25.07.2013 07:15:00

First half 2013 results of Solocal Group

Regulatory News:

On the announcement of Solocal Group’s (Paris:LOCAL) interim 2013 results, Jean-Pierre Remy, Chairman and CEO, said:

"The 4.7% decline in revenues in the first half of 2013 reinforces our determination to continue and accelerate the digital transformation of our Group, which derived 63% of its revenues from Internet business at the end of June. Through "Digital 2015”, we have taken action to support Internet growth and the Group’s profitability, including in the short term. However, the market remains very difficult and we expect annual results at the low end of the range of our objectives.”

The Board of Directors, which met on 24 July 2013, approved the Group’s consolidated financial statements as at 30 June 2013.

     
In millions of euros   H1 2013   H1 2012   Change
Group revenues   500.3   525.0   -4.7%
of which Internet 316.0 308.5 +2.4%
as % of Group revenues   63.2%   58.8%    
Gross operating margin   215.5   232.1   -7.2%
as % of Group revenues 43.1% 44.2%
 

I. Highlights

Temporary acceleration of the decrease in revenues

  • Decline of 4.7% in H1 2013 revenues in the strongly deteriorated advertising market1
  • Printed directories declining by 14.3% in H1 2013
  • Weak growth of +2.4% in Internet, heavily impacted by the sharp downturn in the display business

Measures taken to support Online revenue growth

  • Launch of new offers (search, deals, local display, Web-2-store, websites)
  • Increased communication on ROI of our products (300k customers on Business Center)
  • Reinforcement of actions and customer acquisition teams at PagesJaunes and Mappy

Acceleration of online audience growth

  • Fixed and mobile Internet: +8% in visits2 in Q2
  • Mobile and tablets: +58% in visits2 in Q2, representing 23% of total audiences
  • Mobile: more than 26 million application downloaded, a +50% increase year-on-year

New strategic initiatives

  • Acceleration of Mappy’s development in online shopping and start of the commercialisation of the Web-2-store « Vitrine digitale » offer for shops and retailers in Bordeaux and Paris
  • Launch of eBay partnership to develop an e-commerce offer
  • Zoom On, France’s leading social media with more than 1 million fans on Facebook
  • Digital 2015: highly motivated teams and implementation on schedule

II. Trend in fixed and mobile Internet audiences

In millions of visits   H1 2013   H1 2012   Change
PagesJaunes 658.0 608.3 +8.2%
of which mobile 157.5 102.6 +53.5%
Mappy 158.1 151.2 +4.6%
of which mobile 50.3 29.4 +71.2%
Other (a)   97.9   90.3   +8.5%
Total excluding 123people   914.0   849.8   +7.6%
of which mobile 212.2 134.0 +58.3%
123people 155.7 228.3 -31.8%
of which mobile   18.6   15.8   +17.8%
Total   1,069.7   1,078.1   -0.8%
of which mobile   230.8   149.8   +54.0%
Source : Solocal Group (a) on a like-for-like basis
 

Audiences on the Group’s websites (excluding 123people) grew by +7.6% in H1 2013 compared with H1 2012, thanks in particular to strong growth of +58.3% in mobile Internet visits. As of 30 June 2013, Solocal Group applications (primarily PagesJaunes and Mappy) had been downloaded more than 26 million times across all smartphones and tablets in France.

The Group’s websites continued to enjoy strong audiences in H1 2013: 20 million unique visitors3 via the fixed Internet and 6 million unique visitors3 via the mobile Internet in May 2013 (8th most visited website in France via fixed and mobile Internet).

1 French Advertising market 2013 estimated by Warc at -2.0% (in June 2013 v.s +1.3% estimated in Nov. 2012) and by ZenithOptimedia at -2.5% (in June 2013 vs. -1.4% estimated in Dec. 2012)
2 compared to the end of Q2 2012, excluding 123people

III. Financial results

In millions of euros   H1 2013   H1 2012   Change
Group revenues 500.3   525.0   -4.7%
Internet 316.0   308.5   +2.4%
as % of Group revenues 63.2% 58.8%
Printed directories 173.5 202.4 -14.3%
as % of Group revenues 34.7% 38.6%
Other businesses 10.7 14.1 -24.1%
as % of Group revenues 2.1%   2.7%    
Gross operating margin 215.5   232.1   -7.2%
as % of Group revenues 43.1% 44.2%
Internet 132.7 134.1 -1.0%
as % of Internet revenues 42.0% 43.5%
Printed directories 79.8 93.5 -14.7%
as % of Printed directories revenues 46.0% 46.2%
Other businesses 3.1 4.6 -32.6%
as % of Other businesses revenues 29.0%   32.6%    
Operating income 184.9   207.8   -11.0%
Net financial income (66.8) (65.1) -2.6%
Share of profit or loss of an associate (0.1)   (0.4)   na
Income before tax 118.0   142.3   -17.1%
Corporate income tax (47.4) (55.2) +14.1%
Corporate income tax rate 40.1%   38.7%    
Net income 70.6   87.1   -18.9%
 

In an advertising market that remains on a downward trend in France, the Group recorded a -4.7% decline in its consolidated revenues in the first half of 2013.

