Quarterly Report • May 14, 2020
Quarterly Report
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as at 31 March 2020
SERVIZI ITALIA S.P.A. via San Pietro, 59/B - 43019 Castellina di Soragna (PR) - ITALY Share Capital: Euro 31,809,451 fully paid-up Tax Code and Register of Companies No.: 08531760158 Certified Email: [email protected] Tel. +39 0524 598511 - Fax +39 0524 598232 www.servizitaliagroup.com
| 1 | Company officers and corporate information3 | |
|---|---|---|
| 2 | Group Structure 4 | |
| 3 | Interim Report5 | |
| 4 | Accounting schedules 14 | |
| 5 | Explanatory Notes16 | |
| 5.1 | Introduction 16 | |
| 5.2 | Performance by business segment and geographical area16 | |
| 5.3 | Notes on the main changes in the statement of financial position 18 | |
| 5.4 | Notes on the main changes in the income statement24 | |
| 5.5 | Consolidated net financial position26 |
Board of Directors (in office until approval of the Separate Financial Statements as at 31 December 2020)
| Name and Surname | Position |
|---|---|
| Roberto Olivi (*) | President |
| Ilaria Eugeniani (*) | Vice President |
| Michele Magagna (*) | Director |
| Umberto Zuliani | Director |
| Antonio Paglialonga | Director |
| Lino Zanichelli | Director |
| Antonio Aristide Mastrangelo | Independent Director |
| Paola Schwizer (^) (1)(2)(3) | Independent Director |
| Romina Guglielmetti(1)(2) | Independent Director |
| Chiara Mio(1)(2) | Independent Director |
(1) Member of the Nomination and Remuneration Committee; (2) Member of the Control and Risks Committee; (3) Lead Independent Director
(*) Members of the Executive Committee
(^) Resigned with effect from 30 April 2020
| Name and Surname | Position |
|---|---|
| Roberto Cassader | President |
| Gianfranco Milanesi | Statutory auditor |
| Benedetta Pinna | Statutory auditor |
| Elena Iotti | Alternate auditor |
| Davide Barbieri | Alternate auditor |
| Name and Surname | Position |
|---|---|
| Veronica Camellini | President |
| Laura Verzellesi | Member |
| Francesco Magrini | Member |
Independent Auditors (in office until approval of the Separate Financial Statements as at 31 December 2023)
Deloitte & Touche S.p.A. - Via Tortona, 25 - 20144 Milan
Servizi Italia S.p.A. Via S. Pietro, 59/b – 43019 Castellina di Soragna (PR) – Italy Tel. +390524598511, Fax +390524598232, website: www.servizitaliagroup.com; Share Capital: Euro 31,809,451 fully paid-up Tax Code and Parma Register of Companies no.: 08531760158; Certified Email: [email protected] Founded: 1986 Stock market listing: Borsa Italiana S.p.A MTA, electronic stock market, STAR segment Ordinary Share ISIN: IT0003814537, BLOOMBERG: SRI IM, REUTERS: SRI.MI LEI Code: 815600C8F6D5ACBA9F86
Giovanni Manti (IR) - Innocenti Luigi e-mail: [email protected] – Tel. +390524598511, Fax +390524598232
Servizi Italia S.p.A., whose registered office is in Castellina di Soragna (Parma, Italy), is listed in the STAR segment of the Borsa Italiana S.p.A. MTA stock exchange and is the leading Italian operator in the supply of integrated services of washing, hiring and sterilization of textile materials and surgical instruments for hospital facilities. With a technologically advanced production platform broken down into laundering facilities, linen sterilisation centres, surgical instrument sterilisation centres and numerous linen storage facilities, the Company and its Italian and overseas subsidiaries forming the Servizi Italia Group, mainly provide their broad and diversified range of services for public and private healthcare facilities in central and northern Italy, in the state of São Paulo in Brazil, in Turkey, India, Albania and Morocco.
| Company Name Parent Company and Subsidiaries |
Registered Office | Share Capital | Interest of equity investments |
|
|---|---|---|---|---|
| Servizi Italia S.p.A. | Castellina di Soragna (Parma) - Italy | EUR | 31,809,451 | Parent |
| SRI Empreendimentos e Participações L.t.d.a. |
City of São Paulo, State of São Paulo - Brazil | BRL | 187,906,582 | 100% |
| Steritek S.p.A. | Malagnino (CR) - Italy | EUR | 134,500 | 70% |
| San Martino 2000 S.c.r.l. | Genoa - Italy | EUR | 10,000 | 60% |
| Lavsim Higienização Têxtil S.A. | São Roque, State of São Paulo - Brazil | BRL | 9,280,000 | 100%(*) |
| Maxlav Lavanderia Especializada S.A. | Jaguariúna, State of São Paulo - Brazil | BRL | 2,825,060 | 65.1%(*) |
| Vida Lavanderias Especializada S.A. | Santana de Parnaiba, State of São Paulo - Brazil | BRL | 3,600,000 | 65.1%(*) |
| Aqualav Serviços De Higienização Ltda | Vila Idalina, Poá, State of São Paulo - Brazil | BRL | 15,400,000 | 100%(*) |
| Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi |
Ankara – Turkey | TRY | 20,000,000 | 55% |
| Ergülteks Temizlik Tekstil Ltd. Sti. | Smirne - Turkey | TRY | 1,700,000 | 57.5%(**) |
| Wash Service S.r.l. | Castellina di Soragna (Parma) - Italy | EUR | 10,000 | 90% |
| Ekolav S.r.l. | Lastra a Signa (FI) – Italy | EUR | 100,000 | 100% |
As at 31 March 2020, the Servizi Italia Group included the following Companies:
(*) Held through SRI Empreendimentos e Participações Ltda
(**) Held through Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi
| Company Name Associates and Jointly Controlled Companies |
Registered Office | Share capital | Interest of equity investments |
|
|---|---|---|---|---|
| Arezzo Servizi S.c.r.l. | Arezzo – Italy | EUR | 10,000 | 50% |
| PSIS S.r.l. | Padova – Itay | EUR | 10,000,000 | 50% |
| Steril Piemonte S.c.r.l. | Torino – Italy | EUR | 4,000,000 | 50% |
| AMG S.r.l. | Busca (CN) – Italy | EUR | 100,000 | 50% |
| Iniziative Produttive Piemontesi S.r.l. | Torino – Italy | EUR | 2,500,000 | 37.63% |
| Piemonte Servizi Sanitari S.c.r.l. | Torino – Italy | EUR | 10,000 | 30%(*) |
| CO.SE.S S.c.r.l. in liquidazione | Perugia – Italy | EUR | 10,000 | 25% |
| SAS Sterilizasyon Servisleri A.Ş. | Istanbul - Turkey | TRY | 10,342,000 | 51% |
| Shubhram Hospital Solutions Private Ltd. | Nuova Delhi – India | INR | 305,171,720 | 51% |
| Finanza & Progetti S.p.A. | Vicenza - Italy | EUR | 550,000 | 50% |
| Brixia S.r.l. | Milano - Italy | EUR | 10,000 | 23% |
| Saniservice Sh.p.k. | Tirana – Albania | LEK | 2,745,600 | 30% |
| Sanitary cleaning Sh.p.k. | Tirana – Albania | LEK | 2,798,800 | 40% |
| Servizi Sanitari Integrati Marocco S.a.r.l. | Casablanca - Morocco | MAD | 122,000 | 51% |
| Idsmed Servizi Pte. Limited | Singapore – Singapore | SGD | 1,000,000 | 30% |
| StirApp S.r.l. | Modena – Italy | EUR | 208,124 | 25% |
(*) Indirect shareholding of 15.05% through Iniziative Produttive Piemontesi S.r.l.
