EX-99.1 2 ex991.txt CONSOLIDATED INTERIM FINANCIAL STATEMENTS EXHIBIT 99.1 [PUBLICIS GROUPE LOGO] CONSOLIDATED INTERIM FINANCIAL STATEMENTS (FOR THE SIX MONTHS ENDED JUNE 30, 2006) CONSOLIDATED INCOME STATEMENT ------------------------------------------------------------------------------------------------------------------------------------ MILLIONS OF EUROS NOTES SIX MONTHS SIX MONTHS ENDED YEAR ENDED DEC. ENDED JUNE 30, JUNE 30, 2005 31, 2005 2006 ------------------------------------------------------------------------------------------------------------------------------------ REVENUES 2 122 1 932 4 127 Personnel expenses (1 304) (1 178) (2 454) Other operating expenses (442) (412) (908) OPERATING MARGIN BEFORE DEPRECIATION AND AMORTIZATION 376 342 765 Depreciation and amortization expense (excluding intangibles arising (53) (54) (116) on acquisition) OPERATING MARGIN 323 288 649 Amortization of intangibles arising on acquisition (12) (11) (23) Impairment - - (33) Non-current income (expense) 1 (26) 59 OPERATING INCOME 312 251 652 Cost of net financial debt (23) (41) (78) Other financial income (expense) (9) (4) (14) INCOME OF CONSOLIDATED COMPANIES BEFORE TAXES 280 206 560 Income taxes (87) (68) (157) NET INCOME OF CONSOLIDATED COMPANIES 193 138 403 Equity in net income of non-consolidated companies 17 5 11 NET INCOME 210 143 414 Net income attributable to minority interests 15 13 28 Net income attributable to equity holders of the parent 195 130 386 ------------------------------------------------------------------------------------------------------------------------------------ PER SHARE DATA (IN EUROS) ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF SHARES 210 447 414 210 541 236 210 415 990 Net earnings per share 0.93 0.62 1.83 NUMBER OF SHARES - DILUTED 241 491 601 233 978 190 233 816 994 Net earnings per share - diluted 0.87 0.61 1.76 ------------------------------------------------------------------------------------------------------------------------------------
2 CONSOLIDATED BALANCE SHEET ------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS NOTES JUNE 30, 2006 DECEMBER 31, 2005 (1) ------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------- ASSETS Goodwill, net 2 846 2 883 Intangible assets, net 718 763 Property assets equipment, net 550 580 Deferred tax assets 208 216 Investments accounted for the equity method 46 33 Other financial assets 110 118 NON-CURRENT ASSETS 4 478 4 593 Inventory and costs billable to clients 570 580 Accounts receivable 4 259 4 145 Other receivables and other current assets 517 446 Cash and cash equivalents 1 612 1 980 CURRENT ASSETS 6 958 7 151 TOTAL ASSETS 11 436 11 744 ------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Capital stock 79 79 Additional paid-in capital and retained earnings 1 838 2 006 Shareholders' equity 1 917 2 085 Minority interests 21 20 TOTAL EQUITY 1 938 2 105 Long-term financial debt (more than 1 year) 1 949 1 913 Deferred tax liabilities 194 220 Long-term provisions 542 539 NON-CURRENT LIABILITIES 2 685 2 672 Accounts payable 5 002 5 030 Short-term financial debt (less than 1 year) 193 224 Income taxes payable 234 263 Short-term provisions 96 120 Other creditors and other current liabilities 1 288 1 330 CURRENT LIABILITIES 6 813 6 967 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 11 436 11 744 ------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------- Net financial debt 532 207 ---------------------------------------------------------------------------------------------------------- (1) AFTER RECLASSIFICATION OF RECEIVABLES AND PAYABLES ON MEDIA SPACE TRANSACTIONS (SEE NOTE 1).
3 CONSOLIDATED CASH FLOW STATEMENT --------------------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, 2006 JUNE 30, 2005 FULL YEAR 2005 (1) --------------------------------------------------------------------------------------------------------------------------------- I- CASH FLOWS FROM OPERATING ACTIVITIES Net income 210 143 414 Income taxes 87 68 157 Cost of net financial debt 23 41 78 Capital (gains) losses on disposal (before tax) (1) 26 (58) Depreciation, amortization and impairment on property and equipment and 65 65 172 intangible assets Non-cash expenses on stock options and similar items 7 10 20 Other non-cash income and expenses 8 6 11 Equity in net income of unconsolidated companies (17) (5) (11) Dividends received from equity accounted investments 4 3 9 Restructuring expenditure (9) (18) (30) Taxes paid (119) (92) (167) Interest paid (41) (55) (93) Interest received 30 19 44 Change in working capital requirements (2) (243) (536) 74 NET CASH PROVIDED BY OPERATING ACTIVITIES 4 (325) 620 II- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment and intangible assets (36) (34) (83) Proceeds from sale of property and equipment and intangible assets 1 3 8 Proceeds from sale of investments and other financial assets, net (4) (2) 7 Acquisitions of subsidiaries (39) (35) (71) Disposals of subsidiaries 7 - 98 NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES (71) (68) (41) III- CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid to parent company shareholders - - (55) Dividends paid to minority shareholders of subsidiaries (12) (13) (19) Cash received on new borrowings 5 767 747 Reimbursement of borrowings (50) (465) (460) Net purchases of treasury stock and equity warrants (211) 7 7 NET CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES (268) 296 220 IV- IMPACT OF EXCHANGE RATE FLUCTUATIONS (33) 66 72 NET CHANGE IN CONSOLIDATED CASH FLOWS (I + II + III + IV) (368) (31) 871 --------------------------------------------------------------------------------------------------------------------------------- Cash and cash equivalents at January 1 1 980 1 186 1 186 Bank overdrafts at January 1 (95) (172) (172) ---- ----- ----- Net cash and cash equivalents at beginning of year 1 885 1 014 1 014 Cash and cash equivalents at end of the period 1 612 1 094 1 980 Bank overdrafts at end of the period (95) (111) (95) ---- ----- ---- Net cash and cash equivalents at end of the period 1 517 983 1 885 NET CHANGE IN CASH AND CASH EQUIVALENTS (368) (31) 871 --------------------------------------------------------------------------------------------------------------------------------- (2) BREAKDOWN OF CHANGE IN WORKING CAPITAL REQUIREMENTS --------------------------------------------------------------------------------------------------------------------------------- Change in inventory and costs billable to clients (21) 78 (97) Change in accounts receivable and other receivables (390) (338) (391) Change in accounts payable, other creditors and provisions 168 (276) 562 --- ----- --- CHANGE IN WORKING CAPITAL REQUIREMENTS (243) (536) 74 --------------------------------------------------------------------------------------------------------------------------------- (1) THE DIVIDENDS VOTED BY THE SHAREHOLDERS OF THE PARENT COMPANY IN JUNE 2005 FOR AN AMOUNT OF (EURO) 55 MILLION WERE PAID IN JULY 2005. IN CONSEQUENCE, THEY HAVE BEEN RECLASSIFIED FROM THE "DIVIDENDS PAID TO PARENT COMPANY SHAREHOLDERS" CAPTION INTO THE "CHANGE IN WORKING CAPITAL REQUIREMENT" CAPTION (SEE NOTE 1).
