Official Documents are in Italian. Quarterly Financial Report. at 30 th September 2017

Transcription

1 Official Documents are in Italian Quarterly Financial Report at 30 th September 2017

2 DATALOGIC GROUP Quarterly Financial Report at 30 th September 2017 GROUP STRUCTURE pag. 1 COMPOSITION OF CORPORATE BODIES pag. 2 MANAGEMENT REPORT pag. 3 CONSOLIDATED FINANCIAL STATEMENTS Statement of financial position - assets pag. 16 Statement of financial position - liabilities pag. 17 Statement of income pag. 18 Statement of comprehensive income pag. 19 Statement of cash flow pag. 20 Statement of shareholders equity pag. 21 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Presentation and content pag. 22 Information on the statement of financial position pag. 26 Information on the statement of income pag. 46 ANNEX Restated consolidated statement of income 2. Declaration pursuant to Art. 154-bis, pars. 2, Legislative Decree 58/1998

3 DATALOGIC S.p.A. CAEN RFID S.r.l. (20%) Soredi Touch Systems GmbH (100%) (46,1%) Datalogic IP Tech S.r.l. (53,9%) Datalogic S.r.I (100%) Datalogic Real Estate UK Ltd (100%) Datalogic Real Estate France Sas (100%) Datalogic S.r.l. UK Specialvideo S.r.l. (40%) Datalogic Real Estate GmbH (100%) Datasensor Gmbh (30%) Datalogic USA, Inc. (100%) Datalogic (Shenzhen) Industrial Automation Co., Ltd. (100%) Datalogic Singapore Asia Pacific Pte. Ltd. (100%) Datalogic Australia Pty Ltd. (100%) Datalogic Vietnam LLC (100%) Datalogic S.r.l. [Succursale en France] Datalogic Automation AB [Sweden] (20%) Laservall Asia Co Ltd. (50%) Laservall China Co Ltd. (100%) Datalogic Tecnologías de México, S. de R.L. de C.V. (99,99%) Datalogic do Brasil Ltda. (99,99%) Solution Net Systems Inc. 100% (0,001%) (0,001%) Datalogic Slovakia S.r.o. (100%) Datalogic Hungary Kft. (100%) Datalogic Automation Asia, Ltd. (100%) Datalogic S.r.l. Ireland Datalogic S.r.l. Sucursal en España Datalogic S.r.l. Benelux Datalogic S.r.l. Italian Filial Informatics Holdings, Inc. (100%) WASP Barcode Technologies Ltd. (100%) Datalogic ADC HK Ltd. (100%) Suzhou Mobilead Electronic Technology Co., Ltd (25%) Datalogic S.r.l. (Spòlka z ograniczona odpowiedzialnoscia) oddzial w Polsce Datalogic S.r.l. Merkezi Italya Istanbul Merkez Subesi Datalogic ADC S.r.l. (Incorporated in Bologna Italy) External Profit Company Datalogic S.r.l. Niederlassung Central Europe [branch Germany] ITALY/EMEA IP TECH Datalogic Scanning Eastern Europe GmbH [Germany] (100%) Legal entity Branch / Rep. Office AMERICAS APAC REAL ESTATE OTHER

4 COMPOSITION OF CORPORATE BODIES Board of Directors (1) Volta Romano Chairman (2) Volta Valentina Director & Chief Executive Officer (2) Aversa Carlo Achille Director Caruso Pier Paolo Director Di Stefano Luigi Independent Director Mazzalveri Gaia Independent Director Todescato Pietro Director Volta Filippo Maria Director Statutory Auditors (3) Fiorenza Salvatore Marco Andrea Chairman Santagostino Roberto Statutory Auditor Lancellotti Elena Statutory Auditor Prandi Paolo Alternate Statutory Auditor Fuzzi Mario Alternate Statutory Auditor Magnani Sonia Alternate Statutory Auditor Auditing Company Reconta Ernst & Young S.p.A. (1) The Board of Directors will remain in office until the general meeting that approves the accounts for the financial year ending 31 December (2) Legal representative with respect to third parties. (3) The Statutory Auditors in office until the approval of the accounts for the financial year ending 31 December

5 MANAGEMENT REPORT INTRODUCTION This Interim Report on Operations as at 30 September 2017 was drawn up pursuant to Art. 154 of T.U.F. [Consolidated Law on Finance] and was prepared in compliance with the international accounting standards (IAS/IFRS) endorsed by the European Union. GROUP PROFILE The Datalogic Group is the world leader in the manufacture of fixed bar code readers, mobile computers, RFID-Radiofrequency Identification technology, detection, measurement and security sensors, vision and laser marking systems. Solutions offered by Datalogic increase efficiency and quality of processes, along the entire value chain, in the Retail, Transportation & Logistics, Manufacturing and Healthcare sectors. HIGHLIGHTS OF THE PERIOD The following table summarises the Datalogic Group s key operating and financial results as at 30 September 2017 in comparison with the same period a year earlier (figures in Euro thousands): nine months ended change % change Total revenues 450, ,753 28, % EBITDA (*) 77,905 66,639 11, % % of total revenues 17.3% 15.8% Operating result (EBIT) 62,466 52,750 9, % % of total revenues 13.9% 12.5% Group net profit/loss 45,071 40,882 4, % % of total revenues 10.0% 9.7% Net financial position (NFP) (15,176) (37,577) 22, % The results of the nine months highlight a strong growth in all the economic indicators, thus confirming the positive trend reported over the first half. Thanks to higher revenues from sales and improved efficiency on operating costs, EBITDA increased by 16.9% to around 77.9 million, EBIT increased by over 18.4%, to 62.5 million and net profit by 10.2%, to 45.1 million. The Net Financial Position, negative by 15.2 million, highlighted an improvement of 22.4 million compared to 30 September Management Report as at 30 September

