BOARD OF DIRECTORS REPORT ON MANAGEMENT PERFORMANCE OF THE ENGINEERING GROUP

Transcription

1 ENGINEERING INGEGNERIA INFORMATICA SpA ROME, Via San Martino della Battaglia, 56 THE UNDERSIGNED AND FULLY PAID UP SHARE CAPITAL IS EQUAL TO 31,875,000 TRADE REGISTER NO ROME CHAMBERS OF COMMERCE REA NO QUARTERLY REPORT AS AT 31 MARCH 2014 BOARD OF DIRECTORS REPORT ON MANAGEMENT PERFORMANCE OF THE ENGINEERING GROUP 1. CORPORATE BODIES GROUP ACTIVITIES FORM, CONTENT AND ACCOUNTING PRINCIPLES SCOPE OF CONSOLIDATION BUSINESS PERFORMANCE NET FINANCIAL POSITION SIGNIFICANT EVENTS OCCURRED DURING THE QUARTER SIGNIFICANT EVENTS OCCURRED AFTER THE CLOSE OF THE QUARTER INFRAGROUP OPERATIONS TREASURY SHARES OUTLOOK CERTIFICATION ACCORDING TO ART BIS LGS. DECREE N. 58/

2 1. CORPORATE BODIES Board of Directors Following Ordinary Shareholders Meeting decision of April 24, 2012 and Board of Directors decision of April 24, 2012 the Board of Directors has been re-appointed for the three-year period , as follows: Michele Cinaglia Paolo Pandozy Marilena Menicucci Armando Iorio Massimo Porfiri Giuliano Mari Dario Schlesinger Alberto De Nigro Christoph Sebastian Stephan Giulini Joerg Zirener Chairman Chief Executive Officer Director Executive Director Independent Director Independent Director Independent Director Independent Director Independent Director Independent Director On March 14, 2014 the Board of Directors of Engineering Ingegneria Informatica S.p.A. provided for the co-optation of two new Directors, Christoph Sebastian Stephan Giulini and Joerg Zirener, representing OEP Italy HIGH TECH DUE S.r.l. The appointment of the two directors will be deliberated during the Ordinary Shareholders meeting occurring on May 15, The Ordinary Shareholders meeting, confirmed the two new directors. The so-called one-tier system of governance system adopted by Engineering Ingegneria Informatica S.p.A. required that the Internal Control and Risk Management Committee, delegated to the Board of Directors, be entirely composed of independent directors. Also the Remuneration Committee, the Appointments Committee and the Committee for Transactions with Related Parties are comprised only of independent directors. Secretary Luca Sabelli Lead Independent Director Giuliano Mari Director in charge of the internal control and risk management Paolo Pandozy Quarterly Report at 31 March /15

3 Internal Control and risk management Committee Chairman Massimo Porfiri Members Alberto De Nigro Dario Schlesinger Remuneration Committee Chairman Giuliano Mari Members Massimo Porfiri Alberto De Nigro Appointments Committee Chairman Giuliano Mari Members Massimo Porfiri Dario Schlesinger Committee for Transactions with Related Parties Chairman Massimo Porfiri Members Alberto De Nigro Dario Schlesinger Supervisory Board Chairman Massimo Porfiri Members Alberto De Nigro Dario Schlesinger Executive Responsible Armando Iorio Independent Auditors Deloitte & Touche S.p.A. Specialist BANCA IMI S.p.A. Quarterly Report at 31 March /15

