Elis: Full-year 2022 results
Very good 2022
performance: record
revenue, EBITDA, EBIT and
headline net result
Marked pick-up
in hospitality and
satisfactory pricing
adjustments in a context of
high inflation
Acceleration of Group
deleveraging
Elis’ 2022 financial performance
confirms the strength of its business model despite the uncertain
macro environment
- Record revenue at
€3,820.9m (+25.3%, of which +21.0% on an organic basis)
- Record adjusted
EBITDA at €1,259.6m (33.0% as a % of revenue, down -150bps)
- Record adjusted
EBIT at €543.7m (14.2% as a % of revenue, up +150bps)
- Record headline net
income at €353.2m, up +58.7%
- Record headline net
income per share at €1.54, up +57.0% (€1.46 on a fully diluted
basis, up +53.9%)
- Free cash flow
(after lease payments) at €224.9m, close to the record level of
2021
2022
marked by the recovery in hospitality, very good commercial
momentum in Industry and pricing adjustments tied
to inflation
- Since spring,
client activity In Hospitality is above the 2019 level
- Commercial
development remained solid in Industry and in Trade & Services,
still strongly driven by the evolving need for hygiene,
traceability, and responsible products & services
- Strong reactivity
in a context of high inflation: price negotiations initiated in the
fourth quarter of 2021 led to an average price effect of c. +7% in
2022, almost offsetting, in euros, the c. +11% increase in our cost
base in 2022
- Hedging on a
significant share of Group gas and electricity purchases has been
implemented since the second half of 2022 and for the coming
years
Further M&A activity, dividend
increase and acceleration of Group deleveraging
- 4 major
acquisitions finalized in 2022; the integration of the leader in
the Mexican market, consolidated since July 1st, is progressing
according to plan and activity is above our expectations
- At the May 25, 2023
AGM, the distribution of €0.41 per share will be proposed for the
2022 financial year (up +10% vs 2021), with the option of a payment
in Elis shares
- Financial leverage
ratio down -0.5x to 2.5x at December 31, 2022
- The deleveraging
trajectory should quickly make Elis eligible for investment grade
rating consideration
- Debt maturities are
spread between April 2024 and June 2032; the entire debt is at
fixed rate and the average cost of debt is c. 2%
Many new CSR initiatives launched in
2022
- Development of new,
more responsible product lines and implementation of pilot projects
in connection with the circular economy; Elis’ “Workwear to
Workwear” project has been rewarded by the “Espoir” Trophy at the
European Circular Fashion Awards
- Sharp improvement
of water, thermal energy and CO2 emissions per kg of linen
delivered (European scope)
- Climate objectives
in accordance with the Paris Agreement are being finalized and will
be presented in the second half of 2023
- Ecovadis
certification improved to Platinum level, CDP score improved to A-
rewarding the Group's commitment to fighting climate change, and
significant improvement of the Sustainalytics rating
2023 outlook:
another year of strong organic growth with
marked improvement of all main financial
KPIs and further deleveraging
- 2023 full-year
organic revenue growth expected between +11% and +13%
- 2023 adjusted
EBITDA margin expected up c. +50bps yoy
- 2023 adjusted EBIT
expected above €650m (i.e. up at least +20% yoy)
- 2023 headline net
income expected above €405m (i.e. up at least +15% yoy)
- 2023 headline net
income per share expected above €1.65 on a fully diluted basis
(i.e. up at least +13% yoy)
- 2023 free cash flow
(after lease payments) expected above €260m (i.e. up at least +16%
yoy)
- Financial leverage
ratio at December 31, 2023 expected at c. 2.1x
Saint-Cloud, 8
March 2023 –
Elis, an international multi-service provider, offering textile,
hygiene and facility services solutions, which is present in Europe
and Latin America, today announces it 2022 full-year financial
results. The accounts have been approved by the Management Board
and examined by the Supervisory Board on March 7, 2023. They have
been audited and the auditors issued a report without any
qualification.
Commenting on the announcement, Xavier
Martiré, CEO of Elis, said:
« After two years of pandemic, 2022 was in many
respects another atypical year, marked by major macroeconomic and
geopolitical instability as well as strong inflation.
In this very complex context, the strength and
the flexibility of Elis’ business model allowed the Group to attain
record levels for almost all its financial KPIs.
Group revenue reached more than €3.8bn, with
organic growth of +21%, reflecting the high number of new contract
wins in Industry and Trade & Services, the rebound in
Hospitality and pricing adjustments, notably to offset surging
energy costs.
The great reliability and quality of the service
provided and the privileged commercial relationship the Group has
with its clients allowed Elis to implement pricing adjustments
throughout 2022 to offset, in nominal terms, inflation peaks
recorded during the year. Nevertheless, the very strong increase in
energy costs impacted our EBITDA margin, as expected. However, EBIT
margin and net income per share improved sharply. The Group has
also accelerated its deleveraging with a financial leverage ratio
at 2.5x as of 31 December 2022, down -0.5x yoy. This great set of
results allows us to propose the distribution of a dividend of
€0.41 per share at the next AGM, up +10% year on year.
In 2022, Elis also moved forward with circular
economy initiatives, as well as developing the recycling of its
textiles. The group also continues to work on the definition of its
climate strategy and will announce its objectives, aligned with the
Paris Agreement, in the second half of the year.
In 2023, we anticipate another year of strong
organic growth, along with marked improvement of all our financial
KPIs and further Group deleveraging, with a financial leverage
ratio expected at 2.1x at the end of 2023, which should quickly
make Elis eligible for investment grade rating consideration.
The great resilience shown by Elis through the
various recent crises, its operational know-how, its strengthened
organic growth profile and its circular economy model are major
assets that will enable the company to assert its leadership in all
the countries in which it is present.”
