t o- S. That's who we are, a company that should be focused on society. Companies can no longer solely focus on their own business issue. Beyond our clients, there are consumers and societies. Together with our clients, we can solve those social issues and create mid to long-term value for the society as a whole.
With this B2S perspective, the Dentsu Group can achieve sustainable growth, and it will maximize its corporate values for shareholders, client companies, partners, and employees. Next, to become a B-to-B-to-S company, I would like to explain the strategic focus for 2022. The first is customer transformation and technology, CT&T, the structural growth area within our industry and for our investment. In 2021, CT&T continued to grow significantly with the percentage of the revenue less cost of sales at 29.1% across the group. Through CT&T, integrated growth solution makes B2B2S a reality. We have integrated our services and committed ourselves to customer growth. We will integrate our diverse capabilities, including the new field of CT&T, to deliver solutions that solve clients' challenges. Another point is a new client offering to realize B2B2S. We will globally launch Dentsu Good, a sustainability accelerator, coming April.
This is a client offering that aims to achieve business growth through social contribution based on our know-how to tackle clients' social challenges. Last but not least, to meet social demands, we will challenge ourselves to better our ESG targets. The Sustainable Business Board, established last year with Wendy Clark as Chair and other senior management, is an organization for the integration of sustainability initiatives and business growth strategies at the highest level of governance. Under the Sustainable Business Board, we will promote our sustainability strategy in 2030. Also, the Dentsu Group's largest and most important asset is people. We will continue to invest in our talent and improve employee engagement. I would like to touch on customer transformation and technology, the most important part of our business, and where the bulk of our investment will be focused.
CT&T, by its nature, requires continuous consulting services and can bring longer-term, stickier, and deeper relationships with clients. Growing our exposure in this area de-risks the businesses as we reach budgets beyond the CMOs at our clients.
It produces a higher percentage of recurring revenues and provides greater opportunity for near and offshore capabilities. Our expanding capabilities differentiate us versus consulting competitors because we have deeper marketing and creative skills with which to drive connection, value, and performance for our clients. We are differentiated versus our agency competitors because we have deeper technology and data implementation skills and scale. We will focus on a total M&A fund mainly on CT&T areas. Specifically, in addition to acquiring capabilities for designing customer experiences centered on commerce and consulting clients on their digital transformation, we plan to invest in strengthening our capabilities in the area of marketing technology and cloud solutions with working with Salesforce, Adobe, Google, Amazon, AWS, and others. The acquisition of LiveArea in Q3 is a perfect example of this.
The four pillars of the mid-term management plan announced in February 2021 will now be explained. It will remain constant, but the details are to be reviewed on an annual basis with regard to the fast-changing business environment. Let me explain our first pillar, business transformation and growth. The action plan is listed on the left side of the slide. Investments in customer transformation technology enhancing competitiveness with the data and technology, and those will provide synergies and lead to integrated growth solutions delivered. It is our core for business transformation and will contribute to business growth. Also, a client offering, Dentsu Growth that realizes the B2B2S will create differentiation and competitiveness against our peers. The KPIs and targets listed on the right side of the slide should be referred to.
We will upgrade our organic growth KEGA from 2022 to 2024 into the 4%-5% range. In addition, we will continue to plan reaching a CT&T-to-revenue ratio to 50% over time. Next, the second pillar, operations and margins. In 2022, we will actively invest in our business while maintaining an appropriate balance with medium- to long-term profitability. We will continue to simplify organization structure, enhance the efficiency of our operations, and use of the nearshore and offshore to reduce the delivery cost of our services. In addition, IT can be used to change the way employees work, promote collaboration among employees across organizations, and support the realization of integrated growth solutions from the business infrastructure environment. Our medium-term target of 17% operating margin was achieved in the first year of the four-year plan.
Going forward, we will manage the range of 17%-18%, reaching 18% in 2024. Next, the third pillar, capital allocation and shareholder returns. JPY 70 billion CapEx investment in operations, M&A fund focusing on customer transformation and technology. Those will make profit, and we will return earnings to the shareholders by improving the payout ratio. As a KPI, the medium-term net debt to adjusted EBITDA ratio will be managed at 1.0x-1.5x level. Also, we retain our policy to progressively improve the dividend payout ratio, reaching 35% by 2024. Finally, let me talk about the fourth pillar, social impact and ESG. We will keep carrying out the 2030 sustainability strategy under the governance of the Sustainable Business Board.
