from FLORENTAISE (isin : FR001400GO75)
FLORENTAISE: FLORENTAISE, the pioneer in low-carbon potting soils, launches its IPO on Euronext Growth® Paris
FLORENTAISE
Press release Saint-Mars-du-Désert, 22 March 2023
FLORENTAISE, the pioneer in low-carbon potting soils, launches its IPO on Euronext Growth® Paris
Florentaise, a pioneer in low-carbon potting soils, announces the launch of its initial public offering for the admission of its shares to trading on the Euronext Growth Paris® market (ISIN: FR001400GO75 - Ticker Code: ALFLO).
The Autorité des Marchés Financiers (AMF) has approved the Prospectus under the number 23-078 on March 21st 2023, composed of the Registration Document approved on March 3rd, 2023 under the number I.23-006, a Securities Note, and a summary of the Prospectus (included in the Securities Note and copied in the appendix of this press release)
For more information on the planned IPO on Euronext Growth®, see: https://investir.florentaise.fr/en
Florentaise potting soils promote the preservation of peatlands, A major ecological urgency to fight global warming
Peatlands are wetlands that account for only 3% of the world's surface area but capture 33% of the Earth's CO2, and host 50% of extremely rich biodiversity. Nearly half of the peatlands are now severely damaged due to their overexploitation[2]. "Working to cease the exploitation and drainage of peatlands is one of the most effective ways to eliminate carbon from the atmosphere and thus curb global warming" (IPCC - Intergovernmental Panel on Climate Change, July 2022). Today, the vast majority of potting soils sold to individuals and professionals (horticulturalists, nursery gardeners) still include peat, while the potting soils market is set to expand massively under the impetus of urban greening and the development of off-ground crops. In 2017, this market represented 112 million m3 worldwide for an estimated market volume of €6.7 billion and is expected to multiply by more than 4 to reach €28.3 billion by 2050[3]. To support this rapid development while preserving peatlands, ecological alternatives to peat-based compost are required urgently. Florentaise has developed proprietary solutions to reduce the intensive exploitation of peatlands and the resulting enormous greenhouse gas emissions. Hortifibre® and Turbofibre®, Florentaise’s patented wood fibres developed using wood chips and tree bark, are tried-and-tested alternatives to the peat used in potting soils. These two eco-responsible products have a carbon footprint 20 to 50 times less than that of the peat used in potting soils[4]. The ramp-up of these two products will enable Florentaise to shut down the last authorised national peatland, operated by Florentaise, in France in 2026 (Baupte, Channel). The Group points out that peat already represents a minor proportion of its supplies with only 23% of the intrants used to produce potting soils. Thus, as of 30 June 2022, 77% of the raw materials used in the production of potting soils did not contain peat. The Group's objective is to continue to reduce, progressively over this decade, the proportion of peat in the raw materials used in the production of its potting soils in order to be eventually peatless. [5].
Florentaise, a French leader in potting soils and eco-innovative growing media Founded in 1973, Florentaise is100% owned by the Chupin family. The Group employs 245 FTEs and had generated revenue of €57.5 million[6] at 30 June 2022. Today, more than 600 own brands and retail brand references are available from the major retailers such as Truffaut, Botanic, Aldi, LIDL and Intermarché, allowing Florentaise to sell nearly one in five bags of substrates in France to the general public and to cover 12% of the professional market. Its successful development in France has enabled the Group to extend its reach beyond its borders through a presence in six other countries (England, the Netherlands, India, China, Estonia and soon in the United States). Since the Group’s inception, innovations and R&D investments have been guided by a strong commitment to ecology with the early implementation of concrete measures to reduce its carbon footprint. This eco-awareness resulted in the implementation of a carbon footprint in 2009. Since that date, the Group has reduced the average carbon footprint of the potting soil delivered (per cubic meter) by more than 30%. It has notably reduced the impact of transport for each cubic meter delivered by around 47% thanks to the deployment of a multi-site strategy (9 sites currently), limiting the number of kilometres travelled by raw materials and finished products. Today, 65% of the raw materials used by the Group are sourced in France within a radius of less than 200 km from the production sites. 10% of raw materials are sourced within an average radius of more than 200 km in France and the balance (i.e. 25%) of raw materials mainly represents peat imported from the Baltic countries.
Hortifibre® and Turbofibre®, innovative peat alternatives for new low-carbon potting soils: With 13 international patents from a R&D centre drawing on the support of more than a dozen experts, Florentaise is now an innovative player in the horticultural sector with more than 250 formulas tested each year and a pioneering position in low-carbon potting soil. Its lead in innovation and the environmental transition enabled the Group to market its patented Hortifibre® (from the 2000s) and Turbofibre® (from 2015) wood fibres, which are effective substitutes for peat. Porosity, drainage, aeration and water retention capacity, and agronomic performance are all on track, making it possible to forego the use of peat. It is in terms of the environmental transition that the Hortifibre® and Turbofibre® raw materials stand apart, enabling a reduction in greenhouse gas emissions of around 20 to 50 times over the entire product life cycle, compared to peat. This innovative eco-offering is now competitive: with equal agronomic performance, a balanced mix of Florentaise solutions is 17% cheaper than a peat-based mix.
