Disclaimer: This document is a free translation of and extract from the original French Financial Annual Report for 2016 and the French consolidated

Transcription

1 Disclaimer: This document is a free translation of and extract from the original French Financial Annual Report for 2016 and the French consolidated financial statements. Only the French version is legally binding. A copy of the full Annual Report for 2016 (in French) or the consolidated financial statements (in French) may be obtained inter alia either on ADLPartner s website ( or on request by calling +33(0) or ing relations.investisseurs@adlpartner.fr.

2 MESSAGE FROM THE CHAIRMAN Dear Shareholders, In 2016, the ADLPartner Group confirmed the solidity of its development. While optimizing its prospecting campaigns for its longstanding product lines, the company has continued to diversify into new, fast-growing markets.. With a portfolio of nearly 3.1 million units at the end of 2016, the open-ended subscription offers achieved solid sales thanks to the performance of the marketing mixes rolled out during the year, while the outlook is slightly more challenging for the fixed-term subscription offers and the books, merchandise, audio and video range. B2B marketing services offers, sold under the new ADLPerformance brand, has seen sustained development, particularly in Spain. With higher levels of listings in diverse markets, ADLPerformance is enabling the Group to capitalize on its established relational marketing expertise, as well as its advanced cross-channel and digital marketing capabilities. Lastly, the Group has continued moving forward with the development of ADLP Assurances, its subsidiary specialized in direct marketing insurance brokerage. Its major commercial investments were kept at an identical level to 2015, helping drive the development of a portfolio of contracts that will generate future revenues. Our results for 2016 confirm the relevance of the strategy implemented and the quality of the Group's management. The growth in net sales and the improvement in operating income are based on the strength of the open - ended subscription offers and the good performances achieved by the Spanish subsidiary. In the end, net income (group share) is up 60% year-onyear to 5.5 million, with a net margin of 4.5%, versus 2.9% in The Group's strong balance sheet is helping support its ambitions for Jean-Marie Vigneron development. Consolidated shareholders' equity is up to 23.4 million, with a Chairman of the Management Board cash surplus of 29.2 million at 31 December The company's robust development is also reflected in the 1.4% increase in net asset value (group share) to million. In view of these performances and the plans for investments, the Management Board has decided to submit a dividend of 1 per share for approval by shareholders at the General Meeting on 16 June The ADLPartner Group is developing in line with its long-term strategy focused on creating value and capitalizing on its marketing expertise. By further strengthening the efficiency of its offers and diversifying its activities, the Group will be able to sustainably consolidate its potential for growth and profitability. I would like to thank our partners and our shareholders for their confidence, trust and loyalty. Jean-Marie Vigneron Chairman of the Management Board 2016 annuel report 1

3 2016 KEY FIGURES ( 000,000) GROSS SALES VOLUME NET SALES OPERATING INCOME NET INCOME (GROUP SHARE) 96.5 PORTFOLIO VALUE NET ASSET VALUE (GROUP SHARE) BREAKDOWN OF GROSS SALES VOLUME by product type by region Open-ended subscription Fixed-term subscription Books - Merchandise- Audio - Video Other France Spain & Portugal GROSS SALES VOLUME AND NET SALES The gross sales volume represents the value of subscriptions and other products sold, while net sales (determined in line with the French professional status for subscription sales) only include the amount of remuneration paid by magazine publishers; for subscription sales, net sales therefore correspond to a gross margin, deducting the cost of magazines sold from the amount of sales recorded. For acquisition and management commissions linked to sales of insurance policies, net sales comprise current and future commissions issued, acquired by the accounting reporting date, net of cancellations annuel report

