High-potential SMEs

Egm in the X-ray: iVision Tech finances purchases with minibonds and crowdfunding

The eyewear company will issue two minibonds. One of the bonds will be placed to small savers via crowdfunding

by Valeria Novellini

7 June 2024

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5' min read

Key points

Acquisitions
Growing revenues and ebitda in the first quarter 2024
Two minibond issue announced to finance M&A

5' min read

Where were we? Not even a year has passed since iVision Tech's Euronext Growth Milan debut (3 August 2023) and we are already on our third acquisition. After that of the French high-end eyewear brand Henry Jullien at the end of September 2023 for EUR 150,000, in 2024 the group first entered the lens market by taking over 60% of the Bulgarian Ivilens Ood (with an outlay of EUR 280.000; the transaction was carried out through the subsidiary iVision Tech France Sas, the parent company of the Henry Jullien brand) and then in the electronic components and systems market by taking over 51% of the Reggio Emilia-based Teknoema Srl for €1.02 million.

Acquisitions

Here, it is necessary to point out that the acquisition of Teknoema Srl is specifically functional to the iSee project, iVision Tech's patented innovative prescription eyewear intended for visually impaired and blind people who will be able to verify the spatial positioning of visible objects, the mapping of objects in the scene and the related stereo-acoustic communication, thus enabling them to move around safely in environments.

Hence the need for advanced electronic equipment. To this end, iVision Tech has recently obtained from the Accredia-certified certification body Gcerti the three-year Iso 13485:2016 certification relating not only to the design, production and marketing of 'traditional' frames, spectacles and lenses for prescription spectacles and sunglasses, but also to the production of technological spectacles for the disabled. Precisely the iSee glasses.

The numbers

And with that, one wonders what the effects of such a lively acquisition campaign are on iVision Tech's financial structure. The company closed 2023 with revenues of €9.5 million, a production value of €10.5 million (including about €651,000 in increases in fixed assets for internal work and €949,000 in other income, including non-recurring income of €680,000 from the partial release of the Provision for Risks and Charges to cover estimated future losses needed to start the reindustrialisation of the former Safilo plant in Martignacco).

Ebitda amounted to EUR 2.1 million (on an adjusted basis of the aforementioned non-recurring income of EUR 1.45 million), ebit to EUR 483,000 and net profit to EUR 134,000. There are no comparisons with 2022 as this is the group's first consolidated financial statements. And at the end of 2023, the net financial debt amounted to EUR 2.71 million (Debt/Equity ratio of 0.41 times, thus fully physiological). Prudently, no dividend was distributed from the parent company's net profit of EUR 53,600.

Growing revenues and ebitda in the first quarter 2024

As of 31/3/2024, compared to the same period of 2023 pro-forma (including the figures of Ivilens Ood but not yet those of Teknoema Srl), the group saw revenues rise by 9.9% to EUR 2.44m, production value by 22.9% to EUR 3.23m and ebitda by 10.4% to EUR 0.51m. Net financial debt reached EUR 3.46 million (and based on the equity figure at the end of 2023, the Debt/Equity ratio would have been 0.52 times).

The acquisition of Teknoema Srl is, however, much more financially demanding: EUR 1.02 million, and furthermore, the company had a net financial debt of EUR 2 million at the end of 2023 (in the presence of revenues of EUR 5.5 million, an ebitda of EUR 0.8 million and a net profit of EUR 0.3 million (the latter value, moreover, being higher than that of the iVision Tech group 'ex ante').

The issuance of two minibonds to finance M&A announced

Thus, iVision Tech decided to resort to the issuance of not one but two minibonds, one of which 'traditional' up to EUR 2 million intended for professional investors (unit denomination of EUR 50,000), while the second, up to EUR 5 million, can also be subscribed by the retail public through the crowdfunding modality (minimum denomination of EUR 10,000).

Both bonds have a maximum maturity of 7 years and a floating rate equal to the average of the 6-month Euribor letter rate increased by 290 basis points (this rate currently hovers around 3.755%, resulting in a final rate of approximately 6.655%).

The Fundera portal (controlled by Frigiolini&Partners Merchant) is used for the minibond also intended for the retail public (which will be listed on Euronext Access Milan), but the issue is also reported on the portal of CrowdFundMe, another company of Euronext Growth Milan.

IVision Tech therefore employs an original financial instrument and stands in contrast with the current situation in the minibond market: Azimut Direct's "Minibond Barometer" for the first quarter of 2024 recorded total issues of 60.1 million by 11 issuers, with an average denomination of 5.5 million, an average coupon of 6.86% and an average maturity of 5.8 years. In the same period of 2023, there were 17 issues with a total value of EUR 110.3m, an average denomination of EUR 6.9m, an average coupon of 7.11% and an average maturity of 4.4 years.

In reality, the group's debt level even after the latest acquisitions should not be particularly heavy (adding the outlay for Teknoema Srl to the figure as at 31/3/2024 and a debt of the same in line with the value at the end of 2024 would come to EUR 6.48 million against a net worth of EUR 6.61 million at the end of 2023). However, it must be remembered that, in addition to the promotion of the Henry Jullien brand (iVision Tech also participated with its own stand at the Mido trade fair in February 2024), further investments will be required to complete the iSee project, which of course the non-recurring contribution of 680.000 for the reindustrialisation of the ex-Safilo plant is not eternal and that the labour costs in 2023 (amounting to 4.1 million) benefited from the extraordinary Cig with the cause of the Contratto di Solidarietà, then renewed until 23 June 2024 and therefore the ebitda of the first quarter of 2024 also benefited).

Then there are the warrants, exercisable in the first half of July 2024, 2025 and 2026 respectively at EUR 1.27, EUR 1.39 and EUR 1.53 per new share (1 per warrant). All 'in the money', as iVision Tech's share price is over EUR 1.9 (against an IPO price of EUR 1.15).

Glasses sector bucking the luxury market

Therefore, iVision Tech's main 'challenge' now lies not only in integrating the recently acquired companies, but also in improving profit margins (since the incidence of net financial expenses will necessarily increase). The availability of an own brand, moreover a high-end one, as well as a lens production hub in a country with relatively low labour costs, point in this direction. Fortunately, at the moment the high-end eyewear sector is showing different dynamics than the luxury sector as a whole (which is experiencing a moment of weakness).

In the first quarter of 2024, in fact, the Veneto Congiuntura survey carried out by Unioncamere del Veneto saw, for the eyewear sector, an economic variation in production of +3.2%, an increase in foreign orders of 17.5% and an increase in domestic orders of 7.4%. And although iVision Tech is based in Friuli-Venezia Giulia, the dynamics should not be substantially different.

From being a subcontractor for luxury brands (which of course for contractual reasons cannot be disclosed, but which nonetheless trust the company given that in Q1 2024 the highest revenue growth rate was in Full Account, i.e. the complete processing of the eyewear from design to customer delivery), iVision Tech thus aspires to become a (small) all-round player in the eyewear sector. The launch of iSee could then represent a 'disruptive' factor as it would cover an unattended market niche with high social connotations.

According to a survey conducted in 2023 by the Bhave Institute, in collaboration with the health policy journal Italian Health Policy Brief, a total of 5 million Italians are affected by diabetic retinopathy, maculopathy and glaucoma, all diseases that can lead to blindness or reduced vision. Who knows whether 'good news' might also come from iVision Tech for these people, perhaps on the next World Sight Day, which this year falls on 10 October.