annual report 2010

Transcription

annual report 2010

C.L.N. Group
Annual report & accounts
year ended december 31, 2010
BOARD OF DIRECTORS, BOARD OF STATUTORY
AUDITORS AND INDEPENDENT AUDITORS of C.L.N. S.p.A.
BOARD OF DIRECTORS
Chairman
Chief Executive Officer
Directors
Anna Reinaudo
Aurora Magnetto
Gabriele Perris Magnetto
Vincenzo Perris
Vijay Goyal
Francois Max Eduard Rumpf
Robrecht Himpe
Philippe Darmayan
Francois Daniel Golay
Jean Luc Maurange
Raffaella Perris Magnetto
Brian Edward Aranha
Mario Zibetti
Board of Statutory Auditors
Chairman
Mario Pia
Standing Auditors
Vittorino Pizzoni
Giovanni Sala
Alternate Auditors
Alessandra Odorisio
Riccardo Ronchi
INDEPENDENT AUDITORS DELOITTE & TOUCHE S.P.A. 
83
C.L.N. S.p.A. and its Subsidiaries -the CLN Group - Annual Report & Accounts 2010
84
REPORT ON OPERATIONS
To the Shareholders:
After recording depreciation and taxation in the amount of Euro 89 million and Euro 24 million,
respectively, the profit reported by the Group for the year ended December 31, 2010 amounted
to Euro 13 million. In order to ensure a more immediate and proper grasp of the operating and
financial performance honed by the Group over the last twelve months, a quick glance is given
to the economic landscape, with a keen eye steered toward the marketplace in which the Group
operates.
The Steel Market
After a period of steady and meaningful growth by EU-27 apparent steel consumption over the years
from 2003 to 2007, during which consumption hit a decade high of 204 million tons in 2007, the progressive contraction in apparent steel demand, taking shape in fourth-quarter 2008 and continuing
throughout 2009, unfurled an all-time low at 118 million tons (-42%) exactly in 2009. In 2010, the
welcome improvement echoing across the international plateau led to apparent consumption spiking
a net recovery (+19%) in the UE-27 and in the other geographies, such as the USA, harder hit by 2009,
resurfacing in the UE-27 to 140 million tons, still far short (-31%) of the rate recorded in 2007.
After enduring in 2008 a 1.4% year-on-year downturn from 2007 and a further 8% year-on-year decline in 2009 from 2008, global steel production in 2010 regained vigor and harnessed +15% growth at
the world level and +25% growth in the UE-27, with Italy at just under +30% (or +6 million tons).
Yet again in the limelight were the steel production absolute values reflected by Asia and, more
pointedly, by China, thus edging up BRIC’s share to 60%, with China alone accounting for 45% of
global steel production, against an Asian backdrop accounting for 63% of total steel production.
Unbridled downsizing of consumption in 2009, particularly marked in the more developed markets, the UE in primis, was undoubtedly prompted by depressed real consumption (-23%) in many
bedrock sectors (historically led by the automotive and construction markets), albeit above all in
terms of apparent consumption (-35%) by aggressive destocking throughout 2009.
2010 indeed delivered a significant recovery, where apparent consumption (+19%) outpaced real
consumption (+3%), which in these terms also set the steel-distribution sector as standout, with 2010
ploughing an improvement over 2009 in the range of some +15%, more significant in the sevenmonth period January/July than in the last four-month period September/December of the year.
Also benefiting therefore from positive market trending was the profitability of corporations and
enterprises specializing in steel distribution, despite sector-to-sector and product-to-product sharp
disconnect, with major adversities encountered by the construction sector and relative protruded
products (rods, girders and rolled steel sections).
Reconfirmed in 2010 was the structural increase of volatility, with shorter iron metallurgy cycles,
characterized by bolt-on price gyrations, the dynamics of which was affected by the thrust waged
by key raw materials (primarily iron ore, coking coal and scrap), nurtured by Asia’s insatiable appetite for steel, the region where the international prices of steel products in US$/ton are “formed”
and from there arriving in the EU “translated” by the €/US$ conversion rate, yet another unforeseeable variable of our system.
85
Aggravated by contracting consumption in 2009, the aggressively competitive environment prevailing
historically in the steel-distribution service center segment worked against harnessing bolt-on operating
profitability, inasmuch as the market placed in evidence certain critical “steps” that, at the end of the day,
clawed into the result reported for the year, which remains nonetheless at more than positive values.
In a nutshell, the meaningful recovery in sales volume, in lockstep with a clear improvement in
marginality, driven through by overhead paring efficiencies, enabled your Group to obtain satisfactory key profitability performance indicators for 2010.
The Automotive Market
Looking at the passenger car (“PSC”) market, new registrations at the UE-27 level retreated 5.5% in
2010 to 13.4 million vehicles year-over-year, primarily due to car-scrapping incentives fading out in
a number of countries. Moving across the territorial landscape, the more significant declines were
averted in Germany (-23.4%), in Italy (-9.2%) and in France (-2.2%), whilst gaining headway were
new registrations in Spain (+3.1%) and in the UK (+1.8%). As regards the performances spiked
by the major carmaker customers of the CLN Group in Europe, 2010 bears witness to downward
curved new registrations being delivered by the Fiat Group (-17.4%) and PSA (-1.8%), whilst seeing their car sales tracking an upward route were Renault (+4.4%) and BMW (+5.7%).
Looking at the Light Commercial Vehicles (“LCV”) market in Europe, LCV sector trending (+8.7%)
went against the tide followed by the PSC sector: Italy +6.2%, France +11.5%, Germany +16%,
Spain +8.8%, and the UK +19.5%. As regards the performances spiked by the major LCV customers of the CLN Group in Europe, the new registrations delivered by all of these reflected significant
headway, particularly those delivered by Renault (+20%) and hard on heel those delivered by the
Fiat Group (+7.4%) and PSA (+7%).
Looking at the South America market, carried forward from the years before was upbeat market
trending where the shining spots for sales growth were Brazil up 10.6% and Argentina up 28.8%,
whilst the Turkish market grew even more remarkably 37%
Showing its mettle, the Automotive Division rose to the challenges posed by the PSC market drawing
strength from its customer diversification, its market footprint in certain segments (such as those A/B)
hit less harshly by the market downturn, its geographic landscape diversification, and its enhanced
array of products and processes; the LCV market improvement generated conversely unquestionable
benefits at the level of operating results. The diversification and growth strategies put in place over the
last few years, and the production reorganization and reshaping step-actions launched in 2009 and
carried forward in 2010 (particularly in Italy and France), enabled the Automotive Division to hike
more than satisfactory results notwithstanding the adversities posed by the market of reference.
THE GROUP AT A GLANCE
Organized around three distinct business units, the CLN Group specializes in three distinct business segments: Steel Service Centers, Steel Wheel Manufacturing (car, motorbike and industrial/
commercial vehicles), and Press-Forged Manufacturing for automobiles and commercial vehicles.
The following chart sets out the CLN Group’s legal and organizational framework at December
31, 2010.
86
Report on operations
CLN SPA
(Italy)
97,50%
100%
MW ROMANIA
(Romania)
100%
D.R.
(France)
100%
MW
DEUTSCHLAND
(Germany)
100%
100%
100%
100%
10%
50%
69,50%
MAC (Italy)
50%
50%
100%
wagon
AUTOMOTIVE
(Italy)
25%
TESCO GO (Italy)
9,25%
EMARC (Italy)
100%
MA FRANCE
(France)
EUROSTAMP
(France)
100%
SANREMO
RADAELLI
(Italy)
UM CORPOR.
(France)
100%
MA
AUTOMOTIVE
DEUTSCHLAND
(Germany)
100%
99,35%
in liquidazione
MW
SCANDINAVIA
(Scandinavia)
49%
EMARC (Romania)
100%
Ingenieria de
productos
metalicos
(Spain)
MA
AUTOMOTIVE
SOUTH AFRICA
(South Africa)
100%
AR
MACHINE CO.
(Iran)
MA
AUTOMOTIVE
ROSSLYN
(South Africa)
DMW (PTY) LTD
(South Africa)
80%
100%
MW Eurodisk
TRADE LLC
(Russia)
80%
80%
MW
EURODISK
LLC
(Russia)
EXCEL RIM Co.
ltd
(Japan)
SHL (Poland)
35%
18,99%
MW LUBLIN
(Poland)
DELFO POLSKA
(Poland)
DP metal
processing
(Poland)
PROMA POLAND
(Poland)
100%
85,1%
COSKUNOZ
MA
OTOMOTIV
(Turkey)
IMMOBILIERE
DE VILLERS
(France)
IDEST S.A.R.L.
(France)
60%
100%
MW
POLAND
(Poland)
MWPT B.V.
(Holland)
60%
100%
100%
55%
IG TOOLING
and light
engineering
(South Africa)
50%
JBM MA
AUTOMOTIVE
(India)
95%
MA
AUTOMOTIVE
argentina
EXCEL RIM 82,79%
SDN BHD
(Malaysia)
50%
MA
AUTOMOTIVE
BRASIL (Brazil)
PMC
AUTOMOTIVE
D.O.O. (Serbia)
51%
PRORENA
(Italy)
51%
ITLA srl
(Italy)
50%
ema polska
sp zoo
(Poland)
49%
estampacione s rubi
s.a.u. (Spain)
Galicia
auto estampacion, s.a.u.
(Spain)
de sarollo
de tecnicas
de emsamblaje, s.l.u.
(Spain)
DIERTE S.L.U.
(Spain)
10%
30%
37,48%
ma tool
and die
(South Africa)
100%
August
LappLe East
London
(South Africa)
25%
O.M.V.
(Italy)
17,85%
ETROMEX
(Mexico)
15%
SAN POLO
(Italy)
35%
GERVASI
POLSKA
(Poland)
100%
AVISCALI
(Italy)
IM
(Italy)
almasider
(Croatia)
11,11%
48%
METAL
TRANCIATI
(Italy)
ORIONE
(Italy)
51%
NUOVA SALL
(Italy)
MIM Steel
Processing
Gmbh
(Germany)
39%
Cellino
(Italy)
COMM SID.
del sud
(Italy)
4%
C.S.M.
(Italy)
LIMA
Lavoraz.
italiana
acciai
affini
(Italy)
0,01%
IDROENERG
(Italy)
0,01%
CVA
TRADING
(Italy)
0,01%
CHIERI
ENERGIA
(Italy)
7,50%
aircom
us inc
(U.S.A.)
100%
RIZZATO
nastri
acciaio
(Italy)
20%
claudlynn
investments
(South Africa)
80%
canessa
slovakia
s.r.o.
(Slovakia)
20%
IG TOOLING
property
investments
(South Africa)
Rensor
property
(South Africa)
99,99%
WM (Italy)
100%
98,58%
MW FRANCE
(France)
100%
100%
100%
(Italy)
GIANETTI
(Italy)
0,01%
Canessa
(Italy)
MA
2,50%
100%
100%
100%
100%
MW ITALIA
(Italy)
TOPY
5,35%
7,73%
25,91%
cir
(Italy)
DELNA
(Italy)
LEGEND
5%
Distribution (SSC)
Wheels
SIMEST
17,21%
Stamping and assembly
Others
87
MORE SALIENT EVENTS TAKING SHAPE IN 2010
Of the more salient event taking shape over the last twelve months to December 31, 2010, attention
is drawn to the following:
January
■ On January 12, 2010, Canessa and Workplace Union Representatives (RSUs) reached an
agreement to introduce voluntary mobility for 7 employees at the Osimo production site
structurally overmanned. Accrual for the related charges resulting therefrom was recorded in
the financial statements for 2009.
■ On January 25, 2010, Canessa informed trade union representatives that manufacturing operations at the Moncalieri production site had ceased and that recourse to the Government
Extraordinary Lay-Off Benefit Scheme (CIGS9 had been made for 16 employees working at
that site. Introduced at the same time was voluntary mobility. Accrual for the related charges
resulting therefrom was recorded in the financial statements for 2009.
February
■ On February 11, 2010, Acerbi-Viberti, Margaritelli Group and CLN Group inked a letter
of understanding focused around incorporation of Compagnia Italiana Rimorchi (CIR). As
incorporated part way November, contributed at the same tome to CIR (held 60% by Margaritelli Group, 20% by CLN and 20% by Acerbi-Viberti) were the business lines engaging
in the production of trailers relative to the production sites at Nichelino (Viberti branded
trailers), Verona (Cardi branded trailers) and Tocco da Cesauria (Merker branded trailers),
whilst, as a result of underwriting its stake in money, CLN will assure future truck wheel and
steel supplies; by way of attendant consequence, CIR thus becomes the leading manufacturer
of trailers in Italy and ranks among the first 10 sector-manufacturers in Europe.
March
■ On March 18, 2010, ICL and Workplace Union Representatives (RSUs) reached an agreement to introduce due to business criticality the Government Extraordinary Lay-Off Benefit
Scheme (CIGS) for 64 employees working at that production site. Introduced at the same
time for 25 employees was voluntary mobility. Accrual for the related charges resulting therefrom was recorded in the financial statements for 2009.
April
■
On April 1, 2010, MAC and Workplace Union Representatives (RSUs) reached an agreement
to introduce voluntary mobility for 50 employees working at the Chivasso production site
structurally overmanned.
May
■
88
On May 11, 2010, MA acquired formally the South African company August Lapple South
Africa Ltd. and its subsidiary ALSA East London in exchange for a purchase price consideration in the amount of Rand 230 million (or some Euro 23 million). The investment is
deemed to be particularly strategic insofar as designed toward expanding operations with the
Ford customer (T6 Project). With effect from June 2010, those companies are included line-
by-line in the CLN consolidation. Awarded successively to the company was an important
order from BMW (F30 Project).
