HALF-YEARLY
FINANCIAL REPORT
2019
CONTENTS
A - 2019 HALF-YEARLY FINANCIAL STATEMENTS | 3 | |
1 | SCOPE AND CONSOLIDATION METHODS | 9 |
1.1 | REPORTING STANDARDS | 9 |
1.2 | NEW IFRS STANDARDS AND INTERPRETATIONS | 9 |
1.3 | MANAGEMENT ESTIMATES | 12 |
1.4 | CONSOLIDATION METHODS | 12 |
1.5 | SIGNIFICANT ACCOUNTING POLICIES | 12 |
1.6 | SCOPE OF CONSOLIDATION | 13 |
2 | NOTES TO THE INCOME STATEMENT | 15 |
2.1 | SEGMENT INFORMATION | 15 |
2.2 | EXTERNAL EXPENSES | 16 |
2.3 | EMPLOYEES | 16 |
2.4 | DEPRECIATION AND PROVISIONS | 17 |
2.5 | INVESTMENTS IN ASSOCIATES | 17 |
2.6 | OTHER NON-CURRENT INCOME AND EXPENSES | 17 |
2.7 | FINANCIAL INCOME | 17 |
2.8 | INCOME TAX | 18 |
3. | NOTES TO THE BALANCE SHEET | 19 |
3.1 | GOODWILL | 19 |
3.2 | INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT | 19 |
3.3 | RIGHTS OF USE (IFRS16) | 20 |
3.4 | OTHER NON-CURRENT ASSETS | 20 |
3.5 | TRADE RECEIVABLES AND RELATED ACCOUNTS | 20 |
3.6 | OTHER RECEIVABLES | 20 |
3.7 | CASH AND CASH EQUIVAELNTS | 20 |
3.8 | SHARE CAPITAL AND SHARE PREMIUM | 21 |
3.9 | CURRENT AND NON-CURRENT PROVISIONS | 22 |
3.10 | FINANCIAL LIABILITIES | 22 |
3.11 | OTHER LIABILITIES | 24 |
4 | NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS | 25 |
4.1 | CHANGE IN NET WORKING CAPITAL | 25 |
4.2 | IMPACT OF CHANGES IN THE SCOPE OF CONSOLIDATION | 25 |
4.3 | DIVIDENDS | 25 |
5. | SUBSEQUENT EVENTS | 26 |
6. | OTHER INFORMATION | 27 |
6.1 | FINANCIAL INSTRUMENTS | 27 |
6.2 | INFORMATION ON RELATED PARTIES | 27 |
6.3 | INFORMATION RELATING TO RISK MANAGEMENT | 27 |
B - HALF-YEARLY ACTIVITY REPORT | 28 | |
C - STATEMENT BY THE PERSON RESPONSIBLE FOR THE HALF-YEARLY FINANCIAL REPORT | 30 | |
D - REPORT OF THE STATUTORY AUDITOR ON THE LIMITED REVIEW OF THE CONDENSED | ||
HALF-YEARLY CONSOLIDATED FINANCIAL STATEMENTS OF AKKA TECHNOLOGIES SE FOR | 31 | |
THE SIX MONTHS TO 30 JUNE 2019 |
This document is an English translation of the RAPPORT FINANCIER SEMESTRIEL 2019 that was issued in French and drafted in accordance with Belgian law. This document is provided solely for the convenience of English readers and in case of any discrepancies with the French version, the French version prevails.
2 | 2019 HALF-YEARLY FINANCIAL REPORT |
A - 2019 HALF-YEARLY FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
INCOME STATEMENT | Note no. | 30 June 2019 | 30 June 2018 |
in thousands of euros | |||
REVENUE | 2.1 | 891,422 | 711,902 |
External expenses | 2.2 | (174,375) | (185,683) |
Taxes and duties | 2.3 | (6,230) | (5,394) |
Personnel expenses | (627,617) | (466,978) | |
Net depreciation and provisions | 2.4 | (25,647) | (9,900) |
Other current expenses | (2,157) | (1,925) | |
Other current income | 2.5 | 3,411 | 5,186 |
Income from equity affiliates | 1,209 | 1,621 | |
CURRENT OPERATING PROFIT | 60,017 | 48,829 | |
Free shares and stock options | 3.8 | (3,393) | (3,743) |
RECURRING OPERATING PROFIT | 56,625 | 45,086 | |
Other non-current income and expenses | 2.6 | (11,522) | (7,997) |
OPERATING PROFIT | 45,103 | 37,089 | |
Income from cash and cash equivalents | 2.7 | 148 | 129 |
Cost of gross financial debt | 2.7 | (8,126) | (8,264) |
COST OF NET FINANCIAL DEBT | (7,978) | (8,135) | |
Other financial income and expenses | 2.7 | (198) | (1,289) |
PROFIT BEFORE TAX | 36,926 | 27,665 | |
Tax expense | 2.8 | (10,633) | (7,088) |
CONSOLIDATED NET INCOME | 26,293 | 20,577 | |
Non-controlling interests | (40) | (1,926) | |
GROUP SHARE OF NET PROFIT | 26,254 | 18,650 | |
Earnings per share | €1.31 | €0.95 | |
Diluted earnings per share | €1.31 | €0.93 | |
Weighted average number of ordinary shares outstanding | 20,033,086 | 19,665,442 | |
Weighted average number of ordinary shares plus potential dilutive shares | 20,082,061 | 20,015,882 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | Note no. | 30 June 2019 | 30 June 2018 |
in thousands of euros | |||
CONSOLIDATED NET INCOME | 26,293 | 20,577 | |
Actuarial gains and losses on pension obligations | 3.9 | (1,687) | 269 |
Tax effect of items not to be recycled to profit or loss in subsequent periods | 475 | (84) | |
Items not to be recycled to profit or loss in subsequent periods | (1,212) | 185 | |
Gains and losses on hedging instruments | 3.10 | 266 | 223 |
Change in translation differences | 665 | (588) | |
Tax effect of items to be recycled to profit or loss in subsequent periods | (69) | (63) | |
Items to be recycled to profit or loss in subsequent periods | 861 | (427) | |
CONSOLIDATED COMPREHENSIVE INCOME | 25,943 | 20,334 | |
Non-controlling interests | 39 | 1,747 | |
Group share | 25,903 | 18,587 |
2019 HALF-YEARLY FINANCIAL REPORT | 3 |
A - 2019 HALF-YEARLY FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
ASSETS | Note no. | 30 June 2019 | 30 June 2018 |
in thousands of euros | |||
Goodwill | 3.1 | 361,293 | 360,847 |
Intangible assets | 3.2 | 20,412 | 19,990 |
Tangible assets | 3.2 | 93,701 | 91,160 |
Rights of use - IFRS 16 | 3.3 | 155,674 | - |
Non-current financial assets | 2.5 | 38,842 | 40,340 |
Securities of affiliated companies and joint ventures | 47,439 | 46,230 | |
Other non-current assets | 3.4 | 35,098 | 31,109 |
Deferred tax assets | 34,800 | 34,092 | |
Non-current assets | 787,259 | 623,767 | |
Inventories and work in progress | 3.5 | 9,359 | 12,716 |
Trade receivables | 302,589 | 261,908 | |
Other receivables | 3.6 | 94,563 | 86,112 |
Cash and cash equivalents | 3.7 | 187,320 | 271,785 |
Current assets | 593,831 | 632,520 | |
TOTAL ASSETS | 1,381,090 | 1,256,289 | |
LIABILITIES | Note no. | 30 June 2019 | 31 Dec. 2018 |
in thousands of euros | |||
Share capital | 3.8 | 31,047 | 31,047 |
Share premium | 3.8 | 656 | 656 |
Consolidation reserves | 209,857 | 176,520 | |
Group share of net profit | 26,254 | 50,145 | |
Group share of equity | 267,813 | 258,368 | |
Non-controlling interests | 344 | 305 | |
Shareholders' equity | 268,157 | 258,673 | |
Non-current provisions | 3.9 | 28,731 | 26,689 |
Non-current financial liabilities | 3.10 | 472,704 | 479,860 |
Non-current IFRS 16 lease liabilities | 3.10 | 128,700 | - |
Deferred tax liabilities | 14,511 | 13,667 | |
Non-current liabilities | 644,646 | 520,215 | |
Current provisions | 3.9 | 2,905 | 4,307 |
Current financial liabilities | 3.10 | 83,479 | 71,155 |
Current IFRS 16 lease liabilities | 3.10 | 28,769 | - |
Trade payables | 102,379 | 118,055 | |
State - income taxes | 5,350 | 7,822 | |
Tax and social security liabilities excluding income tax | 3.11 | 198,068 | 212,806 |
Other liabilities | 47,338 | 63,255 | |
Current liabilities | 468,287 | 477,401 | |
TOTAL LIABILITIES | 1,381,090 | 1,256,289 |
4 | 2019 HALF-YEARLY FINANCIAL REPORT |
A - 2019 HALF-YEARLY FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
CONSOLIDATED STATEMENT OF CASH FLOWS | Section | 30 June 2019 | 30 June 2018 |
in thousands of euros | |||
Consolidated net income | 26,293 | 20,577 | |
Reintegration of expenses (+) or elimination of income (-) connected to depreciation and impairment | 25,962 | 9,439 | |
(excluding working capital) | |||
Elimination of income from equity affiliates | (1,209) | (1,621) | |
Dividends received by equity affiliates | - | 857 | |
Reintegration of tax expenses (+) or elimination of tax income (-) | 10,727 | 7,090 | |
Reintegration of expenses (+) or elimination of income (-) calculated under IFRS (1) | 3,669 | 2,464 | |
Reintegration of expenses (+) or elimination of income (-) from net disposals | 2.7 | (151) | (1,903) |
Reintegration of expenses (+) or elimination of income (-) associated with net financial debt | 7,978 | 8,363 | |
Cash flow before net interest expenses and taxes | 73,270 | 45,265 | |
Tax paid | 4.1 | (8,981) | (6,167) |
Change in net working capital | (101,011) | (40,308) | |
Net cash flow from operating activities | (36,722) | (1,209) | |
Acquisitions of fixed assets | 3.2 | (14,873) | (18,777) |
Disposals of fixed assets | 537 | 570 | |
Change in financial assets | 4.2 | 1,330 | (1,630) |
Impact of changes in the scope of consolidation | (14,217) | (20,844) | |
Net cash flow from investment activities | (27,223) | (40,679) | |
Dividends paid to shareholders of the parent company | 4.3 | - | - |
Purchase of treasury shares | 3.10 | (3,859) | - |
Proceeds from new borrowings | 10,000 | 304 | |
Repayment of loans | 3.10 | (6,894) | (102,496) |
Repayment of IFRS 16 lease liabilities | 3.10 | (13,848) | - |
Net interest received | 148 | 129 | |
Net interest paid | (6,314) | (8,561) | |
Net cash flow from financing activities | (20,767) | (110,624) | |
Impact of changes in foreign currency exchange rates | 247 | (189) | |
CHANGE IN CASH AND CASH EQUIVALENTS | (84,465) | (152,702) | |
Cash, cash equivalents and bank overdrafts at the start of the year | 271,785 | 430,892 | |
Cash, cash equivalents and bank overdrafts at year end | 187,320 | 278,191 | |
CHANGE IN CASH AND CASH EQUIVALENTS | (84,465) | (152,702) |
(1) Expenses calculated on the basis of IFRS consist of the valuation of stock options and free shares (IFRS2) and the capitalisation of loan issue expenses.
