Annual Report

Annual
Re p o r t
2001
P U B L I C I S G R O U P E S. A.
A global Group
• 6th largest communications Group
worldwide
• Present in over 100 countries
• Total number of employees: 20,592
Latin America 3.3%
Asia-Pacific
7.4%
3rd largest worldwide in media
consultancy and buying
The Zenith Optimedia Group
Rest of the world
1.7%
North
America
42.5%
3 advertising networks
• Publicis Worldwide
• Saatchi & Saatchi Worldwide
• Fallon Worldwide
Europe
45.1%
Specialized Communications
and Marketing Services agencies
Revenues by geographic region
SAMS, other
23%
Advertising
66%
Media
11%
Distribution of revenues
Contents
Profile
Message from
Elisabeth Badinter
1
A Group in
continual expansion …
2,434
2
16.7
Interview
with Maurice Lévy
10
The Euro Campaign
14
Human Resources
22
4
Advertising Networks
25
The SAMS
33
The Group
Around the World
851
Publicis - organic growth 1997-2001
663
+ 3.1
01
in percentages
98
97
+ 15
00
1,042
6.9
+ 13
+ 12
98
99
5.5
+7
97
1,770
11.8
4
The Holistic Difference
… with organic growth
superior to that of the
global market
99
00
01
Billings
97
98
99
00
01
Revenues
in millions of euros
in billions of euros
+ 5.8
Europe
North America
Asia-Pacific
Rest of the world
- 1.2
+4
+ 11.7
+ 3.1
Group
Publicis organic growth 2001 by geographic region
342
426
275
334
in percentages
44
+ 8.1
97
Reference
Document
187
156
143
45
115
110
98
99
00
01
97
01
98
+ 5.6
+ 11
00
87
97
+4
98
99
99
00
01
- 5.4
Growth of the market worldwide*
1997-2001
EBITDA
EBIT
in percentages
in millions of euros
in millions of euros
* source The Zenith Optimedia Group
PROFILE AND
FINANCIAL
INDICATORS
Publicis, the global advertising
Group, is present on all
continents through three
complementary networks
and their specialized
subsidiaries, and in all fields
of communications.
Founded by
Marcel Bleustein-Blanchet
in 1926, the Publicis Group
has demonstrated
the pertinence of its strategic
choices, year after year,
while preserving its
independence and culture.
The quality of the partnerships
it develops with its local and
international clients and
its holistic approach to
the problems they face,
constitutes the foundation
upon which Publicis
maintains and manages
continuous growth.
1
MESSAGE FROM
ÉLISABETH
BADINTER
How did Publicis
manage to succeed
in the year 2001
which was so unsettled
in so many ways?
It was, in fact,
by drawing on all
the strengths inherent
in its “difference”
—our credo which sets
us apart from others
and which continues
to distinguish us
in the eyes of our
clients worldwide.
“La Difference”
is a matter of Publicis’
strong and independent
identity worldwide,
its respect for the wide
diversity of cultural
differences, and its
historic foundation
of savoir-faire and
professional excellence.
The respect for identity
While the year 2001 was clearly an unsettled one for the world, I am pleased
to say that Publicis was successful in carrying out the major mission it had
set for itself, that is, the progressive integration of the Saatchi & Saatchi
group. It is particularly satisfying that highly beneficial synergies for both
clients and our organizations became apparent. This process should accelerate
by the end of 2002, as integration is not yet complete. However, it is not
part of the Publicis culture, which is founded on the respect of its partners
and on the independence of its agencies, to impose a pace that would be
contrary to the way autonomous agencies operate.
If Publicis has been able to bring together so many different companies,
nationalities and cultures so smoothly, it is because it has always encouraged
integration adapted to the identities and operating methods of each.
Moreover, the desire to decentralize is also what makes our Group unique, it
is the basis of its “difference” and is at the root of its success. That is the
environment that Publicis offers its agencies: to preserve and enhance their
brands, their offerings and their creativity, while channeling their development, through the same rigorous principles of management. That is what
inspires each company to contribute its best, for the growth of the Group as
a whole.
Flexible yet rigorous, with a will to decentralize yet committed to unity,
Publicis is a collection of paradoxes from which it draws its strength as well
as its potential. What makes it work? First, because not only is Publicis
global, it is also fundamentally French, through its roots, its headquarters,
and indeed, its capacity to react boldly and spontaneously to events, with that
famous “French flair”. That is what has enabled it this year to successfully
implement its major objective in the industry’s continuing globalization.
2
Élisabeth Badinter
Chairperson of the
Supervisory Board
Publicis has also proven for five years that it is possible
to play in the big leagues without losing its independence,
or to be listed on both the Paris and New York stock
exchanges without relinquishing its family tradition.
By asserting loudly and clearly that its family
shareholding structure is key to the value of the
Group, Publicis intentionally sets itself apart from its
competitors, both by its clear identity and firm capital
base. This has not escaped the various financial markets
that have come to know and appreciate our uniqueness.
Loyalty, family spirit, a sense of belonging: these values may seem outdated, but
I think, on the contrary, that they reflect the strength of our character in a world
made up of faceless corporations. Indeed, Publicis is still a company on a
human scale, with a foundation based on a personal legacy. This is what
provides a solid base for its entrepreneurial spirit to seize the opportunities that
lie before it. I like to compare Publicis to a tree that draws its strength from its
deep roots, enabling it to bear fruit and grow.
Thanks to the pro-active effectiveness of its management and the commitment
of its employees, Publicis has again proven that it was strong enough to
confront difficult market situations while fulfilling its own objectives. The year
2002 should allow Publicis to show even further all that it can do.
On behalf of the Supervisory Board, I say “Thank You”.
3
INTERVIEW WITH
MAURICE LÉVY
Where do you find
growth in an industry
where there seems
to be so little?
Publicis showed
the way in 2001 with
new strength from the
successful integration of
the major agencies
it acquired, and strong
new business from both
current and new clients
that make up
an exceptional portfolio
of outstanding
business partners.
This all comes together
via Publicis’ “Holistic
Difference”. That will be
the case in 2002
through the acquisition
of Bcom3, which will
demonstrate once again
Publicis’ commitment
to and capability of
innovative development
which continue to create
shareholder value.
Why was Publicis better
able to withstand
the global recession?
2001 : PUBLICIS
What is your judgment of the year 2001?
It reminds me of the book by Sebastian Jünger, “The Perfect Storm”: 2001 was a
“perfect storm” year, bringing together three distinctive elements: a slump in the
American economy from the end of 2000 and the beginning of a recession as of the
2nd quarter of 2001, the speculative bubble of the New Economy, telecommunications
and information technology which finally burst, and unfortunately, the tragic events of
September 11.
In addition to the “perfect storm”, we were subject to the “Chinese water torture”,
which consisted of receiving, day after day, a flood of bad news in the economic sector
(forecasts constantly being revised downward, repeated profit warnings from the largest
global companies, which also affected our sector). In short, it was a year of great
turbulence.
In terms of the advertising market, forecasts were based on a 4.5% to 5.5% growth rate,
while in reality there was a 4% to 5% decline, a 8 to 10 percentage point difference
between the forecasts and reality, which we have never seen before.
However, the shock was less brutal than we might have imagined, because it was
progressive. Finally, as the market had been strong and the year 2000 was exceptional
in every way, the volumes handled by agencies still remain extremely high.
KEEPS MOVING AHEAD
Growth dynamic - Publicis Groupe S.A. was among the top companies in its sector in terms of organic growth (+ 3.1%),
outperforming that of the global advertising market by 7 to 8 percentage points • Publicis Groupe S.A. won 2.3 billion euros
net in new business and rose to third place worldwide according to the “2001 New Business Encyclopaedia”, published by
the US CSFB brokerage firm • Reactivity - Publicis Groupe S.A. maintained profitability (EBIT/revenues margin of 14.1%)
despite the recession, due to a significant program of cost reduction and reorganization.
4
How has Publicis weathered this storm and this turbulence?
Our greatest success in 2001 was a non-event: contrary to the disruptions our competitors
experienced, the integration of Saatchi & Saatchi was achieved smoothly, it was a complete
success. In addition, we were able to conclude an agreement with Cordiant concerning Zenith
Media, making it, together with Optimedia, the third largest Group worldwide for media
consulting and buying.
In terms of figures, Publicis Groupe S.A. has withstood much better than its competitors and
has achieved over 3% organic growth which, given the slump in the global market, is a very
strong performance. We had two financial objectives: to attain an EBITDA/revenues ratio of
17% and an EBIT/revenues ratio of 14%, and we surpassed them both.
How do you explain that Publicis
performed much better than its competitors?
Do you think this can last?
I see three reasons for this, which are practically inherited Publicis
traits: in the first place, the quality of our client portfolio, its
diversified nature and our development strategy. We scored decisive
points in the international arena as well as in local markets. We have
successfully strengthened our relationships with our traditional
clients. This continuing attentiveness, the reminder that “a client is
never acquired”, was key. Our objective is to always remain fresh in
terms of our ideas and to combine a perfect understanding of our
clients’ problems with ideas that are innovative, creative and ahead
of the market. The second point comes from the way Publicis
serves its clients, which aims to continually be developing new
offerings. This is the reasoning behind the total communications
that we call “the Holistic Difference”. Finally, the third factor
is our ability to react very quickly to the external environment and
particularly the economic situation: the first measures were taken as
of January 19, 2001 and we have never stopped re-examining
our cost structure throughout the year. This is a permanent and
continuing process.
Maurice Lévy
Chairman - CEO
Publicis Groupe S.A.
Consolidation - The success of the integration of Saatchi & Saatchi is clear and synergies continue to be realized.
• Publicis Groupe S.A. is strengthening its presence in the SAMS sector (specialized agencies and marketing services) with
acquisitions in direct marketing/CRM, sales promotion, design, corporate communications and ethnic communications,
among others.
5
INTERVIEW WITH
MAURICE LÉVY
What, in your opinion, are the strategic weaknesses
that need to be corrected?
There has been much talk about Marketing Services, but we have realized that it is not
a “cure-all”. The ability to develop our relationship with our clients depends above all
on our ability to manage the client’s brands. It is in managing the brand that we can
develop a total and complete relationship, which is the strong suit of Publicis, ever since
its creation by Marcel Bleustein-Blanchet.
The Group is today equipped with two very important global networks, Publicis
Worldwide and Saatchi & Saatchi Worldwide, and with an emerging network, Fallon
Worldwide. In addition, it holds very strong positions in the areas of media buying and
healthcare communications, without counting other sectors in which we were able
to make important inroads. We offer complete global coverage.
If we analyze our weak points, we see that there are countries where we still have work
to do to attain satisfying critical levels of size, particularly in Japan. We also need to
develop our expertise in the field of Marketing Services (CRM, Public Relations and
sales promotions).
The agreement with Bcom3 and Dentsu goes far in fulfilling these needs.
That said, if we compare the strengths and weaknesses of Publicis with those of our
main competitors, Publicis appears today to be in a remarkable situation, with
considerable potential for development, all the more so when we consider that many of
our competitors are still busy solving organizational and restructuring problems while
we are wholly focused on the problems facing our clients and our development.
Are you satisfied with the current size of Publicis Groupe S.A.?
It would be silly to pretend that we do not want to expand. It is what fuels our
ambition, and we are naturally pursuing a strategy of growth. At the moment this
annual report is being printed, our acquisition of Bcom3 will be well known. It
responds very intelligently to our strategy to develop in a way which is original and
respectful of the brands and management of our networks. It is because we are very
careful in implementing high firewalls between the networks and in allowing their
management to maintain complete powers of authority that our Group can manage
competing accounts in the same sectors, to the satisfaction of all concerned.
2001 : PUBLICIS
KEEPS MOVING AHEAD
Acquisitions - Europe: The Triangle Group (UK), Fisch.Meier.Direkt (Switzerland), Carré Noir, Ecocom (France) • United
States: FusionDM, Creative AIM, Fabianne Gershon & Associates, The Hudson Stone Group, Sanchez & Levitan • Asia:
Gravitas, first acquisition made by the Group in Japan • In October 2001, Publicis created, in partnership with Cordiant, the
third largest Group worldwide for consulting and media buying: The Zenith Optimedia Group. Publicis holds 75% of the new
Group and Cordiant Communications Group holds 25%.
6
The financial structure of the Group has changed enormously
in two years (rising debt, recent refinancing operations, CVRs
to be financed at the beginning of 2002): how do you judge the
Group’s financial situation?
The choice to be a Group which is French in origin and through the location of
its headquarters, and family-oriented by the role played by its founding family,
necessarily has its constraints. We are very attached to the control exerted today by
Madame Elisabeth Badinter and we refuse to create too great a dilution, which by
the way, is good news for our shareholders: they have the guarantee that we are not
creating too many shares.
This is an excellent way to maintain the creation of value. This is the principle
that has guided us when structuring the Bcom3 transaction in 2002.
We have therefore been led over the past two years to take out short-term debt.
At the end of the year 2001 we wanted to take advantage of the low interest rates
to restructure our debt and prepare to pay the CVRs (Contingent Value Rights).
The two financial operations carried out by Publicis Groupe S.A. (exchangeable
bonds and Océane convertible bonds) have therefore provided clear advantages:
fewer financial costs and more financial flexibility.
These operations were a great success, as they put Publicis Groupe S.A. in a new
market for us, and this is excellent news for our shareholders and our clients.
In 2001, we have pursued an extremely measured and careful acquisitions strategy.
We will continue to do likewise in 2002, independently of the merger with
Bcom3, which is totally exceptional.
We have demonstrated our ability to generate a solid cash flow in a regular and
constant way. This ought not to change within the context of the new Publicis
Group because of the merger with Bcom3. Finally, given its structure, this
transaction even improves our debt-to-equity ratio.
What is the meaning of innovation
in your industry?
There are two very different attributes
which exist in our industry: creation and
innovation. They work together, propelling
each other forward and producing a virtuous
cycle: the more creative you are, the more
you innovate, and the more you innovate,
the more creative you become...
Creativity means thinking in original ways
about strategies that will have an impact
on brands and transforming these strategies
into advertising or marketing and communications campaigns.
Innovation means inventing new tools,
techniques and approaches that enable
marketing teams to realize their objectives.
We already have an extraordinary tool called
“Getting it Right Together”, and we have
worked hard to create new techniques, such
as those which collectively we call “Market
Forward”: Siren, a remote-controlled digital
billboard system, and BrandGuard, a data
base enabling advertisers to communicate
their brand identity and pre-formatted media
to their various operational units via
Internet.
How do you see 2002 globally and for Publicis?
Even if some favorable signs of recovery exist in the United States, we can not yet be assured of any
vigorous improvement in terms of growth. Estimates from various research institutes in the sector
indicate variations from –2% to +1% in current prices for 2002.
In this period of uncertainty, we have decided to emphasize consolidating our relationship with our
clients as well as improving our margins, and to take advantage of the exceptional opportunity that the
acquisition of Bcom3 represents, which equips us with new mainsprings for growth.
Development - Fallon Worldwide, the Group’s third advertising network, is intensifying its global development by opening
three new agencies in São Paulo, Singapore and Hong Kong •
• Publicis Groupe S.A. continues to expand on emerging markets with the acquisition of Metro Advertising in Indonesia.
7
INTERVIEW WITH
MAURICE LÉVY
In 2000, during the Saatchi & Saatchi transaction, you indicated
financial objectives for 2003 (particularly a 15% EBIT margin).
Two years later, you seem to be well on your way to achieving
this. What new objectives have you set, especially concerning
the integration of Zenith Media ?
To improve the margins of Saatchi & Saatchi by more than 500 EBIT basis
points within three years is a remarkable goal, and I do not think we have seen
many groups that have achieved such improvement in their profits in so short a
time. We already need to attain these very ambitious objectives before setting
others which will obviously be just as ambitious. Concerning Zenith Media, we
must first realize that the net margin in the media consulting and buying sector
is traditionally higher than in advertising, but given the relative weight of the
Zenith Optimedia Group within Publicis, the impact on our results will be
relatively moderate. On the other hand, on the strategic level, the creation of the
Zenith Optimedia Group marks a decisive event that should enable us to hold a
key position in this extremely competitive market. This will be achieved as we
obtain better conditions from the media, which should accelerate the
consolidation of our client relations and generate new business. To sum up,
I think that the merger between Zenith Media and Optimedia has real strategic
impact on our business that will contribute favorably to our earnings.
Today, following the Bcom3 transaction, we have decided to maintain our
financial objectives for 2003, although this is much more challenging, given the
current difference in profitability between the two groups.
Don’t these developments create new human challenges?
With the development of the concept of “Holistic Difference” and the Group’s global expansion,
attracting and retaining people with talent is without question our main challenge.
I am pleased that over the past few years, in most countries, we have been able to give new life to our
management teams by hiring the most brilliant and promising talents on the American, German and
French markets. The management teams are, on the whole, younger and, above all, multi-cultural: they
come from different backgrounds and all adhere to the culture of Publicis Groupe S.A.
We are currently developing very thorough training programs to enable all our teams to function
according to the same holistic communications principles.
We are also making a special effort to train our employees in Latin America, Asia and Eastern Europe to
further what Publicis Groupe S.A. has always been known for, which is, a breeding ground for talent.
2001 : PUBLICIS
KEEPS MOVING AHEAD
A great year for New Business: As our networks developed, they were more prepared then ever to face the year 2001. The
signs of a weakening economic context were detected early enough for us to launch a major emphasis on business
development within the Group’s various corporate units.
8
Do you think you have created a sense of belonging
within the major agencies you have recently acquired,
or with Saatchi & Saatchi?
This is certainly a delicate management issue: there is a balance to be achieved between
maintaining each agency’s own personality and their adhesion to the culture and values of
Publicis Groupe S.A.
We would have never acquired these agencies if there had not existed total agreement on
core values. In terms of cultures, it is obvious that substantial differences exist, and it is
essential they be preserved because they are part of the heritage of each agency that has
been acquired.
When Publicis acquired Saatchi & Saatchi, it was to keep the culture and creativity of
Saatchi & Saatchi vibrant and alive, and at the same time keep the “Publicis Différence”
intact. It is out of the question that the two Groups merge, come together and confront
each other with regard to their core values, because then we would be offering to the
clients of these networks entities that have lost a little of their soul.
While this is occurring in 2002, we should also mention our acquisition of Bcom3 and
our strategic agreement with Dentsu. This is undoubtedly an operation without
precedent in our sector in terms of size.
As we have seen, Publicis has been doing remarkably well in a sector which has been
experiencing difficulties. Our objective is to build a Group able to accompany its clients
productively over time. However, there is a growing notion that only the three or four
largest groups will be able to survive in the long term. We absolutely needed to be among
them, without giving up our values or our culture.
The acquisition of Bcom3 contributes some of the greatest assets in the field: some of
the best-known clients and professional teams of the highest caliber. We will see that
they are integrated in a totally independent way to preserve their authenticity.
At the same time, the agreement we made with Dentsu brings in a stable shareholder,
while opening wide the doors to Japan. It is difficult to imagine a finer operation. At
the same time, we are not going to let it go to our heads because we have to keep
working hard to make sure that the next integration works as well as the past one.
The Group’s new shape, the rare caliber of its offerings and its creative qualities have also convinced numerous market
leaders who have decided to choose our agencies. Due to these favorable factors, 2001 proved to be a vintage year for
new business, throughout all the networks. Publicis Groupe S.A. earned 2.3 billion euros (net)*, in new accounts in 2001.
* (Zenith Media was integrated in fourth quarter)
9
STRATEGY
Competition between
advertisers is becoming
fiercer by the day
and everyone wants
to curry favor
with the consumer.
However, due to mass
distribution, technology
and progress, the
impact of innovation
is diminished and
so the brand becomes
the most important link
to the consumer.
As they are a
company’s most
important asset
(sometimes valued at
several billion dollars),
brands must differentiate themselves in the
minds of consumers.
Difference gives
rise to Preference.
The unceasing
development in the
proliferation and means
of communications,
together with the
changes in the lifestyles
of consumers, make it
necessary to harmonize
the communication
of messages, the way
they are conveyed
to consumers,
and above all, an
understanding of the
various facets that
make up their lives.
10
The Holistic Difference:
a pioneering approach
to communications
The concept: “Communicate holistically”
The “Holistic Difference” is, first of all, difference: knowing how to communicate
what differentiates one brand from another, the values that form the basis upon
which a brand creates its relationship with the consumer. And knowing how to do
it fully, at all times, and in all places.
Why?
Firstly, there exists today an ever-growing realization of consumers, of their power,
tastes and choices. Their lives are more complex, they are under the stress brought
about by harder lives, made up of many uncertainties. Consumers have their moods,
weaknesses and emotions. Communicating to them as consumers means communicating only to their economic aspect. They may be potential clients for brands of
cars, banks or clothing, but they are also men and women, employees, citizens, fathers
and mothers, they receive promotions in their jobs or encounter difficulties. They
are young, or older, etc… The same is true for their consumption. The housewife
under the age of 49, considered as such until now, is an outdated concept. We must
consider all the elements that make up her life, her job, her relationship to others, to
better understand and justify the role the brand should play and the link
Implementation:
that the advertiser wants to create between the person and the brand.
a client-specific plan of action
All aspects of life should be taken into account: job, family,
environment, etc.
The implementation of “Holistic
Difference” implies that:
And what else?
- the full range of a client’s objecCommunications channels have exploded: electronic media, of course, but
tives be analyzed holistically from
also billboards, point of sale communications, direct marketing, Internet,
the start;
etc. The messages are different: the idea could be to praise the merits of a
- the agency move beyond the limits
product or the values of a brand, or to promote a special price or offer. Or
of traditional advertising, to bring
to create loyalty.
together from the start all the
The objective of holistic communication is to create coherence between
specialized fields of communicathe values of the company or brand and the many facets of its diverse
tions;
- creative teams take into account all
audiences, and to bring together all forms of communication, smoothly
audiences, issues, opportunities,
and over time.
from the start;
and finally, that the agency put
together a dedicated team, capable
of responding immediately to any
problem the brand faces.
11
STRATEGY
Agencies recreated in their role and their organization
What is a traditional (non-holistic) communications Group?
A collection of profit centers organized into independent “silos”, each one
mastering a specific activity (advertising, direct marketing, public relations, etc.).
Publicis has revolutionized this system. Not without some difficulty, given
traditions and egos, even in as creative and innovative a field as advertising.
Publicis has innovated by creating an organization that erases boundaries between the
various types of expertise and distinctions between activities that are considered to
be noble (media advertising or “above-the-line”) and those that are considered less
noble, or even secondary (“below-the-line”). Multi-disciplinary teams meet just
after receiving the client’s brief and look at the problem together in order to arrive
at a solution without any exclusive or particular bias.
Inasmuch as a recommendation can be “neutral” in terms of a choice between
media/non-media, this system affords the best guarantee. Moreover, the strategy
will be more and more specialized because it will be made up of concerns which are
specific to each activity.
Publicis is the only agency today which is capable of working in this way because its
culture makes it possible, its teams have been trained for several years, and it has
always made a point to put its clients’ interests first. And today the client’s interest
makes this the only way to work.
This organization, on the national or transnational level, simplifies the chain of
creation of value for the client: in terms of production, follow-up, administrative,
financial or technological services. Finally, this mode of operation authorizes
remuneration systems that guarantee better effectiveness for the client, the long-term
objective being to improve the client’s global profitability for the good of the agency.
The conductor: the brand manager
The brand manager is the pillar of the relationship with the client and the
guarantor of the brand’s values throughout the development of the agency’s
communications strategy. He is the conductor, gathering around him specialists in
advertising, CRM, sales promotion, public relations, and media consulting and
purchasing, according to the client’s objectives nationally, but also worldwide.
The brand manager is surrounded by colleagues who ensure strategic planning,
execution of the holistic methodology and daily follow-up of the account. Creation,
the essential and vital part of the agency’s plan of action, is at the heart. But with a
wider, more open vision than that of the “30-second commercial”, and the need to
12
take into account all the elements at the outset: adaptations for the daily press,
the creation of brochures, public relations or promotional initiatives or commercial
agreements with retailers. As creation is richer, more open-ended and more
generous, it can address all aspects and develop a communications concept that
is also flexible and open, not only to promote a brand’s values but a special price
or special offer as well.
2001: towards a generalization of the concept
The holistic approach has already been adopted by several of Publicis’ major
international clients. They appreciate the increase in effectiveness, and the great
majority among them have decided to expand their collaboration with the Group
significantly.
On the national level, the holistic organization which is being progressively
implemented convinces clients that this is the best way of working together. The
most advanced Publicis agencies today are located in the United Kingdom
At the beginning, the WWAD…
and the United States: the London agency brings together all communicaPublicis, a pioneer in the area of
tions activities. More than 75% of its clients utilize at least three of them,
managing worldwide advertisers,
all administrative functions are shared in common, and all new
implemented the role of WWAD
business won in 2001 was holistic.
(worldwide account director) as early
Within the context of its Publicis 2010 project, France is implementing
as 1975! Created for our major international clients, the WWAD is the
this concept and Germany will adopt such an organization very shortly.
“guardian” of the brand: his mission
The whole process should be completed by the end of 2003 for Publicis
is to assume global responsibility for
Worldwide.
the agency’s contribution to the brand’s
Today, no other communications Group is really able to propose this
development, to set up creative norms,
method to its clients. That it comes from Publicis is naturally a testament
to impart knowledge, train teams and
finally, to control quality and ensure
to its strategic vision but also to the history of its geographic development
profitability for the account. The
and diversification, which is more recent than that of its competitors. This
WWAD is a transnational account
is a great advantage in that Publicis can break new ground in a field full
director who permanently coordinates
of opportunities.
the work of dozens of national
agencies that work on the brand. The
WWAD’s responsibilities take on a
multidisciplinary
dimension
determined by clients’ needs.
13
as
The Holistic Difference in action:
THE EURO CAMPAIGN
The historic event
for Europe last year
was clearly and will
for quite some time
be the creation of the Euro.
It is also by far the most
exceptional event that
the field of communications
has ever known.
Never before has a campaign
been created to communicate
with 304 million people,
speaking different
languages and living
in different cultures
and who will now be united
every day through
a new common currency.
The Publicis Groupe
is proud to have been
selected to carry out
this operation by
the European Central Bank
after lengthy competition,
demonstrating its
understanding of Europeans
and the quality of its unique
communications concept,
“The Holistic Difference”.
After competition,
Publicis was also chosen
to direct the national
campaigns developed
for the French, German
and Dutch governments.
14
The euro, launched on January 1, 2002, has become a part of the daily life of
304 million people: the enthusiasm Europeans have shown for their new currency has
special meaning for Publicis, as this historic event was built on one of the most
complex launches in advertising history.
The challenge was to communicate a coherent message simultaneously in twelve
countries, under a strict deadline, to extremely diverse audiences, some of which are
located beyond the borders of Euroland. Moreover, the launch took on an unprecedented political, cultural and emotional dimension. The communications strategy and
implementation for such a launch played a decisive role in the preparations managed
by the European Central Bank (ECB).
P UBLICIS
ON CAMPAIGN
The Publicis network was chosen by the ECB in November 1999, after nine months of
competition and a final selection involving 49 agencies.
The mission assigned to the Group, between April 2000 and January 1, 2002, was to
inform, prepare and reassure the citizens from twelve countries, a population much
more numerous than that of the United States and speaking nine different languages.
Within this population, very different audiences had to be considered: the general
public first of all, but also officials and professionals (employees of banks and
financial establishments, retailers and a variety of other institutions). Finally, it was
also necessary to inform the main economic partners of the countries adopting the
euro, especially the United States, Japan, the Middle East, and in Europe, Switzerland,
the United Kingdom and Sweden.
T HE ECB
CAMPAIGN : A HOLISTIC APPROACH
The challenge for Publicis was to create a concept that would bring together twelve
different countries and whose level of preparation for the euro was extremely varied.
Research was conducted in each country throughout Europe by partner companies,
and a strategy and specific timetable were set up.
The communications campaign had two facets: to familiarize the public with its new
currency (unveiled on August 30, 2001 in Frankfurt by Wim Duisenberg, Governor of the
ECB) and to inform professionals of the anti-counterfeit features of euro bills.
The campaign consisted of two phases:
• From April 2000 to September 2001: activities involving the central banks of the
countries concerned, the authorities from the twelve member States (customs, police,
finance ministries, education ministries, etc.), economic partners from the countries
concerned, various institutions (professionals in the tourist industry, retailers, among
others), banking professionals, shopkeepers, bar, hotel and restaurant cashiers.
• From September 2001 to February 2002, general public launch.
The Euro project was the occasion for Publicis to implement its methodology and
concept of “Holistic Difference” and to demonstrate its effectiveness.
Publicis implemented a team of professionals from seven fields of communications
and eight different nationalities, who were based in London, Paris, Amsterdam, Berlin
and coordinated by a “brand manager” based in
Frankfurt.
15
The Euro coordinator managed ongoing relations with the ECB as well as the team of
consultants from the seven fields: strategic planning, advertising creation, media
consulting and buying, press and public relations, direct marketing and data base
marketing, interactive communications and events communications. In addition,
twelve agencies from the Publicis network ensured the link with the central banks from
the twelve euro countries. Finally, a “Euroburo” was created in Frankfurt.
O NE
SLOGAN , TWELVE COUNTRIES , ELEVEN LANGUAGES ,
TWENTY- TWO MONTHS , SEVEN DISCIPLINES ,
AND FOUR COMMUNICATIONS CHANNELS
The campaign slogan “The Euro, our money” caught the public’s imagination. In the
simplest possible manner, it informed Europeans of the arrival of their new currency,
and made it accessible to all Europeans, whatever their social, economic or intellectual
level, as confirmed by the various surveys conducted regularly. What remained was to
illustrate the concept in its most varied forms to reach all the target audiences over a
period of 22 months.
16
The ECB campaign and national campaigns
The ECB advertising campaign for television and the press, which respected the
cultural contexts of the twelve countries, was produced in eleven different versions
(the nine languages of the euro countries plus Swedish and Danish). The essential
objective of the TV campaign was to create a feeling of pride and community around
the new currency. The objective of the press campaign was to instruct, by presenting
the new coins and bills while stressing the anti-counterfeit features.
The major difficulty confronting the creative teams was to avoid excessive enthusiasm,
the political dimension and cultural references that might be too specific to certain
countries.
17
The ECB campaign was complemented by national campaigns. The Finance ministers
of each of the twelve countries organized their own competition to select their
advertising agency: Publicis won the accounts for Germany, France and
the Netherlands, three countries representing 50%
of the population concerned by the operation. These
campaigns were communicated on television, in the
press and on billboards.
18
A multifunctional web site: www.euro.ecb.int
Publicis created a 4,000 page Internet web site in eleven languages for the euro,
accessible from the European Central Bank web site. The objective of the site was to
communicate information about the euro to the general public, including children, as
well as to the media and various professional partners connected to the launch
program. The site had a record number of visits, reaching 15,000 contacts per day as
bills and coins were unveiled to the public, for an average visit of 11 minutes.
Sections with secured access were created to enable professionals to download
training documents, including videos.
Part of the press relations program used the web site to offer journalists direct access
to press kits, lists of events, timetables, names of contacts from the central banks of
the twelve countries and at the ECB, and of course, official press releases.
19
A broad program of press and public relations
An information brochure for the general public was published in 200 million copies,
which represents one copy per European household.
Numerous meetings were organized in all Euro countries to inform public officials, the
banking industry and economic leaders.
Moreover, from January 1 to December 31, 2001, through press releases, conferences
and meetings, the press was kept informed throughout the process, with two
highlights: the first presentation to the public of euro bills and coins, held in Frankfurt
on August 30, 2001 and on the night before the final conversion to the euro on
January 1, 2002.
Finally, children were involved in this huge public relations program through a contest
accessible on the Internet web site: winners were invited to Frankfurt on December 31,
2001 to receive the first euros in person.
20
Mobilizing companies
Publicis created a very effective partnership program between the ECB and
The euro
Campaign:
tools and details
organizations in both the private and public sectors: more than 2,600 partners
committed themselves to participate in training the public, by distributing information
materials to their clients, employees and partners.
Supported by its direct marketing team, Publicis provided a series of promotional
documents to be made available at points of sale. Moreover, partners had access to
information tools on the ECB web site.
In all, Publicis
developed advertising
campaigns, a web site,
educational videos,
10,000 kits for partner
companies,
100,000 information
kits,
200,000 educational
kits,
6,000,000
training brochures,
182,000,000
brochures for the general
public and
20,000 press kits in
eleven languages.
In addition it organized
numerous events
throughout Europe
on the theme of the euro.
21
HUMAN
RESOURCES
AT PUBLICIS
It is in difficult
moments, when it is
necessary to cut costs,
that the Difference in
Bringing together ethics
and creation of value
the Publicis personality
and culture is
expressed most clearly,
and first of all in the
field of Human
Resources.