■ On May 20, 2010, MW Italia reached an agreement with the Japanese enterprise Tagasako
Tekko relating to the acquisition of a business line of the subsidiary RK Excel CO, based in
Japan (Shiga), accomplished through a “rim business” segregation mechanism with related
transfer thereof to a newly-incorporated Japanese company. In particular, the business line
acquisition concerns the sector dedicated to the production and sale of motorbike rims and
comprises also the acquisition of 55% of the stake in Excel Rim sdn, based in Malaysia (Penang), and engaging wholly in the production of motorbike rims. As a consequence, the initially agreed purchase price consideration of Yen 300 million (or Euro 2.7 million) has been
renegotiated and reduced to Euro 0.8 million.
The shares were transferred part way July 2010 and, with effect therefrom, the Japanese company and the Malaysian company are included line-by-line in the CLN consolidation.
■ On May 27, 2010 Gianetti and Workplace Union Representatives (RSUs) reached an agreement to introduce voluntary mobility for 50 employees at the Ceriano Laghetto production
site structurally overmanned.
June
■
On June 30, 2010, SHL sold, by way of attendant consequence of the understandings inked
by and between CLN and Cellino Group part way December 2009, its Kielce business line
specializing in heavy carpentry to SHL Production Sp. Zoo (held 100% by Cellino S.r.l.) in
exchange for a purchase price consideration of Euro 7.7 million.

July
■
On July 27, 2010, the shareholders of Cellino S.r.l., by way of attendant consequence of the
understandings inked by and between CLN and Cellino Group part way December 2009,
passed resolution, by way of extraordinary shareholders’ resolution, approving the share capital increase reserved to CLN (wholly subscribed and paid-in by the latter) by virtue of which
CLN now holds 39% of Cellino S.r.l. In turn, Cellino S.r.l. holds 100% of the following entities: Celmac S.r.l. Intek CM S.r.l., Ocevi CM S.r.l., and SHL Produztion S.p. zoo.

August
■ In August 2010, MA and Proma Group set up a company, incorporated and operating under the laws of Serbia, known as PMC Automotive d.o.o. (held on a par basis) as a result of
an important order being awarded by Fiat Group Automobiles. This involves a green field
within the hub created for the suppliers of the Kragujevac production site taken over by the
Fiat Group; PMC Automotive will specialize in seating assembly and presswork, roll formed
structural components and suspension components.

September
■ On September 22, 2010, MAC and Workplace Union Representatives (RSUs) reached an
agreement to introduce voluntary mobility for a further 50 employees working at the Chivasso production site structurally overmanned.
■ In September 2010, MW Italia increased its stake in MWPT BV from 50% to 69.5% and,
in consequence, acquiring the controlling interest therein. As if any reminder were needed,
89
MWPT BV is the holding incorporated and operating under the laws of the Netherlands that
holds the absolute interests in the Russian enterprises MWEurodisk (Kingisepp) and MWEurodisk Trade (St Petersburg). As a consequence, the balance sheet accounts of the three companies referred to above are included in the CLN Group’s line-by-line scope of consolidation
with effect from 1st January 2011. The result reported by MWPT Group for 2010 is reflected
wholly in the consolidated income statement of the CLN Group using the equity method.
Given that the Russian companies started to manufacture passenger car wheels at year-end,
and only at year-end, the line-by-line consolidation of their income statement accounts for
the period covering September to December would not have been significantly different from
what has arisen under equity method.

October
■ Taking backward-looking accounting effect as from January 1, 2010 and legal effect as from
October 31, 2010, executed formally under notary deed signed and sealed on October 12,
2010 was merger by incorporation of ICL S.r.l. with and into Canessa S.p.A.
■ Taking backward-looking accounting effect as from January 1, 2010 and legal effect as from
November 1, 2010, executed formally under notary deed signed and sealed on October 12,
2010 was merged by incorporation of ITLA RTL S.p.A. with and into Canessa S.p.A.

December
■ On December 14, 2010, Canessa acquired a further 1% stake in the associate ITLA S.r.l.,
thus stretching out its related interest therein to reach 51%. Given the corporate governance
shareholder covenants currently prevailing, this continues to configure as a jointly controlled
entity and, as such, the investment in ITLA S.r.l. continues to be classified under Associates
also in the consolidated financial statements for 2010 and continues to be accounted for under the equity method.
■ On December 30, 2010, CLN acquired a further 1% stake in the associate Nuova Sall, thus
stretching out its related interest therein to reach a 51% controlling interest. In consequence,
and only from a balance sheet perspective, Nuova Sall was included line-by-line in the CLN
consolidation for 2010.
90
OPERATING AND FINANCIAL REVIEW
Reclassified Consolidated Income Statement
2010
2009
2008
2007
SALES REVENUE (Euro/’000)
1,700,886
1,412,532
2,026,384
1,823,169
Cost of raw materials sold
1,020,478
938,858
1,261,448
1,081,192
60.0
66.5
62.3
59.3
680,408
473,674
764,936
741,977
40.0
33.5
37.7
40.7
178,344
46,226
180,725
177,068
10.5
3.3
8.9
9.7
79,294
75,519
77,553
69,638
4.7
5.3
3.8
3.8
9,982
13,980
19,166
20,484
0.6
1.0
0.9
1.1
89,068
-43,273
84,006
86,946
5.2
-3.1
4.1
4.8
-21,206
-29,693
-42,353
-35,356
Foreign exchange gains/(losses)
-1,868
-3,476
-11,153
-43
Result of investments carried at equity
-6,393
-19,333
-5,402
-2,229
-18,540
436
-2,154
-2,220
41,061
-95,339
22,944
47,099
% sales revenue
2.4
-6.7
1.1
2.6
Income tax expense
-24,124
-4,688
-11,744
-19,558
-59.0
4.9
-51.2
-41.5
16,937
-100,027
11,200
27,541
1.0
-7.1
0.6
1.5
% sales revenue
Gross Margin
% sales revenue
EBITDA
% sales revenue
Depreciation of plant and equipment
% sales revenue
Amortization of intangible assets
% sales revenue
EBIT
% sales revenue
Financial income/(expenses)
Extraordinary income/(expenses)
EBT
% Average tax rate
EAT
% sales revenue
91
The CLN Group
Generally speaking, financial year 2010 ended with sales revenue stretching out to reach Euro 1.7
billion, a clear recovery from 2009 (+20%), and with EBITDA at Euro 178 million (up 285.8% from
the year before) thus resurfacing to pre-crisis values.
Net Sales 2003-2010
2100
2000
1900
1800
1700
1600
1500
1400
1300
1200
1100
1000
900
800
700
600
500
400
300
200
100
0
2003
2004
2005
2006
2007
2009
2008
2010
Ebitda & Capex 2003-2010
200
190
180
170
160
150
140
130
120
110
100
90
80
70
60
50
40
30
20
10
0
Ebitda
Capex
2003
2004
2005
2006
2007
2008
2009
2010
The recovery in volumes stretched across all the Group Divisions; however, also working toward
the sales revenue uplift was the differing scope of consolidation that led to including in the consolidation for 2010 the companies specializing in Presswork in South Africa (sales revenue of Euro
92
72 million in 2010) and the Japanese and Malaysian companies acquired by the Wheels Division in
September (sales revenue of Euro 9 million in 2010).
Working toward to improvement in FY 2010 EBITDA (+Euro 132 million from 2009) was the
differing scope of consolidation (consolidation scope delta contribution in terms of EBITDA was
Euro 5 million in the review period) and, above all, the impact arising from bolt-on volumes and
overhead paring efficiencies, driven through by the reorganization and reshaping step-actions
taken by Corporate Management (mainly with regard to the Italian and French production sites)
with effect from 1Q2009 and which generated unquestionable economic benefits in financial year
2010. Insofar as steps and measures structural in nature, such benefits will be retained over the
foreseeable horizon. And lastly, as if any reminder were needed, flattening FY2009 EBITDA were
non-recurring items (steel stock write-down) in the amount of Euro 38 million, the related effects
of which no longer affect the accounts for 2010.
Analysis of the results by geographic area confirms a marked disconnect between the results delivered by the French and Italian production sites, albeit in clear recovery, and the undoubtedly more
vibrant results delivered by the production units based in East Europe (Poland, Romania, and Slovakia), in Germany, in Turkey and in South America. The profitability as yet not satisfactory honed
by the production units based in Italy, in unison with consensus expectation leaving no significant
headroom for bolt-on volumes in the foreseeable future, led the way to goodwill recognized in prior periods being written down in 2010 by some Euro 10 million, as classified under extraordinary
expenses for the year. Also, emerging on first-time consolidation of the Russian companies was a
consolidation difference in the amount of some Euro 2.3 million, as written down, for reasons of
prudence, and classified under extraordinary items for the year.
As referred to above, the steps taken in 2009 to reshape the Group’s organizational framework (and
which led to extraordinary expenses of some Euro 17.9 million being incurred the year before)
were carried forward in 2010 with the related expenses resulting therefrom (some Euro 6 million)
also being reflected and classified as extraordinary items.
Looking at equity investment activities, 2010 ends the year reporting net write-downs for an
amount totaling Euro 7 million, wholly attributable de facto to the losses reported for 2010 by the
Russian companies of the Wheels Division, recognized on a pro-rated basis in the Group income
statement. As if any reminder were needed, PSC wheel production saw onset in Russia with effect
from August 2010.
SSC Division
2010
EBITDA
% sales revenue
2009
Change
477,401
405,596
71,805
13,311
(41,011)
54,322
2.8%
(10.1%)
75.6%
The SSC Division hiked a significant increase at the sales revenue level (+18%) mainly as a result of the
recovery in volumes (driven through by apparent demand in 2010 taking a bolder stance from 2009).
At the EBITDA level, explaining the year-on-year Euro 54 million increase was the combination
of bolt-on volumes and the fact that FY2009 EBITDA was dampened harshly by meaningful (not
recurring in nature) inventory write-downs recorded in the wake of destocking (Euro 38 million)
and no longer affecting the income statement 2010. In addition thereto, FY2010 benefited from the
93
reshaping and reorganization step-actions launched by Corporate Management as from 1Q2009
in respect of certain Italian production sites (Poirino, Moncalieri, Racconigi and Bologna) in order
to readjust the structure to the minor volumes demanded by the market and which undoubtedly
enabled overhead to be pared. Insofar as reaped from structural operations, those benefits will continue to unfold in the foreseeable future.
Wheels Division
2010
2009
Change
237,549
204,690
32,859
EBITDA
26,721
6,421
20,300
% sales revenue
11.2%
3.1%
61.8%
2010 also bears witness to the Wheels Division hiking a significant uplift in sales revenue (+16%)
driven through: in the amount of Euro 9 million, by the differing scope of consolidation for 2010
(Japan and Malaysia); in the amount of Euro 4 million, by bolt-on truck wheel sales revenue (+23%
from FY2009, essentially attributable to superior volumes), and; in terms of the remainder (Euro 20
million), by bolt-on car wheel sales revenue, essentially attributable to raw material price increases
transferred to selling prices (PSC volumes instead stepped ahead 3% from FY2009).
Emerging immediately from the foregoing is that largely contributing to the powerful stride forward taken by EBITDA in 2010 were the reshaping and reorganization step-actions put in place by
Corporate Management in a strategic intent to prune overhead across the Wheels Division production plants, with a keen eye steered toward Italy and France.
Automotive Division
2010
EBITDA
% sales revenue
2009
Change
1,116,981
958,386
158,595
138,710
81,023
57,687
12.4%
8.5%
36.3%
Calendar 2010 for the Automotive Division bears witness to volumes and profitability resurfacing
from the crippling blow waged the year before by the global economic crisis that swept across all
sectors and, in particular, the Automotive sector.
Revenue growth (+16.5%) also surprised on the upside for all the companies helmed by the Division aside from operations in Poland, where revenue retreated marginally; of note, the impact
arising on first-time consolidation of the operations taken over in South Africa from Comau and
August Laepple during the period from end FY2009 to FY2010 onset (some € 72m of consolidated
revenue in the period).
Carried forward over the last twelve months were the organic streamlining and industrial
restructuring programs launched as from 1Q2009 in a strategic intent to align the structures
to minor volumes wherever market downturns were deemed to be permanent (mainly in Italy
and in France).
By way of attendant consequence of resurfaced volumes and the programmed organic streamlining
94
and industrial restructuring referred to above, which led to a meaningful reduction in overhead,
the operating profitability of the Division at the EBITDA level grew significantly stretching out to
account for 12.4% of sales revenue (FY2009: 8.5%).
Reclassified Consolidated Balance Sheet
(Euro/’000)
12.31.2010
12.31.2009
12.31.2008
12.31.2007
Trade receivables, Net
287,773
254,210
269,493
334,154
(Trade payables, Net)
-339,884
-298,390
-362,653
-381,876
Ending inventory
298,698
287,125
460,910
334,404
Other current assets /(liabilities)
-73,773
-60,986
-71,297
-51,186
NET WORKING CAPITAL
172,814
181,959
296,453
235,496
659,423
620,293
646,300
639,590
19,285
35,591
49,759
70,099
67,879
68,128
59,134
-60,012
-2,601
856,788
409,462
-74,183
-19,448
-5,004
-68,156
-2,299
835,516
375,942
-59,523
-19,184
-5,046
-48,835
-13,121
989,690
364,961
-49,979
-26,206
-1,828
-2,140
-4,001
1,417
-
375,950
172,151
447,326
856,788
329,137
218,191
459,574
835,516
398,347
302,978
624,729
989,690
241,700
395,463
525,803
896,468
Property, plant and equipment, Net
Intangible assets, Net
Investments and Fin. receivables
Provisions
Deferred tax assets / (liabilities)
NET CAPITAL EMPLOYED
EQUITY
(Cash and cash equivalents)
(Investment securities)
(Marketable securities)
(Net financial receivables, net financial
accruals and deferrals)
Current financial payables
Non-current financial payables
NET FINANCIAL INDEBTEDNESS
NET CAPITAL EMPLOYED
25,486
-50,549
-23,654
896,468
370,665
-85,094
-26,266
-
Looking at the consolidated balance sheet, the CLN Group endured in 2010 net working capital
declines of some Euro 9.1 million; however, encompassed within the figure reported the year before
(Euro 182 million) were amounts due from shareholders (Euro 35 million) for capital not paid,
as later collected wholly in January. When shown net of those amounts, working capital in effect
moved forward Euro 25.8 million year-over-year, a somewhat meager increase compared to the
significant increase in FY2010 volumes vis-à-vis FY2009 volumes.
