Intercos — Interim / Quarterly Report 2018

Nov 12, 2018

INTERCOS GROUP Global Cosmetic Manufacturer

INTERIM CONSOLIDATED REPORT AT SEPTEMBER 30, 2018

PREPARED IN ACCORDANCE WITH IFRS ENDORSED BY THE EUROPEAN UNION

Intercos S.p.A. Registered office in Milan Piazza Generale Armando Diaz 1

Corporate Information

BOARD OF DIRECTORS *

Name	Office
Dario Gianandrea Ferrari	Chairman and CEO
Renato Semerari**	CEO
Ludovica Arabella Ferrari	Director
Gianandrea Ferrari	Director
Nikhil Thukral Kumar	Director
James Michael Chu	Director
Ciro Piero Cornelli	Director
Decio Masu	Director
Ginevra Ott	Director
Maggie Fanari	Director
Junbae Kim***	Director

BOARD OF STATUTORY AUDITORS *

Name	Office
Nicola Pietro Lorenzo Broggi	Chairman
Matteo Tamburini	Standing auditor
Maria Maddalena Gnudi	Standing auditor
Francesco Molinari	Alternate auditor
Simone Alessandro Marchiò	Alternate auditor

INDEPENDENT AUDITORS

EY SpA

* The current board of directors and the board of statutory auditors will remain in office until the date of the shareholders' meeting called to approve the financial statements for the year ended December 31, 2019.

_____________________________________________________________________________________

• ** Renato Semerari, a director of the company, was appointed chief executive officer on March 27, 2018. His powers were at the same time expanded and are today equivalent to those conferred to the chairman of the board, Dario Gianandrea Ferrari.
• *** Junbae Kim was appointed a member of the board of directors by co-option on November 28, 2017 and his appointment was subsequently confirmed by the shareholders' meeting held on April 27, 2018.

INTERIM CONSOLIDATED REPORT AT SEPTEMBER 30, 2018

INTRODUCTION

The Interim Consolidated Report on Operations at September 30, 2018 of the Intercos Group is prepared in accordance with the provisions of Art. 154 ter, paragraph 5 of Legislative Decree 58/98 – T.U.F., as amended, and drawn up in accordance with IAS 34 – "Interim Financial Reporting", issued by the International Accounting Standards Board (IASB).

The notes to the interim consolidated financial statements at September 30, 2018, in accordance with IAS 34, are presented in a condensed form and do not include all the information that would be required for annual financial statements, in that they refer solely to those components which, by amount, composition or variation, are necessary for an understanding of the results of operations, cash flows and financial position of the Group as at that date. Therefore, the interim consolidated financial statements at September 30, 2018 should be read in conjunction with the 2017 consolidated financial statements of Intercos S.p.A.

The accounting policies and basis of preparation of the interim consolidated financial statements have been applied on basis consistent with those adopted in the annual consolidated financial statements at December 31, 2017 of Intercos S.p.A.

All amounts are expressed in thousands of Euros, unless otherwise indicated.

The preparation of the Interim Consolidated Report on Operations has required the use of estimates by management.

The comparative consolidated income statement for the two periods include the Cosmint Group and, regarding 2017 only, the carrying amounts of the transactions recorded and estimated beginning from the acquisition date, as described in detail under Business Combinations on page 5.

With the intention of providing disclosure in line with the analysis and control criteria used by management to assess the Group's performance, the following pages present the reclassified consolidated statement of financial position at September 30, 2018 and the reclassified consolidated income statement for the nine months then ended, as well as the comparative financial statements at December 31, 2017 and September 30, 2017, respectively, supplemented with non-IFRS alternative performance measures.

The reclassifications had no effect on the net profit or on the equity reported in the interim consolidated financial statements.

The non-IFRS alternative performance measures expressed in the reclassified consolidated income statement and the reclassified consolidated statement of financial position are used by management to provide information for a better assessment of the results of operations and financial position of the Group. Such performance measures should not be considered as a substitute for those established by IFRS.

The alternative performance measures that are not arrived at directly from the financial statements are defined as follows:

• EBITDA: is calculated as profit before taxes, financial income (expenses) without any adjustment and before depreciation, amortization and impairment reversals (losses). EBITDA also excludes income (expenses) from the management of unconsolidated companies and securities, as well as gains or losses on disposal of consolidated equity investments, classified under financial income (expenses) or, for the share of the profit (loss) of only investments accounted for using the equity method (non-operating), within the item result from investments accounted for using the equity method.
• Adjusted EBITDA: is calculated by deducting the following, if applicable, from EBITDA, as defined above:
• impairment of goodwill, if any;
• amortization of the portion of the purchase price allocated to intangible assets in a business combination, as established in IFRS 3;
• restructuring costs, under specific and significant restructuring plans;
• nonrecurring other income (expenses) referring to particularly significant events unrelated to ordinary business operations.
• Operating working capital includes inventories and trade receivables and payables;
• Net working capital is given by operating working capital net of other current assets and liabilities:
• Net invested capital is the sum of non-current assets, non-current liabilities and net working capital;
• Net debt (cash) or net financial position is given by the sum of current and non-current financial liabilities net of short- and long-term financial receivables, including cash and cash equivalents;
• Headcount is given by the number of employees registered in the payroll book on the last day of the reporting period.

BUSINESS COMBINATIONS – ACQUISITION OF THE COSMINT GROUP

On August 3, 2017, Intercos S.p.A. completed the 100% acquisition of Cosmint Group S.p.A., a company operating in the B2B cosmetic sector for more than 20 years and a leader in the manufacture of skin, hair and body care products. This acquisition has contributed to the creation of one of the largest B2B groups in the world of beauty. Cosmint Group's manufacturing excellence, profound knowledge of the beauty market and state-of-the-art factories in Italy and Poland will allow Intercos to grow significantly in terms of organizational skills and manufacturing capacity. Not least, Intercos will now be able to satisfy customers' needs in almost every category of the beauty industry thanks to the addition of Cosmint to the Intercos family.

The acquisition of Cosmint Group S.p.A. was partly financed by own funds and partly by new credit lines obtained with a modification to the loan contract.

The higher price paid of €42,852 thousand, although not yet entirely disbursed, was allocated to goodwill on a provisional basis until completion of the allocation process as set out in IFRS 3.

