Interim / Quarterly Report • Aug 3, 2016
Interim / Quarterly Report
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REPLY HALF-YEAR FINANCIAL REPORT 2016
| Board of directors and controlling bodies | 4 |
|---|---|
| The Group's financial highlights | 6 |
| Reply Living Network | 8 |
| Financial review of the group | 16 |
| Other information | 21 |
| Outlook on operations | 23 |
| Consolidated statement of income (*) | 25 |
| Consolidated statement of comprehensive income | 26 |
| Consolidated statement of financial position (*) | 27 |
| Statement of changes in consolidated equity | 28 |
| Consolidated statement of cash flows | 29 |
| Annexed tables | 69 |
| Attestation of the half-year condensed financial statements | 75 |
| Independent Auditors' Report | 77 |
Chairman and Chief Executive Officer
Mario Rizzante
Chief Executive Officer Tatiana Rizzante
Daniele Angelucci Claudio Bombonato Oscar Pepino Filippo Rizzante Fausto Forti (1) (2) (3) Maria Letizia Jaccheri (1) (2) Enrico Macii (1) (2)
President Cristiano Antonelli
Paolo Claretta Assandri Ada Alessandra Garzino Demo
Ernst & Young S.p.A.
(1) Directors not invested with operational proxies. (2) Independent directors in accordance to the Corporate Governance Code drawn up by the Committee for Corporate Governance (3) Lead Independent Director
This report has been translated into English form the original Italian version, in case of doubt the Italian version shall prevail.
4 | Half year financial report at 30 June 2016
| % | Economic figures (Euros/000) |
1st half 2016 | % | 1st half 2015 | % |
|---|---|---|---|---|---|
| 100.0 | Revenue | 386,513 | 100.0 | 345,483 | 100.0 |
| 14.0 | Gross operating income | 51,333 | 13.3 | 47,265 | 13.7 |
| 12.8 | Operating income | 47,992 | 12.4 | 42,850 | 12.4 |
| 12.6 | Income before taxes | 47,271 | 12.2 | 43,859 | 12.7 |
| 8.0 | Group net income | 30,079 | 7.8 | 28,200 | 8.2 |
| YE 2015 | Financial figures (Euros/000) |
1st half 2016 | 1st half 2015 |
|---|---|---|---|
| 295,425 | Group shareholders' equity | 305,420 | 274,257 |
| 653 | Non-controlling interest | (341) | 353 |
| 700,745 | Total assets | 689,582 | 607,216 |
| 162,566 | Net working capital | 156,633 | 137,150 |
| 267,893 | Net invested capital | 281,785 | 251,758 |
| 44,334 | Cash flow | 34,727 | 27,260 |
| 28,186 | Net financial position | 23,294 | 22,851 |
| YE 2015 | Data per single share (in Euros) |
1st half 2016 | 1st half 2015 |
|---|---|---|---|
| 9,352,857 | Number of shares | 9,352,857 | 9,352,857 |
| 9.68 | Operating result per share | 5.13 | 4.58 |
| 6.07 | Net result per share | 3.22 | 3.02 |
| 4.74 | Cash flow per share | 3.71 | 2.91 |
| 31.59 | Shareholders' equity per share | 32.66 | 29.32 |
| YE 2015 | Other information | 1st half 2016 | 1st half 2015 |
|---|---|---|---|
| 5,245 | Number of employees | 5,739 | 4,957 |
Reply is a company that specializes in consulting, systems integration and digital services with a focus on the conception, design and implementation of solutions based on the new communication channels and digital media.
Composed of a network of companies, Reply partners with key industrial groups in defining and developing business models made possible by the new technological and communication paradigms such as big data, cloud computing, digital communication, the Internet of Things and mobile and social networking. In so doing, it aims to optimize and integrate processes, applications and devices.
Reply operates through a network of companies that specialize in processes, applications and technologies and that represent centers of excellence in their respective fields of expertise.
Reply's services include:
Consulting – on strategy, communications, processes and technologies;
System integration – to use the full potential of technology by combining business consulting services with innovative technical solutions and high levels of added value;
Application management – the management, monitoring and continuous development of software assets.
In every market segment in which it operates, Reply combines specific sector expertise with wide experience in the provision of services and a wealth of advanced technological capabilities.
Reply now ranks as a leading technological partner for the telecoms and media market, more specifically Reply has defined an integrated offering of strategic and technological consultancy to support the design, definition and management of the new-generation networks, based on SDN (Software Defining Network) paradigms, capable of integrating and managing virtual networks (network virtualization) through network engineering services and network operations. In the field of network security, Reply has provided an innovative solution, based on the paradigms of Ethereum Blockchain, in order to enable the identification, preemption and removal of attacks by hackers on SDN networks, typically more flexible and adaptable to the requirements of the service, but, at the same time, more vulnerable to external attacks.
Lastly, Reply assists its clients in the design and implementation of services and applications designed for latest generation devices and the design of omni-channel engagement models, both at the touchpoint level (physical and digital) and as the development of innovative solutions of customer experience, increasingly integrated with social logics.
Reply is increasingly active in the digital transformation of financial institutions. In this field, Reply is working with some of the major European players in the sector on many key issues, such as the definition of complete multi-channel digital experience and customer engagement strategies: from digital branding to the implementation of apps strategy, from the development of a new generation of portals and multi-channel touchpoints to the complete redefinition of the underlying technological architecture, and the analysis of new customer journeys.
Another subject in which Reply is strongly present and highly specialised is mobile payments and related mcommerce services. Reply offers both consultancy services and a verticalised proprietary platform for various industrial sectors (banks, insurance companies, payment service providers, telecoms, retailers, media and internet companies).
Lastly, in the most advanced frontiers of innovation, Reply is present with numerous projects, such as, for example, in the area of the most recent biometric recognition technologies and digital identity, in IoT applied to specific insurance sectors (auto, home and health), in cripto currencies and in related solutions within the blockchain, in experimentation and assessment of "fintech" models of peer to peer lending, crowd funding and in the definition of specific e-marketplaces for financial institutions.
Reply accompanies companies in the phases of transformation and management of information systems: from strategic design to the understanding and redefinition of core processes, and the implementation of solutions that integrate the core applications in the production and distribution sectors.
The areas of focus and development of skills concern: support for supply and purchase management (SPM) processes; the design of production chain control systems (MES); distribution and movement of products on complex logistics networks (SCM).
In particular, Industry 4.0 and Logistics 4.0 are elements of particular focus for the strategic development of companies in the sector.
Reply has also defined a specific offering for the retail sector that combines e-commerce consulting with the design and development of multi-channel platforms (web, mobile, call centres and instore) in which digital devices, innovations and physical venues meet to create a unique and integrated customer experience.
Reply combines in-depth knowledge of the market and its typical processes with a distinctive ability in the design, implementation and management of application and technological solutions in support of core business in the areas of monitoring and optimisation of generation from renewable sources, trading & risk management, pricing & forecasting, metering, billing, CRM, etc.
The ability to support and transform managerial models of operators in the sector and the verticalisation of specific skills and solutions (IoT, big data, cloud, mobile, etc.) will enable Reply to assist energy generation, sales, transportation and distribution companies in defining and developing new operating models and raise cost efficiency, in situations of operational excellence, based on skills in fields such as smart metering, smart grid, asset & work management. Reply also assists its customers in the adoption of new energy management paradigms aimed at raising energy efficiency, a field in which a complete offering is provided, aimed at both energy sales companies and final consumers.
The need for "cost saving" as well as the reorganisation of important sectors of the public administration, including health, have determined in Italy, in 2015, an initial legislative consolidation in central government, with the contextual redefinition of spending centres and, in various regions, the redefinition of organisational models that establish the centrality of citizens with regard to services supplied, be they health or of another kind. The slogan for this transformation is: Digital PA
In this scenario, Reply benefits from the experience it has built up in the most advanced online services, creating vertical applications and expertise that enable it to implement specific solutions for managing relationships with the public and with businesses.
Moreover, another important field of specialisation for Reply is telemedicine, or digital healthcare, which will increasingly move therapies and patient monitoring out of the hospital environment.
Technological innovation has formed the basis for the development of Reply, a company that has always pursued the objective of providing its customers with the tools necessary to increase flexibility and efficiency. Reply is involved in a continuous process of research, selection and marketing of innovative solutions for sustaining the creation of value within organisations.
Big data technologies has moved on from being a strictly technological field to become one of the levers in the digital transformation of companies. Indeed, significant projects were initiated on data for the purpose of defining programmes aimed at improving business performance (e.g. the subject of risk management in financial institutions), innovating service models (e.g. passenger car policies in the insurance sector) or at understanding and serving its customers better (e.g. loyalty programs in the retail sector).
By combining technological skills in data analysis, data modelling and process re-engineering, Reply made it easier for its clients to approach the issue of big data, by favouring the activation of a real and concrete pathway of cultural change and by introducing a new approach to data management. In particular, in 2015, Reply assisted companies in the application of big data technology, creating architectures based on the new data lake concept and transforming models applied to data analysis through the insertion of specialised data scientists in projects to redefine core company processes.
Reply has also begun to develop a specific proposal in the field of machine learning for the management of the enormous body of data produced by the world of the Internet of Things and for their use in the creation of added value by companies.
In recent years cloud computing has established itself as one of the most important areas of transformation that companies have had to face. The offering of virtual environments and services by leading vendors worldwide has in fact modified if not revolutionised the concept of IT as it had been traditionally interpreted, leading it to go from being a simple commodity to one of the basic elements on which to configure one's digital transformation.
In order to fulfil the requirements for strategic and technological transformation and change management required for the implementation of the most suitable cloud model for specific situations, Reply has defined a service offering structured along the following lines:
The new communication models and the ubiquity of connectivity, through a wide range of means (that support mobile phones and tablets, smart TV, beacons and devices for virtual reality), have demanded the implementation of CRM solutions that create value by helping to construct a pervasive, immersive and customer-centred experience.
The creation of an optimal customer experience is achieved by building a one-to-one relationship model that focuses on the distinctive aspects of company organisation, on an approach that places the customer and its interaction with the company at the centre of the processes, be they marketing, sales or support and services.
To this end, over the years Reply has built and developed a strategic CRM framework which enables the creation of a unique customer experience for the client, defining an approach coherent with all possible customer journeys, maximising the attraction towards the prospects and the engagement of existing customers.
The digital marketing transformation process that has been redesigning the business world and company functions over the last few years is now also profoundly permeating the market of brand communications. This phenomenon has no geographical or product boundaries, where processes and branding strategy are radically imposing new paradigms and new economies, in a panorama of users who are now channel agnostic, moving freely between new technologies and constantly evolving platforms. In addition to creating and managing every aspect of the brand image in an interactive digital environment, Reply's skills include creativity and technology, applied to important sectors such as mobile telephony, ecommerce, gaming and the Internet of Things, present and, in particular, future targets of brand names, as can already be seen in the most important international communications markets.
Another important sector that Reply supports its clients in is communication on social networks, a fast developing mainstream phenomenon in recent years that is today, more than ever, being hailed as the global arena of brand-user relations.
The wide diffusion of mobile devices with consumers and the creation of new payment instruments that see in the mobile component a supporting factor, make the payment sector one of the areas with the highest growth rate. Reply has defined a dedicated offer - based on consultancy services and technological platforms - to assist banks, financial institutions, telecom companies, utilities and retailers in the processes to create and supply innovative services of remote and proximity digital payments.
The technological asset is HI Credits™, the Reply platform that, by using the available smartphone technologies, enables personalised and contextualised payment services.
Increasingly more demanding, mobile consumers are now requesting a completely integrated experience from companies, personalised and unified as much as possible through various physical and digital channels. In a similar purchasing scenario, the success of this sector lies in the ability to invest in services aimed at promoting relations and interaction between sellers and customers, constantly innovating and extending sales models with new multi-channel strategies capable of offering consumers different touchpoints, both digital and physical, used to purchase products. One example is the increasingly widespread success of purchasing processes based in click and collect models, very useful in order to avoid additional delivery costs or unexpected events such as delays: purchases are made online and the product is collected free of charge at the shop.
The increasingly widespread use of social media to compare prices and products has further enriched and modified purchasing processes which are increasingly based on an exchange of information and multichannel interactions in which the transaction is begun and completed without a solution of continuity between chat, social media, online store and physical shop.
An evolution of this dimension in the traditional purchasing scenario has led Reply to define an omni-channel strategy centred on customer needs capable of enabling companies to provide the final consumer with a completely unified and integrated experience through online, mobile and physical channels.
Nowadays, digital transformation is the predominant issue in the agenda of companies. All the organizations have created or are creating systems and processes that require a bi-modal approach to information and development and management systems.
In order to excel in the digital economy, characterized by the convergence between the physical and the digital, the organizations must remove the boundaries between IT and business. This will allow companies to operate rapidly to exploit the new developments available to them, proceeding however with caution to avoid damaging existing systems and processes.
This new approach to IT requires agile delivery models in which small, highly qualified, multi-disciplinary teams implement a process of end-to-end change in very short timescales, working directly with the managers of the various business areas involved. Reply supports its customers in enterprise architecture, through the use of a vast catalogue of architectural frameworks, methods and models consolidated in many projects completed for large industrial, media and service groups.