Regarding employee diversity, equity, and inclusion, DJN has appointed a Chief Diversity Officer, and Dentsu International has appointed three regional Chief Equity Officers who will promote employee diversity, equity, and inclusion throughout the organization. To improve our governance, we will focus on the supervisory function of the Board of Directors and promote diversity in the management structure. The Non-Executive Chairman's role of the Board of Directors separates supervision from execution to improve checks and balances. With a female ratio of 31% and non-Japanese executive ratio of 38%, we will lead the group's sustainable growth under the new leadership. To ensure its effectiveness of pursuing ESG management, we recently decided to reflect non-financial indicators in the senior leaders' compensations for 2022 and onward. As for the KPI, we will continue to make progress against long-held targets such as net zero emission and DE&I.
We will ensure better working environment for our people, our greatest asset, improve the employee engagement scores and employee diversity. By 2030, we will reach the target of 50% female managers at Dentsu International, 25% at Dentsu Japan Network, and 30% for the entire group. From here onward, updates on our Japan and international business will be reported from each CEO. Kuretani-san, please go ahead.
Thank you, Igarashi-san. I would like to talk about our Japan business. In 2021, the integrated growth partner model made significant progress. The graph on the left shows the total volume of internet advertising of the Dentsu Japan Network and Septeni. In 2021, the combined billing volume has reached JPY 407.9 billion, the highest market share in Japan with the top growth rate.
This resulted from the development of integrated planning based on the group-wide collaboration, the promotion of cross-sell with CT&T, and the delivery of the Advanced Solutions through joint development with platformers. The graph on the right shows revenues by business domain. The advertising business, including internet advertising, has recovered to the level that exceeds a pre-COVID level. On the other hand, CT&T achieved a significant increase of 29.1% compared to 2019. As a result, the CT&T revenue ratio of Dentsu Japan Network has increased significantly to a level over 20%. This is due to the uniqueness of the group's unified capabilities of creative analytics, project management, and system integrators such as ISID and DD. We believe that the foundational work of the integrated growth partner model is approaching completion.
On the next slide, I will explain the strategic focus to achieve the medium-term targets from this year to 2024. Securing talents is a major focus. As mentioned earlier, the breadth and quality of the solution that integrated growth partners assumes has been developed to a considerable extent. From this year onward, we will start to scale this. The graph on the left shows the proportions of advertising and CT&T's talents. While stably supplying talents to respond to the growing demand in internet advertising by accelerating the hiring of CT&T talents, we will increase the proportion of CT&T human resources from the current 30% to over 40% in 2024. This will be achieved through the hiring of new graduates and mid-career talents, the promotion of reskilling and M&A. Competition for talent is intensifying.
However, our unique integrated growth partner model offers a wide range of posts for B2B2S, which is being well-received by employees as they satisfy their willingness to contribute to society and upgrade their skills. In fact, the turnover rate is lower than the industry average, and the number of transfers from major consultancies and other companies is increasing. With regard to reskilling, the majority of its employees within the group have the potentials to be business consultants, and a good cycle of talent development has begun with the 100 or more role model talents in the organization. Finally, I will explain about Dentsu Corporate One, which is our shared service. With the expansion of the group, we are no longer waiting to upgrade our corporate functions, such as human resources, finance, legal affairs, and auditing.
On the other hand, it is necessary to separate highly specialized strategic planning operations from daily operations, expand the use of BPO, and promote efficiency. The establishment of Dentsu Corporate One aims for this sophistication and efficiency at the same time. The number of employees of the group companies that the group provides services will increase from 35% this year to at least 50% in 2024. This will lead to an improvement in margins, including the effect of early voluntary retirement programs, which was implemented for the last two years. Above, I have explained the business in Japan. Wendy, please introduce the international business.
Thank you, Kuretani-san. 2021 has been a significant year of return performance for Dentsu International, with much for us to be proud of and excited by. You've already seen our financial results, so I'll highlight some of our other achievements. We've shared our vision of becoming the most integrated agency network in the world, and the statistics from our clients show we're making progress here. 83 of our top 100 clients now take services from us in two or more of our three service lines. This shows the demand and potential that already exists within our client base. We successfully launched Dentsu Gaming and Dentsu Health, and these cross-service line solutions are gaining traction. Our integrated global health offering has seen multiple new cross-service line client wins. Of note, we awarded Creative AOR for one of the largest pharma brand launches coming later this year.
