CIR Group

Earnings Release • Mar 11, 2019

Informazione Regolamentata n. 0097-28-2019		Data/Ora Ricezione 11 Marzo 2019 21:39:58	MTA
Societa'	:	COFIDE
Identificativo Informazione Regolamentata	:	114954
Nome utilizzatore	:	COFIDEN03 - Speciale
Tipologia	:	REGEM; 1.1; 2.2
Data/Ora Ricezione	:	11 Marzo 2019 21:39:58
Data/Ora Inizio Diffusione presunta	:	11 Marzo 2019 21:39:59
Oggetto	:	2018	COFIDE Group: net income at € 4.5 mln for
Testo del comunicato

Vedi allegato.

PRESS RELEASE

Board of Directors approves results for year ended December 31 2018

COFIDE GROUP: NET INCOME AT € 4.5 MLN FOR 2018 DIVIDEND OF € 0.0145 PER SHARE

Highlights from the results for 2018

(in millions of €)
	2017*	2018	Δ%
Revenues	2,754.2	2,817.4	+2.3%
EBITDA	329.6	304.7	+12.4%
Net result	(3.0)	4.5
Net financial debt	303.6	323

*Some values for 2017 were recalculated following the application of "IFRS 15 – Revenue from Contracts with Customers"

Milan, March 11 2019 – The Board of Directors of COFIDE-Gruppo De Benedetti S.p.A., which met today in Milan under the chairmanship of Rodolfo De Benedetti, approved the proposed statutory Financial Statements and the Consolidated Financial Statements for the year ended December 31 2018. The Board approved the 2018 Consolidated Non-Financial Disclosure (DNF), prepared in accordance with the terms of Legislative Decree no. 254/2016. The Board also voted to propose to the Annual General Meeting of the Shareholders the distribution of a dividend of € 0.0145 per share.

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

Consolidated results and results of the parent company

The revenues of the COFIDE group in 2018 totalled € 2,817.4 million and were up by 2.3% (+5.2% at constant exchange rates) from € 2,754.2 million in 2017.

EBITDA came to € 304.7 million (10.8% of revenues), down by 7.5% from € 329.6 million (12% of revenues) in 2017.

In 2018 the COFIDE group reported consolidated net income of € 4.5 million compared to a loss of € 3 million in 2017. The result consisted of a positive contribution of € 7.3 million from the subsidiary CIR (-€ 3.3 million in 2017) and the negative contribution of the parent company of the group COFIDE S.p.A. of € 2.8 million (€ 0.3 million in 2017).

The subsidiary CIR closed the year 2018 with consolidated net income of € 12.9 million after a loss of € 5.9 million in the previous year. As was the case in 2017, when the net result of the group was affected by the extraordinary charge incurred by GEDI to settle a tax dispute for events going back to 1991, in 2018 again, non-recurring charges were reported in the investee GEDI for organizational restructuring and the write-down of goodwill and equity investments after impairment tests had been carried out. Excluding these items, the net result would be € 33.7 million.

The consolidated net financial debt of the COFIDE group at December 31 2018 amounted to € 323 million and was up by € 19.4 million from € 303.6 million at December 31 2017. The difference was due mainly to the investments made by KOS and Sogefi in acquisitions, the distribution of dividends, the buyback of own shares and the payment of the last instalment of GEDI's extraordinary tax charge, all of which were almost entirely offset by the considerable cash flow from operations.

The net debt of the parent company COFIDE S.p.A. came to € 25.9 million at December 31 2018 (€ 31.1 million at December 31 2017). The change was mainly the combination of an increase caused by outflows of € 2.5 million for the buyback of own shares and a reduction of € 9.8 million from the receipt of dividends net of those paid out.

Total shareholders' equity stood at € 1,436 million at December 31 2018 compared to € 1,469.6 million at December 31 2017.

The equity of the group totalled € 515.8 million at December 31 2018 versus € 521.2 million at December 31 2017. The change was substantially due to an increase from the net income for the year offset by the distribution of dividends and the buyback of own shares.

The equity of the parent company COFIDE S.p.A. amounted to € 561 million at December 31 2018 compared to € 562.2 million at the end of 2017. The equity increased by € 11.1 million, the amount of the result for the year, but was reduced by the dividend distribution of € 9.8 million and the buyback of own shares of € 2.5 million.

Financial investments at December 31 2018 were worth € 13.5 million.

