Azelis Group NV: FY2022 Results: Strong Momentum Drives 70% Growth in Adjusted EBITA

Rhea-AI Summary

Azelis Group reported a substantial revenue growth of 45.3% year-on-year, reaching EUR 4.1 billion for 2022. Organic growth was 20.1%, with strong contributions from Life Sciences (40.7%) and Industrial Chemicals (53.0%). Adjusted EBITA surged 70.5% to EUR 456.9 million, with a margin of 11.1%. Free Cash Flow rose 141.2% to EUR 438 million, showcasing a conversion rate of 94.8%. The company completed 12 acquisitions, boosting annualized revenue by over EUR 620 million. A dividend of EUR 67.8 million, or EUR 0.29 per share, was proposed. The management expects 8%-10% revenue growth in the medium term.

Positive

• Revenue increased by 45.3% to EUR 4.1 billion.
• Adjusted EBITA rose 70.5% to EUR 456.9 million.
• Free Cash Flow increased 141.2% to EUR 438 million.
• Successfully completed 12 acquisitions, adding over EUR 620 million in annualized revenue.
• Proposed dividend of EUR 67.8 million, implying EUR 0.29 per share.

Negative

• Temporary elevation of effective tax rate due to EUR 25 million non-tax-deductible charges.

2022 Highlights

• Revenue of EUR 4.1bn, representing 45.3% year-on-year growth, of which 20.1% was organic. Both life sciences and industrial chemicals delivered strong growth of 40.7% and 53.0% respectively.
• Adjusted EBITA increased 70.5% year-on-year to EUR 456.9m, translating to an adjusted EBITA margin of 11.1%. Conversion margin expanded by 635 bps to 47.6%.
• Free Cash Flow increased 141.2% to EUR 438.0m, representing a cash conversion rate of 94.8%.
• Adjusted net profit increased 122.9% to EUR 218.9m driven by strong topline growth and margin expansion. Reported earnings per share were EUR 0.91, cash earnings per share were EUR 1.18.
• Temporary elevation of effective tax rate mainly due to EUR 25m charges¹ booked in 2022 which are not tax-deductible.
• 12 acquisitions completed, representing total annualized revenue of over EUR 620m. If all these acquisitions were closed at the beginning of 2022, revenue would have been EUR 4.4bn.
• Leverage ratio was reduced to 2.2x at end December 2022, from 2.7x at end December 2021.
• Top Sustainalytics industry rating with a score of 12.4, the lowest risk assessment in the industry.
• Proposal for a dividend of EUR 67.8m, representing 32% of net profit, and implying EUR 0.29 dividend per share².
• The management remains confident of delivering 8%-10% of revenue growth and 10-15 bps of adjusted EBITA margin per year over the medium term.

ANTWERP, Belgium--(BUSINESS WIRE)-- Regulatory News:

Azelis Group NV (Brussels:AZE):

(in millions of €)		2022		2021		Reported Change		Constant Currency
Revenue		4,109.1		2,827.3		45.3%		40.4%
Gross Profit		960.7		650.1		47.8%		43.0%
Gross Profit Margin		23.4%		23.0%		39 bp		42 bp
Adjusted EBITDA1		484.7		287.8		68.4%		63.4%
Adjusted EBITDA Margin		11.8%		10.2%		162 bp		161 bp
Adjusted EBITA2		456.9		267.9		70.5%		65.5%
Adjusted EBITA Margin		11.1%		9.5%		164 bp		163 bp
Conversion Margin3		47.6%		41.2%		635 bp		623 bp
Adjusted net profit4		218.9		98.2		122.9%		116.6%
Adjusted earnings per share		0.91		0.41		122.8%		113.8%
Net Profit		218.9		70.2		211.7%		205.4%
Cash earnings per share5		1.18		0.47		151.5%		145.2%
Earnings per share		0.91		0.29		214.8%		204.6%
Proposed dividend per share		0.29		0.03		866.7%
Operating Cash Flow		458.9		205.5		123.4%
Free Cash Flow6		438.0		181.6		141.2%
FCF Conversion ratio7		94.8%		67.1%		2771 bp
Net Working Capital / Revenue normalized for acquisitions8		13.8%		15.3%		-152 bp
Leverage Ratio		2.2		2.7		-19.2%

1		Adjusted EBITA before depreciation of property, plant and equipment
2		Operating profit or loss before amortization and impairment of intangible assets and excluding adjustments
3		Adjusted EBITA / Gross profit
4		Adjusted for one-off cash and non-cash costs related to the IPO
5		Result for the year before amortisation and impairment of intangible assets divided by the weighted average number of outstanding shares
6		Adjusted EBITDA less lease payments, plus changes in Net Working Capital, plus changes in other assets, liabilities and provisions, less net capital expenditures
7		Free Cash Flow divided by Adjusted EBITDA less lease payments
8		Net Working Capital/Revenue including those from acquisitions for the full period

Comment from Dr. Hans Joachim Müller, CEO: “I am proud to present another strong set of results for 2022. We achieved revenue of EUR 4.1bn and adjusted EBITA of EUR 457m, representing 45% revenue growth and 164 bp margin expansion.