4 2. GROUP ACTIVITIES Engineering is the leading domestic provider of integrated ICT services, products and consultancy. The company was founded in Padua on 6 June 1980 and has been listed on the FTSE STAR segment of the Italian Stock Market since December With approx. 7,300 employees, 40 offices throughout Italy, the EU and Latin America and with an agent in the United States, the Group derives approx. 11% of revenues abroad and manages IT initiatives in over 20 countries with projects for the Industry, Telecommunications, Banking and Public Administration sectors. The Group operates in the outsourcing and Cloud Computing market through an integrated network of 6 data centres located in Pont St. Martin (Aosta), Turin, Padua, Vicenza, Milan and Rome, which manages approx. 300 clients with an infrastructure corresponding to the highest technological, qualitative and security standards. The Engineering market consists of medium-large clients, both in the private (banks, insurance companies, industry, services and telecommunications) and in the public sector (healthcare, local and central public administration and defence) to which SMEs and small municipalities have now been added, for which dedicated offers are targeted in the areas of ERP-CRM and tax collection, respectively. Quarterly Report at 31 March /15

5 The Group plays a leadership role in software research, coordinating a number of national and international projects through a network of scientific partners and universities across Europe. It develops Cloud computing solutions and operates in the Open Source community. The Group operates in Software and IT Services, with a market share of around 7.2% in Italy and a leading position in numerous vertical sectors, due to a wide range of proprietary solutions, from banking compliance (SISBA, ELISE), to Billing and CRM for Utilities (NET@Suite), to integrated diagnostics and administration solutions for Healthcare (AREAS), WFM systems (OverIT) and mobile platforms for TLC. In relation to system integration, application management and outsourcing, the Group s market share considerably exceeds 10%. As a result of its business model, the Group creates tangible value in its various areas of operation, as it can meet all the needs of its existing and potential clients and define, plan and develop concretely efficiency and effective IT strategies. Quarterly Report at 31 March /15

6 3. FORM, CONTENT AND ACCOUNTING PRINCIPLES With relation to the implementation of the policy on Transparency and complying with the communication n 1814 of 28/1/2008 issued by Borsa Italiana and provisions of Consob communication of 30/4/2008 DEM/ , the information contained herein has been drafted according to the instructions contained in the Art. 154-ter Financial Reports of the Testo Unico della Finanza, introduced by Legislative Decree 195/2007. Economic and financial results herein contained have been drafted in compliance with International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS), validated by the European Union, as well as to all relevant interpretations of the International Financial Reporting Interpretation Committee (IFRIC) and of the Standing Interpretation Committee (SIC). The companies included within the scope of the consolidation have been consolidated lineby-line, with the exception of the ones that are not operative and winding-up evaluated with net equity method, and results for subsidiaries and the parent company are based on the same financial year. All evaluations have been made considering the Group continuing the activities in the foreseeable future. Achieved results as at March 31, 2014 include the companies shown in the scheme on paragraph 4. Consolidated income statement represents the progressive situation as at the date and the one of the reference quarter compared with the same periods of previous year. Quarterly Report at 31 March /15

7 In this present report, some alternative performance indicators not envisaged by IFRS are used, in line with recommendation CESR/05-178b published on 3 November In particular, Ebitda (Gross Operating Margin) is calculated, with reference to the income statement tables, from the operative income gross of amortizations, provisions and writedowns. Instead, Ebit matches with the operating income. Furthermore, some estimates and assumptions have been made, evenly on all intermediate shown periods, having an effect on economic values and assets. If in the future, these estimates and assumptions, based on management s best evaluations, should differ from actual happenings, they will be modified in the period in which these circumstances will change. These evaluations are inspired to the principle of fairness and take into account standard procedures, past experiences, the involvement of external consultants as well as market conditions. Net financial position figures are compared with previous quarter closing figures and with last financial year figures. Values in this quarterly report are expressed in millions of Euros. Quarterly Report at 31 March /15

8 4. SCOPE OF CONSOLIDATION Following the scope of consolidation as at March 31, Engineering Ingegneria Informatica S.p.A. Engiweb Security S.p.A. 100% 100% Engineering Tributi S.p.A. Engineering Sardegna S.r.l. 100% 100% Engineering International Inc. Engineering International Belgium S.A. 100% 100% Engineering.mo S.p.A. OverIT S.r.l. 95% 70% MHT S.r.l. Nexen S.p.A. 95% 100% Sicilia e-servizi Venture S.c.r.l. * Engineering do Brasil S.A. 75% 100% Servizi Telematici Siciliani S.r.l. * Engi da Argentina S.A. 90% 100% EngO S.p.A. * * Sicilia e-servizi Venture S.c.r.l., Servizi Telematici Siciliani S.r.l. and EngO S.p.A. are in liquidation Quarterly Report at 31 March /15