2019 HALF-YEARLY FINANCIAL REPORT | 5 |
6
REPORT FINANCIAL YEARLY-HALF 2019
Number of shares | Share | Share | Consolidated | Profit | Translation | Group share | Non- | Consolidated | |||
Amounts in thousands of euros | Components | Treasury | Outstanding | for | |||||||
capital | premium | reserves | the | adjustments | of equity | controlling | shareholders' | ||||
of equity | shares | shares | period | interests | equity | ||||||
Shareholders' equity as at 1 January 2018 | 20,291,990 | 626,263 | 19,665,728 | 31,047 | - | 162,394 | 39,253 | (938) | 231,756 | 34,501 | 266,258 |
Income for the period | - | - | - | - | - | - | 18,650 | - | 18,650 | 1,926 | 20,577 |
Other comprehensive income | - | - | - | - | - | 291 | - | (354) | (63) | (179) | (243) |
Consolidated comprehensive income | - | - | - | - | - | 291 | 18,650 | (354) | 18,587 | 1,747 | 20,334 |
Change in the share capital of the parent | - | - | - | - | - | - | - | - | - | - | - |
company | |||||||||||
Purchase of own shares | - | - | - | - | - | - | - | - | - | - | - |
Change in the scope of consolidation | - | - | - | - | - | (2,357) | - | - | (2,357) | - | (2,357) |
Appropriation of earnings | - | - | - | - | - | 39,253 | (39,253) | - | - | - | - |
Dividends | - | - | - | - | - | (13,768) | - | - | (13,768) | - | (13,768) |
Impact of free shares and stock options | - | - | - | - | - | 2,907 | - | - | 2,907 | - | 2,907 |
Other changes | - | 285 | (285) | - | - | (6) | - | - | (8) | - | (8) |
Shareholders' equity as at 30 June 2018 | 20,291,990 | 626,548 | 19,665,443 | 31,047 | - | 188,714 | 18,650 | (1,292) | 237,119 | 36,249 | 273,368 |
Shareholders' equity as at 1 January 2019 | 20,291,990 | 650,960 | 19,641,031 | 31,047 | 656 | 178,275 | 50,145 | (1,755) | 258,368 | 305 | 258,673 |
Income for the period | - | - | - | - | - | - | 26,254 | - | 26,254 | 40 | 26,293 |
Other comprehensive income (1) | - | - | - | - | - | (1,015) | - | 665 | (350) | (0) | (351) |
Consolidated comprehensive income | - | - | - | - | - | (1,015) | 26,254 | 665 | 25,903 | 39 | 25,943 |
Change in the share capital of the parent | - | - | - | - | - | (0) | - | - | (0) | - | (0) |
company | |||||||||||
Purchase of own shares | - | 61,445 | (61,445) | - | - | (3,859) | - | - | (3,859) | - | (3,859) |
Change in the scope of consolidation | - | - | - | - | - | (0) | - | - | (0) | - | (0) |
Appropriation of earnings | - | - | - | - | - | 50,145 | (50,145) | - | - | - | - |
Dividends | - | - | - | - | - | (14,026) | - | - | (14,026) | - | (14,026) |
Impact of free shares and stock options | - | (421,459) | 421,459 | - | - | 1,610 | - | - | 1,610 | - | 1,610 |
Other changes | - | (32,042) | 32,042 | - | - | (184) | - | - | (186) | - | (186) |
Shareholders' equity as at 30 June 2019 | 20,291,990 | 258,904 | 20,033,086 | 31,047 | 656 | 210,945 | 26,254 | (1,090) | 267,813 | 344 | 268,157 |
(1) As at 30 June 2019, the amount of actuarial gains and losses was €(4,057) thousand, and that of hedging reserves was €(332) thousand.
EQUITY CONSOLIDATED IN CHANGES OF STATEMENT
STATEMENTS FINANCIAL YEARLY-HALF 2019 - A
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
These notes contain additional information regarding the consolidated balance sheet, the total of which is €1,381,090 thousand, and the consolidated income statement, which shows a Group share of comprehensive income of €25,903 thousand.
Such information is only included when its importance is material.
Unless otherwise stated, all figures are expressed in thousands of euros.
The Board of Directors of the AKKA Technologies Group approved the financial statements on 4 September 2019.
AKKA Technologies' business operations:
AKKA ranks as the European leader in engineering consulting and R&D services in the mobility sector. As an innovation accelerator for its clients, AKKA supports leading industry players in the automotive, aerospace, rail and life sciences sectors throughout the life cycle of their products A dynamic force in innovation for its clients, AKKA offers them all the benefits of its unique dual expertise in both engineering and state-of-the-art digital technologies (AI, ADAS, IoT, Big Data, robotics, embedded computing, machine learning, etc.).
Founded in 1984, AKKA has a strong entrepreneurial culture and is pursuing its fast-paced growth and international development in line with its CLEAR 2022 strategic plan. With over 20,000 employees, who are passionate about technology and dedicated to advancing the future of industry, the Group recorded revenues of €1.5 billion in 2018.
The company's registered office is located at 143 avenue Louise, 1050 Brussels, Belgium.
AKKA Technologies is listed on Euronext Paris - Segment A - ISIN code: FR0004180537.
Significant events and transactions during the first half:
Not applicable.
2019 HALF-YEARLY FINANCIAL REPORT | 7 |
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01
CONSOLIDATED FINANCIAL STATEMENTS
1. SCOPE AND CONSOLIDATION METHODS
1.1 Reporting standards
The interim condensed consolidated financial statements of the AKKA Technologies Group are prepared in accordance with the standards, amendments and interpretations issued by the IASB (International Accounting Standards Board) and adopted by the European Union as of the reporting date.
The standards, amendments and interpretations used to prepare the consolidated financial statements for the six months to 30 June 2019 and comparative data for 2018 are those published in the Official Journal of the European Union (OJEU) before 30 June 2019 and whose application was mandatory as of that date.
These standards are available on the European Commission website at the following address: https://ec.europa.eu/info/ business-economy-euro/company-reporting-and-auditing/company-reporting/financial-reporting_fr
The interim condensed consolidated financial statements of the AKKA Technologies Group are prepared in accordance with IAS 34 "Interim Financial Reporting", the IFRS framework adopted in the European Union for interim financial reporting.
These interim consolidated financial statements have been prepared and presented in condensed form. The notes cover the significant features of the half-year, and should be read in conjunction with the consolidated financial statements for the year ended 31 December 2018 included in the registration document filed with the French financial markets authority (Autorité des Marchés Financiers - AMF) on 30 April 2019, and available on the company's website, at www.akka-technologies.com, in the investors area, under "Access all financial reports".
