2020
HALF-YEAR FINANCIAL REPORT
As of July 31, 2020
Contents
1
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE | 1 | |
1.1 | Half-year highlights | 2 |
1.2 | Post-closing events | 3 |
1.3 | Historical breakdown of income statements | 4 |
1.4 | Ownership structure | 9 |
1.5 | Information on related parties | 10 |
1.6 | Risk factors | 10 |
1.7 | Outlook | 18 |
2 |
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020 | 19 | |
2.1 | Consolidated financial statements | 20 |
2.2 | Notes to the consolidated financial statements | 27 |
2.3 | Statutory auditors' review report on the half-yearly financial information | 56 |
3
STATEMENT OF THE PERSON RESPONSIBLE FOR THE INTERIM | |
FINANCIAL REPORT | 57 |
COMMENTS ON 1 QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
1.1 | HALF-YEAR HIGHLIGHTS | 2 | 1.4 | OWNERSHIP STRUCTURE | 9 |
1.2 | POST-CLOSING EVENTS | 3 | 1.5 | INFORMATION ON RELATED | |
PARTIES | 10 |
1.3 HISTORICAL BREAKDOWN OF
INCOME STATEMENTS | 4 | 1.6 | RISK FACTORS | 10 | |
1.3.1 | Resilient recurring revenue in H1 | 1.6.1 | Risk assessment | 10 | |
2020 | 5 | 1.6.2 Main risks and risk management | |||
1.3.2 | Major Operations supported by | systems | 11 | ||
the performance of growth | |||||
engines | 5 | 1.7 | OUTLOOK | 18 | |
1.3.3 | Additional Operations | 7 | |||
1.3.4 | Current operating income | 7 | |||
1.3.5 | Operating income | 7 | |||
1.3.6 | Net income | 7 | |||
1.3.7 | Cash flow generation | 8 | |||
1.3.8 | Debt and liquidity position | 8 |
2020 HALF-YEAR FINANCIAL REPORT | 1 |
- COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Half-year highlights
For the half of 2020, the Group achieved sales of 485 million euros, down 12.9 % compared to the first half of 2019, i.e. down by 12.8 % in organic terms (1)
Major Operations (90% of total sales), gathering the Group's four strategic solutions across the two main geographies, i.e. North America and the Main European countries, as well as the activities of Parcel Locker Solutions in Japan and of Customer Experience Management in the rest of world, show a 10.5 %-organic decline in total sales. North America posted a 6.0 % organic decline. The segment of the Main European countries recorded a 17.6 %-decrease in sales, excluding currency and scope effects and International posted a 4.8 % organic growth.
Moreover, Additional Operations (10% of total sales) posted a 28.9 %-organic decline.
The share of recurring revenues in total Group sales remains high and stands at 75 %
Current operating income before acquisition-related expenses totaled 61 million euros in H1 2020, down by 34.2 % compared to H1 2019. Current operating margin before acquisition-related expenses stood at 12.6 % of sales.
Net attributable income was down 54.5 % ending at 21 million euros.
1.1 Half-year highlights
Quadient continued to actively execute its "Back to Growth" strategy in the first half of H1 2020, leading to the implementation of multiple strategic initiatives across all solutions, which encompassed new innovative product launches, new contracts and partnerships, as well as further reshaping of the portfolio with one divestment (ProShip) and one acquisition (YayPay).
Acquisition of leading FinTech company YayPay™, specialized in Accounts Receivable automation
On 29 July 2020, Quadient announced the acquisition of YayPay, a best-in-class and rapidly growing company at the forefront of SaaS accounts receivable (AR) automation solutions. Founded in 2015, YayPay provides a combination of automated invoice delivery paired with collections management, credit assessment, payment and cash application solutions, delivering a comprehensive cloud-based platform to more than 3,000 users globally. YayPay's solution also combines real-time reporting with artificial intelligence to provide companies insight into future payer behavior and how it impacts their cash flow, helping them reduce write-offs and Days Sales Outstanding (DSOs). The acquisition of YayPay will expand Quadient's Business Process Automation offer, notably complementing its cloud-based platform Quadient® Impress™, a multichannel document automation platform for small and medium businesses. YayPay is based in New York and has a team of nearly 60 people.
Quadient owns c.87% in the parent company of YayPay. The purchase price, excluding transaction-related costs, amounted to more than €17 million (2)
Global Partnership with Infosys to enhance delivery of Customer Experience Management solutions
On 23 July 2020, Quadient announced that Infosys has become a Platinum Business Partner in Quadient's Partner Advantage Program. Infosys is a global provider of next-generation digital services and consulting. Under the partnership, it aims to leverage and supply Quadient solutions to provide businesses with the leading omni-channel Customer Communication Management (CCM) platform and the capability to meet complex communication needs, while being aligned to their customer experience strategy. Additionally, Infosys and Quadient will jointly develop innovative solutions in the customer experience management (CXM) space, making demonstrations available at Infosys technology and innovation hubs.
Introduction of iX-Series Mailing Systems to US Market
On 30 Juin 2020, Quadient announced the launch of the iX-Series Mailing Systems and S.M.A.R.T. MailCenter software in the US, designed to meet the needs of small, medium and large businesses across a variety of industry verticals. The new series brings customers additional features and technology updates while meeting the latest requirements of the US Postal Service. This development initiative is part of Quadient objective to extend its leadership in the mail industry in the US, as outlined in the frame of its Back to Growth strategy.
- H1 2020 sales are compared to H1 2019 sales, from which is deducted revenue from Proship for an amount of 4.3 million euros, and are restated of a 3.1 million euros positive currency impact over the period.
- Based on ECB's €/$ exchange reference rate as at 28 July 2020.
2 2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Post-closing events
Further expansion of Quadient Parcel Lockers Solution
Successful Launch of Cloud-based Platform Quadient®
offering and activity
Impress for small and medium-size businesses
1
Combining the expertise of recently acquired US-based Parcel Pending with its longstanding global leadership in parcel locker solutions for carriers, retailers, commercial buildings or universities, Quadient has adopted the Parcel Pending by Quadient" brand across its entire parcel locker portfolio in North-America and Europe since June 2020.
On 22 June 2020, Quadient announced the simultaneous launch in France, Japan, the UK and the US of Parcel Locker Lite™ a new series of compact and modular parcel lockers, designed to facilitate the roll-out and accelerate the adoption of parcel locker solutions at an affordable cost by customers with smaller floor areas and lower volumes of parcels.
In Japan, Quadient signed in Q1 2020 a new contract with Yamato concerning the installation of 3,000 Parcel Locker Lite units for its pick-up and drop-off sites that include convenience stores, train stations, supermarkets and drugstores. Roll-out has started last Summer and will continue through 2023.
On 16 July 2020, Quadient announced the launch of Parcel Pending by Quadient for multi-tenant residential buildings across the UK. The customizable parcel locker systems provide seamless management of incoming packages through an automated parcel process, securing delivery, storage and pick-up, enhancing resident satisfaction and improving operational efficiency.
On 16 June 2020, Quadient announced the general availability of Quadient® Impress, a user-friendly outbound document automation platform that automates the customer communication workflow for small and medium businesses (SMBs). The comprehensive cloud-based platform provides the flexibility to prepare and send single or batch transactional documents to customers through any combination of channels-print, digital or outsourced.
Quadient Impress is a major milestone in the consolidation and streamlining of the Company's Business Process Automation solutions into a single software platform integrating four suites of applications (Automate, Portal, Dispatch, Outsourced Hybrid Mail). More than 140 new customers have been acquired since the launch.
Divestment of ProShip
In February 2020, Quadient announced the sale of its subsidiary, ProShip, a global provider of automated multi-carrier shipping software, to FOG Software Group, a division of Constellation Software, Inc, a company listed in Toronto. The transaction was closed on 28 February 2020 and the selling price totaled 15 million US dollar.
1.2 Post-closing events
First major contract in the US retail sector with Lowe's
In September 2020, Quadient announced it has signed with Lowe's, an US-based retail chain specializing in home improvement, a major contract for the deployment of Parcel Lockers Solutions in the US retail sector. The nationwide rollout of more than 1,700 self-service parcel lockers is planned. Lowe's ranks amongst the top 10 US retailers with more than 2,200 stores.
Quadient Named Finalist in Two Categories in the Parcel and Postal Technology International Awards 2020
On 8 September 2020, Quadient announced it has achieved finalist status in two categories in the Parcel and Postal Technology International (PPTI) Awards 2020 for its Parcel Pending Lite and CVP Everest solutions. The PPTI Awards recognize the latest developments in the postal sector.
Repayment of all borrowings contracted under US private placements, for a total of USD 115 million
On 4 September 2020, Quadient proceeded to the repayment of all borrowings contracted under US private placements, for a total amount of 115 million US dollar. On top of the mandatory repayment of 30 million US dollar scheduled for September 2020, Quadient decided the early repayment of 85 million US dollar of debt, maturing in 2021 (35 million US dollar) and 2022 (50 million US dollar). This operation is in the straight continuation of the Group's policy aiming at managing its balance sheet in a dynamic way and at optimizing its financing resources.
The impact on the Group's cost of net debt will be slightly positive over the remaining term of the early-repaid borrowings.
2020 HALF-YEAR FINANCIAL REPORT | 3 |
-
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Historical breakdown of income statements
1.3 Historical breakdown of income statements
H1 2020 (ended | H1 2019 (ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
(In millions of euros) | 31/07/2020) | 31/07/2019) | FY 2019 | |||||||||||||||||||||||||||||||||||||||||||||||||
Sales | 556.9 | 100.0 % | 1.142.7 | 100.0 % | ||||||||||||||||||||||||||||||||||||||||||||||||
484.9 | 100.0 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales | (145.9) | (26.2) % | (302.1) | (26.4) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(129.0) | (26.6) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Gross margin | 411.0 | 73.8 % | 840.6 | 73.6 % | ||||||||||||||||||||||||||||||||||||||||||||||||
355.9 | 73.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
R&D expenses | (24.5) | (4.4) % | (53.2) | (4.7) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(24.6) | (5.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Selling expenses | (136.1) | (24.4) % | (283.3) | (24.8) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(126.4) | (26.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Administrative expenses | (107.2) | (19.3) % | (214.9) | (18.8) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(100.5) | (20.8) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Maintenance and other operating expenses | (50.7) | (9.1) % | (103.5) | (9.1) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(45.1) | (9.3) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Employee profit-sharing and share-based | 0.0 % | (0.1) % | ||||||||||||||||||||||||||||||||||||||||||||||||||
payments | 0.1 | (0.6) | ||||||||||||||||||||||||||||||||||||||||||||||||||
1.7 | 0.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Current operating income excluding expenses | 16.6 % | 16.2 % | ||||||||||||||||||||||||||||||||||||||||||||||||||
related to acquisitions | 92,6 | 185.1 | ||||||||||||||||||||||||||||||||||||||||||||||||||
61.0 | 12.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Expenses related to acquisitions | (10.8) | (1.9) % | (15.5) | (1.4) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(11.1) | (2.3) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Current operating income | 81,8 | 14.7 % | 169.6 | 14.8 % | ||||||||||||||||||||||||||||||||||||||||||||||||
49.9 | 10.3 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Proceeds from asset sales and other operating | 0.0 % | (7.2) % | ||||||||||||||||||||||||||||||||||||||||||||||||||
expenses | 0.1 | (82.5) | ||||||||||||||||||||||||||||||||||||||||||||||||||
(0.6) | (0.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Structure optimization expenses | (2.7) | (0.5) % | (10.1) | (0.9) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(7.5) | (1.6) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Operating income | 79.2 | 14.2 % | 77.0 | 6.7 % | ||||||||||||||||||||||||||||||||||||||||||||||||
41.8 | 8.6 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Financial income/(expenses) | (19.1) | (3.4) % | (41.1) | (3,6) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(17.2) | (3.5) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Income before taxes | 60,1 | 10,8 % | 35.9 | 3.1% | ||||||||||||||||||||||||||||||||||||||||||||||||
24,9 | 5,1 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes | (13.6) | (2.4) % | (21.4) | (1.9) % | ||||||||||||||||||||||||||||||||||||||||||||||||
(2.7) | (0.6) | |||||||||||||||||||||||||||||||||||||||||||||||||||
Income from associated companies | 0.6 | 0.1 % | 0.8 | 0.1 % | ||||||||||||||||||||||||||||||||||||||||||||||||
(0.4) | (0.1) | |||||||||||||||||||||||||||||||||||||||||||||||||||
NET INCOME | 21.8 | 4.5% | 47.1 | 8.5% | 15.3 | 1.3% | ||||||||||||||||||||||||||||||||||||||||||||||
Attributable to: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
holders of the parent company | 47.1 | 8.5 % | 14.1 | 1.2 % | ||||||||||||||||||||||||||||||||||||||||||||||||
21.4 | 4.4 | |||||||||||||||||||||||||||||||||||||||||||||||||||
non-controlling interests | 0.0 | 0.0 % | 1.2 | 0.1 % | ||||||||||||||||||||||||||||||||||||||||||||||||
0.4 | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4 2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Historical breakdown of income statements
1.3.1 RESILIENT RECURRING REVENUE IN H1 2020
Quadient's strategy is to promote recurring revenues in all solutions through SaaS subscription and rental sales in particular. In the first half of 2020, the Group's business model has proved once again resilient, with solid recurring revenue performance, despite difficult trading and economic conditions.
Consolidated sales stood at €485 million in the first half of 2020, a contained decline of -12.9 % compared to the first
half of 2019. Organic change stood at -12.8 % (excluding currency impacts and scope effects related to the divestment of ProShip in February 2020).
Recurring revenue (75% of total sales) recorded a limited organic decline of 5.9 % in H1 2020 compared to H1 2019, helping to mitigate the 28.3 % organic decline experienced in hardware and license sales.
1
Change at | |||||||||||||||||||||||||
constant | Organic | ||||||||||||||||||||||||
(In million euros) | H1 2020 | H1 2019 | Change | rates | change | ||||||||||||||||||||
Major Operations | 483 | (9.6) % | (10.5) % | ||||||||||||||||||||||
437 | (10.5) | % | |||||||||||||||||||||||
Customer Experience Management | 65 | (5.2) % | (5.5) % | ||||||||||||||||||||||
61 | (5.5) | ||||||||||||||||||||||||
Business Process Automation | 30 | +1.6 % | +1.1 % | ||||||||||||||||||||||
31 | +1.1 | ||||||||||||||||||||||||
Parcel Locker Solutions | 28 | +12.0 % | +9.4 % | ||||||||||||||||||||||
32 | +9.4 | ||||||||||||||||||||||||
Mail Related Solutions | 360 | (13.1) % | (13.9) % | ||||||||||||||||||||||
313 | (13.9) | ||||||||||||||||||||||||
Additional Operations | 74 | (34.5) % | (33.1) % | ||||||||||||||||||||||
48 | (28.9) | % | |||||||||||||||||||||||
GROUP TOTAL | 485 | 557 | (12.9)% | (13.5)% | (12.8)% | ||||||||||||||||||||
Change at | |||||||||||||||||||||||||
H1 2020 | Change | constant | Organic | ||||||||||||||||||||||
(In million euros) | H1 2019 | rates | change |
Major Operations
North America
Main European countries (a)
International (b)
Additional Operations
GROUP TOTAL
437 | 483 | (9.6) % | (10.5) % | (10.5) | % | |||||||||||||||||
250 | (4.5) % | (6.0) % | ||||||||||||||||||||
239 | (6.0) | % | ||||||||||||||||||||
210 | (17.4) % | (17.6) % | ||||||||||||||||||||
173 | (17.6) | % | ||||||||||||||||||||
23 | +4.8 % | +4.8 % | ||||||||||||||||||||
25 | +4.8 | % | ||||||||||||||||||||
74 | (34.5) % | (33.1) % | ||||||||||||||||||||
48 | (28.9) | % | ||||||||||||||||||||
485 | 557 | (12.9)% | (13.5)% | (12.8)% |
- Austria, Benelux, France, Germany, Ireland, Italy, Switzerland, United Kingdom.
-
International includes the activities of Parcel Lockers Solutions in Japan and of Customer Experience Management
outside of North America and the Main European countries. The breakdown of H1 2019 revenue by segment and activity has been restated accordingly.
1.3.2 MAJOR OPERATIONS SUPPORTED BY THE PERFORMANCE OF GROWTH ENGINES
In the first half of 2020, Major Operations posted revenue of €437 million (90% of total sales), down 10.5 % on an organic basis compared to the first half of 2019. The resilience of recurring revenue (77% of Major Operations sales), down only 4.5 % organically vs. H1 2019, with strong growth in both Parcel Locker Solutions and Business Process Automation activities, helped partially mitigate the impact of hardware equipment and license sales decline.
The International segment delivered a solid organic sales growth (+4.8%) in H1 2020, driven by the strong increase of rental revenue from Parcel Locker Solutions in Japan, mitigated by a high comparable base in Q2 2019 for Customer Experience Management, which benefited from two large deals.
Sales in North America recorded a moderate organic decrease (-6.0%) in H1 2020, thanks to strong double-digit growth in Customer Experience Management activity with a very dynamic activity in professional services and in license sales.
Main European countries posted a sharper organic sales decline (-17.6%) in H1 2020, due to tougher impact of social distancing measures.
Customer Experience Management
In the first half of 2020, Customer Experience Management sales stood at €61 million, down 5.5 % organically compared to the first half of 2019. Recurring revenue (77% of Customer Experience Management sales) showed a very good resilience (2.5%) with a continuous significant increase in revenue from SaaS subscription and growth in maintenance revenue. This performance was offset by the decline in revenue from professional services, mainly operated on-site and thus affected by social distancing measures.
2020 HALF-YEAR FINANCIAL REPORT | 5 |
- COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Historical breakdown of income statements
License sales (-14.4%) were affected by a high comparable base in Q2 2019. Moreover, in the social-distancing context, go-to-market was more difficult with large accounts, weighing on new customer acquisitions. Quadient however succeeded in gaining customers in its traditional verticals as well as newer verticals like Governments, Telecommunications and Utilities. Answering customer demand, the progressive shift from on-premise licenses to SaaS-based subscription model impacted license sales by reinforcing the recurring revenue model of Quadient going-forward.
Sales in North America recorded strong double-digit growth, reflecting good business momentum and a favorable comparable base in H1 2019. Conversely, sales in main European countries were affected by more severe social distancing measures and unfavorable comparable base in professional services in H1 2019. International sales were also down due to a high comparable base in H1 2019.
Business Process Automation
In the first half of 2020, Business Process Automation sales stood at €31 million, up 1.1 % organically compared to the first half of 2019.
This increase reflected the strong growth in SaaS revenue thanks to increased level of SaaS subscriptions recorded in the previous quarters. This shift in customer demand to SaaS-mode solutions, particularly in North America and France, contributed to double-digit growth in recurring revenue (+13.2%), representing 88 % of Business Process Automation sales in H1 2020. In addition, the Group continued its campaigns to accelerate new customer acquisitions under this subscription model in all regions, with a particularly positive effect on contract activations across North America. The good performance from recurring revenue was partly offset by the decrease in revenue linked to volume-based usage Business Process Automation platforms, particularly in the Property Management sector in France. However, this trend tends to reverse at the end of H1 2020, with an improvement in volume-based activity.
License sales, even if representing a relatively small portion of Business Process Automation revenue, were strongly impacted (-43.9%), mainly due to the lower traction of bundled offers with Mail-Related Solutions as the COVID-19 context made more difficult the placement of new hardware equipment.
Parcel Locker Solutions
In the first half of 2020, Parcel Locker Solutions sales stood at €32 million, up 9.4 % organically compared to the first half of 2019, due to the strong growth of recurring revenue (+35.2%), representing 64% of Parcel Locker Solutions sales in H1 2020.
In Japan, the rental-based model proved its strength with strong double-digit revenue growth in H1 2020, due to the increase of the installed base in the previous quarters, despite some slowdown in new installations in Q2 2020. In the US, the Property Management sector experienced a strong growth in subscription. In addition, recurring revenue benefited from the increase in maintenance and consumption/usage activity (e.g., resident fees, storage fees).
Hardware sales (-18.3%) were impacted by social distancing measures, especially in the Property Management and Corporate/University sectors in the US, leading to delays in installations. Bookings were also affected by the economic situation that led to new construction projects being postponed. Moreover, the comparable base was very tough as Q2 2019 delivered strong performance, while Q2 2020 suffered from deals on hold due to institutions focusing on other priorities.
Mail-Related Solutions
In the first half of 2020, Mail-RelatedSolutions sales stood at €313 million, down 13.9% organically compared to the first half of 2019. Recurrent revenue (77% of Mail-Related Solutions sales), largely supported by multi-year contracts, posted a more moderate decline (-8.7%), benefiting from the good level of new hardware placements in 2019, especially in North America.
Revenue from consumables (ink cartridges) were impacted by the COVID-19 context, but the decrease was less pronounced from May with a gradual recovery in volumes as usage started to return. While the level of activity showed improving trends compared to the second half of Q1 2020, the recovery was still limited due to remote working linked to social distancing measures.
In this context, new hardware placements were affected (-27.6%), especially for large deals (e.g. production mail), in spite of the increase in remote sales (telesales or sales by email). The decline continued to be less marked in North America than in Europe and this trend was amplified by less stringent social distancing measures in place in North America. However, Quadient recorded a progressive recovery from May from the lows experienced in April.
6 2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Historical breakdown of income statements
1.3.3 ADDITIONAL OPERATIONS
In the first half of 2020, Additional Operations recorded revenue of €48 million (10% of total sales), down 28.9% on an organic basis compared to the half of 2019. This mainly reflected a drop in revenue from graphics and Mail-Related Solutions sales in the Nordics and Australia, as well as weaker revenue related to the export business
(e.g. OEM contracts with third-partyMail-Related Solutions distributors) due to high comparable base in H1 2019. It reflects as well the lower level of recurring revenues in this segment. Furthermore, the Group sold 4 CVP units of automated packing systems in H1 2020 (vs. 6 units in H1 2019).
1
1.3.4 | CURRENT OPERATING INCOME (1) | ||||||||||||||||
2020 | 2019 | ||||||||||||||||
Major | Additional | Group | Major Additional | Group | |||||||||||||
Operations | Operations | total | Operations | Operations | total | ||||||||||||
Revenue | 483 | 74 | 557 | ||||||||||||||
437 | 48 | 485 | |||||||||||||||
Current operating income before | (3) | ||||||||||||||||
acquisition-related expenses | 96 | 93 | |||||||||||||||
65 | (4) | 61 | |||||||||||||||
- As a reminder, sales from Parcel Locker Solutions Japan as well as sales from Customer Experience Management for the other geographies, formerly integrated into Additions Operations are now accounted for in Major Operations revenue under International segment. 2019 data was restated accordingly.
Current operating income before acquisition-related expenses stood at €61 million in H1 2020 compared to €93 million in H1 2019, mainly reflecting the decrease in revenue. Active cost management in both cost of sales and operating expense levels partially helped protect the profitability.
Gross margin remained broadly stable at 73.4 % in H1 2020 compared to 73.8 % in H1 2020, despite a significant volume effect, due to the built-in flexibility of the cost base resulting from a high proportion of outsourcing in hardware manufacturing (90% of mail equipment, 100 % of parcel lockers) and a more favorable mix. Moreover, continued tight cost optimization measures helped to generate approximately €23 million of savings in operating expenses, before impact of bad debt, in H1 2020, while
allowing the Group to maintain ongoing investment efforts to support the implementation of its strategic initiatives.
Current operating margin before acquisitions-related expenses stood at 12.6% of sales in H1 2020 compared to 16.6% in H1 2019.
Acquisition-related expenses reached €11 million in H1 2020, a stable level compared to H1 2019, and notably included costs associated with the divestment of ProShip (bonus contingent to the closing of the transaction) and the acquisition of YayPay (non-recourseloans to the founders).
Current operating income totaled €50 million in H1 2020 compared to €82 million in H1 2019.
1.3.5 OPERATING INCOME
Optimization and other operating expenses amounted to
€8 million in H1 2020 compared to €3 million in H1 2019, including costs related to the shutdown of Temando and increased restructuring expenses associated with cost optimization measures.
