STAR7 - Board of Directors approves Consolidated Half-yearly Report as at 30 June 2023
STAR7 - Board of Directors approves Consolidated Half-yearly Report as at 30 June 2023
STRONG GROWTH IN REVENUES AND FALLING DEBT
Lease of CAAR Group business division drives revenues while optimisation of operating costs has yet to be expressed
Revenues: €50.9 million (+28.3% compared to €39.6 million in the first half of 2022)
EBITDA: €6.9 million (-4.3% compared to €7.2 million in the first half of 2022)
EBITDA Margin: 13.6% (compared to 18.2% in the first half of 2022)
Profit for the period: €1.0 million (-33.8% compared to €1.5 million in the first half of 2022)
Adjusted EBITDA*: €7.5 million
Adjusted EBITDA Margin*: 14.7%
Net financial position: Net debt of €33.6 million as at 30 June 2023 ( -€1.5 milion compared compared to debt of €35.1 million as at 31 December 2022)
* Adjustments mainly relate to integration costs of the CAAR Group business division
Valle San Bartolomeo (Alessandria, Italy), 26 September 2023
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 2023. 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: "These half-year results demonstrate that STAR7 has been able to significantly expand its presence in engineering services and continue its internationalisation process, thanks to the contribution from the lease of the CAAR Group business division, effective 1 January 2023. With an ever more robust business model and increasingly balanced ratio between the different service lines, we have improved visibility on future growth, which we will be able to capture through up-selling and cross-selling within a rapidly expanding customer portfolio. Despite the difficult economic environment, STAR7 has proven its ability to deliver strong revenue growth, including organically. In this first half of the year, we completed an important cycle of multi-year contract renewals with our main customers, as well as winning global contracts with leading international groups.”
Lorenzo Mondo continued: "While the first half of 2023 saw a strong boost in revenues driven by improved strategic positioning, from the second half we also expect to be able to reap the expected benefits in terms of margins. Meanwhile, the continued expansion of our offshore operational base, albeit with some delays, is enabling us to cope with the negative impact of macroeconomic factors such as the extraordinary level of inflation. Given the results achieved in the first half of 2023 and the expected payback from the structural optimisation measures initiated, we are therefore confident of a continuation of the revenue growth trend and a rapid recovery in margins," the CEO concluded.
PERFORMANCE AND FINANCIAL POSITION
Revenues
STAR7 Group revenues amounted to €50.9 million in the first half of 2023, an increase of 28.3% compared to €39.6 million in the first half of 2022. This change was driven by the incremental contribution of the lease of the CAAR group's business division and organic growth, which continued in line with the trend of the past few years, thanks to the development of contractual relationships with new customers and an expansion in the activities carried out for existing customers.
The geographical breakdown of revenue for the first half of 2023 confirms STAR7’s increasing internationalisation.
Geographical breakdown of Group revenues |
H1 2022 |
H2 2023 |
|---|---|---|
| ITALY | 58.8% | 57.2% |
| USA | 27.0% | 21.6% |
| BRAZIL | 8.0% | 14.1% |
| OTHER | 6.2% | 7.1% |
The increase in the weight of the Engineering service line on total Group revenues reflects the contribution deriving from the lease of the CAAR Group business division.
Printing, Experience and Product Knowledge services retain strong potential for development through cross-selling initiatives, which will be aimed at customers that currently use STAR7 exclusively for language or engineering services.
Service Lines as a % of Group Revenues |
H1 2022 |
H2 2023 |
|---|---|---|
| Global content | 46.0% | 35.9% |
| Experience and Product Knowledge | 34.7% | 29.0% |
| Printing | 16.5% | 16.7% |
| Engineering | 2.8% | 18.4% |
EBITDA
Despite inflation, integration costs generated by the absorption of the CAAR Group business division and efficiencies yet to be realised, the STAR7 Group’s EBITDA in the first half of 2023 amounted to €6.9 million. Meanwhile, Adjusted EBITDA (adjusted for the integration costs of the CAAR Group business division) reached €7.5 million. The EBITDA Margin therefore stood at 13.6% while the Adjusted EBITDA Margin was 14.7%.
EBIT
In the first half of 2023, the EBIT of the STAR7 Group amounted to €3.1 million, a decrease of 12.5% compared to €3.5 million in the first half of 2022. The €0.4 million reduction in EBIT mainly reflects the €0.3 million decrease in EBITDA compared to the same period of 2022.
Profit for the period
In the first half of 2023, the STAR7 Group reported a net profit of €1.0 million, down 33.8% compared to €1.5 million in the first half of 2022.
The decrease of €0.5 million in net profit reflects the 4.3% decrease in EBITDA as well as the 3.7% increase in depreciation and amortisation, and the 17.2% increase in net financial expense in the first half of 2023.
The M&A transactions carried out to date have generated goodwill in the amount of €31.7 million, resulting in amortisation of €2 million, as better detailed in the Notes to the Financial Statements (section B). Excluding this amortisation, in line with the presentation adopted by other European companies, net profit for the first half of 2023 would be €2.9 million.
Net Working capital
As at 30 June 2023, the STAR7 Group's net financial position showed debt of €33.6 million, a decrease of €1.5 million compared to the end of 2022 (debt of €35.1 million). The change in the net financial position reflects the effective management of net working capital.
STAR7 has maintained a good level of available liquidity (€16.5 million as at 30 June 2023), so as to be able to promptly seize any acquisition opportunities.
STAR7 also continues to meet the covenants of the bonds issued to finance the acquisition of LocalEyes by an ample margin.
SIGNIFICANT EVENT IN THE FIRST HALF OF 2023
On 1 January 2023, STAR7 signed the agreement for the lease of the CAAR group business division.
Contracts of significant size were renewed in the first half of 2023, confirming customers’ trust in STAR7 and providing revenue visibility for the coming years.
In line with the strategy of optimising costs through offshoring, a new office in Tirana was opened in the first half of 2023 to accommodate the increased number of staff needed to manage projects arising from the award of new international contracts.
SUBSEQUENT EVENTS
In July 2023, STAR7 began the merger process of Vertere S.r.l., an Italian company that was wholly acquired in July 2022.
OUTLOOK
Performance in the first few months since 30 June 2023 has continued to be good despite the complex scenario caused by inflation and the ongoing increase in the cost of capital. STAR7 expects to achieve a profit for the full-year 2023.
FILING OF DOCUMENTATION
A copy of the Consolidated Half-yearly Report as at 30 June 2023, 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 2023 RESULTS
The results for the first half of 2023 will be presented in a conference call by STAR7 management today, Tuesday 26 September 2023, at 3:00 PM (CET).
The conference call can be joined by registering at the following URL: https://events.teams.microsoft.com/event/4583453c-48f6-4ab1-ba57-a64a93dbb561@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
Barbara Donadio, CFO e Investor Relations Manager STAR7
Tel: +39 349 591 02 59
E-mail: barbara.donadio@star-7.com
MEDIA RELATIONS
mediarelations@star-7.com
star7@icorporate.it
Elisa Piacentino
Senior Consultant and Client Supervisor
Mob: +39 366 9134595
EURONEXT GROWTH ADVISOR
ALANTRA Capital Markets
ega@alantra.com
Mob: +39 334 6267243