SOLUCOM : A dynamic 1st Half, resistant profitability but under pressure, annual growth targets reviewed upwards

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At its meeting on 26 November 2012, Solucom's Supervisory Board approved the consolidated half-year financial statements as at 30 September 2012, summarised below. The auditors have summarily examined these financial statements.

Consolidated data as at 30 September
(In ¤m)
H1 2012/13 H1 2011/12 Change
 Turnover 59.5 50.0 +19%
 EBIT 4.3 4.1 +4%
 Current operating margin 7.2% 8.2%  
 Operating income 4.9 4.1 +19%
 Group's share of net profit 3.3 2.0 +64%
 Net margin 5.6% 4.0%  

At the end of the first half of 2012/13, Solucom's consolidated turnover was ¤59.5M, up 19%, of which 7% was growth on the same consolidation scope.

Despite a depressed market, the firm's growth has been dynamic in the period, with sustained organic growth, the result of intense sales investments and the continuation of recruitment efforts, as well as two external growth transactions, Alturia Consulting and Eveho, which have been consolidated since 1 April 2012..

Operating indicators still solid despite market difficulties

On the other hand, the difficult market environment has weighed on the firm's operating indicators, even if these have in the end stood up well.

The activity rate was 81% for the 1st half of 2012/13, including Alturia Consulting and Eveho, and 83% for the same consolidation scope. Even though this figure is in line with the firm's usual range (82% - 84%), it is down as compared with the 1st half of 2011/12 (85%).

Sales prices are down, with an average daily rate of ¤715 for the half year, ¤713 at the same consolidation scope, as against ¤720 for the entire past financial year. The drop of 1% at the same consolidation scope is in line with the firm's annual forecast, but was slightly compensated for by the higher average daily rates of Alturia Consulting and Eveho.

Current operating margin firm but under pressure

This slight tension on indicators together with the increase in sales investments has put the brakes on growth in EBIT. This was ¤4.3M for the half-year, up 4%. Current operating margin was 7.2%, as against 8.2% the previous year.

Operating profit came to ¤4.9M, up 19%. This figure includes the recognition in Other Operating Income of a research tax credit for 2010 and 2011, and of costs related to the recent acquisitions, posted to Other Operating Costs. The Group's share of net income came to ¤3.3M, up 64% on the first half of the 2011/12 financial year. The net margin was 5.6%, as against 4% a year earlier.

Substantial leeway for financial manoeuvre

Consolidated shareholders' equity was strengthened at ¤47.1M at the end of the 1st Half. Net cash flow was ¤3.3M after financing the acquisitions of Alturia Consulting and Eveho, but prior to the payment following the merger with Stance.

After the acquisition of Stance at the beginning of the 2nd Half, Solucom retains considerable room for financial manoeuvre, thanks to opening confirmed lines of credit of ¤16M, and the issue of a ¤3M debenture as part of the Micado France 2018 transaction.

This liquid cash position gives the company the ability to seize new development opportunities and already now ensures the financing of the Solucom 2015 strategic plan.

The bet on growth despite the crisis

The past half-year has allowed the company to progress towards Solucom 2015 with:

dynamic growth, beyond the initial roadmap; the company's value proposition is taking shape, combining business know-how with technological skills; confirmation of Solucom opening up abroad, which has led the firm to create a subsidiary at the end of the half-year in Casablanca to serve its Moroccan clients.

The 2nd Half has opened in a market situation that remains unattractive. Demand has slowed down, competition has become tougher, and there is increasing pressure on prices. The company sees no signs of an easing in the short-term and visibility as to the beginning of 2013 remains uncertain.

Despite the situation, Solucom intends to maintain its growth efforts, while remaining very much on guard about how its advanced indicators develop and the market environment.

Increased growth targets, confirmation of the margin target

Allowing for the progress the company has made to 30 September 2012 on its annual road map and the acquisition of Stance at the beginning of October, Solucom is revising upwards its target for annual growth. The company is now fixing the target to achieve total growth of over 19%, as against 13% initially, together with organic growth of over 5%, as against an initial target of positive organic growth.

At the profitability level, Solucom is maintaining its target of annual current operating margin in double figures, even if this target is becoming tighter due to present market difficulties.

Upcoming date: Q3 2012/13 turnover, 23 January 2012 (after close of trade).

About Solucom

Solucom is a management and IT consulting firm.

Solucom's customers are among the top 200 large companies and public bodies. For them, Solucom is capable of mobilizing and combining the skills of more than 1,000 staff members.

Our mission statement? To place innovation at the heart of business lines, target and steer transformations that are sources of added value, and turn the information system into an actual asset designed to serve corporate strategies.

Solucom is listed on NYSE Euronext Paris and has been granted the innovative company award from OSEO Innovation.