Operating income totaled €42 million in H1 2020 compared to €79 million in H1 2019.
1.3.6 NET INCOME
The net cost of debt amounted to €16 million in H1 2020 compared to €17 million in H1 2019, reflecting the positive impact from 2019/2020 refinancing operations on interest
expenses.
The Group reduced its currency losses and other financial items to -€1million in H1 2020 compared to €2 million in H1 2019.
As a result, net financial result was a loss of €17 million in H1 2020 compared to a loss of €19 million in H1 2019.
Income tax amounted to €3 million in H1 2020 compared to €14 million in H1 2019, mainly thanks to the benefit of tax loss carry-back measures implemented in the US in H1 2020 to support corporates in the COVID-19 context.
(1) Current operating income before acquisition-related expenses.
2020 HALF-YEAR FINANCIAL REPORT | 7 |
- COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Historical breakdown of income statements
The corporate tax rate stood at 11.1 % in H1 2020 compared to 22.6 % in H1 2019. Excluding non-recurring items, corporate tax rate would have been at 22.8 % in H1 2020.
1.3.7 CASH FLOW GENERATION
EBITDA (1) totaled €104 million in H1 2020 compared to €137 million in H1 2019, reflecting lower current operating income and broadly stable depreciation and amortization. EBITDA margin stood at 21.5 % in H1 2020 compared to 24.6 % in H1 2019.
The change in working capital generated a net cash outflow of €25 million in H1 2020 compared to a net cash outflow of €55 million in H1 2019. This mainly reflected the lower level of activity, as well as the postponement of payments of some social and VAT charges to H2 2020 in several countries.
The Group recorded a higher decrease in its lease receivables (€54 million in H1 2020 compared to €31 million in H1 2019) due to lower placements of new equipment in the current context of social distancing.
The leasing portfolio and other financing services amounted to €613 million as at 31 July 2020 compared to €698 million as at 31 January 2020, representing an
Net attributable income amounted to €21 million in H1 2020 compared to €47 million in H1 2019. Earnings per share stood at €0.50 in H1 2020 compared to €1.24 in H1 2019.
organic decrease of 7.6 % in H1 2020 versus an organic decrease of 4.3 % in H1 2019.
At the end of H1 2020, the default rate of the leasing portfolio stood at around 1.7%
Interest and taxes paid totaled €16 million in H1 2020 compared to €37 million in H1 2019, mainly thanks to the positive impact from 2019/2020 refinancing operations on interest expenses and reduced amount of tax paid
Capital expenditure amounted to €39 million in H1 2020 compared to €49 million in H1 2019. This reflected lower investments related to maintenance, in line with decreased level of activity, and reduced investments related to Parcel Locker Solutions in Japan (mostly due to a high comparable base in 2019), as well as in rented mail equipment.
In total, the Group recorded cash flow after capital expenditure of €76 million in H1 2020 compared to €21 million in H1 2019.
1.3.8 DEBT AND LIQUIDITY POSITION
Net debt was reduced by €82 million to €586 million as at 31 July 2020, from €668 million as at 31 January 2020. The leverage ratio (net debt/EBITDA) slightly improved, at 2.3x (2) as at 31 July 2020 compared to 2.4x (2) as at 31 January 2020. The Group's net debt is backed by future cash flows generated from its rental and leasing activities.
Excluding leasing, the leverage ratio remained low, at 0.8x (2) as at 31 July 2020 compared to 0.9x (2) as at 31 January 2020.
Shareholders' equity amounted | to €1,221 million as at |
31 July 2020 compared to €1,249 | million as at 31 January |
2020. The gearing ratio decreased to 48 % of shareholders' equity as at 31 July 2020 compared to 54 % as at 31 January 2020.
The Group has a robust liquidity position of €933 million as at 31 July 2020, of which €533 million in cash and €400 million of undrawn credit line, the latter maturing in 2024.
- EBITDA = current operating income + provisions for depreciation of tangible and intangible fixed assets.
- Including IFRS 16.
8 2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Ownership structure
1.4 Ownership structure | 1 |
At 31 July 2020, Quadient S.A.'s share ownership was as follows:
Number of | % | Number of | % |
shares | voting rights |
Management and employees
Directors (non-executive)
Treasury shares held under liquidity contract
Treasury shares held for stock option and free share allocations
Teleios Capital Partners GmbH (a)
Dimensional Fund Advisors, LP (US) (a)
Marathon Asset Management, LLP (a)
Norges Bank Investment Management (Norway) (a) LLB Asset Management AG (a)
Other shareholders
TOTAL
(1) Source: Ipreo as at 31 July 2020
537,286 | 1,555 | % | 537,286 | 1,562 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0,018 | 0,018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
6,147 | 6,147 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
154,021 | 0,446 | % | 0,000 | % | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
5,968 | 0,017 | 0,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
4,569,500 | 13,221 | % | 4,569,500 | 13,302 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,669,400 | 4,830 | 1,669,400 | 4,860 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,513,000 | 4,378 | 1,513,000 | 4,404 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,466,100 | 4,242 | 1,466,100 | 4,268 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
% | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
1,227,500 | 3,551 | 1,227,500 | 3,573 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
23,454,931 | 67,862 | % | 23,454,931 | 68,277 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
34,562,912 | 100,000% | 34,352,724 | 100,000% |
To the Group's knowledge, there is no other shareholder owning more than 3% of the capital or voting rights. Quadient was communicated the following thresholds between 1 February 2020 and 22 September 2020:
Date
09/03/2020
27/03/2020 20/05/2020 24/06/2020 01/07/2020 01/07/2020 11/09/2020
Name of the Investment Funds
Teleios Capital Partners LLC
Teleios Capital Partners LLC
Wellington Management Group
Teleios Capital Partners LLC
BWM Value Investing
LLB Fund Services AG
Dimensional Fund Advisors LP
Threshold cross
Crossing upwards the 11 % with 11.05 % of voting rights Crossing upwards the 12 % with 12.03 % of voting rights Crossing downwards the 3 % with 2.99 % of voting rights Crossing upwards the 13 % with 13.02 % of voting rights Crossing downwards the 3 % with 0 % of voting rights Crossing upwards the 3 % with 3.55 % of voting rights
Crossing downwards the 4 % with 3.997 % of voting rights
2020 HALF-YEAR FINANCIAL REPORT | 9 |
- COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Information on related parties
1.5 Information on related parties
Quadient owns a 35% stake in Docapost BPO IS and a 24 % stake in AMS Investissement. The transactions with these
companies, consolidated using the equity method, are not significant.
1.6 Risk factors
1.6.1 RISK ASSESSMENT
The Group has implemented a mapping process for its risks. The risk map was updated between the end of 2019 and the beginning of 2020 under the supervision of the head of internal control. This was done by holding discussions with key Group managers and subsidiary management teams (selection of the 20 top managers). It has been updated afterwards to take into account the COVID-19 crisis. A list of risks classified by theme was then drawn up and rated by the persons interviewed, based on two criteria: impact and likelihood.
The risk map is then presented to the Chief Executive Officer, the audit committee and the management team.
A number of operational action plans were introduced across the Group, overseen by clearly identified individuals and monitored on a regular basis at the highest level.
In addition to the review carried out by the audit committee at the end of March 2020, risks are reviewed by the Board of directors before taking any major decision (new acquisitions, restructuring, new credit lines, etc.). Risks are discussed by the Board from a Group-wide perspective when the three-year plan is drawn up, during which:
- Quadient's Chief Executive Officer presents market conditions: change in regulation, market trends, competition;
- the chief financial officer presents the Group strategy and financial objectives (by country, business line, etc.). Risks are also assessed as part of the preparation and presentation of the budget.
Regarding the CSR (corporate social responsibility)/non-financial risks, they have been assessed with the same methodology. They are presented in the risk mapping for the highest ones and in a more detailed way in chapter 5 "Non-financial performance statement" of the present document.
In addition, the risks and opportunities related to the Group's external environment are analyzed every year during preparation of the three-year strategic plan.
Finally, the directors of operating entities are responsible for identifying and assessing the risks associated with the activities they supervise. The results of their assessments are sent to the Group management and reviewed and discussed during operational reviews. Highlighting "red flags" risk areas is always part of the process.
10 2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Risk factors
1.6.2 MAIN RISKS AND RISK MANAGEMENT SYSTEMS
Risks are classified by category: strategic, operational, legal, technological, financial and CSR/extra-financial.
During the interviews, they are rated on a scale of 1 to 4 in terms of impact and likelihood, 4 being the highest level of risk. Risk values are expressed in net value knowing that they have been rated in terms of impact and likelihood after taking into account management systems to mitigate them. The risk map below represents the situation after the last risk assessment.
The horizontal axis represents the impact and the vertical axis the likelihood. The size of the circles represents the risk value that is calculated by multiplying the average impact mentioned during interviews by the average likelihood and by the number of occurrences ( i.e. number of times the risk was mentioned during the interviews). The graphic below presents the top 16 risks identified during the last risk assessment.
1
Average likelihood
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
St | ra | t | e | L | e | reg | t | P | rocess risk | Financial risk | T | CSR risk | ||||||||
gislation/ | ula | echnol | ||||||||||||||||||
gic risk | ory risk | ogic risk |
COVID | -19 and | |||||||||||||||||
global r | ecession | |||||||||||||||||
Time | t | o mar | ket for | |||||||||||||||
Information system | Tr | new products | Mail decline | |||||||||||||||
and cyber crime | ansformation | |||||||||||||||||
Attraction and | Tax matters | Acquisitions | ||||||||||||||||
Forex interest rates, | retention of talent | Data | privacy | |||||||||||||||
liquidity and shares | ||||||||||||||||||
Increasing business | Dependence | |||||||||||||||||
competition | on suppliers | |||||||||||||||||
New regulations | ||||||||||||||||||
Environment | Intellectual property | |||||||||||||||||
Ethical rules | ||||||||||||||||||
1.0 | 1.5 | 2.0 | 2.5 | 3.0 | 3.5 | 4.0 | 4.5 |
Average impact
- SUMMARY OF THE SIX MAIN RISK CATEGORIES
Strategic | Operational | Legal | Technological | Financial | CSR/Extrafinancial | |||||||
High | ||||||||||||
risks | ||||||||||||
COVID-19 crisis | Transformation | Information | Attractivity, | |||||||||
and risk of global | systems and | talent retention | ||||||||||
recession | cybercriminality | and succession | ||||||||||
plans | ||||||||||||
Mail decline | ||||||||||||
New competition | ||||||||||||
Acquisitions | Data privacy | |||||||||||
Time to market | Change in | Low | risks | Tax | Ethic and | |||||||
for new products | regulations | compliance | ||||||||||
interest rates, | ||||||||||||
Dependence | liquidity and | Environment | ||||||||||
on suppliers | shares | |||||||||||
Intellectual | ||||||||||||
property | ||||||||||||
2020 HALF-YEAR FINANCIAL REPORT | 11 |
- COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Risk factors
The table below gives a precise description and dedicated action plan for each of the 6 risk categories and the way these risks are mitigated.
Strategic risks
HIGH RISKS
Risks | Risk management system |
COVID-19 crisis and global recession
COVID-19 crisis started in China in December 2019. It has spread to Italy since the beginning of February 2020 and then in other European countries, in North America and in South America. Containment measures have been taken in most countries and business and production activities are widely impacted but differently depending on the country.
Since beginning of February 2020, business continuity committees have been created in each regions and in each production sites. A weekly COMEX meeting is also dedicated to COVID-19.
Five major risks have been identified:
Risk on employees and human capital
COVID-19 represents a risk on human capital. Health and safety of the Group's employees and works conditions allowing the maximum of security are key.
Risk on employees and human capital.
Since beginning of February 2020, measures have been taken:
• communication: health and safety preventive measures;
- preparation of home office and trainings on different applications;
- travel: travel ban on international flights except for imperious reasons, business trip reduction, cancellation or postponement of meetings or events.
Since March 2020:
- home office for all employees if possible;
- repatriation of employees. no more internal or external face to face meetings;
- very limited number of on site service visit.
Risk on service continuity for customer | Risk on service continuity for customer | ||||
The majority of regions | where | Quadient | operates | are | On site service visit have been reduced to the minimum and |
subject to containment | measures. | Service | continuity | for | organized in the most safer way for the Group's employees |
customers must be organized and, in the meantime, the | and customers. Meanwhile call centers have been prepared | ||||
maximum of security must be applied for the employees. | and equiped for home office. Service continuity has been set | ||||
up and is in line with preventive measures. |
Risk on revenue | Risk on revenue | |||
Containment of populations | in main regions may | lead | to | Home office for sales people and service business continuity |
global recession. Quadient | could be exposed | on | its | have been established very quickly and as a consequence all |
non-recurring revenue: hardware and software sales. On the | measures have been taken to reduce the impact on revenue. | |||
opposite this crisis may create opportunities in terms of | The percentage of recurring revenue is also key to assess | |||
revenue, especially for digitalization solutions. | risk on revenue. | |||
Risk on profitability | Risk on profitability | |||
Risk on revenue could have an impact on the level of | The Group has performed a review of all variable costs that | |||
profitability. The impact will depend on the magnitude of the | could be postponed (third parties, projects…). Action plan | |||
decline and on the actions taken to adapt cost structure. | will take into | account | the | level of the activity. Partial |
unemployment | has been | put | in place. | |
12 2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Risk factors
Risks | Risk management system | 1 | |||||||||||||||||||||||||||||||
Risk on cash position | Risk on cash position | ||||||||||||||||||||||||||||||||
Group cash position could be impacted | by the recession: | Since 31 January 2020, Quadient has pursued its active debt | |||||||||||||||||||||||||||||||
decrease of cash inflows in relation with a drop of revenue | management. In February 2020, | Quadient bought | back an | ||||||||||||||||||||||||||||||
and with customers' cash issues. | additional | 15 million euros of | its bond | 2,50 % maturing in | |||||||||||||||||||||||||||||
June 2021. After this new buy | back, the outstanding | amount | |||||||||||||||||||||||||||||||
of the bond is 163.2 million euros. In February 2020, following | |||||||||||||||||||||||||||||||||
a reverse inquiry from some investors, | Quadient proposed | ||||||||||||||||||||||||||||||||
to its investors base invested in the | German law private | ||||||||||||||||||||||||||||||||
debt named Schuldschein to prolonge the maturity of their | |||||||||||||||||||||||||||||||||
existing investment maturing the | 21 February | 2020. | |||||||||||||||||||||||||||||||
Following this operation, Quadient paid | back 17 million euros | ||||||||||||||||||||||||||||||||
and 30 million | US dollars | and | issue a new Schuldschein for | ||||||||||||||||||||||||||||||
3 million US dollars with a | four years maturity and 10 million | ||||||||||||||||||||||||||||||||
US dollars | and | 30.5 million of euros | both with | a five year | |||||||||||||||||||||||||||||
maturity. Quadient net debt | end of | March 2020 | shows the | ||||||||||||||||||||||||||||||
same level as of end of January 2020 and a revolving credit | |||||||||||||||||||||||||||||||||
line of 400 million euros. This credit line is available | in euros | ||||||||||||||||||||||||||||||||
and US dollars under the condition to meet covenants. This | |||||||||||||||||||||||||||||||||
credit | line | is | spread | over | a | syndicate | of | 11 | financial | ||||||||||||||||||||||||
institutions. Risk of counterpart is limited as they are rated A | |||||||||||||||||||||||||||||||||
a minima. Cash management | department | members use | |||||||||||||||||||||||||||||||
SaaS (1) applications. They are all confined | since 16 March | ||||||||||||||||||||||||||||||||
2020 in different locations. Cash management is performed | |||||||||||||||||||||||||||||||||
through automatic cash pooling | without any risk of liquidity | ||||||||||||||||||||||||||||||||
for subsidiaries. Cash reporting and three months forecast | |||||||||||||||||||||||||||||||||
are in | place with a weekly | report | in | order to anticipate | |||||||||||||||||||||||||||||
potential impact on cash. | |||||||||||||||||||||||||||||||||
decline | |||||||||||||||||||||||||||||||||
Mail volumes are down | in all countries | where the Group | To mitigate this decline, the Group continues to innovate to | ||||||||||||||||||||||||||||||
operates. Experts anticipate a further decline of about (4) to | gain market share and develops complementary activities | ||||||||||||||||||||||||||||||||
(6) % per year. The Group's Mail Related Solutions activities | which enjoy strong growth. Quadient has announced its new | ||||||||||||||||||||||||||||||||
are linked | to mail volumes. These activities were down by | strategy for the three coming years in January 2019. Named | |||||||||||||||||||||||||||||||
(5.3) % in 2015, by (4.6) % in 2016, by (4,3) % in 2017, by (3,8) % | "Back to Growth". Main orientations are described in the | ||||||||||||||||||||||||||||||||
in | 2018 and by (3.0) % in 2019. | section "Transformation" below. | Thanks | to | these | ||||||||||||||||||||||||||||
complementary activities, Quadient reduced the organic | |||||||||||||||||||||||||||||||||
decline of its consolidated sales by (1.8) % in 2015, (2.1) % in | |||||||||||||||||||||||||||||||||
2016 and (2.2) % in 2017. Sales increased by 0.2 % in 2018 and | |||||||||||||||||||||||||||||||||
by 1,6 % in 2019. | |||||||||||||||||||||||||||||||||
new | |||||||||||||||||||||||||||||||||
Increasing | |||||||||||||||||||||||||||||||||
competition | |||||||||||||||||||||||||||||||||
in | activities | ||||||||||||||||||||||||||||||||
Quadient has two main | competitors | in its legacy business | The Group's strategic and marketing department regularly | ||||||||||||||||||||||||||||||
(Mail Related | Solutions): world leader Pitney Bowes | and | analyze | the competition | and | this topic | is discussed during | ||||||||||||||||||||||||||
Francotyp | Postalia, No. 3 | in the world. Pitney Bowes is listed | the Board meetings and during the | management team | |||||||||||||||||||||||||||||
on the New York Stock Exchange. Its main market is North | meetings at least once a year. Regarding new activities, the | ||||||||||||||||||||||||||||||||
America. Francotyp Postalia is listed | on the Frankfurt Stock | Group has access to market studies made by renowned | |||||||||||||||||||||||||||||||
Exchange. Germany is its main market. | research firms. | ||||||||||||||||||||||||||||||||
Regarding | its new activities (Business Process Automation, | ||||||||||||||||||||||||||||||||
Customer | Experience | Management | and Parcel Locker | ||||||||||||||||||||||||||||||
Solutions), the Group | made a number of acquisitions, | ||||||||||||||||||||||||||||||||
notably: GMC Software in 2012, Icon Systemhaus in 2016 and | |||||||||||||||||||||||||||||||||
Parcel Pending | in January 2019. These acquisitions operate | ||||||||||||||||||||||||||||||||
on | markets where the | competitive | landscape is different | ||||||||||||||||||||||||||||||
from Mail Related Solutions. Quadient's competitors in these | |||||||||||||||||||||||||||||||||
new markets are more | numerous and could have greater | ||||||||||||||||||||||||||||||||
financial resources than the Group, which might affect the | |||||||||||||||||||||||||||||||||
Group's competitiveness. | |||||||||||||||||||||||||||||||||
Finally, it | can | be mentioned that | Customer Experience | ||||||||||||||||||||||||||||||
Management activity | is number | two | worldwide | and | |||||||||||||||||||||||||||||
considered | as a leader | by Gartner | thanks to continuous | ||||||||||||||||||||||||||||||
effort in R&D. | |||||||||||||||||||||||||||||||||
(1) | Software as a Service. |
2020 HALF-YEAR FINANCIAL REPORT | 13 |
1
14
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Risk factors
HIGH RISKS
Risks | Risk management system | ||||||||||||||
Acquisitions | |||||||||||||||
Quadient unveiled in | January 2019 | its new strategy | for | the | All project are thoroughly analyzed and then presented to the | ||||||||||
2019-2022 period. Named "Back to | Growth", this | strategy | investment committee | and to the board. Strict | financial | ||||||||||
aims at expanding and | growing the Group | while | critérias are applied during the analysis of the target and in | ||||||||||||
accelerating its transformation. | terms | of return on investmet. Ability of integration | is also a | ||||||||||||
To achieve this strategy, the Group intends to seize bolt-on | key topic. These acquisitions are then included in the four | ||||||||||||||
acquisition opportunities which, together with organic | major solutions: Mail | Related Solutions, Business | Process | ||||||||||||
growth in selected business | segments, will contribute to | Automation, | Customer | Experience Management and Parcel | |||||||||||
scale up the Group's major offers. | Locker Solutions, and in the four main regions (North America | ||||||||||||||
In this context, | the | Group | acquired Parcel | Pending | in | and | main | European | countries: France/Benelux, | United | |||||
January 2019. These acquisitions, as do all acquisitions, bring | Kingdom/Ireland, Germany/Austria/Switzerland/Italy). | ||||||||||||||
about uncertainty as | to the | consolidation of | the | acquired | |||||||||||
teams, and on the capacity to develop appropriate products | |||||||||||||||
and generate | synergies | within | Quadient's | historical | |||||||||||
distribution network. | |||||||||||||||
Operational risks
HIGH RISKS
Risks | Risk management system | ||||||||||||||||
Transformation | |||||||||||||||||
The "Back to Growth" strategy implies many changes and is | The refocus of the Group on its major activities goes hand in | ||||||||||||||||
built around the following pilars: | hand with | the implementation | of | a | new | management | |||||||||||
reinvest in Quadient highly cash generative legacy Mail | organization aimed at conducting these businesses in a far | ||||||||||||||||
Related Solutions offering; | more integrated manner than this was the case up to now. | ||||||||||||||||
focus on four major solutions in the main geographies; | Four main activities | have been defined. Each of them | are | ||||||||||||||
seize bolt-on acquisition opportunities; | overseen by a dedicated Chief Solutions Officer, In parallel, | ||||||||||||||||
streamline the Group's organization; | the | organization | is | structured | under | geographical | |||||||||||
either grow, improve or divest the Group's Additional | responsibilities with: | ||||||||||||||||
Operations by no later than 2022; | North America on the one hand; | ||||||||||||||||
adapt the Group's shareholder return policy. | and main European | countries on the other hand, | the | later | |||||||||||||
Transformation and | the ability to move quickly are key for | being divided into three regions: | |||||||||||||||
the Group financial | result in the future. | France & Benelux; | |||||||||||||||
UK & Ireland; | |||||||||||||||||
Germany, Austria, | |||||||||||||||||
Switzerland & Italy. | |||||||||||||||||
Additional | Operations | are | put | under | the | separate | |||||||||||
responsibility of one manager. The main objective is to truly | |||||||||||||||||
operate as one company in order to unlock more | |||||||||||||||||
commercial synergies in each main geography, as well as to | |||||||||||||||||
streamline | the | local | operations | and | be | more | efficient. To | ||||||||||
that extent, support | functions play also a key | role, including | |||||||||||||||
that of overseeing the Group's transformation, support the | |||||||||||||||||
new | strategy, | coordinate | cross-functional | projects | and | ||||||||||||
initiatives, conduct | acquisitions and potential divestments, | ||||||||||||||||
forge | a | common | marketing | vision, | centralize | the | |||||||||||
development and management of the product portfolio, | |||||||||||||||||
ensure greater consistency in the offering from one region | |||||||||||||||||
to another, as well as strengthen synergies | both in | R&D and | |||||||||||||||
in the supply chain. | |||||||||||||||||
This organization aims | to | create | a strong | and unique | |||||||||||||
company culture. | |||||||||||||||||
2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Risk factors
LOW RISKS
Risks | Risk management system | 1 | |
Time to market for new products
Developing and launching new products and services requires major investments. The Group's results and future financial position will depend in part on its ability to improve its products and services, to develop and produce new ones at the best price, and within the deadlines set by demand, and to distribute and market them.
A very strict procedure is applied for each launch of a new product. It includes Group project, planning, risk assessment and steering committee. All departments oncerned by this launch are involved in the project and in the steering comity.
