SOLOCAL (EPA:LOCAL) - Review of rating agencies’ opinions following Solocal 2018 annual results release
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28/02/2019 23:14
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PRESS RELEASE / Boulogne-Billancourt, 28th February 2019
Review of rating agencies' opinions following Solocal 2018 annual results
release
Following the release of Solocal 2018 annual results on 19th February 2019,
Fitch rating agency has maintained, on the same day, the corporate rating at
B-, placing it on rating watch negative. Moody's today downgraded the corporate
rating from B3 to Caa1, with a negative outlook. Solocal duly notes Moody's
decision, the foundation of which it contests, as Moody's analysis does not
take into account the announced outlook of a return to Digital order intake(1)
growth in 2019, nor does it take into account working capital facilities that
can be drawn by the company.
Moody's decision is based on 2019 Digital order intake estimates in
contradiction with the growth outlook communicated by Solocal
The management team has led a rapid transformation positioning Solocal on a
growth path.
Regardless, Moody's explains that its decision to downgrade Solocal rating is
based on a financial simulation with a highly stressed case where Digital order
intakes would keep decreasing strongly by 25% in the first quarter 2019 (vs.
first quarter 2018) and by 20% in the second quarter 2019 (vs. second quarter
2018). However, as announced upon the 2018 annual results presentation on 19th
February 2019, Solocal has indicated its guidance of a return to Digital order
intake1 growth in 2019. This growth in Digital order intake(1) should take
place gradually, quarter after quarter.
Moody's decision overlooks Solocal's capacity to draw its working capital
facilities
Moody's model shows a funding gap risk below 20 million euros in the third and
fourth quarters 2019, with highly stressed business assumptions and without
taking into account the company's ability to draw on its working capital
facilities. At this stage, those facilities add up to 10 million euros, an
amount that can be revised upwards. The company carries indeed over 200 million
euros in account receivables on its balance sheet. In addition,
Moody's does not take into consideration potential asset disposals the
company is currently working on.
All those various points, as a whole, have led the Board of Directors to
approve Solocal 2018 consolidated accounts as a going concern, and auditors to
certify those.
As indicated by Solocal in its 2018 annual results press release published on
19th February 2019, according to the cash outflows the group is projecting
(based in particular on the growth of Digital order intake(1) in 2019) and
taking into account its financial facilities, the group is in a position to
finance its business activity in 2019 as well as the large outflows, related
to the PSE, which will take place in the third and fourth quarters of 2019.
(1) Continued activities
Solocal - www.solocal.com
We are the local digital partner for companies. Our job: advising and
supporting them to boost their activity thanks to our digital services (Digital
Presence, Digital Advertising, Websites, New Solutions and Digital to Print).
We also provide users with the best possible digital experience with
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Microsoft/Bing, Yahoo!, etc.). We provide professionals and the public with our
high audience services, geolocalised data, scalable technology platforms,
unparalleled order intake coverage across France, our privileged partnerships
with GAFAM and our talents in terms of data, development, digital marketing,
etc. We gather more than 430,000 companies all over France and 2.4 billion
visits on our services. To know more about Solocal (Euronext Paris "LOCAL"):
let's keep in touch @solocal
Press contacts
Chralotte Millet +33 (0)1 46 23 30 00
cmilleT4@solocal.com
Edwige Druon +33 (0)1 46 23 37 56
edruon@solocal.com
Investor contacts
Nathalie Etzenbach-huguenin
+33 (0)1 46 23 48 63
netzenbach@solocal.com
Alima Lelarge Levy +33 (0)1 46 23 37 72
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