SOLOCAL GROUP PRESS RELEASE
Sèvres, 28 April 2015
Internet revenues up +4.1%, Group revenues in slight decrease and partnerships strengthened with major web players in Q1 2015 Q1 2015 results
o Progression in Internet revenue growth reaching +4.1% (compared to +2% in Q4
2014)
o Solid audience growth of +14%, of which +26% for mobile platforms
o Robust growth in Search & Display ARPA1 up by +11%
o Print & Voice revenues down by -20.6%
o Group revenues down by -3.0%
o EBITDA/revenue margin2 of 26%
Strengthened strategic partnerships with Google3, Microsoft (Bing) and Apple positioning Solocal Group as the gateway for advertisers to the local mobile web
Outlook for 2015
o Internet revenue growth between +5% and +10%
o Slight decrease in Group revenues - less than in 2014 - due to the accelerated decrease in the Print & Voice business
o EBITDA/revenue margin2 between 29% and 30%
At its Investor Day to be held today in Paris, Solocal Group, #1 in Europe for local digital communication, will present its strategic development and growth objectives for the period up to 2018.
Jean-Pierre Remy, Chief Executive Officer, stated: "Internet revenues continued to grow by +4% in the first quarter thanks to the sharp increase in the audiences we generated for our advertisers. The quality of our audiences has considerably improved, which is reflected in the significant growth of our average revenue per advertiser. In addition, we have pursued the implementation of our Digital 2015 transformation program, which implies the adaptation of our sales structures longer than expected. Our sales results remain below our expectations. We still have a strong focus on the growth of our Internet business, while managing with discipline our investments and expenses."1 Average Revenue Per Advertiser
2 Recurring EBITDA / Group revenue margin, excluding exceptional items
3 cf. Press release Solocal Group / Google published today
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The full Investor Day presentation will be available on www.solocalgroup.com on 28 April at 2 pm.I. Revenues and EBITDA in the 1st quarter of 2015
The Board of Directors approved the Group's consolidated accounts as of 31 March 2015.In million of euros Q1 2014 Q1 2015 Change Internet revenues 154.0 160.3 +4.1% Search & Display revenues 121.2 127.9 +5.5%
Number of visits (in million) 485 555 +14% ARPA 4 (in €) 215 237 +10% Number of clients (in thousand) 560 536 -4% Digital marketing revenues 32.7 32.3 -1.2%
Penetration rate (in number of clients) 5 21% 22% +1 pt
Print & Voice revenues 61.7 49.0 -20.6%
Group revenues 215.7 209.2 -3.0%
The Group posted consolidated revenues of €209.2 million in Q1 2015, down -3.0% compared to Q1
2014:
The Internet business is up by +4.1%, driven by the Search & Display business, which grew by
+5.5% mainly driven by the increase of +10% in ARPA4, which is the result of improved monetisation of Internet audiences, up by +14%. The strong increase in ARPA4 more than offsets the decrease in the number of clients -4%, which, amongst others, has been impacted by the priority given to the commercial development of high-value clients in early 2015.
The Digital marketing6 penetration rate5 rose from 21% to 22%, which is in line with our strategy of reaching a penetration rate of 30% within 3 years.
The Print & Voice business fell by -20.6% in the period, which is a sharper decrease than last year (-19% in Q4 2014 and -17% in full year 2014), and which leads us to revise slightly our
Group revenue growth forecast 2015.
Recurring EBITDA7
Recurring EBITDA / Revenues7
In million of euros Q1 2014 Q1 2015 Change Q1 2014 Q1 2015
Internet 56.8 41.8 -26.4% 37% 26% Print & Voice 25.0 12.4 -50.4% 40% 25% Group 81.8 54.2 -33.7% 38% 26%
EBITDA of €54.2 million in Q1 2015 dropped by 33.7% compared to Q1 2014. The EBITDA/revenues margin was 26% in Q1 2015, compared to 38% in Q1 2014. This 12-point fall in the EBITDA/revenue margin is due primarily to: a 7-point increase due to sales cost increase as a result of investments made to the reinforcement of the sales and marketing organisation around around our 5 verticals;
a 5-point drop due do the Print & Voice business as a result of the accelerated decrease in that business.
4 Average Revenue Per Advertiser
5 % of Internet clients "Search & Display" benefiting from a Digital marketing product
6 Creation and referencing of web/marketing content and transactional services
7 Excluding exceptional items
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Under these circumstances, the Group is setting up an operational contingency plan that will reduce costs by nearly €30 million on a yearly basis. Thanks to this plan, we remain confident in our ability to achieve an EBITDA/revenue margin8 of between 29% and 30% in 2015.
