Quarterly Report • Nov 14, 2018
Quarterly Report
Open in ViewerOpens in native device viewer
The Board of Directors of November, 14th 2018
| 1 | THE COMPANY B&C SPEAKERS S.P.A. – CORPORATE BODIES 3 |
|---|---|
| 2 | INTRODUCTION 4 |
| 3 | THE MAIN ASPECTS OF THE PERIOD FROM JANUARY TO SEPTEMBER 2018 4 |
| 4 | RESULTS OF OWNERSHIP STRUCTURE, ASSET MANAGEMENT AND FINANCIAL MANAGEMENT…………………………………………………………………………………………………………4 |
| 1 | THE COMPANY B&C SPEAKERS S.P.A. – CORPORATE BODIES 3 |
| 2 | INTRODUCTION 4 |
| 3 | THE MAIN ASPECTS OF THE PERIOD FROM JANUARY TO SEPTEMBER 2018 4 |
| 4 | RESULTS OF OWNERSHIP STRUCTURE, ASSET MANAGEMENT AND FINANCIAL MANAGEMENT 4 |
| 5 | STATEMENT OF CHANGES IN EQUITY 10 |
| 6 | NET FINANCIAL POSITION 10 |
| 7 | SIGNIFICANT EVENTS OCCURRING AFTER SEPTEMBER 30, 2018 11 |
| 8 | OUTLOOK FOR THE ENTIRE 2018 YEAR 11 |
| 9 | SHARE PERFORMANCE 11 |
| BALANCE SHEET AND CONSOLIDATED INCOME STATEMENT RELATING TO SEPTEMBER, 31 2018 13 |
|
| CERTIFICATION OF FINANCIAL REPORTING MANAGER PURSUANT TO ARTICLE 154-BIS, PARAGRAPH 2 OF LEGISLATIVE DECREE NO. 58/1998. 15 |
| Chairperson: | Gianni Luzi |
|---|---|
| Chief Executive Officer: | Lorenzo Coppini |
| Director: | Simone Pratesi |
| Director: | Alessandro Pancani |
| Director: | Francesco Spapperi |
| Indipendent Director: | Raffaele Cappiello |
| Independent Director: | Roberta Pecci |
| Independent Director: | Gabriella Egidi |
| Independent Director: | Patrizia Mantoan |
| Chairmen: | Riccardo Foglia Taverna |
|---|---|
| Regular Auditor: | Giovanni Mongelli |
| Regular Auditor: | Sara Nuzzaci |
| Alternate Auditor: | Placida Di Ciommo |
| Alternate Auditor: | Antonella Rapi |
Francesco Spapperi
PricewaterhouseCoopers S.p.A.
The Interim Report at September 30, 2018has been prepared pursuant to Legislative Decree 195/2007 and article 154 ter of the T.U.F.; the economic and financial aggregates shown below, even if determined on the basis of IFRS and in particular the same measurement criteria used for the preparation of the consolidated financial statements as at December 31, 2017, do not represent an interim financial statement prepared in accordance with I.F.R.S. and in particular with IAS 34.
This interim report has not been subjected to audit.
At the date of preparation of this report, official data indicate the following significant shareholders
This Interim Report at September 30, 2018 contains the information required by art. 154 ter of the TUF.
The IFRS accounting standards used by the Group are the same as those applied in the preparation of the financial statements for the year ended December 31, 2017, to which reference should be made.
In particular, as required by IFRS, a provision was made for the carrying out of estimates and the formulation of assumptions, which are reflected in the determination of the carrying amounts of assets and liabilities, including potential assets and liabilities at the end of the period. These estimates and assumptions are used specifically for determining amortisation and depreciation, impairment testing of assets (including the measurement of receivables), provisions, employee benefits, deferred tax assets and liabilities. The final results could therefore differ from these estimates and assumptions; moreover, the estimates and assumptions are reviewed and updated periodically and the effects of each change are immediately reflected in the financial statements.
Below are the financial statements and the explanatory notes to the statements. All values are expressed in euros, unless otherwise indicated. The financial and economic data presented, are compared with the corresponding figures of 2017.