Dependence | on | suppliers | ||||||
The Group's main supplier is Hewlett-Packard (HP) for inkjet | The Group has put in place alternative solutions in case such | |||||||
printing heads and cartridges. HP accounted for 6.1 % of total | an event should actually occur. The Group works with three | |||||||
Group purchases in 2019 and 2018. | OEM vendors (tier | one suppliers), which assemble | ||||||
The top five suppliers and the top ten suppliers respectively | entry-level and mid-range machines in Asia. Production is | |||||||
account for 18,7 % and 27.6 % of total purchases in 2019 | divided between these three tier one suppliers. In the event | |||||||
versus 19,9 % and 27,8 % in 2018. | disruption in | one of these suppliers should fail, the other two could take | ||||||
The Group works | also with OEM vendors. A | over production. | ||||||
supply from any | one of these suppliers could | significantly | Quadient also has a choice of strategic tier two suppliers, | |||||
affect the Group's business, despite the contractual clauses | and for each of these, a replacement supplier has been | |||||||
in the agreements protecting the Group against such risk. | selected. | |||||||
In addition, the Group is the owner of all molds, specific tools | ||||||||
and industrial design. | ||||||||
The Group has put | in place alternative solutions for | |||||||
procurement. The Group has not been or very few impacted | ||||||||
by COVID-19 crisis for procurement. | ||||||||
Legal risks
LOW RISKS
Risks | Risk management system |
New regulations
Quadient operates in several regions and in different activities. Some activities are under special regulations. This is the case for Mail Related Solutions and postal regulations. Other activities are also under specific regulations such as intellectual property and data privacy. The Group must be very careful.
(1) General Data Protection Regulation.
The Group legal councel department and its local delegates follow the evolution of regulations. Group projets are launched to adapt the Group's processes to new regulations such as Sapin II law and GDPR (1) As of today, the Group is not aware of any governmental, legal or arbitral proceedings likely to have a material impact, or which had over the past 12 months a material impact on the Group's financial position or profits.
Technological risks
HIGH RISKS
Risks | Risk management system | ||||||||||||||||||||
Information | |||||||||||||||||||||
system | cyber | criminality | |||||||||||||||||||
and | |||||||||||||||||||||
Quadient | past decentralized | organization and growth | by | A Chief Digital Officer | has | been | appointed in 2019. | His | |||||||||||||
acquisitions lead to great | diversity | in terms of information | responsability | is to align operational processes and IT within | |||||||||||||||||
systems. | Harmonization | of | IT | insfrastructures, | and | the Group. All | IT teams report to him. This new team aims to | ||||||||||||||
pallications is part of the "Back to Growth" strategy. | focus on operational | processes, cooperate with the | |||||||||||||||||||
management | team in | order | to enforce "Back to Growth" | ||||||||||||||||||
strategy. IT | security | in | terms | of infrastructure | and | ||||||||||||||||
application is | a key topic. | ||||||||||||||||||||
2020 HALF-YEAR FINANCIAL REPORT | 15 |
1
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Risk factors
Financial risks
LOW RISKS
Risks | Risk management system |
Tax matters
With regard to their current activities in France and abroad, Quadient entities are regularly subject to tax audits. Tax adjustments or uncertain tax positions not yet subject to tax adjustments are covered with appropriate provisions. The amounts of these provisions are regularly revised. In 2012, Quadient received a notification of tax adjustments in the Netherlands related to the financial years 2006, 2007, 2008. A mutual agreement was signed in 2019 by the Group with a payment of 15,7 million euros to the Dutch adminsitration and a refund of 9,1 million euros by the French administration. An investigation is still on going in United Kingdom. A provision has been recorded in 2019 for an amount of 9,1 million euros.
A tax review is performed annually at least in each entity with the help of an external tax adviser. Each tax investigation must be reported to the Group. An agreement has been signed with a global tax adviser to manage tax issues at Group level.
16
Exchange, | rate, | liquidity | and | shares | ||||||||||||||||||||||||||
The Group is mainly exposed to currency exchange rate | The Group believes that its cash flow (as defined in the | |||||||||||||||||||||||||||||
risks through its international activity and to interest rate | consolidated cash flow statement in | chapter 6 of | this | |||||||||||||||||||||||||||
risks | through | its debt. Quadient enjoys a | natural hedge on | universal | registration | document) will easily | enable | it | to | |||||||||||||||||||||
its current operating margin and its net income. | service its debt, given | the current level | of debt. Debt | by | ||||||||||||||||||||||||||
Based on the 2020 budget, the breakdown of sales and costs | maturity | is | detailed | in | note 12-2-5 | to | the | consolidated | ||||||||||||||||||||||
in United States dollars is as follows: sales | 43.4 % cost | of | financial statements. Group debt is subject to compliance | |||||||||||||||||||||||||||
sales | 52.0 % operating costs 37,7 % interest | expense 34.6 % | with covenants. Failure to comply with these covenants may | |||||||||||||||||||||||||||
A 5.0 % decrease in the euro/United States dollar exchange | lead to early repayment of the debt. As of 31 January 2020, | |||||||||||||||||||||||||||||
rate from the budget rate of 1.15 would have the following | the Group complies with all covenants (cf. note 12-2-3 to the | |||||||||||||||||||||||||||||
impacts | on | the Group's | income | statement: | sales | consolidated financial statements). | ||||||||||||||||||||||||
(23.6) million | euros, | current | operating income | (4.1) million | The Group | treasurer, | who reports | to | the | Group | chief | |||||||||||||||||||
euros and net income (2.2) million euros. | financial officer, monitors exchange | rate | and interest | rate | ||||||||||||||||||||||||||
Based on the 2020 budget, the breakdown of sales and costs | risks for all Quadient group's entities. A report showing the | |||||||||||||||||||||||||||||
in pounds sterling is as follows: sales 7.9 % cost of sales 8.2 % | Group's underlying position and hedges is sent each month | |||||||||||||||||||||||||||||
operating | costs 9.7 % A | 5.0 % decrease | in the euro/pound | to the chief financial officer to provide complete visibility | on | |||||||||||||||||||||||||
sterling exchange rate from the budget rate of 0.90 would | the financial risks relating to hedging activities, and to | |||||||||||||||||||||||||||||
have | the | following | impacts | on the | Group's | income | measure | the financial | impact of | unhedged positions. | ||||||||||||||||||||
statement: | sales (4.3) million | of euros, | current operating | Quadient uses the services of an independent consultancy | ||||||||||||||||||||||||||
income (0.5) million euros and net income | (0.4) million | based in Paris. This consultancy helps Quadient in its | ||||||||||||||||||||||||||||
euros. | exchange rate risk hedging policy, and values its portfolio of | |||||||||||||||||||||||||||||
The other currencies are not a major concern for the Group. | hedging instruments under IFRS. This | ensures | the | |||||||||||||||||||||||||||
None of them, individually taken, represents more than 5.0 % | consistency of methodologies used and provides a financial | |||||||||||||||||||||||||||||
of total sales. Beyond the natural hedge, no guarantee can | opinion independent | of | any financial | institution. | This | |||||||||||||||||||||||||
however be | given regarding the Group's ability to | hedge | Company has the technical and human resources to monitor | |||||||||||||||||||||||||||
exchange rate risk effectively. | interest rate and exchange rate trends every day and alert | |||||||||||||||||||||||||||||
To limit the impact of a | rise | in | interest rates on | its | interest | the Group treasurer in light of the strategy in place. | ||||||||||||||||||||||||
expenses, | Quadienthas | a | risk-hedging | policy aimed | at | Please see tables below for detailed impacts of interest and | ||||||||||||||||||||||||
protecting a maximum annual interest rate for the three | exchange rate risks. | |||||||||||||||||||||||||||||
years ahead at all times. | ||||||||||||||||||||||||||||||
2020 HALF-YEAR FINANCIAL REPORT
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Risk factors
CSR risks
HIGH RISKS | 1 | ||||||||||||
Risks | Risk management system | ||||||||||||
Attraction | retention | of | |||||||||||
and | talents | ||||||||||||
Intellectual and human capital is a real source of value | To avoid risk of losing key employees, the Group has put in | ||||||||||||
creation and talent management has become essential. In a | place retention incentives such as phantom shares and free | ||||||||||||
constantly changing employment market, it is essential to | shares. It has also implemented contingency plans for all | ||||||||||||
retain and motivate talents. Some positions require | major key positions at all the Group's entities. These plans | ||||||||||||
particular attention due to their key role in the organization | are regularly updated and reviewed by the remuneration | ||||||||||||
and the associated specific skills. | and nomination committee. | ||||||||||||
Data privacy
Quadient decentralized organization and growth by acquisitions lead to great diversity in terms of data base.
The head of IT security reports to the Chief Digital offcer and is in charge of the definition and of the application of IT security policies within the Group. In terms of security, postal audits were conducted successfully in all countries concerned in 2019, and continuous improvement plans are designed to meet postal requirements every year.
The Group security policy has been updated. Based on the ISO 27001 standard, the policy started to be rolled-out early 2017, particularly in markets that commercialize SaaS offerings.
Requirements relating to the GDPR ruling has also been addressed in these planned roll-outs to ensure compliance as of May 2018.
LOW RISKS
Risks | Risk management system |
Ethical and compliance
A code of ethic has been set up. No matter in which entity or coutry we are operating, rules and principles have been defined.
As all companies, Quadient is exposed to risk of fraud and especially due to the development of cybercriminality. The Group has rolled out an initiative with managers of subsidiaries to ensure this risk is fully understood, to gather information on best practice and ensure standard practices are disseminated throughout the Group.
The code of ethic covers human rights, health and safety at work, diversity and human development, ethic and fair business relationship, environment and social responsability. A wistle blowing procedure has been been enforced.
An anti-fraud policy was prepared and sent out in September 2014 to local chief financial officers and managing directors. The policy includes theoretical and practical recommendations to prevent fraud. If there is an attempted fraud using new methods, the head of internal control notifies local managing directors and chief financial officers where necessary.
Neopost S.A. has taken out a specific insurance policy to enhance its protection against this type of risk. As part of the planned Group ethics charter, the Group internal control department introduced a procedure for managing conflicts of interest since October 2012 (refer to chapter 2 of this universal registration document, section "By-laws for the Board and committees").
Environment
Given the nature of the Group's assembly and distribution businesses, the Group is not aware of any environmental risk or risk related to climate change that might have a material impact on its financial position, business or results. Please refer to the social and environmental information detailed in chapter 5 of this universal registration document.
Regarding industrial risks, the Group updates a Disaster Recovery Plan every year. This plan allows the Group to assert that these risks would not have a material impact on its financial position, business or results.
Intellectual property
The Group is the owner of its trademarks and has about 320 families of patents published. The geographical coverage of these patents is essentially European and American.
Quadient is not dependent on any single patent which might bring the Group's level of business or profitability into question.
2020 HALF-YEAR FINANCIAL REPORT | 17 |
-
COMMENTS ON QUADIENT'S RESULTS AND FINANCIAL STRUCTURE
Outlook
Exchange rate risk
Impact on net income before tax | Impact on equity as at | ||||||||||||||||||
on 2020 budget | 31 January 2020 | ||||||||||||||||||
Increase | Decrease | Increase | Decrease | ||||||||||||||||
(In million euros) | of 5% | of 5% | of 5% | of 5% | |||||||||||||||
USD | |||||||||||||||||||
(4.1) | (18.5) | ||||||||||||||||||
4.1 | 18.5 | ||||||||||||||||||
GBP | |||||||||||||||||||
(0.5) | (3.1) | ||||||||||||||||||
0.5 | 3.1 | ||||||||||||||||||
Interest rate risk
31 January 2020 | |||||||||||||||||
Impact on net | Impact on USD | Impact on EUR | |||||||||||||||
income before | Impact | denominated | denominated | ||||||||||||||
(In millions euros) | tax | on equity | debt | debt | |||||||||||||
Impact of a rise of +0.5 % in interest rates | |||||||||||||||||
(1.2) | (1.1) | ||||||||||||||||
0.2 | 0.1 | ||||||||||||||||
Impact of a decrease of (0.5) % in interest rates | |||||||||||||||||
1.2 | 1.0 | 2.2 | |||||||||||||||
1.7 Outlook
Thanks to its business portfolio, Quadient is uniquely positioned to continue to benefit from the acceleration of the shift towards digital solutions and e-commerce booming.
After the resilient performance recorded in the first half of 2020, revenue trend is expected to improve in the second half of 2020, driven by the growth in Business Process Automation and Parcel Locker Solutions activities.
Excluding unfavorable development with regards to the COVID-19 health crisis and worsening economic environement in the coming months, Quadient expects for full-year 2020 (1) :
- Organic sales decline of around 10 % compared to full-year 2019;
- Current EBIT (2) in the range of €135 million to €145 million (3) ;
- Free cash flow (4) of more than €100 million (3)
- The indications given up to 2022 as part of the "Back to Growth" plan remain suspended.
- Current operating income before acquisition-related expenses.
- Based on H1 2020 average exchange rates.
- Cash flow after capital expenditure.
18 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED 2FINANCIAL STATEMENTS
AT 31 JULY 2020
2.1 CONSOLIDATED FINANCIAL | 2.3 | STATUTORY AUDITORS' REVIEW | |
STATEMENTS | 20 | REPORT ON THE HALF-YEARLY | |
FINANCIAL INFORMATION | 56 |
2.2 NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS | 27 |
2020 HALF-YEAR FINANCIAL REPORT | 19 |
-
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Consolidated financial statements
2.1 Consolidated financial statements
❚ CONSOLIDATED ASSETS
(In millions of euros) | Notes | 31 July 2020 | 31 July 2019 | 31 January 2019 | ||||||||||||||||||||||||||||||||
Goodwill - Net | (4-1) | 1,139.6 | 1,045.3 | |||||||||||||||||||||||||||||||||
1,040.0 | ||||||||||||||||||||||||||||||||||||
Intangible fixed assets | ||||||||||||||||||||||||||||||||||||
Gross value | (4-2) | 534.1 | 538.8 | |||||||||||||||||||||||||||||||||
553.9 | ||||||||||||||||||||||||||||||||||||
Amortization | (4-2) | (393.1) | (408.5) | |||||||||||||||||||||||||||||||||
(425.5) | ||||||||||||||||||||||||||||||||||||
128.4 | 141.0 | 130.3 | ||||||||||||||||||||||||||||||||||
Tangible fixed assets | ||||||||||||||||||||||||||||||||||||
Gross value | (4-3) | 693.8 | 704.5 | |||||||||||||||||||||||||||||||||
600.0 | ||||||||||||||||||||||||||||||||||||
Amortization | (4-3) | (535.5) | (540.7) | |||||||||||||||||||||||||||||||||
(447.6) | ||||||||||||||||||||||||||||||||||||
152.4 | 158.3 | 163.8 | ||||||||||||||||||||||||||||||||||
Assets right of use | ||||||||||||||||||||||||||||||||||||
Gross value | (8) | 129.0 | 138.7 | |||||||||||||||||||||||||||||||||
137.2 | ||||||||||||||||||||||||||||||||||||
Amortization | (8) | (58.7) | (67.7) | |||||||||||||||||||||||||||||||||
(76.6) | ||||||||||||||||||||||||||||||||||||
60.6 | 70.3 | 71.0 | ||||||||||||||||||||||||||||||||||
Other non-current financial assets | ||||||||||||||||||||||||||||||||||||
Investments in associated companies | 7.8 | 7.9 | ||||||||||||||||||||||||||||||||||
7.5 | ||||||||||||||||||||||||||||||||||||
Non-current financial derivative instruments | (12) | 4.1 | 4.1 | |||||||||||||||||||||||||||||||||
1.8 | ||||||||||||||||||||||||||||||||||||
Other non-current financial assets | (4-4) | 54.3 | 56.9 | |||||||||||||||||||||||||||||||||
53.0 | ||||||||||||||||||||||||||||||||||||
62.3 | 66.2 | 68.9 | ||||||||||||||||||||||||||||||||||
Net long-term lease receivables | (6-2) | 413.2 | 416.6 | |||||||||||||||||||||||||||||||||
375.1 | ||||||||||||||||||||||||||||||||||||
Other net long-term receivables | 3.2 | 3.8 | ||||||||||||||||||||||||||||||||||
3.2 | ||||||||||||||||||||||||||||||||||||
Deferred tax assets | (13-2) | 5.2 | 8.9 | |||||||||||||||||||||||||||||||||
17.9 | ||||||||||||||||||||||||||||||||||||
Total non-current assets | 1,997.0 | 1,908.6 | ||||||||||||||||||||||||||||||||||
1,839.9 | ||||||||||||||||||||||||||||||||||||
Net inventories and work in progress | (6-5) | 83.8 | 76.9 | |||||||||||||||||||||||||||||||||
75.0 | ||||||||||||||||||||||||||||||||||||
Net receivables | ||||||||||||||||||||||||||||||||||||
Net accounts receivable | (6-2) | 197.7 | 233.2 | |||||||||||||||||||||||||||||||||
187.0 | ||||||||||||||||||||||||||||||||||||
Net short-term lease receivables | (6-2) | 271.9 | 281.8 | |||||||||||||||||||||||||||||||||
238.3 | ||||||||||||||||||||||||||||||||||||
Income tax receivables | 36.3 | 43.7 | ||||||||||||||||||||||||||||||||||
47.1 | ||||||||||||||||||||||||||||||||||||
Net other receivables | 6.4 | 6.2 | ||||||||||||||||||||||||||||||||||
9.5 | ||||||||||||||||||||||||||||||||||||
481.9 | 512.3 | 564.9 | ||||||||||||||||||||||||||||||||||
Prepaid expenses | 40.3 | 44.5 | ||||||||||||||||||||||||||||||||||
42.0 | ||||||||||||||||||||||||||||||||||||
Current financial derivative instruments | (12) | 3.9 | 1.3 | |||||||||||||||||||||||||||||||||
6.0 | ||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||||||||||||||
Short-term and liquid investments | 0.6 | 0.5 | ||||||||||||||||||||||||||||||||||
0.3 | ||||||||||||||||||||||||||||||||||||
Cash | 426.2 | 497.8 | ||||||||||||||||||||||||||||||||||
532.6 | ||||||||||||||||||||||||||||||||||||
532.9 | 426.8 | 498.3 | ||||||||||||||||||||||||||||||||||
Total current assets | 1,067.1 | 1,185.9 | ||||||||||||||||||||||||||||||||||
1,137.8 | ||||||||||||||||||||||||||||||||||||
Assets held for sale | (5) | 20.8 | ||||||||||||||||||||||||||||||||||
TOTAL ASSETS | 2,977.7 | 3,064.1 | 3,115.3 | |||||||||||||||||||||||||||||||||
The following notes form an integral part of the consolidated financial statements.
20 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Consolidated financial statements
❚ CONSOLIDATED LIABILITIES
(In millions of euros) | Notes | 31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||||||||||||||||||||||||||||||
Shareholders' equity | 2 | ||||||||||||||||||||||||||||||||||||||||
Share capital | 34.6 | 34.6 | |||||||||||||||||||||||||||||||||||||||
34.6 | |||||||||||||||||||||||||||||||||||||||||
Additional paid-in capital | 52.9 | 52.9 | |||||||||||||||||||||||||||||||||||||||
52.9 | |||||||||||||||||||||||||||||||||||||||||
Reserves and retained earnings | 934.9 | 933.5 | |||||||||||||||||||||||||||||||||||||||
935.2 | |||||||||||||||||||||||||||||||||||||||||
Cumulative translation adjustments | (13.3) | (3.8) | |||||||||||||||||||||||||||||||||||||||
(36.0) | |||||||||||||||||||||||||||||||||||||||||
Treasury shares | (3.3) | (2.8) | |||||||||||||||||||||||||||||||||||||||
(3.3) | |||||||||||||||||||||||||||||||||||||||||
Equity instruments | (14-1) | 224.6 | 220.1 | ||||||||||||||||||||||||||||||||||||||
215.6 | |||||||||||||||||||||||||||||||||||||||||
Net income | 47.1 | 14.1 | |||||||||||||||||||||||||||||||||||||||
21.4 | |||||||||||||||||||||||||||||||||||||||||
Total shareholders' equity | 1,277.5 | 1,248.6 | |||||||||||||||||||||||||||||||||||||||
1,220.4 | |||||||||||||||||||||||||||||||||||||||||
Attributable to: | |||||||||||||||||||||||||||||||||||||||||
holders of the parent company | 1,268.5 | 1,238.4 | |||||||||||||||||||||||||||||||||||||||
1,213.8 | |||||||||||||||||||||||||||||||||||||||||
non-controlling interests | 9.0 | 10.2 | |||||||||||||||||||||||||||||||||||||||
6.6 | |||||||||||||||||||||||||||||||||||||||||
Non-current financial debts | (12-2) | 841.3 | 993.9 | ||||||||||||||||||||||||||||||||||||||
771.0 | |||||||||||||||||||||||||||||||||||||||||
Non-current lease obligations | (8) | 60.9 | 61.4 | ||||||||||||||||||||||||||||||||||||||
51.0 | |||||||||||||||||||||||||||||||||||||||||
Long-term provisions | (11-1) | 25.4 | 28.6 | ||||||||||||||||||||||||||||||||||||||
25.3 | |||||||||||||||||||||||||||||||||||||||||
Non-current financial derivative instruments | (12) | 0.0 | 0.0 | ||||||||||||||||||||||||||||||||||||||
2.9 | |||||||||||||||||||||||||||||||||||||||||
Other non-current liabilities | 7.5 | 1.3 | |||||||||||||||||||||||||||||||||||||||
1.3 | |||||||||||||||||||||||||||||||||||||||||
Deferred tax liabilities | (13-2) | 144.6 | 134.8 | ||||||||||||||||||||||||||||||||||||||
143.8 | |||||||||||||||||||||||||||||||||||||||||
Total non-current liabilities | 1,079.7 | 1,220.0 | |||||||||||||||||||||||||||||||||||||||
995.3 | |||||||||||||||||||||||||||||||||||||||||
Accounts payable | |||||||||||||||||||||||||||||||||||||||||
Trade payables | 67.6 | 79.5 | |||||||||||||||||||||||||||||||||||||||
56.3 | |||||||||||||||||||||||||||||||||||||||||
Other operating liabilities | (6-6) | 193.0 | 201.4 | ||||||||||||||||||||||||||||||||||||||
197.4 | |||||||||||||||||||||||||||||||||||||||||
Tax payables | 33.6 | 36.4 | |||||||||||||||||||||||||||||||||||||||
32.7 | |||||||||||||||||||||||||||||||||||||||||
Short-term provisions | (11-1) | 12.8 | 10.3 | ||||||||||||||||||||||||||||||||||||||
9.5 | |||||||||||||||||||||||||||||||||||||||||
Deferred income | 164.7 | 198.3 | |||||||||||||||||||||||||||||||||||||||
167.8 | |||||||||||||||||||||||||||||||||||||||||
463.7 | 471.7 | 525.9 | |||||||||||||||||||||||||||||||||||||||
Current financial derivative instruments | (12) | 1.5 | 2.0 | ||||||||||||||||||||||||||||||||||||||
1.2 | |||||||||||||||||||||||||||||||||||||||||
Current lease obligations | (8) | 19.9 | 20.0 | ||||||||||||||||||||||||||||||||||||||
19.4 | |||||||||||||||||||||||||||||||||||||||||
Financial debts | |||||||||||||||||||||||||||||||||||||||||
Short-term portion of debts from credit institutions | (12-2) | 208.7 | 86.7 | ||||||||||||||||||||||||||||||||||||||
271.2 | |||||||||||||||||||||||||||||||||||||||||
Bank overdrafts | (12-2) | 5.1 | 4.9 | ||||||||||||||||||||||||||||||||||||||
6.5 | |||||||||||||||||||||||||||||||||||||||||
277.7 | 213.8 | 91.6 | |||||||||||||||||||||||||||||||||||||||
Total current liabilities | 706.9 | 639.5 | |||||||||||||||||||||||||||||||||||||||
762.0 | |||||||||||||||||||||||||||||||||||||||||
Liabilities held for sale | (5) | 7.2 | |||||||||||||||||||||||||||||||||||||||
TOTAL LIABILITIES | 2,977.7 | 3,064.1 | 3,115.3 | ||||||||||||||||||||||||||||||||||||||
The following notes form an integral part of the consolidated financial statements.
