Dalenys: Half Yearly Results 2016

Optimal deployment of the 2016 - 2018 strategic plan

• Strong performance in Payment: CA +81%, Run rate¹ on 31st July 2016: €1.9 billion
• First tangible effects of human, technological and product investment

BRUSSELS--(BUSINESS WIRE)--Regulatory News:

Dalenys (Brussels:NYS) (Paris:NYS) (ISIN BE0946620946 -- Mnemo NYS) publishes half yearly results approved by the Board of Directors.

HALF YEARLY ACTIVITY 2016
In thousands of euros	30^th June 2016	30^th June 2015^2	Variation
Dalenys	33,394	22,485	49%
Payment	8,557	4,715	81%
Marketing	2,983	2,742	9%
Telecom	21,854	15,028	45%

Thibaut Faurès Fustel de Coulanges, Chief Executive Officer of Dalenys states, “The first half of 2016 is as we expected. Some years ago we took a bold gamble, launching a technologically advanced payment platform which is now the spearhead of our development and considered to be the leading French FinTech³. This division is growing strongly and the flow coming from major retailers is more than significant. Our Marketing and Telecoms divisions have been the subject of a deep review and will now be developed in terms of the added value that they bring to our Payment offer. Everything is now in place to implement our ‘Puissance 5’ strategic plan, which has an objective of 5 billion in volume for the Payment division in 2018. "

DIVISIONAL OPERATION PERFORMANCE

Payment Division: doubling volumes, in line with strategic objectives

• Strong activity performance

ln the first half of 2016, the Payment division generated a revenue of €8.6 million, a growth of 81% relative to the first half of 2015.

In the second quarter of 2016, with a confidence arising from an excellent contract renewal rate and the increase in volume handled by the majority of existing clients, the Be2bill platform continued with its strong growth momentum and market gains.

Therefore, the revenue collected in the first six months of the year rose to €777 M (€402 M in the second quarter, after €375 M in the first quarter), twice as much as in the first half year 2015 (€389 M). The Run rate (excluding micropayment activities included in the Telecom division) reached €1.9 billion on 31st July 2016, in line with the ‘Puissance 5’ plan.

• Focus on major retailers

In France, 5% of sites account for 85% of total e-commerce sales⁴. Dalenys decided to focus its commercial efforts on these major retailers and, on 30th June 2016, 12 of the 100 leading French e-commerce sites (E-commercemag - June 2016) are already clients.

This proactive, accepted policy of gaining market share is accompanied by a necessary adjustment of tariff in return for volume commitments policy, as had been declared and budgeted for. Thus, the average commission rate rose to 1.1% in the first half of 2016.

• A powerful lever on operating income

The strong increase in turnover has highlighted the Payment division's operational lever on profitability with, in the first half of 2016, a gross margin of 67.8% (vs. 63.0% in the first half of 2015). Therefore, while the operating expenses of this division rose to 36% (€5,466k vs €4,023k in the first half of 2015), to continue and accelerate this process, the Payment division has achieved a modestly positive Current Operating Income in the period (€0.2M), up on the first half of 2015 by €1.5M.

Marketing Division: strong growth in activities in synergy with Payment

Continuing the trend that began in the first quarter of the current financial year, the Marketing division's turnover has risen by 9% in the first half of 2016. It reached €3.0M, boosted by the retargeting activity for which the turnover showed a growth of 36% in comparison with the first half of 2015. This performance is the fruit of the implementation of synergy with the Payment division, and is particularly tied to the success of a new feature, Alerting, which allows for the web user to be informed if a product they have viewed is reduced in price or if new stock has become available.

However, the turnover of the cash back activity was down and corrective measures are already in place, with increased selectivity of contracts and the appointment of the new managing director.

The under-performance of cash back and the refocusing of this activity has had a negative effect on the Marketing division's Current Operating Income, at €-0.8M, against €-0.7M for the first half of 2015.

From this point on, the development of this division will be conducted on the basis of potential synergies with the Payment division. Similarly, management methods will be aligned with the proven methods of the Payment division.

Telecoms Division: independent and selective development, in synergy with Payment

During this half year, in the context of the joint venture announced at the beginning of the year, the business strategy has targeted gaining an increased market share. This project and this strategy are now abandoned in favor of a systematic search for synergies with the Payment Division.

With operational expenses up 77% to € 8.0M (largely due to the increase in commissions operators), of which staffing costs rose by 50% to €1.4M, the Current Operational Expenses of the Telecoms division is negative, at €-0.9M for the first half of 2016 (vs € +0.9M for the first half of 2015).

