Pascal Imbert Chairman of The Management Board Solucom : "The new growth cycle is now open ".
Strategy and perspectives 2016

SOLUCOM | LCO | FR0004036036

Back in the first half of the consulting firm that conducted in recent months several acquisitions. Market seems to have found his tone , customers especially in the banking sector have begun to reinvest . How is the strategy, with a recent announcement of the proposed acquisition , my guest Pascal Imbert Chairman of Solucom Management Board estimates that the firm will be able to growth and have significant size in its industry.

Web TV www.labourseetlavie.com: Good day to you, Pascal Imbert.

Pascal Imbert – Chairman of the Management Board, Solucom:  Hello.

Web TV www.labourseetlavie.com: You’re Chairman of the Management Board at Solucom. We’d like to talk to you about your half-year results. You’ve also announced an acquisition, so we’ll be talking about that, too. Looking at this half-year period, would you say that your market –management and IT consulting – is edging into recovery?

Pascal Imbert – Chairman of the Management Board, Solucom: Yes, it is. A new cycle of growth is opening up. We’ve seen a completely different picture in 2015 from previous years, with our clients starting to invest again. The driver for these investments is transition, the digital revolution that every company is engaging with now. So the market context is infinitely better than it was over past three or four years.

Web TV www.labourseetlavie.com: Is it fair to say that the times of wait-and-see, of companies putting off projects, are coming to an end?

Pascal Imbert – Chairman of the Management Board, Solucom: Yes, that’s right. The need to invest has become sufficiently urgent now. People used to say that consulting is always a little ahead of the curve. You’ve seen how much growth Solucom managed to free up in the first half year – 24% growth, 16% of it organic. Obviously that wouldn’t have been possible without a shift towards new investments among our clients, who can’t wait any longer to move over to digital and to streamline their organisation so they’re in a better position to satisfy their clients’ expectations. I also think that many companies have been working for years on improving their bottom line and now they’re seeing results, so they can think about increasing turnover and taking a more bullish stance again.

Web TV www.labourseetlavie.com: You work with clients in different industries. Do you see some sectors opening up more than others?

Pascal Imbert – Chairman of the Management Board, Solucom: The main driver at the moment is finance – especially the banking sector. The big banks are investing in digital because they’re facing considerable challenges in terms of compliance, legislation – there are a lot of new regulations coming into force – and, of course, they want to have a better control on risk, to improve risk management. So after years of sluggish performance, this is definitely the industry that’s leading the recovery. But what’s interesting is that other sectors such as manufacturing, mass market retail, and energy – which used to be a driver for the economy – these sectors are also seeing investment and transformations. So the momentum of recovery is pretty general across the whole economy, with very few exceptions.

Web TV www.labourseetlavie.com: Looking back over this first half year for Solucom, you’ve made a fair number of acquisitions. How does that alter the company’s profile?

Pascal Imbert – Chairman of the Management Board, Solucom: Solucom was already shifting towards a more international profile. In the past twelve months we’ve completed our first foreign acquisitions, in the UK and Switzerland, and we’re putting significant resources into international growth. As well as acquisitions, we’re also building partnerships aimed at increasing turnover in new regions, particularly in the Gulf area and also in Singapore. The company is entering new territory with these developments. We’ve also consolidated Solucom’s core business with a very interesting acquisition we made right at the beginning of the financial year. We took over a company called Hapsis to strengthen our capabilities in cybersecurity. It’s a field that’s experiencing a real boom, obviously, both because of the constantly evolving nature of cyber threats – of which I think everyone’s aware, so I needn’t elaborate – and because the shift towards digital will simply not be possible unless people trust the new services that will be available through digital communication tools.

Web TV www.labourseetlavie.com: You’ve also reported that your market has seen a rise in sales prices over this last period – that’s another positive indicator.