Dentsu has a firm stake in the ground on gaming, cemented by the successful launch of our Global Gaming Solution in the second half of 2021. Now, with over 700 gaming creators globally, Dentsu has a passionate community of experts who enable brands to become part of gaming culture. For instance, we're purchasing land and building a persistent experience space in the metaverse for a beverages client, and we're leveraging our media expertise to create moments of hype for digital drops and NFT projects for luxury brand clients. Our leadership in this space has been further validated recently as we've been officially awarded as the lead agency for Facebook gaming globally. Dentsu's Gaming Solution will power a full end-to-end creative media, social, and analytic solution for Facebook's gaming unit worldwide.
We've continued to scale our relationships with our technology partners, and we retain our ranking as Salesforce's ]Number 1 agency partner in the world. This scale gives us strong marketplace advantage versus peers. The simplification of our business continues. This not only drives margin and client advantage as previously referenced, it also makes Dentsu International a simpler, easier place for our employees to work. This was validated through our most recent annual employee engagement survey at the end of 2021, where we achieved our highest employee engagement score in the last four years. We're investing in our people, in dedicated development and training, supporting our high-potential talent, our senior female leaders, and giving our P&L leaders accelerated training through a bespoke development program with Duke University.
We're ensuring we have a diverse and inclusive workforce at all levels of the organization, and are on track to achieve our publicly stated goals in this area. In the last year, we've recruited three new world-class leaders to the Dentsu International Executive leadership team in the roles of Global Chief Creative Officer, Global Chief Strategy Officer, and Global Chief Operating Officer. Finally, our social impact remains a cause close to my heart and where we continue to differentiate ourselves. We're incredibly proud that Dentsu International is one of just seven companies worldwide to have its net zero target validated by the globally recognized Science Based Targets initiative, including a deep decarbonization target of 90% by 2040. Now, looking ahead to 2022, as Igarashi-san has said, our focus is on growth, and here I'll touch on some of our key initiatives from each of our service lines.
For Media, our pipeline of opportunities is currently $4.5 billion, a healthy level, and 80% of those opportunities are offensive. We are focused on converting this pipeline and growing our revenues ahead of the market. In 2021, we closed the year with $1.5 billion in net new media billings and will continue to build on this momentum in 2022. Indeed, in last night's Super Bowl in the United States, more than 30% of the media inventory was negotiated and bought by Dentsu. We will also continue to deploy our technology platform, dentsu.Connect, creating a simplified end-to-end platform, connecting our people and clients and accelerating our integrated work. For CXM, this is a priority area for investment and acquisitions. We will focus on fast growth areas, adding capabilities and scale, as well as continuing to develop our technology partner relationships.
These partners' platforms are growing double-digit and generating 2x-5x spending requirements in their ecosystem to support this technology. This is where we come in on the implementation and integration into a client's existing platforms, and of course, the usage of it to attract, retain, and grow our clients' customers. For creative, under the new leadership of Fred Levron, our Global Chief Creative Officer, we're launching a refreshed product offering, making creativity the horizontal unifier of our people, company, and clients. We will continue to scale content, Content Symphony, a flexible on-demand content production capability for our clients. We already have 30 clients on board.
All of our growth initiatives will be supported by continued business simplification and brand optimization that not only reduces our cost to operate, but also connects directly to the demand we see in the marketplace of growth delivered through agility and efficiency, which of course, directly connects to our ambition to be the most integrated agency network in the world. I'll now hand back to Igarashi-san.
Wendy, thank you. Lastly, I would like to point out that we will focus on maximizing corporate value for all stakeholders of Dentsu Group by accelerating business transformation. We aim to become a B2 B2 S company. Through this, we will maximize the corporate value of the Dentsu Group for shareholders, clients, our people, and all our stakeholders. We will extend our capabilities by investments in customer transformation and technology, enhance our competitiveness, and create sustainable value to the society, solving clients' business and social challenges. At the same time, we will keep simplifying organizational structure and driving operational efficiency. As a result, profits from growth and efficiencies will be appropriately allocated and be returned to shareholders, including the improvement of the working environment for our people. We will pursue ESG of our own and solidify the business foundation. This is the end of my presentation.
Thank you for your attention. The MC will guide you through the Q&A session. Kate, please.