I. 2022 annual
results
Full-year 2022 reported growth breakdown
In millions of
euros |
2022 |
2021 |
Organic growth |
External growth |
FX |
Reported growth |
France |
1,185.0 |
953.8 |
+24.2% |
- |
- |
+24.2% |
Central Europe |
870.0 |
735.3 |
+15.0% |
+2.5% |
+0.9% |
+18.3% |
Scandinavia &
East. Eur. |
580.7 |
498.9 |
+14.9% |
+2.9% |
-1.4% |
+16.4% |
UK &
Ireland |
476.5 |
364.2 |
+28.8% |
+1.2% |
+0.9% |
+30.8% |
Latin America |
347.3 |
234.1 |
+9.1% |
+24.4% |
+14.9% |
+48.3% |
Southern
Europe |
330.5 |
235.9 |
+40.1% |
- |
- |
+40.1% |
Others |
30.8 |
26.1 |
+17.5% |
- |
+0.5% |
+18.0% |
Total |
3,820.9 |
3,048.3 |
+21.0% |
+3.1% |
+1.2% |
+25.3% |
« Others » includes Manufacturing
Entities and
Holdings. Percentage
change calculations are based on actual figures.
2022 organic growth
breakdown
|
Q1 |
Q2 |
H1 |
Q3 |
Q4 |
H2 |
France |
+30.8% |
+37.1% |
+34.1% |
+17.0% |
+15.9% |
+16.5% |
Central Europe |
+14.1% |
+18.5% |
+16.4% |
+13.7% |
+13.8% |
+13.7% |
Scandinavia &
East. Eur. |
+15.2% |
+19.6% |
+17.4% |
+13.2% |
+12.0% |
+12.6% |
UK &
Ireland |
+38.5% |
+38.8% |
+38.7% |
+21.4% |
+21.3% |
+21.4% |
Latin America |
+10.0% |
+7.6% |
+8.8% |
+7.1% |
+11.8% |
+9.4% |
Southern
Europe |
+52.9% |
+62.2% |
+58.0% |
+32.5% |
+23.2% |
+28.0% |
Others |
+19.3% |
+10.2% |
+14.5% |
+37.4% |
+7.4% |
+19.8% |
Total |
+24.2% |
+29.0% |
+26.7% |
+17.0% |
+15.7% |
+16.3% |
« Others » includes Manufacturing
Entities and
Holdings. Percentage
change calculations are based on actual figures.
As announced on January 30, 2023, 2022 activity
was marked by the recovery in hospitality, very good commercial
momentum and pricing adjustments tied to inflation. In 2022, Elis
recorded revenue increase of +25.3%, of which +21.0% on an organic
basis.
In France, revenue was up
+24.2% (entirely organic). Hospitality continued to rebound
throughout 2022 and is now above the 2019 level. All end-markets
showed very good commercial momentum, especially in Workwear and in
Pest control. In addition, the pricing dynamic was good.
In Central Europe, revenue was
up +18.3% (+15.0% on an organic basis) and all countries in the
region posted strong organic revenue growth of +10% or more.
Switzerland, where the share of Hospitality is high, posted strong
growth, as did Belux, where all segments were still well-oriented
(Flat linen, Workwear and Hygiene and well-being). In Germany,
pricing momentum was very good in Hospitality but remains
insufficient in Healthcare and Workwear in light of the inflation
level. That said, commercial development remains dynamic,
especially in Industry (Workwear) and in Hospitality (Flat
linen).
In Scandinavia &
Eastern Europe, revenue was up +16.4% (+14.9% on an
organic basis) and all countries in the region posted strong
organic revenue growth. Pricing negotiations took longer than in
the other regions but eventually came to a positive conclusion.
Hospitality sharply rebounded in Denmark and in Sweden throughout
2022, and commercial momentum is strong (notably in Workwear).
In the UK and & Ireland,
revenue was up +30.8% (+28.8% on an organic basis). Activity in
Hospitality continued to pick up although the pace was slower than
in the other regions. However, pricing momentum is well oriented in
the region, especially in Hospitality and in Healthcare: extra
capacity is limited, and most players focus on pricing rather than
volumes. Furthermore, we recorded an improvement in churn rate and
many new contract wins in Healthcare and in our Workwear
business.
In Latin America, revenue was
up +48.3% (+9.1% on an organic basis). The acquisition of a leader
in the Mexican market, consolidated since July 1st, largely
contributed to the strong scope effect in the year (+24.4%).
Integration is going well, and financial performance is even above
our expectations. Pricing dynamic was good in the region, but
volumes were slightly down, following the end of temporary
contracts signed in Brazil during the pandemic. The currency effect
was strongly positive in 2022 (+14.9%).
In Southern Europe, revenue was
up +40.1% (entirely organic). The region has a high exposure to
Hospitality and the marked rebound in activity throughout 2022
drove growth, notably with a strong summer season. In Workwear,
good commercial momentum continued on the back of an acceleration
of outsourcing. Last, pricing momentum in the region was
satisfactory during the year.
