Earnings Release • Mar 10, 2016
Earnings Release
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Solid +6.3% revenue growth, EBITDA in line with expectations and further international development
| (EUR million) | 2015 | 2014* | Change |
|---|---|---|---|
| Revenue | 1,415.4 | 1,331.0 | +6.3% |
| EBITDA | 446.1 | 429.1 | +4.0% |
| Net result | (57.1) | (21.9) | |
| Headline net result** | 71.4 | 6.5 | |
| Headline free cash-flow *** | 56.6 | 87.0 | |
| Adjusted net debt (as of end of period) | 1,440.7 | 2,019.1 |
Percentage change calculations are based on actual figures
* 2014 figures are restated from the first application of the IFRIC 21 interpretation and are in accordance with IFRS 3 - Business Combinations
** After elimination of impairment charge, PPA depreciation and IPO and refinancing expenses (net of tax)
*** After elimination of IPO and refinancing expenses (net of tax)
The definitions of organic revenue growth, EBITDA, EBITDA margin, EBIT, headline free cash-flow and adjusted net debt are in the "Financial definitions" section of this release.
Puteaux, March 10 2016 – Elis, the leading multi-services group in Europe and Latin America, specializing in the rental and maintenance of flat linen, professional clothing, hygiene and well-being appliances, today announces its 2015 full year financial results.
The accounts have been approved by the Management Board and examined by the Supervisory Board on March 9, 2016. These accounts have been audited and the auditors issued a report without any qualification.
Commenting on the 2015 full year results, Xavier Martiré, CEO of Elis, said:
« We are pleased to announce today a solid set of 2015 results which confirm the strength of the Elis model. Despite a difficult macro environment especially in France and Brazil, organic revenue growth was +2.9% and EBITDA of €446.1mn was in line with the target we set last summer, with a margin of 31.5%, slightly above our expectations.
In France, 2015 was marked by good commercial momentum leading to organic revenue growth of +2.5% despite the negative impact from the terrorist attacks in Paris. However, pricing pressure in the French market had a dilutive impact on our margins, especially during the first half.
In Europe, we further strengthened our market shares through both organic growth and acquisitions. EBITDA margin improved by 60 basis points, thanks notably to the achievement of synergies..
Elis SA Head Office: 33, rue Voltaire – 92800 Puteaux – France – Tél.: +33 (0) 1 41 25 45 00 www.corporate-elis.com
Joint-stock corporation governed by an Executive Board and a Supervisory Board Registered capital of 1.140.061.670 euros – # RCS: 499 668 440 Nanterre
In Latin America, we continued our expansion in Brazil and became the market leader in Chile through the acquisition of Albia. Despite a difficult macro environment in Brazil, commercial momentum and the transfer of Elis know-how allowed us to post organic growth of above +3% and a margin improvement of 110 basis points.
In 2015, Elis began a new chapter in its history with the success of the IPO in February and the full refinancing of its debt, with an interest charge that is now a third of that paid previously and with no significant maturity before 2020. We now have all the necessary resources to accelerate the deployment of our 4 strategic pillars: 1) Consolidate our positions in all our geographies, 2) Continue the development of our Brazilian platform 3) Pursue the improvement of our operational excellence and 4) Launch new products and services.
In 2016, we target revenues of €1.5bn driven by 3% organic growth, external growth of 4% and an impact of currencies that we today estimate at -1%. As far as margins are concerned, we expect another slight decrease of 30 basis points in France but aim to achieve further margin improvement in Europe and in Latin America.»
