PININFARINA S.P.A. PRESS RELEASE
(Translation from the Italian original which remains the definitive version) Pininfarina Group - Interim financial report Events after the reporting period Going concern and outlook for 2015
Cambiano, 30 July 2015 - The Board of Directors of Pininfarina S.p.A., chaired by Paolo Pininfarina, met today and approved the Group's interim financial report for the first half of 2015. The key financial figures of the Pininfarina Group as at and for the first six months of 2015 and
2014 are as follows:
(€'million) | FIRST HALF 2015 | FIRST HALF 2014 | 2014 | Variation * |
Value of production | 42.1 | 40.0 | 2.1 | |
EBITDA | -0.3 | -0.5 | 0.2 | |
EBIT | -2.0 | -2.1 | 0.1 | |
Loss for the period | -4.8 | -4.5 | -0.3 | |
Net financial debt | -52.7 | -51.6 | -44.8 | -7.9 |
Equity | 23.3 | 25.0 | 27.9 | -4.6 |
* Variations in the statement of financial position figures relate to the corresponding figures at 31 December 2014.
EBITDA is the operating profit or loss gross of amortisation, depreciation and provisions. EBIT is the operating profit or loss.
Pursuant to article 154-bis.2 of the Consolidated finance act, the manager in charge of financial reporting, Gianfranco Albertini, states that the financial disclosures provided in this press release are consistent with the relevant documentation, ledgers and accounting records.
The most significant issues that arise from an analysis of the consolidated figures for the first six months of 2015 are summarised below:
the value of production (revenue) has increased by 5% compared to the corresponding period of
2014 thanks to the contribution of the design and engineering services segment;
EBITDA and EBIT are still negative, but show a slight improvement compared to the corresponding period of the previous year, especially EBITDA which is close to break-even;
compared to the first six months of 2014, the Group's Italian automotive operations reduced their loss, the German subsidiaries' profit margins have improved, while the contribution of the Chinese operations and industrial design activities has decreased;
the loss for the period increased by roughly 7% due to the contraction in financial income following the partial liquidation of assets under management at the end of 2014;
the Group's financial position at 30 June 2015 deteriorated compared to 31 December 2014, as a result of the loss for the period and the reduction in liquidity due to net working capital trends and the recognition of unrealised losses, which increased the carrying amount of the parent's debt.
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Specifically, value of production came to €42.1 million for the reporting period compared to €40 million for the corresponding period of 2014 (+5.3%).
EBITDA is a negative €0.3 million, better than the €0.5 million loss of the first half of 2014. The latter figure benefitted from gains on the sale of assets of €0.7 million compared to roughly €50 thousand for the first six months of 2015. EBIT decreased by approximately €0.1 million to €2.0
million.
Net financial expense increased to €2.8 million, up by €0.6 million on the corresponding period of the previous year. The worsening is mainly due to the less than proportionate decrease in interest
expense (realised and unrealised), calculated on a smaller amount of loans and borrowings due to
the repayments made through to December 2014, compared to the reduction in the fair value gains on securities in portfolio, following the sale of some securities at the end of 2014.
The loss before taxes amounts to €4.7 million, compared to €4.3 million for the six months ended
30 June 2014. The loss for the period (net of taxes of €53 thousand) totals €4.8 million, up by €0.3 million on the €4.5 million loss for the first half of 2014.
Net financial debt at €52.7 million is higher than the €44.8 million at 31 December 2014 (and €51.6 million at 30 June 2014). This €7.9 million increase is mainly due to net working capital trends and the increase in the carrying amount of debt following recognition of unrealised losses. In July, the parent collected €7.3 million in relation to the tax litigation (see the 'Events after the reporting period' section).
Equity attributable to the owners of the parent decreased from €27.9 million at 31 December 2014 to €23.3 million (€25 million at 30 June 2014), mostly as a result of the loss for the period.
