- Strong organic growth at the CRM and
strategic data division
- Response to the IMS Health proposed
transaction expected before end-November 2014
- The Group reiterates its targets for
2014
Regulatory News:
Cegedim, a global technology and services company specializing
in the healthcare field, posted consolidated second quarter 2014
revenues of €224.7 million, up 0.1% on a reported basis and 1.0%
like for like compared with the same period in 2013.
The decline in L-f-L revenues at the Healthcare professionals
division was more than offset by organic growth in revenue at the
CRM and strategic data and Insurance and services divisions. It is
worth noting that the Healthcare professionals division’s sales
momentum turned around over the month of June. This growth of
revenue in the second quarter will not have a positive impact on
first half EBITDA.
The activities of GERS in France and Romania and the company
Pharmastock were transferred from the CRM and strategic data
division to the Reconciliation division that was accordingly
renamed Gers Activities and Reconciliation. This reorganization
aims to simplify the reading of the Cegedim income statement in the
case that the IMS Health proposal results in a favorable outcome.
In that case, most of the proceeds from the deal will go towards
repaying debt. According to the schedule announced on June 24, the
process of consulting employee representatives has begun, and once
their opinion is known, the board of directors will meet to
consider the offer. It will meet no later than end-November
2014.
- The change in revenues per division
for the second quarter is as follows:
€ million
2nd quarter 2014 2nd quarter 2013 Q2 2014/2013 change
Reported L-f-L CRM and strategic data
102.0 101.8 0.1% 3.0% Healthcare professionals 74.6 75.7
(1.4)% (2.8)% Insurance and services 40.0 39.9 0.3% 0.3% GERS
Activities and Reconciliation 8.2 7.0 16.8%
17.0%
Group 224.7 224.4
0.1% 1.0%
In the second quarter of 2014, Cegedim posted consolidated
revenues of €224.7 million, up 0.1% on a reported basis and
1.0% like for like relative to the year-earlier period.
Acquisitions (Webstar in the UK and SoCall in France) lifted
revenues by 0.2%, while currency effects had a negative impact of
1.0%.
- The change in revenues per division
for the first half is as follows:
€ million
HY 2014 HY 2013 HY 2014/2013 change
Reported L-f-L CRM and strategic data 194.5 198.5
(2.0)% 1.2% Healthcare professionals 141.9 147.6 (3.9)%
(5.0)% Insurance and services 78.0 77.0 1.2% 1.2% GERS Activities
and Reconciliation 14.3 14.0 2.1% 2.3%
Group 428.7 437.2
(1.9)% (0.9)%
In the second quarter of 2014, Cegedim posted consolidated
revenues of €428.7 million, down 1.9% on a reported basis and
0.9% like for like relative to the year-earlier period.
Acquisitions (Webstar in the UK and SoCall in France) lifted
revenues by 0.2%, while currency effects had a negative impact of
1.2%.
Analysis of business trends by division
In the second quarter of 2014, the division’s revenues came to
€102.0 million, up 0.1% on a reported basis. Currencies had a
negative impact of 2.9%. There were no acquisitions or divestments.
Like-for-like revenues rose 3.0% over the period.
In the first half of 2014, the division’s revenues came to
€194.5 million, down 2.0% on a reported basis compared with H1
2013. Currencies had a negative impact of 3.2%. There were no
acquisitions or divestments. Like-for-like revenues rose 1.2% over
the period.
The CRM and strategic data division represented 45.4% of
consolidated first-half revenues, both in 2014 and in 2013.
The increase in revenues, excluding negative currency effects,
was chiefly the result of emerging country growth; Compliance
activities, with Europe taking up the slack from the US; and OneKey
database products and services. We note that the market research
activity was stable over the period.
In 2013, division revenues were mainly affected by a change in
seasonal order intake trends in the market research activity, which
caused a substantial postponement of orders until the second half
of the year, a phenomenon that will probably not be repeated this
year.
