Quarterly Report • Sep 1, 2021
Quarterly Report
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Consolidated Half-Year
9 Directors' Report of the Aquafil Group
39 Notes to the Consolidated Financial Statements
67 Statement of the Principal Financial Officer and the Delegated Bodies
69 Report on the Audit of the Half-Year Directors' Report at June 30, 2021
| GIULIO BONAZZI | Chairman & Chief Executive Officer |
|---|---|
| ADRIANO VIVALDI | Executive Director |
| FABRIZIO CALENTI | Executive Director (*) |
| FRANCO ROSSI | Director |
| SILVANA BONAZZI | Director (1) |
| SIMONA HEIDEMPERGHER | Director (1) (2) (3) |
| FRANCESCO PROFUMO | Director (1) (2) |
| ILARIA MARIA DALLA RIVA | Director (1) (2) |
| MARGHERITA ZAMBON | Director (1) (2) |
| SIMONA HEIDEMPERGHER | Chairperson |
|---|---|
| FRANCESCO PROFUMO | Member |
| ILARIA MARIA DALLA RIVA | Member |
| FRANCESCO PROFUMO | Chairman |
|---|---|
| ILARIA MARIA DALLA RIVA | Member |
| MARGHERITA ZAMBON | Member |
| FABIO EGIDI | Chairman |
|---|---|
| KARIM TONELLI | Member |
| MARCO SARGENTI | Member |
STEFANO POGGI LONGOSTREVI Chairman BETTINA SOLIMANDO Statutory Auditor BEATRICE BOMPIERI Statutory Auditor
PRICEWATERHOUSECOOPERS S.p.A. – Trento (Italia), Via della Costituzione 33
The Board of Directors will remain in office until the approval of the financial statements for the year 2022 and the Board of Statutory Auditors will remain in office until the approval of the financial statements for the year 2023. The Independent Audit Firm were appointed for the period 2017/2025.
For full details on the Corporate Boards, reference should be made to the Corporate Governance and Ownership Structure Report, drawn up in accordance with Article 123-bis of Legislative Decree 58/1998 and available on the Aquafil Group website.
9 Directors' Report of the Aquafil Group at June 30, 2021
Registered Office: Via Linfano, 9 - Arco (TN) - 38062 - Italy Telephone: +39 0464 581111 Certified e-mail: [email protected] E-mail: [email protected] Website: www.aquafil.com Share capital (at approval of the Half-Year Financial Statements at June 30, 2021): • Approved: Euro 50,676,034.18 • Subscribed: Euro 49,722,417.28 • Paid-in: Euro 49,722,417.28
Tax and VAT No.: IT 09652170961 ATECO Code: 20.6 Trento Economic & Administrative Registration: TN - 228169
The Aquafil Group is one of the leading manufacturers — both in Italy and globally — of polyamide 6 (PA6) fibres and polymers. The Group is headquartered in Arco (TN) and undertakes production at 17 facilities located in Europe, the USA, China and Thailand.
The fibres produced by the Group target two main markets — textile flooring (carpets and rugs) and clothing (underwear, hosiery and technical sportswear). The polymers are mainly sold on the engineering plastics market. The Group also operates in the industrial plant sector through the German engineering company Aquafil Engineering GMBH, which specialises in the design of industrial chemical plant.
The Aquafil Group's key success factors are:
Aquafil's production and marketing activities are organized into three product lines, textile flooring yarns (Bulk Continuous Filament, or BCF), yarn for clothing and sports usage (Nylon Textile Filament, or NTF) and nylon 6 (engineering plastic) polymers, mainly targeting the plastics moulding industry.
Textile flooring yarn production has been Aquafil's core business since its foundation. The BCF line is engaged in the production, re-processing and marketing of textile flooring yarns, mainly in polyamide 6, of which partly Econyl®, for three major markets: contract services (e.g. hotels, offices, schools, nursing homes, and public spaces), automotive (e.g. car carpets, linings, coverings and upholstery) and residential. The Group has set up Carpet Centers in each of its main production markets (Europe, the USA and China), whereby specialist technicians support customers in the design and creation of new products that meet the needs of the market, developing chromatic, constructive and chemical-textile solutions for tailor-made fibres.
The NTF line is dedicated to the production of polyamide 6 (including Econyl®), polyamide 6.6 and Dryarn® fibres for underwear fabrics, for hosiery, and for use in the sports, fashion and leisure clothing sectors. The Aquafil Group constantly collaborates with its customers to continuously improve the aesthetic and performance qualities its customers demand, and prioritises uses that fit into the circular economy.
Thanks to the versatility of its polymerization plant, the Aquafil Group produces not only polyamide 6 polymers optimised for the production of fibres used in textile flooring and clothing sector yarns - but also products specially designed for use in engineering plastics production, with polymers destined directly, or following transformation, for the plastics moulding industry. The extremely broad family of products cover a variety of specifications, such as viscosity, functionalising additive content and monomers affecting physical and chemical characteristics, colourings or sector applications.
The Group operates on a global scale, offering a level of service that is in line with the demands of its various markets. Indeed, today's industrial globalization standards have been achieved through a precise strategy of technological and technical know-how sharing between the various companies of the Group, utilizing a centralized Enterprise Resource Planning (ERP) system, based on SAP ECC, which guarantees product specification compliance, technological uniformity and the real-time circulation of information.
Two of the defining features of the Aquafil Group since its inception have been the development of synchronized market penetration and the building of the logistics and industrial infrastructures required to supply products on a global scale.
International expansion has enabled the Group to develop and operate on the following markets:
On its key markets, the Aquafil Group manages sales both directly and through distributors (under exclusivity) and, for smaller markets, through individual multi-mandate agents.
The Group consolidates the following companies, with headquarters in EMEA, the United States, Asia and Oceania. The changes to the scope in the period are outlined in the Notes.
The Group's key events in the first half of the year included:
Itochu and Aquafil consider contributing to the United Nations' "Sustainable Development Goals" as a strategy "to obtain a better and more sustainable future for everyone" and the mutual support in striving to achieve these goals as a key policy over the medium-term. With the further expansion of circular nylon regeneration activities, this strategic partnership can significantly contribute to the progress of a company increasingly focused on sustainable regeneration.
The Aquafil Group constantly monitors the development of the Covid-19 outbreak across its operating locations globally, promptly adopting all prevention, control and containment measures required to protect the health of its employees and partners, such as extended remote working, access to company locations only by those strictly required for organisational processes, the changing of production layouts, personnel hygiene and cleaning/office sanitation measures, personal protective equipment, temperature monitoring using thermal cameras and social distancing rules.
The sharp focus on healthcare safety measures adopted since January 2020 at Aquafil's Chinese Jiaxing facility and extended thereafter to all Group companies has supported the effective combating of the virus and the very significant limiting of infections among employees in the workplace.
The Group has constantly monitored the real and potential impact of the Covid-19 emergency on the Group's various business activities, financial position, credit risk, liquidity risk and overall operating performance.
Specifically, it may be concluded that the continuation of the health crisis has not had significant impact on the period results, nor has it generated particular difficulties with regards to the above-mentioned risks, as outlined in greater detail in paragraph "1.5 Financial risk management" of the Notes.
At June 30, 2021, the Aquafil share price (ISIN IT0005241192) was Euro 6.65, up approx. 37% on December 30, 2020 (Euro 4.85), while the increase in the FTSE MIB index was 13% in the period.
The Aquafil share generally trended upwards during the period, between a low of Euro 4.20 (on January 25, 2021) and a high of Euro 7.02 (on June 18, 2021).
The average traded volume in the period was 94,963 shares, with a maximum daily volume (traded on February 12, 2021) of 534,513 shares and a minimum daily volume (traded on January 29, 2021) of 12,677 shares.
This is an alternative performance indicator not defined under IFRS but used by company management to monitor and assess the operating performance as not impacted by the effects of differing criteria in determining taxable income, the amount and types of capital employed, in addition to the amortisation and depreciation policies. This indicator is defined by the Aquafil Group as the net result for the year adjusted by the following components:
Calculated as EBITDA, to which the accounts "amortisation, depreciation and write-downs" and "provisions and write-downs" are added. Adjusted EBIT differs from EBIT in terms of the non-recurring components and other charges, as specified in the notes to the "Parent Company Key Financial Highlights" table.
On April 29, 2021, Consob issued "Call to attention No. 5/21" in which it highlighted that the new "ESMA Guidelines" of March 4, 2021 replaced on May 5, 2021 those of preceding Consob communications. In particular, guideline No. 39 requires that financial statement disclosure includes the following definition of net financial debt:
Application of the new definition of debt according to the above format has not resulted in any change to the Group's Net Financial Position for the period under review or for the preceding comparative periods.
| (in Euro thousands) | June 30, 2021 | June 30, 2020 |
|---|---|---|
| Profit/(loss) for the period | 8,911 | (1,935) |
| Income taxes | 2,078 | 371 |
| Investment income and charges | ||
| Amortisation, depreciation and write-downs | 23,312 | 21,754 |
| Provisions & write-downs | 51 | 1,087 |
| Financial items (*) | 4,485 | 2,848 |
| Non-recurring items (**) | 504 | 2,751 |
| EBITDA | 39,341 | 26,876 |
| Revenues | 274,700 | 222,733 |
| EBITDA Margin | 14.3% | 12.1% |
| (in Euro thousands) | June 30, 2021 | June 30, 2020 |
|---|---|---|
| EBITDA | 39,341 | 26,876 |
| Amortisation, depreciation and write-downs | (23,312) | (21,754) |
| Provisions & write-downs | (51) | (1,087) |
| Adjusted EBIT | 15,978 | 4,036 |
| Revenues | 274,700 | 222,733 |
| Adjusted EBIT margin | 5.8% | 1.8% |
(*) Comprises: (i) financial income for Euro 0.5 million, (ii) interest expense on loans and other bank charges for Euro -3.8 million, (iii) customer cash discounts for Euro -1.4 million and (iv) net exchange gains for Euro 0.3 million.
(**) Comprises: (i) non-recurring charges related to the expansion of the Aquafil Group for Euro -0.1 million, (ii) non-recurring ECONYL® development charges of Euro -0.6 million, (iii) other personnel charges of Euro -0.1 million and (iv) net income from investments of Euro 0.4 million and (v) other non-recurring charges of Euro -0.1 million. For further details, see paragraph 6.14 of the Notes to the Half-Year Financial Statements.
For an analysis of the highlights indicated above, reference should be made to subsequent paragraphs.
| (in Euro thousands) | June 30, 2021 | December 31, 2020 |
|---|---|---|
| Consolidated Shareholders' Equity | 142,539 | 126,897 |
| Net Financial Position | 184,689 | 218,736 |
| EBITDA LTM (Last Twelve Months) | 70,821 | 58,356 |
| NFP/EBITDA RATIO | 2.608% | 3.748% |
| NFP/SE RATIO | 1.296% | 1.724% |
The comments on the movements in the Net Financial Position are reported in paragraph 10 "Group balance sheet and financial position" paragraph.
The H1 2021 Income Statement compared with the previous half year is reported below:
| Consolidated Income Statement | June 30, 2021 | of which | June 30, 2020 | of which |
|---|---|---|---|---|
| (in Euro thousands) | non-recurring | non-recurring | ||
| Revenues | 274,700 | 0 | 222,733 | |
| of which related parties | 27 | 27 | ||
| Other revenues and income | 2,685 | 443 | 3,371 | 226 |
| Total revenues and other revenues | 277,385 | 443 | 226,104 | 226 |
| and income | ||||
| Cost of raw materials and changes | (135,494) | 0 | (109,477) | (58) |
| to inventories | ||||
| Service costs and rents, leases and similar | (50,100) | (305) | (42,296) | (1,036) |
| costs | ||||
| of which related parties | (212) | (211) | ||
| Personnel costs | (55,805) | (582) | (51,635) | (1,168) |
| Other costs and operating charges | (1,640) | (61) | (2,582) | (716) |
| of which related parties | (35) | (35) | ||
| Amortisation, depreciation and write-downs | (23,312) | (21,754) | ||
| Provisions & write-downs | (128) | (1,084) | ||
| Write-downs of financial assets | 77 | (3) | ||
| (receivables) | ||||
| Increase in internal work capitalised | 3,077 | 2,666 | ||
| EBIT | 14,060 | (504) | (62) | (2,751) |
| Financial income | 491 | 197 | ||
| Financial charges | (3,822) | (4,241) | ||
| of which related parties | (79) | (123) | ||
| Exchange gains/losses | 260 | 2,541 | ||
| Profit/(loss) before taxes | 10,989 | (504) | (1,564) | (2,751) |
| Income taxes | (2,078) | (371) | ||
| Profit/(loss) for the period | 8,911 | (504) | (1,935) | (2,751) |
| Minority interest net profit | 0 | 0 | ||
| Group Net Profit/(loss) | 8,911 | (504) | (1,935) | (2,751) |
| Basic earnings per share | 0.17 | (0.04) | ||
| Diluted earnings per share | 0.17 | (0.04) |
Comments on the main H1 Consolidated Income Statement accounts compared to H1 of the previous year follow:
Revenues by region and product line are presented in the following table (Euro millions) and also in percentage terms, alongside an analysis of the movements against the same period of the previous year:
| BCF (carpet yarn) |
NTF (clothing yarn) |
Polymers | Total | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in Euro millions) | H121 | H120 | Cge | Cge% | H121 | H120 | Cge | Cge% | H121 | H120 | Cge | Cge% | H121 | H120 | Cge | Cge% |
| EMEA | 90.6 | 82.4 | 8.2 | 10.0% | 41.6 | 37.4 | 4.2 | 11.3% | 35.1 | 13.5 | 21.6 160.4% | 167.3 | 133.3 | 34.1 | 25.6% | |
| North America | 41.0 | 41.9 | (1.0) | (2.3%) | 13.9 | 10.4 | 3.4 | 32.8% | 3.3 | 3.3 | (0.0) | (0.4%) | 58.1 | 55.7 | 2.4 | 4.4% |
| Asia and Oceania | 45.8 | 31.5 | 14.3 | 45.5% | 2.1 | 1.6 | 0.5 | 34.2% | 0.4 | 0.0 | 0.4 | N,A, | 48.3 | 33.1 | 15.2 | 46.0% |
| Rest of the world | 0.2 | 0.1 | 0.1 | 49.5% | 0.8 | 0.6 | 0.2 | 29.8% | 0.0 | 0 | 0.0 | N,A, | 0.9 | 0.7 | 0.2 | 33.0% |
| Total | 177.6 | 155.9 | 21.6 | 13.9% | 58.4 | 50.0 | 8.4 | 16.8% | 38.7 | 16.8 | 22.0 130.8% | 274.7 | 222.7 | 52.0 | 23.3% | |
| % | 64.6% | 70.0% | 21.3% | 22.4% | 14.1% | 7.5% |
They amounted to Euro 274.7 million, compared to Euro 222.7 million in H1 2020, up 23.3%. This increase on the one hand reflects the almost 30% rise in quantities sold - thanks in part to the excellent polymers product line performance - and on the other the lower average sales price, mainly due to the indexing of sales prices to raw material values. Specifically, a comparison between the two periods highlights:
The improvement stemmed from (a) for the BCF product line, which grew 10%, the recovery of residential and automotive sector demand, despite a lower average sales price following both lower quantities sold on the contract sector and the indexing of sales prices to raw material values, (b) for the NTF product line, which was up 11.3%, the recovery of demand particularly in the sectors related to the use of ECONYL® branded textile fibres, while (c) for the polymers product line, which grew by almost 160%, very strong end-market demand.
Other revenues and income amounted to Euro 2.7 million, compared to Euro 3.4 million in H1 2020, a decrease of Euro 0.7 million (20.6%). The reduction compared to 2020 is mainly due to the employment maintenance subsidies received in Slovenia in the same period of the previous year, as a form of economic support to compensate the reduced demand during the Covid-19 pandemic, in addition to the higher subsidies received for carpet recycling activities.