The drive for convergence between the telecoms, media and consumer electronics sectors is making it necessary to treat items that currently lack any form of connectivity as "networked devices" (such as household appliances and home automation control systems). Consequently, one of the major revolutions underway consists of the progressive connection not only of computers and devices but of a range of material objects. This will result in an increasingly more pervasive network integrated with the daily activities of people.There are various fields of application: from industrial applications (production processes) to logistics and info-mobility, energy efficiency, remote assistance and environmental protection.
Reply has designed and developed HI ReplyTM, a platform of services, devices and middleware, on which to base specific vertical applications such as advanced logistics, environmental security, contactless payment and product traceability. HI ReplyTMwas designed and produced at the Reply research and development centre on theInternet of Things.
Thanks to its many years of activity in the sector, Reply has gained extensive experience in the mobile segment, developing skills that range from strategy to the development of mobile applications, from user experience to testing, from payments in mobility to the most recent technologies and devices (beacons, wearables) introduced onto the market.
In order to meet the ever-increasing requests for the supply of services with a high degree of interaction with the user on all mobile platforms, channels and devices, Reply has also set up its own application factory dedicated to the development of mobile applications in both the business and consumer sectors.
Augmented reality (the vision of the real world increased by digital information) and virtual reality (the exploration and interaction of virtual environments) are technologies that have continued to develop over the years, but are experiencing, in this particular period of history, a surprising expansion that involves important investments by the big names in digital technology.
By combining experience in the 3D sector deriving from the gaming world with mobile skills and new technologies in the world of wearable devices, Reply has developed an offering specifically orientated towards the development of solutions devised to increase user involvement. This offering includes the development of augmented reality applications (aimed at visualising a virtual product in a real environment) and immersive reality applications specifically designed to give the user an unforgettable experience, transporting him/her into a navigable virtual environment.
Reply is now one of the leading players in this sector, with a comprehensive portfolio of services for risk management, privacy and information security management. In particular, Reply has developed an integrated approach for measuring and managing risk that is capable of assessing, concurrently, both the risk involved and the potential loss of value and sales associated with that risk. Using this method, Reply enables its clients to implement a set of tools and activities aimed at cutting the operating costs associated with risk management, thereby ensuring that capital and resources can be allocated in the best possible ways.
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Social media has changed the way people find information and how they interact and communicate. People of all ages use this communication model in an increasingly pervasive and natural way in their daily lives. It has now been embraced on a massive scale by businesses, too, which have seized new opportunities for using these paradigms, seeking innovative ways to connect their organisation/ brand/service with their customers and stakeholders.
Along with market solutions for social engagement and social listening, Reply bases its enterprise social networking offering ((business community, social intranet and consumer community) on the TamTamy™ proprietary platform, available in on-premises mode and as a service on cloud computing architecture.
The explosive phenomenon of mobile and apps that we have seen in recent years brings with it new social behaviour patterns and new habits. One especially obvious phenomenon involves the use of video games. Smartphones and tablets have seen the disproportionate growth of the gaming community, previously confined to owners of consoles or to the PC gaming community, transforming gaming into a mass phenomenon.
Reply has developped an offer capable of satisfying the requirements of the brand from the use of virtual reality and augmented reality to the realization of games to teach (edutainment ) or to promote a product or a message (advergames).
Reply constantly invests to provide, through the use of technology, gaming experiences ever more innovative and capitivating. Reply's credibility in this sector is guaranteed by the quality of the B2C products it has developed over recent years and by the success they have enjoyed in the global market.
The Half-Year report for the period ended June 30, 2016 has been prepared in accordance with the Legislative Decree. 58/1998, as amended, and the "Regolamento Emittenti" issued by Consob. The Report also conforms with the requirements of the International Financial Reporting Standards ("IFRS") issued by International Accounting Standards Board ("IASB") adopted by the European Union and has been prepared in accordance with IAS 34 – Interim Financial Reporting.
Since the start of the year, the Group has recorded a consolidated turnover of €386.5 million, which is an increase of 11.9% compared to the same period in 2015.
In the first half of 2016, increased profit margins have also been recorded, with consolidated EBITDA of €51.3 million (+8.6%) and EBIT for the period of €48.0 million (+12.0%). Pre-tax profit amounted to €47.3 million, which represents an increase of 7.8% compared to 2015.
For the second quarter of the year, the Group's performance is equally positive, with consolidated turnover for the period of €200.2 million, which is an increase of 13.5% compared to 2015.
EBITDA, from April to June 2016, amounted to 26.4 million, with EBIT of €25.5 million and pre-tax profit of €24.8 million.
As at 30 June 2016, the Group's net financial position was positive for €23.3 million (€28.2 as at 31 December 2015). At 30 June 2015, the financial position was positive for €22.9 million.
The first six months of the year have been very positive for the Group, with significant growth in all the market segments in which it operates. In particular, Reply has worked to further strengthen a distinctive presence that is unique on the market, matching technology, digital experience and industry consulting.
Today Reply's goal is to keep investing in new skills and specializations, to support clients in defining and implementing transformation strategies based on Big Data, Cloud Computing, Digital Services, Machine Learning, Industry 4.0 and Internet of Things.
Reply's performance is shown below in the following reclassified consolidated income statement of the first half and is compared to the corresponding figures of the previous year:
| (thousand Euros) | 1st half 2016 | % | 1st half 2015 | % |
|---|---|---|---|---|
| Revenues | 386,513 | 100 | 345,483 | 100 |
| Purchases | (8,428) | (2.2) | (6,632) | (2) |
| Personnel | (189,838) | (49.1) | (175,246) | (50.7) |
| Services and other costs | (137,915) | (35.7) | (116,796) | (33.8) |
| Other operating (costs)/income | 1,000 | 0.3 | 456 | 0.1 |
| Operating costs | (335,181) | (86.7) | (298,217) | (86.3) |
| Gross operating income (EBITDA) | 51,333 | 13.3 | 47,265 | 13.7 |
| Amortization, depreciation and write-downs | (4,863) | (1.3) | (4,415) | (1.3) |
| Other unusual (costs)/income | 1,523 | 0.4 | - | - |
| Operating income (EBIT) | 47,992 | 12.4 | 42,850 | 12.4 |
| Financial income/(expenses) | (721) | (0.2) | 1,009 | 0.3 |
| Income before taxes | 47,271 | 12.2 | 43,859 | 12.7 |
| Income taxes | (17,119) | (4.4) | (15,192) | (4.4) |
| Net income | 30,152 | 7.8 | 28,667 | 8.3 |
| Non-controlling interests | (74) | - | (467) | (0.1) |
| Group net income | 30,079 | 7.8 | 28,200 | 8.2 |
Reply's second quarter performance is shown below in the following reclassified consolidated income statement and is compared to corresponding figures of the previous second quarter:
| (thousand Euros) | Q2 2016 | % | Q2 2015 | % |
|---|---|---|---|---|
| Revenues | 200,170 | 100.0 | 176,291 | 100.0 |
| Purchases | (3,738) | (1.9) | (3,183) | (1.8) |
| Personnel | (98,492) | (49.2) | (88,510) | (50.2) |
| Services and other costs | (72,919) | (36.4) | (58,882) | (33.4) |
| Other operating (costs)/income | 1,365 | 0.7 | 201 | 0.1 |
| Operating costs | (173,785) | (86.8) | (150,375) | (85.3) |
| Gross operating income (EBITDA) | 26,385 | 13.2 | 25,916 | 14.7 |
| Amortization, depreciation and write-downs | (2,524) | (1.3) | (2,480) | (1.4) |
| Other unusual (costs)/income | 1,655 | 0.8 | - | - |
| Operating income (EBIT) | 25,516 | 12.7 | 23,436 | 13.3 |
| Financial income/(expenses) | (738) | (0.4) | (106) | (0.1) |
| Income before taxes | 24,778 | 12.4 | 23,330 | 13.2 |
(*) Region 1: ITA, USA, BRA, POL, ROU Region 2: DEU, CHE, CHN Region 3: GBR, LUX, BEL, NLD, FRA
18 | Half year financial report at 30 June 2016
The table below illustrates the Group's financial structure as at June 30, 2016, compared to December 31, 2015:
| (thousand Euros) | 30/06/2016 | % | 31/12/2015 | % | Change |
|---|---|---|---|---|---|
| Current operating assets | 388,331 | 401,151 | (12,820) | ||
| Current operating liabilities | (231,698) | (238,585) | 6,887 | ||
| Working capital, net (A) | 156,633 | 162,566 | (5,933) | ||
| Noncurrent assets | 224,209 | 191,259 | 32,950 | ||
| Noncurrent liabilities | (99,057) | (85,932) | (13,125) | ||
| Fixed capital (B) | 125,152 | 105,327 | 19,825 | ||
| Invested capital, net (A+B) | 281,785 | 100.0 | 267,893 | 100.0 | 13,892 |
| Shareholders' equity (C) | 305,079 | 108.3 | 296,079 | 110.5 | 9,000 |
| NET FINANCIAL POSITION (A+B-C) | (23,294) | (8.3) | (28,186) | (10.5) | 4,892 |
Net invested capital as at June 30, 2016, amounted to 281,785 thousand Euros, and was entirely financed by Shareholders' equity for 305,079 thousand Euros, that generated a positive net financial position of 23,294 thousand Euros.
The following table provides a breakdown of net working capital:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Work in progress | 105,375 | 57,929 | 47,446 |
| Trade receivables | 237,103 | 302,250 | (65,147) |
| Other current assets | 45,853 | 40,973 | 4,880 |
| Current operating assets (A) | 388,331 | 401,151 | (12,820) |
| Trade payables | 89,455 | 77,686 | 11,769 |
| Other current liabilities | 142,243 | 160,899 | (18,656) |
| Current operating liabilities (B) | 231,698 | 238,585 | (6,887) |
| Working capital, net (A-B) | 156,633 | 162,566 | (5,933) |
| % return on investments | 20.3% | 23.0% |
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Cash and cash equivalents, net | 62,008 | 70,109 | (8,101) |
| Current financial assets | 1,910 | 2,289 | (380) |
| Due to banks | (13,758) | (10,786) | (2,972) |
| Due to other providers of finance | (811) | (466) | (345) |
| Short-term financial position | 49,348 | 61,147 | (11,798) |
| Non current financial assets | 1,171 | 908 | 262 |
| Due to banks | (26,284) | (33,008) | 6,725 |
| Due to other providers of finance | (941) | (860) | (81) |
| M/L term financial position | (26,054) | (32,960) | 6,906 |
| Total net financial position | 23,294 | 28,186 | (4,892) |
Change in the item cash and cash equivalents is summarized in the table below:
| (thousand Euros) | 1st half 2016 |
|---|---|
| Cash flows from operating activities (A) | 34,727 |
| Cash flows from investment activities (B) | (29,196) |
| Cash flows from financial activities (C) | (13,632) |
| Change in cash and cash equivalents (D) = (A+B+C) | (8,101) |
| Cash and cash equivalents at beginning of period (*) | 70,109 |
| Cash and cash equivalents at year end (*) | 62,008 |
| Total change in cash and cash equivalents (D) | (8,101) |
(*) Liquid assets and cash equivalents net are net of current account overdrafts
The complete consolidated cash flow statement and the details of cash and other cash equivalents net are set forth below in the financial statements.
Reply offers high technology services and solutions in a market where innovation is of primary importance. Reply considers research and continuous innovation a fundamental asset in supporting clients with the adoption of new technology.
Reply dedicates resources to Research and Development activities and concentrates on the development and evolution of its own platforms:
Reply has important partnerships with major global vendors so as to offer the most suitable solutions to different company needs. Specifically, Reply boasts the highest level of certification amongst the technology leaders in the Enterprise sector, among which:
During the period, there were no transactions with related parties, including intergroup transactions, which qualified as unusual or atypical. Any related party transactions formed part of the normal business activities of companies in the Group. Such transactions are concluded at standard market terms for the nature of goods and/or services offered.
The company in the notes to the financial statements and consolidated financial statements provides the information required pursuant to Art. 154-ter of the TUF [Consolidated Financial Act] as indicated by Consob Reg. no. 17221 of 12 March 2010, indicating that there were no significant transactions concluded during the period.
Information on transactions with related parties as per Consob communication of 28 July 2006 is disclosed at the annexed tables herein.
At June 30, 2016 the number of employees of the Group was 5,739 with an increase of 494 compared to December 31, 2015 and an increase of 782 resources compared to June 30, 2015.
In the first six months of 2016, Reply achieved extremely positive results, both in terms of turnover and profitability. The second quarter, in particular, was characterized by substantial growth, and this allows looking forward to the coming months with optimism, continuing on the path of development of our Group.
