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Edited Transcript of IVS.MI earnings conference call or presentation 6-Sep-19 3:00pm GMT

Half Year 2019 IVS Group SA Earnings Call

Luxembourg Sep 12, 2019 (Thomson StreetEvents) -- Edited Transcript of IVS Group SA earnings conference call or presentation Friday, September 6, 2019 at 3:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Alessandro Moro

IVS Group S.A. - CFO

* Antonio Tartaro

IVS Group S.A. - Co-CEO & Executive Director

* Marco Giacinto Gallarati

IVS Group S.A. - Investor Relator & Chairman of Coin Division

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Conference Call Participants

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* Alessandro Cecchini

Equita SIM S.p.A., Research Division - Analyst

* Giorgio Martorelli;Amber Capital;Analyst

* Matteo Bonizzoni

Kepler Cheuvreux, Research Division - Equity Research Analyst

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Presentation

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Operator [1]

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Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the IVS Group First Half 2019 Results Conference Call. (Operator Instructions) At this time, I would like to turn the conference over to Mr. Antonio Tartaro, CEO of IVS. Please go ahead, sir.

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [2]

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Thank you. Dear ladies and gentlemen, good afternoon. I am Antonio Tartaro, IVS Group Co-CEO. With me are present, Mr. Massimo Paravisi, Co-CEO of IVS Group; Mr. Alessandro Moro, CFO; and Mr. Marco Gallarati, responsible for Investor Relations and head of our Coin Service business.

As usual, I will start this presentation by giving a short picture of the overall situation for IVS Group. Then Alessandro Moro will summarize the financial results of the year. Finally, we will be available for your questions.

Well, first of all, I'm going to the point. I can say that despite quite difficult market condition, we are generating good cash flow and positive result. In fact, we are quite happy with the increase of cash flow and slight reduction of the net debt even after dividend and CapEx paid. And the fact that we are generating more cash flow than during the same period in the previous years and even if the EBITDA was almost flat confirms that the base of our business is really sound and resilient.

This do not mean, if you asked me if we are satisfied that we are happy. Certainly, we cannot be happy when we see flat to slightly negative volumes generated by our existing client base, and we cannot be happy when all the efforts we are doing in commercial area and internal organization with traditional innovative CapEx do not generate the increase in innovative profit.

But otherwise, in an [earlier] market, as all of you know well, that mostly depends on how many persons are at their job, places and in many factories. Not only today but since in the beginning of the year, we are seeing an increase of unemployment (inaudible) implications.

And this has affected the level of consumption and volumes in our market. We are able to face this weakness with stronger commercial proposition, better products and better vending machines without (inaudible) average price. And we saw that the benefits of this effort are offset by overall weak situation.

If we are going to be more precise, there are some specific factors which explain the lack of [EUR 23 million] in our EBITDA despite what we would have expected in normal market condition. Actually, the first is just a nominal lack because we had in the first part of the year 1 working day less, and that means the lower sales of [multi-million] and the lack of a little more than EUR 1 million of gross margin.

The second aspect is more substantial and is related to Spain. Our presence in Spain is still quite small. So if you (inaudible) standard space, mostly in the automotive sector, have seen a strong decrease of volume in the first 6 months. In the short time, we cannot cut the cost of structure and logistics. This requires some more times for us to be compensated to winning other clients or making new acquisition. We are starting to see some sign of recovery in automotive in Spain since the beginning of September, but in the first half, Spain was down around EUR 2 million in sales and EUR 0.8 million in margin.

Italy, it came from the unfavorable weather during the Q2 2019 compared to the favorable weather condition [later] in Q2 2008 -- in '18. We sold millions bottle less than the same month of the past year, and this implies another lack of margin of some EUR 100,000.

Finally, as I told you before, in Italy, despite the overall weak consumption, we performed in a quite sophisticated way, at least, in the [model] segment of automatic vending machines, the biggest one. Although at the prior Phase pricing basis, volumes slightly decreased at like-for-like, including new clients acquired (inaudible).

