Quarterly Report • Aug 3, 2015
Quarterly Report
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REPLY HALF-YEAR FINANCIAL REPORT 2015
| Board of directors | 3 |
|---|---|
| Reply Living Network | 6 |
| Financial review of the Group | 12 |
| Other information | 17 |
| Outlook on operations | 19 |
| Consolidated statement of income (*) | 21 |
| Consolidated statement of comprehensive income | 22 |
| Consolidated statement of financial position (*) | 23 |
| Statement of changes in consolidated equity | 24 |
| Consolidated statement of cash flows | 25 |
| Annexed tables | 61 |
| Attestation of the half-year condensed financial statements pursuant to 154 bis of legislative decree no. 58/98 | 66 |
| Independent auditors' report | 67 |
Chairman and Chief Executive Officer
Mario Rizzante
Chief Executive Officer Tatiana Rizzante
Daniele Angelucci Claudio Bombonato Oscar Pepino Filippo Rizzante Fausto Forti (1) (2) (3) Maria Letizia Jaccheri (1) (2) Enrico Macii (1) (2)
President Cristiano Antonelli
Paolo Claretta Assandri Ada Alessandra Garzino Demo
Independent Auditors Reconta Ernst & Young S.p.A.
(1) Directors not invested with operational proxies (2) Independent Directors according to the Corporate Governance code drawn up by the Committee for Corporate Governance (3) Lead Independent Director
This half year report has been translated into English from the original Italian version, in case of doubt the Italian version prevail.
| YE 2014 | % | Economic figures (Euros/000) | 1st half 2015 | % | 1st half 2014 | % |
|---|---|---|---|---|---|---|
| 632,184 | 100.0 | Revenue | 345,483 | 100.0 | 308,499 | 100.0 |
| 85,119 | 13.5 | Gross operating income | 47,265 | 13.7 | 41,554 | 13.5 |
| 80,663 | 12.8 | Operating income | 42,850 | 12.4 | 37,924 | 12.3 |
| 79,267 | 12.5 | Income before taxes | 43,859 | 12.7 | 37,346 | 12.1 |
| 47,909 | 7.6 | Group net income | 28,200 | 8.2 | 22,067 | 7.2 |
| YE 2014 | Financial figures (Euros/000) | 1st half 2015 | 1st half 2014 | |
|---|---|---|---|---|
| 251,908 | Group shareholders' equity | 274,257 | 227,358 | |
| 936 | Non controlling interest | 353 | 519 | |
| 616,712 | Total assists | 607,216 | 530,094 | |
| 134,341 | Net working capital | 137,150 | 119,446 | |
| 236,531 | Net invested capital | 251,758 | 218,802 | |
| 49,578 | Cash flow | 27,260 | 30,036 | |
| 16,313 | Net financial position | 22,851 | 9,075 |
| YE 2014 | Data per single share (in Euros) | 1st half 2015 | 1st half 2014 |
|---|---|---|---|
| 9,352,857 | Number of shares | 9,352,857 | 9,352,857 |
| 8.62 | Operating result per share | 4.58 | 4.05 |
| 5.12 | Net result per share | 3.02 | 2.36 |
| 5.30 | Cash flow per share | 2.91 | 3.21 |
| 26.93 | Shareholders' equity per share | 29.32 | 24.31 |
| YE 2014 | Other information | 1st half 2015 | 1st half 2014 |
|---|---|---|---|
| 4,689 | 4,957 | 4,477 |
Reply is a company that specializes in consulting, systems integration and digital services with a focus on the conception, design and implementation of solutions based on the new communication channels and digital media.
Composed of a network of companies, Reply partners with key industrial groups in defining and developing business models made possible by the new technological and communication paradigms such as big data, cloud computing, digital communication, the Internet of Things and mobile and social networking. In so doing, it aims to optimize and integrate processes, applications and devices.
Reply operates through a network of companies that specialize in processes, applications and technologies and that represent centers of excellence in their respective fields of expertise.
Processes – For Reply, the understanding and use of technology involves the introduction of a new enabling factor for business processes, based on an in-depth knowledge of both the market and the specific industrial contexts of implementation.
Applications – Reply designs and develops application solutions aimed at meeting core business needs.
Technologies – Reply optimizes the use of innovative technologies, creating solutions that are capable of guaranteeing maximum operational efficiency and flexibility for its clients.
Reply's services include:
Consulting – on strategy, communications, processes and technologies;
System integration – to use the full potential of technology by combining business consulting services with innovative technical solutions and high levels of added value;
Application management – the management, monitoring and continuous development of software assets.
In every market segment in which it operates, Reply combines specific sector expertise with wide experience in the provision of services and a wealth of advanced technological capabilities.
Reply now ranks as a leading technological partner for the telecoms and media market, a sector characterised by the continuous transformation of the operators involved, which are increasingly positioning themselves as providers of innovative services and content. Reply has a particular focus on redefining omni-channel engagement models for its clients both at the touchpoint (physical and digital) level and through the development of innovative customer experience solutions that increasingly often are integrated with social models.
Reply is increasingly active in the digital transformation of Europe's financial institutions. In this area Reply is focused on working with some of the leading players in the sector to define comprehensive multi-channel customer journey and customer engagement strategies. These range from digital branding to the implementation of strategy apps and from the development of a new generation of multi-channel portals and touchpoints to the complete redefinition of the underlying technological architectures.
Reply supports companies with the transformation and management of their information systems. Services provided range from strategic design and the understanding and redefinition of core business processes to the creation of solutions for application integration in support of the extended enterprise.
Reply has also defined a specific service offering for the retail sector that combines e-commerce and multichannel consulting with the design and development of solutions that integrate web, mobile, call centre and in-store services and in which digital devices, innovation and physical places are brought together to create an engaging and consistent customer experience.
The energy and utilities sector is currently undergoing a profound transformation with regard to the models used for generating, distributing and selling energy. The increasingly widespread presence of renewable energy generation facilities, the regulatory implications and the market opportunities, together with a desire on the part of customers to utilise new instrumentation for the control, analysis and management of consumption, are leading to substantial changes in the operational, organisational and technological models used. The requirements in terms of both real-time activity monitoring and the evolutionary and predictive analysis of the phenomena involved, combined with the need for constant communication with customers, are resulting in the introduction of digital devices throughout the chain, from power plants down to households.
Reply combines a deep understanding of the market and its specific processes with a distinctive capability in the design, implementation and management of application and technological solutions in support of
core business. Its ability to support the transformation of management models used by operators in the sector and the verticalisation of skills and specific solutions (IoT, big data, cloud, mobile, etc.) allow Reply to assist companies that generate, sell and distribute energy in defining and developing new operational models. Aspects covered include smart metering, smart grid management, real-time pricing and demand response.
In the health and public administration sectors, there has been an increasingly strong focus over recent years on cutting costs while still maintaining quality and improving service opportunities for consumers. There are two contributing factors involved here. Firstly, by defining "standard costs", legislation has identified an element of balance between the various territorial differences associated with the cost of the service. Secondly, in the operational context there is an increasing use of online technologies, of big data and of cloud computing, which are all contributing to a reduction in overall costs. In this scenario, Reply benefits from the experience it has built up in the most advanced online services, creating vertical applications and expertise that enable it to implement specific solutions for managing relationships with the public and with businesses.
Technological innovation has formed the basis for the development of Reply, a company that has always pursued the objective of providing its clients with the tools necessary to increase flexibility and efficiency. Reply is involved in a continuous process of research, selection and marketing of innovative solutions for sustaining the creation of value within organisations.
In recent years, every sector of industry has seen a clear growth in the awareness of the different possibilities available from the exploitation of "big data", by means of analytical models capable of exploiting the potential of the new NoSql technologies. This increased awareness does not appear to be a logical consequence of the transformation of the datasets associated with the now outdated "3Vs" (velocity, variety and volume) paradigm, which originally characterised the field of big data. Rather, it is the result of the strong pressure on development times and on the TCO of data analysis solutions, which is requiring different choices to be made compared to traditional business intelligence models.
In recent years cloud computing has established itself as one of the most important areas of transformation that companies have had to face. In fact the provision of virtual environments and services by major global vendors has modified, or even revolutionised, the concept of IT as it was traditionally interpreted. From being seen as a simple commodity, IT has become one of the fundamental elements underlying the true digital transformation of an organisation.
The increasing degree of integration with new communication technologies especially in terms of mobile services, the social aspect of participation and collaboration, and the spread of multi-channel services have all taken on vital importance for the implementation of CRM solutions that create actual value, by redefining traditional models in favour of a customer-centric approach.
The communications sector has seen a clear growth over recent years in the importance attributed to the presence of a single brand, product or service across various digital platforms, for both its end users and its employees. This multi-channel and multi-recipient presence is increasingly dialectical and interactive, far removed from the traditional promotional model.
In recent years e-commerce has taken on an increasingly central role in the relationship between businesses and consumers. More and more frequently, companies are extending their business models by defining new multi-channel strategies capable of providing consumers with different touchpoints, both digital and physical, to use when purchasing products.
In order to cope with a future characterized by a convergence between the physical and digital space, a future in which the boundary between business and IT becomes increasingly blurred, IT must be capable of operating at "two speeds". In other words, businesses need to take swift action to exploit the new innovations available to them, while at the same time taking care to avoid harm to existing systems. This new approach to IT requires agile delivery models, in which small, highly qualified, multi-disciplinary teams implement a process of end-to-end change in very short time-scales, working directly with the managers of the various business areas involved. Reply, in particular, supports its clients in the field of enterprise architecture, helping them to extend their internal capabilities by using a wide portfolio of frameworks, methods and architectural models and by making available highly specialized teams.
The drive for convergence between the telecoms, media and consumer electronics sectors is making it necessary to treat items that currently lack any form of connectivity as "networked devices" (such as household appliances and home automation control systems). The Internet of Things (IoT) is a market that, according to the estimates of leading analysts, will grow in Europe by over 46% per year during the 2015- 2020 period. At a global level, they predict that sales from products and services will be worth more than 7,100 billion Euros, with more than 50 billion machines connected in networks by 2020.
Grazie alle consolidate competenze su device, user experience, protocolli di comunicazione e alla conoscenza dei principali processi telco e media, Reply affianca i propri clienti nel definire scenari e modelli d'interazione multidevice, creando nuovi ambienti collaborativi.
The widespread use of mobile devices by consumers and the development of new payment tools, enabled by the mobile elements of technology, make the mobile payment sector one of the fastest-growing fields. Reply has defined a dedicated product offering – based around consulting services and technological platforms – to support banks, financial institutions, telecoms providers, utilities and retailers in the creation and supply of innovative remote and proximity mobile payment services.
Reply is now one of the leading players in this sector, with a comprehensive portfolio of services for risk management, privacy and information security management. In particular, Reply has developed an integrated approach for measuring and managing risk that is capable of assessing, concurrently, both the risk involved and the potential loss of value and sales associated with that risk. Using this method, Reply enables its clients to implement a set of tools and activities aimed at cutting the operating costs associated with risk management, thereby ensuring that capital and resources can be allocated in the best possible ways.
Public social media are remarkable for the way in which they have been adopted for everyday use by all age brackets, with people becoming more aware and more frequent users of the networks involved. Thanks to the value they provide, social media have therefore transformed the Internet, turning it from simply a source of information to a vast space for dialogue and conversation. This has created new opportunities for interaction between people and between brands and the consumers of those brands.. Along with specific social engagement and social listening solutions, Reply bases its own social enterprise networking services (business community, social Intranet and consumer community) on its proprietary TamTamy™ platform. This is available both in on-premises mode and "as a service" via a cloud computing architecture.
