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Esprinet Group
Interim management statement as at 30 September 2014
Approved by the Board of Directors on 13 November 2014
Parent company: Esprinet S.p.A. VAT number: IT 02999990969 Monza/Brianza Companies Register Number and tax code: 05091320159 Economic Administrative Index 1158694 Head Office and Admin.ve Headquarters Via Energy Park, 20 - 20871 Vimercate (MB) Share capital subscribed and paid up as at 30/09/2014: Euro 7,860,651 www.esprinet.com - [email protected]
Interim Management Statement as at 30 September 2014
Esprinet Group page 2
Company officers
Board of Directors:
(Mandate expiring with approval of accounts for the year ending 31 December 2014)
Chairman Francesco Monti (SC)
Deputy Chairman & CEO Maurizio Rota (SC)
CEO Alessandro Cattani (SC)
Director Giuseppe Calì (SC)
Director Stefania Calì (SC)
Director Valerio Casari
Director Andrea Cavaliere (InD) (CRC) (RAC)
Director Mario Massari (InD) (CRC) (RAC)
Director Marco Monti
Director Umberto Giovanni Quilici (InD)
Director Chiara Mauri (InD) (CRC)
Director Cristina Galbusera (InD) (RAC)
Secretary Paolo Fubini Studio Fubini Jorio Cavalli
Notes: (InD): Indipendent Director (CRC): Control and Risk Commitee (RAC): Remuneration and Appointments Commitee (SC): Strategy Commitee
Board of Statutory Auditor:
(Mandate expiring with approval of financial statement for the year ending 31 December 2014)
Chairman Giorgio Razzoli
Permanent Auditor Emanuele Calcaterra
Permanent Auditor Mario Conti
Alternate Auditor Silvia Santini
Alternate Auditor Maurizio Rusconi
Independent Auditors:
(Mandate expiring with approval of accounts for the year ending 31 December 2018)
Reconta Ernst & Young S.p.A.
Waiver of the obligations to provide information on extraordinary transactions
Pursuant to article 70, section 8, and article 71, section 1-bis, of the Issuers’ Regulations issued by Consob, on 21 December 2012 the Board of Directors of Esprinet S.p.A. resolved to make use of the right to waive the obligations to publish the information documents stipulated for significant transactions relating to mergers, demergers, increases in capital by the contribution of goods in kind, acquisitions and transfers.
Interim Management Statement as at 30 September 2014
Esprinet Group page 3
CONTENTS
Company officers page 2
1 Summary of the Group's economic and financial results page 4
2 Contents and format of the interim management statement page 5
2.1 Consolidation policies, accounting principles and valuation criteria
2.2 General information about the Esprinet Group
2.3 Consolidation area
2.4 Principal assumptions, estimates and roundings
2.5 Restatements of previous published financial statements
3 Consolidated income statement and notes page 8
3.1 Consolidated separate income statement
3.2 Consolidated statement of comprehensive income
3.3 Notes on financial performance for the Group
3.4 Notes to consolidated income statement items
Sales
- Sales by geographical area
- Sales by products and services
- Sales by product family and customer type
Gross profit
Operating costs
Reclassification by nature of some categories of operating costs
- Labour costs and number of employees
- Amortisation, depreciation , write-downs and accruals for risks
Finance costs net
Income tax expenses
Net income and earnings per share
Income/(loss) from disposal groups
4 Consolidated statement of financial position and notes page 21
4.1 Consolidated statement of financial position
4.2 Notes to the most significant statement of financial position items
4.2.1 Gross investments
4.2.2 Net financial position and covenants
4.2.3 Goodwill
5 Consolidated statement of changes in net equity page 24
6 Consolidated statement of cash flows page 25
7 Relationship with related parties page 27
8 Segment information page 27
8.1 Introduction
8.2 Separate income statement by operating segments
9 Atypical and/or unusual operations page 32
10 Non-recurring significant events and operations page 32
11 Significant events occurred in the period page 32
12 Subsequent events page 34
13 Outlook page 34
14 Declaration of the officer responsible for financial reports page 35
Interim Management Statement as at 30 September 2014
Esprinet Group page 4
1. Summary of the Group’s economic and financial results
(1)
EBITDA is equal to the operating income (EBIT) gross of amortisation and depreciation and accruals for risks and charges. (2)
Different amounts from those published in the Interim Management Statement as at 30 September 2013 due to reclassification, recurred even in the comparative figures, of the profit and loss values into ‘Income/loss from disposal Group’ item.
(3) Sum of consolidated net profit before minority interests and amortisation and depreciation.
(4) Sum of current assets, non-current assets held for sale and current liabilities, except of short-term net financial position.
(5) Data/indicator referring as at 31 December 2013.
(6) Sum of trade receivables, inventory and trade payables.
(7) Non-current assets except of non-current financial assets.
(8) Equal to the sum of the net working capital plus fixed assets net of non-current liabilities except of financial liabilities.
(9) Equal to net equity less goodwill and intangible assets.
(10) Sum of borrowings and short term financial liabilities net of cash and cash equivalents, assets/liabilities for financial derivatives and financial receivables.
(11) Average of the balance at period beginning and end of companies consolidated.
The economic and financial results and those of the relative period of comparison have been measured by applying International Financial Standards (‘IFRSs’), adopted by the EU during the reference period. In the table above, in addition to the conventional economic and financial indicators laid down by IFRSs, some ‘alternative performance indicators’, not defined the IFRSs, are presented. These ‘alternative performance indicators’, consistently presented in previous periodic Group reports, are not intended to substitute IFRSs indicators; they are used internally by Management for measuring and controlling the Group’s profitability, performance, capital structure and financial position. As required by CESR (Committee of European Securities Regulators) recommendation no. CESR/05 178b, the basis of calculation is provided.
% var. % var.
14/13 14/13
Profit & Loss
Sales 1,535,383 100.0% 1,391,312 (2) 100.0% 10% 502,413 100.0% 431,012 (2) 100.0% 17%
Gross profit 96,287 6.3% 85,018 (2) 6.1% 13% 31,274 6.2% 25,569 (2) 5.9% 22%
EBITDA (1) 26,874 1.8% 23,065 (2) 1.7% 17% 7,387 1.5% 6,369 (2) 1.5% 16%
Operating income (EBIT) 24,313 1.6% 20,825 (2) 1.5% 17% 7,234 1.4% 5,637 (2) 1.3% 28%
Profit before income tax 22,956 1.5% 19,187 (2) 1.4% 20% 6,206 1.2% 5,154 (2) 1.2% 20%
Net income 17,350 1.1% 13,498 1.0% 29% 4,086 0.8% 3,181 0.7% 28%
Financial data
Cash flow (3) 19,748 15,474 (2)
Gross investments 2,211 1,961
Net w orking capital (4) 223,108 34,364 (5)
Operating net w orking capital (6) 246,497 49,457 (5)
Fixed assets (7) 98,836 96,753 (5)
Net capital employed (8) 309,631 118,746 (5)
Net equity 265,635 259,826 (5)
Tangible net equity (9) 189,403 185,840 (5)
Net f inancial debt (10) 43,996 (141,652) (5)
Main indicators
Net f inancial debt / Net equity 0.2 (0.5) (5)
Net f inancial debt / Tangible net equity 0.2 (0.8) (5)
EBIT / Finance costs - net 18.2 12.8 (2)
EBITDA / Finance costs - net 20.1 14.1 (2)
Net f inancial debt/ EBITDA 0.8 (3.5) (5)
Operational data
N. of employees at end-period 979 976
Avarage number of employees (11) 978 974
Earnings per share (euro)
- From continuing operations - basic 0.30 0.24 25% 0.08 0.05 60%
- Basic 0.34 0.26 (2) 31% 0.08 0.06 (2) 33%
- From continuing operations - diluted 0.30 0.24 25% 0.08 0.05 60%
- Diluted 0.33 0.26 (2) 27% 0.08 0.06 (2) 33%
2013 %
Q3
(euro/000) notes % notes %
9 months
2014 2013 2014 % notes
Interim Management Statement as at 30 September 2014
Esprinet Group page 5
2. Contents and format of the interim management statement
2.1 Consolidation policies, accounting principles and valuation criteria
Ordinary shares in Esprinet S.p.A. (ticker: PRT.MI) have been listed in the STAR segment of the MTA market of Borsa Italiana S.p.A., the Italian Stock Exchange since July 27, 2001. Due to this, the herein Esprinet Group consolidated interim management statement, non-audited, has been drawn up as per Article 154-ter (Financial Reports) of the Legislative Decree No. 58/1998 (T.U.F. – Finance Consolidation Act). Financial data presented in this document result from the application of the same accounting principles (IFRSs - International Financial Reporting Standards), consolidation principles and methods, valuation criteria, conventional definitions and accounting estimates used in previous consolidated financial statements for interim and annual periods, unless otherwise indicated. Pursuant to Consob Communication No. DEM/8041082 of 30 April 2008 (‘Interim financial report of companies listed in Italy’) the financial data in said report is comparable with that shown in previous reports and is confirmed in the financial statements published in the annual report as at 31 December 2013 to which reference should be made for all the explanatory notes to the annual report.
2.2 General information about the Esprinet Group
The chart below illustrates the structure of the Esprinet Group as at 30 September 2014:
9.5%
100% 60% 100%
100% 100% 25%
100%
Celly S.p.A.V-Valley S.r.l. Esprinet Iberica S.L.U.
Esprinet S.p.A. Assocloud S.r.l.
Celly Pacific Limited
Celly Nordic OYCelly Swiss S.a.g.l. Ascendeo S.a.s.
Esprinet S.p.A. (hereafter ’Esprinet’ or the ’parent company’) and its subsidiaries (the ‘Esprinet Group’ or the ‘Group’) operate in Italy and Spain. In Italy and in Spain, the Group operates solely in the ‘business-to-business’ (B2B) distribution of Information Technology (IT) and consumer electronics. References to ‘Subgroup Italy’ and ‘Subgroup Spain’ can be found in next comments and tables. As at 30 September 2014, the ‘Subgroup Italy’, made of companies governed by the Italian law, includes, besides the parent company Esprinet S.p.A., V-Valley S.r.l. and Celly S.p.A. (acquired on 12 May 2014), all directly controlled companies, in addition to the associated company Assocloud S.r.l.. The latter, even if jointly controlled, is considered as an ‘investment in associate’ due to Esprinet’s significant influence as per the statutory agreements.
Interim Management Statement as at 30 September 2014
Esprinet Group page 6
The acquisition perimeter includes Celly S.p.A., company operating in the ‘business-to-business’ (B2B) distribution of Information Technology (IT) and consumer electronics and specifically in the wholesale distribution of accessories for mobile devices, as well as its wholly-owned subsidiaries: - Celly Nordic OY, a Finnish-law company; - Celly Swiss SAGL, a Helvetic-law company; - Celly Pacific LTD, a Chinese-law company, completely owned by Celly Swiss SAGL; all of which are operating in the same segment as the Holding Company, as well as Celly’s 25% share in Ascendeo SAS, a French-law company. Up to 28 February 2014 the Group operated also in the ‘business-to-consumer’ industry (B2C) of IT and consumer electronics through the company Monclick S.r.l., and up to 23 July in the ‘business-to-business’ (B2B) distribution of microelectronic components through the company Comprel S.r.l.. At the same date, the Subgroup Spain is made up solely of Esprinet Iberica S.L.U. Esprinet S.p.A. has its registered and administrative offices in Italy in Vimercate (Monza e Brianza), while warehouses and logistics centres are located in Cambiago (Milan) and Cavenago (Monza e Brianza). Esprinet uses Banca IMI S.p.A.as its specialist firm.
2.3 Consolidation area
The consolidated financial statement derives from the interim accounts of the parent company Esprinet S.p.A. and of its directly and/or indirectly subsidiaries or associate companies, approved by their respective Boards of Directors. Wherever necessary, the interim accounts of subsidiaries have been suitably adjusted to ensure consistency with the accounting principles used by the parent company.
The table below lists companies included in the consolidation perimeter as at 30 September 2014, all consolidated on a line-by-line basis except for the companies Assocloud S.r.l. and Ascendeo SAS accounted for using the equity method.
