Quarterly Report • Nov 20, 2017
Quarterly Report
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INTERIM MANAGEMENT REPORT AS AT 30 SEPTEMBER 2017
On 29 April 2016, the Shareholders' Meeting of the parent company Landi Renzo S.p.A. elected the Board of Directors and the Board of Statutory Auditors for the period 2016-2018. They will therefore remain in office until the Meeting of Shareholders called to approve the Financial Statements for the year ending 31 December 2018. The Meeting also appointed PricewaterhouseCoopers S.p.A. as the independent auditing firm for the period 2016-2024. On 28 April 2017, after increasing the number of members of the Board of Directors from eight to nine, the Shareholders' Meeting appointed Cristiano Musi (formerly General Manager) as director; on the same date, the Board of Directors made him Chief Executive Officer and revoked all other mandates previously assigned. Chairman Stefano Landi continues to act as Executive Chairman of the Board. On 17 October 2017 the Shareholders' Meeting of the parent company Landi Renzo S.p.A. approved the reduction of the number of members of the Board of Directors from nine to eight, following the resignation of Claudio Carnevale in July 2017.
At the same meeting, to allow for compliance with gender balance requirements by the company's Board of Statutory Auditors, due to the death of Massimiliano Folloni in May 2017, the ordinary Shareholders' Meeting of Landi Renzo S.p.A. also approved the appointment of Domenico Sardano as standing auditor.
On the date this Interim Management Report was drafted, the company officers were as follows:
| Executive Chairman | Stefano Landi |
|---|---|
| Honorary Chairperson - Director | Giovannina Domenichini |
| Chief Executive Officer | Cristiano Musi |
| Director | Silvia Landi |
| Director | Angelo Iori |
| Independent Director | Anton Karl |
| Independent Director | Sara Fornasiero (*) |
| Independent Director | Ivano Accorsi |
| Board of Statutory Auditors | |
| Chairman of the Board of Statutory Auditors | Eleonora Briolini |
| Standing Statutory Auditor | Domenico Sardano |
| Standing Statutory Auditor | Diana Rizzo |
| Alternate Auditor | Filomena Napolitano |
| Alternate Auditor | Andrea Angelillis |
| Control and Risks Committee | |
| Chairman | Sara Fornasiero |
| Committee Member | Ivano Accorsi |
| Committee Member | Angelo Iori |
| Remuneration Committee | |
| Chairman | Ivano Accorsi |
| Committee Member | Sara Fornasiero |
| Committee Member | Angelo Iori |
| Committee for Transactions with Related Parties | |
| Committee Member | Sara Fornasiero |
| Committee Member | Ivano Accorsi |
| Supervisory Board (Italian Legislative Decree |
Member of the Board Sara Fornasiero Member of the Board Enrico Gardani
Chairman Jean-Paule Castagno
Independent Auditing Firm PricewaterhouseCoopers S.p.A.
(*) The Director also holds the office of Lead Independent Director
Landi Renzo S.p.A. Via Nobel 2/4/6 42025 Corte Tegge – Cavriago (RE) – Italy Tel. +39 0522 9433 Fax +39 0522 944044 Share capital: €11,250,000 Tax Code and VAT No. IT00523300358
This report is available on the Internet at: www.landirenzogroup.com
| (Thousands of Euro) | |||
|---|---|---|---|
| ECONOMIC INDICATORS FOR THE THIRD QUARTER | Q3 2017 | Q3 2016 | Change |
| Revenue | 46,001 | 42,445 | 3,556 |
| Adjusted Gross Operating Profit (EBITDA) (1) | 3,388 | 706 | 2,682 |
| Gross Operating Profit (EBITDA) | 2,590 | 706 | 1,884 |
| Adjusted Operating Profit (EBIT) (1) and (1bis) | -176 | -3,394 | 3,218 |
| Net Operating Profit (EBIT) | -833 | -3,394 | 2,561 |
| Earnings before Tax | -1,990 | -4,886 | 2,896 |
| Net profit (loss) for the Group and minority interests | -2,655 | -5,061 | 2,406 |
| Adjusted Gross Operating Profit (EBITDA) / Revenue | 7.4% | 1.7% | |
| Adjusted Net Operating Profit (EBIT) / Revenue | -0.4% | -8.0% | |
| Net profit (loss) for the Group and minority interests / Revenue | -5.8% | -11.9% | |
| (Thousands of Euro) | |||
|---|---|---|---|
| ECONOMIC INDICATORS OF THE FIRST NINE MONTHS | 30/09/2017 | 30/09/2016 | Change |
| Revenue | 149,509 | 131,735 | 17,774 |
| Adjusted Gross Operating Profit (EBITDA) (1) | 9,818 | 2,602 | 7,216 |
| Gross Operating Profit (EBITDA) | 7,047 | -848 | 7,895 |
| Adjusted Operating Profit (EBIT) (1) and (1bis) | -1,694 | -9,535 | 7,841 |
| Net Operating Profit (EBIT) | -6,384 | -12,985 | 6,601 |
| Earnings before Tax | -10,564 | -16,493 | 5,929 |
| Net profit (loss) for the Group and minority interests | -11,276 | -17,827 | 6,551 |
| Adjusted Gross Operating Profit (EBITDA) / Revenue | 6.6% | 2.0% | |
| Adjusted Net Operating Profit (EBIT) / Revenue | -1.1% | -7.2% | |
| Net profit (loss) for the Group and minority interests / Revenue | -7.5% | -13.5% | |
| (Thousands of Euro) | |||
|---|---|---|---|
| FINANCIAL POSITION | 30/09/2017 | 31/12/2016 | 30/09/2016 |
| Net fixed assets and other non-current assets | 85,388 | 96,967 | 98,122 |
| Operating capital (2) | 31,770 | 36,442 | 54,283 |
| Non-current liabilities (3) | -10,207 | -12,611 | -12,253 |
| NET INVESTED CAPITAL | 106,951 | 120,798 | 140,152 |
| Net financial position (cash) (4) | 65,040 | 75,716 | 87,065 |
| Shareholders' equity | 41,911 | 45,082 | 53,087 |
| BORROWINGS | 106,951 | 120,798 | 140,152 |
| (Thousands of Euro) | |||
|---|---|---|---|
| KEY INDICATORS | 30/09/2017 | 31/12/2016 | 30/09/2016 |
| Operating capital / Turnover (rolling 12 months) | 15.7% | 19.8% | 28.3% |
| Net financial debt / Equity | 155.2% | 168.0% | 164.0% |
| Gross tangible and intangible investments | 3,607 | 9,376 | 6,644 |
| Personnel (peak) | 751 | 781 | 790 |
| (Thousands of Euro) | |||
|---|---|---|---|
| CASH FLOWS | 30/09/2017 | 31/12/2016 | 30/09/2016 |
| Operational cash flow | 4,165 | -6,104 | -20,676 |
| Cash flow for investment activities | -2,898 | -9,144 | -6,487 |
| FREE CASH FLOW | 1,267 | -15,248 | -27,163 |
(1) The figures do not include the recognition of extraordinary costs of €2,771 thousand in the first nine months of 2017, of which €798 thousand incurred in the third quarter of 2017, as described in more detail in paragraph 2.1 of this Report.
(1 bis) The data does not include accounting of the net capital loss of €1,919 thousand deriving from assets held for sale in the first nine months of 2017, due to the disposal of the Technical Centre business unit.