Turin, August 2, 2016
/s/ Mario Rizzante
For the Board of Directors The Chairman Mario Rizzante
| (thousand Euros) | Note | 1st half 2016 | 1st half 2015 | Year 2015 |
|---|---|---|---|---|
| Revenues | 5 | 386,513 | 345,483 | 705,601 |
| Other income | 4,075 | 4,101 | 15,643 | |
| Purchases | 6 | (8,428) | (6,632) | (14,049) |
| Personnel | 7 | (189,838) | (175,246) | (349,721) |
| Services and other costs | 8 | (141,989) | (120,897) | (256,137) |
| Amortization, depreciation and write-downs | 9 | (4,863) | (4,415) | (9,371) |
| Other unusual (cost)/income | 10 | 2,522 | 456 | (1,408) |
| Operating income | 47,992 | 42,850 | 90,558 | |
| Income/(loss) on investments | - | - | 440 | |
| Financial income/(expenses) | 11 | (721) | 1,009 | (2,067) |
| Income before taxes | 47,271 | 43,859 | 88,930 | |
| Income taxes | 12 | (17,119) | (15,192) | (31,502) |
| Net income | 30,152 | 28,667 | 57,428 | |
| Non-controlling interest | (74) | (467) | (680) | |
| Group net result | 30,079 | 28,200 | 56,748 | |
| Earnings per share | 13 | 3.22 | 3.02 | 6.07 |
| Diluted earnings per share | 13 | 3.22 | 3.02 | 6.07 |
(*) Pursuant to Consob Regulation No. 15519 of 27 July 2006, the effects of related-party transactions on the Consolidated statement of income are reported in the Annexed tables herein and fully described in Note 33.
| (thousand Euros) | Note | 1st half 2016 | 1st half 2015 |
|---|---|---|---|
| Profit of the period (A) | 30,152 | 28,667 | |
| Other comprehensive income that will not be reclassified subsequently to profit or loss |
|||
| Actuarial gains/(losses) from employee benefit plans | (1,559) | 755 | |
| Total Other comprehensive income that will not be reclassified subsequently to profit or loss, net of tax (B1): |
25 | (1,559) | 755 |
| Other comprehensive income that may be reclassified subsequently to profit or loss: |
|||
| Gains/(losses) on cash flow hedges | 25 | - | 2 |
| Gains/(losses) on exchange differences on translating foreign operations |
25 | (5,214) | 1,435 |
| Total Other comprehensive income that may be reclassified subsequently to profit or loss, net of tax (B2) |
(5,214) | 1,437 | |
| TOTAL OTHER COMPREHENSIVE INCOME, NET OF TAX (B) = (B1) +(B2) |
(6,773) | 2,193 | |
| Total comprehensive income (A)+(B) | 23,379 | 30,859 | |
| Total comprehensive income attributable to: | |||
| Owners of the parent | 23,306 | 30,392 | |
| Non-controlling interest | 74 | 467 |
| (thousand Euros) | Note | 30/06/2016 | 31/12/2015 | 30/06/2015 |
|---|---|---|---|---|
| Tangible assets | 14 | 17,025 | 17,022 | 15,148 |
| Goodwill | 15 | 156,959 | 133,376 | 134,481 |
| Other intangible assets | 16 | 11,038 | 9,696 | 7,222 |
| Equity investments available for sale | 17 | 11,665 | 9,105 | 6,011 |
| Other financial assets | 18 | 7,268 | 5,629 | 4,289 |
| Deferred tax assets | 19 | 21,425 | 17,339 | 16,237 |
| Non current assets | 225,380 | 192,167 | 183,387 | |
| Inventories | 20 | 105,375 | 57,929 | 42,084 |
| Trade receivables | 21 | 237,103 | 302,250 | 270,442 |
| Other receivables and current assets | 22 | 45,853 | 40,973 | 33,165 |
| Financial assets | 18 | 1,910 | 2,289 | 603 |
| Cash and cash equivalents | 24 | 73,962 | 105,137 | 77,535 |
| Current assets | 464,203 | 508,577 | 423,829 | |
| TOTAL ASSETS | 689,582 | 700,745 | 607,216 | |
| Share Capital | 4,863 | 4,863 | 4,863 | |
| Other reserves | 270,477 | 233,814 | 241,194 | |
| Net result of the period | 30,079 | 56,748 | 28,200 | |
| Group shareholders' equity | 25 | 305,420 | 295,425 | 274,257 |
| Non-controlling interest | 25 | (341) | 653 | 353 |
| NET EQUITY | 305,079 | 296,079 | 274,610 | |
| Due to minority shareholders | 26 | 28,394 | 19,746 | 14,405 |
| Financial liabilities | 27 | 27,225 | 33,869 | 33,935 |
| Employee benefits | 28 | 28,813 | 25,866 | 24,661 |
| Deferred tax liabilities | 29 | 24,148 | 21,471 | 14,399 |
| Provisions | 30 | 17,702 | 18,849 | 14,137 |
| Non current liabilities | 126,282 | 119,801 | 101,537 | |
| Financial liabilities | 27 | 26,524 | 46,280 | 22,528 |
| Trade payables | 31 | 89,455 | 77,686 | 78,180 |
| Other current liabilities | 32 | 141,403 | 160,640 | 129,557 |
| Provisions | 30 | 840 | 260 | 804 |
| Current liabilities | 258,222 | 284,865 | 231,069 | |
| TOTAL LIABILITIES | 384,504 | 404,666 | 332,606 | |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 689,582 | 700,745 | 607,216 |
(*) Pursuant to Consob Regulation No. 15519 of 27 July 2006, the effects of related-party transactions on the Consolidated statement of financial position are reported in the Annexed tables herein and fully described in Note 33.
| (thousand Euros) | Share capital |
Treasury shares |
Capital reserve |
Earning reserve |
Cash flow hedge reserve |
Cumulative translation adjustment reserve |
Reserve for actuarial gains/(losses) |
Non controlling interest |
Total |
|---|---|---|---|---|---|---|---|---|---|
| At January 1, 2015 | 4,863 | (9) | 52,836 | 196,878 | (4) | 652 | (3,309) | 936 | 252,843 |
| Increase of share capital | - | - | - | - | - | - | - | - | - |
| Dividends distributed | - | - | - | (7,950) | - | - | - | (1,012) | (8,962) |
| Change in treasury shares |
- | (15) | - | - | - | - | - | - | (15) |
| Total comprehensive income/(loss) |
- | - | - | 28,200 | 2 | 1,435 | 755 | 467 | 30,859 |
| Other changes | - | - | - | (77) | - | - | - | (38) | (115) |
| At June 30, 2015 | 4,863 | (25) | 52,836 | 217,051 | (2) | 2,087 | (2,554) | 353 | 274,610 |
| Share | Treasury | Capital | Earning | Cash flow hedge |
Cumulative translation adjustment |
Reserve for actuarial |
Non controlling |
||
|---|---|---|---|---|---|---|---|---|---|
| (thousand Euros) | capital | shares | reserve | reserve | reserve | reserve | gains/(losses) | interest | Total |
| At January 1, 2016 | 4,863 | (25) | 72,836 | 218,947 | - | 1,546 | (2,742) | 653 | 296,079 |
| Increase of share capital | - | - | - | - | - | - | - | - | - |
| Dividends distributed | - | - | - | (9,353) | - | - | - | 816 | (10,169) |
| Change in treasury shares |
- | - | - | - | - | - | - | - | - |
| Total comprehensive income/(loss) |
- | - | - | 30,079 | - | (5,214) | (1,559) | 74 | 23,379 |
| Other changes | - | - | 116 | (4,074) | - | - | - | (252) | (4,210) |
| At June 30, 2016 | 4,863 | (25) | 72,952 | 235,598 | - | (3,668) | (4,301) | (341) | 305,079 |
| (thousand Euros) | 1st half 2016 | 1st half 2015 |
|---|---|---|
| Net result of the period | 30,079 | 28,200 |
| Income taxes | 17,119 | 15,192 |
| Depreciation and amortization | 4,863 | 4,415 |
| Other non-monetary expenses/(income) | (6,538) | (1,932) |
| Change in work in progress | (47,446) | (1,283) |
| Change in trade receivables | 65,147 | 15,022 |
| Change in trade payables | 11,769 | (5,180) |
| Change in other assets and liabilities | (28,979) | (24,507) |
| Income taxes paid | (11,285) | (2,667) |
| Net cash flows from operating activities (A) | 34,727 | 27,260 |
| Payments for tangible and intangible assets | (6,207) | (5,260) |
| Payments for financial assets | (1,260) | 1,824 |
| Payments for the acquisition of subsidiaries net of cash acquired | (21,729) | (9,016) |
| Net cash flows from investment activities (B) | (29,196) | (12,452) |
| Dividends paid | (10,169) | (8,962) |
| In payments from loans | 978 | 22,419 |
| Repayment of loans | (4,304) | (19,361) |
| Other changes | (137) | 1,771 |
| Net cash flows from financing activities (C) | (13,632) | (4,133) |
| Net cash flows (D) = (A+B+C) | (8,101) | 10,675 |
| Cash and cash equivalents at beginning of period | 70,109 | 50,745 |
| Cash and cash equivalents at period end | 62,007 | 61,420 |
| Total change in cash and cash equivalents (D) | (8,101) | 10,675 |
| Detail of cash and cash equivalents | ||
|---|---|---|
| (thousand Euros) | 1st half 2016 | 1st half 2015 |
| Cash and cash equivalents at beginning of period | 70,109 | 50,745 |
| Cash and cash equivalents | 105,137 | 88,819 |
| Bank overdrafts | (35,028) | (38,073) |
| Cash and cash equivalents at period end | 62,007 | 61,420 |
| Cash and cash equivalents | 73,962 | 77,535 |
| Bank overdrafts | (11,955) | (16,115) |
| General information | Note 1 | - General information |
|---|---|---|
| Note 2 | - Accounting principles and basis of consolidation | |
| Note 3 | - Risk management | |
| Note 4 | - Consolidation | |
| Income statement | Note 5 | - Revenue |
| Note 6 | - Purchases | |
| Note 7 | - Personnel | |
| Note 8 | - Services and other costs | |
| Note 9 | - Amortization, depreciation and write-downs | |
| Note 10 | - Other unusual operating income/(expenses) | |
| Note 11 | - Financial income/(expenses) | |
| Note 12 | - Income taxes | |
| Note 13 | - Earnings per share | |
| Statement of financial position - Assets |
Note 14 | - Tangible assets |
| Note 15 | - Goodwill | |
| Note 16 | - Other intangible assets | |
| Note 17 | - Equity Investments | |
| Note 18 | - Financial assets | |
| Note 19 | - Deferred tax assets | |
| Note 20 | - Work-in-progress | |
| Note 21 | - Trade receivables | |
| Note 22 | - Other receivables and current assets | |
| Note 23 | - Cash and cash equivalents | |
| Statement of financial position - Liabilities and equity |
Note 24 | - Shareholders' equity |
| Note 25 | - Payables to minority shareholders and corporate transactions | |
| Note 26 | - Financial liabilities | |
| Note 27 | - Employee benefits | |
| Note 28 | - Deferred tax liabilities | |
| Note 29 | - Provisions | |
| Note 30 | - Trade payables | |
| Note 31 | - Other current liabilities | |
| Other information | Note 32 | - Segment Reporting |
| Note 33 | - Transactions with related parties | |
| Note 34 | - Guarantees, commitments and contingent liabilities | |
| Note 35 | - Events subsequent to 30 June 2016 | |
| Note 36 | - Approval of the Half year condensed Consolidated financial statements and authorization to publish |
Reply [MTA, STAR: REY] specializes in the implementation of solutions based on new communication channels and digital media. Reply, consisting of a network of specialist companies, supports important European industries belonging to the Telco & Media, Manufacturing & Retail, Bank & Insurances and Public Administration segments, in defining and developing new business models utilizing Big Data, Cloud Computing, CRM, Mobile, Social Media and Internet of Things paradigms. Reply offers consultancy, system integration and application management and business process outsourcing (www.reply.eu).
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board and endorsed by the European Union. The designation "IFRS" also includes all valid International Accounting Standards ("IAS"), as well as all interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), formerly the Standing Interpretations Committee ("SIC"). Following the coming into force of European Regulation No. 1606 of July 2002, starting from 1 January 2005, the Reply Group adopted International Financial Reporting Standards (IFRS). The accounting principles applied are consistent with those used for preparation of the Consolidated Financial Statements at December 31, 2015.
More specifically the half year condensed consolidated financial statements at June 30, 2016 have been prepared in accordance to IAS 34 Interim financial reporting.
The Half-Year financial report has been prepared in accordance with Consob regulations regarding the format of financial statements, in application of art. 9 of Legislative Decree 38/2005 and other Consob regulations and instructions concerning financial statements.
The consolidated financial statements are prepared on the basis of the historic cost principle, modified as requested for the appraisal of some financial instruments for which the fair value criterion is adopted in accordance with IAS 39.
The consolidated financial statements have been prepared on the going concern assumption. In this respect, despite operating in a difficult economic and financial environment, the Group's assessment is that no material uncertainties (as defined in paragraph 25 of IAS 1) exist with regards its ability to continue as a going concern. These half year consolidated financial statements are expressed in thousands of Euros and are compared to the consolidated financial statements of the previous year prepared in accordance with the same principles. Further indication related to the format of the financial statements respect to IAS 1 is disclosed here within as well as information related to significant accounting principles and evaluation criteria used in the preparation of the following consolidated report.
The consolidated financial statements includes, statement of income, statement of comprehensive income, statement of financial position, statement of changes in shareholders' equity, statement of cash flows and the explanatory notes.
The income statement format adopted by the Group classifies costs according to their nature, which is deemed to properly represent the Group's business.
The Statement of financial position is prepared according to the distinction between current and non-current assets and liabilities. The statement of cash flows is presented using the indirect method.
