2018 business and earnings

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The accounts were approved by the Board of Directors on March 13, 2019. The audit procedures have been completed and the report on the consolidated accounts without any reservations is scheduled to be issued at a later date. The certification report will be issued once the management report has been verified.

IFRS 15 “Revenue from Contracts with Customers” came into force and has been applied as of January 1, 2018 using the simplified retrospective approach. The financial information for previous periods has not been restated, but a presentation of the impacts of the application for 2018 is appended.

Parrot received €67.5m on this sale, taking its overall proceeds from this operation up to €108.5m, including €41m from the conversion of the bonds issued in 2017 by Parrot SA for Faurecia, converted at the same time as the sale of the remaining interests. The corresponding capital gain in Parrot SA’s accounts at December 31, 2018 represents:

In addition, Parrot Faurecia Automotive will continue to benefit from the “Parrot” brand license until the end of the agreed timeframe, i.e. end-2021, in return for royalties based on Parrot Automotive’s revenues.

Alongside this, the Parrot Group has chosen to develop a portfolio of subsidiaries and associates. With recognized brands, strong management and complementary positionings, the subsidiaries and associates are focusing on the development of their commercial activities, jointly or independently addressing the needs of consumers, professionals, businesses and major groups, as well as the rest of the drone industry.

The Offer concerns all the Parrot shares and all the warrants not already held directly or indirectly by the Offeror.

The Offeror does not intend to ask the AMF, in connection with the Offer, to apply a squeeze-out for the Parrot shares and warrants, or to ask Euronext to delist the Parrot shares and warrants from the regulated market Euronext.

The Offer is being carried out based on the standard procedure, in accordance with the terms of Articles 232-1 of the AMF’s general regulations, and is subject to the minimum acceptance threshold set by Article 231-9 I of the AMF's general regulations.

On the date of this press release, the Offer is underway and the detailed information relating to it is available on corporate.parrot.com, under “Public tender offer”.

(1) Revenues for Parrot Professional and Sequoia are presented under “Commercial drones”. In 2017, they were not particularly significant and were presented under “Consumer Drones”.

Consumer Drones generated €52.8m of revenues in 2018, down 32%. In total, Parrot Drones, the company housing consumer operations, sold around 413,000 consumer drone units in 2018, compared with around 604,000 in 2017, with volumes contracting 32%.

Following the resizing of the product portfolio in 2017, Parrot presented a new consumer drone in June 2018, the Parrot ANAFI. With its renowned technical features, combining 4K images, zoom and 180° vision, as well as its battery life (25 mins) and portability (foldable and weighing 320gr), Parrot Anafi’s sales, against a backdrop of a sharp slowdown on the consumer drone market in the third quarter, remained well below Parrot Drones’ expectations. Drone market trends were no more favorable in the fourth quarter and revenues for the period came to €14.8m, contracting 47% compared to the fourth quarter of 2017.

This situation, affecting the company’s business model, led to the reorganization announced on November 23, 2018: a departure plan covering around 100 people, focused on international operations, has been rolled out with a view to reducing the resources consumed by the marketing and production structures, in line with current market capacity. This plan will be finalized during the first quarter of 2019.

The commercial drone subsidiaries generated total revenues of €43.6m in 2018, up 5%.

Sales of software and services (Pix4D, Airinov) are up 24% year on year, to €25.2m, driven by the robust performances of Pix4D (drone imaging analysis software), which has extended its offering and its international organization, with a presence already established in Spain and Germany and underway in Japan, following on from its structures in China and the US. The development of Airinov (drone imaging services and data analysis for precision farming) has plateaued for the moment: the adoption of new technologies to measure crop health and productivity is following the agricultural sector’s pace for modernization. As announced in November 2018, Parrot Airsupport was put on standby in the fourth quarter.

Equipment revenues (senseFly and Micasense) came to €18.4m, with this year on year contraction (-14%) reflecting the delays with launches for the next generation of fixed-wing drones, which was carried out in the fourth quarter. Making a lower contribution, sensor sales continued to progress throughout the year. In the fourth quarter, the performance for equipment sales was able to be normalized, with revenues up 73% from the previous quarter.

On the Defense and Security market, following a phase to research and understand expectations, headed up by the new experts recruited, promising initial trials have been carried out in various countries and the companies (Parrot Drones, Sky Hero and Planck Aerosystems) are delivering their first orders and will gradually ramp up their commercial activities.

The contraction (-62%) in this historical business (retail automotive handsfree kits and connected devices) is in line with the strategy to realign the business around drones. After sales of connected devices were discontinued in 2018, sales of automotive products will continue to be scaled down in 2019.

