Quarterly Report • May 12, 2016
Quarterly Report
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Elica S.p.A.
Interim Report
at March 31, 2016
| Directors' Report at March 31, 2016 | |
|---|---|
| Key Financial Highlights | page 4 |
| Q1 2016 Operating review | page 4 |
| Significant events in Q1 2016 | page 6 |
| Elica Group structure and consolidation scope | page 6 |
| Related party transactions | page 7 |
| Subsequent events and outlook | page 7 |
| Compliance pursuant to Section VI of the regulation implementing Legislative Decree No. 58 | |
| of February 24, 1998 concerning market regulations ("Market Regulations") | page 8 |
| Obligations in accordance with Article 70, paragraph 8 and Article 71, paragraph 1-bis of the "Issuers' Regulation" |
page 8 |
| Interim Report at March 31, 2016 | |
| Consolidated Income Statement | page 9 |
| Consolidated Statement of Comprehensive Income | page 10 |
| Consolidated Statement of Financial Position | page 11 |
| Consolidated Statement of Cash Flows | page 12 |
| Notes to the Interim Report at March 31, 2016 | page 13 |
| Statement of the corporate financial reporting manager in accordance with Article | |
| 154 bis, paragraph 2 of Legislative Decree 58/1998 | page 21 |
Corporate boards page 3
Executive Chairman,
born in Senigallia (AN) on 5/6/1961, appointed by resolution of 29/04/2015.
Chief Executive Officer, born in Varese (VA) on 30/10/1958, appointed by resolution of 29/04/2015.
Gianna Pieralisi
Executive Director, born in Monsano (AN) on 12/12/1934, appointed by resolution of 29/04/2015.
Director, born in Monsano (AN) on 14/02/1938, appointed by resolution of 29/04/2015.
Chairman, born in Jesi (AN) on 14/01/1954, appointed by resolution of 29/04/2015.
Franco Borioni Statutory Auditor, born in Jesi (AN) on 23/06/1945, appointed by resolution of 29/04/2015.
Statutory Auditor, born in Jesi (AN) on 02/04/1971, appointed by resolution of 29/04/2015.
Davide Croff (Chairman) Elio Cosimo Catania Enrico Vita
Independent Audit Firm
KPMG S.p.A.
Elica S.p.A. Registered office: Via Casoli, 2 – 60044 Fabriano (AN) Share capital: Euro 12,664,560.00 Tax Code and Companies' Register Number: 00096570429 Ancona REA No. 63006 – VAT Number 00096570429
Laura Giovanetti e-mail: [email protected] Telephone: +39 0732 610727
Independent Director, born in Fabriano (AN) on 16/02/1969, appointed by resolution of 29/04/2015.
Independent Director, born in Catania on 05/06/1946, appointed by resolution of 29/04/2015.
Independent Director and Lead Independent Director, born in Conegliano (TV) on 30/03/1967, appointed by resolution of 29/04/2015.
Independent Director, born in Venice on 01/10/1947, appointed by resolution of 29/04/2015.
Alternate Auditor, born in Sassoferrato (AN) on 04/05/1966, appointed by resolution of 29/04/2015.
Alternate Auditor, born in Montesangiorgio (AP) on 04/04/1965, appointed by resolution of 29/04/2015.
Elio Cosimo Catania (Chairman) Davide Croff Enrico Vita
| Q1 16 | % | Q1 15 | % | 16 Vs 15 | |
|---|---|---|---|---|---|
| In Euro thousands | revenue | revenue | % | ||
| Revenue | 103,326 | 96,283 | 7.3% | ||
| EBITDA before restructuring charges | 7,129 | 6.9% | 6,157 | 6.4% | 15.8% |
| EBITDA | 7,080 | 6.9% | 6,098 | 6.3% | 16.1% |
| EBIT | 2,617 | 2.5% | 1,856 | 1.9% | 41.0% |
| Net financial charges | (925) | (0.9%) | 248 | 0.3% | (473.0%) |
| Income taxes | (841) | (0.8%) | (762) | (0.8%) | 10.4% |
| Profit from continuing operations | 851 | 0.8% | 1,342 | 1.4% | (36.6%) |
| Profit from continuing operations and discontinued | |||||
| operations | 851 | 0.8% | 1,342 | 1.4% | (36.6%) |
| Profit attributable to the owners of the Parent | 687 | 0.7% | 1,169 | 1.2% | (41.2%) |
| Basic earnings per share on continuing operations and discontinued | |||||
| operations (Euro/cents) | 1.11 | 1.88 | (41.0%) | ||
| Diluted earnings per share on continuing operations and discontinued operations (Euro/cents) |
1.11 | 1.88 | (41.0%) | ||
The earnings per share for Q1 2016 and Q1 2015 were calculated by dividing the Group net result from continuing and discontinued operations by the number of outstanding shares at the respective reporting dates.
EBITDA is the operating profit (EBIT) plus amortisation and depreciation and any impairment losses on goodwill. EBIT is the operating profit as reported in the consolidated income statement.
| In Euro thousands | Mar 31, 16 | Dec 31, 15 |
|---|---|---|
| Trade receivables | 67,853 | 68,504 |
| Inventories | 67,340 | 62,701 |
| Trade payables | (99,804) | (99,474) |
| Managerial Working Capital | 35,389 | 31,731 |
| as a % of annualised revenue | 8.6% | 7.5% |
| Other net receivables/payables | (12,995) | (14,061) |
| Net Working Capital | 22,394 | 17,670 |
| In Euro thousands | Mar 31, 16 | Dec 31, 15 |
|---|---|---|
| Cash and cash equivalents | 38,342 | 34,463 |
| Finance leases and other lenders | (8) | (9) |
| Bank loans and borrowings | (48,546) | (44,048) |
| Non-current loans and borrowings | (48,554) | (44,057) |
| Finance leases and other lenders | (6) | (6) |
| Bank loans and borrowings | (51,745) | (43,405) |
| Current loans and borrowings | (51,751) | (43,411) |
| Net Financial Debt | (61,963) | (53,005) |
Net Financial Debt is the sum of cash and cash equivalents less amounts due under finance leases and to other lenders (current and non-current), plus bank loans and borrowings (current and non-current), as reported in the consolidated statement of financial position.
