Earnings Release • Jul 22, 2015
Earnings Release
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The undersigned declare that:
Eric Van Zele, CEO Carl Peeters, CFO
| IN THOUSANDS OF EURO | 1st half 2015 | 1st half 2014 |
|---|---|---|
| Continuing business | ||
| Net sales | 506,167 | 434,073 |
| Gross Profit | 179,304 | 144,457 |
| EBIT | 7,453 | 12,717 |
| EBITDA | 40,509 | 46,752 |
| Capitalized development | 0 | 24,482 |
| Adjusted EBITDA1 | 40,509 | 22,270 |
| Profit before taxes | 7,587 | 11,730 |
| Net income from continuing operations | 5,388 | 9,648 |
| Net income from discontinued operations | 46,295 | 1,359 |
| Net income | 51,683 | 11,007 |
| Net income attributable to non-controlling interest | 5,247 | 2,520 |
| Net income attributable to the equityholder of parent | 46,436 | 8,487 |
| Net income (continuing) attributable to the equityholder of parent | 141 | 7,128 |
| Net income (discontinued) attributable to the equityholder of parent | 46,295 | 1,359 |
| Earnings per share (in euro) | 3.86 | 0.69 |
| Diluted earnings per share (in euro) | 3.76 | 0.68 |
| Earnings (continuing) per share (in euro) | 0.01 | 0.58 |
| Diluted earnings (continuing) per share (in euro) | 0.01 | 0.57 |
1 Adjusted EBITDA (EBITDA minus capitalized development costs) is defined as earnings before taxes, interest expense, depreciations and amortizations less capitalized development expenses for both the current and prior periods.
SALES
30 June 2015 30 June 2014 Total (full-time equivalents) 3,305 3,919
| Michel Van de Wiele NV 200 20 |
12.76% | (1,660,049 shares) 200 |
|---|---|---|
| 2013 2012 2011 ACF IV Investment S.à.r.l. 100 10 |
2013 2012 2011 5.07% |
2011 (658,915 shares) 100 |
| Templeton Investment Counsel, LLC | 4.89% | (636,239 shares) |
| 0 0 3D NV (in millions of euro) |
3.38% (in millions of euro) |
0 (439,785 shares) (in millions of euro) |
| GO Investment Partners LLP | 3.06% | (397,419 shares) |
| Barco | 7.56% | (984,784 shares) |
| EBIT EBIT Public |
63.28% | EBITDA (8,235,286 shares) |
| (before restructuring & impairment) Total |
(after restructuring & impairment) 100% |
(before restructuring & impairment) (13,012,477 shares) |
| 120 120 Fully diluted 110 110 |
160 150 |
|
| 100 100 Michel Van de Wiele NV |
12.64% | 140 130.2 130 (1,660,049 shares) |
| 90 90 ACF IV Investment S.à.r.l. |
5.02% | 120 (658,915 shares) |
| 100.2 79 78.4 Templeton Investment Counsel, LLC 80 80 |
4.84% | 110 (636,239 shares) |
| GO Investment Partners LLP 70 70 |
68.4 97.6 69.6 3.03% |
100 (397,419 shares) |
| 3D NV | 3.35% | 90 (439,785 shares) |
| 60 60 Barco |
7.49% | 80 (984,784 shares) 70 |
| 50 50 Public |
63.63% | (8,359,316 shares) 60 |
| Total 40 40 |
100% | (13,136,507 shares) 50 |
Building on a strong first quarter and helped by favourable currency translations, Barco's first semester marks a return to robust sales growth and encouraging profitability. Successful growth initiatives in networking and collaboration, particularly ClickShare, and increased digital cinema sales in China, fueled the sales gains over last year.
Each of the divisions delivered increases in sales and in adjusted EBITDA margins. The Entertainment division sustained its leadership position in digital cinema while the Healthcare division continued to drive growth from IP-based operating room solutions. The Enterprise division continued to generate strong growth in the corporate segment with ClickShare, while control rooms sales stabilized and with profitability improvements under consideration.
The following statements are forward looking and actual results may differ materially.
Assuming foreign exchange rates remain at current levels, management expects to grow sales for the year in the high single digit range. Adjusted EBITDA, including planned growth initiatives for the second half, will improve moderately year-on-year.
In light of shortened product life cycles and rapidly evolving technologies, the Board of Directors of Barco has decided to adopt a more conservative capitalization methodology. The Board believes that this decision will better align the Company's financial statements with its business realities and enhance transparency of its reported results.
Therefore, effective 1 January, 2015, Barco will no longer capitalize product development expenses. Outstanding capitalized product development expenses will be amortized in accordance with the Company's current amortization policies.
