Board of Directors approves Consolidated Half-yearly Report as at 30 June 2022
Guidance of €15 million EBITDA in 2022 confirmed
REVENUES IN CONTINUOUS GROWTH AND EBITDA MARGIN AT 18.2%
Revenues: €39.6 million (+41.2% compared to €28.1 million in the first half of 2021; +13.4% compared to the pro forma figure of €35.0 million in the first half of 2021)
EBITDA: €7.2 million (+68.5% compared to €4.3 million in the first half of 2021; +9.8% compared to the pro forma figure of €6.6 million in the first half of 2021)
EBITDA Margin: 18.2% (compared to 15.3% in the first half of 2021; the pro forma figure in the first half of 2021 was 18.8%)
Profit for the period: €1.5 million (-23.7% compared to €2.0 million in the first half of 2021; -29.7% compared to the pro forma figure of €2.1 million in the first half of the year)
Net financial position: debt of €37.4 million as at 30 June 2022 (increase of €5.5 million compared to debt of €31.9 million as at 31 December 2021)
Valle San Bartolomeo (Alessandria, Italy), 29 September 2022 – The Board of Directors of STAR7 (EGM ticker: STAR7) met today under the chairmanship of Lorenzo Mondo to examine and approve the Consolidated Half-yearly Report as at 30 June 2022. STAR7 is a company that provides an integrated range of product-information services, from product and process engineering support to the creation and management of technical and marketing content, translation, printing and virtual experience. The financial statements were prepared in accordance with the Euronext Growth Milan Issuers Regulation and in compliance with Italian accounting standards.
Lorenzo Mondo, Chairman and Chief Executive Officer of STAR7, commented: “Results in the first half confirm the Group's continued growth, driven by rigorous implementation of the strategy announced at IPO in December 2021. In 2022 we have found ourselves in an operating context that has turned out to be much more complicated than we could have predicted at the end of last year. Nevertheless, STAR7 has managed to achieve double-digit growth rates in both revenues and EBITDA, with all Group companies making a positive contribution. This shows that the acquisitions we have made were the right ones and that we have successfully integrated them, with a positive impact not only on scale but on margins, too. The good half-year results also testify to the validity of STAR7’s business model, which hinges on upselling and cross-selling between the various service lines, as well as the successful management of operating costs within the current inflationary environment.”
Mondo continued: "This year we have also intensified our efforts in the US market, where we have strengthened the sales force and rebranded recent acquisitions under the STAR7 name to provide a more streamlined organisation and clearer customer perception.”
He added: “In light of the results achieved in 2021 and in the first part of the current year, we feel even more confident that we can achieve the target EBITDA of €15 million for the full-year 2022, as forecast at IPO.”
“We are without doubt ready to seize new acquisition opportunities, generating still more value for our shareholders,” the Group CEO concluded. “The tough operating environment has increased the number of companies for sale, enhancing our pipeline of M&A candidates, which we can now evaluate selectively. This feeds into fresh ideas for the near future, even as we remain focused on managing the challenges of the present scenario.”
PERFORMANCE AND FINANCIAL POSITION
Revenues
STAR7 Group revenues amounted to €39.6 million in the first half of 2022, an increase of 41.2% compared to €28.1 million in the first half of 2021. This change was driven by the incremental contribution of the acquisitions made in the second half of last year (Geo Group and LocalEyes) and organic growth, thanks to the development of contractual relationships with new customers and an expansion in the activities carried out for existing customers.
The geographical distribution of revenues in the first half of 2022 reflects the growing internationalisation of STAR7, with the proportion of revenues from non-EU countries rising from 19% to 36%, mainly due to the contribution of LocalEyes.
Geographical breakdown of Group revenues |
H1 2022 |
H1 2021 |
|
|---|---|---|---|
| Italy | 59% | 75% | |
| European Union | 5% | 6% | |
| Non EU | 36% | 19% |
The increase in the proportion of Group Revenues accounted for by the Global Content service line reflects the consolidation of LocalEyes, acquired in November 2021. Engineering, Experience and Product Knowledge services retain strong potential for development through cross-selling initiatives, which will be targeted at customers that currently use STAR7 exclusively for language services.