At December 31 2018 the COFIDE group had 16,365 employees (15,839 at December 31 2017).

Outlook for the year 2019

COFIDE's performance in 2019 will depend mainly on the performance of the sectors in which it operates its strategic businesses.

KOS expects to see a marginal increase in revenues and margins as far as its current perimeter is concerned and will continue its development activities, particularly in Italy, both externally (acquisitions) and internally (greenfield development projects).

As for Sogefi, sources in the sector expect the market to be in line with 2018, with a decline in production in the first half of the year and a recovery in the second half. It should however be stressed that there is little visibility at the moment as to how the whole year will evolve, and as to market volatility, which remains high. The evolution of commodity prices is equally uncertain. In this climate, Sogefi is forecasting revenues in line with the market and is committed to recouping profitability, especially in the Suspensions sector.

As far as GEDI is concerned, evidence available today does not allow us to forecast any change in the market that is significantly different from what characterized 2018. In this environment, the group will continue with its commitment to implementing rationalization initiatives to preserve its profitability in a market that is structurally difficult, and will continue to reap further benefits from its merger with the ITEDI group, while strengthening its leadership in the digital businesses.

Annual General Meeting of the Shareholders

The Annual General Meeting of the Shareholders has been convened for April 29 2019 at a single call. At today's meeting the Board resolved:

• To put before the Shareholders' Meeting a motion to cancel and renew the Board's authorization for a period of 18 months to buy back a maximum of 70 million of the Company's own shares at a unit price that cannot be more than 10% higher or lower than the benchmark price recorded by the shares on regulated markets on the trading day preceding each single buyback transaction or the date on which the price is fixed. In any case, when the shares are bought back in the regulated market, the price must not be higher than the higher of the price of the last independent transaction and the highest current independent bid price on the same market, in compliance with what is set out in EU Delegated Regulation no. 2016/1052. The main reasons why this authorization is being renewed are: to fulfil the obligations resulting from possible stock option plans or other awards of shares of the Company to employees or members of the Board of Directors of COFIDE or its subsidiaries; to fulfil any obligations resulting from debt instruments that are convertible into or exchangeable with equity instruments; to have a portfolio of own shares to use as consideration in any possible extraordinary transactions, even those involving an exchange of equity holdings with other entities within the scope of transactions of interest to the Company (a so-called "stock of securities"); to support market liquidity of the shares; to take advantage of opportunities for creating value, as well as investing liquidity efficiently in relation to the market trend; for any other purpose qualified by the competent Authorities as admitted market practice in accordance with applicable European or domestic rules, and with the procedures established therein.

The Board of Directors also voted to submit the following proposal to the extraordinary session of the Annual General Meeting:

• An amendment to the Bylaws to lengthen the period of continuous possession of the shares needed to benefit from increased voting rights (so-called Vesting Period) from the current 24 months to 48 months. Any shareholders of COFIDE who do not agree to the adoption of this resolution will be able to exercise the right of withdrawal as per the terms of Art. 2437, paragraph 1, letter g), of the Civil Code. The effective application of this amendment to the Bylaws will be subject to the condition, which COFIDE may waive, that the total value of the sale of COFIDE shares for which the right of withdrawal may be validly exercised, does not exceed Euro 5 million. The unit price paid for the liquidation of the shares of the Company will be calculated in accordance with the terms of Article 2437/ter, paragraph 3, of the Civil Code, with exclusive reference to the arithmetic average of the closing prices in the six months preceding the date of publication of the notice of Annual General Meeting, and will be published in accordance with the terms of the law and regulations. The amendment of the Bylaws will take effect on the thirtieth day following the date of completion of the merger by incorporation of CIR into COFIDE, approved today by the respective Boards of Directors, and in any case as from June 1 2020.

The Annual General Meeting will also be called upon to adopt a resolution to renew the Board of Directors.

***

Proposed dividend

The Board of Directors has decided to put before the Shareholders' Meeting a dividend of € 0.0145 per share. The dividend will be paid out with detachment of coupon no. 34 on July 8 2019, record date July 9 2019 and payment date July 10 2019 in favour only of shareholders who have not exercised the right of withdrawal.

For further information on the plan for the merger by incorporation of CIR into COFIDE, see the joint press release published today.

For further information on the results of the subsidiary CIR, see the press release published by the company today (goo.gl/LbJjMf).