The disruptive impact of mobile devices and apps that has been seen over recent years has brought with it new kinds of social behaviour and habits. One especially obvious phenomenon involves the use of video games. Smartphones and tablets have dramatically enlarged gaming communities, which used to be limited to owners of consoles or to the community of players on PCs. As a result, gaming has been transformed into a mass-market phenomenon (with more than 50% of mobile consumers using their device for games and one-quarter of them playing on their device on a daily basis).
Reply has developed a service offering capable of fulfilling the needs of the brand in a comprehensive way, from the use of virtual reality and augmented reality to the creation of games that educate ("edutainment") and games that promote a product or a message ("advergames"). Reply is constantly investing in this area, so that by using the technologies involved it can offer increasingly innovative and involving game experiences. Creating games is a highly professional and specialist activity. Reply's credibility in this sector is guaranteed by the quality of the B2C products it has developed over recent years and by the success they have enjoyed in the global market. The games produced by Reply involve all of the group's technological and distribution platforms, while the portfolio includes titles of varying complexity aimed at a variety of target audiences.
The Half-Year report for the period ended June 30, 2015 has been prepared in accordance with the Legislative Decree. 58/1998, as amended, and the "Regolamento Emittenti" issued by Consob. The Report also conforms with the requirements of the International Financial Reporting Standards ("IFRS") issued by International Accounting Standards Board ("IASB") adopted by the European Union and has been prepared in accordance with IAS 34 – Interim Financial Reporting.
The accounting principles applied are consistent with those used for preparation of the Consolidated Financial Statements at December 31, 2014.
The Group's consolidated revenues since the start of the year are 345.5 million Euros, an increase of 12% compared to 2014.
The first half of 2015 has also registered an increase in margins, with a consolidated EBITDA of 47.3 million Euros (+13.7%) and an EBIT for the six months of 42.9 million Euros (+13%). Pre-tax profits, at 43.9 million Euros, have grown by 17.4% as compared with 2014.
In the second quarter, the group's progress has been equally positive, with consolidated revenues for the quarter of 176.3 million Euros, an increase of 13.8% on the corresponding figure for 2014.
The EBITDA from April to June 2015 was 25.9 million Euros (+14.5% compared with 2014), with an EBIT of 23.4 million Euros (+12.8%) and pre-tax profits of 23.3 million Euros (+12.9%).
As at 30 June 2015, the Group's net financial position was positive for 22.9 million Euros, compared with 26.6 million Euros as at 31 March 2015 and 16.3 million Euros at 31 December 2014.
The first six months of the year have been very positive for the group, with considerable growth in all active market segments. The most significant aspect is the solidity of this growth, based on a consolidation of relations with main customers, who value Reply's ability to offer extremely innovative paradigms in terms of technology, processes and business models.
Reply aims , in a market becoming ever more globalized and multi-national, to be seen as a benchmark for all businesses using technology as their main engine for competitive growth.
Reply has the skills, size and stability to be a leader in this new world. Investments will therefore be targeted towards further development of Big Data, Cloud Computing, Digital Services and the Internet of Things.
Reply's performance is shown below in the following reclassified consolidated income statement and is compared to corresponding figures of the previous year:
| (thousand Euros) | 1st half 2015 | % | 1st half 2014 | % |
|---|---|---|---|---|
| Revenues | 345,483 | 100 | 308,499 | 100 |
| Purchases | (6,632) | (1.9) | (5,910) | (1.9) |
| Personnel | (175,246) | (50.7) | (154,393) | (50.0) |
| Services and other costs | (116,340) | (33.7) | (106,642) | (34.6) |
| Operating costs | (298,217) | (86.3) | (266,945) | (86.5) |
| Gross operating income (EBITDA) | 47,265 | 13.7 | 41,554 | 13.5 |
| Amortization, depreciation and write-downs | (4,415) | (1.3) | (3,583) | (1.2) |
| Other unusual (costs)/income | - | - | (47) | - |
| Operating income (EBIT) | 42,850 | 12.4 | 37,924 | 12.3 |
| Financial income/(expenses) | 1,009 | 0.3 | (578) | (0.2) |
| Income before taxes | 43,859 | 12.7 | 37,346 | 12.1 |
| Income taxes | (15,192) | (4.4) | (14,885) | (4.8) |
| Net income | 28,667 | 8.3 | 22,461 | 7.3 |
| Non controlling interests | (467) | (0.1) | (393) | (0.1) |
| Group net income | 28,200 | 8.2 | 22,067 | 7.2 |
Reply's second quarter performance is shown below in the following reclassified consolidated income statement and is compared to corresponding figures of the previous second quarter:
| (thousand Euros) | Q2 2015 | % | Q2 2014 | % |
|---|---|---|---|---|
| Revenues | 176,291 | 100.0 | 154,902 | 100.0 |
| Purchases | (3,183) | (1.8) | (2,780) | (1.8) |
| Personnel | (88,510) | (50.2) | (77,882) | (50.3) |
| Services and other costs | (58,682) | (33.3) | (51,612) | (33.3) |
| Operating costs | (150,375) | (85.3) | (132,274) | (85.4) |
| Gross operating income (EBITDA) | 25,916 | 14.7 | 22,628 | 14.6 |
| Amortization, depreciation and write-downs | (2,480) | (1.4) | (1,802) | (1.2) |
| Other unusual (costs)/income | - | - | (47) | - |
| Operating income (EBIT) | 23,436 | 13.3 | 20,780 | 13.4 |
| Financial income/(expenses) | (106) | (0.1) | (117) | (0.1) |
| Income before taxes | 23,330 | 13.2 | 20,663 | 13.3 |
REVENUE BY BUSINESS LINES
The table below illustrates the Group's financial structure as at June 30, 2015, compared to December 31, 2014:
| (thousand Euros) | 30/06/2015 | % | 31/12/2014 | % | Change |
|---|---|---|---|---|---|
| Current operating assets | 345,691 | 353,927 | (8,236) | ||
| Current operating liabilities | (208,541) | (219,586) | 11,045 | ||
| Working capital, net (A) | 137,150 | 134,341 | 2,809 | ||
| Non current assets | 182,211 | 170,351 | 11,860 | ||
| Non current liabilities | (67,602) | (68,161) | 559 | ||
| Fixed capital (B) | 114,609 | 102,190 | 12,419 | ||
| Invested capital, net (A+B) | 251,758 | 100.0 | 236,531 | 100.0 | 15,227 |
| Shareholders' equity (C) | 274,610 | 109.1 | 252,843 | 106.9 | 21,767 |
| NET FINANCIAL POSITION (A+B-C) | (22,851) | (9.1) | (16,313) | (6.9) | (6,538) |
Net invested capital as at June 30, 2015, amounted to 251,758 thousand Euros, and was financed by Shareholders' equity for 274,610 thousand Euros, with a remaining positive net financial position of 22,851 thousand Euros.
The following table provides a breakdown of net working capital:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Work in progress | 42,084 | 40,801 | 1,283 |
| Trade receivables | 270,442 | 285,465 | (15,022) |
| Other current assets | 33,165 | 27,661 | 5,504 |
| Current operating assets (A) | 345,691 | 353,927 | (8,236) |
| Trade payables | 78,180 | 83,360 | (5,180) |
| Other current liabilities | 130,361 | 136,225 | (5,864) |
| Current operating liabilities (B) | 208,541 | 219,586 | (11,045) |
| Working capital, net (A-B) | 137,150 | 134,341 | 2,809 |
| % return on investments | 19.8% | 21.3% |
| (thousand Euros) | 30/06/2015 | 30/06/2014 | Change |
|---|---|---|---|
| Cash and cash equivalents, net | 61,420 | 50,745 | 10,675 |
| Current financial assets | 603 | 2,245 | (1,642) |
| Due to banks | (6,056) | (6,348) | 292 |
| Due to other providers of finance | (357) | (671) | 314 |
| Short-term financial position | 55,610 | 45,972 | 9,639 |
| Non current financial assets | 1,177 | 1,371 | (194) |
| Due to banks | (33,287) | (29,994) | (3,293) |
| Due to other providers of finance | (649) | (1,036) | 387 |
| M/L term financial position | (32,759) | (29,659) | (3,100) |
| Total net financial position | 22,851 | 16,313 | 6,539 |
Change in the item cash and cash equivalents is summarized in the table below:
| (thousand Euros) | 1st half 2015 |
|---|---|
| Cash flows from operating activities (A) | 27,620 |
| Cash flows from investment activities (B) | (12,452) |
| Cash flows from financial activities (C) | (4,133) |
| Change in cash and cash equivalents (D) = (A+B+C) | (10,675) |
| Cash and cash equivalents at beginning of period (*) | 50,745 |
| Cash and cash equivalents at year end (*) | 61,420 |
(*) Liquid assets and cash equivalents net are net of current account overdrafts
The complete consolidated cash flow statement and the details of cash and other cash equivalents net are set forth below in the financial statements.
Reply offers high technology services and solutions in a market where innovation is of primary importance. Reply considers research and continuous innovation a fundamental asset in supporting clients with the adoption of new technology.
Reply dedicates resources to Research and Development activities and concentrates on the following sectors:
Reply has important partnerships with major global vendors so as to offer the most suitable solutions to different company needs. Specifically, Reply boasts the highest level of certification amongst the technology leaders in the Enterprise sector, among which:
During the period, there were no transactions with related parties, including intergroup transactions, which qualified as unusual or atypical. Any related party transactions formed part of the normal business activities of companies in the Group. Such transactions are concluded at standard market terms for the nature of goods and/or services offered.
The company in the notes to the financial statements and consolidated financial statements provides the information required pursuant to Art. 154-ter of the TUF [Consolidated Financial Act] as indicated by Consob Reg. no. 17221 of 12 March 2010, indicating that there were no significant transactions concluded during the period.
Information on transactions with related parties as per Consob communication of 28 July 2006 is disclosed at the annexed tables herein.
At June 30, 2015 the number of employees of the Group was 4,957 with an increase of 268 compared to December 31, 2014 and an increase of 480 resources compared to June 30, 2014.
In the first six months of 2015 Reply achieved extremely positive results, both in terms of turnover and profitability. The second quarter, in particular, was characterized by substantial growth, and this allows looking forward to the coming months with optimism, continuing on the path of development of our Group.