In the first quarter of 2016, Elica reported consolidated revenue of Euro 103.3 million, an increase of 7.3% on Q1 2015 - thanks to significant organic growth and net of currency effects of 7.5%. Growth was achieved within a market which continues to contract, with global range hood demand1 falling 1.6% in the first quarter of 2016, due both to the 1.7% reduction on the East European market – which continues to be impacted by the Russian performance - and the further poor performance of Latin America (-2.3%), together with a contraction on the Asian market of 4.0%, influenced by falling Chinese demand. On the other hand, fresh growth was reported for the North American (+5.0%) and the Western European (+3.2%) markets.
The Cooking Segment drove growth, with revenue up 9.0% on the first quarter of 2015 - thanks both to third party brand sales (+6.2%) and the significant development of own brand product sales (+13.3%). The Elica brand continues to significantly outperform the general market and accounted for 23.0% of revenue in the first quarter of 2016, owing to the success of the policy to develop brand awareness and the distribution network.
Motor Segment revenue in the first quarter of 2016 reduced 1.6%, although excluding currency movements was substantially stable (-0.8%) compared to the first quarter of 2015.
Analysing revenue by the principal markets2 , all regions reported significant sales growth - in particular the Americas (+9.7%), principally on the basis of organic growth; European revenues rose 7.6% and Asia3 grew 3.2%, partly due to a particularly strong performance in India, with sales up 35.6%.
EBITDA in Q1 2016 of Euro 7.1 million (6.9% of Net Revenue) grew 16.1% on the same period of 2015, due to increased sales volumes, the improved price/mix, increased productivity, together with raw material and component procurement efficiencies and the positive currency effect.
EBIT amounted to Euro 2.6 million, up 41.0% on Euro 1.9 million in the same period of 2015, although Amortisation and Depreciation rose following the significant investment implemented by the Company to support the expansion of own brands and the development of new products.
| average Q1 2016 |
average Q1 2015 |
% | Mar 31, 16 | Dec 31, 15 | % | |
|---|---|---|---|---|---|---|
| USD | 1.10 | 1.13 | -2.3% | 1.14 | 1.09 | 4.7% |
| JPY | 127.00 | 134.12 | -5.3% | 127.90 | 131.07 | -2.4% |
| PLN | 4.37 | 4.19 | 4.2% | 4.26 | 4.26 | -0.1% |
| MXN | 19.90 | 16.83 | 18.3% | 19.59 | 18.91 | 3.6% |
| INR | 74.43 | 70.09 | 6.2% | 75.43 | 72.02 | 4.7% |
| CNY | 7.21 | 7.02 | 2.7% | 7.35 | 7.06 | 4.1% |
| RUB | 82.45 | 70.96 | 16.2% | 76.31 | 80.67 | -5.4% |
| GBP | 0.77 | 0.74 | 4.1% | 0.79 | 0.73 | 7.6% |
In Q1 2016, the Euro average exchange rate strengthened against all currencies to which the Group is exposed, with the exception of the US Dollar and the Japanese Yen.
Net financial income/charges as a percentage of revenue in Q1 2016 deteriorated significantly, from a contribution of financial income of 0.3% in the first quarter of 2015 to a charge of 0.9% in the first quarter of 2016, due to the extraordinary currency performance related to an economic environment creating significant currency market volatility in the first quarter of 2015.
The Net Profit of Euro 0.9 million, compared to Euro 1.3 million in the same period of 2015, was impacted by currency movements affecting the financial items described above and a higher tax rate in the first quarter of 2016.
The Managerial Working Capital on annualised revenue of 8.6% improved on 9.7% at March 31, 2015, and was higher than the 7.5% at December 31, 2015, in line with the seasonality of the business model over the last 5 years.
1 Global range hood market volumes.
2 Data concerns sales revenue by geographic area and therefore does not refer to the breakdown by operating segment according to the various Group company locations.
3 Concerning revenue in "Other Countries" - principally the Asian markets.
The Net Financial Debt at March 31, 2016 of Euro 62.0 million increased on Euro 53.0 million at December 31, 2015, although reducing significantly on Euro 65.0 million at March 31, 2015, in line with business seasonality.
On January 27, 2016, Elica joined the Internet of Things market with the launch of a new product: SNAP, the first Air Quality Balancer. With SNAP, Elica continues to innovate as an air treatment specialist, unveiling its first IOT product for other household environments. The project will see the participation of 2 leading partners: Vodafone, which contributed to the implementation of the APP for the launch of the SNAP remote control, providing also a SIM card which ensures an alternative connection of the product to Wi-Fi and IBM, owner of the cloud in which all of the data collated is stored.
On January 29, 2016, in accordance with Article 2.6.2, paragraph 1, letter b) of the Regulations of the Markets Organised and Managed by Borsa Italiana S.p.A., Elica S.p.A. published the Financial Calendar for the year 2016.
The Board of Directors of Elica S.p.A. on February 12, 2016 approved the 2015 Fourth Quarter Report, prepared in accordance with IFRS accounting standards, communicating to the market also the 2016 objectives, including an increase in consolidated revenue of between 5% and 9% and increased consolidated EBIT of between 13% and 26% on 2015, in addition to a 2016 year-end net debt of Euro 58 million.
On March 15, 2016, Elica participated in the 2016 STAR Conference organised in Milan by Borsa Italiana.
On March 22, 2016, the Board of Directors of Elica S.p.A approved the 2015 Consolidated Financial Statements and the 2015 Separate Financial Statements of Elica S.p.A., prepared in accordance with IFRS, proposed the distribution of a dividend of Euro 0.0098 per share and approved the 2015 Corporate Governance and Ownership Structure Report and the Remuneration Report, in addition to the Directors' Report to the Shareholders' AGM on the proposal to authorise the buy-back and utilisation of treasury shares. The Board of Directors also approved the proposal to the Shareholders' AGM of a long-term incentive plan called the 2016-2022 Phantom Stock & Voluntary Co-investment Plan in favour of certain directors and employees of Elica S.p.A. and/or its subsidiaries, according to the terms outlined in the Disclosure Document published on the same date.
The Board of Directors of Elica S.p.A. called the Shareholders' AGM for April 28, 2016 at 9AM in single call.