4 GROUP PROFILE With its extensive track record in performance marketing, the ADLPartner Group designs, markets and implements performance marketing solutions on its own behalf or for its major partners. Strong value-added marketing expert Created in 1972, the ADLPartner Group supports businesses from all sectors with their marketing issues through a wide range of customer recruitment, management and loyalty solutions. Its expertise is built around its extensive marketing engineering know-how and its proven cross-channel track record, combined with the most innovative digital expertise. Historically, the Group has supported leading brands from the banking, mass retail or service sectors. With its strong partnership-based culture, it works with more than 40% of the companies from the CAC 40. Over 130 million contacts 3.1 million active subscribers 2.5 million orders Over 400,000 tablets distributed Presence in 3 countries: France, Spain and Portugal Cross-channel customer marketing specialist The ADLPartner Group aims to support businesses to create value by maximizing the performance of their customer marketing actions and capitalizing on their customer knowledge. To achieve this, ADLPartner develops original cross-channel solutions that will create performance. Fees for these solutions are primarily dependent on their success and brands do not need to make any financial investment, enabling the Group to develop a portfolio of assets (press subscriptions, insurance brokerage, etc.) that will generate recurrent revenues. The Group's experts oversee and manage all aspects of marketing campaigns, capitalizing on the Group's industrial and technological capabilities, demanding management model, rigorous cost management, quality culture and highly responsive approach. HIGH-LEVEL EXPERTISE THROUGHOUT THE CUSTOMER MARKETING VALUE CHAIN Distance-selling expertise for recurrent services Expertise in relational and promotional marketing techniques Optimization of channels and interactions (crosschannel) Prospect and customer relationship management (CRM) Operation management and monitoring Covering of commercial investments and performance-based remuneration ADLPartner already has a strong position on the market, in France and Spain, providing solutions for all the issues facing pan-european brands with the implementation of their customer marketing actions annuel report 3

5 PERFORMANCE MARKETING SOLUTIONS ADLPartner develops original cross-channel solutions to create performance. Its marketing engineering know-how and its expertise in innovative marketing techniques enable it to capture the true essence of each channel. Press services ADLPartner has been marketing and selling magazine subscriptions for over 40 years. Its strong BtoBtoC culture has enabled it to establish itself as a benchmark in this sector. ORIGINAL MARKETING MIXES For several years, the Group has notably been developing a whitelabel magazine subscription service. This advantageous and attractive offer, automatically renewed based on a system for regular direct debits, provides a solution for publishers looking for new readers and for top brands looking for a premium turnkey, multichannel service. With this press service, customers of partner brands are able to benefit from magazine subscriptions (paper and digital) at preferential prices from a selection of over 400 titles. A tablet is also offered as a gift for all orders. This premium service, deployed for major partner brands (banking, insurance, services, retail), is effectively aligned with their expectations for managing their customers and building loyalty, while making it possible to capitalize on and monetize their databases. Longstanding product lines Distributed primarily with a white-label approach, open-ended subscriptions represent the main product line, with a portfolio of 3 million active subscriptions. Fixed-term subscriptions, generally for 12 months, cover a wide range of magazines and newspapers at significantly discounted prices, distributed BtoC, for instance under the brands offered by Plusdemags or France Abonnements, which also has a distance-selling business for cultural products (books, audio and video) and practical items (health, wellness and leisure). Marketing services Under the ADLPerformance brand, the integrated BtoB customer marketing offers bring together all the high-level cross-channel marketing solutions and expertise from across the Group and its subsidiaries (Converteo, Activis, Leoo and ADLPartner Hispania). These marketing services activities are effectively aligned with the expectations of partners and customers who want to develop their ADLPerformance unites together all the high-level cross-channel marketing solutions from across the Group and its subsidiaries in France, Spain and Portugal under one dedicated commercial brand annuel report