The Group Human Resources Division is imbued with the Publicis charter whose
principles and values are at the heart of its mission: “Publicis has always behaved
irreproachably, with integrity, loyalty and respect”. The ethical concern we show our
clients and shareholders is just as strong with regard to our employees.
Publicis is a community of men and women, and respects human values in all
circumstances. We strive to act creatively so that our employees, of whom we
demand full involvement and performance in the face of ever demanding
competition, are in turn fully satisfied and enthusiastic in their work.
22
Our primary raw material is intelligence. Our sources of energy are many: talent,
creativity, innovation, presence, pro-activity, commitment and the ability to question
ourselves. One of the roles of the Group Human Resources Division is to cultivate
this energy in all its forms, to develop it, to help Managers to channel it in the best
way, and to always ask: “Who could do even better, and where would be the best
place for them within the Group, to serve our clients?”. In spite of our demands,
we are conscious of the fact that this task, in a Group which is always evolving, is
never-ending.
Publicis endeavors to enable all who really want to express their talent, their
commitment and creativity to join its teams and further their careers, always
keeping in mind the code of ethics of our founder Marcel BleusteinBlanchet: to fully satisfy our clients, to grow with them, to remain
attentive to their concerns, their needs and their ambitions.
And in the same spirit of fairness and truth, we need to maintain our level
of excellence by treating those employees whose paths take a different
course, with respect for their dignity and for the work they accomplished,
just as we motivate the best and most effective. It is this delicate balance:
knowing how to listen, sincerely seeking the best solutions, but also
expressing firmness and concern for the interests of the Group, that also
makes the Publicis Difference.
20,340
20,592
10,362
99
00
01
Headcount
AsieAsia-Pacific
Pacifique
14,9
%
14.9%
Reste
monde
Rest ofduthe
world 3,4
%
3.4%
Amérique
Latine Latin America
3,6
%
3.6%
Europe
Europe
47,2
%
47.2%
Amérique
North
du
Nord
America
30,9
%
30.9%
Effectifs Employees
par
géographique
byzone
geographic
region
Publicis does not hesitate to remind its employees that the ultimate goal of
any company is naturally the creation of wealth, the obligation to provide
our shareholders the best possible return. They place their confidence in
us, because of the important added value that we owe our clients. This is
why our commitment goes beyond a strictly creative or professional imperative, and includes our obligation to achieve exemplary financial performance in the long term.
Indeed, our activities are not limited to the present or the immediate future.
We are inspired by Montesquieu’s credo of a “vision that is far-reaching
and just”. We try to see opportunities quickly. Publicis is devoted to
23
HUMAN
RESOURCES
AT PUBLICIS
Administration/
Management 15%
Other
6%
Account
Handling
26%
Media and
Research
19%
Production and
specialized staff
16%
Creation
18%
Employees by function
Zenith Optimedia
Zenith Optimedia
9%
9%
Fallon Worldwide
Fallon Worldwide
2%
2%
Autres
Other
16
%
16%
Publicis
Publicis Worldwide
Worldwide
48
%
48%
Saatchi & Saatchi
Saatchi
& Saatchi
Worldwide
Worldwide
26 %
26%
Effectifs par
Employees
byréseau
network
24
considering the future boldly and realistically as regards new business
prospects, not only in terms of technical developments, but also with regard
to the important changes in the ways work is accomplished.
Finally, Publicis is a Group with a social responsibility and which cares
about current problems. We make a point of respecting the cultures of the
countries where we carry out our activities, and of not interfering with their
values or moral code. We also want our work to show respect for
consumers, and our code of conduct emphasizes our ambition to
contribute to the improvement of the human environment.
GLOBAL
OFFERING
Advertising
Networks
A network is a group of agencies
with the same brand name, operating
in different regions, countries
or continents, and all sharing
the same spirit, culture and tools.
Publicis Groupe S.A. is composed
of three global advertising networks,
each one operating independently:
Publicis Worldwide, the Group’s historic
network, Saatchi & Saatchi Worldwide,
acquired in 2000 and considered
throughout the world to be
one of the finest brands in the field,
and Fallon Worldwide, an expanding
group of ultra-creative agencies.
In 2001, the activities
of these three networks represented
66% of the Group’s
total revenues.
In a very
complementary
and specific way,
these networks are
developing Publicis
expertise and creativity
in 102 countries and
182 cities. In this way,
whether globally
or locally, clients have
for all their activities
an agency of reference
capable of adapting
the Publicis
“difference” and
holistic approach
to their specific needs.
25
GLOBAL
OFFERING Advertising Networks
PUBLICIS WORLDWIDE
The Publicis Worldwide
network, present on
five continents and
in 83 countries,
enjoyed 6.4% organic
growth as compared
to 2000, and revenues
of 1,094 million
euros in 2001.
Publicis Worldwide
operates on the
principle of holistic
communications
and integrates the
Publicis Dialog network
within the services
it offers to its clients.
The year was
highlighted by the
development of our
offering, continuing
review of its structures
and tools to face
the difficulties of the
market, and a very
active new business
approach, which
resulted in the
acquisition of
numerous new
accounts and
expanding collaboration with its main
international clients.
26
While our main competitors in 2001 met with difficulties due mainly to the
significant decline in advertising investments, Publicis Worldwide outperformed
the market once more, which is not surprising. In the first place, the Publicis brand
is well respected, and within just a few years has acquired a strong presence on
markets around the world. Moreover, its agencies are managed by true entrepreneurs,
who have strong roots within their markets. Finally, its approach is holistic and
multi-cultural, in harmony with advertisers’ needs and consumers’ expectations.
Finally, its creativity is effective, in building brands for the long-term and winning
market shares.
The best performances in terms of revenues were made in Western Europe, and
especially in France, in Northern Europe (particularly in the United Kingdom), in
Latin America (with the exception of Argentina and Peru), in Canada, and in the
Middle East. The situation was more contrasted in the United States, in the AsiaPacific region, and in Eastern and Southern Europe.
A network designed to succeed
The organization or structure of an agency is in a constant state of flux: oddly,
stability is a liability. It leads to the creation of habits and weakens creativity.
Publicis has always been changing and thrives on change. A little like with a bicycle,
strategic thinking about the organization needs to be constant to maintain balance.
The difficulties of the market in 2001 have only added to the ways Publicis responds
to advertisers’ needs and their professional and economic demands. Leaner structures,
an organization in concentric circles, a reinforcement of specialized agencies, a more
pointed approach to strategy, a more comprehensive way to treat communications,
more effective tools: all this has made of Publicis Worldwide an agency designed for
its clients’ success, which is the only way a communications Group can at all succeed.
In France, Publicis Conseil and FCA!BMZ have merged, thus enabling their
advertising activities to be streamlined and consolidating their position in the
market. In Germany, Publicis Worldwide has accelerated the restructuring of its
local organization: the Publicis NetWorks and Hiel agencies closed while the
offering of its German network has expanded with a new structure in Frankfurt
aimed at brand consulting, a public relations agency in Berlin and a direct marketing
agency in Dusseldorf.
New Biz
In the United States, the Publicis and Publicis & Hal Riney agencies adapted their
workforce early on to the change in demand. The network streamlined its organization to form a holistic communications package, combining the offerings from the
Publicis, Publicis Dialog and FusionDM agencies.
In Asia, Publicis acquired the Indonesian agency Metro Advertising at the end of
2001, thereby acquiring a position on a market with strong potential. In the Middle
East, Publicis-Graphics opened a new agency in Amman, Jordan.
Creativity at the forefront
Creativity is at the heart of our activity, and Publicis applies this creativity to all it
does. Its progress in this area has been spectacular and it has been able to produce
numerous campaigns that have met with the approval of its peers and especially of
consumers.
One example of this creativity can be seen in the “Nestlé, 80 years” campaign in
Brazil. At the outset a promotional campaign, it strengthened the relationship
between Nestlé and its consumers, to break sales records and to improve the brand’s
image. Why? Quite simply because its creative best was used for holistic communications. That this campaign won the prize for “Best Promotional Campaign of the
Year” was gratifying to us, but less so than the records it broke.
• Siemens Corporate,
VoiceStream, CIBA
Vision, Siebel,
The Washington Apple
Commission,
Safeco in the United
States • Areva, Jet
Tours, Syngenta,
Helena Rubinstein,
Façonnable in France
• Credito Italiano
in Italy • The Post
Office in England •
Molson Black Label
in Canada • FC
Barcelona in Spain •
Zivnostenska Banka
in the Czech Republic
• Novartis, Liquorland
Vintage Cellars
in Australia • Korea
Telecom and Renault
Samsung in Korea •
São Luiz and Tostines
cookies and crackers
in Brazil •
Winning profitable accounts
The network was able to win over numerous new clients around the world and
consolidate its relations with existing clients.
In France, Publicis Conseil won Helena Rubinstein, Façonnable, Club Internet and
reinforced its collaboration with Heineken and Jet Tours. Publicis Etoile won the
accounts for Syngenta, Sanex France, the National Education Ministry and the
Tourist Office of French Guiana. Its German agencies won the accounts for Sara
Lee/Sanex, Deutsche Lotto, T-Mobile, Citibank , Daihatsu and Coca-Cola Light. In
the United Kingdom, the Publicis London agency won the accounts for the Post
Office and Toby Taverns. Its recognition by the Central Office of Information
enabled it to win the accounts for the Army and UK Online for Business. In Spain,
Publicis España won the accounts for the sports newspaper Marca, the Agencia
Tributaria (Tax authority), and the Bank of Spain - within the context of the euro
launch - and of the Tourist Office for the Valencia region. Publicis•Casadevall
Pedreño, established mainly in Barcelona, won the accounts for the Football Club of
Barcelona, Gerblé Spain and Nike Urban. In Italy, the network enriched its local
2001 Revenues
Latin America
Amérique
Latine
33%
%
Asia-Pacific
Asie-Pacifique
8%
8
%
Other
Autres3%
3%
North Amérique
America
du Nord
26%
26
%
Europe
Europe 60%
60 %
Publicis
Worldwide
Revenu
de Publicis
Worldwide
Revenues
by geographic
region
par zone
géographique
27
client portfolio with Parmalat, Credito Italiano, Tuborg and ENIT (Italian National
Tourist Office). In the Austrian market, Publicis rose to seventh place in 2001 after
winning Ferrero, the Austrian national television station and the Deutsche Post as
important new clients. The network maintained its positions in the Czech Republic,
as the decline in its international accounts was offset by the acquisition of local
accounts such as Zivnostenska Banka, Sazka and Pfizer/Viagra.
In the United States, within a context not very favorable to major competitions,
Publicis won the accounts for Siemens NA, CIBA Vision, Novartis EyeCare, Safeco
and The Washington Apple Commission. The agency also acquired new accounts
for L’Oréal and Nestlé. Publicis & Hal Riney renewed its contract with Sprint PCS
and won the Siebel Systems account. The agency now handles the entire worldwide
Hewlett-Packard account.
In the Middle East, the development of Publicis Graphics was furthered by the
arrival of new clients, including American Express, Ferrero, Renault, SABIC, the
National Commercial Bank and The Banque du Liban. In Latin America, aside from
new local accounts such as Sudameris, Roche and the Government of Brasilia,
Publicis•Norton won numerous international accounts, including Nestlé São Luiz
and Tostines cookies and crackers, HP and Ericsson.
In the Asia-Pacific region, the most vigorous growth was achieved by Publicis Japan.
After heightening its activities with Renault and UBS and winning the AXA Direct
and Helena Rubinstein accounts, the agency broke even, only three years after its
creation. In other countries, the network made up for the decline in the investments
of its established clients through important new business acquisitions. In Australia,
Publicis•Mojo won first place on the market for “new business” (NRMA,
Liquorland, Lion Nathan, Esanda, Melbourne Grand Prix, Novartis, among others).
In Korea, in association with Saatchi & Saatchi, Publicis won the Hankook Tires
account while Publicis•Welcomm won the accounts for Renault Samsung and Korea
Telecom.
28
GLOBAL
Advertising Networks OFFERING
SAATCHI & SAATCHI WORLDWIDE
Its most satisfying performances were made in Latin America, in the Asia-Pacific
region and in some European countries, particularly in Germany. Saatchi & Saatchi’s
creativity once more justified its reputation, winning numerous prizes and awards,
as it does every year.
Consolidation of the second worldwide Publicis network
The first full year with Saatchi & Saatchi within Publicis Groupe S.A. has been above
all dedicated to integration. This was a difficult task, as could be seen in other
communications Groups. The objectives were to strengthen the network’s
independent positioning and its operating philosophy, to carefully protect its
autonomy so that clients and employees are reassured about the identity of the
agency, and to preserve confidentiality and competitiveness, including, and above all,
with respect to the other agencies within the Group.
But it is also important to implement synergies to realize the strategies and
profitability necessary to the development of Saatchi & Saatchi. To this end, initial
measures were taken in the administrative, accounting and tax areas.
Moreover, in the United States and the United Kingdom, streamlining of the
network was solidified by restructuring measures, in order to adjust costs to the
change in demand. The network closed its less profitable agency in San Francisco
and reduced the workforce of its London agency. In Portugal and in the
Netherlands, the Saatchi & Saatchi and Publicis agencies merged during the year.
Saatchi & Saatchi
is probably the finest
brand in the world on
the advertising market.
Its reputation is
excellent and
the image of its
international creative
agency is at the very
highest level.
The Saatchi & Saatchi
network is present
in 82 countries
worldwide. In 2001 it
generated 698 million
euros in revenues,
representing a 0.5%
organic growth rate
as compared to 2000.
International star at Cannes
During this time, the network’s creativity was in full force. In winning seven gold,
six silver and ten bronze “Lions”, Saatchi & Saatchi finished second at the Cannes
advertising film festival. Saatchi & Saatchi’s F. Nazca São Paulo agency won the
“Agency of the Year” award while Saatchi & Saatchi China, the only Chinese agency
to win an award, obtained a gold Lion.
New clients…
Equipped with a solid foundation, the network significantly developed its
collaboration with its main clients.
In the United States, Toyota/Lexus brought in accounts for the Highlander, Sequoia
and Camry brands, and Procter & Gamble brought in Old Spice and Cascade Scents
29
New Biz
L’OFFRE
GLOBALE
• T-Mobile (Deutsche
Telekom) in several
countries • Guinness
in Asia • Adidas in
Japan • i-STT in
Singapore • significant
extension with General
Mills in the United
States and with Procter
& Gamble in several
countries • CDC
(Centers for Disease
Control and Prevention)
in the United States
with Frankel and
Publicis Dialog • the
Greek National Tourist
Office worldwide •
Alfred Ritter Chocolate
in Germany • Danone
Robust and Sony
Consumer Electronics
in China • Hankook
Tires in Korea in
association with
Publicis•Welcomm •
2001 Revenues
Latin America 7%
Other 1%
Asia-Pacific 14%
North
America 50%
Europe 28%
Saatchi & Saatchi Revenues by geographic region
30
Advertising Networks
SAATCHI & SAATCHI WORLDWIDE
Expressions. The Rowland agency expanded its DuPont account worldwide for
“Teflon”.
As historic clients of Saatchi & Saatchi New York, General Mills entrusted to them
its Yoplait, Colombo, Wheaties and Oatmeal Crisp accounts along with Johnson &
Johnson for St. Joseph’s Aspirin. In Latin America, the best performances go to the
Puerto Rican and Brazilian agencies whose accounts have grown considerably.
… And new business!
In Europe, thanks to a strong new business development, the network won a
number of new worldwide accounts: Hennessy and Saint Gobain (glass products),
Pernod Ricard, The Greek National Tourist Office, Palm Islands Development
worldwide, Procter & Gamble Olay Daily Facials and Touch Moisturizer, T-Mobile
(Deutsche Telekom), Procter & Gamble Pampers Sunnies and Bibsters, Rittersport
Chocolate, for Europe and Guinness Extra Stout for Asia.
Among the numerous local accounts won, the most significant are Cadbury Fingers,
Manor Bakeries and Diageo (Archers Aqua, José Cuervo, etc.) in the United Kingdom,
Telenet and Ferrero in Belgium, Kinder (Ferrero) and Procter & Gamble Ariel
Liquitabs in France and the Labor Ministry in Italy.
In the United Arab Emirates, the Dubai agency won the account for Arab Digital
Distribution. In the United States, the New York agency, in collaboration with the
Group’s Publicis Dialog and Frankel entities, developed a holistic offering that won
over the Centers for Disease Control and Prevention.
In Asia, the network won several accounts including Adidas in Japan, Carrefour in
Taiwan, i-STT in Singapore, Alliance Bank in Malaysia, La Tondeña and Philippines
Dairy Product Corp. in the Philippines, Toyota Prius, Road and Traffic Authority,
DMG Radio, Unicef in Australia and, in cooperation with Publicis•Welcomm,
Hankook Tires in Korea.
Activity in China was also enriched with a harvest of new business: Johnson &
Johnson, Electrolux, China Netcom, Ha Ci, Yili Ice Cream, Danone Robust,
Volkswagen Polo , Vitasoy (Hong Kong) and the Bank of China (Hong Kong).
In Latin America, the number one region for the growth of Saatchi & Saatchi in
2001, the network was pleased to add the UOL-Sinectis accounts in Argentina,
Jornal do Brasil, Multishow and Mextra Cosmeticos in Brazil, Triara and Schering
Plough in Mexico and Verizon in Puerto Rico.
GLOBAL
Advertising Networks OFFERING
FALLON WORLDWIDE
As opposed to most agencies, Fallon was created in a city (Minneapolis) that does
not have the reputation for being a center for advertising. Nevertheless, the agency
not only acquired a national reputation, overtaking the best agencies in New York,
Chicago and San Francisco, but also became known internationally.
Major advertisers who demand top quality wanted Fallon Worldwide to serve them
globally, which explains the creation of Fallon in London, and that proved to be
a remarkable success. The start-up agency was built by a team of talented and
energetic young people who proved their strategic and creative capabilities.
This is the same recipe that was used in São Paulo with the creation of a brand
new agency that has made an auspicious debut.
The situation in the United States led Fallon to set up an important restructuring
program to adjust its operational costs to a lower level of activity than in 2000.
The New York agency adapted the size of its team to the development of its local
accounts and now relies on the creative resources of its Minneapolis headquarters.
During the year 2001, Fallon Worldwide won the global accounts for United
Airlines and Timberland, Ralston Purina’s PurinaOne, Gulfstream (the aircraft
builder), NORA (National Oilheat Research Alliance), Silversea in the United
States and Ben&Jerry’s, Citibank and COI in the United Kingdom.
Fallon has traditionally been part of the most award-winning agencies in the
industry worldwide, and the year 2001 reconfirmed it: in the United States, Fallon
received, among other awards, first prize at the Advertising/Marketing Effectiveness
Awards (AME) for its Holiday Inn “Mark” campaign, an Andy Award for its
campaign for the US public television channel PBS, several Clio Awards including a
gold one for Lee Jeans (The Buddy Lee Challenge) and a gold and silver “Lion” at
the Cannes Festival for its campaign for Sports Illustrated magazine. Several of its
campaigns won EFFIE awards (Holiday Inn Express, EDS, Lee Jeans). In the United
Kingdom, several spots from its Skoda campaign won prizes at the British Creative
Circle Award and the British Television Advertising Awards. Finally, the agency was
recognized by its peers for its United Airlines campaign released in October, which
aimed at reinstalling confidence in the employees and clients of the airline, sorely
affected by the tragedy of September 11, 2001.
Fallon Worldwide is
not and never will be
a network like
the others. Based
in Minneapolis,
with offices in London,
New York, São Paulo,
Singapore and Hong
Kong, it operates from
regional “hubs”.
This is what
makes it different
from other networks,
plus the fact that
all its agencies are
created from scratch
in order to preserve
the unique culture
and creativity
that makes it so
remarkable.
New Biz
• United Airlines,
Gulfstream Aircraft,
National Oilheat
Research Alliance,
Purina One pet food
in the United States •
the Ministry of
Defense and the
Central Office
of Information
in Great Britain •
Timberland worldwide
and an extension to
Europe of the Citibank
account •
31
GLOBAL
OFFERING
ETHNIC COMMUNICATIONS
If there is a segment
of the population
that has been
blossoming for
a number of years
in the United States,
it is the minority
segment. Since
the elaboration
of its global
development
strategy, Publicis
has realized
the importance
of addressing
this community
and responding
to the needs of
its advertisers in
an extremely creative
and dynamic way.
This is why today
we have five
agencies that are
considered among
the best on
the US market.
32
Since 1999, Publicis has had a significant presence on the ethnic communications
market through Burrell Communications, specializing in the African-American
population, and then through Conill Advertising, the Saatchi & Saatchi Group’s
Hispanic agency.
In 2001, the Group reinforced its position in the Hispanic communications segment
through the acquisition of two entities: Sanchez & Levitan and the Siboney Group’s
Dallas and Los Angeles agencies.
Hispanic communications
These acquisitions were reorganized to form the sixth largest Hispanic agency in the
country for a segment that communicates to 35 million people and that in 2001 has
grown by 6%, while the whole of the advertising market was in decline.
Among the numerous accounts the new entity has won are British Airways/Latin
America, Stouffer’s, Nescafé, Nestlé Crunch and Hewlett-Packard.
African-American communications
Burrell Communications, specializing in communications for the African-American
community and urban youth, has also withstood the American recession. The agency
has maintained its revenues at the same level as in 2000 by winning two significant
new business accounts - General Mills and Toyota - both clients of the Saatchi &
Saatchi network. The creative qualities Burrell displayed for the Verizon campaign
won awards by the Association of National Advertisers.
GLOBAL
OFFERING
Specialized agencies
and marketing services
(SAMS)
To respond to the growing
needs advertisers have for specialized
communications, we can fulfill them
with people and structures
with specialized skills. For the sake
of organizational clarity, we have
grouped them under the unwieldy name
of SAMS. In fact, the goal is to build
public relations and customer loyalty
programs, promote products
and services, organize conventions
and events, to communicate
for recruitment purposes or to keep
talented people, to speak
to the financial community
or to shareholders or simply
to buy advertising space.
Simply? As we will see,
handling these
techniques is complex,
but the goal is
to make it simple,
coherent, easy to use
and economical.
These activities
represented 34%
of the Group’s revenues
in 2001. As we created
new entities and
acquired agencies,
we have accelerated
the development
of these activities
in order to reinforce
the depth our offering
and extend it on
a global scale.
Our strategy leads us
to further strengthen
ourselves so that all
our clients benefit from
our holistic approach,
which makes for
a very competitive
and effective offering.
33
GLOBAL
OFFERING The SAMS
THE ZENITH OPTIMEDIA GROUP
The creation of The
Zenith Optimedia Group,
the world’s third largest
leader in the very
competitive media
buying sector, marks
a major acceleration
in the global strategy
for consulting and
media buying of
Publicis Groupe S.A.
In 2001, The Zenith
Optimedia Group
bought for clients a
total of $17.5 billion
in advertising space,
or more than
19 billion euros,
and generated
revenues of
231 million euros.
The new Group
includes nearly
4,000 employees
in 59 countries.
Media buying and strategy are becoming more complex with the development of
electronic media, the explosion of the Internet, the increase in the number of media
and the emergence of new interactive media. In addition, there is the arrival of a
new medium using 3rd generation telephones.
The objective is to identify, understand and track the various audiences with
precision and to choose the most productive expenditures, keeping in mind that new
techniques will soon allow audiences to “zap” advertising.
To face these changes and outdo the competition, to choose the best means of
allocating resources, it is important to have reached critical mass, not only in two or
three countries but worldwide.
This has been achieved with the creation of the brand new Zenith Optimedia Group.
A new key player in the media world
At its beginnings, Zenith Media was owned 50/50 by Cordiant and Saatchi &
Saatchi. Optimedia, created by Publicis, was 100% owned by the Group. In July
2001, Publicis Groupe S.A. and the Cordiant Communications Group decided to
pool their media buying activities. The Zenith Optimedia Group was created in
October 2001, in London. Publicis owns 75% of the new company’s equity and the
Cordiant Communications Group owns 25%.
The creation of The Zenith Optimedia Group allows its clients to benefit from two
brands with clear economy of scale in the field of media buying. If the Zenith
Media and Optimedia brands remain independent and keep their own sales
organizations, working groups have begun, country by country, to identify synergies
in terms of buying (research, …) and back offices. Their association enables the two
structures to jointly develop more effective tools and services. As their geographic
locations are complementary, their development can be reinforced in various regions.
Optimedia, a global network in expansion
Bolstered by its development in new business and growth in the accounts of some of
its clients, Optimedia bought 7.3 billion euros in advertising space for clients in
2001 and generated revenues of 98 million euros, representing a 5% growth rate as
compared to 2000.
The Optimedia network significantly expanded its geographical coverage by opening
offices in South Africa, Egypt, Saudi Arabia, Lebanon, the United Arab Emirates,
Finland, Sweden, Uruguay, Croatia and in Macedonia. In Switzerland, the
34
New Biz
acquisition of BG Media AG allowed for the Optimedia brand to be launched and
to claim first place on the market.
Optimedia was very successful in obtaining new business during the year, gaining
the worldwide accounts for Allied Domecq, Sanofi Synthelabo and EDS, winning
the European accounts for Vizzavi, Polo Ralph Lauren, Aspen Technologies and
the European Central Bank as well as a number of national accounts such as COI,
EFD and UK Online in the United Kingdom, Honda, Fairfax Newspapers and
Lion Nathan in Australia, Usinor in France, Nestlé in Egypt and Grupo Recoletos
in Spain.
The network’s creativity won it several prizes: its campaign for Go (airline) received
the M&M Europe award for best campaign.
Optimedia improved its technology tools with its intranet/extranet Optinet2
network, thus allowing it to improve communication with clients.
Zenith Media, Media Agency of the Year
Zenith Media bought 12 billion euros in advertising space. The sharp progression
of its market shares generated revenues of 133 million euros, representing a 20%
growth rate as compared to 2000.
This dynamic can be explained by an extremely active new business strategy.
In 2001, the agency won the United Airlines, Iberia, Infineon Siemens and Hankook
Tires accounts worldwide, Monster in Germany and in the United Kingdom,
General Mills, Schering Plough, Georgia Pacific, Boston Beer Co. and Bausch&Lomb
in the United States, Procter & Gamble, Danone and Robust in China, Columbia
Tristar, COI Communications in the United Kingdom, and Hyundai Motor Corp.
in Australia.
These exceptional performances led to Zenith Media USA being named “Media
Agency of the Year” by The Delaney Report’s “Marketing and Media Awards” and
to Zenith Media Asia being named “Agency of the Year” by the Hong Kong Media
magazine. Zenith Media France was awarded for its work on the Puma brand.
• Entertainment Film
Distributors,
Sony Digital, Toyota
(dealers) in Great
Britain • Bausch &
Lomb in the United
States • The Ministry
of Finance in the
Netherlands • The
Ministry for National
Education, Usinor, the
Army in France •
Honda, Fairfax
Newspapers and Lion
Nathan Brewery in
Australia • Procter &
Gamble, Chun Lan and
Sony in China • Polo
Ralph Lauren and
Vizzavi in Europe
• And worldwide,
Sanofi Synthélabo,
Aspen Technology,
Allied Domecq,
Siemens-Infineon,
Iberia •
35
GLOBAL
OFFERING The SAMS
MÉDIA & RÉGIES EUROPE
The Médias et Régies
Europe group brings
together agencies
specialized in
advertising space
selling for the media.
The diversity of its
activities has enabled
the Group to react
to and manage the
decline in advertising
investments that
had an impact
on the year 2001:
the maintenance of
business in the sectors
of radio and outdoor
media and public
transportation
made up for the
difficulties encountered
by the press and
cinema business.
36
Throughout the year 2001, the media has suffered from successive reductions in
advertising investments. The events of September 11 made this phenomenon worse
although there was a slight turnaround in December for most major media in France.
Faced with the brutal collapse of the “Net Economy”, the Group curtailed its
activities in its subsidiary Média et Régies Interactive. Its space selling activities for
the print press as well as for the cinema through Mediavision were particularly
affected by the decline in the market, and after September 11, by the wave of
cancellations of advertising campaigns. In all the countries where it is present
(Spain, Portugal, Switzerland, Italy, the Netherlands, Poland and Brazil) Mediavision
and its subsidiaries renegotiated its main contracts with cinema owners, and was
thereby able to restore more favorable operating conditions.
The other activities of Médias et Régies Europe have also weathered well the crisis.
Despite a reduction in advertising investments, the leading radio agencies in France
and in Portugal, the subsidiaries “Régie 1” and Intervoz Publicidade achieved
satisfactory revenues as compared to the year 2000.
Innovation energize billboards in public transportation
The near disappearance of “dot.com” communications and the decline in investments on the part of telecommunications operators have slowed the growth of
Métrobus’ activities in France and of TCS in Portugal.
In France, however, its innovations have enabled Métrobus to limit the effects of the
slowdown in the advertising market. Utilizing the “third side” of buses and new
billboard techniques in the metro, such as “main corridors”, “entrances” and plasma
screens using the Siren methodology, have responded well to advertisers’ needs. The
long-standing relationship between the RATP (Paris Transit Authority) and
Métrobus was reviewed and benchmarked. This led to the renewal of the contract
for nine years.
In Spain, despite an extremely depressed market, Publisistemas was able to increase
its revenues in the Madrid and Valencia metros.
The outdoor media sector makes a breakthrough
in the United States
The Group achieved growth in the outdoor media sector. In the Netherlands, the
Publex Group, rated second in the sector, managed the huge decline in the market
through an extension of its street furniture installation contracts. In the United
States, the new subsidiary Omni Media, established in Cleveland, completed the
installation of its stands (billboard fixtures especially made for city centers) and
began to break into local advertising markets. The first results are very encouraging
and should lead to an entry into selected other cities.
37
GLOBAL
OFFERING The SAMS
RELATIONSHIP MARKETING
The Group’s
relationship
marketing agencies key tools for Publicis’
holistic approach complement each other
through three main
brands: Frankel,
Publicis Dialog and
The Triangle Group.
By significantly
expanding its direct
marketing offering,
the Group has
the means to respond
to the demand for
holistic services
around the world.
The Publicis approach is significantly different from that of its competitors in
the fields of operational and relationship marketing. Considered by most in the
industry to be a “below-the-line” activity, Publicis has decided to group them in
coherent units, where they form an integral part of the communications process. In
that way, Publicis has created with them a “critical success factor”. To demonstrate
to our advertisers as well as to our people how important this is to us, plus the fact
that these techniques are at least as effective as the 30-second commercial, we have
grouped them under the name of Publicis Dialog. Then, we added Frankel and The
Triangle Group to enrich our global offering. The Publicis vision in this field, that
we like to call active marketing, is to create a tool which powerfully promotes
dialogue with consumers.
It is a powerful tool in the sense that it ensures that the product, service or message
is present at the right moment, where and when consumers make their purchases.
It promotes dialogue in that it reinforces the link between the consumer and the
brand, as a natural complement to communication for the brand in the mass media.
A new asset: The Triangle Group
The Triangle Group, acquired in May 2001, is the leading independent agency in
its field in the United Kingdom, and is known for its impressive creative record:
it was elected “Agency of the Year” by the magazine Marketing Week/SPCA and
two of its campaigns, “Tango Megaphone” and “Viva Italia” won awards from the
trade press in the United Kingdom.
At the same time, the agency won a number of new accounts, including Transport
for London, Symantec, Disney Consumer Products, Golden Wonder Wotsits,
Kellogg’s (Frosties and Special K).
The EyeIIEye agency that developed within the Triangle Group was integrated into
The Facilities Group, a production and publishing group within Saatchi & Saatchi.
In January 2002, Triangle opened its first agency in Australia, which was a first step
towards international development, which should continue.
Frankel expands its offering
Frankel, the American network, has enriched its services offering and reinforced its
network in the United States, by acquiring Creative AIM, a grass-roots marketing
agency on the East coast.
38
At the same time, in a difficult market due to the decline in direct marketing
accounts, Frankel implemented severe restructuring measures.
It has continued to develop its commercial activity by winning three important
accounts: e-Bay, Nestlé (preparations for baked goods) and the Centers for Disease
Control and Prevention, won in partnership with Saatchi & Saatchi and Publicis
Dialog USA.
Publicis Dialog, new milestones on all continents
In the United States, Publicis Dialog acquired a new dimension following the
integration of four organizations: FusionDM, a CRM agency acquired in October,
Publicis Technology and two agencies specialized in financial communications
acquired during the year: Fabianne Gershon & Associates and The Hudson Stone
Group.
In Europe, the network acquired Fisch.Meier.Direkt, the Swiss leader in direct
marketing. By merging with them, Publicis Dialog Switzerland became the most
important relationship marketing agency in the country, winning accounts like UBS,
Kuoni, NetJets et Die Mobiliar.
Finally, at the beginning of the year 2002, Publicis Dialog made its first acquisition
in Japan by acquiring Gravitas, a pioneer in relationship marketing in the country.
