Quarterly Report • Aug 27, 2015
Quarterly Report
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(Translation from the Italian original which remains the definitive version)
Elica S.p.A.
Half-Year Report
at June 30, 2015
| Directors' Report on the First Half 2015 | |
|---|---|
| Key Financial Highlights | page 4 |
| H1 2015 operating review | page 5 |
| Significant events in H1 2015 | page 6 |
| Elica Group structure and consolidation scope | page 8 |
| Related-party transactions | page 9 |
| Subsequent events and outlook | page 9 |
| Compliance pursuant to Section VI of the regulation implementing Legislative Decree No. 58 | |
| of February 24, 1998 concerning market regulations ("Market Regulations") | page 9 |
| Obligations as per Article 70, paragraph 8 and Article 71, paragraph 1-bis of the "Issuers' Regulation" |
page 9 |
| Condensed Interim Consolidated Financial Statements as at and for the six months ended June 30, 2015 |
|
| Income Statement | page 11 |
| Statement of Comprehensive Income | page 12 |
| Statement of Financial Position | page 13 |
| Statement of Cash Flows | page 14 |
| Statement of changes in Equity | page 15 |
| Notes to the Condensed Interim Consolidated Financial Statements at June 30, 2015 | page 16 |
| Statement of the corporate financial reporting manager in accordance with Article | |
| 154 bis, paragraph 2 of Legislative Decree 58/1998 | page 27 |
Corporate boards page 3
Executive Chairman,
born in Senigallia (AN) on 5/6/1961, appointed by resolution of 29/04/2015.
Chief Executive Officer, born in Varese (VA) on 30/10/1958, appointed by resolution of 29/04/2015.
Executive Director, born in Monsano (AN) on 12/12/1934, appointed by resolution of 29/04/2015.
Director, born in Monsano (AN) on 14/02/1938, appointed by resolution of 29/04/2015.
Chairman, born in Jesi (AN) on 14/01/1954, appointed by resolution of 29/04/2015.
Statutory Auditor, born in Jesi (AN) on 23/06/1945, appointed by resolution of 29/04/2015.
Statutory Auditor, born in Jesi (AN) on 02/04/1971, appointed by resolution of 29/04/2015.
Davide Croff (Chairman) Elio Cosimo Catania Enrico Vita
KPMG S.p.A.
Elica S.p.A. Registered office: Via Casoli, 2 – 60044 Fabriano (AN) Share capital: Euro 12,664,560.00 Tax Code and Companies' Register Number: 00096570429 Ancona REA No. 63006 – VAT Number 00096570429
Laura Giovanetti e-mail: [email protected] Telephone: +39 0732 610727
Independent Director, born in Fabriano (AN) on 16/02/1969, appointed by resolution of 29/04/2015.
Independent Director, born in Catania on 05/06/1946, appointed by resolution of 29/04/2015.
Independent Director and Lead Independent Director, born in Conegliano (TV) on 30/03/1967, appointed by resolution of 29/04/2015.
Independent Director, born in Venice on 01/10/1947, appointed by resolution of 29/04/2015.
Alternate Auditor, born in Sassoferrato (AN) on 04/05/1966, appointed by resolution of 29/04/2015.
Alternate Auditor, born in Montesangiorgio (AP) on 04/04/1965, appointed by resolution of 29/04/2015.
Elio Cosimo Catania (Chairman) Davide Croff Enrico Vita
| H1 15 | % | H1 14 | % | 15 Vs 14 | |
|---|---|---|---|---|---|
| In Euro thousands | revenue | revenue | % | ||
| Revenue | 203,212 | 195,743 | 3.8% | ||
| EBITDA before restructuring charges | 14,354 | 7.1% | 13,018 | 6.7% | 10.3% |
| EBITDA | 13,412 | 6.6% | 12,326 | 6.3% | 8.8% |
| EBIT | 4,873 | 2.4% | 4,054 | 2.1% | 20.2% |
| Net financial charges | (1,052) | (0.5%) | (2,052) | (1.0%) | (48.7%) |
| Income taxes | (2,206) | (1.1%) | (685) | (0.3%) | 222.0% |
| Profit from continuing operations | 1,615 | 0.8% | 1,317 | 0.7% | 22.6% |
| Profit from continuing operations and discontinued operations | 1,615 | 0.8% | 1,317 | 0.7% | 22.6% |
| Profit attributable to the owners of the parent | 1,371 | 0.7% | 741 | 0.4% | 85.0% |
| Basic earnings per share on continuing operations and discontinued | |||||
| operations (Euro/cents) | 2.2100 | 1.1943 | 85.1% | ||
| Diluted earnings per share on continuing operations and |
|||||
| discontinued operations (Euro/cents) | 2.2100 | 1.1943 | 85.1% | ||
The earnings per share for H1 2015 and H1 2014 were calculated by dividing the profit attributable to the owners of the parent from continuing and discontinued operations by the number of outstanding shares at the respective reporting dates.
EBITDA is the operating profit (EBIT) plus amortisation and depreciation and any impairment losses on goodwill. EBIT is the operating profit as reported in the consolidated income statement.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | June 30, 14 |
|---|---|---|---|
| Trade receivables | 73,518 | 63,456 | 75,643 |
| Inventories | 63,851 | 57,609 | 59,876 |
| Trade payables | (102,747) | (88,238) | (95,390) |
| Managerial Working Capital | 34,622 | 32,827 | 40,129 |
| as a % of annualised revenue | 8.5% | 8.4% | 10.3% |
| Other net receivables/payables | (9,649) | (11,854) | (15,144) |
| Net Working Capital | 24,973 | 20,973 | 24,985 |
| In Euro thousands | June 30, 15 | Dec. 31, 14 | June 30, 14 |
|---|---|---|---|
| Cash and cash equivalents | 26,976 | 35,241 | 24,970 |
| Finance leases and other lenders | (10) | (12) | (13) |
| Bank loans and borrowings | (25,575) | (29,277) | (29,973) |
| Non-current loans and borrowings | (25,585) | (29,289) | (29,986) |
| Finance leases and other lenders | (9) | (12) | (13) |
| Bank loans and borrowings | (65,149) | (57,364) | (55,900) |
| Current loans and borrowings | (65,158) | (57,376) | (55,913) |
| Net Financial Debt | (63,767) | (51,424) | (60,929) |
Net Financial Debt is the sum of cash and cash equivalents less amounts due under finance leases and to other lenders (current and non-current), plus bank loans and borrowings (current and non-current), as reported in the statements of financial position.
In the first half of 2015 Elica Group consolidated revenue amounted to Euro 203.2 million - an increase of 3.8% on the same period of the previous year and substantially stable at like-for-like exchange rates. Global range hood demand meanwhile decreased 2.8%1 in the period, principally due to the further contractions on the Asian2 (-4.1%) and Latin American (-3.2%) markets and the steeper decline of the Eastern European market (-8.3%), which was heavily impacted by the Russian performance. The Western European market continued to recover however (+2.7%), as did North America (+4.2%).
The Cooking segment saw 3.1% revenue growth on H1 2014, following both increased third party brand (+1.5%) and own brand sales (+5.5%) - which significantly developed. In particular, the Elica brand reported extraordinary growth of 16.7% following major brand-focused investment.
The Motors segment in H1 2015 also reports strong revenue growth of 8.1%, following excellent heating sector results, which recovered significantly in the second quarter.
Analysing revenue by the principal markets3 , the Americas grew 17.3%, principally due to favourable exchange rate movements. European revenue also grew (+2.3%), although negatively impacted by currency movements, while Asian4 revenue reduced 2.0%, impacted by - among other issues - the weakened Japanese market.
