Interim / Quarterly Report • Sep 9, 2022
Interim / Quarterly Report
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| Corporate bodies _________ |
4 |
|---|---|
| Group structure __________ |
5 |
| DIRECTORS' REPORT AT 3O JUNE 2022 ___________7 |
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| Mergers & Acquisitions __________ | 8 |
| Impacts of the Russia-Ukraine conflict ___________ | 8 |
| Group performance ____________ |
9 |
| CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT AND FOR | |
| THE SIX MONTHS AND NOTES THERETO AT 30 JUNE 2022 ______17 |
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| Statement of financial position___________18 | |
| Statement of profit or loss ________19 |
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| Statement of comprehensive income ___________19 | |
| Statement of cash flows _________20 | |
| Statement of changes in equity __________21 |
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| NOTES TO THE CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS___22 | |
| Statement on the condensed interim consolidated financial statements pursuant to article | |
| 154-bis of Legislative decree no. 58/98 and article 81-ter of Consob regulation no. 11971 of | |
| 14 May 1999 as subsequently amended and supplemented______51 | |
| Independent auditors' report Condensed interim consolidated financial statements _____52 |
| Chairperson | Luigi Rossi Luciani | |
|---|---|---|
| Executive deputy chairperson | Luigi Nalini | |
| Chief executive officer | Francesco Nalini | |
| Board of directors | Executive director | Carlotta Rossi Luciani |
| Independent director | Cinzia Donalisio | |
| Independent director | Marina Manna | |
| Independent director | Maria Grazia Filippini | |
| Chairperson | Paolo Prandi | |
| Standing statutory auditor | Saverio Bozzolan | |
| Board of statutory auditors | Standing statutory auditor | Claudia Civolani |
| Alternate statutory auditor | Fabio Gallo | |
| Alternate statutory auditor | Alessandra Pederzoli | |
| Independent auditors | Deloitte & Touche SpA | |
| Chairperson | Marina Manna | |
| Audit, risk and sustainability committee | Member | Cinzia Donalisio |
| Member | Maria Grazia Filippini | |
| Chairperson | Cinzia Donalisio | |
| Remuneration committee | Member | Marina Manna |
| Member | Maria Grazia Filippini | |
| Chairperson | Fabio Pinelli | |
| Supervisory body | Member | Arianna Giglio |
| as per Leg. dec. no. 231/2001 | Member | Alessandro Grassetto |
The following graph shows the group's structure at 30 June 2022:
On 15 April 2022, the parent completed the acquisition of an additional 30% of Arion S.r.l., in which it already held a 40% investment.
Arion S.r.l. was established in 2015 by Bridgeport S.p.A. and Carel Industries S.p.A. and specialises in the production of sensors for the air-conditioning and refrigeration sectors.
In 2021, it generated revenue of approximately €2.7 million and a gross operating profit of about €0.7 million; its net financial position was roughly €0.3 million. For more information about the assets acquired and liabilities assumed at the acquisition date, reference should be made to the Consolidation scope section of the notes. The transaction became effective on 1 April 2022 and the amount paid for 30% of the company's quota capital amounted to €1.6 million.
In accordance with IFRS 3, the purchase price allocation procedure is currently underway. Reference should be made to the Consolidation scope section of the notes for further information.
At the acquisition date, the acquiree had five employees.
Arion contributed revenue of approximately €0.8 million in the first half of 2022.
On 13 June 2022, the parent entered into a binding agreement to acquire 70% of Sauber S.r.l., a company based in Porto Mantovano (MN) which provides on-field services for the installation and servicing of cooling/ humidification systems in residential and commercial buildings.
70% of the enterprise value was calculated at €3.6 million; the remaining 30% of Sauber is subject to a crossoption mechanism between the parties exercisable in 2025.
The closing of the transaction took place on 12 July 2022, when Carel obtained control of the company. Consequently, the impacts on profit or loss and equity of the Sauber consolidation will be effective as of July 2022.
The first half of 2022 was affected by the Russia-Ukraine conflict, which is still ongoing and has somewhat reduced the expectations of robust, generalised economic growth for the current year.
The group operates in both countries with two commercial companies. However, exposure in both markets is limited. Consolidated revenue in both areas is less than 5% of the total and, at the reporting date, the group was not affected by any significant impact on its financial performance or losses on current assets. Noncurrent assets are not significant both in absolute value and as a percentage of the group's non-current assets.
The statement of profit or loss for the first half of 2022 compared with the corresponding period of the previous year is as follows.
| (€'000) | First half of 2022 | First half of 2021 | % First half of 2022 |
% First half of 2021 |
|---|---|---|---|---|
| Revenue | 261,346 | 202,601 | ||
| Other revenue | 2,023 | 2,761 | 0.8% | 1.4% |
| Costs of raw materials, consumables and goods and changes in inventories |
(119,010) | (88,575) | (45.5%) | (43.7%) |
| Services | (31,691) | (23,420) | (12.1%) | (11.6%) |
| Capitalised development expenditure | 275 | 803 | 0.1% | 0.4% |
| Personnel expense | (55,633) | (49,173) | (21.3%) | (24.3%) |
| Other expense, net | (1,203) | (874) | (0.5%) | (0.4%) |
| Amortisation, depreciation and impairment losses |
(11,168) | (9,669) | (4.3%) | (4.8%) |
| OPERATING PROFIT | 44,938 | 34,454 | 17.2% | 17.0% |
| Net financial expense | (1,540) | (1,130) | (0,6%) | (0,6%) |
| Net exchange losses | (153) | (255) | (0,1%) | (0,1%) |
| Fair value gain (loss) on call option | - | - | - | - |
| Share of profit of equity-accounted investees |
2,363 | 618 | 0.9% | 0.3% |
| PROFIT BEFORE TAX | 45,608 | 33,688 | 17.5% | 16.6% |
| Income taxes | (9,756) | (6,701) | (3.7%) | (3.3%) |
| PROFIT FOR THE PERIOD | 35,853 | 26,987 | 13.7% | 13.3% |
| Non-controlling interests | 1,044 | 145 | 0.4% | 0.1% |
| PROFIT FOR THE PERIOD ATTRIBUTABLE TO THE OWNERS OF THE PARENT |
34,809 | 26,843 | 13.3% | 13.2% |
| (€'000) | First half of 2022 | First half of 2021 | Variation % | FX variation % * |
|---|---|---|---|---|
| Revenue | 261,346 | 202,601 | 29.0% | 26.0% |
The group's revenue for the first half of 2022 soared 29.0% on the corresponding period of 2021, reaching €261,346 thousand (first half of 2021: €202,601 thousand). Calculated at constant exchange rates, the increase would have been 26.0%.
The revenue was attributable to both the huge surge in demand and the group's capacity to grasp new opportunities. A breakdown of revenue by geographical segment is as follows:
| REVENUE BY GEOGRAPHICAL SEGMENT | First half | First half | Variation % | FX variation % * |
|---|---|---|---|---|
| (€'000) | of 2022 | of 2021 | ||
| Europe, Middle East and Africa | 187,103 | 146,958 | 27.3% | 27.3% |
| APAC | 36,275 | 29,764 | 21.9% | 13.4% |
| North America | 31,841 | 21,497 | 48.1% | 34.7% |
| South America | 6,127 | 4,382 | 39.8% | 24.3% |
| Total | 261,346 | 202,601 | 29.0% | 26.0% |
* The FX variation % is calculated as the percentage of change at constant exchange rates, i.e., using those at 30 June 2021.
The geographical segments reflect the geographical location of the countries in which the revenue is earned considering the group's marketing strategies.
All geographical segments contributed to the significant growth in consolidated revenue in the first half of 2022, with double-digit increases in EMEA (Europe, Middle East and Africa), APAC (Asia-Pacific) and the Americas.
A breakdown of revenue by market is as follows:
| REVENUE BY MARKET | First half of 2022 |
First half | Variation % | FX variation % |
|---|---|---|---|---|
| (€'000) | of 2021 | |||
| HVAC revenue | 171,370 | 129,678 | 32.1% | 28.9% |
| REF revenue | 87,513 | 70,631 | 23.9% | 21.3% |
| Total core revenue | 258,883 | 200,310 | 29.2% | 26.2% |
| Non-core revenue | 2,463 | 2,292 | 7.5% | 7.3% |
| Total revenue | 261,346 | 202,601 | 29.0% | 26.0% |
In line with prior periods, growth trends became stronger in the refrigeration (especially food retail) and HVAC (notably, datacentre and indoor air quality) sectors. Moreover, the residential heat pump segment in Europe continued to accelerate, driven by the many initiatives that make it a pillar of the strategy of environmental sustainability and the reduction of European dependence on gas and fossil fuels in general. This explains the particularly strong performance of the HVAC market, especially in the EMEA region.
On the other hand, Carel continues to pursue its growth strategy in overseas regions. The results for the period confirm strong growth in the Americas and the APAC region, partially slowed down during the period by the recent lockdowns in China.
The main financial indicators for the first half of 2022 compared with the corresponding period of the previous year are set out below.
| (€'000) | First half of 2022 | First half of 2021 | Variation | Variation % |
|---|---|---|---|---|
| EBITDA1 | 56,106 | 44,123 | 11,983 | 27.2% |
| EBITDA % 2 | 21.5% | 21.8% | n.a. | (1.4%) |
| ADJUSTED EBITDA 3 | 56,343 | 45,309 | 11,034 | 24.4% |
| ADJUSTED EBITDA % 4 | 21.6% | 22.4% | n.a. | (3.6%) |
| Profit for the period | 35,853 | 26,987 | 8,865 | 32.9% |
The group's EBITDA % for the first half of 2022 was 21.5%, essentially in line with the corresponding period of the previous year (21.8%). In absolute terms, EBITDA amounted to €56,106 thousand (+27.2% compared to the same period of the previous year).
The rise in EBITDA is mainly due to the operating leverage and the consolidation for the entire period of the companies acquired in 2021.
Costs of raw materials and goods and changes in inventories rose both in absolute terms and as a percentage of revenue (from 43.7% to 45.5%) mainly due to the inflationary pressure on the purchase prices of raw materials and the ongoing shortage of certain electronic components.
Personnel expense increased in absolute terms due to the increase in the number of employees over the past 12 months. As a percentage of revenue, it came to 21.3% (first half of 2021: 24.3%).
Adjusted EBITDA amounted to €56,343 thousand, compared to €45,309 thousand for the first half of 2021. The adjusted costs chiefly refer to consultancy costs for M&A activities (€237 thousand).
Amortisation and depreciation amounted to €11,168 thousand (first half of 2021: €9,669 thousand). Of this amount, €2,490 thousand (first half of 2021: €1,627 thousand) refers to the amortisation of gains allocated upon consolidation of the companies acquired in previous years.
Net financial expense amounted to €1,540 thousand (first half of 2021: €1,130 thousand). The increase is mainly attributable to higher interest expense on bonds issues and as a result of the related origination costs, which were recognised at amortised cost.
Since the acquisition of Arion was achieved in stages, the initial 40% investment held by the parent was measured at fair value, generating a gain of €2,098 thousand, which was recognised in profit or loss.
The group tax rate is 21.4%, up from 19.9% at 30 June 2021.
Profit amounted to €35,853 thousand compared to €26,987 thousand in the corresponding period of the previous year, showing an increase of 32.9%.
1 EBITDA is not identified as an accounting measure under the IFRS, but the group calculates EBITDA as the sum of the profit before tax, the share of profit (loss) of equity-accounted investees, exchange differences, net financial income (expense) and amortisation, depreciation and impairment losses. It uses EBITDA to assess its operating performance.
