Earnings Release • Aug 25, 2011
Earnings Release
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Performance reflecting business model's robustness and first effects of the strategy implementation, after one year as a standalone company
Objective confirmed: paperless solutions to account for 50% of issue volume by 2012
• Full-year 2011 EBIT target: €340 million to €360 million
1 Growth as reported
2 Before non-recurring items
The consolidated financial statements for the six months ended June 30, 2011 were approved by the Board of Directors on August 24, 2011. The Group's main financial indicators for the period are presented below:
| (in € millions) | H1 20103 | H1 2011 | % change | |
|---|---|---|---|---|
| Reported | Like-for-like4 | |||
| Issue volume | 6,615 | 7,264 | +9.8% | +10.0% |
| Operating revenue | 422 | 456 | +8.1% | +9.2% |
| Financial revenue | 39 | 44 | +14.8% | +16.0% |
| Total revenue | 461 | 501 | +8.6% | +9.8% |
| Operating EBIT | 116 | 123 | +5.7% | +10.8% |
| Financial EBIT | 39 | 44 | +14.8% | +16.0% |
| EBIT | 155 | 167 | +8.0% | +12.1% |
| Operating profit before tax and non-recurring items | 114 | 144 | +25.8% | |
| Net profit, Group share | 37 | 98 | ||
| Recurring profit after tax | 72 | 96 | +31.3% | |
| Recurring earnings per share (in €) | 0.32 | 0.42 |
Issue volume amounted to €7,264 million in the first half of 2011, up 10.0% like-for-like and 9.8% as reported, after taking into account the 0.9% negative currency effect for the period.
The increase reflected strong growth in emerging markets (up 18% like-for-like). These markets accounted for 57% of total issue volume, led by Latin America. Issue volume in developed markets rose by 1%. However, excluding the loss of the CONSIP contract in Italy5 , the growth rate was 3.5%, in line with the Group's 2010 performance in these markets.
| Employee benefits | Expense management |
Incentive and rewards |
Public social programs |
TOTAL | ||
|---|---|---|---|---|---|---|
| Meal & Food | Quality of life | |||||
| Issue volume (in € millions) |
5,794 | 520 | 618 | 271 | 61 | 7,264 |
| % of total issue volume |
80% | 7% | 8% | 4% | 1% | 100% |
| Like-for-like growth |
+10% | +10% | +19% | -3%6 | +17% | +10% |
3 The first-half 2010 comparatives presented in this press release are based on pro forma financial statements that simulate the effects that the demerger from Accor would have had on Edenred's balance sheet, income statement, statement of cash flows and statement of changes in equity if the demerger had been carried out on January 1, 2007, in line with the prospectus issued in connection with Edenred's stock market listing which was approved by the AMF on May 12, 2010.
4 Based on a comparable scope of consolidation and at constant exchange rates.
5 Representing €81 million in the first half.
6 Incentive & Rewards issue volume was negatively affected by the drop in Kadéos BtoC card issue volume in France.
The drivers of the 10.0% growth in issue volume were:
The 10.0% like-for-like increase in first-half issue volume was in line with Edenred's mid-term target of 6% to 14% normalized annual growth.
| (in € millions) | H1 2010 | H1 2011 | % change | |
|---|---|---|---|---|
| Reported | Like-for-like | |||
| Operating revenue | 422 | 456 | +8.1% | +9.2% |
| Financial revenue | 39 | 44 | +14.8% | +16.0% |
| Total revenue | 461 | 501 | +8.6% | +9.8% |
Total revenue for the period amounted to €501 million, an increase of 8.6% as reported and 9.8% like-for-like, comprising:
7 Net gain of new clients, not won from the competition and excluding existing client companies.
8 The float corresponds to the business's negative working capital requirement.
Operating EBIT (which excludes financial revenue) rose by a strong 10.8% like-for-like. Underpinning this good performance, the operating flow-through ratio9 adjusted for the extra costs generated by the digital transition stood at 49%, in line with the Group's target of 40% to 50%.
Operating EBIT as a percentage of operating revenue came to 26.9% as reported in first-half 2011 compared with 27.5% in the year earlier period, reflecting the €6 million in extra costs generated during the period by the digital transition, negative currency effects and the negative impact of changes in scope of consolidation. The like-for-like change excluding digital transition costs was a sharp 180-basis point improvement.