EBITDA before restructuring charges in H1 2015 of Euro 14.4 million increased 10.3% on H1 2014, principally due to production efficiencies generated by improved value chain integration and procurement operations, together with favourable exchange rate movements. EBITDA net of restructuring charges totalled Euro 13.4 million - up 8.8% on the first half of the previous year. The restructuring charges of Euro 0.9 million relate principally to the plan being implemented at the Mexican subsidiary.
EBIT net of restructuring charges was Euro 4.9 million, increasing 20.2% compared to Euro 4.1 million in H1 2014.
In H1 2015, the Euro average exchange rate weakened against all currencies to which the Group is exposed, with the exception of the Ruble.
| average H1 2015 |
average H1 2014 |
% | June 30, 15 | Dec. 31, 14 | % | |
|---|---|---|---|---|---|---|
| USD | 1.12 | 1.37 | -18.2% | 1.12 | 1.21 | -7.4% |
| JPY | 134.20 | 140.40 | -4.4% | 137.01 | 145.23 | -5.7% |
| PLN | 4.14 | 4.18 | -1.0% | 4.19 | 4.27 | -1.9% |
| MXN | 16.89 | 17.97 | -6.0% | 17.53 | 17.87 | -1.9% |
| INR | 70.12 | 83.29 | -15.8% | 71.19 | 76.72 | -7.2% |
| CNY | 6.94 | 8.45 | -17.9% | 6.94 | 7.54 | -8.0% |
| RUB | 64.64 | 47.99 | 34.7% | 62.36 | 72.34 | -13.8% |
| GBP | 0.73 | 0.82 | -11.0% | 0.71 | 0.78 | -9.0% |
Net financial charges as a percentage of revenue halved, from 1.0% in H1 2014 to 0.5% in the first half of 2015, principally due to an improved currency management performance.
The Profit for the period of Euro 1.6 million was up 22.6% on Euro 1.3 million in the first half of 2014.
The Managerial Working Capital on annualised revenue of 8.5% is significantly lower than 10.3% at June 30, 2014 and in line with 8.4% at December 31, 2014. This excellent result, due in particular to improved inventory levels on the previous quarter, stems from Elica's constant focus on optimising resource allocation.
The Net Financial Debt at June 30, 2015 of Euro 63.8 million increased on Euro 51.4 million at December 31, 2014 and Euro 60.9 million at June 30, 2014, particularly due to the payment of Euro 6.8 million for
1 Global range hood market volumes.
2 Concerning "Other Countries" demand - principally the Asian markets.
3 Data concerns sales revenue by geographic area and therefore does not refer to the breakdown by operating segment according to the various Group company locations.
4 Concerning revenue in "Other Countries" - principally the Asian markets.
non-recurring charges, mainly relating to the restructuring plan already concluded and expensed in 2013 and 2014.
On January 27, 2015, in accordance with Article 2.6.2, paragraph 1, letter b) of the Regulations of the Markets organised and managed by Borsa Italiana S.p.A., Elica S.p.A. published the financial calendar for the year 2015.
The Board of Directors of Elica S.p.A. on February 12, 2015 approved the 2014 Fourth Quarter Report, prepared in accordance with IFRS.
At the same meeting, the Board of Directors also decided to appoint Equita SIM, a leading merchant bank involved in stock markets globally and a leading broker for institutional investors interested in Italian equities, as the new Specialist for Elica S.p.A.. The appointment runs from March 2, 2015, with the current Specialist's appointment therefore concluding on the same date.
On March 19, 2015 the Board of Directors of Elica S.p.A approved the Consolidated Financial Statements at December 31, 2014 and the Separate Financial Statements at December 31, 2014 of Elica S.p.A, prepared in accordance with IFRS. The Board in addition proposed the distribution of a dividend of Euro 0.0284 per share (before withholding taxes) from the profit for the year recognised in the separate financial statements, resulting in a payout ratio of 36.3%. Dividend coupon No. 7 of May 25, record date of May 26 and payment date of May 27, 2015 was proposed.
The Board of Directors on the same date approved the 2014 Corporate Governance and Ownership Structure Report, the Remuneration Report, the Illustrative Report to the Shareholders' Meeting for the appointment of the Board of Directors and fixing of relative remuneration, the Illustrative Report to the Shareholders' Meeting for the appointment of the Board of Statutory Auditors and fixing of relative remuneration, the Illustrative Report to the Shareholders' Meeting concerning the proposal of the Board of Statutory Auditors for the appointment of the Independent Audit Firm and the Directors' Report to the Shareholders' Meeting on the proposal to authorise the purchase and utilisation of treasury shares.
Elica considers that the Guidance performance objectives announced to the market on February 14, 2014 were substantially achieved, reporting consolidated revenue growth of 0.8% at like-for-like exchange rates (forecast at between 1 and 3%), EBITDA before restructuring charges of Euro 30.8 million, growth of 6.6% (forecast at between 4 and 7%) and a Net Financial Debt of Euro 51.4 million (forecast not to exceed Euro 52 million).
On March 25, 2015, Elica participated at the STAR Conference 2015 in Milan.
On April 5, 2015, Elica announced that on April 2, 2015 the slate for the renewal of the Board of Directors and the Board of Statutory Auditors of the majority shareholder FAN S.R.L., holder of 52.809% of the subscribed and paid-in share capital, was filed.
On April 7, 2015, Elica made available to the public at the registered office of the company, on the authorised storage mechanism () and on the Elica S.p.A. website at http://corporation.elica.com, the Annual Report comprising the Separate and Consolidated Financial Statements at December 31, 2014, the Directors' Report and the Declaration as per Article 154-bis, paragraph 5 of Legs. Decree No. 58/1998, together with the Board of Statutory Auditors' Report, the Independent Auditors' Report, the 2014 Corporate Governance and Ownership Structure Report and the Remuneration Report and the Directors' Report to the Shareholders' Meeting on the proposal to authorise the purchase and utilisation of treasury shares. The Annual Accounts and/or the Financial Statements as per Article 2429 of the Italian Civil Code of the subsidiaries and associates of Elica S.p.A. and the Financial Statements of the subsidiaries as per Article 36 of the Market Regulation were made available to the public at the registered office.
On April 29, 2015, the Shareholders' AGM of Elica S.p.A., meeting in ordinary session, approved the 2014 Annual Accounts of Elica S.p.A., the Directors' Report, the Board of Statutory Auditors' Report and the Independent Auditors' Report.
The Shareholders' AGM also approved the distribution of a dividend of Euro 0.0284 per share (before withholding taxes) from the profit for the year recognised in the separate financial statements, resulting in a payout ratio of 36.3%. Dividend coupon No. 7 of May 25, record date of May 26 and payment date of May 27, 2015 was approved.
The Shareholders' AGM of Elica S.p.A. considered the content of the Remuneration Report and expressed its approval of the first section of the report and appointed KPMG S.p.A. as the legal auditors of accounts for the 2015-2023 period, approving their fees and adjustment criteria.
The Directors were appointed at the Meeting, who will remain in office for the years 2015, 2016 and 2017, until the Shareholders' AGM called for the approval of the 2017 Annual Accounts, which shall consist of eight members: Francesco Casoli, appointed Chairman, Giuseppe Perucchetti, Gianna Pieralisi, Enrico Vita, Elio Cosimo Catania, Katiusa (Katia) Da Ros, Davide Croff and Gennaro Pieralisi. Messrs. Enrico Vita, Elio Cosimo Catania, Katiusa Da Ros and Davide Croff declared their independence in accordance with the regulations in force.
The AGM also appointed the three standing members of the Board of Statutory Auditors: Gilberto Casali, Chairman, Simona Romagnoli and Franco Borioni.
The Shareholders' AGM finally approved the authorisation to purchase and utilise treasury shares, pursuant to Article 2357 and 2357 ter of the Italian Civil Code, in order to provide the company with an important instrument of strategic and operative flexibility.