Holding company:
Esprinet S.p.A. Vimercate (MB) 7,860,651
Subsidiaries directly controlled:
V-Valley S.r.l. Vimercate (MB) 20,000 100.00% Esprinet S.p.A. 100.00%
Celly S.p.A. Vimercate (MB) 1,250,000 60.00% Esprinet S.p.A. 60.00%
Esprinet Iberica S.L.U. Saragozza (Spain) 55,203,010 100.00% Esprinet S.p.A. 100.00%
Subsidiaries indirectly controlled:
Celly Nordic OY Helsinki (Finland) 2,500 60.00% Celly S.p.A. 100.00%
Celly Swiss SAGL Lugano (Switzerland) 16,296 60.00% Celly S.p.A. 100.00%
Celly Pacific LTD Honk Kong (China) 935 60.00% Celly Swiss SAGL 100.00%
Associated company
Ascendeo SAS La Courneuve (France) 37,000 15.00% Celly S.p.A. 25.00%
Assocloud S.r.l. Vimercate (MB) 72,000 9.52% Esprinet S.p.A. 9.52%
Interest
held
Group
interestCompany name Head Office
Share capital
(euro) *Shareholder
(*)
Share capital values, with reference to the companies publishing financial statements in a currency other than euro, are displayed at historical value.
Compared to 31 December 2013 we report the exit from the consolidation area of the companies Monclick S.r.l. and Comprel S.r.l., respectively sold on 28 February 2014 and 23 July 2014 and the entry on 12 May 2014 of the company Celly S.p.A. together with its subsidiaries and associated companies as a consequence of the acquisition of a 60% share by Esprinet on 12 May 2014. On 2 April 2014 the shareholding in the associated company Assocloud grew from 8.33% to 9.52%. For further information please refer to the paragraph ‘Significant events occurred in the period’.
Interim Management Statement as at 30 September 2014
Esprinet Group page 7
2.4 Principal assumptions, estimates and rounding
Within the scope of preparing these interim consolidated financial statements, several estimates and assumptions have been made on the values of revenue, costs, assets and liabilities in the financial statements and on the information relating to potential assets and liabilities at the date of the interim financial statements. These have been applied uniformly to all the financial years presented in this document, unless indicated otherwise. If these estimates and assumptions, which are based on the best valuation by the management, should differ from actual circumstances in the future, they will be suitably amended during the period in which those circumstances arise.
A detailed description of the assumptions and estimates adopted can be found in the Notes to the Consolidated Financial Statements of the Esprinet Group as at 31 December 2013, to which reference is made. During this interim period, as permitted by IAS 34, income taxes have been calculated based on the best estimate of the tax burden expected for the entire financial year. In the annual consolidated financial statements current taxes have been calculated specifically based on the tax rates in force at the closing date of the financial statements. Prepaid and deferred taxes instead have been estimated based on the tax rates considered to be in force at the time of realization of the assets or settlement of the liabilities to which they refer. Figures in this document are expressed in thousands of euro, unless otherwise indicated. In some cases, errors occurring in the tables might be due to the rounding up of figures to the nearest thousand.
2.5 Restatements of previous published financial statements
Pursuant to IAS8, already published income statements are restated due to reclassification, also affecting the comparative figures, of the profit and loss values of both Monclick S.r.l. and Comprel S.r.l. to ‘Income/(loss) from disposal groups’. In the following tables, effects of the above said disclosure process are shown with reference to the consolidated separate income statements published in the interim management statement as at 30 September 2013.
Italy Spain Group Italy Spain Group Italy Spain Group
Sales 1,086,688 337,759 1,391,312 1,116,654 337,759 1,421,278 (29,966) - (29,966)
Cost of sales (1,017,043) (322,372) (1,306,294) (1,037,371) (322,372) (1,326,623) 20,328 - 20,329
Gross profit 69,645 15,387 85,018 79,283 15,387 94,655 (9,638) - (9,637)
Sales and marketing costs (18,580) (3,387) (22,321) (23,679) (3,387) (27,419) 5,099 - 5,098
Overheads and admin. costs (33,069) (9,162) (41,872) (35,760) (9,162) (44,562) 2,691 - 2,690
Operating income (Ebit) 17,996 2,838 20,825 19,844 2,838 22,674 (1,848) - (1,849)
Finance costs - net (1,632) (1,816) 184
Share of profits of associates (6) (6) -
Profit before income tax 19,187 20,852 (1,665)
Income tax expenses (6,823) (7,354) 531
Profit from continuing operations 12,364 13,498 (1,134)
Income/(loss) from disposal groups 1,134 - 1,134
Net income 13,498 13,498 -
(euro/000) Restated Published Variation
9 months 2013
Interim Management Statement as at 30 September 2014
Esprinet Group page 8
3. Consolidated income statement and notes
3.1 Consolidated separate income statement Below is the consolidated separate income statement, showing revenues by ‘function’ in accordance with the IFRS, complete with the additional information required under CONSOB decision number 15519 of 27 July 2006:
(*)
Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item. (**)
Excludes fees paid to executives with strategic responsibilities.
Italy Spain Group Italy Spain Group Italy Spain Group
Sales 328,917 112,151 431,012 337,541 112,151 439,636 (8,624) - (8,624)
Cost of sales (308,356) (107,145) (405,443) (313,884) (107,145) (410,972) 5,528 - 5,529
Gross profit 20,561 5,006 25,569 23,657 5,006 28,664 (3,096) - (3,095)
Sales and marketing costs (5,672) (1,110) (6,900) (7,280) (1,110) (8,507) 1,608 - 1,607
Overheads and admin. costs (10,235) (2,912) (13,032) (11,048) (2,912) (13,844) 813 - 812
Operating income (Ebit) 4,654 984 5,637 5,329 984 6,313 (675) - (676)
Finance costs - net (483) (543) 60
Share of profits of associates - - -
Profit before income tax 5,154 5,770 (616)
Income tax expenses (2,406) (2,589) 183
Profit from continuing operations 2,748 3,181 (433)
Income/(loss) from disposal groups 433 - 433
Net income 3,181 3,181 -
(euro/000)
Q3 2013
Restated Published Variation
9 months 9 months
2014 2013 restated*
Sales 33 1,535,383 - 10 1,391,312 - 11
Cost of sales (1,439,096) - - (1,306,294) - -
Gross profit 35 96,287 - 85,018 -
Sales and marketing costs 37 (27,260) - - (22,321) - -
Overheads and administrative costs 38 (44,714) (893) (2,543) (41,872) (98) (2,544)
Operating income (EBIT) 24,313 (893) 20,825 (98)
Finance costs - net 42 (1,334) - 22 (1,632) (66) 22
Other investments expenses/(incomes) 43 (23) - (6) -
Profit before income tax 22,956 (893) 19,187 (164)
Income tax expenses 45 (7,450) 295 - (6,823) (495) -
Profit from continuing operations 15,506 (598) 12,364 (659)
Income/(loss) from disposal groups 47 1,844 1,134
Net income 17,350 (598) 13,498 (659)
- of which attributable to non-controlling interests (168) -
- of which attributable to owners of the parent 17,518 (598) 13,498 (659)
Earnings continuing operation per share - basic 46 0.30 0.24
Earnings per share - basic (euro) 46 0.34 0.26
Earnings continuing operation per share - diluted 46 0.30 0.24
Earnings per share - diluted (euro) 46 0.33 0.26
related
parties**
(euro/000)Notes
non -
recurring
related
parties**
non -
recurring
Interim Management Statement as at 30 September 2014
Esprinet Group page 9
(*) Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the
comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item. (**)
Excludes fees paid to executives with strategic responsibilities.
3.2 Consolidated statement of comprehensive income
(*) Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the
comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item.
Q3 Q3
2014 2013 restated*
Sales 33 502,413 - 4 431,012 - -
Cost of sales (471,139) - - (405,443) - -
Gross profit 35 31,274 - 25,569 -
Sales and marketing costs 37 (9,793) - - (6,900) - -
Overheads and administrative costs 38 (14,247) - (847) (13,032) (98) (850)
Operating income (EBIT) 7,234 - 5,637 (98)
Finance costs - net 42 (1,020) - 7 (483) (66) 7
Other investments expenses/(incomes) 43 (8) - - -
Profit before income tax 6,206 - 5,154 (164)
Income tax expenses 45 (1,920) - - (2,406) (495) -
Profit from continuing operations 4,286 - 2,748 (659)
Income/(loss) from disposal groups 47 (200) 433
Net income 4,086 - 3,181 (659)
- of which attributable to non-controlling interests (169) -
- of which attributable to owners of the parent 4,255 - 3,181 (659)
Earnings continuing operation per share - basic 46 0.08 0.05
Earnings per share - basic (euro) 46 0.08 0.06
Earnings continuing operation per share - diluted 46 0.08 0.05
Earnings per share - diluted (euro) 46 0.08 0.06
related
parties**
(euro/000)Note
non -
recurring
related
parties**
non -
recurring
9 months 9 months Q3 Q3
2014 2013 restated* 2014 2013 restated*
Net income 17,350 13,498 4,086 3,181
Other comprehensive income:
- Changes in "cash flow hedge" equity reserve (161) 492 51 -
- Taxes on changes in 'cash flow hedge' equity reserve (51) (148) (51) -
Other comprehensive income not to be reclassified in the separate
income statement
- Changes in 'TFR' equity reserve (375) (50) 206 (3)
- Taxes on changes in 'TFR' equity reserve 103 14 (57) 1
Other comprehensive income (484) 308 149 (2)
Total comprehensive income 16,866 13,806 4,235 3,179
- of w hich, attributable to ow ners of the parent 17,034 13,806 4,404 3,179
- of w hich, attributable to non-controlling interests (168) - (169) -
(euro/000)
Interim Management Statement as at 30 September 2014
Esprinet Group page 10
3.3 Notes on financial performance for the period A) Esprinet Group’s financial highlights The Group’s main economic, financial and asset results as at 30 September 2014 are hereby summarized:
(*)
Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item.
(*)
Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item.