Adjusted EBITDA
In millions of
euros |
2022reported |
2021restated1 |
Var. 22/21 |
|
H1 |
H2 |
Total |
H1 |
H2 |
Total |
H1 |
H2 |
Total |
France |
209.7 |
246.5 |
456.2 |
153.2 |
220.5 |
373.7 |
+36.8% |
+11.8% |
+22.1% |
As of % of
revenue |
37.0% |
39.6% |
38.4% |
36.3% |
41.2% |
39.1% |
+70bps |
-160bps |
-70bps |
Central Europe |
121.5 |
137.5 |
259.0 |
111.2 |
129.4 |
240.5 |
+9.3% |
+6.3% |
+7.7% |
As of % of
revenue |
29.4% |
29.8% |
29.6% |
32.1% |
33.0% |
32.6% |
-270bps |
-320bps |
-290bps |
Scandinavia &
East. Eur. |
100.7 |
109.5 |
210.2 |
92.1 |
99.8 |
191.9 |
+9.4% |
+9.7% |
+9.6% |
As of % of
revenue |
35.9% |
36.4% |
36.2% |
39.0% |
38.0% |
38.5% |
-310bps |
-150bps |
-230bps |
UK &
Ireland |
67.4 |
75.8 |
143.2 |
46.7 |
65.3 |
112.1 |
+44.2% |
+16.1% |
+27.8% |
As of % of
revenue |
30.0% |
30.0% |
30.0% |
30.1% |
31.3% |
30.8% |
= |
-120bps |
-70bps |
Latin America |
45.6 |
70.8 |
116.4 |
37.6 |
40.2 |
77.8 |
+21.4% |
+76.1% |
+49.7% |
As of % of
revenue |
32.4% |
34.3% |
33.5% |
33.5% |
33.0% |
33.2% |
-110bps |
+130bps |
+30bps |
Southern
Europe |
39.4 |
50.7 |
90.1 |
24.2 |
43.5 |
67.7 |
+62.8% |
+16.6% |
+33.1% |
As of % of
revenue |
26.2% |
28.1% |
27.2% |
25.4% |
30.9% |
28.7% |
+80bps |
-280bps |
-140bps |
Others |
(7.9) |
(7.6) |
(15.5) |
(6.3) |
(5.3) |
(11.6) |
-25.4% |
-44.6% |
-34.1% |
Total |
576.4 |
683.2 |
1,259.6 |
458.7 |
593.4 |
1,052.1 |
+25.7% |
+15.1% |
+19.7% |
As of % of
revenue |
32.3% |
33.5% |
33.0% |
33.3% |
35.5% |
34.5% |
-100bps |
-190bps |
-150bps |
1: A reconciliation is provided in the “Restated
income statement for prior financial years” section of this
release.Margin rates and percentage change calculations are based
on actual figures.« Others » includes Manufacturing Entities and
Holdings.
In 2022, Group adjusted EBITDA was up +19.7% yoy
at €1,259.6m. Adjusted EBITDA margin was down -150bps.
In France, adjusted EBITDA
margin was down -70bps compared to 2021, at 38.4%. The strong rise
in energy prices in 2022 weighed on our costs: gas purchases were
not hedged, and the Flat linen business (highly gas intensive) was
strong due to the rebound in Hospitality. Pricing dynamics were
good, with an unavoidable lag given the sudden gas price increase,
leading to margin compression.
In Central Europe, adjusted
EBITDA margin was down -290bps compared to 2021, at 29.6%.
Covid-related absenteeism (paid by companies) and recruitment
difficulties, especially in Germany, had an impact on our
productivity (logistics and workshops). Furthermore, price
adjustment negotiations were difficult with big clients in
Healthcare and Workwear, which represent a significant part of the
region’s revenue.
In Scandinavia & Eastern
Europe, adjusted EBITDA margin was down -230bps compared
to 2021, at 36.2%. The pick-up in Hospitality had a dilutive effect
on margin. Just like Central Europe, performance was impacted by
Covid-related absenteeism (paid by companies) and by the lag in
implementing price adjustments for big clients in Healthcare and
Workwear.
In the UK &
Ireland, adjusted EBITDA
margin was down -70bps compared to 2021, at 30.0%. Operational KPIs
are improving. However, very strong inflation, while offset in
value by the rebound in Hospitality and pricing dynamics, had a
dilutive effect on margin.
In Latin America, adjusted
EBITDA margin was up +30bps compared to 2021, at 33.5%. The
acquisition of the leader in the Mexican market had an accretive
effect on margin. Furthermore, productivity is improving in all
countries and inflation has been easing, which generates a
favorable effect on the back of strong pricing adjustments that
have been kicking in with a time lag.
In Southern Europe, adjusted
EBITDA margin was down -140bps compared to 2021, at 27.2%. Just
like France, the cost base was impacted by fact that gas purchases
were unhedged and by the high share of Flat linen, which is more
gas intensive.
From adjusted EBITDA to net income
In millions of
euros |
2022 reported |
2021 restated1 |
Var. 22/21 |
Adjusted
EBITDA |
1,259.6 |
1,052.1 |
+19.7% |
As a % of
revenue |
33.0% |
34.5% |
-150bps |
D&A |
(715.9) |
(663.7) |
|
Adjusted EBIT |
543.7 |
388.3 |
+40.0% |
As a % of
revenue |
14.2% |
12.7% |
+150bps |
Current operating
income |
519.6 |
358.8 |
+44.8% |
Amortization of
intangible assets recognized in a business combination |
(80.1) |
(81.1) |
|
Goodwill
impairment |
(58.7) |
- |
|
Non-current
operating income and expenses |
(9.0) |
(16.1) |
|
Operating
income |
371.8 |
261.5 |
+42.2% |
Net financial
result |
(86.7) |
(90.5) |
|
Income tax |
(80.5) |
(56.6) |
|
Income from
continuing operations |
204.6 |
114.4 |
+78.8% |
Net income |
204.6 |
114.4 |
+78.8% |
Headline net
income2 |
353.2 |
222.6 |
+58.7% |
1: A reconciliation is provided in the “Restated
income statement for prior financial years” section of this
release.2: A reconciliation is provided in the “Net income to
headline net income” section of this release.Margin rates and
percentage change calculations are based on actual figures.
