– EBITDA increases by a 4.5%, reaching 21.5 million euros, continuing with a high conversion of EBITDA into cash
– Profit before taxes increased by 25.2% and stood at 16.1 million euros
– The proposed dividend distribution reaches 3.8 million euros
– The financial debt has been reduced from 5.3 million euros to a positive net treasury of 3.3 million euros at the end of 2017
– The electronic payment means business continues to lead growth with an increase in sales of 12%
Spanish multinational with headquarters in Navarra, has obtained a net profit of 12.8 million euros at the end of 2017, which translates into a 15.3% profit increase over the previous year.
The net turnover of the Azkoyen group has increased slightly with respect to the previous year by 0.4%, reaching 135 million euros, continuing this way with the bullish path that started from 2013, but with a lighter growth than the previous year. It should be noted that part of this growth is due to the good performance of the payment technologies division, which has increased its sales by 12% in the last year, followed by the division of Security systems that has registered an increase of 2.3% in the last year.
If we analyze the turnover by region, 17% of the turnover corresponding to last year comes from Spain, while 77.5% comes from the rest of the European Union and 5.5%, from other countries where Azkoyen Group has a commercial presence. This geographical distribution of the turnover reiterates the international nature of the Azkoyen Group.
In the last exercise, it is worth mentioning the EBITDA growth by 4.5% standing at the end of 2017 in 21.5 million euros and in the case of net profit this increase is higher by 15.3% and it is situated in 12.8 million euros. On the other hand, EBITDA has increased by 1.4 million euros, 9.3% more compared to the previous year standing at 16.9 million euros compared to 15.5 in 2016.
The EBITDA / Sales percentage has continued to grow and stands at 15.9%, 0.6 tenths above the previous year when it stood at 15.3%.
Debt converted into positive net cash
The group has continued with a high conversion of EBITDA to cash. After allocating 3.3 million euros to dividend payments and 2.7 million euros to payments for minority acquisitions of the Primion Subgroup (including expenses of advisors and others), the generation of net financial surplus of the Group during the year 2017 amounted to 8,658 thousand euros, from 5,311 thousand euros of net financial debt at the end of the previous year to 3,347 thousand euros of net financial surplus at the end of 2017, which makes it possible to address in organic growth plans.
Net financial expenses decreased compared to the previous year by 26.2% despite the inclusion in June 2017 of an extraordinary amount of 183 thousand euros for early imputation to results of debt formalization expenses (without effect on cash flows of the period).
Distribution of dividend
The Board of Directors will propose to the General Shareholders’ Meeting to allocate 30% of the consolidated result to dividends, that is, 3.8 million euros.
Evolution of sales by business line
The division of Payment technologies has registered the highest growth of all Azkoyen’s business units, with a sales increase of 12%, to 40.7 million euros compared to 36.3 million in the previous year. Following this, there is the Security systems division that has achieved the highest sales amount of all business areas with 51.9 million euros, with a rise of 2.3% over the previous year. On the contrary, the division of Vending Systems (tobacco and vending) has experienced a decline of 10.4% compared to 2016. However, the turnover of this business unit was 42.5 million euros.
Payment technologies division
This division has increased its sales the most during the past year, specifically, 12% more than in 2016.
In industrial payment methods (including gaming, service automation and retail) sales have increased 16% compared to the previous year with significant growth in the retail segment and maintenance of aggregate sales of payment methods for gaming and automation of services. In the retail segment, after significant R&D efforts, the Group’s resources continue to be concentrated in its automatic payment system, Cashlogy, which allows the collection time to be halved, reinforcing the security of the transactions when detecting frauds and avoids the uncertainties of the cash and the small thefts.
Regarding the above, after intensive and successful tests, it is worth mentioning the launching of the new Cashlogy product series at the world retail trade fair, “Euroshop”, in Dusseldorf, 5-9 March 2017, called “POS1500” (which replaces the previous “POS1000”), with an excellent reception. Among other aspects, it expands its accessibility with the incorporation of a new folding banknote module and, likewise, its connectivity to all the most frequent operating systems in shops around the world including, in addition to Windows, Android, iOS and Linux; the latter with the “POS1500x” model. Like its predecessor, it incorporates the most innovative technologies, positioning itself as one of the most reliable devices on the market, with better benefits and performance and a contained price. These aspects will make it possible to continue with their progressive placement in retail establishments such as bakeries, fishmongers’, pharmacies, bars and restaurants.
