Publicis Groupe SA (ADR) (OTCQX:PUBGY)
Q2 2016 Earnings Conference Call
July 21, 2016 04:00 AM ET
Maurice Levy - Chairman and CEO
Jean-Michel Etienne - EVP and CFO
Charles Bedouelle - Exane BNP Paribas
Annick Maas - Liberum
Lisa Yang - Goldman Sachs
Tim Nollen - Macquarie Research
Adrien de Saint Hilaire - Morgan Stanley
Julien Roch - Barclays
Conor O'Shea - Kepler Cheuvreux
Tom Singlehurst - Citigroup
Brian Wieser - Pivotal Research Group
Chris Collett - Deutsche Bank
Bonjour, everyone. And as Mark said, welcome to our first half 2016 earnings call. Jean-Michel is here, and sits next to me, and he will walk you through the financials. There is another Jean-Michel, Jean-Michel Bonamy, who is here as well, and he will be able to take any offline question you may put. So, while you will read this disclaimer that our legal department always insists on, I'm going to share a few introductory remarks.
It will come as no surprise to all of us, unfortunately to say that we have been going through geopolitical turmoil and very difficult time lately. Over the last few days we had to cope with the Bastille Day massacre in Nice, a failed coup in Turkey and the renewed racial tension in the U.S., not to mention, icing on the cake, Brexit. With regard to our industry and keeping everything in proportion the ride proved bumpy as well. On behalf of the ANA, K2 Intelligence released its media transparency report followed by Ebiquity & FirmDecisions' guideline report. Comment on these two reports have been plentiful, to say the least, so I will not add anything.
Now, at Publicis Groupe level the period has been of the utmost importance. As you recall, back in December 2015 we announced a game changing transformation plan for our organization. In the opinion of many people implementing such a program would have taken two years to three years. As for us, we were convinced that it was a very kind of transformation you can only succeed when going all out on it, and at the speed of light. That's the reason why we decided to do it in six months. Saying that teams have been up to the challenge is an understatement. They have been fantastic within the impossible guideline -- deadline, sorry. So, kudos to them, and a big thank you.
Building on Saatchi & Saatchi motto, nothing is impossible, the teams even managed to succeed two very ambitious initiatives simultaneously. The first one is a celebration of Publicis' 90th anniversary. And instead of gazing at our past victories, we decided to look forward. So, no coffee table book, no fancy party, but rather a future proof project to give 90 startups and project a leg up with funding and mentoring. A thrilling and successful mission with the group of -- with the support of the entire Group, most notably, Elizabeth Badinter, the Chair of our Supervisory Board who has been there and followed everything personally.
Second, and in partnership with French leading business newspaper Les Echos, we successfully launched a global landmark event in digital innovation, [indiscernible] technology. The idea was to showcase the latest innovations, and to force the genuine collaboration at scale between companies and startups. The numbers speak volumes of what was borne there. 5,000 start-ups and over 45,000 visitors and we were extremely proud to put France on the global map for technology and for the future. As you can see, the teams have been very busy. I do want to pay tribute to all of them, the Group transformation, Viva Technology, Publicis 90. The over arcing principle has been always the same, who dares wins.
Coming back to Publicis Groupe transformation, we have dared, definitely, we have dared. Our new organization is already bearing fruits. With some great wins and initiatives, it bodes very well going forward as solution hubs work hand-in-hand like Publicis Communication and Publicis.Sapient, with the newly created Sapient Inside. This shows how relevant this transformation is, how powerful is the Power of One concept, both for our clients, who have been supportive from day one and for our talents. I must say that the teams within the Group made no mistake about it, they embraced it at once with great enthusiasm. However, this transformation was no mean feat, obviously. Out of the difficult and daunting tasks I have had to complete during all my long life, this one was one of the most difficult, no question about it.
Many talents within the Group got new roles, new scopes, new responsibilities, all our systems had to change, new accounting and financial breakdown had to be put in place, and last but not least, talent had to be properly trained and supported within this new environment. And, at the very same time, we also had to best serve our clients and to meet all of our objectives. As you know, last year's budget clauses were supposed to progressively take a toll on our growth and our results with a deep growth wise in Q2 and a further decrease in Q3 and Q4. Yet, thanks to the Power of One mindset, and the collaborative effort of everyone, we managed to evade the headwinds and to lessen this impact on H1. At the end of the day, our numbers are satisfactory. Some more enthusiastic than me would say that they are very satisfactory. I suggest that we now discover them together before Jean-Michel walks us through the H1 result.
As I said, satisfactory numbers. We have posted solid H1 earnings for all our indicators. Revenue are up by 4.6% in reported term; 7.1% excluding ForEx. And organic growth is at 2.8%. If we look at Q2, reported growth is 0.9%, due to lot of currency exchange effect; and excluding those effect, it's up by 4.6%. Organic growth is at a very good 2.7%. Operating margin are up by 5.1%. The rate of our operating margin is at 13%. And Group net income is up by 5%. Headline EPS, on diluted basis, is up 7.7%. And our free cash flow before change in working capital, up by 23.1%. So as you can see good numbers.
If we now go down to a few more details, and if we look at the slide that we have currently on the webcast, and on the Publicis website, you have the Q1 numbers that you already know well, Q2, and H1. Revenue is at the level of 4.753 billion, compared to, in 2015, 4.542 billion, so the reported growth 4.6%, as I said and excluding ForEx, 7.1%. Organic growth, as already mentioned 2.8%. The breakdown by geography regarding Q2 is quite interesting to watch, and I suggest that we stop a little bit on the numbers by main geography.
Europe. Europe is in organic growth, up by 7.3%. I must say it's long time that I have not seen such a number as far as Europe is concerned and we will see in detail but there are a lot of good news all over Europe; it's not only something which is limited to one or two countries which are making the difference.
North America is, unfortunately at let's say even slightly below, minus 0.1%; this mainly due to the impact of the losses of last year. And it shows, and, I must say that it will still show, in Q3. Asia Pacific, up by 5.5%, Latin America positive, 4.8%, and the region which is slightly negative is Middle East Africa. But, as we know, it's a small region in term of absolute number minus 1.5% leading to a total of 2.7%. On H1, I will not go through all the detail but Europe is still very strong 5.5%; North America 1.4%; Asia Pacific, 4.7%, Latin America, positive 0.9%, Middle East Africa negative, minus 0.5%, a total of 2.8%.
