STORE ELECTRONIC SYSTEMS - 2014 annual results | Bourse Reflex
Accueil > Actualités > Communiqués

€ 9.66  +0.1%
AJOUTER À : Mon Portefeuille | Ma Liste | Mes alertes

STORE ELECTRONIC SYSTEMS - 2014 annual results

Lundi 30 Mar 2015 à 18:40

2014 annual results

  • Improvement in operating profitability with stable sales
  • Core EBITDA up 18% to €11.1 million (13.6% of sales)
  • Strategic Plan: “Leapfrog 2020”

Store Electronic Systems (Euronext: SESL, FR0010282822, PEA-pme eligible), the leading supplier of Electronic Shelf Labels (ESL) for large-scale food and non-food retailers, today announced its annual results for the year to December 31, 2014.

 (€m) - audited 2014 2013 Δ
Sales 81.2 82.3 -1.3%
Core operating profit(1) 6.5 6.2 +5.0%
% 8.0% 7.5% +50bp 
Core EBITDA 11.1 9.4 +18.0%
% 13.6% 11.4%  +220bp
Operating profit 4.2 6.2 -32.0%
% 5.2% 7.6%  
Net profit 3.2 3.9 -16,3%
% 4.0% 4.7%  

Despite a difficult environment for the mass retail sector and virtually flat consolidated sales of €81.2 million (including Imagotag), the Group's core profitability improved. Core Operating Profit was thus up 5% at €6.5 million and Core EBITDA increased by 18% to €11.1 million (13.6% of sales). The gross margin saw a substantial improvement (+300 bp) and the core operating margin rose from 7.5% to 8.0% of sales. However, operating profit (EBIT) and net profit were affected by non-recurrent expenses related to the Imagotag acquisition.

Despite short-term uncertainties affecting the pace of investment in the mass retail sector, the global ESL market is benefiting from medium-term structural development factors: increase in the frequency of price changes, development of multichannel shopping, higher labor costs and the need for in-store customer connectivity. Given the development potential of its sizeable client base, the rate of acquisition of new chains of stores and Imagotag's momentum, Store Electronic Systems is anticipating substantial development over the coming years and has designed a new strategic plan aimed at accelerating profitable growth over 2015-2020.

 

 Growth in France and abroad, apart from Scandinavia

As announced in the press release of January 19, consolidated sales were virtually stable at €81.2 million. Sales in France increased by +10% to €41.6 million, stimulated by the modernization of the installed base and the development of new market segments (local stores, non-food, etc.) International sales totaled €39.6 million (including €5.7 million for Imagotag), compared with €44.5 million in 2013. SES continued its international development in most regions of the world, but total international sales were affected by a local downturn in Scandinavia, where sales fell from €25 million to €9 million because of the end of a major deployment undertaken in Norway in 2013. Excluding Scandinavia, international sales totaled €31 million (including €5.7 million for Imagotag), a jump of +63% compared with 2013 and an increase of +32% organically on a comparable scope (€25 million in 2014 vs. €19 million in 2013). This growth was particularly buoyant in Europe.

 

Improvement in core profitability

Core operating profit was €6.5 million in 2014, up +5% on 2013. The core operating margin represented 8.0% of sales, up 0.5 percentage points compared with 2013 (7.5%) despite stable sales. Imagotag's operating loss was -€0.6 million in 2014 (share consolidated since June 2014). At constant scope (excluding Imagotag), SES recorded a core operating margin of 9.4% in 2014.

EBITDA was €11.1 million, or 13.6% of sales, giving an increase of +18% compared with 2013 (15.2% of sales at constant scope).

The contribution margin was €30.9 million in 2014 vs. €28.9 million in 2013, up +7% despite virtually stable sales. The margin thus improved 3 percentage points over the year (from 35% in 2013 to 38% in 2014) thanks to a favorable business mix and the effects of the “i3” plan.

Core operating expenses totaled €24.4 million in 2014, up €1.7 million (+7.5%) compared with 2013, essentially as a result of the integration of Imagotag within the Group's scope (€1.2 million).

Non-recurrent expenses include exceptional expenses associated with the Imagotag acquisition (fees of €0.6 million paid out in H1 and a share of the additional price written down as €1.1 million in accordance with ifrs 3(2)), as well as the accelerated amortization associated with the transfer of SES' head offices and warehouse (non-cash expense of €0.6 million).

Once these non-recurrent expenses are taken onboard, operating profit (EBIT) was €4.2 million, or 5% of sales. At constant scope, operating profit was €6.5 million, an improvement of 5%.

The FINANCIAL profit totaled €1.6 million, essentially as a result of the updating of fair value adjustments for foreign exchange rate hedging instruments. The tax burden came to -€2.6 million, thus leading to a net profit of €3.2 million, or 4% of sales, down -16% compared with 2013.

 

Further R&D investments

The Group continued its investments, which totaled €8.6 million in 2014, including €0.8 million for Imagotag (R&D Epaper and HF) and €7.8 million for the SES scope, essentially devoted to R&D (€5.6 million), to the modernization of its ERP & Digital SES IT system and to equipment for the new logistics warehouse and new head offices (€0.7 million).