4 STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY ------------------------------------------------------------------------------------------------------------------------------------ GAINS AND MILLIONS OF EUROS ADDITIONAL RESERVES LOSSES SHARE- MINORITY TOTAL NUMBER OF SHARE PAID-IN AND RECOGNIZED HOLDER'S INTERESTS EQUITY SHARES CAPITAL CAPITAL RETAINED THROUGH EQUITY EARNINGS EQUITY ------------------------------------------------------------------------------------------------------------------------------------ 195 471 061 JANUARY 1, 2005 BEFORE DEDUCTION OF TREASURY 78 2 537 (692) 38 1 961 31 1 992 STOCK ------------------------------------------------------------------------------------------------------------------------------------ (13 382 843) DEDUCTION OF TREASURY STOCK EXISTING AT (332) (332) (332) JANUARY 1 (A) ------------------------------------------------------------------------------------------------------------------------------------ 182 088 218 January 1, 2005 after deduction of treasury 78 2 537 (1 024) 38 1 629 31 1 660 stock ------------------------------------------------------------------------------------------------------------------------------------ Change in value of available for sale (5) (5) (5) investments Hedge on net investment 10 10 10 Change in cumulative translation adjustment 69 69 4 73 ------------------------------------------------------------------------------------------------------------------------------------ GAINS AND LOSSES RECOGNIZED THROUGH EQUITY 74 74 4 78 ------------------------------------------------------------------------------------------------------------------------------------ Net income for the period 130 130 13 143 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RECOGNIZED INCOME AND EXPENSES FOR THE 130 74 204 17 221 PERIOD ------------------------------------------------------------------------------------------------------------------------------------ 9 880 Increase in capital stock of Publicis Groupe SA Dividends paid (55) (55) (13) (68) Share-based compensation 10 10 10 Buyback of equity warrants (BSA) (1) (1) (1) Partial early redemption of the 2018 Oceane (9) (9) (9) (equity component) Effect of acquisitions and of commitments to (8) (8) purchase minority interests ------------------------------------------------------------------------------------------------------------------------------------ 195 480 941 JUNE 30, 2005 BEFORE DEDUCTION OF TREASURY 78 2 537 (617) 112 2 110 27 2 137 STOCK (1) ------------------------------------------------------------------------------------------------------------------------------------ 292 834 Purchases/sales of treasury stock (B) 8 8 8 ------------------------------------------------------------------------------------------------------------------------------------ (13 090 009) Deduction of treasury stock existing at June (324) (324) (324) 30, 2005 (C=A+B) ------------------------------------------------------------------------------------------------------------------------------------ 182 390 932 JUNE 30, 2005 AFTER DEDUCTION OF TREASURY 78 2 537 (941) 112 1 786 27 1 813 STOCK (1) ------------------------------------------------------------------------------------------------------------------------------------ (1) AFTER ADJUSTMENTS DETAILED IN NOTE 1 - ACCOUNTING POLICIES
5 ------------------------------------------------------------------------------------------------------------------------------------ GAINS AND NUMBER OF ADDITIONAL RESERVES LOSSES SHARE- MINORITY TOTAL SHARES MILLIONS OF EUROS SHARE PAID-IN AND RECOGNIZED HOLDER'S INTERESTS EQUITY CAPITAL CAPITAL RETAINED THROUGH EQUITY EARNINGS EQUITY ------------------------------------------------------------------------------------------------------------------------------------ 197 109 010 JANUARY 1, 2006 BEFORE DEDUCTION OF 79 2 584 (402) 147 2 408 20 2 428 TREASURY STOCK ------------------------------------------------------------------------------------------------------------------------------------ (13 039 764) Deduction of treasury stock existing at (323) (323) (323) January 1 (a) ------------------------------------------------------------------------------------------------------------------------------------ 184 069 246 JANUARY 1, 2006 AFTER DEDUCTION OF TREASURY 79 2 584 (725) 147 2 085 20 2 105 STOCK ------------------------------------------------------------------------------------------------------------------------------------ Change in value of available for sale (6) (6) (6) investments Hedge on net investment (2) (2) (2) Change in cumulative translation adjustment (82) (82) (1) (83) ------------------------------------------------------------------------------------------------------------------------------------ GAINS AND LOSSES RECOGNIZED THROUGH EQUITY (90) (90) (1) (91) ------------------------------------------------------------------------------------------------------------------------------------ Net income for the period 195 195 15 210 ------------------------------------------------------------------------------------------------------------------------------------ TOTAL RECOGNIZED INCOME AND EXPENSES FOR 195 (90) 105 14 119 THE PERIOD ------------------------------------------------------------------------------------------------------------------------------------ 2 500 Increase in capital stock of Publicis Groupe SA Dividends paid (66) (66) (12) (78) Share-based compensation 7 7 7 Buyback of equity warrants (BSA) (201) (201) (201) Additional interest on Oranes (1) (1) (1) Effect of acquisitions and of commitments (1) (1) to purchase minority interests ------------------------------------------------------------------------------------------------------------------------------------ 197 111 510 JUNE 30, 2006 BEFORE DEDUCTION OF TREASURY 79 2 584 (468) 57 2 252 21 2 273 STOCK ------------------------------------------------------------------------------------------------------------------------------------ (358 550) Purchases/sales of treasury stock (B) (12) (12) (12) ------------------------------------------------------------------------------------------------------------------------------------ 13 398 314 Deduction of treasury stock existing at (335) (335) (335) June 30, 2006 (A=B+C) ------------------------------------------------------------------------------------------------------------------------------------ 183 713 196 JUNE 30, 2006 AFTER DEDUCTION OF TREASURY 79 2 584 (803) 57 1 917 21 1 938 STOCK ------------------------------------------------------------------------------------------------------------------------------------ ----------------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, 2006 JUNE 30, 2005 DECEMBER 31, 2005 ----------------------------------------------------------------------------------------------------------------------------- 105 105 105 Revaluation of property 18 35 24 Revaluation of available for sale investments Hedge on net investment 7 10 9 Cumulative translation adjustment (73) (38) 9 ----------------------------------------------------------------------------------------------------------------------------- TOTAL GAINS AND LOSSES RECOGNIZED THROUGH EQUITY 57 112 147 -----------------------------------------------------------------------------------------------------------------------------
6 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. ACCOUNTING POLICIES The Publicis Group's consolidated financial statements are prepared in accordance with IAS/ IFRS international standards applicable at June 30, 2006 as approved by the European Union. The half year consolidated interim financial statements are prepared in accordance with IAS 34 "Interim financial reporting". The accounting policies applied at June 30, 2006 are identical to those applied in the consolidated financial statements published at December 31, 2005, with the exception of the change in balance sheet presentation described below. The half year consolidated interim financial statements at June 30, 2006 and the notes included therein were authorized for issue by the Management Board meeting of July 24, 2006 and were reviewed by the Supervisory Board of July 26, 2006. EFFECT OF IFRS STANDARDS AND INTERPRETATIONS APPLICABLE AS FROM JANUARY 1, 2006 Publicis adopted the following interpretations and amendments to IFRS which were obligatorily applicable as from January 1, 2006: - IFRIC 4 "Determining whether an arrangement contains a lease", - Amendment to IAS 19 "Employee benefits", - Amendments to IAS 39 "Cash flow hedge accounting of forecast intra- group transactions" and "Fair value option", - Amendment to IAS 39 and IFRS 4 on financial guarantees, - Amendment to IAS 21 on net foreign investments. Application of these texts did not have a material impact on the Group's financial statements. In particular, Publicis did not elect for the fair value option provided by the IAS 39 amendment "Fair value option" and did not elect to recognize actuarial gains and losses outside the income statement in accordance with the option provided by IAS 19. A) MODIFICATION OF THE FINANCIAL STATEMENTS AT JUNE 30, 2005 The opening IFRS balance sheet at January 1, 2004 was finalized at the time of preparation of the consolidated financial statements at December 31, 2005. As a result, the consolidated financial statements at June 30, 2005 were modified in comparison with the published interim financial statements in the following manner: - Reduction in shareholders' equity of 134 M(euro) following the recognition of deferred tax liabilities relating to the tradenames recognized on the acquisition of Bcom3, - Increase in shareholders' equity of 26 M(euro) relating to the accounting treatment of the finance lease of the Chicago building. All of these changes resulted in a reduction in shareholders' equity at June 30, 2005 of 108 M(euro). The impact on the results for the first half of 2005 is immaterial. 7 B) CHANGE IN BALANCE SHEET PRESENTATION All receivables and payables on media space purchases, including those where the Group acts as an agent, are henceforth classified in the "Accounts receivable" and "Accounts payable" captions. The effects of this change in balance sheet presentation at December 31, 2005 are presented hereafter: ----------------------------------------------------------------------------------------------------------------- BALANCE SHEET AT BALANCE SHEET AT MILLIONS OF EUROS DECEMBER 31, 2005 - RECLASSIFICATIONS DECEMBER 31, 2005 - PUBLISHED AFTER RECLASSIFICATIONS ----------------------------------------------------------------------------------------------------------------- Accounts receivable 4 014 131 4 145 Other receivables and other current 577 (131) 446 assets ----------------------------------------------------------------------------------------------------------------- Accounts payable 4 605 425 5 030 Other creditors and other current 1 755 (425) 1 330 liabilities -----------------------------------------------------------------------------------------------------------------
C) ADJUSTMENT TO CASH FLOW STATEMENT AT JUNE 30, 2005 The cash flow statement published in respect of the half year ended June 30, 2005 presented the dividends voted by the shareholders of Publicis Groupe SA under the "Dividends paid to parent company shareholders", even though these dividends were not paid until the start of July 2005. As a consequence, these dividends, representing an amount of 55 M(euro), have been reclassified from the "Dividends paid to parent company shareholders" caption to the "Change in working capital requirements" caption. 8 2. CHANGES IN THE SCOPE OF CONSOLIDATION 2.1 ACQUISITIONS IN THE PERIOD The main acquisitions in the period were as follows: - In March 2006, the Group acquired 60% of Solutions Integrated Marketing Services, leader in marketing services in India, - In April 2006, the Group acquired 100% of a Belgian agency Duval Guillaume, the largest independent advertising and marketing services agency in the country, - In May 2006, the Group acquired 51% of Yorum, Allmedia, Bold and Zone, which are Turkish advertising and communications agencies. All acquisitions in the period, taken together, represent less than 0.5 % of consolidated revenues and made a positive contribution of less than 0.5 % to net income attributable to equity holders of the parent. 2.2 DISPOSALS IN THE PERIOD The Group did not make any material disposal in the period. 3. PERSONNEL EXPENSES AND HEADCOUNT Personnel expenses include salaries, commissions, bonuses, employee profit sharing and holiday pay. They also include expenses related to stock option plans and expenses related to pensions (excluding the net effect of unwinding of discount on benefit obligations which is included in "Other financial income (expense)"). --------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, JUNE 30, 2005 2006 --------------------------------------------------------------------------- Remuneration 1 037 941 Social security expenses 174 154 Post-employment benefits 38 32 Stock-option expense 7 10 Temporaries and freelances 48 41 --------------------------------------------------------------------------- TOTAL 1 304 1 178 ---------------------------------------------------------------------------
BREAKDOWN OF HEADCOUNT BY GEOGRAPHICAL AREA: ---------------------------------------------------------------------------- JUNE 30, 2006 JUNE 30, 2005 ---------------------------------------------------------------------------- Europe 15 320 14 429 North America 12 026 11 484 Rest of the world 12 477 11 574 ---------------------------------------------------------------------------- TOTAL 39 823 37 487 ----------------------------------------------------------------------------
9 4. DEPRECIATION, AMORTIZATION AND IMPAIRMENT --------------------------------------------------------------------------- ----------------- ---------------- MILLIONS OF EUROS JUNE 30, 2006 JUNE 30, 2005 --------------------------------------------------------------------------- ----------------- ---------------- Amortization expense on other intangible assets (excluding intangibles (8) (8) arising on acquisition) Depreciation of property and equipment (45) (46) ----------------- ---------------- DEPRECIATION AND AMORTIZATION EXPENSE (EXCLUDING INTANGIBLES ARISING ON (53) (54) ACQUISITION) (12) (11) AMORTIZATION OF INTANGIBLES ARISING ON ACQUISITION - - Impairment of intangibles arising on acquisition Impairment of goodwill - - Impairment of property and equipment - - ----------------- ---------------- IMPAIRMENT - - --------------------------------------------------------------------------- ----------------- ---------------- TOTAL DEPRECIATION, AMORTIZATION AND IMPAIRMENT (65) (65) --------------------------------------------------------------------------- ----------------- ----------------
5. NON-CURRENT INCOME (EXPENSE) This caption brings together unusual items of income and expense. It notably includes capital gains and losses on disposal of assets. ---------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, 2006 JUNE 30, 2005 ---------------------------------------------------------------------------------------------------------- Capital gains (losses) on disposal of assets 1 (4) Capital gains (losses) on redemption of financing instruments (1) - (22) Other non-current income (expense) - - ---------------------------------------------------------------------------------------------------------- NON-CURRENT INCOME (EXPENSE) 1 (26) ---------------------------------------------------------------------------------------------------------- (1) AT JUNE 30, 2005, THIS REPRESENTS THE CAPITAL LOSS ON REDEMPTION OF 62.36% OF THE OCEANE 2018.
