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Regulatory News:
Séché Environnement (Paris:SCHP):
Sustained growth
Solid operating results
Improved liquidity generation and financial flexibility
Targets for 2023 confirmed
New international acquisitions
Quality results compared to a H1 2022 sustained by spot contracts
Strong organic growth
Contributed revenue: €492 million: +9% vs. 06/30/22
High operating margins
EBITDA: €102 million (23% of revenue*): +5%* vs. 06/30/22 COI: €45 million (11% of revenue*): +3%* vs. 06/30/22
Stronger financial position
Free cash flow at 45% of EBITDA: +81% vs. 06/30/22 Financial leverage ratio: 2.7x: -0.1x vs. 12/31/2022
* at constant scope and exchange rates
Continuation of our international external growth strategy with the acquisitions of:
Furia, a hazardous waste and soil remediation specialist in Northern Italy
Rent-A-Drum, the leading waste management and circular economy firm in Namibia
Outlook for 2023 confirmed
Revenue close to €1,000 million before contributions from 2023 acquisitions
EBITDA margin close to 22% of revenue before contribution from 2023 acquisitions
Financial leverage ratio of 2.7x EBITDA (excluding 2023 acquisitions)
At the Board of Directors meeting held on September 6, 2023, to approve the financial statements for the period ended June 30, 2023, the Chairman, Joël Séché, stated:
Our achievements of the first half of 2023 confirm the relevance of our development strategy. Indeed, the quality of our economic, operational, financial and extra-financial performance confirms both our expectations for the current fiscal year, and it also validates our growth and profitability trajectory in the medium term.
During the period under review, our Group successfully continued to integrate and develop the businesses we acquired during the previous year, in promising industrial infrastructure risk management sectors such as wastewater treatment, as well as in strategic circular economy and decarbonization sectors, such as chemicals recycling and the industrial water cycle.
Within our historical scope, performance to June 30, 2023 has been strong, particularly in view of the challenging baseline in the first half of 2022 in terms of both business activity and results.
In a challenging macroeconomic context, our markets have remained well-oriented and Séché Environnement has maintained a high level of activity and operating profitability, particularly in France.
In addition, our Group has strengthened its financial position, demonstrating once again that Séché Environnement is an agile company with a liquid and flexible balance sheet.
In non-financial terms, our Group has consolidated its successes, with its climate strategy validated by the SBTi, the alignment of its activities with the EU's ‘green taxonomy’ strengthened, and a new Group-wide biodiversity action plan launched, among other achievements.
On the strength of these achievements, Séché Environnement is in a position to actively pursue its development strategy, and in particular its targeted external growth policy.
At the start of the second half of 2023, our Group is simultaneously making two international acquisitions, complementing the commercial, industrial, and geographic strengths of its existing facilities.
In addition, after the “Investor Day” in 2019, we would like to present before the end of the current fiscal year our new plan with financial and non-financial objectives for 2026.
It will mark a new milestone in the profitable growth strategy of a Group endowed with a long-term vision, positioned in growing markets, committed to creating a comprehensive offering of high value-added services to help economic operators meet their challenges in terms of the ecological transition and sustainable development. "
Selected financial data2
In €m
Consolidated
France
International
At June 30
2022
2023
2022
2023
2022
2023
Revenue (reported)
463.9
530.1
334.1
404.4
129.8
125.7
Contributed revenue
429.2
491.6
299.4
365.9
129.8
125.7
EBITDA
% of revenue
99.9
23.3%
101.9
20.7%
73.0
24.4%
81.4
22.3%
26.9
20.7%
20.5
16.3%
COI
% of revenue
47.7
11.1%
45.3
9.2%
33.1
11.1%
35.9
9.8%
14.6
11.2%
9.4
7.5%
Operating income
% of revenue
45.6
10.6%
45.5
9.3%
Net financial income
% of revenue
(8.8)
(2.1)%
(11.4)
(2.3)%
Income tax
% of revenue
(9.8)
(2.3)%
(9.0)
(1.8)%
Share of income of equity-accounted investees
(0.2)
(1.2)
Minority interests
(1.6)
(1.0)
Net income attributable to company shareholders
% of revenue
25.2
5.9%
23.0
4.7%
Net earnings per share
€3.23
€2.94
Cash flow
Recurring operating cash flow
88.5
88.5
% of revenue
20.6%
18.0%
Net CAPEX paid
47.4
42.2
% of revenue
11.0%
8.6%
Available operating cash flow
25.5
46.2
% of revenue
5.9%
9.4%
Balance sheet
Net financial debt
531.0
581.7
Financial leverage ratio
2.7x
2.7x
Published consolidated data
Summary of activity, results, and financial position for the period ended June 30, 2023
At June 30, 2023, Séché Environnement posted revenue of €491.6 million, up +14.5% on a reported basis and +8.5% on an organic basis3 compared with the first half of 2022.
