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TRANSCRIPT
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that SG may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in
making their investment decision. PLEASE SEE APPENDIX AT THE END OF THIS REPORT FOR THE ANALYST(S)
CERTIFICATION(S), IMPORTANT DISCLOSURES AND DISCLAIMERS AND THE STATUS OF NON-US RESEARCH ANALYSTS.
EQUITY STRATEGY
18 December 2012
Extract from a report
French Compass
France’s new tax credit allowance – A significant impact on selected sectors and companies
Contributing analysts
Alain Kayayan (Equity Strategy)
(44) 20 7676 6933 [email protected]
Michel Martinez (Economics)
(33) 1 42 13 34 21 [email protected]
Patrick Jousseaume (Equity Rsch)
((33) 1 42 13 66 62 [email protected]
The proposed CICE tax credit for competitiveness and employment currently being
examined by the French parliament should be adopted by the beginning of next year. The tax
credit will benefit companies that employ workers earning between 1x and 2.5x the French
minimum wage (SMIC), with an upper bound of €42,900 gross on a yearly basis. The €20bn
annual cut in labour costs budgeted by the government will help to offset the withholding taxes
that have been applied to French companies over the past six months. A number of French
companies will be positively impacted by the tax credit, particularly those with low margins and
a large proportion of employees in France. Overall, we see the measure as positive.
First, the tax credit is an olive branch extended to businesses that we believe is not yet
fully priced in. It shows that after months of ratcheting up the tax burden on firms, the
socialist government elected last June recognises the fact that French businesses pay higher
labour costs than many of their competitors in the rest of Europe.
Second, we think a number of sectors stand to gain substantially from this move,
particularly IT services, construction, environment, utilities and retailers, as well as companies
whose results are poor or recovering. The projected average impact on the companies in our
sample (100+ companies for which we have calculated the tax credit’s expected impact) is
just over 2% of net income for the first year of the tax credit operating at full regime, i.e.
based on a 6% tax credit. The CICE tax credit comes on the heels of several fiscal measures
that will have an adverse impact on companies and appears to constitute a transfer of wealth
between companies, from the most profitable and international to those with lower paid
employees and mainly based in France.
Third, the measure enables companies to boost their competitive positions by
reinvesting part of the tax credit proceeds in prices or new hires. So while the tax credit may
not have an immediate impact on earnings, it should have a positive impact in the long run.
Below are some of the companies that SG analysts believe will benefit the most from the new
scheme on an ongoing basis (as the proposed legislation currently stands).
Our selection of companies that would benefit the most from CICE
Impact on 2014e Net Income Impact on 2014e Net Income
Air France-KLM 18% Suez Environnement 7%
Eiffage 17% Thales 6%
Veolia Environnement 11% Capgemini 6%
Bouygues 10% Faurecia 5%
Vinci 9% France Télécom 5%
Areva 7% Safran 5%
Source: SG Cross Asset Research
Equity Strategy Team
Paul Jackson
(44) 20 7762 5921
Alain Kayayan
(44) 20 7676 6933
Yoann Charenton
Research Associate
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18 December 2012 2
Which companies will be the most impacted?
Facts. The CICE tax credit bill recently approved by the French National Assembly will benefit
companies that employ workers in France earning between 1x and 2.5x the French minimum
wage (SMIC) that is set to rise to €1,430 gross starting from January 2013. This translates to
an annual gross salary range of €17,160 to €42,900, i.e. 85% of French employees. The bill is
now back before the National Assembly after having been rejected by the French upper house
and should be voted into law shortly, following a final back and forth. At the end of the day,
the National Assembly has the last word. The tax credit allowance will be paid to companies
starting in 2013 and will be calculated as 4% of the gross payroll in 2013 and 6% in 2014 and
beyond, for a total annual amount of €20bn. As some parliamentarians have pointed to the
threshold effect of the bill in its current form, the current figures and rates could be modified in
its second reading in parliament. Fifty percent of the initiative will be financed by a VAT
increase, with the remainder financed by public spending cuts. The proposed €20bn annual
reduction in labour costs is equal to 40% of total income taxes paid by French corporations
(€52bn according to the 2013 budget bill).
The CICE tax credit aims to boost competitiveness by favouring businesses that employ
workers in France, whether French or foreign. The bill was drawn up partly on the basis of the
recommendations of report by the former CEO of aerospace group EADS, Louis Gallois, who
was appointed by the government to examine ways to make French companies more
competitive. (Please refer to Michel Martinez’s contribution directly below and on pages 6-11).
Neutral impact at first glance. The €20bn tax credit granted by the government will simply
offset the increase in the corporate withholding tax that the socialist government introduced in
June 2012. Our economists estimate this at €23bn over 18 months (cap on interest
deductions reduced to 85% in 2013 and 75% in 2014, tax on dividends, higher taxes on stock
options, withholding taxes for oil companies as well as specific levies on banks and insurers,
VAT hikes, impact of planned government spending cuts on industries like construction and
defence, etc.). Since some companies may decide to reinvest part of the saving in price cuts
or new hires, not all the benefits of the tax measures will flow immediately into earnings.
The CICE bill signals a shift in the government’s position regarding the corporate sector.
The new tax credit highlights the government’s willingness to ease the burden on French
companies compared with the more unfavourable stance taken at the beginning of its
mandate. By choosing to support business, the French authorities will find it more difficult to
turn back the clock and raise taxes again. In addition, we believe the positive impact of the tax
credit has not yet been fully priced in by market participants who in our view have tended to
overprice the escalating tax burden for French companies in the past few months.
Looking beyond the measure’s limited overall effect, we find that some sectors and
companies – to the detriment of others – are likely to reap great benefits. We have
examined the tax credit’s impact on about 100 representative listed French companies. For
most, the impact on 2014 earnings will be minimal (less than 2% on average), particularly
companies with a significant international presence or those with high margins and with fewer
than average workers with wages equal to or below the 2.5x minimum wage threshold.
However, some sectors or companies stand to benefit substantially from the tax credit.
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18 December 2012 3
These include:
IT services companies: 2014 earnings should be impacted by more than 5% on average.
The two largest-listed French food retailers: Carrefour and Casino should see their 2014
earnings increase by c.17% on average (not covered by SG equity research analysts).
Construction: the average impact of around 5% in 2014 should partly offset the negative
effects from the reduction in public expenditure and lower deductibility of interest charges.
-Environmental services: positive impact of 9% in 2014.
The tax credit bill has not yet been voted. The bill was adopted by the French National
Assembly but was rejected by the Senate, the upper house, on 15 December. It is now back
before Parliament and could undergo a number of amendments, such as the inclusion of
conditions governing the use of the tax credit (for example, it has already been decided that it
cannot be used for management remuneration or paid as dividends), a change in the rates
(initially the government was considering three rates, 3% in 2013, 4.5% in 2014 and 6% in
2015) and possibly a sliding scale of tax credits to avoid a ‘threshold effect’ beyond the level
of 2.5x minimum wage.
