LIMITATION OF LIABILITY

Transcription

1 2016 HALF-YEAR RESULTS September 2016

2 LIMITATION OF LIABILITY Forward-looking statement (Safe Harbour) This presentation contains forward-looking statements (made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995), which, by their nature, involve a degree of risk and uncertainty. Forward-looking statements represent the company s judgement regarding future events, and are based on currently available information. Consequently the company cannot guarantee their accuracy and their completeness. Actual results may differ materially from those the company anticipated due to a number of uncertainties, many of which the company is not aware of. For additional factors that may cause the company s actual results to differ materially from expectations and underlying assumptions, please refer to the reports filed by the company with the Autorité des Marchés Financiers (French financial markets authority - AMF). 2

3 AGENDA H HIGHLIGHTS H BUSINESS REVIEW H FINANCIAL REVIEW OUTLOOK AND FOCUS 3

4 H HIGHLIGHTS Intensification of Group transformation Significant investments in Temando & Innovation projects, at historical highs Acceleration of Group structure optimization Group EBIT margin stabilized excluding Temando & Innovation Net debt stabilized thanks to good level of cash flow SME Solutions: Protecting margins in a very weak market Disappointing performance in H sales, at historical lows EBIT margin stabilized thanks to additional c. 15m net OPEX reduction CSS DU: Solid performance in ongoing investment phase Strong EDS sales growth and increased profitability icon Systemhaus acquisition adding German insurance market and access to IBM mainframe technology Underlying sales growth in Shipping and improved profitability 4

5 GROUP MARGIN STABLE EXCLUDING INVESTMENTS NEOPOST GROUP Profitable Transformation Operating margin stabilized excluding investments at historical highs H Operating Margin 18.0% 20.1% excl. Temando & Innovation projects H Operating Margin 19.1% 20.2% excl. Temando & Innovation projects 5

6 DESPITE H SALES DECLINE Innovation projects NEOPOST GROUP Objective Margin protection Profitable Growth Investing for growth Profitable Transformation Sales 484m 82m 1m 557m Organic Growth -4.8% +8.8% n/a -3.3% 6

7 AGENDA H HIGHLIGHTS H BUSINESS REVIEW H FINANCIAL REVIEW OUTLOOK AND FOCUS 7

8 SME Solutions Maintaining operating margins in a declining market Difficult market conditions in Mail Solutions Strong decline in hardware, notably in Europe Limited recurring revenues decline, with US almost flat Good digital software performance despite SaaS transition Unfavorable business cycle in Graphic activities Success of cost optimization programs driven by Group transformation Net cost reduction of 5.7% or c. 15m in H1 2016, accelerating from 13m in FY

9 CSS DU Enterprise Digital Solutions: double digit growth and improved profitability GMC: strong double digit growth Strong performance in vertical markets, especially in Bank & Insurance Improved profitability Confirmed leadership by Gartner and Forrester studies icon Systemhaus: complementary footprint and technology N 1 in Germany in Customer Communication Management Strong client base in Insurance and Bank New market deployment through access to IBM mainframe customers Stabilization of Data Quality Integration completed within Enterprise Digital Solutions 9

10 GMC INSPIRE FOR LA CAJA DE AHORRO Y SEGUROS ARGENTINA Situation La Caja de Ahorro y Seguros (La Caja) is a leader in the Argentina insurance market. Established in 1915, La Caja now has 2,300 employees, and over 3 million customers. The system La Caja was using to distribute their electronic customer communications was cumbersome and slow. Neopost s Solution GMC Inspire offered La Caja the ability to quickly and effectively design and deploy consistent, personalized communications across the growing range of communication delivery channels from a highly efficient, automated workflow with a seamless integration into La Caja s existing core IT systems. Outcome In just two months, La Caja and GMC deployed 123 and SMS/text campaign workflows resulting in the delivery of 500,000 s and 50,000 SMS/text communications per month. La Caja can now create highly personalized content with targeted offers, messages and charts and graphs driving increased revenue and customer loyalty. 10

