ANNUAL REPORT 2011
ELICA GROUP
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Letter to the shareholders Financial Highlights Chief Executive Officer’s view
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The growth Elica is Elica Group in the world Values and commandments Corporate governance
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The people
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Web communication and related interactions Sissi, Aspiranti Aspiratori Corporate Social Responsibility Internally addressed initiatives External initiatives Awards
Domestic use range hoods › Own brand production › Third-party brand production Electric motors Air purifiers
Consolidated Financial Statements › Directors’ Report › Elica Group Consolidated Financial Statements at December 31, 2011 › Notes to the Consolidated Financial Statements for the year ended December 31, 2011 › Auditors’ report
5
4
167
165
161 163
6
160
168 162
166
164
159* 3
169 7
158 2
8 [45] [34] 36 1*
189
35*
191
190
157 [199] 192 198
266
57 56
38 43* 39 60 58 59 82 90* 83 81 [89] 50 49 84 88 [91] 79* 87
9
74
27 47
106 107 20 172
105 10
25
108 17
104
23
26
18
171
30 69
[31] 100 94 [99][101] 95 [70] 21 93 96 98 97 92* 22
46*
109
24
103
16
15 193
102*
262 261*
115* 111*
186
[122]
185
121 184
75
68
[78] 66* 29
48 28
53 197
[268]
19
76
71* 77 67
32*
[65]
52
73
72
51 64*
85
54
263
187
86
55
264
267
62 [63] 80
188
33 44
40 61
[42]
265
170
37
41
196
112
[144] 143
154 113
130* [156]
137
138 131
[114]
156
127
174
124 134
135
136
132
155
125
126
141
182
12
173
128
140
139
13 11
157
[129]
142
183 155
[110] 14
[158]
117 149* [153] 118 150 120* 151 152 [119]
194 195
116
123*
175 154*
133 212 213
204
146
[223]
147 [148]
145*
181
214
211
176
215 205
203
210
202
216
256*
206
177
180
222
257
178
179
217
224* 209
[218]
201
258
200* 207 221
208
237 234
233 259
[243]
229*
235 238 245
230 232 247 220
246
225
236
[239]
231 [248]
226 252
242
251 227 254* 244*
241 [253]
250
219*
[255]
240*
[260] 249*
[228]
LEGEND
00*
[00]
NUMBER WITH AN ASTERISK: STARTING POINT FOR A NEW LINE NUMBER IN SQUARE BRACKETS: INTERRUPT THE LINE AND START THE MARKING FROM THE FOLLOWING NUMBER
6
7 8
5
4 9
3 10
2 11
*1 [39]
[42]
*38 139 140
[45]
62
12 *138
78
[35] 23
*34
80
64
21
22
44
*40
77
[23] [26]
24
*14
76
*20
86
75
28
*48
30
29 *17
87
84
31
[33] 30 *27
[16]
*46
57 [37] 32
85
60 59
[71]
142
58
*43
25
15
65
141
41
61
79
63
[47]
[19]
18
[93] [161]
74
[82] 73
[13]
*94
144
97
118
115 116 117
[98]
146
102
126
[108]
136
135
*101
153 [129]
125
124
[113] 112
149
122
123 111
110
[100]
121 *120 *109 152 *198
*168 *130
*176
131
[132]
[150] *182
155
*99
128
127
148
156
154
134 147
52
106 107
[137]
*133
[103]
[119]
53
51
105
*114
91
90
50
*104
95 96
89
49
69
68
157
92
88
70
67
145
158
160
54
*72 143
159
56 55
81 66
183
*83
*36
[167]
169
*151
*162
199
*185
*221
166
177 186
163
170 165
[184]
222
164
*214 200
201 223 215 *225
178 202
171
[224] 192
179
[193]
172
187
180
[195] *194
173
203
226
208 [220]
188
216
174
209 210
189
*196
190
[175] 204
[213] 205 [181]
227
*207
191
[206]
228
217
211
212 219
218 [197]
[229]
LEGEND
00*
[00]
NUMBER WITH AN ASTERISK: STARTING POINT FOR A NEW LINE NUMBER IN SQUARE BRACKETS: INTERRUPT THE LINE AND START THE MARKING FROM THE FOLLOWING NUMBER DASHED AREA: ONCED THE TRACK IS COMPLETE FILL THIS AREA WITH BLACK
Letter to the Shareholders Dear Shareholders, 2011 was a difficult year for the entire kitchen appliances sector and parallels can be drawn with three years ago when the severe economic and financial crisis hit all sectors and the global economy. In this situation, we can proudly state with objectivity and transparency that we have implemented all necessary measures to deal with this crisis in the best manner possible. Our Group has demonstrated an ability to rapidly respond to external factors and also to anticipate events and manage market instability. Our personnel have demonstrated high levels of professionalism and dedication in their work and have renewed their trust in us enabling us to become in 2011 among the best companies to work for in Europe, and in 2012, for the second consecutive year, the best company in Italy to work for - according to the Great Place to Work Institute. The strong results are not seen by us as an ultimate goal - but rather as a platform for the future. From this we can draw even greater enthusiasm, motivation and determination for the coming year. Every day we will win your trust and continue to be the leaders. Together.
Francesco Casoli Executive Chairman
Chief Executive Officer’s view
2011 was a very difficult year, presenting a critical set of factors for our sector: on the one hand, the increase in raw material prices and on the other, a general market contraction - due essentially to the property market crisis, but also the international economic-financial difficulties which drove costs upwards and saw access to credit tighten, creating a lack of confidence which impacted end-user consumption, particularly in the second part of the year. The property market crisis spread as far as China, affecting for the first time, after many years of growth, cooking product consumption (by approx. 10%), following the move by the Chinese government to stave off the development of a property bubble. China remains however by far the largest market for the production and consumption of range hoods for domestic use. Considering this very challenging environment, our Group therefore achieved excellent results: —› we increased sales and therefore strengthened our global leadership; —› we increased overall margins, maintaining percentage margins in line with the previous year; —› we reduced the percentage of Managerial Working Capital on revenues1. The increase in the net debt - remaining at a sustainable level for the Group - follows the completion of the Merger & Acquisition operations in Asia, which have enabled us to become the only Global Player in the range hood market.
(1): This refers to Working Capital concerning ordinary business operations
We will continue to implement the policies which positioned us as market leader in recent years: we will continue with product innovation and excellence in design; we will continue to implement operational process efficiencies - particularly in relation to production; we will continue to focus on people and relationships - both internally and externally. The awards received in 2011 recognise this commitment and the results achieved on a number of fronts: red dot award 2011 for the Skin and Sombra range hoods; the Best Place to Work Europe 2011 awarded by the Great Place to Work Institute; the Top Employers 2011 for Italy and Poland awarded by CFR Institute; the Web Award Standard of Excellence 2011 awarded by the Web Marketing Association to the new website www.elica.com; the International Award Le Fonti 2011 which recognises Italian business development excellence in the consumer goods sector. In 2012, raw material prices are expected to settle, although the market remains very complex: the European markets will continue to contract in a similar fashion to the previous year, with North America showing signs of improvement and Japan expected to extend the strong performance of the second half of 2011 due to the reconstruction efforts after the earthquake and tsunami, with India continuing to grow and China expected to contract again this year if the government does not alter its strategy to contain property market growth. The Elica Group’s response to these new challenges is once again based on prudency and a close control of costs, but particularly centres on an extensive updating of products for the Eurocucina 2012 (the Milan Furniture Trade Fair), drawing on the creativity of our designers and the know-how and passion of our engineers. We are now quicker and more efficient, with faster decision making processes and are more reactive to the market and to all stakeholders, thanks to a new organisation: more skilled and experienced personnel, who believe in team projects and who come to work each day with great enthusiasm. ARIA NUOVA.
Andrea Sasso Chief Executive Officer
40 30 20 10 0
80 60 40 20 0
400 300 200 100 0
500 400 300 200 100
2007
426,8
2007
359,2
MILLION OF EURO
EBITDA
MILLION OF EURO
2007
2008
22,7
2008
2007
38,5
65,7
2008
319,7
2008
385,4
67,6
Motor area revenues
MILLION OF EURO
Cooking area revenues
MILLION OF EURO
Consolidated revenues
Financial Highlights
2009
20,1
2009
47,2
2009
287,9
2009
335 1 335,1
2010
26,2
2010
55,2
2010
313,1
2010
368,3
2011
26,5
2011
59,3 3
2011
319,1
2011
378,4
10% 8% 6% 4% 2% 0%
0 -20 -40 -60 -80
16 12 8 4 0
12 9 6 3 0
25 20 15 10 5 0
EBIT
2007
22,1
2007
16,2
2007
9,2
RATIO
ROCE*
MILLION OF EURO
2007
8,9
2007
3,2
Cash / ( Net Debt )
EURO / CENTS
EPS*
MILLION OF EURO
Group Net Profit
MILLION OF EURO
2008
2,4
2008
(34,9)
2008
6,2
2008
3,6
2008
2,6
2009
1,9
2009
(22,9)
2009
0,4
2009
0,2
2009
0,7
2010
4,1
2010
(34,9)
2010
7,5
2010
4,3
2010
10,6
2011
5,3
(68,8) 2011
2011
6,9
2011
4,2
2011
12,0
Return on Capital Employed
Earning per Share
1972 ACQUISITION OF THE CONTRACT WITH PHILIPS
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1970 ERMANNO CASOLI O FOUNDED ELICA S.P.A.
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1990 FRANCESCO CASOLI BECAME CHIEF EXECUTIVE OFFICER
2010 FOUNDED ELICA PB INDIA PRIVATE LTD., JOINT VENTURE BETWEEN ELICA S.P.A. AND PRALHAD BHUTADA; ACQUISITION OF 55% OF ZHEJIANG PUTIAN ELECTRIC CO. LTD.
2005 FOUNDATION OF FIME POLSKA
2009 R BY MERGER O INCORPORATION OF FIME S.P.A.
ELICA GROUP: THE GROWTH
2003 ACQUISITION OF 100% OF FOX AND ANOTHER 25% OF AIRFORCE
2008 SALE OFF ACEM S DIVISION; I BUSINESS T ACQUISITION M OF GUTMANN; P ELICA S.P.A. T AND ARTEMIDE AGREEMENT
2007 MERGER R BY INCORPORATION O N OF JET AIR, A TURBO AIR, T A FOX OX D DESIGN S AND D ACQUISITION ACQUISI SIITION TIO UP TO 60% OF AIRFORCE O
1990
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2011 ELICA INCREASE ITS HOLDING TO 70% OF T ZHEJIANG PUTIAN ELECTRIC CO. LTD EQUITY
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2006 FOUNDATION A OF ELICAMEX; A ACQUISITION A I OF JET AIR; A ELICA S.P.A. INCREASES S ARIAFINA A A HOLDING TO 51% %
2000 A ACQUISITION OF 60% OF JET AIR A AND 20% A OF AIRFORCE
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2002 INCORPORATION O OF JOINT T VENTUR TURE VENTURE ARIAFINA A A BE BETWEEN ELICA AS S.P.A. AND FUJI INDUSTRIA FUJ D
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2011
ELICA IS Elica (Propeller ((Propeller) r ) is a feminine noun: 1 tecn. An engine built from a number of surfaces, with blades, with equal corner intervals around a hub, which generates a drive, rotating in air or in water. 2 geom. A curved shape around the surfaces of a cylinder or a cone and with generators at a constant angle (propeller, spiral) || biol. double propeller, the DNA configuration comprising two filaments in the form of a helix. [Italian Dictionary]
Elica develops p ideas to arrive at new and more significant g meanings. g Elica is for us an engine through which passion, experience, innovation, well-being and listening to internal and external needs can create an impression on our surrounding environment. Air, a vital element, tangible and dynamic, is processed, filtered, blended and put in movement to improve well-being. The philosophy p p y of Elica brings g Aria Nuova (New Air) to the world, continually offering the latest developments to all levels and all partners - from clients to suppliers, to investors, to employees, right up to the local communities which host the Group throughout the world. This approach to thinking and working within Elica is coupled with a constant striving for the best quality: in life, in relationships, in products and in the productive processes.
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Elica is an industrial culture, a collective involvement to enhance constructive know-how, created through a pooling of knowledge where the mechanics is founded on science, the fluid-dynamics based on electronics and the art fed by design. Relations are established - without barriers - between workers who communicate with managers, designers who meet with the prototype developers, and engineers who interact with artists. A reciprocal exchange at all levels, which has created a different mentality, rich in passion and focused on project design, without any preconceptions, but with a desire to anticipate development in a continuously evolving environment.
PRODUCTS FOR COOKING The Elica Group was founded, and has developed over time, within the range hood for domestic use sector and today is the global leader with a market share of 13% 1. The Group designs, produces and markets kitchen hoods for domestic use and for the Asian market hobs, ovens and sterilisers both own brand (comprising 38% of sales revenues) and brands for the principal international home and kitchen appliance producers (62% of sales revenues). The Group brand products are universally recognised as unique items, both in their form and in the highly innovative technological content. The sophistication of the materials used together with a constant focus on maximising efficiency and reducing consumption ensures the quality of the final product. A highly personalised range, co-design, introduction of greatly innovative licensed technologies and high manufacturing and servicing quality distinguishes the Group as a highly qualified partner for supply to Original Equipment Manufacturers (OEM). For many years, well-known brands such Whirlpool, Electrolux, Indesit Company, Fagor, Bosch-Siemens, General Electric and Mabe have renewed their trust in the Group, safe in the knowledge of receiving cutting-edge technology, a personalised range and a high degree of professionalism.
MOTORS The Group designs, produces and markets, under the FIME brand, electric motors for home appliances, security, Elica is certified for environmental security y, on a voluntary basis and based on its ability to distribute products and services built in range hoods and boilers for domestic use and is the leader on the European market. In the traditional boiler sector, FIME’s market respect for nature and for future generations. share for motors on the European market is today 65%, while in the steam boilers sector holding 15% of the market. community, Elica is an engaged g g global g community y, y based on a continuous Thanks to the experience and professionalism acquired over the cultural exchange, which takes place with respect for local years, the Elica Group can offer clients electromechanical design traditions and for differing social conditions throughout the world. People who travel and who meet to improve the production for electric motors, fluid-dynamics and electronic design, creating and the life of those who produce in all regions in which the Group not just motors, but integrated systems for the movement and treatment of air. is present. Recently, the Group also entered the commercial refrigeration sector, utilising innovative technologies to create energybuilds and distributes throughout Elica is an entity y that designs, g the world its products and services - but Elica more than anything saving ventilation systems. The client portfolio includes the is an industrial and cultural hub which believes in the art of living. major producers within the sector: Indesit Company, Whirlpool, Electrolux, General Electric, Bosch, Vaillant, Riello, Ariston Thermo Group, Viessmann, Gorenje and V-Zug. Range hoods, purifiers, home appliance fans, mixers for the combustion of boilers and many other products. PRODUCTION SITES The Elica Group has nine production sites with a wide geographic spread, of which four in Italy, one in Poland, one in Mexico, one in Germany, one in India and one in China. The global expansion has been strategically undertaken to become the only supplier in the sector capable of offering high
quality products and services internationally. In 2010 this objective was realised following the entry into the Asian markets of China and India - two of the markets with the highest development potential. The policy to establish proximity with clients allows a timely response to their demands and to develop an offer focused on the individual needs and styles of the target consumer, thus expanding market share. The Elica Group has not forgotten its roots and is headquartered in the long-standing offices at Fabriano and in 2011 carried out 57% of total production2 in Italy, promoting the development of a business culture which is increasingly “glocal” tapping into all of the knowledge which is part of the global production and sales network.
THE AMERICAS The American market accounts for 18% of the global range hood market in volume terms. The Elica Group has grasped the opportunity presented by this region, despite the difficult year for the sector. The subsidiary Elicamex, the Group’s productive and commercial base in Mexico, in 2011 achieved a market share in the Americas of over 13% in volume terms, thanks both to the growth of the OEM business which includes major clients such as Mabe, Whirlpool, General Electric, Electrolux and BSH, and thanks to the growth of the own brand business. The trading company Elica Inc., with offices in Chicago, is dedicated entirely to the North American market and in which it promotes the Elica Group brands.
(1): Volume data as per the Company (2): Production of range hoods in volumes (3): Commonwealth of Independent States
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ASIA In Asia, the Group has been present since 2002 following the joint venture with Fuji Industrial, leader in Japan in the production of range hoods. The agreement led to the creation of ARIAFINA - today a leading brand for high-end range hoods. ARIAFINA designs and markets products created specifically for the Japanese market and boasts a showroom in the main shopping —› kitchen manufacturers, some examples in street of Osaka. Italy include Boffi, Scavolini, Lube, Veneta Since 2010 the Group has operated on the Indian market, Cucine, while abroad including, Nobilia, the whose growth is among the strongest globally, through a Joint Nobia Groupn and the Fournier Group; Venture with the Indian Pralhad Buthada, one of the leading —› distributors, which include among their players in the region with proven product knowledge and longclients home furnishing stores and kitchen standing relationships with the range hoods and home appliance studios; distributors. Elica PB India Ltd. was therefore created, which —› large retailers, for example, Darty, Brico produces and markets own brand and third party brand range Depot and the Foxtrot Group; hoods, hobs and ovens for the Indian market. —› kitchen studios, specialised kitchen The Group has been present on the Chinese market since 2010 furnishing stores, which are supplied directly following the acquisition of a majority (today 70%) holding in in Germany, Russia and Spain. the Chinese company Zhejiang Putian Electric Co. Ltd., which operates under the “Puti” brand, a leader in the Chinese home To improve the distribution of Elica Group products globally, a appliance sector producing and marketing range hoods, gas hobs direct sales presence exists in various strategic geographic areas: and kitchenware sterilisers. The Group has therefore entered Europe, the Commonwealth of Independent States 3, Asia and the the largest range hood market – with a product line boasting a Americas. The mission is not just to improve distribution efficiency, high level of brand awareness, a good position in the distribution but also to improve market share through the creation of a network and a high quality production base with strong potential dedicated support structure. A number of these distribute directly for development. The production site is located in Shengzhou, to the final consumer, enabling growth and improving knowledge a major Chinese industrial district for the production of kitchen and connection with the markets served. home appliances. In 2011 the Chinese household appliance market declined with the contraction of the real estate sector, following EUROPE The Group holds a 32% market volume share in the strategy introduced by the Chinese government to stave Europe, with the strongest presence in Italy. In addition to the long- off the development of a property bubble. In this increasingly difficult market climate, competition among the other local players standing direct sales structures in Italy and in Poland, in 2008 a direct presence was added in Germany following the acquisition of intensified; however the Group quickly responded by increasing its investment in commercial and product development, and Gutmann, leader in the high-end range hood sector and in 2010 a dedicated organisation was introduced to Spain which allowed the dedicating a significant proportion of the resources generated from Group to achieve strong results in a geographic area experiencing the Chinese company to this objective. market difficulties. The strong presence in Asia confirms the unique global role that the Elica Group holds in the range hood sector which, through CIS The Elica Group in 2011 decided to strengthen its direct presence in this market, in which it has operated through acquiring an increasing market share to support its leadership, has enabled the possibility to serve the OEM clients with local its brands since 1995, with a new subsidiary Elica Trading LLC, which enables the sales of own brand products – such as Elica, Jet production in all major global markets. Air and Turbo Air – with greater market and territorial penetration. Elica Trading LLC, with head offices in St. Petersburg, is present also in Moscow and thanks to its product warehouses and dedicated locally-based distribution network, which is directly served, guarantees timely delivery and a punctual and all encompassing service throughout the Russian market. The Elica Group today can ensure quality and efficiency both for the product and the service offered to consumers, thanks to the direct management of a technical assistance network for the final client.
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DISTRIBUTION NETWORKS Third party brand products are distributed directly through close relationships with Original Equipment Manufacturer clients which have been developed and consolidated over the years. Brand products are sold through various distribution channels:
EXECUTIVES 36
ELICA GROUP IN THE WORLD
WHITE-COLLAR 696
DEGREE RE HOLDERS 436
DIPLOMA HOLDERS 1,097
WOMEN 1,246
TOTAL EMPLOYEES IN THE WORLD
2,966 1,512
HUMAN RESOURCES
ELICA
GUTMANN
ELICA GROUP POLSKA
BARCELONA ( SPAIN )
MÜHLACKER ( GERMANY )
JELCZ - LASKOWICE ( POLAND )
PRODUCTION NETWORK DIRECT PRESENCE ELICAMEX ELICA INC.
QUERÉTARO ( MEXICO )
CHICAGO ( UNITED STATES )
ELICA ( ITALY )
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FABRIANO ( HEADQUARTER ) SERRA S.QUIRICO MERGO CASTELFIDARDO CERRETO D’ESI
BLUE-COLLAR 2,043
OTHERS 191
OTHER TITLES 1,433 O
MEN 1,720
ITALIAN EMPLOYEES 1,454
ELICA TRADING LLC
AIRFORCE
ST. PETERSBURG ( RUSSIAN FEDERATION )
FABRIANO ( ITALY )
ARIAFINA SAGAMIHARA-SHI ( JAPAN ) PUTIAN SHENGZHOU ( CHINA )
ELICA PB
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MUMBAI ( INDIA ) - PUNE ( INDIA )
VALUES L S
THE REFERENCE R POINT FOR ALL THE T ACTIVITIES OF THE ELICA E GROUP
LOVE YOUR CUSTOMERS, PUT PASSION INTO WORKING FOR THEM
USE INNOVATIVE THINKING
MAKE IT EASY FOR EVERYONE TO BE INVOLVED IN THEIR OWN WORK
EMPLOY OY AND COMMUNICATE C TOTAL TA ENERGY
IDENTIFY NEW N OBJECTIVES IV AND ACHIEVE AC THEM
STAY CURIOUS AND NEVER STOP LEARNING
WANT TO WIN
SEE CHANGES AS AN OPPORTUNITY
FIGHT TO REDUCE COSTS AND SIMPLIFY YOUR WORK
COMMANDMENTS THE INSPIRING PRINCIPALS FOR ELICA GROUP’S WORK
1 MANAGE PEOPLE SO THAT THEY CAN MANAGE THEIR WORK 10 DON’T MAKE THE COMPANY TOO COMPLICATED
2 DELEGATE, DELEGATE, DELEGATE
3 WORK TOWARDS OBJECTIVES
8 DON’T GET TANGLED UP IN A BUREAUCRATIC MENTALITY
4 PERSEVERE, PERSEVERE, PERSEVERE
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9 COMMUNICATE, COMMUNICATE, COMMUNICATE
7 TRY TO ACHIEVE THE IMPOSSIBLE
6 ESTABLISH SELF-MANAGING TEAMS TO SOLVE PROBLEMS
5 REWARD THE ACCEPTANCE OF RISK AND RESPONSIBILITY
CORPORATE GOVERNANCE Principal p activities in 2011 The activities in 2011 which have impacted the organisational structure and the structural developments are reported below.
Organisational g structure
Structural developments p
Within the adjustment activities to comply with legal requirements in relation to the management of Financial Disclosure risks, the Company implemented the project focused on the complete and updated mapping of the processes and controls concerning administrative-accounting information flows. The Internal Control Committee continued its role of issuing a non-binding prior opinion on the interest of the company, as well as the suitability and substantial correctness of the conditions, in the case of transactions with related parties as per the new Procedure for Transactions with Related Parties. In addition, the Company in applying the criteria established under the legal framework, with particular regard to Law 262/2005 and Legislative Decree 231/01, will carry out further actions extending the Internal Control System to significant foreign associates. For a more expansive analysis and In addition the Extraordinary Shareholders’ description of the activities carried out Meeting modified the By-Laws and the and to be carried out, reference is made to Shareholders’ Meeting Regulation in line the Corporate Governance and Ownership with the provisions introduced by Legislative Structure Report updated to March 21, 2012, Decree No. 27 of January 27, 2010, enacting published and available on the internet site Directive 2007/36. of the company www.elicagroup.com, in the Finally in January 2012, in accordance with Investor Relations section. Article 154-bis of the CFA, as modified by Law No. 262 of December 28, 2005 (the so-called “Savings Law”) and in compliance with Article 26 of the By-Laws, the Board of Directors, with the approval of the Board of Statutory Auditors, replaced the Executive Responsible for the preparation of the accounting documents.
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—› Increase in the number of members of the Board of Directors from 7 to 8 and consequent appointment of a new independent director, who also joined the Remuneration Committee which is now comprised of 4 members. The appointment by the Board of Directors of the Internal Control Manager in the person of the Elica Group Internal Audit Manager, with the duty to develop the Internal Control System and to support the activities of the Internal Control Committee and the Board of Directors. —› Appointment by the Board of Directors of a new member of the Supervisory Board who undertakes also the role of Internal Audit Manager of the Elica Group. —› Evaluation of the adequacy, efficacy and effective functioning of the Internal Control System, expressing approval on the state of the System.
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The Elica Group considers the development of the Internal Control System and the corporate governance system in its totality as an issue of prime importance. Therefore, and considering the considerable expansion being undertaken by the Group and the priority placed on integration within the Group, the model has incorporated some of the strictest regulations and best international practices in order to create a competitive advantage. The Elica Group, which complies with the Self-Governance Code promoted by Borsa Italiana SpA as approved in March 2006 and updated in March 2010, in 2012 will implement the new version of the Code issued in December 2011.
THE PEOPLE
MEMBERS OF THE BOARD OF DIRECTORS
Francesco Casoli
Executive Chairman
Gennaro Pieralisi
Director
Giovanni Frezzotti
Independent Director
REMUNERATION COMMITTEE Andrea Sasso
Chief Executive Officer
INTERNAL CONTROL COMMITTEE
Independent Director and Lead Independent Director
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Stefano Romiti
Gianna Pieralisi
Executive Director
Giuseppe Perrucchetti
Independent Director
Luca Pacces
Independent Director
MEMBERS OF THE BOARD OF STATUTORY AUDITORS
Corrado Mariotti
Chairman
Stefano Marasca
Statutory Auditor
Franco Borioni
Alternate Auditor
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Gilberto Casali
Statutory Auditor
Daniele Capecci
Alternate Auditor
Alberto Romagnoli
Finance Director
Emilio Zampetti
Claudio Mulazzani
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Paolo Patrizi
Planning & Controlling Director
Chief of Human Resources
IT Director
Fabrizio Stronati
Chief Procurement Officer
Gianguido Cerullo
Chief Commercial Officer B2B & Product Development
TOP MANAGEMENT Marco Vidali
Rober to Di Fiore
Chairman & General Manager Zhejiang Putian Co. Ltd
Chief of Industrial Area&Quality
Alessandro Ciabatti
Chief Operating Officer Americas
Alessandro Gasparri
Chief Logistic Officer
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Marco Bonfigli
Chief Commercial Officer B2C
Manuel Fernadez
Managing Director Exklusiv-Hauben Gutmann GmbH
KEY INTERNATIONAL PEOPLE
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22
Keichii Kashimura
Chairman & Representative Director ARIAFINA CO., LTD
Pralhad Bhutada
Chief of Executive Officer Airforce S.p.A.
Director Zhejiang Putian Electric Co. Ltd
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Renyao Du
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Urbano Urbani
Chief of Executive Officer Elica PB India Private Ltd
INVESTOR RELATIONS
APP: HTTP://GETTAG.MOBI
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Laura Giovanetti
Investor Relations Manager
THE TAG CODES CAN BE SCANNED BY A SMART PHONE’S VIDEOCAMERA USING THE FREE APPLICATION DOWNLOADABLE FROM THE ABOVE LINK. BY SCANNING THIS DOSSIER’S TAG CODES YOU ACCESS THE WEB PAGES DEDICATED TO THE PEOPLE IN ELICA GROUP.
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DOMESTIC USE RANGE HOODS OWN BRAND PRODUCTION
The Elica brand was created in 1970 with an expansive vision: to bring healthy air to kitchens throughout the world. For over 40 years the products of the Elica brand have satisfied millions of clients across the world for their quality, reliability and technology.
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Elica is a brand synonymous with elegance and innovation. Elica represents Italian style and with over 100 models satisfies the needs of all types of kitchens - modern, traditional and classic. A model for every need: wall-mounted, corner-mounted, kitchen island and in-built hoods. Alongside the classic and historic brand products, Elica also offers groundbreaking innovative products, through which a new concept has been experimented with - focused on the importance of design and stimulated by famous international designers. This laboratory of ideas and technologies expresses a new way of thinking in relation to the range hood, which have become a distinguishing and character infusing object within each individual kitchen. Therefore, Elica has today developed the most extensive range of products in the world, housed under a single brand and which calls on all of the knowledge, experience and artistic culture acquired over the years. Conceptualising, designing, creating and distributing products throughout the world – from Italy to India – establishing a common identity, results in the production of high quality items which create a better standard of living within the home.
Experience, tradition, high performance and innovative development are the values which encompass the Gutmann brand. The brand offers a wide range of solutions to satisfy special projects, such as the design and creation of a dream home. The Gutmann brand is positioned at the high-end of the brand architecture of the Elica Group. In the German factory at Mühlacker, high-end range hoods are produced which in their size, form and material, satisfy the specific design requirements of clients. Gutmann is focused on exclusivity, through an industrial process based on handcrafting and attention to detail, producing high value crafted range hoods - unique tailor-made models in their class. The leadership of Gutmann allows the Elica Group to lead the exclusive segment of the market, providing extractor units tailormade to fit into unique surroundings.
For over 35 years, Turbo Air has been “Pure Italian Technology�: a mid-range brand which is known for the new features in its lines and materials - marrying quality and originality. The brand offers a range - created for the Far East markets, the CIS 1 and Italy - which integrates and completes to a high standard the Group offer through the introduction of models which combine design and practicality. Innovative solutions are an indispensable feature of all brand models, without however sacrificing efficiency. Solidity, reliability and careful selection of the materials used combine to create the TurboAir products in an Italian style, easily recognisable by its tradition and beauty. The Ariafina brand was created through a joint venture between Elica and Fuji Industrial, a leading company in range hood production, which has allowed the Elica Group to enter the Japanese market, confirming its place in the high-end range hood segment. Ariafina combines Japanese productive and technological know-how with Italian design style, made with good taste and sophistication, offering cooking and living solutions, with the domestic space seen as reflection of lifestyle. Enjoyment begins with the preparation of the meal. Arietta, a brand distributed in North America, offers competitive products which do not forsake design and quality. Its products are a symbol of the coming together of tangible and intangible values, a metaphor for a lifestyle: technology, quality and beauty - in addition to culture and the ability to dream. The Arietta models encapsulate the Italian culture and its personality: defined and innovative shapes, catching the eye without disturbing the ear.
