Good afternoon. This is the Chorus Call conference operator. Welcome, and thank you for joining the SeSa Group full year consolidated results as of the thirtieth April two thousand twenty-two conference call. As a reminder, all participants are in listen only mode. After the presentation, there will be an opportunity to ask questions. Should anyone need assistance during the conference call, they may signal an operator by pressing star then zero on their telephone. At this time, I would like to turn the conference over to Ms. Conxi Palmero, IR Manager of SeSa. Please go ahead, ma'am.
Good afternoon. I welcome you to SeSa Group Financial Presentation of Full Year Consolidated Results as of April 30, 2022. On behalf of SeSa, participating Alessandro Fabbroni, who's Chief Executive Officer, Jacopo Laschetti, Group Sustainability Officer, and myself, Investor Relations Officer of SeSa. In the morning, we made available our corporate presentation on SeSa site that we will review following during the conference call. Today, our board of directors approved the 12 months integrated group results, reporting an outstanding set of economic and financial and ESG performance. Alessandro will introduce the key points of the presentation.
Thank you, Conxi, and thanks to all of you for joining our conference call. In the full year 2022, we outperformed average consensus and our long-term track record, achieving revenue growth equal to 17%, human resources increased by 21%, and net consolidated profit growth over 40%, thanks to our great industrial achievements. We continue to develop in sustainable way our human capital, reaching the line of 4,200 employees compared to 3,500 one year ago. We improved our customer set to 35,000 clients, of which over 4,000 abroad, mainly in the DACH area. We boosted our M&A path with 10 acquisition closings January 2022, 350 new people, EUR 70 million of additional revenues with 20% accretive EBITDA margin.
In the full year 2022, all key indicators improved over the rates of our long-term goals. Group revenues achieved EUR 2.4 billion, up by 17.3%, with over 16% increase in value-added distribution sector, 18% improvement in system integration sector, and 25% growth in business services one. Consolidated EBITDA reached EUR 168 million, up by 33%, with an EBITDA margin equal to 7%, up 80 basis points compared to 6.20% as of April 30, 2021. Thanks to positive contribution of all group sectors, the EBITDA increased by 41%, achieving EUR 91 million, with an EBITDA margin equal to around 5% compared to 4% the previous year.
Software and System Integration sector EBITDA was up by 22%, achieving the amount of EUR 68 million, with an EBITDA margin equal to around 12% compared to 11.5% for the previous year. While Business Services sector EBITDA grew by about 100%, with an EBITDA margin equal to 10% compared to around 6% for the previous year. Bottom line, group adjusted EBIT achieved total amount of EUR 82 million, up 42% year-on-year, with an EBIT margin equal to around 3.40% compared to 2.90% for the previous year. Thanks to the group's higher focus on business applications recurrent revenues, we reported also strong improvement of cash flow generation, achieving an operating cash flow of around EUR 150 million, with a 90% EBITDA cash conversion.
Net of investment CapEx and M&A for around EUR 120 million. The net financial position as of April 30, 2022 was active. That means net liquidity and cash for around EUR 245 million, improving by over EUR 50 million compared to around EUR 195 million as of April 30, 2021. In the 12 months under review, we also enlarged our size of operations with several strategic bolt-on M&A, which contributed to annual growth in revenues and profitability for about 60%, with additional EUR 210 million revenues with accretive 12% EBITDA margin, onboarding more than 500 additional human resources. Now, I give again the floor to Conxi Palmero, who will explain us several details about M&A operations and the next August shareholders meeting agenda. Please, Conxi Palmero.
As introduced by Alessandro, in the fiscal year 2022, we boosted our M&A investments that contributed by 60% to the annual growth, confirming our capability to aggregate skills across all business sectors. [inaudible] . In the fiscal 2021, we underlined the great contribution of PM Service, leading Italian player in green technology, Value Added Distribution that achieved in the fiscal 2022 revenue for about EUR 150 million and over 2,000 customers. Since January 2022, we closed 10 new M&As with EUR 70 million revenue contribution, expected in the fiscal 2023, and accretive margin, about 20% EBITDA margin, onboarding 350 skilled human resources.