These financial statements, prepared in accordance with the requirements of art. 154 ter of the TUF, report the positive and negative components of income, the net financial position, divided between short, medium and long term items, as well as the Group's financial position. In view of this, the financial statements presented and the relative explanatory notes, were prepared for the sole purpose of compliance with the provisions of the aforementioned Issuer Regulations, are devoid of certain data and information that would be required for a complete representation of the financial position and the results of the Group for the quarter ended at September, 30 2018 in accordance with IFRS.
B&C Speakers is a key international entity in the production and marketing of "top quality professional loudspeakers"; owing to the nature and type of business carried on, the Group operates exclusively in this sector, both nationally and internationally.
Products are manufactured and assembled at the Italian production plant of the Parent Company and the subsidiary Eighteen Sound S.r.l., which also deals directly with marketing and sales in the various geographical areas covered.
Distribution in the US market is handled through the American subsidiary B&C Speakers NA LLC, which also offers support services for sales to local customers.
Distribution in the Brazilian market is handled through the subsidiary B&C Speakers Brasil LTDA.
Below is the table showing the Group's economic performance during the first three months of 2018 compared with the figures for the same period of 2017.
| (€ thousands) | IIIQ 2018 YTD | Incidence IIIQ 2017 YTD | Incidence | |
|---|---|---|---|---|
| Revenues | 41,230 | 100.00% | 29,654 | 100.0% |
| Cost of sales | (25,616) | -62.13% | (17,260) | -58.2% |
| Gross margin | 15,615 | 37.87% | 12,394 | 41.8% |
| Other revenues | 337 | 0.82% | 143 | 0.5% |
| Cost of indirect labour | (2,740) | -6.64% | (1,644) | -5.5% |
| Commercial expenses | (833) | -2.02% | (664) | -2.2% |
| General and administrative expenses | (3,780) | -9.17% | (3,032) | -10.2% |
| Ebitda | 8,600 | 20.86% | 7,198 | 24.3% |
| Depreciation of tangible assets | (821) | -1.99% | (576) | -1.9% |
| Amortization of intangible assets | (234) | -0.57% | (21) | -0.1% |
| Writedowns | (3) | -0.01% | 0 | 0.0% |
| Earning before interest and taxes (Ebit) | 7,541 | 18.29% | 6,601 | 22.3% |
| Financial costs | (551) | -1.34% | (351) | -1.2% |
| Financial income | 255 | 0.62% | 464 | 1.6% |
| Earning before taxes (Ebt) | 7,245 | 17.57% | 6,714 | 22.6% |
| Income taxes | (1,537) | -3.73% | (1,991) | -6.7% |
| Profit for the year | 5,708 | 13.84% | 4,723 | 15.9% |
| Minority interest | 0 | 0.00% | 0 | 0.0% |
| Group Net Result | 5,708 | 13.84% | 4,723 | 15.9% |
| Other comprehensive result | 34 | 0.08% | (100) | -0.3% |
| Total Comprehensive result | 5,742 | 13.93% | 4,623 | 15.6% |
Some financial indicators and some reclassified financial statements not defined by the IFRS are presented and commented on in this financial statement.
These figures are defined below in compliance with the Consob Communication of July 28, 2006 (DEM 6064293) and subsequent amendments and additions (Consob Communication No. 0092543 of December 3, 2015, which incorporates the ESMA / 2015/1415 guidelines).
The alternative performance indicators listed below shall be used as an informative supplement to the provisions of the IFRS to assist the users of the financial report with a better understanding of the Company's economic, equity and financial performance. The alternative performance indicators are measures used by the Issuer to monitor and evaluate the performance of the Group and are not defined as accounting measures, either in the Italian Accounting Principles or in the IAS / IFRS. Therefore, the determination criterion applied by the Group may not be homogeneous with the one adopted by other operators and/or Groups and therefore may not be comparable. It is emphasized that the method of calculation of these corrective measures used by the Company is consistent over the years.
EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) is defined by the Issuer's Directors as the "profit before tax and financial income and expenses", as resulting from the consolidated income statement, gross of amortisation of intangible fixed assets, depreciation of tangible fixed assets, provisions and impairment and acquisition costs of Eighteen Sound, as shown on the above consolidated income statement. EBITDA is a measure used by the Issuer to monitor and assess the Group's operating performance.
EBIT (Earnings Before Interest and Tax) is the consolidated result before tax, charges and financial income as recorded in the income statement prepared by the Directors in drawing up the IAS/IFRS-compliant financial statements.
EBT (earnings before taxes) is the consolidated result before tax, as recorded in the income statement prepared by the Directors in preparing IAS/IFRS-compliant consolidated financial statements.
In the first nine months of 2018 amounted to Euro 41.23 million, resulting in growth of 39.04% over the same period of 2017 when turnover stood at Euro 29.65 million.
This significant increase was the result of the 6.89% growth achieved by the B&C Speakers Group when the scope of consolidation is held constant, to which was added the turnover achieved by Eighteen Sound which provided a net contribution of Euro 9.53 million.
During the period, thanks also the effects of the acquisition, the Group heavily increased turnover in all operating areas. In particular we note the significant growth in the European market (+33% with sales of Euro 18.36 million), in the national market (+50% with sales of Euro 2.8 million) and in the Latin American market (+99% with sales of Euro 4.19 million).
| Revenues per geographic area (values in Euro/thausand) |
IIIQ 2018 YTD |
% | IIIQ 2017 YTD |
% | Difference | Difference % |
|---|---|---|---|---|---|---|
| Latin America | 4,196 | 10% | 2,107 | 7% | 2,089 | 99% |
| Europe | 18,359 | 44% | 13,790 | 47% | 4,569 | 33% |
| Italy | 3,506 | 8% | 1,876 | 6% | 1,630 | 87% |
| North America | 7,348 | 18% | 5,440 | 18% | 1,908 | 35% |
| Middle East & Africa | 265 | 1% | 328 | 1% | (63) | -19% |
| Asia & Pacific | 8,255 | 20% | 6,112 | 21% | 2,143 | 35% |
| Total | 41,929 | 100% | 29,653 | 100% | 12,276 | 41% |
Below is a full breakdown for the third quarter of 2018 by geographic area:
During the first nine months of 2018 had an increased impact on revenues compared to the first three months of 2017, rising from 58.20% to 62.13%.
The greater impact of the Cost of Sales with respect to revenues was due to the consolidation of the subsidiary Eighteen Sound, which at present still has margins which are much lower than those traditionally associated with B&C Speakers. The positive effects deriving from the integration of the two structures, mainly associated with synergies in acquisitions and production, will be progressively seen during the year and will be fully achieved during 2019.
Costs for indirect personnel increased in both absolute terms and in terms of impact on turnover. This increase can mainly be attributed to the acquisition of Eighteen Sound.
Commercial expenses showed a slight increase in absolute values compared to the first nine months of the previous year. As a result, their incidence has slightly reduced given the strong growth of the company.
General and administrative costs increased to a less than proportional extent compared to the increase in Group sales, reducing their impact by almost one percent; this is essentially due to greater production volumes following the acquisition.
Mainly as a result of the trends described above, EBITDA in the first nine months of 2018 increased to € 8.60 million, an increase of 19.48% over the same period of 2017 (when the amount was € 7.20 million).
The EBITDA margin for the first nine months of 2018 was 20.86% of revenues (24.27% in the first nine months of the previous year). The decrease is due to the combined effect of the increase in volumes and the inclusion of Eighteen Sound, which still has lower margins with respect to B&C Speakers.
The increase in depreciation and amortization of tangible and intangible assets with respect to the corresponding period of the previous year is entirely due to the integration of Eighteen Sound.
EBIT referred to the first nine months of 2018 amounting to 7.54 million euros, an increase of 14.24% compared to the same period of 2017 (when it was equal to 6.60 million euros). The EBIT margin is equal to 18.29% of revenues (22.26% in the corresponding period of 2017).
