Third Quarterly Report as of 30 September 2013

Transcription

1 THIRD QUARTERLY REPORT AS OF 30 SEPTEMBER

2 CONTENTS THIRD QUARTERLY REPORT AS OF 30 SEPTEMBER 2013 Corporate bodies Directors Report on the trend of the Third Quarterly Report as of 30 September 2013 Consolidated Third Quarterly Report as of 30 September 2013 Consolidated statement of financial position Consolidated income statement Explanatory Notes Statement as of art.154-bis, clauses 2, D.lgs n.58 2

3 CORPORATE BODIES BOARD OF DIRECTORS CHAIRMAN MR FILIPPO CASADIO EXECUTIVE DIRECTOR MR FRANCESCO GANDOLFI COLLEONI NON-EXECUTIVE DIRECTOR MR GIANFRANCO SEPRIANO INDEPENDENT DIRECTOR MS FRANCESCA PISCHEDDA INDEPENDENT DIRECTOR MR ORFEO DALLAGO BOARD OF STATUTORY AUDITORS CHAIRMAN MR LEONELLO VENCESLAI STANDING STATUTORY AUDITOR MR FRANCO STUPAZZINI STANDING STATUTORY AUDITOR MR ADALBERTO COSTANTINI SUBSTITUTE STATUTORY AUDITOR MR GIANFRANCO ZAPPI SUBSTITUTE STATUTORY AUDITOR MR DAVIDE GALLI INDEPENDENT AUDITORS PricewaterhouseCoopers S.p.A. INTERNAL CONTROL AND REMUNERATION COMMITTEE MR GIANFRANCO SEPRIANO MS FRANCESCA PISCHEDDA MR ORFEO DALLAGO INTERNAL CONTROL MANAGER MR WILMER NERI SUPERVISORY BODY MS FRANCESCA PISCHEDDA MS PAOLA PRETI MR GIANLUCA PIFFANELLI 3

4 DIRECTORS REPORT ON THE TREND OF THE THIRD QUARTERLY REPORT AS OF 30 SEPTEMBER 2013 In the first nine months of 2013, IRCE Group (hereafter only Group) recorded a reduction in results if compared to those of the same period of 2012, as a consequence of the economic recession in Europe. In this difficult context, consolidated turnover was million, 8.6% lower than in the first nine months of 2012 ( million). Considering our two business areas, cables registered a more marked decrease, as a result of the lasting crisis of the construction industry. We have also to underline that winding wires have benefited from the growth in South America. Turnover without metal 1 fell by 11.0% in the first nine months of In detail, the winding wire sector slumped by 6.8% and the cable sector by 26.9%. Consolidated turnover without metal ( /million) months months Change Value % Value % % Winding wires % % -6.8% Cables % % -26.9% Total % % -11.0% The following table shows the changes in results compared to the first nine months of 2012, including adjusted EBITDA and EBIT. Consolidated income statement data ( /million) 9 months months 2012 Restated Change % Sales % EBITDA % EBIT % Result before taxes % Net result % EBITDA adjusted % EBIT adjusted % For details of the restatement of 9 months 2012, please refer to the Explanatory Notes. 1 Turnover without metal corresponds to overall turnover after deducting the metal component. 2 The item Sales represents Revenues as stated on the consolidated income statement. 3 EBITDA is a performance indicator used by Group Management to evaluate its operational performance and is not identified as an accounting measure under IFRS, it is calculated by adding to the EBIT, amortizations, provisions and depreciations. 4 Adjusted EBITDA and adjusted EBIT are measured, respectively, as the sum of EBITDA and EBIT plus/minus the income/costs deriving from copper derivatives transactions ( million in nine months 2013 and million in nine months 2012). These indicators are measurements used by Group Management to monitor and evaluate its operational performance and are not identified as an accounting measure under IFRS. Since the composition of these measurements is not governed by the reference accounting standards, it is possible that the Group s benchmark may not be the same as that used by others, and could therefore not be comparable. 4