The most significant items are disclosed in a specific note in which details related to the composition and changes compared to the previous year are provided.
It should be noted that in order to comply with the indications contained in Consob Resolution no. 15519 of 27 July 2006 "as to the format of the financial statements", additional statements: income statement and statement of financial position have been disclosed showing the amounts of related party transactions.
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2015, except for the adoption of new standards and interpretations effective as of 1 January 2016. The Group has not early adopted any other standard, interpretation or amendment that has been issued but is not yet effective.
The nature and the effect of these changes are disclosed below. Although these new standards and amendments apply for the first time in 2016, they do not have a material impact on the annual consolidated financial statements of the Group or the interim condensed consolidated financial statements of the Group. The nature and the impact of each new standard or amendment is described below:
IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Where the contributions are linked to service, they should be attributed to periods of service as a negative benefit. These amendments clarify that, if the amount of the contributions is independent of the number of years of service, an entity is permitted to recognize such contributions as a reduction in the service cost in the period in which the service is rendered, instead of allocating the contributions to the periods of service. This amendment is effective for annual periods beginning on or after 1 February 2015. This amendment is not relevant to the Group, since none of the entities within the Group has defined benefit plans with contributions from employees or third parties.
These improvements are effective for accounting periods beginning on or after 1 February 2015. The Group has applied these improvements for the first time in these consolidated financial statements. They include:
This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions, including:
The clarifications are consistent with how the Group has identified any performance and service conditions which are vesting conditions in previous periods. Thus, these amendments did not impact the Group's financial statements or accounting policies.
The amendment is applied prospectively and clarifies that all contingent consideration arrangements classified as liabilities (or assets) arising from a business combination should be subsequently measured at fair value through profit or loss whether or not they fall within the scope of IAS 39. This is consistent with the Group's current accounting policy and, thus, this amendment did not impact the Group's accounting policy.
The amendments are applied retrospectively and clarify that:
An entity must disclose the judgements made by management in applying the aggregation criteria in paragraph 12 of IFRS 8, including a brief description of operating segments that have been aggregated and the economic characteristics (e.g., sales and gross margins) used to assess whether the segments are 'similar'.
The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker, similar to the required disclosure for segment liabilities. The Group has not applied the aggregation criteria in IFRS 8.12. The Group has presented the reconciliation of segment assets to total assets in previous periods and continues to disclose the same in Note 32 in this period's financial statements as the reconciliation is reported to the chief operating decision maker for the purpose of decision making.
The amendment is applied retrospectively and clarifies in IAS 16 and IAS 38 that the asset may be revalued by reference to observable data by either adjusting the gross carrying amount of the asset to market value or by determining the market value of the carrying value and adjusting the gross carrying amount proportionately so that the resulting carrying amount equals the market value. In addition, the accumulated depreciation or amortization is the difference between the gross and carrying amounts of the asset. This amendment did not have any impact to the revaluation adjustments recorded by the Group during the current period.
The amendment is applied retrospectively and clarifies that a management entity (an entity that provides key management personnel services) is a related party subject to the related party disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for management services. This amendment is not relevant for the Group as it does not receive any management services from other entities.
The amendments to IFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation, in which the activity of the joint operation constitutes a business, must apply the relevant IFRS 3 Business Combinations principles for business combination accounting. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation if joint control is retained. In addition, a scope exclusion has been added to IFRS 11 to specify that the amendments do not apply when the parties sharing joint control, including the reporting entity, are under common control of the same ultimate controlling party. The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments do not have any impact on the Group as there has been no interest acquired in a joint operation during the period.
The amendments clarify the principle in IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is a part) rather than the economic benefits that are consumed through use of the asset. As a result, a revenue-based method cannot be used to depreciate property, plant and equipment and may only be used in very limited circumstances to amortize intangible assets. The amendments are effective prospectively for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments do not have any impact to the Group given that the Group has not used a revenue-based method to depreciate its non-current assets.
The amendments will allow entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. Entities already applying IFRS and electing to change to the equity method in their separate financial statements will have to apply that change retrospectively. First-time adopters of IFRS electing to use the equity method in their separate financial statements will be required to apply this method from the date of transition to IFRS. The amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments do not have any impact on the Group's consolidated financial statements.
These improvements are effective for annual periods beginning on or after 1 January 2016. They include:
Assets (or disposal groups) are generally disposed of either through sale or distribution to owners. The amendment clarifies that changing from one of these disposal methods to the other would not be considered a new plan of disposal, rather it is a continuation of the original plan. There is, therefore, no interruption of the application of the requirements in IFRS 5. This amendment must be applied prospectively.
The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. An entity must assess the nature of the fee and the arrangement against the guidance for continuing involvement in IFRS 7 in order to assess whether the disclosures are required. The assessment of which servicing contracts constitute continuing involvement must be done retrospectively. However, the required disclosures would not need to be provided for any period beginning before the annual period in which the entity first applies the amendments.
The amendment clarifies that the offsetting disclosure requirements do not apply to condensed interim financial statements, unless such disclosures provide a significant update to the information reported in the most recent annual report. This amendment must be applied retrospectively.
The amendment clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated, rather than the country where the obligation is located. When there is no deep market for high quality corporate bonds in that currency, government bond rates must be used. This amendment must be applied prospectively.
The amendments to IAS 1 clarify, rather than significantly change, existing IAS 1 requirements. The amendments clarify:
Furthermore, the amendments clarify the requirements that apply when additional subtotals are presented in the statement of financial position and the statement(s) of profit or loss and OCI. These amendments are effective for annual periods beginning on or after 1 January 2016, with early adoption permitted. These amendments do not have any impact on the Group.
For business purposes, specific policies are adopted to assure its clients' solvency.
With regards to financial counterparty risk, the Group does not present significant risk in credit-worthiness or solvency.
The group is exposed to funding risk if there is difficulty in obtaining finance for operations at any given point in time.
The cash flows, funding requirements and liquidity of the Group companies are monitored and centrally managed under the control of the Group Treasury. The aim is to guarantee the efficiency and effectiveness of the management of current and perspective capital resources (maintaining an adequate level of reserves of liquidity and availability of funds via a suitable amount of committed credit lines).
The difficult economic situation of the markets and of financial markets necessitates special attention being given to the management of the liquidity risk, and in that sense particular emphasis is being placed on measures taken to generate financial resources through operations and maintaining an adequate level of liquid assets. The Group therefore plans to meet its requirements to settle financial liabilities as they fall due and to cover expected capital expenditures by using cash flows from operations and available liquidity, renewing or refinancing bank loans.
As the Group operates mainly in a "Euros area" the exposure to currency risks is limited.
The exposure to interest rate risk arises from the need to fund operating activities and M&A investments, as well as the necessity to deploy available liquidity. Changes in market interest rates may have the effect of either increasing or decreasing the Group's net profit/(loss), thereby indirectly affecting the costs and returns of financing and investing transactions.
The interest rate risk to which the Group is exposed derives from bank loans; to mitigate such risks, the Group has used derivative financial instruments designated as "cash flow hedges".
The use of such instruments is disciplined by written procedures in line with the Group's risk management strategies that do not contemplate derivative financial instruments for trading purposes.
The IFRS 13 establishes a fair value hierarchy which classifies the input of evaluation techniques on three levels adopted for the measurement of fair value. Fair value hierarchy attributes maximum priority to prices quoted (not rectified) in active markets for identical assets and liabilities (Level 1 data) and the non-observable minimum input priority (Level 3 data). In some cases, the data used to assess the fair value of assets or liabilities could be classified on three different levels of the fair value hierarchy. In such cases, the evaluation of fair value is wholly classified on the same level of the hierarchy in which input on the lowest level is classified, taking account its importance for the assessment.
The levels used in the hierarchy are:
The following table presents the assets and liabilities that were assessed at fair value on 30 June 2016, according to the fair value hierarchical assessment level.
| (thousand Euros) | Note | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Investments | 17 | - | - | 11,665 |
| Convertible loans | 18 | - | - | 3,008 |
| Financial securities | 18 | 1,967 | - | - |
| Total financial assets | 1,967 | - | 14,673 | |
| Liabilities to minority shareholders and earn out | 26 | - | - | 28,394 |
| Other financial liabilities | 31 | - | - | 1,146 |
| Total financial liabilities | - | - | 29,540 |
The valuation of investments in start-ups within the Internet of Things (IoT) business, through the acquisition of equity investments and through the issuance of convertible loans, is based on data not directly observable on active stock markets, and therefore falls under the fair value hierarchical Level 3.
The item financial securities is related to securities listed on the active stock markets and therefore falls under the fair value hierarchical Level 1.
The fair value of Liabilities to minority shareholders and earn out was determined by Group management on the basis of the sales purchase agreements for the acquisition of the company's shares and on economic parameters based on budgets and plans of the purchased company. As the parameters are not observable on stock markets (directly or indirectly) these liabilities fall under the hierarchy profile in Level 3. Cash settled share-based payments of companies belonging to the Group included within the caption Other financial liabilities, are valued on the basis of profitability parameters. Since these parameters are not observable market parameters (directly or indirectly) such debts fall under the hierarchy of Level 3.
As at 30 June 2016, there have not been any transfers within the hierarchy levels.
Companies included in the consolidation are included on a line-by-line basis.
Change in consolidation compared to 30 June 2015 is related to:
Change in the consolidation does not significantly affect the Group's revenues and profits before tax on 30 June 2016 (approximately 0.9% on consolidated revenue).
Furthermore, the list of the Reply Group's companies and equity investments, presented as an annex herein, also includes in consolidation the following newly incorporated companies with respect to 30 June 2015:
Revenues from sales and services, including change in work in progress, amounted to 386,513 thousand Euros (345,483 thousand Euros al 30 June 2015).
This item includes consulting services, fixed price projects, assistance and maintenance services and other minor revenues.
The following table shows the percentage breakdown of revenues by Region. Moreover, the breakdown reflects the business management of the Group by Top Management and the allocation approximates the localization of services provided:
| Region (*) | 1 st half 2016 |
1 st half1 2015 |
|---|---|---|
| Region 1 | 71.7% | 72.2% |
| Region 2 | 16.7% | 15.5% |
| Region 3 | 11.3% | 12.2% |
| IoT Incubator | 0.3% | 0.1% |
| Total | 100.0% | 100.0% |
Disclosure required by IFRS 8 ("Operating segment") is provided in Note 32 herein.
(*) Region 1: ITA, USA, BRA, POL, ROU Region 2: DEU, CHE, CHN Region 3: GBR, LUX, BEL, NLD, FRA
Detail is as follows:
| (thousand Euros) | st half 2016 1 |
st half 2015 1 |
Change |
|---|---|---|---|
| Software licenses for resale | 5,037 | 3,769 | 1,268 |
| Hardware for resale | 649 | 273 | 376 |
| Other | 2,742 | 2,591 | 151 |
| Total | 8,428 | 6,632 | 1,796 |
Purchases of Software licenses and Hardware licenses for resale are recognized net of any change in inventory.
The item Other includes the purchase of fuel for 1,054 thousand Euros and the purchase of consumption material for 1,001 thousand Euros.
Detail is as follows:
| (thousand Euros) | st half 2016 1 |
st half 2015 1 |
Change |
|---|---|---|---|
| Payroll employees | 177,733 | 157,966 | 19,767 |
| Executive Directors | 12,060 | 13,722 | (1,662) |
| Project collaborators | 44 | 3,558 | (3,513) |
| Total | 189,838 | 175,246 | 14,592 |
The increase in the cost of employees, amounting to 14,592 thousand Euros, is attributable to the total registered increase in the Group's business and in the increase in employees.
Detail of personnel by category is provided below:
| (number) | st half 2016 1 |
st half 2015 1 |
Change |
|---|---|---|---|
| Directors | 323 | 291 | 32 |
| Managers | 863 | 757 | 106 |
| Staff | 4,553 | 3,909 | 644 |
| Total | 5,739 | 4,957 | 782 |
On 30 June 2016 the Group had 5,739 employees compared with 4.957 of the first half 2015.
Change in consolidation brought an increase to the workforce equal to 146 employees.
Payroll employees comprise mainly electronic engineers and economic, computer science, and business graduates from the best Universities.
Services and other costs comprised the following:
| (thousand Euros) | 1 st half 2016 |
1 st half 2015 |
Change |
|---|---|---|---|
| Commercial and technical consulting | 88,198 | 72,638 | 15,559 |
| Travelling and professional training expenses | 14,494 | 13,512 | 982 |
| Other services costs | 22,420 | 20,102 | 2,318 |
| Office expenses | 8,900 | 8,305 | 595 |
| Lease and rentals | 3,979 | 3,788 | 191 |
| Other | 3,998 | 2,552 | 1,446 |
| Total | 141,989 | 120,897 | 21,092 |
Change in Services and other costs, amounting to 21.092 thousand Euros, is attributable to an overall increase in the Group's business.
The item Other services cost mainly includes marketing services, administrative and legal services, telephone and canteen.
Office expenses include services rendered by related parties referred to service contracts for the use of premises, domiciliation and provision of secretarial services for 539 thousand Euros and rent charged by third parties for 5,555 thousand Euros, utility costs for 1,545 thousand Euros, cleaning expenses for 652 thousand Euros and maintenance expenses for 266 thousand Euros.