1.2 New IFRS standards and interpretations
1.2.1 IFRS 16 - Leases
IFRS 16 "Leases", issued by the IASB in 2016 and adopted by the European Union in November 2017, is applicable for financial years beginning on, or after, 1 January 2019.
Before that date, each lease was classified as either an operating lease or a finance lease, with a specific accounting treatment for each category.
Under IFRS 16, for leases not subject to an exemption under the standard, lessees are now required to recognise as:
- Assets, a depreciable Right of Use;
- Liabilities, a Lease Liability which corresponds to the present value of future payments.
The lease term is defined on a contract-by-contract basis and corresponds to the firm period of the commitment taking into account any optional periods that are reasonably certain to be exercised.
Lease payments for low-value assets (less than USD 5,000) or a short-term lease (less than 12 months) were recognised directly as expenses.
In addition, the following simplification measures were applied at the transition date:
- Leases with a residual term of less than 12 months as of 1 January 2019, are not recognised as an asset and a liability;
- The discount rates applied at the transition date are based on the Group's marginal borrowing rate. These discount rates were determined with respect to the remaining terms of leases from the date of first-time application, namely 1 January 2019, and also to the geographical area:
Europe
- < 3 years: 1.00%
- 3 to 6 years: 1.50%
- 6 to 9 years: 2.00%
- > 9 years: 2.60%
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01
CONSOLIDATED FINANCIAL STATEMENTS
North America
- 0 to 6 years: 3.90%
- > 6 years: 4.10%
1.2.2 Impacts of IFRS 16 and comparability of financial statements at opening
The Group leases its offices in most of the cities where it operates. The leases that come under the scope of IFRS 16 also apply to vehicles and certain computer equipment.
ASSETS | 31 Dec. 2018 | First-time | 1 Jan. 2019 |
in thousands of euros | application of IFRS 16 | ||
Goodwill | 360,847 | - | 360,847 |
Intangible assets | 19,990 | - | 19,990 |
Tangible assets | 91,160 | - | 91,160 |
Rights of Use (IFRS 16) | - | 166,113 | 166,113 |
Non-current financial assets | 40,340 | - | 40,340 |
Securities of affiliated companies and joint ventures | 46,230 | - | 46,230 |
Other non-current assets | 31,109 | - | 31,109 |
Deferred tax assets | 34,092 | - | 34,092 |
Non-current assets | 623,767 | 166,113 | 789,880 |
Inventories and work in progress | 12,716 | - | 12,716 |
Trade receivables | 261,908 | - | 261,908 |
Other receivables | 86,112 | - | 86,112 |
Cash and cash equivalents | 271,785 | - | 271,785 |
Current assets | 632,520 | - | 632,520 |
TOTAL ASSETS | 1,256,289 | 166,113 | 1,422,401 |
LIABILITIES | 31 Dec. 2018 | First-time | 1 Jan. 2019 |
in thousands of euros | application of IFRS 16 | ||
Share capital | 31,047 | - | 31,047 |
Share premium | 656 | - | 656 |
Consolidation reserves | 176,520 | - | 176,520 |
Group share of net profit | 50,145 | - | 50,145 |
Group share of equity | 258,368 | - | 258,368 |
Non-controlling interests | 305 | - | 305 |
Shareholders' equity | 258,673 | - | 258,673 |
Non-current provisions | 26,689 | - | 26,689 |
Non-current financial liabilities | 479,860 | - | 479,860 |
Non-current IFRS 16 lease liabilities | - | 139,344 | 139,344 |
Deferred tax liabilities | 13,667 | - | 13,667 |
Non-current liabilities | 520,215 | 139,344 | 659,559 |
Current provisions | 4,307 | - | 4,307 |
Current financial liabilities | 71,155 | - | 71,155 |
Current IFRS 16 lease liabilities | - | 26,769 | 26,769 |
Trade payables | 118,055 | - | 118,055 |
State - income taxes | 7,822 | - | 7,822 |
Tax and social security liabilities excluding income tax | 212,806 | - | 212,806 |
Other liabilities | 63,255 | - | 63,255 |
Current liabilities | 477,401 | 26,769 | 504,170 |
TOTAL LIABILITIES | 1,256,289 | 166,113 | 1,422,401 |
Rental expenses for leases that come under the scope of IFRS 16 are now replaced by depreciation expenses and financial expenses; other contracts are still recognised as external expenses as previously.
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CONSOLIDATED FINANCIAL STATEMENTS
The expenses published in note 9.2 of the 2018 consolidated financial statements are reconciled with the new accounting treatment as follows:
in thousands of euros | 31 Dec. 2018 |
Rental expenses 31 December 2018 | (55,550) |
Rental expenses adjusted under IFRS 16: | (32,682) |
2018 lease payments | |
Rental expenses not adjusted under IFRS 16: | (9,370) |
IT and software leases | |
Real estate rental expenses | (4,819) |
Vehicles - commitment < 12 months | (4,721) |
Real estate - commitment < 12 months | (2,586) |
Others | (1,372) |
The impact on the main income statement aggregates at 30 June 2019 is as follows:
in thousands of euros | Excluding IFRS 16 | 30 June 2019 | Published |
IFRS 16 impact | |||
Operating profit | 59,168 | 849 | 60,017 |
Financial income/(expense) | (6,519) | (1,657) | (8,176) |
Consolidated net income | 27,101 | (808) | 26,293 |
1.2.3 Other IFRS standards and interpretations
IFRIC 23 interpretation "Uncertainty over Income Tax Treatments", published by the IASB in June 2017, is applicable for financial years beginning on, or after, 1 January 2019.
This interpretation of IAS 12 "Income Taxes" clarifies the treatment of any situation of uncertainty regarding the acceptability of a tax treatment relating to income tax. The first-time application of this standard had no significant impact on the Group's financial statements.
The other standards applicable from 1 January 2019 had no significant impact on the Group's financial statements:
- Amendments to IFRS 9 "Prepayment Features with Negative Compensation"
- Amendments to IAS 28 "Long-Term Interests in Associates and Joint Ventures"
- Annual improvements to IFRS standards, 2015-2017 cycle
Amendments to IFRS 3 "Business Combinations" & IFRS 11 "Joint Arrangements"
Amendments to IAS 12 "Income Taxes"
Amendments to IAS 23 "Borrowing Costs" - Amendments to IAS 19 "Plan Amendment, Curtailment or Settlement"
The Group has elected not to early-adopt the standards, interpretations and amendments adopted by the European Union before 30 June 2019, for which early application was possible, but which become effective after that date. This relates primarily to the following standards:
- IFRS 17 "Insurance Contracts"
- IFRS 3 amendments "Change in Definition of a Business"
- IAS 1 and IAS 8 amendments "Change in Definition of 'Material' "
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CONSOLIDATED FINANCIAL STATEMENTS
1.3 Management estimates
The preparation of consolidated financial statements under IFRS requires the use of estimates and assumptions that have an impact on the financial statements. These estimates and assumptions are based on information available when they are drawn up. Estimates may be revised in the event of change in the circumstances on which they were based. Actual results may therefore differ from the initial estimate.
The consolidated financial statements for the year were prepared taking into account the prevailing macroeconomic environment and the financial market parameters available as of the reporting date, in particular for the estimates below.
The use of estimates impacts the following information in particular:
- the assumptions used for asset impairment testing,
- the calculation of deferred tax assets,
- the assessment of earnings based on the state of progress of contracts,
- the measurement of the expense related to the allocation of free and performance shares,
- the measurement of provisions and pension commitments,
- the estimate of projects eligible for research tax credits.
1.4 Consolidation methods
The companies over which the Group directly or indirectly exercises exclusive control are consolidated by the full consolidation method.
Exclusive control is assessed in accordance with the criteria set out in IFRS 10 (power over the relevant activities, exposure to variable returns and ability to use power to affect the amount of returns). This is presumed to be the case in companies in which the Group directly or indirectly holds at least 50% of voting rights. Immediately exercisable potential voting rights, including those held by another entity, are taken into account in assessing control.
The analysis of joint arrangements pursuant to the criteria set out in IFRS 11 has resulted in the identification of joint ventures, but no joint activities. Joint ventures are consolidated by the equity method.
As at 30 June 2019, similarly to 30 June 2018, only one company was consolidated by the equity method (notes 1.6 and 2.5).
1.5 Significant accounting policies
1.5.1 Impairment of non-currentnon-financial assets
Impairment testing is performed at the close of the financial year, as described in Note 2.10 to the consolidated financial statements for the year ending 31 December 2018, which is included in the 2018 Registration Document. Impairment testing was only performed as of 30 June in cases where indications of impairment existed as of 31 December 2018 or were identified during the half-year to 30 June 2019.
The application of these policies did not result in the recognition of impairment in the six months under review.
1.5.2 Tax expense
In accordance with IAS 34, tax expense on earnings is recognised in the interim financial statements on the basis of the best estimate of the weighted average annual income tax rate expected for the full year. Deferred tax assets are recognised only when their recovery is deemed likely.
