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Profiling people

Profiling people. Results for the first half 2002. The market. How Ipsos makes progress. Financial results. Outlook. Net income, shareholders’ part * 9.5 +29%. * Before amortization of goodwill. Key figures: growth and profitability. in millions of euros. Revenues 244.5 +13%.

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Profiling people

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  1. Profiling people

  2. Results for the first half 2002 • The market • How Ipsos makes progress • Financial results • Outlook

  3. Net income, shareholders’ part* 9.5 +29% * Before amortization of goodwill Key figures: growth and profitability in millions of euros • Revenues 244.5 +13% • Operating income 17.8 +27%

  4. The market

  5. A non-cyclical market… • The research market*: a market that keeps on growing 2001 vs. 2000 +4% H1 2002 vs. H1 2001 +3 to 4% • “[…] Market information remains valuable to clients even in a time of economic downturn.” Mike Kirkham, CEO Taylor Nelson Sofres *Source: Esomar

  6. The advertising market*: a shrinking market 2001 vs. 2000 -4% H1 2002 vs. H1 2001 -2% *Source: Zenith Media … unlike the advertising market • “This has been a longer and deeper advertising recession than anyone predicted. The US advertising market beganto show some tentative signs of recovery in the first halfof the year, however the European market was down." Doug Flynn, CEO Aegis Group plc • “[…] Fear and uncertainty rule a lot of client thinking today […]”Sir Martin Sorrell, CEO WPP

  7. Ipsos is outgrowing its competitors 2001 vs. 2000 H1 2002 vs. H1 2001 Overall growth Organic growth Overall growth Organic growth Ipsos +46.0% +8.0% +13.0% +7.3% TNS +21.6% +6.1% +9.1% +1.4% GfK* +11.0% +6.6% +17.7% +3.6% Kantar (WPP) +15.3% N/a +5.9% N/a Source: competitors * Overall growth H1 02 / H1 01: + 4.4 % according to 2001 published data

  8. Ipsos’ profitability is improving Change in operating margins H1 00 H1 01 H1 02 Ipsos 5.6% 6.4% 7.3% GfK 7.0% 7.4% 7.2% TNS 8.0% 8.5% 8.3% Kantar (WPP) 9.4% 9.5% 7.6% Ipsos vs. competitors (average) 2.5% 1.3% 0.4% Source: competitors

  9. How Ipsos makes progress

  10. Our objective • To become the world leader insurvey-based research

  11. Our business: survey-based research • Qualitative & quantitative research • Continuous services & one off projects • Branded products & custom research • Mono & multi-clients services • International & local operations • Consultancy & fab & tabs works • Off & on line data collection systems

  12. Four rules for success 1. Build long-term relations with major international clients 2. Reinforce our leadership in key countries 3. Develop our expertise in our areas of specialization 4. Steer transition toward on-line data collection systems

  13. 1. Build long-term relations with major international clients • Some 50 corporations spend over 75 million eurosper annum on consumer research • Ipsos works with the majority of them • A special program (KAM) for 10 of them • Our business with these 10 major clients grew30% in 2001 / 2000 and 32% in H1 2002 / H1 2001of pure organic growth • These 10 major clients will contribute around 20% of Ipsos revenues in 2002 (16% in 2001) and account for 2/3 of its total organic growth

  14. Major international clients in 2003-2005 • The KAM programme expanded to 5 extra clients in 2003 • International clients • Ipsos has worked with them for several years • A large growth potential • Ready to contract global commitments • Market share gains will continue • Objective: to lead at least 15% of the survey-based contracts of the 15 key accounts • Potential: 100 million additional euros

  15. Four rules for success 1. Build long-term relations with major international clients 2. Reinforce our leadership in key countries 3. Develop our expertise in our areas of specialization 4. Steer transition toward on-line data collection systems

  16. 2. Reinforce our leadership in key countries • 15 countries spend over 100 million euros on researcheach year; between them they account for 87% ofthe world market • Ipsos is established in 14 of these 15 main countries • In 10 of them • Ipsos is in the top five • Ipsos utilizes at least three of its five specializations • In 2002, Ipsos strengthened its position in the following countries:USA 1st market (Ipsos-Vantis) Germany 3rd market (Sample-INRA) Japan 5th market (Lyncs) Sweden 13th market (Ipsos-Imri, Ipsos-Eureka) China 14th market (Fams)