An array of expertise made richer
In France, Publicis Dialog merged with Global Event System, the events agency that
has managed the organization of the World Economic Forum in Davos for several
years. The network expanded its array of activities by acquiring Sales Story, an
agency specialized in customer loyalty programs, and Media Publics, specialist in
business travel and incentive programs. In all, Publicis Dialog France today boasts
seven areas of expertise: events, CRM, video, new media, institutional, direct sales
and data intelligence and, as of this year, marketing partnership.
In Germany, Publicis Dialog took over part of the interactive expertise of the
Publicis NetWorks agency, which closed in 2001.
In the Netherlands, Publicis Dialog/KHP enjoyed brisk activity due to its participation in the project for the launch of the euro for the European Central Bank and
the acquisition of accounts like Casema.
* Customer Relationship Management
39
GLOBAL
OFFERING The SAMS
SPECIALIZED COMMUNICATIONS
Publicis Consultants
is unlike any other
communications
company and that
is undoubtedly what
makes its success.
In offering strategic
counsel to its clients,
Publicis Consultants
intervenes in the most
sensitive subjects:
institutional, financial,
internal and crisis
communications
and strategic reflection
on brands, among other
areas of vital importance
to organizations in both
the public and private
sectors. Not only does
Publicis Consultants
define strategies, it also
implements them.
40
PUBLICIS CONSULTANTS
For the Publicis Consultants network, the year 2001 was highlighted by important
changes in scope linked to a significant expansion in its fields of activity. In France,
the acquisition of Carré Noir enabled it to offer one of the best known design
teams, which has created some of the most noteworthy French brands. The merger
of Publicis Design under the name of Carré Noir makes it one of the French
leaders in its sector.
The network also reinforced its expertise in France in financial communications
through the acquisition of Ecocom and in the US, through the integration of Winner
& Associates, which Publicis acquired in 2000. At the beginning of 2002, Winner
& Associates took control of 60% of the equity of a well-known Washington
lobbying firm, Bennett Johnston & Associates. As Publicis’ European clients need
support in the US market to have their problems understood, especially in
Washington with government agencies, the Johnston firm will provide them with the
support they need.
The extent of the network’s developments has attracted a number of new accounts:
PPR, L’Oréal, Rhodia, Schlumberger for financial communications; EDS, Fidelity
Investments, Whirlpool, HP France for corporate communications; Club Med,
Galeries Lafayette, Fondation des Hôpitaux de Paris-Hôpitaux de France (Hospital
Authority) for public relations and Air Lib airline, Adia, Vediorbis and SNCF
(French Railways) for strategic design.
MEDIA SYSTEM
In a recruitment communications market that has declined by 30%, Media System
has resisted better than its competitors and has continued to earn market shares. The
Group has won the Dassault Aviation, Manpower, Axa Conseil, Hitachi Computer
and Unilog accounts. The group will further develop by moving from employment
communications to creating true employee communication, which is an indispensable
tool for modern companies.
Apart from the launch of “buymundo.com” Mundocom has continued to modernize its tools within the field of graphics and to adapt its organization to the needs
of the Group’s agencies and clients.
INTERACTIVE COMMUNICATIONS
The Group’s interactive agencies have eluded the disaster that has devastated the
market at the cost of intense and ongoing restructuring. The Group’s main activities
and competencies have been preserved, enabling it to pursue development, guarantee
service to our clients and maintain a high level of expertise with regard to interactive
communications.
The Group was selected to carry out several major projects, such as the creation of
the Euro web site for the European Central Bank and for the Ministry of Finance in
France. Fallon Interactive won the BMW web site in the United States. In Europe,
Publicis e-Brand won the global account for L’Oréal’s “Garnier” brand, as well as the
communications to complement the launch of Michelin’s “ViaMichelin” web site. In
the Internet monitoring field, Net Intelligenz signed a contract with Peugeot. On the
consolidated level, total revenues from interactive activities remained almost stable as
compared to 2000 but operational losses in the sector have increased.
In order to streamline activities, the Group has created a new entity called Market
Forward, which regroups the Siren and BrandGuard services and technological
tools first developed by Frankel. In the United States, Market Forward won the
Lincoln/Mercury (Ford) and Jim Beam Brands accounts for its BrandGuard service
(a technology enabling secured communication via Internet of a brand’s visual
identity or the basics of an advertising campaign). Market Forward has taken its first
steps in France in collaboration with Métrobus to market Siren, a remote-controlled
digital billboard system for the RATP (Paris metro).
Media System is
a leader in human
resource communications
in France. It is a leader
in terms of figures
and growth but
especially in terms
of its approach, which
has revolutionized
the market by creating
a dialogue with job
applicants and
employees. Mundocom,
a French subsidiary
of the Group specializing
in publishing, offers
a complete range
of services in this field.
In 2001, the Group
created the most
effective and most
transparent on-line
marketplace providing
estimates to customers:
“buymundo.com”.
41
GLOBAL
OFFERING The SAMS
HEALTHCARE COMMUNICATIONS
Founded by Wayne
Nelson, the agency that
bears his name has
progressively asserted
itself as a leader
in healthcare
communications
in the United States,
and recently worldwide.
What makes Nelson
so attractive to its
clients is the very
high quality and
professionalism of its
employees: all its
executives have
laboratory, medical
or pharmaceutical
experience.
The restructuring
of Nelson in 2001
should enable it
to grow with
its marketplace
in the future.
42
NELSON COMMUNICATIONS
Growth in healthcare communications on the US market has remained positive,
although less vigorous than forecast. The sector has undergone changes;
advertisers are concentrated differently and the FDA (Food and Drug
Administration) has been slow to clear new products, which has reduced
opportunities for new business.
The gloomy market environment, combined with reductions in investments in the
field of sales promotion and education, have taken a toll on the company’s revenues.
However, Nelson’s medical marketing and education activities have continued to
progress.
The agency won the Biovail “Cardizen CD” account, the “MyDoc.Online” web site
account, and several important clients such as Johnson & Johnson CNS, Berlex and
TriPath have expanded their business with Nelson.
At the same time, the agency has begun to streamline its organization in order to
implement the synergies resulting from the integration of Nelson within the Publicis
and Saatchi & Saatchi networks. Several administrative functions have been
centralized within Nelson or incorporated within the pooled resources of the
Publicis network in the US.
Nelson has also undertaken to balance the distribution of its activities portfolio
between its “medical marketing” units (advertising, consulting, direct marketing and
education) and “professionals sales” (recruitment, training of sales teams, lobbying,
telemarketing, interactive communications). “Outsourced sales force offering” and
“public relations” have been reduced due to the interruption of
certain unprofitable activities or their transfer to managers.
Marketing activity has been reinforced through the implementation of an
international development team whose mission is to operate outside the United
States. Through its expansion into Western Europe, its main target market, it can
create synergies with the Group’s European agencies specializing in this field.
THE PUBLICIS DRUGSTORE
“A symbol of the dynamic spirit and strength that the Publicis Group displays
throughout the world, in all its projects.”
Our goal for the new Drugstore is to make it the showcase for the Group.
Combining conviviality and modernity, it will also convey the notions of communication, exchange and dialogue through all the services it proposes to the public.
The main features that have made the Drugstore a success with Parisians will, for the
most part, still be present: the newsstand, tobacco shop, movie theater, restaurant,
bookstore, grocery store and pharmacy. However, new additions will enable the
Publicis Drugstore to once again be the “happening place” of Paris, a true “Parisian”
place, ahead of its time and fulfilling the public’s expectations.
The renovation is being managed by Michael Saee, a young California architect and
winner of the International competition launched in 2000. He will have a hand in
the entire architectural design of the Drugstore, outside as well as inside, as well as
in the design of the furniture.
The renovation of the
Publicis Drugstore,
which commenced
at the beginning
of the year 2002,
will pay homage to
and breathe new life
into the concept
launched by Marcel
Bleustein-Blanchet
in 1958, to better
illustrate the Group’s
international
positioning and
its signature,
“La Difference”.
43
PUBLICIS
AROUND THE WORLD
NORTH AMERICA
Revenues 1,034
Employees 6,372
Number of Countries 2
Number of Cities 32
LATIN AMERICA
Revenues 80
Employees 750
Number of Countries 17
Number of Cities 20
EUROPE
Revenues 1,098
Employees 9,704
Number of Countries 37
Number of Cities 69
Main Brands
Publicis
Publicis & Hal Riney
Saatchi & Saatchi
Fallon
Publicis Dialog
Publicis Consultants
Zenith Media
Optimedia
Nelson
Frankel
Burrell
Main Brands
Publicis
Saatchi & Saatchi
Fallon
Zenith Media
Optimedia
Publicis Dialog
Main Brands
Publicis
Saatchi & Saatchi
Fallon
Publicis Dialog
Publicis Consultants
Zenith Media
Optimedia
Triangle
Media System
Media & Régies Europe
Services
Advertising
Relationship Marketing
Sales Promotion
CRM
Healthcare Communications
Corporate Communications
Ethnic Communications
Media Buying and Consulting
Media Sales
Design
Interactive Communications
44
Services
Advertising
Relationship Marketing
Sales Promotion
CRM
Media Buying and Consulting
Interactive Communications
Services
Advertising
Relationship Marketing
Sales Promotion
CRM
Healthcare Communications
Corporate Communications
HR Communications
Media Buying and Consulting
Media Sales
Design
Interactive Communications
Reference
Document
MIDDLE EAST/
REST OF THE WORLD
Revenues 42
Employees 707
Number of Countries 28
Number of Cities 32
ASIA-PACIFIC
Revenues 180
Employees 3,059
Number of Countries 18
Number of Cities 29
Main Brands
Publicis
Saatchi & Saatchi
Zenith Media
Optimedia
Publicis Dialog
Main Brands
Publicis
Saatchi & Saatchi
Fallon
Zenith Media
Optimedia
Publicis Dialog
Services
Advertising
Relationship Marketing
Sales Promotion
CRM
Media Buying and Consulting
Interactive Communications
Services
Advertising
Relationship Marketing
Sales Promotion
CRM
Media Buying and Consulting
Interactive Communications
In accordance with
its regulation 98.01,
the Commission
des Opérations de Bourse
(the French Securities and
Exchange Commission)
has registered this
reference document on
May 2, 2002, under the
number D.02-746.
It may only be used in
connection with a financial
transaction if it is
complemented by
a prospectus
(note d’opération)
approved by the
Commission des
Opérations de Bourse.
Contents
Corporate Governance
46
Publicis and its Shareholders
52
2001 Financial Highlights
56
2001 Financial Data
57
45
CORPORATE
GOVERNANCE
MANAGEMENT BOARD
Maurice Lévy
Chairman - CEO
Publicis Groupe S.A.
Kevin John Roberts
CEO
Saatchi & Saatchi Worldwide
Bertrand Siguier
Executive Vice President
Publicis Worldwide
COMMITTEES
Audit Committee
Bruno Desbarats-Bollet
CEO
Médias & Régies Europe
Chairman:
Gérard Worms
Simon Badinter
Jean-Paul Morin
Appointment and
Compensation Committee
Chairperson:
Elisabeth Badinter
Gérard Pédraglio
Henri-Calixte Suaudeau
46
SUPERVISORY
BOARD
Elisabeth Badinter
Chairperson
Hélène Ploix
Chairperson, Pechel Industries
Sophie Dulac
Vice-Chairperson
Felix Rohatyn
Chairman of the Board,
Aton Pharma Inc.
Robert Badinter*
Professor Emeritus, University of Paris 1
Simon Badinter
Director, International Development,
Médias & Régies Europe
Monique Bercault
Technical Advisor to the CEO,
Médias & Régies Europe
Michel Cicurel
Chairman of the Board,
Compagnie Financière
Edmond de Rothschild Banque
Michel David-Weill*
Worldwide Chairman, Lazard LLC
Robert Louis Seelert
Chairman, Saatchi & Saatchi
Amaury-Daniel de Sèze
Chairman of the Board,
COBEPA
Henri-Calixte Suaudeau
Director, Property Division,
Groupe Publicis Services
Gérard Worms
Associé-Gérant, Rothschild & Cie Banque
and Rothschild & Cie
AUDITORS
Statutory Auditors
Mazars & Guérard
125, rue de Montreuil
75011 Paris, France
Ernst & Young Audit
4, rue Auber
75009 Paris, France
Alternate Auditors
Patrick de Cambourg
Denis Thibon
*Renewal submitted to the Annual General meeting
on June 18, 2002.
47
PUBLICIS AND ITS
SHAREHOLDERS
PUBLICIS ON THE STOCK MARKET
In a context
of significant downturn,
Publicis nonetheless
ranked among the top
market performers
in the advertising
industry as a whole.
While the CAC 40 index
declined by 22% and
the SBF 120 index slid
21%, Publicis managed
to limit the decrease
in its share price to 16%
for the year.
Over a five-year period,
the share price has
increased by an average
of 34% per year.
Our share price:
outperforming most advertising stocks
The vast majority of advertising and media stocks suffered a significant erosion in value over the
past year, mainly because of their high sensitivity to the overall business climate. Broadly speaking,
advertising was hard hit by a combination of bad economic news and the specific troubles besetting
the TMT (telecoms, media and technology) sector with which it is equated in most investors’ minds.
Yet Publicis succeeded in booking one of the three best performances in an industry in which several
stocks lost anywhere from 20% to 65% of their value between the beginning and the end of 2001.
During the first five months of 2001, Publicis maintained its market price within the 30-to-40-euro
range, in line with its opening share price of €35.40. However, early profit warnings made by
competitors as well as accumulating evidence of the worsening global economic situation led analysts
to revise their forecasts strongly downward in the month of June. The result was that in the summer
months, Publicis’ share price was dragged down into the 25-to-30-euro range. The tragic events of
September 11 in the United States further depressed the worldwide business climate, with industries
like travel and transportation taking a particularly severe beating. Once again, advertising agencies
had to pay the price for downward revision of earnings forecasts. Publicis’ share price thus hit a low
of €15.83 on October 2, 2001. But as market operators began to realize how undervalued many
stocks were, our share price subsequently inched its way back up to the 30-euro region, ending the
year at €29.75.
At the beginning of 2002, our share price dipped slightly below the 30-euro mark following the
launch of the Publicis Océane (bonds convertible into or exchangeable for either new or existing
shares). Since then, it has remained consistently above the 30-euro level. According to a number of
financial analysts, Publicis’ share price still holds significant upside potential, in light of the Group’s
many strong fundamentals.
Publicis share fact sheet
Nominal value
0.40 €
Share capital
as of 3/30/2002 55,912,740 €
Number of shares
in issue
as of 3/30/2002 139,781,849
Market capitalization
on 3/30/2002 (€bn)
5.43
Euroclear Paris Code
13057
NYSE Ticker
PUB
Reuters
PUBP.PA
Bloomberg
PUB FP
Datastream
F : PUB (Paris)
U : PUB (NY)
48
Publicis Groupe S.A. share price/SBF 120 Index
basis 100
500
daily closing prices
450
400
350
300
Publicis
250
200
150
100
SBF 120 indexed
50
0
1
1
1
1
1
1
2
2
0
0
0
0
0
0
9
9
9
9
9
9
1/9 /03/9 /05/9 /07/9 /09/9 /11/9 /01/0 /03/0 /05/0 /07/0 /09/0 /11/0 /01/0 /03/0 /05/0 /07/0 /09/0 /11/0 /01/0 /03/0
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4
4/0
Publicis and its shareholders:
1.37
an ongoing and transparent relationship
At December 31, 2001, Publicis had approximately 68,000 shareholders in some 45 different countries.
The largest share was to be found in France, the United States and the United Kingdom, followed
by a number of countries in Europe (e.g. Germany, Switzerland, Italy and the Netherlands) and in
Asia.
High-quality shareholder relations is one of the Group’s core values. To uphold it, we have set up a
full range of tools that go well beyond legal requirements.
0.93
0.68
- A department dedicated to investors.
98
99
00
01
Diluted EPS
pre-goodwill
In 2001, Publicis created an investor relations department and stepped up its communication with
both institutional investors and financial analysts by holding investor presentations in Paris and
London, as well as nearly 150 one-on-one meetings in Paris and various other global financial centers
(e.g. London, New York, Montreal, Zurich, Amsterdam, Frankfurt).
- Widely acclaimed emphasis on transparency.
in euros
0.22
0.20
- A dedicated web site.
Publicis has created a specific web site (www.finance.publicis.com) to enable retail and institutional
investors as well as Group employees, journalists and analysts to access everything we have published
(press releases, annual reports, prospectuses, etc.), to be fully informed about the Group and to track
our market performance.
1.43
0.17
98
99
00
01
0.122
0.08
97
Net dividend per share
in euros
In February 2002, Publicis was awarded the Top Com d’Or Prize for the best annual report in 2000.
Océane offering in January 2002
Publicis issued bonds that are convertible into or exchangeable for new or existing Publicis shares
totaling €690 million in January 2002. This was the first transaction of its kind ever launched
by Publicis. Its purpose was to refinance a large part of the Group’s debt, most of it short-term, and
to reduce average interest expense by taking advantage of the low interest rate (yield to maturity
of 2.75% per year). The bonds have been listed on Euronext since January 18, 2002.
Treasury stock repurchased
The General Shareholders’ Meeting authorized Publicis management to repurchase Group shares,
with the total not to exceed 10% of capital stock. In 2001, Publicis made use of this authorization to buy back 3,857,758 shares at an average price of €31.04, representing an outlay of
€119.8 million. Most of this treasury stock was granted to Group employees under stock
option schemes.
Oceane bond fact sheet
Nominal value
Number
of bonds in issue
39.15 €
17,624,521
Total amount
689,999,997 €
Coupon rate
1% p.a.
Yield-to-maturity
2.75% p.a.
Maturity
16 years (2018)
Redemption
at 134.59%
Euroclear Paris Code
18012
49
PUBLICIS AND ITS
SHAREHOLDERS
LISTED SECURITIES
Publicis Groupe S.A. share
- Listing: the Premier Marché of Euronext Paris (13057) and the New York Stock Exchange (PUB), in the form of
American Depositary Receipts (with a parity of one ADR for one ordinary share).
- Securities approved for listing on the Premier Marché (Euronext Paris): all securities making up the company’s capital stock.
- Trading volume and share price trend over the last eighteen months on the Euronext Paris stock exchange (in euros):
Period
Number of
trading days
2000 September
October
November
December
2001
January
February
March
April
May
June
July
August
September
October
November
December
2002
January
February
21
22
22
19
22
20
22
19
22
20
22
23
20
23
22
18
22
20
Daily trading volume
Number
Value
of shares
(€ thousands)
869,001
717,643
538,630
458,205
369,792
394,889
380,244
505,827
450,088
762,843
528,397
290,391
652,590
825,025
621,524
436,358
871,181
510,923
48,963.2
24,246.2
20,341.9
16,802.5
13,559.9
13,881.2
13,270.2
17,305.3
16,910.0
24,134.2
14,106.7
8,110.7
13,154.2
16,793.0
17,384.5
12,749.7
25,206.5
16,127.0
Opening
44.90
36.15
38.80
33.45
36.30
35.60
35.97
34.50
38.05
37.59
28.99
26.91
26.48
17.50
24.68
27.15
30.00
28.15
Monthly price (in €)
Closing
High
34.60
38.55
34.25
35.99
35.80
36.10
34.50
38.00
37.10
28.60
27.50
26.10
18.50
24.60
27.91
29.75
28.58
30.52
45.89
38.99
41.89
39.98
39.27
36.99
37.70
38.50
38.77
38.00
29.89
30.70
26.77
26.84
30.85
33.20
32.85
30.52
Low
33.50
29.10
33.55
33.30
32.11
33.02
31.35
30.49
35.20
27.50
24.63
25.51
16.12
15.83
24.44
26.55
26.80
26.85
Publicis Groupe S.A. Océane
- Listing: Euronext Paris (18012)
- First listing: January 21, 2002
- Trading volume and share price trend over the last two months (in euros):
Period
2002
50
Number
of trading days
January
February
9
20
Daily trading volumes
Number
Value
of bonds
(€ thousands)
49,861
13,707
1,989,075.1
543,046.6
Opening
40.30
40.15
Monthly price (in €)
Closing
High
40.10
40.90
40.35
41.49
Low
39.40
39.31
Dividend distribution and yield
Fiscal year
of dividend
payment
1997
1998
1999
2000
2001
Number
of shares
Dividend
per share
(in euros)
Tax
credit
(in euros)
Total income
per share
(in euros)
Total
distribution
(in millions
of euros)
81,509,930
89,791,110
94,293,000
139,262,350
139,781,449
0.079
0.122
0.17
0.20
0.22
0.040
0.061
0.085
0.10
0.11
0.12
0.18
0.26
0.30
0.33
6.5
10.9
16.0
27.9
30.8
Price at
Dec. 31
(in euros)
8
15
38
36
30
Net
yield
1.06%
0.80%
0.45%
0.56%
0.73%
Unclaimed dividends are payable to the beneficiary for up to five years, after which the dividends are paid to the French
State.
Over the past several years, Publicis’ policy has been to provide a steady dividend payout to its shareholders, while at
the same time preserving sufficient cash flow to fund the company’s further development.
Publicis intends in the future to provide steady dividend growth for its shareholders so as to achieve a yield close
to the average for stocks listed on the Paris Stock Exchange. Thus, after two years of sustained growth in dividend
payments, the per-share dividend will once again be raised significantly (+10%).
Publicis Groupe S.A. ownership structure at December 31, 2001
Shareholders owning
more than 5% of total share capital
Somarel SA (1)
Elisabeth Badinter
Public
Treasury shares
Total
(1)
Shares beneficially owned
%
Voting rights
%
30,960,000
7,766,800
96,242,769
22.18
5.56
68.94
61,916,400
15,533,600
96,436,868
35.61
8.93
55.46
4,630,427
139,599,996
3.32
100.00
173,886,868
100.00
Somarel is controlled by Elisabeth Badinter and her children (51.29%), Sophie Dulac (7.98%), institutional investors (18.55%), Groupe Publicis S.A.
employees (18.55%), Michèle Bleustein-Blanchet (2.42%) and Nicolas Rachline (1.21%)
Somarel and
Elisabeth Badinter
28%
Treasury shares
3%
Private investors
13%
Other Europe
14%
Asia
3%
Rest of the world
1%
United States
17%
Institutional
investors
56%
Equity ownership structure
United Kingdom
20%
France
45%
Bearer shareholders
by geographic region
51
2001
FINANCIAL HIGHLIGHTS
Between 1999 and
2001, Publicis more
than doubled its size:
2,434
in millions of euros
1,770
Revenues and
EBITDA were
Revenues
2,434
663
97
851 1,042
98
99
00
multiplied by 2.3,
EBITDA
426
110 143
97
98
99
00
342
87
97
115
98
275
00
01
156
99
128
Group Net Income
151
35
47
97
98
87
Cash flow
107
99
00
134
98
99
00
396
Shareholders’ Equity
in millions of euros
(incl. minority interests)
01
259
259
97
Revenues
of top 10 markets
151
74
228
52
01
342
EBIT
980
392
219
159
88
57
52
51
39
37
187
doubled.
US
France
UK
Germany
Netherlands
Spain
Canada
Italy
Brazil
Australia
01
426
334
EBIT by 2.2 and
Group Net Income
358
01
376 372
321
372
97 98
99
00
01
2001
Financial data
Contents
Management Board Report
54
Supervisory Board Report
72
2001 Consolidated financial statements
73
Report of the Statutory Auditors
on consolidated financial statements
107
Pro forma accounts
108
2001 Summarized statutory accounts
109
General and special reports
of the Statutory Auditors
118
Supplementary information
119
Table of concordance
131
53
Management Board
Report for 2001
From the outset, it was clear that 2001 would be a
year of special challenges for the Publicis group in its
new form, faced with tasks that included not only the
integration of Saatchi & Saatchi, Fallon, Frankel and
Nelson, but also a shift from a single network to a multinetwork structure and the implementation of Holistic
Difference approach in client relations. Yet by year-end it
was clear that the challenges of the economic setting had
been far more severe than initially anticipated.
In 2000 the world advertising industry grew
exponentially, breaking all previous records, and leading to
a consensus that the global advertising market would grow
by 4 to 5% in 2001. Yet events proved otherwise, with
recession in the US, the collapse of the Internet bubble,
and the tragic events of September 11th all taking their
toll. Ultimately, the market declined 4 to 5%, creating
an 8 to 10-point gap between projections and reality.
What is more, this downward adjustment did not
come in one fell swoop, but rather as a creeping recession
throughout the year.
This, then, was the backdrop for our Group’s 2001
performance. Publicis has in the past tended to play
down its own achievements, and we continue to do so
today, yet it would be wrong to underestimate the
outstanding quality of our results, the real growth
recorded, and market share gains. Most importantly of
all, and in contrast to all of our competitors, our efforts
to integrate a series of major acquisitions, notably
Saatchi & Saatchi, went smoothly and successfully.
Finally, we would like to acknowledge the key
contribution of staff members around the world to this
performance, despite repeated restructuring made
necessary by changes in the economic environment.
Group revenues for the year showed a rise of 37.5%,
a figure that naturally reflects the consolidation of new
acquisitions, but also factors in the contribution of
3.1% organic growth. Set against general trends, Publicis
outperformed the market by 7 to 8 points and very
clearly gained market share during the year. We thus have
some reason to feel satisfied with these achievements,
which demonstrate our success in consolidating
acquisitions and market positions, as well as our capacity
to continue growing in tight markets with poor visibility.
54
The inflow of new business was generally very
satisfactory over the year. While third-and fourthquarter gains of €390 million and €400 million
respectively were significantly lower than the
€800 million recorded in the first quarter and
€670 million in the second, the net total for the year
still comes to over €2.3 billion. This is far higher than
the full-year total for 2000, and keeps us well up among
the leaders in the new business league tables calculated
monthly by Crédit Suisse First Boston, whose “New
Business Encyclopaedia 2001” ranks Publicis third
worldwide.
Major new budgets won in 2001 are shown below:
Publicis Worldwide: Siemens Corporate, VoiceStream,
CIBA Vision, Siebel, The Washington Apple
Commission, Washington State Lottery and Safeco in
the United States; Areva, Jet Tours, Syngenta, Helena
Rubinstein and Façonnable in France; Credito Italiano
in Italy; The Post Office and Six Continents Retail in the
United Kingdom; Molson Black Label in Canada;
FC Barcelona in Spain; Zivnostenska Banka in the Czech
Republic; Novartis and Liquorland Vintage Cellars in
Australia; Korea Telecom and Renault Samsung in
Korea; São Luiz & Tostines biscuits in Brazil.
Saatchi & Saatchi Worldwide: T-Mobile (Deutsche
Telekom); Guinness in Asia; Adidas in Japan; i-STT in
Singapore; a significant extension of work with General
Mills in the United States and with Procter & Gamble in
several countries; CDC (Centers for Disease Control
and Prevention) in the United States with Frankel and
Publicis Dialog; the Greek National Tourist Office
worldwide; Alfred Ritter Chocolate in Germany;
Danone Dairy, Danone Robust and Sony Consumer
Electronics in China; Hankook Tires in Korea in
conjunction with Publicis • Welcomm.
Fallon Worldwide: United Airlines, Gulfstream
Aircraft, National Oil Heat Research Alliance and
Purina One petfood in the United States; the Ministry
of Defense and the Central Office of Information
(COI) in the United Kingdom; Timberland worldwide
and extension of Citibank account to cover Europe.
Zenith Optimedia Group (media buying and
consultancy): Vizzavi in Europe; Entertainment Film
Distributors, Sony Digital and Toyota (dealerships) in
the United Kingdom; Bausch & Lomb in the United
States; the Dutch Ministry of Finance; in France, the
Ministry of Education, Usinor, and the French Army;
Honda, Fairfax Newspapers and Lion Nathan Brewery
in Australia; Procter & Gamble, Chun Lan and Sony in
China; Polo Ralph Lauren in Europe, and worldwide:
Sanofi Synthélabo, Aspen Technology, Allied Domecq,
Siemens-Infineon and Iberia.
Our agencies’ creative talent was also rewarded with
a host of national and international prizes during the
year. Publicis came in second overall in the Cannes
International Festival, winning 28 “Lion” awards, due in
large part to the outstanding contribution of Saatchi &
Saatchi, which shared first place among participating
agencies.
Acquisitions also continued, focusing principally on
Specialized Agencies and Marketing Services (SAMS).
Transactions included:
• The acquisitions of The Triangle Group, the largest
independent sales promotion company in the UK, of
Fisch.Meier.Direkt, Switzerland’s leading direct marketing
firm, and of FusionDM in San Francisco, a large
independent direct marketing agency that has since
merged with Publicis Dialog, as well as Frankel’s
acquisition of Creative AIM, a grassroots marketing
agency.
• Reinforcement of Publicis’ business in areas
including design, with the acquisition of Carré Noir in
France; financial communications through France’s
Ecocom and US firms Fabianne Gershon & Associates
and Hudson Stone Group; and finally Sanchez & Levitan,
a major Hispanic agency in the US, consolidating our
presence in the fast-growing ethnic communications
market.
More recently, Publicis has acquired Gravitas, a
communications agency in Japan specialized in
marketing services and public relations. This is our first
acquisition in Japan, where we have had an agency since
1998, and will enable us to provide clients with a holistic
offering covering a wide variety of services. Last but not
least, Publicis Consultants has acquired lobbying
expertise in the US by taking a majority interest in
Johnston & Associates through its subsidiary Winner &
Associates.
Looking to other geographical markets, at year-end
2001 we acquired the well-known Indonesian agency
Metro Advertising, which has had an outstanding
growth trajectory since it was created.
The year 2001 also saw the creation of the world’s
third largest media buying and consultancy group. At the
end of July, Publicis Groupe S.A. signed an agreement
with Cordiant Communications Group plc for the
combination of their media operations, Optimedia and
Zenithmedia, through a holding company in which
Publicis has a 75% equity interest and Cordiant 25%.
Launched on October 1, 2001, the new group, named
The Zenith Optimedia Group, is the world’s third
largest media buying agency, according to Advertising
Age magazine’s ranking (July 23, 2001 issue). The move
makes Publicis the majority shareholder of a world
leader in the strategic media-buying sector.
Finally, Fallon Worldwide pursued its international
deployment, setting up agencies in São Paulo, Singapore
and Hong Kong to round out existing operations in
Minneapolis, New York and London. This marks an
important step forward in the international expansion of
the group’s third network, reflecting a drive to build
business structured around regional hubs covering all
major markets in the world.
Reconstituted billings totaled €16.7 billion in
2001, an increase of 41.2% from 2000 of €11.8
billion.
Consolidated revenues are €2,434 billion in 2001, a
rise of 37.5% compared with €1,770 billion in 2000.
Adjusted for exchange rate and consolidation
differences, the increase in revenue was 3.1%. Organic
growth was up 6.4% for the Publicis network, 0.5% for
the Saatchi & Saatchi network, and down 2.6% for
Médias & Régies Europe.
Consolidated net income excluding minority
interests came to €200 million for the year before
amortization of goodwill and exceptional items, 32.5%
more than the €151 million recorded in 2000. After
amortization of goodwill and exceptional items,
consolidated net income excluding minority interests
came to €151 million in 2001, or 18% more than the
€128 million recorded in the previous year.
55
MANAGEMENT BOARD
REPORT
Key figures at December 31, 2001
(in millions of euros)
Reconstituted billings
16,667
Revenues
2,434
EBITDA
426
EBITDA/revenues
17.5%
EBIT
342
EBIT/revenues
14.1%
Net interest expense and other financial items (30)
Net income before minority interests
(before exceptional items
and goodwill amortization)
200
Net income after minority interests
(after exceptional items
and goodwill amortization)
151
Results for different areas of business are described
below. All figures in this section are before exceptional
items and goodwill amortization.
COMMUNICATIONS
The Communications division reported reconstituted
billings of €16.1 billion, up 43% and consolidated
revenues of €2,289 billion, up 40.8% from €1,626
billion in the previous year, while consolidated net
income excluding minority interests was up 50.2% from
€137.4 million to €206.4 million. This increase in
revenues mainly reflected the contributions of Saatchi &
Saatchi over eight additional months and of Nelson
Communications in the US over ten additional months,
plus Zenith Media (consolidated since October 1,
2001) and, of course, organic growth at our existing
agencies. Currency translation had practically no impact
on 2001 operations. Momentum was mainly from
Europe (+7%), since business in North America,
especially the US, was down on the previous year - a
trend reflecting the steep economic slowdown and the
disruption following the September 11 attacks.
Altogether organic growth in North America was a
negative 1.2% for the year. The pace of growth in Asian
business slowed slightly (+4%), while combined revenue
growth of Latin America and the rest of the world was
56
11.7%. The former FCA!BMZ advertising network was
largely dismantled: depending on local situations, units
were merged with Publicis Worldwide or Saatchi &
Saatchi Worldwide units, with the exception of Germany
and Italy.
