ELITE WORLD S.A. CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2013
ELITE WORLD AT A GLANCE Elite World Share ISIN LU0252519037 Stock exchange symbol E1M Stock exchange Frankfurt Stock Exchange / Entry Standard M M Facts & Figures 30/06/2013 30/06/2012 Change in % Revenue 29 26 # + 12 % EBITDA -1.8 1.9 # - 195 % EBIT -2.1 1.7 # - 224 % Total assets 31 30.7 # + 1 % Cash 5.9 8.1 # - 27 % Reported equity -5.6 7.9 # - 171 % Board of Directors Mr. Silvio SCAGLIA Ms. Stefania VALENTI Mr. Andrew GLEESON Mr. Paul JOHNSTON Mr. Serge MARION Mr. Paolo BARBIERI Chairman of the Board and Non-Executive Director Chief Executive Officer and Executive Director Chief Financial Officer and Executive Director Non-Executive Director Non-Executive Director Non-Executive Director 2
Contents Page Management report 5 Consolidated interim statement of comprehensive income 6 Consolidated interim statement of financial position 7 Consolidated interim statement of changes in equity 9 Condensed Consolidated interim statement of cash flows 10 Notes to the consolidated financial statements 11 3
Index to the notes to the consolidated financial statements Page 1. General information 11 2. Significant accounting policies 11 3. Revenue 12 4. Segment information 12 5. Other gains and losses 13 6. Investments in associates 13 7. Subsidiaries 13 8. Significant Events 14 4
MANAGEMENT REPORT 5
CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME Consolidated statement of profit or loss and other comprehensive income (Unaudited) (Unaudited) 30/06/2013 30/06/2012 Continuing operations Total Revenues 28 941 772 26 049 074 Total Cost of sales -18 935 315-16 398 588 Gross profit 10 006 457 9 650 487 Professional services -3 112 817-1 440 178 Office expenses -596 464-582 101 Staff costs (including Social Security costs) -6 340 597-3 997 904 Other operating expenses -1 470 569-1 424 002 Other Taxes -282 851-286 529 Depreciation -194 538-117 478 Amortisation -144 511-124 796 Operating profit / (loss) -2 135 888 1 677 499 Finance costs -1 019 013-56 890 Finance income 725 506 209 042 Other operation revenues and expenses -1 072 731 214 671 Share of profits of associates 137 303 Profit / (loss) before tax from continuing operations -3 502 126 2 181 624 Income tax expense -25 514-16 341 Profit / (loss) for the first six months from continuing operations -3 527 641 2 165 284 Profit / (loss) for the first six months from discontinued operations 0 0 PROFIT / (LOSS) FOR THE FIRST SIX MONTHS -3 527 641 2 165 284 Other comprehensive income, net of income tax Exchange differences on translating foreign operations 72 490 4 479 Other comprehensive income for the year, net of tax 72 490 4 479 TOTAL COMPREHENSIVE INCOME FOR THE FIRST SIX MONTHS -3 455 151 2 169 762 Minority Share of Profit of Subsidiaries -218 249-265 186 Profit / Loss attributable to: Owners of the Company -3 745 890 1 900 098 Non-controlling interests -218 249-265 186-3 527 641 2 165 284 Total comprehensive income attributable to: Owners of the Company -3 673 400 1 904 577 Non-controlling interests -218 249-265 186 Earnings per share From continuing and discontinued operations -3 455 151 2 169 762 Basic (cents per share) -19 10 6
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION Consolidated statement of financial position (Unaudited) (Audited) 30/06/2013 31/12/2012 Assets Non-current assets Goodwill 0 0 Other intangible assets 806 292 839 324 Property, plant and equipment 2 077 840 2 032 289 Investments in associates 0 969 820 Other financial assets 3 043 170 2 068 548 Deferred tax assets 531 575 531 575 Total non-current assets 6 458 878 6 441 556 Current assets Trade and other receivables 16 174 488 16 320 040 Current tax assets 757 546 1 297 820 Other assets 1 731 634 1 672 775 Cash and bank balances 5 905 099 7 472 896 Total current assets 24 568 767 26 763 531 Total assets 31 027 645 33 205 087 7
Consolidated statement of financial position (Unaudited) (Audited) 30/06/2013 31/12/2012 Equity and liabilities Capital and reserves Issued capital 14 298 185 14 298 185 Reserves 304 791 304 791 Retained earnings -16 970 332-8 513 854 Result of the year -3 673 400-9 005 545 Equity attributable to owners of the Company -6 040 756-2 916 424 Non-controlling interests 478 324 260 075 Total equity -5 562 432-2 656 349 Non-current liabilities Borrowings 4 552 215 4 356 952 Retirement benefit obligation 412 027 412 027 Provisions 3 119 520 3 210 538 Deferred tax liabilities 519 928 519 928 Finance lease 44 792 44 792 Total non-current liabilities 8 648 483 8 544 237 Current liabilities Borrowings 6 753 Trade and other payables 19 862 138 19 792 939 Current tax liabilities 3 060 433 2 813 643 Deferred revenue 324 633 1 610 426 Other liabilities 4 694 391 3 093 436 Total current liabilities 27 941 594 27 317 197 Total liabilities 36 590 077 35 861 434 Total equity and liabilities 31 027 645 33 205 087 8
