CIR Group

Earnings Release • Jul 29, 2019

Informazione Regolamentata n. 0097-67-2019		Data/Ora Ricezione 29 Luglio 2019 17:55:20	MTA
Societa'	:	COFIDE
Identificativo Informazione Regolamentata	:	121118
Nome utilizzatore	:	COFIDEN03 - Speciale
Tipologia	:	REGEM; 1.2
Data/Ora Ricezione	:	29 Luglio 2019 17:55:20
Data/Ora Inizio Diffusione presunta	:	29 Luglio 2019 17:55:21
Oggetto	:	COFIDE: results for first half 2019
Testo del comunicato

Vedi allegato.

PRESS RELEASE

Board of Directors approves results of first half 2019

COFIDE GROUP: REVENUES AT € 1,362.0 MLN IN FIRST HALF 2019

(in millions of €)
	1H 2018	1H 2019*
Revenues	1,404.6	1,362.0
EBITDA	158.1	160.2
Net income	12.7	0.7
	31/12	30/6
Net financial debt before IFRS 16	323.0	368.8
Payables for leasing and rights of use IFRS 16 Net financial debt after IFRS 16		443.2 812.0

Highlights from results of 1H 2019

* As from January 1 2019 accounting standard IFRS 16 is being applied as stated in the Foreword

Milan, July 29 2019 - The Board of Directors of COFIDE-Gruppo De Benedetti S.p.A., which met today in Milan under the chairmanship of Rodolfo De Benedetti, has approved the Semi-Annual Financial Report for 2019.

COFIDE is the controlling Shareholder of CIR-Compagnie Industriali Riunite S.p.A. (CIR), the company at the head of an industrial group active mainly in the healthcare sector (KOS), in automotive components (Sogefi), and in media (GEDI Gruppo Editoriale).

Foreword

The Semi-Annual Financial Report for 2019 was drawn up with application of IFRS 16, which establishes a new way of accounting for leasing contracts, with significant effects particularly on the net debt figure and the EBITDA of the Group, which will be indicated further on in this press release.

Consolidated results

The revenues of the COFIDE group for the first half of 2019 came in at € 1,362.0 million and were down from € 1,404.6 million in the same period of 2018.

EBITDA came to € 160.2 million (11.8% of revenues) compared to € 158.1 million (11.3% of revenues) in the first half of 2018; excluding the effect of IFRS 16, EBITDA would be € 129.9 million (9.5% of revenues), down by 17.8% compared to the first half of 2018.

In first half 2019 the COFIDE group reported net income of € 0.7 million, down from € 12.7 million in the previous year. The consolidated result was a combination of the contribution of the subsidiary CIR of € 1.1 million (€ 13.5 million in first half 2018) and the loss of the parent company Cofide of € 0.4 million (- € 0.8 million in the first half of 2018).

For the first six months of 2019 the consolidated net income of CIR was € 2.0 million, down from € 24.1 million in the same period of 2018 because of the lower operating result and the write-down of the GEDI's interest in Persidera with the prospect of its disposal ( with a negative impact for the group of € 7.9 million).

The consolidated net debt of the COFIDE group at June 30 2019, excluding the financial payables for rights of use introduced by IFRS 16, totalled € 368.8 million versus € 323 million at December 31 2018. The application of IFRS 16 led to the recognition of financial payables of € 443.2 million at June 30 2019 for rights of use.

The net debt of the parent company COFIDE S.p.A. at June 30 2019 amounted to € 11.4 million, an improvement on the € 25.9 million reported at December 31 2018 due to the receipt of dividends from the subsidiary CIR. After the close of the first half, on July 10 COFIDE distributed dividends totalling € 10 million to its own shareholders.

Total shareholders' equity stood at € 1,391.7 million at June 30 2019 compared to € 1,436 million at December 31 2018.