Service Lines as a % of Group Revenues |
H1 2022 |
H1 2021 |
|
|---|---|---|---|
| Global Content | 46% | 31% | |
| Engineering, Experience e Product Knowledge | 38% | 49% | |
| Printing | 16% | 20% |
EBITDA
Despite the increase in headcount and the inflation of some operating costs, the STAR7 Group’s EBITDA rose significantly from €4.3 million in the first half of 2021 to €7.2 million (+68.5%) in the first half of 2022. The EBITDA Margin therefore reached 18.2%, compared to 15.31% in the same period of 2021.
The strong margin reflects careful cost rationalisation achieved through corporate simplifications and the further development of offshoring activities in Albania, while also bearing witness to the effective integration of the acquired companies.
EBIT
In the first half of 2022, the EBIT of the STAR7 Group reached €3.5 million, an increase of 24.2% compared to €2.9 million in the first half of 2021, despite the significant increase in Amortisation, Depreciation, Write-downs and Provisions (+€2.2 million compared to the first half of 2021), linked in particular to the goodwill of the acquired companies.
Profit for the period
In the first half of 2022, the STAR7 Group reported a net profit of €1.5 million, down 23.7% compared to €2.0 million in the first half of 2021. The €0.5 million decrease in net profit, compared to an EBIT increase of €0.7 million, reflects the negative impact of higher net financial expenses (+€0.8 million) as a result of the debt taken out to finance the acquisition of LocalEyes as well as the increase in income taxes (+€0.4 million).
Net working capital
Net working capital was up significantly as at 30 June 2022, but this was not linked to a change in payment and collection conditions. Inventories increased mainly due to the rise in the cost of raw materials. Trade receivables increased in line with the uplift in turnover, but this was also due to the fact that this is an interim report, hence part of the increase will be absorbed by the end of the financial year. The reduction in trade payables is mainly linked to the payment of a number of costs related to the listing process, recognised at the end of 2021 both in trade payables and other payables.
This dynamic was due by the combined effect of the factors described. It will be partially reabsorbed by the end of the 2022 financial year, leading to an improvement in net financial position towards the values at the start of the year.
Net financial position
As at 30 June 2022, the STAR7 Group's net financial position showed debt of €37.4 million, an increase of €5.5 million compared to the end of 2021 (net debt of €31.9 million). The change in the net financial position reflects the impact of the payment of certain costs related to the listing process that took place in December 2021, as well as the expansion of net working capital linked to the increase in turnover. In the first half of 2022, the Parent Company STAR7 S.p.A. also took out a new medium-term bank loan of €3.0 million, which will be used in part to repay a short-term loan.
STAR7 has maintained a good level of available liquidity (€21.0 million as at 30 June 2022), so as to be able to promptly seize any acquisition opportunities. During the first half of 2022, the Company also extended the profile of its average debt maturity, with an increase in long-term bank debt. STAR7 continues to meet the covenants of the bonds issued to finance the acquisition of LocalEyes by an ample margin.
SIGNIFICANT EVENTS IN THE FIRST HALF OF 2022
On 28 February 2022, STAR7 announced that it had renewed significant multi-year contracts covering all service lines with a historic customer in the Automotive sector, and that it had signed a new contract for Global Content activities with one of the largest tourism operators in Italy. Additional contracts of significant size were also renewed in the first half of 2022, confirming customers’ trust in STAR7 and providing revenue visibility for the coming years.
In March 2022, the offices of the two Albanian companies based in Tirana and controlled respectively by STAR7 and LocalEyes were joined together, further facilitating the integration of the most important acquisition completed in 2021.
In June 2022, a new STAR7 office was opened in Shkodra, Albania, with the aim of seizing further offshoring opportunities in addition to those managed through the Tirana office.