Our results demonstrate the progress made towards our growth agenda, with market share gains and principal mandate wins reflected in the 20% organic growth achieved during the year. We also continued to participate in the ongoing industry consolidation with the acquisition of 12 companies across different regions, expanding our footprint and strengthening our lateral value chain in many end markets worldwide. Furthermore, in-line with our objective to be the industry reference in digitalization, we successfully rolled out more than 100 customer portals during 2022, as well as 14 e-labs, and continued the development of partner portals for our largest suppliers. Furthermore, we reinforced our technical and laboratory capabilities with the opening of the group’s Regional Innovation Center for Food & Nutrition in Singapore and a Competence Center for Meat & Meat Alternatives in Poland. We are pleased to have been recognized for our commitment to innovation with three different industry awards in 2022³. Lastly, we are proud to have received the top industry ranking for 2023 from Sustainalytics, reflecting our ongoing efforts to contribute to a more sustainable world.

These achievements would not have been possible without the commitment and hard work of our Azelis colleagues around the world. I am grateful to work alongside such dedicated professionals, who have consistently demonstrated resilience and ability to deliver regardless of challenges.

We have a solid, resilient business and have demonstrated in 2022 again that we are successful even in a challenging, fast-changing economic environment. Therefore, I remain confident in achieving our objective of delivering 8-10% revenue growth and 10-15bps of margin expansion per year over the medium term.”

RESULTS PRESENTATION BY MANAGEMENT

The management of Azelis invites you to a webcast at 10:00 CET to discuss our full year results, as well as operating trends and outlook for 2023. Please click here to view the webcast.

OPERATIONAL REVIEW

(in millions of €)		2022		2021		F/X Translation		M&A Growth Contribution		Organic Growth		Total Growth
EMEA		1,811.6		1,232.3		-1.3%		21.3%		27.0%		47.0%
Americas		1,549.9		1,164.2		11.5%		10.7%		11.0%		33.1%
Asia Pacific		747.5		430.8		5.1%		43.2%		25.3%		73.5%
Group Revenue		4,109.1		2,827.3		4.9%		20.3%		20.1%		45.3%
EMEA		432.9		292.8		-1.4%		17.5%		31.7%		47.8%
Americas		385.2		270.9		11.4%		14.6%		16.2%		42.2%
Asia Pacific		142.6		86.2		4.8%		32.1%		28.5%		65.4%
Group Gross Profit		960.7		650.1		4.8%		18.2%		24.8%		47.8%
EMEA		215.4		125.3		-2.4%		22.4%		51.9%		71.9%
Americas		211.9		137.6		11.2%		18.8%		23.8%		53.9%
Asia Pacific		58.1		29.6		4.2%		42.0%		49.9%		96.1%
Adjusted EBITA1		456.9		267.9		5.1%		24.7%		40.7%		70.5%

1

Total Adjusted EBITA includes Holding companies

Azelis achieved revenue of EUR 4.1bn, an increase of 45.3% compared to the prior year (+40.4% in constant currency), supported by positive industry trends as well as the benefits from the group’s growing footprint and increased scale. Both Life Sciences and Industrial Chemicals delivered strong results driven by volume growth and positive pricing trends. Revenue from Life Sciences increased by 40.7% to EUR 2.5bn, representing 60% of total group revenue, while Industrial Chemicals delivered revenue of EUR 1.6bn, an increase of 53.0% versus the prior year.

The 20.1% organic growth generated for the year reflects robust demand across most of the business. Revenue growth contribution from acquisitions was 20.3%, while FX represented a 4.9% revenue tailwind.