Depreciation of tangible assets, calculated on the basis of economic-technical rates determined in relation to the residual useful lives of the assets, resulted in an overall charge as at 30 June 2016 of 2,828 thousand Euros. Details of depreciation are provided in the notes to tangible assets.
Amortization of intangible assets for the first half 2016 amounted to 2,035 thousand Euros. Details of depreciation are provided in the notes to intangible assets.
Other unusual operating costs amounted to positive 2.523 (456 thousand Euros in the first half of 2015) and were related to:
Detail is as follows:
| (thousand Euros) | 1 st half 2016 |
1 st half 2015 |
Change |
|---|---|---|---|
| Financial income | 136 | 131 | 5 |
| Interest expenses | (549) | (698) | 149 |
| Other | (308) | 1,575 | (1,884) |
| Total | (721) | 1,009 | (1,730) |
Financial gains are related to interest on bank accounts.
Interest expenses mainly include expenses related to loans for M&A operations.
The item Other includes the Exchange rate differences from the translation of balance sheet items not stated in Euros, as well as changes in fair value of financial liabilities pursuant to IAS 39.
At June 30, 2016 income taxes amounted to 17,119 thousand Euros and were recognized in accordance to the expected annual average income tax rates.
The basic earnings per share as at 30 June 2016 was calculated on the basis of the Group's net result amounting to 30,079 thousand Euros (28,200 thousand Euros as at 30 June 2015) divided by the weighted average number of shares as at 30 June 2016 which amounted to 9,351,850 (9,351,850 as at 30 June 2015).
| (in Euros) | st half 2016 1 |
st half 2015 1 |
|---|---|---|
| Group net result | 30,079,000 | 28,200,000 |
| No. of shares | 9,351,850 | 9,351,850 |
| Basic earnings per share | 3.22 | 3.02 |
Tangible assets as at 30 June 2016 amounted to 17,025 thousand Euros and are detailed as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Buildings | 1,835 | 1,906 | (71) |
| Plant and machinery | 2,839 | 2,805 | 34 |
| Hardware | 3,760 | 3,357 | 403 |
| Other | 8,592 | 8,955 | (363) |
| Total | 17,025 | 17,022 | 3 |
Change in tangible assets in the first half of 2016 is summarized in the table below:
| (thousand Euros) | Buildings | Plant and machinery |
Hardware | Other | Total |
|---|---|---|---|---|---|
| Historical Cost | 4,023 | 8,165 | 26,777 | 19,331 | 58,296 |
| Accumulated depreciation | (2,117) | (5,359) | (23,420) | (10,377) | (41,274) |
| 31/12/2015 | 1,906 | 2,805 | 3,357 | 8,955 | 17,022 |
| Historical cost | |||||
| Increases | - | 485 | 1,709 | 1,733 | 3,926 |
| Disposals | - | (1) | (260) | (91) | (353) |
| Other changes | - | 144 | 141 | (1,005) | (847) |
| Accumulated depreciation | |||||
| Depreciation | (71) | (519) | (1,157) | (1,080) | (2,828) |
| Utilized | - | 1 | 140 | 87 | 227 |
| Other changes | - | (75) | (42) | (6) | (123) |
| Historical Cost | 4,023 | 8,792 | 28,240 | 19,968 | 61,022 |
| Accumulated depreciation | (2,188) | (5,953) | (24,480) | (11,376) | (43,997) |
| 30/06/2016 | 1,835 | 2,839 | 3,760 | 8,592 | 17,025 |
The item Buildings mainly includes the net value of a building owned by the group amounting to 1,903 thousand Euros located in Guetersloh, Germany.
Change in the item Hardware is due to investments made by the Italian subsidiaries for 626 thousand Euros, 868 thousand Euros for purchases made by German companies and 215 thousand Euros for purchases made by the English companies. Furthermore, this item includes financial leases for 685 thousand Euros (230 at 31 December 2015).
The item Other assets as at 30 June 2016 mainly includes improvements to third party assets and office furniture. The increase of 1.733 Euros mainly refers to the purchases of furniture and fittings for 788 thousand Euros and to improvements made to the offices where the Group's companies operate. Such item also includes a financial leasing for furniture for a net value amounting to 1.143 thousand Euros (1.412 thousand Euros at 31 December 2015).
Other changes refer to change in consolidation and exchange differences.
As at 30 June 2016, tangible assets were depreciated by 72.1% of their value, compared to 70.8% at the end of 2015.
This item includes goodwill arising from consolidation of subsidiaries and the value of business branches purchased against payment made by some Group companies.
Goodwill was allocated to the cash generating units ("CGU"), identified in the countries in which the Group operates, and are summarized as follows:
| Value at | Value at | |||
|---|---|---|---|---|
| (thousand Euros) | 31/21/2015 | Increase | Exchange difference | 30/06/2016 |
| Region 1 | 39,003 | 277 | - | 39,280 |
| Region 2 | 39,572 | 18,834 | - | 58,406 |
| Region 3 | 54,801 | 7,120 | (2,648) | 59,273 |
| Total | 133,376 | 26,231 | (2,648) | 156,959 |
The increase is related to TD GmbH, a company incorporated under German law (Region 2) acquired by the subsidiary Reply AG, WM Ltd, a company incorporated under English law (Region 3) acquired by the subsidiary Reply Ltd and Protocube S.r.l., a company incorporated under Italian law (Region 1) by Reply S.p.A..
The following table summarizes the calculation of the temporary goodwill and the aggregate book value of the companies as at the acquisition date.
| (thousand Euros) | Fair value (*) |
|---|---|
| Total assets | 6,703 |
| Total liabilities | (4,787) |
| Net assets acquired | 1,916 |
| Compensation | 28,147 |
| Goodwill | 26,231 |
(*) book value is equal to fair value
In the first half of 2016, the Group did no detect any impairment indicators.
Net intangible assets as at 30 June 2016 amounted to 11,038 thousand Euros (9,696 thousand Euros on 31 December 2015) and are detailed as follows:
| Net book value as at | |||
|---|---|---|---|
| (thousand Euros) | Cost original | Cumulative amortization | 30/06/2016 |
| Development costs | 23,018 | (17,396) | 5,622 |
| Software | 21,978 | (17,100) | 4,879 |
| Trademarks | 537 | - | 537 |
| Other intangible assets | 3,150 | (3,150) | - |
| Total | 48,683 | (37,646) | 11,038 |
Intangible assets in the first half of 2016 developed as follows:
| (thousand Euros) | Net book value at 31/12/2015 |
Increase | Cumulative amortization |
Other changes | Net book value at 30/06/2016 |
|---|---|---|---|---|---|
| Development costs | 5,436 | 1,408 | (1,222) | - | 5,622 |
| Software | 3,723 | 1,183 | (814) | 787 | 4,879 |
| Trademark | 537 | - | - | - | 537 |
| Total | 9,696 | 2,591 | (2,035) | 787 | 11,038 |
Development costs refer to software products and are accounted for in accordance with provisions of IAS 38.
The item Software mainly refers to software licenses purchased and used internally by the Group companies. This item includes 219 thousand Euros related to software development for internal use.
The item Trademark mainly refers to the value of the "Reply" trademark granted on 9 June 2000 to the Parent Company Reply S.p.A. (at the time Reply Europe Sàrl), in connection with the share capital increase that was resolved and subscribed to by the Parent Company. Such amount is not subject to systematic amortization.
Other intangible assets mainly includes the know-how of the Security Operation Centre (SOC), which offers a range of Managed Security Services (MSS) aimed at avoiding and identifying real or potential threats to which the complex IT infrastructures are exposed, in addition to proposing and implementing adequate counter-measures to limit or remove such dangers.
Other changes refer to change in consolidation and exchange differences.
The item Equity investments available for sale amounts to 11,665 thousand Euros and refers to investments in start-up companies in the "Internet of Things" or IoT field made principally by the Investment company Breed Investments Ltd.
Note that the companies listed below, mainly held through an Investment Entity, are designated at fair value and accounted for in accordance with IAS 39 "Financial Instruments: Recognition and Measurement". The fair value is determined using the International Private Equity and Venture Capital valuation guideline (IPEV ) and, as per industry practice, any change therein is recognized in profit /(loss) in the period in which they occurred.
| Company name | Country | % acquired |
Value at 31/12/2015 |
Increase/ decrease |
Fair value evaluation |
Impairment | Exchange differences |
Value at 30/06/2016 |
|---|---|---|---|---|---|---|---|---|
| Cocoon Alarm Limited | England | 22.09% | 2,990 | - | (336) | 2,654 | ||
| Xmetrics Sports Limited | England | 30.00% | 920 | - | (104) | 816 | ||
| iNova Design Ltd | England | 30.00% | 704 | 313 | (80) | 937 | ||
| Zeetta Networks Ltd | England | 23.39% | 579 | - | (66) | 513 | ||
| Amiko Digital Health Ltd | England | 11.11% | - | 514 | - | 514 | ||
| Sentryo SaS | France | 12.64% | - | 750 | - | 750 | ||
| Connecterra BV | Belgium | 9.21% | - | 625 | - | 625 | ||
| Iotic Labs Ltd | England | 9.50% | - | 968 | - | 968 | ||
| Sensoria Inc | USA | 21.37% | 3,888 | - | - | 3,888 | ||
| Total | 9,081 | 3,170 | - | - | (585) | 11,665 |
A UK based start-up that has created a smart home security system that senses unusual activity throughout the house in real time, without the need for any additional sensors or professional installation. It avoids false alarms by learning what is normal for home, only sending alerts and high quality video straight to your smartphone via the mobile app. Cocoon received a London Design Award and has been listed in Forbes as one of the top new businesses to keep an eye on in 2015. The investments was valued at the market value of the last round that took place on October 12, 2015.
A company that offers innovative devices for swimmers Xmetrics uses sensors, electronic components and software via mobile devices, to enhance the training sessions of professional and amateur swimmers, analyzing their main biometric parameters and their real time performance. The investment was valued at the price paid upon acquisition, there were no subsequent rounds.
Inova Design is a technology company specializing in design, development and marketing of new solutions for detecting body parameters in order to optimize performance and prevention of illnesses. The product is a headset capable of offering the accurate measurement of all the physiological parameters together with the monitoring of the movement, all in a single miniaturized device, not- invasive and that provides the user data in a continuous, real-time and wireless way. The Inova's patented technology can be applied in many fields such as sports, health and defense. The investment was valued at the price paid upon acquisition. The increase is related to the payment of the third tranche defined in the first round of investment on 24 February 2016.there were no subsequent rounds.
Zeeta Networks offers NetOS®: a powerful orchestration software which manages, automates and monitors an ICT network while significantly reducing its operating costs. The investment was valued at the price paid upon acquisition, there were no subsequent rounds.
Quantified medicine to improve healthcare with real-world data. Amiko's Quantified Medicine is a connected health platform that enables a smarter management of chronic treatments based on the acquisition and analysis of medication usage data. Amiko's sensor-based technology is improving care, cost efficiency and outcomes by transforming drug delivery devices into smart objects that collect data to empower patients, caregivers, physicians and researchers. The investment was valued at the price paid upon acquisition.
Sentryo ICS Cybervision prevents cyberattacks by monitoring machine to machine networks, detecting abnormal events and streamlining incident response.
Sentryo is pioneering the market for cybersecurity protection for machine-to-machine networks and critical industrial systems. ICS CyberVision passively monitors the network and detects abnormal events utilizing machine learning algorithms, therefore preventing cyber-attacks, streamlining incident response and avoiding damage. ICS CyberVision simplifies operational and information technology collaboration to keep critical industrial infrastructure owners ahead of the threat. Sentryo addresses the energy, transportation, telco and aerospace segments and more broadly all companies needing to meet the Industry 4.0 challenge. The investment was valued at the price paid upon acquisition.
The Connecterra dairy health service provides actionable insights to farmers to improve farm productivity. Using advanced sensors and machine learning, the system provides near real time analytics for end users. combines the power of sensor technologies and deep learning to provide a complete health monitoring service for dairy cattle. Connecterra's end-to-end solution consists of a wearable device, which monitors the herd in real-time and transmits the data to a cloud platform for analysis and prediction of behavioral patterns.
This allows farmers to free up labor time, improve production per animal and save a significant amount of money by optimizing their breeding cycles. The investment was valued at the price paid upon acquisition.
Iotic Labs provides access to Iotic Space, a place where things can share data, where data can be mashed with different sorts of data from others things, where anything can be related to anything else. Iotic Labs has created an Internet-like environment for things. Data from anything can be shared or exchanged with anything else creating new relationships, insights and whole new ways to interact. It is free from pre-defined formats, database structures and any other pre-determined model. Just like the Internet you are free to interact with myriads of data sources and mash data together with Iotic Mashapps. The investment was valued at the price paid upon acquisition.
Headquartered in Redmond, Washington – Sensoria is a leading developer of wearable platforms and devices. The company was founded on the vision that clothing would become the fulcrum between Internet of Things and People as a seamless, naturally wearable body-sensing computer. The investment was valued at the price paid upon acquisition, there were no subsequent rounds.
All fair value assessments shall be part of the hierarchy level 3.
Current and non current financial assets amounted to a total of 9,178 thousand Euros compared to 7,918 thousand Euros as at 31 December 2015.