Beginning with this 1H15 report, management will present "Adjusted EBITDA" defined as earnings before taxes, interest expense, depreciations and amortizations less capitalized product development expenses for prior periods.
Please see the comments in the financial report detailing the rationale behind the modification of capitalization methodology of development expenses.
1 Adjusted EBITDA is EBITDA minus capitalized development costs and before restructuring. See remarks on reporting methodology on page 2.
2 EBITDA: Had the company continued to capitalize product development expenses, EBITDA margin for 1H15 would have been approximately 12.8% compared to 10.1% for 1H14.
3 EBIT: Had the company continued to capitalize product development expenses, EBIT margin would have been approximately 6.2% compared to 2.9% for 1H14. See remarks on reporting methodology on page2.
Barco completed the divestiture of its Defense & Aerospace business on 31 January 2015.
To facilitate year-on-year trend analysis, the financial highlights reported above and the consolidated results show financials for the first half of 2014 and 2015 on a continuing basis and exclude the Defense and Aerospace contributions.
Following the divestiture of D&A and effective 1 January 2015, Barco streamlined its organization into three divisions: Entertainment, Enterprise, and Healthcare:
Order intake was 522.5 million euro, an increase of 15.9% compared to last year driven by increases in each division and each region. The order book at the end of the first semester of 2015 was 333.7 million euro, down from 356.0 million euro a year earlier and up from 302.2 million euro at the end of 2014.
| IN MILLIONS OF EURO | 1H15 | 2H14 | 1H144 | 2H13 | 1H13 |
|---|---|---|---|---|---|
| Order book | 333.1 | 302.2 | 356.2 | 334.5 | 330.7 |
| Order intake | 522.5 | 418.3 | 451.0 | 496.7 | 497.0 |
| IN MILLIONS OF EURO | 1H15 | 1H14 | Change 1H |
|---|---|---|---|
| The Americas | 37% | 33% | +28% |
| EMEA | 33% | 35% | +8% |
| APAC | 31% | 32% | +12% |
First semester sales were strong on group level and for each division. Growth was driven by good uptakes in the American and APAC regions.
| IN MILLIONS OF EURO | 1H15 | 2H14 | 1H14 | 2H13 | 1H13 |
|---|---|---|---|---|---|
| Sales | 506.2 | 474.3 | 434.1 | 481.6 | 526.9 |
| IN MILLIONS OF EURO | 1H15 | 1H14 | Change 1H |
|---|---|---|---|
| The Americas | 37% | 37% | +16% |
| EMEA | 31% | 36% | -0% |
| APAC | 32% | 27% | +40% |
4 Order Book 1H14 still includes Orthogon-order book for 13.1 million euro.
Gross profit margin increased to 35.4% for the first half of 2015 compared to 33.3% for the first half of 2014.
Driven in part by currency translations, total operational cash expenses were 147.6 million euro compared to 131.9 million euro a year earlier. As a percentage of sales, total indirect cash expenses were 29.2% compared to 30.4% for the first half of 2014.
Adjusted EBITDA was 40.5 million euro, compared to 22.3 million euro for the prior year first semester.
Adjusted EBITDA margin was 8.0% versus 5.1% for the first half of 2014. By division, adjusted EBITDA and Adjusted EBITDA margin is as follows:
| Sales | Adjusted EBITDA | Adjusted EBITDA % | |
|---|---|---|---|
| Entertainment | 264.4 | 27.5 | 10.4% |
| Enterprise | 138.9 | 2.7 | 1.9% |
| Healthcare | 104.7 | 10.3 | 9.9% |
| Intra-group eliminations | -1.8 | ||
| Group | 506.2 | 40.5 | 8.0% |
EBIT on the continuing basis – and impacted by the cessation of capitalization of development expenses - was 7.5 million euro or 1.5 % of sales reflecting amortization of outstanding capitalized product development expenses. For the first half of last year EBIT was 12.7 million euro or 2.9% of sales.
In the first half of 2015 taxes were 1.5 million euro for an effective tax rate of 20.0%, compared to 2.1 million euro in the first half of 2014, or an effective tax rate of 18.0%.
Net income from continuing operations was 5.4 million euro or 1.1% of sales compared to 9.6 million euro for the first half of 2014 or 2.2% of sales.
Net income attributable to the equityholders was 46.4 million euro, including net income from discontinued operations of 46.3 million euro, booked in connection with divestiture of Defense and Aerospace, compared to 8.5 million euro for the first half in 2014.
Net earnings per ordinary share (EPS) for the first semester were 3.86 euro, compared to 0.69 euro in 1H14. Fully diluted net earnings per share were 3.76 euro, compared to 0.68 euro last year.
