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July

28

2017

CIR: results higher in H1 2017, revenues at € 1.4 bln (+5.6%), net income at € 27.1 mln

Board of Directors approves results as of June 30 2017

CIR GROUP: RESULTS HIGHER IN FIRST HALF 2017
REVENUES AT € 1.4 BLN (+5.6%), NET INCOME AT € 27.1 MLN (€ 25.9 MLN IN 2016)

Thanks to the higher earnings of Sogefi and KOS, the contribution of the industrial subsidiaries to the net result of the group is up by 20.9% (from € 17.7 mln in 2016 to € 21.4 mln in 2017)

In the media sector the GEDI deal has been completed:
the company closed the first half with slightly higher revenues and a positive net result

Net financial position of the parent company at 30/6 a positive € 320.4 mln

Milan, July 28 2017 – The Board of Directors of CIR-Compagnie Industriali Riunite S.p.A., which met today under the chairmanship of Rodolfo De Benedetti, has approved the Semi-Annual Financial Report for 2017 presented by Chief Executive Officer Monica Mondardini.

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

Monica Mondardini, Chief Executive of the CIR Group, made the following statement: "The higher results obtained in the first half confirm the solidity of the CIR Group as a whole and that of its main subsidiaries: Sogefi is continuing the process of recovering profitability started two years ago despite the signs of a slowdown in certain important markets, KOS continues to grow and to make acquisitions while GEDI’s results have held up well overall in an extremely difficult moment for publishing”.

Rodolfo De Benedetti, Chairman of the CIR Group, made the following comment: "The results achieved by CIR in the first half of the year are evidence of the good work of management and of the whole group to develop our businesses and create value for all the stakeholders in the long term".

In the media sector GEDI Gruppo Editoriale has been established

On June 27 2017 the merger of the companies Italiana Editrice S.p.A., Publikompass S.p.A. and Nexta S.r.l. (ITEDI Group) into GEDI was completed. As an effect of this operation, GEDI acquired control of the entire ITEDI Group.

The results of GEDI at June 30 2017 do not include the profit and loss figures of the ITEDI Group which were consolidated as from July 1 2017 (the Statement of Financial Position does however include the balance sheet figures of the companies of the ITEDI Group). With a view to the merger with ITEDI, in 2016 five newspapers were deconsolidated in order to guarantee compliance with the circulation limits imposed by current legislation, and thus the consolidation perimeter for the first half of 2017 is significantly different and smaller than that of the first half of 2016. Therefore, to guarantee that the figures were comparable, an income statement for the first half of 2016 was drawn up using the same consolidation perimeter.

Consolidated results

The revenues of the CIR group in the first half of 2017 came in at € 1,392.4 million, with a rise of 5.6% from € 1,319.1 million in the same period of 2016, underpinned in particular by the significant growth of Sogefi (+8.4%). The revenues obtained from abroad accounted for 58.6% of the total thanks to the international development of Sogefi.

The gross operating margin (EBITDA) came to € 148.2 million (10.6% of revenues), up by 18.6% from € 125 million in the first half of 2016 (9.5% of revenues). The increase was due mainly to the higher EBITDA of Sogefi. The net income of the group was € 27.1 million, up from € 25.9 million in the first half of 2016.

The contribution of the industrial subsidiaries (GEDI, Sogefi and KOS) to the earnings of the first half of 2017 amounted to € 21.4 million and was up by 20.9% from € 17.7 million in the first half of 2016 thanks to the higher results of Sogefi and KOS.

GEDI, despite a climate that is still difficult for the publishing sector, for the first half reported slightly higher revenues (+1.6%) on a like-for-like basis and EBITDA unchanged from the same period of last year (€ 22.7 million); the net result was a positive € 7.4 million (the reduction from € 10.3 million for the previous year was due mainly to the amortization of the fair value of the digital terrestrial frequencies implicit in the value of the investment in Persidera S.p.A., which was recognized as from year end 2016).