(in millions of €)		Q4 2022		Q4 2021		Reported Change		2022		2021		Reported Change		Constant Currency
Revenue		440.6		338.0		30.4%		1,811.6		1,232.3		47.0%		48.3%
Gross Profit		102.2		79.41		28.7%		432.9		292.8		47.8%		49.2%
Gross Profit Margin		23.2%		23.5%1		-29 bp		23.9%		23.8%		13 bp		15 bp
Adjusted EBITDA		48.0		32.9		45.9%		226.8		134.1		69.1%		71.5%
Adjusted EBITDA Margin		10.9%		9.7%		116 bp		12.5%		10.9%		163 bp		176 bp
Adjusted EBITA		44.4		30.6		45.3%		215.4		125.3		71.9%		74.3%
Adjusted EBITA Margin		10.1%		9.0%		104 bp		11.9%		10.2%		172 bp		184 bp
Conversion Margin		43.5%		38.5%1		496 bp		49.8%		42.8%		696 bp		742 bp

1

Q4 2021 of EMEA includes reclassification in Azelis’ income statement 2021 since the publication (in March 2022) of Azelis’ Annual Report 2021, with no impact on previously reported Adjusted EBITDA and Adjusted EBITA. Q4 2021 previously reported Gross Profit, Gross Profit Margin and Conversion Margin were EUR 82.3m, 24.3% and 37.2%, respectively. Refer to p. 120 of the 2021 Annual Report and p. 24 of the H1 2022 Interim Financial Report.

Revenue in EMEA rose 30.4% to EUR 440.6m in the fourth quarter, bringing full year 2022 revenue to EUR 1,811.6m, representing a year-on-year increase of 47.0%, of which 27.0% was organic. Revenue growth contribution from acquisitions was EUR 262.9m, representing 21.3% of revenue growth for the full year, while FX headwinds reduced reported revenues by 1.3%. Our Life Sciences business benefitted from positive momentum, notably in Food & Nutrition and in Personal Care. The recovery in the Pharma business, as well as the uplift in Agricultural & Environmental Solutions also supported the business in the second half of the year. The group’s Industrial Chemicals activities in the region benefitted from positive pricing momentum and our increased footprint.

In the first half of 2022, Azelis completed the acquisition of Umongo, a leading specialty distributor active in L&MWF (Lubricants & Metalworking Fluids) in South Africa; Whitchem, a specialty distributor in CASE and AM&A (Advanced Materials & Additives) in the UK; and Tunçkaya, a leading distributor of specialty food ingredients and additives in Turkey. In the second half of the year, Azelis further accelerated its growth strategy in the region with four more acquisitions. In October, we completed the acquisition of Chemical Partners, a specialty chemicals distributor active in the CASE and AM&A markets in Africa and the Middle East. We also closed the acquisition of the specialty lubricant distribution assets of Ak-taş in Turkey, and Eurotrading, a leading distributors of specialty chemicals to the personal care market in Italy. Finally, in November, Azelis completed the acquisition of Dagalti, a specialty chemicals distributor active in the Turkish AM&A market. These companies generated combined annual revenue of over EUR 330m for the full year 2022.

Gross profit grew 28.7% to EUR 102.2m in the fourth quarter, bringing the full year 2022 gross profit to EUR 432.9m, representing a year-on-year increase of 47.8%, of which 31.7% was organic, reflecting continued efficiency improvements in our pricing strategy as we leverage our growing scale. Adjusted EBITA grew 71.9% to EUR 215.4m, driving a 172 bp margin expansion to 11.9%. The margin expansion during the year implies a 696 bp increase in conversion margin, supported by the benefits of continuous efficiency programs.

(in millions of €)		Q4 2022		Q4 2021		Reported Change		2022		2021		Reported Change		Constant Currency
Revenue		351.0		308.7		13.7%		1,549.9		1,164.2		33.1%		21.7%
Gross Profit		84.5		76.51		10.5%		385.2		270.9		42.2%		30.8%
Gross Profit Margin		24.1%		24.8%1		-70 bp		24.9%		23.3%		158 bp		159 bp
Adjusted EBITDA		46.0		38.7		18.7%		221.1		143.7		53.8%		42.6%
Adjusted EBITDA Margin		13.1%		12.5%		55 bp		14.3%		12.3%		192 bp		247 bp
Adjusted EBITA		43.4		37.0		17.3%		211.9		137.6		53.9%		42.7%
Adjusted EBITA Margin		12.4%		12.0%		38 bp		13.7%		11.8%		185 bp		187 bp
Conversion Margin		51.3%		48.4%1		298 bp		55.0%		50.8%		420 bp		428 bp

1

Q4 2021 of Americas includes reclassification in Azelis’ income statement 2021 since the publication (in March 2022) of Azelis’ Annual Report 2021, with no impact on previously reported Adjusted EBITDA and Adjusted EBITA. Q4 2021 previously reported Gross Profit, Gross Profit Margin and Conversion Margin were EUR 79.5m, 25.8% and 46.5%, respectively. Refer to p. 120 of the 2021 Annual Report and p. 24 of the H1 2022 Interim Financial Report.

Revenue in the Americas increased 13.7% to EUR 351.0m in Q4, bringing revenue in FY 2022 to EUR 1,549.9m, representing year-on-year growth of 33.1%. The group’s activities in the Americas generated 11.0% organic growth, as continued pricing strength offset some of the impact of the destocking in the flavors & fragrance business. Revenue growth contribution from acquisitions was EUR 124.2m, contributing 10.7% of revenue growth, and F/X translation represented an 11.5% tailwind in 2022.