1.5.3 Subsidies
In accordance with IAS 20, subsidies (including research tax credits) are deducted from the expense to which they relate.
The amount recognised in regard to the six months to 30 June 2019 is calculated based on the estimated eligible expenses.
1.5.4 Leases
Leases are recognised on the balance sheet at the outset of the lease at the present value of future payments. These leases are recognised under "Lease liabilities (IFRS 16)" on the liabilities side, offset by "Rights-of-use IFRS 16" on the assets side.
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CONSOLIDATED FINANCIAL STATEMENTS
They are amortised over the term of the lease, which is typically the fixed period of the lease unless there is a stated intention to renew or terminate. In the Income Statement, depreciation and amortisation expenses are recognised in the operating result and interest expenses in the financial income. The tax effect of this consolidation restatement is accounted for through the recognition of deferred taxes. Leases of low-value assets (less than USD 5,000) or short-term leases (less than 12 months) are recognised directly as expenses.
1.6 Scope of consolidation
Companies | % | % | Consolidation | Country in which the |
control | interest | method (1) | company is based | |
AKKA TECHNOLOGIES SE | - | - | CE | Belgium |
AEROCONSEIL SAS | 100% | 100% | FC | France |
AKKA ENERGY SAS | 100% | 100% | FC | France |
AKKA I&S SAS | 100% | 100% | FC | France |
AKKA INFORMATIQUE ET SYSTEMES SAS | 100% | 100% | FC | France |
AKKA INGENIERIE PRODUIT SAS | 100% | 100% | FC | France |
AKKA LIFE SCIENCE SAS | 100% | 100% | FC | France |
AKKA MANAGER SARL | 100% | 100% | FC | France |
AKKA RESEARCH SAS | 100% | 100% | FC | France |
AKKA SERVICES SAS | 100% | 100% | FC | France |
EKIS FRANCE SAS | 100% | 100% | FC | France |
EKIS SAS | 100% | 100% | FC | France |
ELRON CONSULTING SARL | 100% | 100% | FC | France |
ERDIMAT SAS | 100% | 100% | FC | France |
AKKA HIGH TECH SAS | 100% | 100% | FC | France |
MATIS HOLDING SAS | 100% | 100% | FC | France |
MODELISATION ASSISTANCE TECHNIQUE INFORMATIQUE SCIENTIFIQUE (MATIS) SA | 100% | 100% | FC | France |
OPERANTIS SAS | 100% | 100% | FC | France |
OPERANTIS-SI SARL | 100% | 100% | FC | France |
REAL FUSIO SAS | 100% | 100% | FC | France |
SOLIANTIS SARL | 100% | 100% | FC | France |
AKKA DEUTSCHLAND GmbH | 100% | 100% | FC | Germany |
AKKA EMV GmbH | 100% | 100% | FC | Germany |
AKKA GERMANY GmbH | 100% | 100% | FC | Germany |
AKKA SERVICES GmbH | 100% | 100% | FC | Germany |
ATP AUTOMOTIVE TESTING PAPENBURG GmbH | 100% | 100% | FC | Germany |
ELEKTRONISCHE FAHRWERKSYSTEME GmbH | 51% | 51% | EM | Germany |
AKKA MANAGEMENT SERVICES GmbH (formerly GIGATRONIK HOLDING GmbH) | 100% | 100% | FC | Germany |
AKKA DNO GmbH (formerly GIGATRONIK KOLN GmbH) | 100% | 100% | FC | Germany |
AKKA DSO GmbH (formerly GIGATRONIK MUNCHEN GmbH) | 100% | 100% | FC | Germany |
AKKA DSW GmbH (formerly GIGATRONIK STUTTGART GmbH) | 100% | 100% | FC | Germany |
AKKA Consulting GmbH (formerly MBTECH CONSULTING GmbH) | 100% | 100% | FC | Germany |
AKKA EMC GmbH (formerly MBTECH EMC GmbH) | 100% | 100% | FC | Germany |
AKKA GmbH & Co. KGaA (formerly MBTECH GROUP GmbH & Co. KGaA) | 100% | 100% | FC | Germany |
AKKA Verwaltungs GmbH (formerly MBTECH VERWALTUNGS - GmbH) | 100% | 100% | FC | Germany |
AKKA CONCEPT GmbH (formerly PROCEDA GmbH) | 100% | 100% | FC | Germany |
SYSTEM DESIGN GmbH | 100% | 100% | FC | Germany |
2019 HALF-YEARLY FINANCIAL REPORT | 13 |
01
CONSOLIDATED FINANCIAL STATEMENTS
Companies | % | % | Consolidation | Country in which the |
control | interest | method (1) | company is based | |
AKKA Austria GmbH (formerly GIGATRONIK Austria GmbH) | 100% | 100% | FC | Austria |
AKKA BELGIUM SA | 100% | 100% | FC | Belgium |
AKKA FINANCE SPRL | 100% | 100% | FC | Belgium |
AKKA INTERNATIONAL SA | 100% | 100% | FC | Belgium |
AKKA GROUPE AMERIQUE DU NORD INC | 100% | 100% | FC | Canada |
AKKA TECHNOLOGIES BEIJING Ltd. | 100% | 100% | FC | China |
ERLKONIG MANAGEMENT CONSULTING BEIJING Ltd. | 100% | 100% | FC | China |
MB SIM TECHNOLOGY Co. Ltd. | 100% | 100% | FC | China |
AKKA CONGO SA | 70% | 70% | FC | Congo |
AKKA MIDDLE EAST DMCC | 100% | 100% | FC | Dubai |
AKKA MIDDLE EAST LLC | 100% | 100% | FC | Qatar |
AKKA TECHNOLOGIES SPAIN SL | 100% | 100% | FC | Spain |
ALL ENERGY CORIALIS WEST AFRICA SL | 51% | 51% | FC | Spain |
CORIALIS ANGOLA SL | 100% | 100% | FC | Spain |
EDELWAY SPAIN SL | 100% | 100% | FC | Spain |
AKKA DEVELOPMENT UK LTD | 100% | 100% | FC | Great Britain |
AKKA RESOURCING LIMITED * | 100% | 100% | FC | Great Britain |
MBTECH HUNGARY ENGINEERING AND CONSULTING LLC | 100% | 100% | FC | Hungary |
BERTONE DIGITAL MOBILITY SRL | 100% | 100% | FC | Italy |
AKKA ENERGY Srl | 100% | 100% | FC | Italy |
AKKA ITALIA SRL | 100% | 100% | FC | Italy |
CTP SYSTEM SRL | 100% | 100% | FC | Italy |
AKKA JAPAN K.K | 100% | 100% | FC | Japan |
AKKA DEVELOPMENT SARL | 100% | 100% | FC | Luxembourg |
AKKA NETHERLANDS BV | 100% | 100% | FC | The Netherlands |
AEROCONSEIL PACIFIC SAS | 100% | 100% | FC | French Polynesia |
MBTECH BOHEMIA s.r.o. | 100% | 100% | FC | Czech Republic |
AKKA ROMSERV SRL | 100% | 100% | FC | Romania |
AKKA TECHNOLOGIES SINGAPORE LTD | 100% | 100% | FC | Singapore |
AKKA SLOVAKIA s.r.o. | 100% | 100% | FC | Slovakia |
AKKA SWITZERLAND SA | 100% | 100% | FC | Switzerland |
EDELWAY AG | 100% | 100% | FC | Switzerland |
THE AKKADEMY SWITZERLAND SA | 100% | 100% | FC | Switzerland |
AKKA DIGITAL SWISS AG (formerly GIGATRONIK TECHNOLOGIES AG) | 100% | 100% | FC | Switzerland |
LEORA HUMAN CAPITAL SA | 100% | 100% | FC | Switzerland |
AKKA TECHNOLOGIES MUHENDISLIK VE DANISMANLIK Limited Sirketi LLC | 100% | 100% | FC | Turkey |
MBTECH MUHENDISLIK VE DANISMANLIK Limited Sirketi LLC | 100% | 100% | FC | Turkey |
AKKA DEV US INC | 100% | 100% | FC | USA |
AKKA GROUP NORTH AMERICA Inc. | 100% | 100% | FC | USA |
MBTECH NORTH AMERICA Inc. | 100% | 100% | FC | USA |
MB-TECHNOLOGY NA LLC. | 100% | 100% | FC | USA |
PDS TECH Inc. | 100% | 100% | FC | USA |
(1) CE = Consolidating Entity; FC = Full Consolidation; EM = Equity Method
Changes in the scope of consolidation in the first half of 2019
There was no significant change in the scope of consolidation in the first half of 2019.
Changes in percentage interests
There was no significant change in percentage interests held in the first half of 2019.
14 | 2019 HALF-YEARLY FINANCIAL REPORT |
02
CONSOLIDATED FINANCIAL STATEMENTS
2. NOTES TO THE INCOME STATEMENT
2.1 Segment information
Segment information is provided pursuant to IFRS 8. The information provided in the segment breakdown is based on the internal reporting used by the chief operating decision-maker (Group Executive Committee) to assess the performance of the various segments.