(2) This is calculated as the difference between Trade Receivables, Inventories, Contract Work in Progress, Other Current Assets and Trade Payables, Tax liabilities, Other Current Liabilities.
(3) These are calculated by totalling Deferred Tax Liabilities, Defined Benefit Plans for employees and Provisions for Risks and Charges.
(4) The net financial position is calculated in accordance with the provisions of CONSOB Communication DEM/6064293 of 28 July 2006;
Following the changes mentioned above, the debenture loan was named "LANDI RENZO 6.10% 2015-2022", maintaining the same ISIN IT0005107237.
At the same time, the Group's financial structure Optimization Agreement was finalized, the guidelines of which were developed with the support of the financial advisor Mediobanca – Banca di Credito Finanziario S.p.A., after all banking institutions involved had signed it.
The agreement calls for, inter alia:
The project was also prepared in light of and consistent with the Group's Business Plan, the update of which was approved by the Board of Directors on 30 December 2016. The Business Plan was subject to an independent business review by KPMG Advisory S.p.A. in the capacity of independent third-party business advisor, and the results of that analysis and the relative documentation were considered by the Group's management in developing and finalizing the Financial Optimization Project.
In line with the above-mentioned Optimization Agreement, on 30 March 2017 the controlling shareholder made a future capital increase contribution to the Parent Company for a total of €8,866.5 thousand.
April On 26 April 2017, Landi Renzo and AVL entered into the preliminary agreement for the sale of a business unit regarding part of the technical centre (consisting of laboratories, equipment and sundry materials) to the AVL Group, a leading global operator in the development of powertrains. The agreement calls for, inter alia, a disposal consideration of €5.7 million gross of liabilities transferred, to be paid in instalments.
April On 28 April 2017, the Shareholders' Meeting resolved, amongst other things:
With this transaction, the Landi Renzo Group obtained two significant results: on one hand, it launched a significant partnership with a leading automotive sector operator specialized in CNG, LNG and hydrogen powertrains and, on the other hand, it is continuing with the Group reorganization process undertaken by the new management, with the goals of reducing the fixed cost structure and focusing activities on the core business.
As part of the above-mentioned disposal, 7 employees were transferred directly from Landi Renzo to AVL and at the same time the real estate rental contract with the affiliate Gireimm S.r.l. was renegotiated.
The economic impact of this transaction was a net capital loss of €1,919 thousand.
On an annual basis, the transaction will entail a positive impact on the reduction in fixed costs, specifically roughly €3 million annually in terms of EBIT, of which around €1.5 million in terms of EBITDA, and a positive impact of roughly €2 million annually in terms of financial management. The disposal of the business unit will also allow for a reduction of between €500 thousand and €700 thousand in the annual investments necessary to maintain and upgrade the equipment sold.
July At the end of July 2017, Claudio Carnevale resigned with immediate effect from his position as member of the Board of Directors of Landi Renzo S.p.A. to take advantage of new professional opportunities. Claudio Carnevale was an executive member of the Board of Directors with no role in the Landi Renzo S.p.A. internal committees. At the date of his resignation Claudio Carnevale held 2,050 Landi Renzo S.p.A. ordinary shares.
September On 13 September 2017 the Board of Directors of Landi Renzo examined and approved the fiveyear 2018-2022 strategic plan presented by the CEO Cristiano Musi. The strategic plan is based on 4 fundamental pillars:
The main financial targets of the 2018-2022 strategic plan can be summarised as follows:
• End of period revenues (2022) equal to €266 million, with a CAGR of 7% (on a like-forlike basis) of which €211 million in the Automotive segment and €55 million in SAFE;
• Adjusted target EBITDA (2022) of €50 million (€27 million in 2018 and €30 million in 2019);
• The Net Financial Position is also expected to improve over the plan period; it amounts to a positive €22 million at the end of 2022.
September On 15 September the Board of Directors of Landi Renzo approved the proposed merger by incorporation of the wholly owned subsidiary AEB S.p.A. Unipersonale into the parent company Landi Renzo S.p.A., as well as the relative merger plan. This transaction represents one of the initiatives aimed at improving operating efficiency to be implemented as part of the new 2018- 2022 strategic plan. In particular, the merger should make it possible to optimize decision-making processes and improve the utilization and enhancement of resources and skills currently existing within the companies participating in the merger, which through the aggregation of activities within a single legal entity will lead to an improvement in operating efficiency (corporate, accounting and administrative) and the achievement of synergies and overall cost reductions, avoiding the duplication of certain activities in two separate legal entities, thus helping to streamline costs.
Following the closure of the Group's financial structure Optimization Agreement with the banks and the appointment of Cristiano Musi as Chief Executive Officer in order to guide the Group's recovery and relaunch, including by reviewing its strategic guidelines, in the first nine months of 2017 a project got underway to reorganize the Automotive business area, which includes OEM (Original Equipment Manufacturer) and AM (After Market) channel sales as well as Electronic Equipment sales, with a view to enabling the Group to better meet market needs, improving upon its capacity to satisfy a range of business requirements, reducing time to market and, in general, bringing Automotive sector area efficiency levels into line with market best practices. The new organizational model calls for the strategic integration of the management of the Group's different Automotive companies (Landi Renzo S.p.A., Lovato Gas S.p.A., AEB S.p.A. and Emmegas S.r.l.) and the foreign investees, in order to define a shared strategic vision and thus improve efficiency, effectiveness and innovation capacity. With this in mind, on 15 September 2017 the Board of Directors of Landi Renzo S.p.A. approved the proposed merger by incorporation of the wholly owned subsidiary AEB S.p.A., which will be finalized by the end of this year.
At the same time, the new management team began a project meant to improve operating efficiency, taking significant steps in order to reduce the break even, with the identification of a series of initiatives meant to reduce fixed and variable product costs to align them with Automotive best practices at international level. The project envisages activities on the SG&A (Selling, General & Administrative) cost structure, a review of the production footprint and processes, sourcing & procurement strategies and the supply chain at international level, as well as the reorganization of product development activities, with the aim of fully exploiting synergies deriving from the possibility of managing production and procurement in different parts of the world. In order to quickly launch the EBITDA improvement plan, a top consulting firm was engaged to support the Chief Executive Officer and the company's top management in preparing and implementing an action plan. Significant, positive results will be seen already in the final quarter of 2017, with full benefits expected as of 2018.
Consolidated revenues as at 30 September 2017 totalled €149,509 thousand, increasing by €17,774 thousand (+13.5%) compared with the same period of the previous year.
This revenue growth was caused by robust sales trends in the Automotive sector (+16.3%), particularly in the OEM channel (+39%) as well as After Market (+4.7%), specifically in high-end innovative products.
The growth in volumes is correlated with rising sales of LPG and CNG fuelled vehicles as well as the greater commercial focus of the Group, which is seeking to adopt an increasingly market-oriented approach, which is more and more concentrated on providing solutions to the market quickly.
The adjusted Gross Operating Profit (EBITDA) as at 30 September 2017 totalled €9,818 thousand, a significant improvement compared with the same period of the previous year (€2,602 thousand) due to the higher sales volumes in the Automotive sector, as well as the initial benefits of the EBITDA improvement activities launched during the period, focusing on aligning the Automotive business area efficiency levels with sector best practices, with a series of actions aiming to reduce fixed and variable costs. The Gas Distribution and Compressed Natural Gas segment also posted a slight increase in sales, with an improvement of 2.8% compared to September 2016, correlated with the rise in EBITDA, which however remains negative.