The headcount decreased by 1.6% (-11 units) from 667 at 30 June 2014 to 656.
In addition to the sale of spare parts for cars manufactured in previous years and business lease income, this segment includes the costs of the support and property management functions of the parent, Pininfarina S.p.A.. Value of production decreased by 5.7% from €3.5 million for the first half of 2014 to €3.3 million.
Segment EBIT worsened by €1 million, or 22.2%, to a negative €5.5 million from a negative €4.5 million in the corresponding period of the previous year. The main reasons behind this higher loss
are the inexistence of the positive effect of the gains on the sale of assets recognised in 2014 (€0.7
million) and the incurrence of higher costs for the ongoing restructuring and litigation.
This segment, comprising the design and engineering businesses, recognised value of production of €38.8 million, up by 6.3% compared to the first half of 2014 (€36.5 million).
Segment EBIT amounted to a positive €3.5 million, an increase from the €2.4 million for the six
months ended 30 June 2014, thanks to a generalised improvement in profitability, seen mainly by the parent.
The key financial figures of the parent, Pininfarina S.p.A., are summarised below:
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(€'million) | FIRST HALF 2015 | FIRST HALF 2014 | 2014 | Variation * |
Value of production | 24.5 | 23.8 | 0.7 | |
EBITDA | -1.6 | -1.9 | 0.3 | |
EBIT | -2.7 | -3.2 | 0.5 | |
Loss for the period | -4.4 | -4.3 | -0.1 | |
Net financial debt | -56.4 | -52.6 | -50.1 | -6.3 |
Equity | 24.6 | 27.9 | 28.9 | -4.3 |
* Variations in the statement of financial position figures relate to the corresponding figures at 31 December 2014.
EBITDA is the operating profit or loss gross of amortisation, depreciation, provisions, impairment losses, reversals of impairment losses and utilisation of provisions. EBIT is the operating profit or loss.
Information required by Consob (the Italian Commission for listed companies and the stock exchange) pursuant to article 114.5 of Legislative decree no. 58/98
1) The tables showing the net financial debt of the Pininfarina Group and Pininfarina S.p.A., with separate classification of current and non-current items, are attached hereto.
2) The Group has no past-due liabilities (of a commercial, financial, tax or social security nature). No actions against the Group have been filed by creditors.
3) The tables showing the Group's and parent's related party transactions are attached
hereto.
4) Compliance with the financial covenants in force for the current reporting year will be checked when the annual consolidated financial statements at 31 December 2015 are approved. According to the outlook for 2015, the Group will not reach the 2015 EBITDA level required by the existing Rescheduling Agreement, while the covenant on the net financial position at 31 December 2015 does not pose a problem.
5) The parent's debt restructuring plan is proceeding in accordance with the current agreements.
6) Reference should be made to that disclosed in the 'Going concern and 2015 outlook'
section as regards the business plan's implementation.
On 14 July 2015, the tax authorities returned the advances paid by the parent for the registration tax litigation to it. The litigation referred to the agreements signed in Lugano (Switzerland) in 2008 and the advances had been taken by the tax authorities as a preventive measure (€5.7 million, including interest).
On 17 July 2015, Pincar S.r.l., the parent of Pininfarina S.p.A., repaid the two loans received from
Pininfarina S.p.A. (principal of €1.6 million) that it had required to make the advance payment required by law to appeal against the orders for payment of taxes and decisions to impose penalties received from the tax authorities in 2013 and 2014. This litigation also referred to the non-payment of registration tax on agreements signed in Lugano (Switzerland) in 2008 and 2009 and, like above, the advances had been taken by the tax authorities as a preventive measure.
There are no other significant events that occurred after the reporting period.
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GOING CONCERN AND OUTLOOK FOR 2015 Going concern
The figures for the period show an improvement in terms of the Group's value of production and EBIT compared to the corresponding period of 2014. However, they also confirm that disclosed by the directors in the 2014 annual report, namely, that the Group's growth and cash flows from operations are not in line with the 2011-2018 business plan's medium term forecasts.
