Milan, March 9 2009 – The Board of Directors of CIR (Compagnie Industriali Riunite) SpA, which met today under the chairmanship of Mr Carlo De Benedetti, approved the proposed financial statements and the consolidated financial statements of the group for financial year 2008.
Performance of operations
The CIR group closed 2008 with double digit growth in revenues and net income compared to the previous year. The rise in sales (+12.2% to over 4.7 billion euro) was due especially to the expansion of business in the energy sector (Sorgenia) and in healthcare (HSS), while net income (+15.6% to 95.5 million euro) benefited particularly from the positive contribution of the main operating companies, the gains from the capital increases made during the year by minority shareholders in Sorgenia and HSS and the capital gains on the partial disinvestment from Medinvest. Despite the strong rise in the operating results of Sorgenia and HSS, margins were affected by the lower profitability of the media business (Espresso group) and of automotive components (Sogefi), which were penalized by the general performance of these two sectors.
“In a very difficult year for the economy and financial markets – said Chief Executive of CIR, Rodolfo De Benedetti – the group achieved a significant rise in earnings compared to the previous year and consolidated its industrial businesses. Sorgenia and HSS in particular have continued to grow their businesses and have strengthened their position of leadership as private operators in Italy in their respective business sectors, while Espresso and Sogefi closed the year 2008 in profit despite a decline in earnings as a result of the critical situation in both publishing and the car industry.
In 2009 we will have to face a general environment that will be much more complex since it is not yet possible to foresee the end of the structural crisis that is affecting the world economy. Our strategy involves concentrating on our current five core businesses (energy, media, automotive components, healthcare and financial services), with an emphasis on cutting costs, refocusing the businesses operating in the sectors in most difficulty and developing all the companies of the group, with the aim of using this phase of discontinuity as an opportunity to strengthen our competitive positioning and our market share”.
Consolidated results
The consolidated revenues of the CIR group in 2008 amounted to 4,728.7 million euro and were up by 12.2% from 4,214.9 million euro in 2007. This rise was due principally to the expansion of the business of Sorgenia, whose contribution to total revenues of the group rose to 51.5%, and of HSS.
The consolidated gross operating margin (EBITDA) was 461.5 million euro (9.7% of revenues), down by8.6% from 504.8 million euro in 2007. The consolidated operating income figure (EBIT) came in at 320.1 million euro (6.7% of revenues) and was down by 16.4% from 382.7 million euro in 2007. The contraction in operating income, despite the good performance of Sorgenia and HSS, was due to the lower profitability of Espresso and Sogefi, which were affected by restructuring costs incurred during the year and by the difficult situation in their respective business sectors.
Financial management gave a negative result of 44.2 million euro, compared to net expense of 81.2 million euro in 2007. The improvement was due mainly to the change in non-recurring gains following the capital increases in Sorgenia and HSS subscribed by minority shareholders.
The consolidated net income of the CIR group in 2008 was 95.5 million euro, up from 82.6 million in 2007 (+15.6%). The result benefited from the positive contribution of the operating companies (63.6 million euro), capital gains on partial disinvestment from Medinvest (50.3 million euro) and non-recurring gains from the subscription of capital increases in Sorgenia and HSS by minority shareholders (117.8 million euro). These items more than compensated for the effects of the write-down of the investment in Oakwood (53.6 million euro) and the result at holding level, a negative 80.8 million euro, mainly relating to net financial expense of 30.6 million euro and losses from trading securities of 43.9 million due to the prudential adjustment to fair value of the assets invested in bonds which were negatively affected by the global financial market crisis.
Consolidated net invested capital stood at 3,764.3 million euro at December 31 2008, up from 3,375.3 million at the end of 2007, with a rise of 389 million euro due mainly to a rise in net working capital and to the investments made by Sorgenia.
The net debt of the CIR group at December 31 2008 amounted to 1,685.4 million euro, which was substantially in line with the figure at September 30 2008 (1,643.5 million euro) and up by 351.9 million euro from 1,333.5 million at December 31 2007. The consolidated net debt figure was the result of the following:
– an aggregate net financial surplus at holding level of 44.2 million euro. The change from the figure of 112.3 million euro at December 31 2007 was due mainly to disbursements made for investments in companies of the group and in own shares for 65.8 million euro and to the fair value adjustment of bonds for 43 million euro and Medinvest for 53 million euro. These effects were partly offset by the positive balance of 101.3 million euro between dividends received and those paid out. – total net debt of the operating companies totalling 1,729.6 million euro, up from 1,445.8 million euro at December 31 2007. The rise was mainly due to the higher level of debt of Sorgenia for the investments made and of Sogefi because of the payout of an extraordinary dividend.
