Azkoyen Group, the Spanish multinational based in Navarre, has obtained a net profit of 9.5 million euros at the end of the third quarter in 2019, which translates into an increase of 4.8% compared to the same period last year.
The net turnover of the Azkoyen Group also increased by 6.3% (similar percentage at constant exchange rates) compared to the first nine months of the previous year, reaching 106.6 million euros. This growth is due to the good performance of the Time & Security division, which increased sales by 11.1%, as well as the Payment Technologies division, which recorded a 6.6% increase.
If we analyse the consolidated turnover by region, in the first nine months of the 2019 financial year, 18.8% of the turnover came from Spain, 75.7% from the rest of the European Union and the remaining 5.5% from other countries in which the Azkoyen Group operates. This geographical distribution of turnover reaffirms the international nature of the Azkoyen Group. The gross margin as a percentage also increased (from 43% in the previous year to 43.5% this year), with a different mix of businesses and products.
It is also worth mentioning that EBITDA increased by 14.8%at the end of the third quarter of 2019, reaching 17.6 million euros. Also, the Group’s EBITDA/sales ratio was 16.5%.
The EBIT also increased to 13.0 million euros, 6.2% more than the 12.2 million recorded in the first nine months of the previous year.
The Group retroactively adopted IFRS 16, recognising the cumulative effect of the initial application of the standard on 1 January 2019 (in the consolidated balance sheet, lease liabilities of approximately 6.1 million euros and right-of-use assets for the same amount), without restructuring the comparative information.
For comparison purposes, as at 30 September 2019, before the first application of IFRS 16, EBITDA amounted to 15.8 million euros, 3.2% more than the same period in the previous year, after an increase in the gross margin of 7.8% and partially offset by certain increases in fixed and other costs.
As a result of the new regulation, in the first nine months of 2019, EBITDA increased by 1.8 million euros (operating lease payments were previously included in EBITDA, but depreciation of assets for right of use and the financial cost for lease liabilities were excluded). As at 30 September 2019, the consolidated balance sheet includes assets for right of use and lease liabilities, both amounting to approximately 6.9 million euros.
The net effect of applying IFRS 16 on EBIT and consolidated net profit is practically nil (with a lower lease cost and, in contrast, an increase in depreciation).
Fixed costs amounted to 33.1 million euros, 7.4% higher than in the same period of the previous year, after certain increases in commercial fixed costs, R&D and others, in accordance with the defined organisational growth plans in force.
Payment of dividends and others
The Ordinary and Extraordinary General Shareholders’ Meeting held on 4 June approved the distribution of an ordinary dividend of 4.7 million euros and an extraordinary dividend of 25 million euros charged to unrestricted reserves. The total approved dividend amounted to 29.7 million euros, more than 1.21 euros for each of the existing and outstanding shares with the right to receive a dividend. This dividend was paid on 19 June 2019. Prior to this, on 10 June 2019, the Parent Company arranged long-term bilateral bank loans totalling 20 million euros with two Spanish financial institutions. With quarterly repayments, they have a final maturity in four years.
After the above-mentioned distribution of dividends and the accounting for lease liabilities under IFRS 16, the net financial debt at the close of the third quarter of the 2019 financial year amounted to 21.5 million euros.
Also, at the same Ordinary and Extraordinary General Shareholders’ Meeting, a reduction of share capital for an amount of 451,124.40 euros was approved through the redemption of 751,874 treasury shares. Since the shares to be redeemed were owned by the parent company, this capital reduction did not involve any repayment of contributions. The capital reduction was formalised in writing in front of a notary public on 12 June 2019 and was registered in the Companies Register of Navarre on 12 July 2019.
Sales performance by division
The Time & Security division (Technology and security systems) recorded the strongest growth of all the Azkoyen divisions, with sales up 11.1%, reaching 42.6 million euros, compared to 38.4 million euros in the first nine months of the previous year. It was followed by the Payment Technologies division (Electronic means of payment) which achieved 31.8 million euros and an increase of 6.6%. The Coffee & Vending Systems division recorded an increase of 0.3% compared to the third quarter of 2018, with a turnover of 32.2 million euros.
The new “2019-2021” strategic plan of the Azkoyen Group has been completed with the help of a leading outside consultant. This strategic plan was approved by the Company’s Board of Directors on 27 February 2019. It establishes the goals for accelerated organic growth, along with the initiatives aimed at providing resources and supporting business development.
For 2019 as a whole, the growth in sales revenue is expected to be higher than the 3.2% recorded in 2018 with EBITDA in absolute terms (“before IFRS 16” – Leases, which came into effect on 1 January 2019) basically similar to that of 2018, with increases in fixed costs, mainly for sales and R&D, in accordance with the approved strategic plan.
Investments by the various businesses in intangible assets and materials are being strengthened, with an aggregate budget for 2019 of 7.3 million euros (3.0 million euros in real numbers in 2018), 143% higher than in 2018.
The benefits of the plan will be progressive, expecting to obtain the highest increases in sales and results by 2021.