Also on April 29, 2015, the Board of Directors appointed Francesco Casoli, Giuseppe Perucchetti and Gianna Pieralisi as executive directors of Elica S.p.A.; assessed the independence of the Directors Elio Catania, Davide Croff, Katia Da Ros and Enrico Vita, declaring them independent in accordance with Article 148, paragraph 3 of the CFA (restated in Article 147-ter, paragraph 4 of the CFA) and under Article 3.C.1. of the Self-Governance Code for listed companies; appointed Elio Catania (Chairman), Davide Croff and Enrico Vita, independent/non-executive directors as members of the Appointments and Remuneration Committee and also appointed Davide Croff (Chairman), Elio Catania and Enrico Vita, independent/non-executive directors, as members of the Internal Control and Risk Management Committee; appointed independent director Katia Da Ros as Lead Independent Director; identified the Executive Director Francesco Casoli as the Internal Control and Risk Management System Manager; appointed the director Giuseppe Perucchetti with responsibilities for "Employment".
Mr. Alberto Romagnoli, holding the necessary requirements pursuant to the Company By-Laws, was appointed as Corporate Financial Reporting Manager, having heard the opinion of the Board of Statutory Auditors.
The Board of Directors of Elica S.p.A. on May 14, 2015 approved the 2015 First Quarter Report, prepared in accordance with IFRS.
On May 15, 2015, Elica participated in an Investor Presentation, organised in Milan by Equita Sim, undertaking presentations and meetings with institutional investors.
On May 20, Elica was involved in the Italian Stock Market Opportunities Conference, organised in Paris by Banca IMI.
On May 25, 2015, the minutes of the Shareholders' AGM of April 29, 2015, together with the relative attachments, were made available at the registered office of the company, on the authorised storage mechanism at and on the company website http://corporation.elica.com, Shareholders' Meetings section.
The Elica Group is currently the world's largest manufacturer of kitchen range hoods for domestic use and is leader in Europe in the sector of motors for boilers used in home heating systems.
o Elica S.p.A. - Fabriano (Ancona, Italy) is the Parent of the Group (in short Elica).
o Elica Group Polska Sp.zo.o – Wroclaw – (Poland) (in short Elica Group Polska). This wholly-owned company has been operational since September 2005 in the production and sale of electric motors and from December 2006 in the production and sale of exhaust range hoods for domestic use;
o Elicamex S.A. de C.V. – Queretaro (Mexico) (in short Elicamex). The company was incorporated at the beginning of 2006 (The Parent owns 98% directly and 2% through Elica Group Polska). Through this company, the Group intends to concentrate the production of products for the American markets in Mexico and reap the benefits deriving from optimisation of operational and logistical activities;
o Leonardo Services S.A. de C.V. – Queretaro (Mexico) (in short Leonardo). This wholly-owned subsidiary was incorporated in January 2006 (the Parent owns 98% directly and 2% indirectly through Elica Group Polska Sp.zo.o.). Leonardo Services S.A. de C.V. manages all Mexican staff, providing services to ELICAMEX S.A. de C.V;
o Ariafina CO., LTD – Sagamihara-Shi (Japan) (in short Ariafina). Incorporated in September 2002 as an equal Joint Venture with Fuji Industrial of Tokyo, the Japanese range hood market leader, Elica S.p.A. acquired control in May 2006 (51% holding) to provide further impetus to the development of the important Japanese market, where high-quality products are sold;
o Airforce S.p.A. – Fabriano (Ancona, Italy) (in short Airforce). This company operates in a special segment of the production and sale of hoods sector. The holding of Elica S.p.A. is 60%;
o Airforce Germany Hochleigstungs-Dunstabzugssysteme GmbH – Stuttgart (Germany) (in short Airforce Germany). Airforce S.p.A. owns 95% of Airforce Germany GmbH, a company that sells hoods in Germany through so-called "kitchen studios";
o Elica Inc. – Chicago, Illinois (United States), offices in Bellevue, Washington (United States). The company aims to develop the Group's brands in the US market by carrying out marketing and trade marketing with resident staff. The company is a wholly owned subsidiary of ELICAMEX S.A. de C.V.;
o Exklusiv Hauben Gutmann GmbH – Mulacker (Germany) (in short Gutmann) - a German company entirely held by Elica S.p.A. and the German leader in the high-end kitchen range hood market, specialised in tailor made and high performance hoods.
o Elica PB India Private Ltd. - Pune (India) (in short Elica India); in 2010, Elica S.p.A. signed a joint venture agreement, subscribing 51% of the share capital of the newly-incorporated Indian company and therefore attaining control. Elica PB India Private Ltd. is involved in the production and sale of Group products.
o Zhejiang Elica Putian Electric CO.,LTD. – Shengzhou (China) (in short Putian), a Chinese company held 66.76% and operating under the Puti brand, a leader in the Chinese home appliances sector, producing and marketing range hoods, gas hobs and kitchenware sterilisers. Putian is one of the main players in the Chinese range hood market and the principal company developing western style range hoods. The production site is located in Shengzhou, a major Chinese industrial district for the production of kitchen home appliances.
o Elica Trading LLC – St. Petersberg (Russian Federation) (in short Elica Trading), a Russian company held 100%, incorporated on June 28, 2011.
o Elica France S.A.S. - Paris (France) (in short Elica France), a wholly-owned French company incorporated in 2014.
o I.S.M. S.r.l. – Cerreto d'Esi (AN-Italy). The company, of which Elica S.p.A. holds 49.385% of the Quota Capital, operates within the real estate sector.
There were no changes in the consolidation scope compared to December 31, 2014.
Transactions were entered into with subsidiaries, associates and other related parties during the period. All transactions were conducted on an arm's length basis in the ordinary course of business.
On July 9, 2015, Elica took part in the Mid&Small Cap Event, organised in Frankfurt by Equita SIM, holding meetings with the financial community.
The Group carries out an ongoing and extensive monitoring of demand dynamics, which in the first six months of 2015 was generally poor compared to H1 2014 - particularly in Eastern Europe, Asia and Latin America. Strong performances were however reported in North America and Western Europe.
The Group carries out an ongoing and extensive monitoring of demand dynamics, which in 2015 is expected to improve in Europe and the Americas and contract in Asia on the previous year.
Against the results expected from the ongoing implementation of the long-term Group strategy, Elica estimates an increase in Consolidated revenue of between 1 and 3% for 2015 and an increase in consolidated EBITDA before restructuring charges of between 7% and 14% on 2014, while targetting also a Net Financial Debt at December 31, 2015 of Euro 50 million.
Elica S.p.A. confirms compliance with the conditions for listing pursuant to Articles 36 and 37 of Consob's Market Regulations. In particular, having control, directly or indirectly, over some companies registered in countries outside of the European Union, the financial statements of the above-mentioned companies, prepared for the purposes of the Elica Group Consolidated Financial Statements, were made available in accordance with the provisions required by the current regulations enacted on March 30, 2009.