Barco had a net financial cash position of 187.7 million euro, compared to 41.0 million euro on 30 June 2014 and 63.4 million euro on 31 December 2014.
The increase reflects inflow from a positive free cash flow and the proceeds from the divestiture of the Defense & Aerospace business, partially offset by uses of cash including dividend payments of 19.4 million euro and an investment of 12.1 million euro for the acquisition of ADVAN.
Free cash flow for the first half of 2015 was 14.5 million euro compared to a negative 14.5 million euro for the first half of 2014.
Barco generated 38.2 million euro in gross operating cash flow versus 46.8 million euro for the same period in 2014 while working capital increased with 10.2 million euro due to higher trade receivables and lower trade payables. Inventory levels decreased.
Net working capital balance was 5.1% of sales on an annualized base versus 4.9% of sales for 2014.
Capital expenditure, excluding capitalized development, was 18.1 million euro, compared to 10.7 million euro for the same period last year. Capitalized expenditure for 2015 will increase mainly driven by the investment in the One Campus program.
The One Campus program is an investment in new headquarters for Barco, bringing together nearly the entire Belgian Barco community on one campus. Total capital expenditure is expected to be approximately 50 million euro over 2014, 2015 and 2016. This investment will be partially offset by the sale of premises in Kortrijk to Esterline, in connection with the divestiture of the Defense & Aerospace business, and by the sale of the site in Kuurne. Depreciation on the investment will begin 1 January 2016 and continue for 20 years.
Capitalized Research & Development expenses were at 49.2 million euro down from 71.4 million euro at the end of 2014.
Due to the Board's decision regarding Barco's capitalization methodology, future development expenses will no longer be capitalized and the outstanding capitalized development asset will be further amortized over 2015 and 2016.
| 1H15 | 2H14 | 1H14 | Change 1H % | |
|---|---|---|---|---|
| Orders | 297.0 | 195.5 | 235.7 | +26.0% |
| Sales | 264.4 | 232.0 | 227.7 | +16.2% |
| Adjusted EBITDA | 27.5 | 11.6 | 22.7 | +21.1% |
| Adjusted EBITDA margin | 10.4% | 5.0% | 10.0% |
The Entertainment division delivered top-line increases in both the Cinema and Venues & Hospitality segments with Cinema accounting for 65% of orders and sales compared to 60% for the same period last year.
Barco generated sales growth for Digital Cinema on the strength of an uptick in wins in China and the deployment of projects in Brazil, resulting in increased market share.
In addition the company completed installations of high-end laser technology solutions, bringing the total to more than 25 installations worldwide; delivered laser-based solutions under the IMAX program; and launched the E-series projector to address customer needs in the lowerend rural and e-cinema end-markets that are converting to digital cinema. In the Venues and Hospitality segment the growth was fuelled by the launches and increasing sales of new image processing solutions while the projection business held its ground. This activity is investing in expanding its footprint in the fixed install market and is integrating and repositioning the former LiveDots (LED) venture.
The division continued to deliver healthy profitability with both adjusted EBITDA and adjusted EBITDA margin higher than in the first semester of last year.
| 1H15 | 2H14 | 1H14 | Change 1H % | |
|---|---|---|---|---|
| Orders | 135.2 | 129.3 | 126.2 | +7.1% |
| Sales | 138.9 | 144.4 | 115.4 | +20.4% |
| Adjusted EBITDA | 2.7 | 14.2 | -5.5 | N/M |
| Adjusted EBITDA margin | 1.9% | 9.8% | -4.8% |
The Enterprise division delivered improved results compared to last years' first semester with the Corporate segment contributing strong sales and profitability gains while Control Rooms sales stabilized. Adjusted EBITDA turned positive relative to the same period last year. Based on a thorough assessment of the Control Room segment's business model and market opportunities, Barco is now considering initiatives including rationalizing the product portfolio to improve profitability in line with the standard set for each of the company's business segments.
As a result of continued success of ClickShare, the Corporate segment accounted for approximately 45% of the division's order intake and sales, compared to 38% last year. While sales of corporate projectors remained slow, demand picked up after successfully launching the laser phosphor projector.
The Control Rooms segment continued to expand its portfolio of networking and connectivity software solutions while selling a balanced mix of LCD and rear-projection based solutions.
| 1H15 | 2H14 | 1H14 | Change 1H % | |
|---|---|---|---|---|
| Orders | 90.8 | 93.2 | 87.8 | +3.4% |
| Sales | 104.7 | 98.2 | 88.4 | +18.4% |
| Adjusted EBITDA | 10.3 | 8.4 | 1.9 | +442.0% |
| Adjusted EBITDA margin | 9.9% | 8.6% | 2.1% |
The Healthcare division sustained its market leadership position in the diagnostic and modality imaging segment while continuing to build its digital operating room business, expanding the network of channel partners and deploying systems in Europe and North America, and entering new geographies in the APAC region, including Japan, Australia and China. As of the end of the first semester, Barco had reached an important milestone of installing digital solutions in 500 operating rooms in Europe.