During the year, Azelis entered South America with the acquisition of Rocsa, a specialty chemical distributor active in both Life Sciences and Industrial Chemicals markets in Colombia, providing Azelis the platform to accelerate its footprint expansion in the region. Rocsa generated annual revenue of over EUR 120m for the full year 2022.

Gross profit increased by 10.5% in the fourth quarter, driving full year 2022 gross profit to EUR 385.2m, a step-up of 42.2% from the prior year, out of which 16.2% was organic. The gross profit expansion in the region was driven by the positive pricing trends, which offset some of the mix effect from new activities in South America and the temporary impact of destocking in flavors & fragrances in the US. Adjusted EBITA grew 53.9% to EUR 211.9m, resulting in a conversion margin expansion of 420bp to 55.0% largely due to continuing efficiency gains.

(in millions of €)		Q4 2022		Q4 2021		Reported Change		2022		2021		Reported Change		Constant Currency
Revenue		209.7		144.4		45.2%		747.5		430.8		73.5%		68.4%
Gross Profit		38.0		27.41		38.9%		142.6		86.2		65.4%		60.6%
Gross Profit Margin		18.1%		18.9%1		-83 bp		19.1%		20.0%		-94 bp		-88 bp
Adjusted EBITDA		16.8		9.4		79.4%		64.5		33.7		91.3%		87.0%
Adjusted EBITDA Margin		8.0%		6.5%		153 bp		8.6%		7.8%		80 bp		86 bp
Adjusted EBITA		15.1		8.1		86.2%		58.1		29.6		96.1%		91.9%
Adjusted EBITA Margin		7.2%		5.6%		159 bp		7.8%		6.9%		90 bp		96 bp
Conversion Margin		39.8%		29.7%1		1012 bp		40.8%		34.4%		638 bp		658 bp

1

Q4 2021 of Asia Pacific includes reclassification in Azelis’ income statement 2021 since the publication (in March 2022) of Azelis’ Annual Report 2021, with no impact on previously reported Adjusted EBITDA and Adjusted EBITA. Q4 2021 previously reported Gross Profit, Gross Profit Margin and Conversion Margin were EUR 29.9m, 20.7% and 27.1%, respectively. Refer to p. 120 of the 2021 Annual Report and p. 24 of the H1 2022 Interim Financial Report.

In APAC, revenue grew 45.2% to EUR 209.7m in the fourth quarter, resulting in full year 2022 revenue of EUR 747.5m, representing year-on-year growth of 73.5%, of which 25.3% was organic. Demand held strong across most of the region, mitigating the slower growth in China during the year. In 2022, revenue growth contribution from acquisitions was EUR 185.9m, representing 43.2% of growth, while F/X provided a 5.1% growth uplift.

During the year, the group completed four acquisitions in Asia Pacific. In February, Azelis closed the acquisition of Catalite in Thailand, and in May, Azelis completed the acquisition of Chemo India. The acquisition of ChemSol in Malaysia was closed in September, and Azelis created a global platform for flavors and fragrances with the acquisition of Ashapura Aromas in India. These companies generated total combined annual revenue of EUR 170m in 2022.

Gross profit in Asia-Pacific increased 38.9% to EUR 38.0m in the fourth quarter, and full year gross profit to EUR 142.6m, representing year-on-year growth of 65.4%, of which 28.5% was organic. The 94 bp gross profit margin contraction was due to the mix effect from the first-time-time inclusion of acquisitions, as well as the slower activities in China during the year. Despite this, adjusted EBITA grew 96.1% year-on-year to EUR 58.1m, representing a 90 bp EBITA margin expansion, and conversion margin of 40.8%, translating to a 638 bp conversion margin step-up in 2022.

		Q4 2022		Q4 2021		Reported Change		2022		2021		Reported Change		Constant Currency
Adjusted EBITA (in millions of €)		-6.1		-8.3		-26.3%		-28.5		-24.7		15.5%		15.5%
As % of Group Revenues		-0.6%		-1.1%		47 bp		-0.7%		-0.9%		18 bp		14 bp

Operating costs at the group’s holding companies, which relate to the Group’s non-operating entities as well as the headquarters in Belgium, were EUR 28.5m in 2022, compared to EUR 24.7m in the previous year. Relative to total group revenue, operating costs at the Group’s holding companies were reduced from 0.9% to 0.7%.