9 ELITE WORLD CONSOLIDATED INTERIM FINANCIAL STATEMENTS 2013 CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY Consolidated statement of changes in equity in Retained Additional earnings Attributable Non Share paid in Legal including result to owners -controlling capital capital Reserves for the year of the parent interests Total Balance at 31 December 2011 14 298 185 0 277 477-8 785 230 5 790 432 175 673 5 966 105 Profit / Loss for the year -9 005 546-9 005 546 185 650-8 819 895 Other comprehensive income for the year, net of income tax -101 309-101 309-10 510-111 818 Transfer 27 314-27 314 0 0 0 Acquisition of non-controlling interest in Elite Model Management London Ltd -86 417-86 417 86 417 0 Acquisition of non-controlling interest in Elite Model Management Barcelona -2 844-2 844 2 844 0 Disposal of a subsidiary: Elite Retail S.A. 489 260 489 260 0 489 260 Payment of dividends 0 0-180 000-180 000 Balance at 31 December 2012 14 298 185 0 304 791-17 519 399-2 916 424 260 075-2 656 349 Profit / Loss for the first six months 0 0 Other comprehensive income for the half year, net of income tax -3 673 400-3 673 400 218 249-3 455 151 Transfer 0 0 Merger Elite Talent with Elite Model Management SA 54 711 54 711 54 711 Other Variation 494 356 494 356 494 356 Balance at 30 June 2013 14 298 185 0 304 791-20 643 732-6 040 756 478 324-5 562 433
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS Condensed Consolidated statement of financial position (Unaudited) (Unaudited) 30/06/2013 30/06/2012 EBIT -2 135 888 1 677 499 + Depreciation and amortization 339 048 242 275 +/- Other income / expenses -1 319 262 492 264 +/- changes in account receivables ' Trade debtors 242 672 2 402 181 ' Model receivables -247 264-409 736 +/- changes in other assets 739 487 2 052 294 +/- Net capex / divestitures in fixed assets (tangible and intangible) -351 568-450 890 +/- changes in financial assets -112 731-844 575 +/- changes in account payables ' Trade creditors 884 145-797 031 ' Model payables 308 763-607 069 +/- changes in other current liabilities 79 492-2 340 098 +/- changes in financial debt -31 781-1 983 999 +/- changes in financial debt intercompany 37 091-6 447 +/- changes in equity (capital increases, dividends, etc) -54 700 +/- changes in equity (non-controlling interest) 0 +/- cash flow -1 567 797-628 031 Beginning cash balacnce 7 472 896 8 766 873 Closing cash balance 5 905 099 8 138 842 10
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. General information Elite World S.A. (the Company) is a limited company which was incorporated on December 14th 1999 and organized under the laws of Luxembourg for an unlimited period. Elite World S.A. is the Group's ultimate parent company being in scope of consolidation. The parent company is Pacific Global Management S.A.R.L. and the ultimate parent of the Group is SMS Finance S.A. The registered office of the Company is at 28, boulevard d Avranches - L-1160 Luxembourg. The Company s register number is B 73 844. The official publication was made on April 12, 2000. The financial year starts on January 1 and ends on December 31 of each year. Elite World s shares are listed on the Entry Standard of the Frankfurt Stock Exchange. The main activity of the Company is to carry out all transactions pertaining directly or indirectly to the acquiring of participating interests in any enterprise in whatever form and the administration, management, control and development of these participating interests. In particular, Elite World is one of the world s leading model agencies. The Group s principal activity is to act as a model booking agent for some of the leading and most promising models worldwide. The Group also provides agency and management services to independently owned agencies; licenses trademarks to distributors of consumer products and promotes model look competitions. Based on the criteria defined by the Article 309 (1) of the August 10, 1915 Luxembourg law and the general terms and conditions of DBAG for the Entry Standard, the Company has the obligation to draw up consolidated accounts and a consolidated management report for the period ending December 31, and semi-annual accounts statement and the interim management report. 2. Significant accounting policies 2.1. Basis of preparation of the consolidated financial statements The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union ('EU IFRS'). These are the Group's consolidated interim financial statements. The date of transition to IFRS was 1 January 2009. The consolidated financial statements for the year ended 31 December 2012 (including comparatives) were approved and authorized for issue by the Board of directors on May 30, 2013 (see note Approval of financial statements). Under the security regulations act of Euroland, amendments to the financial statements are not permitted after approval. The accounting policies for the consolidated interim financial statements are unchanged in relation to the consolidated financial statements of the last financial year. They are in conformity with IAS 34 Interim Financial Reporting. The interim financial statements do not contain all the explanatory notes and disclosures prescribed for the financial statements of a full financial year and should thus be read in conjunction with the consolidated financial statements in accordance with the IFRS as at 31 December 2012. The interim financial statements were neither subjected to an audit review in accordance with Article 309 (1) of the August 10, 1915 Luxembourg law. It is also recommended that this financial report be considered together with any public announcement made by Elite World and its controlled entities during the period ended 30 June 2013.The consolidated interim financial statements are presented in Euro. 11
