B&C Speakers

Earnings Release • Nov 13, 2019

Informazione Regolamentata n. 0931-25-2019		Data/Ora Ricezione 13 Novembre 2019 15:53:51	MTA - Star
Societa'	:	B&C SPEAKERS
Identificativo Informazione Regolamentata	:	124692
Nome utilizzatore	:	BCSPEAKERSN01 - Pratesi
Tipologia	:	1.2
Data/Ora Ricezione	:	13 Novembre 2019 15:53:51
Data/Ora Inizio Diffusione presunta	:	13 Novembre 2019 18:00:22
Oggetto	:		B&C Speakers IIIQ2019 financials approval
Testo del comunicato

Vedi allegato.

PRESS RELEASE

B&C Speakers S.p.A.:

The Board of Directors approves the Interim Report on Operations at 30 September 2019

• Consolidated revenues equal to € 42.95 million (an increase of 4.18% compared to the € 41.23 million for the same period in 2018);
• Consolidated EBITDA equal to € 10.08 million (an increase of 17.20% compared to the € 8.60 million for the same period in 2018);
• Group profit equal to € 7 million (22.70% up from the € 5.71 million for the same period in 2018);
• Group net financial position negative and equal to € 8.53 million (negative and equal to € 4.59 million at year-end 2018).

Bagno a Ripoli (Florence), Italy, 13 November 2019 – 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 Group's Interim Report for the first nine months of 2019 in accordance with IFRS international accounting standards.

Consolidated revenues

Consolidated revenues in the first nine months of 2019 amounted to € 42.95 million, resulting in growth of 4.18% over the same period in 2018, when turnover stood at € 41.23 million.

During the period, the Group increased its turnover on the European market (+9.6% with sales of € 20.12 million) and the North American market (+15.0% with sales of € 8.45 million). In contrast, there was a decrease in sales in the Latin American market (-25.9%) due to the area's economic difficulties and a slowdown in sales in the Asian markets, particularly in China where sales for the period amounted to € 8.02 million, down 2.8% from the first nine months of 2018.

Below, is a full breakdown for the first nine of 2019 by geographic area compared with the same period in 2018 (amounts in euros):

Revenues per geographic area	III Q 2019	%	III Q 2018	%	Difference	Difference %
(values in Euro/thausand)	YTD		YTD
Latin America	3,110	7 %	4,196	10%	(1,086)	-25.9%
Europe	20,116	47%	18,359	45%	1,757	9.6%
Italy	2,981	% 7	2,807	7 %	174	6.2%
North America	8,452	20%	7,348	18%	1,104	15.0%
Middle East & Africa	273	% 1	265	1 %	8	3.2%
Asia & Pacific	8,022	19%	8,255	20%	(233)	-2.8%
Total	42,955	100%	41,230	100%	1,725	4.2%

Cost of sales

Cost of sales during the first nine months of 2019 improved their impact on revenues compared to the first nine months of 2018, going from 62.13% to 61.01%. This improvement is driven by the improvement in the margins of the subsidiary Eighteen Sound after realising the benefits of streamlining and rendering operational and production processes more efficient.

Indirect Personnel

This category refers to costs for office staff, executives and workers not associated with the production process.

The cost for indirect personnel, though increasing slightly compared to the first nine months of 2018, maintained a consistent impact on turnover, going from 6.64% to 6.70%.

Commercial expenses

This category refers to costs for commercial consultancy, advertising and marketing, travel and subsistence and other minor charges relating to the commercial sector. Commercial expenses, though showing a slight increase in absolute value compared to the first nine months of the previous year, maintained their impact on turnover, going from 2.02% to 2.05%.

Administrative and General

General and administrative costs decreased by € 740,000, reducing their impact on sales by 2.1%. The effect of this decrease is entirely due to the adoption of the new accounting standard IFRS 16 Leases, effective from 1 January 2019. For comparison, applying the previous accounting methods, these costs would have increased by € 194,000, leaving the impact on revenues substantially unchanged from the first nine months of 2018.

EBITDA and EBITDA Margin

Mainly as a result of the changes illustrated above, in the first nine months of 2019, EBITDA rose to € 10.08 million, with an increase of € 1.48 million (17.20%) compared to the same period in 2018. The € 934,000 increase in EBITDA was the result of adopting IFRS 16. Applying the previous accounting methods, EBITDA would have been € 9.14 million, still higher than € 8.60 of the corresponding period in 2018.

The EBITDA margin for the first nine months of 2019 was 23.46% of revenues (20.86% in the first nine months of the previous year). With the previous accounting standard, the EBITDA margin would have been 21.29%.

Depreciation and amortisation

Amortisation and depreciation of tangible and intangible fixed assets and usage rights were € 1.72 (€ 1.05 in the first nine months of 2018). Also in this case, the increase is entirely due to adoption of IFRS 16.

Group Net Result and Net Financial Position

The Group's net profit at the end of the first nine months of 2019 was € 7 million and represents 16.31% of consolidated revenues, with a total increase of 22.70% over the corresponding period in 2018. The effect on net profits of adopting IFRS 16 was not significant.

The Net Financial Position at the end of the first nine months of 2019 was negative and equal to € 8.53 million, against a value of € 4.59 million at year-end 2018.