Thank you. We will now start the Q&A session. Please use Zoom's Raise Your Hand function, and for those joining from the telephone line, please press Star nine. I will ask you to unmute, introduce yourself and your company name. Please limit questions to two per person, and please state your two questions at the start. Thank you. We'll take a quick pause if the first question comes in. Our first question comes from Fiona Orford-Williams from Edison. Fiona, please unmute yourself and go ahead.
Hi, Fiona, can you hear me? Please unmute yourself.
Yes, I can.
Thank you.
Yes, can you hear me now? Yes. All right. Sorry about that. Good morning, everybody. Good evening in Japan. Given the scale of your outlined M&A investment, can you tell me a little bit more please about the sort of businesses you're looking for, scale and what multiples vendors are expecting? Then my second question please is about the margin performance. Can you talk us through the impact of the investment and the underlying assumptions that you've built in for the FY 2022 guidance, please? Thank you very much.
Thank you, Fiona. The first question focused on our M&A investments that are planned over the next few years. I'll ask Yushin Soga to start, followed up by Nick Priday. Thank you.
This is Yushin Soga, and let me take the question first. Capital allocation policy was described in my presentation. 2024, between JPY 250 billion-JPY 300 billion will be used for transformation, as mentioned. M&A pipeline is quite full, and there are several deals in the pipeline already. Domain we will be focusing on is CT&T and for the group, Japan and North America for the priority markets, we will be focusing our investment efforts. On the assumption or criteria of acquisition CT&T, as you know, the price tags are quite high, but EBITDA multiple between 15x-20x, that's probably the level. After Aegis got together with Dentsu in 2013, many deals have been dealt with. In the future, rather than focusing on several deals in several market, we will focus on important markets, and the deals will be quite large.
We did $2 billion-$3 billion deals and many of them, but we will be selective, deals that would be north of $10 billion. There have been successful deals and unsuccessful deals in the past, but as we try to be selective on case by case after the M&A deal is closed, PMI will be done at a more quicker phase to integrate the acquired target into a group. This is going to be a major important agenda. To supplement, in International, there are many plans for M&A, so I would like to ask my colleague, Nick Priday, to supplement my comment and explain about the plans for international.
Thank you, Soga-san, and thank you, Fiona, for the question. The real thrust here is to focus on growth, as we emerge from the pandemic, and to really deliver on the strategic priorities for the group, and growing our profile in the CT&T space as we've set out earlier in the presentation. The focus is on those fast-growing businesses. Within CT&T segment, we're really focused on Commerce and Digital Transformation businesses. Historically, the type of activity we've done has mostly been in the small to medium-sized bolt-on space with a deal size of around $25 million in total. We do anticipate doing a smaller number of larger deals on a go-forward basis with a sweet spot somewhere between $50 million-$150 million. Depending on the opportunity.
Recognizing that we may do some smaller deals in Asia Pacific where there's less scale in the CT&T space at this point in time. I should say in terms of the track record on M&A, it's generally been very positive. If you look at the Merkle acquisition back in 2016, that's enabled us to really transform our business and to really have that very strong starting point with the best asset in the market on which to build our CT and offering, CT&T offering going forward. Soga-san's already talked about the multiples.
It's a very competitive space, but we do believe that our model, our approach, and the experience of vendors who've sold to Dentsu in the past adds a competitive advantage to us in terms of being able to attract those companies to join us going forward. Thank you.
Thank you. The second question focused on the movements in full year 2022 margin. I'll ask Soga-san to answer for Dentsu Japan and Nick for Dentsu International. Thank you.
Thank you for the question. On the Japanese business margin, let me go first. 2021 midterm management plan commitment, 20% margin. Our performance was 29.9%, which was well beyond the target. 2022, as for 2022 is concerned, this margin, rather than focusing on improving this margin, of course we will continue to seek efficiency of our business. Such efficient business should generate profit, and that will be used for mid- to long-term investment. In the Japan business transformation is being sought. In comparison to the International market, the M&A is rather subdued. Human capital investment, infrastructure investment tilted towards organic. We have to focus on structural transformation, and that is the area where we will be investing in order to gain our strength in CT&T and solution and transformation in such areas in the mid-term.
For the Japan business, 22% operating margin has been announced in our guidance. We don't assume that our operating margin will be significantly below 22% in the mid-term. We will continue gradual improvement from this level and continue to strike a balance between growth and investment. That's it for the Japan business.