During the year, the higher value was allocated as follows:

• €14,947 thousand to property, plant and equipment according to a measurement of their fair value as determined by an independent third-party company. Net of the tax effect, the amount allocated is equal to €10,777 thousand.
• the remaining €32,075 thousand to goodwill, allocated in part to the already-existing individual Make-up and Skin Care CGUs and in part to the new Hair & Body CGU.

The allocation process among the different CGUs was determined based on the internal measurement of the fair value of the assets on which an impairment test will be conducted periodically by the Group as set out in IAS 36.

The comparative consolidated income statement for the two periods includes the figures of the Cosmint Group starting from the acquisition date for 2017 and from January 1 for 2018.

HIGHLIGHTS OF THE GROUP

Main highlights of the Group:

(in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2017	Change
Revenues	508,818	418,616	90,202
EBITDA	68,649	58,461	10,188
Adjusted EBITDA	68,811	59,959	8,852
Adjusted EBITDA margin	13.5%	14.3%	-0.8%
Operating profit (EBIT) EBIT margin	45,873 9.0%	40,813 9.7%	5,060 -0.7%
Profit before taxes (EBT) EBT margin	39,102 7.7%	32,077 7.7%	7,025 0.0%
Profit for the period	28,340	20,600	7,740
Profit margin	5.6%	4.9%	0.6%

(in € thousands)	9/30/2018	12/31/2017	Change
Net working capital	108,197	77,987	30,210
Net working capital turnover	6.29	7.57	-1.28
Net invested capital	404,092	373,770	30,322
Non-current assets	318,468	315,866	2,602
Net financial position	219,224	217,671	1,553

	9/30/2018	9/30/2017	Change
Headcount (number)	3,485	3,275	210
Earnings per share (basic and diluted) – in Euro	0.31	0.22^	0.08

^ Figure restated after the entry of the Canadian shareholder "The Innovation Trust".

RECLASSIFIED CONSOLIDATED FINANCIAL STATEMENTS

Reclassified Consolidated Statement of Financial Position

(in € thousands)	9/30/2018	12/31/2017
Fixed assets	290,748	290,112
Inventories	122,060	111,870
Trade receivables	121,117	126,578
Trade payables	(99,744)	(123,408)
Operating working capital	143,433	115,039
Other current assets and liabilities, net (*)	(35,236)	(37,052)
Net working capital	108,197	77,987
Other non-current assets and liabilities, net (**)	(1,197)	915
Investments accounted for using the equity method	6,345	4,757
Invested capital	404,092	373,770
Equity	184,868	156,099
Cash and cash equivalents	(84,188)	(68,777)
Financial payables	303,412	286,448
Net financial position	219,224	217,671
Total sources	404,092	373,770
Ratios
Fixed assets / Invested capital	71.95%	77.62%
Net financial position / Equity Invested capital / Equity	1.19 2.19	1.39 2.39
Operating working capital / Revenues	21.08%	19.49%

Notes on the reconciliation between the reclassified consolidated statement of financial position and the consolidated statement of financial position are the following:

Net working capital / Revenues 15.90% 13.21%

(*) Includes Other current assets, Other current liabilities and Derivatives.

(**) Includes Deferred tax assets, Other non-current receivables, Non-current provisions for risks, Deferred tax liabilities, Other non-current liabilities and Employee benefits.

Consolidated net financial position - net debt (cash)

(in € thousands)	9/30/2018	12/31/2017
Current net financial position	(8,501)	(10,081)
Non-current net financial position	227,725	227,752
Total net financial position	219,224	217,671

Reclassified Consolidated Income Statement by function

(in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2017
Revenues	508,818	418,616
Cost of sales	(399,138)	(318,541)
Industrial gross profit	109,680	100,075
Industrial gross margin	21.6%	23.9%
Research & Development and innovation costs	(26,736)	(23,872)
Selling expenses	(17,683)	(17,353)
General and administrative expenses	(21,092)	(18,781)
Other operating income (expenses)	4,805	3,435
Result from investments accounted for using the equity method (operating)	(2,940)	(1,193)
Nonrecurring income (expenses)	(161)	(1,498)
Operating profit (EBIT)	45,873	40,813
EBIT margin	9.0%	9.7%
Depreciation, amortization and impairment reversals (losses)	(22,776)	(17,648)
EBITDA (*)	68,649	58,461
Nonrecurring income (expenses)	(161)	(1,498)
Adjusted EBITDA (*)	68,811	59,959
Adjusted EBITDA margin	13.5%	14.3%
Financial income (expenses) (**)	(6,788)	(8,771)
Result from investments accounted for using the equity method	18	35
Profit before taxes (EBT)	39,102	32,077
Income taxes	(10,762)	(11,478)
Profit for the period	28,340	20,600
Attributable to:
- owners of the parent	28,247	20,479
- non-controlling interests	93	121
Earnings per share:
Basic and diluted in Euro	0.31	0.22^

(*) For additional details, reference should be made to the comments on pages 3 and 4.

(**) Financial income (expenses) is the sum of financial income (expenses) without any adjustment.

^ Figure restated after the entry of the Canadian shareholder "The Innovation Trust".

The breakdown of the Group's headcount at September 30, 2018 is as follows:

Group headcount	9/30/2018	9/30/2017
Executive and mid-level managers	271	265
White-collars	1,278	1,176
Blue-collars	1,936	1,834
Total	3,485	3,275
Temporary	1,912	2,511
Total	5,397	5,786

At September 30, 2018, total headcount of the Intercos Group (on a same consolidation basis) is 5,397, of whom 3,485 are permanent and 1,912 temporary employees.

PROFIT AND FINANCIAL PERFORMANCE OF THE GROUP

* Revenues for the first nine months of 2017 are consistent with the figure reported in the interim consolidated report at September 30, 2017 prior to drawing up the new Group BU organizational structure. During 2018, in fact, at the conclusion of the PPA (Purchase Price Allocation) process of the Cosmint Group, management structured the business activities of the acquired group into different business units, which in part were integrated into the already-existing BUs (Make-up and Skin Care) and in part to the new Hair & Body BU.

Main consolidated profitability and balance sheet indicators

In the first nine months of 2018, excluding Cosmint, the Group reported revenues from sales of €393,469 thousand compared to €392,890 thousand in the same period of 2017, basically unchanged at €579 thousand (+0.15%). Considering Cosmint in the scope of consolidation, the overall increase in revenues is €90,202 thousand (+21.5%), bringing total sales to €508,818 thousand.