Consolidated sales, equal to 1,535.4 million euro, showed an increase of +10% (144.1 million euro) compared to 1,391.3 million euro of the first nine months 2013. In the third quarter consolidated sales increase of +17% compared to the same period of the previous year. Consolidated gross profit is equal to 96.3 million euro showing an increase (equal to +13% or 11.3 million euro) compared to the same period of 2013 as a consequence of both higher sales and higher gross profit margin. In the third quarter gross profit, equal to 31.3 million euro, showed an increase of +22% compared to the same period of the previous year. Consolidated operating income (EBIT) totalled 24.3 million euro, showing an increase of +17% compared to the first nine months of 2013 (20.8 million euro), with an EBIT margin increased to 1.58% from 1.50%, notwithstanding a 7.8 million euro growth in operating costs compared to the same period of 2013. In the
9 months 9 months
2014 2013 restated*
Sales 1,535,383 100.00% 1,391,312 100.00% 144,071 10%
Cost of sales (1,439,096) -93.73% (1,306,294) -93.89% (132,802) 10%
Gross profit 96,287 6.27% 85,018 6.11% 11,269 13%
Sales and marketing costs (27,260) -1.78% (22,321) -1.60% (4,939) 22%
Overheads and administrative costs (44,714) -2.91% (41,872) -3.01% (2,842) 7%
Operating income (EBIT) 24,313 1.58% 20,825 1.50% 3,488 17%
Finance costs - net (1,334) -0.09% (1,632) -0.12% 298 -18%
Other investments expenses / (incomes) (23) 0.00% (6) 0.00% (17) 283%
Profit before income taxes 22,956 1.50% 19,187 1.38% 3,769 20%
Income tax expenses (7,450) -0.49% (6,823) -0.49% (627) 9%
Profit from continuing operations 15,506 1.01% 12,364 0.89% 3,142 25%
Income/(loss) from disposal groups 1,844 0.12% 1,134 0.08% 710 63%
Net income 17,350 1.13% 13,498 0.97% 3,852 29%
Earnings per share - continuing operations 0.30 0.24 0.06 25%
Earnings per share - basic (euro) 0.34 0.26 0.08 30%
% % Var. Var. %(euro/000)
Q3 Q3
2014 2013 restated*
Sales 502,413 100.00% 431,012 100.00% 71,401 17%
Cost of sales (471,139) -93.78% (405,443) -94.07% (65,696) 16%
Gross profit 31,274 6.22% 25,569 5.93% 5,705 22%
Sales and marketing costs (9,793) -1.95% (6,900) -1.60% (2,893) 42%
Overheads and administrative costs (14,247) -2.84% (13,032) -3.02% (1,215) 9%
Operating income (EBIT) 7,234 1.44% 5,637 1.31% 1,597 28%
Finance costs - net (1,020) -0.20% (483) -0.11% (537) 111%
Other investments expenses / (incomes) (8) 0.00% - 0.00% (8) 0%
Profit before income taxes 6,206 1.24% 5,154 1.20% 1,052 20%
Income tax expenses (1,920) -0.38% (2,406) -0.56% 486 -20%
Profit from continuing operations 4,286 0.85% 2,748 0.64% 1,538 56%
Income/(loss) from disposal groups (200) -0.04% 433 0.10% (633) -146%
Net income 4,086 0.81% 3,181 0.74% 905 28%
Earnings per share - continuing operations 0.08 0.05 0.03 56%
Earnings per share - basic (euro) 0.08 0.06 0.02 34%
(euro/000) % % Var. Var. %
Interim Management Statement as at 30 September 2014
Esprinet Group page 11
third quarter EBIT was equal to 7.2 million euro with an increase of +28% (1.6 million euro) compared to the third quarter 2013 showing an EBIT margin growth (from 1.31% to 1.44%). Consolidated profit before income taxes equal to 23.0 million euro, benefitting lower financial costs of 0.3 million euro showed an increase of +20% compared to the first nine months of 2013. In the third quarter profit before income taxes registered an increase of +20% (1.1 million euro) reaching the value of 6.2 million euro. Consolidated net income from continuing operation was equal to 15.5 million euro, with an increase of +25% (3.1 million euro) compared to the first nine months of 2013. In the third quarter net income from continuing operation rose of 1.5 million euro (+56%) compared to the same period of 2013. Consolidated net income was equal to 17.4 million euro, with a growth of +29% (3.9 million euro) compared to the first nine months of 2013 benefitting of 1.8 million euro from ‘Income/(loss) from disposal groups’ increased of 0.7 million euro (+63%) compared to the same period of 2013. In the third quarter consolidated net income increased of 0.9 million euro (+28%) compared to the same period of 2013 despite a 0.2 million euro negative effect in the ‘Profit/(loss) from disposal groups’ worsened by 0.6 million euro compared to the same period of 2013. Basic earnings per share from continuing operations as at 30 September 2014 was equal to 0.30 euro, showing an increase of +25% compared to the first nine months of 2013. In third quarter this value was equal to 0.08 euro compared to 0.05 euro of the same quarter in 2013. Basic earnings per ordinary share as at 30 September 2014 equal to 0.34 euro, showed an increase of +30% compared to the first nine months of 2013. In the third quarter basic earnings per ordinary share was equal to 0.08 euro compared to 0.06 euro of the corresponding quarter of 2013.
Consolidated net working capital as at 30 September 2014 is equal to 246.5 million euro, compared to 49.5 million euro as at 31 December 2013. Consolidated net financial position as at 30 September 2014, is negative by 44.0 million euro, compared to a cash surplus equal to 141.7 million euro as of 31 December 2013. The financial indebtedness growth was connected to the increase of consolidated net working capital as of 30 September 2014 influenced both by technical events often not related to the average level of working capital particularly by a ‘without-recourse’ sale of account receivables from customers. This program is aimed at transferring risk and reward to the buyer thus receivables sold are stripped out by balance sheet according to IAS 39.
(euro/000) 30/09/2014 % 31/12/2013 % Var. Var. %
Fixed assets 98,836 31.92% 96,753 81.87% 2,084 2%
Operating net w orking capital 246,497 79.61% 49,457 41.85% 197,040 398%
Other current assets/liabilities (23,389) -7.55% (15,665) -13.26% (7,725) 49%
Other non-current assets/liabilities (12,313) -3.98% (12,371) -10.47% 58 0%
Total assets 309,631 100.00% 118,174 100.00% 191,457 162%N.S.
Short-term financial liabilities 23,489 7.59% 38,569 32.64% (15,080) -39%
Current f inancial (assets)/liabilities for derivatives - 0.00% 174 0.15% (174) -100%
Financial receivables from factoring companies (643) -0.21% (2,829) -2.39% 2,186 -77%
Customers f inancial receivables (469) -0.15% (572) -0.48% 102 -18%
Cash and cash equivalents (53,797) -17.37% (176,893) -149.69% 123,096 -70%
Net current f inancial debt (31,420) -10.15% (141,551) -119.78% 110,130 -78%
Borrow ings 68,574 22.15% 3,356 2.84% 65,218 1943%
Debts for investments in subsidiaries 9,927 3.21% - 0.00% 9,927 N.S.
Customers f inancial receivables (3,085) -1.00% (3,457) -2.93% 373 -11%
Net f inancial debt (A) 43,996 14.21% (141,652) -119.87% 185,648 -131%
Net equity (B) 265,635 85.79% 259,826 219.87% 5,809 2%
Total sources of funds (C=A+B) 309,631 100.00% 118,174 100.00% 191,457 162%
Interim Management Statement as at 30 September 2014
Esprinet Group page 12
Even considering other technicalities from factoring by means of which to obtain the result of advancing cash-in of credits on a ‘no recourse’ basis - such as ‘confirming’ used in Spain –, the impact on financial debt was approx. 107 million euro as at 30 September (approx. 154 million euro as at 31 December 2013 and 59 million euro as at 30 September 2013). Consolidated net equity as at 30 September 2014 was 265.6 million euro, increasing by 5.8 million euro compared to 259.8 million euro as at 31 December 2013. B) Financial highlights by geographical area
B.1) Subgroup Italy
The main economic, financial and asset results for the Italian subgroup (Esprinet, V-Valley and Celly Group) as at 30 September 2014 are hereby summarized:
(*)
Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item.
(*)
Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item.
Sales were 1,186.4 million euro, with an increase of +9% compared to 1,086.7 million euro of the first nine months of 2013. The third quarter registered an increase of +15% compared to the third quarter 2013. Gross profit was 79.7 million euro showing an increase of +14% compared to 69.6 million euro of the first nine months of 2013 thanks to the combination of the increasing gross profit margin (from 6.41% to 6.71%) and higher sales. In the third quarter 2014 gross profit was 25.8 million euro (+26% compared to the third quarter 2013). Operating income (EBIT) was 20.3 million euro, with an increase of + 13% compared to the same period of 2013 and EBIT margin increased from 1.66% to 1.71% despite an increase of operating costs (7.7 million euro). EBIT of the third quarter 2014 registered an increase of +25% reaching 5.8 million euro compared to 4.7 million euro of 2013 with an increase of EBIT margin (to 1.55% from 1.41% of the same period of 2013).
9 months 9 months
2014 2013 restated*
Sales to third parties 1,153,531 100.00% 1,053,553 100.00% 99,978 9%
Intercompany sales 32,908 2.85% 33,135 3.15% (227) -1%
Sales 1,186,439 102.85% 1,086,688 103.15% 99,751 9%
Cost of sales (1,106,771) -95.95% (1,017,043) -96.53% (89,728) 9%
Gross profit 79,668 6.71% 69,645 6.41% 10,023 14%
Sales and marketing costs (23,212) -1.96% (18,580) -1.71% (4,632) 25%
Overheads and administrative costs (36,175) -3.05% (33,069) -3.04% (3,106) 9%
Operating income (EBIT) 20,281 1.71% 17,996 1.66% 2,285 13%
% % Var. Var. %(euro/000)
Q3 Q3
2014 2013 restated*
Sales to third parties 365,190 318,861 46,329 15%
Intercompany sales 11,496 10,056 1,440 14%
Sales 376,686 328,917 47,769 15%
Cost of sales (350,851) (308,356) (42,495) 14%
Gross profit 25,835 6.86% 20,561 6.25% 5,274 26%
Sales and marketing costs (8,525) -2.26% (5,672) -1.72% (2,853) 50%
Overheads and administrative costs (11,479) -3.05% (10,235) -3.11% (1,244) 12%
Operating income (EBIT) 5,831 1.55% 4,654 1.41% 1,177 25%
(euro/000) % % Var. Var. %
Interim Management Statement as at 30 September 2014
Esprinet Group page 13
Operating net working capital as at 30 September 2014 was 174.5 million euro, compared to 31.9 million euro as at 31 December 2013. Net financial position as at 30 September 2014 was negative by 34.8 million euro compared to the cash surplus of 134.7 million euro as at 31 December 2013. The impact of ‘without-recourse’ sale of both account receivables as at 30 September 2014 was 36 million euro (approx. 68 million euro as at 31 December 2013 and 36 million euro as at 30 September 2013).
B.2) Esprinet Iberica The main economic, financial and asset results of the Spanish subgroup as 30 September 2014 are hereby summarized:
(euro/000) 30/09/2014 % 31/12/2013 % Var. Var. %
Fixed assets 92,799 32.02% 90,227 77.28% 2,573 3%
Operating net w orking capital 174,467 60.19% 31,900 27.32% 142,567 447%
Other current assets/liabilities 32,237 11.12% 4,500 3.85% 27,736 616%
Other non-current assets/liabilities (9,664) -3.33% (9,869) -8.45% 205 -2%
Total assets 289,839 100.00% 116,758 100.00% 173,081 148%
Short-term financial liabilities 13,349 4.61% 31,118 26.65% (17,769) -57%
Current f inancial (assets)/liabilities for derivatives - 0.00% 70 0.06% (70) -100%
Financial receivables from factoring companies (643) -0.22% (2,829) -2.42% 2,186 -77%
Financial (assets)/liab. from/to Group companies - 0.00% (40,000) -34.26% 40,000 -100%
Customers f inancial receivables (469) -0.16% (572) -0.49% 102 -18%
Cash and cash equivalents (52,834) -18.23% (122,354) -104.79% 69,520 -57%
Net current f inancial debt (40,597) -14.01% (134,567) -115.25% 93,969 -70%
Borrow ings 68,574 23.66% 3,356 2.87% 65,218 1943%
Debts for investments in subsidiaries 9,927 3.43% - 0.00% 9,927 N.S.
Customers f inancial receivables (3,085) -1.06% (3,457) -2.96% 373 -11%
Net Financial debt (A) 34,819 12.01% (134,668) -115.34% 169,487 -126%
Net equity (B) 255,020 87.99% 251,426 215.34% 3,594 1%
Total sources of funds (C=A+B) 289,839 100.00% 116,758 100.00% 173,081 148%
9 months 9 months
2014 2013
Sales to third parties 381,852 100.00% 337,759 100.00% 44,093 13%
Intercompany sales - - - 0.00% - 0%
Sales 381,852 100.00% 337,759 100.00% 44,093 13%
Cost of sales (365,105) -95.61% (322,372) -95.44% (42,733) 13%
Gross profit 16,747 4.39% 15,387 4.56% 1,360 9%
Sales and marketing costs (3,761) -0.98% (3,387) -1.00% (374) 11%
Overheads and administrative costs (8,833) -2.31% (9,162) -2.71% 329 -4%
Operating income (EBIT) 4,153 1.09% 2,838 0.84% 1,315 46%
(euro/000) % % Var. Var. %
Q3 Q3
2014 2013
Sales to third parties 137,224 112,151 25,073 22%
Intercompany sales - - - 0%
Sales 137,224 112,151 25,073 22%
Cost of sales (131,645) (107,145) (24,500) 23%
Gross profit 5,579 4.07% 5,006 4.46% 573 11%
Sales and marketing costs (1,208) -0.88% (1,110) -0.99% (98) 9%
Overheads and administrative costs (2,831) -2.06% (2,912) -2.60% 81 -3%
Operating income (EBIT) 1,540 1.12% 984 0.88% 556 57%
(euro/000) % % Var. Var. %
Interim Management Statement as at 30 September 2014
Esprinet Group page 14
Sales amounted to 381.9 million euro showing an increase of +13% compared to 337.8 million euro of the first nine months of 2013. In the third quarter sales registered an increase of + 22% (+ 25.1 million euro) compared the same period of 2013. Gross profit as at 30 September 2014 was 16.8 million euro, with an increase of +9% compared to 15.4 million euro of the corresponding period of 2013, with a gross profit margin decrease from 4.56% to 4.39%. In the third quarter the gross profit increased by 11% compared to the previous period, with a gross profit margin from 4.46% to 4.07%. Operating income (EBIT), equal to 4.2 million euro, increased of 1.3 million euro compared to the first nine months of 2013, with EBIT margin increasing from 0.84% to 1.09%. In the third quarter 2014 EBIT was 1.5 million euro compared to 1.0 million euro of the third quarter 2013 with EBIT margin from 0.88% to 1.12%.