  17. Ipsos in the 15 key countries in 2002 USA Ipsos position UK Rateof development Germany France Profitability Japan Italy Canada Spain Brazil Australia Mexico Holland Sweden China Belgium

  18. Four rules for success 1. Build long-term relations with major international clients 2. Reinforce our leadership in key countries 3. Develop our expertise in our areas of specialization 4. Steer transition toward on-line data collection systems

  19. 3. Develop our expertisein our areas of specialization • Ipsos has a unique position: a single business, survey-based research,with five specializations • Advertising Research • Marketing Research • Media Research • Opinion and Social Research • Quality and Customer Satisfaction

  20. Ipsos-ASI: a model • July 1, 1999: Ipsos-ASI founded, an integrated global organization • Advertising research:to measure the foreseeable and evidential effectsof advertising expenditure on brand positions • A comprehensive range • Pre-tests (with the Next range) • Advertising and brand tracking (Equity Builder and Ad*Graph) • Post-tests • 15% average organic growth per annum • Ipsos-ASI is present in 15 countries, and is setting upin Japan, China, Russia, Poland and Sweden

  21. Ipsos Marketing today • Marketing Research: to know and understand markets and consumers’ relations with products and brands in order to evaluate and optimize options • Ipsos’ current position • No.4 in the world / 300 million euros • 7% organic growth (12% for KAM) • Separate businesses (Ipsos-NPD, Ipsos-Novaction, Ipsos-Focus, Ipsos-Explorer…)

  22. Ipsos Marketing in 2003 • A single brand and a global leader • Jean-Michel Carlo (Ipsos Europe) • Three main sectors • Manufactured products / Services / Pharmaceuticals • Specific areas of expertise • Qualitative research / Modeling and sales forecasting • International research • Global services • Brand Equity / Concept Forecaster / STM • Major clients • P&G / General Mills / Kraft / Unilever / L’Oréal / Mars … • Visa / ATT / Microsoft ... • Pfizer / GSK / J&J ...

  23. Four rules for success 1. Build long-term relations with major international clients 2. Reinforce our leadership in key countries 3. Develop our expertise in our areas of specialization 4. Steer transition toward on-line data collection systems

  24. Change is gathering pace in the USA 2000 2001 2002 On-line expenditurein millions of USD 258 392 578 % of overall spending 6.6% 9.6% 13.6% Source: Inside Research 4. Steer transition toward on-line data collection systems • Significant benefits • Speed: from week to day • Reliability: easier access to interviewees • Global perspective: a unique platform • Innovation: new protocols due to high-speed data processing

  25. Ipsos and on-line datacollection systems • In the USA, 30% of Ipsos Marketing revenuesare generated on-line • The Ipsos-NPD group panel is the most used • A profitable business • Ipsos has been selected by oneof our big accounts as “preferred worldwide supplier”for the changeover to on-line copy-testing(due in 2004)

  26. Financial resultsfor the first half of 2002

  27. Sharp growthin first-half revenues in millions of euros +13% +64% +34% +12%

  28. 1st half 2002: a steady organic growth Organic growth rate* +9.9 % +7.3 % In millions of euros * On a comparable basis

  29. Sharper increase in organic growth in 2nd quarter Organic growth rate +7.0 % +7.7 % In millions of euros 108.4 136.1 T1 2002 T2 2002

  30. FY 2002 organic growth estimated at least at 8% In millions of euros 2001 2002 Revenues Organic growth Revenues Organic growth 1st quarter 95.0 +9.7% 108.4 +7.0 % 2nd quarter 122.0 +10.1 % 136.1 +7.7 % 3rd quarter 115.9 +5.0 % 4th quarter 147.3 +7.7 % Year 480.2 +8.0 % +8.0 %* * estimated

  31. Growth varies according to region... In millions of euros Revenues H1 2002 Organic growth H1 2002 Reminderorganic growth 2001 Europe 107.3 0 % +7 % North America 106.5 +15 % +10 % Latin America 23.9 +11 % +6 % Asia-Pacific and Middle East 6.8 +10 % +10 % Total 244.5 +7.3 % +8.0%

