Quarterly Report • Nov 11, 2016
Quarterly Report
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Emak S.p.A. • Via Fermi, 4 • 42011 Bagnolo in Piano (Reggio Emilia) ITALY Tel. +39 0522 956611 • Fax +39 0522 951555 - [email protected] • www.emak.it Capitale Sociale Euro 42.623.057,10 Interamente versato • Registro delle Imprese N. 00130010358 • R.E.A. 107563 Registro A.E.E. IT08020000000632 • Registro Pile/Accumulatori IT09060P00000161 Meccanografico RE 005145 • C/C Postale 11178423 • Partita IVA 00130010358 • Codice Fiscale 00130010358
| Group chart of Emak Group 3 | |
|---|---|
| Corporate Bodies of Emak S.p.A. 4 | |
| Emak Group profile 5 | |
| Main economic and financial figures for the Group 7 | |
| Directors' report 8 | |
| Comments on economic figures 8 | |
| Balance sheet and financial position analysis 11 | |
| Business outlook 13 | |
| Subsequent events 14 | |
| Other informations 14 | |
| Definitions of alternative performance indicators 14 | |
| Consolidated Financial Statements 15 | |
| Consolidated Income Statement 15 | |
| Statement of consolidated financial position 16 | |
| Statement of changes in consolidated equity 17 | |
| Comments on the financial statements 18 | |
| Declaration of the executive in charge of preparing the accounting statements pursuant to the rules of Article 154- | |
| bis, paragraph 2 of Legislative Decree no. 58/1998 21 |
Valley Industries LLP is consolidated at 100% as a results of the "Put and Call Option Agreement" that governs the purchase of the 10% remaining.
Lemasa is consolidated at 100% as a results of the "Put and Call Option Agreement" that governs the purchase of the 30% remaining. P.T.C. S.r.l. is consolidated at 100% as a results of the "Put and Call Option Agreement" that governs the purchase of the 10% remaining. Comet do Brasil Investimentos Ltda is owned for 99.63% by Comet S.p.A .and 0.37% by P.T.C. S.r.l.
The Ordinary General Meeting of the Shareholders of the Parent Company, Emak S.p.A. on 22 April 2016 appointed the Board of Directors and the Board of Statutory Auditors for the financial years 2016-2018 and conferred also the engagement for the independent audit for the financial years 2016-2024.
| Board of Directors | |
|---|---|
| Chairman and Chief Executive Officer | Fausto Bellamico |
| Deputy Chairman | Aimone Burani |
| Executive Director | Stefano Slanzi |
| Lead Independent Director | Massimo Livatino |
| Independent Directors | Alessandra Lanza |
| Elena Iotti | |
| Directors | Francesca Baldi |
| Ariello Bartoli | |
| Luigi Bartoli | |
| Paola Becchi | |
| Giuliano Ferrari | |
| Vilmo Spaggiari | |
| Guerrino Zambelli | |
| Marzia Salsapariglia | |
| Audit Committee and Remuneration Committee | |
| Chairman | Massimo Livatino |
| Components | Alessandra Lanza |
| Elena Iotti | |
| Board of Statutory Auditors | |
| Chairman | Paolo Caselli |
| Acting auditors | Gianluca Bartoli |
| Francesca Benassi | |
| Alternate auditor | Maria Cristina Mescoli |
| Federico Cattini | |
| Independent Auditor | Deloitte & Touche S.p.A. |
| Financial Reporting Officer | Aimone Burani |
| Supervisory Body as per Legislative Decree 231/01 | |
| Chairman | Sara Mandelli |
| Acting member | Roberto Bertuzzi |
The Emak Group develops, manufactures and distributes a wide range of products in three business areas complementary to each other: Outdoor Power Equipment (OPE); Pumps and High Pressure Water Jetting (PWJ); Components and Accessories (C&A).
I. Outdoor Power Equipment, includes the development, manufacture and marketing of products for gardening, forestry and small agricultural equipments, such as brush cutters, lawnmowers, garden tractors, chainsaws, tillers and motor cultivators. The Group distributes its products under its main brands Oleo-Mac, Efco, Bertolini and Nibbi Staub (the latter only to the French market). The Group's product range is intended for professional and high demanding private users. The Group operates mainly in the specialized dealer channel, distributing its products through its commercial subsidiaries and, where it hasn't a direct presence, through a network of 135 distributors; it is estimated to serve around the world over 22,000 specialty dealers.
The reference market of the Group (considered to be the specialized dealer channel, excluding large-scale distribution) has an estimated value of 7-8 billion of Euros. In mature markets such as North America and Western Europe, demand is mainly for replacement: the main driver is represented by economic and gardening trends. Weather conditions are a factor affecting the level of demand for some product families such as brush cutters, lawnmowers and garden tractors in the spring-summer and chainsaws in the autumnwinter. In emerging markets, such as the Far East, Eastern Europe and South America, demand is mainly for "first purchase": the main driver in these areas is economic growth, the evolution of agricultural mechanization and relative support policies. Another factor that influences the demand is the price of commodities: the trend in oil prices can affect the demand for alternative energy sources, such as wood for heating and consequently the demand for chain saws; the trend in the price of agricultural commodities influences investments in agricultural equipment.