6 customer management and loyalty within quick turnaround times, while limiting the investments involved. Partners entrust ADLPerformance with creating value through their databases. ADLPerformance handles the marketing of products and services based on their customers (up-selling and cross-selling). To achieve this, ADLPerformance deploys cross-channel marketing techniques, additional sales forces and dedicated tools to continuously improve performances for each campaign. Search marketing and qualified contact generation Cross-channel and digital strategy consulting The innovative marketing solutions offered by ADLPerformance make it possible to implement effective global cross-channel approaches harnessing the full potential of digital and data. More specifically, these solutions make it possible to: Brand experience program management and design Qualify customers Generate leads Develop customer value Outsource sales / invoicing / customer service functions for partners. Insurance Since 2014, the ADLPartner Group has offered insurance products on a direct marketing basis for its own customers, as well as its partners customers and prospects, through its brokerage subsidiary ADLP Assurances. HASSLE-FREE RANGE OF USEFUL EVERYDAY INSURANCE PRODUCTS Focused on the quality of its offers, ADLP Assurances works with market-leading general and personal risk insurance firms to create bespoke, targeted products (accidental death, legal protection, etc.), renowned for their performances. Marketed under the AvoCotés brand, these everyday insurance products are easy to understand and activate. They are also effectively aligned with general needs for cover and perfectly adapted for their target populations. STRONG INSURANCE PARTNERS This diversification is based around the Group s well-established distance-selling expertise for recurrent services, tailored to the insurance market. This new offer has seen strong growth for the past two years annuel report 5

7 STRATEGY The ADLPartner Group is moving forward with a strategy to create value and capitalize on its marketing expertise in new developing markets with a view to further strengthening its potential for growth and profitability over the medium and long term. Optimizing investment in the longstanding business lines In connection with its magazine subscription sales business, the Group has mapped out its commercial priorities for several years with a stronger focus on partnership-based open-ended subscriptions, creating more value than traditional subscriptions. To support this offer's development, ADLPartner is continuously improving its marketing mixes. The innovations rolled out in the past few years are helping support the portfolio's lifespan and commercial returns, while further strengthening relations with partners. Alongside this, ADLPartner is significantly scaling back its commercial investments in its fixed-term subscription offers and the books, merchandise, audio and video range, considering the challenging outlook for these specific markets. Development of ADLPerformance Capitalizing on its 40 years of marketing engineering experience, combined with its highly innovative approach and data expertise, the Group is supporting the development of ADLPerformance, the BtoB commercial brand that unites together all the marketing services activities. ADLPerformance covers all marketing techniques and offers BtoC brands a wide range of turnkey customer marketing solutions tailored to their needs. Its development in 2016 enabled it to build its visibility alongside key account customers, with stronger listings across diverse markets. With its innovative strong value-added solutions, ADLPerformance is positioning itself as a pivotal player for relational marketing with best-in-class cross-channel and digital marketing capabilities. Its development is helping support value creation for the Group on a growing market. Investments in ADLP Assurances To further strengthen the foundations for its development, ADLPartner is focusing part of its actions on generating value through its know-how with new customers and products that have similar economic features to press subscriptions. More specifically, this diversification strategy is helping drive the development of ADLP Assurances and is moving forward in synergy with the Group's established distance-selling expertise for recurrent services. This subsidiary, specialized in direct marketing insurance brokerage, has embarked on major commercial investments in the past two years aiming to build up a portfolio of contracts that will generate future revenues. The development of ADLP Assurances will enable the Group to further strengthen its potential for growth and profitability over the medium and long term. Monitoring of opportunities for external growth The ADLPartner Group is moving forward with a strategy for self-financed, targeted acquisitions of small or mid-size companies that have promising prospects and strong market positions or proven technological expertise annuel report

8 STOCK MARKET AND SHAREHOLDING Change in the share price closing price ( ) 20 Breakdown of capital % % 8 janv.-14 avr.-14 juil.-14 oct.-14 janv.-15 avr.-15 juil.-15 oct.-15 janv.-16 avr.-16 juil.-16 oct.-16 janv % volume Vigneron family Group Treasury stock Public Shareholder dashboard Listing market Euronext Paris (France) ISIN FR ALP PEA-PME Eligible Number of shares 4,294,725 Parent company net income 11,249 k Proposed payout 3,943 k after deducting treasury stock Payout rate 35.1 % Proposed dividend per share 1 Yield 7.1 % based on average share price for 2016 Share price: 2016 average share price high low End of period Market capitalization (at 31 Dec 2016) 69,574,545 Theoretical breakdown of voting rights 4.8% 11.7% 83.5% Legal structure at 31 December 2016 (% of capital) 2016 annuel report 7

