Landi Renzo

Earnings Release • Nov 10, 2016

Informazione Regolamentata n. 0915-34-2016		Data/Ora Ricezione 10 Novembre 2016 16:14:43	MTA - Star
Societa'	:	LANDI RENZO
Identificativo Informazione Regolamentata	:	81250
Nome utilizzatore	:	LANDIN02 - Marziali
Tipologia	:	IRAG 03; IRCG 02
Data/Ora Ricezione	:	10 Novembre 2016 16:14:43
Data/Ora Inizio Diffusione presunta	:	10 Novembre 2016 16:29:44
Oggetto	:	Manager appointment	9M16 Financial Results and Group General
Testo del comunicato

Vedi allegato.

Landi Renzo: Board of Directors approves Q3 2016 Results

• Revenue of Euro 131.7 million (Euro 145.6 million in Q3 2015)
• Adjusted EBITDA of Euro 2.6 million (Euro 1.9 million in Q3 2015)
• Adjusted EBIT of Euro -9.5 million (Euro -9.6 million in Q3 2015)
• Net Financial Debt of Euro 87.1 million (debt of Euro 78.3 million at 30 June 2016)
• Cristiano Musi appointed as General Manager of the Company starting from 12 December 2016

Cavriago (RE), 10 November 2016

The Board of Directors of Landi Renzo, in a meeting chaired today by Stefano Landi, approved the Interim Report at 30 September 2016 and appointed Cristiano Musi as Group General Manager.

Stefano Landi, Chairman and CEO of Landi Renzo said: "The third quarter of the current year confirms the difficulties that the industry and our Group are coping with. This requires us to continue with the economic and financial health recovery actions which, although they have so far yielded good results as showed by the increase in margins during a period of a decline in revenues, should be strengthened. It is in this light that we welcome Cristiano Musi within the Group with the role of General Manager. With his proven track record in the execution of reorganization and development plans - continues Landi – he will also give an important contribution to efficiently seize all opportunities that the alternative fuels industry continues to envisage."

Key financial highlights in Q3 2016

Revenue amounted to Euro 131.7 million (Euro 145.6 million in Q3 2015). The change refers to sales to Car Makers, as a result of the shift underway towards new Euro 6 LPG engines, as well as the slowdown in sales in the After-Market segment in several European and American countries. Albeit with lower revenue, the financial results for the first nine months of the year, excluding the impact of non-recurring costs, improved through the reduction in operating costs, mainly personnel expenses, as well as industrial costs as a result of the implementation of the organisational and production restructuring already underway in the previous year with regard to both the downsizing of the workforce and the consolidation of production and distribution units.

Adjusted EBITDA stood at Euro 2.6 million, an improvement compared with Q3 2015(Euro 1.9 million), mainly as a result of the positive effects of the cost-cutting actions undertaken by the Group. EBITDA amounted to Euro -0.8 million (Euro 1.9 million in Q3 2015): in addition to the above-mentioned factors, non-recurring costs of Euro 3.5 million, which refer to commercial agreements with Car Makers, impacted this result.

Adjusted EBIT stood at Euro -9.5 million (Euro -9.6 million in Q3 2015). EBIT saw a loss of Euro 13.0 million (a loss of Euro 9.6 million in Q3 2015) after amortisation and depreciation of Euro 12.1 million (Euro 11.5 million in Q3 2015).

Pre-tax loss stood at Euro -16.5 million (Euro -13.5 million in Q3 2015). The Net loss for the Group stood at Euro -17.8 million (Euro -11.3 million in Q3 2015).

Net Financial Debt was Euro 87.1 million compared with Euro 78.3 million in H1 2016 and Euro 59.5 million in Q4 2015, mainly as a result of the performance of cash flows from operating activities, as well as less receivables discounted through factor.

Breakdown of revenue

Segments

Gas segment revenue amounted to Euro 118.8 million, compared with Euro 131.8 million in Q3 2015. Specifically:

• revenue from sales of Vehicle Systems (LPG and Methane) came to a total of Euro 104.1 million (Euro 116.6 million in Q3 2015); the recovery in the OEM channel in the third quarter offsets only partially the fall in H1 which was due to the switch from Euro 5 to Euro 6 platforms. The change in this segment was also attributable to the fall in revenues in the After-Market channel in Q3;
• revenue from sales of Distribution Systems came to Euro 14.7 million (Euro 15.2 million in Q3 2015). Sales in this segment recorded an improvement in Q3 (+54.2% compared with the same period of the previous year) over the performance in the first half of the year, thanks even to supplies in Russia.

Revenue from Other Sectors (Anti-theft, Sound, Robotics¹, Oil & Gas and other) were Euro 13.0 million, compared with Euro 13.8 million in Q3 2015, recording a solid performance during the third quarter in spite of the economic downturn affecting sales of Oil & Gas equipment.