ADVERTISING
1. Publicis Worldwide network
Revenues of the Publicis Worldwide network
increased 3.9% in 2001, from €1,053 million in 2000
to €1,094 million. Consolidated net income from
ordinary business, excluding minority interests, was
€96.4 million, compared with €93.1 million in 2000,
an increase of 3.5%. The strongest growth was in
France, other Western Europe (primarily the United
Kingdom), Northern Europe (Germany and the
Netherlands), Canada, Latin America and the Middle
East. The United States, Asia-Pacific, Southern Europe
and Central Europe reported declines.
In France, the Publicis Conseil group reported
revenues up 8.6% to €211 million. Consolidated
net income was €30.2 million, up 37.7% from
€21.9 million in 2000. FCA!BMZ was successfully
integrated by Publicis Conseil in autumn 2001.
In the rest of Europe, revenues increased 4.3% to
€392 million. Performances were strongest in the UK,
the Netherlands, Germany, Switzerland, Finland and
Greece, while revenue growth was moderate in Spain.
In contrast, Italy, Portugal and countries in Central
Europe saw revenues fall off sharply. Net income of
European operations were €40.6 million for the year.
Several restructuring initiatives took place in Europe
during the year: Germany’s Hiel and Publicis Networks
(web activities) were closed, as was Change The Script in
the Netherlands, to eliminate major loss centers, while
staff cuts were implemented in almost all countries. In
the dismantling of FCA!BMZ, the London agency was
taken over by Publicis UK and its accounts were
distributed between Publicis and Saatchi & Saatchi, while
agencies in other countries were for the most part merged
with Saatchi & Saatchi units. In Italy and Germany, they
remained independent given their client base.
In the Asia-Pacific region, revenues were down 6.9%
to €84 million (-0.8% at constant exchange rates and
scope of consolidation). The decline mainly reflected a
general contraction in business in the region due to
economic upheavals. This was only partly offset by
strong earnings in the Philippines and New Zealand.
In Japan, Publicis reported a steep rise in business that
brought operations past breakeven point during the year.
Net income from the region was lower than in 2000.
Strategic moves included the acquisition of Metro
Advertising, one of Indonesia’s top agencies, and in early
2002 the acquisition of Gravitas, a Japanese agency
specialized in direct marketing and public relations.
In Africa and the Middle East, revenues rose 5% to
€34 million, mainly due to robust performances by
Publicis-Graphics in the Middle East. In contrast, there
was a sharp drop in business in Israel and South Africa.
In Latin America, revenues were €33.8 million,
down 0.6% on the 2000 figure but up 9% at constant
exchange rates and scope of consolidation. Strong
revenue growth in Mexico, Brazil, Chile, Colombia and
Venezuela offset sharp contraction in Peru and
Argentina. Yet overall, results deteriorated significantly
in the region, and Latin America as a whole showed a
loss for the period.
In Canada, Publicis generated revenues of
€39.5 million, adding 10.8% on 2000 level. Earnings
were broadly in line with the previous year.
In the United States, the group’s advertising agencies
Publicis & Hal Riney, Publicis Evans, Publicis Bloom
and Burrell generated revenues of €248 million, down
0.3% from €248.6 million in 2000; the decline was
3.2% at constant exchange rates and scope of
consolidation. Revenues held steady at Publicis USA,
edged down at Burrell Communications, and showed a
more marked decline at Publicis & Hal Riney. At the
same time, income reported by Publicis agencies in the
US fell 16.3% from €21.6 million in 2000 to
€18 million. Altogether agencies reported lower
earnings than in 2000. Restructuring was naturally most
extensive in the US, with total staff numbers down 250
during the year. Restructuring should continue in the
first half of 2002 following Publicis & Hal Riney’s loss
of the Saturn account.
In strategic terms, 2001 saw continued acquisitions
with a view to significantly enhancing the Publicis
offering in the US and finalizing its holistic approach.
Targets included Hispanic agency Sanchez & Levitan;
financial communications specialists Fabianne Gershon
& Associates and the Hudson Stone Group; and
FusionDM, a CRM/direct marketing agency.
2. Saatchi & Saatchi Worldwide network
The Saatchi & Saatchi network reported revenues of
€697 million in 2001. Organic growth was up 0.5% on
2000. Europe (in particular the United Kingdom and
certain countries on the Continent) and North America
saw revenue decline 3.4% and 1.4%, respectively, while
operations in Asia-Pacific and Latin America/the
Middle East were very satisfactory, with organic growth
of 8.5% and 17.3%, respectively. Net income reported
by the Saatchi & Saatchi network stood at €62.8 million
in 2001.
In the United Kingdom, sweeping reorganization of
agency operations led to staff cuts affecting over 10% of
employees in London, and revenues were down 3.8%
(organic) on 2000 at €87 million.
In the rest of Europe, major agencies in the Saatchi
& Saatchi network reported revenues down on 2000,
except for Germany where revenues rose sharply,
reflecting large new accounts. Declines were steeper in
France, Spain and Portugal than in Italy. Saatchi &
Saatchi agencies in Portugal and the Netherlands took
over FCA!BMZ units during the year.
In North America, Saatchi & Saatchi reported
revenues down 1.4% organically, at €341 million.
Strong performances at the Los Angeles agency,
TeamOne, Klemtner (healthcare communications) and
Hispanic agency Conill Advertising failed to offset a
marked fall in revenue at the New York agency. The San
Francisco agency was closed in the first half of 2001,
and other cost-cutting measures, less sweeping in scale,
were introduced in the US network. Saatchi & Saatchi
Canada had a difficult year and is now undergoing widereaching restructuring.
In Latin America, the Saatchi & Saatchi network
reported a steep rise in business, with revenues of
€46 million up 21% on 2000 at constant exchange
57
MANAGEMENT BOARD
REPORT
rates and scope of consolidation. Puerto Rico and Brazil
turned in the strongest performances. Yet following the
loss of the Telemar account, it was decided to close the
Rio agency.
In Asia-Pacific, organic growth was also a satisfactory
8.5%, with revenues of €95.4 million. Agencies in
China, Japan, Malaysia and Thailand more than offset
declines in business in Australia, New Zealand,
Singapore and India.
In the Middle East, Saatchi & Saatchi reported
vigorous growth in Egypt and Saudi Arabia.
3. Fallon Worldwide network
The Fallon Worldwide network generated revenues
of €105 million, down 2.5%, with a sharp decline at
Fallon USA, hit hard by the US recession and the
bursting of the Internet bubble. At the same time, Fallon
London reported continued strong growth. Net income
reached €5.8 million, up 82.4%. Sweeping cost-cutting
measures were introduced during the year in
Minneapolis and the New York agency was restructured
in early 2002.
Fallon announced upcoming plans to set up three
new units – in Hong Kong, Singapore and São Paulo
– as part of its emerging world network.
the US reported vigorous revenue growth in 2001, while
in Germany (Optimedia and More Media) revenue fell
back, due in large part to the loss of the Renault account
at year-end 2000. In France, PCM managed to partially
offset the Renault account loss and reported only a
slight decline in revenue. The year 2001 marked the
start-up of several units (Canada, the Netherlands) and
new entities were launched or developed in South Africa,
Egypt, Saudi Arabia, the Lebanon, the United Arab
Emirates, Finland, Sweden, Switzerland, Uruguay,
Croatia and Macedonia.
Zenith Media owes most of its 2001 growth to new
accounts, notably in the United States. These gave a
sharp boost to revenues at Zenithmedia USA, while
Zenithmedia UK was stable. Most other European
operations reported a decline.
AND MARKETING SERVICES (SAMS)
2. Corporate communications
Publicis Consultants repor ted billings of
€89.5 million, up 21% on 2000 and revenues totaling
€48.3 million in 2001, reflecting the acquisitions of
Carré Noir (design) and Ecocom (financial communications)
as well as the first-time consolidation of Publicis Design.
Consolidated net income excluding minority interests
fell 3.7% from €5.3 million to €5.2 million.
In early 2002, Publicis Consultants acquired a 60%
equity interest in lobbying specialists Johnston &
Associates, based in Washington, through its US
subsidiary Winner & Associates.
1. Media buying and consulting
The Zenith Optimedia Group, a new entity founded
at the beginning of October 2001 with Publicis
Groupe S.A. holding 75% of equity and Cordiant 25%,
was consolidated for the first time from October 1. For
the period to September 30, only Optimedia was within
the scope of consolidation.
Media buying and consultancy generated total
billings of €3.3 billion and revenues of €133 million
in 2001. On a full-year basis, the Zenith Optimedia
Group achieved revenues of €231 million, while net
income excluding minority interests stood at €18.7 million.
Optimedia group units in the UK, Italy, Spain and
3. Interactive communications
Publicis.Net companies, operating on a market that
could be described as devastated in 2001, generated
billings of €18.7 million during the year versus
€8 million in 2000 and revenues of €10.4 million.
The Group reported a net loss of €3 million for the
year. In response, drastic measures including closures,
staff cuts and more were taken as of the first half, and
account for part of the exceptional charge booked for
the year.
The Group’s other internet operations are included
in the business of Publicis agencies described earlier
under the heading Publicis Worldwide.
SPECIALIZED AGENCIES
58
4. Relationship marketing
Frankel in the US faced difficult conditions from
the beginning of the year on, as several major clients
slashed budgets. Revenues totaled €94.5 million, down
10.7% on 2000. In contrast, net income rose sharply
(excluding Siren and BrandGuard). Frankel reduced
payroll and operating costs sharply in 2001, reducing
costs further when it lost the large Frito Lay account at
the end of the year. Finally, it acquired Creative AIM, an
East Coast agency specialized in grassroots marketing, to
expand its reach and expertise in the region.
Marketing services subsidiaries in the Publicis
Dialog network, including Fisch.Meier.Direkt are part
of Publicis Worldwide.
The Triangle Group in the UK, acquired at the
beginning of the year, achieved a 2% organic growth in
revenues in 2001.
5. Healthcare communications
While the US market for healthcare communications
continued to expand, albeit at a moderate pace, Nelson’s
performance in 2001 suffered from comparison with a
strong showing in 2000, particularly in the first half.
Other adverse factors included divestments or
suspension of some operations, notably in public
relations and professional sales. In addition, a number of
key clients cut promotional outlays sharply during the
year, and some projects were halted. Overall
performance was thus disappointing.
Nelson’s billings totaled €1.1 billion whilst revenues
fell nearly 10% to €147 million. Net income declined
sharply, and staff numbers were slashed by nearly 200
during the year.
MEDIA SALES REPRESENTATION
(MÉDIAS & RÉGIES)
The Media Sales Representation division’s billings
rose 0.9% to €556.6 million and revenues totaled
€131.7 million, down 2.5% from €135 million in
2000. Total net income for the division came to
€13 million, down 19% on 2000.
Following a vigorous first quarter, continuing the
trend of the previous year, Médias & Régies Europe
suffered from a sharp fall in spending by French
advertisers, particularly from the second quarter.
All sectors were affected with the exception of radio and
outdoor advertising, which proved resilient.
In the press sector, billings fell 15.6% to
€187.8 million and revenues slid to €35.3 million.
Consolidated net income stood at €0.6 million, down
sharply on 2000.
Outdoor advertising showed a 3.1% rise in billings
to €192 million and a 4.9% rise in revenues to
€64.6 million, while net income declined 7.8% to
€9.8 million.
Performances of main sector businesses are
described below:
• The Métrobus Group held up well in the face of
cuts in overall advertising budgets, buoyed by its
innovative flair. The Paris urban transport authority
RATP renewed its contract with Métrobus for 9 years,
while in Spain Publisistemas expanded vigorously during
the year. Revenues totaled €33.5 million, up slightly on
the figure reported in 2000.
• Publex Group, operating in a generally depressed
advertising market in the Netherlands, reported revenues
of €31.1 million, up 9% on 2000. Contributing factors
included successful account wins in several cities.
Radio business through Régie 1 in France and
Intervoz in Portugal progressed in a generally difficult
environment, with billings up 24.2% to
€125.8 million and revenues for the period rising by
approximately the same percentage to €21 million.
Publicis’ share in net income from the sector rose 33%
from €1.5 million in 2000 to €2 million.
Cinema advertising representation through
Médiavision generated billings of €49.2 million,
showing a rise of 27.9% as subsidiaries in Brazil, Spain,
the Netherlands, Italy and Switzerland went into
operation. Yet business was very hard hit by the recession
on advertising markets during the year. Revenues totaled
€10.5 million, down 24%, and net income was
€1.2 million compared with €2.5 million in 2000.
Most business development outside France performed
59
MANAGEMENT BOARD
REPORT
well below expectations, and contracts are now being
renegotiated.
Interactive business suffered from the collapse of
the internet sector and showed a loss of €400,000
compared with a loss of €300,000 in 2000. Médias &
Régies Europe has decided to terminate this activity in
2002.
OTHER BUSINESS
Publicis Drugstore sales declined 7% to
€11 million in 2001, compared with €11.7 million in
2000. The company reported a full-year loss of
€3.9 million compared with a loss of €679,000 in
2000. The Drugstore outlet closed its doors at the end
of December 2001 and will reopen in 18 months time,
completely renovated. Based on a new concept developed
by a well-known architect, renovation is aimed at
restoring the avant-garde image the store enjoyed in its
early years, and bringing operations back on to a longterm profitable basis.
STATEMENT OF INCOME
Consolidated revenues for the year rose 37.5% to
total €2,434 million. Steep growth was due to major
changes in the scope of consolidation over the period,
including consolidation over eight additional months for
Saatchi & Saatchi, ten additional months for Nelson
Communications, three months for Zenith Media, and
the inclusion of a number of agencies acquired in 2001.
Organic growth (excluding changes in exchange rates and
scope of consolidation) stood at 3.1%. This rate is
based on constant scope of consolidation, i.e. including
in particular Saatchi & Saatchi (12 months) and Zenith
Media (3 months) both in 2000 and 2001; however,
Nelson Communications was excluded, as this company
underwent major organizational changes in 2001 .
Payroll expense was equal to 56% of revenues, up
from 55.6% in 2000. The rise was due primarily to
hiring at the end of 2000 and the consolidation of
companies acquired in 2000 and 2001 at which the ratio
of payroll expense to revenues was generally higher than
at existing business. This ratio, which peaked on June 30,
60
2001, was reduced substantially through cost-cutting
measures implemented throughout the year. Other
operating expense increased from 26.6% of 2000
revenues (and 28.3% of pro forma 2000 revenues) to
27.1% in 2001.
Depreciation and amortization amounted to
€84 million compared with €59 million in 2000
(€74 million pro forma basis).
Operating income stood at €343 million, up 27%
and 9.6%, respectively, from €270 million in 2000 and
€313 million on a pro forma basis.
Interest and other financial expense rose sharply
from 2000 to 2001, reflecting a steep rise in debt due in
turn to the many acquisitions made at the end of 2000
and in 2001. It increased from €15 million in 2000
(pro forma) to €30 million in 2001.
The income tax rate was 32% compared with 33.2%
on a pro forma basis and 35% on a historical basis in
2000. The decline reflects the application of loss
carryforwards at Saatchi & Saatchi in the US and the UK.
Amortization of goodwill on acquisitions excluding
write-downs amounted to €49 million compared with
€34 million in 2000 (pro forma accounts). This
marked rise is the direct consequence of the pace of
acquisitions in 2000 and 2001. However, no goodwill
was generated by the acquisition of Saatchi & Saatchi,
since this was carried out on a pooling of interests basis
(French GAAP, Art. 215-99-02).
We draw your attention to the fact that the
consolidated statement of income for 2001 shows a net
exceptional charge of €3 million (after tax). This
includes exceptional payments linked to staff cutbacks,
losses on discontinued businesses, notably by
subsidiaries in interactive communications and
exceptional amortization of goodwill in the amount of
€62.5 million, plus a capital gain on the contribution of
a 25% interest in Optimedia to The Zenith Optimedia
Group in exchange for €59.5 million.
Consolidated net income excluding minority
interests totaled €200 million before amortization of
goodwill and excluding exceptional items, compared
with €151 million in 2000, representing an increase of
32.5%. After amortization of goodwill and including
exceptional items, net income excluding minority interests
was €151 million, resulting in an increase of 18%.
Basic net earnings per share were €1.44, with
diluted earnings per share at €1.43 (before amortization
of goodwill and exceptional items). These figures are up
3% and 4%, respectively, on those published in 2000.
BALANCE SHEET AND DEBT
Consolidated shareholders’ equity went from
€376 million at December 31, 2000 to €372 million
on December 31, 2001, or €283 million excluding
minority interests. The Group’s net financial debt at
December 31, 2001 amounted to €465 million,
including €270 million in ordinary net debt and
€195 million in commitments relating to contingent
value rights (CVRs), with the total up from
€372 million at December 31, 2000. This is 1.09 times
EBITDA and 11% of the Group’s market capitalization
at March 1, 2002. The rise reflects the commitment to
reimburse CVR entitlements in March 2002 as well as
acquisitions over the period and financing of working
capital requirements, these factors being partly offset by
the consolidation of Zenith Media, which generated a
significant cash surplus at the end of 2001.
We remind you that in 2001 the Management Board
made the irrevocable decision to allocate treasury shares
to new stock options plans related to existing shares.
As a result, these shares now appear in the financial
statements as marketable securities and are thus equated
with cash.
Debt, primarily consisting of direct short-term
borrowing from banks, was restructured in December
2001 and again in January 2002 to reduce the average
cost of borrowing, extend maturities and secure greater
financial flexibility for the Group. This involved:
• A €200 million issue of bonds exchangeable for
shares of Interpublic, carrying a 2% coupon. Publicis
USA Holdings holds 5,310,120 Interpublic shares as a
result of Interpublic’s successful swap offer for True
North. The issues enabled us to monetize a nonstrategic investment and obtain cash at a time when
market prices were below our expectations.
• A highly successful €690 million Océane issue
(bonds convertible into or exchangeable for new or
existing shares) offering a yield to maturity of 2.75%.
In 2001, cash flow from operations came to
€259 million, up 13.6% from €228 million in 2000.
Investments in property, equipment and intangible
assets totaled €92 million for the year, and acquisitions
of subsidiaries (net of divestments) amounted to
€77 million. However this was offset by cash surpluses
of subsidiaries acquired, mainly that of Zenith,
representing a total of €241 million.
PUBLICIS GROUPE S.A.
(parent company)
Operating revenues of the parent company Publicis
S.A., made up exclusively of real-estate rents and rental
management fees, amounted to €11.4 million at
December 31, 2001, showing a decline of around 1.5%
from €11.6 million one year earlier.
Financial income rose from €44.8 million in 2000
to €68 million, an amount consisting almost entirely of
income from investments in subsidiaries, which came to
€56.8 million.
After a deduction of €12 million in operating
expense and €42.3 million in interest and other
financial expense, and the addition of its share in the
losses of sociétés de personnes (companies in which the active
participation is required by each unit-holder intuitu
personae), amounting to €(5.4) million, the company
showed pre-tax income from ordinary business
amounting to €23.4 million. This compares with
€28.2 million in 2000.
In 2001, the accounts of parent company Publicis
Groupe S.A. include an exceptional loss of
€492.5 million that can mainly be attributed to a
€496 million write-down of Saatchi & Saatchi
securities, since they were valued lower at year-end than
they had been in June 2000, at the time the acquisition
was announced. This provision will not affect the
consolidated financial statements. For tax purposes, it
will be treated as a long-term capital loss. Payment of
the CVR’s in 2002, which should generate an increase in
the company’s stake to the appropriate level, has already
been taken into account in calculating this provision. In
addition, capital gains and losses on disposal of assets
61
MANAGEMENT BOARD
REPORT
and exchange of investment securities within the Group
have generated a positive balance of €3.5 million.
In 2000, the contribution of Publicis Groupe S.A.
interests in US companies to Publicis USA Holdings
resulted in the recognition of a capital gain of
€186 million. The transaction was subject to temporary
tax exemption granted by the French Tax Inspectorate,
with a provision for taxes set aside in the amount of
€40 million.
At December 31, 2001, after taking into consideration
the provision against Saatchi & Saatchi securities, parent
company Publicis Groupe S.A. recorded a loss of
€469 million, following a profit of €192 million in 2000.
FINANCIAL AND LEGAL INFORMATION
Acquisition of shareholdings
There was no acquisition of interests in French
companies as provided under article L. 233-6 of the
French Commercial Code.
Distribution of dividends
After the 17.6% increase in dividend approved last
year, we propose another increase in dividends this year
of 10%. This is in keeping with our commitment to
gradually raise the share of profits distributed as
dividends. However, in light of the €469,109,040 loss
recorded in fiscal year 2001, the total amount of
dividends to be distributed will have to be offset against
the share and merger premium reserve, and will thus be
€30,752,007 compared with €27,129,878 in 2000.
We therefore propose that the net loss of Publicis
Groupe S.A. for 2001, i.e. €469,109,040, be allocated
as follows:
Retained earnings
Revenue reserve
Long-term capital gains reserve
Share and merger premium reserve
€188,110,587
€91,670,158
€23,659,026
€165,669,269
The “Share and merger premium reserve” would
thus show a distributable balance of €1,868,338,585,
of which we propose to allocate €30,752,007 (€0.22 x
139,781,849 shares as at February 28, 2002) to share
62
distribution. In accordance with article L. 225-210,
paragraph 4 of the French Commercial Code, dividends
due on treasury stock held at the date of payment will be
allocated to retained earnings.
If you accept the proposed allocation, the net
dividend will be €0.22 per €0.40 par value share, plus a
tax credit of €0.11. It will be payable from July 10, 2002.
In compliance with article L. 223-16 of the French
Commercial Code, dividends paid on operations in the
past three years were as follows (prior to the ten for one
split on September 7, 2000):
1998
• €1.22 per 25-franc par value share
+ €0.61 tax credit
1999
• €1.70 per 25-franc par value share
+ €0.85 tax credit
2000
• €0.20 per €0.40 par value share
+ €0.10 tax credit
Ownership structure
In compliance with the provisions of article L. 23313 of the French Commercial Code, shareholders
owning more than 5% of the company’s capital at
December 31, 2001 were Société Anonyme Somarel
(22.18%), Ms. Elisabeth Badinter (5.56%) and Publicis
Groupe S.A. (3.32% in treasury stock).
Saatchi & Saatchi share swap offer
As part of the swap offer for Saatchi & Saatchi
shares and more specifically under the authorization
granted to the Management Board by the third and
fourth resolutions approved by the Shareholders’
General Meetings held on August 29, 2000 and June 14,
2001, we inform you that as consideration for Saatchi &
Saatchi shares presented for exchange, the Management
Board had, at December 31, 2001, issued a total of
45,194,876 new shares of Publicis Groupe S.A. and an
equivalent number of contingent value rights (CVRs).
This figure includes the shares issued after the
acquisition, in connection with options exercised under
Saatchi & Saatchi stock option plans.
On March 1, 2002, Saatchi & Saatchi optionholders that had exercised their options received, as
consideration for the Saatchi & Saatchi shares
contributed to the offer, 4,112,959 shares in Publicis
Groupe S.A. and an equivalent number of contingent
value rights (CVR).
Valid for 18 months after their issue date, the
contingent value rights expired on March 7, 2002.
Moreover, given that Saatchi & Saatchi optionholders can exercise their Saatchi & Saatchi options until
the expiration date of the stock option plans, the
Management Board requests that the Shareholders’
General Meeting renew the authorization to issue a
maximum of 266,046 new Publicis Groupe S.A. shares
as consideration for the Saatchi & Saatchi shares
contributed resulting from the exercise of options in this
company. This authorization in no way increases the
maximum number of shares authorized by the second
resolution of the meeting of August 29, 2000.
At the same time, the Management Board wishes to
confirm what it stated to the Meeting of June 14, 2001,
namely that it has not carried out grants of stock
options or share purchases in Publicis Groupe S.A. in
exchange for Saatchi & Saatchi option-holders’ waiving
their rights to exercise their options, given that the
option to exercise such rights has been maintained as
stated above.
Stock options
As a result of the merger/absorption of Publicis
Communication by Publicis Groupe S.A. on December 11,
1998, 62,397 stock options previously issued and
allocated by Publicis Communication were recovered by
Publicis Groupe S.A. and converted into 935,970 new
options for the subscription of Publicis Groupe S.A.
shares of €0.40.
The Extraordinary General Shareholders’ Meeting
held on August 29, 2000 authorized your Management
Board to issue, in one or several operations, options
entitling holders to purchase or subscribe existing shares
of the company up to the limits provided by law.
Beneficiaries are entitled to exercise this option for a
period of ten years.
In accordance with the authorization granted by
your Extraordinary Shareholders’ General Meeting of
August 29, 2000 in its seventh resolution, the
Management Board has made the irrevocable decision to
allocate the treasury shares purchased during the year to
the stock options plan. In fiscal year 2001, a total of
3,323,135 options for the purchase of Publicis Groupe
S.A. shares were issued.
In 2001, 74,450 subscription options were exercised.
At December 31, 2001, a total of 4,075,285
subscription or purchase options of €0.40 nominal
value each remained outstanding.
Treasury stock
In 2001, Publicis Groupe S.A. bought back its own
shares under the authorization granted by the General
Shareholders’ Meeting held on June 14, 2001.
This resulted in 3,857,758 shares of Publicis
Groupe S.A. being acquired in 2001 at an average price
of €31.04.
At December 31, 2001, the number of treasury
shares (par value €0.40) thus held came to 4,630,427,
representing 3.32% of Publicis Groupe S.A. share
capital. These were acquired for total net cost of
€136,022,000 taking into account a €1,898,000
provision for depreciation of treasury stock held.
The authorization given on June 14, 2001 is valid
for a period of 18 months ending December 13, 2002.
We propose that within the framework of a new
program, you authorize the Management Board to
purchase shares in the company for a further 18-month
period subject to a maximum of 10% (including
previously acquired treasury shares) of the total number
of shares constituting the capital stock, with the
Management Board thereby being authorized to modify
the conditions of this new program in order to take into
account any changes in legislation. The objectives of this
purchase will be subject to the following order of priority:
- Allocation to company employees within the scope
of the legal profit-sharing scheme, when call options are
exercised or within the scope of a share ownership or
employee savings program.
- Market intervention in order to regulate the share
price.
63
MANAGEMENT BOARD
REPORT
- The transfer of shares, by whatever means this may
be, particularly with a view to taking holdings or stakes
in other companies and to paying back, converting or
exercising any financial instrument giving access to the
company’s capital.
- Conservation by the company.
- Possible cancellation of shares via a capital reduction,
in order to optimize earnings per share.
Issue of new shares or financial instruments
Issue by the Company of bonds exchangeable for
Interpublic Group of Companies securities
The Management Board has made use of the
authorization granted to it by the Shareholders’ General
Assembly of June 22, 2000, in its tenth resolution, to
issue as it sees fit, in one or several operations, in France
or elsewhere, bonds that may be exchanged for securities
of any kind issued by other issuers, subject to a maximum
nominal value of €200,000,000. In December 2001,
the Company issued bonds exchangeable for existing
Interpublic Group of Companies shares up to a
maximum total of €200,000,000.
Issue of new shares and/or bonds convertible into
new shares and/or exchangeable for existing shares in
the Company
The Shareholders’ General Meeting of January 9,
2002, in its seventh and eighth resolutions, has
authorized the Management Board to increase the
capital stock, whether in one or several operations,
subject to a maximum nominal value of €40,000,000,
by issuing, with cancellation of pre-emptive rights, new
shares and marketable securities other than shares
representing claims against the Company and granting
the right to receive shares either directly or indirectly,
through conversion, exchange, repayment, presentation
of warrants or any other means, at any time or at fixed
dates, up to a maximum nominal value of €800,000,000.
In January 2002, the Management Board issued
€690,000,000 in bonds convertible into or
exchangeable for new or existing shares and with a
maturity of 16 years. This debenture loan is comprised
of 17,624,521 bonds with a principal of €39.15,
issued at par and carrying a 1% coupon. These bonds
will be repaid in full at their maturity date, January 18,
64
2018, for the equivalent of 134.59% of face value.
Their main characteristics are detailed in point 27 of the
notes to the consolidated financial statements.
As at the Shareholders’ General Meeting of January
9, 2001, we again request that you authorize the
Management Board to increase the capital stock by
issuing new shares or financial instruments with the
possibility of canceling pre-emptive rights, for a period
of 26 months, subject to a maximum nominal value of
€40 million or the equivalent value in any other
currency.
We also request the right to make use of these
authorizations during the period of a takeover or
exchange bid relating to the Company’s securities.
In accordance with the provisions of the French law
of February 19, 2001 on employee savings, you have
been presented with a resolution calling for an increase
in capital stock as a means to foster employee
shareholding schemes. Since use has not yet been made
of the previous authorization granted by your
Extraordinary Shareholders’ General Meeting of January
9, 2002, we suggest that you not approve this resolution.
Corporate governance
The Supervisory Board has set up two committees to
improve the quality of corporate governance within the
Group.
The Appointments and Compensation Committee is
charged with proposing the appointment and
remuneration of board members of the company and its
main subsidiaries. Its members include Ms. Elisabeth
Badinter, Chairman, Mr. Henri-Calixte Suaudeau and
Mr. Gérard Pédraglio. This committee is pursuing its
review of the remuneration of the principal managers of
the Group. The committee also approved the
remuneration schemes and option plans put into place
during the year.
The Audit Committee, composed of Mr. Gérard
Worms (Chairman), Mr. Simon Badinter and Mr. JeanPaul Morin, is responsible for organizing and
conducting the Group audit to ensure the accuracy and
fairness of financial statements, the efficiency and
effectiveness of financial procedures, and the
implementation of recommendations by external
auditors. It approves budgets for the Group’s external
audit. This committee met several times in 2001 and
among other deliberations approved the appointment of
Ernst & Young as statutory auditor for the Group.
The Audit Committee examined on February 26,
2002, the draft statement of account for fiscal year
2001. The Committee has received all the relevant
information from the Group’s finance management and
Statutory Auditors. In the course of 2002, the
Committee will be probing the quality of the Group’s
internal control and internal audit procedures.
Directors’ fees
We propose that directors’ fees be paid to each
member of the Supervisory Board of €7,622.45 for
2001, increased by one third for members effectively
serving on the Audit Committee and the Appointments
and Remuneration Committee, and attending related
meetings.
Renewal of mandates for two members of the
Supervisory Board
We propose that you renew the mandates of
Mr. Robert Badinter and Mr. Michel David-Weill, both
members of the Supervisory Board, for a period of six
years to expire at the end of the Ordinary Shareholders’
General Meeting called to approve the accounts for the
year 2007.
65
Information regarding Management Board
and Supervisory Board members
In compliance with the provisions of article L. 225102-1 of the French Commercial Code, the table below
sets out the total remuneration and benefits of all types
paid to each member of the Management Board and
Supervisory Board during the year, both by the parent
company and by companies controlled by the parent
company as defined by article 233-16 of the
Commercial Code. For certain members of the
Management Board and the Supervisory Board, this
remuneration includes a fixed and variable component,
the amount of the fixed portion included in the total
remuneration is disclosed below.
Remuneration (in euros) paid during the fiscal year
(gross amount before deduction of social and tax charges)
Members of the Management Board
Maurice Lévy
Bruno Desbarats-Bollet
Kevin Roberts
Bertrand Siguier
Members of the Supervisory Board
Elisabeth Badinter
Sophie Dulac
Robert Badinter
Michel David-Weill
Henri-Calixte Suaudeau
Monique Bercault
Hélène Ploix
Gérard Worms
Amaury-Daniel de Sèze
Simon Badinter
Michel Cicurel
Robert L. Seelert
Felix George Rohatyn
Total gross
remuneration
Including a
fixed portion of
1,541,969
351,038
1,895,423
272,655
480,000
181,948
1,051,618
165,941
193,102
7,622
7,622
7,622
136,391
7,622
7,622
10,163
7,622
305,431
7,622
802,542
–
193,102
7,622
7,622
7,622
136,391
7,622
7,622
10,163
7,622
220,887
7,622
358,976
–
Share subscription or purchase options
Share subscription and purchase options granted
to each Management Board and Supervisory Board
member and options exercised by the latter
Options granted during the fiscal year
Maurice Lévy
Bruno Desbarats-Bollet
Bertrand Siguier
Kevin Roberts
Options exercised during the fiscal year
Kevin Roberts
(1)
(2)
Number
of options granted/
subscribed or purchased
Price
in euros
200,000
10,000
10,000
278,057
33.18
33.18
33.18
29.79
258,374
(2)
Maturity
Plan
2011 11th tranche
2011 11th tranche
2011 11th tranche
(1)
12th tranche
(2)
(2)
Allotment of options are contingent upon achievement of objectives. The options may be exercised within 10 years only after confirmation of the allotment.
Shares coming from former Saatchi & Saatchi shares were converted using the same conversion ratio used at the time of the acquisition of Saatchi & Saatchi
by Publicis (18,252 Publicis shares for 100 Saatchi & Saatchi shares).
