DELCLIMA SPA
Treviso, November 12, 2014
Press Release
DeLclima S.p.A.
The Board of Directors today approved the consolidated results at September 30, 2014: Consolidated Financial Highlights
../Revenues of Euro296.8 million, up 5.2%;
../EBITDA of Euro 32.2 million, increasing 13.3%;
../Group Net Profit of Euro 12.0 million, significantly improving on 2013 figures (€ 10.4 million excluding impairment of the goodwill in the Radiators business; € -11.1 million including the write-down);
../Net financial position (net debt) of Euro 2.7 million, improving on Euro 13.9 million at
September 30, 2013;
../The BoD has also approved a Dividend Policy the contents of which are explained at page 5.
The figures reported in the present document, including some percentage values, were rounded to the nearest Euro. Therefore, some totals in the tables may not coincide with the sum of constituent amounts.
In a change from the previous year, the current press release does not contain a separate indication of the third quarter 2014 (July 1 - September 30) figures, which have been omitted to provide greater clarity on the 30thSeptember
2014 figures.
First nine month operating performance
Operating results
Euro Millions | 9M 2014 | % on 9M 20131% on Change Change % Revenues Revenues |
Revenues | 296.8 | 100.0% 282.1 100.0% 14.7 5.2% |
Gross Profit | 105.3 | 35.5% 100.4 35.6% 4.9 4.9% |
EBITDA | 32.2 | 10.8% 28.4 10.1% 3.8 13.3% |
EBIT - pre-impairment Group Net Profit - pre-impairment | 24.2 12.1 | 8.1% 20.7 7.3% 3.5 16.7% 4.1% 10.4 3.7% 1.7 16.9% |
Write-downs | (0.1) | - (21.5) (7.6%) 21.4 n.a.% |
EBIT | 24.1 | 8.1% (0.8) (0.3%) 24.8 n.a.% |
Group Net Profit | 12.0 | 4.0% (11.1) (3.9%) 23.1 n.a.% |
Note 1: at the beginning of 2014, DeLclima, following an amendment to the agreements with the local partner and although maintaining the percentage holding unchanged, attained control of the Chat Union Climaveneta Company Limited (CUCCL) Group, jointly control until the end of the previous year. In addition, the amendments following the introduction of IFRS 11 required the restatement at equity of the amounts consolidated proportionally in the previous year. The figures and performance of the DeLclima Group would therefore be difficult to compare due to the line-by- line consolidation in the first nine months of 2014 of CUCCL and at equity in the same period of 2013: therefore the Directors prepared the condensed consolidated quarterly financial statements in accordance with IFRS, while also comparing results in the present press release at like-for-like consolidation scope, simulating a line-by-line consolidation of CUCCL for the previous period.
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The reported Operating results and key financial indicators are presented at page 4 of the present document.
Revenues
EuroMillions9M 2014 9M 20131Change Change %
Indoor Climate Control & Refrigeration (ICC&R) Radiators
Revenues
In the first nine months of 2014 revenues totalled Euro 296.8 million, improving 5.2% compared to same period of 2013, and include also the first consolidation of Powermaster Products and Powermaster Services (not separately reported given their relative materiality; in this regard reference should be made to the paragraph "Consolidation of the activities of Powermaster Products and Powermaster Service" in the Press Release of May 13, 2014).
Both the ICC&R and Radiators businesses contributed to growth.
The increase on the first nine months of 2013 reported revenues was 28.9% (please see page 4): Euro 14.7 million of this improvement stems from the business performance, with the issues at Note 1 accounting for the remainder.
EuroMillions9M 2014 9M 20131Change Change %
Europe 158.0 156.5 1.5 0.9% Asia 78.8 69.2 9.6 13.9% Rest of the world 12.6 11.9 0.7 6.2% ICC&R249.4237.611.85.0%
ICC&R business revenues grew across all regions, strongly in Asia and significantly in the Rest of the World.
The gross profit rose, while the revenue margin remained stable.
EBITDA amounted to Euro 32.2 million compared to Euro 28.4 million in the same period of 2013, with the revenue margin increasing to 10.8% from 10.1%. The EBITDA growth relates both to the ICC&R business, improving 5.9%, and the Radiators business, which reported substantial break- even. The Radiators business result was achieved on the basis of a turnaround strategy which involved the restructuring of the client portfolio and the acquisition of a major OEM commercial contract. In both sectors, the component and raw material procurement activities contributed significantly.
