GRAND DUCHY OF LUXEMBOURG – The Board of Directors of IVS Group S.A., convened on March 24th, 2020, and chaired by Mr. Paolo Covre, examined and approved the Annual Report 2019 (statutory and consolidated), the Management Report and related documents and the Sustainability Report.
Given the uncertainty on the possible impact and duration of Covid-10 epidemic, even with the good results reached in 2019, the Board resolved to propose to the AGM not to pay any dividend.
The Board has mandated the Chairman to convene the Annual Shareholders’ Meeting, in accordance with law and the Company’s statute, on May 12th, 2020, at 11.00 or a following date, in any case no later than June 30th, 2020, 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 2019 and related matters, the allocation of the Company’s result, the renewal of the auditors’ mandate and directors’ indemnification.
Summary of results at December 31st, 2019
- Consolidated Revenues: Euro 462.9 million, +6.6%, compared to 2018.
- Adjusted EBITDA1: Euro 105.5 million (with IFRS16 new effects) and Euro 94.3 million before IFRS16.
- Adjusted Net Profit: Euro 26.3 million (with IFRS16) and Euro 27.3 million (without IFRS16), +4.1% (before minorities of Euro 1.2 million).
- Completed 11 new acquisitions in the core vending business and 1 in the Coin division, with an Enterprise Value of around Euro 29.8 million.
Consolidated revenues in 2019 reached Euro 462.9 million (of which 417.0 million related to the core vending business), with an increase of 6.6% from 434.4 million in 2018 (Euro 395.9 million in vending).
Total sales increased by 7.1% in Italy and 3.5% in France, decreased by 5.7% in Spain and 2.4% in Switzerland. Coin Service division sales increased in total by 26.6% (+6.2% in the core metal coins business), thanks also to the growth of the new businesses, (digital money), developed by the subsidiary Venpay S.p.A. (+50.3%) and the acquisition of Moneynet S.p.A., consolidated in IVS Group since August 2019.
Overall vending sales (like-for-like and at par working days) were almost stable, with +0.7% in Italy, -1% in France, -5.4% in Spain, -2.8% in in Switzerland. As already reported in previous quarters, the decrease in Spain was particularly due to volumes reduction in some major industrial clients (i.e. in the automotive industry). In Switzerland, although limited in absolute amount, the decrease is due to a rotation of clients portfolio, which in any case determined an increase in margins.
The total number of vends in 2019 was equal to around 867.3 million, +4.0% from 834.3 million of 2018. Confirming the trend of previous years and quarters, also in 2019 IVS shows an acquisition rate of new clients higher than the churn rate.
Average price per vend was equal to Euro 48.08 cents from Euro 47.45 cents of 2018 (+1.3%).
In the core vending business, in 2019 were completed 11 acquisitions in Italy and France, with an Enterprise Value of Euro 29.7 million, contributing Euro 18.7 million to sales on pro-rata basis from the date of the acquisition.
EBITDA reported (with IFRS16) increased to Euro 104.8 million from Euro 91.1 million (without IFRS 16) of 2018.
Adjusted EBITDA was equal to Euro 105.5 million (with IFRS 16) or Euro 94.3 million without IFRS 16, from Euro 93.4 million of 2018 (without IFRS 16), +1.0%, with an EBITDA margin on sales of 20.4%.
Group Reported Net Profit (with IFRS 16) in 2019 is equal to Euro 19.7 million (before minorities of Euro 1.2 million). The reported net profit is influenced by non recurring costs and revenues, of which Euro 2.2 million related to acquisitions.
The most important extraordinary costs, for a total of Euro 6.4 million, are however related to the refinancing – completed between September and November 2019 – of the bond expiring on November 2022 with the issue of the new bond expiring on September 2026 (including legal cost and fees for the placement of the new issue, the redemption price at 101.125 for the old bond, the residual costs already paid, accrued and not amortised of the old bond, and the higher interest costs in the period of overlapping of the new Euro 300 mln bond at 3% and the old Euro 240 million bond at 4.5%). All these una tantum costs sustained in 2019 for the bond refinancing will generate significant interest savings until 2026.