As of the end of June 2019, the Group had identified 4 segments within the meaning of IFRS 8 on segment reporting, representing geographic regions, namely France, Germany, North America and International (excluding Germany and North America).
With the exception of France, Germany and the United States, no country has reached the threshold of 10% in terms of revenue or profit cited in IFRS 8.
June 2019 - in thousands € | France | Germany | International | North America | Other | TOTAL |
INCOME STATEMENT | 330,823 | 255,393 | 152,771 | 152,435 | (0) | 891,422 |
External revenue | ||||||
% of revenue | 37.1% | 28.7% | 17.1% | 17.1% | 0.0% | 100.0% |
Inter-segment revenue | 9,029 | 6,068 | 11,575 | 319 | 26,222 | 53,212 |
Revenue | 339,852 | 261,461 | 164,346 | 152,753 | 26,222 | 944,634 |
Operating income and expenses | (305,930) | (235,705) | (135,787) | (146,875) | (7,108) | (831,404) |
Operating profit | 24,893 | 19,688 | 16,984 | 5,560 | (7,108) | 60,017 |
Free shares and stock options | (3,393) | |||||
Other non-current income and expenses | (11,522) | |||||
Cost of net financial debt | (7,978) | |||||
Other financial income and expenses | (198) | |||||
Tax expense | (10,633) | |||||
Net profit | 26,293 | |||||
June 2018 - in thousands € | France | Germany | International | North America | Other | TOTAL |
INCOME STATEMENT | 306,042 | 251,970 | 143,810 | 10,078 | 1 | 711,902 |
External revenue | ||||||
% of revenue | 43.0% | 35.4% | 20.2% | 1.4% | 0.0% | 100.0% |
Inter-segment revenue | 10,092 | 3,665 | 7,755 | 1,172 | 20,037 | 42,720 |
Revenue | 316,134 | 255,635 | 151,565 | 11,250 | 20,038 | 754,622 |
Operating income and expenses | (284,143) | (233,465) | (128,430) | (9,966) | (7,070) | (663,074) |
Operating profit (3) | 21,901 | 18,504 | 15,380 | 112 | (7,069) | 48,829 |
Free shares and stock options | (3,743) | |||||
Other non-current income and expenses | (7,997) | |||||
Cost of net financial debt | (8,135) | |||||
Other financial income and expenses | (1,289) | |||||
Tax expense | (7,088) | |||||
Net profit | 20,577 | |||||
June 2019 - in thousands € | France | Germany | International | North America | Other | TOTAL |
REVENUE BY ACTIVITY | 252,383 | 240,431 | 87,599 | 135,896 | - | 716,310 |
Mobility | ||||||
Others | 78,439 | 14,962 | 65,172 | 16,539 | - | 175,112 |
External revenue | 330,823 | 255,393 | 152,771 | 152,435 | - | 891,422 |
June 2018 - in thousands € | France | Germany | International | North America | Other | TOTAL |
REVENUE BY ACTIVITY | 231,260 | 238,959 | 76,120 | 9,973 | - | 556,311 |
Mobility | ||||||
Others | 74,783 | 13,011 | 67,690 | 105 | 1 | 155,591 |
External revenue | 306,043 | 251,970 | 143,810 | 10,078 | 1 | 711,902 |
2019 HALF-YEARLY FINANCIAL REPORT | 15 |
02
CONSOLIDATED FINANCIAL STATEMENTS
June 2019 - in thousands € | France | Germany | International | North | Other | TOTAL |
America | ||||||
BALANCE SHEET | 211,601 | 288,274 | 99,052 | 76,801 | 37,888 | 713,616 |
Segment assets (1) | ||||||
Segment financial liabilities (2) | 59,723 | 78,865 | 20,613 | 16,507 | 537,945 | 713,652 |
- Goodwill, intangible assets and property, plant and equipment, IFRS 16 rights of use, other non-current assets accounted for by the equity method
- Financial liabilities including IFRS 16 leases
December 2018 - in thousands of euros | France | Germany | International | North | Other | TOTAL |
America | ||||||
BALANCE SHEET | 151,280 | 214,076 | 80,322 | 71,454 | 32,204 | 549,335 |
Segment assets (1) | ||||||
Segment financial liabilities | 259 | 4,927 | 2,659 | 18,476 | 524,694 | 551,015 |
(1) Goodwill, intangible assets and property, plant and equipment, other non-current assets accounted for by the equity method | ||||||
2.2 External expenses |
Amounts in thousands of euros | 30 June 2019 | 30 June 2018 |
Sub-contracting | (72,781) | (73,497) |
Other external expenses* | (101,594) | (112,186) |
External expenses | (174,375) | (185,683) |
* Including restatement of the IFRS 16 rental expense of €16,236 thousand in 2019.
2.3 Employees
2.3.1 Workforce of consolidated companies
Workforce at end of period | Average workforce | |||
30 June 2019 | 30 June 2018 | 30 June 2019 | 30 June 2018 | |
France | 7,721 | 7,595 | 7,861 | 7,399 |
Germany | 4,911 | 4,880 | 4,944 | 4,874 |
International | 3,907 | 3,844 | 3,974 | 3,756 |
North America | 3,991 | 214 | 3,935 | 198 |
Others | 94 | 86 | 92 | 86 |
TOTAL | 20,624 | 16,619 | 20,806 | 16,313 |
2.3.2 Personnel expenses | ||||
Amounts in thousands of euros | 30 June 2019 | 30 June 2018 | ||
Wages and salaries | (502,827) | (358,832) | ||
Social security contributions | (124,790) | (108,144) | ||
Personnel expenses | (627,617) | (466,976) |
Subsidies were deducted from personnel expenses in the amount of €11,239 thousand for the period ending 30 June 2019, compared with €15,917 thousand in the period ending 30 June 2018.
This lower amount is as a result of changes to the French tax credit for competitiveness and employment (CICE) reducing social security contributions in 2019.
16 | 2019 HALF-YEARLY FINANCIAL REPORT |
02
CONSOLIDATED FINANCIAL STATEMENTS
2.4 Depreciation and provisions
Amounts in thousands of euros | 30 June 2019 | 30 June 2018 |
Net depreciation, amortisation and impairment of assets | (11,629) | (10,202) |
Depreciation, amortisation and impairment of rights of use - IFRS 16 | (15,387) | - |
Net impairment of current assets | (225) | (460) |
Provisions for risks and expenses | 1,594 | 762 |
Net depreciation and provisions | (25,647) | (9,900) |
2.5 Investments in associates
Elektronische Fahrwerksysteme GmbH (EFS) is jointly owned by AKKA DSO GmbH (51%) and AEV GmbH (subsidiary of the Audi Group) (49%); it has been accounted for by the equity method at 51% since 1 January 2017.
Amounts in thousands of euros | EFS | |
Percentage interest in equity associates | 51% | |
1 January 2019 * | 46,230 | |
Share of net income of equity associates | 1,209 | |
Dividends received from associates | - | |
30 June 2019 | 47,439 | |
* of which goodwill allocated to associates | ||
2.6 Other non-current income and expenses | ||
30 June 2019 | 30 June 2018 | |
Acquisitions, integrations and restructuring | 886 | 374 |
Transformation and strategic programmes | 4,977 | 4,601 |
Launch of new activities | 3,216 | 2,132 |
Others | 2,445 | 890 |
Other non-current income and expenses | 11,523 374 | 7,997 |
Other non-current income and expenses consist primarily of expenses intended to consolidate and accelerate the Group's profitable and sustainable development over the next few years, as defined in its strategic plan.
2.7 Financial income 2.7.1 Cost of net financial debt
Amounts in thousands of euros | 30 June 2019 | 30 June 2018 |
Income from cash and cash equivalents | 148 | 129 |
Interest expenses | (6,471) | (8,264) |
Interest expenses - IFRS 16 | (1,655) | - |
Cost of gross financial debt | (8,126) | (8,264) |
COST OF NET DEBT | (7,978) | (8,135) |
2.7.2 Other financial income and expenses
Amounts in thousands of euros | 30 June 2019 | 30 June 2018 |
Other financial income and expenses | (198) | (1,289) |
2019 HALF-YEARLY FINANCIAL REPORT | 17 |
02
CONSOLIDATED FINANCIAL STATEMENTS
2.8 Income tax
Amounts in thousands of euros | 30 June 2019 | 30 June 2018 |
Current tax | (6,713) | (3,658) |
CVAE (French business tax based on added value) | (3,920) | (3,430) |
Total corporation tax | (10,633) | (7,088) |
In accordance with IAS 34, the current tax expense for the period under review was recognised on the basis of the average effective rate expected over the full year in 2019.
