Ipsos

Thank you. Good morning, everybody. And thank you to everybody in the room who has made their way to Janty early this morning. It's nice to see investors, colleagues, analysts here. And it's my job to kick off proceedings on the first half results of 2023 for Ipsos. I think, Mike, obviously, Dan, our CFO, will take you through some of the detail in the numbers in a second. But the key point, which... consistent with what we were talking about at the beginning of the year is that the profile of 2023 is just very, very different to 2022. We've known that for a long time. So 2022, remember, we saw very rapid growth in the first six months of the year and then a deceleration at the back end of the year, quite similar in some ways to some of the tech companies. This year, we start slowly and then accelerate. And that, of course, has effects on the revenue that we're announcing today. So really important to understand that difference and also the comparative for the numbers that we're now looking at for the first half compared to the first half of 2022. Dan, please take us through the key numbers.

Merci beaucoup, Ben. Thank you very much Ben. Ladies and gentlemen, good morning. with a few comments on the top line, on revenue. Revenue, as disclosed for the first half, reached 1 billion, 0.87 million, down 3.7% on last year, including minus 1.1 for organic growth. Currency effect, minus 1.8%, quite significant, originating mainly in the euro, appreciating against the many emerging currency and against the sterling pound and some minus 0.1 scope effect organic growth accelerating from minus 2.8 down to 0.5 percent for the first half and there are three driver three factors which weigh down on the trading the first is what ben mentioned the inferable base effect due to the fact that the first half of the first quarter of 2022 was very strong with Growth up 12%, weighing down on trading on business activity. The second factor was the termination of the large COVID contracts, which in the first half of 2022 generated some 25 million euros for the first quarter, mainly, when you lose these contracts immediately. These COVID contracts, it weighs down on growth. So 1.1% of organic growth excluding COVID contracts with the same momentum between the first and second quarter. The third factor weighing down on the results is large big tech clients restructuring where we lost some 18% of revenue in the first quarter. quarter of 2023, year on year, and Ben will review the prospects and outlook for these big tech accounts. Now, some more detail on the breakdown by region. The first comment we can make is that there's a strong de-correlation between emerging region performance growing 9% organically and performance in advanced countries which show negative growth of 5% for the reasons I mentioned. In some more detail, the first line, EMEA, is down 1% in organic growth for the first quarter due to the termination of COVID growth, excluding these effects We have organic growth of 4%, accelerating between non-COVID organic growth, reached 6% in the EMEA zone. Trading in the Americas down 3% organically. Here again, this reflects reality, which is quite mixed. Mixed picture between Latin America, performing very high with 8% organic growth, and North America, which is penalized by lower demand on the big tech accounts, and also by a number of lag effects in the public affairs contracts, which are connected with the discussions on the debt ceiling for the U.S. government, which led to lagging in decision-making by U.S. companies. public institutions with these contracts being postponed from the second quarter to the third quarter. Now, the Asia-Pacific zone shows organic growth of 3% with a rebound with a rally of 7%, organic growth of 7% in the second quarter with good momentum, both in India with growth in excess of 20% and in many southeast countries. Asian countries. Comment on China. China rebounding as expected after the end of the zero COVID policy introduced by Chinese government, posting 6% growth in the first quarter. But with respect to outlook, some economists question that the Chinese economy might slow down. Now, some comments on our own performance by audience. Revenue with consumers is up 3% in the first quarter, rebounding up to 5% in second quarter, reflecting, we said that a number of times, the fact that our clients need to keep understanding consumption behavior in a complex world which is subject to many shocks, many contingencies. and our clients and employees audience showing stable flat organic growth with good performance in our service line dedicated to client performance and tracking distribution channels but this audience channel is weighed down by the decline in big tech citizens Trading down 12.5% quite mechanically due to the termination of large COVID contracts, including the COVID contracts. Public affairs show revenue of 3.5%, but the momentum in the order book is more than 10%, and Ben will review the prospects in a few minutes. Now, on doctors and patients, we have negative growth of 3%, with acceleration momentum in second quarter, revenue stabilized across the first half. Trading was impacted by some late decisions by some former accounts, but the order book, starting from early January, has been organically up 9%. Now, so much for revenue. What's important to understand here is to the extent that we are showing a momentum of growth, revenue in the first half will obviously not be half for the full year. The best proxy for understanding our full year performance is the order book. rather than the revenue for the first half. As you can see on this slide, the order book is growing in the end of Q1 by 2.6% and is accelerating because you can see Q1 plus 1.6%, Q2 5.3% and when you exclude the COVID contracts, the order book is growing 6.2% which reflects the underlying momentum of the order book of the group because you need to exclude the COVID effects due to their being gone. Some factors to explain how each client segment contributes to growth. And we are not talking about growth, we are talking about contribution to growth of the order book. So as you can see here, very good momentum of the public sector growing. and showing double digit growth contributing to growing the order book by some 1.2% good resilience of CPG accounts as retailers and CPG contribute to increasing the growth of the order book by some 1.2% and good performance as well across all economic sectors which account for less of a share in the APSO's revenue yet contributing somewhat like travel, auto transportation and financial services, respectively, contributing 1.2% and 1.3%. Conversely, what's weighing down on the growth of the order book is the big tech accounts, including in the U.S., and obviously the termination of the COVID contract. Now, all in all, we note a lagging effect between growth in the order book and the growth in revenue. It might be useful for me to remind you what we define the order book. The order book is the sales of the first half, which will be generating revenue across 2023. Remember that revenue is recognized in a linear manner at Ipsos between the beginning of the project and the end of the project period. Mechanically, if I might say, At the end of the year, the order book equates the revenue. Why do we have this lag effect between the growth in the order book and the growth in the revenue? Well, this is due to the factors you can see on the right-hand side of the slide. The first effect is the end of the COVID contract. I told you earlier that we still had 25 million of COVID contracts to recognize the first half of 2022. When you compare the 25 million euros of COVID contracts to the 1.1 billion euros of revenue, It's more of a share on the decline compared with 1.8 billion of the order books. This has a mechanical effect and a lag effect between the growth in the order book and the growth in revenue. Second factor is, as I said, we are accelerating. And when you accelerate, of course, the revenue has a lag effect compared with the order book. And the third factor is a mixed impact. Basically, we performed higher than the group's average in some service lines. whose average contract maturity is longer than the average maturity. And this is the case of public affairs and the trackers business. This leads to a gap between the order book growing 2.6% and the revenue showing negative growth of 1.6%, giving 3.7%. growth, which is reflected in the revenue of the second half. So even before we generate sales in the second half, we already have resident sales, we already have sales existing for the second half. Now, acceleration of the order book, which I mentioned a minute ago, confirms, as Ben said, what we had announced in February with respect to how fiscal 2023 will would go about. In 2022, we had strong growth in first half and a more sluggish growth across the rest of the year. 2023, the profile will be totally the contrary. We come back to some kind of a cyclical pattern, which is more usual with our business, which was more or less mitigated during the COVID period with a stronger second half in revenue and in profitability. You can see on this slide that you have numbers illustrating this factor for each of the financial aggregate you have. Look at the share of the first half in the entire full year results. For the order book, if you take the average for the period 2017-2022, the order book, end of June, accounted for 72% of the year's revenues. In 2023, we reached 73%, slightly early. For revenue or turnover, end of June revenue accounted for 45% of the year. We are in line with that. For gross margin, we are also in line with this. And for operating margin, we are also in line year on year. These factors give us confidence that we'll be able to reach our targets for the full year. Now, another way to look at things on this return to a historical cyclical factor is to look at the operating margin and how it behaves between the first half and the rest of the year. As you can see, when I look at the pre-COVID, i.e. 2017 through 2019, there was A historical gap of 4%, 4.2% in average, between the profitability rate for the first half and that for the second half. For the first half, we have operating margin of 8.7%, and you can see that the 8.7%, when you add a bit more than 4, is fully aligned with our target for the full year, which is to reach operating margin of some 13%. Now, some more detail with the condensed income statement. I've already given you the details on the top line, on the revenues. I won't dwell on that. Gross margin reached 67.7% of revenue. So, originating a number of factors. The first is the termination of COVID contracts, which were contracts with a gross margin level, so lower than the group margin, because the collection costs were significant when you exclude these contracts, gross margin levels. increases mechanically, then you have the trend, the tendential increase of online surveys year on year which increases growth margin as well. We have mixed impact as well which are connected with strong growth in our business operations of advisory and optimizing marketing Expenses which have no collection cost with a close to 100% gross margin which increases the margin again and again we also held up our prices firm with a capacity to increase our prices in this inflationary context which enabled us to grow the gross margin significantly. Below the gross margin items with respect to operating costs, the payroll increased 2.7% due to the four-year impact of the hirings we conducted in 2022 to support our growth trend. But it's important to know that the ratio of payroll on gross margin remains below that before the COVID period. And the caution we showed earlier in the change of operating expenses in the first half, especially with respect to hiring, will generate a positive impact in the second half and will enable us to significantly increase our profitability level in the second half. General expenses overheads increased by 7 million euros in line with the increase of IT and technology expenses and renewed travelling and the ratio of overheads and gross margins remained significantly below that before the COVID period. And all in all, operating margin reached 8.7% in the first half, down 260 basis points year-on-year. So, if we make projections to the second half, as I said earlier, we'll have both return to some cyclical pattern in the trading with the second half, which will be stronger than the first, with acceleration As expected, revenue, which will be driven by the accelerating order book that I mentioned, and the full impact of the cost-cutting measures we implemented in the first half, all this will lead to a significant increase of the operating margin in the second half. So, all in all, adjusted net profit attributable to the group reached €70 million, down from €97 million last year.

