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Cegedim: robust revenue growth continued in Q3 2016, and the decline in EBITDA slowed

Boulogne-Billancourt, France, Nov. 29, 2016 (GLOBE NEWSWIRE) --


PRESS RELEASE

Quarterly Financial Information as of September 30, 2016
IFRS - Regulated Information - Not Audited

Cegedim: robust revenue growth continued in third quarter 2016, and the decline in EBITDA slowed

  • Revenue up 4.9% like for like in Q3 2016
  • Margins temporarily pinched by investments and the start of operations with BPO clients
  • Positive net income of €3.4 million compared with a loss a year ago
  • 2016 revenue target revised upward and 2016 EBITDA target maintained

Disclaimer: Pursuant to IAS 17 as it applies to Cegelease's activities, leases are now classified as financial leases, resulting in an adjustment to the quarterly 2015 figures published in 2015. Readers should refer to the last annexes of this press release for full details of the adjustments. All of the figures in this press release reflect the adjustments. Furthermore, the consolidated data presented in this press release relate to continuing activities, unless otherwise mentioned.


Conference CALL ON November 29, 2016, at 6:15pm cet
FR : +33 1 70 77 09 44 USA : +1 866 907 5928 UK : +44 (0)20 3367 9453 No access code required

Boulogne-Billancourt, November 29, 2016

Cegedim, an innovative technology and services company, posted consolidated first nine months of 2016 revenues of €318.3 million, up 3.7% on a reported basis and 4.0% like for like compared with the same period in 2015. EBITDA came to €40.6 million in first nine months of 2016, down 22.4% year on year.
In the third quarter 2016, revenues came to €102.8 million, up 2.6% on a reported basis and 4.9% like for like. The Q3 2016 EBITDA came to €14.9 million, down 13.4% year on year.

The revamp of the business model continues and will allow Cegedim to enjoy greater customer loyalty, closer client relationships, simpler operating processes, more robust offerings and stronger geographic positions. The changes now under way will also boost the share of recurring revenues, improve sales growth and predictability, and enhance the Group's profitability. Profitability has been negatively affected during this business model transition. Cegedim expects to begin seeing the initial positive impact of its investments, reorganizations and transformations in 2017, with a full impact in 2018.

As proof that its clients see the relevance of its new strategy, Cegedim is revising its 2016 revenue target upward once again, and reiterates its 2016 EBITDA target. However, there is a chance that recently signed BPO contracts could negatively affect profitability in the fourth quarter of 2016, since related revenues will not be recognized until 2017.


Simplified income statement

9M 2016 9M 2015 Chg.
In €m In % In €m In % In %
Revenue 318.3 100.0 % 306.9 100.0 % +3.7 %
EBITDA 40.6 12.7 % 52.3 17.0 % (22.4 )%
Depreciation (25.3 ) - (22.4 ) - +12.7 %
EBIT before special items 15.3 4.8 % 29.9 9.7 % (48.9 )%
Special items (5.7 ) - (5.0 ) - +14.3 %
EBIT 9.6 3.0 % 24.8 8.1 % (61.6 )%
Cost of net financial debt (25.2 ) - (32.7 ) - (22.9 )%
Tax expenses (1.4 ) - (2.5 ) - (42.8 )%
Consolidated profit from continuing activities (15.5 ) (4.9 )% (9.0 ) (2.9 )% (72.9 )%
Net earnings from activities held for sale (1.2 ) - 32.2 - n.m.
Profit attributable to the owners of the parent (16.8 ) (5.3 )% 23.2 7.6 % n.m.
EPS before special items (0.7 ) - (0.3 ) - (146.4 )%

Over the third quarter of 2016, Cegedim posted consolidated revenues of €102.8 million, up 2.6% on a reported basis. Excluding an unfavorable currency translation effect of 2.3%, revenues rose 4.9%. There were no disposals or acquisitions. In like-for-like terms the Health Insurance, HR and e-services division's revenues rose by 9.5%, whereas the Healthcare professionals division's revenues fell by 0.7%.

In the first nine months of 2016, Cegedim posted consolidated revenues of €318.3 million, up 3.7% on a reported basis. Excluding an unfavorable currency translation effect of 1.4% and a 1.1% boost from acquisitions, revenues rose 4.0%. In like-for-like terms the Health Insurance, HR and e-services division's revenues rose by 9.5%, whereas the Healthcare professionals division's revenues fell by 2.3%.