In the first half of 2023, the Group maintained strong growth in most markets and delivered quality results, particularly within its historical scope.
Indeed, the past period compares to a first half of 2022 which recorded the significant contribution of «spots» contracts in terms of activity as well as operational results. It also recorded a significant foreign exchange effect outside France, as well as a tax impact from the electricity price cap in France.
At the same time, the Group consolidated the businesses acquired in 2022 and pursued its acquisition strategy in France and abroad.
The Group also strengthened its financial position by significantly improving its liquidity generation and maintaining its financial flexibility.
The achievements of the first half of 2023 allow the Group to confidently look forward to continuing its internal and external growth momentum and to confirming all its objectives for the 2023 financial year.
Consolidation of new strategic activities
Acquisition of Assainissement Rhône-Isère (ARI)
On January 16, 2023, Séché Environnement completed the acquisition of Assainissement Rhône-Isère (ARI), since renamed Séché Assainissement Rhône-Isère.
Based in Bonnefamille (Isère) and present throughout the Auvergne-Rhône-Alpes region, this company provides sanitation, industrial cleaning and high-pressure hydrocleaning services. Licensed to work on Seveso sites, the company generated revenue of around €2 million in 2022.
The acquisition price of approximately €0.7 million was financed by drawing on the Group’s cash.
This acquisition completes Séché Environnement's commercial operations with respect to industrial clients in the Rhône-Alpes region.
For technical reasons, ARI – now Séché Assainissement Rhône-Isère – was not included in the scope of consolidation at June 30, 2023, without any material impact on the consolidated activity, results, and financial position at that date.
Transfer of a portfolio of “Industrial water” activities
During the first half of 2023, Séché Environnement continued the transfer of a portfolio of industrial water management activities acquired from the Veolia Group on November 30, 2022.
The acquired assets include contracts signed with more than 120 manufacturers and a network of twenty branches in France. The process also involved the transfer of some 350 employees – specialists in industrial water cycle management.
With their highly technological nature and reliance on rare expertise, these businesses enhance Séché Environnement’s outsourcing offer as part of its “comprehensive service” to its industrial clients. These businesses address with recurring markets with high barriers to entry and high potential in view of the growing environmental problems related to access, reuse and return to the natural environment of this resource.
This portfolio of contracts represents revenue – over a full year – of around €50 million, of which some €38 million were transferred by December 31, 2022. The transfer of the entire business should be completed by the end of 2023.
UPON completion of the transfer operations, the total amount paid for this acquisition should be on the order of €35 million (of which nearly €31 million had been disbursed by December 31, 2022).
First half in line with annual targets
Continued strong organic growth momentum – excluding contribution from spots markets in H1 2022
The first half of 2023 confirms Séché Environnement's strong growth momentum in its markets.
By June 30, 2023, contributed revenue had risen by +14.5% to €491.6 million.
At constant scope and exchange rates, contributed revenue amounted to €457.0 million, representing organic growth4 of +8.5%.
This increase was particularly strong in the first half of 2022, due in particular to emergency environmental contracts «spots» that had significantly contributed to the activity of the period (up to approximately €25 million).
Strong operating results within historical scope
Operating results, both gross and current, were up on the same period last year:
Net income attributable to company shareholders at 5% of contributed revenue
Net financial income came to (€11.4) million, vs. (€8.8) million at June 30, 2022.
This change essentially reflects the rise in gross debt costs (+€2.6 million) resulting from the increase in average gross financial debt over the period, as the average gross financial debt cost rose from 2.56% in the first half of 2022 to 3.14% in the first half of 2023.
After accounting for:
Net income attributable to company shareholders stood at €23.0 million, or 4.7% of contributed revenue at June 30, 2023, vs. €25.2 million (or 5.9% of contributed revenue) a year earlier.
As a result, Earnings per share came to €2.94, vs. €3.23 at June 30, 2022.
Strong liquidity generation and improved financial flexibility
In the first half of 2023, Séché Environnement confirmed its ability to control its industrial investments (particularly recurring investments). The Group generated strong free cash flow and improved its financial flexibility.
Over the period, free operating cash flow generation6 rose by +81.2% to €46.2 million (vs. €25.5 million at June 30, 2022), notably through:
The free cash flow to EBITDA rate stood at 45%, significantly higher than the Group’s targets (“greater than or equal to 35% of EBITDA”).
The liquidity position was strong at €311.3 million euros, vs. €313.1 at December 31, 2022, with a cash balance of €116.3 million, vs. €126.1 million at December 31, 2022.
Net financial debt fell slightly to €581.7 million, vs. €587.4 million at December 31, 2022.
Financial leverage improved to 2.7 times EBITDA, vs. 2.8 times EBITDA at December 31, 2022.