Operating net working capital as at 30 September 2014 totalled 72.2 million euro compared to 17.6 million euro as at 31 December 2013. Net financial position as at 30 September 2014 is negative by 49.2 million euro, compared to a cash surplus of 7.0 million euro as at 31 December 2013. The impact of ‘without-recourse’ sale of both account receivables or advancing cash-in of credits as at 30 September 2014 is equal to approx. 71 million euro (approx. 85 million euro as at 31 December 2013 and 23 million euro as at 30 September 2013).
(euro/000) 30/09/2014 % 31/12/2013 % Var. Var. %
Fixed assets 66,846 55.35% 67,373 108.11% (527) -1%
Operating net w orking capital 72,206 59.78% 17,611 28.26% 54,595 310%
Other current assets/liabilities (15,626) -12.94% (20,165) -32.36% 4,539 -23%
Other non-current assets/liabilities (2,649) -2.19% (2,502) -4.01% (147) 6%
Total assets 120,777 100.00% 62,317 100.00% 58,460 94%
Short-term financial liabilities 50,140 41.51% 7,451 11.96% 42,689 573%
Current f inancial (assets)/liabilities for derivatives - 0.00% 104 0.17% (104) -100%
Financial (assets)/liab. from/to Group companies - 0.00% 40,000 64.19% (40,000) -100%
Cash and cash equivalents (963) -0.80% (54,539) -87.52% 53,576 -98%
Net current f inancial debt 49,177 40.72% (6,984) -11.21% 56,161 -804%
Net Financial debt (A) 49,177 40.72% (6,984) -11.21% 56,161 -804%
Net equity (B) 71,600 59.28% 69,301 111.21% 2,299 3%
Total sources of funds (C=A+B) 120,777 100.00% 62,317 100.00% 58,460 94%
Interim Management Statement as at 30 September 2014
Esprinet Group page 15
3.4 Notes to consolidated income statement items In this section the paragraph numbers refer to the corresponding ‘Note’ in the consolidated separate income statement. 33) Sales The following provides a breakdown of the Group’s sales performance during the period. Sales by geographical area
(euro/million)9 months
2014%
9 months
2013
restated
% % Var.Q3
2014%
Q3
2013
restated
% % Var.
Italy 1,147.9 74.8% 1,050.1 75.5% 9% 362.7 72.2% 317.4 73.6% 14%
Spain 355.7 23.2% 310.3 22.3% 15% 127.3 25.3% 101.5 23.5% 25%
Other EU countries 27.8 1.8% 28.2 2.0% -1% 10.5 2.1% 11.1 2.6% -5%
Extra EU countries 4.0 0.3% 2.7 0.2% 48% 1.9 0.4% 1.0 0.2% 90%
Group sales 1,535.4 100.0% 1,391.3 100.0% 10% 502.4 100.0% 431.0 100.0% 17%
Sales in other EU countries mainly refer to sales made by the Spanish subsidiary to customers resident in Portugal. Sales in non-EU countries refer mainly to sales to customers resident in the Republic of San Marino. Sales by products and services
Sales by product family and customer type
(euro/million)9 months
2014%
9 months
2013
restated
% % Var.Q3
2014%
Q3
2013
restated
% % Var.
Dealer 453.6 29.5% 395.0 28.4% 15% 165.5 32.9% 121.6 28.2% 36%
GDO/GDS 322.9 21.0% 294.5 21.2% 10% 107.7 21.4% 96.4 22.4% 12%
Office/Consumable dealer 292.9 19.1% 261.9 18.8% 12% 89.0 17.7% 76.9 17.8% 16%
VAR 274.0 17.8% 254.9 18.3% 7% 86.1 17.1% 77.2 17.9% 12%
Shop on-line 114.5 7.5% 107.0 7.7% 7% 30.4 6.1% 34.7 8.1% -12%
Sub-distributor 77.5 5.0% 78.0 5.6% -1% 23.7 4.7% 24.2 5.6% -2%
Sales 1,535.4 100.0% 1,391.3 100.0% 10% 502.4 100.0% 431.0 100.0% 17%
9 months 9 months % Q3 Q3 %
2014 2013
restatedVar.
2014 2013
restatedVar.
Product sales 1,147.5 74.7% 1,046.8 75.2% 10% 363.6 72.4% 317.1 73.6% 15%
Services sales 6.0 0.4% 6.8 0.5% -12% 1.6 0.3% 1.8 0.4% -11%
Sales - Subgroup Italy 1,153.5 75.1% 1,053.6 75.7% 9% 365.2 72.7% 318.9 74.0% 15%
Product sales 381.9 24.9% 337.7 24.3% 13% 137.2 27.3% 112.1 26.0% 22%
Sales - Subgroup Spain 381.9 24.9% 337.7 24.3% 13% 137.2 27.3% 112.1 26.0% 22%
Group sales 1,535.4 100.0% 1,391.3 100.0% 10% 502.4 100.0% 431.0 100.0% 17%
(euro/million) % % % %
Interim Management Statement as at 30 September 2014
Esprinet Group page 16
(euro/million)9 months
2014%
9 months
2013
restated
% % Var.Q3
2014%
Q3
2013
restated
% % Var.
PC notebook 343.6 22.4% 310.4 22.3% 11% 113.3 22.6% 107.1 24.8% 6%
Consumables 179.5 11.7% 197.6 14.2% -9% 54.0 10.7% 62.1 14.4% -13%
PC - desktop e monitor 169.6 11.0% 140.5 10.1% 21% 49.5 9.9% 43.3 10.0% 14%
Consumer Electronics 159.2 10.4% 136.1 9.8% 17% 49.8 9.9% 40.8 9.5% 22%
TLC 149.9 9.8% 91.9 6.6% 63% 70.3 14.0% 20.8 4.8% 237%
PC - tablet 140.8 9.2% 144.8 10.4% -3% 43.7 8.7% 38.9 9.0% 12%
Peripherical devices 78.5 5.1% 73.7 5.3% 6% 24.3 4.8% 22.7 5.3% 7%
Software 75.4 4.9% 67.8 4.9% 11% 21.7 4.3% 19.9 4.6% 9%
Storage 72.0 4.7% 79.6 5.7% -10% 21.3 4.2% 27.1 6.3% -22%
Networking 28.6 1.9% 28.4 2.0% 1% 9.3 1.9% 8.8 2.0% 5%
Server 25.4 1.7% 30.4 2.2% -16% 7.8 1.6% 10.4 2.4% -25%
Services 13.3 0.9% 10.9 0.8% 22% 3.9 0.8% 4.0 0.9% -3%
Others 99.6 6.5% 79.1 5.7% 26% 33.5 6.7% 25.0 5.8% 34%
Sales 1,535.4 100% 1,391.3 100% 10% 502.4 100% 431.0 100% 17%
The sales analysis by customer type shows a general improvement compared to the first nine months of 2013, in particular in the ‘Dealer’ channel (+15%), while the 'Sub-distributor' channel is the only one showing a light decrease (-1%). A general channel growth can be highlighted also in the third quarter, with significant performance in 'Dealer' channel (+36%) notwithstanding the decrease occurred in the “Shop on-line” channel (-12%). From the product standpoint, there was a good performance in the PC Client segment (notebooks, desktops and tablets), to be attributed mainly to the rapid growth of the PC notebook, only partially counterbalanced by the negative trend of ‘Tablet’ (-3%). Among the other categories, note should be taken of the excellent performances of ‘TLC’ (+63%) and of ‘Consumer electronics’ (+17%), while ‘Consumables’ (-9%), 'Storage' (-10%) and ‘Server’ (-16%) posted the worst sales results. Also the analysis of the third quarter shows generally a good performance in various product families reaching peaks in 'TLC' (+237%) and 'Consumer electronic' (+22%) products, along with some negative performances, notably in 'Consumables' (-13%) and 'Storage' (-25%).
35) Gross profit
The consolidated gross profit totalled 96.3 million euro (equal to 6.27% as margin on sales) and shows a light increase of 11.3 million euro compared to the same period of 2013 as a consequence of both higher sales and an increase in gross profit margin. 37-38) Operating costs
9 months 9 months % Q3 Q3 %
20142013
restatedVar. 2014
2013
restatedVar.
Sales 1,535,383 100.00% 1,391,312 100.00% 10% 502,413 100.00% 431,012 100.00% 17%
Cost of sales 1,439,096 93.73% 1,306,294 93.89% 10% 471,139 93.78% 405,443 94.07% 16%
Gross profit 96,287 6.27% 85,018 6.11% 13% 31,274 6.22% 25,569 5.93% 22%
(euro/000) % % % %
9 months 9 months % Q3 Q3 %
2014 2013
restatedVar. 2014
2013
restatedVar.
Sales 1,535,383 100.00% 1,391,312 100.00% 10% 502,413 100.00% 431,012 100.00% 17%
Sales and marketing costs 27,260 1.78% 22,321 1.60% 22% 9,793 1.95% 6,900 1.60% 42%
Overheads and administrative costs 44,714 2.91% 41,872 3.01% 7% 14,247 2.84% 13,032 3.02% 9%
Operating costs 71,974 4.69% 64,193 4.61% 12% 24,040 4.78% 19,932 4.62% 21%
- of w hich non recurring 893 0.06% 98 0.01% 811% 1,786 0.36% 98 0.02% 1722%
'Recurring' operating costs 71,081 4.63% 64,095 4.61% 11% 22,254 4.43% 19,834 4.60% 12%
%(euro/000) % % %
Interim Management Statement as at 30 September 2014
Esprinet Group page 17
During the first nine months of 2014 operating costs, amounting to 72.0 million euro, increased by 7.8 million euro or +12% compared to the same period of 2013. In the solely third quarter 2014 the increase amounts to +21% (+4.1 million euro). The incidence of 'recurring' operating costs on sales increased by +2bps compared to the same period of 2013. Reclassification by nature of some categories of operating costs For the purposes of providing more information, some categories of operating costs allocated by ‘function’ have been reclassified by ‘nature’. Labour costs and number of employees
(euro/million)9 months
2014%
9 months
2013
restated
% % Var.Q3
2014%
Q3
2013
restated
% % Var.
Sales 1,535,383 1,391,312 10% 502,413 431,012 17%
Wages and salaries 22,865 1.49% 21,340 1.53% 7% 7,202 1.43% 8,837 2.05% -19%
Social contributions 7,026 0.46% 6,425 0.46% 9% 2,246 0.45% 2,537 0.59% -11%
Pension obligations 1,370 0.09% 1,276 0.09% 7% 490 0.10% 457 0.11% 7%
Other personnel costs 563 0.04% 548 0.04% 3% 195 0.04% 228 0.05% -14%
Employee termination incentives (2)
745 0.05% - 0.00% 100% 25 0.00% 382 0.09% -93%
Share incentive plans 165 0.01% 201 0.01% -18% 55 0.01% 123 0.03% -55%
Total labour costs (1)
32,734 2.13% 29,790 2.14% 10% 10,213 2.03% 12,564 2.92% -19%
(1)
Cost of temporary workers excluded.
(2) Balance related solely to the Spanish subgroup in 2013.