Sogefi obtained a rise in sales revenues of 8.4% with a better performance than that of the market in all geographical areas. EBITDA rose by 25.8% to € 93.9 million. Net income was up from € 8.3 million in the first half of 2016 to € 20 million in the first six months of 2017. These results confirm the effectiveness of the action taken by the company to improve its profitability and cash generation.

Lastly, KOS reported a rise in revenues of 5.1%, due to the organic growth of all areas of the business and to the acquisition of three facilities completed during the last year.

EBITDA, compared to first half 2016, increased from € 37.1 million to € 39.4 million and net income from € 9.6 million to € 11.3 million.

The contribution of the parent company (including the non-industrial subsidiaries) to consolidated net income was a positive € 5.7 million versus a result of € 8.2 million in the first half of 2016, which included a capital gain of € 6.5 million on the sale of a non-strategic equity investment.

Consolidated net debt stood at € 163 million at June 30 2017, compared to € 143.6 million at December 31 2016 and € 218.2 million at June 30 2016.

The total net debt of the industrial subsidiaries at June 30 2017 amounted to € 483.4 million, substantially in line with the figure for December 31 2016 (€ 477.9 million) but significantly lower than that at June 30 2016 (€ 531.5 million), thanks to the cash flow generated by Sogefi and GEDI.

The net financial position of the parent company (including the non-industrial subsidiaries) at June 30 2017 was a positive € 320.4 million, down from € 334.3 million at December 31 2016 and € 313.3 million at June 30 2016. The change in the first half of 2017 was due to disbursements for the distribution of dividends (€ 25.1 million) and for the buyback of own shares (€ 9.4 million), offset by the positive cash flow from operations (€ 20.6 million).

The shareholders’ equity of the group stood at € 1,006.8 at June 30 2017, down from € 1,052.3 million at December 31 2016. The decline of € 45.5 million was substantially due to the dilution resulting from the merger of ITEDI into GEDI, the distribution of dividends and the buyback of own shares. These effects were partly offset by the net result for the period.

At June 30 2017 the CIR group had 14,613 employees (14,329 at December 31 2016).

Results of the industrial subsidiaries of the CIR group

Media: GEDI Gruppo Editoriale
GEDI Gruppo Editoriale, established in 2017 from the merger of Gruppo Editoriale L’Espresso and ITEDI (publisher of the newspapers La Stampa and Il Secolo XIX), is the top Italian company and one of the most important in Europe in daily and multimedia news. It operates mainly in the following sectors: newspapers and magazines, radio, the internet and the collection of advertising. The company is controlled by CIR (43.4%) and is listed on the Stock Exchange.

The revenues of GEDI in the first half of 2017 came in at € 287.3 million and were up by 1.6% compared to the same period of 2016 on a like-for-like basis (-1.9% with the different consolidation).

Circulation revenues, amounting to € 84.3 million, were down by 5.7% on the same period of the previous year on a like-for-like basis, in a market that has continued to report a significant decline in the circulation of newspapers (-8.9% in the first five months of 2017 according to ADS figures).

Advertising revenues were up by 8.2%, but with a decline of 4.3% for the Group media and a significant increase in third-party concessions, thanks to the new concessions of Radio Italia, La Stampa and Il Secolo XIX, for national advertising. Costs were down by 5.6% on a like-for-like basis. EBITDA came to € 22.7 million and was unchanged on the figure for first half 2016 on a like-for-like basis (€ 22.8 million) despite the adverse evolution of the sector.

Net income came in at € 7.4 million, versus € 10.3 million in the first half of 2016 with the same consolidation. The decline was due mainly to the amortization of the fair value of the digital terrestrial frequencies implicit in the value of the investment in Persidera S.p.A., which was recognized as from the balance sheet date of December 31 2016.

The net financial position at June 30 2017 was a positive € 26.4 million, compared to € 31.7 million at December 31 2016 and €18.2 million at June 30 2016. The decrease compared to the end of 2016 was due to the consolidation in the balance sheet of ITEDI, which contributed net debt of € 7.8 million.

For further information on the results of GEDI, see the press release published by the company on July 26 (goo.gl/dvzpH4).

