Editoria e Media
JCDecaux: H1 2018 results
(Euronext Paris: DEC), the number one outdoor advertising company worldwide, announced today its 2019 half year financial results.
Following the adoptions of IFRS 11 from January 1 , 2014 and IFRS 16 from January 1 , 2019, and in compliance with the AMF's instructions, the operating data presented below are adjusted:
Please refer to the paragraph "Adjusted data" on pages 5 and 6 of this release for the definition of adjusted data and reconciliation with IFRS.
Commenting on the 2019 first half results, , said:
Adjusted revenue for the six months ending June 30 , 2019 increased by +12.1% to €1,842.3 million from €1,643.3 million in the same period last year. On an organic basis (i.e. excluding the positive impact from foreign exchange variations and the positive impact from changes in perimeter), adjusted revenue grew by +5.2%. Adjusted advertising revenue, excluding revenue related to sale, rental and maintenance of street furniture and advertising displays, increased by +5.7% on an organic basis in the first half of 2019.
In the second quarter, adjusted revenue increased by +11.3% to €1,002.3 million. On an organic basis, adjusted revenue grew by +5.1% compared to Q2 2018.
Adjusted advertising revenue, excluding revenue related to sale, rental and maintenance of street furniture and advertising displays, increased by +5.8% on an organic basis in Q2 2019.
Please note that the geographic comments below refer to organic revenue growth.
First half adjusted revenue increased by +6.4% to €790.6 million, +5.6% on an organic basis, driven by a good performance in France, Rest of Europe and North America as well as a double-digit growth in Asia-Pacific. UK was down, impacted by the advertising ban for HFSS products (High Fat, Salt and Sugar products) in London on TfL assets.
First half adjusted advertising revenue, excluding revenue related to sale, rental and maintenance of street furniture were up +4.9% on an organic basis compared to the first half of 2018.
In the second quarter, adjusted revenue increased by +10.0% to €446.3 million. On an organic basis, adjusted revenue increased by +9.6% compared to the same period last year. Adjusted advertising revenue, excluding revenue related to sale, rental and maintenance of street furniture were up +9.6% on an organic basis in Q2 2019 compared to Q2 2018.
First half adjusted revenue increased by +17.8% to €777.0 million, +8.1% on an organic basis, thanks to a good performance in Asia-Pacific, a double-digit growth in the Rest of Europe and North America; UK and France were up single-digit.
In the second quarter, adjusted revenue increased by +11.8% to €409.0 million. On an organic basis, adjusted revenue increased by +3.0% compared to the same period last year, mainly due to a revenue decline in our Chinese metro business.
First half adjusted revenue increased by +13.9% to €274.7 million, -3.8% on an organic basis. Reported growth benefited from the contribution of APN Outdoor. Organically, Europe (including France and UK) and the Rest of the World were down. North America was up double-digit.
In the second quarter, adjusted revenue increased by +13.7% to €147.0 million. On an organic basis, adjusted revenue decreased by -3.1% compared to the same period last year.
In the first half of 2019, adjusted operating margin increased by +29.4% to €306.4 million from €236.7 million in the first half of 2018. The adjusted operating margin as a percentage of revenue was 16.6%, +220bp above prior year.
In the first half of 2019, adjusted operating margin increased by +7.8% to €176.1 million. As a percentage of revenue, the adjusted operating margin increased by +30bp to 22.3%, compared to the first half of 2018.
In the first half of 2019, adjusted operating margin increased by +84.2% to €107.2 million. As a percentage of revenue, the adjusted operating margin increased by +500bp to 13.8% compared to the first half of 2018, positively impacted by the good organic revenue growth and, to a lesser extent, by APN Outdoor contribution.
In the first half of 2019, adjusted operating margin increased by +52.0% to €23.1 million. As a percentage of revenue, adjusted operating margin increased by +210bp to 8.4% compared to the first half of 2018, due to the accretive impact from APN Outdoor. Excluding APN Outdoor contribution, margin ratio decreased by -90bp reflecting the organic revenue decline.
In the first half of 2019, adjusted EBIT before impairment charge increased by +58.6% to €136.1 million compared to €85.8 million in the first half of 2018. As a percentage of revenue, this represented a +220bp increase to 7.4%, from 5.2% in H1 2018. No significant variation in the consumption of maintenance spare parts in H1 2019. Net amortisation and provisions were up compared to the same period last year, in line with our investments related to significant contract wins and digital. Other operating income and expenses impacted EBIT positively in H1 2019.
No impairment charge on goodwill has been recorded in H1 2019 like in H1 2018. A €3.2 million reversal on provisions for onerous contracts and a -€0.1 million impairment on tangible and intangible assets have been recognised in H1 2019 (a €0.7 million reversal on provisions for onerous contracts and a -€0.8 million impairment on tangible and intangible assets were booked in H1 2018).
Adjusted EBIT, after impairment charge increased by +62.4% to €139.2 million compared to €85.7 million in H1 2018.
In the first half of 2019, interest expenses on IFRS 16 leases were -€83.3 million compared to -€71.5 million in the first half of 2018, a variation of -€11.8 million mainly coming from the increase in lease liabilities related to new contracts secured during the period.