On 15 June 2015 Barco closed the acquisition of ADVAN, which is intended to strengthen the Healthcare division's position in the modality and surgical imaging segment particularly in North America. Barco will consolidate the results of ADVAN as of 1 July 2015.
The division posted improved profitability as a result of higher sales, gross profit margin improvements and cost saving actions taken in 2014. In addition, investments in establishing a distribution network in China have begun to yield results with the division receiving initial orders during the first semester and interest in the newly launched UNITI model has begun to translate into concrete orders from key accounts.
Management refers to the section "Risk Factors" in the Annual Report 2014 (pages 110 to 117), which remain valid for the second year-half of 2015.
New product development & product lifecycle management – Risks related to new products
Shorter life cycles of products, unpredictability of which development projects will become successful together with the volatility of technologies and the markets Barco operates in, made the Board of Directors conclude that Barco's development expenses no longer fully meet the criteria of IAS38.57. As the criteria of IAS38.57 are no longer fulfilled, our accounting policy, with respect to research and development costs, does no longer allow the capitalization of development expenses.
| IN THOUSANDS OF EURO | 1st half 2015 | 1st half 2014 |
|---|---|---|
| Continuing business | ||
| Net sales | 506,167 | 434,073 |
| Cost of goods sold | -326,863 | -289,616 |
| Gross profit | 179,304 | 144,457 |
| Research and development expenses | -70,354 | -44,169 |
| Sales and marketing expenses | -77,127 | -66,164 |
| General and administration expenses | -23,404 | -21,372 |
| Other operating income (expense) - net | -967 | -35 |
| EBIT | 7,453 | 12,717 |
| Interest income | 2,313 | 765 |
| Interest expense | -2,191 | -1,762 |
| Other non-operating income (expense) - net | 11 | 9 |
| Income before taxes | 7,587 | 11,730 |
| Income taxes | -1,517 | -2,111 |
| Result after taxes | 6,070 | 9,619 |
| Share in the result of joint ventures and associates | -681 | 29 |
| Net income from continuing operations | 5,388 | 9,648 |
| Net income from discontinued operations | 46,295 | 1,359 |
| Net income | 51,683 | 11,007 |
| Net income attributable to non-controlling interest | 5,247 | 2,520 |
| Net income attributable to the equity holder of the parent | 46,436 | 8,488 |
| Net income (continuing) attributable to the equity holder of the parent | 141 | 7,129 |
| Net income (discontinued) attributable to the equity holder of the parent | 46,295 | 1,359 |
| Earnings per share (in euro) | 3.86 | 0.69 |
| Diluted earnings per share (in euro) | 3.76 | 0.68 |
| Earnings (continuing) per share (in euro) | 0.01 | 0.58 |
| Diluted earnings (continuing) per share (in euro) | 0.01 | 0.57 |
| IN THOUSANDS OF EURO | 1st half 2015 | 1st half 2014 |
|---|---|---|
| Net income from continuing operations | 5,388 | 9,648 |
| Net income from discontinued operations | 46,295 | 1,359 |
| Net income | 51,683 | 11,007 |
| Other comprehensive income to be reclassified to profit or loss in subsequent periods: | ||
| Continuing operations | ||
| Exchange differences from continuing operations on translation of foreign operations | 15,634 | 2,041 |
| Net gain/(loss) on cash flow hedges continuing operations | 1,181 | -644 |
| Income tax | -236 | 116 |
| Net gain/(loss) on cash flow hedges continuing operations, net of tax | 945 | -528 |
| Other comprehensive income (loss) for the period (continuing), net of tax | 16,579 | 1,513 |
| Discontinued operations | ||
| Exchange differences from discontinued operations on translation of foreign operations | - | 341 |
| Other comprehensive income (loss) for the period (discontinued), net of tax | - | 341 |
| Other comprehensive income (loss) for the period, net of tax, attributable to equity holders of the parent | 15,990 | 1,921 |
| Other comprehensive income (loss) for the period, net of tax, non-controlling interest | 589 | -68 |
| Total comprehensive income (continuing), net of tax, attributable to equity holder of the parent | 21,378 | 11,229 |
| Total comprehensive income (discontinued) for the period, net of tax, attributable to equity holder of the parent | 46,295 | 1,700 |