While we have seen a pretty strong decline in the OCS sector, it is possible that the very small business and clients who are more affected by the larger clients in this period of crisis (inaudible) of the continuous (inaudible) some branded coffee pots like Nespresso.

Even if OCS represents quite a small portion of our sales, in any case, it contributed to a loss of a part of the margin that we are able to gain in the automatic segment in Italy.

They are the main trends and the explanation of our performance net of our core accounting effect from the definition of IFRS 17's accounting principle. As usual, there was modest price, which [knocked] our price in the public and transport sector, which is more stable than corporate, are suffering more and more than us from the consumption of the client.

Overall, there is a clear negative cycle, which is something that we have already seen many times in the past. And between 2012 and 2014, it was even harder than today. Certainly, also we saw a decrease from the same client base. Fortunately, our business is quite resilient, and the client base is so larger diversified that we don't talk about low single-digit variation.

But on the other side, there is also clear opportunity in those past years while we were able to complete some quite big acquisitions at a good price and with excellent return. So the weakness that we are seeing today can be transformed into a new opportunity.

Finally, from a financial point of view, in addition to the increase of operating cash flow, as we say during the past conference call, the Board steadily examines the opportunity to exercise in the short time the call on our existing bond expiring in 2022 and to refinance it with a new bond issue at a cheaper interest rate and with increasing the duration. Favorable market condition, we think, supports this possibility. Net of the various transaction costs, we could expect a cost saving of interest, allowing us to increase our net profit.

Finally, the implementation of digital and payments system linked to IVS vending machines network is going very well. We started off first direct marketing and shopper marketing initiatives in collaboration with some big players in the food and beverage like Coca-Cola, Mars, Ferrero, et cetera, and in service payments with Alipay, part of the Chinese Alibaba group. We are pretty sure that IVS capacity to combine a large and new infrastructure network with millions of final consumers represents a strategic and, I believe, a viable option for the future.

Now I pass over to our CFO, Mr. Alessandro Moro, who can provide more details on the numbers.

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Alessandro Moro, IVS Group S.A. - CFO [3]

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Ladies and gentlemen, good afternoon. Alessandro Moro speaking. I will make a summary of the most important numbers of the first half that you can find also in the presentation in the Investor Relations section of the IVS Group website.

As you have probably seen from the presentation, we have tried to give all the details to allow a clear comprehension of the differences arising from the application of IFRS 16 new rules. I will answer to all questions also on this aspect.

Well, starting from the volumes. The total number of vends was EUR 444 million with an increase of 3.7% compared to the first half of 2018. The consolidated revenues in 6 months amounted to EUR 232 million, a growth of 6.1% from around EUR 219 million in 2018.

Please keep in mind that the first half of this year has almost 1 working days less than the 2018. More specifically, the revenues in the core vending business calculated like-for-like and at par working days grew by 1.8% in Italy and 1.8% in France, too. In both these 2 markets, we are quite satisfied as our commercial workforce has done a good job, taking some important new concept even if consumption volumes are weak since the beginning of the year.

The acquisition of new clients, especially in Italy, allowed it to compensate the negative trend of volumes at our client base. In fact, in Italy, overall like-for-like volumes at par working days volumes were almost flat and are negative in the other countries.

We suffered particularly in Spain, as we have already seen in the first quarter. In this country, we had a decline of around 5% in both volumes and sales despite the price increase we were able to apply. This is mostly due to our worked hours and temporary unemployment in some big clients we have in Spain in the automotive sector like Fiat, Volkswagen and Mercedes.

In Switzerland, which is still very small, we had a decline in sales and volumes, but it was a loss of an unprofitable contract. At the same time, we improved our margin, cutting also some operating costs.

Overall, also in this period, we had an acquisition rate of new client higher than the churn rate and the acquisition of new client compensate those volumes lost at stable client base.

The average price per vend increased by around 1.3%, confirming our capacity to continue to increase average prices versus weak market condition, thanks to the improvement that we constant -- continuously make in the service to clients and our rich product mix.