18 | 2019 HALF-YEARLY FINANCIAL REPORT |
03
CONSOLIDATED FINANCIAL STATEMENTS
3 NOTES TO THE BALANCE SHEET
3.1 Goodwill
Cash-generating unit | 30 June 2019 | Change in the scope | Translation | Other changes | 31 Dec. 2018 |
of consolidation | adjustments | ||||
France | 131,291 | - | - | - | 131,291 |
Germany | 97,455 | - | - | - | 97,455 |
USA | 70,516 | - | 431 | - | 70,085 |
Italy | 32,011 | - | - | - | 32,011 |
Benelux | 14,117 | - | - | - | 14,117 |
Spain | 10,610 | - | - | - | 10,610 |
Switzerland | 5,193 | - | 16 | - | 5,176 |
Romania | 100 | - | (2) | - | 102 |
Amount of goodwill | 361,293 | - | 446 | - | 360,847 |
The implementation of the procedures defined in Note 1.5.1 did not result in the recognition of any impairment in the financial statements for the six months to 30 June 2019, as was the case for the year ending 31 December 2018.
No significant acquisitions were made during the first half of 2019.
The amount of goodwill related to earn-out payments and associated holdbacks came to €3,327 thousand, offsetting a debt to the vendors recorded in the "Other liabilities" line of the balance sheet for the same amount.
3.2 Intangible assets and property, plant and equipment
Amounts in thousands of euros | Gross | Depreciation on | Total |
intangible fixed assets | intangible fixed assets | ||
1 January 2018 | 60,819 | (43,451) | 17,368 |
Changes in the scope of consolidation | 1,450 | (950) | 500 |
Acquisitions | 5,707 | - | 5,707 |
Transfers | (1,126) | 1,091 | (35) |
Depreciation | - | (5,149) | (5,149) |
Translation adjustments | (38) | 29 | (9) |
Other changes | 1,618 | (11) | 1,607 |
31 December 2018 | 68,430 | (48,440) | 19,990 |
Changes in the scope of consolidation | - | - | - |
Acquisitions | 3,217 | - | 3,217 |
Disposals | (49) | 47 | (2) |
Depreciation and amortisation | - | (2,941) | (2,941) |
Translation adjustments | 26 | (19) | 6 |
Other changes | (262) | 404 | 142 |
30 June 2019 | 71,361 | (50,949) | 20,412 |
Amounts in thousands of euros | Gross | Depreciation on | Total |
intangible fixed assets | intangible fixed assets | ||
1 January 2018 | 201,236 | (118,309) | 82,927 |
Changes in the scope of consolidation | 11,737 | (9,094) | 2,643 |
Acquisitions | 29,286 | - | 29,286 |
Transfers | (27,583) | 22,060 | (5,524) |
Depreciation | - | (16,532) | (16,532) |
Translation adjustments | (326) | 174 | (152) |
Other changes | (1,637) | 148 | (1,489) |
31 December 2018 | 212,713 | (121,553) | 91,160 |
Changes in the scope of consolidation | (18) | 18 | - |
Acquisitions | 11,656 | - | 11,656 |
Disposals | (1,619) | 1,235 | (384) |
Depreciation and amortisation | - | (8,626) | (8,626) |
Translation adjustments | 255 | (138) | 117 |
Other changes | (235) | 13 | (222) |
30 June 2019 | 222,752 | (129,052) | 93,701 |
2019 HALF-YEARLY FINANCIAL REPORT | 19 |
03
CONSOLIDATED FINANCIAL STATEMENTS
3.3 Rights of use (IFRS 16)
Analysis of rights of use per category of underlying assets:
Amounts in thousands of euros | Real | Vehicle | Other | Total |
estate | rights of | rights of | ||
rights of use | use | use | ||
31 December 2018 | - | - | - | - |
First-time application of IFRS 16 | 154,858 | 10,646 | 608 | 166,113 |
Changes in the scope of consolidation | - | - | - | - |
Acquisitions | 3,193 | 1,895 | - | 5,088 |
Disposals | - | (1) | - | (1) |
Depreciation and amortisation | (12,729) | (2,526) | (131) | (15,385) |
Translation adjustments | (27) | 1 | (0) | (26) |
Other changes | (91) | (24) | - | (115) |
30 June 2019 | 145,204 | 9,992 | 477 | 155,674 |
3.4 Other non-current assets
This item mainly includes receivables in respect of R&D subsidies for the amount of €35,098 thousand (compared with €31,109 thousand as at 31 December 2018).
3.5 Trade receivables and related accounts
Amounts in thousands of euros | 30 June 2019 | 31 Dec. 2018 |
Work in progress for customers | 124,964 | 131,696 |
Unbilled work | 186,518 | 139,100 |
Gross trade receivables | 311,481 | 270,796 |
Provisions | (8,892) | (8,888) |
Net trade receivables | 302,589 | 261,908 |
Unmatured receivables assigned to the factor and derecognised totalled €251,818 thousand as at 30 June 2019 compared with €208,775 thousand as at 31 December 2018. They represent the total amount of unmatured receivables assigned to the factor and not yet settled by customers, and are recorded as a credit in the trade receivables account.
3.6 Other receivables
Other net receivables amounted to €94,563 thousand as at 30 June 2019 consisting primarily of Treasury claims in the amount of €46,568 thousand.
Other net receivables amounted to €86,112 thousand as at 31 December 2018, including Treasury claims in the amount of €56,055 thousand.
In 2019, as in 2018, following analysis ofthe maturity ofotherreceivables, the portion due in more than one yearhas been reclassified in "Other non-current assets" (see Note 3.4).
3.7 Cash and cash equivalents
This item breaks down as cash in the amount of €187,225 and cash equivalents in the net amount of €95 thousand.
Cash includes funds which were made available by the factor but not used in the amount of €65,859 thousand as at 30 June 2019 (compared with €91,924 thousand as at 31 December 2018).
20 | 2019 HALF-YEARLY FINANCIAL REPORT |
03
CONSOLIDATED FINANCIAL STATEMENTS
3.8 Share capital and share premium
As at 30 June 2019, the share capital of AKKA Technologies comprised 20,291,990 shares with a par value of €1.53 each, or a total of €31,047 thousand, and the share premium stood at €656 thousand. These items varied as follows in the first half of 2019:
Number of | Carrying | Amount | Share | Comment | |
shares | value | of share capital | premium | ||
31 December 2017 | 20,291,990 | 1.53 | 31,047 | - | |
Increase in capital | - | 1.53 | - | 656 | Contribution premium |
31 December 2018 | 20,291,990 | 1.53 | 31,047 | 656 | |
Capital increase | - | 1.53 | - | - | |
30 June 2019 | 20,291,990 | 1.53 | 31,047 | 656 |
Potentially dilutive instruments:
As part of the performance share plan introduced by the Combined Shareholders' Meeting of 16 June 2016, and put in place by AKKA Technologies SE's Board of Directors in 2016 and 2017, 392,898 shares were transferred to 248 beneficiaries in April 2019. This volume corresponds to an allocation of 117% of the initial objectives, based on performance criteria (operational profitability and cash generation).
Moreover, on 20 March 2018, the Board of Directors approved the allocation of 2 tranches of 10,000 shares to former shareholders of recently acquired companies in order to streamline integration into the Group. This allocation is subject to the condition of continued presence within the Group until 31 December 2019 for the 2nd tranche.
On 6 December 2018, the Board of Directors also approved the allocation of 20,000 shares to an employee, to be allocated in 2022 subject to cumulative conditions of continued presence in the workforce and the achievement of performance criteria, with a cap set at 200%.
Issuer | AKKA Technologies | AKKA Technologies |
Decision of the Board of Directors | 20/03/2018 | 06/12/2018 |
Type of plan | Allocation of free shares | Allocation of performance shares |
Maximum number of shares that can be allocated | 10,000 | 40,000 |
Number of shares to be allocated in the event of objectives being fully reached | 2,975 | 20,000 |
Estimated number of shares to be allocated | 2,975 | 20,000 |
Means of settlement | Issuance of securities | Issuance of shares |
End of the vesting period | 31/12/2019 | 31/03/2022 |
Conditions for beneficiaries leaving the Group's service | loss | loss |
Share price on allocation (EUR) | 46.30 | 49.10 |
Shares lost as at 30/06/2019 | - | - |
Lock-up period | None | None |
On 15 June 2017, the Shareholders' Meeting approved the principle of stock option plans in a decision confirmed by the Shareholders' Meeting held on 22 February 2018; as such, two plans are being drawn up as at 30 June 2019:
Date allocated by the Board | 19/11/2018 | Stock options |
07/12/2018 | ||
Number of remaining options | 20,000 | 6,000 |
Potential number of corresponding shares | 20,000 | 6,000 |
First date it can be exercised | 01/01/2022 | 01/01/2022 |
Last date it can be exercised | 30/06/23 | 30/06/23 |
First possible disposal date | 01/01/22 | 01/01/22 |
Strike price in euros (per option) | 62.40 | 58.70 |
2019 HALF-YEARLY FINANCIAL REPORT | 21 |
03
CONSOLIDATED FINANCIAL STATEMENTS
The company is not subject to any specific regulatory or contractual obligations in respect of its share capital. The Group has no specific management policy in respect of share capital. The choice between funding through debt or capital increase is made depending on the prospective transaction. Shareholders' equity monitored by the Group contains the same components as consolidated equity.
Dilutive instruments represented 0.24% of share capital as at 30 June 2019.