In the light of the above and together with the ultimate parent, Pincar S.r.l., and the lending institutions, the Board of Directors has taken steps in order to definitively secure the Group, by
finding the resources necessary for its growth and stabilising its cash flows with new business and commercial opportunities in the strategic sectors in which it operates.
This includes the ongoing negotiations with the Indian group Mahindra for the sale of the Pininfarina S.p.A. shares held by Pincar S.r.l., currently being conducted with the active participation of all the interested parties to finalise the transaction.
Although it is confident about the positive outcome of these negotiations, the Board of Directors is however preparing a new stand alone business plan that better reflects the Group's current ability to generate the cash flows necessary to repay its remaining debt and ensure its capitalisation. It plans to present the outline of this business plan to the Group's banks in the last quarter of this year.
Considering all that discussed above and evaluating medium-term uncertainties, the Board of Directors continues to reasonably expect that the Group and the parent are nonetheless able to continue as going concerns in the foreseeable future and prepared the condensed interim consolidated financial statements on a going concern basis.
Consolidated value of production for 2015 is expected to be in line with the 2014 figure and the
EBIT is forecast to be negative.
Net financial debt at the end of 2015 is expected to worsen compared to 31 December 2014, due principally to net working capital trends and the accumulated unrealised losses resulting from the
measurement of financial liabilities at amortised cost.
Gianfranco Albertini, CFO and Investor Relations, tel. +39.011.9438367
Francesco Fiordelisi, Corporate and Product Communication Manager, tel. +39.011.9438105/335.7262530
Studio Mailander:Carolina Mailander, tel. +39.011.5527311/335.6555651
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RECLASSIFIED FINANCIAL STATEMENTS
The reclassified financial statements group the figures presented in the legally-required statements to improve their understanding, without however changing their presentation logic.
The terms 'EBITDA' and 'EBIT' as used in the reclassified financial statements are the 'operating profit or loss, gross of amortisation, depreciation, provisions, impairment losses, reversals of impairment losses and utilisation of provisions', and 'operating profit or loss'
presented in the IFRS financial statements, respectively.
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PININFARINA GROUP Reclassified income statement (€'000)First half
2015 %
First half
2014 %Variation 2014
Revenue from sales and services 37,844 89.85 36,372 90.87 1,472 84,179
Change in inventories and contract work in progress 1,687 4.01 1,307 3.26 380 (2,313) Other revenue and income 2,575 6.15 2,346 5.87 229 4,705
Value of production 42,106 100.00 40,025 100.00 2,081 86,571
Net gains on the sale of non-current assets 50 0.12 705 1.76(655) 705
Materials and services (*) (17,382) (41.28) (15,736) (39.32) (1,646) (31,720) Change in raw materials 45 0.12 (556) (1.38) 601 (622)
Value added 24,819 58.94 24,438 61.06 381 54,934
Labour cost (**) (25,157) (59.75) (24,899) (62.21) (258) (47,901)
EBITDA (338) (0.80) (461) (1.15) 123 7,033
Amortisation and depreciation (1,704) (4.05) (1,678) (4.19) (26) (3,348) (Additions to)/utilisation of provisions and impairment losses 78 0.18 17 0.04 61 261
EBIT (1,964) (4.66) (2,122) (5.30) 158 3,946
Net financial expense (2,750) (6.52) (2,192) (5.47) (558) (4,748) Share of profit of equity-accounted investees 7 0.02 5 0.01 2 8
Loss before taxes (4,707) (11.18) (4,309) (10.76) (398) (794) Income taxes (53) (0.13) (154) (0.39) 101 (469)Loss from continuing operations (4,760) (11.30) (4,463) (11.15) (297) (1,263) Loss from discontinued operations - - - - - -
Loss for the period/year (4,760) (11.30) (4,463) (11.15) (297) (1,263)
(*) Materials and services are net of utilisations of the provisions for product warranty and risks (€44 thousand and €93 thousand for the first six months of 2014 and 2015, respectively).