II. Net income and financial structure in the 1st quarter of 2015
In million of euros Q1 2014 Q1 2015 Change
Recurring EBITDA9 81.8 54.2 -33.7% Exceptional items (9.3) (0.5) 94.6% EBITDA 72.5 53.7 -25.9% Depreciation and amortisation (10.3) (11.9) -15.5% Net financial income10 (27.7) (22.0) -20.9%
Corporate income tax (14.9) (7.5) +49.7%
Net income 19.5 12.4 -36.4%
The Group's EBITDA of €53.7 million in Q1 2015 is down -26% and is impacted by the drop in recurring EBITDA, which is partially offset by non-recurring exceptional items in the Q1 2015. Net financial income was negative by -€22.0 million in the Q1 2015, down -20.9% compared to Q12014, thanks primarily to the impact of debt repayments made between the two periods.
In Q1 2015, the Group recognised corporate income tax expense of €7.5 million, a decrease of -49.7% compared to Q1 2014. The effective tax rate of 38% in the Q1 2015 is exceptionally lower by 5 points compared to Q1 2014 due to the one-off deduction of share-based compensation expenses. The Group net income amounted to €12.4 million in Q1 2015, down -36.4% compared to Q1 2014. After the refinancing carried out in 2014, net debt11 totalled €1,125.8 million as of 31 March 2015, in decrease by €416.1 million compared to 31 March 2014. The Group's net cash flow was €20.7 million as of 31 March 2015, down by -59.5% compared to Q12014. This drop is primarily driven by the EBITDA decrease and the increase in working capital requirements temporarily implied by the new sales compensation structure. These two items are partially offset by the fact that no tax payments were made during the period.
As of 31 March 2015, Solocal Group held €42.0 million in net cash.8 Recurring EBITDA / Group revenue margin, excluding exceptional items
9 Excluding exceptional items
10 Including share of profit or loss of an associate
11 Net debt is the gross financial debt plus or minus the fair net asset value of asset and/or liability derivative instruments used for cash flow hedging purposes, minus cash and cash equivalents.
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III. Outlook for 2015-2018
The expected outlook for 2015 is: Internet revenues growth between +5% and +10%
A slight decrease in Group revenues - less than in 2014 - due to the accelerating decrease in the
Print & Voice business
EBITDA/revenues margin12 between 29% and 30%
In order to maintain this margin rate, the Group is setting up an operational contingency plan that will reduce costs by nearly €30 million on a yearly basis. As a result of this plan, net income is expected to remain stable compared to 2014.
Furthermore, in 2015 the Group would like to: proceed with partial purchases of its high yield debt;
proceed with partial purchases of its bank debt by at least €15 million;
achieve a reverse split, subject to the shareholders vote at the next combined shareholders'
meeting scheduled on 11 June 2015.
At the Investor Day to be held today in Paris, the Group will present its priorities for the period up to 2018: sustainable and profitable growth and continuing deleverage. The Group is aiming to achieve in 2018: an Internet revenue growth of ~+10%
an EBITDA/revenue margin of ~30%
a Net debt reduction > €300 million compared to the current amount
About Solocal Group
Solocal Group, the European market leader in local online communication, provides digital content, advertising solutions and transactional services that simply connect people with local businesses. The Group employs some 4,800 people (including nearly 2,300 local communication advisors) in France, Spain, Austria and the United Kingdom and supports the online development of SMB and major client accounts, mainly through its four flagship brands: PagesJaunes, Mappy, ComprendreChoisir and A Vendre A Louer. Over the years, Solocal Group has earned the trust of some 550,000 Internet clients. In 2014, Solocal Group generated revenues of 936 million euros, of which Internet business accounted for 68%, making it a European market leader in terms of online advertising revenues. Solocal Group is listed on Euronext Paris (LOCAL). More information may be obtained at www.solocalgroup.com.