5 Consolidated net financial debt at the end of September 2013 was million versus at the end of 2012; thanks to the reduction in working capital. Consolidated statement of financial position data ( /million) As of As of Change % Net capital employed % Equity % Net financial debt % The Group's investments in fixed assets were 4.17 million, mainly addressed to the completion of the product range of the brazilian company production capacity. Over the next few months we do not foresee improvements of the current market situation, we however expect to close the 2013 financial year with a positive result Imola, 14 th November Net financial debt is measured as the sum of short-term and long-term financial liabilities minus cash and financial assets, note no. 10. It should be noted that the methods for measuring net financial debt comply with the methods for measuring the Net Financial Position defined by Consob Resolution no of 28 July 2006 and CESR recommendation of 10 February

6 CONSOLIDATED ASSETS AND LIABILITIES STATEMENT ASSETS Note NON - CURRENT ASSETS Goodwill and intangibles assets 1 2,431,866 2,436,325 2,465,577 Property, plant and machinery 2 63,844,364 65,008,537 69,630,083 Equipment and other tangible other assets 2 1,469,999 1,592,201 1,782,260 Fixed assets under construction and on account 2 3,621,304 4,257,223 1,746,494 Financial assets and non-current receivables 111, , ,476 Tax credits 811, , ,582 Deferred taxes assets 3 5,079,426 4,876,374 4,892,884 TOTAL NON- CURRENT ASSETS 77,369,560 79,101,293 81,454,356 CURRENT ASSETS Inventories 4 90,527, ,627, ,144,428 Trade receivables 5 73,261,943 84,749,221 69,218,464 Tax credits 5,927,876 7,580,672 8,804,869 Other receivables 1,087,427 1,909, ,221 Current financial assets 6 154, , ,423 Cash and cash equivalent 7 4,875,919 4,302,443 5,666,135 TOTAL CURRENT ASSETS 175,835, ,086, ,422,540 TOTAL ASSETS 253,205, ,187, ,876,896 6

7 SHAREHOLDERS EQUITY AND LIABILITIES Note SHAREHOLDERS EQUITY SHARE CAPITAL 8 14,626,560 14,626,560 14,626,560 RESERVES 8 121,285, ,942, ,039,907 PROFIT / (LOSS) OF THE PERIOD 784, ,526 1,108,618 TOTALGROUP SHAREHOLDERS EQUITY 136,696, ,498, ,775,085 MINORITY INTEREST 232, , ,251 TOTAL SHAREHOLDERS EQUITY 136,928, ,744, ,010,336 NON CURRENT LIABILITIES Non-current financial liabilities 9 2,751,951 2,736,966 3,819,713 Deferred tax 2,316,629 2,321,113 2,526,531 Provision for risks and charges 1,332,182 1,284,676 1,452,515 Provision for employee benefits 5,948,755 5,846,966 6,262,923 TOTAL NON-CURRENT LIABILITIES 12,349,517 12,189,722 14,061,682 CURRENT LIABILITIES Current financial liabilities 10 71,299,976 93,751,782 81,620,444 Trade payables 22,787,650 27,435,443 19,353,361 Tax payables 1,771,289 2,351,986 1,201,246 Payable to the parent company - 433, ,984 Amounts due to social security 1,738,396 2,107,559 2,291,553 Other current liabilities 6,329,492 7,173,245 5,904,290 TOTAL CURRENT LIABILITIES 103,926, ,254, ,804,878 TOTAL SHAREHOLDERS EQUITY AND LIABILITIES 253,205, ,187, ,876,896 7