(**) Labour cost is net of utilisations of the restructuring and other provisions (€1,647 thousand and €285 thousand for the first six
months of 2014 and 2015, respectively).
As required by Consob resolution no. DEM/6064293 of 28 July 2006, a reconciliation of the data in the condensed interim consolidated financial statements with those in the reclassified schedules is provided below:
- Materials and services include raw materials and components, other variable production costs, external variable engineering services, exchange rate gains and losses
and other expenses.
- Amortisation and depreciation comprise amortisation of intangible assets and depreciation of property, plant and equipment and investment property.
- (Additions to)/utilisation of provisions and impairment losses include additions to/utilisation of provisions, impairment losses and inventory write-downs.
- Net financial expense comprises net financial expense and dividends.
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Net non-current assets (A)
30.06.2015 31.12.2014 Variation 30.06.2014
Net intangible assets 2,540 2,676 (136) 2,698
Net property, plant and equipment and investment property 60,697 60,845 (148) 61,951
Equity investments 318 311 7 307
Total A 63,555 63,832 (277) 64,956
Working capital (B)
Inventories 5,381 3,649 1,732 7,337
Net trade receivables and other assets 35,113 31,286 3,827 33,457
Assets held for sale - - - -
Deferred tax assets 1,071 1,036 35 1,015
Trade payables (15,060) (12,246) (2,814) (14,335) Provisions for risks and charges (375) (847) 472 (977) Other liabilities (*) (8,820) (8,674) (146) (9,611) Total B 17,310 14,203 3,107 16,886
Net invested capital (C=A+B) 80,865 78,035 2,830 81,842
Post-employment benefits (D) 4,816 5,347 (531) 5,239
Net capital requirements (E=C-D) 76,049 72,688 3,361 76,603
Equity (F) 23,346 27,888 (4,542) 24,955
Net financial debt (G)
Non-current loans and borrowings 71,478 69,116 2,362 81,052
Net current financial (position) debt (18,775) (24,316) 5,541 (29,404)
Total G 52,703 44,800 7,903 51,648
Total as in E (H=F+G) 76,049 72,688 3,361 76,603
(*) Other liabilities include the following items: deferred tax liabilities, other financial liabilities, current tax liabilities and other liabilities.
PININFARINA GROUP Net financial debt (€'000)30.06.2015 31.12.2014 Variation 30.06.2014
Cash and cash equivalents 16,706 24,424 (7,718) 13,175
Current assets held for trading 16,017 16,359 (342) 30,711
Current loans and receivables - - - - Loan assets - related parties - - - - Current bank overdrafts - - - - Current finance lease liabilities (5,827) (5,827) - (5,827) Current portion of bank loans and borrowings (8,121) (10,640) 2,519 (8,655) Net current financial position (debt) 18,775 24,316 (5,541) 29,404
Non-current loans and receivables - third parties - - - - Non-current loans and receivables - related parties 1,824 1,770 54 1,119
Non-current held-to-maturity investments - - - - Non-current finance lease liabilities (45,038) (43,547) (1,491) (47,731) Non-current bank loans and borrowings (28,264) (27,339) (925) (34,440) Non-current loans and borrowings (71,478) (69,116) (2,362) (81,052)
NET FINANCIAL DEBT (52,703) (44,800) (7,903) (51,648)
Cash and cash equivalents include a restricted account of €5,000,000.