6 ALTERNATIVE PERFORMANCE INDICATORS To allow for a better valuation of the Group s performance, the Management adopted some alternative performance indicators (NON-GAAP measures) that are not identified as accounting measures within IFRS. The measurement criteria applied by the Group might be not consistent with the ones adopted by other groups and the balance obtained might not be comparable with the one determined by the latter. These alternative performance indicators, determined according to provisions set out by Guidelines on Alternative Performance Indicators, issued by ESMA/2015/1415 and adopted by CONSOB with communication no of 3 December 2015, refer only to the performance of the accounting period related to this Interim Report on Operations and the compared periods. The alternative performance indicators must be considered as supplementary and do not supersede information given pursuant to IFRS standards. The main alternative performance measures are described hereunder. The measures described relate to overall results achieved: EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation): this indicator is defined as Profit/Loss for the period before depreciation and amortisation of tangible and intangible assets, non-recurring costs/revenues, financial income and expenses and income taxes; EBITANR (Earnings Before Interests, Taxes, Acquisition and Not Recurring) or Ordinary operating result: this indicator is calculated as operating result before the impact of non-recurring costs/revenues and amortisation/depreciation related to acquisitions; EBIT (Earnings Before Interests and Taxes) or Operating result: operating result, as inferable from the Income Statement; Net working capital in the trading segment: this indicator is calculated as the sum of Inventories and Trade Receivables, less Trade Payables; Net working capital: this indicator is calculated as the sum of Net working capital in the trading segment and Other Assets, as well as of Current Liabilities, including short-term Provisions for risks and charges; Net invested capital: this indicator is the total of current and non-current Assets, excluding financial assets, less current and non-current Liabilities, excluding financial liabilities; Net financial debt/(net financial position): this indicator is calculated based on provisions set out by Consob Communication no of 28 July 2006, also including other non-current Financial Assets represented by temporary liquidity investments. Management Report as at 30 September

7 ANALYSIS OF RECLASSIFIED INCOME STATEMENT DATA The following table shows the main income statement items, compared with the same period in the previous year: nine months ended (in /000) change % change Total revenues 450, % 421, % 28, % Cost of goods sold (238,201) -52.9% (227,381) -53.9% (10,820) 4.8% Gross profit 212, % 194, % 18, % Other revenues 2, % 2, % (316) -13.6% Research and development expenses (39,889) -8.9% (36,636) -8.7% (3,253) 8.9% Distribution expenses (73,225) -16.2% (72,259) -17.1% (966) 1.3% General and administrative expenses (32,966) -7.3% (30,394) -7.2% (2,572) 8.5% Other operating costs (1,450) -0.3% (1,147) -0.3% (303) 26.4% Total Operating costs and other costs (147,530) -32.7% (140,436) -33.3% (7,094) 5.1% Ordinary operating result before nonrecurring 66, % 56, % 10, % costs and revenues and administrative costs arising from acquisitions (EBITANR) (*) Non-recurring costs and revenues (858) -0.2% % (1,007) n.a. Depreciation & amortisation due to (3,661) -0.8% (3,656) -0.9% (5) 0.1% acquisitions Operating result (EBIT) 62, % 52, % 9, % Net financial income (expenses) (3,441) -0.8% (2,603) -0.6% (838) 32.2% Profits/(losses) from associates (1) 0.0% (466) -0.1% % Foreign exchange gains/(losses) (2,259) -0.5% (548) -0.1% (1,711) 312.2% Pre-tax profit/(loss) 56, % 49, % 7, % Taxes (11,694) -2.6% (8,251) -2.0% (3,443) 41.7% GROUP NET PROFIT/(LOSS) 45, % 40, % 4, % Depreciation and write-downs of (7,649) -1.7% (6,629) -1.6% (1,020) 15.4% tangible assets Amortisation and write-downs of (3,271) -0.7% (3,753) -0.9% % intangible assets EBITDA 77, % 66, % 11, % It should be noted that, since 2017, some costs have been reclassified under various items. Comparative data as at 30 September 2016 have therefore been disclosed accordingly. For details please refer to the Annex 1 to the Interim report on operations. The Group results as at 30 September 2017 included data related to the third quarter of the company Soredi Touch Systems GmbH acquired on 6 July 2017, as better described in the Explanatory Notes in section Change in the scope of consolidation and Business combination. Consolidated net revenues amounted to 450,711 thousand, an increase of 6.9% compared to 421,753 thousand as at 30 September 2016 (+6.8% at constant Euro/Dollar change), despite a negative trend of Euro/Dollar exchange in the third quarter, which fully compensated the benefits recorded in the first half of the year. On a consolidation like-for-like basis, consolidated net revenues related to the first nine months of the year stood at 448,775 thousand, up 6.4% compared to the same period of the previous year (up 6.3% at constant Euro/Dollar exchange rate). Management Report as at 30 September