The Gross Operating Profit (EBITDA) was positive at €7,047 thousand. This result was affected not only by the above factors but also by extraordinary costs of €2,771 thousand, of which:
The Net Operating Profit (EBIT) is negative at -€6,384 thousand (-€12,985 thousand as at 30 September 2016), after depreciation and amortization of €11,512 thousand and an extraordinary net capital loss of €1,919 thousand deriving from the disposal on 31 July 2017 of the business unit relating to the part of the Technical Centre responsible for the management of laboratories to the AVL Group.
With reference to the above-mentioned transaction, it is important to underscore that on an annual basis, starting from 2018, the estimated advantages of the transaction will allow for a reduction in costs of roughly €3 million in terms of EBIT, of which around €1.5 million in terms of EBITDA, and a positive impact of roughly €2 million in terms of financial management. The disposal of the business unit will also allow for a reduction of the annual investments necessary to maintain and upgrade the equipment sold of between €500 thousand and €700 thousand.
The following table sets out the main economic indicators of the Group for the first nine months of 2017 compared with the same period in 2016.
| (Thousands of Euro) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 30/09/2017 | Extraordinary costs |
30/09/2017 ADJ |
% | 30/09/2016 | Extraordinary costs |
30/09/2016 | % | ADJ changes |
ADJ % | |
| Revenues from sales and services |
149,509 | 149,509 100.0% | 131,735 | 131,735 | 100% | 17,774 | 13.5% | |||
| Other revenues and income | 490 | 490 | 0.3% | 792 | 792 | 0.6% | -302 | -38.1% | ||
| Operating costs | -142,952 | -2,771 | -140,181 | -93.8% | -133,375 | -3,450 | -129,925 | -98.6% | -10,256 | 7.9% |
| Gross operating profit | 7,047 | 9,818 | 6.6% | -848 | 2,602 | 2.0% | 7,216 | 277.3% | ||
| Amortization, depreciation and impairment |
-11,512 | -11,512 | -7.7% | -12,137 | -12,137 | -9.2% | 625 | -5.1% | ||
| Net capital loss from disposal | -1,919 | -1,919 | 0 | 0.0% | 0 | 0 | 0.0% | 0 | 0.0% | |
| Net Operating Profit | -6,384 | -1,694 | -1.1% | -12,985 | -9,535 | -7.2% | 7,841 | n/a | ||
| Financial income (charges) and exchange differences |
-4,217 | -4,217 | -2.8% | -3,433 | -3,433 | -2.6% | -784 | 22.8% | ||
| Gain (loss) on equity investments valued using the equity method |
37 | 37 | 0.0% | -75 | -75 | -0.1% | 112 | -149.3% | ||
| Profit (Loss) before tax | -10,564 | -5,874 | -3.9% | -16,493 | -13,043 | -9.9% | 7,169 | n/a | ||
| Current and deferred taxes | -712 | -1,334 | ||||||||
| Net profit (loss) for the Group and minority interests, including: |
-11,276 | -17,827 | ||||||||
| Minority interests | -223 | -293 | ||||||||
| Net profit (loss) for the Group | -11,053 | -17,534 | ||||||||
In compliance with the provisions of IFRS 8, information is provided below on the business operating segments.
Since the first half of 2017, with the appointment of the new Chief Executive Officer, the Group has been engaged in an organizational evolution which has entailed the reorganization of activities into the following segments:
The new organizational model also calls for the integration of the management of the Group's different Automotive companies (Landi Renzo S.p.A., Lovato Gas S.p.A., AEB S.p.A. and Emmegas S.r.l.) and the foreign investees, with a view to developing a shared strategic vision, improving efficiency, effectiveness and innovation capacity. However, it is important to underscore that, consistent with the strategies applied particularly for the After Market segment, the Group maintains separate commercial, product development and industrial management units for the three companies and the relative Landi Renzo, Lovato and Emmegas brands, which are intended for different customers and at times different markets.
The criteria applied to identify the operating segments and the performance indicators are consistent with the management reporting periodically prepared and used by the Group's top management to take strategic decisions.
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| Distribution of revenues by segment | Q3 2017 | % of revenues |
Q3 2016 (*) | % of revenues |
Changes | % |
| Automotive segment | 35,719 | 77.6% | 32,634 | 76.9% | 3,085 | 9.5% |
| Gas Distribution and Compressed Natural Gas segment | 7,202 | 15.7% | 6,501 | 15.3% | 701 | 10.8% |
| Sound segment | 3,080 | 6.7% | 3,310 | 7.8% | -230 | -6.9% |
| Total revenues | 46,001 | 100% | 42,445 | 100% | 3,556 | 8.4% |
(*) The values at 30 September 2016 have been reclassified based on the Segment Reporting adopted starting in the first half of 2017.
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| Distribution of revenues by segment | At 30/09/2017 | % of revenues |
At 30/09/2016 (*) |
% of revenues |
Changes | % |
| Automotive segment | 122,977 | 82.3% | 105,773 | 80.3% | 17,204 | 16.3% |
| Gas Distribution and Compressed Natural Gas segment | 17,082 | 11.4% | 16,611 | 12.6% | 471 | 2.8% |
| Sound segment | 9,450 | 6.3% | 9,351 | 7.1% | 99 | 1.1% |
| Total revenues | 149,509 | 100% | 131,735 | 100% | 17,774 | 13.5% |
The Group's total revenues in the first nine months were €149,509 thousand, an increase of +13.5% (€17,774 thousand) compared to the same period in the previous year.
Revenues from sales of products and services in the Automotive segment increased by 16.3% (€17,204 thousand) in the first nine months from €105,773 thousand in 2016 to €122,977 thousand in 2017.
The growth in sales as of 30 September 2017 in the Automotive segment was caused by the increase in revenues on the OEM channel (+39%) and, to a lesser extent, in the After Market segment (+4.7%).
Revenues in the Gas Distribution and Compressed Natural Gas segment were €17,082 thousand, up by €471 thousand compared with the same period of 2016 (+2.8%). The increase in the order portfolio subsequent to the end of the quarter bolsters forecasts of a good recovery in turnover in the fourth quarter as well.
Revenues from sales in the Sound segment increased slightly by 1.1% (€99 thousand) in the first nine months from €9,351 thousand in 2016 to €9,450 thousand in 2017 due to sales of CIARE brand products through the subsidiary Sound & Vision S.r.l. as well as the turnover generated under the main Eighteen Sound brand.