This interim report as at 31 March 2020 includes the condensed consolidated financial statements as at 31 March 2020 drafted in compliance with the International Accounting Standard applicable to interim financial reporting, IAS 34, as allowed by Consob Communication No. DEM/5073567 of 4 November 2005 and must be read together with the information provided in the Consolidated Financial Statement as at 31 December 2019. Moreover, in order to allow a better evaluation of the economic and financial performance, the following summary tables show some "Alternative performance indicators", not provided by the IFRS International Accounting Standards. The footnotes of said tables indicate the calculation method used and the composition of these ratios, in line with the guidelines of the European Securities and Market Authority (ESMA).
The table below presents a comparison of the main consolidated income statement figures as at 31 March 2020 with the results as at 31 March 2019 (in thousands of Euros):
| (thousands of Euros) | 31 March 2020 | 31 March 2019 | Change | Change % |
|---|---|---|---|---|
| Revenues | 62,856 | 65,119 | (2,263) | -3.5% |
| Ebitda (a) | 15,447 | 16,890 | (1,443) | |
| Ebitda % | 24.6% | 25.9% | -1.4% | |
| Operating Profit (Ebit) | 1,914 | 3,216 | (1,302) | |
| Operating Profit (Ebit)% | 3.0% | 4.9% | -1.9% | |
| Net profit | 158 | 2,730 | (2,572) | |
| Net profit % | 0.3% | 4.2% | -3.9% |
(a) The company management has defined EBITDA as the difference between the value of sales and services and operating costs before depreciation, amortization, impairment and provisions.
The table below presents a comparison of the main consolidated statement of financial position figures as at 31 March 2020 with the figures as at 31 December 2019 (in thousands of Euro):
| (thousands of Euros) | 31 March 2020 | 31 December 2020 |
Change | Change % |
|---|---|---|---|---|
| Net operating working capital (a) | 2,175 | 6,644 | (4,469) | -67.3% |
| Other current assets/liabilities (b) | (11,944) | (18,852) | 6,908 | -36.6% |
| Net working capital | (9,769) | (12,208) | 2,439 | -20.0% |
| Non-current assets – Medium/Long term provisions | 272,597 | 277,873 | (5,276) | -1.9% |
| of which right of use for IFRS 16 | 34,079 | 35,783 | (1,704) | -4.8% |
| Net Invested capital | 262,828 | 265,665 | (2,837) | -1.1% |
| Shareholders' equity (B) | 127,719 | 138,257 | (10,538) | -7.6% |
| Net financial debt (d) (A) | 135,109 | 127,408 | 7,701 | 6.0% |
| of which financial liabilities for IFRS 16 | 34,498 | 36,258 | (1,760) | -4.9% |
| Invested capital (c) | 262,828 | 265,665 | (2,837) | -1.1% |
| Gearing [A/(A+B)] | 51.4% | 48.0% | ||
| Debt/Equity (A/B) | 105.8% | 92.2% |
(a) Net operating working capital is not an accounting measurement under the IFRSs endorsed by the European Union. The Company management has defined net operating working capital as the algebraic sum of inventories, trade receivables and trade payables.
(b) Other current assets/liabilities are calculated as the difference between other current assets, current tax receivables, current tax payables and other current liabilities.
(c) The Company management has defined invested capital as the sum of Shareholders' equity and net financial debt.
(d) The management has defined net financial debt as the sum of amounts Due to banks and other lenders net of Cash and cash equivalents and Current financial receivables.
Concerning the business performance, during the first quarter of 2020, the Servizi Italia Group recorded a consolidated turnover equal to Euro 62,856 thousand, down by 3.5% (-1.5% at constant exchange rates) compared to the financial statements as at 31 March 2019.
Concerning the performance of revenues from sales and services and the comparison between the first quarter 2020 and the first quarter 2019, the following should be noted:
Consolidated EBITDA passed from Euro 16,891 thousand in the first quarter of 2019 to Euro 15,447 thousand in the first quarter 2020, with a margin on revenues of 24.6% (25.1% at the same exchange rates and consolidation scope). It should be noted that the contraction in the margin is attributable to the decrease in turnover in Italy, as already explained. There was a higher incidence of raw material costs compared to turnover (+0.5%) mainly due to the purchase of disposable devices, PPE and detergent products, together with a higher incidence of costs for services (+1.2%) due to greater outsourcing of core services. Personnel costs decreased in relative terms with respect to turnover (- 0.4%), due to a reduction of temporary agency work and a greater use, facing the Covid-19 emergency, of holidays and days of leave. In the first quarter 2020, the excellent results of operating margins at international level were confirmed both in Brazil (EBITDA margin 35.4%) and Turkey (EBITDA margin 37.2%), which recorded a significant increase compared to the first quarter 2019.
The operating result (EBIT) went from Euro 3,216 thousand in the first quarter of 2019 (4.9% compared to turnover for the period) to Euro 1,914 thousand in the same period of 2020 (3.0% compared to turnover for the period or 3.2% at the same exchange rates and consolidation scope), mainly due to the dynamics already described in the commentary on the change in turnover and EBITDA.
Financial management shew an increase in financial charges compared to the same period of the previous year mainly due to exchange losses (Euro 365 thousand) relating to the depreciation of Real and Turkish Lira against the Euro. It should also be noted that the results for the quarter were adversely affected by the valuation of some jointly controlled companies, whose results recorded high exchange losses due to the depreciation of the reference currencies (especially Lek and Rupee) against the Euro.
Taxes for the period are positive (Euro 364 thousand), deriving mainly from the recognition in the income statement of deferred tax assets on the tax loss generated by Servizi Italia S.p.A. due to the cumulative effect of tax benefits deriving, in the Italian area, from the deduction from corporate income of the so-called "super and hyper amortization" on investments as provided by 2017 Budget Law (Law n.232/2016).
Therefore, the interim consolidated financial statements as at 31 March 2020 closed with a net profit of Euro 158 thousand compared to Euro 2,730 thousand in the same period of the year.
On 7 January 2020, the Company announced the resignation of its CEO Mr. Enea Righi from every office, function and role covered in the Company and in any other company of the Servizi Italia Group. The Board of Directors, upon consultation with the Nomination and Remuneration Committee, activated the succession planning policy and assigned the management powers to an Executive Committee consisting of Roberto Olivi (Chairman of the Board of Directors), Ilaria Eugeniani (Director, appointed Vice-Chairman of the Board of Directors) and Michele Magagna (Director), assisted by the Chief Operating Officer Andrea Gozzi. For additional information, please refer to the press release.
