2016-17 HALF-YEAR EARNINGS IN LINE WITH THE INTEGRATION AND DEPLOYMENT PHASE FOR THE COMPANIES ACQUIRED
NEW BOND FINANCING SET UP FOR A MAXIMUM OF €5 MILLION TO SUPPORT THE GROUP'S DYNAMIC DEVELOPMENT
At the Board meeting on December 7, 2016, the Directors reviewed and approved the 2016-17 half-year financial statements for the period ended September 30, 2016. In addition, the Group is announcing that it has set up new financing based on issuing ORNANE bonds that may be redeemed in cash and/or converted into new and/or existing shares (“ORNANE bonds”) with equity warrants (“BSA warrants”) attached, for a nominal total of €1 million, to a fund managed by the investment firm Yorkville Advisors Global LP, within a maximum overall commitment for a nominal value of up to €5 million.
The GECI International Group (the “Group”) has seen a significant change in the scope of its operations over the past 18 months. More specifically, the consolidated half-year accounts at September 30, 2016 include: i/ three months of business for ETUD Integral, the company acquired at the end of June 2016, and ii/ six months of business for the EOLEN group, compared with two at September 30, 2015.
|€'000,000||Sep 30, 2016 |
|Sep 30, 2015 |
|Mar 31, 2016 |
|Current operating income||0.21||(1.01)||0.96|
|Pre-tax current operating income||(0.34)||(0.62)||0.20|
|Consolidated net income||(0.27)||(0.78)||0.47|
|Net income (Group share)||(0.57)||(0.67)||0.01|
During the first half of FY 2016-17, the Group continued moving forward with its strategy to redeploy the EOLEN group, adjusting its positioning around strong value-added markets. As a result of the actions rolled out, the sales and recruitment teams have been further strengthened to help drive progress with commercial activities.
Internationally, the Group has continued to expand its operations, particularly with its Brazilian and South African subsidiaries, which have achieved promising levels of development with their sales, while further strengthening their visibility.
Alongside this, at the end of June 2016, the Group acquired ETUD Integral, a company specialized in design, engineering and prototypes for the automotive and transport sectors in particular. This external growth is being combined with major development opportunities, particularly with new solutions for urban and interurban mobility. An operational reorganization has been rolled out immediately for this new subsidiary and its full impacts are expected to be seen from next year.
The Group's revenues climbed to €11.5 million at September 30, 2016, up 191% year-on-year. The breakdown of the Group's sales between its various markets was as follows: 22% for engineering, 52% for IT and telecoms, and 26% for finance, with 16% international business.
At end-November, the Group had a total of 460 employees, compared with 352 at the end of September 2015.
To increase the efficiency of the strategies deployed and the relevance of their offers, the business divisions across the Group's various subsidiaries have been reorganized as specialized Business Units focused on a limited number of activities and markets.
Current operating income
Earnings are in line with forecasts thanks to the efforts made in terms of: i/ integrating and putting in place a new strategy for ETUD Integral, and ii/ investing in dedicated commercial and recruitment resources for the deployment of the EOLEN group's offering and its repositioning around stronger value-added markets: cybersecurity, self-driving vehicles, and finance (regulatory compliance and market risks).
The margin on direct costs for the first half of the year came to 26.7%, delivering a significant improvement of 20% compared with the first half of the previous year (22.2%).
Current operating income totaled €0.2 million for the first half of FY 2016-17, up from a €(1.0) million loss for the first half of 2015-16. ETUD Integral's contribution for the period is not significant.
After net finance costs of €(0.1) million and the capitalization of deferred taxes for €0.2 million, total net income represents €(0.3) million, with €(0.6) million Group share, an improvement compared with the previous year's figure of €(0.8) million.
Note that net income for the first half of 2016-17 factors in €0.6 million of non-recurring expenses, including €0.2 million of depreciation for the client portfolio (identified when allocating the EOLEN group's acquisition price).
At September 30, 2016, consolidated shareholders' equity was stable compared with March 31, 2016. Similarly, the Group's net finance costs are unchanged at €12.3 million. Cash and cash equivalents are up to €0.6 million, compared with €0.4 million at March 31, 2016.
