B&C Speakers

Earnings Release • Nov 13, 2020

Informazione Regolamentata n. 0931-24-2020		Data/Ora Ricezione 13 Novembre 2020 14:21:03	MTA - Star
Societa'	:	B&C SPEAKERS
Identificativo Informazione Regolamentata	:	139294
Nome utilizzatore	:	BCSPEAKERSN01 - Pratesi
Tipologia	:	3.1
Data/Ora Ricezione	:	13 Novembre 2020 14:21:03
Data/Ora Inizio Diffusione presunta	:	13 Novembre 2020 18:00:22
Oggetto	:		B&C Speakers IIIQ2020 financial results
Testo del comunicato

Vedi allegato.

COMUNICATO STAMPA

B&C Speakers S.p.A.:

The Board of Directors approves the Interim Report on Operations as at September 30, 2020

• Consolidated revenues amounted to € 24.84 79 million (a decrease of 42.2% compared to the € 42,95 million for the same period in 2019);
• Consolidated EBITDA equal to € 4.44 million (a decrease of 55.9% compared to the 10,1 million for the same period in 2019);
• Consolidated EBITDA margin of 17.9%, while it was of 23.5% at September 30, 2019;
• Group net profit amounted to € 1.78 million, down by 74.5% compared to € 7.00 million in the same period of 2019);
• Group net financial position equal to € 1.64 million (it amounted to € 5.00 million at year-end 2019);
• Continuation of the actions already taken at the beginning of the pandemic to mitigate the financial and economic effects linked to Covid19.

Bagno a Ripoli (prov. Florence), Italy, November 13, 2020 – The Board of Directors of B&C Speakers S.p.A., one of the foremost international players in the design, manufacture, distribution and marketing of professional electro-acoustic transducers, approved the abbreviated Group's Interim Report as at September 30, 2020 for the first nine months of 2020, in accordance with IFRS international accounting standards.

Revenues

Even during the summer, the Group's reference market continued to significantly suffer from the consequences of the ongoing pandemic that led to a significant decrease in the Group's turnover, which amounted to Euro 24.8 million at the end of the first nine months in 2020 and down by 42.16% compared to the same period of 2019.

In addition to this, it should be noted that the health provisions that have made possible the resumption of production activities, determine a loss of production efficiency that can be measured in about 20% of normal capacity, as a result of the provisions on interpersonal distancing and sanitation of production facilities.

The decrease in the Group's turnover compared to the first half of 2019 occurred, albeit with different timescales and methods, on all the reference markets as summarized in the chart here below.

Revenues per geographic area	III Q 2020	%	III Q 2019	%	Difference	Difference %
(values in Euro/thausand)	YTD		YTD
Latin America	1,783	7 %	3,110	7 %	(1,327)	-43%
Europe	9,846	40%	20,116	47%	(10,270)	-51%
Italy	1,867	% 8	2,981	7 %	(1,114)	-37%
North America	6,855	28%	8,452	20%	(1,597)	-19%
Middle East & Africa	337	% 1	273	1 %	64	23%
Asia & Pacific	4,157	17%	8,022	19%	(3,865)	-48%
Total	24,844	100%	42,954	100%	(18,110)	-42%

It should be noted that the Asian market, and China in particular, in the course of the quarter just passed, gave clear signs of a gradual recovery in demand, made possible by the ability to block the spread of the virus, allowing the resumption of all social aggregation activities. The geographic area that, at Group level, is best reacting to this crisis, is North America, thanks to the success achieved in the sale of car transducers and in selling to end customers, through an effective network of traditional and non-traditional resellers, which have partly balanced the loss in turnover suffered by manufacturers (OEMs).

Cost of sales

The cost of sales showed a slight worsening in its incidence on revenues in the first nine months of 2020 compared to the same period of 2019, going from 61.00% to 63.18%; this worsening is attributable to the contraction in turnover not fully balanced by the cost containment policies that the Company has put in place, including the use of the Covid redundancy fund.