Recent events and outlook
Ongoing international acquisitions strategy
Acquisition of Furia in Italy
Furia specializes in the collection, sorting, consolidation, and recovery of hazardous and non-hazardous industrial waste. The Company also generates 40% of its revenue from soil remediation and site decontamination activities.
Furia is an integrated operator across the entire industrial waste management value chain, offering its large industrial clients (ENI, Enel...) collection, sorting, massification, material recovery, and transfer of non-recoverable waste to treatment and energy recovery solutions.
Located in Caorso, south-east of Milan, Furia has 120 highly qualified employees working under a management team that upholds the same environmental values and family business culture as Séché Environnement; its platform, authorized for 220,000 tons per year, is perfectly synergized in commercial, industrial, and geographical terms with Mecomer's facilities, also located near Milan (authorized for 180,000 tons per year), as well as those of Tredi-Salaise (Isère), of which it is already a customer.
In particular, Furia and Mecomer complete and strengthen the Group’s commercial offering on the industrial waste markets in Northern Italy; enabling them to offer comprehensive services to their large industrial clients.
As a result, the two companies now position Groupe Séché Environnement as one of the leading players in the hazardous waste market in Northern Italy.
This new entity also helps broaden and consolidate the Group's diversified supply of hazardous waste.
By 2022, Furia will have achieved revenue of around €52 million, generating EBITDA of around €6.5 million.
The acquisition, involving 100% of the capital, is based on a multiple of 7 times the 2022 EBITDA. It is debt-financed, initially by drawing on the Group's liquidity line and then refinanced on a long-term basis.
Signed at the beginning of August 2023, this acquisition will be finalized in the weeks following the preparation of this document, subject to the fulfillment of conditions precedent for the benefit of both parties.
Acquisition of Rent-A-Drum (Namibia)
Rent-A-Drum is Namibia’s leading waste management company. It offers a wide range of services to its clientèle of large Namibian companies, as well as to a number of leading local authorities such as the capital Windhoek, thanks to its integrated waste recovery and treatment services.
Its expertise covers most areas of hazardous and non-hazardous waste management, as well as medical waste. Rent-A-Drum is active in on-site waste collection and management, recycling, landfill management and rehabilitation, deconstruction, and site decontamination.
With a workforce of around 500 skilled employees, and already OHSAS 18001-certified and ISO 14001 and ISO 9001-certified, Rent-A-Drum is driven by experienced management and strong environmental values.
With a growth strategy focused on the circular economy and recovery businesses that already account for a quarter of its revenue, the company is supported by recent logistics tools and 7 sites in Namibia, including a solid recovered fuel (SRF) production unit and 2 recovery units for materials as diverse as aluminum cans, cardboard packaging, plastic bottles and aerosols, which RAD sends to South Africa to be transformed into new materials. The company is also expanding in the hazardous waste market, particularly with industrial customers in the mining sector, which accounts for almost 40% of its revenue.
The Company has forecast revenue of around €7.5 million in 2022, up around 20% on 2021, for an EBITDA of around €0.9 million.
Along with South Africa and Mozambique, this acquisition completes Séché Environnement’s presence in Southern Africa, with industrial clients who are key targets for the Group, and in attractive regions with strong economic potential and demanding environmental regulations.
Completed at the end of August 2023, the acquisition concerns 100% of the shares and will be financed from the Group’s cash resources.
Strong outlook for 2023
A second half of 2023 focused on growth and profitability
Positioned as a specialist in the Circular Economy in sustainable growth markets in France and abroad
Séché Environnement is developing in the growth markets of the ecological transition and is positioning itself in the high-barrier businesses of the circularECONOMYand the decarbonization of economic activities; the Group is also positioning itself as a specialist in Hazard Management and the protection of human health and the environment.
Both in France and abroad, the Group offers its industrial and public-sector clients highly technological tools and rare know-how in the form of high value-added services, enabling them to control the impact of their activities on the environment, gain access to rare, low-carbon resources, materials and energy, and meet their targets for reducing greenhouse gas emissions.
In this way, the Group's offer meets the growing needs of its clients in the medium term, posed by the restrictive regulations associated with the ecological transition, as well as their short-term economic imperatives, such as access to competitively priced local resources.
Séché Environnement considers that this growth dynamic in its markets is sustainable and gives its businesses a high degree of visibility and resilience over the medium term.
Continued organic growth momentum
The achievements of the first half of 2023 confirm Séché Environnement's objectives for the current fiscal year7.
Séché Environnement expects its organic growth to continue over the next few months at a rate close to that seen in the recent period.
Overall, Séché Environnement confirms its target of 5% organic growth in contributed revenue compared to its historical scope8.
With the contribution of the scopes consolidated in 2022, contributed revenue should be nearly €1,000 million in financial year 2023.
Focus on maintaining operating margins, free cash flow generation, and financial flexibility
The Group will continue to improve its operating margins:
Séché Environnement thus confirms its target of gross operating profitability (EBITDA/contributed revenue) for 2023 at close to 22% of contributed revenue (before acquisitions made in the second half of 2023).