In the first half of 2016, the Telecoms division had a turnover of €21.9M, a growth of 45% on the same period in 2015, due to an increase in new clients generating significant volumes.

Taking into account the profound changes in the economic model this year, characterised by the structural increase in operators commission rates which has had a negative impact on profitability, Dalenys has decided to take a business approach centered around the client and an increase in ARPU (Average Revenue Per User). In addition the division was reorganised with the setting up of good risk management practices already in place in the Payment division;

DALENYS’S FINANCIAL PERFORMANCE FOR THE FIRST HALF OF 2016
INCOME STATEMENT
INCOME STATEMENT (in thousands of euros)	30th June 2016	30th June 2015 published	30th June 2015 pro forma	Variation pro forma
Revenue	33,394	38,544	22,485	+49%
Gross margin	14,825	21,182	9,912	+50%
As % of the turnover	44.4%	55.0%	44.1%	+0.3 points
Other operating incomes	261	119	118	+120%
Payroll expenses	(7,645)	(7,529)	(6,083)	+26%
Total operating expenses	(17,374)	(19,022)	(12,234)	+42%
Depreciations and amortisations	(957)	(544)	(635)	+51%
Recurring operating income	(3,246)	1,734	(2,839)	14%
As % of the turnover	-9.7%	4.5%	-12.6%	-2.9 points
Operating income	(4,290)	1,692	(2,881)	-49%
As % of the turnover	-12.8%	4.4%	-12.8%
Financial results	294	(12)	-	n/a
Tax on income	851	70	841	+1%
Consolidated net income	(3,145)	1,751	(2,041)	-54%
As % of the turnover	-9.4%	4.5%	-9.1%

Overall, the consolidated turnover for Dalenys for the first half of 2016 rose to €33.4M, an increase of 49% on the same period of 2015 restated for the contribution of the B to C division, which was sold on 30th June 2015.

Gross margin increased slightly to reach 44.4% (vs. 44.1% in the first half of 2015). In line with the ‘Puissance 5’ development plan which anticipates the recruitment of more than 60 staff, an increase in marketing investments and the launch of new offers, the staffing costs rose to 26% and other operational expenses to 66%.

As a consequence and with Current Operational Expenses of the Corporate division of €-1.6M, the company's Current Operational Expenses stood at €3,2M, in line with forecasts.

After non-recurring expenses of €1.0M, tied mainly to an adjustment of the Research Tax Credit, the Operating Income is at €-4.3M.

Finally, as of 30th June 2016, equity stood at €63M and cash at Dalenys, €16.8M, made up of €5.9M of its own cash and €10.9M held for third parties within the payment activity. A credit line of €8M was established during the half year, of which €4M was drawn in May 2016.

PROSPECTS

The achievement of targets set within the ‘Puissance 5’ development plan requires investments carried out during the first half of 2016, not just on the product, marketing and technology, but also on recruitment.

2016 is the first year of ‘Puissance 5’. It is, therefore, as announced, a year of transformation, laying the groundwork for the growth in profitability in 2017 and 2018. The expected growth will allow for better absorption of fixed fees and the mechanical improvement in profitability, as already shown in the first half of 2016 in the Payment division.

As a consequence, Dalenys confirms its aim to achieve organically an annual volume base of 5 billion euros between now and 2018.

Next financial communication:

Publication of 2016 third quarter turnover 7th November 2016 in the morning.

Read the press release on the Dalenys website:

www.dalenys.com/en/news/2016-08-30-half-yearly-results-2016.html

About Dalenys

Founded in 2002 by Jean-Baptiste Descroix-Vernier, Dalenys -NYS- (formerly Rentabiliweb) offers Payment Marketing solutions that aim to increase revenues for online and point-of-sale merchants. These solutions integrate transactional and marketing data to increase the conversion of the customers during their purchasing path. With over 200 employees in France and abroad, publicly traded on Euronext Brussels and Paris (C compartment), the company rigorously applies the ten principles laid out by the UN Global Compact and is eligible to the FCPI investment funds and to the French PEA-PME savings plan.

¹ Run rate: yearly projected turnover based on a given month

² The figures for the first half 2015 pro forma in this document do not include the contribution of the Division B to C, assigned to 30th June 2015, and to provide a comparable basis with the figures for the first half 2016.

³ Source: Frenchweb, June 2016

⁴ Source: Fédération e-commerce et Vente à Distance (FEVAD) [E-commerce and Distance Selling Union] – June 2016