Among the last corporate acquisitions, we undertook in the VAD Sector. We launched the DACH region coverage, thanks to Brainworks Technology, targeting revenue for EUR 20 million in fiscal 2023, with an EBITDA margin in line with VAD Sector, and 30 skilled human resources with 2,000 additional business partners. In software and system integration sector, we closed 5 small M&A acquisitions. We integrated the digital consulting agency, Adacto, focusing customers on business experience with 75 human resources, EUR 5 million revenue and an EBITDA margin of about 30%. In the cybersecurity segment, we acquired the majority stake of NEF, company with 6.5 million revenue, EBITDA over 20% and 20 human resources.
We launched our skills in collaboration and digital workspace with a 51% stake acquisition of Datef, company with 140 skilled human resources and expected revenue of about EUR 16.5 million, with an EBITDA margin of 12.5%. Last June, we closed the acquisition of Everlast, focused on cloud and data center solutions, with annual revenue of EUR 4 million and 20 skilled human resources. In the last week, we announced majority stake acquisition of Giotto IT, offering valuable services in data center and cloud solution sectors, with EUR 4 million expected revenue and 20% EBITDA margin. In university sector, we enhanced the science of operations and several industrial companies focused on digital platforms and business applications platforms.
On February 22, we closed acquisition of Omigrade Group, key vertical applications for financial services industry, with EUR 10 million annual revenue, 15% EBITDA margin, and around 100 human resources. In May, we launched the deployment of digital platform business unit and the three acquisitions, CUBER Italia, MDE, and E3, combining 50 skilled human resources with 18 in training, with 20% EBITDA margin. We continue to acquire from industry leaders with mid-market companies with skilled human resources, keeping under control over 5x EBITDA multiple central value. We now have mechanisms and progressive residual stake acquisition to commit in the long term with the people of the target companies.
We underline that in the light of the strong results of the fiscal year, our board have proposed to the next shareholders meeting as of August 26th, by second call, to distribute EUR 0.90 per share compared to EUR 0.85 per share, and propose a new Stock Grant Plan of EUR 12 million compared to the previous year Stock Grant Plan that was equal to EUR 6 million.
Thank you, Conxi Palmero, for our M&A program presentation. We closed a great first half of operation. We intend to maintain the same path also in the second half of calendar year 2022. For the first time in our history, in the full year 2022, we presented the group integrated report combining both financial and ESG performance. I'm glad to introduce Jacopo Laschetti, our Group Sustainability Officer, who work a lot in the last months to improve our ESG path and who will describe us our main sustainability programs and achievements. Please, Jacopo, go ahead.
Good afternoon, everybody, and thank you, Alessandro. We closed the full year 2022 with general improvement of our ESG performance, confirming our strong commitment to value generation for all stakeholders. We invested in sustainability and environmental protection through programs for the responsible management of natural resources and the development of services and digital technologies, enabling energy efficiency and production for renewable sources, believing the future growth of companies and organizations will be increasingly based on digital transformation and sustainability. The main goals achieved in the field of ESG Programs focused on three main pillars. First of all, we reported a strong improvement of environmental performance. Reduced emissions per capita down by 31.8% year-on-year, from 1.99 CO2 tons in 2021 to 1.36 CO2 tons in 2022.
We increased the clean energy produced by our photovoltaic systems 1.04 million kWh, up by 314% year-on-year. We increased the share of green electricity purchased from third parties about 90% with the addition of self-produced green energy. We decreased the consumption of water, down 14% year-on-year, natural gas down 11% year-on-year, as well as the waste per capita 0.04 tons in full year 2022 compared to 0.11 tons in full year 2021. On second end, in full year 2022, SeSa Group achieved a great development of human resources, total 4,200 employees, up by 21% compared to year 2021. Concerning its long term growth and development plan, thanks to our quick recruiting programs and M&As industrial pipeline.
In terms of HR initiatives, we pursue intensive talent programs, 607 hiring, up by 51% year-on-year, an investment for skill development with 61,000 training hours, up by 152% year-on-year, enlarging our welfare initiatives to support parenting, diversity, well-being and work-life balance of employees and continuing our programs in favor of diversity and inclusion. In terms of governance of sustainability, we established a group sustainability committee to advise board of directors, targeting the integration of sustainability principles in business strategies. We extended ISO 14001 certification to the main group companies. We improved our EcoVadis rating to silver level and confirmed our United Nations Global Compact membership. For the new fiscal year, we will extend our ESG performance programs for the benefit of all stakeholders. Now, I give the floor again to Alessandro for the final conclusions.