2020 HALF-YEAR FINANCIAL REPORT | 21 |
2
22
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Consolidated financial statements
❚ CONSOLIDATED INCOME STATEMENTS
(In millions of euros) | Notes | 31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||||||||||||||||||||||||||||
Sales | (6-1) | 556.9 | 1,142.7 | ||||||||||||||||||||||||||||||||||||
484.9 | |||||||||||||||||||||||||||||||||||||||
Current operating expenses | |||||||||||||||||||||||||||||||||||||||
Cost of sales | (145.9) | (302.1) | |||||||||||||||||||||||||||||||||||||
(129.0) | |||||||||||||||||||||||||||||||||||||||
Research and development expenses | (24.5) | (53.2) | |||||||||||||||||||||||||||||||||||||
(24.6) | |||||||||||||||||||||||||||||||||||||||
Sales and marketing expenses | (136.1) | (283.3) | |||||||||||||||||||||||||||||||||||||
(126.4) | |||||||||||||||||||||||||||||||||||||||
Administrative expenses | (107.2) | (214.9) | |||||||||||||||||||||||||||||||||||||
(100.5) | |||||||||||||||||||||||||||||||||||||||
Service and other operating expenses | (50.7) | (103.5) | |||||||||||||||||||||||||||||||||||||
(45.1) | |||||||||||||||||||||||||||||||||||||||
Employee profit-sharing,share-based payments | 0.1 | (0.6) | |||||||||||||||||||||||||||||||||||||
1.7 | |||||||||||||||||||||||||||||||||||||||
Expenses related to acquisitions | (6-7) | (10.8) | (15.5) | ||||||||||||||||||||||||||||||||||||
(11.1) | |||||||||||||||||||||||||||||||||||||||
Total current operating expenses | (475.1) | (973.1) | |||||||||||||||||||||||||||||||||||||
(435.0) | |||||||||||||||||||||||||||||||||||||||
Current operating income | (6-3) | 81.8 | 169.6 | ||||||||||||||||||||||||||||||||||||
49.9 | |||||||||||||||||||||||||||||||||||||||
Structure optimization expenses - net of reversals | (6-8) | (2.7) | (10.1) | ||||||||||||||||||||||||||||||||||||
(7.5) | |||||||||||||||||||||||||||||||||||||||
Proceeds from asset sales | (0.0) | (0.2) | |||||||||||||||||||||||||||||||||||||
(0.0) | |||||||||||||||||||||||||||||||||||||||
Other non-current operational expenses | (6-9) | 0.1 | (11.9) | ||||||||||||||||||||||||||||||||||||
(0.6) | |||||||||||||||||||||||||||||||||||||||
Impairment of goodwill | (4-5) | - | (70.4) | ||||||||||||||||||||||||||||||||||||
Operating income | 79.2 | 77.0 | |||||||||||||||||||||||||||||||||||||
41.8 | |||||||||||||||||||||||||||||||||||||||
Interest expenses | (16.4) | (37.9) | |||||||||||||||||||||||||||||||||||||
(15.2) | |||||||||||||||||||||||||||||||||||||||
Interests on lease obligations | (8) | (1.3) | (2.6) | ||||||||||||||||||||||||||||||||||||
(1.2) | |||||||||||||||||||||||||||||||||||||||
Interest income | 0.2 | 2.0 | |||||||||||||||||||||||||||||||||||||
0.5 | |||||||||||||||||||||||||||||||||||||||
Net cost of debt | (17.5) | (38.5) | |||||||||||||||||||||||||||||||||||||
(15.9) | |||||||||||||||||||||||||||||||||||||||
Losses on foreign exchange | (5.6) | (13.4) | |||||||||||||||||||||||||||||||||||||
(7.1) | |||||||||||||||||||||||||||||||||||||||
Gains on foreign exchange | 4.0 | 8.9 | |||||||||||||||||||||||||||||||||||||
5.8 | |||||||||||||||||||||||||||||||||||||||
Net gains (losses) on foreign exchange | (1.6) | (4.5) | |||||||||||||||||||||||||||||||||||||
(1.3) | |||||||||||||||||||||||||||||||||||||||
Other financial gains | 0.0 | 1.9 | |||||||||||||||||||||||||||||||||||||
0.3 | |||||||||||||||||||||||||||||||||||||||
Other financial losses | (0.0) | ||||||||||||||||||||||||||||||||||||||
Income before tax | 60.1 | 35.9 | |||||||||||||||||||||||||||||||||||||
24.9 | |||||||||||||||||||||||||||||||||||||||
Share of results of associated companies | 0.6 | 0.8 | |||||||||||||||||||||||||||||||||||||
(0.4) | |||||||||||||||||||||||||||||||||||||||
Income taxes | (13-1) | (13.6) | (21.4) | ||||||||||||||||||||||||||||||||||||
(2.7) | |||||||||||||||||||||||||||||||||||||||
NET INCOME | 21.8 | 47.1 | 15.3 | ||||||||||||||||||||||||||||||||||||
Attributable to: | |||||||||||||||||||||||||||||||||||||||
holders of the parent company | 47.1 | 14.1 | |||||||||||||||||||||||||||||||||||||
21.4 | |||||||||||||||||||||||||||||||||||||||
non-controlling interests | 0.0 | 1.2 | |||||||||||||||||||||||||||||||||||||
0.4 | |||||||||||||||||||||||||||||||||||||||
NET EARNINGS PER SHARE (IN EUROS) | (14-2) | 0.50 | 1.24 | 0.15 | |||||||||||||||||||||||||||||||||||
DILUTED NET EARNINGS PER SHARE (IN EUROS) | (14-2) | 0.50 | 1.18 | 0.15 | |||||||||||||||||||||||||||||||||||
The following notes form an integral part of the consolidated financial statements.
2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Consolidated financial statements
- CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In millions of euros) | 31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||||||||
Net income | 47.1 | 15.3 | ||||||||||||||||
21.8 | ||||||||||||||||||
Actuarial variances recognized in equity | 4.9 | 1.5 | ||||||||||||||||
(5.7) | ||||||||||||||||||
Deferred taxes on actuarial variances recognized in equity | (1.9) | (0.7) | ||||||||||||||||
1.3 | ||||||||||||||||||
Sub-total of items that could not be reclassified in net income | 3.0 | 0.8 | ||||||||||||||||
(4.4) | ||||||||||||||||||
Change in fair value of hedging instruments | (2.7) | (2.7) | ||||||||||||||||
0.5 | ||||||||||||||||||
Deferred taxes on change in fair value of hedging instruments | 0.8 | 0.2 | ||||||||||||||||
0.0 | ||||||||||||||||||
Translation variance | 9.9 | 19.4 | ||||||||||||||||
(32.2) | ||||||||||||||||||
Sub-total of items that could be reclassified in net income | 8.1 | 16.9 | ||||||||||||||||
(31.7) | ||||||||||||||||||
TOTAL INCOME FOR THE YEAR | (14.3) | 58.2 | 33.0 | |||||||||||||||
Attributable to: | ||||||||||||||||||
holders of the parent company | 58.2 | 31.8 | ||||||||||||||||
(14.7) | ||||||||||||||||||
non-controlling interests | 0.0 | 1.2 | ||||||||||||||||
0.4 | ||||||||||||||||||
The following notes form an integral part of the consolidated financial statements.
2020 HALF-YEAR FINANCIAL REPORT
2
23
2
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Consolidated financial statements
- CONSOLIDATED STATEMENTS OF CASH FLOW
(In millions of euros) | Notes | 31 July 2020 | 31 July 2019 | 31 January 2020 |
Net income attributable to shareholders of the parent company
Net income attributable to non-controlling interests Expenses (income) with no cash effect
Share of results of associated companies (net of dividends received)
Income taxes expense (including deferred taxes) Net cost of debt
Cash flow before net cost of debt and income taxes
Working capital variation
Increase (decrease) in lease receivables
Cash flow from operating activities
Interests paid
Interests paid on lease obligation
Income taxes paid
Net cash flow from operating activities (A)
Investments in tangible fixed assets
Investments in intangible fixed assets
Impact of changes in assets right-of-use
Financial investments
Sub-total investments
Disposals of fixed assets
Income from investments
Repayment of loans and other long-term advances
Net cash flow from investing activities (B)
Parent company capital increase
Share buyback liquidity contract
Dividends paid to shareholders
New medium and long-term borrowings
ODIRNANE issued*
Repayment of long-term borrowings
Repayment of lease obligation
Net cash flow from financing activities (C)
Cumulative translation adjustments on cash and cash equivalents (D)
Change in net cash (A) + (B) + (C) + (D)
Net cash - opening
Net cash closing
Cash and cash equivalents
Overdrafts
NET CASH - CLOSING
21.4 | 47.1 | 14.1 | |||||||||||||||||||||||||||||||||||||||||
0.0 | 1.2 | ||||||||||||||||||||||||||||||||||||||||||
0.4 | |||||||||||||||||||||||||||||||||||||||||||
(9-1) | 53.2 | 188.1 | |||||||||||||||||||||||||||||||||||||||||
50.9 | |||||||||||||||||||||||||||||||||||||||||||
(0.6) | (0.8) | ||||||||||||||||||||||||||||||||||||||||||
0.4 | |||||||||||||||||||||||||||||||||||||||||||
(13-1) | 13.6 | 21.4 | |||||||||||||||||||||||||||||||||||||||||
2.7 | |||||||||||||||||||||||||||||||||||||||||||
17.5 | 38.6 | ||||||||||||||||||||||||||||||||||||||||||
15.9 | |||||||||||||||||||||||||||||||||||||||||||
130.8 | 262.6 | ||||||||||||||||||||||||||||||||||||||||||
101.7 | |||||||||||||||||||||||||||||||||||||||||||
(9-2) | (54.6) | (7.2) | |||||||||||||||||||||||||||||||||||||||||
(25.0) | |||||||||||||||||||||||||||||||||||||||||||
30.7 | 25.1 | ||||||||||||||||||||||||||||||||||||||||||
53.6 | |||||||||||||||||||||||||||||||||||||||||||
106.9 | 280.5 | ||||||||||||||||||||||||||||||||||||||||||
130.3 | |||||||||||||||||||||||||||||||||||||||||||
(17.5) | (37.8) | ||||||||||||||||||||||||||||||||||||||||||
(15.0) | |||||||||||||||||||||||||||||||||||||||||||
(8) | (1.3) | (2.6) | |||||||||||||||||||||||||||||||||||||||||
(1.2) | |||||||||||||||||||||||||||||||||||||||||||
(18.5) | (45.0) | ||||||||||||||||||||||||||||||||||||||||||
0.6 | |||||||||||||||||||||||||||||||||||||||||||
69.6 | 195.1 | ||||||||||||||||||||||||||||||||||||||||||
114.7 | |||||||||||||||||||||||||||||||||||||||||||
(4-3) | (31.1) | (60.1) | |||||||||||||||||||||||||||||||||||||||||
(18.8) | |||||||||||||||||||||||||||||||||||||||||||
(4-2) | (17.4) | (35.7) | |||||||||||||||||||||||||||||||||||||||||
(17.6) | |||||||||||||||||||||||||||||||||||||||||||
(8) | (13.5) | ||||||||||||||||||||||||||||||||||||||||||
(2.8) | |||||||||||||||||||||||||||||||||||||||||||
(9-3) | (11.7) | (11.9) | |||||||||||||||||||||||||||||||||||||||||
(9.2) | |||||||||||||||||||||||||||||||||||||||||||
(60.2) | (121.2) | ||||||||||||||||||||||||||||||||||||||||||
(48.4) | |||||||||||||||||||||||||||||||||||||||||||
0.0 | 0.5 | ||||||||||||||||||||||||||||||||||||||||||
0.0 | |||||||||||||||||||||||||||||||||||||||||||
1.9 | |||||||||||||||||||||||||||||||||||||||||||
0.9 | |||||||||||||||||||||||||||||||||||||||||||
0.1 | 0.4 | ||||||||||||||||||||||||||||||||||||||||||
0.8 | |||||||||||||||||||||||||||||||||||||||||||
(60.1) | (118.4) | ||||||||||||||||||||||||||||||||||||||||||
(46.7) | |||||||||||||||||||||||||||||||||||||||||||
0.2 | 0.6 | ||||||||||||||||||||||||||||||||||||||||||
(1.4) | |||||||||||||||||||||||||||||||||||||||||||
- | (18.2) | ||||||||||||||||||||||||||||||||||||||||||
(9-4) | 217.3 | 536.4 | |||||||||||||||||||||||||||||||||||||||||
49.7 | |||||||||||||||||||||||||||||||||||||||||||
(13-1) | (4.5) | (8.9) | |||||||||||||||||||||||||||||||||||||||||
(4.5) | |||||||||||||||||||||||||||||||||||||||||||
(9-4) | (30.1) | (327.0) | |||||||||||||||||||||||||||||||||||||||||
(70.1) | |||||||||||||||||||||||||||||||||||||||||||
(8) | (10.5) | (8.7) | |||||||||||||||||||||||||||||||||||||||||
(7.7) | |||||||||||||||||||||||||||||||||||||||||||
172.4 | 174.2 | ||||||||||||||||||||||||||||||||||||||||||
(34.0) | |||||||||||||||||||||||||||||||||||||||||||
(2.3) | 0.4 | ||||||||||||||||||||||||||||||||||||||||||
(1.0) | |||||||||||||||||||||||||||||||||||||||||||
179.6 | 251.3 | ||||||||||||||||||||||||||||||||||||||||||
33.0 | |||||||||||||||||||||||||||||||||||||||||||
242.1 | 242.1 | ||||||||||||||||||||||||||||||||||||||||||
493.4 | |||||||||||||||||||||||||||||||||||||||||||
421.7 | 493.4 | ||||||||||||||||||||||||||||||||||||||||||
526.4 | |||||||||||||||||||||||||||||||||||||||||||
426.8 | 498.3 | ||||||||||||||||||||||||||||||||||||||||||
532.9 | |||||||||||||||||||||||||||||||||||||||||||
(5.1) | (4.9) | ||||||||||||||||||||||||||||||||||||||||||
(6.5) | |||||||||||||||||||||||||||||||||||||||||||
526.4 | 421.7 | 493.4 | |||||||||||||||||||||||||||||||||||||||||
24
The following notes form an integral part of the consolidated financial statements.
- ODIRNANE: senior unsecured net share settled undated bond convertible into new shares and/or exchangeable for existing shares.
2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Consolidated financial statements
- CHANGES IN SHAREHOLDERS' EQUITY
Reserves | ||||||||||
retained | ||||||||||
Additional | earnings | Cumulative | ||||||||
Number of | Share | paid-in | and net | Treasury | translation | |||||
(In millions of euros) | Par value | shares | capital* | capital* | income | shares | adjustments | Total | ||
Consolidated shareholders' equity | (4.1) | (23.2) | ||||||||
at 31 January 2019 | EUR 1 | 34,562,912 | 34.6 | 52.9 | 1,187.2 | 1,247.4 | ||||
Attributable to: | ||||||||||
holders of the parent company | 1,238.6 | |||||||||
non-controlling interests | 8.8 | |||||||||
Transtion to IFRS 16 | (5.7) | (5.7) | ||||||||
Consolidated shareholders' | equity | (4.1) | (23.2) | |||||||
at 1 February 2019 | EUR 1 | 34,562,912 | 34.6 | 52.9 | 1,181.5 | 1,241.7 | ||||
Net income | 15.3 | 15.3 | ||||||||
Items that could not be reclassified | ||||||||||
in net income | 0.8 | 0.8 | ||||||||
Items that could be reclassified in net | (2.5) | 19.4 | 16.9 | |||||||
income | ||||||||||
Comprehensive income 2019 | - | 13.6 | - | 19.4 | 33.0 | |||||
Change in treasury shares | liquidity | |||||||||
contract | (0.3) | 1.0 | 0.7 | |||||||
Free shares delivered (12,381 shares) | (0.3) | 0.3 | 0.0 | |||||||
2018 dividends | (18.2) | (18.2) | ||||||||
Share-based payments | 0.7 | 0.7 | ||||||||
ODIRNANE interests | (8.9) | (8.9) | ||||||||
Other | (0.4) | (0.4) | ||||||||
Consolidated shareholders' equity | (2.8) | (3.8) | ||||||||
at 31 January 2020 | EUR 1 | 34,562,912 | 34.6 | 52.9 | 1,167.7 | 1,248.6 | ||||
Attributable to: | ||||||||||
holders of the parent company | 1,238.4 | |||||||||
non-controlling interests | 10.2 | |||||||||
Movements first half of 2020 | ||||||||||
Net income | 21.8 | 21.8 | ||||||||
Items that could not be reclassified | ||||||||||
in net income | (4.4) | (4.4) | ||||||||
Items that could be reclassified in | net | 0.5 | (32.2) | (31.7) | ||||||
income | ||||||||||
Comprehensive income | (32.2) | (14.3) | ||||||||
first half 2020 | - | 17.9 | - | |||||||
Treasury shares liquidity contract | (0.5) | (0.2) | (0.7) | |||||||
Free shares attributed | ||||||||||
(26,464 shares) | (0.4) | (0.3) | (0.7) | |||||||
2019 dividend | (12.0) | (12.0) | ||||||||
Share-based payments | (0.6) | (0.6) | ||||||||
ODIRNANE interests | (4.5) | (4.5) | ||||||||
Fair value adjustment on the | ||||||||||
investments in X'Ange and Partech | 5.0 | 5.0 | ||||||||
Other | (0.4) | (0.4) | ||||||||
CONSOLIDATED SHAREHOLDERS' | ||||||||||
EQUITY AT 31 JULY 2020 | EUR 1 | 34,562,912 | 34.6 | 52.9 | 1,172.2 | (3.3) | (36.0) | 1,220.4 | ||
Attributable to: | ||||||||||
holders of the parent company | 1,213.8 | |||||||||
non-controlling interests | 6.6 | |||||||||
The following notes form an integral part of the consolidated financial statements.
* The share capital is fully released. Additional paid-in capital includes issue and translation premiums.
2020 HALF-YEAR FINANCIAL REPORT
2
25
2
26
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Consolidated financial statements
Reserved | |||||||||
retained | |||||||||
Additional | earnings | Cumulative | |||||||
Number | Share | paid-in | and net | Treasury | translation | ||||
(In millions of euros) | Par value | of shares | capital* | capital* | income | shares | adjustments | Total | |
Consolidated shareholders' | |||||||||
equity at 31 January 2019 | EUR 1 | 34,562,912 | 34.6 | 52.9 | 1,187.2 | (4.1) | (23.2) | 1,247.4 | |
Attributable to: | |||||||||
holders of the parent | |||||||||
company | 1,238.6 | ||||||||
non-controlling interests | 8.8 | ||||||||
Transition to IFRS 16 | - | (5.7) | - | (5.7) | |||||
Consolidated shareholders' | |||||||||
equity at 1 February 2019 | EUR 1 | 34,562,912 | 34.6 | 52.9 | 1,181.5 | (4.1) | (23.2) | 1,241.7 | |
Movements first half of 2019 | |||||||||
Net income | - | 47.1 | - | 47.1 | |||||
Items that could not be | |||||||||
reclassified in net | income | - | 3.0 | - | 3.0 | ||||
Items that could be reclassified | (1.8) | 9.9 | 8.1 | ||||||
in net income | |||||||||
Comprehensive income | |||||||||
first half 2019 | 48.3 | 9.9 | 58.2 | ||||||
Treasury shares | liquidity | ||||||||
contract | (0.4) | 0.6 | 0.2 | ||||||
Free shares attributed | |||||||||
(4,032 shares) | - | (0.3) | 0.2 | - | (0.1) | ||||
2018 dividend | (18.2) | (18.2) | |||||||
Share-based payments | 0.5 | 0.5 | |||||||
ODIRNANE interests | - | (4.5) | - | (4.5) | |||||
Other | (0.3) | (0.3) | |||||||
CONSOLIDATED SHAREHOLDERS' | |||||||||
EQUITY AT 31 JULY 2019 | EUR 1 | 34,562,912 | 34.6 | 52.9 | 1,206.6 | (3.3) | (13.3) | 1,277.5 | |
Attributable to: | |||||||||
holders of the parent | |||||||||
company | 1,268.5 | ||||||||
non-controlling interests | 9.0 | ||||||||
The following notes form an integral part of the consolidated financial statements.
- The capital is fully released. Additional paid-in capital includes issue and translation premiums.
2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
2.2 Notes to the consolidated financial statements
Financial statements for half-year ended | 31 July 2020 and | Therefore, the sum of rounded amounts may present | |||||||||
31 July 2019 and fiscal year 31 January 2020. | immaterial differences with the total shown. | 2 | |||||||||
The consolidated | half-year financial | statements | were | Some | amounts as at 31 July | 2019 | and 31 January | ||||
2020 | |||||||||||
approved | by | the | Board | of | directors | on | have | been reclassified to | be | comparable to | the |
25 September 2020. | presentation adopted as at 31 July 2020. |
Unless otherwise indicated, all amounts stated hereafter are in millions of euros, rounded to one decimal place.
TABLE OF CONTENTS
NOTE 1 PRESENTATION OF THE QUADIENT GROUP AND ITS CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 ACCOUNTING POLICIES
NOTE 3 SCOPE AND PRINCIPLES
OF CONSOLIDATION
NOTE 4 INTANGIBLE ASSETS, TANGIBLE ASSETS AND OTHER NON-CURRENT ASSETS
NOTE 5 ASSETS HELD FOR SALE
NOTE 6 OPERATING DATA
NOTE 7 SEGMENT INFORMATION
NOTE 8 ASSETS RIGHT OF USE AND LEASE OBLIGATIONS
NOTE 9 | CASH FLOW DETAILS | 43 | |
28 | NOTE 10 | HEADCOUNT AND EMPLOYEE BENEFITS | 44 |
29 | NOTE 11 | OTHER PROVISIONS, CONTINGENT | |
LIABILITIES AND OTHER NON-CURRENT | |||
30 | LIABILITIES | 45 | |
NOTE 12 | FINANCIAL INSTRUMENTS AND FINANCIAL | ||
30 | DEBTS | 46 | |
34 | NOTE 13 | TAX POSITION | 53 |
34 | NOTE 14 | SHAREHOLDERS' EQUITY AND EARNINGS | |
PER SHARE | 55 | ||
39 | NOTE 15 | POST-CLOSING EVENTS | 55 |
41 |
2020 HALF-YEAR FINANCIAL REPORT | 27 |
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 1 PRESENTATION OF THE QUADIENT GROUP AND ITS CONSOLIDATED FINANCIAL STATEMENTS
Quadient is the driving force behind the most meaningfull customer experience. By focusing on four major business areas which are Customer Experience Management (CXM), Business Process Automation (BPA), Mail Related Solutions (MRS) and parcel lockers solutions (PLS), Quadient assists on a daily basis hundred of thousands of companies in building powerfull connections with their customers and in delivering exceptional customer experiences, in a world where interaction have to be always more connected, personal and mobile.
The term "Quadient S.A." refers to the parent company (excluding consolidated subsidiaries), which is listed and registered in France, while "Quadient" and "the Group" refer to the economic group formed by the parent company and its consolidated subsidiaries.
The parent company's head office is located at 42-46 avenue Aristide Briand, 92220 Bagneux (France).
Quadient shares are listed on compartment B of Euronext Paris.