The "Bivis" production line, a tried and tested industrial tool used to produce Florentian wood fibres. The manufacturing process for Hortifibre® and Turbofibre® wood fibres, which enables these products to achieve the performance necessary to replace peat, is unique and protected by Florentaise patents. These fibres are produced according to a specific process with a "Bivis" production line based on the extrusion and thermomechanical fibre refining of tree bark or wood chips of high-quality ingredients from the circular
economy, with the sawmill waste (wood chips, bark) used being collected from local sawmills, some of which source mainly from PEFC-certified forests[7]. The key advantages of this process are the complete sanitisation of output materials while controlling granulometry. These wood fibres can then be either incorporated into the finished potting soil sold to end consumers in France or to other potting soils manufacturers for distribution outside France. In this context, Florentaise has acquired, from a partner manufacturer, several proprietary Bivis machines that it uses on its sites in France to manufacture potting soil while renting other Bivis machines to other land manufacturers based on an economic model that has recently transitioned to hourly rental and a maintenance contract (rental contract over a renewable 5-year period). Since 2006, Florentaise has renewed its agreement with the manufacturing partner for the right to exclusive use and distribution of the Bivis for horticultural purposes; this agreement expanded to the international level in 2021. Under this renewable exclusivity agreement, no actor can develop and sell the same machines anywhere in the world without risking an intellectual property violation; this applies to both the industrial machine itself and to the outbound wood fibres. The products obtained, Hortifibre® and Turbofibre®, are protected by Florentaise patents.
Sale of potting soil in France: strengthening its positions In France, the Group already has a leading position among end consumers, representing 1 out of 5 bags sold in France (61% of the Group's revenue) and among professionals such as horticulturalists, landscapers and nursery gardeners (39% of sales). Among the general public, the recent and persistent growth of the gardening industry should enable the Group to consolidate its position with existing customers looking for responsible products and also to conquer new brands seeking added value for consumers. As a reminder, the Group already has leading brands such as Truffaut, Botanic and Mr. Bricolage, Super U, Casino, Intermarché, Lidl and Aldi among its clients. In the professional market, sales will be driven by the development of off-ground crops and the greening of cities.
Sale of potting soil in China: continued acceleration Present in China since 2016, the Group recognised the potential of this market very early on, favouring the development of off-ground crops rather than the exploitation of peatlands. The protection of wetlands is indeed a priority objective of China's ambitious green plan to reach peak emissions in 2030 and "net zero" in 2060. These commitments require global investments valued at between $14,000 and $17,000 billion according to the World Bank. In this market, Florentaise's development strategy is to duplicate the French model by drawing on local partnerships.
Florentaise already has two plants, one established in 2016 in Jiangsu and the second in Guangdong in 2021. These units generated more than €11 million in revenue in 2022[8], 50% of which was included in Florentaise's pro forma financial statements as at 30 June 2022. With growth of more than 85% per year since 2020, the Group intends to strengthen its footprint in China with the installation of three new production units planned for 2023, 2024 and 2025 in regions where it is not yet present.
Bivis: roll-out of the rental model to international potting soils producers In addition to the sale of substrates for professionals and consumers in France and China, Florentaise has developed a Bivis production line rental model for potting soils manufacturers in Europe and, potentially, in the United States. This offer consists of providing a turnkey solution based on a model of hourly rental combined with a maintenance package. There is no initial CAPEX to install the production line; the pre-assembly and on-site assembly of the Bivis as well as the maintenance provided by Florentaise form a range of services that meet the needs of manufacturers. For example, a leading potting soil manufacturer in the UK is already leasing six Bivis and has ordered seven others that are being installed. This model, which is complementary to that of the potting soil sales business, should enable the Group to accelerate its growth. Revenue from this activity is expected to amount to €3.4 million at the end of June 2024 and to account for 20% of estimated consolidated revenue by 2027.
Inevitable end to the economic exploitation of peatlands: a regulatory framework already in place in certain countries The signature of an historic global agreement for the preservation of biodiversity and wetlands (including peatlands) was ratified by 117 countries at COP15 Biodiversity held in December 2022[9]. In Ireland, where peat is an historic resource, its industrial and commercial use has already been banned since 2019. This first at the European level is expected to lead to its total continent-wide ban by 2050[10]. These developments should guide the potting soil market in a gradual shift towards the use of raw materials other than peat. Thus, while in 2017 the share of peat represented nearly 60% of professional potting soil, it is expected to account for less than 30%, or half the current amount, by 2050[11]. With the funds raised as part of the IPO and the establishment of three new Bivis lines in France by the end of 2024, Florentaise is likely to be able to replace all the peat in its potting soil by 2030, subject to market conditions, the pace of adoption of peatless potting soils by customers and applicable regulations.