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PININFARINA S.p.A. Reclassified income statement(€'000)
First half | First half | ||||
2015 | % | 2014 | % | Variation | 31.12.2014 |
Revenue from sales and services 21,582 88.25 21,235 89.24 347 51,228
Change in inventories and contract work in progress 714 2.92 600 2.52 114 (2,316) Other revenue and income 2,160 8.83 1,961 8.24 199 3,933
Value of production 24,456 100.00 23,796 100.00 660 52,845
Net gains on the sale of non-current assets 50 0.20 705 2.96 ( 655) 705
Materials and services (*) (13,520) (55.28) (13,122) (55.14) (398) (26,342) Change in raw materials 45 0.18 (556) (2.34) 601 (622)
Value added 11,031 45.11 10,823 45.48 208 26,586
Labour cost (**) (12,592) (51.49) (12,757) (53.61) 165 (23,797)
EBITDA (1,561) (6.38) (1,934) (8.13) 373 2,789
Amortisation and depreciation (1,256) (5.14) (1,275) (5.36) 19 (2,518) (Additions to)/utilisation of provisions and impairment losses 94 0.38 30 0.13 64 311
EBIT (2,723) (11.14) (3,179) (13.36) 456 582
Net financial expense (1,740) (7.11) ( 1,207) (5.07) (533) (3,771) Loss before taxes (4,463) (18.25) (4,386) (18.43) (77) (3,189) Income taxes 111 0.45 118 0.50 (7) 217
Loss for the period/year (4,352) (17.80) (4,268) (17.94) (84) (2,972)
(*) Materials and services are net of utilisations of the provisions for product warranty and risks (€44 thousand and €93 thousand for the first six months of 2014 and 2015, respectively).
(**) Labour cost is net of utilisations of the restructuring and other provisions (€1,647 thousand and €285 thousand for the first six
months of 2014 and 2015, respectively).
As required by Consob resolution no. DEM/6064293 of 28 July 2006, a reconciliation of the data in the interim separate financial statements with those in the reclassified schedules is provided below:
- Materials and services include raw materials and components, other variable production costs, external variable engineering
services, exchange rate gains and losses and other expenses.
- Amortisation and depreciation comprise amortisation of intangible assets and depreciation of property, plant and equipment
and investment property.
- (Additions to)/utilisation of provisions and impairment losses include additions to/utilisation of provisions, impairment losses and inventory write-downs.
- Net financial expense comprises net financial expense and dividends.
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Net non-curre nt assets (A)
PININFARINA S.p.A. Reclassified statement of financial position(€'000)
30.06.2015 31.12.2014
Net intangible assets 1,026 1,102
Net property, plant and equipment and investment property 51,465 51,647
Equity investments 21,578 21,578 - 21,578
Total A 74,069 74,327 (258) 75,202
Working ca pital (B)
Inventories 4,091 3,333 758 6,315
Net trade receivables and other assets 26,733 24,512 2,221 24,988
Trade payables (12,951) (11,384) (1,567) (13,234) Provisions for risks and charges (375) (847) 472 (977) Other liabilities (6,227) (6,250) 23 (7,118) Total B 11,271 9,364 1,907 9,974
Net inve sted capital (C=A+B) 85,340 83,691 1,649 85,176
Post-employment benefits (D) 4,254 4,711 (457) 4,685
Net capital requirements (E=C-D) 81,086 78,980 2,106 80,491
Equity (F) 24,646 28,869 (4,223) 27,858
Net fina ncial de bt (G)
Non-current loans and borrowings 68,862 66,321 2,541 77,987
Net current financial (position) debt (12,422) (16,210) 3,788 (25,354)
Total G 56,440 50,111 6,329 52,633
Total as in E (H=F+G) 81,086 78,980 2,106 80,491
PININFARINA S.p.A. Net financial debt(€'000)
30.06.2015 31.12.2014 Va riation 30.06.2014
Cash and cash equivalents 10,651 16,616 (5,965) 9,389
Current assets held for trading 16,017 16,359 (342) 30,711
Current loans and receivables - - - - Loan assets - related parties - - - - Current bank overdrafts - - - - Current finance lease liabilities (5,827) (5,827) - (5,827) Loans and borrowings - related parties (298) (298) - (264) Current portion of bank loans and borrowings (8,121) (10,640) 2,519 (8,655) Net current financial position (de bt) 12,422 16,210 (3,788) 25,354
Non-current loans and receivables - third parties - - - -
Non-current loans and receivables - related parties 4,140 4,265 (125) 3,884
Non-current held-to-maturity investments - - - - Non-current finance lease liabilities (45,038) (43,547) (1,491) (47,731) Non-current bank loans and borrowings (27,964) (27,039) (925) (34,140) Non-current loans and borrowings (68,862) (66,321) (2,541) (77,987)
NET FINANCIAL DEBT (56,440) (50,111) (6,329) (52,633)
Cash and cash equivalents include a restricted account of €5,000,000.