1-1 : History
Quadient was created in 1992 through a Leveraged Buy-Out (LBO) of Alcatel's mail processing equipment division. A second LBO took place in 1997. In February 1999, the Group was listed on the Paris stock exchange. Since then, Quadient has made acquisitions of various sizes. In
2002, Quadient | acquired Ascom Hasler | the | mailing |
systems division | of the Swiss company Ascom | which at |
the time was ranked third in the world. In 2009, Quadient acquired the company Satori Software. In 2012, Quadient acquired GMC Software AG, parent company of the group GMC Software Technology AG, leader in the field of customer communication management and Human Inference, a specialist in master data management. In 2013, Quadient acquired DMTI Spatial, the leading Canadian provider of location-based data quality solutions. In 2014, Quadient acquired Proship, one of the largest providers of multi-carrier parcel shipping solutions. In 2015, Quadient acquired a 55 % stake in Temando Holdings Pty Ltd, an Australian company that provides logistic solutions to the e-commerce sector. In 2016, Quadient acquired icon Systemhaus GmbH, German leader in customer communication solutions, mainly active in Germany and Austria. In 2017, the Group divested its distribution subsidiaries in Indonesia, Malaysia, Singapore and Thailand and its subsidiary DMTI Spatial. Quadient also acquired Temando's remaining minority interests in September 2017 and owns since 100% of the company. In 2018, Quadient acquired 100 % of the company Parcel Pending Inc., leader in the American parcel locker market and the main supplier of residential, commercial, retail and universities in the United States and Canada. In 2018, Quadient also sold its 100 % stake in the company Quadient Data USA (former Satori Software), one of the leaders in address quality solutions in the United States. In February 2019, Quadient announced the disposal of Quadient Data
Netherlands BV (former Human Inference), a leading data processing solutions provider. In September 2019, Quadient decided an orderly and phased shutdown of activity in its Australian subsidiary Temando (e-commerce shipping software), subject to Temando's legal obligations to its customers and other stakeholders. In September 2019, the Group also announced its decision to change the name Neopost to become Quadient. This choice of an unified and modern brand is the result of deploying a new Group organization as part of the Group's "Back to growth" strategy, moving away from companies operating independent businesses to a single company with an integrated portfolio of solutions.
1-2 : Main events of the period
SALE OF PROSHIP INC.
On 28 February 2020, Quadient divested the company Proship Inc., a global provider of automated multi-carrier shipping software. As of 31 January 2020, the assets and liabilities of the entity had been disclosed as assets held for sale in compliance with IFRS 5.
ACQUISITION OF YAYPAY
On 29 July 2020, Quadient acquired 100 % of the company YayPay, leading Fintech company specialized in account receivables automation solutions.
PANDEMIC COVID-19
The first half of 2020 has been marked by the global health crisis resulting from the circulation of the infection Covid-19. Containment measures have been implemented in many countries where Quadient operates. With the spread of the virus, the priority for Quadient has been the health and the security of its employees. Since the beginning of this crisis, the Group has adopted a number of measures to keep its employees safe and to ensure the business continuity to its customers while containing the effects of the crisis on its profitability. These measures include in particular a strong costs reduction program (temporary recruitment freezes, drastic reduction in subcontractors, reduction of bonuses...), partial unemployment wherever possible, further use of home working, providing protection material for the employees...
European manufacturing sites have been affected to various degrees from a strong decline in activity for some to a total two months closing for others.
This crisis is considered as an indicator of impairment as at 31 July 2020. A goodwill impairment test has been performed (see note 4-5).
In accordance with the regulator recommandations, all impacts in relation with this health crisis have been booked in the current operating income.
28 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 2 ACCOUNTING POLICIES
2-1 : Accounting standards applied
The interim consolidated accounts ended at 31 July 2020 comply with the principles of the norm IAS 34 with summarized financial statements completed by detailed notes.
The interim consolidated accounts at 31 July 2020 do not include all information required in the fiscal year accounts and must be read along with the fiscal year accounts ended 31 January 2020 and published on the 5 May 2020.
Accounting standards used for the preparation of the interim consolidated financial statements are the same as those used for the preparation of the annual consolidated financial statements at 31 January 2020. Quadient group's consolidated financial statements comply with the international accounting standards (standards IFRS: International Financial Reporting Standards) issued by the IASB (International Accounting Standards Board) applicable to 31 July 2020 as approved by the European Union.
The IFRS are available on the European Commission website: https://ec.europa.eu/info/law/international-accounting- standards- regulation-ec-no-1606-2002/
International accounting standards include IFRS, IAS (International Accounting Standards), and interpretations of these (SIC and IFRIC).
Standards, amendments and interpretation adopted by the European Union that are mandatory for financial years beginning on or after 1 January 2020:
- amendment to IFRS 3: Definition of a business;
- amendments to IAS 1 and IAS 8: Definition of material;
- amendments to IAS 39, IFRS 7 and IFRS 9 regarding pre-replacement issues in the context of the IBOR reform.
Standards, amendments and interpretations published by | 2 |
the IASB but not yet adopted by the European Union: ● amendment to IFRS 16.
2-2 : Translation of financial statements denominated in foreign currencies
The operating currency for each of the Group's entities is the currency of the economic environment in which that entity operates. Assets and liabilities of subsidiaries operating outside France, which are presented in local currencies, are translated into euros the currency used in the Group's financial statements - at the year-end exchange rate. Income and expenses are translated at the average exchange rate over the period. The resulting translation variance is recognized in the translation adjustment reserve under shareholder's equity.
The exchange rates for the main Group's currencies are as follows:
31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Period end | Average | Period end | Average | Period end | Average | ||||||||||||||||||||||||||||||||||||||||||||||||||
United States dollar (USD) | 1.12 | 1.13 | 1.11 | 1.12 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1.18 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
1.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Pound Sterling (GBP) | 0.92 | 0.88 | 0.84 | 0.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||
0.90 | 0.88 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Canadian dollar (CAD) | 1.47 | 1.50 | 1.46 | 1.48 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1.59 | 1.52 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Swiss franc (CHF) | 1.10 | 1.13 | 1.07 | 1.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1.08 | 1.06 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Japanese yen (JPY) | 121.04 | 123.81 | 120.35 | 121.87 | |||||||||||||||||||||||||||||||||||||||||||||||||||
124.31 | 119.38 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Norwegian kroners (NOK) | 9.78 | 9.71 | 10.19 | 9.85 | |||||||||||||||||||||||||||||||||||||||||||||||||||
10.73 | 10.86 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Swedish kroners (SEK) | 10.66 | 10.57 | 10.68 | 10.60 | |||||||||||||||||||||||||||||||||||||||||||||||||||
10.28 | 10.63 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Danish kroners (DKK) | 7.47 | 7.47 | 7.47 | 7.47 | |||||||||||||||||||||||||||||||||||||||||||||||||||
7.44 | 7.46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Australian dollar (AUD) | 1.62 | 1.60 | 1.65 | 1.61 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1.65 | 1.68 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Singapore dollar (SGD) | 1.53 | 1.53 | 1.51 | 1.52 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1.62 | 1.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Indian rupee (INR) | 76.70 | 78.51 | 78.91 | 78.77 | |||||||||||||||||||||||||||||||||||||||||||||||||||
88.64 | 82.80 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Brazilian real (BRL) | 4.22 | 4.34 | 4.72 | 4.44 | |||||||||||||||||||||||||||||||||||||||||||||||||||
6.12 | 5.66 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Chinese yuan (CNY) | 7.67 | 7.66 | 7.67 | 7.73 | |||||||||||||||||||||||||||||||||||||||||||||||||||
8.26 | 7.81 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Czech koruna (CZK) | 25.66 | 25.67 | 25.21 | 25.62 | |||||||||||||||||||||||||||||||||||||||||||||||||||
26.18 | 26.56 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hungarian forint (HUF) | 326.48 | 321.30 | 337.05 | 326.45 | |||||||||||||||||||||||||||||||||||||||||||||||||||
344.95 | 348.19 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Polish zloty (PLN) | 4.29 | 4.29 | 4.30 | 4.30 | |||||||||||||||||||||||||||||||||||||||||||||||||||
4.40 | 4.45 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
New-Zealand dollar (NZD) | 1.69 | 1.68 | 1.71 | 1.70 | |||||||||||||||||||||||||||||||||||||||||||||||||||
1.78 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
1.77 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
2020 HALF-YEAR FINANCIAL REPORT | 29 |
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 3 SCOPE AND PRINCIPLES OF CONSOLIDATION
3-1 : Accounting policies relating
to the scope of consolidation
The Group's consolidated financial statements are prepared in accordance with generally accepted accounting principles in the country of operation. Financial statements of foreign companies have been restated in accordance with Quadient group accounting principles.
The consolidated balance sheet incorporates all items of assets and liabilities along with the results of consolidated companies. Intra-Group transactions and profits relating to these operations as well as intra-Group capital gains are eliminated.
Subsidiaries controlled directly by the parent company or indirectly through other subsidiaries are consolidated using the full consolidation method. Stakes in associated companies over which the investor has significant influence are consolidated using the equity method. Significant influence is assumed when the investor controls directly or through subsidiaries 20 % or more of the voting rights in the Company held.
which control is transferred outside the Group. Control is the power to direct a company's financial and operational policies in order to derive profit from its activities.
Changes in the scope of consolidation for the first half-year 2020 are as follows:
- on 28 Februa ry 2020, Quadient divested the company Proship Inc. ;
- the company Cesar Holding Inc has been created the 13 July 2020. 87 % of the company is held by Quadient Holding Inc and it is fully consolidated ;
- on 29 July 2020, Cesar Holding Inc acquired 100 % of the company YayPay, fully consolidated ;
- the company Neopost Services has been merged with
Quadient France with retroactive effect to the 1 February 2020 ;
- the company Francotech GmbH has been merged with Quadient Germany Gmbh effective the 1 February 2020.
3-2 : Changes in the scope of consolidation
The consolidated financial statements include the financial statements of Quadient SA and its subsidiaries. The subsidiaries are consolidated as from the date on which control is acquired by the Group and until the date on
3-3 : Other information relating the scope of consolidation
Quadient owns a 35 % stake in Docapost BPO IS and a 24% stake in AMS Investissement. The transactions with these companies, consolidated using the equity method, are not significant.
NOTE 4 INTANGIBLE ASSETS, TANGIBLE ASSETS AND OTHER NON-CURRENT ASSETS
4-1 : Goodwill
Gross goodwill at 31 January 2020
YayPay acquisition
Translation differences
Gross goodwill at 31 July 2020
Cumulative impairment
NET BOOK VALUE AT 31 JULY 2020
1,155.3
19.8
(24.9)
1,150.2
(110.2)
1,040.0
In the first half of 2020, the goodwill variation is explained by the recognition of a temporary goodwill of 19.8 million euros for the acquisition of YayPay in the United States at the end of July 2020.
The cumulative impairment amounts to 110.2 million euros at the 31 July 2020.
The impairment test realized at the end of July 2020 is detailed in the note 4-5.
30 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
The level of analysis at which the group Quadient determines the recoverable amount of the goodwill thus corresponds to the following CGUs or groups of CGUs:
31 July 2020 | 31 January 2020 | |||||||||||||||||
France - Benelux (FRBNL) | 203.6 | |||||||||||||||||
203.6 | ||||||||||||||||||
United Kingdom - Ireland (UK-IE) | 149.0 | |||||||||||||||||
148.4 | ||||||||||||||||||
Germany - Austria - Italy - Switzerland (DACH-IT) | 146.5 | |||||||||||||||||
146.4 | 2 | |||||||||||||||||
North America (NORAM) | 415.3 | |||||||||||||||||
398.4 | ||||||||||||||||||
Parcel Pending (PP) | 91.9 | |||||||||||||||||
85.7 | ||||||||||||||||||
YayPay | ||||||||||||||||||
18.5 | ||||||||||||||||||
International | 36.2 | |||||||||||||||||
36.2 | ||||||||||||||||||
Major Operations | 1,042.5 | |||||||||||||||||
1,037.2 | ||||||||||||||||||
Additional Operations (AO) (a) | 2.8 | |||||||||||||||||
2.8 | ||||||||||||||||||
GOODWILL NET BOOK VALUE | 1,040.0 | 1,045.3 | ||||||||||||||||
- The Additional Operations group several CGU or group of CGUs
4-2 : Intangible assets
Concessions, | Development | |||||
rights | Licenses | expenses | IT costs | Other | Total | |
Gross value at 31 January 2020 | 33.1 | 119.2 | 274.1 | 57.0 | 55.4 | 538.8 |
Acquisitions/Capitalization | 0.0 | 0.4 | 15.9 | 0.0 | 1.3 | 17.6 |
Disposals | (0.1) | 0.0 | (0.1) | |||
Other changes | 0.0 | 0.1 | 3.8 | (0.1) | 3.8 | |
Translation difference | (0.1) | (2.9) | (2.0) | (0.3) | (0.9) | (6.2) |
Gross value at 31 July 2020 | 33.0 | 116.7 | 291.8 | 56.7 | 55.7 | 553.9 |
Cumulative amortization | (31.3) | (107.5) | (198.6) | (52.5) | (35.6) | (425.5) |
NET BOOK VALUE AT 31 JULY 2020 | 1.7 | 9.2 | 93.2 | 4.2 | 20.1 | 128.4 |
The change in intangible fixed assets is mainly due to the capitalization of development.
The other changes mainly include some reclassifications.
Concessions, | Development | |||||
rights | Licenses | expenses | IT costs | Other | Total | |
Amortization at 31 January 2020 | 31.0 | 107.4 | 184.4 | 51.4 | 34.3 | 408.5 |
Charges | 0.3 | 2.9 | 13.6 | 1.4 | 1.9 | 20.1 |
Disposals | 0.0 | 0.0 | ||||
Other changes | 0.0 | 1.7 | 1.7 | |||
Translation difference | 0.0 | (2.8) | (1.1) | (0.3) | (0.6) | (4.8) |
AMORTIZATION AT 31 JULY 2020 | 31.3 | 107.5 | 198.6 | 52.5 | 35.6 | 425.5 |
At 31 July 2020, no evidence of impairment was noted on intangible fixed assets.
2020 HALF-YEAR FINANCIAL REPORT | 31 |
-
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
4-3 : Tangible assets
Machinery | |||||||
Land and | and | Rented | IT | Demonstration | |||
buildings | equipment equipment | equipment | equipment | Other | Total | ||
Gross value at 31 January 2020 | 33.2 | 60.1 | 532.6 | 39.8 | 7.2 | 31.6 | 704.5 |
Acquisitions | 0.1 | 0.8 | 14.7 | 0.8 | 0.5 | 1.9 | 18.8 |
Disposals | (0.2) | (102.6) | (0.3) | (0.3) | (0.2) | (103.6) | |
Other changes | 0.1 | 0.1 | 0.0 | 0.2 | (0.7) | (0.4) | (0.7) |
Translation difference | (0.4) | (0.9) | (15.1) | (1.1) | (0.2) | (1.3) | (19.0) |
Gross value at 31 July 2020 | 33.0 | 59.9 | 429.6 | 39.4 | 6.5 | 31.6 | 600.0 |
Cumulative amortization | (20.0) | (50.9) | (320.4) | (35.1) | (3.2) | (18.0) | (447.6) |
NET BOOK VALUE AT 31 JULY 2020 | 13.0 | 9.0 | 109.2 | 4.3 | 3.3 | 13.6 | 152.4 |
The other variations mainly represent reclassifications.
Machinery | Demonstration | ||||||
Land and | and | Rented | IT | ||||
buildings | equipment equipment | equipment | equipment | Other | Total | ||
Amortization at 31 January 2020 | 19.5 | 50.4 | 415.1 | 35.1 | 3.0 | 17.6 | 540.7 |
Charges | 0.6 | 1.3 | 19.0 | 1.2 | 0.5 | 1.1 | 23.7 |
Disposals | (0.2) | (102.6) | (0.3) | (0.2) | (0.1) | (103.4) | |
Other changes | 0.0 | 0.0 | 0.0 | ||||
Translation difference | (0.1) | (0.6) | (11.1) | (0.9) | (0.1) | (0.6) | (13.4) |
AMORTIZATION AT 31 JULY 2020 | 20.0 | 50.9 | 320.4 | 35.1 | 3.2 | 18.0 | 447.6 |
At 31 July 2020, no evidence of impairment was noted on tangible fixed assets.
The variation of assets right-of-use gross value and amortization, recognized as part of the application of IFRS 16, are presented in the note 8.
4-4 : Other non-current financial assets
Deposits, loans and guarantees
Pension plan net asset
Other financial assets
TOTAL
31 July 2020
4.8
34.9
13.3
53.0
31 January 2020
4.7
43.0
9.2
56.9
At 31 July 2020, the deposits, loans and guarantees include
an escrow account | for 2.1 million euros related | to the sale | ||||
of | Quadient | Data | USA and ProShip | (1.3 million euros | at | |
31 | January | 2020) | and | a | guarantee deposit | for |
0.6 million euros related | to | the | liquidity | contract | ||
(1.4 million euros at | 31 January 2020). |
The Group has a pension plan in the United Kingdom that shows a surplus of 34.9 million euros (31.4 million pounds sterling) at 31 July 2020 compared with 43.0 million euros (36.2 million pounds sterling) at 31 January 2020. The
change in the pension plan's net assets is mainly related to actuarial differences.
The tax rate applicable for the cash refund of this asset in the United Kingdom will be 35 % This tax effect is presented in the consolidated financial statements liabilities on the line deferred tax liabilities.
The other financial assets include the investments realized by Quadient for the benefit of the professional private equity funds X'Ange 2 and Partech Entrepreneurs. These assets are valued at their fair value as at 31 July 2020.
32 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
4-5 : Impairment test
The global health and economic crisis related to the pandemic Covid-19 is considered as an indicator of impairment as at 31 July 2020. An impairment test of the
goodwill has been realized according to the method described in the note 4-5 of the universal registration document 2019.
Goodwill is tested for impairment based on its value in | use. | 2 |
For the main cash-generating units or group of CGUs, the following assumptions were used:
EBTDA average | Sales average | |||
growth rate | growth rate | Average growth | ||
over 5 years | over 5 years | rate to perpetuity | Discount rate | |
North America | 2.9 % | 1.5 % | (0.7) % | 6.8 % |
Parcel Pending | 31.7 % | 21.7 % | 2.0 % | 8.6 % |
France Benelux | 0.0 % | 2.5 % | 0.1 % | 7.7 % |
UK Irlande | 6.4 % | 7.5 % | 0.4 % | 7.9 % |
DACH-IT | 5.7 % | 3.7 % | 0.3 % | 7.0 % |
International | 10.0 % 12.2 % | 7.9 % 13.2 % | 2.0 % | 7.9 % |
Additional operations | 10.1 % | (0.6) % | 0.3 % | 7.9 % |
IMPAIRMENT TEST OF THE GOODWILL
As part of the "Back to growth" strategy, the Group has followed and reviewed the different elements reported within the additional operations portfolio.
In 2019, the Group lead to the conclusion of a lack of potential for growth or synergies of some additional activities with the Group's strategic solutions. Within the additional operations, Australia and Nordics countries have in particular an important graphics activity regarded as
SENSITIVITY
non-strategic by Quadient. Those elements have led the Group to decide to stop its investments in these activities in decline which are so continued as they stand.
Projections made by the Group on those bases for the purposes of the impairment led to the depreciation of the goodwill recognized for Australia, Nordic countries and shipping software business in France for a total amount of 70.4 million euros.
Sensitivity tests have been performed on the different assumptions used for the goodwill impairment test: (i) the EBITDA average growth rate over 5 years (ii) the infinite
growth rate and (iii) the weighted average cost of capital to determine at which rates the valuation of goodwill becomes equal to the value of the discounted cash flow.
The results of these tests are presented in the table below for the main CGU or groups of CGUs:
Breaking point | |||
EBITDA average growth | Infinite average | ||
rate over 5 years | growth rate | Discount rate | |
North America | (5.8) % | (14.5) % | 13.4 % |
Parcel Pending | 20.2 % | (1.6) % | 11.0 % |
France Benelux | (9.4) % | (18.5) % | 15.6 % |
UK Irlande | 3.4 % | (1.6) % | 9.3 % |
DACH-IT | 1.4 % | (2.6) % | 8.9 % |
International | 0.5 % (4.3) % | (8.7) %-(22.1) % | 13.9 % 18.1 % |
Additional operations | (20.2) % | < (100) % | 40.4 % |
In key assumptions, any reasonably possible change of one parameter at a time cannot lead to a recoverable value of CGU or group of CGUs becoming equal to its carrying amount.
2020 HALF-YEAR FINANCIAL REPORT | 33 |
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 5 ASSETS HELD FOR SALE
As at 31 January 2020, assets and liabilities classified as held for sale for respectively 23.9 million euros (20.8 million euros after depreciation) and 7.2 million euros are related to Proship, sold on 28 February 2020. This company was part of the cash-generating unit "Other Solutions". The goodwill has been valuated using the relative fair value method.
These assets and liabilities were measured at their fair value: the net book value of assets and liabilities as at
31 January 2020 has been compared to the sale price. This leads to the recognition of a depreciation booked in other operational expenses for an amount of 3.1 million euros.
ProShip | effective divestment which | occured | on |
28 February 2020 generates additionnal | charges | for | an |
amount | of 1.9 million euros recorded | in the | current |
operating income, in expenses related to acquisitions (note 6-7).
NOTE 6 OPERATING DATA
6-1 : Sales breakdown
Sales breakdown as follows:
- By business - Group sales
Group sales are composed of five revenue categories: (1) Mail Related Solutions, (2) Business Process Automation, (3) Customer Experience Management, (4) Parcel Locker Solutions and (5) Other activities. The other activities
comprise revenues that are not part of the four major solutions and include in particular graphics activities, other shipping software solutions and the automated packing systems (CVP).
31 July 2020 | 31 July 2019 | 31 January 2020 |
Mail related solutions | 333.6 | 392.3 | 789.5 | ||||||||
Business process automation | 31.1 | 64.9 | |||||||||
31.2 | |||||||||||
Customer experience management | 64.9 | 140.1 | |||||||||
61.6 | |||||||||||
Parcel locker solutions | 29.4 | 64.8 | |||||||||
32.9 | |||||||||||
Other activities | 39.2 | 83.4 | |||||||||
25.6 | |||||||||||
TOTAL | 484.9 | 556.9 | 1,142.7 | ||||||||
- By business - Major operations
The major operations have been defined around the four major solutions defined above, in three main geographic areas which are North America, Europe, including twelve
countries, and International. The revenues of additional operations are realized on activities that are different from the four major solutions, in all geographic areas.
31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||||
Mail related solutions | 360.0 | 728.3 | |||||||||||
312.9 | |||||||||||||
Business process automation | 30.2 | 63.2 | |||||||||||
30.6 | |||||||||||||
Customer experience management | 64.9 | 140.1 | |||||||||||
61.6 | |||||||||||||
Parcel locker solutions | 28.1 | 62.5 | |||||||||||
31.5 | |||||||||||||
Major operations | 483.2 | 994.1 | |||||||||||
436.6 | |||||||||||||
Additional operations | 73.7 | 148.6 | |||||||||||
48.3 | |||||||||||||
TOTAL | 484.9 | 556.9 | 1,142.7 | ||||||||||
34 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
● By type of revenues
31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||
Equipment and licenses sales | 171.7 | 363.8 | |||||||
123.0 | |||||||||
Recurring revenue* | 315.8 | 639.2 | |||||||
292.6 | |||||||||
Rental revenue | 69.4 | 139.7 | 2 | ||||||
69.3 | |||||||||
TOTAL | 484.9 | 556,9 | 1,142.7 | ||||||
- Recurring revenue mainly comprises maintenance, professional services and software right-of-use.
- By geographic area
31 July 2020 | 31 July 2019 | 31 January 2020 |
France Benelux
North America
Germany Austria Italy Switzerland
United Kingdom Ireland
International
Rest of the world *
TOTAL
87.3 | 105.1 | 208.3 | ||||||
250.2 | 523.6 | |||||||
238.8 | ||||||||
57.9 | 117.2 | |||||||
47.5 | ||||||||
46.5 | 95.1 | |||||||
38.3 | ||||||||
23.5 | 49.9 | |||||||
24.7 | ||||||||
73.7 | 148.6 | |||||||
48.3 | ||||||||
484.9 | 556.9 | 1,142.7 | ||||||
- The "Rest of the world" sales correspond to the sales of the segment "additional operations".
