press release, REGULATORY INFORMATION, 14 February 2023
Econocom realises revenue growth of 14.8%,
and exceeds its objective of
Recurring Net Profit per share
2022 targets outperformed
- Revenue of €2,718 million, up1 14.8%, including 10.0% organic2 growth
- Robust Recurring Operating Profit (ROP)3 of €139.4 million, up1 9.2%
- Recurring Net Profit4 increases1 significantly to €95.5 million, or €0.53 per share
Organic growth supported by the acquisition of new customers
The Econocom Group generated revenue of €2,718 million in 2022, an increase2 of 10.0% compared with 2021. At constant accounting standards, but without including the revenue of companies acquired in 2022 in the 2021 comparison base, total revenue growth1 was 14.8%, showing the strong contribution from both organic growth and acquisitions.
Over the period, trends in continued activities were as follows:
• Products & Solutions (P&S) revenue totalled €1,238 million, up1 27.6%, with organic2 growth of 15.5%. The Group outperformed a steadily growing digital asset distribution market. P&S delivered a ROP3 up1 8.9% at €49.0 million, or 4.0% of revenue.
• Technology Management & Financing (TMF) continued its growth path, with revenue of €989 million, up1 12.3% as reported and 10.2% on an organic2 basis. The final quarter, traditionally a strong season, saw particularly dynamic growth of 12.7%. Taking advantage of favourable volumes, TMF grew1 its ROP3 by 23.7% to €49.8 million, putting the margin (ROP/Revenue) at 5.0%.
• After declining over the first nine months, Services revenue recovered as expected in the fourth quarter, with growth2 of 6.1% taking annual revenue to €492 million, virtually stable2 (-1.9%) compared with 2021. At €40.6 million, the ROP3 was identical to the previous year2, keeping the margin at a sound level of 8.3%.
Benefiting from the Group's overall growth and despite the increase in costs linked to higher component or transport prices, the Group's Recurring Operating Profit3 (ROP) was up1 9.2% at €139.4 million, compared with €127.7 million (restated1) in 2021.
After taking into account other net operating expenses of €27.4 million, net financial expense of €14.5 million and tax expense of €22.7 million, the annual net profit from continuing operations was €72.6 million, compared to €69.5 million in 2021, up1 4.5%. After deducting the €7.3 million loss from discontinued operations, consolidated net profit was €65.3 million, down1 €4.8 million. Note that Econocom sold certain non-strategic assets in 2021, generating one-off gains of approximately €7 million that were not repeated in 2022.
Recurring net profit4 increased1 by 20.7% to €95.5 million, resulting in recurring earnings per share6 of €0.53, above the target of €0.50 set for 2022.
Free Cash-Flow increases to €71 million and Net Financial Debt (NFD)5 less than 1x EBITDA
In 2022, Econocom recorded a free cash flow of €71 million, an increase compared with 2021. The Group also returned €57 million to its shareholders and paid out €67 million in net cash for its acquisitions.
NFD5 was consequently €143 million at 31 December 2022, vs €67 million a year earlier, which represents 31% of shareholders equity or 0.9 times EBITDA for the year. NFD should be seen against the 44 million treasury shares held (€124 million based on the average closing share price over the last 20 days).
Operating debt, i.e. NFD5 less expected future receipts from own-booked TMF contracts (at €284 million at the end of 2022 compared with €208 million at the end of 2021), shows a cash surplus of €140 million at the end of 2022.
The Board of Directors will propose at the next General Meeting to repay shareholders €0.16 per share from the share premium, up 14.3% vs 2022. Based on the average closing share price over the last 20 days, this represents a yield of 5.7%.
Total planned pay-outs in July 2023 would accordingly amount to €28.6 million, or 43.8% of the 2022 net profit, compared to €24.9 million for the prior year.
Econocom Group targets a 5% revenue growth in 2023, as well as an increase of its consolidated net profit.