The Group will strive to increase its operating free cash flow9 above its target of 35% of EBITDA through:
Séché Environnement thus confirms its financial leverage target of 2.7 times EBITDA at December 31, 2023 (excluding acquisitions made in the second half of 2023).
In addition, Séché Environnement will hold an ‘Investor Day’ at the end of 2023 to present its medium-term financial and non-financial objectives.
Results presentation webcast: September 12, 2023 at 8.30 a.m.
Connect on the home page of the Séché Environnement website
In French: https://www.groupe-seche.com/fr In English: https://www.groupe-seche.com/en
Next release
Third-quarter 2023 revenue: October 24, 2023 after market close Investor Day: December 12, 2023
About Séché Environnement
Séché Environnement is a leading player in waste management, including the most complex and hazardous waste, and in environmental services, particularly in the event of an environmental emergency. Thanks to its expertise in the creation of circular economy loops, decarbonization and hazard control, the group has been contributing to the ecological transition of industries and territories, as well as to the protection of the living world, for nearly 40 years. A French family-owned industrial group, Séché Environnement deploys the cutting-edge technologies developed by its R&D department at the heart of territories in more than 120 locations in 15 countries, including some 50 industrial sites in France. With over 5,700 employees, including 2,500 in France, Séché Environnement generated revenue of nearly €900 million in 2022, 30% of which from its international operations. Séché Environnement has been listed on the Euronext Eurolist (Compartment B) since November 27, 1997. It is included in the CAC Mid&Small, EnterNext Tech 40 and EnterNext PEA-PME 150 indexes. ISIN: FR 0000039139 – Bloomberg: SCHP.FP – Reuters: CCHE.PA
FINANCIAL INFORMATION AT JUNE 30, 2023
(Excerpts from the Management Report)
Comments on activity and results for the year ended June 30, 2023
Change in consolidated activity
Reported revenue and contributed revenue - Scope effect
At June 30, 2023, Séché Environnement reported consolidated revenue of €530.1 million, vs. €463.9 million at June 30, 2022.
The reported consolidated revenues include non-contributed revenue of €38.5 million (vs. €34.7 million at June 30, 2022), which breaks down as follows:
In €m
06/30/2022
06/30/2023
IFRIC 12 investments
7.1
9.0
French General Tax on Polluting Activities
27.6
29.5
Non-contributed revenue
34.7
38.5
Net of non-contributed revenue, contributed revenue came to €491.6 million, vs. €429.2 million at June 30, 2022, an increase of +14.5% over the period.
This includes a scope effect of €34.6 million, broken down as follows:
It should be noted that Séché ARI, acquired in January 2023, was not included in the scope of consolidation at June 30, 2023, with no material impact on the analysis of consolidated revenues and results for the period.
Breakdown of scope effect by activity and division
In €m
Services
Circular Economy:
Hazard Management
Total
Hazardous waste
24.0
8.5
-
32.5
Non-hazardous waste
2.1
-
-
2.1
Total
26.1
8.5
-
34.6
The period saw a negative foreign exchange effect of (€7.9) million, mainly due to the deterioration of the South African rand (compared with a positive foreign exchange effect of +€2.8 million at June 30, 2022).
At constant scope, contributed revenue amounted to €457.0 million at June 30, 2023, up 6.5% at current exchange rates and 8.5% at constant exchange rates.
Breakdown of revenue by geographic region
06/30/2022
06/30/2023
Gross change
Organic change
In €m
In %
In €m
In %
As a %
As a %
Subsidiaries in France
o/w scope effect
299.4
-
69.8%
-
365.9
34.6
74.4%
-
+22.2%
+10.6%
International subsidiaries
o/w scope effect
129.8
-
30.2%
-
125.7
-
25.6%
-
-3.1%
+2.9%
Total contributed revenue
429.2
100.0%
491.6
100.0%
+14.5%
+8.5%
Consolidated data at current exchange rate At constant exchange rates, contributed revenue for the year ended June 30, 2022 came to €421.3 million, reflecting a negative foreign exchange effect of (€7.9) million.
The first half of 2023 confirmed strong performance in France, reinforced by the contribution of the newly consolidated scopes, while growth Internationally was penalized by the comparison to the first half of 2022, which included the significant contribution (of the order of €15 million) of exceptionally large environmental emergencies “spots” contracts, as well as the deterioration of the exchange rate in South Africa:
Revenue earned by subsidiaries outside France accounted for 25.6% of contributed revenue for the year ended June 30, 2023 (vs. 30.2% one year earlier).