6. NET FINANCIAL COSTS ------------------------------------------------------------------------------------------------------------ MILLIONS OF EUROS JUNE 30, 2006 JUNE 30, 2005 ------------------------------------------------------------------------------------------------------------ Interest expense on loans and bank overdrafts (53) (55) Interest expense on finance lease obligations (5) (5) Interest income 35 19 ------------------------------------------------------------------------------------------------------------ COST OF NET FINANCIAL DEBT (23) (41) ------------------------------------------------------------------------------------------------------------ Foreign exchange gains (losses) 9 - Change in the fair value of derivatives (10) 1 Financial expense related to unwinding of discount on long-term (3) (3) vacant property provisions (at a rate of 5%) Net financial expense related to unwinding of discount on pension (5) (3) provisions Dividends received from unconsolidated companies - 1 ------------------------------------------------------------------------------------------------------------ OTHER FINANCIAL INCOME (EXPENSE) (9) (4) ------------------------------------------------------------------------------------------------------------ NET FINANCIAL COSTS (32) (45) ------------------------------------------------------------------------------------------------------------
10 7. INCOME TAXES The income tax expense for the interim period ended June 30, 2006 is calculated by applying the estimated average effective rate for the full year to the pre-tax result for the interim period. On this basis, the effective tax rate is 31 % for the first half of 2006 as against 33% for the first half of 2005. 8. EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE ------------------------------------------------------------------------------------------------------------------------ JUNE 30, 2006 JUNE 30, 2005 ------------------------------------------------------------------------------------------------------------------------ NET INCOME USED FOR THE CALCULATION OF EARNINGS PER SHARE (IN MILLIONS OF EUROS) Net income attributable to equity holders of the parent a 195 130 IMPACT OF DILUTIVE INSTRUMENTS: - Savings in financial expenses related to the conversion of debt instruments, net of tax (1) 16 12 ----------------------------------------- Net income attributable to equity holders of the parent - diluted b 211 142 NUMBER OF SHARES USED FOR THE CALCULATION OF EARNINGS PER SHARE Average number of shares in circulation (after deduction of treasury 183 891 221 182 416 236 shares) Shares to be issued to redeem the ORANEs 26 556 193 28 125 000 ----------------------------------------- Average number of shares used for the calculation c 210 447 414 210 541 236 IMPACT OF DILUTIVE INSTRUMENTS: - Effect of exercise of dilutive stock options 2 043 274 264 541 - Effect of exercise of equity warrants 344 166 - - Shares resulting from the conversion of the convertible bonds 28 656 747 23 172 413 ----------------------------------------- Number of shares - diluted d 241 491 601 233 978 190 ------------------------------------------------------------------------------------------------------------------------ (IN EUROS) ------------------------------------------------------------------------------------------------------------------------ EARNINGS PER SHARE a/c 0.93 0.62 EARNINGS PER SHARE - DILUTED b/d 0.87 0.61 ------------------------------------------------------------------------------------------------------------------------ (1) THE ONLY ANTI-DILUTIVE INSTRUMENTS AT JUNE 30, 2006 ARE THE STOCK-OPTIONS WHOSE EXERCISE PRICE IS GREATER THAN THE AVERAGE SHARE PRICE DURING THE PERIOD. AT JUNE 30, 2005, THE EQUITY WARRANTS AND THE 2018 OCEANES WERE ALSO ANTI-DILUTIVE AND WERE THUS NOT TAKEN INTO ACCOUNT IN THIS CALCULATION.
11 ------------------------------------------------------------------------------------------------------------------------ JUNE 30, 2006 JUNE 30, 2005 ------------------------------------------------------------------------------------------------------------------------ NET INCOME USED FOR THE CALCULATION OF HEADLINE EARNINGS PER SHARE (1) (IN MILLIONS OF EUROS) Net income attributable to equity holders of the parent 195 130 ITEMS EXCLUDED: - Amortization of intangibles arising on acquisition, net of tax 7 7 - Impairment, net of tax - - - Capital loss on the early redemption of the OCEANE 2018, net of tax - 16 ----------------------------------------- Adjusted net income attributable to equity holders of the parent e 202 153 IMPACT OF DILUTIVE INSTRUMENTS: - Savings in financial expenses related to the conversion of debt 16 12 instruments, net of tax ----------------------------------------- Adjusted net income attributable to equity holders of the parent - f 218 165 diluted NUMBER OF SHARES USED FOR THE CALCULATION OF EARNINGS PER SHARE Average number of shares in circulation (after deduction of treasury 183 891 221 182 416 236 shares) Shares to be issued to redeem the ORANEs 26 556 193 28 125 000 ----------------------------------------- Average number of shares used for the calculation c 210 447 414 210 541 236 IMPACT OF DILUTIVE INSTRUMENTS: - Effect of exercise of dilutive stock options 2 043 274 264 541 - Effect of exercise of equity warrants 344 166 - - Shares resulting from the conversion of the convertible bonds 28 656 747 23 172 413 ----------------------------------------- Number of shares - diluted d 241 491 601 233 978 190 ------------------------------------------------------------------------------------------------------------------------ (IN EUROS) ------------------------------------------------------------------------------------------------------------------------ HEADLINE EARNINGS PER SHARE (1) e/c 0.96 0.73 HEADLINE EARNINGS PER SHARE (1) - DILUTED f/d 0.90 0.71 ------------------------------------------------------------------------------------------------------------------------ (1) EARNINGS PER SHARE BEFORE AMORTIZATION OF INTANGIBLES ARISING ON ACQUISITION, IMPAIRMENT, CAPITAL LOSS ON THE EARLY REDEMPTION OF THE OCEANE 2018, NET OF TAX
It should be noted that the following operations affecting ordinary shares or potential ordinary shares took place during the half year period: - Exercise of the put on the OCEANE 2018 in January 2006: 1,149,587 OCEANEs were redeemed, thus eliminating an equivalent number of potential shares. - Public equity warrant buyback offer closed on February 14, 2006: the offer resulted in the buyback of 22,107,049 equity warrants, leading to the elimination of an equivalent number of potential shares. 12 9. GOODWILL CHANGES IN GOODWILL ---------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS GROSS VALUE IMPAIRMENT NET VALUE ---------------------------------------------------------------------------------------------------------- AT JANUARY 1, 2005 2 732 (109) 2 623 ---------------------------------------------------------------------------------------------------------- Acquisitions / impairment 72 (6) 66 Changes related to the recognition of commitments to 50 - 50 purchase minority interests (1) Disposals and derecognition (8) - (8) Translation adjustment and other 160 (8) 152 ---------------------------------------------------------------------------------------------------------- DECEMBER 31, 2005 3 006 (123) 2 883 ---------------------------------------------------------------------------------------------------------- Acquisitions / impairment 64 - 64 Changes related to the recognition of commitments to 16 - 16 purchase minority interests (1) Disposals and derecognition (11) 11 - Translation adjustment and other (121) 4 (117) ---------------------------------------------------------------------------------------------------------- JUNE 30, 2006 2 954 (108) 2 846 ---------------------------------------------------------------------------------------------------------- (1 ) WHILE AWAITING A SPECIFIC IFRS OR AN IFRIC INTERPRETATION, COMMITMENTS TO PURCHASE MINORITY INTERESTS HAVE BEEN RECOGNIZED IN FINANCIAL DEBT WITH THE DOUBLE ENTRY BEING BOOKED TO MINORITY INTERESTS AND, FOR THE BALANCE, TO GOODWILL. ANY FUTURE CHANGES IN SUCH MINORITY INTERESTS AS WELL AS ANY CHANGE IN THE VALUATION OF SUCH COMMITMENTS WILL MODIFY THE RELATED GOODWILL BALANCE.