This is Nick speaking. Just following up on the margin guidance for Dentsu International. First of all, I'd say that the margin performance in 2021 has seen us deliver on our long-held goal of 15% margin and actually exceed that target by 90 basis points one year early. The margin improvement versus 2020 is up by 220 basis points. If you go back to 2019, the margin improvement for the International business is up 370 basis points. As we now move into 2022, the priority really is for us to deliver stronger growth on a sustained basis going forward. We are confident in our ability to sustain margin in 2022, and that's certainly what we expect.
There are a number of levers which have been behind the margin improvement of the group. Property cost and reducing our office footprint has been one feature. We've also obviously been engaged on an accelerated transformation program across the business, which has seen us simplify and de-duplicate across the group, and has resulted in a structural lowering of our expenses. The other point I would call out is that actually we've actually spent less money achieving those savings than we'd previously anticipated. Quite material reductions in the level of restructuring costs that we've taken as a group and in the international business, and yet we've still delivered the margin improvements, which we committed to the market.
We're relatively confident in terms of our ability to sustain margin into 2022. As I say, the focus is on growth and number of investments we've been making, as Wendy outlined previously, which will hopefully enable us to deliver on that goal. Thank you.
Thank you. The next question is from Mr. Ishihara from Daiwa Securities. Mr. Ishihara, please go ahead.
This is Ishihara of Daiwa Securities. I have two questions. First of all, once again, I would like to ask about the CT&T. Is there something lacking in terms of CT&T for Dentsu today? What is missing? I think that in Japan, CT&T ratio is lower compared to overseas. I think the imminent challenge is to increase CT&T in Japan. Is this a correct understanding? Second question, regarding the share buyback that has been announced at this time. Once again, let me confirm. For share buyback, when implementing share buyback, what are the conditions? In terms of total shareholder return, is that the criteria?
Is it because of excess funding that it will enable that it has been implemented last year and another share buyback is going to be implemented this year? What is the background for you to come to a decision in terms of share buyback?
Thank you for your questions. The first question focuses on customer transformation technology, and what is needed within the business. I'd like to ask Mr. Igarashi to comment first, followed by Mr. Kuretani, and then Wendy Clark. Thank you.
This is Igarashi. Thank you very much for your question. Regarding CT&T, what is missing today for our group now will be addressed. With respect to this is the most important challenge that we're taking on today, in the marketing activities of our clients, so we need to make a commitment, and digital measures must be supported in full. This is the major flow that is required. What we are emphasizing in this regard is the client's customers experience design in order to enable this. What is the most important is the data analytics domain, and we are making progress in a steadfast manner in this area. We have been able to lay down the foundation. Regarding the area of CX, customer experience area, commerce and digital promotion domain.
These are very important domains for us, for the Japan business as well as, for Dentsu International. This is a very important domain for both businesses. Therefore, we will consider M&A investments going forward. In terms of the Japan business, compared to Dentsu International, the progress is behind. It may look that way. For on the part of Dentsu Japan, we are, however, accelerating the pace in this area for this year in the consulting, area Dream Incubator asset has been acquired for this process. So we are accelerating the pace, in this area for the Japan business. The conventional Marcom, collaboration, can be very promising as well. Therefore, the existing domain and also look for areas where we can spiral upward by 2024, we believe that significant progress can be made. Kuretani-san, over to you. Hi.
First of all, regarding the Japan business, what is missing in terms of CT&T business? In terms of functions, it does not exist. As I have already mentioned, we have already laid the foundation for this area. What we lack is scale. Let me give you some background information. For Dentsu Japan, inherently, the client and customer touchpoints, the communication thereof, has been our business domain from the past. In the past, communication excellence has been aspired, and we have been making headway. Corporate identity, rebranding, and service development, or product development, are areas that we have been providing consultation services. From several years ago, ABX scale has already been established. In addition to that, with the progress made in digitalization, everything has to be more data-driven in terms of the PDCA.
Therefore, the foundation for data management or data management platform will need to be added to our service line. ISID and Dentsu Digital have been driving growth in this area. At the risk of repeating myself, I'd like to say that there is nothing we are lacking in terms of functions. What we need to do is to provide more volume so that we can provide the services to more customers. We need to add resources to enhance the scale of our capabilities. For the International business, Wendy, over to you.
For Dentsu International, as you all recognize, now represents fully within total revenue. It’s accelerating. You saw transformation, as Nick mentioned, MarTech and technology. Overall, we feel positive about our current position in growth. Just let’s take a quick break while we sort out that technical problem. Please bear with us. Apologies for that. The second question focused on buyback and how was the buyback decided, and will there be further shareholder returns? Soga-san, please go ahead.
