GROUPE GORGE : FULL YEAR RESULTS : Good 2nd semester - Operating income up 58%

In millions of euros
2016
2015
H2 2016
Change 2016–2015 (%)


Revenue
281.2
264.5
139.2
+6.3%


EBITDA⁽¹⁾
21.7
21.5
14.4
+0.9%


Profit (loss) from continuing operations
9.0
11.8
6.5
-23.2%


Current operating margin
3.2%
4.4%
4.7%
-


Operating income
11.6
7.3
10.7
+58.2%


Income tax
(4.5)
(1.7)
(2.9)
-


Net income
4.9
3.6
7.2
+33.5%


Net income - Group share
0.2
1.1
3.5
-84.0%

(1) EBITDA: Current operating income before depreciation, amortisation and provisions

The 2016 financial statements were approved by the Board of Directors on 20 March 2017. Audit procedures were performed by the statutory auditors, and the audit report is currently being issued.

In 2016, all divisions (Smart Safety Systems, Protection of High-Risk Installations and 3D Printing) experienced growth and consolidated revenue increase by 6.3% to €281.2 million. The net income of the Group is €4.9 million, a rise of 33.5%. Net profit of the Group for the period fell to €0.2 million

The Group continues to develop its business while sustaining the significant investment made three years ago in 3D printing. After adjustments for losses linked to 3D printing, the Group posted total operating income of €20.4 million. The 2016 business year represents a turning point in the development of 3D printing; the lowest point was reached in the first quarter and losses were decreasing in the second quarter.

Detailed performance by division

Revenue from Smart Safety Systems grew by 6.9% to €112.5 million.

Profit from continuing operations for the division was €9.3 million compared with €8.9 million in 2015, and €7.1 million in 2014, confirming the improvement in operational performance that has been under way since 2013. In 2016, unlike previous years, the second-quarter contribution to yearly revenue was only slightly better than for the first quarter. However, the margin is better in the second quarter as in previous years.

The Protection of High-Risk Installations division has grown by 1.8%, with revenue of €144.9 million. The division's business is driven by fire protection, particularly internationally. In contrast, business in the nuclear sector declined over the year, penalised by new setbacks for large export projects.

Profit from continuing operations for the division stood at €7.1 million, representing 4.9% of revenue (compared with €7.5 million and 5.3% of revenue in 2015), a reduction related to problems encountered, especially in the first quarter, by the AI Group and its nuclear projects, which garnered returns significantly lower than expected.

The 3D Printing division generated revenue of €25.2 million in 2016, versus €17.8 million in 2015 and €5.0 million in 2014.

Continuing operations recorded a loss of €8.1 million (a decline of €4.5 million in 2015), taking into account the expenses incurred to create, structure and develop the division (many new hires, especially for R&D and sales, creation of a distribution network).

Operating income for the Group was €11.6 million, compared with €7.3 million in 2015. Hit with €1.6 million of moving costs in 2015, it benefited from €5.5 million of negative goodwill due to the acquisition of ELTA under favourable conditions.

Financial structure and Dividend

The net debt of the Group is €51.4 million. This €12.3 million increase in 2016 can be explained by the following: cash injections into the 3D Printing Division, because of its losses and elevated investments; maintaining a high level of investment in R&D in the Smart Safety Systems Division, and an increase in the working capital requirement.

Indeed, the total capital requirement of the Group was up by €14.4 million over the year, including €4 million for the working capital requirement (customers, inventory and suppliers), an increase consistent with revenue increases. Tax liability, research tax credit and employment tax credit account for a significant portion of the increase in the working capital requirement excluding operations. The increase in the working capital requirement mainly concerned the Smart Safety Systems Division.

In order to reserve all of its cash flow from operating activities for investment and growth, the Board of Directors will ask the Shareholders' Meeting not to distribute any dividends for 2016.

Outlook

After a year characterised by strong revenue growth, in 2016 the Group turned its sights towards improving its margins, while maintaining strong growth. In 2017, the Group started out with an orderbook worth €200 million, and anticipates revenue of up to €300 million in 2017.

In 2016, the Group Management began to implement a programme to optimise purchases, both for direct purchases and overheads. The first effects of this should begin to be felt in 2017.

Through its Robotics and Integrated Systems Division,  the Smart Safety Systems Division is continuing with its development and sales plan for integrated drone-based maritime solutions for maritime surveillance, underwater mine disposal, hydrography and oceanography, whilst also developing robot systems - different and complementary - for the same mission.

The Robotics and Integrated Systems Division is also focusing on broadening its USV (surface drone) range and its ability to integrate its robotic systems into different types of vessel via its new subsidiary, BE Mauric, in which the Group acquired 60% of the share capital at the end of the financial year.

The Group is also continuing to develop its magnetic ranging offer for vessels (STERNA®), for which it received the innovation trophy at Euronaval 2016. An initial order for STERNA® has already been announced.

The Smart Safety Systems Division also strengthened competence in 2016 in its Aerospace Division through the acquisition of ELTA, which will now make it possible for the Group to have strong experience in onboard aeronautical equipment and a great deal of know-how in the radio frequency and radio transmission fields. This acquisition should enable the Group to target new customers. The Group recently announced contracts worth over €3 million to equip 680 aircraft with its Emergency Location Transmitters (ELT's).

Finally, the Group's Simulation Division should be a source of dynamic growth in 2017. The Simulation Division continues to focus on the area of mission training,

in particular for the defence and security sectors: The Defence Training Simulation market accessible for the Group is estimated at over €50 million annually. The division also announced at the beginning of the year that it had won a large contract in the Middle East for this type of driver training simulation for military vehicles.