Regional performances

Overseas revenue totalled Euro 104.3 million, 79.2% of total revenue (Euro 117.0 million in Q3 2015; 80.4%), confirming the historically strong international focus of the Landi Renzo Group.

• Revenue in Italy stood at Euro 27.4 million, essentially similar to Q3 2015 (Euro 28.6 million) albeit in the presence of both a fall in conversions in the After Market, also on account of a high degree of competition in the sector, and a fall in new OEM bi-fuel registrations.
• In Europe revenue stood at Euro 59.9 million, down 4.1% compared with Q3 2015 (Euro 62.5 million), with a good recovery during the third quarter (+5.8% compared with Q3 2015), driven mainly by the positive performance of sales of Distribution Systems.
• In America sales figures were Euro 22.5 million, a fall of 22.9% compared with H1 2015 (Euro 29.2 million) following the continued unfavourable performance of markets in Bolivia, Argentina, Colombia and North America, only partly offset by growth in other important areas for the sector.
• In Asia and the Rest of the World revenue totalled Euro 22.0 million, down 13.4% compared with Q3 2015 (Euro 25.4 million), mainly as a result of important contracts for Distribution Systems in Asia.

Significant events after the close of Q3 2016

Consistently with the recent decisions, the Board of Directors, appointed Mediobanca - Banca di Credito Finanziario S.p.A. as financial adviser of the Group in the context of the Company's plan for the optimisation of the Group's financial structure. In that context the Company has instructed the financial adviser to arrange preliminary meetings with the main financial creditors of the Group aimed at exploring possible measures aimed at rebalancing the overall financial position of the Group on the basis of the mentioned optimisation plan.

The above activity is part of a wider project the Company is carrying out since a while, aimed at providing the Group with a more balanced financial structure in line with the industrial plan expected results.

Business outlook

With regard to business outlook, taking into account the results for the first nine months of 2016 and the uncertainties of the reference market, we can confirm what was announced during the approval of the Half-Year Financial Report at 30 June 2016, with annual sales forecasts in the range of Euro 180 and 190 million and annual EBITDA adjusted by non-recurring costs in the range of Euro 4 and 6 million.

1 The Robotics division was sold on 28 April.

Appointment of Mr Cristiano Musi as General Manager of the Company

The Board of Directors held today also approved at unanimity the appointment of Mr Cristiano Musi as General Manager of the Company starting from 12 December 2016, who, following the necessary corporate resolutions, will be also appointed as Managing Director. Mr Cristiano Musi has a vast experience in sectors adjacent to the automotive one and significant managerial skills gained in the course of his career through top roles in companies operative in various sectors. The curriculum vitae of the General Manager is available at the Company's website www.landirenzogroup.com, in the Investor Relations section.

The Executive responsible for the preparation of the corporate accounting documents, Mr Paolo Cilloni, declares, in accordance with Article 154-bis, paragraph 2 of Legislative Decree No 58 of 24 February 1998, that the accounting information contained in this press release corresponds to the underlying accounting documents, records and accounting entries.

This press release is also available on the Company's website www.landirenzogroup.com.it

This press release is a translation. The Italian version prevails.

Landi Renzo is the global leader in the LPG and Methane gas components and systems for motor vehicles sector. The Company is based in Cavriago (Reggio Emilia) and has over 60 years' experience in the sector, and is renowned for the extent of its international activities in over 50 countries, with export sales of about 80%. Landi Renzo S.p.A. has been listed on the STAR segment of the MTA Market of Borsa Italiana since June 2007.

LANDI RENZO IR TOP CONSULTING M&A and Investor Relations Officer Tel. +39 02 45473884/3 ir@landi.it ir@irtop.com Corrado Storchi Public Affairs Officer cstorchi@landi.it Tel. +39 0522.94.33

Pierpaolo Marziali Maria Antonietta Pireddu, Domenico Gentile

Press Release

Press Release 10 November 2016
(thousands of Euro)
INCOME STATEMENT	30/09/2016	30/09/2015
Revenues (goods and services)	131,539	145,453
Revenues (goods and services) - related parties	196	158
Other revenue and income	792	1,443
Cost of raw materials, consumables and goods and change in inventories	-63,459	-70,666
Costs for services and use of third party assets	-35,905	-39,185
of which non-recurring	-2,150
Costs for services and use of third party assets - related parties	-2,407	-2,339
Personnel expenses	-27,456	-31,232
Accruals, impairment losses and other operating expenses	-4,148	-1,718
of which non-recurring	-1,300
Gross Operating Profit	-848	1,914
Amortization, depreciation and impairment losses	-12,137	-11,509
Net Operating Profit	-12,985	-9,595
Financial income	81	314
Financial expenses	-3,914	-3,437
Gains (losses) on exchange rate	400	-525
Gains (losses) on equity investments consolidated using the equity method	-75	-210
Profit (Loss) before tax	-16,493	-13,453
Current and deferred taxes	-1,334	2,157
Profit (loss) of the period for the Group and minority interests, including:	-17,827	-11,296
Minority interests	-293	-145
Profit (Loss) of the period for the Group	-17,534	-11,151
Basic earnings (loss) per share (calculated on 112,500,000 shares)	-0.1559	-0.0991
Diluted earnings (loss) per share	-0.1559	-0.0991