8 CONSOLIDATED INCOME STATEMENT Note Restated III quarter 2013 III quarter 2012 Restated Revenues ,140, ,690,334 81,502,097 95,350,488 Other revenues and income of which: non-recurring , ,047 1,785, , , , ,120 - TOTAL REVENUES 272,088, ,475,796 81,870,470 96,177,608 Cost for raw material and consumables 12 (214,842,943) (236,841,151) (58,423,630) (74,477,241) Change in work in progress and finished goods (3,765,912) (3,599,413) (7,206,171) (2,454,180) Cost for services (24,449,006) (26,679,218) (6,833,537) (8,287,197) Personnel costs (21,450,468) (21,740,748) (6,640,333) (6,824,873) Depreciation 13 (5,478,727) (5,931,422) (1,839,704) (2,027,339) Allocation and write-dwns (776,616) (506,774) (134,702) 45,706 Other operating costs (762,064) (643,679) (247,410) (352,100) EBIT 562,384 2,533, , ,384 Financial incomes / (charges) ,615 (388,926) (1,329,747) (1,301,075) of which: non-recurring 932, PROFIT / (LOSS) BEFORE TAXES 1,055,999 2,144,465 (784,764) (500,691) Income taxes 15 (272,521) (1,233,441) 635, ,290 PROFIT / (LOSS) FOR THE PERIOD 783, ,024 (149,520) (123,401) Of which profit (loss) of minority shareholders 1,518 41,316 4,990 31,199 Of which profit (loss) of the Group 784, ,340 (144,530) (92,202) 8

9 NOTES TO THE THIRD QUARTERLY REPORT AS OF 30 SEPTEMBER 2013 GENERAL INFORMATION The Board of Directors authorized this Quarterly Report as of 30 September 2013, to be published on 14 th November The IRCE group owns nine manufacturing plants and is one of the major industrial players in Europe in the field of winding wires as well as in the field of electrical cables in Italy. Its plants are located in the Italian towns of Imola (Bologna), Guglionesi (Campobasso), Umbertide (Perugia) and Miradolo Terme (Pavia); foreign locations include Nijmegen (NL) - the registered office of Smit Draad Nijmegen BV -, Blackburn (UK) - the registered office of FD Sims Ltd -, Joinville (SC Brazil) - the registered office of Irce Ltda -, Kochi (Kerala India) - the registered office of Stable Magnet Wire P.Ltd. - and Kierspe (D) - the registered office of Isodra Gmbh. The distribution uses agents and the following commercial subsidiaries: Isomet AG in Switzerland, DMG GmbH in Germany, Isolveco S.r.l. in Italy, Irce SL in Spain and Irce Kablo Ve Tel Ltd in Turkey. GENERAL DRAFTING CRITERIA The consolidated financial statements for the nine months ended 30 September 2013 have been prepared in accordance with IAS 34 Interim Financial Reporting and with art.154 ter TUF. The consolidated financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group annual financial statements as of 31 December The financial statements have been prepared in accordance with the provisions of IAS 1; in particular: the statement of financial position was drafted by presenting current and non-current assets, and current and non-current liabilities, as separate classifications; the income statement was drafted by classifying the items by nature ; These notes have been prepared in thousands of euro. Evaluation usage The compilation of quarterly consolidated financial statement requires the evaluation and the value assuming which affect the assets and the liabilities and the advises related to potential assets and liabilities up to reference date. The collected results could be different from these evaluations. The evaluations are used to point out allowances due to credit risks, warehouse obsolescences, amortizations, asset depreciation, benefits to employees and taxes. For the purposes of clarity in reporting, it should be noted that certain items of the financial statements as of 30 September 2012 have been re-classified. The impact of said reclassifications is shown below: Reclassified item /000 Previous reclassification Current reclassification IAS 18 Fair value of sales 1,497 Revenues Financial income and charges As of 31 December 2012, the Group applied IAS 19 revised. The re-determination of the income statement values as of 30/09/2012 resulted in a higher result for the period of 316 /000. CONSOLIDATION PRINCIPLES There have been no changes to the consolidation principles compared to that already mentioned in the Report on the consolidated financial statements as of 31/12/