Detail is as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Receivables from insurance companies | 3,074 | 3,194 | (120) |
| Guarantee deposits | 885 | 853 | 32 |
| Loans to non-consolidated companies | - | 68 | (68) |
| Long term securities | 55 | 55 | - |
| Other financial assets | 244 | 14 | 230 |
| Convertible loans | 3,008 | 1,512 | 1,496 |
| Receivables from factor | - | 744 | (744) |
| Short term securities | 1,912 | 1,478 | 434 |
| Total | 9,178 | 7,918 | 1,260 |
The item Receivables from insurance companies mainly refers to the insurance premiums paid against pension plans of some German companies and to directors' severance indemnities.
Convertible loans relate to the option to convert into shares of the following start-up company in the field of IoT:
Receivables from factoring companies refer to receivables for the assignment of invoices without recourse for 4,610 thousand Euros, net of advance payments received for the same amount.
Short term securities mainly refer to Time Deposit investments made by a Brazilian subsidiary.
The items Receivables from insurance companies other financial assets are not included in the net financial position.
Such item, which amounted to 21,425 thousand Euros as at 30 June 2016 (17.339 thousand Euros as at 31 December 2015), includes the fiscal charge corresponding to the temporary differences deriving from income before taxes and taxable income in relation to deferred deductibility items.
The decision to recognize deferred tax assets is taken by assessing critically whether the conditions exist for the future recoverability of such assets on the basis of expected future results.
Work in progress, amounting to 105,375 thousand Euros, is detailed as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Contract work in progress | 199,152 | 141,309 | 57,844 |
| Advance payments from customers | (93,777) | (83,380) | (10,397) |
| Total | 105,375 | 57,929 | 47,446 |
Any advance payments made by the customers are deducted from the value of the inventories, within the limits of the accrued consideration; the exceeding amounts are accounted as liabilities.
Trade receivables as at 30 June 2016 amounted to 237,103 thousand Euros with a net decrease of 65,147 thousand Euros.
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Domestic clients | 180,859 | 233,502 | (52,643) |
| Foreign trade receivables | 58,785 | 71,178 | (12,393) |
| Credit notes to be issued | - | (9) | 9 |
| Total | 239,645 | 304,672 | (65,027) |
| Allowance for doubtful accounts | (2,542) | (2,422) | (119) |
| Total trade receivables | 237,103 | 302,250 | (65,147) |
Trade receivables are shown net of allowances for doubtful accounts amounting to 2,542 thousand Euros at 30 June 2016 (2,422 thousand Euros at 31 December 2015).
The Allowance for doubtful accounts developed in the first half of 2016 as follows:
| (thousand Euros) | 31/12/2015 | Provision | Other changes | Utilized | 30/06/2016 |
|---|---|---|---|---|---|
| Allowance for doubtful accounts | 2,422 | 343 | 148 | (371) | 2,542 |
Over-due trade receivables and the corresponding allowance for doubtful accounts, compared to 31 December 2015 , are summarized in the tables below:
| (thousand Euros) | Trade receivables |
Current | 0 - 90 days | 91 - 180 days |
181 - 360 days |
Over 360 days |
Total overdue |
|---|---|---|---|---|---|---|---|
| Trade receivables | 239,645 | 217,468 | 17,241 | 1,214 | 1,261 | 2,487 | 22,177 |
| Allowance for doubtful accounts | (2,542) | (9) | (127) | (223) | (380) | (1,811) | (2,533) |
| Total trade receivables | 237,103 | 217,459 | 17,087 | 991 | 882 | 676 | 19,635 |
Aging at
31/12/2015
| (thousand Euros) | Trade receivables |
Current | 0 - 90 days | 91 - 180 days |
181 - 360 days |
Over 360 days |
Total overdue |
|---|---|---|---|---|---|---|---|
| Trade receivables | 304,672 | 256,601 | 41,039 | 3,574 | 1,615 | 1,843 | 48,071 |
| Allowance for doubtful accounts | (2,422) | (11) | (301) | (220) | (499) | (1,391) | (2,411) |
| Total trade receivables | 302,250 | 256,590 | 40,738 | 3,354 | 1,115 | 452 | 45,660 |
The Group assigns part of its trade receivables through factoring operations.
The assignments of receivables can be with or without recourse; some assignments without recourse can include deferred payment clauses (for example, payment by the factor of a minor part of the purchase price is subordinated on the collection of the total amount of the receivables), require a deductible from the assignor, or require maintaining significant exposure to the cash flow trend deriving from the assigned receivables. This type of operation does not comply with the requirements of IAS 39 for the elimination of the assets from the financial statements, since the risks and benefits related to their collection have not been substantially transferred.
Consequently, all receivables assigned through factoring operations that do not satisfy the requirements for elimination provided by IAS 39 continue to be recognized in the Group's financial statements, even though they have been legally assigned and a financial liability for the same amount is recognized in the consolidated financial statements as Liabilities for advance payments on assignments of receivables. Gains and losses related to the assignment of these assets are only recognized when the assets are derecognized from the Group's financial-economic position.
As at 30 June 2016 the receivables transferred via Factoring operations with recourse amounted to 19,543 thousand Euros.
The book value of the assets assigned without recourse as at 30 June 2016 amounted to 4,610 thousand Euros, with an increase of available liquidity of the same amount.
The carrying amount of Trade receivables is in line with its fair value. Trade receivables are all collectible within one year.
Detail is as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Tax receivables | 20,115 | 15,425 | 4,690 |
| Advances to employees | 136 | 100 | 37 |
| Accrued income and prepaid expenses | 5,680 | 6,049 | (369) |
| Other receivables | 19,922 | 19,399 | 523 |
| Total | 45,853 | 40,973 | 4,880 |
The item Tax receivables mainly includes:
The item Other receivables includes the contribution to research in relation to financed projects in the amount of 16,099 thousand Euros.
The balance of 73,962 thousand Euros, with a decrease of 31,175 thousand Euros compared with 31 December 2015, represents cash and cash equivalents and the existence of cash on hand and valuables as at the end of the year.
Changes in cash and cash equivalents are fully detailed in the Consolidated statement of cash flow.
As at 30 June 2016 the share capital of Reply S.p.A., fully subscribed and paid, amounted to 4,863,486 Euros and comprises 9,352,857 ordinary shares of a nominal value of 0.52 Euros each.
The value of the Treasury shares, amounting to 25 thousand Euros, refers to the shares of Reply S.p.A. held by the parent company, that at 30 June 2016 were equal to n. 1.007. In the first half of 2016 no changes have occurred compared to 31 December 2015.
On 30 June 2016 Capital reserves, amounting to 72,952 thousand Euros, were mainly comprised as follows:
Earnings reserves amounted to 235,599 thousand Euros and were comprised as follows:
Other comprehensive income can be analyzed as follows:
| (thousand Euros | 30/06/2016 | 30/06/2015 |
|---|---|---|
| Other comprehensive income that will not be reclassified subsequently to profit or loss, net of tax: |
||
| Actuarial gains/(losses) from employee benefit plans | (1,559) | 755 |
| Total Other comprehensive income that will not be reclassified subsequently to profit or loss, net of tax (B1): |
(1,559) | 755 |
| Other comprehensive income that may be reclassified subsequently to profit or loss, net of tax: |
||
| Gains/(losses) on cash flow hedges | - | 2 |
| Gains/(losses) from the translation of financial statements | (5,214) | 1,435 |
| Total Other comprehensive income that may be reclassified subsequently to profit or loss, net of tax (B2): |
(5,214) | 1,437 |
| Total other comprehensive income, net of tax (B) = (B1) +(B2) | (6,773) | 2,193 |
There are no stock option plans resolved by the General Shareholders' meetings.
Payables to minority shareholders and for company operations (earn out) owed on 30 June 2016 amount to 28,394 thousand Euros (19,746 thousand Euros on 31 December 2015) and are detailed as follows:
| (thousand Euros) | 31/12/2015 | Increases | Fair value adjustments |
Payments | Exchange differences |
30/06/2016 |
|---|---|---|---|---|---|---|
| Payables to minority shareholders | 11,942 | - | - | (434) | 177 | 11,685 |
| Payables for Earn out | 7,427 | 12,885 | (1,508) | (2,033) | (439) | 16,708 |
| Total payables to minority shareholders and earn out |
19,746 | 12,885 | (1,508) | (2,467) | (262) | 28,394 |
The increase in Payables for Earn-out amounting to 12,885 is related for 9,013 thousand Euros to TD GmbH, a company incorporated under German law, acquired in the month of March 2016 by the subsidiary Reply AG, and for 3,872 thousand Euros to WM Ltd, a company incorporated under English law, acquired in the month of March 2016 by the subsidiary Reply Ltd.
The item Fair value adjustments in the first half of 2016 amounted to 1,508 thousand Euros with a balancing entry in Profit and loss, reflects the best estimate in relation to the deferred consideration originally posted at the time of acquisition.
Total payments made amounted to 2,467 thousand Euros and refer to the consideration paid in relation to the original contracts signed at the time of acquisition.
Detail is as follows:
| 30/06/2016 | 31/12/2015 | |||||
|---|---|---|---|---|---|---|
| (thousand Euros) | Current | Non current | Total | Current | Non current | Total |
| Bank overdrafts | 11,955 | - | 11,955 | 35,028 | - | 35,028 |
| Bank loans | 13,758 | 26,284 | 40,042 | 10,786 | 33,008 | 43,794 |
| Total due to banks | 25,713 | 26,284 | 51,996 | 45,814 | 33,008 | 78,822 |
| Other financial borrowings | 811 | 941 | 1,752 | 466 | 860 | 1,326 |
| Total financial liabilities | 26,524e | 27,225 | 53,749 | 46,280 | 33,869 | 80,149 |
The following table illustrates the distribution of financial liabilities by due date:
| 30/06/2016 | 31/12/2015 | |||||||
|---|---|---|---|---|---|---|---|---|
| (thousand Euros) | Due in 12 months |
From 1 to 5 years |
Over 5 years |
Total | Due in 12 months |
From 1 to 5 years |
Over 5 years |
Total |
| Bank overdrafts | 11,955 | - | - | 11,955 | 35,028 | - | - | 35,028 |
| M&A loans | 13,696 | 25,437 | - | 39,132 | 10,553 | 32,606 | - | 43,159 |
| Mortgage loans | 140 | 847 | - | 987 | 311 | 403 | - | 714 |
| Other financial borrowings | 811 | 941 | - | 1,752 | 466 | 860 | - | 1,326 |
| Other | (78) | - | - | (78) | (78) | - | - | (78) |
| Total | 26,524 | 27,225 | - | 53,749 | 46,280 | 33,869 | - | 80,149 |
M&A loans refer to credit lines to be used for acquisition operations carried out directly by Reply S.p.A. or via companies controlled directly or indirectly by the same.
Summarized below are the existing contracts entered into for such a purpose:
Interest rates are also applied according to certain predetermined ratios (Covenants) of economic and financial nature calculated on the consolidated financial statements as at 30 June of each year and/or the consolidated interim report.
As contractually defined, such ratios are as follows:
At 30 June 2016, Reply fulfilled the Covenants under the various contracts.
Mortgage loans refers to a loan undersigned by Tool Reply GmbH, for the acquisition of the building in which the company has its registered office.
Reimbursement takes place via six monthly instalments (4.28%) with expiry on 30 September 2019.
Other financial borrowings are related to financial leases determined according to IAS 17.
The carrying amount of Financial liabilities is deemed to be in line with its fair value.
In compliance with Consob regulation issued on 28 July 2006 and in accordance with ESMA guidelines, the net financial position of the Reply Group at 30 June 2016 was as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Cash and cash equivalents | 73,962 | 105,137 | (31,175) |
| Current financial assets | 1,910 | 2,289 | (380) |
| Non current financial assets | 1,171 | 908 | 262 |
| Total financial assets | 77,042 | 108,335 | (31,292) |
| Current financial liabilities | (26,524) | (46,280) | 19,756 |
| Non current financial liabilities | (27,225) | (33,869) | 6,644 |
| Total financial liabilities | (53,748) | (80,149) | 26,400 |
| Total net financial position | 23,294 | 28,186 | (4,892) |
For further details with regards to the above table see Notes 18 and 23 as well as Note 26.
Employee benefits are detailed as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Employee severance indemnities | 21,141 | 18,489 | 2,652 |
| Employee pension funds | 6,155 | 5,860 | 295 |
| Directors severance indemnities | 1,502 | 1,502 | - |
| Other | 16 | 16 | - |
| Total | 28,813 | 25,866 | 2,947 |
The Employee severance indemnity represents the obligation to employees under Italian law (amended by Law 296/06) that has accrued up to 31 December 2006 and that will be settled when the employee leaves the company. In certain circumstances, a portion of the accrued liability may be given to an employee during his working life as an advance. This is an unfunded defined benefit plan, under which the benefits are almost fully accrued, with the sole exception of future revaluations.
The procedure for the determination of the Company's obligation with respect to employees was carried out by an independent actuary according to the following stages:
Reassessment of Employee severance indemnities in accordance with IAS 19 was carried out "ad personam" and on the existing employees, that is analytical calculations were made on each employee in force in the company at the assessment date without considering future work force.