(1): Commonwealth of Independent States
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Acquired as part of the joint venture with Zhejiang Putian Electric Ltd., Puti is a leading brand in the home appliance sector in China, offering hobs, kitchen sterilisers and range hoods. Putian is one of the main players in the Chinese range hood market and develops western style products, today providing a mid and high range offer. These products are recognised for the high technological and aesthetic content, linking a Chinese industrial tradition and know-how with a western style and the experience of the Elica Group. The Puti products are practical, reliable and affordable, creating a minimalist feel and bringing a European design style to the environment in which it is placed.
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Jet Air is the brand in which the Group has been present on the Russian market for many years and is a product of the rich history of the made in Italy brand, particularly loved and appreciated for its functionality, technology and aesthetic beauty. Knowledgably mixing reliability and style, Jet Air creates multifunction range hoods, high in detail, which reduces to the minimum the circulation of smoke in the kitchen and ensures a comfortable environment.
DOMESTIC USE RANGE HOODS THIRD-PARTY BRAND PRODUCTION
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For over 40 years, the Elica Group has supplied not only products but also services to important industrial groups, with whom it partners in an optimised coming together of design, processes, research and production. The goal is to provide an integrated service which begins with the idea, which turns into a concept, and then into an industrial project and results in the creation of a series of personalised products, perfectly in line with the needs of the client and the market. With a constant requirement for innovation from clients, the Elica Group has acquired experience and a technical capacity which anticipates and exceeds international standards in terms of environmental protection, energy saving and security. Today Elica is the leading global player in its sector, supporting its clients in all geographic markets, providing not just a product, but also a service which has always ensured the Group as a world leader.
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ELECTRIC MOTORS
The FIME motors are our secret allies.
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FIME seeks to improve the quality of life through its technology and becoming the benchmark in relation to energy consumption, silence and efficiency. The FIME brand over the years has developed its presence in the domestic ventilation sector with range hood ventilators, boiler ventilators, commercial refrigeration ventilators and electric motors for home appliances. With the advantage of over 30 years experience in the ventilation and heating sector, the FIME brand today holds a leadership position in the European market. The range of products is highly recognised by the leading industrial groups operating in the various sectors served: Vaillant, Bosch, Viessmann, BDR Thermea, Riello, Ariston Thermo, Immergas, BSH, Whirpool, Electrolux and Indesit Company. The Elica Group has developed extensive know-how not just in electromechanical design of electric motors, but also in the fluid-dynamics and electronic design which today allows the provision of integrated client systems for the movement of air.
The design, as with production, is also carried out and controlled within the Group dedicated motors structure. The technicians have the most modern calculation and simulation instruments for fluid dynamics and electromagnetism, controls integration and for structure mechanics available to them. In line with the industrial policy of the Group, also this Business line is increasingly orientated towards production focused on the well-being of the individual and the environment. The FIME brand ventilation systems comply with the regulatory requirements concerning sustainability and the lowering of consumption, in all sectors of application.
AIR PURIFIERS
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Elica designs and produces a line of multifunctional appliances which combine lighting and the purification of air - created to improve well-being in the domestic environment. Elica has focussed on the interplay of light and air to create a new experience and new ways of conceiving of the environment. Cutting-edge technology and exclusive design have created a new object, which revolves around the emerging focus of clients on high quality living. In addition to the Luxerion models, Elica has created a new line of models to combine aesthetically with the range hood products in order to offer a complete range for the living room and kitchen.
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INDEX
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Web communication and related interactions Sissi, Aspiranti Aspiratori Corporate Social Responsibility Internally addressed initiatives External initiatives Awards
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FEEL
The corporate blog of Elica: blog.elica.it At the 2011 International Furniture Fair, Elica opened its corporate blog: blog.elica.it – created from the need to open a window to the world of Elica, in which a dialogue can be developed with readers – content shared in four sections related to a monthly theme, which follows a precise editorial plan. —› Elicanomics dedicated to descriptions of products which improve daily life; —› Elicart a journey through Elica initiatives which concern art in collaboration with the Ermanno Casoli Foundation; —› Elicommunity a place in which conversations take place on the Aria Nuova of Elica; —› Elicoolest a section dedicated to all that inspires the design world.
WEB COMMUNICATION AND RELATED INTERACTIONS
The idea to create a web space dedicated to architects and interior designers stemmed from the thought that publishing projects helped both the authors and those who access the images. The professionalism of a project is provided a platform on the Elica site, visited by a large number of people, making the designer identifiable through the location map of the studio and their project style. The images published of the domestic environments, which the Elica products inhabit, may act as a stimulus or a concrete suggestion for those who wish to furnish their homes, making them aware of possibilities and spreading the project culture. Designing means “putting it out there”, providing all that is needed to complete an environment, taking account of usability and function. Good design avoids problems at the time of construction, mounting or – even worse still – in daily use. The Designer Lounge is completed with a selection of architecturaldefined products, which can be integrated with furniture, wall structures and construction systems, such as suspended ceilings or plaster boards. Products which create solutions through tailored installation significantly contributing to improving living spaces. Through the Designer Lounge, we have opened up a dialogue with internal designers in order to provide targeted information so we can breathe Aria Nuova together.
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The website www.elica.com is dedicated to the product, impressing the user with innovative graphics and layouts, while at the same time providing easy access to useful information. A web space for the Elica brand, designed to communicate with passion our products and values - which marry creativity and practicality. The range of things to discover, through quickly navigable sections, include: the Products, the Range Hoods, the Designer Lounge, the Blog, where we open up discussions on design, architecture and art. New instruments make the choice of an Elica range hood easier: an interactive product guide, a quick path to discover the perfect model and the Store Locator function to find the nearest Elica vendor. The user - according to their functional, installation and aesthetic taste requirements - can find the most suitable product, through easy navigation. The range hood is outlined and described together with a summary of uses and product choices. We have created a window to the world, the Designer Lounge, where internal architecture designers can sign up and publish their projects, informing themselves on the Made in Elica news and downloading materials dedicated to them. A space for the creation of the project culture. The Blog is a space to share content in an informal and innovative manner. Users can update themselves and discuss developments, world design news and new issues proposed by Elica. Clarity, knowledgeable use of images and simple and immediate graphics are the instruments used by the web designers to facilitate understanding of the content and the navigation of the site - utilising the cutting-edge web 2.0. Usability is a central aspect of the project. The home page summarises all of the content through a menu listing all the major items. Many people have worked meticulously towards a common objective: to create the best site possible - a benchmark for the sector. We are confident that this new instrument will contribute to the success of Elica in the world.
Elica shares the project culture: Designer Lounge
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Web communication and related interactions
The kitchen breaks a habit with the new Elica campaign The advertising campaign Elica “NO SMOKING” carried in the leading furniture publications in Italy and abroad, features the efficiency of the range hood products. A provocative message with a simple image - but with significant impact - similar to the distinctive features of the Elica brand: surprise, fantasy and individuality. The new “NO SMOKING” campaign ironically invites consumers to “quit smoking” their kitchens, through the Elica range hoods. The creativity plays on the ambiguity between “smoke” which develops during the cooking of food and the smoke of a cigarette, to carry a dual message: the efficiency and quality of the Elica product, which is the basis of the Aria Nuova theme, together with an invitation to free oneself from the smoke which pollutes our daily life. From this ambivalence, the idea developed to take the form of a pack of cigarettes, with a recognisable black panel, which carries warning messages on the dangers of smoking, reinterpreting the high impact slogans such as “Smoking Kills”, “Stop Smoking” and “Smoking damages your kitchen”. The “NO SMOKING” campaign is multi-faceted, both aimed at the sector press, and to communicate to the wider public the elements which are the distinguishing features of the brand.
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The first K viral In order to bring the Elica brand to a fresh target audience, the Communication Team produced its first Elica viral marketing project. “-Viral- concerns marketing actions which utilise the ability of a small number of people to transmit a message to a wider audience of final consumers”, explains Seth Godin, ex-vice president of Yahoo and the supposed inventor of viral marketing. A video of approximately 4 minutes explains, or better offers -K-, a mysterious Elica product capable of tackling bodily odours, nicotine smells and flatulence. It is a portable object, to be worn also on the body - a surprising innovation. -K- perfectly embodies the values of the Elica brand: it is innovative, elegant, deals with particular issues and improves one’s well-being. In short - it is Aria Nuova (New Air). Curious web users will visit the k.elica.com site or tell their friends or relatives of the latest “invention”, contributing - whether aware of it or not - to the result of the spreading of the message in an exponential manner. Buzz marketing or word of mouth, which has enabled Elica to reach thousands of people through less conventional channels or media, is less costly than the classic magazine or brochure advertising. -K- is a “fake” product, but the features are very interesting, supported by an ad hoc site and a 6-month communication plan. With the -K- project, we have sought to spread the word of the Elica brand, increasing visits to our website, informing with originality and creativity who we are, our core business and our products. Spread the word of k.elica.com: broadcast the video on Facebook, YouTube or Twitter, spread the word and together we will make Elica viral.
We see ourselves in the eyes of others
“It was very interesting to discover the “creative” and industrial path which leads to the design of the new products, based both on market demand and aesthetics, which must not only be “beautiful”, but also innovative, functional and discrete.” Caterina di Iorgi, Design & Style Blogosfere, one of the leading Blog Networks in Italy
“The range hood communicates a status - and the design is the means through which this communication takes place.”
In 2011, the Communication department worked towards a single objective: to make ourselves aware – and to circulate information on our product – through connecting with a view from outside. We employed 4 bloggers with the task of describing the KITCHEN RANGE HOODS, a world still to be discovered and communicated. The meeting took place in December where the bloggers, art and design experts, visited the historic offices of Elica in Fabriano. A day dedicated to the history of the range hood from the origins to the present – 40 years summarised in a meeting of little more than 24 hours. A full immersion which provided an understanding of all the work which is behind the creation of these home appliances and the interaction of the Elica industry with the world of art, which led to the creation of the Ermanno Casoli Foundation. The result was amazement, admiration and disbelief. They were each astounded by a particular aspect which they described through their own eyes.
“After a truly fantastic tour of Elica I was proud of – maybe wrongly so, but with the pride of a beginner – to have become an expert in front of friends and relatives.” Frizzifrizzi, diretto da Simone Sbarbati, one of the leaders in the Italian fashion, art and design worlds
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Teresa Nicole Erra, a web content manager for the art, design and entertainment channels of Tuttogratis
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“Before being aware of the Ermanno Casoli Foundation, I would not have believed that it was possible to create such a strong synergy between such disparate worlds as the arts and industry.”
WEB COMMUNICATION AND RELATED INTERACTIONS
The relationship with the Bloggers is the mirror in which Elica wished to see itself – to see the reflection of its image.
Daniele Devoti, an architect and one of the most active Italian bloggers in architecture circles
Sissi Aspiranti Aspiratori curated by Marcello Smarrelli
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“Being a purifier means bring a change, develop.� Sissi
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Sissi,
Aspiranti Aspiratori
Capillare, preliminary stage of construction photo Ramiro Castro Xiques
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Nidifico Angolare The Nest-building Aspirator settles on prominent surfaces in search of shelter, preferring corners, edges, eaves. Its sur face retains the impurities that surround it by means of afoliated shield with a branchial sequence of layers.
The idea of Aspiranti Aspiratori evolved from a meeting of a business need and a cultural proposal. The business need was that of the Elica Group, world leader in the production of range hoods to open up new thinking in relation to air purification. The cultural proposal was that of the Ermanno Casoli Foundation, established in order to begin a dialogue between the arts and industry, which suggested a proposal to an artist to rethink this concept. Due to its relational, substantive, biomorphic, metamorphic, flexible, penetrative and evocative nature, the work of Sissi was immediately considered suitable for this experiment. The artist, in line with her outlook to reappoint and classify reality, began with the formulation of a new method of interaction between arts and industry in which the artist is housed within the
factory, familiarises herself with the environment, making it one with her own body and filling it with content. Industry, transformed into the body of the artist, begins to function in a continuous and unceasing osmotic exchange. Sissi called the initial phase of the process Innesto, her transfer to the Elica factory at Fabriano, and the construction of her studio, which has been called Cubatrice, within the Prototype Laboratory. In this protected and limited space, but open to all interactions, the employees of the company witnessed the birth and growth of the work of the artist, becoming participants within her work. At the same time, the actions and thinking of the company began to communicate in an osmotic manner with the artist, influencing her until creating a single creative thought, where the ideas of Sissi and the creative process became actions, visions and projects shared with the employees of the company. Over the course of one year, Sissi gave life to her ideas and a series of 10 collages which she entitled Aspiranti Aspiratori. These 10 pieces are potential air purifiers, each with a well defined identity and a name, which identifies the key concept in line with its form and its functionality. Three of them (Riflettente, Continentale and Capillare) were created into 3 sculptures which the artist created with the help of the employees of the Company, while all 10 are involved in the Casting video, created by the artist in collaboration with the Academy of Fine Arts of Bologna, which tells a story of their birth and evolution.
Mucosa Cigliosa The purifying tissue of the Ciliate Aspirator has a mucous body filled with vascularising circles that extend in ciliate material fortheintake of air. The formation of cilia can be confined to one point or distributed over the whole surface of the aspirator with variable lengths, allowing it an outward fibrous coupling to take hold of the substances to be purified.
Riflettente The Reflecting Aspiratoris revealed by opening a reflection on the inside within itself. Its mirroring capacity offers a gift of awareness to those who look at it .
Ostriature The Oystriating Aspirator comes from the depths. Its method rises to purification through a precious luminosity emanated by the fissures that its shield releases.
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SISSI, ASPIRANTI ASPIRATORI
Architetturale The Architetturale is a multifunctional wall that without hierarchical processes contains within itself purification, illumination, amplification and other aggregative concepts. A sur face that makes space, constructs environments, working space to improve it .
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Among the collective: Silenzi, in cui le cose s’abbandonano, Muzej The research of Sissi (Bologna, 1977) Suvremene Umjetnosti – Museum of Contemporary Arts, Zagreb, 2012; features a repeated and almost Furla for Art, Furla Foundation, Italian scientific analysis of the body Embassy, Moscow and Tokyo, 2011; and its experience which becomes Patterns of the Mind, Turku Biennial, the materials which embody the Turku, Finland, 2011; Via Farini at artist in a continuous movement No Soul For Sale, Tate Modern, between life and art. London, 2011; Artifici contemporanei Utilising a variety of media, such e difformità barocche, Collaudi, as sculptures, installations and Italian Pavillion, 53a Biennale of performance, Sissi redefines the Venice, Venice, 2009; 15a Rome reality which surrounds her and Quadriennale, Rome, 2008, Global with it her own identity. The daily Feminism, Brooklyn Museum, New life and the emotions of the artist York, 2007; Italian Genius Now, take the form of clothes, books, travelling exhibition: Pecci Museum, files, sculptures, created in the Prato; Museum of Fine Arts, Hanoi; most diverse materials which are White House, Emily Hill House transformed and redefined in a Singapore; Korean Design Center, constant search for identity and its Seoul; Xuexue Institute, Taipei; multiple relations. Travancore Palace, New Delhi, 2007 – 2008; Phantom of Desire, She has won numerous awards, Neue Galerie am Landesmuseum including: Gotham Prize, awarded Joanneum, Graz, 2003; Watou by the Ministry of Foreign Affairs, 2012; Rome Prize American Academy Poeziezomer, Watou Smak, Ghent, 2001. in Rome, 2006; New York Award, awarded by the Ministry of Foreign Affairs, Italian Academy of Columbia University, New York, 2005; Furla for the Arts Award, 2002. She has had numerous personal and collective shows of international acclaim. Among the personal: Abitanti, FaMa Gallery, Verona, 2011; Addosso, Arnaldo Pomodoro Foundation, Milan, 2010; Al di là dello sguardo alla corda lega, Mizuma Gallery, Tokyo, 2008; Voliare, Fattoria di Celle, Gori Private Collection, Pistoia, 2007; Nature, Chelsea Art Museum, New York, 2006; Nidi, Macro, Rome, 2004; The walk, W139, Amsterdam, 2003; Aerea, Moca, Miami, 2001.
Sissi, Aspiranti Aspiratori book, original prototype
Sissi biography
Sissi, Aspiranti Aspiratori photo Ramiro Castro Xiques
The results of the delicate contamination and exchange between the artist and the company will be presented in a show held in the Elica space of Milan at the Fuori Salone 2012 show where the three Aspiranti Aspiratori pieces and the Casting video will be shown. During the show the public may vote on their favourite. The show will be accompanied by a book of the artist edited by Corraini, which will cover all of the stages of the project, documenting in diary form the new embodiment of the company after the meeting with Sissi: a body which hosts and feels, or an “Organindustria”. A visit to this show will be an immersive experience within this body, thanks to the presence of a guide which will involve the public within a narration of art, myth and science. The project will not conclude with the show, but rather open it, establishing a grounding from which the Elica Group can develop its ideas.
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SISSI, ASPIRANTI ASPIRATORI
—› www.aspirantiaspiratori.com www.fondazionecasoli.org
Dedicated to the memory of the founder of Elica, the Ermanno Casoli Foundation was established in 2007 in order to strengthen the link between the worlds of the arts and industry, promoting initiatives in which contemporary art could act as a development tool and one through which a greatly innovative workplace environment is allowed to thrive.
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Ermanno Casoli Foundation
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WIZARD
Corporate Social Responsibility Elica signed the Charter for Equal Opportunity in the Workplace,
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promoted by Sodalitas, under the patronage of the President of the Republic, in order to contribute to the establishment of an inclusive corporate culture and policies, free from discrimination and prejudice, evaluating abilities in all their diversity.
In 2011 Elica, together with the Indesit Company, with the Sodalitas Foundation and with the National Anti-racism Office organised at the auditorium of its Fabriano offices the Training seminar on the fight against discrimination within business, at which companies, associations and institutions participated to affirm their commitment to more effective management of diversity within businesses. The principal objective of the meeting was to promote the Charter for Equal Opportunity in the Workplace.
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We are different we are together campaign.
CORPORATE SOCIAL RESPONSIBILITY
High beech tree reaching for light communication campaign “we are different we are together �
The theme of diversity was in fact one of the principal internal communication themes, thanks also to the
Quercia Oak treeininprimavera spring
Excellence cannot be created if we do not live in a workplace which practices excellence in the care of the individual, both within and outside the workplace environment. From this starting point, Elica Life* was created, whose objective is to provide to employees a series of services in line with their needs, to improve their lifestyle and to create a direct contact with the company – establishing more than a mere professional relationship. In this context, the welfare and the work life balance initiatives drawn up by Elica are placed. Forestaofdibamboo Forest bambÚ
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Elica Life
A Member card, provided to all Group employees, utilisable by all of the family - a card which grants access to a series of subsidised services for a number of activities within the commerce, services and healthcare area, with discounts of between 5% and 30% in all regions in which Elica is present. In 2011 the card was improved through an agreement with Poste Italiane and became also a “Postepay” card, increasing therefore the discounts and purchasing power of the individual throughout the country.
Member card
Aerò, the Elica gym, was established to promote the philosophy of well being and quality of life, a space equipped with latest generation machinery and in which physical activity is undertaken with the assistance of a specialised trainer. The aim is to promote a culture of incorporating healthy lifestyle choices and increasing “well being” knowledge and behaviours.
Aerò
Internally addressed initiatives I Am, an internationalisation programme through which the Company communicates to family members open and multicultural ideas, contributing to foreign study vacations for employees’ children where they can learn the English language. In 2011 I Am Poland was created which, with its high social content, was supported by the Polish Government. With the support of the Victoria Company, accredited by the language institute of Jesi (AN), Elica organised in the heart of Le Marche an English course dedicated to 10 Polish children - children of the employees of the subsidiary Elica Group Polska.
I Diving
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Elica, in collaboration with the Club Subacqueo of Jesi, for the 5th consecutive year organised for its employees and for “friends of Elica” (relatives, friends, professional partners) a scuba diving course. The objective of this activity was to bring people out of their comfort zone and to develop reciprocal trust.
INTERNALLY ADDRESSED INITIATIVES
I Am
Pine forest
Training
Bamboo trees
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The training programme for 2011 focused on innovation and internationalisation. For the blue collar workers WCM (World Class Manufacturing) courses were organised to introduce the Kaizen methodologies to the factory; safety courses, communication and IT courses, to continually update and develop crossover skills; finance courses to provide education on economic and administrative issues which other employees undertake in order to better educate on useful issues both for the workplace and for personal life (management of the family budget, reading of banking documents, the understanding of mortgages and loans, pension systems).
New Mind
Tools The “tools” course is aimed at newly-hired employees, a 2-day course which concerns 4 principal issues: leadership, negotiation, innovation and problem solving. Uniting these themes, team work is also dealt with.
E-straordinario E-straordinario, a training course for company personnel, designed and managed by the Ermanno Casoli Foundation, which focuses on the contemporary arts in order to create a relationship between art and industrial production, to contribute to the development of creativity and innovative approaches to situations. E-straordinario 2011 takes as its principal theme engraving, with the contribution of Francesco Barocco, winner of the Ermanno Casoli 2011 award.
Doing business China Particular attention was placed on the Elica structure in China, Zhejiang Putian Electric Co. Ltd., recently acquired by the Group and therefore subject to the integration process: “doing business China”, a course dedicated to middle management, educating on the culture of the east and in particular China. Mental mapping and the importance to “train” soft skills, necessary for an intercultural approach, allowing over the long-term the development of a sense of belonging, not just locally, but with an international outlook, also in the corporate world.
INTERNALLY ADDRESSED INITIATIVES
The ad hoc “Elica and Unions” programme to communicate the corporate culture through knowledge sharing activities and to allow the sharing of objectives between the production sites and the corporate offices.
In 2011 also EBIT (Elica Business International Tour) was introduced: the company, in collaboration with the Rotary Club of Fabriano District 2090 and the Rotary Foundation, selected an Elica employee, chosen after passing an internal competition and final interview with the Rotary Club representatives, to participate in a one-month business tour in Toledo, Ohio, undergoing an important workplace experience at an international level. All of the Elica community could follow the experience through periodic updating in the house organ or through an online diary.
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Elica and Unions
EBIT
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The New Mind programme is a international in-house mini masters which involves 20 high potential managers from both the Italian offices and the foreign Group offices, carried out in collaboration with the ISTUD foundation and the University of Rome 3.
Internal communications
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The internal communication activities have the following purposes: to promote internal knowledge of the company reputation; contribute to the knowledge of employees concerning corporate strategies; to strengthen the sense of belonging and responsibility in relation to the work carried out and the results achieved.
The FACE-to-FACE is among the principal instruments used, periodic meetings of all employees with the Chief Executive Officer and/or the Chairman; the company intranet with information relating to the organisation, certifications, duties and other issues; official communications through the calling by the Chief Executive Officer of a plenary meeting in Piazza Elica for all employees for important communications of an extraordinary nature, such as acquisitions; internal communication campaigns and the ElicaNews house organ.
ElicaNews ElicaNews (EN) is a bi-monthly publication which is sent to the house of each Group employee. EN is a communication instrument which not only communicates information, but also the model of the company and its philosophy. The objective of the journal is to involve all employees of the Group. All employees may write articles for the house organ: factory workers and office workers within each production site have their own structure in which to write suggestions or describe situations and communicate. EN has an international character and the format of a newspaper and in 2011 was entirely restyled to reflect also in its appearance the values which it transmits: from the new “page layout� to the composition of the page to the organisation of the content. The text layout is comprised of 8 columns for the current text with a rectangle with borders, plus two service columns. The typefaces were chosen to create more authority and elegance for the content. The logo was freed of complex graphic elements and reduced to ensure compactness and solidity, a distinctive and certain emblem underlined by an imposing modular aesthetic.
External initiatives
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The industrial relations of the Elica Group are founded on an integrated system which maintains correct and transparent relationships with the trade union organisations. The Group recognises the Trade Union Organisations as a principal interface with the collective corporate interest. In addition to the periodic meetings established by the collective contract, the Group has added annual meetings which are carried out outside of the company in an informal environment to share the corporate strategy and to seek to improve relationships through training programmes and role plays. The best industrial relation practices are exported also to Poland: Elica is the only Italian company to have developed a collaboration agreement with Solidarnosc (the leading Polish trade union organisation). Elica always operates in compliance with local regulations and trade union agreements, involving trade union leaders and employees in all corporate choices, so as to guarantee a harmonious corporate climate and to avoid situations of conflict.
EXTERNAL INITIATIVES
Industrial relations
Environment and Safety
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Particular attention was focused on the impact of production on the surrounding environment. The environmental vision of the Company is to ensure processes and products which respect the environment throughout their entire life cycle, seeking to reduce the consumption of non-renewable energy and of waste from production.
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EXTERNAL INITIATIVES
©Tomo.yun (www.yunphoto.net/it/)
Old green tree Surrounded by oak and lime trees
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Attention to the individual relates also to a focus on their workplace security and their health: protection of workers relates to all sectors within the Group and primarily is a civic and moral duty in addition to a legal obligation.
Energy saving
Certifications
World Class Manufacturing
During the year, the Group opened in Castelfidardo (AN) its first photovoltaic plant, capable of producing 35% of the energy needs of the factory, for an annual energy production of 1,240,000 kWh and of reducing CO2 emissions by over 765 tonnes/year. The plant, installed in the industrial site for the production of range hood electric motors, home appliances and boilers comprises 4,002 panels for a total surface area of 12,000 sq.m. and output of 920 kWp. In the head offices at Fabriano, a Leaf Meter, a sustainability monitor, allows the live measuring of the level of energy production and the mapping of the energy consumption trends of the factory. The entire photovoltaic plant and the Leaf Meter have been developed and installed in partnership with Loccioni.
In all of the Italian Group factories and the Mexican factory in Queretaro, an Integrated Quality & Environmental Management System certified according to the UNI EN ISO 9001:2008 (Quality) and UNI EN ISO 14001:2004 (Environment) Regulation was implemented. The next step of the Company is to extend the environmental certification also to the Polish factory at Jelcz, which to date is certified under the UNI EN ISO 9001:2008 (Quality) regulation. In 2011, Elica was awarded by the National Customs Authority, being among the very few in Italy and the only company in Le Marche to receive the certification of Full Authorised Economic Operator at AA level for Customs Simplifications and for Security with international validity in all countries of the European Union. The compliance with security regulations ensured that the Company achieved the recognition of AEO/security status. Elica was accepted by the EU certification programme as, taking part in the activities governed by the customs regulation in the course of its commercial activities, the company was recognised among operators for its reliability and security within the supply chain. The certification was granted after an audit carried out by the National Customs Authority.
From 2010, Elica adopted the World Class Manufacturing programme (WCM) implementing a change in the logisticalproductive process to render it quick, reactive, non wasteful and under close control. The WCM programme is based on a cultural transformation focused on eliminating all types of waste (“MUDA” in Japanese) which involves all personnel, utilising strict methods and standards, overcoming inter-departmental divisions to establish a teamwork ethic. In 2011, the company also joined the World Class Manufacturing Association (WCMA), a non-profit international organisation which brings together companies from various sectors such as FIAT, Royal Mail, Ariston and Unilever - all involved in the implementation of the same change process.
67
EXTERNAL INITIATIVES
Among the tangible results achieved we report those concerning “Environment & Security”: firstly we highlight the considerable improvement in accident frequency, reducing by 27% on the previous year to 17.5 events per million work hours. Another important objective achieved and under continual observation is the improvement of the workstation ergonomics, the optimisation of the flow of materials, the improved product quality and the significant reduction in the percentage of defective finished products.
P.
In order to focus greater attention on the environment around us, Elica has prioritised sustainable mobility, implementing a progressive replacement policy of the petrol-fuelled cars with methane-fuelled cars. Green cars in fact are available for employees. At the same time, in order to speed up the global replacement process, Elica is making its providers aware of the reduction of the rental cost, so that environmental protection is seen not just from an environmental point of view, but also an economic one.
P.
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SKIN
NOW!
P.
69
35CC
Awards Red dot award: “Product Design 2011” The Skin range hood designed by Fabrizio Crisà, the manager of the Elica Design Centre, was presented the “red dot award: product design 2011”, one of the most important world design competitions – “red dot award” established in 1955 in order to recognise exceptional quality in design and production. The international recognition for the high quality of the project is testament to the close attention to design of the Elica Group in the production of objects. A result of continuous research on functionality and formal and material innovation, Skin was selected by a jury of international experts for its functionality, ergonomics, attention to the environment, durability and design, after a rigourous product test. The object was designed fully in compliance with the principles of ergonomics, with its shape not impinging the user in the vision of the work plan and on free movement during the preparation of food. Based on these characteristics, Skin is the kitchen range hood which guarantees maximum air flow performance and lighting through the application of cutting-edge technology and informed design.
P.
70
Top Employers Italy 2011 and Top Employers Poland 2011 awarded by the CFR Institute For the third consecutive year Elica was included in the Top Employers Italy awards (2011 version), as one of the best Italian companies to work for. This was recognised by the CRF Institute, an independent international organisation which evaluates and certifies over 2,500 companies in 12 countries and on 3 continents, which recognised Elica as “a company excelling in the management of human resources”. The survey, carried out according to strict standards established by the Top Employers HR Best Practices Survey, extensively evaluated the Human Resource Management system of Elica S.p.A.. Elica Group Polska, a subsidiary of the Elica Group, was also awarded the prestigious Top Employers Polska 2011 certificate.
Best Place to Work Italy and Europe 2011, awarded by the Great Place to Work Institute The Group, having been awarded in 2011 first place in Italy, was also classified the Best Place to Work in Europe. Elica in fact has been recognised as among the best large companies to work for in Italy: awarded by the Great Place to Work Institute, which evaluates the standard of work environments. Elica S.p.A. in 2011 therefore was the No. 1 company to work for in Italy and Europe based on the quality of the work environment. In addition the company was awarded first place in the Inspiring special category, which concerns not just the communication of corporate values to business partners, but also all of the activities undertaken to create awareness around the particular importance of the work carried out: the people who work with Elica understand the significance of their work in reaching the organisation’s results and for the well being of the Company and are always involved in corporate processes.
2011 WebAward “Manufacturing Standard of Excellence”, awarded by The Web Marketing Association for www.elica.com The new website of Elica – www.elica.com – was awarded the prestigious Manufacturing Standard of Excellence within the Web Awards 2011 by The Web Marketing Association, an organisation founded in 1997 in order to improve the quality of online marketing and advertising. The Web Awards 2011 is the most important international competition, established 15 years ago to establish a standard of excellence in the design and development of internet sites, with the participation of 3,000 sites from 50 different countries. The awards provide an authoritative recognition for the creative talent and design and website construction of the Elica site, evaluated based on 7 criteria: Design, Innovation, Content, Technology, Interactivity, Text and Usability. The “participative” design played a strategic role in the construction of the site. The work was extensive and involved a large number of professionals within the Group, each with their own specific skill set. A common objective was to create a space on the web which will be simple and open to the specific needs of users. The Elica site was internally developed by the Elica Team Communication with the involvement of the Websolute web agency.