| (EUR million) | 2015 | 2014 | Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| H1 | H2 | FY | H1 | H2 | FY | H1 | H2 | 14/15 | |
| Hospitality | 145.5 | 164.0 | 309.5 | 136.5 | 154.0 | 290.5 | +6.6% | +6.5% | +6.6% |
| Industry | 94.0 | 95.6 | 189.6 | 93.3 | 94.3 | 187.6 | +0.7% | +1.4% | +1.0% |
| Trade & Services | 168.6 | 171.4 | 340.0 | 170.2 | 168.6 | 338.8 | -1.0% | +1.7% | +0.3% |
| Healthcare | 79.3 | 80.3 | 159.7 | 76.1 | 76.4 | 152.5 | +4.2% | +5.2% | +4.7% |
| France* | 478.6 | 499.5 | 978.1 | 468.0 | 486.0 | 954.0 | +2.3% | +2.8% | +2.5% |
| Northern Europe | 84.2 | 100.9 | 185.2 | 72.5 | 76.2 | 148.7 | +16.1% | +32.5% | +24.5% |
| Southern Europe | 66.0 | 76.6 | 142.5 | 59.3 | 66.2 | 125.5 | +11.2% | +15.6% | +13.5% |
| Europe** | 150.2 | 177.5 | 327.7 | 131.9 | 142.4 | 274.3 | +13.9% | +24.7% | +19.5% |
| Latin America | 45.1 | 47.0 | 92.2 | 36.2 | 49.1 | 85.3 | +24.6% | -4.2% | +8.0% |
| Manufacturing entities | 8.5 | 9.0 | 17.5 | 8.2 | 9.2 | 17.4 | +3.2% | -1.5% | +0.7% |
| Total | 682.4 | 733.0 | 1 415.4 | 644.3 | 686.7 | 1,331.0 | +5.9% | +6.7% | +6.3% |
Percentage change calculations are based on actual figures
* After other items including rebates ** Europe excluding France
| (EUR million) | H1 | H2 | FY 2015 |
|---|---|---|---|
| organic growth | organic growth | organic growth | |
| Hospitality | +6.6% | +6.5% | +6.6% |
| Industry | +0.7% | +1.4% | +1.0% |
| Trade & Services | -1.0% | +1.7% | +0.3% |
| Healthcare | +4.2% | +5.2% | +4.7% |
| France* | +2.3% | +2.8% | +2.5% |
| Northern Europe | -0.9% | +3.5% | +1.4% |
| Southern Europe | +7.5% | +8.5% | +8.0% |
| Europe** | +2.9% | +5.8% | +4.4% |
| Latin America | +3.8% | +2.8% | +3.2% |
| Manufacturing entities | -1.2% | -5.2% | -3.3% |
| Total | +2.4% | +3.3% | +2.9% |
Percentage change calculations are based on actual figures
* After other items including rebates
** Europe excluding France
In 2015, Group revenues increased by 6.3% to €1,415.4mn.
The increase of €84.4mn was driven by organic growth in France, Southern Europe and in Latin America along with the integration of our acquisitions.
In 2015, the +2.5% revenue increase in France was entirely organic and mostly driven by the roll-out of large contracts.
Revenue growth in Northern Europe (+24.5%) was driven by acquisitions in Germany and Switzerland. Organic revenue growth (+1.4%) was impacted by hospitality in Switzerland, which suffered from the rise of the Swiss Franc during the first half.
Revenue growth was also strong in Southern Europe (+13.5% including +8.0% organic). The improving macro environment helped drive good commercial momentum with Hospitality and Industry clients. The acquisitions completed in Spain in April also contributed to the strong growth in the region.
Revenue growth in Latin America (+8.0%) was driven by acquisitions, which accounted for about half our growth. In a difficult macro environment in Brazil, organic growth was helped by very good commercial momentum, confirming our view of the market's potential..