The Group continues to invest in innovation, which will allow it
to launch new products and services in the month ahead. It also
continues to adapt its products and its invoicing model to the
transformational shifts in the global pharmaceutical industry.
In the second quarter of 2014, division revenues came to
€74.6 million, down 1.4% on a reported basis. The acquisitions
of Webstar Health in the UK and SoCall in France had a positive
impact of 0.5%, while currency effects lifted revenues by 0.8%.
Like-for-like revenues fell 2.8% over the period.
In the first half of 2014, the division’s revenues came to
€141.9 million, down 3.9% on a reported basis compared with H1
2013. Acquisitions and currencies had positive impacts of 0.5% and
0.6% respectively. Like-for-like revenues fell 5.0% over the
period.
The Healthcare professionals division represented 33.1% of the
Group’s consolidated first-half revenue, compared with 33.8% a year
ago.
The drop in revenues was chiefly attributable to doctor
computerization in the UK as a result of a demanding comparison
caused by the exceptional level of 2013 revenues stemming from the
NHS. This performance was partially offset by sustained growth in
France in products for doctors – with an enhanced services offering
– and for nurses with the Simply Vitale solution and by the
successful launch of an offering for multidisciplinary healthcare
facilities and clusters.
The software for pharmacists activity in France was also softer
as a result of pharmacists’ changing business model. That said the
activity’s momentum turned around in June, pointing to a more
positive second half of the year, especially with the launch of a
new generation of software.
The division’s second-quarter 2014 revenues came to
€40.0 million, up 0.3% both on a reported basis and like for
like. Currencies had virtually no impact and there were no
acquisitions or divestments.
In the first half of 2014, revenues rose 1.2% year on year, both
on a reported basis and like for like, to €78.0 million.
Currencies had virtually no impact and there were no acquisitions
or divestments.
The Insurance and services division represented 18.2% of the
Group’s consolidated first half revenues, compared with 17.6% in
the year-earlier period.
The main growth drivers were continued development in managing
third-party payment flows and numerous commercial successes at
Cegedim SRH (HR solutions).
Cegedim Assurances, a leading supplier to large corporates and a
market leader, continues to bring in new contracts. For example, it
recently signed deals with Génération and the Henner Group to
manage their hospital invoices using Cegedim’s e-invoicing
solution.
- GERS Activities and
Reconciliation
The division’s second-quarter 2014 revenues came to
€8.2 million, up 16.8% on a reported basis and 17.0% like for
like. Currencies had a negative impact of 0.1% and there were no
acquisitions or divestments.
In the first half of 2014, revenues rose 2.1% year on year on a
reported basis and 2.3% like for like, to €14.3 million.
Currencies had a negative impact of 0.2% and there were no
acquisitions or divestments.
The Gers Activities and Reconciliation division represented 3.3%
of the Group’s consolidated first half revenues, compared with 3.2%
in the year-earlier period.
This increase results mainly from the continuing growth of the
sales statistics business activity. The strong growth in the second
quarter is reflects a billing problem in the first quarter.
Financial resources – 2nd quarter highlights
On April 7, 2014, Cegedim launched an additional bond offering
of €100 million, upsized to €125 million on the issue
date, of its 6.75% Senior Notes due 2020. Apart from the date and
price of issuance (105.75% plus interest accrued since April 1,
2014), the new bonds are identical to the €300 million of
6.75% Senior Notes due in 2020 that the Group issued on
March 20, 2013. It should be noted that Cegedim was able to
issue at 5.60% compared to 6.75% one year earlier.
The proceeds from the offering were used, among other things, to
finance the redemption of €105,950,000 of outstanding bonds due
2015 (at a price of 108.102%), pay the premium and any related
fees, and repay the bank overdraft facilities.
As a result, the Group’s current debt structure is as
follows:
- €62.6 million of 7.00% bonds due July
27, 2015;
- €425 million of 6.75% bonds due April
1, 2020;
- €80 million of revolving credit due
June 10, 2016, undrawn as of March 31, 2014;
- Overdraft facilities.