At June 30, 2006, the gross value of goodwill resulting from the Bcom3 acquisition amounts to 1,826 M(euro). Impairment recognized in respect of this goodwill amounts to 9 M(euro) at June 30, 2006. It corresponds to the amount of tax loss carryforwards of Bcom3 used since 2004. 10. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD Investments accounted for by the equity method at June 30, 2006 amounted to 46 M(euro) (as against 33 M(euro) at December 31, 2005). Changes in this account caption in the first half of 2006 were as follows: ------------------------------------------------------------------- MILLIONS OF EUROS CARRYING AMOUNT ------------------------------------------------------------------- AMOUNT AT JANUARY 1, 2006 33 ------------------------------------------------------------------- Acquisitions 5 Disposals (2) Group share of earnings of equity accounted 17 investments Dividends paid (4) Effect of translation and other (3) ------------------------------------------------------------------- AMOUNT AT JUNE 30, 2006 46 -------------------------------------------------------------------
The main entities accounted for under the equity method are Bartle, Bogle Hegarty (BBH), International Sports and Entertainment (iSe) and Burrell Communications. The carrying amounts of the investments in BBH, iSe and Burrell Communications amount, respectively, to 13 M(euro), 11 M(euro) and 8 M(euro). iSe, which was created jointly in 2003 between Publicis (45%) and Dentsu (45%), managed the "Hospitality and Prestige Ticketing" program in respect of the 2006 World Cup Football Championship. 13 11. OTHER FINANCIAL ASSETS Other financial assets are principally comprised of investments considered to be available-for-sale. The portion of other financial assets maturing in less than one year is classified in current assets. ------------------------------------------------------------------------------------------------ MILLIONS OF EUROS JUNE 30, 2006 DECEMBER 31, 2005 ------------------------------------------------------------------------------------------------ Available-for-sale financial assets - IPG shares (1.23% of the share capital) 35 43 - Other 7 10 Loans and advances to equity accounted and 7 6 non-consolidated companies Other non-current financial assets 87 86 ------------------------------------------------------------------------------------------------ GROSS VALUE 136 145 Provisions (26) (27) ------------------------------------------------------------------------------------------------ NET VALUE 110 118 ------------------------------------------------------------------------------------------------
12. SHAREHOLDERS' EQUITY The statement of changes in shareholders' equity is presented on page 5. SHARE CAPITAL OF THE PARENT COMPANY Publicis Groupe SA's share capital did not change materially during the first half of 2006. At June 30, 2006 the company's share capital was 78 844 604 euros, comprised of 197 111 510 shares with a par value of 0.40 euro each. BUYBACK OF EQUITY WARRANTS In the context of its program to simplify its balance sheet, Publicis Groupe SA completed a buyback of 22,107,049 of its equity warrants in February 2006, representing nearly 80% of such equity warrants in circulation, for a total amount of 199 M(euro). The total impact on shareholders' equity, including buyback expenses, amounted to 201 M(euro). DEDUCTION OF TREASURY STOCK EXISTING AT JUNE 30, 2006 Treasury stock held at the end of the period, including treasury stock held in the context of the liquidity contract, is deducted from shareholders' equity. The following movements took place on the treasury stock portfolio in the first half of 2006: ----------------------------------------------------------------------------------- (MILLIONS OF EUROS EXCEPT SHARES) NUMBER OF GROSS VALUE SHARES ----------------------------------------------------------------------------------- TREASURY STOCK HELD AT DECEMBER 31, 2005(1) 13 039 764 323 Options exercised (32 950) (1) Other movements at June 30, 2006 (1) 391 500 13 ----------------------------------------------------------------------------------- TREASURY STOCK HELD AT JUNE 30, 2006 (1) 13 398 314 335 ----------------------------------------------------------------------------------- (1) INCLUDING SHARES HELD UNDER THE LIQUIDITY CONTRACT
DIVIDENDS Publicis Groupe SA made a dividend payment of 66 M(euro) at the start of July 2006. This payment will not have any tax impact for the company. 14 13. PROVISIONS AND CONTINGENT LIABILITIES PROVISIONS ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- RE-STRUCTURING VACANT SUB-TOTAL PENSIONS AND LITIGATION OTHER MILLIONS OF EUROS PROPERTY OTHER AND CLAIMS TOTAL POST-EMPLOYMENT BENEFITS ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- JANUARY 1, 2005 56 176 232 242 46 123 643 Increases 10 8 18 22 5 32 77 Releases on use (35) (21) (56) (22) - (14) (92) Other releases - - - - - (1) (1) Changes to scope of - - - - - (4) (4) consolidation Translation and other 3 19 22 1 (3) 16 36 ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- DECEMBER 31, 2005 34 182 216 243 48 152 659 ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- Increases 4 1 5 19 - 28 52 Releases on use (8) (7) (15) (13) (4) (12) (44) Other releases - - - - - - - Changes to scope of - - - - - - - consolidation Translation and other 3 (18) (15) (9) (15) 10 (29) ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- JUNE 30, 2006 33 158 191 240 29 178 638 ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- OF WHICH LONG-TERM 16 140 156 211 21 154 542 ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- ----------- OF WHICH SHORT-TERM 17 18 35 29 8 24 96 ----------------------------- ----------- ----------- ------------ -------------- ------------ ----------- -----------
CONTINGENT LIABILITIES The Group is currently subject to a number of tax audits throughout the world, including an audit of the tax group headed by Publicis Groupe SA. The required provisions have been recognized in accordance with IAS 37 "Provisions, contingent liabilities and contingent assets". 14. FINANCIAL DEBT ---------------- ----------------------------------------------------------------------- ---------------- --------------------- Number of MILLIONS OF EUROS JUNE 30, 2006 DECEMBER 31, 2005 securities ---------------- ----------------------------------------------------------------------- ---------------- --------------------- BONDS (EXCLUDING ACCRUED INTEREST) ISSUED BY PUBLICIS GROUPE S.A.: 750 000 Eurobond 4.125% - January 2012 (Effective rate 4.30%) 750 750 5 484 334 OCEANEs 2.75% - January 2018 (Effective rate 7.37%) 234 278 23 172 413 OCEANEs 0.75% - July 2008 (Effective rate 6.61%) 597 580 1 562 129 ORANEs 0.82% variable - September 2022 (Effective rate 8.50%) 34 36 750 Bond convertible into IPG shares - 2% - January 2007 7 7 OTHER DEBT: Accrued interest 20 15 Other borrowings and lines of credit 25 23 Bank overdrafts 95 95 Debt related to finance leases 104 112 Debt related to acquisition of shareholdings 109 87 Debt arising from commitments to purchase minority interests 167 154 ---------------- ----------------------------------------------------------------------- ---------------- --------------------- TOTAL FINANCIAL DEBT 2 142 2 137 ---------------- ----------------------------------------------------------------------- ---------------- --------------------- OF WHICH LONG-TERM 1 949 1 913 ---------------- ----------------------------------------------------------------------- ---------------- --------------------- OF WHICH SHORT-TERM 193 224 ---------------- ----------------------------------------------------------------------- ---------------- ---------------------
15 In January 2006, a certain number of OCEANE 2018 bondholders exercised their right to redemption, leading Publicis Groupe SA to reimburse 1,149,587 bonds for a total amount of 51 M(euro) (including accrued interest). This buyback had no impact on shareholders' equity or on the income statement. Commitments to purchase minority interests, as well as earn-out clauses, are identified on a centralized basis and are valued on the basis of contractual clauses and the most recent available data as well as on projections for the relevant figures over the period. Changes in debt arising from commitments to purchase minority interests are presented hereafter: --------------------------------------------------------------------------- MILLIONS OF EUROS DEBT ARISING FROM COMMITMENTS TO PURCHASE MINORITY INTERESTS --------------------------------------------------------------------------- AT DECEMBER 31, 2005 154 --------------------------------------------------------------------------- Debts contracted in the period 20 Buyouts exercised (5) Revaluation of the debt and translation (2) adjustments --------------------------------------------------------------------------- AT JUNE 30, 2006 167 ---------------------------------------------------------------------------
Net financial debt, after deduction of cash and cash equivalents, is as follows: ------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, 2006 DECEMBER 31, 2005 ------------------------------------------------------------------------------------------------------------- Financial debt (long and short-term) 2 142 2 137 Fair value of the derivative hedging net investment 3 59 Fair value of derivatives on intercompany loans / borrowings (1) (9) Cash and cash equivalents (1 612) (1 980) ------------------------------------------------------------------------------------------------------------- NET FINANCIAL DEBT 532 207 -------------------------------------------------------------------------------------------------------------