We have our traditional breakdown by country, and the list of countries, on the following slide. The breakdown is starting with below zero level, which is minus something. And we have a few countries, the most notables are Brazil, which is negative still, Canada, even if not a lot but Canada is negative, Colombia, Israel, Saudi Arabia, and Switzerland. If we move to the next level, which up between 0% and 5%, we have some very good countries, like Australia, Belgium, India; India is posting a good number. Malaysia, Russia. Russia has to be noticed, because we had, since a few years, a difficult situation in Russia due to the oil price decrease, and the situation locally. And it is very rewarding to see that the country is back. Spain is positive, United Arab Emirates positive, UK is positive, USA is positive. North America is negative, it is the combination of Canada and USA.
Interestingly, we are moving now to the other bracket, which between 5% and 10%. And we have a few very good and very important countries for us, China, France, Germany, Indonesia, Italy, Korea, Singapore, Taiwan. And above 10%, Argentina, Chile, Japan. Japan, which is back. Mexico, with a very good growth, the Netherlands, Norway, Poland, Romania, South Africa, Thailand, Turkey, despite the failed coup we had a first half which was very good, so we do hope the situation will improve locally and that the market will continue to grow, Ukraine and Vietnam. What is increasing when you look at all these numbers, all these countries is to see that the growth that we are facing is not coming from one singular country, or one singular situation. We see a lot of very good news building one after the after and creating that situation which is positive and which gives us faith for the future.
Interestingly, we are showing the breakdown on digital revenue and what we are doing, the growth, and the result of our investment in this field. And in H1, compared to last year, we have an increase of 10.2%. And when it comes to organic growth, it is 6.3%. So something which is very interesting and which demonstrate that our strategy since 10 years is really a good one and delivering. Our Group revenue, in term of digital represent today more than 53% and we will see what's going on when we are going through the breakdown by operation. So as I said we have roughly 54%, 53.6%. Europe is up in digital by 12.5%; North America by 2.5%; Asia Pacific 23%; Latin America a modest 1.3%; Middle East Africa 10.7%, which give an agglomerate number of 6.3%.
Analog is still declining. This is not big news. It's something that we already have seen. And I don't believe that it is interesting to go through all the details. You have all these numbers. And we will now move on to the H1 2016 result and Jean-Michel Etienne will walk you through and give you all the details you would like to know. Jean-Michel, the floor is yours.
Thank you, Maurice. We will start with the income statement. Maurice has already covered the change in revenue and our organic growth rate. Year-on-year as reported in the P&L our revenue is growing by 4.6%; you heard that already.
First-half EBITDA is exceeding, for the first time, €700 million, at €704 million. The operating margin in absolute value reached €619 million, growing by 5.1%; faster than the revenue. As a percentage of revenue our margin rate is at 13% at the same level as last year. But this year, as you know we have the Sapient numbers for the entire six months, when last year we had Sapient for only four months and three weeks. I will come back of course, on that margin analysis.
The amortization of intangible is a charge of €440 million; slightly lower than last year. The non-current income and expense line is again this year a profit, which includes mostly the partial disposal of Mediavision business in France in the field of media in movie theaters. I will come back on the financial expense later on, as well as on the income tax line, we will see that later. The Group net income is at €381 million, and increasing by 5% versus first-half 2015.
On slide number 12, we are presenting the details of the operating margin. The personnel costs before restructuring represent 63.5% of revenue. This is an improvement of 50 basis points versus first-half 2015. The restructuring costs for the first part of the year are at €55 million, versus €39 million last year. These costs have been incurred mostly to implement the new Group organization, announced at the end of 2015. Just a comment, en passant, as we say you will notice that Publicis is recording 100% of its restructuring charge in the operating margin to the contrary by the way of its European competitors. The other operating expenses, at €978 million, represent 20.6% of revenue, which is slightly higher than last year. We'll come back on this. Overall, this change versus last year indicates that despite the significant restructuring activity our cost base has been well controlled. And it is even truer if we take in to consideration the heavier weight of Sapient in our H1 2016 result versus last year. In a nutshell, this is important: we consider that we are on track to deliver our mid-year cost reduction program.
On slide 13 now, we are detailing a simplified source of change to operating margin rate. Even if the margin rate that we are posting in H1 is identical to the one we had in H1 2015, there are a few items which deserve to be explained in the year-on-year change. Starting with the exchange rate, the effect of the exchange rate is small, as you can see, at 10 basis points. The acquisitions have no effect on margin rate, year on year. Regarding personnel costs, we have generated 60 basis points of improvement on the margin rate, coming from a reasonable control on personnel costs.
And, as I mentioned already, restructuring costs have been especially high in first half, lowering the margin by 40 basis points. The other operating costs are also lowering by 40 basis points. And this includes an effect of non-billable costs to the client, and also, to a less extent, high occupancy cost on new leases. We are also including in this column higher costs incurred for the rollout of the ERP, which starts, by the way, to be a good success.
Our shared service platform continues its transformation to deliver services on a global and a regional basis when previously we were country based. Despite some transformation cost, our shared services have delivered efficiencies, net efficiencies, representing an improvement of the Group margin rate by 10 basis points. As a result, in this context of the reorganization plan that which has been deployed during H1, and the increased weight of Sapient margin, we are considering this margin rate at 13% as a good performance, and a clear improvement versus last year.
The slide 14 now relates to the net financial expense. The earn-out revaluation, which is one of the beauty of IFRS, by the way, indicates that the future results that we have for the entities under earn out are better than expected with the consequence of creating a charge of €10 million in the H1 P&L when last year we had a profit of €5 million, so a very significant swing of €15 million. This non-cash item explains mostly the change of net financial expense versus last year. And overall, the interest on net financial debt are slightly lower than last year at €39 million.
Regarding tax, on slide 15, we have an improvement of the tax rate of 80 basis points, which is significant. But first-half 2015 was the first period during which we were reporting Sapient in our numbers. This improvement that we have is, I say already, an improvement in H2 2015, shows that we are absorbing the higher Sapient tax rate as part of the integration process. And the rate that we are disclosing for H1 2016 appears to be sustainable. The headline earnings per share, fully diluted, is €1.81 and is increasing by 7.7%.
If we move now to the balance sheet on Slide 17, we have a reduction in the negative working capital of €123 million when last year this amount was increasing by €443 million. This is an area that we are managing cautiously, in the context of the pressure on payment terms; can come back on that later on. There are still areas of improvement in the working capital management to balance the increase on payment terms. Total shareholder equity is at €6.5 billion.