The Elica Group is currently the world's largest manufacturer of kitchen range hoods for domestic use and is leader in Europe in the sector of motors for boilers used in home heating systems.
o Elica S.p.A. - Fabriano (Ancona, Italy) is the parent company of the Group (in short Elica).
o Elica Group Polska Sp.zo.o – Wroclaw – (Poland) (in short Elica Group Polska). This wholly-owned company has been operational since September 2005 in the production and sale of electric motors and from December 2006 in the production and sale of exhaust range hoods for domestic use;
o Elicamex S.A. de C.V. – Queretaro (Mexico) (in short Elicamex). The company was incorporated at the beginning of 2006 (The Parent owns 98% directly and 2% through Elica Group Polska). Through this company, the Group intends to concentrate the production of products for the American markets in Mexico and reap the benefits deriving from optimisation of operational and logistical activities;
o Leonardo Services S.A. de C.V. – Queretaro (Mexico) (in short Leonardo). This wholly-owned subsidiary was incorporated in January 2006 (the Parent owns 98% directly and 2% indirectly through Elica Group Polska Sp.zo.o.). Leonardo Services S.A. de C.V. manages all Mexican staff, providing services to ELICAMEX S.A. de C.V;
o Ariafina CO., LTD – Sagamihara-Shi (Japan) (in short Ariafina). Incorporated in September 2002 as an equal Joint Venture with Fuji Industrial of Tokyo, the Japanese range hood market leader, Elica S.p.A. acquired control in May 2006 (51% holding) to provide further impetus to the development of the important Japanese market, where high-quality products are sold;
o Airforce S.p.A. – Fabriano (Ancona, Italy) (in short Airforce). This company operates in a special segment of the production and sale of hoods sector. The holding of Elica S.p.A. is 60%;
o Airforce Germany Hochleigstungs-Dunstabzugssysteme GmbH – Stuttgart (Germany) (in short Airforce Germany). Airforce S.p.A. owns 95% of Airforce Germany G.m.b.h., a company that sells hoods in Germany through so-called "kitchen studios";
o Elica Inc – Chicago, Illinois (United States), offices in Bellevue, Washington (United States). The company aims to develop the Group's brands in the US market by carrying out marketing and trade marketing with resident staff. The company is a wholly owned subsidiary of ELICAMEX S.A. de C.V.;
o Exklusiv Hauben Gutmann GmbH – Mulacker (Germany) (in short Gutmann) - a German company entirely held by Elica S.p.A. and the German leader in the high-end kitchen range hood market, specialised in tailor made and high performance hoods.
o Elica PB India Private Ltd. - Pune (India) (in short Elica India); in 2010, Elica S.p.A. signed a joint venture agreement, subscribing 51% of the share capital of the newly-incorporated Indian company and therefore attaining control.
Elica PB India Private Ltd. is involved in the production and sale of Group products.
o Zhejiang Elica Putian Electric Co. LTD. Shengzhou (China) (in short Putian), a Chinese company held 66.76% and operating under the Puti brand, a leader in the Chinese home appliances sector, producing and marketing range hoods, gas hobs and kitchenware sterilisers. Putian is one of the main players in the Chinese range hood market and the principal company developing western style range hoods. The production site is located in Shengzhou, a major Chinese industrial district for the production of kitchen home appliances.
o Elica Trading LLC – St. Petersberg (Russian Federation) (in short Elica Trading), a Russian company held 100%, incorporated on June 28, 2011.
o Elica France S.A.S. - Paris (France) (in short Elica France), a wholly-owned French company incorporated in 2014.
o I.S.M. S.r.l. – Cerreto d'Esi (AN-Italy). The company, of which Elica S.p.A. holds 49.385% of the Share Capital, operates within the real estate sector.
There were no changes in the consolidation scope compared to December 31, 2015.
Transactions were entered into with subsidiaries, associates and other related parties during the period. All transactions were conducted on an arm's length basis in the ordinary course of business.
The Group carries out an ongoing and extensive monitoring of demand dynamics4 , which in 2016 is expected to improve in the Americas5 by 3% and in Europe by 2%; on the other hand, a contraction of approx. 1% is expected in Asia.
Against the results expected from the implementation of the long-term Company strategy and thanks to the continued innovations introduced to the market, Elica estimates an increase for 2016 in Consolidated revenue of between 5% and 9% and an increase in consolidated EBIT of between 13% and 26% on 2015, while targeting also a Net Debt of Euro 58 million.
On April 6, 2016, Elica S.p.A. announced that the Annual Report of Elica S.p.A. comprising the Separate and Consolidated Financial Statements at December 31, 2015, the Directors' Report and the Statement as per Article 154-bis, paragraph 5 of Legs. Decree No. 58/1998, together with the Board of Statutory Auditors' Report, the Independent Auditors' Report, the Corporate Governance and Ownership Structure Report and
4 Global range hood market volumes.
5 Includes North, Central and South America
the Remuneration Report, according to the legally required means for each document, were made available to the public. On the same date, the Board of Directors' Illustrative Report to the Shareholders' AGM, concerning the proposal to purchase and utilise treasury shares, in addition the Annual Accounts and/or the Financial Statements as per Article 2429 of the Civil Code of the subsidiaries and associates of Elica S.p.A. and the Financial Statements of the subsidiaries as per Article 36 of the Market Regulation, were also made available to the public in accordance with the applicable regulation.
On April 28, 2016, the Shareholders' AGM of Elica S.p.A. approved the 2015 Annual Accounts of Elica S.p.A., the Directors' Report, the Board of Statutory Auditors' Report and the Independent Auditors' Report. The AGM also noted the consolidated results for 2015. The Meeting approved the distribution of a dividend of Euro 0.0098 per share. The adoption of the phantom stock option incentive plan for the 2016-2022 period was also approved (the "2016-2022 Phantom Stock & Voluntary Co-investment Plan"). In accordance with Article 123-ter, paragraph 6 of Legs. Decree No. 58/1998, the Shareholders' AGM of Elica S.p.A. noted the content of the Remuneration Report and approved the First Section. The Shareholders' Meeting also approved, with prior revocation of the previous authorisation granted on April 29, 2015, the authorisation to purchase and utilise treasury shares, pursuant to Article 2357 and 2357-ter of the Civil Code.