6-2 : Accounts receivable and lease receivables
ACCOUNTS RECEIVABLE
31 July 2020 | 31 January 2020 | ||||||||||||
Accounts receivable | |||||||||||||
Gross value | 251.3 | ||||||||||||
208.5 | |||||||||||||
Depreciation | (18.1) | ||||||||||||
(21.5) | |||||||||||||
Total | 233.2 | ||||||||||||
187.0 | |||||||||||||
Lease receivables | |||||||||||||
Short term | 286.1 | ||||||||||||
243.7 | |||||||||||||
Long term | 422.3 | ||||||||||||
380.1 | |||||||||||||
Gross value | 708.4 | ||||||||||||
623.8 | |||||||||||||
Depreciation | (10.0) | ||||||||||||
(10.4) | |||||||||||||
Total | 698.4 | ||||||||||||
613.4 | |||||||||||||
TOTAL | 800.4 | 931.6 | |||||||||||
2020 HALF-YEAR FINANCIAL REPORT | 35 |
-
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
31 July 2020 | 31 January 2020 | |||||||||
Accounts receivable Depreciation | ||||||||||
Depreciation at the beginning of the year | 18.0 | |||||||||
18.1 | ||||||||||
Charges * | 3.2 | |||||||||
4.8 | ||||||||||
Used | (1.4) | |||||||||
(0.4) | ||||||||||
Not used | (0.9) | |||||||||
(0.5) | ||||||||||
Other | (1.0) | |||||||||
0.1 | ||||||||||
Translation difference | 0.2 | |||||||||
(0.5) | ||||||||||
TOTAL | 21.5 | 18.1 | ||||||||
- The Covid-19 sanitary crisis resulted in an increase of trade receivables depreciation as a result of higher ageing.
FINANCING LEASES
31 July 2019 | 31 January 2020 | |||||||||||||||||
Non-current receivables | ||||||||||||||||||
Financing leases | gross receivables | 512.3 | ||||||||||||||||
459.9 | ||||||||||||||||||
Unearned financial income | (90.0) | |||||||||||||||||
(79.8) | ||||||||||||||||||
Total | 422.3 | |||||||||||||||||
380.1 | ||||||||||||||||||
Current receivables | ||||||||||||||||||
Financing leases | gross receivables | 341.6 | ||||||||||||||||
293.7 | ||||||||||||||||||
Unearned financial income | (55.5) | |||||||||||||||||
(50.1) | ||||||||||||||||||
Total | 286.1 | |||||||||||||||||
243.7 | ||||||||||||||||||
Gross receivables on financing leases | ||||||||||||||||||
Less than one year | 341.6 | |||||||||||||||||
293.7 | ||||||||||||||||||
One to five years | 503.6 | |||||||||||||||||
452.3 | ||||||||||||||||||
More than five years | 8.7 | |||||||||||||||||
7.6 | ||||||||||||||||||
Total gross value | 853.9 | |||||||||||||||||
753.6 | ||||||||||||||||||
Unearned financial income on financing leases | (145.5) | |||||||||||||||||
(129.9) | ||||||||||||||||||
Net investment in financing leases | ||||||||||||||||||
Less than one year | 286.1 | |||||||||||||||||
243.7 | ||||||||||||||||||
One to five years | 413.7 | |||||||||||||||||
372.7 | ||||||||||||||||||
More than five years | 8.6 | |||||||||||||||||
7.4 | ||||||||||||||||||
TOTAL | 623.8 | 708.4 | ||||||||||||||||
6-3 : Current operating income and EBITDA
31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||||||||||||||||||
Gross value | In% | Gross value | In % | Gross value | In% | ||||||||||||||||||||||
Sales | 556.9 | 100.0 % | 1,142.7 | 100.0 % | |||||||||||||||||||||||
484.9 | 100.0 | ||||||||||||||||||||||||||
Cost of sales | (145.9) | (26.2) % | (302.1) | (26.4) % | |||||||||||||||||||||||
(129.0) | (26.6) | ||||||||||||||||||||||||||
Gross margin | 411.0 | 73.8 % | 840.6 | 73.6 % | |||||||||||||||||||||||
355.9 | 73.4 | % | |||||||||||||||||||||||||
Operating expenses | (329.2) | (59.1) % | (671.0) | (58.7) % | |||||||||||||||||||||||
(306.0) | 63.1 | ||||||||||||||||||||||||||
Current operating profit | 81.8 | 14.7 % | 169.6 | 14.8 % | |||||||||||||||||||||||
49.9 | 10.3 | % | |||||||||||||||||||||||||
Amortization of fixed assets | 55.1 | 9.9 % | 112.5 | 9.8 % | |||||||||||||||||||||||
54.2 | 11.2 | ||||||||||||||||||||||||||
EBITDA | 104.1 | 21.5% | 136.9 | 24.6% | 282.1 | 24.7% |
36 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
6-4 : Breakdown of expenses by categories
Cost of inventories recognized as expense
Wages, bonuses, commissions and payroll charges
Rents and associated costs
Fees
Transport and travel
Fixed assets depreciation and amortization Other
Total expenses by category
Cost of sales
Operating expenses
TOTAL
31 July 2020 | 31 July 2019 | 31 January 2020 | ||||||||||||||||
128.9 | 285.8 | |||||||||||||||||
116.5 | ||||||||||||||||||
223.1 | 465.8 | |||||||||||||||||
213.1 | ||||||||||||||||||
4.0 | 9.0 | |||||||||||||||||
3.0 | ||||||||||||||||||
21.1 | 40.9 | |||||||||||||||||
22.3 | ||||||||||||||||||
21.0 | 41.0 | |||||||||||||||||
12.2 | ||||||||||||||||||
55.1 | 112.5 | |||||||||||||||||
53.9 | ||||||||||||||||||
22.0 | 18.1 | |||||||||||||||||
14.0 | ||||||||||||||||||
475.2 | 973.1 | |||||||||||||||||
435.0 | ||||||||||||||||||
145.9 | 302.1 | |||||||||||||||||
129.0 | ||||||||||||||||||
329.2 | 671.0 | |||||||||||||||||
306.0 | ||||||||||||||||||
435.0 | 475.2 | 973.1 | ||||||||||||||||
2
6-5 : Inventories and work in | progress | |||||
31 July 2020 | 31 January 2020 | |||||
Gross value | Depreciation | Net | Gross value | Depreciation | Net | |
Work in progress | 8.2 | (0.7) | 7.5 | 6.7 | (0.7) | 6.0 |
Raw materials | 13.9 | (2.3) | 11.6 | 13.4 | (2.0) | 11.4 |
Finished goods | 63.7 | (10.4) | 53.3 | 67.4 | (10.7) | 56.7 |
Spare parts | 4.6 | (2.0) | 2.6 | 4.6 | (1.8) | 2.8 |
TOTAL | 90.4 | (15.4) | 75.0 | 92.1 | (15.2) | 76.9 |
31 July 2020 | ||||||
Gross value | Depreciation |
Opening
Net inventory entries
Charges
Used
Other
Translation difference
TOTAL
92.1 (1.2)
0.8 (1.3)
90.4
(15.2)
(0.8) 0.4 (0.0) 0.2
(15.4)
6-6 : | Other operating liabilities | ||||||
The | other | operating | liabilities | for | an amount of | credit balances, debts to employees, short-term part of | |
197.4 million | euros | as | at | 31 July | 2020, | compared with | earn-outs and deposits made by customers in relation to |
193.0 million | euros | as | at | 31 July | 2019 | and 201.4 million | postage prepayment. |
euros | as at | 31 January | 2020 mainly comprise customer |
2020 HALF-YEAR FINANCIAL REPORT
37
2 | CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020 | |||||||||||
Notes to the consolidated financial statements | ||||||||||||
6-7 : Expenses and gains related to acquisitions | ||||||||||||
31 July 2020 | 31 July 2019 | 31 January 2020 | ||||||||||
Consulting fees | 6.2 | 7.1 | ||||||||||
5.0 | ||||||||||||
Amortization of intangible assets recognized as part of the purchase | ||||||||||||
price allocation | 4.6 | 8.4 | ||||||||||
3.0 | ||||||||||||
Other expenses related to acquisitions* | ||||||||||||
3.1 | ||||||||||||
EXPENSES RELATED TO ACQUISITIONS | 11.1 | 10.8 | 15.5 | |||||||||
- Costs related to YayPay acqusition (non-recourse loan to YayPay founders) and ProShip divestment (mainly retention bonuses contingent to the transaction closing).
6-8 : Structure optimization expenses - net of reversal
The Group continued its structure optimization program. An expense of 7.5 million euros, net of reversals not used for 0.8 million euros, is recorded in this regard in the first half of 2020 compared with 2.7 million euros in the first half of 2019 and 10.1 million euros in 2019. This expense
is mainly related to the costs incurred by the implementation of some actions related to reorganizations within the Group and to expenses related to staff reduction.
6-9 : Other operational expenses and income
During the financial year 2019, the other non current operational expenses amounted to 11.9 million euros and were mainly composed of the following elements:
- an expense of 3.1 million euros related to the recognition under IFRS 5 of ProShip divestment, which occurred at the beginning of 2020 financial year;
● an expense of 5.3 million euros related to the write-off
of the net value of the intangible assets recognized as part of the purchase price allocation of Temando. This followed the decision to shutdown the Temando businesses;
- an expense of 3.0 million euros related to the costs incurred with new visual identity.
6-10 : Off-balance sheet commitments related to operational data
Currency | 31 July 2020 | 31 January 2020 | |||||
Bank guarantee | in favor of the British postal service | GBP | 0.8 | ||||
0.8 | |||||||
Bank guarantee | in favor of the Irish postal service | EUR | 1.7 | ||||
1.7 | |||||||
38 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 7 SEGMENT INFORMATION
Since the announcement of the Group's strategy in January 2019, the activity of Quadient is split into two big categories: the major operations and the additional operations.
- Major Operations
Quadient focuses on four major solutions which are businesses where Quadient has already built strong legitimacy and that have the potential to reach a significant size and/or provide significant growth potential. These solutions are (1) the Mail Related Solutions, (2) the Business Process Automation, (3) the Customer Experience Management and (4) the Parcel Locker Solutions.
From a geographical standpoint, Quadient concentratesits efforts on twelve countries gathered on four segments: North America (NORAM), France Benelux (FR-BNL), Germany, Austria, Switzerland, Italy (DACH-IT), United Kingdom -Ireland(UK-IE).
Quadient's income breaks down by activities as follows:
At the beginning of 2020, a fifth geographical segment has been created in the major operations, the International segment, which groups two activities: the Parcel Lockers in Japan and the management of the customers experience solutions in the other regions of the world. These two activities have revealed a strong potential of growth for the future and a real complementarity with the rest of the major activities.
- Additional Operations
The portfolio of additional operations includes operations outside the main geographies as well as other activities, in particular graphics activities, other shipping software solutions and the automated packing system (CVP).
The segment "Innovation" includesin 2019 andin 2020 the charges linked to the development of new projects for Customer Experience Management.
2
Major | Additional | 31 July | |||||||||||||||||||||||
FR-BNL | NORAM | DACH-IT | UK-IE | International | Innovation operations | operations | 2020 | ||||||||||||||||||
Total sales | 87.3 | 238.8 | 47.5 | 38.3 | 24.6 | 0.1 | 436.6 | 48.3 | |||||||||||||||||
484,9 | |||||||||||||||||||||||||
Segment income | 19.2 | 39.4 | 5,7 | 4.2 | 0.9 | (4.7) | 64.7 | (3.7) | |||||||||||||||||
61.0 | |||||||||||||||||||||||||
in percentage | 22.1 % | 16.5 % | 11.9 % | 10.9 % | 3. % | n/a | 14.8 % | (7.7) % | |||||||||||||||||
12.6 | % | ||||||||||||||||||||||||
Expenses related | |||||||||||||||||||||||||
to acquisitions | |||||||||||||||||||||||||
(11.1) | |||||||||||||||||||||||||
Current operating income | |||||||||||||||||||||||||
49.9 | |||||||||||||||||||||||||
Structure optimization | |||||||||||||||||||||||||
expenses | |||||||||||||||||||||||||
(7.5) | |||||||||||||||||||||||||
Proceeds from net assets | |||||||||||||||||||||||||
sales | |||||||||||||||||||||||||
0.0 | |||||||||||||||||||||||||
Other operational gains | |||||||||||||||||||||||||
and expenses | |||||||||||||||||||||||||
(0.6) | |||||||||||||||||||||||||
Operating income | |||||||||||||||||||||||||
41.8 | |||||||||||||||||||||||||
Financial result | |||||||||||||||||||||||||
(16.9) | |||||||||||||||||||||||||
Share of results of associated | |||||||||||||||||||||||||
companies | |||||||||||||||||||||||||
(0.4) | |||||||||||||||||||||||||
Income taxes | |||||||||||||||||||||||||
(2.7) | |||||||||||||||||||||||||
NET INCOME | 21.8 | ||||||||||||||||||||||||
2020 HALF-YEAR FINANCIAL REPORT
39
-
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
Major | Additional | 31 July | |||||||
FR-BNL | NORAM | DACH-IT | UK-IE | International | Innovation operations | operations | 2019 | ||
Total sales | 105.1 | 250.2 | 57.9 | 46.5 | 23.4 | 0.1 | 483.2 | 73.7 | 556.9 |
Segment income | 26.4 | 54.1 | 7.8 | 7.4 | 2.7 | (2.5) | 95.9 | (3.3) | 92.6 |
In percentage | 25.1 % | 21.6 % | 13.4 % | 15.9 % | 11.5 % | n/a | 19.8 % | (4.5) % | 16.6 % |
Expenses related | |||||||||
to acquisitions | (10.8) | ||||||||
Current operating income | 81.8 | ||||||||
Structure optimization | |||||||||
expenses | (2.7) | ||||||||
Proceeds from net assets | |||||||||
sales | (0.0) | ||||||||
Other operational gains and | |||||||||
expenses | 0.1 | ||||||||
Operating income
Financial result
Share of results of associated companies
Income taxes
NET INCOME
79.2
(19.1)
0.6
(13.6)
47.1
Major | Additional | 31 January | |||||||||
FR-BNL NORAM DACH-IT | UK- | IEInternational | InnovationOperations | Operations | 2020 | ||||||
Total sales | 208.3 | 523.6 | 117.2 | 95.1 | 49.8 | 0.1 | 944.1 | 148.6 | 1,142.7 | ||
Segment income | 50.1 | 106.3 | 16.1 | 16.4 | 7.7 | (8.3) | 188.3 | (3.2) | 185.1 | ||
in percentage | 24.1 % | 20.3 % | 13.7 % | 17.2 % | 15.4 % | n/a | 18.9 % | (2.1) % | 16.2 % | ||
Expenses related to acquisitions | (15.5) | ||||||||||
Current operating income | 169.6 | ||||||||||
Impairment of goodwill | (70.4) | ||||||||||
Structure optimization expenses | (10.1) | ||||||||||
Proceeds from net assets sales | (0.2) | ||||||||||
Other operational expenses and income | (11.9) | ||||||||||
Operating income | 77.0 | ||||||||||
Financial result | (41.1) | ||||||||||
Share of results of associated companies | 0.8 | ||||||||||
Income taxes | (21.4) | ||||||||||
NET INCOME | 15.3 | ||||||||||
Transfer prices between business segments are the prices that would have been set under normal competitive conditions, as for a transaction with third parties.
Amounts recognized during the year but which had no effect on Group cash (before amortization, depreciation and provisions) mainly relate to amounts recorded in respect of share-based payments, which represent a gain of 0.6 million euros at the first half 2020 compared with a
gain of 0.5 million euros at the first half 2019 and an expense of 0.7 million euros in 2019.
The financial result is mainly due to the financial costs associated with each line of debt. The breakdown of the hedge accounting impacts is presented in note 12 for the portion of derivative financial instruments related to foreign exchange and interest rates.
40 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
The balance sheet breaks down by sector as follows:
Major | Additional | 31 July | ||||||||||||||
FR-BNL | NORAM | DACHIT | UK-IE International operations | operations | Other | 2020 | ||||||||||
Segment assets | 918.7 | 847.4 | 197.3 | 260.9 | 83.8 | 2,308.1 | 27.5 | 642.1 | ||||||||
2,977.7 | ||||||||||||||||
TOTAL ASSETS | 2,977.7 | |||||||||||||||
Segment liabilities | 121.2 | 251.0 | 49.7 | 88.6 | 37.0 | 547.5 | 30.6 | 1,179.2 | ||||||||
1,757.3 | 2 | |||||||||||||||
Equity | ||||||||||||||||
1,220.4 | ||||||||||||||||
TOTAL LIABILITIES | 2,977.7 | |||||||||||||||
Major Additional | 31 January | |||||||||||||||
FR-BNL | NORAM | DACHIT | UK-IE International operations | operations | Other | 2020 | ||||||||||
Segment assets | 1,018.7 | 883.5 | 212.8 | 272.1 | 80.5 | 2,467.6 | 24.7 | 623.0 | 3,115.3 | |||||||
TOTAL ASSETS | 3,115.3 | |||||||||||||||
Segment liabilities | 141.8 | 275.9 | 64.8 | 95.1 | 33.8 | 611.4 | 43.8 | 1,211.5 | 1,866.7 | |||||||
Equity | 1,248.6 | |||||||||||||||
TOTAL LIABILITIES | 3,115.3 | |||||||||||||||
The column "Other" includes the net indebtedness of Quadient SA, factories and supply-chain assets and liabilities as well as some assets and liabilities that cannot be allocated to an operational segment.
These assets and liabilities are not allocated to the different operational segments as only an allocation based on the total sales could be done. However, that would generate, year on year, variations potentially significant
for specific geographical areas, without a direct connection to their own performance.
NOTE 8 ASSETS RIGHT OF USE AND LEASE OBLIGATIONS
As of 31 July 2020, IFRS 16 impacts on the balance sheet, the income statement and the cash flow statement are the following:
● Impacts on the income statement
31 July 2020 | 31 July 2019 | 31 January 2020 | ||||||||||
Cancellation of rent expenses | 11.8 | 24.0 | ||||||||||
11.7 | ||||||||||||
Amortization expenses | (10.9) | (21.8) | ||||||||||
(10.5) | ||||||||||||
EBIT impact | 0.9 | 2.2 | ||||||||||
1.2 | ||||||||||||
Amortization of the period | 10.9 | 21.8 | ||||||||||
10.5 | ||||||||||||
EBITDA impact | 11.8 | 24.0 | ||||||||||
11.7 | ||||||||||||
Financial interests | (1.3) | (2.6) | ||||||||||
(1.2) | ||||||||||||
Scope variation impact | ||||||||||||
0.4 | ||||||||||||
NET INCOME IMPACT | 0.4 | (0.4) | (0.4) | |||||||||
2020 HALF-YEAR FINANCIAL REPORT | 41 |
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
● Impacts on the cash flow statement
31 July 2020 | 31 July 2019 | 31 January 2020 |
Net Income
Expenses (income) with no cash effect
Amortization
Net cost of debt
Interests paid
Net cash flow from operating activities
Impact of changes in the assets right-of-use
Net cash flow from investing activities
Changes in the lease obligation
Net cash flow from financing activities
CHANGE IN NET CASH
0.4 | (0.4) | 0.4 | |||||||||
(0.4) | |||||||||||
10.9 | 21.8 | ||||||||||
10.5 | |||||||||||
1.3 | 2.6 | ||||||||||
1.2 | |||||||||||
(1.3) | (2.6) | ||||||||||
(1.2) | |||||||||||
10.5 | 22.2 | ||||||||||
10.5 | |||||||||||
(13.5) | |||||||||||
(2.8) | |||||||||||
(13.5) | |||||||||||
(2.8) | |||||||||||
(10.5) | (8.7) | ||||||||||
(7.7) | |||||||||||
(10.5) | (8.7) | ||||||||||
(7.7) | |||||||||||
- | - | - | |||||||||
- Tables of variations of the assets right-of-use and the lease obligations
As of 31 July 2020, the assets right of use net value amounts to 60.6 million euros.
Other intangible | Assets right | ||
Buildings | assets | of use | |
Gross value at 31 January 2020 | 124.2 | 14.5 | 138.7 |
New contracts/renewals | 2.8 | 0.0 | 2.8 |
Other changes | (0.9) | (0.9) | |
Translation differences | (3.4) | (3.4) | |
Gross value at 31 July 2020 | 122.7 | 14.5 | 137.2 |
Amortization at 31 January 2020 | (61.9) | (5.8) | (67.7) |
Charges | (7.6) | (2.9) | (10.5) |
Other changes | (0.1) | (0.1) | |
Translation differences | 1.7 | 1.7 | |
Amortization at 31 July 2020 | (67.9) | (8.7) | (76.6) |
NET VALUE AT 31 JULY 2020 | 54.8 | 5.8 | 60.6 |
As of 31 July 2020, the lease obligations amount to 70.4 million euros including 51.0 million euros of long term portion.
31 January | Debt | Translation | Other | 31 July | |||||
2020 | modification Reimbursements | differences | variations | 2020 | |||||
Non-current lease obligations | 61.4 | 0.7 | 0.0 | (2.2) | (8.9) | ||||
51.0 | |||||||||
Current lease obligations | 20.0 | 2.1 | (10.5) | 7.8 | |||||
19.4 | |||||||||
LEASE OBLIGATIONS | 81.4 | 2.8 | (10.5) | (2.2) | (1.1) | 70.4 | |||
42 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 9 CASH FLOW DETAILS
Cash flows correspond to consolidated balance sheet items. However, these flows may differ from balance sheet variations in particular because of translation of operations in foreign currencies, translation of subsidiaries' financial statements denominated in foreign currencies and scope variations.
9-1 : Expenses (income) with no cash effect
2
31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||
Amortization of fixed assets | 55.1 | 112.5 | |||||||||
54.2 | |||||||||||
Provisions (reversals) | (4.1) | (4.9) | |||||||||
3.7 | |||||||||||
(Gains) and losses in fair value | 1.6 | 2.6 | |||||||||
1.3 | |||||||||||
(Proceeds) expenses from share based payments | 0.5 | 0.7 | |||||||||
(0.6) | |||||||||||
Net (gains) losses on disposals of fixed assets | 0.0 | ||||||||||
0.0 | |||||||||||
Goodwill impairment | 70.4 | ||||||||||
Intangible assets impairment | 5.3 | ||||||||||
Other | 0.1 | 1.5 | |||||||||
2.3 | |||||||||||
TOTAL | 60.9 | 53.2 | 188.1 | ||||||||
As at 31 July 2020, the change in provisions (reversals) is mainly related to additionnal charges on assets depreciation for an amount of 5.1 million euros and to provision reversals for (1.4) million euros.
As at 31 July 2019, the change in provisions (reversals) was mainly related to reversals on assets depreciation for an amount of (1.9) million euros and to provision reversals for (2.2) million euros.
As at 31 January 2020, the provisions variation was mainly related to net reversals on assets depreciation for an amount of 1.1 million euros and to provision reversals for 3.8 million euros.
As at 31 July 2020, the line "Other" includes the research tax credit for (1.1) million euros and reclassification of expenses related to YayPay acquisition and to ProShip divestment.
As at 31 July 2019, the line "Other" included the research tax credit for (0.9) million euros and the impact on the current operating income following the IFRS 16 application for 0.9 million euros.
As at 31 January 2020, the line "Other" mainly included the depreciation of Proship assets classified as assets held for sale for 3.1 million euros and the research tax credit for (2.2) million euros.
9-2 : Working capital variation
Inventories variation
Trade accounts receivable variation Deferred income variation
Trade accounts payable variation
Other current assets and liabilities variation
TOTAL
31 July 2020 | 31 July 2019 | 31 January 2020 | ||||||
(12.2) | (6.8) | |||||||
1.2 | ||||||||
29.1 | (2.1) | |||||||
35.5 | ||||||||
(29.2) | 5.6 | |||||||
(26.6) | ||||||||
(9.0) | 2.2 | |||||||
(22.6) | ||||||||
(33.3) | (6.1) | |||||||
(12.5) | ||||||||
(25.0) | (54.6) | (7.2) | ||||||
As at 31 July 2020, the variation of the other current assets and liabilities is mainly explained by time differences on VAT and social costs paiements due to Covid-19 measures.
As at 31 July 2019, the variation of the other current assets and liabilities was mainly explained by time differences on VAT receipts and disbursements.
As at 31 January 2020, the variation of the other current assets and liabilities was mainly explained by time differences on prepayments.
2020 HALF-YEAR FINANCIAL REPORT | 43 |
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
9-3 : Impact of changes in scope
At 31 July 2020, the acquisition of YayPay has generated a net cash out of 21.0 million euros. The effective divestment of ProShip, realized on 28 February 2020, has generated a net cash collection of 11.9 million euros.