Working capital is stated on a net basis, i.e. less impact waged by trade receivables sold without
recourse, estimable at December 31, 2010 in an amount totaling Euro 118 million (December 31,
2009: Euro 166 million).
Explaining essentially the year-on-year Euro 21 million increase in net capital employed was the
scope of consolidation delta (Russia, South Africa, Japan and Malaysia), as set off to some extent by
95
depreciation/amortization expense for the year and trimmed provisions for risks (primarily provisions for programmed restructuring used in the review period).
Equity grew to Euro 409 million mainly due to the result delivered for the year, benefiting from the
increase in the cumulative translation adjustment reserve.
Denoting a downward tone on the other hand was net financial indebtedness: cash flow from operations financed wholly the investments and acquisitions put in place during the year, even though
the current/non-current breakdown reflects a deterioration.
Looking back to July 2007, CLN S.p.A., the parent company, entered into a pool financing agreement (syndicated loan) with Banca Monte dei Paschi di Siena S.p.A. for an amount totaling Euro
135 million; out of this, Euro 74.2 million prevailing at December 31, 2010. The financing is covered by economic-financial covenants based upon the following financial performance indicators:
1. Net Financial Indebtedness/Equity
2. Net Financial Indebtedness/EBITDA
3. EBITDA/Net Finance Expenses
As at December 31, 2010, those financial performance indicators or ratios have been observed.
Key Performance Indicators
EBITDA represents the key operating performance indicator for the CLN Group, whilst the key
financial performance indicator is represented by Net Debt (as illustrated in the reclassified consolidated balance sheet and the reclassified income statement presented above). Set forth below are
other operating and/or financial performance indicators of relevance. The reasons for the clearly
apparent generalized improvement vis-à-vis the financial ratios (ROE, ROI and ROS) reported the
year before have been examined and discussed earlier.
ROE - Return On Equity (Net Result/Shareholders’ Equity)
A measure used as a general indication of a company’s efficiency: in other words, how much profit
it is able to generate given the resources provided by its shareholders.
F/Y 2010
ROE
F/Y 2009
4.1%
-26.6%
ROI - Return On Investment (EBIT/Net Capital Employed)
A measure of a company’s core business profitability, excluding as such non-recurring expenses, to
net capital employed.
F/Y 2010
ROI
F/Y 2009
10.4%
-5.2%
ROS - Return On Sales (EBIT/Sales Revenue)
A measure of the efficiency of sales to produce revenue.
F/Y 2010
ROS
96
F/Y 2009
5.2%
-3.1%
Equity/Capital Employed
This expresses the ratio of Equity to Capital Employed.
F/Y 2010
Equity/Capital Employed
F/Y 2009
48%
45%
Current Ratio
A measure of the degree to which Current Assets (trade and financial plus cash and cash equivalents) cover Current Liabilities (trade and financial).
F/Y 2010
Current Assets/Current Liabilities
F/Y 2009
0.88
0.95
In determining the Current Ratio, current assets also include, insofar as readily convertible into
known amounts of cash, the “securities” classified under “financial fixed assets”.
The Current Ratio as at December 31, 2010 was less than 1 hence reflecting a marginal deterioration from the year before; in connection thereto, as placed in evidence below under the
heading Liquidity Risk, the Group had undrawn committed facilities available at December
31, 2010 in the amount of Euro 59 million. Furthermore, in 1Q2011, the Group: (i) took out
new medium to long-term loans and financing for an amount totaling Euro 40 million, and;
(ii) reached a general understanding with regard to the disposal by and before summer of the
investment in IPM (selling price consideration approximating Euro 8 million). In view of the
foregoing, the Current Ratio, taken on a pro forma basis, would be >1.
Equity/Fixed Assets Ratio
A measure of the extent to which fixed assets are financed by Equity.
F/Y 2010
Equity/ Fixed Assets
54.5%
F/Y 2009
51.8%
In determining the Equity/Fixed Assets ratio, excluded from fixed assets are the “securities”, insofar
as readily convertible into known amounts of cash, classified under “financial fixed assets”.
MAIN RISKS AND UNCERTAINTIES FACING THE GROUP
Financial risk
The CLN Group is exposed to a variety of financial risks arising in the normal course of business,
which it monitors on a continuing basis to identify, mitigate and cut out:
■ Credit risk, whether in relation to day-to-day commercial business with customers or funding extended to Group companies;
■ Liquidity risk, with a keen eye steered toward financial resources available and credit market
access;
97
■
Financial risk (mainly relating to interest rate risk and currency risk), insofar as the CLN
Group operates across the international landscape and, as such, may be exposed to interest
rate fluctuations and foreign exchange gyrations.
Credit risk
The theoretical maximum exposure to credit for receivables and other financial assets as at December 31, 2010 is represented by their carrying amount.
The CLN Group adopts creditworthiness policies designed toward monitoring the solvency of
its customers, and enters into factoring transactions (sales of trade receivables) without recourse,
thereby transferring the relative risk.
Specific provisions are recorded in respect of bad debt or doubtful accounts. Where applicable, and
based on historic data and experience, across-the-board provisions are recorded, for reasons of
prudence, in respect of receivables not written down on a detailed basis.
Liquidity risk
CLN Group policy on liquidity risk is to ensure that sufficient cash and undrawn committed facilities are available to fund ongoing operations and to meet any unforeseen obligations and opportunities. The principal factors impacting the liquidity position of the CLN Group are, on the
one hand, the resources generated by or absorbed in operations and, on the other, the resources
deployed investing toward strategy and production development, and servicing debt. The levels
of cash flows (actual and forecasted), credit lines and liquidity of the Group are monitored on a
continuing basis under the control of treasury reports. Of note: as at December 31, 2010, liquidity (including portfolio securities) amounts to Euro 98 million and the credit lines available for
short-term financial advances amount to Euro 59 million, whilst the lines available for advances on
invoices under usual reserve/factoring with recourse amount to Euro 180 million in total.
Currency risk
The CLN Group publishes its consolidated financial statements in Euro and conducts business in
many foreign currencies across the international landscape. As a result, it is subject to foreign currency risk due to exchange rate movements or fluctuations which will affect the Group’s transaction
costs and the translation of the results and underlying net assets of its international operations.
All of this may have the effect of either increasing or decreasing the Group’s net profit (loss) and equity.
In FY2010, the principal rates of exchange to which the CLN Group was exposed were the following:
■ EUR/Zloty;
■ EUR/Peso (Argentina);
■ EUR/Real;
■ EUR/Leu;
■ EUR/Rand.
Interest rate risk
The CLN Group regularly puts in place factoring transactions with or without recourse (sales of
trade receivables with or without recourse) and, moreover, reverts to other technical forms of funding, whether short-term (hot money, and advances on import/export) or medium to long-term
usually at variable rates of interest.
Changes in market interest rates affect the level of net financial charges.
98
In accordance with generally accepted bank practices, some medium to long-term loans and financing are covered by covenants requiring certain operating and financial performance indicators
or ratios to be observed. Non-observance thereof results in increasing the spread applied by the
financer banks and, in consequence, the relative finance expenses.
Business risk
The CLN Group is exposed to a number of risks relating to the marketplace in which it operates,
and principally:
Risks associated with steel pricing
In particular, a sudden and significant rise in crude or raw material (coils) prices may expose the
Group to the risk of not being able to promptly recharge such price mark-up to its end-customers.
Looking at the SSC Division, mention is made to the fact that, whilst the price of steel is affected
sharply by “global” market dynamics (carbon and iron costs, and steel demand from emerging
markets with Asia standout), end-demand for processed steel is affected sharply by “local” market
dynamics. Over the last two years, the market in which the SSC Division operates has been (and
will be) beleaguered structurally by steel price wild gyrations, erupting, suddenly and violently,
on diverse occasions in the one same period thus creating a string of micro-cycles, which lead to
building up speculation in purchase decision-taking (formation of demand), whether in terms of
distribution or end-users, active primarily in the “general industry” segment, and hence increasing
the risk associated with our business activity.
Risks associated with automotive market trending
Affecting significantly CLN Group operating and financial performance is automotive market trending, particularly European automotive market trending and South American automotive market
trending. Those markets are highly competitive in terms of quality of product, innovation and, especially in the last few years, pricing. Also, by way of attendant consequence of shrinking auto demand,
major carmakers the world over are struggling with production overcapacity. As you may be aware,
the automotive market is subject more than other industrial market segments to risks and uncertainties such as, for example: GDP upturns or downturns; corporate and/or consumer confidence,
and; consumer credit interest rate trending, insofar as always affecting demand for durable goods. In
addition thereto, the Automotive market is subject historically to elevated cyclicality, the magnitude
and duration of which are virtually impossible to predict. To the extent possible, CLN Group policy
with regard to this risk is to broaden its customer-base and to heighten geographic diversification
finely tuned toward following its carmaker customers in their new business initiatives and stretching
out processes and product arrays. Forming part of this are new initiatives recently undertaken by the
Group through JV agreements in South Africa, India, Russia and Serbia.
Risks associated with sales in international markets
A significant portion of the Group’s production activities are conducted and located outside of
Italy and the Group expects that revenues from sales outside Italy will account for a continually increasing portion of its total revenues in the foreseeable future. All of this exposes the Group to risks
inherent to operating globally, including those related to exposure to local economic and political
conditions, import and/or export restrictions, and multiple tax regimes.
99
Risks associated with market footprint in emerging economies
The Group operates across a broad spectrum of emerging economies, whether directly (Brazil and
Argentina) or through JV agreements or other cooperation agreements (Turkey, India, Russia and
South Africa). The Group’s exposure to the trending followed by those economies has heightened
in recent years. Unfavorable economic or political developments in any one of those areas (which
may vary from country to country) could have a material adverse effect on the Group’s activities
and future prospects, as well as its earnings and financial position.
Risks associated with JV agreements
The Group currently pursues a policy designed toward seeking out alliance and JV opportunities
through which to achieve such objectives as vertical production, customer loyalty and business expansion, capital deployment optimization and risk mitigation, particularly in relation to new-entry
in emerging economies. JV agreements also crystallize through minority or par-venture acquisitions. Myriad factors affect achievement of the objectives underlying the relative JV agreements
such as, for example: relationships with respective venturers; shared vision of future strategies to be
pursued, and compliance with technical, financial and local laws and regulations.
ENVIRONMENTAL REVIEW
In conducting business, the CLN Group is committed to protecting the environment and ensuring
compliance with applicable eco-friendly laws and regulations. At all points in the manufacturing
chain, from the way we treat materials to the way we dispose of waste and the amount of energy we
consume, we try to ensure that CLN makes the lightest possible impact on the environment.
Having regard to REACH (the Regulation on the Registration, Evaluation, Authorization and Restriction of Chemicals across the European Union territory), introduced in application of and pursuant
to Regulation (EC) No. 1907/2006, CLN continued to monitor – throughout 2010 - regulatory evolution through the REACH coordination team created in-house part way 2008. In particular, clear
focus was placed on identifying the substances manufactured or imported into the EU that have to be
registered in order to eliminate potential supply chain disruption arising as a result of any vital or essential product used in the production cycle not being registered in compliance with the EU’s REACH
legislation. And lastly, CLN continued to monitor supplier activities for REACH compliance.
Looking at industrial safety and industrial health, the year under review was characterized by perpetuation of works inherent to the Industrial Safety Project launched in 2009 and, not least, by the
introduction of new activities designed toward raising the bar of industrial safety.
As referred to above, the Industrial Safety Project represents the first step toward creating an Industrial Safety & Health Management System skewed toward:
■ providing a safe and healthy working environment for all staff and assuring the prevention of
risks in accordance with applicable laws and regulations;
■ identifying and encouraging the adoption of appropriate protection and prevention measures to minimize accident and injury frequency rates;
■ making available to company management an efficient and effective management system to
ensure that any and all problems that might arise are identified, monitored and managed on
a continuing basis and that information can be pulled down as and when wanted to ensure
that operating and decision-taking responsibilities are adequately supported;
100
■
■
■
■
■
raising the awareness, understanding and support of staff;
galvanizing efficiencies and performances to hone improvement on a continuing basis;
promoting a safer and healthier working place;
setting values that state our principles and standards and express the kind of company we aspire to be, thus providing a framework for the way we relate to colleagues, customers, suppliers and supervisory authorities/agencies and sum up everything we believe to be important
and distinctive in the way CLN operates;
paring progressively industrial safety and health costs.
RESEARCH AND DEVELOPMENT
Capital investment by the Group on research and development activities, as expensed in full in the
income statement, was steered toward:
■ applying innovative solutions linked to the use of materials;
■ creating product solutions geared toward increasing safety and reliability;
■ raising the bar of key production processes;
■ responding proactively to customers by anticipating their needs and acting quickly and efficiently to any requests they make.
RELATED PARTY TRANSACTIONS
Transactions between Group companies are conducted at fair value based on market conditions.
Transactions between CLN S.p.A. and its Subsidiaries and Associates, including therein transactions between those subsidiaries and associate undertakings, are primarily commercial in nature.