The equity of the group was € 504.8 million at June 30 2019 versus € 515.8 million at December 31 2018. The reduction of € 11.0 million was a combination of an increase of € 0.7 million as the result for the period and a decrease caused by the buyback of own shares for € 1.5 million and by the resolution to distribute dividends of € 10.0 million.

Financial investments at June 30 2019 (of the parent company COFIDE S.p.A.) totalled € 11.5 million.

At June 30 2019 the COFIDE group had 16,709 employees (16,358 at December 31 2018).

Outlook for the year

As far as KOS is concerned, revenues are expected to grow in line with the development strategy.

As regards Sogefi and GEDI, performance in the remaining part of the year will depend on developments in the automotive market and those in the publishing market in Italy, both of which are currently characterized by an unfavourable performance and an outlook of substantial uncertainty.

For Sogefi in particular, if the evolution of the market confirms the current forecasts for the sector (a more limited decline in vehicle production in the second half of 2019 than in the first half, -0.4%), sales could be substantially in line with the previous period and the EBIT margin could be slightly better than that of the first half.

For GEDI, no change in the current market trends is expected; as an effect of the action taken and on the basis of the trend observed in the results of the second quarter, it can however be predicted that for the remaining part of the year there will be an improvement in profitability compared to the first half.

Significant events that have taken place since June 30 2019

On July 19 2019, Extraordinary General Meetings of the shareholders of CIR and COFIDE approved the proposed merger by incorporation of CIR into its parent company COFIDE. The merger will be legally and fiscally effective as from January 1 2020, subject to completion of the company procedure and the signing of the merger agreement.

For further information on the results of the subsidiary CIR, see the press release issued by the company today.

***

The executive responsible for the preparation of the company's financial statements, Giuseppe Gianoglio, hereby declares, in compliance with the terms of paragraph 2 Article 154 bis of the Finance Consolidation Act (TUF), that the figures contained in this press release correspond to the results documented in the company's accounts and general ledger

***

Contacts: Press Office Mariella Speciale Tel.: +39 02 722701 www.cofide.it

***

Alternative performance indicators

Below the meaning and content are given of the "alternative performance indicators", not envisaged by IFRS accounting standards but used in this press release to provide a better evaluation of the economic and financial performance of the COFIDE group

• EBITDA (gross operating margin): an indicator of operating performance calculated by adding "amortization, depreciation and writedowns" to the operating result;
• Consolidated net financial debt: an indicator of the financial structure of the group; it is the algebraic sum of financial receivables, securities, other financial assets and cash and cash equivalents in current assets, of bonds and other borrowings in non-current liabilities, and of bank overdrafts, bonds and other borrowings in current liabilities.

Attached are key figures from the Consolidated Statement of Financial Position and Income Statement

1. Statement of Financial Position

(in thousands of euro) ASSETS 30.06.2019 31.12.2018 NON-CURRENT ASSETS 2,669,895 2,328,789 INTANGIBLE ASSETS 1,139,049 1,139,840 TANGIBLE ASSETS 750,455 822,444 INVESTMENT PROPERTY 17,808 18,677 RIGHTS OF USE 516,803 -- INVESTMENTS CONSOLIDATED USING THE EQUITY METHOD 18,420 110,179 OTHER EQUITY INVESTMENTS 11,748 12,525 OTHER RECEIVABLES 49,620 50,655 OTHER FINANCIAL ASSETS 65,010 75,469 DEFERRED TAX ASSETS 100,982 99,000 CURRENT ASSETS 1,233,929 1,218,476 INVENTORIES 133,916 134,218 TRADE RECEIVABLES 443,415 420,969 of which with related parties (*) 1,178 690 OTHER RECEIVABLES 102,472 79,283 of which with related parties (*) 105 105 FINANCIAL RECEIVABLES 21,117 25,773 SECURITIES 36,494 33,563 OTHER FINANCIAL ASSETS 288,322 276,880 CASH AND CASH EQUIVALENTS 208,193 247,790 ASSETS HELD FOR DISPOSAL 70,180 13,599 TOTAL ASSETS 3,974,004 3,560,864

