General Meeting Nobodys Unpredictable Paris, 18 May 2005 Contents - PowerPoint PPT Presentation

What is she going to say? What is he going to hear? What does he have in mind? General Meeting Nobody’s Unpredictable Paris, 18 May 2005

Contents Ipsos and its market Transition to IFRS 2

Ipsos and its market 3

A buoyant research market 2003: a market worth USD18,922 million (1) 2004: = 5% growth at constant exchange rates (2) An expanding market: � Strong momentum in major markets in 2004 US: up 9.9% France: up 5.6% UK: up 5.4% � Strong impetus in emerging markets Asia, Latin America and Eastern Europe � Strong drive in certain sectors IT, telecoms, corporate and media 1 - Sources: Esomar 2004; 2 – Ipsos estimate 4

A consolidating market Research market in 2001-04 / General rankings Revenues in % change % change 2001 2002 2003 2004 millions of euros over 3 years over 1 year 1 VNU 2,697 2,994 2,697 2,757 2% 2% (1) 2 TNS 913 966 1,385 1,393 53% 1% 3 IMS Health 1,316 1,297 1,223 1,255 -5% 3% 4 Kantar Group 1,131 1,099 1,017 1,098 -3% 8% 5 GfK 539 563 596 671 24% 12% 6 Ipsos 480 538 570 606 26% 6% (2) Information 7 625 590 490 490 -22% 0% Resources 8 Synovate 300 338 316 401 34% 27% (2) 9 Westat 321 364 338 330 3% -3% 10 NOP 365 340 297 329 -10% 11% Top 10 combined 8,687 9,089 8,930 9,330 7% 4% % of global market 49% 51% 53% 56% - - (1) Pro forma total (TNS +NFO) for 2003 (Esomar) - (2) Ipsos estimate for 2004 - Source: Companies for 2004 5

A consolidating market Survey-based research market in 2001-04 Revenues in % change % change 2001 2002 2003 2004 millions of euros over 3 years over 1 year 1 Kantar 949 952 1,017 1,098 16% 8% (1) 2 TNS 477 492 860 865 81% 1% 3 Ipsos 480 538 570 606 26% 6% 4 VNU 450 416 390 410 -9% 5% 5 Synovate 300 338 316 401 34% 27% (2) 6 Westat 321 303 338 330 3% -2% 7 NOP 365 340 297 329 -10% 11% 8 GfK 219 274 280 327 49% 17% 9 Arbitron 254 264 242 237 -7% -2% - NFO 498 496 - - Top 10 combined 4,313 4,413 4,310 4,603 7% 5% % of global market 37% 38% 40% 42% TNS +NFO 975 988 860 865 -11% 1% (1) Pro forma total (TNS +NFO) for 2003 (Esomar) - (2) Ipsos estimate for 2004 - Source: Companies for 2004 6

A fast-moving market Three key positives More multi-country research Stronger operating performance More value: � Expertise � Local presence � Commitment � Reputation 7

Ipsos in 2005: Robust growth in the first quarter in millions of euros 2004 Q1 2005 Q1 2005 organic growth revenues organic growth Europe 65.3 +6.5% +6% North America 52.2 +7.5% +6% Latin America 10.9 +25% +22% Asia-Pacific 15.1 +7.5% +17% and Middle East Total 143.5 +8.2% +7.5% 8

Ipsos in 2005: firm growth in all areas of specialisation in millions of euros 2004 Q1 2005 Q1 2005 organic growth revenues organic growth Advertising Research 31.5 +13% +15% Marketing Research 78.1 +7% +7% Media Research 11.8 +1% +2% Opinion & Social Research 7.6 +13% +5% CRM-CSM 13.9 +8% +9% Other 0.6 NM NM Total 143.5 +7.5% +8.2% 9

T ransition to IFRS 10

Contents 1 – Background 2 – Main IFRS impacts 3 – Summary Appendices Stable platform • Minor impacts • 2004 financial statements restated under IFRS • 11

Background 12

Background Regulatory framework European Commission regulation no. 16606/2002 of 19 July 2002 on the application of international accounting standards � As from 1 January 2005, all listed EU companies are required to apply IFRS (International Financial Reporting Standards) to their consolidated financial statements. IFRS is optional for unlisted companies. � IFRS does not apply to individual company financial statements in France. The 'stable platform' comprises 36 IFRS standards, including 31 former IAS standards and their interpretations (IFRIC: International Financial Reporting Interpretations Committee) 13

