During FY 2022, Span recorded an increase in sales revenue of 12% YoY, strong EBITDA growth of 64.1%, and a net profit increase of more than 2x.
The total consolidated revenue of Span increased by 12% (or HRK 93m) YoY. Of this, operating revenue grew by HRK 62.5m, of which revenues in the segment of IT services with high added value increased by HRK 100.7m, whereas revenues in the segment of software asset management and licensing recorded a decline of HRK 38.2m. The decline in revenues comes from the fall of revenue in the Ukrainian market given that Microsoft has enabled Span’s users in Ukraine the use of its products and services without compensation, in the period from 1st April until 12th 31st December 2022. Consequently, TOV Span (subsidiary in Ukraine) reported a write-off of debts towards Microsoft – reflecting in HRK 30.5m of Other revenues.
Breaking the revenue down into segments, the largest absolute increase was recorded by Infrastructure Services, Cloud & Cyber Security, which increased by HRK 40.4m, or 49% YoY. Following them, we have Service Center Management and Technical Support, which increased by HRK 32.7m, or 35% and Software and Business Solution Development, which increased by HRK 27.6m, or 62% YoY.
Meanwhile, OPEX grew by HRK 69.6m (or 9.3% YoY) and amounted to HRK 816.8m. Of this, Staff costs increased the most, by HRK 55.7m, or 40.2% YoY. This came as a result of a much higher number of employees. Further, we emphasize that the growth in staff expenses follows an increase in revenues in the segment of IT services with high added value. Higher growth in staff expenses is somewhat of CAPEX for an IT company like Span, which is something that should be considered when looking at staff expenses – it should not be “just” be considered as a pressure on margin, rather than an investment. The average number of employees in the FY 2022 amounted to 704, which is an increase of 31.1%, or 167 new employees YoY on average. As expected, most of the newly employed were hired in the mentioned high-added value segments. Finally, COGS slightly decreased by 5.3% of HRK 30.6m.
EBITDA increased significantly, growing by HRK 27.3m or 64.1% compared to 2021, mainly as a result of higher revenue from IT services with high-added value, which is something that the Company wants to focus on. Further, below the operating level, the net financial result amounted to HRK -1.4m (from a net gain of HRK 1m in 2021) due to FX losses of HRK 7.5m. Overall, the Group managed to increase EBT by as much as 75.7% YoY, amounting to HRK 49m.
Span key financials (2022 vs. 2021, HRKm)
Source: Span, InterCapital Research
Moving on to the balance sheet, the total assets of Span on 31 December 2022 amounted to HRK 414m, an increase of 17.7% YoY. This was mainly driven by growth in Goodwill in the Group’s long-term assets due to the acquisition of Ekobit during the second half of the year. This was further amplified by growth in current assets due to higher receivables.
Finally, we note that besides the strong results achieved by the Group, Span established the Cyber Security Center in July with the goal of providing software for cyber protection. This center is the only of its kind in this part of Europe that offers defense from cyber-attacks.
According to the first estimate, in real terms, the Croatian GDP grew by 6.3% YoY and amounted to EUR 57.2bn. Meanwhile, seasonally adjusted quarterly GDP in real terms increased by 0.9% QoQ and 4.2% YoY in Q4 2022.
Looking at the first estimates for the Croatian GDP, released yesterday by the Croatian Bureau of Statistics (DZS), the Croatian GDP grew by 6.3% YoY in real terms during the entire 2022. In terms of the seasonally adjusted quarterly data, in real terms, the GDP increased by 0.9% QoQ, and 4.2% YoY. This would also mean that on a full-year basis, it amounted to EUR 57.24bn, while in Q4 2022, it amounted to HRK 14.05bn.
Breaking the components of the GDP a bit further, on a YoY basis, in 2022 final consumption expenditure increased by 4.5%, and amounted to EUR 45bn. Inside this category, Households and NPISH recorded growth of 5.1%, while the General government increased by 3%. Gross capital formation increased by 13.4% YoY, amounting to EUR 12.9bn, with increases in Gross fixed capital formation of 5.8%, while Changes in inventories recorded growth of more than 160% YoY. Exports of goods and services grew by 25.4% YoY, amounting to EUR 34.7bn while imports of goods and services grew by 25%, amounting to EUR 35.4bn, implying that exports grew faster than imports.
Meanwhile, on Q4 2022 vs. Q4 2021 basis, Final consumption expenditure increased by 2.9% YoY, with Households and NPISH driving an increase of 1.3%, while the General government contributed 6.8% growth. Gross capital formation was even higher on a Quarter-vs-quarter basis, with 13.8% growth YoY, driven by higher Gross fixed capital formation (+9.6% YoY). Exports of goods and services grew by 14.2% YoY, while imports of goods and services grew by 14.6%.
In this estimate, we can see that the Croatian GDP grew across its constituent lines, with household expenditure, investments, and exports/imports especially growing. This is quite encouraging, especially considering the current macroeconomic situation and the developments we are currently seeing, including high inflation rates, and rising interest rates. There are some estimates that in H1 2023, Croatia will enter a technical recession (2 consecutive quarters of GDP decline), but as things are seeming right now, even if this does happen it will be a mild recession at best.
Croatian GDP growth (YoY, %)*
Source: Croatian Bureau of Statistics, InterCapital Research
*Quarterly Gross Domestic Product, seasonally adjusted real growth rate
At the share price before the announcement, this would amount to a DY of 4.5%. Ex-date is set for 27 April 2023.
According to the statement released by Valamar Riviera yesterday, Valamar Riviera’s Supervisory and Management Boards propose the distribution of profit for 2019 with a dividend amounting to EUR 0.20 or HRK 1.51 per share. This indicates a dividend yield of 4.5%. Ex-date is set for 27 April 2023. Finally, a payment date is set for 10 May 2023.
Dividend per share (HRK) & dividend yield (%) (2015 – 2023)
Yesterday, Valamar’s subsidiary Imperial Riviera proposed a dividend payment of EUR 2.07 DPS. At the share price before the proposal, this would amount to a DY of 1.9%.
After its Supervisory Board meeting, the Company announced the Board’s proposals for the distribution of profit. In total, they proposed EUR 2.07 DPS, which at the share price before the announcement would lead to a DY of 1.9%. The proposal is subject to approval at the GSM.
It should be noted that EUR 1.3m is reserved for legal reserves and retained earnings, while EUR 4.7m is proposed to be distributed as dividend payments – partially financed from retained earnings from 2019, 2021, and 2022.
Considering Imperial Riviera operates in the tourism industry like Valamar Riviera, and is a subsidiary of Valamar, the same law for the payment of dividends applies. The outcome for both companies is in line with our expectations, as we did not expect any dividend payment until 2023.
Imperial Riviera Dividend per Share (EUR) and Dividend Yield (%) (2020 – 2023)
Source: Bloomberg, InterCapital Research
At the share price before the announcement, this would amount to a DY of 9.3%.
Today Atlantska Plovidba published the convocation to the General Assembly in which the Management Board proposed the dividend distribution amounting to EUR 5 per share. This indicates a dividend yield of 9.3%.