11 CSS DU Neopost Shipping : Investing to become the partner of choice: THE FACILITATOR Double digit underlying growth in Shipping Solutions The RFID French Army contract still affecting the CSS DU shipping performance (base effect of 4m) Packcity Slow deployment in France Launch in Japan with Yamato Temando s deployment requires further investments Adjusted go to market following the strategic Magento contract Magento provides access to 250,000 e-commerce customers through a global omnichannel retail platform Solution delivered to La Redoute 11

12 TEMANDO: WE SOLVE THE CHALLENGES OF SHIPPING IN COMMERCE A multi-carrier platform for today s business systems Reduce cart abandonment by providing delivery options and being upfront with shipping costs. Shipping calculator can be displayed on product and/or cart level. Multi-carrier management and software that matches what a customer wants with what a carrier can deliver. Increase conversions Transparent costs and efficient fulfillment Multi-carrier management 12

13 A PRAGMATIC APPROACH TO INNOVATION PROJECTS CVP-500 3D automated packing system H Sales 1.4m for 2 units EBIT (2.1)m 2 units signed in August in the US, to be delivered in H Suite of web-based services and software applications for micro businesses Two pilots currently tested in the UK and in the US with 3 different partners complementary to Neopost s applications EBIT (3.3)m Neopost s applications Partners applications 13

14 AGENDA H HIGHLIGHTS H BUSINESS REVIEW H FINANCIAL REVIEW OUTLOOK AND FOCUS 14

15 H SALES Change in sales (in million) Communication & Shipping Solutions 24.4% Mail Solutions 75.6% Growth: -5.0% Growth excluding currency effects: -3.0% Scope effect*: +0.3% 2015 Scope effect* * Organic growth Currency effects 2016 Organic growth: -3.3% Difficult market conditions in H * Impact of acquisitions: 1.7m on 2014 sales for Temando & icon Systemhaus 15

16 H SALES BREAKDOWN BY COUNTRY AND REVENUE TYPE H sales per country Organic change H sales per type of revenue Organic change Europe -6.4% Sales of equipment & licenses -10.7% 48% 7% Rest of the world +2.6% 31% 45% 69% North America -0.7% Recurring revenues +0.5% Sales split unchanged despite ongoing transformation 16

17 H SALES PERFORMANCE BY DISTRIBUTION NETWORK H sales H organic growth In million Mail Solutions (MS) Communication & Shipping Solutions (CSS) SME Solutions CSS DU & Innovation Elim. Total SME Solutions CSS DU & Innovation Elim. Total % % % +8.8% +14.0% +5.3% Total % +8.8% +14.0% -3.3% Strong decline in Mail Solutions and underlying double digit growth in CSS Average rates /$ 2016 = 1.12 and 2015 = 1.10; / 2016 = 0.79 and 2015 =

18 CURRENT OPERATING INCOME In million H H Sales Gross margin % of sales 75.3% 75.4% EBITDA % of sales 25.6% 24.9% Current operating income (before acquisition-related expense) % of sales 19.1% 18.0% Gross margin stabilization Average rates /$ 2016 = 1.12 and 2015 = 1.10; / 2016 = 0.79 and 2015 =

19 H PROFITABILITY BREAKDOWN BY DISTRIBUTION NETWORK H H In million and in % of sales SME CSS DU Elim. Innovation ** Total SME CSS DU Elim. Innovation ** Total Total sales (9) (10) Current EBIT* (4) (5) 100 Current EBIT* margin 21.4% 7.2% % 21.0% 4.6% % Quasi-stabilization of SME EBIT margin despite sales decline, strong impact of Temando investments on CSS DU EBIT margin Average rates /$ 2016 = 1.12 and 2015 = 1.10; / 2016 = 0.79 and 2015 = 0.72 *Before acquisition-related expense ** Innovation include the CVP-500 and the online platform & applications for SME 19