Elica S.p.A. confirms compliance with the conditions for listing pursuant to Articles 36 and 37 of Consob's Market Regulations. In particular, having control, directly or indirectly, over some companies registered in countries outside of the European Union, the financial statements of the above-mentioned companies, prepared for the purposes of the Elica Group Consolidated Financial Statements, were made available in accordance with the provisions required by the current regulations enacted on March 30, 2009.
In accordance with Article 70, paragraph 8 and Article 71, paragraph 1-bis of the Consob Issuers' Regulation, on January 16, 2013, Elica announced that it would employ the exemption from publication of the required disclosure documents concerning significant merger, spin-off, and share capital increase operations through conferment of assets in kind, acquisitions and sales.
| In Euro thousands | Note | Q1 16 | Q1 15 |
|---|---|---|---|
| Revenue | 1. | 103,326 | 96,283 |
| Other operating income | 2. | 519 | 612 |
| Changes in inventories of finished and semi-finished goods | 3. | 3,885 | 3,043 |
| Increase in internal work capitalised | 1,163 | 1,521 | |
| Raw materials and consumables | 3. | (58,408) | (54,675) |
| Services | 4. | (19,063) | (17,919) |
| Labour costs | 5. | (21,884) | (20,602) |
| Amortisation & Depreciation | (4,463) | (4,242) | |
| Other operating expenses and provisions | 6. | (2,409) | (2,106) |
| Restructuring charges | (49) | (59) | |
| Operating profit | 2,617 | 1,856 | |
| Share of profit/(loss) from associates | (2) | (4) | |
| Financial income | 7. | 57 | 31 |
| Financial charges | 7. | (833) | (901) |
| Exchange rate gains/(losses) | 7. | (147) | 1,122 |
| Profit before taxes | 1,692 | 2,104 | |
| Income taxes | (841) | (762) | |
| Profit from continuing operations | 851 | 1,342 | |
| Profit from discontinued operations | - | - | |
| Profit for the period | 851 | 1,342 | |
| of which: | |||
| Attributable to non-controlling interests | 164 | 173 | |
| Profit attributable to the owners of the Parent | 687 | 1,169 | |
| Basic earnings per Share (Euro/cents) | 1.11 | 1.88 | |
| Diluted earnings per Share (Euro/cents) | 1.11 | 1.88 |
| In Euro thousands | Q1 16 | Q1 15 |
|---|---|---|
| Profit for the period | 851 | 1,342 |
| Other comprehensive income/(expense) which may not be subsequently reclassified to profit/(loss) for the period: |
||
| Actuarial gains/(losses) of employee defined plans | (835) | (962) |
| Tax effect concerning the Other income/(expense) which may not be subsequently reclassified to the profit/(loss) for the period |
(3) | 252 |
| Total other comprehensive income/(expense) which may not be subsequently reclassified to profit/(loss) for the period, net of the tax effect |
(839) | (710) |
| Other comprehensive income/(expense) which may be subsequently reclassified to profit/(loss) for the period: |
||
| Exchange differences on the conversion of foreign financial statements Net change in cash flow hedges |
(1,655) 1,583 |
7,262 307 |
| Tax effect concerning the Other income/(expense) which may be subsequently be reclassified to the profit/(loss) for the period |
(223) | (84) |
| Total other comprehensive income/(expense) which may be subsequently reclassified to profit/(loss) for the period, net of the tax effect |
(295) | 7,485 |
| Total other comprehensive income/(expense), net of the tax effect: | (1,134) | 6,775 |
| Total comprehensive income/(expense) for the period | (283) | 8,117 |
| of which: Attributable to non-controlling interests Attributable to the owners of the parent |
20 (303) |
998 7,119 |
| Mar 31, 16 | Dec 31, 15 | ||
|---|---|---|---|
| In Euro thousands | Note | ||
| Property, plant & equipment | 8. | 89,037 | 88,779 |
| Goodwill | 9. | 45,398 | 45,712 |
| Other intangible assets | 10. | 28,451 | 28,676 |
| Investments in associates | 1,422 | 1,423 | |
| Other receivables | 181 | 330 | |
| Deferred tax assets | 16,227 | 16,185 | |
| AFS financial assets | 56 | 56 | |
| Total non-current assets | 180,771 | 181,162 | |
| Trade receivables and loan assets | 11. | 67,853 | 68,504 |
| Inventories | 12. | 67,340 | 62,701 |
| Other receivables | 9,951 | 7,370 | |
| Tax assets | 6,370 | 7,825 | |
| Derivative financial instruments | 1,130 | 223 | |
| Cash and cash equivalents | 38,342 | 34,463 | |
| Current assets | 190,986 | 181,088 | |
| Total assets | 371,757 | 362,250 | |
| Liabilities for post-employment benefits | 11,503 | 10,619 | |
| Provisions for risks and charges | 13. | 3,692 | 3,854 |
| Deferred tax liabilities | 4,288 | 4,749 | |
| Finance leases and other lenders | 8 | 9 | |
| Bank loans and borrowings | 48,546 | 44,048 | |
| Other payables | 2,583 | 3,277 | |
| Tax liabilities | 409 | 442 | |
| Derivative financial instruments | 376 | 166 | |
| Non-current liabilities | 71,405 | 67,164 | |
| Provisions for risks and charges | 13. | 6,228 | 7,398 |
| Finance leases and other lenders | 6 | 6 | |
| Bank loans and borrowings | 51,745 | 43,405 | |
| Trade payables | 11. | 99,804 | 99,474 |
| Other payables | 16,005 | 14,133 | |
| Tax liabilities | 7,082 | 7,726 | |
| Derivative financial instruments | 1,924 | 3,736 | |
| Current liabilities | 182,794 | 175,878 | |
| Share capital | 12,665 | 12,665 | |
| Capital reserves | 71,123 | 71,123 | |
| Hedging, translation and stock option reserve | (11,608) | (11,408) | |
| Reserve for actuarial gains/losses | (3,697) | (2,907) | |
| Treasury shares | (3,551) | (3,551) | |
| Retained earnings | 46,677 | 40,630 | |
| Profit attributable to the owners of the parent | 687 | 6,190 | |
| Equity attributable to the owners of the parent | 112,296 | 112,742 | |
| Capital and reserves attributable to non-controlling interests | 5,098 | 5,211 | |
| Profit attributable to non-controlling interests | 164 | 1,255 | |
| Equity attributable to non-controlling interests | 5,262 | 6,466 | |
| Total equity | 117,558 | 119,208 | |
| Total liabilities and equity | 371,757 | 362,250 | |
| Q1 16 | Q1 15 | |
|---|---|---|
| In Euro thousands | Note | |
| Opening cash and cash equivalents | 34,463 | 35,241 |
| Operating profit - EBIT | 2,617 | 1,856 |
| Amortisation, depreciation and impairment losses | 4,463 | 4,242 |