10 The table below lists the companies included in the consolidation area at 30 September 2013: Company % of investment Registered office Share capital Consolidation Isomet AG 100% Switzerland CHF 1,000,000 line by line Smit Draad Nijmegen BV 100% Netherlands 1,165,761 line by line FD Sims Ltd 100% UK 15,000,000 line by line Isolveco S.r.l. 75.0% Italy 46,440 line by line DMG GmbH 100% Germany 255,646 line by line IRCE SL 100% Spain 150,000 line by line IRCE Ltda 99.9% Brazil BRL 133,258,796 line by line ISODRA Gmbh 100% Germany 25,000 line by line Stable Magnet Wire P.Ltd. 100% India INR 165,189,860 line by line IRCE Kablo Ve Tel Ltd 100% Turkey TRY 1.700,000 line by line During the third quarter has been made a share capital increase of the subsidiary IRCE Ltda amounting to Real/000 24,652 (equal to /000 8,102), fully subscribed and paid up by the parent company IRCE SPA and a share capital increase of the subsidiary IRCE Kablo Ve Tel Ltd amounting to TRY/000 1,600 (equal to / ), fully subscribed and paid up by the parent company IRCE SPA (99%) and subsidiary ISOMET AG (1%). DERIVATIVE INSTRUMENTS The Group uses the following types of derivative instruments: Derivative instruments related to copper forward transactions with maturity after 30 September Sales agreements have been entered into in order to hedge against price decreases relating to the availability of raw materials. The fair value of copper forward contracts, which were in effect at the reporting date, is determined on the basis of forward prices of copper with reference to the maturity dates of contracts in effect at the reporting date. These transactions do not satisfy the conditions required for recognising these instruments as hedging instruments for the purposes of hedge accounting. A summary of derivative contracts related to commodities (copper) for forward sales and purchases, in force on 30 September 2013, is shown below: Measurement unit of the notional value Notional value with maturity within one year (tons) Notional value with maturity after one year Result with fair value measurement as of /000 Tons/Sales 4,875 0 (165) A derivative instrument related to an interest rate SWAP entered into in previous years for the purposes of hedging against exposure to the interest rate risk associated with a medium/long-term loan. On the basis of this agreement, the contracting parties commit to paying or collecting, on predetermined dates, the amounts determined on the basis of the spread of different interest rates. These transactions satisfy the conditions required for recognising these instruments as hedging instruments for the purposes of cash flow hedge accounting. A summary of the derivative contract related to interest rate SWAP, in force on 30 September 2013 (amounts in Euro/000), is shown below: Nominal amount Starting date Maturity date Year Irs Frequency Bank rate Custom er rate Fair Value ( /000) 3,266 15/03/ /12/2014 Half-year EURIBOR 6M ACT/ % (61) 10

11 Derivative instruments related to obligations for USD forward purchases, with maturity date after 30 September The transactions do not satisfy the conditions required for recognising these instruments as hedging instruments for the purposes of cash flow hedge accounting. A summary of derivative contracts related to USD forward purchases, in force on 30 September 2013, is shown below: Measurement unit of the notional value Notional value with maturity within one year ( /000) Notional value with maturity after one year Result with fair value measurement as of /000 USD 8,500 0 (79) FAIR VALUE A comparison between the carrying amount of financial instruments held by the Group and their fair value did not yield significant differences in value. IFRS 7 defines the following three levels of fair value for measuring the financial instruments recognised in the statement of financial position: Level 1: quoted prices in active markets. Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: inputs not based on observable market data. The following tables highlight the assets and liabilities that are measured at fair value as of 30 September 2013 and as of 31 December 2012 in terms of hierarchical level of fair value measurement ( /000): September 2013 Level 1 Level 2 Level 3 Total Assets: Derivative financial instruments Total assets Liabilities: Derivative financial instruments Total liabilities December 2012 Level 1 Level 2 Level 3 Total Assets: Derivative financial instruments Total assets Liabilities: Derivative financial instruments Total liabilities During the quarterly there were no transfers between the three fair value levels specified in IFRS 7. 11