The increase on the nine months of 2013 reported figure was Euro 12.3 million (please see page 4)
and relates for Euro 3.8 million to the operating performance; the remainder is explained by Note
1.
Net financial charges amounted to Euro 1.3 million, reducing on Euro 1.8 million in the same period of 2013. In the first nine months of 2014 a one-off contribution of Euro 1.1 million derived from the revaluation of put and call options; in the first nine months of 2013 this totalled Euro 0.7 million.
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The financial statements, as outlined at Note 1, reported in the first nine months of 2013 an additional Euro 3.0 million as the share of the result from joint ventures measured at equity (please see attachment at page 7).
The Group Net Profit was Euro 12.0 million, significantly increasing on the same period of 2013, whether including or excluding write-downs made in 2013 principally on Radiators business goodwill. We recall that in the first nine months of 2013 one-off tax benefits of approximately Euro 0.9 million were reported.
Working capital
Euro Millions 30.09.2014
% on Rolling 12 month Revenues
31.12.20131% on
Revenues
30.09.20131
% on Rolling 12 month Revenues
Receivables 85.4 21.2% 75.4 19.4% 78.3 19.5% Inventories 57.5 14.3% 46.4 11.9% 58.2 14.5% Trade payables (98.8) (24.5%) (91.6) (23.6%) (98.3) (24.5%) NetOperatingWorkingCapital44.211.0%30.27.8%38.19.5%Other payables (net of receivables) (22.6) (5.6%) (17.7) (4.5%) (20.7) (5.2%) NetWorkingCapital21.65.4%12.63.2%17.44.3%
Net Working Capital on revenues at September 30, 2014 increased on the same period of 2013 due to the increase in the ratio of trade receivables on revenues. This is due to a different client/product mix.
EuroMillions30.09.2014 31.12.2013130.09.20131
Change
30.09.14 -
31.12.13
Change
30.09.14 -
30.09.13
Cash and cash equivalents 91.1 70.8 59.5 20.4 31.6
Other financial receivables 13.6 13.8 3.2 (0.2) 10.4
Current financial debt (87.7) (62.8) (42.9) (24.9) (44.8)
Net current financial debt 17.1 21.8 19.9 (4.7) (2.8)
Non-current financial debt (19.7) (28.8) (33.8) 9.0 14.1
Net financial position (2.7) (7.0) (13.9) 4.3 11.3
of which:
- positions with bank and other financial payables 2.3(3.9)(9.8)6.112.2
- fair value of derivative financial instruments and
options/payablesforinvestments(4.9) (3.1) (4.1) (1.8) (0.8)
The net financial position (net debt) at September 30, 2014 improved approximately Euro 11.3 million compared to September 30, 2013, thanks to the liquidity generated by operations, and approximately Euro 4.3 million compared to December 31, 2013. The net financial position (net debt) at September 30, 2014 also includes the effects from the acquisition of Powermaster Products and Powermaster Service.
The net financial position (net debt) at September 30, 2014 improved significantly compared to a reported Euro 25.2 million at December 31, 2013. This improvement relates for Euro 18.2 million to the effects described at Note 1 and for Euro 4.3 million to liquidity generated by the business.
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The tables below report the 2013 comparative figures as reported in the Financial Statements as per IFRS 11:
Operating results
Euro Millions | 9M 2014 | % on 9M 2013 % on Change Change % Revenues Revenues |
Revenues | 296.8 | 100.0% 230.2 100.0% 66.6 28.9% |
Gross Profit | 105.3 | 35.5% 79.1 34.4% 26.1 33.0% |
EBITDA | 32.2 | 10.8% 19.9 8.6% 12.3 62.0% |
EBIT | 24.1 | 8.1% (8.7) (3.8%) 32.9 n.a.% |
GroupNetProfit12.04.0%(11.1)(4.8%)23.1n.a.%
Equity and financial position
(*)Net of the financial items concerning the valuation at fair value of options and derivative contracts and payables for the acquisition of investments.