| EBITDA | 7,080 | 6,098 |
| Trade working capital Other working capital accounts |
(3,663) 820 |
(3,448) (5,786) |
| Income taxes paid | (2,404) | (1,601) |
| Change in provisions | (1,338) | (2,626) |
| Other changes | (1,457) | (85) |
| Cash flow from operating activities | (963) | (7,447) |
| Net increases Intangible assets Property, plant & equipment Equity investments and other financial assets |
(4,621) (1,409) (3,212) - |
(5,693) (1,780) (3,911) (2) |
| Cash flow used in investing activities | (4,621) | (5,693) |
| Dividends Increase (decrease) in loans and borrowings Net changes in other financial assets/liabilities Interest paid |
(1,163) 12,897 (1,520) (713) |
(729) 12,323 (113) (799) |
| Cash flow used in financing activities | 9,501 | 10,682 |
| Change in cash and cash equivalents | 3,916 | (2,458) |
| Effect of exchange rate change on liquidity | (38) | 2,210 |
| Closing cash and cash equivalents | 38,342 | 34,993 |
The operating segments are as follows:
The activities are based in the same geographic areas and therefore in Europe, specifically in Italy, Poland, Germany, Russia and France, in America, i.e. in Mexico and in the United States, and in Asia, respectively in China, India and Japan.
Segment revenue is determined based on the geographic area to which the respective companies belong. Segment results are determined by taking into account all the costs that can be allocated directly to sales in a specific segment. Costs not allocated to the segments include all costs not directly attributable to the area, including manufacturing, sales, general, administrative costs, as well as financial income and charges and taxes.
Inter-segment revenue includes revenue between Group segments that are consolidated on a line-by-line basis in relation to sales made to other segments.
Assets, liabilities and investments are allocated directly on the basis of their classification in a specific geographic area.
The Euro is the functional and reporting currency for Elica and all consolidated companies, except for such foreign subsidiaries as Elica Group Polska Sp.zo.o, Elicamex S.A. de C.V., Leonardo Services S.A. de. C.V., Ariafina CO., LTD, Elica Inc., Elica PB India Private Ltd., Zhejiang Elica Putian Electric Co. Ltd. and Elica Trading LLC, which prepare their financial statements in the Polish Zloty (Elica Group Polska Sp.zo.o), the Mexican Peso (Elicamex S.A. de C.V. and Leonardo Services S.A. de C.V.), Japanese Yen, US Dollar, Indian Rupee, Chinese Renminbi and Russian Ruble respectively.
The exchange rates used for the translation to Euro of the financial statements of companies consolidated in a currency other than the consolidation currency, compared with those used in the previous periods, are shown in the table below:
| average Q1 2016 | average Q1 2015 | % | Mar 31, 16 | Dec 31, 15 | % | |
|---|---|---|---|---|---|---|
| USD | 1.10 | 1.13 | -2.3% | 1.14 | 1.09 | 4.7% |
| JPY | 127.00 | 134.12 | -5.3% | 127.90 | 131.07 | -2.4% |
| PLN | 4.37 | 4.19 | 4.2% | 4.26 | 4.26 | -0.1% |
| MXN | 19.90 | 16.83 | 18.3% | 19.59 | 18.91 | 3.6% |
| INR | 74.43 | 70.09 | 6.2% | 75.43 | 72.02 | 4.7% |
| CNY | 7.21 | 7.02 | 2.7% | 7.35 | 7.06 | 4.1% |
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The Interim Report at March 31, 2016 was prepared in accordance with Article 2.2.3, paragraph 3 of the Stock Exchange Regulation, as clarified by NOTICE No. 7587 of April 21, 2016 issued by Borsa Italiana. The report was approved by the Board of Directors of Elica S.p.A. on May 12, 2016 and the board authorised its publication on the same date.
The accounting principles utilised for the preparation of the financial statements as at March 31, 2016 are the IAS/IFRS issued by the IASB and approved by the European Union at the date of the Report. IAS/IFRS refers to the International Accounting Standards (IAS), the International Financial Reporting Standards (IFRS) and all the interpretive documents issued by the IFRIC (formally the Standing Interpretations Committee). In their preparation, the same accounting principles were adopted as in the preparation of the Consolidated Financial Statements as at December 31, 2015.
The interim report was prepared on the basis of the historical cost principle, except for some financial instruments which are recognised at fair value. The financial statement accounts have been measured in accordance with the general criteria of prudence and accruals and on a going concern basis, and also take into consideration the economic function of the assets and liabilities.
The preparation of interim financial statements requires the use of estimates and assumptions based on the best evaluations of management. If in the future these estimates and assumptions should be different from the actual circumstances, they will obviously be modified appropriately in the period in which the circumstances change.
In particular, with reference to the determination of any loss in value of non-current assets, tests are generally made on a complete basis on the preparation of the annual accounts, when all the necessary information is available, except where there are specific indications of impairment which require an immediate valuation of any loss in value or when facts arise requiring an impairment test.
This interim report is presented in Euros and all the amounts are rounded to the nearest thousand, unless otherwise specified.
The financial statements utilised are the same as those used for the preparation of the consolidated financial statements at December 31, 2015. No new accounting policies with significant impact on the consolidated financial statements were adopted in the period.
As required by IAS 8 - Accounting standards, changes in accounting estimates and errors - the main new accounting standards and interpretations, in addition to amendments to the existing standards and interpretations already applicable, not yet in force or not yet approved by the European Union (EU), which could be applied in the future to the financial statements, are illustrated below. Management is assessing their potential impact on future financial statements.