During the quarter in question, revenues from sales of products and services of the Group increased, overall, from €42,445 thousand in the third quarter of 2016 to €46,001 thousand in the third quarter of 2017, a rise of 8.4% primarily resulting from higher sales volumes in the Automotive segment.
| (Thousands of Euro) | ||||||
|---|---|---|---|---|---|---|
| Geographical distribution of revenues | Q3 2017 | % of revenues |
Q3 2016 | % of revenues |
Changes | % |
| Italy | 8,239 | 17.9% | 8,004 | 18.9% | 235 | 2.9% |
| Europe (excluding Italy) | 22,053 | 47.9% | 19,146 | 45.1% | 2,907 | 15.2% |
| America | 7,225 | 15.7% | 8,188 | 19.3% | -963 | -11.8% |
| Asia and Rest of the World | 8,484 | 18.5% | 7,107 | 16.7% | 1,377 | 19.4% |
| Total | 46,001 | 100% | 42,445 | 100% | 3,556 | 8.4% |
| At 30/09/2017 | % of revenues |
At 30/09/2016 | % of revenues |
Changes | % |
|---|---|---|---|---|---|
| 29,409 | 19.7% | 27,394 | 20.8% | 2,015 | 7.4% |
| 71,707 | 48.0% | 59,895 | 45.5% | 11,812 | 19.7% |
| 22,387 | 15.0% | 22,482 | 17.1% | -95 | -0.4% |
| 26,006 | 17.3% | 21,964 | 16.6% | 4,042 | 18.4% |
| 149,509 | 100% | 131,735 | 100% | 17,774 | 13.5% |
Regarding the geographical distribution of revenues, during the first nine months of 2017 the Group achieved 80.3% of its consolidated revenues abroad (48% in Europe and 32.3% outside Europe), up compared to 77.3% in the same period of last year, and thus continues to improve its competitive position at international level, where the Group observes the markets with the most growth potential especially for the Automotive segment, and in more detail:
Sales in the Italian market, totalling €29,409 thousand (up €2,015 thousand compared to the same period of the previous year), substantially reflect good overall domestic market demand trends during the first nine months of the year, although with different performance in the OEM and After Market segments, as described below:
Revenue in Europe recovered significantly in the course of the first nine months of the year, with growth of 19.7% compared to the same period of 2016, driven mainly by the above-mentioned increase in OEM channel sales as a result of the completion of the phase of transitioning to new Euro 6 LPG engines.
Sales in the first nine months for this area, equal to €22,387 thousand, represented substantial stability overall, with different trends amongst the various countries primarily attributable to the good trend of the markets in Peru, Colombia, Mexico and the United States, which offset the slowdown in Argentina, Brazil, Chile and the Dominican Republic.
The Asia and Rest of World markets saw a significant increase (+18.4% compared to the first nine months of 2016, €4,042 thousand). This was essentially due to favourable revenue performance in the markets of Algeria, Bangladesh, India and Iran.
| (Thousands of Euro) | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Values at 30 September 2017 | Values at 30 September 2016 | |||||||||
| Automotive | Gas Distribution and Compressed Natural Gas |
Sound Adjustments | Landi Renzo Consolidated |
Automotive | Gas Distribution and Compressed Natural Gas |
Sound Adjustments | Landi Renzo Consolidated |
|||
| Net sales outside the Group | 122,977 | 17,082 | 9,450 | 149,509 | 105,773 | 16,611 | 9,351 | 131,735 | ||
| Intersegment sales | 473 | 81 | 31 | -585 | - | 474 | 57 | 3 | -534 | 0 |
| Total Revenues from net sales and services |
123,450 | 17,163 | 9,481 | -585 | 149,509 | 106,247 | 16,668 | 9,354 | -534 | 131,735 |
| Other revenues and income | 451 | 38 | 1 | 490 | 704 | 80 | 8 | 792 | ||
| Operating costs | -114,273 | -17,927 | -8,542 | 561 | -140,181 | -103,405 | -18,277 | -8,762 | 519 | -129,925 |
| Adjusted gross operating profit |
9,628 | -726 | 940 | -24 | 9,818 | 3,546 | -1,529 | 600 | -15 | 2,602 |
| Extraordinary costs | -2,771 | 0 | 0 | -2,771 | -3,450 | 0 | -3,450 | |||
| Gross operating profit | 6,857 | -726 | 940 | -24 | 7,047 | 96 | -1,529 | 600 | -15 | -848 |
| Amortization, depreciation and impairment |
-10,049 | -887 | -576 | -11,512 | -10,798 | -906 | -433 | -12,137 | ||
| Net capital loss from disposal | -1,919 | 0 | 0 | -1,919 | 0 | 0 | 0 | 0 | ||
| Net Operating Profit | -5,111 | -1,613 | 364 | -24 | -6,384 | -10,702 | -2,435 | 167 | -15 | -12,985 |
| Financial income (charges) and exchange differences |
-4,217 | -3,433 | ||||||||
| Gain (loss) on equity investments valued using the equity method |
37 | -75 | ||||||||
| Profit (Loss) before tax | -10,564 | -16,493 | ||||||||
| Current and deferred taxes | -712 | -1,334 | ||||||||
| Net profit (loss) for the Group and minority interests, including: |
-11,276 | -17,827 | ||||||||
| Minority interests | -223 | -293 | ||||||||
| Net profit (loss) for the Group | -11,053 | -17,534 | ||||||||
The adjusted Gross Operating Profit (adjusted GOP or adjusted EBITDA) at 30 September 2017 was positive at €9,818 thousand, equal to 6.6% of revenues – an increase of €7,216 thousand compared to the figure for September 2016 (€2,602 thousand), especially due to the higher sales volumes of the Automotive Segment, which alone had an adjusted EBITDA margin of roughly €9,628 thousand, equal to 6.4% of revenues, compared to €3,546 thousand at 30 September 2016 (2.7% of revenues), while the Gas Distribution and Compressed Natural Gas segment had a negative impact of -€726 thousand. On the other hand, the adjusted GOP in the Sound operating segment was positive at €940 thousand, marking an increase of 56.6% (€600 thousand).
The Gross Operating Profit (GOP or EBITDA) was positive in the amount of €7,047 thousand, inclusive of €2,771 thousand in extraordinary costs referring to strategic advisory expenses as well as voluntary retirement incentives agreed upon with personnel, as shown in detail below:
| (Thousands of Euro) | |||
|---|---|---|---|
| EXTRAORDINARY COSTS | 30/09/2017 | 30/09/2016 | Change |
| Strategic consultancy | 2,331 | - | 2,331 |
| Voluntary retirement incentives | 440 | - | 440 |
| Costs for services and use of third party assets | 0 | 2,150 | -2,150 |
| Provisions, provision for bad debts and other operating expenses | 0 | 1,300 | -1,300 |
| Total | 2,771 | 3,450 | -679 |
Costs of raw materials, consumables and goods and changes in inventories increased overall from €63,459 thousand as at 30 September 2016 to €71,446 thousand as at 30 September 2017, which in absolute terms is an increase of €7,987 thousand, mainly related to the growth in sales volumes.
At 30 September 2017, the costs of services and use of third-party assets amounted to €39,797 thousand and included extraordinary costs of €2,331 thousand related to the strategic advisory costs mentioned above, compared to €38,312 thousand in the same period of last year (of which €2,150 thousand for non-recurrent expenses). Net of extraordinary costs, there was an increase of €1,304 thousand, ascribable mainly to top line growth due to the increase in external processing on products.
At 30 September 2017, personnel costs amounted to €29,544 thousand, including the above-mentioned extraordinary costs of €440 thousand, an increase of €2,088 thousand compared with €27,456 thousand recorded in the same period of last year, when no extraordinary costs were incurred. Not considering the effects of the extraordinary component, note that personnel expenses were up by €1,648 thousand as a result of the increased use of temporary agency work linked to the rising production and less recourse to solidarity agreements for the Parent Company and the subsidiary AEB S.p.A., likewise correlated with the recovery in production.