Financial EBIT, reflecting 100% flow-through of financial revenue for the period (€44 million), rose by 16.0% like-for-like as a result of higher interest rates.
In France, EBIT amounted to €23 million, a decline of 6.6% like-for-like due to the €2 million in extra costs generated during the period by the digital transition. Excluding these costs, EBIT was 2.1% higher than in first-half 2010.
In the Rest of Europe, EBIT came to €59 million, down 3.4% like-for-like. The decline was due to the difficulties experienced in Romania and the €3 million in extra costs generated during the period by the digital transition in this region. Excluding these costs, EBIT was 1.5% higher than in first-half 2010.
In Latin America, EBIT amounted to €96 million, up by a very strong 25.0% like-for-like. Excluding the €1 million in extra costs generated during the period by the digital transition, EBIT was 26.0% higher than in first-half 2010.
After deducting net financial expense of €23 million, income tax expense of €44 million and minority interests of €4 million, recurring profit after tax came to €96 million, an increase of 31.3% from €72 million in first-half 2010.
Net profit, Group share came to €98 million, compared with €37 million for the year-earlier period.
9 Operating flow-through ratio: ratio between the like-for-like change in operating EBIT and the like-for-like change in operating revenue.
Funds from operations before non-recurring items (FFO) amounted to €119 million, versus €89 million in first-half 2010, representing a like-for-like increase of 20.2%, in line with the Group's target of more than 10% normalized annual growth.
During the period, Edenred paid its first dividend in the amount of €113 million, representing a payout rate of nearly 70% of 2010 recurring profit after tax.
Net debt at June 30, 2011 amounted to €338 million versus €320 million at June 30, 2010. The ratio of adjusted funds from operations to adjusted net debt came to 40%, reflecting a strong investment grade rating10 .
In the second half, growth in issue volume should be sustained by strong dynamism in Latin America, despite a higher basis of comparison, and by slightly improving trends in Europe, mainly explained by the first signs of stabilization in Central Europe.
Operating revenue should benefit from the gradual stabilization of client fee rates in some countries, while rising interest rates should drive up financial revenue, despite higher prior period comparatives in Latin America as from the fourth quarter.
On this basis, assuming that the operating flow-through ratio is within the target range of 40% to 50% and that the extra costs generated by the digital transition are in the region of €10 million to €15 million, Edenred expects to report full-year 2011 EBIT between €340 million to €360 million.
Edenred's first-half results support the aims of its two-pronged strategy to ―Conquer 2012" by:
After one year as a standalone company, Edenred's first-half performance reflects the robustness of its business model and the initial benefits of the EDEN: Moving Forward Differently Together corporate mission project designed to engage its 6,000 employees in making the company's strategic vision a reality.
10 The ratio of adjusted funds from operations to adjusted net debt, determined by the Standard & Poor's method, must be above 30% to maintain a Strong Investment Grade rating.
Quarterly Report released on October 19, 2011 Investor Day in London on November 29, 2011
Edenred, which invented the Ticket Restaurant® meal voucher and is the world leader in prepaid corporate services, designs and delivers solutions that make employees' lives easier and improve the efficiency of organizations.
—
Edenred solutions ensure that funds allocated by companies are used as intended. These solutions help to manage:
Employee benefits (Ticket Restaurant® , Ticket Alimentación, Ticket CESU, Childcare Vouchers, etc.).
Expense management process (Ticket Car, Ticket Cleanway, etc.).
Incentive and rewards programs (Ticket Compliments, Ticket Kadéos, etc.).
The Group also supports public institutions in managing their social programs.
Listed on the NYSE Euronext Paris stock exchange, Edenred operates in 40 countries, with 6,000 employees, nearly 530,000 companies and public sector clients, 1.2 million affiliated merchants and 34.5 million beneficiaries. In 2010, total issue volume amounted to €13.9 billion, of which 55% was generated in emerging markets.
Full details of Edenred's first-half 2011 results are available on the Company's website: www.edenred.com.
Ticket Restaurant® and all other tradenames of Edenred products and services are registered trademarks of Edenred SA.
Eliane Rouyer-Chevalier, Executive Vice President Communications – Phone: +33 (0)1 74 31 86 26 – [email protected] Media relations Anne-Sophie Sibout, Media Relations Director - Phone: +33 (0)1 74 31 86 11 – [email protected] Investor relations
Virginie Monier, Investor Relations – Phone: + 33 (0)1 74 31 86 16 – [email protected]
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