IFRS 16 Leases. The International Accounting Standards Board (IASB) issued IFRS 16 Leases in January 2016. The standard defines the principles for the recognition, measurement, presentation and disclosure of leasing contracts, for both parts of the contract, therefore concerning the client ("lessee") and the supplier ("lessor"). IFRS 16 will be effective from January 1, 2019. Companies may choose to apply the standard before this date, although only if applying also IFRS 15 Revenue from Contracts with Customers. IFRS 16 completes the IASB project to improve the financial reporting of leases. It replaces the previous Standard IAS 17 Leases and the related Interpretations. The principal effect of application of the new standard for a lessee will be that all leasing contracts of a company will imply a right to use the asset from the beginning of the contract and, where the relative payments are expected in a specific period, also recognition of a corresponding financial payable. Therefore, IFRS 16 eliminates the breakdown of leases into operating leases and finance leases, as previously the case under IAS 17, introducing a single measurement model. Applying this model, a lessee should recognise: (a) assets and liabilities for all leases with a duration of greater than 12 months, except where the value of the underlying asset is minimal; and (b) amortisation of leased assets separately from interest on leasing payables, to the income statement.
IFRS 15 - Revenue from contracts with customers. On May 28, 2014, the IASB published the new standard IFRS 15. It replaces the previous standard IAS 18, in addition to IAS 11, concerning construction contracts and the relative interpretations IFRIC 13, IFRIC 15, IFRIC 18 and SIC 31. IFRS 15 sets out the principles for the recognition of revenues from contracts with clients, except for those contracts falling within the scope of the standards concerning leasing contracts, insurance contracts and financial instruments. The new standard establishes an overall framework to identify the moment and the amount of revenue recognition. According to the new standard, the amount that the entity recognises as revenue should reflect the consideration which it has a right to receive following the exchange of the assets transferred to the client and/or services provided, to be recognised upon fulfilment of the contractual obligations. In addition, for recognition of the revenue, the requirement of probable obtainment/receipt of the economic benefits linked to the income is emphasised; for a contract in progress, currently governed by IAS 11, a requirement to recognise revenues taking account of any discounting effect from payments deferred over time is introduced. IFRS 15 should be applied from January 1, 2018. On first application, where retrospective application of the new standard is not possible, an alternative approach ("modified approach") is provided for, on the basis of which the effects from application of the new standard should be recognised to opening equity in the period of first application.
IFRS 9 - Financial Instruments. In July 2014, the IASB issued the definitive version of IFRS 9, in replacement of the current IAS 39 for the recognition and valuation of financial instruments. IFRS 9 shall be applied from January 1, 2018. The standard introduces new classification and measurement rules for financial instruments and a new financial asset impairment model, in addition to rules upon the recognition of "hedge accounting" operations.
In the preparation of the Interim Report, the Group's management made judgements, estimates and assumptions which have an effect on the values of the assets and liabilities and disclosures. The actual results may differ from these estimates. The estimates and assumptions are revised periodically and the effects of any change are promptly reflected in the financial statements.
In this context it is reported that the situation caused by the current economic and financial crisis resulted in the need to make assumptions on a future outlook characterised by significant uncertainty, for which it cannot be excluded that results in the coming years will be different from such estimates and which therefore could require adjustment, currently not possible to estimate or forecast, which may even be significant, to the carrying amount of the relative items.
The account items principally concerned by uncertainty are: goodwill, the allowance for impairment and inventory obsolescence and bad debt provision, non-current assets (property, plant and equipment and intangible assets), pension funds and other post-employment benefits, provisions for risks and charges and deferred tax assets and liabilities.
Reference is made to the previous year annual accounts and the notes to these financial statements for the details relating to the estimates stated above.
| In Euro thousands | Q1 16 | Q1 15 | Changes |
|---|---|---|---|
| Revenue | 103,326 | 96,283 | 7,043 |
| Total revenue | 103,326 | 96,283 | 7,043 |
For the comments relating to the changes in revenue, reference should be made to the paragraph "Q1 2016 Operating review" of the Directors' Report.
The following tables contain segment information as defined in the "Group structure and brief description of its activities" paragraph.
| INCOME STATEMENT | Europe America |
Asia and the Rest of World |
Unallocated items and eliminations |
Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Q1 16 | Q1 15 | Q1 16 | Q1 15 | Q1 16 | Q1 15 | Q1 16 | Q1 15 | Q1 16 | Q1 15 | |
| Segment revenue: | ||||||||||
| Third parties | 77,631 | 72,199 | 15,792 | 14,367 | 9,920 | 9,738 | (16) | (22) | 103,326 | 96,283 |
| Inter-segment | 2,880 | 3,971 | 2 | 8 | 1,604 | 501 | (4,485) | (4,480) | - | - |
| Total revenue | 80,510 | 76,170 | 15,793 | 14,375 | 11,524 | 10,239 | (4,502) | (4,502) | 103,326 | 96,283 |
| Segment result: Unallocated overheads |
6,153 | 6,138 | 3,378 | 1,424 | 364 | 285 | 9,895 (7,278) |
7,848 (5,992) |
||
| Operating Profit | 2,617 | 1,856 | ||||||||