On 5 March 2020, the Board of Directors appointed Roberto Olivi as Director responsible for the internal control and risk management system ad interim. This role had been previously held by the outgoing CEO.
The main characteristics of the awarded contracts in Italy, which have an annual contract value of more than Euro 50 thousand, are provided below:
| Customer | Description of service provided | Duration years |
Contract value per year (thousands of Euros) |
|---|---|---|---|
| Azienda ULSS 8 Berica* | Integrated management of anti-RX personal protective equipment |
15 months | 53 |
| Rete Ferroviaria Italiana (Ferrovie dello Stato Group)** |
PPE washing services | 2 | 111 |
| A4 Autostrada S.p.A.** | Wash-hire and maintenance of high-visibility PPE | 3 | 68 |
| ARPAE Emilia Romagna* | Wash-hire service for staff clothes | 3 | 130 |
| ASST Spedali Civili di Brescia* (awarded as part of a temporary joint consortium) |
Extension of sterilization service: construction of a sub-CSSD in Gardone Val Trompia and outsourcing of new specialties |
4 | 654 |
| Regione Sardegna – Lotto 1: ATS Sardegna** (awarded as part of a temporary joint consortium) |
Wash-hire services | 5 | 278 |
| Regione Sardegna – Lotto 2: AO Brotzu e AOU Cagliari** (awarded as part of a temporary joint consortium) |
Wash-hire services | 5 | 91 |
| Regione Sardegna – Lotto 3: AOU Sassari** (awarded as part of a temporary joint consortium) |
Wash-hire services | 5 | 80 |
| ASST Milano Nord** | Wash-hire services | 2,5 | 609 |
| ASM Impianti e servizi ambientali S.p.A.** | Rental, washing, maintenance, logistics and management of uniforms and high visibility PPE |
3 | 58 |
* re-awarded
**new customer
| Customer | Service provided | Contract value per year (thousands of Euros) |
|---|---|---|
| ASST SS. Paolo e Carlo | Wash-hire services | 2,321 |
| Fondazione Maugeri | Wash-hire services | 720 |
During the first quarter of 2020, the Group's activities, which operate in strict compliance with the relevant regulations, were affected by the viral pandemic SARS-Cov-2 or Covid-19 (also known as Coronavirus), which had its first displays in Italy from February 2020 and in other countries where the Group operates from the beginning of March 2020.
The Group has promptly started to monitor the effects of the pandemic on its results and the related analyses are still ongoing. In the first quarter of 2020, there were different impacts on Group's results, depending on the sector of reference and relative geographical area.
For what concerns the Group's activities in Italy, the following should be particularly noted:
• since the beginning of Coronavirus emergency, the wash-hire sector in healthcare has seen an increase in the reconditioning activities of certain categories of hospital textiles, with particular regard to the reconditioning of uniforms of healthcare workers, as well as a greater demand for equipment. These higher volumes compensated the lower demand for bed linen, since hospitals, in their strategy to contain the virus, reduced hospital accesses and interrupted outpatient services, thus causing a reduction in bed linen consumption. It is believed that from the month of May 2020 there will be a gradual recovery in ordinary healthcare services and therefore hospitalisation;
The current health emergency represents an extraordinary and unforeseeable event which, by altering the synallagma of some essential contracts, puts the Group in a position to initiate discussions with customer administrations in order to define the conditions for recovering any excess costs incurred.
In addition to Italy, the activities consolidated on a line-by-line basis by the Group concern laundry services for healthcare in Brazil and Turkey. In these countries, the Coronavirus emergency started to have effects some weeks later than in Italy. On the basis of the preliminary analysis carried out, it is estimated that the effects of the emergency on business volumes in these areas follow the same trend for hospital laundry services as in Italy.
The mix of factors highlighted here above, in relation to how Coronavirus emergency impacted service demand trends, had a direct impact on productive and business support activities. In particular:
In view of the fact that the services provided by the Group are considered essential, crucial and of public utility and therefore defensive with respect to the current epidemiological situation, the Group has implemented risk & project management and project control activities in order to (i) avoid the spread of contagion and protect the health and safety of its personnel and the environment, (ii) ensure business continuity, (iii) mitigate any possible negative impact on economic results coming from a drop in demand for certain types of services; (iv) have an updated mapping of risks, related impacts and mitigation actions in the various areas of Company organization, in line with the requirements of Risk Management and Internal Audit processes.
It should also be noted that the effects mentioned above, in relation to the impact of the recession caused by Covid-19 virus, have shown their first economic effects starting from March 2020 and, compared with management's estimates currently available, will mainly affect the second quarter results.
On 28 April 2020, the Ordinary Shareholders' Meeting:
approved the remuneration policy of Servizi Italia S.p.A.;
appointed the members of the Board of Statutory Auditors, who will remain in office until the Shareholders' Meeting called to approve the financial statements as at 31 December 2022, also determining their remuneration;
On 15 April 2020, the minority shareholders of the Brazilian companies Maxlav Lavanderia Especializada S.A. and Vida Lavanderia Especializada S.A., which were already indirectly controlled by Servizi Italia through a 65.1% stake, exercised the put option to sell their 34.9% stake in the share capital of the two companies for a total consideration of Real 19,994 thousand (Euro 3,501 thousand at the exchange rate of 15 April 2020). Servizi Italia therefore, through SRI Empreendimentos and Participacoes LTDA., will hold 100% of the share capital of both companies.
On 30 April 2020, Servizi Italia received the resignation with immediate effect of Director Paola Schwizer, who resigned as director of the Company due to the add up of professional commitments. It should be noted that the resigning director is not entitled to indemnities or other benefits resulting from the termination of the office and that at the date of resignation she holds no share in Servizi Italia S.p.A.
As at 11 May 2020, the Company acquired a total of 1,240,941 treasury shares on the market regulated and managed by Borsa Italiana, equal to 3.90% of the share capital.
The Group's activities are influenced by the general economic conditions and the epidemiological situation of the countries in which it operates. In addition to what has been described above regarding the effects of the SARS-Cov-2 viral epidemic, it should be noted that the Italian market for industrial laundries is experiencing a structural contraction related to certain critical issues specific to the healthcare services sector, such as the phenomenon of the awarding of contracts with downward economic offers, the effects of which have affected the Parent Company, with the failure to reconfirm contracts in portfolio and the awarding of contracts already in portfolio at lower prices than in the past. While maintaining forecasts of an overall positive operating margin in the foreseeable future, management will be affected in the medium term by a reduction in turnover in the domestic wash-hire sector and a reduction in operating margins which, in part, can be offset by the further development of the sectors with higher margins and by the following targets:
o implementation of appropriate measures to ensure business continuity, managing the epidemiological risk to ensure health, safety and working activities of employees, in compliance with the regulatory requirements of governments in the countries where the Group operates, protocols on safety in the workplace and internal operating procedures.