***

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

***

Mariella Speciale Tel.: +39 02 722701 e-mail: infostampa@cirgroup.it www.cofide.it

Alternative performance indicators

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

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

Attached are key figures from the consolidated statement of financial position and income statement

(in thousands of euro)

ASSETS		31.12.2018		31/12/2017
				(**)
NON-CURRENT ASSETS		2,328,789		2,352,230
INTANGIBLE ASSETS		1,139,840		1,156,202
TANGIBLE ASSETS		822,444		799,830
INVESTMENT PROPERTY		18,677		19,434
INVESTMENTS CONSOLIDATED USING THE EQUITY METHOD		110,179		125,181
OTHER EQUITY INVESTMENTS		12,525		12,249
OTHER RECEIVABLES		50,655		56,874
OTHER FINANCIAL ASSETS		75,469		79,511
DEFERRED TAX ASSETS		99,000		102,949
CURRENT ASSETS		1,218,476		1,294,304
INVENTORIES		134,218		139,222
TRADE RECEIVABLES		420,969		472,614
of which with related parties (*)	690		1,677
OTHER RECEIVABLES		79,283		105,207
of which with related parties (*)	105		105
FINANCIAL RECEIVABLES		25,773		21,717
SECURITIES		33,563		57,228
OTHER FINANCIAL ASSETS		276,880		235,251
CASH AND CASH EQUIVALENTS		247,790		263,065
ASSETS HELD FOR DISPOSAL		13,599		3,418
TOTAL ASSETS		3,560,864		3,649,952
LIABILITIES AND SHAREHOLDERS' EQUITY		31.12.2018		31.12.2017
EQUITY		1,436,037		1,469,585
SHARE CAPITAL		347,523		350,011
RESERVES		51,490		76,349
RETAINED EARNINGS (LOSSES)		112,263		97,758
NET INCOME (LOSS) FOR THE YEAR		4,535		(2,967)
EQUITY OF THE GROUP		515,811		521,151
MINORITY SHAREHOLDERS' EQUITY		920,226		948,434
NON-CURRENT LIABILITIES		1,046,239		1,099,686
BONDS		270,254		365,112
OTHER BORROWINGS		365,004		281,863
OTHER PAYABLES		63,003		72,116
DEFERRED TAX LIABILITIES		169,864		171,963
PERSONNEL PROVISIONS		135,091		139,735
PROVISIONS FOR RISKS AND LOSSES		43,023		68,897
CURRENT LIABILITIES		1,069,224		1,080,681
LOANS FROM BANKS		13,046		17,551
BONDS		113,801		20,168
OTHER BORROWINGS		144,874		196,189
TRADE PAYABLES		497,420		513,928
of which to related parties (*)	2,238		1,830
OTHER PAYABLES		212,706		261,601
PROVISIONS FOR RISKS AND LOSSES		87,377		71,244
LIABILITIES HELD FOR DISPOSAL		9,364		--
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		3,560,864		3,649,952

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

(**) Some values for 2017 were recalculated after application of "IFRS 15 – Revenue from contracts with customers"

Income Statement

(in thousands of euro)

		2018		2017 (**)
REVENUES		2,817,434		2,754,192
CHANGE IN INVENTORIES		(1,995)		(4,268)
COSTS FOR THE PURCHASE OF GOODS		(1,004,032)		(980,475)
COSTS FOR SERVICES		(679,498)		(656,550)
of which from related parties (*)	(3,163)		(2,573)
PERSONNEL COSTS		(787,016)		(732,661)
OTHER OPERATING COSTS		40,237		30,907
of which with related parties (*)	1,838		1,949
OTHER OPERATING COSTS		(80,469)		(81,513)
AMORTIZATION, DEPRECIATION AND WRITE-DOWNS		(204,385)		(176,773)
OPERATING RESULT		100,276		152,859
FINANCIAL INCOME		8,800		9,594
of which from related parties (*)	2		3
FINANCIAL EXPENSE		(53,162)		(59,356)
DIVIDENDS		2,783		5,373
GAINS FROM TRADING SECURITIES		14,621		26,391
LOSSES FROM TRADING SECURITIES		(986)		(156)
SHARE OF INCOME (LOSS) OF INVESTEES CONSOLIDATED
USING THE EQUITY METHOD		677		(524)
ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS		(23,205)		(3,998)
RESULT BEFORE TAXES		49,804		130,183
INCOME TAXES		(32,287)		(181,159)
RESULT FROM OPERATIONS DESTINED TO CONTINUE		17,517		(50,976)
NET INCOME (LOSS) FROM OPERATIONS HELD FOR DISPOSAL		--		7,594
NET INCOME (LOSS) FOR THE YEAR INCLUDING MINORITY INTERESTS		17,517		(43,382)
- NET LOSS (INCOME) OF MINORITY SHAREHOLDERS		(12,982)		40,415
- NET INCOME (LOSS) OF THE GROUP		4,535		(2,967)
BASIC EARNINGS (LOSS) PER SHARE (in euro)		0.0065		(0.0042)
DILUTED EARNINGS (LOSS) PER SHARE (in euro)		0.0065		(0.0042)