| Share of profit/(loss) from associates Financial income Financial charges |
(2) 57 (833) |
(4) 31 (901) |
||||||||
| Exchange rate gains/(losses) | (147) | 1,122 | ||||||||
| Profit before taxes Income taxes |
1,692 (841) |
2,104 (762) |
||||||||
| Profit from continuing operations | 851 | 1,342 | ||||||||
| Profit from discontinued operations | - | - | ||||||||
| Profit for the period | 851 | 1,342 |
| STATEMENT OF FINANCIAL |
Europe | America | Asia and the Rest of World |
Unallocated items and eliminations |
Consolidated | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| POSITION | Mar 16 | Dec 15 | Mar 16 | Dec 15 | Mar 16 | Dec 15 | Mar 16 | Dec 15 | Mar 16 | Dec 15 | |
| Assets: | |||||||||||
| Segment assets | 243,772 | 236,253 | 32,154 | 32,724 | 50,378 | 52,144 | (10,754) | (11,374) | 315,549 | 309,747 | |
| Investments | 1,422 | 1,423 | 1,422 | 1,423 | |||||||
| Unallocated assets |
54,787 | 51,080 | 54,787 | 51,080 | |||||||
| Total | |||||||||||
| operational assets |
243,772 | 236,253 | 32,154 | 32,724 | 50,378 | 52,144 | 45,454 | 41,129 | 371,757 | 362,250 | |
| Total assets of discount. operations |
- | - | - | - | - | - | |||||
| Total assets | 243,772 | 236,253 | 32,154 | 32,724 | 50,378 | 52,144 | 45,454 | 41,129 | 371,757 | 362,250 | |
| Liabilities | |||||||||||
| Segment liabilities Unallocated |
(129,710) | (129,151) | (15,369) | (15,610) | (21,188) | (21,961) | 12,373 | 11,148 | (153,895) | (155,575) | |
| liabilities | (100,304) | (87,468) | (100,304) | (87,468) | |||||||
| Equity | (117,558) | (119,208) | (117,558) | (119,208) | |||||||
| Total operational liabilities |
(129,710) | (129,151) | (15,369) | (15,610) | (21,188) | (21,961) | (205,490) | (195,528) | (371,757) | (362,250) | |
| Total liabilities of discontinued operations |
- | - | - | - | |||||||
| Total liabilities |
(129,710) | (129,151) | (15,369) | (15,610) | (21,188) | (21,961) | (205,490) | (195,528) | (371,757) | (362,250) |
| (in Euro thousands) | Q1 16 | Q1 15 | Changes |
|---|---|---|---|
| Rental income | 2 | 2 | - |
| Grants related to income | 108 | 183 | (75) |
| Ordinary gains | 73 | 171 | (98) |
| Claims and insurance payouts | 60 | 85 | (25) |
| Other revenue and income | 276 | 171 | 105 |
| Total | 519 | 612 | (93) |
The account decreased by Euro 93 thousand. This principally follows the decrease in Grants related to income and Ordinary gains, net of the increase in Other revenue and income.
| In Euro thousands | Q1 16 | Q1 15 | Changes |
|---|---|---|---|
| Purchase of raw materials | (46,850) | (49,807) | 2,957 |
| Shipping expenses on purchases | (1,407) | (1,239) | (168) |
| Purchases of consumable materials | (927) | (720) | (207) |
| Packaging | (455) | (383) | (72) |
| Purchases of supplies | (208) | (221) | 13 |
| Purchases of semi-finished materials | (3,959) | (3,615) | (344) |
| Purchase of finished products | (5,793) | (1,003) | (4,790) |
| Other purchases | (306) | (260) | (46) |
| Change in inventory of raw materials, consumables and goods for re-sale | 1,498 | 2,573 | (1,075) |
| Raw materials and consumables | (58,408) | (54,675) | (3,733) |
| Changes in inventories of finished and semi-finished goods | 3,885 | 3,043 | 842 |
| Total | (54,523) | (51,632) | (2,891) |
The account increased in absolute terms by approx. Euro 3 million, although decreasing as a percentage of revenue from 53.6% to 52.8%.
| In Euro thousands | Q1 16 | Q1 15 | Changes |
|---|---|---|---|
| Outsourcing expenses | (6,552) | (5,982) | (570) |
| Transport | (2,345) | (2,267) | (78) |
| Finished goods inventories management | (1,317) | (1,420) | 103 |
| Consulting | (1,342) | (1,243) | (99) |
| Other professional services | (2,364) | (2,203) | (161) |
| Maintenance | (579) | (350) | (229) |
| Utilities | (1,175) | (1,339) | 164 |
| Commissions | (439) | (401) | (38) |
| Travel expenses | (748) | (732) | (16) |
| Advertising | (608) | (610) | 2 |
| Insurance | (332) | (300) | (32) |
| Directors & Statutory Auditor fees | (475) | (465) | (10) |
| Trade fairs and promotional events | (480) | (352) | (128) |
| Industrial services | (157) | (146) | (11) |
| Banking commissions and charges | (150) | (109) | (41) |
| Total Services | (19,063) | (17,919) | (1,144) |
The account increased in absolute terms by approx. Euro 1.1 million. This is principally due for Euro 0.6 million to Outsourcing expenses, for Euro 0.2 million to Maintenance and for Euro 0.2 million to Other professional services. The percentage on revenues decreased from 18.6% to 18.4%.
Labour costs incurred by the Group were as follows:
Interim Report at March 31, 2016 – Elica Group
| In Euro thousands | Q1 16 | Q1 15 | Changes |
|---|---|---|---|
| Wages and salaries Social security charges Post-employment benefits Other costs |
(16,170) (4,266) (628) (820) |
(15,018) (4,051) (635) (898) |
(1,152) (215) 7 78 |
| Total | (21,884) | (20,602) | (1,282) |
The account increased by Euro 1.3 million. As a percentage of revenues these costs decreased from 21.4% in 2015 to 21.2% in 2016.
| In Euro thousands | Q1 16 | Q1 15 | Changes |
|---|---|---|---|
| Leasing and rental | (583) | (516) | (67) |
| Rental of vehicles and industrial equipment | (622) | (602) | (20) |
| Hardware, software and patents | (220) | (211) | (9) |
| Other taxes | (219) | (268) | 49 |
| Magazine and newspaper subscriptions | (7) | (5) | (2) |
| Various equipment | (72) | (56) | (16) |
| Catalogues and brochures | (42) | (111) | 69 |
| Other prior year charges and losses | (645) | (338) | (307) |
| Total | (2,409) | (2,106) | (303) |
The account increased by approx. Euro 0.3 million. As a percentage of revenues these costs increased from 2.2% in 2015 to 2.3% in 2016.
| In Euro thousands | Q1 16 | Q1 15 | Changes |
|---|---|---|---|
| Financial income Financial charges Exchange rate gains/(losses) |
57 (833) (147) |
31 (901) 1,122 |
26 68 (1,269) |
| Total net financial charges | (923) | 252 | (1,175) |
Financial activities were impacted by exchange rate movements concerning the currencies utilised by the Group.