Adjusted EBITDA, excluding the Cosmint Group, increased from €57,149 thousand to €59,445 thousand (+4.0%), with an Adjusted EBITDA margin of 15.1% compared to 14.5% in the first nine months of 2017. Total Adjusted EBITDA, including the Cosmint Group, is €68,811 thousand (+14.8%) with a 13.5% Adjusted EBITDA margin. The margin is lower overall owing to the impact of a different margin contribution by Cosmint's business activities.

Operating profit (EBIT), excluding the Cosmint Group, is €42,005 thousand, with a 10.7% operating margin versus €39,013 thousand in the first nine months of 2017, with a 9.9% operating margin. In total, EBIT of the Group is €45,873 thousand (+12.4%), with a 9.0% operating margin.

Capital expenditures in property, plant and equipment and intangible assets during the first nine months of 2018 total €14,081 thousand and €5,921 thousand, respectively.

The consolidated net financial position is €219,224 thousand compared to €217,671 thousand at December 31, 2017, increasing €1,553 thousand. The leverage ratio is 2.34 based on the Adjusted EBITDA of the last 12 months (2.56 at December 31, 2017).

Total equity of the Group is €184,868 thousand compared to €156,099 thousand at December 31, 2017. The increase of €28,769 thousand to a large extent reflects the net profit for the period.

Group organization

Intercos S.p.A. is a corporation organized under the laws of the Republic of Italy, with registered offices in Milan, Piazza General Armando Diaz 1.

At the end of 2013 the Group's business was reorganized into two areas identified on the basis of the following operating segments:

• Make-up Business Unit: specialized in the creation, development, manufacture and marketing of powders, emulsions, lipsticks, nail polishes and types of cosmetics using delivery systems in the form of pens/pencils for the face, eyes and lips.
• Skin Care Business Unit: dedicated to the manufacture and marketing of cosmetic and skin care creams.

The Group's main manufacturing facilities are at the plant sites in Italy, the United States, Switzerland, China, Brazil and South Korea.

On August 3, 2017, Intercos S.p.A. completed the 100% acquisition of Cosmint Group S.p.A., a company operating in the B2B cosmetic sector with manufacturing facilities in Italy and Poland.

The operations of Cosmint are organized into various business units, whose flows, at the conclusion of the PPA process have been integrated into Intercos' already-existing BUs to which the following BU was added:

Hair & Body Business Unit: focused on the manufacture of products for hair and body care.

Additional details are provided in the paragraph on Business Combinations on page 5.

The Group's organization structure is updated to the closing date of the interim consolidated financial statements at September 30, 2018 and shows the operating companies and companies in liquidation:

100%

COMPOSITION OF THE GROUP AND RELATED TRANSACTIONS AND INVESTMENTS

The interim consolidated financial statements at September 30, 2018 include the financial statements and/or accounting data of Intercos S.p.A. (group holding company) and the subsidiaries and other companies (Italian and foreign) that carry out manufacturing and marketing activities consolidated line-by-line or accounted for using the equity method.

Scope of consolidation:

SUBSIDIARIES

(consolidated line-by-line)
Name	Headquarters	Currency	Capital in currency/000	Percentage of ownership
				Direct	Indirect
Intercos Europe S.p.A.	Milan	Euro	3,000	100.00%
Kit Productions S.r.l.	Pessano con Bornago (Milan)	Euro	10	70.00%
Marketing Projects S.r.l. in liquidation	Milan	Euro	40	100.00%
Ager S.r.l.	Monza	Euro	31	76.00%
Drop Nail S.r.l.	Milan	Euro	50	100.00%
Intercos America Inc.	Wilmington, New Castle, Delaware (USA)	US dollar	10	100.00%
Intercos do Brasil Indústria e Comércio de Productos Cosméticos ltda	Atibaia (Brazil)	Brazilian real	30,377	99.7%	0.3%
Intercos Paris S.ar.l.	Paris (France)	Euro	14	100.00%
Intercos UK Ltd	Barnstaple (UK)	Pound sterling	0,1	65.00%
Intercos Marketing Ltd	South Molton (UK)	Pound sterling	0.001		100%
CRB S.A.	Puidoux (Switzerland)	Swiss franc	100	100.00%
Vitalab S.r.l.	Milan	Euro	160		75.01%
CRB Benelux B.V.	Maastricht (Netherlands)	Euro	18		100.00%
Intercos Technology Co.Ltd.	Suzhou (P.R.C.)	US dollar	8,400		100.00%
Interfila Cosmetics (Shanghai) Co. Ltd	Shanghai (P.R.C)	US dollar	2,700		100.00%
Intercos Cosmetics Suzhou Co. Ltd.	Suzhou (P.R.C.)	US dollar	12,800		100.00%
Intercos Asia Pacific Limited	Hong Kong	US dollar	29,104*	100.00%
Intercos Concept S.r.l.	Milan	Euro	10	100.00%
Cosmint Group S.p.A. **	Como	Euro	50	100.00%
Cosmint S.p.A. **	Olgiate Comasco	Euro	1,586		100.00%
Sodisco S.r.l. **	Olgiate Comasco	Euro	10		100.00%
Tatra Spring Polska Spółka zoo **	Garwolin (Poland)	PLN	50		100.00%

* The investment in Intercos Asia Pacific is recorded for USD 29,101 thousand and HKD 26 thousand; the latter, converted at the exchange rate at the transaction date, is €3 thousand.

** The company is an integral part of the Intercos Group since August 3, 2017 following the 100% acquisition by Intercos S.p.A. of Cosmint Group S.p.A., which, in turn, owns the entire share capital of Cosmint S.p.A., Sodisco S.r.l. and Tatra Spring Polska Spółka zoo. Cosmint S.p.A. also holds a minority interest of 1.85% in Lariana Depur S.p.A. with registered offices in Como (Italy) at Via Raimondi 1.

The scope of consolidation has remained unchanged during the first nine months of the year.

	SUBSIDIARIES CONSOLIDATED BY EQUITY METHOD
Company	Headquarters	Type of business conducted	Date of financial statements	Accounting principles applied	Share capital €/000	Total assets €/000	Total liabilities €/000	Currency	% Holding	% Voting rights	Ownership > 50% of voting rights but not control	Ownership < 50% of voting rights but control	Ownership > 20% of voting rights but not significant influence	Ownership < 20% of voting rights but significant influence	Amount €/000
Direct control
Hana Co.Ltd	Hwasung, South Korea	Packaging	9/30/2018	IFRS	919	19,137	12,675	KRW	20%	20%	N/A	N/A	√	N/A	1,702
Shinsegae Intercos Korea	South Korea	Cosmetics Prod.	9/30/2018	IFRS	21,132	37,944	28,658	KRW	50%	50%	N/A	N/A	√	N/A	4,643

The share capital of the Shinsegae Intercos Korea joint venture was increased during the period by Intercos and by the other shareholder Shinsegae each by an amount of €4,608 thousand (KRW 6,000,000 thousand), thus not modifying the 50% interest held by each shareholder.