ANALYSIS BY DATE OF MATURITY ---------------------------------------------------------------------------------------------------------------------- JUNE 30, 2006 DECEMBER 31, 2005 ---------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS TOTAL MATURITY TOTAL MATURITY --------------------------------- -------------------------------- LESS THAN 1 TO 5 MORE THAN LESS 1 TO 5 MORE THAN 1 YEAR YEARS 5 YEARS THAN 1 YEARS 5 YEARS YEAR ---------------------------------------------------------------------------------------------------------------------- Bonds and other bank 1 762 145 614 1 003 1 784 173 611 1 000 borrowings Debt related to finance leases 104 - - 104 112 - - 112 Debt related to 109 36 63 10 87 29 46 12 acquisition of shareholdings Debt arising from 167 12 128 27 154 22 93 39 commitments to purchase minority interests ---------------------------------------------------------------------------------------------------------------------- TOTAL 2 142 193 805 1 144 2 137 224 750 1 163 ----------------------------------------------------------------------------------------------------------------------
ANALYSIS BY CURRENCY ----------------------------------------------------------------- ----------------------- --------------------- MILLIONS OF EUROS JUNE 30, 2006 DECEMBER 31, 2005 ----------------------------------------------------------------- ----------------------- --------------------- Euros 1 083 1 037 US dollars 905 956 Other currencies 154 144 ----------------------------------------------------------------- ----------------------- --------------------- TOTAL 2 142 2 137 ----------------------------------------------------------------- ----------------------- ---------------------
In order to hedge its net dollar-denominated assets, and thus to significantly reduce sensitivity of Group shareholders' equity to future exchange rate fluctuations between the euro and the US dollar, the Group swapped its 750M(euro) fixed rate Eurobond issued in January 2005 into 977 MUSD of fixed rate dollar debt. As a result, the Eurobond is considered to be dollar denominated debt. 16 ANALYSIS BY INTEREST RATE CATEGORY The Group's financial indebtedness in comprised of fixed rate loans (93 % of gross financial debt at June 30, 2006, excluding debt related to acquisition of shareholdings and debt arising from commitments to purchase minority interests) at an average interest rate for the period of 5.74 % (this rate takes account of the additional interest related to the separate recognition of the debt and equity components of both the OCEANE convertible bonds and the ORANEs). Variable rate indebtedness, (approximately 7 % of indebtedness at June 30, 2006) incurred an average interest rate of 3.89 % in the half year period. 15. OFF-BALANCE SHEET COMMITMENTS CONTRACTUAL COMMITMENTS ---------------------------------------------------------------------------------------------------------------------- JUNE 30, 2006 DECEMBER 31, 2005 ---------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS TOTAL MATURITY TOTAL MATURITY --------------------------------- ------------------------------- LESS THAN 1 TO 5 MORE THAN LESS 1 TO 5 MORE THAN 1 YEAR YEARS 5 YEARS THAN 1 YEARS 5 YEARS YEAR ---------------------------------------------------------------------------------------------------------------------- COMMITMENTS GIVEN Operating lease 1 325 242 711 372 1 309 290 676 343 commitments (1) Commitments to sell investments 8 8 - - 8 8 - - Guarantees 86 30 42 14 113 50 42 21 ---------------------------------------------------------------------------------------------------------------------- TOTAL 1 419 280 753 386 1 430 348 718 364 ---------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------------------------------- June 30, 2006 December 31, 2005 ---------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS TOTAL MATURITY TOTAL MATURITY --------------------------------- -------------------------------- LESS THAN 1 TO 5 MORE THAN LESS 1 TO 5 MORE THAN 1 YEAR YEARS 5 YEARS THAN 1 YEARS 5 YEARS YEAR ---------------------------------------------------------------------------------------------------------------------- COMMITMENTS RECEIVED Sub-lease commitments (1) 75 17 46 12 58 10 34 14 ---------------------------------------------------------------------------------------------------------------------- TOTAL 75 17 46 12 58 10 34 14 ---------------------------------------------------------------------------------------------------------------------- (1) LEASE RENT EXPENSE (NET OF SUB-LEASE INCOME) WAS 92 M(EURO) IN THE FIRST HALF OF 2006 (AS AGAINST 83 M(EURO) IN THE FIRST HALF OF 2005).
GUARANTEES These include a guarantee of payment of real estate taxes and operating expenses relating to the Leo Burnett building in Chicago, for a total amount of 63 M(euro) over the period to 2012. Other guarantees mainly concern guarantees given by Group companies to television networks and to governmental bodies in the context of tenders. 17 OTHER COMMERCIAL COMMITMENTS ---------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, 2006 DECEMBER 31, 2005 ---------------------------------------------------------------------------------------------------------------------- TOTAL MATURITY TOTAL MATURITY --------------------------------- --------------------------------- LESS THAN 1 TO 5 MORE THAN LESS THAN 1 TO 5 MORE THAN 1 YEAR YEARS 5 YEARS 1 YEAR YEARS 5 YEARS ---------------------------------------------------------------------------------------------------------------------- COMMITMENTS RECEIVED Unutilized credit lines 1 526 491 1 035 - 1 609 574 1 035 - COMMITMENTS GIVEN Other commercial commitments 55 24 31 - - - - - ----------------------------------------------------------------------------------------------------------------------
OTHER COMMERCIAL COMMITMENTS These are composed, for 40 M(euro), of minimum guaranteed fees in the context of outdoor advertising contracts COMMITMENTS UNDER FINANCE LEASE ARRANGEMENTS The reconciliation between future minimum payments required under finance lease contracts and the present value of net minimum lease payments is as follows: ---------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, 2006 DECEMBER 31, 2005 ---------------------------------------------------------------------------------------------------------------------- TOTAL MATURITY TOTAL MATURITY --------------------------------- --------------------------------- LESS THAN 1 TO 5 MORE THAN LESS THAN 1 TO 5 MORE THAN 1 YEAR YEARS 5 YEARS 1 YEAR YEARS 5 YEARS ---------------------------------------------------------------------------------------------------------------------- Minimum payments 316 9 39 268 345 10 41 294 Effect of discounting (212) (9) (39) (164) (233) (10) (41) (182) ---------------------------------------------------------------------------------------------------------------------- PRESENT VALUE OF MINIMUM 104 - - 104 112 - - 112 PAYMENTS ----------------------------------------------------------------------------------------------------------------------
COMMITMENTS RELATED TO BONDS, ORANES AND EQUITY WARRANTS These are the same as at December 31, 2005 with the exceptions of: - Shares to be issued in the case of a request for conversion of the OCEANE 2018, following the exercise by certain bondholders of their redemption right in January 2006. At June 30, 2006, the number of shares to be issued in the case of a request for conversion of all the bonds is 5,484,334 (as against 6,633,921 shares at December 31, 2005), - The equity warrants, following the public buyback offer initiated by Publicis in January 2006 which closed on February 14, 2006. At June 30, 2006, 5,602,699 equity warrants providing a right o subscribe for an equivalent number of Publicis shares are in circulation (as against 27,709,748 shares at December 31, 2005). 18 16. FINANCIAL INSTRUMENTS FAIR VALUE The table below sets out a comparison, by category of assets and liabilities, of the carrying amounts and the fair values of all the Group's financial instruments at June 30, 2006 (except for receivables and payables). Financial assets belonging to the "held-for-trading" and "available-for-sale" categories are already valued at fair value in the financial statements. Financial debts are valued at amortized cost in the financial statements, in accordance with the effective interest rate method. -------------------------------------------------------------------------------------------------------------------- MILLIONS OF EUROS JUNE 30, 2006 DECEMBER 31, 2005 --------------------------------------------------------------------------- CARRYING AMOUNT FAIR VALUE CARRYING AMOUNT FAIR VALUE -------------------------------------------------------------------------------------------------------------------- FINANCIAL ASSETS: Cash and cash equivalents 1 612 1 612 1 980 1 980 Available-for-sale assets (IPG and 39 39 48 48 others) Other financial assets 71 71 70 70 Derivatives in asset position 57 57 39 39 -------------------------------------------------------------------------------------------------------------------- FINANCIAL LIABILITIES: Convertible bonds (OCEANEs) - debt 831 838 858 912 component ORANEs - debt component 34 48 36 48 Eurobond 750 764 750 804 Debt related to finance leases 104 160 112 184 Commitments to purchase minority 276 276 241 241 commitments and earn-outs payable Other loans 147 147 140 140 Derivatives in liability position 60 60 89 89 --------------------------------------------------------------------------------------------------------------------