| Total comprehensive income for the period, net of tax, attributable to equity holder of the parent | 67,673 | 12,929 |
| Total comprehensive income (continuing), net of tax, non-controlling interest | 589 | -68 |
| Total comprehensive income for the period, net of tax, non-controlling interest | 589 | -68 |
| IN THOUSANDS OF EURO | 30 June 2015 | 31 December 2014 |
|---|---|---|
| ASSETS | Continuing business | |
| Goodwill | 144,375 | 143,774 |
| Capitalized development cost | 49,235 | 71,351 |
| Other intangible assets | 56,417 | 55,926 |
| Land and buildings | 21,073 | 21,315 |
| Other tangible assets | 56,771 | 44,597 |
| Investments | 25,591 | 14,360 |
| Deferred tax assets | 70,449 | 68,219 |
| Other non-current assets | 28,903 | 15,736 |
| Non-current assets | 452,814 | 435,278 |
| Inventory | 179,270 | 185,631 |
| Trade debtors | 193,378 | 170,486 |
| Other amounts receivable | 18,398 | 18,940 |
| Cash and cash equivalents | 263,026 | 145,340 |
| Prepaid expenses and accrued income | 7,717 | 8,948 |
| Assets from discontinued operations | - | 110,761 |
| Current assets | 661,789 | 640,106 |
| Total assets | 1,114,603 | 1,075,384 |
| EQUITY AND LIABILITIES | ||
| Equity attributable to equityholders of the parent | 629,300 | 587,415 |
| Non-controlling interest | 9,964 | 7,146 |
| Equity | 639,263 | 594,561 |
| Long-term debts | 82,539 | 57,737 |
| Deferred tax liabilities | 5,794 | 6,830 |
| Other long-term liabilities | 2,842 | - |
| Non-current liabilities | 91,175 | 64,567 |
| Current portion of long-term debts | 8,586 | 7,130 |
| Short-term debts | 2,218 | 19,253 |
| Trade payables | 111,005 | 109,091 |
| Advances received from customers | 98,140 | 107,544 |
| Tax payables | 16,843 | 15,171 |
| Employee benefit liabilities | 47,983 | 44,759 |
| Other current liabilities | 18,268 | 5,204 |
| Accrued charges and deferred income | 42,798 | 33,390 |
| Provisions | 38,324 | 40,148 |
| Liabilities from discontinued operations | - | 34,567 |
| Current liabilities | 384,165 | 416,257 |
| Total equity and liabilities | 1,114,603 | 1,075,384 |
IAS 34 was applied to the half year financial report.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2014, except for the accounting treatment of development expenses and the adoption of new standards and interpretations effective as of 1 January 2015.
Change in accounting treatment of development expenses Shorter life cycles, unpredictability of which development projects will become successful together with the volatility of technologies and the markets Barco operates in, made the Board of Directors conclude that Barco's development expenses no longer meet the criteria of IAS38.57. As the criteria of IAS38.57 are no longer fulfilled, our accounting policy,
ACQUISITIONS AND DIVESTMENTS
Per 12 June 2015, Barco acquired 100% of the shares of the US-based company ADVAN Int'l Corp, a manufacturer of high-quality LCD displays for medical modality applications. The acquisition fits within Barco's strategy to grow its market share in the modality imaging segment and strengthen its partnerships with leading medical device manufacturers worldwide.
The total transaction cost paid at closing amounts to 13.5 million dollar, of which 3.4 million dollar was put in escrow. The contract further provides for an additional earn-out, which is capped at 5 million dollar over the next three years.
As the effective control is transferred on 1 July, 2015, the Advan figures will be taken up in the figures of the Barco Group from 1 July, 2015 onwards. The 13.5 million dollar paid is shown on the balance sheet per 30 June, 2015 as investments.
with respect to research and development costs, does no longer allow the capitalization of development expenses.
The new standards and interpretations effective as of 1 January 2015 include the following:
However, they do not impact the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group.
On September 29th, 2014, Barco reached an agreement with US-based aerospace and defense group Esterline Corporation to sell its Defense & Aerospace division. The sale, which covers both shares of the legal entities Barco Singapore Private Ltd, Barco Texen, Barco Federal Systems LLC and Barco Electronic Systems Ltd and assets of the Defense & Aerospace division in Belgium and the United States, is valued at 150 million euro. Closing of the deal was finalized on January 31st 2015.