9 annuel report

10 2016 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET 10 CONSOLIDATED INCOME STATEMENT 12 STATEMENT OF CONSOLIDATED NET CASH FLOW 13 CHANGE IN CONSOLIDATED SHAREHOLDERS' EQUITY 15 KEY PERFORMANCE INDICATORS annuel report 9

11 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET ASSETS ( thousands) 12/31/ /31/2015 NON-CURRENT ASSETS Goodwill 1, Intangible assets 1,583 1,276 Tangible assets 3,325 3,523 Investments in associates 1,804 3,496 Assets held for sale Other financial assets 2,560 2,680 Deferred tax assets 978 1,038 Total Non-current assets 11,727 12,087 CURRENT ASSETS Inventory 3,262 2,939 Trade and other receivables 41,893 36,358 Other current assets 2,417 2,519 Cash and cash equivalents 29,234 26,594 Total Current assets 76,805 68,410 Assets held for disposal TOTAL ASSETS 88,532 80, annuel report

12 CONSOLIDATED FINANCIAL STATEMENTS EQUITY AND LIABILITIES ( thousands) 12/31/ /31/2015 Share capital 6,681 6,681 Consolidated reserves 11,274 12,535 Consolidated net income 5,470 3,428 Shareholders' equity 23,426 22,644 Of which: Group share 23,426 22,644 Minority interests,0,0 NON-CURRENT LIABILITIES Long-term provisions 2,641 2,203 Financial debt Deferred taxes liabilities Total Non-current liabilities 3,669 2,840 CURRENT LIABILITIES Short-term provisions Tax, personnel and fringe benefits 12,617 10,749 Trade and other payables 47,053 42,518 Financial debt Other liabilities 1,051 1,399 Total Current liabilities 61,437 55,012 Liabilities held for disposal TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 88,532 80, annuel report 11

13 CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATED INCOME STATEMENT ( thousands) 12/31/ /31/2015 Net sales (excluding VAT) 122, ,370 Purchases (33,706) (34,448) Personnel costs (24,120) (22,848) External charges (49,605) (50,572) Taxes and duties (2,032) (1,820) Depreciation and amortization (738) (787) Other operating income (expenses) (2,718) (2,574) Current operating income 9,381 5,322 Other income (expenses) (491) Operating income 8,890 5,322 Income from cash and cash equivalents Gross cost of financial debt (56) (47) Net financial income Other financial income (expense) 108 (163) Income tax charge (3,115) (1,754) Share of Associates' net income (490) (163) NET INCOME BEFORE INCOME FROM DISCONTINUED OPERATIONS OR HELD FOR DISPOSAL 5,470 3,504 Net income (loss) on discontinued operations or held for disposal (76) NET INCOME 5,470 3,428 Group share 5,470 3,428 Minority interests Basic net income (Group share) per share ( ) Diluted net income (Group share) per share ( ) Statement of comprehensive income Net income 5,470 3,428 Income and expenses directly taken to equity: Translation adjustment relating to the conversion of foreign currency-denominated operations Net actuarial (losses)/gains on defined benefit pension schemes, net of tax (0) (142) 85 Comprehensive income 5,328 3,513 Group share 5,328 3,513 Minority interests annuel report

