Consolidated annual results 2022-2023

                 Paris, 19 October 2023                                             

Consolidated  annual results  2022-2023

TERACT showed good resilience: 

•       Continued work on building a committed retail model

•       Good cash generation despite the macroeconomic environment

Group net income impacted by a non-current and non-cash technical listing service charge of             €91.4 million as part of the combination of InVivo Retail and the 2MX Organic SPAC.

TERACT (Euronext Paris: TRACT, ISIN: FR001400BMH7) is publishing its consolidated results for the financial year ended 30 June 2023^[1] as approved by the Board of Directors at its meeting of 18 October 2023. 

Moez-Alexandre Zouari, Chief Executive Officer of TERACT, stated: “The results for the past year show that TERACT held up well despite persistent macroeconomic pressures. The Group was able to continue generating cash without compromising its ability to invest for its development. With uncertainty around price and cost inflation expected to continue in 2023-2024, TERACT is targeting growth in its business volume primarily through the development of the growing bakery-snacks market and an acceleration of the franchise model and its own-brands in the Garden Centre segment. The Group remains open to alliances and acquisitions that make good business sense, where the market positioning would be relevant and complement the downstream activity of InVivo group by which it is backed.”

Guillaume Darrasse, Deputy Chief Executive Officer of TERACT, stated: “In 2023-2024, TERACT will continue to implement the operational plans put in place last year, involving strict management of inventories and costs, the efficient execution of which has enabled it to reduce the impact of inflationary pressures on its results. Additionally, it will forge ahead with the development of its own-brands with the goal of achieving 24% of revenue this year, thus responding effectively to the purchasing power constraints of our customers.”  

Foreword on the key figures

TERACT’s 2022-2023 consolidated financial statements have been exceptionally impacted by a listing expense as a result of the combination of InVivo Retail with the 2MX Organic SPAC.

This listing expense was recognised as a non-cash listing service charge, of €91.4 million, which was classified under “Other operating income and expenses”.  

Key figures in 2022-2023

Breakdown of revenue by segment 

Financial indicators 

²   Additional information on the length of the 2022-2023 financial year is provided in the press release dated 6 June 2023. 

³   For the purpose of comparability of this indicator, revenue is reconstituted over 12 months. As a reminder, TERACT’s consolidated financial statements for the 2021-2022 financial year covered a period of nine months (1 October 2021 to 30 June 2022) due to the change in closing date for InVivo Retail which was applied in 2022.

The Bio&Co food stores were also restated over 12 months (acquisition by InVivo Retail on 1 June 2022).

⁴   Constant scope restating all changes in the scope of consolidation.

⁵   TERACT’s consolidated financial statements for the 2021-2022 financial year covered a period of nine months (1 October 2021 to 30 June 2022) due to the change in closing date for InVivo Retail which was applied in 2022.

⁶   Defined as current operating income plus the elimination of expenses (or income) related to depreciation/ amortisation or impairment (or reversals of depreciation/amortisation or impairment) of fixed assets.

⁷   Based on net cash flow from operating activities, plus disposals and deductions of property, plant and equipment and intangible assets and after the deduction of acquisition of in property, plant and equipment and intangible assets.

⁸   Restated for the outflow of non-recurring expenses related to the combination transaction in the amount of €11 million.   

Analysis of the 2022-2023 consolidated results

Revenue for the 2022-2023 financial year came to €902.1 million, an increase of +10.9% in reported data and a decrease of -1.9% like-for-like over 12 months versus 2021-2022. 

The consolidated annual revenue for the 2022-2023 financial year of the Garden Centre/Pet Retail business, which includes the Jardiland, Gamm Vert (and Frais d’ICI range), Delbard, Jardineries du Terroir and Noa brands, came to €808.6 million. This represents an increase of +1.7% in reported data and a decrease of -1.8% like-for-like, of which -1.1% in the second half of the year, marked by ongoing macroeconomic pressures. In this highly inflationary environment that also put pressure on purchasing power, TERACT decided to forge ahead and step up the development of its exclusive brands. The penetration rate of its own-brands has thus improved by five points compared with 30 June 2022 (20.6% of the revenue of integrated stores at 30 June 2023).

The e-commerce websites (Gammvert.fr and Jardiland.com) saw further growth during the second half of the year, benefiting from the ongoing rollout of the digital plan.

The consolidated annual revenue of the Food Retail business, which includes the Bio&Co (consolidated over 12 months), Boulangerie Louise (consolidated over 7 months) and Grand Marché La Marnière (consolidated over 7 months) banners, reached €93.5 million. The period was impacted by the integration of Boulangerie Louise and Grand Marché la Marnière and their teams, and by the ongoing overhaul of Boulangerie Louise's offering with a particular focus on snack products. 