In accordance with Article 70, paragraph 8 and Article 71, paragraph 1-bis of the Consob Issuers' Regulation, on January 16, 2013, Elica announced that it would employ the exemption from publication of the required disclosure documents concerning significant merger, spin-off, and share capital increase operations through conferment of assets in kind, acquisitions and sales.
as at and for the six months ended June 30, 2015
| In Euro thousands | Note | H1 2015 | H1 2014 |
|---|---|---|---|
| Revenue | 1 | 203,212 | 195,743 |
| Other operating income | 2 | 1,386 | 4,122 |
| Changes in inventories of finished and semi-finished | |||
| goods | 3 | 3,675 | 3,850 |
| Increase in internal work capitalised | 3,081 | 2,571 | |
| Raw materials and consumables | 3 | (112,990) | (110,784) |
| Services | 4 | (37,121) | (32,842) |
| Labour costs | 5 | (41,939) | (42,354) |
| Amortisation & Depreciation | (8,539) | (8,272) | |
| Other operating expenses and provisions | 6 | (4,950) | (7,288) |
| Restructuring charges | 20 | (942) | (692) |
| Operating profit | 4,873 | 4,054 | |
| Share of profit/(loss) from associates | (5) | (9) | |
| Financial income | 7 | 72 | 210 |
| Financial charges | 7 | (1,849) | (2,126) |
| Exchange rate gains/(losses) | 7 | 730 | (127) |
| Profit before taxes | 3,821 | 2,002 | |
| Income taxes | (2,206) | (685) | |
| Profit from continuing operations | 1,615 | 1,317 | |
| Profit from discontinued operations | - | - | |
| Profit for the period | 1,615 | 1,317 | |
| of which: | |||
| Attributable to non-controlling interests | 244 | 576 | |
| Attributable to the owners of the parent | 1,371 | 741 | |
| Basic earnings per Share (Euro/cents) | 2.21 | 1.19 | |
| From continuing and discontinued operations (Euro/cents) | 2.21 | 1.19 | |
| From continuing operations (Euro/cents) | 2.21 | 1.19 | |
| Diluted earnings per Share (Euro/cents) | 2.21 | 1.19 | |
| From continuing and discontinued operations (Euro/cents) | 2.21 | 1.19 | |
| From continuing operations (Euro/cents) | 2.21 | 1.19 |
| In Euro thousands | H1 2015 | H1 2014 |
|---|---|---|
| Profit for the period | 1,615 | 1,317 |
| Other comprehensive income/(expense) which may not be subsequently reclassified to profit/(loss) for the period: |
||
| Actuarial gains/(losses) of employee defined plans | 189 | (643) |
| Tax effect concerning the Other income/(expense) which may not be subsequently reclassified to the profit/(loss) for the period Total other comprehensive income/(expense) which may not |
(44) | 209 |
| be subsequently reclassified to profit/(loss) for the period, net | ||
| of the tax effect | 145 | (434) |
| Other comprehensive income/(expense) which may be subsequently reclassified to profit/(loss) for the period: Exchange differences on the conversion of foreign financial statements Net change in cash flow hedges Tax effect concerning the Other income/(expense) which may be subsequently be reclassified to the profit/(loss) for the period Total other comprehensive income/(expense) which may be subsequently reclassified to profit/(loss) for the period, net of |
3,769 (128) 35 |
151 (30) 8 |
| the tax effect | 3,676 | 129 |
| Total other comprehensive income/(expense), net of the tax effect: |
3,821 | (305) |
| Total comprehensive income for the period of which: |
5,436 | 1,012 |
| Attributable to non-controlling interests | 758 | 687 |
| Attributable to the owners of the parent | 4,678 | 325 |
| In Euro thousands | Note | June 30, 15 | Dec. 31, 14 |
|---|---|---|---|
| Property, plant & equipment | 8 | 90,748 | 88,014 |
| Goodwill | 9 | 45,923 | 44,911 |
| Other intangible assets | 10 | 27,603 | 26,660 |
| Investments in associates | 11 | 1,430 | 1,437 |
| Other receivables | 16 | 242 | 182 |
| Tax assets | 17 | 5 | 5 |
| Deferred tax assets | 12 | 15,279 | 15,265 |
| AFS financial assets | 156 | 156 | |
| Derivative financial instruments | 28 | 1 | |
| Total non-current assets | 181,414 | 176,631 | |
| Trade receivables and loan assets | 13 | 73,518 | 63,456 |
| Inventories | 14 | 63,851 | 57,609 |
| Other receivables | 16 | 8,542 | 6,935 |
| Tax assets | 17 | 10,066 | 7,330 |
| Derivative financial instruments | 202 | 146 | |
| Cash and cash equivalents | 19 | 26,976 | 35,241 |
| Current assets | 183,155 | 170,717 | |
| Total Assets | 364,569 | 347,348 | |
| Liabilities for post-employment benefits | 10,690 | 12,752 | |
| Provisions for risks and charges | 15 | 2,662 | 5,441 |
| Deferred tax liabilities | 12 | 5,077 | 4,910 |
| Finance leases and other lenders | 19 | 10 | 12 |
| Bank loans and borrowings | 19 | 25,575 | 29,277 |
| Other payables | 16 | 4,030 | 4,786 |
| Tax liabilities | 17 | 503 | 568 |
| Derivative financial instruments | 88 | 146 | |
| Non-current liabilities | 48,635 | 57,892 | |
| Provisions for risks and charges | 15 | 5,117 | 3,006 |
| Finance leases and other lenders | 19 | 9 | 12 |
| Bank loans and borrowings | 19 | 65,149 | 57,364 |
| Trade payables | 13 | 102,747 | 88,238 |
| Other payables | 16 | 15,643 | 16,394 |
| Taxes liabilities | 17 | 7,496 | 6,719 |
| Derivative financial instruments | 1,427 | 2,113 | |
| Current liabilities | 197,588 | 173,846 | |
| Share capital | 12,665 | 12,665 | |
| Capital reserves | 71,123 | 71,123 | |
| Hedging, translation and stock option reserve | (6,426) | (9,585) | |
| Reserve for actuarial gains/losses | (3,049) | (3,188) | |
| Treasury shares | (3,551) | (3,551) | |
| Retained earnings | 40,792 | 39,894 | |
| Profit attributable to the owners of the parent | 1,371 | 2,592 | |
| Equity attributable to the owners of the parent | 18 | 112,925 | 109,950 |
| Capital and reserves attributable to non-controlling interests | 5,177 | 4,766 | |
| Profit attributable to non-controlling interests | 244 | 894 | |
| Equity attributable to non-controlling interests | 18 | 5,421 | 5,660 |
| Total equity | 118,346 | 115,610 | |
| Total liabilities and equity | 364,569 | 347,348 |
| In Euro thousands | Note H1 2015 | H1 2014 |
|---|---|---|
| Opening cash and cash equivalents | 35,241 | 27,664 |
| Operating profit - EBIT | 4,873 | 4,054 |
| Amortisation, depreciation and impairment losses | 8,539 | 8,272 |
| EBITDA | 13,412 | 12,326 |
| Trade working capital | (1,343) | 1,410 |
| Other working capital accounts | (4,099) | (3,637) |
| Income taxes paid | (2,362) | (3,175) |
| Change in provisions | (2,677) | 885 |
| Other changes | 177 | (475) |
| Cash flow from operating activities | 3,108 | 7,334 |
| Net increases | (10,081) | (8,101) |
| Intangible assets | (3,785) | (3,172) |
| Property, plant & equipment | (6,296) | (4,923) |
| Equity investments and other financial assets | 0 | (6) |
| Acquisition/Sale of investments | 0 | 44 |
| Cash flow used in investing activities | (10,081) | (8,057) |
| Dividends | (2,551) | (2,413) |
| Increase (decrease) in loans and borrowings | 3,435 | 1,651 |
| Net changes in other financial assets/liabilities | (1,423) | 362 |
| Interest paid | (1,656) | (1,755) |
| Cash flow used in financing activities | (2,195) | (2,155) |
| Change in cash and cash equivalents | (9,167) | (2,878) |
| Effect of exchange rate change on liquidity | 902 | 183 |
| Closing cash and cash equivalents | 26,976 | 24,969 |
| Share capital |
Share premium reserve |
Acquisition/Sale of Treasury shares |
Retained earnings |
Hedge, trans., stock option & post employment benefits |
Profit for the period | Equity attributable to the owners of the parent |
NEEquity attributable to non controlling interests |
Total equity |
|
|---|---|---|---|---|---|---|---|---|---|
| reserve | |||||||||
| In Euro thousands | |||||||||
| Balance at December 31, 2013 | 12,665 | 71,123 | (3,551) | 40,294 | (10,423) | 1,357 | 111,465 | 5,276 | 116,741 |
| Change in cash flow hedges net of tax effect Actuarial gains/(losses) on post-employment benefits Differences arising from translation of foreign subsidiaries' financial |