This financial position takes into account the equity warrants1 issued as decided by the combined general meeting on March 29, 2016 and exercised since then by the Group's shareholders. At end-September 2016, 5,424,674 BSA warrants, representing 23.8% of the potential maximum total, had been exercised, with 5,424,674 new shares created and a total gross subscription of €325,480.44. For reference, the outstanding BSA warrants are scheduled to mature on October 7, 2017.
Financial structure further strengthened to accelerate development
The Group has today issued €1 million of ORNANE bonds that may be redeemed in cash and/or converted into new and/or existing shares (“ORNANE bonds”) with equity warrants (“BSA warrants”) attached. Within a global commitment made by a fund managed by Yorkville Advisors Global, LP (the “Investor”), the Group will also have the option to issue 400 ORNANE bond warrants with BSA warrants attached (the “bond warrants”) subject to approval by shareholders at the next extraordinary general meeting and a prospectus approved beforehand by the French financial markets authority (AMF).
The 400 bond warrants will make it possible to issue, over the next 36 months, in several successive tranches, with the Group having total control over their issue (provided that certain conditions are met), a maximum nominal total of €4 million of ORNANE bonds with equity warrants attached.
The bond warrants will be subscribed for in full by the Investor as part of a reserved issue.
A presentation of the legal terms, the characteristics of the various instruments and the obligations for the Group and the Investor is appended to the French version of the press release. A summary table presenting the bond warrants, ORNANE bonds, BSA equity warrants and the number of shares outstanding will be put online on the Group's site (www.geci.net).
The Group has chosen ORNANE bonds with characteristics that notably make it possible to limit any potential dilution for existing shareholders.
In an improving economic environment, the Group is forecasting over 50% growth in full-year revenues for FY 2016-17 compared with the previous financial year.
The Group's actions are targeting strong progress with organic growth and profitability, focused on expanding its client base, further strengthening the quality of its offers and optimizing costs across its subsidiaries.
The Group is also looking to capitalize on the opportunities for development opening up with the digital revolution in all areas of engineering, telecoms and IT. By capitalizing on its expert capabilities and knowledge of international markets, while developing industrial partnerships, the Group is diversifying its business in high-potential niches, such as new mobility solutions or cybersecurity.
With its highly complementary and innovative expert capabilities, the Group aims to support major industrial firms, SMEs and startups, ensuring the success of their digital transition and designing smart services and solutions.
The consolidated half-year financial statements have been subject to a limited review by the statutory auditors, in line with the regulations in force. The half-year financial report is available in French on the Group's site: www.geci.net.
Next date: 2016-17 third-quarter revenues on Wednesday February 15, 2017 after close of trading
About GECI International: Smart Solutions for a Smart World
The GECI International Group, created in 1980, has established itself as a high-tech engineering specialist. Today, GECI International is targeting high-growth, strong value-added market segments, focusing in particular on engineering, IT, telecommunications and smart products and services. With its world-renowned credibility for advisory services, its expertise and its ability to deploy the most qualified skills, GECI International is supporting businesses with their digital transition and their efforts to design and develop new smart services and solutions.
GECI International - French limited company (société anonyme) with capital of €671,663.94
Registered office: 48 bis Avenue Kléber - 75116 Paris - France - Paris trade and companies register: 326 300 969
GECI International is listed on the regulated market Euronext Paris - Compartment C
ISIN (shares): FR0000079634 - GECP
ISIN (equity warrants): FR0013141249 - GECBS
Tel: +33 (0)1 44 34 00 20
Tel: +33 (0)1 53 65 68 68
1 As decided at the combined general meeting on March 29, 2016, GECI International has issued equity warrants (“BSA warrants”) awarded freely to its shareholders in order to engage them in its new development projects. On April 7, 2016, 61,741,720 BSA warrants were issued, with one BSA warrant entitling beneficiaries to subscribe for one GECI International share at any time up until October 6, 2017 inclusive based on a unit price of €0.06 per share. For reference, the leading shareholders - Serge Bitboul, XLP Holding and Air Invest - have made commitments to not exercise or sell the free BSA warrants awarded to them, with an accretive impact for the other shareholders. The BSA warrants have been listed on Euronext Paris since April 7, 2016 under ISIN FR0013141249.