The acquisitions completed during the first half were 6, with an enterprise value of EUR 35 million and contributed to annual sales of around EUR 8 million on a pro rata basis. The most important have been completed at the end of February and then in March. So we have the financial impact of the acquisition but around just 1 quarter contribution to P&L.

Finally, we have a growth in Coin Service division of around 12%, both in the main metal coin business, which represents 75% of the business unit sales and which grew by around 6%; and in the new digital money business carried out by the subsidiary Venpay, which grew by more than 40%. In the last year, the startup of this new activity generated some losses at the operating level, which affected the results of the business unit. In the first half of this year, we have reached a small but positive result.

Now I start to comment on margins, where IFRS 16 changes has an impact. Adjusted EBITDA was equal to EUR 55 million, 23.7% of total sales. Net of IFRS changes, it was just slightly below EUR 50 million, the same level as the last year. On the full year, we expect an increase of EBITDA due to IFRS changes of around EUR 11 million, EUR 12 million.

Net profit reported was not significantly influenced by IFRS changes. The reported net profit was equal to EUR 13 million. And the adjusted net profit without IFRS 16 effect was EUR 14.5 million, with a decline of around 5% compared to last year.

With reference to the net debt, it was reduced compared to March 2019 by around EUR 5 million. In total amount, it was equal to EUR 361 million, including EUR 63 million of IFRS 16 effect or EUR 298 million without this effect. The net debt includes approximately EUR 11 million of dividend payment, payment for CapEx and M&A of around EUR 50 million and other debt paid in -- as part of businesses acquired for approximately another EUR 10 million.

So we had a very strong generation of cash in the period with a positive result, especially from working capital management. The operating cash flow before investment increased to almost EUR 67 million from EUR 50 million of the first half of 2018.

The total VAT credit, which is not calculated as a positive component in net debt, increased by around EUR 4 million and is equal to around EUR 80 million.

We have used part around of -- of the bank loan facility of EUR 150 million signed last year with a small pool of banks. The interest rate has been fixed. As a rule in interest rate, it will be below 2%. We had negative market -- mark-to-market value of the hedging at the end of March, which is included in the net debt.

Now we are available for your questions. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from Matteo Bonizzoni with Kepler.

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Matteo Bonizzoni, Kepler Cheuvreux, Research Division - Equity Research Analyst [2]

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I have some questions. The first one is on your country performance. If you look at Slide 18, we see that Spain was down in terms of revenues like-for-like and at constant working days by 4.7% in the first half. It was down by 9% in Q1. So I calculated in Q2, it was down only 0.5%, it accounts for growth. So it seems that the impact on Spain was not a continuing deterioration in the quarter at constant working days like-for-like, but it was more the number of working days. Can you confirm that?

And on the other side, I see that Italy, on the contrary, slowed down because -- also looking at Slide 18, in the first half, it was -- revenues like-for-like were up 1.8%, but in Q1, 3.7%. So I mean Italy went from 3.7% in Q1 to less in Q2, if I had calculated that correctly. So if you can elaborate a little bit on that and in particular on Spain.

Then, second question is on Italy. Because if you exclude IFRS 16, I calculated in Italy, the EBITDA margin in Q2 dropped by more than 200 basis points. Can you -- so there was a deterioration on the profitability in Italy compared to what we saw in the previous quarter. Can you comment on that?

And then another question is simply how much do you plan to recover of this small decline of the EBITDA in the first half? So there was a EUR 0.4 million (inaudible) How much do you expect to recover (inaudible)?

And fourth question, if I may, what's around could be the yield for the new bond that you are going to launch in the following days? And so as a result of that, how much could be the saving on the financial charges? And can you remind us the technicality on the recall of the previous bonds? I'm surprised in the overall technicality.

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [3]

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Excuse me, Matteo, could you repeat your third question because we lost the signal and we didn't hear you? Thank you.

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Matteo Bonizzoni, Kepler Cheuvreux, Research Division - Equity Research Analyst [4]

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The first question. Yes, the first question...