According to the requirements of IFRS 5, net income of the Defense & Aerospace division were shown separately on the face of the income statement as 'Net income from discontinued operations' per 31 December 2014 in the annual report of 2014. The same was done for the balance sheet of the Defense & Aerospace division per 31 December 2014, as 'Assets and Liabilities from discontinued operations'. The 'net income from discontinued operations' per 30 June 2015 includes the result of the month January 2015 of Defense & Aerospace division and the result realized upon closing of the transaction, which has resulted in a (pre-tax) gain of 64 million euro. The net cash flows attributable to the operating, investing and financing of discontinued operations includes the cash flow of the month January 2015 of the Defense & Aerospace division. The income statement and net cash flow per 30 June 2014 have been restated.
| Cash flow on divestment | |
|---|---|
| Cash received | 159,500 |
| Net cash sold with the share deal subsidiaries | -8,000 |
| Net cash flow on divestment | 151,500 |
| IN THOUSANDS OF EURO | 1st half 2015 | 1st half 2014 |
|---|---|---|
| Discontinued | ||
| Net sales | 5,775 | 63,935 |
| Cost of goods sold | -8,792 | -44,298 |
| Gross profit | -3,017 | 19,637 |
| Research and development expenses | -294 | -7,017 |
| Sales and marketing expenses | -2,083 | -8,104 |
| General and administration expenses | -587 | -3,970 |
| Other operating income (expense) - net | 63,847 | 1,108 |
| EBIT | 57,867 | 1,654 |
| Interest income | - | 2 |
| Interest expense | -2 | - |
| Income before taxes | 57,866 | 1,655 |
| Income taxes | -11,571 | -296 |
| Result after taxes | 46,295 | 1,359 |
| Share in the result of joint ventures and associates | - | - |
| Net income from discontinued operations | 46,295 | 1,359 |
Apart from compensation transactions with the CEO, Senior Vice Presidents and Directors of the Board, there were no other transactions with related parties. The nature of the compensation transactions with the CEO, Senior Vice Presidents and Directors during the first 6 months of 2015 did not significantly differ from the transactions disclosed in the Annual Report of 2014 (pages 106 - 107).
All transactions involving shares or other financial instruments of Barco performed in the first half year of 2015 are reported on the company's website by the end of the month following the quarter.
No important changes occurred during the first 6 months of 2015 relating to the litigations and commitments which have been disclosed in the 2014 consolidated financial statements.
| IN THOUSANDS OF EURO | 1st half 2015 | 1st half 2014 |
|---|---|---|
| Equity attributable to equityholders of the parent December 31 | 587,415 | 574,943 |
| Net income (continuing) attributable to the equity holder of the parent | 141 | 7,129 |
| Net income (discontinued) attributable to the equity holder of the parent | 46,295 | 1,359 |
| Net income attributable to equityholders of the parent | 46,436 | 8,487 |
| Dividend | -19,364 | -18,410 |
| Other comprehensive income (loss) for the period, net of tax | 15,990 | 1,921 |
| Capital decrease | -262 | -741 |
| Purchase (-)/Sale (+) of own shares | -1,570 | -1,543 |
| Share-based payment | 656 | 634 |
| Equity attributable to equityholders of the parent June 30 | 629,300 | 565,291 |
| Non-controlling interest December 31 | 7,146 | 4,423 |
| Dividend distributed to non-controlling interest | -3,019 | -1,728 |
| Net income (continuing) attributable to non-controlling interest | 5,247 | 2,520 |
| Net income (discontinued) attributable to non-controlling interest | - | |
| Net income attributable to non-controlling interest | 5,247 | 2,520 |
| Other comprehensive income (loss) for the period, net of tax | 589 | -68 |
| Non-controlling interest June 30 | 9,964 | 5,147 |
| Equity June 30 | 639,263 | 570,438 |
| IN THOUSANDS OF EURO | 1st half 2015 | 1st half 2014 |
|---|---|---|
| Cash flow from operating activities | Continuing business | |
| EBIT | 7,453 | 12,717 |
| Gain on sale Orthogon | -1,406 | - |
| Amortization capitalized development cost | 23,290 | 24,356 |
| Depreciation of tangible and intangible fixed assets | 9,765 | 9,679 |
| Gain/(Loss) on tangible fixed assets | -190 | 21 |
| Share options recognized as cost | 656 | 634 |
| Share in the profit/(loss) of joint ventures and associates | -681 | 29 |
| Discontinued operations : cash flow from operating activities | -5,260 | 8,118 |
| Gross operating cash flow | 33,628 | 55,555 |
| Changes in trade receivables | -15,550 | 9,192 |
| Changes in inventory | 12,488 | -20,371 |