Raw materials, ancillaries and consumables totalled Euro 135.5 million, compared to Euro 109.5 million in H1 2020, an increase of Euro 26.0 million (23.8%). The rise is due both to the increased consumption of raw materials in the first half of 2021 due to the greater quantities sold and their higher unit cost.
Service costs totalled Euro 50.1 million, compared to Euro 42.3 million in H1 2020, an increase of Euro 7.8 million (18.5%). Excluding the effect of non-recurring costs, the increase would have been Euro 8.5 million. The increase in the period is entirely due to the greater quantities produced in the first half of 2021 compared to the same period of the previous year. Not considering "non-recurring costs", service costs represented 18.1% of revenues, compared to 18.5% in the same period of the previous year. The reduction in the percentage of revenues is due to the higher recovery of fixed costs deriving from the increase in quantities sold and the relative margin generated.
Personnel costs were Euro 55.8 million, compared to Euro 51.6 million in H1 2020, an increase of Euro 4.2 million (8.1%). Excluding the effects of non-recurring costs, the increase would have amounted to Euro 4.8 million, accounting for 20.1% of revenues (22.7% in H1 2020).
The increase in personnel costs is primarily due to the greater hours worked in the first half of 2021, in addition to the usual productivity and efficiency bonuses not accrued in 2020 due to limited production levels as a result of the Covid-19 pandemic.
Other costs and operating charges amount to Euro 1.6 million (Euro 2.6 million in H1 2020), decreasing Euro 0.9 million (36.5%). Excluding the effects of non-recurring costs, the decrease would have amounted to Euro 0.3 million, accounting for 0.6% of revenues (0.8% in H1 2020).
The increases for internal work amount to Euro 3.1 million (Euro 2.7 million in H1 2020), increasing Euro 0.4 million (+15.4%). The movements principally concern the increased costs for development projects incurred in the H1 2020 compared to the same period of the previous year.
EBITDA, as defined by the alternative performance indicators outlined in the key financial highlights of this report, was Euro 39.3 million, compared to Euro 26.9 million in the same period of the previous year, up Euro 12.5 million (46.4%).
The increase is due to the higher quantities sold in the period, in addition to the margin recovery actions undertaken from the end of 2019. The EBITDA Margin on revenues in H1 2021 was 14.3% (12.1% in the same period of the previous year).
Amortisation, Depreciation and Write-downs in H1 2021 amounted to Euro 23.3 million (Euro 21.8 million in the same period of the previous year), increasing by Euro 1.6 million. The increase is principally due to a number of prudent write-downs of fixed assets, in addition to the entry into service of new investments.
Other provisions in H1 2021 totalled Euro 0.1 million (Euro 1.1 million in the same period of the previous year), decreasing Euro 1.0 million. The decrease is due to the greater accrual to the risks provision in the first half of 2020.
H1 2021 EBIT reported a profit of Euro 14.1 million (compared to a loss of Euro 0.1 million in the same period of the previous year), improving Euro 14.2 million. The improvement is principally due to the increase in EBITDA, in addition to the combined effects from changes to amortisation and depreciation and lower non-recurring charges and other provisions.
H1 2021 net financial charges were Euro 3 million, compared to Euro 1.5 million in the same period of the previous year (increasing by Euro 1.5 million). The increase relates to:
(a) financial charges in the period, which decreased to Euro 3.8 million from Euro 4.2 million in the same period of the previous year, partly due to lower effective charges and partly to the early settlement cost for the Euro 5 million minibond repaid in February 2020;
(b) exchange gains in the period of Euro 0.3 million, down Euro 2.2 million on net gains of Euro 2.5 million in the same period of the previous year.
Income taxes were Euro 2.1 million, compared to Euro 0.4 million in the same period of the previous year, increasing Euro 1.7 million as a result of the higher gross profit.
The Group consolidated net result was a profit of Euro 8.9 million, compared to a loss of Euro 1.9 million in the same period of the previous year.
The interim reporting is supported by a breakdown of the consolidated result for Q2 2021 against the same period of 2020.
| Key Financial Highlights (in Euro thousands) |
Q2 2021 | Q2 2020 |
|---|---|---|
| Profit/(loss) for the period | 5,417 | (6,012) |
| Income taxes | 863 | (1,201) |
| Investment income and charges | ||
| Amortisation, depreciation and write-downs | 11,984 | 10,921 |
| Provisions & write-downs | (51) | 1,073 |
| Financial items | 2,483 | 2,501 |
| Non-recurring items | 318 | 1,378 |
| EBITDA | 21,014 | 8,660 |
| Revenues | 144,060 | 82,019 |
| EBITDA Margin | 14.6% | 10.6% |
| (in Euro thousands) | Q2 2021 | Q2 2020 |
|---|---|---|
| EBITDA | 21,014 | 8,660 |
| Amortisation, depreciation and write-downs | (11,984) | (10,921) |
| Provisions & write-downs | 51 | (1,073) |
| Adjusted EBIT | 9,082 | (3,334) |
| Revenues | 144,060 | 82,019 |
| Adjusted EBIT margin | 6.3% | (4.1%) |
| Consolidated Income Statement | Q2 2021 | of which | Q2 2020 | of which |
|---|---|---|---|---|
| (in Euro thousands) | non‑recurring | non‑recurring | ||
| Revenues | 144,060 | 0 | 82,019 | 166 |
| of which related parties | 14 | 0 | ||
| Other revenues and income | 1,859 | 439 | 2,889 | 42 |
| Total revenues and other revenues | 145,919 | 439 | 84,909 | 209 |
| and income | ||||
| Cost of raw materials and changes | (72,729) | 0 | (36,746) | (46) |
| to inventories | ||||
| Service costs and rents, leases and similar | (25,785) | (232) | (17,194) | (410) |
| costs | ||||
| of which related parties | (103) | (102) | ||
| Personnel costs | (28,490) | (471) | (23,817) | (544) |
| Other costs and operating charges | (845) | (53) | (1,436) | (587) |
| of which related parties | (17) | (17) | ||
| Amortisation, depreciation and write-downs | (11,984) | (10,921) | ||
| Provisions & write-downs | (19) | (1,070) | ||
| Write-downs of financial assets | 70 | (3) | ||
| (receivables) | ||||
| Increase in internal work capitalised | 1,852 | 1,028 | ||
| EBIT | 7,990 | (318) | (5,250) | (1,378) |
| Financial income | 254 | 151 | ||
| of which related parties | (0) | 0 | ||
| Financial charges | (1,790) | (2,035) | ||
| of which related parties | (33) | (94) | ||
| Exchange gains/losses | (174) | (78) | ||
| Profit/(loss) before taxes | 6,280 | (318) | (7,213) | (1,378) |
| Income taxes | (863) | 1,201 | ||
| Profit/(loss) for the period | 5,417 | (318) | (6,012) | (1,378) |
| Minority interest net profit | (0) | (0) | ||
| Group Net Profit/(loss) | 5,417 | (318) | (6,012) | (1,378) |
Comments on the main Q2 Consolidated Income Statement accounts compared to Q2 of the previous year follow:
Revenues by region and product line are presented in the following table (Euro millions) and also in percentage terms, alongside an analysis of the movements against the same period of the previous year:
| BCF (carpet yarn) |
NTF (clothing yarn) |
Polymers | Total | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in Euro millions) | 2Q21 | 2Q20 | Δ | Δ% | 2Q21 | 2Q20 | Δ | Δ% | 2Q21 | 2Q20 | Δ | Δ% | 2Q21 | 2Q20 | Δ | Δ% |
| EMEA | 47.2 | 30.0 | 17.2 | 57.3% | 20.3 | 12.4 | 7.8 | 63.1% | 22.6 | 5.1 | 17.6 346.2% | 90.1 | 47.5 | 42.6 | 89.6% | |
| North America | 21.7 | 17.1 | 4.6 | 27.1% | 6.6 | 3.5 | 3.1 | 89.6% | 2.1 | 1.2 | 0.9 | 78.5% | 30.4 | 21.7 | 8.7 | 39.9% |
| Asia and Oceania | 21.1 | 11.9 | 9.2 | 76.8% | 1.6 | 0.7 | 0.9 140.1% | 0.2 | 0.0 | 0.2 | N,A, | 23.0 | 12.6 | 10.3 | 81.9% | |
| Rest of the world | 0.1 | 0 | 0.1 | N,A, | 0.4 | 0.1 | 0.3 | N,A, | 0.0 | 0 | 0.0 | N,A, | 0.5 | 0.1 | 0.4 | N,A, |
| Total | 90.1 | 59.0 | 31.1 | 52.7% | 29.0 | 16.7 | 12.2 | 73.0% | 25.0 | 6.3 | 18.7 299.1% | 144.1 | 82.0 | 62.0 | 75.6% | |
| % | 62.6% | 72.0% | 20.1% | 20.4% | 17.3% | 7.6% |
They amounted to Euro 144.1 million, compared to Euro 82.0 million in Q2 2020, up 75.6%. This increase on the one hand reflects the almost 77% rise in quantities sold, thanks in part to the excellent polymers product line performance and on the other the lower average sales price, mainly due to the indexing of sales prices to raw material costs. Specifically, a comparison between the two periods highlights:
spite a lower average sales price following both lower quantities sold on the contract sector and the indexing of sales prices raw material values, (b) for the NTF product line, which was up 63.1%, the recovery of demand particularly in the sectors related to the use of ECONYL® branded textile fibres, while (c) for the polymers product line, which grew by over 300%, very strong end-market demand.
Other revenues and income amounted to Euro 1.9 million, compared to Euro 2.9 million in Q2 2020, a decrease of Euro 1.0 million (35.7%). This decrease is chiefly due to employment maintenance subsidies received in Q1 2020, mainly in Slovenia in the form of economic support to compensate reduced demand following the COVID-19 pandemic.
Raw materials, ancillaries and consumables totalled Euro 72.7 million, compared to Euro 36.7 million in Q2 2020, an increase of Euro 36.0 million (97.9%). The rise is due both to the increased consumption of raw materials in the second quarter of 2021 due to the greater quantities sold and their higher unit cost.
Service costs totalled Euro 25.8 million, compared to Euro 17.2 million in Q2 2020, an increase of Euro 8.6 million (50.0%). Excluding the effect of non-recurring costs, the increase would have amounted to Euro 8.8 million. The increase in the period is entirely due to the greater quantities
produced in the second quarter of 2021 compared to the same period of the previous year. Not considering "non-recurring costs", service costs represented 17.7% of revenues, compared to 20.5% in the same period of the previous year. The reduction in the percentage of revenues is due to the higher recovery of fixed costs deriving from the increase in quantities sold and the relative margin generated.
Personnel costs were Euro 28.5 million, compared to Euro 23.8 million in Q2 2020, an increase of Euro 4.7 million (19.6%). The percentage of revenues, net of non-recurring costs, was 19.4% (28.4% in Q2 2020). The increase in the period is entirely due to the greater quantities produced in the second quarter of 2021 compared to the same period of the previous year.
Other costs and operating charges amount to Euro 0.8 million (Euro 1.4 million in Q2 2020), decreasing Euro 0.6 million (41.2%). Excluding the non-recurring costs, the reduction would amount to Euro 0.1 million, accounting for 0.5% of revenues (1.0% in Q2 2020).
The increases for internal work amount to Euro 1.9 million (Euro 1.1 million in Q2 2020), increasing Euro 0.8 million (80.2%). The movements principally concern the increased costs for development projects incurred in the second quarter of 2020 compared to the same period of the previous year.
EBITDA, as defined by the alternative performance indicators outlined in the key financial highlights of this report, was Euro 21.0 million, compared to Euro 8.7 million in the same period of the previous year, up Euro 12.4 million (142.7%).
The increase is due to the higher quantities sold in the period, in addition to the margin recovery actions undertaken from the end of 2019. The EBITDA Margin on revenues in Q2 2021 was 14.6% (10.6% in the same period of the previous year).
Amortisation, Depreciation and Write-downs in Q2 2021 amounted to Euro 12.0 million (Euro 10.9 million in the same period of the previous year), increasing by Euro 1.1 million. The increase is principally due to a number of prudent write-downs of fixed assets, in addition to the entry into service of new investments.
Other provisions in Q2 2021 totalled Euro 0.01 million (Euro 1.1 million in the same period of the previous year), decreasing Euro 1.0 million. The decrease is due to the greater accrual to the risks provision in the second quarter of 2020.
Q2 2021 EBIT was Euro 8.0 million (compared to a loss of Euro 5.3 million in the same period of the previous year), an increase of Euro 13.2 million. The improvement is principally due to the increase in EBITDA, in addition to lower non-recurring charges.
Q2 2021 net financial charges were Euro 1.7 million, compared to Euro 2.0 million in the same period of the previous year (improving by Euro 0.3 million). The decrease is mainly due to:
(a) the lower financial charges in the period of Euro 1.8 million, compared to Euro 2 million in the same period of the previous year; (b) exchange losses in the period of Euro 0.2 million, compared to Euro 0.1 million in the same period of the previous year.
Income taxes were Euro 0.9 million, compared to gains of Euro 1.2 million in the same period of the previous year, increasing Euro 2.1 million as a result of the higher gross profit.
The Group consolidated net result was a profit of Euro 5.4 million, compared to a loss of Euro 6.0 million in the same period of the previous year.
The following table reclassifies the consolidated equity and financial position of the Group at June 30, 2021 and December 31, 2020.
| Group Balance Sheet and Financial Situation | June 30, 2021 | December 31, 2020 | Change |
|---|---|---|---|
| (in Euro thousands) | |||
| Trade receivables | 30,985 | 22,015 | 8,970 |
| Inventories | 154,364 | 150,920 | 3,444 |
| Trade payables | (97,209) | (69,168) | (28,041) |
| Tax receivables | 597 | 1,772 | (1,175) |
| Other current assets | 17,003 | 11,981 | 5,022 |
| Other current liabilities | (26,618) | (22,835) | (3,783) |
| Non-current assets held for sale | 0 | 0 | 0 |
| Net working capital | 79,121 | 94,684 | (15,563) |
| Property, plant and equipment | 226,548 | 229,495 | (2,947) |
| Intangible assets | 23,329 | 23,578 | (249) |
| Goodwill | 14,043 | 13,600 | 443 |
| Financial assets | 648 | 650 | (2) |
| Net fixed assets | 264,568 | 267,324 | (2,756) |
| Employee benefits | (5,740) | (5,969) | 229 |
| Other net assets/(liabilities) | (10,721) | (10,405) | (316) |
| Net capital employed | 327,228 | 345,633 | (18,405) |
| Cash and banks | 165,854 | 208,954 | (43,099) |
| ST bank payables and loans | (55,081) | (67,172) | 12,091 |
| M-LT bank payables and loans | (185,865) | (240,940) | 55,075 |
| M-LT bond loan | (90,380) | (90,406) | 26 |
| ST bond loan | (348) | (308) | (40) |
| Current financial receivables | 8,359 | 834 | 7,525 |
| Other financial payables | (27,229) | (29,698) | 2,469 |
| Net Financial Position | (184,689) | (218,736) | 34,047 |
| Group shareholders' equity | (142,539) | (126,897) | (15,642) |
| Minority interest shareholders' equity | (1) | (1) | 0 |
| Total shareholders' equity | (142,539) | (126,897) | (15,642) |
Net working capital amounts to Euro 79.1 million, decreasing Euro 15.6 million on Euro 94.7 million at December 31, 2020. The decrease stems from the combined effect of (a) the increase in trade payables to suppliers for Euro 28.0 million, from Euro 69.2 million to Euro 97.2 million, due to the increase in raw material procurement prices at the end of the period and the higher volumes acquired, (b) from trade receivables, which increased by Euro 9 million, from Euro 22.0 million to Euro 31.0 million, as a result of higher revenues in May and June compared to November and December 2020 and increased average sales prices, and (c) the value of inventories, whose increase was contained to Euro 3.4 million, from Euro 150.9 million to Euro 154.4 million, thanks to the major Group stock containment activities and logistical operations.
Fixed assets at June 30, 2021 amounted to Euro 264.6 million, a decrease of Euro 2.8 million compared to the previous year, due to the combined effect of:
Investments in tangible and intangible assets are outlined in detail in the Notes. No significant divestments are reported.