14 CONSOLIDATED FINANCIAL STATEMENTS STATEMENT OF CONSOLIDATED NET CASH FLOW ( thousands) CONSOLIDATED NET INCOME (INCLUDING MINORITY INTERESTS) 5,470 3,428 +/- Net depreciation, amortization and provisions (excluding items linked to current assets) /+ Unrealized capital gains (losses) relating to fair value movements (100) +/- Calculated (expenses) income linked to stock options and related items 133 (3) -/+ Other calculated (expenses) income -/+ Capital gains losses on disposal of assets /+ Dilution gains (losses) +/- Share of Associates' net income Dividends (unconsolidated securities) Cash flow after cost of net financial debt and tax 7,281 4,535 - Net financial income (77) (263) +/- Income tax charge (including deferred taxes) 3,115 1,754 Cash flow before net financial income and income tax (A) 10,318 6,026 - Income tax paid (B) (392) (3,066) +/- Change in WCR linked to operations (including debt linked to employee benefits) (C) (1,958) (3,723) = NET CASH FLOW FROM OPERATIONS (D) = (A + B + C) 7,968 (763) - Funds paid for acquisition of tangible and intangible assets (501) (842) + Funds received from the sale of tangible and intangible assets 18 - Funds paid for acquisition of long-term investments (unconsolidated securities) (100) + Funds received from the sale of long-term investments (unconsolidated securities) +/- Impact of changes in group structure (209) (1,315) + Dividends received (equity accounted companies, unconsolidated securities) 17 +/- Movements in loans and advances granted (1,000) (1,100) + Investments grants received +/- Other cash flows from (used in) investing operations (79) (17) = NET CASH FLOW FROM (USED IN) INVESTING ACTIVITIES (E) (1,873) (3,255) + Proceeds from share capital increases. Paid by parent company shareholders. Paid by minority interests in consolidated companies + Sums received upon exercise of stock options /+ Purchase and sale of treasury shares 6 (1,612) - Dividends paid over the fiscal year. Dividends paid to parent company shareholders (4,092) (4,411). Paid to minority interests in consolidated companies + Proceeds from new borrowings - Repayment of loans (including lease finance agreements) (4) -/+ Net financial interest (including lease finance agreements) /- Other cash flows used in financing operations 16 = NET CASH FLOW FROM (USED IN) FINANCING ACTIVITIES (F) (3,840) (5,432) +/- Impact of fluctuations in currency exchange rates (G) (0) = CHANGE IN NET CASH (D + E + F + G) 2,255 (9,450) Cash and cash equivalents at the beginning of the year 26,586 36,037 Cash and cash equivalents at the end of the year 28,841 26, annuel report 13

15 CONSOLIDATED FINANCIAL STATEMENTS CHANGE IN CONSOLIDATED SHAREHOLDERS EQUITY ( thousands) SHAREHOLDERS' EQUITY AS AT 12/31/14 Share capital Parent company surplus (1) Group share Consolidated reserves (2) Net income for the year TOTAL Minority interests Total consolidated entity 6,681 17,730 (9,448) 9,957 24, ,921 Net income for the year 3,428 3,428 3,428 Translation adjustment relating to the conversion of foreign currency-denominated 0 0 operations Net actuarial (losses)/gains on defined benefit pension schemes, net of tax Comprehensive income for the year 85 3,428 3, ,513 Net income allocation 9, (9,957) 0 0 ADLPartner dividends (4,411) (4,411) (4,411) Impact of treasury shares (1,376) (1,376) (1,376) Impact of stock options and attribution of bonus shares (3) (3) (3) SHAREHOLDERS' EQUITY AS AT 12/31/15 6,681 22,478 (9,943) 3,428 22, ,644 Net income for the year 5,470 5,470 5,470 Translation adjustment relating to the conversion of foreign currency-denominated (0) (0) (0) operations Net actuarial (losses)/gains on defined benefit (142) (142) (142) pension schemes, net of tax Comprehensive income for the year (142) 5,470 5, ,328 Net income allocation 8,899 (5,470) (3,428) 0 0 ADLPartner dividends (4,092) (4,092) (4,092) Impact of treasury shares Impact of stock options and attribution of bonus shares Impact of put on minority shares Activis (458) (458) (458) Impact of change consolidation method Activis (210) (210) (210) SHAREHOLDERS' EQUITY AS AT 12/31/16 6,681 27,285 (16,010) 5,470 23, ,426 (1) Additional Paid-in capital + legal reserve + other reserves + retained earnings in the financial statements of ADLPartner (2) Group reserves + translation adjustment annuel report