The following summary table sets forth the commercial and financial transactions entered into
with and between the Group companies (all amounts in thousands of Euro):
101
Commercial
receivables
9,550
Commercial
payables
-
Financial
receivables
-
4,587
87
3,000
-
400
3
-
-
ALMASIDER
1,263
-
-
-
GERVASI POLSKA
1,204
2
-
-
PRORENA ORTOLANO
2,518
23
-
-
92
-
-
-
667
41
-
-
72
-
-
-
388
-
2,500
-
METALTRANCIATI
7
-
-
-
COMM.SID.DEL.SUD
4
-
-
-
DELNA
3
174
-
-
RUBI
1
-
-
-
AVISCALI
-
-
1,300
-
89
-
-
-
-
-
16
-
3,692
171
-
-
1
-
-
-
Other
117
95
-
-
TOTAL
24,655
596
6,816
-
JBM – MA LTD
ITLA SRL
LIMA
IM ITALIA
EMARC
OMV
DMW SOUTH AFRICA
PROMA POLAND
ALSA
GRUPPO CELLINO
CIR
102
Financial
payables
-
JBM – MA LTD
Operating
revenues
1,334
Operating
expenses
Financial
revenues
Financial
expenses
-
-
-
13,840
264
109
-
108
26
-
-
ALMASIDER
94
-
-
-
GERVASI POLSKA
47
-
-
-
6,405
1,053
-
-
497
-
-
-
EMARC
1,849
128
-
-
OMV
1,015
28
-
-
-
-
28
-
RIZZATO
95
-
-
-
METALTRANCIATI
23
17
-
-
6
-
-
-
23
708
-
-
1
-
101
-
74
-
-
-
5,879
-
-
-
CIR
1
-
-
-
IPM
-
-
285
-
OTHER
35
-
-
-
TOTAL
31,326
2,224
523
-
ITLA SRL
LIMA
PRORENA ORTOLANO
IM ITALIA
DMW South AFRICA
COMM.SID.DEL.SUD
DELNA
EMA POLONIA
PROMA POLAND
GRUPPO CELLINO
Looking at related party transactions outstanding and, more pointedly, transactions with investees
in which the CLN Group holds 50% or less of the respective voting powers, attention is drawn to
the following: aside from specific cases where control over an investee is exercised jointly with the
other party sharing control (at December 31, 2010, joint control exercised over: DMW, MA-JBM,
Almasider, Prorena Ortolano S.r.l. and Itla S.r.l.), the CLN Group has no power to govern the financial and operating policies of the investees. In consequence, aside from the jointly controlled
investees referred to above, the CLN Group has no power to control the strategic, financial and
operating decisions of an investee, particularly in terms of relationships with customers, suppliers,
employees and lending institutions.
103
SIGNIFICANT POST-BALANCE SHEET EVENTS
Summarized below are the more significant events that occurred after the consolidated balance
sheet date:
■ In February 2011, MA sealed a letter of understanding with regard to the disposal of its
18.99% stake in Igenieria de Productos Metalicos in exchange for a selling price consideration of Euro 8 million; transfer of the stakeholdings and collection of the selling price consideration should be put in place no later than end July.
■ On March 18, 2011, Canessa and trade union representatives reached an agreement to introduce a mobility scheme for 16 employees working at the Bologna production site structurally
overmanned.
■ Also in March 2011, the subsidiaries MAD and Delfo Polska authorized the purchase of two
transfer presses, involving an overall outlay estimated at some Euro 20 million.
■ In April 2011, MA and Proma Group reached an understanding designed toward setting up
in Italy a Newco (held on a par basis) to which the respective interests in PMC Automotive
d.oo will flow; once all the preliminary formalities required by law have reached completion, the Newco will take over the presswork business line of Frigostamp S.p.A. (Bruino).
The presswork business line acquisition provides the platform from which to roll out more
rapidly well-managed and cost-efficient presswork productions earmarked for Fiat Group
Automobiles manufacturing facilities in Serbia.
■ Also in April 2011, MW Italia and Jantsa AS (a Turkish manufacturer of truck wheels) inked
a Joint Venture Agreement designed toward setting up in Turkey a NewCo known as “JMW
AS” (held on a par basis by the two venturers) specializing in the manufacture and commercialization of auto wheels. The new plant (scheduled to enter into production in 4Q2012)
will have a production capacity of some 2 million wheels.
LOOKING AHEAD
Despite the spectrum of despondent demand prevailing in a number of markets in which the
Group operates. 1Q2011 underpins the resilience of the profitability resurgence taking shape in
2010. Alert to this, financial actuals at March 31, 2011 are absolutely comforting and, when taken
as a whole, surpass budget.
Examined and discussed below are the trends expected to be tracked by the Group’s key markets.
The Steel Market
Steel trade associations, such as EUROFER (for steelmakers) and EUROMETAL (for steel distribution), forecast that EU-27 real/apparent steel consumption in 2011 will strike only marginal
headway from 2010, albeit with significant disconnect between the economies, posturing the best
opportunities of performance in Germany, owing to greater possibilities of export, especially in the
Far East, for the mechanics and automotive sectors.
Consensus expectation for GDP growth in south Europe and in Italy stands at around +1% with
the level of apparent steel consumption verging on 26/27 million tons (as compared to some 25
million tons in 2010), still far short of the levels struck in 2007-1H/2008.
With real consumption gaining only marginal headway (+3% in the EU), the improvement in
104
apparent steel demand should be at times somewhat more significant (around +5% in the EU),
albeit characterized as always by steep hikes in the purchase prices of coils, which already rallied, in
1Q2011, an increase of just under 200 €/ton (+30% or more).
Regrettably, the Italian marketplace continues to remain constrained without denoting any measure of stability in demand, with further turmoil unbridled by 1Q2011 raw material contracts on
the 2Q production cost of coils, not always “in line” with the trending followed by demand and international market pricing. Causing uncertainty to rise were exogenous factors beyond our control,
such as the earthquake and tsunami that devastated Japan and the “tensions” in the North-African
region, the related consequences of which will impact our iron-metallurgy market, both in terms
of consumption and prices.
Whilst placing in evidence a good first-quarter as regards shipped volumes and actual unit margins, the need for prudence remains fundamental in looking ahead to 2011, a year that will be still
dominated by erratic demand not in line with offering capacity and a year in which unrelenting
focus must be placed on the spectrum of operating costs in a strategic intent to prune break-even,
given that volumes and marginality will remain at times under pressure, due to the structural excess of unconstrained competition in the Italian steel distribution market.
The Automotive market
Looking at the passenger car (“PSC”) market, EU-27 new-car registrations in 1Q2011 declined 2.3%
from 1Q2010 thus confirming the anemic demand that beleaguered the year before, albeit with alarming divergence across the EU landscape. In fact, Germany (+13.9%) staged a turnaround putting an end
to the mighty downturn endured in 2010 (primarily pushed through by scrapping incentives fade out)
and France (+8.9%) scored a clear recovery in volumes, whilst the UK (-8.7%), Spain (- 27.3%) and Italy
(-23,1%) remained caught in the trap of adversities that mired 2010. As regards the performances spiked
by the major carmaker customers of the CLN Group in Europe on a comparative basis with the yearearlier period, 1Q2011 bears witness to downward curved new registrations being delivered by the Fiat
Group (-19.2%), PSA (-5.4%) and Renault (-7.4%), while BMW (+11.4%) has increased significantly.
On the capital expenditure front, following in the wake of the extremely low levels reported in 2009 and
that continued into 2010 throughout, major carmakers re-activated important development projects
that will also lead to the CLN Group raising significantly its level of capital expenditures in 2011.
Looking at the Light Commercial Vehicles (“LCV”) market in Europe, 1Q2011 trending went
against the tide (+10.2%) traced out by the PSC market, here again, however, with sharp disconnect between countries: Italy -13,3%; Spain -8.4%; France +8.5%; Germany +24.4%; UK +31%.
As regards the performances spiked by the major customers of the CLN Group operating in the
European LCV market on a comparative basis with the year-earlier period, 1Q2011 bears witness to
good results being delivered by Renault (+9.8%), Fiat Group (+7.5%) and PSA (+10%).
Looking at the South American market, the positive trending hiked in recent quarterly periods
continued to prevail.
As befits the foregoing, consensus expectation sees FY2011 still presenting uncertainties as to the
evolution of demand in Europe with significant and clear disconnect between nations / carmakers / models/segments. Against this backdrop, the Automotive Division will continue to pursue its
strategies focused around customer diversification, geographic diversification, product positioning
by segment and model, building upon the bolt-on efficiencies achieved in 2010 and 2009 and, not
least, the stronger, leaner and more robust organization emerging from the programmed restructuring put in place. 1Q2011 actuals in that sense are comforting.
105
A further thrust should be waged by the initiatives launched in new markets where the Division
was not present (particularly South Africa) and from which, even on the mid horizon, exciting opportunities for bolt-on growth should be created, whilst other internationalization initiatives will
be tangibly launched (Serbia).
Reaping benefit from greater production volumes and restructuring step-changes, the Wheels Division will see year-on-year positive performance consolidating in Romania, Poland and France,
whilst continuing to denote a lackluster tone will be the Italian units, as yet under restructuring and
with volumes inadequate to strike economic break-even. Continuing instead to move ahead will be
the route to internationalization already tracked out in the past, particularly in Turkey through the
JV Agreement inked with Jantsa.
106
By Order of the Board of Directors
Chairman
Anna Reinaudo
CONSOLIDATED FINANCIAL STATEMENTS
for the year ended December 31, 2010
107
Consolidated Balance Sheet
ASSETS
DUE FROM SHAREHOLDERS FOR CAPITAL NOT PAID IN
FIXED ASSETS
I
Intangible assets
Incorporation and subsequent expenses
R&D costs and advertising expenses
Industrial patent and intellectual property rights
Concessions, licenses, trademarks and similar rights
Goodwill
Intangibles in progress and payments on account
Other
Consolidation difference
Total Intangible assets
II
Tangible fixed assets (Property, Plant and Equipment)
Land and buildings
Plant and machinery
Production and commercial equipment
Other tangible fixed assets
Tangibles under constr. and payments on account
Total Tangible fixed assets (PPE)
III Financial fixed assets
Investments:
Subsidiaries
Associates
Parent companies
Other enterprises
Total Investments
Receivables:
amounts due from subsidiaries
amounts due from associates
amounts due from parent companies
amounts due from other
Total Receivables
Investment securities
Treasury stock
Total Financial fixed assets
Total Fixed assets
CURRENT ASSETS
I
Inventories
Raw materials, ancillary materials and consumables
Work-in-progress and semi-finished goods
Contract work-in-progress
Finished goods and goods for resale
Advances
Total Inventories
108
(Accounts in Euro/’000)
12.31.2010
12.31.2009
35,000
2,624
690
1,074
271
519
4,329
9,778
19,285
236,821
353,327
17,280
6,187
45,808
659,423
632
54,733
12,514
67,879
1,124
4,575
1,078
1,400
338
219
4,455
22,402
35,591
220,702
340,183
19,336
6,906
33,166
620,293
3,000
1,268
4,268
19,448
91,595
770,303
9,677
49,398
9,053
68,128
270
1,220
1,490
19,194
88,812
744,696
158,550
28,969
52,955
53,214
5,010
298,698
147,885
26,991
64,697
45,322
2,230
287,125
Consolidated financial statements
ASSETS (cont’d)
Receivables
Trade receivables
amounts due within next accounting period
amounts due after next accounting period
Due from subsidiaries
Due from associates
Due from parent companies
Receivable/Recoverable from taxation authorities
Deferred tax assets
Due from other enterprises
Other receivables
Total Receivables
III Financial assets not representing fixed assets
Investments
Marketable securities
Treasury stock
Total Financial assets not representing fixed assets
IV Cash at bank and on hand
Bank and post-office deposits
Cash and valuables on hand
Total Cash at bank and on hand
Total Current assets
PREPAID EXPENSES AND ACCRUED INCOME
Prepaid expenses and accrued income
Total Prepaid expenses and accrued income
TOTAL ASSETS
II
12.31.2010
12.31.2009
287,423
233,698
350
88
1,318
341
26,055
17,528
221
3,908
19,703
23,044
1,775
1,775
13,804
8,782
21,709
31,181
877
1,165
45,100
34,743
35
98
418,370
356,351
17
5,004
5,029
5,004
5,046
74,074
109
74,183
796,255
59,423
100
59,523
708,045
4,870
4,870
1,571,428
2,723
2,723
1,490,464
109
12.31.2010
12.31.2009
EQUITY AND LIABILITIES
Equity
I
Share capital
II
Share premium reserve
III Revaluation reserves
IV Legal reserve
V
Reserve for treasury stock
VI Statutory reserves
VII Other reserves
- Capital account reserve
- Consolidation reserve
- Cumulative translation adjustment reserve
VIII Retained earnings (accumulated deficit)
IX Net income (loss) for the year
TOTAL EQUITY attributable to the Group
Attributable to minority interest
TOTAL EQUITY
RESERVES FOR RISKS AND CHARGES
Reserve for severance indemn. and similar obligations
Reserve for taxation, including deferred taxation
Other
Total Reserves for risks and charges
RESERVE FOR EMPLOYEE TERMINATION INDEMNITIES
PAYABLES
Debentures
Convertible debentures
Stakeholder financing repayable
Banks
Other financers
Advances
Suppliers
Payables represented by negotiable instruments
Subsidiaries
Associates
110
235,000
13,463
3,720
-
235,000
13,463
3,720
-
100,000
7,553
5,060
9,140
13,151
387,087
22,375
409,462
100,000
3,228
-6,090
111,913
-102,773
358,461
17,481
375,942
9,972
39,503
24,162
73,637
24,488
10,400
42,262
31,145
83,807
26,611
12
3,893
272,590
99,914
265,940
155,605
101,917
72,236
65.547
59,304
62,586
75,610
339,884
1,431
280,711
12,472
-
-
221
-
459
-
4,954
-
Accounts in Euro/’000)
EQUITY AND LIABILITIES (cont’d)
Parent companies
12.31.2010
12.31.2009
-
-
-
-
137
32
-
-
Other enterprises
Taxation authorities
29,643
17,707
834
-
17,927
18,350
339
528
27,451
24,112
3,230
201
1,033,551
982,226
-
-
30,290
21,878
30,290
21,878
1,571,428
1,490,464
Provident and social security institutions
Other payables
Total Payables
ACCRUED EXPENSES AND DEFERRED INCOME
Premium on loans issued
Other
Total Accrued expenses and deferred income
TOTAL EQUITY AND LIABILITIES
111
MEMORANDUM ACCOUNTS
12.31.2010
12.31.2009
GUARANTEES GIVEN
Real guarantees
in favor of others
-
-
for other own obligations
-
-
REAL GUARANTEES
-
-
3,847
3,796
3,847
3,796
-
9,850
43,500
51,169
43,500
61,019
Discounted notes at bank and lending institutions
-
-
DISCOUNTED NOTES
-
-
2,153
2,153
-
-
2,153
2,153
2,153
2,153
49,500
66,968
SURETIES
TOTAL GUARANTEES GIVEN
COMMITMENTS
Commitments for purchases
Commitments for derivatives
TOTAL COMMITMENTS
CONTINGENCIES
Endorsements & surety received from unrelated parties
Other
OTHER CONTINGENCIES
TOTAL CONTINGENCIES
TOTAL MEMORANDUM ACCOUNTS
112
Consolidated income statement
A) VALUE OF PRODUCTION
Revenues from the sale of goods and services
Change in work-in-progress, semi-finished goods and
finished goods
Change in contract work-in-progress
Increase in fixed assets for internal work
Other revenues and income
Total Value of production
B) PRODUCTION COSTS
Raw materials, ancillary materials, consumables and goods
for resale
Service costs
Expenses relating to the use of third party assets
Personnel:
Salaries and wages
Social security contributions
Employee termination indemnities
Severance and similar charges
Other personnel expenses
Total Personnel expenses
Depreciation and write-downs:
Amortization of intangible assets
Depreciation of tangible fixed assets