(24) (413) |
(24) (413) |
(21) | (24) (434) |
|||||
| statements | 19 | 19 | 132 | 151 | |||||
| Total gains/(losses) recognised directly to equity | - | - | - | - | (418) | - | (418) | 111 | (307) |
| Profit for the period | 741 | 741 | 576 | 1,317 | |||||
| Total gains/(losses) recognised in the income statement Allocation of profit for the period |
- | - | - 1,190 |
- 167 |
741 (1,357) |
741 - |
576 | 1,317 - |
|
| Other movements Dividends |
- | (30) (1,669) |
- | (30) (1,669) |
(128) | (157) (743) (2,413) |
|||
| Balance at June 30, 2014 | 12,665 | 71,123 | (3,551) | 39,786 | (10,674) | 741 | 110,090 | 5,092 | 115,182 |
| Balance at December 31, 2014 | 12,665 | 71,123 | (3,551) | 39,894 | (12,773) | 2,592 | 109,950 | 5,660 | 115,610 |
| Change in cash flow hedges net of tax effect Actuarial gains/(losses) on post-employment benefits Differences arising from translation of foreign subsidiaries' financial |
(100) 136 |
(100) 136 |
6 | (100) 143 |
|||||
| statements | 3,261 | 3,261 | 508 | 3,769 | |||||
| Total gains/(losses) recognised directly to equity | - | - | - | - | 3,297 | - | 3,297 | 514 | 3,812 |
| Profit for the period | 1,371 | 1,371 | 244 | 1,615 | |||||
| Total gains/(losses) recognised in the income statement Allocation of profit for the period |
- | - | - 2,592 |
- | 1,371 (2,592) |
1,371 - |
244 | 1,615 - |
|
| Other movements | - | 68 | 68 | (209) | (140) | ||||
| Dividends | (1,762) | (1,762) | (789) | (2,551) | |||||
| Balance at June 30, 2015 | 12,665 | 71,123 | (3,551) | 40,792 | (9,475) | 1,371 | 112,925 | 5,421 | 118,346 |
The operating segments are as follows:
The activities are based in the same geographic areas and therefore in Europe, specifically in Italy, Poland, Germany, Russia and France, in America, i.e. in Mexico and in the United States, and in Asia, respectively in China, India and Japan.
Segment revenue is determined based on the geographic area to which the respective companies belong. Segment results are determined by taking into account all the costs that can be allocated directly to sales in a specific segment. Costs not allocated to the segments include all costs not directly attributable to the area, including manufacturing, sales, general, administrative costs, as well as financial income and charges and taxes.
Inter-segment revenue includes revenue between Group segments that are consolidated on a line-by-line basis in relation to sales made to other segments.
Assets, liabilities and investments are allocated directly on the basis of their classification in a specific geographic area.
The Euro is the functional and reporting currency for Elica and all consolidated companies, except for such foreign subsidiaries as Elica Group Polska Sp.zo.o, Elicamex S.A. de C.V., Leonardo Services S.A. de. C.V., Ariafina CO., LTD, Elica Inc., Elica PB India Private Ltd., Zhejiang Elica Putian Electric Co. Ltd. and Elica Trading LLC, which prepare their financial statements in the Polish Zloty (Elica Group Polska Sp.zo.o), the Mexican Peso (Elicamex S.A. de C.V. and Leonardo Services S.A. de C.V.), Japanese Yen, US Dollar, Indian Rupee, Chinese Renminbi and Russian Ruble respectively.
The exchange rates used for the translation to Euro of the financial statements of companies consolidated in a currency other than the consolidation currency, compared with those used in the previous periods, are shown in the table below:
| average H1 2015 |
average H1 2014 |
% | June 30, 15 | Dec. 31, 14 | % | |
|---|---|---|---|---|---|---|
| USD | 1.12 | 1.37 | -18.2% | 1.12 | 1.21 | -7.4% |
| JPY | 134.20 | 140.40 | -4.4% | 137.01 | 145.23 | -5.7% |
| PLN | 4.14 | 4.18 | -1.0% | 4.19 | 4.27 | -1.9% |
| MXN | 16.89 | 17.97 | -6.0% | 17.53 | 17.87 | -1.9% |
| INR | 70.12 | 83.29 | -15.8% | 71.19 | 76.72 | -7.2% |
| CNY | 6.94 | 8.45 | -17.9% | 6.94 | 7.54 | -8.0% |
| RUB | 64.64 | 47.99 | 34.7% | 62.36 | 72.34 | -13.8% |
The report for the period ended June 30, 2015 was approved by the Board of Directors on August 27, 2015.
The annual consolidated financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and endorsed by the European Union through Regulation No. 1606/2002.
These condensed consolidated half-year financial statements were prepared, in summary form, in conformity with IAS 34 "Interim Financial Statements" and in conformity with the requirements of Consob Regulation No. 11971 of May 14, 1999 and subsequent amendments and integrations.
The condensed half-year financial statements therefore do not include all the information published in the annual report and must be read together with the consolidated financial statements as at December 31, 2014.
The accounting and consolidation principles adopted for the preparation of the current condensed consolidated half-year financial statements are unchanged compared to those adopted for the preparation of the Group annual consolidated financial statements for the year ended December 31, 2014.
The Condensed Consolidated Half-Year Financial Statements were prepared on the basis of the historical cost convention, except for some financial instruments which are recognised at fair value. The financial statement accounts have been measured in accordance with the general criteria of prudence and accruals and on a going concern basis, and also take into consideration the economic function of the assets and liabilities.
The Condensed Interim Consolidated Financial Statements at June 30, 2015 consist of the Statement of Financial Position, the Income Statement, the Statement of Comprehensive Income, the Statement of Cash Flows, the Statement of Changes in Equity and notes thereto. The condensed interim consolidated financial statements are compared with the corresponding period of the previous year for the income statement, statement of cash flows and statement of changes in equity and with the statement of financial position at December 31, 2014.
This Half-Year Report is presented in Euros and all the amounts are rounded to the nearest thousandth, unless otherwise specified.
The financial statements utilised are the same as those used for the preparation of the consolidated financial statements at December 31, 2014. No new accounting principles with impact on the consolidated financial statements were adopted in the period.
We report below the accounting standards, amendments and interpretations issued by the IASB and endorsed by the European Union adopted from January 1, 2015:
must be presented only if the total assets of the operating segments are regularly reviewed by the chief operating decision maker.
These new applications did not impact the Group consolidated financial statements.
In the preparation of the condensed half-year financial statements, the Group's management made judgements, estimates and assumptions which have an effect on the values of the assets and liabilities and disclosures. The actual results may differ from these estimates. The estimates and assumptions are revised periodically and the effects of any change are promptly reflected in the financial statements.
In this context it is reported that the situation caused by the current economic and financial crisis resulted in the need to make assumptions on a future outlook characterised by significant uncertainty, for which it cannot be excluded that results in the coming years will be different from such estimates and which therefore could require adjustment, currently not possible to estimate or forecast, which may even be significant, to the carrying amount of the relative items.
The account items principally concerned by uncertainty are: goodwill, the allowance for impairment and inventory obsolescence provision, non-current assets (property, plant and equipment and intangible assets), pension funds and other post-employment benefits, provisions for risks and charges and deferred tax assets and liabilities.
