HCO High Co

Paris, 31 August 2016

EXCELLENT PERFORMANCE IN H1 2016

Further acceleration of growth

• Q2 2016 gross profit of €22.56 M, up 15.4% LFL¹.
• H1 2016 gross profit of €42.95 M, up 14.8% LFL.

Sharp growth in earnings

• Headline PBIT² of €10.52 M, up 41.1%.
• Attributable net income up 40% to €6.42 M.

Strong cash generation

• Net cash³ of €54.26 M at 30 June 2016, up €13.49 M compared to 31 December 2015.

Continued substantial acceleration in Digital

• Ongoing sharp growth of 32% in Digital (up 23.3% in H1 2015).
• Share of digital business rose from 38.4% in H1 2015 to 44.7% in H1 2016.

Improved business and earnings growth outlook for 2016

• Growth in gross profit revised from > 6% to > 8% LFL.
• Growth in headline PBIT before the cost of the performance share plans⁴ revised from >= 10% to >= 20%.

¹ LFL: On a like-for-like basis and at constant exchange rates.
² Headline PBIT: Profit before interest, tax and restructuring costs. Operating margin: Headline PBIT/Gross profit.
³ Net cash (or net cash surplus): Cash and marketable securities less gross current and non-current financial liabilities.
⁴ Before the cost of the new performance share plans.
⁵ At 31 December 2015.

Didier Chabassieu, Chairman of the Management Board, stated, "I'm proud of the work accomplished by all our teams over the past three years, which has resulted in this excellent first half of 2016 and our successful shift to Digital and Data businesses. This outstanding performance in the first half of the year means that we can expect 2016 to be a great year."

FINANCIAL PERFORMANCE IN H1 2016

Following the strong like-for-like growth in Q1 and Q2 of 14.1% and 15.4% respectively, H1 2016 gross profit totalled €42.95 M, rising significantly by 14.8% on a like-for-like basis. This increase was driven by the growth in Digital (up 32%) and offline businesses (up 3.9%) over the first half of the year.

The further acceleration of growth in France of 19.5% like for like to €27.96 M€ in H1 2016, remains driven by Digital (up 39.8%).

Growth in international business continued in H1 2016 (up 6.9% like for like to €14.99 M):

• Benelux confirmed its strong growth trend (up 7.4% in H1 2016).
• Spain grew 7.4% in H1 2016 thanks to Digital.
• Italy's mobile businesses, launched in early 2015, are showing growth.
• Business in the United Kingdom under-performed the rest of the Group (up 0.4% like for like in H1 2016).

Headline PBIT showed strong growth of 41.1% to €10.52 M in H1 2016:

• Business growth in France brought about a significant rise in headline PBIT (up 53%).
• International headline PBIT posted further growth (up 9.8%), with a 4.9% rise in headline PBIT in Benelux.

The growth in headline PBIT, combined with a slight drop in restructuring costs (€0.19 M in H1 2016 versus €0.26 M in H1 2015), led to a robust 43.4% increase in current operating income to €10.33 M.

The share of income of associates virtually broke even in H1 2016 (-€0.01 M), mainly due to the small profit posted by Central European businesses.

As a result, attributable net income rose dramatically, by 40% to €6.42 M in H1 2016.

The Group recorded half-year EPS of €0.62, up 40.4% from H1 2015.

Net cash rose substantially, up €13.49 M to €54.26 M at 30 June 2016. Half-year cash flow climbed 31.9% to €7.25 M, while net working capital resources improved by €11.29 M. Excluding net working capital resources of €58.03 M, net debt fell €2.16 M from 31 December 2015 to €3.77 M.

HIGHLIGHTS

Digital strategy

Gross profit in Digital soared 32% in H1 2016. Digital businesses represented 44.7% of the Group's gross profit in H1 2016, as against 41.3% at the end of 2015. The share of Digital business in France came to 54.2% of gross profit in H1 2016, already exceeding the 50% target.

This confirms that the Group is on its way towards its goal of exceeding 50% of gross profit in Digital as of 2017.

1. Significant growth in fully digital DRIVE TO STORE solutions

The strong performance of mobile businesses (gross profit up 33% in H1 2016) was mainly reflected in the dramatic 92% increase in the volume of SMS and push notifications.

Brand content and targeted media on social networks grew 12% in H1 2016.

Two innovations were also launched in the first half of the year:

• Load to Card: an innovation that received an LSA 2016 award for cross-channel solutions. The service is used by members of the Ma vie en couleurs loyalty programme (Mondelez and Unilever) to download deals directly onto their Cora loyalty card.
• Clicoupon©: an innovation that promotes impulse purchases by offering discount coupons from brands directly on the Click & Collect website chosen by consumers.