Its commercialization is being carried out intensely in Spain, as well as, to a lesser extent, in France and Italy, among others. Tests are being conducted and new distribution agreements negotiated in other countries of the European Union and beyond. Specifically, in 2017, actions and commercial media in France, Italy and Germany have intensified. Recently, the Cashlogy “POS1500x” has been presented at “Europain 2018”, Paris, 3-6 February, an international show aimed at professionals in the bakery-pastry sector. Also, progressively, Cashlogy development is being undertaken for other “non-euro” currencies.
Finally, it should be noted that 35% of the income from industrial payment technologies are related to means of payment for retail or Cashlogy. Its sales have increased 65.8% compared to the previous year.
In the area of Payment technologies for vending machines (Coges), it should be noted that sales have increased by 7.5% compared to the previous year, mainly with a notable improvement in the behaviour of sales in Italy (with widespread growth in the existing customer base, partly due to effects derived from the new legislation tax explained later, also with certain new customers). In 2017, around 68% of the sales of the products of the Payment technologies for vending machines, Coges, which is the European leader in cashless systems in a closed environment, was made in the aforementioned Italian market.
According to independent external sources, the companies dedicated to the operation of vending machines will have to invest intensively in making the payment processes progressively more “cashless”, with new technological solutions that complement the functionalities offered to users and operators of vending machines.
In relation to the above, Coges Mobile Solutions, SRL (51% owned by Coges), commercializes through licenses an innovative technology that allows, among other aspects, the payment in vending machines through an application for smartphones, called Pay4Vend. Pay4Vend allows people to recharge the user account with coins and bills in the same vending machine, with a credit card or with PayPal in a virtual way, without the need to equip the machine with banking hardware. Among other advantages, it also offers an online management and marketing tool available to the operator and a channel of communication with the client. The app is available for operating systems Android and iOS. In the financial year of 2017 its implementation has been accelerated in that market, as well as in the United Kingdom, France and Spain, with the respective involvement of other large accounts in these countries.
Finally, it is important to note that other innovative projects are being executed related to the development of platforms “Machine to Machine” (M2M) and Internet of Things (IOT) applications, which will add value to the Coges hardware and that will also contribute to the generation of recurring income.
Security Systems division
In 2017 there was an important milestone: the Azkoyen Group became the sole shareholder of Primion Technology AG. In addition, in the previous year, the consolidation perimeter of the Primion Subgroup varied as a result of the acquisition on October 7, 2016 of 100% of the German company Opertis, GmbH (which was acquired for a symbolic price of one euro). The activity of the acquired company, which includes the development, production and marketing of mechatronic closing systems, was integrated into the segment of Technology and safety systems.
The Primion Subgroup continues, successfully, the commercial strategy oriented in recent years to projects of greater profitability, more oriented to own solutions and with a lower integration of products and subcontracts of third parties, together with efficiency improvements in its management. Thus, sales have increased by 2.3% compared to the previous year of 2016 (0.1% decrease excluding Opertis, GmbH). It should also be noted an increase in customer order entry of 5.9%, up to 55.9 million euros. At the end of 2017, the order book, including maintenance projects and contracts, amounted to 33.1 million euros, 13.7% more than the previous year. The new German subsidiary has contributed external sales amounting to 1.6 million euros (0.4 million euros in the year 2016 since its acquisition). Regarding the rest, sales grow in Germany (4.3%), through Primion Technology, AG, and in France (+2.0%), and decrease in Benelux (-7.8%) and in Spain ( -8.0%).
Tobacco vending machines
The volume of sales revenue from tobacco vending machines has decreased by 27.7% with respect to the previous year, with a fall in the volume of orders in the different geographic markets in which the Azkoyen Group operates. A contraction that had been manifesting since the last quarter of 2016 and that was basically registered in the business plans of the company. However, it should be noted that the Azkoyen Group continues to be the benchmark for large tobacco companies in the European market.
Vending machines
The Vending Systems division includes, fundamentally, professional coffee machines for the Vending industry and the Horeca sector and, to a lesser extent, vending machines for cold drinks and snacks. In this area, Azkoyen Group is focusing its plans on the coffee business, a sector that is in the growth phase.