When the operation was announced on April 7, 2014, rating agency
Standard and Poor’s confirmed its B+ rating with a stable outlook
for Cegedim and its two bonds.
On April 15, 2014, Cegedim acquired the French company SoCall,
which is based in Sèvres. Its core activity is providing
secretarial and scheduling services for practices of healthcare
professionals. The company manages incoming patient calls,
messages, scheduling and records of past consultations for around
50 practices. Financed by internal financing, these activities
represent annual revenues of less than €0.3 million and are part of
the consolidation scope of Cegedim Group from Q2 2014.
- Binding offer received from IMS
Health for the new CRM and Strategic Data division
On June 24, 2014, Cegedim announced that it had received a
binding offer from IMS Health Inc. to acquire its new CRM and
strategic data division in exchange for €385 million in
cash1.
In compliance with regulatory requirements in some
jurisdictions, employee representatives are currently being
consulted regarding the deal, which will then be submitted to the
Board of Directors for a decision before end-November 2014.
If this proposal is accepted, most of the proceeds from the
transaction would be used to repay debt and thus strengthen
Cegedim's balance sheet and income statement with a debt ratio
close to 1 and an improving margin. In addition, the Group would be
led to recognize, at the effective time of the sale, an accounting
loss with no impact on the Group's cash, approximately 180 million
euros.
The business activities targeted by this proposal represent 47%
of non-group revenue, 43% of current EBIT and 41% of EBITDA on the
basis of figures at December 31, 2013. It should be noted that the
financial statements closed at June 30, 2014, including the revenue
figures published in this press release, continue to include all
the data relating to the business activities targeted by the IMS
proposal. IFRS 5, whose objective is to separately classify
activities considered as held for sale, does not apply for the time
being. In fact, the sale cannot be considered as "highly probable"
as long as the Board of Directors of Cegedim has not made a
statement on the transaction, and the business activities cannot be
considered as being "immediately available for sale in their
current condition", knowing that it is first essential to
physically separate the data processing centers that support all
the Group's operational activities, as well as divide the assets
held in legal entities sheltering mixed activities.
Apart from the items cited above, to the best of the company’s
knowledge, there were no events or changes during the period that
would materially alter the Group’s financial situation.
Significant post-closing transactions and events
Decision no. 14-D-06 of July 8, 2014, by French Competition
Authorities imposed a €5.7 million fine on Cegedim based on a
complaint brought by Euris. Euris claimed that Cegedim refused to
sell its OneKey database to clients using Euris software products.
As a reminder, Cegedim’s refusal to do so was related to a lawsuit
alleging that Euris has counterfeited its OneKey database.
Cegedim reserves the right to appeal this decision.
As the Competition Authority’s decision is immediately
enforceable, regardless of whether it is appealed, it will have a
negative impact on Cegedim’s 2014 results. We note that this risk
was cited in paragraph 4.3.24 of the 2013 Annual Report and in the
prospectus that accompanied our bond issue in April.
The fine does not in any way affect the terms of the offer made
by IMS Health on June 24.
Apart from the items cited above, to the best of the company’s
knowledge, there were no events or changes during the period that
would materially alter the Group’s financial situation.
Outlook
In a changing environment, Cegedim is striving to improve its
operational leverage The Group also pursues its goal of debt
reduction.
The Competition Authority’s decision will have a negative impact
of €5.7 million on Cegedim’s 2014 operating result (as of June 30,
2014).
For the full year 2014, the Group expects its revenues and
operating margin from recurring operations to be at least stable.
In addition, if the IMS proposed transaction is accepted, the Group
would be led to recognize, an accounting loss of around 180 million
euros with no impact on the Group's cash position, at the
effective time of the sale.