At 30 September 2014 the labour costs amounted to 32.7 million euro, increasing by +10% (+3.0 million euro) compared to the same period of 2013. The ‘Share incentive plans’ amount refers to the costs of “Long Term Incentive Plan” in force in each different period. In the first nine months of 2013, 165 thousand euro refer to the last plan approved in May 2012 and expired in April 2014, the residual 36 thousand euro refer to the 2010-2012 plan ended in April 2013. The employees number of the Group as at 30 September 2014 - split by qualification - is shown in the table below
1.
Executives
Clerks and
middle
manager
Workers Total Average (1)
Esprinet S.p.A. 19 612 2 633
Celly S.p.A. 1 72 - 73
V-Valley S.r.l. - - - -
Subgroup Italy 20 684 2 706 714
Subgroup Spain - 219 54 273 264
Group as at 30 September 2014 20 903 56 979 978
Group as at 31 December 2013 24 903 48 975 973
Var 30/09/14 - 31/12/13 (4) - 8 4 5
Var % -17% 0% 17% 0% 1%
Group as at 30 September 2013 24 906 46 976 974
Var 30/09/14 - 30/09/13 (4) (3) 10 3 4
Var % -17% 0% 22% 0% 0%
(1)
Average of the balance at period-beginning and period-end.
1 Trainees and temporary workers excluded.
Interim Management Statement as at 30 September 2014
Esprinet Group page 18
The number of employees increased by 4 units, from 975 to 979, compared to 31 December 2013, while the employees average number in the first nine months of 2014 increased by 4 units compared to the same period in the previous year. Amortisation, depreciation, write-downs and accruals for risks
42) Finance costs – net
The negative balance of 1.3 million euro between financial income and charges shows an improvement compared to the previous year both in absolute terms (decrease of 0.3 million euro compared to the negative balance of 1.6 million euro of the first nine months of 2013) and in terms of incidence on sales (0.09% in September 2014 compared to 0.12% in September 2013). This result is mainly due to the net interest to banks (equal to a negative balance of 0.4 million euro), showing a 0.9 million euro decrease compared to the same period of last year (-70%), as a consequence of the following combined elements: - a widespread improvement in the average financial indebtedness position of the Group; - a different mix of technical forms, to the benefit of short-term ones, which are both self-liquidating and by
their very nature less expensive. Please consider that the use of the new middle-term loan for 65 million euro as at 26 August 2014, which replaced the previous one having the same nature and expired in June 2014, did not have any material effects in terms of interest expenses in the period under review;
- a general decrease in spreads paid compared to the financial market parameters; - greater use of without recourse factoring compared to the previous year.
9 months 9 months % Q3 Q3 %
20142013
restatedVar. 2014
2013
restatedVar.
Sales 1,535,383 ##### 1,391,312 ##### 10% 502,413 ##### 431,012 ##### 17%
Depreciation of tangible assets 1,978 0.13% 1,719 0.12% 15% 670 0.13% 595 0.14% 13%
Amortisation of intangible assets 421 0.03% 257 0.02% 63% 160 0.03% 90 0.02% 77%
Amort . & depreciation 2,398 0.16% 1,976 0.14% 21% 830 0.17% 685 0.16% 21%
Write-dow ns of f ixed assets - 0.00% - 0.00% 0% - 0.00% - 0.00% 0%
Amort. & depr., write-downs (A) 2,398 0.16% 1,976 0.14% 21% 830 0.17% 685 0.16% 21%
Accruals for risks and charges (B) 163 0.01% 264 0.02% -38% (677) -0.13% 47 0.01% -1540%
Amort. & depr., write-downs,
accruals for risks (C=A+B) 2,561 0.17% 2,240 0.16% 14% 153 0.03% 732 0.17% -79%
(euro/000) % % % %
9 months 9 months % Q3 Q3 %
20142013
restatedVar. 2014
2013
restatedVar.
Sales 1,535,383 ###### 1,391,312 ###### 10% 502,413 ###### 431,012 ###### 17%
Interest expenses on borrow ings 498 0.03% 866 0.06% -42% 200 0.04% 178 0.04% 12%
Interest expenses to banks 493 0.03% 532 0.04% -7% 166 0.03% 327 0.08% -49%
Other interest expenses 8 0.00% 69 0.00% -88% - 0.00% 58 0.01% -100%
Upfront fees amortisation 108 0.01% 122 0.01% -11% 64 0.01% 31 0.01% 106%
Interest on shareholdings acquired 236 0.02% - 0.00% NS 116 0.02% - 0.00% NS
IAS 19 expenses/losses 93 0.01% 96 0.01% -3% 32 0.01% 32 0.01% 0%
Derivatives ineffectiveness - 0.00% 23 0.00% -100% - 0.00% 8 0.00% 0%
Total financial expenses (A) 1,436 0.09% 1,708 0.12% -16% 578 0.12% 634 0.15% -9%
Interest income from banks (615) -0.04% (155) -0.01% 297% (103) -0.02% (27) -0.01% 281%
Interest income from others (133) -0.01% (22) 0.00% 505% (44) -0.01% (7) 0.00% 529%
Derivatives ineffectiveness (310) -0.02% - 0.00% NS - 0.00% - 0.00% NS
Total financial income(B) (1,058) -0.07% (177) -0.01% 498% (147) -0.03% (34) -0.01% 332%
Net financial exp. (C=A+B) 378 0.02% 1,531 0.11% NS 431 0.09% 600 0.14% NS
Foreign exchange gains (158) -0.01% (311) -0.02% -49% (81) -0.02% (124) -0.03% -35%
Foreign exchange losses 1,114 0.07% 412 0.03% 170% 670 0.13% 7 0.00% 9471%
Net foreign exch. (profit)/losses (D) 956 0.06% 101 0.01% 847% 589 0.12% (117) -0.03% -603%
Net financial (income)/costs (E=C+D) 1,334 0.09% 1,632 0.12% -18% 1,020 0.20% 483 0.11% 111%
(euro/000) % % % %
Interim Management Statement as at 30 September 2014
Esprinet Group page 19
The abovementioned effects more than counterbalanced the adverse impact of an increase in the average market interest rates compared to the first nine months of 2013, particularly for short-term maturities (mainly 1-month and 3-months Euribor). The aforesaid increase is also strengthen by the positive effect of 0.3 million euro relating to reversal in the profit and loss of the derivatives equity reserve come to maturity during the first nine months, only partially offset by -0.2 million euro interest expenses booked on the purchase option of the 40% share in Celly held by Esprinet due to the movement in interest rates compared to the recording date. The item ‘net foreign exchange (profit)/losses’ shows an increase of 0.9 million euro mainly due to the impact of US dollar strengthening vs euro with reference to the goods purchased in US dollar. In the third quarter 2014 net financial expenses increased by 0.5 million euro compared to the same quarter of 2013 mainly because of net foreign exchange losses (0.7 million euro higher) and of “Interest on shareholdings acquired” (equal to 0.1 million euro) only partially offset by a lower net interest to banks (0.2 million euro). 45) Income tax expenses
Income tax expenses, equal to 7.5 million euro, increased by +9% compared to the first nine months of 2013 because of a higher taxable income only partially offset by lower estimated tax rate for the 2014 financial year. 46) Net income and earnings per share
No own shares held in portfolio were used to calculate the ‘basic’ earnings per share. The potential shares involved in the stock grant plan approved on 9 May 2012 by the Esprinet S.p.A. Shareholders’ meeting, resulting in the free assignment of 1,150,000 rights to receive Esprinet S.p.A. ordinary shares, were used in the calculation of the ‘diluted’ profit per share.
9 months 9 months % Q3 Q3 %
20142013
restatedVar. 2014
2013
restatedVar.
Sales 1,535,383 ###### 1,391,312 ###### 10%Ricavi 502,413 ###### 431,012 ###### 17%
Current and deferred taxes 7,450 0.49% 6,823 0.49% 9% Imposte correnti e differite 1,920 0.38% 2,406 0.56% -20%
Profit before taxes 22,956 1.50% 19,187 1.38% 20% Utile ante imposte 6,206 1.24% 5,154 1.20% 20%
Tax rate 32% 0.00% 36% 0.00% -9% Tax rate31% 0.00% 47% 0.00% -34%
(euro/000) % % % %
9 months 9 months % Q3 Q3 %
20142013
restatedVar. 2014
2013
restatedVar.
Profit from continuing operations 15,506 12,364 3,142 25% 4,286 2,748 1,538 56%
Net income 17,350 13,498 3,852 29% 4,086 3,181 905 28%
Weighed average no. of shares in circulation:
basic 51,222,940 51,147,318 51,222,940 51,222,118
Weighed average no. of shares in circulation:
diluted 52,300,067 51,894,736 52,361,129 52,103,874
Earnings continuing operation per share - basic 0.30 0.24 0.06 25% 0.08 0.05 0.03 60%
Earnings per share in euro - basic 0.34 0.26 0.08 31% 0.08 0.06 0.02 33%
Earnings continuing operation per share - diluted 0.30 0.24 0.06 25% 0.08 0.05 0.03 60%
Earnings per share in euro - diluted 0.33 0.26 0.07 27% 0.08 0.06 0.02 33%
(euro/000) Var. Var.
Interim Management Statement as at 30 September 2014
Esprinet Group page 20
47) Income/(loss) from disposal groups
As at 30 September 2014 this item sums up all the net income of the subsidiaries Monclick S.r.l. and
Comprel S.r.l. as well as the other charges and income referring to their disposal, occurred on 28 February
with respect to Monclick and on 23 July 2014 with respect to Comprel.
The table below summarizes the abovementioned results, broken down by disposal group, as already
detailed in the paragraph 'Disposed or disposal groups’ in the half-yearly 'Interim Director’s Report on
Operations to which reference is made.
Monclick Comprel Total Monclick Comprel Total
Net income from disposal group 14 330 344 880 254 1,134
Gain/(Loss) realized 2,452 (1,141) 1,311 - - -
Income taxes on gain/(loss) from disposal groups 7 182 189 - - -
Income/(loss) from disposal group 2,473 (629) 1,844 880 254 1,134
9 months 2014 9 months 2013(euro/000)
Realised disposal gains/losses are stated net of selling costs.
9 months 9 months % Q3 Q3 %
20142013
restatedVar. 2014
2013
restatedVar.
Sales 1,535,383 1,391,312 10% 502,413 431,012 17%
Income/(loss) from disposal group 1,844 0.12% 1,134 0.08% 63% (200) -0.04% 433 0.10% -146%
(euro/000) % %% %
Interim Management Statement as at 30 September 2014
Esprinet Group page 21
4. Consolidated statement of financial position and notes
4.1 Consolidated statement of financial position
The table below shows the consolidated statement of financial position drawn up according to IFRS principles, together with the information required pursuant to Consob Resolution No. 15519 of 27 July 2006.
(*)
For further details on related parties, see the related section ‘Operations with related parties’.
ASSETS
Non-current assets
Property, plant and equipment 9,660 9,877
Goodw ill 74,982 73,219
Intangible assets 1,250 767
Investments in associates 26 -
Deferred income tax assets 11,374 11,369
Receivables and other non-current assets 4,629 1,188 4,978 1,188
101,921 1,188 100,210 1,188
Current assets
Inventory 293,516 217,304
Trade receivables 206,718 27 232,519 35
Income tax assets 2,085 1,723
Other assets 10,004 10,621
Cash and cash equivalents 53,797 176,893
566,120 27 639,060 35
Disposal groups assets - -
Total assets 668,041 1,215 739,270 1,223
EQUITY
Share capital 7,861 7,861
Reserves 237,798 228,870
Group net income 17,518 23,095
Group net equity 263,177 259,826
Non-controlling interests 2,458 -
Total equity 265,635 259,826
LIABILITIES
Non-current liabilities
Borrow ings 68,574 3,356
Deferred income tax liabilities 5,100 5,331
Retirement benefit obligations 4,469 4,707
Debts for investments in subsidiaries 9,927 -
Provisions and other liabilities 2,744 2,333
90,814 15,727
Current liabilities
Trade payables 253,737 - 400,366 -
short-term financial liabilities 23,489 38,569
Income tax liabilities 3,201 664
Derivative f inancial liabilities - 174
Provisions and other liabilities 31,165 23,944
311,592 - 463,717 -
Disposal groups liabilities - -
Total liabilities 402,406 - 479,444 -
Total equity and liabilities 668,041 - 739,270 -
(euro/000) 30/09/2014related
parties*
related
parties*31/12/2013
Interim Management Statement as at 30 September 2014
Esprinet Group page 22
4.2 Notes to the most significant statement of financial position items
4.2.1 Gross investments
31/12/2013 30/09/2013
Esprinet
Group
Subgroup
Italy
Esprinet
Iberica
Esprinet
Group
Esprinet
Group
Plant and machinery 226 218 8 551 465
Ind. and comm. Equipment & Other assets 910 798 112 1,762 1,263
Assets under construction and advances 185 137 48 495 74
Total Property, plant and equipment 1,321 1,153 168 2,808 1,802
Formation and extension expenses 78 78 - - -
Industrial patents and intellectual rights 455 450 5 209 139
Assets under construction and advances 357 357 - - 20
Total intangible asstes 890 885 5 209 159- - - - -
Total gross investments 2,211 2,038 173 3,017 1,961
(euro/000)
30/09/2014
Investments in property, plant and equipment mainly refer to security equipment, electronic machines and furnishings.