Thank you very much for the question. So far, in terms of additional shareholder returns, we have been utilizing short-term excess from the fund. That's not what we're doing, but rather mid-term cash position as well as cash plan will be the basis of making decisions in an agile manner. With respect to upgrade of mid-term management plan by 2024, the business plan has been identified. In other words, profit growth is considered in that regard. M&A and other business transformation investment funds will be taken into consideration and to consider the cash position in the mid-term. As we have communicated in the past, when we make sales of significant assets, we will consider additional shareholder returns.
These two will be taken into consideration. This time, at this structure, we have decided to conduct a share buyback. As I have already mentioned, at the end of 2021, the balance sheet has become sound and very strong. At the end of fiscal year, net cash was established. Mid-term financing needs have been considered in coming to the decision of the share buyback. That's all.
Thank you. Our next question comes from Mr. Maeda from SMBC Nikko Securities. Mr. Maeda, please go ahead.
Thank you. My name is Maeda of SMBC Nikko Securities. I hope you can hear my voice.
We can. Thank you. Please go ahead.
I have two questions. First of all, organic growth target will be raised from 4%-5% or between 4%-5% CAGR. I would like to confirm the backdrop. Advertising market recovered more than you had expected or CT&T performance was strong, so you factored in the potential growth in CT&T. Digitalization through the people has probably become a tailwind. Have you found a new pathway of growth and judged that that has potential? So can you describe the background to the upgrading of the guidance? That's my first point. Second, this is rather a qualitative question, but this question is to Igarashi-san. Yamamoto, previous CEO, had embarked upon a major structural transformation, and during that time, mindsets of the employees changed. Is that true? Expertise for future growth and updating of skills might have been completed.
What needs to be changed, what must remain? Preparation for future growth, is that well established? Are you being able to share your thoughts with the employee from the perspective of top management? Can you explain? Those are my two questions.
Thank you. The first question focused on the upgraded guidance over the mid-term to 4%-5% organic growth. Mr. Igarashi, could you start with your confidence, please, in the long-term outlook of the business? Wendy, follow on for international. Thank you.
Thank you very much. Thank you, Maeda-san. First of all, let me try to respond to the first question regarding the organic growth and upgrading. Again, the biggest driver is the recovery in the advertising market. Last fiscal year, the recovery had been larger than we had assumed. There had been supply chain disruptions, but the momentum in the recovery was over and beyond such disruption in the supply chain. Further, in the CT&T domain, our clients are continuing their significant investment in that area, and we are strongly committed to supporting them. Therefore, CT&T is also a major contributor. Maeda-san, you spoke of the third factor, which is the behavioral change on the part of the consumers and digitalization becoming a positive factor for us. That is another factor that's creating this tailwind, especially in the area of commerce.
In such new growth area.
We are investing, and that is well-aligned with the behavioral changes in the consumers. Thank you.
I'll just build on to Igarashi-san's comments here for Dentsu International. Our confidence comes across multiple factors. The return to growth has come from cyclical benefit, but it will now also start to come from the structural benefit of CXM, as I was just mentioning in the last answer. We've seen strong acceleration from CXM in fourth quarter at 14.7% growth, and now at 6% growth versus 2019. We also saw our creative service line accelerating in Q4 at 9.7% growth. If you couple that with our new media billings of $1.5 billion from 2021, we see all three service lines now performing strongly. We had over 4,000 new business wins in the network in 2021.
As I mentioned in my earlier prepared comments, we're seeing our strategy really take hold now. 83 of our top 100 clients working with us in two or more service lines. All the while, we are maintaining our client satisfaction with total rating score at an eight out of ten, which puts us in the highest performing quadrant of our peers. We're seeing a four-year high on our employee engagement score. So to your second question, also, I'll kinda weave it in here. We have an engaged workforce, and we're investing in our skills training, as I mentioned in our prepared comments.
If we take that and then we couple that with the M&A commitment that you've heard earlier from our comments, and we really look at our restructured cost base, we start to see all factors here coming together which give us the confidence in accelerating growth to that 4%-5% level in 2022. The second question is for Mr. Igarashi, focusing on the investments in our people to ensure we have the skills to support customer transformation and technology going forward. Thank you.