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

(**) Some values for 2017 were recalculated on application of "IFRS 15 – Revenue from contracts with customers"

(in thousands of euro)

	2018	2017 (*)
OPERATING ACTIVITY
RESULT OF OPERATIONS DESTINED TO CONTINUE	17,517	(50,976)
ADJUSTMENTS:
AMORTIZATION, DEPRECIATION AND WRITE-DOWNS	204,385	176,773
ADJUSTMENT TO INVESTMENTS CONSOLIDATED USING THE EQUITY METHOD	2,976	4,806
ACTUARIAL VALUATION OF STOCK OPTION/STOCK GRANT PLANS	3,733	3,430
CHANGES IN PERSONNEL PROVISIONS, PROVISIONS FOR RISKS AND LOSSES	(11,965)	(37,324)
ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS	23,205	3,998
LOSSES (GAINS) ON THE SALE OF CAPITAL ASSETS	(11,396)	(22,877)
INCREASE (REDUCTION) IN NON-CURRENT RECEIVABLES/PAYABLES	(5,212)	2,074
(INCREASE) REDUCTION IN NET WORKING CAPITAL	15,952	42,476
CASH FLOWS FROM OPERATING ACTIVITY	239,195	122,380
of which:
- interest received (paid)	(32,747)	(32,945)
- income tax payments	(28,502)	(30,908)
INVESTMENT ACTIVITY
AMOUNT PAID FOR BUSINESS COMBINATIONS	(21,533)	(43,948)
NET FINANCIAL POSITION OF ACQUIRED COMPANIES	551	9,983
(PURCHASE) SALE OF SECURITIES	(24,259)	8,143
SALE OF CAPITAL ASSETS	10,278	14,223
PURCHASE OF CAPITAL ASSETS	(194,220)	(180,317)
CASH FLOW FROM INVESTMENT ACTIVITY	(229,183)	(191,916)
FINANCING ACTIVITY
INFLOWS FROM CAPITAL INCREASES	928	1,546
OTHER CHANGES IN EQUITY	22	(443)
CHANGE IN OTHER FINANCIAL RECEIVABLES	(4,056)	(8,803)
DRAWDOWN/(EXTINGUISHMENT) OF OTHER FINANCIAL PAYABLES/RECEIVABLES	30,601	46,122
BUYBACK OF OWN SHARES OF THE GROUP	(15,043)	(25,421)
DIVIDENDS PAID	(33,234)	(29,860)
CASH FLOW FROM FINANCING ACTIVITY	(20,782)	(16,859)
INCREASE (REDUCTION) IN CASH AND CASH EQUIVALENTS OF OPERATIONS DESTINED TO CONTINUE	(10,770)	(86,395)
CASH FLOW/NET CASH AND CASH EQUIVALENTS AT START OF YEAR FROM ASSETS HELD FOR DISPOSAL	--	11,417
NET CASH AND CASH EQUIVALENTS AT START OF YEAR	245,514	320,492
NET CASH AND CASH EQUIVALENTS AT END OF YEAR	234,744	245,514

(*) Some values for 2017 were recalculated following application of "IFRS 15 – Revenue from contracts with customers"