Indirect Personnel

The cost for indirect personnel, although decreasing by 24.5% compared to the first nine months of 2019, has increased its incidence on turnover from 6.70% to 8.75%; this is explained by the fact that, despite the use of social safety nets, it was not possible to adjust the cost of labor to the decline in business volumes.

Commercial expenses

This category refers to costs for commercial consultancy, advertising and marketing expenses, travels and business trips and other minor charges relating to the commercial sector.

Commercial expenses show a sharp decrease in absolute value compared to the first nine months of the previous year and a significant reduction in the incidence on turnover going from 2.05% to 1.51%; this contraction is mainly explained by the cancellation of all trade shows scheduled during the year.

Administrative and General

General and administrative costs showed a significant decrease (-23% compared to the first nine months of 2019) and slightly increased their incidence on turnover, which went from

7.08% to 9.42%. In this category of costs, the cost containment measures implemented by the Company management, which will be explained in detail in a subsequent paragraph, were particularly effective.

EBITDA and EBITDA Margin

Mainly due to the dynamics shown above, EBITDA for the first nine months of 2020 was equal to Euro 4.44 million, down by 55.9% compared to the same period of 2019.

L'EBITDA margin or the first nine months of 2020 is equal to 17.87% of revenues while it amounted to 23.47% in the same period of the previous year.

Depreciation

Depreciation of tangible and intangible fixed assets and rights of use amounted to Euro 1.65 million (Euro 1.72 million in the first nine month of 2019).

Provisions

Provisions made during the period are zero, as there was no need for provisions, taking into account the risk of bad debt of trade receivables, despite the crisis triggered by the ongoing epidemic. Currently there are no situations of bad debt on the part of the Group's customers. Even the stocks do not show critical situations that require value adjustments.

EBIT

EBIT for the first nine months of 2020 amounts to Euro 2.79 million, also in sharp decline compared to the same period of 2019.

Utile Netto di Gruppo

The Group's net profit at the end of the first nine months of 2020 amounts to Euro 1.78 million, representing a percentage of 7.18% of consolidated revenues, with an overall decrease of 74.5% compared to the corresponding period of 2019.

It should be noted that the Group's net profit is also affected by the alleged valuation losses of the securities held in the portfolio, which, although constantly decreasing, amount to Euro 0.26 million at the end of the first nine months of 2020. The securities portfolio itself showed a loss of Euro 0.37 million at the end of the first half and amounted to 0.96 at the end of the first quarter.

Therefore, the securities portfolio at issue has already recovered a significant part of the loss and, given the quality of the securities that comprise it, it can be assumed it will continue towards a complete recovery by the end of the year.

The Net Financial Position at the end of the first nine months of 2020 was equal to Euro 1.64 million against a value of 5.00 at the end of the 2019 financial year.

	30 September	31 December
Values in Euro Thousands	2020	2019	Change %
A. Cash	13,167	5,277	149%
C. Securities held for trading	7,651	7,916	-3%
D. Cash and cash equivalent (A+C)	20,818	13,194	58%
F. Bank overdrafts	(0)	(314)	-100%
G. Current portion of non current borrowings	(6,660)	(6,686)	0%
H. Other current financial debts	(961)	(1,212)
I. Current borrowings (F+G)	(7,621)	(8,211)	-7%
J. Current net financial position (D+I)	13,197	4,982	165%
K. Non current borrowings	(12,414)	(6,958)	78%
M. Other non current financial debts	(2,423)	(3,031)
N. Non current borrowings	(14,837)	(9,989)	49%
O. Total net financial position (J+N)	(1,640)	(5,006)	-67%

The improvement of the Net Financial Position was mainly affected by the decision of the Shareholders' Meeting not to proceed with the distribution of the dividend initially proposed, in order to prudently maintain the balance sheet unchanged, besides a cash generation deriving from operating activities for 5,076 thousands of Euro which, despite the decrease in turnover, remained at excellent levels.