Le Fonti 2011 International Award in the Consumer goods category which recognises Elica’s Italian excellence in the business world In the year, the Group was classified among Italian excellence for internationalisation, design and innovation, achieving the inaugural Le Fonti International Award 2011 in the consumer goods enterprises category. The Award, which recognises Italian excellence in the world of high quality goods producers, was presented to the Group “for international Italian excellence, leader in its sector and for revolutionising the traditional image of the range hood, focusing on design, sophistication and eco-sustainable innovation”.
71 P.
In 2011 the German subsidiary Gutmann, the high-end brand of the Elica Group, was awarded the Giove d’Oro, a prestigious economics award which recognises excellence in the social economy of the market. The Award recognised the work carried out in Germany by the German subsidiary, in perfect harmony with the Group philosophy which seeks constantly to establish a perfect balance between the results of the business and the social needs of the region in which it operates.
AWARDS
Giove d’Oro Economics Award
Elic
a Gr oup
P.
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2011 Fina Consoli date n d Stat cial emen ts
Note
s
p 9 6 p 9 p78 2 Elic
a Gr
75
6004 ered O f 4 Shar Fabria fice at n e full Capita o (AN) Via Dan te, l y pa 288 id-i Euro 1 2,66 n 4,56 0
P.
Dire c Repo tors’ rt
Cons o Fina lidated n Stat cial e at 3 ments 1/12 /201 Regi 1 st
DIRECTORS’ REPORT
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2011
78
The Elica Group today
92
Consolidated Income Statement
78
The Macroeconomic Environment
92
Comprehensive Consolidated Income
93
Consolidated Balance
94
Consolidated Cash Flow
95
Statement of changes in
in 2011 and Outlook 2012 79
Currency markets
79
IAS/IFRS
80
Financial and operating
82
Reconciliation between Parent
Statement Sheet
review
Statement
Company and Consolidated net
Consolidated Shareholders’
equity and net profit
Equity
83
Elica S.p.A.
84
Significant events in 2011
85
Information relating to the
and the financial markets NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2011
environment 85
Information relating
85
Exposure to risks and uncertainty
86
Corporate boards
87
Elica Group structure and
to personnel and financial risk factors
96
1. Group structure and activities
96
2. Accounting principles and basis
97
2.1 Basis of Consolidation
99
2.2 Accounting principles and
104
2.3 Accounting standards,
of consolidation
consolidation scope 88
Elica Group Inter-company and
89
Corporate governance and
other related-party transactions ownership structure report 89
Remuneration Report
89
Events after December 31, 2011 and outlook
89
policies amendments and interpretations applied after January 1, 2011 104
2.4 Accounting standards, amendments and interpretations
Compliance pursuant to Section VI of the regulation implementing
not yet effective and not
legislative decree No. 58
adopted in advance by the
of 24 February 1998 concerning
Company
market regulations (“Market Regulations”)
106
3. Significant accounting estimates
107
4. Composition and changes in the consolidation scope
108
5. Notes to the Consolidated Income Statement, Balance Sheet 5.1 Revenues
108
5.1.1 Segment information
110
5.2 Other operating income
110
5.3 Changes in inventories of finished and semi-finished goods
P.
76
and Cash Flow Statement 108
110
5.4 Increases on internal work capitalised
110
5.5 Raw materials and consumables
111
5.6 Service expenses
111
5.7 Labour costs
111
5.8 Amortisation and depreciation
112
5.9 Other operating expenses
130
and provisions 112
5.10 Restructuring charges
112
5.11 Share of profit/(loss) from
5.44 Significant non-recurring events and operations
131
5.45 Acquisitions and asset transfers
associates 112
5.12 Financial Income
113
5.13 Financial charges
113
5.14 Exchange gains/(losses)
113
5.15 Income taxes
115
5.16 Result attributable to minority interest
115
132
6. Guarantees, commitments and contingent liabilities
133
7. Risk management policy
141
8. Disclosure pursuant to IAS 24
5.17 Basic earnings per share –
on management compensation
Diluted earnings per share
and related-party transactions
115
5.18 Other information on the
141
Income Statement accounts
Statutory Auditors and Senior
116
5.19 Property, plant & equipment
Management with strategic
119
5.20 Goodwill
120
5.21 Other intangible assets
141
8.2 Share-based payments
121
5.22 Investments in associated
142
8.3 Information on subsidiary
responsibility
companies 122
5.23 Other receivables
companies 142
(non-current) 122
5.24 Trade Receivables
123 123
8.5 Transactions with other related parties
5.25 Available-for-sale financial assets
122
8.4 Information on associated companies
143
(non-current) 122
8.1 Remuneration of Directors,
143
9. Positions or transactions
5.26 Trade receivables
arising from exceptional and/or
and loans
unusual transactions
5.27
Inventories
5.28 Other receivables
143
10. Subsequent events
Disclosure pursuant to article 149
(non-current) 123
5.29 Tax receivables (current)
124
5.30 Derivative financial instruments
124
5.31 Cash and cash equivalents
144
124
5.32 Assets of discontinued
of the CONSOB Issuer’s Regulation
operations
145
5.33 Liabilities for post-
Financial Statements as per Article 81-ter
retirement benefits
of CONSOB Regulation No. 11971 of 14 May,
5.34 Provisions for risks and
1999 and subsequent modifications and
charges
integrations
5.35 Deferred tax assets -
147
Deferred tax liabilities
companies, including foreign, of over 10%
5.36 Amounts due under finance
at the reporting date
124 125 126 127
Declaration of the Consolidated
List of holdings in non-listed
5.37 Bank loans and mortgages
128
5.38 Other Payables
128
5.39 Current and non-current tax liabilities
148
Auditors’ report
128
5.40 Trade payables
151
Contacts & credits
129
5.41 Group shareholders' equity
130
5.42 Minority interest shareholders’ equity
130
5.43 Net debt, default risk and covenants
P.
127
77
leases and other borrowings
The Elica Group today
In the Eurozone, in 2011 the sovereign debt issue took centrestage. This issue was particularly relevant in the second half of the year. In the first six months of 2011 the situation was entirely different with the Euro strengthening against the US Dollar, contained government spreads and interest in risky assets. The opposing trends in the year were in part related to the ending of the second Fed1 asset purchase program in June. The reawakening of the sovereign risk issue in the last months of the year was due to the difficulties in reaching an agreement within the Eurozone to expand the powers and recourse to the EFSF2. In 2011 Eurozone GDP3 grew by 1.6% on the previous year, driven in particular by German GDP expanding by 3%. Italy and Spain respectively report growth of 0.4% and 0.7%. The consumer price index increased in the Eurozone by 2.7% on 2010. The most recent IMF4 estimates indicate a contraction in Eurozone GDP in 2012 of 0.5% following the restrictive measures introduced by the European Authorities in order to contain the sovereign risk in the countries which were impacted greatest in 2011. Inflation is expected at 2.3%. In the United States, GDP grew 1.8% against a rise in consumer prices of 3.2%. This data highlights that the US real estate sector was not substantially improved by the two rounds of Quantitative Easing which overall totalled USD 2,300 billion. The drop in property values was the principal reason behind a further contraction in the so-called Owners’ equity - the value of property net of the mortgage cost due. The equities sector was the recipient of the greatest benefit. In 2012 GDP growth of 1.8% is forecast with the consumer price index increasing 2%. The events in March 2011 led to a contraction in Japanese GDP of 0.9% on 2010. In the second half of 2011, a significant recovery took hold in Japan, which should continue also in 2012. In China, GDP in 2011 grew by 9.2%; a slight slowdown is expected in 2012.
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The Elica Group has been present in the cooker hood market since the 1970s, is chaired by Francesco Casoli and led by Andrea Sasso and today is the world leader in terms of units sold. It is also a European leader in the design, manufacture and sale of motors for central heating boilers. With approx. 3,000 employees and an annual output of over 18 million units, the Elica Group has nine plants - of these, four are in Italy, one is in Poland, one in Mexico, one in Germany, one in India and one in China. With many years’ experience in the sector, Elica has combined meticulous care in design, judicious choice of material and cutting edge technology guaranteeing maximum efficiency and reducing consumption making the Elica Group the prominent market figure it is today. The Group has revolutionised the traditional image of the kitchen cooker hood: it is no longer seen as simple accessory but as a design object which improves the quality of life.
The Macroeconomic Environment in 2011 and Outlook 2012
(1): Federal Reserve System (2): European Financial Stability Fund (3): Gross Domestic Product (4): International Monetary Fund
Currency markets
The currency markets saw two opposing trends in 2011. The first part, in which the concerns in the Eurozone were not entirely apparent, the principal currencies strengthened significantly against the US Dollar, both in relation to developed and emerging economy currencies. The Euro in particular benefited from the record growth of Germany in the first two quarters and the restrictive monetary policy of the ECB7. The climate of greater optimism encouraged operators to implement carry trade operations in order to benefit from the high yields offered by emerging economy currencies due to the interest rate increases adopted in order to offset inflationary pressures. The second part, which coincided with the end of QE2 (June 2011), saw a significant decline in investor confidence. The worsening of the global economic data, together with a heightening of the Eurozone crisis which impacted the single currency, led investors to seek safe haven currencies. In 2011, the global range hood market contracted by 4.6% on 20108. The European market remained stable on the previous year, however with opposing performances: a significant drop in demand in Western Europe (approx. -6%) offset by growth in Eastern Europe (+7%). The principal Western European markets (Italy, Spain and the United Kingdom) saw contractions of up to 10/15%, with the exception of France (stable) and Germany (slight growth). The strong performance in Eastern Europe was driven particularly by the Russian market (+30%). Demand in North America (United States and Canada) also contracted significantly in 2011 (-5%) while the Central and South American markets continued to show signs of vibrancy (+5%). 2011 in fact was the first year in which a slowdown was seen in China, the principal global range hood market, with a drop of 10% on 2010.
(5): (6): (7): (8):
Quantitative Easing 2 West Texas Intermediate European Central Bank Data in volumes
average 2011
average 2010
USD
1.39
1.33
GBP
0.87
31/12/11
31/12/10
4.7%
1.29
1.34
-3.4%
0.86
0.9%
0.84
0.86
-2.9%
110.96
116.24
-4.5%
100.20
108.65
-7.8%
PLN
4.12
3.99
3.3%
4.46
3.98
12.2%
MXN
17.29
16.74
3.3%
18.05
16.55
9.1%
INR
64.89
60.59
7.1%
68.71
59.76
15.0%
CNY
9.00
8.97
0.3%
8.16
8.82
-7.5%
RUB
40.88
40.26
1.6%
41.77
40.82
2.3%
JPY
%
%
(in Euro)
IAS/IFRS The consolidated financial statements of Elica S.p.A. for the year ended December 31, 2011 were prepared in accordance with IAS/ IFRS issued by the International Accounting Standards Board and approved by the European Commission, and in accordance with article 9 of Legislative Decree No. 38/2005. The accounting principles utilised for the preparation of the Consolidated Financial Statements are consistent with those utilised for the preparation of the Consolidated Financial Statements for the year ended December 31, 2010. These Consolidated Financial Statements are presented in thousands of Euro and all the amounts are rounded to the nearest thousandth, unless otherwise specified.
79
In relation to Commodities, the start of 2011 saw a general increase for the principal sectors, reaching a peak in April with the announcement of the imminent conclusion of QE25. This sparked a contraction in all sectors (with the exception of precious metals) fed by increased concerns in the Eurozone, signs of a slowdown in the principal geographic areas (Europe and the emerging markets, in particular China) and a pullback from speculative positions at the end of the QE2. In the final part of the year, a recovery in energy assets took place (thanks to WTI6), following the lowering of industrial metal and agricultural prices, with weakness also for precious metals. In 2012, prices are expected to increase in the first half of the year, with a possible consolidation/correction towards the end of the year.
In 2011, the Euro reports weakness only against the Japanese yen, while the currency strengthened against all the other currencies in which the Group carries out commercial transactions in comparison to the average exchange rate in 2010. Exchange rate movements resulted in exchanges losses of Euro 1,611 thousand and the translation reserve decreased by Euro 2,565 thousand.
P.
In relation to the emerging countries, expansionary policies have already been partly introduced in larger countries such as Brazil. In 2011, the GDP of the emerging countries as a whole grew by 6.2%. The latest IMF estimates predict growth in 2012 of approx. 5.4%.
Financial and operating review
REVENUES EBITDA REVENUE MARGIN EBIT REVENUE MARGIN FINANCIAL INCOME/(COSTS) REVENUE MARGIN NET PROFIT FOR THE YEAR REVENUE MARGIN GROUP NET PROFIT REVENUE MARGIN
FY 11
FY 10
2011 vs 2010
378,406
368,265
2.8%
26,542
26,194
1.3%
7.0%
7.1%
TRADE PAYABLES
MANAGERIAL WORKING CAPITAL
12,039
10,553
14.1%
3.2%
2.9%
(5,642)
(982)
474.5%
-1.5%
-0.3%
4,116
5,577
-26.2%
1.1%
1.5%
4,162
4,262
-2.3%
1.1%
1.2%
BASIC EARNINGS PER SHARE (EURO/CENTS)
6.92(*)
7.48(*)
-7.5%
DILUTED EARNINGS PER SHARE (EURO/CENTS)
6.59(*)
7.48(*)
-11.8%
31/12/11
31/12/10
TRADE RECEIVABLES
82,207
89,276
INVENTORIES
50,598
42,671
(89,806)
(88,742)
42,999
43,205
11.4%
11.7%
% REVENUES
OTHER NET RECEIVABLES/PAYABLES
(2,929)
(3,869)
NET WORKING CAPITAL
40,070
39,336
10.6%
10.7%
% REVENUES
In Euro thousands
The account “Other net receivables/payables” include the accounts “Other receivables/payables” and “Tax receivables/payables” and “Provisions for risks and charges” of current assets/liabilities.
31/12/11
31/12/10
20,026
25,102
In Euro thousands
CASH AND CASH EQUIVALENTS (*) The earnings per share for the years 2011 and 2010 were calculated by dividing the Group net result by the number of outstanding shares at the respective reporting dates. EBITDA is the operating profit (EBIT) plus amortisation and depreciation and write-downs of goodwill for losses in value. EBIT is the operating profit from continuing operations as reported in the consolidated Income Statement.
FINANCE LEASES AND OTHER LENDERS
(56)
(76)
BANK LOANS AND MORTGAGES
(45,105)
(30,457)
LONG-TERM DEBT
(45,162)
(30,533)
FINANCE LEASES AND OTHER LENDERS
(25)
(23)
BANK LOANS AND MORTGAGES
(43,640)
(29,426)
SHORT-TERM DEBT
(43,665)
(29,449)
NET DEBT
(68,800)
(34,880)
P.
80
In Euro thousands
Net debt is the algebraic sum of amounts due under finance leases and other borrowings (current and non-current) plus bank borrowings and mortgages (current and non-current), less cash and cash equivalents, as reported in the balance sheet.
2011 operating performance In 2011 Elica Group consolidated revenues amounted to Euro 378.4 million - an increase of 2.8% on the previous year. The principal growth drivers - both for the Motors Area and the Cooking Area - were increased sales volumes and the improved price/mix. Consolidated revenues in 2011 were significantly ahead of the overall range hoods global market (-4.6%) - with a particularly strong performance vs. the market in the Americas. Cooking Area revenues increased 1.9%. Own brand revenues grew 7.3% on 2010 - owing also to the sales of the Indian and Chinese companies. The Motors area grew revenues by 7.4% on 2010 thanks to the expansion of the "heating� segment and strong performances across all segments. Revenues by principal geographic sales area report a slight contraction of 1.4% in Europe with the Americas returning a significant increase of 20.1% - a performance mirrored by growth in the Other geographic areas of 18.3% - principally due to the consolidation of the Indian and Chinese companies. EBITDA amounted to Euro 26.5 million compared to Euro 26.2 million in 2010, a 7.0% revenue margin. The 1.3% increase in the margin is a result of the continued operational efficiency improvements and the innovation investments which offset the significant raw material cost increases, in particular iron, copper and oil-based materials. The EBIT amounted to Euro 12.0 million compared to Euro 10.6 million in 2010 (a margin of 3.2%) - increasing 14.1% on 2010. Net interest expense, including the financial component of IAS 19, amounted to Euro 4 million, significantly increasing on Euro 1.3 million in 2010, which however included non-recurring financial income of approx. Euro 0.9 million concerning the fee paid by Whirlpool following the purchase of Elica shares. This significant increase is principally due to the higher net debt in 2011. The Group net profit amounted to Euro 4.2 million, 1.1% of revenues, in line with Euro 4.3 million in 2010.
P.
The Net Debt at December 31, 2011 amounted to Euro 68.8 million from Euro 34.9 million at December 31, 2010, principally due to the acquisition of a further 15% stake in the Chinese company Putian9, concluded in April 2011.
81
Managerial Working Capital on annualised net revenues decreased from 11.7% at December 31, 2010 to 11.4% at December 31, 2011. This improvement derives from the sustained drive on Working Capital efficiencies undertaken by the Elica Group.
(9): Zhejiang Putian Electric Co. Ltd
Reconciliation between Parent Company and Consolidated net equity and net profit The following table contains a reconciliation between the Shareholders’ Equity and profit for the year of Elica S.p.A. and Consolidated Shareholders’ Equity and net profit. Net profit
As per Parent Company Financial Statements
As at December 31, 2010
Elimination of the effect of intercompany operations net of tax effect: Non-realised gains on fixed assets Non-realised gains on sale of goods Tax effect Dividends received from consolidated companies Other Share of expenses/(income) from equity investments Carrying value of consolidated companies Net equity and result for the year of consolidated companies Allocation of differences to assets of consolidated companies and related depreciation and write-down: Intangible and tangible assets Consolidation difference As per Consolidated Financial Statements Group share Minority interest share
1,594
129,824
25 (80) 17 (4,587) (341)
(252) (410) 208 (4,587) (52)
(592)
(216) (75,897)
9,596
75,755
(54)
6,671 8,485
5,577 4,262 1,315
139,530 131,220 8,310
Net profit/ (loss)
As per Parent Company Financial Statements
As at December 31, 2011
82
Shareholders´ equity
(26,853)
106,894
22 (179) 31 (6,074) 1,532
(230) (588) 231 (6,074) 653
182 27,841
(0) (77,856)
7,821
75,891
Allocation of differences to assets of consolidated companies and related depreciation and write-down: Intangible and tangible assets Consolidation difference
(207) 0
6,896 9,082
As per Consolidated Financial Statements Group share Minority interest share
4,116 4,162 (46)
114,899 108,151 6,748
Elimination of the effect of intercompany operations net of tax effect: Non-realised gains on fixed assets Non-realised gains on sale of goods Tax effect Dividends received from consolidated companies Other Share of expenses/(income) from equity investments Carrying value of consolidated companies Net equity and result for the year of consolidated companies
P.
Shareholders´ equity
In Euro thousands
In Euro thousands
Elica S.p.A. and the financial markets ELICA FTSE ITALIA STAR 22.78%
-11.87%
-46.53%
The graph shows the performance of the Elica S.p.A. share price in 2011 in comparison to the average performance of other companies listed on the STAR segment (performance of the FTSE Italia STAR index indicated). The Share Capital consists of 63,322,800 ordinary voting shares. At December 31, 2011, the shareholders of Elica S.p.A. were as follows:
JUL 2011
OCT 2011
DEC 2011
Shareholder
Number of shares held
FAN SRL
33,440,445
52.81%
6,332,280
10.00%
WHIRLPOOL EUROPE SRL
Percentage holding
ELICA S.P.A. (TREASURY SHARES)
3,166,140
5.00%
FIRST CAPITAL S.P.A.
1,955,041
3.09%
IMMI INVEST SRL
1,266,456
2.00%
S.A.F.E. S.A.P.A.
116,245
0.18%
FRANCESCO CASOLI
70,000
0.11%
GIANNA PIERALISI
52,000
0.08%
OTHERS
16,924,193
26.73%
TOTAL
63,322,800
100.00%
83
APR 2011
P.
JAN 2011
Significant events in 2011 On January 31, 2011 the period for the share capital increase as per article 2439, paragraph 2 of the civil code approved by the Board of Directors on June 27, 2007, based on the delegation of power by the Shareholders’ Meeting of April 12, 2006, elapsed without any subscriptions. The subscribed and paid-in share capital therefore remains unchanged at Euro 12,664,560.00. The Board of Directors of Elica S.p.A. on February 14, 2011 approved the 2010 Fourth Quarter Report, prepared in accordance with IFRS accounting standards. Also on February 14, 2011, Elica S.p.A., following the authorisation of the Board of Directors’ to utilise treasury shares at the same date, sold 1,899,684 shares, equal to 3% of the share capital, to First Capital S.p.A., at the price of Euro 1.64 per share. On March 19, 2011, Elica S.p.A. signed an agreement to acquire a further 15% holding in the Chinese company Zhejiang Putian Electric Co. Ltd. Elica S.p.A. signed, among other agreements, an equity transfer agreement with the Putian minority shareholders, Renyao Du and Dong Wenhua, which modifies and supplements the equity transfer agreement signed with the same parties in July 2010. In particular, in accordance with the new equity transfer agreement, the Company is committed to acquire a further 15% holding of Putian, for consideration of Renminbi 278,312,573 (corresponding to Euro 29,983,148 at the Euro/Renminbi exchange rate of March 18, 2011). This new equity transfer agreement, until April 2011, remained subject to the fulfilment of certain conditions including the granting by the Chinese authorities of the necessary authorisations, the establishment of guarantees in favour of Elica and substantial fulfilment of the conditions. Since April 2011 Elica holds 70% of the share capital of Putian, while the remaining 30% is held by Mr. Renyao Du.
P.
84
On March 22, 2011, the Board of Directors of Elica S.p.A. approved the 2010 annual accounts, prepared in accordance with IFRS accounting standards. The appointments of Mr. Bruno Assumma as Chairman and of Messrs Glauco Vico and Massimo Enrico Ferri were also confirmed as members of the Supervisory Board until the approval of the 2013 annual accounts. On April 28, 2011, the Extraordinary Shareholders’ Meeting amended the By-Laws and the Shareholders’ Meeting Regulation in line with the Directors’ Report to the Shareholders’ Meeting on the By-Law amendments, which is available on the company internet site. The Shareholders’ Meeting also noted the 2010 consolidated results, approved the 2010 Financial Statements of Elica S.p.A., in addition to the distribution of a dividend of Euro 00.0251 per share (gross of withholding taxes). The Shareholders’ Meeting also appointed Luca Pacces to the Board, who will remain in office until the Shareholders’ Meeting called for the approval of the financial statements at December 31, 2011. On the same date, the Board of Directors of Elica S.p.A. met and confirmed the independence of the new director Luca Pacces and appointed him as a member of the Remuneration Committee. The Board of Directors also established the 2011 performance objective concerning the 2010
Stock Grant plan and included two further Beneficiaries, updating therefore the Disclosure Document - available on the internet site of the Company. The Board also noted the resignation of the Internal Control System Manager, who also was a member of the Supervisory Board and the Internal Audit Manager, Massimo Ferri. On May 12, 2011, the Board of Directors of Elica S.p.A. approved the Interim Report at March 31, 2011. In June, Elica incorporated the new company Elica Trading LLC in the Russian Federation. On August 25, 2011, the Board of Directors of Elica S.p.A. approved the Half-Year Report at June 30, 2011. At the same date the Board of Directors of Elica S.p.A., following the resignation of the Independent Director Fiorenzo Busso during the board meeting with immediate effect, appointed as his replacement Giuseppe Perrucchetti as an Independent Director until the next Shareholders’ Meeting. On November 14, 2011, the Board of Directors of Elica S.p.A. approved the Third Quarter Interim Report 2011 and appointed Cristiano Babbo as the Internal Control Manager, the Internal Auditing Manager and as a member of the Supervisory Board. On December 19, 2011 the Board of Directors of Elica S.p.A. approved the utilisation of treasury shares held in portfolio by the Company. Elica S.p.A. therefore sold 1,266,456 shares, comprising 2% of the share capital, to IMMI Invest S.r.l., the Agarini family holding company, at a price of Euro 1.049 per share.
Exposure to risks and uncertainty and financial risk factors The Elica Group’s operations are exposed to different types of financial risks, or risks associated to changes in exchange rates, interest rates, commodity prices and cash flow. In order to mitigate the impact of these risks on the company’s results, the Elica Group commenced the implementation of a financial risk monitoring system through a “Financial Risk Policy” approved by the Board of Directors of the Parent Company. Within this policy, the Group constantly monitors the financial risks related to the operating activities in order to assess any potential negative impact and undertakes corrective action where necessary. The main guidelines for the Group risk policy management are as follows:
Information relating to personnel Elica, in its commitment to continuous improvement, has undertaken initiatives focussed on increasing security levels at the plant, reducing and monitoring risks and training personnel for more conscientious behaviour and prudency in the workplace, further improving the already low staff turnover levels and accidents.
—› Prudent management of the risk with a view to protecting the expected value of the business; —› Use of “natural hedges” in order to minimise the net exposure on the financial risks described above; —› Undertake hedging operations within the limits approved by Management and only in the presence of effective and clearly identified exposures. The process for the management of the financial risks is structured on the basis of appropriate procedures and controls, based on the correct separation of the activities of conclusion, settlement, registration and reporting of the results. The paragraphs below report an analysis of the risks which the Elica Group is exposed to, indicating the level of exposure and, for the market risks, the potential impact on the results deriving from hypothetical fluctuations in the parameters (sensitivity analysis).
85
Elica S.p.A. operates in compliance with all regulations - local, national and international – for the protection of the environment both in relation to products and the productive cycles. It is highlighted that the types of activities carried out have limited implications in environmental terms and in terms of atmospheric emissions, waste disposal and water disposal. The maintenance of such standards however requires the incursion of costs for the company.
The Group “Financial Risk Policy” is based on the principle of a dynamic management and the following assumptions:
P.
Information relating to the environment
—› identify the risks related to the achievement of the business objectives; —› assess the risks to determine whether they are acceptable compared to the controls in place and if they require additional treatment; —› reply appropriately to risks; —› monitor and report on the current state of the risks and the effectiveness of their control.
MEMBERS OF THE BOARD OF DIRECTORS Francesco Casoli Executive Chairman
Corporate boards
born in Senigallia (AN) on 5/6/1961, appointed a director by resolution dated 27/04/09
Andrea Sasso Chief Executive Officer born in Rome on 24/8/1965, appointed by resolution dated 27/04/2009
Gianna Pieralisi Executive Director born in Monsano (AN) on 12/12/1934, appointed a director by resolution dated 27/04/2009
Gennaro Pieralisi Director born in Monsano (AN) on 14/02/1938, appointed a director by resolution dated 27/04/2009
Stefano Romiti Independent Director and Lead Independent Director born in Rome (RM) on 17/11/1957, appointed a director by resolution dated 27/04/2009
Giuseppe Perrucchetti Independent Director born in Varese (VA) on 30/10/1958, appointed by resolution dated 25/08/2011
P.
86
Giovanni Frezzotti Independent Director born in Jesi (AN) on 22/02/1944, appointed by resolution dated 27/04/2009
Luca Pacces Independent Director born in Rome on 16/02/1940, appointed by resolution dated 28/04/2011
MEMBERS OF THE BOARD OF STATUTORY AUDITORS Corrado Mariotti Chairman born in Numana (AN) on 29/2/1944, appointed by resolution dated 27/4/2009
Stefano Marasca Statutory Auditor born in Osimo (AN) on 9/8/1960, appointed by resolution dated 27/4/2009
Gilberto Casali Statutory Auditor born in Jesi (AN) on 14/1/1954, appointed by resolution dated 27/04/2009
Daniele Capecci Alternate Auditor born in Jesi (AN) on 03/04/72, appointed by resolution dated 27/4/2009
Franco Borioni Alternate Auditor born in Jesi (AN) on 23/06/1945, appointed by resolution dated 27/4/2009
INTERNAL CONTROL COMMITTEE Stefano Romiti Gennaro Pieralisi Giovanni Frezzotti
REMUNERATION COMMITTEE Stefano Romiti Gennaro Pieralisi Giovanni Frezzotti Luca Pacces
INDEPENDENT AUDITORS Deloitte & Touche S.p.A.
REGISTERED OFFICE AND COMPANY DATA Elica S.p.A. Registered office: Via Dante, 288 60044 Fabriano (AN) Share capital: Euro 12,664,560.00 Tax Code and Companies’ Register Number: 00096570429 Ancona REA No. 63006 VAT Number 00096570429
INVESTOR RELATIONS MANAGER Laura Giovanetti e-mail: l.giovanetti@elica.com Telephone: +39 0732 610727
Structure of the Elica Group
Elica PB India Private Ltd. Pune (India) (in short Elica India); in June 2010 Elica S.p.A. signed a joint venture agreement subscribing 51% of the share capital of the newlyincorporated Indian company. Elica PB India Private Ltd. is involved in the production and sale of Group products.
The Elica Group is currently the world's largest manufacturer of kitchen range hoods for domestic use and is leader in Europe in the sector of motors for boilers used in home heating systems.
Subsidiaries at December 31, 2011 Elica Group Polska Sp.zo.o Wroclaw – (Poland) (in short EGP). This wholly-owned company has been operational since September 2005 in the production and sale of electric motors and from December 2006 in the production and sale of exhaust range hoods for domestic use
Elicamex S.A. de C.V. Queretaro (Mexico) (in short Elicamex). The company was incorporated at the beginning of 2006 (The Parent Company owns 98% directly and 2% through Elica Group Polska). Through this company, the Group intends to concentrate the production of products for the American markets in Mexico and reap the benefits deriving from optimisation of operational and logistical activities
Leonardo Services S.A. de C.V. Queretaro (Mexico) (in short Leonardo). This wholly-owned subsidiary was incorporated in January 2006 (the Parent Company owns 98% directly and 2% indirectly through Elica Group Polska Sp.zo.o.). Leonardo Services S.A. de C.V. manages all Mexican staff, providing services to ELICAMEX S.A. de C.V.