The Net Operating Profit (EBIT) for the period was negative, in the amount of -€6,384 thousand (-€12,985 thousand as at 30 September 2016), after accounting for amortization, depreciation and impairment losses of €11,512 thousand (€12,137 thousand as at 30 September 2016), net capital losses from the disposal of tangible assets relating to the Technical Centre of €1,919 thousand as well as the above-mentioned extraordinary costs of €2,771 thousand.
The adjusted Net Operating Profit (EBIT) was negative at -€1,694 thousand, marking a significant improvement compared to -€9,535 thousand at 30 September 2016.
Overall, financial management had higher costs of €784 thousand compared to 30 September 2016, most of which deriving from exchange losses from valuation equal to €1,446 thousand, mainly in relation to the depreciation of the Brazilian Real and the Pakistani Rupee.
Taking these changes into account, the result before tax was negative at -€10,564 thousand (-€16,493 thousand at 30 September 2016), while the Net Result of the Group showed a loss of -€11,053 thousand (-€17,534 thousand at 30 September 2016).
With reference to the business operating segments, economic information is provided below relating to the three business segments for the first half of 2016 and 2017.
| (Thousands of Euro) | ||||
|---|---|---|---|---|
| 30.09.2017 | 30.09.2016 | Change | % Change | |
| Net sales outside the Group | 122,977 | 105,773 | 17,204 | 16.3% |
| Intersegment sales | 473 | 474 | -1 | -0.2% |
| Total Revenues from net sales and services | 123,450 | 106,247 | 17,203 | 16.2% |
| Other revenues and income | 451 | 704 | -253 | -35.9% |
| Operating costs | -114,273 | -103,405 | -10,868 | 10.5% |
| Adjusted gross operating profit | 9,628 | 3,546 | 6,082 | 171.5% |
| Extraordinary costs | -2,771 | -3,450 | 679 | -19.7% |
| Gross operating profit | 6,857 | 96 | 6,761 | 7042.7% |
| Amortization, depreciation and impairment | -10,049 | -10,798 | 749 | -6.9% |
| Net capital loss from disposal | -1,919 | 0 | -1,919 | |
| Net Operating Profit | -5,111 | -10,702 | 5,591 | 52.2% |
In the first nine months of 2017, the Automotive segment had net sales outside the Group of €122,977 thousand, up 16.3% compared with the same period of the previous year (€105,773 thousand).
The increase was caused mostly by the significant recovery of sales in the OEM channel for LPG fuelled systems for European car manufacturers. Furthermore, After Market sales benefitted from a significant sales drive, particularly in countries like Turkey, Algeria and Mexico.
Adjusted EBITDA came to €9,628 thousand, a considerable improvement compared with the first nine months of 2016 (€3,546 thousand) thanks to the significant growth in sales.
EBITDA was positive at €6,857 thousand (€96 thousand in the first nine months of 2016 after accounting for extraordinary costs of €3,450 thousand) although in the reference period there were extraordinary costs of €2,771 thousand, also correlated with the quick launch of the development and EBITDA improvement plan, for which a top consulting firm was engaged to support the Chief Executive Officer and the company's top management in preparing and implementing the plan.
In addition, in the third quarter of 2017 an agreement was finalized regarding the disposal to the AVL Group of the part of the Technical Centre for the management of laboratories with the aim of further reducing the fixed cost structure in upcoming years and focusing activities on the core business. The disposal consideration is €5.7 million, gross of liabilities transferred for around €25 thousand: the amount will be paid in 10 annual instalments. The sale of this business unit resulted in a net capital loss at 30 September 2017 of €1,919 thousand.
The segment also includes sales of alarm systems for cars under the MED brand (non-core business), with revenues during the nine months equal to €1,081 thousand.
| 30.09.2017 | 30.09.2016 | Change | % Change | |
|---|---|---|---|---|
| Net sales outside the Group | 17,082 | 16,611 | 471 | 2.8% |
| Intersegment sales | 81 | 57 | 24 | 42.1% |
| Total Revenues from net sales and services | 17,163 | 16,668 | 495 | 3.0% |
| Other revenues and income | 38 | 80 | -42 | -52.5% |
| Operating costs | -17,927 | -18,277 | 350 | -1.9% |
| Gross operating profit | -726 | -1,529 | 803 | 52.5% |
| Amortization, depreciation and impairment | -887 | -906 | 19 | -2.1% |
| Net Operating Profit | -1,613 | -2,435 | 822 | 33.8% |
In the first nine months of 2017, the Gas Distribution and Compressed Natural Gas segment had net sales outside the Group of €17,082 thousand, up 2.8% compared with the same period of the previous year (€16,611 thousand). The gross operating profit recovered considerably from -€1,529 thousand in the first nine months of 2016 to -€726 thousand at 30 September 2017, also as a result of the improvement in the economic contribution of several contracts, in particular for fuelling and RNG stations.
Turnover aligned with budget forecasts and the company's order portfolio for the fourth quarter totalling more than €10 million make it reasonable to predict that revenue will be up compared to the previous year, with greater profit margins thanks to the operating cost containment measures taken by the new management team, strengthened in the course of the second quarter with the appointment of a new General Manager with more than 25 years of experience in top-tier companies operating in the compressor for gas and Oil & Gas sectors.
| 30.09.2017 | 30.09.2016 | Change | % Change | |
|---|---|---|---|---|
| Net sales outside the Group | 9,450 | 9,351 | 99 | 1.1% |
| Intersegment sales | 31 | 3 | 28 | 933.3% |
| Total Revenues from net sales and services | 9,481 | 9,354 | 127 | 1.4% |
| Other revenues and income | 1 | 8 | -7 | -87.5% |
| Operating costs | -8,542 | -8,762 | 220 | -2.5% |
| Gross operating profit | 940 | 600 | 340 | 56.7% |
| Amortization, depreciation and impairment | -576 | -433 | -143 | 33.0% |
| Net Operating Profit | 364 | 167 | 197 | 118.0% |
The Sound segment, a non-core business which includes the design, manufacture, distribution and marketing of electroacoustic transducers (loudspeakers) for professional use (the main components of speakers for the reproduction of music) used mainly by the manufacturers of the best sound reinforcement systems for live events as well as for fixed installations, achieved net sales outside the Group in line with expectations which, in the first nine months of the year 2017, amount to €9,450 thousand, marking slight growth of 1.1% compared to the same period of 2016 (€9,351 thousand), with sales of CIARE brand products through the subsidiary Sound & Vision S.r.l. as well as the turnover generated through the main Eighteen Sound brand.
