Econocom Group SE — Earnings Release 2017

Feb 26, 2018

econocom

ECONOCOM ACHIEVES ITS TARGETS AND COMPLETES ITS MUTATION PLAN IN A SUCCESSFUL 2017. A FURTHER DOUBLE-DIGIT RISE IN RECURRING OPERATING PROFIT AND REVENUE CONFIRMS ITS PROFITABLE GROWTH PROFILE

2017 RESULTS CONFIRMED

• Sharp increase in revenue to €2,980 million (up 17.5%)
• . Organic growth, which accelerated in the second half, stands at 11.2%, supported by all the group's activities
• Recurring operating profit¹ rose 10.1% to €154.4 million
• Recurring net profit² attributable to owners of the parent increased 13.8% and recurring earnings² per share³ attributable to owners of the parent stood at €0.41 (after the share-split), up 5.4%
• Equity increased to €483 million, due notably to the ORNANE bond conversion
• A year of investments: over €160 million invested in CAPEX, M&As (7 targeted transactions) and in the internal refinancing company (EDFL)
• Net debt stands at €279 million, i.e. 1.5x EBITDA.

THE GROUP'S GROWTH PROSPECTS

Econocom confirms it achieved its annual quidance for 2017 and the targets of the "Mutation" 5-years strategic plan. In October 2017, the group presented its new plan, "e for excellence", which aims to achieve revenue of €4 billion and double recurring operating profit¹ to €300 million by 2022.

2018, the first year of the plan, will be devoted to implementing the new strategy, which will involve making substantial investments in order to develop the organisation and offering. The group expects sustained organic growth (above the market rate for digital service companies) and a further rise in recurring operating profit¹.

Notes and definitions in the appendix

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ABOUT ECONOCOM FOR FURTHER INFORMATION

(in $\epsilon$ millions)	2016 5	2017
Revenue	2,536.2	2,979.7	$+17.5%$
Recurring operating profit before amortisation of intangible assets from acquisitions	140.3	154.4	$+10.1%$
Recurring operating profit	136.1	150.2	$+10.4%$
Non-recurring operating expenses	(12.3)	(19.9)
Operating profit	123.8	130.2	$+5.2%$
Financial result	(17.4)	(12.5)	$-28.4%$
Change in fair value of the ORNANE derivative 4	(37.9)	4.1
Profit before tax	68.6	121.9	$+77.7%$
Income tax	(35.7)	(31.2)	$-12.7%$
Share of profit/(loss) of associates	(0.2)	0.0
Net profit	32.8	90.7	$+177,5%$
Net profit attributable to owners of the parent	33.4	86.4	+159.0%
Recurring net profit 2 attributable to owners of the parent	83.0	94.5	$+13.8%$
Earnings per share attributable to owners of the parent (euros)	0.15	0.37	139.7%
Diluted net earnings per share attributable to owners of the parent (euros)	0.15	0.36	139.9%
Recurring earnings 2 per share 3 attributable to owners of the parent (euros)	0.39	0.41	$+5.4%$

ASSETS (in $f$ millions)	31/12/2016	31/12/2017
Goodwill	539	599
Non-current assets	237	297
Gross cash flow	349	238
Current assets	1,010	1,294
Total assets	2,135	2,428

EQUITY & LIABILITIES	31/12/2016	31/12/2017
Equity	279	483
Non-current liabilities	195	215
Gross financial liabilities	534	517
Current liabilities	1,127	1,213
Total liabilities	2 1 3 5	2 4 2 8

Notes and definitions in the appendix

Notes and definitions

• 1) Recurring operating profit before amortisation of intangible assets from acquisitions. (at 31 December 2017, this was amortisations of the ECS customer portfolio and the Osiatis brand).
• 2) Since H1 2016, recurring net profit attributable to owners of the parent has been the performance indicator chosen by Econocom in order to gain a better understanding of its economic and financial performance. It corresponds to net profit attributable to owners of the parent, before the inclusion of the following items:
• a. Amortisation expenses of intangible assets from acquisitions, net of income tax,
• b. Adjustment to fair value of the ORNANE derivative component,
• c. Other non-recurring operating income and expenses, net of income tax,
• d. Non-recurring financial operating income and expenses, net of income tax,
• e. Profit (loss) from discontinued operations, net of income tax.
• 3) After the two-for-one share split of the Econocom Group share on 2 June 2017. At 31 December 2017 the share capital was represented by 245,140,430 shares compared with 122,570,215 shares after the ORNANE conversion.
• 4) The Group's 2014 ORNANE bond had a derivative component whose value varied in line with changes in Econocom's share price and other criteria (volatility, dividends, interest rates). Under IFRS, this component must be revalued at each balance sheet date, with any change recognised in profit or loss.
• 5) Changes in fair value of liabilities from put options are now recognised in equity; as this change in accounting method is applied retrospectively, the $\epsilon$ 5.5 M of reversal of debts which improved the non-recurring items in 2016 are restated here.