66
List of mandates and functions in any company
held by members of the Management Board and
Supervisory Board during the year
Management Board
Maurice Lévy:
Chairman – Appointed November 27, 1987, resident
at 240 bis, boulevard Saint-Germain, Paris (75007)
• Chairman and CEO
Publicis Conseil
MLMS
Publicis.Net, Inc. (United States)
Publicis USA Holdings Inc. (United States)
• Vice-Chairman,
Supervisory Board
Médias & Régies Europe
Publicis.Eureka (Singapore)
• Member of the Board
Publicis.Romero (Mexico)
Publicis Communication (South Africa)
Publicis Johannesburg (South Africa)
Publicis Cape Town (South Africa)
Publicis Communications (Australia)
Publicis Communications (New Zealand)
Publicis (Canada)
Publicis.Unitros (Chile)
Publicis.Welcomm (Korea)
Publicis.Ariely (Israel)
Fallon Worldwide (United States)
Frankel (United States)
Publicis & Hal Riney (United States)
Publicis.Wet Desert (Malaysia)
Publicis.Pakistan (Pakistan)
Publicis.Ad-Link (China)
Publicis Casadevall Pedreno (Spain)
Publicis MMS (UK)
• Director
Publicis Centre Média
Céréol
• Gérant
MLMS Gestion
• Permanent representative
of Publicis Groupe S.A.
Publicis Technology
• Permanent representative
of Publicis Conseil
Verbe
• Permanent representative
of Publicis.Net, Inc.
Publicis e.brand
• Permanent representative of MLMS Gestion
MLMS 2
Bruno Desbarats-Bollet:
Appointed November 27, 1987,
resident at 7, rue de la Fontaine, Bailly (78870)
• Chairman of Management Board Médias & Régies Europe
• Member of Supervisory Board
MLMS 2
• Director
MLMS
S.O.P.A.C.T.
• Member of Management Committee Le Monde 2 Publicité
I Régie.com
• Gérant
Régie 1
Espaces Libération
Régiscope
Consumer Médias
• Permanent representative
of Médias & Régies Europe
Le Monde Publicité
SO.MU.PI
Groupe Publicis Services
Intervoz Publicidade (Lisbon)
Metrobus
Mediavision SA
Promométro
S.M.A.
SODEX
S.P.P.
Bertrand Siguier:
Appointed June 17, 1999
resident at 12, rue d’Auteuil, Paris (75016)
• Director
Publicis Cachemire
Publicis Technology
Gantois SA
HM Editions
• Member of the Board
Publicis BCP (Canada)
Publicis & Hal Riney (United States)
Publicis (Italy)
Optimedia Italia/More Media Italia
Carmi & Ubertis Design (Italy)
Publicis Hellas Advertising (Greece)
Publicis Worldwide BV (Netherlands)
• Permanent representative
of Publicis.Net, Inc.
Institutionnel Design
Kevin Roberts:
Appointed September 14, 2000 resident at
57 Portland Road, Auckland (New Zealand)
• Chief Executive Officer
• Trustee
Saatchi & Saatchi
Team New Zealand
67
Supervisory Board
Elisabeth Badinter:
Chairperson – Member of the Supervisory Board since
November 27, 1987, Chairperson since April 29, 1996
resident at 38, rue Guynemer, Paris (75006)
• Chairperson
of Supervisory Board
Médias & Régies Europe
• Chairperson
Somarel
Michel David-Weill:
Member of the Supervisory Board
since June 21, 1990
resident at Viking’s Cove, Peacock Lane, Locust Valley,
New York 11560 (United States)
• Worldwide Chairman
Lazard LLC
• Chairman and CEO
Lazard Frères Banque
• Chairman - Managing Partner
Maison Lazard (SAS)
• Lecturer at the Ecole Polytechnique
• Managing Partner
Lazard Frères (SAS)
• Author
• Managing Director
Lazard Frères & Co. LLC
(United States)
Lazard Brothers & Co. Ltd (UK)
• Managing Partner
Partena
Partemiel
• Gérant
Parteman
Parteger
Sophie Dulac:
Vice-Chairperson – Member of the Supervisory Board
since June 25, 1998, Vice-Chairperson since June 17,
1999
resident at 86, avenue Niel, Paris (75017)
• Gérante
Sophie Dulac Productions
• Director
• Chairperson of Board of Directors
Les Ecrans de Paris
• Vice-Chairman - Director
Robert Badinter:
Member of the Supervisory Board
since June 14, 1996,
resident at 38, rue Guynemer, Paris (75006)
• Emeritus Professor at Université de PARIS 1
(Panthéon-Sorbonne)
68
• Member of Investment
Advisory Board
Eurazeo
Fonds-Partener-Gestion (FPG)
Groupe Danone
Corporate Advisors LP
(United States)
Henri-Calixte Suaudeau:
Member of the Supervisory Board
since November 27, 1987,
resident at 127, avenue Jean-Baptiste Clément,
Boulogne (92100)
Gérard Worms:
Member of the Supervisory Board
since June 25, 1998, resident at
61 bis, avenue de la Motte Picquet, Paris (75015)
• Managing Partner
• Director
Publicis Conseil
• Director of Real Estate Department
Groupe Publicis
Services
Rothschild & Cie Banque
Rothschild & Cie
• Chairman
Chaîne Thématique Histoire
S.G.I.M.
• Director
Monique Bercault:
Member of the Supervisory Board
since June 25, 1998,
resident at 51, rue Berthier, Versailles (78000)
• Technical Consultant to the President of Médias et
Régies Europe
• Member of Supervisory Board
ODEO Degrémont
Métropole Télévision
Mercapital S.A. (Spain)
Paris-Orléans
SIACI
Editions Atlas
Francarep
Hélène Ploix:
Member of the Supervisory Board since June 25,
1998, resident at 71, boulevard Arago, Paris (75013)
Amaury-Daniel de Sèze:
Member of the Supervisory Board
since June 25, 1998,
resident at 51, boulevard Beauséjour, Paris (75116)
• Chairperson
• Chairman of Board of Directors
• Director
Pechel Industries
Lafarge
Aquarelle.com Group
The Boots Company (UK-based)
Ferring BV (Swiss-based)
• Permanent representative
of Pechel Industries
Financière d’Or
Quinette Gallay
IDM
CVBG
Panoranet
CoSpirit
Xiring
Homeride
• Member of Supervisory Board
• Director
COBEPA
Gras Savoye
Eiffage
International Métal Service
Groupe Bruxelles Lambert
Groupe Industriel Marcel Dassault
GIB Group
Power Corporation du Canada
Pargesa Holding S.A.
69
Simon Badinter:
Member of the Supervisory Board
since June 17, 1999, resident at
2191 Anthony Drive, Bath, Ohio 44333 (United States)
• Member of Management Board
• Director
Médias et Régies Europe
Somarel
Metrobus
Intervoz Publicidade S.A.
Gestion Omni Media Inc. (Canada)
Omni Media Cleveland Inc. (United States)
• Chairman and CEO
Médias et Régies
America Inc. (United States)
• Chairman and CEO
of Development Department
• Director of International
Development
Médias et Régies (France)
La Compagnie Financière
Edmond de Rothschild Banque
Compagnie Financière Saint-Honoré
• Member of Supervisory Board
• Chairman of Board of Directors
• Director
Francarep
e-Rothschild Services
Banque de Gestion Edmond de Rothschild
(Monaco)
Banque Privée Edmond de Rothschild (Geneva)
LCF Rothschild Limited (London)
La Compagnie Financière Holding Edmond
et Benjamin de Rothschild (Genève)
La Compagnie de Trésorerie Benjamin
de Rothschild (Geneva)
Bouygues Telecom
Cdb Web Tech (Italy)
Cir International (Luxembourg)
Rexecode
70
• Member, Conseil des Commanditaires
Rothschild &
Compagnie Banque
• Permanent representative of Compagnie
Cogifrance
Financière Saint-Honoré
Compagnie de Conseils
Saint-Honoré
des Assurances
FCC (BFM)
Médias et Régies
Europe (United States)
Michel Cicurel:
Member of the Supervisory Board since June 17, 1999,
resident at 2, rue Alphonse Yvon, Paris (75 116)
• Chairman of
Management Board
Assurances
• Permanent representative of La Compagnie
Financière Edmond de Rothschild Banque
Saint-Honoré
Bolloré Investissement
E. de Rothschild Corporate Finance
LCF Rothschild Asset Management
LCF Rothschild Financial Services
Equity Vision
Robert L. Seelert:
Member of the Supervisory Board since August 29, 2000
resident at 51, West Road, Newcanaan, CT 06 840
(United States)
• Chairman
Saatchi & Saatchi
Felix George Rohatyn:
Member of the Supervisory Board since
June 14, 2001,
Ex-US Ambassador to France,
resident at 810 5 th Avenue, New York, NY 10 021
(United States)
• Chairman of the Board
• Member of the Board
• Director
Aton Pharma Inc.
Comcast Corporation
(United States)
Fiat SPA (Italy)
Suez
LVMH Moët Hennessy Louis Vuitton
Resolutions
We invite you to approve the annual financial
statements for 2001, including the consolidated
accounts, and the operations summarized in the reports
of the Management Board, the Supervisory Board and
the Statutory Auditors. We also invite you to:
• allocate 2001 earnings and distribute a dividend
debited to the share and merger reserve;
• grant discharge to members of the Management
Board for their management in 2001;
• grant discharge to members of the Supervisory
Board for the execution of their mandate in 2001;
• set the amount of directors’ fees to be allocated to
members of the Supervisory Board for 2001;
• deliberate on the application of article L. 225-86
of the French Commercial Code;
• renew the mandates of two members of the
Supervisory Board;
• authorize the Company to purchase its own shares;
• authorize the Management Board to increase the
capital stock by issuing shares, transferable
securities and warrants, with pre-emptive rights
either maintained or cancelled, including during
the period of a takeover or exchange bid;
• authorize the Management Board to issue new
shares as part of a rights offering to Company
employees only;
• empower bearers of certified copies of
deliberations to use these for all formalities.
These are the aims of the resolutions submitted for your
approval.
2002 OUTLOOK
Projections by research institutes call for advertising
markets to hold steady or possibly decline slightly in
2002, after twelve months of already sharp correction in
2001. Given the nature and quality of its client portfolio
and its success in winning new business in 2001, we
expect Publicis once again to report real organic growth
and outperform the market, as it has generally done over
the past ten years. Comparison with the company’s
strong showing in the first half of 2001 means that
organic growth may be slightly negative in the six
months to June 30, 2002, before picking up in the
second half.
In terms of profits, we expect synergies generated by
the integration of Saatchi & Saatchi to continue to
emerge, allowing Publicis to move closer to its 2003
objectives, calling for EBITDA/revenues of 18% and
EBIT/revenues of 15%. Group financial statements
should also show a reduction in financial expense
following refinancing of debt at year-end 2001 and early
2002, but also to take into account restructuring
expenses at several subsidiaries (Fallon, Publicis & Hal
Riney, etc.). In May 2002, Publicis will pay
€196 million for 45,460,922 CVR entitlements linked
to the Saatchi & Saatchi share swap, based on market
prices between February 20 and March 7. This
commitment is already reflected in the accounts at
December 31, 2001.
Finally, as part of its drive to strike an improved
balance between traditional advertising and SAMS by
2003 — official target: 55% advertising and 45%
SAMS — the Group can be expected to pursue its
acquisitions program in 2002, targeting companies
specialized in direct marketing/CRM, sales promotion
and public relations.
71
Supervisory Board Report
Before the year 2001 even got under way, Publicis
found itself confronted with two major challenges. Not
only was the company called upon to integrate its recent
acquisitions Saatchi & Saatchi, Fallon, Frankel and
Nelson, thereby shifting from a single-network to a
multi-network structure, but it also had to attempt to
maintain the impetus of what was in all likelihood the
most outstanding year in all of advertising history.
In 2000, the world advertising industry broke all
previous growth records and moved to a level never
achieved before. Yet observers confidently predicted that
the advertising growth spurt would continue in 2001.
Things turned out quite differently. Visibility
suddenly became poor, the world economy went into a
tail-spin and the events of September 11 in the United
States accelerated the equally unprecedented downward
spiral affecting the advertising market. At the same time,
however, our Group has demonstrated its uncommon
resilience, its tremendous flexibility and its remarkable
ability to weld a number of newly acquired, complex,
culturally diverse organizations into one. This is the
backdrop against which our Group’s performance for
2001 should be judged.
The results with which you have been presented by
the Management Board are noteworthy for several
reasons. In addition to achieving real growth and
expanding our market share, we have clearly
distinguished ourselves from our peers by accomplishing
the seamless integration of all our acquisitions,
especially Saatchi & Saatchi — a sterling success in every
respect. Moreover, early on in the year, Group
management boldly made vital adjustment decisions
which now allow us to state that Publicis has come out
of the recession in better shape than upon entering it.
Publicis clearly stands out as one of the sturdiest,
healthiest players in the industry today. We would also
like to mention the many strategic initiatives successfully
carried out this year, most notably the creation of Zenith
Optimedia Group, in the highly competitive field of
Consulting and media purchasing.
Lastly, the considerable efforts by all our teams around
the world to make such performance a reality, in spite of
the repeated structural adjustments made necessary by a
changing business environment, deserve to be stressed.
We therefore wish to thank all of Publicis’ staff and
directors who work so closely with the Chairman of the
Management Board, and to express our wholehearted
support for them in their ongoing endeavors. While fully
72
aware of the awesome challenges ahead and of the need
for certain strategic shifts in the future, we remain as
confident as ever that our Group will succeed.
In accordance with article L. 225-68 of the French
Commercial Code relating to commercial companies,
the company and consolidated financial statements for
fiscal year 2001 together with the Management Board
Report have been submitted to us. We have no
comments to make on these documents and have
received all relevant information.
In our capacity as shareholder representatives, we
accept the proposal made by the Management Board to set
the level of the unit dividend at €0.22 per €0.40 par
value share with a tax credit of €0.11, making a total of
€0.33, which represents a unit increase of 10% following
the rise of 17% in the previous year. In light of the loss
recorded in fiscal year 2001, the dividend amount
should be offset against the share and merger reserve.
The Management Board proposes that we distribute
a total dividend of €30,752,007, compared with
€27,129,878 in the previous year.
We propose that you once again appoint Mr. Robert
Badinter and Mr. Michel David-Weill as Members of
the Supervisory Board for a six-year term of office.
Finally, we have given our preliminary consent to the
Management Board for a plan relating to company
repurchase of its own shares on the stock market and a
request to renew the authorization to increase the capital
stock during a takeover bid or exchange offer by issuing
shares, transferable securities or warrants, with subscription
rights either maintained or cancelled. We have also given
our preliminary consent to its request to renew the
delegation to issue new shares as consideration for the
contribution of Saatchi & Saatchi shares issued following
the exercise of subscription options for Saatchi & Saatchi
securities.
We invite you to approve the resolutions that have
been proposed at this Joint Annual Ordinary and
Extraordinary Shareholders’ General Meeting.
Finally, we do not consider it necessary for the
Meeting to approve the resolution authorizing the
Management Board to increase the capital stock, should
it be deemed appropriate, in accordance with the
conditions laid out in article L. 443-5 of the French
Labor Code, as a means to fostering employee stock
ownership, since use has not yet been made of the
preceding authorization granted by your Extraordinary
Shareholders’ Meeting of January 9, 2002.
Publicis Groupe S.A.
consolidated financial statements
for the year ending December 31, 2001
Contents
Consolidated statements of income
74
Consolidated balance sheets at December 31
75
Consolidated statements of cash flows
76
Notes to the consolidated financial statements
77
List of consolidated entities
at December 31, 2001
104
73
CONSOLIDATED
FINANCIAL STATEMENTS
Consolidated statements of income
in millions of euros
Note
Reconstituted billings
Revenues
Salaries and related expenses
Other operating expenses
Total operating expenses
Other operating income
Operating income before depreciation and amortization
Depreciation and amortization expense
Operating income
Financial (expense) income, net
Income of consolidated companies before taxes,
exceptional items and goodwill amortization
Income taxes
Net income of consolidated companies
before exceptional items and goodwill amortization
Equity in net income of non-consolidated companies
Net income before exceptional items
and goodwill amortization
Of which Group interests
Exceptional (expense) income, net of tax
Goodwill amortization
Net income before minority interests
Minority interests
Group net income
Per share data (in euros)
Net earnings per share
Earnings per share after tax and before exceptional items
and goodwill amortization
Net earnings per share – diluted
Earnings per share after tax and before exceptional items
and goodwill amortization – diluted
74
2001
2000
1999
22
16,667
2,434
(1,363)
(661)
(2,024)
16
426
(84)
342
(30)
11,806
1,770
(984)
(470)
(1,454)
18
334
(59)
275
(11)
6,860
1,042
(576)
(291)
(867)
12
187
(31)
156
9
15
312
(99)
264
(92)
165
(65)
6
213
9
172
5
100
2
222
200
(3)
(49)
170
(19)
151
177
151
15
(33)
159
(31)
128
102
82
12
(19)
95
(21)
74
1.09
1.18
0.85
1.44
1.08
1.40
1.15
0.94
0.84
1.43
1.37
0.93
19
20
21
23
21
Consolidated balance sheets at
December 31
in millions of euros
ASSETS
Note
2001
2000
1999
3
3
4
5
6
993
199
351
67
8
861
22
331
82
7
237
20
123
50
7
1,618
1,303
437
195
1,845
439
178
621
129
1,770
399
100
429
49
1,002
240
76
273
Current assets
3,278
2,827
1,641
TOTAL ASSETS
4,896
4,130
2,078
Note
2001
2000
1999
Capital stock
Additional paid-in capital and retained earnings
Shareholders’ equity
11
56
227
283
53
246
299
36
309
345
Minority interests
12
89
77
51
Provisions for contingencies and charges
13
266
169
70
Bank borrowings and overdrafts
Accounts payable
Accrued expenses and other liabilities
Bank borrowings and current liabilities
14
16
17
1,069
1,875
1,314
4,258
901
1,590
1,094
3,585
212
872
528
1,612
4,896
4,130
2,078
270
372
Goodwill, net
Intangible assets, net
Property and equipment, net
Investments and other financial assets, net
Investments accounted for by the equity method
Tangible and intangible assets, net
Inventory and costs billable to clients
Accounts receivable
Other receivables
Marketable securities
Cash and cash equivalents
LIABILITIES AND SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
Net financial debt
7
8
9
10
(137)
75
CONSOLIDATED
FINANCIAL STATEMENTS
Consolidated statements
of cash flows
in millions of euros
2001
2000
1999
I- Cash flows from operating activities
Net income
Gain on sales of fixed assets (before tax)
Depreciation and amortization
Self-financing ability
Equity in net income of non-consolidated companies
Dividends received from investments accounted for under the equity method
Change in working capital requirements
Net cash provided by operating activities
170
(60)
149
259
(9)
8
(214)
44
159
(24)
93
228
(5)
1
(19)
205
95
(12)
51
134
(2)
2
46
180
II- Cash flows from investing activities
Purchases of property and equipment and intangible assets
Sales of property and equipment
Purchases of investments and other financial assets, net
Acquisitions of subsidiaries (1)
Disposal of subsidiaries
Net cash provided by (used in) investing activities
(108)
6
10
164
72
(106)
4
(13)
(565)
24
(656)
(66)
10
(4)
(55)
4
(111)
III- Cash flows from financing activities
Dividends paid to shareholders of Publicis Groupe S.A.
Dividends paid to minority shareholders of subsidiaries
Increase in capital
Change in borrowings
Share repurchases (2)
Change in treatment of treasury shares (2)
Net cash provided by (used in) financing activities
(27)
(25)
1
118
34
101
(15)
(14)
5
630
(34)
572
(11)
(14)
14
0
(57)
(68)
IV- Impact of exchange rate fluctuations
(1)
(2)
4
5
0
Net change in consolidated cash flows (I + II + III + IV)
220
126
1
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year (2)
Net change in cash and cash equivalents
263
483
220
137
263
126
136
137
1
After deducting the net cash of the companies acquired on acquisition date (€235 million in net cash in the case of Zenith Media Group)
As from 2001, given their new function, treasury shares are treated as equivalent to marketable securities
76
Notes to the consolidated
financial statements
(amounts expressed in millions of euros except per share amounts)
1
SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Since January 1, 2000, the consolidated financial
statements of Publicis Group and its subsidiaries
(“Publicis”) have been prepared in accordance with the
new rules and accounting policies applicable to
consolidated financial statements in France (“nouvelles
règles et méthodes relatives aux comptes consolidés”),
approved by the ministerial order of June 22, 1999, which
enacted rule 99-02 of the accounting rules and regulation
committee (Comité de Réglementation Comptable).
The application of the new rules was treated as a
change in accounting policy in 2000, whereas the
financial statements for the year ended December 31,
1999 have not been adjusted to incorporate such
changes, given the insignificant impact of the change. We
should note that the overall net effect on shareholders’
equity as at January 1, 2000 was €8 million.
1.1 Principles of consolidation
Reporting currency
Since January 1, 1999, Publicis has prepared and
reported its consolidated financial statements in euros.
All previous historical financial information has been
restated in euros using the official conversion rate
established on January 1, 1999 of FF 6.55957 = 1 euro.
Scope of consolidation
Publicis consolidates all subsidiaries over which it
exercises exclusive direct or indirect control and
subsidiaries for which it has assumed management
responsibility and has a dominant influence on operations.
The companies over which Publicis exercises
substantial influence, which is presumed when the
percentage owned is at least 20%, are consolidated under
the equity method.
Certain companies which meet the criteria listed
above are not consolidated, given their non-significant
nature (where non-group revenues are less than
€2 million). Consolidating all of these companies
would not have a significant impact on the consolidated
financial statements.
The list of the principal consolidated companies
together with their method of consolidation is presented
in Note 28.
Translation of accounts of foreign subsidiaries
The financial statements of subsidiaries located
outside of the euro zone and expressed in local
currencies are translated into euros as follows:
- assets and liabilities are translated at year-end
exchange rates;
- statement of income items are translated at average
exchange rates for the year;
- translation gains and losses resulting from the
application of these rates are recorded in retained
earnings for the portion related to the Group
interest, with the remainder recorded in minority
interests.
Publicis’ very limited exposure in high inflation
countries (which represent less than 0.3% of
consolidated revenues), justifies the fact that the
accounts of the Group’s subsidiaries in these countries
are not converted any differently from the principles
outlined above.
Year-end
The Group, the parent company and nearly all
consolidated subsidiaries have a year-end of December 31.
Inter-company transactions
The transactions between consolidated entities are
fully eliminated, as are the resulting receivables and
payables. Similarly, the Group’s internally generated
results (sales proceeds, internal dividends, provisions
relating to subsidiaries) are eliminated on consolidation.
1.2. Significant accounting policies
Research costs
Publicis records expenses related to studies and
research in the period in which they are incurred.
These expenses relate primarily to the following: studies
77
CONSOLIDATED
FINANCIAL STATEMENTS
and tests related to advertising campaigns, costs resulting
from the development of internet sites and related tools,
research programs on consumer behavior and advertisers’
needs in various areas, and studies and modeling
conducted in order to optimize the use and choice of
media purchases for the clients of the Group.
Goodwill
Goodwill arising on consolidation represents the
difference between the acquisition cost of interests in
consolidated companies (including potential additional
purchase price) and the Group’s equity in the underlying
net assets at the date of acquisition.
Goodwill appearing on the balance sheet is
amortized on a straight-line basis according to the
following principles:
- goodwill amounts of less than €150,000 are
amortized immediately in full;
- goodwill related to media buying and media sales
subsidiaries operating locally is amortized over five
years;
- goodwill related to the international media-buying
network is amortized over a twenty-year period;
- goodwill related to communications subsidiaries is
amortized over a period of 10 to 40 years based on
the country, size and the specific characteristics of
each agency.
The fair value of goodwill amortized over long periods
is reviewed each year based on the valuation criteria
used at the time of the acquisition. If the fair value of
the goodwill is lower than the carrying value in the
long-term, a provision is made to reduce the carrying
value of the goodwill to the fair value.
Purchase accounting and goodwill
Upon acquisition of sole ownership of a business,
the purchase price is allocated on a fair value basis to the
identifiable assets and liabilities of the business acquired.
The excess of the purchase price of such assets and
liabilities, as recorded in the consolidated balance sheet,
over their carrying value in the acquired entity’s accounts
is recorded as a purchase price discrepancy.
Purchased goodwill is amortized over the estimated
useful life of the assets on which it arose.
Other intangible assets
Other intangible assets are comprised primarily of
78
client relationships, trademarks and software.
Trademarks and identifiable components of client
relationships are amortized over their estimated useful
life. Non-identifiable components are valued and
accounted for in the same manner as goodwill.
Software consists of the following:
- software purchased for internal use, which is stated
at purchase cost;
- internally developed software for sales and
marketing purposes, which is used primarily by the
Group’s information systems services subsidiary, and is
stated at production cost.
Software is generally amortized over a period of one
or two years and not in excess of three years.
Property and equipment
“Property and equipment” is stated at historical
acquisition cost. This is based either on their original
value or on their contribution value. A limited number
of assets have been revalued in accordance with French
legislation; the value of such assets is not significant.
“Property and equipment” is depreciated on a
straight-line basis over the assets’ estimated useful lives as
described below:
- buildings: between 20 and 50 years;
- fixtures, fittings and general installations: 10 years;
- billboards: 4 to 7 years;
- office furniture and equipment: 5 to 10 years;
- vehicles: 4 years;
- computer hardware: 2 to 4 years.
Publicis records assets under capital leases in
Property and equipment with corresponding amounts
recorded in financial debt. These assets are amortized
over the periods described above. In the statement of
income, the lease rental expenses are replaced by interest
expense on the debt and the depreciation expense on the
assets.
Investments in non-consolidated affiliates
Investments in non-consolidated affiliates are
recorded at historical acquisition cost. They are
depreciated when their fair market value is lower than
their carrying value. Fair market value is determined on
the basis of criteria such as revalued net assets,
capitalized earnings, quoted stock prices, the outlook for
the sector or industry and the strategic value of the
investment to the Group.
Loans and advances to subsidiaries and affiliates
Loans and advances to subsidiaries and affiliates
represent receivables from affiliates accounted for by the
equity method or other non-consolidated affiliates.
A provision is recorded against these receivables
when there is a recoverability risk resulting from the
financial condition of the subsidiaries or affiliates
concerned. Such provisions are included in “Provisions
for long-term investments.”
Inventory and costs billable to clients
Inventory and costs billable to clients represent
primarily work-in-progress related to advertising which
consists of technical, creative and production work
(graphic design, TV and radio production, editing, etc.)
which is billable, but has not yet been billed to clients.
A provision is recorded when the revenue to be received
on completion of the work is expected to be inferior to
the production costs incurred. Non-billed work or costs
incurred relating to new client development activities are
not capitalized except when the eventual billing of
expenses incurred during the proposal process is
specified in the contract. Costs billable to clients do
not include the direct costs of personnel.
Accounts receivable
Accounts receivable are recorded at their carrying
value. An allowance for doubtful accounts is recorded for
receivables for which there is a collection risk.
Accounts receivable denominated in foreign
currencies are recorded at the year-end exchange rate.
Unrealized gains and losses resulting from currency
translation are recorded in the income statement.
Marketable securities
The gross value of marketable securities is recorded
at the acquisition or subscription price, which may be
depreciated with reference to the average stock market
price during the previous month. We should note that
following the decisions made by the Management Board
in 2001 to allocate irrevocably treasury shares to the new
option plans relating to the purchase of existing shares,
the latter are now presented within marketable securities
and are therefore treated as cash equivalents. Prior to
December 31, 2000, given their previous function, they
were deducted from shareholders’ equity on consolidation.
Derivatives
The Group does not use derivative instruments
other than short-term foreign currency contracts.
Pensions and other post-employment benefits
The policies applied by Publicis are in accordance
with the laws and regulations of the respective countries
in which the subsidiaries of the Group are located and
are described below:
- the German and Italian regulatory requirements are
applied in the form of retirement indemnities;
- in France, the provisions of the collective
bargaining agreement of the advertising industry
are applied and result in the recording of a
provision for costs;
- in the UK and the United States, the obligations
related to pensions and other retirement benefits
are held in investment trusts with insurance
companies. These plans may be either:
• defined contribution plans: the amount of contributions by the Group to the investment funds is
defined and recorded as expense during the period;
• defined benefit plans: the benefit amounts to be
received upon retirement are defined and accounted
for by establishing a provision intended to cover
the present value of the obligation to be paid to
employees at retirement, as calculated by actuaries
based upon years of service.
Restructuring reserves
Restructuring costs are fully provided for in the
period in which the decision to implement the
restructuring plan is made. These costs consist primarily
of severance and early retirement payments, other
employment expenses, and potential write-downs of
Property and equipment and other assets.
Vacant property provisions
A provision is established for the amount of rent and
related expenses to be paid - net of any sublease revenues
to be received - for all buildings that are sublet or vacant
and not intended to be used for the principal activities of
the Group.
Reconstituted billings
The billings presented in the consolidated
statements of income represent calculated amounts
79
CONSOLIDATED
FINANCIAL STATEMENTS
determined in accordance with common industry
practices to facilitate comparison with other major
companies operating in the communications consulting
business. The commission and fee billings that are
generated directly from the accounting systems do not
permit meaningful comparisons with the operations of
other major companies, because they excluded, notably
in France following the implementation of the Sapin
Law in March 1993, the purchases of media space by
agents on behalf of their clients.
Moreover, in certain foreign countries, where the
subsidiaries serve as agents, some of the media space
purchase and sales transactions are excluded from the
income statements. Reconstituted billings are
determined by applying a coefficient (typically 6.67),
which corresponds to the traditional agency
commissions of 15%, to clients’ effective budget
commitments.
Reconstituted billings therefore reflect the volume
of advertising budgets managed, independently of the
contractual provisions between Publicis and its clients.
Revenues
Revenues (or gross margin) represent the
commissions and fees for services of companies in the
advertising industry. The Group’s revenue recognition
policies are summarized below:
- fees: when the service is provided to the client;
- sales of media space: date of publication or
broadcast;
- sales of technical advertising: when services are
performed.
Income taxes
Net income is taxed based on the tax laws and
regulations in effect in the respective countries where the
income is recognized. In accordance with statutory
provisions, Publicis records deferred income taxes
resulting from temporary differences between the tax
basis and the book basis of assets and liabilities.
Taxable and deductible temporary differences are
determined by their dates of maturity and may reverse
from year-to-year. Temporary differences are calculated
by taxable entity.
Deferred taxes are calculated based on the tax laws
and regulations in effect at the respective year-ends and
using the tax rates expected to be in effect when the
80
temporary differences reverse. The impact of changes in
enacted tax rates are recorded in the income statement in
the period in which the change in the tax rate is decided.
Deferred tax assets are recognized when the
respective taxable entities are reasonably assured to
recover the benefits in future periods.
Exceptional income
Exceptional income represents exceptional items, net
of tax, which do not result from ordinary operations.
Interest rate risk
Group management determines the mix between
fixed- and variable-rate debt and periodically reviews
their decision based on interest rate trend forecasts.
At December 31, 2001, the majority of the Group’s
debt accrues interest at variable rates. Only the issue of
€200 million in notes exchangeable for Interpublic
Group shares accrues interest at a fixed rate (2% per
annum). In fiscal year 2001, the Group did not make use
of derivative instruments to hedge possible interest rate
risk, since it was deemed not significant.
In order to reduce both overall interest expense and
its exposure to interest rate risk, the Group has been
carrying on with its debt refinancing program initiated
at the end of 2001, proceeding in January 2002 with an
Océanes issue for €690 million, whose annual yield to
maturity is 2.75%.
After this operation, three quarters of the Group’s
financial liabilities will be composed of fixed-rate
instruments with average interest of 2.13%.
Exchange rate risk
The majority of sales transactions are denominated
in the local currencies of the countries in which they are
realized. As a result, exchange rate risk is not significant
and is at times hedged via short-term foreign currency
contracts.
In addition, changes in exchange rates between other
currencies and the euro, the currency in which the
Group’s accounts are presented, may have an impact on
the Group’s financial position. The breakdown of Group
revenues among the various currencies is as follows:
Euro
US dollar
Pound sterling
Other
Total revenues 2001
33%
40%
9%
18%
100%
Country risk
Publicis’ operations in geographic regions
considered to be at risk (Asia Pacific, Latin America)
continue to represent a minor portion (7%) of
consolidated revenues.
Basic and diluted earnings per share
Basic earnings per share is calculated by dividing net
earnings by the weighted average number of ordinary
shares outstanding during the period. Until December
31, 2000, treasury shares held at the balance sheet date
were not included in this figure. As from January 1,
2001, given the change in treatment, the denominator
includes all of the shares issued, including treasury stock.
Diluted earnings per share is calculated on the basis
of the weighted average number of shares that would
result from all outstanding stock options being exercised
at year-end.
2
CHANGES IN CONSOLIDATION SCOPE
25%-stake in Zenith Optimedia Group to Publicis and
Publicis may exercise a purchase option enabling it to
repurchase Cordiant’s stake.