The actuarial valuation model is based on the so called technical bases which represent the demographic, economic and financial assumptions underlying the parameters included in the calculation. In accordance with IAS 19, Employment severance indemnities at 30 June 2016 are summarized in the table below:
| Balance as at 31/12/2015 | 18,489 |
|---|---|
| Cost relating to current work (service cost) | 1,652 |
| Actuarial gain/loss | 2,052 |
| Interest cost | 181 |
| Indemnities paid during the year | (1,126) |
| Balance as at 30/06/2016 | 21,141 |
The Pension fund item relates to liability as regards the defined benefit pensions of some German companies.
This amount is related to Directors severance indemnities paid during the year.
Deferred tax liabilities at 30 June 2016 amount to 24,148 thousand Euros and are referred mainly to the fiscal effects arising from temporary differences deriving from statutory income and taxable income related to deferred deductibility.
Deferred tax liabilities have not been recognized on retained earnings of the subsidiary companies as the Group is able to control the timing of distribution of said earnings and in the near future does not seem likely.
| (thousand Euros) | Balance at 31/12/2015 |
Other | Accruals | Utilization | Reversals | Balance at 30/06/2016 |
|---|---|---|---|---|---|---|
| Fidelity fund | 305 | - | - | - | - | 305 |
| Provision for risk | 11,846 | 689 | 4 | (726) | (532) | 11,281 |
| Motorola research center fund | 6,957 | - | - | - | - | 6,957 |
| Total | 19,108 | 689 | 4 | (726) | (532) | 18,543 |
Provisions amount to 18,543 thousand Euros (of which 17,702 thousand Euros are non current). Change in the first half of 2016 is summarized in the table below:
Employee fidelity provisions refer mainly to provisions made for the employees of some German companies in relation to anniversary bonuses. The liability is determined through actuarial calculations applying a 5.5% rate.
The provision for other risks, amounting to 11,281, represents the amounts set aside by the individual companies of the Group principally in connection with contractual commercial risks and disputes. Utilization and reversals of the period relate to the resolution of previous disputes mostly related to employees. Other changes mainly concern change in consolidation.
The Provision for Motorola Research Centre originates from the acquisition of the business branch Motorola Electronics S.p.A. in 2009 and reflects the best estimate of the residual costs to incur in relation to the agreements reached with the parties involved in the transaction to implement research and development projects, in accordance with IAS 37. This provision is used on the basis of the progression of the abovementioned research activities.
Acquisition of the Motorola Research Centre was carried out as a consequence of agreements reached with Motorola Electronics S.p.A, Trade Unions and the region of Piedmont and the commitment to carry out research activities on agreed upon themes.
The residual provision will be written off to profit and loss on the basis of the progress of the research activities, in part financed by the public administrations, for which the Group has committed to carry out to several parties in view of the undersigning of the aforesaid agreements.
In the first half of 2016 the provision remained unchanged as the parties involved are discussing how to go forward with the operating methods of the initial agreements.
Trade payables at 30 June 2016 amount to 89,455 thousand Euros and are detailed as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Domestic suppliers | 78,307 | 66,790 | 11,518 |
| Foreign suppliers | 12,131 | 11,577 | 554 |
| Advances to suppliers | (984) | (681) | (303) |
| Total | 89,455 | 77,686 | 11,769 |
Other current liabilities at 30 June 2016 amounted to 141,403 thousand Euros with a decrease of 19,237 thousand Euros with respect to the previous financial year. Detail is as follows:
| (thousand Euros) | 30/06/2016 | 31/12/2015 | Change |
|---|---|---|---|
| Income tax payable | 17,550 | 3,641 | 13,909 |
| VAT payable | 3,264 | 7,451 | (4,187) |
| Withholding tax and other | 3,503 | 5,886 | (2,383) |
| Total due to tax authorities | 24,317 | 16,978 | 7,339 |
| National social insurance payable | 17,863 | 20,578 | (2,715) |
| Other | 1,361 | 1,512 | (151) |
| Total due to social securities | 19,224 | 22,090 | (2,866) |
| Employee accruals | 49,586 | 46,578 | 3,009 |
| Other payables | 41,285 | 64,154 | (22,869) |
| Accrued expenses and deferred income | 6,990 | 10,840 | (3,850) |
| Total other payables | 97,862 | 121,572 | (23,710) |
| Other current liabilities | 141,403 | 160,640 | (19,237) |
Due to tax authorities amounting to 24,317 thousand Euros, mainly refers to payables due to tax authorities for withholding tax on employees and professionals' compensation.
Due to social security authorities amounting to 19,224 thousand Euros, is related to both Company and employees contribution payables.
Other payables at 30 June 2016 amount to 97,862 thousand Euros and mainly include:
Accrued Expenses and Deferred Income mainly relate to advance invoicing in relation to T&M consultancy activities to be delivered in the subsequent financial period.
Segment reporting has been prepared in accordance with IFRS 8, as a breakdown of revenues by region, determined as the area in which the services are executed.
| (thousand Euros) | Region 1 | % | Region 2 | % | Region 3 | % | IoT Incubator |
% | Intraseg | Total 1st half 2016 |
% |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 282,199 | 100 | 65,872 | 100 | 44,560 | 100 | 1,223 | 100 | (7,341) | 386,513 | 100 |
| Operating costs | (237,783) | (84.3) | (59,725) | (90.7) | (43,569) | (97.8) | (1,445) | (118.1) | 7,341 | (335,181) | (86.7) |
| Gross operating income | 44,416 | 15.7 | 6,147 | 9.3 | 991 | 2.2 | (221) | (18.10) | 51,333 | 13.3 | |
| Amortization/depreciation | (3,780) | (1.3) | (746) | (1.1) | (324) | (0.7) | (13) | (1.1) | (4,863) | (1.3) | |
| Other unusual income/(expenses) |
(133) | - | - | - | 1,655 | 4 | - | - | 1,523 | - | |
| EBIT | 40,503 | 14.4 | 5,401 | 8.2 | 2,322 | 5.2 | (234) | (19.20) | 47,992 | 12.4 |
| (thousand Euros) | Region 1 | % | Region 2 | % | Region 3 | % | IoT Incubator |
% | Intraseg | Total 1st half 2015 |
% |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenues | 256,244 | 100 | 55,103 | 100 | 43,105 | 100 | 462 | 100 | (9,432) | 345,483 | 100 |
| Operating costs | (215,354) | (84) | (50,977) | (92.5) | (39,689) | (92.1) | (1,630) | (352.7) | 9,432 | (298,217) | (86.3) |
| Gross operating income | 40,890 | 16 | 4,126 | 7.5 | 3,417 | 7.9 | (1,168) | (252.7) | 47,265 | 13.7 | |
| Amortization/depreciation | (3,472) | (1.4) | (646) | (1.2) | (291) | (0.7) | (7) | (1.6) | (4,415) | (1.3) | |
| Other unusual income/(expenses) |
- | - | - | - | - | - | - | - | - | - | |
| EBIT | 37,419 | 14.6 | 3,481 | 6.3 | 3,126 | 7.3 | (1,175) | (254.3) | 42,850 | 12.4 |
| Financial figures (thousand Euros) |
Region 1 | Region 2 | Region 3 | IoT Incubator |
Interseg. | Total 30/06/2016 |
Region 1 | Region 2 | Region 3 | IoT Incubat or |
Interseg. | Total 31/12/2015 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current operating assets |
332,445 | 43,590 | 30,797 | 394 | (18,895) | 388,331 | 340,676 | 42,516 | 31,447 | 397 | (13,885) | 401,151 |
| Current operating liabilities |
(198,755) | (31,026) | (18,993) | (1,819) | 18,895 | (231,698) | (206,935) | (28,660) | (14,989) | (1,885) | 13,885 | (238,585) |
| Net working capital (A) |
133,690 | 12,564 | 11,804 | (1,425) | - | 156,633 | 133,741 | 13,856 | 16,458 | (1,488) | - | 162,566 |
| Non-current assets | 129,020 | 44,853 | 36,030 | 11,298 | 221,201 | 122,598 | 22,414 | 31,687 | 13,048 | - | 189,747 | |
| Non financial liabilities long term |
(65,664) | (29,077) | (4,260) | (57) | (99,057) | (63,567) | (18,165) | (3,975) | (225) | - | (85,932) | |
| Fixed capital (B) | 63,355 | 15,776 | 31,771 | 11,242 | - | 122,144 | 59,031 | 4,249 | 27,712 | 12,823 | - | 103,815 |
| Net invested capital (A+B) |
197,045 | 28,340 | 43,575 | 9,817 | - | 278,777 | 192,773 | 18,106 | 44,170 | 11,335 | - | 266,381 |
Breakdown of employees by operating segment is as follows:
| Region | 30/06/2016 | 30/06/2015 | Change |
|---|---|---|---|
| Region 1 | 4,326 | 3,833 | 493 |
| Region 2 | 935 | 734 | 201 |
| Region 3 | 471 | 383 | 88 |
| IoT Incubator | 7 | 7 | - |
| Total | 5,739 | 4,957 | 782 |
In accordance with IAS 24 Related parties are Group companies and persons that are able to exercise control, joint control or have significant influence on the Group and on its subsidiaries.
Transactions carried out by the group companies with related parties that as of the reporting date are considered ordinary business and are carried out at normal market conditions.
The main economic and financial transactions with related parties are summarized below.
| (thousand Euros) | |||
|---|---|---|---|
| Financial transactions | 30/06/2016 | 31/12/2015 | Nature of transactions |
| Trade receivables | - | 3 | Receivables from professional services |
| Trade payables | 7 | 8 | Payables for professional services and office rentals offices |
| Other payables | 1,962 | 3,924 | Payables for emoluments s to Directors and Managers with strategic responsibilities and Board of Statutory Auditors |
| Economic transactions | st half 2016 1 |
st half 2015 1 |
Nature of transactions |
| Revenues from professional services | 3 | 43 | Professional services executed |
| Services from Parent company and related parties |
539 | 493 | Service contracts relating to office rental , and administration office |
| Personnel | 4,042 | 4,232 | Emoluments to Directors and Key Management with strategic responsibilities |
| Services and other costs | 61 | 74 | Emoluments to Statutory Auditors |
In accordance with IAS 24, emoluments to Directors, Statutory Auditors and Key Management are also included in transactions with related parties.
In accordance with Consob Resolution no. 15519 of 27 July 2006 and Consob communication no. DEM/6064293 of 28 July 2006 the financial statements annexed herein present the Consolidated Income statement and Balance Sheet showing transactions with related parties separately, together with the percentage incidence with respect to each account caption.
Pursuant to Art. 150, paragraph 1 of the Italian Legislative Decree n. 58 of 24 February 1998, no transactions have been carried out by the members of the Board of Directors that might be in potential conflict of interests with the Company.
Guarantees and commitments where existing, have been disclosed at the item to which they refer.
Following is a summary of the commitments to which the Group is exposed at 30 June:
Within three months from the registration of the merger in the Turin Companies Register, each minority shareholder was able to present a petition for the purpose of commencing, in compliance with German law, before a Judge qualified in Germany – who shall have exclusive jurisdiction – the assessment inherent in the Share Swap ratio and the corresponding amount in cash. All shareholders of Reply Deutschland will have the right to benefit from a possible increase in the exchange ratio determined by the Judge or on the basis of an agreement between the parties, and that is to say independently of their participation in the evaluation procedure.
On the contrary, from the possible increase of the corresponding amount in cash determined by the Judge or on the basis of an agreement between the parties only the shareholders who verbally annotated their disagreement in the general meeting in respect of conditions of the law can benefit.
In the case where evaluation procedures include a modification of the exchange ratio, every single difference shall be regulated in cash.
At present, some minority shareholders have commenced the aforementioned procedures.
With specific reference to the request to obtain the corresponding amount in cash, the time limit for exerting such an authority shall expire starting from the shortest time limit between the day following it expiring from the two months subsequent to the final ruling of the qualified court or the publication of a binding agreement between the parties. During the said period, the former Reply Deutschland shareholders can freely decide on whether to obtain the corresponding amount in cash or whether to remain shareholders of Reply.
As an international company, the Group is exposed to numerous legal risks, particularly in the area of product liability, environmental risks and tax matters. The outcome of any current or future proceedings cannot be predicted with certainty. It is therefore possible that legal judgments could give rise to expenses that are not covered, or not fully covered, by insurers' compensation payments and could affect the Group financial position and results.
Instead, when it is probable that an overflow of resources embodying economic benefits will be required to settle obligations and this amount can be reliably estimated, the Group recognizes specific provision for this purpose.
In July 2016 Xister S.r.l. was acquired by Reply S.p.A. that holds 89.2% of the share capital. The company is a digital creative agency, leader in consulting and development of solutions and strategies in digital branding.
In July 2016 Lynx Recruitment Ltd, a company incorporated under English law, was acquired by Reply Ltd that holds 100% of the share capital. The company offers recruitment and selection services of temporary and permanent staff.