Thank you very much, Jacopo, for our ESG performance presentation. My final considerations about our outlook and our trend in coming quarters. In the last three years period, we reported really strong growth. We moved from 1.5 billion consolidated revenues three years ago, up to 2.4 billion in full year 2022, and from a consolidated EBITDA equal to EUR 74 million in 2019 up to EUR 170 million in the last full year. We close a great full year 2022 with strong industrial achievements and record growth in terms of revenue strength, up 17%, profitability up by 42% and ESG performance with positive trend confirmed overall in the fourth quarter.
Now, our job is to extend this trend to coming year, thanks to our strong competitive advantages and targeting to become the largest Italian system integrator for the middle segment. Under a crucial phase of market evolution, the demand of digitalization remains strong, driven by the main digital transformation trends in security, network infrastructure, cloud, data platform and vertical applications, where SeSa Group has built a unique business model and offering. We are accelerating our M&A path with 10 acquisitions since January 2022 and a great pipeline of additional opportunities, not only in Italy, but also across Europe, in particular in the DACH area, targeting industrial skills and a critical EBITDA margin.
Considering our market position and a positive start to the full year 2023, with around 15% revenue growth in the month of May, we confirm the positive outlook for the full year 2023, with growth rates in line with our long term track record, targeting 11% growth in revenues to EUR 2.65 billion and 20% growth in profitability, targeting EUR 200 million of EBITDA for the full year 2023. We will continue to pursue sustainable long term value generation for all our stakeholders, leveraging on our strong competitive advantages. I thank you for your attention. Now, we open the Q&A final session.
Thank you. This is the conference call operator. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. To remove yourself from the question queue, please press star and two. Please pick up the receiver when asking questions. Anyone who has a question may press star and one at this time. The first question is from Renato Gargiulo with Stifel. Please go ahead.
Yes, good afternoon. Well, my first question is on profitability. Looking at your fiscal year guidance, it may seem a bit conservative, especially in terms of EBITDA margin, meaning that the bottom range will be in line with the last year. I was wondering what could be the main drivers looking forward for the next year, also in terms of the segments. Do you expect still a pretty strong performance in terms of margin improvement from VAD, or can we assume a stronger contribution from Software System Integration services going forward?
The second question is more general one. Looking at the current business trends, can you give us any indication about the start to the new fiscal year? If it's a good start, and if you are seeing any kind of, let's say, slowdown related to the macro trend for some of your customers or some of your end markets. Third and last question is on M&A. You were recently pointing also in a recent press interview that you confirmed that you should look also to Germany and Central Europe in there for potential new acquisitions. How is the competitive scenario there?
Are you seeing many opportunities, and also in terms of valuation, if we can assume a similar policy like in your domestic Italian market? Thank you.
Renato, thanks for your questions. First of all, about our guidance for the full year 2023, as usual, we prefer to stay conservative at the beginning of the year. We are working a lot. The start of the new fiscal year is really positive with growth in revenues of over 15%, that is the month of May. We intend to leverage our competitive advantages to continue to work in the long-term view. When we approve the first quarter results mid-September, we evaluate again the guidance and the forecast. We consider achievable the guidance of 11% growth in revenues and around 20% growth in profitability.
We have really great pipeline of new M&As, not only in Italy, but also across Europe and in particular in Germany. Our guidance is considering the M&A that we already closed until now, so that means, if we may able to improve our path of M&A in the second half of calendar year, we may also reevaluate our guidance. We intend to continue to work with the same path in the second half of the calendar year. Also in the terms of evaluation criteria, the competitive scenario is not so different from Italian one.
There are really great fragmentation in the system integration area for the business segment, with a lot of opportunity to aggregate and to try to take on board in the long term, the key people with the same criteria that we already applied in Italy. I remember that we are already operating in Germany with more than 15 legal entities, and so we already experience our capability to aggregate in that area. We intend to continue to work in that direction. We hope to be ready to disclose 2-3 acquisitions in the second half of the calendar year in Germany.
That's very clear. Thank you. Thank you very much.
The next question is from Aleksandra Arsova with Equita. Please go ahead. Miss Arsova, your line is open.
Yeah. Can you hear me?
Yes, please go ahead.
