CIR GROUP: 149.6 MILLION NET INCOME IN 2004 (62.8 IN 2003). GROWTH IN ALL SUBSIDIARIES. SHAREHOLDING AND FINANCIAL STRUCTURE OF THE GROUP STRENGTHENED.
Consolidated results for fiscal year 2004.
Revenues of 3,061.2 million euros (+7.8%) Operating income of 268.6 million euros (+5.3%) Net income of 149.6 million euros (+138%) Net debt of 129.4 million euros (552.4 million at end of 2003).
Aggregate net financial position a positive 358.2 million euros
The Board will propose to the Shareholders the distribution of a dividend of 0.050 euro (+9%) payable on May 9 2005.
The Board of Directors of CIR, which met today in Milan under the chairmanship of Mr Carlo De Benedetti, approved the Statutory and Consolidated Financial Statements of the Group for fiscal year 2004. The Accounts will be submitted to the Annual General Meeting of the Shareholders which has been convened for April 26 2005 at the first calling and for April 27 if a second calling is necessary.
Fiscal year 2004, which closed with consolidated net income of 149.6 million euros, up from 62.8 million in 2003 (+138%), was characterized by two factors:
– The good performance of the operating sectors which, despite a European economic environment still experiencing limited growth, contributed to the improvement in operating income;
– The subscription by Verbund of a capital increase in Energia and the favourable solution of the dispute between CIR and the Hutchison group, with the payment to the subsidiary Cirtel of a total of 469.6 million euros.
The capital increase made by Verbund in Energia, totalling 150 million euros, generated income of approximately 64 million for the part attributable to CIR, bringing the implied value of Energia, in which CIR holds a controlling stake of 57.5%, up to 880 million euros. The net investment made by CIR in the Energia Group since it was established in 1999 as of the moment of this transaction stood at approximately 65 million euros.
Following the settlement of the dispute with Hutchison, net extraordinary revenues for 26.4 million euros were posted to the consolidated statement of income of CIR for fiscal year 2004, and the net financial position benefited from a significant increase to the extent of the amount received.
The financial structure of the CIR Group was also affected by the bond issue for 300 million euros, maturing in 2024, placed successfully on December 2 2004, which has extended the average length of the Group’s gross debt quite substantially.
In 2004 consolidated revenues of the CIR Group totalled 3,061.2 million euros, compared with 2,839 million in 2003 (+7.8%). To this increase the Espresso Group contributed 28.7 million euros, the Energia Group 135.2 million and the Sogefi Group 63.7 million.
MEDIA In 2004 the Espresso Group reported consolidated revenues of 1,079.8 million euros, compared with 1,051.1 million in 2003 (+2.7%), with very significant growth in consolidated earnings which rose from 67.8 million in 2003 to 87.7 million in 2004 (+29.3%). With a rise of 2.3% in advertising revenues, fiscal year 2004 was characterized by the complete roll-out of the full color project of ‘la Repubblica’, by the confirmed success of the optional products sold with ‘la Repubblica’ and ‘L’espresso’, by the growth of the audience share of the radio stations and by the substantial recovery of the Internet sector. At the same time, within the sphere of the development of new publishing initiatives, an important agreement was reached for the acquisition of the nationwide television channel Rete A.
UTILITIES In 2004 the Energia Group continued to see strong development of its business, recording a rise in consolidated revenues of 16.7% compared with 2003 (943.2 million euros against 808 million), thanks especially to the good performance of gas sales (+34% in volume). Consolidated net income came in at 36.4 million euros, up from 16.1 million in 2003. This figure was impacted significantly by the result of Tirreno Power, 50% controlled by Energia Italiana, which following the ministerial decree posted recognition of stranded costs to the extent of 167.5 million euros. The Energia Group is strongly committed to the implementation of a program of greenfield combined cycle thermoelectric power plants, each of 770 MW, fired by natural gas. After the Termoli plant (which has been under construction for over a year), the Modugno plant has now obtained its single authorization and work is expected to begin in the next few months. The projects regarding Aprilia (Latina), Pisticci (Matera) and Bertonico-Turano Lodigiano (Lodi) are going ahead with their authorization processes. Energia is also developing generating projects from renewable sources with particular emphasis on the creation of new wind farms.
AUTOMOTIVE COMPONENTS In 2004 the Sogefi Group reported consolidated revenues of 966.1 million euros, showing a rise of 7.1% compared with 2003 (902.4 million). Consolidated net income was 37.9 million, up from 28.5 (+33.1%). Among the world leaders in filter systems and suspension components for motor vehicles, Sogefi in 2004 achieved the best results ever recorded in its 25 years of business, despite the presence of considerable tension in the prices of raw materials. These negative elements were successfully countered by an increase in selling prices, a partial offsetting of the higher cost of raw materials onto prices and a further contraction of structure costs after the process of industrial and corporate reorganization put in place earlier.
