The table below shows the calculation of the Group’s free cash-flow:
| (in millions of euros) | H1 2020 | H1 2019 |
|---|---|---|
| EBITDA | EBITDA H1 2020 923 | EBITDA H1 2019 885 |
| Financial interest paid (net) | Financial interest paid (net) H1 2020 (81) | Financial interest paid (net) H1 2019 33 |
| Refunding of lease commitments and associated interest | Refunding of lease commitments and associated interest H1 2020 (234) | Refunding of lease commitments and associated interest H1 2019 (214) |
| Income tax paid | Income tax paid H1 2020 (74) | Income tax paid H1 2019 (190) |
| Other | Other H1 2020 34 | Other H1 2019 42 |
| Cash flow from operations before changes in WCR | Cash flow from operations before changes in WCR H1 2020 568 | Cash flow from operations before changes in WCR H1 2019 556 |
| Investments in fixed assets (net) | Investments in fixed assets (net) H1 2020 (73) | Investments in fixed assets (net) H1 2019 (65) |
| Free cash flow before variations in WCR | Free cash flow before variations in WCR H1 2020 495 | Free cash flow before variations in WCR H1 2019 491 |
| Variation in working capital requirements | Variation in working capital requirements H1 2020 (853) | Variation in working capital requirements H1 2019 (826) |
| Free cash flow | Free cash flow H1 2020 (358) | Free cash flow H1 2019 (335) |
There are no new related party transactions entered into during the first half of 2020.
Publicis Groupe’s revenue is entirely comprised of rental income on real estate and fees for services to the Groupe’s subsidiaries.
Operating income totaled 51 million in the first half of 2020, compared to 30 million in 2019. Financial income stood at 48 million as of June 30, 2020 compared to 88 million in the previous year; this decrease was due to lower dividends received.
Operating expenses for the year amounted to euro 48 million as of June 30, 2020, compared to euro 30 million the previous year. Financial expenses amounted to 62 million as of June 30, 2020, compared to 54 million the previous year, an increase mainly due to the interest expense on the drawdown of the syndicated credit facility in full, i.e., euro 2.2 billion, from the end of March to the end of June.
Pre-tax profit is a loss of 10 million for the first half of 2020, against a profit of euro 35 million in the first half of 2019.
After inclusion of a euro 2 million income tax credit resulting from tax consolidation in France, the net result of Publicis Groupe, the parent company of the Group, was a loss of euro 8 million for the six months to June 30, 2020, compared with a profit of euro 48 million for the six months to June 30, 2019.
The full impact of the current crisis on the economy remains largely unknown. This creates uncertainties which make it difficult to provide any specific guidance for the second half of 2020.
When it comes to net revenue, Q2 could be the low point, but it is premature to say whether the second half will be better or worse than the first half, as some sectors but also some countries will recover faster than others, and clients will react differently.
The operating margin rate will be higher in H2 than in H1, taking into account that several factors will have a negative impact: as countries reopen, some of the operating expenses will resume, and the Groupe will continue to invest in its model.
Heading into the second half, the Groupe is committed to limit the impact of client cuts, accelerate its new offering and continue to adapt its cost base to the evolution of revenue.
