– EBITDA grew by nearly 10%, amounting to €10.6 million.
– Financial debt was reduced by nearly 50%, standing at €5.6 million.
– The 2016 dividend distribution amounted to €3.3 million.
– The Payment Technologies division continues to lead the growth trend with a 13% increase in sales.
The Azkoyen Group, a Spanish multinational with headquarters in Navarre, earned a net profit of €5.5 million during the first half of 2017, representing a 22% increase in profits over the second half of 2016.
The net turnover for the group had increased slightly compared to the previous year, by 0.8%, amounting to €68 million, where it continued its upward trend that had begun in 2013. It is worth noting that a large portion of this net growth was due to the sound performance, during the first half of the year, of the Payment Technologies division, which had increased its sales by 13%. It must be noted that, during the first half of 2017, 18.1% of the Group’s turnover was generated in Spain, while 75.9% was generated in other countries of the European Union and the remaining 6% was derived from countries outside the European Union. These figures reflect the international business nature of the Azkoyen Group.
Financial debt continues to fall.
After taking into effect a pending dividend disbursement of €3.3 million, as financial debt, at the end of the half-yearly period, along with the allocation of another €3.3 million for payments of minority shareholding acquisitions of the Primion Subgroup (€0.5 million for the second half of 2016 and €2.8 million for the first half of 2017), at the end of the first half of 2017, the Group’s net financial debt decreased by €5.5 million compared to that at the close of the first half of the previous financial year (€5.7 million lower for the second half of 2016 and a slight increase of €0.2 million for the first half of 2017, respectively). This data shows a 49.8% reduction in net financial debt and this has been feasible due to the EBITDA.
In June, the Azkoyen Group fully, and without penalty, repaid the remaining amount of €13.6 million on a syndicated loan, approved in December 2008, with various credit institutions for an initial amount of €55 million, which was later increased to the amount of €65 million. After this repayment, the secured guarantees and other limitations and obligations established under the syndicated loan have been removed.
The EBITDA rose by more than 10.2% during the first half of the year, amounting to €10.6 million. The EBITDA/company sales percentage stood at 15.6%, which represents a one-point positive change over the 14.3% achieved during the second half of 2016. Moreover, Azkoyen recorded an EBIT of €8.3 million, an increase of 16.8%. The company has also recorded an improvement on the gross margin percentages (from 40.9% to 42.9%), which was due, primarily, to reasons related to the product and business mix.
Distribution of dividend
On 23 June 2017, the Ordinary General Meeting of Shareholders of the Azkoyen Group approved the proposed distribution of results of the 2016 fiscal year, including a final dividend of €3.3 million, which corresponds to a gross amount of around €0.136 per share in circulation at that time. The net amount of the foregoing dividend was disbursed on 14 July 2017.
Evolution of sales by business line
The Payment Technologies division registered the greatest growth of all Azkoyen’s business units, with a 13% increase in sales, standing at €21.2 million. The Security Systems division has achieved the highest volume of sales for all business areas, with a turnover of €24.8 million, up by 3% on the previous period. By contrast, on the downside, the Vending Systems division’s sales had experienced a year-on-year fall of 10.7%. This reduction stemmed from a significant devaluation of the pound sterling, following the referendum on the Brexit in June 2016, along with the poor performance, at the end of 2016, experienced by the tobacco vending machine business.
Vending Systems division
The income stream related to cigarette vending machines experienced a 10.7% decrease during the first half of the year over same period as the previous year.
The Cigarette Machine business recorded significant reductions to sales, by 30.5%, compared to the first half of the previous year, along with a generalised drop in order volumes for the various geographic markets in which Azkoyen operates. This downward trend in sales began during the last quarter of 2016 and was essentially reflected in the defined business plans. Despite this, within this niche market of tobacco vending machines, Azkoyen continues to be a leader in the European arena and it is a reference company with regards to large multinational tobacco companies, where there are various projects currently being implemented.
The Vending Machine business for the most part includes professional coffee vending machines and, to a lesser extent, vending machines for cold drinks and snacks. In this sector, the Azkoyen Group is allocating a significant portion of its plans to the coffee business, an industry that is experiencing a growth phase.
During the first half of 2017, there was a 3.6% decrease in sales compared to the figures for the same period of the previous year. This decrease can be explained, in part, due to the lower supply of automated home postal terminals (Homepaq) in Spain for S.E. de Correos y Telégrafos S.A. (Correos).
Over the last three years, the average annual growth in sales amounted to 19.6%, due to, among other reasons, the success of the new offered products, as well as the broadening of the customer base in various geographic markets (mainly in the European continent).
Coffetek, the Azkoyen brand used in the UK market, had achieved slightly higher sales during the first half of 2017 compared to the previous year (+5.8%) in pounds sterling, representing a fall of 4.2% in euros after the average exchange conversion rate. The negative effect of the exchange rate on the results is for the most part limited, as most of the expenses are made in pounds sterling. More than 90% of the total sales were in pounds sterling for the UK domestic market and the rest are from other markets.