COMPANIES STATED AT COST
Company	Headquarters	Currency	Capital in €/000		Percentage ownership
				Direct	Indirect
Lariana Depur S.p.A.	Como	EUR	24		1.85%

All amounts in the interim consolidated financial statements and tables are expressed in thousands of Euros, unless otherwise indicated.

The exchange rates used for the translation of amounts expressed in currencies other than the Euro are the following:

	Income Statement 9 months ended 9/30/2018	Statement of Financial Position 9/30/2018	Income Statement 9 months ended 9/30/2017	Statement of Financial Position 12/31/2017
	Average for period	At September 30, 2018	Average for period	At December 31, 2017
U.S. dollar	1.1949	1.1576	1.1132	1.1993
Pound sterling	0.8839	0.8873	0.8725	0.8872
Swiss franc	1.1611	1.1576	1.0946	1.1702
Chinese renminbi (yuan)	7.7791	7.9662	7.5721	7.8044
Brazilian real	4.2966	4.6535	3.5311	3.9729
South Korean won	1,303.55	1,285.7500	1,267.0597	1,279.6100
Polish zloty	4.2478	4.2774	4.3042	4.1770

SEGMENT REPORTING .

At September 30, 2018, the Group's business is aggregated into three areas identified on the basis of the product lines indicated below:

• Make-up Business Unit: specialized in the creation, development, manufacture and marketing of powders, emulsions, lipsticks, nail polishes and types of cosmetics using delivery systems in the form of pens/pencils for the face, eyes and lips.
• Skin Care Business Unit: dedicated to the manufacture and marketing of cosmetic and skin care creams.

The Group's main manufacturing facilities are at the plant sites in Italy, the United States, Switzerland, China, Brazil and South Korea.

On August 3, 2017, Intercos S.p.A. completed the 100% acquisition of Cosmint Group S.p.A., a company operating in the B2B cosmetic sector with manufacturing facilities in Italy and Poland.

The operations of Cosmint are organized into various business units, whose flows, at the conclusion of the PPA process have been integrated into Intercos' already-existing BUs to which the following BU was added:

Hair & Body Business Unit: focused on the manufacture of products for hair and body care.

Additional details are provided in the paragraph on Business Combinations on page 5.

The financial information reported below is periodically reviewed by the board of directors and also used for planning and budgeting purposes.

Detailed information on each identified segment for the nine months ended September 30, 2018 and September 30, 2017, with a separate indication of invested capital of the Cosmint Group at December 31, 2017, is presented in the following tables.

9 months ended 9/30/2018 - (in € thousands)	Make-up	Skin Care	Hair & Body	Total
Revenues	327,141	78,667	103,010	508,818
Adjusted EBITDA (*)	48,992	10,363	9,456	68,811
Depreciation, amortization and impairment reversals (losses)	(15,010)	(2,620)	(5,146)	(22,777)
Nonrecurring income (expenses)				(161)
Financial income (expenses)				(6,788)
Result from investments accounted for using the equity method				18
Income taxes				(10,762)
Profit for the period				28,340
Net invested capital at 9/30/2018	263,311	68,266	72,515	404,092

(*) For additional details, reference should be made to the comments on page 4.

			Cosmint
9 months ended 9/30/2017 - (in € thousands)	Make-up	Skin Care	Group	Eliminations	Total
Revenues	336,560	56,331	25,726		418,616
Adjusted EBITDA (*)	49,253	7,896	2,810		59,959
Depreciation, amortization and impairment reversals (losses)	(14,501)	(2,137)	(1,011)		(17,648)
Nonrecurring income (expenses)					(1,498)
Financial income (expenses)					(8,771)
Result from investments accounted for using the equity method					35
Income taxes					(11,478)
Profit for the period					20,600
Net invested capital at 12/31/2017	299,020	50,109	94,242**	(69,601)	373,770

** The figure included goodwill of €42,852 thousand which was allocated as set out in IFRS 3. For additional details, reference should be made to Business Combinations on page 5.

Make-up BU: including Cosmint, reported revenues total €327,141 thousand. This is a decrease of €9,419 thousand (-2.8%) compared to the corresponding period of the prior year due mostly to a slowdown in the Americas region.

Adjusted EBITDA is €48,992 thousand, despite the reduction in revenues, and basically in line with €49,253 thousand reported in the first nine months of 2017 (-0.5%). The Adjusted EBITDA margin of 15.0% in the first nine months of 2018 shows an improvement over 14.6% in the same period of 2017.

Skin Care BU: including Cosmint, revenues increased by €22,336 thousand (+39.7%) from the first nine months of 2017 to €78,667 thousand in the first nine months of 2018, mainly in Asia.

Adjusted EBITDA is €10,363 thousand, recording an increase of €2,466 thousand (+31.2%) over €7,896 thousand in the first nine months of the prior year. The Adjusted EBITDA margin is 13.2% to September 30, 2018 (14% to September 30, 2017). The decrease is primarily due to higher fixed costs and the impact of a different margin contribution by the Cosmint Group and Intercos Technology Co. LTD.

Hair & Body BU: revenues total €103,010 thousand and Adjusted EBITDA is €9,456 thousand, with a 9.2% margin.

(in € thousands)

Sales by Business Unit	9 months ended 9/30/2018	9 months ended 9/30/2017
Make-up	327,141	336,560
Skin Care	78,667	56,331
Hair & Body	103,010	-
Cosmint	-	25,726
Total	508,818	418,616

Detailed information on sales by geographic region according to the location in which the recipient of the sales invoice has its headquarters is as follows:

(in € thousands)

Sales by Geographic Region	9 months ended 9/30/2018	9 months ended 9/30/2017
Americas	134,481	151,333
EMEA	297,116	194,520
Asia	77,221	47,037
Cosmint Group	-	25,726
Total	508,818	418,616

The different trends in sales by geographic region in the first nine months of 2018 compared to the corresponding period of the prior year are as follows:

• The Americas region reported an 11% reduction in sales mainly in the Mass Market and Private Label market segments with "multinational" and "retail" customers.
• The EMEA region posts sales of €297,116 thousand compared to €194,520 thousand in the same period of the prior year. The increase of €89,234 thousand (+52.7%) is for the most part due to the change in the scope of consolidation which includes the Cosmint Group for the entire nine months of 2018.
• The Asia region has overall sales of €77,221 thousand, with an increase of 64.1% from €47,037 thousand over the first nine months of the prior year. This increase rewards the Group's strategy to grow sales volumes with local "emerging brands" and "retailers". In addition, although to a lesser extent, the region recorded a growth in sales with "multinational" customers.