9 5. BUSINESS PERFORMANCE The results of the first quarter have been characterized by the significant improvement in cash generation, a growth in revenues, and by the confirmation of profitability levels on our projects (the comparison with 2013 must be evaluated net of the extraordinary sale of software licences, influencing in a positive way the first quarter 2013). (Amounts in mn) 1 / 1-31 / 03 ECONOMIC FIGURES yoy Net revenues % Other revenues and income Total revenues % Raw materials, consumables and goods % Services % Personnel % Other overhead costs % Production costs % Gross operating result (EBITDA) % % on net revenues 9.8% 8.6% Operating result (EBIT) % % on net revenues 7.0% 5.4% Result before taxes (EBT) % % on net revenues 7.0% 5.2% Total revenues reached mn, + 4.6% on mn on previous year, obtained in market still influenced by a negative trend in the IT (-4.2%) and TLC (-4.3%) sectors (*); Gross operating result (EBITDA) came in at 16.6 mn, compared with 18.2 mn registered in the first quarter 2013; Operating result (EBIT) reached 10.3 mn, compared with 12.9 mn registered in first quarter (*) Source SIRMI SPA April 2014 Quarterly Report at 31 March /15

10 These results are in line with management expectations, especially if taking in consideration the integration process of the company Engineering.mo (ex T-Systems Italia) and the consolidation of the newly-acquired company MHT. As at March 31, 2014, Group headcount registered 7,233 employees, +324 units compared to the same period 2013, due to the entrance in the group of former T-Systems Italia (today Engineering.mo) and MHT. 6. NET FINANCIAL POSITION Net financial position at March 31, 2014 registered 36.7 mn, compared with mn of the same period of previous year, with a positive increase of about 76 mn. It is particularly significant the comparison between December 31, 2013, highlighting a trend change on the first quarter, historically characterized by a strong cash absorption, which, for the first time, it closes substantially with a break even. This element attests the effects of the regulation on credit payments for current activities for Public Administration clients. (Amounts in mn) NET FINANCIAL POSITION 31 / 03 / / 12 / / 03 / 2014 Non current liabilities (23.0) (19.5) (16.7) Liquid Cash Current financial liabilities (106.2) (87.7) (81.3) TOTAL NET FINANCIAL POSITION (39.4) Quarterly Report at 31 March /15

11 7. SIGNIFICANT EVENTS OCCURRED DURING THE QUARTER Main events: On January 28, 2014 the company Sicilia e-servizi Venture S.c.r.l. has been wound-up and all personnel has been hired on January 23 by the company Sicilia e Servizi S.p.A. On February 3, 2014 Engineering Ingegneria Informatica S.p.A. acquired a 70% stake of share capital in the company MHT S.r.l.. On March 14, 2014 the Board of Directors of Engineering Ingegneria Informatica S.p.A. has appointed by co-optation of two new Directors: Christoph Sebastian Stephan Giulini and Joerg Zirener, thus re-establishing board plenum. On March 26, 2014 the company Sicilia e-servizi Venture S.c.r.l., sold to the Regione Siciliana the entire stake owned in the company Sicilia e Servizi S.p.A., equal to 49%, now in liquidation. 8. SIGNIFICANT EVENTS OCCURRED AFTER THE CLOSE OF THE QUARTER The Ordinary shareholders meeting of Engineering Ingegneria Informatica S.p.A., occurring on May 15, 2014, deliberated: to distribute, as dividends, a portion of net profit for the year amounting , equal to euro per ordinary share in circulation; A dividend payout date starting from July 10, 2014, ex dividend date on July 7, 2014 and record date on July 9, 2014; On May 5, 2014 Engineering Ingegneria Informatica S.p.A. acquired the entire equity stake held by Gianni Fuolega in the company Nexen S.p.A., corresponding to a 5% stake of share capital. Through this acquisition, Engineering Ingegneria Informatica S.p.A. fully owns the share capital in the company. On May 15, 2014 the Ordinary Shareholders meeting appointed the two new directors, Christoph Sebastian Stephan Giulini and Joerg Zirener. Quarterly Report at 31 March /15