Write-down of intangible/tang. fixed assets
Write-down of receivables and liquid funds
Total Depreciation and write-downs
Change in raw materials, ancillary materials, consumables
and goods for resale
Provisions for risks
Other provisions
Other operating expenses
Total Production costs
Difference between the value of production
and production costs
C) FINANCIAL INCOME AND EXPENSES
Income from investments:
in subsidiaries
in associates
in parent companies
in other enterprises
Total Income from investments
F/Y 2010
F/Y 2009
1,700,886
1,412,532
665
-41,460
-20,938
172
219,463
1,900,248
16,897
238
121,027
1,509,234
1,221,624
868,575
190,040
13,427
153,437
14,172
189,720
56,123
6,857
650
23,296
276,646
9,982
79,294
2,398
2,809
94.483
164,082
53,294
6,907
1,393
8,376
234,052
-1,783
166,985
1,326
1,000
14,417
1,811,180
1,289
110
20,207
1,552,507
89,068
-43,273
385
385
297
426
723
13.980
75.519
458
3.723
93,680
113
Consolidated Income Statement (cont’d)
F/Y 2010
F/Y 2009
Other financial income:
- from receivables classified under fixed assets
From subsidiaries
-
-
109
-
-
-
74
246
183
246
375
-
1,214
-
-
-
28
51
-
-
1,441
860
Total Income other than that listed above
1,469
911
Total Other financial income
3,241
1,157
From subsidiaries
-
-
From associates
-
-
From parent companies
-
-
From other Group companies
-
-
24,447
31,573
Total Interest and financial charges
24,447
31,573
Foreign exchange gains/(losses)
-1,868
-3,476
-22,688
-33,169
2,529
45
-
-
-
-
2,529
45
From associates
From parent companies
Other
Total Receivables classified under fixed assets
- From securities classified under fixed assets, not
representing investments
- From securities classified under current assets, not
Income other than that listed above
Interest and commission from subsidiaries
Interest and commission from associates
Interest and commission from parent companies
Interest and comm. from other, and other income
Interest and other financial charges
Other
Total Financial income and expenses
D) ADJUSTMENTS TO THE VALUE OF FINANCIAL ASSETS
Revaluations:
Investments
114
Financial fixed assets, not representing investments
Securities classified under current assets, not
Total Revaluations
Consolidated Income Statement (cont’d)
F/Y 2010
Write-downs:
Investments
F/Y 2009
9,308
19,378
-
-
-
-
-
-
9,308
19,378
-6,779
-19,333
Gain on disposals
2,084
33,287
Other
2,596
13,258
4,680
46,545
836
1,027
1,354
37
21,030
45,045
23,220
46,109
-18.540
436
41,061
-95,339
Current income tax
28,290
18,476
Deferred income tax assets and liabilities
-4,166
-13,788
Income tax
24,124
4.688
NET INCOME (LOSS) BEFORE MINORITY INTEREST
16,937
-100,027
Minority interest
-3,786
-2,746
13,151
-102,773
Financial fixed assets, not representing investments
Securities classified under current assets, not representing
investments
Financial receivables
Total Write-downs
Total Adjustments to the value of financial assets
E) EXTRAORDINARY INCOME AND EXPENSES
Extraordinary income
Total Extraordinary income
Loss on disposals
Taxes relative to prior periods
Other
Total Extraordinary expenses
Total Extraordinary items
INCOME BEFORE INCOME TAX
NET INCOME (LOSS) AFTER MINORITY INTEREST
115
116
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2010
1. core business
CLN S.p.A. is a joint stock company duly incorporated and existing under the laws of Italy. CLN
S.p.A. and its Subsidiaries (“the Group”) operate in some 15 countries with 3 diverse business lines:
Iron & Steel-Metallurgy Service Centers (steel coil premachining and sheet-metal machining in
general), Presswork and Steel Wheel Production.
As entered into during the normal course of business pursued by the Group companies, related
party transactions are primarily commercial in nature. Such transactions are conducted at fair
value based on market conditions.
2. FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements for 2010 have been prepared in application of Section III of
Italian legislative decree 127/1991 taking into due account the amendments of law and interpretations introduced in under Italian legislative decree no. 6 of January 17, 2003 (the Corporate Governance Reform Act), as subsequently amended and integrated, and, not least, the requirements set forth
in the Italian Civil Code. The consolidated financial statements also reflect the accounting principles
recommended by the Italian Accounting Profession (Consiglio Nazionale dei Dottori Commercialisti
e dei Ragionieri) and, not least, the interpretations issued by the Italian Accounting Board (Organismo Italiano di Contabilità) and, in compliance therewith or in the absence thereof, the International
Accounting Standards issued by the International Accounting Standards Board (I.A.S.B.).
These have been applied exercising prudence and on a going concern basis, taking into account the
economic function of the asset or liability component considered.
The consolidated financial statements are represented by the consolidated balance sheet, the consolidated income statement and these accompanying Notes.
As examined and discussed in the Report on Operations, the more significant post-balance sheet
events form an integral part of the consolidated financial statements.
Included on a line-by-line basis in the consolidated financial statements are the accounts of CLN
S.p.A., the parent company, and the accounts of the Italian and foreign companies in which CLN
S.p.A. holds directly or indirectly the majority of voting rights. The scope of consolidation is set
out as an attachment hereto.
Along with their respective business name, registered office, declared strategic intent, share capital
and percentage of direct or indirect ownership held therein, the list of Group companies included
in the consolidation is set out as an attachment hereto.
The financial statements used in the consolidation are drawn out to December 31, 2010, i.e. to the
reporting date adopted by the parent.
No departures pursuant to Article 2423.4 of the Italian Civil Code, have been taken in the consolidated financial statements.
All items included in the consolidated balance sheet and the consolidated income statement are
presented on a comparative basis with the year before.
117
Unless otherwise specified, all amounts reported in the consolidated financial statements and in
these Notes are in thousands of Euro.
Consolidation principles
As drawn out to December 31, 2010, the consolidated financial statements have been prepared
from the statutory financial statements of the Group companies included in the consolidation, as
drafted by the respective Boards of Directors for approval by the shareholders of the individual
companies, and adjusted, where applicable, to conform with Group accounting policies and measurement criteria.
The income statements of foreign subsidiaries denominated in foreign currency are converted into
Euro at the respective average rate of exchange. Conversely, the related balance sheets thereof are
converted into Euro at the respective rate of exchange prevailing at year-end.
Exchange differences resulting from the conversion of opening shareholders’ equity at current rates
of exchange and at year-end rates of exchange, are taken to consolidated equity reserves.
The rates of exchange applied are reported in the Notes under the heading “Other information”.
As summarized below, all subsidiary undertakings are included in the consolidation on a line-byline basis:
a. The assets, liabilities, revenues and expenses of subsidiaries consolidated on a line-by-line
basis are included, regardless of the percentage of ownership, in the consolidated financial
statements, after eliminating the book value of the investments held by the parent company,
or by other consolidated companies against the related shareholders’ equity. Minority interests in the net equity and the net result for the year of the consolidated subsidiaries are shown
separately in the consolidated balance sheet and the consolidated income statement.
b. The difference between the purchase consideration paid and the net result for the year of the
companies acquired during the year is taken to the consolidated financial statements. Where
applicable, any differences are allocated to the assets and liabilities of the company being
consolidated. Any residual difference is treated as follows:
− if positive, this is recognized on the asset side of the consolidated balance sheet under line
account “consolidation difference”, and is amortized on a straight-line basis over the period of expected future benefit attaching thereto;
− if negative, this is recognized within consolidated net equity under line account “consolidation reserve”, or, should future losses be forecasted, under line account “consolidation
reserve for risks and future charges”.
c. Eliminated on consolidation are intragroup receivables, payables, revenues and expenses
arising on transactions between consolidated companies which have not been realized with
unrelated parties.
Also eliminated on consolidation are the following:
− capital gains arising from or relating to fixed assets transferred among consolidated companies;
− intragroup profits, if significant, arising from transactions between consolidated companies relating to assets transferred that continue to remain as inventory with acquirer;
− write-downs or write-backs of investments held for the longer term in consolidated companies, intragroup receivables and intragroup dividends.
118
Notes to the consolidated financial statements
3. MEASUREMENT CRITERIA AND ACCOUNTING POLICIES
As required by Article 2426 of the Italian Civil Code, set out below are the measurement criteria
and accounting policies adopted in the preparation of the consolidated financial statements for
2010. The measurement criteria and accounting policies are unchanged from the previous year.
Intangible Assets
Intangible assets are stated at purchase price or production cost. Cost includes accessory expenses,
as well as the indirect and direct costs that can be reasonably attributed to the relevant asset. In no
case the cost incurred, as defined above, exceeds recoverable amount.
Intangible assets, the expected useful benefit of which is limited in time, are amortized systematically each period according to the remaining possibilities of utilizing the related asset. The amortization schedules carry differing terms depending upon the estimated useful benefit expected to be
derived from the related asset.
The Group considers at each reporting date whether there is any indication that non-current assets
are impaired. If the recoverable amount of an asset is less than its carrying amount, an impairment
loss is recognized, and the asset is written down to its recoverable amount. An impairment loss recognized in prior periods for an asset other than goodwill is reversed if, and only if, there has been a
change in the estimates used to determine the asset’s recoverable amount since the last impairment
loss was recognized. Should the write-downs result from permanent impairment losses arising as a
result of transactions exceptional in nature, or production re-conversion, restructuring or production downsizing, these are classified as extraordinary expenses.
Tangible Fixed Assets (Property, Plant and Equipment)
Tangible fixed assets are stated at purchase price or production cost, adjusted in some cases as a
result of the application of specific monetary revaluation laws or gains arising from the difference
between the cost of new acquisitions and purchased net equity, less accumulated depreciation.
Tangible fixed assets, the expected useful life of which is limited in time, are depreciated systematically each period on the basis of economic/technical rates determined according to the remaining
possibilities of utilizing the related asset.
The depreciation rates applied in the year under review are as follows:
Prefabricates and industrial buildings
Plant and machinery
3% to 10%
6.7% to 17.5%
5% to 25%
12% to 25%
The assets are depreciated as from the period in which these enter into service. For assets acquired in the financial period, the annual depreciation is taken at half (50%) the regular rate,
based on the assumption that the depreciation charge thus taken does not differ significantly
from the depreciation charge determined as from the moment in which the asset is made available and ready for use.
In the case of a permanent impairment in value, regardless of the depreciation already provided, the
asset is written down accordingly; if, in subsequent periods, the reasons for the write-down cease to
apply, the original value of the asset is reinstated. Should the write-downs result from permanent im119
pairment losses arising as a result of transactions exceptional in nature, or production re-conversion,
restructuring or production downsizing, these are classified as extraordinary expenses.
Ordinary maintenance costs are charged wholly against the consolidated income statement. Maintenance costs of a betterment nature are attributed to the fixed asset to which they relate, and are
depreciated in relation to the remaining possibilities of utilizing that asset.
Not encompassed within the value of tangible fixed assets are financial charges incurred in the
purchase or construction thereof.
Shown separately are payments on account and tangibles under construction, as yet not entered
into service at the consolidated balance sheet date.
Leasing arrangements are accounted for in the consolidated financial statements under the finance
method whereby the capital value of assets, including therein the portion of lease rentals on inception encompassed within “prepaid expenses” in the statutory accounts, is taken to “tangible fixed
assets”, whilst lease rentals payable by way of principal are taken to “non-current financial payables”.
The lease rentals accounted for in the statutory accounts are replaced by depreciation determined
in relation to the useful life expectancy of the assets held under lease, classifying the related interest
expense under “financial charges” and the related deferred taxation provisioned.
By way of departure from Italian GAAP, and where:
(i) permitted by specific monetary revaluation laws, or
(ii) deemed to portray more fairly and truly the values of land and buildings,
the Group has recorded revaluations (in accordance with the thresholds permitted by law), with
the corresponding income statement item being equity reserves. No revalued amounts are in excess
of recoverable amount.
Financial Fixed Assets
Not included in the consolidation are idle subsidiaries (in start-up) insofar as their impact on aggregate assets, liabilities, net financial position and the result reported by the Group is not meaningful.
Investments in associates are measured and accounted for under the equity method; the positive
(negative) difference between the value determined under the equity method and the carrying
amount stated in the prior year accounts, for the portion arising from profits (losses) is taken to a
specific income statement line. Also taken into account when accounting for associates under the
equity method are the investments held by the latter in subsidiary or associate undertakings.
Conversely, investments in other enterprises are carried at cost, as written down to reflect any permanent impairment in value.
Receivables are stated at their presumed realizable value.
Securities are stated at cost, and are written down to reflect any permanent impairment in value.
Inventories
Inventories are stated at the lower of purchase or production cost, determined in accordance with
the first-in, first-out (FIFO) method of inventory valuation, and presumed realizable value based
on market conditions. The valuation of inventory at current cost would not have been significantly
different from the FIFO valuation.
