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IVS Group releases Interim Financial Report

IVS Group

GRAND DUCHY OF LUXEMBOURG – The Board of Directors of IVS Group S.A. (Milan: IVS.MI), convened on November 28th, 2016, and chaired by Cesare Cerea, reviewed and approved the Interim Financial Report at 30 September 2016, which shows the continuous growth of IVS Group results.

These results are very positive especially considering that the third quarter, usually the weakest of the year for consumptions trends, in 2016 registered also unfavourable weather conditions for cold beverage sales compared to the corresponding period of 2015.

Highlights

Consolidated Revenues: Euro 269.7 million, +4.8%, compared to 30 September 2015 (Euro 257.3 million).

Adjusted EBITDA 2: Euro 62.0 million, +3.2% compared to September 2015 (Euro 60.1 million), with an EBITDA margin on sales of 23%.

Group Net Profit: Euro 11.9 million (after profits attributable to minorities of Euro 1.3 million), from Euro 12.6 million at September 2015 (which however included also Euro 2.6 million of extraordinary financial income).

Adjusted Net Profit of Euro 13.0 million (after minorities) +11.1% from Euro 11.7 million at September 2015.

Net Financial Position: Euro -229.2 million, from Euro -230.8 at 31 December 2015, after net investments in fixed assets, and acquisitions for Euro 40.1 million, and considered also payments for Euro 8.9 million related to the early reimbursement of 7.125% notes due 2020 made on 1 April 2016.

Completed in the first nine months 16 acquisitions for an enterprise value of around Euro 9.0 million.

Operating performances

In the first nine months of 2016 consolidated revenues amounted to Euro 269.7 million (of which 248.3 related to the core vending business), with an increase of 4.8% compared to Euro 257.3 million at 30 September 2015 (Euro 237.5 million in vending).

Revenues increased by 4.3% on the Italian market, by 5.7% in Spain, by 6.1% in France, and decreased by 11.8% in Switzerland (which is still quite small, with sales of only Euro 0.3 million). Sales increased also in the coins management business (Coinservice division, +18.6%).

The sales increase in the vending business is mostly the effect of the consolidation of the acquisitions made during 2015, supported also by the increase of the average price per vend (+0.6% to 46.44 Euro cents); the average price per vend was influenced by the less favourable product mix, with a lower portion, in the third quarter 2016, of cold drinks.

Sales slightly increased, on a like-for-like basis, in the larger sector of automatic vending machines (+0.8%), and were substantially stable (+0,2%) in total, because of the continuing decrease in the semi-automatic OCS-Office Coffee Service segment, which represents around 5.4% of total sales.

It must be remembered than in the OCS sector IVS is developing the on-line sales activity, through the 50% owned (hence not fully consolidated – consolidated at equity value) Cialdamia S.r.l. and its French subsidiary MB Web S.a.s. which in the period generated sales of around Euro 3 million (value not significant at September 2015).

The total number of vends in the first 9 months of 2016 was equal to 535 million, +3.9% compared to the same period of 2015.

CoffecApp, the mobile app developed by the controlled company Venpay, showed in the period an increase of registered users of 740% and of 902% of sales compared to December 2015; the instalment of the App on an increasing number of vending machines is therefore envisaged.

The acquisition rate of new clients continues to be much higher than the churn rate (clients lost), with a significant improvement in the third quarter, confirming the effectiveness of commercial policies and of the investments in new models of vending machines.

During the first nine months of 2016 were completed 16 new business acquisitions in Italy and France, with an Enterprise Value of around Euro 9.0 million, and an effect on the sales of the period, calculated from the date of the acquisition, of Euro 5.2 million.

Adjusted EBITDA increased by 3.2% in the first nine months of 2016, from Euro 60.1 million to Euro 62.0 million.

The increase of EBITDA comes from the acquisitions made in 2015, whose integration in the group is completed in 10-12 months, and from the savings on operating costs (purchases, labour, services).

The EBITDA margin at 30 September, equal to 23%, is very positive considering that sales are usually weaker during the summer holidays period, and that in July and August 2016 weather was unfavourable compared to the very hot summer 2015.

Group Net Profit in the first nine months is equal to around Euro 11.9 million (after profits attributable to minorities of Euro 1.3 million), compared to Euro 12.6 million in the first nine months of 2015.

It should be noticed that the net profit at 30 September 2015 included an extraordinary financial income, Euro 2.6 million of “variation in the fair value of derivatives”, related to the negative price change of warrants issued in 2011 and convertible into IVS Group shares, which expired on January 2016.

The P&L in the first 9 months of 2016 includes also other extraordinary costs of Euro 1.1 million (mainly related to staff redundancies and other costs for acquisitions).

The Net Profit Adjusted for the above mentioned items of the period is equal to Euro 13.0 million (after profits to minorities), +11.1% from Euro 11.7 million of 2015.

Net Financial Position, is equal to Euro -229.2 million, from Euro -230.8 million as of 31 December 2015, after payments for net fixed investments and acquisitions in the first nine months of 2016 of Euro 40.1 million.

Net financial position includes the payment of Euro 8.9 million for the early reimbursement of the 7.125% notes due 2020 made on 1 April 2016, whilst is excluded the VAT credit of Euro 12.4 million, grown also following the acceleration of capex during the first half of 2016.

Other significant events occurred after 30 September 2016 and prospects for the full year

On October 2016 the subsidiary IVS Italia announced the signing of an important agreement with Nespresso Italiana for the exclusive distribution, in several on the main Italian regions, of the Professional Line of Nespressotm coffee pods.

It is expected that this agreement, with a 3 years duration until the end of 20190, might contribute to a significant increase of sales in the OCS sector.

On November 2016 IVS Italia acquired the vending business of Prod & Pan S.r.l. in Sardinia, for a value and with sales of approximately Euro 1.5 million.

With reference to the decisions of June 2016 of the AGCM (Italian antitrust authority) against all the major Italian players in the vending sector, IVS Italia submitted its appeal to the relevant Court (TAR of Lazio), which is expected will convene for the first hearing on 7 June 2017; in the meantime, IVS Italia obtained a delay, with instalments over a period of 30 months, of the payment of the fine, for which relevant provisions were already made in 2015 Annual Report.

About IVS Group S.A.

IVS Group S.A. is the Italian leader and the third 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 (85% of sales), France, Spain and Switzerland, with around 155,000 vending machines, a network of 75 branches and around 2,400 employees.

IVS Group serves more than 15,000 corporate clients and public entities, with more than 700 million vends per year.