| (EUR million) | 2015 | 2014* | Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| H1 | H2 | FY | H1 | H2 | FY | H1 | H2 | 14/15 | |
| France | 162.7 | 183.8 | 346.5 | 164.9 | 180.2 | 345.1 | -1.4% | +2.1% | +0.4% |
| As a % of revenues | 33.9% | 36.8% | 35.4% | 35.1% | 37.0% | 36.1% | -120bps | -20bps | -70bps |
| Europe** | 33.6 | 47.3 | 80.9 | 31.7 | 34.2 | 65.9 | +5.8% | +38.6% | +22.8% |
| As a % of revenues | 22.3% | 26.6% | 24.6% | 24.0% | 23.9% | 24.0% | -170bps | +270bps | +60bps |
| Latin America | 8.6 | 11.2 | 19.8 | 7.0 | 10.4 | 17.3 | +22.1% | +8.3% | +13.9% |
| As a % of revenues | 19.1% | 23.7% | 21.4% | 19.5% | 21.0% | 20.3% | -40bps | +270bps | +110bps |
| Manufacturing entities | 1.4 | 1.1 | 2.5 | 1.6 | 0.7 | 2.3 | -9.1% | +54.0% | +8.7% |
| As a % of revenues | 10.1% | 8.3% | 9.2% | 12.7% | 5.2% | 8.8% | -260bps | +310bps | +40bps |
| Holdings | -1.6 | -2.0 | -3.6 | -0.5 | -1.0 | -1.5 | n/a | n/a | n/a |
| Total | 204.6 | 241.5 | 446.1 | 204.8 | 224.3 | 429.1 | -0.1% | +7.7% | +4.0% |
| As a % of revenues | 30.0% | 32.9% | 31.5% | 31.8% | 32.7% | 32.2% | -180bps | +20bps | -70bps |
Percentage change calculations are based on actual figures
* 2014 figures are restated from the first application of the IFRIC 21 interpretation and are in accordance with IFRS 3 - Business Combinations
** Europe excluding France
In 2015, Group EBITDA increased by 4.0% to €446.1mn.
In France, EBITDA was slightly up but the margin as a percentage of revenues fell 70bps, mainly due to: - Phasing from a base effect in H1 2014 due to some non-recurring items,
However, this decrease contained to 70bps was better than our expectations.
In all other regions, EBITDA was up both in absolute terms and as a percentage of revenues:
In Europe (excluding France), the consolidation of our footprint and the transfer of know-how continued to bear fruit with EBITDA margin up 60bps (after +200bps in 2013 and +80bps in 2014);
In Latin America, transfer of know-how also led to a +110bps EBITDA margin improvement.
| (EUR million) | 2015 | 2014* |
|---|---|---|
| EBITDA | 446.1 | 429.0 |
| As a % of revenues | 31.5% | 32.2% |
| Depreciation & amortization | (237.7) | (218.9) |
| EBIT | 208.4 | 210.2 |
| As a % of revenues | 14.7% | 15.8% |
| Banking charges | (1.5) | (1.1) |
| PPA depreciation | (45.6) | (41.3) |
| Goodwill impairment | (14.6) | - |
| Other operating income and expenses** | (12.3) | (23.1) |
| Operating result before IPO & refinancing expenses | 134.4 | 144.7 |
| As a % of revenues | 9.5% | 10.9% |
| Financial result** | (68.7) | (153.6) |
| IPO & refinancing expenses | (123.3) | - |
| Result before tax | (57.6) | (8.9) |
| Tax | 0.4 | (13.0) |
| Reported net result | (57.1) | (21.9) |
| Headline net result*** | 71.4 | 6.5 |
Percentage change calculations are based on actual figures
* 2014 figures are restated from the first application of the IFRIC 21 interpretation and are in accordance with IFRS 3 - Business Combinations
** Excluding IPO and refinancing expenses
*** After elimination of impairment charge, PPA depreciation and IPO and refinancing expenses
Purchase of linen linked to the implementation of large contracts signed in 2014 led to higher depreciation, impacting EBIT greater than EBITDA.
PPA depreciation was mainly accounted for in 2007 and the amortization period will end in 2018. The impairment tests conducted as of 31 December 2015 led to the booking of:
Elis completely refinanced its debt in 2015 in 2 stages: (i) as part of the IPO in February, then (ii) on April 22 with the issuance of €800 million of 2022 Notes priced at 3.0%.
The new financing structure is totally unsecured without any major repayment before 2020. This leads to a full year normative interest charge which should be a third of that paid before the IPO.
NB: the new financing structure was implemented in February and April 2015. Therefore, the 2015 cost of debt is therefore not normative.