The Protection of High-Risk Installations Division was reorganised at the 2016 year-end. The emphasis is being placed on sharing and implementing best practices in recurring service and maintenance activities, and in export sales which now represent 32%.

After a phase in 2015 when the focus was on gaining market share, which improved the profitability of the division, in 2016 the focus turned to maintaining good business relations and improving profitability. The sub-optimal performance of the AI Group and Baumert nevertheless hindered the efforts made in this direction.

New management was brought in for these subsidiaries in 2016, and the results of this should gradually become apparent.

The Group remains upbeat about the medium-term prospects for this division, especially with projects for new nuclear plants in Great Britain and China. However, it is difficult to reliably predict how soon customers will make significant decisions affecting these projects.

Outlook for the 3D Printing Division

Since it became active in the 3D printing market, the Group has stepped up several levels with very strong growth.

By integrating design for machines, materials, and parts into the core of its know-how, the 3D Printing Division is active across the whole value chain. This is enabling the Group to develop an integrated model, offering a turnkey solution to its customers that is unique in Europe with genuine potential on a global scale.

After an initial structuring phase for the business to ensure that it had all the necessary means to ensure its development, and a second phase to integrate acquisitions made and partnerships concluded (acquisition of DeltaMed, Initial, Norge Systems and Exceltec, broadening of the plastic and metal powder sintering technologies, acquisition of an interest in Varia 3D), the Group is aiming to give its 3D Printing Division the means to enter a new phase of development by raising funds.

With this in mind, on 7 March the Group announced a plan to float its subsidiary PRODWAYS GROUP on the Euronext Paris stock exchange in 2017, subject to market conditions. Groupe Gorgé would continue to be the majority stakeholder of PRODWAYS GROUP after that operation.

2017 looks set to be a dynamic year for business. Indeed, the Group is expecting significant growth in sales for its new machine (ProMaker P1000) which is due to be launched on the market in the first quarter of 2017.

A commented presentation in English will be available in “Results presentation slideshows” in a few days:

http://www.groupe-gorge.com/en/blog/category/finance-space/documents/

 

Next key date:

Publication of revenue for first-quarter 2017 on 25 April 2017.

About Groupe Gorgé

Groupe Gorgé is an independent group that specializes in high-tech industries. Today, the Group is active in the fields of security and protection in extreme environments, as well as in the 3D printing sector. It employs around 1,700 people, is located in eight countries and directly exports around 40% of its activity. In its more than twenty-five year history, Groupe Gorgé has always developed and driven the latest technological and industrial innovations.

Smart Safety Systems:

Developing complete, innovative technological solutions for complex missions in hostile and confined environments.

Protection of High-Risk Installations:

Protecting people and ensuring the active and passive protection of installations for energy markets and industrial and tertiary sectors in France. Ensuring the maintenance of these protection systems.

3D Printing:

Enabling major industry players to find new routes to successful innovation and production processes by providing systems, 3D printers and new premium material.

In 2016, the Group reported revenue of €281.2 million. It is backed by 1,800 employees and operations in over ten countries.

More information available on www.groupe-gorge.com

Groupe Gorgé is listed on Euronext Paris and on the US OTC market in the form of ADR.

Euronext Paris:

Compartment B.

ISIN code: FR0000062671

Ticker code: GOE

US OTC market:

CUSIP NUMBER: 399451 103

ISIN NUMBER: US3994511034

Ticker Code: GGRGY / GGRGF

Contact

Groupe Gorgé - Raphaël GORGÉ – CEO & Chairman - Tel.: +33 1 44 77 94 77 - E-mail: [email protected]

Finance News – Natacha MORANDI – Analysts/Investors Relations - Tel.: +33 1 53 67 36 94 - E-mail: [email protected]

Finance News – Jean-Michel MARMILLON – Press Relations - Tel.: +33 1 53 67 36 73 - E-mail: [email protected]

Image 7 – Lauranne Guirlinger – Press relations – Tel: +33 1 53 70 74 18 – E-mail: [email protected]

Disclaimer

This press release contains forward-looking statements regarding GROUPE GORGE's targets for its 3D printing division. These forward-looking statements reflect GROUPE GORGE's current expectations. Such forward-looking statements and targets depend on known and unknown risks, uncertainties and other factors that could cause actual results, performance or events to differ materially from those anticipated herein. The risks and uncertainties that could affect the Group's future ability to achieve its targets include, in addition to those indicated in the press release: the strength of competition; the development of markets in which the Group's 3D printing division operates; currency fluctuations; obtaining the export authorizations that may be required for certain activities; control of costs and expenses; changes in tax legislation, laws,
regulations or their enforcement; our ability to successfully keep pace with technological advances; our ability to attract and retain qualified personnel and key staff; the evolution, interpretation and uniform application and enforcement of International Financial Reporting Standards (IFRS), according to which we prepare our financial statements; manufacturing and supply chain bottlenecks; the performance of our business partners (subcontractors, agents, suppliers, etc.). Some of these risk factors are set forth and detailed in our Document de Référence (Registration Document including the annual financial report filed with the French Autorité des Marchés Financiers), available on our website www.groupe-gorge.com. This list of risks, uncertainties and other factors is not limitative.
Other unanticipated, unknown or unforeseeable factors, such as changes in the economic situation or financial markets, could also have a material adverse effect on our targets.

This press release and the information it contains do not constitute an offer to sell or to subscribe, or a solicitation to purchase or subscribe shares or securities in GROUPE GORGE in any country whatsoever.

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Source: Actusnews