Manufacturing costs comprise the cost of raw materials, direct costs and the portion of indirect
costs that can be attributed to the cost of production. Obsolete and slow-moving inventories are
written down on the basis of their possible utilization or saleability.
120
Receivables
Receivables classified under Current Assets are stated at their nominal value. More pointedly, trade receivables are written down to their presumed realizable value, as required under
Article 2426 of the Italian Civil Code, by recording an appropriate allowance for doubtful
accounts.
The Group enters into factoring and/or securitization transactions involving the sale and securitization of its trade receivables. The Group also securitizes and sells certain trade receivables
“with recourse”, whereby the receivables sold remain on the asset side of the consolidated balance
sheet, as matched on the other side of the consolidated balance sheet by a financial liability in par
amount. In both cases, no receivables are derecognized.
Accruals and Prepayments
Accruals and prepayments include the portion of revenues and expenses covering two or more periods, in accordance with the matching or accrual basis of accounting. Under this basis, the effects
of transactions and other events are recognized when they occur (and not as cash or its equivalent
is received or paid) and they are recorded in the accounting records and reported in the financial
statements of the periods to which they relate.
The matching of costs with revenues is a process in which expenses are recognized in the income
statement on the basis of a direct association between the costs incurred and the earning of specific
items of income. This process involves the simultaneous or combined recognition of revenues and
expenses that result directly and jointly from the same transaction or other events.
Application of the matching concept does not allow the recognition of items in the balance sheet
not meeting the definition of assets or liabilities.
Dividend Distribution
Dividend distribution to the shareholders is recognized as a liability in the Group’s financial
statements in the period in which the dividends are declared at the relevant Shareholders’
Meeting.
Reserves for Risks and Charges
Reserves for risks and charges are provided to cover certain or probable losses or liabilities for
which the exact value and effective date are not determinable at the year-end. The reserves represent the best estimate possible based on the information currently available.
Also allocated thereto is the reserve for taxation, including therein deferred taxation.
Reserve for Employee Termination Indemnities
As accrued by the Italian companies of the Group, the reserve for employee termination indemnities is provided to cover the full liability due to employees in conformity with current legislation,
national labor contracts and payroll agreements prevailing in Italy.
Law No. 296 enacted on December 27, 2006 (Italian Financial Act 2007) introduced pension reform
regulations (establishment of agreed-upon supplementary pension fund) in respect of Termination Indemnity (TFR) allocations maturing after January 1, 2007
By way of attendant consequence thereof:
■ TFR allocations maturing up to December 31, 2006 remain as a book reserve and are left with
the company;
121
■
in accordance with the principle of silent or implied consent envisaged by law, TFR allocations maturing with effect from January 1, 2007 are transferred or directed, as designated by
employee, into:
a) agreed-upon second-pillar pension funds; or
b)left with the company, which transfers the TFR allocations to a TFR pension fund managed by the National Social Insurance Institute (INPS).
TFR allocations maturing with effect from January 1, 2007 continue to be classified in the consolidated income statement under “Reserve for sererance indemnities”. At the consolidated balance
sheet level, “Reserve for employee termination indemnities” represents the residual balance on the
reserve existent at December 31, 2006; classified under “Amounts due to provident and social security institutions” is the liability accrued at December 31 in respect of TFR allocations as yet to be
transferred to the pension funds or provident institutes.
Payables
Payables are stated at their nominal value.
Commitments, Guarantees and Contingencies
Reported in the memorandum accounts are the effective contingencies, commitments and guarantees outstanding at the consolidated balance sheet date.
Revenue Recognition
Revenue is accounted for in accordance with the accrual basis of accounting, less returns, trade
discounts, rebates and premiums. Revenue from the sale of goods is recognized at the moment that
title passes to customer, which generally coincides with shipping or consignment. Revenue from
the provision of services is recognized at the moment that the services are rendered.
Cost and Expense Recognition
Costs and expenses are recognized in accordance with the accrual basis of accounting.
Interest Income, Interest Expense, Other Income and Expenses
Interest income and interest expense, and, not least, other income and expenses, are recognized
and included in the accounts, along with the related accruals and deferrals, in accordance with the
accrual basis of accounting.
Taxation
Income taxes are determined in accordance with the tax laws and regulations prevailing in the differing countries in which the Group companies operate.
With effect from fiscal 2004, the Italian Companies of the Group have elected to adhere to the National Tax Consolidation program pursuant to Article 117 through Article 129 of the Italian Tax
Code (T.U.I.R).
Insofar as the tax consolidating entity, CLN S.p.A. determines a single taxable base for the grouping
of companies adhering to the tax consolidation program, thereby benefiting from the possibility to
set off. Each and every company adhering to the tax consolidation program contributes in full to
the tax consolidating entity its taxable income recording an account payable, for an amount equating the ‘Ires’ corporation tax payable, vis-à-vis the tax consolidating entity; the companies contrib122
uting tax losses record an account receivable vis-à-vis the tax consolidating entity, for an amount
equating the ‘Ires’ corporation tax effectively offset at the Group level.
In addition, deferred tax assets and deferred tax liabilities are determined for the more significant
consolidation transactions and all temporary differences between the consolidated assets and the
consolidated liabilities and the corresponding amounts for the purposes of taxation shown in the
statutory accounts of the consolidated companies.
More pointedly, deferred tax assets, classified under “deferred tax assets”, are recognized if, and only
if, their future recovery is more likely than not. On the other hand, deferred tax liabilities, classified
under “reserve for taxation, including deferred taxation”, are not recognized if it is more unlikely
than not that a future liability will arise.
In accordance with benchmark accounting standards, a deferred tax asset is recognized for the
carryforward of unused tax losses to the extent that it is probable that future taxable profit will be
available against which the unused tax losses can be utilized.
Dividends from Investees
Dividends from investees are recognized under “Income from investments” in the period in which
these are collected.
Other Information
The following table sets out the conversion rates applied in respect of:
(Source: Bank of Italy)
Currency
Nation
Peso
Argentina
Real
Conversion rate
12.31.2010
Average 2010
12.31.2009
5.30994
5.185602
5.46185
Brazil
2.2177
2.331427
2.5113
Zloty
Poland
3.975
3.994669
4.1045
New Leu
Romania
4.262
4.212160
4.2363
Indian Rupee
India
59.758
60.587825
67.04
Ruble
Russia
40.82
40.262944
43.154
Rand
South Africa
8.8625
9.698434
10.666
Kuna
Croatia
7.383
7.289055
7.3
Yen
Japan
108.65
116.238565
133.16
Ringgit
Malaysia
4.095
4.266794
4.9326
New Turkish Lira
Turkey
2.0694
1.996545
2.1547
123
4. notes to the consolidated financial statements for the year ended
December 31, 2010
4.1 FIXED ASSETS
Intangible assets
As analyzed below, intangible assets as at December 31, 2010 amount to Euro 19,285 thousand.
12.31.2010
Incorporation and subsequent expenses
12.31.2009
-
1,124
2,624
4,575
690
1,078
1,074
1,400
271
338
Other
4,329
4,455
Consolidation difference
9,778
22,402
519
219
19,285
35,591
R&D costs and advertising expenses
Industrial patent and intellectual property rights
Concessions, licenses, trademarks and similar rights
Goodwill
Intangibles in progress and payments on account
Total
Set forth below is the movement for the year on the historic cost of the differing items of Intangible
Assets:
Incorpor.
R&D
Ind. patent
Intangibles
Licenses
Other
and
costs and and intell.
Consol. in progress/
andtrade- Goodwill intangible
subsequent advertising property
difference payments on
marks
assets
expenses expenses
rights
account
Historic cost at
12.31.2009
Total
14,988
59,270
5,076
6,299
2,038
18,371
38,481
219
144,742
Additions
-
463
134
168
20
1,853
-
280
2,918
Divestments
-
-7,221
-
-2
-
-678
-10,220
-15
-18,136
-
-
3
-112
-
215
-
14
120
5,152
1,392
2
-1,786
756
6,524
-
21
12,061
20,140
53,904
5,215
4,567
2,814
26,285
28,261
519
141,705
Consolidation
scope Delta
Reclassif./ Other
changes
Historic cost at
12.31.2010
124
Set forth below is the movement for the year on accumulated amortization:
Incorpor.
R&D
Ind. patent
Intangibles
Licenses
Other
and
marks
assets
expenses expenses
rights
account
Accumulated
amortization at
12.31.2009
Total
13,863
54,695
3,998
4,899
1,700
13,916
16,079
-
109,150
Increase
-
4,436
525
441
88
2,108
2,404
-
10,002
Use
-
-9,197
-
-1
-
-305
-
-
-9,503
-
-
-
-28
-
26
-
-
-2
6,277
1,346
2
-1,818
755
6,211
-
-
12,773
20,140
51,280
4,525
3,493
2,543
21,956
18,483
-
122,420
Consolidation
scope Delta
Reclassif./ Other
changes
Accumulated
amortization at
12.31.2010
As such, the net book value of the Intangible Assets is analyzed as follows:
Incorpor.
R&D
Ind. patent
Intangibles
Licenses
Other
and
marks
assets
expenses expenses
rights
account
Net book value
at 12.31.2009
Additions and
amortiz.
1,125
4,575
1,078
1,400
338
4,455
22,402
219
35,592
-
-3,973
-391
-273
-68
-255
-2,404
280
-7,084
-
1,976
-
-1
-
-373
-10,220
-15
-8,633
-
-
3
-84
-
189
-
14
122
-1,125
46
-
32
1
313
-
21
-712
-
2,624
690
1,074
271
4,329
9,778
519
19,285
Divestment/Use
Consolidation
scope Delta
Reclassif./ Other
changes
Net book value
at 12.31.2010
Total
Looking at “Consolidation difference”, the following table sets out the items of goodwill determined as the difference between the value of the investee and the pro-rated net equities of the
subsidiaries arising on first-time consolidation and not allocated to the assets or liabilities of the
entity being consolidated.
Goodwill
MAC, Delfo Polska and
SHL
Magnetto Argentina
MWPT BV (Russia)
TOTAL
12.31.2009
Amortization/
Other changes
Impairment
12.31.2010
21,992
(1,994)
(10,220)
9,778
410
22,402
(410)
2,290
114
(2,290)
(12,510)
9,778
125
Determined according to the remaining possibilities of utilizing the assets, amortization is taken
over a 5-year, 10-year or 15-year period starting from the date on which the investment was acquired. Based on the subsidiary’s forecasted earnings, operations and programs envisaged in the
foreseeable future, the residual value of the “Consolidation difference” is deemed to be recoverable.
Looking at the consolidation difference, Company Management updated over the last twelve
months its Business Plan placing in evidence that, for certain presswork Italian sites, no meaningful recovery in volumes or operating profitability can be expected; as a consequence thereof, the
impairment analysis carried out underscored the need to write down the residual value of certain
items of goodwill recorded in prior years (Euro 10.2 million – classified in the income statement as
extraordinary expenses for the year).
As a result of first-time consolidation of the Russian companies helmed by the Wheels Division,
also arising initially over the course of 2010 was a consolidation difference of Euro 2.3 million.
Given the adversities currently beleaguering the local market, Company Management retained it
more appropriate, for reasons of prudence, to deal with such difference through the income statement under extraordinary items rather than recognizing it on the asset side of the balance sheet.
Tangible fixed assets (PPE)
As analyzed below, tangible fixed assets as at December 31, 2010 amount to some Euro 659,423
thousand:
12.31.2010
12.31.2009
Land and buildings
236,821
220,702
Plant and machinery
353,327
340,183
17,280
19,336
6,187
6,906
45,808
33,166
659,423
620,293
Tangibles in course of construction
Total
Set forth below is the analysis by tangible fixed asset class:
■ Land and buildings: encompassed herein are the premises and property from which the
Group companies conduct business.
■ Plant and machinery: encompassed herein are the production lines employed in the machining process.
■ Production and commercial equipment: encompassed herein are production process tooling
and equipment.
■ Other tangible fixed assets: encompassed herein are electronic and electric machinery, fixtures and fittings.
126
Set forth below is the movement for the year on the historic cost of the differing items of Tangible
Fixed Assets:
Historic cost at
12.31.2009
Additions
Divestments
Consolidation
scope Delta
Reclassification/
other changes
Historic cost at
12.31.2010
Tangibles
Production &
Other
under constr.
commercial tangible fixed
& payments
equipment
assets
on account
Land and
buildings
Plant and
machinery
324,057
934,118
125,655
31,818
33,166
1,448,814
15,065
19,575
2,563
967
43,322
81,492
-11,913
-26,374
-3,980
-3,381
-19,770
-65,418
35,026
73,949
5,299
2,987
853
118,114
10,598
35,026
4,771
-983
-11,763
37,649
372,833
1,036,294
134,308
31,408
45,808
1,620,651
Total
Set forth below is the movement for the year on accumulated depreciation:
Accumulated
depreciation at
12.31.2009
Increase
Use
Consolidation
scope Delta
Reclassification/
other changes
Accumulated
depreciation at
12.31.2010
Tangibles
Production &
Other
under constr.
& payments
equipment
assets
on account
Land and
buildings
Plant and
machinery
103,355
593,935
106,319
24,912
- 828,521
14,620
56,220
6,986
1,899
-
79,725
-3,884
-15,994
-3,567
-2,898
-
-26,343
14,366
32,819
3,486
2,115
-
52,786
7,555
15,987
3,804
-807
-
26,539
136,012
682,967
117,028
25,221
-
961,228
Total
127
As such, the net book value of the items of Tangible Fixed Assets is analyzed as follows:
Net book value at
12.31.2009
Increase/
Depreciation
Divestments/Use
Consolidation
scope Delta
Reclassification/
Other changes
Net book value at
12.31.2010
Tangibles
Production &
Other
under constr.