Indeed, SES has consolidated its Argenteuil tertiary workforce in new head offices located in nearby Nanterre, better served by public transport and more in line with the image of an innovative technology company. The expected benefits are both improved productivity through consolidation of teams previously spread over two sites and an increased ability to attract and retain talent. Simultaneously, a new more spacious and functional logistics warehouse has been built in Cergy. This move of the logistics platform was one of the central projects of the improvement of SES' supply chain within the framework of the “i3” program.

 

Cash position and financial structure

Following the acquisition of Imagotag, the Group had €14.3 million in available cash at the end of December 2014 (vs. €22.2 million at end-2013). The change in the Group's cash position over the year (-€7.9 million) was the result of cash flow of +€11.4 million, investments (-€8.6 million), a change of -€11.2 million in working capital requirements, spending associated with the Imagotag acquisition (-€7.7 million) and funding flows of +€8.2 million (financial loans).

The significant change in working capital requirements in 2014 is explained by Imagotag's integration within the Group's scope, the change in the fair value of financial instruments (non-operating WCR impact) and disruptions associated with the implementation of SES' new ERP in the 1st half that affected operating WCR, which stabilized in H2.

Total debt was €11.9 million at end-December 2014, and consisted of €9.5 million in long-term loans and an additional payment of €2.4 million for Imagotag due to be paid in 2016.

The closing cash position was €2.4 million, giving a change in the net cash position of -€19.8 million in 2014 (-€5.9 million in SES operating free cash flow and -€13.9 million associated with the acquisition of Imagotag). Shareholders' equity increased by €20.3 million, essentially as a result of the capital increase initiated at the time of the Imagotag acquisition and the change in the fair value of foreign exchange rate hedging instruments.

 

Assessment of the “i3” transformation plan

2014 was the second year of implementation of the “i3” strategic transformation plan focusing on International, Innovation and Industrialization and aimed at establishing SES as the global leader in a high-potential technological sector: the digital transformation of physical stores. The corresponding action plan will be finalized in 2015 with the completion of the ERP & Digital SES program. Crucial results have been obtained in all three areas of the ”i3” plan:

International sales have doubled in 3 years

SES became the world n°1 on its sector in 2013, and further strengthened its leadership position in 2014. On an international level, SES has established its main regional hubs through the setting up of subsidiaries and sales offices: Mexico, Singapore, Canada, United States, Italy, Spain, Scandinavia. Simultaneously, SES has accelerated the development of its sales and service partner network in these regions. Thanks to these investments, international sales have doubled over the last 3 years from €21 million in 2011 to almost €40 million in 2014 (including Imagotag). The number of overseas stores equipped by the Group was 4,800 (including 1,200 for Imagotag) at end-2014, or 55% of the total number of stores equipped by SES (8,800 stores). 2014 also saw the completion of a strategic international external growth operation with the acquisition of Imagotag, which has resulted in the Group now being able to offer the broadest and most technologically-advanced range of electronic labeling solutions.

Innovation: SES brings smart labels to the Internet of Things (IoT)

SES has multiplied its world firsts in the field of new smart-label uses:

  • In-store customer interactivity based on NFC contactless interactive labels whose installations reached the symbolic number of 1,000 full-NFC stores in Europe at end-2014. In particular, the first mobile self-scanning applications combined with an electronic discount coupon offer have been initiated in the new Intermarché store in Issy-les-Moulineaux.
  • Accurate geolocation based on networks of smart labels and their applications: real-time updating and dynamic control of planograms, consumer guidance, optimization of Drive-through productivity (store picking).
  • Multi-protocol communication platform: following the integration of Imagotag's HF technology, SES has begun deploying its new multi-frequency infrastructure that allows stores to capitalize on all labeling technologies. Thanks to the “Radio Lab” research program, the Group has developed the first Access Point that incorporates HF, Wi-Fi and BLE technologies, thus allowing the same infrastructure to support all in-store BtoB and BtoC digital applications.
  • Extension of the range: thanks to the acquisition of Imagotag, in the 2nd half of 2014 the Group accelerated the development and industrialization of a color Epaper range whose commercial launch was formalized at the NRF trade fair in New York in January.

Industrialization: operational performance and IT modernization

In 2014, SES continued to implement its Sourcing and industrial productivity program aimed at improving the competitiveness of its products. The first tangible results of this strategic program contributed to improving the Group's margins over the year.

2014 also saw the Group's IT transition, with the implementation of the new ERP and other applications of the “Digital SES” program. This IT transformation is a pivotal step in increasing the Company's agility and productivity and reducing its WCR.

 

Outlook

Despite the difficult economic conditions for the mass retail sector and an adoption rate that remains sluggish in poorly-equipped countries, the market is benefitting from medium-term structural development factors: increase in the frequency of price changes, development of multichannel shopping, higher labor costs, need for in-store customer connectivity, etc.

