AUSTRIACARD HOLDINGS AG: AUSTRIACARD HOLDINGS AG ANNOUNCES H1 2024 RESULTS

 

 

 

 

AUSTRIACARD HOLDINGS AG

ANNOUNCES H1 2024 RESULTS

 

 

 

August 29^th, 2024: AUSTRIACARD HOLDINGS AG (ACAG) revenues and profitability growth accelerates in H1 2024 driven by technology segment expansion.

 

• H1 2024 Group Revenues increase by 7.0% vs H1 2023 reaching € 192.0m, driven by a near quadrupling of Digital Transformation Technologies’ revenues and good growth in the Document Lifecycle Management segment.
• From a geographic cluster point, Central Eastern Europe & DACH Revenues grow by 14.2% to € 121.6m and Türkiye, Middle East and Africa Revenues grow by 24.5% to € 37.5m, driving the Group’s revenues.
• Improved sales mix leads to a 10.1% gross profit increase to € 48.8m and a gross profit margin of 25.4% vs 24.7% in same period LY
• Sales mix composition with much higher technology component, together with contained OPEX, significantly enhance operating profitability, leading to a 11.2% Adj. EBITDA increase, to € 28.8m, and a margin of 15.0%.
• Net Profit after Tax reached € 11.2m, and the margin stood at 5.9%.
• On track to reach or exceed 2024 guidance

 

 

CEO COMMENTARY

 

AUSTRIACARD HOLDINGS AG Group Vice-Chairman and CEO, Manolis Kontos, noted:

 

“Consistent with the potential we had highlighted in the first quarter of 2024, growth accelerated significantly in the second quarter driven by an approx. 13% increase in revenues, leading H1 2024 to 7% revenues increase and an even stronger EBITDA growth of 11.2%. Our strategy to transition the company into a technology solutions provider is already materializing, with the revenues of that segment increasing 4 times to € 16.3m compared to € 4.4m in H1 2023.

Growth was also achieved in the Document Lifecycle Management segment, while Secure Chip & Payment Solutions recorded a slight decrease on a reported level due to the discontinuation of low margin wholesale chip module sales business, resulting from our decision to focus on selling complete smart card solutions.

We continue expanding in Türkiye, Middle East and Africa, a geographical cluster from which we have high expectations for growth, while retaining our commanding presence in all markets that we operate, as well as the Challenger/Neo Banks, where more sophisticated products like metal cards prove to be a strong marketing tool for our B2B clients that are looking for innovation in their offering.

We are on track to meet or exceeded our guidance of 10% revenue growth and a higher percentage EBITDA growth, resulting from enhanced operating synergies and an improved sales mix more skewed towards Digital Transformation Technologies.”

 

 

 

 

 

GROUP BUSINESS PERFORMANCE

 

 

Business performance of AUSTRIACARD HOLDINGS Group as monitored by Management

 

The following analysis is based on the business performance as monitored by Group management excluding effects of IAS 29 Hyperinflation accounting and with a separate presentation of Special Items (e.g. Management participation programs etc.) below adjusted Profit (Loss) before tax.

 

 

In H1 2024 AUSTRIACARD HOLDINGS Group’s Revenues reached € 192.0m increasing by € 12.5m or 7.0% compared to the same period in 2023. The growth was mainly driven by Digital Transformation Technologies, which increased by € 11.9m and nearly quadrupled their revenues compared to last year. This is the result of the focus given by the Group in this solution category. The main contributors to this stage are public sector digitalization projects in Greece as well as continued growth of this solution category in the Romanian market. Document Lifecycle Management also contributed to the growth, increasing by € 2.8m or 5.1%, mainly driven from the Romanian market.

 

 

 

 

Revenues by solution category
in € million H1 2024 H1 2023 D '24-'23 D '24-'23 % Secure Chip & Payment Solutions 118.7                120.8 (2.2) -1.8% Document Lifecycle Management 57.0 54.3 2.8 5.1% Digital Transformation Technologies 16.3 4.4 11.9 271.7% Total 192.0  179.5 12.5 7.0%

 

Secure Chip & Payment Solutions are slightly lower vs last year by € -2.2m or -1.8%. However, if we exclude from the comparative period the impact of our strategic decision to de-prioritize wholesale chip module sales and focus in selling complete smart card solutions (with total effect amounting to € 15.5m), the like-for-like organic growth of the Secure Chip & Payment category recorded is € 13.4m or 12.8%. The growth is coming from both regular banking cards sales as well as high end metal cards offered to our clients which have a significantly higher selling price per card and are accompanied by increased revenue from personalization and fulfilment services.

