GRAND DUCHY OF LUXEMBOURG – The Board of Directors of IVS Group S.A. (Milan: IVS.MI), convened on March 30th, 2021 and chaired by Mr. Paolo Covre, examined and approved the Annual Report 2020 (statutory and consolidated), the Management Report and related documents and the Sustainability Report. 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 business is mainly carried out in Italy (79% of sales), France, Spain and Switzerland, with around 224,900 vending machines, a network of 88 branches and around 2,900 employees. IVS Group served more than 15,000 corporate clients and public entities, with over 600 million vends per year.
The Board resolved to propose to the AGM to carry forward the Company’s results, and mandate the Chairman to convene the Annual Shareholders’ Meeting, in accordance with law and the Company’s statute, on 27 May 2021, at 11.30 at IVS Group registered office, 18 Rue de l’Eau L – 1449, L-Luxembourg, Grand Duchy of Luxembourg, to vote on the approval of the Annual Report 2020 and related matters, the allocation of the Company’s result, the renewal of the auditors’ mandate and directors’ indemnification.
IVS Group: Summary of results at 31 December 2020
- Consolidated Revenues: Euro 329.9 million.
- EBITDA Reported equal to Euro 69.8 million. Adjusted EBITDA¹: Euro 61.9 million.
- Reported Net Result equal to Euro -15.3 million (after an impairment of goodwill of Euro 18.8 million).
- Adjusted Net Results: Euro -6.5 million (after profits attributable to minorities).
- Net Financial Debt reduced by Euro 32.2 million and equal to Euro 353.8 million
- Completed 6 new acquisitions with an Enterprise Value of around Euro 6.8 million.
Operating performances
Consolidated revenues in 2020 reached Euro 329.9 million (of which 284.8 million related to the core vending business), with a decrease of 28.7% from 462.9 million in 2019 (of which Euro 417.0 million in vending).
Total sales where strongly affected by the effects of Covid pandemic and decreased in all areas: by 30.3% in Italy, 22.5% in France, 36% in Spain and 26.2% in Switzerland. The French performance was helped by the start – although still partial – of the Paris Metro contract. Coin GCU sales decreased by 11.5% but they fully include the controlled subsidiary Moneynet (in 2019 consolidated since August) in the payment service business, whilst CoinService sales (metallic coins business) decreased by 26.6% and Venpay sales (digital money business) decreased by 53%, as a consequence of the cut of the Capex on new Digital Payments Systems by the clients in the vending sector.
In the core vending business the total number of vends in 2020 was equal to around 607.3 million, -30.0% from 867.3 million of 2019. As in the former years, IVS has always an acquisition rate of new clients higher than the churn rate; the volumes decrease is due to the pandemic effects on economic and social activities. At par client base, the hours worked in the corporate sector, the number of people at school, in the universities, travelling, and, consequently, their consumptions, decreased. The average price per vend was equal to Euro 46.90 cents, from Euro 48.08 cents of 2019 (-2.5%). The average price decrease is not due to real lower unit prices, but to differences in the product mix and in the locations where vends take place. In particular, the negative trend is related to the lower consumptions in the public locations, where prices are on average much higher compared to the prices applied to the clients in the corporate sector or to clients with agreed prices, and the prevailing presence of employees, often using electronic keys and enjoying lower prices, with less occasional external consumers using coins.
In 2020 were completed 6 acquisitions in Italy, with an Enterprise Value of Euro 6.8 million, contributing Euro 1.8 million to sales on pro-rata basis from the date of the acquisition.
Reported EBITDA in 2020 was equal to Euro 69.8 million (21.2% on sales), -33.4% from Euro 104.8 million of 2019 (22.6% on sales). Adjusted EBITDA2 was equal to Euro 61.9 million, from Euro 105.5 million of 2019 (-41.3) with an EBITDA margin on sales of 18.8% (21.0% on sales net of positioning fees and redevances).
The difference between Reported EBITDA e Adjusted EBITDA is mainly due to the extraordinay income for the partial reimbursement of the Antitrust fine paid in previous years (Euro 8.0 million), and to other net minor costs / income, related to non recurring situations (including the application of the amendments to IFRS 16 principle approved for the Covid-19 emergency).
Despite the Covid emergency, that caused the strong decrease in absolute numbers of volumes and contribution margin, the operating profitability (EBITDA margin) was maintained at excellent percentage levels, in the range of 20%.
