Emakina Group Results 2019: More sustained growth in activities in the second half of the year and operating performance under control
Income of EUR 96,618, up 4.6%; EBIDTA of EUR 5,881, down 3.7%
Friday, March 27, 2020 — (Embargo 6.00 pm CET)
Inside and regulated information - Free translation of the official French version
Emakina Group (Euronext Growth Brussels: ALEMK) announces its 2019 annual results today.
1. Key figures for 2019
| In thousands of EUR | 2019 | 2018 | Variation |
| Income | 96,618 | 92,390 | +4.6% |
| Earnings before interest, depreciation | 5,881 | 6,107 | -3.7% |
| Operating margin % | 6.1% | 6.6% |
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| Result before tax | 235 | 1,093 | -858 |
| Net result | -71 | 57 | -128 |
2. Key events in 2019
a) New business
In 2019, many national and international companies chose an Emakina agency as their partner.
These include, among others: Allergan, Al Tayer Group - Bloomingdales, Arcelik, Basic-Fit, Beko, Brussels Expo, Chalhoub Group, Courrèges, Fluxys, FrieslandCampina, Gulf Marketing Group, Heineken Blade, Honda, Majid Al Futtaim Fashion, Moteo, Nike, Nuskin, Olympique de Marseille, Sodexo, Stockmann, Suitsupply, Sunweb, TVH, UnifiedPost and VOO.
b) New activities
In 2019, the group continued its strategy of expanding its service range, in particular in the field of marketplace activity, influencer marketing and e-commerce.
Selecting the best technological partners to come out of this is therefore crucial to support its clients as well as possible with their digital challenges.
c) Continued acquisitions
The group’s policy of expanding via external operations is continuing in line with the strategy set out. In October 2019, Emakina Group acquired 100% of the shares in the company Cloudworks Consulting DMCC (Dubai Multi Commodities Center), an innovative Cloud IT consultancy firm with offices in Dubai and 27 experts, through its subsidiary Emakina FZ‑LLC, based in Dubai. This operation confirms Emakina’s ambition to be a sound partner in the Middle East.
d) Geography
In geographic terms, international income increased by over 5.4% during 2019 and accounted for 63% of the consolidated income in 2019. The commercial pipeline and the expansion policy of the group (in particular with the new Dubai offices) will support this growing share of activities located outside Belgium in the coming months.
e) Integration and processes
In 2019, Emakina Group continued to invest in integration and synergies within its network, particularly in the Netherlands and in France, where the new centralised management platform for projects combined with the new version of the ERP was successfully deployed. These platforms are scheduled to be put in place in the group’s main operating entities over the course of the next two financial years.
Finally, the Emakina teams worked hard to ensure that its processes comply with the new European General Data Protection Regulation (GDPR).
f) Talents
The management of human capital remains a key element in the group’s development.
With over 1,000 talented individuals at Emakina, the management’s priority is to attract the best people and accompany them in their career while maintaining a subtle balance between the skills required by clients and technological progress and the need to keep costs under control.
g) Partnerships
Through its commercial partners, Emakina Group continues to offer its clients a wide geographic scope combined with in-depth local knowledge: Air (Belgium); Asiance (South Korea, Japan); Bubblegum (Spain); Domino (Italy); Metia (Great Britain, United States, Singapore) and SinnerSchrader (Germany).
h) Prizes and awards
In 2019, Emakina Group won several awards, including five ‘AVA Website Awards’, with The Athlete’s Foot, Van Cleef & Arpels, ECCO and Boucheron, as well as a special award for its own brand communication platform. Other awards include the ‘Trends Digital Pioneer Award’ with DP World, the ‘Gold Best e-commerce SpinAward’ with Rituals, the ‘YouTube Works Award’ and two ‘Swedish Content Awards’ with SBAB.
The teams also won several technological awards including the ‘Best Kentico Website of the Year Award’ with Bardahl and the ‘Kentico MVP Award’, the ‘Umbraco Best Cloud Solution Award’ with Vivaldis Interim and four ‘Sitecore MVP Awards’.