Shareholders' Equity increased Euro 15.6 million, from Euro 126.9 million to Euro 142.5 million, substantially due to (a) the consolidated net profit for the period of Euro 8.9 million, (b) exchange gains from the translation of the financial statements of foreign companies for Euro 6.6 million.
The Net Financial Position at June 30, 2021 was a debt position of Euro 184.7 million, compared to Euro 218.7 million at December 31, 2020, improving Euro 34.0 million. The movements are outlined in detail in the consolidated cash flow statement, indicating in particular (a) the cash flows generated from operating activities for Euro 35.2 million, (b) the cash flows generated from changes in working capital for Euro 12.7 million and (c) the impact of the intangible asset investment activities for Euro -13.9 million.
The raising of funding by the Parent Company in 2020 has placed the various Group companies in a position of extraordinary liquidity when viewed in terms of business needs and is now no longer considered necessary considering COVID-19 pandemic developments. The Group therefore in the first half of 2021 repaid in advance a number of medium-term loans totalling Euro 51.8 million, in addition to settling the ordinary amortising loans during the period for Euro 15.2 million. A breakdown of the bank debt is provided in the Notes.
The short-term credit lines granted to the Group companies were entirely available for a total amount at period-end of Euro 78.4 million, and all the relative lines remain unused. A "Shelf Facility" line was in addition available, related to the bond loan signed by the Prudential Group companies for a total amount of approx. USD 50 million.
Group liquidity at period-end of Euro 165.9 million was distributed in the current accounts of the various operating companies and, following the utilisations to repay in advance the above-mentioned loans, continues to respond to the need to contain the Group's liquidity risk with amounts in excess of the ordinary operating needs of the individual companies.
Aquafil Group operations directly involve - both in terms of production and distribution - the Group companies, which are assigned (depending on the case) the processing, special processing, production and sales phases for specific regions.
The main activities of the various group companies and principal events in H1 2021, broken down by each of the three product lines, were as follows:
The core business of the Aquafil Group is the production, re-processing and sale of yarn, mainly polyamide 6-based yarn for the higher-quality end-markets. The Group also produces and markets polyester fibres for certain textile flooring applications.
The Group companies involved in the production and sales processes for this product line are the Parent Company Aquafil S.p.A., with production site in Arco (Italy), Tessilquattro S.p.A., with production based in Cares (Italy) and in Rovereto (Italy), Aquafil SLO d.o.o., with facilities in Ljubljana, Store and Ajdovscina (Slovenia), Aquafil USA Inc. with two facilities in Aquafil Drive and Fiber Drive in Cartersville (U.S.A.), Aquafil Synthetic Fibres and Polymers Co. Ltd with facilities in Jiaxing (China), Aquafil Asia Pacific Co. Ltd with facilities in Rayong (Thailand), Aquafil UK, Ltd. with facilities in Kilbirnie (Scotland), Aquafil Japan Co. Ltd with facilities in Tokyo (Japan), the commercial companies Aquafil Benelux-France B.V.B.A., Harelbeke (Belgium) and Aquafil Oceania Pty Ltd., Melbourne (AUS).
Group commercial operations for this product line are undertaken with industrial clients, which in turn produce for the intermediate/end-consumer markets, whose sectors are principally (a) the "contract" markets (hotels, offices and large public environments), (b) internal high-end car floors and (c) residential textile flooring. Ongoing product and process technology innovation involves frequent updates to the yarns comprising the customer's collection; the research and development is carried out by the internal development centre in collaboration with developers within client companies and architectural studies upon the final users of carpets.
The NTF product line produces and reprocesses polyamide 6 and 66 fibres, Dryarn® polypropylene microfibers for men's and women's hosiery, knitwear and non-run fabrics for underwear, sportswear and special technical applications. The markets concern producers in the clothing, underwear and sportswear sectors, on which the main clothing brands operate.
The production/sale of fibres for textile/clothing use is undertaken by the companies Aquafil S.p.A., Aquafil SLO d.o.o. with facilities in Ljubljana and Senozece (Slovenia), AquafilCRO d.o.o., Oroslavje (Croatia), Aquafil O'Mara Inc., North Carolina (USA), Aquafil Tekstil Sanayi Ve Ticaret A. S., with commercial operations based in Istanbul (Turkey).
The Group produces and sells polymers and polyamide 6 for the "engineering plastics" sectors.
The polymers are principally produced/sold by the companies Aquafil S.p.A. and Aquafil SLO d.o.o., by Aquafil Synthetic Fibres and Polymers Co. Ltd. Jiaxing (China) and Aquafil USA Inc. Cartersville (USA).
A significant proportion of polyamide 6 fibres are produced using the caprolactam from regenerated ECONYL®, a logistical-production system which employs top quality caprolactam, transforming industrial recovered polyamide 6-based materials (pre-consumer) and/or that disposed of at the end of their life cycle (post-consumer).
With regards to supporting the process through polyamide 6 textile flooring materials recovered at the end of their life cycle, the process involves a number of pre-treatment phases at two newly constructed production facilities — "Aquafil Carpet Recycling" and specifically Aquafil Carpet Recycling (ACR) #1 Inc. in Phoenix, Arizona (USA) and Aquafil Carpet Recycling (ACR) #2 Inc. in Woodland, California (USA). Aquafil Carpet Collection (Phoenix (USA) activities — acquired at year-end 2020 to support the research and collection phase of end-of-life carpets for subsequent treatment in ACRs — are now fully operational.
The caprolactam monomer obtained at the Ljubljana plant from the ECONYL® regeneration process supports all three product lines — BCF, NTF and polymers — as an alternative raw material to that from fossil sources, for applications (a) in textile flooring with a strong sustainability focus, (b) in clothing and accessories, in particular at the request of the leading international fashion brands more dedicated to a concrete circular economy and (c) in the design and manufacture of innovative polyamide 6 based plastic products, instead of other plastic materials that can not be chemically regenerated.
The Slovak company Cenon S.r.o. (Slovakia) does not carry out production activities; it holds a long-term lease of land and owns buildings and non-specific plant which remain on the site after the disassembly and sale to third parties of specific chemical plant concerning the activities carried out previously.
Aquafil Engineering GmbH, Berlin (Germany) carries out industrial chemical plant design and supply for customers outside the Group and in part for Group companies.
The German tax consolidation of the earnings of Aquafil Engineering GmbH into the consolidating company Aqualeuna GmbH, which is fully operational, began in 2021.
With the other related companies to which reference is not expressly made, commercial operations are undertaken at arm's length, in consideration of the features of the goods and services rendered.
The subsidiary Aquafil India Private Ltd. (India) is not operational.
The transactions of the Aquafil Group with related parties, as defined by international accounting standard IAS 24, relating to the Half-Year Report at June 30, 2021, are presented below. The Aquafil Group undertakes commercial and financial transactions with its related companies, consisting of transactions relating to ordinary operations and at normal market conditions, taking into account the features of the goods and services provided.
The Group makes the Related Parties Transactions Policy available on its website www.aquafil.com, in the Corporate Governance section.
The Aquafil Group undertakes transactions with the following related parties:
The transactions between the Parent Company, its subsidiaries outside of the consolidation scope and the Aquafil Group concern financial transactions, commercial leases and transactions for the settlement of accounts receivable and payable arising from the tax consolidation of Aquafin Holding S.p.A., which includes, in addition to Aquafil S.p.A., the company Tessilquattro S.p.A.. The transactions are shown in the notes to the financial statements.
The transactions were executed at market conditions; for a breakdown of the income statement and balance sheet amounts generated by related party transactions included in the Group Half-Year Financial Report at June 30, 2021, reference should be made to the Explanatory Notes.
With the exception of that indicated above there were no other transactions or contracts with related parties which, with regard to materiality upon the financial statements, may be considered significant in terms of value or conditions.
Aquafil has a standing Research & Development unit that manages and oversees all product and process innovation applied to raw BCF yarns and dyed solutions, NTF yarns, PA6 polymers and the ECONYL® process and the continued development of the bio caprolactam production process.
Technological research, development and innovation for H1 2021 concerned the main stages of production and the materials used, from the production inputs to the subsequent by-products of polymerisation, spinning, reprocessing and, for ECONYL®, regeneration and recycling of materials.
More specifically, R&D led to actions regarding efficiency, performance, product functioning, eco-design, recycling and reuse, the use of natural pigments, the study of micro-plastics, the development of polymerisation processes, and developments in areas of product application, taking advantage of outside contributions coming in the form of market input, new technologies, new solutions and new materials, and the use of solutions recommended by qualified research partners.
A number of projects — due to their complexity and difficulty — last many years and are undertaken in collaboration with outside partners; other less complex projects present results in a short timeframe.
Technological research, development and innovation that continued in H1 2021 concerned numerous projects, some of which began in prior years. The main projects are listed below:
"organic caprolactam" project in collaboration with Genmatica Inc., in San Diego, California (USA). This project called for finalisation of the first production of the first batch of organic 6-ACA in quantities close to a tonne and the subsequent conversion into organic caprolactam. Subsequently, the focus was on the scale-up to a pre-industrial level, with a system (representative of industrial scale) dedicated to transformation of intermediate organic 6-ACA into bio-caprolactam to be constructed for the AquafilSLO plant in Ljubljana in 2021; all the steps of the innovative process developed with Genomatica Inc. have been validated on an industrial scale and the project for the construction of the plant dedicated to bio caprolactam has been launched with the completion of engineering activities also on the basis of the bio intermediate that will be produced by Genomatica Inc. through a European subcontractor; activities are underway (authorisations, purchase of equipment and materials, various assemblies) for its construction in a specific area in AquafilSLO, in Ljubljana; the start-up of the plant is expected by the end of 2021 and will allow the obtaining of tens of tons of bio caprolactam in repeated production campaigns whose transformation into bio Nylon 6 will be used, within the Effective project, for the final validation of prototypes of carpets and circular knitted fabrics, providing positive indications about the workability of nylon obtained through this new process;
research and development of processes aimed at the chemical recovery of polymers from polycondensation and efforts to increase the efficiency of polymerisation processes and of new polymerisation technologies in order to enhance the mechanical properties of the polymers;
The following is a list of patents that have been filed:
Prior to the conclusion of 30 months from the priority date (June 28, 2021), the various countries/regions were assessed for patent extension based on their potential market for caprolactam/nylon 6 and the potential availability of the new renewable source of the bio raw material. The final selection was addressed to the following countries:
Aquafil sent the application to the Italian Patent Office and the European Patent Office respectively. In non-EU countries/regions, the patent application has been submitted to the various National Offices of the above-mentioned regions and the relevant assessments are pending;
(h) as part of the development of the PET recycling process, a patent application has been filed in Italy for new depolymerization catalysts with a lower environmental impact than those currently known and in use. The patent is owned by Aquafil S.p.A. alone with joint inventors Aquafil and the Department of Industrial Engineering of the University of Padua.
The application was filed on May 17, 2021.
Within 12 months, after the receipt of the Opinion that the Italian Patent Office provides through the European Patent Office, the filing will also proceed under the PCT, with validity for the 152 signatory countries to the Patent Cooperation Treaty.
Without prejudice to that set out in paragraph 5 above regarding the changes made to the composition of the corporate boards in the period, for further information on corporate governance, reference should be made to the Corporate Governance and Ownership Structure Report, prepared in accordance with Article 123-bis of Legislative Decree 58/1998, made available at the registered office of the Company and on the Group website (http://ir.aquafil.com/ita/bilanci-relazioni).
The company is not subject to management and co-ordination pursuant to Article 2497 and subsequent of the Civil Code.
The Parent Company Aquafin Holding S.p.A. does not exercise management and co-ordination over Aquafil as substantially operating as a holding company, without an independent organisational structure and, consequently, de facto does not exercise direct management over Aquafil S.p.A..
All of the Italian direct or indirect subsidiaries of Aquafil S.p.A. have met the publication requirements under Article 2497-bis of the Civil Code, indicating Aquafil S.p.A. as the company exercising management and co-ordination.
At June 30, 2021, Aquafil S.p.A. and the other companies of the Group do not own and did not own during the period treasury shares and/or shares of parent companies, in its portfolio or through trust companies or third parties, and no share purchases or sales were made.
Aquafil S.p.A. is the consolidating company of the group taxation procedure, as chosen by Aquafin Holding S.p.A. for the 2021-2023 three-year period in accordance with Articles 117 to 128 of Presidential Decree 917/1986, as amended by Legs. Decree No. 344/2003.
The company Tessilquattro S.p.A. is a consolidated company within the Group taxation procedure, in accordance with the option exercised by Aquafin Holding S.p.A. as consolidating company for the three-year period 2019-2021.
In preparing the financial statements of these companies, the effects of the transfer of the tax positions due to the consolidated tax accounts were taken into account; in particular, the subsequent accounts receivable from/payable to the consolidating company were recognised.
The Italian companies of the Aquafil Group have supplemented the organisation, management and control model as per Legislative Decree no. 231 of June 8, 2013, including the conduct code and operating procedures, as updated by: (a) Law No. 3 of January 9, 2019, "Measures to combat offenses against the public sector, as well as on the statute of limitations and the transparency of political parties and movements", with particular reference to the new offense as per Article 346-bis of the Italian Criminal Code — Exercising of undue influence, introduced by Article 25 of Legislative Decree 231/01; (b) Law no. 157 of December 19, 2019, "Conversion into law, with amendments, of Legislative Decree no. 124 of 26 October 2019, containing urgent provisions on tax matters and for unavoidable needs", which introduces tax offences into the catalogue as per Legislative Decree No. 231/01; (c) Legislative Decree no. 75 of July 14, 2020, "Implementation of Directive (EU) 2017/1371 on the fight against fraud to the EU's financial interests by means of criminal law".
In order to conduct impairment tests for the purpose of verifying the recoverability of assets, the Parent Company has adopted specific, formal procedures as approved by the Board of Directors on February 15, 2019.
With regards to this matter, it should be noted that the German tax authorities notified Aqualeuna GmbH on July 9, 2021 of the initiation of a tax audit for the periods 2018-2019, which is expected to begin in September 2021, for which, in the event of the consideration of taxable income in Germany, it is expected that the same international joint-audit procedure already tested between the two administrations for the 2016 tax year may be applied, or in any case other possible procedures that are considered to make it possible to recover any amounts arising in Germany from taxation in Italy.
The platform brings together, in a single digital space, various types of products that all have ECONYL® — the ingredient they are made of — in common, and targets end-consumers who are more keenly aware of the importance of circularity.
The platform also hosts a wide variety of content to responsibly inform consumers and build their knowledge on key topics related to sustainability, climate change and more generally the daily actions that everyone can responsibly take to help our planet.
The expected alleviation of the Covid-19 pandemic and of the benefits from the extension of the vaccine campaign indicate that global economic growth — which has already been evident over recent months both at domestic and European level — may continue in the second quarter of 2021, despite the ongoing uncertainties and changing environment following the outbreak of new variants and the difficulty in administering vaccinations in less-developed countries.
Forecast Group revenues and customer orders confirm the uptrend in H1 2021 across the various regions and for all three product areas.
For 2021, based on the above and on information currently available, and assuming H1 trends in the overall landscape continue, the H2 outlook for the Group is as follows:
(a) revenues and earnings in line with H1, taking account of the normal development of business in the second half of the year;
(b) improvement in the NFP/EBITDA ratio compared to the end of 2020, in view both of better profitability and an improved net financial position.
Arco, September 1, 2021
for the Board of Directors The Chairman Mr. Giulio Bonazzi
With our yarns, beautiful and comfortable carpets are being produced everyday. Thanks to our regenerated ECONYL® yarn, these carpets are sustainable and can be utilized for many generations to come.