Financial calendar
The Group will hold a conference call on July 29th, 2014, at
6:15 pm in English (Paris time). The call will be hosted by Jan
Eryk Umiastowski, Cegedim Chief Investment Officer and Head of
Investor Relations.
A presentation of Cegedim 2014 Q2 Revenue will also be available
on the website:
http://www.cegedim.com/finance/documentation/Pages/presentations.aspx
Contact numbers: France: +33 (0)1 76 77
22 23
Access code: US : +1646 254 3367
8250351 UK and others: +44 (0)20 3427 1915
September 18, 2014 (after the stock market closes)
- H1 2014 Results announcement
September 19, 2014 at 10:30am
- SFAF meeting presenting H1 2014 Results
(24 rue de Penthièvre, 75008 Paris)
October 28, 2014 (after the stock market closes)
- Q3 2014 Revenue announcement
November 27, 2014 (after the stock market closes)
- Q3 2014 Results announcement
Additional information
Complete financial information is available on our website:
www.cegedim.com/finance.
A presentation on Cegedim’s second quarter revenues is also
available on the website.
This information is also available on Cegedim IR, the
Group’s financial communications app for smartphones and iOS and
Android tablets. To download the app, visit:
http://www.cegedim.fr/finance/profil/Pages/CegedimIR.aspx.
Appendices
- Revenues by division and by
quarter#:
# Figures rounded to the nearest unit
Year 2014
€ thousands Q1 Q2
Q3 Q4 Total
CRM and strategic data 92,586
101,956
194,542 Healthcare professionals 67,315 74,579
141,894 Insurance and services 38,012 39,969 77,981 GERS Activities
and Reconciliation 6,137
8,175
14,312
Group
204,050 224,679
428,729
Year 2013
€ thousands Q1 Q2
Q3 Q4 Total
CRM and strategic data 96,690
101,845
198,535 Healthcare professionals 71,961 75,672
147,634 Insurance and services 37,192 39,850 77,042 GERS Activities
and Reconciliation 7,021
6,996
14,017
Group
212,865 224,363
437,229
- By division and geographic zone, the
distribution of revenues for the 1st half of 2014 is
as follows:
France EMEA ex
France Americas APAC CRM
and strategic data 28.6%
38.8% 23.5% 9.1%
Healthcare professionals 73.1% 23.3% 3.7% - Insurance and services
99.5% 0.5% - - GERS Activities and Reconciliation
90.3% 9.7% -
-
Group
58.8% 25.7%
11.9% 4.1%
- By division and currency, the
distribution of revenues for 1st half of 2014 is as
follows:
Euro USD
GBP Others CRM and strategic
data 48.6% 19.6%
5.3% 26.4% Healthcare
professionals 74.8% 3.7% 20.9% 0.6% Insurance and services 99.5%
0.0% 0.0% 0.5% GERS Activities and Reconciliation
90.3% 0.0% 0.0%
9.7%
Group
67.9% 10.1%
9.3% 12.6%
EPS: Earnings Per Share is a specific financial indicator
defined by the Group as the net profit (loss) for the period
divided by the weighted average of the number of shares in
circulation.
Revenue at constant exchange rate: when changes in
revenue at constant exchange rate are referred to, it means that
the impact of exchange rate fluctuations has been excluded. The
term, “at constant exchange rate” covers the fluctuation resulting
from applying the exchange rates for the preceding period to the
current fiscal year, all other factors remaining equal.
Revenue on a like-for-like basis: the effect of changes
in scope is corrected by restating the sales for the previous
period as follows:
• by removing the portion of sales originating in the entity or
the rights acquired for a period identical to the period during
which they were held to the current period;
• similarly, when an entity is transferred, the sales for the
portion in question in the previous period are eliminated.
Life-for-like data: at constant scope and exchange
rates.
Internal growth: internal growth covers growth resulting
from the development of an existing contract, particularly due to
an increase in rates and/or the volumes distributed or processed,
new contracts, acquisitions of assets allocated to a contract or a
specific project.