3. Revenue The following is a break-down of the Group's revenue by category of activity: Revenue 30/06/2013 30/06/2012 Modeling Revenue 26 416 918 23 514 853 Licensing Revenue 1 685 269 1 881 442 Elite Model Look Revenue 839 585 652 780 28 941 772 26 049 074 See next note segment information for an analysis of revenue by major products and services. 4. Segment information 4.1. Products and services from which reportable segments derive their revenues Information reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance focuses on types of goods or services delivered or provided. The Group's reportable segments under IFRS 8 are therefore as follows. Modeling: - catwalk presentations, shooting, (for example) - sale of rights Licensing: - products sold by licensees using Elite brand EML: - Elite Model Look contests Elite Model look expenses relating to the Elite Model Look Contest are generally covered by sponsorship income which is included in Licensing Revenues. Group function: - Holding / Dormant companies 4.2. Segment revenues and results The following is an analysis of the Group's revenue and gross profit from continuing operations by reportable segment. Segment revenue Segment operating profit Segment revenues and results 30/06/2013 30/06/2012 30/06/2013 30/06/2012 Modeling Revenue 26 416 918 23 514 853 8 223 780 8 072 900 Licensing Revenue 1 685 269 1 881 442 1 441 864 1 677 410 Elite Model Look Revenue 839 585 652 780 340 813-99 823 Group function / Dormant Cy Total for continuing operations 28 941 772 26 049 074 10 006 457 9 650 487 Segment profit represents the profit earned by each segment without allocation of central administration costs and directors' salaries, investment income, other gains and losses, finance costs and income tax expense. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance. 12
5. Other gains and losses 5.1. Other operation revenues and expenses Other operation expenses for 1 072 K relate primarily to a settlement payment for the early termination of a license agreement (695 K ) and the litigation costs concerning a case against a former model (193 K ). 6. Investments in associates Details of the Group's associates at the end of the reporting year are as follow: 30/06/2013 31/12/2012 31/12/2011 Entity City Country % owned % owned % owned ABC Distribution S.A.S. Paris France 3.00 % 10.50 % 10.50 % The Group sold 7.5 % of ABC Distribution shares in the first half 2013. This company is no longer consolidated under the Equity Method Summarized financial information in respect of the Group's associates is set out below. Investments in associates 30/06/2013 31/12/2012 Investments in associates 0 969 820 7. Subsidiaries Details of the Group's subsidiaries at the end of the reporting period are as follows. 30/06/2013 31/12/2012 31/12/2011 Entity City Country % owned % owned % owned Elite Management S.A. Barcelona Spain 99.96 % 99.96 % 94.96 % Elite Model Management Amsterdam B.V. Amsterdam Holland 100 % 100 % 100 % Elite Model Management Limited London United Kingdom 100 % 100 % 100 % Elite Model Management S.A. Fribourg Switzerland 100 % 100 % 100 % Elite Model Management SARL Milan Italy 100 % 100 % 100 % Elite Model Management SARL Paris France 100 % 100 % 100 % Nathalie SARL Paris France 55 % 55 % 55 % Inmod AG Fribourg Switzerland 100 % 100 % 100 % Elite Licensing Company S.A. Fribourg Switzerland 100 % 100 % 100 % Elite Media SARL Paris France 100 % 100 % 100 % Elite Model Management Prague Sro Prague Czech Republic 60 % 60 % 60 % Elite Model Management Bratislava Sro. Bratislava Slovakia 60 % 60 % 60 % Elite Model Management Copenhagen Copenhagen Denmark 100 % 100 % 100 % Elite Model Management London London United Kingdom 69.0 % 69.0 % 50.1 % Angels Model Management SARL Paris France 100 % 100 % 100 % Society Model Management INC New York USA 100 % 100.0 % * Elite Entertainment S.A. Fribourg Switzerland 100 % 100 % 100 % ** Elite Talent Management S.A. Fribourg Switzerland 100 % 100 % 100 % * Non-trading companies ** Merged by absorption with retroactive effect as of January 1, 2013 Those subsidiaries are fully consolidated. 13
8. Significant Events At a Board Meeting held on May 30, 2013 the decision was taken to not to renew Mr. Sandro Gibillaro s mandate as a director. At a subsequent Board Meeting held on June 24, 2013 Mr. Silvio Scaglia was appointed to the Board as Chairman. 14