On March 4 2005 the BPM Private Equity Fund signed an agreement to acquire 15.1% of HSS (Holding Sanità e Servizi), taking part in a coming capital increase in the company with 5 million euros. In 2004 HSS reported revenues of 18.6 million euros and is currently managing some 1,200 beds.
The economic results of fiscal year 2004.
In 2004 CIR recorded consolidated revenues of 3,061.2 million euros, up from 2,839 million in 2003 (+7.8%). 35.3% of this result was contributed by the media sector, 30.8% by utilities, 31.6% by automotive components (the remaining 2.3% came from other activities).
Consolidated income from ordinary operations was a positive 268.6 million euros (8.6% of the value of production), up by 5.3% compared with 255.1 million in 2003 (8.8% of the value of production).
Income before taxes and minority interests and before extraordinary income and charges was a positive 275.3 million euros, compared with 223.7 million in 2003 (+23%).
Consolidated net income came in at 149.6 million euros, up from 62.8 million in 2003 (+138%). As has already been shown, results were influenced by the good performance of the operating sectors together with the capital increase of Energia subscribed by Verbund and the solution of the dispute with the Hutchison Group. The result was also positively impacted by the participation of the Group in the “national fiscal consolidation” procedure introduced with the reform of IRES. Consolidated Shareholders’ Equity of the Group rose from 874.7 million euros at December 31 2003 to 996.8 million at December 31 2004, with a net increase of 122.1 million euros, after payment of dividends for 35 million. Total Shareholders’ Equity at December 31 2004 totalled 1,524.1 million euros, compared with 1,244.6 million at December 31 2003, with an increase of 279.5 million after the distribution of dividends of 35 million euros by CIR and of a total of 32.7 million by the subsidiaries to their minority shareholders. Apart from the net income figure of 149.6 million euros, this increase in total equity was also due to the capital increase in Energia for the amount of 150 million.
The consolidated net financial position of the Group at December 31 2004 showed indebtedness of 129.4 million euros, against indebtedness of 552.4 million at December 31 2003. At December 31 2004 the aggregate net financial position of CIR and its wholly owned subsidiaries showed a positive balance of 358.2 million euros, compared with net debt of 96.6 million at December 31 2003. This was due to the receipt at the close of the year of 469.6 million euros subsequent to the favourable conclusion of the arbitration proceedings with the Hutchison Group.
At December 31 2004 the CIR Group had 10,192 employees on its payrolls.
As far as the Parent Company CIR SpA is concerned, fiscal year 2004 closed with net income of 149.6 million euros and Shareholders’ equity of 996.8 million at December 31 2004. As a result of the application of the equity method, these figures coincide with the consolidated numbers and can be compared therefore with net income of 62.8 million and with 874.7 million of shareholders’ equity for fiscal year 2003.
At December 31 2004 the net financial position showed a positive balance of 119.7 million euros, compared with a positive net financial position of 138.2 million at December 31 2003.
The Board of Directors will propose to the Annual General Meeting of Shareholders a dividend of 0.050 euros per share (compared with 0.046 in 2003). The total payout of dividends for 2004 will be approximately 38 million euros. The dividend will be payable as from May 12 2005, against presentation of the coupon detachable on May 9 2005.
Exercising the mandate given by the Shareholders on May 12 2000, the Board of Directors approved a share capital increase for a total of 2,215,000 euros, through the issuance of 4,430,000 shares at the price of 2.34 euros per share. This capital increase will be servicing a stock option plan in favour of the employees of CIR and its parent company COFIDE.
The Board of Directors will also submit the following items to the approval of the coming General Meeting of the Shareholders:
Ordinary Session
The proposal to revoke and renew the mandate of the same Board, for a period of eighteen months, to buy back a maximum of 25 million of the Company’s own shares at a minimum price of 0.50 and at a maximum of 4.00 euros per share, with a maximum potential outlay of 100 million euros. The main reasons for the renewal of this mandate are as follows: on the one hand, the possibility of investing in the shares of the Company at prices considered to be below their effective intrinsic value, based on the economic value of the Company’s equity and on its future income prospects; and on the other hand the possibility of reducing the Company’s average cost of capital. The Company currently has in its portfolio 15,759,000 own shares, corresponding to 2.03% of the shares in circulation.
Extraordinary Session
The proposal to renew the mandate of the same Board to make capital increases up to a maximum amount of 500 million euros, to make share capital increases in favour of employees for a maximum amount of 20 million euros, and to issue convertible bonds within the limits laid down by law.
Lastly, the coming Shareholders’ Meeting will be called upon to approve the renewal of the Board of Directors and of the Board of Statutory Auditors and also to award a mandate to the firm of independent auditors.
Milan, March 11 2005
CONTACTS
CIR GROUP www.cirgroup.it DIREZIONE RELAZIONI ESTERNE E UFFICIO STAMPA Beppe Pescetto Francesca Sagramoso Tel.: +39 02 722701 e-mail: info@cirgroup.it
Below are charts showing highlights from the consolidated and statutory balance sheets and statements of income.
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