Okay, thank you. A brief follow-up on the previous questions. Just to recap, do you expect margins improvement in the coming months, since we saw a fourth quarter of the full year 2022 with slightly lower margins than the previous nine months? Should we be back to about 7% EBITDA margin for the group or even improving to 7.5%? Just to check for how costs are evolving in terms of especially personnel costs and the other costs.
On the M&A, as far as we understand, you continue with your bolt-on M&A strategy, but maybe I was wondering, are you also looking to start more, let's say, transformational deals, since you are increasing the size, your market share in Italy and you are starting to expand also outside Italy? Thank you.
Thank you, Aleksandra, for your questions. In the Q4, we were more or less in line with our expectation. In terms of marginality, we had a down compared to the average full year and the previous nine months, because we invested, you know, we work without any kind of capitalization of long-term investment. We believe to be able to recover an over 7% EBITDA margin trend in the new fiscal year. In particular, in the full year 2022, we work with a 7.02% EBITDA marginality compared to 6.20% of the previous year. It means 2021 year.
Now we are targeting an EBITDA margin in the range between 7.27% and 7.5%. We expect a positive contribution from Business Services sector and also from Software and System Integration. The other question refers to our trend of market share in Italy. The market share position we have is really different, considering the different sectors. In Software and System Integration in Italy, the market fragmentation continues to be very high. Our market share is around 7%. There is a great opportunity to continue to grow also through bolt-on M&As, and that is an opportunity to improve our size of operation as we did in the last three-year period.
In value-added distribution, we earn a market share of around 45%, that more or less was stable. Last year we achieved a new cluster of business partners and technology areas and ecosystem. In particular, we started operating in the green tech, and we developed more than EUR 150 million revenues in that area. That means we have an opportunity to continue to grow in value-added distribution, thanks to our capability to extend our perimeter of operation to include new technology ecosystems, as we did there with green tech. Outside Italy, we are observing great opportunities in particular in the DACH area, where the fragmentation in particular in information technology industry for the business segment is high.
We have the opportunity to work in the same direction that we made in Italy, starting consolidating the perimeter that we tend to enlarge quarter by quarter in a progressive way, as we did in Italy.
Okay. Just to be sure. No transformational M&A deal at the moment, only bolt-on M&A, right?
No, not transformational deal in. If you consider just single deal. Obviously the path we intend to promote in green tech or in DACH area is if you consider the combination of different consecutive small-mid deals may be considered transformational evolution also for our business model.
Okay, thank you.
Thank you so much.
The next question is from Andrea Randone with Intermonte. Please go ahead.
Thank you. Good afternoon and congratulations for the results. Well, I have been covering this stuff for many years, and I am pretty confident that you set a conservative guidance also this year. At the same time, I wonder if you can help us in providing some elements that make you pretty confident the business is able to grow even in case Italian economy will suffer a bit in 2023. You mentioned a number of factors already in your speech, but if you can give us some other ideas.
Also, if you can comment on a longer term your ambitions of becoming the largest system integrator in the business segment you mentioned before, in terms of potential market you are addressing. The second question is a very small one. I mean, the tax rate was quite low, lower than the year before. I wonder if we can take this level as a proxy also for the current year. Thank you.
Thank you, Andrea, for the question. First of all, my view of Italian scenario is that, despite general worsening of macro scenario, the digital demand and the requirements of digitalization and also sustainability from companies and organizations continue to be really, really strong. Recently the analyst forecast have been improved from 6% to 8% in the two-year period, the coming two-year period, 2023, 2024. That means, despite a worsening of scenario, we are facing new waves of digitalization. Some macro trends such as security or data platform or network infrastructure, or again vertical applications continue to be really, really strong for any mid companies across the different districts in Italy.
I think that we have to continue to work to enlarge our perimeter of operation, in particular in central Europe, in order to become the largest Italian system integrator. As you know that I consider system integrator as operation, not only the perimeter of system integration and software, but also the perimeter of value-added distribution, because what we are delivering to value-added distribution is an integration of technologies towards a channel of more than 15,000 business partners, integrated with education training and technical support services, with more than 75% of technology that is intangible technologies. That means no other but software, enterprise software in the main area of data platform, data management, security.
We are in the right direction, because if we manage to start in significant way the coverage on that region, we may in short term period of time really become the largest system integrator Italian system integrator for the business segment. The final question about the tax rate, it's true that we worked with slightly lower tax rate. That is an advantage of a higher income before taxes. As we improve the size of income before taxes, we may work with a slightly lower year after year taxation.