CONSOLIDATED FINANCIAL STATEMENTS
| (in Euro thousands) | Note | June 30, 2021 | December 31, 2020 |
|---|---|---|---|
| Intangible assets | 5.1 | 23,329 | 23,578 |
| Goodwill | 14,043 | 13,600 | |
| Property, plant & equipment | 5.2 | 226,548 | 229,495 |
| Financial assets | 5.3 | 648 | 650 |
| of which parent companies, related parties | 313 | 313 | |
| Other assets | 5.4 | 1,636 | 1,336 |
| Deferred tax assets | 5.5 | 11,818 | 14,563 |
| Total non-current assets | 278,022 | 283,223 | |
| Inventories | 5.6 | 154,364 | 150,920 |
| Trade receivables | 5.7 | 30,985 | 22,015 |
| of which parent companies, related parties | 29 | 66 | |
| Financial assets | 5.3 | 8,359 | 834 |
| Tax receivables | 5.8 | 597 | 1,772 |
| Other assets | 5.9 | 17,003 | 11,981 |
| of which parent companies, related parties | 3,649 | 3,187 | |
| Cash and cash equivalents | 5.10 | 165,854 | 208,954 |
| Total current assets | 377,162 | 396,475 | |
| Total assets | 655,184 | 679,698 | |
| Share capital | 5.11 | 49,722 | 49,722 |
| Reserves | 5.11 | 83,905 | 76,579 |
| Group net result | 5.11 | 8,911 | 595 |
| Total Parent Company share. equity | 142,539 | 126,897 | |
| Minority interest net equity | 5.11 | 1 | 1 |
| Minority interest net profit | 5.11 | 0 | 0 |
| Total consolidated net equity | 142,539 | 126,897 | |
| Employee benefits | 5.12 | 5,740 | 5,969 |
| Financial liabilities | 5.13 | 294,739 | 352,560 |
| of which parent companies, related parties | 4,056 | 5,406 | |
| Provisions for risks and charges | 5.14 | 1,762 | 1,506 |
| Deferred tax liabilities | 5.5 | 9,824 | 11,761 |
| Other liabilities | 5.15 | 11,066 | 11,848 |
| Total non-current liabilities | 323,132 | 383,644 | |
| Financial liabilities | 5.13 | 64,163 | 75,964 |
| of which parent companies, related parties | 3,140 | 3,361 | |
| Current tax payables | 5.17 | 1,522 | 1,189 |
| Trade payables | 5.18 | 97,209 | 69,168 |
| of which parent companies, related parties | 336 | 403 | |
| Other liabilities | 5.15 | 26,618 | 22,835 |
| of which parent companies, related parties | 230 | 230 | |
| Total current liabilities | 189,512 | 169,157 | |
| Total shareholders' equity & liabilities | 655,184 | 679,698 |
| Note | June 30, 2021 | of which | June 30, 2020 | of which | |
|---|---|---|---|---|---|
| (in Euro thousands) | non-recurring | non-recurring | |||
| Revenues | 6.1 | 274,700 | 0 | 222,733 | |
| of which related parties | 27 | 27 | |||
| Other revenues and income | 6.2 | 2,685 | 443 | 3,371 | 226 |
| Total revenues and other revenues | 277,385 | 443 | 226,104 | 226 | |
| and income | |||||
| Cost of raw materials and changes to | 6.3 | (135,494) | 0 | (109,477) | (58) |
| inventories | |||||
| Service costs and rents, leases and similar | 6.4 | (50,100) | (305) | (42,296) | (1,036) |
| costs | |||||
| of which related parties | (212) | (211) | |||
| Personnel costs | 6.5 | (55,805) | (582) | (51,635) | (1,168) |
| Other costs and operating charges | 6.6 | (1,640) | (61) | (2,582) | (716) |
| of which related parties | (35) | (35) | |||
| Amortisation, depreciation and write-downs | 6.7 | (23,312) | (21,754) | ||
| Provisions & write-downs | 6.8 | (128) | (1,084) | ||
| Write-downs of financial assets | 6.8 | 77 | (3) | ||
| (receivables) | |||||
| Increase in internal work capitalised | 6.9 | 3,077 | 2,666 | ||
| EBIT | 14,060 | (504) | (62) | (2,751) | |
| Financial income | 6.10 | 491 | 197 | ||
| Financial charges | 6.11 | (3,822) | (4,241) | ||
| of which related parties | (79) | (123) | |||
| Exchange gains/losses | 6.12 | 260 | 2,541 | ||
| Profit/(loss) before taxes | 10,989 | (504) | (1,564) | (2,751) | |
| Income taxes | 6.13 | (2,078) | (371) | ||
| Profit/(loss) for the period | 8,911 | (504) | (1,935) | (2,751) | |
| Minority interest net profit | 0 | 0 | |||
| Group Net Profit/(loss) | 8,911 | (504) | (1,935) | (2,751) | |
| Basic earnings per share | 6.15 | 0.17 | (0.04) | ||
| Diluted earnings per share | 6.15 | 0.17 | (0.04) | ||
| (in Euro thousands) | Note | June 30, 2021 | June 30, 2020 |
|---|---|---|---|
| Profit/(loss) for the period | 5.11 | 8,911 | (1,935) |
| Actuarial gains/(losses) | 23 | (10) | |
| Tax effect from actuarial gains and losses | (6) | 2 | |
| Other income items not to be reversed to income statement | 18 | (8) | |
| in subsequent periods | |||
| Currency difference from conversion of financial statements | 6,578 | (3,547) | |
| in currencies other than the Euro | |||
| Other income items to be reversed to income statement | 6,595 | (3,547) | |
| in subsequent periods | |||
| Total comprehensive income | 15,507 | (5,490) | |
| Minority interest comprehensive income | 0 | 0 | |
| Group comprehensive income | 15,506 | (5,490) |
| (in Euro thousands) | Note | June 30, 2021 | June 30, 2020 |
|---|---|---|---|
| Operating activities | |||
| Profit/(loss) | 5.11 | 8,911 | (1,935) |
| of which related parties: | (299) | (342) | |
| Income taxes | 6.13 | 2,078 | 371 |
| Financial income | 6.10 | (491) | (197) |
| Financial charges | 6.11 | 3,822 | 4,241 |
| of which related parties: | (79) | 123 | |
| Exchange gains/(losses) | 6.12 | (260) | (2,541) |
| Asset disposal (gains)/losses | (77) | (72) | |
| Net provisions | 6.8 | 128 | 1,084 |
| Net provisions (Doubtful debt provision) | 6.8 | (77) | 3 |
| Amortisation, depreciation and write-downs of tan. assets | 6.7 | 23,312 | 21,761 |
| Non-monetary change IFRS 16 | 5.2 | (2,159) | (1,206) |
| Cash flow from operating activities before working capital changes | 35,187 | 21,508 | |
| Decrease/(Increase) in inventories | 5.6 | (3,444) | 16,571 |
| Increase/(Decrease) in trade payables | 5.16 | 28,041 | (11,287) |
| of which related parties: | (67) | 279 | |
| Increase/(Decrease) in trade receivables | 5.7 | (8,892) | 2,531 |
| of which related parties: | 37 | (29) | |
| Changes to assets and liabilities | 811 | (3,640) | |
| of which related parties: | (462) | (191) | |
| Net paid financial charges | (3,331) | (4,044) | |
| Income taxes paid | 0 | 610 | |
| Utilisation of provisions | (464) | (571) | |
| Cash flow generated/(absorbed) from operating activities (A) | 47,908 | 21,678 | |
| Investing activities | |||
| Investments in tangible assets | 5.2 | (11,871) | (12,120) |
| Disposal of tangible assets | 5.2 | 162 | 584 |
| Investments in intangible assets | 5.1 | (2,166) | (2,979) |
| Disposal of intangible assets | 5.1 | 13 | 167 |
| Cash flow generated by investing activities (B) | (13,862) | (14,348) | |
| Financing activities | |||
| Drawdown non-current bank loans and borrowings | 5.13 | 0 | 45,059 |
| Repayment non-current bank loans and borrowings | 5.13 | (67,152) | (7,991) |
| Net changes in current financial assets and liabilities | 5.13 | (9,993) | (2,024) |
| of which related parties: | (1,571) | (2,400) | |
| Cash flow from generated/(absorbed) by financing activities (C) | (77,145) | 35,044 | |
| Net cash flow in the period (A) + (B) + (C) | (43,100) | 42,375 | |
| Opening cash and cash equivalents | 5.10 | 132,774 | 90,400 |
| Closing cash and cash equivalents | 5.10 | 165,854 | 132,774 |
| Share | Legal | Translation | Share | Listing cost | ||
|---|---|---|---|---|---|---|
| capital | reserve | reserve | premium | reserve | ||
| (in Euro thousands) | reserve | |||||
| December 31, 2019 | 49,723 | 517 | (9,514) | 19,975 | (3,287) | |
| Sale minority interest | ||||||
| Other changes | ||||||
| Allocation of prior-year result | 148 | |||||
| Distribution dividends | ||||||
| Share capital increase | ||||||
| Profit/(loss) for the period | ||||||
| Actuarial gains/(losses) employee benefits | ||||||
| Translation difference | (3,547) | |||||
| Total comprehensive income/(loss) for the period | (3,547) | |||||
| June 30, 2020 | 49,723 | 665 | (13,061) | 19,975 | (3,287) | |
| December 31, 2020 | 49,723 | 665 | (25,180) | 19,975 | (3,287) | |
| Sale minority interest | ||||||
| Other changes | ||||||
| Allocation of prior-year result | 35 | |||||
| Distribution dividends | ||||||
| Share capital increase | ||||||
| Profit/(loss) for the period | ||||||
| Actuarial gains/(losses) employee benefits | ||||||
| Translation difference | 6,578 | |||||
| Total comprehensive income/(loss) for the period | 6,578 | |||||
| June 30, 2021 | 49,723 | 700 | (18,602) | 19,975 | (3,287) |
| Total consol. share. equity |
Min. interest share. equity |
Total Parent Company share. equity |
Net result | Retained earnings |
IAS 19 reserve |
FTA reserve |
|---|---|---|---|---|---|---|
| 142,336 | 1 | 142,335 | 9,005 | 78,956 | (649) | (2,389) |
| 0 | 0 | |||||
| (235) | (235) | (235) | ||||
| 0 | (9,005) | 8,857 | ||||
| 0 | 0 | |||||
| 0 | 0 | |||||
| (1,935) | (1,935) | (1,935) | ||||
| (8) | (8) | (8) | ||||
| (3,547) | (3,547) | |||||
| (5,490) | (5,490) | (1,935) | (8) | |||
| 136,609 | 1 | 136,608 | (1,935) | 87,577 | (657) | (2,389) |
| 126,897 | 1 | 126,897 | 595 | 87,787 | (989) | (2,389) |
| 0 | 0 | |||||
| 137 | 137 | 137 | ||||
| (0) | (0) | (595) | 560 | |||
| 0 | 0 | |||||
| 0 | 0 | |||||
| 8,911 | 8,911 | 8,911 | ||||
| 18 | 18 | 18 | ||||
| 6,578 | 6,578 | |||||
| 15,506 | 15,506 | 8,911 | 18 | |||
| 142,539 | 1 | 142,538 | 8,911 | 88,347 | (971) | (2,389) |
The yarn produced by the NTF division has multiple applications from sportswear to underwear, The leading brands in this division are Dryarn® and ECONYL®
39 Notes to the Consolidated Financial Statements at June 30, 2021
Aquafil S.p.A. ("Aquafil", "Company" or "Parent company" and, together with its subsidiaries, "Group" or "Aquafil Group") is a company listed on the Italian Stock Exchange, STAR Segment since December 4, 2017, resulting from the business combination through merger by incorporation of Aquafil S.p.A. (pre-merger), founded in 1969 in Arco (TN) and renowned for the production and distribution of fibres and polymers, principally polyamide, into Space3 S.p.A., as an Italian registered Special Purpose Acquisition Company (SPAC), with efficacy from December 4, 2017.
The majority shareholder of Aquafil S.p.A. is Aquafin Holding S.p.A., with registered office in Via Leone XIII No. 14, 20145 Milan, Italy, which does not exercise management and co-ordination activities. The ultimate Parent Company, which draws up specific consolidated financial statements, is GB&P S.r.l. with registered office in Via Leone XIII No. 14, 20145 Milan, Italy.
The Aquafil Group produces and sells nylon on a global scale by transforming it into three different product lines represented by:
(i) BCF fibre (bulk continuous filaments), or synthetic yarns mainly intended for the textile flooring sector and used in "contract" segments (hotels, airports, offices, etc.), residential buildings and the automotive market;
(ii) NTF fibre (nylon textile filaments), or synthetic yarns mainly intended for the clothing sector (sportswear, classic, technical or specialist apparel); (iii) nylon 6 polymers, mainly targeting the engineering plastics sector for subsequent use in the moulding industry.
The above product lines are also sold on the market under the ECONYL® brand, which offers the Group's products obtained by regenerating industrial waste and end-of-life products.
The Group enjoys a consolidated presence in Europe, the United States and Asia through its subsidiaries
The consolidated half-year report of the Aquafil Group at June 30, 2021 and for the six months ended at that date (hereafter the "Half-Year Financial Report") was prepared in accordance with Article 154-ter paragraph 2 of Legislative Decree no. 58/98 — CFA — and subsequent amendments and supplements and comprises the following documents:
These consolidated financial statements (hereafter the "financial statements") include the comparative figures, as per IAS 34, i.e. (i) the figures at December 31, 2020 for the consolidated balance sheet (ii) the figures relating to H1 2020 for the consolidated income statement, the comprehensive consolidated income statement, the consolidated cash flow statement and the movements in consolidated shareholders' equity pursuant to IAS 34.
The Half-Year Financial Report was prepared in Euro, the functional currency of the Group. The amounts reported in the financial statements and in the accompanying tables in the explanatory notes are expressed in thousands of Euro, unless otherwise indicated.
The Half-Year Financial Report was prepared in accordance with international accounting standards (IFRS/IAS) issued by the International Accounting Standard Board (IASB),recognised by the European Union pursuant to regulation (EU) no. 1606/2002 and in force at the reporting date, the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), as well as the interpretations of the Standing Interpretations Committee (SIC), in force at the same date.
In particular, the Half-Year Financial Report was prepared in accordance with IAS 34 "Interim Financial Statements", issued by the International Accounting Standard Board (IASB).
The accounting policies adopted in the preparation of these financial statements are the same as those adopted for the preparation of the consolidated financial statements at December 31, 2020, to which reference should be made.
The explanatory notes, in accordance with IAS 34, are reported in condensed format and do not include all the disclosures required for annual accounts, as they refer exclusively to those items which, for amount, composition or variation, are essential for the full understanding of the financial situation, equity and results of the Group at June 30, 2021.
The Half-Year Financial Report should therefore be read together with the 2020 Group Annual Financial Report.
The Half-Year Financial Report at June 30, 2021 of the Aquafil Group was subject to a limited audit by PricewaterhouseCoopers and was approved by the Board of Directors on September 1, 2021, which authorised its publication according to the terms and means required by current regulations.
The Group's business is not impacted by seasonal factors. Despite this, we report that typically there is a small drop in production in second half of the year due to the lower number of working days in this period compared to the first half of the year. This generally results in a small decrease in revenues and costs and in the margin in the second half of the year compared to the first half of the year.
As previously outlined in the interim report, the Group has kept in place all of the COVID-19 virus containment measures adopted in 2020, which have demonstrated their efficacy in protecting the health of workers at facilities; in particular, all of the organisational measures to manage financial risks and to guarantee both the health of its workers and the operability of its facilities, while fully complying with regulations and ensuring safe working conditions, were confirmed. The Group continues to monitor the real and potential impact of the Covid-19 emergency on the Group's various business activities, financial position, credit risk, liquidity risk and overall operating performance.
With regards to that outlined above and in view of the development of the health and economic situation therefore, the expectations do not require the Group to amend or review its business model as its operating, equity and financial structure, also on a forward-looking basis, guarantees the going concern of the various product areas in all the regions in which the Group operates.
Group management has constantly monitored the real and potential impact of the Covid-19 emergency on the Group's business activities, financial position, credit risk, liquidity risk and operating performance.
As regards credit risk, the Group has consistently implemented a hedging strategy which, as part of a specific risk policy, makes use of insurance policies agreed with leading insurance companies and carries out accurate daily assessments of the levels of exposure to customers; at the date of this report, the credit risk remains under control, despite reductions in insurance ceilings. Changes in the situation are monitored by the Credit Committee.