8 The following table shows the breakdown by geographical area of Group revenues achieved in the first nine months of 2017 compared with the same period of 2016: nine months ended Change % % % Italy ,2% ,5% ,2% EMEA (except Italy) ,5% ,0% ,1% Total EMEA (*) 237, % 221, % 16, % North America 133, % 131, % 2, % Latin America 20, % 20, % (411) (2.0%) Asia & Pacific (including China) 59, % 48, % 11, % Total revenues 450, % 421, % 28, % (*) EMEA: Europe, Middle East and Africa. Since 2017, data related to geographical areas will be disclosed to reflect the actual involvement of each area within the new commercial organisation of the Group. Comparative data as at 30 September 2016 will be disclosed accordingly. In the first nine months of 2017, a consolidation in EMEA was reported, with 7.4% growth ( million), as well as a significant growth in APAC, driven by China. North America performed moderately well, with 1.5% growth, above all thanks to the performance of Solution Net Systems in the third quarter and the T&L sector. Latin America continued to improve, with a double-digit growth (+16.1%) in the third quarter, albeit over the nine months, this result was still affected by the negative performance reported in the first quarter of the year. The booking over the nine-month period, achieved million, up by 9.2% compared to the same period of The impact of new products on sales for the period amounted to 12.9% (25.6% in the same period of 2016), as the benefits of the sale of new products announced at the end of the quarter had not been included yet. Gross profit, equal to 212,510 thousand, increased by 9.3% against 194,372 thousand reported in the same period of the previous year (+9.5% at constant Euro/Dollar exchange rate), while its impact on revenues increased by one percentage point, from 46.1% in the first nine months of 2016 to 47.1% in the first nine months of 2017 (47.3% in the analysis at constant Euro/Dollar exchange rate), due mainly to sales volumes, the improvement of sales mix and efficiencies of the main components of cost of goods sold. Operating costs, amounting to 147,530 thousand, increased by 5.1% (+4,9% at constant Euro/Dollar exchange rate), compared to 140,436 thousand of the same period in 2016, albeit improving in their impact on turnover, from 33.3% to 32.7%. This trend reflects an increase in costs for Research and Development by 8.9%, achieving 39,889 thousand, with 8.9% impact on revenues over 8.7% reported in the first nine months of EBITDA reported a significant growth of 16.9%, from 66,639 thousand of the previous year to 77,905 thousand (+17.7% at constant Euro/Dollar exchange rate), while the impact on revenues (EBITDA margin) rose to 17.3% (17.4% at constant Euro/Dollar exchange rate), compared to 15.8%, thanks to improved gross profit, a reduction in general and administrative expenses and a different seasonal effect of distribution expenses. Management Report as at 30 September

9 The Operating Result (EBIT) increased by 18.4%, from 52,750 thousand in the previous year to 62,466 thousand (+19.5% at constant Euro/Dollar exchange rate). Group net profit amounted to 45,071 thousand, 10.2% (+11.7% at constant Euro/Dollar exchange rate) higher than the profit obtained in the same period of the previous year, equal to 40,882 thousand. PROFIT/(LOSS) OF THE THIRD QUARTER The following table compares the main operating results achieved in the third quarter of 2017 with the same period of Q 2017 % 3Q 2016 % change % Total revenues 151, % 139, % 11, % EBITDA 26, % 21, % 4, % Operating result (EBIT) 21, % 17, % 3, % Group net profit/loss 15, % 14, % 1, % In the third quarter of 2017, total revenues amounted to million, an increase of 8.2% compared to the third quarter of 2016 (+10.7% at constant Euro/Dollar exchange rate). On a consolidation like-for-like basis, consolidated net revenues would stand at million in the third quarter, up 6.8% compared to the same period of the previous year (+9.3% at constant Euro/Dollar exchange rate). The following table shows the breakdown by geographical area of Group revenues achieved in the third quarter of 2017 compared with the same period of 2016: Change 3Q 2017 % 3Q 2016 % % Italy ,2% ,3% 951 7,3% EMEA (except Italy) ,0% ,1% ,1% Total EMEA (*) 79, % 73, % 5, % North America 43, % 44, % (1,233) (2.8%) Latin America 8, % 7, % 1, % Asia & Pacific (including China) 20, % 15, % 5, % Total revenues 151, % 139, % 11, % (*) EMEA: Europe, Middle East and Africa. Revenues recorded in the third quarter continued to highlight a positive trend despite the typical seasonality effect of the period, the negative performance of the Euro/Dollar exchange and the postponement of some important launches of new products to the fourth quarter. The recorded growth is mainly related to Manufacturing and T&L sectors, thanks to significant orders made by some important customers and China s excellent performance. Revenues grew in EMEA, which benefited also of our recent acquisition of Soredi Touch System, in Asia & Pacific driven by China and also in Latin America. The positive feedback from customers on the new products launched over the quarter, including the new Android terminal with Joya Touch A6 wireless charging, the new Magellan bench scanners and the new Quickscan Lite manual reader, intended for the Retail sector, as well as the new Powerscan 9100 industrial reader, equipped with the innovative scan engine, developed in house, suggests a positive performance in the last quarter of the year as well. Management Report as at 30 September

10 The booking of the quarter amounted to 142 million, up 2.9% compared to the third quarter of 2016, as it was still not benefiting from the sale of the new products announced at the end of the quarter. The impact on turnover of new products in the third quarter of 2017 amounted to 8.4% (20.4% in the same period of 2016). EBITDA amounted to 26,080 thousand, an increase of 20.3% (+19.1% at constant Euro/Dollar exchange rate), compared to the third quarter of 2016, with an impact on revenues from 15.5%, recorded in the third quarter of 2016, to 17.2%, recorded in the third quarter of 2017 (16.7% at constant Euro/Dollar exchange rate), primarily thanks to improved Gross profit. Management Report as at 30 September