Turin, July 31, 2015
/s/ Mario Rizzante
For the Board of Directors The Chairman Mario Rizzante
| (thousand Euros) | Note | 1st half 2015 | 1st half 2014 | Year 2014 |
|---|---|---|---|---|
| Revenues | 5 | 345,483 | 308,499 | 632,184 |
| Other income | 4,557 | 5,633 | 17,085 | |
| Purchases | 6 | (6,632) | (5,910) | (12,227) |
| Personnel | 7 | (175,246) | (154,393) | (308,452) |
| Services and other costs | 8 | (120,897) | (112,275) | (239,220) |
| Amortization, depreciation and write-downs | 9 | (4,415) | (3,583) | (8,021) |
| Other unusual (cost)/income | 10 | - | (47) | (686) |
| Operating income | 42,850 | 37,924 | 80,663 | |
| Financial income/(expenses) | 11 | 1,009 | (578) | (1,396) |
| Income before taxes | 43,859 | 37,346 | 79,267 | |
| Income taxes | 12 | (15,192) | (14,885) | (30,646) |
| Net income | 28,667 | 22,461 | 48,621 | |
| Non controlling interest | (467) | (393) | (712) | |
| Group net result | 28,200 | 22,067 | 47,909 | |
| Earnings per share | 13 | 3.02 | 2.36 | 5.12 |
| Diluted earnings per share | 13 | 3.02 | 2.36 | 5.12 |
(*) Pursuant to Consob Regulation No. 15519 of 27 July 2006, the effects of related-party transactions on the Consolidated statement of income are reported in the Annexed tables herein and fully described in Note 33.
| (thousand Euros) | Note | 1st half 2015 | 1st half 2014 |
|---|---|---|---|
| Profit of the period (A) Other comprehensive income that will not be reclassified subsequently to profit or loss |
28,667 | 22,461 | |
| Actuarial gains/(losses) from employee benefit plans | 755 | (973) | |
| Total Other comprehensive income that will not be reclassified subsequently to profit or loss, net of tax (B1): Other comprehensive income that may be reclassified subsequently to profit |
25 | 755 | (973) |
| or loss: | |||
| Gains/(losses) on cash flow hedges | 25 | 2 | 113 |
| Gains/(losses) on exchange differences on translating foreign operations |
25 | 1,435 | 48 |
| Total Other comprehensive income that may be reclassified subsequently to profit or loss, net of tax (B2) |
1,437 | 161 | |
| TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX (B) = (B1) +(B2) |
2,193 | (812) | |
| Total comprehensive income (A)+(B) | 30,859 | 21,649 | |
| Total comprehensive income attributable to: | |||
| Owners of the parent | 30,392 | 21,256 | |
| Non-controlling interest | 467 | 393 |
| (thousand Euros) | Note | 30/06/2015 | 31/12/2014 | 30/06/2014 |
|---|---|---|---|---|
| Tangible assets | 14 | 15,148 | 14,976 | 13,132 |
| Goodwill | 15 | 134,481 | 126,763 | 126,731 |
| Other intangible assets | 16 | 7,222 | 6,549 | 6,405 |
| Equity investments available for sale | 17 | 6,011 | 3,911 | - |
| Other financial assets | 18 | 4,289 | 4,471 | 4,350 |
| Deferred tax assets | 19 | 16,237 | 15,052 | 13,117 |
| Non current assets | 183,387 | 171,722 | 163,735 | |
| Inventories | 20 | 42,084 | 40,801 | 44,710 |
| Trade receivables | 21 | 270,442 | 285,465 | 234,037 |
| Other receivables and current assets | 22 | 33,165 | 27,661 | 22,499 |
| Financial assets | 18 | 603 | 2,245 | 1,458 |
| Cash and cash equivalents | 23 | 77,535 | 88,819 | 63,655 |
| Current assets | 423,829 | 444,990 | 366,359 | |
| TOTAL ASSETS | 607,216 | 616,712 | 530,094 | |
| Share Capital | 4,863 | 4,863 | 4,863 | |
| Other reserves | 241,194 | 199,135 | 200,427 | |
| Net result of the period | 28,200 | 47,909 | 22,067 | |
| Group shareholders' equity | 24 | 274,257 | 251,908 | 227,358 |
| Non controlling interest | 24 | 353 | 936 | 519 |
| NET EQUITY | 274,610 | 252,843 | 227,877 | |
| Due to minority shareholders | 25 | 14,405 | 13,306 | 18,131 |
| Financial liabilities | 26 | 33,935 | 31,030 | 29,817 |
| Employee benefits | 27 | 24,661 | 24,454 | 22,190 |
| Deferred tax liabilities | 28 | 14,399 | 15,630 | 10,785 |
| Provisions | 29 | 14,137 | 14,772 | 11,957 |
| Non current liabilities | 101,537 | 99,191 | 92,880 | |
| Financial liabilities | 26 | 22,528 | 45,092 | 27,537 |
| Trade payables | 30 | 78,180 | 83,360 | 66,995 |
| Other current liabilities | 31 | 129,557 | 135,202 | 114,039 |
| Provisions | 29 | 804 | 1,024 | 766 |
| Current liabilities | 231,069 | 264,678 | 209,337 | |
| TOTAL LIABILITIES | 332,606 | 363,869 | 302,217 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 607,216 | 616,712 | 530,094 |
(*) Pursuant to Consob Regulation No. 15519 of 27 July 2006, the effects of related-party transactions on the Consolidated statement of financial position are reported in the Annexed tables herein and fully described in Note 33.
| (thousand Euros) | Share capital |
Treasury shares |
Capital reserve |
Earning reserve |
Cash flow hedge reserve |
Cumulative translation adjustment reserve |
Reserve for actuarial gains/(losses) |
Non controlling interest |
Total |
|---|---|---|---|---|---|---|---|---|---|
| At January 1, 2014 | 4,840 | (9) | 51,899 | 155,849 | (124) | 313 | (960) | 799 | 212,608 |
| Increase of share capital | 23 | - | 937 | - | - | - | - | - | 960 |
| Dividends distributed | - | - | - | (6,546) | - | - | - | (694) | (7,240) |
| Total comprehensive income/(loss) |
- | - | - | 22,067 | 113 | 48 | (973) | 393 | 21,649 |
| Other changes | - | - | - | (119) | - | - | - | 21 | (98) |
| At June 30, 2014 | 4,863 | (9) | 52,836 | 171,251 | (11) | 361 | (1,933) | 519 | 227,877 |
| Share | Treasury | Capital | Earning | Cash flow hedge |
Cumulative translation adjustment |
Reserve for actuarial |
Non controlling |
||
|---|---|---|---|---|---|---|---|---|---|
| (thousand Euros) | capital | shares | reserve | reserve | reserve | reserve | gains/(losses) | interest | Total |
| At January 1, 2014 | 4,863 | (9) | 52,836 | 196,878 | (4) | 652 | (3,309) | 936 | 252,843 |
| Increase of share capital | - | - | - | - | - | - | - | - | - |
| Dividends distributed | - | - | - | (7,950) | - | - | - | (1,012) | (8,962) |
| Change in treasury shares | - | (15) | - | - | - | - | - | - | (15) |
| Total comprehensive income/(loss) |
- | - | - | 28,200 | 2 | 1,435 | 755 | 467 | 30,859 |
| Other changes | - | - | - | (77) | - | - | - | (38) | (115) |
| At June 30, 2014 | 4,863 | (25) | 52,836 | 217,051 | (2) | 2,087 | (2,554) | 353 | 274,610 |
| (thousand Euros) | 1st half 2015 | 1st half 2014 |
|---|---|---|
| Net result of the period | 28,200 | 22,067 |
| Income taxes | 15,192 | 14,885 |
| Depreciation and amortization | 4,415 | 3,583 |
| Other non monetary expenses/(income) | (1,932) | (2,369) |
| Change in work in progress | (1,283) | (22,800) |
| Change in trade receivables | 15,022 | 37,129 |
| Change in trade payables | (5,180) | (1,129) |
| Change in other assets and liabilities | (24,507) | (19,140) |
| Income taxes paid | (2,667) | (2,190) |
| Net cash flows from operating activities (A) | 27,260 | 30,036 |
| Payments for tangible and intangible assets | (5,260) | (3,204) |
| Payments for financial assets | 1,824 | (517) |
| Payments for the acquisition of subsidiaries net of cash acquired | (9,016) | (16,752) |
| Net cash flows from investment activities (B) | (12,452) | (20,474) |
| Shares issued | - | 960 |
| Dividends paid | (8,962) | (7,240) |
| In payments from loans | 22,419 | 11,173 |
| Repayment of loans | (19,361) | (6,811) |
| Other changes | 1,771 | 138 |
| Net cash flows from financing activities (C) | (4,133) | (1,779) |
| Net cash flows (D) = (A+B+C) | 10,675 | 7,784 |
| Cash and cash equivalents at beginning of period | 50,745 | 38,861 |
| Cash and cash equivalents at period end | 61,420 | 46,645 |
| Total change in cash and cash equivalents (D) | 10,675 | 7,784 |
| Detail of cash and cash equivalents | ||
|---|---|---|
| (thousand Euros) | 1st half 2015 | 1st half 2014 |
| Cash and cash equivalents at beginning of period | 50,745 | 38,861 |
| Cash and cash equivalents | 88,819 | 66,145 |
| Bank overdrafts | (38,073) | (27,284) |
| Cash and cash equivalents at period end | 61,420 | 46,645 |
| Cash and cash equivalents | 77,535 | 63,655 |
| Bank overdrafts | (16,115) | (17,010) |
| General information | Note 1 | - General information |
|---|---|---|
| Note 2 | - Accounting principles and basis of consolidation | |
| Note 3 | - Risk management | |
| Note 4 | - Consolidation | |
| Income statement | Note 5 | - Revenue |
| Note 6 | - Purchases | |
| Note 7 | - Personnel | |
| Note 8 | - Services and other costs | |
| Note 9 | - Amortization, depreciation and write-downs | |
| Note 10 | - Other unusual operating income/(expenses) | |
| Note 11 | - Financial income/(expenses) | |
| Note 12 | - Income taxes | |
| Note 13 | - Earnings per share | |
| Statement of financial position - Assets | Note 14 | - Tangible assets |
| Note 15 | - Goodwill | |
| Note 16 | - Other intangible assets | |
| Note 17 | - Equity Investments | |
| Note 18 | - Financial assets | |
| Note 19 | - Deferred tax assets | |
| Note 20 | - Work-in-progress | |
| Note 21 | - Trade receivables | |
| Note 22 | - Other receivables and current assets | |
| Note 23 | - Cash and cash equivalents | |
| Statement of financial position - Liabilities and equity | Note 24 | - Shareholders' equity |
| Note 25 | - Payables to minority shareholders and corporate transactions | |
| Note 26 | - Financial liabilities | |
| Note 27 | - Employee benefits | |
| Note 28 | - Deferred tax liabilities | |
| Note 29 | - Provisions | |
| Note 30 | - Trade payables | |
| Note 31 | - Other current liabilities | |
| Other information | Note 32 | - Segment Reporting |
| Note 33 | - Transactions with related parties | |
| Note 34 | - Guarantees, commitments and contingent liabilities | |
| Note 35 | - Fair value assessment hierarchy levels | |
| Note 36 | - Events subsequent to 30 June 2015 | |
Reply [MTA, STAR: REY] specializes in the implementation of solutions based on new communication channels and digital media. Reply, consisting of a network of specialist companies, supports important European industries belonging to the Telco & Media, Manufacturing & Retail, Bank & Insurances and Public Administration segments, in defining and developing new business models utilizing Big Data, Cloud Computing, CRM, Mobile, Social Media and Internet of Things paradigms. Reply offers consultancy, system integration and application management and business process outsourcing (www.reply.eu).
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and endorsed by the European Union. The designation "IFRS" also includes all valid International Accounting Standards ("IAS"), as well as all interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), formerly the Standing Interpretations Committee ("SIC"). Following the coming into force of European Regulation No. 1606 of July 2002, starting from 1 January, 2005, the Reply Group adopted International Financial Reporting Standards (IFRS).
The Half-Year financial report has been prepared in accordance with Consob regulations regarding the format of financial statements, in application of art. 9 of Legislative Decree 38/2005 and other Consob regulations and instructions concerning financial statements.
In particular, this Half-year financial report has been prepared in accordance with IAS 34- Interim Financial Reporting applying the same accounting principles and policies used in the preparation of the Consolidated financial statements at December 31, 2014 other those discussed in the following paragraph "Accounting principles, amendments and interpretations adopted January 1, 2015.
This Half-year financial report is expressed in thousands of Euros.