II. Pompe e High Pressure Water Jetting, this category brings together the development, manufacture and marketing of diaphragm pumps intended for agriculture (spraying and weeding), piston pumps for the industrial sector, of professional pressure washers and hydrodynamic units and machines for urban cleaning. The Group distributes its products under Comet, HPP, PTC, Master Fluid and Lemasa brands. Group customers are the followings: manufacturers of machines for spraying and weeding with regard to agriculture pumps; builders of hydrodynamic units and pressure washers in relation to industrial pumps; specialized dealers and contractors respectively for pressure washers and hydrodynamic units.
The market has a value globally estimated between 2.5 and 3.4 billion Euros. The pumps for agriculture market consists mainly of Italian operators. The demand is strongly linked to economic cycles, population growth and the resulting increase in demand for agricultural production; in developing countries demand is linked to the evolution of the mechanization of agriculture and relative support policies. The market for high pressure water jetting is constantly evolving, given the different fields of application of pumps and systems. There are several drivers of market demand, depending on the type of product:
motor Industry.
The Group's business is affected by seasonal demand. Gardening machines and components, which represent the majority of the Group's sales, follow the purchase model of the end user. Most of the products are in fact sold in the spring and summer, seasons in which are concentrated the maintenance of the green. Whereas the principal Group's markets are in the northern hemisphere, sales are concentrated in the first and second quarters, in order to supply the network of specialized dealers in time to meet the demands of the end customer at the beginning of season. The demand for products aimed forest activity is usually higher in the second half. Demand for the products of the line Pumps and High Pressure Water Jetting sees a higher concentration in the first half given the more pronounced seasonality of sales of pumps for agriculture, while the product water jetting (industrial pumps, pressure washers and hydrodynamic units) are overall homogeneously distributed during the year.
The following graphic shows the breakdown of sales by quarter of last financial year.
| Year 2015 | 3 Q 2016 | 3 Q 2015 | 9 months 2016 | 9 months 2015 | |
|---|---|---|---|---|---|
| 381,579 | Net sales | 79,809 | 74,410 | 309,759 | 302,182 |
| 37,495 | EBITDA ADJ (*) |
6,470 | 5,527 | 36,896 | 34,203 |
| 35,814 | EBITDA (*) |
6,087 | 5,162 | 36,314 | 32,593 |
| 23,286 | EBIT | 2,959 | 2,123 | 26,691 | 23,609 |
| 8,992 | Net profit | 767 | (3,691) | 16,559 | 7,850 |
| Year 2015 | 3 Q 2016 | 3 Q 2015 | 9 months 2016 | 9 months 2015 | |
|---|---|---|---|---|---|
| 10,291 | Investment in property, plant and equipment | 1,728 | 2,150 | 7,744 | 6,749 |
| 1,926 | Investment in intangible assets | 321 | 418 | 1,321 | 1,440 |
| 21,520 | Free cash flow from operations (*) |
3,895 | (652) | 26,182 | 16,834 |
| 31.12.2015 | 30.09.2016 | 30.09.2015 | |
|---|---|---|---|
| 267,871 | Net capital employed | 266,631 | 272,145 |
| (99,383) | Net debt | (87,790) | (104,781) |
| 168,488 | Total equity | 178,841 | 167,364 |
| Year 2015 | 3 Q 2016 | 3 Q 2015 | 9 months 2016 | 9 months 2015 | |
|---|---|---|---|---|---|
| 9.4% | EBITDA / Net sales (%) | 7.6% | 6.9% | 11.7% | 10.8% |
| 6.1% | EBIT/ Net sales (%) | 3.7% | 2.9% | 8.6% | 7.8% |
| 2.4% | Net profit / Net sales (%) | 1.0% | -5.0% | 5.3% | 2.6% |
| 8.7% | EBIT / Net capital employed (%) | 10.0% | 8.7% | ||
| 0.59 | Net Debt / Equity | 0.49 | 0.63 | ||
| 1,693 | Number of employees at period end | 1,683 | 1,652 |
| 31.12.2015 | 30.09.2016 | 30.09.2015 | |
|---|---|---|---|
| 0.054 | Earnings per share (€) | 0.101 | 0.047 |
| 163,934,835 | Number of shares comprising share capital | 163,934,835 | 163,934,835 |
| 163,537,602 | Average number of outstanding shares | 163,537,602 | 163,537,602 |
(*) See section "definitions of alternative performance indicators"
Consolidated income statement summary figures for the first nine month of 2016 are shown below:
| FY 2015 | % | €/000 | 9 months 2016 |
% | 9 months 2015 |
% | Change % |
|---|---|---|---|---|---|---|---|
| 381,579 | 100 | Net sales | 309,759 | 100 | 302,182 | 100 | 2.5 |
| 37,495 | 9.8 | Ebitda Adj (*) | 36,896 | 11.9 | 34,203 | 11.3 | 7.9 |
| 35,814 | 9.4 | Ebitda (*) | 36,314 | 11.7 | 32,593 | 10.8 | 11.4 |
| 23,286 | 6.1 | Ebit | 26,691 | 8.6 | 23,609 | 7.8 | 13.1 |
| 15,092 | 4.0 | Profit before taxes | 24,680 | 8.0 | 15,161 | 5.0 | 62.8 |
| 8,992 | 2.4 | Net profit | 16,559 | 5.3 | 7,850 | 2.6 | 110.9 |
(*)See section "Definition of alternative performance indicators"
The third-quarter revenue in 2016 amounted to 79,809 thousand Euro against 74,410 thousand Euros for the same period last year, an increase of 7.3%.