Moreover, the Group as a whole will be able to benefit from the effects of the internationalization strategy by consolidating the positive results achieved in the countries where it operates, particularly in Brazil and Turkey.
The Group has a solid financial position, good creditworthiness with banks and remains confident that it can efficiently manage the effects of the current epidemiological crisis. As a confirmation of this, the Shareholders' Meeting of 28 April 2020 approved the distribution of dividends to shareholders.
The Company shares have been traded on the STAR segment of the Borsa Italiana S.p.A. electronic stock market since 22 June 2009. The main share and stock exchange data as at 31 March 2020 are reported below along with share volume and price trends (in Euros):
| Share and stock exchange data | 31 March 2020 |
|---|---|
| No. of shares making up the share capital | 31,809,451 |
| Price at IPO: 4 april 2007 | 8.50 |
| Price as at 31 March 2020 | 2.32 |
| Maximum price during the period | 3.22 |
| Minimum price during the period | 1.95 |
| Average price during the period | 2.63 |
| Volumes traded during the period | 9,205,915 |
| Average volumes during the period | 146,126 |
During the period, the investor relations team held several individual and group meetings with analysts and investors and organized guided tours of CSSDs and industrial laundries for shareholders and potential investors who asked for.
The Group, in addition to the research study carried out by Specialist Intermonte SIM, also appointed Midcap Partners (Appointed rep by Louis Capital Markets UK, LLP).
The Directors acknowledge that the company took the necessary measures to ensuring the company's compliance with the provisions of Regulation EU 2016/679 ("GDPR") and the applicable national legislation governing personal data protection. In particular, given the company does not fall under the cases of mandatory appointment of a DPO indicated by GDPR, in order to guarantee proof of its accountability, Servizi Italia S.p.A. appointed a Chief Privacy Officer who, with the appropriate organizational model, will have the task of monitoring and providing support and consultancy to all company functions regarding the application and observance of the GDPR and the applicable legislation governing personal data protection.
Servizi Italia S.p.A, pursuant to article 3 of the Consob Resolution no. 18079 of 20 January 2012, decided to join the out-put regime set forth in article 70, paragraph 8, and 71, paragraph 1 bis, of the Consob Regulations n. 11971/99 (as amended), availing itself of the right to derogate from the obligation to publish the information documents as set forth in annex 3B of the above mentioned Consob Regulations when carrying out significant merging, demerging, share capital increases through contributions in kind, acquisitions and transfer operations.
With reference to the changes made in 2016 to the regulatory framework, Servizi Italia S.p.A. will publish the additional periodical information notwithstanding the obligations set forth for the issuers listed in the STAR segment, as specified in article 2.2.3, par. 3, of the Regulations of the Markets organized and managed by Borsa Italiana S.p.A. and in the notice no. 7578 issued by Borsa Italiana on 21 April 2016.
The Chairman of the Board of Directors
(Roberto Olivi)
| (thousands of Euros) | 31 March 2020 | 31 December 2019 |
|---|---|---|
| ASSETS | ||
| Non-current assets | ||
| Property, plant and equipment | 172,548 | 175,575 |
| Intangible assets | 6,128 | 5,901 |
| Goodwill | 68,390 | 71,025 |
| Equity-accounted investments | 24,510 | 25,372 |
| Equity investments in other companies | 3,717 | 3,677 |
| Financial receivables | 6,896 | 6,577 |
| Deferred tax assets | 5,510 | 4,960 |
| Other assets | 4,625 | 5,821 |
| Total non-current assets | 292,324 | 298,908 |
| Current assets | ||
| Inventories | 7,000 | 6,882 |
| Trade receivables | 75,108 | 72,126 |
| Current tax receivables | 2,065 | 2,085 |
| Financial receivables | 8,047 | 8,310 |
| Other assets | 13,512 | 9,604 |
| Cash and cash equivalents | 9,034 | 7,141 |
| Total current assets | 114,766 | 106,148 |
| TOTAL ASSETS | 407,090 | 405,056 |
| SHAREHOLDERS' EQUITY AND LIABILITIES | ||
| Group shareholders' equity | ||
| Share capital | 30,633 | 30,935 |
| Other reserves and retained earnings | 93,966 | 94,728 |
| Profit (Loss) for the period | (39) | 8,990 |
| Total shareholders' equity attributable to shareholders of the parent | 124,560 | 134,653 |
| Total shareholders' equity attributable to non-controlling interests | 3,159 | 3,604 |
| TOTAL SHAREHOLDERS' EQUITY | 127,719 | 138,257 |
| LIABILITIES | ||
| Non-current liabilities | ||
| Due to banks and other lenders | 62,344 | 68,558 |
| Deferred taxes liabilities | 2,407 | 2,408 |
| Employee benefits | 9,799 | 10,321 |
| Provisions for risks and charges | 4,134 | 4,429 |
| Other financial liabilities | 3,387 | 3,877 |
| Total non-current liabilities | 82,071 | 89,593 |
| Current liabilities | ||
| Due to banks and other lenders | 89,846 | 74,301 |
| Trade payables | 79,933 | 72,364 |
| Current tax payables | 154 | 191 |
| Other financial liabilities | 7,544 | 9,269 |
| Provisions for risks and charges | 1,387 | 1,453 |
| Other payables | 18,436 | 19,628 |
| Total current liabilities | 197,300 | 177,206 |
| TOTAL LIABILITIES | 279,371 | 266,799 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 407,090 | 405,056 |
| (thousands of Euros) | 31 March 2020 | 31 March 2019 |
|---|---|---|
| Sales revenues | 62,856 | 65,119 |
| Other income | 926 | 895 |
| Raw materials and consumables | (6,938) | (6,839) |
| Costs for services | (19,506) | (19,418) |
| Personnel expense | (21,445) | (22,497) |
| Other costs | (446) | (370) |
| Depreciation, amortization, write-downs, impairment and provisions | (13,533) | (13,674) |
| Operating profit | 1,914 | 3,216 |
| Financial income | 404 | 546 |
| Financial expenses | (1,647) | (1,246) |
| Income/(Expense) from equity investments in other companies | - | - |
| Revaluation/Impairment of equity-accounted investments | (877) | 370 |
| Profit before tax | (206) | 2,886 |
| Current and deferred taxes | 364 | (156) |
| Profit (Loss) of the period | 158 | 2,730 |
| of which: Attributable to shareholders of the parent | (39) | 2,657 |
| Attributable to non-controlling interests | 197 | 73 |
| (thousands of Euros) | 31 March 2020 |
31 March 2019 |
|---|---|---|
| Profit (Loss) of the period | 158 | 2,730 |
| Other comprehensive income that will not be reclassified to the Income Statement | ||
| Actuarial gains (losses) on defined benefit plans | - | - |
| Income taxes on other comprehensive income | - | - |
| Other comprehensive income that may be reclassified to the Income Statement | ||
| Gains (losses) from translation of foreign financial statements | (9,377) | (333) |
| Portion of comprehensive income of the investments measured using the equity method | (140) | (360) |
| Income taxes on other comprehensive income | - | - |
| Total other comprehensive income after taxes | (9,517) | (693) |
| Total comprehensive income for the period | (9,359) | 2,037 |
| of which: Attributable to shareholders of the parent | (9,308) | 2,005 |
| Attributable to non-controlling interests | (51) | 32 |
| (thousands of Euros) | 31 March 2020 |
31 December 2019 |
31 March 2019 |
|---|---|---|---|
| Cash and cash equivalents in hand | 29 | 44 | 53 |
| Cash at bank | 9,005 | 7,097 | 13,658 |
| Cash and cash equivalents | 9,034 | 7,141 | 13,711 |
| Current financial receivables | 8,047 | 8,310 | 8,588 |
| Current liabilities to banks and other lenders | (89,846) | (74,301) | (81,281) |
| of which financial liabilities for IFRS 16 | (3,467) | (3,707) | (2,885) |
| Current net financial debt | (81,799) | (65,991) | (72,693) |
| Non-current liabilities to banks and other lenders | (62,344) | (68,558) | (73,077) |
| of which financial liabilities for IFRS 16 | (31,031) | (32,552) | (31,013) |
| Non-current net financial debt | (62,344) | (68,558) | (73,077) |
| Net financial debt | (135,109) | (127,408) | (132,059) |
The Interim Report as at 31 March 2020 has been drafted in compliance with Art. 154-ter of the Consolidated Law on Finance.