1. Property, plant and equipment

Changes in property, plant and equipment during the first nine months of 2018 are as follows:

(in € thousands)	January 1, 2018	Increases / Depreciation	Increases/Deprec. Immobiliare Cometa	Translation differences / Reclassifications	Business Combinations	Decreases / Utilization	September 30, 2018
Historical cost
Land and buildings	164,098	488	-	469	7,759	(187)	172,628
Plant and machinery	188,831	5,468	-	3,768	6,281	(1,447)	202,901
Industrial equipment	42,605	1,364	-	659	808	(11)	45,425
Office furniture and equipment	16,042	362	-	261	99	(72)	16,692
Motor vehicles and internal transportation equipment	1,686	-	-	7	-	(202)	1,490
Cell phones	2,333	1	-	(5)	-	-	2,329
Assets under construction and payments on account	6,897	6,398	-	(7,071)	-	(290)	5,934
Total	422,493	14,081	-	(1,913)	14,947	(2,208)	447,401
Accumulated depreciation
Land and buildings	83,849	4,809	167	233	12	-	89,071
Plant and machinery	140,424	9,598	-	(1,899)	284	(1,414)	146,993
Industrial equipment	37,908	1,961	-	(35)	56	(11)	39,879
Office furniture and equipment	12,047	780	-	107	14	(71)	12,878
Motor vehicles and internal transportation equipment	1,579	57	-	6	-	(202)	1,440
Cell phones	869	210	-	(1)	-	-	1,078
Total	276,677	17,416	167	(1,589)	366	(1,697)	291,339
Net carrying amount	145,816	(3,335)	(167)	(323)	14,581	(511)	156,062

2. Intangible assets

Changes in Intangible Assets during the first nine months of 2018 are as follows.

(in € thousands)	January 1, 2017	Increases	Decreases/ Adjustments/ Translation differences	Reclassifications	Amortization	September 30, 2018
Development costs	12,539	942	52	-	(3,568)	9,965
Patent and software rights	3,705	381	4	403	(1,106)	3,388
Concessions and licenses	1,999	-	(1)	328	(344)	1,982
Assets under development	7,014	4,668	(15)	(1,249)	-	10,418
Other intangible assets	874	(69)	(4)	428	(175)	1,054
Total	26,130	5,921	36	(90)	(5,194)	26,805

3. Borrowings from banks and other lenders

Borrowings from banks and other lenders and the relative due dates are provided in the following table:

(in € thousands)

September 30, 2018	Short-term	Medium-term	Long-term	Total
Intercos S.p.A. bonds	1,987	9,937	107,481	119,405
Medium/long-term bank borrowings (syndicate)	14,082	96,534	-	110,616
Medium/long-term bank borrowings (CRB)	339	1,086	3,724	5,149
Mortgages	7	-	-	7
Finance leases payable	1,244	8,963	-	10,207
Other financial payables	26,487	-	-	26,487
Derivatives (liabilities)	(3)	-	-	(3)
Medium/long-term debt	44,143	116,520	111,205	271,868
Revolving credit facility Intercos China	16,224	-	-	16,224
Bank overdrafts	7,320	-	-	7,320
Advances on invoices	8,000	-	-	8,000
Short-term debt	31,544	-	-	31,544
Total	75,687	116,520	111,205	303,412

Details of the remaining debt outstanding at September 30, 2018 are as follows:

Company	Bank	Amount	Internal rate of return	Description
Intercos S.p.A.	Bank syndicate	62,013	1.5% - 2.5%	Tranche in EUR
Intercos S.p.A.	Bank syndicate	10,979	4.84%	Tranche in \$
Intercos S.p.A.	Institutional investors	119,405	3.77%	Bonds
Cosmint Group S.p.A.	Bank syndicate	23,947	1.89%	Tranche in EUR
Intercos Europe S.p.A.	Bank syndicate	13,679	2.58%	Tranche in EUR
		230,021
CRB S.A.	BCV Bank	1,149	1.85%	Mortgage (in CHF)
CRB S.A.	BCV Bank	4,000 5,149	2.18%	Batiplus (in CHF)
Drop Nail	BPM Bank	7	1.75%	Mortgage (in EUR)

The internal rate of return is the rate used for IFRS 9 measurements on the loans shown in the table.

Financial data:

Total equity of the Group is €184,868 thousand compared to €156,099 thousand at December 31, 2017, with an increase of €28,769 thousand.

The net financial position at September 30, 2018 is analyzed as follows:

(in € thousands)	9/30/2018	12/31/2017
Cash and cash equivalents	(84,188)	(68,777)
Borrowings from banks and other lenders	75,687	58,696
Total current financial position	(8,501)	(10,081)
Borrowings from banks and other lenders	227,725	227,752
Non-current financial position	227,725	227,752
Debt (cash)	219,224	217,671

4. Financial position data summary

The equity and financial structure of the Group at September 30, 2018 compared to December 31, 2017 is represented as follows:

	(in € thousands)	9/30/2018	12/31/2017
	Inventories	122,060	111,870
	Trade receivables and other receivables	139,834	142,170
	Income taxes receivable	5,312	2,735
	Current non-financial liabilities (*)	(159,010)	(178,788)
A.	Net working capital	108,196	77,987
	Property, plant and equipment	156,062	145,816
	Other intangible assets (**)	134,662	144,271
	Other non-current assets (*)	27,720	25,754
	Investments in other companies	24	24
B.	Non-current assets	318,468	315,866
C.	Non-current assets held for sale	-	-
D.	Employee benefit obligations	(9,246)	(9,841)
E.	Provisions	(1,988)	(2,147)
F.	Other non-current liabilities (*)	(11,338)	(8,095)
G.	Net invested capital	404,092	373,770
	Financed by:
	Current net financial position (*)	(8,501)	(10,081)
	Non-current net financial position (*)	227,725	227,752
H.	Total consolidated net financial position	219,224	217,671
I.	Equity	184,868	156,099
L.	Total	404,092	373,770

(*) Details of the composition of these items are provided in the "Reconciliation Schedule" on page 24.