11 COMMENTS ON FINANCIAL RESULTS OF DIVISIONS The operating sectors, as periodically remeasured by the top management, are defined in the following divisions: Datalogic, which represents the core business of the Group and designs and produces bar code scanners, RFID, mobile computers, detection, measurement and security sensors, and vision and laser marking systems intended to contribute for higher efficiency and quality of processes in the areas of large-scale distribution, manufacturing, transport & logistics and health, along the entire value chain; Solution Net Systems specialised in supplying and installing integrated solutions for automated distribution for the postal segment and distribution centres in the Retail sector; Informatics sells and distributes products and solutions for the management of inventories and mobile assets tailored to small and medium sized companies. Revenues in the nine months and in the third quarter and EBITDA related to nine months are broken down hereunder by Divisions. REVENUES IN THE 9 MONTHS nine months ended Change % (*) % % Datalogic 417, % 390, % 26, % Solution Net Systems (*) 19, % 13, % 5, % Informatics 16, % 18, % (2,193) (11.8%) Adjustments (2,707) (0.6%) (1,549) (0.4%) (1,158) 74.8% Total revenues 450, % 421, % 28, % (*) Data for 2016 have been restated on the basis of the new operational structure REVENUES IN THIRD QUARTER Third Quarter Change 2017 % 2016 (*) % % Datalogic 138, % 130, % 7, % Solution Net Systems (*) 8, % 3, % 4, % Informatics 5, % 5, % (680) (11.7%) Adjustments (1,023) (0.7%) (512) (0.4%) (511) 99.8% Total revenues in third quarter 151, % 139, % 11, % (*) Data for 2016 have been restated on the basis of the new operational structure EBITDA IN THE 9 MONTHS nine months ended Change % (*) % % Datalogic 75, % 68, % 6, % Solution Net Systems (*) 2, % (1,247) (9.0%) 4,087 n.a. Informatics (115) (0.7%) (938) (5.1%) 823 n.a. Adjustments 21 (0.8%) (69) 4.5% 90 n.a. Total EBITDA 77, % 66, % 11, % (*) Data for 2016 have been restated on the basis of the new operational structure Management Report as at 30 September

12 In the third quarter of the year, the Datalogic Division recorded a turnover of million, up 5.9% (+8.1% at constant Euro/Dollar exchange rate) compared to the third quarter of 2016, with a very positive trend in EMEA and in APAC, especially in China, where a growth of over 80% was recorded, and benefited from the contribution of Soredi Touch Systems, equal to around 2 million. In North America, the T&L Division reported a double-digit growth, while the Retail sector was affected by the postponement in the launching of new products and some important projects. In the first nine months of 2017, this Division reported a turnover of million, up 6.9% (+6.7% at constant Euro/Dollar exchange rate), compared to the same period of EBITDA related to the Division amounted to 75.2 million, up 9.1%, with an impact on sales of 18%. Below is the breakdown of the Datalogic Division s revenues, divided by business sector: nine months ended Change % % % Retail 204, % 207, % (2,623) -1.3% Manufacturing 110, % 100, % 10, % Transportation & Logistics 43, % 40, % 3, % Healthcare 20, % 14, % 6, % Channel (unallocated) (*) 37, % 28, % 9, % Total revenues 417, % 390, % 26, % (*) The Channel sector (unallocated) includes revenues not directly attributable to the 4 areas identified. The Retail sector reported a slight decrease (-1.3%) compared to last year, mainly due to a slowdown in sales in North America, due to the postponement of some projects with key customers. EMEA and China confirmed the growth trend. An expansion is confirmed in the Manufacturing sector, with 10.2% growth compared to the first nine months of last year. The increase was driven by China, where sales grew by about 70% compared to the previous year. After a non-positive performance for the first months of the year, the Transportation & Logistics sector recorded a double-digit growth in the following quarters, mainly driven by North America and China. In the nine months of the year, growth was equal to 9.2% compared to The Healthcare sector continues to have the strongest growth in percentage terms, or 42.5% over last year. This is mainly due to North America, where revenue has more than doubled. Very positive performance should be also highlighted in sales through distribution channel, especially to small and medium-sized customers (SMEs), not directly attributable to any of the four main sectors, and that reported 32.4% growth compared to The Solution Net Systems Division recorded an excellent performance in the quarter, with a turnover of 8.7 million, more than doubled compared to 3.8 million recorded in the third quarter of 2016 (+128.1%, % at constant Euro/Dollar exchange rates), thanks to important orders in addition to the order in place made by the Royal Mail. Management Report as at 30 September

13 In the first nine months of 2017, the Division recorded a turnover of 19.3 million, highlighting 40.1% growth compared to the same period of 2016 (+41% at constant Euro/Dollar exchange rate). EBITDA related to the Division amounted to 2.8 million (negative by 1.2 million in the same period of 2016), with an impact on sales of 14.7%. In the second quarter, the Informatics Division recorded a turnover of 5.1 million, down 11.7% (-7.5% at constant Euro/Dollar exchange rate) compared to the third quarter of In the first nine months of 2017, this Division reported a turnover of 16.4 million, down 11.8% (-12.2% at constant Euro/Dollar exchange rate), compared to the same period of EBITDA of the Division is negative by 0.1 million and it is improving compared to the same period of 2016 (negative by 0.9 million). Management Report as at 30 September