Net result amounted to -€57.1mn and includes (i) €123.3mn non-recurring expenses related to the IPO and various debt refinancing charges, (ii) a €14.6mn impairment charge and (iii) a €45.6mn PPA depreciation.
The Headline net result was €71.4m in 2015, significantly up relative to 2014. It is after the elimination of (i) the IPO & refinancing expenses, (ii) the impairment charge and (iii) the PPA depreciation (net of tax),
Group net investments amounted to €259.0mn in 2015 (18.3% of revenues), compared to €143.9mn in 2014 (10.8% of revenues). It should be noted that during 2014, a real estate sale & lease program was undertook which had a favourable impact of c. €93mn. 2015 is notably impacted by linen purchase and by some industrial investments in order to absorb additional volumes linked to large contracts signed at the end of 2014.
After the elimination of the IPO & refinancing expenses, Headline free cash-flow amounted to €56.6mn, compared to €87.0mn in 2014. This decline is mainly due to the 2014 base effect linked to the sale & lease program.
Group adjusted net financial debt as of 31st December 2015 was €1,440.7mn or 3.1x trailing 12 month EBITDA (proforma for the full year impact of acquisitions).
In addition to the elements mentioned above, the net financial debt is impacted by some acquisitions completed at the end of 2014 and by an unfavourable evolution of some non-operating components of the working capital requirement (notably the French CICE which is not pre-financed).
At the next Annual General Meeting of Shareholders on 27 May 2016, the Supervisory Board will recommend the payment of €0.35 per share for the 2015 financial year, similar to that approved in 2015 for the 2014 financial year.
The 2015 annual results presentation will be available from 8:30 am Paris time on March, 10th in the "Other press releases and documents" section of our website: http://www.corporateelis.com/en/investor-relations
Speakers: Xavier Martiré, CEO Louis Guyot, CFO
Date: Thursday, March 10 9:00 am Paris time – 8:00 am London time
http://edge.media-server.com/m/p/ki95zg9i Webcast replay will be available for 1 year following the event.
Speakers: Xavier Martiré, CEO Louis Guyot, CFO
Date : Thursday, March 10 2:00 pm Paris time – 1:00 pm London time – 8:00 am New York time
http://edge.media-server.com/m/p/p2akm32z Webcast replay will be available for 1 year following the event.
France: +33 1 76 77 22 29 France (toll-free): 0805 631 579 United Kingdom: +44 203 427 1907 United Kingdom (toll-free): 0800 279 4992 United States of America: +1646 254 3360 United States of America (toll-free): 1877 280 2342 Code: 9012847#
Numbers for replay: France: +33 1 74 20 28 00 United Kingdom: +44 203 427 0598 United States of America: +1 347 366 9565 Code for replay: 9012847# Audio replay will be available for 1 week following the event.
This release may contain some forward-looking statements. These statements are not undertakings as to the future performance of the Company. Although the Company considers that such statements are based on reasonable expectations and assumptions at the date of publication of this release, they are by their nature subject to risks and uncertainties which could cause actual performance to differ from those indicated or implied in such statements.
These risks and uncertainties include without limitation the risk factors that are described in the Document de Base and in the 2014 Annual Financial Report, both registered in France with the French Autorité des marchés financiers.
Investors and holders of shares of the Company may obtain copy of these documents from the Autorité des marchés financiers' website: www.amf-france.org or from the Company's website: www.corporateelis.com
The 2015 Document de Référence will be registered with the Autorité des marchés financiers in the second half of April 2016. The Company does not have the obligation and undertakes no obligation to update or revise any of the forward-looking statements.
Q1 2016 revenues: May 4, 2016 (before market)
Elis is a specialized multi-services group, leader in Europe and Latin America for the rental and maintenance of flat linen, professional clothing, as well as hygiene appliance and well-being services. With more than 21,000 employees spread across 13 countries, Elis consolidated turnover in 2015 was €1,415 million and consolidated EBITDA reached €446 million. Benefiting from more than a century of experience, Elis today services more than 240 000 businesses of all sizes in the hotel, catering, healthcare, industry, retail and services sectors, thanks to its network of more than 300 production and distribution centers and 13 clean rooms, which guarantees it an unrivalled proximity to its clients.