EBITDA declined by €11.7 million, or 22.4%, to €40.6 million. The first-nine month's margin fell to 12.7% from 17.0% a year earlier. The EBITDA trend was attributable to investments made in human resources and innovation in order to speed up the transition of software products to cloud-based formats and swiftly roll out the Group's new BPO offerings. It is worth noting that more than 80% of this decline occurred during the first half of 2016.

Depreciation charges rose €2.9 million, from €22.4 million for the first nine months of 2015 to €25.3 million for the first nine months of 2016. Amortization of R&D expenses over the period amounted to 1.0 million.

EBIT from recurring operations fell €14.6 million over the first nine months of 2016, or 48.9%, to €15.3 million. The margin fell from 9.7% for the first nine months of 2015 to 4.8% for the first nine months of 2016.

Special items amounted to a €5.7 million charge over the first nine months of 2016 compared with a €5.0 million charge a year earlier. The increase was chiefly due to the increase in restructuring costs due to the implementation of new organizational structures.

The net cost of financial debt amounted to €25.2 million over the first nine months of 2016 compared to €32.7 million for the first months of 2015, a decrease of €7.5 million, or 22.9%. It represented 7.9% of first nine months 2016 revenues, compared with 10.7% of first nine months 2015 revenues. This decline reflects lower interest expenses in the second and third quarters as a result of the debt restructuring carried out in January and March 2016.

Tax amounted to €1.4 million for the first nine months of 2016, compared with €2.5 million for the first nine months of 2015, a decrease of €1.1 million, or 42.8%. This was chiefly due to the lack of corporate income tax.

Thus, the consolidated net result from continuing activities came to a loss of €15.5 million at end-September 2016, compared with a loss of €9.0 million in the year-earlier period. Earnings per share before special items came to loss of €0.7 at end of September 2016, compared with a €0.3 loss a year earlier. Note that consolidated net result from continuing activities came to €3.4million profit in the third quarter, compared with a €0.7 million loss a year earlier.


Analysis of business trends by division

  • Key figures by division

Revenue EBIT
before special items
EBITDA
In €m 9M 2016 9M 2015 9M 2016 9M 2015 9M 2016 9M 2015
Health Insurance, HR and e-services 185.2 166.2 15.4 18.0 26.8 29.9
Healthcare Professionals 130.8 138.0 2.3 13.3 12.1 21.8
Activities not allocated 2.3 2.8 (2.4 ) (1.4 ) 1.6 0.6
Cegedim 318.3 306.9 15.3 29.9 40.6 52.3

  • Health insurance, HR and e-services

Over the first nine months of 2016, division revenues came to €185.2 million, up 11.4% on a reported basis. The July 2015 acquisition of Activus in the UK made a positive contribution of 2.0%. Currencies had virtually no impact. Like-for-like revenues rose 9.5% over the period.
The Health insurance, HR and e-services division represented 58.2% of consolidated revenues from continuing activities, compared with 54.1% over the same period a year earlier.
The division's Q3 2016 revenues came to €60.6 million, up 9.3% on a reported basis. There were no disposals or acquisitions. Currencies had virtually no impact. Like-for-like revenues rose 9.5% over the period:

This significant revenue growth over the first nine months of 2016 was chiefly attributable to:

  • Cegedim Insurance Solutions, driven by double-digit growth in its iGestion BPO activities and a brisk increase in third-party payment processing. The start of operations with new clients allowed the software and services business for the personal insurance segment to more than offset the effects of switching over to the cloud.
  • Double-digit growth at Cegedim e-business following the start of operations with new clients on its Global Information Services SaaS platform for digital data exchanges, including payment platforms.
  • The start of operations with numerous clients on the Cegedim SRH SaaS platform for human resources management, resulting in double-digit revenue growth.

Over the first nine months of 2016, division EBITDA came to €26.8 million, down €3.1 million, or 10.4%. The EBITDA margin came to 14.5%, vs. 18.0% a year earlier.
In the third quarter of 2016, division EBITDA came €9.0 million, slightly down €0.2 million, or 2.1%. The EBITDA margin came to 14.8%, vs. 16.6% a year earlier.