14 ANALYSIS OF FINANCIAL AND CAPITAL DATA The following table shows the main financial and equity items as at 30 September 2017, for the Datalogic Group, compared with 31 December 2016 and 30 September Net intangible assets 43,464 51,997 50,777 Goodwill 176, , ,597 Net tangible assets 68,108 72,082 67,488 Unconsolidated equity investments 12,013 6,928 6,088 Other non-current assets 54,892 51,807 51,766 Non-current capital 355, , ,716 Net trade receivables from customers 93,141 75,477 72,626 Amounts due to suppliers (90,846) (104,585) (86,714) Inventories 87,521 82,344 90,399 Net working capital, trading 89,816 53,236 76,311 Other current assets 37,570 34,184 36,147 Other current liabilities and provisions for short term risks (76,299) (77,625) (68,763) Net working capital 51,087 9,795 43,695 Other M/L term liabilities (30,387) (30,836) (26,055) Employee severance indemnity (6,745) (6,647) (6,661) Provisions for risks (13,674) (11,169) (10,469) Net invested capital 355, , ,226 Total Shareholders Equity (340,519) (336,394) (317,649) Net financial position (15,176) 3,503 (37,577) As at 30 September 2017, the net working capital in the trading segment amounted to 89.8 thousand, ( 88.6 million on a like-for-like basis), an increase of 36.6 million compared to 31 December 2016, and of 13.5 million compared to the same period in the previous year. The increase in this item, compared to 31 December 2016, is primarily attributable to the increase in customer trade receivables. Trade payables and inventories show improvement over the same period of the prior year, while the difference with respect to 31 December 2016 is instead purely due to seasonal effects. Management Report as at 30 September

15 As at 30 September 2017, the net financial debt/(net financial position) is broken down as follows: A. Cash and bank deposits 238, ,930 76,499 B. Other cash and cash equivalents b1. restricted cash deposit C. Securities held for trading c1. Short-term c2. Long-term 0 0 D. Cash and equivalents (A) + (B) + (C) 238, ,977 76,545 E. Current financial receivables F. Other current financial receivables f1. hedging transactions G. Bank overdrafts H. Current portion of non-current debt 51,463 30,180 24,196 I. Other current financial payables 2,956 5,878 2,992 i1. hedging transactions i2. payables for leasing i3. current financial payables 2,929 5,593 2,723 J. Current financial debt (G) + (H) + (I) 54,570 36,270 27,381 K. Current financial debt, net/(current net financial (184,158) (110,707) (49,164) position) (J) - (D) - (E) - (F) L. Non-current bank borrowing 229, , ,349 M. Other non-current financial assets 31,171 32,117 31,716 N. Other non-current liabilities n1. hedging transactions 0 56 n2. lease payables n3. non-current financial payables O. Non-current financial debt (L) - (M) + (N) 199, ,204 86,741 P. Net financial debt/(net financial position) (K) + (O) 15,176 (3,503) 37,577 The Net Financial Position, as at 30 September 2017, was negative by 15.2 million, down by 18.7 million compared to 31 December 2016 (positive by 3.5 million) and up by 22.4 million, compared to 30 September Management Report as at 30 September

16 The reconciliation between the Parent Company s shareholders equity and net profit and the corresponding consolidated amounts is as shown below: 30 September December 2016 Total equity Period results Total equity Period results Parent Company shareholders equity and profit 287,881 21, ,677 52,334 Difference between consolidated companies' 114,623 50, ,061 51,183 shareholders equity and their carrying value in the Parent Company's financial statements; effect of equity-based valuation Reversal of dividends (27,657) (53,387) Amortisation of intangible assets business (5,827) (5,827) combination Effect of acquisition under common control (31,733) (31,733) Elimination of capital gain on sale of business (18,479) 186 (18,665) branch Effect of eliminating intercompany transactions (13,410) 679 (17,700) (4,231) Reversal of write-downs and capital gains on equity 5,517 5,517 (604) investments Sale of know-how (7) (7) Goodwill impairment (1,395) (1,395) Other (1,226) (27) (1,193) (61) Deferred taxes 4,575 (84) 4, Group shareholders' equity 340,519 45, ,394 45,846 FINANCIAL INCOME (EXPENSES) Nine months ended Change Financial income/(expenses) (2,208) (1,296) (912) Foreign exchange differences (2,259) (548) (1,711) Bank expenses (1,600) (1,340) (260) Other Total Net financial income (expenses) (5,700) (3,151) (2,549) The financial management was negative by 5.7 million, compared to the negative result of 3.2 million reported in the same period of the previous year, mainly by effect of the performance of exchange differences (losses amounting to 2.3 million compared to losses equal to 0.5 million in the first nine months of 2016), connected with the effects, on net Group balances, of the depreciation of the US Dollar and the increase in financial expenses due to the higher gross indebtedness. RELATED-PARTY TRANSACTIONS Transactions with related parties, as disclosed in the financial statements, and described in detail in the related Notes to the Income Statements items, to which reference is made, cannot be quantified as atypical or unusual, given that they can be included in the normal business of the Group companies, and are governed at arm s length. As regards the Procedure for Transactions with Related Parties, reference is made to the documents published on the website in the Investor Relations section. Management Report as at 30 September