It is also recalled that the Parent Company has taken out new loans for 7.5 million (of whom 5 million are related to two loans of 2.5 million, each of whom have been guaranteed by Medio Credito Centrale SpA, pursuant to Legislative Decree 23 / 2020, art.13, paragraph 1.), reimbursable starting from 2021

Provided here below the Group's reclassified Income Statement for the first nine months of 2020, compared with the same period in 2019.

Economic trends - Group B&C Speakers

(€ thousands)	9 months	Incidence	9 months	Incidence
	2020		2019
Revenues	24,844	100.00%	42,955	100.0%
Cost of sales	(15,697)	-63.18%	(26,204)	-61.0%
Gross margin	9,148	36.82%	16,751	39.0%
Other revenues	179	0.72%	127	0.3%
Cost of indirect labour	(2,173)	-8.75%	(2,878)	-6.7%
Commercial expenses	(375)	-1.51%	(880)	-2.0%
General and administrative expenses	(2,340)	-9.42%	(3,040)	-7.1%
Ebitda	4,440	17.87%	10,080	23.5%
Depreciation of tangible assets	(1,517)	-6.11%	(1,505)	-3.5%
Amortization of intangible assets	(132)	-0.53%	(212)	-0.5%
Writedowns	0	0.00%	0	0.0%
Earning before interest and taxes (Ebit)	2,791	11.23%	8,363	19.5%
Financial costs	(832)	-3.35%	(415)	-1.0%
Financial income	226	0.91%	878	2.0%
Earning before taxes (Ebt)	2,185	8.79%	8,825	20.5%
Income taxes	(402)	-1.62%	(1,820)	-4.2%
Profit for the year	1,783	7.18%	7,005	16.3%
Minority interest	0	0.00%	0	0.0%
Group Net Result	1,783	7.18%	7,005	16.3%
Other comprehensive result	(238)	-0.96%	76	0.2%
Total Comprehensive result	1,545	6.22%	7,080	16.5%

Significant events after September 30, 2020

The company activity is still strongly impacted by the crisis generated by the spread of Covid-19, the first effect of whom still remains the strong contraction in demand which continues to be significantly lower than in the same period of the previous year.

The persistence of the ban on carrying out activities requiring proximity between people, makes it impossible to truly resume the reference market (live shows, concerts) for the moment. The Chinese market is an exception, which instead shows strong signs of recovery that have already impacted the order intake in October.

Measures aimed at mitigating the economic and financial impact of the Covid-19 emergency

In continuity with what was already made public on the occasion of the press release issued on September 10, 2020, the Company maintained the cost containment and efficient financial management actions listed at the time; it should be added that during the second half of the year, a downward adjustment of the cost of real estate rents was defined with the Parent Company, adapting them to the worsening economic situation.

Business Outlook

Given the current uncertainty about the duration and intensity of the health and socioeconomic emergency relating to Covid-19, the Company believes that today's situation will

continue until the end of the year, thus the entire year will be strongly and negatively impacted with results, in line with those of September.

The Company reserves the right to provide updates as soon as the visibility conditions allow for more accurate estimates to be drawn up.

The B&C Speakers S.p.A. Financial Reporting Manager, Francesco Spapperi, confirms—in accordance with Art. 154-bis, paragraph 2 of Italian Legislative Decree No. 58/1998—that the accounting disclosures contained in this press release are consistent with the company's accounting documents, books and records.

B&C Speakers S.p.A. Simone Pratesi (Investor Relator), Tel: 055/6572 303 Email: spratesi@bcspeakers.com

B&C Speakers S.p.A. is an international leader in designing, producing, distributing and promoting professional electro-acoustic transducers (the main components in acoustic speakers for music, commonly referred to as loudspeakers), supplied mainly to professional audio-system manufacturers (OEM). With around 160 employees, approximately 10% of whom are assigned to its Research and Development Department, B&C Speakers carries out all design, production, marketing and control activities at its offices in Florence and Reggio Emilia for the brands of the Group: B&C, 18SOUND and CIARE. Most of its products are developed according to its key customers' specifications. B&C Speakers also operates in the US and Brazil through two subsidiaries carrying out commercial activities.