The consolidated for 2018 came to 31.0% of revenues, and 33.5% restated for the impact of IFRS15, compared with 33.7% in 2017. In the fourth quarter, developments on the Consumer Drone market impacted the gross margin rate, which came to 18.9%, compared with 21.6% for the same period in 2017.

At December 31, 2018, the Group's (permanent and fixed-term contracts) represented 641 people (597 at December 31, 2017 and 658 at September 30, 2018), in addition to 23 external contractors (32 at December 31, 2017 and 41 at September 30, 2018). The Commercial Drone subsidiaries have a total of 328 staff (285 at December 31, 2017 and 320 at September 30, 2018), representing 51% of the Group’s workforce. Parrot Drones has 268 staff (269 at December 31, 2017 and 291 at September 30, 2018) and Parrot SA has 45 (44 at December 31, 2017 and 47 at September 30, 2018). Overall, Parrot still has an outstanding European design office and continues to benefit from its market-leading capacity for innovation in the drone sector.

Net cash (including current and non-current financial assets and liabilities) represents €160.3m at end-2018, compared with €115.4m at end-2017: the losses for the year were offset by the divestments, including €108.5m from the sale of the automotive subsidiary.

The change in working capital requirements came to €5.5m for the year, with the impact of the measures adopted at the end of the year to offset the effects of the launches and the slowdown on the consumer drone market.

Parrot’s shareholders’ equity represents €162.9m (€251.2m at December 31, 2017), with a total balance sheet of €244.3m (€402.7m at December 31, 2017), reflecting the total writedown of goodwill and the losses for the period. Net inventories of €19.4m (€23.2m at December 31, 2017) and trade payables of €27.7m (€37.6m at December 31, 2017) are in line with the measures rolled out at the end of the year to limit consumer drone production and launch production for commercial drones. Trade receivables represent €27.7m (€40,2m at December 31, 2017), in line with the level of business.

In line with the strategic guidance announced on November 23, 2018, Parrot SA’s Board of Directors accepted, during its meeting on March 13, 2019, Mr Gilles Labossière’s resignation from his position as Executive Vice President. To ratify Parrot Drones’ streamlined organization and continue building the recognition of a portfolio of outstanding equity investments, the Board invited Mr Gilles Labossière to rejoin Parrot SA’s teams, which he accepted, with a mission to oversee two of the Group’s strategic equity interests - senseFly and MicaSense - in addition to serving as their Executive Director.

Parrot Drones is continuing to adapt its organization in line with drone market developments and is targeting substantial savings in 2019, after taking into account restructuring costs, which are still estimated at around €15m (nearly €10m of which was already recorded over 2018). Resources are focused on advanced R&D, ramping up the gateways between consumer and commercial uses, streamlined distribution networks, managed primarily from France, and targeting online sales in priority, as well as opportunistic marketing operations, linked to trends on the various regional markets.

The commercial drone subsidiaries are forecasting double-digit growth, supported by a diversified offering, developed specifically for the various target industries (precision farming, 3D mapping, geomatics, inspection and security), but whose development is still dependent on the increased penetration of the new technologies offered by drones, while the pace of adoption is difficult to forecast.

Over 2019, the expectations will be reflected in:

Based on these elements, Parrot is expected to have around €100m of cash and an outstanding portfolio of companies and interests at the end of 2019.

From the first quarter of 2019, in line with the strategy and organization, the various business units will be presented independently.

Founded in 1994 by Henri Seydoux, Parrot is today the leading European group in the fast-growing industry of drones. Visionary, at the forefront of innovation, Parrot is the only group to be positioned across the entire value chain, from equipment to services and software.

The Parrot Group designs and engineers its products in Europe, mainly in France and Switzerland. It currently employs over 500 people worldwide and makes the majority of its sales outside of France. Parrot, headquartered in Paris, has been listed since 2006 on Euronext Paris (FR0004038263 - PARRO). For more information: 

The reclassification of certain marketing costs as a deduction against revenues, whereas they were previously classed as operating expenses, represents the only impact of the application of IFRS 15.

The impact of the reclassification in the Group’s consolidated accounts at December 31, 2018 represents €(4.1)m for revenues.

(1) Revenues for Parrot Professional and Sequoia are presented under “Commercial drones”. In 2017, they were not particularly significant and were presented under “Consumer Drones”.

(2) Historical Retail Automotive and Connected Devices products. (3) Revenues from applications enabling the use of consumer products, which currently cannot be allocated between drones and other consumer products.

More news and information about Parrot

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Globe Newswire: 06:00 GMT Friday 15th March 2019

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