I'm not sure what the improvements are in terms of basis points, but we in effect may take advantage of this trend also in coming quarters and coming year.
Thank you, Alessandro, and congratulations again.
Thank you, Andrea.
As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, if you wish to ask a question, please press star and one on your telephone. The next question is from Paolo Cipriani, private investor. Please go ahead.
Good afternoon. I have a question regarding the guidance 2023. Is there any implied, like, inflationary cost from, for example, from the personnel in the guidance?
Mr. Cipriani, this is the operator. Can you get closer to the receiver, please, because we cannot hear you.
Okay.
Thank you.
Let me remove the headphone. Regarding the guidance for fiscal year 2023, is there implied any inflationary cost from the personnel point of view? On the cost personnel?
Uh.
Is not considered anything?
Yes. Obviously, we are taking this driver into consideration. Consider that we close the full year 2022 with an average cost personnel more or less in line with the average cost of personnel of the previous year. That is as a result of the good work we did in terms of hiring. We managed to decrease the average age of our personnel and as a result, also to take under control the cost. We work a lot in terms of retaining human resources. We improve a lot of the hours of training up to the line of 50,000 hours every year in the last twelve months.
We also may disclose that we work with a churn rate in the last 12 months around, that is, around 7.5%. Really lower both compared to average IT industry and average Italian telecom sector.
Okay. Thank you.
Thanks for the question.
For any further questions, please press star and one on your telephone. The next question is from Emmanuel Carlier with Quaestor. Please go ahead.
Hi, congratulations on the earnings. A question on value-added distribution. Given the changing macro environment, do you see some softening in this business?
Sorry, may you repeat the question, to be sure to have understood well.
Sure. Concerning the Value Added Distribution, do you see some softening in these activities, maybe selling IT equipment to your customers? Do you see some softening given the macro environment changing?
Our perimeter of operation is mainly focused on enterprise software that is embracing several technology areas from security to data platform or data management or analytics. Several technologies that we offer are offered under as a service program. We added also technology for networking and technology for data center. We recently added in our portfolio green tech technology.
Given the possibility that the economy going through a recession, do you see some signals that there is some softening in selling those products?
The demand of these kind of products is really strong. Also in the beginning of the new fiscal year, we are improving by over 10% our trend. We are working well with a good backlog. Our end users belong mainly to, as I explained, the several Italian districts and the business segments, so we don't cover consumer needs of technology. We observe in our history that we always face very well also period of recession with a continuous path of development.
We are confident to be able to face also a period of slowdown of economic macroeconomic scenario, even though the IT analysts are forecasting until now, so the forecast refers to last week, an improvement of the demand of information technology and digital, and not a decrease, despite the general scenario.
Okay, great. Thank you.
Thanks for the question.
Once again, if you wish to ask a question, please press star and one on your telephone. Mr. Fabbroni, gentlemen, there are no more questions registered at this time. Excuse me, there is a follow-up question from Paolo Cipriani, private investor. Please go ahead.
Yeah. Yeah, just a follow-up on the fiscal year 2022, or especially with the last few quarters. Is there, in the organic revenue, any, you know, price increase on the revenue from the top line? Due to price adjustment, I mean, of the goods that you receive.
Considering that as we mainly distribute. Because the question, I understand, this refers to value-added distribution.
Yeah.
Because we mainly distribute software. The trend of prices was not so unstable. We observed a slight increase, but not a change, a dramatic change in the price. We expect a similar situation in coming quarters. The problem of the supply chain for hardware that were relevant in particular one year ago are more or less disappearing, and they continue to be relevant in the supply chain of networking. Most of our business refer to enterprise software or cloud programs combined with system integration services and consultancy.
Obviously we may also adopt the pricing level, but we are working with the situation that is overall more or less stable in terms of pricing, because we are mainly focused on software.
Okay. Okay. Thank you.
Once again, if you wish to ask a question, please press star and one on your telephone. Mr. Fabbroni, gentlemen, there are no more questions registered at this time. I turn the conference back to you for the closing remarks.
Thank you. Thank you very much for all of you. We are available for providing additional questions together with Conxi, our team of Investor and Stakeholder Relations. Good afternoon to everybody.
Ladies and gentlemen, thank you for joining. The conference is now over. Thank you. You may disconnect your telephones.