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April

28

2017

CIR group: rise in revenues and EBITDA in Q1 2017

Board of Directors approves results for first quarter 2017

CIR GROUP: RISE IN REVENUES (€ 693 MLN; +7.6%) AND EBITDA (€ 72.4 MLN; +16.8%)

Net income in line with last year (€ 14.1 mln in 1Q 2017 vs € 14.7 mln in 1Q 2016, which included a capital gain of € 6.5 mln)


The contribution of the three industrial subsidiaries to group earnings is up 64.9% on 2016 (€ 12.2 mln vs € 7.4 mln) thanks to growth in the contributions of Sogefi and KOS


Net financial position of the parent company positive for € 331.6 mln at 31/3


In the media sector, the merger of Espresso and ITEDI gives rise to
GEDI Gruppo Editoriale: CIR will be the main shareholder with 43.4% of its capital


Milan, April 28 2017 – The Board of Directors of CIR-Compagnie Industriali Riunite S.p.A., which met today under the chairmanship of Rodolfo De Benedetti, approved the Interim Financial Report as of March 31 2017 as presented by Chief Executive Officer Monica Mondardini.

The CIR group, which was founded in 1976, operates mainly in three sectors: media (GEDI Gruppo Editoriale), automotive components (Sogefi) and healthcare (KOS).

In the media sector GEDI Gruppo Editoriale is launched


In the media sector, as is known, in 2016 Gruppo Editoriale L’Espresso signed an agreement to merge with ITEDI, the company that publishes the newspapers La Stampa and Il Secolo XIX.

On April 27 2017, once the conditions for carrying out the transaction had been verified positively, the Annual General Meeting of the Shareholders of Gruppo Editoriale L’Espresso approved the capital increase that will implement the merger.

The capital increase will be subscribed to and paid in through the contribution of the entire share capital of ITEDI, with the issuance of new ordinary shares in Gruppo Editoriale L’Espresso. Given the importance of the merger deal, the name of the company has been changed to GEDI Gruppo Editoriale.

GEDI Gruppo Editoriale
will be one of the most important companies in Italy and at European level in daily newspapers and digital news. CIR will be the main shareholder of the company with an interest of 43.4%. For the first quarter of 2017 the results of the media sector refer to Gruppo Editoriale L’Espresso and are compared with the results of the previous year on a like-for-like basis. In view of the merger with ITEDI, during 2016

Espresso divested five local newspaper titles (one of which was leased) in order to guarantee compliance with the circulation thresholds required by current legislation.

Consolidated results

The revenues of the CIR group in the first quarter of 2017 came in at € 693 million, with a rise of 7.6% from € 644.3 million in the same period of 2016, underpinned in particular by the significant growth of Sogefi (+12.6%).

The gross operating margin (EBITDA) came to € 72.4 million (10.4% of revenues) and was up by 16.8% from € 62 million in first quarter 2016 (9.6% of revenues). The increase was due mainly to the higher EBITDA of Sogefi.

The net income of the group was € 14.1 million, in line with the result of first quarter 2016 (€ 14.7 million, including a capital gain of € 6.5 million on the sale of a non-strategic equity investment in China).

The contribution of the industrial subsidiaries (Espresso, Sogefi and KOS) to the earnings of first quarter 2017 came to € 12.2 million, up by 64.9% from € 7.4 million in 2016 thanks to the higher contributions of Sogefi and KOS.
Espresso
, despite an environment that is still difficult for the publishing sector, reported a slight increase in revenues and EBITDA for the quarter on a like-for-like basis compared to the same period of last year and a positive net result of € 5 million (€ 5.5 million in 2016).
Sogefi
posted a rise in revenues of 12.6%, thanks to significant growth in Europe, North America and Asia and to the recovery in South America. EBITDA was up by 30.2% at € 45.1 million. Net income rose from € 2.9 million in the first quarter of 2016 to € 11.6 million in 2017. These results are confirmation that the action taken by the company to improve its profitability and cash flow generation has been effective.

Lastly, KOS reported a rise in revenues of 3.6%, due to the organic growth of all areas of the business and to an acquisition in rehabilitation in the second half of 2016. EBITDA was in line with the previous year at € 17.8 million, and the net result was € 4.6 million (€ 4.4 million in 2016).
The contribution of the parent company (including the non-industrial subsidiaries) to consolidated net income was a positive € 1.9 million compared to a result of € 7.3 million in first quarter 2016, which included the already mentioned capital gain of € 6.5 million on the sale of a non-strategic equity interest. Consolidated net debt stood at € 144.7 million at March 31 2017, almost unchanged from € 143.6 million at December 31 2016 (€ 110.2 million at March 31 2016).

The total net debt of the industrial subsidiaries amounted to € 476.3 million at March 31 2017, in line with the figure at December 31 2016 (€ 477.9 million) but significantly lower than at March 31 2016 (€ 520.2 million), thanks to the cash flow generated by Sogefi and Espresso.