Nicolas Buron, Investor Relations Director – Phone: +33 1 41 25 46 77 - [email protected]
| In thousands of euros | 2015 | 2014 |
|---|---|---|
| Revenue | 1,415,418 | 1,330,980 |
| Cost of linen, equipment and other consumables | (240,048) | (222,214) |
| Processing costs | (518,275) | (470,014) |
| Distribution costs | (224,819) | (212,921) |
| Gross margin | 432,276 | 425,831 |
| Selling, general and administrative expenses | (225,346) | (216,748) |
| Operating income before other income and expense and amortization | ||
| of customer relationships | 206,930 | 209,083 |
| Amortization of customer relationships | (45,584) | (41,271) |
| Goodwill impairment | (14,575) | 0 |
| Other income and expense | (33,413) | (23,130) |
| Operating income | 113,359 | 144,681 |
| Net financial expense | (170,932) | (153,551) |
| Income (loss) before tax | (57,573) | (8,870) |
| Income tax benefit (expense) | 435 | (13,018) |
| Share of net income of equity-accounted companies | 0 | 0 |
| Net income (loss) | (57,138) | (21,888) |
| Attributable to: | ||
| owners of the parent | (57,613) | (22,731) |
| non-controlling interests | 475 | 843 |
| Earnings (loss) per share (EPS): | ||
| basic, attributable to owners of the parent | -0.54€ | -0.46€ |
| diluted, attributable to owners of the parent | -0.54€ | -0.46€ |
* 2014 figures are restated from the first application of the IFRIC 21 interpretation and are in accordance with IFRS 3 - Business Combinations
| In thousands of euros | 31 December 2015 | 31 December 2014 |
|---|---|---|
| Goodwill | 1,589,340 | 1,536,098 |
| Intangible assets | 368,778 | 404,383 |
| Property, plant and equipment | 774,923 | 707,086 |
| Equity-accounted companies | 0 | 0 |
| Available-for-sale financial assets | 146 | 168 |
| Other non-current assets | 6,270 | 6,890 |
| Deferred tax assets | 12,118 | 12,450 |
| TOTAL NON-CURRENT ASSETS | 2,751,575 | 2,667,074 |
| Inventories | 52,547 | 58,641 |
| Trade and other receivables | 358,341 | 327,863 |
| Current tax assets | 4,099 | 2,842 |
| Other assets | 12,780 | 13,461 |
| Cash and cash equivalents | 56,594 | 59,255 |
| TOTAL CURRENT ASSETS | 484,361 | 462,062 |
| Assets held for sale | 0 | 0 |
| TOTAL ASSETS | 3,235,936 | 3,129,136 |
| In thousands of euros | 31 December 2015 | 31 December 2014 |
|---|---|---|
| Share capital | 1,140,062 | 497,610 |
| Additional paid-in capital | 320,777 | 175,853 |
| Other reserves | 724 | 7,224 |
| Retained earnings (accumulated deficit) | (361,142) | (302,305) |
| Other components of equity | (45,616) | (10,105) |
| EQUITY ATTRIBUTABLE TO OWNERS OF THE PARENT | 1,054,804 | 368,277 |
| NON-CONTROLLING INTERESTS | (338) | (125) |
| TOTAL EQUITY | 1,054,466 | 368,152 |
| Non-current provisions | 22,918 | 28,997 |
| Employee benefit liabilities | 58,259 | 48,337 |
| Non-current borrowings | 1,267,386 | 1,947,291 |
| Deferred tax liabilities | 182,131 | 197,777 |
| Other non-current liabilities | 39,639 | 34,373 |
| TOTAL NON-CURRENT LIABILITIES | 1,570,332 | 2,256,775 |
| Current provisions | 5,766 | 4,078 |
| Current tax liabilities | 1,848 | 892 |
| Trade and other payables | 135,059 | 139,718 |
| Other liabilities | 232,546 | 234,836 |
| Bank overdrafts and current borrowings | 235,919 | 124,684 |