Consolidated revenue of €120 million in 2027, with an operating margin of around 20% This ambition requires the Group to conquer and establish its presence on new markets in its historic potting soil sales activity in France and China. In France, with a full range of eco-innovative substrates, the Group aims to strengthen its position via the acquisition of new customers and the strengthening of commercial relations with existing customers. The Group also anticipates a promising market development for low-carbon potting soil and Florentaise solutions. In China, the launch of three new sites will enable the Group to accelerate its growth in a region that contributes significantly to the acceleration of sales and the improvement of its profitability. Florentaise will continue to promote its rental model with the aim of significantly expanding the Bivis fleet in service by 30 June 2027. At that date, the Group will target a fleet of 38 Bivis machines in operation. As a reminder, 7 machines had already been installed as of 30 June 2022 and 7 additional machines are being installed and expected to be in service by 30 June 2023. The commercial pipeline of identified projects includes 15 machines, corresponding to €16.5 million in annual revenue. Three of these projects are at an advanced stage of discussion in Europe and the United States with installations planned between 1 July 2023 and 30 June 2024. Thus, by 2027, Florentaise plans to generate consolidated revenue of €120 million (with a breakdown of sales of 80% for potting soil and 20% from Bivis rentals). The execution of this roadmap should be accompanied by an improvement in profitability, driven by the rollout of the Bivis model offering higher margins and the development of the Potting soils business in China, which has a lighter cost structure. As such, the Company plans to increase its operating income to more than 20% of revenue in 2027.
An IPO on Euronext Growth® Paris to support the development strategy and finance growth The purpose of the Offer and the listing of the Company's shares on Euronext Growth® Paris is to enable the Group to finance the development of its current projects, to finance its working capital requirements and to support its growth strategy. The estimated net proceeds of the Offer amount to approximately 26.2 million euros based on a median price of the Indicative Range of which:
In the event that the Offer is only 75% subscribed, on the basis of a price equal to the lower limit of the Indicative Range, the funds raised (excluding debt compensation) would be allocated up to 70% to the repayment of a shareholder's current account debt to Floreasy S.A.S. and 30% will be dedicated to the financing of the current working capital requirement (in addition to the renewal of its short-term credit lines) and its increase linked to the expected growth of the activity. The other strategic axes related to investments would be financed by a recourse to debt and a new fund raising to complete its financing needs and reach its objectives, after having demonstrated the relevance of its business model.
Subscription commitments It is recalled that the family holding company (Floreasy) has undertaken to subscribe, without any price limit in relation to the indicative price range of the Offer, an amount of €12 million by way of debt compensation.
Offering eligible for PEA and PME-ETI (ex PEA-PME) equity savings plans Florentaise meets the eligibility criteria for PME-ETI equity savings plans specified by the provisions of Articles L. 221-32-2 and D. 221-113-5 et seq. of the French Monetary and Financial Code. As a result, Florentaise shares can be fully integrated into personal equity plans (PEAs) and PME-ETI accounts, which enjoy the same tax benefits as a traditional PEA. A summary of the tax regime that may apply is described in the Securities Note (see section 4.1.9). The persons concerned are invited to consult their usual tax advisor about the taxation applicable to their particular case, in particular with regard to the subscription, acquisition or holding.
Availability of the Prospectus Copies of the prospectus, approved by the AMF on March 21, 2023 under number 23-078, are available free of charge and upon request from the Company at the registered office of Florentaise (Le Grand Pâtis, 44850 Saint-Mars-du-Désert) and on the websites of the AMF (https://www.amf-france.org) et de Florentaise (https://investir.florentaise.fr). Approval of the Prospectus should not be considered a favourable opinion on the securities offered or admitted for trading on Euronext Growth®.
Risk factors Investors are encouraged to carefully consider Chapter 3, “Risk factors”, of this Transaction Memorandum and Chapter 3 of the Registration Document before making any investment decisions. The occurrence of all or part of these risks is likely to have a negative impact on the Company's activities, situation, financial results or the achievement of its objectives, as well as on the market price of the Company's shares once they are admitted to trading on Euronext Growth®.
Financial intermediaries and advisers
Press contact:
Further information about Florentaise’s planned IPO at: https://investir.florentaise.fr/en/
For more information about the Florentaise IPO project, we are available by phone:
+33 (0) 7 57 81 50 60
MAIN TERMS OF THE TRANSACTION
INDICATIVE TIMETABLE FOR THE OPERATION
SHARE CAPITAL BEFORE THE ISSUE Share capital of 635 680 euros, divided into 6,356,800 shares with a par value of €0.10 each.
CHARACTERISTICS OF THE SHARES
Eligible for PEA and PME-ETI equity savings plans
INDICATIVE PRICE RANGE Between €9.44 and €12.76 per share offered. This information is provided for information purposes only and is in no way indicative of the price of the Offering, which may be set outside this indicative range.
NUMBER OF SHARES OFFERED 2,522,523 new shares to be issued in connection with a share capital increase by way of a public offering.
STRUCTURE OF THE OFFERING An offering to the public in France in the form of an open-price offering, mainly intended for private individuals, where:
A global placement mainly intended for institutional investors comprising:
If permitted by the request expressed under the OPO, the number of shares allocated in response to orders issued under the OPO will be at least equal to 10% of the number of shares offered under the Offering (before any exercise of the Extension Clause).
GROSS AMOUNT OF THE TRANSACTION
|