Airforce S.p.A. Fabriano (AN) (in short Airforce). This company operates in a special segment of the production and sale of hoods sector. The holding of Elica S.p.A. is 60%
Zhejiang Putian Electric Co. Ltd Shengzhou (China) (in short Putian), a Chinese company held 70% and operating under the “Puti” brand, a leader in the Chinese home appliances sector, producing and marketing range hoods, gas hobs and kitchenware sterilisers. Putian is one of the main players in the Chinese range hood market and the principal company developing western style range hoods. The production site is located in Shengzhou, a major Chinese industrial district for the production of kitchen home appliances
Elica Trading LLC St. Petersberg (Russian Federation) (in short Elica Trading), a Russian company held 70%, incorporated on June 28
Airforce Germany GmbH Stuttgart (Germany) (in short Airforce Germany). Airforce S.p.A. owns 95% of Airforce Germany G.m.b.h., a company that sells hoods in Germany through so-called “kitchen studios”
Associated companies Elica Inc. Chicago, Illinois (United States) The company aims to develop the Group’s brands in the US market by carrying out marketing and trade marketing with resident staff. The company is a wholly owned subsidiary of ELICAMEX S.A. de C.V.
Exklusiv Hauben Gutmann GmbH Mulacker (Germany) (in short Gutmann) - a German company entirely held by Elica S.p.A. and the German leader in the high-end kitchen range hood market, specialised in “tailor made” and high performance hoods
I.S.M. Srl Cerreto d’Esi (AN). The company, of which Elica S.p.A. holds 49.385% of the Share Capital, operates within the real estate sector
87
Elica S.p.A. Fabriano (AN) is the parent company of the Group.
Ariafina CO., LTD Sagamihara-Shi (Japan) (in short Ariafina). Incorporated in September 2002 as an equal Joint Venture with Fuji Industrial of Tokyo, the Japanese range hood market leader, Elica S.p.A. acquired control in May 2006 (51% holding) to provide further impetus to the development of the important Japanese market, where high-quality products are sold
P.
Parent Company
Changes in the consolidation scope In 2011, the holding in the Chinese company Zhejiang Putian Electric Co. Ltd. increased to 70% from 55% at December 31, 2010. At the end of June the Russian company Elica Trading LLC was incorporated, of which the Group owns 70%.
Elica Group Inter-company and other related-party transactions In 2011, transactions were entered into with subsidiaries, associated companies and other related parties. All transactions were conducted on an arm’s length basis in the ordinary course of business.
Associated companies: 2011 Financial Highlights
Subsidiaries – 2011 Financial Highlights Assets
Liabilities
Net equity
Revenues
Net result
33,772
10,917
22,855
35,418
2,082
ELICA GROUP POLSKA 40,024 SP.ZO.O
14,993
25,031
74,038
5,262
ELICAMEX S.A. DE C.V.
8,409
6,185
2,224
18,419
249
ARIAFINA CO., LTD
7,972
3,172
4,800
20,571
1,432
301
355
(54)
3,845
(59)
24,015
14,849
9,166
24,097
921
ELICA INC.
438
333
105
701
19
AIRFORCE GERMANY (*)
101
17
84
9
(49)
4,600
6,983
(2,383)
7,539
(1,696)
10,849
2,861
7,988
12,290
(233)
4,635
4,635
-
3,363
(97)
EXKLUSIV HAUBEN GUTMANN GMBH
ELICA PB INDIA PRIVATE LTD. ZHEJIANG PUTIAN ELECTRIC CO. LTD
(*) AIRFORCE GERMANY HOCHLEISTUNGS-DUNSTABZUGSSYSTEME GMBH
In Euro thousands
P.
88
ELICA TRADING LLC
I.S.M. SRL
CERRETO D’ESI (AN)
% held
Share capital
Net equity
Net result
49.385
10
1,377
(43)
In Euro thousands
AIRFORCE S.P.A.
LEONARDO SERVICES S.A. DE C.V.
Head Office
Elica S.p.A. also carries out financial operations with Group companies as part of a general plan to centralise treasury management activities. These loans are interest bearing and at market rates. Transactions with consolidated companies have been eliminated from the Consolidated Financial Statements. As a result they are not reported in these notes.
The table below shows the operating and financial amounts from transactions with associated companies for 2011. No separate disclosure of these positions was given in the financial statements, given the limited amounts involved, in accordance with Consob resolution No. 15519 of July 27, 2006.
I.S.M. SRL
Payables
Receivables
Costs
Revenues
-
103
-
3
In Euro thousands
Remuneration Report In accordance with Article 123-ter of Legislative Decree 58/98 and Article 84-quater of the Consob Resolution No. 11971/1999 and subsequent amendments, Elica S.p.A. prepares a remuneration report in accordance with the indications at Attachment 3A, Table 7-bis of the same Consob Resolution No. 11971/1999 and subsequent amendments. This report is available on the Company internet site www.elicagroup.com in the Investor Relations/ Corporate Governance section.
Events after December 31, 2011 and outlook On January 9, 2012, the Board of Directors of Elica S.p.A. accepted the resignation of Mr. Vincenzo Maragliano from his role as CFO and Executive Responsible for the preparation of corporate accounting documents of Elica S.p.A. for personal reasons and with immediate effect. The Board subsequently appointed Mr. Alberto Romagnoli as the Executive responsible for the preparation of corporate accounting documents of Elica S.p.A., while the Chief Executive Officer Mr. Andrea Sasso will for the interim period assume the role of Chief Financial Officer. The Group closely monitors market demand on an ongoing basis, which in the initial months of 2012 was generally in line with forecasts on the Group’s principal markets. The ongoing focus continues on innovation and efficiency pursued by the Elica Group to strengthen further its global leadership footprint. The Board of Directors of Elica S.p.A. on February 14, 2012 approved the 2011 Fourth Quarter Report, prepared in accordance with IFRS accounting standards.
Considering the economic outlook for 2012, the Elica Group will pursue two principal policies to maintain and strengthen its leadership position and its role as a global player. Investment in ongoing innovation across all product lines and constant cost control and containment, particularly thanks to production process efficiencies.
Compliance pursuant to Section VI of the regulation implementing legislative decree No. 58 of 24 February 1998 concerning market regulations (“Market Regulations”) In accordance with article 36 of the Regulation enacting Legs. Decree No. 58 of February 24, 1998, Elica S.p.A., having control, directly or indirectly, over some companies registered in countries outside of the European Union, the financial statements of the above-mentioned companies, prepared for the purposes of the Elica Group Consolidated Financial Statements, were made available in accordance with the provisions required by the current regulations. For the reasons for which it is considered that the company is not under the direction and control of the parent company, in accordance with article 37, reference is made to paragraph 8 “Disclosure in accordance with IAS 24 on the payment of management and related parties”.
Fabriano, March 21, 2012 For the Board of Directors The Executive Chairman Francesco Casoli
89
In accordance with article 123-bis of Legislative Decree 58/98, with article 89-bis of Consob Resolution No. 11971/1999 and successive amendments and integrations of article I.A.2.6 of the Regulation Instructions of Markets Organised and Managed by Borsa Italiana S.p.A., Elica S.p.A. provides complete disclosure on the corporate governance system adopted, at March 21, 2012, in line with the recommendations of the Self-Governance Code, in the Annual Corporate Governance Report, available on the website of the Company www.elicagroup.com in the Investor Relations/Corporate Governance section.
2012 Policies
P.
Corporate governance and shareholder structure report
P.
90
Note
s
Elic
p92
a Gr oup
Cons o Fina lidated n Stat cial e Dece ments a t mber 31, Regi 20 st
p96
P.
91
11 6004 ered O f 4 Shar Fabria fice at no ( e Ca V i a Da A p full nte, y pa ital Eu N) 288 ro 1 id-i 2,66 n 4,56 0
Consolidated Income Statement
REVENUES
Note
2011
2010
5.1
378,406
368,265
OTHER OPERATING REVENUES
5.2
6,788
2,371
CHANGES IN INVENTORIES OF FINISHED AND SEMI-FINISHED GOODS
5.3
10,958
3,838
INCREASE IN INTERNAL WORK CAPITALISED
5.4
2,350
2,633
RAW MATERIALS AND CONSUMABLES
5.5
(215,697)
(193,686)
SERVICES
5.6
(73,228)
(73,873)
LABOUR COSTS
5.7
(73,657)
(72,397)
5.8
(14,503)
(15,641)
5.9
(9,178)
(10,221)
5.10
(200)
(736)
12,039
10,553
AMORTISATION AND DEPRECIATION OTHER OPERATING EXPENSES AND PROVISIONS RESTRUCTURING CHARGES EBIT
SHARE OF LOSS FROM ASSOCIATES
5.11
(45)
(592)
FINANCIAL INCOME
5.12
229
1,383
FINANCIAL CHARGES
5.13
(4,260)
(2,678)
EXCHANGE GAINS
5.14
(1,611)
313
(5)
-
OTHER INCOME AND NON-OPERATING CHARGES PRE-TAX RESULT INCOME TAXES
5.15
NET PROFIT FROM NORMAL OPERATIONS NET PROFIT FROM DISCONTINUED OPERATIONS NET PROFIT FOR THE YEAR
6,347
8,979
(2,231)
(3,402)
4,116
5,577
-
-
4,116
5,577
PERTAINING TO: MINORITY INTERESTS SHARE
5.16
GROUP NET PROFIT
Comprehensive Consolidated Income Statement
(46)
1,315
4,162
4,262
BASIC EARNINGS PER SHARE (EURO/CENTS)
5.17
7.09
7.48
DILUTED EARNINGS PER SHARE (EURO/CENTS)
5.17
6.75
7.48
NET PROFIT
2011
2010
4,116
5,577
(2,565)
3,922
(331)
93
In Euro thousands
OTHER COMPREHENSIVE INCOME STATEMENT ITEMS: EXCHANGE DIFFERENCES ON THE CONVERSION OF FOREIGN FINANCIAL STATEMENTS
92
INCOME TAXES ON OTHER COMPREHENSIVE INCOME STATEMENT ITEMS
P.
NET CHANGE IN CASH FLOW HEDGES
TOTAL OTHER COMPREHENSIVE INCOME STATEMENT ITEMS, NET OF TAX EFFECTS
72
(20)
(2,824)
3,995
1,292
9,572
MINORITY INTERESTS SHARE
591
1,577
GROUP COMPREHENSIVE NET PROFIT
701
7,995
TOTAL COMPREHENSIVE PROFIT PERTAINING TO:
In Euro thousands
12/31/2010
PROPERTY, PLANT AND EQUIPMENT
5.19
85,165
83,680
GOODWILL
5.20
41,765
41,168
OTHER INTANGIBLE ASSETS
5.21
24,424
23,868
INVESTMENTS IN ASSOCIATED COMPANIES
5.22
1,377
1,717
OTHER FINANCIAL ASSETS
-
30
276
1,920
OTHER RECEIVABLES
5.23
TAX RECEIVABLES
5.24
6
6
DEFERRED TAX ASSETS
5.35
10,032
9,357
AFS FINANCIAL ASSETS
5.25
672
614
DERIVATIVE FINANCIAL INSTRUMENTS
5.30
29
189
163,746
162,549
TOTAL NON-CURRENT ASSETS TRADE AND FINANCIAL RECEIVABLES
5.26
82,207
89,276
INVENTORIES
5.27
50,598
42,671
OTHER RECEIVABLES
5.28
6,036
4,281
TAX RECEIVABLES
5.29
5,943
7,589
DERIVATIVE FINANCIAL INSTRUMENTS
5.30
813
649
CASH AND CASH EQUIVALENTS
5.31
20,026
25,102
165,623
169,568
CURRENT ASSETS ASSETS OF DISCONTINUED OPERATIONS
5.32
TOTAL ASSETS
1,065
-
330,434
332,117
LIABILITIES FOR POST-EMPLOYMENT BENEFITS
5.33
8,907
9,182
PROVISIONS FOR RISKS AND CHARGES
5.34
2,505
8,254
DEFERRED TAX LIABILITIES
5.35
6,772
7,890
FINANCE LEASES AND OTHER LENDERS
5.36
56
76
BANK LOANS AND MORTGAGES
5.37
45,105
30,457
OTHER PAYABLES
5.38
1,859
1,510
TAX PAYABLES
5.39
888
978
DERIVATIVE FINANCIAL INSTRUMENTS
5.30
60
-
66,152
58,347 953
NON-CURRENT LIABILITIES PROVISIONS FOR RISKS AND CHARGES
5.34
1,882
FINANCE LEASES AND OTHER LENDERS
5.36
25
23
BANK LOANS AND MORTGAGES
5.37
43,640
29,426
TRADE PAYABLES
5.40
89,806
88,742
OTHER PAYABLES
5.38
10,211
9,022
TAX PAYABLES
5.39
2,814
5,764
DERIVATIVE FINANCIAL INSTRUMENTS
5.30
1,004
310
149,383
134,240
SHARE CAPITAL
12,665
12,665
CAPITAL RESERVES
71,123
71,123
HEDGING, TRANSLATION AND STOCK OPTION RESERVE
(5.668)
(3,411)
TREASURY SHARES
(8,815)
(17,629)
RETAINED EARNINGS
34,684
64,210
CURRENT LIABILITIES
GROUP PROFIT GROUP SHAREHOLDERS' EQUITY
5.41
CAPITAL AND RESERVES OF MINORITY INTERESTS MINORITY INTEREST PROFIT/(LOSS)
4,162
4,262
108,151
131,220
6,794
6,995
(46)
1,315
6,748
8,310
CONSOLIDATED SHAREHOLDERS’ EQUITY
114,899
139,530
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
330,434
332,117
MINORITY INTEREST EQUITY
5.42
Consolidated Balance Sheet
93
12/31/2011
P.
Note
In Euro thousands
Note
OPENING CASH AND CASH EQUIVALENTS
Consolidated Cash Flow Statement
25,102
19,235
12,039
10,553
AMORTISATION, DEPRECIATION AND WRITE-DOWNS
14,503
15,641
EBITDA
26,542
26,194
(534)
5,673
TRADE WORKING CAPITAL OTHER WORKING CAPITAL ACCOUNTS
(4,069)
2,663
INCOME TAXES PAID
(3,894)
(2,007)
CHANGE IN PROVISIONS
(5,563)
1,437
OTHER CHANGES
(3,422)
630
9,060
34,589
(19,405)
(23,798)
NET INCREASES INTANGIBLE ASSETS PROPERTY, PLANT & EQUIPMENT EQUITY INVESTMENTS AND OTHER FINANCIAL ASSETS
ACQUISITION OF PUTIAN INVESTMENT
CASH FLOW FROM INVESTMENTS
(ACQ.)/SALE OF TREASURY SHARES OTHER MOVEMENTS IN SHARE CAPITAL
5.45
(5,318)
(6,559)
(14,213)
(11,026)
126
(6,213)
(29,785)
(10,127)
(49,190)
(33,925)
8,815
-
-
120
DIVIDENDS
(1,478)
-
INCREASE FINANCIAL PAYABLES
28,969
6,627
NET CHANGES IN OTHER FINANCIAL ASSETS/LIABILITIES
2,575
(815)
INTEREST PAID
(3,656)
(1,796)
CASH FLOW FROM FINANCING ACTIVITY
35,224
4,135
CHANGE IN CASH AND CASH EQUIVALENTS
(4,905)
4,799
(172)
1,068
20,025
25,102
EFFECT OF EXCHANGE RATE CHANGE ON LIQUIDITY CLOSING CASH AND CASH EQUIVALENTS
94
12/31/2010
EBIT- OPERATING PROFIT
CASH FLOW FROM OPERATING ACTIVITY
P.
12/31/2011
In Euro thousands
Statement of changes in Consolidated Shareholders’ Equity
In Euro thousands
Share capital
Share premium reserve
Acquisition/ Sale of treasury shares
12,665
71,123
(17,629)
64,086
CHANGE IN CASH FLOW HEDGES NET OF THE TAX EFFECT
-
-
-
RECOGNITION OF STOCK GRANT
-
-
DIFFERENCES ARISING FROM TRANSLATION OF FOREIGN SUBSIDIARIES’ FINANCIAL STATEMENTS
-
TOTAL COMPREHENSIVE GAINS
Retained earnings
Hedge, trans. & stock option reserve
Total Group NE
Total MIN. NE
Total
(8,431)
231
122,045
2,112
124,157
-
73
-
73
-
73
-
-
1,366
-
1,366
-
1,366
-
-
-
3,660
-
3,660
262
3,922
-
-
-
-
5,099
-
5,099
262
5,361
NET PROFIT FOR THE YEAR
-
-
-
-
-
4,262
4,262
1,315
5,577
TOTAL GAINS/(LOSSES) RECOGNISED IN THE INCOME STATEMENT
-
-
-
-
-
4,262
4,262
1,315
5,577
ALLOCATION OF NET PROFIT
-
-
-
310
(79)
(231)
-
-
-
OTHER CHANGES
-
-
-
(186)
-
-
(186)
4,621
4,435
DIVIDENDS
-
-
-
-
-
-
-
-
-
12,665
71,123
(17,629)
64,210
(3,411)
4,262
131,220
8,310
139,530
CHANGE IN CASH FLOW HEDGES NET OF THE TAX EFFECT
-
-
-
-
(259)
-
(259)
-
(259)
RECOGNITION OF STOCK GRANT
-
-
-
-
1,216
-
1,216
-
1,216
DIFFERENCES FROM TRANSLATION FOREIGN SUBSIDIARIES’ FINANCIAL STATEMENTS
-
-
-
-
(3,202)
-
(3,202)
637
(2,565)
TOTAL GAINS/(LOSSES) RECOGNISED DIRECTLY TO EQUITY
-
-
-
-
(2,245)
-
(2,245)
637
(1,608)
NET PROFIT FOR THE YEAR
-
-
-
-
-
4,162
4,162
(46)
4,116
TOTAL GAINS/(LOSSES) RECOGNISED IN THE INCOME STATEMENT
-
-
-
-
-
4,162
4,162
(46)
4,116
ALLOCATION OF NET PROFIT
-
-
-
4,273
(11)
(4,262)
-
-
-
SALE OF TREASURY SHARES
-
-
8,814
(4,370)
-
-
4,444
-
4,444
ACQUISITION OF A FURTHER 15% IN SUBSIDIARY COMPANY
-
-
-
(27,841)
-
-
(27,841)
(1,944)
(29,785)
OTHER CHANGES
-
-
-
(110)
-
-
(110)
(209)
(319)
DIVIDENDS
-
-
-
(1,478)
-
-
(1,478)
-
(1,478)
12,665
71,123
(8,815)
34,684
(5,668)
4,162
108,151
6,748
114,899
BALANCE AT DECEMBER 31, 2010
BALANCE AT DECEMBER 31, 2011
P.
BALANCE AT DECEMBER 31, 2009
95
Result for the year
1. Group structure and activities
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2011
Table of contents p. 96
1.
Group structure and activities
p. 96
2.
Accounting principles and basis of consolidation
p. 10 6
3.
Significant accounting estimates
p. 10 7
4.
Composition and changes in the consolidation scope
p. 10 8
5.
Notes to the Consolidated Income Statement, Balance Sheet and Cash Flow Statement
p. 13 2
6.
Guarantees, commitments and contingent liabilities
p. 13 3
7.
Risk management policy
p. 14 1
8.
Disclosure pursuant to IAS 24 on management compensation and related-party transactions
p. 14 3
P.
96
p. 14 3
9.
Positions or transactions arising from exceptional and/or unusual transactions
10. Events after the year-end
Elica S.p.A. is a company incorporated under Italian law based in Fabriano (AN - Italy). The main activities of the Company and its subsidiaries as well as its registered office and secondary offices are illustrated in the Directors’ Report on Operations under “Elica Group structure and Consolidation Scope”. The Euro is the functional and presentation currency of Elica and all of the consolidated companies, except for the foreign subsidiaries Elica Polska Sp.zo.o Elicamex S.A.de C.V., Leonardo Services S.A.d.C.V., Ariafina CO., LTD, Elica Inc., Elica PB India Private Ltd, Zhejiang Putian Electric Co. Ltd and Elica Trading LLC which prepare their financial statements in the Polish Zloty, the Mexican Peso (Elicamex S.A. de C.V. and Leonardo Services S.A. de C.V.), Japanese Yen, US Dollar, Indian Rupie, Chinese Renminbi and Russian Rouble respectively. The Board of Directors today approved the Consolidated Financial Statements for the year ended December 31, 2011 and authorised its publication.
2. Accounting principles and basis of consolidation The Consolidated Financial Statements were prepared in accordance with International Financial Reporting Standards, issued by the International Accounting Standards Board and approved by the European Union, as well as in accordance with Article 9 of Legislative Decree No. 38/2005 and related CONSOB regulations. The Consolidated Financial Statements at December 31, 2011 are compared with the previous year and consist of the Balance Sheet, the Income Statement, the Comprehensive Income Statement, the Cash Flow Statement, the Statement of changes in Shareholders’ Equity and the Explanatory Notes thereto. The financial statements and related notes comply with the minimum disclosure requirements of IFRS, as supplemented, where applicable, by the provisions enacted by law and by CONSOB. The Group did not make any changes in the accounting principles applied between the comparative dates of December 31, 2011 and December 31, 2010. Furthermore, neither the International Accounting Standards Board (IASB) nor the International Financial Reporting Interpretation Committee (IFRIC) have revised or issued standards or interpretations due to take effect on January 1, 2011 that have had a material effect on the Consolidated Financial Statements, except as described below.
The Consolidated Financial Statements were prepared on the basis of the historical cost convention, except for some financial instruments which are recognised at fair value. The financial statement accounts have been measured in accordance with the general criteria of prudence and accruals and on a going concern basis, and also take into consideration the economic function of the assets and liabilities.
2.1 Basis of Consolidation The Consolidated Financial Statements for the year ended December 31, 2011 include the financial statements of the Company and the companies it controls directly or indirectly (the subsidiaries). Control is exercised when the company has the power to determine the financial and operating policies of an entity so as to benefit from its activity. The separate financial statements at December 31, 2011 of the Parent Company Elica S.p.A. were prepared in accordance with IFRS, in accordance with Legislative Decree No. 38/2005 and CONSOB regulations. The financial statements of the Italian subsidiaries were prepared in accordance with Legislative Decree No. 127/91 as supplemented, where necessary, by accounting standards issued by the Italian Accounting Profession (Consiglio Nazionale dei Dottori Commercialisti e dei Ragionieri) and, in the absence of standards laid down by this latter, by accounting standards issued by the IASB as well the documents issued by the Italian Accounting Standards Setter. The financial statements of foreign subsidiaries were prepared in accordance with applicable local regulations. All the Group companies have provided the data and information required to prepare the Consolidated Financial Statements in accordance with IFRS. For information on the consolidation scope and the associated companies reference should be made to sections “4 Composition and changes in the consolidation scope” and “8 Disclosure pursuant to IAS 24 on management compensation and relatedparty transactions”. The results of subsidiaries acquired or sold during the year are included in the Consolidated Income Statement from the date of acquisition until the date of sale. All significant transactions between companies included in the consolidation scope are eliminated.
shareholders at the original acquisition date (see below) and changes in equity after that date. Losses attributable to minority shareholders in excess of the minority interest share in the subsidiary’s equity are allocated to equity attributable to the shareholders of the Parent Company, except to the extent that the minority shareholders are subject to a binding obligation and are capable of making additional investments to cover the losses.
Consolidation of foreign companies and translation into Euro of foreign-denominated items The assets and liabilities of consolidated foreign companies in currencies other than the Euro are translated using the exchange rates at the balance sheet date. Revenues and costs are translated into Euro using the average exchange rate for the year. Translation differences are recognised in the translation reserve until the investment is sold. At December 31, 2011, the consolidated foreign companies whose operating currency is other than the Euro are Elica Group Polska Sp.zo.o, ELICAMEX S.A. de C.V., Leonardo Services S.A. de C.V, ARIAFINA CO., LTD, Elica Inc, Elica PB India Private Ltd, Zhejiang Putian Electric Co. Ltd and Elica Trading LLC, which use the Polish Zloty, the Mexican Pesos (ELICAMEX S.A. de C.V. and Leonardo Services S.A. de C.V.), the Japanese Yen, the US Dollar, the Indian Rupee, the Chinese Renmimbi and the Russian Rouble respectively. The exchange rates used for translation purposes are set out below:
average 2011
average 2010
%
1.39
1.33
4.7%
1.29
1.34
-3.4%
110.96
117.21
-5.3%
100.20
108.65
-7.8%
PLN
4.12
3.99
3.3%
4.46
3.98
12.2%
MXN
17.29
16.74
3.3%
18.05
16.55
9.1%
INR
64.89
60.45
7.3%
68.71
59.76
15.0%
CNY
9.00
9.04
-0.5%
8.16
8.82
-7.5%
RUB
(*) 41.96
N/A
N/A
41.77
N/A
N/A
USD JPY
12/31/2011
12/31/2010
%
Gains and losses arising on inter-company sales of tangible fixed assets are eliminated, where considered material.
97
(*) THE AVERAGE EXCHANGE RATE OF THE RUSSIAN ROUBLE WAS CALCULATED FOR THE PERIOD IN WHICH THE RUSSIAN SUBSIDIARY WAS CONSOLIDATED. P.
Minority interest share in the net assets of consolidated subsidiaries are recorded separately from the Group Shareholders’ Equity (“Minority Interest”). Minority Interest Net Equity includes the amount attributable to the minority
Business Combinations Business combinations are recognised according to the acquisition method. According to this method, the amount transferred in a business combination is valued at fair value, calculated as the sum of the fair value of the assets transferred and the liabilities assumed by the Group at the acquisition date and of the equity instruments issued in exchange for control of the company acquired. Accessory charges to the transaction are recorded to the income statement at the moment in which they are incurred. At the acquisition date, the identifiable assets acquired and the liabilities assumed are recorded at fair value at the acquisition date; the following items form an exception, which are instead valued according to the applicable standard: —› Deferred tax assets and liabilities; —› Employee benefit assets and liabilities; —› Liability or equity instruments relating to share-based payments of the company acquired or share-based payments relating to the Group issued in substitution of contracts of the entity acquired; —› Assets held for sale and Discontinued Operations.
P.
98
Goodwill is calculated as the excess of the amounts transferred in the business combination, of the value of minority interests’ net equity and the fair value of any holding previously held in the acquired company compared to the fair value of the net assets acquired and liabilities assumed at the acquisition date. If the value of the net assets acquired and the liabilities assumed at the acquisition date exceeds the sum of amounts transferred, of the value of minority interest net equity and the fair value of any holding previously held in the acquired company, this excess is immediately recorded to the income statement as income deriving from the transaction concluded. The share of minority interest net equity, at the acquisition date, may be valued at fair value or pro-quota of the value of net assets recognised of the acquired entity. The valuation method is chosen on the basis of each individual transaction.
Goodwill or income deriving from an acquisition of control of a subsidiary must be calculated as the sum of the price paid for gaining control, the value of minority interests (valued according to one of the methods permitted by the standard), the fair value of the minority holding previously held, net of the fair value of the identifiable net assets acquired. According to the previous version of the standard, step acquisitions were recognised transaction by transaction, as a series of separate acquisitions which generated overall goodwill calculated as the sum of the goodwill generated by each individual transaction. Any payments subject to conditions are considered part of the transfer price of the net assets acquired and are valued at fair value at the acquisition date. If the combination contract establishes a right of repayment of some price elements on the fulfilment of certain conditions, this right is classified as an asset of the purchaser. Any subsequent changes to the fair value must be recorded as an adjustment to the original accounting treatment only if resulting from additional or improved information concerning the fair value and if occurring within 12 months from the acquisition date; all other changes must be recorded to the income statement. The previous version of the standard established that payments subject to conditions were recorded at the acquisition date only if their payment was considered probable and the amount could be reliably calculated. Every subsequent change to the value of these payments was recorded as an adjustment to goodwill. Once control of an entity has been attained, transactions in which the parent company acquires or sells further minority shares without amending the control exercised on the subsidiary are considered transactions with shareholders and therefore must be recognised to net equity. The carrying amount of the controlling investment and of the minority interest must be adjusted to reflect the change in the share of the investment held and any difference between the amount of the adjustments allocated to minority interests and the fair value of the price paid or received against the transaction is recorded directly to shareholders' equity and is allocated to the shareholders of the parent company. No adjustments will be made to the goodwill and the profits or losses recorded to the income statement. Accessory charges to these operations must be recorded in shareholders' equity in accordance with paragraph 35 of IAS 32.
In the case of a step acquisition of a subsidiary, a business combination occurs only at the moment in which control is acquired and that, at this moment, all of the net assets identifiable Business combinations before January 1, 2010 were recognised of the company acquired must be valued at fair value; minority according to the previous version of IFRS 3. interests must be valued according to their fair value or based on a proportion of the fair value of the net assets identifiable of the company acquired. In a step acquisition of a holding, the previously held share, until that time recorded according to IAS 39 – Financial instruments: recognition and measurement, or according to IAS 28 – Investments in associated companies or according to IAS 31 – Investments in joint ventures, must be treated as if it had been sold and reacquired at the date in which control is acquired. The holding therefore must be valued at the fair value at the acquisition date and the profits and losses from the valuation must be recorded to the income statement. Any amount previously recorded to shareholders' equity as Other comprehensive profits and losses, which must be recorded to the income statement following the sale of the assets to which it refers, must be reclassified in the income statement.
2.2 Accounting principles and policies
Investments in associated companies and joint ventures
The profits and losses, assets and liabilities of associated companies and joint ventures are recorded in the Consolidated Financial Statements using the Equity method, except where the investments are classified as held for sale. Under this method, investments in associated companies and joint ventures are recorded in the Balance Sheet at cost, as adjusted for changes after the acquisition of the net assets of the associated companies, less any impairment in the value of the individual investments. Losses of the associated companies and joint ventures in excess of the Group share are not recorded unless the Group has an obligation to cover them. Any excess of the acquisition cost over the Group’s share in the fair value of the identifiable assets, liabilities and contingent liabilities at the acquisition date, is recognised as Goodwill. Goodwill is included in the carrying value of the investment and is subject to an impairment test. Any excess of the Group’s share in the fair value of the identifiable assets, liabilities and contingent liabilities of the associated company over the cost of acquisition is recorded in the Income Statement in the year of acquisition. Unrealised profits and losses on transactions between a Group company and an associated company or joint venture are eliminated to the extent of the Group’s share in the associated company or joint venture, except when the unrealised losses constitute a reduction in the value of the asset transferred.
Property, plant & equipment Property, plant and equipment are recorded at purchase or production cost, including any directly attributable costs. Some assets have been adjusted under specific revaluation legislation prior to 1 January 2004 and are considered representative of the fair value of the asset at the revaluation date (“deemed cost” as per IFRS 1). Depreciation is calculated on a straight-line basis on the cost of the assets based on their estimated useful lives applying the following rates:
buildings
3%
lightweight buildings
10%
plant and machinery
6% - 15%
industrial and commercial equipment
10% - 25%
office furniture and equipment
12%
EDP
20%
commercial vehicles
20%
automobiles
25%
Assets held under finance leases are recorded as property, plant and equipment and depreciated on a straight-line basis over their estimated useful lives, on the same basis as owned tangible fixed assets. Purchase cost is also adjusted for capital grants already allocated to the Group companies. These grants are recognised in the income statement by gradually reducing the depreciation charged over the useful life of the assets to which they relate. Maintenance, repair, expansion, modernisation and replacement costs that do not lead to a significant, measurable increase in the production capacity and useful life of the asset are charged to the income statement in the year incurred.