Pascal Imbert – Chairman of the Management Board, Solucom: Absolutely, it shows that the market is beginning to move again. Our clients are experiencing less financial stress, the pressures are easing, and that allows them to focus more on the value they get when they buy our consultancy services, rather than worrying about how to keep their costs down.

Web TV www.labourseetlavie.com: We see that your operating margin has decreased somewhat. Is that due to your acquisitions?

Pascal Imbert – Chairman of the Management Board, Solucom: It’s related to the company’s new strategic plan, called Up 2020. Our new strategic plan was launched back in June and sets out our strategic development objectives for the coming years. As part of the plan, we are launching a new offensive of international acquisitions. We’re also looking at acquisitions that would reinforce the company at a structural level. Earlier this week we announced that we’ve entered into exclusive negotiations with Kurt Salmon with a view to buying out most of their European operations. We’re embarking on larger-scale projects than previously so we need to mobilise more resources to make sure they materialise.

Web TV www.labourseetlavie.com: Let’s talk about your order book. Again, the outlook is similar, we can see that in the immediate term it’s not plain sailing. Your order book is filled for the next 3.3 months or so – that figure has remained fairly steady.

Pascal Imbert – Chairman of the Management Board, Solucom: I agree, we can’t see very far ahead at the moment but that’s not entirely surprising. We know that when the market starts to take off again, the last place the traffic lights will turn green is the order book. At the moment everything tells us that companies are ready to start investing again, but they’re still waiting for a little more certainty. They’re keeping their feet not far from the brakes, just in case, and there’s a tendency to commit for shorter periods and to slice up projects so they can jam on the brakes at any moment if anything happens. So right now we aren’t booked up very far ahead. But if the upturn continues and the pace of recovery increases in the coming months, we know that we’ll gradually see this reflected in the number of orders.

Web TV www.labourseetlavie.com: You’ve told us about Up 2020 and just now you spoke about the possibility of Solucom acquiring Kurt Salmon and taking over their operations in Europe. If the buy-out goes ahead, will that lead to modifications in the 2020 plan, or is this project really in line with your strategic plan?

Pascal Imbert – Chairman of the Management Board, Solucom: It’s completely consistent with the strategic objectives of Up 2020, but it’s a much larger-scale acquisition than we usually take on. In the past we’ve approached smaller consulting firms with a very specialist focus. This is a sizable acquisition that would obviously have a big impact on Solucom’s objectives for 2020 if it materialises. I think it would enable us to considerably speed up the trajectory we envisage in Up 2020 and we’d certainly have to set new objectives. We’d revisit our Up 2020 objectives in light of developments following the acquisition, and we’d be more ambitious, especially in terms of international growth.

Web TV www.labourseetlavie.com: As things stand today, can this potential acquisition be financed and do you have the wherewithal?

Pascal Imbert – Chairman of the Management Board, Solucom: We would finance it with a bank loan. We’ve already secured enough funds to enable us to carry out the acquisition, and actually it would also help Solucom optimise its financial profile slightly. At the moment interest rates are very low and it would make a lot of sense from our shareholders’ point of view if we made more use of bank loans to optimise the business’s financial profile.

Web TV www.labourseetlavie.com: Before we wrap up, tell us about the outlook for 2015–2016.

Pascal Imbert – Chairman of the Management Board, Solucom: We’re very optimistic, despite the lack of certainty that you mentioned earlier. In fact we’re pretty confident, all things considered. We announced this morning that we’re increasing our growth objectives. We’re aiming to achieve overall growth above 16%, with 8% organic growth, and bearing in mind the first semester margin, I think we’ll comfortably meet those objectives. It’s fair to say that 2015-2016 will be a good year for us, growth-wise. We’ll hit our targets in terms of profitability. All in all, this financial year augurs well for the prospects of our Up 2020 plan.

Web TV www.labourseetlavie.com: We’ll be keeping a close eye on developments. Thank you, Pascal Imbert.

Pascal Imbert – Chairman of the Management Board, Solucom: Thank you.