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [5]

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The third question, the third question.

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Matteo Bonizzoni, Kepler Cheuvreux, Research Division - Equity Research Analyst [6]

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Third question, guidance, guidance, sir. So guidance, sir, indicates -- I don't mean to say guidance. But I mean the EBITDA in the first half was down EUR 0.4 million compared to last year if you exclude the IFRS 16, from $50 million to $49.6 million. Then how much do you expect to recover in the second half? And why?

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [7]

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Well, let me begin from Spain. We see that the negative aspect continues during Q2. Our profit was related historical [the first 6 months], so the point is that automotive and [trend] spend consumption continued during the first half of 2019. I cannot provide you the information on [like-for-like]. However, excuse me, Matteo, could you please put the mute on first because we hear a lot of noise?

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Matteo Bonizzoni, Kepler Cheuvreux, Research Division - Equity Research Analyst [8]

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Yes.

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [9]

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Thank you. However, we see Spain is the same decline compared to the previous year of the -- that we experienced in Q1 even because all the automotive factories did not begin again the production located in Spain, of course, do not begin the production at normal level since the beginning of this month of September. So we see some maintenance inside the plants, but we do not justify an increase in terms of volumes. Other question is guidance?

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Alessandro Moro, IVS Group S.A. - CFO [10]

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No, no. Italy. In Q2 -- actually, the first half of the year is apparently flat, and the first quarter was pretty good in Italy. It means that in the second quarter, there was an acceleration of volume decline also in Italy.

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [11]

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But the volume declines, we observed that it is what we see with more attention is not like-for-like, but it is same-client basis. If you see, we have decline in terms of same-client basis. Of course, our action to increase average price or to make some acquisition by commercial effort, it means nothing that (inaudible) offset the phenomena. But what we see is more decline in like-for-like basis client. That is the reason because our margin was compressed during this Q2.

Concerning the guidance, it means that the first half, and so especially the Q2 of 2019, has 1 day less. And this is almost EUR 1 million less in terms of EBITDA because that's almost the same except for the cost of goods sales and the other costs. Operative and personnel is keeping the same because they are calculated on the day in calendar, not in working day.

In July, we will have 1 day more compared than the 2018. But again, we will have 1 day less compared to the last year. We think that we can recover this gap of 1 day with 2018 within the end of this year. Of course, the point is that we will see the EUR 1 million more in EBITDA not before the end of 2018.

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Alessandro Moro, IVS Group S.A. - CFO [12]

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Additionally, there is the [brand-new] asset in May, which we saw a EUR 0.5 million of decrease in margins. And then in the costs, in the labor cost there, we have some hundreds [300, 400] of additional costs for our contribution in Italy as the former possibilities of reduced contribution approved by current government has finished its positive effect. So we have a small increase also in labor cost in Italy.

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [13]

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Concerning the bond, maybe Marco, you want to say something because he asked it.

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Marco Giacinto Gallarati, IVS Group S.A. - Investor Relator & Chairman of Coin Division [14]

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The Board have said to go ahead with, I will say, from velocity to take advantage of the present market situation. We expect to save around 1.5% over the existing fixed rate of the bond, which means to decrease from 4.5% to 3% fixed interest rate applied on total issue, which could range between EUR 250 million and EUR 300 million. The saving would be a little bit less than (inaudible) internal interest rate. Then have the cost of the transaction, which has to be split along the 6-, 7-year duration, we will see. Starting that could be officially announced in the next 15 days, we guess according also to the timing requested by the market authorities to approve the documentation.

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Operator [15]

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The next question is from Alessandro Cecchini with Equita.

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Alessandro Cecchini, Equita SIM S.p.A., Research Division - Analyst [16]

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The first one is a little bit to go into details about -- I mean your indication for the year and full year interim of EBITDA, of course, excluding IFRS 16. I mean, if we estimate the EBITDA ex IFRS 16 flat year-on-year for the full year, is that something that you saw a small recovery versus first half. It's for you challenging or reasonable assumption considering your current trading and new project that you have in these 2 quarters? This is my first question.