Adjusted EBIT and ROCE
In 2022, adjusted EBIT was up +40.0% yoy, at
€543.7m. Adjusted EBIT margin was up +150bps in 2022 at 14.2%, due
to the decrease in linen capex in 2020 and in 2021, leading to
limited increase of D&A in 2022 (c. +5%).
ROCE before tax, defined as adjusted EBIT
divided by capital employed at the beginning of the period, is at
11.6% in 2022 compared to 8.4% in 2021. The calculation of capital
employed is provided in the “Capital employed” section of this
release.
Operating income
The main items between adjusted EBIT and
Operating income are as follows:
- Expenses related to
free-share plans correspond to the requirements of the IFRS 2
accounting standard. They showed a -€5.7m decrease in 2022 compared
to 2021,
- The amortization of
intangible assets recognized in a business combination is mainly
related to the goodwill allocation of Berendsen. In 2022, the
aggregate was stable compared to 2021,
- Goodwill
impairment: in Russia, on June 30, 2022, in accordance with
accounting standards, the Group booked a €58.7m goodwill impairment
(at an exchange rate of RUB56.6/€), based on a 26.3% WACC (compared
to 11.4% as of December 31, 2021),
- Non-current
operating expenses amount to €9.0m in 2022, down yoy.
Net financial result
In 2022, despite a total interest charge up
+€7.3m following the various recent refinancings, net financial
expense was down c. -€4m yoy at €86.7m, mainly due to interest
received by the Group on its available cash in the context of
rising interest rates.
Net income
Net income was €204.6m in 2022, compared to
€114.4m in 2021, i.e. up +78.8%.
Net income to headline net
income
In millions of
euros |
2022 reported |
2021 restated1 |
Var. 22/21 |
Net income |
204.6 |
114.4 |
+78.8% |
Amortization of
intangible assets recognized in a business combination2 |
63.4 |
65.4 |
|
Goodwill
impairment |
58.7 |
- |
|
IFRS 2
expense2 |
21.5 |
25.9 |
|
Accelerated
amortization of loans issuing costs2 |
0.3 |
2.1 |
|
Exceptional gains /
losses linked to refinancing operations2 |
(2.2) |
3.3 |
|
Non-current
operating income and expenses2 |
7.0 |
11.5 |
|
Headline net
income |
353.2 |
222.6 |
+58.7% |
Attributable
to: |
|
|
|
- owners of the
parent |
353.2 |
222.5 |
|
- non-controlling
interests |
- |
0.1 |
|
Headline net income
per share (in euros): |
|
|
|
- basic,
attributable to owners of the parent |
1.54 |
0.98 |
+57.0% |
- diluted,
attributable to owners of the parent |
1.46 |
0.95 |
+53.9% |
1: A reconciliation is provided in the “Restated
income statement for prior financial years” section of this
release.2: Net of tax effect.
Headline net income was €353.2m in 2022, up
+58.7% compared to 2021. Headline net income per share was up
+57.0% at €1.54 (up +53.9% at €1.46 on a fully diluted basis).
Cash flow statement
In millions of
euros |
2022 reported |
2021 restated1 |
Adjusted
EBITDA |
1,259.6 |
1,052.1 |
Non-recurring items
and changes in provisions |
(9.7) |
(14.1) |
Acquisition and
disposal expenses |
(4.4) |
(1.6) |
Other |
(1.7) |
(1.6) |
Cash flow before
finance costs and tax |
1,243.8 |
1,034.7 |
Net capex |
(691.9) |
(569.5) |
Change in working
capital requirement |
(52.6) |
10.1 |
Net interest
paid |
(72.9) |
(74.6) |
Tax paid |
(100.1) |
(83.2) |
Lease liabilities
payments - principal |
(101.5) |
(89.4) |
Free cash flow
(after lease liabilities payments) |
224.9 |
228.1 |
Acquisitions of
subsidiaries, net of cash acquired |
(221.6) |
(86.8) |
Changes arising
from obtaining or losing control of subsidiaries or other
entities |
(22.4) |
(7.3) |
Other cash flows
related to financing activities |
(3.4) |
6.8 |
Proceeds from sale
of subsidiaries, net of cash transferred |
(0.0) |
0.0 |
Dividends and
distributions paid |
(33.2) |
(0.0) |
Equity increase
& treasury shares |
4.5 |
17.7 |
Other |
17.4 |
(21.4) |
Net debt
variance |
(33.8) |
137.1 |
Net financial
debt |
3,177.6 |
3,143.9 |
1: A reconciliation is provided in the “Restated
income statement for prior financial years” section of this
release.
Net capex
In 2022, the Group’s net capex represented 18.1%
of revenue, compared to 18.7% last year, despite the significant
inflation of linen price (c. +20%). In value, net capex increased
by c. +€122m over the period, but the strong revenue increase
resulted in a lower ratio.
Change in working capital
requirement
In 2022, change in WCR was strongly negative at
c. -€53m, reflecting the impact on trade receivables of the strong
activity pick-up and high inventories (both in terms of volume and
price) in a context of tension on the worldwide supply chain.
However, the Group recorded good cash collection ratios: average
payment time was 53 days at December 31, 2022, despite an
unfavorable calendar effect.
Free cash flow
In 2022, free cash flow (after lease liabilities
payments) was €224.9m, just slightly below 2021 level (€228.1m)
despite the strongly negative change in working capital requirement
(-€52.6m in 2022 compared to +€10.1m in 2021).
Net financial debt
The Group’s net financial debt as of December
31, 2022 stood at €3,177.6m compared to €3,143.9m at December 31,
2021 and €3,187.3m at June 30, 2022. The financial leverage ratio
was 2.5x at December 31, 2022 compared to 3.0x at December 31,
2021.