16 CONSOLIDATED FINANCIAL STATEMENTS KEY PERFORMANCE INDICATORS GROSS SALES VOLUME Gross sales volume represents the value of subscriptions and other products sold. Net sales represent: For subscription sales: the amounts paid by magazine publishers, with sales generated by the company in its capacity as a press agent. Net sales therefore correspond to a gross margin, deducting the cost of magazines sold from the amount of sales recorded, For other products sold: sales revenue. Gross sales volume is reported before any discounts or cancellations. It therefore represents the most stable and standard indicator for the group's performances. Gross sales volume from continuing operations was stable at 277,862 thousand in 2016 compared with 277,973 thousand in Gross sales volume can be broken down as follows: 1.1. By region ( 000) France 263, ,982 Spain 13,936 9,992 TOTAL 277, , By product range ( 000) Open-ended subscriptions 204, ,849 Fixed-term subscriptions 36,202 39,060 Books-merchandise-audio-video 18,567 20,393 Other 18,409 10,671 TOTAL 277, ,973 NET ASSET VALUE The portfolio of open-ended subscriptions managed by the Company represented 3,174,811 units at 31 December It came to 3,093,222 subscriptions at 31 December It should be noted that all group companies hold the financial rights relating to each open-ended subscription. The value of the portfolio of open-ended subscriptions, net of taxes (group share), rose from million at 31 December 2015 to million at 31 December This change in the real asset value is not reflected in the consolidated financial statements. The value of the portfolio of open-ended subscriptions is calculated by determining the present value of the future net revenues that these subscriptions will generate throughout their useful life. These revenues are determined accurately using the statistical information accumulated by the Company over several years concerning the behavior of such subscriptions in France and for its subsidiaries. The life curve of subscriptions recruited by a promotional campaign makes it possible to determine, at any time, the residual life expectancy of subscriptions with great accuracy. The net contribution still to be received can be determined by applying 2016 annuel report 15

17 CONSOLIDATED FINANCIAL STATEMENTS the average revenues observed and the margin on direct costs (with discounts deducted) to the number of remaining subscriptions. For mixed subscriptions with a firm 12-month commitment, the value of the portfolio determined in this way is restated for the margin on direct costs, already recognized in the group s accounts. Indeed, net sales and the outstanding costs for the firm commitment period are recorded in the group s accounts as soon as subscriptions are activated with publishers. The present value of this contribution, calculated by applying a rate based on the money market rate, gives the value of this portfolio of subscriptions. This value is then corrected for any underlying tax. The value of the portfolio of open-ended subscriptions, net of taxes (group share), can be broken down as follows: ( 000) Value of ADL portfolio (net of tax) (group share) at 12/31/2016 at 12/31/2015 ADLPartner France 101,326 99,958 ADLPartner Hispania 1,481 1,949 Total 102, ,907 Factoring in the portfolio value (group share) and consolidated shareholders equity (group share), net asset value (group share), rose 1.4% from million at 31 December 2015 to million at 31 December The net asset value does not include an estimate of the net future income of the portfolio of insurance contracts held by the group. Net asset value can be broken down as follows: ( 000) 12/31/ /31/2015 Total Group share Minority Interests Total Group share Minority Interests Consolidated shareholders' equity 23,426 23, ,644 22,644 0 Value of ADL's portfolio (net of taxes) 102, , , ,907 0 NET ASSET VALUE 126, , , ,551 0 Net asset value (group share) represents 32.1 per share (excluding treasury stock) annuel report

18

19 3, rue Henri Rol-Tanguy Montreuil - France Tél. : +33 (0) Fax : +33 (0)