20 STEPPING UP TRANSFORMATION IN SME: MINIMUM 50M OF NET SAVINGS BY 2018 Transformation drives OPEX reduction Digitalized go-to-market Simplify existing portfolio of products and solutions Dematerialized service Shared services 60m 50m 40m 30m 20m 10m 0m new net OPEX reduction objective of minimum 50m m FY2014 H FY 2015 H FY 2016 H FY 2017 New objective 50m min. Previous objective 35 to 50m 28m of costs reduction already achieved in 18 months 20

21 GROUP EBIT MARGIN STABILIZED EXCL. INVESTMENTS Improved underlying profitability in CSS Investments at historical highs H margin 20.1% 101 Margin 21.0% Margin 20.1% 100 Margin 18.0% excluding Temando & Innovation projects SME EBIT EDS EBIT Shipping excl. Temando EBIT Group EBIT excl. Investments 118 New projects EBIT Temando EBIT -2 Group EBIT H margin 20.2% Margin 21.4% Margin 20.2% Margin 19.1% SME EBIT EDS EBIT Shipping excl. Temando EBIT Group EBIT excl. Investments New projects EBIT Temando EBIT Group EBIT 21

22 OPERATING INCOME In million Current operating income (before acquisitionrelated expense) H H Acquisition-related expense (6) (6) Current operating income Optimization expenses & other (2) (8) Operating income Stabilization of acquisition-related expense Level of 2016 optimization expenses in line with plan Average rates /$ 2016 = 1.12 and 2015 = 1.10; / 2016 = 0.79 and 2015 =

23 NET INCOME In million H H Operating income Cost of debt (17) (15) Currency gains and losses and other (3) 2 Net financial income/(expense) (20) (13) Taxes (20) (17) Income from associated companies - - Minority interest 1 2 Net attributable income Net margin as a % of sales 11.0% 10.5% EPS Fully diluted EPS* Net margin above 10% of sales Average rates /$ 2016 = 1.12 and 2015 = 1.10; / 2016 = 0.79 and 2015 = 0.72 *As per IFRS treatments, the calculation takes into account the dividends paid to ODIRNANE s holders 23

24 CASH FLOW GENERATION Change relative to 31 January, in million H H excl. UK extraordinary VAT payment H EBITDA Other items (7) (7) (11) Cash flow* Change in WCR (74) (37) (43) Change in lease receivables (9) (9) 19 Interest and income tax paid (50) (50) (17) Cash flow from operations Capital expenditure (44) (44) (42) Cash flow after CAPEX (34) 3 44 Acquisitions (26) (26) (23) Cash flow after CAPEX & acquisitions (60) (23) 21 Good level of cash flow * Before net cost of debt and tax Average rates /$ 2016 = 1.12 and 2015 = 1.10; / 2016 = 0.79 and 2015 =

25 FINANCIAL STRUCTURE In million 31/07/ /01/ /07/2016 Financial debt 1, Cash and marketable securities Net financial debt Shareholders equity 1,038 1,069 1,078 Net debt / shareholders' equity 78% 76% 76% Net debt / EBITDA ratio Net debt stabilized over 12 months despite dividend payment over 12 months still at 100m Closing rates /$ H = 1.11 and H = 1.10; / H = 0.84 and H =

26 AGENDA H HIGHLIGHTS H BUSINESS REVIEW H FINANCIAL REVIEW OUTLOOK AND FOCUS 26

27 H FOCUS Focusing on costs & Free Cash Flow in SME Solutions Visibility remains low and market likely to remain tough in Mail Solutions Push CSS revenues within SME Solutions Significantly higher net OPEX reduction plan of minimum 50m by 2018 Stabilize EBIT margin at the highest level possible Investing and deploying in CSS Dedicated Units Generate strong growth and continuous margins improvement on existing offer Deploy Temando & integrate icon Systemhaus Pursuing investments in Innovation projects CVP-500 and web-based applications for micro businesses 27