99
A joint venture is a contractual agreement whereby the Group undertakes a jointly controlled business venture with other parties. Joint control is defined as a contractually shared control over a business. It exists only when the strategic financial and operating decisions of the business require the unanimous approval of all of the parties that share control.
The main accounting principles and policies adopted in the preparation of the Consolidated Financial Statements are described below.
P.
An associated company is a company in which the Group has significant influence, but not full control or joint control. The Group exerts its influence by taking part in the associated company’s financial and operating policy decisions.
During the year, the parent company Elica S.p.A., within the analysis of the suitability of the useful life of property, plant and equipment, reviewed the useful life of assets related to industrial production (the “Plant and machinery” and “Industrial equipment” categories). In particular, the strategic vision of Elica S.p.A. and of the Group over recent years was considered, based on the international expansion policy and the altered market conditions, in relation to which the production relocation was critical, enabling the Group to gradually change its productive facilities. The lesser use of productive assets, together with their regular maintenance, justifies the lengthening of their useful life. In order to verify the new estimates made by our technical management in relation to the useful life of these assets and therefore to support the new depreciation rates through an independent external source, the company Praxi S.p.A. was appointed to analyse a representative sample of assets belonging to the categories in which the residual useful life was altered. The analysis of Praxi S.p.A. confirmed the estimates of our technical management.
Goodwill Goodwill arising on the acquisition of a subsidiary or other business combinations represents the excess of the acquisition cost over the Group’s share in the fair value of the identifiable assets, liabilities and contingent liabilities of the subsidiary at the acquisition date. Goodwill is recognised as an asset and reviewed at least annually for any impairment. An impairment loss is recorded immediately in the Income Statement and is not restated in a subsequent period.
P.
100
On the sale of a subsidiary, any Goodwill not amortised attributable to the subsidiary is included in determining the gain or loss on the sale. Goodwill arising on acquisitions prior to January 1, 2004 is carried at the amount recognised under Italian GAAP after an impairment test at that date.
Research and development costs The research costs are recognised in the Income Statement in the year in which they are incurred. Development costs in relation to projects are capitalised when all of the following conditions are satisfied: —› the costs can be reliably determined; —› the technical feasibility of the product is demonstrated, —› the volumes, and expected prices indicate that costs incurred for development will generate future economic benefits; —› the technical and financial resources necessary for the completion of the project are available. The development costs capitalised are amortised on a straight-line basis, commencing from the beginning of the production over the estimated life of the product. The carrying value of the development costs are reviewed annually through a test in order to record any loss in value when the asset is no longer in use, or with greater frequency when there are indications of a possible loss in the carrying value. All other development costs are charged to the Income Statement when incurred.
Other intangible assets The other intangible assets acquired or produced internally are recorded under assets, in accordance with the provisions of “IAS 38 – Intangible Assets”, when it is probable that the use of the asset will generate future economic benefits and when the cost of the asset can be determined reliably. The useful life of the intangible assets are classified as definite or indefinite. Intangible fixed assets with a definite useful life are amortised monthly for the duration of the period. According to management and expert estimations the most important software utilised by the Group has a useful life of 7 years. The useful life is reviewed on an annual basis and any changes are made
in accordance with future estimates. The intangible assets with indefinite useful life are not amortised but are subject annually or, more frequently where there is an indication that the activity may have suffered a loss in value, to a verification which identifies any reduction in value. Currently the Group only holds intangible assets with definite useful life.
Impairment Tests At each balance sheet date, the Group assesses whether events or circumstances exist that raise doubts as to the recoverability of the value of tangible and intangible fixed assets with a definite useful life. If there are any indications that there has been an impairment, the Group estimates the recoverable value of the tangible and intangible assets so as to determine the extent of the impairment loss (if any). Intangible assets with an indefinite useful life – in particular Goodwill – are subject to an impairment test at least annually or when there is an indication of a loss in value. In these situations, the recoverable value of these assets is estimated so as to determine the amount of the impairment. The recoverable value is the higher between fair value less costs to sell and value in use. In accordance with the accounting standards, the impairment test is performed in respect of each individual asset, where possible, or in respect of groups of assets (Cash-Generating Units CGU). Cash-Generating Units are identified depending on the organisational and business structure of the Group as units that generate cash on an autonomous basis as a result of the continuous use of the assets allocated. If the recoverable value of an asset (or a CGU) is considered lower than its carrying value, it is reduced to its recoverable value. An impairment is recognised in the income statement immediately unless the asset consists of land or buildings other than investment property recorded at the revalued amount; in this case, the impairment loss is charged to the revaluation reserve.
When the reasons for the impairment no longer exist, the carrying value of the asset (or CGU) – except for Goodwill – is increased to the revised estimate of its recoverable value. The new value cannot exceed the net carrying value if no writedown for impairment had being recorded. The reversal of an impairment loss is recorded immediately in the Income Statement unless the asset is stated at the revalued amount, in which case the reversal is credited to the revaluation reserve.
their realisable value. The provision is calculated as the difference between the carrying amount of the receivables and the present value of the expected cash flow discounted at the effective interest rate on initial recognition.
Inventories
Non-current assets (and disposal groups) are classified as held for sale when their carrying value is expected to be recovered by means of a sales transaction rather than through use in company operations. This condition is met only when the sale is highly likely, the assets (or group of assets) are available for immediate sale in their current condition and, consequently, management is committed to a sale, which should take place within 12 months of the classification as held for sale.
Obsolete and slow moving inventories are written down taking account of their prospects of utilisation or sale.
Non-current assets held for sale Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying value and market value less selling costs.
Trade receivables and loans are recorded at nominal value which normally represents their fair value. In the event of a significant difference between nominal value and fair value, the receivables are recorded at fair value and subsequently valued at amortised cost using the effective interest rate method. The receivables are adjusted through a provision for doubtful debt so as to reflect
Bank and other borrowings Bank borrowings – comprising of medium/ long-term loans and bank overdrafts – and other borrowings, including the liabilities deriving from finance leases, are recorded in the balance sheet based on the amounts received, less transaction costs, and subsequently measured at amortised cost using the effective interest rate method.
Cash and cash equivalents Cash and cash equivalents include cash balances and bank current accounts and deposits repayable on demand plus other highly liquid short term financial investments that can be readily converted into cash and are not subject to a significant risk of a change in value.
Trade receivables and loans and other financial assets Financial assets other than trade receivables, loans and cash and cash equivalents are initially recorded at fair value, including charges directly related to the transaction.
Trade payables and other financial assets are recorded at nominal value which generally represents their fair value. In the event of significant differences between nominal value and fair value, trade payables are recorded in the balance sheet at fair value and subsequently measured at amortised cost using the effective interest rate method.
Financial liabilities and Equity instruments Financial liabilities and equity instruments issued by the Group are classified based on the substance of the contractual agreements that generated them and in accordance with the respective definitions of financial liabilities and Equity instruments. Equity instruments consist of contracts which, stripped of the liability component, give rights to a share in the assets of the Group.
Derivative instruments and hedge accounting Derivative financial instruments are used with the intention of hedging, in order to reduce the foreign currency or interest rate risk or from fluctuations in market prices. In compliance with IAS 39, the derivative financial instruments can be recorded in accordance with the “hedge accounting” method only when at the beginning of the hedge, the formal designation and documentation relating to the hedge exists, it is presumed that the hedge is highly effective, such effectiveness can be reliably measured and the hedge is highly effective over the accounting periods for which it was designated. All the derivative financial instruments are measured at fair value, in accordance with IAS 39.
101
Net realisable value represents the estimated selling price less expected completion costs and selling costs.
Trade payables and other financial liabilities
P.
Inventories are recorded at the lower of purchase or production cost and net realisable value. The purchase cost of raw, ancillary, supplies and goods for resale is determined using the weighted average cost method. The production cost of finished goods, work in progress and semi-finished goods is determined considering the cost of the materials used plus direct operating costs and overheads.
Accounting policies adopted for specific financial liabilities and Equity instruments are indicated below.
When the financial instruments have the necessary characteristics to be recorded under hedge accounting, the following accounting treatment is applied: —› for derivatives that hedge scheduled transactions (i.e. cash flow hedges), changes in the fair value of derivative instruments are allocated to Equity for the portion considered effective while the portion considered ineffective is recognised in the Income Statement; —› for derivatives that hedge receivables and payables recorded in the balance sheet (i.e. fair value hedges), differences in fair value are recognised in full in the Income Statement. Moreover, the value of the receivables/payables hedged is adjusted for the change in the risk hedged, again in the Income Statement. —› for derivatives classified as hedges of a net investment in a foreign operation, the effective portion of profits or losses on the financial instruments are recorded under net equity. The cumulative gains or losses are reversed from the net equity and recorded in the income statement on the sale of the foreign operation. If the hedge accounting cannot be applied, the profits or losses deriving from the fair value of the derivative financial instruments are immediately recognised in the income statement. Concerning the management of the risks related to the exchange rates and interest rates reference should be made to section 7 “Risk management policy” of the Notes.
Treasury shares
Post-employment benefits Post-employment benefits Italian post-employment benefits are considered equivalent to a defined benefit plan. For defined benefit plans, the cost of the benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at the end of each year. Actuarial gains and losses that exceed 10% of the fair value of the benefits defined by the Group are amortised over the estimated average remaining employment service of the employees taking part in the scheme. Post-employment benefits recognised in the balance sheet represent the fair value of liabilities under defined benefit plans as adjusted for unrecorded actuarial gains and losses. Finally, the Group records the interest on employee benefit plans under finance costs. Up to December 31, 2006, the employee leaving indemnities of the Italian companies were considered as defined benefit plans. The regulations of this provision were modified by Law No. 296 of 27 December 2006 (“2007 Finance Act”) and subsequent Decrees and Regulations issued at the beginning of 2007. In view of these changes, and specifically with reference to companies with more than 50 employees, this fund is now to be considered a defined benefit plan exclusively for the amounts matured prior to 1 January 2007 (and not paid at the balance sheet date), while subsequent to this date they are similar to a defined contribution plan. Share-based payments The Group recognises additional benefits to some members of senior management and some employees through stock option plans. In accordance with IFRS 2 – Share-based payments, these plans represent a remuneration component of the beneficiaries; therefore, the cost representing the fair value of these instruments at the granting date is recognised in the income statement on a constant quota criteria over the period between the assignment date and that of maturity, and directly recorded to shareholders’ equity. Subsequent changes in the fair value to the assignment date do not have an effect on the initial value.
Treasury shares are recorded at cost as a reduction of Shareholders’ Equity. The gains and losses deriving from trading of treasury shares, net of the tax effect are recorded under Equity reserves.
P.
102
Provisions for risks and charges Provisions are recorded when the Group has a current obligation that is the result of a past event and it is probable that the Group will be required to fulfil the obligation. Provisions are made based on management’s best estimate of the cost of fulfilling the obligation at the balance sheet date and are discounted to the present value when the effect is significant.
Income taxes
Revenues from the sale of goods are recognised when the goods are shipped and the Company has transferred the significant risks and rewards of ownership of the goods to the buyer.
In the preparation of the financial statements of the individual Group companies, transactions in foreign currencies entered into by Group companies are translated into the functional currency (the currency in the main area in which the company operates) using the exchange rate at the transaction date or otherwise at the date on which the fair value of the underlying assets/liabilities is determined. Foreign currency assets and liabilities are translated at the balance sheet date using the exchange rate at the balance sheet date. Non-monetary assets and liabilities valued at historical cost in foreign currency are translated using the exchange rate at the transaction date.
Income taxes for the year represent the sum of current and deferred taxation. Deferred income taxation is recorded on temporary timing difference between the statutory financial statements and the fiscal assessable result, recorded under the liability method. The deferred taxes are calculated based on the fiscal rates applicable when the temporary differences reverse. The deferred tax charges are recognised in the income statement with the exception of those relating to accounts recognised in equity in which case the deferred tax charges are also recognised in equity. Deferred tax income is recognised when the income taxes are considered recoverable in relation to the assessable results expected for the period in which the deferred tax asset is reversed. The carrying value of deferred tax assets is revised at the end of the year and reduced, where necessary. The compensation between deferred tax assets and liabilities is carried out only for similar items, and if there is a legal right to compensation the current deferred tax assets and liabilities; otherwise they are written separately under receivables and payables. Elica S.p.A. and the subsidiary Airforce S.p.A. (since 2008) have opted for a consolidated tax regime in Italy. This means that the IRES (Corporation Tax) charge is calculated on a tax base representing the aggregate of the taxable income and tax losses of the individual companies. Transactions plus reciprocal responsibilities and obligations between the consolidating company and the aforementioned subsidiary company are defined by a specific consolidation agreement. With regard to responsibility, the agreement provides that the Parent Company is jointly liable with the subsidiary for: —› amounts due by the subsidiary under Article 127(1) of the Income Tax Code; —› payment of amounts due to the tax authorities, should it emerge that sums declared in the consolidated tax return have not been paid; —› consolidation adjustments made based on figures supplied by the subsidiary and contested by the tax authorities.
Interest income is recorded on an accruals basis based on the amount financed and the effective interest rate applicable: this represents the rate at which the expected future cash flow along the life of the financial asset is discounted to equate them with the carrying amount of the asset. Dividends are recorded when the shareholders have the right to receive them.
Leases and lease agreements Leasing contracts are classified as finance lease contracts when the terms of the contract are such that they substantially transfer all of the risks and rewards of ownership to the lessee. All the other leases are considered operating leases. Assets held under finance leases are recorded as assets of the Group at the lower of their fair value at the date of the lease contract and the present value of the minimum payments due under the lease contract. The corresponding liability towards the lessor is included in the Balance Sheet as a finance lease obligation. Finance lease payments are divided between a capital portion and an interest portion in order to apply a constant interest rate on the residual liability. The finance costs are recorded directly in the Income Statement for the year. Operating lease costs are recorded on a straight-line basis over the term of the lease agreement. Benefits received or receivable as an incentive for entering into operating lease agreements are also recorded on a straight-line basis over the duration of the operating lease agreement.
Exchange differences arising on such transactions or on the translation of monetary assets and liabilities are recorded in the Income Statement except for those arising on derivative financial instruments qualified as cash flow hedges. These differences are recorded in Equity if unrealised, otherwise they are recorded in the Income Statement.
Public grants Grants from public bodies are recorded when there is a reasonable certainty that the conditions required to obtain them will be satisfied and that they will be received. Such grants are recorded in the income statement over the period in which the related costs are recorded. The accounting treatment of benefits deriving from a public loan obtained at a reduced rate are similar to those for public grants. This benefit is calculated at the beginning of the loan as the difference between the initial book value of the loan (fair value plus direct costs attributable to obtaining the loan) and that received, and subsequently recorded in the income statement in accordance with the regulations for the recording of public grants.
103
Foreign currency transactions
P.
Revenues and income
The group tax liability is shown under “Tax payables” or “Tax receivables” in the accounts of the consolidating company, less payments made on account. In the accounts of the subsidiaries and in the present accounts of the Elica Group the debt for the transfer of income taxes to the parent company is recorded under “Other payables”. The receivables which derive from the transfer of income tax losses are classified in the account “Other receivables”.
Earnings per share Basic earnings per share is calculated based on the net profit of the Group and the weighted average number of shares outstanding at the balance sheet date. Treasury shares are excluded from the calculation. Diluted earnings per share equate to the basic earnings per share adjusted to assume conversion of all potentially dilutable shares, i.e. all financial instruments potentially convertible into ordinary shares, with a dilutive effect on earnings, increasing the number of shares which potentially may be added to those in circulation under an allocation or utilisation of treasury shares in portfolio under stock grant plans.
2.3 Accounting standards, amendments and interpretations applied after January 1, 2011 The only new accounting standard applied for the first time by the Group from January 1, 2011 was the revised version of IAS 24 – Related party disclosures, issued on November 4, 2009 by the IASB, which simplifies the type of information required in the case of transactions with related parties controlled by the State and clarifies the definition of related parties. The adoption of this amendment does not have any effect in relation to the valuation of the financial statement items and has limited effects on the disclosure of transactions with related parties. The following amendments, improvements and interpretations, with effect from January 1, 2011, concern facts and events not applicable to Elica S.p.A. at the date of the present Report but which may have accounting effects on future transactions or agreements: —› Amendment to IAS 32 - Financial Instruments: Disclosure: Classification of rights issued; —› Amendment to IFRIC 14 – Minimum funding requirements; —› IFRIC 19 – Extinguishing financial liabilities with equity instruments; —› Improvements to IAS/IFRS (2010).
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2.4 Accounting standards, amendments and interpretations not yet effective and not adopted in advance by the Company At the date of the present Annual Report, the relevant bodies of the European Union have not yet concluded the process necessary for the adoption of the following accounting standards and amendments, with the exception of the amendments of October 7, 2010 to IFRS 7 – Financial instruments: Disclosure, which is explained below:
On May 12, 2011, the IASB issued IFRS 10 – Consolidated Financial Statements which will replace SIC-12 Consolidation – Special Purpose Entities and parts of IAS 27 – Consolidated and Separate Financial Statements (to be renamed Separate Financial Statements) and will govern the inclusion of investments in the separate financial statements. The new standard is based on existing standards, identifying control as the determining factor for the consolidation of a company in the consolidated financial statements of the parent company. It provides also a guide for the determination of control in cases in which it is difficult to ascertain. The standard is effective in a retrospective manner from January 1, 2013.
On May 12, 2011, the IASB issued IFRS 12 – Disclosure of interests in other entities which is a new and complete standard on additional information to be provided on all types of investments, including those in subsidiaries, joint arrangements, associated companies, special purpose entities and other non consolidated vehicle companies. The standard is effective in a retrospective manner from January 1, 2013.
On May 12, 2011 the IASB issued IFRS 13 – Fair value measurement which clarifies how the fair value is calculated for the purposes of the financial statements and is applied to all IFRS standards which require or permit the calculation of the fair value or the presentation of information based on the fair value. The standard is effective in a prospective manner from January 1, 2013.
On June 16, the IASB published this amendment which requires the grouping of items presented in Other Comprehensive Income based on whether they are potentially reclassifiable to profit or loss subsequently. The amendment was applicable from periods beginning July 1, 2012.
105
On December 20, 2010, the IASB issued a minor amendment to IAS 12 – Income taxes which clarifies the calculation of deferred taxes on investment property valued at fair value. The amendment introduces the requirement that deferred taxes relating to investments property valued at fair value according to IAS 40 must be calculated based on the presumption that the book value of these assets will be recovered through sale. Following this amendment SIC-21 – Income taxes – Recovery of revalued non-depreciable assets will no longer be applicable. The amendment is effective in a retrospective manner from January 1, 2012.
P.
On November 12, 2009, the IASB published IFRS 9 – Financial instruments, which was subsequently amended. The standard, applicable from January 1, 2015 in a retrospective manner is the first step toward the full replacement of IAS 39 and introduces new criteria for the classification and measurement of financial assets and liabilities. In particular for financial assets the new standard utilises a single approach based on the management method of financial instruments and on the contractual cash flow characteristics of the financial assets in order to determine the measurement criteria, replacing the various rules established by IAS 39. For financial liabilities however the standard is amended with regard to the accounting treatment of the fair value changes of a financial liability allocated as a financial liability valued at fair value through the income statement, in the case in which these relate to changes in the credit position of the liability. According to the new standard these changes must be recorded to Other comprehensive profits and losses and no longer transferred to the income statement.
On May 12, 2011, the IASB issued IFRS 11 – Joint arrangements which will replace IAS 31 – Interests in Joint Ventures and SIC-13 – Jointly controlled entities – non monetary contributions by ventures. The new standard establishes the criteria for the classification of joint arrangements based on the rights and obligations of the agreements rather than on the legal form and establishes the net equity method as the only method to be applied to holdings in joint ventures in the consolidated financial statements. The standard is effective in a retrospective manner from January 1, 2013. Following the issue of IAS 28 – Investments in associates, IFRS 11 was amended to include in its application, from the date of efficacy of the standard, also holdings in joint ventures.
On June 16, 2011, the IASB issued an amendment to IAS 19 – Employee benefits which removes the option to defer recognition of gains or losses under the corridor method, requiring presentation in the balance sheet of the deficit or surplus of the relevant provision and the separate recognition to the income statement of the labour cost components and net financial charges and the recognition of the gains or losses which derive from the recalculation in each period of the assets and liabilities under Other Comprehensive Income. In addition the income from the assets included under net financial charges must be calculated based on the discount rate of the liability and no longer on the expected income. The amendment finally introduces new additional information to be provided in the notes to the financial statements. The amendment is applicable in retrospective manner from periods beginning January 1, 2013.
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On December 16, 2011, the IASB issued a number of amendments to IAS 32 – Financial instruments: disclosure, to clarify the application of a number of criteria for the composition of the assets and liabilities present in IAS 32. The amendments are applicable in retrospective manner from the periods beginning January 1, 2014.
On December 16, 2011, the IASB issued a number of amendments to IFRS 7 – Financial instruments: disclosure. The amendment requires information on the effects or potential effects of remuneration contracts on the financial assets and liabilities in the balance sheet. The amendments are applicable for the periods beginning January 1, 2013 and the interim periods subsequent to this date. The information must be provided in retrospective manner.
Finally, on October 7, 2010, the IASB published a number of amendments to IFRS 7 – Financial instruments: additional disclosures, applicable for the accounting periods after July 1, 2011. The amendments were issued in order to improve understanding of transfers of financial assets (derecognition), including understanding the possible effects of any risks pertaining to the company which has transferred these assets. The amendments also require additional information in the case in which a disproportionate amount of these transactions are carried out near the end of an accounting period. The adoption of the amendment will not have any impact on the valuation of any accounts in the financial statements.
3. Significant accounting estimates In the preparation of the Consolidated Financial Statements in accordance with IFRS, the Group’s management must make accounting estimates and assumptions which have an effect on the values of the assets and liabilities and disclosures. The actual results may differ from these estimates. The estimates and assumptions are revised periodically and the effects of any change are promptly reflected in the financial statements. In this context it is reported that the situation caused by the current economic and financial crisis resulted in the need to make assumptions on a future outlook characterised by significant uncertainty, for which it cannot be excluded that results in the coming years will be different from such estimates and which therefore could require adjustment, currently not possible to estimate or forecast, which may even be significant, to the book value of the relative items. The account items principally concerned by uncertainty are: Goodwill, doubtful debt provision and inventory write downs, non-current assets (tangible and intangible), pension funds and other post-employment benefits, provisions for risks and charges and deferred tax assets. Reference should be made to the comments of each individual account in the financial statements for further information on the estimates mentioned.
4. Composition and changes in the consolidation scope At December 31, 2011, the consolidation scope includes the companies controlled by the Parent Company, Elica S.p.A.. Control exists where the Parent Company has the power to determine, directly or indirectly, the financial or management policies of an entity so as to obtain benefits from the activities of the company. The following table contains a list of the companies consolidated on a line-by-line basis and controlled directly or indirectly by the Parent Company.
Companies consolidated by the line-by-line method Registered Office
Currency
Share Capital
Direct holding
Indirect holding
Total holding
ELICA S.P.A.
FABRIANO (ITALY)
EUR
12,664,560
ELICAMEX S.A. DE C.V.
QUERETARO (MEXICO)
MXN
458,633,515
98%
2%
(B)
100%
ELICA GROUP POLSKA SP.ZO.O
WROKLAW (POLAND)
ZTY
78,458,717
100%
-
100%
AIRFORCE S.P.A.
FABRIANO (ITALY)
EUR
103,200
60%
-
60%
ARIAFINA CO., LTD
SAGAMIHARA - SHI (JAPAN)
JPY
10,000,000
51%
-
51%
LEONARDO
QUERETARO (MEXICO)
MXN
1,250,000
98%
2%
(B)
100%
EXKLUSIV HAUBEN GUTMANN GMBH
MÜHLACKER (GERMANY)
EUR
25,000
100%
-
100%
ELICA INC.
CHICAGO, ILLINOIS (UNITED STATES)
USD
5,000
-
100%
(A)
100%
AIRFORCE GE (*)
STUTTGART (GERMANY)
EUR
26,000
-
95%
(C)
95%
ELICA PB INDIA PRIVATE LTD.
PUNE (INDIA)
INR
41,000,000
51%
-
51%
ZHEJIANG PUTIAN ELECTRIC CO. LTD
SHENGZHOU (CHINA)
CNY
29,300,000
70%
-
70%
ELICA TRADING LLC
SAINT PETERSBURG (RUSSIAN FEDERATION)
RUB
4,072,000
70%
-
70%
In Euro thousands
In 2011, the Elica Group acquired a further 15% of the company Zhejiang Putian Electric Co. Ltd., increasing the holding therefore to 70%. The Group also acquired 70% of the Russian company Elica Trading LLC. The following table contains a list of associated companies consolidated under the Equity method and held directly or indirectly by the Parent Company:
(*)
AIRFORCE GERMANY HOCHLEISTUNGS-DUNSTABZUGSSYSTEME GMBH (A) QUOTA HELD THROUGH ELICAMEX S.A. DE C.V. (B) QUOTA HELD THROUGH ELICA GROUP POLSKA SP.ZO.O (C) QUOTA HELD THROUGH AIRFORCE S.P.A.
Associated companies measured under the Equity method Currency
Share Capital
% held directly
EUR
10.327
49,39%
% held indirectly
Total held
I.S.M. SRL
CERRETO D'ESI (AN)
-
49,39%
in Euro
In 2011 the associated company I.S.M. Srl approved the distribution of dividends for Euro 296 thousand. Concerning data and information on associated companies, reference should be made to section 8 of the Notes.
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107
Registered Office
5. Notes to the Consolidated Income Statement, Balance Sheet and Cash Flow Statement
5.1.1 Segment information In 2011, the Group reviewed the Corporate Reporting system without substantial amendments to the set of internal reports reviewed periodically by management, but with greater emphasis placed on the geographic breakdown of data rather than analysis by product. As per IFRS 8, from the half-year report the segment disclosure is reviewed and reported in line with that utilised by management for the undertaking of operational decisions. For the purposes of comparison, the disclosure relating to the previous year was restated. The present reporting is in line with management strategy which increasingly has a global focus, with a direct presence now established in Europe, America and Asia. In this manner the Group can provide information which enables readers of the financial statements to evaluate the nature and effects on the financial statements of the strategies undertaken and of the general economic context. The new operational segments are as follows:
CONSOLIDATED INCOME STATEMENT 5.1 Revenues Details of the Group’s revenue are as follows: In Euro thousands 2011
Revenues from product sales Service revenues Total
2010
Changes
378,332
367,854
10,478
74
411
(337)
378,406
368,265
10,141
For an analysis on revenues, reference should be made to the paragraph “Financial and operating review” in the Directors’ Report. The impact on the present account of the consolidation of the Chinese, Indian and Russian companies amounts to approx. Euro 21 million (in 2010 the impact of the Chinese and Indian companies was Euro 12.5 million). Clients who comprise more than 10% of total revenues constituted 10.3% of revenues in 2011 compared to 24.39% in 2010.
—› “Europe”: production and sale of range hoods, accessories and electric motors developed by the companies based in Europe, i.e. the Italian companies Elica S.p.A. and Airforce S.p.A., the German companies Exklusiv Hauben Gutmann GmbH and Airforce Germany GmbH, the Polish company Elica Group Polska Sp.zo.o and the Russian company Elica Trading LLC; —› “America”: production and sale of range hoods and accessories, developed by the Group companies based in America, i.e. the Mexican companies Elicamex S.A. de C.V. and Leonardo S.A. de C.V. and the US company Elica Inc; —› “Asia and the rest of the world”: production and sale of range hoods, accessories and other products, developed by the Group companies located in Asia, i.e. the Chinese company Zhejiang Putian Electric Co. Ltd, the India company Elica PB India Private Ltd. and the Japanese company Ariafina CO., LTD.
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108
The activities are based in the same geographic areas and therefore in Europe, specifically in Italy, Poland, Germany and Russia, in America, i.e. in Mexico and in the United States, and in Asia, respectively in China, India and Japan.
Income Statement Europe
America
2011
SEGMENT REVENUE CUSTOMERS INTER-SEGMENT
2010 (*)
2011
Asia and Rest of the world
2010 (*)
2011
Unallocated and eliminations
2010 (*)
Consolidated
2011
2010 (*)
304,239
312,925
35,411
29,177
38,718
26,098
38
2011
2010 (*)
378,406
368,265
10,076
8,629
8
254
1,682
439
(11,766)
(9,256)
-
-
TOTAL REVENUES
314,315
321,554
35,418
29,430
40,400
26,537
(11,728)
(9,256)
378,406
368,265
SEGMENT RESULT:
31,754
32,432
2,781
1,034
696
4,325
35,231
37,791
(23,192)
(27,238)
12,039
10,553
(45)
(592)
UNALLOCATED OVERHEADS EBIT SHARE OF ASSOCIATES
(45)
FINANCIAL INCOME
(592)
229
1,383
229
1,383
FINANCIAL CHARGES
(4,260)
(2,677)
(4,260)
(2,677)
EXCHANGE GAINS
(1,616)
313
(1,616)
313
PROFIT BEFORE TAXES INCOME TAXES NET PROFIT FROM NORMAL OPERATIONS NET PROFIT FROM DISCONTINUED OPERATIONS
NET PROFIT
6,347
8,978
6,347
8,978
(2,231)
(3,402)
(2,231)
(3,402)
4,116
5,576
4,116
5,576
-
-
-
-
4,116
5,576
4,116
5,576
(*) THE DATA RELATING TO THE PREVIOUS YEAR WAS RECLASSIFIED FOR COMPARABILITY WITH DECEMBER 31, 2011.