Our analysts have estimated the impact on all of the companies in our sample using their
own estimates as many companies were unwilling to communicate on the impact of the new
tax measure on their earnings. We have taken into account the impact on 2014e earnings’
estimates; however, we acknowledge the likely impact is not representative for some
companies such as Peugeot and Aperam, which are in recovery mode.
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18 December 2012 4
Which sectors should be the most impacted?
Sector Impact on 2014e Net Income Comment
Food & Drug Retail >10% Non-covered stocks. These two leading retailers are among the biggest beneficiaries of the CICE tax
credit as they employ numerous employees in France with salaries below the 2.5x minimum wage
threshold. Assuming a 6% rate, we estimate the impact will be well over €100m for each company.
As pricing power is quite low, we expect retailers to pass part of the CICE benefit on to customers.
Casino >10%
Carrefour >10%
Environmental Services 7.5-10% Highly geared and labour intensive water and waste businesses should benefit materially from the
CICE which could even fully offset the previous tax increases voted in the budget (e.g. tax
deductibility cap on interest and the 3% tax on the cash dividends).
With French water tariffs indexed to a basket of costs that include labour costs, municipalities may
receive or seek some of the gains in the form of lower prices, although in the more labour-intensive
waste division market participants could seek to retain all of the benefit to restore depressed
profitability.
Veolia Environnement >10%
Suez Environnement 5-7.5%
IT Services 5-7.5% Given the weight of staff costs on IT Service companies’ income statements – the biggest item
being billable engineers’ wages – our initial estimate is that the CICE tax credit could boost net
earnings significantly. All else equal, we believe Devoteam could benefit the most.
We assume the bulk of the gains could be returned to clients given fierce competition in the sector.
We see Axway as the only player able to keep most of the CICE benefit given it is a leader in the
MFT segment (high-end positioning limiting pricing pressure).
Devoteam >10%
Aubay >10%
Sopra Group >10%
Altran Technologies >10%
Alten >10%
Steria 7.5-10%
Capgemini 5-7.5%
Atos 2-5%
CGI Group <2%
Axway Software <2%
Construction & Materials 2-5% We don't think construction and materials companies will pass on the tax benefits to customers as
they have been struggling with cost increases for some time; some could use the CICE benefits to
offset other tax increases.
Eiffage, which has an important France-based labour force, will benefit the most from the CICE. The
company is also highly impacted by increases in income tax and would use it to offset this impact.
Given its high employee base in France, Vinci could be one of the biggest beneficiaries of the CICE.
It will help the business offset the increase in income tax (limited deductibility of financial costs).
Eiffage >10%
Vinci 7.5-10%
Saint-Gobain 2-5%
Imerys <2%
Vicat <2%
Lafarge <2%
Telecoms 2-5% Since these three companies compete directly with each other, it is difficult to imagine them
adopting very different attitudes. Indeed, the past VAT increases have led to identical competitive
behavior by the three players.
We believe that Iliad and Bouygues could pass part or all of the benefits on to their customers and
that competitors would immediately replicate this move.
Bouygues >10%
France Télécom 2-5%
Iliad <2%
Auto & Components 2-5% Auto companies and equipment suppliers are likely to pass most of the CICE benefit on to clients.
As for Peugeot, we admit the positive impact on earnings is clearly misleading and is mainly due to
the high cyclicality of PSA's earnings. In absolute terms, the full impact should be around €120m in
2015e or a c.3% saving on its total payroll costs in France (66,000 eligible employees, of which
8,400/€15m for Faurecia). We expect PSA to report net losses of respectively €1.9bn and €0.6bn in
2012 and 2013. PSA should only break even in 2014e (€0.1bn) and be back in the black only in
2015e (€0.9bn).
Peugeot Citroen PSA >10%
Faurecia 2-5%
Plastic Omnium 2-5%
Valeo 2-5%
Renault <2%
Michelin <2%
Source: SG Cross Asset Research – Strategist team analysis, Company’s data.
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18 December 2012 5
Which companies should be the most impacted? (figures have not been normalised for cyclicality*)
Impact on 2014e Net Income Impact on 2014e Net Income
Peugeot Citroen PSA* 91% Air Liquide <2%
Aperam 44% Alstom <2%
Aubay 39% ArcelorMittal <2%
Pierre & Vacances 34% Arkema <2%
Norbert Dentressangle 32% AXA <2%
Devoteam 28% Axway Software <2%
Derichebourg 23% BNP Paribas <2%
LISI 20% Bourbon <2%
Air France-KLM 18% Bureau Veritas <2%
Casino 17% Cegedim <2%
Club Med 17% CGGVeritas <2%
Eiffage 17% CNP Assurances <2%
Bénéteau 16% Crédit Agricole SA <2%
Carrefour 16% Danone <2%
Sopra Group 16% Euler Hermes <2%
Altran Technologies 14% Foncière des Régions <2%
Alten 12% Gecina <2%
Veolia Environnement 11% GL events <2%
Bouygues 10% Havas <2%
Boiron 7.5-10% Icade <2%
Lectra 7.5-10% Iliad <2%
Seche Environnement 7.5-10% Imerys <2%
Steria 7.5-10% Ipsos <2%
Vinci 7.5-10% JCDecaux <2%
Areva 5-7.5% Klepierre <2%
Capgemini 5-7.5% Lafarge <2%
Manitou 5-7.5% Legrand <2%
Medica 5-7.5% L'Oréal <2%
Orpea 5-7.5% M6 <2%
Suez Environnement 5-7.5% Michelin <2%
Thales 5-7.5% Natixis <2%
Trigano 5-7.5% Neopost <2%
Alcatel-Lucent 2-5% Pernod Ricard <2%
Atos 2-5% Publicis Groupe <2%
BioMérieux 2-5% Rémy Cointreau <2%
EADS 2-5% Renault <2%
EDF 2-5% Rexel <2%
Eramet 2-5% Sanofi <2%
Faurecia 2-5% Schneider <2%
France Télécom 2-5% Scor <2%
GDF Suez 2-5% Solvay SA <2%
Gemalto 2-5% STMicroelectronics <2%
Groupe Seb 2-5% Technip <2%
Haulotte Group 2-5% TF1 <2%
Ipsen 2-5% Total <2%
Lagardère 2-5% Vallourec <2%
Mersen 2-5% Vicat <2%
Nexans 2-5% Vivendi <2%
PagesJaunes 2-5%
Plastic Omnium 2-5%
Safran 2-5%
Saft 2-5%
Saint-Gobain 2-5%
Stallergènes 2-5%
Teleperformance 2-5%
Valeo 2-5%
Zodiac Aerospace 2-5%
Source: SG Cross Asset Research, Company data. *The above table shows the likely impact on 2014e net income which may be exceptionally high for some companies given unfavourable conditions
for certain of their businesses. For Peugeot, see the detailed comment on cyclicality of results that has been made in the sector-centered table on prior page.
