GRAND DUCHY OF LUXEMBOURG – The Board of Directors of IVS Group S.A., convened on November 14th, 2019 and chaired by Mr. Paolo Covre, examined and approved the Interim Report at 30 September 2019, showing IVS Group growth also in a weak economic scenario.
Consolidated Revenues amounted to Euro 342.6 million, +6.6% compared to 2018. Adjusted EBITDA totalled Euro 79.1 million including IFRS 16 effects; Euro 70.7 million excluding IFRS 16 effects. Group Adjusted Net Profit reached Euro 17.7 million including IFRS 16 effects; Euro 18.5 million excluding IFRS 16. The company completed 9 new acquisitions in Italy and France, with an Enterprise Value of around Euro 37.7 million.
“Adjusted EBITDA’’: is equal to operating income, increased by depreciation, amortisation, write-downs, non-recurring costs and exceptional in nature
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 (80% of sales), France, Spain and Switzerland, with around 201,000 vending machines. The group has a network of 83 branches and over 3,000 employees. IVS Group serves more than 15,000 corporate clients and public entities, with around 850 million vends per year.
IVS Group: Operating performances
Consolidated revenues in the first 9 months of 2019 reached Euro 342.6 million (of which 310.4 million related to the core vending business), with an increase of 6.6% from 321.5 million of 2018 (of which Euro 294.0 million in vending).
Total sales increased by 7.4% in Italy and by 7.1% in France, while decreased in Spain (-7.0%) and in Switzerland (-1,5%, where however margins increased). Coin Service division sales increased in total by 18.3% of which +7.1% in the core metal coins business, and +51,2% in digital payments and IoT, where the subsidiary Venpay S.p.A.. after the start-up phase of new businesses, shows first positive margins. Coinservice division includes also Moneynet since July 31st, 2019 (with a contribution to sales Euro 0.6 million).
Vending sales grew by 5.6% in total (stable Like-for-Like and at par working days); in detail: +7.3% in Italy, +6.2% France, -6.0% in Spain and -1,4% in Switzerland. In particular, L-f-L and par days sales increased in Italy by around 0.7%, with a decrease of -1.3% in volumes; in Spain, there was a significant decrease of volumes (-5.6% L-f-L and par days almost in line with to the first half 2019) especially in some major industrial clients (automotive industry), already experienced at the last quarters, compensated only in part by the average price increase.
In France are going ahead the preparation activities necessary for the start in 2020 of the important Paris Metro contract.
The total number of vends at September 2019 was equal to 646.3 million from 619.5 million at September 2018 (+4.3%). Confirming the trend of previous years and quarters, IVS always has an acquisition rate of new clients higher than the churn rate. Average price per vend in the period was equal to Euro 48.0 cents, from 47.5 cents (+1.1%).
In the first nine months of 2019 were completed 9 acquisitions (8 in Italy and 1 in France), with an Enterprise Value of Euro 37.7 million, contributing Euro 13.5 million to sales on pro-rata basis from the date of the acquisition.
Adjusted EBITDA reported increased by 12.8% (including IFRS16 effects) compared to 30 September 2018, from Euro 70.1 million to Euro 79.1 million. Adjusted EBITDA net of IFRS 16 effects slightly grew too, +0.9%, at Euro 70.7 million.
EBITDA includes a negative contribution, of around Euro 0.4 million, deriving from Moneynet acquisition completed on 31 July 2019. The final price and the PPA-Purchase Price Allocation of this transactions still provisional as of 30 September 30th 2019.
Group Net Profit reported at 30 September 2019 is equal to Euro 15.7 million (Euro 16.6 excluding IFRS 16, -15.8% compared to 30 September 2018). Net profit includes some costs and profits considered of exceptional nature, totalling Euro 2.0 million (net of tax effects).
The group Net Profit Adjusted for the exceptional items is equal to Euro 17.7 million (before Euro 1.0 million of profits attributable to minorities), and would be equal to Euro 18.5 million without the effects of IFRS 16 (-11.4% compared to the first 9 months of 2018).