The Azkoyen Group continues to invest and dedicate significant resources to renew its range of vending products, so as to improve the customer experience and to rank highly in usability, connectivity and design. Furthermore, Azkoyen also endeavours to develop certain niche products for large accounts, new applications in catering and retail, to continue growing its traditional markets and to continue its expansion in the Americas. The Navarrese company continues its commitment toward technologies behind the high quality coffee dispensers. For this reason, this March, at the Vending Paris 2017 trade fair, it boasted the new Vitro S5 model, aimed at the Horeca sector. The launch also coincided with the marketing of the second generation of automatic coffee machines belonging to the Vitro series, which incorporated a more attractive design and new technological functionalities.
For the second consecutive year, Azkoyen participated at the NAMA trade show, the most important American event in the worldwide vending and Office Coffee Service industry. The Azkoyen’s presence at the event in April was part of the company’s expansion plan in the United States, as this is a strategic market. At NAMA, the group showcased the entire range of coffee and other hot beverage machines being offered on the American continent, such as the Zensia, Zintro, Zen and Vitale models, along with the new Vitro S5. Moreover, in February 2017, the company established Azkoyen USA Inc, being fully owned by Azkoyen S.A., with its head office situated in North Carolina. With this new company, Azkoyen will carry out the commercial activity of its professional coffee vending machines in the United States.
Additionally, the Azkoyen Group is currently presenting two new models of free-standing machines, the Novara Double Cup and Zensia Double Espresso, which offer various qualities of coffee, while dispensing coffee in two types of cups, where this is, without a doubt, an excellent opportunity to improve upon the coffee service margins and consumer satisfaction.
Payment Technologies Division
This is the business unit that has increased its sales the most during the first half of the year, in particular, 13% more than the same period in 2016.
For industrial means of payment (which includes gaming, service automation and retail), turnover had increased by 12.5%, having experienced a significant growth in the retail segment while maintaining aggregate means of payment sales for gaming and service automation. For the retail segment, following significant R&D developments, the Group’s resources have been focused on its automatic payment system called “Cashlogy”, which reduces collection times by half, enhances the security of Transactions by detecting fraud and avoiding cash discrepancies and petty thefts. At the beginning of March, at the “Euroshop Retail Trade Fair”, Azkoyen exhibited the new “Cashlogy” product series, called “Cashlogy POS1500“, which broadens its connectivity to including new operating systems such as Android, iOS, Linux and Windows, while improving its accessibility by incorporating a new folding banknote module. “Cashlogy POS1500” is being marketed intensively in Spain and, to a lesser extent, in France and Italy. 31.5% of the industrial means of payment revenue was associated with retail means of payment or Cashlogy, where sales have grown by 54.7% over the first half of last year.
In the area of Means of payment for vending machines, (Coges), invoicing had increased by 13.7%, with considerably better sales experienced in Italy. During the first half of 2017, around 70% of the means of payment sales for vending, by the Italian subsidiary Coges (European leader in closed-environment cashless systems), were made in the Italian market. In March 2015, Coges Mobile Solutions was created, 51% of which is owned by Coges. This new company developed “Pay4Vend”, a smartphone payment application for vending machines. In Italy, there is great support among the consumers, while its use has been expanding throughout other markets such as the United Kingdom, France and Spain.
Security Systems division. Primion Subgroup.
For the Security Technology and Systems business line, the scope of consolidation was varied during the first half of 2017 when compared to the same period of 2016, as a result of the full acquisition, on 7 October 2016, of the German company Opertis GmbH. This company is focused on the development, production and commercialisation of mechatronic locking systems. Moreover, Azkoyen has successfully continued with its commercial strategy oriented towards projects with a greater cost-benefit within this Security Technology and Systems division, resulting in better a gross sales margin. In this context, sales have experienced a 3% year-on-year increase (0.9% organic decrease and 3.9% from sales via Opertis GmbH). At 30 June 2017, the orderbook, including maintenance contracts and projects, stood at €29.9 million, this being 3.8% higher than at the close of the previous year. The new German subsidiary has contributed to sales with more than €0.9 million. With regard to others, sales have grown in Germany (5.0%) due to Primion Technology, AG, and in France (+0.3%), while having fallen in Benelux (-11.5%) and in Spain (-2.5%).
At the end of the first quarter of 2017, the participation of the Azkoyen Group in Primion Technology AG stood at 95.73%. Nevertheless, as the 95% shareholding threshold had been exceeded, in October 2016, a process to exercise the right of forced acquisition of the remaining percentage had taken place, in exchange for a fair compensation in cash. Accordingly, during the first week of April, this process had culminated in the transfer of shares held by minority shareholders (4.27%) to the Azkoyen Group. From this moment, Azkoyen had become the sole shareholder of this company, which specialises in comprehensive security, access control and time management solutions. In this manner, the Navarrese group will be capable of broadening its control over and creation of synergies.
The Azkoyen Group remains committed in its efforts to boost sales and foster innovation, while maintaining the efficiency of its operations and the control over its expenditure. With regard to innovation, during the first semester of 2017, fixed costs, while not including the work undertaken by Azkoyen in the area of fixed assets, and research and development activities represented 7.5% of the net amount of the consolidated turnover (as compared to 7.1% in 2016).
For the whole of 2017, following an excellent 2016, Azkoyen expects a moderate increase in sales revenues and a moderately higher EBITDA than the previous year, with certain increases to overheads, mostly in marketing and R&D. Furthermore, the investments of the different businesses in intangible assets (development projects in the Subgroup Primion and computer applications) and materials have been leveraged, where the aggregate budget for this year stood at €5 million (in 2016 this figure was €3.2 million).