 

Revenues by Segments
in € million H1 2024 H1 2023 D '24-'23 D '24-'23 % Western Europe, Nordics, Americas 64.9                67.3 (2.4) -3.6% Central Eastern Europe & DACH 121.6 106.5 15.1 14.2% Türkiye / Middle East and Africa 37.5 30.1 7.4 24.5% Eliminations & Corporate (31.9) (24.3) (7.6) 31.1% Total             192.0             179.5 12.5 7.0%

 

From a geographical segment perspective, revenue growth was driven by CEE and MEA with revenue increases of € 15.1m or 14.2% and € 7.4m or 24.5% respectively being mainly attributable to digitalization projects in the CEE segment and to Secure Chip & Payment solutions in the MEA segment. The WEST segment lagged compared to 2023 by € 2.4m or -3.6% mainly due to the above-described de-prioritization of wholesale chip module sales totalling € 13.9m in this segment. Excluding this impact, like-for-like revenues from WEST increased by € 11.5m or 21.7% with metal payment cards, personalization & fulfilment services being the main driver of this strong growth. The increase of Eliminations & Corporate mainly reflects the increase in intra-segment revenues between the CEE and the MEA segment related to payment card deliveries to the Turkish market.

 

Gross profit I increased by € 9.7m or 12.4% reaching € 87.7m as a result of revenue and margin growth. Gross margin I improved from 43.5% to 45.7%, mainly due to a higher proportion of service revenues without associated material costs.

 

Gross profit II grew by € 4.5m or 10.2%, reaching € 48.8m. Gross margin II improved by 0.7 percentage points and reached 25.4% mainly as a result of a different sales mix having higher contribution from Digital Services.

 

Operating expenses (OPEX)
in € million H1 2024 H1 2023 D '24-'23 D '24-'23 % Production Costs (38.9) (33.7) (5.2) 15.4% Selling and distribution expenses (11.8) (11.5) (0.4) 3.1% Administrative expenses (14.3) (12.5) (1.8) 14.1% Research and development expenses (3.5) (3.5) (0.1) 2.3% + Depreciation & amortization 8.2 7.6 0.6 8.3% Total (60.4) (53.6) (6.8) 12.6% Operating expenses as a percentage of Sales 31.4% 29.8% 1.5%  

 

Operating expenses (OPEX) excluding depreciation, amortization and impairment increased by € 6.8m, or 12.6% totalling to € 60.4m. A significant part of the Production costs increase (€ 3.0m) relates to the consolidation of Pink Post in Romania (company offering distribution & postal services enabling us to provide end to end services in that market), which was first consolidated in the Group post the majority stake acquisition in March 2023. Administrative expenses increased by € 1.8m as a result of the strengthening of the Group management team following the Group’s listing and reorganization in H1 2023. In addition, OPEX also increased due to adjustments on salaries and other costs due to inflation. As a proportion of revenues, OPEX increased by 1.5 percentage points to 31.4%, compared to 29.8% in the first six months of 2023.

 

 

 

Adjusted EBITDA increased by € 2.9m, or 11.2%, from € 25.9m to € 28.8m, due to revenue and gross margin growth. The adjusted EBITDA margin increased by 0.6 percentage points from 14.4% to 15.0% in H1 2024.

 

Adjusted EBIT improved by € 2.3m, or 12.4% and reached € 20.5m, fully offsetting the € 0.6m increase in depreciation & amortization, related to machinery and equipment added in the previous year to support business expansion.

 

Adjusted profit before tax increased by € 1.6m or 10.1% reaching € 17.0m as the growth in EBIT was partially offset by the increase in net finance costs amounting to € 0.7m resulting from the hike in interest rates and the higher average outstanding financial debt. 

 

Special items
in € million included in H1 2024 H1 2023 D '24-'23 D '24-'23 % Management participation programs EBITDA (2.1) (0.6) (1.4) 228.5% Expense from financial assets and liabilities at fair value through profit or loss Profit before tax (0.0) (0.1) 0.1 -69.5% Total   (2.1) (0.7) (1.4) 191.1%

 

Profit decreased by € 0.7m or 6.2% and reached € 11.2m which is mainly attributable to the normalization of the expenses for management participation programs (€ +1.4m) which in H1 2023 had been positively affected by a provision release and higher corporate income tax expenses (€ +0.9m), resulting from a change in tax rules in Romania and the United Kingdom. In more detail, expenses for management participation programs (SOP) amounted to € 2.1m in H1 2024 compared to only € 0.6m in H1 2023.