In 2022, Elis priced the issue of €300m
aggregate principal amount of senior unsecured notes under its EMTN
(Euro Medium Term Notes) Program. The maturity of the notes is 5
years and the notes carry a fixed annual coupon of 4.125%.
In June, the Group signed a new $175m USPP (US
private placement) financing with a group of US investors led by
Barings. The new notes have a 10-year maturity (June 2032) and will
offer investors a 4.32% coupon in US dollars. The notes have been
swapped in euros for a total amount of €159m by Elis which will pay
a final 3% coupon in euros.
In September, Elis placed Bonds Convertible into
New Shares and/or Exchangeable for Existing Shares (OCEANEs) due 22
September 2029, for a nominal amount of €380m and has partially
repurchased the outstanding OCEANEs due 6 October 2023 for a
nominal amount of €200m.
Payout for the
2022 financial year
At the next Annual General Meeting of
shareholders on 25 May 2023, the Supervisory Board will recommend
the payment of €0.41 per share for the 2022 financial year (+10%
compared to 2021). An option of a payment in Elis shares will be
proposed.
2023
outlook
2023 organic revenue growth is expected between
+11% and +13%, driven by:
- A price effect of
at least +9% made up of the embedded price adjustments negotiated
throughout 2022 and the additional adjustment implemented since
January 1st, 2023,
- A favorable
comparable base in Hospitality in the first quarter.
The lower end of the organic growth range
factors in the potential impact from a slowdown in the economy, of
which we see no sign to date.
In a context of very strong energy price
inflation, the Group has progressively negotiated fixed rate
tariffs for 2023 and the following years. These hedging measures,
as well as the embedded effect of pricing adjustments and new
productivity gains expected in 2023, should contribute to an
improvement of adjusted 2023 EBITDA margin of c. +50bps compared to
2022.
2023 adjusted EBIT is expected above €650m,
driven by top line dynamism and a slight decrease in D&A as a
percentage of revenue.
2023 headline net income is expected above
€405m, corresponding to a 2023 headline net income per share above
€1.65 (on a fully diluted basis, notably factoring in the potential
dilutive effect from the new OCEANE bods issued in September
2022).
2023 free cash flow (after lease payments) is
expected above €260m, driven by EBITDA increase and despite an
expected negative calendar effect on receivables (30 December 2023
and 31 December 2023 will be not worked).
Financial leverage ratio as of December 31, 2023
is expected at c. 2.1x, down -0.4x yoy.
II. Acquisition of a leading player in the Mexican
market
Presentation of the acquired company
The acquired company is a century-old business
and a leader in the Mexican market. It mainly provides flat linen
and workwear to clients in the Healthcare market. It is the only
Mexican player with national coverage: it operates 11 production
sites, 12 distribution centers and a manufacturing workshop. The
company employs more than 2,600 employees. 2021 revenue was c. €85m
(using June 2022 €/MX$ exchange rate), with EBITDA margin of c. 38%
and EBIT margin of c. 18%. The business delivers strong organic
revenue growth, driven by the rapid development of the Mexican
market. The group has been consolidated since July 1st, 2022. In
the second half, activity was strong, driven by very good
commercial dynamism (6-month 2022 revenue was c. €50m with adjusted
EBITDA margin of c. 42%).
Acquisition rationale
- Further development
in Latin America, a geography in which Elis posts strong organic
growth
- Elis is acquiring
one of the main Mexican players and the only one with a nationwide
network
- Elis enters its 4th
country in the region after Brazil, Colombia, and Chile
- Elis has delivered
average annual organic revenue growth of +9.4% in the zone since it
first entered the region in 2014
- Elis has an
excellent track record in integrating assets in Latin America with
c. 10 acquisitions since 2014
- The Mexican economy
is solid and stable
- Relatively low
inflation (4% per year before the pandemic) and low unemployment
(3.5%)
- Strong organic
growth potential as outsourcing is currently limited
- External growth
potential: additional bolt-on opportunities in a fragmented
market
- Mexican economy
strongly correlated with US activity
Attractive multiples
The initial invested amount for the acquisition
of 100% of the share capital (at an exchange rate set in March 2022
at MX$23.6/€) corresponds to a multiple of 5.0x 2021 EBITDA and
10.7x 2021 EBIT. The highly experienced management team continues
to run the business; the transaction includes some potential
earn-outs over the 2023-2025 period at lower multiples.
III. Other information
The circular economy at the heart of Elis’ business
model
Elis offers its clients products that are
maintained, repaired, reused, and reemployed to optimize their
usage and lifespan. The Group therefore selects its textile
products based on sustainability criteria, to ensure frequent
washing, and also operates repair workshops. Elis’ conviction is
that the circular economy model, which notably aims at reducing
consumption of natural resources by optimizing the lifespan of
products, is a sustainable solution to address today’s
environmental challenges.
The services offered by Elis are a sustainable
alternative to:
- Simple purchase or
use of products: by sharing them between several users or clients,
and by constantly looking at improving the industrial processes
linked to their washing. As an example, the use of workwear
operated by Elis leads to a 37% decrease of CO2 emissions compared
to workwear that is washed at home or in a standard laundry, and to
a 48% decrease of water consumption. (Source: EY)
- Single use /
disposable products: by offering reusable products, which are
mostly maintained locally, hence supporting local employment and
local economic development. As an example, the use of reusable
surgical garments in care facilities leads to a decrease ranging
from 31% to 62% of CO2 emissions compared to disposable clothes.
(Source: Cleaner Environmental Systems)
These alternatives to a linear consumption
approach enable our clients to avoid CO2 emissions and contribute
to a reduction of their own emissions.
