GRAND DUCHY OF LUXEMBOURG – The Board of Directors of IVS Group S.A. (Milan: IVS.MI), convened on May 15th, 2019, and chaired by Mr. Paolo Covre, examined and approved the Interim Financial report at 31 March 2019, showing the constant growth of IVS Group.
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 (79% of sales), France, Spain and Switzerland, with around 202,000 vending machines.
The group has a network of 81 branches and over 2,900 employees. IVS Group serves more than 15,000 corporate clients and public entities, with more than 830 million vends per year.
Summary of results at 31 March 2019
- Consolidated Revenues: Euro 114.2 million, +6.4%, compared to March 2018.
- EBITDA reported: Euro 27.8 million, +18.4% compared to 2018 (+6.6% net of effects arising from the new definition of IFRS 16 accounting principle).
- Adjusted EBITDA: Euro 28.0 million, +14.9%, (+3.6% net IFRS 16) with an EBITDA margin on sales of 24.5% (22.1% without IFRS 16 effects)
- Group Net Profit: Euro 6.9 million, after profits attributable to minorities of Euro 0.4 million, +13.1% vs Euro 6.1 of March 2018 (15.4% without IFRS 16 effects);
- Adjusted Net Profit: Euro 7.1 million, after minorities of Euro 0.4 million, +4.6% (+6.7% without IFRS 16 effects).
- “Adjusted EBITDA’’: is equal to operating income, increased by depreciation, amortisation, write-downs, non-recurring costs and exceptional in nature
- Completed 4 new acquisitions in Italy and France, with an Enterprise Value of around Euro 34.2 million.
Consolidated revenues in 1Q 2019 reached Euro 114.2 million (of which 104.0 million related to the core vending business), with an increase of 6.4% from 107.3 million in 1Q 2018 (Euro 98.9 million in vending). Working days in 1Q 2019 were 0,5 less than in 1Q 2018 (0.8% on the total).
Total sales increased by 6.8% in Italy and by 8.0% in France, while decreased in Spain (-5,6%) and in Switzerland (-6%, where however margins increased). Coin Service division sales increased in total by 13.3% of which +5.9% in the core metal coins business, and +64% in digital payments and IoT, where the subsidiary Venpay S.p.A.. after the start-up phase of new businesses, shows first positive margins.
Vending sales grew by 5.1% in total and +1.9% Like-for-Like and at par working days; in detail +3.7% in Italy, +2.5% in Spain, -9.0% in France and -8.4% in Switzerland. In particular, volumes L-f-L and par days increased by 1.6% confirming IVS strong commercial capacity event in weak consumption scenario; in Spain, there was a significant decrease of volumes (-9.3%) especially in some major industrial clients (automotive industry), already experienced at the end of 2018, compensated only in part by average price increase.
The total number of vends of the period was equal to around 220.8 million, +3.5% from 213.4 million at March 2018. 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 1Q 2019 was equal to Euro 47.1 cents, from 46.4 cents of 1Q 2018 (+1.5%).
During 1Q 2019 were completed 4 acquisitions (3 in Italy and 1 in France), with an Enterprise Value of Euro 34.2 million, contributing Euro 2.6 million to sales on pro-rata basis from the date of the acquisition.
On March 18tth, 2019 IVS was awarded the tender for the vending machines on the Paris Metro network. This contract – starting on 2020 and following other important contracts won in Paris – in addition to an evident economic importance, will have great visibility and further effects for IVS growth strategy in France.
EBITDA reported increased by 18.4% compared to March 2018, from Euro 23.5 million to Euro 27.8 million (Euro 25.0 million excluding IFRS 16 effects, +6.6%).
Adjusted EBITDA grew by 14.9%, from Euro 24.4 million to Euro 28.0 million, with an EBITDA margin on sales of 24.5%. Net of IFRS 16 effects, Adjusted EBITDA is equal to Euro 25.2 million (+3.6% and 22.1% on sales).
Group Net Profit at March 2019 is equal to Euro 6.9 million (after profits attributable to minorities of Euro 0.4 million) +13.1% compared to Euro 6.1 of 2018 (after minorities of Euro 0.3 million). Net profit includes some costs and profits considered of exceptional nature, totalling Euro 0.2 million (net of tax effects) mostly related to the acquisitions competed. The Net Profit Adjusted for the exceptional items is equal to Euro 7.1 million (after minorities), increased by 4.6% from Euro 6.8 million. Net profit is influenced by the increase of depreciation, from Euro 11.4 million to 14.3 million, deriving from the new IFRS 16 accounting principle.
Net Financial Position (“NFP”), is equal to Euro -366.4 million (of which 63.0 million deriving from the application of new IFRS 16), from EURO -285.5 million at the end of 2018, after payments for net investments of Euro 35.2 million, of which Euro 13.8 million for net investment in fixed assets – including those linked to newly acquired businesses and done in previous quarters – and Euro 21.4 million for payments related to acquisitions, which in practice contributed to quarterly P&L only one month, since March 2019. The cash generated from operations in the period was equal to Euro 30.9 million.
The working capital increase experienced at the end of 2018 has been normalised.
As of 31 March 2019 the group has Euro 13.3 million of VAT credit. IVS Group, after utilisation to pay part of the acquisition price of SDA 2000, still holds n. 1,895,818 treasury shares, valued around Euro 18.6 million, coming from the redemption of the business combination SPAC-IVS of 2012. These values are not included in Net Financial Position.
The existing notes due November 2022 and term bank loans, have financial covenants providing for the neutrality of the effects deriving from the new IFRS 16 accounting principle. The covenants as of December 31st 2018 (last date of formal measurement) were respected with a large headroom.
Other significant transactions and events occurred after 31 March 2019
On 18 April 2019, was contributed to a subsidiary of IVS Italia S.p.A. the vending business of GDL S.r.l. active in Lazio region, valued around Euro 0.6 million and exchanged with a corresponding minority interest.
On 30 April 2019 IVS Group shares were admitted to trading of the STAR segment of MTA managed by Borsa Italiana.
On 14 May 2019 IVS Group AGM approved 2018 annual reports, the payment of a dividend of Euro 0.30 per share and the a buy-back plan, up to 1,000,000 own shares, with a duration of 5 years.
The economy and consumption scenario remains uncertain, in line with the changes in GDP and hours worked in the countries where IVS operates. This has an impact on Like-for-Like volumes, 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 of size and profitability.
The implementation of technical investments, digital and payment systems linked to IVS vending machines network allowed, from the beginning of 2019, the start of first direct marketing and shopper marketing initiatives (in collaboration with some big players in the food & beverage, like Coca Cola, Mars, Ferrero, ..); these programs represent an important strategic option and confirm IVS attractiveness and leadership in vending innovation. IVS was also the first (and sole to date) vending player, able to integrate in its fintech network the payment systems of Alipay, part of the Chinese Alibaba group.