In 2008 the partial disinvestment from Medinvest led to the realization of gains, net of write-downs, of 50.3 million euro. CIR’s remaining investment in Medinvest, including the redemption of 35 million euro cashed in February 2009, today stands at approximately 130 million euro. This disinvestment strategy has the aim of rebalancing the portfolio with a view to optimizing the financial structure of the group. Despite a decline of 18.3% during 2008, the performance of Medinvest since its inception (April 1994) until December 31 2008 gave a weighted annual return on the portfolio of 7.7%. In January 2009 performance was a positive 0.7%.
Total consolidated equity at December 31 2008 stood at 2,078.9 million euro versus 2,041.8 million euro at December 31 2007. The group’s equity amounted to 1,264.9 million euro, down from 1,319.9 million euro at December 31 2007, with a reduction caused mainly by the negative change in the fair value reserve.
At December 31 2008 the CIR group had 12,969 employees (12,422 at December 31 2007).
Industrial businesses
Energy (Sorgenia) In 2008 Sorgenia continued along its path of growth pursued over the years and consolidated its position in the Italian electricity and gas market, getting close to its target of 500,000 clients. During the year the company continued to develop plans to increase its thermoelectric generating capacity and strengthened its presence in renewable sources.
Specifically, work on the combined cycle power plant at Modugno (BA) was almost completed and the plant is scheduled to start operating by the summer of 2009, two new wind parks with a total output of 28 MW were completed in Campania and Puglia and the company’s photovoltaic capacity in Italy was increased to 13 MW. In the gas sector during 2008 the project for building a large regasification plant at Gioia Tauro obtained its VIA decree (Valuation of environmental impact).
In 2008 Sorgenia reported revenues of 2,433.7 million euro, up by 30.7% from 1,861.7 million euro in 2007. In a scenario of declining demand for energy, especially in the later part of the year, Sorgenia actually increased its sales volumes of electricity (10.4 TWh from 9.7 TWh in 2007) and maintained its natural gas sales to end user clients in line with 2007 (2.1 billion m3). EBITDA went up by 24.7% from 152.1 million euro in 2007 to 189.7 million. Net income came in at 66.7 million euro, with a rise of 2.3% from 65.2 million in 2007. The smaller increase in net income compared with that recorded in EBITDA was due mainly to the impact of the Robin Hood Tax for 12 million euro. The consolidated earnings of Sorgenia without the Robin Hood Tax would have been 78.7 million euro, posting a rise of 18%.
Media (Espresso group)
The results of the Espresso group in 2008 were affected by the difficult situation in the publishing sector, which suffered from the dramatic fall in advertising investment in the second half of the year. In order to counter the situation and the market prospects, cost cutting action was taken which basically involved reducing advertising campaigns and labour costs, with the implementation of corporate reorganization plans. These measures should be intensified given the further worsening of the general situation.
The revenues of the group at December 31 2008 amounted to 1,025.5 million euro, posting a decline of 6.6% on the previous year (1,098.2 million euro). The advertising revenues of the group, totalling 608.2 million euro, fell by 7.4%, being particularly impacted by the fall recorded by la Repubblica and the periodicals as well as the decline in the radio and television sector, while the advertising collected by the local newspapers held up well and internet advertising again rose sharply. EBITDA came in at 142.5 million euro, down by 36.2% compared to 2007 (223.4 million euro). Net income came in at 20.6 million euro (95.6 million euro in 2007).
Automotive components (Sogefi)
In 2008 Sogefi, European leader in the production of filters and suspension components, was hard hit by the crisis in the car market, which worsened particularly in the fourth quarter of the year. As from September demand and car production went down steadily in all the main markets, with a fall of around 20% on the same period of 2007.
Against this backdrop, the company closed the year with a positive net result (28.5 million euro), down by 45.4% compared to 2007 (52.2 million euro). Sales revenues, which came in at 1,017.5 million euro, were down by 5.1% on the previous year (1,071.8 million euro), while EBITDA, which declined by 22% to 104.9 million euro (134.6 million euro in 2007), was also affected by exchange rates and the unfavourable trend of extraordinary items compared to 2007.
