(Translation from the Italian original which remains the definitive version)

Transcription

1 (Translation from the Italian original which remains the definitive version) Management & Capitali S.p.A. Registered office - Via Valeggio 41 - Turin Head office - Via dell Orso 6 - Milan Share capital 80,000,000 Interim financial report at 31 March 2010 Management & Capitali S.p.A. capitale sociale euro ,00 sede operativa: Via dell Orso Milano - Tel Fax sede legale: Via Valeggio Torino - C.F. e Registro Imprese di Torino n iscritta nell elenco generale di Banca d Italia ex art. 106 n iscritta nell elenco speciale di Banca d Italia ex art. 107 n

2 Honorary chair Carlo De Benedetti Board of directors Franco Girard (Chair) (*) Giovanni Tamburi (Deputy chair) Alessandra Gritti Corrado Ariaudo François Pauly Giovanni Cavallini Giorgio Alpeggiani Massimo Segre Orazio Mascheroni (**) Board of statutory auditors Vittorio Ferreri (Chair) Angelo Rocco Bonissoni Emilio Fano Maurizio Barbieri (alternate) Stefano Gorgoni (alternate) Independent auditors KPMG S.p.A. (*) appointed by the shareholders on 27 April 2010 (**) appointed by the shareholders on 27 April 2010 Management & Capitali S.p.A. Interim financial report 1

3 Contents Interim financial report 3 Interim separate financial statements of M&C S.p.A. 8 Management & Capitali S.p.A. Interim financial report 2

4 Interim financial report at 31 March 2010 This report at 31 March 2010 has been prepared in accordance with article 154-ter of the Consolidated Finance Act, introduced by Legislative decree no. 195/2007, and based on the Consob (the Italian Commission for the stock exchange and listed companies) communication no. DEM/ of 30 April It gives a general overview of the financial position at 31 March 2010 and results of operations for the three months then ended of the company and its subsidiaries and of the significant events that took place during the period which have affected their financial position. The attached interim separate statement of financial position and income statement of M&C S.p.A. have been prepared using the layouts included in the instructions issued by Banca d Italia in its Regulation of 16 December 2009; the accounting policies are unchanged with respect to those applied in the preparation of the 2009 annual financial statements. This report has not been audited by the independent auditors. *** Management & Capitali S.p.A. ( M&C, the company or the parent ), set up in 2005, invests in underperforming assets, development projects and financial restructuring transactions. The parent s ordinary shares are listed on the stock exchange managed by Borsa Italiana in the investment vehicles market (MIV) segment set up for investment companies. Its share capital of 80,000,000 comprises 474,159,596 ordinary shares at the date of this document after conversion of 5,500,000 preferred shares into ordinary shares, as described in the Subsequent events section. M&C s results for the first quarter of 2010 M&C recorded a loss of 0.2 million for the first quarter of 2010 (loss of 3.9 million for the corresponding period of 2009), being the sum of: a) total income of 0.1 million; b) operating costs of 1.6 million, comprising: personnel expenses of 0.3 million; professional services, rental, insurance policies and other general costs of 0.9 million; fees of 0.4 million for the directors and statutory auditors; c) net gain of 1.3 million on the stock option plans (being the sum of the accrual of 0.1 for costs related to the accounting treatment of the existing stock option plans and a gain of 1.4 million due to the reclassification of prior accruals for the former director Carlo Frau s stock options to profit or loss). The directors prudently decided not to recognise deferred tax assets on the loss for the period. At 31 March 2010, M&C has a net financial position of 46.1 million, equal to 0.11 per outstanding share (31 December 2009: 45.9 million) and equity of 99.2 million (31 December 2008: million). Its net financial position includes Italian treasury bonds (CCT) of 21.6 million (classified as available-for-sale financial assets) and bank current account balances of 24.5 million (classified under loans and receivables). Investments At 31 March 2010, the company s portfolio includes the following investments: a 94.35% interest in Botto Fila S.p.A., an investment giving it significant influence in Treofan Holdings GmbH (roughly 46%); 1.4% of the profit participation rights issued by Comital S.p.A. following its debt restructuring. Following the board of directors formal acceptance of the purchase offer made by Aholding S.r.l. on 26 March 2010, M&C s 96.8% investment in Comital S.p.A. has been classified under Non-current assets held for sale and discontinued operations. Management & Capitali S.p.A. Interim financial report 3