Automotive components: Sogefi
Sogefi is one of the main producers worldwide in the sectors of suspension, filtration, and air and cooling systems for vehicles with 41 production plants in three continents. The company is controlled by CIR (57%) and is listed on the Stock Exchange.

Sogefi’s sales revenues came in at € 866 million for the first half of 2017, up by 8.4% from € 798.6 million in the same period of 2016 (+7.7% at the same exchange rates). After the increase of 12.6% in the first quarter, in the second quarter the company reported revenue growth that was slower but still significant (+4.5%).

In all geographical areas revenues increased, showing a performance that was better than that of the market: +2.6% in Europe, +11.6% in North America, +32.1% in Asia and +26.1% in South America. All of the Business Units reported higher revenues: +10.1% for Air and Cooling, +9.4% for Filtration, +6.1% for Suspensions.

EBITDA came to € 93.9 million and was up by 25.8% on the figure for first half 2016 (€ 74.7 million). The increase was due to the higher sales revenues and to the improvement in profitability, which rose from 9.3% to 10.8%. The greater profitability was the result of an increased contribution margin and of the lower impact of indirect costs.

Net income totalled € 20 million, up from € 8.3 million in the first half of 2016. Net financial debt stood at € 280.4 million at June 30 2017, with an improvement of € 18.6 million compared to December 31 2016 (€ 299 million) and of € 45.8 million compared to June 30 2016 (€ 326.2 million).

For further information on the results of Sogefi, see the press release published by the company on July 25 (goo.gl/PeUYSj).

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 78 facilities in Italy, mainly in the centre and north, for a total of around 7,500 beds and is also active in India and the United Kingdom.

In the first half of 2017 KOS reported revenues of € 239.1 million (+5.1% from € 227.6 million in the same period of 2016), mainly thanks to organic growth in all areas of the business and to the acquisition of three facilities completed in the last year.

EBITDA came to € 39.4 million, up by 6.2% compared to the margin obtained in the first half of 2016 (€ 37.1 million).

Net income came in at € 11.3 million versus € 9.6 million in the first half of 2016.

Net debt amounted to € 231.6 million at June 30 2017, up from € 213.6 million at December 31 2016 after the distribution in the period of dividends of € 13 million, and from € 226.3 million at June 30 2016.

On July 1 2017, following the merger by incorporation of the businesses of Residenze Anni Azzurri into Istituto di Riabilitazione Santo Stefano, the company KOS Care was established, a company which operates in eight regions of Italy with the brands Santo Stefano (rehabilitation), Anni Azzurri (care homes for the elderly) and Neomesia (psychiatrics).

Lastly, on July 26 2017, through its subsidiary Medipass (oncology treatments, diagnostics and management of hospital facilities), acquired the Tuscan company Ecomedica, specializing in diagnostics and radio therapy with annual revenues of approximately € 9 million.

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 June 30 2017 of € 104.5 million (€ 114.7 million at December 31 2016.

In particular, the CIR group has a diversified portfolio of funds in the private equity sector (with a fair value at June 30 2017 of € 49.9 million, down by € 8.2 million compared to December 31 2016). Total distributions in the period came to € 8.7 million, generating a capital gain of € 6 million.

At June 30 2017 CIR directly or indirectly had investments in non-strategic shareholdings worth € 18.8 million and a portfolio of non-performing loans worth a total of € 35.8 million.

Results of the parent company of the group CIR S.p.A.

The parent company of the group CIR S.p.A. closed the first half of 2017 with net income of € 11.5 million, down from € 17.4 million in 2016 because of a lower dividend flow.

The Shareholders’ equity of the company stood at € 956.5 million at June 30 2017, down from € 978.1 million at the end of 2016 because of the distribution of dividends (€ 25.1 million) and the buyback of own shares (€ 9.4 million).

Outlook for 2017

Regarding the performance of the CIR group for the whole year 2017, a positive result should be confirmed unless there are any extraordinary events that cannot for the moment be foreseen.

28 July 2017 | 12:04 CEST

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