Aix-en-Provence, 26 August 2020 (6.00 p.m.)
HIGHCO: HEALTHY RESULTS IN H1 2020 DESPITE THE COVID-19 PANDEMIC
Decline less steep than expected
- H1 2020 gross profit of €40.42 M, down 16.1% on a reported basis and LFL1.
- Better resilience of digital businesses: decline limited to 9.4% LFL, i.e. 59.3% of the Group’s total business in H1 2020.
Drop in earnings but healthy profitability
- Adjusted headline PBIT2 of €7.03 M, down 44.7%.
- Adjusted operating margin2 of 17.4% (H1 2019: 26.4%).
- Recurring operating income of €7.63 M, down 36.4%.
- Attributable net income of €4.13 M, down 37%.
- Net cash3 of €71.49 M at 30 June 2020, up €8.96 M compared with 31 December 2019.
- Net cash excluding operating working capital of €8.01 M at 30 June 2020, for an increase of €4.75 M compared to 31 December 2019.
- €30 M government-backed loan, unused to date.
Guidance: Business decline of more than 5% expected for H2 2020 and 2020 adjusted operating margin forecast at over 10%.
|(€ M)||H1 2020||H1 2019||H1 2020/H1 2019 |
|Gross profit||40.42||48.20||-16.1% |
|Adjusted headline PBIT2||7.03||12.72||-44.7%|
|Adjusted operating margin2 (%)||17.4%||26.4%||-900 bp|
|Recurring operating income||7.63||12.00||-36.4%|
|Attributable net income||4.13||6.56||-37.0%|
|Net cash3 |
Net cash3 excluding operating working capital
|+€8.96 M |
Didier Chabassieu, Chairman of the Management Board, stated, “In this unprecedented health and economic crisis, HighCo has shown sound financial performance in the first half of 2020, mainly due to the strong resilience of its digital businesses. COVID-19 has significantly influenced the digital transformations under way. To help our clients navigate these major changes, the Group will accelerate its innovation policy, primarily by investing in its startup studio HighCo Venturi.”
FINANCIAL PERFORMANCE IN H1 2020
Decline less steep than expected
H1 2020 gross profit amounted to €40.42 M, down 16.1% on a reported basis and like for like. The decline was less steep than expected thanks to a recovery in June after lockdown restrictions were eased (up 2.7% like for like). Digital continued to hold up better, posting a decline limited to 9.4% like for like. The share of Digital in total Group business rose significantly to 59.3% in H1 2020 (54.8% on a reported basis in H1 2019).
In France, with the 7% upturn in business in June, the business decline in H1 2020 was limited to 14.8% like for like, for gross profit of €30.95 M, or 76.6% of the Group’s total gross profit. Digital business held up well (down 6.9% like for like), with its share of total French business at 67.4% in H1 2020.
After a stable first quarter, International business fell sharply by 20.3% like for like in H1 2020 to €9.47 M, with Benelux showing a decline of 21.3% and Southern Europe (Spain and Italy) remaining stable.
Drop in earnings but healthy profitability
The business decline resulted in a 44.7% drop in adjusted headline PBIT to €7.03 M in H1 2020 with:
- France: Down 41.8% to €6.48 M (H1 2019: €11.13 M), with adjusted operating margin holding strong at 20.9%;
- International business: Down 65.7% to €0.55 M (H1 2019: €1.59 M), with adjusted operating margin remaining positive at 5.8%.
Adjusted operating margin (adjusted headline PBIT/gross profit) came to 17.4%, down 900 basis points compared with H1 2019 (26.4%).
The drop in adjusted headline PBIT was partly offset by the write-back of the provision on performance share plans (H1 2020: income of €0.78 M; H1 2019: expense of €0.55 M). This resulted in a less steep decline in recurring operating income and operating income of 36.4% to €7.63 M (H1 2019: €12 M). Restructuring costs remained stable (H1 2020: €0.18 M; H1 2019: €0.17 M).
The tax expense decreased 38.4%, totalling €2.78 M in H1 2020 (H1 2019: expense of €4.52 M).
Adjusted attributable net income fell 48.7% to €3.57 M (H1 2019: €6.96 M). On a reported basis, the figure stood at €4.13 M, down 37% (H1 2019: €6.56 M).
The Group recorded EPS in H1 2020 of €0.20, down 36.5% compared with H1 2019 (€0.31).