3. General comments
Growth in activities on the international scene in particular
In 2019, Emakina Group’s consolidated sales amounted to EUR 96,618,148 compared with EUR 92,389,601 in 2018, an increase of +4.6% (+4.2% at constant scope).
This progression is driven in particular by the growth in activities ‘outside Belgium’ of 5.4%. The commercial pipeline and the group’s expansion policy continue to support this growing share of activities located outside Belgium.
Development of EBITDA
Consolidated earnings before interest, depreciation and amortisation (EBITDA) amounted to EUR 5,881,414 (EUR 5,820,909 at constant scope) in 2019, compared with EUR 6,107,455 in 2018, a fall in absolute terms of 3.7% (4.7% at constant scope). Expressed as a percentage of total sales, EBITDA passed from 6.6% to 6.1% (6.0% at constant scope) between 2018 and 2019.
Despite keeping selling prices and staff costs under control, more complex schedule management weighed on the average rate of use of resources and hence on the performance posted in 2019 compared with 2018. Aligning clients’ requests and the talents available remains a constant and major challenge in a context of ever-evolving technologies.
Current profit under control and net result near break-even
The current profit before tax amounted to EUR 1,256,070 in 2019, down 9.2% compared with 2018.
This may be attributed to the operating performance, as explained above, and the increase in amortisation and write-downs, partly offset by a better financial result owing in particular to the fall in charges for the amortisation of goodwill linked to the lengthening of the depreciation period from 8 to 10 years so as to reflect a period more commonly seen in the sector (see point 7 below).
The fall in the net result (EUR -71,265) in 2019 compared with 2018 (EUR 56,727) may be attributed to the development of the current result, a substantial non-recurrent element (EUR -1,020.792) mainly linked to a reorganisation programme, offset by tax credit linked to innovative activities. Despite this fall, the net profit nevertheless remains close to zero, making it possible to maintain the level of the group’s equity base.
4. Financial health
At the end of 2019, the group’s financial health was maintained thanks to a net result close to zero (despite the charges for the amortisation of goodwill), a level of financial indebtedness in line with the growth in activities and the availability of proportionate credit lines. It is important to keep a constant eye on the impact of the growth on working capital requirements and liquid assets.
5. Events after closure and outlook for 2020
The coronavirus pandemic and the impact of the confinement measures will affect Emakina’s economic performance from March 2020. However, it is not possible at this moment to quantify the financial impact. This will be the subject of a specific communication at a later stage, as soon as it is possible to calculate it. The management has already set in motion a raft of precautionary measures needed to limit the impact of this pandemic on the group’s margins and cash position.
6. Statement from the company directors
The Board of Directors of the company declares that, to the best of its knowledge, the condensed consolidated financial statements as at 31 December 2019, established in accordance with Belgian accounting standards, give a true and fair view of the assets, financial status and results of Emakina Group. The annual financial report contains an accurate description of the information that must be included in it.
7. Miscellaneous
Auditor’s report
The auditor has confirmed that his audit of the consolidated accounts is complete in terms of substance and has not revealed any significant adjustment to be made to the accounting data presented in the annual report.
Belgian accounting standards
All the consolidated figures given in the appendices have been established in accordance with Belgian accounting standards. These figures provide a summary of the financial results that are presented in detail in the 2019 annual report.
As a reminder, the compulsory systematic amortisation of goodwill (booked in financial charges and imposed by Belgian accounting law) weighs significantly on the group’s consolidated net profit. Lengthening the period for the amortisation of goodwill from 8 to 10 years had a positive impact on the net result for the 2019 financial year, amounting to EUR 895,829. The valuation rules applied to the consolidated accounts as at 31/12/2019 have been modified accordingly.