The net financial position of the parent company (including the non-industrial subsidiaries) at March 31 2017 was a positive € 331.6 million, which was slightly lower than at the end of 2016 (€ 334.3 million) mainly as result of the buyback of own shares in the quarter (€ 4.2 million).

The equity of the group amounted to € 1,062 million at March 31 2017, up from € 1,052.3 million at December 31 2016. The increase of € 9.7 million was due substantially to the result for the period net of the own shares bought back.   At March 31 2017 the CIR group had 14,398 employees (14,329 at December 31 2016).

Results of the industrial subsidiaries of the CIR group

Media: Espresso
Gruppo Editoriale L’Espresso is one of the most important publishing companies in Italy. It operates mainly in the following sectors:  newspapers and magazines, radio, internet and advertising. The group, which is 56.5% controlled by CIR, is listed on the Stock Exchange. After the merger with ITEDI, the company has changed its name to GEDI Gruppo Editoriale.

The revenues of Espresso in first quarter 2017 came in at € 136.4 million, up by 0.4% on first quarter 2016 (-3.1% on a non like-for-like basis). Circulation revenues (including sundry revenues), totalling € 47 million, were down by 3.4%, in a market that is continuing to experience a significant decline in newspaper circulation (-9.3% in the first two months of 2017 according to ADS figures).
Advertising revenues were up by 6.8%, posting a decline of 6.6% for the group media but a significant increase in third-party concessions, thanks to the new national advertising concessions for Radio Italia, La Stampa and Il Secolo XIX. Costs were down by 6.4%.  EBITDA came to € 13.1 million versus € 12.3 million in first quarter 2016.Net income came in at € 5 million, down from € 5.5 million in first quarter 2016.The net financial position at March 31 2017 was a positive € 29 million compared to € 31.7 million at December 31 2016. 
For further information on the results of Espresso, see the press release published by the company on April 27 (goo.gl/Ja2dct ).

Automotive components: Sogefi
Sogefi is one of the main producers worldwide in the sectors of suspension, filtration, and air and cooling systems with 42 production plants in three continents. The company is controlled by CIR (57%) and is listed on the Stock Exchange Sogefi’s sales revenues in first quarter 2017 came in at € 439.1 million, up by 12.6% from € 390.1 million in 2016 (+11% with the same exchange rates). In Europe revenues rose by 8.2% with a better performance than that of the market as a whole (+4.2%). Business continued to develop strongly in North America (+15.4%) and Asia (+26.4%). In South America revenues were up by 30.6%, reflecting the recovery in that market and the favourable effect of exchange rates (+14.1% at the same exchange rates). All of the Business Units reported significant growth: Air and Cooling +17.8%, Filtration +13.8%, and Suspensions +7.1%. 
EBITDA came in at € 45.1 million and was up by 30.2% compared to the figure for first quarter 2016 (€ 34.6 million). The increase was due to the revenue growth and to the improvement in profitability, which rose to 10.3% from 8.9% in 2016. The higher profitability was the consequence of the further increase in the contribution margin and the reduced impact of indirect costs.
Net income came to € 11.6 million, up from € 2.9 million in 2016.
Net debt stood at € 291.4 million at March 31 2017, with an improvement of € 7.6 million compared to December 31 2016 (€ 299 million).
For further information on the results of Sogefi, see the press release published by the company on April 26 (goo.gl/Nt7fWi).

Healthcare: KOS
KOS, which is controlled by CIR and in which F2i Healthcare has an interest, is one of the largest groups in Italy in the sector of healthcare and care homes (care homes, rehabilitation units, oncology treatments, diagnostics and management of hospital facilities). The group manages 77 facilities in Italy, mainly in the centre and north, for a total of around 7,300 beds and is also active in India and the United Kingdom. In the first quarter of 2017 KOS reported revenues of € 117.5 million (+3.6% versus € 113.4 million in 2016), mainly thanks to organic growth in all areas of the business and to the acquisition of Villa Jolanda in rehabilitation, which was completed in the second half of 2016.
EBITDA came to € 17.8 million, in line with the margin obtained in the first quarter of 2016.
Net income was € 4.6 million, versus € 4.4 million in 2016.
Net debt totalled € 216.5 million at March 31 2017, up from € 213.6 million at December 31 2016.

Non-core investments
The non-core investments of the CIR group consist of private equity initiatives, non-strategic shareholdings and other investments with a total value at March 31 2017 of € 111.3 million (€ 114.7 million at December 31 2016.
More specifically the CIR group has a diversified portfolio of funds in the private equity sector (with a fair value at March 31 2017 of € 56.3 million, down by € 1.8 million compared to December 31 2016). Total distributions in the period came to € 2.2 million generating a capital gain of € 1.5 million.
At March 31 2017 CIR directly or indirectly had investments in non-strategic shareholdings worth € 18.3 million and a portfolio of non-performing loans worth a total of € 36.8 million.

Outlook for 2017
As regards the performance of the CIR group in the whole of 2017, the trends seen in the first quarter are expected to be confirmed unless there are any extraordinary events that cannot at the moment be foreseen.

28 April 2017 | 11:31 CEST

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