At 31 July 2019, the sale of Quadient Data Netherlands BV (former Human Inference) generated a cash collection of 1.2 million euros. The tax paid on Quadient Data USA (former Satori) sale triggered a cash out for a 12.5 million euros tax in the United States.
9-4 : Reconciliation of the liabilities flows coming from financing activities
Cash-flow movements | Non-cash changes | ||||||||
Other * | Translation | ||||||||
31 January 2020 | New debt | Repayment | difference | 31 July 2020 | |||||
Non current financial debt | 993.9 | 46.5 | (67.3) | (184.6) | (17.5) | ||||
771.0 | |||||||||
Current financial debt | 86.7 | 3.2 | (2.8) | 184.1 | 0.0 | ||||
271.2 | |||||||||
FINANCIAL DEBT | 1,080.6 | 49.7 | (70.1) | (0.5) | (17.5) | 1,042.2 | |||
* The column "Other" is mainly composed of reclassifications.
In February 2020, Quadient bought back 15.0 million euros of the bond 2.50 % maturing in June 2021. The remaining notional of this bond after the buyback is 163.2 million euros at the 31 July 2020. In February 2020, Quadient repaid its private placement under the German law Schuldschein maturing for an amount of 17.0 million euros and 30.0 million United-States dollars. At the same date,
Quadient issued a private placement under the German law Schuldschein for an amount of 30.5 million euros and
- million United States dollars with maturity of four and five years. In June 2020, Quadient repaid at maturity
- million United States dollars of the United States private placement.
NOTE 10 HEADCOUNT AND EMPLOYEE BENEFITS
10-1 :Payroll
Wages and salaries, bonus and commissions Social costs
Share-based payments
Pension expenses under defined contribution plans
TOTAL
31 July 2020 | 31 July 2019 | 31 January 2020 | ||||
176.2 | 366.4 | |||||
168.4 | ||||||
46.4 | 98.4 | |||||
45.3 | ||||||
0.5 | 0.7 | |||||
(0.6) | ||||||
0.3 | ||||||
213.1 | 223.1 | 465.8 | ||||
10-2 : Retirement benefit obligations
The main | retirement obligation for | the Group | is | the | ||||
obligation | for | the | United Kingdom. | This | pension | fund | ||
shows a net asset of 31.4 million euros (34.9 million pounds | ||||||||
sterling) | as | at | 31 July | 2020 | compared | with | ||
43.0 million euros | (36.2 million | pounds | sterling) | as at | ||||
31 January | 2020. It | is accounted for in non-current | assets. | |||||
When a pension plan shows a | net | asset based | on | the | ||||
assumptions used, IAS 19 states that this | net | asset | should | |||||
only be recognized in the balance sheet if | an economic |
benefit is possible for the Company. Regarding the rules of the pension plan, Quadient has an unconditional repayment right of all the amounts left in the plan after the payment of the last pension to the last member of the pension plan. We consider this to be a sufficient justification to recognize the net asset of the pension fund in the consolidated balance sheet, in accordance with IAS 19/IFRIC 14.
The United Kingdom pension plan has not admitted any new members since 2001 and the rights of its members were frozen in June 2006. Every three years, the British regulator requires a valuation using different assumptions than those used for the valuation under IAS 19. If the
44 2020 HALF-YEAR FINANCIAL REPORT
valuation requested by the British regulator shows a deficit, Quadient has to make payments to offset it. In 2017, the British regulator did not identify any deficit. The next valuation will be performed during the second half of 2020.
The majority of pension obligations in the United Kingdom are financially hedged.
The retirement benefits of French employees are not covered by investments in pension funds except for Quadient France which has covered part of their retirement benefit obligations through investments in funds managed by insurance companies. The Chief Executive Officer and other Group executives have a defined benefit pension scheme (article 39 of the French general tax code).
An expense of 0.3 million was recorded as at 31 January 2020 as defined contribution pension plan for all Group entities. The Group did not carry out a new valuation at 31 July 2020.
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
10-3 : Share-based payments
The expenses or (income) recorded with respect to the share-based payments are as follows:
31 July 2020 | 31 July 2019 | 31 January 2020 | |||
Free share granted valuation | 0.5 | 0.7 | |||
(0.6) | |||||
INFORMATION RELATING TO THE FOUR STOCK-OPTION PLANS
Regarding warrant or purchase options plans, there was no allocation during the first half-year 2020. Variations on the first half-year are as follow: no exercise of option and no cancellation.
INFORMATION RELATING TO THE FREE SHARE PLANS
There was no allocation of free share plans during the first half-year 2020.
10-4 : Long term incentives (phantom shares)
Number of | Number of | |||||||
shares initially | out-standing | 31 January | 31 July | |||||
Plan | granted | shares | 2020 | Added | Reversals | Other | 2020 | |
July 2016 | 147,600 | 0.6 | (0.6) | 0.0 | ||||
March 2017 | 98,020 | 0.8 | (0.8) | 0.0 | ||||
Long term | incentives | 1.4 | (1.4) | 0.0 | ||||
At the 31 July 2020, there are no more long term incentives.
NOTE 11 OTHER PROVISIONS, CONTINGENT LIABILITIES AND OTHER NON-CURRENT LIABILITIES
11-1 : Other provisions
Short | Long | ||||||||||||
31 January | 31 July | term | term | ||||||||||
2020 | Added | Used | Non-used | Other | 2020 | portion | portion | ||||||
Other provisions | |||||||||||||
Structure optimization | 4.5 | 7.5 | (7.1) | 0.0 | (0.3) | 4.6 | |||||||
4.6 | |||||||||||||
Customer guarantees/business risk | 0.2 | 0.1 | 0.3 | 0.0 | |||||||||
0.3 | |||||||||||||
Provisions for business risk | 4.1 | 0.4 | (0.4) | (0.1) | 0.0 | 1.9 | 2.1 | ||||||
4.0 | |||||||||||||
Other | 3.7 | 1.0 | (0.4) | (0.2) | (0.1) | 2.7 | 1.3 | ||||||
4.0 | |||||||||||||
12.5 | 8.9 | (7.9) | (0.3) | (0.3) | 12.9 | 9.5 | 3.4 | ||||||
Retirement benefit obligations | 25.0 | 0.1 | (0.8) | (2.4) | 21.9 | ||||||||
21.9 | |||||||||||||
Long term incentives note 10-4 | 1.4 | (1.2) | (0.2) | 0.0 | |||||||||
TOTAL | 38.9 | 9.0 | (9.9) | (0.5) | (2.7) | 34.8 | 9.5 | 25.3 | |||||
STRUCTURE OPTIMIZATION | 11-2 : Contingent liabilities | ||||
The Group continues the optimization of its operations. | In their current activity, Quadient entities are regularly | ||||
Provisions | of | a total amount of 4.5 million | euros were | subject to tax investigations. | |
booked as at | 31 January 2020. During 2020 first half-year, | Tax adjustments or uncertain tax positions not | yet subject | ||
additional | charges of 7.5 million euros were | booked | and | ||
to tax adjustment, are | covered with | appropriate | |||
(7.1) million | euros were used. As at 31 July | 2020, | the | ||
provisions. The amount of | these provisions | is regularly | |||
balance of these provisions is 4.6 million euros. | |||||
revised. The Group has | not identified any | significant | |||
contingent liability as at 31 July 2020.
2020 HALF-YEAR FINANCIAL REPORT
2
45
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 12 FINANCIAL INSTRUMENTS AND FINANCIAL DEBTS
Quadient's financing strategy is coordinated by the Group chief financial officer. All Group exposure to interest rate and exchange rate risk is centralized within the Group cash management department.
Financial instruments mentioned in notes 12, especially those presented in table 12-1, are level 2 financial instruments, whose fair value is based on observable data.
12-1 : Breakdown of the balance sheet by financial instruments
Non-current financial assets
Lease receivables (a)
Other long term receivables
Receivables (b)
Other receivables (b)
Derivative financial instruments (c) Cash and cash equivalents (d)
ASSETS
Financial debts from credit institutions and bank overdrafts (e)
Other long-term debts
Accounts payable (b)
Other operating liabilities (b)
Derivative financial instruments (c)
LIABILITIES
31 July 2020 | Breakdown by instrument category | |||||||||||||||||||||||||||||||||||||||||||||
Fair value | Loans and | Debts at | ||||||||||||||||||||||||||||||||||||||||||||
through | receivables/ | amortized | Derivative | |||||||||||||||||||||||||||||||||||||||||||
Book value | Fair value | P&L | Debts | costs | instruments | |||||||||||||||||||||||||||||||||||||||||
13.3 | 39.7 | 1.8 | ||||||||||||||||||||||||||||||||||||||||||||
54.8 | 54.8 | |||||||||||||||||||||||||||||||||||||||||||||
613.4 | ||||||||||||||||||||||||||||||||||||||||||||||
613.4 | 635.2 | |||||||||||||||||||||||||||||||||||||||||||||
3.2 | ||||||||||||||||||||||||||||||||||||||||||||||
3.2 | 3.2 | |||||||||||||||||||||||||||||||||||||||||||||
187.0 | ||||||||||||||||||||||||||||||||||||||||||||||
187.0 | 187.0 | |||||||||||||||||||||||||||||||||||||||||||||
9.5 | ||||||||||||||||||||||||||||||||||||||||||||||
9.5 | 9.5 | |||||||||||||||||||||||||||||||||||||||||||||
6.0 | ||||||||||||||||||||||||||||||||||||||||||||||
6.0 | 6.0 | |||||||||||||||||||||||||||||||||||||||||||||
532.9 | ||||||||||||||||||||||||||||||||||||||||||||||
532.9 | 532.9 | |||||||||||||||||||||||||||||||||||||||||||||
1,406.8 | 1,428.6 | 13.3 | 1,385.7 | - | 7.8 | |||||||||||||||||||||||||||||||||||||||||
156.9 | 891.8 | |||||||||||||||||||||||||||||||||||||||||||||
1,048.7 | 1,062.6 | |||||||||||||||||||||||||||||||||||||||||||||
1.3 | ||||||||||||||||||||||||||||||||||||||||||||||
1.3 | 1.3 | |||||||||||||||||||||||||||||||||||||||||||||
56.3 | ||||||||||||||||||||||||||||||||||||||||||||||
56.3 | 56.3 | |||||||||||||||||||||||||||||||||||||||||||||
197.4 | ||||||||||||||||||||||||||||||||||||||||||||||
197.4 | 197.4 | |||||||||||||||||||||||||||||||||||||||||||||
1.2 | ||||||||||||||||||||||||||||||||||||||||||||||
1.2 | 1.2 | |||||||||||||||||||||||||||||||||||||||||||||
1,304.9 | 1,318.8 | 156.9 | 255.1 | 891.8 | 1.2 | |||||||||||||||||||||||||||||||||||||||||
- Due to the large number of deals handled by the leasing entities, the Group did not perform an individual valuation for each deal. The assumptions used are the following: average maturity of three years for the portfolio, yield curve ending on 31 July 2020 and constant exchange rate. The valuation is performed excluding credit spread. The British and American postage financing portfolio are comprised of very short-term maturities (less than a month) and renewable credits, the fair value considered is as mentioned in the balance sheet.
- Historical cost valuation.
- Valuation method described in note 12-4 of the 2019 universal registration document.
- Valuation based on realizable value.
-
The fair value of the debt is the portion of the 2.50% Quadient S.A. bond that was swapped for 125 million euros and the portion of the Schuldschein debt that was swapped for 29.5 million euros. The swap and the debt are recognized at their fair value as mentioned in note 12-4 of the 2019 universal registration document.
Concerning the debt accounted for at amortized cost, the main amounts are broken down as follows: - for all floating-rate debt described in note 12-2-6 of the 2019 universal registration document. The drawdown is
performed on a one-month,three-month and six-month basis and with a variable rate (EURIBOR and USD LIBOR); there is no difference between the fair value and the value as appearing in the balance sheet which represents an amount of 514.9 million euros; - concerning fixed rate debts, the fair value is calculated from the yield curve as at 31 July 2020. The difference between the fair value and the value as appearing in the balance sheet is 15.4 million euros.
- for all floating-rate debt described in note 12-2-6 of the 2019 universal registration document. The drawdown is
Debt in foreign currencies is valued at constant exchange rates.
46 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
Non-current financial assets
Lease receivables (a)
Other long term receivables
Receivables (b)
Other receivables (b)
Derivative financial instruments (c) Cash and cash equivalents (d)
ASSETS
Financial debts and bank overdrafts (e) Other long-term debts
Accounts payable (b)
Other operating liabilities (b) Derivative financial instruments (c)
LIABILITIES
31 January 2020 | Breakdown by instrument category | ||||
Fair value | Loans and | Debts at | |||
through | receivables/ | amortized | Derivative | ||
Book value | Fair value | P&L | debts | costs | instruments |
61.0 | 61.0 | 9.2 | 47.7 | 4.1 | |
698.4 | 717.2 | 698.4 | |||
3.8 | 3.8 | 3.8 | |||
233.2 | 233.2 | 233.2 | |||
6.2 | 6.2 | 6.2 | |||
1.3 | 1.3 | 1.3 | |||
498.3 | 498.3 | 498.3 | |||
1,502.2 | 1,521.0 | 9.2 | 1,487.6 | - | 5.4 |
1,085.5 | 1,091.0 | 158.6 | 926.9 | ||
1.3 | 1.3 | 1.3 | |||
79.5 | 79.5 | 79.5 | |||
201.4 | 201.4 | 201.4 | |||
2.0 | 2.0 | 2.0 | |||
1,369.7 | 1,375.2 | 158.6 | 282.2 | 926.9 | 2.0 |
2
- Due to the large number of deals handled by the leasing entities, the Group did not perform an individual valuation for each deal. The assumptions used are the following: average maturity of three years for the portfolio, yield curve ending on 31 January 2020 and constant exchange rate. The valuation is performed excluding credit spread. The British and American postage financing portfolios are comprised of very short-term maturities (less than one month) and renewable credits, the fair value considered is the same as the one booked in the balance sheet.
- Historical cost valuation.
- Valuation method described in note 12-4 of the 2019 universal registration document.
- Valuation based on realizable value.
-
The fair value of the debt includes the portion of the 2.50 % Quadient S.A. bond that was swapped for 125 million euros
and the portion of the Schuldschein debt that was swapped for 29.5 million euros. Swaps and debt are recognized at their fair value as mentioned in note 12-4 of the 2019 universal registration document.
Concerning the debt accounted for at amortized cost, the main amounts are broken down as follows: - for all floating-rate debt, described in note 12-2-6 of the 2019 universal registration document, the drawdown is
performed on a one-month,three-month and six-month basis and with a variable rate (EURIBOR and USD LIBOR); there is no difference between the fair value and the value in the balance sheet which represents an amount of 531.1 million euros; - concerning fixed rate debts, the fair value has been calculated from the yield curve as at 31 January 2020. The difference between the fair value and the value as appearing in the balance sheet is 12.5 million euros.
- for all floating-rate debt, described in note 12-2-6 of the 2019 universal registration document, the drawdown is
Debts in foreign currencies are valued at constant exchange rates.
2020 HALF-YEAR FINANCIAL REPORT
47
-
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
12-2 : Breakdown by type of debt
Financial | Short-term | |||||||||||||
debts and | part of | |||||||||||||
bank | long-term | Long-term | 31 July | 31 January | ||||||||||
overdrafts | debt | debt | 2020 | 2020 | ||||||||||
Bonds issue | Quadient S.A. 2.50 % (a) | 165.2 | 183.2 | |||||||||||
165.2 | ||||||||||||||
Bonds issue | Quadient S.A. 2.25 % (b) | 3.8 | 323.3 | 323.3 | ||||||||||
327.1 | ||||||||||||||
United States private placement (c) | 97.4 | 109.1 | ||||||||||||
97.4 | ||||||||||||||
Schuldschein (d) | 2.2 | 413.7 | 429.0 | |||||||||||
415.9 | ||||||||||||||
Revolving credit facility (e) | 0.1 | 0.1 | ||||||||||||
0.1 | ||||||||||||||
Other debts | 6.5 | 2.5 | 34.0 | 40.8 | ||||||||||
43.0 | ||||||||||||||
TOTAL | 6.5 | 271.2 | 771.0 | 1,048.7 | 1,085.5 | |||||||||
- Quadient issued an inaugural 350 million euros public bond on 23 June 2014 listed on Euronext Paris under ISIN number
FR0011993120 after filing a prospectus with the Autorité des Marchés Financiers (approval number 14-310 of 19 June 2014). This bond carries a fixed interest of 2.50 % and is payable on 23 June 2021. IFRS accounting entails an initial debt of 348.1 million euros, representing a debt issued at 2.5830 % The debt has been swapped against variable rate for a
notional amount of 125 million euros and the debt fair value adjustment represents an amount of 1.7 million euros. The fair value of the swap is recorded in non-current financial derivative instruments (assets) for an amount of 1.6 million euros. As at 31 July 2020, the impact in the financial charges of this fair value hedge is 0.01 million euros. On 5 February 2020, Quadient bought back on the market a nominal of 15.0 million euros, in addition to the 148.8 million euros bought back on the 23 February 2020, bringing the notional outstanding amount to 163.2 million euros.
-
Quadient issued a 325 million euros public bond on 23 January 2020 listed on Euronext Paris under ISIN number
FR0013478849 after filing a prospectus with the Autorité des Marchés Financiers (approval number 20-018 of 21 January 2020). This bond carries a fixed interest of 2.25% and is payable on 3 February 2025. IFRS accounting entails an initial debt of 323.1 million euros, representing a debt issued at 2.3750 % - On 20 June 2012, Quadient concluded a private placement in the United States consisting of five tranches with different maturities between four and ten years for a total of 175 million United States dollars. The different tranches bear a fixed interest rate of between 3.17 % and 4.50 % depending on the maturity of the tranche. In June 2020, Quadient repaid
5.0 million United States dollars which had matured. The amount of the private placement is 25.0 million United States dollars at the end of July 2020. On 4 September 2014, Quadent S.A. concluded a 90.0 million United States dollars private placement amortizable in three equal instalments starting in September 2020. This private placement bears a variable rate of three-month LIBOR USD. On the 4 September 2020, all the notes totaling an amount of 115.0 million United States dollars has been repaid before maturity. - In February 2017, Quadient concluded private placements under German law (Schuldschein ) consisting of ten tranches with different maturities between three and six years for a total amount of 135.0 million euros and 86.5 million United States dollars. The debt has been swapped against variable rate for a notional amount of 29.5 million euros and the debt fair value adjustment represents an amount of (0.6) million euros. The fair value of the swap is recorded in non-current financial derivative instruments (assets) for an amount of 0.5 million euros. As at 31 July 2020, the impact in the financial charges of this fair value hedge is 0.1 million euros. In February 2020, Quadient repaid 17.0 million euros and 7.5 million United States dollars which had matured. In May 2019, Quadient concluded private placements under German law (Schuldschein) consisting of nine tranches with different maturities of between three and six years for a total amount of 130.0 million euros and 90.0 million United States dollars. In February 2020, Quadient concluded private placements under German law (Schuldschein) consisting of four tranches with different maturities of between four and five years for a total amount of 30.5 million euros and 13.0 million United States dollars.
- On 20 June 2017, Quadient arranged a revolving credit line for drawdown in euros and in United States dollars for an initial amount equivalent to 400.0 million euros for a period of five years. The maturity of the revolving credit line has been extended to the 20 June 2024, thanks to the exercise of an extension option. The interest rate is indexed to the EURIBOR or LIBOR USD over the relevant drawdown period plus a margin depending on the debt coverage ratio by the EBITDA calculated on the Group's consolidated financial statements excluding leasing activities. At the end of January 2020, Quadient does not use that credit facility.
12-3 : Financial ratios
With the exception of the Quadient SA 2.50% bond issue and Quadient SA 2.25 % bond issue, which are not subject to any covenant, the various debts (private placements, Schuldscheins and revolving credit facilities) are subject to financial covenants. Failure to comply with these covenants may lead to early repayment of the debt. Quadient complies with all covenants at 31 July 2020.
48 2020 HALF-YEAR FINANCIAL REPORT
12-4 : Risk management
12-4-1: MARKET RISKS
The Group is mainly exposed to currency exchange rate risks through its international activity and to interest rate risks through its debt.
EXCHANGE RATE RISK
Quadient has a policy of centralizing its foreign currency risk, enabling it to monitor the Group's overall exchange rate risk exposure and to gain full control over the market instruments used in hedging operations.
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
First half-year position
The tables below represent Quadient's half year-end positions as regards exchange rate hedging for commercial activities.
- FINANCIAL YEAR 2020 - ASSETS AND LIABILITIES HEDGING: HEDGING POSITIONS COVERING FINANCIAL ASSETS OR LIABILITIES ON QUADIENT'S BALANCE SHEET AT 31 JULY 2020 AND EXPECTED TO BE REALIZED NO LATER THAN OCTOBER 2020
value | USD | GBP | CAD | NOK | JPY | SEK | CHF | DKK | CZK | SGD | AUD | PLN | |
Financial assets | 41.0 | 5.8 | 1.6 | 8.4 | 185.6 | 4.7 | 4.5 | 2.3 | 7.8 | 0.6 | 5.4 | 0.1 | |
Financial liabilities | 9.2 | 4.0 | 2.7 | 1.4 | 33.7 | 1.9 | 5.8 | 2.6 | 55.8 | 0.6 | 1.1 | 0.1 | |
Net position before hedging | 31.8 | 1.8 | (1.1) | 7.0 | 151.9 | 2.8 | (1.3) | (0.3) | (50.0) | 4.3 | |||
Hedging | (31.8) | (6.4) | (151.9) | (2.8) | (1.3) | 47.5 | (4.3) | ||||||
NET POSITION | |||||||||||||
AFTER HEDGING | - | 1.8 | (1.1) | 0.6 | - | - | (2.6) | (0.3) | (0.5) | - | - | - | |
Quadient uses | symmetrical collars | in | particular. | United States dollars sold, and 30.0 million Czech crowns |
These option instruments are unlikely to be exercised in a | bought. | |||
non-reciprocal manner in terms of the spot | exchange rate | Quadient also makes use of asymmetric options collars. | ||
or expiry date. As | a result, for each collar only | one of the | ||
There is no asymmetric options collar as at 31 July 2020. | ||||
two options is reported in the table above. The value of | ||||
the commitment in | these symmetric options is | 17.0 million |
- 2020 BUDGET: HEDGING POSITIONS COVERING ANTICIPATED FINANCIAL ASSETS AND LIABILITIES IN SECOND HALF-YEAR 2020 EXPECTED TO BE REALIZED NO LATER THAN APRIL 2021
Notional value | USD | GBP | CAD | NOK | JPY | SEK | CHF | DKK | CZK | SGD | AUD | PLN | |
Projected financial assets | 61.8 | 13.7 | 9.3 | 18.2 | 440.4 | 26.5 | 10.8 | 19.3 | 54.4 | 2.2 | 10.6 | (0.4) | |
Projected financial liabilities | 55.0 | 5.6 | (3.1) | 0.7 | 186.7 | 6.2 | 11.8 | 1.0 307.3 | 2.4 | (0.4) | 2.7 | ||
Net position before hedging | 6.8 | 8.1 | 12.4 | 17.5 | 253.7 | 20.3 | (1.0) | 18.3 | (252.9) | (0.2) | 11.0 | (3.1) | |
Hedging | (15.7) | 0.1 | (5.1) | (98.2) | (23.3) | (4.5) | (10.6) | 127.5 | (1.0) | (8.8) | 0.1 | ||
NET POSITION | |||||||||||||
AFTER HEDGING | (8.9) | 8.2 | 7.3 | 17.5 155.5 | (3.0) | (5.5) | 7.7 | (125.4) | (1.2) | 2.2 | (3.0) | ||
2
Quadient uses symmetric collars in particular. These option instruments are unlikely to be exercised in a non-reciprocal manner in terms of the spot exchange rate or expiry date. As a result, for each collar only one of the two options is reported in the table above. The value of the commitment in these symmetric options is 2.5 United States dollars sold, 0.7 million Canadian dollars sold, 25.0 million Yens sold, 11.0 million Swedish koruna sold and 30.0 million Czech crowns bought.