  • Internet business, which accounted for 63.2% of Group revenues, posted weak growth of +2.4% in the first half of 2013, impacted in particular by the sharp downturn in the display business,
  • The contraction in Printed Directories revenues remained under control, with a -14.3% decline in the first half of 2013, thanks to an appropriate pricing policy.

The Group's gross operating margin of €215.5 million in the first half of 2013 represented a -7.2% decline compared with the first half of 2012. The gross operating margin represented 43.1% of revenues in H1 2013, compared with 44.2% in H1 2012, impacted notably by the overlap of non-recurring income4 as well as the strong deterioration of activity Display which dampened Internet margin.

The Group’s operating income, down -11.0% in H1 2013 compared with H1 2012, was €184.9 million. The decrease in operating income resulted mainly from the decline in gross operating margin and the increase in depreciation and amortisation expense in line with the policy of Internet investment.

The Group’s net income was €70.6 million in H1 2013, a decline of -18.9% compared with H1 2012. The decline in net income was attributable mainly to the decline in operating income and the increase in the tax rate (as a result of partial deductibility of interest expenses enacted at the end of 2012). The average cost of gross debt (including hedging instruments) was accordingly 6.9% in H1 2013, compared with 5.8% (excluding RCF) in H1 2012. The net financial income is stable, the decline in debt offseting the increase in the average cost of debt.

3 Source: Médiamétrie NetRatings – May 2013
4 Including investment tax credits from 2008 and 2009 recorded in 2012

IV. Financial structure

Net debt5 amounted to €1,628.5 million at 30 June 2013, a reduction of €113.2 million compared with 31 December 2012.

As of 30 June 2013, the group had a 9% headroom on its financial leverage covenant, which was 3.63x an aggregate close to GOM and 25% on its interest coverage covenant, which was 3.75x the net interest expense6.

The Group’s net cash flow was down -26.5% at €95.0 million in H1 2013, compared with €129.3 million in H1 2012, partly linked to a shift of 2012 interest payment in 2013. At 30 June 2013, the Group had net cash and cash equivalents of €105.9 million.

V. Outlook for 2013

The Group maintains its 2013 objectives at the low end of the range in view of the further deterioration in the advertising market in France:

  • Revenue decrease between -5% and -3%
  • 2013 GOM between €425 million and €445 million
  • Confirmation of the priority given to reducing indebtedness.

5 Net debt corresponds to total gross financial debt plus or minus the fair value of derivative asset and/or liability hedging instruments and minus cash and cash equivalents
6 Excluding change in the fair value of hedging instruments, amortisation of loan issue expenses and accretion income.

About Solocal Group

Solocal Group, the leader in local communication, became the new name of PagesJaunes Groupe on 5 June 2013. The Group offers online content, advertising solutions and transactional services that connect consumers and clients locally. It brings together around 5,000 people, including more than 2,300 advisors in local communication in France and Spain to support the digital development of companies (SMEs and micro businesses, tier 1 brand accounts, etc.), 18 strong and complementary brands (PagesJaunes, Mappy, 123people, 123deal, A vendre A louer, Embauche.com, Keltravo, Chronoresto, ZoomOn, Solocal Network, ComprendreChoisir, ClicRDV, PJMS, Horyzon Media, Leadformance, QDQ, Editus and Solocal Group) and nearly 700,000 clients. In 2012, Solocal Group generated €1.07 billion in revenues, of which 58.4% via the Internet, and thus ranks among the key European players in terms of online advertising revenues. Solocal Group is listed on NYSE Euronext Paris (LOCAL). Information on Solocal Group is available at www.solocalgroup.com.

This document contains forward-looking statements. Although Solocal Group believes its expectations are based on reasonable assumptions, these statements are subject to numerous risks and uncertainties. Important factors that could cause actual results to differ materially from the results anticipated in the forward-looking statements include, among other things: the effects of competition, usage levels, the success of investments by the Solocal Group in France and abroad, and the effects of the economic situation. A description of the risks borne by the Solocal Group appears in section 4 "Risk Factors” of the Solocal Group’s "Document de Référence” filed with the French financial markets authority (AMF) on 29 April 2013. The forward-looking statements contained in this document apply only from the date of this document, and Solocal Group does not undertake to update any of these statements to take account of events or circumstances arising after the date of said document or to take account of the occurrence of unexpected events. All accounting data are presented in audited consolidated form.