The decline in EBITDA took place almost entirely in the first half of 2016, as third-quarter EBITDA was virtually stable. The decline in the first half was chiefly the result of:

  • The start of operations with BPO clients for iGestion and Cegedim e-business;
  • Cegedim Insurance Solutions switching its core products over to SaaS format, the start of operations with numerous new clients, and the start of new projects for existing clients;
  • A difference in the timing of promotional campaigns in the first half of 2016 compared to 2015 for RNP;

The impact was partially offset by Cegedim SRH's fine performance in processing third-party payment flows


  • Healthcare professionals

Over the first nine months of 2016, division revenues came to €130.8 million, down 5.2% on a reported basis. Currency effects made a negative contribution of 2.9%. There was no impact from acquisitions or divestments. Like-for-like revenues fell 2.3% over the period.
The Healthcare professionals division represented 41.1% of consolidated revenues from continuing activities, compared with 45.0% over the same period a year earlier.
The division's Q3 2016 revenues came to €41.5 million, down 5.6% on a reported basis. Currency effects made a negative contribution of 4.9%. There was no impact from acquisitions or divestments. Like-for-like revenues fell 0.7% over the period.

The decline in revenues over the first nine months of 2016 was mainly due to the following:

  • A slowing in the UK doctor computerization business in anticipation of the early-2017 launch of a cloud-based offering. Marketing for that offering should restore sales momentum;
  • The September 2016 release in France of the new Smart Rx offering - a comprehensive pharmacy management solution built around a hybrid architecture that combines local and cloud-based computing. The new solution allows networks amongst individual pharmacies and links with healthcare professionals. Thus, revenues at the French pharmacy business are likely to resume their growth in the next few months.
  • The negative short-term impact of switching Belgian doctors over to SaaS format.

These performances were offset mainly by a double-digit growth:

  • At Pulse, driven by the RCM and EHR activities.
  • In offerings for physical therapists and nurses in France.

Over the first nine months of 2016, division EBITDA came to €12.1 million, down €9.6 million, or 44.3%. The EBITDA margin came to 9.3%, vs. 15.8% a year earlier.
In the third quarter of 2016, division EBITDA came €4.7 million, slightly down €2.9 million, or 38.2%. The EBITDA margin came to 11.4%, vs. 17.3% a year earlier.

The decline in EBITDA was chiefly attributable to investments made to ensure future growth. The Group was chiefly penalized by the investments it made in:

  • France, to develop the new hybrid offering for pharmacies;
  • The US, focusing on Revenue Cycle Management (RCM) activities and SaaS electronic health records (EHR);
  • The UK, where it aims to have a cloud-based offering for UK doctors in 2017

EBITDA felt a pinch in the short term from efforts to switch Belgian doctors over to SaaS format and reorganize the business in the US.

  • Activities not allocated

Over the first nine months of 2016, division revenues came to €2.3 million, down 15.4% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments.

The Activities not allocated division represented 0.7% of consolidated revenues from continuing activities, compared with 0.9% over the same period a year earlier.

The division's Q3 2016 revenues came to €0.8 million, down 8.7% on a reported basis and like for like. There were no currency effects and no acquisitions or divestments.

This trend reflects the return to a normal level of billing.

Over the first nine months of 2016, division EBITDA came to €1.6 million, up €1.0 million. In the third quarter of 2016, division EBITDA came €1.2 million, up €0.8 million.

Financial resources

Cegedim's consolidated total balance sheet amounted to €659.9 million, at September 30, 2016,

Acquisition goodwill represented €183.8 million at September 30, 2016, compared with €188.5 million at end-2015. The €4.7 million decrease, equal to 2.5%, was mainly attributable to the euro's appreciation against the British pound, for a total of €4.8 million. Acquisition goodwill represented 27.9% of the total balance sheet at September 30, 2016, compared with 21.8% on December 31, 2015.

Cash and equivalents came to €9.1 million at September 30, 2016, a decrease of €222.2 million compared with December 31, 2015. The drop was principally due to the early redemption of the 2020 bond for a nominal value of €340.1 million, payment of a €15.9 million early redemption premium, and an €9.8 million deterioration in WCR, partly offset by drawing €169.0 million from the €200 million revolving credit facility. Cash and equivalents represented 1.4% of the total balance sheet at September 30, 2016, compared with 26.8% at December 31, 2015.