The Ellen MacArthur Foundation states that
“circular economy is necessary to reach Net Zero” and that “nearly
10 billion tons of CO2 (i.e., 20% of world emissions) could be
reduced thanks to the transition of our current model towards a
circular economy”.
(https://climate.ellenmacarthurfoundation.org)
Non-financial rating
In 2022, Sustainalytics improved Elis’s ESG
rating by 10pts to 14.8 (« low risk »). Furthermore, the Group was
rated A- by the CDP (Carbon Disclosure Project), a non-profit
organization which performs independent assessments on the basis of
information made available by companies on their strategy, risk
& opportunity management, climate goals, annual climate
performance, etc… This rating puts Elis in the “Leadership”
category and underscores its commitment and actions with regards to
climate change.
After winning a Gold medal related to the
EcoVadis questionnaire for 5 consecutive years, Elis obtained a
Platinum medal, the highest possible reward. This medal places Elis
within the top 1% of the c. 90,000 companies assessed by
EcoVadis.
Finally, Elis maintained its high performance
with rating agency Gaïa (72/100), which ranks the Group at the Gold
level.
Our climate commitment
Conscious of the environmental challenges with
regards to climate change, Elis is committed to an approach to
reduce its emissions that is in line with the Paris Agreement to
contribute to keeping the increase in temperature below 1.5C°
compared to preindustrial levels1. At the General Shareholders
Meeting held on 19 May 2022, the Group already proposed that
shareholders support this strategic step, via an advisory
resolution. This resolution was approved. The setup of Elis’
Climate plan that started in 2022 will continue in 2023 in order to
be as accurate and fair as possible.
The Group aims at presenting its climate
objectives, aligned with the methodology of the Science Based
Targets initiative in the second half of 2023. The Group currently
plans to submit its climate objectives to the advisory vote of its
shareholders at the 2024 General Shareholders Meeting.
Restated income statement for prior financial
years
The table below presents the adjustments made
retrospectively linked to business combinations (IFRS3) on the
previously published income statement as of December 31, 2021.
In millions of
euros |
2021 reported |
IFRS 3 |
2021restated |
Revenue |
3,048.3 |
- |
3,048.3 |
Adjusted
EBITDA |
1,052.1 |
- |
1,052.1 |
D&A |
(663.7) |
- |
(663.7) |
Adjusted EBIT |
388.3 |
- |
388.3 |
Current operating
income |
358.8 |
- |
358.8 |
Amortization of
intangible assets recognized in a business combination |
(81.0) |
(0.1) |
(81.1) |
Goodwill
impairment |
- |
- |
- |
Non-current
operating income and expenses |
(16.1) |
- |
(16.1) |
Operating
income |
261.7 |
(0.1) |
261.5 |
Net financial
result |
(90.5) |
- |
(90.5) |
Income tax |
(56.6) |
0.0 |
(56.6) |
Income from
continuing operations |
114.6 |
(0.1) |
114.4 |
Net income |
114.6 |
(0.1) |
114.4 |
Capital employed
The capital employed calculation excludes the
intangible assets recognized in the Group’s last LBO for €1,536.8m
in 2021 and €1,537.7m in 2022 (net of deferred tax).
In millions of
euros |
As of January 1st, 2022 |
As of January 1st, 2021 |
TOTAL ASSETS |
8,043.1 |
7 862,4 |
Employee benefit
assets |
(51.8) |
(34,1) |
Cash and cash
equivalents |
(160.1) |
(137,6) |
Intangible assets
recognized in the Group’s last LBO (net of deferred tax) |
(1,537.7) |
(1,536.8) |
Subtotal (I) |
6,293.4 |
6,153.8 |
TOTAL EQUITY AND
LIABILITIES |
8,043.1 |
7,862.4 |
EQUITY |
(3,013.7) |
(2,808.3) |
Employee benefit
liabilities |
(105.9) |
(108,9) |
Borrowings and
financial debt |
(3,084.5) |
(3,066.6) |
Bank overdrafts and
current borrowings |
(219,5) |
(352.0) |
Subtotal (II) |
1,619.5 |
1,526.5 |
Capital employed at
beginning of period = (I)-(II) |
4,673.9 |
4,627.3 |
Financial definitions
- Organic growth in
the Group’s revenue is calculated excluding (i) the impacts of
changes in the scope of consolidation of “major acquisitions” and
“major disposals” (as defined in the Document de Base) in each of
the periods under comparison, as well as (ii) the impact of
exchange rate fluctuations.
- Adjusted EBITDA is
defined as adjusted EBIT before depreciation and amortization net
of the portion of grants transferred to income.
- Adjusted EBITDA
margin is defined as adjusted EBITDA divided by revenue.
- Adjusted EBIT is
defined as net income (loss) before net financial income (loss),
income tax, share in net income of equity accounted companies,
amortization of intangible assets recognized in a business
combination, goodwill impairment losses, other operating income and
expense, miscellaneous financial items (bank fees recognized in
operating income) and IFRS 2 expense (share-based payments).
- Adjusted EBIT
margin is defined as adjusted EBIT divided by revenue.
In order to take into account the statement
published by the European Securities and Markets Authority (ESMA)
on 29 October 2021 regarding alternative performance indicators,
the Group added the term “adjusted” to the above definitions. The
content of these indicators remains unchanged compared to previous
financial years.
- Headline net
result corresponds to net income or loss excluding
extraordinary items which, due to their type and unusual nature,
cannot be considered as intrinsic to the Group’s current
performance.
- Free cash flow is
defined as adjusted EBITDA less non-cash-items and changes in
working capital, purchases of linen, capital expenditures (net of
disposals), tax paid, financial interest paid and lease liabilities
payments.