Shareholders’ diary 2020
1 April 2020: Annual report 2019 (brochure)
22 April 2020: General meeting of shareholders
25 September 2020: Publication of the first half-yearly results 2020
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CONTACTS
Karim Chouikri Chief Executive Officer +32(0)2 400 40 75 kch@emakina.com
Frédéric Desonnay Chief Financial Officer +32(0)2 788 79 26 fds@emakina.com
Luc Malcorps Director of Media Relations +32(0)2 788 79 73 lma@emakina.com
Emakina Group S.A.
Rue Middelbourg 64A
1170 Brussels
Belgium
VAT 0464.812.221
ISIN BE 0003843605
In accordance with the Euronext Growth Brussels regulations, all the regulated information is included in the Emakina Group annual financial report 2019, available on our website www.emakina.group (“Investor Relations” section).
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CONSOLIDATED FIGURES 2019 – EMAKINA GROUP SA
| CONSOLIDATED INCOME STATEMENT (EUR)* | 31/12/2019 | 31/12/2018 | 31/12/2017 |
| SALES AND SERVICES | 96,618,148 | 92,389,601 | 80,304,612 |
| Turnover | 92,485,616 | 91,972,627 | 75,916,133 |
| Variations in projects in progress | 1,317,713 | -1,451,203 | 1,210,431 |
| Capitalised production | 1,228,745 | 439,660 | 999,717 |
| Other operating income | 1,586,074 | 1,428,517 | 2,178,331 |
| OPERATING CHARGES (BEFORE AMORTISATION) | -90,736,734 | -86,282,146 | -74,577,795 |
| Purchase of equipment and services linked to sales | -40,311,250 | -39,612,198 | -34,115,576 |
| Staff costs | -50,118,578 | -46,357,109 | -40,302,954 |
| Other operating charges | -306,907 | -312,839 | -159,265 |
| EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION AND AMORTISATION = EBITDA | 5,881,414 | 6,107,455 | 5,726,817 |
| AMORTISATION AND DEPRECIATION | -1,995,269 | -1,637,892 | -1,581,827 |
| Amortisation of intangible and tangible fixed assets | -1,830,219 | -1,729,416 | -1,438,455 |
| Depreciation of trade receivables | -155,455 | 12,948 | -58,166 |
| Provisions for liabilities and charges | -9,595 | 78,576 | -85,206 |
| OPERATING PROFIT | 3,886,145 | 4,469,563 | 4,144,990 |
| FINANCIAL RESULT | -2,630,075 | -533,278 | -378,316 |
| Financial income | 636,275 | 1,375,494 | 778,476 |
| Financial charges | -3,266,350 | -1,908,772 | -1,156,792 |
| CURRENT PROFIT BEFORE AMORTISATION OF CONSOLIDATED DIFFERENCES | 3,106,643 | 3,936,285 | 3,766,674 |
| AMORTISATION OF GOODWILL** | -1,850,573 | -2,553,237 | -2,390,944 |
| CURRENT PROFIT | 1,256,070 | 1,383,048 | 1,375,730 |
| NON-RECURRING RESULT | -1,020,792 | -289,816 | -136,583 |
| RESULT BEFORE TAXES | 235,278 | 1,093,232 | 1,239,147 |
| DEFERRED TAXES | 485 | 970 | 970 |
| INCOME TAX | -307,028 | -1,037,475 | -1,207,911 |
| SHARE IN THE RESULT OF COMPANIES CONSOLIDATED USING THE EQUITY METHOD | 0 | 0 | 0 |
| NET PROFIT BEFORE AMORTISATION OF CONSOLIDATION DIFFERENCES | 1,779,308 | 2,609,964 | 2,423,150 |
| NET RESULT | -71,265 | 56,727 | 32,206 |
| A. Share of minority interests | 152,933 | 137,169 | 143,388 |
| B. Group share | -224,198 | -80,442 | -111,182 |
| DATA PER SHARE | 31/12/2019 | 31/12/2018 | 31/12/2017 |
| NUMBER OF SHARES | 3,893,353 | 3,893,353 | 3,893,353 |
| NUMBER OF SHARES AND WARRANTS | 3,893,353 | 3,893,353 | 3,893,353 |