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Related party transactions for the six months ended 30 June 2015 - Pininfarina GroupThe table below, which is presented pursuant to Consob communication no. DEM/6064293 of 28 July 2006, summarises related party transactions, including intragroup transactions. These transactions were carried out at market conditions, consistent with the nature of the goods exchanged or services provided. They were neither atypical nor unusual for the purposes of the above-mentioned communication.
Commercia l Financial Operating Financia l
Assets Liabilities Assets Liabilitie s Re ve nue Expe nse Income Expense
Pincar S.r.l. - - 1,692,517 - - - 52,748 -
Goodmind S.r.l. 10,749 10,880 131,982 - 26,749 19,880 1,981 -
Tota l 10,749 10,880 1,824,499 - 26,749 19,880 54,729 -
In addition to the above figures:
- Studio Professionale Pavesio e Associati, related to the director Carlo Pavesio, provided legal assistance to the parent and Pininfarina Extra S.r.l. for total fees of €214,279, respectively;
- Pantheon Italia S.r.l., related to the director Roberto Testore, provided commercial assistance for total fees of €24,070;
- Giovanni Pininfarina, son of the chairman of the Board of Directors, Paolo Pininfarina, provided commercial assistance for total fees of €2,100.
Directors' and statutory auditors' feesFees to the parent's directors and statutory auditors for their respective duties, including to other consolidated companies, are as follows:
(€'000)
First half
2015
First half
2014
Directors 489 486
Statutory auditors 56 56
Total 545 542
Related party transactions for the six months ended 30 June 2015 - Pininfarina S.p.A.Commercial Fina ncia l Opera ting Fina ncia l
Asse ts Liabilitie s Assets Liabilitie s Re venue Ex pe nse Income Ex pense
Pincar S.r.l. | - - 1,692,517 - - | - 52,748 | - |
Pininfarina Extra S.r.l. | 115,189 11,851 697,126 297,581 267,838 | 19,638 1,001,040 | - |
Goodmind S.r.l. | - - - - 16,000 | - - | - |
Pininfarina Deutschland GmbH | - - - - - | - 996 | - |
mpx Entwicklung GmbH Monaco - 940,375 1,750,000 - - 2,085,803 11,663 -
Pininfarina Automotive Engineering (Shanghai) Co Ltd 616,065 85,360 - - 405,371 115,360 - -
Tota l 731,254 1,037,586 4,139,643 297,581 689,209 2,220,801 1,066,447 -
The financial assets and liabilities with Pininfarina Extra S.r.l. relate to the domestic tax consolidation agreement.
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In addition to the above figures, Studio Professionale Pavesio e Associati, related to the director Carlo Pavesio, provided legal assistance to the parent for total fees of €214,279 and Pantheon Italia S.r.l., related to the director Roberto Testore, provided commercial assistance for total fees of €24,070.
Fees to directors, statutory auditors and key management personnel:Fees to the parent's directors and statutory auditors for their respective duties are as follows:
(€'000)
First half
2015
First half
2014
Directors 309 306
Statutory auditors 51 51
Total 360 357
The total fees to Pininfarina S.p.A.'s key management personnel approximate €0.7 million for the first six months of 2015.
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