- Net income impacted by an exceptional and non-recurring deferred tax asset
- Clearly positive outlook for 2018
- Development of a 3-year strategic plan
Pursuing its main objective of increasing its margins, 2017 was a year of strong transformation for Micropole. The numerous actions carried out in H2 2017 have resulted in initial significant results in the Group's major, high value-added business areas. Operating profit rose significantly despite the costs associated with these developments. Net income is positive, excluding an effect related to deferred taxes. Perfectly positioned in a very buoyant market, 2018 offers the Micropole Group clear prospects for growth and a further increase in its margins. The Group will also announce the publication of its 3-year strategic plan in September, at the time of the publication of the half-yearly results.
| In millions of euros - IFRS (Under audit) | 2017 | 2016 |
| Sales figures | 114,0 | 113,7 |
| Current operating income | 3,6 | 3,4 |
| As a % of sales | 3,2% | 3,0% |
| Non-operating income and expenses | (2,0) | (2,1) |
| Operating income | 1,6 | 1,2 |
| Income from continuing operations (excluding IDA impact) | 0,6 | (0,3) |
| IDA Impact | (2,2) | |
| Income from continuing operations | (1,6) | (0,3) |
| Income from discontinued operations | (0,3) | (0,0) |
| Net income | (1,9) | (0,3) |
Annual financial statements for 2017 being audited and approved by the Board of Directors on April 18, 2018
Micropole, an international consulting and innovative technology group specializing in Digital Transformation, Performance Management and Data Governance, generated revenues of €114.0 million for the full year 2017, compared to €113.7 for the same period last year. At constant scope and exchange rates, the increase was 1%.
Profit from recurring operations increased by 7% to EUR 3.6 million. This evolution is mainly linked to the improvement of the operational indicators reflecting the good positioning of the offers (increase of the price positioning linked to the upmarket offer). Operating profit showed very strong growth (+30%) to EUR 1.6 million.
Net income for the period was strongly impacted by two exceptional and non-recurring items:
- Following the change in the French tax rate and a revision of the assumptions for the recovery of deferred tax assets (DTA), it was decided to adjust the amounts of deferred tax assets (DTA) recorded in the balance sheet. Without any cash effect, this operation has an impact on net income of -2.2 million euro. Excluding IDA, net income from continuing operations would have been positive by EUR 0.6 million.
- The exceptional impact of all the transformation operations carried out by the Group mainly in the second half of 2017 led to the recognition of -2.2 million euro in expenses under Other income and expenses.
At December 31, 2017, cash and cash equivalents amounted to €13.7 million with net financial debt at €12.1 million (down €7.9 million), for shareholders' equity of €49.6 million. At the end of 2017, the company set up a deconsolidating factoring contract and new medium/long-term bank loans.
Highlights of the period
Evolution of the internal organization
In the Paris region, in order to accelerate the implementation of its strategic plan and its profitability, Micropole has changed its organization, thereby increasing the agility of its teams and the development of high added value services. In concrete terms, these decisions have resulted in the regrouping of activities (initially 5 entities in Paris) into two Business Units: Performance Management and Digital. In order to optimize this organization, a new articulation between the commercial and operational entities has been put in place to accentuate the specialization of the commercial teams and to bring them to better develop the potential of key clients.
In Switzerland, WIDE is continuing its strong growth in a particularly buoyant market in which the agency is the leader. In a process of continuous improvement of the business model, the Group announces that it has evolved the operational structure of the digital agency during the second half of 2017.
All these adjustments generated exceptional and non-recurring costs in the accounts for the period, linked to the optimization of the internal organization and the renewal of several management functions.
Disposal of activities and divestments
As announced in previous publications, during 2017 Micropole made several business disposals and divestments with an overall negative impact of €2.7m on annual group revenues:
- Sale in December of the Toulouse agency, which had become non-strategic as it was mainly focused on supporting local companies in the mid-market segment.
- Cessation in September of commercial development in the Provence-Alpes-Côte d'Azur (PACA) region to reinforce Micropole's other regional establishments in France (Centre-East, Great West, North).
- Sale on April 30, 2017 of the stake in the Belgian company WeQan to allow Micropole Belgium to refocus on the development of its strategic Consulting offerings around Data and Digital.
- At the same time, the Group has changed its license sales policy. Micropole has decided to refocus its activities in France on reselling licenses with high margin potential.
Progression of activities
Recognized in the market, Micropole's positioning based on value-added services for business, digital and IT departments has enabled the Group to sign a number of highly innovative projects over the period. The achievements of the WIDE teams are regularly rewarded in France and Switzerland, most recently with the prize for the best e-commerce site at the Grand Prix Stratégies du Digital 2018 for the creation of the international e-commerce site for L'Occitane. Micropole is at the forefront of technologies such as IoT, voice command, data analysis, connected commerce, mobility, etc. Micropole also pursues an active policy of Research and Innovation in order to anticipate the expectations of its customers and meet the challenges of tomorrow.
Recruiting
In a recruitment market that is still under pressure, the Group's ambition is to recruit 380 new employees. It is therefore continuing its active search for business consultants, project managers and data experts in particular. To attract the best talent, Micropole has a dynamic Employer Brand policy, which was doubly rewarded in 2017 by the Happy at Work for Starters and Happy Trainees labels.
Perspectives
The 2018 financial year looks particularly favorable. The various reorganization actions carried out internally in France have enabled us to start the year with real dynamism. While recruitment remains the main challenge, the first quarter of 2018 has already seen a 33% increase in the number of recruitments compared to the same period last year. In line with the value-added positioning strategy and perfectly in line with our clients' expectations, ARR continues to grow significantly (+6% over Q1 2018 in France). In terms of revenues, growth looks set to be gradual throughout the year (with the1st half counting with 1 day less), and should be impacted at the beginning of the period by the divestments made in 2017, particularly in the Aix and Toulouse regions.
Finally, to support its objective of improving its margins, the Group will announce the publication of its 3-year development plan in September.