17 EVENTS OCCURRED IN THE NINE-MONTH PERIOD On 13 April 2017, Datalogic S.p.A. signed an agreement for a new credit line worth 250 million and maturing in The loan granted was partly intended for an early redemption, compared to the original maturity, of the existing credit line ( 126 million), and partly to support the ordinary activities and development of the Group. On 4 May 2017, the Extraordinary Shareholders' Meeting approved the amendments, amongst other, to Articles 6 and 9 of the Corporate By-Laws, mainly aimed at introducing the concept of enhanced voting rights for long-term shareholders of the Company, pursuant to Art. 127 quinquies of the Legislative Decree 58/1998 ( T.U.F. ), introduced by Art. 20, par. 1 bis, of the Law Decree no. 91/2014, converted into Law no. 116/2014 ( Competitiveness Decree ). On 6 June 2017, a binding agreement was entered, finalised on 6 July, for the acquisition of 100% share capital of the German company Soredi Touch Systems GmbH, leader in technologies for terminals, especially forklifts terminals. This transaction envisaged a total maximum financial commitment for Datalogic, within 2021, of 10 million, of which 8 million cash and 2 million treasury shares. OUTLOOK FOR CURRENT YEAR As already reported in the first two quarters, the third quarter confirmed the growth trend of revenues with respect to the previous year. Consistently with its customer-oriented business model, the Group is planning to continue its investments in R&D and in commercial structures. The positive feedback from customers in relation to new products launched in the quarter, including the new Android terminal with Joya Touch A6 wireless charging, the new Magellan bench scanners and the new Quickscan Lite manual reader, intended for the Retail sector, as well as the new Powerscan 9100 industrial reader, equipped with the innovative scan engine, developed in house, suggests a positive performance for the rest of the year as well. As for the last months of the year, in a substantially stable macroeconomic scenario, the Group expects to confirm the growth trend of revenues recorded in the first nine months of the year, and to continue the streamlining of production processes for the purposes of consolidating the improvement of profitability over the previous year. Management Report as at 30 September

18 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ASSETS (Euro/000) Note A) Non-current assets ( ) ) Tangible assets land buildings other assets assets in progress and payments on account of which from related parties 182 2) Intangible assets goodwill development costs other assets in progress and payments on account ) Equity investments in associates ) Financial assets equity investments securities other ) Loans ) Trade and other receivables ) Deferred tax assets B) Current assets ( ) ) Inventories raw and ancillary materials and consumables work in progress and semi-finished products finished products and goods ) Trade and other receivables trade receivables trade receivables from third parties trade receivables from associates trade receivables from related parties other receivables - accrued income and prepaid expenses of which from related parties ) Tax receivables of which to the parent company ) Financial assets ) Loans ) Financial assets - Derivative instruments ) Cash and cash equivalents Total assets (A+B)

19 CONSOLIDATED STATEMENT OF FINANCIAL POSITION LIABILITIES (Euro/000) Note A) Total shareholders equity ( ) ) Share capital ) Reserves ) Profits (losses) of previous years ) Group profit (loss) for the period/year ) Minority interests B) Non-current liabilities ( ) ) Financial payables ) Financial liabilities - Derivative instruments 6 8) Tax payables ) Deferred tax liabilities ) Post-employment benefits ) Provisions for risks and charges ) Other liabilities C) Current liabilities ( ) ) Trade and other payables trade payables trade payables to third parties trade payables to parent company trade payables to associates trade payables to related parties other payables - accrued liabilities and deferred income ) Tax payables of which to the parent company ) Provisions for risks and charges ) Financial liabilities - Derivative instruments ) Financial payables Total liabilities (A+B+C)

20 CONSOLIDATED STATEMENT OF INCOME (Euro/000) Note ) Total revenues of which from related parties and associates ) Cost of goods sold of which non-recurring of which from related parties and associates Gross profit (1-2) ) Other operating revenues ) R&D expenses of which non-recurring of which amortisation, depreciation and write-downs pertaining to acquisitions of which from related parties and associates ) Distribution expenses of which non-recurring of which from related parties and associates ) General and administrative expenses of which non-recurring of which amortisation, depreciation and write-downs pertaining to acquisitions of which from related parties and associates ) Other operating expenses of which non-recurring 0 (399) Total operating costs Operating result ) Financial income ) Financial expenses Net financial income (expenses) (8-9) (5.700) (3.151) 10) Profits from associates 3 (1) (466) Profit/(loss) before taxes from the operating assets Income tax Profit/(loss) for the period Basic earnings/(loss) per share ( ) 22 0,7755 0,7026 Diluted earnings/(loss) per share ( ) 22 0,7755 0,

21 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Euro/000) Note Net profit/(loss) for the period Other components of the statement of comprehensive income: Other components of the statement of comprehensive income which will be restated under profit/(loss) for the year: Profit/(loss) on cash flow hedges 11 (1.011) 49 Profit/(loss) due to translation of the accounts of foreign companies 11 (17.552) (4.062) Profit/(loss) on exchange rate adjustments for financial assets available for sale (587) Reserve for exchange rate adjustment 11 (11.155) (1.982) Total other components of the statement of comprehensive income which will be restated under profit/(loss) for the year (25.503) (6.582) Other components of the statement of comprehensive income which will not be restated under profit/(loss) for the year: Actuarial (loss)/gain on defined-benefit plans of which tax effect Total other components of the statement of comprehensive income which will not be restated under profit/(loss) for the year 0 0 Total profit/(loss) of Comprehensive Income Statement (25.503) (6.582) Total net profit/(loss) for the period Attributable to: Parent company shareholders Minority interests