- The financial
leverage ratio is the leverage ratio calculated for the purpose of
the financial covenant included in the banking agreement signed in
2021: Leverage ratio is equal to Net financial debt / adjusted
EBITDA, pro forma of acquisitions finalized during the last 12
months, and after synergies.
Geographical breakdown
- France
- Central Europe:
Austria, Belgium, Czech Republic, Germany, Hungary, Luxembourg,
Netherlands, Poland, Slovakia, Switzerland
- Scandinavia &
Eastern Europe: Denmark, Estonia, Finland, Latvia, Lithuania,
Norway, Russia, Sweden
- UK &
Ireland
- Latin America:
Brazil, Chile, Colombia, Mexico
- Southern Europe:
Italy, Portugal, Spain & Andorra
Presentation of full-year
2022
results (in
English)
Date: Wednesday 8 March 2023 at 7:30am GMT (8:30am CET)
Speakers: Xavier Martiré (CEO) and Louis Guyot (CFO)
Webcast link: https://edge.media-server.com/mmc/p/fahw7btv
Conference call & Q&A session link:
https://register.vevent.com/register/BI32712b793ca4499ca789819537904bbb
An investor presentation will be available at 7:00am GMT (8:00am
CET) at this
address:https://fr.elis.com/en/group/investor-relations/regulated-information
Forward looking statements
This document may contain information related to
the Group’s outlook. Such outlook is based on data, assumptions and
estimates that the Group regarded as reasonable at the date of this
press release. Those data and assumptions may change or be adjusted
as a result of uncertainties relating particularly to the economic,
financial, competitive, regulatory or tax environment or as a
result of other factors of which the Group was not aware on the
date of this press release. Moreover, the materialization of
certain risks, especially those described in chapter 4 “Risk
management and internal control” of the Universal Registration
Document for the financial year ended 31 December 2021, which is
available on Elis’s website (www.elis.com), may have an impact on
the Group’s activities, financial position, results or outlook and
therefore lead to a difference between the actual figures and those
given or implied by the outlook presented in this document. Elis
undertakes no obligation to publicly update or revise the Group’s
outlook or any of the abovementioned data, assumptions, or
estimates, except as required by applicable laws and regulations.
Reaching the outlook also implies success of the Group’s strategy.
As a result, the Group makes no representation and gives no
warranty regarding the achievement of any outlook set out
above.
Next information
Q1 2023 revenue: Wednesday 10 May 2023 (after
market)
AGM: Thursday 25 May at 3pm CET - Maison des
Travaux Publics - 3, rue de Berri - 75008 Paris
Contact
Nicolas Buron - Investor Relations Director -
Phone: +33 1 75 49 98 30 - nicolas.buron@elis.com
Excerpt from condensed consolidated financial
statements
Consolidated income
statement
(in millions
of euros) |
31/12/2022 |
31/12/2021restated |
Revenue |
3,820.9 |
3,048.3 |
Cost of linen,
equipment and other consumables |
(575.0) |
(517.5) |
Processing
costs |
(1,491.3) |
(1,127.8) |
Distribution
costs |
(585.5) |
(470.9) |
Gross margin |
1,169.1 |
932.1 |
Selling,
general and administrative expenses |
(655.1) |
(581.7) |
Net impairment
on trade and other receivables |
5.7 |
8.4 |
Operating income before amortization of intangible assets
recognized in a business combination, goodwill impairment and other
operating income and expenses |
519.6 |
358.8 |
Amortization
of intangible assets recognized in a business combination |
(80.1) |
(81.1) |
Goodwill
impairment |
(58.7) |
- |
Other
operating income and expenses |
(9.0) |
(16.1) |
Operating income |
371.8 |
261.5 |
Net financial
income (expense) |
(86.7) |
(90.5) |
Income (loss) before tax |
285.1 |
171.0 |
Tax |
(80.5) |
(56.6) |
Income from continuing operations |
204.6 |
114.4 |
Income from
discontinued operation, net of tax |
- |
- |
NET INCOME (LOSS) |
204.6 |
114.4 |
Attributable
to: |
|
|
- owners of
the parent |
204.6 |
114.3 |
-
non-controlling interests |
0.0 |
0.1 |
Earnings
(loss) per share (EPS) (in euros): |
|
|
- basic,
attributable to owners of the parent |
€0.89 |
€0.50 |
- diluted,
attributable to owners of the parent |
€0.86 |
€0.50 |
Earnings
(loss) per share (EPS) from continuing operations (in euros): |
|
|
- basic,
attributable to owners of the parent |
€0.89 |
€0.50 |
- diluted, attributable to owners of the parent |
€0.86 |
€0.50 |
Consolidated statement of financial
position
Assets
(in millions of euros) |
31/12/2022 |
31/12/2021 |
|
|
restated |
Goodwill |
3,962.6 |
3,818.3 |
Intangible
assets |
697.1 |
752.7 |
Right-of-use