The preparation of the interim financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities and disclosure of contingent assets and liabilities at the date of the interim financial statements. If in the future such estimates and assumptions, which are based on management's best judgment at the date of the interim financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the period in which the circumstances change. Reference should be made to the section
"Use of estimates" in the consolidated financial statements for the year ended December 31, 2014 for a detailed description of the more significant valuation procedures used by the Group.
Moreover, these valuation procedures, in particular those of a more complex nature regarding matters such as any impairment of non-current assets, are only carried out in full during the preparation of the annual financial statements, when all the information required is available, other than in the event that there are indications of impairment, when an immediate assessment is necessary.
Income taxes are recognized based on the best estimate of the expected average rates of the entire fiscal year.
The consolidated financial statements are prepared on the basis of the historic cost principle, modified as requested for the appraisal of some financial instruments for which the fair value criterion is adopted in accordance with IAS 39.
The consolidated financial statements have been prepared on the going concern assumption. In this respect, despite operating in a difficult economic and financial environment, the Group's assessment is that no material uncertainties (as defined in paragraph 25 of IAS 1) exist with regards its ability to continue as a going concern.
These consolidated financial statements are expressed in thousands of Euros and are compared to the consolidated financial statements of the previous year prepared in accordance with the same principles.
Further indication related to the format of the financial statements respect to IAS 1 is disclosed here within as well as information related to significant accounting principles and evaluation criteria used in the preparation of the following consolidated report.
The consolidated financial statements includes, statement of income, statement of comprehensive income, statement of financial position, statement of changes in shareholders' equity, statement of cash flows and the explanatory notes.
The income statement format adopted by the Group classifies costs according to their nature, which is deemed to properly represent the Group's business.
The Statement of financial position is prepared according to the distinction between current and noncurrent assets and liabilities. The statement of cash flows is presented using the indirect method. The most significant items are disclosed in a specific note in which details related to the composition and changes compared to the previous year are provided.
It should be noted that in order to comply with the indications contained in Consob Resolution no. 15519 of 27 July 2006 "as to the format of the financial statements", additional statements: income statement and statement of financial position have been disclosed showing the amounts of related party transactions.
IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after 1 July 2014. This amendment is not relevant to the Group, since none of the entities within the Group has defined benefit plans with contributions from employees or third parties.
IFRIC 21 is effective for annual periods beginning on or after 1 January 2014 and is applied retrospectively. It is applicable to all levies imposed by governments under legislation, other than outflows that are within the scope of other standards (e.g., IAS 12 Income Taxes) and fines or other penalties for breaches of legislation.
The interpretation clarifies that an entity recognizes a liability for a levy no earlier than when the activity that triggers payment, as identified by the relevant legislation, occurs. It also clarifies that a levy liability is accrued progressively only if the activity that triggers payment occurs over a period of time, in accordance with the relevant legislation. For a levy that is triggered upon reaching a minimum threshold, no liability is recognized before the specified minimum threshold is reached. The interpretation requires these same principles to be applied in interim financial statements.
This amendment is effective for annual periods beginning on or after 1 July 2014, and it is not relevant to the Group.
These improvements have been in force since July 1, 2014 and the Group has applied them for the first time in these interim consolidated financial statements. The improvements are related to a series of amendments to IFRS , in response to eight topics discussed during the cycle from 2010 to 2012 . They relate largely to clarification, and their adoption had no material impact on the interim consolidated financial statements.
These improvements have been in force since July 1, 2014 and the Group has applied them for the first time in these interim consolidated financial statements. The improvements are related to a series of amendments to IFRS, in response to four topics discussed during the cycle from 2011 to 2013. They relate
largely to clarification, and their adoption had no material impact on the interim consolidated financial statements.
For business purposes, specific policies are adopted to assure its clients' solvency. With regards to financial counterparty risk, the Group does not present significant risk in credit-worthiness or solvency.
The group is exposed to funding risk if there is difficulty in obtaining finance for operations at any given point in time.
The cash flows, funding requirements and liquidity of the Group companies are monitored and centrally managed under the control of the Group Treasury. The aim is to guarantee the efficiency and effectiveness of the management of current and perspective capital resources (maintaining an adequate level of reserves of liquidity and availability of funds via a suitable amount of committed credit lines).
The difficult economic situation of the markets and of financial markets necessitates special attention being given to the management of the liquidity risk, and in that sense particular emphasis is being placed on measures taken to generate financial resources through operations and maintaining an adequate level of liquid assets. The Group therefore plans to meet its requirements to settle financial liabilities as they fall due and to cover expected capital expenditures by using cash flows from operations and available liquidity, renewing or refinancing bank loans.
As the Group operates mainly in a "Euros area" the exposure to currency risks is limited. The exposure to interest rate risk arises from the need to fund operating activities and M&A investments, as well as the necessity to deploy available liquidity. Changes in market interest rates may have the effect of either increasing or decreasing the Group's net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions.
The interest rate risk to which the Group is exposed derives from bank loans; to mitigate such risks, the Group has used derivative financial instruments designated as "cash flow hedges".
The use of such instruments is disciplined by written procedures in line with the Group's risk management strategies that do not contemplate derivative financial instruments for trading purposes.
Companies included in the consolidation are included on a line-by-line basis.
Change in consolidation compared to 30 June 2014 is related to Leadvise, a company incorporated under German law acquired in the month of March 2015 by the subsidiary Reply GmbH & Co. KG. The company offers services in Management Consulting mainly in the areas of Innovation Management, Risk Management and Digital Optimization.
Change in the consolidation does not significantly affect the Group's revenues and profits before tax on 30 June 2015 (approximately 0.8% on consolidated revenue and 0.9% on EBT).
Revenues from sales and services, including change in work in progress, amounted to 345,483 thousand Euros (308,499 thousand Euros al 30 June 2014).
This item includes consulting services, fixed price projects, assistance and maintenance services and other minor revenues.
The following table shows the percentage breakdown of revenues by geographic area, the allocation approximates the localization of services provided:
| Country | st half 2015 1 |
st half 2014 1 |
|---|---|---|
| Italy | 72.3% | 72.9% |
| Germany | 15.5% | 15.0% |
| United Kingdom | 12.2% | 12.1% |
| Total | 100.0% | 100.0% |
Disclosure required by IFRS 8 ("Operating segment") is provided in Note 32 herein.
Detail is as follows:
| (thousand Euros) | st half 2015 1 |
st half 2014 1 |
Change |
|---|---|---|---|
| Software licenses for resale | 3,769 | 3,337 | 432 |
| Hardware for resale | 273 | 209 | 64 |
| Other | 2,591 | 2,364 | 227 |
| Total | 6,632 | 5,910 | 722 |
Purchases of Software licenses and Hardware licenses for resale are recognized net of any change in inventory.
The item Other includes the purchase of fuel for 1,120 thousand Euros and the purchase of consumption material for 985 thousand Euros.
Detail is as follows:
| (thousand Euros) | st half 2015 1 |
st half 2014 1 |
Change |
|---|---|---|---|
| Payroll employees | 157,966 | 138,690 | 19,276 |
| Executive Directors | 13,722 | 12,409 | 1,313 |
| Project collaborators | 3,558 | 3,294 | 264 |
| Total | 175,246 | 154,393 | 20,853 |
The increase in the cost of employees, amounting to 20,853 thousand Euros, is attributable to the total registered increase in the Group's business and in the increase in employees.
Detail of personnel by category is provided below:
| (number) | st half 2015 1 |
st half 2014 1 |
Change |
|---|---|---|---|
| Directors | 291 | 293 | (2) |
| Managers | 757 | 655 | 102 |
| Staff | 3,909 | 3,529 | 380 |
| Total | 4,957 | 4,477 | 480 |
On 30 June 2015 the Group had 4,957, employees compared with 4,477 of the first half 2014.
Change in consolidation brought an increase to the workforce equal to 26 employees.
Payroll employees comprise mainly electronic engineers and economic, computer science, and business graduates from the best Universities.
Services and other costs comprised the following:
| (thousand Euros) | st half 2015 1 |
st half 2014 1 |
Change |
|---|---|---|---|
| Commercial and technical consulting | 72,638 | 69,850 | 2,788 |
| Travelling and professional training expenses | 13,512 | 12,441 | 1,071 |
| Other services costs | 20,102 | 17,662 | 2,440 |
| Office expenses | 8,305 | 6,639 | 1,666 |
| Lease and rentals | 3,788 | 3,444 | 344 |
| Other | 2,552 | 2,238 | 314 |
| Total | 120,897 | 112,275 | 8,622 |
Change in Services and other costs, amounting to 8,622 thousand Euros, is attributable to an overall increase in the Group's business.
The item Other mainly includes marketing services, administrative and legal services, telephone and canteen.
Office expenses include services rendered by related parties referred to service contracts for the use of premises, domiciliation and provision of secretarial services for 591 thousand Euros.
Depreciation of tangible assets, calculated on the basis of economic-technical rates determined in relation to the residual useful lives of the assets, resulted in an overall charge as at 30 June 2015 of 2,365 thousand Euros. Details of depreciation are provided in the notes to tangible assets.
Amortization of intangible assets for the first half 2015 amounted to 2,045 thousand Euros. Details of depreciation are provided in the notes to intangible assets.
The Group did not register any other unusual operating income/expenses in the first half of 2015 (47 thousand Euros in the first half of 2014 were related to the fair value adjustment of the deferred consideration liabilities for the acquisition of shareholdings in subsidiary companies).
Detail is as follows:
| (thousand Euros) | st half 2015 1 |
st half 2014 1 |
Change |
|---|---|---|---|
| Financial income | 131 | 37 | 94 |
| Interest expenses | (697) | (878) | 181 |
| Other | 1,575 | 263 | 1,312 |
| Total | 1,009 | (578) | 1,587 |
Financial gains are related to interest on bank accounts.
Interest expenses mainly include expenses related to loans for M&A operations.
The item Other includes the Exchange rate differences from the translation of balance sheet items not stated in Euros, as well as changes in fair value of financial liabilities pursuant to IAS 39.
At June 30, 2015 income taxes amounted to 15,192 thousand Euros and were recognized in accordance to the expected annual average income tax rates.
The basic and diluted earnings per share as at 30 June 2015 were calculated on the basis of the Group's net result amounting to 28,200 thousand Euros (22,067 thousand Euros as at 30 June 2014) divided by the weighted average number of shares as at 30 June 2015 which amounted to 9,352,447 (9,349,712 as at 30 June 2014).
| (in Euros) | st half 2015 1 |
st half 2014 1 |
|---|---|---|
| Group net result | 28,200,000 | 22,067,000 |
| No. of shares | 9,352,447 | 9,349,712 |
| Basic and diluted earnings per share | 3.02 | 2.36 |
Tangible assets as at 30 June 2015 amounted to 15,148 thousand Euros and are detailed as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Buildings | 1,977 | 2,048 | (71) |
| Plant and machinery | 2,017 | 2,209 | (192) |
| Hardware | 3,366 | 3,586 | (220) |
| Other | 7,788 | 7,134 | 654 |
| Total | 15,148 | 14,976 | 172 |
Change in tangible assets in the first half of 2015 is summarized in the table below:
| (thousand Euros) | Buildings | Plant and machinery |
Hardware | Other | Total |
|---|---|---|---|---|---|
| Historical Cost | 4,023 | 6,147 | 25,844 | 16,113 | 52,127 |
| Accumulated depreciation | (1,975) | (3,938) | (22,259) | (8,979) | (37,151) |
| 31/12/2014 | 2,048 | 2,209 | 3,586 | 7,134 | 14,976 |
| Historical cost | |||||
| Increases | - | 155 | 991 | 1,188 | 2,334 |
| Disposals | - | (70) | (388) | (370) | (828) |
| Other changes | - | 17 | 173 | 558 | 747 |
| Accumulated depreciation | |||||
| Depreciation | (71) | (337) | (1,222) | (735) | (2,365) |
| Utilized | - | 44 | 361 | 128 | 533 |
| Other changes | - | - | (134) | (114) | (249) |
| Historical Cost | 4,023 | 6,248 | 26,620 | 17,489 | 54,380 |
| Accumulated depreciation | (2,046) | (4,231) | (23,254) | (9,701) | (39,233) |
| 30/06/2015 | 1,977 | 2,017 | 3,366 | 7,788 | 15,148 |
The item Buildings mainly includes the net value of a building owned by the group amounting to 1,974 thousand Euros located in Gutersloh, Germany.
