Half-year results in line with targets

26/09/06 - 2006 targets confirmed

 

• Revenue: +12.4%

 

• Recurring operating income: +14.0%

 

Internal growth of 7.7%,ahead of market average

 

Audika Group posted revenue of EUR 39.5 million, up 12.4% on the previous year, with 7.7% of this rise attributable to internal growth. This was well above the average for the market, which remained disrupted in the first quarter by the implementation of the system requiring patients to register their attending physician.

 

In EUR thousands, under IFRS	H1 2005	H1 2006	Change
Revenue	35,138	39,492	+12.4%
Recurring operating income	5,247	5,983	+14.0%
Recurring operating margin	14.9%	15.2%
Operating income	5,168	5,983	+15.8%
Group net income	3,122	3,551	+13.7%
Net margin	8.9%	9.0%

Audika is now reaping the rewards of its aggressive strategy which is based on:

 

• the Group’s number one position in France with over 320 hearing correction centers;

 

• a proven marketing policy which has put Audika Group significantly ahead in terms of customer recognition, making it the first to benefit from any market growth. The initial results of the new campaign launched in January look very promising;

 

• ongoing efforts to optimize the quality of our service and to maximize customer loyalty;

 

• an innovative service offering such as the successful implementation of the ten-installment, interest-free payment plan.

Increase in recurring operating income: +14%

 

This buoyant revenue growth was accompanied by 14% increase in recurring operating income to EUR 6.0 million, representing a recurring operating margin of 15.2%, which is in line with the Group’s expectations.

 

This performance is attributable to a further improvement in the Group’s gross margin which came out at 75.5% of revenue, versus 74.3% for the whole of 2005.

 

However, the Group was penalized slightly by an unexpected seasonal effect in marketing expenditure, which is usually evenly balanced across the first and second half of the year, but was higher in the first half of 2006 due to the launch of the Group’s new advertising campaign. In total, 57% of this year’s marketing budget (representing a one-off additional cost of EUR 0.3 million) was allocated to the first half of the year.

 

Net income increased by 13.7% to EUR 3.6 million, representing a net margin of 9%.

 

 

Significant reduction in gearing to 63%

 

The steady increase in cash flow combined with a significant improvement in WCR enabled the Group to reduce its gearing to 63% at June 30 (versus 99% for the first half of 2005).

 

This improvement is particularly satisfactory given the extensive expansion of the Group’s network over the first half of the year with 20 acquisitions (10 of which were franchised centers) and 9 new center openings.

 

 

2006 outlook: targets confirmed

 

On the back of its performance over the first half of the year, Audika has confirmed its 2006 target of between 10% and 15% revenue growth, excluding the impact of acquisitions in 2006.

 

Acquisitions made in the first half of the year will bring in around EUR 1 million of additional revenue in 2006.

 

The positive leverage of this growth on margins will be accentuated in the second half of the year by a favorable seasonal effect in costs, and notably in marketing expenditure. Audika has also confirmed its full-year recurring operating margin target of over 15.7%.

 

Three new centers created since July

 

Audika aims to continue the expansion of its network, taking advantage of its solid financial structure. Three new centers have already been created since July – the Group has opened one in Tours (its first in the Indre et Loire regional department), strengthened its presence in Nantes with the addition of a second center, and increased its network coverage in Vienne.
In addition, Audika is still in negotiations regarding future acquisitions.

 

Audika Group will publish its revenue for the third quarter of 2006 on October 17, 2006

 

 

About Audika :

 

With more than 320 centers in 77 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 environment, Audika aims to consolidate its leadership in a sector that remains very highly fragmented. Audika is listed on the Eurolist SMALL 90, segment B.

 

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IISIN FR0000063752-ADI

Reuters DIKA.PA,

Bloomberg ADI

Number of shares: 9,450,000



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

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



KAPARCA FINANCE - 26/09/06