The fair value of the Eurobond and of the debt components of convertible bonds and ORANEs has been calculated by discounting the expected future cash flows at market interest rates. 19 17. SEGMENT REPORTING INFORMATION BY GEOGRAPHICAL AREA The information is calculated on the basis of location of the agencies. ------------------------------------------------------------------------------------------------------------------ MILLIONS OF EUROS EUROPE NORTH AMERICA REST OF THE TOTAL WORLD ------------------------------------------------------------------------------------------------------------------ JUNE 2006 INCOME STATEMENT ITEMS: Revenue (1) 820 922 380 2 122 Depreciation and amortization expense (21) (24) (8) (53) (excluding intangibles arising on acquisition) Operating margin 107 170 46 323 Amortization of intangibles arising on (4) (7) (1) (12) acquisition Impairment - - - - Equity in net income of non-consolidated 16 1 - 17 companies BALANCE SHEET ITEMS: Goodwill and intangible assets, net 1 138 1 753 673 3 564 Property and equipment, net 299 190 61 550 Deferred tax assets 63 124 21 208 Investments accounted for by the equity 32 12 2 46 method Other financial assets 37 59 14 110 Current assets (liabilities) (2) (109) (1 019) (146) (1 274) Deferred tax liabilities (105) (48) (41) (194) Long-term provisions (195) (328) (19) (542) DISCLOSURES IN RESPECT OF THE CASH FLOW STATEMENT: Purchases of property and equipment and (20) (9) (7) (36) intangible assets Purchases of investments and other financial - (4) - (4) assets, net Acquisitions of subsidiaries (24) (1) (14) (39) Non-cash expenses on stock options and 3 3 1 7 similar items Other non-cash income and expenses 4 4 - 8 ------------------------------------------------------------------------------------------------------------------
20 ------------------------------------------------------------------------------------------------------------------ MILLIONS OF EUROS EUROPE NORTH AMERICA REST OF THE TOTAL WORLD ------------------------------------------------------------------------------------------------------------------ 2005 INCOME STATEMENT ITEMS: Revenue (1) 1 647 1 763 717 4 127 Depreciation and amortization expense (49) (49) (18) (116) (excluding intangibles arising on acquisition) Operating margin 238 315 96 649 Amortization of intangibles arising on (7) (13) (3) (23) acquisition Impairment (20) (11) (2) (33) Equity in net income of non-consolidated 9 1 1 11 companies BALANCE SHEET ITEMS: Goodwill and intangible assets, net 1 209 1 890 547 3 646 Property and equipment, net 299 225 56 580 Deferred tax assets 41 157 18 216 Investments accounted for by the equity 21 10 2 33 method Other financial assets 36 70 12 118 Current assets (liabilities) (2) (188) (1 111) (273) (1 572) Deferred tax liabilities (104) (75) (41) (220) Long-term provisions (189) (345) (5) (539) DISCLOSURES IN RESPECT OF THE CASH FLOW STATEMENT: Purchases of property and equipment and (38) (30) (15) (83) intangible assets Purchases of investments and other financial 4 2 1 7 assets, net Acquisitions of subsidiaries (46) (12) (13) (71) Non-cash expenses on stock options and 8 8 4 20 similar items Other non-cash income and expenses 2 9 - 11 ------------------------------------------------------------------------------------------------------------------
21 ------------------------------------------------------------------------------------------------------------------ NORTH AMERICA REST OF THE MILLIONS OF EUROS EUROPE WORLD TOTAL ------------------------------------------------------------------------------------------------------------------ JUNE 2005 INCOME STATEMENT ITEMS: Revenue (1) 786 829 317 1 932 Depreciation and amortization expense (23) (23) (8) (54) (excluding intangibles arising on acquisition) Operating margin 96 153 39 288 Amortization of intangibles arising on (3) (6) (2) (11) acquisition Impairment - - - - Equity in net income of non-consolidated 2 3 - 5 companies DISCLOSURES IN RESPECT OF THE CASH FLOW STATEMENT: Purchases of property and equipment and (16) (11) (7) (34) intangible assets Purchases of investments and other financial (2) - - (2) assets, net Acquisitions of subsidiaries (19) (10) (6) (35) Non-cash expenses on stock options and 4 4 2 10 similar items Other non-cash income and expenses 1 5 - 6 ------------------------------------------------------------------------------------------------------------------ (1) AS A RESULT OF THE MANNER IN WHICH THIS INDICATOR IS CALCULATED (DIFFERENCE BETWEEN BILLINGS AND COST OF BILLINGS), NO ELIMINATIONS ARE REQUIRED BETWEEN THE DIFFERENT ZONES. (2) CURRENT ASSETS (LIABILITIES) ARE COMPRISED OF THE FOLLOWING BALANCE SHEET CAPTIONS: INVENTORIES AND COSTS BILLABLE TO CLIENTS, ACCOUNTS RECEIVABLE, OTHER RECEIVABLES AND OTHER CURRENT ASSETS, ACCOUNTS PAYABLE, INCOME TAXES PAYABLE, SHORT-TERM PROVISIONS AND OTHER CREDITORS AND OTHER CURRENT LIABILITIES.
SEGMENT REPORTING After performing detailed analysis of risks and profitability by area of business in accordance with IAS 14 "Segment reporting", the Group considers that it operates in a single segment. The Group's operational structure does not correspond to a coherent configuration of companies by standard types of business or discipline. This structure, which has been in the making for several years, is designed to provide the Group's clients with a global, holistic service offering involving all disciplines. Segmented presentation by standard types of business or discipline does not correspond to the current Group structure. 22 18. PUBLICIS GROUPE S.A. STOCK OPTIONS DESCRIPTION OF EXISTING PLANS The stock option plans are the same as those which were in existence at December 31, 2005. 1- STOCK OPTION PLANS ORIGINATED BY PUBLICIS CHARACTERISTICS OF PUBLICIS STOCK OPTION PLAN IN PROGRESS AT JUNE 30, 2006 ---------------------------------------------------------------------------------------------------------------------------------- EXERCISE OUTSTANDING OF WHICH EXPIRY REMAINING SHARES WITH 0.40 PAR VALUE TYPE OF OPTION DATE OF GRANT PRICE OF OPTIONS AT EXERCISABLE DATE CONTRACTUAL OPTIONS ((EURO)) 30/06/06 AT 30/06/06 LIFE (IN YEARS) ---------------------------------------------------------------------------------------------------------------------------------- 7th tranche(1) Subscription 10/03/1997 5.63 25 600 25 600 2007 0.71 8th tranche Subscription 11/03/1998 8.66 40 500 40 500 2008 1.69 9th tranche Subscription 04/11/1998 10.24 280 000 280 000 2008 2.34 10th tranche Purchase 07/09/2000 43.55 100 000 100 000 2010 4.18 11th tranche Purchase 23/04/2001 33.18 380 000 380 000 2011 4.81 13th tranche Purchase 18/01/2002 29.79 104 600 104 600 2012 5.55 14th tranche Purchase 10/06/2002 32.43 5 000 5 000 2012 5.94 15th tranche Purchase 08/07/2002 29.79 220 000 - 2012 6.02 16th tranche Purchase 28/08/2003 24.82 517 067 - 2013 7.15 17th tranche(2) Purchase 28/08/2003 24.82 6 564 758 3 282 539 2013 7.15 18th tranche Purchase 28/09/2004 24.82 11 000 - 2014 8.24 19th tranche(2) Purchase 28/09/2004 24.82 1 783 160 891 612 2014 8.24 20th tranche(2) Purchase 24/05/2005 24.76 843 301 421 661 2015 8.89 ---------------------------------------------------------------------------------------------------------------------------------- TOTAL OF ALL TRANCHES 10 874 986 5 531 512 Average exercise price ((euro)) 24.95 24.88 ---------------------------------------------------------------------------------------------------------------------------------- (1) AFTER A TECHNICAL CORRECTION OF THE BALANCE OF OUTSTANDING OPTIONS UNDER THE 7TH TRANCHE AT 31/12/2000 (+ 20 190 OPTIONS). (2) CONDITIONAL OPTIONS WHOSE EXERCISE IS SUBJECT TO MEETING OBJECTIVES OVER THE COURSE OF A 3 YEAR PLAN
23 MOVEMENTS IN THE HALF YEAR PERIOD ON PUBLICIS STOCK OPTION PLANS ---------------------------------------------------------------------------------------------------------- OPTIONS CANCELLED OPTIONS OPTIONS OR LAPSED SHARES WITH 0.40 PAR VALUE EXERCISE OUTSTANDING GRANTED IN EXERCISED IN IN THE OUTSTANDING PRICE OPTIONS AT THE FIRST THE FIRST FIRST HALF OPTIONS AT (EUROS) 31/12/2005 HALF OF 2006 HALF OF 2006 OF 2006 30/06/2006 ---------------------------------------------------------------------------------------------------------- 6th tranche 4.91 12 870 (12 870 ) 0 7th tranche (1) 5.63 25 600 25 600 8th tranche 8.66 40 500 40 500 9th tranche 10.24 282 500 (2 500) 280 000 10th tranche 43.55 100 000 100 000 11th tranche 33.18 380 000 380 000 13th tranche 29.79 104 600 104 600 14th tranche 32.43 5 000 5 000 15th tranche 29.79 220 000 220 000 16th tranche 24.82 517 067 517 067 17th tranche 24.82 7 010 200 (445 442) 6 564 758 18th tranche 24.82 11 000 11 000 19th tranche 24.82 1 832 186 (49 026) 1 783 160 20th tranche 24.76 887 975 (44 674) 843 301 ---------------------------------------------------------------------------------------------------------- TOTAL OF ALL TRANCHES 11 429 498 0 (2 500) (552 012) 10 874 986 Average exercise price ((euro)) 24.92 10.24 24.35 24.95 Average share price on 31,49 exercise ((euro)) ---------------------------------------------------------------------------------------------------------- (1 ) AFTER A TECHNICAL CORRECTION OF THE BALANCE OF OUTSTANDING OPTIONS UNDER THE 7TH TRANCHE AT 31/12/2000 (+ 20 190 OPTIONS)
2- STOCK OPTION PLANS ORIGINALLY PUT IN PLACE BY NELSON On the acquisition of Nelson, these plans were converted into Publicis share purchase option plans. -------------------------------------------------------------------------------------------------------------------- TYPE OF OPTION EXERCISE OUTSTANDING OPTIONS OPTIONS OUTSTANDING OF WHICH EXPIRY REMAINING PRICE OF OPTIONS AT EXERCISED CANCELLED OPTIONS AT EXERCISABLE DATE CONTRACTUAL OPTIONS 31/12/2005 IN THE OR LAPSED 30/06/2006 AT JUNE 30, LIFE (IN YEARS) FIRST HALF IN THE FIRST 2006 OF 2006 HALF OF 2006 -------------------------------------------------------------------------------------------------------------------- Purchase $24.40 47 623 32 950 - 14 673 14 673 2008 2.1 -------------------------------------------------------------------------------------------------------------------- Average exercise price $24.40 $24.40 $ 24.40 $24.40 Average share price (euro)31.49 on exercise --------------------------------------------------------------------------------------------------------------------