As regards liquidity risk, which is constantly monitored by the Risk Control Committee, the Group operates a mitigation strategy that combines careful planning and monitoring of its financial structure to ensure solvency both in normal operating conditions and in crisis situations. This strategy is designed to guarantee ample liquidity through the generation of cash from business activities, and access to new medium-term financial resources that allow available short-term credit lines to remain unused.
In view of the significant level of available liquidity, the Parent Company Aquafil S.p.A. in the period settled and repaid in advance loans for an amount of Euro 51.8 million.
For all other additional information required in relation to financial risk management, reference should be made to the Group's annual financial statements at December 31, 2020 for a detailed analysis.
The Consolidated Financial Statements includes the equity and financial position and results of the Parent Company and of the subsidiaries and/or associated companies, prepared on the basis of the relative accounting entries and, where applicable, appropriately adjusted in line with international accounting standards IAS/IFRS.
The following table summarises, with reference to the subsidiaries and associated companies, details on the Company name, registered office, share capital, profit for the period, functional currency and the direct and indirect holding of the company and the consolidation method applied at June 30, 2021:
| Company | Registered office | Share capital |
June 30, 2021 Net Profit |
Currency | Group holding |
% of votes |
Method of consoli dation |
|---|---|---|---|---|---|---|---|
| Parent Company: | |||||||
| Aquafil S.p.A. | Arco (IT) | 49,722,417 | 3,787,867 | Euro | |||
| Subsidiary companies: | |||||||
| Aquafil SLO d.o.o. | Ljubjiana (SLO) | 50,135,728 | 3,478,903 | Euro | 100.00% | 100.00% | Line-by-line |
| Aquafil USA Inc. | Cartersville (USA) | 77,100,000 | 1,782,330 | US Dollar | 100.00% | 100.00% | Line-by-line |
| Tessilquattro S.p.A. | Arco (IT) | 3,380,000 | 64,272 | Euro | 100.00% | 100.00% | Line-by-line |
| Aquafil Jiaxing Co. Ltd. | Jiaxing (CHN) | 355,093,402 | 20,597,868 | Chinese Yuan | 100.00% | 100.00% | Line-by-line |
| Aquafil UK Ltd. | Ayrshire (UK) | 3,669,301 | (309,320) | UK Sterling | 100.00% | 100.00% | Line-by-line |
| Aquafil CRO d.o.o. | Oroslavje (CRO) | 71,100,000 | 1,154,800 | Croatian Kuna | 100.00% | 100.00% | Line-by-line |
| Aquafil Asia Pacific Co. Ltd. | Rayoung (THA) | 53,965,000 | 18,417,102 | Baht | 99.99% | 99.99% | Line-by-line |
| Aqualeuna GmbH | Leuna (GER) | 2,325,000 | (1,419,137) | Euro | 100.00% | 100.00% | Line-by-line |
| Aquafil Engineering GmbH | Berlino (GER) | 255,646 | 1,640,423 | Euro | 100.00% | 100.00% | Line-by-line |
| Aquafil Tekstil Sanayi Ve Ticaret A.S. Istanbul (TUR) | 1,512,000 | 695,177 | Turkish Lira | 99.99% | 99.99% | Line-by-line | |
| Aquafil Benelux France B.V.B.A. | Harelbake (BEL) | 20,000 | 68,992 | Euro | 100.00% | 100.00% | Line-by-line |
| Cenon S.r.o. | Zilina (SLO) | 26,472,682 | (487,294) | Euro | 100.00% | 100.00% | Line-by-line |
| Aquafil Carpet Recycling #1. Inc. | Phoenix (USA) | 250,000 | (3,144,154) | US Dollar | 100.00% | 100.00% | Line-by-line |
| Aquafil Carpet Recycling #2. Inc. | Woodland California (USA) | 250,000 | (1,004,669) | US Dollar | 100.00% | 100.00% | Line-by-line |
| Aquafil Oceania Ltd | Melbourne (AUS) | 49,990 | 118,722 | Australian Dollar | 100.00% | 100.00% | Line-by-line |
| Aquafil India Private Ltd. | New Dehli (IND) | 85,320 | 0 | Indian Rupee | 99.97% | 99.97% | Line-by-line |
| Aquafil O'Mara Inc. | North Carolina (USA) | 36,155,327 | 1,288,694 | US Dollar | 100.00% | 100.00% | Line-by-line |
| Aquafil Carpet Collection | Phoenix (USA) | 3,400,000 | 43,576 | US Dollar | 100.00% | 100.00% | Line-by-line |
| Aquafil Japan | Chiyoda (JP) | 310,000 | (8,039,835) | Japanese Yen | 100.00% | 100.00% | Line-by-line |
The changes in the Aquafil Group consolidation scope in the period concerned:
At June 30, 2021 there are no associated companies included in the consolidation scope.
The main criteria adopted by the Group for the definition of the consolidation scope and the relative consolidation principles did not change compared to those applied for the consolidated financial statements at December 31, 2020.
The financial statements of subsidiaries are prepared in the primary currency in which they operate. The rules for the translation of financial statements of companies in currencies other than the functional currency of the Euro are as follows:
The exchange rates utilised for the conversion of these financial statements are shown in the table below:
| June 2021 | December 2020 | June 2020 | |||||
|---|---|---|---|---|---|---|---|
| Period-end | Average | Period-end | Average | Period-end | Average | ||
| rate | rate | rate | rate | rate | rate | ||
| US Dollar | 1.19 | 1.21 | 1.23 | 1.14 | 1.12 | 1.10 | |
| Croatian Kuna | 7.49 | 7.55 | 7.55 | 7.54 | 7.57 | 7.53 | |
| Chinese Yuan | 7.67 | 7.80 | 8.02 | 7.87 | 7.92 | 7.75 | |
| Turkish Lira | 10.32 | 9.52 | 9.11 | 8.05 | 7.68 | 7.15 | |
| Baht | 38.12 | 37.15 | 36.73 | 35.70 | 34.62 | 34.82 | |
| UK Sterling | 0.86 | 0.87 | 0.90 | 0.89 | 0.91 | 0.87 | |
| Japanese Yen | 131.43 | 129.87 | |||||
| Australian Dollar | 1.59 | 1.56 | 1.59 | 1.65 | 1.63 | 1.68 |
Transactions in currencies other than the Euro are recognised at the exchange rate at the date of the transaction. Assets and liabilities denominated in currencies other than the Euro are subsequently adjusted to the exchange rate at the reporting date. Exchange differences are recognised to the income statement under "Exchange gains and losses".
No business combinations were undertaken in the period.
The impairment (or recoverability) test assesses whether there exist any indications that an asset may have incurred a reduction in value. For goodwill and any other indefinite useful life intangible assets an assessment should be made at least annually that their recoverable value is at least equal to the book value and, when considered necessary, or rather in the presence of trigger events (IAS 16 paragraph 9), the impairment test must be undertaken more frequently.
The goodwill arising from the business combination was subject to a recoverability test as per IAS 36. In particular, it is noted that the recoverable value of a non-current asset is based on the estimates and on the assumptions utilised for the determination of the cash flows and of the discount rate applied. Where it is considered that the book value of a non-current asset has incurred a loss in value, the asset is written-down up to the relative recoverable value, estimated with reference to its utilisation and any future disposal, based on the most recent business plans.
In assessing the recoverable value of property, plant and equipment, of investment property, of intangible assets and of goodwill, the Group generally applies the criterion of the value in use.
The value in use is the present value of the expected future cash flows to be derived from an asset. In defining the value in use, the expected future cash flows are discounted utilising a pre-tax rate that reflects the current market assessment of the time value of money, and the specific risks of the asset.
The estimated future cash flows utilised to determine the value in use is based on the most recent business plans, approved by management and containing forecasts for volumes, revenues, operating costs and investments. For the sole purpose of verifying the recoverability of the value of the assets, the figures in the business plan have been adjusted on the basis of a number of possible scenarios to reflect the updated market situation and the resulting economic and financial forecasts. These forecasts cover the period of the next three years; consequently, the cash flows relating to the subsequent years are determined on the basis of a growth rate which does not exceed the average growth rate for the sector and the country.
Where the book value of an asset is higher that its recoverable value a loss in value is recognised which is recorded in the income statement under "Amortisation, depreciation and write-downs".
The loss in value of a cash generating unit (the Aquafil Group has only one CGU) are firstly attributed to the reduction in the carrying value of any goodwill allocated and, thereafter, to a reduction of other assets, in proportion to their carrying value.
When the reasons for the write-down no longer exist, the carrying value of the asset is restated through the income statement, in the account "Amortisation, depreciation & write-downs", up to the value at which the asset would be recorded if no write-down had taken place and amortisation or depreciation had been recorded.
The original value of the goodwill is not restated even when in subsequent years the reasons for the reduction in value no longer exist.
The tables below illustrate the breakdown of financial assets and liabilities of the Group required by IFRS 7, as per the categories identified by IAS 39, at June 30, 2021:
| (in Euro thousands) | Financial assets and liabilities measured at fair value through P&L |
Loans and receivables |
AFS financial assets |
Financial liabilities at amortised cost |
Total |
|---|---|---|---|---|---|
| Current and non-current financial assets |
0 | 9,007 | 0 | 0 | 9,007 |
| Trade receivables | 30,985 | 30,985 | |||
| Tax receivables | 0 | 597 | 0 | 0 | 597 |
| Other current & non-current assets | 0 | 18,639 | 0 | 0 | 18,639 |
| Cash and cash equivalents | 0 | 165,854 | 0 | 0 | 165,854 |
| Total | 0 | 225,082 | 0 | 0 | 225,082 |
| Current and non-current financial liabilities | 705 | 0 | 0 | 358,197 | 358,902 |
| Trade payables | 0 | 0 | 0 | 97,209 | 97,209 |
| Other current and non-current liabilities | 0 | 0 | 0 | 37,684 | 37,684 |
| Total | 705 | 0 | 0 | 493,090 | 493,795 |
The other financial assets and liabilities are short-term and regulated at market interest rates and therefore the book value is considered to reasonably approximate fair value.
For the purposes of IFRS 8 – Operating Segments, Group activity is identifiable in a single operating segment.
In fact, the Group structure identifies a strategic and singular vision of the business and this representation is consistent with the manner in which management takes its decisions, allocates resources and defines the communication strategy. Dividing the business into separate divisions is therefore currently viewed as detrimental to its economic interests.
The breakdown in the account and changes in the period were as follows:
| (in Euro thousands) | Development costs |
Patents & property rights |
Trademarks, concessions and licenses |
Other intangible assets |
Intangible assets in progress |
Non Contractual Customer relationships |
Total |
|---|---|---|---|---|---|---|---|
| Balance at December 31, 2019 | 1,812 | 356 | 535 | 4,070 | 9,760 | 4,568 | 21,101 |
| – Historical cost |
1,812 | 5,218 | 4,868 | 15,327 | 9,760 | 5,770 | 42,756 |
| – Accumulated depreciation |
0 | (4,863) | (4,332) | (11,257) | 0 | (1,202) | (21,655) |
| Reclassifications | 0 | 0 | 41 | 609 | (607) | 0 | 43 |
| Increase | 2,227 | 0 | 66 | 453 | 3,272 | 0 | 6,018 |
| Decreases | 0 | 0 | (77) | 0 | (3) | 0 | (80) |
| Amortisation | (581) | (304) | (160) | (1,622) | 0 | (716) | (3,383) |
| Exchange diff. - Historic cost | 0 | (8) | (11) | (31) | 0 | (145) | (195) |
| Exchange diff. - Accumulated | 0 | 8 | 10 | 14 | 0 | 44 | 74 |
| depreciation | |||||||
| Balance at December 31, 2020 | 3,459 | 52 | 405 | 3,491 | 12,422 | 3,750 | 23,578 |
| – Historic cost |
4,039 | 5,211 | 4,751 | 16,355 | 12,422 | 5,625 | 48,403 |
| – Accumulated depreciation |
(581) | (5,159) | (4,346) | (12,863) | (1,875) | (24,825) | |
| Reclassifications | 0 | 0 | (2) | 1,775 | (1,759) | 0 | 14 |
| Increases | 1,293 | 0 | 7 | 80 | 786 | 0 | 2,166 |
| Decreases | 0 | 0 | 0 | (13) | 0 | 0 | (13) |
| Amortisation | (472) | 0 | (26) | (842) | 0 | (362) | (1,702) |
| provision | 0 | 0 | 0 | 0 | (885) | 0 | (885) |
| Exchange diff. - Historic cost | 0 | 4 | 2 | 12 | 0 | 255 | 274 |
| Exchange diff. - Accumulated | 0 | (4) | (2) | (6) | 0 | (91) | (103) |
| depreciation | |||||||
| Balance at June 30, 2021 | 4,280 | 52 | 383 | 4,497 | 10,565 | 3,552 | 23,329 |
| – Historical cost |
5,332 | 5,215 | 4,755 | 18,209 | 10,565 | 5,880 | 49,956 |
| – Accumulated depreciation |
(1,052) | (5,163) | (4,372) | (13,711) | 0 | (2,327) | (26,627) |
Other intangible assets, in progress and not in progress, include costs incurred for Information and Communication Technology activities and for projects for the development of new products and processes, including the "Effective" project coordinated by Aquafil and funded by the Bio-Based Industries Joint Undertaking (BBI JU) as part of the European Horizon 2020 research programme.
The increases in the year, overall amounting to Euro 2.1 million, principally relate to:
The amount of Euro 0.9 million recognised under write-downs of "Intangible assets in progress" is primarily due to a number of prudent reductions in the value of previously capitalised expenses, the recoverability of which has not yet been assessed.
The breakdown in the account and changes in the period were as follows:
| (in Euro thousands) | Land and buildings |
Plant & equipment |
Industrial and commercial equipment |
Other assets |
Assets in progress |
Investment property |
Total before RoU |
Right of-Use |
Total |
|---|---|---|---|---|---|---|---|---|---|
| Balance at December 31, 2019 |
61,214 | 136,734 | 482 | 2,778 | 26,602 | 368 | 228,177 | 23,314 | 251,492 |
| – Historical cost |
114,516 | 442,257 | 10,984 | 7,399 | 26,602 | 793 | 602,552 | 28,676 | 631,228 |
| – Accumulated depreciation |
(53,303) | (305,523) | (10,503) | (4,621) | 0 | (425) | (374,375) | (5,362) | (379,736) |
| Change in consolidation scope |
0 | 922 | 0 | 0 | 0 | 0 | 922 | 0 | 922 |
| Reclassifications | 867 | 10,363 | 26 | 57 | (11,354) | 0 | (43) | 0 | (43) |
| Increase | 401 | 7,847 | 74 | 396 | 13,132 | 0 | 21,851 | 8,930 | 30,781 |
| Decreases | 1 | (153) | (1) | (360) | (18) | 0 | (531) | (5,400) | (5,931) |
| Depreciation | (4,161) | (27,824) | (178) | (664) | 0 | (12) | (32,839) | (7,393) | (40,233) |
| Exchange diff. - Historic cost |
(772) | (10,839) | (32) | (373) | (1,372) | 0 | (13,388) | (1,082) | (14,470) |
| Exchange diff. - Accumulated depreciation |
139 | 6,323 | 26 | 214 | 0 | 0 | 6,703 | 274 | 6,977 |
| Balance at December | 57,689 | 123,373 | 396 | 2,048 | 26,990 | 356 | 210,852 | 18,643 | 229,495 |
| 31, 2020 | |||||||||
| – Historical cost |
115,010 | 438,306 | 11,027 | 5,179 | 26,990 | 793 | 597,304 | 29,619 | 626,924 |
| – Accumulated depreciation |
(57,321) | (314,933) | (10,631) | (3,131) | 0 | (437) | (386,452) | (10,976) | (397,429) |
| Reclassifications | 144 | 4,379 | 5 | 30 | (4,572) | 0 | (14) | 0 | (14) |
| Increases | 11 | 755 | 34 | 57 | 11,014 | 0 | 11,871 | 2,301 | 14,172 |
| Decreases | 0 | (7) | 0 | (2) | 0 | 0 | (9) | (142) | (151) |
| Depreciation | (2,108) | (14,016) | (56) | (317) | 0 | (6) | (16,502) | (3,823) | (20,325) |
| provision | (400) | 0 | (400) | 0 | (400) | ||||
| Exchange diff. - Historic cost |
486 | 5,522 | (2) | 146 | 543 | 0 | 6,696 | 435 | 7,130 |
| Exchange diff. - Accumulated depreciation |
(120) | (3,017) | 3 | (90) | 0 | 0 | (3,225) | (134) | (3,358) |
| Balance at June 30, 2021 |
55,702 | 116,988 | 380 | 1,872 | 33,976 | 350 | 209,268 | 17,280 | 226,548 |
| – Historical cost |
115,251 | 447,587 | 11,055 | 5,379 | 33,976 | 793 | 614,041 | 31,508 | 645,549 |
| – Accumulated depreciation |
(59,549) | (330,599) | (10,675) | (3,506) | 0 | (443) | (404,773) | (14,228) | (419,001) |
The increases for the period, after deduction of the related decreases and excluding movements in the Right-of-Use in application of IFRS 16, amounted to a total of Euro 11.9 million and refer mainly to:
• for Euro 4.3 million, the increase in industrial efficiency and the optimisation of utilities and consumables;
• for approx. Euro 3.8 million the increase in the production capacity of the various product lines and regions in which the Group operates;
• for approx. Euro 1.6 million, the increase in the production capacity of ECONYL® regenerated caprolactam, including through the initiation of the complex and innovative carpet recovery technology of the two plants ACR #1 Inc. and ACR #2 Inc.