Shareholders' equity fell by €32.7 million, i.e. 14.3%, to €195.4 million at September 30, 2016, compared with €228.1 million at December 31, 2015. Shareholders' equity represented 29.6% of the total balance sheet at end-September 2016, compared with 26.4% at end-December 2015.

Net financial debt amounted to €215.6 million at end-September 2016, up €48.0 million compared with end-December 2015. It represented 110.3% of Group shareholders' equity at September 30, 2016.

Before the net cost of financial debt and taxes, cash flow was €44.6 million at September 30, 2016, compared with €51.5 million at September 30, 2015.

Highlights

Apart from the items cited below, 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.

  • New credit facility

In January 2016, the Group took out a new five-year revolving credit facility (RCF) of €200 million. The applicable interest rate for this credit facility is Euribor plus a margin. The Euribor rate can be the 1-, 3- or 6- month rate; if Euribor is below zero, it will be deemed to be equal to zero. The margin can range from 0.70% to 1.40% depending on the leverage ratio calculated semi-annually in June and December (Refer to point 2.4.1.1 on page 14 of the Q2-2016 Quarterly Financial Report).

  • Exercise of the call option on the entire 2020 bond

On April 1, 2016, Cegedim exercised its call option on the entire 6.75% 2020 bond with ISIN code XS0906984272 and XS0906984355, for a total principal amount of €314,814,000.00 and a price of 105.0625%, i.e. a total premium of €15,937,458.75. The company then cancelled these securities. The transaction was financed by drawing a portion of the RCF obtained in January 2016 and using the proceeds of the sale to IMS Health. Following this transaction, the Group's debt comprised the €45.1 million FCB subordinated loan, the partially drawn €200 million RCF, and overdraft facilities.

  • S&P has raised Cegedim's rating to BB with positive outlook

After Cegedim announced that it would redeem the entire 6.75% 2020 bond, rating agency Standard and Poor's raised the company's rating on April 28, 2016, to BB with a positive outlook.

Significant post-closing transactions and events

Apart from the items cited below, 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.

  • Cegedim signs heads of agreement to acquire Futuramedia Group

Cegedim announced on November 2, 2016, that it has signed a heads of agreement to acquire Futuramedia Group. This deal will strengthen the digital offerings of its subsidiary RNP, which specializes in pharmacy displays in France.

Last year Futuramedia Group generated revenues of around €5.4 million. It will have an accretive impact on Cegedim Group's margins and will begin contributing to the Group's consolidation scope from December 1, 2016.

  • Kadrige sale

The Kadrige business was sold to IMS Health on November 9, 2016.

Outlook

Cegedim is revising upward its target for 2016 revenues and maintained it 2016 EBITDA target, despite economic uncertainty and a challenging geopolitical environment. Thus for the full year 2016, Cegedim expects:

  • Like-for-like revenue growth of 4% instead of at least 3% before.
  • EBITDA down by €10 million relative to 2015. However, the signing of a significant BPO contracts in third quarter 2016 could have an impact on Group profitability in fourth quarter 2016, because revenues related to the contract will not be booked until 2017.

Cegedim expects to begin seeing the initial positive impact of its investments, reorganizations and transformations in 2017, with a full impact in 2018.

In 2016, the Group acquired Futuramedia. It currently has no plans for further significant acquisitions. Lastly, the Group does not communicate earnings estimates or forecasts.

  • Potential Brexit impact

In 2015, the UK accounted for 15.1% of consolidated Group revenues and 19.2% of consolidated Group EBIT.

Cegedim deals in local currency in the UK, as it does in every country where it is present. Thus, Brexit is unlikely to have a material impact on Group EBIT.

With regard to healthcare policy, the Group has not identified any major European programs at work in the UK and expects UK policy to be only marginally affected by Brexit.

  • Quarterly statements

Starting in 2017, Cegedim will only publish half-year and annual results. It will, however, continue to publish quarterly revenues.