							Attributable to the Shareholders of the parent company
(in thousands of euro)	Issued Capital	less own shares	Share Capital	Share premium reserve	Legal reserve	Fair value reserve	Translation reserve	Treasury stock reserve	Other reserves	Retained earnings (losses)	Net income (loss) for the period	Total	Minority interests	Total
BALANCE AT DECEMBER 31 2016	359.605	--	359.605	5.044	22.644	15.833	(3.434)	--	54.954	87.519	21.249	563.414	943.482	1.506.896
Capital increases	--	--	--	--	--	--	--	--	--	--	--	--	85.198	85.198
Dividends to Shareholders	--	--	--	--	--	--	--	--	--	(10.069)	--	(10.069)	(19.791)	(29.860)
Retained earnings	--	--	--	--	941	--	--	--	--	20.308	(21.249)	--	--	--
Adjustment for own share transactions	--	(9.594)	(9.594)	--	--	--	--	9.594	(11.364)	--	--	(11.364)	--	(11.364)
Effects of equity changes
in subsidiaries	--	--	--	--	--	204	(51)	--	(13.252)	--	--	(13.099)	1.274	(11.825)
Comprehensive result for the period
Fair value measurement of hedging instruments	--	--	--	--	--	980	--	--	--	--	--	980	2.146	3.126
Fair value measurement of securities	--	--	--	--	--	6.689	--	--	--	--	--	6.689	(426)	6.263
Securities fair value reserve released to income statement	--	--	--	--	--	(852)	--	--	--	--	--	(852)	(685)	(1.537)
Effects of equity changes in subsidiaries									(220)			(220)	(428)	(648)
Currency translation differences	--	--	--	--	--	--	-- (8.450)	--		--	--	(8.450)	(15.458)	(23.908)
Actuarial gains (losses)	-- --	-- --	-- --	-- --	-- --	-- --	--	-- --	-- 601	-- --	-- --	601	1.219	1.820
Result for the period	--	--	--	--	--	--	--	--	--	--	(2.966)	(2.966)	(40.422)	(43.388)
Total comprehensive result for the period	--	--	--	--	--	6.817	(8.450)	--	381	--	(2.966)	(4.218)	(54.054)	(58.272)
BALANCE AT DECEMBER 31 2017	359.605	(9.594)	350.011	5.044	23.585	22.854	(11.935)	9.594	30.719	97.758	(2.966)	524.664	956.109	1.480.773
Adjustments at the date of initial application of IFRS 15 (net of tax)	--	--	--	--	--	--	116	--	(3.628)	--	(1)	(3.513)	(7.675)	(11.188)
BALANCE AT DECEMBER 31 2017 RECALCULATED	359.605	(9.594)	350.011	5.044	23.585	22.854	(11.819)	9.594	27.091	97.758	(2.967)	521.151	948.434	1.469.585
Adjustments at the date of initial application of IFRS 9 (net of tax)	--	--	--	--	--	(24.302)	(3.677)	--	(770)	27.979	--	(770)	(1.771)	(2.541)
BALANCE AT JANUARY 1 2018 RECALCULATED	359.605	(9.594)	350.011	5.044	23.585	(1.448)	(15.496)	9.594	26.321	125.737	(2.967)	520.381	946.663	1.467.044
Capital increases	--	--	--	--	--	--	--	--	--	--	--	--	928	928
Dividends to Shareholders	--	--	--	--	--	--	--	--	--	(9.800)	--	(9.800)	(23.434)	(33.234)
Retained earnings	--	--	--	--	707	--	--	--	--	(3.674)	2.967	--	--	--
Adjustment for own share transactions	--	(2.488)	(2.488)	--	--	--	--	2.488	(2.477)	--	--	(2.477)	--	(2.477)
Effects of equity changes
in subsidiaries	--	--	--	--	--	(30)	(320)	--	5.893	--	--	5.543	(11.970)	(6.427)
Comprehensive result for the period
Fair value measurement of hedging instruments	--	--	--	--	--	490	--	--	--	--	--	490	1.033	1.523
Effects of equity changes in subsidiaries
Currency translation differences	-- --	-- --	-- --	-- --	-- --	-- --	-- (3.411)	-- --	-- --	-- --	-- --	-- (3.411)	-- (7.276)	-- (10.687)
Actuarial gains (losses)	--	--	--	--	--	--	--	--	550	--	--	550	1.300	1.850
Result for the period	--	--	--	--	--	--	--	--	--	--	4.535	4.535	12.982	17.517
Total comprehensive result for the period	--	--	--	--	--	490	(3.411)	--	550	--	4.535	2.164	8.039	10.203
BALANCE AT DECEMBER 31 2018	359.605	(12.082)	347.523	5.044	24.292	(988)	(19.227)	12.082	30.287	112.263	4.535	515.811	920.226	1.436.037