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18 December 2012 6
Assessing the macroeconomic impact of CICE
What is the CICE? On 6 November PM Ayrault announced several measures to boost French competitiveness
with a material impact expected from 2014. Of these, the CICE (Crédit dIimpôt pour la
Compétitivité et l'Emploi) is the key measure.
Taxes on companies will be reduced by €20bn (1.0% of GDP) by 2016 to be financed by
cuts in public spending, a VAT hike and green taxes. The CICE tax credit allowance will rise
progressively to reach €20bn (1.0% of GDP) over two years. The rebate should be €10-14bn
in 2014 (calculated on 2013 corporate income), increasing to €20bn-23bn in 2015 (applying to
2014 corporate incomes).
6% of gross wages equal to or less than 2.5 times the minimum wage. The tax credit
allowance applies for salaried staff employed in France earning equal to or less than 2.5 times
the minimum wage (SMIC) and will paid at a rate of 4% gross payroll in 2014 and 6% in 2015.
On average, it will concern 85% of employees, most of whom work for SMEs. The payroll
basis is gross wages, i.e. labour compensation minus employer social contribution. The basis
includes overtime and bonuses, but excludes profit sharing and employee savings schemes.
Companies that do not pay income tax will receive a check from the Treasury.
Fiscal devaluation: The purpose of the CICE is to improve competitiveness. It implies a shift
in the tax burden sometimes known as a fiscal devaluation. Three measures will offset the
negative impact of the new tax credit on the public finances. First, it will be financed by €10bn
in public spending cuts (€5bn in 2014 and €5bn in 2015) which still need to be specified and
could be politically costly. Second, VAT hikes in January 2014 will bring €6bn in tax receipts:
the government plans to raise the standard VAT rate to 20% from 19.6% at the beginning of
January 2014, while the medium rate will be increased from 7% to 10% (hotel and restaurants,
maintenance services, property repairs) and the reduced rate (food, electricity and gas) will be
lowered to 5% from 5.5%. The super reduced rate of 2.1%, which mainly applies to cultural
goods and services, remains unchanged. According to our estimates, the overall impact is
equivalent to a VAT hike of 0.6% across the board. Lastly, green taxes have to be specified
over the summer 2013 (€3-4bn).
Assessing the impact of fiscal tightening in 2012-13 At first sight, the tax credit move is significant and represents 6.3% of 2011 corporate profits
(EBITDA) and 8% of profits after tax. However, the move only offsets the recent fiscal
tightening given that French corporates will be taxed to the tune of €23bn between mid-2012
and end-2013. Hence, the CICE on its own will not materially strengthen French corporate
competitiveness relative to its position in the first half of 2012.
Low corporate savings still a real hurdle in 2013: We have often stated that weak
corporate profitability is one of the main weaknesses of the French economy and one of the
main causes of the decline in French competitiveness. The margin rate of French corporates is
the lowest in Europe according to Eurostat (Chart 1). Corporate profit margins (EBITDA)
remained near an all-time low at 28.2% of value added in Q2 2012 vs a historical average of
31.1%. Chart 2 below represents French corporate gross savings (or profits after taxes). It
shows that the share of earnings available to pay for dividends or finance investment has
consistently diminished over the past ten years. With the impact of fiscal tightening in 2012
and 2013, it is doubtful that this share can recover next year.
Michel Martinez
(33) 1 42 13 34 21
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18 December 2012 7
Chart 1: Profit share (EBIT/value added, %) Q2 2012 Chart 2: French corporate gross savings (% of GDP)
Source: Eurostat, SG Cross Asset Research / Economics Source: Datastream, SG Cross Asset Research/Economics
Corporates taxed to the tune of €23bn between mid-2012 and end-2013: The
government has tightened fiscal policy on corporates since the summer, first with the 2012
supplementary bill in July and then with the 2013 budget law. The government has
implemented a 3% tax on dividends and other payouts, and the social charge levied on
employee profit sharing programmes was increased from 8% to 20%. The tax on financial
transactions was raised. An additional tax was applied to the banking sector and another on
oil product inventories, which would bring in some €0.55bn to government coffers. Other
measures include a significant reduction in corporate tax breaks, the reduction of the tax
exemption on capital gains on the sale of securities and the payment of a corporate tax to be
pushed forward.
20%
25%
30%
35%
40%
45%
50%
55%
60%
6%
7%
7%
8%
8%
9%
9%
10%
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
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18 December 2012 8
Table 1: cumulative impact of 2012-2013 fiscal tightening on companies (€bn)
Total impact 23.5
Higher taxation on profit sharing/company savings (from 8% to 20%) 2.6
Reduction in corporate tax optimization 2.2
Financial transactions tax (0.2%) 1.3
Tax on dividends and other payouts (3.0%) 0.8
Reduction in social security contribution exemptions for overtime 0.7
Contribution from the banking sector 0.6
Contribution from the oil industry 0.5
Increase in employers’ pension contributions 0.5
Stock options and bonus shares taxation 0.3
Reduction in corporation tax breaks (interests…) 4.0
Corporate tax pushed forward 3.1
Reduction of advantages in gains on sales of securities 2.0
Smaller loss carry-forwards 1.0
Reform of social security system for independents 1.0
Higher taxation of insurance reserves 0.8
Higher pension contribution from hospital and local authorities 0.6
Tax on wages in the financial industry 0.5
Higher social contributions for independent professions 0.3
Hike in social contributions on severance payments 0.3
Tax on transportation of gas and electricity 0.2
Hike in contributions for work accidents 0.2
Source: SG Cross Asset Research/Economics. Measures in italic were voted during the July 2012 supplementary bill. Others have been voted in the
2013 budget bill
€20bn represents 8% of corporate profits after tax: Hence, we have a situation where
fiscal tightening is slightly higher than €20bn in 2012-2013 and is gradually offset by the CICE
tax credit up to 2015. Those amounts are meaningful: €20bn represents 8% of corporate
profits after taxes (€251bn, see Table 2). This amount compares to €73bn of net dividends
paid by corporations and €215bn of fixed investment savings in 2011.
Table 2: French corporate profits in 2011 (€bn)
Source: INSEE, SG Cross Asset Research/Economics
Corporations Non financial
corporations
Financial
corporations
Gross value added 1091 1003 88
Labour compensation 752 696 56
Profit (EBITDA) 316 286 30
- other 56 16 40
- net interests -36 12 -48
- taxes on corporate
incomes 45 33 12
- Profits after tax 251 225 26
- net dividends 73 90 -17
- Gross savings 178 135 43
- Gross investment 215 202 14
- Cash flow -37 -65 29
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18 December 2012 9
Measuring the impact of the CICE tax credit The CICE could have a positive impact sooner than generally expected. The government’s
action in favour of the corporate sector could augur well for companies in the future.
Corporates might also anticipate the payment of the CICE. However, the financing of the CICE
still needs to be clarified, and as long as uncertainty remains, companies could pursue a ‘wait
and see’ approach regarding hiring and spending decisions.