The figures cited above include guidance on Cegedim's future financial performances. This forward-looking information is based on the opinions and assumptions of the Group's senior management at the time this press release is issued and naturally entails risks and uncertainty. For more information on the risks facing Cegedim, please refer to points 2.4, "Risk factors and insurance", and 3.7, "Outlook", of the 2015 Registration Document filed with the AMF on March 31, 2016, as well as point 2.4, "Risk factors", of the Interim Financial Report of Q3 2016.


December 14, 2016,
at 1:30pm

January 26, 2017, after market closing

March 22, 2017, after market closing

March 23, 2017, at 10:00am CET

April 27, 2017, after market closing

7th Investor Day

Full year 2016 revenue

Full year 2016 earnings

Analyst meeting (SFAF meeting)

Q1 2017 revenues

Financial calendar


November 29, 2016, at 6:15pm (Paris time)
The Group will hold a conference call hosted by Jan Eryk Umiastowski, Cegedim Chief Investment Officer and Head of Investor Relations.
The Q3 2016 earnings presentation is available at:

The website: http://www.cegedim.fr/finance/documentation/Pages/presentations.aspx

The Group's financial communications app, Cegedim IR. To download the app, visit: http://www.cegedim.fr/finance/profil/Pages/CegedimIR.aspx
Contact numbers: France: +33 1 70 77 09 44

United States: +1 866 907 5928

UK and others: +44 (0)20 3367 9453
No access code required

Informations additionnelles

The Audit Committee met on November 25, 2016, and the Board of Directors met on November 29, 2016, to review the Q3 2016 consolidated financial statements.
The interim financial report for Q3 2016 is available:

on our website In French: http://www.cegedim.fr/finance/documentation/Pages/rapports.aspx

In English: http://www.cegedim.com/finance/documentation/Pages/reports.aspx

on Cegedim IR, the Group's financial communications app To download the app, visit http://www.cegedim.fr/finance/profil/Pages/CegedimIR.aspx.


Appendices

Balance sheet as September 30, 2016

  • Assets as of September 30, 2016

In thousands of euros 09.30.2016 12.31.2015(1)
Goodwill on acquisition 183,814 188,548
Development costs 38,719 16,923
Other intangible fixed assets 96,157 108,166
Intangible fixed assets 134,876 125,089
Property 459 459
Buildings 4,824 5,021
Other tangible fixed assets 20,123 16,574
Construction work in progress 684 51
Tangible fixed assets 26,090 22,107
Equity investments 1,098 1,098
Loans 3,138 3,146
Other long-term investments 5,719 5,730
Long-term invetsments - excluding equity shares in equity method companies 9,956 9,973
Equity shares in equity method companies 9,780 10,105
Government - Deferred tax 29,672 28,722
Accounts receivable: Long-term portion 26,916 26,544
Other receivables: Long-term portion 407 1,132
Non-current assets 421,511 412,219
Services in progress - 0
Goods 10,429 8,978
Advances and deposits received on orders 1,012 218
Accounts receivables: Short-term portion 155,039 161,923
Other receivables: Short-term portion 48,929 32,209
Cash equivalents 8,000 153,001
Cash 1,142 78,298
Prepaid expenses 13,023 16,666
Current Assets 237,575 451,293
Assets of activities held for sale 840 768
Total Assets 659,925 864,280

  1. Restated see note "Correction of the accounting treatment of the finance lease business in the group consolidated financial statement.
  • Liabilities and shareholders' equity as of September 30, 2016

In thousands of euros 09.30.2016 12.31.2015(1)
Share capital 13,337 13,337
Group reserves 202,113 139,287
Group exchange gains/losses (3,283 ) 8,469
Group earnings (16,782 ) 66,957
Shareholders' equity, Group share 195,384 228,051
Minority interests (reserves) 9 39
Minority interests (earnings) 10 41
Minority interests 19 79
Shareholders' equity 195,403 228,130
Long-term financial liabilities 220,518 51,723
Long-term financial intruments 2,517 3,877
Deferred tax liabilities 6,131 6,731
Non-current provisions 26,064 19,307
Other non-current liabilities 13,208 14,376
Non-current liabilities 268,439 96,014
Short-term financial liabilities 4,242 347,213
Short-term financial instruments 5 5
Accounts payable and related accounts 49,858 54,470
Tax and social liabilities 60,623 70,632
Provisions 2,930 2,333
Other current liabilities 77,457 61,657
Current liabilities 195,116 536,311
Liabilities of activities held for sale 968 3,823
Total Liabilities 659,925 864,280

(1) Restated see note "Correction of the accounting treatment of the finance lease business in the group consolidated financial statement".