Moreover, during 2008 Sogefi put in place a program of restructuring and cost cutting to counter the crisis and entered the promising Indian market in the Filter Division. In the Suspension Components Division in 2008 Sogefi started a new initiative to build products in alternative materials to steel in
order to make vehicles lighter and thus less polluting.
Healthcare (HSS)
During the year, HSS-Holding Sanità e Servizi continued to follow the growth trend that in just five years of business has enabled the group to become one of the main private healthcare operators in Italy. The company consolidated its position in the Italian market, particularly in the social welfare sector (with the management of residences for the non self-sufficient elderly), and in the healthcare sector (with the management of hospitals and rehabilitation centres). One of the main events of the year was the acquisition of the Cardinal Ferrari Centre in Fontanellato (PR), through which HSS has further strengthened its presence in the field of rehabilitation.
In 2008 HSS reported revenues of 246.3 million euro, which were up by 34.7% on 2007 (182.9 million), thanks to the development of all areas of the business and to the new acquisitions made during the year.
EBITDA was 28.7 million euro, up by 42.3% from 2007 (20.2 million). The net result was a negative 1.5 million euro, compared to net income of 0.3 million in the previous year. This change was due mainly to an extraordinary item, notably a provision of 2 million euro set up in relation to the value of minority shareholdings of the group, resulting from previous acquisitions and considered non-strategic.
Financial services (Jupiter and other businesses)
In the financial services sector, the CIR group is present with the company Jupiter Finance and other minor businesses. Jupiter Finance operates in the sector of non-performing loans: since it was set up the company has acquired loan portfolios for a total gross book value of around 1.3 billion at a price of 157 million euro.
Collections obtained since 2005, the year in which the company was founded, up to and including December 31 2008 amounted to 56 million euro and are more than 25% above the targets forecast at the moment when the portfolios were acquired. CIR is also a shareholder of Ktesios, the company of the Oakwood group active in the sector of loans secured on one fifth of borrowers’ salaries. In 2008 Ktesios made loans for approximately 690 million euro. CIR’s remaining investment in the Oakwood group amounted to 20 million euro at December 31 2008.
Performance of the parent company of the group
The parent company CIR SpA closed financial year 2008 with net income of 33.3 million euro, down from 79.9 million euro in 2007. Shareholders’ equity totalled 974.5 million euro at December 31 2008, versus 983.8 million euro at December 31 2007.
Outlook for the year 2009
In 2009 the results of the CIR group will inevitably feel the effects of the current period of deep recession, with varying intensity on the different business sectors, especially media and automotive components.
During the year the group will concentrate on improving efficiency and repositioning the subsidiaries operating in the sectors most in difficulty and on further developing the businesses with more resilience to the crisis and with a higher growth potential.
Shareholders’ Meeting
In view of the current situation of the economy and of the financial markets, the Board of Directors will put forward the proposal to the Shareholders’ Meeting that no dividend be distributed for the year 2008 in order to strengthen further the capital structure of the company and give it greater resources to support its business development. The AGM has been convened for April 29 at the first call and for April 30 if a second call is necessary.
Proposal for appointment of a new chairman
At the indication of Mr Carlo De Benedetti, who will be leaving the position of chairman of CIR with the approval of the financial statements for 2008, the Board of Directors unanimously accepted the proposal to be put before the Shareholders’ Meeting for the entry on to the Board of Mr Stefano Micossi, with a view to his being subsequently appointed as chairman of the company. Mr Micossi, 62, is the general manger of Assonime. Mr Carlo De Benedetti will remain a director of the company.
Proposal to cancel and assign new powers to buy back own shares
The Board of Directors voted to put before the Shareholders’ eeting a motion to cancel and renew the Board’s authorization for a period of 18 months to buy back a maximum of 35 million own shares, with a maximum disbursement limit of 50 million euro, at a price that cannot be more than 10% higher or lower than the benchmark price recorded by the shares on regulated markets on the trading day preceding each single buyback transaction. The main reasons why this authorization is being renewed are, on the one hand, the possibility of investing in shares of the company at prices below their actual value based on the real economic value of its equity and its income generating prospects, and on the other hand, the possibility of reducing the average cost of capital.
At December 31 2008 there were 42,974,000 shares in the portfolio (39,644,000 at December 31 2007), equal to 5.43% of capital. As of today CIR is holding 43,074,000 ordinary shares, corresponding to 5.44% of share capital.