Net Financial Position (“NFP”), compared to -348.5 at 1 January 2019 is equal to Euro -385.6 million of which around 60.0 million deriving from the application of new IFRS 16. In the first nine months of 2019 were made payments related to net investments for total Euro 70.3 million, of which Euro 39.2 million for net investment in fixed assets, including those linked to new capex on acquired businesses and done in previous quarters, Euro 19.6 million for price payments related to acquisitions (with additional Euro 11.1 million debt of the acquired businesses to be added to total NFP of Euro 2.8 million reimbursed at 30 September 2019). Furthermore, on July 2019 was paid a dividend of Euro 11.3 million.
In the third quarter 2019, the increase in working capital absorbed approximately Euro 27.2 million; in particular, there was an increase of payments of trade payables for Euro 17.1 million, related in part to liabilities arisen in the second quarter, but matured and paid at the beginning of the third quarter (Euro 10.7 million), payments of liabilities of the companies acquired (around Euro 4.4 million), an increase in other credits and inventory for a total of Euro 5.1 million, of which Euro 2.2 million VAT credit increase. VAT credit in the first 9 months of 2019 increased by Euro 6.6 million, and the total VAT credit outstanding is Euro 20.5 million (not included in NFP).
Moreover, in the third quarter there were higher payments related to the accruals for 14th months’ salaries (Euro 5.2 million) and other higher tax payments compared to the first half 2019 (for Euro 4.3 million). As of 30 September 2019 the group has financial assets for Euro 18.6 million (n. 1,895,818 treasury shares coming from the redemption of the business combination SPAC-IVS of 2012), not included in the NFP.
At the beginning of October 2019 IVS Group issued a new bond for a total amount of Euro 300 million, maturity October 2026, 3% fixed rate. The proceeds will be mostly devoted to the redemption of the existing notes, due November 2022, 4.5% fixed rate. The price for the early redemption call (on 15 November 2019) is 101.125%. The refinancing will generate some “one off” costs charged to the last quarter 2019 for a total of around Euro 5.1 million; on the other side, the debt duration will increase by 4 years, and interest savings (at par principal of the bond redeemed) will reach Euro 3.6 million per year (Euro 14.4 million on four years extension).
The new notes include covenants with a larger headroom, compared to the previous bond, and defined in such a way to contain the effects of new IFRS 16 definitions, that were also neutralised for the existing – used or undrawn – bank term facilities.
Other significant transactions and events occurred after 30 September 2019
On 2 September 2019 the Council of State (Consiglio di Stato) has ruled on the appeal filed by IVS Italia S.p.A. against the Italian Antitrust Authority (IAA, stating that the IAA applied without proper motivation the so-called entry fee (additional amount of the value of the sales of the goods or services subject to the infringement) and the aggravating circumstance (leader of the cartel). The Council of State, ordered the IAA to re-determine the fine imposed on IVS Italia S.p.A (fine that was already fully paid). IAA on 15 October 2019 started the procedure for re-determine the fine formerly applied. The procedure should be completed by 28 February 2020.
On 7 October 2019 IVS Group, through its subsidiary IVS Italia S.p.A. finalized the acquisitions of the vending business of Fullin S.r.l., in Veneto region, with a provisional consideration of Euro 2.0 million.
The economy and consumption scenario in the countries where IVS operates remains weak, in line with the changes in GDP and hours worked. This has an impact on Like-for-Like volumes (number of vends) at par client base, but on the other side it contributes to the concentration trend in the vending sector, carried out by the most qualified and solid players within the industry. In this context, IVS expects to continue a pattern of growth, both in terms of size and profitability, also thanks to its existing solid performances and financial base.
The technical investments in digital and payment systems linked to the vending machines network, give IVS Group a unique capacity to combine a large and integrated infrastructure and logistic network, which is daily in direct contact with millions of final consumers. Such capacity, which is attracting increasing and concrete interests from big international players, represents an important strategic option of value creation for IVS Group.