First half 2019 results solid organic growth and sharp improvement in earnings
European digital services group SQLI presents its first half results as approved at the Board of Directors meeting on 23 September 2019 chaired by Philippe Donche-Gay.
The statutory auditors have conducted a limited review of the first half financial statements. The interim financial report was published and filed with the French Financial Markets Authority (AMF) today. It can be consulted on the Company’s website.
Net operating income doubled
First half 2019 turnover came to €123.0 million, up 6% like-for-like versus first half 2018. Billing was driven by growth in the European digital agency’s business (Commerce & Experience), which posted turnover of €52.8 million, up 15%. Digital services turnover in France (Digital & Technology) remained stable at €70.2 million, despite ongoing pressure on resources. At constant exchange rates, Group turnover was up 6%.
The first half statements confirm the favourable impact of revenue growth on earnings, in line with previous announcements. Recurring operating income was up 14% to €6.0 million, representing 4.9% of turnover. The sharp reduction in non-recurring expenses (€1.4 million down from €2.9 million a year earlier) strengthened this trend, pushing net operating income up 94% to €4.7 million and net income up 563% to €2.4 million.
Healthy financial position
At 31 December 2018, SQLI posted net borrowings of €22.7 million, excluding IFRS 16 lease liabilities, and shareholders’ equity of €88.5 million. The increase in debt is the result of a cyclical increase in working capital (€12 million) due to an increased number of invoices to be issued and less use of factoring.
The net debt-to-equity ratio came to 26%.As a reminder, SQLI raised €3.6 million in early September 2019 through the exercise of share warrants by the Group’s primary shareholders, Amar Family Office and Nobel.
Implementation of the ONE FORCE 2022 strategic plan
The first half of 2019 was marked by the drafting and presentation of the ONE FORCE 2022 strategic plan in early July. This plan aims to provide a framework that fosters the Group’s emergence as a major European e-commerce player (Commerce & Experience), while restoring growth and profitability to its digital services business in France (Digital & Technology) and drawing on Group-wide technological expertise.
The plan involves increasing turnover by over 20% and recurring operating income by over 80% to over €22 million during the next four years, excluding the impact of any new acquisitions.SQLI also intends to play a unifying role in the concentration of digital agencies in Europe and will continue to review acquisition opportunities for this purpose.
Trends for 2019
SQLI expects to see growth in full-year 2019 turnover driven by robust momentum in Commerce & Experience and gradual improvement in Digital & Technology, despite a sluggish French digital services market.Earnings should continue to improve in line with these trends.SQLI will publish its Q3 2019 turnover on 14 November 2019 after close of trading.