Board of Directors approves results as of June 30 2013
CIR GROUP: REVENUES STABLE AT € 2.4 BLN
MARGINS AND NET RESULT AFFECTED BY WRITE-DOWNS
Consolidated loss due to the write-downs in Sorgenia, which reported an improvement in ordinary operations. Without the write-downs the net result was substantially in line with that of first half 2012. Consolidated debt down by € 134 mln from end of 2012
Results for the first half of 2013
Revenues: € 2,409.6 million (+0.1% from € 2,406.9 million in H1 2012)
EBITDA before write-downs: € 225.7 million (+28.4% from € 175.8 million in H1 2012)
EBITDA post write-downs: € 94.7 million (-46.1% from 175.8 million in H1 2012)
Net result before write-downs: -€ 2.5 million (€ 0.7 million in H1 2012)
Net result post write-downs: -€ 164.9 million (€ 0.7 million in H1 2012)
Consolidated net financial debt: € 2,370.1 million (€ 2,504.4 million at 31/12/2012)
Net financial surplus of parent company: € 47.7 million (€ 33.2 million at 31/12/2012)
Milan, July 29 2013 – The Board of Directors of CIR-Compagnie Industriali Riunite SpA, which met today under the chairmanship of Rodolfo De Benedetti, has approved the results of the group at June 30 2013.
The CIR group operates in five sectors: energy (Sorgenia), media (Espresso), automotive components (Sogefi), healthcare (KOS) and non-core investments (private equity, minority shareholdings, venture capital).
Performance of operations
The CIR group, in a difficult economic climate, reported revenues substantially in line with 2012 at € 2.4 billion in the first half of 2013, while the gross operating margin (EBITDA) and the net result were affected by the write-down of assets by the Sorgenia group. The net loss for the period of € 164.9 million was due almost entirely to the write-downs. However ordinary operations showed EBITDA up by 28.4% to € 225.7 million and a net result of -€ 2.5 million, substantially in line with the figure reported in the same period of 2012. Three of the four main subsidiaries of the group (Espresso, Sogefi and KOS) closed the first half of the year with a positive net result.
Consolidated results
The revenues of the CIR group for the first half of 2013 came to € 2,409.6 million and were substantially stable (+0.1%) from the figure of € 2,406.9 million reported for the same period of 2012.
EBITDA before write-downs was € 225.7 million, up from € 175.8 million in the first half of 2012 (+28.4%). This performance was due mainly to the higher EBITDA of Sorgenia before write-downs. EBITDA post write-downs came to € 94.7 million (3.9% of revenues), down by 46.1% on 2012. This reduction was caused by the write-down by Sorgenia of its indirect shareholding investment in Tirreno Power for € 131 million.
The result of financial management was a negative € 74.2 million, versus a charge of € 45.3 million in the first six months of 2012. More specifically, net financial expense amounted to € 70.7 million (€ 60.8 million in 2012) and negative adjustments to the value of financial assets to € 9.3 million (positive adjustments of € 9.9 million in 2012).
The net result of the CIR group before write-downs was –€ 2.5 million, which was substantially in line with the result of the first half of 2012 (+€ 0.7 million). The contribution of the main operating subsidiaries of the group, net of write-downs, was a positive € 6.3 million (a loss of € 4.7 million in 2012) thanks to the earnings achieved by Espresso, Sogefi and KOS, while the result at CIR holding level (including the non-operating subsidiaries) was a negative € 8.8 million (earnings of € 5.4 million in 2012). The net result of the CIR group after the write-down of assets by Sorgenia was –€ 164.9 million.
Consolidated net financial debt stood at € 2,370.1 million at June 30 2013, down by € 134 million from € 2,504.4 million at December 31 2012. The consolidated net debt figure is a combination of the following:
– An aggregate net financial surplus at parent company level of € 47.7 million, up from € 33.2 million at December 31 2012 resulting mainly from the receipt of dividends.