LIABILITIES AND EQUITY	30.06.2019	31.12.2018
SHAREHOLDERS' EQUITY	1,391,744	1,436,037
SHARE CAPITAL	345,998	347,523
RESERVES	44,262	51,490
RETAINED EARNINGS (LOSSES)	113,823	112,263
NET INCOME (LOSS) FOR THE PERIOD	757	4,535
EQUITY OF THE GROUP	504,840	515,811
MINORITY SHAREHOLDERS' EQUITY	886,904	920,226
NON-CURRENT LIABILITIES	1,392,333	1,046,239
BONDS	233,308	270,254
OTHER BORROWINGS	314,325	365,004
FINANCIAL PAYABLES FOR RIGHTS OF USE	443,489	--
OTHER PAYABLES	61,300	63,003
DEFERRED TAX LIABILITIES	173,357	169,864
PERSONNEL PROVISIONS	133,634	135,091
PROVISIONS FOR RISKS AND LOSSES	32,920	43,023
CURRENT LIABILITIES	1,189,927	1,069,224
BANK BORROWINGS	15,707	13,046
BONDS	41,600	113,801
OTHER BORROWINGS	252,934	144,874
FINANCIAL PAYABLES FOR RIGHTS OF USE	64,767	--
TRADE PAYABLES	505,059	497,420
of which with related parties (*)	2,612	2,238
OTHER PAYABLES	238,258	212,706
PROVISIONS FOR RISKS AND LOSSES	71,602	87,377
LIABILITIES HELD FOR DISPOSAL	--	9,364
TOTAL LIABILITIES AND EQUITY	3,974,004	3,560,864

(*) As per Consob communiqué no. 6064293 of July 28 2006

2. Income Statement

(in thousands of euro)

		1st half 2019		1st half 2018 (**)
REVENUES		1,362,006		1,404,620
CHANGE IN INVENTORIES		(1,642)		1,522
COSTS FOR THE PURCHASE OF GOODS		(484,066)		(500,153)
COSTS FOR SERVICES		(300,292)		(338,562)
of which with related parties (*)	(1,636)		(1,127)
PERSONNEL COSTS		(391,293)		(390,201)
OTHER OPERATING INCOME		18,287		14,687
of which with related parties (*)	774		963
OTHER OPERATING COSTS		(42,841)		(33,767)
AMORTIZATION, DEPRECIATION AND WRITE-DOWNS		(109,868)		(82,802)
OPERATING RESULT		50,291		75,344
FINANCIAL INCOME		4,987		4,869
of which with related parties (*) FINANCIAL EXPENSE	--	(30,068)	--	(29,408)
DIVIDENDS		14		2,767
GAINS FROM TRADING SECURITIES		3,900		6,744
LOSSES FROM TRADING SECURITIES		(1,838)		(395)
SHARE OF THE EARNINGS (LOSS) OF EQUITY INVESTMENTS
CONSOLIDATED USING THE EQUITY METHOD		161		161
ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS		4,572		(773)
RESULT BEFORE TAXES		32,019		59,309
INCOME TAXES		(15,783)		(20,780)
RESULT OF CONTINUING OPERATIONS		16,236		38,529
NET INCOME/(LOSS) OF OPERATIONS HELD FOR DISPOSAL		(13,299)		3,121
NET INCOME/(LOSS) FOR THE PERIOD INCLUDING MINORITY INTERESTS		2,937		41,650
- (NET INCOME) OF MINORITY SHAREHOLDERS		(2,180)		(28,922)
- NET INCOME (LOSS) OF THE GROUP		757		12,728
BASIC EARNINGS (LOSS) PER SHARE (in euro)		0.0011		0.0182
DILUTED EARNINGS (LOSS) PER SHARE (in euro)		0.0011		0.0182

(*) As per Consob communiqué no. 6064293 of July 28 2006

(**) It should be noted that the effect of the application of "IAS 29 "Financial Reporting in Hyperinflationary Economies", recognized for the close of the financial statements for the year ended December 31 2018, was spread over the six months of the same year.