5 Botto Fila S.p.A. M&C fully impaired its 94.4% investment in Botto Fila S.p.A. at 31 December At the reporting date, its transactions with the subsidiary include a loan of 5.4 million granted thereto and a term deposit of 1.6 million securing the employment commitments taken on for the first two years. Botto Fila prepared a reporting package at 31 March 2010 under IFRS for the purposes of this interim financial report. This reporting package shows sales of approximately 263 thousand metres of fabric and revenue of 4.0 million for the three months, up 7.3% and 12.9%, respectively, on the corresponding period of 2009 despite the unrelenting very difficult competitive environment and the events of During the period, management continued to implement the cost containment programme rolled out in The subsidiary recorded a gross operating loss of 0.8 million for the quarter, a significant improvement on the corresponding period of 2009 (loss of 1.5 million). Its loss for the three months came to 1.1 million compared to 1.7 million for the first quarter of At 31 March 2010, Botto Fila had equity of 3.9 million (31 December 2009: 5.2 million) and net financial debt of 11.7 million (31 December 2009: 10.0 million), including an outstanding payable to INPS (Italian social security institution) of 2.4 million and self-liquidating financial liabilities of 0.7 million. Treofan Holdings GmbH M&C had a 46% interest in Treofan Holdings GmbH ( Treofan ) at the reporting date as the result of its financial restructuring completed on 29 September Treofan was given the option to issue profit participation rights, convertible into preferred Treofan shares, for 5 million, provided for by contract. M&C has agreed to subscribe 40%. The contractual provisions also establish that depending on when the senior facility is refinanced and specifically whether this will take place: (i) between 1 January and 1 April 2010, or (ii) between 1 April and 1 July 2010, or (iii) after 1 July 2010, the senior financial backers will have the right to warrants whose exercise will dilute M&C s investment in Treofan from 46% to 43%, 42% or 40%, respectively, if the additional profit participation rights option is not exercised, or from 46% to 43%, 41% or 39%, respectively, if the option is exercised. Given the materiality of the investment, even though the group does not control the company, the key results of the Treofan group for the period are set out below: resin (the group s main raw material) prices grew roughly 20% during the period. The group sold 50.0 tonnes recording revenue of million, up 3.3% and 8.3% on the corresponding period of 2009, respectively, thanks to a higher sales price positively affected by the upturn in the underlying raw material price. The gross operating profit for the period was 9.1 million (8.4% of revenue) compared to 9.2 million for the first quarter of 2009 (9.2% of revenue). At 31 March 2010, the Treofan group s net financial debt was 40.4 million (31 December 2009: 35.9 million). The deterioration is mainly due to the greater net working capital requirements arising from the rise in raw materials prices. Equity came to 81.6 million at the same date (31 December 2009: 72.9 million) with the difference relating solely to the 8.9 million increase in the translation reserve. Comital S.p.A. M&C s investment in Comital S.p.A. has its basis in the September 2009 recapitalisation of 5.0 million following the financial restructuring agreement reached with the subsidiary s lending banks, aimed at resolving the situation when it had a serious deficit such that it fell under the provisions of article 2447 of the Italian Civil Code (which led M&C to fully impair its investment at 31 December 2008). Corrado Ariaudo, the managing director of M&C, offered to acquire M&C s investment in Comital via his investee Aholding S.r.l. for 4.0 million in cash and an earn out option for M&C equal to 25% of the difference between 10 million and the possible consideration paid for the Comital shares should the company be sold. The amount would be shared among the shareholders and the profit participation rights holders as provided for in the profit participation rights regulation (which is an integral part of Comital S.p.A. s by-laws). In their meeting of 26 March 2010, M&C s directors held the transaction to be of interest, partly for the consideration and also given: (i) the difficult situation of Comital s market; (ii) the long-term nature of its business plan; (iii) the significant management commitment involved due to the size of the Comital group, especially considering M&C s structural resizing; (iv) risks of contingent liabilities arising from Comital s past, as shown by a recent claim for compensation for alleged anti-fair competition practices in the period before 2002; (v) the lack of guarantees given to the buyer or Management & Capitali S.p.A. Interim financial report 4