Adjusted EBITDA came to €67.5 million in 2022-2023. It was impacted in particular by an increase in inflation across all cost items which did not slow down at the end of the fiscal year. The increase in energy costs was partly offset by the energy savings plan initiated by the Group in September 2022. This notably included the launch of a new platform for the management of electricity consumption, which helped to reduce the latter by 30% versus the previous year. Costs relating to the successful integration of the newly acquired companies and their teams, a priority goal for the Group, and the significant rise in purchasing costs, which were not passed on to selling prices immediately and then only in a limited manner to help preserve purchasing power, also impacted EBITDA. The latter was also impacted by closing effects linked in particular to IFRS consolidation, which explains the difference in relation to the EBITDA estimate of         €75-85 million communicated at the end of July^[2].

Consequently, the adjusted EBITDA margin rate is 7.5%.

Current operating income came to €2.1 million at 30 June 2023. 

There was an operating loss of €90.6 million after factoring in non-current expenses of €92.7 million, mainly attributable to the recognition in 2022-2023 of a non-cash listing service charge of €91.4 million in the context of the combination of InVivo Retail with the 2MX Organic SPAC. 

TERACT made a Group net loss of €106.6 million at 30 June 2023, primarily incorporating the aforementioned impact of the listing expense as part of the combination of InVivo Retail with the 2MX Organic SPAC of €91.4 million (a non-cash listing service charge), a net financial loss of €17.6 million and a tax expense of €2.3 million. The net income from discontinued operations of €3.2 million corresponds to a rotation policy applicable to non-strategic assets. 

Financial structure in 2022-2023

Free cash-flow  

The Group's free cash flow in 2022-2023 was €56.8 million. TERACT chose to focus its financial priorities on recurring cash generation. On the one hand, it maintained sound cost management and, on the other, introduced efficient management of existing inventories. At €33.4 million, investment in operating activities was preserved as part of a rigorous selection process. The difference with the free cash flow estimate of €60-65 million communicated at the end of July¹¹ is due to the aforementioned lag in relation to EBITDA.

Net debt 

The Group had net debt of €447.4 million at 30 June 2023 (of which €222.8 million with its parent company InVivo Group and €225 million in rental liabilities). The change is mainly attributable to the development of the Food Retail activity and in particular the acquisition over the year of two companies (Boulangerie Louise and Grand Marché La Marnière) and their impact in terms of rental payments. 

Outlook

Commitments and outlook concerning CSR

In line with its commitments, in 2023, TERACT will submit a proposal to its Shareholders’ Meeting for a change of status to “société à mission”, with its purpose being “To help make the benefits of nature accessible to all”.  This will entail the Group building and providing access to an offering of products and services that are healthy and responsible, applying operating practices that promote well-being and the environment and mobilising its employees and stakeholders in the regions in order to achieve the Group's societal ambition and meet new consumption expectations. To this end, it will implement and commit to a series of operational objectives that it will also track. The Group’s main CSR objectives over the coming years are as follows^[4]: 

                            Between now and 2025: 

-          50% of managers to be hired through internal promotion (14.7% in 2022-2023)

-          50% less workplace accidents compared with 2020 

-          90% of exclusive own-brand plant-based products of French origin (excluding greenhouse) (83% in 2022-2023) and 50% of plant products from sector commitments (43% in 2022-2023) -              80% of exclusive own-brands with a positive impact (54.4% in 2022-2023) By 2030:

-          10% less water consumption compared with 2022-2023

-          100% of stores accredited an animal welfare label (35% in 2022-2023)

-          70% of waste sorted and recycled (59% in 2022-2023)

-          -46% reduction in greenhouse gas emissions versus 2019-2020 (scopes 1 and 2) (47.6% reduction in 2022-2023). The target has therefore already been achieved for the Garden Centre/Pet Retail scope thanks to the effectiveness of TERACT’s multi-annual energy savings and efficiency plan. 

Operating and financial outlook

Amid persistent macroeconomic pressures in the second half of 2023 (first half of TERACT’s 2023-2024 financial year) and uncertainty as to how the situation will evolve in the first half of 2024 (second half of TERACT's 2023-2024 financial year), the Group is maintaining a prudent approach in order to limit the effects of inflation and reduced purchasing power while also improving the seasonal aspect of its business model in order to generate growth. 