3.9 Current and non-current provisions
Amounts in thousands of euros | Current | Non-Current | ||
Maturity | 30 June 2019 | 31 Dec. 2018 | 30 June 2019 | 31 Dec. 2018 |
Provisions for litigations and risks | 2,228 | 3,264 | 7,365 | 7,471 |
Provisions for pensions | - | - | 19,409 | 17,268 |
Provisions for taxes | - | - | 1,099 | 1,099 |
Provisions for other expenses | 677 | 1,043 | 858 | 851 |
Total | 2,905 | 4,307 | 28,731 | 26,689 |
Change in provisions
Amounts in thousands of euros | Litigations and risks | Pensions | Taxes | Other provisions | Total |
1 January 2018 | 11,540 | 16,849 | 1,099 | 1,968 | 31,457 |
Changes in the scope of consolidation | - | - | - | - | - |
Allowances | 1,628 | 1,291 | - | 251 | 3,170 |
Reversals of used provisions | (2,275) | (167) | - | (313) | (2,755) |
Reversals of unused provisions | (169) | (143) | - | (11) | (323) |
Translation adjustments | (1) | - | - | (1) | (3) |
Actuarial gains (losses) | - | (563) | - | - | (563) |
Reclassifications and other | 12 | - | - | - | 12 |
31 December 2018 | 10,735 | 17,268 | 1,099 | 1,894 | 30,996 |
Changes in the scope of consolidation | - | - | - | - | - |
Allowances | 543 | 713 | - | 337 | 1,593 |
Reversals of used provisions | (1,638) | (230) | - | (696) | (2,564) |
Reversals of unused provisions | (50) | - | - | - | (50) |
Translation adjustments | 4 | - | - | - | 4 |
Actuarial gains (losses) | - | 1,687 | - | - | 1,687 |
Reclassifications and other | - | (29) | - | - | (29) |
30 June 2019 | 9,592 | 19,410 | 1,099 | 1,535 | 31,636 |
3.10 Financial liabilities
The financial liabilities shown below exclude the debt resulting from external growth described in 3.11.
Amounts in thousands of | Borrowings and | Leases | IFRS 16 lease liabilities | Total financial liabilities* | ||||
euros | other financial liabilities | |||||||
Maturity | 30 June 2019 | 31 Dec. 2018 | 30 June 2019 | 31 Dec. 2018 | 30 June 2019 | 31 Dec. 2018 | 30 June 2019 | 31 Dec. 2018 |
Current (less than one year) | 82,833 | 70,299 | 646 | 856 | 28,769 | - | 112,248 | 71,155 |
1 to 5 years | 336,553 | 343,493 | 1,478 | 1,490 | 76,070 | - | 414,101 | 344,983 |
More than 5 years | 132,500 | 132,500 | 2,173 | 2,377 | 52,630 | - | 187,303 | 134,877 |
Total | 551,886 | 546,292 | 4,297 | 4,723 | 157,469 | - | 713,652 | 551,015 |
*Including the IFRS 16 lease liability
The portion of financial liabilities due within one year appears on the balance sheet under "current financial liabilities". The portion due in more than a year appears under "non-current financial liabilities".
22 | 2019 HALF-YEARLY FINANCIAL REPORT |
03
CONSOLIDATED FINANCIAL STATEMENTS
Change in financial liabilities between 31 December 2018 and 30 June 2019 breaks down as follows:
Amounts in thousands of euros | 1 January | Cash variations | Translation | Non-cash variations | Other non- | 30 June | ||
Incr. | Decr. | Change in | Change of | |||||
2019 | adjustments | fair value | method | cash var. | 2019 | |||
Loans from credit institutions | 545,624 | 10,000 | (6,449) | 166 | (208) | - | 2,082 | 551,215 |
Restatement of leasing contracts | 4,723 | - | (426) | - | - | - | - | 4,297 |
Bonds | - | - | - | - | - | - | - | - |
Other borrowings | 668 | - | (19) | 2 | - | - | 20 | 671 |
Financial liabilities | 551,015 | 10,000 | (6,894) | 168 | (208) | - | 2,102 | 556,183 |
Cash equivalents | (243) | - | 148 | - | - | - | - | (95) |
Cash | (271,542) | - | 84,317 | - | - | - | - | (187,225) |
Cash and cash equivalents | (271,785) | - | 84,465 | - | - | - | - | (187,320) |
Net debt excluding IFRS 16 lease liability | 279,230 | 10,000 | 77,571 | 168 | (208) | - | 2,102 | 368,863 |
IFRS 16 lease liabilities | - | - | (13,848) | (22) | 141 | 166,113 | 5,086 | 157,470 |
Net debt | 279,230 | 10,000 | 63,723 | 146 | (67) | 166,113 | 7,188 | 526,333 |
Note that on 30 October 2014, the Group further restructured its medium-term financing by placing a Schuldscheindarlehen- type loan (placement subject to German law). The €140 million placement matures in five to seven years. It includes a fixed tranche and a variable tranche, fully hedged by a swap contract. At the end of December 2017, partial payments were made for all variable parts, i.e. €67.0 million for the 5-year tranche and €13.5 million for the 7-year tranche.
On 31 October 2017, the Group issued a further Schuldscheindarlehen-type loan for an amount of €450 million, comprising 5 fixed and variable tranches of 5-, 7- and 10-year maturities, with an average cost of financing slightly below 1.5%.
With regard to short-term financing:
- on 30 June 2016, AKKA Technologies signed a new five-year €200 million revolving credit facility, replacing the 2012 contract;
- AKKA Technologies also implemented a €300 million NEU CP (Negotiable European Commercial Paper) in the first quarter of 2017.
As at 30 June 2019, €25 million were drawn against this NEU CP facility.
Pledges and guarantees amounted to €0 as of 30 June 2019, compared with €110,002 as of 31 December 2018.
- In the context of acquisitions, no vendor guarantee nor any collateral clause covering assets and liabilities through sureties is in force as of 30 June 2019;
- With the application of IFRS 16, off-balance sheet commitments related to real estate lease guarantees are no longer required, since these commitments are included in liabilities on the balance sheet.
As of 30 June 2019, the covenants negotiated with the Group's banks were as follows:
Leverage Ratio: Consolidated Net Debt/Consolidated EBITDA < 3.5x as of 30 June and 31 December each year;
Gearing Ratio: Consolidated Net Debt/Equity < 1.5 x as at 30 June and 31 December each year.
These two covenants are defined according to the IFRS standards applicable at the date of signature of the bank contracts, therefore excluding the impact of IFRS 16. The Group was in compliance with both covenants as at 30 June 2019.
Hedging instruments
On 30 October 2014, the Group signed an interest rate hedging contract on the Schuldschein loan to protect itself against a possible increase in 6-month Euribor. The derivative financial instrument is a SWAP contract with the following characteristics:
SWAP at a fixed rate of 0.465% (matures on 30 October 2019) for an amount of €67.0 million;
SWAP at a fixed rate of 0.710% (matures on 30 October 2021) for an amount of €13.5 million;
2019 HALF-YEARLY FINANCIAL REPORT | 23 |
03
CONSOLIDATED FINANCIAL STATEMENTS
This hedging instrument meets the definition of a cash flow hedge; the hedging qualification was maintained given that the variable rate tranches of the new Schuldschein loan have the same underlying characteristics and the same interest payment dates as the previous one, with higher notional amounts. The change in its fair value was recorded in the amount of €208 thousand in other comprehensive income as at 30 June 2019.
3.11 Other liabilities
Amounts in thousands of euros | 30 June 2019 | 31 Dec. 2018 |
Other liabilities related to external growth | 3,327 | 17,510 |
Deferred income | 17,576 | 31,698 |
Dividends payable | 14,026 | - |
Other items | 12,410 | 14,047 |
Total other liabilities | 47,338 | 63,255 |
24 | 2019 HALF-YEARLY FINANCIAL REPORT |
04
CONSOLIDATED FINANCIAL STATEMENTS
4. NOTES TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
4.1 Change in net working capital
Amounts in thousands of euros | 30 June 2019 | 30 June 2018 |
Inventories | 3,358 | (1,934) |
Trade receivables | (39,686) | (21,277) |
Other receivables | (36,088) | (9,656) |
Trade payables | (15,998) | 12,453 |
Tax and social security liabilities | (17,697) | (20,609) |
Other liabilities (excluding debt related to acquisitions of fixed assets) | 4,019 | 716 |
Change in net working capital | (102,092) | (40,308) |
4.2 Impact of changes in the scope of consolidation
The impact of changes in the scope of consolidation corresponds to earn-out and purchase price payments net of cash contributed by the acquired companies.
4.3 Dividends
Dividends in respect of 2018 due in July 2019 amounted to €14,026 thousand or €0.70 per share, compared with €13,768 thousand or €0.70 per share paid in 2018.
2019 HALF-YEARLY FINANCIAL REPORT | 25 |
05
CONSOLIDATED FINANCIAL STATEMENTS
5. SUBSEQUENT EVENTS
On 1 August 2019, AKKA Technologies took out a new €300 million syndicated loan with 4 participating banks. This new syndicated loan matures in 5 years with two possible one-year extensions and will be used primarily to finance the Group's acquisitions.