6 Comital s creditors; and (vi) the possibility to continue to benefit from a possible upswing in the investment s value as a result of the earn out option. In addition to receipt of the consideration, the sale of the investment will result in Comital s financial debt of million at 31 March 2010 being excluded from the consolidation scope with the related benefits in terms of reducing M&C group s bank exposure which would also ease future negotiations. The board of directors acknowledged the fairness of the consideration offered on 26 March 2010, based also on Mediobanca s fairness opinion. As the transaction involves a related party, the offer and fairness opinion were previously checked by the internal control committee, which reported in favour thereof to the board of directors. The fairness assessment was mainly based on the comparison between the consideration offered by Aholding and M&C s investment in Comital, made as part of its recapitalisation in September 2009, which was held to be the best current basis for determining the carrying amount of M&C s investment in Comital given that the investment (which was aimed at meeting the capital requirements of article 2447 of the Italian Civil Code) was one of the key elements of Comital s restructuring agreement, signed after lengthy negotiations with numerous third parties. In line with the approach adopted by the directors in the financial statements at 31 December 2009, the carrying amount of the investment in Comital at 31 March 2010, classified in caption 130 Non-current assets and discontinued operations, reflects the fair value of the cash component only ( 4 million) without considering the earn out option. The Comital group recorded turnover of 72.2 million for the period, down 11.4% on the corresponding period of 2009 ( 81.5 million), although a comparison is of little significance due to the restructuring of the Aluminium division. Its gross operating profit was 3.3 million, equal to 4.6% of revenue ( 2.8 million in the first quarter of 2009). Net financial debt at 31 March 2010 came to million ( 31 December 2009: million) and equity to 46.9 million (31 December 2009: 48.6 million), including the loss for the period of 1.7 million ( 2.1 million for the first quarter of 2009). Shareholding structure Treasury shares At the reporting date, M&C held 64,372,907 treasury shares repurchased for 47.6 million. On 9 June 2009, the shareholders authorised, pursuant to article 2357 of the Italian Civil Code, the repurchase of a maximum 89 million ordinary shares and a maximum 5.5 million preferred shares, or if less, another number of shares making up 20% of the share capital, for a maximum investment of 10 million. As described in the Subsequent events section of this report, the unlisted preferred share category had been eliminated at the date of this report following conversion of the 5,500,000 preferred shares into ordinary shares. Therefore, M&C s share capital consists of 474,159,596 listed ordinary shares. The following table shows the company s main shareholders, according to the information available at 13 May 2010, and the share capital at that date: Name % of investment Romed S.p.A. (Carlo De Benedetti) 27.5 TIP S.p.A Treasury shares in portfolio 14.1 La Luxembourgoise SA 6.1 Banca Intermobiliare di Investimenti e Gestioni S.p.A. 4.4 Aholding S.r.l. 1.7 Other and market 25.9 Total Management & Capitali S.p.A. Interim financial report 5

7 Stock option plans The existing stock option plans are unchanged with respect to that disclosed in the 2009 Annual Report, following the resignation of the director Carlo Frau with effect from the board meeting of 26 March The situation at the reporting date is as follows: Options Held at period end Assigned Assigned in Average Exercised Cancelled during the Expiry previous years exercise during the during the Average Name Position held period date (number) price period period Number exercise Expiry date (number) price Corrado Ariaudo Director 18,050, ,050, Giovanni Canetta Manager 1,180, ,180, Former directors - 38,266, ,274,000 25,992, Other information 57,496, ,274,000 45,222,000 Atypical and/or unusual transactions Pursuant to the Consob communication of 28 July 2006, it is noted that no such transactions took place during the year. Management and coordination, related party transactions With respect to article 2497-sexies of the Italian Civil Code, M&C is not managed or coordinated by another company. Related parties and related party transactions: Aholding S.r.l., controlled by M&C s managing director, which receives fees for his position ( 100 for the period) following an ongoing reversibility agreement between Aholding and Corrado Ariaudo. CIR S.p.A., indirectly controlled by the honorary chair, Carlo De Benedetti, and one of whose directors is the chair of M&C, with which M&C has a lease agreement for the offices in Via dell Orso 6, Milan where the parent s operations are based; the related lease payments for the period were 53 thousand. The lease agreement was recently renegotiated reducing the leased space and the related annual payments will amount to 70 thousand starting from 1 July Transactions with the subsidiary Comital S.p.A. related to the subscription of profit participation rights issued by the subsidiary, the receivable for the reversibility of fees paid by Comital to directors of M&C in 2009 and the recharging of costs incurred on the subsidiary s behalf. Botto Fila S.p.A., a subsidiary of M&C, to which it gave a loan amounting to 5,428 thousand at the reporting date and which had generated interest income of 40 thousand during the period. Omniservizi Finanziari&Amministrativi S.r.l., which is 30% owned by Aholding S.r.l. and with which M&C has an annual contract for the supply of accounting and administrative services ( 46 thousand for the period). The payable to Omniservizi Finanziari&Amministrativi amounted to 55 thousand at the reporting date. The contract has been renegotiated and amounts to an annual 120 thousand starting from 1 April Studio Segre and Studio Segre S.r.l., owned by the director Massimo Segre, which provide ongoing consultancy and corporate office services to M&C. The related payable for the period is 37 thousand and includes his fees as director. It reflects the renegotiation of the fees which have been decreased to 120 thousand per annum starting from 1 January TIP S.p.A., of which Giovanni Tamburi and Alessandra Gritti are chair and deputy chair, respectively, and which receives their fees for the positions as deputy chair and director of M&C ( 37 thousand for the period) following an existing reversibility agreement between TIP S.p.A. and the two directors. At the reporting date, the payable due to TIP S.p.A. amounted to 37 thousand. Transactions with the associate Treofan Holdings GmbH relate to the recharging of travel costs and the related receivable incurred on behalf of Treofan Holdings GmbH. Management & Capitali S.p.A. Interim financial report 6