On Slide 18, the average net debt is at €2.7 billion, and is increasing versus first half 2015 as we did not have in H1 2015 the full effect of the acquisition debt of Sapient. The net debt at the end of June 2016 is €2.5 billion, showing a decrease of €450 million versus June 30, 2015.
On Slide 19, you will see the calculation of our financial ratios that we use for our own internal discipline. Average net debt-on-EBITDA, at 1.58, is slightly above our internal objective but this is due to the seasonality of our business and we should much lower at year end. Net debt-on-equity ratio as well as interest cover are well under our internal threshold.
On Slide 20, at the end of June the total liquidity is at €3.7 billion, with an improvement which is mostly due to our Club Deal facility, which has been increased in July last year from €1.2 billion to €2 billion.
On Slide 21, our free cash flow before change in working capital for the first half of the year is very strong at €564 million. This starts with the EBITDA at €704 million. Interest paid are slightly lower than last year. The tax paid is significantly lower than H1 2015, mostly due to reimbursement received in a few countries. CapEx are at €72 million, slightly lower than last year. And a significant part of this spending relates to installation costs in the context of real estate projects, and also relates to the implementation of our ERP. CapEx should be close to last year on a full year basis. Overall, free cash flow is increasing significantly by 23%.
Use of cash, on slide -- on next slide, at the end of June due to the seasonality of our business, the change in working capital for the first six months is always negative. For the first six months, however, we have a change at €1.1 billion, which is higher than last year; and this is mostly due to the extension of payment terms in some -- of some of our clients. Regarding the acquisitions, you can see almost no spending during the first part of the year, highlighting our strict financial discipline when focusing on integrating Sapient, and implementing also the new organization. Earn out and buy out are altogether represent payments slightly higher than last year at €137 million.
And this is my last slide. And Maurice will cover the end of the presentation. Thank you.
Merci. Merci, Jean-Michel. So we see where we are now, and what we, what are the conclusions that we can draw, and the outlook for the year. So the first thing, which is probably the most important that I want to show to you, is the Power of One, our end-to-end offering, which is currently receiving a very good welcome by all our clients. They see that as a sea change compared to the competition. They see that we are helping them to transform their own business, and that we are covering a full range of services, and particularly consulting and platforms, which normally are not part of what a classic communication group can deliver.
So we do that creation, media planning, media buying, obviously, the platform, the consulting, and the content. What is interesting is that this organization is completed. And it has been completed on time, as we planned it. And there is nothing that we can add or change to this organization. The structure has been put in place, the definition of the role of each one has been done, the group client leaders, which is a key role in the new organization, have been appointed, with one major objective, which is help our client to solve their problem. build their brand, accelerate their sales, and transform their businesses in order to be ready for the future.
We are a partner to our clients in order to leverage all our assets to bring the best of Publicis Groupe, offering in all the sectors in which we are playing, which is advertising, media, data, technology, commerce, omni-channelm consulting; and transformation. We have also put in place a program which is designed to build the capability and the skills of all our GCL in order that they can fulfill their roles to the fullest. This means that we need to help them understanding all their skills, how they can work together and how this can be put in motion for the best interests of our clients. And the first client training happened recently, it is in the first half of July, in New York City. And there is a full range of other sessions which are underway.
So, they are the GCL, which is the global client leader, have been appointed. They know what is their responsibility. The client know who they are. And our global client leaders are accountable with individual P&L per client. As I said we celebrated our 90th anniversary. I don't need to insist on. This is something which is quite unique. We wanted to pay tribute to the entrepreneurial spirit of our Publicis founder Marcel Bleustein-Blanchet. We got more than 3,500 applications coming from more than 130 countries by entrepreneurs, students and including by Publicis Groupe employees. 23% were coming from the U.S.; 18% from France; 14% from the UK; followed by Germany 7%, Israel 6%; and India, 3%. All sectors of the economy are represented and, obviously, marketing and communication; but also healthcare; fintech; retailing; and including some extremely sophisticated block change solutions. More than 600 projects that came from entrepreneurs from Publicis Groupe and 25 of the entrepreneurs' projects have been selected and rewarded. So it's great because it shows clearly that we are true to our values, we are true to our roots and we are true to our entrepreneur spirit.
The second interesting operation that we have put in place at the speed of light is Viva Technology. And this is to show that we are at the forefront of innovation. It's an international event. It's global by definition and it did took place in Paris in partnership with business paper Les Echos -- Groupe Les Echos. And it is dedicated to the growth of start-ups to the digital transformation of the large company, to innovation. For its first edition, Viva Technology brought together over 45,000 visitors of which tens of thousands of entrepreneurs, talents, executives, investors and academics. I'm not going through all the detail but I can assure you that this has been quite an impressive event with a combination which has never been seen before of blue-chip companies collaborating with start-ups and exhibition of technological innovation little bit as a modus CES and a unique lineup of speakers with absolute exceptional conferences, extremely interesting.
At the time of Viva Technology, we also signed a global strategic partnership with Tencent. This has been widely publicized. I'm not going to develop all the details but it's the first partnership of the like with all the element product line of Tencent which is China's largest Internet company. And this transcends Publicis Groupe's three solution hubs: Publicis Media, Publicis Communication, and Publicis.Sapient. The partnership will cover three key areas, future capabilities with the launch of a drugstore incubation facility to create, invest, and cultivate startups in the future in China. Data, Tencent will offer Publicis Groupe access to the vast and rich online behavioral data that they own. And content, the two companies will partner on the co-creation and co-investment of web native content. So this is something for which we are extremely proud. And we are grateful to Tencent for having decided to do this first-of-a-kind agreement with us. It is also a testimony to the leadership in digital technology that we have. And, obviously, with this kind of mock up we will see how we can develop new kind of partnership with other platforms.
In conclusion, what I would like to insist on is, in fact, three elements. The first one is to remind that we have solid first half of the year with something which you are all waiting for. So I do confirm the 2016 outlook, as we have announced it already in the past. Our Q3 organic growth will be impacted by last year's account losses. Obviously, we will work in order to weather that situation and improve our numbers as we have done in the last two quarters. We are seeing very good progress in delivering savings and Sapient synergies. And I would like to thank all the Sapient people for their collaboration, the spirit with which they are embracing the new Group. They are seeing also the vast array of development that they can have for the future. So, it's something which is extremely interesting and the people who had doubt on the reason why we have acquired Sapient have now the answer. This is boding extremely well with our concept of Power of One, and it is already delivering. And it is right on target of what our clients are expecting in order to build their own future.
