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News comment

Stable results in 2014 Baptiste de Leudeville

bdeleudeville@keplercheuvreux.com

+41 22 994 1573

Bottom-line growth came flat in 2014

DLSI released stable annual results in 2014. Main metrics are flat. Operating profit came at EUR6.5m versus EUR6.6m last year (-1.2%), while net profit remains stable at EUR3.9m (net margin of 2.1%). A bit earlier in the year, DLSI released revenues of EUR181m compared to EUR184m a year ago, a slight decrease of -2% on current basis but that conform to our expectations on a like-for-like basis (+3.4%). Overall, results are below our expectations in terms of margin as we were hoping for restructuring measures (closing or grouping of agencies) and improved geographical mix to offset challenging conditions in France (-1.2% in revenues). The group confirmed better conditions in the French domestic market for Q1 2015, making us confident about EBIT and net profit picking up in 2015 (respectively EUR8.5m and EUR5.0 expected), as well as margins (4.5% and

2.8% forecasted).

International expansion on the agenda

The satisfactory performance reported on the international front comforts management's aim of expanding abroad, where margins and needs for temporary staff are greater than in France. In our view, DLSI is likely to conclude at least one deal in 2015 in countries where it already has a presence (Switzerland, Germany and Poland). At the same time, DLSI is continuing to develop nuclear activity through the opening of dedicated agencies close to large French nuclear facilities.

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Excessive discount, rating unchanged 15

With a P/E of 6x and EV/EBITDA ratio of 5x in FY 2015E, DLSI is suffering 14 an excessive discount compared to sector peers (40% estimated discount), 13 which cannot in our view be entirely justified by the liquidity discount. We 12 keep our Buy rating and a target price of EUR15.40. 11

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Apr 14 Jul 14 Oct 14 Jan 15 Apr 15



Price

DJ Stoxx 600 (rebased)

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DLSI Buy TP EUR 15.40

Key financials


FY to 31/12 (EUR) 2010 2011 2012 2013 2014E 2015E 2016E 2017E

Per share data
EPS adjusted 0.55 0.57 0.15 1.54 1.65 1.97 2.13 2.18
EPS adj and fully diluted 0.55 0.57 0.15 1.54 1.65 1.97 2.13 2.18
EPS reported 0.55 0.57 0.15 1.54 1.65 1.97 2.13 2.18
Cash flow per share -1.58 2.81 1.85 1.69 1.73 2.12 2.33 2.42
Book value per share 6.62 6.91 6.82 8.15 9.55 11.26 13.14 15.07
Dividend per share 0.30 0.30 0.23 0.23 0.25 0.25 0.25 0.25
Number of shares, YE (m) 2.5 2.5 2.5 2.5 2.5 2.5 2.5 2.5
Valuation
P/E adjusted 12.7 12.6 23.7 3.1 7.2 6.1 5.6 5.5
P/E adjusted and fully diluted 12.7 12.6 23.7 3.1 7.2 6.1 5.6 5.5
P/BV 1.1 1.0 0.5 0.6 1.2 1.1 0.9 0.8
P/CF na 2.6 2.0 2.8 6.9 5.6 5.1 4.9
Dividend yield (%) 4.3% 4.2% 6.3% 4.8% 2.1% 2.1% 2.1% 2.1% FCF yield (%) -24.8% 36.7% 49.2% 32.7% 11.6% 14.7% 16.4% 17.1% EV/Sales 0.2 0.2 0.2 0.2 0.3 0.3 0.3 0.2
EV/EBITDA 9.4 5.8 7.5 4.0 7.9 6.2 5.3 4.8
EV/EBIT 10.7 6.6 8.7 4.5 8.4 6.6 5.7 5.1
Income Statement (EURm)
Sales 172.7 205.2 183.9 183.8 181.0 188.2 193.9 197.8
EBITDA adjusted 4.1 6.6 3.8 7.4 7.8 9.1 9.7 9.9
EBIT adjusted 3.6 5.9 3.3 6.6 7.3 8.5 9.1 9.3
Net financial items & associates -1.2 -1.0 -0.9 -0.5 -0.5 -0.5 -0.5 -0.5
Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Tax -1.0 -3.2 -1.9 -1.9 -2.3 -2.7 -3.0 -3.0
Net profit from continuing operations 1.4 1.6 0.6 4.2 4.4 5.2 5.7 5.8
Net profit from discontinuing activities 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Net profit before minorities 1.4 1.6 0.6 4.2 4.4 5.2 5.7 5.8
Net profit reported 1.4 1.5 0.4 3.9 4.2 5.0 5.4 5.5
Net profit adjusted 1.4 1.5 0.4 3.9 4.2 5.0 5.4 5.5
Cash Flow Statement (EURm)
Cash flow from operating activities -4.0 7.1 4.7 4.3 4.4 5.4 5.9 6.2
Capex -0.4 -0.4 -0.2 -0.3 -0.9 -0.9 -1.0 -1.0
Free cash flow -4.4 6.7 4.5 4.0 3.5 4.5 5.0 5.2
Acquisitions & Divestments 0.4 -3.3 -2.1 -0.7 0.0 0.0 0.0 0.0
Dividend paid -0.8 -0.8 -0.8 -0.6 -0.6 -0.6 -0.6 -0.6
Others 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0
Change in net financial debt -4.8 3.7 3.7 5.7 6.9 8.8 10.3 11.5
Balance Sheet (EURm)
Intangible assets 24.6 24.5 26.8 26.3 26.5 26.8 27.0 27.3
Tangible assets 1.0 1.1 1.0 1.0 1.1 1.2 1.3 1.5
Financial & other non-current assets 2.1 1.3 1.3 1.3 1.3 1.3 1.3 1.3
Total shareholders' equity 17.2 18.1 18.0 21.5 25.3 29.9 35.0 40.1
Pension provisions 0.8 0.2 0.2 0.3 0.3 0.3 0.3 0.3
Liabilities and provisions 71.7 63.7 61.5 59.2 61.4 63.1 64.3 65.2
Net debt 20.9 19.7 18.9 16.6 13.8 9.9 5.6 1.1
Working capital requirement 10.6 11.1 7.9 9.7 10.3 10.7 11.1 11.3
Invested Capital 33.1 34.2 33.6 35.5 36.2 36.7 37.1 37.5
Ratios
ROE (%) 7.2% 8.3% 2.2% 19.7% 17.9% 18.1% 16.7% 14.8% ROIC (%) 14.3% 23.4% 13.0% 25.7% 27.3% 31.4% 33.3% 33.6% Net fin. debt / EBITDA (x) 4.9 3.0 4.9 2.2 1.7 1.1 0.6 0.1
Gearing (%) 117.0% 107.7% 103.7% 76.0% 53.3% 32.4% 15.4% 2.1%

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