In early 2016, the Group acquired CAPITALDATA, a provider of big data integration and development solutions used to automate and hyper-personalise advertising and promotional messages, giving the Group a new performance driver, personalisation. This innovative company puts together targeting campaigns for advertisers including voyageprive.com, Nestlé, Parc Asterix and, more recently, Franprix. CAPITALDATA posted 18% growth in gross profit in H1 2016.

2. Continued digitisation of IN-STORE solutions

Digital services continue to grow in the area of IN-STORE solutions that are still predominantly "paper-based". The proportion increased from 19.6% in H1 2015 to 23.6% in H1 2016.

The point-of-sale paper coupon and media businesses rose slightly in France and Belgium.
Contracts with the Group's retail partners remained in effect in the first half of the year in France and Belgium.

On Click & Collect websites, HighCo is developing a unique media and targeted coupon offer deployed across 80% of the market.

The Group continues to innovate with the development of digital NFC terminals in Leclerc stores used to download Load to Card discount coupons, a solution which won a 2016 POPAI Award.

3. DATA solutions

The share of digital DATA solutions rose from 33.1% in H1 2015 to 35.3% in H1 2016.

The volume of paper coupons cleared rose slightly in France and Belgium.

The volume of dematerialised coupons cleared, particularly with online food shopping websites in France, grew sharply.

OTHER HIGHLIGHTS

People

As part of its employee incentive and loyalty policy, the Management Board decided to introduce new performance share plans with the following terms:

• Grant of a maximum of 650,000 performance shares (5.8% of share capital);
• Share grants to corporate officers, managers and certain categories of employees;
• Vesting based on criteria of annual performance and company service from 2016 to 2020;
• Vesting of performance shares drawn from treasury shares to avoid diluting share capital;
• Impact on 2016 headline PBIT estimated at €1.4 M.

Shareholders

On the date of this press release, the Management Board decided to increase the Group's share capital by incorporation of reserves to reward shareholders for their loyalty and to increase the liquidity of the shares. This capital increase took the form of a one-for-one bonus issue of shares granted to all shareholders.

A press release with further details on this operation is available on the Company's website (www.highco.com), under Finance>Regulated Information/Statement released by the issuers regarding the permanent information obligation.

2016 GUIDANCE

HighCo has raised its business and growth earnings outlook for 2016:

• Growth in 2016 gross profit revised from more than 6% to more than 8% LFL (2015 gross profit: up 5.5% like for like);
• Rise in headline PBIT before the performance share plans⁴ revised from equal to or more than 10% to equal to or more than 20% (2015 headline PBIT: €11.15 M);
• Increase in operating margin before the performance share plans⁴ revised from equal to or more than 100 bp to equal to or more than 120 bp (2015 operating margin: 14.8%);
• Growth in EPS before the performance share plans⁴ revised from equal to or more than 10% to equal to or more than 20% (2015 EPS: €0.65).

As a reminder, the Group's financial resources will be allocated as a priority to:

• Capital expenditure, for between €1.5 M and €2 M (€1.58 M in 2015, €0.73 M in H1 2016);
• Share buybacks, for between €0.5 M and €1 M (€0.5 M in 2015, €0.42 M in H1 2016);
• Continued acquisitions and investments in Digital and Data businesses.

The share of the Group's Digital business is expected to exceed 45% of gross profit in 2016 and its target of 50% as of 2017 (41.3% in 2015, 44.7% in H1 2016).

A conference call with analysts is scheduled on Thursday, 1 September 2016 at 11 a.m. (CEST). The presentation will be available online on the Company's website www.highco.com.

About HighCo

Since its creation, HighCo has placed innovation at the heart of its values, offering its clients - brands and retailers - Intelligent Marketing Solutions to influence shopper behaviour with the right deal, in the right place, at the right time and on the right channel.
With nearly 900 employees, HighCo operates in 14 countries. HighCo is listed in compartment C of Euronext Paris and in the Gaia Index, a selection of 70 responsible Small and Mid Caps, winning first prize in its category (revenue < €150 M) for 2015.

Your contacts

Cécile Collina-Hue                                             Géraldine Myoux
Deputy Managing Director                                   Press Relations
+33 1 77 75 65 06                                              +33 1 77 75 64 67
comfi@highco.com                                             g.myoux@highco.com

Publications take place after market close.

Conference call on 2016 half-year earnings: Thursday, 1 September 2016 (11 a.m. CEST)
Q3 and 9-month YTD 2016 Gross Profit: Wednesday, 19 October 2016
Q4 2016 Gross Profit: Tuesday, 24 January 2017

HighCo is a component stock of the indices CAC® Small (CACS), CAC® Mid&Small (CACMS) and CAC® All-Tradable (CACT).
ISIN: FR0000054231
Reuters: HIGH.PA
Bloomberg: HCO FP
For further financial information and press releases, go to www.highco.com

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