2 The EBITDA % is the ratio of EBITDA to revenue.
3 Adjusted EBITDA is not identified as an accounting measure under the IFRS, but is commonly used by both management and investors to evaluate the operating performance of the company and group. Adjusted EBITDA is EBITDA plus costs taken from the consolidated financial statements prepared in accordance with the IFRS integrated by the notes thereto.
4 The adjusted EBITDA % is the ratio of adjusted EBITDA to revenue.
The main statement of financial position indicators at 30 June 2022 compared with those at 31 December 2021 are set out below:
| STATEMENT OF FINANCIAL POSITION | 30.06.2022 | 31.12.2021 | Variation % |
|---|---|---|---|
| (€'000) | |||
| Net non-current assets 5 | 237,814 | 230,338 | 3.2% |
| Net working capital 6 | 93,044 | 55,591 | 67.4% |
| Defined benefit plans | (7,906) | (8,612) | (8.2%) |
| Net invested capital 7 | 322,952 | 277,317 | 16.5% |
| Equity | 198,304 | 169,875 | 16.7% |
| Call options on non-controlling interests | 49,892 | 49,602 | 0.6% |
| Net financial debt | 74,756 | 57,841 | 29.2% |
| Total | 322,952 | 277,317 | 16.5% |
Non-current assets increased by €7,477 thousand on 31 December 2021, mainly due to the consolidation of Arion which led to the recognition of goodwill and technology for a total of €4,283 thousand. Reference should be made to note 2 for more information on the allocation of gains.
Investments in property, plant and equipment amounted to €7,882 thousand, compared to €5,423 thousand in the first half of 2021. The main investments related to the construction of the new production site in Croatia in order to meet increased demand, especially in the EMEA region, and the construction of new production lines at the Italian and Chinese sites. Intangible assets increased by €1,040 thousand (€1,488 thousand in the first half 2021), net of goodwill and gains on the acquisition made.
The breakdown of investments by geographical segment, net of right-of-use assets and goodwill, is as follows:
| INVESTMENTS | First half of 2022 | First half of 2021 | Variation |
|---|---|---|---|
| Europe, Middle East and Africa | 7,273 | 5,873 | 23.8% |
| APAC | 1,169 | 546 | >100% |
| North America | 200 | 441 | (54.6%) |
| South America | 280 | 51 | >100% |
| Total investments | 8,922 | 6,911 | 29.1% |
Net working capital increased from €55,591 thousand at 31 December 2021 to €93,044 thousand at 30 June 2022. This increase was mainly due to trade receivables which rose by €27,814 thousand chiefly as a result of sales volumes and higher inventories (+€21,142 thousand) which were necessary to support the organic growth of the period. These increases are partly offset by higher trade payables (+€11,159 thousand).
5 Net non-current assets is the sum of property, plant and equipment, intangible assets, equity-accounted investments and other noncurrent assets less other non-current liabilities.
6 Net working capital is the sum of trade receivables, inventories, tax assets, other current assets, deferred tax assets, trade payables, current tax liabilities, other current liabilities, deferred tax liabilities and provisions for risks.
7 Net invested capital is the sum of (i) net non-current assets, (ii) net working capital and (iii) defined benefit plans.
The net financial debt amounted to €74,756 thousand, compared to €57,841 thousand at 31 December 2021, as shown below:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Non-current financial liabilities | 114,670 | 70,180 |
| Current financial liabilities | 62,788 | 61,213 |
| Non-current lease liabilities | 22,969 | 23,520 |
| Current lease liabilities | 4,598 | 4,037 |
| Cash and cash equivalents | (124,757) | (100,625) |
| Current financial assets | (5,513) | (483) |
| Net financial debt | 74,756 | 57,841 |
| Net financial debt (excluding the effects of IFRS 16) | 47,188 | 30,285 |
| Net bank loans and borrowings | 45,748 | 28,845 |
The net financial debt is mainly comprised of:
At 30 June 2022, over 70% of cash and cash equivalents and current financial assets were held by Italian group companies and approximately 5% by the Chinese subsidiary. The remaining amount was split between the other group companies.
During the period, dividends of €14,995 thousand were also distributed (30 June 2021: €11,998 thousand). Reference should be made to the statement of cash flows for more information on changes in such caption.
The workforce increased by 70 employees at 30 June 2022 and is broken down by geographical segment as follows:
| 30.06.2022 | 31.12.2021 | Variation | |
|---|---|---|---|
| Europe, Middle East and Africa | 1,384 | 1,353 | 31 |
| APAC | 347 | 328 | 19 |
| North America | 153 | 136 | 17 |
| South America | 51 | 48 | 3 |
| Total workforce | 1,935 | 1,865 | 70 |
The group's financial position, financial performance and cash flows may be influenced by a number of factors related to the general macroeconomic backdrop, such as changes in GDP, the cost of raw materials and the level of business confidence in the various countries in which the group operates.
Significant macroeconomic events, such as a generalised and significant increase in the price of the main raw materials, a considerable drop in demand in one of the group's main new markets, a lingering uncertainty and volatility on financial and capital markets, a negative interest rate trend and unfavourable exchange rate fluctuations in the group's main currencies, may negatively affect the group's outlook and operations, in addition to its performance figures and financial position.
The effects of such macroeconomic context may inevitably also have an impact on the other risks described below.
The markets in which the group operates may be influenced to varying degrees by often unpredictable cyclical expansion and resizing. The ways in which the main customers absorb these fluctuations in demand and reflect them through the entire production chain may have a significant impact on procurement policies and inventories management and, as a result, on working capital needs and the ability to adequately absorb fixed costs.
In the first half of 2022, demand for Carel Group products was particularly positive despite the continuing shortage of certain components, which reduced its range. The dynamics of the different markets, in terms of both their geographical size and product families, including legislative measures, were closely monitored, both in order to adjust commercial, procurement and production policies and to identify opportunities to develop new products.
The group's debt partly bears floating interest rates. Given its ample liquidity, it has an immaterial liquidity risk with respect to its short-term deadlines and, therefore, this risk principally refers to its medium to longterm financing. When deemed significant, the group agrees hedging instruments to neutralise interest rates fluctuations.
The group still has a high level of liquidity.
The group's credit risk management policy includes rating its customers, setting purchase limits and taking legal action. It prepares periodic reports to ensure tight control over credit collection. Each group company has a credit manager in charge of credit collection on sales made in their markets. Coordination between the companies is based on the electronic exchange of information about common customers and the coordination of delivery blocks or the commencement of legal action. The loss allowance is equal to the nominal amount of the uncollectible receivables after deducting the part secured with bank collateral. Impairment losses are recognised considering past due receivables from customers with financial difficulties and receivables for which legal action has commenced. The group mainly deals with well-known and reputable customers. Its policy is to constantly monitor those customers that request payment extensions.
As already mentioned, the group has not recorded significant changes in credit management and related risks.
Inadequate management of the group's strategic suppliers with reference to quality controls, delivery times and requested production flexibility would result in the risk of potential operating inefficiencies and inability to satisfy customers' needs.
In order to tackle this risk, Carel subjects its suppliers to an initial evaluation, followed by regular subsequent evaluations, particularly strategic suppliers. This evaluation measures their suitability in terms of technological and production capacity, overall quality of processes and products, ISO standards quality certifications, business and financial situation and compliance with standards of ethical behaviour.
The second quarter of 2022 was characterised by the continued shortage of energy commodities and electronic equipment which had begun in the previous quarters and which, to date, shows no signs of easing. This is one of the main causes behind the rise in inflation (+8.1% in May 2022 in the Eurozone), also fuelled by the conflict between Russia and Ukraine. In addition to this already challenging scenario, the severe lockdowns imposed in China due to a resurgence of the COVID-19 pandemic, which put further pressure on the global supply chain, and the implementation of a restrictive monetary policy by the European Central Bank and the Federal Reserve have also come into play. The latter has exacerbated market and consumer fears of a possible recession in the near future, notably in Europe and the US.
However, the group continues to report robust revenue growth thanks to both extremely positive demand in almost all the sectors in which it operates (particularly in certain segments such as heat pumps, data centres, room air quality and refrigeration in supermarkets) and the relentless and significant efforts to mitigate the effects of the shortage of electronic components. Unless the shortage of materials further deteriorates, which is not foreseeable as of today, the above elements should ensure a double-digit percentage revenue growth trend in the lower/middle second decile also for the second half of 2022 (on a like-for-like basis and at current exchange rates).