| TOTAL CURRENT LIABILITIES | 611,138 | 504,208 |
| Liabilities directly associated with assets held for sale | 0 | 0 |
| TOTAL EQUITY AND LIABILITIES | 3,235,936 | 3,129,136 |
| In thousands of euros | 2015 | 2014* |
|---|---|---|
| CASH FLOWS FROM OPERATING ACTIVITIES | ||
| CONSOLIDATED NET INCOME (LOSS) | (57,138) | (21,738) |
| Depreciation, amortization and provisions | 284,508 | 251,518 |
| Portion of grants transferred to income | (128) | (125) |
| Goodwill impairment | 14,575 | 0 |
| Share-based payments | 981 | 0 |
| Discounting adjustment on provisions and retirement benefits | 824 | 1,266 |
| Net gains and losses on disposal of assets | 1,229 | (3,737) |
| Share of net income of equity-accounted companies | 0 | 0 |
| Other | (1,478) | 0 |
| Dividends received (from non-consolidated entities) | (12) | (13) |
| CASH FLOWS AFTER FINANCE COSTS AND TAX | 243,361 | 227,171 |
| Net finance costs | 101,606 | 151,268 |
| Income tax expense | (435) | 13,095 |
| CASH FLOWS BEFORE FINANCE COSTS AND TAX | 344,532 | 391,535 |
| Income tax paid | (17,280) | (21,414) |
| Change in inventories | 5,980 | (11,989) |
| Change in trade receivables | (17,883) | (12,982) |
| Change in other assets | 602 | (7,076) |
| Change in trade and other payables | (14,198) | 18,608 |
| Change in other liabilities | (7,159) | 5,191 |
| Variation des autres postes | (231) | (471) |
| Other changes | (455) | (437) |
| NET CASH FROM OPERATING ACTIVITIES | 293,908 | 360,965 |
| CASH FLOWS FROM INVESTING ACTIVITIES | ||
| Acquisition of intangible assets | (6,481) | (4,853) |
| Proceeds from sale of intangible assets | 0 | 0 |
| Acquisition of property, plant and equipment | (261,475) | (231,558) |
| Proceeds from sale of property, plant and equipment | 8,910 | 92,541 |
| Acquisition of subsidiaries, net of cash acquired | (117,253) | (97,262) |
| Proceeds from disposal of subsidiaries, net of cash transferred | 1,000 | 1,000 |
| Changes in loans and advances | (226) | 121 |
| Dividends from equity-accounted companies | 12 | 13 |
| Investment grants | 50 | 0 |
| NET CASH USED IN INVESTING ACTIVITIES | (375,463) | (239,998) |
| CASH FLOWS FROM FINANCING ACTIVITIES | ||
| Capital increase | 689,400 | 43,000 |
| Treasury shares | (2,175) | 0 |
| Dividends paid | ||
| - to owners of the parent | (39,881) | 0 |
| - to non-controlling interests | (5) | (9) |
| Change in borrowings** | (490,785) | (37,237) |
| - Proceeds from new borrowings | 3,962,527 | 1,270,786 |
| - Repayment of borrowings | (4,453,312) | (1,308,023) |
| Net interest paid | (76,939) | (117,206) |
| Other flows related to financing activities | (853) | 0 |
| NET CASH USED IN FINANCING ACTIVITIES | 78,762 | (111,452) |
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | (2,793) | 9,515 |
| Cash and cash equivalents at beginning of period | 58,523 | 48,598 |
| Effect of changes in foreign exchange rates on cash and cash | ||
| equivalents | (33) | 410 |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | 55,697 | 58,523 |
* 2014 figures are restated from the first application of the IFRIC 21 interpretation and are in accordance with IFRS 3 - Business
Combinations
** Net change in credit lines
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