Prior to this operation, Publicis owned practically
100% of Optimedia and More Media, and via Saatchi
& Saatchi, held a 50%-stake in Zenith Media group,
which was for the first time accounted for by the equity
method at December 31, 2001 (following the
acquisition of Saatchi & Saatchi in September 2001).
This operation is comprised of two components in
the consolidated financial statements:
- on the one hand, the purchase of an additional
25%-stake in Zenith Media with the recognition of
goodwill on acquisition;
- on the other hand, the disposal of a 25%-stake in
Optimedia with the recognition of a capital gain on
disposal in the consolidated statement of income.
The capital gain on sale and goodwill on acquisition
were determined on the basis of the fair market value of
Zenith Media and Optimedia, both of which were
deemed to be €240 million (€60 million for the 25%
that was acquired and sold).
Residual goodwill (after allocating the purchase
price discrepancy to identifiable intangible assets) arising
from the additional 25% -acquisition of Zenith media
amounted to €41 million, to be amortized over 20 years.
The principal change in consolidation scope in
2001 results from the agreements signed at the end of
September 2001 with Cordiant Communications
Group.
According to the terms of this agreement, a new
UK-based company called Zenith Optimedia Group was
formed, which is governed by British law, and is
75%-owned by Publicis and 25%-owned by Cordiant.
This new group, now the third most important
player in the Consulting and media purchasing sector,
was constituted through the contributions and disposals
of the following entities:
- Zenith Media Holding and its subsidiaries, located
in the United States, England and nine other European
countries;
- Optimedia in the United States, the UK, France,
Spain, Portugal, Italy, the Netherlands, Canada and
Germany; More Media in Germany.
Moreover, according to the terms of the
shareholders’ agreement, Cordiant may sell its
81
CONSOLIDATED
FINANCIAL STATEMENTS
The summary balance sheet of Zenith Media Group at acquisition date is as follows:
in millions of euros
Property, equipment and intangible assets
Operating receivables
Net cash and cash equivalents
Total assets
8
307
235
550
In addition to its purchase of an additional stake in
Zenith Media, during the course of fiscal year 2001,
Publicis carried out a number of purchase transactions
designed to increase its positions in specialized agencies
and marketing services (SAMS): The Triangle Group, a
UK-based leader in the field of sales promotions; Carré
Noir, a major French design agency; Fisch.Meier.Direkt in
Switzerland; Ecocom, a French financial communications
agency; Fabianne Gershon & Ass and The Hudson Stone
Group, two US financial communications agencies;
Fusion DM and Creative AIM, two agencies specialized in
82
Shareholders’ equity (including earnings
Jan. 1 to Sept. 30, 2001)
Operating payables
Total liabilities and shareholders’ equity
(28)
578
550
relational marketing in the US and finally Sanchez &
Levitan and the Dallas- and Los Angeles-based offices of
Siboney USA, the leading Hispanic communications
agencies in the US market.
Publicis also acquired two traditional communications
agencies with the objective of bolstering the Group’s
geographical coverage: Metro in Indonesia and Impetu
in Uruguay.
The Group did not make any material divestments
in 2001.
3
GOODWILL AND INTANGIBLE ASSETS, NET
Analysis of the principal components of goodwill related to consolidated subsidiaries:
in millions of euros
France
Other
Europe
North
America
Rest
of World
Total
Net value 1999
Net value 2000
27
31
51
63
92
670
67
97
237
861
Year 2001:
– Existing goodwill at January 1, 2001
– 2001 additions
Total gross value
Amortization
43
26
69
(21)
93
65
158
(49)
718
74
792
(46)
123
3
126
(35)
977
168
1,145
(152)
Total net value 2001
48
109
746
91
993
Gross Value
Business
Software
goodwill
and Other
Total
Changes in goodwill and other intangible assets, gross
in millions of euros
December 31, 1998
241
5
16
Additions
Disposals
Translation and other
75
(33)
5
8
1
4
(1)
-
87
(34)
6
262
December 31, 1999
288
14
19
321
Additions
Disposals
Translation and other
646
(1)
12
1
(1)
(7)
12
7
659
(2)
12
December 31, 2000
945
7
38
990
Additions (1)
Disposals
Translation and other
168
(6)
38
176
0
1
9
(2)
1
353
(8)
40
1,145
184
46
41
174
December 31, 2001
(1)
Goodwill
including amounts arising from the additional 25% acquisition of Zenith Media:
1,375
83
CONSOLIDATED
FINANCIAL STATEMENTS
Changes in accumulated goodwill amortization and other intangible assets
in millions of euros
(1)
Goodwill
Accumulated Depreciation
Business
Software
goodwill
and Other
Total
December 31, 1998
37
1
9
47
Additions
Disposals
Translation and other
18
(4)
-
1
-
2
-
21
(4)
-
December 31, 1999
51
2
11
64
Additions
Disposals
Translation and other
33
-
1
-
5
(2)
5
39
(2)
5
December 31, 2000
84
3
19
(1)
Additions
Disposals
Translation and other
63
5
3
(1)
5
(1)
4
December 31, 2001
152
5
27
of which exceptional items
84
16
106
71
(1)
7
183
16
4
PROPERTY AND EQUIPMENT, NET
Changes in gross property and equipment
in millions of euros
December 31, 1998
Additions
Disposals
Translation and other
December 31, 1999
Gross Value
Land and
Other
Buildings
30
234
13
40
(5)
(16)
3
9
Total
264
53
(21)
12
41
267
308
8
-
8
December 31, 1999 adjusted
49
267
316
Impact of acquisitions
Additions
Disposals
Translation and other
15
8
(2)
4
391
83
(30)
(1)
406
91
(32)
3
December 31, 2000
74
710
784
Impact of acquisitions
Additions
Disposals
Translation and other
2
(2)
29
97
(73)
17
29
99
(73)
15
December 31, 2001
74
780
Impact of the application of rule 99-02
Land and buildings
Publicis has land and buildings with a net value of
€54 million at December 31, 2001.
The principal asset is the corporate headquarters
located at 133 avenue des Champs-Elysées, in Paris. This
seven-story building comprises about 12,000 square
meters of office space which is primarily occupied by
Group companies and 1,500 square meters of commercial property occupied by the Champs-Elysées Drugstore and two public cinemas. A major renovation
program of the Drugstore and movie theater complex
was started on December 30, 2001.
The parent company, Publicis Groupe S.A., owns
854
four floors of a building occupied by Métrobus at
15 rue du Dôme in Boulogne, a suburb of Paris.
Publicis also has a capital lease contract expiring in
2007 for the two other floors in this building. Following
the acquisition of Saatchi & Saatchi, the Group also
owns a six-story building located at 30 rue Vital Bouhot
in Neuilly-sur-Seine, a suburb of Paris, comprising
approximately 5,660 square meters of office space which
is for the most part occupied by Group companies.
Outside France, Publicis agencies own buildings in
Brussels, Amsterdam, Lisbon, Lima and Seoul comprising
a total of 14,000 square meters, all in city center
locations.
85
CONSOLIDATED
FINANCIAL STATEMENTS
Other property and equipment
The Group has significant information systems
equipment dedicated to the creation and production of
advertising, the management of media buying and administrative functions. Publicis Technology, the Group’s
computer services and electronic communications subsidiary, owns significant amounts of conventional computer
and information systems equipment as well as equipment
for new media and technologies.
In addition, gross property and equipment includes
€55 million (€10 million, net) of billboards and furniture and fixtures belonging to the Group’s outdoor
display companies, principally Publex in the Netherlands and Métrobus, a sales unit specializing in public
transportation advertising space.
Assets under capital leases
The net adjusted total of these assets recorded in the
consolidated balance sheet came to €15 million at
December 31, 2001.
The principal assets capitalized in this way are
the office building located rue du Dôme in BoulogneBillancourt and the building on the Ile de la Jatte in
Neuilly (both in France).
Balance sheet totals relating to assets under capital
leases did not vary significantly in 2001.
Changes in accumulated depreciation of property and equipment
in millions of euros
Accumulated Depreciation
Land
Other
and Buildings
Total
December 31, 1998
8
160
168
Additions
Disposals
Translation and other
1
(1)
-
28
(16)
5
29
(17)
5
December 31, 1999
8
177
185
Impact of the application of rule 99-02
2
-
2
December 31, 1999 adjusted
10
177
187
Impact of acquisitions
Additions
Disposals
Translation and other
5
1
(2)
1
239
52
(27)
(2)
244
53
(29)
(1)
December 31, 2000
15
439
454
Impact of acquisitions
Additions
Disposals
Translation and other
2
2
20
76
(61)
10
20
78
(61)
12
December 31, 2001
19
86
484
503
5
INVESTMENTS AND OTHER
FINANCIAL ASSETS, NET
in millions of euros
Investments in
non-consolidated
affiliates
Investments accounted
for under the equity
method
Advances to affiliates
Other under financial
assets, gross
Gross value
Provisions
for investments
and financial assets
Net value
6
December 31,
2001
2000
1999
37
37
29
Total
Investments accounted for under the equity method
at December 31, 2001 totaled €8 million (at December 31,
2000: €7 million; at December 31,1999: €7 million).
The variation in the account during fiscal year 2001
can be broken down as follows:
in millions of euros
8
15
7
19
7
6
33
93
32
95
17
59
(18)
75
(6)
89
(2)
57
List of investments in non-consolidated entities
at December 31, 2001
in millions
% of
of euros
ownership
Interpublic
1.4%
Group (IPG)
Other
-
INVESTMENTS ACCOUNTED FOR
UNDER THE EQUITY METHOD
Gross
value
23
Net
value
23
Market
value
178
14
12
n/a
37
35
Total at January 1, 2001
7
Group share of earnings from 2001 acquisitions 2
Dividends paid in 2001
(1)
Total at December 31, 2001
8
We should note that at December 31, 2000, the
Group’s stake in Zenith Media generated a provision for
contingencies and charges of €19 million, relating to
the Group’s share in Zenith Media’s shareholders’ deficit.
As a consequence of the purchase of the additional
25% equity-accounted stake in Zenith Media, this
investment has been fully consolidated from October 1,
2001. However, the share in earnings attributable to
Publicis for the first nine-month period, i.e. €7 million,
is included in the statement of income under “equity in
net income of non-consolidated companies” and is
added to the share in earnings from other investments
(€2 million). In total, the Group’s share in earnings
from equity-accounted companies recorded in the
statement of income amounts to €9 million.
Summary data on IPG (consolidated figures):
in millions of dollars
Revenues
Net income
Shareholders’ equity at Dec. 31
2000
5,626
358
2,369
87
CONSOLIDATED
FINANCIAL STATEMENTS
7
INVENTORY AND COSTS BILLABLE
TO CLIENTS
9
OTHER RECEIVABLES
in millions of euros
in millions of euros
2001
Advertising
costs billable
to clients
Other inventory
(Drugstore,
inventory for
display companies)
Gross value
Provision
for depreciation
Net value
December 31,
2000
1999
194
123
44
6
199
6
129
5
49
(4)
195
129
49
The balance at December 31, 2001 includes, among
other things, the sum of €42 million relating to an
advertising campaign for which billing is currently under
way, covered by a client advance of the equivalent
amount (recorded in the balance sheet in “Other
payables”).
8
ACCOUNTS RECEIVABLE
in millions of euros
Trade accounts
receivable
Notes receivable
Gross value
Allowance for
doubtful accounts
Net value
December 31,
2001
2000
1999
1,874
19
1,893
1,793
9
1,802
996
26
1,022
(48)
1,845
(32)
1,770
(20)
1,002
All accounts receivable are due within one year.
Note: for situations in which Publicis buys media
space as an agent on behalf of its clients in France
(transactions for which there is no income statement
impact), the related accounts receivable are recorded in
“Other receivables” in the balance sheet.
88
Taxes receivable
Receivables
on agency transactions
Advances to suppliers
Other receivables
Prepaid expenses and other
Gross value
Provision
Net value
(excluding deferred
tax assets)
Deferred tax assets – Net
Net value
(including deferred
tax assets)
December 31
2001
2000
68
76
75
30
171
68
412
(1)
88
25
137
69
395
(12)
411
28
383
15
439
398
Other receivables are due within one year, except in
the case of deferred tax assets, for which the maturities
are for the most part unspecified.
10
MARKETABLE SECURITIES
The portfolio of marketable securities at December 31, 2001, the net value of which is €178 million, consists
primarily of:
• €42 million of money market funds, mutual funds, certificates of deposit and bonds, with the stock market value
of listed securities being very slightly higher than the historic value.
• €136 million of treasury stock (after provisions of €2 million). The variation in the Group’s portfolio of
treasury stock between December 31, 2000 and December 31, 2001 is as follows:
Number of shares
Treasury stock at December 31, 2000 (1)
2001 purchases
Exercised options and other
Treasury shares held at December 31, 2001 before provision
Accrued losses on treasury shares
Treasury stock at December 31, 2001 after provision
(1)
871,309
3,857,758
(98,640)
4,630,427
4,630,427
Balance sheet value
(in millions of euros)
34
120
(16)
138
(2)
136
The treasury stock portfolio in Group financial statements at December 31, 2000 totaled 6,982,929 shares valued at €204 million. The variance with
respect to the consolidated figure (€34 million) results from the fact that remittance for payment of the balance of the treasury shares due as part of the Nelson
acquisition, occurred at the beginning of 2001, was anticipated in the 2000 consolidated accounts.
89
CONSOLIDATED
FINANCIAL STATEMENTS
11
SHAREHOLDERS’ EQUITY
Number of
shares
94,259,960
70,710
43,889,149
138,219,819
(871,309)
137,348,510
1,380,177
871,309
139,599,996
90
in millions of euros
December 31, 1999 before impact
of treasury stock
Publicis Groupe S.A. capital increase
Dividends paid by Publicis Groupe S.A.
Impact of S&S acquisition
– Article 215 derogatory method
Application of rule 99-02
Translation adjustment
Consolidated net income, Group interest
December 31, 2000
before impact of treasury stock
Treasury stock at December 31, 2000
December 31, 2000
after impact of treasury stock
Publicis Groupe S.A. capital increase
Impact on nominal share price of conversion to euros
Dividends paid by Publicis Groupe S.A.
Translation adjustment
Additional impact of S&S acquisition
– Article 215 derogatory method
Saatchi & Saatchi additional acquisition cost resulting
from the probable payment of CVR
Revaluation of the share in Zenith (50%),
previously equity accounted
Change in treatment of treasury shares
Other movements
Consolidated net income, Group interest
December 31, 2001
Capital
stock
Retained
earnings
Total
Shareholders’
Equity
36
-
380
(15)
416
(15)
17
-
(215)
8
(6)
128
(198)
8
(6)
128
53
-
280
(34)
333
(34)
53
1
2
-
246
(2)
(28)
0
299
1
(28)
0
-
(37)
(37)
-
(195)
(195)
-
60
34
(2)
151
60
34
(2)
151
227
283
56
Impact of the Saatchi & Saatchi acquisition –
2001 addition
This acquisition, which was made in 2000, was
treated in accordance with the derogatory method laid
down by article 215 of rule 99-02 of the Comité de la
Réglementation Comptable which allows the value of
the net assets that constitute the acquired company’s
shareholders’ equity, adjusted to take into account the
Group’s accounting policies, to be substituted for the
acquisition cost of the company. Consequently, there was
an impact of - €198 million on shareholders’ equity at
December 31, 2000.
In 2001, the finalized September 2000 firstconsolidation of Saatchi & Saatchi resulted in the
recording of an additional impact of - €37 million
in this period. This amount is composed essentially of
restructuring costs arising from the acquisition of a
controlling interest in Saatchi & Saatchi group
(€15 million), the cost of setting up Publicis stock
option plans in substitution for existing Saatchi & Saatchi
programs (€10 million), accounting policy harmonization
adjustments on the opening balance sheet (€8 million),
additional expenses relating to the acquisition transaction
(€1 million).
Moreover, an additional charge of €195 million was
made in connection with this acquisition, since it appeared
that the payment of contingent value rights (CVR)
maturing in March 2002 was highly probable as at the
balance sheet date. The corresponding debt was recorded
in the balance sheet under “Accrued expenses and other
liabilities.”
The amount of €195 million was determined on
the basis of the number of CVR in circulation at
December 31, 2001 (45,194,876) and taking into
account the maximum unit value per CVR of €4.32.
as of September 2001, gave rise to an increase in consolidated shareholders’ equity of €60 million, which
corresponds to the net tax impact relating to the 50%
previously held in Zenith Media.
Change in the treatment of existing treasury
shares during fiscal year 2001
Following the decisions of the Management Board
during fiscal year 2001 to allocate exclusively to employee
attribution the treasury shares held in the portfolio, the
shares that were previously debited to shareholders’
equity are now recorded as marketable securities.
On this basis, the amount of the treasury shares held
at December 31, 2000 (€34 million) which were debited at the time to shareholders’ equity had an equal and
opposite effect in 2001.
Imputation of goodwill to shareholders’ equity
Over the last 10 years, the only significant imputation
of goodwill to shareholders’ equity related to the
acquisition of FCA Group for which goodwill of
€54 million was recognized. This goodwill, which related
to all of the subsidiaries of the FCA network, would
have been amortized over periods of 10 to 40 years.
Revaluation of the share in Zenith Media (50 %),
previously equity-accounted
As stated above, the agreements signed in September
2001 have resulted in the recognition in the Group’s
consolidated financial statements of an additional 25%
-stake in Zenith Media. The fair market value determined for this acquisition, €60 million, represents an
enterprise value of €240 million, which is based on a
revaluation of identifiable intangible assets of
€173 million. Applying this asset revaluation throughout, owing to the full consolidation of Zenith Media
91
CONSOLIDATED
FINANCIAL STATEMENTS
12
MINORITY INTERESTS
in millions of euros
Retained earnings
December 31, 1998
Activity 1999
44
7
December 31, 1999
Dividends paid by subsidiaries to minority interests
Consolidated net income for the period, minority interests
Other
51
(14)
31
9
December 31, 2000
Dividends paid by subsidiaries to minority interests
Consolidated net income for the period, minority interests
Minority interests (25%) in Zenith’s
negative equity position at the date of the additional 25% purchase
Minority interests (25%) in the revaluation of Zenith assets
Other
77
(25)
19
December 31, 2001
89
92
(9)
30
(3)
13
PROVISIONS FOR CONTINGENCIES AND CHARGES
in millions
of euros
Pensions
Legal
and other Provisions
post-employment
benefits
Deferred
tax
liabilities
Client
risks
Restructuring
Zenith
Equity
Method
Vacant
property
Other
Total
-
5
1
-
25
14
(11)
66
21
(17)
December 31, 1998 23
Additions
3
Reversals
-
9
(4)
-
4
(2)
3
-
December 31, 1999 26
Impact of acquisitions 8
Additions
5
Reversals
(4)
Translation and other 2
5
6
3
(1)
-
-
2
6
(2)
-
3
12
(5)
-
16
3
-
6
75
2
(9)
(10)
28
16
(20)
(4)
70
117
35
(41)
(12)
December 31, 2000
Impact of
acquisitions (1)
Additions
Reversals
Translation and other (2)
Other (3)
37
13
-
6
10
19
64
20
169
3
8
(5)
12
14
3
(3)
1
-
10
(2)
6
52
(3)
-
9
(4)
(1)
4
(19)
-
4
(9)
10
6
14
(16)
3
-
(10)
47
(39)
18
80
14
66
3
18
69
27
December 31, 2001 69
-
266
(1)
The provision resulting from equity-accounting for Zenith (50% -owned at the time) was cancelled due to the purchase of the additional 25% stake in Zenith
Media, which led to the full-consolidation of this sub-group.
(2)
Retirement payments increased by €10 million relating to the reclassification of amounts that were included at the end of 2000 within “Accrued expenses
and other liabilities”.
(3)
All provisions included in this category were established in the course of the year and correspond to adjustments and revaluations made in the opening balance
sheets of entities acquired in the course of the fiscal year.
Deferred tax liabilities
This account comprises €52 million relating to the
tax payable on the revaluation of Zenith’s assets.
Provisions for restructuring
These include an estimation of the costs relating to
the closure or restructuring of certain activities resulting
from the plans that were announced but not as yet
executed at December 31, 2001 (principally severance pay).
Vacant property provisions
Vacant property provisions consist primarily of
a reserve recorded at Saatchi & Saatchi to cover future
losses related principally to the lease contract for the
building at 375 Hudson Street in New York
(€56 million at December 31, 2001).
93
CONSOLIDATED
FINANCIAL STATEMENTS
14
Analysis by currency
BANK BORROWINGS
AND OVERDRAFTS
in millions of euros
Debenture loans
Other loans
and short-term
credit lines
Bank overdrafts
Obligations
under capital leases
Total
in millions of euros
December 31
2001
2000
1999
200
-
Euros
U.S. dollars
Other currencies
Total
549
316
630
266
212
4
5
-
1,069
901
212
2001
592
328
149
December 31
2000
1999
446
158
360
1
95
53
1,069
901
212
Analysis by type of interest rate
The principal portion of debt is made up of loans
with variable rates of interest. The weighted average
interest rate for the year ended December 31, 2001
amounts to 5%.
15
INCOME TAXES
Analysis by date of maturity
Analysis of income tax expense
in millions of euros
Due in less
than one year
Due in one
to five years
Due in more
than five years
Total
December 31
2001
2000
1999
758
721
212
103
180
-
208
-
-
1,069
901
212
in millions of euros
2001
Current income
tax expense
Deferred income tax
expense
December 31
2000
1999
(98)
(93)
(65)
(1)
1
-
Income tax on income of
consolidated companies (99)
(92)
(65)
The above data do not include tax on exceptional
items, which are presented net of tax in the statement of
income.
In 2001, a tax credit of €21 million was recorded
with regard to exceptional items.
In 2000 and 1999, tax on exceptional items
amounted to €4 million and €7 million respectively.
94
Effective tax rate
Deferred taxes
The effective tax rate is as follows:
in millions of euros
Income of consolidated
companies before taxes, exceptional
items and goodwill amortization
French tax rate
Expected tax expense:
Impact of:
– income of subsidiaries
taxed at different rates
– income taxes at reduced rates
– utilization of deferred tax assets
on operating losses (1)
– provisions on deferred tax assets
– permanent differences
Tax expense recorded
in the statement of income:
– tax on results from operations
of fully consolidated companies
– tax on exceptional items
Effective tax rate
including tax on results from operations
(1)
Deferred tax assets and liabilities are included in the
following balance sheet line items:
December 31,
2001
2000
304
35.33%
(107)
283
37.8%
(107)
(3)
1
5
2
37
(31)
25
8
(4)
in millions of euros
Other receivables:
– short-term portion
– long-term portion
December 31,
2001
2000
25
3
11
4
Total deferred tax assets
28
Accrued expenses and other liabilities:
– short-term portion
(1)
– long-term portion
(65)
15
Total deferred tax liabilities
(66)
(1)
Deferred tax assets
(liabilities), net
(38)
14
(1)
-
Sources of deferred taxes
(78)
(96)
(99)
21
26%
32%
(92)
(4)
34%
35%
In 2001, a tax credit of €37 million was recorded relating to the
recognition of tax credits attributable to carried forward expenses of
Saatchi & Saatchi group companies that arose in previous periods and that
may be utilized since the inclusion of Saatchi & Saatchi in the consolidated
tax filings in the US in 2001. This recognition was motivated by the
effective utilization of these tax credits in 2001 (two thirds of them
imputable to the US tax base) or their highly probable utilization in 2002.
There is a substantial amount of tax loss carry-forward at Saatchi &
Saatchi, in respect of which, given the uncertainties surrounding the
limited potential to utilize these losses and given that most of them are set
to expire within a relatively short period (three quarters expire in less than
three years), a deferred tax credit has not been recognized in the
consolidated financial statements.
in millions of euros
Deferred tax assets arising
from temporary differences
Deferred tax assets arising from
operating loss carry-forwards
December 31,
2001
2000
25
12
3
3
28
15
Total deferred tax assets
Deferred tax liability arising
from temporary differences
Deferred tax liabilities
attributable to asset
revaluation of Zenith Media
(14)
(1)
(52)
-
Total deferred tax liabilities
(66)
(1)
Deferred tax assets
(liabilities), net
(38)
14
95
CONSOLIDATED
FINANCIAL STATEMENTS
16
ACCOUNTS PAYABLE
17
The line “Accounts payable” includes all trade
accounts payable (including notes payable and accrued
purchases) related to the purchase of goods and services,
except for purchases of media space in France under the
Sapin Law (Loi Sapin), which are included in “Accrued
expenses and other liabilities”. These liabilities fall due
within less than one year.
ACCRUED EXPENSES
AND OTHER LIABILITIES
in millions of euros
Corporation taxes payable
Payables related
to agency transactions
Other liabilities
Advances received
Other payables
Deferred revenues
and other liabilities
Contingent Value Rights
payable by Publicis (1)
Total
(1)
18
December 31,
2001
2000
62
44
119
35
208
631
119
79
156
646
62
50
195
1,314
1,094
Please see explanation detailed in Note 11 – Shareholders’ equity
OFF-BALANCE SHEET COMMITMENTS
in millions of euros
Non-matured discounted notes
Guarantees
Commitment to purchase 25%
of Zenith Optimedia Group (1)
Contingent value rights (CVRs)
on Publicis shares (2)
Other
Total
(1)
Given at December 31,
Received at December 31,
2001
3
2000
4
1999
1
3
2001
13
2000
19
1999
12
123
-
-
123
-
-
4
199
5
12
2
2
3
130
208
16
138
21
15
According to the terms of the agreement signed with Cordiant in September 2001, Publicis holds a put option over Cordiant’s 25% -stake in Zenith
Optimedia Group, as well as a call option. The exercise price will be determined by applying to the results of Zenith Optimedia Group a multiple calculated
on the basis of the average price earnings ratio of Publicis and Cordiant.
The floor price of the 25% -stake held by Cordiant has been fixed at £75 million (€123 million on the basis of the share price at December 31, 2001)
payable in cash.
(2)
In light of the very strong likelihood that payment will be required on the CVR maturing March 2002, the total amount falling due, €195 million, was
treated in the consolidated balance sheet at December 31, 2001 as a supplementary acquisition price of Saatchi & Saatchi shares and the corresponding payable
was recorded in “Accrued expenses and other liabilities”.
96
Moreover, we should note that the €200 million
exchangeable bond issued by Publicis Groupe S.A. in
December 2001, redeemable in 2007, with a fixed
interest rate of 2%, provides the possibility for
bondholders to request that their bonds be exchanged
into an equivalent number of Interpublic Group shares,
representing a 30%-premium with respect to the
reference price (an exchange price of US$36.74).
Thus, in the event of an exchange request, as from June
30, 2003, Publicis may be called upon to deliver a
maximum of 4,885,950 Interpublic Group shares in
order to repay the loan.
We should recall that as at December 31, 2001, the
Group held in its portfolio 5,310,120 Interpublic
Group shares.
19
EMPLOYEE COMPENSATION AND
HEADCOUNT
Employee compensation includes salaries, benefits,
commissions, bonuses, profit sharing and paid vacation.
Payroll taxes on salaries are included in general and
administrative expenses.
Headcount: evolution and breakdown
By geographic region:
– France
– Other Europe
– North America
– Rest of world
2001
2000
1999
3,521
6,183
6,372
4,516
3,411
5,493
6,954
4,482
2,922
3,480
1,628
2,332
Total
By segment:
– Communication
– Media
– Other activities
20,592 20,340 10,362
Total
20,592 20,340 10,362
19,373
823
396
Breakdown by function (%)
Sales
Creative development
Production and specialized staff
Media and research
Administration/Management
Other
Total
19,133
828
379
9,167
813
382
26%
18%
16%
19%
15%
6%
100%
Compensation of directors and officers
Compensation paid to members of the Supervisory 20 OTHER OPERATING EXPENSES
Board and the Management Board in 2001 totalled
€1.5 million and €4 million respectively.
Other operating expenses represent all of the
These figures are not directly comparable to the
external charges other than purchases of production and
figures for fiscal year 2000, since the members’ list has
media. They principally include taxes (other than income
changed.
taxes) and additions to and reversals of provisions.
97
CONSOLIDATED
FINANCIAL STATEMENTS
21
DEPRECIATION
AND AMORTIZATION EXPENSE
in millions of euros
2001
Amortization expense
on other intangible assets
6
(excluding goodwill)
Depreciation expense
on property and equipment
77
Depreciation
and amortization of other
intangible assets and property
and equipment
Goodwill amortization
Total depreciation and
amortization expense
23
2000
1999
6
2
53
29
Exceptional items for 2001 can be broken down as
follows:
in millions of euros
Restructuring costs
Cessation of activity
and other exceptional losses
Exceptional goodwill amortization
31
19
Total exceptional
expenses
(84)
Capital gain on the disposal of 25% Optimedia 60
133
92
50
Exceptional expense before tax
Tax on exceptional items
in millions of euros
2001
Interest and other financial
(expense) income, net
(27)
Exchange losses, net
(4)
Dividends received from
non-consolidated affiliates
3
Accrued losses
on treasury shares
(2)
98
(28)
(16)
59
33
Exceptional expense after tax
(30)
2000
1999
(13)
(2)
6
-
4
3
-
-
(11)
9
(24)
21
(3)
In 2000, exceptional income consists of the gain on
sale, net of tax, of a non-consolidated investment.
In 1999, exceptional income was comprised of the
gain on sale of the Drugstore Matignon in Paris, a gain
on the sale of foreign real estate and a gain on the sale of
a non-consolidated investment.
FINANCIAL (EXPENSE) INCOME
Total
December 31,
2001
(40)
84
49
Exceptional goodwill amortization (principally with
regard to interactive and German agencies) of €16 million
are included as exceptional items.
22
EXCEPTIONAL (EXPENSE) INCOME
NET OF TAX
24
BASIC AND DILUTED EARNINGS
PER SHARE
Basic earnings per share amounted to €1.09 in
2001, versus €1.18 in 2000 and €0.85 in 1999.
The weighted average number of shares outstanding
for the calculation of diluted earnings per share
amounted to 139,645,986 shares for 2001. The
corresponding diluted earnings per share was €1.08 per
share in 2001, versus €1.15 per share in 2000 and
€0.84 per share in 1999.
25
SEGMENT INFORMATION
Information by geographic region
in millions of euros
2001
Reconstituted billings
Revenues
Operating income
Net income after tax, Group interest *
Goodwill, property and equipment
and intangible assets, net
2000
Reconstituted billings
Revenues
Operating income
Net income after tax, Group interest *
Goodwill, property and equipment
and intangible assets, net
1999
Reconstituted billings
Revenues
Operating income
Net income after tax, Group interest *
Goodwill, property and equipment
and intangible assets, net
France
Other
Europe
North
America
Rest of
World
Total
1,812
383
66
22
4,573
714
110
65
8,120
1,035
137
101
2,162
302
29
12
16,667
2,434
342
200
114
297
1,001
131
1,543
1,730
342
72
38
3,551
536
97
58
5,043
688
83
46
1,482
204
23
9
11,806
1,770
275
151
85
172
818
139
1,214
1,495
294
45
24
2,620
408
76
36
1,847
214
21
18
898
126
14
4
6,860
1,042
156
82
72
106
116
86
380
* before goodwill amortization and exceptional income
99
CONSOLIDATED
FINANCIAL STATEMENTS
Information by business segment
The Communication segment accounts for over 95% of aggregate Group revenue. It includes all our advertising and
communication business.
The line “Other activities” includes all subsidiaries operating as advertising space selling entities for press, radio,
outdoor and movie theater advertising. They also include the Drugstore and a number of service businesses.
in millions of euros
2001
Reconstituted billings
Goodwill, property and equipment
and intangible assets, net
2000
Reconstituted billings
Goodwill, property and equipment
and intangible assets, net
1999
Reconstituted billings
Goodwill, property and equipment
and intangible assets, net
100
Communication
Other
activities
Total
16,117
550
16,667
1,482
61
1,543
11,216
590
11,806
1,173
41
1,214
6,353
507
6,860
344
36
380
26
PUBLICIS GROUPE S.A. STOCK OPTION PLANS
1- Publicis options
At December 31, 2001, the status of outstanding options – both subscription options and options to purchase
existing shares–was as follows:
€0.40 par value
shares
Option
type
Grant
date
Number
of options
remaining to
be exercised at
Dec. 31, 2000
Second tranche
Third tranche
Fourth tranche
Fifth tranche
Sixth tranche
Seventh tranche
Eighth tranche
Ninth tranche
Tenth tranche
Eleventh tranche
Twelfth tranche
Subscription
Subscription
Subscription
Subscription
Subscription
Subscription
Subscription
Subscription
Purchase
Purchase
Purchase
February 20, 1992
December 15, 1992
March 22, 1994
March 30, 1995
April 26, 1996
March 20, 1997
March 11, 1998
November 4, 1998
September 7, 2000
April 23, 2001
November 26, 2001
17,700
25,450
28,760
93,970
87,260
75,960
66,000
331,500
100,000
Total tranches
(1)
Options
granted
in 2001
Options
exercised
in 2001
(14,850)
(19,410)
(20,190)
(20,000)
380,000
2,943,135
826,600 3,323,135
(74,450)
Outstanding
options at
December 31,
2001
Exercise
price
(euros)
Expiry
date
17,700
25,450
28,760
79,120
67,850
55,770
66,000
311,500
100,000
380,000
2,943,135
7.17
6.88
6.37
6.63
4.91
5.63
8.66
10.24
43.55
33.18
29.79
2002
2002
2004
2005
2006
2007
2008
2008
2010
2011
(1)
4,075,285
Allotment of options are contingent upon achievement of objectives. The options may be exercised within 10 years only after confirmation of the allotment
2- Saatchi & Saatchi options
The existing Saatchi & Saatchi option plans confer a right when exercised to conversion into Publicis shares based
on the ratio applied for the exchange of shares when Saatchi & Saatchi was acquired by Publicis (18,252 Publicis
Groupe S.A. shares for 100 Saatchi & Saatchi shares).