The table below shows the breakdown of the third quarter 2016 sales by business and geographical area, compared with the same period last year.
| OUTDOOR POWER EQUIPMENT | PUMPS AND HIGH PRESSURE WATER JETTING |
COMPONENTS AND ACCESSORIES |
TOTAL | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| €/000 | 3Q 2016 | 3Q 2015 | Var. % | 3Q 2016 | 3Q 2015 | Var. % | 3Q 2016 | 3Q 2015 | Var. % | 3Q 2016 | 3Q 2015 | Var. % |
| Europe | 30,638 | 25,306 | 21.1 | 8,731 | 8,321 | 4.9 | 14,643 | 13,970 | 4.8 | 54,012 | 47,597 | 13.5 |
| Americas | 1,903 | 2,572 | (26.0) | 10,390 | 10,977 | (5.3) | 4,762 | 4,774 | (0.3) | 17,055 | 18,323 | (6.9) |
| Asia, Africa and Oceania | 4,182 | 4,203 | (0.5) | 2,205 | 2,338 | (5.7) | 2,355 | 1,949 | 20.8 | 8,742 | 8,490 | 3.0 |
| Total | 36,723 | 32,081 | 14.5 | 21,326 | 21,636 | (1.4) | 21,760 | 20,693 | 5.2 | 79,809 | 74,410 | 7.3 |
The Emak Group achieved in the first nine months of 2016 consolidated revenues amounting to 309,759 thousand Euro compared with 302,182 thousand Euros in the same period last year, an increase of 2.5%. This increase comes from organic growth by 3.1%, from consolidation changes by 0,6% and the negative exchange rate by 1.2%.
The table below shows the breakdown of sales in the first nine months in 2016 by business sector and geographic area, compared with the same period last year.
| OUTDOOR POWER EQUIPMENT | PUMPS AND | HIGH PRESSURE WATER JETTING | COMPONENTS AND ACCESSORIES |
TOTAL | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| €/000 | 9M 2016 | 9M 2015 | Var. % | 9M 2016 | 9M 2015 | Var. % | 9M 2016 | 9M 2015 | Var. % | 9M 2016 | 9M 2015 | Var. % |
| Europe | 120,447 115,805 | 4.0 | 34,888 | 34,118 | 2.3 | 57,992 | 56,227 | 3.1 | 213,327 206,150 | 3.5 | ||
| Americas | 7,071 | 9,664 | (26.8) | 36,043 | 35,579 | 1.3 | 19,511 | 18,536 | 5.3 | 62,625 | 63,779 | (1.8) |
| Asia, Africa and Oceania | 17,076 | 16,359 | 4.4 | 8,029 | 8,083 | (0.7) | 8,702 | 7,811 | 11.4 | 33,807 | 32,253 | 4.8 |
| Total | 144,594 141,828 | 2.0 | 78,960 | 77,780 | 1.5 | 86,205 | 82,574 | 4.4 | 309,759 302,182 | 2.5 |
The increase in sales in Europe was driven by strong performance in the third quarter in Western European countries, in particular where the Group has a direct presence, which more than offset the delay in the second quarter due to the late start of the season for gardening products, because of unfavorable weather conditions. The difference of sales in the Americas was mainly due to the South American market, which in 2015 had benefited from a special operation. The sales trend in Asia, Africa and Oceania confirms an increase compared to the figure recorded in the same period last year.
The increase in sales on the European market was mainly caused by the positive results obtained on the Italian market. The sales growth in the Americas was mainly due to a good performance in South America, thanks to strong performance in Mexico and the contribution of the first quarter sales of Lemasa not included in the same period of 2015, which offset the slight decrease in the North American market. In Asia, Africa and Oceania sales were in line overall compared to the same period of last year.
The growth of the European market sales was due to the continuation of the positive trend in the markets of Western Europe and the Italian market as well as the recovery in the third quarter in the countries of Eastern Europe. The increase in sales in the Americas was mainly due to the good results obtained during the first half especially with reference to the US market. In the markets of Asia, Africa and Oceania was confirmed in the third quarter, the positive sales trend recorded in the first six months of the year.
EBITDA for the third quarter 2016 amounts to 6,087 thousand Euro up 7.6% compared to 5,162 thousand Euro in the corresponding quarter of last year.
EBITDA in the first nine months of 2016 amounts to 36,314 thousand Euro against 32,593 thousand Euro in the corresponding period last year, an increase of 11.4%. The ratio of EBITDA to revenues stands at 11.7% compared with 10.8% in the same previous period.
The increase in volumes and the favorable sales mix among the three business areas contributed to the improvement in Group profitability.