Breakdown of revenue by activity
06/30/2022
06/30/2023
Gross change
Organic change
In €m
In %
In €m
In %
As a %
As a %
Services
o/w scope effect
190.2
-
44.3%
233.4
26.1
47.5%
22.7%
+12.2%
Circular economy and decarbonization
o/w scope effect
132.6
-
30.9%
155.6
8.5
31.7%
17.4%
+10.8%
Hazard management
o/w scope effect
106.4
-
24.8%
-
102.6
-
20.8%
-3.6%
-1.1%
Total contributed revenue
429.2
100.0%
491.6
100.0%
14.5%
+8.5%
Consolidated data at current exchange rate
Growth in the first half of 2023 was driven by Services activities and those linked to the circular economy and decarbonization. In France, which continues to be a positively oriented market in terms of both volumes and prices, revenue was also sustained by the contribution of recently consolidated acquisitions, while the situation outside France is more uneven, given the challenging baseline in the of 2022 as well as foreign exchange effects.
Service activities posted revenue of €233.4 million for the year ended June 30, 2023, an increase of +22.7% (reported data).
This strong growth includes the consolidation of STEI and Séché Assainissement 34 (+€26.1 million).
At constant scope and exchange rates, Services activities revenue grew by +10.4% to €207.3 million.
These figures benefited from:
Environmental Services activities accounted for 47.5% of contributed revenue at June 30, 2022 (vs. 44.3% a year earlier)
Activities related to the Circular Economy and Decarbonization generated revenue of €155.6 million at June 30, 2022, up +17.4% on a reported basis. This includes the consolidation of All'Chem (+€8.5 million).
At constant scope and exchange rates, revenue rose by 10.8% over the period, mainly reflecting performance in France:
Activities related to the circular economy and decarbonization accounted for 31.7% of contributed revenue at June 30, 2023 (vs. 30.9% one year earlier).
Hazard Management activities generated revenue of €102.6 million at June 30, 2023, a decline of -0.8% on a reported basis and +1.9% at constant exchange rates.
At constant scope and exchange rates, this change reflects:
Hazard Management activities accounted for 20.8% of contributed revenue at June 30, 2023 (vs. 24.8% one year earlier).
Breakdown of revenue by division
06/30/2022
06/30/2023
Gross change
Organic change
In €m
In %
In €m
In %
As a %
As a %
Hazardous waste
o/w scope effect
275.0
-
64.1%
323.2
32.5
65.7%
+17.5%
+4.8%
Non-hazardous waste
o/w scope effect
154.2
-
35.9%
168.4
2.1
34.3%
+9.3%
+13.5%
Total contributed revenue
429.2
100.0%
491.6
100.0%
+14.5%
+8.5%
Consolidated data at current exchange rate
Over the period, division trends varied from one geographical area to another. Their growth in France confirms the positive trend in volumes and prices in most Hazardous and Non-Hazardous Waste markets, while internationally, Non-Hazardous Waste markets drove growth:
Change in Operating income
EBITDA
At June 30, 2023, earnings before interest, taxes, depreciation and amortization (EBITDA) stood at €101.9 million, or 20.7% of contributed revenue, up +2.0% on June 30, 2022 (€99.9 million, or 23.3% of contributed revenue). This increase includes a scope effect of (€1.3) million, related to the consolidation of All'Chem, Séché Assainissement 34, and STEI over the period. It also includes a negative foreign exchange effect of (€1.6) million primarily due to the deterioration of the South African rand.
At constant scope, EBITDA stood at €104.8 million, up +4.9% compared to the first half of 2022, giving a gross operating margin of 22.5% of contributed revenue.
The changes in EBITDA and gross operating margin over the period primarily reflect:
This was partially offset by the increase in:
Breakdown of EBITDA by geographic area
In €m
06/30/2022
06/30/2023
Group
France
Internal
Group
France
Internal
Contributed revenue
429.2
299.4
129.8
491.6
365.9
125.7
EBITDA
99.9
73.0
26.9
101.9
81.4
20.5
% of contributed revenue
23.3%
24.4%
20.7%
20.7%
22.3%
16.3%
Consolidated data at current exchange rate
For each geographic scope, the main changes were:
Current operating income (COI)
At June 30, 2023, current operating income (COI) stood at €45.4 million, or 9.2% of revenues. This includes a scope effect of (€3.0) million and a negative foreign exchange effect of (€0.8) million.
At constant scope and exchange rates, COI was €49.2 million, or 10.6% of revenue (vs. €47.7 million, or 11.1% of revenue at June 30, 2022). This growth primarily reflects the increase in EBITDA at constant scope and exchange rates, as well as tight control over depreciation and amortization expenses in line with our selective investment policy.
Breakdown of current operating income by geographic scope
In €m
06/30/2022
06/30/2023
Group
France
Internal
Group
France
Internal
Contributed revenue
429.2
299.4
129.8
491.6
365.9
125.7
COI
47.7
33.1
14.6
45.3
35.9
9.4
% of contributed revenue
11.1%
11.1%
11.2%
9.2%
9.8%
7.5%
Consolidated data at current exchange rate
For each geographic scope, the main changes were:
Operating income (OI)
Operating income reached €45.5 million, or 9.3% of revenue, vs. €45.6 million, or 10.6% of revenue at June 30, 2022.