The number of shares remaining to be exercised is broken down as follows:
Outstanding
at December 31, 2000
1,595,773
(1)
Exercised during
fiscal year 2001
(1,305,727)
Lapsed
in 2001
(24,000)
Outstanding
at December 31, 2001
266,046 (1)
The latest exercise date for these options ranges between 2003 and 2006
101
CONSOLIDATED
FINANCIAL STATEMENTS
3- Nelson options
On the acquisition of Nelson, these plans were transformed into Publicis share purchase plans.
The number of outstanding options at year end can be broken down as follows:
Outstanding
at December 31, 2000
699,367
(1)
27
Exercised during
fiscal year 2001
(98,733)
Lapsed
in 2001
(81,904)
Outstanding
at December 31, 2001
518,730 (1)
The latest exercise date for these options ranges between 2002 and 2009
SUBSEQUENT EVENTS
In January 2002, as part of the debt refinancing
program, Publicis issued Océanes (bonds that may be
converted into or exchanged for new or existing shares),
thereby raising €690 million with a maturity period of
16 years.
This issue is composed of 17,624,521 bonds of
€39.15 (representing a 35%-premium over the
reference price for Publicis shares at the time of issue),
issued at par value, and bearing interest at the rate of 1%
per year. These bonds will be fully redeemed on maturity,
i.e. January 18, 2018, for an amount equivalent to
134.59% of par. However, they may be redeemed early,
either via a market repurchase operation, or via a public
purchase or exchange offer, at any time as from January
18, 2007. Bondholders will have the right to request
early redemption on January 18, 2006, 2010 and 2014.
Bondholders will have the right to request the
conversion or exchange of their bonds at any time as
from January 18, 2002 and up until the seventh working
day prior to the maturity date, with one bond equal to
one share. The Group is entitled to determine whether
the shares granted under this option will be new or
existing shares.
102
28
RECONCILIATION WITH US GAAP
The table reconciling earnings and shareholders’
equity established according to French and American
accounting principles will be presented in Form 20-F, to
be submitted no later than June 30, 2002 in the United
States.
The differences between these two accounting
methods had the following impact on the accounts at
December 31, 2001:
Saatchi & Saatchi acquisition
• Treatment of the Saatchi & Saatchi acquisition, in
accordance with the French derogatory method (laid
down by Article 215 of rule 99-02 of the Comité de la
Réglementation Comptable) or the purchase accounting
method under U.S. GAAP.
• Contingent Value Rights (CVRs), stated under
French GAAP at their probable exercise value (maximum
CVR value multiplied by the number of CVR
outstanding). Under U.S. GAAP, they are recorded at
fair value, with subsequent changes in value recorded in
the statement of income.
• Saatchi & Saatchi stock options outstanding.
Options that have not been exercised are accounted for
under French GAAP at the time they are exercised,
whereas under U.S. GAAP, they are included in the
initial acquisition price.
• Write-down of Saatchi & Saatchi goodwill.
Following valuation of Saatchi & Saatchi at December 31,
2001, an impairment charge has been recorded against
goodwill. Since the derogatory method is applied, this
write-down will have no impact on the French
consolidated accounts.
Other acquisitions
• Restructuring expense. Under French GAAP,
goodwill includes restructuring expenses related to
reorganization programs decided upon at the time of
acquisition and costed in the period up until the yearend following the acquisition year-end. Under U.S.
GAAP, the restructuring charge is expensed as incurred
in the event that it could not be decided upon and costed
within one year of the acquisition date.
• Goodwill arising on the acquisition of FCA in
1993, which was paid for by issuing new shares, was
imputed to shareholders’ equity. Since U.S. GAAP does
not allow for this departure from the principle of
treating goodwill as an asset, the goodwill has been
recorded as an asset and amortized in accordance with
the Group’s usual accounting practices.
• Certain payments made to former employee
shareholders following acquisitions are treated as a
supplementary acquisition cost under French accounting
standards. Under U.S. GAAP, the relevant amounts are
expensed as incurred if such payments are contingent
upon the continuation of the beneficiaries’ employment
contracts.
Stock options
According to French GAAP, when stock options are
exercised, an increase in share capital and a premium
equal to the exercise price must be recorded. Under U.S.
GAAP, the difference between fair value and exercise
price at the time the options are granted is recorded in
the balance sheet and amortized in the income statement
over the vesting period of the options.
Marketable securities
According to French GAAP, only unrealized losses
arising from the difference between balance sheet value
and fair value may be recognized, while the provisions
pertaining to them may be reversed in the event of a
subsequent rise in the market value of the securities.
Under U.S. GAAP, the marketable securities of the kind
held by the Group (available-for-sale securities) are
recorded at fair value at closing date in the balance sheet.
Treasury stock
Until the end of 2000, both accounting systems
treated treasury stock in the same fashion (as a deduction
from total shareholders’ equity). Following the decision
to allocate treasury shares held by the Company to the
new existing stock purchase plan, treasury shares are now
recorded as marketable securities under French GAAP.
Under U.S. GAAP, they are treated as previously.
Provisions for contingencies and charges
A number of provisions previously established in the
Group’s accounts in accordance with French GAAP are
at variance with the criteria under U.S. GAAP, especially
with respect to the following:
• the amount of documentation required to justify
provisions, detailing the nature of the contingencies
covered; the likelihood of loss (probable under French
standards, certain under U.S. GAAP); the events
generating each provision (assessed under French GAAP
at the date at which the books are balanced, but at yearend under U.S. GAAP):
• assessment of how reasonable the estimated
probable loss appears.
The provisions established in accordance with
French accounting principles have been cancelled under
the U.S. GAAP.
At December 31, 2001, all balance sheet provisions
comply with U.S. GAAP.
103
CONSOLIDATED
FINANCIAL STATEMENTS
29
LIST OF CONSOLIDATED ENTITIES AT DECEMBER 31, 2001
Fully-consolidated companies.
Company
% control
Business
Country
City
San Francisco, Seattle, Salt Lake City,
Boise, Dallas, Indianapolis, Los Angeles,
Chicago, New York
San Francisco, Atlanta, New York
Chicago
San Francisco,
Seattle, Salt Lake City, Dallas,
Indianapolis, Chicago, New York
New York
Chicago
Minneapolis
Los Angeles
Montreal, Toronto
São Paulo, Brasilia, Porto Alegre,
Rio de Janeiro
1- Advertising agencies
Publicis
100.00
Advertising
United States
Publicis Hal Riney
Burrell Communications
Publicis Dialog
100.00
100,00
Advertising
Advertising
Advertising
United States
United States
United States
Nelson Communications
Frankel
Fallon
Winner & Associates
Publicis Canada
Publicis Norton
100.00
100.00
100.00
60.00
70.00
60.00
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
United States
United States
United States
United States
Canada
Brazil
Publicis Conseil
Mundocom
Publicis Dialog
Média System
Publicis Consultants
Carré Noir
Publicis Consultants Ecocom
Publicis Allemagne
Publicis Dialog
BMZ
Publicis Kommunikation Agentur
Publicis Austria
Publicis Belgium
Publicis Denmark
Publicis Spain
99.61
99.93
100.00
94.96
100.00
95.53
83.05
100.00
100.00
100.00
100.00
100,00
100.00
80.00
100.00
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
France
France
France
France
France
France
France
Germany
Germany
Germany
Germany
Austria
Belgium
Denmark
Spain
Publicis Casadevall y Pedreño
Publicis International Oy
Publicis Hellas
Publicis Hungary
85.00
64.72
100.00
100.00
Advertising
Advertising
Advertising
Advertising
Spain
Finland
Greece
Hungary
104
Paris
Paris
Paris
Paris
Paris
Paris
Paris
Frankfurt, Berlin
Frankfurt, Hamburg
Düsseldorf
Erlangen, Munich
Vienna
Brussels
Copenhagen
Madrid, Barcelona, Seville,
Valencia, Alicante
Barcelona, Madrid
Helsinki
Athens
Budapest
Company
% control
Business
Country
City
Publicis Italy
Publicis Amsterdam
Publicis Poland
Publicis Portugal
BMZ/Park
Publicis UK
The Triangle Group
Publicis Zürich
100.00
100,00
85.00
90.00
56.44
100.00
100.00
90.00
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Italy
Netherlands
Poland
Portugal
Portugal
UK
UK
Switzerland
Milan, Rome
Amsterdam
Warsaw
Lisbon
Lisbon
London
London
Zürich
Publicis Communication
Publicis Mojo
100.00
100.00
Advertising
Advertising
Australia
New Zealand
Brisbane, Melbourne, Sydney
Auckland
60.00
Advertising
China, Hong Kong
Publicis Welcomm
Publicis Japan
Publicis Wet Desert
Publicis Philippines
Publicis Eureka
Publicis Taiwan
Publicis Prakit
60.00
100.00
70.00
65.63
60.00
100.00
50.00
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Korea
Japan
Malaysia
Philippines
Singapore
Taiwan
Thailand
Beijing, Hong Kong, Shanghai,
Guangzhou, Chengdu
Seoul
Tokyo
Kuala Lumpur
Manila
Singapore
Taipei
Bangkok
Publicis Cape Town
Publicis Johannesburg
84.30
100.00
Advertising
Advertising
South Africa
South Africa
Cape Town
Johannesburg
82.00
60.00
Advertising
Advertising
Israel
Lebanon, Jordan,
Bahrain, Egypt,
UAE, Saudi Arabia,
Kuwait, Turkey
Tel Aviv
Beirut, Amman,
Bahrain, Cairo,
Dubai, Jeddah, Riyadh
Kuwait, Istanbul.
Saatchi & Saatchi North America
Klemtner Advertising
Rowland - Rochester (SSBC)
Saatchi & Saatchi Canada
Finance Nazca Publicidade Brazil
100.00
100.00
100.00
100.00
51.00
Advertising
Advertising
Advertising
Advertising
Advertising
United States
United States
United States
Canada
Brazil
New York
New York
New York
Toronto
São Paulo
Saatchi & Saatchi Advertising Pty
Saatchi & Saatchi New Zealand
Saatchi & Saatchi
Great Wall Advertising Co
Saatchi & Saatchi Japan
Saatchi & Saatchi Malaysia
Saatchi & Saatchi Singapore
Saatchi & Saatchi Taiwan
Saatchi & Saatchi Thailand
Saatchi & Saatchi Vietnam
100.00
100.00
Advertising
Advertising
Australia
New Zealand
Sydney
Wellington
51.00
66.67
80.00
100.00
100.00
51.00
70.00
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
China
Japan
Malaysia
Singapore
Taiwan
Thailand
Vietnam
Beijing
Tokyo
Petaling Jaya
Singapore
Taipei
Bangkok
Ho Chi Minh City
Publicis Ad Link
Publicis Ariely
Publicis Graphics
105
CONSOLIDATED
FINANCIAL STATEMENTS
Company
% control
Business
Country
City
Saatchi & Saatchi Germany
Saatchi & Saatchi Austria
Saatchi & Saatchi Belgium
Saatchi & Saatchi Denmark
Saatchi & Saatchi Madrid
Saatchi & Saatchi France
Saatchi & Saatchi Hungary
Saatchi & Saatchi Italy
Saatchi & Saatchi Holland
Saatchi & Saatchi Portugal
The Facilities Group
Saatchi & Saatchi UK
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
70.00
100.00
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Advertising
Germany
Austria
Belgium
Denmark
Spain
France
Hungary
Italy
Netherlands
Portugal
UK
UK
Frankfurt
Vienna
Brussels
Copenhagen
Madrid
Paris
Budapest
Rome, Milan
Amstelveen
Lisbon
London
London
Optimedia USA
Zenith Media USA
100.00
100.00
Media Buying
Media Buying
United States
United States
New York
New York
More Media
Optimedia Germany
Zenith Media Germany
Optimedia Spain
Zenith Media Spain
Publicis Centre Media
Zenith Media France
Optimedia Italy
Zenith Media Italy
Optimedia Netherlands
Zenith Media Holland
Optimedia UK
Zenith Media
90.5
100.00
100.00
100.00
97.50
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Media Buying
Germany
Germany
Germany
Spain
Spain
France
France
Italy
Italy
Netherlands
Netherlands
UK
UK
Düsseldorf, Munich
Düsseldorf
Düsseldorf
Madrid
Madrid
Paris
Paris
Milan
Milan
Amsterdam
Amsterdam
London
London
100.00
49.00
49.00
100.00
66.63
50.00
50.00
Press Media Sales
Press Media Sales
Press Media Sales
Outdoor Media Sales
Cinema Sales
Outdoor Media Sales
Radio Media Sales
France
France
France
France
France
Netherlands
France
Paris
Paris
Paris
Paris
Paris
100.00
Retail
France
2. Media Sales
Médias & & Régies Europe
Le Monde Publicité
Espaces Libération
Metrobus
Mediavision
Publex
Régie 1
Amsterdam
Paris
3. Other businesses
Publicis Drugstore
106
Paris
Report of the Statutory Auditors on
consolidated financial statements
In our capacity as Statutory Auditors, we have audited the accompanying consolidated accounts of Publicis Groupe S.A.,
presented in euros, as of December 31, 2001, in accordance with accounting principles generally accepted in France.
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these accounts based on our audit.
We conducted our audit in accordance with French professional standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in
the consolidated accounts. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall consolidated account presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the consolidated accounts present fairly, in all material respects, the financial position of the Group
as of December 31, 2001 and the results of the Group’s operations included in the consolidation for the year then
ended, in accordance with accounting principles generally accepted in France.
We have also reviewed the information in the Management Board Report on the management of the Group.
We have nothing to report with respect to the fairness of such information and its consistency with the consolidated
accounts.
Paris, March 5, 2002
The Statutory Auditors
Mazars & Guérard
Frédéric Allilaire
Isabelle Massa
Ernst & Young Audit
Bruno Perrin
107
Consolidated statements of income for 2001
compared to pro forma results for 2000 and 1999
(reflecting the impact of the Saatchi & Saatchi acquisition)
in millions of euros
2001
Pro forma
2000
Pro forma
1999
Reconstituted billings
Revenue
16,667
2,434
14,936
2,231
11,159
1,687
Salaries and related expenses
Other operating expenses
Total operating expenses
Other operating income
Operating income before depreciation and amortization
(1,363)
(661)
(2,024)
16
426
(1,231)
(631)
(1,862)
18
387
(922)
(505)
(1,427)
12
272
Depreciation and amortization expense
Operating income
(84)
342
(74)
313
(53)
219
Financial (expense) income, net
Income of consolidated companies before taxes,
exceptional items and goodwill amortization
(30)
(15)
312
Income taxes
(99)
(99)
(80)
Net income of consolidated companies before
exceptional items and goodwill amortization
213
199
143
298
4
223
Equity in net income of non-consolidated companies
Net income before exceptional items
and goodwill amortization
9
10
9
222
209
152
Of which Group interests
Exceptional (expense) income, net of tax
Goodwill amortization
Net income before minority interests
200
(3)
(49)
170
181
15
(34)
190
130
12
(20)
144
Minority interests
Group net income
(19)
151
(33)
157
(23)
121
Per share data (in euros)
Net earnings per share
Earnings per share after tax and before exceptional items
and goodwill amortization
Net earnings per share – diluted
Earnings per share after tax and before exceptional items
and goodwill amortization – diluted
1.09
1.16
0.94
1.44
1.08
1.34
1.13
1.01
0.91
1.43
1.31
0.97
The pro forma accounts for 2000 and 1999, presented in the notes to the accounts for 2000, have been reproduced
here in order to facilitate comparison with fiscal year 2001. They include Saatchi & Saatchi on a full-year basis, i.e. as
though Saatchi & Saatchi had been part of the Group since the beginning of 1999 rather than since acquisition in
September 2000.
No pro forma balance sheets are presented here. The balance sheet for 2001 is comparable to the 2000 balance
sheet, since the acquisition of Saatchi & Saatchi was included in the consolidated accounts as of December 31, 2000.
The Statutory Auditors have issued a report on these pro forma accounts dated April 23, 2001
108
Summarized statutory accounts
of Publicis Groupe S.A.
for the year ended December 31, 2001
Contents
Statements of income
110
Balance sheets
110
Statements of cash flows
111
Notes to the statutory accounts of Publicis Groupe S.A.
112
Subsidiaries and affiliates at December 31, 2001.
115
Detail of investments at December 31, 2001.
116
Operating results of Publicis Groupe S.A.
over the last five years
117
109
Statements of income
in millions of euros
2001
2000
1999
Operating revenues
Operating expenses
Operating income
15
(12)
3
18
(16)
2
11
(9)
2
Investment income
Other financial income
Total financial income
Financial expense
Group share in partnerships
Financial income, net
57
11
68
(43)
(5)
20
43
1
44
(18)
26
11
4
15
(3)
(2)
10
Net income before taxes
Exceptional income
23
473
28
357
12
18
Exceptional impairment charge
Other exceptional expense from capital transactions
Total exceptional expense
Income tax
(496)
(469)
(965)
-
(40)
(153)
(193)
-
(4)
(4)
(5)
Net income (expense)
(469)
192
21
Balance sheet at December 31
in millions of euros
ASSETS
Intangible assets, net
Property and equipment, net
Investments
Other investments
Provisions for investments and other financial assets
Investments and other financial assets, net
Intangible assets, property and equipment
Current assets
2001
2000
1999
3
9
2,770
185
(516)
2,439
2,451
3
8
2,706
206
(21)
2,891
2,902
3
9
290
171
(21)
440
452
154
15
10
9
8
-
2,614
2,925
462
2001
2000
1999
Shareholders’ equity before net income for the period
2,399
2,177
300
Net income for the period
Shareholders’ equity
(469)
1,930
192
2,369
21
321
43
43
8
435
184
14
633
441
48
15
505
121
3
9
133
8
8
-
2,614
2,925
462
Regularization and translation adjustments
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Provisions for contingencies and charges
Bank borrowings and overdrafts
Loans and other financial debts
Other liabilities
Total debt
Translation adjustments
Total liabilities and shareholders’ equity
110
Statements of cash flows
in millions of euros
2001
I - Cash flows from operating activities
Net income (excluding exceptional gains on sales of assets)
Depreciation and amortization
Self-financing ability
(472)
496
24
2000
1999
28
1
29
14
1
15
Change in net working capital requirements
(2)
(5)
6
Net cash provided by operating activities
22
24
21
(125)
54
(4)
(49)
(213)
(16)
(75)
(262)
(16)
(27)
56
416
(208)
34
(15)
407
(2)
(115)
-
(11)
14
2
(4)
(57)
-
Net cash provided by (used in) financing activities
271
275
(56)
Net change in cash flows (I + II + III)
218
37
(51)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(82)
136
(119)
(82)
(68)
(119)
Net change in cash and cash equivalents
218
37
(51)
II - Cash flows from investing activities
Acquisitions of subsidiaries
Disposal of subsidiaries
Purchases of investments and other financial assets, net
Net cash used in investing activities
III - Cash flows from financing activities
Dividends paid to shareholders of Publicis Groupe S.A.
Capital increase
Proceeds from new loans
Repayment of principal on loans
Net purchases of treasury stock
Reclassification of treasury stock
111
SUMMARIZED
STATUTORY ACCOUNTS
Notes to the statutory accounts
of Publicis Groupe S.A.
SIGNIFICANT EVENTS
OF THE PERIOD
Several significant events occurred in 2001:
• as part of its program to restructure existing debt,
in December 2001 Publicis Groupe S.A. issued bonds
that may be exchanged for shares in Interpublic Group.
The amount of the debenture loan was €200 million.
The bonds have an interest rate of 2% per year and will
be redeemed in January 2007.
• modifications to the securities portfolio:
– a provision of €496 million was set aside in
respect of the decline in the fair value of this investment,
– Nelson shares were contributed to Publicis USA
Holdings;
– Publicis Centre Media shares were sold to
Optimedia Holdings Ltd.
• the decision to allocate irrevocably the treasury
shares held by the company to new option plans for the
purchase of existing shares. The consequence of this is
to reclassify all of the treasury shares as “marketable
securities”.
INVESTMENTS
Gross investments increased by €64 million.
This increase is primarily attributable to the following:
• a supplementary purchase price component for
Nelson: this is attributable to the effective completion of
the balance of the purchase in 2001 and amounts to
€68 million;
• an increase in the investment in Saatchi & Saatchi:
increase in the cost price of the 100% purchase of
Saatchi & Saatchi relating to the exercise of 1,305,727 share
subscription options realized within the scope of the
transfer of old Saatchi & Saatchi plans, for an amount of
€56 million;
112
• Nelson sale paid by Publicis USA Holdings’
shares: in exchange for the investment held by Publicis
Groupe S.A. in Nelson (100%), valued at US$200 million,
Publicis Groupe S.A. received 30,364 new shares issued
by Publicis USA Holdings in remuneration for this
contribution, after which Publicis Groupe S.A. had a
39.30%-stake in Publicis USA Holdings;
• disposal of the investment held in Publicis Centre
Media (100%) to Optimedia Holdings Ltd: according
to the terms of the agreements signed in September
2001, relating to the creation of Zenith Optimedia
Group’s space purchasing network, 75%-owned by
Publicis, all of its investment in Optimedia was sold to
OHL.
The amount of the provisions for depreciation on
investment securities totaled €507 million at December 31,
after writing back an amount of €10 million relating to
securities sold and a provision charge of €496 million
relating to depreciation on Saatchi & Saatchi shares. The
going concern value of Saatchi & Saatchi shares was
performed at December 31, 2001 using various
valuation methods such as discounted future cash flows,
multiples of comparable quoted companies and
multiples of recent comparable transactions. On the
basis of this valuation, a depreciation charge of
€496 million was recorded within exceptional items.
TREASURY SHARES
The book value of treasury shares held as investment
securities totaled €136 million. A provision of
€2 million was recorded to align this amount with the
market value on the basis of the average price for
December 2001. The detail of the variation in treasury
shares during the year appears in Note 10 to the
consolidated financial statements.
SHAREHOLDERS’ EQUITY
Five-year summary of changes in shareholders’ equity of Publicis Groupe S.A.:
Amount of capital changes
Number Nominal
Issue
of shares
value
premium
(in
(in
thousands thousands
of euros)
of euros)
Dates Capital transactions
As at January 1, 1996
1997 Exercise of options
1998 Exercise of options
Purchase merger of Publicis Communication
1999 Exercise of options
2000 10-for-1 stock split
Saatchi & Saatchi acquisition
Exercise of options
2001 Saatchi & Saatchi exercise of options
Exercise of options under the Publicis plan
Conversion of the capital into euros
As at December 31, 2001
44,972
43,022
792,076
447,785
84,833,964
43,889,149
70,710
1,305,727
74,450
-
PROVISIONS FOR CONTINGENCIES
AND CHARGES
This item includes provisions for tax of €40 million
corresponding to the capital gain generated from the
transfer of shares to Publicis USA Holdings, benefiting
from deferred tax credits by virtue of article 210-A of
the French General Tax Code.
The balance of the provisions for contingencies and
charges includes retirement accruals and provisions for
major repairs and accrued losses on the former Nelson
shares.
BANK BORROWINGS, LOANS AND
OTHER FINANCIAL DEBTS
Bank borrowings break down as follows:
in millions of euros
Debenture loan
Short-term credit lines
Bank overdrafts
Total
171
164
3,019
1,707
16,727
27
522
30
2,609
1,149
1,132
52,210
12,067
1,854,066
422
55,493
482
-
Successive
Total
amounts
cumulative
of capital
number
(in of shares with a
thousands nominal value
of euros)
of €0.40
30,864
8,098,141
31,035
8,143,113
31,199
8,186,135
34,218
8,978,211
35,925
9,425,996
35,925
94,259,960
52,652 138,149,109
52,679 138,219,819
53,201 139,525,546
53,231 139,599,996
55,840 139,599,996
55,840 139,599,996
The debenture loan issued in December 2001 is
divided into 20,000 bonds with a face value of €10,000
payable at par in January 2007 and paying a fixed annual
yield of 2%. All bonds will be exchangeable as of
June 30, 2003 into a number of Interpublic Group
shares representing a premium of 29% in relation to the
reference price of US$28.26 (which represents an
exchange price of US$36.74) or repaid in cash at the
choice of Publicis. The bonds will be redeemable at the
choice of Publicis as from January 10, 2005, if the
Interpublic Group share price exceeds the initial
exchange price of US$36.74 by 30% during a period of
20 trading days. Bondholders may request from Publicis
the redemption of their bonds at par on March 1, 2004.
A portion of the credit lines is denominated in U.S.
dollars (US$133 million) and is intended to finance
current account advances granted to Publicis USA
Holdings.
December 31, 2001
200
231
4
435
113
SUMMARIZED
STATUTORY ACCOUNTS
EXCEPTIONAL ITEMS
INCOME TAXES
The exceptional loss of €492 million represents
primarily a provision for Saatchi & Saatchi shares of
€496 million. This loss also includes €3 million
corresponding to the sale or exchange of equity interests.
A loss of €12 million that may be carried forward at
the normal corporate tax rate until 2006 was generated
in 2001.
We note that as of December 31, 2000 there was a
prior tax loss of €2 million that may be carried over
until 2005.
In addition, a long-term net capital loss of
€488 million may be carried over until 2011. Losses
resulting from amortization which have unlimited useful
lives amounted to €0.5 million.
OFF-BALANCE SHEET COMMITMENTS
• Lease contract guarantee
Two stories of the office block located rue du Dôme in Boulogne, France, were acquired under a lease agreement.
This contract, at 31 December 2001, presents the following characteristics:
Values of assets held under lease agreements at December 31, 2001 in millions of euros
Fixed asset
category
Original
value
Land and buildings
(1)
8 (1)
Theoretical
Residual purchase
Lease payments
depreciation charge
price
for the year accumulated for the year accumulated at end of contract
1
8
0.3
3
3
including €2 million in land value
Outstanding lease payment schedule as at December 31, 2001 in millions of euros
Fixed asset category
Land and buildings
(1)
less than 1 year
0.5
1 to 5 years
2 (1)
More than 5 years
0.5 (1)
Total
3
excluding additional payments of €2.5 million relating to the residual purchase price at the end of the contract (of which €2 million 1 to 5 years and
€0.5 million more than 5 years)
• Contingent Value Rights (CVRs)
Publicis Groupe S.A. issued contingent value rights
(CVRs) to recipients of the Publicis shares exchanged
for Saatchi & Saatchi shares, which guarantee the value of
each Publicis share exchanged for Saatchi & Saatchi shares.
The recipients of the CVRs will receive in the
60-day period following the waiting period of 18 months
after the issuance of the rights, a cash sum in euros equal
to the difference, if negative, between the average
Publicis share price during the 10 days preceding the
expiration of the 18-month waiting period, and the
reference share price, limited to a maximum of €4.32
for each contingent value right.
The closing price on December 31, 2001 of CVRs
issued in September 2001 was €3.65, representing a total
amount of €165 million for the 45,194,876 CVRs
outstanding to date. In light of the number of options
114
remaining to be exercised, the number of certificates
granted may not exceed 45,460,922 corresponding to
a maximum commitment of €196 million. The
CVRs reach maturity on March 7, 2002.
• Exchangeable bonds of €200 million
The bonds issued on December 18, 2001 will be
exchangeable, as from June 30, 2003, into a maximum of
4,885,950 Interpublic Group shares representing a
premium of 29% in relation to the reference price of the
IPG share on the date the definitive procedures were
fixed, or payable in cash at the choice of Publicis.
• Publicis stock option plans
All information relating to these plans is provided in
Note 26 to the consolidated financial statements.
Subsidiaries and affiliates
at December 31, 2001
Amounts expressed in millions of euros, except for shareholders’ equity which is stated in local currencies
A- Subsidiaries and investments in non-consolidated companies for which book value exceeds 1 % of the
capital stock of Publicis Groupe S.A.
Companies
Capital
stock
Reserves
and
earnings
retained
%
interest
Gross
book
value
Net book
value
Loans
and
advances
Revenues
Net
income
Dividends
Publicis Worldwide B.V.
45,378
Prof. W.H. Keesomlaan 12
1 183 DJ Amstelveen
195,237
100.00
82,427
71,643
23,677
0
(1,077)
20,000
Saatchi & Saatchi Ltd
89-89 Whifield Street
WAA 4XA London
182,904
GBP
100.00 1,938,860 1,442,860
0
0
(375)
0
1- Subsidiaries
24,579
GBP
Publicis USA Holdings
14185 North Dallas
Parkway, Suite 400 Dallas
- 1,193,185
USD
39.3 (1)
619,485
619,485
118,702
0
15,918
0
Publicis Conseil
133, Champs Elysées
75008 Paris
28,074
26,055
99.61
90,833
90,833
0
480,262
25,095
20,122
Médias et Régies Europe
133 Champs Elysées
75008 Paris
24,150
16,404
99.99
25,508
25,508
0
39,317
13,239
3,450
Publicis Consultants
133, Champs Elysées
75008 Paris
142
3,401
98.93
4,224
4,224
13,199
27,167
1,486
2,969
Farner Holding AG
Theaterstrasse 8
8 001 Zürich
650
CHF
6,457
CHF
100.00
3,241
3,241
0
0
(27)
663
Drugstore Champs Elysées
133, Champs Elysées
75008 Paris
1,133
3
99.99
1,137
1,137
563
11,204
(6,848)
0
Publicis Technology
4-6, passage Louis Philippe
75011 Paris
173
(338)
99.89
999
999
1,630
11,934
88
0
1,050
2,325
10.00
1,959
1,959
0
0
939
47
2- Affiliates
Europe 1 Immobilier
26 bis, rue François 1er
75008 Paris
(1)
An additional 60.70%-stake is held by Saatchi & Saatchi Holdings Limited, a wholly-owned subsidiary of Publicis Groupe S.A.
B- General information with regard to subsidiaries and investments in non-consolidated companies
Subsidiaries
French
Foreign
Book value of interest held
– Gross
– Net
Amount of loans granted
Amount of dividends received
123,561
123,561
15,392
28,136
2,644,264
2,137,480
142,379
20,663
Non-consolidated companies
French
Foreign
1,979
1,979
0
53
87
2
0
0
No guarantees have been granted to subsidiaries.
115
SUMMARIZED
STATUTORY ACCOUNTS
Details of investments
at December 31, 2001
in millions of euros
I- Investments in affiliates
A. Investments in French companies
3,728,633 shares
Publicis Conseil
1,609,989 shares
Médias et Régies Europe
9,230 shares
Publicis Consultants
7,000 shares
Europe 1 Immobilier
74,599 shares
Drugstore Champs Elysées
4,539 shares
Publicis Technology
245,000 shares
Régie 1
13,465 shares
Groupe Publicis Services
2,493 shares
WAM
Investments with carrying value of less than €15,000 - aggregate
%
interest
Book
value
99.61%
99.99%
98.93%
10.00%
99.99%
99.89%
49.00%
99.99%
99.72%
91
26
4
2
1
1
1
Total investments in French affiliates
B. Investments in foreign companies
240,462,213 shares
Saatchi & Saatchi Ltd
30,564 shares
Publicis USA Holdings
100,000 shares
Publicis Worldwide BV
6,500 shares
Farner Holding
6,100 shares
Publicis Consultants Bruxelles
Investments with carrying value of less than €15,000 - aggregate
126
100.00%
39.30%
100.00%
100.00%
100.00%
1,443
619
72
3
-
Total investments in foreign affiliates
2, 137
Total investments in affiliates
2,263
II- Other securities
C. French securities
4,630,427 shares
1,713 shares
Total other securities
Total investments
116
Publicis Groupe S.A. treasury shares
GITT
3.32%
n/m
136
136
2,399
Operating results
of Publicis Groupe S.A.
over the last five years
(in thousands of euros)
2001
Capital stock at year-end
Capital stock
Number of shares issued
Maximum number of future shares
to be issued through the exercise
of stock options granted
2000
1999
1998
1997
55,840
52,679
35,925
34,218
31,035
139,599,996 138,219,819 94,259,960 89,782,110 81,431,130
Operating results
Billings, excluding taxes
Net income before taxes, depreciation,
amortization and provisions
Income taxes
Net income after taxes, depreciation,
amortization and provisions
Income distributed to shareholders
918,196
726,600
797,310
5,275,160
4,774,420
11,436
11,620
10,911
65,077
-
25,009
0
227,527
9
24,091
5,102
46,711
19
2,096
(1,221)
(469,109)
30,752
192,019
27,852
20,711
16,030
28,010
10,951
3,313
6,462
0.18
1.64
0.20
0.52
0.04
(3.36)
0.22
1.38
0.20
0.22
0.17
0.31
0.12
0.04
0.08
5
745
5
811
5
515
89
3,912
5
561
359
540
141
1,578
127
Earnings per share in euros
Earnings per share after taxes but
before depreciation, amortization and provisions
Earnings per share after taxes, depreciation,
amortization and provisions
Dividends per share
Staff
Average number of employees
Gross salaries expense
Social charges and benefits
(social security, charities and similar benefits)
NB: Earnings per share for the years 1997 to 1999 have been adjusted to take into account the 10-for-1 stock split of August 29, 2000
The comprehensive version of statutory accounts
may be obtained at the company’s head office,
133 avenue des Champs Elysées, 75008 Paris – France
117
SUMMARIZED
STATUTORY ACCOUNTS
Reports
of the Statutory Auditors
GENERAL REPORT
In our capacity as Statutory Auditors, we present
below our report on:
• the accompanying annual accounts of Publicis
Groupe S.A. (the Company), presented in euros, in
accordance with French accounting principles and,
• the specific procedures and disclosures prescribed
by law, for the year ended December 31, 2001.