· Income statements as of September 30, 2016

In thousands of euros 09.30.2016 09.30.2015(1)
Revenue 318,345 306,889
Other operating activities revenue - -
Purchased used (24,704 ) (26,600 )
External expenses (93,962 ) (81,696 )
Taxes (5,469 ) (7,858 )
Payroll costs (150,447 ) (136,258 )
Allocations to and reversals of provisions (2,952 ) (2,739 )
Change in inventories of products in progress and finished products - -
Other operating income and expenses (249 ) 555
EBITDA 40,562 52,294
Depreciation expenses (25,295 ) (22,444 )
Operating income from recurring operations 15,267 29,850
Depreciation of goodwill - -
Non-recurrent income and expenses (5,717 ) (5,003 )
Other exceptional operating income and expenses (5,517 ) (5,003 )
Operating income 9,550 24,847
Income from cash and cash equivalents 1,056 1,202
Gross cost of financial debt (27,215 ) (32,775 )
Other financial income and expenses 914 (1,153 )
Cost of net financial debt (25,245 ) (32,726 )
Income taxes (579 ) (2,134 )
Deferred taxes (867 ) (394 )
Total taxes (1,446 ) (2,528 )
Share of profit (loss) for the period of equity method companies 1,613 1,428
Profit (loss) for the period from continuing activities (15,528 ) (8,979 )
Profit (loss) for the period from discontinued activities (1,244 ) 32,186
Consolidated profit (loss) for the period (16,772 ) 23,207
Group share (16,782 ) 23,217
Minority interests 10 (10 )
Average number of shares excluding treasury stock 13,955,230 13,934,479
Current Earnings Per Share (in euros) (0.7 ) (0.3 )
Earnings Per Share (in euros) (1.2 ) 1.7
Dilutive instruments None None
Earning for recurring operation per share (in euros) (1.2 ) 1.7

(1) Restated see note "Correction of the accounting treatment of the finance lease business in the group consolidated financial statement.


  • Consolidated cash flow statement as of September 30, 2016

In thousands of euros 09.30.2016 09.30.2015(1)
Consolidated profit (loss) for the period (16,772 ) 23,207
Share of earnings from equity method companies (1,613 ) (1,470 )
Depreciation and provisions 36,395 22,929
Capital gains or losses on disposals (86 ) (30,687 )
Cash flow after cost of net financial debt and taxes 17,925 13,979
Cost of net financial debt 25,262 31,758
Tax expenses 1,448 5,744
Operating cash flow before cost of net financial debt and taxes 44,636 51,481
Tax paid (3,743 ) (9,877 )
Change in working capital requirements for operations: requirement (9,849 ) (23,097 )
Cash flow generated from operating activities after tax paid and change in working capital requirements (A) 31,044 18,507
Of which net cash flows from operating activities of held for sales 2,019 5,177
Acquisitions of intangible assets (33,667 ) (30,381 )
Acquisitions of tangible assets (10,496 ) (9,731 )
Acquisitions of long-term investments - -
Disposals of tangible and intangible assets 699 1,532
Disposals of long-term investments (265 ) 1,604
Impact of changes in consolidation scope (1,448 ) 319,370
Dividends received from equity method companies - 81
Net cash flows generated by investment operations (B) (45,177 ) 282,475
Of which net cash flows connected to investment operations of activities held for sales (13 ) (7,482 )
Dividends paid to parent company shareholders - -
Dividends paid to the minority interests of consolidated companies (87 ) (69 )
Capital increase through cash contribution - -
Loans issued 169,000 -
Loans repaid (340,259 ) (144,457 )
Interest paid on loans (31,630 ) (41,530 )
Other financial income and expenses paid or received (995 ) (643 )
Net cash flows generated by financing operations (C) (203,971 ) (186,699 )
Of which net cash flows related to financing operations of activities held for sales (16 ) (850 )
Change In Cash without impact of change in foreign currency exchange rates (A + B + C) (218,104 ) 114,283
Impact of changes in foreign currency exchange rates (954 ) 2,850
Change in cash (219,057 ) 117,133
Opening cash 228,120 99,715
Closing cash 9,062 216,848

(1) Restated see note "Correction of the accounting treatment of the finance lease business in the group consolidated financial statement"


  • Correction of the accounting treatment of the finance lease business in the group consolidated financial statement

Cegelease is a wholly owned subsidiary of Cegedim which offers since 2001 financing options through a variety of contracts dedicated to pharmacies and healthcare professionals in France.