The write-down of Euro 0.4 million of land and buildings concerns the buildings of the subsidiary Cenon S.r.o., which are not utilised.
The recoverability of all assets, including investments not yet definitively operative, was verified with an impairment test carried out on the only Aquafil Group CGU.
The table below, in accordance with IFRS 16, presents the right-of-use of the non-current asset subject to the leasing contract. In particular this refers to buildings, equipment and transport and motor vehicles as illustrated in the table below:
| Right-of-use buildings |
Right- of-use equipment and transport |
Right-of-use motor vehicles |
Right-of-use | Total |
|---|---|---|---|---|
| 18,817 | 3,837 | 580 | 81 | 23,314 |
| 22,865 | 5,047 | 679 | 85 | 28,676 |
| (4,047) | (1,211) | (100) | (4) | (5,362) |
| 6,424 | 2,144 | 344 | 18 | 8,930 |
| (4,349) | (1,031) | (9) | (5,390) | |
| (5,750) | (1,404) | (230) | (20) | (7,405) |
| (943) | (116) | (14) | (8) | (1,082) |
| 230 | 40 | 2 | 2 | 274 |
| 14,428 | 3,470 | 673 | 72 | 18,643 |
| 22,548 | 5,982 | 995 | 94 | 29,619 |
| (8,120) | (2,511) | (322) | (23) | (10,976) |
| 1,492 | 599 | 211 | 0 | 2,301 |
| (41) | (17) | (84) | (142) | |
| (2,952) | (719) | (142) | (10) | (3,823) |
| 375 | 52 | 5 | 3 | 435 |
| (111) | (20) | (1) | (1) | (134) |
| 13,190 | 3,365 | 661 | 64 | 17,280 |
| 24,279 | 6,060 | 1,071 | 98 | 31,508 |
| (11,090) | (2,695) | (410) | (33) | (14,228) |
| vehicles |
The increases mainly refer to the signing by the subsidiary Aquafil Jiaxing Co. Ltd of a lease agreement for industrial buildings for Euro 1.5 million, the renewal of contracts for apartments provided for employee use and company cars and internal transport vehicles.
The breakdown of the account is shown below (including current and non-current):
| (in Euro thousands) | June 2021 | December 2020 |
|---|---|---|
| Receivables from parent companies | 234 | 234 |
| Investments in other companies | 24 | 24 |
| Escrow bank deposits | 8,399 | 875 |
| Current and non-current financial assets | 271 | 272 |
| Receivables from related parties | 79 | 79 |
| Total | 9,007 | 1,484 |
| of which current | 8,359 | 834 |
| of which non-current | 648 | 650 |
"Receivables from parent companies" refer to guarantee deposits paid by Aquafil S.p.A. to the Parent Company Aquafin Holding S.p.A. over the multi-year leasing contract for the industrial and logistical use property located in viale dell'Industria - Verona.
The investments in other companies refer to minority investments.
The "Escrow bank deposits", amounting to Euro 8.4 million, are held by the Group companies Aquafil Jiaxing Co Ltd and Aquafil Engineering GmbH. The increase on the previous year is due to the new interest-bearing bank deposits by Aquafil Jiaxing with short-term restriction.
"Receivables from other related parties" refer to guarantee deposits paid by Tessilquattro S.p.A. and Aquafil S.p.A. to Aquaspace S.p.A. over a multi-year leasing contract for the industrial and logistical use property located in Via del Garda 40 - Rovereto.
The amount mainly relates to the receivable of the Parent Company Aquafil S.p.A. and Aquafil SLO d.o.o. from the European Union related to the "Effective" project, co-ordinated by Aquafil and funded by Bio-Based Industries Joint Undertaking (BBI JU) as part of the European Horizon 2020 research programme, with the entire chain (from raw material manufacturers to brands) involved in validating the use of bio Nylon 6 and other bio-polymer consumer market products.
In particular, with the signing of the agreement between the partners and other lenders, an overall amount of Euro 3.3 million was stipulated, with deferred income recognised under Other liabilities (Note 5.15). The receivable is reduced for the amounts effectively paid by the European Union, substantially recognised on the basis of the convention rules which provides for payment based on the state of advancement. At June 30, 2021, the residual receivable amounted to Euro 1.3 million.
The breakdown of the items "Deferred tax assets" and "Deferred tax liabilities" is shown below:
| (in Euro thousands) | June 2021 | December 2020 |
|---|---|---|
| Deferred tax assets | 11,818 | 14,563 |
| Deferred tax liabilities | (9,824) | (11,761) |
| Total | 1,994 | 2,802 |
The movement in the total balance is mainly due to the use of the prior ACE benefit by the Parent Company.
The changes in the account were as follows:
| June 2021 | December 2020 |
|---|---|
| 51,222 | |
| 95,462 | 99,408 |
| 433 | 289 |
| 154,364 | 150,920 |
| 58,469 |
Inventories are recorded net of the obsolescence provision amounting to Euro 0.50 million and relates to slow moving prior stock.
The changes in the account were as follows:
| (in Euro thousands) | June 2021 | December 2020 |
|---|---|---|
| Trade receivables | 33,042 | 24,102 |
| Parent, associates and other related parties | 29 | 66 |
| Doubtful debt provision | (2,086) | (2,153) |
| Total | 30,985 | 22,015 |
The increase in trade receivables strictly relates to greater volume of activities in H1 2021.
The following table provides a breakdown of trade receivables at June 30, 2021, grouped by due date and net of doubtful debt provision:
| (in Euro thousands) | June 30, 2021 | Not overdue | Overdue within 30 days |
Overdue between 31 and 90 days |
Overdue between 91 and 120 days |
Overdue beyond 120 days |
|---|---|---|---|---|---|---|
| Guaranteed trade receivables (a) | 25,000 | 21,074 | 3,242 | 272 | (7) | 419 |
| Non-guaranteed trade receivables (b) | 7,563 | 5,146 | 1,547 | 290 | (28) | 608 |
| Non-guaranteed trade receivables | 508 | 482 | 0 | 0 | 0 | 26 |
| impaired (c) | ||||||
| Trade receivables before doubtful | 33,071 | 26,702 | 4,789 | 562 | (35) | 1,053 |
| debt provision [(a) + (b) + (c)] | ||||||
| Doubtful debt provision | (2,086) | (1,428) | (315) | (85) | 1 | (259) |
| Trade receivables | 30,985 | 25,274 | 4,474 | 477 | (34) | 794 |
Current tax receivables of Euro 0.6 million refer to advances paid for current tax by the Parent Company Aquafil S.p.A., Aquafil USA Inc. and Aquafil Engineering GmbH.
The changes in the account were as follows:
| (in Euro thousands) | June 2021 | December 2020 |
|---|---|---|
| Tax receivables | 3,519 | 3,255 |
| Supplier advances | 1,155 | 679 |
| Pension and social security institutions | 132 | 374 |
| Employee receivables | 159 | 298 |
| Tax receivables from parent | 3,639 | 3,187 |
| Other receivables | 2,097 | 1,279 |
| Prepayments and accrued income | 6,302 | 2,910 |
| Total | 17,003 | 11,981 |
The following is specified in relation to the above items:
Technology; the increase on the previous period relates to the timing of the recognition of these costs
The account is comprised of:
| (in Euro thousands) | June 2021 | December 2020 |
|---|---|---|
| Cash and equivalents | 21 | 24 |
| Bank and postal deposits | 165,834 | 208,930 |
| Total | 165,854 | 208,954 |
The item relates to the current account balances of the different Group companies. The breakdown of cash and cash equivalents in Euro of foreign currencies is illustrated in the table below:
| (in Euro thousands) | June 30, 2021 |
|---|---|
| EUR | 118,999 |
| HRK | 141 |
| TRL | 40 |
| USD | 37,622 |
| THB | 987 |
| CNY | 7,257 |
| AUD | 200 |
| GBP | 454 |
| JPY | 155 |
| Total | 165,854 |
There were no restrictions on liquidity.
The significant reduction compared to December 31, 2020 is mainly related to the early repayment of a series of medium-term loans made in period for a total of Euro 51.8 million.
For further details on cash and cash equivalents, reference should be made to the consolidated cash flow statement.
The movement of the individual accounts in presented in the Statement of changes in Consolidated Shareholders' Equity. The individual components are described below.
At June 30, 2021, the Parent Company Aquafil S.p.A.'s authorised share capital amounted to Euro 50.7 million, whose subscribed and paid-up capital amounts to Euro 49.72 million, while the unsubscribed and unpaid portion relates to: (i) an amount of Euro 0.15 million as the residual capital increase in service of Aquafil Market Warrants and (iii) an amount of Euro 0.80 million for the capital increase in service of Aquafil Sponsor Warrants.
The subscribed and paid-up share capital is divided into 51,218,794 shares without nominal value divided into:
The detailed breakdown of Aquafil S.p.A.'s subscribed and paid-up share capital at June 30, 2021 is shown below:
| Type of shares | No. shares | % of share capital | Listing |
|---|---|---|---|
| Ordinary | 42,822,774 | 83.61% | MTA, STAR Segment |
| Class B | 8,316,020 | 16.24% | Non-listed |
| Class C | 80,000 | 0.15% | Non-listed |
| Total | 51,218,794 | 100% |
On the basis of communications sent to the National Commission for Companies and the Stock Exchange "Consob", and received by the Company pursuant to Article 120 of Legislative Decree no. 58 of February 24, 1998, as well as the effect of the conversion of Market Warrants in the year, holders of a significant shareholding as at June 30, 2021 — i.e. considering Aquafil S.p.A.'s qualification as an SME pursuant to Article 1(w-quater.1) of the CFA and with a shareholding greater than 5% of the Aquafil S.p.A. voting share capital — are as follows:
| Direct shareholder | Type of shares | No. shares | No. of voting rights |
|---|---|---|---|
| Aquafin Holding S.p.A. | Ordinary | 21,487,016 | 21,487,016 |
| Class B | 8,316,020 | 24,948,060 | |
| Total | 29,803,036 | 46,435,076 | |
| Holding | 58.19% | 68.52% | |
The following were initially issued on listing:
On June 30, 2021, 2,014,322 Aquafil Market Warrants were converted (with the assignment of 498,716 Conversion Shares) and therefore the number of Market Warrants still in circulation totalled 5,485,662.
At June 30, 2021, no Aquafil Sponsor Warrants have been converted.
The legal reserve at June 30, 2021 was equal to Euro 0.70 million; the increase of Euro 0.35 million was approved by the Shareholders' Meeting of April 28, 2021 which allocated to this reserve one-twentieth of the profit for the year 2020.
The translation reserve, negative at June 30, 2021 for Euro 18.6 million (reducing Euro 6.6 million in the year), includes all the differences arising from the translation into Euro of the subsidiaries' financial statements included in the consolidation scope expressed in foreign currency.
The item amounted to Euro 19.98 million at June 30, 2021 and is derived from the merger transaction between Aquafil S.p.A. and Space 3 S.p.A. in 2017.
The item amounted to Euro 3.29 million at June 30, 2021 as a decrease in shareholders' equity and relates to the costs incurred in 2017 for the listing and thereafter the share capital increase.
The item amounts to Euro 2.39 million and represents the conversion effects from Italian GAAP to IFRS.
At June 30, 2021, it was equal to a Euro 0.97 million reduction in shareholders' equity and includes the actuarial effects at that date of severance indemnities and all the other benefits for employees of Group companies.
At June 30, 2021, the account amounts to Euro 88.48 million and represents the results generated by the Aquafil Group in previous years (including pre-merger with Space3).
As illustrated in paragraph 2 "Consolidation scope" and consolidation criteria, the minority interests shareholders' equity substantially reduced to zero.
The account is comprised of:
(in Euro thousands)
| Balance at December 31, 2020 | 5,969 |
|---|---|
| Financial charges | 14 |
| Advances and settlements | (268) |
| Actuarial gains/(losses) | 23 |
| Balance at June 30, 2021 | 5,740 |
The post-employment benefits provision includes the effects of discounting as required by the IAS 19 accounting standard. The following is a breakdown of the main economic and demographic assumptions used for actuarial valuations:
| Financial assumptions | June 30, 2021 |
|---|---|
| Discount rate | 0.25% |
| Rate of inflation | 0.80% |
| Annual increase in employee leaving indemnity | 2.10% |
| Death | The RG48 mortality tables published by the General State Controller |
|---|---|
| Disability | INPS tables by age and gender |
| Retirement | 100% on satisfying AGO requirements |
| Frequency advances | 4.50% |
|---|---|
| Frequency turnover | 2.50% |
The bond's financial average duration at June 30, 2021 is approx. 8 years.
The account is comprised of:
| June 2021 | of which | December 2020 | of which | |
|---|---|---|---|---|
| (in Euro thousands) | current portion | current portion | ||
| Medium/long term bank loans | 241,581 | 55,716 | 308,630 | 67,690 |
| Accrued interest and accessory charges | (635) | (635) | (518) | (518) |
| on medium/long-term bank loans (*) | ||||
| Total medium/long-term bank loans | 240,946 | 55,081 | 308,112 | 67,172 |
| Bond loans | 90,380 | 0 | 90,406 | 0 |
| Accrued interest and charges on bonds | 348 | 348 | 308 | 308 |
| Total bond loan | 90,727 | 348 | 90,713 | 308 |
| Leasing and RoU financial payables | 26,497 | 8,707 | 28,524 | 8,353 |
| Liabilities for derivative financial instruments | 705 | 0 | 1,042 | 0 |
| Other lenders and banks – short term | 28 | 28 | 131 | 131 |
| Total financial liabilities (current | 358,902 | 64,163 | 428,524 | 75,964 |
| and non-current) | ||||
| Total non-current financial liabilities | 294,739 | 352,560 |
(*) Represents the effect of applying the amortised cost method.