Our macroeconomic models suggest that the CICE framework will enhance French
competitiveness and boost GDP by 1.0% in the long run. We used INSEE’s MESANGE model
to simulate the impact of those measures on the French economy and French inflation. The
table below shows the combined impact of: 1) a VAT hike worth €6bn in 2014; 2) a decrease in
corporate taxes worth €10bn in 2014 rising to €15bn in 2015 and €20bn in 2016; 3) cuts in
public investment spending worth €5bn in 2015 rising to €10bn in 2015; and 4) a green tax
worth €3bn in 2016. We make the following two assumptions: a) the cuts in public
expenditures will broadly target public investment; b) the green tax is equivalent to a VAT hike.
Our first observation is that the effect of CICE on both economic growth and prices will be
limited, reflecting the relatively small amounts involved and the fact that it has an ex-ante
neutral impact on public finances (i.e. an unchanged public deficit). In the long run, the GDP
level will be raised by 1.0% and 205k jobs would be created, while the unemployment rate
would be reduced by 0.8pp. Those developments reflect the improvement in competitiveness
which would be far greater if the cuts in corporate taxes were matched by an equivalent
reduction in social security spending, rather than being partially paid for with higher VAT. Our
second observation is that the impact on economic activity would be negative in the short
term, reflecting the cut in public spending.
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18 December 2012 10
Macroeconomic simulation of government measures starting in 2014: % change from central
scenario level (situation in 2013)
Source: SG Cross Asset Research/Economics., based on INSEE MESANGE macroeconomic model
Signaling the right direction: The “Pact for Competitiveness” and the CICE are doubtless a
major move. First, all political parties now recognise that corporate profitability is one of the
main weaknesses of the French economy. Hence, there is a need to shift the tax burden from
corporates onto households (either the consumer or the taxpayer) in the long term. Second,
when it comes to improving cost competiveness there is no free lunch and government
administrations will have to cut back spending. For the ruling party, such a move has probably
been not so easy. Just after the CICE announcement, Le Monde editorial wrote that with this
new competitiveness pact, President Hollande breaks three taboos for the Socialists: 1) the
acceptance that labour costs are one cause of the industrial decline in France; 2) the cut in
public expenditure to finance the €10bn of the cost reduction for businesses, earlier
considered impossible; and 3) the rise in VAT; after having unwind during the summer the rise
in the main VAT rate to 21.2% proposed by the former conservative government. To put it
simply, the Pact for Competitiveness and the CICE probably open the door for calls for further
reforms at a future date. Companies could feel less uncertain about future developments.
Corporates might anticipate the positive impact of the CICE as soon as 2013. For
instance, French banks said they are ready to lend SMEs an equivalent amount to the
expected 2014 CICE, providing they have sufficient guarantees. And a few companies said
they would consider a securitisation of this tax credit allowance as soon as the Law is
enacted.
Uncertainties remain as the CICE is not yet financed. Les Echos reported on 12
December that 81% of companies think they will not change their hiring or investment
spending decisions despite the CICE. The government expects to cut €60bn in public
spending from 2014 to 2017 with the aim of financing the CICE and cutting public deficit. The
point is that the bulk of those expected cuts still need to be specified. As long as this remains
1Y 2Y 3Y 10Y Long term
GDP -0.2 -0.4 -0.3 0.4 1.0
Households consumption -0.1 0.1 0.1 0.5 1.0
Investment -1.3 -2.7 -2.6 -2.1 -1.6
Exports 0.0 0.1 0.3 0.9 1.3
Imports -0.3 -0.4 -0.4 -0.5 -0.7
Household real disposable income -0.1 0.0 0.1 0.5 1.0
Savings rate 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0
CPI (level) 0.3 0.1 -0.1 -1.9 -3.0
CPI inflation 0.3 -0.3 -0.2 -0.2 0.0
Producer prices (level) -0.1 -0.4 -0.9 -2.7 -3.9
Export prices (level) 0.0 -0.3 -0.6 -1.7 -2.4
import prices (level) -0.1 -0.2 -0.4 -1.3 -2.1
Real wage -0.1 0.2 0.2 0.6 1.3
Real cost of labor -0.8 -1.2 -1.5 -0.9 -0.1
Employment (k) 17 29 46 143 205
Unemployment rate (in pp) -0.1 -0.1 -0.2 -0.6 -0.8
Trade balance (% of GDP) 0.1 0.1 0.1 0.3 0.5
Primary budget balance (% of GDP) 0.0 0.0 -0.1 0.2 0.4
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18 December 2012 11
the case, companies may fear that the government will raise other taxes to fill the public
finances gap. Le Echos quotes that firms fear future cuts in the social contribution rebate on
low wages, the so-called “Allégèment Fillon”, which represented just €23bn in 2011…In our
mind, this seems unlikely as it would be contrary to the message that has just been sent with
the CICE (i.e. lowering taxes on corporates). However, companies do not like uncertainty.
We wish to acknowledge the contribution of Yoann Charenton in the preparation of this report.
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18 December 2012 12
APPENDIX
COMPANIES MENTIONED
Air France-KLM (AIRF.PA, Hold)
Air Liquide (AIRP.PA, Hold)
Alcatel-Lucent (ALUA.PA, Sell)
Alstom (ALSO.PA, Buy)
Alten (LTEN.PA, Buy)
Altran Technologies (ALTT.PA, Buy)
Aperam (APAM.AS, Sell)
ArcelorMittal (ISPA.AS, Buy)
Areva (AREVA.PA, Hold)
Arkema (AKE.PA, Buy)
Atos Origin (ATOS.PA, Buy)
Aubay (AUBT.PA, Hold)
Axway Software (AXW.PA, Buy)
Bénéteau (CHBE.PA, Hold)
BioMérieux (BIOX.PA, Hold)
BNP Paribas (BNPP.PA, Hold)
Boiron (BOIR.PA, Hold)
Bourbon (GPBN.PA, Buy)
Bouygues (BOUY.PA, Hold)
Bureau Veritas (BVI.PA, Buy)
Capgemini (CAPP.PA, Buy)
Cegedim (CGDM.PA, Hold)
Centrica (CNA.L, Buy)
CGGVeritas (GEPH.PA, Buy)
CGI Group (GIBa.TO, Hold)
Club Med (CMIP.PA, Buy)
Crédit Agricole (CAGR.PA, Hold)
Danone (DANO.PA, Hold)
Derichebourg (DBG.PA, Buy)
Devoteam (DVTM.PA, Buy)
EADS (EAD.PA, Buy)
EDF (EDF.PA, Buy)
Eiffage (FOUG.PA, Hold)
Enagas (ENAG.MC, Hold)
Eramet (ERMT.PA, Buy)
Faurecia (EPED.PA, Hold)
Foncière des Régions (FDR.PA, Buy)
France Télécom (FTE.PA, Hold)
GDF Suez (GSZ.PA, Buy)
Gecina (GFCP.PA, Hold)
Gemalto (GTO.PA, Buy)
GL events (GLTN.PA, Buy)
Groupe SEB (SEBF.PA, Buy)
Haulotte Group (PYHE.PA, Buy)
Havas (EURC.PA, Buy)
Iliad (ILD.PA, Buy)
Imerys (IMTP.PA, Hold)
Ipsen (IPN.PA, Hold)