We have already announced that we have a payout ratio which will be improving. I can confirm that this will happen in 2016 numbers, which mean that, based on the 39.5%, we will see at the AGM of next year an increase for 2016 dividend paid in 2017. How much this will be the privilege of the Conseil de Chevance. Regarding the potential impact of Brexit, I must say that I'm personally very sorry that our friends from Great Britain have decided Brexit. Obviously, we can only respect that decision. This is a popular vote. And even if they have not answered the right question with the right vote, they have expressed their issues and problem on other issues. But that's life, and we have to deal with this. When we will have to deal with this aspect on a European level, this will be the problem of the leadership of Europe. And I do hope that this will act as a very strong wake-up call in order to build a very strong Europe which will be a conquistador of the future.
When it comes now to something which is next to us and close to home, in 2015 UK represented roughly 9% of our Group revenue, and roughly 5% of our Group operating income. This is, obviously, normal because we were going through some difficulties. And things are improving. It is a country where we are [banking] on. We will continue. Even if they are not part of the EU, they are still part of the world, and of Europe. It is a resilient operating margin for us, because our revenue, as well as our operating costs are all located in the UK and they are on sterling-denominated. Therefore, the only consequence that we may suffer, if any, it is on the consolidated numbers when it come to ForEx.
Last, but not least, our reorganization has been completed. And this is big news for everyone; maybe not so much for the competition, but we are not caring about competition, we are caring about our clients. Our focus is, obviously, on execution and on profitable growth, and I can assure you that we have a dedicated plan for this.
To close with, our priorities for 2016 and 2017, the first one is transformation. We have finalized the transformation. We are working on the execution. The next one is to achieve our 2016 objectives. And we are all working very hard in order to deliver, and, hopefully, to over-deliver. On organic growth, we know that we have solutions and we have a concept which is a winning one; some people would say a killer [app]. And we will definitely reap the fruits of this killer app in 2017. And we are going to build now the funnel for 2017.
I would like to thank you for your attention. I'm now handing over to Mark, who will lead the conversation. Thank you. Mark, the floor is yours.
[Operator Instructions] We can now take our first question from Mr. Charles Bedouelle from Exane. Go ahead caller. Your line is open.
[indiscernible] Well done for the results. A couple of questions, if I may. The first one is around organic growth. Can you help us understand what will be the impact of the client losses, but also maybe what could be the impact of some of the client wins you recently announced, going in to Q3 and Q4? So that’s my first question. And on the second question, I wanted to understand a bit better what was happening with the personnel cost, and how we should think about it for the full year, and maybe going forward. Is it a big source of improvement, or was it any phasing effect? That would be very helpful. And then, my third question would be really housekeeping. Jean-Michel, can you give us an idea of what to expect in terms of ForEx and M&A contribution maybe for the full year? Thank you very much.
Jean-Michel will answer the question on personnel cost and ForEx. Regarding organic growth, in fact, what’d happened, and what we are working on currently, is two different streams. The first one is to present to our current clients and to new clients the new concept. And we are pitching, most of the time, with this new concept, which is the Power of One, as I explained already several times. We have been quite successful on this. We have the big win of Asda in the UK, which will deliver the biggest impact as soon as next fall.
So we are ramping up. And it is from, let’s say, September, mostly October, at the end of the year that we will see the impact of, the full impact of this win. The second is Walmart. And Walmart represented an end-to-end solution with all our capabilities. And this has been extremely well received. We are working on many aspects of Walmart, we will not go through the detail. But here also we can expect some negative effect, which is the loss of the media account, which happened, unfortunately, before we had been able to present our new concept otherwise, we believe we would have been able to keep it. And we will see the benefit from, roughly, the months of September, October.
The last win is, clearly, the win of GSK. And on GSK which is, which has been always a company working mainly with WPP and Omnicom, and, thanks to the Novartis merger, we have been invited to pitch. And we became, according to everything that we have understood, their second largest partner. So it shows that every time that we are presenting our proposal it does work. We will see now if it will be the case for some other pitches that are going underway. So we cannot expect a lot of impact of the wins in Q3 it will come mostly in Q4. The current losses represent roughly 300 basis points slightly less. We will see exactly what will be the numbers and there is another stream of growth that we have built since the beginning of the year, which is, with the collaboration of all our units together, to help the client and to increase our portfolio of services, and to win some order assignments. And this has been working extremely well. So we had a few wins in the old way. We have also a lot of increase, either as one shot, or on project basis, or on a continuous basis. So all this leads to lead us we will certainly have to face this 300 basis point of negative impact. But we will also be able, and we are working hard on this, to mitigate the consequence of these losses.
Jean-Michel, can you please answer the question of Charles on personnel cost and ForEx?
Bonjour, Charles. Regarding personnel cost, you have probably noticed that we had some restructuring costs, heavy restructuring costs, during the last part of 2015. At some point of time, this kind of investment is paying back. And we have some effect on the personnel cost improvement, obviously. So that on a full-year basis we are expecting roughly €100 million of restructuring costs, for the full year we spent -- we have incurred sorry, 55 million for the first half. We have still some costs to incur and some project to deliver, so this will continue. We are continuing our plan to improve the cost base, because this is in line with what we want to deliver also as part of our medium-term strategic plan, as you know.
Regarding ForEx, if we assume that the H1 rates applied in H2, ForEx effect should be minus €200 million on revenues. And acquisition, and the effect on M&A -- I mean acquisition, effect of acquisition on revenue should be a plus of between €200 million and €250 million.
One very quick follow up, if I may. Can you just tell us how did Sapient do over the quarter? And how you're thinking about it for the rest of the year? And that will be it. Thank you very much.
Organic growth, Sapient, has continued to perform extremely well. You remember that the first quarter was up by roughly 12%; and the second quarter is about the same region, so slightly less, but double-digit growth. So we are extremely pleased with the performance of Sapient. In terms of the margin?
Margin, that's clear that they are improving their margin as planned. Again, the plan is ongoing. And there is no surprise, and we are delivering what we have promised.
We can now take our next question from Mr. Annick Maas, Liberum.