IMPACT OF STOCK OPTION PLANS ON THE INCOME STATEMENT FOR THE HALF YEAR PERIOD The total impact of Publicis stock option plans on the income statement for the first half of 2006 is 7M(euro), excluding tax and social security expenses, as against 20 M(euro) for full year 2005 and 10 M(euro) for the first half of 2005 (see note 3 - Personnel expenses). During the second quarter of 2006, the conditions of achievement of the objectives of the LTIP 2003-2005 ("Long Term Incentive Plan") were reviewed. The final percentage grant that resulted from this review was 98.92 %. As the expense had previously been calculated on the basis of a 100% grant, it was adjusted in the financial statements for the first half of 2006. 24 19. POST-BALANCE SHEET EVENTS No material event requiring disclosure has occurred since the balance sheet date. 25 BUSINESS HIGHLIGHTS FOR THE FIRST HALF ENDED JUNE 30, 2006 Publicis Groupe turned in a very satisfactory performance for the first half of 2006, benefiting from a favourable market context and the new accounts booked in 2005. Organic growth reached 6.8%, buoyed by the contributions of media and healthcare communications as well as the performance of Saatchi & Saatchi in advertising. New business was strong with new accounts totalling over $3 billion, but the net gain was limited to $1.6 billion as a result of the loss of accounts including Cadillac and Procter & Gamble/Old Spice in advertising, and Sprint and Nokia (Asia) in media, as well as reduced business flows on some accounts, among them the advertising accounts for Hewlett Packard's PSG division in North America/Latin America and EMEA. Also worth noting, the sharp decline observed in new business activity in 2006 marks a return to normal compared to 2004 and 2005, when several exceptionally large accounts were put out for review. In creative terms, a major achievement this year came at the 53rd annual International Advertising Festival in Cannes, when Publicis Groupe swept nearly 100 Lions -- 94 to be precise -- up from 66 last year. Awards included 2 Grand Prix, 23 Gold, 21 Silver, 43 Bronze and 3 Promo Lions, the last an all-new category. The Group also won a Young Creative Award and a Special Award. Saatchi & Saatchi was the Group's top-ranked network with 37 awards, and came in second overall in the Festival, just a few points short of the winner. It was followed by Leo Burnett with 29 Lions, then Publicis, with 16 -- its best performance ever, with Marcel, not even a year old, already in the winner's circle. Fallon won four Lions, including the Grand Prix in outdoor advertising, and BBH one Lion. Starcom MediaVest Group and ZenithOptimedia received awards for press advertising. Altogether, Publicis Groupe ranked third this year, behind Omnicom and WPP. At the same time it led the Festival in the film category and all networks in Asia-Pacific turned in impressive performances, notably Australia and Singapore. Finally, Publicis Groupe brought home the most awards in pro bono campaigns, underscoring our agencies' commitment to promoting humanitarian and public-interest causes. Turning to acquisitions, the first half saw the closing of the acquisition of Solutions, India's number-one marketing services agency, plus the acquisitions of Betterway, a leader for marketing services in China; of Duval Guillaume, the leading independent marketing services and advertising agency in Belgium; and a majority interest in Capital MS&L, a financial communications agency in the UK. The Group also finalized the acquisition of a majority stake in Turkish communications and advertising agencies Yorum, Allmedia, Bold and Zone, bringing some of the most creative and dynamic agencies in Turkey into the Publicis network. In new technologies, the period saw the launch of Denuo, a major strategic initiative aimed at anticipating and building on the fast-moving world of interactive digital communications. Denuo rests on three pillars: strategic consultancy, development of all-new solutions, and investment in partnerships. This unique new unit -- the only one of its kind in the sector -- is headed by Rishad Tobaccowala, Chief Innovation Officer of Publicis Groupe Media (PGM) and has operations in Chicago and New York. Operating at the heart of the Group, Denuo will be able to work in liaison with networks or as an outside supplier to enhance solutions on offer, and can also serve its own stable of clients directly. At the same time Publicis Groupe and Simon Property Group, Inc., a leading North American contender in commercial real estate, announced the launch of OnSpot Digital Network, a new high-resolution digital cable network showing life-style reports, news, special features and general advertising in shopping centers/malls operated by Simon Malls in New York, Los Angeles, Chicago and other major US cities. Between now and the end of the summer, OnSpot Digital Network will broadcast this content on around 2,000 screens in 50 of Simon Malls largest centers, covering most of the top 10 US cities. 26 Another important development is a closer alliance between Publicis Groupe and Dentsu Inc., who on February 15 -- "Alliance Day" -- announced a commercial agreement under which Paname in France and BMZ+more in Germany will serve as a focal point for Japanese advertisers on these two national markets. In January, Publicis Groupe made a public offer for the purchase of all the 27,709,748 outstanding equity warrants issued in 2002 in connection with the Bcom3 acquisition. The offer was highly successful with 22.1 million warrants or 79.78% of the total tendered in response and eliminated. At a unit price of (euro)9 per warrant, the transaction represented a total outlay of (euro)199 million. Also in January, holders of the OCEANE convertible issue maturing in 2018 exercised put options, eliminating a further 6.5% of the total issue representing a potential 1.1 million new shares. This closed the process of balance-sheet simplification initiated in September 2004, under which a total of 35 million potential shares were eliminated. STATEMENT OF INCOME REVENUES Consolidated revenues of Publicis Groupe showed a rise of nearly 10% from (euro)1,932 million in the first half of 2005 to (euro)2,122 million in the first six months of this year. This was essentially attributable to organic growth of 6.8%, with the negative net impact of changes in the scope of consolidation limited to (euro)4 million and translation of revenues from businesses outside the euro zone making a positive contribution of (euro)59 million. The average euro value of the dollar showed a rise of 4.6% from the first half of 2005 to the first half of 2006. In the first quarter organic growth stood at 6.3%, accelerating to 7.3% in the second quarter. OPERATING MARGIN Group operating margin before depreciation and amortization rose 10% from (euro)342 million in the first half of 2005 to (euro)376 million in the first half of this year. Payroll expense rose more quickly than revenues to reach (euro)1,304 million in the first half of 2006, or 61.4% of revenues. This represents a 45 basis-point rise from year-end 2005 (61% in the first half 2005), mainly attributable to recruitment to serve new accounts won in 2005 and upgrading of some teams. The 12-month rise in group employees was 6.2%. In contrast, other operating expense eased 50 basis points from 21.3% to 20.8% of revenues, although showing a rise from (euro)412 million to (euro)442 million in absolute terms. All told, operating expense including payroll and other charges held practically steady from one year to the next. Depreciation and amortization for the period came to (euro)53 million, an amount little changed from the previous year in absolute value, but down 30 basis points as a percentage of revenue. Operating margin came to (euro)323 million, showing a rise of 12.2% from (euro)288 million in the same period of 2005, while the operating margin rate (operating margin/revenues) rose 30 basis points from 14.9% to 15.2%. This improvement is primarily due to the decline in the relative weight of depreciation and amortization and other operating expenses. After amortization of acquisition-related intangibles, which was practically on a par with the previous year, and a net (euro)1 million non-recurring capital gain on divestments (compared with a (euro)26 million charge in the first half of 2005), operating income for the six-month period came to (euro)312 million, showing a rise of +24.3% from (euro)251 million in 2005. Operating income in the first half of 2005 included a non-recurring charge of (euro)22 million relating to the capital loss on the early redemption of 2018 OCEANE convertible bonds. OTHER INCOME STATEMENT ITEMS Financial results consisting of the cost of net financial debt and other financial items represented a net charge of (euro)(32) million, showing a substantial (euro)13 million decline from (euro)(45) million in the first half of 2005. This resulted primarily from a rise in financial income combined with a reduction in the charge for 2018 convertible bonds following major redemptions in 2005 and early 2006. 