This stability essentially reflects the trend in COI as well as the non-recurrence of expenses linked to the effects of the business combinations, which had reduced the balance by (€2.1) million at June 30, 2022. This result also includes income of €1.1 million from the disposal of fixed assets.
Change in Net income attributable to company shareholders
Net financial income
At June 30, 2023, Net financial income stood at (€11.4) million, compared with (€8.8) million a year earlier.
This change reflects:
Income tax
At June 30, 2023, income tax expenses stood at (€9.0) million, vs. (€9.8) million.
This breaks down to (€6.8) million – compared to (€6.5) million a year ago – for France and (€2.1) million – vs. (€3.3) million a year ago – Internationally.
The Group's effective tax rate stood at 26.3% at June 30, 2023, vs. 26.6% a year ago.
Share of profit of equity-accounted investees
Share of profit of equity-accounted investees amounted to (€1.2) million at June 30, 2023 (vs. (€0.2) million a year earlier). This unfavorable trend is linked to Gerep in the amount of (€1.0) million.
Net income attributable to company shareholders
At June 30, 2023, Net income before non-controlling interests came to €24.0 million.
After accounting for minority interests, which amounted to €1.0 million (vs. €1.6 million at June 30, 2022), representing in particular minority interests in Solarca and the South African subsidiaries, Net income attributable to company shareholders came to €23.0 million, or 4.7% of contributed revenue (vs. €25.2 million and 5.9% of revenue in the first half of 2022).
Earnings per share came to €2.94, vs. €3.23 at June 30, 2022.
Comments on cash flows and the financial position for the year ended June 30, 2023
Cash flow
Summary consolidated statement of cash flows
In €m
06/30/2022
06/30/2023
Cash flow from operating activities
65.5
84.9
Cash flows from investments
(83.3)
(57.0)
Cash flows from financing activities
(33.7)
(34.4)
Change in cash from continuing operations
(51.5)
(6.5)
Change in cash flow from discontinued operations
-
Change in cash and cash equivalents
(51.5)
(6.5)
The change in cash and cash equivalents went from (€51.5) million at June 30, 2022 to (€6.5) million at June 30, 2023.
Over the period, this change of +€45.0 million reflects the combined impact of:
Cash flows from operating activities
In the first half of 2023, the Group generated €84.9 million in cash flow from operating activities (vs. €65.5 million one year earlier), an increase of +€19.4 million.
This increase reflects the combined effect of:
Investment flows
In €m
06/30/2022
12/31/2022
06/30/2023
Net industrial investments (excl. IFRIC 12)
41.0
105.0
36.7
Net financial investments
0.2
0.2
-
Investments recorded
47.6
105.2
36.7
Industrial investments
47.4
95.7
42.2
Financial investments
0.2
3.0
14.1
Acquisition of subsidiaries - Net cash flow
35.7
77.7
0.7
Investments paid out
83.3
176.4
57.0
During the first half of 2023, industrial investments were particularly tightly controlled, amounting to €36.7 million (vs. €41.0 million over the same period in 2022).
These include:
By activity, industrial investments break down as follows:
Net cash relating to financing activities
The balance of net cash relating to financing activities, i.e., (€34.4) million at June 30, 2023, includes:
The generation of free operating cash flow can be analyzed as follows:
In €m
06/30/2022
06/30/2023
EBITDA
99.9
101.9
Other income and operating expenses
(0.5)
(1.7)
Rehabilitation and maintenance expenses for sites and assets under concession (including major maintenance and renewal)
(10.9)
(11.7)
Recurring operating cash flow
88.5
88.5
Net disbursed recurring investments (excluding major maintenance and renewal)
(25.3)
(21.8)
Change in WCR
(25.1)
(5.8)
Tax paid
(4.1)
(4.4)
Net interest payments (including interest on lease liabilities)
(8.5)
(10.3)
Free operating cash flow
25.5
46.2
Cash conversion rate (free operating cash flow/EBITDA)
26%
45%
Recurring operating cash flow9 was at the same level as last year, €88.5 million, taking into account the change in EBITDA over the period, on the one hand, and calculated operating expenses and rehabilitation and maintenance expenses for concession sites (including major maintenance and renewal) on the other.
Free operating cash flow10 improved significantly by +81.2% to €46.2 million (vs. €25.5 million a year ago), which reflects the reduction in changes in working capital over the period. The change in WCR in the first half of 2022 was mainly due to the increase in trade receivables resulting from the consolidation of Séché Assainissement’s activities. In the first half of 2023, the change in WCR is explained by the high level of activity of certain subsidiaries in France and Peru at the end of the period.