Update on the Recall
In relation to the "recall" campaign undertaken in 2012 by a number of companies of the French Group Adeo (Leroy Merlin, Bricoman, Weldom), concerning electric towel-warmer models manufactured by the subsidiary DL Radiators S.p.A. (see latterly the 2014 Half-Year Report and the press release of August 28, 2014), on September 11, 2014 the Douais Court of Appeal rejected the challenge by DL Radiators against the two attachment orders on trade receivables for the supply of products other than those subject to the recall, for an original Euro 14.3 million (subsequently reduced to Euro 13.4 million), issued in the initial months of 2013 by the Executing Judge of the Tribunale de Grande Instance de Lille on the request of Leroy Merlin and confirmed by the same court with judgment of September 16, 2013 (in this regard see the press release of September 18,
2013). However, it is noted that the two attachment orders were purely of a cautionary nature and the cases approving the appropriateness of the recall and the relative means and costs are proceeding.
Subsequent events to period-end
There were no significant events after the end of the quarter.
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RC Group acquires Aircotech
RC Group S.p.A. (subsidiary of DeLclima), a leading manufacturer with more than 50 years of experience and leadership in IT cooling and air-conditioning solutions, has completed the acquisition of Aircotech in October.
Aircotech was established in Belgium in 1991 and has been RC Group's exclusive distributor in
Belgium, France and Luxembourg for many years.
This acquisition, by strengthening RC Group's presence in a key area particularly relevant for IT
applications, enables RC Group to further improve its market share and margins.
Carlo Grossi, DeLclima CEO says: "The completion of this operation is a further successful step in an expansion strategy we have been pursuing for some time now throughout all DeLclima companies. The acquisition of Aircotech will enable RC Group to harness the growth potential available in Belgium and France and creates the ideal conditions to further develop the company's international presence".
Banca IMI S.p.A., specialist operator on DeLclima shares
At today's meeting, the Chief Executive Officer also informed the Board of the appointment of Banca IMI S.p.A. as the specialist operator on DeLclima shares for the execution of all actions necessary to support the share's liquidity; following the notice issued by Borsa Italiana on October
20, 2014, Banca IMI S.p.A. undertook this role from October 27, 2014.
Dividend Policy
DeLclima aims at granting a stable and significant dividend payment stream for its shareholders while providing increased long term value for their investment .
In the absence of exceptional events, the Board of Directors will propose to the yearly Shareholders' Meeting the distribution as a dividend of between 30.0% and 50.0% of Annual Profits, which is compatible with ensuring growth potential also through external lines, maintaining an appropriate and safe debt ratio.
Outlook
The Group's markets continue to be impacted by uncertainty. Due to the current global economic difficulties, demand visibility continues to be limited.
The latest market forecasts indicate for the final quarter of 2014 stable market demand in Europe and growth in the Middle East. Reliable forecasts are not yet available for Asia, in which the Group however expects to confirm significant year-on-year growth.
Other information
In accordance with Article 3 of Consob Resolution No. 18079 of January 20, 2012, the Board of
Directors on December 18, 2012 decided to avail with immediate effect of the opt-out faculty
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established by Article 70, paragraphs 8 and 71 of section 1-bis of Consob Regulation No 11971/99 (and subsequent amendments and integrations) and therefore employed the exception from publication of the required disclosure documents concerning significant merger, spin-off, share capital increase through conferment of assets in kind, acquisition, and sales operations.
Declaration of the executive officer responsible for the preparation of the company's financial statements
The executive officer responsible for the preparation of the company's financial statements, Vincenzo Maragliano, declares in accordance with Article 154 bis, paragraph 2, of the Consolidated Finance Act, that the accounting information contained in the present press release corresponds to the underlying accounting documents, records and accounting entries.
TheInterimFinancialReportatSeptember30,2014isavailableonthecompanywebsitewww.del-clima.com, inthe"InvestorsRelations"-"Investors"-"AnnualandInterimreports"-"2014"section,inadditiontotheauthorisedstoragemechanism1INFOavailableathttp://www.1info.it/www.1info.it("Documents"Section).