4.2.2 Net financial position and covenants
For the definition of financial payables please see the paragraph ‘Principal accounting definitions and estimates’ in the consolidated accounts as at 31 December 2013. The Group's net financial position, negative in the amount of 44.0 million euro, corresponds to a net balance of gross financial debts of 92.0 million euro, 'Customer financial receivables' equal to 0.5 million euro, 'Financial receivables from factoring companies' totalling 0.6 million euro and 'Cash and cash equivalents' of 53.8 million euro. The liquid assets mainly consist of free and unrestricted bank deposits of a transitional nature as they are formed temporarily at the end of the month as a result of the Group's distinctive financial cycle. A feature of this cycle is the high concentration of funds received from customers and factoring companies – the latter in the form of net income from the non-recourse assignment of trade receivables – normally received at the end of each calendar month, while payments to suppliers, also tending to be concentrated at the end of the period, are usually spread more equally throughout the month. For this reason, the precise figure at the end of a period does not represent the financial borrowings net of the average treasury resources for the same period. The without-recourse sale of account receivables revolving programme focusing on selected customer segments continued during 2014 both in Italy and in Spain as part of the processes aimed at the structural optimisation of the management of working capital. Since these assignments result in the risks and benefits
(euro/000) 30/09/2014 31/12/2013 Var. 30/09/2013 Var.
Short-term financial liabilities 23,489 38,569 (15,080) 85,254 (61,765)
Customer f inancial receivables (469) (572) 102 - (469)
Current f inancial (assets)/liabilities for derivatives - 174 (174) 521 (521)
Financial receivables from factoring companies (643) (2,829) 2,186 (1,537) 894
Cash and cash equivalents (53,797) (176,893) 123,096 (10,145) (43,652)
Net current financial debt (31,420) (141,551) 110,130 74,093 (105,044)
Borrow ings 68,574 3,356 65,218 - 68,574
Debts for investments in subsidiaries 9,927 - 9,927 - 9,927
Customer f inancial receivables (3,085) (3,457) 373 - (3,085)
Net financial debt 43,996 (141,652) 185,648 74,093 (30,097)
Interim Management Statement as at 30 September 2014
Esprinet Group page 23
being transferred fully to the assignees, the assigned receivables are removed from the total assets in accordance with IAS 39 accounting principle. Even considering other technicalities from factoring by means of which to obtain the result of advancing cash-in of credits on a ‘no recourse’ basis - such as ‘confirming’ in Spain –, the impact on financial debt as at 30 September 2014 was equal to approx. 107 million euro (approx. 154 million euro as at 31 December 2013). The value of non-current financial debts arises mainly from the new middle-term loan entered into on 31 July 2014 amounting to 65.0 million euro in principal. The above loan is subject to specific clauses, which allow the lenders to demand early repayment in the event of failure to meet certain economic and financial criteria which are checked every six months against the data in the consolidated and audited financial statements. These covenants will be checked on a six-month basis starting from 31 December 2014. 4.2.3 Goodwill
Goodwill amounts to 75.0 million euro and shows an increase of +1.8 million euro compared to 73.2 million euro as at 31 December 2013. This change is due to the booking of the 'consolidation difference' following Celly S.p.A acquisition (3.9 million euro), only partially offset by the elimination of Comprel goodwill (equal to 2.1 million euro) as a consequence of its exit from the Group as at 23 July 2014. IAS 36 requires the goodwill impairment test to be effected more frequently whenever ‘triggering events’ occur, i.e. indications of loss of value. As no such indicators were pointed out between the annual impairment test of March 2014 and the date of this interim financial report, no other impairment tests were conducted on 30 September 2014 with reference to Esprinet S.p.A and Esprinet Iberica S.L.U. figures. Similarly no ‘triggering events’ occurred with reference to the consolidation difference arising from the acquisition of the 60% share in Celly between the acquisition date (12 May 2014), i.e. when the value was defined, and the date of this report. In the light of above, the goodwill values booked as at 31 December 2013 and still outstanding in the balance sheet, together with the 'consolidation difference' referring to Celly S.p.A. recorded during 2014, are confirmed. For further information please refer to the Annual Report as at 31 December 2013 and to the Half-yearly Financial Report as at 30 June 2014.
Interim Management Statement as at 30 September 2014
Esprinet Group page 24
5. Consolidated statement of changes in net equity
Balance at 31 December 2012 7,861 223,231 (14,935) 23,718 239,875 - 239,875
Total comprehensive income/(loss) - 308 - 13,498 13,806 - 13,806
Allocation of last year net income/(loss) - 19,159 - (19,159) - - -
Dividend payment - - - (4,559) (4,559) - (4,559)
Transactions with owners - 19,159 - (23,718) (4,559) - (4,559)
Increase/(decrease) in 'stock grant' plan reserve - (473) - - (473) - (473)
Assignment of Esprinet ow n shares - (666) 1,865 - 1,199 - 1,199
Balance at 30 September 2013 7,861 241,559 (13,070) 13,498 249,847 - 249,847 -
Balance at 31 December 2013 7,861 241,941 (13,070) 23,095 259,826 - 259,826
Total comprehensive income/(loss) - (484) - 17,350 16,866 (168) 17,034
Increase in reserve from Celly acquisition 2,704 2,704 2,704 -
Allocation of last year net income/(loss) - 18,536 - (18,536) - - -
Dividend payment - - - (4,559) (4,559) - (4,559)
Transactions with owners - 18,536 - (23,095) (4,559) - (4,559)
Increase/(decrease) in 'stock grant' plan reserve - 684 - - 684 - 684
Variation in IAS / FTA reserve (128) (128) (51) (77)
Other variations - (68) - - (68) (27) (41)
Variation in reserve on 40% Celly option - (9,691) - - (9,691) - (9,691)
Balance at 30 September 2014 7,861 253,494 (13,070) 17,350 265,635 2,458 263,177
Own
sharesReserves
Share
capital(euro/000)
Group net
equity
Minority
interest
Total net
equity
Profit for
the
period
Interim Management Statement as at 30 September 2014
Esprinet Group page 25
6. Consolidated statement of cash flows
(euro/000)9 months
2014
9 months
2013
restated*
Cash flow provided by (used in) operating activities (D=A+B+C) (171,922) (128,903)
Cash flow generated from operations (A) 28,935 25,252
Operating income (EBIT) 24,313 20,826
Net income from disposal groups 2,002 1,665
Depreciation, amortisation and other fixed assets write-downs 2,398 1,975
Net changes in provisions for risks and charges (26) 296
Net changes in retirement benefit obligations (436) (235)
Stock option/grant costs 684 725
Cash flow provided by (used in) changes in working capital (B) (194,345) (150,147)
Inventory (74,031) (20,150)
Trade receivables 15,259 19,427
Other current assets (4,538) 5,257
Trade payables (143,615) (159,290)
Other current liabilities 12,580 4,609
Other cash flow provided by (used in) operating activities (C) (6,512) (4,008)
Interests paid, net 449 (931)
Foreign exchange (losses)/gains (780) (144)
Net results from associated companies (12) -
Gain on Monclick disposal (2,452) -
Comprel write-down 1,141 -
Income taxes paid (4,858) (2,933)
Cash flow provided by (used in) investing activities (E) 1,717 (1,570)
Net investments in property, plant and equipment (1,325) (1,545)
Net investments in intangible assets (799) (146)
Changes in other non current assets and liabilities 471 121
Celly business combination (12,336) -
Monclick selling 2,787 -
Comprel selling 12,919 -
Cash flow provided by (used in) financing activities (F) 47,109 29,519
Medium/long term borrowing 67,000 -
Repayment/renegotiation of medium/long-term borrowings (13,274) (12,140)
Net change in financial liabilities (4,322) 44,979
Net change in financial assets and derivative instruments 2,487 895
Deferred price Celly acquisition 9,927 -
Option on 40% Celly shares (9,691) -
Dividend payments (4,559) (4,559)
Increase/(decrease) in 'cash flow hedge' equity reserve (212) 344
Other movements (247) -
Net increase/(decrease) in cash and cash equivalents (G=D+E+F) (123,096) (100,954)
Cash and cash equivalents at year-beginning 176,893 111,099
Net decrease (increase) in cash and cash equivalents (123,096) (100,954)
Cash and cash equivalents at year-end 53,797 10,145
(*) Different amounts from those published in the interim management statement as at 30 September 2013 due to reclassification, recurred
even in the comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item.
Interim Management Statement as at 30 September 2014
Esprinet Group page 26
The detailed figures of both 'Monclick disposal' and 'Comprel disposal' are below summarised. In particular, disposed assets and liabilities (sold on 28 February and on 23 July 2014 respectively), gain or loss on disposal and sales receipt are all split up into transaction.
(euro/000) Monclick Comprel
Property, plants and equipment 217 82
Goodw ill - 2,126
Other non-current assets 23 (194)
Inventory 1,209 4,568
Trade receivables 3,273 12,870
Other current assets (3,392) (508)
Cash and cash equivalents 1,216 53
Retirement benefit obligations (285) (442)
Trade payables (645) (5,125)
Short-term financial liabilities (3) (7,072)
Income tax liabilities (99) (136)
Gain/(Loss) on disposed group 2,486 (322)
Selling value of disposed group 4,000 5,900
Cash and cash equivalents transferred (1,216) (53)
Short-term financial liabilities transferred 3 7,072
2,787 12,919
Gain/(Loss) on disposed group 2,486 (322)
Salling costs (34) (819)
2,452 (1,141)
Cash flow resulting from the sele of the CGU (Cash Generiting Unit), net of the
net financial position transferred
Selling value of disposed group
The table below shows the changes during the period and the reconciliation with the final situation at the end of that period:
(euro/000)9 months
2014
9 months
2013
restated*
Net financial debt at start of year (141,652) (61,100)
Cash flow provided by (used in) operating activities (171,922) (128,903)
Cash flow provided by (used in) investing activities 1,717 (1,570)
Cash flow provided by (used in) changes in net equity (14,709) (4,215)
Total cash flow (184,914) (134,688)
Unpaid interests (734) (505)
Net financial position at end of year 43,996 74,093
Short-term financial liabilities 23,489 85,254
Current financial (assets)/liabilities for derivatives - 521
Financial receivables from factoring companies (643) (1,537)
Financial receivables from customers (469) -
Cash and cash equivalents (53,797) (10,145)
Net currant financial debt (31,420) 74,093
Non current financial (assets)/liabilities for derivatives - -
Financial receivables from customers (3,085) -
Borrowings 68,574 -
Debts for investments in subsiadiaries 9,927
Net financial debt 43,996 74,093
(*)
Different amounts from those published in the Interim management statement as at 30 September 2013 due to reclassification, recurred even in the comparative figures, of the profit and loss values into ‘Income/(loss) from disposal groups’ item.