The breakdown of property, plant and equipment at March 31, 2016 and December 31, 2015 is detailed below.
| In Euro thousands | Mar 31, 16 | Dec 31 15 | Changes |
|---|---|---|---|
| Land, land usage rights and buildings | 45,701 | 46,678 | (977) |
| Plant and machinery | 21,108 | 21,113 | (5) |
| Industrial and commercial equipment | 16,893 | 15,805 | 1,088 |
| Other assets | 3,684 | 3,654 | 30 |
| Assets in progress and advances | 1,651 | 1,529 | 122 |
| Total property, plant and equipment | 89,037 | 88,779 | 258 |
Property, plant and equipment increased from Euro 88,779 thousand at December 31, 2015 to Euro 89,037 thousand at March 31, 2016, an increase of Euro 258 thousand as a result of the sales, purchases and a depreciation charge of Euro 2,852 thousand.
| In Euro thousands | Mar 31, 16 | Dec 31, 15 | Changes |
|---|---|---|---|
| Goodwill recorded by subsidiaries | 45,398 | 45,712 | (314) |
| Total goodwill | 45,398 | 45,712 | (314) |
The account increased in part due to exchange rate movements.
The breakdown of the "Other intangible assets" at March 31, 2016 and December 31, 2015 is shown below.
| In Euro thousands | Mar 31, 16 | Dec 31, 15 | Changes |
|---|---|---|---|
| Development Costs | 8,680 | 9,309 | (629) |
| Industrial patents and intellectual property rights | 8,213 | 8,746 | (533) |
| Concessions, licenses, trademarks & similar rights | 1,484 | 1,539 | (55) |
| Assets in progress and advances | 7,284 | 6,046 | 1,238 |
| Other intangible assets | 2,790 | 3,036 | (246) |
| Total other intangible assets | 28,451 | 28,676 | (225) |
Other intangible assets decreased from Euro 28,676 thousand at December 31, 2015 to Euro 28,451 thousand at March 31, 2016, a reduction of Euro 225 thousand as a result of the purchases, sales and amortisation recorded to the income statement of Euro 1,612 thousand.
"Assets in progress and advances" refer in part to advances and the development of projects for the implementation of new IT platforms and the design, development and creation of new software applications, and also the development of new products.
The account "Other intangible assets" relates principally to both the technology developed and the client portfolio of the German subsidiary Exklusiv Hauben Gutmann GmbH.
Trade receivables and trade payables were as follows:
| (in Euro thousands) | Mar 31, 16 | Dec 31, 15 | Changes |
|---|---|---|---|
| Trade receivables and loan assets Trade payables |
67,853 (99,804) |
68,504 (99,474) |
(651) (330) |
| Total | (31,951) | (30,970) | (981) |
Trade receivables are recorded net of the allowance for impairment, made following an analysis of the credit risk on receivables and on the basis of historical data on impairment losses, considering that a substantial portion of the receivables is insured by prime international insurance companies. Management considers that the value approximates the fair value of the receivables.
| In Euro thousands | Mar 31, 16 | Dec 31, 15 | Changes |
|---|---|---|---|
| Raw materials, ancillary and consumables | 25,273 | 24,489 | 784 |
| Work-in-progress and semi-finished goods | 14,227 | 14,138 | 89 |
| Finished products and goods | 27,827 | 24,069 | 3,758 |
| Advances | 14 | 6 | 8 |
| Total | 67,340 | 62,701 | 4,639 |
The account increased from Euro 62,701 thousand at December 31, 2015 to Euro 67,340 thousand at March 31, 2016.
Inventories are stated net of the obsolescence provisions in order to take into consideration the effect of waste, obsolete and slow moving items and the risk estimates of the non-existent value in use of some categories of raw materials and semi-finished goods based on assumptions made by management.
The details are reported below.
| (in Euro thousands) | Mar 31, 16 | Dec 31, 15 | Changes |
|---|---|---|---|
| Agents' termination benefits | 522 | 523 | (1) |
| Product warranty provisions | 1,233 | 1,435 | (201) |
| Legal, tax and other risks provision | 3,142 | 3,183 | (41) |
| Personnel Fund | 605 | 1,550 | (945) |
| LTIP provision | 3,886 | 3,886 | - |
| Other Provisions | 531 | 675 | (144) |
| Total | 9,920 | 11,252 | (1,332) |
| of which | |||
| Non-current | 3,692 | 3,854 | (162) |
| Current | 6,228 | 7,398 | (1,170) |
| Total | 9,920 | 11,252 | (1,332) |
Agents' termination benefits are intended to cover possible charges upon termination of relations with agents and sales representatives.
Product warranty provisions represent an estimate of the costs likely to be incurred to repair or replace items sold to customers. These provisions reflect the average warranty costs historically incurred by the Group as a percentage of sales still covered by warranty.
The legal, tax and other risks provision relates to likely costs and charges to be incurred as a result of ongoing legal and tax disputes. The provisions have been determined based on the best possible estimates, considering the available information. They include allocations required to comply with the waste disposal regulation.
The Long Term Incentive Plan provision refers to the accrued liability, approved by the Board of Directors on November 14, 2013.
Personnel provisions include the higher cost estimated by the Group for contractual indemnity and for employee bonuses.
The income statement and statement of financial position amounts deriving from the transactions carried out as per IAS 24 with related parties are in line with the past and reference should therefore be made to the Annual Report.
In accordance with IAS 24, compensation paid to Directors, Statutory Auditors and Key Management Personnel are included in transactions with related parties, and their amounts are in line with previous periods; reference should be made to the Annual Report in this regard.
Fabriano, May 12, 2016
The Chairman Francesco Casoli
The undersigned Giuseppe Perucchetti as Chief Executive Officer and Alberto Romagnoli as the Corporate Financial Reporting Manager of Elica S.p.A. declare in accordance with Article 154-bis, paragraph 2, of the Consolidated Finance Act, that the accounting and corporate information in the present Interim Report at March 31, 2016 corresponds to the underlying accounting documents, records and accounting entries.
Fabriano, May 12, 2016
The Chief Executive Officer Corporate Financial Giuseppe Perucchetti Reporting Manager
Alberto Romagnoli
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