These annual accounts are the responsibility of the
Company’s management. Our responsibility is to express
an opinion on these accounts based on our audit.
I. Opinion on the statutory accounts
We conducted our audit in accordance with French
professional standards. Those standards require that we
plan and perform the audit to obtain reasonable
assurance about whether the annual accounts are free
from material misstatement. An audit includes
examining, on a test basis, evidence supporting the
amounts and disclosures in the annual accounts.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall annual
account presentation. We believe that our audit provides
a reasonable basis for our opinion.
In our opinion, the statutory accounts present fairly,
in all material respects, the financial position of the
Company as of December 31, 2001 and the results of
its operations for the year then ended, in accordance
with French accounting principles.
II. Verifications and specific information
We have also carried out, in accordance with French
professional standards, the specific procedures
prescribed by French law.
We have nothing to report with respect to the
fairness of information contained in the Management
Board Report and its consistency with the annual
accounts and other information presented to
shareholders concerning the financial position and
annual accounts.
In accordance with French law, we have ensured that
the required information concerning the purchase of
investments and controlling interests and the names and
voting rights of the principal shareholders has been
properly disclosed in the Management Board Report.
Paris, March 5, 2002
The Statutory Auditors
Mazars & Guérard
Frédéric Allilaire
Isabelle Massa
Ernst & Young Audit
Bruno Perrin
SPECIAL REPORT OF THE STATUTORY
AUDITORS ON CERTAIN RELATED
PARTY TRANSACTIONS
In our capacity as the Statutory Auditors of your
Company, we are required to report on certain
contractual agreements with certain related parties of
which we have been advised. However, our role does not
entail researching the possible existence of such
agreements.
We hereby inform you that we have not been advised
of any agreements covered by article L. 225-86 of
French Company Law (Code de Commerce).
Paris, March 5, 2002
The Statutory Auditors
Mazars & Guérard
Ernst & Young Audit
Frédéric Allilaire
Bruno Perrin
Isabelle Massa
118
Supplementary information
Contents
Report editor and auditors
120
Report editor
Independent auditors
Investor relations
General information on Publicis Groupe S.A.
and its capital stock
122
General information on Publicis Groupe S.A.
General information on the capital stock
Breakdown of capital stock and voting rights
Information relating to the business of Publicis Groupe S.A.
125
Business overview
Investment policy
Extraordinary items and litigation
Insurance and risk management
Administrative, management and supervisory bodies
128
Meetings of the Supervisory Board and the Management Board
Special committees
Employee profit-sharing schemes
Recent developments
129
2002 Financial calendar
130
119
SUPPLEMENTARY
INFORMATION
Report editor
and auditors
REPORT EDITOR
Maurice Lévy, Chairman of Management Board.
Certification
“To the extent of my knowledge, the data in this document are true and include all of the information that investors
need to evaluate Publicis’ business assets, its activity, financial position, earnings and prospects. There are no omissions
that could alter its meaning.”
INDEPENDENT AUDITORS
Statutory Auditors
Date first
appointed
End of term
– Cabinet Mazars & Guérard
represented by Frédéric Allilaire & Isabelle Massa
125, rue de Montreuil
75011 Paris, France
June 25, 1981
2005 A.G.M
– Cabinet Ernst & Young Audit
represented by Bruno Perrin
4, rue Auber
75009 Paris, France
June 14, 2001
2007 A.G.M.
– Patrick de Cambourg
125, rue de Montreuil
75011 Paris, France
June 25, 1998
2004 A.G.M.
– Denis Thibon
11, faubourg de l’Arche
92037 Paris la Défense, France
June 14, 2001
2007 A.G.M.
Alternate auditors
INVESTOR RELATIONS
Any information pertaining to this document may be obtained from:
Jean-Michel Etienne, Chief Financial Officer
133, avenue des Champs-Elysées - 75008 Paris, France
(Tel.: +33 1 44 43 72 30 - Fax: +33 1 44 43 75 60
e-mail : [email protected])
120
Pierre Bénaich, Director, Investor Relations
133, avenue des Champs-Elysées - 75008 Paris, France
(Tel.: +33 1 44 43 65 00 - Fax: +33 1 44 43 75 60
email : [email protected])
AUDITORS REPORT
As the Statutory Auditors of Publicis Groupe S.A.
and pursuant to COB regulation 98-01, we have carried
out our audit in accordance with French accounting
standards, by examining the information relating to the
financial position and historic accounts contained in this
report.
This reference document was drawn up under the
responsibility of the Company’s Management Board.
It is our responsibility to provide an opinion on the
sincerity of the information it contains with respect to
the financial position and accounts.
Our due diligence consisted of evaluating the
sincerity of the information pertaining to the financial
position and accounts, checking to see that it agreed
with the accounts, reading the information contained in
the report in order to identify any material
inconsistencies with the information on the financial
position and accounts and highlighting any obviously
erroneous information which we may have found. With
respect to certain isolated forecasted data extracted from
a structural process, our reading of such data was made
in conjunction with Management’s assumptions and the
related result of these assumptions on the isolated
forecasted data.
The annual financial statements and consolidated
financial statements drawn up by the Supervisory Board,
were audited by the Statutory Auditors Mazars &
Guérard and Pierre Loeper for the fiscal year ended
December 31, 1999, the Statutory Auditors Mazars &
Guérard and Pierre Loeper and by the contractual
auditor Ernst & Young Audit for the fiscal year ended
December 31, 2000, and by the Statutory Auditors
Mazars & Guérard and Ernst & Young Audit for the
fiscal year ended December 31, 2001 in accordance
with French professional standards. The annual financial
statements for the period ended December 31, 1999
were certified without qualification or reserve.
The financial statements for the year ended December 31,
2000 were certified without qualification and have given
rise to an observation in the report concerning
paragraph 2 of the footnotes to the consolidated
financial statements concerning the adoption of rule
99-02 of the CRC on consolidated accounts and the
related change in accounting method. The annual
financial statements for the period ended December 31,
2001 were certified without qualification or reserve.
The pro forma financial statements of Publicis
Groupe S.A. for the period from December 31, 1998 to
December 31, 2000 established under the responsibility
of the Company, have been examined by us in
accordance with French professional standards. During
the course of this examination for which a report has
been issued by the Statutory Auditor and contractual
auditor dated April 23, 2001, the assumptions retained
provide a reasonable basis for presenting the significant
effects directly attributable to the acquisition of Saatchi
& Saatchi, the related pro forma adjustments give
appropriate effect to those assumptions, and the
accounting principles used are consistent with those
used to prepare the most recent consolidated financial
statements of Publicis Groupe S.A. Extracts from these
pro forma financial statements have been included in this
reference document.
Based on this due diligence, we have no comment to
make as to the fair presentation of the information
pertaining to the financial position and historical
accounts in this report.
Paris, April 26, 2002
The Statutory Auditors
Mazars & Guérard
Frédéric Allilaire
Isabelle Massa
Ernst & Young Audit
Bruno Perrin
121
SUPPLEMENTARY
INFORMATION
General information
on Publicis Groupe S.A.
and its capital stock
GENERAL INFORMATION ON
PUBLICIS GROUPE S.A.
Business name and headquarters
Publicis Groupe S.A. 133, avenue des ChampsElysées, 75008 Paris.
Legal form and applicable legislation
French Société Anonyme with a Management Board
and Supervisory Board governed by Articles L 225-57
and L 225-93 of the French commercial code.
Founding date and expiration date of charter
Founding: October 4, 1938
Expiration: October 3, 2 037 unless extended
Summary of corporate purpose
(Article 2 of the by-laws)
The company’s purpose in all countries is to directly
or indirectly:
- create and operate advertising in all its forms in any
manner no matter what its nature;
- acquire equity interests in French and foreign
businesses and companies.
Business and company registers
542 080 601 RCS Paris; CODE NAF 741 J
Fiscal year
It begins on January 1 and ends on December 31 of
each year.
Place where documents relating to the company
may be read: at the headquarters office
Statutory appropriation of earnings (Articles 28
and 29 of the by-laws)
Firstly, at least 5% of the profits less any previous
years’ losses are allocated to a legal reserve. This
allocation ceases to be mandatory when the said reserve
reaches one-tenth of the capital stock. It resumes when,
for any reason, the reserve falls below this threshold.
122
The earnings which may be distributed consist of
the net income for the year minus any previous years’
losses as well as any amounts to be set aside in reserves
pursuant to the law and by-laws plus any retained
earnings.
From this profit, an initial 5% dividend to be paid to
the shareholders is deducted on all paid-in unredeemed
shares. Should the earnings for a given fiscal year be
insufficient to pay this dividend, it may be paid out of
the retained earnings of future years.
From this surplus and acting on a proposal from the
Management Board, the General Shareholders’ Meeting
is empowered to withhold an amount it deems
appropriate. This sum is either to be carried forward to
the next fiscal year or to be set aside in one or several
reserves for either general or special purposes. The
General Shareholders’ Meeting determines how the
funds are to be allocated or used.
Any remaining balance is allocated among the shares.
The General Shareholders’ Meeting, which is called
to approve the year’s financial statements, is empowered
to grant to each shareholder, for all or part of the
dividend distributed, an option to have the dividend paid
in cash or in shares pursuant to legal and regulatory terms.
Shareholders’ Meetings
(Articles 19 to 24 of the by-laws):
The General Shareholders’ Meeting is open to all
shareholders, no matter how many shares they hold. The
meetings are held under the terms, forms and deadlines
set by law.
Representation and admission to Shareholders’
Meetings:
The right to take part in Shareholders’ Meetings is
reserved for:
- owners of nominative shares that are listed on the
company’s share register;
- owners of bearer shares, subject to the delivery of a
certificate of share ownership by the authorized account
holding intermediary, at the place indicated on the
meeting invitation.
Office – Attendance sheets - Votes
Each member of the General Shareholders’ Meeting
has as many votes as the shares he holds or represents,
without limit. However, a double voting right is
conferred on registered shares held over two years
(Extraordinary Shareholders’ Meeting of 14 September
1968).
Any vote to remove the double voting right, which
falls under the jurisdiction of the Extraordinary
Shareholders’ Meeting of 14 September 1968, is also
subject to approval by the special shareholders’ meeting
of holders of those shares bearing double voting rights.
The votes are expressed by a show of hands, unless a
secret ballot is requested by one or several shareholders
who together represent one-tenth of the capital stock.
Statutory thresholds which must be declared
(Extraordinary Shareholders’ Meeting of 17 December
1993 - Article 7 III of the by-laws)
“Any individual or moral person, acting alone or in
concert, who holds or has just held in any manner at all
in the sense of Article L 233-7 of the French
commercial code, a fraction equal to 1% of the capital
stock or any multiple of this percentage, must report to
the Company the total number of shares that he
possesses by means of a registered letter with return
receipt requested mailed to the company headquarters
within fifteen days from the time one of these thresholds
is passed. In the event that the number or the allocation
of voting rights should exceed the number or allocation
of shares, the aforementioned percentages would pertain
to the voting rights held. This obligation also applies
each time that the fraction of capital stock or voting
rights held falls below one of the thresholds stipulated
in the above paragraph.
In the event that one of the above provisions is
breached, the shares in excess of the fraction which
should have been declared are deprived of voting rights
up to the expiration of a two-year period following the
date the notification is legalized. Except where one of
the previously cited thresholds stipulated in Article
L. 233-7 is passed, this sanction shall only be applied at
the request of one or several shareholders holding at
least 1% of the company’s capital stock, as recorded in
the minutes of the General Shareholders’ Meeting.”
GENERAL INFORMATION
ON THE CAPITAL STOCK
Composition of the capital stock
The capital stock amounted to €55,839,998.40
euros at 31 December 2001 divided among
139,599,996 shares of €0.40 par value.
At January 1, 2001, after converting the 2.5 franc
par value into a €0,40 par value, the capital stock was at
€55,287,928 divided among 138,219,819 shares of
€0,40 par value.
Raising the par value resulted in a capital increase by
capitalizing €2,609,238 of reserves.
Authorization to issue shares
The Extraordinary General Meetings of Publicis
Groupe S.A. held on November 27, 1987 and June 21,
1991 authorized the issuance of 616,800 shares of
25 francs par value in the form of stock options. In
addition, as part of the merger-takeover of Publicis
Communication by Publicis Groupe S.A., which took
place in December 1998, the 62,397 options granted
and not yet exercised on the absorbed company’s books
at the merger date were taken up by the absorbing
company after being converted into 935,970 options to
subscribe to Publicis Groupe S.A. shares at €0.40 per
value.
Moreover, the Extraordinary General Meeting of
August 29, 2000 authorized the Management Board to
grant share subscription or purchase options, subject to
legally-imposed limits.
The options were all awarded to the members of the
administrative and management bodies of Publicis
Groupe S.A., the parent company or its principal
subsidiaries.
All the information pertaining to these option plans
appears in the notes to the consolidated financial
statements.
Under the share exchange offer filed by the company
involving Saatchi & Saatchi securities, the Extraordinary
General Meeting of August 29, 2000 authorized the
issuance of a maximum of 46,096,133 shares of 2.50
francs par value in exchange for all of the Saatchi &
Saatchi shares tendered. The Meeting also decided on
the issue of a maximum of 46,096,133 contingent value
rights (CVR) under which one CVR is to be granted for
each Publicis Groupe S.A. share provided in exchange for
123
SUPPLEMENTARY
INFORMATION
Saatchi & Saatchi shares contributed. This authorization
was renewed by the Extraordinary Shareholders’ General
Meeting of June 14, 2001.
The Shareholders’ General Meeting of August 29,
2000 authorized the Management Board to increase the
capital stock, either in one or several operations, subject
to a maximum of €30 million, with or without
elimination of pre-emptive rights. This authorization
has been superseded by the one given by the
Extraordinary Shareholders’ General Meeting of January 9,
2002 to increase the capital stock, either in one or
several operations, up to a maximum nominal value of
€40 million, with or without elimination of preemptive rights, including during the period of a takeover
or exchange bid.
The Extraordinary Shareholders’ General Meeting
of January 9, 2002 also authorized the Management
Board to issue bonds or other credit instruments up to a
maximum nominal value of €800 million. In addition,
the Meeting authorized the Management Board to issue
new shares for a total value of €2,800,000, reserved for
beneficiaries of company savings schemes and/or multiemployer defined benefit plans.
BREAKDOWN OF CAPITAL STOCK
AND VOTING RIGHTS
The breakdown of capital stock and voting rights as
of December 31, 2001 appears in the first part of the
present report in the section “Publicis on the stock
market”. Other than the shareholders mentioned in this
table, there are no other shareholders, to the company’s
knowledge, who hold over 5% of the capital stock or
voting rights.
Following the death of Marcel Bleustein-Blanchet,
Somarel’s capital stock was restructured in April 1998 to
partner friendly investors with members of the group’s
personnel and top management in France and abroad.
By way of information, we are reporting Somarel’s
ownership structure as it is known today once Sophie
Bleustein-Blanchet’s inheritance was liquidated. The
capital stock is now held by Elisabeth Badinter
–51.29%, Sophie Dulac – 7.98%, institutional investors
–18.55%, Publicis group employees –18.55%, Michèle
Bleustein-Blanchet –2.42% and Nicolas Rachline – 1.21%.
All of these shareholders have signed an agreement
124
aimed at ensuring an ongoing control exercised by
Somarel. The agreement expressly stipulates that
Somarel merge with Publicis by June 30, 2003.
The approximate number of shareholders is 70,000.
At December 31, 2000, the employees did not
directly hold any material equity stake in the company.
Aside from Mrs. Elisabeth Badinter’s holding, which
appears in the table showing the breakdown of Publicis
Groupe S.A.’s capital stock, no other member of the
Supervisory Board and no member of the Management
Board held a significant equity stake in the company.
As part of the authorizations for the company to
repurchase up to 10% of its own stock, granted by the
General Shareholders’ Meetings held on June 25, 1998,
December 11, 1998, June 22, 2000, August 29, 2000
and June 14, 2001 (COB visa no. 01-627), Publicis
Groupe S.A. repurchased in 2001 4,630,427 of its own
shares. A plan was implemented to allocate the
repurchased shares under the authorization given by the
General Shareholders’ Meeting of August 29, 2000.
Moreover, none of the treasury stock is held
indirectly nor is there any shareholders’ agreement which
has been declared to the securities market authorities.
Information relating to the
business of Publicis Groupe S.A
.
Publicis is the world’s sixth largest advertising firm
with offices in 102 countries on five continents and
182 cities. It has two major global networks: Publicis
Worldwide and Saatchi & Saatchi Worldwide and a third
network, Fallon Worldwide, with a leading-edge creative
positioning, operating out of several key “regional hub”
countries. Finally, Publicis has one of the largest global
communications networks specializing in healthcare,
since its acquisition of Nelson Communications and is
the third ranking global player in media consulting and
buying with its Optimedia and Zenithmedia networks
(via The Zenith Optimedia Group, which is
75%-owned by Publicis and 25%-owned by Cordiant).
Publicis has 20,600 employees worldwide. In
addition to its enviable international position, Publicis is
the leading European network, ranking amongst the topfive in France, Germany, the UK, the Netherlands,
Spain, Italy and Switzerland. Publicis now ranks among
the ten largest communication groups in the United
States and Canada. It is well represented in Asia, Latin
America and the Middle East.
Publicis is proud not only of its multinational
clients (which make up about one-third of its sales) but
also of its role in promoting the leading brands in the
various countries in which it operates.
The group’s advertising activity accounts for around
two-thirds of revenues
Moreover, Publicis has substantially bolstered its
marketing and specialized communications units, which
account for one third of its total revenues. These
activities are organized the following way:
• Marketing services with Frankel, The Triangle
Group and Publicis Dialog in 22 countries (United
States, France, Germany, United Kingdom, etc.).
• Healthcare communications with Nelson
Communications and specialized units in the Publicis
and Saatchi & Saatchi networks.
• Corporate communications, consulting and public
relations with Publicis Consultants, present in Europe
and the United States.
• Communication focused on Human Resources
with Media System, a French organization that belongs
to the RAN international network.
• Interactive communications with specialized units
like Publicis NetWorks, Net Intelligenz and Publicis
e-Brand along with interactive departments in advertising
network agencies.
• Media buying and consultancy, with The Zenith
Optimedia Group (Optimedia and Zenithmedia
trademarks), with a presence in 59 countries.
Publicis is also a major player in the media sales
sector. Its Médias et Régies Europe division sells
advertising space (billboards and public transport) with
Metrobus, Publex, SB System and Somupi. It also
sells space in French newspapers and magazines like
Le Monde, Libération, Pariscope, L’Evénement du Jeudi,
Marianne, Télé Z and the Nouvel Economiste. In radio,
the group works through Europe 1 in France and
Intervoz Publicidade in Portugal. Its Médiavision
subsidiary sells cinema advertising space in several
European countries.
In parallel with the Group’s core communications
activities, Publicis is involved in retailing with the
Publicis Drugstore, on which refurbishment work began
in January 2002.
125
SUPPLEMENTARY
INFORMATION
MAJOR CLIENTS
INVESTMENT POLICY
Number
of countries
Number
of years
Publicis Worldwide
Nestlé
Renault
British Airways
Carrefour
Club Med
Coca Cola
Ericsson
Hewlett-Packard
L'Oréal
Sara Lee
Siemens
UBS
Whirlpool
Inmarsat
Hermès
Tefal
Arc International
57
34
64
10
37
29
36
90
70
12
23
32
48
79
22
18
12
50
39
7
17
4
8
3
6
23
39
11
4
13
6
5
5
2
Saatchi & Saatchi Worldwide
Johnson&Johnson
Toyota
Procter & Gamble
Sony Consumer Electronics
Visa
DuPont
Diageo Guinness UDV
General Mills CPW
25
30
75
36
17
10
28
31
31
27
81
3
15
53
12
78
Global clients
Major clients
Fallon Worldwide
United Airlines
EDS
Timberland
Citibank
Ralston Purina
BMW of America
Archipelago
Georgia Pacific
Holiday Inn
126
Number
of years
5
3
1
2
12
7
2
2
6
Research
The Group’s policy with regard to research is detailed
in note 1.2 to the consolidated financial statements.
Major investments made over the past three years
In 1999, the Group continued very actively to roll out
its globalization strategy that began in 1996 and bolstered
its positions in several areas worldwide:
• in Asia, it acquired the Welcomm agency in Korea,
AD Link in China and AMA in the Philippines;
• in the Middle East, it took control of PubliGraphics, which is based in Lebanon and has offices in
seven countries of the region.
• in the United States, Publicis bought out Burrell
Communications, one of the most reputable publicity
agencies directed at the Afro-American community and
urban youth.
Net acquisitions totalled €51 million. Other
investments came to €114 million of which 58 million
was used to purchase treasury stock.
The year 2000 was exceptionally rich in events with
major strategic implications. This resulted in a large
amount of investments made during the year. The major
transaction was the Saatchi & Saatchi acquisition,
providing Publicis with a second high-quality global
network. However, this acquisition was paid for in Publicis
shares following an equity issue, thereby not adding to the
capital expenditures in 2000.
Publicis made a large number of acquisitions,
particularly in the United States. The companies acquired
were:
• Fallon, a high-prestige advertising agency, allowing
the Group to lay the foundations for a third global
advertising network;
• Frankel, a leader in marketing services;
• DeWitt Media, an agency specialized in consulting
and advertising space which enabled us to introduce the
Optimedia brand in the United States;
• Winner Associates, a public relations agency;
• Nelson Communications, the largest healthcare
advertising network made Publicis number one in this
sector. This acquisition was partly paid in Publicis stock.
In addition, the Group continued to expand into Latin
America by acquiring Publicistas Asociados, Peru’s biggest
agency. Publicis bolstered its German network by acquiring
the Boebel Adam agency. The Group also invested in
interactive communication by forming Publicis.Net, whose
purpose is to group together the Group’s equity
investments in the web agencies acquired worldwide.
All of the deals for the year 2000 taken together added
a total of €1.1 billion to gross margin. Publicis spent a
total of €540 million net of disposals to make these
acquisitions.
Other investments totaled €136 million, of which
102 million went to investments in fixed assets and 34 to
repurchase shares.
Throughout 2001, Publicis has focused its
acquisition strategy mainly on specialized communication
agencies and has finalized an agreement with the UK-based
company Cordiant leading to the creation of The Zenith
Optimedia Group, a top-tier global player in the field of
media buying and consultancy:
Publicis has bought up several agencies specialized in
direct marketing, sales promotion and CRM, including
Fisch.Meier.Direkt, the leading Swiss agency in this sector,
The Triangle Group, the UK’s number one independent
group and a veritable pioneer in sales promotion, and two
US-based agencies, FusionDM and Creative AIM.
Publicis acquired Carré Noir, one of France’s top
design agencies.
The Group has reinforced its offering in a number of
areas pertaining to institutional and financial
communication through the acquisition of Ecocom in
France, as well as two American organizations, Fabianne
Gershon & Associates and the Hudson Stone group.
On the booming market of communication aimed at
the Hispanic population in the United States, Publicis has
acquired a controlling interest in the agency Sanchez &
Levitan as well as in the Dallas and Los Angeles branches
of the Siboney group.
In September 2001, Publicis and Cordiant created
The Zenith Optimedia Group by combining their
respective media buying and consultancy operations,
Zenithmedia (previously 50%-owned by Saatchi & Saatchi
and 50% by Cordiant) and Optimedia (100% Publicis).
The resulting company, in which Publicis holds a 75%
stake and Cordiant a 25% stake, has been rated the world’s
number three player in the field by the trade magazine
Advertising Age.
In addition, Publicis has also extended its footprint in
Asia though the acquisition of the Indonesian agency
Metro Advertising.
All told, these acquisitions have brought in about
€70 million on a full-year basis. A total of €77 million
were set aside for the acquisition of subsidiaries, but if we
take into account the cash held by the acquired companies
(especially Zenithmedia), these acquisitions, net of
disposals, have provided the Group with €164 million in
additional resources. Other net expenditures on tangible
and intangible assets amounted to €92 million. The
repurchase of treasury stock cannot be classified as an
investment, owing to the fact that the shares repurchased in
this way are to be used in employee stock option plans and
are thus accounted for as cash and cash equivalents. The
Group spent a total of €119.8 million on repurchase of
its own shares.
Future investments
The Group plans to concentrate its investments in
three areas:
• continued growth in specialized agencies and
marketing services, in order to extend its holistic difference
approach to its clients;
• consolidating our advertising positions by country
in key geographic areas (Europe, North America and
South America).
Exceptional items and litigation
The Chairman of the Management Board is not aware
of any exceptional items or legal disputes that could have,
or has had in the recent past, a material effect on the sales,
earnings, financial position or business assets of Publicis
Groupe S.A.
Insurance and risk management
Coverage of different risks is handled centrally at
Group level in order to allow for a more comprehensive
view of the risks involved and a more targeted choice of
insurance programs in terms of coverage quality and cost.
Regarding most liability risks, the guarantees
subscribed by all Group subsidiaries generally meet the
standards prevailing in the United States.
In the field of property damage and business loss, the
necessary guarantees have been worked out so as to take the
specific situation and local environment of each subsidiary
into account.
127
SUPPLEMENTARY
INFORMATION
Administrative, management
and supervisory bodies
Meetings of the Supervisory Board and the
Management Board
The Supervisory Board meets every three months to
consider the quarterly report submitted by the
Management Board.
The Management Board meets every month.
If applicable, these two management bodies meet, on
an exceptional basis, as often as required by the
company's interests.
Employee profit-sharing schemes
Special committees
At beginning of fiscal year 2000, two committees were
created:
• the nomination and compensation committee continued
its work regarding the Group's management compensation
policy. The committee validated the guidelines of the
compensation system and the stock option plans
established during the year;
• the audit committee continued to carry out its mission,
notably on the occasion of the approval of the fiscal year
2001 accounts.
Profit-sharing and stock ownership
There is no comprehensive staff profit-sharing scheme other than the statutory one applied to the Group’s French
subsidiaries.
Stock subscription or purchase options
Stock subscription and purchase options
to the leading ten non-officer employee allotees
and options exercised by the latter
Number
Weighted
of options granted/ average
subscribed or purchased price
Options granted in the fiscal year by the issuer and by any company
included in the scope of option allotment to the ten employees
of the issuer and any company included in the scope of option
712,705
allotment who were granted the highest number of options
(aggregate data)
Options held against the issuer and above-mentioned companies
and exercised during the fiscal year by the ten employees of the
540,242
issuer and these companies who subscribed or purchased the highest
number of options (aggregate data)
(1)
(2)
Plan
29.79
12th tranche (1)
(2)
(2)
Allotment of options contingent upon achievement of objectives.
Shares coming from the Saatchi & Saatchi acquisition were converted using the same conversion ratio used at the time of the acquisition of Saatchi & Saatchi
by Publicis (18,252 Publicis shares for 100 Saatchi & Saatchi shares).
128
Recent developments
At the beginning of 2002, Publicis carried out two
acquisitions in the field of specialized communication:
the Japanese relationship marketing and public relations
agency Gravitas and the American lobbying firm Johnston
& Associates.
In January 2002, Publicis floated an Océanes issue
(bonds convertible into or exchangeable for new or
existing shares) for a total of €690 million, with a term
of 16 years and a 2.75% yield to maturity as a means to
restructuring its debt (thereby achieving longer maturities
and lower average interest expense). This operation
followed upon the issue in December 2001 of a bond
exchangeable for Interpublic shares for a total of
€200 million, with a 2% coupon and a 5-year term.
On March 7, 2002, Publicis announced a major
strategic undertaking: its merger with the US
communication firm Bcom3 and the signing of a strategic
alliance with Dentsu Inc., the number one communications
group in Japan. The result of this operation is the birth of
the world’s fourth largest communications group, second
largest media buying and consultancy firm (according to
Advertising Age) and the emergence of the only
multicultural communications group in the world,
welding together a European, an American and an Asian
firm for the benefit of its clients. The new group, which
will retain the name Publicis, should generate about €4.6
billion in revenues.
Valued at €3.4 billion at the time of the negotiation,
this operation will be financed in the following way: one
half by issuing new shares, one fourth by issuing Oranes
(bonds repayable in new or existing shares) and one fourth
by issuing Obsa (bonds with warrants).
Finally, as part of this agreement, Dentsu is to sign a
12-year shareholders agreement with Mrs. Elisabeth
Badinter, receive 15% of voting rights in Publicis Groupe
S.A. (with the commitment not to exceed this proportion)
and be granted two seats on the Supervisory Board. This
operation will be submitted for approval to the
shareholders as well as to the US and European authorities.
As regards Publicis, this transaction will be put before
the Ordinary and Extraordinary Shareholders’ General
Meeting of June 18, 2002, with finalization scheduled for
June 2002. This operation will be fully detailed in
documentation available to the public.
129
SUPPLEMENTARY
INFORMATION
2002 Financial Calendar
2001 billings and revenues (12 months)
February 12, 2002
2001 annual results
March 5, 2002
Release of annual report
May 2002
First quarter 2002 billings and revenues
May 14, 2002
Shareholders' Meeting
June 18, 2002
Dividend payment date
July 10, 2002
Second quarter 2002 billings and revenues (6 months)
August 12, 2002
Results as of June 30, 2002
September 10, 2002
Third quarter 2002 billings and revenues (9 months)
November 13, 2002
2002 billings and revenues (12 months)
February 11, 2003
130
Table of concordance
To facilitate the reading of this reference document, the table of contents presented below permits the identification
of the principal sections of the application instructions of COB rule 98-01.
1. Reference document editor and independent auditors
1.1 Document editor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
1.2 Independent auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
1.3 Investor relations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
2. General information concerning Publicis Groupe S.A. and its share capital
2.1 General information on Publicis Groupe S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122
2.2 General information concerning the share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .101, 113, 123
2.3 Breakdown of share capital and voting rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51, 124
2.4 Stock markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
2.5 Dividends and yields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
3. Information related to the business of Publicis Groupe S.A.
3.1 Business overview of Publicis Groupe S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125
3.2 Revenues by segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
3.3 Evolution of headcount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
3.4 Investment approach
Research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
Major investments of the last three years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
3.5 Data on the business of major subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 to 60
3.6 Risks incurred by Publicis
Market-related risks (interest rate, exchange rate, shares, credit) . . . . . . . . . . . . . . . . . . . . . 80, 81, 87, 94
Exceptional items and litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
Insurance and risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
4. Patrimony – Financial situation – Results
Summarized statutory financial statements of Publicis Groupe S.A. . . . . . . . . . . . . . . . . . . . . . . . . 109 to 117
Consolidated financial statements of Publicis Groupe S.A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 to 106
5. Administration, management and supervisory bodies
Supervisory Board and Management Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46, 47, 67 to 70, 128
Special committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46, 128
Directors’ shareholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65, 97
Employee profit sharing schemes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
6. Recent developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
131
Consulting, copy,
design and production by
26, rue Murillo
75008 Paris - France
Tel. : +33 (0) 1 56 21 20 13
Illustrations:
Sophie Pierre
Photographs:
J. Dailey,
H. de Oliviera,
P. Zamora.
132
Publicis Groupe S.A.
133, avenue des Champs-Élysées
75008 Paris - France
Tel. : + 33 (0)1 44 43 70 00 - Fax : + 33 (0)1 44 43 75 25
www.publicis.com and www.publicis.fr