Interim Management Statement as at 30 September 2014
Esprinet Group page 27
7. Relationship with related parties
Group operations with related parties have been defined as per IAS 24 and were effected in compliance with current laws and according to mutual economic advantage. In case of products sold to individuals, these sales are made under the same conditions as those usually applied to employees. Operations among the parent Company Esprinet S.p.A. and its subsidiaries included in the consolidation area were excluded from the interim consolidated financial statements and therefore they are not quoted in this section. During the first nine months, relationships with related parties consisted essentially in the sales of products and services at market conditions between Group’s entities and associates or companies where the key management personnel of Esprinet S.p.A. play important roles. Relationships with key managers result from the recognition of the payments for services rendered by the same. Achieved sales are related to the sales of consumer electronics products to business and private customers at market condition. Services received are related to real estate lease agreements at market condition signed in previous periods than the one under review with the Immobiliare Selene S.r.l. dealing with Cambiago (MI) warehouse and with M.B. Immobiliare S.r.l. dealing with Cavenago (MB) warehouse. The total value of the aforementioned operations is not significant compared to the overall volume of the Group’s activities.
8. Segment information
8.1 Introduction The Esprinet Group is organised in the geographical business areas of Italy and Spain (operating segments) where it performs the business-to-business (B2B) distribution of Information Technology (IT) and consumer electronics. Solely in Italy, the Group was also marginally active in the business-to-consumer (B2C) IT and consumer electronics distribution and business-to-business (B2B) micro-electronic components distribution business segments, both disposed as at 30 September 2014. A ‘geographical segment’ is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those achievable in other geographical segments. A ‘business segment’ is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. Although the organisation by geographical segments is the main way of managing and analysing the Group’s results, the next tables also provide a fuller picture of the operating results and assets balances of the business segments where the Group has operated in Italy.
Interim Management Statement as at 30 September 2014
Esprinet Group page 28
8.2 Separate income statement by operating segments The separate income statement, statement of financial position and other significant information regarding each of the Esprinet Group’s operating segments are as follows: Separate income statement and other significant information by operating segments
Italy Spain
(euro/000) Distr. IT &
CE B2B
Distr. IT
& CE B2C
Electr.
Comp.
Distr.
Elim. and
other Total %
Distr. It
& CE B2B %
Elim.
and
other
Group
Sales to third parties 1,153,531 - - - 1,153,531 381,852 - 1,535,383
Intersegment sales 32,908 - - - 32,908 - (32,908) -
Sales 1,186,439 - - - 1,186,439 381,852 (32,908) 1,535,383
Cost of sales (1,106,725) - - (46) (1,106,771) (365,105) 32,780 (1,439,096)
Gross profit 79,714 - - (46) 79,668 6.91% 16,747 4.39% (128) 96,287
Sales and marketing costs (23,212) - - - (23,212) -2.01% (3,761) -0.98% (287) (27,260)
Overheads and admin. costs (36,167) - - (8) (36,175) -3.14% (8,833) -2.31% 294 (44,714)
Operating income (Ebit) 20,335 - - (54) 20,281 1.76% 4,153 1.09% (121) 24,313
Finance costs - net (1,334)
Share of profits of associates (23)
Profit before income tax 22,956
Income tax expenses (7,450)
Profit from continuing operations 15,506
Income/(loss) from disposal groups 1,844
Net income 17,350
- o f which attributable to non-contro lling interests (168)
- of which attributable to owners of the parent 17,518
Depreciation and amortisation 1,987 - - - 1,987 227 184 2,398
Other non-cash items 2,270 19 123 - 2,412 18 - 2,430
Investments 2,038 173 - 2,211
Total assets 591,352 183,746 (107,057) 668,041
9 months 2014
Italy Spain
(euro/000) Distr. IT &
CE B2B
Distr. IT
& CE B2C
Distr.
Comp.
Elettr.
Elim. and
other Total %
Distr. It
& CE B2B %
Elim.
and
other
Group
Sales to third parties 1,053,553 - - - 1,053,553 337,759 - 1,391,312
Intersegment sales 33,135 - - - 33,135 - (33,135) -
Sales 1,086,688 - - - 1,086,688 337,759 (33,135) 1,391,312
Cost of sales (1,017,043) - - - (1,017,043) (322,372) 33,121 (1,306,294)
Gross profit 69,645 - - - 69,645 6.61% 15,387 4.56% (14) 85,018
Sales and marketing costs (18,580) - - - (18,580) -1.76% (3,387) -1.00% (354) (22,321)
Overheads and admin. costs (33,069) - - - (33,069) -3.14% (9,162) -2.71% 359 (41,872)
Operating income (Ebit) 17,996 - - - 17,996 1.71% 2,838 0.84% (9) 20,825
Finance costs - net (1,632)
Share of profits of associates (6)
Profit before income tax 19,187
Income tax expenses (6,823)
Profit from continuing operations 12,364
Income/(loss) from disposal groups 1,134
Net income 13,498
- o f which attributable to non-contro lling interests -
- o f which attributable to owners of the parent 13,498
Depreciation and amortisation 1,596 - - - 1,596 233 147 1,976
Other non-cash items 2,224 77 196 - 2,497 30 - 2,527
Investments 1,924 37 - 1,961
Total assets 487,169 194,763 (104,712) 577,220
9 months 2013 restated
Interim Management Statement as at 30 September 2014
Esprinet Group page 29
Italy Spain
(euro/000) Distr. IT
& CE B2B
Distr. IT
& CE B2C
Electr.
Comp.
Distr.
Elim. and
Other Total %
Distr. It &
CE B2B %
Elim.
and
other
Group
Sales to third parties 365,190 - - - 365,190 137,224 502,413
Intersegment sales 11,496 - - - 11,496 - (11,496) -
Sales 376,686 - - - 376,686 137,224 (11,496) 502,413
Cost of sales (350,805) - - (46) (350,851) (131,645) 11,357 (471,139)
Gross profit 25,881 - - (46) 25,835 7.07% 5,579 4.07% (139) 31,274
Sales and marketing costs (8,525) - - - (8,525) -2.33% (1,208) -0.88% (60) (9,793)
Overheads and admin. costs (11,473) - - (6) (11,479) -3.14% (2,831) -2.06% 63 (14,247)
Operating income (Ebit) 5,883 - - (52) 5,831 1.60% 1,540 1.12% (136) 7,234
Finance costs - net (1,020)
Share of profits of associates (8)
Profit before income tax 6,206
Income tax expenses (1,920)
Profit from continuing operations 4,286
Income/(loss) from disposal groups (200)
Net income 4,086
- o f which attributable to non-contro lling interests (169)
- of which attributable to owners of the parent 4,255
Depreciation and amortisation 682 - - - 682 67 81 830
Other non-cash items 73 - - - 73 11 - 84
Investments 663 4 - 667
Total assets 591,352 183,746 (107,057) 668,041
Q3 2014
Italy Spain
(euro/000) Distr. IT
& CE B2B
Distr. IT
& CE B2C
Electr.
Comp.
Distr.
Elim. and
Other Total %
Distr. It &
CE B2B %
Elim.
and
other
Group
Sales to third parties 318,861 - - - 318,861 112,151 431,012
Intersegment sales 10,056 - - - 10,056 - (10,056) -
Sales 328,917 - - - 328,917 112,151 (10,056) 431,012
Cost of sales (308,356) - - - (308,356) (107,145) 10,058 (405,443)
Gross profit 20,561 - - - 20,561 6.45% 5,006 4.46% 2 25,569
Sales and marketing costs (5,672) - - - (5,672) -1.78% (1,110) -0.99% (118) (6,900)
Overheads and admin. costs (10,235) - - - (10,235) -3.21% (2,912) -2.60% 115 (13,032)
Operating income (Ebit) 4,654 - - - 4,654 1.46% 984 0.88% (1) 5,637
Finance costs - net (483)
Share of profits of associates -
Profit before income tax 5,154
Income tax expenses (2,406)
Profit from continuing operations 2,748
Income/(loss) from disposal groups 433
Net income 3,181
- o f which attributable to non-contro lling interests -
- o f which attributable to owners of the parent 3,181
Depreciation and amortisation 556 - - - 556 77 53 686
Other non-cash items 695 28 56 - 779 - - 779
Investments 150 26 - 176
Total assets 487,169 194,763 (104,712) 577,220
Q3 2013 restated
Interim Management Statement as at 30 September 2014
Esprinet Group page 30
Statement of financial position by operating segments
Distr. IT
& CE
B2B
Distr. IT
& CE
B2C
Electr.
Comp.
Distr.
Elim.
and
other
Total Italy
Distr. IT
& CE
B2B
Elim.
and
other
Group
ASSETS
Non-current assets
Property, plant and equipment 9,030 - - - 9,030 630 - 9,660
Goodw ill 10,626 - - 4,755 15,381 58,561 1,040 74,982
Intangible assets 1,163 - - - 1,163 87 - 1,250
Investments in associates 44 - - (18) 26 - - 26
Investments in others 79,558 - - (17,655) 61,903 - (61,903) -
Deferred income tax assets 3,935 - - 16 3,951 7,369 54 11,374
Receivables and other non-current assets 4,430 - - - 4,430 199 - 4,629
108,786 - - (12,902) 95,884 66,846 (60,809) 101,921
Current assets
Inventory 227,927 - - (46) 227,881 65,811 (176) 293,516
Trade receivables 157,106 - - - 157,106 49,612 - 206,718
Income tax assets 2,085 - - - 2,085 - - 2,085
Other assets 55,562 - - - 55,562 514 (46,072) 10,004
Cash and cash equivalents 52,834 - - - 52,834 963 - 53,797
495,514 - - (46) 495,468 116,900 (46,248) 566,120
Disposal groups assets - - - - - - - -
Total assets 604,300 - - (12,948) 591,352 183,746 (107,057) 668,041
EQUITY
Share capital 9,131 - - (1,270) 7,861 54,693 (54,693) 7,861
Reserves 240,648 - - (11,109) 229,539 14,467 (6,208) 237,798
Group net income 18,201 - - (3,039) 15,162 2,440 (84) 17,518
Group net equity 267,980 - - (15,418) 252,562 71,600 (60,985) 263,177
Non-controlling interests - - - 2,458 2,458 - - 2,458
Total equity 267,980 - - (12,960) 255,020 71,600 (60,985) 265,635
LIABILITIES
Non-current liabilities
Borrow ings 68,574 - - - 68,574 - - 68,574
Derivative f inancial liabilities 9,927 - - (9,927) - - - -
Deferred income tax liabilities 2,624 - - - 2,624 2,476 - 5,100
Retirement benefit obligations 4,469 - - - 4,469 - - 4,469
Debts for investments in subsidiaries - - - 9,927 9,927 - - 9,927
Provisions and other liabilities 2,559 - - 12 2,571 173 - 2,744
88,153 - - 12 88,165 2,649 - 90,814
Current liabilities
Trade payables 210,520 - - - 210,520 43,217 - 253,737
Short-term financial liabilities 13,349 - - - 13,349 50,140 (40,000) 23,489
Income tax liabilities 2,726 - - - 2,726 475 - 3,201
Provisions and other liabilities 21,572 - - - 21,572 15,665 (6,072) 31,165
248,167 - - - 248,167 109,497 (46,072) 311,592
Disposal groups liabilities - - - - - - - -
Total liabilities 336,320 - - 12 336,332 112,146 (46,072) 402,406
Total equity and liabilities 604,300 - - (12,948) 591,352 183,746 (107,057) 668,041
(euro/000)
30/09/2014
Italy Spain
Interim Management Statement as at 30 September 2014
Esprinet Group page 31
Distr. IT
& CE
B2B
Distr. IT
& CE
B2C
Electr.
Comp.
Distr.