OUTLOOK

Azelis' strategy of driving growth is underpinned by a consistently strengthening lateral value chain, supported by continuous investments in innovation capabilities and digitalization, as well as a commitment to sustainability to create long-term value. In line with this, the management is positive that it should be able to deliver 8-10% of revenue growth and 10-15 bps adjusted EBITA margin expansion per year over the medium-term.

FINANCIAL REVIEW

Revenue

(in millions of €)		2022		2021		F/X Translation		M&A Growth Contribution		Organic Growth		Total Growth
Revenue		4,109.1		2,827.3		4.9%		20.3%		20.1%		45.3%
Gross Profit		960.7		650.1		4.8%		18.2%		24.8%		47.8%
Adjusted EBITA		456.9		267.9		5.1%		24.7%		40.7%		70.5%

(in millions of €)		Q4 2022		Q4 2021		Reported Change		2022		2021		Reported Change		Constant Currency
Life Sciences		613.8		498.6		23.1%		2,474.6		1,758.9		40.7%		36.3%
Industrial Chemicals		387.5		291.0		33.2%		1,634.5		1,068.4		53.0%		47.2%
Revenue		1,001.4		789.6		26.8%		4,109.1		2,827.3		45.3%		40.4%
Gross Profit		224.7		183.2		22.7%		960.7		650.1		47.8%		43.0%
Gross Profit Margin		22.4%		23.2%		-76 bp		23.4%		23.0%		39 bp		42 bp
Adjusted EBITDA		105.0		73.0		43.8%		484.7		287.8		68.4%		63.4%
Adjusted EBITDA Margin		10.5%		9.2%		124 bp		11.8%		10.2%		162 bp		161 bp
Adjusted EBITA		96.8		67.4		43.7%		456.9		267.9		70.5%		65.5%
Adjusted EBITA Margin		9.7%		8.5%		113 bp		11.1%		9.5%		164 bp		163 bp
Conversion Margin		43.1%		36.8%		630 bp		47.6%		41.2%		635 bp		623 bp
Net Profit		8.2		20.3		-59.3%		218.9		70.2		211.7%		205.4%
Adjusted Net Profit								218.9		98.2		122.9%		116.6%

Revenue increased 26.8% in the fourth quarter to EUR 1.0bn, driving full year 2022 revenue to EUR 4.1bn, a year-on-year increase of 45.3%, of which 20.1% was organic. The organic growth deceleration in the final quarter was in-line with the historical trend in the business as economic activities generally unwind for the holiday season. Revenue growth contribution from acquisitions was EUR 573m, representing a topline growth contribution of 20.3%, while FX resulted in a 4.9% currency tailwind for the full year.

Revenue in Life Sciences increased by 40.7% to EUR 2.5bn for the full year, supported by positive trends and market share gains in most end markets, as well as revenue growth contribution from acquisitions. Demand in Food & Nutrition and Personal Care remained solid throughout the year, especially in EMEA and Asia Pacific. In North America, revenue growth deceleration in the second half of the year was driven by destocking in flavors & fragrance. In Industrial Chemicals, revenue increased 53.0% to EUR 1.6bn for the full year, driven by the group’s expanding footprint in the segment through recent acquisitions and a positive pricing environment.

Across our geographic markets, organic growth remained strong, with EMEA, Americas and APAC delivering 27.0%, 11.0% and 25.3% organic growth respectively.

Profitability

In the fourth quarter, gross profit increased by 22.7%, bringing the full year 2022 gross profit to EUR 960.7m, representing a year-on-year increase of 47.8%, of which 24.8% was organic. Gross profit margin expanded by 39 bp to 23.4% driven largely by the mix effect from the group’s growing footprint and from continued price optimization initiatives.

Adjusted EBITA increased by 70.5% to EUR 456.9m, implying a 164 bp margin expansion. Strong topline growth and increasing scale efficiencies offset the impact of supply chain pressures and the mix effect from recent acquisitions. The group’s ability to leverage its scale is reflected in the 635 bp expansion in conversion margin during the year.

Net financial expense for the year was EUR 73.8m, a 15.7% reduction from the prior year. The EUR 6.0m financial income relates to the adjusted fair value of certain financial instruments. Financial expense was reduced by 9.6% to EUR 79.8m, as the 25.9% reduction in interest expense was partially offset by higher financial costs driven by an increase in the fair value of put options from previous acquisitions, as well as the impact of hyperinflation notably in Turkey.

Tax expense in 2022 was EUR 95.8m, implying an effective tax rate (ETR) of 30.4%, versus 41.6% in the previous year. The high ETR was largely due to the costs related to the fair value adjustment of acquisition-related instruments and hyperinflation accounting, which are not tax-deductible.

Net profit for 2022 was EUR 218.9m, an increase of 122.9% compared to the adjusted net profit for 2021. Reported earnings per share for the period is EUR 0.91, while cash earnings per share was EUR 1.18, representing a year-on-year increase of 151.5% compared to 2021.

