First-half 2016 results - Fleury Michon · 2016. 10. 3. · 80 100 120 140 160 180 Q1 2010 Q2 2010...
Transcript of First-half 2016 results - Fleury Michon · 2016. 10. 3. · 80 100 120 140 160 180 Q1 2010 Q2 2010...
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First-half 2016 results06/09/2016
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First-half 2016 results06/09/2016
Grégoire Gonnord, Chairman
Régis Lebrun, Chief Executive Officer
Jean-Louis Roy, Senior Vice President
Administration and Finance
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Summary02
Situation and New Strategic Priorities 4
Financial Results 11
Operations and Action Plans 22
Business Segments: French Supermarkets, International, New Food Services
Development Paths
Appendices 54
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Page
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Situation and New Strategic Priorities
Financial Results
Operations and Action Plans
4
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Our business environment
DEMANDING... ...BUT FAVORABLE IN THE LONG-TERM
01
• Pressure on margins
• Price war in French Supermarkets
• Pig farming crisis
• Media pressure
• Consumer focus:
"eat better", act responsibly
• Transparency a must
• Numerous opportunities for
innovation/differentiation
• Growth potential
in France and abroad
5
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What are Fleury Michon's
strategic priorities
for the future?
New strategic challenges require
new priorities for action!
6
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Fleury Michon’s past challenges and
priorities
SITUATION OUR PAST PRIORITIES
02
• A major brand, but not top-of-mind(2008: Herta no. 1, FM ranked 9th)
• Looming battle among brands
(2008 law on modernisation of the
French economy)
• Food scandals and consumer
distrust - brands asked to
respond; Fleury Michon and agro-
industry put in same basket
• Digital revolution
• Win the race to achieve leadership
and critical size
• Make FM the leading brand with a
project that was truly responsible and
focused on society
• Strengthen our historic core
segments: hams, prepared meals and
surimi
• Explore our potential in services and
international markets
7
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2015 results03
• Revenue multiplied by two in ten years
• Brand gains new status
• Gap widens with competitors
• International Operations:
from €10m to €120m in ten years **
* Source: Kantar year-to-date 30 June 2016 ** 2015 revenue based on FM's interest 8
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Fleury Michon’s future challenges and
priorities
A NEW SITUATION NEW PRIORITIES
04
• Pressure on margins
• Customers looking to reinvent
themselves
• Emergence of new
technologies
• Historic opportunity for
innovation: "Help People Eat
Better!"
• Focus on profitable, lasting growth
• Be recognised as the most
innovative food company
• Put an emphasis on high-impact
innovations (usefulness for
consumers, high growth,
profitability, image)
• Unleash our potential in services
and international operations
9
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Keys to success05
• Continue to shift to an even more consumer-focused culture
• Determine our priority projects for the future
• Focus our resources
for even greater success
• Adapt our organisation to be
increasingly nimble and efficient
10
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Situation and New Strategic Priorities
Financial Results
Operations and Action Plans
11
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Revenue01
Total International
€63.2m +11.4%
*Joint venture revenue based on Fleury Michon's interest and at constant exchange rates
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in €m H1 2015 H1 2016 % change
French 314.9Super-
markets
+28%
International 27.9+33.9% at constant
exchange rates
Services 29.2
and Other
TOTAL 374.5 372.0 -0.70%
27.1 +7.7%
325.6 -3.30%
21.8
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Fleury Michon brand revenue02
Revenue
in €m
Average year-on-year revenue growth (Q3 to Q2)
+5.1%
13
102,7
110,3113,1
115,4119,6
125 124,3 123,5
130,8136 134,2 136
139,7 138,6 139,5
133,2135,9
143,8 142,2145,3
149154,1
156,9151,7 150,4
147
0
20
40
60
80
100
120
140
160
180
Q12010
Q22010
Q32010
Q42010
Q12011
Q22011
Q32011
Q42011
Q12012
Q22012
Q32012
Q42012
Q12013
Q22013
Q32013
Q42013
Q12014
Q22014
Q32014
Q42014
Q12015
Q22015
Q32015
Q42015
Q12016
Q22016
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Operating Profit and Margin03
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Other Businesses
Operating Profit
Operating Margin
French Supermarkets Operating
Profit
(€0.54m) €0.18m
€13.12m€15.91mFrench
SupermarketsOp Margin
4.7%
H1 2015 H1 2016
€15.4m €13.3m
4.1% 3.6%
French Supermarkets
Op Margin4.0%
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Net Profit and Margin04
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in €m H1 2015 H1 2016Recurring operating profit
15.4 13.3Operating profit
Finance costs, other financial income and
expense, net (0.7) 0
Income tax expense (5.9) (3.7)Share in profits (losses)