 

 

Effect of IAS 29 Hyperinflation

 

As presented in the table below, the application of IAS 29 Hyperinflation with respect to our Türkiye-based operations, hyperinflation accounting led to increased Revenues by € 3.3m reaching € 195.4m in 1-6 2024 compared to an increase of € 1.6m to € 181.2m in 1-6 2023.

 

Hyperinflation accounting also increased Operating expenses (OPEX) and adjusted EBITDA in the IFRS Income statement compared to the Management Income statement by € 0.2m compared to € 0.1m in 1-6 2023. Also adjusted EBIT increased by € 0.2m (2023: € 0.0m) and adjusted Profit before tax by € 0.3m (2023: € 0.0m) due to Hyperinflation accounting.

 

With respect to Profit before tax and Profit in 2024, Hyperinflation accounting led to only minor differences as both the IFRS Income statement and the Management Income Statement showed € 14.9m and € 11.2m respectively.

 

  1-6 2024 1-6 2023 Impact of IAS 29 Hyperinflation
in € million  IFRS IAS29 Effect MGMT IFRS IAS29
 Effect MGMT   Revenues 195.4 3.3 192.0 181.2 1.6 179.5   Gross Profit I 88.2 0.5 87.7 78.3 0.3 78.1   Gross Profit II 49.1 0.3 48.8 44.3 0.1 44.3   OPEX (60.6) (0.2) (60.4) (53.7) (0.1) (53.6)   adjusted EBITDA 29.0 0.2 28.8 26.0 0.1 25.9   adjusted EBIT 20.8 0.2 20.5 18.3 0.0 18.3   adjusted Profit before tax 17.2 0.3 17.0 15.4 0.0 15.4   Profit before tax 14.9 (0.0) 14.9 15.0 0.3 14.7   Profit 11.2 (0.1) 11.2 12.3 0.3 12.0                    

 

 

 

 

FINANCIAL POSITION

 

 

Total assets increased by € 18.4m from € 321.7m on 31 December 2023, to € 340.1m on 30 June 2024 as a result of higher current assets (€ +10.3) and non-current assets (€ +8.1m). The increase in non-current assets relates to the acquisition of new subsidiaries resulting in additional goodwill amounting to € 3.8m as well as regular investing activities. The increase in non-current liabilities is related to the increase in financial liabilities (€ +5.4m) as well as to contingent purchase price liabilities in connection with M&A activity (€ +1.7m). As a result of the profits generated and share-option expense recognized in the relevant reserve in equity, Total Equity increased by € 13.7m to € 120.8m. The Equity ratio of the AUSTRIACARD Group improved from 33.3% on 31 December 2023 to 35.5% on 30 June 2024.

 

Consolidated statement of financial position in € million	30/06/2024	31/12/2023	D '24-'23	D '24-'23 %
Non-current assets	164.9	156.8	8.1	5.2%
Current assets	175.2	164.9	10.3	6.3%
Total assets	340.1	321.7	18.4	5.7%
Equity	120.8	107.2	13.7	12.8%
Non-current liabilities	122.7	115.2	7.5	6.5%
Current Liabilities	96.6	99.3	(2.7)	-2.8%
Total Equity and Liabilities	340.1	321.7	18.4	5.7%

 

Net Working Capital increased by € 15.9m or 27.3%, from € 58.2m as of 31 December 2023 to € 74.1m on 30 June 2024. This increase is due to higher inventory levels (€ +11.5m), especially of raw materials (chips), and higher trade receivables 
(€ +3.9m) related to increase in revenues. As percentage of revenues (12 months rolling), net working capital increased from 16.6% to 20.4% in line with Q1 2024 as well as close to the industry benchmarks but significantly above the comparative as of 30 June 2023 when stock levels were still significantly affected by Covid-19-related supply chain issues.

 

Working Capital
in € million 30/06/2024 31/12/2023 D '24-'23 D '24-'23 % Inventories 69.6 58.2 11.5 19.7% Contract assets 18.9 20.4 (1.5) -7.4% Current income tax assets 0.9 0.8 0.1 14.1% Trade receivables 48.6 44.7 3.9 8.8% Other receivables 16.3 17.1 (0.7) -4.3%   154.4 141.1 13.3 9.4% Current income tax liabilities (4.2) (3.0) (1.2) 40.7% Trade payables (45.8) (43.6) (2.2) 5.0% Other payables (18.0) (18.3) 0.3 -1.8% Contract liabilities (10.9) (17.4) 6.6 -37.8% Deferred income (1.4) (0.5) (0.9) 176.9%   (80.2) (82.9) 2.7 -3.2% Net Working Capital 74.1 58.2 15.9 27.3%            

 

The Group’s Cash flow from operating activities increased by € 5.7m in the first half of 2024 from € 2.5m in 2023 to 
€ 8.3m in 2024 as a result of the strong operating performance which was partially offset in cash-flow terms in the increase in the Net working capital.