The Net Profit Adjusted for the exceptional items and before minorities is equal to Euro 26.3 million with IFRS 16, and Euro 27.3 million without IFRS 16, +4.1% compared to 2018.
Net Financial Position (“NFP”), is equal to Euro -386.0 million (with IFRS 16), or Euro 326.5 without IFRS 16, from Euro -385.6 million as of September 30th, 2018 and Euro -348.5 million at January 1st, 2019 (with IFRS 16).
During the year were made payments for net investments of Euro 72.6 million, of which Euro 51.6 million for net investment in fixed assets – including those linked to newly acquired businesses and done in previous quarters – and Euro 21.0 million for payments related to acquisitions. In addition to the payments related to investments, during 2019 were paid Euro 11.1 million of dividends (in the third quarter), Euro 7.8 million related to the bond refinancing (in the fourth quarter) and Euro 3.2 million for the antitrust fine of 2016 (in the first quarter, until March 2019).
As of December 31st, 2019 the group has also approximately Euro 22.0 million of VAT credit (Euro 13.6 million at the end of 2018) not included in Net Financial Position, which could be cashed-in with pro-soluto credit sale.
Other significant transactions and events occurred after December 31st, 2019
On January 1st, 2020 has been finalized the merger of S.D.A. 2000 S.r.l. into SDA-DDS S.p.A..
On January 30th, 2020 Coffee System Società Cooperativa, an Italian company active in the vending sector in Lazio region, transferred its business into the subsidiary IVS Italia S.p.A. The provisional value of the transaction is around Euro 0.7 million.
On March 6 th, 2020 IVS Italia S.p.A. completed the acquisition of the business of Idea vending S.r.l. with a value of around Euro 0.1 million.
On March 12th, 2020 IVS Italia S.p.A. sent to AGCM (Italian Antitrust Authority) the formal request of reimbursement for a total amount of around Euro 8.0 million (plus legal interests), corresponding to exceeding part of the fine already fully paid.
During 2019, IVS Group recorded a slight increase in like-for-like vending sales, despite a slight drop in volumes, due to the general slowdown in the economy, in Europe and in Italy, which gradually emerged during the year.
The policies on investments, on the quality and innovation of services, on the product mix, however, allowed the maintenance of good levels of profitability.
2020 started in line with the previous trend, until the rapid diffusion of the Covid-19 virus emerged, first in Italy and then in the rest of Europe. Various government measures were adopted, aimed at addressing the emergency, with consequent effects on all economic activities, starting from the regions of Northern Italy and in some market segments, and therefore on a national basis.
This has led to a significant decrease in consumption volumes, in Italy, due to the sharp drop in people in public locations and work places. Data on other European markets are not yet consolidated, but similar levels of decrease can be realistic.
The government measures formally included the activity of automatic food distribution (vending) among those authorized to maintain the service continuity.
The impact – expected to be signficant – on the company results of 2020 in terms of margin reduction, is obviously not quantifiable precisely, given the impossibility of predicting the duration and intensity of the effects of the epidemic.
The company immediately put in place actions aimed at preserving both the economic results and the company’s financial position; among these, the adjustment of the logistics structure (refilling and technical staff), also providing for the activation of social safety nets (CIGS); the redefinition of some categories of costs (i.e. positioning fees); the downsizing of planned investments.
The financial debt of the group, being almost entirely represented term loans (bullet) and long-term bonds (expiring September 2026), represents a base of relative strength, compared to many companies in the vending sector. The company has also significant liquidity and unused committed bank facilities.
All this allows, despite the contingent difficulties, to look to the future still with a positive view to business growth.
IVS Group has already demonstrated, even in periods characterized by a very weak economic environment, such as in 2013-2015, its strength and resiliency; IVS knows how to face hard challenges, seize new opportunities and improve its position and market share.
Among these opportunities, the growing and significant numbers of users of interconnection and digital payment systems on the IVS distributor network, represent an important competitive and value-creating tool for the group and for many of its partners and stakeholders.
2 “Adjusted EBITDA’’: is equal to operating income, increased by depreciation, amortisation, write-downs, non-recurring costs and exceptional in nature.