8 Transactions carried out with related parties take place at normal market conditions. Brief description of related party transactions: Name ( '000) Loans and receivables Other assets Q Financial assets Other Personnel Other admin. held for sale liabilities expense expenses Other income Interest income Aholding S.r.l CIR S.p.A Comital S.p.A Botto Fila S.p.A. 5, Omniservizi S.r.l Studio Segre Tamburi Investment Partners S.p.A Treofan Holdings GmbH Total 5, % of financial statements caption 17.2% 7.0% 3.7% 8.8% 17.4% 14.9% 55.6% 29.2% Subsequent events Outlook The conditions for dilution of M&C s investment in Treofan to 43% were fulfilled on 1 April 2010 due to the nonrefinancing of the senior facility by the shareholder Goldman Sachs before 31 March The shareholders appointed Franco Girard as chair of the board of directors in their meeting of 27 April He had already been co-opted by the board on 12 November 2009 following the resignation of Carlo De Benedetti. They also appointed Orazio Mascheroni as director to replace Carlo Frau. Corrado Ariaudo s resignation from his position as managing director became effective on the same date. With approval of the separate financial statements at 31 December 2009 by the shareholders on 27 April 2010, 3,118,855 preferred shares held by former directors were converted into the same number of ordinary shares, because the necessary conditions were met and as provided for by the company s by-laws and related agreements. The conversion was effective from 12 May The company filed the documentation related to the purchase of 2,381,445 preferred shares from Messrs. Ariaudo and Frau 12 May 2010 as resolved by the board of directors on 26 March This transaction eliminated the unlisted preferred shares category since the shares were converted into the same number of ordinary shares. On 30 April 2010, the sale of M&C s entire investment in Comital S.p.A. (96.83%) to Aholding S.r.l. (controlled by M&C s former managing director, Corrado Ariaudo) was formalised, in line with the board of directors resolution of 26 March The board of directors acknowledged the decision taken by unanimous vote to reduce its fees in its meeting of 13 May Total fees will decrease from an annual 430 thousand to an annual 230 thousand from 1 June The company will focus on managing its investments during the year in order to increase their value. Any additional investments will only be made after a prudent and selective analysis is made considering its available resources and reduced size. Milan, 13 May 2010 On behalf of the board of directors Franco Girard Chair (signed on the original) Management & Capitali S.p.A. Interim financial report 7

9 M&C S.p.A. INTERIM FINANCIAL STATEMENTS Statement of financial position Income statement Management & Capitali S.p.A. Interim financial report 8

10 MANAGEMENT & CAPITALI S.p.A. Statement of financial position as at 31 March 2010 ( '000) STATEMENT OF FINANCIAL POSITION ASSETS Cash and cash equivalents Available-for-sale financial assets 22,479 22, Loans and receivables 31,558 31, Investments 35,511 39, Property, equipment and investment property Intangible assets Tax assets 3,825 3, Non-current assets held for sale and discontinued operations 4, Other assets 3,264 4,531 Total assets 100, ,722 LIABILITIES AND EQUITY Other liabilities 1, Post-employment benefits Share capital 80,000 80, Treasury shares (47,649) (47,649) 160. Reserves 67,182 70, Valuation reserves (128) (100) 180. Loss for the period/year (174) (1,550) Total liabilities and equity 100, ,722 Management & Capitali S.p.A. Interim financial report 9

11 MANAGEMENT & CAPITALI S.p.A. Income statement for the three months ended 31 March 2010 ( '000) INCOME STATEMENT Q Q Interest and other income 137 3,570 Net interest income 137 3, Commission income - 1 Net commission income Gain (loss) from the sale or repurchase of: a) financial assets - (6,323) Total income 137 (2,751) 110. Administrative expenses (296) (1,201) 120. Depreciation and net impairment losses on property, equipment and investment property (10) (10) 130. Amortisation and net impairment losses on intangible assets - (1) 160. Other operating income (expenses) (5) 17 Operating loss (174) (3,945) Pre-tax loss from continuing operations 190. Income taxes - - Post-tax loss from continuing operations (174) (3,945) Loss for the period (174) (3,945) Loss per share (0.0004) (*) (0.0096) (*) Diluted loss per share (0.0004) (*) (0.0084) (*) (*) Calculated considering outstanding shares, less treasury shares * * * Pursuant to article 154-bis.2 of the Consolidated Finance Act, the manager in charge of financial reporting, Marco Viberti, states that the financial information in this report is consistent with the accounting records, ledgers and documents. Management & Capitali S.p.A. Interim financial report 10