Personnel costs is higher, compared to the same period last year, partly because of the different scope of consolidation, partly because of the higher incidence of the cost of temporary staff employed in some Group plants to meet higher production volumes, as well as for the least used social welfare. Overall, the Group employed an average of 1,814 compared to 1,808 employees over the same period last year.
Operating costs were lower than in the same period mainly due to the continuation of actions to reduce general operating costs and efficiencies gained on service costs. The figure for the nine months 2016 includes charges of 582 thousand Euro for M&A and restructuring transactions. In the year-earlier period, the figure included charges of 1,610 thousand Euro for litigation, M&A and reorganization. Excluding these costs, EBITDA would have been 36,896 thousand Euro (11.9% of sales) compared to 34,203 thousand Euro (equal to 11.3% of sales) in the same period of 2015.
The third-quarter 2016 operating profit is equal to 2,959 thousand Euro, against 2,123 thousand Euro for the same quarter last year.
Operating profit for the first nine months of 2016 is equal to 26,691 thousand Euro, against 23,609 thousand Euro in the same period last year.
Depreciation and amortization amount to 9,623 thousand Euro, against 8,984 thousand Euro for the same period last year.
The ratio of operating profit percentage of revenues, for the nine months is 8.6%, compared to 7.8% in September 30, 2015.
The incidence, not annualized operating profit on net invested capital is 10%, compared to 8.7% in September 30, 2015.
Net income for the third quarter 2016 is equal to 767 thousand Euro against a loss of 3,691 thousand Euro for the same period last year.
Net income for the first nine months of 2016 is 16,559 thousand Euro against 7,850 thousand Euro in the yearearlier period.
The item "Financial expenses" includes charges for the discounting of payables to assignors of Lemasa participation for 1,455 thousand Euro compared to 951 thousand Euro in the year-earlier period.
Over the same period, there were higher expenses paid for price rectification relative to the acquisition of S.I.Agro Mexico in the amount of 360 thousand Euro
Currency management of the first nine months 2016 was positive by 1,631 thousand Euro while it was negative for 4,991 thousand Euro in the same period last year (accrued during the third quarter of 2015 due to the strong devaluation of the Brazilian Real against the Euro and the US dollar).
During the month of August, the subsidiary Comet S.p.A. proceeded to convert in capital the intercompany loan, amounting to 9,240 thousand Euro, previously granted to the subsidiary Comet do Brasil, generating an exchange rate difference of approximately 1,640 thousand Euro (consequently to the strengthening of the Brazilian currency).
The valuation of commercial items to the September 30 exchange rates has seen the positive effects of the appreciation of the Real against the Euro and the US dollar partially offset by the devaluation of the Mexican Peso against Euro and the US Dollar.
The tax rate amounts to 32.9%, down compared to 48.2% in the same period last year. The effective tax rate for the first nine months reflects a positive effect on the parent company, amounting to 606 thousand Euro related to the recognition of Facility "ACE" (Aid to Economic Growth), which had not yet been recognized in equal period last year. In addition, the tax rate for the same period last year was negatively impacted by the recognition of charges for tax litigations on prior years for 838 thousand Euro (with a 5.6% effect on the tax rate for 2015) and the nonregistration , for prudential purposes, of the deferred tax assets on losses carryforwards in the amount of approximately 970 thousand Euro (with a 6.4% effect on the tax rate for 2015).
| 31.12.2015 | €/000 | 30.09.2016 | 30.09.2015 |
|---|---|---|---|
| 113,363 | Net non-current assets (*) | 114,061 | 110,807 |
| 154,508 267,871 |
Net working capital (*) Total net capital employed |
152,570 266,631 |
161,338 272,145 |
| 166,992 | Equity attributable to the Group | 177,359 | 165,848 |
| 1,496 | Equity attributable to non controlling interests | 1,482 | 1,516 |
| (99,383) | Net debt | (87,790) | (104,781) |
| (*)See section "Definition of alternative performance indicators" |
During first nine month of 2016 Emak Group invested € 9,065 thousand in property, plant and equipment and intangible assets, as follows:
Investments broken down by geographical area are as follows:
Net working capital, compared to 31 December 2015, decreases by 1,938 thousand Euro, from 154,508 thousand Euro 152,570 thousand Euro.
The following table shows the change in net working capital of the first nine months of 2016 compared with the same period last year:
| €/000 | 9M 2016 | 9M 2015 |
|---|---|---|
| Net working capital at 01 January | 154,508 | 148,575 |
| Increase/(decrease) in inventories | (12,798) | 207 |
| Increase/(decrease) in trade receivables | (9,869) | (2,410) |
| (Increase)/decrease in trade payables | 23,204 | 13,192 |
| Change in scope of consolidation | 140 | 3,487 |
| Other changes | (2,615) | (1,713) |
| Net working capital at 30 September | 152,570 | 161,338 |
Compared with the same period last year, net working capital goes from 161,338 thousand Euro 152,570 thousand Euro due to efficiencies achieved in inventory management and trade receivables, which more than offset the decrease in trade payables.