Ipsos (ISOS.PA, Buy)
JCDecaux (JCDX.PA, Sell)
Lafarge (LAFP.PA, Buy)
Lagardère (LAGA.PA, Buy)
Lectra (LECS.PA, Buy)
Legrand (LEGD.PA, Buy)
LISI (GFII.PA, Buy)
L'Oréal (OREP.PA, Buy)
M6 (MMTP.PA, Buy)
Manitou (MANP.PA, Buy)
Medica (MDCA.PA, Buy)
Mersen (CBLP.PA, Buy)
Michelin (MICP.PA, Buy)
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French Compass
18 December 2012 13
Natixis (CNAT.PA, Hold)
Neopost (NPOS.PA, Hold)
Nexans (NEXS.PA, Buy)
Norbert Dentressangle (GNDP.PA, Hold)
Orpea (ORP.PA, Buy)
PagesJaunes (PAJ.PA, Buy)
Pernod Ricard (PERP.PA, Buy)
Peugeot Citroen PSA (PEUP.PA, Hold)
Pierre & Vacances (PVAC.PA, Buy)
Plastic Omnium (PLOF.PA, Buy)
Publicis Groupe (PUBP.PA, Hold)
Rémy Cointreau (RCOP.PA, Sell)
Renault (RENA.PA, Buy)
Rexel (RXL.PA, Hold)
Safran (SAF.PA, Hold)
Saft (S1A.PA, Buy)
Saint-Gobain (SGOB.PA, Buy)
Sanofi (SASY.PA, Buy)
Schneider (SCHN.PA, Buy)
Scor (SCOR.PA, Buy)
Séché Environnement (CCHE.PA, Hold)
Sopra Group (SOPR.PA, Buy)
Stallergènes (GENP.PA, Hold)
Steria (TERI.PA, Buy)
STMicroelectronics (STM.N, Buy)
Suez Environnement (SEVI.PA, Buy)
Technip (TECF.PA, Buy)
Teleperformance (ROCH.PA, Buy)
TF1 (TFFP.PA, Hold)
Thales (TCFP.PA, Buy)
Trigano (TRIA.PA, Buy)
Valeo (VLOF.PA, Buy)
Vallourec (VLLP.PA, Hold)
Veolia Environnement (VIE.PA, Buy)
Vicat (VCTP.PA, Hold)
Vinci (SGEF.PA, Buy)
Vivendi (VIV.PA, Buy)
Zodiac Aerospace (ZODC.PA, Hold)
ANALYST CERTIFICATION
The following named research analyst(s) hereby certifies or certify that (i) the views expressed in the research report accurately reflect his or
her or their personal views about any and all of the subject securities or issuers and (ii) no part of his or her or their compensation was, is, or
will be related, directly or indirectly, to the specific recommendations or views expressed in this report: Alain Kayayan, Michel Martinez,
Patrick Jousseaume
The analyst(s) who author research are employed by SG and its affiliates in locations, including but not limited to, Paris, London, New York,
Hong Kong, Tokyo, Bangalore, Madrid, Milan, Warsaw and Moscow.
F1880
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18 December 2012 14
SG EQUITY RESEARCH RATINGS on a 12 months period (in effect
as of March 14, 2012)
BUY: absolute total shareholder return forecast of 15% or more
over a 12 month period.
HOLD: absolute total shareholder return forecast between 0% and
+15% over a 12 month period.
SELL: absolute total shareholder return forecast below 0% over a
12 month period.
Total shareholder return means forecast share price appreciation
plus all forecast cash dividend income, including income from
special dividends, paid during the 12 month period. Ratings are
determined by the ranges described above at the time of the
initiation of coverage or a change in rating (subject to limited
management discretion). At other times, ratings may fall outside of
these ranges because of market price movements and/or other
short term volatility or trading patterns. Such interim deviations
from specified ranges will be permitted but will become subject to
review by research management.
Sector Weighting Definition on a 12 months period:
The sector weightings are assigned by the SG Equity Research
Strategist and are distinct and separate from SG research analyst
ratings. They are based on the relevant MSCI.
OVERWEIGHT: sector expected to outperform the relevant broad
market benchmark over the next 12 months.
NEUTRAL: sector expected to perform in-line with the relevant
broad market benchmark over the next 12 months.
UNDERWEIGHT: sector expected to underperform the relevant
broad market benchmark over the next 12 months
SG EQUITY RESEARCH RATINGS on a 12 months period (in effect
through March 13, 2012)
BUY: expected upside of 10% or more over a 12 month period.
HOLD: expected return between -10% and +10% over a 12 month
period.
SELL: expected downside of -10% or worse over a 12 month
period.
Sector Weighting Definition on a 12 months period:
The sector weightings are assigned by the SG Equity Research
Strategist and are distinct and separate from SG research analyst
ratings. They are based on the relevant MSCI.
OVERWEIGHT: sector expected to outperform the relevant broad
market benchmark over the next 12 months.
NEUTRAL: sector expected to perform in-line with the relevant
broad market benchmark over the next 12 months.
UNDERWEIGHT: sector expected to underperform the relevant
broad market benchmark over the next 12 months.
Ratings and/or price targets are determined by the ranges
described above at the time of the initiation of coverage or a
change in rating or price target (subject to limited management
discretion). At other times, the price targets may fall outside of
these ranges because of market price movements and/or other
short term volatility or trading patterns. Such interim deviations
from specified ranges will be permitted but will become subject to
Equity rating and dispersion relationship
Source: SG Cross Asset Research
47%
37%
16%
54%
41%
35%
0
50
100
150
200
250
300
Buy Hold Sell
Updated on 03/12/12
Companies Covered Cos. w/ Banking Relationship
F1880
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18 December 2012 15
review by research management.
MSCI DISCLAIMER: The MSCI sourced information is the exclusive property of Morgan Stanley Capital International Inc. (MSCI). Without
prior written permission of MSCI, this information and any other MSCI intellectual property may not be reproduced, redisseminated or
used to create any financial products, including any indices. This information is provided on an “as is” basis. The user assumes the entire
risk of any use made of this information. MSCI, its affiliates and any third party involved in, or related to, computing or compiling the
information hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular
purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall MSCI, any of its affiliates or any
third party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. MSCI, Morgan
Stanley Capital International and the MSCI indexes are service marks of MSCI and its affiliates or such similar language as may be
provided by or approved in advance by MSCI.
IMPORTANT DISCLOSURES
Air France-KLM SG has sold Amadeus shares in the context of a hedging transaction with Air France-KLM on part of its stake in
Amadeus (collar).
Air Liquide SG acted as joint book runner in Air Liquide's inaugural Euro denominated Socially Responsible Investment bond
issue.
Alstom SG acted as joint bookrunner the accelerated bookbuilding of Alstom's primary shares.