Elim.
and
other
Total Italy
Distr. IT
& CE
B2B
Elim.
and
other
Group
ASSETS
Non-current assets
Property, plant and equipment 8,919 221 78 - 9,218 659 - 9,877
Goodw ill 10,625 - 2,126 867 13,618 58,561 1,040 73,219
Intangible assets 656 - - - 656 111 - 767
Investments in associates 6 - - (6) - - - -
Investments in others 66,159 - - (4,256) 61,903 - (61,903) -
Deferred income tax assets 2,664 25 809 - 3,498 7,855 16 11,369
Receivables and other non-current assets 4,790 - 1 - 4,791 187 - 4,978
93,819 246 3,014 (3,395) 93,684 67,373 (60,847) 100,210
Current assets
Inventory 160,977 1,183 3,808 - 165,968 51,390 (54) 217,304
Trade receivables 166,755 4,619 10,478 - 181,852 50,667 - 232,519
Income tax assets 1,723 - - - 1,723 - - 1,723
Other assets 65,375 1,209 1,100 (6,349) 61,335 388 (51,102) 10,621
Cash and cash equivalents 120,780 1,568 6 - 122,354 54,539 - 176,893
515,610 8,579 15,392 (6,349) 533,232 156,984 (51,156) 639,060
Total assets 609,429 8,825 18,406 (9,744) 626,916 224,357 (112,003) 739,270
EQUITY
Share capital 7,881 100 500 (620) 7,861 54,693 (54,693) 7,861
Reserves 220,779 221 5,070 (2,769) 223,301 11,766 (6,197) 228,870
Group net income 18,753 1,179 341 (9) 20,264 2,842 (11) 23,095
Group net equity 247,413 1,500 5,911 (3,398) 251,426 69,301 (60,901) 259,826
Non-controlling interests -
Total equity 247,413 1,500 5,911 (3,398) 251,426 69,301 (60,901) 259,826
LIABILITIES
Non-current liabilities
Borrow ings 3,356 - - - 3,356 - - 3,356
Deferred income tax liabilities 2,279 1 704 - 2,984 2,347 - 5,331
Retirement benefit obligations 3,959 278 470 - 4,707 - - 4,707
Provisions and other liabilities 1,920 - 255 3 2,178 155 - 2,333
11,514 279 1,429 3 13,225 2,502 - 15,727
Current liabilities
Trade payables 311,204 630 4,086 - 315,920 84,446 - 400,366
Short-term financial liabilities 25,333 5 5,780 - 31,118 47,451 (40,000) 38,569
Income tax liabilities 276 93 2 - 371 293 - 664
Derivative f inancial liabilities 70 - - - 70 104 - 174
Provisions and other liabilities 13,619 6,318 1,198 (6,349) 14,786 20,260 (11,102) 23,944
350,502 7,046 11,066 (6,349) 362,265 152,554 (51,102) 463,717
Total liabilities 362,016 7,325 12,495 (6,346) 375,490 155,056 (51,102) 479,444
Total equity and liabilities 609,429 8,825 18,406 (9,744) 626,916 224,357 (112,003) 739,270
(euro/000)Italy Spain
31/12/2013
Interim Management Statement as at 30 September 2014
Esprinet Group page 32
9. Atypical and/or unusual operations
No atypical and/or unusual events or operations according to the definition as per Consob communication No. DEM/6064293 of the 28 July 2006 occurred during the period.
10. Non-recurring significant events and operations
During the first nine months of 2014 employee termination indemnities in the parent company (equal to 700 thousand euro) as well as estimated transaction costs on Celly’s acquisition (equal to 193 thousand euro) were identified as non-recurring items. In 2013 on the contrary, no operations of a non-recurring nature occurred. The following table shows effects of the above said events and operations on the income statement (included the related fiscal effects):
(euro/000) Charge type9 months
2014
9 months
2013Var.
Overheads and administrative costs Transaction costs on Celly's acquisition (193) - (193)
Overheads and administrative costs Employee termination incentives (700) - (700)
Overheads and administrative costs Defence charges - (98) 98
Total SG&A (893) (98) (893)
Operating income (EBIT) (893) (98) (893)
Finance costs - net Interests on delayed tax payments - (66) 66
Profit before income taxes (893) (164) (827)
Income tax expenses Recovery of previous years taxes - (495) 495
Income tax expenses Non-recurring events impact 295 - 295
Profit for the period (598) (659) (37)
Non - controlling interest - - -
Net income / (loss) (598) (659) (37)
11. Significant events occurred in the period
The significant events occurred during the period are hereby described: Esprinet to sale 100% of Monclick’s share capital
On 28 February 2014 Esprinet finalised the sale of 100% stake in its subsidiary Monclick S.r.l. for an equity value of 4.0 million euro paid in cash net of non-significant sale costs. On the same day the value of the Monclick subsidiary in the separated statement was 3.7 million euro, against an asset value of 1.5 million euro.
The transaction represents a step forward in the process aimed at further focusing in the technology wholesale distribution business through maximizing ‘non-core assets’ value. The buyer is Project Informatica S.p.A. - one of the most valuable IT system integrators in the Italian market - through a wholly owned company. Agreements with Project Informatica S.p.A. include collateral contracts having the purpose of smoothing the process of exiting the Esprinet Group and ruling future commercial relationships between Esprinet and Monclick. Esprinet S.p.A. Shareholders’ General Meeting.
On 30 April 2014, in second call, the Esprinet Shareholders’ Meeting approved the financial statements of Esprinet S.p.A as at 31 December 2013 and resolved to distribute a gross dividend of 0,089 euro per ordinary share before taxes and any mandatory substitute taxation. The dividend, equal to 4.5 million euro, was paid out from 8 May 2014. Shareholders’ Meeting approved the first section of the report on remuneration pursuant to paragraph 6 art. 123-ter decree law 58/1998.
Interim Management Statement as at 30 September 2014
Esprinet Group page 33
The Shareholders’ Meeting approved the proposal for change and integration of current three years period 2012-2014 “Long Term Incentive Plan” for executive directors and employees of Esprinet S.p.A., based on the grating of a up to a maximum of 1,150,000 shares of company’s own shares (‘performance stock grant’) approved by the Annual Shareholders’ Meeting on 9 May 2012. Major changes refer to the right granted to beneficiaries to receive a portion of the maximum number of shares in case of a partial achievement of financial targets, provided that a performance-threshold is at least overtaken. The Shareholders’ Meeting resolved to authorise, subject to prior revocation of former authorization resolved in the Shareholder’s Meeting on 29 April 2013, the acquisition and disposal of own shares. During 2013 the company granted n. 168,000 own shares to some Company’s managers, in execution of the Long Term Incentive Plan for the 2010-2012 period. The proposed plan represents the re-iteration of the former one and comprises up to 10,480,000 ordinary shares of Esprinet S.p.A. with a nominal value of 0.15 euro each, or a maximum of 20% of share capital taking into account the own shares hold by the Company. Acquisition of 60% stake in Celly’s share capital.
On 12 May 2014 Esprinet S.p.A. signed the agreement for the acquisition of a 60% stake in the share capital of Celly S.p.A., an Italian company active in the wholesale distribution of accessories for mobile devices. The aforementioned deal will be executed through a purchase of shares from former shareholders as well as company’s own shares and, ultimately, the subscription of a share capital increase. Total cash-out for Esprinet is 7.944 million euro, which corresponds to a pre-money equity value for 100% of share capital of 13.0 million euro. The binding agreement comprises a shareholders’ agreement with the owner of 40% of the capital, aimed at establishing corporate governance rules along the investment period when the minority shareholders will co-manage the operations together with Esprinet. The way-out from investment is regulated through put/call options. Sale of 100% stake of the subsidiary Comprel S.r.l.
On 23 July 2014 Esprinet S.p.A. sold 100% stake in its subsidiary Comprel S.r.l., a leading Italian distributor of electro-components and subsystems, for a total value of 5.9 million euro paid in cash. On the same day the value of the Comprel subsidiary in the separated statement of Esprinet S.p.A. was 0.5 million euro, against an asset value of 6.2 million euro. Buyer is Melchioni S.p.A., one of the largest distributor of electro-components in the Italian market also operating in the supply of spare parts for the automotive industry, in ‘B2B’ distribution of professional electronics and ‘B2C’ distribution of consumer electronics and being active in the renewable energy market (photovoltaic and LED lighting). This transaction, as happened in February 2014 with the Monclick sale, represents a step forward in the process aimed at further focusing in the technology wholesale distribution business through maximizing ‘non-core assets’ value. Signing of a long term syndacated loan
On 31 July 2014 Esprinet S.p.A. signed an unsecured medium-term loan for a total maximum amount of 130.0 million euro split into a Term Loan Facility of up to 65.0 million euro and a Revolving Facility of up to 65.0 million euro with an expiry date fixed on 31 July 2019. Banca IMI S.p.A. both acted as Global Coordinator Bank and was, together with Unicredit S.p.A. and Banca Nazionale del Lavoro S.p.A., the Arranger and Bookrunner. Underwriters of the loan were primary banks as Intesa Sanpaolo S.p.A., Unicredit S.p.A., Banca Nazionale del Lavoro S.p.A., Banca Monte dei Paschi di Siena S.p.A., UBI Banca Soc. Coop. per azioni, Banco Popolare Soc. Coop., Caixabank, S.A., Cassa di Risparmio di Parma e Piacenza S.p.A.. These underwriters identified Banca IMI S.p.A.. as Agent Bank on behalf of the banking pool. Main purpose of the loan is to support Group’s financial needs by maintaining an adequate degree of stability and flexibility of the financial structure.
Interim Management Statement as at 30 September 2014
Esprinet Group page 34
12. Subsequent events
No significant events occurred after 30 September 2014.
13. Outlook
Most of the largest economies in Europe continue to have major structural problems. So far, there are no strong signs that this will change significantly in the coming months and neither that Governments are starting to undertake and, above all, to fully enact necessary reforms. Recent political tensions are contributing to an overall climate of uncertainty, which is causing an investment restraint by companies and the bank credit crunch currently in place. This tough situation is reflected even in the Ifo Business Climate Index (Source: Ifo - Institut für Wirtschaftsforschung, November 2014) which measures the climate of confidence among German companies and anticipate the economic development in September this index dropped to its lowest value since April 2013. Notwithstanding the abovementioned, the Information Technology industry showed a significant degree of vivacity among other major industries. Windows XP phasing out along the year - with customers’ assistance no longer granted by Microsoft since April - has been causing a revamping of the mature PC-desktop business which is also benefitting from the launch of new products by main suppliers. Positive demand for computing supported revenues especially in the business sector whereas retailers partially suffered due to deteriorated creditworthiness. Such trend in PCs was coupled by a similar favorable trend in mobility (smartphones and mobile phones), also pushed by Apple’s decision to vehicle iPhone sales along the indirect channel (which will positively affect the Group’s sales in Italy starting from the current quarter). In the first nine months of 2014 the European distribution market (source: Global Tech Distribution Council - Context, October 2014) achieved an even higher level of growth with respect to the first half (+9% year-on-year) despite a sudden stop in Germany (+1% in the third quarter of 2014), while UK (+16% in the same period) and all other Countries showed a significant level of growth. In the same period Spain and Italy, the two countries where the Group operates, grew respectively by +19% and +12% as compared to the previous year, with even better results in the third quarter (+29% and +14% respectively). Esprinet Italy’s market share was stable as compared to the first nine months in 2013, thus confirming its clear leadership among Italian IT distributors. Also Esprinet Iberica could maintain intact its market share in the third quarter of 2014, a good indicator considering that iPhones are not distributed by the Group in this country. In the light of the results delivered and of the persistent favorable trend in sales both in Italy and in Spain, the Group expects a significant sales growth in 2014 full fiscal year compared to the 2013. Despite the persistent pressure expectations on product gross margin percentage, even in the last part of the fiscal year, and considering that the costs structure is under strict control, the Group’s profitability is supposed to grow in the current fiscal year with constant perimeter. Vimercate, 13 November 2014 For and on behalf of the Board of Directors The Chairman
Francesco Monti
Interim Management Statement as at 30 September 2014
Esprinet Group page 35
14. Declaration of the officer responsible for financial reports
DECLARATION UNDER ARTICLE 154-bis (2) OF THE FINANCE CONSOLIDATION ACT
SUBJECT: Interim management statement as at 30 September 2014
The undersigned Pietro Aglianò, the manager responsible for preparing the accounting documents of
ESPRINET S.p.A.
in accordance with the provisions of in article 154 bis (2) of the Finance Consolidation Act
HEREBY DECLARES that the Interim management statement as at 30 September 2014 agrees with the accounting documents, books and records. Vimercate, 13 November 2014
The Officer in charge of drawing up
financial reports (Pietro Aglianò)