This item refers to payables relating to financing agreements obtained from credit institutions. These agreements envisage the payment of interest at a fixed rate or, alternatively, at a variable rate typically linked to the Euribor rate for the period plus a spread.
| Original amount |
Gran ting |
Maturity date |
Repayment plan | Rate applied | June 30, 2021 |
of which current |
|
|---|---|---|---|---|---|---|---|
| (in Euro thousands) | date | portion | |||||
| Medium/long term bank loans - | |||||||
| fixed rate | |||||||
| Banca Intesa () (*) | 15,000 | 2018 | 2024 | half-year from 31/07/2019 | 1.15% fixed (**) | 9,000 | 1,500 |
| Mediocredito Trentino Alto Adige | 3,000 | 2017 | 2022 | half-year from 28/12/2018 | 0.901% fixed | 1,009 | 1,009 |
| Banca Nazionale del Lavoro (*) | 7,500 | 2018 | 2025 | half-year from 31/12/2019 | 1.4% fixed | 5,455 | 1,364 |
| Banca Nazionale del Lavoro (*) | 12,500 | 2018 | 2025 | half-year from 31/12/2019 | 1.25% fixed | 9,091 | 2,273 |
| Credito Valtellinese (*) | 15,000 | 2018 | 2024 | quarterly from 05/10/2018 | 1 fixed % | 11,830 | 2,127 |
| Banca di Verona | 3,000 | 2019 | 2024 | quarterly from 06/08/2021 | 1.30% fixed | 3,000 | 727 |
| Cassa Centrale Banca Cred, Coop, | 15,000 | 2019 | 2026 | quarterly from 30/09/2021 | 1.25% fixed since 01/07/2024 | 15,000 | 2,926 |
| Nord Est (*) | Euribor 3 months + 1 | ||||||
| Cassa Depositi e Prestiti (*) | 20,000 | 2020 | 2027 | half-year from 20/06/2023 | 1.48% fixed | 20,000 | 0 |
| Total medium/long term bank loans - | 74,385 | 11,926 | |||||
| fixed rate | |||||||
| Medium/long term bank loans - | |||||||
| variable rate | |||||||
| Banca Popolare di Milano () (*) | 25,000 | 2018 | 2026 | quarterly from 31/03/2020 | Euribor 3 months + 0.90% | 21,621 | 3,389 |
| Cassa Risparmio di Bolzano (*) | 20,000 | 2018 | 2025 | quarterly from 31/03/2020 | Euribor 3 months + 0.85% | 18,038 | 3,949 |
| Cassa Centrale Banca Cred, Coop, Nord Est |
5,000 | 2016 | 2022 | half-year from 31/12/2017 | Euribor 6 months + 1.50% | 1,272 | 1,272 |
| Banca di Verona | 3,500 | 2016 | 2023 | quarterly from 30/06/2017 | Euribor 3 months + 1.80% | 1,313 | 651 |
| Banca di Verona | 15,000 | 2017 | 2024 | quarterly from 30/06/2017 | Euribor 3 months + 2% | 8,967 | 2,498 |
| Deutsche Bank (*) | 5,000 | 2018 | 2024 | quarterly from 15/01/2019 | Euribor 3 months + 1.20% | 3,438 | 625 |
| Credit Agricole Friuladria () (*) | 10,000 | 2017 | 2025 | quarterly from 31/03/2019 | Euribor 3 months + 1.30% | 6,423 | 907 |
| Credito Valtellinese | 3,000 | 2017 | 2023 | quarterly from 05/07/2017 | Euribor 3 months + 0.90% | 1,367 | 604 |
| Monte dei Paschi di Siena (*) | 15,000 | 2018 | 2025 | half-year from 31/12/2019 | Euribor 6 months + 0.80% | 13,125 | 1,875 |
| Credito Emiliano | 5,000 | 2018 | 2022 | monthly from 26/11/2018 | Euribor 1 month + 0.65% | 2,228 | 1,670 |
| Cassa Rurale Raiffeisen Alto Adige | 3,000 | 2017 | 2023 | quarterly from 30/06/2018 | Euribor 3 months + 0.90% | 1,326 | 755 |
| Banca Popolare di Sondrio | 5,000 | 2017 | 2023 | monthly from 31/08/2018 | Euribor 1 month + 0.80% | 2,624 | 1,254 |
| Banco BPM () (*) | 15,000 | 2019 | 2025 | quarterly from 30/09/2020 | Euribor 3 months + 1.05% | 12,772 | 2,234 |
| Banca Popolare Emilia Romagna () (*) | 10,000 | 2019 | 2025 | monthly from 26/09/2020 | Euribor 3 months + 0.75% | 10,000 | 2,059 |
| Credit Agricole Friuladria () (*) | 10,000 | 2019 | 2025 | half-year from 28/12/2020 | Euribor 6 months + 1.05% | 8,182 | 1,818 |
| Banca del Mezzogiorno () (*) | 10,000 | 2019 | 2026 | quarterly from 09/11/2020 | Euribor 1 month + 1.20% | 9,500 | 2,000 |
| Banco BPM (**) | 10,000 | 2020 | 2023 | quarterly from 31/12/2021 Euribor 3 months + 0.70% + SACE | 10,000 | 3,750 | |
| Banca Intesa | 30,000 | 2020 | 2023 | quarterly from 31/12/2021 Euribor 3 months + 0.60%+ SACE | 30,000 | 11,250 | |
| Credito Valtellinese (*) | 5,000 | 2020 | 2025 | quarterly from 30/09/2021 | Euribor 3 months + 1.40% | 5,000 | 1,230 |
| Total medium/long term bank loans - | 167,196 | 43,790 | |||||
| variable rate | |||||||
| Accrued interest on medium/long term | (635) | (635) | |||||
| bank loans | |||||||
| Medium/long term bank loans - fixed a | 240,946 | 55,081 | |||||
| nd variable rate |
(*) Loans that provide for compliance with financial covenants.
(**) Loan to which an interest rate swap contract is linked under which interest to be paid to the bank is fixed and equal to the value shown in the table.
Certain loan agreements provide for compliance with financial and equity covenants, as summarised below:
| Loan | Period | Parameter | Reference | Limit |
|---|---|---|---|---|
| Credite Agricole Friuladria | Annually | Net Debt/Net Equity | Group | ≤ 2.50 |
| Annually | Net debt/EBITDA net of lease costs | ≤ 3.75 | ||
| Banca Intesa | Annually | Net Debt/Net Equity | Group | ≤ 2.50 |
| Annually | Net Deb/EBITDA | ≤ 3.75 | ||
| Cassa di Risparmio di Bolzano | Annually | Net Debt/Net Equity | Group | ≤ 2.50 |
| Annually | Net Deb/EBITDA | ≤ 3.75 | ||
| Banca Nazionale del Lavoro | Annually | Net Debt/Net Equity | Group | ≤ 2.50 |
| Annually | Net Deb/EBITDA | ≤ 3.75 | ||
| Banco BPM | Annually | Net Deb/EBITDA | Group | ≤ 3.75 |
| Annually | Net Debt/Net Equity | ≤ 2.50 | ||
| Credito Valtellinese | Annually | Net Deb/EBITDA | Group | ≤ 3.75 |
| Annually | Net Debt/Net Equity | ≤ 2.50 | ||
| Deutsche Bank | Annually | Net Deb/EBITDA | Group | ≤ 3.75 |
| Annually | Net Debt/Net Equity | ≤ 2.50 | ||
| Annually | EBITDA/Financial charges | > 3.50 | ||
| Monte dei Paschi di Siena | Annually | Net Deb/EBITDA | Group | ≤ 3.75 |
| Annually | Net Debt/Net Equity | ≤ 2.50 | ||
| Cassa Centrale Banca Cred. | Annually | Net Deb/EBITDA | Group | ≤ 3.75 |
| Coop. Nord Est | Annually | Net Debt/Net Equity | ≤ 2.50 | |
| Banca Popolare Emilia Romagna Annually | Net Deb/EBITDA | Group | ≤ 3.75 | |
| Annually | Net Debt/Net Equity | ≤ 2.50 | ||
| MCC/Banca del Mezzogiorno | Annually | Net Deb/EBITDA | Group | ≤ 3.75 |
| Annually | Net Debt/Net Equity | ≤ 2.50 | ||
| Cassa Depositi e Prestiti | Half-yearly | Net Deb/EBITDA | Group | ≤ 3.75 |
| Half-yearly | Net Debt/Net Equity | ≤ 2.50 | ||
As previously stated, in the first half of 2021 loans totalling Euro 51.8 million were settled or repaid in advance.
For further information on the transactions undertaken in the period with the lending institutions, reference should be made to the Directors' Report.
With reference to the loans granted, there are no mortgages or guarantees registered on company assets.
For loans stipulating compliance with the above half-yearly covenants, these had been satisfied at June 30, 2021.
The company had issued two fixed-rate bond loans for an original total value of Euro 90 million, as follows:
For both loans, with the contractual review agreed in 2020 relating to the modification of the financial covenants, an additional margin ratchet of 0.50% was introduced, which is applied on exceeding the NFP/EBITDA ratio of 4; the ratio at June 30, 2021, in addition to that at December 31, 2020, does not trigger the rate increase.
The following table summarises the main characteristics of the aforementioned bond loans:
| Bond loan | Total Nominal Value |
Issue date | Maturity date | Capital portion repayment plan |
Fixed interest rate |
|---|---|---|---|---|---|
| Bond loan A | 50,000,000 | 23/06/2015 | 20/09/2028 | 7 annual instalments from 20/o9/2022 |
4.70% |
| Bond loan B | 40,000,000 | 24/05/2019 | 24/05/2029 | 7 annual instalments from 24/05/2023 |
2.87% |
Bond loans envisage compliance with the following financial covenants, as contractually defined, to be calculated on the basis of the Group's consolidated financial statements:
| Financial parameters | Parameter | Covenant limit |
|---|---|---|
| Interest Coverage Ratio | EBITDA/Net financial charges | > 3.50 |
| Leverage Ratio (*) | Net Debt/EBITDA | < 3.75 |
| Net Debt Ratio | Net Debt/Net Equity | Minimum Net Equity |
| threshold levels |
(*) This indicator must be calculated with reference to the 12-month period which terminates on December 31 and June 30 for all years applicable. For June 30, 2021, the required "Leverage Ratio" is < 4.25, while for subsequent periods it reverts to < 3.75.
Non-compliance with just one of the above financial parameters, where not resolved within the contractual deadlines provided, would constitute a circumstance for the bond loan's compulsory early repayment.
Compliance with the above covenants is on a half-yearly basis. The covenants had been complied with at June 30, 2021.
The terms and conditions of the above bond loans also envisage, as is customary for financial transactions of this type, a structured series of commitments to be borne by the Company and Group companies ("Affirmative Covenants") and a series of limitations on the possibility of carrying out certain transactions, if not in compliance with certain financial parameters or specific exceptions provided for by the agreement with the bondholders ("Negative Covenants"). Specifically, there are in fact certain limitations on the assumption of financial debt, on carrying out certain investments and on acts of disposal of corporate assets. To ensure the timely and correct fulfilment of obligations arising on account of the Parent Company from the issue of securities, the companies Aquafil Usa Inc. and Aquafil SLO d.o.o. have issued joint corporate guarantees in favour of underwriters.
The lease liability, which amounts to Euro 26.5 million, includes Euro 18.7 million relating to the effects of application of IFRS 16. The lease liability also includes the finance lease contract with the company Trentino Sviluppo S.p.A., involving the building in Arco (TN). The contract in question was entered into in December 2007 and expires in November 2022. At June 30, 2021, the residual capital relating to financial leasing contracts totalled Euro 7.6 million. The contract is regulated at the 6-month Euribor rate plus a spread of 0.50%.
The account is comprised of:
| (in Euro thousands) | June 2021 | December 2020 |
|---|---|---|
| Agents' supplementary indemnity provision and others | 1,241 | 1,113 |
| Guarantee fund on client engineering orders | 521 | 392 |
| Total | 1,762 | 1,506 |
The account is comprised of:
| (in Euro thousands) | June 2021 | of which current portion |
December 2020 | of which current portion |
|---|---|---|---|---|
| Employee payables | 12,743 | 12,743 | 9,356 | 9,356 |
| Social security payables | 2,770 | 2,770 | 2,939 | 2,939 |
| Payables to parent for income taxes | 230 | 230 | 230 | 230 |
| Tax payables | 2,729 | 2,729 | 2,450 | 2,450 |
| Other payables | 3,287 | 3,287 | 3,457 | 3,457 |
| Accrued liabilities and deferred income | 15,926 | 4,859 | 16,251 | 4,403 |
| Total other current and non-current liabilities | 37,685 | 26,618 | 34,683 | 22,835 |
| Total other non-current liabilities | 11,066 | 11,848 |
The most significant changes refer to:
Accrued liabilities and deferred income mainly comprise:
The account is comprised of:
| (in Euro thousands) | June 2021 | December 2020 |
|---|---|---|
| Trade payables | 94,108 | 62,134 |
| Payables to parent, associates and other related parties | 336 | 403 |
| Payments on account | 2,765 | 6,631 |
| Total | 97,209 | 69,168 |
This account includes payables related to the normal conduct of commercial activity by the Group, in particular, the purchase of raw materials and external processing services.
The increase strictly relates to the greater volume of activities in H1 2021.
At June 30, there were no debts falling due over five years in the balance sheet.
Current tax payables of Euro 1.5 million refer to Group company income tax payables.
The breakdown of revenues is shown below:
| June 2021 | June 2020 | Change | ||||
|---|---|---|---|---|---|---|
| in Euro | % | in Euro | % | in Euro | % | |
| millions | millions | millions | ||||
| EMEA | 167.4 | 60.9% | 133.3 | 59.9% | 34.1 | 25.6% |
| North America | 58.1 | 21.2% | 55.7 | 25.0% | 2.4 | 4.4% |
| Asia and Oceania | 48.3 | 17.6% | 33.1 | 14.9% | 15.2 | 46.0% |
| Rest of the world | 0.9 | 0.3% | 0.7 | 0.3% | 0.2 | 33.0% |
| Total | 274.7 | 100.0% | 222.7 | 100.0% | 52.0 | 23.3% |
Revenues almost entirely include the value of the sale of goods of the three Group product lines described above, that is, the BCF Product Line (carpet fibres), the NTF Product Line (clothing fibres) and the Polymers Product Line.
Revenues by Product Line, in addition to the comments on the increase in revenues compared to the previous year, are reported in the above paragraphs, in addition to the Directors' Report.
The revenue account includes, as a direct reduction, "cash discounts", which in the first half of 2021 totalled Euro 1.4 million.
"Other revenues and income" amounts to Euro 2.7 million and refers mainly to:
The account includes raw materials and consumables costs, in addition to changes in inventories.
The increase relates to the higher revenues in the period. The account is comprised of:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Raw materials and semi-finished goods | 120,190 | 97,710 |
| Ancillaries and consumables | 12,745 | 10,112 |
| Other purchases and finished products | 2,559 | 1,656 |
| Total | 135,494 | 109,477 |
The account is comprised of:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Transport, shipping & customs | 9,774 | 7,099 |
| Electricity, propulsive energy, water and gas | 18,203 | 16,026 |
| Maintenance | 4,372 | 4,317 |
| Services for personnel | 1,633 | 1,351 |
| Technical, ICT, commercial, legal & tax consultancy | 4,550 | 4,026 |
| Insurance | 1,274 | 1,137 |
| Marketing and advertising | 1,664 | 1,629 |
| Cleaning, security and waste disposal | 1,845 | 1,475 |
| Warehousing and external storage | 1,920 | 1,430 |
| External processing | 2,052 | 731 |
| Other sales expenses | 100 | 59 |
| Emoluments of statutory auditors | 78 | 82 |
| Other service costs | 1,375 | 1,674 |
| Rentals and hire | 1,261 | 1,258 |
| Total | 50,100 | 42,296 |
The increase in service costs follows the increase in production and sales volumes.
These costs are broken down as follows:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Wages and salaries | 43,303 | 40,025 |
| Social security expenses | 9,383 | 8,617 |
| Post-employment benefit | 988 | 976 |
| Other non-recurring costs | 582 | 1,168 |
| Director fees | 1,549 | 848 |
| Total | 55,805 | 51,635 |
The increase in personnel costs is primarily due to the greater hours worked in the first half of 2021, in addition to the usual productivity and efficiency bonuses not accrued in 2020 due to limited production levels as a result of the Covid-19 pandemic.
"Other personnel costs" refers primarily to personnel costs related to the extraordinary shutdowns of the plant of the company Aquafil Carpet Recycling#1.