This was achieved thanks to timely actions of reorganisations in the logistic of the branches, to the reduction of all the most important costs, and also using the various public subsidies for temporary unemployment, according to labour rules in the different countries where the goup is active. Notwithstanding the acquisitions completed and the national blocking of layoffs, the overall number of the groups’ employees decreased by around 200 units (-6.6%), because of the expiry of term labour contracts and for normal personnel rotation.
Group Reported Net Result in 2020 is equal to Euro -15.3 million, and the Adjusted Net Result is Euro -6.5 million (after profit to minorities of Euro 0.2 million), compared, respectively, to Euro 18.5 million and Euro 25.1 million of 2019. In addition to the lower EBITDA and the extraordinary income and costs already mentioned, the Net Result is influenced by the higher level (Euro 80.4 million) of non cash costs, related for Euro 61.6 million to depreciation and amortisation (increased by Euro 2.1 million, due to past years Capex), and for Euro 18.8 million to an extraordinary impairment of the goodwill related to Spain CGU (equal to 25.3 million at December 31st, 2019), particularly hit by the crisis, and subject to the impairment test (as all the other CGUs). The Net Result benefits from the lower interests cost, thanks to the bond refinancing completed at the end of 2019, and from the formation of credits to offset future taxes.
Net Financial Position (“NFP”), is equal to Euro -353.8 million (with IFRS 16), from Euro -386.0 million at the end of 2019. The decrease of net financial debt is equal to Euro 32.2 million. Excluding the debt related to the application of the new IFRS 16 rules, (Euro 51.5 million), net consolidated financial debt would be around Euro 302 million, almost equal to the outstanding amount of IVS Group bond expiring on October 2026. In a very difficult scenario, the group was able to generate a high free cash-flow, even continuing to invest a significant amount of money, although lower than in the past years. In 2020 the total cash payments for investments were equal to Euro 41.3 million, of which Euro 35.6 million for net industrial capex (including those for the Paris Metro, the new acquisitions and those related to previous years) and Euro 5.7 million for M&A transactions. The large stock of investments made in previous years allows today to reduce significantly the new capex, as it was done after the start of the pandemic, with no backlash on commercial coverage and service quality.
As of December 31st, 2020 the group has cash on bank accounts of Euro 90 million, and Euro 15.6 million of VAT credit (Euro 22.0 million at the end of 2019) not included in Net Financial Position, and n. 1.895.818 treasury shares (usable as form of payment in possible acquisitions).
Other significant transactions and events occurred after 31 December 2020
On November 18th, 2020 the subsidiary IVS Italia SpA received the payment of Euro 8.0 million for the partial reimbursement of the Antitrust fines paid in the past years.
On January 7th, 2021 IVS Group exercised the call option on minority stakes of the controlled companies Coin Service SpA (2%) and Coin Service Nord SpA (2%), for a total price of around Euro 0.85 million, paid Euro 0.5 million in cash and Euro 0.35 million with IVS Group own shares.
On February 24th, 2021 IVS Group received the reimbursement of Euro 9.0 million VAT credit (related to 2019 and 1Q 2020).
On March 12th, 2021 IVS Group received by BNP Paribas, in its quality of agent of the bank pool financing signed at the end of 2018, the communication that financial covenants related to Report at June 30th, 2021 will not be tested (a similar communication about non testing of covenants related to the Annual Report at December 31st, 2020 had been already received before the end of 2020).
During a difficult 2020, that in the last part of the year showed a new worsening of the pandemic effects, IVS Group proved a remarkable resilience and capacity to generate cash. It is likely that the present situation will continue along the first part of 2021 in all the group’s business areas, until the vaccine campaign will have concrete positive effects.
IVS Group slowed or suspended its major investment programmes, but accellerated, without making significant capex, the start of new potentially interesting activities in the food delivery, using its logistic and IT vending platform, and also in ancillary businesses, in order to develop and enhance the value of its network and know-how, also through possible partnerships. The signing of a Memorandum of Understanding with ENEL X Financial Services for possible cooperation in the payment services is an example of this approach.
The Covid crisis has triggered deep changes in the European vending scenario, in terms of accelleration of the concentration process and new ways of managing products and services. The most solid and skilled players in the industry will turn these changes into new business opportunities.
IVS continued to analise possible acquisitions and business combinations, also of large size, in Italy and abroad. The objective to consolidate larger market shares will increase the group’s operating efficiency and will make even more IVS Group a reference player in the vending sector and for the coffee industry chain.
¹ “Adjusted EBITDA’’: is equal to operating income, increased by depreciation, amortisation, write-downs, non-recurring costs and exceptional in nature