Some values for 2018, relating to "Assets held for sale", were reclassified following application of IFRS 5 "Non-current assets held for sale and discontinued operations" in the item "Income/(Loss) from assets held for disposal",

3. Comprehensive Income Statement

(in thousands of euro)

	1st half 2019	1st half 2018 (*)
RESULT OF CONTINUING OPERATIONS	16,236	38,529
OTHER ITEMS OF THE COMPREHENSIVE INCOME STATEMENT ITEMS THAT WILL NEVER BE RECLASSIFIED TO NET INCOME (LOSS) FOR THE YEAR
- ACTUARIAL GAINS (LOSSES)	(3,894)	1,137
- TAX EFFECT ON ITEMS THAT WILL NEVER BE RECLASSIFIED TO NET INCOME (LOSS) FOR THE YEAR	661	(193)
SUB-TOTAL OF ITEMS THAT WILL NEVER BE RECLASSIFIED TO NET INCOME (LOSS) FOR THE	(3,233)	944
PERIOD ITEMS THAT COULD SUBSEQUENTLY BE RECLASSIFIED TO NET INCOME (LOSS) FOR THE PERIOD
- CURRENCY TRANSLATION DIFFERENCES OF FOREIGN OPERATIONS	48	(6,593)
- NET CHANGE IN CASH FLOW HEDGE RESERVE	407	1,679
- OTHER ITEMS OF THE COMPREHENSIVE INCOME STATEMENT	--	--
- TAX EFFECT ON ITEMS THAT COULD SUBSEQUENTLY BE RECLASSIFIED TO NET INCOME (LOSS )
FOR THE PERIOD	(97)	(403)
SUB-TOTAL OF ITEMS THAT COULD BE RECLASSIFIED TO NET INCOME (LOSS) FOR THE PERIOD	358	(5,317)
TOTAL OTHER ITEMS OF THE COMPREHENSIVE INCOME STATEMENT	(2,875)	(4,373)
TOTAL COMPREHENSIVE INCOME FROM CONTINUING OPERATIONS	13,361	34,156
TOTAL COMPREHENSIVE INCOME (LOSS) FROM OPERATIONS HELD FOR DISPOSAL	(13,299)	3,121
TOTAL COMPREHENSIVE INCOME (LOSS)	62	37,277
TOTAL COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO:
SHAREHOLDERS OF THE PARENT COMPANY	(178)	11,343
MINORITY SHAREHOLDERS	240	25,934
BASIC COMPREHENSIVE EARNINGS (LOSS) PER SHARE (IN EURO)	(0.0003)	0.0162
DILUTED COMPREHENSIVE EARNINGS (LOSS) PER SHARE (IN EURO)	(0.0003)	0.0162

(*) It should be noted that the effect of the application of "IAS 29 "Financial Reporting in Hyperinflationary Economies", recognized for the close of the financial statements for the year ended December 31 2018, was spread over the six months of the same year.

Some values for 2018, relating to "Assets held for sale", were reclassified following application of IFRS 5 "Non-current assets held for sale and discontinued operations" in the item "Income/(Loss) from assets held for disposal".