Background IFRS transition work carried out by Ipsos 1998 (run-up to IPO): Ipsos accounting principles brought in line with IAS (International Accounting Standards) by adopting most of the recommended treatments laid down in CRC regulation 99-02. The main changes were in the following areas: � Revenue recognition � Provisions for pension obligations � Finance lease adjustments � Amortisation of business goodwill and acquisition goodwill over 20 years. 2003-04: differences with respect to IFRS compiled by an international in-house team, assisted by a specialist consultancy. September 2004: first estimate of IFRS impact. 2005 General Meeting: presentation of IFRS impact on 2004 financial statements. First-half 2005: publication of first IFRS-compliant financial statements (including IFRS reclassifications and additional disclosures required in the notes to the financial statements). 14

Background IFRS 1: rules for first-time adoption For consolidated financial statements, retrospective application of IFRS from 1 January 2004 However, IFRS 1 allows for certain exceptions and provides options for alternative treatments. For the Ipsos Group, these options apply to the following areas: � Goodwill adjustments � Treatment of foreign exchange gains and losses � Asset valuations � Stock option valuations � Financial instruments 15

Background Significant Some Minor impact impact impact � IFRS 3: Business combinations � � IAS 32 and 39: Financial instruments � � IAS 37: Provisions, contingent liabilities and contingent assets � � IAS 12: Income taxes � � IAS 33: Earnings per share � � IFRS 2: Share-based payment � � IAS 21: Effects of changes in foreign exchange rates � � IAS 1: Presentation of financial statements � � IAS 7: Cash flow statements � 16

Background Significant Some Minor impact impact impact � IAS 17: Leases � � IAS 7: Inventories � � IAS 14: Segment reporting (single business only) � � IAS 16: Tangible assets � � IAS 18: Revenue � � IAS 19: Employee benefits � � IAS 36: Impairment of assets � � IAS 38: Intangible assets � � IAS 24: Related-party disclosures � 17

Background To sum up... The presentation that follows details the adjustments (= impacts to net profit or shareholders’ equity) to be made by Ipsos as a result of applying IFRS rules. Overall, the adjustments made to Ipsos' 2004 financial statements have a positive impact on: � Net profit � Shareholders' equity The adoption of IFRS has no impact on the Group's cash flow 18

Main IFRS impacts 19

Treatment of goodwill Options for first-time adoption (IFRS 1) Options available: 1) Restatement of business combinations that occurred prior to the date of first-time adoption under IFRS 3 2) Application of IFRS 3 as from the date of first-time adoption, with no retrospective restatement Option 1 selected by Ipsos � Retrospective restatement of business combinations that have occurred since 1 January 1997 (date of changeover to IAS) � Application of IFRS 3 as if this method had always been used � Impact: for acquisitions made since 1997, the relevant IFRS rules for valuing each business combination are applied retrospectively. For Ipsos, the main rules are: - IAS 16 and 38 (recognition of assets) and IAS 36 (impairment of assets) - IFRS 3 and IAS 37 (recognition of provisions for restructuring) 20

Treatment of goodwill Business combinations (IFRS 3) General rules for treating goodwill � Acquisition goodwill no longer amortised (retroactive to 1997) � Expected earn-out payments stated at their present fair value together with repurchase agreements (see IAS 32-39). (Under French GAAP, earn-outs are indicated in the notes to the financial statements) � Formal application of impairment tests (IAS 36). The recoverable amount of goodwill should be measured as the higher of fair value (selling price) and value in use (present value of estimated future cash flows) - No impairment provision is required Impact of impairment tests 0 21

Treatment of goodwill Effects of changes in foreign exchange rates (IAS 21) Exchange rate applicable � French GAAP: two options - Foreign currency-denominated goodwill is translated at the year-end exchange rate or historical exchange rate - Ipsos had opted for the historical exchange rate � IFRS: foreign currency-denominated goodwill is translated using the year-end exchange rate � Differences between the historical exchange rates used by the Group and the year-end exchange rates for various currencies (in North America and Latin America) give rise to a foreign exchange loss. Impact of -€23.528m exchange rates The above figures are unaudited 22

Treatment of goodwill Provisions (IFRS 3 and IAS 37) Two-fold impact 1) Restatement of provisions for restructuring costs 2) Retrospective application of IAS 37 Provisions for restructuring � French GAAP: any provisions for restructuring arising from a business combination are recognised as identifiable liabilities and are included in the goodwill calculation. � IFRS: - Only provisions for restructuring within the scope of IAS 37 and previously recognised by the acquired company may be considered as identifiable liabilities when calculating goodwill. - All provisions arising from a business combination must be recognised in the income statement. 23