28 UNCHANGED MID TERM OUTLOOK Return to positive organic growth By growing the relative share of Communication & Shipping Solutions to 35% of total sales Maintain a current operating margin level before acquisitionrelated expense above 18% throughout transformation By increasing the CSS margin contribution in all business units By reducing expenses within SME Solutions While allocating 10m expenses to innovation projects Bring back the Group current operating margin before acquisitionrelated expense to minimum 20% By increasing the CSS margin contribution 28

29 APPENDICES 29

30 QUASI STABILIZED SME MARGIN IMPROVED CSS-DU & GROUP MARGINS EXCL. TEMANDO & INVESTMENTS H m except for margin SME EDS Shipping excl. Temando CSS DU excl. Temando Elim. Total excl. investments Innovation Temando Total investments Total Sales (9) EBIT EBIT Margin 21,4% 11,5% 4,5% 9,7% - 20,2% n/a n/a n/a 19,1% H m except for margin SME EDS Shipping excl. Temando CSS DU excl. Temando Elim. Total excl. investments Innovation Temando Total investments Total Sales (10) EBIT EBIT Margin 21,0% 13,6% 9,5% 12,5% - 20,1% n/a n/a n/a 18,0% SME margin stabilized thanks to OPEX reduction CSS DU margin excl. Temando improved Total Group margin excl. Temando and new projects stabilized Investment at peak level 30

31 DEBT SCHEDULE AT 31 JULY ODIRNANE 3.375% USPP USD 90 million Public Bond 2.5% Drawn revolving facility (total facility (total facility of 500 of 500m) Bond 3.5% USPP USD 175 million USD 26% USPP USD 50 million EUR 74% No refinancing deadline before

32 CONSOLIDATED BALANCE SHEET (1/2) Assets ( millions) 31/07/ /07/2016 Goodwill 1,107 1,140 Intangible fixed assets Tangible fixed assets Non-current financial assets Other non-current receivables 3 2 Leasing receivables Deferred tax assets Inventories Trade receivables Other current assets Financial securities Current financial instruments 1 1 TOTAL 3,008 2,809 32

33 CONSOLIDATED BALANCE SHEET (2/2) Liabilities ( millions) 31/07/ /07/2016 Shareholders equity before minority interest 1,032 1,069 Minority interest 6 9 Shareholders equity 1,038 1,078 Non-current provisions Non-current financial debt Current financial debt Other non-current liabilities Deferred tax liabilities Non-current financial instruments 1 0 Prepaid income Other current liabilities Current financial instruments 1 1 TOTAL 3,008 2,809 33

34 SME SOLUTIONS Hardware Software Folders/Inserters DS range Address printers Global solutions USA France United Kingdom Germany Franking Machines IS range Openers/ extractors

35 ENTERPRISE DIGITAL SOLUTIONS (EDS) Customer Communication Management Data Quality GMC Inspire Inspire Interactive Inspire Design DataCleaner DataCleaner Cloud Dataentry DataHub Bulk Mailer Satori Infuse desktop Satori infuse web services Satori Architect Satori Office CanMap Location Hub Location Hub Analytics Location Hub Post-Event service Location Hub Viewer

36 NEOPOST SHIPPING Automated packing solutions Shipping solutions Tracking solutions Automated Parcel Terminals

37 GLOSSARY Mail Solutions: mailing systems, document systems (folder/inserters for offices, mailrooms, other mailroom equipment) and related services Communication & Shipping Solutions (CSS): customer communication management and data quality software, logistics solutions, document finishing and graphics solutions SME Solutions (previously Neopost Integrated Operations - NIO): Neopost subsidiaries developing, producing and distributing Mail Solutions and CSS services to the Group's long-standing customers CSS Dedicated Units (CSS DU): entities distributing CSS solutions to large accounts: Enterprise Digital Solutions Customer Communication Management (GMC Software Technology) and Data Quality solutions (DMTI Spatial, Human Inference and Satori Software), Neopost Shipping (former Neopost ID, ProShip and Temando) 37

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