Thank you very much. Let me respond to the second question then. During the past two years, under the leadership of previous CEO, Mr. Yamamoto, reform had taken place, but with much pain. Structural transformation was conducted, but that transformation, more or less, has been completed. In this context, we ourselves realize that we have to transform ourselves, and that had led to great changes in the mindset of our employees. Along with that change, skill set had to change. Re-capability had to be done. In order to upgrade the skills of our employees, we have to inject even more energy in the upgrading of our skills, and we're going to begin that in this fiscal year.
The key to B2B2S in our strategy, which I mentioned in my presentation, Dentsu Group has to become a big presence in the society with our corporate value and our meaning of existence. Our existence has to be evaluated. We've declared that we will create value in order to become a contributor to the society, and with that, we think we will be able to raise the motivation of our employees, as Wendy commented. Engagement of our employees is reflected in the index. That's another proof, and we will seek to further improve employee engagement. Thank you.
Thank you for your question. Our next question comes from Julien Roch from Barclays. Julien, please go ahead.
Hi there. Good morning. Thank you for taking the question. First of all, a remark. There was a technical problem, so we couldn't hear at all Wendy's answer on M&A. If she could answer again, that would be great. My first question on international. If I look at your 4.5% group target organic for 2021-2024, do you expect international to be lower, in line, or higher? That's the first question. Then to get to this growth rate, what kind of growth rates do you expect from media, creative, and CXM? Thank you very much.
Thank you, Julien. I'll hand over to Wendy. Wendy, if you could repeat your previous answer where we had the technical issue, and then talk about Dentsu International's growth rate by service line over the three years. Thank you.
Sorry, I was on mute. Thanks, Julien. To repeat the answer on CXM. So what I'd said was that CXM now for CT&T. Sorry, I'm putting the two acronyms together. It represents over a third of our revenue now. We've seen that accelerate, as I said, 14.7% performance in Q4. Now 6% growth over 2019. We're seeing double-digit growth in B2B, commerce, experience, and analytics, which give us confidence in the results and the acceleration into 2022 and beyond.
Of course, you've heard about the M&A commitment now that we are focusing on CT&T, and so we've got that investment and that line of sight moving forward to continue up to that 50% goal, which we believe we'll achieve by the end of the mission for Dentsu International. The question itself
Missing what might be missing, all I said at the time was that we have to continue to stay at the forefront of these capabilities. This is where we see the fastest growth, the fastest change in our capabilities, and we therefore have to continue to invest and sharpen across all of them, including cloud technology, MarTech, and Digital Transformation, which we believe will represent a lot of the future. That was my previous answer. Moving on to the second question, sorry, just to repeat, I believe it was around our growth targets for the next three years and our confidence on where we are in the 4%-5% growth target. We have confidence in that as we just sort of were answering previously.
We've raised that target, previously $3 billion-$4 billion, now $4 billion-$5 billion. It's coming off a lot of the confidence that I mentioned in the last answer. We are seeing the transformation of the creative business take hold, which I think, you know, arguably has been the drag on our business. We saw the overexposure in our experiential business MKTG. Of course, now coming out of the pandemic, that is improving. We're leading that transformation now creatively under Fred Levron's leadership to be that horizontal unifier. We're really talking about creative delivered through all three service lines. We again feel a measure of confidence coming off Q4 with a really resilient performance across creative.
From CXM, as you can see also from my previous answer, we have a lot of confidence in CXM continuing to deliver. We will see that pushing to double-digit growth in the mid-term, and we feel confident about our continued investment there and position. Media will continue to be cyclical. It will continue to be absolutely critical and important. This is where we really differentiate ourselves from the consultancies. Of course, when we're doing our consultation and transformation work with clients, we can actually take those plans into the marketplace, execute on them, and invest.
Media continues to be a very critical lever for us and a critical lever for our clients who use it as, you know, probably the most sensitive and rapid lever they can use in the marketplace when they're looking to return performance and invest in brands. That will continue. Across all three service lines, we feel well-positioned in the mid-term.
Thank you.
Thank you.
Thank you, Julien. Our next question will come from Mr. Kinoshita at Bank of America. Mr. Kinoshita, please go ahead.
Than you. Kinoshita of BOA. Is my voice coming through? Hello.
Yes, sir. Please go ahead.