Balance Sheet Europe
ASSETS: SEGMENT ASSETS INVESTMENTS
America
TOTAL OPERATIONAL ASSETS
TOTAL ASSETS
LIABILITIES
Consolidated
Dec´10 (*)
Dec´11
Dec´10 (*)
Dec´11
Dec´10 (*)
Dec´11
Dec´10 (*)
Dec´11
Dec´10 (*)
234,948
234,097
30,253
29,292
33,540
31,134
(6,777)
(4,724)
291,964
289,800
74,299
44,854
-
-
(72,922)
(43,138)
1,377
1,717
-
-
36,029
40,599
36,029
40,599 332,115
309,248
278,951
1,065
30,253
29,292
33,540
31,134
(43,671)
(7,263)
329,370
-
-
-
1,065
30,253
29,292
33,540
31,134
(43,671)
(7,263)
330,434
332,115
278,951
(109,795) (115,672)
(10,898)
(8,820)
(12,779)
(12,314)
6,763 (88,827)
4,202 (126,709) (132,603)
UNALLOCATED LIABILITIES
-
-
-
(59,982)
109
310,312
NET EQUITY
-
-
- (114,899) (139,531) (114,899) (139,531)
P.
SEGMENT LIABILITIES
Unallocated and eliminations
Dec´11
UNALLOCATED ASSETS
TOTAL ASSETS OF DISCOUNT. OPERATIONS
Asia and Rest of the world
TOTAL OPERATIONAL LIABILITIES TOTAL LIABILITIES OF DISCOUNT OPERATIONS TOTAL LIABILITIES
(109,795) (115,672)
(10,898)
(8,820)
(12,779)
-
-
(109,795) (115,672)
(10,898)
(8,820)
(12,779)
(59,982)
(88,827)
(12,314) (196,962) (195,310) (330,434) (332,115)
(12,314) (196,962) (195,310) (330,434) (332,115)
(*) THE DATA RELATING TO THE PREVIOUS YEAR WAS RECLASSIFIED FOR COMPARABILITY WITH DECEMBER 31, 2011.
5.2 Other operating income
5.5 Raw materials and consumables In Euro thousands
In Euro thousands
2011
2010
Changes
Rental income Operating grants Ordinary gains on disposal Claims and insurance payouts Expenses recovered Other revenues and income
94 2,604 451 416 158 3,065
40 98 234 340 258 1,402
54 2,506 217 76 (100) 1,663
Total
6,788
2,371
4,417
The increase of the present account principally relates to the “Operating grants”, under which the “2015 Industry” project was recognised, in addition to the photovoltaic plant project of Elica S.p.A., and to the account “Other revenues and income”, under which various items are grouped, including the reversal of prior year provisions.
Purchases of consumable materials Purchases of supplies Purchase of raw materials Change in inventory of raw materials, consumables and goods for re-sale Finished and semi-finished products Packaging Other purchases Shipping expenses on purchases Total
2011
2010
Changes
1,865 648 182,866
1,774 872 163,489
91 (224) 19,377
1,163
6,366
(5,203)
21,701 3,134 828 3,493
9,574 8,322 550 2,737
12,127 (5,188) 278 756
215,697
193,686
22,011
Raw material and consumables increased on 2010 in overall terms by Euro 22,014 thousand. The impact of the consolidation of the Chinese, Indian and Russian companies was approx. Euro 11,809 thousand (Euro 6.9 million in 2010). The increase relates both to higher production volumes and the The account changes in inventories of finished and semi finished goods, amounting to Euro 10,958 thousand, increased by Euro 7,120 increase in raw material costs - in particular metals, copper and oil-based materials, which increased following oil price rises. thousand on 2010, in line with the increase in Group inventories. Therefore the account decreased by 3% on revenues and the change in finished and semi finished products on 2010.
5.3 Changes in inventories of finished and semi-finished goods
5.4 Increases on internal work capitalised
P.
110
The account amounted to Euro 2,350 thousand (Euro 2,633 thousand in the previous year) and mainly relates to the capitalisation of charges regarding the design and development of new products and costs sustained internally for the construction of mouldings, industrial equipment and the implementation of new IT programmes.
Outsourcing expenses Transport Finished goods inventories Consulting Maintenance Utilities Commissions Travel expenses Advertising Insurance Directors & Statutory Auditor fees Trade fairs and promotional events Industrial services Banking commissions and charges Other services Total
2011
2010
Changes
27,062 7,876 4,174 5,334 2,409 4,201 2,702 2,870 3,806 1,246
30,262 7,503 3,951 6,644 2,280 3,983 2,513 2,748 2,118 1,349
(3,200) 373 222 (1,311) 129 218 188 122 1,689 (104)
1,224
1,112
112
1,358 413
1,006 599
352 (186)
396 8,158
438 7,366
(42) 792
73,228
73,873
(645)
Service costs in overall terms decreased by Euro 645 thousand and reducing as a percentage of revenues from 20% to 19%. The impact on this account of the consolidation of the Russian, Chinese and Indian companies was Euro 5.4 million (Euro 3.8 million in 2010). The account other services includes communication services (Euro 884 thousand), technical assistance costs (Euro 2,143 thousand), regulatory and trademark costs (Euro 602 thousand), canteen costs (Euro 486 thousand), cleaning costs (Euro 693 thousand), vehicle expenses (Euro 563 thousand), training courses (Euro 267 thousand), and costs for import services (Euro 319 thousand).
5.7 Labour costs Labour costs incurred by the Group in 2010 and 2011 were as follows: In Euro thousands
Wages and salaries Social security expenses Post-employment benefit provisions Other costs Total
2011
2010
Changes
50,646 14,753
49,455 15,348
1,191 (595)
3,358 4,900 73,657
2,998 4,596 72,397
360 304 1,260
The table below shows the Group workforce at December 31, 2010 and December 31, 2011. Workforce
12/31/2011
12/31/2010
Changes
Executives White-collars Blue-collars Other
36 696 2,043 191
34 618 1,989 159
2 78 54 32
Total
2,966
2,800
166
The increase in employees is principally due to the consolidation of the new Russian subsidiary Elica Trading, for 43 persons, in addition to the expansion of the workforce of the Mexican company.
5.8 Amortisation and depreciation Amortisation and depreciation decreased on the previous year from Euro 15,641 thousand to Euro 14,503 thousand in 2011. This decrease is principally due (for approx. Euro 1.6 million) to the fact that the parent company Elica S.p.A., within the analysis of the estimate of the residual useful life of the fixed assets, reviewed the “Plant and machinery” and “Industrial equipment” categories. This analysis was carried out by the technical management of the company and supported by an independent company (Praxi S.p.A.). For further details on depreciation, reference should be made to the accounting principles and to point 5.19 of the present notes.
111
In Euro thousands
The account reports a net increase of Euro 1,260 thousand, principally due on the one hand to the consolidation of the Chinese, Indian and Russian companies for Euro 3,377 thousand (in 2010, the consolidation of the Chinese and Indian companies amounted to Euro 693 thousand) and on the other to the reduction in Elica S.p.A. labour costs of Euro 3,139 thousand, principally due to the Group performance based targets not being met by the company. The account “other costs” includes temporary staff costs of Euro 2,156 thousand, in addition to stock grant plan costs for Euro 0.7 million (only the Retention portion matured, with the performance targets not met) and leaving incentive costs for of Euro 1 million. During the year, the Parent Company has utilised the Temporary Lay-off and Mobility Schemes, coupled with social security benefits for the employees involved in order to rationalise labour costs within the production sites.
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5.6 Service expenses
5.9 Other operating expenses and provisions
5.11 Share of profit/(loss) from associates
The details of the account are as follows: In Euro thousands 2011
Leasing and rental Rental of vehicles and industrial equipment Expenses for hardware, software and patents Other taxes Magazine and newspaper subscriptions Various equipment Catalogues and brochures Losses and bad debts Provisions for risks and charges Other prior year expenses and losses Total
2010
In Euro thousands
Changes
1,393
1,222
172
2,279
1,881
398
996 1,030
1,048 764
(52) 266
61 251 252 146 191
61 190 598 1,517 1,687
61 (347) (1,371) (1,496)
2,578
1,254
1,325
9,178
5.10 Restructuring charges The Restructuring charges account, totalling Euro 200 thousand, principally relates to the provision for current restructuring.
112
2010
Share of loss from associates
(45)
(592)
547
Total
(45)
(592)
547
Changes
The amounts recorded under this heading relate to the Equity method of accounting for investments in the associated company I.S.M. Srl.. The result is based on the real estate activities of the company. The prior year results were impacted by the company reorganisation, with the sale of the mechanical processing division and the change of the corporate scope in line with the current activities carried out (real estate).
10,221 (1,043)
The account reduced by Euro 1,044 thousand. The decrease particularly relates to the reduction in receivable related costs, losses and write-downs and the reduction in the risks and charges provision. “Other prior year expenses and losses” increased however, which include expenses for damages and penalties amounting to Euro 1,523 thousand (Euro 195 thousand in 2010), charitable donations for Euro 146 thousand (Euro 137 thousand in 2010) and Samples for Euro 650 thousand (Euro 428 thousand in 2010).
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2011
5.12 Financial Income The details of financial income are reported below, which is in line with that of the previous year: In Euro thousands
Income from other non-current financial assets Interest on bank deposits Interest income from customers Other financial income Total
2011
2010
13 192 24 229
17 34 7 1,326 1,383
Changes
(4) 159 (7) (1,302) (1,154)
The decrease principally relates to the “Other financial Income” account, which in the preceding year included income of Euro 950 thousand relating to the fee from Whirlpool of Euro 0.50 for every share purchased in accordance with the Shareholder Agreement, the Modifying Agreements thereof and the Supplementary Agreement signed on March 8, 2010.
5.13 Financial charges
Net exchange gains excluding transactions in derivative instruments amounted to gains of Euro 382 thousand compared to Euro 588 thousand in 2010. Changes The account includes the balance of the non-realised gains and losses deriving from the adjustment at the end of the year of debtor and creditor positions in foreign currencies of a loss of Euro 163 thousand in 2011 compared to a loss of Euro 361 thousand in 2010. 1,867 A large part of the exchange gains and losses are concentrated in (153) the Parent Company Elica S.p.A. (loss of Euro 1,824 thousand), in (40) Elica Group Polska Sp.zo.o (gain of Euro 451 thousand) and in Elica (85) PB India Private Ltd. (loss of Euro 264 thousand). The “Net Charges (profits) on derivative instruments” report charges in 2011 of Euro 1,992 thousand, increasing on a loss of Euro 275 thousand in 2010. The significant loss in value of the Polish - Zloty in the second half of the year had a significant impact on this result, exacerbated by the high levels of volatility (particularly in (6) the second half of the year) of the currencies in which the Group operates (in particular the US Dollar). For further information on exchange gains and losses in the year, 1,583 reference is made to the Directors’ Report.
In Euro thousands 2011
Financial charges: 3,335 on overdrafts and bank loans 26 on other borrowings on post-employment benefit provisions 504 345 Discounts on sales Other financial expenses: Losses/(Gains) from cash flow - hedges transferred from equity Net financial gains/(losses) 50 from traded financial instruments 4,260 Total
2010
1,468 179 544 430
56 2,677
The increase in financial charges of Euro 1,576 thousand is principally due to the higher Group debt relating to the acquisition of the Putian holding. Euro 50 thousand refers to the loss in value on the CAP options to hedge interest rate fluctuations as described in paragraph 7 “Information on risk management” of the present Notes.
5.15 Income taxes Deferred and current taxes in 2011 are broken down as follows: In Euro thousands 2011
5.14 Exchange gains/(losses)
2010
Changes
Current taxes Deferred tax income
(3,875) 1,644
(3,712) 310
(163) 1,334
Total income taxes
(2,231)
(3,402)
1,171
In Euro thousands
(7,519) (11,083) 7,901 11,671 (1,058) (317) (934) 42 (1,611)
313
Changes
3,564 (3,770) (741) (976) (1,924)
The decrease in income taxes relates particularly to the utilisation of deferred tax assets. We highlight in particular the increase in the tax receivable of the subsidiary Elica Polska Sp.zo.o., whose net increase between provisions and utilisations was PLN 1,383 thousand. This credit arose following admission to the Special Economic Zone by the Polish Tax Authorities in February 2007, in which the Group acquired tax credit rights related to an investment programme, equal to Zloty 41 million, to be realised by December 31, 2011, which require the maintenance of a workforce of 160 persons until December 31, 2016. In 2011, the Parent Company theoricial tax rate (theorical tax on pre-tax income) was 31.63%, in line with 2010, based on the corporate income tax (IRES) and regional business tax (IRAP) rates applicable to the reported taxable income for the year ended December 31, 2011. For foreign subsidiaries the tax rate varies from country to country.
113
Exchange losses Exchange gains Charges on derivative instruments Profits on derivative instruments Net financial income (charges)
2010
P.
2011
The table below shows a reconciliation between the theoretical and effective income taxes (“IRES” for the Italian Group companies) paid by the Parent Company.
2011
2010
THEORETICAL IRES RATE
27.50%
THEORETICAL IRAP RATE
4.13%
Assessable
Income taxes
Income taxes
Regional taxes
Total
% on pre-tax profit
2,311
1,563
3,875
71
(310)
(1,685)
41
(1,644)
1,687
3,402
19.1%
626
1,604
2,231
9.9%
2,096
1,616
DEFERRED – COST (INCOME)
(381) 1,715
8,979
Assessable
3,712
CURRENT
6,347
+
TAX CALCULATED USING LOCAL TAX RATE
+
TAX EFFECT OF EXPENSES/REVENUES EXEMPT/ NOT DEDUCTIBLE FOR TAX PURPOSES
−
TAX EFFECT ON THE DIFFERENT TAX RATES OF THE FOREIGN SUBSIDIARIES
−
% on pre-tax profit
PROFIT BEFORE TAXES
Total
DECREASE/INCREASE IN DEFERRED TAX ASSETS/LIABILITIES DUE TO CHANGES IN TAX RATES
2,470
27.5%
(11,934)
861
9.6%
(2,587)
(711)
-
1,746
27.5%
(3,278)
(899)
-14.2%
-7.9%
(2,956)
(813)
-12.8%
-
0.0%
-
-
0.0%
(102)
(27)
-0.3%
1,112
307
4.8%
(5,541)
2,592
28.9%
113
341
5.4%
(877)
-9.8%
285
4.5%
−
OTHER DIFFERENCES
[B] EFFECTIVE TAX CHARGE AND TAX RATE NET OF SUBSTITUTE TAX
−
TAX CREDIT FROM POLISH INVESTMENTS
−
SUBSTITUTE TAX EFFECT
[C] EFFECTIVE TAX CHARGE AND TAX RATE
P.
114
Regional taxes
INCOME TAXES
[A] TOTAL INCOME TAXES
4.13%
27.50%
(5,541)
0.0% 1,715
19.1%
113
0.0% 626
9.9%
in Euro thousands
5.16 Result attributable to minority interest
5.18 Other information on the Income Statement accounts
The minority interest profit relates to those subsidiaries not wholly owned by the Elica Group and in particular they relate to ARIAFINA CO., LTD (minority interest 49%), Airforce S.p.A. (40%), Airforce Germany Hochleistungs-Dunstabzugssysteme GmbH (43%), Zhejiang Putian Electric Co. Ltd (30%), Elica PB Private Ltd. (49%) and Elica Trading LLC (30%). The effect on the account of the consolidation of the Chinese, Indian and Russian subsidiaries on the present account was Euro 855 thousand.
5.17 Basic earnings per share – Diluted earnings per share The calculation of basic and diluted earnings per share is based on the following data:
From continuing and discontinued operations Net profit for the year 4,162 (thousands of Euro) Average number of ordinary 58,692,429 shares net of treasury shares Basic earnings per share 7.09 (Euro/Cents) Weighted average number of ordinary shares to calculate diluted earnings per share Diluted earnings per share (Euro/Cents) From continuing operations Net profit for the year (thousands of Euro) Average number of ordinary shares net of treasury shares Basic earnings per share (Euro/Cents)
2011
2010
Changes
R&D costs expensed Amortisation of capitalised R&D costs
4,766
5,789
(1,023)
952
885
67
Total R&D costs
5,718
6,674
(956)
R&D costs capitalised during the year
1,062
758
304
“R&D costs capitalised in the year” regards product design and development activities. The increase mainly relates to the cost of developing new products.
4,262 56,990,520 7.48
61,645,382
56,990,520
6.75
7.48
4,162
4,262
58,692,429
56,990,520
7.09
7.48
61,645,382
56,990,520
6.75
7.48
P.
Weighted average number of ordinary shares to calculate diluted earnings per share Diluted earnings per share (Euro/Cents)
2010
In Euro thousands
115
2011
The research and development costs charged in the Income Statement in 2010 and 2011 are summarised in the table below:
The diluted earnings per share is calculated by dividing the net profit by the average weighted number of shares in circulation in the period, excluding treasury shares, increased by the potential number of shares which may be in circulation following the allocation or disposal of treasury shares in portfolio under the stock grant plants approved on April 28, 2011.
CONSOLIDATED BALANCE SHEET 5.19 Property, plant & equipment The table below shows details of the changes in property, plant and equipment in 2010 and 2011.
PROPERTY, PLANT AND EQUIPMENT Historical cost 12/31/2009
Increases
Disposals & Reclass.
Other movements
12/31/2010
LAND AND BUILDINGS
52,111
1,000
1,387
13,159
67,657
PLANT AND MACHINERY
72,689
4,532
(1,550)
4,555
80,226
COMMERCIAL AND INDUSTRIAL EQUIPMENT
85,318
4,902
(3,847)
526
86,900
OTHER ASSETS
9,218
1,400
(504)
865
10,980
ASSETS IN PROGRESS AND ADVANCES
2,860
401
(2,636)
235
860
222,196
12,235
(7,149)
19,340
246,623
12/31/2009
Deprec.
Disposals & Reclass.
TOTAL
in Euro thousands
Accumulated depreciation Other movements
12/31/2010
LAND AND BUILDINGS
13,321
1,856
(14)
921
16,084
PLANT AND MACHINERY
55,823
4,403
(1,041)
1,954
61,139
COMMERCIAL AND INDUSTRIAL EQUIPMENT
76,722
4,702
(3,680)
278
78,022
7,230
628
(483)
323
7,698
153,096
11,588
(5,218)
3,476
162,943
12/31/2009
Increases
Disposals & Reclass.
Other movements
OTHER ASSETS TOTAL
in Euro thousands
P.
116
Net value Deprec.
12/31/2010
LAND AND BUILDINGS
38,790
1,000
1,402
12,237
(1,856)
51,573
PLANT AND MACHINERY
16,866
4,532
(509)
2,601
(4,403)
19,087
COMMERCIAL AND INDUSTRIAL EQUIPMENT
8,596
4,902
(167)
249
(4,702)
8,878
OTHER ASSETS
1,988
1,400
(21)
542
(628)
3,282
ASSETS IN PROGRESS AND ADVANCES
2,860
401
(2,636)
235
-
860
69,100
12,235
(1,931)
15,864
(11,588)
83,680
TOTAL
in Euro thousands
The movements in 2011 were as follows:
PROPERTY, PLANT AND EQUIPMENT Historical cost 12/31/2010
Increases
LAND AND BUILDINGS
67,657
2,552
(190)
(1,658)
68,361
PLANT AND MACHINERY
80,226
5,083
(2,170)
(838)
82,301
Disposals & Reclass.
Other movements
12/31/2011
COMMERCIAL AND INDUSTRIAL EQUIPMENT
86,900
5,648
(1,439)
(942)
90,167
OTHER ASSETS
10,980
1,656
(319)
(211)
12,106
860
370
(164)
(152)
914
246,623
15,309
(4,282)
(3,801)
253,849
Other movements
12/31/2011
ASSETS IN PROGRESS AND ADVANCES TOTAL
in Euro thousands
Accumulated depreciation 12/31/2010
Depreciation
Disposals & Reclass.
LAND AND BUILDINGS
16,084
2,208
31
(103)
18,220
PLANT AND MACHINERY
61,139
3,526
(2,151)
(186)
62,328
COMMERCIAL AND INDUSTRIAL EQUIPMENT
78,022
3,336
(895)
(567)
79,896
7,698
894
(321)
(31)
8,240
162,943
9,964
(3,336)
(887)
168,684
12/31/2010
Increases
Disposals & Reclass.
Other movements
OTHER ASSETS TOTAL
in Euro thousands
Net value
LAND AND BUILDINGS
51,573
2,552
(221)
(1,555)
(2,208)
50,141
PLANT AND MACHINERY
19,087
5,083
(19)
(652)
(3,526)
19,973
COMMERCIAL AND INDUSTRIAL EQUIPMENT
8,878
5,648
(544)
(375)
(3,336)
10,271
OTHER ASSETS
3,282
1,656
2
(180)
(894)
3,866
860
370
(164)
(152)
-
914
83,680
15,309
(946)
(2,914)
(9,964)
85,165
ASSETS IN PROGRESS AND ADVANCES TOTAL
117
12/31/2011
P.
Depreciation
in Euro thousands
LEASED ASSETS The investments made in the year mainly regarded the upgrading and expansion of facilities, improvements to the manufacturing plant and machinery, the acquisition of new mouldings and Table of leased assets equipment for the launch of new products and the development of hardware for the implementation of new technical-logisticaladministrative projects. The column “other movements” on the one hand includes exchange losses of Euro 1.7 million, and on the other, the reclassification from “Property, plant and equipments” to “Assets held for sale” of a GROSS VALUE factory of the Polish subsidiary for which a preliminary agreement was signed for Euro 1,065 thousand. The notary deed will be signed ACCUMULATED DEPRECIATION in 2012. 12/31/2011 They include assets acquired under finance lease agreements. As highlighted in the table below, nearly all the finance leasing contracts held by Group companies were redeemed in the year. DEPRECIATION AT Details of the historical cost, accumulated depreciation and DECEMBER 31, 2011 depreciation charged to the income statement in the year as a result of the application of the method recommended by IAS 17 GROSS VALUE for the accounting treatment of assets held under finance lease agreements are provided below. ACCUMULATED DEPRECIATION The table highlights a decrease in depreciation in the year from 12/31/2010 Euro 11,588 thousand to Euro 9,964 thousand. Reference should be made to note 5.8 for further details. DEPRECIATION AT DECEMBER 31, 2010
Land and buildings
Plant and machinery
Commercial and industrial equipment
Total
-
139
-
139
-
(66)
-
(66)
-
73
-
73
-
21
-
21
-
139
-
139
-
(24)
-
(24)
-
115
-
115
-
21
-
21
in Euro thousands
P.
118
It is recalled that the historical cost criteria was retained as the measurement criteria for property, plant and equipment after initial recognition. The historical cost includes revaluations permitted by previous legislation as considered representative of the fair value of the property, plant and equipment when the revaluation was made.
5.20 Goodwill
Changes
GOODWILL
41,765
41,167
598
GOODWILL
41,765
41,167
598
In Euro thousands
Details of the allocations are provided below: Cost for CGU 12/31/2010
EUROPE AMERICA ASIA TOTAL
33,817
Other movements
Acquisitions/ (write-downs)
-
-
7,350
598
41,167
598
12/31/2011
Changes
33,817
-
-
7,948
598
-
41,765
598
In Euro thousands
The change in “other movements” is solely due to the exchange rate impact on the goodwill of the Asia CGU. In line with the new Group strategic vision, which centres on international expansion, and the altered market conditions in which our market and sales channel leadership is paramount, Elica S.p.A. over time has forged a new path for the business and established new organisational and disclosure policies with the historical Range Hood, Putian Range Hood and Motors Cash Generating Units becoming increasingly integrated. For this reason in 2011 it was considered necessary to establish new Cash Generating Units, which better reflect the current Group situation and the International Accounting Standards (IAS 36); the new CGU’s are the Cash Generating Unit Europe, the Cash Generating Unit Asia and the Cash Generating Unit America. In addition, a number of assets were identified as common allocation and use between the three CGU’s and could not be specifically identified to an individual CGU and therefore were identified as corporate assets and valued according to the applicable IAS 36 provisions. The recoverable value of the Cash Generating Units to which the individual goodwill is allocated was verified through the determination of the value in use considered as the current value of the expected cash flows utilising a rate which reflects the risks of the individual Cash Generating Units at the valuation date. In particular, these calculations discount the financial cash flow projections of the various CGU’s over a time period of 5 years, the
first of which (2012) coincides with the updated budget and the subsequent years (2013-2016) estimated based on the respective budgets, utilising a CAGR of revenues for the 2012-2016 period of 3.0% for the Cash Generating Unit Europe, 3.6% for the Cash Generating Unit Asia, and 3.3% for the Cash Generating Unit America, in line with the best estimates available. In relation to raw material costs, an annual average decrease of their percentage of revenues of 0.02% is provided for in relation to the Cash Generating Unit Europe, an annual decrease of 2.5% for the Cash Generating Unit Asia and an increase of 0.8% for the Cash Generating Unit America. These changes are based on the 2012 budget for the various categories of goods, of which the average is for a decrease of 1.5% on the previous year. The variable operational cost components (direct labour, outsourcing and commercial costs) are expected to remain constant in terms of revenues while the fixed operating cost components are projected to increase by 2.4% in the 2012 budget for the Cash Generating Unit Europe, by 3.0% for the Cash Generating Unit Asia and by 2.7% for the Cash Generating Unit America, in line with inflation. The working capital absorbed by the CGU’s is expected to remain constant in terms of revenues at around 10% for the Cash Generating Unit Europe, 2.7% for the Cash Generating Unit Asia and 11% for the Cash Generating Unit America. These amounts were based on a growth rate of 2.4% for the Cash Generating Unit Europe and Corporate (2% in 2010), of 3.0% for the Cash Generating Unit Asia (3.8% in 2010) and of 2.7% for the Cash Generating Unit America (3.5% in 2010). The discount rate (WACC) was estimated at 8.7% for the Cash Generating Unit Europe and Corporate (9% in 2010), of 8.6% for the Cash Generating Unit Asia (8.7% in 2010) and of 8.6% for the Cash Generating Unit America (11.4% in 2010). These are the principal assumptions used by the Group to predict future performances and for the year-end impairment test. Regarding the CGU’s analysed, the valuations made at consolidated level did not result in the recognition of a loss in value of Goodwill at December 31, 2011. The Cash Generating Unit Europe has a coverage of the book value against the value in use of 3.8 times. The Cash Generating Unit Asia has a coverage of the book value against the value in use of 2.0 times. The Cash Generating Unit America has a coverage of the book value against the value in use of 1.8 times. No write-down was considered necessary for the corporate assets considering the excess capacity of the Cash Generating Units. In carrying out the analyses for the impairment tests, assumptions and projections of future performance were utilised based on the corporate plans and the best currently available estimates: of sales, of prices of raw materials and operating costs, of investments, of changes in working capital and the average weighted cost of capital. A change in these assumptions could result a significantly different value in use and give rise to “impairment”. For this reason, and considering the uncertainties which continue to affect the market at the present moment, management will monitor periodically the circumstances and the events which affect the above-mentioned assumptions and future trends.
119
12/31/2010
P.
12/31/2011
5.21 Other intangible assets The table below shows details of changes in other intangible assets in 2010 and 2011.
INTANGIBLE ASSETS Net value 12/31/2009
Increases
Decr.
Other changes
Amort.
12/31/2010
DEVELOPMENT COSTS
2,544
758
-
157
(885)
2,575
INDUSTRIAL PATENTS AND INTELLECTUAL PROPERTY RIGHTS
8,047
3,708
(24)
37
(1,974)
9,793
CONCESSIONS, LICENSES, TRADE MARKS & SIMILAR RIGHTS
2,090
10
-
855
(965)
1,989 2,491
ASSETS IN PROGRESS AND ADVANCES OTHER INTANGIBLE ASSETS TOTAL
582
2,302
-
(392)
-
7,830
150
-
(734)
(228)
7,018
21,093
6,928
(24)
(77)
(4,052)
23,867
in Euro thousands
INTANGIBLE ASSETS Net value 12/31/2010
Increases
Decr.
Other changes
Amort.
12/31/2011
DEVELOPMENT COSTS
2,575
1,332
-
(99)
(952)
2,855
INDUSTRIAL PATENTS AND INTELLECTUAL PROPERTY RIGHTS
9,794
1,843
-
(83)
(2,433)
9,120
CONCESSIONS, LICENSES, TRADE MARKS & SIMILAR RIGHTS
1,990
62
-
3
(197)
1,856
ASSETS IN PROGRESS AND ADVANCES
2,491
1,937
-
-
-
4,428
OTHER INTANGIBLE ASSETS
7,019
123
-
(19)
(957)
6,166
23,869
5,297
-
(198)
(4,539)
24,425
TOTAL
in Euro thousands
At December 31, 2011, intangible assets amounted to Euro 24,425 thousand, an increase of Euro 558 thousand on the previous year.
P.
120
“Development costs” relate to product design and development activities. The increase is mainly attributable to the cost of developing new products. “Industrial patents and intellectual property rights” includes patents, intellectual property rights and software programs. The increase for the year, primarily for the parent company, mainly refers to the implementation of the integrated SAP and Octopus projects and the continuous upgrading of technical and management reporting software. “Concessions, licenses, brands and similar rights” refers to the registration of brands by Group companies.
The assets in progress and advances of Euro 4,428 thousand refer in part to advances and the development of projects for the implementation of new IT platforms and the design and development of new software applications, and also the development of new products, including two projects focused on energy efficiency. The account “Other intangible assets” relates principally to the recording both of technologies developed and the client portfolio deriving from the acquisition of the German subsidiary Exklusiv Hauben Gutmann GmbH in 2008. The “other changes” column includes net exchange losses of Euro 0.2 million. The method applied to amortise intangibles is considered appropriate to reflect the remaining useful life of the assets.
5.22 Investments in associated companies The table below shows changes in investments in associated companies:
12/31/2010
Acq. or subscrip.
Other movements
Reval./ (Write-downs)
12/31/2011
INVESTMENTS IN ASSOCIATED COMPANIES
1,717
-
(295)
(45)
1,377
TOTAL
1,717
-
(295)
(45)
1,377
in Euro thousands
The balance of the “Revaluations/(Write downs)” column, negative for Euro 45 thousand, includes the adjustments in the year to investments based on the results for the year, while the column “Other movements” includes dividends approved by the associated company in favour of Elica S.p.A. utilising retained earnings of the associated company. For further clarifications, reference is made to paragraph 5.11. The table below shows the carrying values at the end of the previous year and as at December 31, 2011.
Balance at 12/31/2011
Purchase cost
Pro-quota postacquisition gain/loss (exclud. dividends)
Balance at 12/31/2010
I.S.M. SRL
1,899
(522)
1,377
1,899
(182)
1,717
TOTAL
1,899
(522)
1,377
1,899
(182)
1,717
in Euro thousands
121
Pro-quota postacquisition gain/loss (exclud. dividends)
P.
Purchase cost
5.23 Other receivables (non-current)
5.26 Trade receivables and loans
The breakdown of the other receivables is as follows:
The account consists of:
In Euro thousands 12/31/2011
12/31/2010
117 159 276
141 1,778
Employees Other receivables Total
1,920
In Euro thousands Changes
(24) Trade receivables (1,620) Receivables from associated companies (1,644) Total
The decrease in “Other receivables” is principally due to a receivable of the Polish subsidiary in 2010 concerning a supplier. This receivable had been settled at December 31, 2011.