1 Like for like: Based on a comparable scope and at constant exchange rates (i.e. applying the average exchange rate over the period to data from the compared period).
2 Adjusted headline profit before interest and tax: Recurring operating income before restructuring costs (H1 2020: €0.18 M; H1 2019: €0.17 M) and excluding the impact of performance share plans (H1 2020: income of €0.78 M; H1 2019: expense of €0.55 M). Adjusted operating margin: Adjusted headline PBIT/Gross profit.
3 Net cash (or net cash surplus): Cash and cash equivalents less gross current and non-current financial debt, excluding finance lease debt.
4 At 31 December 2019, excluding finance lease debt.
The net cash position rose €8.96 M to €71.49 M as at 30 June 2020. This was mainly due to cash flow, which amounted to €8.31 M. Excluding operating working capital (€63.49 M at 30 June 2020), net cash came to €8.01 M, up by €4.75 M with respect to 31 December 2019.
The Group was also granted a €30 M government-backed loan, unused to date, enabling it to post gross cash of €106.5 M at 30 June 2020.
Overview of strategic focuses
With its unique positioning and complementary expertise covering the entire consumer engagement chain – from initial contact to end transaction – HighCo will continue to invest in its two strategic focuses: digital, which held up better amid the health and economic crisis (down 9.4% in H1 2020), and data, which is used to enhance the customer relationship and generate store traffic.
Accelerating the digitisation of promotions
The COVID-19 health and economic situation has profoundly impacted business and significantly influenced the digital transformations under way.
To help its clients navigate these major changes and create growth drivers for the future, HighCo will accelerate its innovation policy primarily by investing in the creation of its startup studio HighCo Venturi.
The Group has set its priority on digitising two main promotional tools, discount coupons and flyers:
- For discount coupons, issuance and clearing are still mostly physical. The Group aims to dematerialise issuance and acquisition (e-commerce websites, mobile apps, digital wallets), as well as clearing, especially with solutions to log in to retailer checkout systems;
- As HighCo estimates that €1 billion is invested annually in France, flyers represent an important tool in the retail industry. The Group aims to offer a 100% digital alternative to paper flyers.
Given the inherent uncertainty of the current health and economic environment, the Group has issued the following guidance:
- Decline in gross profit of more than 5% in H2 2020 (H1 2020: down 16.1%);
- Share of Digital in the Group’s total business for 2020 higher than the share in 2019 (56.2% in 2019);
- 2020 adjusted operating margin (adjusted headline PBIT/gross profit) of over 10% (2019 adjusted operating margin: 18.5%).
The Group’s financial resources will be allocated as a priority to:
- Capital expenditure, between €4 M and €5 M (2019: €2.21 M; H1 2020: €1.94 M), of which about €3 M invested in redesigning office space;
- The creation of its startup studio HighCo Venturi;
- The share buyback programme is suspended in 2020 (2019: €1.8 M).
A conference call with analysts will take place on Thursday, 27 August 2020 at 11 a.m. (CET). The presentation will be available at the beginning of the meeting on the Company’s website (www.highco.com) under Investors>Regulated Information>Financial Analysts Meetings.
As an expert in data marketing and communication, HighCo continuously innovates to work with brands and retailers in meeting the retail challenges of tomorrow.
Listed in compartment C of Euronext Paris, and eligible for SME equity savings plans (“PEA-PME”), HighCo has more than 700 employees and since 2010 has been included in the Gaia Index, a selection of 70 responsible Small and Mid Caps.
Cécile Collina-Hue Cynthia Lerat
Managing Director Press Relations
+33 1 77 75 65 06 +33 1 77 75 65 16
Publications take place after market close.
Conference call on 2020 half-year earnings: Thursday, 27 August 2020 (11.00 a.m. CET)
Q3 and 9-month YTD 2020 Gross Profit: Wednesday, 14 October 2020
Q4 and FY 2020 Gross Profit: Wednesday, 20 January 2021
HighCo is a component stock of the indices CAC® Small (CACS), CAC® Mid&Small (CACMS) and CAC® All-Tradable (CACT) and Euronext® Tech Croissance (FRTPR).
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For further financial information and press releases, go to www.highco.com.
This English translation is for the convenience of English-speaking readers. Consequently, the translation may not be relied upon to sustain any legal claim, nor should it be used as the basis of any legal opinion. HighCo expressly disclaims all liability for any inaccuracy herein.