My second one is about -- so second quarter was you stated -- we saw was poor. I would like to -- and maybe we saw consumption in Italy or in Spain and France are weak. I mean, I would like to better understand if you are working on some specific cost-cutting initiatives in order to, I mean, to adjust cost in order to offset the volumes and so on. And this is my second question.

My third question is you see, I mean, the current trading better than the second quarter that you saw recently.

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Alessandro Moro, IVS Group S.A. - CFO [17]

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Well, beginning from the first question, we hope to be higher than last year in terms of EBITDA. Not more, but we hope to be -- we are confident to be higher. However, what we see during the -- also in -- to your last question, what we see during July, it was quite comfortable. We made good performance in July. We make a good performance during the first 2 weeks of August. What we see in the last 2 weeks of August in Italy, it was again the reductions in terms of consumption compared to the last year. We need to expect the beginning of this month to understand if it was a retribution in terms of holiday, in terms of meter or water or if we have to expect a different profile of consumptions in our main market.

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Unidentified Company Representative, [18]

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Cost cutting.

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Alessandro Moro, IVS Group S.A. - CFO [19]

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Cost cutting, of course. Each time we observe stable reductions in terms of consumption, we reorganize our terms and our -- and detract of the refillers. We think people from the company always will need time, but we can first ensure that we have adoption in that are in order to make a cost reduction. But you will see this aspect only during the last Q of the 2019.

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Alessandro Cecchini, Equita SIM S.p.A., Research Division - Analyst [20]

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So basically, if I understood correctly, so you expect some cost-cutting initiatives in the fourth quarter is correct?

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Alessandro Moro, IVS Group S.A. - CFO [21]

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During the last part of this quarter, but it's not so visible, of course, during the last quarter because we have our chief U.S. sponsor the new profile. And since beginning of the month of September, the new rounds are operating as it means that we have extra human hours available. It means that we -- they will take holiday and all the vacations that they have to (inaudible). And in the meantime, we stop the turnover, and we (inaudible) exactly. We have a good turnover, so in terms of the refillers and technicians, so I expect that this, moreover, will take -- will give some reduction in terms of cost of the manpower during the last quarter.

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Alessandro Cecchini, Equita SIM S.p.A., Research Division - Analyst [22]

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So basically, if I understood correctly, you are working on people management in order to -- so to better use your resources?

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Alessandro Moro, IVS Group S.A. - CFO [23]

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You told me about the cap reduction -- the capital and cost reduction, the largest fee use in my balance in terms of (inaudible) manpower. The cost of goods sales is automatic if I have less consumption, I will have a cost sale. The other figures that we can manage is personnel. Manage fixed cost longer than. Of course, when you cut around in terms of filler, you will have saving those in terms of maintenance of dam, fuel, houses, highway, the (inaudible) for traffic safety central (inaudible). So the point is that you save money while just cutting the refillers, the numbers of refillers. But we are not talking about stopping but just reducing the number using the turnover we have. Mind that usually, in our workforce, that is made in terms -- when we speak about refillers. We have about 2/3 is quite stable. 1/3 is rotating between 12 or 18 months. So we have enough headroom to maneuver to wherever we have enough space to do a cut reduction in time that it is not used to have in other industry.

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Operator [24]

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(Operator Instructions) The next question is a follow-up from Alessandro Cecchini with Equita.

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Alessandro Cecchini, Equita SIM S.p.A., Research Division - Analyst [25]

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I have time to make a couple of additional questions. First one is about CapEx, of course, is always the same story. I would like to better understand what could be the amount for the year-end 2019 and for the next year. What kind of CapEx do you expect?

And then if you can elaborate a little bit more on your view on the plastic-free on the bottles. What are you observing? What is your view if you see a tangible impact or not? Just to better understand this point.