Press Release

Press Release
10 November 2016
(thousands of Euro)
ASSETS	30/09/2016	31/12/2015	30/09/2015
Non-current assets Property, plant and equipment	31,788	35,364	34,917
Development expenditure	7,871	8,404	7,524
Goodwill	30,094	30,094	39,942
Other intangible assets with finite useful lives	20,922	22,696	23,384
Equity investments consolidated using the equity method	34	109	186
Other non-current financial assets	720	574	792
Deferred tax assets	12,629	13,779	20,047
Total non-current assets	104,058	111,020	126,792
Current assets
Trade receivables	35,522	31,340	33,202
Trade receivables - related parties	2,389	2,424	2,408
Inventories	59,283	57,528	61,416
Contract works in progress	2,979	2,904	3,744
Other receivables and current assets	12,708	16,347	15,609
Cash and cash equivalents	12,616	38,264	29,517
Total current assets	125,497	148,807	145,896
TOTAL ASSETS	229,555	259,827	272,688
(thousands of Euro)
EQUITY AND LIABILITIES	30/09/2016	31/12/2015	30/09/2015
Group shareholders' equity
Share capital	11,250	11,250	11,250
Other reserves Profit (loss) of the period	59,214 -17,534	95,428 -35,288	96,035 -11,151
Total equity attributable to the shareholders of the parent	52,930	71,390	96,134
Minority interests	157	425	575
TOTAL EQUITY	53,087	71,815	96,709
Non-current liabilities
Non-current bank loans Other non-current financial liabilities	21,579 26,363	11,935 1,468	34,990 34,093

Current assets
(thousands of Euro)
Group shareholders' equity
Share capital	11,250	11,250	11,250
Other reserves	59,214	95,428	96,035
Profit (loss) of the period	-17,534	-35,288	-11,151
Total equity attributable to the shareholders of the parent	52,930	71,390	96,134
Minority interests	157	425	575
TOTAL EQUITY	53,087	71,815	96,709
Non-current liabilities
Non-current bank loans	21,579	11,935	34,990
Other non-current financial liabilities	26,363	1,468	34,093
Provisions for risks and charges	8,565	8,059	3,902
Defined benefit plans	3,313	3,313	3,385
Deferred tax liabilities	6,311	6,691	8,172
Total non-current liabilities	66,131	31,466	84,542
Current liabilities
Bank overdrafts and short-term loans	45,119	50,797	32,266
Other current financial liabilities	6,620	33,523	268
Trade payables	44,695	56,260	45,500
Trade payables - related parties	3,705	2,091	1,909
Tax liabilities	1,737	4,990	1,603
Other current liabilities	8,461	8,885	9,891
Total current liabilities	110,337	156,546	91,437
TOTAL EQUITY AND LIABILITIES	229,555	259,827	272,688

Press Release

(thousands of Euro) STATEMENT OF CASH FLOWS 30/09/2016 30/09/2015 Cash flow from operating activities Profit (Loss) of the period -17,827 -11,296 Adjustments for: Depreciation 6,395 6,480 Amortization of intangible assets 5,542 5,029 Imperment losses on intangible assets 200 impairment loss on trade receivables 1,064 329 Net finance costs including forex exchange 3,433 3,648 Income tax for the year 1,334 -2,157 141 2,033 Changes in: inventories -1,830 699 trade and other receivables -568 -3,779 trade and other paybles -14,996 -8,722 provisions and employee benefits 199 -1,253 Cash generated from operating activities -17,054 -11,022 Interest paid -3,078 -2,292 Interest received 43 238 income taxes paid -587 -969 Net cash flow from (for) operating activities -20,676 -14,045 Cash flow from investing activities Proceeds from sale of property, plant and equipment 82 207 Affiliates consolidated using the equity method 75 -6 Acquisition of property, plant and equipment -3,329 -6,326 Acquisition of intangible assets -265 -664 Development expenditure -3,050 -3,536 Net cash used in investing activities -6,487 -10,325 Cash flow from financing activities Net proceeds from the issue of bonds 0 33,046 Bond repayments -2,040 Net repayments and loans 4,005 -10,495 Net cash from (used in) financing activities 1,965 22,551 Net increase (decrease) in cash and cash equivalents -25,198 -1,819	Press Release 10 November 2016
Cash and cash equivalents as at 1 January 38,264 31,820
Effect of exchange rate fluctuations on cash held -450 -484
Cash and cash equivalents at the end of the period 12,616 29,517