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    HCO   FR0000054231

HIGHCO

(HCO)
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Real-time Quote. Real-time Euronext Paris - 05/07 09:12:56 am
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HIGHCO : Q3 GROSS PROFIT 2016

10/19/2016 | 12:25pm EDT

Paris, 19 October 2016

FURTHER DOUBLE-DIGIT GROWTH IN Q3 2016: GROSS PROFIT UP 11.4% LFL

Growth trend remains robust

  • Q3 20161 gross profit of €19.13 M, up 12.5% on a restated basis2 and 11.4% LFL3.
  • 9-month 20161 gross profit of €60.4 M, up 15% on a restated basis and 14.1% LFL.
  • Another strong surge in growth for digital businesses: Q3 up 16.5% LFL, 9-month YTD up 28.1% LFL.
  • Sharp growth continued in France: Q3 up 13.2% LFL, 9-month YTD up 17.4% LFL.
  • Exclusive negotiations under way to invest in a stake in WakeOnWeb in France.
  • Growth trend remains strong in Belgium: Q3 up 7.5% LFL, 9-month YTD up 7.5% LFL.

Strategic reorientation outside France

  • Sale of businesses in the United Kingdom ("MRM"), which represented 3.9% of the Group's H1 2016 gross profit.
  • Exclusive negotiations under way to sell the joint venture POS Media in Central Europe.

2016 Business guidance raised

  • Growth in gross profit of more than 11% LFL.
  • Growth in headline PBIT before performance share plans4 of equal to or greater than 25%, growth in operating margin before performance share plans4 of equal to or greater than 250 bp (>=17.3%).
Gross profit (in € m) 20162 2015
restated2
2015
LFL3
2016/2015
Change restated2
2016 / 2015
LFL3 change
Q1 19.51 16.99 17.05 +14.9% +14.4%
Q2 21.76 18.50 18.68 +17.6% +16.5%
Q31 19.13 17.01 17.18 +12.5% +11.4%
9-month total1 60.40 52.50 52.91 +15.0% +14.1%


1 Unaudited data.
2 In application of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the businesses in the United Kingdom were presented as discontinued operations as of the third quarter of 2016. For reasons of consistency, the data reported for 2015 and the first half of 2016 have been restated to account for the impact of the UK businesses.
3 LFL: On a like-for-like basis and at constant exchange rates.
4 Headline PBIT before performance share plans: Profit before interest, tax and restructuring costs and before the cost of the new performance share plans. Operating margin before performance share plans: Headline PBIT before performance share plans/gross profit.

Didier Chabassieu, Chairman of the Management Board, stated, "HighCo has turned in a robust third quarter in 2016, driven by growth in France and Belgium, where our digital strategy has produced strong results over the past three years. In line with this strategy, we have decided to sell two of our subsidiaries, one in the United Kingdom and the other in Central Europe. These entities are significantly behind in digitising their offer. As such their growth and profitability levels have come in below the Group's expectations for the past several quarters. This results in a divergence in strategy with their management teams. However, given the Group's strong performance in the third quarter and the deconsolidation of these subsidiaries, we have raised our business growth and profitability targets for 2016."

STRONG SURGE IN GROWTH CONTINUED FOR DIGITAL BUSINESSES IN Q3 2016: UP 16.5% LFL

With like-for-like (LFL) growth of 16.5% in Q3 2016, Digital has enabled the Group to maintain its double-digit growth. The share of digital business increased from 43.3% in Q3 2015 (restated for the United Kingdom) to 45.9% in Q3 2016. Offline businesses continued their strong growth trend, rising 7.4% like for like over the quarter. As a result, HighCo posted strong business growth in Q3 2016, up 12.5% on a restated basis and 11.4% like for like to €19.13 M.

Over the first nine months of the year, digital businesses grew 28.1% on a like-for-like basis, and the share of Digital increased from 40.2% at the end of September 2015 (restated for the United Kingdom) to 45.6% at the end of September 2016. This means that HighCo has met its target of Digital businesses representing a share of more than 45% of the Group's total business in 2016 and is on track to reach a share of 50% in 2017. Offline businesses showed like-for-like growth of 4.6% over the first nine months of the year. The Group's gross profit amounted to €60.4 M for the first nine months of 2016, up 15% on a restated basis and 14.1% like for like.

Driven by Digital, France continues to show robust growth

France turned in another excellent performance in Q3 2016, with gross profit of €13.59 M, up 13.2% like for like, thus accounting for 71% of the Group's gross profit. This gain was again driven by Digital, which rose 20.4% like for like in the third quarter, with the significant expansion in fully digital Drive to Store businesses (digital coupon issuing, services for click-and-collect and online retail platforms, social media) and the strong performance of In-store businesses in Q3.

For the first nine months of 2016, gross profit totalled €41.55 M in France and rose 17.4% like for like. Digital businesses grew 32.8% over the same period, and their share in gross profit reached 54.4% at the end of September 2016.