The Group's net profit at the end of the first nine months of 2018 amounted to € 5.71 million and represents 13.84% of consolidated revenues with a total increase of 20.85% with respect to the corresponding period in 2017.
The Group maintains good financial stability; the Net Financial Position at the end of the first nine months of 2018 was negative, equalling Euro 7.01 million against a value of 6.72 at the end of 2017. However, it should be noted that in the same period, dividends were paid totalling Euro 4.61 million.
The balance sheet figures for the year ended September 30, 2018 compared with the balance sheet values at the end of 2017 are shown below.
| Reclassified Balance sheet | 30 September | 31 December | |
|---|---|---|---|
| (€ thousands) | 2018 | 2017 | Change |
| Property, plant & Equipment | 3,466 | 3,918 | (453) |
| Inventories | 14,393 | 13,216 | 1,177 |
| Trade receivables | 13,889 | 11,253 | 2,636 |
| Other receivables | 1,502 | 2,143 | (641) |
| Trade payables | (6,296) | (6,129) | (167) |
| Other payables | (2,890) | (1,957) | (933) |
| Working capital | 20,599 | 18,526 | 2,073 |
| Provisions | (897) | (843) | (54) |
| Invested net working capital | 23,167 | 21,601 | 1,566 |
| Cash and cash equvalents | 2,985 | 4,411 | (1,426) |
| Investments in associates | 50 | 50 | - |
| Goodwill | 2,318 | 2,318 | - |
| Short term securities | 6,037 | 5,174 | 863 |
| Other financial receivables | 568 | 568 | (0) |
| Financial assets | 11,958 | 12,522 | (564) |
| Invested net non operating capital | 11,958 | 12,522 | (564) |
| NET INVESTED CAPITAL | 35,124 | 34,122 | 1,002 |
| Equity | 19,091 | 17,814 | 1,276 |
| Short-term financial borrowings | 7,682 | 5,789 | 1,893 |
| Long-term financial borrowing | 8,352 | 10,519 | (2,167) |
| RAISED CAPITAL | 35,124 | 34,122 | 1,002 |
Note:
Fixed assets: are defined by the Issuer's Directors as the value of long-term assets (tangible and intangible). Net Operating Working Capital: is defined by the Issuer's Directors as the value of inventories, trade receivables and other receivables net of debts for supplies and other payables. Funds: the value of bonds linked to employees' and directors' severance pay. Invested net working capital: is the value of financial assets and other financial credits as described above. Raised capital: is the value of net assets of the Group and the total indebtedness of the Group.
A number of comments on the classification of assets and liabilities according to their operational destination are showed here below.
Net Operating Invested Capital shows a decrease of € 1.5 million compared with December 31, 2017. This increase was mainly due to the combined effect of the following factors:
The Net Non-Operating Invested Capital increases of around Euro 0.5 million compared to December 31, 2017, it is mainly due to the combined effect of the increase in short-term Securities held for liquidity reasons and the decrease in liquidity due essentially to the financial absorption resulting from the payment of dividends, repayment of installments of existing loans and payment of taxes.
The other Capital categories showed no changes compared with December 31, 2017.
The Net Financial Position at the end of the first nine months of 2018 is negative and equal to Euro 7.01 million, against a value of 6.72 at the end of the 2017 financial year, but it is useful to underline that in the same period dividends were paid for an amount of 4.61 million euros.