(in millions of €)		2022		2021
Operating Profit		388.4		207.8
Net Financial Expense		-73.8		-87.5
Financial Income		6.0		0.7
Financial Expense		-79.8		-88.3
Interest Expense on Bank Loans and Overdrafts		-34.8		-46.9
Interest Lease Commitments		-3.4		-3.0
Accelerated Amortization of Transaction Costs due to IPO		0.0		-19.6
Other Financial Cost		-41.6		-18.8
Share of associates' result		0.1		-0.1
Profit Before Tax		314.7		120.2
Tax Expense		-95.8		-50.0
Net Profit		218.9		70.2
One-off Cash and Non-cash Charges due to IPO:
IPO Cost		0.0		8.4
Accelerated Amortization of Transaction Costs due to IPO		0.0		19.6
Adjusted Net Profit		218.9		98.2
Earnings per share		0.91		0.29
Adjusted earnings per share		0.91		0.41
Cash earnings per share		1.18		0.47

Cash flow and financing

(in millions of €)		2022		2021
Operating Cash Flow		458.9		205.5
Free Cash Flow		438.0		181.6
FCF Conversion		94.8%		67.1%
Net Working Capital / Revenue normalized for acquisitions		13.8%		15.3%
Net Indebtedness		1,161.9		870.7
Net Leverage		2.2		2.7

Net working capital to revenue normalized for acquisitions was 13.8% at the end of 2022, compared to 15.3% at the end of December 2021, driven by significant improvements in working capital management, as reflected in the reduction in working capital from 56 days to 50 days of revenue. The improvement in working capital also reflects the progress Azelis is making in integrating acquired companies, as financial policies align with the group. The working capital intensity of recent acquisitions also show modest improvement, although still well above group level.

Operating cash flow more than doubled to EUR 458.9m in 2022, supported by the significant improvement in working capital efficiency. Capital expenditure was EUR 18.4m, broadly stable compared to the prior year, as Azelis continues to invest in digital and IT infrastructure, and laboratory network to support long-term growth.

Free cash flow in 2022 was EUR 438.0m, representing a free cash flow conversion ratio of 94.8%, versus 67.1% in the 2021, which was impacted by higher investment in working capital to prepare for the unprecedented growth in the first quarter of 2022. The expansion in free cash flow conversion reflects our profit growth and the significant working capital improvement during the year, bringing the group closed to historical trends.

At the end of December 2022, net debt was EUR 1.2bn and the leverage ratio stood at 2.2x, versus 2.3x at the end of June 2022 and 2.7x at the end of December 2021. At the end of the period, the group had liquidity of EUR 647.2m in cash and unused credit facilities.

POST-CLOSING EVENTS

On the 10^th of January 2023, Azelis completed the acquisition of Smoky Light, a distributor of smoke ingredients in the Benelux market. On the 31^st of January 2023, we completed the acquisition of Chemiplas, one of the leading distributors of specialty chemicals, plastic raw materials and ingredients in Australia, New Zealand and the Pacific Islands.

On the 24^th of January 2023, we announced that we have signed an agreement to acquire Lidorr Elements, one of Israel's leading specialty chemical distributors in crop-protection, industrial materials, and care & nutrition. Closing of the transaction is expected in the second quarter of the year.

FINANCIAL CALENDAR

Date				Event
May 12th, 2023				Q1 2023 trading update
June 8th, 2023				Annual General Meeting 2023
August 3rd, 2023				Half year 2023 results
November 9th, 2023				Q3 2023 trading update

ALTERNATIVE PERFORMANCE MEASURES

Throughout its financial communication (Annual and Interim reports, website, press releases, presentations, etc.), Azelis presents certain financial measures and adjustments that are not in accordance with IFRS, or any other internationally accepted accounting principles. Certain of these measures are termed 'alternative performance measure' ("APM's") because they exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure calculated and presented in accordance with IFRS, or are calculated using financial measures that are not calculated in accordance with IFRS. For more information regarding these APM's, including definitions and calculation methodology, refer to the section 'Alternative performance measures' in the in the Annual Report 2022.

APPENDIX

All figures and tables contained in the appendix have been compiled in accordance with the IFRS accounting and valuation principles, as adopted within the European Union. The applied valuation principles, as published in the latest annual report at 31 December 2022, were applied for the figures included in this press release.

The statutory auditor, PwC Bedrijfsrevisoren BV / Reviseurs d’Entreprises SRL, represented by Peter Van den Eynde, has completed the audit of the Azelis Group NV consolidated financial statements, which comprise the consolidated statement of financial position as at 31 December 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies and other explanatory information, and which is characterized by a consolidated statement of financial position total of EUR 4,976,725 thousand and a profit for the year of EUR 218,879 thousand.