22 CONSOLIDATED STATEMENT OF CASH FLOW (Euro/000) Note Pre-tax profit Depreciation of tangible assets and write-downs 1, Amortisation of intangible assets and write-downs 1, Capital losses from sale of assets Capital gains from sale of assets 19 (4) (132) Change in provisions for risks and charges (*) (3.811) Effect of change in provisions for risks and charges Change in employee benefits reserve (153) Bad debt provisions Net financial expenses including exchange rate differences Net financial income including exchange rate differences 20 (636) (436) Foreign exchange differences Adjustments to value of financial assets Cash flow generated (absorbed) from operations before changes in working capital Change in trade receivables (including provision) (*) 7 (16.920) (3.939) Change in final inventories (*) 8 (3.630) (20.922) Change in current assets (*) 7 (3.762) (1.730) Change in other medium-/long-term assets (103) Change in trade payables (*) 16 (14.475) (14.997) Change in other current liabilities (*) Other medium/long-term liabilities 16 (634) 383 Commercial foreign exchange differences (308) Foreign exchange effect of working capital (1.708) 378 Cash flow generated (absorbed) from operations after changes in working capital Change in tax (16.710) (12.298) Foreign exchange effect of tax (3.298) (528) Interest paid and banking expenses 20 (3.440) (2.603) Cash flow generated (absorbed) from operations (A) Increase in intangible assets excluding exchange rate effect 2 (2.568) (2.738) Decrease in intangible assets excluding exchange rate effect Increase in tangible assets excluding exchange rate effect 1 (6.658) (6.582) Decrease in tangible assets excluding exchange rate effect Change in unconsolidated equity investments Acquisition of an equity investment (5.866) Cash flow generated (absorbed) from investments (B) (13.950) (9.005) Change in LT/ST financial receivables 5 (129) 563 Change in short-term and medium-/long-term financial debt (*) 12, (33.523) Financial foreign exchange differences 20 (5.517) (240) Purchase/sale of treasury shares (*) 11 0 (368) Change in reserves Exchange rate effect of financial assets/liabilities, equity and tangible and intangible assets (*) 11, 1, (384) Dividend payment 11 (17.443) (14.543) Cash flow generated (absorbed) by financial activity (C) (48.495) Net increase (decrease) in available cash (A+B+C) (*) (49.576) Net cash and cash equivalents at beginning of period (Note 10) Net cash and cash equivalents at end of period (Note 10)

23 CHANGES IN CONSOLIDATED SHAREHOLDERS' EQUITY (Note 11) Description Share capital and capital reserves Total share capital and capital reserves Cash-flow hedge reserve Translation reserve Reserves of Statement of Comprehensive Income Reserve for exchange rate adjustment Actuarial gains/(losses) reserve Held-for-sale financial assets reserve Total Reserves of Statement of Comprehensive Income Earnings carried forward Capital contribution reserve Legal reserve IAS reserve Retained earnings Total Profit for the year Total Group shareholders equity (92) (371) Allocation of earnings (40.547) 0 Dividends 0 0 (14.543) (14.543) (14.543) Translation reserve Change in IAS reserve Sale/purchase of treasury shares (368) 0 0 (368) Other changes Profit/(loss) as at Total other components of the statement of comprehensive income 49 (4.062) (1.982) (587) (6.582) 0 (6.582) (43) (371) (78) Description Share capital and capital reserves Reserves of Statement of Comprehensive Income Retained earnings Total share capital and capital reserves Cash-flow hedge reserve Translation reserve Reserve for exchange rate adjustment Actuarial gains/(losses) reserve Held-for-sale financial assets reserve Total Reserves of Statement of Comprehensive Income Earnings carried forward Capital contribution reserve Legal reserve IAS reserve Total Profit for the year Total Group shareholders equity (28) (371) Allocation of earnings (45.846) 0 Dividends 0 (17.443) (17.443) (17.443) Translation reserve Change in IAS reserve Sale/purchase of treasury shares Other changes 0 65 (65) 0 0 Profit/(loss) as at Total other components of the statement of comprehensive income (1.011) (17.552) (11.155) (25.503) 0 (25.503) (1.039) (371)

24 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS GENERAL INFORMATION Datalogic is the world leader in the markets of automatic data capture and process automation. The company is specialized in the design and production of fixed bar code readers, RFID, mobile computers, detection, measurement and security sensors, vision and laser marking systems. Its pioneering solutions contribute to increase efficiency and quality of processes in the areas of large-scale distribution, manufacturing, transport & logistics and health, along the entire value chain. Datalogic S.p.A. (hereinafter Datalogic, the Parent Company or the Company ) is a joint-stock company listed on the STAR segment of Borsa Italiana, with its registered office in Italy. The address of the registered office is Via Candini, 2 - Lippo di Calderara (BO). The Company is a subsidiary of Hydra S.p.A., which is also based in Bologna and is controlled by the Volta family. This Interim report on operations as at 30 September 2017 includes the figures of the Parent Company and its subsidiaries (defined hereinafter as the Group ), as well as its minority interests in associates. The publication of the Interim report on operations ended 30 September 2017 of the Datalogic Group was authorised by resolution of the Board of Directors dated 13 November PRESENTATION AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS The Interim report on operations as at 30 September 2017 was prepared pursuant to Art. 154 ter of Italian Legislative Decree no. 58/1998, and to the Consob provisions in this field. The International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) issued by the International Financial Reporting Interpretations Committee (IFRIC), endorsed by the European Commission and in force when this Report was approved, were applied for the evaluation and measurement of the accounting balances. This Report must therefore be read together with the Consolidated Financial Statements and the Notes as at 31 December 2016, which have been prepared in accordance with the IFRS endorsed by the European Union, approved at the Shareholders Meeting held on 4 May 2017 and available in the section Investor Relations Interim Report on Operations as at 30 September 2017 Explanatory Notes 22