The accounting principles and criteria adopted to prepare this Interim Report as at 31 March 2020, which has not been audited, are the same as those used to prepare the annual financial statements as at 31 December 2019. It is underlined that, as required by Consob Communication No. DEM/5073567 of 4 November 2005, the Group has exercised the option to provide less details than required under IAS 34 (Interim Financial Reporting).
The subsidiaries San Martino 2000 S.c.r.l, Steritek S.p.A, Wash Service S.r.l., Ekolav S.r.l., SRI Empreendimentos e Participações Ltda (parent company of Lavsim Higienização Têxtil S.A., Maxlav Lavanderia Especializada S.A., Vida Lavanderias Especializada S.A., Aqualav Serviços De Higienização Ltda) are all consolidated line-by-line, as well as Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi (parent company of Ergülteks Temizlik Tekstil Ltd. Sti).
On 25 March 2020, the Junta Comercial do Estado Do Amazonas approved the process of extinction, with retroactive effect from 20 February 2020, of the company SIA Lavanderia S.A. in liquidation, initially approved by Company's shareholders' meeting. Therefore, from the above date, the company is extinguished and consequently excluded from the Group's scope of consolidation.
The estimation criteria used to prepare the Interim Report are basically the same as those applied in the Annual Financial Statements.
This Interim Report is approved by the Board of Directors on 13 May 2020.
Revenues from sales and services of Servizi Italia Group are shown below divided by business line for periods ending on 31 March 2020 and 31 March 2019.
| (thousands of Euros) | 31 March 2020 |
% | 31 March 2019 |
% | Change % |
Organic change % |
Translation change % |
|---|---|---|---|---|---|---|---|
| Wash-hire | 47,656 | 75.8% | 47,913 | 73.6% | -0.5% | -2.4% | -2.7% |
| Linen Sterilization (STERIL B) | 4,432 | 7.1% | 5,378 | 8.3% | -17.6% | -17.6% | - |
| Surgical instrument sterilization (STERIL C) | 10,768 | 17.1% | 11,828 | 18.2% | -9.0% | -9.0% | - |
| Sales revenue | 62,856 | 100.0% | 65,119 | 100.0% | -3.5% | -1.5% | -2.0% |
• Revenues from wash-hire services (which in absolute terms represent 75.8% of Group's revenues) pass from Euro 47,913 thousand in the first quarter of 2019 to Euro 47,656 thousand in 2020, supported by the acquisitions made in 2019 and by the excellent growth in Brazil and Turkey, however offset by a negative exchange rate variation equal to 2.7% and by a drop in volumes in the Italian area, which leads to an overall decrease of 0.5%;
The following graph shows the details of revenue by business line:
The table below shows revenue from sales and services of the Group broken down by geographical area, for the periods ending on 31 March 2020 and 2019:
| (thousands of Euros) | 31 March 2020 |
% | 31 March 2019 |
% | Change % |
Organic change % |
Translation change % |
|---|---|---|---|---|---|---|---|
| Italy | 53,445 | 85.0% | 55,671 | 85.5% | -4.0% | -8.0% | - |
| Brazil | 7,092 | 11.3% | 7,611 | 11.7% | -6.8% | 7.1% | -13.9% |
| Turkey | 2,319 | 3.7% | 1,837 | 2.8% | 26.2% | 39.4% | -13.2% |
| Revenues from sales | 62,856 | 100% | 65,119 | 100.0% | -3.5% | -1.5% | -2.0% |
Changes in property, plant and equipment and the associated accumulated depreciation are shown in the table below.
| (thousands of Euros) | Land and buildings |
Plant and machinery |
Returnable assets |
Equipment | Other assets |
Assets under construction |
Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 43,234 | 154,548 | 34,648 | 66,743 | 152,812 | 5,713 | 457,698 |
| Accumulated depreciation | (5,773) | (99,713) | (24,270) | (52,262) | (100,105) | - | (282,123) |
| Balance as at 31 December 2019 | 37,461 | 54,835 | 10,378 | 14,481 | 52,707 | 5,713 | 175,575 |
| Translation differences | (512) | (2,901) | (352) | (161) | (1,930) | (206) | (6,062) |
| Change in the consolidation scope | 384 | 1,022 | 43 | 1,706 | 11,454 | 2,128 | 16,737 |
| Increases | (379) | (7) | - | (2) | (70) | (214) | (672) |
| Decreases | (859) | (2,191) | (597) | (1,322) | (8,011) | - | (12,980) |
| Amortization | - | - | - | - | (50) | - | (50) |
| Write-downs (reinstatements) | - | 981 | 34 | 177 | 115 | (1,307) | - |
| Reclassifications | 36,095 | 51,739 | 9,506 | 14,879 | 54,215 | 6,114 | 172,548 |
| Balance as at 31 March 2020 | 42,649 | 152,060 | 34,110 | 68,369 | 159,515 | 6,114 | 462,817 |
| Historical cost | (6,554) | (100,321) | (24,604) | (53,490) | (105,300) | - | (290,269) |
| Accumulated depreciation | 36,095 | 51,739 | 9,506 | 14,879 | 54,215 | 6,114 | 172,548 |
| Balance as at 31 March 2020 | 43,234 | 154,548 | 34,648 | 66,743 | 152,812 | 5,713 | 457,698 |
The item "Translation differences" refers to the exchange rate variation for Brazilian companies (Lavsim Higienização Têxtil S.A., Maxlav Lavanderia Especializada S.A., Vida Lavanderias Especializada S.A., SRI Empreendimentos e Participações L.t.d.a., Aqualav Serviços De Higienização Ltda) and Turkish companies (Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi and Ergülteks Temizlik Tekstil Ltd. Sti.).
