press release

REGULATORY INFORMATION

29 July 2020

H1 2020 Results:

Recurring operating profit1 up

Net book debt3 down

H1 2020 Key Points

  • Revenue at €1,240m, down2 12.5%
  • Recurring operating profit1 up2 at €43.5m (up 12.4%)
  • Net book debt3 down more than €100m on 30 June 2019
  • Net profit consolidated at €22.1m (versus €5.2m at end-June 2019)

First fruits of Econocom's transformation plan

On 27 July 2020, the Econocom group's board of directors met and approved the consolidated statements for 30 June 2020.

As announced in the press release on 10 July, the group made €1,240m in revenue in H1 2020, down2 12.5%. During H1 2020, Econocom's business was impacted by the health crisis because of extended delays in contracting into business, disrupted supplies of equipment and difficulties in gaining access to certain clients' sites. These effects, which delayed revenue recognition from many contracts, gradually waned over Q2.

Business at Technology Management and Financing (TMF) generated €479m in revenue, down2 13.5%. The decrease was more significant in Q1 (-16.2%) than in Q2 (-11.7%), with new operations gradually introduced again. Revenue at Digital Services and Solutions (DSS) was down2 11.9%. There was a 12.4% drop for Services and a 11.7% fall for Products and Solutions.

Recurring operating profit1 (ROP) was up 12.4%, reaching €43.5m, versus €38.7m2 for the same period in 2019. This increase came directly from cost-cutting measures which have been applied since the start of 2019 and have intensified during the covid-19 pandemic. These measures especially benefited DSS, whose ROP was at €33.5m (versus €22.1m2 in H1 2019). TMF's ROP was down €10m (versus €16.6m2 in H1 2019) due to a sharp fall in H1 business and less variability in its cost model.

Non-recurring expenses of €23.7m, mainly due to the group's operations in reorganisation and the covid-19 crisis, were posted in H1 2020.

H1 2020 net profit was at €22.1m, versus €5.2m in H1 2019. This includes the capital gain from selling the firm EBC.

Group's net book debt3 still falling

Net book debt3 was at €303m, sharply down on 30 June 2019 (€405m). Econocom is therefore reaping the rewards of its debt-reduction policy, which includes the closure of loss-making entities, the sale of non-strategic business, the reduction of structural expenses and improvement in working capital requirement.

  1. Before amortisation of intangible assets from acquisitions and after restatement in line with IFRS 5 regarding assets held for sale and discontinued operations
  2. Based on unchanging norms and scope
  3. Before taking into account debt brought about by application of IFRS 16 to lease contracts (real estate, vehicles, etc.) in which Econocom is the lessee
  4. EBITDA is equivalent to recurring operating profit1 + operating expenses and - operating income in amortisation and impairment of assets.
  5. Gearing is the ratio of net book debt to equity

Net book debt3 now only represents 1.8 times EBITDA4 over a 12-month rolling period at 30 June 2020, versus

2.5 times EBITDA at 30 June 2019. Given that equity is at €498m, gearing5 is at 0.6, versus 0.9 a year earlier, under the combined effect of a fall in net book debt and growth in the group's equity. The latter benefited from an increase in net profit over the period and the decision to not repay share premium at the general meeting of shareholders in May 2020.

In H1 2020, the group bought treasury shares for €7.2m. On 30 June 2020, Econocom held 1.8 million treasury shares, amounting to 0.8% of the company's capital. The company cancelled 24.5 million cross-holding shares in May 2020.

Post-close event

On 27 July, as part of its efforts to streamline its business, Econocom announced it was entering into exclusive negotiations with the company Atos with a view to selling its stake in the capital of its subsidiary digital.security, which specialises in digital risk management and is one of Europe's leading computer emergency response teams. Today, this entity includes 250 consultants and in 2019 it made nearly €29m in revenue.

Outlook

If the effects of the health crisis do not worsen, Econocom expects its business to gradually recover in H2, with its clients' sites reopening, remote working increasing and new contracts getting under way.

Beyond the economic situation caused by the health crisis, the Covid-19 pandemic has helped change the ways businesses work fundamentally. With remote working becoming more widespread more lastingly and the digital transformation of firms gathering pace, the markets in which Econocom operates will be buoyed, bringing ever more growth. The unique solutions Econocom offers, combining distribution, services and financing, make it a major player in Europe and should help it make the most of these growth markets.

The group has full confidence in its ability to get back to long-term growth as early as 2021. In September, it will present to the financial community its main lines of development and its ROP1 aims for 2020 and 2021.

Next publication: information meeting on the 2020 half-year results and outlook for 2020/21 on 10 September 2020.

A B O U T E C O N O C O M

F O R F U R T H E R I N F O R M A T I O N

Econocom conceives, finances and facilitates the digital transformation of

www.econocom.com

large firms and public organisations. With 40 years' experience, it is the only

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market player offering versatile expertise through a combination of project

Investor and shareholder relations contact:

financing, equipment distribution and digital services. The group is present in

etienne.jacquet@econocom.com

18 countries, with over 10,000 employees and €2,927m in revenue.

Financial press relations contact:

Econocom is listed on Euronext in Brussels, on the BEL Mid and Family

anne-marie.cravero@econocom.com

Business indices.

Tel. +33 6 28 49 47 41

INCOME STATEMENT

(€m) Unaudited data

H1 2020

H1 2019

restated*

Revenue

1,240

1,424

Recurring operating profit before amortisation of

43.5

41.2

acquisition-related intangible assets

Recurring operating profit

42.5

40.2

Non-recurring income and expenses

-23.7

-13.5

Operating profit

18.8

26.8

Financial profit

-8.5

-8.9

Profit before tax

10.3

17.9

Income tax expense

-5.6

-7.8

Net profit from continued operations

4.7

10.1

Profit from discontinued operations

17.4

-4.9

Net profit

22.1

5.2

*In line with norm IFRS 5, income and expenses in H1 2019 from operations considered to be discontinued in H1 2020 were restated in 'Net profit from discontinued operations' in the H1 2019 income statement. Furthermore, the H1 2019 consolidated income statement was affected by recognition of direct deliveries of equipment now as principal (in line with IFRS 15).

BALANCE SHEET

(€m) Unaudited data

ASSETS

30.06.2020

31.12.2019

Goodwill

509

513

Residual interest in assets leased (non-current)

138

132

Other non-current assets

219

234

NON-CURRENT ASSETS

865

879

Residual interest in assets leased (current)

39

33

Trade and other receivables

1,013

1,094

Other current assets

167

137

Cash and cash equivalents

478

594

Assets held for sale

114

201

CURRENT ASSETS

1,811

2,058

TOTAL ASSETS

2,676

2,937

(€m) Unaudited data

LIABILITIES

30.06.2020

31.12.2019

Equity attributable to owners of the parent

424

410

Non-controlling interests

74

74

EQUITY

498

484

Non-current financial liabilities

469

452

Gross liability for purchases of leased assets (non-current)

79

81

Other non-current liabilities

146

131

NON-CURRENT LIABILITIES

694

664

Trade and other payables

866

981

Other current liabilities

233

311

Current financial liabilities

312

395

Gross liability for residual financial values (current)

26

20

Liabilities held with a view to sale

47

83

CURRENT LIABILITIES

1,484

1,789

TOTAL LIABILITIES AND EQUITY

2,676

2,937

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Disclaimer

Econocom Group SE published this content on 29 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 July 2020 16:05:09 UTC