2005 Results: Recurrent operating margin of 15.3% (16.1% excluding profit sharing)

28/03/06 - Promising outlook for 2006

 

In 2005, Audika Group generated sales of EUR 70.6 million, representing growth of 9.0%, of which 4.3% organic. After a sluggish start to the year due to the impact of one-off external factors (unfavorable climate, system of attending physicians), Audika reaped the rewards of its sales and marketing initiatives in the fourth quarter with a return to buoyant growth of 19.3%, of which nearly 14% organic.

 

At the same time, Audika continued to expand its nationwide network with 26 new centers in 2005 (17 acquired and 9 created). The Group now has a total of 305 centers throughout 75 regional departments in France.

 

In EUR thousands under IFRS	2004	H1 2005	H2 2005	2005
Sales	64,746	35,138	35,445	70,583
Recurring operating income (*)	10,074	5,247	5,552	10,799
Recurring operating margin	15.6%	14.9%	15.7%	15.3%
Operating income	10,028	5,168	5,442	10,61
Group net income	5,89	3,122	3,164	6,286
Net margin	9.1%	8.9%	8.9%	8.9%

(*) Implemented starting in 2005, employee profit sharing had a total impact of EUR 0.6 million on recurring operating in income in 2005 (of which EUR 0.3 million in each half year).

 

 

Improvement in recurring operating margin on a like-for-like basis: 16.1%

 

Despite 2005 being an unusual year, Audika Group managed to improve its margin on a like-for-like basis. Operating margin, published at 15.3%, came out at 16.1% excluding employee profit sharing implemented for the first time in 2005, compared with 15.6% in 2004.

 

This performance, mainly due to a strong second half, is based on a further improvement in gross margin, which stood at 74.3% (versus 73.4% in 2004) and the sound management of expenses.

 

Net income totaled EUR 6.3 million, representing net margin of 8.9%, with shareholders’ equity amounting to EUR 22.0 million at the end of 2005.

 

 

Sharp reduction in gearing, which came out at 72.2%

 

The steady improvement in cash flow, along with the control of the WCR, resulted in improved net gearing, which came out at 72.2% at the end of the year (versus 85.3% in 2004). This performance is especially satisfying as investment, in particular investment in acquisitions, remained strong.

 

 

Maintenance of the dividend payment policy

 

A dividend of EUR 0.17 per share will be proposed at the Shareholders’ Meeting, representing an increase of nearly 11% on 2004.

 

 

Outlook for 2006: ongoing development and optimization of margins

 

Audika, the leading French network in terms of brand awareness, has strong medium-term visibility in its market, primarily due to favorable demographics (impact of the “oldies boom”) and a very low usage rate (15%).

 

In order to benefit fully from this growth, Audika will pursue its aggressive marketing strategy aimed at the general public with a new advertising campaign featuring Robert Hossein. This campaign will be bolstered in centers by the new 10-installment interest-free payment scheme. Audika will also continue to focus on the constant improvement in the quality of its services in order to promote customer loyalty.

 

Building on the strength of the last quarter of 2005, Audika confirmed its sales growth target for 2006 of between 10% and 15% (excluding new acquisitions). The Group also expects this growth to impact its gross margin and cost structure in order to continue improving its recurring operating margin compared with the level reached in the second half of 2005.

 

Audika will also pursue its active strategy of geographic expansion with a medium-term target of 500 centers, despite a still fragmented market with 1,800 independent centers. The Group remains in negotiations with a number of targets but should conclude its first set of acquisitions before the end of the first half of the year.

 

Audika Group will publish its sales for the first quarter of 2006 on April 25, 2006.

 

 

About Audika:

 

With more than 300 centers in 75 different regions and a 13% market share, Audika is the number one network offering hearing correction consulting and solutions in France. Positioned on the market for hearing correction solutions for senior citizens, which is not affected by changes in the economic situation, Audika aims to consolidate its leadership in a sector that remains very highly fragmented. Audika is listed on the Eurolist SMALL 90, compartment B.

 

ISIN FR0000063752-ADI

Reuters DIKA.PA

Bloomberg ADI

Number of shares:

9,450,000



For further information on Audika, please contact: www.audika.com



Audika contact: Alain Tonnard / Etienne Sirand-Pugnet on +33 (0)1 55 37 30 30

Kaparca Finance contact: Guillaume Le Floch on +33 (0)1 72 74 82 25



KAPARCA FINANCE - 28/03/06