WakeOnWeb: Investment in a French digital technology company

Moving forward in its strategy to integrate a comprehensive range of targeting and data businesses, HighCo announces that it has entered into exclusive negotiations with the founders of WakeOnWeb to invest in a 40% stake in the share capital. WakeOnWeb is a French digital service company that designs and develops specific web applications. It deploys its recognised expertise in the Symfony framework, operating as a certified partner of the designer of the Symfony platform, SensioLabs. With WakeOnWeb, HighCo expects to build synergies, gain new technical expertise and refine its quality processes and methods in developing its digital tools. WakeOnWeb is a fast growing company that currently employs 22 people and expects to generate about €1.3 M in revenue in 2016.

Growth trend remains strong in Belgium

In Benelux, gross profit rose 7.5% like for like to €5.38 M in Q3 2016, representing 28.1% of the Group's gross profit. For the first nine months of 2016, gross profit totalled €18.09 M in Benelux, also climbing 7.5% like for like.

STRATEGIC REORIENTATION OUTSIDE FRANCE

The digital transformation achieved in France and under way in Belgium over the past three years has shown results, enabling HighCo to return to strong organic growth and improve its profitability. Despite the Group's expectations, its entities in the United Kingdom and Central Europe have not moved in the same direction. This has led to a stark difference compared with the financial performance generated in France and Belgium. To avoid hindering its future performance, the Group has decided to sell these businesses. However, HighCo plans to complete the digital transformation initiated in Belgium and continue developing its fully digital businesses in Italy, launched in 2015, and in Spain.

Sale of MRM in the United Kingdom

The Group announces the sale of its British subsidiary to the local management team. The deal has just closed to sell all shares in Multi Resource Marketing Holdings Limited ("MRM"). Acquired by HighCo in 2011, MRM has not met the targets initially set by the Group, in particular regarding its digital transformation, resulting in a divergence in strategy between the subsidiary's local management team and HighCo. With business still overly focused on domestic clients and not enough on retailers, the Group has not achieved the anticipated business synergies. The sale of MRM will provide the opportunity to divest a subsidiary whose business has been declining for several quarters and whose profitability has dropped significantly in 2016. Furthermore, the British government's new legislation concerning the National Living Wage (NLW) is likely to weigh on MRM's overheads in the years to come. The impact on attributable net income is currently estimated at an expense of about €6.5 M.

Plan to sell POS Media in Central Europe

The Group announces that it has also entered into exclusive negotiations to sell POS Media, its joint venture operating in Central Europe. The deal would involve selling all shares owned in the Dutch company POS Media BV, representing 47.55% of its share capital. POS Media was acquired in 2011. Its mainly "paper-driven" businesses have not developed in line with HighCo's expectations, due in part to the complex geopolitical climate in Central Europe over the past two years (Russia, Turkey and Ukraine). The sale of POS Media, which has been accounted for using the equity method since 2014, would provide the opportunity to deconsolidate a joint venture with an uncertain outlook for its business growth and profitability and in need of cash flow. At this stage, the Group does not expect this sale to have an impact on attributable net income for 2016.

2016 BUSINESS GUIDANCE RAISED

Given the combined factors including the sale of MRM, the better-than-expected performance in Q3 and positive outlook for Q4, the Group has further raised its annual business guidance and revised its other guidance figures for 2016:

  • Growth in 2016 gross profit revised from more than 8% to more than 11%5 LFL;
  • Growth in headline PBIT before performance share plans4 revised from equal to or more than 20% to equal to or more than 25%5;
  • Increase in operating margin before performance share plans4 revised from equal to or more than 120 bp (>=16%) to equal to or more than 250 bp5 (>=17.3%).

5 In application of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, the businesses in the United Kingdom will be reported under discontinued operations and presented as a single item in the 2016 income statement, Net income from assets held for sale or discontinued operations. For reasons of consistency, the data reported for 2015, especially headline PBIT and operating income, will be restated to account for the impact of the UK businesses. The UK businesses are not included in the revised guidance figures for 2016.

About HighCo

Since its creation, HighCo has placed innovation at the heart of its values, offering its clients - brands and retailers - Intelligent Marketing Solutions to influence shopper behaviour with the right deal, in the right place, at the right time and on the right channel.
Listed in compartment C of Euronext Paris, HighCo has more than 700 employees and since 2010 has been included in the Gaia Index, a selection of 70 responsible Small and Mid Caps.

Your contacts

Cécile Collina-Hue                                             Géraldine Myoux
Deputy Managing Director                                   Press Relations
+33 1 77 75 65 06                                              +33 1 77 75 64 67
comfi@highco.com                                             g.myoux@highco.com

Upcoming events

Publication takes place after market close.

Q4 2016 Gross Profit: Tuesday, 24 January 2017

HighCo is a component stock of the indices CAC® Small (CACS), CAC® Mid&Small (CACMS) and CAC® All-Tradable (CACT).
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. HighCo expressly disclaims all liability for any inaccuracy herein.




This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: HIGHCO via Globenewswire

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Mean consensus BUY
Number of Analysts 3
Average target price 6,27 €
Last Close Price 5,44 €
Spread / Highest target 19,5%
Spread / Average Target 15,2%
Spread / Lowest Target 10,3%
EPS Revisions
Managers and Directors
NameTitle
Didier Chabassieu Chairman-Management Board
Cécile Collina-Hue Chief Executive Officer & Member-Management Board
Richard Caillat Chairman-Supervisory Board
Nicolas Butin Vice Chairman-Supervisory Board
Nathalie Biderman Independent Member-Supervisory Board
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