Alstom SG acted as joint bookrunner in Alstom's senior bond issue (3.875% 02/03/16 EUR).
Alten SGSP managed a liquidity contract including production of research on behalf of Alten
ArcelorMittal SG acted as joint bookrunner in ArcelorMittal's bond issue (4.5% 29/03/18 EUR).
ArcelorMittal SG acted as passive joint bookrunner in ArcelorMittal's bond issue. (USD)
Areva SG acted as financial advisor and is providing financing to Weather Investments II in the acquisition of the Areva's
63%-stake in La Mancha Resources.
Areva SG has acted as financial advisor to Areva notably to give a fairness opinion on its stake in Eramet to be sold to the
FSI.
Areva SG is acting as financial advisor to Areva
Arkema SG acted as joint bookrunner in Arkema's bond issue (TAP 3.85% 30/04/20 EUR).
Aubay SGSP managed a liquidity contract including production of research on behalf of Aubay
AXA SG acted as joint bookrunner in AXA BE's covered bond issue (EUR 2.25% 19/04/2017).
BNP Paribas SG is acting as financial advisor to SFPI, 100% owned by the Belgian State, which holds a 25% stake in Fortis Bank
SA/NV
Boiron SGSP managed a liquidity contract on behalf of Boiron
Bouygues SG acted as joint bookrunner in Bouygues's bond issue (3.625% 16/01/23 EUR).
Bouygues SG acted as joint bookrunner in Bouygues's senior bond issue.
Bureau Veritas SG acted as joint bookrunner in the Bureau Veritas's bond issue. (Maturity : 24th May 2017).
Carrefour SG is acting as joint bookrunner in Carrefour's bond issue. (5yr)
Carrefour SG acted as joint bookrunner in Carrefour Banque's bond issue (2.875% 25/09/15 EUR).
Carrefour SG acted as exclusive financial advisor to Carrefour in Guyenne et Gascogne's acquisition.
Carrefour SGSP managed a liquidity contract on behalf of Carrefour
Casino SG acted as joint bookrunner in Casino's bond issue (3.157% 06/08/19 EUR).
Casino SG is acting as financial advisor to Galeries Lafayette in the disposal of their Monoprix's stakes to Casino
Casino SG has had and has IB relationships with Casino in context of several transactions.
CGGVeritas SG is acting as joint bookrunner in CGGVeritas' convertible bonds due 2019.
CGGVeritas SG was one of the financing bank to CGG Veritas in Fugro's Geo Science Division acquisition and acted as joint
bookrunner in the right issue.
Citigroup SG acted ng as co-manager of Citigroup's bond issue. (Perp NC10)
Citigroup SG acted as a senior co-manager in the Citigroup's bond issue. (Perp NC10 - 5,950%)
Citigroup SG acted as co manager in Citigroup's High Grade bond issue.
Crédit Agricole SG acted as joint bookrunner in Crédit Agricole's covered bond issue.
Danone SG acted as active joint bookrunner in Danone's bond issue (1.125% 27/11/17 EUR).
Danone SG acted as joint bookrunner for Danone's bond issue. (USD)
Derichebourg SG is one of the main lenders to Derichebourg
EADS SG is acting as lead arranger of the loan granted to Republic of Brazil to finance the acquisition of helicopters from
EADS Group.
EDF SG acted as active joint bookrunner in EDF's bond issue (2.75% 10/03/23 EUR).
EDF SG acted has joint bookrunner in EDF's bond issue (15yr).
EDF SG acted as joint bookrunner of EDF's senior bond issue (3.875% 18/01/22 EUR).
EDF SG has acted as financial advisor to Iren in the restructuring of the shareholding of Edison and Edipower.
EDF Energies
Nouvelles
SG acted as active joint bookrunner in EDF's bond issue (2.75% 10/03/23 EUR).
EDF Energies SG acted has joint bookrunner in EDF's bond issue (15yr).
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18 December 2012 16
Nouvelles
EDF Energies
Nouvelles
SG acted as joint bookrunner of EDF's senior bond issue (3.875% 18/01/22 EUR).
EDF Energies
Nouvelles
SG has acted as financial advisor to Iren in the restructuring of the shareholding of Edison and Edipower.
Eiffage SG is acting as financial advisor to Eiffarie in the purchase of the shares it does not own in APRR.
Enagas SG acted as joint bookrunner in Enagas's bond issue (4.25% 05/10/17 EUR).
Eramet SG has acted as financial advisor to Areva notably to give a fairness opinion on its stake in Eramet to be sold to the
FSI.
Faurecia SG acted as sole global coordinator and joint bookrunner in Faurecia's convertible bond issue.
Faurecia SG acted as joint bookrunner in Faurecia's high yield bond issue (tap - 9.375% 15/12/16 EUR)
Foncière des Régions SG acted as joint bookrunner in Fonciere des Regions' inaugural bond issue.
France Télécom SG acted as co-lead Manager in France Telecom's bond issue (maturity 15/06/22 3 euros)
GDF Suez SG acted as as passive Joint Bookrunner in the USD GDF SUEZ' bond issue.
Gecina SG acted as joint bookrunner in Gecina's bond issue (7y).
Icade SG is acting as financial advisor to Silic for the potential combination between Icade and Silic.
Iliad SG is one of the main lenders to Iliad
Ipsos SGSP managed a liquidity contract including production of research on behalf of Ipsos.
Lafarge SG acted as joint bookrunner in the Lafarge Bond issue (5.875% 09/07/19 EUR).
Lagardère SG has acted as dealer manager in Lagardère's partial Tender Offer on the outstanding 2014 bond and joint
bookrunner in the consecutive bond issue (4.125% 31/10/17 EUR).
Lagardère SG has acted as financial advisor to Lagardère in the sale of its radio division in Russia.
Lectra SGSP managed a liquidity contract including production of research on behalf of Lectra.
Manitou SG holds between 5% and 10% of Manitou
Mersen SG is acting as exclusive arranger and subscriber in the Carbone Lorraine's PACEO (Optional Step Up Equity
Offering)
Michelin SG acted as joint bookrunner in Michelin's bond issue (maturity 02/06/19 2,75 EUR)
Nexans SG is acting as joint bookrunner in Nexan's bond issue. (6yr, 4.625% )
Nexans SG acted as joint bookrunner in Nexans' convertible bond issue.
Orpea SG acted as joint bookrunner in ORPEA's capital increase.
Pernod Ricard SG acted as joint bookrunner in the disposal of Pernod-Ricard's stakes by Groupe Bruxelles Lambert.
Pernod Ricard SG acted as passive joint bookrunner in Pernod-Ricard's bond issue (5yr, 10.5yr, 30yr).
Pernod Ricard SGSP managed a liquidity contract on behalf of Pernod-Ricard.
Peugeot Citroen PSA SG acted as joint global coordinator and joint bookrunner in Peugeot Citroen PSA's capital increase.
Peugeot Citroen PSA SG acted as joint bookrunner in Banque PSA Finance's bond issue (6% 16/07/14 EUR)..