| Changes in trade payables | -6,515 | 4,534 |
| Other changes in net working capital | -626 | -19,509 |
| Discontinued operations : change in net working capital | 13,334 | 4,549 |
| Change in net working capital | 3,131 | -21,604 |
| Net operating cash flow | 36,759 | 33,951 |
| Interest received | 2,313 | 765 |
| Interest paid | -2,191 | -1,762 |
| Income taxes | -7,913 | -3,774 |
| Discontinued operations : income taxes and interest received/(paid) | -7,542 | -418 |
| Cash flow from operating activities | 21,426 | 28,762 |
| Cash flow from investing activities | ||
| Expenditure on product development | 0 | -24,482 |
| Purchases of tangible and intangible fixed assets | -6,052 | -9,644 |
| Proceeds on disposals of tangible and intangible fixed assets | 295 | 4,058 |
| Acquisition of Group companies, net of acquired cash 1 | -0 | -20,340 |
| Disposal of Group companies, net of disposed cash 2 | 152,974 | - |
| Other investing activities 3 | -23,540 | - |
| Dividend distributed to non-controlling interest | -3,019 | -1,728 |
| Discontinued operations : cash flow from investing activities | -887 | -6,165 |
| Cash flow from investing activities (including acquisitions and divestments) | 119,772 | -58,300 |
| Cash flow from financing activities | ||
| Dividends paid | -19,364 | -18,410 |
| Capital increase/(decrease) | -262 | -741 |
| (Acquisition)/sale of own shares | -1,570 | -1,543 |
| Proceeds from (+)/Payments (-) of long-term liabilities | 7,618 | -88 |
| Proceeds from (+), payments of (-) short-term liabilities | -20,134 | -14,160 |
| Cash flow from financing activities | -33,712 | -34,943 |
| Net decrease/increase in cash and cash equivalents | 107,486 | -64,481 |
| Cash and cash equivalents at beginning of period | 145,340 | 156,545 |
| Cash and cash equivalents (CTA) | 10,200 | 374 |
| Cash and cash equivalents at end of period | 263,026 | 92,438 |
1 Per 30 June 2014 this relates to the acquisition X2O for an amount of 13.2 million, 2.5 million euro earn-out on Fimi acquisition paid to Philips, 1 million euro deferred consideration paid on JAOTech and 4.2 million euro on Awind. Per 30 June 2015 this relates to the sale of the division DAT finalized per 31 January 2015, net of cash and 1 million euro released of the amount put in escrow on the 2014 sale of Orthogon. Per 30 June 2015 Other investing activities relate to the acquisition of 100% of the shares of Advan, as transfer of control is assumed from 1st July, 2015 onwards, for an amount of € 12.1 million and the investment in One Campus, the new building at headquarters, for an amount of € 11.4m, which is financed with long term liabilities.
| IN THOUSANDS OF EURO | 1st half 2015 | 1st half 2014 | |
|---|---|---|---|
| Continuing business | |||
| EBIT | 7,453 | 12,717 | |
| Gain on sale Orthogon | -1,406 | - | |
| Amortization capitalized development cost | 23,290 | 24,356 | |
| Depreciation of tangible and intangible fixed assets | 9,765 | 9,679 | |
| Gain/(Loss) on tangible fixed assets | -190 | 21 | |
| Share in the profit/(loss) of joint ventures and associates | -681 | 29 | |
| Gross operating free cash flow | 38,232 | 46,802 | |
| Changes in trade receivables | -15,550 | 9,192 | |
| Changes in inventory | 12,488 | -20,371 | |
| Changes in trade payables | -6,515 | 4,534 | |
| Other changes in net working capital | -626 | -19,509 | |
| Change in net working capital | -10,203 | -26,153 | |
| Net operating free cash flow | 28,029 | 20,649 | |
| Interest received | 2,313 | 765 | |
| Interest paid | -2,191 | -1,762 | |
| Income taxes | -7,913 | -3,774 | |
| Cash flow from operating activities | 20,238 | 15,878 | |
| Expenditure on product development | 0 | -24,482 | |
| Purchases of tangible & intangible fixed assets | -6,052 | -9,644 | |
| Proceeds on disposals of tangible & intangible fixed assets | 295 | 4,058 | |
| Cash flow from investing activities (excluding acquisitions) | -5,757 | -30,068 | |
| Free cash flow continued | 14,481 | -14,190 |
Effective 1 January 2015, and in anticipation of closing the divestiture of the Defense & Aerospace activities, Barco continued the streamlining of its organization. Entertainment, Enterprise and Healthcare are now Barco's divisions:
Management monitors the results of each of the three divisions separately, so as to make decisions about resource allocation and performance assessment. Division performance is evaluated based on EBITDA minus capitalized development. Group financing (including finance costs and finance revenue) and income taxes are managed on a group basis and are not allocated to the operating divisions.