Change in the item Hardware is due to investments made by the Italian subsidiaries for 447 thousand Euros, 375 thousand Euros for purchases made by German companies, and 149 thousand Euros for purchases made by the English companies. Furthermore this item includes financial leases for 362 thousand Euros (248 at 31 December 2014).
The item Other assets as at 30 June 2015 mainly includes improvements to third party assets and office furniture. The increase of 1.188 Euros mainly refers to improvements made to the offices where the Group's companies operate. Such item also includes a financial leasing for furniture for a net value amounting to 831 thousand Euros (294 thousand Euros at 31 December 2014).
As at 30 June 2015 tangible assets were depreciated by 72.1% of their value, compared to 71.3% at the end of 2014.
This item includes goodwill arising from consolidation of subsidiaries and the value of business branches purchased against payment made by some Group companies.
Goodwill in the first half of 2015 developed as follows:
| (thousand Euros) | |
|---|---|
| Beginning balance | 126,763 |
| Increases | 5,435 |
| Exchange rate differences | 2,283 |
| Ending balance | 134,481 |
The increase is related to Leadvise, a company incorporated under German law acquired in the month of March 2015 by the subsidiary Reply GmbH & Co. KG. for an initial cash consideration of 3,500 thousand Euros.
The following table summarizes the calculation of goodwill and the aggregate book value of the companies as at the acquisition date.
| (thousand Euros) | Fair value (*) |
|---|---|
| Tangible and intangible assets | 33 |
| Trade receivables and other assets | 415 |
| Cash and cash equivalents | 741 |
| Financial liabilities | (673) |
| Trade payables and other liabilities | (105) |
| Deferred taxes | (4) |
| Net assets acquired | 408 |
| Consideration | 5,842 |
| Goodwill | 5,435 |
(*) book value is equal to fair value
Goodwill was allocated to the cash generating units ("CGU"), identified in the countries in which the Group operates, and are summarized as follows:
| Value at | Value at | |||
|---|---|---|---|---|
| (thousand Euros) | 31/21/2014 | Increases | Exchange rate differences |
30/06/2015 |
| Italia | 38,548 | - | - | 38,548 |
| Germania | 34,152 | 5,435 | - | 39,587 |
| UK | 54,063 | - | 2,283 | 56,346 |
| Total | 126,763 | 5,435 | 2,283 | 134,481 |
In the first half of 2015 the Group did no detect any impairment indicators.
Net intangible assets as at 30 June 2015 amounted to 7,222 thousand Euros (6,549 thousand Euros on 31 December 2014) and are detailed as follows:
| Net book value at | |||
|---|---|---|---|
| (thousand Euros) | Historical cost | Cumulative amortization | 30/06/2015 |
| Development costs | 18,993 | (14,923) | 4,070 |
| Software | 17,413 | (14,799) | 2,614 |
| Trademarks | 538 | - | 538 |
| Other intangible assets | 3,150 | (3,150) | - |
| Total | 40,094 | (32,872) | 7,222 |
Intangible assets in the first half of 2015 developed as follows:
| Net book value at | Net book value at | ||||
|---|---|---|---|---|---|
| (thousand Euros) | 31/12/2014 | Cumulative amortization |
Other changes | 30/06/2015 | |
| Development costs | 3,599 | 1,500 | (1,031) | 2 | 4,070 |
| Software | 2,414 | 1,210 | (1,014) | 4 | 2,614 |
| Trademark | 538 | - | - | - | 538 |
| Total | 6,551 | 2,710 | (2,045) | 6 | 7,222 |
Development costs refer to software products and are accounted for in accordance with provisions of IAS 38.
The item Software mainly refers to software licenses purchased and used internally by the Group companies. This item includes 102 thousand Euros related to software development for internal use.
The item Trademark mainly refers to the value of the "Reply" trademark granted on 9 June 2000 to the Parent Company Reply S.p.A. (at the time Reply Europe Sàrl), in connection with the share capital increase that was resolved and subscribed to by the Parent Company. Such amount is not subject to systematic amortization.
Other intangible assets mainly includes the know-how of the Security Operation Centre (SOC), which offers a range of Managed Security Services (MSS) aimed at avoiding and identifying real or potential threats to which the complex IT infrastructures are exposed, in addition to proposing and implementing adequate counter-measures to limit or remove such dangers.
The item Equity investments available for sale amounts to 6,011 thousand Euros and refers to investments in start-up companies in the IoT field across Europe and USA, detail is as follows.
| Company name | Country | % acquired | Value at 31/12/2014 | Increase/decrease | Value at 30/06/2015 |
|---|---|---|---|---|---|
| Cocoon Alarm Limited | England | 15.83% | - | 820 | 820 |
| Xmetrics Sports Limited | England | 22.22% | - | 656 | 656 |
| Greeniant BV | Holland | 35.76% | - | 647 | 647 |
| Sensoria | USA | 19.99% | 3,888 | 3,888 | |
| Total | 3,888 | 2,123 | 6,011 |
A UK based start-up that has created a smart home security system that senses unusual activity throughout the house in real time, without the need for any additional sensors or professional installation. It avoids false alarms by learning what's normal for home, only sending alerts and high quality video straight to your smartphone via the mobile app. Cocoon received a London Design Award and has been listed in Forbes as one of the top new businesses to keep an eye on in 2015.
A company that offers innovative devices for swimmers Xmetrics uses sensors, electronic components and software via mobile devices, to enhance the training sessions of professional and amateur swimmers, analyzing their main biometric parameters and their real time performance.
A Dutch start-up whose solution analyses energy consumption by using the data from smart meters. Greeniant provides energy providers and end users, a device which is able to analyze consumption and use of electrical appliances resulting in a reduction of energy, cost savings and CO2 emission.
Headquartered in Redmond, Washington – Sensoria is a leading developer of wearable platforms and devices. The company was founded on the vision that clothing would become the fulcrum between Internet of Things and People as a seamless, naturally wearable body-sensing computer.
In compliance with IAS 39, these investments are recognized at fair value, which normally equals the cost of purchase . Subsequently, gains and losses arising from changes in fair value are recognized directly in equity until the assets are sold or suffer an impairment loss; when the asset is sold, the gains and losses previously recognized in equity are recognized in the income statement of the period .
Current and non-current financial assets amounted to a total of 4,892 thousand Euros compared to 6,716 thousand Euros as at 31 December 2014.
Detail is as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Receivables from insurance companies | 3,095 | 3,082 | 13 |
| Guarantee deposits | 1,048 | 1,013 | 34 |
| Loans to non-consolidated companies | - | 20 | (20) |
| Long term securities | 129 | 358 | (229) |
| Other financial assets | 17 | 18 | (1) |
| Receivables from factor | 550 | 960 | (410) |
| Short term securities | 53 | 1,265 | (1,212) |
| Total | 4,892 | 6,716 | (1,824) |
The item Receivables from insurance companies mainly refers to the insurance premiums paid against pension plans of some German companies and to directors' severance indemnities.
Receivables from factoring companies refer to receivables for the assignment of invoices without recourse, net of advance payments received for 2,199 thousand Euros.
Short term securities mainly refer to Time Deposit investments made by a Brazilian subsidiary.
The items Receivables from insurance companies other financial assets are not included in the net financial position.
Such item, which amounted to 16,237 thousand Euros as at 30 June 2015 (15,052 thousand Euros as at 31 December 2014), includes the fiscal charge corresponding to the temporary differences deriving from income before taxes and taxable income in relation to deferred deductibility items.
The decision to recognize deferred tax assets is taken by assessing critically whether the conditions exist for the future recoverability of such assets on the basis of expected future results.
Work in progress, amounting to 42,084 thousand Euros, is detailed as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Contract work in progress | 94,903 | 112,045 | (17,141) |
| Advance payments from customers | (52,819) | (71,244) | 18,425 |
| Total | 42,084 | 40,801 | 1,283 |
Any advance payments made by the customers are deducted from the value of the inventories, within the limits of the accrued consideration; the exceeding amounts are accounted as liabilities.
Trade receivables as at 30 June 2015 amounted to 270,442 thousand Euros with a net decrease of 15,023 thousand Euros.
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Domestic clients | 210,829 | 227,900 | (17,071) |
| Foreign trade receivables | 61,311 | 59,368 | 1,943 |
| Credit notes to be issued | - | (42) | 42 |
| Total | 272,140 | 287,226 | (15,086) |
| Allowance for doubtful accounts | (1,698) | (1,761) | 63 |
| Total trade receivables | 270,442 | 285,465 | (15,023) |
Trade receivables are shown net of allowances for doubtful accounts amounting to 1,698 thousand Euros at 30 June 2015 (1,761 thousand Euros at 31 December 2014).
The Allowance for doubtful accounts developed in the first half of 2015 as follows:
| (thousand Euros) | 31/12/2014 | Provision | Other changes | 30/06/2015 | |
|---|---|---|---|---|---|
| Allowance for doubtful accounts | 1,761 | 56 | 23 | (142) | 1,698 |
Over-due trade receivables and the corresponding allowance for doubtful accounts, compared to 31 December 2014, are summarized in the tables below:
| (thousand Euros) | Trade receivables |
Current | 0 - 90 days |
91 - 180 days |
181 - 360 days | Over 360 days |
Total overdue |
|---|---|---|---|---|---|---|---|
| Trade receivables | 272,140 | 238,179 | 25,977 | 4,320 | 1,609 | 2,055 | 33,961 |
| Allowance for doubtful accounts |
(1,698) | (8) | (183) | (68) | (135) | (1,305) | (1,690) |
| Total trade receivables | 27,442 | 238,171 | 25,794 | 4,252 | 1,474 | 750 | 32,271 |
Aging at
31/12/2014
| (thousand Euros) | Trade receivables |
Current | 0 - 90 days | 91 - 180 days |
181 - 360 days |
Over 360 days |
Total overdue |
|---|---|---|---|---|---|---|---|
| Trade receivables | 287,226 | 243,922 | 37,374 | 3,346 | 856 | 1,728 | 43,304 |
| Allowance for doubtful accounts |
(1,761) | (11) | (313) | (78) | (129) | (1,230) | (1,750) |
| Total trade receivables | 285,465 | 243,911 | 37,061 | 3,268 | 726 | 498 | 41,554 |
The Group assigns part of its trade receivables through factoring operations.
The assignments of receivables can be with or without recourse; some assignments without recourse can include deferred payment clauses (for example, payment by the factor of a minor part of the purchase price is subordinated on the collection of the total amount of the receivables), require a deductible from the assignor, or require maintaining significant exposure to the cash flow trend deriving from the assigned receivables. This type of operation does not comply with the requirements of IAS 39 for the elimination of the assets from the financial statements, since the risks and benefits related to their collection have not been substantially transferred.