(0.6) (0.7)of associates
Net profit 8.2 8.9
Net margin 2.2% 2.4%
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Cash Flow05
Presented in accordance with French GAAP 16
* Securitisation programme launched in February 2016
H1 2016 in €m Uses Sources
Cash flow 24.3
Change in operating
working capital(2.6)
Net cash provided by 21.7
operating activities
Capital spending 11.7
Borrowings 15.1
Dividends 5
Securitisation programme* 46.2
Other 0.3
TOTAL 32.1 67.9
Change in cash and
cash equivalents35.8
Cash and cash
equivalents at beginning of
period94.6
Cash and cash
equivalents at end of period130.4
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Capital Spending06
in €m H1 2016
TOTAL 11.6
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*Capital spending as a % of revenue
standard level
4% < > 5% of revenue
€m
6.0%*
7.8%
5.9%
3.9%
3.6%
4.7%
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07 Key Ratios
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H1 2015 H1 2016After-tax ROCE
6.7% 6.20%(Return on capital employed)
Recurring operating margin2.3% 2.30%
after income tax
Asset turnover 2.9 2.70%
ROE 4.1% 4.20%
(Return on equity)
EPS 1.88 2.02
(Earnings per share)
PER (at closing share price on 30 June 201415.2 14.4
= €60.39; 2015 = €57.05)
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GEARING
(Net debt/Equity)
08 Debt
Net financial debt in €m 55.1
27.5%
Net debt/EBITDA
Free cash flow in €m
0.89
10.7
H1
2015
H1
2016
53.3
25.3%
0.93
10.2
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09 Statement of Financial Position
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+5.2%
-3.3%
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21
Conclusion10
First half ended with a year-on-year decrease in operating profit as
revenue held virtually stable.
This reflects lower revenue and a narrower operating margin in French
Supermarkets.
The International and New Food Services segments enjoyed
continued growth and wider operating margins.
Net margin improved and finance costs (net) came in at zero.
Fleury Michon continued to strengthen its financial position and saw
an improvement in gearing.
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Situation and New Strategic Priorities
Financial Results
Operations and Action Plans Business Segments
Development Paths
22
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Situation and New Strategic Priorities
Financial Results
Operations and Action Plans
Business Segments Development Paths
23
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Operations and Action Plans
Business Segments
French Supermarkets
International
New Food Services 24
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French Supermarkets impacted by higher raw
material costs and lower consumer prices01
25*Source IRI , July 2016, FMCG, HMSM
Fleury Michon has made a conscious choice to raise its
prices in a situation of dwindling value
Consumer selling prices: Inflation over 1 yr*
All products: -1.20%
National brands: -1.73%
Ham, flank removed consensus – Price at Rungis+6.3%Norwegian salmon market price trends in NOK
+43.0%
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Promotional discounts
granted
Increasingly costly promotional campaigns*02
26* Source Nielsen 2015
FMCG
revenue+8%+1.5%
YEAR AFTER YEAR, PROMOTIONS ARE WEIGHING MORE ON PRODUCERS
+ 5 points in 5 years for producer brands, and the trend is continuing in 2016
Proportion of revenue from “heavy” promotions (in %)
Hypermarket/Supermarket – Producer Brands
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General trend: Promotions pushed down
FMCG brands' revenue in Q1 2016 03
Source: Nielsen Q1 2016 27
PROMOTION TRENDS FOR FAST-MOVING CONSUMER GOODS
Change in Fresh Self-Service FMCG revenue in hypermarkets and supermarkets
Year-to-date P3 2016Full year 2015
Excluding store promotions Total store promotions Of which flyers Of which displays
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•Our goal is to achieve profitable, lasting growth and maintain our connection with consumers
Enhanced presence for Fleury Michon in flyers(products in flyers up 5.3%): greater visibility among consumers
But reasonable promotional discounts
• Result: Fleury Michon products sold via promotionsdown by 1,100 metric tons in H1 2016 vs H1 2015
• But we have strengths in this environment
Fleury Michon: Carefully considered
promotions04
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An effective brand identity05
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Around €1bn in consumer sales
Only majority family-owned company
Fleury Michon is one of the few players to maintain its market share
Mkt share in value (and change in bp vs. Y-1) Change in mkt share value (%) Purchase frequency
Fresh Self-Service FMCG – All channels – Q2 2016 MAT vs Q2 2015 MAT
Fleury Michon stabilises: No. 3 in Top 10 for market share in
value, but No. 1 single brand
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An increasingly trusted brand06
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2009: the 9th most purchased brand
2014: the 4th most purchased brand
2016: the 2nd most purchased brand!
