Key points of 2019
- Revenue from continuing operations2 stable3 at €2,927m
- Recurring operating profitle1 at €126.2m, in line with forecasts
- Net book debt4 under control at €252m, at same level as at end-2018
- Two non-strategical businesses sold and other sales underway
- Offer to repay share premium for €0.12 per share
Improved levels of operating performance
In 2019, the Econocom group made €2,927m in revenue from its continuing operations, a stable3 level following 2018. Organic revenue was down slightly, by 0.8%, on the previous year. Technology Management & Financing (TMF) was hit by an exceptional event: a fraud, to which Econocom Italy fell victim, with an adverse effect estimated at just over €130m on its revenue. Restated with this exceptional factor, the group’s growth3 was at 4.5% (3.7% of which was organic). Digital Services and Solutions (DSS, made up of Products & Solutions, and Services) carried on growing and posted €1,802m in revenue, up3 7.4%.
Following the transformation plan begun in 2019, several operations were restated in line with the IFRS 5 norm on ‘assets held for sale and discontinued operations’. The 2018 income statement was adjusted as a result and the impact on the 2019 annual financial statements is provided in lines separated from the financial statements. In 2019, the group also adopted recognition of direct deliveries, excluding licences, as principal (in line with IFRS 15). The 2018 financial statements were modified to take into account the effects of this change in accounting.
Recurring operating profit1 (ROP) from continuing operations reached €126.2m, compared with €110.4m for the same period in 20183, despite the negative impact of €13m posted for TMF Italy. ROP1 from continuing operations for TMF reached €43.9m (compared with €50.5m in 20183) and that for DSS reached €82.3m (compared with €59.9m in 20183). ROP1 benefited from effects of the cost-cutting plan that began in 2018 and gathered pace in H2 2019, as well as improved business activity in France, Belgium, Spain and the United Kingdom.
Non-recurring net expenses of €24.8m, mainly from the group’s reorganisation operations, were posted in 2019 for continuing operations. Operating profit from the latter was €99.4m, up 14.5% on 2018.
After financial profit, income tax and net profit from discontinued operations were allocated, the consolidated net profit for the year was €48.6m, compared to €44.6m in 2018.
These healthy levels of performance, reached despite the adverse impact of Italy’s exceptional event, reflect the favourable balance and solid resilience of Econocom’s business portfolio.
Debt under control
In 2019, operating cash flow from continuing operations2 reached €140m, a €7.5m increase3 on 2018. €63m was generated in free cash flow from continuing2 operations, benefiting from capex reduction and good WCR control.
Net book debt4 was at €252m, the same level as at the end of the previous year thanks to disciplined management of undertakings. Net book debt4 was therefore 1.4 times 2019 EBITDA5. Almost all this debt (€238m) was secured by rent to be received and assets leased under leasing contracts self-funded by the group. With equity at €483.9m at 31 December 2019, the debt ratio was 0.5.
Governance now more efficient and experienced
Jean-Louis Bouchard, Chairman and CEO, brought stability to the group’s governance by surrounding himself with a more efficient, highly experienced team that knows Econocom’s different business lines well.
Angel Benguigui was appointed Managing Director in charge of all the group’s business activities worldwide. He has kept his responsibilities as Group Finance Director.
Laurent Roudil, who had previously been in charge of services, was appointed Managing Director in charge of all the group’s business activities in France. He will also oversee Purchasing and IT.
Together, alongside Jean-Louis Bouchard, they will lead the group’s executive committee, which forms Econocom’s operational management team.
Bruno Grossi, advisor to the Chairman and head of corporate communications, will provide the link with the Board of Directors.
Furthermore, in the Board of Directors meetings on 23 January and 9 March 2020, the resignation of four directors was duly noted. For greater efficiency around the Chairman, it was decided not to replace them in the short term.
At the next general meeting of shareholders, the Board of Directors will offer to repay share premium at €0.12 per share, the same level as in 2019.
As part of its long-standing policy to pay back shareholders, the group bought treasury shares for €26m in 2019. On 29 February 2020, Econocom held 26.3 million treasury shares, excluding liquidity agreements, amounting to 10.7% of the company’s capital.
Bright outlook for 2020 against a backdrop of uncertainty
Econocom will continue to bolster its traditional business line, Technology Management & Financing, and refocus on the high-potential activities of its business line Digital Services and Solutions with productive investments on the one hand and sales and closures of non-strategical activities on the other.
Two sales were completed in 2019 (Jade and Rayonnance). On 28 February, the company also announced it was in exclusive negotiations with investment firm Chequers Capital to sell its subsidiary EBC (Econocom Business Continuity), which brings together the group’s maintenance activities in France. If this sale is completed, these three operations would make a combined total of €150m in proceeds from sales. Other sales are underway at different stages of progress.
Econocom will pursue its transformation plan to help boost its operating margin and return to strong growth. This will involve enhancing the company’s talents and providing new offers, whether developed in-house or incorporated by acquisition. With this approach, Econocom will further strengthen its ability to provide its clients with end-to-end support and finance their digital transformation.
Before the COVID-19 crisis recently arose, the group had set itself the goal of reaching a level of recurring operating profit much higher in 2020 than in 2019.
Given the uncertainty about how this crisis might unfold and how long it may last, the group has decided not to publish guidance with figures for its ROP 2020.
Next publication: Q1 2020 revenue on 23 April 2020 after market close.
 Before amortisation of acquisition-related intangible assets and after restatement in line with IFRS 5 regarding discontinued operations.
2 After restatement in line with IFRS 5 regarding discontinued operations and recognition of direct deliveries, excluding licences, as principal, in line with IFRS 15.
3 Based on unchanging norms
4 Before taking into account debt brought about by application of IFRS 16 to lease contracts (real estate, vehicles, etc.) in which Econocom is the lessee
5 EBITDA is equivalent to operating profit + non-cash expenses and - non-cash income.