Consequently, all receivables assigned through factoring operations that do not satisfy the requirements for elimination provided by IAS 39 continue to be recognized in the Group's financial statements, even though they have been legally assigned and a financial liability for the same amount is recognized in the consolidated financial statements as Liabilities for advance payments on assignments of receivables. Gains and losses related to the assignment of these assets are only recognized when the assets are derecognized from the Group's financial-economic position.
As at 30 June 2015 the receivables transferred via Factoring operations with recourse amounted to 16,274 thousand Euros.
The book value of the assets assigned without recourse as at 30 June 2015 amounted to 2,749 thousand Euros, with an increase of available liquidity of 2,199 thousand Euros.
The carrying amount of Trade receivables is in line with its fair value.
Trade receivables are all collectible within one year.
Detail is as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Tax receivables | 13,383 | 8,339 | 5,044 |
| Advances to employees | 116 | 116 | - |
| Accrued income and prepaid expenses | 5,295 | 5,120 | 175 |
| Other receivables | 14,371 | 14,086 | 285 |
| Total | 33,165 | 27,661 | 5,504 |
The item Tax receivables mainly includes:
The item Other receivables includes the contribution to research in relation to financed projects in the amount of 12,484 thousand Euros.
The balance of 77,535 thousand Euros, with a decrease of 11,284 thousand Euros compared with 31 December 2014, represents cash and cash equivalents and the existence of cash on hand and valuables as at the end of the year.
Changes in cash and cash equivalents are fully detailed in the Consolidated statement of cash flow.
As at 30 June 2015 the share capital of Reply S.p.A., fully subscribed and paid, amounted to 4,863,486 Euros and comprises 9,352,856 ordinary shares of a nominal value of 0.52 Euros each.
The value of the Treasury shares, amounting to 25 thousand Euros, refers to the shares of Reply S.p.A. held by the parent company, that at 30 June 2015 were equal to n. 1,007. In the first half of 2015 the item increased by 15 thousand Euros.
On 30 June 2015 Capital reserves, amounting to 52,836 thousand Euros, were mainly comprised as follows:
Earnings reserves amounted to 217,051 thousand Euros and were comprised as follows:
Other comprehensive income can be analyzed as follows:
| (thousand Euros) | Note | 30/06/2015 | 30/06/2014 |
|---|---|---|---|
| Other comprehensive income that will not be reclassified subsequently to profit or loss, net of tax: |
|||
| Actuarial gains/(losses) from employee benefit plans | 755 | (973) | |
| Total Other comprehensive income that will not be reclassified subsequently to profit or loss, net of tax (B1): |
24 | 755 | (973) |
| Other comprehensive income that may be reclassified subsequently to profit or loss, net of tax: |
|||
| Gains/(losses) on cash flow hedges | 2 | 113 | |
| Gains/(losses) from the translation of financial statements | 1,435 | 48 | |
| Total Other comprehensive income that may be reclassified subsequently to profit or loss, net of tax (B2): |
24 | 1,437 | 161 |
| Total other comprehensive income, net of tax (B) = (B1) +(B2) | 24 | 2,193 | (812) |
Non controlling interest amounted to 353 thousand Euros on 30 June 2015 (936 thousand Euros on 31 December 2014.
There are no stock option plans resolved by the General Shareholders' meetings.
Payables to minority shareholders and for company operations (earn out) owed on 30 June 2015 amount to 14,405 thousand Euros (13,306 thousand Euros on 31 December 2014) and are detailed as follows:
| (thousand Euros) | 31/12/2014 | Increases | Fair value adjustments |
Payments | Exchange differences |
30/06/2015 |
|---|---|---|---|---|---|---|
| Payables to minority shareholders | 5,878 | - | - | (832) | (84) | 4,962 |
| Payables for Earn out | 7,427 | 2,229 | - | (650) | 436 | 9,442 |
| Total payables to minority shareholders and earn out |
13,306 | 2,229 | - | (1,482) | 352 | 14,405 |
The increase is related to Leadvise, a company incorporated under German law, acquired in the month of March 2015 by the subsidiary Reply GmbH & Co. KG.. The increase reflects the best estimate of the consideration in relation to the original contract signed.
No fair value adjustments occurred in the first half of 2015; the amount outstanding reflects the best estimate in relation to the deferred consideration originally posted at the time of acquisition.
Total payments made amounted to 1,482 thousand Euros and refer to the consideration paid in relation to the original contracts signed at the time of acquisition.
Detail is as follows:
| 30/06/2015 | 31/12/2014 | |||||
|---|---|---|---|---|---|---|
| (thousand Euros) | Current | Non current | Total | Current | Non current | Total |
| Bank overdrafts | 16,115 | - | 16,115 | 38,073 | - | 38,073 |
| Bank loans | 6,056 | 33,287 | 39,343 | 6,348 | 29,994 | 36,342 |
| Total due to banks | 22,171 | 33,287 | 55,458 | 44,421 | 29,994 | 74,415 |
| Other financial borrowings | 357 | 649 | 1,006 | 671 | 1,036 | 1,707 |
| Total financial liabilities | 22,528 | 33,935 | 56,463 | 45,092 | 31,030 | 76,122 |
The following table illustrates the distribution of financial liabilities by due date:
| Due in 12 | 30/06/2015 From 1 to 5 |
Over 5 | Due in 12 | 31/12/2014 From 1 to 5 |
Over 5 | |||
|---|---|---|---|---|---|---|---|---|
| (thousand Euros) | months | years | years | Total | months | years | years | Total |
| Bank overdrafts | 16,115 | - | - | 16,115 | 38,073 | - | - | 38,073 |
| M&A loans | 5,693 | - | 33,132 | 38,825 | 5,967 | - | 29,801 | 35,768 |
| Mortgage loans | 115 | 460 | - | 575 | 115 | 460 | 58 | 633 |
| Other financial borrowings | 357 | 649 | - | 1,006 | 671 | - | - | 1,706 |
| Other | 248 | (306) | - | (58) | 266 | (325) | - | (59) |
| Total | 22,528 | 803 | 33,132 | 56,463 | 45,092 | 1,172 | 29,859 | 76,122 |
M&A loans refer to credit lines to be used for acquisition operations carried out directly by Reply S.p.A. or via companies controlled directly or indirectly by the same.
Summarized below are the existing contracts entered into for such a purpose:
Interest rates are also applied according to certain predetermined ratios (Covenants) of economic and financial nature calculated on the consolidated financial statements as at 30 June of each year and/or the consolidated interim report.
As contractually defined, such ratios are as follows:
At 30 June 2015, Reply fulfilled the Covenants under the various contracts.
Mortgage loans refers to a loan undersigned by Tool Reply GmbH, for the acquisition of the building in which the company has its registered office.
Reimbursement takes place via six monthly instalments (4.28%) with expiry on 30 September 2019.
Other financial borrowings are related to financial leases determined according to IAS 17.
The item Other refers mainly to the evaluation of derivative hedging instruments as at 30 June 2015.
The carrying amount of Financial liabilities is deemed to be in line with its fair value.
In compliance with Consob regulation issued on 28 July 2006 and in accordance with CESR's Recommendations for the consistent implementation of the European's regulation on Prospectuses issued on 10 February 2005, the Net financial position of the Reply Group at 30 June 2015 was as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Cash and cash equivalents | 77,535 | 88,819 | (11,284) |
| Current financial assets | 603 | 2,245 | (1,642) |
| Non current financial assets | 1,177 | 1,371 | (194) |
| Total financial assets | 79,315 | 92,434 | (13,119) |
| Current financial liabilities | (22,528) | (45,092) | 22,564 |
| Non current financial liabilities | (33,935) | (31,030) | (2,905) |
| Total financial liabilities | (56,463) | (76,122) | 19,659 |
| Total net financial position | 22,851 | 16,313 | 6,538 |
For further details with regards to the above table see Notes 18 and 23 as well as Note 26.
Employee benefits are detailed as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Employee severance indemnities | 17,305 | 17,091 | 214 |
| Employee pension funds | 5,893 | 5,928 | (35) |
| Directors severance indemnities | 1,447 | 1,419 | 28 |
| Other | 16 | 16 | - |
| Total | 24,661 | 24,454 | 207 |
The Employee severance indemnity represents the obligation to employees under Italian law (amended by Law 296/06) that has accrued up to 31 December 2006 and that will be settled when the employee leaves the company. In certain circumstances, a portion of the accrued liability may be given to an employee during his working life as an advance. This is an unfunded defined benefit plan, under which the benefits are almost fully accrued, with the sole exception of future revaluations.
The procedure for the determination of the Company's obligation with respect to employees was carried out by an independent actuary according to the following stages:
Reassessment of Employee severance indemnities in accordance with IAS 19 was carried out "ad personam" and on the existing employees, that is analytical calculations were made on each employee in force in the company at the assessment date without considering future work force.
The actuarial valuation model is based on the so called technical bases which represent the demographic, economic and financial assumptions underlying the parameters included in the calculation.
In accordance with IAS 19, Employment severance indemnities at 30 June 2015 are summarized in the table below:
| Balance at 31/12/2014 | 17,092 |
|---|---|
| Cost relating to current work (service cost) | 1,488 |
| Actuarial gain/loss | (755) |
| Interest cost | 128 |
| Indemnities paid during the year | (648) |
| Balance at 30/06/2015 | 17,305 |
The Pension fund item relates to liability as regards the defined benefit pensions of some German companies.
This amount is related to Directors severance indemnities paid during the year.
Change amounting to 28 thousand Euros refers to the resolution made by the Shareholders Meeting of several subsidiary companies to pay an additional indemnity to some Members of the Board in 2015.
Deferred tax liabilities at 30 June 2015 amount to 14,399 thousand Euros and are referred mainly to the fiscal effects arising from temporary differences deriving from statutory income and taxable income related to deferred deductibility.
Deferred tax liabilities have not been recognized on retained earnings of the subsidiary companies as the Group is able to control the timing of distribution of said earnings and in the near future does not seem likely.
Provisions amount to 14,941 thousand Euros (of which 14,136 thousand Euros are non current). Change in the first half of 2015 is summarized in the table below:
| (thousand Euros) | Balance at 31/12/2014 |
Other | Accruals | Utilization | Write-offs | Balance at 30/06/2015 |
|---|---|---|---|---|---|---|
| Fidelity fund | 492 | - | 112 | (194) | (25) | 385 |
| Provision for risk | 8,347 | (132) | 223 | (809) | (30) | 7,598 |
| Motorola research center fund |
6,957 | - | - | - | - | 6,957 |
| Total | 15,796 | (132) | 334 | (1,003) | (54) | 14,941 |
Employee fidelity provisions refer mainly to provisions made for the employees of some German companies in relation to anniversary bonuses. The liability is determined through actuarial calculations applying a 5.5% rate.
The provision for other risks amounting to 7,599 represents the amounts set aside by the individual companies of the Group principally in connection with contractual commercial risks and disputes. The accrual of the year is referred to the update of this estimate and to new legal ongoing controversies, lawsuits with former employees and other liabilities, as also described at Note 36. "Other" refers to exchange differences arising from the translation of values different from Euros.
The Provision for Motorola Research Centre originates from the acquisition of the business branch Motorola Electronics S.p.A. in 2009 and reflects the best estimate of the residual costs to incur in relation to the agreements reached with the parties involved in the transaction to implement research and development projects, in accordance with IAS 37. This provision is used on the basis of the progression of the abovementioned research activities.
Acquisition of the Motorola Research Centre was carried out as a consequence of agreements reached with Motorola Electronics S.p.A, Trade Unions and the region of Piedmont and the commitment to carry out research activities on agreed upon themes.