Than k you very much. I have two questions. First of all, this is related to a previous question, but on share buyback, how do you think about it? Mid- to long-term M&A pipeline shareholder return and JPY 40 billion share buyback that was announced. Mid- to long-term performance, if it goes as planned and without any disposal of asset and M&A goes as planned, by 2024, is there low likelihood of additional share buyback or is there still a buffer and the JPY 40 million max is set with a buffer beyond? Can you clarify on that point? That's my first question. Second, sports marketing. This recent market environment, can you comment on that? On the Olympics, many comments had been made.
It's not been confirmed, but FIFA World Cup broadcasting rights, the bank consortium may not be granted according to press reports, or you won't be, you might not be involved. Sports marketing is one of your strengths, had been, or are you seeing any environmental changes in the market? If so, how are you going to respond to changes in the sports marketing market? Thank you.
Thank you for the questions. The first question focused on capital allocation, balance of M&A and shareholder returns. Can we expect any further buybacks by 2024? I'll hand over to Soga-san. Thank you.
Kinoshita-san, thank you for the question.
First of all, JPY 40 billion share buyback was announced, and I spoke about background. What about the future? As you said, or as you have thought through, future share buybacks, I'm not denying any additional share buyback for the future. We will look at the cash flow. Is there a buffer? No, we're not saving any room intentionally. Up to 2024, as I said, through business growth, operating cash flow may increase and of course a payout ratio will increase and through profit growth. Shareholder benefit through dividend will also increase. As I said, a major budget is allocated for business structure transformation investment. Those are all the factors behind the decision of this buyback. As I've been speaking, agility is necessary. We will be looking at the midterm capital plan and announce share buyback.
With flexibility. If the assumption changes, then we will make changes flexibly to our decisions. Again, I'm not denying the possibility. Are we saving headroom? No, that's not the right way to look at it either. Thank you.
Thank you. The second question focused on sports marketing. I'd like to ask Mr. Kuretani to answer. Thank you.
Thank you. On sports, too, if we look at the short-term trend, especially when it comes to broadcasting rights, because of the unreasonable pricing caused by some broadcasters, there had been a spike, but we think of that as a one-off factor. You may know that the unreasonable player who had made unreasonable prices is disabled from continuation of business activities. At any rate, we together with the clients, will seek ROI that the clients seek with transparency and through progressing on digitalization with various federations, we will engage in sports business, and we will further sustain and strengthen our competitiveness in this area. Thank you.
Thank you. I'll now hand over to Igarashi-san to finish the question. Thank you.
Igarashi speaking. Let me add to the comment made by Kuretani-san. Kinoshita, as you said, the rights business is the traditional sports marketing business, but that's not the only area we're engaged in. We think of sports as a content, and we're focused on upgrading our solutions capability. Since January in Japan, we started up a division engaged in sports business, sports solution business, and Dentsu Sports International was started up last year for Japan and international. This is an organization, a new entity, that will look at Japan and international markets. This entity will not be engaged only in the simple rights transaction business, but will be offering sports solution business. Those are some of the initiatives that we've launched. Thank you.
Thank you. Our next question comes from Mr. Kinoshita from Bank of America. Thank you. Mr. Kinoshita, please go ahead.
Oh, I just posed my question. Can I do another one?
Yes, please go ahead. Thank you.
Well, I have a follow-up question to the previous one, but availing myself of this opportunity, I'd like to ask the following question. It seems that Japan is not able to keep up with the global trends fully for global sports events. What is the positioning of Japan? Is it weakening in terms of the tournament timing? It seems that Japan is increasingly becoming disadvantaged. Is that the case, or do we not have to worry about that? What is your understanding on this matter?
Thank you for your question focused on the sports division in Japan again. I'll ask Igarashi-san to start to follow up with Kuretani-san if there's any additional comments. Thank you.
Mr. Kinoshita-san, thank you for your question. Well, as you have rightly mentioned, we are in a deal war, and there have been cases where we have lost. As mentioned by Kuretani-san, unreasonable high price deals will inevitably die down. This is the theory of the market. The market will converge to the appropriate direction. In terms of broadcasting time for Japan, you asked whether there is a disadvantage or not, and if we have lost a deal battle because of the broadcasting time in Japan. We are not assuming that to be the case going forward, and we don't want to participate in unreasonable pricing battle. I think it will converge to the right level ultimately. The negative impact should be limited. That's all.
Thank you very much. I would now like to conclude today's earnings call. Thank you very much for participating today, and you may now disconnect. Thank you again.