The net financial position amounts to 87,790 thousand Euro at September 30, 2016 against 99,383 thousand Euro at December 31, 2015.
Below are the movements in net debt in the first nine months of 2016 compared with the same period last year:
| €/000 | 9 months 2016 | 9 months 2015 |
|---|---|---|
| Opening NFP | (99,383) | (79,043) |
| Ebtida | 36,314 | 32,593 |
| Financial income and expenses | (3,642) | (3,457) |
| Exchange gains and losses | 1,631 | (4,991) |
| Income taxes | (8,121) | (7,311) |
| Cash flow from operations, excluding changes in operating assets and liabilities |
26,182 | 16,834 |
| Changes in operating assets and liabilities | 3,533 | (9,130) |
| Cash flow from operations | 29,715 | 7,704 |
| Change from investments and disinvestments | (11,404) | (4,228) |
| Other equity changes | (6,206) | (585) |
| Change in scope of consolidation | (512) | (28,629) |
| Closing NFP | (87,790) | (104,781) |
The cash flow from operating activities is positive for 29,715 thousand Euro, compared to 7,704 thousand Euro for the same period last year. The improvement in operating income, the positive impact of currency management with the efficient net working capital management contributed to cash generation in the period.
The net financial position is made up as follows:
| ( €/000) | 30.09.2016 | 30.06.2016 | 31.12.2015 | 30.09.2015 |
|---|---|---|---|---|
| Cash and banks | 39,098 | 37,598 | 42,518 | 32,541 |
| Securities and derivative financial instruments | 169 | 283 | 88 | 70 |
| Other financial assets | 522 | 536 | 452 | 871 |
| Financial liabilities | (53,614) | (61,751) | (55,936) | (51,954) |
| Derivative financial instruments | (453) | (487) | (501) | (595) |
| Short-term net debt | (14,278) | (23,821) | (13,379) | (19,067) |
| Other financial assets | 9,321 | 9,467 | 7,836 | 7,397 |
| Financial liabilities | (82,833) | (91,657) | (93,840) | (93,111) |
| Long-term net debt | (73,512) | (82,190) | (86,004) | (85,714) |
| Cash and banks | 39,098 | 37,598 | 42,518 | 32,541 |
| Securities and derivative financial instruments | 169 | 283 | 88 | 70 |
| Other financial assets | 9,843 | 10,003 | 8,288 | 8,268 |
| Financial liabilities | (136,447) | (153,408) | (149,776) | (145,065) |
| Derivative financial instruments | (453) | (487) | (501) | (595) |
| Total net debt | (87,790) | (106,011) | (99,383) | (104,781) |
Long-term financial payables include the non-current portion of loan principal repayments and debt for equity investments in the amount of € 15,901 thousand.
Short-term financial payables mainly consist of:
Financial liabilities for the purchase of the remaining shares of the minority investments and for the adjustment of acquisition transactions with deferred payment subject to contractual restrictions, in the amount of € 18,394 thousand related to the following companies:
Total equity is equal to 178,841 thousand Euro against 168,488 thousand Euro at 31 December 2015. Earnings per share at 30 September 2016 is equal to 0.101 Euro compared to Euro 0.047 Euro in the previous year.
On 31 December 2015 the company held 397,233 treasury shares in portfolio number for the equivalent of € 2,029 thousand Euro.
From 1 January 2016 to 30 September 2016 Emak S.p.A. did not buy or sell treasury shares, for which the inventory and value are unchanged from December 31, 2015.
The results for the first nine months of the year show an improvement in sales and profitability of the Group. The increase in operating income, combined with efficient management of working capital contributed to the improvement in cash generation in the period. Based on what was achieved in the nine months and projections for
the last quarter, the Group expects to close the year with sales of about 390 million Euro Ebitda of around 40 million Euro.
On October 12, the parent company Emak S.p.A. has completed the closing for the acquisition of a 30% share of Cifarelli S.p.A., based in Voghera (PV), a company active in the production and marketing of professional machines for agriculture and gardening such as mistblowers, olive shakers for olives blowers. The price paid for the acquisition of the 30% amounts to 3,750 thousand Euro. On the remaining 70% were agreed a call option and a put option to be exercised on the date of approval of the financial statements at 31/12/2019, for which the exercise price will be based on the results that will be achieved by Cifarelli in the period 2017-2019. With the same occasion and in case of failure to achieve certain minimum future results, the agreement includes a put option in favor of Emak and a call option in favor of Cifarelli family on the acquired share of 30%.
With the confirmation of Cifarelli family to run the company, the transaction sees as fundamental aspect for future value creation for the benefit of both parties, the implementation of a plan of commercial, production and new products development synergies that Emak and Cifarelli have identified and intend to develop with a joint work plan starting from the closing date.
The Company has resolved to make use, with effect from 31 January 2013, of the right to derogate from the obligation to publish the informative documents prescribed in the event of significant merger, demerger, share capital increase through the transfer of goods in kind, acquisition and disposal operations, pursuant to art. 70, paragraph 8, and art. 71, paragraph 1-bis of Consob Issuers Regulations, approved with resolution no. 11971 of 4/5/1999 and subsequent modifications and integrations.