25 GROUP STRUCTURE The consolidated financial statements include interim reports of the Parent Company and the companies that are directly and/or indirectly controlled by the Parent Company or on which the latter has a significant influence. Interim reports of subsidiaries were duly adjusted, as necessary, to render them consistent with the accounting criteria of the Parent Company. The companies included in the scope of consolidation as at 30 September 2017, as disclosed hereunder, were all consolidated on a line-by-line basis. Company Registered office Share capital Total shareholders equity ( /000) Profit/loss for the period ( /000) % Ownership Datalogic S.p.A. Bologna Italy Euro 30,392, ,881 21,246 Datalogic Real Estate France Sas Datalogic Real Estate Germany GmbH Paris France Euro 2,227,500 3, % Erkenbrechtsweiler- Germany Euro 1,025,000 1,393 (2) 100% Datalogic Real Estate UK Ltd Redbourn - England GBP 3,500,000 4, % Datalogic IP Tech S.r.l. Bologna Italy Euro 65,677 10,632 8, % Informatics Holdings Inc. Plano Texas - Usa $USA 9,996,000 14,402 (345) 100% Wasp Barcode Technologies Ltd Redbourn - England GBP % Datalogic Automation Asia Ltd. Hong-Kong - China HKD 7,000,000 (232) % Datalogic (Shenzhen) Industrial Automation Co. Ltd. Shenzhen - China CNY 2,136,696 3,000 1, % Datalogic Hungary Kft Fonyod-Hungary HUF 3,000,000 2, % Solution Net Systems, Inc. Quakertown, PA - USA USD 6,959 1, % Datalogic S.r.l. Bologna Italy Euro 10, ,272 14, % Datalogic ADC HK Ltd. Hong-Kong - China HKD 100, (13) 100% Datalogic Slovakia S.r.o. Trnava-Slovakia Euro 66,388 7,616 7, % Datalogic USA Inc. Eugene OR-Usa $USA ,887 4, % Datalogic do Brazil Ltda. Datalogic Tecnologias de Mexico S.de r.l.de c.v. Datalogic Scanning Eastern Europe GmbH Datalogic Australia Pty Ltd Sao Paulo - Brazil R$ 159,525 (3,133) (1,361) 100% Colonia Cuauhtemoc- Mexico $USA % Darmstadt-Germany Euro 25,000 4, % Mount Waverley (Melbourne)-Australia $AUD 3,188, % Datalogic Vietnam LLC Vietnam USD 3,000,000 74,889 17, % Datalogic Singapore Asia Pacific Pte Ltd. SOREDI Touch Systems GmbH Singapore SGD 100,000 1, % Olching (Munich)- Germany Euro 25,000 1, % Interim Report on Operations as at 30 September 2017 Explanatory Notes 23

26 The following companies were consolidated at equity as at 30 September 2017: Laservall Asia Co. Ltd Company Suzhou Mobilead Electronic Technology Co, Ltd (*) CAEN RFID S.r.l. (*) Registered office Hong-Kong - China China Viareggio LU - Italy Share capital Total shareholders equity ( /000) Profit/loss for the period ( /000) % Ownership HKD 2,860,000 3,174 (2) 50% CNY Euro 13,262, ,000 n.a. n.a. 25% n.a. n.a. 20% (*) Financial position not available as at 30 September 2017 The following companies were consolidated at cost as at 30 September 2017: Company Registered office Share capital Total shareholders equity ( /000) Profit/loss for the period ( /000) % Ownership Datasensor Gmbh Otterfing Germany Euro 150,000 0 (3) 30% Datalogic Automation AB Malmö, Sweden KRS 100, % Specialvideo S.r.l. Imola - Italy Euro 10, % Data are as at 31 December 2016 Change in scope of consolidation It is noted that on 6 July 2017, Datalogic S.p.A. finalized the closing for the acquisition of 100% share capital of the German company Soredi Touch Systems GmbH, leader in technologies for terminals, especially forklifts terminals, with registered office in Olching (Munich). As at 30 September 2017, this company was consolidated on a line-by-line basis and the net result considered was related to the 1 July September 2016 period (amounting to 76 thousand). BUSINESS COMBINATION Financing the acquisition The maximum total investment of Datalogic for the acquisition of Soredi Touch Systems GmbH, amounted to 10 million including the acquired net financial position and the best estimate of earn-outs depending on the achievement of sales and profitability targets to be paid over the next few years. For this transaction, Datalogic wholly acquired the company SOREDI Touch Systems GmbH, as well as the SOREDI trademark, recognised under item Intangible assets for 0.4 million. At closing, Datalogic S.p.A. paid 6 million cash and 2 million treasury shares (equal to 85,215 shares). Datalogic will make the residual payment, equal to 2 million, within Interim Report on Operations as at 30 September 2017 Explanatory Notes 24

27 Accounting effects of the acquisition Since the acquisition is a business combination, the Group has recognised it using the purchase method, pursuant to the revised IFRS 3. The acquisition took place for a total consideration of 10 million, with ancillary costs, although directly attributable to the combination, not considered as part of the acquisition cost but fully recognised in the income statement, pursuant to the revised IFRS 3. The preliminary goodwill emerging from this transaction amounted to 7.9 million. It is worth noting that the initial recognition of the business combination, recorded in the third quarter, was temporarily determined as the fair value of assets, liabilities or potential liabilities was still being measured. Moreover, the cost of business combinations was determined in a non-final way. As envisaged by IFRS 3, any possible adjustments shall be recognised within 12 months from the acquisition date. Interim Report on Operations as at 30 September 2017 Explanatory Notes 25