Publicis Groupe SGSP managed a liquidity contract on behalf of Publicis.
Range Resources SG acted as co-manager in Range Resources Corporation's high yield bond issue..
Renault SG acted as joint bookrunner in Renault's bond issue (4.625% 18/09/17 EUR).
Renault SG acted as joint bookrunner of RCI Banque's bond issue. (4.25% 27/04/17 EUR).
Renault SG acted as joint bookrunner in RCI Banque's bond issue (18mth).
Renault SG acted as joint bookrunner of RCI Banque's bond issue. (4% 02/12/13 EUR).
Schneider SG is acting as passive bookrunner in Schneider's USD bond issue.
Sopra Group SG holds between 10% and 20% of Sopra
Stallergènes SGSP managed a liquidity contract on behalf of Stallergènes.
Steria SGSP managed a liquidity contract on behalf of Steria.
Technip SG was sole financial advisor to Technip in the exclusive negotiations for the acquisition of 45.7 % stake in
Cybernetix.
Total SG acted as passive joint bookrunner in Total's USD bond issue (2 tranches 3.5-yr and 10.5-yr).
Valeo SG acted as Joint Dealer Manager and Joint Bookrunner in Valeo's tender offer (5.75% 19/01/17 EUR).
Vallourec SG acted as joint bookrunner in Vallourec's bond issue (Maturity: 14/02/2017).
Veolia Environnement SG acted as Structuring Advisor and Coordinator for Veolia Environnement's tender offer (FR0000474975;
FR0010750497; FR0010397927; FR0000474983) and joint bookrunner in the new bond issue (4.625% 30/03/27 EUR).
Vinci SG acted as joint bookrunner in Vinci's bond issue.
Vivendi SG acted as joint bookrunner in Vivendi's bond issue (2.5% 15/01/20 EUR).
Vivendi SG acted as passive joint bookrunner in Vivendi's USD bond issue (3yr/5yr/10yr).
Vivendi SG acted as joint bookrunner of Vivendi's bond issue (4.125% 18/07/17 EUR).
Director: A senior employee, executive officer or director of SG and/ or its affiliates is a director and/or officer of AXA, Alstom, Axway
Software, Publicis Groupe, Safran, Saint-Gobain, Sanofi, Solvay SA, Sopra Group, Veolia Environnement, Vinci, Vivendi.
SG and its affiliates beneficially own 1% or more of any class of common equity of Alcatel-Lucent, ArcelorMittal, Arkema, Bénéteau, Manitou,
Orpea, Scor, Sopra Group, Vivendi.
SG or its affiliates act as market maker or liquidity provider in the equities securities of AXA, Air France-KLM, Air Liquide, Alcatel-Lucent,
Alstom, ArcelorMittal, BNP Paribas, Bouygues, Capgemini, Carrefour, Casino, Crédit Agricole SA, Danone, EADS, EDF, Enagas, France
Télécom, GDF Suez, L'Oréal, Lafarge, Lagardère, M6, Michelin, Natixis, Pernod Ricard, Peugeot Citroen PSA, Publicis Groupe, Renault,
Saint-Gobain, Sanofi, Schneider, Scor, Suez Environnement, TF1, Technip, Thales, Total, Vallourec, Veolia Environnement, Vinci, Vivendi.
SG or its affiliates expect to receive or intend to seek compensation for investment banking services in the next 3 months from AXA, Air
France-KLM, Alcatel-Lucent, Alstom, Altran Technologies, ArcelorMittal, Areva, Arkema, BNP Paribas, Bouygues, Bureau Veritas,
CGGVeritas, Carrefour, Casino, Cegedim, Centrica, Danone, Derichebourg, EADS, EDF Energies Nouvelles, EDF, Eiffage, Enagas, Foncière
des Régions, France Télécom, GDF Suez, Icade, Iliad, JCDecaux, L'Oréal, Lafarge, Lagardère, Legrand, Neopost, Nexans, Pernod Ricard,
Peugeot Citroen PSA, Publicis Groupe, Range Resources, Renault, Safran, Saint-Gobain, Sanofi, Schneider, Solvay SA, Steria, Suez
Environnement, Technip, Teleperformance, Thales, Total, Valeo, Veolia Environnement, Vicat, Vinci, Vivendi.
SG or its affiliates had an investment banking client relationship during the past 12 months with AXA, Air France-KLM, Air Liquide, Alstom,
F1880
French Compass
18 December 2012 17
Alten, ArcelorMittal, Areva, Arkema, Aubay, Boiron, Bouygues, Bureau Veritas, CGGVeritas, Carrefour, Casino, Citigroup, Crédit Agricole SA,
Danone, Derichebourg, EDF, Eiffage, Enagas, Eramet, Faurecia, Foncière des Régions, France Télécom, GDF Suez, Gecina, Icade, Iliad,
Ipsos, Lafarge, Lagardère, Lectra, Mersen, Michelin, Nexans, Orpea, Pernod Ricard, Peugeot Citroen PSA, Publicis Groupe, Range
Resources, Renault, Schneider, Stallergènes, Steria, Technip, Total, Valeo, Vallourec, Veolia Environnement, Vinci, Vivendi.
SG or its affiliates have received compensation for investment banking services in the past 12 months from AXA, Air France-KLM, Air Liquide,
Alstom, Alten, ArcelorMittal, Areva, Arkema, Aubay, Boiron, Bouygues, Bureau Veritas, CGGVeritas, Carrefour, Casino, Citigroup, Crédit
Agricole SA, Danone, Derichebourg, EDF, Eiffage, Enagas, Eramet, Faurecia, Foncière des Régions, France Télécom, GDF Suez, Gecina,
Icade, Iliad, Ipsos, Lafarge, Lagardère, Lectra, Mersen, Michelin, Nexans, Orpea, Pernod Ricard, Peugeot Citroen PSA, Publicis Groupe,
Range Resources, Renault, Schneider, Stallergènes, Steria, Technip, Total, Valeo, Vallourec, Veolia Environnement, Vinci, Vivendi.
SG or its affiliates managed or co-managed in the past 12 months a public offering of securities of AXA, Air France-KLM, Air Liquide, Alstom,
ArcelorMittal, Arkema, Bouygues, Bureau Veritas, CGGVeritas, Carrefour, Casino, Citigroup, Crédit Agricole SA, Danone, EDF, Eiffage,
Enagas, Faurecia, Foncière des Régions, France Télécom, GDF Suez, Gecina, Lafarge, Lagardère, Mersen, Michelin, Nexans, Orpea, Pernod
Ricard, Peugeot Citroen PSA, Range Resources, Renault, Schneider, Technip, Total, Valeo, Vallourec, Veolia Environnement, Vinci, Vivendi.
