The group closed the year with a loss of approximately € 270 million mainly due to Sorgenia: the investment in the company has been written off entirely both at consolidated and at parent company level
The other main subsidiaries of the group (Espresso, Sogefi and KOS) reported positive earnings. Net of non-recurring items the results of the group were substantially in line with 2012
Milan, June 6 2014 – The Board of Directors of CIR-Compagnie Industriali Riunite S.p.A., which met today under the chairmanship of Rodolfo De Benedetti, approved the proposed financial statements for the year and the consolidated financial statements of the group for 2013.
Performance of operations
In 2013 the CIR group reported a consolidated net loss of € 269.2 million, which was caused for € 236.6 million by non-recurring items. In particular, during the year the subsidiary Sorgenia adjusted the value of its assets to the changed scenario in the energy market and to the company’s new business plan which was approved at the end of 2013; in addition to these write-downs, which are included in the financial statements of Sorgenia, there were also value adjustments made in Sorgenia Holding and in CIR S.p.A. which reduced the value of the holding in the Sorgenia group to zero. The sum of these effects on the consolidated financial statements of CIR was a loss of € 491 million after taxes and net of minority interests. Positive however the effect on earnings of the € 344.2 million due to the definitive ruling of the Court of Cassation on the “Lodo Mondadori” case, which determined compensation for CIR of € 491.3 million.
Consolidated results
The revenues for 2013 of the CIR group came in at € 4,752 million (-4.7% from € 4,988.1 million in 2012).
EBITDA after non-recurring items came to -€ 38.3 million (€ 316.8 million in 2012). The margin was very negatively impacted by negative extraordinary items (€ 385.7 million), mainly in the form of write-downs made by the subsidiary Sorgenia. It should, however, be noted that EBITDA before non-recurring items was a positive € 347.4 million, which was substantially in line with the figure for 2012.
The net loss for the group was € 269.2 million (-€ 30.4 million in 2012). Excluding the non-recurring effects, the net loss would have been € 32.6 million, in line with 2012; this loss before non-recurring items, is attributable to Sorgenia. The other main subsidiaries of the group – Espresso, Sogefi and KOS – closed the year 2013 with a positive net result.
The net financial debt of the CIR group stood at € 1.845,3 million at December 31 2013 and was down significantly from € 2,504.4 million at December 31 2012. This reduction in debt was due partly to the definitive receipt of the Lodo Mondadori compensation but also to the decrease of € 154 million in the debt of the subsidiaries (Sorgenia, Espresso and KOS). In the valuation of the net financial position at December 31 2013, it should however be taken into account that there will be a disbursement of around € 100 million during 2014 for taxes and costs relating to the Lodo Mondadori compensation.
The equity of the group amounted to € 1,131 million at December 31 2013 (€ 1,363.3 million at December 31 2012).
At December 31 2013 the CIR group had 14,111 employees (13,940 at December 31 2012).
Results of the parent company CIR S.p.A.
The parent company CIR S.p.A. reported net income for 2013 of € 155.4 million (€ 7.9 million in 2012). This result, despite the write-off of the entire holding in the Sorgenia group, was due to the proceeds from the Lodo Mondadori.
Results of the main subsidiaries of the CIR group
Energy: Sorgenia
Sorgenia, founded in 1999, operates in the electricity sector in Italy with generating facilities of approximately 5 thousand Megawatts. The company is controlled by CIR (52.9%) and also has the main Austrian utility VERBUND as a shareholder.
In 2013 Sorgenia reported revenues of € 2,326 million (-6.9% from 2,497.5 million in 2012), mainly because of the contraction in sales in the electricity segment.
In 2013 the company was very negatively impacted by significant write-downs caused by the negative economic scenario in general and in the energy sector, as well as by the changed regulatory environment. More specifically Sorgenia wrote down its international businesses in the E&P sector, the goodwill of its renewable businesses, the combined cycle power generating plants, its investments consolidated at equity (particularly Energia Italiana/Tirreno Power) and part of its trade receivables. Taking all this into account, the company reported a net loss of € 783.4 million compared to a loss of € 196.8 million in 2012.
Routine operations reported slight growth compared to 2012, with EBITDA of € 123.4 million. The increase was due particularly to the improvement in certain specific sectors, such as the dispatch service market in the first half of the year, and the reduction in overheads. EBITDA after the write-downs came to -€ 226 million (€ 57.1 million in 2012). The write-downs at EBITDA level were mainly attributable to Energia Italiana/Tirreno Power; the other write-downs also include adjustments to the value of other investments consolidated at equity and of the part of trade receivables no longer considered recoverable.
Sorgenia’s net financial debt stood at € 1,799.5 million at December 31 2013, down by approximately € 60 million from € 1,861.6 million at December 31 2012).
As is known, at the end of 2013, given the difficult climate in the sector and the extent of its debt, Sorgenia deemed it necessary to begin a financial restructuring process, sending its lending banks a request for a moratorium and a standstill to guarantee that it could continue to be fully operational. At the same time the company presented a new business plan for the years up to 2020, which envisages focusing on the electricity generating business through its four combined cycle power plants and on the commercial development of the corporate market, a reduction in operating costs and the disposal of non-strategic assets. The financial restructuring negotiations, which began in January 2014 and continued throughout the following months, are still in progress.
Media: Espresso
Gruppo Editoriale L’Espresso is one of the most important Italian publishing companies. It operates in all sectors of communication: newspapers and magazines, radio, internet, television and advertising. The group, which is 56% owned by CIR, is listed on the Stock Exchange.