As a consequence, the group has aligned its segment reporting with this business structure, resulting in three operating segments.
Transfer prices between operating segments are on an arm's length basis in a manner similar to transactions with third parties.
The following table presents revenue and profit information regarding the Group's operating segments for the 6 months ending June 30, 2015 and 2014, respectively. Last year's figures have been restated to the new organization structure.
| IN THOUSANDS OF EURO | 2015 | 2014 | ||
|---|---|---|---|---|
| Sales | Adjusted EBITDA1 | Sales | Adjusted EBITDA1 | |
| Entertainment | 264,419 | 27,505 | 227,660 | 22,654 |
| Healthcare | 104,690 | 10,342 | 88,421 | 2,863 |
| Enterprise | 138,850 | 2,662 | 115,405 | -3,345 |
| Other (Orthogon in 2014) | 0 | 0 | 4,063 | 97 |
| Intra-group eliminations | -1,791 | 0 | -1,476 | 0 |
| Group continued | 506,167 | 40,509 | 434,073 | 22,270 |
Adjusted EBITDA: EBIT before restructuring + depreciations on capital expenditure + amortizations on capitalized development cost – capitalized development cost
The following table presents segment assets of the Group's operating segments ending June 30, 2015 and December 31, 2014:
| IN THOUSANDS OF EURO | 2015 | 2014 |
|---|---|---|
| 30 June 2015 | 31 December 2014 | |
| Assets | ||
| Segment assets | ||
| Entertainment | 327,991 | 312,084 |
| Healthcare | 130,924 | 131,139 |
| Enterprise | 202,307 | 212,322 |
| Total segment assets | 661,222 | 655,546 |
| Liabilities | ||
| Segment liabilities | ||
| Entertainment | 201,823 | 212,267 |
| Healthcare | 56,438 | 47,040 |
| Enterprise | 56,749 | 53,915 |
| Total segment liabilities | 315,011 | 313,222 |
Management directs sales of the Group based on the regions to which the goods are shipped or the services are rendered and has three reportable regions Europe, Middle East and Africa (EMEA), Americas (North America and LATAM) and Asia-Pacific (APAC). The pie charts below present the Group's sales over the regions for the 6 month period ended 30 June 2015 and 30 June 2014, respectively.
| GROUP | 1H 15 | % of total | 15 - 14 | |
|---|---|---|---|---|
| EMEA | 157.2 | 31.0% | -0.4 | -0.3% |
| AMERICAS | 184.8 | 36.5% | 25.5 | 16.0% |
| APAC | 164.2 | 32.4% | 47.0 | 40.1% |
No subsequent events occurred which could have a significant impact on the consolidated financial statements of the group per 30 June 2015.
REPORT OF THE STATUTORY AUDITOR TO THE SHAREHOLDERS OF BARCO NV ON THE REVIEW OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AS OF 30 JUNE 2015 AND FOR THE SIX MONTHS PERIOD THEN ENDED
We have reviewed the accompanying interim condensed consolidated statement of financial position of Barco NV (the "Company"), and its subsidiaries (collectively referred to as "the Group") as at 30 June 2015 and the related interim condensed consolidated statements of income, comprehensive income, changes in equity and cash flows for the six months period then ended, and explanatory notes, collectively, the "Interim Condensed Consolidated Financial Statements". These statements show a consolidated statement of financial position total of € 1.114.603 thousand and a net income for the six month period then ended of € 51.683 thousand. The directors are responsible for the preparation and presentation of these Interim Condensed Consolidated Financial Statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting ("IAS 34") as adopted for use in the European Union. Our responsibility is to express a conclusion on these Interim Condensed Consolidated Financial Statements based on our review.
We conducted our review in accordance with the International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the International Standards on Auditing 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.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying Interim Condensed Consolidated Financial Statements do not give a true and fair view of the financial position of the Group as at 30 June 2015, and of its financial performance and its cash flows for the six months period then ended in accordance with IAS 34.
Gent, 20 July 2015
Ernst & Young Bedrijfsrevisoren BCVBA Statutory auditor represented by
Marnix Van Dooren Partner*
Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0)56 23 32 11 Fax: +32 (0)56 26 22 62
Pres. Kennedypark 35 BE-8500 Kortrijk Tel.: +32 (0)56 23 32 11 Fax: +32 (0)56 26 22 62
Stock exchange NYSE Euronext Brussels
More information can be obtained at the Investor Relations Department of the group management:
VP Investor Relations Tel.: +32 (0)56 26 23 22 Fax: +32 (0)56 26 22 62 E-mail: [email protected]
Carl Peeters Senior VP-CFO
President Kennedypark 35 8500 Kortrijk – Belgium
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