SG received compensation for products and services other than investment banking services in the past 12 months from AXA, Air France-
KLM, Air Liquide, Alcatel-Lucent, Alstom, Alten, Altran Technologies, Aperam, ArcelorMittal, Arkema, Atos, Aubay, BNP Paribas, Bourbon,
Bouygues, Bureau Veritas, Bénéteau, CGGVeritas, CGI Group, CNP Assurances, Capgemini, Carrefour, Casino, Cegedim, Centrica, Citigroup,
Club Med, Crédit Agricole SA, Danone, Derichebourg, Devoteam, EADS, EDF, Eiffage, Enagas, Eramet, Foncière des Régions, France
Télécom, GDF Suez, GL events, Gecina, Gemalto, Groupe Seb, Haulotte Group, Havas, Iliad, Imerys, Ipsen, Ipsos, JCDecaux, L'Oréal, LISI,
Lafarge, Lagardère, Lectra, Legrand, Medica, Mersen, Michelin, Neopost, Nexans, Orpea, PagesJaunes, Peugeot Citroen PSA, Pierre &
Vacances, Publicis Groupe, Range Resources, Refer, Renault, Rexel, Rémy Cointreau, STMicroelectronics, Safran, Saft, Saint-Gobain, Sanofi,
Schneider, Scor, Seche Environnement, Solvay SA, Sopra Group, Steria, Suez Environnement, Technip, Teleperformance, Thales, Total,
Trigano, Valeo, Vallourec, Veolia Environnement, Vicat, Vinci, Vivendi, Zodiac Aerospace.
SGAS had a non-investment banking non-securities services client relationship during the past 12 months with AXA, Air France-KLM, Alcatel-
Lucent, Altran Technologies, ArcelorMittal, Arkema, BNP Paribas, Bouygues, CGI Group, CNP Assurances, Citigroup, Club Med, Crédit
Agricole SA, Danone, EDF, France Télécom, GDF Suez, Ipsen, JCDecaux, Lafarge, Lagardère, Michelin, PagesJaunes, Peugeot Citroen PSA,
Range Resources, Renault, Safran, Sanofi, Schneider, Scor, Solvay SA, Suez Environnement, Thales, Vallourec, Veolia Environnement, Vicat,
Vinci, Vivendi, Zodiac Aerospace.
SGAS had a non-investment banking securities-related services client relationship during the past 12 months with AXA, BNP Paribas, CNP
Assurances, Citigroup, Club Med, Crédit Agricole SA.
SGAS received compensation for products and services other than investment banking services in the past 12 months from AXA, Air France-
KLM, Alcatel-Lucent, Altran Technologies, ArcelorMittal, Arkema, BNP Paribas, Bouygues, CGI Group, CNP Assurances, Citigroup, Club Med,
Crédit Agricole SA, Danone, EDF, France Télécom, GDF Suez, Ipsen, JCDecaux, Lafarge, Lagardère, Michelin, PagesJaunes, Peugeot Citroen
PSA, Range Resources, Renault, Safran, Sanofi, Schneider, Scor, Solvay SA, Suez Environnement, Thales, Vallourec, Veolia Environnement,
Vicat, Vinci, Vivendi, Zodiac Aerospace.
FOR DISCLOSURES PERTAINING TO COMPENDIUM REPORTS OR RECOMMENDATIONS OR ESTIMATES MADE ON SECURITIES
OTHER THAN THE PRIMARY SUBJECT OF THIS RESEARCH REPORT, PLEASE VISIT OUR GLOBAL RESEARCH DISCLOSURE
WEBSITE AT http://www.sgresearch.com/compliance.rha or call +1 (212).278.6000 in the U.S.
The analyst(s) responsible for preparing this report receive compensation that is based on various factors including SG’s total revenues, a
portion of which are generated by investment banking activities.
Non-U.S. Analyst Disclosure: The name(s) of any non-U.S. analysts who contributed to this report and their SG legal entity are listed below.
U.S. analysts are employed by SG Americas Securities LLC. The non-U.S. analysts are not registered/qualified with FINRA, may not be
associated persons of SGAS and may not be subject to the FINRA restrictions on communications with a subject company, public
appearances and trading securities held in the research analyst(s)’ account(s): Alain Kayayan Société Générale London Michel Martinez
Société Générale Paris, Patrick Jousseaume Société Générale Paris
IMPORTANT DISCLAIMER: The information herein is not intended to be an offer to buy or sell, or a solicitation of an offer to buy or sell, any
securities and has been obtained from, or is based upon, sources believed to be reliable but is not guaranteed as to accuracy or completeness.
Material contained in this report satisfies the regulatory provisions concerning independent investment research as defined in MiFID. Information
concerning conflicts of interest and SG’s management of such conflicts is contained in the SG’s Policies for Managing Conflicts of Interests in
Connection with Investment Research which is available at https://www.sgresearch.com/Content/Compliance/Compliance.aspx SG does, from
time to time, deal, trade in, profit from, hold, act as market-makers or advisers, brokers or bankers in relation to the securities, or derivatives
thereof, of persons, firms or entities mentioned in this document and may be represented on the board of such persons, firms or entities. SG
does, from time to time, act as a principal trader in equities or debt securities that may be referred to in this report and may hold equity or debt
securities positions. Employees of SG, or individuals connected to them, may from time to time have a position in or hold any of the
investments or related investments mentioned in this document. SG is under no obligation to disclose or take account of this document when
advising or dealing with or on behalf of customers. The views of SG reflected in this document may change without notice. In addition, SG may
issue other reports that are inconsistent with, and reach different conclusions from, the information presented in this report and is under no
obligation to ensure that such other reports are brought to the attention of any recipient of this report. To the maximum extent possible at law,
SG does not accept any liability whatsoever arising from the use of the material or information contained herein. This research document is not
intended for use by or targeted to retail customers. Should a retail customer obtain a copy of this report he/she should not base his/her
investment decisions solely on the basis of this document and must seek independent financial advice.
F1880
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The financial instrument discussed in this report may not be suitable for all investors and investors must make their own informed decisions
and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.
The value of securities and financial instruments is subject to currency exchange rate fluctuation that may have a positive or negative effect on
the price of such securities or financial instruments, and investors in securities such as ADRs effectively assume this risk. SG does not provide
any tax advice. Past performance is not necessarily a guide to future performance. Estimates of future performance are based on
assumptions that may not be realized. Investments in general, and derivatives in particular, involve numerous risks, including, among others,
market, counterparty default and liquidity risk. Trading in options involves additional risks and is not suitable for all investors. An option may
become worthless by its expiration date, as it is a depreciating asset. Option ownership could result in significant loss or gain, especially for
options of unhedged positions. Prior to buying or selling an option, investors must review the "Characteristics and Risks of Standardized
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Notice to French Investors: This publication is issued in France by or through Société Générale ("SG") which is authorised and supervised by
the Autorité de Contrôle Prudentiel and regulated by the Autorite des Marches Financiers.
Notice to U.K. Investors: This publication is issued in the United Kingdom by or through Société Générale ("SG"), London Branch . Société
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Authority). Société Générale is subject to limited regulation by the Financial Services Authority (“FSA”) in the U.K. Details of the extent of SG's
regulation by the FSA are available from SG on request. The information and any advice contained herein is directed only at, and made
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