– Total net debt in the operating companies of € 2,417.8 million, down from € 2,537.6 million at December 31 2012, mainly due to the improvement in working capital and the disposals made in the period by the Sorgenia group.
At June 30 2013 the CIR group had 14,083 employees (13,940 at December 31 2012).
Industrial businesses
Energy: Sorgenia
Sorgenia is one of the main private operators in the electricity sector in Italy with around 500 thousand clients and generating facilities of approximately 5 thousand megawatts. The company is controlled by CIR (52.9%) and the main Austrian utility VERBUND also has an interest.
The revenues of the Sorgenia group in the first half totalled € 1,169.3 million, and were up by 4.5% on the figure for 2012 (€ 1,119.3 million) thanks to the higher volumes of electricity sold. The Sorgenia group’s results from ordinary operations in the first half of 2013 showed growth compared to the same period of 2012. In particular EBITDA before the write-downs came to € 103.2 million versus € 32.2 million in the first half of 2012. The rise was due essentially to the partial recovery of profitability in the electricity sector, boosted significantly by the results obtained in the first half, but which will be difficult to replicate, of certain specific business lines. EBITDA after the write-downs, inclusive of the value adjustment of € 131 million following the impairment test on the indirect investment in Tirreno Power (consolidated at equity), was -€ 27.8 million. The net loss for the half, of € 206.3 million (a loss of € 54.1 million in the first half of 2012), was almost entirely due to the write-down of assets for a total of € 190.5 million. More specifically, following the impairment test, Sorgenia effected write-downs to Tirreno Power, the renewable sources businesses, hydrocarbon exploration and production and certain tax receivables.
The actions undertaken by Sorgenia in recent quarters to counter the recession affecting Italy and the difficulties in the Italian energy market will be continuing. More specifically, the company is engaged in meeting two priority objectives: reducing its debt and recovering profit margins.
On July 17 2013 Sorgenia announced that Mr Andrea Mangoni will this month be appointed as Chief Executive Officer and Chairman of the Board of Directors of the company.
Media: Espresso
Gruppo Editoriale L’Espresso is one of the most important publishing companies in Italy. It operates in all sectors of communication: the daily and periodical press, radio, internet, television and the collection of advertising. The group is 55.9% controlled by CIR and is listed on the Stock Exchange.
The revenues of the Espresso group totalled € 369.4 million in the first half of 2013, posting a decline of 12% on the same period of the year 2012 (€ 419.8 million) as a consequence of the crisis that is affecting the whole sector. Circulation revenues, which came to € 144.4 million, showed a decline of 7% compared to the same period of last year (€ 155.3 million) in a market which continues to report a significant fall in the circulation of daily newspapers. The performance of the group titles was however positive compared to the market.
On the basis of the latest Audipress and ADS figures, la Repubblica confirmed its ranking as the top Italian newspaper both in terms of average number of readers per day (2.8 million) and of copies sold, a record that it holds even including the subscribers to its digital version (over 46 thousand at the end of June). Advertising revenues, totalling € 209.6 million, posted a decline of 16.5% on the first half of 2012, in a market that fell by 17.2%. Sundry revenues came in at € 15.5 million and were up by 15.4% compared to the first half of 2012, thanks to the growth in the business of leasing television bandwidth to third parties. Total costs went down by 7.8%. Excluding the digital publishing activities and digital terrestrial television, the costs of which are increasing in order to support development, there was an overall decline of 12.8% thanks to the cost-cutting actions still in progress, especially in the industrial and administrative areas.
EBITDA came in at € 33.3 million, versus € 60.8 million in the first half of 2012. In a market deeply affected by the economic crisis, the group did nonetheless report positive earnings: in the first half consolidated net income came to € 3.7 million compared to € 21.2 million in the same period of 2012.
Automotive components: Sogefi
Sogefi is one of the main world producers in the sectors of filtration, engine air systems and suspension components with 44 production plants in 16 countries. The company is controlled by CIR (58.3%) and is listed on the Stock Exchange.