The level of free operating cash flow shows an EBITDA-to-cash conversion rate of 45% (vs. 26% a year earlier) significantly higher than Group targets (“greater than or equal to 35% of EBITDA”).
Changes in liquidity, net financial debt, and flexibility
The Group maintained a solid liquidity position, at €311.3 million, vs. €313.1 million at December 31, 2022. The liquidity position breaks down as follows:
Net financial debt breaks down as follows:
In €m
31/122022
06/30/2023
Bank loans
186.5
178.8
Non-recourse loans
24.3
22.9
Bonds
415.8
416.5
Lease debt
65.4
61.1
Miscellaneous financial debt
9.6
2.6
Factoring debt
7.0
5.6
Derivatives
-
9.4
Short-term bank borrowings
2.7
1.1
Total financial debt (current and non-current)
713.6
698.0
Cash balance
125.2
116.3
IFRS net financial debt
587.4
581.7
o/w due in less than one year
(14.8)
(15.9)
o/w due in more than one year
602.2
597.6
At June 30, 2023, 74% of gross financial debt, including lease liabilities and after recognizing hedging instruments, was hedged at fixed rates (vs. 73% at December 31, 2022.
The change in net financial debt breaks down as follows:
In €m
12/31/2022
06/30/2023
Net financial debt at opening
474.9
587.4
Cash flows from operating activities
(148.1)
(84.9)
Net industrial CAPEX disbursed
95.7
42.2
Net financial CAPEX
(0.1)
14.8
Dividends paid
8.8
0.8
Net interest payments (including on lease liabilities)
17.0
10.3
Cash and cash equivalents without loss/gain of control
16.1
0.6
Other financing flows
0.6
-
Net financial debt at constant scope and before non-cash effects
464.9
571.2
First-time consolidation
80.7
0.7
Non-cash change in debt (including IFRS 16)
41.8
9.8
Net financial debt at closing
587.4
581.7
At June 30, 2023, net debt (IFRS) stood at €581.7 million (vs. €587.4 million at December 31, 2022), marking a decline of (€5.7) million over the period.
The non-cash variation in debt is mainly due to new IFRS 16 rights-of-use contracted over the period.
The new consolidation (non-cash effect) corresponds to the goodwill arising on the acquisition of Séché Assainissement 34.
The financial leverage ratio stood at 2.7 times EBITDA, a slight improvement compared with December 31, 2022 (2.8 times EBITDA).
APPENDIX 1
Consolidated financial position
(in thousands of euros)
12/31/2022
06/30/2023
Goodwill
395992
395260
Concession intangible assets
30861
28603
Other intangible assets
44151
45976
Property, plant and equipment
409251
402840
Investments in equity-accounted investees
1067
885
Non-current financial assets
32955
40119
Non-current derivatives - assets
777
692
Non-current operating financial assets
32805
31123
Deferred tax assets
15475
16047
Non-current assets
963335
961545
Inventories
25556
26090
Trade and other receivables
245727
307279
Current financial assets
3306
3362
Current derivatives - assets
-
-
Current operating financial assets
40473
49804
Cash and cash equivalents
126166
116343
Current assets
441,229
502876
Assets held for sale
-
-
TOTAL ASSETS
1404564
1464422
(in thousands of euros)
12/31/2022
06/30/2023
Share capital
1572
1572
Additional paid-in capital
74061
74061
Reserves
189861
219201
Net income
44608
22973
Equity attributable to company shareholders
310102
317807
Equity attributable to non-controlling interests
7286
7291
Total equity
317388
325098
Non-current financial debt
547878
548650
Non-current lease liabilities
44680
39556
Non-current derivatives - liabilities
10341
10057
Employee commitments
18029
19199
Non-current provisions
30181
30720
Non-current operating financial liabilities
4761
6873
Deferred tax liabilities
4893
4575
Non-current liabilities
660763
659629
Current financial debt
90553
78709
Current lease liabilities
20882
21720
Current derivatives - liabilities
-
-
Current provisions
2681
2577
Trade payables
165086
174184
Other current liabilities
146119
197428
Tax liabilities
1092
5076
Current liabilities
426412
479695
Liabilities held for sale
-
-
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
1404564
1464422
APPENDIX 2
Consolidated income statement
(in thousands of euros)
06/30/2022
06/30/2023
Revenue
463929
530137
Other business income
876
751
Income from ordinary activities
464805
530887
Purchases used for operational purposes
(65,029)
(73,447)
External expenses
(160,064)
(190,162)
Taxes and duties
(36,114)
(42,292)
Employee expenses
(103,700)
(123,055)
EBITDA
99899
101931
Expenses for rehabilitation and/or maintenance of sites under concession arrangements
(5,097)
(5,049)
Depreciation, impairment, and provisions
(46,793)
(50,928)
Other operating items
(296)
(614)
Current operating income
47712
45340
Other non-current items
(2,150)
133
Operating income
45562
45473
Cost of net financial debt
(8,221)
(10,431)