Initially, these solutions were aimed at serving the pharmacists, who preferred leasing instead of paying up-front, the pharmacies management system software that they bought from the Cegedim group.

As time passed, Cegelease diversified its activities. Starting as the exclusive finance lease provider for Cegedim group products, Cegelease converted to a broker proposing a variety of leasing solutions (for group products as well as products developed by third parties) offered to a variety of clients (including clients who are not already in business with other group entities).

After the sale of its CRM and strategic data business to IMS Health, Cegedim investigated in depth these activities and found that they had to be reclassified pursuant to IAS 17 on March 23, 2016 when the 2015 accounts were published.

All the impacts on previous accounts are indicated in the 2015 Registration Document filled with the AMF on March 31, 2016 in Chapter 4.4 point 1.3 on page 89 to 94, as well as in the Q1 2016 Financial Interim Report in point 2.5.1 on page 17 to 19, in the Q2 2016 Financial Interim Report in point 2.5.1 on page 17 and in the Q3 2016 Financial Interim Report in point 2.5.1 on page 17.

Impacts for the first nine months of 2015 consolidated financial statements are described below:

  • First nine months of 2015 Profit and Loss Statement

In € million 09.30.2015
reported(1)
Correction of leases 09.30.2015
restated
Revenue 365,270 (58,381 ) 306,889
Other operating activities revenue - - -
Purchases used (64,883 ) 38,284 (26,600
External expenses (92,014 ) 10,318 (81,696 )
Taxes (7,858 ) (7,858 )
Payroll costs (136,258 ) - (136,258 )
Allocations to and reversals of provisions (2,739 ) - (2,739 )
Change in inventories of products in progress and finished products - - -
Other operating income and expenses 555 - 555
EBITDA 62,073 (9,780 ) 52,294
Depreciation expenses (32,047 ) 9,603 (22,444 )
Operating income from recurring operations 30,026 (176 ) 29,850
Depreciation of goodwill - - -
Non-recurrent income and expenses (5,003 ) - (5,003 )
Other exceptional operating income and expenses (5,003 ) - (5,003 )
Operating income 25,024 (176 ) 24,847
Income from cash and cash equivalents 1,202 - 1,202
Gross cost of financial debt (32,775 ) - (32,775 )
Other financial income and expenses (1,153 ) - (1,153 )
Cost of net financial debt (32,726 ) - (32,726 )
Income taxes (2,134 ) - (2,134 )
Deferred taxes (461 ) 67 (394 )
Total taxes (2,595 ) 67 (2,528 )
Share of profit (loss) for the period of equity method companies 1,428 - 1,428
Profit (loss) for the period from continuing activities (8,869 ) (109 ) (8,979 )
Profit (loss) for the period discontinued activities 32,185 - 32,186
Consolidated profit (loss) for the period 23,316 (109 ) 23,207
Group share 23,326 (109 ) 23,217
Minority interests (10 ) (10 )

(1) Restated from the IFRS 5 Cegedim Kadrige impact.