Stock option plans and powers to the Board of Directors
The Board of Directors voted to put before the Shareholders’ Meeting a stock option plan for 2009 aimed at executives of the company, its subsidiaries and its parent company for a maximum of 8,100,000 options and the proposal reserved for individuals who are already beneficiaries of phantom stock option plans 2007
and 2008 who are still employees of the company, its subsidiaries and its parent company, to replace the above-mentioned phantom option plans with an extraordinary stock option plan for 2009 at the same conditions. The Board will also propose to the Shareholders, at an extraordinary meeting of the same, that the Board’s authorization to increase the capital be rescinded and then renewed for increases of up to a maximum of 500 million euro, for capital increases in favour of employees for a maximum of 20 million euro, and for issuing convertible bonds within the limits of the law.
Bonds maturing in the 24 months following December 31 2008
The company, which has a BB+ rating with a negative outlook issued by Standard&Poor’s, has the following bond maturities in the 24 months following December 31 2008. These bonds were issued by the subsidiary CIR International SA and were guaranteed by CIR SpA:
– March 10 2009, maturity of the bond with a residual principal of 330 million euro (originally 500 million euro). The bond (ISIN code XS0095147673), listed on the Luxembourg stock exchange, pays
an annual coupon of 5.25%. The company informs the market that it has today transferred the funds needed to repay the bond and pay the coupon to its Agent Bank.
– January 10 2011, maturity of the bond with a residual principal of 160 million euro (originally 300 million euro). The bond (ISIN code XS0169896817), listed on the Luxembourg stock exchange, pays
an annual coupon of 6.375%.
Conference call
The results of financial year 2008 will be illustrated today at 4.30 pm CET by the Chief Executive Officer of CIR SpA, Mr Rodolfo De Benedetti, in a conference call. Journalists can follow the presentation on the phone, in listen-only mode by dialling +39 0683360400, or in a webcast on the website www.cirgroup.com.
The executive responsible for the preparation of the company’s financial statements, Mr Alberto Piaser, hereby declares, in compliance with the terms of paragraph 2 Article 154 bis of the Finance Consolidation Act (TUF), that the figures contained in this press release correspond to the results documented in the company’s accounts and general ledger.
Performance of operations
The CIR group closed 2008 with double digit growth in revenues and net income compared to the previous year. The rise in sales (+12.2% to over 4.7 billion euro) was due especially to the expansion of business in the energy sector (Sorgenia) and in healthcare (HSS), while net income (+15.6% to 95.5 million euro) benefited particularly from the positive contribution of the main operating companies, the gains from the capital increases made during the year by minority shareholders in Sorgenia and HSS and the capital gains on the partial disinvestment from Medinvest. Despite the strong rise in the operating results of Sorgenia and HSS, margins were affected by the lower profitability of the media business (Espresso group) and of automotive components (Sogefi), which were penalized by the general performance of these two sectors.
“In a very difficult year for the economy and financial markets – said Chief Executive of CIR, Rodolfo De Benedetti – the group achieved a significant rise in earnings compared to the previous year and consolidated its industrial businesses. Sorgenia and HSS in particular have continued to grow their businesses and have strengthened their position of leadership as private operators in Italy in their respective business sectors, while Espresso and Sogefi closed the year 2008 in profit despite a decline in earnings as a result of the critical situation in both publishing and the car industry.
In 2009 we will have to face a general environment that will be much more complex since it is not yet possible to foresee the end of the structural crisis that is affecting the world economy. Our strategy involves concentrating on our current five core businesses (energy, media, automotive components, healthcare and financial services), with an emphasis on cutting costs, refocusing the businesses operating in the sectors in most difficulty and developing all the companies of the group, with the aim of using this phase of discontinuity as an opportunity to strengthen our competitive positioning and our market share”.
Consolidated results
The consolidated revenues of the CIR group in 2008 amounted to 4,728.7 million euro and were up by 12.2% from 4,214.9 million euro in 2007. This rise was due principally to the expansion of the business of Sorgenia, whose contribution to total revenues of the group rose to 51.5%, and of HSS.