New store openings, particularly in the bakery/snacks line (around ten to be opened between now and June 2024), will enable to bolster revenue in a sector that continues to offer high margins and a strong growth outlook and in which the potential for greater regional coverage is strong. 

TERACT will also continue to roll out its own Garden Centre brands, for which it targets an increase in the penetration rate of 2 to 3 percentage points to 24% of the revenue of integrated stores in 2023-2024. The company will also continue to ensure effective management and optimisation of its store network while pursuing the development of its franchise model. This will be underpinned by an attractive omnichannel model that is a leader in the sector in France, as part of an overhaul of the e-commerce websites and a focus on stores put back at the core of the digital strategy, through the repayment of the revenue

concerned. The strict cost management policy, particularly in relation to energy, will be maintained while the integration of companies acquired during the year is being completed. 

Taking into account these elements, and barring any further deterioration in the environment, TERACT estimates it will generate revenue in 2023-2024 of €900-950 million. 

The ongoing work to control costs and inventories should continue to have a positive impact on free cash flow generation while maintaining a capex level enabling to effectively pursue the company's development. 

In line with the projects undertaken over the past year, TERACT remains open to alliances that make good business sense and which would generate growth, improve the margin and integrate effectively with the upstream/downstream activities of InVivo. 

***

Appendix

1.     Store network 

2.     Sales volume¹³ 

                                                                                                                                                                                     Unaudited figures

¹³  Sales volume and revenue from the brands include the revenue generated by the integrates stores and by the franchised/affiliated stores.

¹⁴  For the purpose of comparability of this indicator, revenue is reconstituted over 12 months. TERACT’s consolidated financial statements for the 2021-2022 financial year covered a period of nine months (1 October 2021 to 30 June 2022) due to the change in closing date for InVivo Retail which was applied in 2022.

¹⁵  Constant scope restating all changes in the scope of consolidation. Excluding affiliates.

3.     Reconciliation of non-IFRS financial indicators 

Adjusted EBITDA  

4.     Consolidated income statement

5.     Consolidated statement of financial position 

6.     Consolidated statement of cash flows 

7.     Provisional agenda of forthcoming events and financial publications  

For the financial year ended 30 June 2023

For the financial year ended 30 June 2024

Event

             15 February 2024 (before market)           H1 revenue

             26 March 2024 (before market)              H1 results

             30 July 2024 (before market)                    Annual revenue

            17 October 2024 (before market)             Annual results

These dates are indicative and are subject to change.

Disclaimer 

This press release may contain forward-looking statements. 

Forward-looking statements are defined as opposed to historical facts and include, but are not limited to, all expectations regarding:

•       Future events such as trends, plans, expectations or objectives;

•       Future business, such as the results, financial condition, performance or strategy of TERACT.

Forward-looking statements are based on the expectations and assumptions anticipated by TERACT's management as of the date of this release and are only valid as of the date they are made. Investors and/or shareholders of TERACT are warned not to place undue reliance on these forward-looking statements, which are, by their nature, subject to risks and uncertainties that may or may not be identified and are beyond the control of TERACT. These risks include, among others, those set forth in the "Risk Factors" section of the Prospectus registered with the Autorité des Marchés Financiers on 30 June 2022 under visa no. 22-248 and available at www.teract.com (under the heading "Investors/Regulatory Information"). As a result, actual results or performance may differ materially from those expressed or implied by such forward-looking statements.

TERACT does not undertake any obligation to update such forward-looking statements, except as required by law and regulation. All forward-looking statements made by or on behalf of TERACT are qualified by this cautionary statement.

About TERACT: 

Since 29 July 2022, TERACT has combined the distribution activities of the InVivo Group (formerly InVivo Retail) and those of the former SPAC 2MX Organic. 

TERACT is a major responsible distribution player in the garden centre and pet retail and food distribution growth markets. Our ambition is to create a unique network of brands combining tradition and modernity, agricultural knowhow and innovation, in-store and digital experiences. TERACT addresses the demand for a new generation of consumption which is synonymous with quality, sustainability and traceability. TERACT regroups the Garden Centre/Pet Retail brands Jardiland, Gamm vert, Delbard, Jardineries du Terroir and Noa as well as the Food Retail brands Boulangerie Louise, Grand Marché La Marnière, Frais d’Ici and Bio&Co. TERACT's majority shareholder is InVivo, one of the    leading     agricultural               and         agri-food   groups      in             Europe. TERACT is listed on the professional segment of Euronext Paris (ticker code: TRACT, ISIN: FR001400BMH7). Further information is available at www.teract.com.  

CONTACTS:

Investors: investors@teract.com 

Media: media@teract.com