The number of employees, broken down by category, is as follows:
| June 2021 | June 2020 | Average | |
|---|---|---|---|
| Managers | 49 | 46 | 48 |
| Middle managers | 142 | 135 | 139 |
| White-collar | 423 | 452 | 438 |
| Blue-collar | 2,146 | 2,154 | 2,150 |
| Total | 2,760 | 2,787 | 2,774 |
These costs are broken down as follows:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Taxes, duties & sanctions | 1,361 | 1,366 |
| Losses on asset sales | 1 | 288 |
| Other operating charges | 278 | 929 |
| Total | 1,640 | 2,582 |
The item "Taxes, duties and sanctions" mainly includes the costs for local taxes on real estate.
"Other operating charges" includes mainly costs incurred in H1 2020 regarding penalties received and costs incurred by the subsidiary Aquafil Jiaxing to deal with the COVID-19 emergency.
The account is comprised of:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Amortisation | 1,702 | 1,610 |
| Depreciation | 16,502 | 16,570 |
| RoU (Right-of-Use) depreciation | 3,823 | 3,574 |
| Write-down of intangible assets | 885 | 0 |
| Impairment - other tangible assets | 400 | 0 |
| Total | 23,312 | 21,754 |
For comments on write-downs, reference should be made to paragraphs 5.1 and 5.2.
The account is comprised of:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Doubtful debt provision | (77) | 3 |
| Provisions for risks and charges | 128 | 1,084 |
| Total | 51 | 1,087 |
This item, amounting to Euro 3.3 million, refers mainly to the capitalisations made in relation to the following projects:
The account is comprised of:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Derivative financial instruments | 338 | 0 |
| Other interest | 5 | 0 |
| Interest income current accts. | 148 | 197 |
| Total | 491 | 197 |
The account is comprised of:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Interest on bank loans and borrowings | 1,265 | 1,235 |
| Interest on bonds | 1,763 | 1,817 |
| Interest exp. on current accounts | 392 | 372 |
| Write-down of derivative financial instruments | 0 | 372 |
| Financial charges and interest expense | 402 | 446 |
| Total | 3,822 | 4,241 |
The breakdown of the account is as follows:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Total exchange gains | 2,735 | 4,291 |
| Total exchange losses | (2,475) | (1,749) |
| Total exchange differences | 260 | 2,541 |
The amount, equal to a gain of Euro 0.3 million for the period ended June 30, 2021, is the net balance between exchange rate gains (realised and unrealised) and exchange rate losses (realised and unrealised).
The breakdown of the account is as follows:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Current taxes | 1,865 | (561) |
| Deferred taxes | 212 | 932 |
| Total | 2,078 | 371 |
Income taxes, which amount to Euro 1.9 million in H1 2021, refer for Euro 1.6 million to income taxes on foreign companies and for Euro 0.3 million to IRAP.
Aquafil S.p.A. and Tessilquattro S.p.A. opted for the group taxation procedure as chosen by Aquafin Holding S.p.A. in accordance with Article 117 and subsequent of the Income Tax Code.
We report that Aquafil S.p.A. for the current year calculated the IRAP payable in accordance with the provisions for financial companies, at a rate of 4.65%.
The account is comprised of:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Non-recurring charges | 62 | 519 |
| Expansion costs Aquafil Group | 117 | 231 |
| ACR1 and ACR2 non-recurring costs | 560 | 1,491 |
| Restructuring and other personnel costs | 125 | 510 |
| Charges on investments | 83 | |
| Total non-recurring items | 947 | 2,751 |
| Investment income | (443) | 0 |
| Total non-recurring income | (443) | 0 |
| Non-operating income and charges | 504 | 2,751 |
The item "Expansion costs Aquafil Group" refers to costs incurred for the incorporation of the subsidiary Aquafil Japan Co. Ltd..
"ACR1 non-recurring costs" primarily relate to costs incurred by Aquafil Carpet Recycling #1, Inc. for extraordinary machine stoppages.
"Restructuring and other personnel costs" refer mainly to the leaving incentive settled by the Parent Company.
The breakdown of the account is as follows:
| (in Euro thousands) | June 2021 | June 2020 |
|---|---|---|
| Profit attributable to the owners of the Parent | 8,911 | (1,935) |
| Weighted average number of shares | 50,991 | 50,991 |
| Earnings/(loss) per share | 0.17 | (0.04) |
We point out that diluted earnings per share is equal to the above-mentioned earnings per share because there are no stock option plans.
Below is the breakdown of the net financial debt at June 30, 2021 and December 31, 2020, determined in accordance with the ESMA Guidelines (32-382-1138):
| Net Financial Debt (in Euro thousands) |
June 30, 2021 | December 31, 2020 | |
|---|---|---|---|
| A. | Liquidity | 165,854 | 208,954 |
| B. | Cash and cash equivalents | 0 | 0 |
| C. | Other current financial assets | 8,359 | 834 |
| D. Liquidity (A + B + C) | 174,213 | 209,787 | |
| E. Current financial debt (including debt instruments but excluding the current | (28) | (131) | |
| portion of non-current financial debt) | |||
| F. | Current portion of non-current financial debt | (64,136) | (75,833) |
| G. Current financial debt (E + F) | (64,163) | (75,964) | |
| H. Net current financial debt (G - D) | 110,050 | 133,824 | |
| I. | Non-current financial debt (excluding current portion and debt instruments) | (204,359) | (262,154) |
| J. | Debt instruments | (90,380) | (90,406) |
| K. | Trade payables and other non-current payables | 0 | 0 |
| L. | Non-current financial debt (I + J + K) | (294,739) | (352,560) |
| M. Total financial debt (H + L) | (184,689) | (218,736) |
The net financial reconciliation between the beginning and end of the year are presented below. The effects indicated include the currency effects.
| (in Furo thousands) |
|---|
(in Euro thousands) of which current portion of which non-current portion
| Net Debt at December 31, 2020 | (218,736) | 133,824 | (352,560) |
|---|---|---|---|
| Net cash flow in the period | (43,100) | (43,100) | |
| Change in liquidity subject to restrictions | 7,525 | 7,525 | |
| New bank loans and borrowings | 0 | 0 | |
| Repayment/reclass. bank loans and borrowings | 67,152 | 12,051 | 55,101 |
| Repayment/reclass. lease liability | 2,029 | (354) | 2,381 |
| Change in fair value derivatives | 338 | 338 | |
| Other changes | 104 | 104 | |
| Net Debt at June 30, 2021 | (184,689) | 110,050 | (294,739) |
Regarding indirect debt as defined by the ESMA Guidelines, reference should be made to the comments in paragraphs "5.14 Provisions for risks and charges" and "9.1 Commitments and risks".
Transactions and balances with related parties are illustrated in the tables below. The companies indicated are considered related parties as directly or indirectly related to the majority shareholder of the Aquafil Group. Transactions with related parties were undertaken in line with market conditions.
Payables and receivables of the Group with related parties are illustrated in the table below:
| (in Euro thousands) | Parent companies |
Related parties |
Total | Total book value |
% on total account items |
|---|---|---|---|---|---|
| Non-current financial assets | |||||
| At June 30, 2021 | 234 | 79 | 313 | 648 | 48.30% |
| At December 31, 2020 | 234 | 79 | 313 | 650 | 48.15% |
| Trade receivables | |||||
| At June 30, 2021 | 29 | 29 | 30,985 | 0.09% | |
| At December 31, 2020 | 66 | 66 | 22,015 | 0.30% | |
| Other current assets | |||||
| At June 30, 2021 | 3,639 | 10 | 3,649 | 17,003 | 21.46% |
| At December 31, 2020 | 3,187 | 3,187 | 11,981 | 26.60% | |
| Non-current financial liabilities | |||||
| At June 30, 2021 | (1,636) | (2,420) | (4,056) | (294,739) | 1.38% |
| At December 31, 2020 | (2,180) | (3,226) | (5,406) | (352,560) | 1.53% |
| Current financial liabilities | |||||
| At June 30, 2021 | (519) | (2,621) | (3,140) | (64,163) | 4.89% |
| At December 31, 2020 | (513) | (2,848) | (3,361) | (75,964) | 4.42% |
| Trade payables | |||||
| At June 30, 2021 | 0 | (336) | (336) | (97,209) | 0.35% |
| At December 31, 2020 | (62) | (341) | (403) | (69,168) | 0.58% |
| Other current liabilities | |||||
| At June 30, 2021 | (230) | (230) | (26,618) | 0.87% | |
| At December 31, 2020 | (230) | (230) | (22,835) | 1.01% |
The transactions of the Group with related parties are illustrated in the table below:
| Parent companies |
Other related |
Total | Book value | % on total account items |
|
|---|---|---|---|---|---|
| (in Euro thousands) | parties | ||||
| Revenues | |||||
| H1 2021 | 27 | 27 | 274,700 | 0.01% | |
| H1 2020 | 27 | 27 | 222,733 | 0.01% | |
| Service costs and rent, lease and similar costs | |||||
| H1 2021 | (212) | (212) | (50,100) | 0.42% | |
| H1 2020 | (211) | (211) | (42,296) | 0.50% | |
| Other operating costs and charges | |||||
| H1 2021 | (35) | (35) | (1,640) | 2.13% | |
| H1 2020 | (35) | (35) | (2,582) | 1.36% | |
| Financial charges | |||||
| H1 2021 | (23) | (56) | (79) | (3,822) | 2.07% |
| H1 2020 | (28) | (95) | (123) | (4,241) | 2.90% |
At June 30, 2021, the Parent Company provided sureties in favour of credit institutions in the interest of subsidiaries for a total of Euro 19.3 million.
Provided below is a list of fiscal positions and disputed defined and pending as at the balance sheet date that concern the Parent Company, Aquafil S.p.A. We are not aware of the existence of further disputes or proceedings that are likely to have significant repercussions on the Group's economic and financial situation.
(i) Tax audit Aqualeuna GmbH
The company Aqualeuna GmbH received on July 15, 2021 from the competent German tax authorities a notice of closure of tax audits relating to the tax years 2013-2017 regarding inter-company transfer pricing. The tax litigation thus settled gives rise to opposing tax effects for the individual companies, Aqualeuna GmbH and Aquafil S.p.A., which offset one another at consolidated level for the Aquafil Group and which, in particular, resulted in:
With regards to this matter, it should be noted that the German tax authorities notified Aqualeuna GmbH on July 9, 2021 of the initiation of a tax audit for the periods 2018-2019, which is expected to begin in September 2021, for which, in the event of the emergence of taxable income in Germany, it is expected that the same international join-audit procedure already tested between the two administrations for the 2016 tax year may be applied, or in any case other possible procedures that are considered to make it possible to recover any amounts arising in Germany for taxation in Italy.
In view of the above, and with the support of tax consultants, no provisions have been made to cover any potential future liabilities.
(ii) Settlement notice for registry tax on sale of Aquafil EP S.p.A.
Settlement notice of December 21, 2017 for Euro 1,343 thousand of registration tax, in addition to penalties and interest, connected with the sale of the share package of Aquafil EP S.p.A. (later becoming Domo Engineering Plastic S.p.A.) on May 31, 2013. Domo Chemicals Italy S.r.l. has provided for the payment of 100% of the tax plus interest. The Company, in turn, paid Domo Chemicals Italy S.r.l. 50% of the due amount, recording in the 2018 financial statements, a receivable from Domo Chemicals Italy S.r.l., confident in the settlement of that due as the notice is considered undisputedly illegitimate by tax consultants. The court of appeals issued its ruling on July 21, 2020, declaring the issues of constitutionality referred to in the dispute (Article 1, paragraph 1084, of the 2019 Budget Law) to be unfounded. On August 4, 2020, the company filed a request for a hearing which, based on the telephone contacts with the Office, should be held next September. It is confirmed, also with the support of tax consultant opinions, that the risk of losing the case is remote.
(iii) Audit of income tax, IRAP and VAT for 2015
In February 2019, the Trento Office of the Italian tax authority launched a general audit of the 2015 tax period for Aquafil S.p.A., which concluded with the notification, on June 14, 2019, of a tax assessment that revealed a number of findings in relation to transfer pricing for a maximum potential risk for the Company of approx. Euro 876 thousand. The company, supported by its consultants' opinions, given the current health emergency, which has not permitted the entering into effective discussions with the authorities concerning numerous disputed aspects, as to both the merits and the amount, specifically concerning the issues raised, has decided in agreement with the Office, to await the arrival of the assessment notice, which is expected by January 31, 2022. Therefore, it is currently too early to quantify the contingent liability, which is currently seen as merely possible, not probable, and cannot, in any event, be quantified.
(iv) Suspension of VAT refund – 2019 fiscal year
On June 22, 2020, the Company filed for a VAT refund in the amount of Euro 488,147 by way of the 2020 tax return (for 2019 income). The reason given was the lower excess credit not transferable for the payment of group VAT (as per Articles 33 and 73 of Italian Presidential Decree 633/1972). After examining the documentation provided by the Company during the procedures for disbursing the refund, the tax office, during a meeting held on October 13, 2020, at the Trento Office, raised certain doubts concerning the VAT payable by Space3 up to the moment of its merger into Aquafil and, consequently, the right to VAT deduction. With regard to these doubts, in November 2020, the Company issued clarifications in order to obtain recognition of the right to deduct the VAT paid by Space3 (now Aquafil) during the period prior to the merger and, consequently, settlement of the VAT credit to be refunded. Within this context, and given the assessment on the 2015 fiscal year, on November 6, 2020, the tax office issued an order suspending the VAT refund in order to defer execution of the refund in accordance with Article 69 of Italian Royal Decree no. 2440/1923.
There were no significant events for the Aquafil Group subsequent to the first half of 2021 which could have an impact on the Half-Year Financial Statements at June 30, 2021, with the exception of the new developments regarding the Aqualeuna GmbH tax dispute and in terms of the new digital platform which went online on July 1, 2021, as outlined in the "Significant events after June 30, 2021" section of the Directors' Report.
Arco, September 1, 2021
The Chairman of the Board of Directors The Executive Officer Mr. Giulio Bonazzi Mr. Sergio Calliari
$\mathcal{V}$
Part of the Contract
67 Statement of the Principal Financial Officer and the Delegated Bodies
69 Report on the Audit of the Half-Year Directors' Report at June 30, 2021
Aquafil S.p.A. Via Linfano 9 - Arco (TN) - Italy P.I.: 09652170961
of the administrative - accountability procedures aimed at preparing the half-yearly statements as of June 30th, 2021.
The interim management report shall include a reliable analysis of the references to important events that occurred in the first six months of the year and their impact on the consolidated half-yearly financial statement, together with a description of the main risks and uncertainties for the remaining six months of the year. The interim management report shall also include a reliable analysis of information on relevant transactions with related parties.
Arco, September 1st, 2021
Managing Director
Principal F hancial
Independent auditor's report
Aquafil SpA
Review report on consolidated condensed interim financial statements as of 30 June 2021
To the shareholders of AQUAFIL SPA
We have reviewed the accompanying consolidated condensed interim financial statements of AQUAFIL SPA and its subsidiaries (the "AQUAFIL Group") as of 30 June 2021, comprising the statement of financial position, income statement, statement of comprehensive income, cashflow statement, statement of changes in equity and related notes. The directors of AQUAFIL SpA are responsible for the preparation of the consolidated condensed interim financial statements in accordance with International Accounting Standard 34 applicable to interim financial reporting (IAS 34) as adopted by the European Union. Our responsibility is to express a conclusion on these consolidated condensed interim financial statements based on our review.
We conducted our work in accordance with the criteria for a review recommended by Consob in Resolution No. 10867 of 31 July 1997. A review of consolidated condensed interim financial statements consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than a fullscope audit conducted in accordance with International Standards on Auditing (ISA Italia) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the consolidated condensed interim financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the
accompanying consolidated condensed interim financial statements of AQUAFIL Group as of 30 June 2021 are not prepared, in all material respects, in accordance with International Accounting Standard 34 applicable to interim financial reporting (IAS 34) as adopted by the European Union.
Trento, 1 September 2021
PricewaterhouseCoopers SpA
Signed by
Alberto Michelotti (Partner)
This report has been translated into the English language from the original, which was issued in Italian, solely for the convenience of international readers.
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