The consolidated gross operating margin (EBITDA) was 461.5 million euro (9.7% of revenues), down by8.6% from 504.8 million euro in 2007. The consolidated operating income figure (EBIT) came in at 320.1 million euro (6.7% of revenues) and was down by 16.4% from 382.7 million euro in 2007. The contraction in operating income, despite the good performance of Sorgenia and HSS, was due to the lower profitability of Espresso and Sogefi, which were affected by restructuring costs incurred during the year and by the difficult situation in their respective business sectors.
Financial management gave a negative result of 44.2 million euro, compared to net expense of 81.2 million euro in 2007. The improvement was due mainly to the change in non-recurring gains following the capital increases in Sorgenia and HSS subscribed by minority shareholders.
The consolidated net income of the CIR group in 2008 was 95.5 million euro, up from 82.6 million in 2007 (+15.6%). The result benefited from the positive contribution of the operating companies (63.6 million euro), capital gains on partial disinvestment from Medinvest (50.3 million euro) and non-recurring gains from the subscription of capital increases in Sorgenia and HSS by minority shareholders (117.8 million euro). These items more than compensated for the effects of the write-down of the investment in Oakwood (53.6 million euro) and the result at holding level, a negative 80.8 million euro, mainly relating to net financial expense of 30.6 million euro and losses from trading securities of 43.9 million due to the prudential adjustment to fair value of the assets invested in bonds which were negatively affected by the global financial market crisis.
Consolidated net invested capital stood at 3,764.3 million euro at December 31 2008, up from 3,375.3 million at the end of 2007, with a rise of 389 million euro due mainly to a rise in net working capital and to the investments made by Sorgenia.
The net debt of the CIR group at December 31 2008 amounted to 1,685.4 million euro, which was substantially in line with the figure at September 30 2008 (1,643.5 million euro) and up by 351.9 million euro from 1,333.5 million at December 31 2007. The consolidated net debt figure was the result of the following:
– an aggregate net financial surplus at holding level of 44.2 million euro. The change from the figure of 112.3 million euro at December 31 2007 was due mainly to disbursements made for investments in companies of the group and in own shares for 65.8 million euro and to the fair value adjustment of bonds for 43 million euro and Medinvest for 53 million euro. These effects were partly offset by the positive balance of 101.3 million euro between dividends received and those paid out. – total net debt of the operating companies totalling 1,729.6 million euro, up from 1,445.8 million euro at December 31 2007. The rise was mainly due to the higher level of debt of Sorgenia for the investments made and of Sogefi because of the payout of an extraordinary dividend.
In 2008 the partial disinvestment from Medinvest led to the realization of gains, net of write-downs, of 50.3 million euro. CIR’s remaining investment in Medinvest, including the redemption of 35 million euro cashed in February 2009, today stands at approximately 130 million euro. This disinvestment strategy has the aim of rebalancing the portfolio with a view to optimizing the financial structure of the group. Despite a decline of 18.3% during 2008, the performance of Medinvest since its inception (April 1994) until December 31 2008 gave a weighted annual return on the portfolio of 7.7%. In January 2009 performance was a positive 0.7%.
Total consolidated equity at December 31 2008 stood at 2,078.9 million euro versus 2,041.8 million euro at December 31 2007. The group’s equity amounted to 1,264.9 million euro, down from 1,319.9 million euro at December 31 2007, with a reduction caused mainly by the negative change in the fair value reserve.
At December 31 2008 the CIR group had 12,969 employees (12,422 at December 31 2007).
Industrial businesses
Energy (Sorgenia) In 2008 Sorgenia continued along its path of growth pursued over the years and consolidated its position in the Italian electricity and gas market, getting close to its target of 500,000 clients. During the year the company continued to develop plans to increase its thermoelectric generating capacity and strengthened its presence in renewable sources.
Specifically, work on the combined cycle power plant at Modugno (BA) was almost completed and the plant is scheduled to start operating by the summer of 2009, two new wind parks with a total output of 28 MW were completed in Campania and Puglia and the company’s photovoltaic capacity in Italy was increased to 13 MW. In the gas sector during 2008 the project for building a large regasification plant at Gioia Tauro obtained its VIA decree (Valuation of environmental impact).