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Alessandro Moro, IVS Group S.A. - CFO [26]

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CapEx. We will respond to the last question. Massimo, would you say about something about plastic-free? What we can say about plastic-free is that in some areas, we have some request about to review the type of beverage. But it is not so -- and have the impact. It is something that we are currently managing. Different if this process will be adopted in a new law, and we will have a new [regulamentation]. I hope that if new regulamentation comes, this regulamentation allow us to make recycle of the plastic. This will quite solve the problem without high extra cost because we are used to recycle. Mind that we recycle the waste of coffee from our automatic vending machines since 3 years ago. So in theory, we have no problem to recovery it also the PET and polystyrene plastics produced by our vending machines which still (inaudible) and PET plastics bottles from the mix of vending machines.

The point is that at this stage of the law we've seen in Italy but also Spain, France and other countries we're present, in respect of plastic strict [regulamente] and (inaudible) fillers are not allowed to transport to this type of waste. It is incredible, but it is. So well, the point is that plastic-fee is something that goes in terms of trends. But at this moment, accepting some public authority (inaudible) able to speak with the client and explain what we can do in terms of substitution of types of plastic for the glasses and for the bottle. And the fantasy solutions until this moment, we were able to face and to do not adopt.

Regarding the CapEx, the point is so that we increased the numbers of vending machines installed, as you see during -- in the last -- in our reports. What we see in the first half of 2019, unfortunately, is that we and my commercial guys installed a lot of machines. But these new machines effect was offset by the declines in volumes at the same basis of client basis. That's the point. However, as we experienced during the (inaudible) 2010 and 2014, when the people will be back to the job order, we'll begin again to make extraordinary or they will have more protection to make more consumptions. We observed in the past that machines will have an explosion in terms of consumption. To have an explosion, an increase in terms of consumption, you need it to be there. So we install the machines like traps, more or less. We will have the revenues from these machines. And that's the point regarding to the CapEx.

And as you see also in the report, we spent a lot of money this quarter, this Q2 2019. But as we wrote in the report, that was because our main competitor in Italy cut the contract with his external supplier of refillers. And this cooperative social will have keep the vehicles that will belong to them. And they have no use for these hundreds of vehicles, and we'll take the opportunity to acquire vehicles with good enough, good and pretty new. It's already (inaudible) vending industry. So it was an opportunity that we take immediately. What we will see, of course, we will be a reduction in terms of acquisition of vehicle during the second half of 2019.

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Marco Giacinto Gallarati, IVS Group S.A. - Investor Relator & Chairman of Coin Division [27]

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Without the additional CapEx in vending machine, maybe we'll worst instead of remaining stable. And as we are able to increase cash, it would be not worthwhile to generate additional technology to share and strong CapEx that would worsening profitability. That's the overall situation.

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [28]

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As we told you, you need to be there to intercept the consumption. If you do not install machine, you will not have really revenues.

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Alessandro Cecchini, Equita SIM S.p.A., Research Division - Analyst [29]

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No. No, of course, it is clear. But just to be -- back to the basics. So just -- do you confirm, I mean, your indication of EUR 43 million, EUR 45 million of CapEx for the year?

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [30]

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At this moment, yes, maybe EUR 45 million, EUR 48 million, not EUR 43 million.

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Alessandro Moro, IVS Group S.A. - CFO [31]

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Including tariffs.

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [32]

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Including everything.

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Alessandro Cecchini, Equita SIM S.p.A., Research Division - Analyst [33]

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Okay. Okay. And next year, probably there's something, roughly speaking, so not still increasing the CapEx from these levels? Because I remember that last year, you had EUR 49 million of CapEx that seem it was a little bit peak and then for Industry 4.0 and so on, so that's adjusted to...

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Alessandro Moro, IVS Group S.A. - CFO [34]

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For 2020, remember in '20, remember that we will have the install of Paris Metro. So we will have extraordinary CapEx during the 1st month of the next year related to the Paris Metro.

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Operator [35]

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The next question is from Giorgio Martorelli with Amber Capital.