Below are reported, in accordance with recommendation CESR/05-178b published on November 3, 2005, the criteria used for the construction of key performance indicators that management considers necessary to the monitoring the Group performance.
EBITDA adjusted: is obtained by deducting at EBITDA the impact of charges for litigation, expenses related to M&A transaction, and revenue for government grants and restructuring charges.
EBITDA: calculated by adding the items "Net profit" plus "Amortization, depreciation and impairment losses".
FREE CASH FLOW FROM OPERATIONS: calculated by adding the items "Net profit" plus "Amortization, depreciation and impairment losses".
NET WORKING CAPITAL: include items "Trade receivables", "Inventories", current non financial "other receivables" net of "Trade payables" and current non financial "other payables".
NET NON-CURRENT ASSETS: include non-financial "Non current assets" net of non-financial "Non-current liabilities"
Thousand of Euro
| Year 2015 | CONSOLIDATED INCOME STATEMENT | 3 Q 2016 | 3 Q 2015 | 9 months 2016 |
9 months 2015 |
|---|---|---|---|---|---|
| 381,579 | Revenues from sales | 79,809 | 74,410 | 309,759 | 302,182 |
| 2,451 | Other operating incomes | 519 | 569 | 1,665 | 1,452 |
| 8,004 | Change in inventories | (7,126) | 1,646 | (12,355) | 781 |
| (211,493) | Raw materials, consumables and goods | (36,248) | (40,491) | (153,340) | (162,505) |
| (70,460) | Personnel expenses | (15,984) | (15,838) | (55,148) | (53,040) |
| (74,267) | Other operating costs and provisions | (14,883) | (15,134) | (54,267) | (56,277) |
| (12,528) | Amortization, depreciation and impairment losses | (3,128) | (3,039) | (9,623) | (8,984) |
| 23,286 | Operating profit | 2,959 | 2,123 | 26,691 | 23,609 |
| 1,255 | Financial income | 427 | 455 | 1,084 | 948 |
| (5,799) | Financial expenses | (1,352) | (1,828) | (4,726) | (4,405) |
| (3,650) | Exchange gains and losses | (374) | (4,930) | 1,631 | (4,991) |
| 15,092 | Profit before tax | 1,660 | (4,180) | 24,680 | 15,161 |
| (6,100) | Income taxes | (893) | 489 | (8,121) | (7,311) |
| 8,992 | Net profit (A) | 767 | (3,691) | 16,559 | 7,850 |
| (146) | (Profit)/loss attributable to non controlling interests | 13 | 10 | (108) | (120) |
| 8,846 | Net profit attributable to the Group | 780 | (3,681) | 16,451 | 7,730 |
| 0.054 | Basic earnings per share | 0.005 | (0.023) | 0.101 | 0.047 |
| 0.054 | Diluted earnings per share | 0.005 | (0.023) | 0.101 | 0.047 |
| Year 2015 | STATEMENT OF COMPREHENSIVE INCOME | 9 months 2016 |
9 months 2015 |
|
|---|---|---|---|---|
| 8,992 | Net profit (A) | 16,559 | 7,850 | |
| 2,583 | Profits/(losses) deriving from the conversion of foreign company accounts |
(2,055) | 2,577 | |
| (81) | Actuarial profits/(losses) deriving from defined benefit plans (*) |
- | - | |
| 25 | Income taxes on OCI (*) | - | - | |
| 2,527 | Total other components to be included in the comprehensive income statement (B) |
(2,055) | 2,577 | |
| 11,519 | Total comprehensive income for the perdiod (A)+(B) | 14,504 | 10,427 | |
| 66 11,585 |
Comprehensive net profit attributable to non controlling interests Comprehensive net profit attributable to the Group |
(75) 14,429 |
(1) 10,426 |
(*) Items will not be classified in the income statement
| 31.12.2015 | ASSETS | 30.09.2016 | 30.09.2015 |
|---|---|---|---|
| Non-current assets | |||
| 60,236 | Property, plant and equipment | 59,841 | 57,768 |
| 8,118 | Intangible assets | 7,859 | 6,168 |
| 53,132 | Goodwill | 56,039 | 54,367 |
| 230 | Equity investments | 230 | 230 |
| 9,053 | Deferred tax assets | 7,194 | 8,168 |
| 7,836 | Other financial assets | 9,321 | 7,397 |
| 69 | Other assets | 64 | 288 |
| 138,674 | Total non-current assets | 140,548 | 134,386 |
| Current assets | |||
| 138,359 | Inventories | 125,845 | 130,545 |
| 97,006 | Trade and other receivables | 88,409 | 96,457 |
| 5,324 | Current tax receivables | 3,498 | 3,807 |
| 452 | Other financial assets | 522 | 871 |
| 88 | Derivative financial instruments | 169 | 70 |
| 42,518 | Cash and cash equivalents | 39,098 | 32,541 |
| 283,747 | Total current assets | 257,541 | 264,291 |
| 422,421 | TOTAL ASSETS | 398,089 | 398,677 |
| 31.12.2015 | SHAREHOLDERS' EQUITY AND LIABILITIES | 30.09.2016 | 30.09.2015 |
|---|---|---|---|
| Shareholders' Equity | |||
| 166,992 | Shareholders' Equity of the Group | 177,359 | 165,848 |
| 1,496 | Non controlling interest | 1,482 | 1,516 |
| 168,488 | Total Shareholders' Equity | 178,841 | 167,364 |
| Non-current liabilities | |||
| 93,840 | Loans and borrowings | 82,833 | 93,111 |
| 6,049 | Deferred tax liabilities | 5,866 | 4,765 |
| 8,932 | Employee benefits | 8,970 | 8,866 |
| 1,659 | Provisions for risks and charges | 1,568 | 1,689 |
| 835 | Other non-current liabilities | 762 | 862 |
| 111,315 | Total non-current liabilities | 99,999 | 109,293 |
| Current liabilities | |||
| 80,848 | Trade and other payables | 58,994 | 63,694 |
| 3,682 | Current tax liabilities | 4,504 | 4,065 |
| 55,936 | Loans and borrowings | 53,614 | 51,954 |
| 501 | Derivative financial instruments | 453 | 595 |
| 1,651 | Provisions for risks and charges | 1,684 | 1,712 |
| 142,618 | Total current liabilities | 119,249 | 122,020 |
| 422,421 | TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES | 398,089 | 398,677 |
The following table presents the changes in equity from 31 December 2014 to 30 September 2016.