The residual provision will be written off to profit and loss on the basis of the progress of the research activities, in part financed by the public administrations, for which the Group has committed to carry out to several parties in view of the undersigning of the aforesaid agreements.
In the first half of 2015 the provision remained unchanged as the parties involved are discussing how to go forward with the operating methods of the initial agreements.
Trade payables at 30 June 2015 amount to 78,180 thousand Euros and are detailed as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Domestic suppliers | 66,574 | 71,476 | (4,902) |
| Foreign suppliers | 12,406 | 12,786 | (380) |
| Advances to suppliers | (800) | (901) | 101 |
| Total | 78,180 | 83,360 | (5,180) |
Other current liabilities at 30 June 2015 amounted to 129,557 thousand Euros with a decrease of (5,645) thousand Euros with respect to the previous financial year. Detail is as follows:
| (thousand Euros) | 30/06/2015 | 31/12/2014 | Change |
|---|---|---|---|
| Income tax payable | 21,797 | 5,465 | 16,332 |
| VAT payable | 1,460 | 7,675 | (6,215) |
| Withholding tax and other | 3,542 | 5,442 | (1,900) |
| Total due to tax authorities | 26,799 | 18,582 | 8,217 |
| National social insurance payable | 16,191 | 18,634 | (2,443) |
| Other | 1,309 | 1,347 | (38) |
| Total due to social securities | 17,500 | 19,981 | (2,481) |
| Employee accruals | 42,575 | 38,381 | 4,194 |
| Other payables | 29,785 | 48,048 | (18,263) |
| Accrued expenses and deferred income | 12,899 | 10,210 | 2,689 |
| Total other payables | 85,258 | 96,638 | (11,380) |
| Other current liabilities | 129,557 | 135,202 | (5,645) |
Due to tax authorities amounting to 26,799 thousand Euros, mainly refers to payables due to tax authorities for withholding tax on employees and professionals' compensation.
Due to social security authorities amounting to 17,500 thousand Euros, is related to both Company and employees contribution payables.
Other payables at 30 June 2015 amount to 85,258 thousand Euros and mainly include:
Accrued Expenses and Deferred Income mainly relate to advance invoicing in relation to T&M consultancy activities to be delivered in the subsequent financial period.
Segment reporting has been prepared in accordance with IFRS 8, determined as the area in which the services are executed.
| Economic data (thousand Euros) |
Italy | % | Germany | % | United Kingdom |
% | Other Investments |
% | Intraseg | Total 1st half 2015 |
% |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 256,244 | 100 | 55,103 | 100 | 43,105 | 100 | 462 | 100 | (9,432) | 345,483 | 100 |
| Operating costs | (215,354) | (84) | (50,977) | (92.5) | (39,689) | (92.1) | (1,630) | (352.7) | 9,432 | (298,218) | (86.3) |
| Gross operating income | 40,890 | 16 | 4,126 | 7.5 | 3,417 | 7.9 | (1,168) | (252.7) | 47,265 | 13.7 | |
| Amortization/depreciation | (3,472) | (1.4) | (646) | (1.2) | (291) | (0.6) | (8) | (1.6) | (4,415) | (1.3) | |
| Other unusual income/(expenses) |
- | - | - | - | - | - | - | - | - | - | |
| EBIT | 37,419 | 14.6 | 3,481 | 6.3 | 3,126 | 7.3 | (1,175) | (254.3) | 42,850 | 12.4 |
| (thousand Euros) | Italia | % | Germany | % | United Kingdom |
% | Other investments |
% | Intraseg | Total 1st half 2014 |
% |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 232,991 | 100 | 47,975 | 100 | 38,780 | 100 | - | - | (11,247) | 308,499 | 100 |
| Operating costs | (195,606) | (84) | (45,135) | (94.1) | (37,407) | (96.5) | (43) | - | 11,247 | (266,943) | (86.5) |
| Gross operating income | 37,385 | 16 | 2,840 | 5.9 | 1,373 | 3.5 | (43) | - | 41,556 | 13.5 | |
| Amortization/depreciation | (2,646) | (1.1) | (638) | (1.3) | (300) | (0.8) | - | - | (3,583) | (1.2) | |
| Other unusual income/(expenses) |
(1,147) | (0.5) | - | - | 1,100 | 2.8 | - | - | (47) | - | |
| EBIT | 33,592 | 14.4 | 2,203 | 4.6 | 2,173 | 5.6 | (43) | - | 37,924 | 12.3 |
| Financial data (thousand Euros) |
Italy | Germany | United Kingdom |
Other investments |
Intraseg | Total 30/06/2015 |
|---|---|---|---|---|---|---|
| Current operating assets | 288,962 | 38,502 | 34,068 | 533 | (16,374) | 345,691 |
| Current operating liabilities |
(180,095) | (24,096) | (18,219) | (2,504) | 16,374 | (208,541) |
| Net working capital (A) | 108,866 | 14,406 | 15,849 | (1,972) | - | 137,150 |
| Non current assets | 120,353 | 23,012 | 32,765 | 6,080 | 182,211 | |
| Non current liabilities | (49,306) | (13,269) | (5,028) | - | (67,602) | |
| Fixed capital (B) | 71,047 | 9,744 | 27,738 | 6,080 | - | 114,609 |
| Net invested capital (A+B) |
179,914 | 24,150 | 43,587 | 4,108 | - | 251,758 |
| (thousand Euros) | Italy | Germany | United Kingdom |
Other investments |
Intraseg | Total 31/12/2014 |
|---|---|---|---|---|---|---|
| Current operating assets | 310,817 | 31,196 | 31,685 | 22 | (19,794) | 353,927 |
| Current operating liabilities |
(196,728) | (25,365) | (16,671) | (614) | 19,794 | (219,586) |
| Net working capital (A) | 114,088 | 5,831 | 15,014 | (592) | - | 134,341 |
| Non current assets | 119,230 | 17,593 | 29,622 | 3,906 | 170,351 | |
| Non current liabilities | (52,292) | (11,271) | (4,598) | - | (68,161) | |
| Fixed capital (B) | 66,938 | 6,323 | 25,023 | 3,906 | - | 102,190 |
| Net invested capital (A+B) |
181,026 | 12,154 | 40,037 | 3,314 | - | 236,531 |
| Country | 30/06/2015 | 30/06/2014 | Change |
|---|---|---|---|
| Italy | 3,833 | 3,476 | 357 |
| Germany | 734 | 645 | 89 |
| United Kingdom | 383 | 355 | 28 |
| Other Investments | 7 | 1 | 6 |
| Total | 4,957 | 4,477 | 480 |
In accordance with IAS 24 Related parties are Group companies and persons that are able to exercise control, joint control or have significant influence on the Group and on its subsidiaries.
Transactions carried out by the group companies with related parties that as of the reporting date are considered ordinary business and are carried out at normal market conditions.
The main economic and financial transactions with related parties are summarized below.
| (thousand Euros) | |||
|---|---|---|---|
| Financial transactions | 30/06/2015 | 31/12/2014 | Nature of transactions |
| Trade receivables | 2 | 48 | Receivables from professional services |
| Trade payables | 3 | 218 | Payables for professional services and office rentals offices |
| Other payables | 2,174 | 4,348 | Payables for emoluments to Directors and Managers with strategic responsibilities and Board of Statutory Auditors |
| Economic transactions | st half 2015 1 |
st half 2014 1 |
Nature of transactions |
| Revenues from professional services | 43 | 19 | Professional services executed |
| Services from Parent company and related parties |
493 | 444 | Service contracts relating to office rental , and administration office |
| Personnel | 4,232 | 4,212 | Emoluments to Directors and Key Management with strategic responsibilities |
| Services and other costs | 74 | 71 | Emoluments to Statutory Auditors |
In accordance with IAS 24, emoluments to Directors, Statutory Auditors and Key Management are also included in transactions with related parties.
In accordance with Consob Resolution no. 15519 of 27 July 2006 and Consob communication no. DEM/6064293 of 28 July 2006 the financial statements annexed herein present the Consolidated Income statement and Balance Sheet showing transactions with related parties separately, together with the percentage incidence with respect to each account caption.
Pursuant to Art. 150, paragraph 1 of the Italian Legislative Decree n. 58 of 24 February 1998, no transactions have been carried out by the members of the Board of Directors that might be in potential conflict of interests with the Company.
Guarantees and commitments where existing, have been disclosed at the item to which they refer.
Following is a summary of the commitments to which the Group is exposed at 30 June:
Within three months from the registration of the merger in the Turin Companies Register, each minority shareholder was able to present a petition for the purpose of commencing, in compliance with German law, before a Judge qualified in Germany – who shall have exclusive jurisdiction – the assessment inherent in the Share Swap ratio and the corresponding amount in cash. All shareholders of Reply Deutschland will have the right to benefit from a possible increase in the exchange ratio determined by the Judge or on the basis of an agreement between the parties, and that is to say independently of their participation in the evaluation procedure.
On the contrary, from the possible increase of the corresponding amount in cash determined by the Judge or on the basis of an agreement between the parties only the shareholders who verbally annotated their disagreement in the general meeting in respect of conditions of the law can benefit. In the case where evaluation procedures include a modification of the exchange ratio, every single difference shall be regulated in cash.
At present, some minority shareholders have commenced the aforementioned procedures. With specific reference to the request to obtain the corresponding amount in cash, the time limit for exerting such an authority shall expire starting from the shortest time limit between the day following it expiring from the two months subsequent to the final ruling of the qualified court or the publication of a binding agreement between the parties. During the said period, the former Reply Deutschland shareholders can freely decide on whether to obtain the corresponding amount in cash or whether to remain shareholders of Reply.
As an international company, the Group is exposed to numerous legal risks, particularly in the area of product liability, environmental risks and tax matters. The outcome of any current or future proceedings cannot be predicted with certainty. It is therefore possible that legal judgments could give rise to expenses that are not covered, or not fully covered, by insurers' compensation payments and could affect the Group financial position and results.
Instead, when it is probable that an overflow of resources embodying economic benefits will be required to settle obligations and this amount can be reliably estimated, the Group recognizes specific provision for this purpose.
The IFRS 13 establishes a fair value hierarchy which classifies the input of evaluation techniques on three levels adopted for the measurement of fair value. Fair value hierarchy attributes maximum priority to prices quoted (not rectified) in active markets for identical assets and liabilities (Level 1 data) and the non observable minimum input priority (Level 3 data). In some cases, the data used to assess the fair value of assets or liabilities could be classified on three different levels of the fair value hierarchy. In such cases, the evaluation of fair value is wholly classified on the same level of the hierarchy in which input on the lowest level is classified, taking account its importance for the assessment.