First question is on the Q2 impact on the account losses on 2015. Because, if I understood correctly now, according to what you guide for Q3 that implies that the impact of the losses was less severe than you had expected in Q2. My second question is whether you could just a bit elaborate on the KPIs for the chief client officers, just to understand what [was] their performance? And then finally, I think a few weeks ago you guided that the UK ad market would be impacted by 80 basis points post-Brexit. Are you still happy with that claim? And what do you think will be the impact on other European countries?
It's not that the impact of the losses has been less than expected. It is the fact that the wins have been better than expected. And that is the good news. It's, unfortunately, the losses are what they are. And we are feeling the cost of these losses. And this will happen 'til the end of the year with something which will be tougher in Q3, and still tough in Q4. So the task is not to diminish the impact of the loss, it is what it is. It is -- the task is to increase the impact of the wins and to make sure that we are generating new revenues in order to mitigate the consequences of those losses. And this is what we have been doing.
Regarding the Group client leaders, the objective and the KPIs are fairly simple. The first one, above everything, satisfaction of the clients. We are there to best serve our clients. And clearly, the first thing on which they will be judged is that how the client is satisfied with our services, what we are rendering, if we are helping them growing their business, how we are bringing to them new solutions and satisfactory approaches. The second range of KPIs is regarding the way we work and, obviously, the collaborative approach with all the brands of the Group involved, or all the solutions. And it is something which is extremely important. It is not so much in order to cross-sell, even if we can have the idea of cross-selling. It is, above all, to best serve. And the best way to best serve our clients is to make sure that all our units are working in synergies and are delivering to our clients the services that they need in order to get ready for transformation; to help them getting the best platforms; and to, obviously, deliver the best strategies, the best communication tools, and the best services. So we are measuring this.
And last, but not least, some numbers, because if you cannot measure things you can hardly measure the performance. The way to measure the performance, at the end of the day, is growth; is profitability. And we expect to grow with our clients, which is the best sanction of their satisfaction; and also to have profitable growth, because we need to invest, we need to develop, we need to do a lot of things. And our clients need to deliver a profitable growth.
So this is what we have set as key objectives, key KPIs. Regarding the UK, as you know, we are in terra incognita because, and this bodes well with Liberum, nobody knows exactly what will happen in the future. We know that the people who have expressed a will and have defended the Brexit had not a clear plan. And today they are, we say, a blank sheet of paper. And they have to build the solutions for them.
In the European Union, it is about the same. They were pretty sure that UK will stay, and they will get a small positive vote, but a vote. And they are in exactly the same situation: they don't know exactly what will happen.
So, after the emotion, I believe that everyone will work extremely positively toward the future on trying to find the best solution. And Europe will be much stronger, because that is the clear objective; and it will be more united, because there will be less dissenting voice and more united voices. And UK will have to find a way to leave out of EU. I don't know, and nobody knows, exactly what the future will be.
We believe that if there is a deterioration, it will come very progressively, and it will not be a sharp decrease of any indicator. By the same token, in the UK we can also see a positive sign, because, due to the fact that the pound is losing traction and has been devaluated by more than 10%, there will be a more competitive approach as regard to export; and there will be some inflation, due to the increase of the imports. And, therefore, it's not impossible that at the end of the day things remain relatively stable.
Thank you and we move to the next question. Our next question there from Lisa Yang, Goldman Sachs. Please go ahead, ma’am.
Hi. Good morning. Well done on the results. I have a few questions, please. Firstly, is on Europe. Just wondering what has driven such a strong performance. If it’s the certain underlying markets improving, or is it comps, or you’re gaining share? And was curious to have also a view on the second half, especially, post-Brexit, if you could see this trend. The second question is on your U.S. media bundle operations, which obviously lost a few accounts last year. Just wondering how the underlying business is now performing, excluding the account losses. And are we beginning to see the real benefit from the reorganization?
And the third question is on your digital growth, especially in North America. It looks like it slowly abating in Q2 to about 1%. I understand part of that could be due to the account losses. But I was just wondering if in general you’re seeing more cautiousness from advertisers on digital in general because of the issue around fraud and measurement. And do you see that basically continuing and besetting the Chile budgets? Thank you.
So many questions. I will try to answer every one. And very good questions, by the way. Congratulations. Regarding Europe, there is two aspects. And it’s very interesting to look at this. The first one is that there is an improvement of most of the country’s situation. Spain is improving, Italy is improving, UK is improving France, Germany, the Netherlands, Poland, Italy. All the countries are improving currently. And due to our position, and due to the work which has been done with many of our clients, and due also to the strength of our teams, we are also winning market share.
So it’s both, a better situation of all the countries, and a better competitiveness of our group in all those countries. So that’s very clear. Regarding our media operation, it’s a tale of two cities. You have the former ZenithOptimedia, which in a high single-digit and you have Starcom MediaVest Group, who have been suffering most of the losses, which is suffering clearly, and in low single-digit. So what we are expecting is to see this recovery starting as soon as the second half. And we believe that there is no damage which has been done to our operation.
The work which has been done by Steve King in the reorganization, all the changes which happen, the new energy that we see, the new people in charge of the new responsibilities, et cetera, all this is delivering already some very good results. So we feel very comfortable with this. We think that it’s a bad story of the past. We are paying the price today. But we know also that we are building the future, and positively. So we feel very comfortable with the media operations and the way they are reorganized. Regarding digital, you are spot on.
The issue in the U.S. is clearly the fact that we have with all the media accounts which have been lost there is a big chunk of those media accounts which are digital led. And this is something that has an impact on our numbers. It will have still an impact in the second half of the year. And obviously we will be working very hard in order to mitigate this impact and in order to make sure that we are going to improve the situation. So we feel pretty good about this.
Now regarding the question that you have put which is the $1 billion question, which is about the fraud, we unfortunately know that there are some website which have been created with fake numbers fake viewers if we can call them that like this; and fake statistics. And they are used in programmatic mainly. And we know that it is robots or if you prefer engines which are clicking or which are opening the links in order to let people believing that these are real individuals.
We are extremely strict in our products that we have developed since already a few years ago, what was called, in the good old days VivaKi verified because we are checking everything and we are making sure that we are selling to our client something which is pretty solid. We cannot guarantee that it is 100% sure. But we have clear evidences that our verified approach which has been strengthened is avoiding a lot of these fake sites and avoiding a lot of the fraud. So we have an approach which is extremely cautious, extremely rigorous. And I believe that in the days to come we will see more and more attention paid to the fraud and there will be technology as well as serious solutions which will be put in place in order to diminish the level of fraud.