assets |
466.9 |
439.4 |
Property,
plant and equipment |
2,039.5 |
1,911.0 |
Other equity
investments |
0.1 |
0.1 |
Other
non-current assets |
79.2 |
64.7 |
Deferred tax
assets |
43.0 |
32.0 |
Employee
benefit assets |
18.7 |
51.8 |
TOTAL
NON-CURRENT ASSETS |
7,307.0 |
7,070.1 |
Inventories |
195.3 |
138.6 |
Contract
assets |
45.5 |
38.1 |
Trade and
other receivables |
748.2 |
599.8 |
Current tax
assets |
18.2 |
17.2 |
Other
assets |
17.4 |
18.9 |
Cash and cash
equivalents |
286.2 |
160.1 |
Assets held
for sale |
0.2 |
0.4 |
TOTAL CURRENT
ASSETS |
1,311.0 |
973.0 |
TOTAL ASSETS |
8,618.0 |
8,043.1 |
Equity and liabilities
(in millions of
euros) |
31/12/2022 |
31/12/2021 |
|
|
restated |
Share
capital |
230.1 |
224.1 |
Additional
paid-in capital |
2,440.9 |
2,531.6 |
Treasury share
reserve |
(1.7) |
(1.6) |
Other
reserves |
(324.2) |
(322.7) |
Retained
earnings (accumulated deficit) |
868.2 |
581.5 |
EQUITY
ATTRIBUTABLE TO OWNERS OF THE PARENT |
3,213.4 |
3,013.0 |
NON-CONTROLLING INTERESTS |
0.8 |
0.7 |
TOTAL
EQUITY |
3,214.2 |
3,013.7 |
Provisions |
91.6 |
90.0 |
Employee benefit
liabilities |
69.4 |
105.9 |
Borrowings and
financial debt |
3,034.9 |
3 084.5 |
Deferred tax
liabilities |
290.1 |
283.0 |
Lease
liabilities |
390.3 |
367.2 |
Other
non-current liabilities |
68.9 |
33.1 |
TOTAL
NON-CURRENT LIABILITIES |
3,945.2 |
3,963.7 |
Current
provisions |
10.4 |
12.6 |
Current tax
liabilities |
24.0 |
28.2 |
Trade and other
payables |
364.9 |
262.5 |
Contract
liabilities |
81.4 |
75.8 |
Current lease
liabilities |
95.2 |
86.3 |
Other
liabilities |
453.9 |
380.8 |
Bank overdrafts
and current borrowings |
428.9 |
219.5 |
Liabilities
directly associated with assets held for sale |
- |
- |
TOTAL CURRENT
LIABILITIES |
1,458.6 |
1,065.7 |
TOTAL EQUITY AND LIABILITIES |
8,618.0 |
8,043.1 |
Consolidated statement of cash
flows
(in millions of
euros) |
31/12/2022 |
31/12/2021restated |
Consolidated net income (loss) |
204.6 |
114.4 |
Tax |
80.5 |
56.6 |
Net financial
income (expense) |
86.7 |
90.5 |
Goodwill
impairment |
58.7 |
- |
Share-based
payments |
20.3 |
24.4 |
Depreciation,
amortization and provisions |
790.8 |
745.7 |
Portion of
grants transferred to income |
(0.7) |
(0.6) |
Net gains and
losses on sale of property, plant and equipment and intangible
assets |
5.4 |
0.7 |
Other |
(2.5) |
2.9 |
CASH FLOWS BEFORE FINANCE COSTS AND TAX |
1,243.8 |
1,034.7 |
Change in
inventories |
(50.0) |
1.0 |
Change in
trade and other receivables and contract assets |
(119.3) |
(76.8) |
Change in
other assets |
0.3 |
2.8 |
Change in
trade and other payables |
82.2 |
35.3 |
Change in
contract and other liabilities |
35.7 |
45.5 |
Other
changes |
(2.2) |
0.1 |
Employee
benefits |
0.7 |
2.3 |
Tax paid |
(100.1) |
(83.2) |
NET CASH FROM OPERATING ACTIVITIES |
1,091.2 |
961.6 |
Acquisition of
intangible assets |
(26.5) |
(21.1) |
Proceeds from
sale of intangible assets |
- |
- |
Acquisition of
property, plant and equipment |
(673.3) |
(552.8) |
Proceeds from
sale of property, plant and equipment |
7.4 |
3.8 |
Acquisition of
subsidiaries, net of cash acquired |
(221.6) |
(86.8) |
Proceeds from
sale of subsidiaries, net of cash transferred |
(0.0) |
0.0 |
Changes in
loans and advances |
1.1 |
1.0 |
Dividends
earned |
0.0 |
0.0 |
Investment grants |
0.5 |
0.5 |
NET CASH FROM INVESTING ACTIVITIES |
(912.5) |
(655.3) |
Capital
increase |
4.6 |
10.3 |
Treasury
shares |
(0.1) |
7.3 |
Dividends
paid |
|
|
- to owners of
the parent |
(33.2) |
(0.0) |
- to
non-controlling interests of consolidated companies |
- |
- |
Change in
borrowings (a) |
152.8 |
(141.7) |
- Proceeds
from new borrowings |
1 244.0 |
776.1 |
- Repayments
of borrowings |
(1,091.2) |
(917.8) |
Lease
liability payments - principal |
(101.5) |
(89.4) |
Net interest
paid (including interest on lease liabilities) |
(72.9) |
(74.6) |
Other cash flows related to financing activities |
(3.4) |
6.8 |
NET CASH FROM FINANCING ACTIVITIES |
(53.7) |
(281.2) |
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS |
125.1 |
25.2 |
Cash and cash
equivalents at beginning of period |
160.1 |
137.6 |
Effect of changes in foreign exchange rates on cash and cash
equivalents |
1.0 |
(2.7) |
CASH AND CASH EQUIVALENTS AT END OF PERIOD |
286.2 |
160.1 |
(a) Net change
in credit lines |
|
|
1 Reduction in line with the 1.5°C target for direct (Scope 1)
and indirect (Scope 2) emissions, and the well below 2°C target for
other indirect emissions (Scope 3).
- Elis - FY 2022 results (press release)
Elis (EU:ELIS)
Graphique Historique de l'Action
De Mar 2024 à Avr 2024
Elis (EU:ELIS)
Graphique Historique de l'Action
De Avr 2023 à Avr 2024