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IVS Group S.A.: Interim Consolidated Report shows significant growth

With the acquisition of Grup Ibevending, IVS becomes the third player in the vending sector in Spain.

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GRAND DUCHY OF LUXEMBOURG – The Board of Directors of IVS Group S.A., convened on May 25th, 2017, and chaired by Cesare Cerea, reviewed and approved the Interim Consolidated Financial Schedule at 31 March 2017, showing a significant growth of the group’s results.

Highlights

Consolidated Revenues: Euro 101.1 million, +14.8%, compared to 31 March 2016.

Adjusted EBITDA 2: Euro 23.6 million, +14.0% compared to 31 March 2016, with an EBITDA margin on sales of 23.4%.

Group Net Profit: Euro 5.2 million (after profits attributable to minorities of Euro 0.4 million), from Euro 3.3 million at March 2016 (+58.6%). Adjusted Net Profit of Euro 6.0 million (after minorities) from Euro 6.9 million at March 2016, due to the reduction of the tax grants from ACE rules (income tax incentive for companies growth) recently modified by the Italian government.

Net Financial Position: Euro -247.7 million, from Euro -225.6 at 31 December 2016, after payments in the first three months of Euro 38.4 million related to investments in fixed assets and acquisitions.

Completed in the first quarter 4 acquisitions in Italy and Spain for an enterprise value of Euro 32.2 million. In particular, with the acquisition of Grup Ibevending, IVS becomes the third player in the vending sector in Spain.

Operating performance

In the first three months of 2017 consolidated revenues amounted to Euro 101.1 million (of which 93.7 related to the core vending business), with an increase of 14.7% compared to 31 March 2016 (of which Euro 81.4 million in vending).

Revenues in the vending business increased by 9.8% in Italy, by 6.9% in France, by 83.3% in Spain and by 597.4% in Switzerland. Coin Service division sales increased by 3.5% (+12% in core business of metal coins management).

The sales increase in the vending business comes from the consolidation of the acquisitions of the past year and of the first quarter; the most important acquisition, Grup Ibervending in Spain, completed at the end of January, accounts only for two months in the first quarter.

Excluding acquisitions and net of the change in working days (+2 days in the first quarter 2017 vs 2016), like-for-like volumes increased by 0.5% in Italy, also thanks to the contribution, in the OCS-Office Coffee Service segment, of the the new exclusive distribution agreement of the professional line of Nespressotm coffee pods, covering most of the Italian territory.

Volumes organic growth at group level remains close to zero. Sales growth, like-for-like and net of changes in working days, was +1.2% (+1.6% in Italy, -1.7% in France, -0.3% in Spain).

Average price per vend increased by around +0.7% compared to 1Q 2016. The total number of vends in the first quarter 2017 was equal to around 204 million, +14.3%.

The higher number of working days (+2) during the first quarter 2017 compared to 2016 and warmer than average weather in March, should be compensated by more holidays (Eastern, 25 April, 1 May, 2 June) and a quite rainy weather in the first part of the second quarter.

During the first three months of 2017 were completed 4 acquisitions in Italy and Spain, with an Enterprise Value of around Euro 32.2 million.

Adjusted EBITDA increased by 14.0% compared to the first three months of 2016, from Euro 20.7 million to Euro 23.6 million.

The increase of EBITDA comes from the confirmed IVS capacity to integrate, in relatively short time, the acquired businesses, with relevant savings on operating costs (purchases, labour, services) and overheads, and improvements of the offer quality.

EBITDA margin on sales in the first quarter was equal to 23.4%, even including the acquisition of Grup Ibervending completed at the end of January, which has diluting effects if compared to the average group margins, as the actions for rationalisation started after the completion of the acquisition.

Group Net Profit in the first three months is equal to Euro 5.2 million (+58.6%) after profits attributable to minorities of Euro 0.4 million. Net profit includes some extraordinary costs linked with acquisitions and other non recurring operations.

The Net Profit Adjusted for the extraordinary items is equal to Euro 6.0 million (after minorities), compared to Euro 6.9 million of the first quarter 2016, due to the reduction of previous tax grants related to ACE rules (income tax incentive to companies growth) approved in the last months by the Italian government.

Net Financial Position, equal to Euro -247.7 million, from Euro -225.6 million as of 31 December 2016, after payments for investments in the first quarter of Euro 38.4 million, of which Euro 15.1 million for net investment in fixed assets and Euro 23.3 million for acquisitions (around Euro 17.9 million for the payment of 75% of Ibervending acquisition price).

The group has approximately Euro 17.2 million of VAT credit (not included in Net Financial Position).

Other significant events occurred after 31 March 2017 and prospects for the full year

The first part of 2017 has seen a recovery of vending volumes, specifically in the hot beverages segment, compared to the previous years of crisis (at least in Italy); it is expected that this trend might continue for the remaining part of the year, possibly with the usual fluctuations due to weather conditions, especially during the summer.

IVS Group believes to continue a growth path, following its consolidated strategy of acquisitions aimed at constantly increasing service quality and local density, coupled with a gradual increase of like-for-like volumes and selling prices. Macro economy and competition environment, even in the context of modest Italian GDP growth, is supporting such a strategy.

The acquisition of Ibervending group, competed at the beginning of 2017, represents a key moment in the company’s history, as it will allow to execute the strategy effectively applied in Italy also in the Spanish market, which is even more dynamic than the Italian one.

In April and May 2017 were completed 4 additional acquisitions, for a provisional price of Euro 0.2 million.

The financial strategy of the group, after the issue of the notes due November 2022, combined with unused credit facilities and high cash-flow generation, allow IVS to look at the coming periods and years being aware of its capacity to grow and generate value.

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 (82% of sales), France, Spain and Switzerland, with around 184,500 vending machines, a network of 80 branches and around 2,600 employees. IVS Group serves more than 15,000 corporate clients and public entities, with around 800 million of vends per year.

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