5.24 Trade Receivables (non-current) Non-current tax receivables did not change significantly on the previous year, amounting to Euro 6 thousand.
5.25 Available-for-sale financial assets This account regards investments held by the Elica Group in other companies. The investments are held in unlisted companies whose shares are not traded on a regulated market. Therefore, as there were no purchases or sales of these shares in the last year, their fair value cannot be determined in a reliable manner. The carrying value at cost of the investments is shown below: In Euro thousands 12/31/2010
Changes
Meccano S.p.A. UnifabrianoSoc. S.r.l. Consorzio Energia Ceced Inox Market Other minor investments
15 2 4 4 513 133
15 2 4 4 560 28
(47) 105
Total
671
613
58
P.
122
12/31/2011
The change in the investment value of the company Inox Market Mexico S.A. de C.V. is entirely due to exchange rate movements. The increase in “Other minor investments” relates to Elica S.p.A., principally concerning the investment in the “Magna Carta” foundation.
12/31/2011
12/31/2010
Changes
82,104
89,269
(7,164)
103 82,207
7
95 (7,069)
89,276
Trade receivables and loans decreased by Euro 7,069 thousand. The impact of the consolidation of the Indian, Chinese and Russian companies amounted to Euro 2,819 thousand (Euro 3,042 thousand in 2010). The change is principally due to the more restrictive Group credit policy applied in the year. Receivables are recorded net of provisions of Euro 3,474 thousand made following an analysis of the credit risk on receivables and on the basis of historical data on credit losses, considering that a substantial portion of the receivables are insured by prime international insurance companies. Management considers that the value approximates the fair value of the receivables. The charge for the year, considered adequate to adjust receivables to their realisable value, was Euro 146 thousand. The receivables from the associated company I.S.M. for Euro 98 thousand relate to dividends not yet paid and for the remainder to ordinary operations of the company.
5.27 Inventories
5.28 Other receivables (non-current)
In Euro thousands
Raw material, ancillary and consumables Raw materials obsolescence provision Total Products in work-inprogress and semi-finished Semi-finished obsolescence Total Finished products and goods for resale Finished products obsolescence provision Total Payments on account Book value
Changes
12/31/2011
12/31/2010
22,975
19,798
3,176
(1,157) 21,818
(1,201) 18,597
(44) 3,221
The breakdown is as follows: In Euro thousands
11,499 (684) 10,815
11,823 (603) 11,220
(324) 81 (405)
19,018
13,381
5,637
(1,125) 17,893
(1,040) 12,341
85 5,552
72
513
(440)
50,599
42,671
7,928
Changes
12/31/2011
12/31/2010
Other receivables Prepayments and accrued income
4,305
2,462
1,843
1,731
1,818
(88)
Total
6,036
4,281
1,755
The increase in the account principally relates to Elica S.p.A. concerning the “Other receivables” account and due for Euro 1.7 million to the Elica grant under the “2015 Industry” project.
5.29 Tax receivables (current) The break down of the account “Tax Receivables” is summarised in the table below: In Euro thousands Changes
12/31/2011
12/31/2010
IRAP IRES VAT Other tax receivables
2,606 2,083 1,255
22 2,828 2,836 1,904
(22) (222) (753) (649)
Total
5,943
7,589
(1,646)
123
The change in the income tax and regional tax receivables refers to the balance between the payments on accounts and income tax payables for the year 2011. The increase in the account “other tax receivables” is principally due to the increase of the foreign company tax receivables.
P.
The value of inventories increased by Euro 7,927 thousand. Inventories are stated net of obsolescence provisions of approximately Euro 2,966 thousand, in order to take into consideration the effect of waste, obsolete and slow moving items and the risk estimates of the use of some categories of raw and semi-finished materials based on assumptions made by management. Inventories also include materials and products that were not physically held by the Company at the balance sheet date. These items were held by third parties on display, for processing or for examination. Recognition of the inventories at current value does not entail any difference from recognition with the average weighted cost method. The quantification of the stock obsolescence provision of raw materials, semi-finished and finished products is based on assumptions made by Management and amounts to 6% of inventories.
5.30 Derivative financial instruments 12/31/2011
Assets
DERIVATIVES ON FOREIGN EXCHANGE DERIVATIVES ON INTEREST RATES TOTAL
OF WHICH NON-CURRENT CURRENT
TOTAL
5.33 Liabilities for post-retirement benefits
12/31/2010
Liabilities
Assets
Liabilities
774
726
573
143
69
338
265
166
842
1,064
838
310
29
60
189
-
813
1,004
649
310
842
1,064
838
310
In Euro thousands
The Elica Group reports obligations of Euro 8,907 thousand, reflecting the present value of its retirement benefit obligations accruing at the period end in favour of employees of the Group’s companies and representing termination benefits at the end of the employment period. The most recent actuarial calculation of the present value of the provision was performed at December 31, 2011 by Mercer Human Resource Consulting S.r.l. The amounts recognised in the Income Statement may be summarised as follows:
12/31/2011
COSTS RELATING TO CURRENT EMPLOYEE SERVICES NET ACTUARIAL LOSSES RECOGNISED IN THE YEAR
12/31/2010
3,166
2,986
4
11
CURTAILMENT EFFECT
188
-
FINANCIAL CHARGES
504
544
3,862
3,541
TOTAL
For a description of the above account reference should be made to paragraph 7 “Risk management” of the present notes.
In Euro thousands
The changes for the year regarding the present value of retirement benefit obligations were as follows:
5.31 Cash and cash equivalents In Euro thousands 12/31/2011
12/31/2010
Changes
Bank and post office deposits 19,967 Cash and cash equivalents on hand 58 Total 20,025
25,078
(5,110)
24
34
25,102
(5,077)
12/31/2011
OPENING BALANCE COSTS RELATING TO CURRENT EMPLOYEE SERVICES CURTAILMENT EFFECT
P.
124
This account reflects positive balances held in bank current accounts and cash on hand. The decrease was due to a different composition in the Group’s net financial position. The book value of these assets reflects their fair value. For further information, reference should be made to the section on the net financial position in the Directors’ Report.
5.32 Assets of discontinued operations In 2011, the company Elica Group Polska, wholly owned by the Group, signed a preliminary sales contract on a factory for Euro 1,065 thousand. At December 31, 2011 the notary deed had not yet been drawn up, which is scheduled to be signed in 2012.
NET ACTUARIAL LOSSES RECOGNISED IN THE YEAR
FINANCIAL CHARGES
9,182
12/31/2010
9,554
3,166
2,986
188
-
4
11
3,358
2,997
504
544
PENSION FUND
(2,790)
(2,882)
BENEFITS PROVIDED
(1,347)
(1,032)
TOTAL
8,907
9,182
In Euro thousands
The Group has decided to use the corridor method. Under this method it may elect not to recognise the actuarial gains or losses, where these do not exceed 10% of the present value of the defined benefit obligation. Actuarial losses have not been recorded at December 31, 2011 of Euro 1,074 thousand, while in 2010 these losses amounted to Euro 891 thousand. Lastly, the Group shows the interest component of the charge relating to employee defined-benefit schemes under “Financial charges”, with a resulting increase of Euro 504 thousand in this item for the period. The cost of current retirement benefits and net actuarial losses were recorded under staff costs. The costs relating to current employee services and utilisations of pension funds respectively include the charges and settlements in the year.
12/31/2010
4.6% 2.9% 2.0%
5.1% 2.9% 2.0%
5.1%
5.0%
The “Provisions for risks” relates to likely costs and charges to be incurred as a result of ongoing legal disputes. The provisions have been determined based on the best possible estimates, considering the available information. The “Restructuring Fund” was provisioned in the year against charges concerning restructuring operations as described in paragraph 5.44. During the year this fund was principally used for departing personnel for Euro 1,278 thousand.
At December 31, 2011 the Company had 2,996 employees (2,800 in 2010), as detailed in paragraph 5.7.
The Personnel Fund includes contractual indemnities of employees provisioned in the year, not yet definitive and based on the best estimates according to the information available, which will be paid in the subsequent year.
5.34 Provisions for risks and charges
The column “Other movements” exclusively relates to exchange gains/losses.
12/31/2010
Provisions
Utilisations
Others
12/31/2011
SUPPLEMENTARY AGENT TERMINATION BENEFITS
551
90
(113)
-
529
DIRECTORS’ TERMINATION BENEFITS
109
-
-
-
109
PRODUCT WARRANTY PROVISIONS
866
548
(230)
33
1,218
PROVISIONS FOR RISKS
3,409
182
(1,708)
(19)
1,865
RESTRUCTURING PROVISIONS
1,278
200
(1,278)
-
200
PERSONNEL FUND
2,907
424
(2,906)
-
425
87
-
-
(46)
41
9,207
1,444
(6,235)
(32)
4,387
OTHER PROVISIONS TOTAL
OF WHICH NON-CURRENT CURRENT TOTAL
8,254
2,505
953
1,882
9,207
4,387
In Euro thousands
125
The composition and movements of the provisions are as follows:
P.
Discount rate to determine the obligation Expected salary growth rate Rate of inflation Discount rate to determine pension cost
The Directors’ termination benefits regard the termination benefits for the Parent Company’s Executive Chairman. Product warranty provisions represent an estimate of the costs likely to be incurred to repair or replace items sold to customers. These provisions reflect the average warranty costs historically incurred by the company as a percentage of sales still covered by warranty.
ASSUMPTIONS ADOPTED FOR THE CALCULATION 12/31/2011
The “Supplementary agent termination benefits” are intended to cover possible charges upon termination of relations with agents and sales representatives.
5.35 Deferred tax assets Deferred tax liabilities At December 31, 2011, details of deferred tax assets and liabilities, determined on the basis of the asset-liabilities method, were as follows: In Euro thousands
Deferred tax assets Deferred tax liabilities Total
12/31/2011
12/31/2010
Changes
10,032 (6,772)
9,357 (7,890)
675 1,118
3,260
1,467
1,793
The table below shows all the types of timing differences that gave rise to deferred taxes: 12/31/2010
Assets
PROVISIONS GOODWILL
The column “Other movements” includes all the movements of “deferred tax assets and liabilities” which do not have an effect on the Income Statement in the deferred tax income or charge accounts; principally they include exchange rate effects. Deferred tax asset recognition for each Group company is carried out through evaluating the projected future recovery based on budget projections. In particular, in relation to the Group Italian companies, although recording a tax loss for 2011 under the national consolidation, deferred tax assets were maintained based on expected future assessable income.
Credit/Debit to P&L
Liabilities
N.E.
deferred tax liab.
1,922
-
-
(733)
Other move./NE
deferred tax assets
12/31/2011
Assets
276
11
Liabilities
1,476
-
-
884
(2,239)
-
(129)
70
(182)
756
(2,342)
3,460
(24)
-
(192)
2,455
(321)
5,402
(23)
-
INVENTORY WRITE-DOWN
866
(230)
-
(27)
236
-
843
-
-
RESTRUCTURING CHARGES
-
LOSSES CARRIED FORWARD
351
-
-
(351)
55
-
55
-
GAINS, GRANTS
-
(235)
-
-
46
-
(96)
(94)
-
MERGER ADJUSTMENTS
-
(1,013)
-
-
-
45
-
(968)
-
82
(153)
-
(401)
478
-
325
(319)
-
-
(934)
-
-
51
-
-
(884)
-
457
(110)
-
-
179
(45)
591
(110)
-
EXCHANGE DIFF. POST-EMPLOYMENT BENEFIT PROVISION AMORTISATION AND DEPRECIATION SET UP AND EXPANSION COSTS ELIMINATION OF INTERCOMPANY PROFITS STOCK OPTION EMPLOYEE BONUSES
-
-
-
-
-
-
-
-
174
34
-
-
41
-
224
25
-
-
-
519
(519)
-
-
-
-
-
799
-
-
(799)
116
-
116
-
-
-
(2,393)
-
-
260
-
-
(2,134)
-
OTHER
363
(593)
-
(59)
591
120
339
76
-
TOTAL
9,358
(7,890)
519
(3,210)
4,854
(372)
10,031
(6,772)
-
126
ALLOCATION PURCHASE PRICE
P.
N.E.
In Euro thousands
Minimum leasing payments due
12/31/2011 12/31/2010 12/31/2011 12/31/2010
DUE WITHIN ONE YEAR
25
24
25
23
DUE WITHIN FIVE YEARS
59
81
56
76
-
84
105
81
99
DUE OVER FIVE YEARS PERTAINING TO: FUTURE FINANCING COSTS PRESENT VALUE OF OBLIGATIONS UNDER FINANCE LEASES PERTAINING TO:
In Euro thousands
Present value of the minimum leasing payments due
3
6
-
-
81
99
81
99
DUE WITHIN ONE YEAR
25
23
DUE BEYOND ONE YEAR
56
76
in Euro thousands
Finance lease payables refer to plant and machinery. As outlined in the note concerning fixed assets, during the previous year all Group leased assets were redeemed. The current value of the minimum payments due at December 31, 2011 is Euro 81 thousand, of which Euro 25 thousand due within 12 months. The interest rates are linked to one-month or three-month Euribor and are set at the date the finance lease agreement is signed. All finance lease agreements involve a fixed repayment plan and there is no contractual provision for rescheduling the debt.
12/31/2011
12/31/2010
Changes
88,745
59,883
28,862
88,745
59,883
28,862
Bank loans and mortgages have the following repayment schedules: On demand or within one year 43,640 Within two years 11,571 Within three years 11,405 Within four years 8,070 Within five years 6,946 Beyond five years 7,113
29,426 10,357 6,649 6,369 2,992 4,090
14,214 1,214 4,756 1,701 3,954 3,023
Bank loans and mortgages Total
Total Less amounts to be repaid within one year
88,745
59,883
28,862
43,640
29,426
14,214
Due beyond one year
45,105
30,457
14,648
The majority of borrowings indicated above carry a floating rate of interest. While it is exposed to interest rate risk, in 2011 the Group did not systematically hedge its exposure as, particularly concerning short-term debt, given the expectations of constantly generated cash flows, it is inclined to repay early its bank loans, thus eliminating the need for any such “hedge”. For further information on interest rate hedges, reference should be made to paragraph 7 “Risk management” of the present notes.
127
Finance leases and other lenders
5.37 Bank loans and mortgages
P.
5.36 Amounts due under finance leases and other borrowings
5.39 Current and non-current tax liabilities
5.38 Other Payables OTHER PAYABLES (NON-CURRENT)
12/31/2011
Other payables INAIL contributions – earthquake suspension 1997 INPDAI contributions – earthquake suspension 1997 Employee INPS contributions – earthquake 1997 Total
TAX PAYABLES (NON-CURRENT)
In Euro thousands 12/31/2010
294
470
79
87
(8)
43
47
(5)
973
1,082
(109)
1,859
1,510
349
The balance of non-current payables relates for Euro 5 thousand to Airforce, for Euro 546 thousand to Elica India and for Euro 1,307 thousand to the parent company Elica S.p.A.. The parent company payable decreased principally due to the reimbursement of suspended amounts following the earthquake of 1997.
OTHER PAYABLES (CURRENT)
In Euro thousands 12/31/2011
Payments to social security institutions Other payables Payables to personnel for remuneration Customers Accrued expenses and deferred income Payments on account Directors and Statutory Auditors Total
12/31/2011
Changes
764
12/31/2010 Changes
1,210 1,094 4,929 76 918 1,984 -
2,169 993 4,792 103 266 596 102
(959) 101 137 (27) 652 1,388 (102)
10,211
9,021
1,190
The account increased by Euro 1,190 thousand. This increase principally relates to the “payments on account” of the subsidiary Elica Group Polska, in particular for payments received against the warehouse sale. The account “Payables to Social Security Institutions” decreased due to redundancies within the Parent Company.
In Euro thousands
ILOR (former local income tax) payable earthquake suspension Other taxes payable Employee leaving indemnity payable – earthquake suspension Flat tax payable – earthquake suspension Taxes on equity reserves – earthquake suspension Total
12/31/2010
Changes
183
201
(19)
166
183
(17)
27
29
(3)
1
1
-
511
563
(52)
888
978
(90)
The decrease of the other account relates principally to the reimbursement of earthquake suspension payables following the earthquake in 1997.
TAX PAYABLES (CURRENT)
Other taxes IRPEF withheld Ires payables for the year Total
In Euro thousands 12/31/2011
12/31/2010
Changes
742 2,070 2
2,157 2,108 1,499
(1,415) (38) (1,497)
2,814
5,764 (2,950)
The account decreased by Euro 2,950 thousand. This decrease relates both to income tax payables which decreased by Euro 1,497 thousand and other tax payables principally concerning the foreign subsidiaries.
5.40 Trade payables
P.
128
In Euro thousands
Trade payables Total
12/31/2011
12/31/2010
Changes
89,806
88,742
1,064
89,806
88,742
1,064
Trade payables mainly include payables for trade purchases and other costs. Management believes that the book value of trade payables and other payables reflects their fair value.
5.41 Group shareholders' equity For the analysis on the movements in Shareholder’s Equity, reference should be made to the relative table. Comments are provided on each of the Equity reserves.
TREASURY SHARES
Beginning balance at January 1, 2011 Changes Closing balance at December 31, 2011
Number
Book value (in Euro thousand)
6,332,280 (3,166,140) 3,166,140
17,629 (8,814) 8,815
SHARE CAPITAL At December 31, 2011, the treasury shares in portfolio represent 5% The share capital at December 31, 2011 amounts to Euro 12,664,560, of the Share Capital. During the year, as described in the Directors’ Report, treasury consisting of 63,322,800 ordinary shares with a par value of Euro shares were sold in two tranches, the first of which in February, 0.2 each, fully subscribed and paid-in. under which 3% were sold (1,899,684 shares) and the second in December, under which 2% were sold (1,266,456 shares).
CAPITAL RESERVES
This account, negative for Euro 5,688 thousand (in 2010 negative for Euro 3,441 thousand), changed as follows: conversion of financial statements expressed in foreign currencies (ELICAMEX S.A. de C.V., Leonardo S.A. de C.V., Elica Group Polska Sp.zo.o, ARIAFINA CO., LTD, Elica Inc., Elica PB India Private Ltd., Zhejiang Putian Electric Co. Ltd and Elica Trading LLC) resulting in a decrease of Euro 3,202 thousand, including the fair value changes of cash flow hedges, net of the negative tax effect of Euro 259 thousand. The change in the Stock Grant Plan reserve is also recorded to this account, approved by the shareholders’ meeting by April 26, 2010. The 2011 cost was recognised to this reserve, relating only to Retention rights, in addition to the amount concerning the change in the relevant tax regulation.
In Euro thousands 12/31/2011
12/31/2010
Changes
Legal reserve Undistributed earnings IAS transition reserve Extraordinary reserve Reserve restricted under Law 488/92
2.533 (16.032) 1.675 42.633
2.533 9.239 1.675 46.887
(25.271) (4.254)
3.875
3.875
-
Total
34.684
64.210
(29.525)
The significant decrease in retained earnings is principally due to the increase in the allocation of profits for 2010 for the portion not distributed as dividends for an amount of Euro 4,273 thousand and decreases relating to: Euro 1,478 thousand for dividends paid, Euro 4,370 thousand to the contraction in the market value of treasury shares sold in the year and Euro 27,841 thousand to the acquisition of a further 15% in Putian (55% held at December 31, 2010) as a shareholder transaction in line with IAS 27. For further details on the transaction reference should be made to note 5.45. At December 31, 2011, the Stock Market capitalisation of the company was Euro 49.2 million. The market value of shares does not coincide with the market consensus10 value, which however in this period closely approximates to the Group Net Equity book value. 129
HEDGING, TRANSLATION AND STOCK GRANT RESERVE
RETAINED EARNINGS
P.
The capital reserves amount to Euro 71,123 thousand and relate entirely to the Share Premium Reserve. The costs of the IPO, amounting to Euro 3,650 thousand, net of the relevant tax effect Euro 2,190 thousand, were charged to the Share Premium Reserve, in accordance with IAS/IFRS.
(10): Average of the target price indications provided to the market by brokers familiar with the Company.
5.42 Minority interest shareholders’ equity The account decreased by Euro 1,562 thousand, principally due to: —› a decrease of Euro 46 thousand for the allocation of minority losses of 2011, —› an increase of Euro 637 thousand concerning the minority share of the translation effect of financial statements of the investee companies ARIAFINA CO., LTD, Elica PB India Private Ltd., Zhejiang Putian Electric Co. Ltd and Elica Trading LLC, expressed in foreign currencies; —› a decrease of Euro 312 thousand for the distribution of dividends; —› a decrease of Euro 1,944 thousand for the acquisition by the Group of a further 15% of the Chinese subsidiary (note 5.45).
5.44 Significant non-recurring events and operations A summary of the non-recurring operations, considered significant, during the year and with their relative impact, net of taxes, on the Net Equity and Net Profit are shown below.
Net equity
The reconciliation between Net Equity and profit attributable to shareholders of the Parent Company and the corresponding consolidated items is provided in the Directors’ Report.
Amount
AS PER ACCOUNTS RESTRUCTURING CHARGES NOTIONAL BOOK VALUE
5.43 Net debt, default risk and covenants
Net Profit
%
Amount
114,899
145 115,044
%
4,116
0.13%
145
3.52%
4,261
in Euro thousands
(Pursuant to Consob Comm. No. DEM/6064293 of July 28, 2006) The account refers to the Group industrial reorganisation charges of Euro 145 thousand after the tax effect.
CASH AND CASH EQUIVALENTS FINANCE LEASES AND OTHER LENDERS
12/31/2010
20,026
25,102
(56)
(76)
BANK LOANS AND MORTGAGES
(45,105)
(30,457)
LONG-TERM DEBT
(45,162)
(30,533)
FINANCE LEASES AND OTHER LENDERS
(25)
(23)
BANK LOANS AND MORTGAGES
(43,640)
(29,426)
SHORT-TERM DEBT
(43,665)
(29,449)
NET DEBT
(68,800)
(34,880)
P.
130
12/31/2011
In Euro thousands
For further information on the net financial position movements, reference should be made to the Directors’ Report. Concerning the default risk and covenants on debt reference should be made to section 7 “Risk management” of the Notes.
5.45 Acquisitions and asset transfers ACQUISITION OF THE HOLDING IN ZHEJIANG PUTIAN ELECTRIC The Elica Group in 2011 acquired a further 15% of the Chinese company Zhejiang Putian Electric Co. Ltd, as described in the paragraph “Significant events in 2011” in the Directors’ Report. The effects of this operation are summarised in the table below:
Carrying value based on Group principles
Fair value
3,868
3,093
6,961
USAGE RIGHTS OF THE LAND
551
5,127
5,678
OTHER INTANGIBLE ASSETS
97
-
97
TRADE RECEIVABLES
1,216
-
1,216
INVENTORIES
2,218
-
2,218
87
-
87
130
-
130
OTHER RECEIVABLES DEFERRED TAX ASSETS CASH AND CASH EQUIVALENTS
2,225
-
2,225
DEFERRED TAX LIABILITIES
(601)
(2,055)
(2,656)
TRADE PAYABLES
(2,343)
-
(2,343)
OTHER PAYABLES
(467)
-
(467)
TAXES PAYABLE
(187)
-
(187)
TOTAL SHAREHOLDERS' EQUITY
6,794
6,165
12,959
AMOUNT ACQUIRED (15%)
1,944
TOTAL ACQUISITION COST
27,841
29,785 131
REDUCTION IN NET EQUITY OF THE GROUP
in Euro thousands
P.
PROPERTY, PLANT AND EQUIPMENT
Fair value adjustments
6. Guarantees, commitments and contingent liabilities a) Contingent liabilities The Parent Company and its subsidiaries are not involved in administrative, judicial or arbitration proceedings that are underway or have been settled by means of a ruling or arbitration award issued in the last 12 months and which might have or might have had an effect on the financial situation or profitability of the Group. Group companies have valued the contingent liabilities that could arise from pending judicial proceedings and have made appropriate provisions in their financial statements on a prudent basis. The provision included in the Group consolidated financial statements at December 31, 2011 for contingent risks and charges relating to legal disputes amount to Euro 969 thousand. Management considers that the provision for risks in order to cover possible liabilities from pending or potential disputes is, on the whole, adequate.
updated to March 22, 2011 and available on the website of the Company www.elicagroup.com in the Investor Relations/Corporate Governance section, which reports the extracts of the Agreement published in accordance with law on the site www.consob.it. Elica S.p.A. is committed to the following guarantees: - two sureties in favour of Bank DnB Nord for a value of Euro 3,000 thousand and PLN 15,000 for credit lines granted to the subsidiary Elica Group Polska S.p.zo.o; these sureties will expire in 2012. - a guarantee in favour of a supplier of the Mexican subsidiary for the purchase of plant up to a maximum amount of Euro 72 thousand; this guarantee will be valid until 120 days following the last payment date established and however not beyond January 31, 2012. A guarantee provided by the bank PEKAO is in place for the Polish subsidiary concerning a supplier for PLN 120,000 valid until April 4, 2012.
c) Operating leases b) Guarantees and commitments
P.
132
Commitments with suppliers for the purchase of raw materials amount to Euro 13,815 thousand while the amount relating to fixed asset purchases at December 31, 2011 was approx. Euro 409 thousand, principally relating to investments in the productive capacity such as equipment, plant and buildings for the expansion of industrial activities. On December 10, 2007, FAN S.A. (now “FAN S.r.l.”), the parent company of Elica S.p.A., and Whirlpool signed a shareholder agreement (the “Shareholder Agreement”). Under the Shareholder Agreement, Whirlpool and the Company signed a Share Option Agreement (the “Share Option Agreement”). This Agreement was modified through two additional agreements signed between Whirlpool Europe S.r.l. and Elica S.p.A. respectively on December 3, 2008 (the “Modifying Agreement”) and June 15, 2009 (“the “Second Modifying Agreement”). On December 18, 2009, Whirlpool Europe S.r.l., Prop S.r.l. and Elica S.p.A., signed, thus confirming their respective obligations, the communication issued by FAN S.A. relating to the merger by incorporation of the same into Prop s.r.l., which at the same time changed its name to FAN S.r.l. Following the merger, FAN S.r.l. with registered offices in Rome, via Parigi, No.11, registered in the Rome Company Registration Office at No.10379911000, assumed the rights and obligations of FAN S.A. and continues all activities of FAN S.A., including the Shareholder Agreement. On March 8, 2010, Whirlpool Europe S.r.l. and FAN S.r.l. signed a further modification to the Agreement under which the parties agree that, among other issue, any provision of the Agreement dependent on the holding by Whirlpool of 10% of the share capital of Elica at the closing of the option period, as extended by the Second Modifying Agreement, is fully enacted. On December 18, 2010, Whirlpool Europe S.r.l. and FAN S.r.l. announced that the Agreement had been renewed for a further 3-year period and without amendment. The matters outlined above had no impact on the control of Elica S.p.A. which pursuant to article 93 of the Consolidated Finance Act, continues to be indirectly held by Ms. Gianna Pieralisi. For further information reference is made to the “Annual Corporate Governance and Ownership Structure Report” of Elica S.p.A.,
At the balance sheet date there were rental agreements for several industrial and commercial properties, motor vehicle rental agreements and operating leases for hardware and photovoltaic panels. The payments due by the Group under the property rentals and operating leases are summarised in the following table:
12/31/2011
12/31/2010
PROPERTY RENTALS
1,148
1,701
CAR AND FORK LIFT RENTAL
2,573
3,001
HARDWARE OPERATING LEASES
2,213
1,825
OTHER OPERATING LEASES
4,915
4,419
10,849
10,946
TOTAL
In Euro thousands
12/31/2011
Within 1 year
1-5 years
Over 5 years
PROPERTY RENTALS
1,148
652
497
-
CAR AND FORK LIFT RENTAL
2,573
1,374
1,199
-
HARDWARE OPERATING LEASES
2,213
1,069
1,143
-
OTHER OPERATING LEASES TOTAL
4,915
482
1,772
2,662
10,849
3,577
4,611
2,662
In Euro thousands
7. Risk management policy INTRODUCTION
MARKET RISK
The Elica Group’s operations are exposed to different types of financial risks, or risks associated to changes in exchange rates, interest rates, commodity prices and cash flow. In order to mitigate the impact of these risks on the company’s results, the Elica Group commenced the implementation of a financial risk monitoring system through a “Financial Risk Policy” approved by the Board of Directors of the Parent Company. Within this policy, the Group constantly monitors the financial risks related to the operating activities in order to assess any potential negative impact and undertakes corrective action where necessary. The main guidelines for the Group risk policy management are as follows:
Within these types of risks, IFRS 7 includes all the risks directly or indirectly related to the fluctuations of the general market prices and the financial markets in which the company is exposed: —› foreign currency risks; —› commodity risk, related to the volatility of the prices of the raw materials utilised in the production processes; —› interest rate risk.
—› Prudent management of the risk with a view to protecting the expected value of the business; —› Use of “natural hedges” in order to minimise the net exposure on the financial risks described above; —› Undertake hedging operations within the limits approved by Management and only in the presence of effective and clearly identified exposures; The process for the management of the financial risks is structured on the basis of appropriate procedures and controls, based on the correct separation of the activities of conclusion, settlement, registration and reporting of the results. The paragraphs below report an analysis of the risks which the Elica Group is exposed to, indicating the level of exposure and, for the market risks, the potential impact on the results deriving from hypothetical fluctuations in the parameters (sensitivity analysis).
FOREIGN CURRENCY RISKS The Group’s operating currency is the Euro. However, the Group companies trade also in American Dollars (USD), British Pounds (GBP), Japanese Yen (JPY), Polish Zloty (PLN), Mexican Pesos (MXN), Swiss Francs (CHF), Russian Roubles (RUB), Chinese Yuan (CNY) and the Indian Rupie (INR). In all of these currencies, except for the Swiss Franc and the Polish Zloty, the Elica Group has higher revenues than costs; therefore changes in the exchange rates between the Euro and these currencies impact the Group results as follows: —› the appreciation of the Euro has negative effects on revenue and operating results; —› the depreciation of the Euro has positive effects on revenues and operating results. The amount of the exchange risk, defined in advance by management of the Group on the basis of the budget for the period, is gradually hedged over the acquisition process of the orders, up to the amount of the orders corresponding to budget projections. The hedge is made through agreements with third party financiers of forward contracts for the purchase and sale of foreign currency. As previously described, these operations are undertaken without any speculative or trading purpose, in line with the strategic policies of a prudent management of the cash flows. As well as the trading risks just described, the Group is also exposed to balance sheet translation risks. The assets and liabilities of companies consolidated in currencies other than the Euro may be translated into Euro at varying exchange rates, whose amount is recorded in the “translation reserve” under Group Net Equity. The Group monitors this exposure, against which there were no hedging operations at the balance sheet date; in addition, against the total control by the Parent Company over its subsidiaries, the governance on the respective foreign currency operations is greatly simplified.