The recent “Next Gen Retail: Electronic Shelf Labels” report published by ABI Research in 2014 forecasts a key role for electronic labeling in the digital transformation of retail trade, and expects ESL sales to increase by a factor of 6 to 1.7 billion dollars by 2019.

Given the development potential of its sizeable client base, the rate of acquisition of new clients and Imagotag's momentum, Store Electronic Systems is anticipating substantial development over the coming years.

 

New Strategic Plan: “Leapfrog 2020”

To structure the next phase of SES' development, a new strategic plan has been drawn up covering the period from 2015 to 2020. This plan is called “Leapfrog 2020”, in reference to the expected growth over the coming years. 

Anticipating buoyant market development (to over a billion euros by 2020), and within a context of increased competition, SES intends to remain the global n°1 by accelerating its investments in technology, industrial competitiveness and international development.

The Leapfrog 2020 plan is built around structuring operational programs: Total Quality aiming to make SES the high-quality benchmark in this sector; increase in its industrial competitiveness edge; software differentiation on high value-added business solutions; development of the network of international partners to optimize geographical and market-segment coverage, the Company's digital transformation to increase its agility and productivity and putting in place of specific OEM partnerships in place for non-retail applications of very low-energy wireless autonomous digital display solutions, whose needs are increasing in numerous areas (logistics, industry, hospital, construction).

Thierry Gadou, ceo of Store Electronic Systems, concludes: “Despite an economic situation that weighed on our clients' investments and the number of major deployments in 2014, SES generated substantial growth in Europe excluding Scandinavia and improved its operating margin. Significant progress has been MADE over the last three years thanks to the “i3” plan: international sales have doubled, France has seen a return to a solid growth momentum, SES has invented smart labels and has changed the sector's potential and image, and the company now has efficient management tools as well as a functional and modern logistics warehouse and head offices. Lastly, the Group carried out the acquisition of Imagotag, a strategic operation in both technological terms and geographical terms. 2014 was also an intense year in terms of winning over new clients, with pilot schemes implemented in 20 new chains. Despite some uncertainties regarding its pace in the short term, the ESL adoption process is firmly underway: more than 200 mass retailers around the world are currently deploying systems, installing pilot schemes or undertaking feasibility studies, a figure whose rapid growth is a leading sign of future growth.

The objective is by 2020 to equip more than 20,000 stores with SES digital solutions enabling them to improve their margins on the one hand and to connect, know, guide, inform and assist more than 100 million consumers at points of sale on the other. The aim is to accelerate our average growth rate over 2015-2020 compared with the growth recorded in recent years (+16% a year on average since 2010) and to record over 75% of our sales abroad by 2020. At the same time, the plan foresees a further improvement in operating profitability based on increased differentiation and scale effects both abroad and on an industrial level. A substantial reduction in Working Capital Requirements as a percentage of sales should help finance our anticipated growth. What we are aiming for over the next five years is clear: Digital for Retail Now!”

 

Next press release

Sales for the 1st quarter of 2015: April 30, 2015 (after market).

 

About Store Electronic Systems

Store Electronic Systems is the leader in Electronic Shelf Labeling systems (ESL) for large-scale food and non-food retailers. The Group designs, markets and installs all the system's components (software and communication platform, displays, mounts), thus providing clients with a turnkey solution. The range of products and services offered by SES allows retailers to manage pricing dynamically, while significantly improving store productivity and developing new contactless uses for consumers.
Store Electronic Systems is listed on Compartment C of Euronext™ Paris.

www.store-electronic-systems.com

 

Contact
NewCap
Florent Alba, Investor Relations & Financial Communication - Tel.: +33 (0)1 44 71 98 55,
falba@newcap.fr

 

(1) Operating profit before non-recurrent expenses: costs associated with the Imagotag acquisition (€0.6 million) and the additional sum (€1.1 million) to be paid in 2016 (in accordance with IFRS 3), accelerated amortization associated with the transfer of SES' head offices and warehouse (€0.6 million).

(2) In accordance with IFRS, the price of the second tranche to be paid being dependent on both performance criteria as well as managers presence criteria, a part of this tranche is classified under misc. charges in the P&L . This amount of -1.1 M€ is split between -€3.4 million personnel cost and +€2.3 million attached to the performance criteria.


Partager sur Facebook
Article Précédent :
Nomination d'Olivier Hua, expert...
Article Suivant :
Emission d'OSRANE avec maintien du...

Ecrire un commentaire

J'accepte la charte et que mon commentaire soit publié sur BourseReflex.com 

Les autres actualités


Retour vers 'Communiqués' »




Mots-clés : Ble   Dollars   Euros   New york   Smart   Electronic   Systems   Sales   Strategic   Leapfrog   Euronext   Leading   Shelf   Labels   Despite   Retail   Sector   Including   Imagotag   Thus   Affected   Short   Pace   Structural   Frequency   Price   Labor   Costs   Rate   Coming   Growth   Abroad   Totaled  
Sociétés citées dans cette news : FINANCIAL   Store Electronic Systems   MADE   Euronext  

Si vous passez un ordre de bourse sur le CAC40 le vendredi soir à 18h, quand sera t-il éxécuté?