Is it going now to TV? No. TV is relatively stable and TV when I say it's stable, it's stable as the bulk. But the dispersion in TV has changed quite dramatically and we can expect to see this continue to go because of the development a lot of few -- of small channels which are talking some of the revenue. So we may face some big players having a diminished market share when we will see some newcomers grabbing a little bit of revenues.
So that's the kind of answer I can make at this point in time. We are following this very cautiously. And I suggest that you read also the latest report which has been issued by Zenith, which shows that in fact the great beneficiary of all the changes today is clearly mobile. And it's on mobile communication that we see the growth. And I suggest it's only a few days ago which has been published, that you read it carefully.
Thank you. And, Mark, we move to the next question.
Our next question now from Tim Nollen, Macquarie.
Could I follow up, please, on your comments on the second half? Just to be clear, the 300 basis points hit to organic revenue growth is in Q3? And secondly, on the restructuring just to be clear, I thought you were saying you've basically completed the organization now, but there's still €45 million cost for restructuring in the second half. I think if I understood that right. Could you please explain that?
And then, two other quick things. If you can please explain what's going on with Razorfish. You called that out in the press release saying that, that was what was still weighing on North America. I wonder if you could just give us some color on what's going on there. And then lastly, you also mention in the press release expecting to hit your objectives in 2018. Are you referring still to the 200 basis points to 400 basis points margin improvement when you say that?
Okay, Jean-Michel will take you through more detail on the restructuring. But the organization is completed. We are now moving to the execution. Execution, I will tell you something. You can expect that there will be improvement on our cost base for a relatively long period of time, because we are not going to take the whole benefit of the new organization as of today, or tomorrow, or in the next three to six months. We are building something which is extremely new, very different from any of our competitors and Jean-Michel will walk you through that. Regarding the second half, the 300 basis point of impact is something that we are expecting on Q3. It will be slightly less on Q4. But we are clearly having to face the losses that happened last year, this is obvious. On Razorfish, this is an ongoing process. And there are a few issues that we believe are well understood, well known, and on which we are working pretty well. And we don't believe that we will have major issues. Again, for 2018, I'm giving the floor to Jean-Michel, but we are definitely referring to our initial numbers.
I will start on that, on the plan on 2018, to start. The plan is the one which has been communicated. There is, in fact, through the implementation of the new organization, which was not planned, to be fair, when we launched in April 2013 this 2018 plan, this is of something new, in fact. There's something which is crystallizing, clearly, far better what we have said in 2013. Because this new organization is giving room for new areas of simplification, elimination of duplication with a seamless organization, which is something -- helping us clearly to deliver the 2018 objective. And the objective is to be in the lower part of the bracket, obviously, of between 200 basis point and 400 basis point. But this is clearly something that we want to deliver, and all the efforts are made in order to be ready for that.
Regarding the restructuring on the second part of the year, because this is your question, the new organization is in place, in fact, is in place; but a piece of the execution has to happen still in the second -- on the second part of the year.
In some countries, we speak about the small countries, where we have to put under the same roof all the agency within the same country. This is something which cannot be done in six month, definitively. But the leadership is in place; the structure is in place; we know who are the people in charge and we are monitoring very closely the delivery of the plan. So we will some costs, still some restructuring costs, in the second part of the year, linked to the implementation of the new organization.
There is also a part -- some effect of some plans which has been approved and which are not announce yet, which will be announce early Q3, since is moving from end of June to a -- in July, to be fair; which will happen in some areas, which could explain also that we will have still some costs coming from the new organization implementation in second part of the year.
And our next question from Adrien de Saint Hilaire, Morgan Stanley.
Adrien de Saint Hilaire
A few questions, please. First of all, the U.S. margin, or North American margin, let's say, were down quite a lot in the first half. Does that mean that the accounts you've lost actually were very profitable? Or is there something else behind that? Second question is on the free cash flow generation. You had a big working capital negative swing in the first half. What should we have in mind for the full year? And again, is that due to the account losses? But, on the other hand, you had strong cash generation before working cap with very low tax and interest payments. How does that end up for the year? And last question, on the reorganization, Maurice, I asked you last time around if you could share any KPIs around client or employee satisfaction. Do you have any update on that? Do you have any indication that employees are happy within the organization, perhaps, turnover, or satisfaction rate from clients and employees? That would be very helpful. Thank you.
Okay, the two first questions will be taken by Jean-Michel, and I will answer the last one.
U.S. margin, you highlight the effect of the budget losses, of course, which had some effect on the U.S. margin. But you notice also the low growth overall of the U.S., of North America as a whole, which, of course, explain the reduction in profitability in the U.S. And also, we are incurring some restructuring costs also in the U.S., which explains also the decrease in margin that you highlight.
Regarding free cash flow, including working cap, I mentioned the effect of new payment terms or payment terms extensions that we have from some clients. This is something which is very public, that you know. We saw that in the press. We have discussed that at length. But until now, we did not see that really in the numbers. It's coming now, because the implementation was on 2016. And some huge clients have clearly pushed the payment terms in a way which is creating some issue on the working capital. There is also an element which is, and this one could be absorbed on the second part of the year, and I hope that we’ll be able to do that, is the effect of the implementation of the new ERP on the management of working capital, which is normal, something which happen everywhere. All companies which have been going through that process have experienced the same type of issue.
There is an effect as we manage okay, and we implement. So there is, during a few months, some noise on the working capital management, and we will be able to come back on that. We have the experience when we did that already in a few other countries. I mentioned France. For instance, we had that two years ago. It did not appear in the numbers because overall it was small, but we had that effect also. Here, we are talking about the U.S. mostly, which is also something which is big, as you know, for us. And this should be absorbed at the end of the year. But the payment terms on clients, we will have it. So next year, you will see a change of working capital which could be more in line with what you have seen in the past. But this is a kind of reset, taking in to account the new payment terms.
Regarding the last question…
There is another one on the low tax paid system seeing that we will have definitively during the full year. But, okay, there is this reimbursement that we had, but we have paid more in the past, so we should not draw a conclusion on this. This is not permanent and forever. This means that we have paid more than we should have paid before.
So, in short, what Jean-Michel is telling you is that it will be difficult to bet that we will bring the effective tax rate much below the level.
This is something else. This is cash.
Yes, I know.
This is tax.