Other financial income and expenses
(609)
(930)
Net financial income
(8,831)
(11,361)
Share of income of equity accounted investees
(165)
(1,207)
Income tax
(9,760)
(8,957)
Net income
26806
23949
o/w attributable to non-controlling interests
(1,634)
(976)
o/w attributable to company shareholders
25172
22973
Non-diluted earnings per share (in euros)
3.23
2.94
Diluted earnings per share (in euros)
3.23
2.94
APPENDIX 3
Consolidated statement of cash flows
(in thousands of euros)
12/31/2022
06/30/2023
Net income
47870
23949
Share of profit of equity-accounted investees
1341
1207
Dividends from joint ventures and equity accounted investees
-
-
Depreciation, impairment, and provisions
96714
50056
Income from disposals
(55)
(1,078)
Deferred taxes
4386
(818)
Other income and expenses
6850
1445
Cash flows
157106
74761
Income tax
14845
9774
Cost of gross financial debt before long-term investments
16939
10639
Cash flow before taxes and financial expenses
188890
95174
Change in working capital requirement
(24,971)
(5,831)
Tax paid
(15,803)
(4,420)
Net cash flows from operating activities
148117
84923
Investments in property, plant and equipment and intangible assets
(99,861)
(43,344)
Disposals of property, plant and equipment and intangible assets
4157
1063
Increase in loans and financial receivables
(18,632)
(15,648)
Decrease in loans and financial receivables
2518
1549
Acquisition of subsidiaries net of cash and cash equivalents
(76,239)
(670)
Loss of control over subsidiaries net of cash and cash equivalents
(1,426)
-
Net cash flows from investment activities
(189,483)
(57,049)
(in thousands of euros)
12/31/2022
06/30/2023
Dividends paid to parent company shareholders
(7,806)
(0)
Dividends paid to non-controlling interests
(1,027)
(806)
Capital increase or decrease by controlling company
580
-
Cash and cash equivalents without loss/gain of control
(3,047)
(565)
Change in treasury shares
111
13
New loans and financial debt (1)
104804
51805
Repayment of loans and financial debt (2)
(60,683)
(62,689)
Interest paid
(14,580)
(8,830)
Repayment of lease liabilities and associated financial expenses
(23,547)
(13,315)
Net cash flows from financing activities
(5,195)
(34,387)
Total cash flow for the period, continuing operations
(46,561)
(6,513)
Net cash flows from discontinued operations
-
-
TOTAL CASH FLOWS FOR THE PERIOD
(46,561)
(6,513)
Cash and cash equivalents at beginning of the period (2)
169901
123451
Cash and cash equivalents at end of the period (1)
123451
115225
Effect of changes in foreign exchange rates
(112)
1713
(1) of which:
-
Cash and cash equivalents
126166
116343
Short-term bank borrowings and overdrafts (current financial debt)1
(2,715)
(1,117)
(1) To be comparable with the presentation used at June 30, 2023, these lines have been restated less the amount of the factoring debt at June 30, 2022, i.e., €3.2 million. Factoring debt has been excluded from “Cash and cash equivalents at the end of the period” and reclassified under “New loans and financial debt”.
(2) To be comparable with the presentation at June 30, 2023, these lines have been restated less the amount of the factoring debt at December 31, 2021, i.e., €5.4 million. The factoring debt, excluded from cash and cash equivalents at December 31, 2021, was repaid in the first half of 2022.
1 Excluding the scope consolidated in 2022 and 2023 2 The percentages shown in the tables and mentioned in the comments below are calculated based on contributed revenue. 3 At constant scope and exchange rates. 4 At constant scope and exchange rates 5 For technical reasons, Séché Assainissement Rhône-Isère, acquired in January 2023, was not included in the scope of consolidation at June 30, 2023, without any material impact on the consolidated activity, results, and financial position at that date. 6 Free cash flow before non-recurring industrial investments, financial investments, dividends, and debt repayment 7 See: Press release of March 6, 2023 8 Excluding the scope consolidated in 2022 and 2023 9 Free cash flow before financing of development investments, financial investments, dividends, and before repayment of debt. 10 See paragraph 1.1.2 “Definitions.” 11 Free cash flow before non-recurring industrial investments, financial investments, dividends, and repayment of financial debt.
View source version on businesswire.com: https://www.businesswire.com/news/home/20230911355026/en/
SÉCHÉ ENVIRONNEMENT
Analyst/Investor Relations Manuel Andersen Head of Investor Relations m.andersen@groupe-seche.com +33 (0)1 53 21 53 60
Press and Media Anna Jaegy Communications Division a.jaegy@groupe-seche.com +33 (0)1 53 21 53 53
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