| Thousand of Euro | SHARE CAPITAL |
OTHER RESERVES | RETAINED EARNINGS | EQUITY | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SHARE PREMIUM |
Legal reserve |
Revaluation reserve |
Cumulative translation adjustment |
Reserve IAS 19 |
Other reserves |
Retained earnings |
Net profit of the period |
TOTAL GROUP |
ATTRIBUTABLE TO MINORITY INTERESTS |
TOTAL | ||
| Balance at 31.12.2014 | 40,594 | 42,454 | 2,060 | 1,138 | 4,087 | (776) | 27,733 | 30,654 | 10,467 | 158,411 | 1,688 | 160,099 |
| Profit reclassification | 301 | 6,078 | (10,467) | (4,088) | (17) | (4,105) | ||||||
| Other changes | 3,167 | (2,083) | 1,084 | (109) | 975 | |||||||
| Net profit for the period | 2,795 | (56) | 8,846 | 11,585 | (66) | 11,519 | ||||||
| Balance at 31.12.2015 | 40,594 | 42,454 | 2,361 | 1,138 | 6,882 | (832) | 30,900 | 34,649 | 8,846 | 166,992 | 1,496 | 168,488 |
| Profit reclassification | 348 | 4,410 | (8,846) | (4,088) | (89) | (4,177) | ||||||
| Other changes | 26 | 26 | 26 | |||||||||
| Net profit for the period | (2,022) | 16,451 | 14,429 | 75 | 14,504 | |||||||
| Balance at 30.09.2016 | 40,594 | 42,454 | 2,709 | 1,138 | 4,860 | (832) | 30,900 | 39,085 | 16,451 | 177,359 | 1,482 | 178,841 |
The share capital is show n net of treasury shares of a value of € 2,029 thousand
This interim report has been prepared under disclosure continuity, comparability, international best practice and transparency to the market. Despite the lack of legal obligation, the Board of Directors of Emak S.p.A. has in fact decided, also because of his membership in the STAR segment of the MTA, to continue in drafting and systematic publication of quarterly reports, in compliance with art. 2.2.3, paragraph 3, letter. a) of the Regulation of Markets organized and managed by Borsa Italiana S.p.A. . The reports are made available to the public in the usual forms of deposit at the registered office, the company website and the "eMarket Storage storage mechanism". What above as of now complies with the imminent entry into force of the provisions laid down in the amended Article. 82-ter of CONSOB Regulation for Issuers resolutions no. And No. 11971/1999. 19770/2016.
In relation to the above, it is confirmed that the accounting principles and policies adopted by the Group in preparing the quarterly consolidated financial statements are consistent with those adopted in the consolidated financial statements at 31 December 2015.
In this interim report IAS 19 is not applied as far as the quantification of changes in actuarial gains accrued in the period is concerned. In addition, in the context of disclosure of synthetic and essential character, are not observed all the detailed requirements of IAS 34, whenever it is assessed that its application does not bring meaningful information.
It should be noted that:
| 31.12.2015 | Amount of foreign for 1 Euro | Average 9 M 2016 | 30.09.2016 | Average 9 M 2015 | 30.09.2015 |
|---|---|---|---|---|---|
| 0.73 | GB Pounds (UK) | 0.80 | 0.86 | 0.73 | 0.74 |
| 7.06 | Renminbi (Cina) | 7.35 | 7.45 | 6.96 | 7.12 |
| 4.26 | Zloty (Poland) | 4.36 | 4.32 | 4.16 | 4.24 |
| 1.09 | Dollar (Usa) | 1.12 | 1.12 | 1.11 | 1.12 |
| 16.95 | Zar (South Africa) | 16.68 | 15.52 | 13.70 | 15.50 |
| 26.16 | Uah (Ukraine) | 28.40 | 28.94 | 24.00 | 23.81 |
| 4.31 | Real (Brazil) | 3.96 | 3.62 | 3.53 | 4.48 |
| 10.79 | Dirham (Morocco) | 10.88 | 10.87 | 10.82 | 10.88 |
| 18.91 | Mexican Pesos (Mexico) | 20.43 | 21.74 | 17.37 | 18.98 |
| 772.71 | Chilean Pesos (Chile) | 758.70 | 734.35 | 713.67 | 783.24 |
Compared to December 31, 2015 Acquatecnica S.r.l. entered the scope of consolidation, a company acquired on 28 January 2016 and subsequently merged company P.T.C. S.r.l. The economic and financial figures are included in these financial statements since January 1, 2016.