Source: Kantar 2016 Brand Footprint – expressed in CRP: Number of consumers x Frequency of purchase, in millions
107
107
121
121
135
148
182
192
212
224
+3
-5
Two indicators of
attractiveness: How many
households buy a brand and
how often (Consumer Reach
Points - CRP)
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Fleury Michon brand attractiveness07
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For Fleury Michon: +138,000 consumer households, for a10 bp
increase in purchases over the past 12 months
The only brand among the Top 5 FMCG brands to see an increase in
these two indicators
And still plenty of room
for growth
Purchase frequency
105.1 in all for Fresh Self-Service FMCG
Fresh Self-Service FMCG – All channels – Q2 2016 MAT vs Q2 2015 MAT
Customer base
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Fleury Michon: Steady growth in
consumer reach points08
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Increasing CRPs is the key growth driver for Fleury Michon
A strategic challenge for the product offering's value added
Source: Kantar 2016 Brand Footprint – expressed in CRP: Number of consumers x Frequency of purchase
176180
190 190
207 210
0,89
0,92
0,95
0,93
1,01 1,01
0,86
0,88
0,90
0,92
0,94
0,96
0,98
1,00
1,02
130
140
150
160
170
180
190
200
210
220
CAM 2T11 CAM 2T12 CAM 2T13 CAM 2T14 CAM 2T15 CAM 2T16
CRP Part de marché valeur 100% PGC-FLSMarket share in value 100% Fresh Self-Service FMCG
MAT QT11 MAT Q212 MAT Q213 MAT Q214 MAT Q215 MAT Q216
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Operations and Action Plans
Business Segments
French Supermarkets
International
New Food Services33
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Continued growth in International
Operations01
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CANADAEXPORT(1)
-2.9%
Revenue ofconsolidated subsidiaries
€27.9m +28.0%
SLOVENIA
SPAIN(3)
CANADA
SLOVENIA
ITALY(2)
EXPORT(1)
-2.9%
Revenuebased on Fleury Michon's interest
€63.2m +11.4%
NORWAY(4)
-56.5%
35.9%
20%
33.4%
6.9%3.8%
75.6%
8.8%
15.6%
(1) Export + Fleury Michon Switzerland
(2) Piatti Freschi Italia 50% interest
(3) Platos Tradicionales 47.5% interest
(4) Fleury Michon Norge now 100% interest
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Delta Dailyfood02
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Good growth in revenue (up 40.9%), lifted by
airline catering and brand sales
Wider margins thanks to revenue growth and improved
production costs
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Piatti Freschi Italia03
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Revenue down 1.1%, good full-year trend
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Platos Tradicionales04
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First-half 2016 revenue down 2.9% but good full-year
trend
Profitability outlook still positive
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Proconi05
38
Revenue up 6.7%
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Operations and Action Plans
Business Segments
French Supermarkets
International
New Food Services39
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New Food Services
Good performance across the portfolio
Favourable growth in meal solutions for
healthcare facilities
Firm results from
airline catering
01
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€29.2m +7.5%
Excluding non-strategic businesses
CATERING
+9.8%
ROOM SAVEURS
+7.5%
EAT-OUT
+6.8%
46.8%14.3%
38.9%
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Room Saveurs
Robust revenue growth, margins
still at a good level
02
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Situation and New Strategic Priorities
Financial Results
Operations and Action Plans Business Segments
Development Paths
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Priority actions01
Create sustainable,
differentiating
competitive
advantage that gives
Fleury Michon an
exclusive product
offering
OUR PRIORITIES
• Focus on profitable, lasting growth
• Be recognised as the most
innovative food company
• Put an emphasis on high-impact
innovations (usefulness for
consumers, high growth,
profitability, image)
• Unleash our potential in services
and international operations
(43)
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Development paths - method02
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Become the benchmark player in high demand, high
value-added food segments (product offering)
Be as close to consumers as possible (distribution
channels)
Work actively with French Supermarkets to reinvent the
model together
Shift from communicating towards consumers to
creating a relationship with them
Adopt a flexible method and
organisation, adapted to
these objectives
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Changing consumer patterns03 Multiple behaviours depending on:
The time
The place
High expectations for well-being, a clearly-signalled desire to
consume better and responsibly
Consumers are attentive to corporate responsibility and develop special ties
with companies; they voice their opinions to make brands change
Consumers want to make enlightened choices on the product
experience offered to them
The focus of the offering needs to shift from
the product to the "brand experience"
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Priority in product innovation: Develop
value added04
46
Healthy snacking
Healthy delivered meals and
buffets
An offering that is
available at the right time
Health
Well-being
An offering that makes me
feel good
Organic
Quality channels
A responsible offierng
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Health and nutrition05Healthy products
- Carefully controlled
additives• Kept to a strict minimum
• In the smallest possible
proportions
(e.g., nitrates, palm oil,
sodium glutamate,
phosphates, etc.)