In addition, the Group has started developing its 2024-2028 Strategic Plan with the aim of reaching revenues of €5 billion by the end of the Plan. In that respect, the Group has strengthened the operational management of its activities; this is reflected in particular by the appointment to the COMEX of three cross-business directors whose mission is to accelerate business synergies. The 2024-2028 Strategic Plan will be presented to the market in the third quarter of 2023.
Information meeting on the full-year 2022 results on 16 February
1 For continuing operations, at constant accounting standards
2 For continuing operations, at constant scope and accounting standards, including organic growth of acquired companies
3 Going forward, the term “operating profit” will replace the term “recurring operating profit”.
4 Recurring net profit has been the performance indicator used by Econocom to best assess its economic and financial performance. It does not include amortisation of intangible assets from acquisitions, net of tax effects; other operating income and other expenses, net of tax effects; other financial income and other expense, net of tax effects; profit from discontinued operations. Going forward, this indicator will be referred to as “adjusted net profit”.
5 NFD: Net financial debt including current and non-current financial debt excluding debt resulting from the application of IFRS 16 to leases (premises, vehicles, etc.) for which Econocom is lessee.
|Recurring operating profit (operating margin)||127.7||139.4|
|Amortisation of intangible assets from acquisitions||-2.0||-2.2|
|Other operating income||7,2||0.1|
|Other operating expenses||-23,6||-27.5|
|Profit (loss) from operating activities||109.2||109.8|
|Net finance income||3.5||0.5|
|Other financial expenses||-13.4||-15.0|
|Profit (loss) before tax||99.3||95.3|
|Income tax expense||-29.7||-22.7|
|Profit from continuing operations||69.5||72.6|
|Net profit from discontinued activities, associates and joint ventures||0.6||-7.3|
|Profit for the period||70.2||65.3|
|Recurring net profit (adjusted net profit)||79.1||95.5|
|(€m) ASSETS||31.12.2021 |
|Other non-current assets||216||212|
|Residual interest in leased assets||171||165|
|Trade and other receivables||796||879|
|Other current assets||185||181|
|Cash and cash equivalents||406||405|
|Assets held for sale||69||106|
|(€m) EQUITY & LIABILITIES||31.12.2021 |
|Equity attributable to owners of the parent||381||390|
|Gross liability for purchases of leased assets||98||103|
|Trade and other payables||882||932|
|Liabilities held for sale||31||57|
|TOTAL EQUITY AND LIABILITIES||2,339||2,502|
Appendix: Reconciliation between financial data at the end of 2021 as reported in the 2021 annual report and data contained in the 2022 annual report.
“2021 as reported” corresponds to revenue and ROP as presented in the 2021 annual report.
“2021 restated” corresponds to revenue and ROP at the end of 2021 as presented in the 2022 annual report, and takes into account changes in discontinued operations as per IFRS 5 and changes in accounting presentation and corrections for comparability purposes. It serves as the basis for calculating growth rates at constant standards.
“2021 pro forma” corresponds to restated revenue and ROP at the end of 2021 adjusted for the effects of exchange rates and changes in the scope of consolidation (acquisitions and disposals). It serves as the basis for calculating growth rates at constant standards and scope.
|Revenue (€m)||Group total||TMF||P&S||Services|
|2021 as reported||2,505||921||1,067||516|
|Deconsolidation of discontinued activities and changes in accounting presentations||-138||-40||-98||-|
|Change in consolidation scope (acquisitions)||114||14||100|
|Change in consolidation scope (disposals)||-15||-15|
|2021 pro forma||2,470||897||1,071||501|
|ROP3 (€m)||Group total||TMF||P&S||Services|
|2021 as reported||135.7||39.8||53.5||42.5|
|Deconsolidation of discontinued activities and changes in accounting presentations||-8.0||0.5||-8.4||-0.1|
|Change in consolidation scope (acquisitions)||4.0||0.7||3.3|
|Change in consolidation scope (disposals)||-1.7||-1.7|
|2021 pro forma||130.6||41.0||48.8||40.7|