at 30 June 2022
| (€'000) | Note | 30.06.2022 | 31.12.2021 |
|---|---|---|---|
| Property, plant and equipment | 1 | 89,270 | 84,403 |
| Intangible assets | 2 | 135,076 | 134,570 |
| Equity-accounted investments | 3 | 1,419 | 1,250 |
| Other non-current assets | 4 | 12,716 | 10,407 |
| Deferred tax assets | 5 | 7,968 | 7,022 |
| Non-current assets | 246,449 | 237,652 | |
| Trade receivables | 6 | 102,269 | 74,455 |
| Inventories | 7 | 102,049 | 80,907 |
| Current tax assets | 8 | 1,916 | 3,886 |
| Other current assets | 9 | 12,690 | 9,788 |
| Current financial assets | 10 | 5,513 | 483 |
| Cash and cash equivalents | 11 | 124,757 | 100,625 |
| Current assets | 349,194 | 270,144 | |
| TOTAL ASSETS | 595,643 | 507,796 | |
| Equity attributable to the owners of the parent | 12 | 182,833 | 154,952 |
| Equity attributable to non-controlling interests | 13 | 15,471 | 14,923 |
| Total equity | 198,304 | 169,875 | |
| Non-current financial liabilities | 14 | 137,639 | 93,700 |
| Provisions for risks | 15 | 2,143 | 2,157 |
| Defined benefit plans | 16 | 7,906 | 8,612 |
| Deferred tax liabilities | 17 | 17,602 | 17,110 |
| Other non-current liabilities | 18 | 50,559 | 49,894 |
| Non-current liabilities | 215,850 | 171,473 | |
| Current financial liabilities | 14 | 67,386 | 65,250 |
| Trade payables | 19 | 77,603 | 66,444 |
| Current tax liabilities | 20 | 5,813 | 4,775 |
| Provisions for risks | 15 | 2,005 | 1,907 |
| Other current liabilities | 21 | 28,682 | 28,073 |
| Current liabilities | 181,489 | 166,449 | |
| TOTAL LIABILITIES AND EQUITY | 595,643 | 507,796 |
| (€'000) | Note | First half of 2022 | First half of 2021 |
|---|---|---|---|
| Revenue | 22 | 261,346 | 202,601 |
| Other revenue | 23 | 2,023 | 2,761 |
| Costs of raw materials, consumables and goods and changes in inventories |
24 | (119,010) | (88,575) |
| Services | 25 | (31,691) | (23,420) |
| Capitalised development expenditure | 26 | 275 | 803 |
| Personnel expense | 27 | (55,633) | (49,173) |
| Other expense, net | 28 | (1,203) | (874) |
| Amortisation, depreciation and impairment losses | 29 | (11,168) | (9,669) |
| OPERATING PROFIT | 44,938 | 34,454 | |
| Net financial expense | 30 | (1,540) | (1,130) |
| Net exchange losses | 31 | (153) | (255) |
| Fair value gain (loss) on call option | 32 | - | - |
| Share of profit of equity-accounted investees | 33 | 2,363 | 618 |
| PROFIT BEFORE TAX | 45,608 | 33,688 | |
| Income taxes | 34 | (9,756) | (6,701) |
| PROFIT FOR THE PERIOD | 35,853 | 26,987 | |
| Non-controlling interests | 1,044 | 145 | |
| PROFIT FOR THE PERIOD ATTRIBUTABLE TO THE OWNERS OF THE PARENT |
34,809 | 26,843 |
| (€'000) | Note | First half of 2022 | First half of 2021 |
|---|---|---|---|
| Profit for the period | 35,853 | 26,987 | |
| Items that may be subsequently reclassified to profit or loss: | |||
| - Fair value gains on hedging derivatives net of the tax effect | 875 | 131 | |
| - Exchange differences | 6,741 | 3,457 | |
| Items that may not be subsequently reclassified to profit or loss: | |||
| - Actuarial gains on employee benefits net of the tax effect | 556 | 142 | |
| Comprehensive income | 44,025 | 30,717 | |
| attributable to: | |||
| - Owners of the parent | 42,672 | 30,442 | |
| - Non-controlling interests | 1,353 | 276 | |
| Earnings per share | |||
| Earnings per share (in Euros) | 12 | 0.35 | 0.27 |
| (€'000) | Note | First half of 2022 | First half of 2021 |
|---|---|---|---|
| Profit for the period | 35,853 | 26,987 | |
| Adjustments for: | |||
| Amortisation, depreciation and impairment losses | 29 | 11,167 | 9,669 |
| Accruals to/utilisations of provisions | 2,297 | 1,441 | |
| Non-monetary net expense | (391) | (986) | |
| Income taxes | (1,939) | (308) | |
| Gains on the sale of non-current assets | - | (367) | |
| Changes in working capital: | |||
| Change in trade receivables and other current assets | (27,398) | (17,909) | |
| Change in inventories | 7 | (20,350) | (7,844) |
| Change in trade payables and other current liabilities | 11,541 | 13,044 | |
| Change in non-current assets | (1,959) | (152) | |
| Change in non-current liabilities | 771 | (75) | |
| Cash flows from operating activities | 9,591 | 23,501 | |
| Net interest paid | (1,254) | (1,033) | |
| Net cash flows from operating activities | 8,337 | 22,468 | |
| Investments in property, plant and equipment | 1 | (7,881) | (5,423) |
| Investments in intangible assets | 2 | (1,041) | (1,488) |
| Disinvestments of financial assets | 10 | - | 4,390 |
| Disinvestments of property, plant and equipment and intangible assets |
114 | 715 | |
| Interest collected | 53 | 38 | |
| Investments in equity-accounted investees | 3 | - | - |
| Business combinations net of cash acquired | 2 | (932) | (29,563) |
| Cash flows used in investing activities | (9,687) | (31,332) | |
| Disposals (acquisitions) of non-controlling interests | - | - | |
| Capital increases | - | - | |
| Repurchase of treasury shares | - | - | |
| Dividend distributions | 12 | (14,995) | (11,988) |
| Dividends distributed to non-controlling interests | (1,583) | - | |
| Investments in current financial assets | (3,987) | - | |
| Increase in financial liabilities | 14 | 81,950 | 26,000 |
| Decrease in financial liabilities | 14 | (35,295) | (26,824) |
| Decrease in lease liabilities | 14 | (2,504) | (2,312) |
| Cash flows from (used in) financing activities | 23,586 | (15,124) | |
| Change in cash and cash equivalents | 22,235 | (23,988) | |
| Cash and cash equivalents - opening balance | 100,625 | 105,586 | |
| Exchange differences | 1,897 | 848 | |
| Cash and cash equivalents - closing balance | 124,757 | 82,447 |
| Share capital |
Legal reserve |
Translation reserve |
Hedging reserve |
Other reserves |
Retained earnings |
Profit for the period |
Equity | Equity att. to non controlling interests |
Total equity |
|
|---|---|---|---|---|---|---|---|---|---|---|
| Balance at 01.01.2021 | 10,000 | 2,000 | (2,686) | (436) | 56,530 | 58,795 | 35,112 | 159,317 | 304 | 159,621 |
| Owner transactions | ||||||||||
| Allocation of prior year profit |
- | - | - | - | 20,896 | 14,216 | (35,112) | - | - | - |
| Defined benefit plans | - | - | - | - | 409 | - | - | 409 | - | 409 |
| Dividend distributions | - | - | - | - | (11,988) | - | (11,988) | - | (11,988) | |
| Call options for non controlling interests |
(49,075) | (49,075) | (49,075) | |||||||
| Change in consolidation scope |
- | - | - | - | - | - | - | 14,490 | 14,490 | |
| Total owner transactions |
10,000 | 2,000 | (2,686) | (436) | 16,772 | 73,011 | - | 98,663 | 14,794 | 113,457 |
| Profit for the period | 26,843 | 26,843 | 145 | 26,987 | ||||||
| Other comprehensive income |
- | - | 3,326 | 131 | 142 | - | - | 3,599 | 131 | 3,730 |
| Comprehensive income | - | - | 3,326 | 131 | 142 | - | 26,843 | 30,442 | 276 | 30,717 |
| Balance at 30.06.2021 | 10,000 | 2,000 | 640 | (305) | 16,915 | 73,011 | 26,843 | 129,104 | 15,069 | 144,173 |
| Balance at 01.01.2022 | 10,000 | 2,000 | 3,853 | (51) | 17,079 | 73,011 | 49,059 | 154,952 | 14,923 | 169,875 |
| Owner transactions | ||||||||||
| Allocation of prior year profit |
- | - | - | - | 27,145 | 21,914 | (49,059) | - | - | - |
| Defined benefit plans | - | - | - | - | 204 | 204 | - | 204 | ||
| Repurchase of treasury shares |
- | - | - | - | - | - | - | - | ||
| Dividend distributions | - | - | - | - | (14,995) | - | (14,995) | (1,583) | (16,578) | |
| Call options for non controlling interests |
- | - | ||||||||
| Change in consolidation scope |
- | - | - | - | - | - | - | 778 | 778 | |
| Total owner transactions |
10,000 | 2,000 | 3,853 | (51) | 29,433 | 94,925 | - | 140,161 | 14,118 | 154,279 |
| Profit for the period | 34,809 | 34,809 | 1,044 | 35,853 | ||||||
| Other comprehensive income |
- | - | 6,432 | 875 | 556 | - | - | 7,863 | 309 | 8,172 |
| Comprehensive income | - | - | 6,432 | 875 | 556 | - | 34,809 | 42,672 | 1,353 | 44,025 |
| Balance at 30.06.2022 | 10,000 | 2,000 | 10,285 | 824 | 29,990 | 94,925 | 34,809 | 182,833 | 15,471 | 198,304 |
Carel Industries S.p.A. (the "parent") heads the group of the same name and has its registered office in Via Dell'Industria 11, Brugine (PD). It is a company limited by shares and its tax code and VAT number is 04359090281. It is included in the Padua company register.
The group provides control instruments to the air-conditioning (HVAC) and commercial and industrial refrigeration (REF) markets and also produces air humidification systems. It has 12 production sites and 21 commercial companies which serve all the main markets.
The IFRS condensed interim consolidated financial statements at 30 June 2022 refer to the period from 1 January 2022 to 30 June 2022.
The Carel Industries Group adopted the IFRS endorsed by the European Union for the first time on 1 January 2015.
The parent's Board of Directors approved the condensed interim consolidated financial statements at 30 June 2022 on 4 August 2022.
The condensed interim consolidated financial statements include the results of the parent and its subsidiaries, based on their updated accounting records.
The condensed interim consolidated financial statements at 30 June 2022 have been prepared in compliance with IAS 34 Interim financial reporting issued by the International Accounting Standard Board (IASB). Pursuant to IAS 34, these notes have been prepared in a condensed format and do not include all the disclosures required for annual financial statements. They solely provide information about those captions that, due to their size, content or changes therein during the period, are key to an understanding of the Group's financial position, financial performance and cash flows. Therefore, these condensed interim consolidated financial statements shall be read in conjunction with the consolidated financial statements as at and for the year ended 31 December 2021. The condensed interim consolidated financial statements include the statement of profit or loss, statement of comprehensive income, statement of financial position, statement of changes in equity, statement of cash flows and these notes, which are an integral part thereof.
The condensed interim consolidated financial statements were prepared in thousands of Euro, which is the Group's functional and presentation currency. There may be rounding differences when items are added together as the individual items are calculated in Euros.
The condensed interim consolidated financial statements have been prepared on a going concern basis, considering the Group's financial soundness, performance for the period and outlook, in addition to its available resources, which are sufficient to cover any contractual commitments and strategic needs.
Preparation of condensed interim consolidated financial statements under the IFRS requires management to make judgements and estimates that affect the amounts presented therein and in the notes. Actual results may differ from these judgements.
The condensed interim consolidated financial statements include the financial statements at 30 June 2022 of the parent, Carel Industries S.p.A., and its Italian and foreign subsidiaries.
Subsidiaries are those entities over which the parent has control, as defined in IFRS 10 Consolidated financial statements. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of the subsidiaries are consolidated starting from the date when control exists until when it ceases to exist.
Note 35 "Other information" lists the entities included in the consolidation scope at 30 June 2022.
During the period, Arion S.r.l. was consolidated on a line-by-line basis.
Information on this acquisition is provided below.
On 15 April 2022, the parent acquired 30% of Arion S.r.l., in which it already held a 40% investment. The remaining 30% is owned by Bridgeport S.p.A..
Of this investment, 30% was acquired for a cash consideration of €1,626 thousand. As control was acquired in several stages, in compliance with the IFRS, the carrying amount of the existing investment was recalculated based on the fair value of the assets acquired, recognising a gain totalling €2,097 thousand in profit or loss.
The Carel Industries Group acquired control on 1 April 2022 and thus has included the investee in the consolidation scope since such date.
As the assets acquired and liabilities assumed are a business, the transaction is considered a business combination in accordance with IFRS 3. Allocation of the consideration is still provisional. The definitive allocation of the acquisition price will be made within 12 months of the acquisition.
The assets acquired and liabilities assumed are detailed below:
| ARION S.R.L | ||||||
|---|---|---|---|---|---|---|
| (€'000) | Statement of financial position at the acquisition date |
Allocation | Fair value of acquired assets |
|||
| Property, plant and equipment | 153 | 105 | 258 | |||
| Intangible assets | 21 | 2,302 | 2,323 | |||
| Deferred tax assets | 22 | - | 22 | |||
| Non-current assets | 196 | 2,407 | 2,603 | |||
| Trade receivables | 356 | - | 356 | |||
| Inventories | 174 | - | 174 | |||
| Other assets | 109 | - | 109 | |||
| Cash and cash equivalents | 765 | - | 765 | |||
| Current assets | 1,404 | - | 1,404 | |||
| TOTAL ASSETS | 1,600 | 2,407 | 4,007 | |||
| Financial liabilities | (160) | (105) | (265) | |||
| Provisions for risks | - | - | - | |||
| Defined benefit plans | (39) | - | (39) | |||
| Deferred tax liabilities | - | (642) | (642) | |||
| Non-current liabilities | (199) | (747) | (946) | |||
| Financial liabilities | (34) | - | (34) | |||
| Trade payables | (199) | - | (199) | |||
| Tax liabilities | (194) | - | (194) | |||
| (€'000) | Statement of financial position at the acquisition date |
Allocation | Fair value of acquired assets |
|---|---|---|---|
| Other current liabilities | (43) | - | (43) |
| Current liabilities | (470) | - | (470) |
| TOTAL LIABILITIES | (669) | (747) | (1,416) |
When allocating the acquisition price, the group recognised €2,303 thousand attributable to technology, in addition to the relevant deferred taxes €1,982 thousand of the difference between the consideration paid, the assets acquired and the liabilities assumed was provisionally allocated to goodwill, calculated using the proportional method.