The revenues of Sogefi in the first half of 2013 came to € 681.7 million and were substantially unchanged from € 686.8 million in the first half of 2012 (-0.7%; +2.2% with the same exchange rates). The figure benefited particularly from the positive performance of the second quarter, with consolidated revenues reported up by 3.7% (+6.7% at the same exchange rates) at € 352.5 million (€ 339.9 million in the second quarter of 2012). In the first half, the Engine Systems Division reported revenues of € 416.7 million and the Suspension Components Division revenues of €266.2 million (€ 412.9 million and € 275.1 million respectively in the same period of 2012). The company is continuing in its strategy of focusing on non-European countries, which reached 35% of the total revenues of the group, and were up by four percentage points compared to the first half of 2012.
EBITDA came to € 71.2 million and was up by 3.9% on the same period of 2012 (€ 68.5 million).
Net income came in at € 16.2 million and was up by 3.9% on the same period of 2012 (€ 15.6 million).
Healthcare: KOS
KOS is one of the most important Italian groups in the care-home sector (managing nursing homes and rehabilitation centres, and hospital facilities). Controlled by CIR (with 51.3%), KOS also has the AXA Private Equity group as a shareholder.
The revenues of KOS came to € 186.5 million in the first half of 2013, and were up by 4.4% on the figure for the same period of 2012 (€ 178.7 million), thanks to the development of the three business sectors, especially care homes and high-tech services (in hospitals). EBITDA came to € 27.4 million, posting a rise on the figure for the first half of 2012 (€ 25 million) mainly following the change in the perimeter and the development activities undertaken in 2012. Net income for the first half amounted to € 6.1 million compared to € 4.6 million in the same period of 2012. Net debt stood at € 173.6 million at June 30 2013 versus € 170.9 million at March 31 2013.
The KOS group today manages 64 facilities, mainly in the centre and north of Italy, for a total of 5,865 beds in operation plus another 900 or so under construction. The activities in the start-up stage are continuing in India, where in the second half of 2011 the KOS group set up the joint venture ClearMedi Healthcare LTD. 51% controlled by the KOS group and 49% by a local operator, the company is active in the sector of supplying diagnostic and therapeutic technologies in outsourcing to Indian hospitals.
Non-core investments
The non-core investments of the group consist of private equity initiatives and minority shareholdings, venture capital and other investments. More specifically, the CIR group has a diversified portfolio of funds and direct minority shareholdings in the private equity sector (with a fair value at June 30 2013 of € 91.4 million) and the venture capital fund CIR Ventures (with a fair value at June 30 of € 6.2 million). Among the other investments, it should be noted that there is a 20% interest in the company Swiss Education Group, a world leader in managerial training in the hospitality sector.
Lastly, the CIR group has a portfolio of non-performing loans. The net value of the investment in this business at June 30 2013 was € 65 million.
Results of the parent company CIR SpA
The parent company of the group CIR SpA reported net income of € 21.2 million in the first six months of 2013, up from € 19.8 million in the first half of 2012.
Outlook for the year 2013
The performance of the CIR group in the second half of 2013 will be affected by the evolution of the macroeconomic environment, especially the performance of the Italian economy, which is characterized by a continuing recession, the intensity of which cannot at the moment be predicted. In this scenario all the main operating subsidiaries of the group will be continuing their actions to improve operating efficiency without however sacrificing their business development initiatives. The consolidated net result for the full year will be affected by the write-downs reported in the first half of the year.
Bonds maturing in the 24 months following June 30 2013
The company, which has a BB rating with a stable outlook issued by Standard&Poor’s, has no bonds maturing in the 24 months following June 30 2013.
Conference call
The results of operations in the first half of 2013 will be illustrated today at 13.30 hours CEST by the Chairman of CIR, Rodolfo De Benedetti, in a conference call. Journalists can follow the presentation on the phone, in listen-only mode, by dialling +39 02 805 88 27, or in a webcast on the website www.cirgroup.com.
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