The statutory auditor has issued an unqualified report without emphasis of matter paragraph dated 1 March 2023 on the company’s consolidated accounts as of and for the year ended 31 December 2022, and has confirmed that the accounting data reported in the accompanying press release is consistent, in all material respects, with the accounts from which it has been derived.

For the annual report 2022 and the full audit report of the statutory auditor we refer to Azelis' website.

Consolidated income statement for the period ended 31 December

(in thousands of €)		2022		2021
Revenue		4,109,102		2,827,295
Other operating income		15,795		8,470
Total income		4,124,897		2,835,765
Costs for goods and consumables		-3,164,155		-2,185,622
Gross profit		960,742		650,143
Employee benefits expenses		-284,952		-232,215
External services and other expenses		-202,632		-150,731
Depreciation of property, plant and equipment		-27,845		-19,901
Amortization of intangible assets		-56,887		-39,483
Operating profit / loss (-)		388,426		207,813
Financial income		6,008		731
Financial expenses		-79,823		-88,278
Net financial expense		-73,815		-87,547
Share of result of associates		59		-68
Profit / loss (-) before tax		314,670		120,198
Income tax income / expense (-)		-95,791		-49,973
Net profit / loss (-) for the period from continuing operations		218,879		70,225
Attributable to:
Equity holders of the parent		213,193		67,756
Non-controlling interests		5,686		2,469
Net profit / loss (-) for the period		218,879		70,225
		in €		in €
Basic earnings per share		0.91		0.29
Diluted earnings per share		0.91		0.29

Consolidated statement of financial position

(in thousands of €)		2022		2021
Assets
Goodwill		2,174,256		1,803,266
Intangible assets		1,170,486		1,004,258
Property, plant and equipment		57,884		53,008
Right of Use assets		96,982		65,582
Investments in associates		235		180
Other financial assets		11,758		1,355
Deferred tax assets		20,605		10,482
Total non-current assets		3,532,206		2,938,131
Inventories		627,735		467,473
Trade and other receivables		538,381		428,950
Income tax receivables		9,963		4,432
Other financial assets		280		1,522
Cash and cash equivalents		268,160		141,293
Total current assets		1,444,519		1,043,670
Total assets		4,976,725		3,981,801
Equity
Share capital		5,680,000		5,680,000
Reserves		-3,701,231		-3,617,020
Retained earnings		192,570		96,817
Unappropriated result		213,193		67,756
Issued capital and reserves attributable to owners of the parent		2,384,532		2,227,553
Non-controlling interests		55,145		23,792
Total equity		2,439,677		2,251,345
Loans and borrowings		1,178,394		840,030
Lease obligations		81,168		54,078
Employee benefit obligations		8,525		8,822
Provisions		4,597		4,127
Other non-current liabilities		98,264		9,655
Deferred tax liabilities		190,755		135,315
Total non-current liabilities		1,561,703		1,052,027
Bank overdrafts		30,412		40,524
Loans and borrowings		125,323		62,604
Lease obligations		20,390		15,200
Provisions		3,544		1,981
Income tax payables		23,989		17,046
Trade and other payables		771,687		541,074
Total current liabilities		975,345		678,429
Total liabilities		2,537,048		1,730,456
Total equity and liabilities		4,976,725		3,981,801

Consolidated statement of cash flows

(in thousands of €)		2022		2021
Cash flows from operating activities
Net profit / loss (-) for the period		218,879		70,225
Adjustments for:
Depreciation, amortisation and impairment expenses		84,733		59,384
Net financial expense		73,815		87,547
Cost of share-based payment		839		-
Expenses related to IPO included in Net profit / loss for the period		-		8,360
Income tax income / expense		95,791		49,973
Share of result of associates		-59		68
Change in inventories		-65,751		-101,373
Change in trade and other receivables and other investments		27,194		-47,901
Change in trade and other payables		22,340		80,395
Change in provisions		1,140		-1,226
Cash flow from operating activities		458,921		205,452
Income tax paid		-90,327		-43,540
Net cash flow from operating activities		368,594		161,912
Cash flow from investing activities
Acquisition of property, plant and equipment and intangible assets		-18,443		-18,288
Acquisition of subsidiaries, net of cash acquired		-553,665		-633,883
Net cash flow from investing activities		-572,108		-652,171
Cash flows from financing activities
Payments of lease obligation		-22,795		-17,263
Proceeds from shareholders for issue of equity		-		930,000
Dividend payment to shareholders of the group		-7,012		-
Purchase of treasury shares		-2,999		-
Expenses related to capital increase (part through equity)		-		-50,525
Expenses related to capital increase (part of operating income)		-		-8,360
Interest paid		-41,175		-72,016
Proceeds from loans and borrowings		640,621		909,653
Repayments of loans and borrowings		-217,377		-1,231,342
Transaction costs related to loans and borrowings		-2,193		-8,338
Other cash flows from financing activities		-6,031		-
Net cash flow from financing activities		341,039		451,809
Net (decrease) increase in cash and cash equivalents		137,525		-38,450
Effect of exchange rate fluctuations on cash held		-546		-477
Cash and cash equivalents minus Bank overdraft at beginning of the period		100,769		139,696
Cash and cash equivalents minus Bank overdraft at December 31		237,748		100,769

