High Medium ✔ Low
Contracts may be terminated on short notice. Advertisers are free to terminate their contracts with their communications agencies , after a relatively short notice period . Moreover, the Group’s contracts with its clients are under constant threat from rival competitive bids. In addition, there is a trend towards operating on a project-by-project basis, a gradual reduction in the number of agencies working with an advertiser and the concentration of advertising budgets among a few leading agencies.
Finally, with the intensification of corporate consolidation processes at the global level, the risk of losing an advertiser following a merger and/or acquisition has become quite common. All of these factors contribute to the increased risk of a single event having significant consequences.
A significant percentage of the Group’s revenue is derived from its major clients. In 2019, the Group’s top 5, 10, 30 and 100 clients accounted for 12%, 19%, 35% and 53% of the Group’s consolidated revenue, respectively (see also Section 6.6 “Notes to the consolidated financial statements”, Note 28 “Risk management”).
One or several large clients may, at any time and for any reason, decide either to switch advertising and communications agencies or to curtail its spending on advertising or even terminate their relationships, at any time and without having to justify it. A substantial decline in the advertising and communications spending of the largest advertisers, or the loss of any of these accounts, could have a negative impact on the Group.
The Group’s growth may be negatively affected by conflicts of interest between clients competing within the same sector. The ability of the Group or one of its networks to obtain a new client may, at times, be hindered by its partnership with a competitor or by an exclusivity clause in an existing client contract. The Group avoids, as far as possible, these types of commitments, and relies on its numerous networks to limit the situations in which such conflicts of interest may arise. Such conflicts of interest may nonetheless arise and may limit the Group’s growth prospects and adversely affect it.
High Medium ✔ Low
Seeing that the Group’s value creation chain is complex and evolving, the process of transforming the Group’s structures and organization is ongoing in order to offer customers and talent an integrated, clear and effective organization. To this end, the Group has implemented a new country approach (and no longer by network).
Moreover, development through acquisitions requires restructurings in order to integrate the entities being added to the Group.
Difficulties implementing this restructuring may hinder the achievement ofthe Group’s strategy, generate uncertainty for talent or fail to meet client expectations and accordingly have an unfavorable impact on the Group.
High Medium ✔ Low
Publicis may be named as defendant or co-defendant in litigation brought against its clients by third parties, its clients’ competitors, governmental or regulatory authorities, or a consumer association. These actions could, in particular, relate to the following complaints:
Any damages and legal fees arising from such actions may negatively impact the Group. The risk could be either indemnified by the client, or in the case that it is an insurable risk, covered by the Company’s insurance. Moreover, Publicis’ reputation could be negatively affected by such allegations.
During the normal course of its business, the Group may also receive requests for information from the justice or administrative authorities as part of inquiries into business practices in its industry.
The Company has no knowledge of any governmental, legal or arbitration proceedings, whether pending or threatened, liable to have or having had in the last 12 months, a significant effect on the financial position or profitability of the Company and/or the Groupe, other than those mentioned in note 20 and note 1.3 to the consolidated financial statements (section 6.6).
High Medium Low ✔
Since 2005, Publicis Groupe SA has been publicly rated. It is rated BBB by Standard & Poor’s and Baa2 by Moody’s Investors Service. A financial rating downgrade could adversely affect the Group’s ability to raise funds and result in higher interest rates for future borrowings.
High Medium Low ✔
The Group is exposed to a liquidity risk when its incoming payments, which represent a multiple of revenue, no longer cover its outgoing payments, and at the same time its ability to raise new financial resources has been exhausted or is insufficient.