All our news on: www.solucom.fr

Solucom
Pascal IMBERT
CEO
Phone: +33 1 49 03 20 00
Sarah LAMIGEON
Communication Director
Phone: +33 1 49 03 20 00
Actus Finance
Mathieu OMNES
Analysts & investor relations
Phone: +33 1 72 74 81 87
Nicolas Bouchez
Press office
Phone: +33 1 77 35 04 37

Annex 1: consolidated income statement at 30/09/2012

(In ¤ '000)

30/09/2012 30/09/2011 31/03/2012
TURNOVER 59 475 50 048 108 058
Other operating income      
Purchased consumables 2 087 1 709 3 624
Personnel costs (including profit share) 44 255 36 439 76 733
External costs 6 879 6 799 13 556
Taxes and duties 1 185 778 1 824
Net depreciation and provision charges 783 226 669
Other income and expenses on ordinary activities 13 7 5
     
OPERATING INCOME BEFORE TAX AND EXCEPTIONAL ITEMS 4 273 4 090 11 647
Other operating revenues and charges 594 (1) (47)
     
OPERATING PROFIT 4 867 4 089 11 600
Interest Income 1 41 60
Financial expenses 32 56 107
     
NET BORROWING COSTS 31 15 47
Other financial income and expenses 22 (8) 3
     
PROFIT BEFORE TAX 4 858 4 066 11 556
Tax burden 1 539 2 048 4 557
     
NET PROFIT FOR PERIOD 3 319 2 018 6 999
Minority interests      
     
NET PROFIT (Group's share) 3 319 2 018 6 999
Net earnings (Group's share) per share (¤) (1) (2) 0.68 0.42 1.44
Diluted earnings (Group's share) per share (¤) (2) 0.67 0.41 1.40

(1) Average weighted number of shares over the period excluding treasury shares

(2) In accordance with IAS 33, a retrospective restatement has been made to calculate the net earnings per share as at 30/09/11 and as at 31/03/12, on the basis of the number of shares as at 30/09/12.

Data certified by the Auditors, following a limited review of the accounts

Annex 2: Consolidated balance sheet as at 30/09/2012

(In ¤ '000)

30/09/2012 31/03/2012
NON CURRENT ASSETS 37 987 29 657
Goodwill 31 424 24 137
Intangible fixed assets 301 162
Tangible fixed assets 2 376 2 463
Investments 749 700
Other non-current assets 3 137 2 195
 
CURRENT ASSETS 53 663 57 600
Clients and apportioned accounts 41 089 35 844
Other debtors 7 657 7 177
Investments    
Cash and cash equivalents 4 917 14 579
 
TOTAL ASSETS 91 650 87 257
 
 
SHARE CAPITAL (GROUP'S SHARE) 47 127 45 159
Equity 497 497
Issue, merger, and contribution premiums 11 219 11 219
Consolidated reserves and earnings 35 411 33 443
Minority interests    
 
TOTAL SHAREHOLDERS' EQUITY 47 127 45 159
 
NON-CURRENT LIABILITIES 3 759 2 706
Long-term provisions 3 247 2 197
Borrowings (due in more than one year) 267 288
Other long term liabilities 245 221
 
CURRENT LIABILITIES 40 764 39 392
Short-term provisions 1 264 856
Borrowings (due in less than one year) 1 306 2 263
Suppliers and apportioned accounts 5 798 5 544
Income tax and social security liabilities 26 219 26 843
Other current liabilities 6 177 3 886
 
TOTAL LIABILITIES 91 650 87 257

Annex 3: change in consolidated cash position as at 30/09/2012

(In ¤ '000)

30/09/2012 30/09/2011 31/03/2012
 Total net consolidated profit 3 319 2 018 6 999
Elimination of non-cash items:      
Depreciation and provisions charges 1 120 362 1 107
Expenses / (Income) from stock options and similar items      
Capital losses / (Gains) from disposals net of tax (4) 38 38
Other non-cash income and expenditure (548) 100 1 350
     
 Free cash flow after net borrowing costs and after tax 3 887 2 518 9 494
     
Exchange differences on free cash flow      
Change in working capital requirements (4 229) (1 921) (3 698)
     
 Net cash flow from operating activities (342) 597 5 796
     
Acquisition of intangible and tangible assets (486) (562) (1 032)
Disposal of fixed assets 1 0 0
Change in long-term investments 105 (577) (1 213)
Effect of changes in scope of consolidation (6 906)   0
Other cash flow from investments      
     
 Net cash flow from investment operations (7 286) (1 139) (2 245)
     
Capital increase - Proceeds from the exercise of stock options      
Purchase and sale of treasury shares      
Dividends paid to shareholders in the parent company (1 066) (1 031) (1 026)
Dividends paid to minority interests of consolidated companies      
Other cash flows from financial operations (977) (978) (1 966)
     
 Net cash flow from financing operations (2 043) (2 009) (2 992)
     
Net change in cash and cash equivalents (9 671) (2 551) 559

The amount of unused credit lines stands at ¤ 4,000 thousand euros and corresponds to refinancing of the acquisition of Cosmosbay~Vectis: ¤ 4,000 k;

The amount of taxes paid amounted to ¤ 1,780 thousand in the first half of 2012 and ¤ 1,629 thousand in the first half of 2011.

The amount of interest paid amounted to ¤ 22 thousand in the first half of 2012 and to ¤ 63 thousand in the first half of 2011.

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