| CURRENT RESULT / SHARE (in EUR) | 0.3226 | 0.3552 | 0.3534 |
| CURRENT RESULT / SHARE AND WARRANT (in EUR) | 0.3226 | 0.3552 | 0.3534 |
| GROUP SHARE / SHARE (in EUR) | -0.0576 | -0.0207 | -0.0286 |
| GROUP SHARE / SHARE AND WARRANT (in EUR) | -0.0576 | -0.0207 | -0.0286 |
| NET RESULT / SHARE (in EUR) | -0.0183 | 0.0146 | 0.0083 |
| NET RESULT / SHARE AND WARRANT (in EUR) | -0.0183 | 0.0146 | 0.0083 |
| ASSETS (EUR)* | 31/12/2019 | 31/12/2018 | 31/12/2017 |
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| FIXED ASSETS | 21,721,511 | 20,593,604 | 17,471,191 |
| Formation expenses | 137,936 | 152,331 | 175,937 |
| Intangible assets | 3,532,425 | 2,606,863 | 2,344,601 |
| Consolidation differences | 14,912,079 | 15,088,160 | 12,578,751 |
| Tangible assets | 2,562,913 | 2,234,953 | 1,828,617 |
| Financial assets | 576,158 | 511,297 | 543,285 |
| CURRENT ASSETS | 31,407,847 | 28,970,708 | 30,541,335 |
| Stocks and contracts in progress | 4,682,577 | 3,379,452 | 4,835,151 |
| Deferred taxes | 0 | 0 | 0 |
| Amounts receivable within one year | 20,875,917 | 19,371,195 | 21,131,512 |
| Current investments | 8,761 | 584,780 | 238,980 |
| Cash and cash equivalents | 3,824,864 | 3,846,013 | 3,003,982 |
| Accruals and deferrals | 2,015,728 | 1,789,268 | 1,331,710 |
| TOTAL ASSETS | 53,129,358 | 49,564,312 | 48,012,526 |
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| LIABILITIES (EUR)* | 31/12/2019 | 31/12/2018 | 31/12/2017 |
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| CAPITAL AND RESERVES | 10,082,940 | 10,542,268 | 10,729,513 |
| MINORITY INTERESTS | 377,994 | 343,303 | 287,513 |
| PROVISIONS FOR LIABILITIES AND CHARGES | 161,700 | 230,105 | 196,906 |
| DEFERRED TAXES AND DEFERRED TAX LIABILITIES | 0 | 485 | 1,455 |
| DEBTS | 42,506,725 | 38,448,151 | 36,797,139 |
| Amounts payable after one year | 4,257,722 | 3,677,227 | 3,766,343 |
| Amounts payable within one year | 37,958,605 | 34,388,316 | 32,509,046 |
| Current portion of amounts payable after one year | 2,340,100 | 2,173,540 | 1,715,265 |
| Financial debts | 10,363,625 | 8,910,004 | 7,462,653 |
| Trade debts | 7,375,842 | 6,144,366 | 7,698,382 |
| Advances received | 6,762,505 | 4,308,187 | 5,135,502 |
| Taxes, wages and social security charges | 7,230,003 | 7,645,266 | 6,837,322 |
| Other amounts payable | 3,886,529 | 5,206,953 | 3,659,922 |
| Accruals and deferrals | 290,398 | 382,608 | 521,750 |
| TOTAL LIABILITIES | 53,129,358 | 49,564,312 | 48,012,526 |
* Drawn up in accordance with Belgian accounting standards.
** In accordance with the valuation rules, as of 1 January 2019 the consolidation differences (or goodwill) are amortised over 10 years, irrespective of all consideration of any excess value in accordance with Belgian accounting standards.
In accordance with the Euronext GROWTH Brussels regulations, this annual press release is optional. It will be followed by the publication of the Emakina Group annual financial report 2019, which contains all the regulatory information.
The report will be available on the website www.emakina.group (“Investor relations” section) as of 1 April 2020, in accordance with the legal provisions on this matter.