Contacts
Press
Delphine Penalva
+33 (0)1 46 23 35 31 dpenalva@solocal.com
Investors
Elsa Cardarelli
+33 (0)1 46 23 40 92
ecardarelli@solocal.com
Edwige Druon
+33 (0)1 46 23 37 56 edruon@solocal.com
This press release contains forward-looking statements. Although Solocal Group feels that its estimates are based upon assumptions which we believe to be reasonable, these forward-looking statements are subject to numerous risks and uncertainties, which could cause actual results to differ materially from those anticipated in said forward-looking statements. For a discussion of risks and uncertainties which could cause actual results, financial condition, performance or achievements of Solocal Group to differ from those contained in the forward-looking, please refer to the "Risk factors" section of the "Document de Référence" filed with the French financial markets authority (AMF) and available on the Internet sites of the AMF (www.amf-france.org) and of Solocal Group (www.solocalgroup.com). Accounting data arepresented on an annual basis in audited consolidated form and on an quarterly basis in unaudited consolidated form.
12 Recurring EBITDA margin/Group revenues, excluding exceptional items
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Appendix 1: Audiences for 1st quarter
In million of visits Q1 2014 Q1 2015 Change PagesJaunes 359.6 407.4 +13.3% of which mobile 111.4 135.1 +21.3%
Source : Solocal Group *shut down of 123people in Q1 2014
on a like-for-like bas is
Appendix 2: Income statement for 1st quarter
Exceptional items (9.3) (0.5) +94.6%
* Excluding exceptional item s
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Appendix 3: Consolidated cash flow statement for 1st quarter
In million of euros Q1 2014 Q1 2015 Change Recurring EBITDA 81.8 54.2 -33.7% Exceptional items (9.3) (0.5) +94.6% EBITDA 72.5 53.7 -25.9% Non monetary items included in EBITDA and other 7.7 (1.7) -122.1% Net change in working capital 20.2 (2.8) na Acquisition of tangible and intangible fixed assets (16.6) (16.1) +3.0% Operational cash flow 83.8 33.1 -60.5% Cash financial income (12.6) (12.4) +1.6% Corporate income tax paid (20.1) 0.1 +100.5% Net cash flow 51.1 20.7 -59.5% Increase (decrease) in borrowings and bank overdrafts (39.0) (18.6) na Capital increase - - - Other (2.3) (3.7) na Net cash variation 9.8 (1.6) -116.3% Net cash and cash equivalents at beginning of period 73.1 43.6 -40.4%
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Appendix 4: Consolidated balance sheet
In million of euros 31 March 2014 31 Dec 2014 31 March 2015
Net goodwill 80.9 82.5 82.5
Other net intangible fixed assets 87.3 107.3 113.3
Net tangible fixed assets 23.3 25.3 23.6
Other non-current assets of which deferred tax assets 30.2 14.6 15.3
Net trade accounts receivable 399.9 441.8 387.0
Acquisition costs of contracts 63.7 46.7 42.1
Prepaid expenses 13.3 9.4 11.4
Cash and cash equivalents 84.0 46.4 43.7
Other current assets 44.9 62.5 59.9
Non-current financial liabilities and derivatives 1,486.2 1,139.6 1,141.8
Employee benefits (non-current) 87.9 90.4 91.1
Other non-current liabilities 18.3 16.9 15.8
Bank overdrafts and other short-term borrowings 121.6 37.5 14.7
Deferred income 616.2 575.4 547.1
Employee benefits (current) 118.5 117.6 109.1
Trade accounts payable 86.2 98.9 88.1
Other current liabilities 138.1 129.3 130.0
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Appendix 5: Consolidated net debt
In million of euros 31 March 2014 31 Dec 2014 31 March 2015
Cash and cash equivalents 84.0 46.2 84.0
Bank overdrafts (1.1) (2.8) (1.1)
Bank borrowings (1,254.6) (833.8) (1,254.6) Bond borrowings -Senior secured notes (350.0) (350.0) (350.0) Loan issuance expenses 22.4 25.8 22.4
Capital leases (0.0) (0.8) (0.0) Fair value of hedging instruments (18.0) (9.9) (18.0) Accrued interest not yet due (18.2) (5.1) (18.2) Other financial liabilities (6.3) (5.5) (6.3) Gross financial debt (1,624.8) (1,179.4) (1,624.8) of which current (138.7) (39.7) (138.7)
of which non-current (1,486.2) (1,139.6) (1,486.2)
Net debt (1,541.9) (1,135.8) (1,541.9)and loan issuance expenses
*At 03/31/2015, €57 M available under the revolving credit line
31 March 2014 31 Dec 2014 31 March 2015 Financial leverage 3.72X 3.73X 4.03X
Covenant (max) 3.75X 4.50X 4.50X
Covenant (min) 3.00X 3.00X 3.00X
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