12 9. INFRAGROUP OPERATIONS Pursuant to Consob recommendation no of 20 February 1997, this is to certify that operations within the Group took place at normal market conditions and there were no atypical operations and operations with related parties. It should be noted that relations among Engineering Group companies consist mainly of the supply of services required in customer projects, generating shared revenues/costs for 10.7 mn. 10. TREASURY SHARES On May 15, 2014 the Shareholders General meeting voted in favour of a treasury share buyback plan up to a maximum of shares, within a maximum time period of 18 (eighteen) months. Treasury shares, held as at 31 March 2014, totalled n. 310,027 for a value of 6,711,246.26, recorded as a reserve under net equity, in accordance with IAS 32, at an average carrying value of per share. At the date of approval of the present report, the number of treasury shares held in portfolio of the company remained unchanged. Quarterly Report at 31 March /15

13 11. OUTLOOK During the first quarter 2014 total revenues have grown, registering a solidity in profitability margins, as a result of the performance generated both in Italy as well as abroad. The integration process with former T-Systems Italia (today Engineering.mo) continues, accordingly to plans which foresee, during 2014, a significant recovery in profitability margins. The first results of joint trade politics on ERP Microsoft Dynamics market resulting from MHT acquisition are encouraging and open good business opportunities in the near future. A careful evaluation in potential investments, mainly abroad, continues. The results obtained in cash generation, which historically experiences a regression during the first quarter compared to the figures registered at the end of previous year, confirm the improvement in receipts dynamics on Public Administration clients. Given these first quarter results, we confirm the anticipation already given during the approval of year-end 2013 financial statements with regards to the growth expectations for this current year. Quarterly Report at 31 March /15

14 12. CERTIFICATION ACCORDING TO ART BIS LGS. DECREE N. 58/1998 DOCUMENTS IN COMPLIANCE WITH ART BIS, PARAGRAPH 2, LGS. DECREE N. 58/1998 DATED 24 FEBRUARY 1998 AND SUBSEQUENT INTEGRATIONS SUBJECT: First quarter report, as at 31 March 2014 The undersigned Armando Iorio, in the position of Executive responsible for the preparation of the accounting documents of Engineering Ingegneria Informatica S.p.A., certifies that the economic and financial figures shown on this quarterly report as at 31 March 2014 correspond to the results of accounting records, as provided by art. 154 bis, paragraph 2, Lgs. Decree n 58/1998. Rome, 15 May 2014 The Executive responsible for the preparation of the accounting documents Armando Iorio Quarterly Report at 31 March /15

15 ENGINEERING GROUP (Amounts in mn) 1 / 1-31 / 03 ECONOMIC FIGURES yoy Net revenues % Other revenues and income Total revenues % Raw materials, consumables and goods % Services % Personnel % Other overhead costs % Production costs % Gross operating result (EBITDA) % % on net revenues 9.8% 8.6% Operating result (EBIT) % % on net revenues 7.0% 5.4% Result before taxes (EBT) % % on net revenues 7.0% 5.2% (Amounts in mn) NET FINANCIAL POSITION 31 / 03 / / 12 / / 03 / 2014 Non current liabilities (23.0) (19.5) (16.7) Liquid Cash Current financial liabilities (106.2) (87.7) (81.3) TOTAL NET FINANCIAL POSITION (39.4) Quarterly Report at 31 March /15