 

The Cash flow from investing activities came in at a net outflow of € 10.3m and related to M&A activity (€ 1.3m net of cash received), € 2.2m for upgrading our digital security printing capabilities in order to be able to implement new business opportunities for the African markets and regular investments in plant and equipment, inhouse development of software and similar operating investments.

 

Cash from financing activities had a net outflow of € 0.9m compared to an inflow of € 0.3m in the same period in 2023. This outflow primarily relates to interest (€ 3.5m) and lease payments (€ 1.8m) as well as loan repayments (€ 6.5m) which were mostly offset by taking out new loans (€ 10.6m).

 

 

 

 

Statement of cash flows
in € million H1 2024 H1 2023 D '24-'23 D '24-'23% Cash flows from operating activities 8.3 2.5 5.7 226.6% Cash flows from investing activities (10.3) (7.7) (2.6) 33.8% Cash flows from financing activities (0.9) 0.3 (1.1) -436.7% Net decrease in cash and cash equivalents (2.9) (4.9) 2.0 -40.6%           Capital expenditure incl. ROU, excl. M&A (CAPEX) (11.8) (9.9) (1.9) 19.5%

 

Net Debt increased by € 8.3m from € 95.0m as of 31 December 2023 to € 103.3m as of 30 June 2024 due to the increase in Net working capital. Net Debt / Adjusted EBITDA (rolling 12 months) essentially remained stable near 2.0x (1.9x).

 

Net Debt
in € million 30/06/2024 31/12/2023 D '24-'23 D '24-'23 % Cash and cash equivalents (20.9) (23.8) 2.9 -12.3% Loans and borrowings 124.2 118.9 5.4 4.5% Net Debt 103.3 95.0 8.3 8.7%

 

 

 

4.             Financial performance indicators

 

Key performance indicators
in € million H1 2024 H1 2023 D '24-'23 D '24-'23 %   Revenue 192.0 179.5 12.5 7.0% Gross profit I 87.7 78.1 9.7 12.4% Gross profit I margin 45.7% 43.5% 2.2% n/a Gross profit II 48.8 44.3 4.5 10.1% Gross profit II margin 25.4% 24.7% 0.7% n/a Total OPEX excluding depreciation (60.4) (53.6) (6.8) 12.6% Total OPEX excluding depreciation as % on sales -31.4% -29.8% -1.6% n/a adjusted EBITDA 28.8 25.9 2.9 11.2% adjusted EBITDA margin 14.97% 14.40% 0.57% n/a adjusted EBIT 20.5 18.3 2.3 12.4% adjusted EBIT margin 10.7% 10.2% 0.5% n/a adjusted Profit before tax 17.0 15.4 1.6 10.1% adjusted Profit before tax margin 8.8% 8.6% 0.3% n/a adjusted Profit after tax 13.3 12.7 0.6 4.9% adjusted Profit after tax margin 6.9% 7.1% -0.1% n/a Profit after Tax 11.2 12.0 (0.7) -6.2% Profit after Tax margin 5.9% 6.7% -0.8% n/a Operating Cash Flow 8.3 2.5 5.7 226.6% Operating Cash Flow as % on sales 4.3% 1.4% 2.9% n/a           Net Equity / Total Assets (30 June vs. 31 December) 35.5% 33.3% 2.2% n/a Net Working Capital as of 30 June 74.1 43.9 30.2 68.9% Working Capital as % on sales (12 months) 20.4% 12.4% 7.9% n/a Net Debt as of 30 June 103.3 87.1 16.3 18.7% Net Debt / Adjusted EBITDA (12 months) 2.0 1.9 0,0 n/a              

 

 

 

 

REPORT ON SEGMENTS

 

 

Western Europe, Nordics, Americas

 