  • First months of 2015 Cash Flows Statement

In € million 09.30.2015
reported(1)
Correction of leases 09.30.2015
restated
Consolidated profit (loss) for the period 23,316 (109 ) 23,207
Share of earnings from equity method companies (1,470 ) - (1,470 )
Depreciation and provisions 32,532 (9,603 ) 22,929
Capital gains or losses on disposals (30,687 ) - (30,687 )
Cash flow after cost of net financial debt and taxes 23,691 (9,712 ) 13,979
Cost of net financial debt 31,758 - 31,758
Tax expenses 5,811 (67 ) 5,744
Operating cash flow before cost of net financial debt and taxes 61,260 (9,779 ) 51,481
Tax paid (9,877 ) - (9,877 )
Change in working capital requirements for operations: requirement (21,370 ) (1,727 ) (23,097 )
Change in working capital requirements for operations: surplus
Cash flow generated from operating activities after tax paid and change in working capital requirements (A) 30,013 (11,506 ) 18,507
Of which net cash flows from operating activities of held for sales 5,177 - 5,177
Acquisitions of intangible assets (30,615 ) 234 (30,381 )
Acquisitions of tangible assets (21,003 ) 11,272 (9,731 )
Acquisitions of long-term investments - - -
Disposals of tangible and intangible assets 1,532 - 1,532
Disposals of long-term investments 1,604 - 1,604
Impact of changes in consolidation scope (1) 319,370 - 319,370
Dividends received from equity method companies 81 - 81
Net cash flows generated by investment operations (B) 270,969 11,506 282,475
Of which net cash flows connected to investment operations of activities held for sales (7,482 ) - (7,482 )
Dividends paid to parent company shareholders - - -
Dividends paid to the minority interests of consolidated companies (69 ) - (69 )
Capital increase through cash contribution - - -
Loans issued - - -
Loans repaid (144,457 ) - (144,457 )
Interest paid on loans (41,530 ) - (41,530 )
Other financial income and expenses paid or received (643 ) - (643 )
Net cash flows generated by financing operations (C) (186,699 ) - (186,699 )
Of which net cash flows related to financing operations of activities held for sales (850 ) - (850 )
Change In Cash without impact of change in foreign currency exchange rates (A + B + C) 114,283 - 114,283
Impact of changes in foreign currency exchange rates 2,850 - 2,850
Change in cash 117,133 - 117,133
Opening cash 99,715 - 99,715
Closing cash 216,848 - 216,848

(1) Restated from the IFRS 5 Cegedim Kadrige impact.

  • First nine months of 2015 Revenue per division

In € million 09.30.2015
reported
IFRS 5 impact Cegedim Kadrige Correction of leases Divisions aggregation 09.30.2015
restated
(1 ) (2 ) (3 )
Health Insurance H.R. & e-services 167.5 (1.3 ) - - 166.2
Healthcare Professionals 113.0 - - 24.9 137.9
Cegelease 83.3 - (58.4 ) (24.9 ) -
Activities not allocated 2.8 - - - 2.8
Group Cegedim 366.6 (1.3 ) (58.4 ) 0 306.9

(1) The Cegedim Group decided to sell the Kadrige activities. These activities are thus isolated in separate lines of the profit and loss statement and balance sheet, according to the IFRS 5 accounting standard.

(2) The correct accounting treatment of the Cegelease finance lease business, for all types of contracts (self-financed, sold except process management, or backed against a bank) requires a correction over the first nine months of 2015 consolidated revenue of €58.4m downward.

(3) The finance lease business accounts for less than 10% of the consolidated revenue or EBITDA, and as such is not isolated anymore within the Group internal reporting. These activities are reported into the « Healthcare professionals » division, where they already belonged until the 2014 annual closing.


Glossary

Activities not allocated: this 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.

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.

Operating expenses: defined as purchases used, external expenses and payroll costs.

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.




About Cegedim:
Founded in 1969, Cegedim is an innovative technology and services company in the field of digital data flow management for healthcare ecosystems and B2B, and a business software publisher for healthcare and insurance professionals. Cegedim employs more than 4,000 people in 11 countries and generated revenue of €426 million in 2015. Cegedim SA is listed in Paris (EURONEXT: CGM).

To learn more, please visit: www.cegedim.com

And follow Cegedim on Twitter: @CegedimGroup and LinkedIn


Aude Balleydier
Cegedim
Communications Manager
and Media Relations
Tel.: +33 (0)1 49 09 68 81
aude.balleydier@cegedim.com

Jan Eryk Umiastowski
Cegedim
Chief Investment Officer
and Head of Investor Relations
Tel.: +33 (0)1 49 09 33 36
janeryk.umiastowski@cegedim.com

Guillaume de Chamisso
PRPA Agency



Media Relations
Tel.: +33 (0)1 77 35 60 99
guillaume.dechamisso@prpa.fr
Follow Cegedim:

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Source: Cegedim