4. Cash Flow Statement

(in thousands of euro)

	1st half 2019	1st half 2018 (*)
OPERATING ACTIVITY
RESULT FROM CONTINUING OPERATIONS	16,236	38,529
ADJUSTMENTS :
AMORTIZATION, DEPRECIATION AND WRITE-DOWNS	109,868	82,802
ADJUSTMENTS TO INVESTMENTS CONSOLIDATED USING THE EQUITY METHOD	4,671	3,492
ACTUARIAL VALUATION OF STOCK OPTION/STOCK GRANT PLANS	1,862	1,842
CHANGE IN PERSONNEL PROVISIONS, PROVISIONS FOR RISKS AND LOSSES	(35,771)	(7,945)
ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS	(4,572)	773
LOSSES (GAINS) ON SALE OF FIXED ASSETS	(1,622)	(4,889)
INCREASE (REDUCTION) IN NON-CURRENT RECEIVABLES/PAYABLES	4,294	(2,848)
(INCREASE) REDUCTION IN NET WORKING CAPITAL	(19,760)	(15,171)
CASH FLOWS FROM OPERATING ACTIVITY	75,206	96,585
of which:
- interest received (paid)	(16,546)	(16,542)
- income tax payments	(19,837)	(8,533)
INVESTMENT ACTIVITY
AMOUNT PAID FOR BUSINESS COMBINATIONS	--	(20,238)
NET FINANCIAL POSITION OF ACQUIRED COMPANIES	--	1,478
(PURCHASE) SALE OF SECURITIES	3,057	(17,075)
PURCHASE OF FIXED ASSETS	(97,973)	(79,620)
CASH FLOWS FROM INVESTMENT ACTIVITY	(94,916)	(115,455)
FINANCING ACTIVITY
INFLOWS FROM CAPITAL INCREASES	--	357
OTHER CHANGES IN SHAREHOLDERS' EQUITY	(929)	(5,735)
CHANGE IN OTHER FINANCIAL RECEIVABLES	--	--
DRAWDOWN/(EXTINGUISHMENT) OF OTHER FINANCIAL PAYABLES/RECEIVABLES	5,203	46,590
BUYBACK OF OWN SHARES OF THE GROUP	(4,686)	(9,127)
DIVIDENDS PAID	(29,385)	(32,850)
CASH FLOWS FROM FINANCING ACTIVITY	(29,797)	(765)
INCREASE (REDUCTION) IN NET CASH AND CASH EQUIVALENTS FROM CONTINUING OPERATIONS	(49,507)	(19,635)
CASH FLOW/NET CASH AND CASH EQUIVALENTS AT START OF PERIOD FROM OPERATIONS HELD FOR DISPOSAL	7,249	3,121
NET CASH AND CASH EQUIVALENTS AT START OF PERIOD	234,744	245,514
NET CASH AND CASH EQUIVALENTS AT END OF PERIOD	192,486	229,000

(**)It should be noted that the effect of the application of "IAS 29 "Financial Reporting in Hyperinflationary Economies", recognized for the close of the financial statements for the year ended December 31 2018, was spread over the six months of the same year.

Some values for 2018, relating to "Assets held for sale", were reclassified following application of IFRS 5 "Non-current assets held for sale and discontinued operations" in the item "Income/(Loss) from assets held for disposal".