Contacts
DeLclima S.p.A.: VincenzoMaragliano,InvestorRelations,T:+3904224131
e-mail:mailto:vincenzo.maragliano@delclima.itvincenzo.maragliano@delclima.it
on the web:http://www.del-clima.com/http://www.del-clima.com
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ATTACHMENTS
Consolidated Financial Statements of DeLclima S.p.A. at September 30, 2014
Reclassified Consolidated Income Statement
Euro Millions September 2014 % on
Revenues
September 2013(*)% on
Revenues
Net revenues 296.8 100.0% 230.2 100.0%
change 28.9%
Consumption and manufacturing costs
(services and industrial payroll) (191.5) (64.5%) (151.1) (65.6%)
Gross Profit 105.3 35.5% 79.1 34.4%
Services costs, expenses and other
provisions (45.0) (15.2%) (37.0) (16.1%)
Payroll (non-industrial) (28.0) (9.5%) (22.2) (9.7%)
EBITDA 32.2 10.8% 19.9 8.6%
change 62.0%
Amortisation & Depreciation (8.0) (2.7%) (7.1) (3.1%) Write-downs (0.1) - (21.5) (9.3%)
EBIT 24.1 8.1% (8.7) (3.8%)
change n.a.%
Financial income 3.0 1.0% 2.0 0.9% Financial charges (4.3) (1.5%) (4.1) (1.8%)
Share of result of joint ventures and
associates (0.1) - 3,0 1.3%
Profit/(loss) before taxes 22.6 7.6% (7.8) (3.4%)
Income taxes (6.7) (2.2%) (3.3) (1.4%)
Net Profit/(loss) 16.0 5.4% (11.1) (4.8%)
Profit (loss) pertaining to minority interest (4.0) (1.3%) - -
Group Net Profit/(loss) 12.0 4.0% (11.1) (4.8%)
(*)Following the introduction from January 1, 2014 and retrospectively of IFRS 11 - Joint Arrangements, the figures at September
30, 2013 were restated, in compliance with IAS 8.
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Reclassified Consolidated Statement of Financial Position
Change
Change
Euro Millions 30.09.2014 31.12.2013(*)30.09.2013(*)30.09.2014 - 30.09.2014 -
31.12.2013
30.09.2013
- Intangible assets 189.1 166.0 166.5 23.1 22.6
- Tangible assets 90.1 86.1 91.1 4.0 (1.1)
- Financial assets 16.9 39.8 39.7 (22.8) (22.7)
- Deferred tax assets 5.1 2.9 2.8 2.2 2.3
Non-current assets 301.2 294.8 300.1 6.4 1.1
- Inventories 57.5 33.1 43.3 24.4 14.2
- Trade receivables 85.4 60.5 64.6 24.9 20.8
- Trade payables (98.8) (75.8) (82.7) (23.0) (16.0)
Net operating working capital 44.2 17.9 25.2 26.3 19.0
- Other payables (net of receivables) (22.6) (8.8) (8.6) (13.8) (13.9)
Net working capital 21.6 9.1 16.6 12.5 5.1
- Deferred tax liabilities (14.6) (13.2) (15.7) (1.4) 1.1
- Employee benefits (8.7) (8.0) (7.8) (0.8) (0.9)
- Other provisions (12.0) (13.4) (12.4) 1.4 0.4
Total non-current liabilities and provisions (35.3) (34.5) (36.0) (0.8) 0.7
Net capital employed 287.5 269.4 280.7 18.1 6.8
Net financial position 2.7 25.2 35.1 (22.5) (32.4)
Total Net Equity 284.9 244.2 245.6 40.7 39.2
Total debt and equity 287.5 269.4 280.7 18.1 6.8
(*)Following the introduction from January 1, 2014 and retrospectively of IFRS 11 - Joint Arrangements, the figures at September
30, 2013 and December 31, 2013 were restated, in compliance with IAS 8.
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Reclassified Consolidated Cash Flow Statement
Euro Millions September 2014
September 2013
(*)
(9 months)
(9 months)
Cash flow from operating activities excluding Adeo effect 17.5 19.4
Adeo financial effect - (11.5) Cash flow from investment activities (6.7) (4.9)
Operating net cash flow 10.83.0
Change in consolidation scope (4.8) -
Cash flow generated (absorbed) from non-recurring movements (4.8)-
Financial charges in the period (0.9)(2.0)
Cash flow from changes in net equity (0.8) (1.1)
Cash flow generated (absorbed) from net equity movements (0,8)(1.1)
Cash flow in the period 4.3(0,1)
Opening net financial position (25.2) (24.5) IFRS 11 and control JV China effect 18.2 (10.5)
Closing net financial position (2.7)(35.1)
(*)Following the introduction from January 1, 2014 and retrospectively of IFRS 11 - Joint Arrangements, the figures at September
30, 2013 and December 31, 2013 were restated, in compliance with IAS 8.
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