The condensed interim consolidated financial statements at 30 June 2022 include the financial statements of Carel Industries S.p.A. and the Italian and foreign entities over which it has direct or indirect control. Specifically, the consolidation scope includes:
The parent adopted the following consolidation criteria:
In preparing these condensed interim consolidated financial statements, the group applied the same accounting policies as those adopted in drafting the consolidated financial statements at 31 December 2021, to which reference should be made, with the exception of that set out in the following paragraph with regard to new standards.
The group applied the following standards, amendments and interpretations for the first time starting from 1 January 2022:
The adoption of these amendments did not affect the Group's consolidated financial statements.
On 12 February 2021, the IASB published Disclosure of accounting policies—amendments to IAS 1 and IFRS Practice statement 2 and definition of accounting estimates—amendments to IAS 8. The amendments improve accounting policy disclosures so that they provide more useful information to investors and other primary users of the financial statements and help companies distinguish changes in accounting estimates from changes in accounting policies. These amendments will be effective for annual reporting periods beginning on or after 1 January 2023, with early application permitted. The directors do not expect these amendments to significantly affect the Group's consolidated financial statements.
At the reporting date, the EU's relevant bodies had not yet completed the endorsement process for adoption of the following amendments and standards:
and liabilities arising from a single transaction that clarifies how companies account for deferred taxes on transactions that can give rise to equal amounts of assets and liabilities such as leases and decommissioning obligations. The amendment will be effective for annual reporting periods beginning on or after 1 January 2023, but earlier application is allowed. The directors do not expect these amendments to significantly affect the Group's consolidated financial statements.
The main exchange rates (against €1) used to translate the foreign currency financial statements at 30 June 2022, 31 December 2021 and 30 June 2021 are set out below:
| Currency | Average rate | ||||
|---|---|---|---|---|---|
| 30.06.2021 | 30.06.2022 | 31.12.2021 | 30.06.2022 | ||
| Pound sterling | 0.868 | 0.842 | 0.840 | 0.858 | |
| Hong Kong dollar | 9.355 | 8.556 | 8.833 | 8.149 | |
| Brazilian real | 6.490 | 5.557 | 6.310 | 5.423 | |
| US dollar | 1.205 | 1.093 | 1.133 | 1.039 | |
| Australian dollar | 1.563 | 1.520 | 1.562 | 1.510 | |
| Chinese renminbi (yuan) | 7.796 | 7.082 | 7.195 | 6.962 | |
| Indian rupee | 88.413 | 83.318 | 84.229 | 82.113 | |
| South African rand | 17.524 | 16.849 | 18.063 | 17.014 | |
| Russian ruble * | 89.550 | 83.742 | 85.300 | 53.858 | |
| South Korean won | 1,347.540 | 1,347.840 | 1,346.380 | 1,351.600 | |
| Mexican peso | 24.327 | 22.165 | 23.144 | 20.964 | |
| Swedish krona | 10.131 | 10.480 | 10.250 | 10.730 | |
| Japanese yen | 129.868 | 134.307 | 130.380 | 141.540 | |
| Polish zloty | 4.537 | 4.635 | 4.597 | 4.690 | |
| Thai baht | 37.153 | 36.855 | 37.653 | 36.754 | |
| Croatian kuna | 7.550 | 7.542 | 7.516 | 7.531 | |
| UAE dirham | 4.427 | 4.016 | 4.160 | 3.815 | |
| Singapore dollar | 1.606 | 1.492 | 1.528 | 1.448 | |
| Norwegian krone | 10.176 | 9.982 | 9.989 | 10.349 | |
| Swiss franc | 1.095 | 1.032 | 1.033 | 0.996 | |
| Ukrainian hryvnia | 33.459 | 31.732 | 30.922 | 30.402 | |
| Canadian dollar | 1.503 | 1.390 | 1.439 | 1.343 | |
| Turkish lira | 10.382 | 16.258 | 15.234 | 17.322 |
* The average rate for the first half of 2022 and the closing rate at 30 June 2022 are those provided by the Central Bank of Russian Federation.
At 30 June 2022, property, plant and equipment amounted to €89,270 thousand compared to €84,403 thousand at 31 December 2021. The following table provides a breakdown of the caption and the changes of the period.
| CHANGES OF THE PERIOD | ||||||
|---|---|---|---|---|---|---|
| (€'000) | Land and buildings |
Plant and machinery |
Industrial and commercial equipment |
Other items of property, plant and equipment |
Assets under construction and payments on account |
Total |
| 31 December 2021 | 45,561 | 18,191 | 10,530 | 5,377 | 4,743 | 84,403 |
| - Historical cost | 57,642 | 41,356 | 47,606 | 19,331 | 4,743 | 170,679 |
| - Accumulated depreciation | (12,081) | (23,164) | (37,077) | (13,953) | - | (86,276) |
| Changes in 2022 | ||||||
| - Investments | 154 | 1,409 | 1,530 | 677 | 4,112 | 7,882 |
| - Investments in right-of-use assets | 1,828 | - | 34 | 587 | - | 2,449 |
| - Business combinations (historical cost) |
- | 104 | 56 | 36 | 17 | 214 |
| - Business combinations (right of-use assets) |
87 | - | 19 | - | - | 105 |
| - Reclassifications (historical cost) | (7) | 514 | 353 | 17 | (823) | 53 |
| - Impairment losses | - | - | - | - | - | - |
| - Sales (historical cost) | - | (151) | (101) | (175) | - | (426) |
| - Sales - Right-of-use assets (historical cost) |
- | - | - | 2 | - | 2 |
| - Exchange differences on historical cost |
880 | 599 | 363 | 178 | 13 | 2.034 |
| - Exchange differences on accumulated depreciation |
(151) | (237) | (221) | (137) | - | (745) |
| - Exchange differences on right-of-use assets |
48 | - | - | 36 | - | 83 |
| - Depreciation | (424) | (1.635) | (1.939) | (707) | - | (4.704) |
| - Depreciation of right-of-use assets |
(1.557) | - | (88) | (405) | - | (2.050) |
| - Business combinations (accumulated depreciation) |
- | (35) | (23) | (8) | - | (66) |
| - Reclassifications (accumulated depreciation) |
(3) | (19) | - | 19 | - | (3) |
| - Restatement of right-of-use assets | (316) | - | - | (6) | - | (322) |
| - Sales (accumulated depreciation) |
- | 124 | 93 | 145 | - | 361 |
| - Sales - Right-of-use assets (accumulated depreciation) |
- | - | - | - | - | - |
| Total | 538 | 673 | 75 | 261 | 3.320 | 4.867 |
| Balance at 30 June 2022 | 46,100 | 18,865 | 10,605 | 5,638 | 8,063 | 89,270 |
| including: | ||||||
| - Historical cost | 60,316 | 43,831 | 49,859 | 20,684 | 8,063 | 182,753 |
| - Accumulated depreciation | (14,213) | (24,947) | (39,254) | (15,065) | - | (93,479) |
Investments in the first half of 2022 were mainly concentrated at Carel Adriatic for the construction of the second production site as well as at the parent and the Chinese site for industrial equipment for new production lines.
Business combinations refer to the consolidation of Arion.
The group did not capitalise borrowing costs, in line with previous years.
At 30 June 2022, this caption amounted to €135,076 thousand compared to €134,570 thousand at the end of 2021. The following table presents changes in these assets:
| CHANGES OF THE PERIOD | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (€'000) | Development expenditure |
Trademarks, industrial patents and software licences |
Goodwill | Other assets | Assets under development and payments on account |
Total | |||
| 31 December 2021 | 6,269 | 9,651 | 67,347 | 48,807 | 2,496 | 134,570 | |||
| - Historical cost | 27,073 | 28,258 | 67,347 | 56,472 | 2,496 | 181,646 | |||
| - Accumulated amortisation | (20,804) | (18,607) | (7,665) | - | (47,076) | ||||
| Changes in 2022 | |||||||||
| - Investments | 31 | 428 | - | 3 | 579 | 1,041 | |||
| - Business combinations (historical cost) |
- | - | 1,980 | 2,355 | - | 4,335 | |||
| - Reclassifications (historical cost) |
1,243 | 296 | - | - | (1,363) | 175 | |||
| - Sales (historical cost) | - | (6) | (469) | - | - | (475) | |||
| - Exchange differences on historical cost |
33 | 15 | 74 | 27 | 10 | 159 | |||
| - Exchange differences on accumulated amortisation |
(8) | (22) | - | (26) | - | (55) | |||
| - Amortisation | (1,041) | (1,401) | - | (1,972) | - | (4,414) | |||
| - Business combinations (accumulated amortisation) |
- | - | - | (31) | - | (31) | |||
| - Reclassifications (accumulated amortisation) |
- | (225) | - | (9) | - | (234) | |||
| - Sales (accumulated amortisation) |
- | 6 | - | 0 | - | 6 | |||
| Total | 258 | (909) | 68,932 | 347 | (775) | 506 | |||
| Balance at 30 June 2022 | 6,527 | 8,742 | 68,932 | 49,154 | 1,722 | 135,076 | |||
| including: | |||||||||
| - Historical cost | 28,380 | 28,990 | 68,932 | 58,857 | 1,722 | 186,880 | |||
| - Accumulated amortisation | (21,853) | (20,249) | - | (9,703) | - | (51,804) |
Investments amounted to €1,041 thousand. They were mainly concentrated at the parent and were related to the capitalisation of software and development projects, some of which are completed and others are under way.
As a result of the acquisition made, the group recognised intangible assets related to technology and goodwill for a total of €4,335 thousand.
Amortisation amounted to €4,413 thousand, of which €2,490 thousand refers to the allocation of the gain generated by the first-time consolidation of the companies acquired.
With regard to the goodwill recognised in these condensed interim consolidated financial statements, the directors prudently decided to test the Recuperator CGU for impairment also following the significant increase in the price of raw materials, particularly aluminium, which affected production cost. Accordingly, management deemed it appropriate to prepare a new business plan for the 2022-2025 period which was approved on 20 July 2022 in order to update the economic and financial forecasts based on current cost trends. At the same time, the discounting and growth parameters were also updated to reflect the new rate trends recorded during the period. The impairment test methodology is unchanged compared to 31 December 2021.
The resulting values in use confirm the carrying amount of both goodwill and assets.
Therefore, there was no indication of impairment of goodwill or other assets at 30 June 2022.
With regard to the intangible assets recognised in these condensed interim consolidated financial statements, specifically those related to the Hygromatik, CFM and Enginia CGUs, the directors did not detect any trigger events that would require testing their recoverability of such goodwill.
At 30 June 2022, this caption amounted to €1,419 thousand compared to €1,250 thousand at 31 December 2021. It may be analysed as follows:
| COMPANY | Registered office |
Investment % | 30.06.2022 | Change in consolidation |
Exchange differences |
Equity accounting |
31.12.2021 |
|---|---|---|---|---|---|---|---|
| (€'000) | scope | ||||||
| Arion Srl | Brescia (IT) | 70% | - | (2,126) | - | 2,097 | 29 |
| Free Polska s.p.z.o.o. | Krakow (PL) | 30% | 1,356 | - | (68) | 265 | 1,159 |
| Others | 63 | - | - | - | 63 | ||
| Total | 1,419 | (2,126) | (68) | 2,362 | 1,250 |
As described in the section on the Consolidation scope, control over Arion was acquired in several stages. Consequently, the portion of the investment already held was restated based on the fair value of the assets acquired, recognising a total gain of €2,097 thousand in profit or loss.