Business performance
in € million H1 2024 H1 2023 D '24-'23 D '24-'23 %           Revenues 64.9 67.3 (2.4) -3.6% Costs of material & mailing (35.9) (38.3) 2.3 -6.1% Gross profit I 28.9 29.0 (0.1) -0.2% Gross margin I 44.6% 43.1% 1.5%   Production costs (11.3) (10.7) (0.6) 5.8% Gross profit II 17.6 18.3 (0.7) -3.7% Gross margin II 27.1% 27.2% -0.1%   Other income 0.1 0.5 (0.4) -85.3% Selling and distribution expenses (4.4) (4.6) 0.2 -4.4% Administrative expenses (4.3) (4.4) 0.1 -2.6% Research and development expenses (0.5) (0.4) (0.1) 37.0% Other expenses (0.0) (0.1) 0.0 -38.1% + Depreciation, amortization & impairment 3.0 2.7 0.3 11.2% adjusted EBITDA 11.5 12.1 (0.6) -5.1% adjusted EBITDA margin 17.7% 18.0% -0.3%   - Depreciation, amortization & impairment (3.0) (2.7) (0.3) 11.2% adjusted EBIT 8.5 9.4 (0.9) -9.8%

 

The Western Europe, Nordics and Americas (WEST) segment reported Revenues of € 64.9m in the first half of 2024, down by € 2.4m or 3.6% compared to H1 2023. However, if we exclude from the comparative period the impact of the de-prioritization of chip module sales, resulting from our focus in selling complete smart card solutions, which amounted to € 13.9m in this segment, the organic like-for-like growth of this solution category amounts to € 11.5m or 21.7%. The growth is coming from both regular banking cards sales as well as high end metal cards offered to our clients which have a significantly higher selling price per card and are accompanied by increased revenue from personalization and fulfilment services.

 

Gross profit I essentially stayed stable at € 28.9m despite lower revenues as gross margin I increased by 1.5 percentage points to 44.6%. This margin improvement is mainly due to the reduction of revenues from sale of chip wafers which was partially compensated by the increase in sales of metal payment cards.

 

Gross profit II decreased by € 0.7m or 3.7% from € 18.3m to € 17.6m due to the inflation related increase in production costs, personnel costs and higher depreciation charges. Gross margin II essentially stayed stable at 27.1%.

 

Operating expenses excl. D, A&I (OPEX)
in € million H1 2024 H1 2023 D '24-'23 D '24-'23 % Production costs (11.3) (10.7) (0.6) 5.8% Selling and distribution expenses (4.4) (4.6) 0.2 -4.4% Administrative expenses (4.3) (4.4) 0.1 -2.6% Research and development expenses (0.5) (0.4) (0.1) 37.0% + Depreciation, amortization & impairment 3.0 2.7 0.3 11.2% Total (17.5) (17.3) (0.1) 0.7% Operating expenses as a percentage of revenues 26.9% 25.8% -5.3%  

 

OPEX came in at € 17.5m in the first six months of 2024 increasing slightly by € 0.1m or 0.7% as increased costs due to inflation related salary increases were mostly compensated by savings with other operating expenses and utility and maintenance expenses. As a percentage of revenues, OPEX increased from 25.8% to 26.9% in H1 2024 due to the decrease in revenues.

 

Adjusted EBITDA reached € 11.5m decreasing by € 0.6m or 5.1% compared to H1 2023 while adjusted EBITDA margin came in at 17.7% decreasing by 0.3 percentage points. This decrease in adjusted EBITDA is mainly due to the reversal of an allowance for doubtful receivables in the US market which increased Other income by € 0.5m in 2023. Adjusted EBIT came in at € 8.5m decreasing by € 0.9m or 9.8% mainly as a result of lower Other income and higher depreciation & amortization.

 

Central Eastern Europe & DACH

 

Business performance
in € million H1 2024 H1 2023 D '24-'23 D '24-'23 %           Revenues 121.6 106.5 15.1 14.2% Costs of material & mailing (67.8) (62.4) (5.4) 8.6% Gross profit I 53.8 44.0 9.7 22.1% Gross margin I 44.2% 41.4% 2.9%   Production costs (25.2) (20.9) (4.2) 20.3% Gross profit II 28.6 23.1 5.5 23.7% Gross margin II 23.5% 21.7% 1.8%   Other income 1.9 1.5 0.4 28.7% Selling and distribution expenses (6.6) (6.3) (0.3) 4.8% Administrative expenses (9.2) (7.3) (1.9) 26.3% Research and development expenses (2.9) (2.9) (0.0) 1.1% Other expenses (0.5) (0.4) (0.1) 29.5% + Depreciation, amortization & impairment 5.0 4.7 0.3 6.0% adjusted EBITDA 16.2 12.4 3.8 31.0% adjusted EBITDA margin 13.3% 11.6% 1.7%   - Depreciation, amortization & impairment