& payments
equipment
assets
on account
Land and
buildings
Plant and
machinery
220,702
340,183
19,336
6,906
33,166
620,293
445
-36,645
-4,423
-932
43,322
1,767
-8,029
-10,380
-413
-483
-19,770
-39,075
20,660
41,130
1,813
872
853
65,328
3,043
19,039
967
-176
-11,763
11,110
236,821
353,327
17,280
6,187
45,808
659,423
Total
Additions for the year are rather contained (when compared with the volume capital investments
ploughed in previous years) and were put in place primarily for upkeep purposes. Among the more
meaningful capital investments for 2010, mention is made to the Atella (Potenza) business line
(previously rented) acquired for the SSC Division through a debt recovery procedure. The capital
investment came to an amount totaling Euro 10.5 million, of which Euro 7.5 million for land and
buildings and Euro 3 million for production lines.
Conversely, particularly meaningful in 2010 was the impact (equating, when taken as a whole, Euro
65 million) arising from the changed scope of consolidation which now includes Group MWPT
(Russia) and RK Excel Japan/Malaysia for the Wheels Division and the operations based in South
Africa for the Presswork Division.
Tangibles under construction at December 31, 2010 (Euro 45,808 thousand) mainly relate to: MW
Romania tangibles under construction (Euro 5.3 million) relating to car-wheel production revamping; MA Rosslyn tangibles under construction (Euro 11.1 million) relating to the Ford T6 project;
MAA tangibles under construction (Euro 9.5 million) relating to new presses, and; WM tangibles
under construction (Euro 6.2 million) relating to the new line at the Chivasso production site.
Financial fixed assets
Financial fixed assets as at December 31, 2010 amount to Euro 91,595 thousand (December 31,
2009: Euro 88,812 thousand) and are composed of the following:
128
Equity investments
Valued at
Subsidiaries
Magnetto Automotive
Belgique
MA Automotive South
Africa
Claudlynn Investments
Rensor Property
IG Investments
IG Tooling Engineering
Aviscali
TOTAL Subsidiaries
Associates
Metaltranciati
Gervasi Polska
Nuova Sall
Aviscali
OMV
Emarc Romania
DELNA
Almasider
Lima
Proma Poland
JBM – MA
MWPT BV
Dorbyl MW
Prorena Ortolano
Itla S.r.l.
Etromex
Cellino S.r.l.
PMC D.o.o.
Comm. Sid. del Sud
TOTAL Associates
Other enterprises
SPL
Emarc
IPM
MIM Gmbh
IM
CSM
AR Machine
TGO S.p.A.
CIR S.p.A.
Aircom
Minor other enterprises
TOTAL Other
enterprises
TOTAL
Cost
%
ownership
As at
12.31.2009
Acquisitions/
Disposals
Other
changes
Write-down/
Adjustment
As at
12.31.2010
-
3,502
(3,502)
-
-
-
LxL (*)
100.00
1,692
-
(1,692)
-
-
Cost
Cost
Cost
LxL (*)
Cost
80.00
80.00
80.00
80.00
100.00
44
244
265
3,930
9,677
2
63
(3,437)
(3,930)
14
(5,608)
-
44
244
267
77
632
Equity
Equity
LxL (*)
Equity(**)
Equity
Cost
Equity
Equity
Equity
Cost
Equity
LxL (*)
Equity
Equity
Equity
Cost
Equity
Equity
Equity
48.00
35.00
51.00
100.00
25.00
49.00
31.26
50.00
37.48
35.00
50.00
67.76
48.75
51.00
51.00
17.85
39.00
50.00
30.00
1,807
366
1,510
14
1,837
75
8,953
1,826
1,600
3,728
7,667
1,538
12,581
5,365
350
181
49,398
60
1,419
341
12,314
8
14,142
(79)
(1,766)
(14)
(16)
456
(667)
28
(51)
81
(2,028)
(38)
196
(119)
30
(156)
198
(7.000)
(1.000)
1.157
948
(956)
(39)
(6.779)
1,690
366
1,718
75
10,402
1,654
1,600
4,382
566
13,687
6,735
350
11,358
8
142
54,733
15.00
9.25
18.99
10.00
20.00
4.00
9.75
25.00
20.00
7.5
-
2,066
1,705
2,090
450
1,400
335
492
250
265
3.,500
140
(244)
65
-
-
2,066
1,705
2,090
450
1,400
335
557
250
3,500
140
21
9,053
3,396
65
68,128
14,101
(7,571)
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
Cost
(*) as at 12.31.2009, carried at equity; included line-by-line in the consolidation at 12.31.2010.
(**) majority of the shares acquired in 2010 (ownership 31.12.2009: 33.33%).
12,514
(6,779)
67,879
129
Further details and information about the more significant acquisitions put in place by the Group
in the year ended December 31, 2010 can be found in the Report on Operations.
Looking at the subsidiary undertakings not consolidated line-by-line:
■ Magnetto Automotive Belgique saw formal transfer and disposal part way 2010.
■ the South African firms (Claudlynn Investment, Rensor Property and IG Investment) are
accounted at cost insofar as the related line-by-line consolidation thereof would be immaterial.
Looking at the associate undertakings:
■ as far as MWPT BV and Nuova Sall are concerned, the related controlling interests were
acquired formally at year-end and, as such, the entire result pertaining thereto was adjusted
prior to including line-by-line the balance sheet accounts, and only the balance sheet accounts, in the consolidation;
■ the remaining write-downs/revaluations of investments in associates stem from the losses/
profits reported by those entities for 2010 and included on a pro-rated basis in the consolidated accounts.
Prorena Ortolano S.r.l. and Itla S.r.l., in which a 51% interest is held, have not been included lineby-line in the consolidation due to the governance arrangements extant with the venturer under
which joint control is implied. Accordingly, insofar as jointly controlled, Prorena Ortolano S.r.l.
and Itla S.r.l. have been accounted for using the equity method. In order to ensure proper and complete disclosure, set forth below are the operating and financial highlights of Prorena Ortolano S.r.l.
and Itla S.r.l. at December 31, 2010 (all amounts in €/’000):
Prorena Ortolano S.r.l.
Itla S.r.l.
Equity
17,810
7,554
Total assets
59,654
34,959
Sales revenue
78,495
42,460
3,396
2,554
Net result
Financial receivables
Financial receivables at December 31, 2010 relate primarily to financial receivables (Euro 3 million) due from Itla S.r.l. in respect of financing arrangements inked in January 2010 with maturity
profile December 2012.
Investment securities
Investment securities at December 31, 2010 relate primarily to Italian Government Securities (Euro
19 million) held by CLN S.p.A., the parent company. Insofar as held for longer-term investment
purposes, the securities referred to above are recognized in the consolidated financial statements
at cost.
130
4.2 CURRENT ASSETS
Inventories
12.31.2010
Raw materials, ancillary materials and consumables
12.31.2009
158,550
147,885
Work-in-progress and semi-finished goods
28,969
26,991
Contract work-in-progress
52,955
64,697
Finished goods and goods for resale
53,214
45,322
5,010
2,230
298,698
287,125
Advances
Total
Inventories are shown net of the reserve for the write-down of inventories amounting to Euro
16,304 thousand (December 31, 2009: Euro 25,157 thousand) provided to cover raw materials no
longer used in current production as well as finished goods, goods for resale and obsolete or slowmoving ancillary materials in inventory, and lastly, to write down the value of inventories to fair
value based on market conditions when these reflect impairment.
Set out below is the movement for the year on the write-down reserve, the year-end balance of
which is deemed to be appropriate in relation to inventory risk:
Reserve for the write-down of inventories as at 12.31.09
Provision
Use/Other changes
Reserve for the write-down of inventories as at 12.31.10
25,157
2,871
(11,724)
16,304
As at December 31, 2010, the reserve for the write-down of inventories has been provided, in the
amount of Euro 10.3 million, to cover raw materials, in the amount of Euro 2 million, to cover
semi-finished goods and, in the amount of Euro 3.9 million, to cover finished goods.
Primarily pushing through the year-on-year decrease in the reserve for the write-down of inventories was the provision recorded in prior periods (December 31, 2009: some Euro 9.5 million) to
cover the steel stocks of the SSC Division companies, as released wholly over the last twelve months
inasmuch as the FIFO inventory value was lower than presumed realizable value.
Contract work-in-progress relates primarily to equipment and die costs incurred by the Automotive Division for new model production start-up. On entering into production, the equipment and
dies are billed to customer, whilst the costs, held in suspense in inventory during production, are
released to the income statement. The relative margin is spread over five years (presumed average
production term) in order to allocate to each period the effective net revenues. Financially, the
impact was covered entirely by advances collected from the relative customers, as classified in the
accounts under payables.
131
Receivables
Receivables classified under current assets are analyzed as follows:
12.31.2010
Trade receivables
12.31.2009
287,773
233,786
Receivable from subsidiaries
1,318
341
Receivable from associates
26,276
21,436
Receivable/Recoverable from taxation authorities
21,478
24,819
Deferred tax assets
35,513
39,963
877
1,165
45,135
34,841
418,370
356,351
Receivable from other enterprises
Other receivables
Total
Trade receivables
Trade receivables as at December 31, 2010 amount to Euro 287,773 thousand (December 31, 2009:
Euro 233,786) and are shown net of write-down reserves in the amount of Euro 11,939 thousand. The trade receivables are stated net of receivables sold or securitized without recourse for an
amount totaling Euro 118 million (December 31, 2009: Euro 166 million).
Set out below is the movement for the year on the write-down reserve, the year-end balance of
which is deemed to be appropriate in relation to the risk for doubtful accounts outstanding:
Reserve for the write-down of trade receivables as at 12.31.2009
Provision
14.306
1.017
Use /Other changes
(3.384)
Reserve for the write-down of trade receivables as at 12.31.2010
11.939
Accounts receivable from subsidiaries
Accounts receivable from subsidiaries as at December 31, 2010 relate, in the amount of Euro 1.3
million, to financial accounts receivable from the subsidiary Aviscali.
Accounts receivable from associates
Accounts receivable from associates as at December 31, 2010 amount to some Euro 26,276 thousand (December 31, 2009: Euro 21,436 thousand).
The following table sets out the more significant transactions put in place at the consolidated balance sheet date:
132
12.31.2010
12.31.2009
Amounts due from associates
Gervasi Polska
1,204
1,129
4
-
Proma Poland
89
-
Metaltranciati
7
18
1,263
1,411
72
430
Itla S.r.l.
4,587
4,248
Dorbyl MW
2,888
116
-
3,224
Cellino Group
3,692
-
Prorena Ortolano
2,518
948
3
5
9,549
8,469
400
1,438
26,276
21,436
CDS
Almasider
OMV
MWPT
Delna
JBM – MA
Gruppo Lima
Total
Transactions entered into with associates by the CLN Group are primarily commercial in nature.
Aside from the following positions, the accounts receivable presented above are commercial in nature:
■ the account receivable from JBM-MA originates primarily from presswork lines transferred
over the course of 2008;
■ the accounts receivable from DMW include the Euro 2.5 million financing provided by MW
Italia;
■ the accounts receivable from Prorena Ortolano include a receivable in the amount of Euro
1.4 million resulting from adhesion by the associate to the CLN Group national tax consolidation program.
The positions vis-à-vis MWPT are closed as a result of the entity being included line-by-line in the
consolidation.
The positions vis-à-vis Gruppo Lima have been recovered progressively over the course of 2010 as a
result of the credit recovery schedule negotiated between the parties; the residual amount due was
collected wholly in 1Q2011.
Recoverable/Receivable from taxation authorities
Amounts recoverable or receivable from taxation authorities are represented primarily by VAT recoverable from Italian taxation authorities (Euro 15,915 thousand) and income tax (Euro 4,108
thousand).
Deferred tax assets
Information about deferred tax assets, amounting to Euro 35,513 thousand (December 31, 2009:
Euro 39,963 thousand) can be found in the Note relating to the “Reserve for taxation, including
therein deferred taxation”.
133
Accounts receivable from other enterprises
Accounts receivable from other enterprises as at December 31, 2010 amount to some Euro 877
thousand (December 31, 2009: Euro 1,165 thousand).
12.31.2010
12.31.2009
Amounts due from other enterprises
IM S.p.A.
92
673
Emarc
667
487
Minor other enterprises
118
5
Total
877
1,165
Other receivables
Other receivables as at December 31, 2010 amount to Euro 45,135 thousand (December 31, 2009:
Euro 34,841 thousand). These relate, among the other things, to:
■ Amounts due from factoring companies in respect of receivables sold and not yet advanced
in the amount of Euro 21.7 million; the more significant of these are:
(i) accounts receivable by Wagon Italia from Mediofactoring in the amount of Euro 13.2
million (December 31, 2009: Euro 10.5 million);
(ii) accounts receivable by EUV from Banque Palatine in the amount of Euro 4 million (December 31, 2009: nil);
(iii) accounts receivable by MW France from Eurofacteur in the amount of Euro 3.3 million
(December 31, 2009: Euro 4 million).
■ Advances to suppliers in the amount of Euro 4.7 million;
■ Advances to employees in the amount of Euro 1.5 million;
■ Receivable from provident and social security institutes in the amount of Euro 1.2 million;
■ Other sundry receivables in the amount of Euro 13 million.
Cash at bank and on hand
Cash at bank and on hand as at December 31, 2010 amount to Euro 74,183 thousand, and are composed of the following:
12.31.2010
Bank and post-office deposits
Cash and valuables on hand
Total
12.31.2009
74,074
59,423
109
100
74,183
59,523
Cash at bank and on hand reflect a sizeable uplift from December 31, 2009, driven through by bolton cash flow from operating activities.
134
4.3 PREPAID EXPENSES AND ACCRUED INCOME
12.31.2010
12.31.2009
Prepaid expenses
3,329
240
Accrued income
1,541
2,483
Total
4,870
2,723
Prepaid expenses and accrued income are recognized in the accounts once these have been assessed
and measured pursuant to the requirements of law and, not least, in accordance with the accrual
basis of accounting. Encompassed therein are insurance prepaid expenses, administrative consultancy prepaid expenses and lease rental prepaid expenses.