Consolidated Statement of Financial Position as at September 30, 2020.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Values in Euro)		30 September 2020	31 December 2019
ASSETS
Fixed assets
Tangible assets		2,939,410	3,252,228
Right of use		3,291,287	4,179,283
Goodwill		2,318,181	2,318,181
Other intangible assets		259,238	351,582
Investments in non controlled associates		50,000	50,000
Deferred tax assets		608,650	612,160
Other non current assets		669,816	665,646
	related parties	68,392	68,392
Total non current assets		10,136,582	11,429,080
Currents assets
Inventory		13,229,559	13,492,428
Trade receivables		8,684,440	12,842,205
Tax assets		961,044	843,794
Other current assets		8,119,162	8,396,516
Cash and cash equivalents		13,166,683	5,277,278
Total current assets		44,160,888	40,852,221
Total assets		54,297,470	52,281,301
LIABILITIES
Equity
Share capital		1,088,719	1,097,829
Other reserves		4,781,777	5,043,360
Foreign exchange reserve		323,087	560,962
Retained earnings		19,951,279	18,910,616
Total equity attributable to shareholders of the parent		26,144,862	25,612,766
Minority interest		-	-
Total equity		26,144,862	25,612,766
Non current liabilities
Long-term borrowings		12,414,041	6,957,599
Long-term lease liabilities		2,423,373	3,104,267
	related parties	1,791,328	2,290,500
Severance Indemnities		924,872	891,965
Provisions for risk and charges		38,238	38,238
Total non current liabilities		15,800,524	10,992,069
Current liabilities
Short-term borrowings		6,660,130	6,999,955
Short-term lease liabilities		960,521	1,138,075
	related parties	717,773	867,957
Trade liabilities		2,707,634	4,959,909
	related parties	100,119	4,377
Tax liabilities		415,298	720,077
Other current liabilities		1,608,502	1,858,449
Total current liabilities		12,352,085	15,676,465
Total Liabilities		54,297,470	52,281,301

Consolidated Income Statement for the first nine months of 2020

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME	9 months	9 months
(Values in Euro)	2020	2019
Revenues	24,844,461	42,954,631
Cost of sales		(15,696,695) (26,203,849)
Other revenues	179,482	126,966
Cost of indirect labour	(2,172,706)	(2,878,365)
Commercial expenses	(374,793)	(880,165)
General and administrative expenses	(2,340,054)	(3,039,677)
related parties	0	0
Depreciation and amortization	(1,648,999)	(1,716,928)
Writedowns	0	0
Earning before interest and taxes	2,790,695	8,362,613
Financial costs	(831,750)	(415,391)
related parties	(55,491)	(68,143)
Financial income	225,771	877,644
Earning before taxes	2,184,715	8,824,866
Income taxes	(401,839)	(1,820,328)
Profit for the year (A)	1,782,876	7,004,538
Other comprehensive income/(losses) for the year that will not be reclassified in
icome statement:
Actuarial gain/(losses) on DBO (net of tax)	(124)	(15,185)
Other comprehensive income/(losses) for the year that will be reclassified in
icome statement:
Exchange differences on translating foreign operations	(237,875)	90,884
Total other comprehensive income/(losses) for the year (B)	(237,999)	75,699
Total comprehensive income (A) + (B)	1,544,877	7,080,238
Profit attributable to:
Owners of the parent Minority interest	1,782,876 -	7,004,538 -
Total comprehensive income atributable to:
Owners of the parent	1,544,877	7,080,238
Minority interest	-	-
Basic earning per share	0.16	0.64
Diluted earning per share	0.16	0.64