(**) Includes goodwill.

Inventories total €122,060 thousand at September 30, 2018 and increased by €10,190 thousand over December 31, 2017, mainly in reference to the Cosmint Group.

Trade receivables amount to €121,117 thousand al September 30, 2018, with a reduction of €5,461 thousand.

Trade payables come to €99,744 thousand at September 30, 2018. The reduction of €23,664 thousand refers mainly to Intercos Europe S.p.A. and the Asian subsidiaries.

Equity increased by €28,769 thousand principally due to the net profit reported for the period of €28,340 thousand, the positive change in the fair value hedge reserve of €150 thousand, the negative change in exchange differences on translating foreign operations of €873 thousand, the actuarial gain of €518 thousand, the change in the negative reserve relating to business combinations of €264 thousand and the positive change in the consolidation reserve of €897 thousand.

The consolidated net financial position is €219,224 thousand with an increase of €1,553 thousand compared to €217,671 thousand at December 31, 2017.

5. Reconciliation schedules

The reconciliation between the equity and financial structure presented under the financial position data summary and the items in the interim consolidated financial statements at September 30, 2018 are as follows:

(in € thousands)	9/30/2018	12/31/2017
are composed of:
Trade payables and other payables	(148,795)	(171,266)
Taxes payable	(10,215)	(7,522)
Current non-financial liabilities (reclassified format)	(159,010)	(178,788)
(in € thousands)	9/30/2018	12/31/2017
are composed of:
Deferred tax assets	14,504	14,214
Non-current security deposits	780	748
Investments	6,369	4,757
Receivables for indirect taxes	5,523	5,523
Other non-current assets	569	513
Other non-current assets (reclassified format)	27,720	25,754
(in € thousands)	9/30/2018	12/31/2017
are composed of:
Deferred tax liabilities	(11,225)	(7,426)
Other non-current liabilities	(113)	(669)
Other non-current liabilities (reclassified format)	(11,338)	(8,095)
(in € thousands)	9/30/2018	12/31/2017
are composed of:
Cash and cash equivalents	(84,188)	(68,777)
Financial payables (current portion)	75,687	58,696
Current net financial position (reclassified format)	(8,501)	(10,081)
(in € thousands)	9/30/2018	12/31/2017
are composed of:
Financial payables (non-current portion)	227,725	227,752
Non-current net financial liabilities (reclassified format)	227,725	227,752

6. Sales analysis

The Group companies contributed to sales (revenues from sales of goods and services) as summarized below:

(in € thousands)

Company	9 months ended 9/30/2018	9 months ended 9/30/2017
Intercos Europe S.p.A.	208,638	189,009
Intercos America Inc.	50,627	86,885
Intercos Cosmetics Suzhou Co. Ltd	21,008	29,791
Intercos Technology Co. Ltd	59,788	41,251
Interfila Cosmetics (Shanghai) Co. Ltd	29,587	24,614
CRB S.A.	34,491	31,768
Cosmint S.p.A.	102,625	23,629
Tatra Spring Polska SP ZOO	17,806	2,001
Other companies	9,517	13,861
Aggregate Total	534,087	442,810
Eliminations	(25,269)	(24,194)
Consolidated Total	508,818	418,616

In the first nine months of 2018, excluding Cosmint, the Group reported revenues from sales during the period totaling €393,469 thousand. Compared to €392,890 thousand in the nine months ended September 30, 2017, revenues are basically in line with the same period of the prior year, with an increase of €579 thousand (+0.15%). Considering Cosmint in the scope of consolidation, the overall increase in revenues is €90,201 thousand (+21.5%), bringing total sales to €508,818 thousand.

7. Income and expenses summary data

(in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2018
Cost of sales	(399,138)	(318,533)
Net operating costs and nonrecurring expenses, of which:	(63,807)	(59,270)
Research & Development and innovation	(26,736)	(23,871)
Selling expenses	(17,683)	(17,353)
General & administrative expenses	(21,092)	(18,791)
Other operating income (expenses)	4,805	3,435
Result from investments accounted for using the equity method (operating)	(2,940)	(1,193)
Nonrecurring income (expenses)	(161)	(1,498)

Cost of sales, excluding Cosmint, amounts to €291,862 thousand with a decrease from the same period of the prior year of €3,817 thousand (-1.3%), on a same consolidation basis.

The attention placed by management on fixed costs made it possible to substantially contain the increase in these costs, notwithstanding the Group's continual investments.

In total, cost of sales is €399,138 thousand. The increase of €80,605 thousand is due to the impact of a different margin contribution by Cosmint.

Industrial gross profit

Income statement data (in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2017
Industrial gross profit	109,680	100,083

Industrial gross profit, excluding Cosmint, comes to €101,606 thousand, showing an increase €3,938 thousand compared to the first nine months of 2017 with the gross margin stable at 25.8%.

Including Cosmint, the gross profit is €109,680 thousand, recording an increase of €9,597 thousand with an industrial gross margin of 21.6%.

The reduction in the gross margin is basically due to the impact of a different margin contribution by Cosmint.

Gross operating profit (Adjusted EBITDA)

Income statement data (in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2017
Gross operating profit (Adjusted EBITDA)	68,811	59,959

Adjusted EBITDA, excluding the Cosmint Group, is €59,445 thousand, with a 15.1% Adjusted EBITDA margin compared to 14.5% in the first nine months of 2017 (€57,149 thousand). Total Adjusted EBITDA, including the Cosmint Group, comes to €68,811 thousand (+14.8%) and a 13.5% total Adjusted EBITDA margin. The margin reduction is attributable to the impact of the different contribution of the Cosmint business.

Operating profit (EBIT)

Income statement data (in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2017
Operating profit (EBIT)	45,873	40,813

Operating profit (EBIT), excluding the Cosmint Group, is €42,005 thousand, with a 10.7% margin compared to €39,013 thousand in the first nine months of 2017 and a 9.9% margin. Total Group EBIT stands at €45,873 thousand (+12.4%) and a 9.0% margin.

Profit before taxes (EBT)

Income statement data (in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2017
Profit before taxes (EBT)	39,102	32,077

Profit before taxes (EBT), excluding Cosmint, is €35,935 thousand vs. €30,304 thousand in the first nine months of 2017. The increase of €5,631 thousand (+18.5%) is partly due to lower net financial expenses. Total pre-tax profit is €39,102 thousand (+21.9%) compared to the corresponding period of the prior year.