Investments in property, plant and equipment carried out during the first quarter 2020, equal to Euro 16,737 thousand, mainly refer to the purchase of linen in the Italian area (for Euro 9,939 thousand) and in the Brazilian area (for Euro 1,063 thousand) and they are registered as "other assets".
Investments in equipment mainly refer to the purchase of surgical instruments (Euro 1,159 thousand).
The item "Plant and machinery" registers an increase of Euro 1,022 relating to the supply and upgrading of plants and machineries for washing lines, of which Euro 867 thousand made in Italy.
The increase in item "Assets under construction" is related to works on third party assets still under construction at the end of the quarter 2020 for Euro 2,128 thousand and they are mainly related to the installation of new washing lines, respectively for Euro 1,607 in Italy and Euro 173 thousand in Brazil.
Reclassifications show decreases of Euro 1,307 thousand mainly relating to the commissioning of a new washing plant by the Turkish companies Ankateks Turizm İnşaat Tekstil Temizleme Sanayi ve Ticaret Ltd Şirketi (for Euro 484 thousand) and Ergülteks Temizlik Tekstil Ltd. Sti (for Euro 176 thousand) and the Brazilian company Maxlav Lavanderia Especializada S.A. (for Euro 159 thousand).
This item changed as follows:
| (thousands of Euros) | Trademarks, Software and Patent and intellectual property rights |
Customer contracts portfolio |
Other intangible assets |
Assets under construction and payments on account |
Total |
|---|---|---|---|---|---|
| Historical cost | 6,817 | 8,368 | 624 | 266 | 16,075 |
| Accumulated depreciation | (5,261) | (4,788) | (125) | - | (10,174) |
| Balance as at 31 December 2019 | 1,556 | 3,580 | 499 | 266 | 5,901 |
| Translation differences | (46) | - | (100) | (2) | (148) |
| Increases | 102 | - | 547 | 109 | 758 |
| Decreases | - | - | - | - | - |
| Depreciation | (164) | (123) | (96) | - | (383) |
| Write-downs (reinstatements) | - | - | - | - | - |
| Reclassifications | 86 | - | - | (86) | - |
| Balance as at 31 March 2020 | 1,534 | 3,457 | 850 | 287 | 6,128 |
| Historical cost | 6,891 | 8,368 | 1,041 | 287 | 16,587 |
| Accumulated depreciation | (5,357) | (4,911) | (191) | - | (10,459) |
| Balance as at 31 March 2020 | 1,534 | 3,457 | 850 | 287 | 6,128 |
The increase in intangible assets mainly concerns the accounting of the non-competition agreement stipulated with the previous CEO for a total of Euro 547 thousand. This amount is amortized using the pro rata temporis method based on the duration of the agreement, which is going to expire on 7 January 2022.
Goodwill is allocated to the Servizi Italia Group's cash generating units identified by geographical area, which reflects the areas of operation of the companies acquired over the years. Goodwill is allocated by geographical area as follows:
| (Thousands of Euros) | as at 31 December 2019 |
Increases/ (Decreases) |
Translation differences |
as at 31 March 2020 |
|---|---|---|---|---|
| CGU Italy | 51,668 | - | - | 51,668 |
| CGU Turkey | 10,248 | - | (742) | 9,506 |
| CGU Brazil | 9,109 | - | (1,893) | 7,216 |
| Total | 71,025 | - | (2,635) | 68,390 |
The change in the period is exclusively attributable to the exchange rate differences on the translation into Euro of goodwill arising from the acquisitions in Brazil and Turkey
At the date of approval of this interim report, no facts or events have taken place that may indicate an impairment loss in the goodwill recognized and tested for impairment at the end of 2019.
This item changed as follows:
| (Thousands of Euros) | as at 31 March 2020 |
as at 31 December 2019 |
|---|---|---|
| Initial balance | 24,171 | 23,923 |
| Increases/(decreases) | - | 727 |
| OCI changes | (140) | (882) |
| Revaluations/(write-downs) | (877) | 480 |
| Translation differences | (136) | (77) |
| Final balance | 23,018 | 24,171 |
| of which recognized in provisions for risks and charges | (1,492) | (1,201) |
| of which recorded in equity-accounted investments | 24,510 | 25,372 |
Revaluations and write-downs reflect the portion of profits and losses earned by investee companies in the period.
The negative item in OCI change (Euro 140 thousand) corresponds to the portion attributable to the Servizi Italia Group, within the scope of application of the equity method, of the change in the fair value of the hedging derivatives subscribed by the company Ospedal Grando S.p.A. (controlled by the jointly controlled company Finanza e Progetti S.p.A.).
It should be noted that the negative results recorded in the period by Saniservice Sh.p.k. for Euro 449 thousand and Shubhram Hospital Solutions Private Limited for Euro 315 thousand, are mainly due to the depreciation of Lek and Rupee respectively against the Euro.
With reference to the investment in Shubhram Hospital Solutions Private Limited, in consideration of the commitments undertaken with the local Indian partner, the portion of the losses exceeding the value of the investment has been entered in the item "Provisions for risks and charges".
The item is broken down as follows:
| (thousands of Euros) | as at 31 March 2020 |
as at 31 December 2019 |
|---|---|---|
| Substitute Italian tax D.L. 185/2008 subsequent years | 2,642 | 3,354 |
| Receivables for IRES reimbursement request pursuant to Art. 2 par. 1-quater Italian D.L. n. 201 |
175 | 175 |
| Aqualav receivable, in escrow account | 1,407 | 1,776 |
| Other non-current assets | 401 | 516 |
| Total | 4,625 | 5,821 |
The change in this item is mainly due to the release to the income statement of the substitute taxes pursuant to Article 15, paragraph 10-12 of Legislative Decree 185/08, paid in order to obtain tax recognition of the goodwill values that emerged during the business combination. These substitute taxes were recorded as advance payments of current taxes and released to the income statement over the period in which the company will benefit from the tax deductions related to the respective goodwill. The change in the "Aqualav receivable, in escrow account" is attributable to the depreciation of the Real against the Euro.
Trade receivables amount to Euro 75,108 as at 31 March 2020, up by Euro 2,982 thousand compared to 31 December 2019.
During the first quarter of 2019, the Servizi Italia Group carried out some transactions involving the disposal of receivables, as described below:
The item is broken down as follows:
| (thousands of Euros) | as at 31 March 2020 | as at 31 December 2019 |
|---|---|---|
| Due from others | 9,994 | 7,921 |
| Prepayments | 3,273 | 1,398 |
| Guarantee deposits receivable | 213 | 227 |
| Accrued income | 32 | 58 |
| Total | 13,512 | 9,604 |
The item "Due from others" is mainly composed of VAT credit requested for reimbursement, for a total of Euro 6,467 thousand (Euro 4,275 as at 31 December 2019) and, for the residue, mainly advances and receivables from social security institutions, all due within the year. The increase in prepayments is mainly due to the portion of rents and insurance premiums recorded at the beginning of the year. The item "guarantee deposits receivable" relates to energy utilities and rental contracts.