SUBSEQUENT EVENTS
On 26 July 2022, STAR7 signed the contract for the acquisition of 100% of Vertere S.r.l., an Italian company in the translation and localisation sector. Vertere boasts a strong track record of leveraging the benefits of Language Information Technology within a distinctive management process based on workflow optimisation.
Also on 26 July 2022, the deeds were signed for the merger by incorporation into STAR7 of two wholly owned subsidiaries, AD Studio s.r.l. and STAR7 Engineering s.r.l. The operation is part of a long process of corporate optimisation and simplification at STAR7.
OUTLOOK
Performance in the first few months since 30 June 2022 has continued to be good despite the complex international scenario caused by the ongoing geopolitical crisis. STAR7 expects to achieve a profit for the full year 2022.
Performance in the first half of 2022 and visibility of activities already planned up to the end of the year give STAR7 grounds to believe that the EBITDA target of €15 million for 2022 is achievable, confirming the guidance originally provided at IPO and reiterated at the presentation of the results for the 2021 financial year.
FILING OF DOCUMENTATION
A copy of the Consolidated Half-yearly Report as at 30 December 2022, including the Independent Auditors' Report, will be made available to the public within the terms set out by law at the company's registered office in Valle San Bartolomeo (Alessandria, Italy), as well as by publication on the company's website www.star-7.com in the section “Investor Relations/Reports and financial statements”, and on the authorised storage mechanism www.1info.it.
CONFERENCE CALL TO PRESENT H1 2022 RESULTS
The results for the first half of 2022 will be presented in a conference call by STAR7 management today, Thursday 29 September 2022, at 3:00 PM (CET).
The conference call can be joined by registering at the following URL:
https://teams.microsoft.com/registration/IKKIHVxfqEKAgUpnuqAfxA,aO-tHw7pbkWMK4samIBWxQ,3M82bKFUn0GhdJhzfGiLXg,5GpOcLrrwkWiP-qfRlO99w,KjOXalulkUu40rH068h5FQ,lq2lpc_SkkKMifa6zJ_zDA?mode=read&tenantId=1d88a220-5f5c-42a8-8081-4a67baa01fc4
The presentation will be available from the start of the conference call on the company website at:
https://www.star-7.com/en/investor-relations/presentations.
This document is an English translation from Italian. The Italian original shall prevail in case of difference in interpretation and/or factual errors.
STAR7
For more than 20 years, STAR7 has served its customers as a leader in the product information sector. Support for product and process engineering, creating and managing technical content, as well as marketing, translation, printing and virtual experience: with its services, STAR7 is able to support the industrial activity of customers throughout the life cycle of the product, from the design phase to after-sales. The hallmark of STAR7 has always been an approach capable of combining specific know-how, technology and overall perspective to offer the best possible solutions to the needs of customers and the global market. This approach has seen STAR7 strike major partnerships with leading international companies, establishing it as a reliable and credible global partner. STAR7 is part of the STAR Group network.
www.star-7.com
FOR FURTHER INFORMATION:
INVESTOR RELATIONS
investorrelations@star-7.com
Paolo Castagno, CFO e Investor Relations Manager STAR7
Tel: +39 0131 1988872
E-mail: paolo.castagno@star-7.com
Blue Arrow - IR Advisor
Maria Grazia Mantini
Mob: +41 78 723 6840
E-mail: mariagrazia.mantini@bluearrow.ch
MEDIA RELATIONS STAR7
mediarelations@star-7.com
Piera Alasia, Chief Marketing Officer
Tel: +39 0131 19788
E-mail: piera.alasia@star-7.com
Spriano Communication & Partners - Ufficio stampa
Fiorella Girardo
Mob: +39 348 857766
E-mail: fgirardo@sprianocommunication.com
Cristina Tronconi
Mob. +39 346 0477901
E-mail: ctronconi@sprianocommunication.com