External growth: external growth covers acquisitions
during the current fiscal year, as well as those which have had a
partial impact on the previous fiscal year, net of sales of
entities and/or assets.
EBIT: Earnings Before Interest and Taxes. EBIT
corresponds to the net revenue minus operating expenses (such as
salaries, social charges, materials, energy, research, services,
external services, advertising, etc.). It is the operating income
for the Cegedim group.
EBIT from recurring operations: this is EBIT restated to
take account of non-current items, such as losses on tangible and
intangible assets, restructuring, etc. It corresponds to the
operating income from recurring operations for the Cegedim
group.
EBITDA: Earnings before interest, taxes, depreciation and
amortization. EBITDA is the term used when amortization or
depreciation and revaluations are not taken into account. “D”
stands for depreciation of tangible assets (such as buildings,
machines or vehicles), while “A” stands for amortization of
intangible assets (such as patents, licenses and goodwill). The
EBITDA is restated to take account of non-current items, such as
losses on tangible and intangible assets, restructuring, etc. It
corresponds to the gross operating earnings from recurring
operations for the Cegedim Group.
Net Financial Debt: this represents the Company’s net
debt (non-current and current financial debt, bank loans, debt
restated at amortized cost and interest on loans) net of cash and
cash equivalents and excluding revaluation of debt derivatives.
Free cash flow: free cash flow is cash generated, net of
the cash part of the following items: (i) changes in working
capital requirements, (ii) transactions on equity (changes in
capital, dividends paid and received), (iii) capital expenditure
net of transfers, (iv) net financial interest paid and (v) taxes
paid.
Operating margin: Defined as the ratio of
EBIT/revenue.
Operating margin from recurring operations: defined as
the ratio of EBIT from recurring operations/revenue.
Net cash: defined as cash and cash equivalent minus
overdraft.
Reconciliation: division encompasses the activities the
Group performs as the parent company of a listed entity, as well as
the support it provides to the three operating divisions. The
support activities are invoiced to the client subsidiaries at
market prices and notably include bookkeeping, human resources and
cash management, legal assistance and marketing. The parent company
activities are not billable and notably include managing Group
strategy, producing consolidated information and financial
communications. The Reconciliation division’s activities are
performed chiefly by the parent company, Cegedim SA, which also
carries out certain operational activities, the most important of
which is CRM. Previously, Reconciliation division activities had
been housed within the division to which Cegedim SA’s principal
operational activity belongs: CRM and strategic data. The new
distinction will help to clarify the impact that this unit has on
the Group’s accounts.
About Cegedim :
Founded in 1969, Cegedim is a global
technology and services company specializing in the healthcare
field. Cegedim supplies services, technological tools, specialized
software, data flow management services and databases. Its
offerings are targeted notably at healthcare industries, life
sciences companies, healthcare professionals and insurance
companies. The world leader in life sciences CRM, Cegedim is also
one of the leading suppliers of strategic healthcare industry data.
Cegedim employs 8,000 people in more than 80 countries and
generated revenue of €902 million in 2013. Cegedim SA is listed in
Paris (EURONEXT: CGM).
To learn more, please visit:
www.cegedim.com
And follow Cegedim on Twitter:
@CegedimGroup
1 On a cash free debt free basis, subject to certain adjustments
based on the Group's net debt at the date of completion, changes in
net working capital and 2014 CRM and strategic data division
revenue.
Aude BALLEYDIERCegedimMedia RelationsTel.: +33 (0)1 49 09
68 81aude.balleydier@cegedim.frorJan Eryk
UMIASTOWSKICegedimChief Investment OfficerInvestor
RelationsTel.: +33 (0)1 49 09 33
36investor.relations@cegedim.frorGuillaume DE CHAMISSOPRPA
AgencyPress RelationsTel.: +33 (0)1 77 35 60
99guillaume.dechamisso@prpa.fr
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