Reference is made to the previous year annual accounts and the notes to these condensed consolidated half-year financial statements for the details relating to the estimates stated above.
| In Euro thousands | H1 15 | H1 14 | Changes |
|---|---|---|---|
| Revenue | 203,212 | 195,743 | 7,469 |
| Total revenue | 203,212 | 195,743 | 7,469 |
For the comments relating to the changes in revenue, reference should be made to the paragraph "H1 2015 operating review" in the Director' Report. Clients who comprise more than 10% of total revenue constituted 15.1% of revenue in the first six months of 2015 compared to 13.7% in the first half of 2014. The following tables contain segment information as defined in the "Group structure and brief description of its activities" paragraph.
| INCOME STATEMENT | Europe | America | Asia and the Rest of World |
Unallocated items and eliminations |
Consolidated | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| H1 15 | H1 14 | H1 15 | H1 14 | H1 15 | H1 14 | H1 15 | H1 14 | H1 15 | H1 14 | |
| Segment revenue: | ||||||||||
| Third parties | 151,300 | 145,907 | 30,476 | 27,697 | 21,436 | 22,138 | 203,212 | 195,743 | ||
| Inter-segment | 7,119 | 7,270 | 9 | 3 | 1,170 | 490 | (8,297) | (7,763) | - | - |
| Total revenue | 158,419 | 153,178 | 30,485 | 27,701 | 22,606 | 22,628 | (8,297) | (7,763) | 203,212 | 195,743 |
| Segment result: | 14,763 | 8,773 | 2,778 | 5,451 | 757 | 759 | 18,299 | 14,983 | ||
| Unallocated overheads | (13,426) | (10,929) | ||||||||
| EBIT | 4,873 | 4,054 | ||||||||
| Share of profit/(loss) from associates |
(5) | (9) | ||||||||
| Financial income | 72 | 210 | ||||||||
| Financial charges | (1,849) | (2,126) | ||||||||
| Exchange rate gains/(losses) | 730 | (127) | ||||||||
| Profit before taxes | 3,821 | 2,002 | ||||||||
| Income taxes | (2,206) | (685) | ||||||||
| Profit from continuing operations |
1,615 | 1,317 | ||||||||
| Profit from discontinued operations |
- | - | ||||||||
| Profit for the period | 1,615 | 1,317 |
| STATEMENT OF | Europe | America | World | Asia and the Rest of | eliminations | Unallocated items and | Consolidated | |||
|---|---|---|---|---|---|---|---|---|---|---|
| FINANCIAL POSITION | June 15 | Dec 14 | June 15 | Dec 14 | June 15 | Dec 14 | June 15 | Dec 14 | June 15 | Dec 14 |
| Assets: | ||||||||||
| Segment assets | 245,541 | 228,115 | 36,801 | 34,168 | 48,386 | 44,079 | (10,286) | (11,184) | 320,442 | 295,178 |
| Investments | 1,430 | 1,438 | 1,430 | 1,437 | ||||||
| Unallocated assets | 42,697 | 50,733 | 42,697 | 50,733 | ||||||
| Total operational |
||||||||||
| assets | 245,541 | 228,115 | 36,801 | 34,168 | 48,386 | 44,079 | 33,842 | 40,987 | 364,569 | 347,348 |
| Total assets of discount. operations |
- | - | - | - | - | - | ||||
| Total Assets | 245,541 | 228,115 | 36,801 | 34,168 | 48,386 | 44,079 | 33,842 | 40,987 | 364,569 | 347,348 |
| Liabilities | ||||||||||
| Segment liabilities | (131,121) | (123,872) | (15,576) | (12,875) | (18,668) | (19,466) | 9,875 | 11,140 | (155,491) | (145,073) |
| Unallocated liabilities | (90,732) | (86,665) | (90,732) | (86,665) | ||||||
| Equity | (118,346) | (115,610) | (118,346) | (115,610) | ||||||
| Total operational |
||||||||||
| liabilities | (131,121) | (123,872) | (15,576) | (12,875) | (18,668) | (19,466) | (199,203) | (192,106) | (364,569) | (347,348) |
| Total liabilities of |
||||||||||
| discontinued | ||||||||||
| operations | - | - | - | - | ||||||
| Total liabilities | (131,121) | (123,872) | (15,576) | (12,875) | (18,668) | (19,466) | (199,203) | (192,106) | (364,569) | (347,348) |
| In Euro thousands | H1 15 | H1 14 | Changes |
|---|---|---|---|
| Grants related to income | 418 | 381 | 37 |
| Ordinary gains on disposal | 196 | 3,263 | (3,067) |
| Claims and insurance payouts | 181 | 163 | 18 |
| Other revenue and income | 591 | 315 | 276 |
| Total | 1,386 | 4,122 | (2,736) |
The account decreased by Euro 2,736 thousand. The decrease concerned the Ordinary Gains account, which in 2014 included the gain from the sale to third parties of the warehouse of Serra San Quirico (Ancona - Italy).
| In Euro thousands | H1 15 | H1 14 | Changes |
|---|---|---|---|
| Purchase of raw materials | (98,650) | (97,988) | (662) |
| Shipping expenses on purchases | (2,691) | (2,184) | (507) |
| Purchases of consumable materials | (2,214) | (1,383) | (831) |
| Packaging | (781) | (1,551) | 770 |
| Purchases of supplies | (377) | (371) | (6) |
| Purchases of semi-finished materials | (6,548) | (7,888) | 1,340 |
| Purchase of finished products | (2,990) | (3,243) | 253 |
| Other purchases | (529) | (349) | (180) |
| Change in inventory of raw materials, consumables and goods for re-sale | 1,790 | 4,173 | (2,383) |
| Raw materials and consumables | (112,990) | (110,784) | (2,206) |
| Changes in inventories of finished and semi-finished goods | 3,675 | 3,850 | (175) |
| Total | (109,315) | (106,934) | (2,381) |
The account increased in absolute terms by approx. Euro 2.4 million, although it decreased as a percentage of revenue from 54.6% to 53.8%.
| In Euro thousands | H1 15 | H1 14 | Changes |
|---|---|---|---|
| Outsourcing expenses | (12,805) | (10,268) | (2,537) |
| Transport | (4,539) | (4,355) | (184) |
| Finished goods inventories management | (2,382) | (2,651) | 269 |
| Consulting | (2,577) | (2,158) | (419) |
| Other professional services | (4,670) | (4,468) | (202) |
| Maintenance | (1,288) | (602) | (686) |
| Utilities | (2,448) | (2,409) | (39) |
| Commissions | (928) | (1,072) | 144 |
| Travel expenses | (1,549) | (1,315) | (234) |
| Advertising | (1,260) | (1,055) | (205) |
| Insurance | (584) | (572) | (12) |
| Directors & Statutory Auditor fees | (760) | (867) | 107 |
| Trade fairs and promotional events | (867) | (555) | (312) |
| Industrial services | (240) | (266) | 26 |
| Banking commissions and charges | (224) | (229) | 5 |
| Total Services | (37,121) | (32,842) | (4,279) |
The account increased in absolute terms by approx. Euro 4.3 million. This increase is principally due for Euro 2.5 million to Outsourcing expenses, for Euro 0.7 million to Maintenance, for Euro 0.4 million to Consulting and for Euro 0.3 million to Trade Fairs and promotional events. As a percentage of revenue it increased from 16.8% to 18.3%.
Labour costs incurred by the Group were as follows:
| In Euro thousands | H1 15 | H1 14 | Changes |
|---|---|---|---|
| Wages and salaries | (30,949) | (30,859) | (90) |
| Social security charges | (8,250) | (8,335) | 85 |
| Post-employment benefits | (1,197) | (1,441) | 244 |
| Other costs | (1,543) | (1,719) | 176 |
| Total labour costs | (41,939) | (42,354) | 416 |
The account reduced by approx. Euro 0.4 million. As a percentage of revenue these costs decreased from 21.6% in 2014 to 20.6% in 2015.