Below is the statement of changes in equity from 1 January 2018 to September, 30 2018 (figures in thousands of Euro):
| Share Capital |
Legal Reserve |
Share premium reserve |
Extraordinary reserve |
Exchange rate reserve |
Foreign exchange reserve |
Riserve di risultato |
Net Group Equity |
Minority interest |
Total net Equity | |
|---|---|---|---|---|---|---|---|---|---|---|
| Euro thousand | ||||||||||
| Balance December 31, 2017 | 1,097 | 379 | 4,786 | 44 | 54 | 435 | 11,019 | 17,814 | - | 17,814 |
| Result of the period | 5,710 | 5,710 | 5,710 | |||||||
| Other comprehensive income/expenses | 32 | - | 32 | 32 | ||||||
| Totale other comprehensive income/expenses | - | - | - | - | - | 32 | 5,710 | 5,742 | - | 5,742 |
| Shareholders | ||||||||||
| Allocation of previous year result | - | - | - | - | ||||||
| Dividend distribution | (4,607) | (4,607) | (4,607) | |||||||
| Treasury shares allocation | 3 | 138 | - | 141 | 141 | |||||
| Balance September 30, 2018 | 1,100 | 379 | 4,924 | 44 | 54 | 467 | 12,122 | 19,090 | - | 19,090 |
Below is the Net Financial Position table prepared in line with that reported in the consolidated financial statements as at 31 December 2017 (figures in thousands of Euro).
| 30 September | 31 December | |||
|---|---|---|---|---|
| Values in Euro Thousands | 2018 | 2017 | Change % | |
| A. Cash | 2,985 | 4411.4 | -32% | |
| C. Securities held for trading | 6,037 | 5,174 | 17% | |
| D. Cash and cash equivalent (A+C) | 9,022 | 9,586 | -6% | |
| F. Bank overdrafts | (1,747) | (1,443) | 21% | |
| G. Current portion of non current borrowings | (5,935) | (4,346) | 37% | |
| I. Current borrowingse (F+G) | (7,682) | (5,789) | 33% | |
| J. Current net financial position (D+I) | 1,340 | 3,797 | -65% | |
| K. Non current borrowings | (8,352) | (10,519) | -21% | |
| N. Non current borrowings | (8,352) | (10,519) | -21% | |
| O. Total net financial position (J+N) | (7,012) | (6,722) | 4% |
Note: The net financial position, calculated by the Parent Company management as detailed above, is not identified as an accounting measurement under the Italian Accounting Standards or the IFRSs endorsed by the European Commission. Therefore, the measurement criteria may not be consistent with that adopted by other operators and/or groups and may, therefore, not be comparable. Moreover, the definition may differ from that established by the Issuer's loan contracts.
Net Financial Position shows, as previously stated, a substantial consistency compared to December, 31 2017.
With the Regional Revenue Office finalising their ruling (on 11 July 2018) for the Patent Box scheme presented from 2015, B&C Speakers calculated the relevant tax credit for each period, namely 2015, 2016 and 2017. At the date of this release, supplementary returns have already been submitted for 2015 and 2016, whereas the tax return for 2017 is currently been submitted.
The table below sets out the contribution obtained for each individual period:
| Patent Box effect | 2015 | 2016 | ||
|---|---|---|---|---|
| (Euro thousands) | 2017 | |||
| Historic Tax rate pre Patent Box | 30.0% | 28.9% | 27.0% | |
| Tax rate post Patent Box | 25.0% | 21.3% | 17.7% | |
| Tax benefit | 373 | 677 | 754 |
The tax credits resulting from the agreement will be used as from the upcoming tax deadlines.
The available data, as at the date this document was prepared, suggests that 2018 will be a year of significant growth for the B&C Speakers Group supported by the following elements:
The B&C Speakers S.p.A. title is listed on the Mercato Telematico Azionario organized and managed by Borsa Italiana S.p.A.
On September 28, 2018 the reference price of the B&C Speakers S.p.A. (BEC) was 12.94 Euros, and consequently the capitalization amounted to approximately 142.3 million Euros.
Below is a table showing the performance of the B &C Speakers S.p.A. in the period January - October 2018.
| CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Values in Euro) |
30 September 2018 |
31 December 2017 |
|
|---|---|---|---|
| ASSETS | |||
| Fixed assets | |||
| Tangible assets | 2,964,179 | 3,318,310 | |
| Goodwill | 2,318,181 | 2,318,181 | |
| Other intangible assets | 501,324 | 599,748 | |
| Investments in non controlled associates | 50,000 | 50,000 | |
| Deferred tax assets | 522,414 | 352,514 | |
| Other non current assets | 567,670 | 568,135 | |
| related parties | 88,950 | 88,950 | |
| Total non current assets | 6,923,768 | 7,206,888 | |
| Currents assets | |||
| Inventory | 14,393,034 | 13,215,651 | |
| Trade receivables | 13,888,830 | 11,252,674 | |
| Tax assets | 658,958 | 1,297,287 | |
| Other current assets | 6,358,093 | 5,667,487 | |
| Cash and cash equivalents | 2,984,733 | 4,411,203 | |
| Total current assets | 38,283,648 | 35,844,302 | |
| Total assets | 45,207,416 | 43,051,190 | |
| LIABILITIES | |||
| Equity | |||
| Share capital | 1,100,001 | 1,096,845 | |
| Other reserves | 5,401,402 | 5,262,923 | |
| Foreign exchange reserve | 467,677 | 435,600 | |
| Retained earnings | 12,121,724 | 11,019,113 | |
| Total equity attributable to shareholders of the parent | 19,090,805 | 17,814,481 | |
| Minority interest | - | 0 | |
| Total equity | 19,090,805 | 17,814,481 | |
| Non current equity | |||
| Long-term borrowings | 8,351,815 | 10,518,623 | |
| Severance Indemnities | 856,615 | 805,650 | |
| Provisions for risk and charges | 40,564 | 37,831 | |
| Total non current liabilities | 9,248,994 | 11,362,104 | |
| Current liabilities | |||
| Short-term borrowings | 7,681,879 | 5,788,990 | |
| Trade liabilities | 6,295,871 | 6,128,625 | |
| related parties | 1,114 | 1,407 | |
| Tax liabilities | 931,194 | 414,206 | |
| Other current liabilities | 1,958,673 | 1,542,784 | |
| Total current liabilities | 16,867,617 | 13,874,605 | |
| Total Liabilities | 45,207,416 | 43,051,190 |
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | 9 months | |
|---|---|---|
| (Values in Euro) | 9 months 2018 | 2017 |
| Revenues | 41,230,336 | 29,653,628 |
| Cost of sales | (25,615,560) | (17,259,655) |
| Other revenues | 337,031 | 143,477 |
| Cost of indirect labour | (2,739,687) | (1,644,005) |
| Commercial expenses | (832,599) | (663,572) |
| General and administrative expenses | (3,779,798) | (3,032,036) |
| related parties | (697,417) | (694,684) |
| Depreciation of tangible assets | (821,295) | (575,504) |
| Amortization of intangible assets | (234,248) | (21,019) |
| Writedowns | (2,733) | 0 |
| Earning before interest and taxes | 7,541,447 | 6,601,314 |
| Financial costs | (551,427) | (350,580) |
| Financial income | 254,760 | 463,690 |
| Earning before taxes | 7,244,779 | 6,714,424 |
| Income taxes | (1,536,702) | (1,991,157) |
| Profit for the year (A) | 5,708,076 | 4,723,267 |
| Other comprehensive income/(losses) for the year that will not be reclassified in icome statement: |
||
| Actuarial gain/(losses) on DBO (net of tax) | 2,158 | 1,099 |
| Other comprehensive income/(losses) for the year that will be reclassified in icome statement: |
||
| Exchange differences on translating foreign operations | 32,077 | (101,324) |
| Total other comprehensive income/(losses) for the year (B) | 34,235 | (100,225) |
| Total comprehensive income (A) + (B) | 5,742,312 | 4,623,043 |
| Profit attributable to: | ||
| Owners of the parent | 5,708,076 | 4,723,267 |
| Minority interest | - | - |
| Total comprehensive income atributable to: | ||
| Owners of the parent | 5,742,312 | 4,623,043 |
| Minority interest | - | - |
| Basic earning per share | 0.52 | 0.43 |
| Diluted earning per share | 0.52 | 0.43 |
The B&C Speakers S.p.A. Financial Reporting Manager Francesco Spapperi confirms – in accordance with art. 154-bis, paragraph 2 of Italian Legislative Decree No. 58/1998, that the accounting disclosures contained in this press release are consistent with company's accounting documents, books and records.
The Financial Reporting Manager
Francesco Spapperi
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.