  32. Total 244.5 +7.3% +8.0% … and to business lines in millions of euros RevenuesH1 2002 Organic growth H1 2002 Reminder organic growth 2001 Advertising research 55.1 +15% +14.0% Marketing research 129.5 +7% +7.0% Media research 24.1 -1% +3.5% Opinion and social research 14.1 +9% +15.0% Customer satisfaction research 18.6 +6% +7.5% Other 3.1 N/S N/S

  33. Improved profitability

  34. Strong improvement in results H1 2001 H1 2002 H102 /H101 in millions of euros 2001 Revenues 244.5 217.0 480.2 +13% Gross margin 144.3 126.0 272.0 +15% EBITDA 25.9 19.8 51.0 +31% Operating profit * 17.8 13.9 36.9 +27% Financial results -3.3 -3.7 -8.8 -9% Exceptional items -0.1 -0.3 -1.1 - Companies at equity 0 0 -1.0 - Minority interests 0.9 0.9 2.2 - Net income, shareholders’ part** 9.5 7.4 17.3 +29% * after employees’ share in profits** before goodwill

  35. Continued improvement in first half operating margin First-half operating profit / Revenues 7.3% 6.4% 5.5% 5.0% 4.3% 2.7%

  36. Breakdown of operating margin increase +1.0 7.3% +0.2 +0.1 -0.1 -0.2 -0.1 6.4% H1 2001 Increasedmarginon existingperimeter Companiesconsolidated aft. H1 01 Regionalmanagemtstructures Europe and Asia Worldwideproducts offer Economies of scale parent co. managementexpenses Currency effects H1 2002

  37. Results show seasonal trend Operating margin increase 8.8% 8.5% 7.3% 6.4% 5.5%

  38. Cash flow statement H1 2002 H1 2001 H102/ H101 in millions of euros 2001 Operating cash flow before working capital items 17.0 11.8 31.3 +44% Change in working capital requirements - 5.7 -10.5 + 5.9 Cash provided by operating activities 11.3 1.3 37.2 X 9 Investments in tangible and intangible fixed assets -5.9 -9.5 -14.5 -4.9 -155.6 -196.7 Acquisitions and impact of changes in consolidated scope -10.8 -165.1 -207.2 Cash used in investing activities - - 20.3 Share issue Net change in debt / marketable securities +0.5 +175.1 +171.2 Dividends -3.2 -2.8 -2.8 Cash provided by financing activities -2.7 172.3 188.7 Net change in cash -2.2 +8.5 +20.8

  39. A sound financial position June 30, 2002 Dec. 31, 2001 June 30, 2001 in millions of euros Shareholders’ equity 186 184 200 Net debt 147 169 153 Gearing 79% 92% 76% Net debt / EBITDA pro forma 2.6 3.5 2.99 Coverage of financial chargesx 5.4 x 3.8 x 4.4

  40. Commitments arising from acquisitions • From July 1st, 2002 to December 31, 2003 • A maximum total of 40 million eurosOf which 10 to 12 million in 2nd half 2002 • For payment of acquisitions already announced but not consolidated in 1st half 2002 plus all earn outs • After December 31, 2003 • 4 million euros in earn outs between 2004 and 2006 • Ipsos holds the financial resources to pursue its plan • Payment in cash and/or securities • Financing by free cash flow • Flexibility to recourse to borrowing

  41. Outlook

  42. Second half 2002: Ipsos confirms its commitments • Continuing strong growth in North andLatin America • Growth above 10% • Slow turnaround in Europe • Moderate growth below 5% • Establishment of network in Asia-Pacific region • Improvement in profitability

  43. 2003 and beyond:leadership • A more specialized and global Ipsos Marketing organization • CSM / CRM, Medias, and Opinion new offerings • Continuing development of Ipsos-ASI • New countries • New accounts • On-line offering • Rapid expansion of major accounts strategy

  44. Ipsos: 2005 - 2006 An increasingly specialized world leader Revenues of 1 billion euros Operating margin equal or superior to 10% A sound financial position

  45. Profiling people

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