26 | 2019 HALF-YEARLY FINANCIAL REPORT |
06
CONSOLIDATED FINANCIAL STATEMENTS
6. OTHER INFORMATION
6.1 Financial instruments
As at 30 June 2019, there was no reclassification between the various categories of financial instruments.
6.2 Information on related parties
The following companies meet the definition of related parties within the meaning of IAS 24:
- Idéactive Events (event organisation);
- Saône Valley, Andromède Valley, Ralosa (property leasing);
- BMC Management & Investment, HR Management & Investment, Valvest Management (professional assistance and consulting services).
As transactions with these three companies are not considered material, they are not disclosed in these notes.
6.3 Information relating to risk management
In the course of their operations, companies within the Group are subject to audit by tax authorities and social security bodies. The Group is subject to regular audits of all of its accounting, tax (income tax, subsidies, research tax credits, VAT, etc.) and social security (social security contributions and taxes levied on wages) reporting obligations, for subsidiaries operating both in France and internationally.
Ongoing disputes with the tax administration relate chiefly to research tax credits ("CIR") and, in particular, to the manner in which expenses incurred by approved sub-contracting companies for the determination of their own Research Tax Credit are taken into account.
The Group has made provisions to cover all the ongoing checks as explained in note 9.3 of the notes to the 2018 consolidated financial statements.
The Group and its advisers believe that the changes in the various procedures that took place in the first half of 2019 do not call into question the risk analysis performed as of 31 December 2018.
2019 HALF-YEARLY FINANCIAL REPORT | 27 |
B - HALF-YEARLY ACTIVITY REPORT
Significant events over the last six months
The first half of 2019 was marked by the following events:
1. Revenue and margins
The Group recorded revenue of €891.4 million during the first half of the year. Sales rose +25.2% in the first half of 2019, 5.9% of which was organic (+6.6% in Q1 and +5.1% in Q2) thanks to strong growth in the France Business Unit and AKKA North America.
- The France Business Unit recorded strong economic growth of 9.0% in the first half of the year, with revenue of €330.8 million. Demand is strong in all sectors of activity. Growth was sustained in particular by the numerous digital projects won in the automotive, aerospace and rail sectors and this should continue to be the case over the next few quarters. After having significantly improved its staff activity rate (excluding holidays) in H1 and reaching its optimum in May, the BU is once again stepping up its recruitment momentum to foster future growth. The operating margin rose to 7.5% in the first half of 2018 (7.2% in H1 2018). The increase in revenue per employee offset the inherent weakness of the staff activity rate in the first quarter. The rise in the staff activity rate since late May and the strong growth momentum bode well for margins in the second half of the year.
- The Germany Business Unit recorded first-half revenue of €255.4 million, with economic growth of 2.1%. This growth does not reflect the expected growth momentum. The seasonal impact is strong this year due to a low number of working days in H1, and activity has been duly slowed down with the establishment of the new organisation and the adoption of the AKKA one brand strategy. Improved productivity at the centres of excellence and an increased revenue per employee helped offset the negative seasonal impact. In total, the BU's operating margin increased by 40 basis points to reach 7.7% over the half-year. The BU should gradually, over the second half of the year, benefit from its close relations with the main German OEMs and from the expected acceleration in the digital sector.
- Pro forma growth in North America (including PDS Tech) accelerated in the first half to 26.1%. The BU recorded revenue of €152.4 million in the first half of the year. AKKA North America is enjoying strong demand from US and European customers in the United States. Strong growth with Boeing, Honeywell, United Technologies, Daimler and Porsche confirms the relevance of the Group's offer for its US and European customers. The BU's profitability is improving significantly in line with the Group's objectives. It stands at 3.6% for the first half of the year. This improvement is driven by strong organic growth, better renegotiation of certain contracts and the initial effects of the Group's transformation plan. It confirms the Group's objective of achieving an operating margin of 7% in 2020 and 10% in 2022.
•The Group's International activities recorded revenue of €152.8 million the first half of the year, reflecting organic growth of 5.8%. The major hubs that make up the International BU, Northern Europe, Southern Europe and Asia are experiencing strong growth, masked by the specific difficulties faced in Switzerland and in the Energy sector in Italy. With adjustments made for Switzerland and for the Energy business in Italy, international activities posted a 10% growth in revenue, in line with the BU's historic growth. The BU's operating margin continues to bounce back and stands at 11.1% in the first half-year, up from 10.7% in H1 2018 (excluding North America).
2. Operating profit
Operating profit increased by 22.9% to €60 million (€48.8 million in the first half of 2018). The operating profit fell by 20 basis points to 6.7% compared with 6.9% in H1 2018. Excluding PDS Tech, the operating margin from ordinary activities rose by 40 basis points to 7.3%.
3. Cost of net financial debt
The cost of net financial debt stood at €8.0 million as at 30 June 2019, stable compared with 30 June 2018. It includes, in particular, €5.6 million in loan interest (compared with €7.3 million in 2018), a reduction due to repayment of the €100 million bond at the end of June 2018. Interest charges of €1.7 million were recognised as a result of the new IFRS 16 standard.
28 | 2019 HALF-YEARLY FINANCIAL REPORT |
B - HALF-YEARLY ACTIVITY REPORT
4. Net income
The Group's share of consolidated net income was up 40.8%. It amounted to €26.3 million in H1 2019 compared with €18.7 million in H1 2018. The Group's consolidated net profitability stands at 2.9% (2.6% in the first half of 2018).
Main transactions with related parties
See Note 6.2 to the interim condensed financial statements above.
Significant events since 30 June 2019
See Note 5 to the interim condensed financial statements above.
Outlook
2019: the strong momentum in the first half of 2019 affirms the Group's objectives for the 2019 financial year: organic growth above 6%, operating margin from ordinary activities of 8% and free cash flow greater than or equal to 5%.
CLEAR 2022 will enable the company to benefit from the growth offered by the digital revolution and ensure continued improvement in financial performance, reaching the following targets by 2022:
Revenue of €2.5 billion
Current operating profit of €250 million
€150 million in free cash flow
Risks and uncertainties in the second half
See Note 6.3 to the interim condensed financial statements above.
No new risks liable to have a significant impact on the second half of 2019 have been identified since the filing of the 2018 Registration Document.
2019 HALF-YEARLY FINANCIAL REPORT | 29 |
C - STATEMENT BY THE PERSON RESPONSIBLE FOR THE HALF-YEARLY FINANCIAL REPORT
I the undersigned, Mauro RICCI, Chairman and Chief Executive Officer of the AKKA Technologies Group, declare that to the best of my knowledge:
- The consolidated financial statements for the six months to 30 June 2019 were prepared in accordance with IFRS and give a true and fair view of the financial position and consolidated results of the AKKA Technologies Group and its subsidiaries included in the consolidation;
•The management report for the year ending 30 June 2019 gives a true and fair view of the activities, results and position of the AKKA Technologies Group and its subsidiaries included in the consolidation, as well as a description of the main risks and uncertainties facing the AKKA Technologies Group.
Brussels, 4 September 2019
Mauro Ricci
Chairman and CEO
30 | 2019 HALF-YEARLY FINANCIAL REPORT |
D - REPORT OF THE STATUTORY AUDITOR ON THE LIMITED REVIEW OF THE CONDENSED HALF-YEARLY CONSOLIDATED FINANCIAL STATEMENTS OF AKKA TECHNOLOGIES SE FOR THE SIX MONTHS TO 30 JUNE 2019
Introduction
We have reviewed the accompanying consolidated balance sheet of AKKA Technologies SE (the "Company") and its subsidiaries as of 30 June 2019, and the related consolidated statements of income, changes in equity and cash flows for the six- month period ended on that date together with the explanatory notes, commonly referred to as the "condensed half-yearly consolidated financial statements". These financial statements show a consolidated balance sheet total of €1,381,090 thousand and consolidated net income for the period of €26,293 thousand. The company's Board of Directors is responsible for the preparation and presentation of these condensed half-yearly consolidated financial statements in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union. Our responsibility is to express a conclusion on these condensed half-yearly consolidated financial statements based on our limited review.
Scope of the limited review
We conducted our limited review in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A limited review of the interim financial information consists of conducting interviews, primarily with the staff of the company responsible for financial and accounting matters, and applying analytical and other review procedures. The scope of this work is substantially less than that of an audit conducted in accordance with International Standards on Auditing (ISA), and consequently does not provide us with the assurance that we have identified all material matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our limited review, we have not identified any matters causing us to believe that the accompanying condensed half-yearly consolidated financial statements for the six-month period ended 30 June 2019 have not been prepared in all material respects in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union.
Brussels, 4 September 2019
Ernst & Young Réviseurs d'Entreprises SCCRL Statutory Auditor
represented by
Eric Van Hoof
Partner*
- Acting for and on behalf of an SPRL [public limited liability company] 20EVH0022
2019 HALF-YEARLY FINANCIAL REPORT | 31 |
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AKKA Technologies SE published this content on 07 January 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 January 2020 17:22:01 UTC