In the first half of 2019, excluding IFRS 16, other net financial income / (loss) was -€12.7 million compared to -€11.2 million in the first half of 2018, a variation limited to -€1.5 million mainly corresponding to foreign exchange losses while our financial interest expenses decreased slightly despite the increase in our net debt. This is due to our optimised sources of funding which allows us to benefit from good market conditions.
In the first half of 2019, the share of net profit from equity affiliates was €38.4 million, slightly lower compared to the same period last year (€39.2 million).
In the first half of 2019, net income Group share before impairment charge increased by +80.8% to €93.1 million compared to €51.5 million in H1 2018, including a positive net impact of €24.3 million due to the application of IFRS 16 on our core business, leading to reversal of lease liabilities and rights-of-use relating to contracts renegotiation during the period.
Taking into account the impact from the impairment charge, net income Group share increased by +86.8% to €96.0 million compared to €51.4 million in H1 2018.
In the first half of 2019, adjusted net capex (acquisition of property, plant and equipment and intangible assets, net of disposals of assets) was at €136.6 million compared to €94.2 million, up compared to the same period last year, mainly due to the new Street Furniture contracts in Europe as well as the digitisation across all segments.
In the first half of 2019, adjusted free cash flow was -€7.8 million compared to €38.4 million in the same period last year despite an increase in funds from operations. This decrease is mainly due to higher working capital requirements from trade liabilities and inventories despite a good cash collection from our operations and expected higher capex in line with our investments following significant contract wins over the last 2 years.
The dividend of €0.58 per share for the 2018 financial year, approved at the Annual General Meeting of Shareholders on May 16 , 2019, was paid on May 23 , 2019, for a total amount of €123.4 million.
Net debt as of June 30 , 2019 amounted to €1,316.2 million compared to a net debt position of €473.8 million as of June 30 , 2018, mainly due to the acquisition of APN Outdoor on October 31 , 2018.
Right-of-use, IFRS 16 as of June 30 , 2019 amounted to €4,618.1 million compared to €4,518.0 million as of December 31 , 2018, an increase related to new contracts, contracts extended and contracts renewed, partially offset by the amortisation of right-of-use during the period.
As a result of this strengthening of our contracts portfolio, IFRS 16 lease liabilities increased by €31.1 million from €5,192.9 million as of December 31 , 2018 to €5,224.0 million as of June 30 , 2019, the increase in lease liabilities corresponding to new contracts, contracts extended and contracts renewed being partially offset by rents paid and renegotiated during the period.
Under IFRS 11, applicable from January 1 , 2014, companies under joint control are accounted for using the equity method.
Under IFRS 16, applicable from January 1 , 2019, a lease liability for contractual fixed rental payments is recognised on the balance sheet, against a right-of-use asset to be depreciated over the lease term. As regards P&L, the fixed rent expense is replaced by the depreciation of the right-of-use in EBIT, below the operating margin, and a lease interest expense on the lease liability in financial result, below EBIT. IFRS 16 has no impact on cash payments but payment of debt (principal) is booked in funds from financing activities.
However, in order to reflect the business reality of the Group and the readability of our performance, our operating management reports used to monitor the activity, allocate resources and measure performance continue:
As regards the P&L, it concerns all aggregates down to the EBIT. As regards the cash flow statement, it concerns all aggregates down to the free cash flow.
Consequently, pursuant to IFRS 8, Segment Reporting presented in the financial statements complies with the Group's internal information, and the Group's external financial communication therefore relies on this operating financial information. Financial information and comments are therefore based on "adjusted" data, consistent with historical data, which is reconciled with IFRS financial statements.
In the first half of 2019, the impacts of IFRS 11 and IFRS 16 on our adjusted aggregates are:
The full reconciliation between adjusted figures and IFRS figures is provided on page 9 of this release.
The Group's organic growth corresponds to the adjusted revenue growth excluding foreign exchange impact and perimeter effect. The reference fiscal year remains unchanged regarding the reported figures, and the organic growth is calculated by converting the revenue of the current fiscal year at the average exchange rates of the previous year and taking into account the perimeter variations , but including revenue variations from the gains of new contracts and the losses of contracts previously held in our portfolio.
This news release may contain some forward-looking statements. These statements are not undertakings as to the future performance of the Company. Although the Company considers that such statements are based on reasonable expectations and assumptions on the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual performance to differ from those indicated or implied in such statements.
These risks and uncertainties include without limitation the risk factors that are described in the annual report registered in France with the French Autorité des Marchés Financiers.
Investors and holders of shares of the Company may obtain copy of such annual report by contacting the Autorité des Marchés Financiers on its website www.amf-france.org or directly on the Company website www.jcdecaux.com.
The Company does not have the obligation and undertakes no obligation to update or revise any of the forward-looking statements.
Agathe Albertini
+33 (0) 1 30 79 34 99 - agathe.albertini@jcdecaux.com
Arnaud Courtial
+33 (0) 1 30 79 79 93 - arnaud.courtial@jcdecaux.com
2321 Rosecrans Avenue. Suite 2200
90245 El Segundo Stati Uniti