This account in H1 2015 principally comprises lease and rental charges for Euro 1.1 million, motor and industrial vehicle rental for Euro 1.2 million, product warranty provisions for Euro 0.3 million and allowances for impairment of trade receivable for Euro 0.2 million. This account reduced significantly, from Euro 7.3 million to Euro 4.9 million, following the conclusion of the analysis by Group management on the recoverability of receivables and on possible losses related to other risks.
| In Euro thousands | H1 15 | H1 14 | Changes |
|---|---|---|---|
| Financial income | 72 | 210 | (138) |
| Financial charges | (1,849) | (2,126) | 277 |
| Exchange rate gains/(losses) | 730 | (127) | 857 |
| Total net financial charges | (1,047) | (2,043) | 996 |
Financial activities benefitted from exchange rate movements concerning the currencies utilised by the Group.
The breakdown of property, plant and equipment at June 30, 2015 and December 31, 2014 is detailed below.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Land, land usage rights and buildings | 47,955 | 47,576 | 379 |
| Plant and machinery | 21,732 | 21,455 | 277 |
| Industrial and commercial equipment | 16,122 | 15,273 | 849 |
| Other assets | 3,493 | 3,387 | 106 |
| Assets in progress and advances | 1,446 | 323 | 1,123 |
| Total property, plant and equipment | 90,748 | 88,014 | 2,734 |
Property, plant and equipment increased from Euro 88,014 thousand at December 31, 2014 to Euro 90,748 thousand at June 30, 2015, an increase of Euro 2,734 thousand as a result of the sales, purchases and depreciation charge of Euro 5,477 thousand. The change includes exchange rate losses of approx. Euro 1.9 thousand.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Goodwill | 45,923 | 44,911 | 1,012 |
| Total goodwill | 45,923 | 44,911 | 1,012 |
The account increased almost exclusively due to exchange rate movements. No operations in the halfyear produced additional goodwill compared to December 2014.
Based on the information currently available, no impairment indicators were evident at June 30, 2015. In particular, Management confirms Guidance 2015, on the basis of which the Elica Group estimates Consolidated revenue growth of between 1% and 3% and an improvement in Consolidated EBITDA, before restructuring charges, of between 7% and 14% on 2014, and targets a net financial debt of not greater than Euro 50 million at the end of 2015.
The Management of the Group will continue to constantly monitor the circumstances and the events which form the basis of the future development of the business and will carry out at December 31, 2015 a more extensive analysis in relation to an impairment test.
The breakdown of the "Other intangible assets" at June 30, 2015 and December 31, 2014 is shown below.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Development Costs | 7,397 | 8,184 | (787) |
| Industrial patents and intellectual property rights | 9,349 | 10,206 | (857) |
| Concessions, licenses, trademarks & similar rights | 1,545 | 1,557 | (12) |
| Other intangible assets | 3,465 | 3,862 | (397) |
| Assets in progress and advances | 5,847 | 2,851 | 2,996 |
| Total other intangible assets | 27,603 | 26,660 | 943 |
Other intangible assets increased from Euro 26,660 thousand at December 31, 2014 to Euro 27,603 thousand at June 30, 2015, with an increase of Euro 943 thousand as a result of the purchases, sales and amortisation charge of Euro 3,061 thousand.
"Assets in progress and advances" refer in part to advances and the development of projects for the implementation of new IT platforms and the design, development and creation of new software applications, and also the development of new products.
The account "Other intangible assets" relates principally to both the technology developed and the client portfolio of the German subsidiary Exklusiv Hauben Gutmann GmbH.
The change in the account, which decreased from Euro 1,436 thousand at December 31, 2014 to Euro 1,430 thousand at June 30, 2015, relates to the performance of the company I.S.M. S.r.l..
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Deferred tax assets | 15,279 | 15,265 | 14 |
| Deferred tax liabilities | (5,077) | (4,910) | (167) |
| Total | 10,202 | 10,355 | (153) |
Deferred taxes are in line with December 31, 2014.
The deferred tax asset was recorded as it is considered recoverable in relation to the taxable income for the periods in which deferred taxes will reverse in the financial statements and as Group management considers that such commitments will be respected.
Trade receivables and trade payables were as follows:
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Trade receivables and loan assets | 73,518 | 63,456 | 10,062 |
| Trade payables | (102,747) | (88,238) | (14,509) |
| Total | (29,229) | (24,782) | (4,447) |
The increase in the two accounts on December relates principally to seasonal factors.
Trade receivables are recorded net of the allowance for impairment of Euro 4,287 thousand (Euro 4,195 thousand at December 31, 2014) made following an analysis of the credit risk on receivables and on the basis of historical data on impairment losses, considering that a substantial portion of the receivables are insured by prime international insurance companies.
Management considers that the value approximates the fair value of the receivables.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Raw materials, ancillary and consumables | 27,280 | 25,162 | 2,118 |
| Raw materials obsolescence provision | (1,759) | (1,477) | (282) |
| Total | 25,521 | 23,685 | 1,836 |
| Work-in-progress and semi-finished goods | 15,468 | 13,845 | 1,623 |
| Semi-finished goods obsolescence provision | (974) | (851) | (123) |
| Total | 14,494 | 12,994 | 1,500 |
| Finished products and goods | 25,304 | 22,664 | 2,640 |
| Finished products obsolescence provision | (1,478) | (1,739) | 261 |
| Total | 23,826 | 20,925 | 2,901 |
| Advances | 10 | 6 | 4 |
| Total inventories | 63,851 | 57,610 | 6,241 |
The account increased from Euro 57,610 thousand at December 31, 2014 to Euro 63,851 thousand at June 30, 2015.
Inventories are stated net of the obsolescence provisions of Euro 4,211 thousand (Euro 4,067 thousand at December 31, 2014), in order to take into consideration the effect of waste, obsolete and slow moving items and the risk estimates of the non-existent value in use of some categories of raw materials and semi-finished goods based on assumptions made by management.
Inventories also include materials and products that were not physically held by the Group at the reporting date. These items were held by third parties on display, for processing or for examination.
The quantification of the inventory obsolescence provision of raw materials, semi-finished and finished goods amounts to 6.19% of inventories (6.59% at December 31, 2014).
The details are shown below.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Agents' termination benefits | 518 | 514 | 4 |
| Product warranty provisions | 1,428 | 1,550 | (122) |
| Legal, tax and other risks provision | 1,806 | 1,973 | (167) |
| Restructuring provision | 236 | - | 236 |
| Personnel provisions | 601 | 1,489 | (888) |
| LTIP provision | 3,088 | 2,875 | 213 |
| Other Provisions | 102 | 47 | 55 |
| Total | 7,779 | 8,447 | (668) |
| of which | |||
| Non-current | 2,662 | 5,441 | (2,779) |
| Current | 5,117 | 3,006 | 2,111 |
| Total | 7,779 | 8,447 | (668) |
Agents' termination benefits are intended to cover possible charges upon termination of relations with agents and sales representatives.
Product warranty provisions represent an estimate of the costs likely to be incurred to repair or replace items sold to customers. These provisions reflect the average warranty costs historically incurred by the Group as a percentage of sales still covered by warranty.
The legal, tax and other risks provision relates to likely costs and charges to be incurred as a result of ongoing legal and tax disputes. The provisions have been determined based on the best possible estimates, considering the available information. They include allocations required to comply with the waste disposal regulation.
Personnel provisions include the higher cost estimated by the Group for contractual indemnity and for employee bonuses. This provision decreased following the payment of the higher costs related to the previous year and increased following the accrual made for this cost for the current period.