- Clear consumer
information (what people need to know, not pedantic)
- Involvement in sourcing
channels47
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Seek out consumers where they are06
48
Convenience stores
E-commerce
43% of growth in FMCG -
purchasing outlets where I live
Eat-out
Heathcare institutions
Airline catering
Wherever consumers
are
Supermarkets
Work together to invent
tomorrow's categories
and aisles
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Organise aisles with the consumer in mind
(rather than professionals)07
49
• Store aisles are still organised on the basis of industrial or supply chain
considerations
• Store aisles and product categories have not changed much since the 1990s
• Think of ways to display products that are aligned with consumers' perceptions and
various expectations
• Consumers organise their
shopping based on their own
buying criteria
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How we will organise differently in the future08
50
Strategic direction
Ensure that all our projects are aligned with our Company Project
-> go from an organisation by market to an organisation by projects
Objectives
Less hierarchy
Greater autonomy, broader areas of
responsibility
Faster implementation at the operating level
Same amount of resources, but allocated
more effectively
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To sum up
A period of transformation
Reflecting our constantly changing lifestyles
Rooted in Fleury Michon's corporate culture
Strengths to implement this change
And a strategy focused on product quality, customer intimacy
and consumer satisfaction
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09
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In conclusion
(52)
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2016: Pivoting to new priorities
• Priorities that are an obvious fit
• An ideal position for achieving our objectives
02
Our past priorities
• Win the race to achieve leadership and critical
size
• Make FM the leading brand with a project that
was truly responsible and focused on society
• Strengthen our historic core segments: hams,
prepared meals and surimi
• Explore our potential in services and
international markets
Our new priorities
• Focus on profitable, lasting growth
• Be recognised as the most innovative food
company
• Put an emphasis on high-impact
innovations (usefulness for consumers, high
growth, profitability, image)
• Unleash our potential in services and
international operations
53
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First-half 2016 results05/09/2016
APPENDICES
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Pork Hams02
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Market
€1,537m -0.9%
Fleury MichonHertaPrivate LabelsMADRANGELowest PriceOther
18.3%(+0.0%)
21.6%(-2.2%)2.4%
(+12.0%)
48.20%(-1.4%)
5.0%(-11.40%)
Moving annual total Supermarkets +
Hard Discount - Source: IRI 12 June 2016
4.6%(+17.3%)
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Fleury Michon
Herta
Private Labels
Lowest Price
Other
Poultry Cuts02
56
Market
€356m +2.4%
5.2%(+23.8%)
43.4%(+3.6%)
4.6%(-3.2%)
37.9%(-2.5%)
8.9%(+16.3%)
Moving annual total Supermarkets +
Hard Discount - Source: IRI 12 June 2016
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Market
€389m +0.2%
Fleury Michon
Petigas
Private Label
Lowest Price
Other
5.3%(+5.3%)
42.3%(+3.6%)
3.7%(-8.1%)
36.1%(-3.8%)
9.0%(+1.6%)
Ready-to-Eat Charcuterie
57
Moving annual total Supermarkets +
Hard Discount - Source: IRI 12 June 2016
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Fleury Michon
Marie
WW
Private Labels
Other
16.2%(+10.6%)
31.1%(-0.7%)
28.6%(-3.1%)
8.7%(+17.0%)
15.4%(+13.5%)
Individual Prepared Meals02
58
Market
€474m +3.7%
Moving annual total Supermarkets +
Hard Discount - Source: IRI 12 June 2016
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Fleury Michon
Coraya
Private Labels
Lowest Price
Other
Surimi02
59
20.7%(+6.0%)
27.5%(-3.2%)
5.9%(-9.7%)
42.1%(-5.2%)
Market
€280m -2.9%
Moving annual total Supermarkets +
Hard Discount - Source: IRI 12 June 2016
3.9%(-7.5%)
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First-half 2016 results06/09/2016