Now a few words about the cash flow statement. The gross operating cash flow is at 137. The change WECA means a negative contribution of 28.3 million euros. No particular comment. It's in line with last year. We invested approximately for 29 million euros like last year in property, plants and equipment and tangible and financial assets. And overall... Free cash flow is in line with the drop in the net profit that I mentioned earlier on. It's 24 million euros, so it's down by approximately 30 million euros against last year. We made small scale acquisitions in the first half for approximately 6 million euros. Most of the effect is the acquisition of Aspirity in America, which is a platform that will allow us to develop our B2B abilities. And the acquisition of Focus Erics, which is a small company in healthcare in China. We've purchased for about 64 million euros of Ipsos shares to finance the free shares programs for Ipsos employees, and also partly to pursue our share buyback program for approximately 27 million euros in the first half. And we've repaid approximately 30 million of borrowing loan, particularly for shoeshine, this year. So as at the end of June, our cash position is €300 million which is down about €36 million against last year, the same period. Before I hand over back to Ben, of course we can see that we have a very sound balance sheet as you can see that our net debt is €129 million which is slightly down against the previous period as at the 30th of June. Our net debt to bidday is approximately 0.4, which is in line with last year. We have also very good liquidity, approximately €500 million of undrawn credit lines with maturities in excess of one year. So of course this allows us to repay the debts that we will have to pay next year, €48 million as you can see. And also I need to add that 80% of our gross debt is at fixed rate, which is very important, particularly given the context in terms of the rates at the moment. Thank you very much for your attention. Over to Benny Skink to give us an update on operations.