EBITDA rose by 56.7%, from €600 thousand in the first nine months of 2016 to €940 thousand at 30 September 2017.
| (Thousands of Euro) | |||
|---|---|---|---|
| Statement of Financial Position | 30/09/2017 | 31/12/2016 | 30/09/2016 |
| Trade receivables | 37,332 | 37,551 | 37,911 |
| Inventories | 51,953 | 49,872 | 59,283 |
| Contract work in progress | 1,163 | 1,281 | 2,979 |
| Trade payables | -57,642 | -53,090 | -48,400 |
| Other net current assets | -1,036 | 828 | 2,510 |
| Net operating capital | 31,770 | 36,442 | 54,283 |
| Tangible assets | 18,236 | 30,500 | 31,788 |
| Intangible assets | 55,297 | 58,873 | 58,887 |
| Other non-current assets | 11,855 | 7,594 | 7,447 |
| Fixed capital | 85,388 | 96,967 | 98,122 |
| TFR (severance indemnity) and other provisions | -10,207 | -12,611 | -12,253 |
| Net invested capital | 106,951 | 120,798 | 140,152 |
| Financed by: | |||
| Net Financial Position | 65,040 | 75,716 | 87,065 |
| Group shareholders' equity | 42,407 | 45,405 | 52,930 |
| Minority interests | -496 | -323 | 157 |
| Borrowings | 106,951 | 120,798 | 140,152 |
| Ratios | 30/09/2017 | 31/12/2016 | 30/09/2016 |
| Net operating capital | 31,770 | 36,442 | 54,283 |
| Net operating capital/Turnover (rolling) | 15.7% | 19.8% | 28.3% |
| Net invested capital | 106,951 | 120,798 | 140,152 |
| Net invested capital/Turnover (rolling) | 52.9% | 65.6% | 73.1% |
Net operating capital at the end of the period totalled €31,770 thousand, marking a reduction compared to the first nine months of 2016 of €22,513 thousand due to the activities for the improvement in working capital already started last year and which continued during 2017; in percentage terms, on rolling turnover, there was a sharp improvement in this figure from 28.3% at 30 September 2016 to the current 15.7%.
Trade receivables totalled €37,332 thousand, substantially unchanged compared to the figure as at 31 December 2016, despite the increase in revenue, with an impact of factoring operations with maturity credit for which there was derecognition of the relative receivables, totalling €21.8 million compared to €22.2 million in December 2016.
There was growth of €4,552 thousand in trade payables, which rose from €53,090 thousand as at 31 December 2016 to €57,642 thousand at 30 September 2017, of which €1,939 thousand referring to the residual debt relating to a charge for compensation received from a car manufacturer for which the corresponding provision was used. Closing inventories and contract work in progress, equal to a total of €53,116 thousand, marked an increase of €1,963 thousand, in large part due to continuity stock procurement correlated with activities under way in processes for the disposal of several production sites.
TFR (severance indemnity) and other provisions declined by €2,404 thousand, from €12,611 thousand at 31 December 2016 to €10,207 thousand at 30 September 2017, primarily as a result of the use of a Provision for risks and compensation for €2,933 thousand.
Net invested capital (€106,951 thousand) was down by €13,847 thousand compared to December 2016, while the percentage indicator calculated on the rolling turnover decreased from 65.6% to 52.9% as a result of an improvement in working capital and the reduction in fixed capital due to the impact of the sale of Technical Centre assets.
| (Thousands of Euro) | |||
|---|---|---|---|
| 30/09/2017 | 31/12/2016 | 30/09/2016 | |
| Cash and cash equivalents | 14,005 | 16,484 | 12,616 |
| Bank financing and short-term loans | -15,029 | -40,662 | -45,119 |
| Bonds issued (net value) | -1,184 | -9,614 | -6,195 |
| Short-term loans | -420 | -425 | -425 |
| Net short term indebtedness | -2,628 | -34,217 | -39,123 |
| Bonds issued (net value) | -30,289 | -21,764 | -22,837 |
| Medium-Long term loans | -32,123 | -19,735 | -25,105 |
| Net medium-long term indebtedness | -62,412 | -41,499 | -47,942 |
| Net financial position | -65,040 | -75,716 | -87,065 |
The Net Financial Position was negative by €65,040 thousand compared to the negative Net Financial Position as at 31 December 2016 of -€75,716 thousand (equal to -€87,065 thousand as at 30 September 2016).
Please note that upon closure of the Financial Optimization Agreement, compared to 31 December 2016, €23,819 thousand was reclassified from short to medium-term, inclusive of amounts referring to the Debenture Loan as well as unsecured loans.
As a result of the above-mentioned Optimization Agreement, on 30 March 2017 the controlling shareholder made a future capital increase contribution to the Parent Company for a total of €8,867 thousand.
The following table shows the total cash flow for the first nine months of 2017 compared with the same period of the previous year:
| (Thousands of Euro) | ||
|---|---|---|
| 30/09/2017 | 30/09/2016 | |
| Operational cash flow | 4,165 | -20,676 |
| Cash flow for investment activities | -2,898 | -6,487 |
| Free Cash Flow | 1,267 | -27,163 |
Net cash flow from operating activities at the end of September, as shown in the Cash Flow Statement, was positive at €4,165 thousand; investment activities absorbed cash totalling €2,898 thousand.
Investments in property, plant, machinery and other equipment totalled €1,423 thousand (€3,329 thousand as at 30 September 2016) and refers to purchases of plant and machinery, new production moulds and testing/control equipment.
The increase in intangible assets amounted to €2,184 thousand (€3,315 thousand as at 30 September 2016) and mainly related to the capitalisation of costs of development projects, which meet the requirements of IAS 38 for recognition as balance sheet assets.
As at 30 September 2017, Landi Renzo S.p.A. had generated revenues of €67,679 thousand, a significant improvement of +32.8% compared to the same period of the previous year (€50,973 thousand).
The Gross Operating Profit was negative and totalled €604 thousand compared to a negative value of -€5,971 thousand at 30 September 2016, with an increase of €5,367 thousand.
In the first nine months of 2017, the Parent Company incurred total extraordinary costs of €2,771 thousand related to the strategic advisory costs and retirement incentives mentioned above.
The Landi Group deals with related parties at market conditions considered to be normal in the markets in question, taking account of the characteristics of the goods and the services supplied.
Transactions with related parties include:
After the end of the quarter and up to the present date we point out that:
October On 2 October 2017, B&C Speakers S.p.A., a company listed in the STAR segment of the Italian Stock Exchange specialized in the manufacture of electroacoustic transducers for professional use, entered into a binding agreement for the acquisition of 100% of the share capital of Eighteen Sound Srl from the Landi Renzo Group through the subsidiary AEB S.p.A. For the Group, this disposal is part of the guidelines of the 2018-2022 strategic plan, which calls for focusing on relaunching core activities with the resulting disposal of non-strategic activities. The consideration, no higher than €7,400 thousand, will be paid at the closing, expected to take place by 30 November 2017, and may be subject to adjustment mechanisms when specific reference economic elements change. The binding offer envisages that the completion of the transaction will be subject to conditions and commitments that are usual for this type of transaction, including the positive completion of legal, tax, financial and accounting due diligence activities.
Consolidation Act) and in application of what is laid out in the articles of association, became effective.
With regard to the business outlook, taking into account the results of the first nine months of 2017, the performance of the core market and the orders in the portfolio, in addition to the actions undertaken following the approval of the 2018-2022 Strategic Plan, the outlook already communicated at the time of the approval of the Annual Financial Report as at 31 December 2016 is confirmed, with business growth forecast along with a recovery in margins in terms of adjusted EBITDA which will also continue in the final quarter of 2017.
Cavriago, 14 November 2017
Chief Executive Officer Cristiano Musi
The Interim Management Report as at 30 September 2017, which has not been audited, has been prepared in compliance with art. 154-ter of Italian Legislative Decree no. 58 of 24 February 1998, as amended, and with the Regolamento Emittenti (Issuers' Regulations) issued by CONSOB (Italian Securities and Exchange Commission). Therefore, the provisions of the IAS on infra-annual financial information (IAS 34 – Interim Financial Reporting) were not adopted.