Profit for the period:

Income statement data (in € thousands)	9 months ended 9/30/2018	9 months ended 9/30/2017
Profit for the period	28,340	20,600

Profit for the period of Intercos, excluding Cosmint, is €26,128 thousand, with an increase over the corresponding period of 2017 (+33.7%). Total profit of the Group is €28,340 thousand (+37.6%) with a 5.6% margin compared to 4.9% for the period ending September 30, 2017. The positive effect is reflected in EPS.

Related party transactions:

In general, related party transactions are carried out on an arm's length basis.

There were no atypical and/or unusual transactions during the period.

Details of the most important transactions that were entered into during the period with related parties, including joint ventures, are as follows:

€ thousands	Commodities, consumer goods and cost for service	Personnel cost	Miscellaneous operating income and expenses	Financial charges	Financial income	Trade receivables	Trade payables	Financial payables
Dafe International Srl	(98)	-	-	-	-	-	45	-
Sci Maragia	(38)	-	-	-	-	-	131	-
Je m'en fous	-	-	-	-	-	-	(1)	-
Arterra Bioscience Srl	(437)	-	(0)	(6)	-	-	331	340
My Style	-	-	(14)	-	-	-	-	-
Interior	(2)	-	(2)	-	-	-	1	-
Catterton	(365)	-	-	-	-	-	3	-
Vault	(159)	-	-	-	-	-	-	-
Maragia USA Inc	(19)	-	-	-	-	-	(6)	-
Cornelli Gabelli e associati	(113)	(19)					41
Familiari e affini di Dario Ferrari	-	(117)	-	-	-	-	-	-
Total	(1.233)	(135)	(16)	(6)	-	-	545	340

€ thousands	Revenues	Other operating income	Commodities, consumer goods and cost for service	Personnel cost	Miscellaneous operating income and expenses	Financial charges	Financial income	Trade receivable s	Trade payables	Financial payables
Intercos Korea LTD	2.323	199	(443)	10	-	-		- 1.415	199	-
Hana Co Ltd	-	-	-	-	-	-		- -	-	-
Total	2.323	199	(443)	10	-	-		1.415 -	199	-

A substantially positive performance is expected for the full year 2018, in effect confirming the Group's expectations, as set out in its business plan.

SIGNIFICANT NONRECURRING EVENTS AND TRANSACTIONS

There were no significant nonrecurring events or transactions during the first nine months of 2018.

IMPORTANT EVENTS DURING THE THIRD QUARTER AND TRANSACTIONS SUBSEQUENT TO SEPTEMBER 30, 2018

Important events during the third quarter and transactions subsequent to September 30, 2018 are reported as follows:

• On July 6, 2018, to complete the acquisition of the entire capital of Cosmint Group S.r.l. (now Cosmint Group S.p.A.), the board of directors of Intercos S.p.A. approved the payment of the deferred price to Futura Società Semplice.
• In July 2018, the shareholders' meeting approved and consequently began the process for the merger of the companies Cosmint Group S.p.A. and Sodisco S.r.l. with and into the company Cosmint S.p.A. The purpose of the merger is to bring Sodisco's real estate assets into Cosmint in order to acquire ownership of the properties used in its production and commercial activities as well as, through the merger of Cosmint Group, to achieve: (1) a simplification and rationalization of the company's organization, resulting in a shortening of the chain of control reporting to the Company aimed at facilitating decisional and operational processes within the Intercos Group, (ii) a greater and better utilization of the potential synergies, particularly production and commercial synergies, in addition to (iii) a reduction in total operating and administrative costs, all with a view toward an overall improvement in terms of operating efficiency. The Cosmint merger will become effective under the Italian Civil Code on November 1, 2018. The accounting effects on the consolidated and separate financial statements will become effective on January 1, 2018.
• On July 31, 2018, the board of directors of Intercos S.p.A. approved a long-term share incentive plan, named Management Long-Term Incentive Plan, intended for certain Intercos key managers. In line with what is envisaged by this Plan, on October 11, 2018, the Intercos S.p.A. extraordinary shareholders' meeting approved an increase in the multiple coefficient of the supermajority voting rights in shareholders' meetings to which the companies Dafe 3000 S.r.l., Dafe 4000 S.p.A. and Dafe 5000 S.r.l. are entitled as holders of Class A shares, such as to ensure that these same Dafe companies continue to have control of the group holding company, Intercos S.p.A., also after the issue of shares pursuant to the share incentive plan.
• On September 7, 2018, Intercos Europe S.p.A. and Drop Nail S.r.l. held their respective shareholders' meetings which approved the project for the merger of Drop Nail S.r.l. with and into Intercos Europe S.p.A. in order to simplify and rationalize the organization of the corporate structures within the Intercos

Group and with a view to reduce the operating and administrative costs and, therefore achieve an overall improvement in terms of operating efficiency. The Drop Nail merger will become effective under the Italian Civil Code on December 1, 2018. The accounting effects on the consolidated and separate financial statements will become effective on January 1, 2018.

INTERCOS GROUP Global Cosmetic Manufacturer

INTERIM CONSOLIDATED FINANCIAL STATEMENTS AT SEPTEMBER 30, 2018

Interim Consolidated Statement of Financial Position at September 30, 2018 – unaudited

(in € thousands)	Note	September 30, 2018	December 31, 2017
NON-CURRENT ASSETS		156,062	145,816
Property, plant and equipment	1	26,805	26,130
Intangible assets Goodwill	2	107,857	118,140
Investments	5	6,369	4,781
Deferred tax assets	5	14,504	14,214
Other non-current assets	5	6,872	6,783
Non-current assets		318,468	315,866
CURRENT ASSETS
Inventories	4	122,060	111,870
Trade receivables	4	121,117	126,578
Other current assets		24,030	18,327
Derivatives		-	-
Cash and cash equivalents	5	84,188	68,777
Current assets		351,394	325,552
TOTAL ASSETS		669,862	641,417
EQUITY
Share capital		10,818 66,005	10,818 66,005
Other reserves		105,484	76,813
Retained earnings		182,308	153,636
Equity attributable to owners of the parent
Equity attributable to non-controlling interests		2,560	2,463
TOTAL EQUITY	4	184,868	156,099
LIABILITIES
NON-CURRENT LIABILITIES
Borrowings from banks and other lenders	3	227,725	227,752
Provisions	4	1,988	2,147
Deferred tax liabilities	5	11,225 113	7,426 669
Other non-current liabilities	5	9,246	9,841
Employee benefit obligations	4	250,297	247,835
Non-current liabilities
CURRENT LIABILITIES
Borrowings from banks and other lenders	3	47,960	30,386
Other financial payables	3	27,727	28,310
Trade payables	5	99,744	123,408
Other payables	5	59,266	55,379
Current liabilities		234,697 -	237,484
TOTAL EQUITY AND LIABILITIES		669,862	641,417

