H1 2019 highlights
• Revenue from continuing operations2 totalled €1,238 million, a 2.9% rise3, of which 1.6% organic growth
• Recurring Operating Profit1 stood at €40 million
• Net Book Debt4 under control at €405 million
• Guidance confirmed: full-year Recurring Operating Profit1 of €128 million on a like-for-like basis.
H1 2019 income statement
As previously announced, Econocom Group reported revenue from continuing operations of €1,238 million in the first half of 2019, a 2.9% increase3, 1.6% of which was organic growth. This growth was driven mainly by the Digital Services and Solutions (DSS) division, which posted 9.3% growth. Technology Management & Financing (TMF), on the other hand, got off to a difficult start to the year and was down3 3.9% compared with H1 2018.
Since the plan was announced by the group, several activities have been restated in accordance with IFRS 5: Non-current assets held for sale and discontinued operations. The H1 2018 Income Statement has therefore been adjusted accordingly and the impact on the 2019 half-year financial statements is shown on separate lines in the balance sheet and income statement.
Recurring Operating Profit1 (ROP) from continuing operations amounted to €40.2 million compared with €34.4 million for the same period in 2018. ROP1 from continuing operations for TMF stood at €15.6 million (vs. €14.2 million in H1 2018) and €24.6 million for DSS (compared with €20.1 million in H1 2018). ROP1 benefited from the first positive results of the measures taken over the past nine months, such as the refocusing of certain business lines and cost reductions, as well as from a favourable effect to the tune of €1.8 M of the application of IFRS 16 to lease contracts taken out by Econocom.
Non-recurring expenses of €13.7 million, resulting mainly from the group’s reorganisation operations, were recognised in H1 2019 in continuing operations. Operating Profit for these operations stood at €25.6 million.
Net Profit for the second half amounted to €5.4 million compared with €0.4 million in H1 2018 and Recurring Net Profit attributable to owners of the parent reached €13.6 million, compared with €7.9 million in the first half of 2018.
Balance Sheet and Net Book Debt4 at 30th June 2019
Net Book Debt4 totalled €405 million, remaining flat compared with the end of June 2018 (€395 million). This amount, which reflects the usual seasonality of the group’s business, was increased by some late refinancing in Italy (amounting to around €30 million) as well as deferred payments from a major client (to the tune of around €20 million).
Net Operating Cash-Flow5 from continuing operations2 for the first half of 2019 amounted to €60.7 million, €20 million3 more than in the first half of 2018. This increase was due chiefly to the increase in net profit and the positive impact of changing residual interest in leased assets.
Net Book Debt4 thus amounted to 2.5 times EBITDA6 over a 12-month period at 30th June 2019. The majority of this debt (€252 million) is secured by rental payments and leased assets under lease contacts self-funded by the group. With equity standing at €451 million at 30th June 2019, gearing amounted to 0.9.
During the first half of 2019, the group bought back treasury shares to the amount of €10 million. At 30th June 2019, Econocom held 16.7 million treasury shares, excluding liquidity contracts, i.e. 6.8% of the company’s share capital.
Outlook for 2019
In the second half Econocom will be continuing its transformation plan which aims to refocus its strategy on its legacy business, Technology Management & Financing, and on synergies with Digital Services and Solutions. The group also plans to improve its levels of operating margin and keep financial debt under control.
The group will be stepping up the significant cost-cutting measures implemented at the end of 2018 and will continue to look for buyers for its non-strategic divisions. On 29th July 2019, the English company Northern Technology Limited (Jade), which was classified at the end of June 2019 as assets held for sale, has been sold.
In addition to these measures, the group will be stepping up its sales efforts and increasing investments in enhancing its offers in order to ensure sustained growth.
From a financial standpoint, the group confirms its 2019 full-year guidance, i.e. Recurring Operating Profit3 of €128 million on a like-for-like basis.
Next publication: the 2019 3rd-quarter revenue release will be published after the close of trading on 24th October 2019.
 Before amortisation of intangible assets from acquisitions and after restatement, in accordance with IFRS 5, of assets held for sale and discontinued operations.
2 After restatement, in accordance with IFRS 5, of assets held for sale and discontinued operations.
3 On a like-for-like basis.
4 Before recognition of the debt resulting from the application of IFRS 16 to contracts for premises, vehicles, etc. leased by Econocom.
5Net Operating Cash-Flow is defined as cash flow from operating activities before the cost of net financial debt and income tax.
6 EBITDA is defined as Operating Profit plus (or less) operating expenses (or income) with no cash offset.