Quadient also makes use of asymmetric collars. The asymmetric part of this kind of options is presented in the table above with a view to reflecting the Group's maximum commitment. The asymmetric part by currency
is as follows: 11.5 million United | States dollars sold, |
0.5 million Canadian dollars sold, | 7.0 million Swedish |
koruna sold and 60.0 million Czech crowns bought.
Instrument and valuations
The Quadient group hedges its exchange rate risk using over-the-counter derivative instruments contracted with external counterparties.
The instruments in the portfolio have a maturity of less than twelve months as at 31 July 2020. These instruments are listed below by type and by currency for the period to which they relate.
2020 HALF-YEAR FINANCIAL REPORT
49
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
❚ 2020: ASSETS AND LIABILITIES HEDGING
Forward | Forward | Put options | Put options | Call options | Call options | |
Notional value Cash flow hedging | purchases | sales | bought | sold | bought | sold |
USD | 14.8 | 17.0 | 17.0 | |||
NOK | - | 6.4 | - | |||
JPY | 45.6 | 197.5 | - | |||
SEK | 2.8 | |||||
CHF | - | 1.3 | - | |||
CZK | 17.5 | 30.0 | 30.0 | |||
AUD | 4.3 | |||||
- 2020 BUDGET: HEDGING OF ANTICIPATED POSITIONS FOR SECOND HALF-YEAR 2020
Forward | Forward | Put options | Put options | Call options | Call options | |
Notional value Total | purchases | sales | bought | sold | bought | sold |
USD | 1.7 | 2.5 | 14.0 | |||
GBP | 0.1 | |||||
CAD | 3.9 | 0.7 | 1.2 | |||
JPY | 73.2 | 25.0 | 25.0 | |||
SEK | 5.3 | 11.0 | 18.0 | |||
CHF | - | 4.5 | - | |||
DKK | 10.6 | |||||
CZK | 97.5 | 90.0 | 30.0 | |||
SGD | 1.0 | |||||
AUD | 8.8 | |||||
PLN | 0.1 | |||||
Derivative instruments are recognized in accordance with the accounting principles and methods presented in note 12-4-1 of the 2019 universal registration document. As of 1 February 2013 and according to IFRS 13 standards Quadient set up a credit risk methodology concerning the valuation of financial instruments. In light of the immaterial
impact of credit risk, Quadient decided not to recognize them in the financial statements at 31 July 2020.
Quadient uses the IFRS 9 standard for hedging instruments accounting.
Changes | ||||||||||
Changes | recognized | |||||||||
Changes | Changes | recognized | in the | |||||||
recognized | recognized | in the | income | |||||||
through | through | income | statement | |||||||
equity- Fair | equity- | statement- | Non-aligned | |||||||
31 January | value via | Aligned cost | Fair value | cost of | ||||||
Notional value | 2020 | OCI* | of hedge | via P&L | hedge | 31 July 2020 | ||||
Financial assets | 0.4 | 1.4 | ||||||||
1.8 | ||||||||||
Cash flow hedge | 0.3 | 1.4 | ||||||||
1.7 | ||||||||||
Ineffective hedge | 0.1 | |||||||||
0.1 | ||||||||||
Financial liabilities | 0.1 | |||||||||
0.1 | ||||||||||
Cash flow hedge | 0.1 | |||||||||
0.1 | ||||||||||
Ineffective hedge | ||||||||||
- OCI: Other Comprehensive Income.
50 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
INTEREST RATE RISK
Quadient has a policy of centralizing its interest rate risk, enabling it to monitor the Group's overall interest rate risk exposure and to gain full control over the market instruments used in hedging operations. The Group hedges
Half-year position
its interest rate risk depending on its current debt levels, but also according to likely future movements in debts, arising from drawings on its revolving credit facilities.
The table below sets out Quadient's 31 July 2020 | position by maturity for the major currencies: | 2 | |||||||
EUR | USD | ||||||||
Notional value | < 1 year | 1 to 5 years | > 5 years | Total | < 1 year | 1 to 5 years | > 5 years | Total | |
Debt | 173.4 | 543.4 | 22.5 | 739.3 | 123.6 | 213.7 | 337.3 | ||
Of which fixed-rate debts | 5.8 | 376.5 | 340.8 | 723.1 | 1.3 | 34.9 | 36.2 | ||
CORRESPONDING HEDGE MATURITIES | - | 220.0 | 220.0 | - | 131.6 | - | 131.6 | ||
Derivative instrument details
The instruments in the portfolio are listed below, according to type, currency and maturity.
Notional value | Currency | < 1 year | 1 to 5 years | > 5 years | |
Cross Currency Swap | EUR/USD | 45.7/50.0 | |||
Swap | buyer | EUR | 125.0 | 29.5 | |
Swap | receiver | USD | 70.0 | ||
Cap | buyer | USD | 65.0 | ||
EUR | 70.0 | ||||
Floor | buyer | USD | 45.0 | ||
EUR | 150.0 | ||||
Floor | receiver | USD | 15.0 | 15.0 | |
Instrument valuations
Derivative instruments are recognized in accordance with the accounting principles and methods presented in note 12-4-1 of the 2019 universal registration document. All interest rate derivative instruments are thus valued on the balance sheet and in the income statement at their market value, in accordance with IFRS 9. As of 1 February 2013 and according to IFRS 13 standard, Quadient set up a credit risk methodology concerning the valuation of financial instruments. In lights of the immaterial impacts of credit risk, Quadient decided not to recognize them in the financial statements at 31 July 2020.
Changes in the market value of instruments not eligible for hedge accounting have been charged in their entirety to the income statement. The ineffective portion of instruments eligible for hedge accounting, plus the time value of these instruments, have been charged to net financial expense. Changes in the intrinsic value of these instruments have been recognized as a restatement of equity.
Quadient applies IFRS 9 on hedge instruments.
2020 HALF-YEAR FINANCIAL REPORT | 51 |
- CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
Changes | |||||||||||||||
Changes | Changes | recognized | |||||||||||||
in the | |||||||||||||||
recognized | recognized | Changes | income | ||||||||||||
through | through | recognized in | statement- | ||||||||||||
Premium on | equity- Fair | equity- | the income | Non-aligned | |||||||||||
31 January | new | Value via | Aligned cost | statement-Fair | cost of | ||||||||||
2020 | operations | OCI* | of hedge | Value via P&L | hedge | 31 July 2020 | |||||||||
Financial assets | 4,7 | (0.8) | 0.2 | 1.5 | (0.1) | ||||||||||
(derivatives) | |||||||||||||||
5.5 | |||||||||||||||
Debt and swap at fair | |||||||||||||||
value hedge | 3,9 | (1.5) | |||||||||||||
2.4 | |||||||||||||||
Derivative instruments | |||||||||||||||
qualified as cash flow | |||||||||||||||
hedges | 0,7 | - | (0.8) | 0.2 | 1.8 | (0.2) | |||||||||
1.7 | |||||||||||||||
Derivative instruments | |||||||||||||||
not eligible | 0,1 | 1.2 | 0.1 | ||||||||||||
1.4 | |||||||||||||||
Financial liabilities | 1,7 | 1.2 | 0.1 | ||||||||||||
(derivatives) | |||||||||||||||
3.0 | |||||||||||||||
Derivative instruments | |||||||||||||||
qualified as cash flow | |||||||||||||||
hedges | 1,7 | 1.2 | 0.1 | ||||||||||||
3.0 | |||||||||||||||
Derivative instruments | |||||||||||||||
not eligible | - | - | |||||||||||||
* OCI: Other Comprehensive | Income. |
As at 31 July 2020, the impact of the valuation of financial instruments according to IFRS 13 is nearly flat.
12-4-2: LIQUIDITY RISK
The Group believes that its cash flow will easily enable it to service its debt, given the current level of that debt. Group debt (United States private placement and revolving loan) is subject to compliance with covenants. Failure to comply with these covenants may lead to early repayment of the debt. Quadient complied with all covenants as at 31 July 2020.
However, this ability will depend on the Group's future performance, which is partly related to the economic cycle, which the Group cannot control. No guarantee can therefore be given regarding the Group's ability to cover its financial needs.
As at 31 July 2020, the Group has 400 million euros of undrawn in credit lines.
12-4-3: CREDIT RISK
Customers' counterparty risk exposure (receivables, lease receivables)
Credit risk is limited because of the diversity and the very high number of customers and because of the low unit value of each contract. No customer accounts for more than 1 % of sales.
The main subsidiaries are equipped with information & telecommunication (IT) tools and dedicated teams that allow them to tailor their receivables collection processes to every customer. In addition, the leasing and postage financing activities have their own credit scoring tools and systematically use an external credit scoring opinion at the inception of a new contract.
During the monthly operating reviews, led by the Group finance department, the accounts receivable of each subsidiary are analyzed.
12-4-4: DEPENDENCE ON SUPPLIERS
The main supplier of the Group is Hewlett-Packard (HP), ink cartridges' supplier. HP accounted for 6.1% of total Group purchases in 2019 compared with 6.1 % in 2018. The top five and the top ten suppliers respectively account for
18.7 % and 27.6 % of total Group purchases in 2019, compared with 19.9 % and 27.8 % in 2018.
Any disruption in supply from any one of these suppliers could significantly affect the Group's business, even though clauses are written into the contracts to protect the Group against this risk. Quadient has already put in place alternative solutions in case such an event actually
occurs.
52 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
12-4-5: BANKING COUNTERPARTY RISK EXPOSURE
The Group defined a list of the banks that subsidiaries are allowed to deal with and made it mandatory to use these authorized banks for cash deposits. Generally, banking services cannot be attributed to unauthorized banks. Exceptions can be made with the authorization of the Group treasury department.
Regarding the offsetting of derivatives in accordance with IFRS 7, Quadient recorded derivatives under assets of 4.6 million euros before netting and recorded derivatives under liabilities of 0.7 million euros before netting. These transactions are carried out with seven banking partners. As at 31 July 2020, the net amount of these instruments is an asset of 3.9 million euros.
12-4-6: BREXIT RISK EXPOSURE
Quadient's business in the United Kingdom consists of hardware sales within Mail Related Solutions and sales of licenses in the digital communications solutions business. Quadient also owns a logistics hub and a folder-inserter factory. These activities generate import and export flows which can be sizeable, in particular with European countries, North-America and the Asia-Pacific area. These activities could be affected by Brexit but, at this stage, the Group has not identified any accounting impacts to be recognized in its financial statements.
2
NOTE 13 TAX POSITION
13-1 : Tax proof
The reconciliation between the theoretical tax charge and the actual tax charge is as follows:
31 July 2020 | 31 July 2019 | 31 January 2020 | ||||||||||||||||||
Net income of consolidated companies before income tax | 60.7 | 36.8 | ||||||||||||||||||
24.5 | ||||||||||||||||||||
Tax rate for the consolidating company | 32.0 % | 34.3 % | ||||||||||||||||||
32.0 | % | |||||||||||||||||||
Theoretical income tax charge | 19.4 | 12.6 | ||||||||||||||||||
7.8 | ||||||||||||||||||||
Permanent differences | 2.0 | 4.7 | ||||||||||||||||||
(1.6) | ||||||||||||||||||||
Income tax rate differences | (6.7) | (12.5) | ||||||||||||||||||
(4.7) | ||||||||||||||||||||
ODIRNANE | (1.4) | (3.1) | ||||||||||||||||||
(1.4) | ||||||||||||||||||||
Prior year tax repayment | 0.5 | 0.5 | ||||||||||||||||||
(0.5) | ||||||||||||||||||||
Rate decrease and other exceptional items (a) | 1.1 | 19.2 | ||||||||||||||||||
3.0 | ||||||||||||||||||||
Other | (1.3) | |||||||||||||||||||
0.1 | ||||||||||||||||||||
TOTAL INCOME TAX | 2.7 | 13.6 | 21.4 | |||||||||||||||||
EFFECTIVE TAX RATE | 11.1% | 22.6% | 58.2% |
- In 2020 first half, exceptional items are mainly composed of a provision for tax risk. For the financial year 2019, exceptional items were mainly composed of permanent differences related to the impairment of goodwill.
31 July 2020 | 31 July 2019 | 31 January 2020 | ||||
Current income tax expense (income) | 17.3 | 31.5 | ||||
(7.7) | ||||||
Deferred income tax expense (income) | (3.7) | (10.1) | ||||
10.4 | ||||||
TOTAL INCOME TAX | 2.7 | 13.6 | 21.4 | |||
2020 HALF-YEAR FINANCIAL REPORT
53
-
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
13-2 : Deferred tax assets and liabilities
Deferred tax assets and liabilities are mainly due to the following:
Changes | Changes | ||||||||||||||||||||||
recognized | recognized in | Foreign | |||||||||||||||||||||
31 January | through | the income | exchange | 31 July | |||||||||||||||||||
2020 | Reclassifications | equity | statement | differences | 2020 | ||||||||||||||||||
Tax loss carry-forward | 5.8 | 0.7 | 0.4 | (0.2) | |||||||||||||||||||
6.7 | |||||||||||||||||||||||
Pension provision | 5.8 | (0.6) | (0.1) | ||||||||||||||||||||
5.1 | |||||||||||||||||||||||
Expenses with deferred deductibility | |||||||||||||||||||||||
Inventories and bad debt | 4.1 | 0.9 | (0.3) | ||||||||||||||||||||
4.7 | |||||||||||||||||||||||
Employees related provisions | 2.2 | (0.7) | (0.1) | ||||||||||||||||||||
1.4 | |||||||||||||||||||||||
Deferred income | 7.4 | 1.4 | (0.2) | ||||||||||||||||||||
8.6 | |||||||||||||||||||||||
Fixed assets amortization | 56.1 | (11.8) | (2.9) | ||||||||||||||||||||
41.4 | |||||||||||||||||||||||
Other expenses with deferred | |||||||||||||||||||||||
deductibility | 3.4 | (0.4) | (0.5) | ||||||||||||||||||||
2.5 | |||||||||||||||||||||||
Patents | 3.4 | (0.4) | (0.0) | ||||||||||||||||||||
3.0 | |||||||||||||||||||||||
Restructuring provisions | 0.1 | (0.1) | (0.0) | ||||||||||||||||||||
0.0 | |||||||||||||||||||||||
Other * | 1.8 | 0.6 | 9.5 | 0.0 | |||||||||||||||||||
11.9 | |||||||||||||||||||||||
Deferred tax assets before tax | |||||||||||||||||||||||
consolidation | 90.1 | 0.7 | 0.6 | (1.8) | (4.3) | ||||||||||||||||||
85.3 | |||||||||||||||||||||||
Tax consolidation | (81.2) | 13.8 | |||||||||||||||||||||
(67.4) | |||||||||||||||||||||||
DEFERRED TAX ASSETS | 8.9 | 14.5 | 0.6 | (1.8) | (4.3) | 17.9 | |||||||||||||||||
- The line "Other" includes in particular an asset of 9.8 million euros related to the forthcoming resolution of a mutual agreement procedure.
The tax loss carry forwards recognized as deferred tax assets have been depreciated when it is deemed unlikely that the Group will be able to use these in the five next years. This provision, presented on the line "Tax loss carry-forward", amounts to (15.4) million euros as at
31 | July 2020 | compared | to (21.8) million euros | as at |
31 | January 2020. The depreciated tax loss carry-forwards | |||
represent a | tax basis of | approximately 60.1 million | euros. | |
There are non-activated tax losses within the Group. |
Changes | Changes | ||||||||||||||||||||||
recognized | recognized in | Foreign | |||||||||||||||||||||
31 January | Reclas- | through | the income | exchange | 31 July | ||||||||||||||||||
2020 | sifications | equity | statement | differences | 2020 | ||||||||||||||||||
Eliminations on margin on inventories, | |||||||||||||||||||||||
rented and demo equipment | (4.2) | 0.4 | 0.1 | ||||||||||||||||||||
(3.7) | |||||||||||||||||||||||
Capitalization of research and | |||||||||||||||||||||||
development expenses | 19.8 | 0.6 | (0.2) | ||||||||||||||||||||
20.2 | |||||||||||||||||||||||
Amortization of intangible assets | |||||||||||||||||||||||
recognized after purchase price | |||||||||||||||||||||||
allocation | 6.1 | (0.9) | (0.1) | ||||||||||||||||||||
5.1 | |||||||||||||||||||||||
Leasing activities | 118.5 | (5.3) | (7.6) | ||||||||||||||||||||
105.6 | |||||||||||||||||||||||
Amortization restatements | 9.3 | (0.8) | - | ||||||||||||||||||||
8.5 | |||||||||||||||||||||||
Goodwill amortization | 36.6 | 1.2 | (2.2) | ||||||||||||||||||||
35.6 | |||||||||||||||||||||||
Pension fund United Kingdom | 15.1 | (1.9) | 0.1 | (0.9) | |||||||||||||||||||
12.4 | |||||||||||||||||||||||
Provisions with deferred deductibility | 3.1 | - | |||||||||||||||||||||
3.1 | |||||||||||||||||||||||
Other * | 11.7 | 0.1 | 13.3 | (0.7) | |||||||||||||||||||
24.4 | |||||||||||||||||||||||
Deferred tax liabilities before tax | |||||||||||||||||||||||
consolidation | 216.0 | (1.8) | 8.6 | (11.6) | |||||||||||||||||||
211.2 | |||||||||||||||||||||||
Tax consolidation | (81.2) | 13.8 | |||||||||||||||||||||
(67.4) | |||||||||||||||||||||||
DEFERRED TAX LIABILITIES | 134.8 | 13.8 | (1.8) | 8.6 | (11.6) | 143.8 | |||||||||||||||||
NET DEFERRED TAX | (125.9) | 0.7 | 2.4 | (10.4) | 7.3 | (125.9) | |||||||||||||||||
- line "Other" includes the provisions for tax risks
54 2020 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Notes to the consolidated financial statements
NOTE 14 SHAREHOLDERS' EQUITY AND EARNINGS PER SHARE
14-1 : Equity instruments - ODINARNE issue
On 16 June | 2015, Quadient SA issued a | senior | unsecured | The conversation ratio is 1.340 at the 31 July 2020. It has | |
net share | settled | undated bond | convertible | into new | been adjusted to 1.382 with effect from 7 September 2020, |
shares and/or | exchangeable for | existing | shares | following the 0.35 euro dividend distribution that occurred | |
(ODIRNANE) for a notional amount of | 265 million | euros | at the beginning of September. | ||
representing 4,587,156 shares with | a | nominal | value of | As at 31 July 2020, the amount of accrued coupons | |
57.77 euros. | This | bond is traded | on | the open market | |
"Freiverkehr" of the Frankfurt stock exchange | under ISIN | represents 1.1 million euros and is a current debt. |
code FR0012799229. |
14-2 : Earnings per share
The table below shows the earnings figures used to calculate basic and fully-diluted earnings per share for all activities:
31 July 2020 | 31 July 2019 | 31 January 2020 | |||||||||||
Net income attributable to equity holders of the parent company | 47.1 | 14.1 | |||||||||||
21.4 | |||||||||||||
ODIRNANE dividends | (4.5) | (8.9) | |||||||||||
(4.5) | |||||||||||||
Restated basic earnings (A) | 42.6 | 5.2 | |||||||||||
16.9 | |||||||||||||
Effect of dilutive instruments: | |||||||||||||
Dilutive free shares | 0.9 | ||||||||||||
ODIRNANE conversion | 4.5 | ||||||||||||
Diluted net income (B) | 48.0 | 5.2 | |||||||||||
16.9 | |||||||||||||
Number of outstanding shares | 34,261 | 34,282 | |||||||||||
34,118 | |||||||||||||
Effect on a prorata time basis of dividend payments in shares, the | |||||||||||||
exercise of stock-options, share buybacks for cancellation and liquidity | |||||||||||||
contract | (6) | (21) | |||||||||||
(3) | |||||||||||||
Weighted average number of shares outstanding (in thousands) * (C) | 34,255 | 34,261 | |||||||||||
34,115 | |||||||||||||
Weighted average number of outstanding free shares, | |||||||||||||
prorata time basis | 232 | ||||||||||||
Number of shares related to bonds (ODIRNANE), prorata time basis | 6,147 | ||||||||||||
Number of shares fully diluted (in thousands) * (D) | 40,634 | 34,261 | |||||||||||
34,115 | |||||||||||||
NET EARNINGS PER SHARE (IN EUROS) (A)/(C) | 0.50 | 1.24 | 0.15 | ||||||||||
DILUTED NET EARNINGS PER SHARE (IN EUROS) (B)/(D) | 0.50 | 1.18 | 0.15 | ||||||||||
* Weighted average over the period. |
At 31 July 2020, the potentially dilutive instruments described in the note 14-3-1 of the universal registration document 2019 have a strengthening effect and had thus been excluded from the calculation of the diluted earnings per share.
NOTE 15 POST-CLOSING EVENTS
On the 4 September 2020, Quadient early repaid the total | From 31 July 2020 until the financial statements approval |
of its two United States private placements for an amount | by the Board of directors on the 25 September 2020, there |
of 115.0 million United States dollars. | was no other significant change in the Group's commercial |
or financial situation. |
2020 HALF-YEAR FINANCIAL REPORT
2
55
-
CONSOLIDATED FINANCIAL STATEMENTS AT 31 JULY 2020
Statutory auditors' review report on the half-yearly financial information
2.3 Statutory auditors' review report on the half-yearly financial information
Period from February 1 to July 31, 2020
This is a translation into English of the statutory auditors' review report on the half-yearly financial information issued in French and is provided solely for the convenience of English-speaking users. This report includes information relating to the specific verification of information given in the Group's half-yearly management report. This report should be read in conjunction with, and construed in accordance with, French law and professional standards applicable in France.
To the Shareholders,
In compliance with the assignment entrusted to us by your Annual General Meetings and in accordance with the requirements of Article L. 451-1-2 III of the French Monetary and Financial Code ("Code monétaire et financier"), we hereby report to you on:
- the review of the accompanying condensed half-yearly consolidated financial statements of Quadient S.A. for the period from February 1 to July 31, 2020,
- the verification of the information presented in the half-yearly management report.
These condensed half-yearly consolidated financial statements were prepared under the responsibility of your Board of Directors on September 25, 2020 on the basis of the information available at that date in the evolving context of the crisis related to Covid-19 and of difficulties in assessing its impact and future prospects. Our role is to express a conclusion on these financial statements based on our review.
1. Conclusion on the financial statements
We conducted our review in accordance with professional standards applicable in France. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with professional standards applicable in France and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying half-yearly consolidated financial statements do not give a true and fair view of the assets and liabilities and of the financial position of the Group as at July 31, 2020 and of the results of its operations for the period then ended in accordance with IFRSs as adopted by the European Union.
2. Specific verification
We have also verified the information presented in the half-yearly management report on the condensed half-yearly consolidated financial statements prepared on September 30, 2020, subject of our review.
We have no matters to report as to its fair presentation and consistency with the condensed half-yearly consolidated financial statements.
Paris and Paris-La Défense, September 30, 2020
The Statutory Auditors
French original signed by
FINEXSI AUDIT | ERNST & YOUNG et Autres |
Lucas Robin | May Kassis-morin |
56 2020 HALF-YEAR FINANCIAL REPORT
STATEMENT 3OF THE PERSON RESPONSIBLE
FOR THE INTERIM
FINANCIAL REPORT
2020 HALF-YEAR FINANCIAL REPORT | 57 |
- STATEMENT OF THE PERSON RESPONSIBLE FOR THE INTERIM FINANCIAL REPORT
"I hereby certify, after having taken all reasonable measures to this effect that the information contained in this first half report is, to my knowledge, in accordance with the facts and makes no omission likely to affect its import.
certify, to my knowledge, that the accounts have been prepared in accordance with applicable accounting standards and give a fair view of the assets, liabilities and financial position and profit or loss of the Company and all its subsidiaries included in the consolidation. The management report on page 2 presents a fair view of the significant events that occurred in the first half of the year and their impact on the accounts, the main transactions between related parties as well as the main risks and uncertainties for the remaining 6 months of the year."
Monsieur Geoffrey Godet
Chief Executive Officer
58 2020 HALF-YEAR FINANCIAL REPORT
42-46, avenue Aristide Briand 92220 BAGNEUX - FRANCE
- invest.quadient.com/en-US
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Quadient SA published this content on 30 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 September 2020 16:09:05 UTC