133
The Group “Financial Risk Policy” is based on the principle of a dynamic management and the following assumptions:
The paragraphs below individually analyse the different risks, indicating where necessary, through sensitivity analysis, the potential impact on the results deriving from hypothetical fluctuations in the parameters.
P.
—› identify the risks related to the achievement of the business objectives; —› assess the risks to determine whether they are acceptable compared to the controls in place and if they require additional treatment; —› reply appropriately to risks; —› monitor and report on the current state of the risks and the effectiveness of their control.
In relation to these risk profiles, the Group uses derivative instruments to hedge its risks. The Group does not engage in derivative trading.
The values are shown below at December 31, 2011 of the balance sheet accounts in foreign currencies for the most significant currencies: 12/31/2011
The hedging operations at December 31, 2011 with financial counterparties have a total Fair Value of approx. Euro 48 thousand. The table below shows the details of the notional and fair values:
12/31/2010 12/31/2011
Assets
Currency
Liabilities
Assets
Currency
CHF
-
(300)
-
(299)
CNY
(3)
93
-
-
GBP
292
(60)
498
(39)
JPY
253
(1)
93
-
(8,338)
10,488
(7,387)
6,305
PLN
Fair Value
Notional
Fair Value
(in foreign currency/000)
(in Euro thousands)
(in foreign currency/000)
(in Euro thousands)
USD FORWARD
3,180
(62)
2,000
28
OPTIONS
9,435
174
8,650
241
590
(6)
730
16
2,874
(6)
44
(2)
USD
12,717
(9,797)
10,098
(3,568)
MXN
(490)
618
(868)
904
PLN
INR
105
(1,687)
-
364
FORWARD
173,468
(533)
6,014
12
7,410
(652)
2,458
(3,941)
OPTIONS
107,265
373
14,145
127
55,000
1
GBP FORWARD
JPY OPTIONS RUB
For the purposes of the sensitivity analysis on the exchange rate, the potential movements on the Euro/CHF, Euro/CNY, Euro/GBP, Euro/YEN, Euro/PLN, Euro/RUB, Euro/USD, Euro/MXN and EUR/INR rates were analysed. The following table shows the sensitivity to reasonably possible movements in the exchange rates, maintaining all other variables unchanged, of the pre tax profit, due to changes in the value of current assets and liabilities in foreign currencies:
2011
Depreciation of foreign currencies 5%
134
Notional
RUB
TOTAL
P.
12/31/2010
Liabilities
2010
Appreciation of foreign currencies 5%
Depreciation of foreign currencies 5%
Appreciation of foreign currencies 5%
CHF
14
(16)
14
(16)
CNY
(4)
5
-
-
GBP
(11)
12
(22)
24
JPY
(12)
13
(4)
5
PLN
(102)
113
52
(57)
RUB
(137)
151
(2)
2
USD
(139)
154
(311)
344
MXN
(6)
7
(2)
2
INR TOTAL
(85)
94
-
-
(482)
533
(305)
337
In Euro thousands
75,000
6
FORWARD
42,000
14
-
-
OPTIONS
167,000
87
-
-
TOTAL
48
430
For the purposes of the sensitivity analysis on the exchange rate, the potential movements on the EUR/USD, EUR/GBP, EUR/PLN, EUR/ JPY and EUR/RUB and the EUR and foreign exchange interest rate curves were analysed. In the stress testing we have stressed, as well as the spot to spot exchange rate, also the monetary curve rates at December 31, 2011 in order to show the effect of changes in the rate curve. For this purpose, the maximum change in the interval between the beginning of November 2010 and the first week of January 2012 was considered. For the EUR/USD exchange rates a stress of 4.5% was applied, for the EUR/GBP 2.5%, for EUR/PLN 4.0%, for EUR/JPY 5% and for EUR/ RUB 3%. For the interest rates, variable based on forward exchange contracts, a stress of 17% was applied for the Eurozone, 15% for the USA, 1% for the Polish and Japanese rates and 1% for the UK rates.
The following table shows the sensitivity to the movements in the exchange rates and the rate curves indicated, maintaining all other variables unchanged, of the Fair Value of the operations in foreign currencies at December 31, 2011 (compared with December 31, 2010): 2011
USD
GBP
PLN
JPY
RUB
Notional 12,615 USD/000
Notional 590 GBP/000
Notional 280,733 PLN/000
Notional 55,000 JPY/000
Notional 209,000 RUB/000
EXCHANGE DEPRECIATION
214,431
17,237
(753,363)
2,511
59,787
CURRENCY DEPREC. EURO
8,311
1,109
(25,868)
15
3,523
CURRENCY DEPRECIATION
(4,071)
(309)
78,107
-
(13,789)
218,671
18,037
(701,124)
2,526
49,521
SENSITIVITY TO DEPRECIATION
EXCHANGE APPRECIATION
(189,186)
(18,121)
955,623
(645)
(54,984)
CURRENCY APPREC. EURO
(8,226)
(1,115)
32,341
(14)
(4,515)
CURRENCY APPRECIATION
4,095
308
(76,296)
-
14,192
(193,317)
(18,928)
911,668
(659)
(45,307)
SENSITIVITY TO APPRECIATION
in Euro
GBP
PLN
JPY
Notional 10,650 USD/000
Notional 730 GBP/000
Notional 20,159 PLN/000
Notional 75,000 JPY/000
EXCHANGE DEPRECIATION
212,667
24,712
(163,196)
9,837
CURRENCY DEPREC. EURO
5,629
853
(847)
(44)
CURRENCY DEPRECIATION
(2,418)
(338)
1,337
(5)
215,878
25,227
(162,706)
9,788
SENSITIVITY TO DEPRECIATION
EXCHANGE APPRECIATION
(185,371)
(26,241)
254,145
(4,412)
CURRENCY APPREC. EURO
(4,671)
(856)
881
(44)
CURRENCY APPRECIATION
2,424
337
(2,624)
5
(187,618)
(26,760)
252,402
(4,451)
SENSITIVITY TO APPRECIATION
P.
USD
135
2010
in Euro
COMMODITY RISK The Group is subject to market risk deriving from fluctuations in commodity prices used in the production process. The raw materials purchased by the Group (including copper and aluminium) are affected by the trends of the principal markets. The Group regularly evaluates its exposure to the risk of change in the price of commodities and manages this risk principally through fixing the price of contracts with suppliers. Based on this strategy, the Elica Group does not adopt any hedging through derivative financial instruments, as the Company implements a hedging policy based on quantities. In particular, as illustrated by Management, between the end and the beginning of the year, on the basis of the production budget for the year, the raw material orders are made establishing the delivery period and the price to be paid. Operating in this manner, the Group covers the standard cost of the raw materials contained in the budget from possible increases in commodity prices, achieving the operating profit objective.
INTEREST RATE RISK The management of the interest rate risk by the Elica Group is in line with the consolidated practices over time to reduce the volatility risk on the interest rates, while at the same time minimising the borrowing costs within the established budget limits. The Group’s debt carries mainly a floating rate of interest. Relating to the Group debt (as already described prevalently at a variable rate), from the sensitivity analysis a change of -25 bps in the interest rate curve in the short-term incurs lower financial charges of Euro 172 thousand, while a change of 25 bps in the same interest rate curve converts into higher financial charges of Euro 172 thousand. The Group hedges the interest rate risk through the utilisation of two Interest Rate Swaps and through CAP options against specific medium-long term loans at variable rate. The table below shows the details of the notional and fair values:
DERIVATIVES ON INTEREST RATES 12/31/2011
Notional
Fair Value
Notional
Fair Value
P.
136
Instrument
12/31/2010
INTEREST RATE SWAP
16,272
(278)
12,969
79
CAP
22,072
8
10,573
19
TOTAL
38,344
(270)
23,542
99
In Euro thousands
Also the interest rate risk is measured through sensitivity analysis, in accordance with IFRS 7. The changes in the interest rate curve utilised for the sensitivity analysis were based on the volatility of the market rates. The analysis shows that a change of the interest rate curve (both short-term and medium/long-term) of -25 bps results in a decrease in the Fair Value of the Interest Rate Swap at December 31, 2011 of Euro 124 thousand. An increase however of 25 bps on the interest rate curve would cause an increase in the fair value of the Interest Rate Swap of Euro 123 thousand. With reference to the CAP options the sensitivity analysis carried out on the interest rate curve shows against a change in the curve (both short and medium/long-term) of -25 bps, the Fair Value of the CAP decreases by Euro 6 thousand. A change in the interest rate curve of 25 basis point prompts an increase in the CAP fair value of Euro 10 thousand.
CREDIT RISK The credit risks represent the exposure of the Elica Group to potential losses deriving from the non-compliance of obligations by trading partners. This risk derives in particular from economicfinancial factors related to a potential solvency crisis of one or more counterparties. The Group only deals with well known and reliable clients. It is Group policy to analyse clients in order to award a credit rating. Moreover, the collection of receivables is monitored during the year so that the exposure to losses is not substantial. The maximum theoretical exposure to the credit risk for the Group at December 31, 2011 is the carrying value of the financial assets recorded in the accounts, and the nominal value of the guarantees given on debts and commitments to third parties as indicated in paragraph 6 "Commitments, guarantees and contingent liabilities". At December 31, 2011, trade receivables of Euro 82.2 million (Euro 89.1 million at December 31, 2010), included approx. Euro 6.2 million (Euro 6.7 million at December 31, 2010) concerning overdue receivables. 1.2% of receivables (0.5% at December 31, 2010) were overdue by 60 days. The amount of trade receivables reported in the balance sheet is net of the allowance for doubtful accounts. The allowance is made on the basis of past experience and on the basis of specific considerations on the individual customers. The doubtful debt provision was created based on the guidelines contained in the attachment to the Financial Risks Policy specifically relating to the management of credit risk. For the management of credit risk, the Group utilises insurance coverage to guarantee against the non payment of a significant part of its clients.
LIQUIDITY RISK During the year, the Group signed with major financial counterparties a medium/long-term loan contract which include an obligation to respect financial covenants based on the Consolidated Financial Statements. In particular the structure of the covenants on some of the The principal factors which determine the liquidity of the Group are, on the one hand, the resources generated and absorbed by the Medium/long-term loans do not immediately determine default of the line through non respecting of the limits, but in first instance operating and investment activities and on the other the maturity result in an increase in the cost of the loan. dates and the renewal of the payable or liquidity of the financial At December 31, 2011 the level of the covenants in question were commitments and also market conditions. These factors are monitored constantly in order to guarantee a correct equilibrium of comfortably complied with both in relation to the increase in the cost of the loan and the level of default of the credit line. the financial resources. The liquidity risk represents the risk related to the unavailability of financial resources necessary to meet short-term commitments assumed by the Group and its own financial needs.
Management believes that at the present moment, the funds available, in addition to those that will be generated from operating and financial activities, will permit the Group to satisfy its requirements deriving from investment activities, working capital management and repayment of debt in accordance with their maturities.
The following table shows the expected cash flows in relation to the contractual expiries of trade payables and various financial liabilities from derivatives: December 31, 2011
within 12 months
FINANCE LEASES AND OTHER LENDERS BANK LOANS AND MORTGAGES
1-5 years
Over 5 years
25
56
-
41,210
37,903
7,113
TRADE AND OTHER PAYABLES
100,018
1,859
-
TOTALE
141,253
39,818
7,113
For details on the net financial position, reference should be made to note 5.43 of the notes.
in Euro thousands
December 31, 2010
Over 5 years
23
76
-
BANK LOANS AND MORTGAGES
29,426
26,367
4,090
TRADE AND OTHER PAYABLES
97,764
1,510
-
127,213
27,953
4,090
TOTAL
in Euro thousands
137
FINANCE LEASES AND OTHER LENDERS
1-5 years
P.
within 12 months
CLASSIFICATION OF THE FINANCIAL INSTRUMENTS
OTHER FINANCIAL ASSETS AFS FINANCIAL ASSETS DERIVATIVE FINANCIAL INSTRUMENTS NON-CURRENT ASSETS
DERIVATIVE FINANCIAL INSTRUMENTS
HIERARCHY OF FAIR VALUE ACCORDING TO IFRS 7 12/31/2011
12/31/2010
-
30
672
614
29
189
701
833
813
649
CASH AND CASH EQUIVALENTS
20,026
25,102
CURRENT ASSETS
20,839
25,751
56
76
FINANCE LEASES AND OTHER LENDERS BANK LOANS AND MORTGAGES
45,105
30,457
NON-CURRENT LIABILITIES
45,161
30,533
FINANCE LEASES AND OTHER LENDERS BANK LOANS AND MORTGAGES DERIVATIVE FINANCIAL INSTRUMENTS CURRENT LIABILITIES
25
23
43,640
29,426
1,004
310
44,669
29,759
P.
138
In Euro thousands
IFRS 7 requires that the classification of financial instruments valued at fair value is determined based on the quality of the input sources used in the valuation of the fair value. The IFRS 7 classification implies the following hierarchy: —› Level 1: determination of fair value based on prices listed in active markets for identical assets or liabilities. The instruments which the Group operates directly on active markets or in “Over the Counter” markets characterised by an adequate level of liquidity belong to this category; —› Level 2: determination of fair value based on other inputs than the listed prices included in “Level 1” but which are directly or indirectly observable. In particular instruments which the Group operates on “Over the Counter” markets, not characterised by an adequate level of liquidity are included in this category; —› Level 3: determination of the Fair Value based on valuation models whose input is not based on observable market data. The classification of the financial instruments may have a discretional element, although not significant, where in accordance with IFRS, the Group utilises, where available, prices listed on active markets as the best estimate of the fair value of derivative instruments. All the derivative instruments in place at December 31, 2011 and December 31, 2010 belong to level 2 of the fair value hierarchy.
DERIVATIVE INSTRUMENTS AT DECEMBER 31, 2011 The table below shows the following information on derivative instruments at December 31, 2011: —› The notional value of the derivative contracts, broken down by maturity; —› The book value of these contracts, represented by their fair value. Notional Value
Book Value
Maturity within 1 year
INTEREST RATE RISK
CASH FLOW HEDGE AS PER IAS 39 FAIR VALUE HEDGE AS PER IAS 39 NOT CONSIDERED HEDGES UNDER IAS 39 TOTAL DERIVATIVES ON INTEREST RATES
Maturity over 1 year
2,712
13,560
(278)
4,592
17,480
8
7,304
31,040
(270)
Maturity over 1 year
Maturity within 1 year
sales
purchases
sales
purchases
CONSIDERED HEDGES UNDER IAS 39
- ON COMMERCIAL OPERATIONS
- ON FINANCIAL OPERATIONS
27,242
49,620
673
1,447
48
- ON FINANCIAL OPERATIONS
27,242
49,620
673
1,447
48
- ON COMMERCIAL OPERATIONS
TOTAL DERIVATIVES ON FOREIGN EXCHANGE
P.
NOT CONSIDERED HEDGES UNDER IAS 39
139
FOREIGN CURRENCY RISKS
in Euro
The situation at December 31, 2010 is outlined below:
Notional Value
Book Value
Maturity within 1 year
INTEREST RATE RISK
CASH FLOW HEDGE AS PER IAS 39 FAIR VALUE HEDGE AS PER IAS 39 NOT CONSIDERED HEDGES UNDER IAS 39
Maturity over 1 year
1,853
11,116
79
2,768
TOTAL DERIVATIVES ON INTEREST RATES
7,805
4,621
18,921
99
Maturity over 1 year
Maturity within 1 year
sales
20
purchases
sales
purchases
FOREIGN CURRENCY RISKS
CONSIDERED HEDGES UNDER IAS 39
- ON COMMERCIAL OPERATIONS
- ON FINANCIAL OPERATIONS
NOT CONSIDERED HEDGES UNDER IAS 39
8,478
4,943
977
-
431
- ON FINANCIAL OPERATIONS
8,478
4,943
977
-
431
TOTAL DERIVATIVES ON FOREIGN EXCHANGE
P.
140
- ON COMMERCIAL OPERATIONS
in Euro
8. Disclosure pursuant to IAS 24 on management compensation and related-party transactions
The Group is indirectly controlled by the Casoli Family through Fintrack S.p.A. of Fabriano. Francesco Casoli, Chairman of Elica S.p.A., is a shareholder and Sole Director of Fintrack S.p.A., a holding company that does not carry out management and coordination activities in accordance with article 2497 and subsequent of the civil code. This conclusion derives from the fact that the majority shareholder does not carry out management activities within the company and, although exercising their voting rights at the shareholders’ meeting, does not exercise any managerial directives or have any involvement in the production and financial programmes. The Company therefore carries out its operations through a totally autonomous and independent decision-making process. Gianna Pieralisi Casoli holds a life-time right of usufruct on 68.33% of the shares of Fintrack S.p.A., thus exercising control over the Issuer, pursuant to article 93 of the Consolidated Finance Act.
8.1 Remuneration of Directors, Statutory Auditors and Senior Management with strategic responsibility The remuneration of the above-mentioned persons in total amounted to Euro 4,402 thousand. The details are reported in the “Remuneration Report”. This report is available on the Company internet site www.elicagroup.com, in the Investor Relations/Corporate Governance section.
8.2 Share-based payments
P.
At December 31, 2011, the Board members and senior managers with strategic responsibilities matured Stock Grants for a total of Euro 676 thousand. The details are reported in the “Remuneration Report”. This report is available on the Company internet site www.elicagroup.com, in the Investor Relations/Corporate Governance section.
141
At December 31, 2011, the stock option plan ”2007-2011 Performance Stock Option Plan” expired without utilisation, whose options were allocated to senior management with strategic responsibilities, in addition to the Chief Executive Officer.
8.3 Information on subsidiary companies
8.4 Information on associated companies
The tables below show key data for subsidiaries and the amount of transactions entered into with them at and for the year ended December 31, 2011.
SUBSIDIARIES 2011 HIGHLIGHTS
Assets
Liabilities
Net equity
Revenues
Net result
33,772
10,917
22,856
35,418
2,082
ELICA GROUP POLSKA 40,024 SP.ZO.O
14,993
25,031
74,038
5,262
ELICAMEX S.A. DE C.V.
AIRFORCE S.P.A.
8,409
6,185
2,224
18,419
249
ARIAFINA CO., LTD
7,972
3,172
4,799
20,571
1,432
301
355
(54)
3,845
(59)
24,015
14,849
9,166
24,097
921
ELICA INC.
438
333
105
701
19
AIRFORCE GERMANY (*)
101
17
83
9
(49)
4,600
6,983
(2,383)
7,539
(1,696)
10,849
2,861
7,989
12,290
(233)
4,635
4,635
-
3,363
(97)
LEONARDO SERVICES S.A. DE C.V. EXKLUSIV HAUBEN GUTMANN GMBH
ELICA PB INDIA PRIVATE LTD. ZHEJIANG PUTIAN ELECTRIC CO. LTD ELICA TRADING LLC
(*) AIRFORCE GERMANY HOCHLEISTUNGS-DUNSTABZUGSSYSTEME GMBH
In Euro thousands
The table below shows the operating and financial amounts arising from transactions with associated companies for 2011. No separate indication of these positions was given in the financial statements as the amounts involved were limited. All transactions were conducted on an arm’s length basis in the ordinary course of business. The table below summarises key operating and financial data for associated companies, as derived from the companies’ financial statements in accordance with Italian GAAP and local GAAP for foreign companies.
ASSOCIATED COMPANIES KEY DATA AT DECEMBER 31, 2011
Head Office
I.S.M. SRL
CERRETO D'ESI (AN)
% held
Share capital
Net equity
Net result
49.385
10
1,377
(43)
In Euro thousands
COMMERCIAL TRANSACTIONS WITH ASSOCIATED COMPANIES The table below shows the operating and financial amounts from transactions with associated companies for 2011. No separate disclosure of these positions was given in the financial statements, given the limited amounts involved, in accordance with Consob resolution No. 15519 of July 27, 2006.
I.S.M. SRL
Payables
Receivables
Costs
-
103
-
Revenues
3
P.
142
In Euro thousands
Elica also has financial relations with Group companies as a result of loans made to them as part of a general plan to centralise cash management activities. These loans are interest bearing and at market rates. Transactions with consolidated companies have been eliminated from the Consolidated Financial Statements. As a result they are not reported in these notes.
8.5 Transactions with other related parties
The operating and financial balances arise from trading transactions conducted to purchase goods and services on an arm’s length basis. The trading relationship with FASTNET S.p.A. forms part of a In 2011, transactions with other related parties took place. All strategic partnership to develop projects and implement advanced transactions were conducted on an arm’s length basis in the technological solutions. These projects have accompanied and ordinary course of business. No separate disclosure of these continue to accompany the growth of the business; from intranet positions was given in the financial statements, given the limited solutions to extranet solutions, from wiring to wireless solutions, amounts involved, in accordance with Consob resolution No. 15519 from software consultancy to hardware consultancy and from of July 27, 2006. training to web marketing. The table below shows the main operating and financial amounts The transactions with Fintrack S.p.A. regard management and arising from trading transactions with FASTNET S.p.A. (30% interest administrative/accounting services. It is noted that the receivable held by FAN, the parent company of Elica), with Roal Electronics is related to the sale in 2007 of the shareholding in Roal Electronics S.p.A. (21.276% interest held by Fintrack, the ultimate parent S.p.A. company of Elica) and with Fintrack S.p.A. (company that indirectly The transactions with Roal Electronics S.p.A. relate to the supply of controls the Parent Company, Elica S.p.A.). electronic control systems for equipment.
In Euro thousands 12/31/2011
ELICA GROUP AND FINTRACK S.P.A.
11 34
ELICA GROUP AND ROAL ELECTRONICS S.P.A.
Receivables Payables Revenues and income Costs and charges
9. Positions or transactions arising from exceptional and/or unusual transactions In 2011, no operations classifiable in this category were recorded.
In Euro thousands 12/31/2011
Receivables Revenues and income
5 19
765 15
12/31/2010
1,013 13
10. Subsequent events For information on events after the year-end, reference should be made to the Directors’ Report.
In Euro thousands 12/31/2011
12/31/2010
86 479 84 2,933
41 1,137 56 3,275
Fabriano, March 21, 2012 For the Board of Directors The Executive Chairman Francesco Casoli
143
Payables Costs and charges
12/31/2010
P.
ELICA GROUP AND FASTNET S.P.A.
The “Procedures for transactions with Related Parties” is available on the company internet site, in the Investor Relations/Corporate Governance section.
Disclosure pursuant to article 149 of the CONSOB Issuer’s Regulation The following table, prepared pursuant to article 149 of the CONSOB Issuer’s Regulations, reports the payments made in 2011 for audit and other services carried out by the audit firm and entities associated with the audit firm.
Type of services
Company delivering the service
Company
AUDITING OF ACCOUNTS
DELOITTE & TOUCHE S.P.A.
ELICA S.P.A.
AUDITING OF ACCOUNTS
DELOITTE & TOUCHE S.P.A.
AIR FORCE S.P.A.
29
AUDITING OF ACCOUNTS
DELOITTE & TOUCHE S.C.
ELICAMEX S.A. DE C.V.
20
AUDITING OF ACCOUNTS
DELOITTE & TOUCHE SP.Z O.O.
ELICA GROUP POLSKA SP.ZO.O.
31
AUDITING OF ACCOUNTS
DELOITTE & TOUCHE GMBH
EXKLUSIV HAUBEN GUTMANN GMBH
32
AUDITING OF ACCOUNTS
DELOITTE & TOUCHE REGIONAL CONSULTING SERVICES LIMITED
ELICA TRADING LLC
15
AUDITING OF ACCOUNTS
DELOITTE TOUCHE TOHMATSU LIMITED
ARIAFINA CO., LTD
27
OTHER SERVICES
DELOITTE & TOUCHE S.P.A.
ELICA S.P.A.
13
OTHER SERVICES
DELOITTE DORADZTWO PODATKOWE SP. Z O.O.
ELICA GROUP POLSKA SP.ZO.O.
5
OTHER SERVICES
DELOITTE & TOUCHE S.C.
ELICAMEX S.A. DE C.V.
6
P.
144
TOTAL
Remuneration (in Euro thousands)
277
455
Type of services
Company delivering the service
Company
AUDITING OF ACCOUNTS
B S R AND CO. (K.P.M.G. AFFILIATE)
ELICA PB INDIA PRIVATE LTD.
14
AUDITING OF ACCOUNTS
PRICE WATERHOUSE COOPERS
ZHEJIANG PUTIAN ELECTRIC CO. LTD
36
OTHER SERVICES
B S R AND CO. (K.P.M.G. AFFILIATE)
ELICA PB INDIA PRIVATE LTD.
3
OTHER SERVICES
PRICE WATERHOUSE COOPERS
ZHEJIANG PUTIAN ELECTRIC CO. LTD
1
TOTAL
Remuneration (in Euro thousands)
54
Declaration of the Consolidated Financial Statements as per Article 81-ter of CONSOB Regulation No. 11971 of 14 May, 1999 and subsequent modifications and integrations The undersigned Andrea Sasso, as Chief Executive Officer, and Alberto Romagnoli, Executive responsible for the preparation of the corporate accounting documents of Elica S.p.A., affirm, and also in consideration of article 154-bis, paragraphs 3 and 4, of Legislative Decree No. 58 of 24 February, 1998: - the accuracy of the information on company operations and - the effective application, of the administrative and accounting procedures for the compilation of the consolidated financial statements for 2011. It is also declared that: —› the Consolidated Financial Statements: a) corresponds to the underlying accounting documents and records; b) were prepared in accordance with International Financial Reporting Standards adopted by the European Union and also in accordance with article 9 of Legislative Decree 38/2005; c) provide a true and correct representation of the economic, balance sheet and financial situation of the issuer and of the companies included in the consolidation;
The Chief Executive Officer Andrea Sasso
—› the Directors’ Report includes a reliable analysis on the performance and operating result as well as the situation of the issuer together with a description of the principal risks and uncertainties to which they are exposed.
145
Executive responsible for the preparation of corporate accounting documents Alberto Romagnoli
P.
Fabriano, March 21, 2012
P.
146
List of holdings in non-listed companies, including foreign, of over 10% at the reporting date
% Direct
% Indirect
ELICAMEX S.A. DE C.V.
QUERETARO (MEXICO)
100%
98%
2%
ELICA GROUP POLSKA SP.ZO.O
WROKLAW (POLAND)
100%
100%
AIRFORCE S.P.A.
FABRIANO (ITALY)
60%
ARIAFINA CO., LTD
SAGAMIHARA - SHI (JAPAN)
LEONARDO SERVICES S.A. DE C.V.
Held by (*)
value "direct"
value "indirect"
Consolidation method
ELICA GROUP POLSKA SP.ZO.O
28,640
625
FULL
N/A
N/A
22,276
N/A
FULL
60%
N/A
N/A
1,212
N/A
FULL
51%
51%
N/A
N/A
49
N/A
FULL
QUERETARO (MEXICO)
100%
98%
2%
ELICA GROUP POLSKA SP.ZO.O
77
2
FULL
EXKLUSIV HAUBEN GUTMANN GMBH
MUHLACKER (GERMANY)
100%
100%
N/A
8,869
N/A
FULL
ELICA INC.
CHICAGO, ILLINOIS (UNITED STATES)
100%
0%
100%
ELICAMEX S.A. DE C.V.
-
110
FULL
AIRFORCE GERMANY HOCHLEISTUNGSDUNSTABZUGSSYSTEME GMBH
STUTTGART (GERMANY)
95%
0%
95%
AIRFORCE S.P.A.
-
238
FULL
ELICA PB INDIA PRIVATE LTD.
PUNE (INDIA)
51%
51%
N/A
N/A
366
N/A
FULL
ZHEJIANG PUTIAN ELECTRIC CO. LTD
SHENGZHOU (CHINA)
70%
70%
N/A
N/A
15,321
N/A
FULL
ELICA TRADING LLC
SANKT PETERBURG (RUSSIAN FEDERATION)
70%
70%
N/A
N/A
71
N/A
FULL
I.S.M. SRL
CERRETO D'ESI (ITALY)
49.39%
49.39%
N/A
N/A
1,376
N/A
EQUITY
(*) NAME AND LEGAL FORM OF ANY SUBSIDIARY COMPANIES WHICH DIRECTLY HOLD INVESTMENTS IN NON-LISTED COMPANIES AND RELATIVE HOLDINGS.
N/A
In Euro thousands
147
% total
P.
Head Office
P.
148
P.
149
P.
150
Headquarters Elica S.p.A. Via Dante, 288 60044 Fabriano (AN), Italy P. +39 0732 610 1 F. +39 0732 610 249 info@elica.com www.elica.com www.elicagroup.com
Concept & graphic design zup associati, Perugia
Marketing&Innovation
Coordination
P. +39 0732 610 200 F. +39 0732 610 740
Investor Relations Manager Elica Laura Giovanetti
Investor Relations
Editing
P. +39 0732 610 727 F. +39 0732 610 390
Press Relations Manager Lea Ricciardi Communication Manager Riccardo Diotallevi
Press Relations
Investor Relations Manager Laura Giovanetti
P: +39 0732 610 315 F: +39 0732 610 289
Visual supervising Communication Manager Riccardo Diotallevi
Via Pontaccio, 10 20121 Milano (MI), Italy P. +39 02 72095812
Graphic Designer Stefano Menconi
Printing CTS Grafica, CittĂ di Castello
Elica Hi-Life Studio Andheri West, New Link Road, Laxmi Industrial Estate 400053 Mumbai Maharashtra
P.
Azuchimachi 3-5-12 Sumitomoseimei Honmachi Bldg 1f, Cyuou-ku, Osaka-shi, Osaka-fu, Japan 541-0052 P. +81 06 6265 2151
151
Showroom
The positive energy which is everpresent is translated into production energy, which for Elica conceives, creates and designs future possibilities.
After 40 years we see ourselves in the eyes of others. We wish to open up even more, interacting with you, listening to your proposals, your desires and the needs of all who enter into relations with us. Sharing is a verb which we treasure and the instruments are our eyes, ears and hands, led by experience and driven by research and by the thirst for knowledge.
We are designing a future which involves five dimensions. Four are the space-time architectural dimensions in which the physical and emotional interrelations between people takes place and the interaction between people and our products. The fifth dimension is yours, as varied and different as each of us - and as unique as your relationship with us.
Elica is a world hub.
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