NOTES AND DISCLAIMER

Azelis is a leading global innovation service provider in the specialty chemical and food ingredients industry present in 63 countries across the globe with +3,800 employees. Our knowledgeable teams of industry, market and technical experts are each dedicated to a specific market within Life Sciences and Industrial Chemicals. We offer a lateral value chain of complementary products to more than +59,000 customers, supported by +2,700 principal relationships, creating a turnover of €4.1 billion (2022). Azelis Group NV is listed on Euronext Brussels under ticker AZE.

Across our extensive network of more than 60 application laboratories, our award-winning staff help develop formulations and provide technical guidance throughout the customers’ product development process. We combine a global market reach with a local footprint to offer a reliable, integrated and unique digital service to local customers and attractive business opportunities to principals. EcoVadis Platinum rated, Azelis is a leader in sustainability. We believe in building and nurturing solid, honest and transparent relationships with our people and partners.

Impact through ideas. Innovation through formulation.

This announcement may contain statement relevant to Azelis Group NV (the “Company”) and/or its affiliated companies (collectively “Azelis” or the “Azelis Group”) which are not historical facts and are hereby identified as “forward-looking statements”. Such forward looking statements, include, without limitation, those relating to the future business prospects, revenue, working capital, liquidity, capital needs, interest costs and income, in each case relating to the Azelis Group.

The forward-looking statements and estimates contained herein represent the judgement of and are based on the information available to the Company’s management as of the date of this announcement. They involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward looking statements.

These forward-looking statements should not be considered as guarantees for future performance of the Azelis Group and should, therefore, be considered in light of various important factors that could cause actual results to differ materially from estimates or projections contained in the forward looking statements. These include without limitation economic and business cycles, the terms and conditions of the Azelis’ financing arrangements, foreign currency rate fluctuations, competition in Azelis’ key markets, acquisitions or disposals of businesses or assets and trends in Azelis’ principal industries or economies.

The foregoing list of important factors is not exhaustive. When considering forward looking statements, careful consideration should be given to the foregoing factors and other uncertainties and events, as well as factors described in any other document published by the Company with the Belgian Financial Services and Markets Authority (“FSMA”) or on the Azelis website (www.azelis.com/investor-relations) from time to time, including the prospectus related to the admission to trading of the securities of Azelis Group NV on the regulated market of Euronext Brussels dated 14 September 2021. No undue reliance should be placed on such forward looking statements which are relevant only as of the date of this announcement. Except as required by the FSMA, Euronext or otherwise in accordance with applicable law, the Company undertakes no obligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise.

___________________________
¹ Related to the impact of hyperinflation accounting in Turkey (EUR 7m), and the increase in fair value of put options driven by the outperformance of past acquisitions (EUR 18m)
² Based on 2022 Net Profit attributable to equity shareholders of EUR 213.2m and 233.8m shares outstanding as of 31/12/2022
³ Two Ringier Technology Awards for food & nutrition and personal care, and a bronze at the Sensory Bar awards at in-cosmetics Global 2022.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230301005998/en/

Azelis Investor Relations

+32 3 613 01 27

investor-relations@azelis.com

Source: Azelis Group NV

FAQ

What were Azelis Group's revenue figures for 2022?

Azelis Group reported revenue of EUR 4.1 billion for 2022, reflecting a 45.3% increase from the previous year.

How did Azelis Group perform in terms of profit in 2022?

The adjusted EBITA for Azelis Group increased by 70.5% to EUR 456.9 million, achieving an adjusted EBITA margin of 11.1%.

What is the expected revenue growth for Azelis Group in the medium term?

The management of Azelis Group expects to achieve 8%-10% revenue growth per year over the medium term.

What dividend proposal was made by Azelis Group for 2022?

Azelis Group proposed a dividend of EUR 67.8 million, representing EUR 0.29 per share.

What were the significant achievements of Azelis Group in 2022?

Azelis Group completed 12 acquisitions, leading to an increase of over EUR 620 million in annualized revenue.