As at 31 March 2020, the fully subscribed and paid-up share capital of Servizi Italia S.p.A. is broken down into 31,809,451 ordinary shares with a nominal amount of Euro 1 each. The Parent Company, during the first three months of 2020, purchased 302,730 treasury shares, for a countervalue of Euro 785 thousand, equal to 0.95% of the share capital, at an average book value of Euro 2.59 per share. Following these operations, as at 31 March 2020, the Company held 1,176,941 treasury shares, equal to 3.70% of the share capital. The value of treasury shares held on 31 March 2020, equal to Euro 3,750 thousand, has been classified as a decrease of net equity.
It should be also noted the negative effect of Euro 9,377 thousand on the translation reserves of the assets of the companies preparing the financial statements in foreign currency and mainly following the depreciation of the Brazilian Real and the Turkish Lira.
Payables to banks and other non-current lenders decreased from Euro 68,558 thousand as at 31 December 2019 to Euro 62,344 thousand as at 31 March 2020. This variation, equal to Euro 6,214 thousand, is connected to the reclassification in short term of the loan instalments falling due within the following 12 months and to the repayment of the loan instalments falling due during the year.
The item is broken down as follows:
| as at 31 March | as at 31 December | |
|---|---|---|
| (Thousands of Euro) | 2020 | 2019 |
| Payables to Area S.r.l. | 200 | 200 |
| Payables to Wash Service S.r.l. shareholders | 492 | 989 |
| Put option payables of Steritek S.p.A. | 1,818 | 1,814 |
| Put option payables of Wash Service S.r.l. | 877 | 874 |
| Other payables | - | - |
| Total | 3,387 | 3,877 |
The change in the period relates to the classification under other current financial liabilities of the portion of debt payable within 12 months to minority shareholders of Wash Service S.r.l. for the price instalments of 90% of the shares purchased during 2019.
Payables to banks and other current lenders registered an increase equal to Euro 15,545 thousand, passing from Euro 74,301 thousand as at 31 December 2019 to Euro 89,846 thousand as at 31 March 2020. The increase in the balance has been determined by greater recourse to self-liquidating credit lines.
The item is broken down as follows:
| (thousands of Euros) | as at 31 March 2020 | as at 31 December 2019 |
|---|---|---|
| Deposits | - | 15 |
| Due to suppliers | 71,706 | 65,375 |
| Due to associates | 2,402 | 2,212 |
| Due to parent company | 4,979 | 4,625 |
| Payables to companies under the control of the parent companies | 846 | 137 |
| Total | 79,933 | 72,364 |
The item is broken down as follows:
| (thousands of Euros) | as at 31 December 2019 |
as at 31 December 2019 |
|---|---|---|
| Payables to Area S.r.l. | - | 300 |
| Payables to Finanza e Progetti S.p.A. | 2,460 | 2,460 |
| Deferred price Aqualav Serviços De Higienização L.t.d.a. | 90 | 191 |
| Put option payables for Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A. |
3,494 | 4,409 |
| Payables to Lavanderia Bolognini M&S S.r.l. | 1,000 | 1,000 |
| Payables to Wash Service S.r.l. shareholders | 500 | 909 |
| Total | 7,544 | 9,269 |
The change in this item is related to the payment of one of the three price tranches (equal to Euro 909 thousand), for the 90% of Wash Service S.r.l., purchased during 2019. The change relating to the payable to the minority shareholders of Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A., who hold a put option enabling them to exercise their right to sell the remaining shares of both companies to the Servizi Italia Group, respectively 34.9%, is mainly attributable to the depreciation of the Real against the Euro. The debt arising from the acquisition from Lavanderia Bolognini M&S S.r.l. of the business unit operating in the washing and industrial washing sector for private facilities remains outstanding.
The table below provides a breakdown of other current liabilities:
| (thousands of Euros) | as at 31 March 2020 | as at 31 December 2019 |
|---|---|---|
| Accrued liabilities | 37 | 135 |
| Deferred income | 117 | 55 |
| Social security contributions | 4,225 | 5,647 |
| Due to employees | 10,573 | 10,247 |
| Employee/professional IRPEF (personal income tax) payable | 1,703 | 2,546 |
| Other payables | 1,781 | 998 |
| Total | 18,436 | 19,628 |
As at 31 March 2020, the consumption of raw materials (equal to Euro 6,938 thousand, up by Euro 99 thousand compared to the same period of the previous year) mainly refers to washing products, chemical products, packaging, consumables and spare parts coming from consolidation of Ekolav S.r.l. and Wash Service S.r.l., as well as disposables and PPE for new customers and purchase of PPE because of Covid-19 emergency.
The item is broken down as follows:
| (thousands of Euros) | From 1 January to 31 March | |||
|---|---|---|---|---|
| 2020 | 2019 | |||
| External laundering and other industrial services | 6,175 | 5,938 | ||
| Travel and transport | 3,564 | 3,718 | ||
| Utilities | 3,337 | 3,418 | ||
| Administrative costs | 725 | 551 | ||
| Consortium and sales costs | 1,983 | 1,872 | ||
| Personnel expense | 586 | 773 | ||
| Maintenance | 1,990 | 1,748 | ||
| Use of third-party assets | 701 | 882 | ||
| Other services | 445 | 518 | ||
| Total | 19,506 | 19,418 |
The item "Costs for services" registers a slight increase compared to the same period of the previous year (Euro 88 thousand), passing from Euro 19,418 in the first quarter 2019 to Euro 19,506 in the first quarter 2020. Costs for external services show an increase of Euro 237 thousand, the item is affected by higher costs linked to new customers in the Emilia Romagna area, as well as external laundry services related to the Covid-19 emergency. The costs for utilities show a decrease of Euro 81 thousand compared to 31 March 2019 connected to the decrease of electricity costs. Personnel costs decreased mainly due to a greater and more pervasive use of smart-working following the Covid-19 emergency. Administrative costs register an increase of Euro 174 thousand, mainly due to higher legal costs incurred by the Parent Company. Moreover, the costs related to maintenance show an increase of Euro 242 thousand due to higher costs related to surgical instruments at some customers in Friuli Venezia Giulia and Emilia Romagna areas.