Appendix 1: Quarterly trends in fixed and mobile Internet traffic

In millions of visits   Q2 2013   Q2 2012   Change
PagesJaunes   324.4   293.9   +10.4%
of which mobile 81.2 55.0 +47.5%
Mappy   81.3   78.6   +3.5%
of which mobile 27.6 16.9 +63.4%
Other (a)   48.2   45.3   +6.3%
Total excluding 123people   453.9   417.8   +8.6%
of which mobile 110.9 73.0 +52.0%
123people   69.7   108.2   -35.6%
of which mobile 8.8 8.2 +7.3%
Total   523.6   526.1   -0.5%
of which mobile 119.7 81.2 +47.5%
Source : Solocal Group (a) on a like-for-like basis
 

Appendix 2: Quarterly revenues and gross operating margin

In millions of euros   Q2 2013   Q2 2012   Change
Group revenues   272.3   290.2   -6.2%
Internet   160.7   158.1   +1.6%
as % of Group revenues 59.0% 54.5%
Printed directories 106.7 125.6 -15.0%
as % of Group revenues 39.2% 43.3%
Other businesses 5.0 6.5 -23.1%
as % of Group revenues   1.8%   2.2%    
Gross operating margin   119.5   133.4   -10.4%
as % of Group revenues 43.9% 46.0%
Internet 68.6 72.3 -5.1%
as % of Internet revenues 42.7% 45.7%
Printed directories 49.7 60.0 -17.2%
as % of Printed directories revenues 46.6% 47.8%
Other businesses 1.2 1.2 na
as % of Other businesses revenues 24.0% 18.5%
 

Appendix 3: Quarterly consolidated income statement

In millions of euros   Q2 2013   Q2 2012   Change
Revenues   272.3   290.2   -6.2%
Net external charges   (56.9)   (56.8)   -0.2%
Salaries and charges   (95.9)   (100.0)   4.0%
Gross operating margin 119.5 133.4 -10.5%
as % of revenues   43.9%   46.0%    
Legal employee profit-sharing (4.1) (4.0) -3.8%
Depreciation and amortisation (10.1) (8.8) -15.2%
Other income and expenses   (2.9)   (0.2)   na
Operating income 102.4 120.5 -15.1%
as % of revenues   37.6%   41.5%    
Net financial income   (32.8)   (32.8)   0.1%
Share of profit or loss of an associate   0.0   (0.3)   na
Income before tax   69.6   87.5   -20.4%
Corporate income tax (28.0) (32.8) 14.6%
Corporate income tax rate   40.2%   37.4%    
Net income   41.6   54.7   -23.9%
 

Appendix 4: H1 2013 consolidated income statement

In millions of euros   H1 2013   H1 2012   Change
Revenues   500.3   525.0   -4.7%
Net external charges   (102.9)   (109.0)   5.6%
Salaries and charges   (182.0)   (183.8)   1.0%
Gross operating margin 215.5 232.1 -7.2%
as % of revenues   43.1%   44.2%    
Legal employee profit-sharing (7.0) (6.8) -2.9%
Depreciation and amortisation (20.0) (17.0) -17.6%
Other income and expenses   (3.5)   (0.6)   na
Operating income 184.9 207.8 -11.0%
as % of revenues   37.0%   39.6%    
Net financial income   (66.8)   (65.1)   -2.6%
Share of profit or loss of an associate   (0.1)   (0.4)   na
Income before tax   118.0   142.3   -17.1%
Corporate income tax (47.4) (55.2) 14.1%
Corporate income tax rate   40.1%   38.7%    
Net income   70.6   87.1   -18.9%
 

Appendix 5: Quarterly consolidated cash flow statement

In millions of euros   Q2 2013   Q2 2012   Change
Gross operating margin   119.5   133.4   -10.4%
Legal employee profit-sharing (4.1) (4.0) -2.5%
Non monetary items included in GOM 2.9 1.5 na
Net change in working capital 4.8 12.5 -61.6%
Acquisition of tangible and intangible fixed assets   (12.1)   (11.8)   -2.5%
Operational cash flow 110.9 131.6 -15.7%
as % of GOM 92.8% 98.6%
Cash financial income* (60.4) (37.1) -62.8%
Other income and expenses (2.0) - na
Corporate income tax paid   (27.3)   (34.0)   +19.7%
Net cash flow 21.2 60.6 -65.0%
Increase (decrease) in borrowings and bank overdrafts (1.9) (2.3) +17.4%
Other   (1.9)   (0.7)   na
Net cash variation 17.5 57.6 na
Net cash and cash equivalents at beginning of period   88.4   427.6   na
Net cash and cash equivalents at end of period 105.9 485.2 na

