GRAND DUCHY OF LUXEMBOURG – The Board of Directors of IVS Group S.A., convened on September 8th, 2022 and chaired by Mr. Paolo Covre, examined and approved the Half Year Report at 30 June 2022. Results further improved, despite the first months of the year still affected by pandemic. IVS Group S.A. is the Italian leader and the second player in Europe in the business of automatic and semi-automatic vending machines for the supply of hot and cold drinks and snacks (vending).
The core vending business is mainly carried out in Italy (81% of sales), France, Spain, and Switzerland, with around 226,000 vending machines; the group has a network of 86 branches and around 2,700 employees.
IVS Group serves more than 15,000 corporate clients and public entities, with over 650 million vends in 2021.
IVS Group: Summary of results at 30 June 2022
- Consolidated Revenues: Euro 197.5 million, +18.1%, compared to June 2021.
- EBITDA Euro 37.3 million. Adjusted EBITDA¹: Euro 37.0 million, +7.2% compared to June 2021.
- EBIT equal to Euro 8.7 million, +152.7% compared to June 2021.
- Consolidated Net Profit: Euro 3.1 million (before profits attributable to minorities of Euro 0.5 million). Adjusted Net Profit: Euro 3.1 million (before minorities).
- Net Financial Debt equal to Euro 135.9 million (including Euro 45.1 million debt related to IFRS 16).
- Completed 2 acquisition in Italy and 1 minority stake acquisition in the U.K. for a value of Euro 2.2 million.
Operating performances
Consolidated revenues in 1st Half 2022 reached Euro 197.5 million (of which 185.2 million related to the core vending business), +18.1% from Euro 167.2 million of 1st Half 2021 (Euro 158.0 in vending).
Sales in 1st Half 2022 increased by 15.8% in Italy (+14.1% in 1st Q 2022), by 44.1%in France (+49.2% in 1st Q), by 16.2% in Switzerland (+6.6% in 1st Q) and by 19.4% in the CGU Coin Service (+23% in 1st Q) and decreased by 0.6% in Spain (-3% in 1st Q).
France enjoys an increase higher than the other markets thanks to Paris Metro contract, although the traffic on public transport in still far from pre Covid conditions. Coin Service division includes the sales in the payment services business (Moneynet), that generates the largest part of its revenues in the fourth quarter and is still brings a negative contribution to the group margins. (negative Adjusted EBITDA of Euro -0.5 million) while metal coins business sales increased by 22.4%. The growth of the digital payment app CoffeecApp® also continued its remarkable growth (almost 1 million registered users and 220,000 active users).
The two small acquisitions of the period contributed pro-rata to sales for around Euro 0.2 million.
The total number of vends as of June 30th, 2022 was equal to 344.7 million, +9.0% from 316.3 million at June 2021. In the first part of 2022 IVS continued to have an acquisition rate of new clients higher than the churn rate.
Average price per vend in 1Half 2022 was equal to Euro 50.10 cents, from 46.64 cents of 1Half 2021 (+7.4%). The increase in average selling reflects the active policy of price adjustments and the gradual recovery of volumes in pubic and travel market segments (including foreign location as the Paris Metro), where prices are usually higher than in the corporate segment.
The selling price increase is remarkable, considering also that, for the nature of the vending business, it requires time for the renewal of thousand contracts and additional costs for the subsequent technical work and setting on the vending machines.
Therefore, while the increases of cost of goods sold, and even more of gasoline and energy were high and rapid, the selling price increase policy will continue to deploy its effects for quite a long time, allowing an overall effect higher than that of inflation on costs.
Volumes and sales in 1st Half 2022 are still lower – by 22.4% and 14.9% respectively – than those of 1st Half 2021. This means that, with respect to the capacity and potential of the company in normal conditions (pre Covid period), there is still a gap in terms of lower efficiency in operations and logistic, and a lower contribution to cover fixed costs; market volumes increase and the effects of the Business Combination with Liomatic and GeSA will allow to recover this gap.
EBITDA reported in 1st Half 2022 is equal to Euro 37.3 million, increased by 11.6% compared to Euro 33.4 million at June 2021. Adjusted EBITDA is equal to Euro 37.0 million, +7.2% from Euro 34.6 million at June 2021, with an EBITDA margin of 18.9% (21.4% if calculated net of positioning fees).
Adjusted EBITDA is influenced by a negative contribution from Moneynet (Euro -0.5 million) that, however improved (by around 38% vs 1st Half 2021), since 3rd Q 2021 is not considered any more as a non-recurring start-up cost. Moneynet reported EBITDA was instead positive (Euro 0.4 million), thanks to non-recurring proceeds. The margin of metal coins management increased significantly (Adjusted EBITDA +47.6%).
EBITDA increase in 1st H 2022 was affected by the sharper increase of fuel and energy costs for a total of Euro 2.0 million (+56% vs 1st H2021); moreover, within the labour costs, also technical intervention increased by 12.6%, more than the +9.0% of volumes increase, as they reflect the efforts and consequent higher costs for setting the selling prices increase on the vending machines.