In 2008 Sorgenia reported revenues of 2,433.7 million euro, up by 30.7% from 1,861.7 million euro in 2007. In a scenario of declining demand for energy, especially in the later part of the year, Sorgenia actually increased its sales volumes of electricity (10.4 TWh from 9.7 TWh in 2007) and maintained its natural gas sales to end user clients in line with 2007 (2.1 billion m3). EBITDA went up by 24.7% from 152.1 million euro in 2007 to 189.7 million. Net income came in at 66.7 million euro, with a rise of 2.3% from 65.2 million in 2007. The smaller increase in net income compared with that recorded in EBITDA was due mainly to the impact of the Robin Hood Tax for 12 million euro. The consolidated earnings of Sorgenia without the Robin Hood Tax would have been 78.7 million euro, posting a rise of 18%.
Media (Espresso group)
The results of the Espresso group in 2008 were affected by the difficult situation in the publishing sector, which suffered from the dramatic fall in advertising investment in the second half of the year. In order to counter the situation and the market prospects, cost cutting action was taken which basically involved reducing advertising campaigns and labour costs, with the implementation of corporate reorganization plans. These measures should be intensified given the further worsening of the general situation.
The revenues of the group at December 31 2008 amounted to 1,025.5 million euro, posting a decline of 6.6% on the previous year (1,098.2 million euro). The advertising revenues of the group, totalling 608.2 million euro, fell by 7.4%, being particularly impacted by the fall recorded by la Repubblica and the periodicals as well as the decline in the radio and television sector, while the advertising collected by the local newspapers held up well and internet advertising again rose sharply. EBITDA came in at 142.5 million euro, down by 36.2% compared to 2007 (223.4 million euro). Net income came in at 20.6 million euro (95.6 million euro in 2007).
Automotive components (Sogefi)
In 2008 Sogefi, European leader in the production of filters and suspension components, was hard hit by the crisis in the car market, which worsened particularly in the fourth quarter of the year. As from September demand and car production went down steadily in all the main markets, with a fall of around 20% on the same period of 2007.
Against this backdrop, the company closed the year with a positive net result (28.5 million euro), down by 45.4% compared to 2007 (52.2 million euro). Sales revenues, which came in at 1,017.5 million euro, were down by 5.1% on the previous year (1,071.8 million euro), while EBITDA, which declined by 22% to 104.9 million euro (134.6 million euro in 2007), was also affected by exchange rates and the unfavourable trend of extraordinary items compared to 2007.
Moreover, during 2008 Sogefi put in place a program of restructuring and cost cutting to counter the crisis and entered the promising Indian market in the Filter Division. In the Suspension Components Division in 2008 Sogefi started a new initiative to build products in alternative materials to steel in
order to make vehicles lighter and thus less polluting.
Healthcare (HSS)
During the year, HSS-Holding Sanità e Servizi continued to follow the growth trend that in just five years of business has enabled the group to become one of the main private healthcare operators in Italy. The company consolidated its position in the Italian market, particularly in the social welfare sector (with the management of residences for the non self-sufficient elderly), and in the healthcare sector (with the management of hospitals and rehabilitation centres). One of the main events of the year was the acquisition of the Cardinal Ferrari Centre in Fontanellato (PR), through which HSS has further strengthened its presence in the field of rehabilitation.
In 2008 HSS reported revenues of 246.3 million euro, which were up by 34.7% on 2007 (182.9 million), thanks to the development of all areas of the business and to the new acquisitions made during the year.
EBITDA was 28.7 million euro, up by 42.3% from 2007 (20.2 million). The net result was a negative 1.5 million euro, compared to net income of 0.3 million in the previous year. This change was due mainly to an extraordinary item, notably a provision of 2 million euro set up in relation to the value of minority shareholdings of the group, resulting from previous acquisitions and considered non-strategic.
Financial services (Jupiter and other businesses)
In the financial services sector, the CIR group is present with the company Jupiter Finance and other minor businesses. Jupiter Finance operates in the sector of non-performing loans: since it was set up the company has acquired loan portfolios for a total gross book value of around 1.3 billion at a price of 157 million euro.
Collections obtained since 2005, the year in which the company was founded, up to and including December 31 2008 amounted to 56 million euro and are more than 25% above the targets forecast at the moment when the portfolios were acquired. CIR is also a shareholder of Ktesios, the company of the Oakwood group active in the sector of loans secured on one fifth of borrowers’ salaries. In 2008 Ktesios made loans for approximately 690 million euro. CIR’s remaining investment in the Oakwood group amounted to 20 million euro at December 31 2008.