The Interim Management Report as at 30 September 2017 has been prepared in accordance with the IAS/IFRS. To this end, the data of the separate financial statements of the Italian and foreign subsidiaries have been reclassified and adjusted accordingly.
The line-by-line method is used for consolidation, which consists of stating all the items of assets and liabilities in their entirety, excluding the company joint venture Krishna Landi Renzo India Private LTD Held, which is consolidated using the equity method.
The accounting standards, and the valuation and consolidation criteria used in preparing the Interim Management Report as at 30 September 2017 are not different to those used in drawing up the consolidated financial statements closed at 31 December 2016, to which please refer for further information.
As well as the interim values as at 30 September 2017 and 2016, the financial data for the year ended on 31 December 2016 is shown for the purpose of comparison.
In application of IAS 12, par. 74, already at 31 December 2016, as well as for the third quarter of 2017 and as a result also at 30 September 2016, to ensure greater comparability, prepaid tax assets were offset with deferred tax liabilities.
The functional and reporting currency is the Euro. Figures in the schedules and tables herein are in thousands of Euro.
The accounting standards and calculation methods used for the preparation of this interim consolidated management report were not modified compared to those used to prepare the consolidated financial statements at 31 December 2016. Please note that the valuation and measurement of the accounting items shown are based on International Accounting Standards and the relative interpretations currently in force, and that no new accounting standards were applied early.
The preparation of the Interim Management Report requires the directors to apply accounting standards and methods that are sometimes based on difficult and subjective assessments and estimates derived from past experience and based on assumptions that are considered reasonable and realistic given the circumstances. Application of these estimates and assumptions affects the amounts presented in the financial statements, such as the Consolidated Statement of Financial Position, the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Shareholders' Equity and the Consolidated Cash Flow Statement, and in disclosures provided. Estimates are used in recognizing goodwill, impairment of fixed assets, development expenditure, taxes, provisions for bad debts and inventories write-down, employee benefits and other provisions. The estimates and assumptions are reviewed periodically and the effects of all changes are normally reflected immediately on the income statement.
However, some valuation processes, especially the more complex ones such as establishing any loss in value of non-current assets, are normally carried out to a fuller extent only during the preparation of the annual financial statements, when all the necessary information is available, except for those cases in which there are impairment indicators that require an immediate assessment of possible losses in value.
The Group performs activities that do not on the whole present significant seasonal or cyclical variations in total sales over the course of the year, except for the signing of new supply contracts on the OEM channel which may involve planned and differing delivery schedules in the individual quarters.
The policies and principles of the Landi Renzo Group for the identification, management and control of risks related to the activity are described in detail in the Consolidated Financial Statements as at 31 December 2016, to which you may refer for a more complete description of such aspects.
The consolidation scope includes the Parent Company Landi Renzo S.p.A. and the companies in which it holds a direct or indirect controlling stake according to IFRS.
The consolidation scope at 30 September 2017 changed compared to 31 December 2016 due to the consolidation of the company Sound&Vision S.r.l., a wholly owned subsidiary of the company Eighteen Sound S.r.l., as well as the removal from Group consolidation scope of the company Eurogas Utrecht B.V. as its liquidation is now complete. These changes did not have any significant impact.
Pursuant to art. 3 of CONSOB Resolution no. 18079 of 20 January 2012, Landi Renzo S.p.A. decided to adopt the opt-out system envisaged by arts. 70, par. 8, and 71, par. 1-bis, of CONSOB Regulation no. 11971/99 (as amended). It is therefore able to opt out from the disclosure of the information documents listed in Annex 3B to said CONSOB Regulation, on occasion of significant mergers, demergers, increases in capital through contribution of goods in kind, acquisitions and disposals.
| (Thousands of Euro) | |||
|---|---|---|---|
| ASSETS | 30/09/2017 | 31/12/2016 | 30/09/2016 |
| Non-current assets | |||
| Land, property, plant and equipment | 18,236 | 30,500 | 31,788 |
| Development expenditure | 6,580 | 8,420 | 7,871 |
| Goodwill | 30,094 | 30,094 | 30,094 |
| Other intangible assets with finite useful lives | 18,623 | 20,359 | 20,922 |
| Equity investments valued using the equity method | 80 | 43 | 34 |
| Other non-current financial assets | 461 | 664 | 720 |
| Other non-current assets | 4,560 | 0 | 0 |
| Deferred tax assets | 6,754 | 6,887 | 6,693 |
| Total non-current assets | 85,388 | 96,967 | 98,122 |
| Current assets | |||
| Trade receivables | 35,680 | 35,553 | 35,522 |
| Trade receivables - related parties | 1,652 | 1,998 | 2,389 |
| Inventories | 51,953 | 49,872 | 59,283 |
| Contract work in progress | 1,163 | 1,281 | 2,979 |
| Other receivables and current assets | 10,724 | 10,082 | 12,708 |
| Cash and cash equivalents | 14,005 | 16,484 | 12,616 |
| Total current assets | 115,177 | 115,270 | 125,497 |
| TOTAL ASSETS | 200,565 | 212,237 | 223,619 |
| (Thousands of Euro) | |||
|---|---|---|---|
| SHAREHOLDERS' EQUITY AND LIABILITIES | 30/09/2017 | 31/12/2016 | 30/09/2016 |
| Shareholders' equity | |||
| Share capital | 11,250 | 11,250 | 11,250 |
| Other reserves | 42,210 | 59,400 | 59,214 |
| Profit (loss) for the period | -11,053 | -25,245 | -17,534 |
| Total Shareholders' Equity attributable to the Group | 42,407 | 45,405 | 52,930 |
| Minority interests | -496 | -323 | 157 |
| TOTAL SHAREHOLDERS' EQUITY | 41,911 | 45,082 | 53,087 |
| Non-current liabilities | |||
| Non-current bank loans | 31,284 | 18,687 | 21,579 |
| Other non-current financial liabilities | 31,128 | 22,812 | 26,363 |
| Provisions for risks and charges | 6,861 | 8,973 | 8,565 |
| Employee defined benefit plans | 2,895 | 3,124 | 3,313 |
| Deferred tax liabilities | 451 | 514 | 375 |
| Total non-current liabilities | 72,619 | 54,110 | 60,195 |
| Current liabilities | |||
| Bank financing and short-term loans | 15,029 | 40,662 | 45,119 |
| Other current financial liabilities | 1,604 | 10,039 | 6,620 |
| Trade payables | 52,902 | 48,919 | 44,695 |
| Trade payables – related parties | 4,740 | 4,171 | 3,705 |
| Tax liabilities | 1,986 | 2,604 | 1,737 |
| Other current liabilities | 9,774 | 6,650 | 8,461 |
| Total current liabilities | 86,035 | 113,045 | 110,337 |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 200,565 | 212,237 | 223,619 |