	30 September	31 December
Values in Euro Thousands	2019	2018	Change %
A. Cash	5,437	3190	70%
C. Securities held for trading	7,809	6,527	20%
D. Cash and cash equivalent (A+C)	13,246	9,717	36%
F. Bank overdrafts	(835)	(643)	30%
G. Current portion of non current borrowings	(8,074)	(6,451)	25%
H. Other current financial debts	(1,244)	-
I. Current borrowings (F+G)	(10,153)	(7,095)	43%
J. Current net financial position (D+I)	3,093	2,622	18%
K. Non current borrowings	(8,344)	(7,210)	16%
M. Other non current financial debts	(3,283)	-
N. Non current borrowings	(11,628)	(7,210)	61%
O. Total net financial position (J+N)	(8,535)	(4,588)	86%

The net financial position at 30 September 2019 was negatively affected by the recognition of usage rights according to IFRS 16. In particular, the non-current net financial position includes financial liabilities related to usage rights for € 3.3 million, and the current net financial position includes financial liabilities related to usage rights for € 1.2 million. The total effect on the nine months is negative for a total of € 4.5 million.

The Group's reclassified Income Statement for the first nine months of 2019 compared with the same period in 2018 is provided below.

Economic trends - Group B&C Speakers

III Q 2019		III Q 2018
YTD		YTD	Incidence
42,955	100.00%	41,230	100.0%
(26,204)	-61.00%	(25,616)	-62.1%
16,751	39.00%	15,615	37.9%
127	0.30%	337	0.8%
(2,878)	-6.70%	(2,740)	-6.6%
(880)	-2.05%	(833)	-2.0%
(3,040)	-7.08%	(3,780)	-9.2%
10,080	23.47%	8,600	20.9%
(1,505)	-3.50%	(821)	-2.0%
(212)	-0.49%	(234)	-0.6%
0	0.00%	(3)	0.0%
8,363	19.47%	7,541	18.3%
(415)	-0.97%	(551)	-1.3%
878	2.04%	255	0.6%
8,825	20.54%	7,245	17.6%
(1,820)	-4.24%	(1,537)	-3.7%
7,005	16.31%	5,708	13.8%
0	0.00%	0	0.0%
7,005	16.31%	5,708	13.8%
76	0.18%	34	0.1%
7,080	16.48%	5,742	13.9%
		Incidence

Significant events after 30 September 2019

After the close of the quarter, there were no particularly relevant events except for the continuation of the positive trend in sales and new orders.

Business outlook

The flow of orders from customers and the data available to the management at the date of preparation of this press release suggest that 2019 will be a year of consolidation and growth, in line with the 30 September results.

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 Relations), Tel: +39 055/6572 303 Email: spratesi@bcspeakers.com

B&C Speakers S.p.A. is an international leader in the design, production, distribution and marketing of 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 30 September 2019.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Values in Euro)		30 September 2019	31 December 2018
ASSETS
Fixed assets
Tangible assets		3,057,967	3,030,360
Right of use		4,477,642	-
Goodwill		2,318,181	2,318,181
Other intangible assets		346,642	453,866
Investments in non controlled associates		50,000	50,000
Deferred tax assets		548,147	571,322
Other non current assets		627,729	628,836
	related parties	88,950	88,950
Total non current assets		11,426,308	7,052,565
Currents assets
Inventory		15,045,424	14,001,498
Trade receivables		13,713,337	12,465,753
Tax assets		562,006	1,766,925
Other current assets		8,085,776	6,929,438
Cash and cash equivalents		5,436,699	3,190,266
Total current assets		42,843,242	38,353,880
Total assets		54,269,550	45,406,445
LIABILITIES
Equity
Share capital		1,099,053	1,099,681
Other reserves		5,267,788	5,366,854
Foreign exchange reserve		591,107	500,222
Retained earnings		17,231,146	15,733,541
Total equity attributable to shareholders of the parent		24,189,094	22,700,298
Minority interest		-	0
Total equity		24,189,094	22,700,298
Non current equity
Long-term borrowings		8,344,251	7,210,266
Long-term lease liabilities		3,283,383	-
	related parties	2,432,987	-
Severance Indemnities		878,912	874,460
Provisions for risk and charges		40,831	40,831
Total non current liabilities		12,547,377	8,125,557
Current liabilities
Short-term borrowings		8,908,845	7,094,917
Short-term lease liabilities		1,243,889	-
	related parties	939,052	-
Trade liabilities		4,845,357	5,543,421
	related parties	2,845	1,715
Tax liabilities		477,711	273,534
Other current liabilities		2,057,277	1,668,718
Total current liabilities		17,533,079	14,580,590
Total Liabilities		54,269,550	45,406,445

Consolidated Statement of Comprehensive Income for the first nine months of 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(Values in Euro) Revenues Cost of sales Other revenues Cost of indirect labour Commercial expenses General and administrative expenses related parties Depreciation and amortization Writedowns Earning before interest and taxes Financial costs related parties Financial income Earning before taxes	III Q 2019 YTD III Q 2018 YTD 42,954,631 (26,203,849) 126,966 (2,878,365) (880,165)	41,230,336 (25,615,560) 337,031 (2,739,687)
		(832,599)
	(3,039,677)	(3,779,798)
	0	(697,417)
	(1,716,928)	(1,055,543)
	0	(2,773)
	8,362,613	7,541,407
	(415,391)	(551,427)
	(68,143)	-
	877,644	254,760
	8,824,866	7,244,740
Income taxes	(1,820,328)	(1,536,702)
Profit for the year (A)	7,004,538	5,708,038
Other comprehensive income/(losses) for the year that will not be reclassified in
icome statement:
Actuarial gain/(losses) on DBO (net of tax)	(15,185)	2,158
Other comprehensive income/(losses) for the year that will be reclassified in
icome statement:

Total other comprehensive income/(losses) for the year (B) 75,699 34,235 Total comprehensive income (A) + (B) 7,080,238 5,742,273 Profit attributable to: Owners of the parent 7,004,538 5,708,038 Minority interest - - Total comprehensive income atributable to: Owners of the parent 7,080,238 5,742,273 Minority interest - -

Exchange differences on translating foreign operations 90,884 32,077

Basic earning per share 0.64 0.52 Diluted earning per share 0.64 0.52