I know, but there is a consequence also. Okay, moving to your question regarding the KPIs and the changes, what we have done in the last few months is a huge change in the organization, in the scope of the responsibility of the people, the role that they had. Some people have been asked to do something else changed roles, changed dimension, changed kind of responsibility. And we also had to make some tough decision on all the aspects. So the implementation of the new organization went extremely well, despite the fact that there have been all these changes, simply because people believe very much in this new organization.
They see the impact that this has on the clients. They see also the interest for their own responsibilities and tasks. They see that they can have a responsibility which is much broader. They can speak about all the aspects. They are less entrenched in to some narrow specialization. And all this is something which is really highly motivating and seen by everyone as a very positive move, for the client the same. We have not at present time, a survey saying 95% is happy, 10% is unhappy and blah, blah, etcetera. We have not done it. It's too early to do. It will be done only at the end of the year. But all the signs that we can feel and in an organization which is based on people, humankind, individuals collaboration, etcetera, you feel it. You feel it immediately. You know if it's working or not. You know if the people are happy or not. And for the time being, we see a lot of enthusiasm, a lot of expectation and the fact that we got so early on and so quickly some wins and some very positive results, it's something which is very well received and generating enthusiasm. So this is an answer which is not based on hard facts, but on feelings; but all our industries are about feelings.
Merci, Adrien. We move to the next question.
Now we will take our next question from Julien Roch, Barclays.
My first question is on the account losses. You're now saying 300 basis point impact in Q3, and slightly less so like 250 basis points in Q4. At the Q1 you said 200 basis points in Q3 and 150 in Q4. Why do you feel that the account losses will be 100 basis points worse three months later? I would think it should not change because it's going to zero. That's my first question.
The second one is Reuters is saying there's a new CEO announce between -- or the new CEO should be announced between December and February. Can you confirm the timing; and maybe, clearly, you're not going to tell us who that is, but whether we can have an indication if it's an external or internal candidate? That's my second question.
And then, the third one is the impact of account win you say was mostly in Q4. You mentioned Asda, Walmart and GSK maybe you have an idea of the impact of those three. Merci.
The reason why I'm saying it's 300 basis point it's maybe 280 basis point it's circa 300 basis points is also because we have now a better understanding of the loss of the Walmart media account which at that time we had not a clear idea when this will start to happen. So you have now the full scope of what is going on. So there is nothing new and nothing big news on that front. It's just an adjustment, based on what happened since when. Regarding succession, it's too bad that you don't want me to tell you who is the successor. But as I don't want to disappoint you, I'm not going to tell you because you don't wish to know. What I have explained yesterday to the press is that there is a process, a process which is under the responsibility of the Supervisory Board. It's the most important task for the Supervisory Board. There is nothing more important for that Board than the nomination that they will be making on the various responsibilities and particularly the members of the [directorate], and the CEO of the Company. And this is something which will be made, as I said, between December and February, it is in that bracket of time, so a little bit ahead of the AGM. And for the time being, as far as I know, we are working only on internal candidates. So, that is for this aspect.
And regarding the account wins, which is the last question, it's a question of ramping up. And there are some negotiations which are not yet finished, for example, we have announced the deal we know, what it does encompass. We have not yet a clear understanding on the detail of the fees for Walmart. It is the same for GSK. We know for Asda because this has been already negotiated. So there are still a few things which are not absolutely decided, so I have to be cautious. But the one thing you can be assured of is that we are working all extremely hard in order that we can, as I said, diminish the impact of the losses, and growing the business. And our main objective is not the short term one. Obviously we are caring about short term, and we are working very hard, but our main objective is to build a very strong funnel for the future, and that is what we are working on for 2017. And we believe that we will start growing as we used to, at being one of the top performers of the industry.
The next question now is from Conor O'Shea, Kepler Cheuvreux.
Just a few follow ups on previous questions, if I could. First question, on the restructuring charges, I think, according to the guidance versus the second half of last year, the restructuring charges are scheduled to fall sharply, which could contribute maybe 70 basis points of margin growth in the second half of the year. I'm just wondering are there other factors which may work in the opposite direction to limit margin growth in the second half? I think Jean-Michel mentioned some new, some project launches; just wondering, specifically on bonus accrual, if there will be -- could be a sharper increase in the second half of the year than there was in the first half of the year. That's the first question. Second question on Europe, if we could just have a little bit more color on those agency networks that performed particularly well in the second quarter just so we can have a sense of how sustainable that improvement is. And then the last question on digital, you've obviously mentioned the pressure on the slowdown in the US, which is understandable. Also, according to the numbers, Latin America was sharply slower in the second quarter versus a very strong first quarter. Just wondering is there anything specific to explain that, or is there something more meaningful behind that trend?
Okay, Jean-Michel, Conor has a lot of questions for you.
Yes, the heavy ones.
Restructuring charges, yes, we have still -- I mentioned €100 million of overall charges for the full-year 2016, which is what we have in our plan. And the detailed plans that we have, the bulk will be, we have already a big part, €55 million at the end of June. We will have in Q3, and mostly July, something which will be pretty significant. Okay, compared to last year, last year it was different, it was different. The bulk of the restructuring happened during Q4.
So, restructuring, we have some hopes behind restructuring, is to get some payback, of course, otherwise, there is no value to this restructuring charge. But there are also some recruitments which have to be made to have this new organization, completely in line with the expectation. In some cases, we will have to reinforce the team. So it is something that we need to take in to consideration for the second part of the year; also, as a consequence of what we did in H1, this is something which has to be clear.
Regarding bonuses, usually, we should not multiply by two. The real life means that based on forecast, the internal forecast, we prepared the bonus provision for H1 based on internal forecast. And the reality of life means that the second part of the year we should have a bonus charge slightly higher. So, I guess I have answered your questions.
I will just amend a little bit the reaction of Jean-Michel on bonuses, as my hope is that we will deliver much higher bonuses to our people. They deserve it. And I hope that the second half will be so good that we will all be happy, including yourselves, that we have increased seriously the bonuses. Regarding now your question on Europe, Conor, what I can tell you is that we have most of our operation in most of the countries doing very well and improving.
Some are still lagging behind, but improving and some are moving full steam ahead. And you have some digital operation, you have Publicis Worldwide, which is doing a very good job, you have Zenith, Starcom, also you have Sapient. So there is many of our operations which are really moving full steam ahead. And we feel very good about most of the operation. We had some issues, for example, in the UK. We have not yet fully recovered. But we are in a very good position, and growing, and we see that we are improving. It’s the same in Germany, the same in Italy, the same almost everywhere. So we, as I said, it’s not just one operation in one area which is doing extremely well, it is something which is widely spread.