The Half year condensed consolidated financial statements at 30 June 2016 were approved by the Board of Directors on August 2, 2016 that authorized the publication within the terms of law.
| (thousand Euros) | 1st half 2016 | of which with related parties |
% | 1st half 2015 | of which with related parties |
% |
|---|---|---|---|---|---|---|
| Revenues | 386,513 | 3 | 0% | 345,483 | 43 | 0% |
| Other income | 4,075 | - | - | 4,101 | - | - |
| Purchases | (8,428) | - | - | (6,632) | - | - |
| Personnel | (189,838) | (4,042) | 2% | (175,246) | (4,232) | 2% |
| Services and other costs | (141,989) | (600) | 0% | (120,897) | (567) | 1% |
| Amortization, depreciation and write-downs | (4,863) | - | - | (4,415) | - | - |
| Other unusual (cost)/income | 2,522 | - | - | 456 | - | - |
| Operating income | 47,992 | - | - | 42,850 | - | - |
| Income from associate companies | - | - | - | - | - | - |
| Financial income/(expenses) | (721) | - | - | 1,009 | - | - |
| Income before taxes | 47,271 | - | - | 43,859 | - | - |
| Income taxes | (17,119) | - | - | (15,192) | - | - |
| Net income | 30,152 | - | - | 28,667 | - | - |
| Result of discontinued activities | - | - | - | - | - | - |
| Non controlling interest | (74) | - | - | (467) | - | - |
| Group net result | 30,079 | - | - | 28,200 | - | - |
| (thousand Euros) | 30/06/2016 | of which with related |
% | 31/12/2015 | of which with |
% |
|---|---|---|---|---|---|---|
| Tangible assets | 17,025 | parties - |
- | 17,022 | related - parties |
- |
| Goodwill | 156,959 | - | - | 133,376 | - | - |
| Other intangible assets | 11,038 | - | - | 9,696 | - | - |
| Equity investments | 11,665 | - | - | 9,105 | - | - |
| Financial assets | 7,268 | - | - | 5,629 | - | - |
| Deferred tax assets | 21,425 | - | - | 17,339 | - | - |
| Non current assets | 225,380 | - | - | 192,167 | - | - |
| Work in progress | 105,375 | - | - | 57,929 | - | - |
| Trade receivables | 237,103 | - | - | 302,250 | 3 | 0% |
| Other current assets | 45,853 | - | - | 40,973 | - | - |
| Financial assets | 1,910 | - | - | 2,289 | - | - |
| Cash and cash equivalents | 73,962 | - | - | 105,137 | - | - |
| Current assets | 464,203 | - | - | 508,577 | - | - |
| Assets of discontinued operations | - | - | - | - | - | - |
| TOTAL ASSETS | 689,582 | - | - | 700,745 | - | - |
| Share capital | 4,863 | - | - | 4,863 | - | - |
| Other reserves | 270,477 | - | - | 233,814 | - | - |
| Group net income | 30,079 | - | - | 56,748 | - | - |
| Group shareholders' equity | 305,420 | - | - | 295,425 | - | - |
| Non controlling interest | (341) | - | - | 653 | - | - |
| SHAREHOLDERS' EQUITY | 305,079 | - | - | 296,079 | - | - |
| Payables to minority shareholders and corporate transactions |
28,394 | - | - | 19,746 | - | - |
| Financial liabilities | 27,225 | - | - | 33,869 | - | - |
| Employee benefits | 28,813 | - | - | 25,866 | - | - |
| Deferred tax liabilities | 24,148 | - | - | 21,471 | - | - |
| Provisions | 17,702 | - | - | 18,849 | - | - |
| Non current liabilities | 126,282 | - | - | 119,801 | - | - |
| Financial liabilities | 26,524 | - | - | 46,280 | - | - |
| Trade payables | 89,455 | 7 | 0% | 77,686 | 8 | 0% |
| Other current liabilities | 141,403 | 1,962 | 1% | 160,640 | 3,924 | 2% |
| Provisions | 840 | - | - | 260 | - | - |
| Current liabilities | 258,222 | - | - | 284,865 | - | - |
| Total liabilities of discontinued operations | - | - | - | - | - | - |
| TOTAL LIABILITIES | 384,504 | - | - | 404,666 | - | - |
| TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES |
689,582 | - | - | 700,745 | - | - |
| Company name | Headquarters | Group interest | |
|---|---|---|---|
| Parent Company | |||
| Reply S.p.A. | Turin – Corso Francia, 110 - Italy | ||
| Companies consolidated on a line-by-line basis | |||
| @logistics Reply S.r.l. | Turin, Italy | 100.00% | |
| @logistics Reply GmbH | Munich, Germany | 100.00% | |
| 4brands Reply GmbH & CO. KG. | Minden, Germany | 51.00% | |
| Air Reply S.r.l. (*) | Turin, Italy | 85.00% | |
| Arlanis Reply S.r.l. | Turin, Italy | 100.00% | |
| Arlanis Reply AG | Potsdam, Germany | 100.00% | |
| Aktive Reply S.r.l. | Turin, Italy | 100.00% | |
| Atlas Reply S.r.l. | Turin, Italy | 100.00% | |
| Avantage Reply Ltd. | London, United Kingdom | 100.00% | |
| Avantage Reply (Belgium) Sarl | Brussels, Belgium | 100.00% | |
| Avantage Reply (Luxembourg) Sarl | Itzig, Luxembourg | 100.00% | |
| Avantage Reply (Netherlands) BV | Amsterdam, Netherland | 100.00% | |
| Avvio Reply Ltd | London, United Kingdom | 100.00% | |
| Bitmama S.r.l. | Turin, Italy | 100.00% | |
| Blue Reply S.r.l. | Turin, Italy | 100.00% | |
| Blue Reply GmbH | Guetersloh, Germany | 100.00% | |
| Bridge Reply S.r.l. | Turin, Italy | 60.00% | |
| Business Reply S.r.l. | Turin, Italy | 100.00% | |
| Breed Reply Ltd | London, United Kingdom | 100.00% | |
| Breed Reply Investment Ltd | London, United Kingdom | 80.00% | |
| Cluster Reply S.r.l. | Turin, Italy | 100.00% | |
| Cluster Reply GmbH & CO. KG | Munich, Germany | 100.00% | |
| Cluster Reply Informatica LTDA. (*) | San Paolo, Brazil | 76.00% | |
| Cluster Reply Roma S.r.l. | Turin, Italy | 100.00% | |
| Concept Reply GmbH | Munich, Germany | 100.00% | |
| Consorzio Reply Energy | Turin, Italy | 100.00% | |
| Consorzio Reply Public Sector | Turin, Italy | 100.00% | |
| Data Reply S.r.l. | Turin, Italy | 100.00% | |
| Data Reply GmbH (*) | Munich, Germany | 70.00% | |
| Discovery Reply S.r.l. | Turin, Italy | 100.00% | |
| e*finance consulting Reply S.r.l. | Turin, Italy | 100.00% | |
| Ekip Reply S.r.l. | Turin, Italy | 100.00% | |
| EOS Reply S.r.l. | Turin, Italy | 100.00% | |
| First Development Hub, LLC | Minsk, Belarus | 100.00% |
| Forge Reply S.r.l. | Turin, Italy | 100.00% |
|---|---|---|
| France Reply Ltd | London, United Kingdom | 80.00% |
| Go Reply S.r.l. | Turin, Italy | 100.00% |
| Healthy Reply GmbH | Düsseldorf, Germany | 100.00% |
| Hermes Reply S.r.l. | Turin, Italy | 100.00% |
| Hermes Reply Polska zo.o | Katowice, Poland | 100.00% |
| InEssence Reply GmbH | Düsseldorf, Germany | 70.00% |
| IrisCube Reply S.p.A. | Turin, Italy | 100.00% |
| Leadvise Reply GmbH | Darmstad, Germany | 100.00% |
| Lem Reply S.r.l. | Turin, Italy | 100.00% |
| Like Reply S.r.l. | Turin, Italy | 100.00% |
| Live Reply GmbH | Düsseldorf, Germany | 100.00% |
| Macros Reply GmbH | Munich, Germany | 100.00% |
| Open Reply GmbH | Guetersloh, Germany | 100.00% |
| Open Reply S.r.l. | Turin, Italy | 100.00% |
| Pay Reply S.r.l | Turin, Italy | 100.00% |
| Portaltech Reply Ltd. | London, United Kingdom | 100.00% |
| Portaltech Reply S.r.l. | Turin, Italy | 100.00% |
| Portaltech Reply GmbH (*) | Guetersloh, Germany | 68.00% |
| Power Reply S.r.l. | Turin, Italy | 100.00% |
| Power Reply GmbH & CO. KG | Munich, Germany | 100.00% |
| Profondo Reply GmbH | Guetersloh, Germany | 100.00% |
| Protocube Reply S.r.l. | Turin, Italy | 55.00% |
| Reply Consulting S.r.l. | Turin, Italy | 100.00% |
| Reply AG | Guetersloh, Germany | 100.00% |
| Reply do Brasil Sistemas de Informatica Ltda | Belo Horizonte, Brazil | 100.00% |
| Reply Inc. | Michigan, USA | 100.00% |
| Reply Ltd. | London, United Kingdom | 100.00% |
| Reply Belgium SA | Mont Saint Guibert, Netherlands | 100.00% |
| Reply France Sarl | Paris, France | 100.00% |
| Reply Luxembourg Sarl | Sandweiler, Luxembourg | 100.00% |
| Reply NL Ltd | London, United Kingdom | 100.00% |
| Reply Services S.r.l. | Turin, Italy | 100.00% |
| Ringmaster S.r.l. | Turin, Italy | 50.00% |
| Risk Reply Ltd | London, United Kingdom | 80.00% |
| Riverland Reply GmbH | Munich, Germany | 100.00% |
| Santer Reply S.p.A. | Milano, Italy | 100.00% |
| Security Reply S.r.l. | Turin, Italy | 100.00% |
| Solidsoft Reply Ltd. | London, United Kingdom | 100.00% |
| Spark Reply S.r.l. | Turin, Italy | 85.00% |
| Square Reply S.r.l. | Turin, Italy | 100.00% |
|---|---|---|
| Storm Reply S.r.l. (*) | Turin, Italy | 80.00% |
| Storm Reply GmbH (*) | Guetersloh, Germany | 80.00% |
| Syskoplan Reply S.r.l. | Turin, Italy | 100.00% |
| Syskoplan Reply GmbH | Zurig, Switzerland | 100.00% |
| Syskoplan Reply GmbH & CO. KG | Guetersloh, Germany | 100.00% |
| Sytel Reply Roma S.r.l. | Turin, Italy | 100.00% |
| Sytel Reply S.r.l. | Turin, Italy | 100.00% |
| Target Reply S.r.l. | Turin, Italy | 100.00% |
| TamTamy Reply S.r.l. | Turin, Italy | 100.00% |
| Technology Reply S.r.l. | Turin, Italy | 100.00% |
| Technology Reply S.r.l. | Bucharest, Romania | 100.00% |
| Tool Reply Gmbh | Guetersloh, Germany | 100.00% |
| Triplesense Reply S.r.l. | Turin, Italy | 100.00% |
| Triplesense Reply GmbH | Frankfurt, Germany | 100.00% |
| Twice Reply S.r.l. | Turin, Italy | 98.00% |
| Twice Reply GmbH | Munich, Germany | 100.00% |
| Trommsdorf+drüner, innovation+marketing consultants GmbH |
Berlin, Germany | 100.00% |
| WM360 Ltd | London, United Kingdom | 100.00% |
| WM360 Consultancy Services Ltd | London, United Kingdom | 100.00% |
| WM360 Crashpad Ltd | London, United Kingdom | 100.00% |
| WM Reply Ltd | London, United Kingdom | 100.00% |
| WM360 Resourcing Ltd | London, United Kingdom | 100.00% |
| Whitehall Reply S.r.l. | Turin, Italy | 100.00% |
| Xuccess Reply GmbH | Munich, Germany | 100.00% |
| Amiko Digital Health Ltd | United Kingdom | 11.11% |
|---|---|---|
| Cocoon Alarm Ltd. | United Kingdom | 22.09% |
| iNova Design Ltd. | United Kingdom | 30.00% |
| Sensoria Inc. | USA | 21.37% |
| Xmetrics Sport Ltd. | United Kingdom | 30.00% |
| Zeetta Networks Ltd. | United Kingdom | 15.83% |
| Iotic Labs Ltd. | United Kingdom | 9.50% |
| Sentryo SAS | France | 12.64% |
| Connecterra BV | Belgium | 9.21% |
(*) For these companies an option exists for the acquisition of the minority shares; the exercise of such option in future reporting periods is subject to the achievement of profitability parameters. The accounting of such options reflects management's best estimate at the reporting date.
3.1 the Half-year condensed financial statements at June 30, 2016:
Turin, August 2, 2016
/s/ Mario Rizzante /s/ Giuseppe Veneziano
Chairman and Chief Executive Officer Director responsible of drawing up the accounting documents
Reply S.p.A. Corso Francia, 110 10143 TURIN – ITALY Tel. +39-011-7711594 Fax +39-011-7495416 www.reply.eu
Share capital: Euro 4,863,485.64 i.v. Fiscal code and Company register of Turin no. 97579210010 VAT no. 08013390011 REA of Turin 938289
E-mail: [email protected] Tel. +39-011-7711594 Fax +39-011-7495416
E-mail: [email protected] Tel. +39-02-535761 Fax +39-02-53576444
Corso Francia, 110, 10143 Turin – Italy Tel. +39-011-7711594 Fax. +39-011-7495416 [email protected] www.reply.eu
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