Performance of the parent company of the group
The parent company CIR SpA closed financial year 2008 with net income of 33.3 million euro, down from 79.9 million euro in 2007. Shareholders’ equity totalled 974.5 million euro at December 31 2008, versus 983.8 million euro at December 31 2007.
Outlook for the year 2009
In 2009 the results of the CIR group will inevitably feel the effects of the current period of deep recession, with varying intensity on the different business sectors, especially media and automotive components.
During the year the group will concentrate on improving efficiency and repositioning the subsidiaries operating in the sectors most in difficulty and on further developing the businesses with more resilience to the crisis and with a higher growth potential.
Shareholders’ Meeting
In view of the current situation of the economy and of the financial markets, the Board of Directors will put forward the proposal to the Shareholders’ Meeting that no dividend be distributed for the year 2008 in order to strengthen further the capital structure of the company and give it greater resources to support its business development. The AGM has been convened for April 29 at the first call and for April 30 if a second call is necessary.
Proposal for appointment of a new chairman
At the indication of Mr Carlo De Benedetti, who will be leaving the position of chairman of CIR with the approval of the financial statements for 2008, the Board of Directors unanimously accepted the proposal to be put before the Shareholders’ Meeting for the entry on to the Board of Mr Stefano Micossi, with a view to his being subsequently appointed as chairman of the company. Mr Micossi, 62, is the general manger of Assonime. Mr Carlo De Benedetti will remain a director of the company.
Proposal to cancel and assign new powers to buy back own shares
The Board of Directors voted to put before the Shareholders’ eeting a motion to cancel and renew the Board’s authorization for a period of 18 months to buy back a maximum of 35 million own shares, with a maximum disbursement limit of 50 million euro, at a price that cannot be more than 10% higher or lower than the benchmark price recorded by the shares on regulated markets on the trading day preceding each single buyback transaction. The main reasons why this authorization is being renewed are, on the one hand, the possibility of investing in shares of the company at prices below their actual value based on the real economic value of its equity and its income generating prospects, and on the other hand, the possibility of reducing the average cost of capital.
At December 31 2008 there were 42,974,000 shares in the portfolio (39,644,000 at December 31 2007), equal to 5.43% of capital. As of today CIR is holding 43,074,000 ordinary shares, corresponding to 5.44% of share capital.
Stock option plans and powers to the Board of Directors
The Board of Directors voted to put before the Shareholders’ Meeting a stock option plan for 2009 aimed at executives of the company, its subsidiaries and its parent company for a maximum of 8,100,000 options and the proposal reserved for individuals who are already beneficiaries of phantom stock option plans 2007
and 2008 who are still employees of the company, its subsidiaries and its parent company, to replace the above-mentioned phantom option plans with an extraordinary stock option plan for 2009 at the same conditions. The Board will also propose to the Shareholders, at an extraordinary meeting of the same, that the Board’s authorization to increase the capital be rescinded and then renewed for increases of up to a maximum of 500 million euro, for capital increases in favour of employees for a maximum of 20 million euro, and for issuing convertible bonds within the limits of the law.
Bonds maturing in the 24 months following December 31 2008
The company, which has a BB+ rating with a negative outlook issued by Standard&Poor’s, has the following bond maturities in the 24 months following December 31 2008. These bonds were issued by the subsidiary CIR International SA and were guaranteed by CIR SpA:
– March 10 2009, maturity of the bond with a residual principal of 330 million euro (originally 500 million euro). The bond (ISIN code XS0095147673), listed on the Luxembourg stock exchange, pays
an annual coupon of 5.25%. The company informs the market that it has today transferred the funds needed to repay the bond and pay the coupon to its Agent Bank.
– January 10 2011, maturity of the bond with a residual principal of 160 million euro (originally 300 million euro). The bond (ISIN code XS0169896817), listed on the Luxembourg stock exchange, pays
an annual coupon of 6.375%.
Conference call
The results of financial year 2008 will be illustrated today at 4.30 pm CET by the Chief Executive Officer of CIR SpA, Mr Rodolfo De Benedetti, in a conference call. Journalists can follow the presentation on the phone, in listen-only mode by dialling +39 0683360400, or in a webcast on the website www.cirgroup.com.
The executive responsible for the preparation of the company’s financial statements, Mr Alberto Piaser, hereby declares, in compliance with the terms of paragraph 2 Article 154 bis of the Finance Consolidation Act (TUF), that the figures contained in this press release correspond to the results documented in the company’s accounts and general ledger.