| (Thousands of Euro) | ||
|---|---|---|
| 30/09/2017 | 30/09/2016 | |
| CONSOLIDATED INCOME STATEMENT | ||
| Revenues from sales and services | 149,118 | 131,539 |
| Revenues from sales and services – related parties | 391 | 196 |
| Other revenues and income | 490 | 792 |
| Costs of raw materials, consumables and goods and change in inventories | -71,446 | -63,459 |
| Costs for services and use of third party assets | -37,496 | -35,905 |
| Costs for services and use of third-party assets – related parties | -2,301 | -2,407 |
| Personnel cost | -29,544 | -27,456 |
| Provisions, provision for bad debts and other operating expenses | -2,165 | -4,148 |
| Gross operating profit | 7,047 | -848 |
| Amortization, depreciation and impairment | -11,512 | -12,137 |
| Net capital loss from disposal | -1,919 | 0 |
| Net Operating Profit | -6,384 | -12,985 |
| Financial income | 67 | 81 |
| Financial expenses | -3,295 | -3,914 |
| Exchange gains (losses) | -989 | 400 |
| Gain (loss) on equity investments valued using the equity method | 37 | -75 |
| Profit (Loss) before tax | -10,564 | -16,493 |
| Current and deferred taxes | -712 | -1,334 |
| Net profit (loss) for the Group and minority interests, including: | -11,276 | -17,827 |
| Minority interests | -223 | -293 |
| Net profit (loss) for the Group | -11,053 | -17,534 |
| Basic earnings (loss) per share (calculated on 112,500,000 shares) | -0.0982 | -0.1559 |
| Diluted earnings (loss) per share | -0.0982 | -0.1559 |
| (Thousands of Euro) | ||
|---|---|---|
| CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | 30/09/2017 | 30/09/2016 |
| Net profit (loss) for the Group and minority interests: | -11,276 | -17,827 |
| Profits/losses that will not be subsequently reclassified in the income statement | ||
| Remeasurement of defined employee benefit plans (IAS 19) | 201 | -308 |
| Total profits/losses that will not be subsequently reclassified in the income statement | 201 | -308 |
| Profits/losses that could subsequently be reclassified in the income statement | ||
| Exchange rate differences from conversion of foreign operations | 502 | -459 |
| Total profits/losses that could subsequently be reclassified in the income statement | 502 | -459 |
| Profits/Losses recorded directly to Shareholders' Equity net of tax effects | 703 | -767 |
| Total consolidated statement of comprehensive income for the period | -10,573 | -18,594 |
| Profit (loss) for Shareholders of the Parent Company | -10,396 | -18,278 |
| Minority interests | -177 | -316 |
| (Thousands of Euro) | ||
|---|---|---|
| CONSOLIDATED CASH FLOW STATEMENT | 30/09/2017 | 30/09/2016 |
| Financial flows deriving from operating activities | ||
| Profit (loss) for the period | -11,276 | -17,827 |
| Adjustments for: | ||
| Net capital loss from disposal | 1,919 | 0 |
| Depreciation of property, plant and equipment | 5,698 | 6,395 |
| Amortization of intangible assets | 5,630 | 5,542 |
| Impairment losses on intangible assets | 184 | 200 |
| Impairment loss on receivables | 209 | 1,064 |
| Net financial expenses | 4,217 | 3,433 |
| Income tax for the year | 712 | 1,334 |
| 7,293 | 141 | |
| Changes in: | ||
| Inventories and contract work in progress | -1,964 | -1,830 |
| Trade receivables and other receivables | 140 | -568 |
| Trade payables and other payables | 3,176 | -14,996 |
| Provisions and employee benefits | -2,237 | 199 |
| Cash generated from operations | 6,408 | -17,054 |
| Interest paid | -1,409 | -3,078 |
| Interest received | 35 | 43 |
| Income taxes paid | -869 | -587 |
| Net cash generated (absorbed) by operations | 4,165 | -20,676 |
| Financial flows from investments | ||
| Proceeds from the sale of property, plant and equipment | 102 | 82 |
| Disposal of operating activities | 570 | 0 |
| Equity investments valued using the equity method | 37 | 75 |
| Purchase of property, plant and equipment | -1,423 | -3,329 |
| Purchase of intangible assets | -266 | -265 |
| Development expenditure | -1,918 | -3,050 |
| Net cash absorbed by investment activities | -2,898 | -6,487 |
| Financial flows from financing activities | ||
| Future share capital increase contributions | 8,867 | |
| Bond repayments | 0 | -2,040 |
| Disbursements (reimbursements) of medium/long-term loans | -552 | -15,354 |
| Change in short-term bank debts | -12,603 | 19,359 |
| Net cash generated (absorbed) by financing activities | -4,288 | 1,965 |
| Net increase (decrease) in cash and cash equivalents | -3,021 | -25,198 |
| Cash and cash equivalents as at 1 January | 16,484 | 38,264 |
| Effect of exchange rate fluctuation on cash | 542 | -450 |
| Closing cash and cash equivalents | 14,005 | 12,616 |
This report, as required by IAS 7, par. 18, has been prepared using the indirect method.
| Other information | 30/09/2017 | 30/09/2016 |
|---|---|---|
| (Increase)/Decrease in trade receivables and other receivables from related parties | 346 | 35 |
| Increase/(Decrease) in trade payables and other payables to related parties | 569 | 1,614 |
| (Thousands of Euro) |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Share capital |
Statutory Reserve |
Extraordinary and Other Reserves |
Share Premium Reserve |
Future share capital increase contributions |
Result for the year |
Group Shareholders' Equity |
Profit (Loss) attributable to minority interests |
Capital and reserves attributable to minority interests |
Total Shareholders' Equity |
||
| Balance as at 31 December 2015 |
11,250 | 2,250 | 46,580 | 46,598 | 0 | -35,288 | 71,390 | -299 | 724 | 71,815 | |
| Result for the year |
-17,534 | -17,534 | -293 | -17,827 | |||||||
| Actuarial profits/losses (IAS 19) |
-308 | -308 | -308 | ||||||||
| Translation difference |
-436 | -436 | -23 | -459 | |||||||
| Total comprehensive profits/losses |
0 | 0 | -744 | 0 | 0 | -17,534 | -18,278 | -293 | -23 | -18,594 | |
| Other changes | -182 | -182 | 48 | -134 | |||||||
| Allocation of profit |
-35,288 | 35,288 | 0 | 299 | -299 | 0 | |||||
| Balance as at 30 September 2016 |
11,250 | 2,250 | 10,366 | 46,598 | 0 | -17,534 | 52,930 | -293 | 450 | 53,087 | |
| Balance as at 31 December 2016 |
11,250 | 2,250 | 10,552 | 46,598 | 0 | -25,245 | 45,405 | -759 | 436 | 45,082 | |
| Result for the year |
-11,053 | -11,053 | -223 | -11,276 | |||||||
| Actuarial profits/losses (IAS 19) |
201 | 201 | 201 | ||||||||
| Translation difference |
456 | 456 | 46 | 502 | |||||||
| Total comprehensive profits/losses |
657 | -11,053 | -10,396 | -223 | 46 | -10,573 | |||||
| Other changes | -1,469 | 8,867 | 7,398 | 4 | 7,402 | ||||||
| Allocation of profit |
-9,365 | -15,880 | 25,245 | 0 | 759 | -759 | 0 | ||||
| Balance as at 30 September 2017 |
11,250 | 2,250 | 375 | 30,718 | 8,867 | -11,053 | 42,407 | -223 | -273 | 41,911 | |
I, the undersigned, Paolo Cilloni, the Financial Reporting Manager of Landi Renzo S.p.A.,
declare
in accordance with Article 154-bis, paragraph 2 of the Testo Unico della Finanza (Italian Finance Consolidation Act – Legislative Decree 58/1998) that the accounting information contained in the Interim Management Report to 30 September 2017 corresponds to the accounting documents, ledgers and records.
Cavriago, 14 November 2017
Financial Reporting Manager Paolo Cilloni
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