Compared to 30 September 2015 there were no changes scope of consolidation, except for those previously described; it should be noted that the interim report at September 30, 2015 included the economic figures of Lemasa referred solely to six months as it was consolidated from April 1, 2015.
On January 28, 2016, the subsidiary P.T.C. Srl signed the act of purchasing a stake of 100% of the share capital of Acquatecnica Srl, based in Cremosano (CR), a company active in the production of applications for the "Water Jetting", for an amount of € 500 thousand, of which € 250 thousand paid at closing and the remainder to be paid the 280 day following the closing. This price balance can vary in relation to the realization of potential contingencies, as determined in the preliminary agreement of purchase shares, signed on 25 November 2015.
On March 4, 2016 was signed the merger act by incorporation of Acquatecnica S.r.l. in P.T.C. S.r.l., which provides the accounting and fiscal effects of the transaction from January 1, 2016 and those civil law from April 1, 2016.
The revenues of the company acquired during the year 2015 amounted to € 500 thousand, while shareholders' equity at December 31 amounted to € 94 thousand.
Through this operation, P.T.C. can reinforce its presence in the hydrodynamic unit sector and in general the Group will extend its range in the Pumps and High Pressure Water Jetting sector.
The fair value of assets and liabilities subject to business combination with effect of 1 January 2016, the price paid and the financial cost are detailed below:
| €/000 | Book values | Fair Value | Fair value of | |
|---|---|---|---|---|
| adjustments | acquired assets | |||
| Non-current assets | ||||
| Other non-current financial receivables | 2 | - | 2 | |
| Current assets | ||||
| Inventories | 284 | - | 284 | |
| Trade and other receivables | 57 | - | 57 | |
| Cash and cash equivalents | 4 | - | 4 | |
| Non-current liabilities | ||||
| Post-emplyment benefits | (36) | - | (36) | |
| Current liabilities | ||||
| Trade and other liabilities | (189) | - | (189) | |
| Current tax liabilities | (12) | - | (12) | |
| Financial liabilities | (16) | - | (16) | |
| Total net assets acquired | 94 | - | 94 | |
| % interest held | 100% | |||
| Net equity acquired | 94 | |||
| Goodwill | 408 | |||
| Purchase price paid | 252 | |||
| Deferred price | 250 | |||
| Cash and cash equivalents | 4 | |||
| Net cash outflow | 248 |
Based on the provisions of IFRS 3, the difference between the price paid and the corresponding share of equity has been allocated as goodwill given the coincidence between the fair value and book value of the merged company.
Pursuant to the agreement signed on January 9, 2014 by Comet S.p.A., for the acquisition of 55% share of company S.I.Agro Mexico (by which the shareholding was increased from 30% to 85%), it is noted that following the results achieved in the year 2015 it was given an additional consideration of € 360 thousand, in settlement of the price per share already paid in 2014, which amounted to € 694 thousand.
In the consolidated financial statements at September 30, 2016, in accordance with IFRS 3, this amount was recorded under financial expenses.
During the month of August the company Comet S.p.A. has fully subscribed the capital increase of the subsidiary Comet do Brasil, through conversion of intercompany loan, for an amount of 9,240 thousand Euro. Consequently, the share capital of Comet do Brasil has increased from 19,000 to 51,777 thousands of Brazilian Reais. The company P.T.C. LTD waived its right to subscribe for shares and therefore now owns 0.37% of the Brazilian company; while the remaining 99.63% is held by Comet S.p.A..
In July, began the work to build the new R&D center at the headquarters of the parent company. The project aims to make available to the team engaged in the development of new products, modern and vanguard equipment that support a fundamental activity for the future growth of the Group. The total estimated investment for the completion of the work is approximately € 5,500 thousand over the next two years.
Bagnolo in Piano (RE), November 11, 2016
On behalf of the Board of Directors
The Chairman
The executive in charge of preparing corporate accounting statements of EMAK S.p.A. Aimone Burani, based on his own knowledge,
certifies,
in accordance with the second paragraph of Art. 154-bis, of Italian Legislative Decree No. 58 of 24 February 1998, that the accounting information contained in the Quarterly Report at 30 September 2016, examined and approved today by the Board of Directors of the company, corresponds with the accounting documents, ledgers and records.
Faithfully, Bagnolo in Piano (RE), November 11, 2016
Aimone Burani Executive in charge of preparing the accounting statements
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