The Espresso group closed 2013 with revenues of € 711.6 million (-12.4% from € 812.7 million in 2012 as a result of the crisis which is affecting the whole sector, both in advertising sales and in the circulation of newspapers and magazines), EBITDA of € 63.5 million (€ 102.4 million in 2012) and net income of € 3.7 million (€ 21.8 million in 2012). For further information on the results of Espresso, see the press release issued by the company on February 26 2014 (http://www.cirgroup.com/press/press-releases/document/gruppo-lespresso-cir-group-fy-2013-results.html).
Automotive components: Sogefi
Sogefi is one of the main producers worldwide in the sectors of filtration, engine air systems and suspension components with 43 production plants in four continents. The company is controlled by CIR (58%) and is listed on the Stock Exchange.
For 2013 Sogefi reported revenues of € 1,335 million (+1.2% from € 1,319 million in 2012, thanks to growth in its market outside Europe, which compensated for the difficulties of the sector in Europe), EBITDA of € 129.5 million (+2.3% from € 126.7 million in 2012) and net income of € 21.1 million, affected by financial expense and restructuring charges compared to € 28.2 million in 2012. For further information on the results of Sogefi, see the press release issued by the company on February 25 2014 (http://www.cirgroup.com/press/press-releases/document/sogefi-cir-group-fy-2013-results.html).
Healthcare: KOS
KOS is one of the most important groups in Italy in the sector of healthcare and care homes (managing care homes, rehabilitation centres, and hospital facilities). Controlled by CIR (51.3%), KOS also has the Ardian group as a shareholder.
KOS closed the year 2013 with revenues higher at € 372.5 million (+4.8% from € 355.4 million in 2012), thanks to the development of its three business areas, especially care home and hi-tech services (hospital management). EBITDA was € 56.1 million (€ 53.4 million in 2012) with growth due mainly to the change in the consolidation perimeter and to businesses developed during the year. Net income came in at € 11.8 million, substantially unchanged from € 12.1 million in 2012. Net financial debt stood at € 155.7 million at December 31 2013, an improvement on the figure of € 163.4 million at December 31 2012 thanks to the cash flows generated by operating activity.
The KOS group today manages 70 facilities, mainly in the centre and north of Italy, for a total of approximately 6,200 beds in operation, plus another 500 or so under construction. On May 30 2014 the KOS group acquired the whole capital of Villa Azzurra S.p.A., a company that manages an accredited private hospital specializing in neuropsychiatric medicine at Riolo Terme (Ravenna). This deal is part of the strategy adopted by KOS in 2004 of developing a range of services to offer in psychiatric rehabilitation.
In the area of high-tech services, activities are continuing in India through the joint venture ClearMedi Healthcare LTD and in the United Kingdom through the subsidiary Medipass Healthcare LTD.
Non-core Investments
The non-core investments of the group consist of private equity initiatives, minority shareholdings and other investments for a total value at December 31 2013 of € 179.9 million (€ 198.3 million at December 31 2012). More specifically, CIR has a diversified portfolio of funds in the private equity sector (with a fair value at December 31 2013 of € 63.9 million). Among the other investments, it should be noted that there is an interest of around 20% in the company Swiss Education Group, a world leader in managerial training in the hospitality sector, which reported growth in revenues and margins for 2013. The value of this investment at December 31 2013 was € 20 million. Lastly, the CIR group has a portfolio of non-performing loans: the net value of the investment in this business at December 31 2013 was € 76.9 million euro.
Outlook for the year 2014
The performance of the CIR group in 2014 will be affected not only by the evolution of the macroeconomic climate, which is still uncertain, but also by the outcome of the restructuring of the debt of its subsidiary Sorgenia.
Regarding the latter, discussions between the banking system, the company and its shareholders are continuing actively, which is evidence of the will of the parties to reach an agreement.
Annual General Meeting of the Shareholders
The Board of Directors will propose to the Shareholders’ Meeting that no dividends be distributed for the year 2013 in order to preserve the financial solidity of the company. The Shareholders’ Meeting (AGM) has been convened for June 28 at the first call and for June 30 at the second call. The Board at today’s meeting and at the meeting held on April 28 2014, among other things, approved the following resolutions:
- To put before the Shareholders’ Meeting a motion to cancel and renew the Board’s authorization for a period of 18 months to buy back a maximum of 30 million own shares, with a maximum disbursement limit of € 50 million, at a unit 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.
- To put before the Shareholders’ Meeting for approval a stock grant plan for 2014 aimed at directors and/or executives of the company, its subsidiaries and its parent company for a maximum of 3,500,000 conditional units, each of which will give the beneficiaries the right to be assigned free of charge 1 CIR share. The shares thus assigned will be made available from the own shares that the company is holding as treasury stock.
- To put before the extraordinary part of the Shareholders’ Meeting a motion to cancel and renew the authorization of the same Board of Directors to increase the share capital up to a maximum amount of € 500 million, for capital increases in favour of directors and employees of the company, its subsidiaries and its parent company, for a maximum amount of € 20 million, and to issue, with the exclusion of the option right, in which case in favour of institutional investors, convertible bonds or bonds with warrants attached.
- The coming Shareholders’ Meeting will be called upon to adopt a resolution on the renewal of the Board of Directors and the Board of Statutory Auditors.
Interim Financial Report as of March 31 2014- The Board of Directors will approve the Interim Financial Report of CIR S.p.A. as of March 31 2014 on June 30, after the Annual General Meeting of the Shareholders of the company.
Bonds maturing in the 24 months following December 31 2013