Regarding LatAm, yes, it is a market situation. It is also the fact that at the end of the first quarter we delivered some project which has been able to invoiced to the client that generated revenue. And we are not very much concerned. But it is a much more a market affect than anything else. And, as you know, there are a few countries which are lagging behind in terms of digital. They are, the penetration is not big enough. This is the case of LatAm, this is also the case of India, it is the case, definitely, of Africa. So we are working on, and we hope to benefit from the improvement of the market in the months to come. And we move now to the next question. I don’t know if we are at the end, or if there is more, but please, Mark, the floor is yours.
We have a number of questions at the moment. We have Tom Singlehurst from Citi.
Yes. Good morning, Maurice. Good morning, Jean-Michel, I feel a bit bad asking a question. Dragging on a bit. I had two very quick ones. The first one is just in terms of the way that new business comes through. Under the new sort of one Publicis team sort of set up, should we xpect fewer large scale pitches and sort of more, sort of business just being, sort of sucked in around the edges? The reason I ask this is obviously just trying to get a sense of whether we should get in to the habit of assuming that potentially growth surprises on the upside because you can pull more business in from the sides.
And then linked to that, on Sapient obviously very strong growth, I know there were easy comps from last year, so I just wanted to get a sense of whether that growth will, or how much it will, slow down in to the second half; and actually, whether there's any way of quantifying any early benefit you're getting at Sapient from, as I say, from pulling in business from the side, plugging in to accounts that you already have a relationship with? Thank you.
Yes, it's related to the first question, this last one, it's specific to Sapient, but it is related to the first question. So when we look at new business there is in fact some large piece of businesses which are put in to play by some clients because of their understanding of the new world the need for consolidation, the need for putting more businesses under one roof. And this is something that we are seeing. It's the case of McDonalds. And it's what also happened with Walmart, are reducing the number of agencies with GSK. So we see a trend, which started a few years ago which has been slowing down and which is again taking speed. So this is something that we would see more and more. And also the fact that as we go, we will have a proven track record of our operation and we will be able to go and take our show on the road and show to our clients what we are capable of doing and how we are delivering on these aspects.
Clearly, the fact that we have some trump cards in our game and particularly Sapient is one of the best trump cards you can dream of having, you can offer services to the client which are broadening the scope of your work and which are also bringing in new players who have a different view on the business. And this is highly enriching for the clients because it's not only the classic perspective that they have with some agencies. It is something a position and an understanding and a view on the future which is very different from the experience they have had with some other partners.
Regarding Sapient, yes there is the easy comp, we know that. But there is also a very strong operation which is taking speed. We believe that Sapient will be delivering on the objective that they had. They feel all extremely comfortable with the numbers and even if there is a small slowdown the objective which was to be high single-digit for 2016, is something which will be delivered, and maybe even beaten. So we feel good. And we consider that as soon as we will have a solid track record we will be able to be more aggressive on the market.
And your next question is from Brian Wieser, Pivotal Research.
I want to ask your thoughts about investing in minority stakes in more mature companies, rather than the early stage ones that you reference and talk about Publicis 90. You invested in Matomy in 2014, so I was curious to hear your thoughts about the pros and cons of that kind of investment, going forward. Obviously, one of your peers has done a significant amount of that sort of investment.
It's a good question, it's a question that we put to ourselves several times. And regarding Matomy, the reason why we have invested is because we wanted to explore that kind of business. As you know, Brian, and you know us quite well, we are working on programmatic mostly transparently. We have on programmatic a very small share of our business which is non-transparent, and which is biased on contract with our clients, who like to see us as principals. But the vast majority of our business is, according to our rules and our client contract, totally transparent. So, it's a big question, and a strategic question. You can have an approach which is, okay, I'm betting on the future of that operation, and I'm taking a small stake and I will grow up as we go and that, at the end of the day, I will take the majority. This has never been our approach. There is only a few exception and we know that one of our competitor, at least, has had this as a philosophy. We believe it's extremely difficult to manage an operation when you have this kind of approach. But, clearly, in new areas it's not something that we are overriding, and it's not a decision that we are saying, okay, we will never do it. If there is as a new area in video, or in [attack], or in new field where we believe that it is still an uncertain position in the market and we should be taking a minority stake, we will do it in order to learn, and then to invest more massively.
Our last question for today is from Chris Collett, Deutsche Bank.
I'll keep it brief. The last conference call, I think you said that you would try and give us an idea of the percentage or proportion of your revenue base that is project based. I wonder, if you have that number, if you could share it with us. And if there had been anything that you would call out in the quarter perhaps particularly in Europe that was more project based and that perhaps boosted the rate of growth.
Unfortunately, we have not done a very good job at getting the numbers. Jean-Michel, when do you think we will be able to give this information?
We have an analysis of revenues which is multi-multi-dimensional. We have a [Indiscernible] of information, but we don't have the information relating project base versus non-project base. What we know, that this percentage is increasing, obviously. But I cannot say more at this time. If you want a precise percentage, I don't have it yet.
We will have to work on it. And now, according to what we have seen so far, that is quite interesting. And this will be a little bit of my conclusion. We have implemented the SAP, ERP. No one would say that it was easy; and no one would say that it has been done exactly according to plans. But the implementation is progressing, and we are getting some interesting traction on our operations. And we start to understand the scope of what we can get out of these ERP.
And, clearly, we will have a lot of interesting analysis that we will be able to do without creating a lot of work for our teams. Building on that, I would like to say that resource is making a lot of progress. That we are moving to new approaches, which will generate new savings in the future. And we are making very, very important progress in many areas.
We are extremely pleased with the changes which happened in our organization. We had a few people who have too much attach to the old system. And the fact that we made some changes are very, very good. On top of that, I feel extremely comfortable with the objectives that we have for the future. And all the signs that we have in the current approach to business and the way we are dealing with some clients, or some issues, or some organization, the fact that we have hugely simplified our approach and our organization, all these are great promises for the future.
So I would like to thank you all. Jean-Michel, both Jean-Michels, are ready to take you further on any question you have, and to give you more details. And, obviously, there is any specific question which is put to any of us they will be released on our website in order that everyone can benefit from.
And I do hope that we will be all enjoying a very good summer. And I look forward to seeing you, or to speak to you at our next call, which will be in October. Thank you very much, and enjoy the summer.
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