27 The effective tax rate showed a steep decline from 33% to 31%, reflecting the continuation of the efforts to optimize tax positions and simplify legal structures. The tax charge for the period was (euro)87 million compared with (euro)68 million in the first half of 2005. The contribution from companies accounted for under the equity method reached a record (euro)17 million compared with (euro)5 million in the first half of 2005, driven by iSe's sale of hospitality programs for the Football World Cup. Minority interests came to (euro)15 million, compared with (euro)13 million in 2005. Altogether net income excluding minority interests totalled (euro)195 million for the period compared with (euro)130 million in 2005, a rise of 50%. EPS stood at (euro)0.93 vs. (euro)0.62 in 2005, in line with growth in net earnings. Diluted EPS rose 43% from (euro)0.61 in the first half of 2005 to (euro)0.87 in the first half of 2006. Headline diluted EPS was up 27% at (euro)0.90. REVENUES BY GEOGRAPHICAL AREA First-half revenues were up in all the regions of the world where the Group does business, with overall organic growth of 6.8% breaking down as follows: +4.8% in Europe +6.6% in North America +7.6% in the Asia-Pacific area +11.1% in Latin America +39.5% in Africa and the Middle East. New advertising accounts booked in 2005 boosted performances in a number of regions, while strong growth in media and healthcare communications business mainly benefited North American operations and, to a lesser extent, Europe. o * EUROPE Overall organic growth in Europe came to 4.8% for the first half with revenues at (euro)820 million. Most networks made a positive contribution, although Leo Burnett was an exception, reflecting the impact of cuts in Fiat's advertising spending on several markets and management changes adversely affecting business in a number of countries in continental Europe. Strongest performances were from Saatchi & Saatchi, Starcom MediaVest, ZenithOptimedia and PHCG, which benefited from new accounts or increased spending from some existing clients. Market growth was quickest in the UK, Northern Europe and Eastern Europe, with Russia a main source of momentum. France reported modest growth, while Italy had a fairly buoyant half year. Spain was the toughest market with business down slightly on 2005. o * NORTH AMERICA Organic growth for the first half came to 6.6%, setting revenues at (euro)922 million. This strong showing is attributable in particular to media buying and consulting business through ZenithOptimedia and Starcom MediaVest, as well as good performances in healthcare communications. In addition, Saatchi & Saatchi and Kaplan Thaler Group both did well, benefiting from large new accounts won in 2005 as well as increased spending by some existing clients. Leo Burnett, under the leadership of a new management team since the beginning of 2005, continued its recovery, but nonetheless felt the first effects of its loss of the US Army account. Fallon reported a decline in revenues reflecting the loss of large accounts including BMW, Dyson and Lee Jeans, as well as major shifts in management. Finally, Publicis USA suffered a steep decline in revenues, with no new accounts to offset those lost. o * REST OF THE WORLD Organic revenue growth for the rest of the world taken as a whole came to 12%, reflecting rises of 7.6% for the Asia-Pacific area, 11.1% for Latin America, and 39.5% for Africa and the Middle East. Together, these set revenues at (euro)380 million. The Group's three main networks all contributed, benefiting from both new accounts and firm demand, particularly from global clients. Advertising 28 networks as well as media buying and consultancy networks both did well. Growth was strongest in India and Argentina. BALANCE SHEET AND FINANCING Consolidated shareholders' equity excluding minority interests declined from (euro)2,085 million at December 31, 2005 to (euro)1,917 million at June 30, 2006, while minority interests were practically unchanged at (euro)21 million ((euro)20 million at year-end 2005). The decline in shareholders' equity was principally attributable to the redemption of 80% of the equity warrants issued in connection with the Bcom3 acquisition in 2002, a transaction carried out in February 2006 following a public offer. Net financial debt was up from (euro)207 million at December 31, 2005 to (euro)532 million at June 30, 2006, a steep rise principally due to the seasonal nature of cash flow, with cash and marketable securities down from (euro)1,980 million at December 31 to (euro)1,612 million at June 30. Yet compared with the situation one year earlier, net debt was nearly halved from (euro)967 million to (euro)532 million. The ratio of net debt to shareholders' equity thus rose from 0.10 at December 31, 2005 to 0.27 at June 30, 2006, although this compares with 0.53 on June 30, 2005. Gross debt, amounting to (euro)2,187 million at December 31, 2005, declined by (euro)43 million over the period, in particular due to further redemption of 2018 OCEANE convertible bonds with the partial exercise of holders' puts. But the most significant change was in average net debt, down (euro)352 million from the same period of last year, standing at (euro)676 million. This reduction was due in particular to an improvement in average working capital requirement over the period. Available liquidity totalled (euro)3,138 million at June 30, 2006 including (euro)1,612 million in cash and (euro)1,526 million in credit lines. There was no major change in other items in the consolidated balance sheet. Net cash from operating activities was (euro)4 million in the first half of 2006, compared with (euro)(325) million in the same period of 2005. Working capital requirement deteriorated by (euro)243 million after a (euro)74 million improvement in 2005. The deterioration is a seasonal trend observed regularly in the first half, and was significantly stronger in the first half of 2005, at (euro)536 million. This was due in part to a (euro)134 million improvement in average working capital requirement over the period. Restructuring expense came to (euro)9 million, after (euro)18 million in the first six months of 2005. Tax paid stood at (euro)119 million with the difference between this amount and the (euro)(32) million charge appearing on the income statement due in particular to the use of loss carryforwards from previous years. Interest paid came to (euro)41 million compared with (euro)55 million in the first half of 2005. Net cash flows relating to investment activities reflect the impact of purchases and disposals of tangible and intangible assets, acquisitions of long-term financial investments, and acquisitions and divestments of subsidiaries. In the first half this represented a cash outflow of (euro)71 million compared with (euro)68 million in the same period of 2005. Net capital expenditure was limited to (euro)39 million compared with (euro)33 million in 2005, and acquisitions of subsidiaries net of divestments represented an investment of (euro)32 million compared with (euro)35 million. Transactions during the period included the acquisitions of Solutions in India, Duval Guillaume in Belgium, Pole Nord in France and Geller Nessis in Israel, as well as increased interests in some other businesses, continued earn-out and buyout payments, and the sale of Sopact. Net cash relating to financing transactions, which includes dividend payments, changes in loans and transactions in the shares and equity warrants issued by the company, represented an outflow of (euro)268 million in the first half of 2006 compared with an inflow of (euro)296 million in the same period of 2005. This reflects the purchase of equity warrants for an amount of (euro)199 million and a total outlay of (euro)45 million for redemption of net debt, essentially the 2018 OCEANE convertible issue following the partial exercise of holders' puts in January. 29 OUTLOOK Prospects for communications business in 2006 are favorable in most geographical regions, including Europe, where growth trends remain uneven from one country to the next. With the benefit of this environment, the expansion of clients' operations and, most importantly, the large amounts of new business won in 2005, Publicis Groupe should enjoy continued support for revenue throughout 2006. Operating margin should also improve over the year as a whole and efforts to reduce average net debt continue. A priority for allocations of cash generated by operations will be to quicken the pace of targeted acquisitions, particularly in the field of SAMS and in emerging markets. 30 STATUTORY AUDITOR'S REPORT ON INTERIM FINANCIAL INFORMATION 2006 In our capacity as statutory auditors and in accordance with Article L.232-7 of French Company Law (Code de Commerce), we have performed the following procedures: |X| A limited review of the interim condensed consolidated financial statements of Publicis Groupe S.A for the six-month period ended June 30, 2006. |X| An examination of the information provided in the Company's interim report. The interim condensed consolidated financial statements were prepared under the responsibility of the Board of Directors (Directoire). Our responsibility is to express a conclusion on these interim financial statements based on our limited review. We conducted our limited review in accordance with French auditing standards. A limited review of interim financial statements consists of obtaining information considered necessary, primarily from persons responsible for financial and accounting matters, and applying analytical and other appropriate procedures. A limited review is substantially less in scope than an audit conducted in accordance with French auditing standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Based on our limited review, we have not identified any material errors that would cause us to believe that the interim condensed consolidated financial statements did not comply, in all material respects, with IAS 34 -the IFRS standard relating to interim financial reporting adopted by the European Union. We have also examined, in accordance with French professional standards, the information contained in the interim report on the interim condensed consolidated financial statements that were the subject of our review. We have nothing to report with respect to the fairness of such information and its consistency with the interim condensed consolidated financial statements. Paris, July 28, 2006 Statutory Auditors Mazars & Guerard Ernst & Young Audit Philippe Castagnac Isabelle Massa Bruno Perrin Valerie Descleve -------------------------------------------------------------------------------- The English language version of this document is a free translation from the original, which was prepared in French. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation, views or opinion expressed therein, the original language version of the document in French takes precedence over the translation. 31