H1 2019 highlights
• Revenue from continuing operations totalled €1,238 million, a 2.9% rise, of which 1.6% organic growth
• Recurring Operating Profit stood at €40 million
• Net Book Debt under control at €405 million
• Guidance confirmed: full-year Recurring Operating Profit 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% increase, 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 down 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 Profit (ROP) from continuing operations amounted to €40.2 million compared with €34.4 million for the same period in 2018. ROP 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). ROP 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.
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 Profit of €128 million on a like-for-like basis.