The levels used in the hierarchy are:
The following table presents the assets and liabilities which were assessed at fair value on 30 June 2015, according to the fair value hierarchical assessment level.
| (thousand Euros) | Note | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Financial securities | 18 | 182 | - | - |
| Equity investments available for sale | 17 | - | - | 6,011 |
| Other assets | - | - | - | |
| Total assets | 182 | - | 6,011 | |
| Derivative financial liabilities (IRS) | 26 | - | 2 | - |
| Liabilities to minority shareholders and earn out |
25 | - | - | 14,405 |
| Total liabilities | - | 2 | 14,405 |
No significant events have occurred subsequent to 30 June 2015.
| (thousand Euros) | 1st half 2015 | Of which related parties |
% | 1st half 2014 | Of which related parties |
% |
|---|---|---|---|---|---|---|
| Revenues | 345,483 | 43 | - | 308,499 | 19 | - |
| Oher income | 4,557 | 5,633 | ||||
| Purchases | (6,632) | (5,910) | ||||
| Personnel | (175,246) | (4,232) | 2.4% | (154,393) | (4,212) | 2.7 % |
| Services and other costs | (120,897) | (567) | 0.5% | (112,275) | (515) | 0.5% |
| Amortization, depreciation and write-downs | (4,415) | (3,583) | ||||
| Other unusual (cost)/income | - | (47) | ||||
| Operating income | 42,850 | 37,924 | ||||
| Financial income/(expenses) | 1,009 | (578) | ||||
| Income before taxes | 43,859 | 37,346 | ||||
| Income taxes | (15,192) | (14,885) | ||||
| Net income | 28,667 | 22,461 | ||||
| Non controlling interest | (467) | (393) | ||||
| Group net result | 28,200 | 22,067 |
| (thousand Euros) | 30/06/2015 | Of which related parties |
% | 31/12/2014 | Of which related parties |
% |
|---|---|---|---|---|---|---|
| Tangible assets | 15,148 | - | - | 14,976 | - | - |
| Goodwill | 134,481 | - | - | 126,763 | - | - |
| Other intangible assets | 7,222 | - | - | 6,549 | - | - |
| Equity investments | 3,911 | - | - | 3,911 | - | - |
| Financial assets | 4,289 | - | - | 4,471 | ||
| Deferred tax assets | 16,237 | - | - | 15,052 | - | - |
| Non current assets | 181,287 | - | - | 171,722 | - | - |
| Work in progress | 42,084 | - | - | 40,801 | - | - |
| Trade receivables | 270,442 | 2 | - | 285,465 | 48 | - |
| Other current assets | 33,165 | - | - | 27,661 | - | - |
| Equity investments held for sale | 2,100 | - | ||||
| Financial assets | 603 | - | - | 2,245 | - | - |
| Cash and cash equivalents | 77,535 | - | - | 88,819 | - | - |
| Current assets | 425,929 | - | - | 444,990 | - | - |
| TOTAL ASSETS | 607,216 | - | - | 616,712 | - | - |
| Share capital | 4,863 | - | - | 4,863 | - | - |
| Other reserves | 241,194 | - | - | 199,135 | - | - |
| Group net income | 28,200 | - | - | 47,909 | - | - |
| Group shareholders' equity | 274,257 | - | - | 251,908 | - | - |
| Non controlling interest | 353 | - | - | 936 | - | - |
| SHAREHOLDERS' EQUITY | 274,610 | - | - | 252,843 | - | - |
| Payables to minority shareholders and corporate transactions |
14,405 | - | - | 13,306 | - | - |
| Financial liabilities | 33,935 | - | - | 31,030 | - | - |
| Employee benefits | 24,661 | - | - | 24,454 | - | - |
| Deferred tax liabilities | 14,399 | - | - | 15.630 | - | - |
| Provisions | 14,137 | - | - | 14,772 | - | - |
| Non current liabilities | 101,537 | - | - | 99,191 | - | - |
| Financial liabilities | 22,528 | - | - | 45,092 | - | - |
| Trade payables | 78,180 | 3 | - | 83,360 | 218 | 0.3% |
| Other current liabilities | 129,557 | 2,174 | 1.7% | 135,202 | 4,348 | 3.2% |
| Provisions | 804 | 1,024 | - | - | ||
| Current liabilities | 231,069 | - | - | 264,678 | - | - |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |
332,606 | - | - | 363,869 | - | - |
| Payables to minority shareholders and corporate transactions |
607,216 | - | - | 616,712 | - | - |
| Company name | Headquarter | Group interest | |
|---|---|---|---|
| Parent company | |||
| Reply S.p.A. | Turin – Corso Francia, 110 - Italy | ||
| Subsidiaries consolidated on a line-by-line basis | |||
| @logistics Reply S.r.l. | Turin, Italy | 100.00% | |
| @logistics Reply GmbH | Monaco, Germany | 100.00% | |
| 4brands Reply GmbH & CO. KG. | Minden, Germany | 51.00% | |
| Air Reply S.r.l. (*) | Turin, Italy | 85.00% | |
| Arlanis Reply S.r.l. | Turin, Italy | 100.00% | |
| Arlanis Reply GmbH | Monaco, Germany | 100.00% | |
| Arlanis Reply AG | Potsdam, Germany | 100.00% | |
| Aktive Reply S.r.l. | Turin, Italy | 100.00% | |
| Atlas Reply S.r.l. | Turin, Italy | 100.00% | |
| Avantage Reply Ltd. | London, United Kingdom | 100.00% | |
| Avantage Reply (Belgium) Sarl | Brussels, Belgium | 100.00% | |
| Avantage Reply (Luxembourg) Sarl | Itzig, Luxemburg | 100.00% | |
| Avantage Reply (Netherlands) BV | Amsterdam, Netherland | 100.00% | |
| Avvio Reply Ltd | London, United Kingdom | 100.00% | |
| Bitmama S.r.l. | Turin, Italy | 51.00% | |
| Blue Reply S.r.l. | Turin, Italy | 100.00% | |
| Bridge Reply S.r.l. | Turin, Italy | 60.00% | |
| Business Reply S.r.l. | Turin, Italy | 100.00% | |
| Breed Reply Ltd | London, United Kingdom | 100.00% | |
| Breed Reply Investment Ltd | London, United Kingdom | 80.00% | |
| Cluster Reply S.r.l. | Turin, Italy | 100.00% | |
| Cluster Reply GmbH & CO. KG | Monaco, Germany | 100.00% | |
| Concept Reply GmbH | Monaco, Germany | 90.00% | |
| Consorzio Reply Energy | Turin, Italy | 100.00% | |
| Consorzio Reply Public Sector | Turin, Italy | 100.00% | |
| Discovery Reply S.r.l. | Turin, Italy | 100.00% | |
| e*finance consulting Reply S.r.l. | Turin, Italy | 100.00% | |
| Ekip Reply S.r.l. | Turin, Italy | 100.00% | |
| EOS Reply S.r.l. | Turin, Italy | 100.00% | |
| Forge Reply S.r.l. | Turin, Italy | 100.00% | |
| France Reply Ltd | London, United Kingdom | 100.00% |
| Hermes Reply S.r.l. | Turin, Italy | 100.00% |
|---|---|---|
| Hermes Reply Polska zo.o | Katowice, Poland | 100.00% |
| InEssence Reply GmbH | Düsseldorf, Germany | 70.00% |
| IrisCube Reply S.p.A. | Turin, Italy | 100.00% |
| Iriscube Reply SA | Savosa, Switzerland | 100.00% |
| Juice Reply S.r.l. | Turin, Italy | 100.00% |
| Leadvise Reply GmbH | Darmstad, Germany | 100.00% |
| Lem Reply S.r.l. | Turin, Italy | 100.00% |
| Like Reply S.r.l. | Turin, Italy | 100.00% |
| Live Reply GmbH | Düsseldorf, Germany | 100.00% |
| Macros Reply GmbH | Monaco, Germany | 100.00% |
| Cluster Reply Informatica LTDA. (*) | San Paolo, Brazil | 76.00% |
| Open Reply S.r.l. | Turin, Italy | 100.00% |
| Pay Reply S.r.l | Turin, Italy | 100.00% |
| Portaltech Reply Ltd. | London, United Kingdom | 100.00% |
| Portaltech Reply S.r.l. (*) | Turin, Italy | 85.00% |
| Portaltech Reply GmbH | Gutersloh, Germany | 68.00% |
| Power Reply S.r.l. | Turin, Italy | 100.00% |
| Power Reply GmbH & CO. KG | Monaco, Germany | 100.00% |
| Profondo Reply GmbH | Gutersloh, Germany | 100.00% |
| Reply Consulting S.r.l. | Turin, Italy | 100.00% |
| Reply GmbH & CO. KG. | Gutersloh, Germany | 100.00% |
| Reply do Brasil Sistemas de Informatica Ltda | Belo Horizonte, Brazil | 100.00% |
| Reply Inc. | Michigan, USA | 100.00% |
| Reply Ltd. | London, United Kingdom | 100.00% |
| Reply Belgium SA | Mont Saint Guibert, Netherland | 100.00% |
| Reply France Sarl | Paris, France | 100.00% |
| Reply Luxembourg Sarl | Sandweiler, Luxemburg | 100.00% |
| Reply Services S.r.l. | Turin, Italy | 100.00% |
| Ringmaster S.r.l. | Turin, Italy | 50.00% |
| Risk Reply Ltd | London, United Kingdom | 100.00% |
| Riverland Reply GmbH | Monaco, Germany | 100.00% |
| Santer Reply S.p.A. | Milan, Italy | 100.00% |
| Security Reply S.r.l. | Turin, Italy | 100.00% |
| Solidsoft Reply S.r.l. (*) | Turin, Italy | 85.00% |
| Solidsoft Reply Ltd. | London, United Kingdom | 100.00% |
| Square Reply S.r.l. | Turin, Italy | 100.00% |
| Storm Reply S.r.l. (*) | Turin, Italy | 80.00% |
| Storm Reply GmbH | Gutersloh, Germany | 80.00% |
|---|---|---|
| Syskoplan Reply S.r.l. | Turin, Italy | 100.00% |
| Syskoplan Reply GmbH | Zurich, Switzerland | 100.00% |
| Sytel Reply Roma S.r.l. | Turin, Italy | 100.00% |
| Sytel Reply S.r.l. | Turin, Italy | 100.00% |
| Target Reply S.r.l. | Turin, Italy | 100.00% |
| TamTamy Reply S.r.l. | Turin, Italy | 100.00% |
| Technology Reply S.r.l. | Turin, Italy | 100.00% |
| Tool Reply Gmbh | Gutersloh, Germany | 100.00% |
| Triplesense Reply GmbH | Frankfurt, Germany | 100.00% |
| Twice Reply S.r.l. | Turin, Italy | 98.00% |
| Twice Reply GmbH | Monaco, Germania | 100.00% |
| Whitehall Reply S.r.l. | Turin, Italy | 100.00% |
| Xpress Reply GmbH & CO. KG | Gutersloh, Germany | 100.00% |
| Xuccess Reply GmbH | Monaco, Germany | 100.00% |
| Xmentrics | United Kingdom | 22.22% |
|---|---|---|
| Cocoon | United Kingdom | 15.83% |
| Greeniant | Holland | 35.76% |
| Sensoria Inc. | USA | 19.99% |
(*) For these companies an option exists for the acquisition of their minority shares; the exercise of such option in future reporting periods is subject to the achievement of profitability parameters. The accounting reflects Management's best estimate as at the closing date of the half year report.
of the administrative and accounting procedures applied in the preparation of the Company's Half-year condensed financial statements at June 30, 2015.
Turin, July 31, 2015
/s/ Mario Rizzante /s/ Giuseppe Veneziano
Chairman and Chief Executive Officer Director responsible of drawing up the accounting documents
Mario Rizzante Giuseppe Veneziano
Reply S.p.A. Corso Francia, 110 10143 TURIN – ITALY Tel. +39-011-7711594 Fax +39-011-7495416 www.reply.eu
Share capital: Euro 4,863,485.64 i.v. Fiscal code and Company register of Turin no. 97579210010 VAT no. 08013390011 REA of Turin 938289
E-mail: [email protected] Tel. +39-011-7711594 Fax +39-011-7495416
E-mail: [email protected] Tel. +39-02-535761 Fax +39-02-53576444
Corso Francia, 110, 10143 Turin – Italy Tel. +39-011-7711594 Fax. +39-011-7495416 [email protected] www.reply.eu
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