In the first half of 2022, the group recognised an gain of €265 thousand on the investment in Free Polska s.p.z.o.o. based on its approved financial statements at 31 December 2021.
At 30 June 2022, these amount to €12,716 thousand, compared to €10,407 thousand at 31 December 2021. A breakdown of the caption is provided below:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Guarantee deposits | 439 | 432 |
| Third parties | 214 | 176 |
| Other assets | 12,063 | 9,799 |
| Other non-current assets | 12,716 | 10,407 |
Other assets increased following payment of the taxes on the amounts allocated to intangible assets and goodwill following the purchase price allocation of Engina pursuant to article 15.10-bis of Decree law no. 185/2008. This resulted in the payment of a 16% substitute tax on the higher values allocated and recognised in the consolidated financial statements at 31 December 2021. Following the payment of €2,085 thousand, the amortisation charge of the above amounts will be deducted in the Recuperator's tax return as of 2024.
The residual balance of this caption relates to the non-current portion of the assets taxed in previous years.
At 30 June 2022, deferred tax assets amounted to €7,968 thousand compared to €7,022 thousand at 31 December 2021. The group has recognised deferred tax assets and liabilities on temporary differences between the carrying amount of assets and liabilities and their tax base.
At 30 June 2022, this caption amounted to €102,269 thousand compared to €74,455 thousand at 31 December 2021. It may be analysed as follows:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Gross trade receivables | 103,802 | 75,719 |
| Loss allowance | (1,533) | (1,265) |
| Net trade receivables | 102,269 | 74,455 |
The next table breaks down gross trade receivables by geographical segment:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Europe, Middle East and Africa | 77,619 | 56,684 |
| APAC | 13,218 | 11,185 |
| North America | 9,999 | 6,238 |
| South America | 2,966 | 1,611 |
| Total | 103,802 | 75,719 |
The group does not usually charge default interest on past due receivables. A breakdown of the receivables that are not yet due and/or are past due with the relevant loss allowance is as follows:
| 30.06.2022 | |||||
|---|---|---|---|---|---|
| (€'000) | Trade receivables |
Loss allowance |
Trade receivables |
Loss allowance |
|
| Not yet due | 94,226 | (981) | 67,699 | (724) | |
| Past due < 6 months | 8,984 | (196) | 7,430 | (159) | |
| Past due > 6 months | 285 | (174) | 134 | (134) | |
| Past due > 12 months | 307 | (182) | 456 | (247) | |
| Total | 103,802 | (1,533) | 75,719 | (1,265) |
The Group's receivables are not particularly concentrated. It does not have customers that individually account for more than 5% of the total receivables.
The loss allowance comprises management's estimates about credit losses on receivables from end customers and the sales network. It recognises the resulting impairment losses in "Other expense, net". Changes in the allowance are shown in the following table:
| (€'000) | 30.06.2022 | Accruals | Utilisations | Exchange differences |
Change in consolidation scope |
31.12.2021 |
|---|---|---|---|---|---|---|
| Loss allowance | (1,533) | (379) | 119 | (8) | - | (1,265) |
At 30 June 2021, this caption amounted to €102,049 thousand compared to €80,907 thousand at 31 December 2021. It may be analysed as follows:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Raw materials | 60,312 | 45,154 |
| Allowance for inventory write-down | (3,241) | (2,828) |
| Semi-finished products and work in progress | 5,756 | 4,455 |
| Finished goods | 44,667 | 38,515 |
| Allowance for inventory write-down | (5,930) | (4,716) |
| Payments on account | 487 | 328 |
| Total | 102,049 | 80,907 |
The group recognised an allowance for obsolete or slow-moving items to cover the difference between the cost and estimated realisable value of obsolete raw materials and finished goods.
The accrual to the statement of profit or loss was recognised in the caption "Costs of raw materials, consumables and goods and changes in inventories".
This caption includes direct tax assets which amounted to €1,916 thousand at 30 June 2022 compared to €3,886 thousand at 31 December 2021.
At 30 June 2022, this caption amounted to €12,690 thousand compared to €9,788 thousand at 31 December 2021. It may be analysed as follows:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Payments on account to suppliers | 2,052 | 1,388 |
| Other tax assets | 3,186 | 3,196 |
| VAT assets | 3,019 | 1,486 |
| Prepayments and accrued income | 2,748 | 2,551 |
| Other | 1,685 | 1,168 |
| Total | 12,690 | 9,788 |
Other is mainly comprised of amounts due from personnel and social security institutions.
At 30 June 2022, this caption amounted to €5,513 thousand compared to €483 thousand at 31 December 2021. It may be analysed as follows:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Available-for-sale securities | 2,891 | - |
| Derivatives | 1,384 | 13 |
| Other financial assets | 1,195 | 465 |
| Deposit accounts | 43 | 6 |
| Other current financial assets | 5,513 | 483 |
Available-for-sale securities refer to investments, with major counterparties, aimed at managing part of the Group's liquidity. The objective of these financial assets is the collection of contractual cash flows comprising payments of principal and interest at fixed rates at specific maturities.
The derivatives are forwards and currency options agreed to hedge commercial transactions but which do not qualify for hedge accounting. Fair value gains and losses are recognised in profit or loss. More information is available in the paragraph on financial instruments in note [34] Other information.
At 30 June 2022, this caption amounted to €124,757 thousand compared to €100,625 thousand at 31 December 2021. Reference should be made to the statement of cash flows for details of changes in the Group's cash and cash equivalents and to the directors' report for the geographical breakdown.
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Current accounts and post office deposits | 124,706 | 100,585 |
| Cash | 51 | 40 |
| Total | 124,757 | 100,625 |
Current accounts and post office deposits are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to immaterial currency risk.
At 30 June 2022, the Group's current account credit balances were not pledged in any way.
The parent's fully paid-up and subscribed share capital consists of 100,000,000 ordinary shares.
Equity may be analysed as follows:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Share capital | 10,000 | 10,000 |
| Legal reserve | 2,000 | 2,000 |
| Translation reserve | 10,286 | 3,855 |
| Hedging reserve | 824 | (51) |
| Other reserves | 29,990 | 17,079 |
| Retained earnings | 94,924 | 73,009 |
| Profit for the period/year | 34,809 | 49,059 |
| Total | 182,833 | 154,951 |
The hedging reserve includes the fair value gains and losses on interest rate hedges.
A resolution to distribute a dividend of €0.15 per share, totalling €14,995 thousand, was made on 22 April 2022.
In April 2022, the parent assigned 70,039 treasury shares for a total of €768 thousand, measured using the FIFO method, to complete the second cycle of shares assigned on 2 December 2019 related to the 2019-2021 performance period. The carrying amount of treasury shares in portfolio was subsequently reduced, with the reserve for long-term incentive plans set up in previous years also reduced by the same amount as balance. The difference between the accrual to such reserve and the carrying amount of the assigned shares was taken to the distributable income-related reserves.
The number of treasury shares in portfolio at 30 June 2022 was 30,482.
For the purposes of the performance share plan, costs totalling €204 thousand were recognised during the period with a balancing entry in other reserves as the plan is equity settled.
At 30 June 2022, following the above-mentioned assignment of treasury shares, the weighted average of outstanding ordinary shares was 99,969,518.
The earnings per share were therefore as follows:
| (€'000) | First half of 2022 | First half of 2021 |
|---|---|---|
| Number of shares (in thousands) | 99,970 | 99,866 |
| Profit for the period (in thousands of Euros) | 34,809 | 26,843 |
| Earnings per share (in Euros) | 0.35 | 0.27 |
At 30 June 2022, this caption amounted to €15,471 thousand compared to €14,923 thousand at 31 December 2021 and comprised the non-controlling interest in Carel Thailand Co. Ltd (20%), CFM (49%) and Arion S.r.l. (30%).
| 30.06.2022 | Profit for the period |
Other comprehensive income |
Dividends distributed |
Change in consolidation scope |
31.12.2021 | |
|---|---|---|---|---|---|---|
| (€'000) | ||||||
| Equity attributable to non controlling interests |
15,471 | 1,044 | 309 | (1,583) | 778 | 14,923 |
These captions may be analysed as follows:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Bank loans and borrowings at amortised cost | 73,674 | 67,942 |
| Amounts due to bondholders | 39,432 | - |
| Lease liabilities | 22,969 | 23,520 |
| Effective designated derivative hedges | - | 27 |
| Other loans and borrowings at amortised cost | 625 | 771 |
| Other financial liabilities | 940 | 1,440 |
| Non-current financial liabilities | 137,639 | 93,700 |
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Current portion of bank loans at amortised cost | 61,350 | 60,281 |
| Lease liabilities | 4,598 | 4,037 |
| Amounts due to bondholders | 114 | - |
| Bank borrowings at amortised cost | 59 | 85 |
| Derivatives held for trading at fair value through profit or loss | 311 | 45 |
| Other loans and borrowings at amortised cost | 454 | 802 |
| Other financial liabilities | 500 | - |
| Current financial liabilities | 67,386 | 65,250 |
Amounts due to bondholders refer to the issue and placement of non-convertible bonds subscribed by funds managed by Prudential Insurance Company of America ("Pricoa"). Specifically, on 6 May 2022, the parent issued two ten-year non-convertible bonds with a nominal amount of €20,000 thousand due in May 2032 and with a five-year interest-only period. These bonds are part of a private shelf agreement whereby the parent can ask Pricoa, on an uncommitted basis and over the next three years, to subscribe additional bonds up to a total maximum amount of USD150 million. They are guaranteed by the parent and certain subsidiaries.
Fixed interest accrues on these bonds from the subscription date and repayment of principal will take place annually starting from the fifth year on a straight-line basis, with the first and last payment dates in May 2028
Bonds are unrated and shall not be listed on regulated markets. Compliance with the following covenants is checked every six months:
At 30 June 2022, such covenants were complied with.
The following table shows the main characteristics of the bank loans and other loans and borrowings by maturity at 30 June 2022:
| COMPOSITION OF LOANS AT 30.06.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| (€'000) | Currency | Original amount |
Maturity | Interest rate | Outstanding liability |
Current | Non-current | |
| Deutschebank | EUR | 400 | 2023 | Fixed | 44 | 44 | - | |
| Intesa San Paolo | EUR | 6,000 | 2022 | Fixed | 6,000 | 6,000 | - | |
| Intesa San Paolo | EUR | 6,000 | 2022 | Fixed | 6,000 | 6,000 | - | |
| BNP Paribas | EUR | 10,000 | 2022 | Fixed | 10,000 | 10,000 | - | |
| Unicredit | EUR | 20,000 | 2023 | Fixed | 4,444 | 4,444 | - | |
| Unicredit | EUR | 20,000 | 2023 | Floating | 6,666 | 6,666 | - | |
| BNP Paribas | EUR | 20,000 | 2023 | Floating | 10,031 | 10,031 | - | |
| BNP Paribas | EUR | 30,000 | 2023 | Floating | 8,571 | 8,572 | - | |
| Mediobanca | EUR | 25,000 | 2023 | Floating | 25,115 | - | 25,115 | |
| Intesa San Paolo | EUR | 10,000 | 2024 | Fixed | 5,037 | 2,514 | 2,523 | |
| Credit Agricole | EUR | 10,000 | 2024 | Fixed | 5,024 | 2,500 | 2,524 | |
| Intesa San Paolo | EUR | 10,000 | 2026 | Fixed | 9,991 | - | 9,991 | |
| Intesa San Paolo | EUR | 20,000 | 2026 | Fixed | 19,983 | - | 19,983 | |
| Mediobanca | EUR | 20,000 | 2026 | Floating | 17,966 | 4,444 | 13,521 | |
| BNP Paribas | USD | 80 | 2022 | Floating | 125 | 125 | - | |
| Medio Credito Italiano | EUR | 200 | 2022 | Floating | 10 | 10 | - | |
| Banco BPM | EUR | 200 | 2023 | Floating | 17 | - | 17 | |
| Total | 135,024 | 61,350 | 73,674 |
| (€'000) | Currency | Original amount |
Maturity | Interest rate | Outstanding liability |
Current | Non-current |
|---|---|---|---|---|---|---|---|
| Senior A bonds | EUR | 20,000 | 2032 | Fixed | 19,773 | 57 | 19,716 |
| Senior B bonds | EUR | 20,000 | 2032 | Fixed | 19,773 | 57 | 19,716 |
| Total | 114 | 39,432 |
| (€'000) | Currency | Original amount |
Maturity | Interest rate | Outstanding liability |
Current | Non-current |
|---|---|---|---|---|---|---|---|
| MedioCredito Centrale Progetto Horizon 2020 |
EUR | 1,241 | 2026 | Fixed | 777 | 192 | 585 |
| Other loans | 302 | 262 | 40 | ||||
| Total | 1,079 | 454 | 625 |
Other current and non-current financial liabilities include amounts due to the non-controlling investors in CFM.