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Giorgio Martorelli;Amber Capital;Analyst, [36]

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I would like to have a better understanding of the EBITDA bridge for the year-end. You said that the second half will show still difficult trading environment. Volumes are declining, but I hope the company will be able to outperform the market with volumes flattish, I don't know in Italy or slightly declining or slightly growing. I would like to see and to hear what's your view on your performance relative to competitors.

And then the other question on the EBITDA bridge is you're talking about one additional working days, which is roughly speaking EUR 1 million of additional EBITDA. And then you have the consolidation of the acquired companies in second half. You consolidated starting from February. Are you expecting only the consolidation of EBITDA or both? Or are you expecting additional EBITDA coming from synergies already in second half 2019? This is for the EBITDA in 2019.

And then on the consolidation process in the market, the market is tough. As we saw in the past, when the market is difficult, you have more opportunities to buy assets at decent M&A multiples. What are you seeing? What are you expecting going forward? I see and I understand that you need to invest in organic CapEx to keep the asset on a good quality, but M&A will probably be even more -- will be even higher returns than what you can get from CapEx. So what are the opportunities there?

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [37]

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Well, beginning from M&A, of course, crisis imply that we will have more opportunity to make good acquisition as we did in 2014. One quarter, it is not sufficient enough to move the market in a strong way. Maybe 3 quarters is the minimum level of crisis is minimum level to expect shift move of the market in terms of available of more increasing the numbers of opportunity and reducing the price, of course. As you know, we calculate the price of volumes. So if the volumes will be acquired, will be reduced -- the prices will be reduced.

In terms of additional EBITDA, of course, we are working on cutting cost, as I told you to Alessandro Cecchini's question. We'll have one more day -- working day during the second half and only this one we have for EUR 1 million. And we expect to attract some synergies from the other branches acquired to the beginning of Q2. The point is that what we will do the consumption at the same basis for the clients decline. This is something that we can maneuver, we can move but not so the magnitude enough at 2% to call it a decline of significant percentage that it means to more than 2% in same basis clients. This depend only from the economy, GDP -- the economy of the state where we are in the market where we are present.

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Marco Giacinto Gallarati, IVS Group S.A. - Investor Relator & Chairman of Coin Division [38]

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Then M&A market consolidation, Giorgio, is clearly linked with what we are doing in the financial strategy where we're financing of the bond, of the longer duration of the bond, the credit line that we have and we are going probably to extend also those credit lines are aimed at an expectation of increased opportunity acquisition is clear.

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Giorgio Martorelli;Amber Capital;Analyst, [39]

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Sorry, I didn't get. What's the consolidated M&A impact from the acquired business in second half? I mean your both assets, what will be the EBITDA -- additional EBITDA coming aside from the synergies, what will be the impact of the EBITDA consolidated in second half?

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Alessandro Moro, IVS Group S.A. - CFO [40]

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Totally or (inaudible).

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Giorgio Martorelli;Amber Capital;Analyst, [41]

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No. The total impact of the M&A consolidated in second half 2019 relative to what you bought early this year or in 2019 -- 2018?

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [42]

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Around [EUR 2 million more].

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Giorgio Martorelli;Amber Capital;Analyst, [43]

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In second half, you have EUR 2 million of additional EBITDA coming from M&A?

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [44]

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If the other part of the company will not reduce and we speak the -- we'll reach the same level of 2018, the acquired branches should produce that level of additional EBITDA. If the rest of the company will suffer decline or underperformance in their lines the same basis installed client seek, of course, this EUR 2 million will be only used to offset the reduction of the other part as in the latter part of Q2.

I'm not happy to say it, but it is.

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Operator [45]

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(Operator Instructions) Gentlemen, there are no more questions registered at this time. Gentlemen, would you like to add any comments to conclude the conference?

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Antonio Tartaro, IVS Group S.A. - Co-CEO & Executive Director [46]

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So thank you for participating to our conference. I will be in the next one, and I will be happy to have better results to show. Thank you, everybody.

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Operator [47]

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Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.