At the end of 2017 there was a decrease in sales of 3.6% compared to the previous year. This decrease is explained, in part, by the effect of the exchange rate of the pound which, since June 2016, after the Brexit consultation, has been significantly devalued. To this, another factor must be added, namely, the lower supplies of automated home parcel terminals in Spain; fundamentally, the supply was made in 2016. On the contrary, the main activity of vending machines (at an adjusted exchange rate) grew by 7.0%.
Coffetek, the subsidiary of Azkoyen in the British market has achieved an increase in sales in pounds of 8.8% at the end of 2017 compared to 2016. This percentage is reduced to 1.7% after conversion into euros.
Throughout 2017, Azkoyen Group has presented two new models of “free-standing” machines: (i) Novara Double Cup, which, among other improvements, incorporates two coffee bean hoppers and two mills (one type of coffee for more expensive selections and another for cheaper selections) and, also, allows dispensing beverages for two types of cups, and (ii) Zensia Double Espresso, which incorporates the double mill, an excellent opportunity to improve margins in coffee services and user satisfaction.
With regard to the successful Vitro series of OCS/dispensing machines, very successful in Europe, especially in the United Kingdom, the Azkoyen Group has participated in the AVEX fair held on September 12th and 13th in Birmingham (United Kingdom). In this fair several models have been presented; among others, the model Vitro S5, a machine that has a high supply of coffee beans conceived for the Horeca sector. This launch coincides with the start of the commercialization of a second generation of the Vitro series that incorporates a more attractive design and other innovative technological features.
Also, on December 2017 the Azkoyen Group installed the first 50 vending machines in the new Westbahn trains in Austria, specifically in the Mistral+ H85 model, which is capable of adapting to all types of products and locations. In 2018 and 2019 the renewal plan will continue.
In the American continent, in 2017 it is worth highlighting the constitution of the company Azkoyen USA INC. (which allows to develop the commercial activity of professional coffee machines of the horeca and vending industries in the United States of America), domiciled in Charlotte, North Carolina. In 2017 the Azkoyen Group participated for the third time at the NAMA One Show. In addition, the rest of the portfolio of coffee machines and other hot drinks that the Group offers in the American continent were incorporated, such as the Zensia, Zintro, Zen, and Vitale models. It should be noted that, recently, a UL certification has been obtained for the Vitro S5 and Vitale models, which will promote their commercialization in the USA.
Azkoyen Group continues investing and dedicating significant resources to the innovation of its range of vending products to improve the design, making it more attractive, the user experience, and the connectivity of the machines.
Ethics and compliance
Azkoyen Group is constantly focusing on innovation and creating value for stakeholders, through a continuous commitment to society, the environment and the governance of the organization. That is why in 2017, the Corporate Defense project was launched, a project through which the Azkoyen Group intends to give a boost to transparency at all levels of the organization and consolidate its culture in matters of Ethics and Compliance.
Thanks to this project, throughout 2017 they have been working on updating the Code of Ethics to adapt and improve it according to the best practices in internal and external communication and training at all levels of the Organization, including directors, managers, other employees of the Organization and third parties. In this context, and in light of the regulatory changes produced in criminal matters and in line with the Ethics and Compliance culture, it should also be noted that the Azkoyen Board of Directors approved in July 2017 the Organization, Prevention, Management and Control of Criminal Risks Model of the Azkoyen Group, which aims to ensure (i) an ethical and compliance culture within the Organization, as well as (ii) the effectiveness of certain rules and control procedures that minimize the risk of unlawful behaviour by part of the Directors and employees of Azkoyen.
Main prospects
Azkoyen Group remains committed to boosting sales and innovation growth, maintaining the efficiency of its operations and controlling expenses. In relation to innovation, during the year of 2017, investment in R&D represented 7.4% of the net amount of the consolidated turnover, a percentage that remained similar to the 2016 annual exercise.
Taking into account the economic forecasts published recently by the European Commission that has predicted a growth of GDP for the whole Euro Zone of 2.3% in 2018 and 2% in 2019, in Azkoyen Group, after once again a good year, a moderate increase in sales revenue is expected for the year 2018 (i) and (ii) an EBITDA (in absolute terms) slightly higher than in 2017, with certain increases in fixed costs, mainly commercial and R&D, in accordance with the defined multi-year business plans. Likewise, the investments of the different businesses in intangible assets (development projects in the Primion Subgroup and computer applications) and materials will be strengthened, with an added budget for the year 2017 of 5.5 million euros (3.6 million euros of real figure in the fiscal year 2017).