Lease liabilities refer to the lease liabilities recognised following the adoption of IFRS 16.
The following tables detail the expected cash flows with regard to contractual due dates and interest to be paid by type of loan:
| (€'000) | TOTAL | Total cash flows |
Within one year |
From one to five years |
After five years |
|---|---|---|---|---|---|
| Bank loans and borrowings at amortised cost | 73,674 | 75,448 | - | 75,448 | - |
| Amounts due to bondholders | 39,432 | 45,614 | - | 3,208 | 42,406 |
| Lease liabilities | 22,969 | 25,163 | - | 12,575 | 12,588 |
| Effective designated derivative hedges | - | - | - | - | |
| Other loans and borrowings at amortised cost | 625 | 638 | - | 638 | - |
| Other financial liabilities | 940 | 940 | - | 940 | - |
| Non-current financial liabilities | 137,639 | 147,803 | - | 92,809 | 54,994 |
| Current portion of bank loans at amortised cost | 61,350 | 62,864 | 62,864 | - | - |
| Amounts due to bondholders | 114 | 802 | 802 | - | - |
| Lease liabilities | 4,598 | 4,656 | 4,656 | - | - |
| Bank borrowings at amortised cost | 59 | 59 | 59 | - | - |
| Other loans and borrowings at amortised cost | 454 | 482 | 482 | - | - |
| Derivatives held for trading at fair value through profit or loss |
311 | 311 | 311 | - | - |
| Other financial liabilities | 500 | 500 | 500 | - | - |
| Current financial liabilities | 67,386 | 69,674 | 69,674 | - | - |
The following loans require compliance with covenants:
At 30 June 2022, such covenants were complied with.
The derivatives included under current financial liabilities are forwards and currency options agreed to hedge commercial transactions but which do not qualify for hedge accounting. More information is available in the paragraph on financial instruments in note 34 Other information. The effective designated derivative hedges include the fair value of IRS agreed to hedge interest rate risk.
The following tables show changes in current and non-current financial liabilities (including cash and noncash changes:
| (€'000) | 30.06.2022 | Net cash flows |
Fair value gains or losses |
Reclassification | 31.12.2021 |
|---|---|---|---|---|---|
| Bank loans and borrowings at amortised cost | 73,674 | 30,328 | - | (24,596) | 67,942 |
| Amounts due to bondholders | 39,432 | 39,432 | - | - | - |
| Effective designated derivative hedges | - | (27) | - | 27 | |
| Other loans and borrowings at amortised cost | 625 | (52) | - | (95) | 771 |
| Other financial liabilities | 940 | - | (500) | 1,440 | |
| Non-current financial liabilities | 114,670 | 69,708 | (27) | (25,191) | 70,180 |
| (€'000) | 30.06.2022 | Net cash flows |
Fair value gains or losses |
Reclassification | 31.12.2021 |
|---|---|---|---|---|---|
| Bank loans | 61,350 | (23,528) | - | 24,596 | 60,281 |
| Amounts due to bondholders | 114 | 114 | - | - | - |
| Bank borrowings | 59 | (26) | - | - | 85 |
| Other loans and borrowings | 454 | (443) | - | 95 | 802 |
| Derivatives | 311 | (45) | 311 | 45 | |
| Other financial liabilities | 500 | - | - | 500 | - |
| Current financial liabilities | 62,788 | (23,928) | 311 | 25,191 | 61,213 |
| 30.06.2022 | Increases | Restatement of financial |
Repayments | Interest | Change in translation |
Change in consolidation |
31.12.2021 | |
|---|---|---|---|---|---|---|---|---|
| (€'000) | liabilities | reserve | scope | |||||
| Lease liabilities | 27,568 | 2,449 | (354) | (2,504) | 230 | 85 | 105 | 27,556 |
A breakdown of net financial debt calculated in accordance with ESMA guideline no. 32-382-1138 of 4 March 2021 is provided below:
| FINANCIAL DEBT | ||||||
|---|---|---|---|---|---|---|
| (€'000) | 30.06.2022 | 31.12.2021 | ||||
| A | Cash | 124,757 | 100,625 | |||
| B | Cash equivalents | 43 | 6 | |||
| C | Other current financial assets | 5,470 | 478 | |||
| D | Liquidity (A+ B + C) | 130,270 | 101,109 | |||
| E | Current loans and borrowings | 870 | 130 | |||
| F | Current portion of non-current loans and borrowings | 66,403 | 65,119 | |||
| G | Current financial debt (E + F) | 67,272 | 65,250 | |||
| H | Current net financial position (G - D) | (62,997) | (35,859) |
| M | Net financial debt (H + L) | 74,756 | 57,841 |
|---|---|---|---|
| L | Non-current financial debt (I + J + K) | 137,753 | 93,700 |
| K | Trade payables and other non-current financial liabilities | - | - |
| J | Debt instruments | 39,545 | 27 |
| I | Non-current loans and borrowings | 98,208 | 93,673 |
As also required by Consob warning no. 5/21 of 29 April 2021, it is noted that the group has recognised a liability subject to conditions related to the option for the non-controlling interest in CFM, as detailed in note 18.
In compliance with such notice, it is also noted that the group recognised liabilities for defined benefit plans of €7,906 thousand (note 16) and provisions for risks and charges of €4,149 thousand (note 15).
At 30 June 2022, provisions amounted to €4,149 thousand compared to €4,064 thousand at 31 December 2021, as follows:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Provision for agents' termination benefits | 768 | 851 |
| Provision for commercial complaints | 113 | 93 |
| Provision for product warranties | 428 | 393 |
| Other provisions | 835 | 820 |
| Total - non-current | 2,143 | 2,157 |
| Provision for product warranties - current portion | 191 | 0 |
| Provision for commercial complaints - current portion | 1,814 | 1,907 |
| Total - current | 2,005 | 1,907 |
| Total | 4,149 | 4,064 |
The provisions for product warranties and commercial complaints were set up to cover liabilities arising on product defects which entail the repair or replacement of the defective parts or payment of a cash compensation to the customer. The directors estimated the provisions based on available information and past experience.
This caption mainly consists of the Group's liability for post-employment benefits and post-term of office benefits for directors recognised by the Italian group entities. These benefits qualify as defined benefit plans pursuant to IAS 19 and the related liabilities are calculated by an independent actuary. The remainder of the caption comprises employee benefits recognised by the foreign group companies which are immaterial both individually and collectively.
At 30 June 2022, deferred tax liabilities amounted to €17,602 thousand compared to €17,110 thousand at 31 December 2021. This increase is mainly due to deferred taxes on the allocation of the gain arising upon the first-time consolidation of Arion.
This caption amounts to €50,559 thousand, of which €49,892 thousand refers to the liability for the call option for the non-controlling interest in CFM (31 December 2021: €49,602 thousand).
At 30 June 2022, trade payables amounted to €77,603 thousand, compared to €66,444 thousand at 31 December 2021. They included payables for materials and services.
Trade payables arise as a result of the different payment terms negotiated with the Group's suppliers, which differ from country to country.
At 30 June 2022, this caption amounted to €5,813 thousand compared to €4,775 thousand at 31 December 2021. It entirely consists of direct income tax liabilities. The change during the period was mainly related to the calculation of current taxes for the period in accordance with IAS 34.
Other current liabilities are broken down in the following table:
| (€'000) | 30.06.2022 | 31.12.2021 |
|---|---|---|
| Social security contributions | 4,420 | 4,888 |
| Tax withholdings | 1,963 | 2,018 |
| Other current tax liabilities | 479 | 263 |
| VAT liabilities | 2,554 | 1,467 |
| Wages and salaries, bonuses and holiday pay | 16,767 | 16,301 |
| Other | 2,499 | 3,135 |
| Total | 28,682 | 28,072 |
The caption mostly includes personnel-related liabilities (wages and salaries, tax withholdings and social security contributions) and tax liabilities, specifically VAT liabilities.
Revenue amounted to €261,346 thousand, compared to €202,601 thousand for the corresponding period of 2021 (+29.0%). It is shown net of discounts and allowances.
Revenue generated by services amounted to €1,974 thousand compared to €1,635 thousand for the first half of 2021. A breakdown of revenue by market is as follows:
| (€'000) | First half of 2022 | First half of 2021 | Variation % |
|---|---|---|---|
| HVAC | 171,370 | 129,678 | 32.1% |
| REF | 87,513 | 70,632 | 23.9% |
| Total core revenue | 258,883 | 200,310 | 29.2% |
| Non-core revenue | 2,463 | 2,292 | 7.5% |
| Total revenue | 261,346 | 202,601 | 29.0% |
There are no customers that individually contribute more than 10% to the Group's revenue.
A breakdown of revenue by geographical segment is as follows:
| (€'000) | First half of 2022 | First half of 2021 | Variation % |
|---|---|---|---|
| Europe, Middle East and Africa | 187,103 | 146,958 | 27.3% |
| APAC | 36,275 | 29,764 | 21.9% |
| North America | 31,841 | 21,497 | 48.1% |
| South America | 6,127 | 4,382 | 39.8% |
| Total revenue | 261,346 | 202,601 | 29.0% |
Reference should be made to the directors' report for an analysis of trends in revenue.
Other revenue amounted to €2,023 thousand, an increase on the €2,761 thousand balance for the corresponding period of 2021. The caption may be broken down as follows:
| (€'000) | First half of 2022 | First half of 2021 | Variation % |
|---|---|---|---|
| Grants related to income | 89 | 1,459 | (93.9%) |
| Sundry cost recoveries | 1,277 | 891 | 43.2% |
| Other revenue and income | 657 | 411 | 59.9% |
| Total | 2,023 | 2,761 | (26.7%) |
In 2021, grants related to income mainly comprised the amount received by the US company as part of the Paycheck Protection Program.
Sundry cost recoveries mostly refer to transport and other costs.
Other revenue and income principally comprise amounts charged to suppliers and customers.