12 COMMENT ON THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION 1. GOODWILL AND OTHER INTANGIBLE ASSETS Patent and Licenses, trademarks, Goodwill Total intellectual property /000 rights similar rights and other multi-year charges Net carrying amount as of ,031 2,466 Movements of the period. Investments Effect of exchange rates (13) (5) - (18). Reclassifications Amortisation (68) (64) - (132) Total changes (77) 43 - (34) Net carrying amount as of ,031 2,432 The goodwill recognised in the financial statements refers to the Cash Generating Unit Smit Draad Nijmegen BV. This amount was tested for impairment as of 31 December As of 30 September 2013 directors did not find any internal or external impairment loss indicators; therefore, they did not deem it necessary to perform another impairment test as of TANGIBLE ASSETS /000 Land Buildings Plant and equipment Industrial and commercial equipment Other assets Fixed assets under construction and advances Total Net carrying amount as of ,952 23,176 34,502 1, ,746 73,160 Movements of the period. Investments ,772 4,168. Effect of exchange rates (118) (751) (2,142) (13) (9) (11) (3,044). Reclassifications (886) -. Divestments - - (2) (58) (101) - (161). Depreciation related to disposals Depreciation of the period - (1,034) (3,715) (441) (157) - (5,347) Total changes (118) (1,672) (3,996) (234) (79) 1,875 (4,224) Net carrying amount as of ,834 21,504 30, ,621 68,936 The Group's investments in fixed assets were 4.17 million, mainly addressed to the completion of the product range of the brazilian company production capacity. 12

13 3. DEFERRED TAXES ASSETS Deferred tax assets were recorded in connection with all deductible temporary differences to the extent that the existence of adequate future tax profit which can allow the use of these differences is deemed probable. 4. INVENTORIES Inventories is detailed below: / Raw materials, ancillary and consumables 28,015 33,718 34,622 - Work in progress and semi-finished goods 17,714 22,142 14,427 - Finished products and goods 48,070 52,776 53,856 - Provisions for write-down of raw materials (1,965) (1,889) (1,725) - Provisions for write-down of finished products (1,306) (1,119) (1,036) Total 90, , ,144 Recognised inventories are not pledged nor used as collateral. The provisions for write-downs correspond to the amount which is deemed necessary to hedge existing obsolescence risks calculated by writing down slow moving packages and finished products. Inventories were also written down by 1.9 million to their estimated realisable value, which is lower than their average weighted cost. The table below shows the changes in provisions for write-down of inventories during the first nine months 2013: / Allocations Uses Provisions for write-down of raw 1, ,965 materials Provisions for write-down of finished 1, ,306 products and goods Total 2, , TRADE RECEIVABLES / Customers/bills receivable 77,465 89,114 73,418 - Bad debts provision (4,203) (4,365) (4,200) Total 73,262 84,749 69,218 The amounts receivable from the customers fall due over the next 12 months. The table below shows the changes in the bad debt provision during 2012 and first nine months of 2013: / Allocations Uses Bad debt provision 4,901 1,668 (2,369) 4,200 / Allocations Uses Bad debt provision 4, (631) 4,203 13