Interim Consolidated Income Statement for the nine months ended September 30, 2018 – unaudited

(in € thousands)	Note	9 months ended September 30, 2018	9 months ended September 30, 2017
Revenues	6	508,818	418,616
Cost of sales	7	(399,138)	(318,533)
Industrial gross profit		109,680	100,083
Research & Development and innovation costs		(26,736)	(23,871)
Selling expenses		(17,683)	(17,353)
General and administrative expenses		(21,092)	(18,789)
Other operating income (expenses)		4,805	3,435
Result from investments accounted for using the equity method (operating)		(2,940)	(1,193)
Nonrecurring income (expenses)		(161)	(1,498)
Operating profit (EBIT)	7	45,873	40,813
Financial income		6,021	3,401
Financial expenses		(12,810)	(12,171)
Result from investments accounted for using the equity method		18	35
Profit before taxes (EBT)	7	39,102	32,077
Income taxes		(10,762)	(11,478)
Profit for the period	7	28,340	20,600
Attributable to: owners of the parent - non-controlling interests -		28,247 93	20,479 121
Earnings per share:
Basic and diluted EPS in Euro		0.31	0.22^
^ Restated earnings per share with entry of the Canadian shareholder "The Innovation Trust". Consolidated Statement of Comprehensive Income – unaudited
(in € thousands)		9 months ended September 30, 2018	9 months ended September 30, 2017
Profit for the period	7	28,340	20,600
Other comprehensive income that will not be reclassified subsequently to the income statement,
net of tax effect
- Actuarial gains (losses) on remeasurement of employee defined benefit plans		561	(16)
- Tax effect		(43)	(13)
Actuarial gains (losses) net of tax effect		518	(29)
Other comprehensive income that will be reclassified subsequently to the income statement, net of tax effect
- Exchange differences on translating foreign operations		(873)	(7,037)

- Exchange differences on translating foreign operations	(873)	(7,037)
Exchange differences on translating foreign operations	(873)	(7,037)
- Cash flow hedge	197	(366)
- Tax effect	(47)	88
Cash flow hedge, net of tax effect	150	(278)
Comprehensive income for the period	28,136	13,256

Attributable to:

owners of the parent -	28,036	13,171
non-controlling interests -	100	85

(in € thousands)	Equity attributable to owners of the parent				Equity attributable to non-controlling interests		Total
Description	Share capital	Other reserves (Share premium reserve)	Reserves and retained earnings	Profit for the period	Share capital	Profit for the period
Balances at January 1, 2018	10,818	66,005	58,219	18,594	2,282	181	156,099
Appropriation of 2017 profit	-	-	18,594	(18,594)	181	(181)	-
Share capital increase	-	-	-	-	-	-	-
Exchange differences on translating foreign operations	-	-	-	(873)	-	-	(873)
Other comprehensive income, net of tax effect	-	-	-	661	-	7	668
Consolidation reserve	-	-	900	-	(3)	-	897
Business combinations reserve	-	-	(264)	-	-	-	(264)
Profit for the period	-	-	-	28,247	-	93	28,340
Balances at September 30, 2018	10,818	66,005	77,448	28,036	2,460	100	184,868

Statement of Changes in Consolidated Equity at September 30, 2017 – unaudited

(in € thousands)		Equity attributable to owners of the parent				Equity attributable to non-controlling interests				Total
Description	Share capital	Other reserves (Share premium reserve)	Reserves and retained earnings	Profit for the period	Share capital	Profit for the period
Balances at January 1, 2017	10,710	66,005	38,366	20,058	2,193	161	137,493
Appropriation of 2016 profit	-	-	20,058	(20,058)	161	(161)	-
Share capital increase	108	-	-	-	-	-	108
Exchange differences on translating foreign operations	-	-	-	(7,003)	-	(34)	(7,037)
Other comprehensive income, net of tax effect	-	-	-	(305)	-	(2)	(307)
Consolidation reserve	-	-	(81)	-	(72)	-	(153)
Profit for the period	-	-	-	20,479	-	121	20,600
Balances at September 30, 2017	10,818	66,005	58,343	13,171	2,282	85	150,704

(in € thousands)	9 months ended September 30, 2018	9 months ended September 30, 2017
Profit from continuing operations	28,341	20,600
Profit for the period	28,340	20,600
Depreciation, amortization and impairment reversals (losses)	22,776	17,646
Nonrecurring income (expenses)	161	1,498
Change in provisions	(396)	(1,613)
Financial income (expenses)	6,788	8,771
Decrease / (Increase) in inventories	(10,616)	(18,069)
Decrease / (Increase) in trade receivables, net	5,289	(22,070)
Increase / (Decrease) in trade payables	(23,536)	(5,632)
Decrease / (Increase) in other assets	(7,192)	9,705
Increase / (Decrease) in other payables	3,360	(1,917)
Cash flows provided by operating activities ( a )	24,977	8,919
Acquisition of property, plant and equipment, net	(14,081)	(12,146)
Acquisition of intangible assets, net	(5,921)	(5,613)
Disposal of property, plant and equipment and intangible assets	513	261
Acquisition of investments	(1,588)	(456)
Cash flows (used in) investing activities ( b )	(21,078)	(86,716)
Increase / (Decrease) in borrowings from banks and other lenders	16,111	69,656
Interest paid during the period	(5,700)	(5,310)
Cash flows provided by financing activities ( c )	10,411	64,348
Change in equity (d)	897	(45)
Net increase (decrease) in cash and cash equivalents ( a )+( b )+( c )+( d )	15,207	(13,497)
Cash and cash equivalents, at beginning of the year	68,777	64,525
Translation exchange differences	(204)	1,491
Cash and cash equivalents acquired	-	959
Cash and cash equivalents, at end of the period	84,188	50,496
Net increase (decrease) in cash and cash equivalents during the period	15,207	(13,497)

Interim Consolidated Statement of Cash Flows for the nine months ended September 30, 2018 - unaudited