This caption amounts to €119,010 thousand, compared to €88,575 thousand in the first half of 2021. A breakdown of the caption is as follows:
| (€'000) | First half of 2022 |
First half of 2021 |
Variation % |
|---|---|---|---|
| Costs of raw materials, consumables and goods and changes in inventories |
(119,010) | (88,575) | 34.4% |
| % of revenue | (45.5%) | (43.7%) | 4.2% |
The group incurred costs of €31,691 thousand for services in the first half of 2022, up 35.3% on the corresponding period of the previous year. A breakdown of the caption is as follows:
| (€'000) | First half of 2022 |
First half of 2021 |
Variation % |
|---|---|---|---|
| Transport | (10,521) | (6,748) | 55.9% |
| Consultancies | (3,936) | (4,118) | (4.4%) |
| Business trips and travel | (1,473) | (684) | >100% |
| Use of third party assets | (990) | (787) | 25.8% |
| Maintenance and repairs | (4,102) | (2,928) | 40.1% |
| Marketing and advertising | (878) | (362) | >100% |
| Outsourcing | (1,427) | (1,154) | 23.6% |
| Agency commissions | (1,038) | (867) | 19.7% |
| Utilities | (1,583) | (818) | 93.5% |
| Fees to directors, statutory auditors and independent auditors | (1,192) | (1,055) | 13.0% |
| Insurance | (817) | (716) | 14.1% |
| Telephone and connections | (478) | (442) | 8.0% |
| Other services | (3,255) | (2,740) | 18.8% |
| Total | (31,691) | (23,420) | 35.3% |
This caption amounted to €275 thousand, compared to €803 thousand in the first half of 2021. It is entirely related to development projects capitalised under intangible assets. The group incurred development expenditure of €9,735 thousand and €9,240 thousand in the first half of 2021 and 2022, respectively (3.72% as a percentage of revenue in both periods). Only the amounts described above can be capitalised.
This caption amounted to €55,633 thousand for the first half of 2022 compared to €49,173 thousand for the corresponding period of the previous year. A breakdown of this caption and of the workforce by employee category is as follows:
| (€'000) | First half of 2022 |
First half of 2021 |
Delta % |
|---|---|---|---|
| Wages and salaries, including bonuses and accruals | (43,735) | (38,470) | 13.7% |
| Social security contributions | (9,412) | (8,530) | 10.3% |
| Defined benefit plans | (1,490) | (1,381) | 7.9% |
| Other costs | (996) | (793) | 25.7% |
| Total | (55,633) | (49,173) | 13.1% |
| First half of 2022 |
First half of 2021 |
|
|---|---|---|
| Managers | 63 | 63 |
| White collars | 1,133 | 1,100 |
| Blue collars | 739 | 650 |
| Total | 1,935 | 1,813 |
This caption amounted to €1,203 thousand for the first half of 2022, compared to €874 thousand for the corresponding period of the previous year. It may be broken down as follows:
| (€'000) | First half of 2022 |
First half of 2021 |
Variation % |
|---|---|---|---|
| Gains on the sale of non-current assets | 29 | 367 | (92.0%) |
| Prior year income | 401 | 359 | 11.9% |
| Other income | 431 | 717 | (39.9%) |
| Losses on the sale of non-current assets | (5) | - | >100% |
| Prior year expense | (97) | (123) | (21.3%) |
| Other taxes and duties | (603) | (483) | 24.9% |
| Impairment losses on loans and receivables | (379) | (285) | 33.1% |
| Accrual to the provisions for risks | (290) | (518) | (44.0%) |
| Credit losses | (6) | (11) | (45.1%) |
| Other costs | (254) | (179) | 41.7% |
| Other expense | (1,633) | (1,599) | 2.7% |
| Other expense, net | (1,203) | (874) | 37.7% |
This caption amounted to €11,168 thousand for the first half of 2022 compared to €9,667 thousand in the first half of the previous year. This increase was mainly due to higher amortisation and depreciation arising from the purchase price allocation made upon consolidation of companies acquired in previous years:
| (€'000) | First half of 2022 |
First half of 2021 |
Variation % |
|---|---|---|---|
| Amortisation | (4,414) | (3,463) | 27.5% |
| Depreciation | (6,754) | (6,204) | 8.9% |
| Impairment losses | - | (2) | (100.0%) |
| Total | (11,168) | (9,669) | 15.5% |
Net financial expense for the first half of 2022 came to €1,540 thousand, compared to €1,130 thousand for the corresponding period of 2021, as follows:
| (€'000) | First half of 2022 |
First half of 2021 |
Variation % |
|---|---|---|---|
| Gains on financial assets | 53 | 1 | >100% |
| Interest income | 41 | 38 | 8.1% |
| Gains on derivatives | 15 | 8 | 99.1% |
| Other financial income | 52 | 43 | 21.9% |
| Dividends received | 30 | - | >100% |
| Financial income | 192 | 90 | >100% |
| Bank interest expense | (278) | (412) | (32.5%) |
| Lease interest expense | (231) | (370) | (37.7%) |
| Other interest expense | (134) | (15) | >100% |
| Losses on derivatives | (42) | (77) | (45.1%) |
| Other financial expense | (648) | (289) | >100% |
| Net fair value losses on financial assets and liabilities | (109) | - | >100% |
| Interest expense on call options for non-controlling interests | (290) | (56) | >100% |
| Financial expense | (1,732) | (1,220) | 42.0% |
| Net financial expense | (1,540) | (1,130) | 36.3% |
The increase in this caption was mainly due to higher interest expense on call options for non-controlling interests and other financial expense including the new loans recognised at amortised cost.
This caption showed net exchange rate losses of €153 thousand for the first half of 2022 compared to €255 thousand for the corresponding period of 2021, as follows:
| (€'000) | First half of 2022 |
First half of 2021 |
Variation % |
|---|---|---|---|
| Exchange losses | (6,655) | (2,585) | >100% |
| Exchange gains | 6,502 | 2,330 | >100% |
| Net exchange losses | (153) | (255) | (40.0%) |
This caption is unchanged.
This caption shows a net profit of €2,363 thousand and relates to the fair value revaluation of the initial 40% investment in Arion and the revaluation of the associate Free Polska.
This caption amounted to €9,756 thousand for the first half of 2022, compared to €6,701 thousand for the corresponding period of 2021. Income taxes were calculated based on the average tax expense determined on the basis of the actual annual tax rate in accordance with the provisions of IAS 34.
Under IFRS 8, an entity shall disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates. Based on the Group's internal reporting system, the business activities for which it earns revenue and incurs expenses and the operating results which are regularly reviewed by the chief operating decision maker to make decisions about resources to be allocated and to assess its performance, the group has not identified individual operating segments but is an operating segment as a whole.
The group is active on international markets and, hence, is exposed to currency and interest rate risks. Specifically, the currencies generating these risks are the US dollar, the Japanese yen, the Australian dollar and the Chinese renminbi.
The group has a hedging policy to mitigate the risks, which involves the use of derivatives, options and forwards, mostly with maturities of less than one year. Transactions in place at the reporting date involving currency hedging transactions are as follows:
| (€'000) | 30.06.2022 | |||
|---|---|---|---|---|
| forward | Purchases * | Sales * | Positive fair value ** | Negative fair value ** |
| USD/CNY | 12,500 | 20 | (245) | |
| USD/EUR | 1,000 | - | (55) | |
| ZAR/USD | 3,900 | 14 | - | |
| Totale forward | 34 | (300) | ||
| Options | ||||
| USD/EUR | 1,000 | - | (11) | |
| EUR/CNY | 6,000 | 36 | - | |
| USD/CNY | 26,000 | 158 | - | |
| CNY/USD | 2,000 | 13 | - | |
| ZAR/USD | 20,000 | 18 | - | |
| THB/USD | 30,000 | 35 | - | |
| Total options | 260 | (11) | ||
| Total | 294 | (311) |
(*) Amount in thousands of local currency
(**) Amount in thousands of Euros
The next table provides information about the interest rate swaps hedging the related risk:
| (€'000) | Notional amount |
Floating interest rate | Fixed interest rate |
Maturity | Fair value 30.06.2022 |
|---|---|---|---|---|---|
| BNL | 30,000 | 6m Euribor > -0.78% / -0.78% if 6m Euribor < -0.78% |
-0.11% | 19/11/2022 | (6) |
| BNL | 20,000 3m Euribor > -0.98% / -0.98% if 3m Euribor < -0.98% |
-0.02% | 30/04/2023 | 45 | |
| Unicredit | 20,000 3m Euribor > -0.92% / -0.92% if 3m Euribor < -0.92% |
-0.04% | 30/04/2023 | 6 | |
| Mediobanca | 25,000 3m Euribor > -0.95% / -0.95% if 3m Euribor < -0.95% |
-0.42% | 04/08/2023 | 352 | |
| Mediobanca | 20,000 | 3m Euribor > -0.6375% / -0.6375% if 3m Euribor < -0.6375% |
-0.31% | 26/06/2026 | 686 |
Derivatives hedging foreign currency assets and liabilities are recognised at fair value with any gains or losses recognised in profit or loss. They are natural hedges of the related risks, which are recognised pursuant to IFRS 9.
The next table shows the classification of financial assets and liabilities pursuant to IFRS 7, using the categories established by IFRS 9, and their fair value:
| FIRST HALF OF 2022 | IFRS 9 category | Carrying | Fair value | ||
|---|---|---|---|---|---|
| (€'000) | amount | Level 1 | Level 2 | Level 3 | |
| Derivatives | Financial instruments held for trading |
1,384 | 1,384 | ||
| Available-for-sale securities | Available-for-sale financial assets | 2,891 | 2,891 | ||
| Other financial assets | Loans and receivables | 1,195 | 1,195 | ||
| Other current financial assets | 5,470 | ||||
| Trade receivables | Loans and receivables | 102,269 | 102,269 | ||
| Total financial assets | 107,738 | ||||
| including: | Available-for-sale financial assets |
2,891 | |||
| Financial instruments held for trading |
1,384 | ||||
| Loans and receivables | 103,463 | ||||
| Bank loans and borrowings | Financial liabilities at amortised cost |
73,674 | 73,674 | ||
| Amounts due to bondholders | Financial liabilities at amortised cost |
39,432 | 39,432 | ||
| Other loans and borrowings | Financial liabilities at amortised cost |
625 | 625 | ||
| Lease liabilities | Financial liabilities at amortised cost |
22,969 | 22,969 | ||
| Effective designated derivative hedges |
Financial instruments held for trading |
- | 0 | ||
| Other financial liabilities | Financial liabilities at amortised cost | 940 | 940 | ||
| Non-current financial liabilities | 137,639 | ||||
| Bank borrowings | Financial liabilities at amortised cost |
59 | 59 | ||
| Bank loans | Financial liabilities at amortised cost |
61,350 | 61,350 | ||
| Lease liabilities | Financial liabilities at amortised cost |
4,598 | 4,598 | ||
| Amounts due to bondholders | Financial liabilities at amortised cost |
114 | 114 | ||
| Derivatives | Financial instruments held for trading |
311 | 311 | ||
| Other loans and borrowings | Financial liabilities at amortised cost | 454 | 454 | ||
| Other financial liabilities | Financial liabilities at amortised cost | 500 | 500 | ||
| Current financial liabilities | 67,386 | ||||
| Trade payables | Financial liabilities at amortised cost |
77,603 | 77,603 |
| FIRST HALF OF 2022 | IFRS 9 category | Carrying | Fair value | ||
|---|---|---|---|---|---|
| (€'000) | amount | Level 1 | Level 2 | Level 3 | |
| Total financial liabilities | 282,628 | ||||
| including | Financial liabilities at amortised cost |
282,317 | |||
| Financial instruments held for trading |
311 |
During the period, the group carried out commercial transactions with related parties as follows:
| RELATED AT 30.06.2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| (€'000) | Trade receivables |
Loan assets |
Trade payables |
Financial liabilities |
Revenue | Financial income |
Costs | Financial expense |
| Arion S.r.l. | - | - | (301) | - | - | - | (743) | - |
| Free Polska s.p.z.o.o. | 389 | - | (2,132) | - | 4 | 30 | (10,764) | - |
| Total associates | 389 | - | (2,433) | - | 4 | 30 | (11,507) | - |
| RN Real Estate S.r.l. | 2 | - | (454) | (13,000) | 2 | - | - | (30) |
| Nastrificio Victor S.p.A. | - | - | (12) | - | - | - | (29) | - |
| Eurotest laboratori S.r.l. | 1 | - | (90) | - | 3 | - | (149) | - |
| Carel Real Estate Adratic d.o.o. | 2 | - | (146) | (2,157) | - | - | (34) | |
| Eurotec Ltd | 126 | - | - | - | 287 | - | (23) | - |
| Panther S.r.l. | - | - | (8) | - | - | - | (7) | - |
| Gestion A.Landry Inc | - | - | - | (44) | - | - | 1 | (1) |
| Humide Expert | - | - | (1) | - | - | - | (14) | - |
| Murat Cem Ozdemir | - | - | - | (1,658) | - | - | (22) | (20) |
| Bridgport S.p.A. | 7 | - | (271) | - | 41 | - | (81) | - |
| Brimind S.r.l. | - | - | (11) | (82) | - | - | (18) | - |
| Others | 5 | - | (4) | - | 2 | - | (12) | - |
| Total other related parties | 143 | - | (997) | (16,941) | 335 | - | (354) | (85) |
| Total | 532 | - | (3,430) | (16,941) | 339 | 30 | (11,861) | (85) |
All the related party transactions take place on an arm's length basis.