The Long Term Incentive Plan provision refers to the accrual made, on the basis of the actuarial estimates of Tower&Watson relating to H1 2015, approved by the Board of Directors on November 14, 2013.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Other receivables (non-current) | 242 | 182 | 60 |
| Other receivables (current) | 8,542 | 6,935 | 1,607 |
| Total | 8,784 | 7,117 | 1,667 |
The increase in Other receivables, principally relating to the Parent, concerns the current portion and is mainly due to the increase in prepayments and accrued income caused by the seasonality of contracts, such as for example those concerning maintenance, insurance and rental charges.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Other payables (non-current) | 4,030 | 4,786 | (756) |
| Other payables (current) | 15,643 | 16,394 | (751) |
| Total | 19,673 | 21,180 | (1,507) |
The decrease of the non-current portion of Other payables principally relates to the Polish subsidiary and is due to third parties for the acquisition of I.S.M. Poland, thereafter merged with Elica Group Polska. The decrease in the current portion of Other payables concerns in particular amounts due to employees, mainly relating to the Parent.
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Tax assets (non-current) | 5 | 5 | 0 |
| Tax assets (current) | 10,066 | 7,330 | 2,736 |
| Total | 10,071 | 7,335 | 2,736 |
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
| Tax liabilities (non-current) | 503 | 568 | (65) |
| Tax liabilities (current) | 7,496 | 6,719 | 777 |
| Total | 7,999 | 7,287 | 712 |
The increase in tax assets mainly relates to the current portion, principally with regards to the VAT position of the Mexican subsidiary, while the increase in tax liabilities, also mainly concerning the current portion, principally relates to the Polish subsidiary for VAT.
The account Equity attributable to the owners of the parent at June 30, 2015 amounted to Euro 112,925 thousand (Euro 109,950 thousand at December 31, 2014). Movements in the half-year principally concerned the distribution of dividends, the translation reserve and the Post-employment benefit reserve. For further details, reference should be made to the Statement of changes in Consolidated Equity.
The account Equity attributable to non-controlling interests at June 30, 2015 amounted to Euro 5,421 thousand (Euro 5,660 thousand at December 31, 2014). The movements in the account in the period principally related to: an increase of Euro 244 thousand following the recording of the profit for the period, an increase of Euro 508 thousand relating to changes in the translation reserve and a decrease of Euro 789 thousand concerning the distribution of dividends.
The Net Financial Debt at June 30, 2015 and at December 31, 2014 is detailed below:
| In Euro thousands | June 30, 15 | Dec. 31, 14 |
|---|---|---|
| Cash and cash equivalents | 26,976 | 35,241 |
| Finance leases and other lenders | (10) | (12) |
| Bank loans and borrowings | (25,575) | (29,277) |
| Non-current loans and borrowings | (25,585) | (29,289) |
| Finance leases and other lenders | (9) | (12) |
| Bank loans and borrowings | (65,149) | (57,364) |
| Current loans and borrowings | (65,158) | (57,376) |
| Net Financial Debt | (63,767) | (51,424) |
The Net Financial Debt at June 30, 2015 amounted to Euro 63.8 million compared to Euro 51.4 million at December 31, 2014.
Covenants exist on the medium-long term credit lines existing at June 30 based on the Condensed Consolidated Half-Year Financial Statements. At June 30, 2015 and until the preparation of this report, the covenants had all been fulfilled.
Management believes that at the present moment, the funds available, in addition to those that will be generated from operating and financial activities, will permit the Group to satisfy its requirements deriving from investment activities, working capital management and repayment of debt in accordance with their maturities.
The following table shows the cash outflows in relation to the contractual expiries of financial liabilities:
| In Euro thousands | June 30, 15 | Dec. 31, 14 | Changes |
|---|---|---|---|
| Bank loans and borrowings | 90,724 | 86,641 | 4,083 |
| Total | 90,724 | 86,641 | 4,083 |
| Bank loans and borrowings have the following repayment schedules: | |||
| On demand or within one year | 65,149 | 57,364 | 7,785 |
| Within two years | 13,428 | 15,005 | (1,577) |
| Within three years | 8,006 | 11,446 | (3,440) |
| Within four years | 2,112 | 2,826 | (714) |
| Within five years | 2,029 | - | 2,029 |
| Beyond 5 years | - | - | 0 |
| Total | 90,724 | 86,641 | 4,083 |
| Less amounts to be repaid within one year | 65,149 | 57,364 | 7,785 |
| Due beyond one year | 25,575 | 29,277 | (3,702) |
A summary of the non-recurring operations, considered significant, during the period and with their relative impact on the Equity and Profit for the period are shown below.
| Equity | Profit for the period | ||||
|---|---|---|---|---|---|
| In Euro thousands | Amount | % | Amount | % | |
| Reported amounts | 118,346 | 1,615 | |||
| Restructuring charges Taxes concerning restructuring charges Taxes concerning tax assessments |
(942) 127 (330) |
-1% 0% 0% |
(942) 127 (330) |
-58% 8% -20% |
|
| Gross notional amount | 119,491 | 2,760 |
Restructuring charges and the relative tax impact, as previously described, relate principally to the reorganisation plan in place at the Mexican subsidiary.
The income taxes concerning the tax assessment were recognised by the Parentin settlement of the amount due.
Intragroup transactions are eliminated in the Consolidated Half-Year Financial Statements and therefore
not shown in this note.
Operations with related parties were carried out in accordance with law and based on reciprocal business needs.
The income statement and statement of financial position amounts deriving from the transactions carried out as per IAS 24 with related parties are summarised below.
Elica Group vs Related parties
| In Euro thousands | Payables and loans and borrowings |
Receivables and loan assets |
Costs | Revenue and income |
|---|---|---|---|---|
| Fintrack S.p.A. | - | - | - | - |
| Fastnet S.p.A . | 6 | - | 13 | |
| I.S.M. S.r.l . | - | 1 | - | 1 |
| 6 | 1 | 13 | 1 |
In accordance with IAS 24, compensation paid to Directors, Statutory Auditors and Key Management Personnel are included in transactions with related parties, and their amounts are in line with previous periods; reference should be made to the Annual Report in this regard.
Group companies have estimated the contingent liabilities that could arise from pending judicial proceedings and have made appropriate provisions in their financial statements on a prudent basis.
The allocation within the Legal, tax and other risks provision included in the Group consolidated financial statements at June 30, 2015 for contingent risks and charges relating to legal disputes amounts to Euro 588 thousand and is mainly held by the Parent.
Management considers that the provision for risks and charges in order to cover contingent liabilities from pending or potential disputes is, on the whole, adequate.
In the first half of 2015, no operations classifiable in this category were recorded.
For information on events after June 30, 2015, reference should be made to the Directors' Report.
Fabriano, August 27, 2015
The Chairman Francesco Casoli
(signed on the original)
The undersigned Giuseppe Perucchetti, as Chief Executive Officer, and Alberto Romagnoli, Corporate Financial Reporting Manager of Elica S.p.A., affirm, also in consideration of Article 154-bis, paragraphs 3 and 4, of Legislative Decree No. 58 of February 24, 1998:
the accuracy of the information on company operations and
the effective application of the administrative and accounting procedures for the compilation of the condensed half-year consolidated financial statements in the first half-year of 2015.
In addition, we declare that the condensed consolidated half-year financial statements:
a) were prepared in accordance with international financial reporting standards, endorsed by in the European Union pursuant to EU regulation No. 1606/2002 of the European Parliament and Council, of July 19, 2002;
b) correspond to the underlying accounting documents and records;
c) provide a true and fair view of the financial position and results of operations of the issuer and of the companies included in the consolidation.
The Directors' Report on the First Half 2015 includes a reliable analysis of the significant events in the first six months of the year and their impact on the condensed consolidated half-year financial statements, with a description of the principal risks and uncertainties for the remaining six months. The condensed consolidated half-year financial statements also contain a reliable analysis of the significant transactions with related parties.
Fabriano, August 27, 2015
The Chief Executive Officer Corporate Financial Reporting Manager
Giuseppe Perucchetti
(signed on the original) (signed on the original)
Alberto Romagnoli
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