The item is broken down as follows:
| (thousands of Euros) | From 1 January to 31 March | |
|---|---|---|
| 2020 | 2019 | |
| Costs for directors' fees | 378 | 424 |
| Salaries and wages | 14,667 | 15,499 |
| Temporary work | 350 | 654 |
| Social security charges | 5,081 | 4,953 |
| Employee severance indemnity | 906 | 895 |
| Other costs | 63 | 72 |
| Total | 21,445 | 22,497 |
The item "Personnel expense" pass from Euro 22,497 thousand as at 31 March 2019 to Euro 21,445 thousand as at 31 March 2020, down by Euro 1,052 thousand. The period was affected by the release of termination benefits, reclassified under personnel costs, which had been allocated to the previous Chief Executive Officer and released following his resignation on 7 January 2020, for Euro 500 thousand. In addition, the decrease in costs comes from lower allocations related to the variable remuneration policy for the period, as well as a management of personnel costs aimed at reducing costs during the quarter, especially in March 2020, due to the contingent epidemic emergency situation, mainly through incentives for the use of holidays and days of leave. It should also be noted that there was a decrease of Euro 304 thousand relating to the item "Temporary agency work" which went from Euro 654 thousand as at 31 March 2019 to Euro 350 thousand as at 31 March 2020, mainly relating to Arco di Trento plant.
| Personnel as at 31 March | |||
|---|---|---|---|
| 2020 | 2019 | ||
| Executives | 19 | 18 | |
| Middle managers | 47 | 40 | |
| White-collar staff | 286 | 279 | |
| Blue-collar staff | 3,259 | 3,332 | |
| Total | 3,611 | 3,669 |
The item is broken down as follows:
| (thousands of Euros) | From 1 January to 31 March | |
|---|---|---|
| 2020 | 2019 | |
| Amortization of intangible assets | 383 | 257 |
| Depreciation of property, plant and equipment | 12,980 | 13,221 |
| Write-down of receivables | 170 | 196 |
| Total | 13,533 | 13,674 |
The item "Depreciation and Amortization" registers a decrease of Euro 141 thousand compared to the same period of the previous year, passing from Euro 13,674 thousand in the first quarter 2019 to Euro 13,533 thousand in the first quarter 2020. It should be noted that part of this change is mainly attributable to the revision of the estimated useful life of some kind of laundry within the Parent Company and San Martino 2000 S.c.r.l. (tailored, mattresses and hotel linen) carried out starting from the annual financial statements as at 31 December 2019, to which reference should be made for adequate information.
The item is broken down as follows:
| (thousands of Euros) | From 1 January to 31 March | |
|---|---|---|
| 2020 | 2019 | |
| Bank interest income | 48 | 110 |
| Default interest | 165 | 156 |
| Interest income on loans to third party companies | 165 | 168 |
| Other financial income | 26 | 112 |
| Total | 404 | 546 |
Financial expenses are composed as follows:
| (thousands of Euros) | From 1 January to 31 March | ||
|---|---|---|---|
| 2020 | 2019 | ||
| Interest expense and bank commission | (542) | (567) | |
| Interest and expense to other lenders | (90) | (87) | |
| Financial expense on employee benefits | (8) | (24) | |
| Exchange rate losses | (365) | (17) | |
| Other financial expenses | (642) | (551) | |
| Total | (1,647) | (1,246) |
The item "Exchange rate losses" is substantially related to the depreciation of both Real and Turkish Lira against Euro, which weighted Euro 302 thousand in the Brazilian area, Euro 40 thousand in Italy and Euro 23 thousand in the Turkish area.
| (thousands of Euros) | 31 March 2020 |
31 December 2019 |
31 March 2019 |
|---|---|---|---|
| Cash and cash equivalents in hand | 29 | 44 | 53 |
| Cash at bank | 9,005 | 7,097 | 13,658 |
| Cash and cash equivalents | 9,034 | 7,141 | 13,711 |
| Current financial receivables | 8,047 | 8,310 | 8,588 |
| Current liabilities to banks and other lenders | (89,846) | (74,301) | (81,281) |
| of which financial liabilities for IFRS 16 | (3,467) | (3,707) | (2,885) |
| Current net financial debt | (81,799) | (65,991) | (72,693) |
| Non-current liabilities to banks and other lenders | (62,344) | (68,558) | (73,077) |
| of which financial liabilities for IFRS 16 | (31,031) | (32,552) | (31,013) |
| Non-current net financial debt | (62,344) | (68,558) | (73,077) |
| Net financial debt | (135,109) | (127,408) | (132,059) |
The increase in availability in bank current accounts (equal to Euro 1, 893 thousand compared to 31 December 2019), is essentially to be related to the increase in cash and cash equivalents in the accounts of the Brazilian subsidiary SRI Empreendimentos and Participacoes LTDA; these resources will be used during the year to finance the Group's growth in Brazil and for paying the price relating to the put option exercised on 15 April 2020 by the minority shareholders of Maxlav Lavanderia Especializada S.A. and Vida Lavanderias Especializada S.A.
It should be noted that current liabilities to banks and other lenders increased by Euro 15,545 thousand compared to 31 December 2019 as a result of a greater use of self-liquidating lines.
Non-current liabilities to banks and other lenders decreased from Euro 68,558 thousand as at 31 December 2019 to Euro 62,344 thousand as at 31 March 2020. This change, equal to Euro 6,214 thousand, is related to the reclassification in short term of the loan instalments falling due within the following 12 months and to the repayment of the loan instalments falling due during the year.
Here follows also the net financial position drafted according to CESR Recommendation of 10 February 2005, now ESMA, which also reports the value of "Other current financial liabilities" in "Other current financial payables" and the value of "Other non-current financial liabilities" in "Other non-current payables".
| (thousands of Euros) | 31 March 2020 |
31 December 2019 |
31 March 2019 |
|---|---|---|---|
| A. Cash | 29 | 43 | 53 |
| B. Other cash equivalents | 9,005 | 7,097 | 13,658 |
| C. Securities held for trading | - | - | - |
| D. Cash and cash equivalents (A)+(B)+(C) | 9,034 | 7,140 | 13,711 |
| E. Current financial receivables | 8,047 | 8,310 | 8,588 |
| F. Current bank borrowings | (59,032) | (41,291) | (44,100) |
| G. Current portion of non-current borrowings | (30,814) | (33,010) | (37,181) |
| of which financial liabilities for IFRS 16 | (3,467) | (3,707) | (2,885) |
| H. Other current financial payables | (7,544) | (9,269) | (5,828) |
| I. Current financial debt (F)+(G)+(H) | (97,390) | (83,570) | (87,109) |
| J. Current net financial debt (I)–(E)–(D) | (80,309) | (68,120) | (64,810) |
| K. Non-current bank borrowings | (62,344) | (68,558) | (73,077) |
| of which financial liabilities for IFRS 16 | (31,031) | (32,552) | (31,013) |
| L. Bonds issued | - | - | |
| M Other non-current payables | (3,387) | (3,876) | (7,886) |
| N. Non-current financial debt (K)+(L)+(M) | (65,731) | (72,434) | (80,963) |
| O. Net financial debt (J)+(N) | (146,040) | (140,554) | (145,773) |
The Chairman of the Board of Directors
(Roberto Olivi)
––––––––––– o –––––––––––
The financial Reporting Manager Angelo Minotta states pursuant to paragraph 2, Article 154 bis of the Consolidated Law on Finance that the accounting information presented in this document corresponds to the documented results, books and accounting entries.
The Financial Reporting Manager
(Angelo Minotta)
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