5. Statement of Changes in Shareholders' Equity

	Attributable to the Shareholders of the Parent Company
(in thousands of euro)	Issued capital	less own shares	Share capital	Share premium reserve		Legal reserve Fair value reserve	Translation reserve	Reserve for own shares held	Other reserves	Retained earnings (losses)	Net income (loss) for the period	Total	Minority interests	Total
BALANCE AT DECEMBER 31 2017	359.605		(9.594) 350.011	5.044	23.585	22.854	(11.935)	9.594	30.719	97.758	(2.966)	524.664	956.109	1.480.773
Adjustments at the date of initial application of IFRS 15 (net of tax)	--	--	--	--	--	--	116	--	(3.628)	--	(1)	(3.513)	(7.675)	(11.188)
BALANCE RECALCULATED AT DECEMBER 31 2017	359.605		(9.594) 350.011	5.044	23.585	22.854	(11.819)	9.594	27.091	97.758	(2.967)	521.151	948.434	1.469.585
Adjustments at the date of initial application of IFRS 9 (net of tax)	--	--	--	--	--	(24.302)	(3.677)	--	(770)	27.979	--	(770)	(1.771)	(2.541)
BALANCE RECALCULATED AT JANUARY 1 2018	359.605		(9.594) 350.011	5.044	23.585	(1.448)	(15.496)	9.594	26.321	125.737	(2.967)	520.381	946.663	1.467.044
Capital increases	--	--	--	--	--	--	--	--	--	--	--	--	928	928
Dividends to Shareholders	--	--	--	--	--	--	--	--	--	(9.800)	--	(9.800)	(23.434)	(33.234)
Retained earnings	--	--	--	--	707	--	--	--	--	(3.674)	2.967	--	--	--
Adjustment for own share transactions	--	(2.488)	(2.488)	--	--	--	--	2.488	(2.477)	--	--	(2.477)	--	(2.477)
Effects of equity changes
in subsidiaries	--	--	--	--	--	(30)	(320)	--	5.893	--	--	5.543	(11.970)	(6.427)
Comprehensive result for the period
Fair value measurement of hedging instruments	--	--	--	--	--	490	--	--	--	--	--	490	1.033	1.523
Effects of equity changes
in subsidiaries	--	--	--	--	--	--	--	--	--	--	--	--	--	--
Currency translation differences	--	--	--	--	--	--	(3.411)	--	--	--	--	(3.411)	(7.276)	(10.687)
Actuarial gains (losses)	--	--	--	--	--	--	--	--	550	--	--	550	1.300	1.850
Result for the period	--	--	--	--	--	--	--	--	--	--	4.535	4.535	12.982	17.517
Total comprehensive result for the period	--	--	--	--	--	490	(3.411)	--	550	--	4.535	2.164	8.039	10.203
BALANCE AT DECEMBER 31 2018	359.605		(12.082) 347.523	5.044	24.292	(988)	(19.227)	12.082	30.287	112.263	4.535	515.811	920.226	1.436.037
Adjustments at the date of initial application of IFRS 16 (net of tax)	--	--	--	--	--	--	--	--	--	(1.534)	--	(1.534)	(3.252)	(4.786)
BALANCE RECALCULATED AT JANUARY 1 2019	359.605		(12.082) 347.523	5.044	24.292	(988)	(19.227)	12.082	30.287	110.729	4.535	514.277	916.974	1.431.251
Capital increases	--	--	--	--	--	--	--	--	--	--	--	--	--	--
Dividends to Shareholders	--	--	--	--	--	--	--	--	(10.034)	--	--	(10.034)	(29.385)	(39.419)
Retained earnings	--	--	--	--	554	--	--	--	887	3.094	(4.535)	--	--	--
Adjustment for own share transactions	--	(1.525)	(1.525)	--	--	--	--	1.525	(1.505)	--	--	(1.505)	--	(1.505)
Effects of equity changes
in subsidiaries	--	--	--	--	--	51	(72)	--	2.301	--	--	2.280	(925)	1.355
Comprehensive result for the period
Fair value measurement of hedging instruments	--	--	--	--	--	100	--	--	--	--	--	100	210	310
Effects of equity changes
in subsidiaries	--	--	--	--	--	--	--	--	--	--	--	--	--	--
Currency translation differences	--	--	--	--	--	--	5	--	--	--	--	5	43	48
Actuarial gains (losses)	--	--	--	--	--	--	--	--	(1.040)	--	--	(1.040)	(2.193)	(3.233)
Result for the period	--	--	--	--	--	--	--	--	--	--	757	757	2.180	2.937
Total comprehensive result for the period	--	--	--	--	--	100	5	--	(1.040)	--	757	(178)	240	62
BALANCE AT JUNE 30 2019	359.605		(13.607) 345.998	5.044	24.846	(837)	(19.294)	13.607	20.896	113.823	757	504.840	886.904	1.391.744