As already said, the growing effect of the selling price applied on the whole clients’ base, should allow to recover, more than proportionally, the initial higher step in these costs.
Consolidated EBIT increased by 152.7% to Euro 8.7 million, from Euro 3.4 million in 1st Half 2021, not only for the growth of EBITDA, but also for the effects of the stronger selection of Capex started in 2020, that will continue to reduce the incidence of depreciation charges.
Pre-Tax Profit was equal to Euro 1.7 million, compared to a loss of Euro 4.2 million in 1st Half 2021, showing the return to profit net of fiscal effects. Consolidated Net Result at June 2022 is equal to Euro 3.1 million (before Euro 0.5 million profits attributable to minorities) compared to Euro 3.7 million at June 2021.
The Net Adjusted Profit (before minorities and net of the exceptional items) is equal to Euro 3.1 million, from Euro 4.8 million at June 2021 (that included Euro 7.8 million of tax proceeds, of which 5.4 million related to tax revaluation on goowdwill and clients’ list).
Net Financial Position (“NFP”), is equal to Euro -135.9 million, that include the186.3 million shares issue (Euro 184 million net of related costs of around Euro 2.1 million, of which Euro 1 million already paid on 30 June 2022) completed at the beginning of June 2022, whose proceeds were used (on July 1st, 2022) to finance the acquisitions of Liomatic and GeSa.
Net of the shares issue (but including its costs) the Net Financial Debt comparable to previous periods was Euro 322.2 million (including Euro 45.1 million related to IFRS 16 effects on rents and leases), from Euro 317.6 at 31 March 2022 and 301.4 million at the end of 2021.
Net Debt at June 30th, 2022 already includes Euro 10 million of advance payments for Liomatic shares (acquired on July 1st, 2022), Euro 10 million for the dividend approved by AGM on June 28th, 2022 (payment date 21 September), Euro 1.8 million for the underwriting on a first 20% stake in N-AND Group (U.K.) and Euro 6.3 million of accrued interest on bonds due Nov. 2026.
Unlike the 1st Half 2021, when the reduction of volumes allowed to generate significant net cash flow from working capital (approximately 17.5 million Euro including relevant reimbursements of VAT credits), the volumes recovery in 1st Half 2022 generated a use of fund in working capital of around Euro 7.0 million, mainly due to: (i) an increase in stocks (Euro 3 million), (ii) a credit of Euro 2.7 million for the sale to Nespresso of the Ho.Re.Ca business (part of the OCS-Office Coffee Service market segment), and (iii) other VAT credits on capex.
During 1st Half 2022 were made payments related to net investments for Euro 30.7 million, of which Euro 17.5 million for investment in fixed assets – including those linked to newly acquired businesses and done in previous quarters – and Euro 13.3 million for payments related to acquisitions (including Liomatic advance payment and N-And minority stake underwriting).
As of 30 June 2021, the group still has significant VAT credits, around Euro 5.7 million, not included in the Net Financial Position.
IVS Group: Other significant transactions and events occurred after 30 June 2022, Covid-19 effects and forecast
On June 2022 IVS Group completed the capital increase aimed at financing the Business Combination with Liomatic and GeSa groups, more specifically the acquisition of 94.6% of Liomatic, 100% of GeSA, their controlled subsidiaries and participated companies and operating real estates.
The Financial Closing of the transaction, for a total price of Euro 192 million, was made on July 1st, 2022; this amount is slightly higher than the estimated 186 million because of the better Net Financial Position of the acquired companies at the closing date. Since July 1st, 2022, IVS Group perimeter will significantly change.
The analysis for the integration with Liomatic and GeSA started before the Financial Closing and in the coming quarters the Business Combination will start to show its positive commercial, operating, and economic effects.
On July 14th, 2022 was acquired for Euro 12.5 million a 26% stake of Vendomat S.p.A., that will also be consolidated since July 1st, 2022.
The present scenario, with high inflation and geopolitical threats, affects IVS Group operations, but certainly with lower intensity compared to the pandemic impacts. Presences and consumptions at the vending machines in locations like schools, universities, railways stations, undergrounds, and airports, are recovering.
The business in the manufacturing companies had already almost fully returned to pre Covid levels, while in major metropolitan areas, corporate services and especially public office services, are still affected by the slow return of employees to their workplaces. This causes the current gradual recovery trend of volumes with respect to pre pandemic periods, that IVS Group faced also with extraordinary moves, made possible also by the flexibility and solidity proved during the Covid period. Since second half of 2022 IVS Group will operate on a much larger base, with new and stronger operating and strategic capacity.
The Business Combination with Liomatic and GeSA will generate in the coming years remarkable and positive economic effects.
Furthermore, having been almost fully financed with equity, the Business Combination brings the group into the future with a larger base and a stronger financial structure. All that will allow to take advantage from new market opportunities, innovative marketing and relationship instruments with millions of final consumers.
¹ Adjusted EBITDA’’: is equal to operating income, increased by depreciation, amortisation, write-downs, non-recurring costs and exceptional in nature