* a shift of €24 M out of which €14 M of Q1 2013 interest disbursed in Q2 2013 and €10 M of 2012 interest disbursed in Q2 2013

Appendix 6: H1 2013 consolidated cash flow statement

In millions of euros   H1 2013   H1 2012   Change
Gross operating margin   215.5   232.1   -7.2%
Legal employee profit-sharing (7.0) (6.8) -3.6%
Non monetary items included in GOM 3.7 1.9 na
Net change in working capital 25.4 29.4 -13.6%
Acquisition of tangible and intangible fixed assets   (21.6)   (19.9)   -8.1%
Operational cash flow 216.0 236.7 -8.7%
as % of GOM 100.2% 102.0%
Cash financial income* (70.8) (58.6) -20.8%
Other income and expenses (2.0) (0.0) na
Corporate income tax paid   (48.3)   (48.8)   +1.1%
Net cash flow 95.0 129.3 -26.5%
Increase (decrease) in borrowings and bank overdrafts (78.9) 279.9 na
Other   (2.1)   (2.0)   -2.7%
Net cash variation 14.0 407.1 na
Net cash and cash equivalents at beginning of period   91.9   78.1   +17.7%
Net cash and cash equivalents at end of period   105.9   485.2   na
* a shift of €10 M of 2012 interest disbursed in Q2 2013
 

Appendix 7: Consolidated balance sheet

In millions of euros   30 June 2013   31 Dec 2012   30 June 2012
ASSETS            
Total non-current assets 210.6 212.3 219.1
Net goodwill 83.9 82.3 93.9
Other net intangible fixed assets 72.2 69.4 69.9
Net tangible fixed assets 24.1 25.5 26.8
Other non-current assets of which deferred tax assets   30.5   35.1   28.4
Total current assets 581.1 653.9 1,038.2
Net trade accounts receivable 350.7 429.9 391.1
Acquisition costs of contracts 64.9 68.9 0.0
Prepaid expenses 12.3 5.6 118.7
Cash and cash equivalents 107.9 111.5 487.7
Other current assets   45.4   38.0   40.7
TOTAL ASSETS   791.7   866.2   1,257.3
LIABILITIES
Total equity   (1,923.5)   (2,006.8)   (2,033.3)
Total non-current liabilities 1,693.0 1,777.2 2,051.0
Non-current financial liabilities and derivatives 1,595.6 1,686.6 1,987.7
Employee benefits (non-current) 89.6 83.3 55.9
Other non-current liabilities   7.9   7.3   7.4
Total current liabilities 1,022.1 1,095.7 1,239.5
Bank overdrafts and other short-term borrowings 133.8 149.9 285.8
Deferred income 599.2 632.1 654.4
Employee benefits (current) 114.9 124.4 108.0
Trade accounts payable 79.9 78.3 88.1
Other current liabilities   94.5   111.0   103.2
TOTAL LIABILITIES   791.7   866.2   1,257.3
 

Appendix 8: Consolidated net debt

In millions of euros   30 June 2013   31 Dec 2012   30 June 2012
Cash and cash equivalents   107.9   111.5   487.7
Gross Cash position   107.9   111.5   487.7
Bank overdrafts   (2.0)   (19.6)   (2.5)
Net Cash position   105.9   91.9   485.2
Bank borrowings (1,368.2) (1,368.2) (1,600.1)
Bond borrowings -Senior secured notes (350.0) (350.0) (350.0)
Revolving credit line drawn* - (75.8) (281.4)
Loan issuance expenses 31.6 37.6 29.3
Capital leases (0.1) (0.1) (0.2)
Fair value of hedging instruments (34.4) (54.6) (59.0)
Accrued interest not yet due (7.0) (16.7) (6.7)
Other financial liabilities   (6.2)   (5.7)   (9.6)
Gross financial debt   (1,734.3)   (1,833.6)   (2,277.6)
of which current (138.8) (147.0) (289.9)
of which non-current   (1,595.6)   (1,686.6)   (1,987.7)
Net cash (debt)   (1,628.5)   (1,741.7)   (1,792.5)
             
Net cash (debt) excluding fair value of financial instruments and loan issuance expenses   (1,625.6)   (1,724.7)   (1,762.7)
*At 06/30/2013, €95,8 M available under the undrawn revolving credit line (€20 M available at 12/31/2012)
 

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