Financial liabilities to Murat Cem Ozdemir refer to the outstanding amount due to the non-controlling investor in CFM to acquire the investment.
The figures in the above table are calculated in accordance with IFRS 16. The rent paid to RN Real Estate S.r.l. and Carel Real Estate Adriatic d.o.o. during the period amount respectively to €604 thousand and €146 thousand.
Others include transactions that are individually and collectively irrelevant.
The following table shows the investees directly and indirectly controlled by the parent as well as all the legally-required disclosures necessary to prepare the condensed interim consolidated financial statements:
| COMPANY NAME | Registered office | Country | Currency | Share Capital/ quota at 31.12.21 |
|---|---|---|---|---|
| Parent: | ||||
| Carel Industries S.p.A | Brugine (Padova) | Italy | Euro | 10,000,000 |
| Consolidated investees: | ||||
| C.R.C. S.r.l. | Bologna | Italy | Euro | 98,800 |
| Carel Deutschland Gmbh | Frankfurt | Germany | Euro | 25,565 |
| Carel France Sas | St. Priest, Rhone | France | Euro | 100,000 |
| Carel U.K. Ltd | London | GB | Pound Sterling | 350,000 |
| Carel Sud America Instrumentacao Eletronica Ltda |
San Paolo | Brazil | Real | 31,149,059 |
| Carel Usa Inc | Pennsylvania | USA | Us Dollar | 5,000,000 |
| Carel Asia Ltd | Hong Kong | Honk Kong | Hong Kong Dollar |
15,900,000 |
| Carel HVAC&R Korea Ltd | Seul | South Korea | South Korean Won |
550,500,000 |
| Carel South East Asia Pte. Ltd. | Singapore | Singapore | Singapore dollar | 100,000 |
| Carel Australia PTY Ltd | Sidney | Australia | Australian Dollar | 100 |
| Carel Electronic Suzhou Ltd | Suzhou | People's Republic of China |
Renminbi | 75,019,566 |
| Carel Controls Iberica SI | Barcelona | Spain | Euro | 3,005 |
| Carel Controls South Africa (Pty) Ltd | Johannesburg | South Africa | Rand | 4,000,000 |
| Carel ACR System India (Pvt) Ltd | Mumbai | India | Rupee | 1,665,340 |
| Carel RUS Llc | St. Petersburg | Russia | Ruble | 6,600,000 |
| Carel Nordic AB | Hoganas | Sweden | Swedish Krona | 550,000 |
| Carel Middle East | Dubai | Dubai | Dirham | 4,333,877 |
| Carel Mexicana, S. DE R.L. DE C.V. | Guerra, Tlalpan | Mexico | Peso | 12,441,149 |
| Carel Adriatic D.o.o. | Rijeka | Croatia | Kuna | 54,600,000 |
| Carel (Thailand) Co. Ltd. | Bangkok | Thailand | Baht | 16,000,000 |
| Alfaco Polska Sp.z.o.o. | Wrocław | Poland | Zloty | 420,000 |
| Carel Japan | Tokyo | Japan | Yen | 60,000,000 |
| Recuperator S.p.A. | Rescaldina (MI) | Italy | Euro | 500,000 |
| Hygromatik G.m.b.H. | Hamburg | Germany | Euro | 639,115 |
| Carel Ukraine LLC | Kiev | Ukraine | UAH | 700,000 |
| Enersol | Beloeil | Canada | CAD | 100 |
| CFM Sogutma Ve Otomasyon | Izmir | Turkey | Euro | 2,473 |
| Enginia Srl | Trezzo Sull'Adda (MI) | Italy | Euro | 10,400 |
| Arion S.r.l. | Bolgare (BG) | Italy | Euro | n.a. |
| Profit for the period 30.06.2022 |
Consolidation method |
Share/quota holder | Investment % 30.06.22 |
Share Capital/ quota at 30.06.22 |
|---|---|---|---|---|
| EURO | ||||
| 25,395,682 | 10,000,000 | |||
| 991,590 | line-by-line | Carel Industries S.p.A. | 100% | 98,800 |
| 1,632,620 | line-by-line | Carel Industries S.p.A. | 100% | 25,565 |
| 340,406 | line-by-line | Carel Industries S.p.A. | 100% | 100,000 |
| 675,902 | line-by-line | Carel Industries S.p.A. | 100% | 350,000 |
| 1,071,224 | line-by-line | Carel Industries S.p.A. | 53.02% | |
| Carel Electronic Suzhou Ltd | 46.98% | 31,149,059 | ||
| 3,037,670 | line-by-line | Carel Industries S.p.A. | 100% | 5,000,000 |
| 427,944 | line-by-line | Carel Industries S.p.A. | 100% | 15,900,000 |
| (28,611) | line-by-line | Carel Electronic Suzhou Ltd | 100% | 550,500,000 |
| 100,000 | ||||
| 337,999 | line-by-line | Carel Electronic Suzhou Ltd | 100% | 100 |
| 6,872,302 | line-by-line | Carel Industries S.p.A. | 100% | 75,019,566 |
| 657,321 | line-by-line | Carel Industries S.p.A. | 100% | 3,005 |
| 390,268 | line-by-line | Carel Electronic Suzhou Ltd | 100% | 4,000,000 |
| Carel France Sas | 0.01% | |||
| Carel Electronic Suzhou Ltd | 99.99% | 1,665,340 | ||
| Carel Industries S.p.A. | 99% | |||
| Carel France Sas | 1% | 6,600,000 | ||
| 312,605 | line-by-line | Carel Industries S.p.A. | 100% | 550,000 |
| 220,059 | line-by-line | Carel Industries S.p.A. | 100% | 4,333,877 |
| 109,044 | line-by-line | Carel Usa LCC | 100% | 12,441,149 |
| 1,740,728 | line-by-line | Carel Industries S.p.A. | 100% | 54,600,000 |
| Carel Electronic Suzhou Ltd | 50% | |||
| Carel Australia PTY Ltd | 30% | 16,000,000 | ||
| 2,313,922 | line-by-line | Carel Industries S.p.A. | 100% | 420,000 |
| 144,797 | line-by-line | Carel Industries S.p.A. | 100% | 60,000,000 |
| 118,408 | line-by-line | Carel Industries S.p.A. | 100% | 500,000 |
| 2,159,899 | line-by-line | Carel Industries S.p.A. | 100% | 639,115 |
| (55,402) | line-by-line | Alfaco Polska Zoo | 100% | 700,000 |
| (82,483) | line-by-line | Carel Usa Inc | 100% | 100 |
| 2,640,474 | line-by-line | Carel Industries S.p.A. | 51% | 2,473 |
| 378,979 | line-by-line | Recuperator S.p.A. | 100% | 10,400 |
| 70% | 100,000 | |||
| period 30.12.2021 | 15,035 44,840 270,817 133,999 89,281 |
line-by-line line-by-line line-by-line line-by-line line-by-line |
Carel Asia Ltd Carel Industries S.p.A. |
100% |
As described in the directors' report, on 13 June 2022, the parent entered into a binding agreement to acquire 70% of Sauber S.r.l., a company based in Porto Mantovano (MN) which provides on-field services for the installation and servicing of cooling/humidification systems in residential and commercial buildings.
70% of the enterprise value was calculated at €3.6 million; the remaining 30% of Sauber is subject to a crossoption mechanism between the parties exercisable in 2025.
The closing of the transaction took place on 12 July 2022, when Carel obtained control of the company. Consequently, the impacts on profit or loss and equity of the Sauber consolidation will be effective as of July 2022.
________________________________ ________________________________
Brugine, 4 August 2022
Chief executive officer Manager in charge of financial reporting
Francesco Nalini Nicola Biondo
Italia
Tel: +39 049 7927911 Fax: +39 049 7927979 www.deloitte.it
To the Shareholders of Carel Industries S.p.A.
We have reviewed the accompanying half-yearly condensed consolidated financial statements of Carel Industries S.p.A. and subsidiaries (the "Carel Group"), which comprise the balance sheet as of June 30, 2022 and the income statement, statement of comprehensive income, statement of changes in equity and cash flow statement for the six month period then ended, and a summary of significant accounting policies and other explanatory notes. The Directors are responsible for the preparation of the half-yearly condensed consolidated financial statements in accordance with the International Accounting Standard applicable to the interim financial reporting (IAS 34) as adopted by the European Union. Our responsibility is to express a conclusion on the half-yearly condensed consolidated financial statements based on our review.
We conducted our review in accordance with the criteria recommended by the Italian Regulatory Commission for Companies and the Stock Exchange ("Consob") for the review of the half-yearly financial statements under Resolution n° 10867 of July 31, 1997. A review of half-yearly condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISA Italia) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying half-yearly condensed consolidated financial statements of the Carel Group as at June, 30, 2022 are not prepared, in all material respects, in accordance with the International Accounting Standard applicable to the interim financial reporting (IAS 34) as adopted by the European Union.
DELOITTE & TOUCHE S.p.A.
Signed by Cristiano Nacchi Partner Padua , Italy August, 5, 2022
This report has been translated into the English language solely for the convenience of international readers.
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220,00 i.v. Codice Fiscale/Registro delle Imprese di Milano Monza Brianza Lodi n. 03049560166 - R.E.A. n. MI-1720239 | Partita IVA: IT 03049560166 Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata ("DTTL"), le member firm aderenti al suo network e le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche "Deloitte Global") non fornisce servizi ai clienti. Si invita a leggere l'informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all'indirizzo www.deloitte.com/about. © Deloitte & Touche S.p.A.
CAREL INDUSTRIES HQs Via dell'Industria, 11 35020 Brugine - Padova (Italy) Tel. (+39) 0499 716611 Fax (+39) 0499 716600 [email protected]
© 2022 CAREL INDUSTRIES S.p.A. All rights reserved.
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