HIGHCO Update on current situation: Impacts of the pandemic on Group businesses
Business decline in Q1 2020 despite a position of slight growth at end-February (GP)
- Q1 20201 gross profit of €20.79 M, down 10.3% on a reported basis and LFL2.
- Better resilience of digital businesses: Q1 LFL down 7.8%.
- Strong decline in
France : Q1 LFL down 13.6%. - Stability in International business: Q1 LFL up 0.5%.
More pronounced decline expected in Q2 2020 than in Q1
COVID-19: Update of measures taken by the Group
- Gross cash of €7.8 M at
end-March 2020 . - Request granted for a €30 M government-backed loan.
Annual General Meeting of
§
| in € M | 2020 | 2019 reported | 2019 LFL2 | 2020/2019 Reported change | 2020/2019 LFL2 change |
| Q1 Gross Profit1 | 20.79 | 23.17 | 23.17 | -10.3% | -10.3% |
1 Unaudited data.
2 Like for like: Based on a comparable scope and at constant exchange rates (i.e. applying the average exchange rate over the period to data from the compared period).
UPDATE ON CURRENT BUSINESS ENVIRONMENT
The pandemic is having a significant impact on the Group’s businesses, mainly due to:
- Closure of large non-food retailers, which account for approximately 20% of the Group’s business;
- The following factors affecting Group businesses that work directly or indirectly with large food retailers:
- Decrease in brand promotions, and chain seasonal event campaigns postponed or cancelled, impacting drive to store businesses;
- Difficulty for merchandisers to access stores and shutdown of printing services, limiting in-store media activities;
- Saturation of click & collect and food e-commerce sites, causing a sharp decline in display media, which limits the better resilience expected from the Group’s digital businesses;
- Relative good performance of the Group’s mobile businesses (push SMS, development of mobile apps).
The Group is maintaining the ad hoc organisational structure implemented at each subsidiary to continue supporting its clients in the best possible way.
BUSINESS DECLINE IN Q1 2020 DESPITE A POSITION OF SLIGHT GROWTH AT END-FEBRUARY
After slight business growth in line with the budget at the beginning of the year, the measures taken to limit the spread of the COVID-19 pandemic began impacting all the businesses of our clients, brands and retailers, in March. As a result,
Digital held up better, posting a decline limited to 7.8% like for like. The segment was driven by Mobile businesses, which grew in the first quarter. The share of Digital in total Group business continued to rise, up from the reported figure of 53.4% in Q1 2019 to 54.9% in Q1 2020.
Strong decline in France
| Gross Profit (in € M) | 2020/2019 Change | % Total gross profit | |||
| 2020 | 2019 reported | Reported | LFL | ||
| Q1 | 15.30 | 17.70 | -13.6% | -13.6% | 73.6% |
Down 13.6%,
Stability in International business
| INTERNATIONAL | Gross Profit (in € M) | 2020/2019 Change | % Total gross profit | ||
| 2020 | 2019 reported | Reported | LFL | ||
| Q1 | 5.49 | 5.47 | +0.5% | +0.5% | 26.4% |
| o/w Benelux | 5.18 | 5.18 | +0.0% | +0.0% | 24.9% |
International gross profit rose slightly by 0.5% like for like to €5.49 M in Q1 2020, representing 26.4% of the Group’s gross profit. In Benelux, gross profit remained stable at €5.18 M for the quarter, benefiting from the later implementation of strict lockdown measures (early April) in Luxembourg. Showing growth of 9.8%, business in
MORE PRONOUNCED DECLINE EXPECTED IN Q2 2020 THAN IN Q1
As anticipated at the end of March and following the extension of lockdown restrictions, Q2 2020 is expected to be impacted even harder by government measures and to show a significant decline both in and outside
All business activities will be impacted due to the following factors:
- Q2 is a period of high seasonal activity (Easter, Mother’s Day and Father’s Day) for the Group;
- Numerous sports events featuring as a basis for special event campaigns launched by large retail chains have been postponed (rescheduling of the UEFA’s Euro 2020 football championship and Summer Olympic Games for 2021 and of the Tour de France for
August 2020 , etc.).
COVID-19: UPDATE OF MEASURES TAKEN BY THE GROUP
Employees
- Dissemination/reminder of “social distancing” on various communication media and stricter health protection measures as of the first announcements from the authorities;
- Closure of Group sites and rollout of measures to ensure business continuity (teleworking);
- Group cohesion maintained with the implementation of various collaborative tools.
Cash position and action plan
At end-March, gross cash (excluding operating working capital) totalled €7.8 M (€10.56 M at 31 December 2019).
The Group has taken the following measures in response to the drop in business activity and to protect its cash position:
- Use of programmes implemented by the government to reduce the impact of the situation (postponed payment of taxes and social security charges, partial unemployment for approximately 35% of payroll, etc.), and, especially, the request granted by its long-standing banking pool for a €30 M government-backed loan, with the aim of rapid repayment;
- Syndicated loan agreement signed in 2015: payment of the
January 2020 instalment (€2.25 M€) and request granted to postpone repayment of the principal initially scheduled forJuly 2020 (€2.25 M) andJanuary 2021 (€2.25 M) by six months; - Savings plan for previously provisioned overhead charges (spending on sales and communication, etc.);
- Suspension of the share buyback programme;
- Suspension of non-priority investments (CAPEX);
- Proposal to allocate all 2019 earnings to reserves, to be put forward at the next Annual General Meeting.
2019 ANNUAL FINANCIAL REPORT AND 2020 ANNUAL GENERAL MEETING
HighCo’s 2019 Universal Registration Document was filed with the Autorité des Marchés Financiers (French financial markets authority) on
Given the current COVID-19 pandemic and government measures taken to limit gatherings, the Company has announced that the Annual General Meeting will be held exceptionally under closed session on
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Q2 and H1 2020 Gross Profit: Thursday
2020 Half-year Earnings: Wednesday
Conference call on 2020 half-year earnings: Thursday
Q3 and 9-month YTD 2020 Gross Profit: Wednesday
Q4 and FY 2020 Gross Profit: Wednesday
ISIN: FR0000054231
Reuters: HIGH.PA
Bloomberg: HCO FP
For further financial information and press releases, go to www.highco.com.
This English translation is for the convenience of English-speaking readers. Consequently, the translation may not be relied upon to sustain any legal claim, nor should it be used as the basis of any legal opinion.
Attachment
- HighCo CP T1 2020 MB_VDEF_EN
© OMX, source