14 6. CURRENT FINANCIAL ASSETS / Mark to Market copper forward transactions Mark to Market foreign currency forward transactions Fixed deposit for LME transactions Total The item Fixed deposit for LME transactions refers to the margin calls lodged with brokers for copper forward transactions on the LME (London Metal Exchange). 7. CASH AND CASH EQUIVALENT This item includes bank deposits, cash in hand and valuables. / Bank deposits 4,856 4,278 5,645 - Cash on hand and valuables Total 4,876 4,302 5,666 Short-term bank deposits yield variable interest. Bank deposits and giro accounts in effect at the close of balance sheet are not subject to liens or restrictions. 8. SHARE CAPITAL AND RESERVES The share capital consists of 28,128,000 ordinary shares for an equivalent of 14,626,560. The share capital is entirely subscribed and paid in. The shares are free of liens, claims or priorities that may affect profit sharing and repayment of capital. Own shares as of 30 September 2013 amounted to 1,915,324 and correspond to 6.81% of the share capital. The decrease compared to June 30, 2013 is due to the change in translation reserve which represents the difference in value resulting from the conversion of subsidiaries (Isomet, FD Sims Ltd, IRCE Ltda and Stable Magnet Wire P.Ltd) at the official exchange rate of September 30, NON-CURRENT FINANCIAL LIABILITIES /000 Currency Rate Company Expiration Banca Intesa Euro Variable IRCE SPA 1,116 1,116 2, NAB CHF Fixed Isomet AG 1,636 1,621 1, Total 2,752 2,737 3, CURRENT FINANCIAL LIABILITIES The current financial liabilities are detailed below: / Payables due to banks 70,995 93,694 81,511 - Payables due for derivative contracts Total 71,300 93,752 81,620 14

15 The item payables due for derivative contracts refers for to the Mark to Market (Fair Value) of derivatives instruments. With regard to financial liabilities, the overall net financial position of the Group, calculated considering the debts to banks, other financial payables, cash and cash equivalents is detailed as follows: / Cash 4,876 4,302 5,666 Other current financial assets * 390* Liquid assets 5,031 4,479 6,057 Current financial liabilities (71,135)* (93,752) (81,620) Net current financial debt (66,104) (89,273) (75,564) Non-current financial liabilities (2,752) (2,737) (3,820) Non-current financial debt (2,752) (2,737) (3,820) Net financial debt (68,865) (92,010) (79,384) * These items differ from the corresponding items of the statement of financial position, since the fair value of copper forward contracts is not included. COMMENT ON THE MAIN ITEMS OF THE CONSOLIDATED INCOME STATEMENT 11. REVENUES These items refer to revenues for the sales of goods and service after returns and discount. The revenues at 30 Septembre 2013 for / ,141 decrease of 8.6% in respect to the same period of the previous year ( / ,690). 12. RAW MATERIALS AND CONSUMABLES USED This item includes the costs borne for purchasing raw materials such as copper, insulating materials, packaging materials and consumable items (for maintenance work), net of changes of inventories. 13. DEPRECIATION Depreciation is as follows: / III quarter 13 III quarter 12 - Intangible asset depreciation Tangibile asset depreciation 5,347 5,793 1,791 1,980 Total 5,479 5,931 1,840 2,027 15

16 14. FINANCIAL INCOMES AND CHARGES The financial incomes and charged are detailed below: / III quarter 13 III quarter 12 - Other financial income 3,082 3, Interest and financial charges (2,463) (3,791) (762) (1,552) - Foreign exchange gains / (losses) (125) (198) (586) (35) Total 494 (389) (1,329) (1,301) Below are detailed the profits and losses on LME already included in the above table: / III quarter 13 III quarter 12 - Income from LME derivatives 1,526 1,570 - (13) - Charges on LME derivatives (165) (606) (500) (931) Total 1, (500) (944) 15. INCOME TAX / III quarter 13 III quarter 12 - Current taxes (1,073) (1,695) 174 (182) - Deferred taxes Total (273) (1,233) EVENTS FOLLOWING THE REPORTING PERIOD No significant events occurred between the reporting date and the date when the Third Quarterly Report are authorised for issue. STATEMENT ACCORDING TO ARTICLE 154-BIS D.LGS NO.58/1998 The Executeive Manager assigned to draw up the company books, Elena Casadio, declares that the information contained in this quarterly report is an accurate representation of the documents, accounting books and records. 16