4.4 EQUITY AND LIABILITIES
Equity
12.31.2010
Share capital
12.31.2009
235,000
235,000
-
-
13,463
13,463
3,720
3,720
100,000
100,000
- Consolidation reserve
7,553
3,228
- Cumulative translation adjustment
5,060
-6,090
9,140
111,913
13,151
-102,773
387,087
358,461
22,375
17,481
409,462
375,942
Share premium reserve
Revaluation reserve
Legal reserve
Other reserves
- Capital account reserve
Retained earnings (accumulated deficit)
Profit (loss) for the year
Equity attributable to the Group
Minority interest
Total Equity
As at December 31, 2010, share capital, fully subscribed and paid-in, is represented by 235,000,000
ordinary shares, with a par value of Euro 1.00 each.
135
Set forth below is the statement reconciling net income and equity as per financial statements of
CLN S.p.A., the parent company, as at December 31, 2010 to consolidated net income and consolidated equity for the year then ended (all amounts in thousands of Euro):
As per CLN S.p.A. financial statements
Effect of eliminating the carrying amount of
investments in consolidated companies
Effect of accounting for the net equities and results
for the year reported by consolidated subsidiaries
Reversal of dividends
Reversal of investment write-downs
Reversal of intragroup gains
Consolidation difference*
Other adjustments
As reported before minority interest in the
consolidated financial statements
Minority interest
As reported after minority interest in the consolidated
financial statements
Net Income
Equity
7,104
368,579
-658,974
63,518
708,680
-47,736
-40,322
11,423
-
485
-32,195
-13,411
37,085
-4,446
26,609
16,937
409,462
-3,786
-22,375
13,151
387,087
(*) Includes differences arising as a result of eliminating the book value of the investment in consolidated companies against the
corresponding share of their net equities on first-time consolidation. As placed in evidence earlier under ‘Consolidation principles’,
any differences arising are allocated, based upon expert appraisals, to the assets and liabilities of the company to be consolidated. As
appropriate, positive differences are classified as goodwill.
The following table sets out the movement for the year on consolidated equity (all amounts in
thousands of Euro):
136
Balance as at
December 31, 2008
Allocation of
FY2008 result
Dividends
Monetary
revaluations
FOREX differences
and other increases/
(decreases)
FY2009 result
Share
capital
Capital
account
reserve
Other
reserves/
Retained
earnings
Result for
the year
Equity
attributable
to Group
Minority
interest
Total Equity
(Group +
Minority)
235,000
-
105,967
9,790
350,757
14,204
364,961
-
-
9,790
(9,790)
-
-
-
-
-
(1,175)
-
(1,175)
-
(1,175)
-
100,000
-
-
100,000
-
100,000
-
-
11,652
-
11,652
531
12,183
-
-
-
(102,773)
(102,773)
2,746
(100,027)
100,000
126,234
(102,773)
358,461
17,481
375,942
-
(102,773)
102,773
-
-
-
Balance as at
235,000
December 31, 2009
Allocation of
FY2009 result
Dividends
-
-
1,918
-
1,918
(3,329)
(1,411)
FOREX differences
and other increases/
(decreases)
-
-
13,557
-
13,557
4,437
17,994
FY2010 result
-
-
-
13,151
13,151
3,786
16,937
Balance as at
235,000
December 31, 2010
100,000
38,936
13,151
387,087
22,375
409,462
FOREX differences arise from translation at the rates of exchange prevailing at year-end 2010 of
the opening net equities of the consolidated companies that draw up their accounts in a currency
other than the Group’s reporting currency. Primarily pushing through the positive change for 2010
was Polish Zloty, Brazilian Real and South African Rand currency appreciation.
Reserves for risks and charges
12.31.2010
Reserve for severance indemnities and similar
obligations
Reserve for taxation, including therein deferred
taxation
Reserve for other risks and charges
Total
12.31.2009
9,972
10,400
39,503
42,262
24,162
31,145
73,637
83,807
Reserve for severance indemnities and similar obligations
The reserve for severance indemnities and similar obligations, amounting to Euro 9,972 thousand, reflects the provisions recorded to cover agents’ indemnities and, not least, the indemnities
accrued in favor of employees in accordance with the requirements of law or pursuant to payroll
agreements.
137
Reserve for taxation
The reserve for taxation as at December 31, 202010 reflects the deferred tax payable by the individual companies (Euro 38,113 thousand) and the reserve for fiscal risk (Euro 1,390 thousand).
The reserve for deferred taxation, less deferred tax assets (classified separately on the asset side of
the consolidated balance sheet), is composed of the following:
12.31.2010
Reserve for deferred taxation
Deferred tax assets
Total
Deferred tax analysis
12.31.2009
38,113
42,262
(35,513)
(39,963)
2,600
2,299
12.31.2010
12.31.2009
Accelerated depreciation
7,898
5,840
LIFO/FIFO difference
4,110
3,006
Accounting for leases (IAS 17)
11,809
15,318
Fixed asset revaluations (*) and other minor items
14,296
18,098
38,113
42,262
3,935
6,607
17,524
17,131
14,054
16,225
(B)
35,513
39,963
(A)-(B)
2,600
2,299
Total Deferred tax liabilities
(A)
Taxed reserves
Statutory depreciation in excess of fiscal threshold
and other changes
Tax benefit on unused tax losses
Total Deferred tax assets
TOTAL
(*) Mac, Delfo Polska and SHL.
The following table sets out the amount of temporary differences, the related effective and theoretical deferred tax asset/(deferred tax liability) and planned timeline for the reversing thereof:
138
Taxed reserves
Unused tax losses
Statutory
depreciation in
excess of fiscal
threshold and
other changes
Total Deferred
tax assets
Accelerated
depreciation
LIFO/FIFO
difference
Accounting for
leases (IAS 17)
Fixed asset
revaluations and
other minor items
Total Deferred
tax liabilities
Amount of
Reversing Reversing Reversing Reversing Reversing
Theoretical Allow- Carrying
temporary
within
within
within
within
after
DTA/DTL
ance
amount
differences
1 year
2 years 3 years 4 years 4 years
29,765
8,190
-4,255
3,935
2,238
962
264
220
252
187,441
54,562
-40,508
14,054
1,165
-
5,726
1,275
5,888
85,724
18,934
-1,410
17,524
10,400
1,668
1,437
1,084
2,935
302,930
81,686
-46,173
35,513
13,804
2,630
7,427
2,579
9,074
34,538
8,098
-199
7,898
1,269
1,317
796
608
3,908
12,917
4,110
-
4,110
4,034
10
10
10
47
32,757
11,809
-
11,809
1,007
1,007
654
526
8,615
50,563
14,967
-671
14,296
2,795
568
-196
440
10,689
130,775
38,983
-870
38,113
9,105
2,902
1,264
1,584
23,258
As may be denoted from the table presented above, deferred tax assets on unused tax losses at
December 31, 2010 have been recognized in the amount of Euro 14 million. Taken as a whole, the
unused tax losses carried forward by the companies included line-by-line in the consolidation
amount to Euro 187 million (mainly generated by the Italian, French or South African companies
of the Group); the theoretical tax benefit on those losses would equate an amount totaling Euro
54.5 million, of which, as mentioned earlier, Euro 14 million, and only Euro 14 million, effectively
recognized. The Euro 40.5 million difference (“allowance”) represents the portion of tax benefit
not recognized, for reasons of prudence, in the consolidated accounts at December 31, 2010.
Other reserves
The reserves for other risks and charges as at December 31, 2010 amount to Euro 24,162 thousand
(December 31, 2009: Euro 31,145 thousand) and represent the provisions accrued by the individual
companies mainly in respect of business reorganization and restructuring, contractual risk, commercial risk and litigation risk.
In particular, the movement for the year unfolds from:
■ provisioning the restructuring reserves in the amount of Euro 6.5 million (December 31,
2010: Euro 13.3 million) in respect of steps and measures put in place to contend with production declines wherever deemed to be permanent in nature;
■ provisioning the reserves for fiscal risk in the amount of Euro 8 million;
■ provisioning the reserves for labor disputes in the amount of Euro 2.7 million;
■ provisioning the reserves for product warranty and general commercial risk in the amount
of Euro 3 million.
Primarily pushing through the year-on-year decrease in the other reserves was use of the restructuring reserves set aside in 2009.
139
Reserve for employee termination indemnities
The reserve for employee termination indemnities (“TFR”) as at December 31, 2010 amounts to
Euro 24,488 thousand (December 31, 2009: Euro 26,611 thousand). This reserve reflects the full
liability due by the Italian companies to employees up to December 31, 2006, as payable upon employment termination or, where applicable, advanced to employees in accordance with the requirements of law.
Balance as at December 31, 2009
26,611
Provision
6,857
Use /Other increases
(8,980)
Balance as at December 31, 2010
24,488
The movement for the year is analyzed as follows:
■ the balance on “Provision” comprises the portion of pre-existent TFR allocations revalued
and determined in accordance with the provisions of law and, not least, the TFR allocations
which, in application of pension reform laws, have been invested, as designated by the individual employee, in second-pillar pension funds or transferred to a pension fund managed
by the National Social Insurance Institute (INPS);
■ the balance on “Use / Other increases/(decreases)” relates to the following: termination indemnities (TFR) paid upon termination of employment; termination indemnities (TFR),
if any, advanced, and; termination indemnities (TFR) transferred to a pension managed by
the National Social Insurance Institute (INPS) or invested in other second-pillar pension
schemes designated by the individual employee.
Payables
Accounts payable as at December 31, 2010 amount to Euro 1,033,511 thousand. Set forth below is
the breakdown of accounts payable:
12.31.2010
Stakeholder funding repayable
12.31.2009
12
3,893
Banks
372,504
421,545
Other financers
174,153
121,890
Advances
65,547
75,610
Suppliers
339,884
293,183
1,431
-
-
221
Associates
459
4,954
Other enterprises
137
32
Taxes
30,477
17,707
Provident and social security istitutions
18,266
18,878
Other payables
30,681
24,313
1,033,551
982,226
Negotiable instruments
Subsidiaries
Total
140
Banks and Other Financers
Set forth in the table below are bank borrowings and amounts due to other financers as at December 31, 2010:
Within
12
months
Total
A/C overdrafts
11,388
Current bank borrowings 95,752
Self-liquidating
87,138
Non-current bank
178,226
borrowings
BANK BORROWINGS
372,504
Due to other financers
27,606
Leasing
90,390
Factoring (with recourse) 56,157
DUE TO OTHER
174,153
FINANCERS
Falling
due in
2012
Falling
due in
2013
Falling
due in
2014
Falling
due in
2015 and
beyond
-
Residual
lines
available
11,388
95,752
87,138
-
-
-
27,658
31,386
122,696
78,312
55,394
34,041
3,221
7,258
-
272,590
55,394
34,041
3,221
7,258
181,740
20,026
25,734
56,157
1,011
17,659
-
1,058
13,626
-
4,125
11,232
-
1,386
22,139
-
56,993
101,917
18,670
14,684
15,357
23,525
56,993
Looking back to the year ending December 31, 2009, bank borrowings and amounts due to other
financers were as follows:
Total
90,728
Within
1 year
90,728
107,733
107,733
-
-
-
56,950
223,084
67,479
62,121
88,361
5,123
-
421,545
265,940
62,121
88,361
5,123
256,007
4,079
1,918
1,713
443
5
-
Leasing
90,197
29,772
17,101
33,177
10,148
-
Factoring (with recourse)
DUE TO OTHER
FINANCERS
27,614
27,614
-
-
-
28,243
121,890
59,304
18,814
33,620
10,153
28,243
A/C overdrafts
Current bank borrowings
Non-current bank
borrowings
BANK BORROWINGS
Due to other financers
From 1
to 2 years
-
From 2
to 5 years
-
Beyond
5 years
-
Residual
lines available
199,057
“A/C overdrafts” mainly relate to advances on invoices; “current bank borrowings” mainly relate to
advances on import and hot money lines.
“Non-current bank borrowings” include the Euro 135 million pool financing (syndicated loan)
entered into with Banca Monte dei Paschi di Siena S.p.A. in July 2007; as at December 31, 2010,
the residual balance thereon equates some Euro 74.2 million. The financing is covered by economic-financial performance covenants (ratios) determined on the basis of the data included in
the consolidated financial statements of the CLN Group; as at December 31, 2010, those financial
performance indicators or ratios have been complied with.
141
Further details and information about the year-on-year decrease in financial debt can be found in
the Report on Operations.
Advances
Advances mainly relate to customer prepayments toward specifically ordered tooling and equipment
earmarked for resale upon completion and underlying-product series-production launch. Collecting the more significant amounts were the subsidiaries MA Tool and Die (Euro 19.1 million – tooling and equipment realized for the customer Ford and Volkswagen), MA France (Euro 15.6 million
– tooling and equipment realized for the customer PSA), Eurostamp (Euro 15.6 million – tooling
and equipment realized for the customer Renault), MAD (Euro 3.5 million – tooling and equipment
realized for the customers Daimler and BMW), and Presswork Division’s South American subsidiaries (totaling Euro 5.9 million – tooling and equipment realized for the customer PSA).
Suppliers
Supplier payables, less trade discounts, as at December 31, 2010 amount to Euro 339,884 thousand
(December 31, 2009: Euro 293,183 thousand).
Subsidiaries
Accounts payable to subsidiaries as at December 31, 2010 amount to Euro 459 thousand (December 31, 2009: Euro 4,954 thousand).
12.31.2010
12.31.2009
Due to associates
Nuova Sall
-
595
174
108
-
4.200
170
-
Prorena Ortolano
23
-
Itla
87
-
Other
5
51
Total
459
4,954
Delna
MWPT BV
Cellino Group
Nuova Sall and MWPT BV are included in the CLN consolidation on a line-by-line basis with effect
from FY2010.
142
Other enterprises
Accounts payable to other enterprises as at December 31, 2010 amount to Euro 137 thousand (December 31, 2009: Euro 32 thousand).
12.31.2010
12.31.2009
Due to other enterprises
Emarc
41
32
Other
96
-
Total
137
32
Taxes
Tax payables as at December 31, 2010 amount to Euro 30,477 thousand and are composed of the
following:
12.31.2010
Income tax payable
12.31.2009
13,275
2,605
Withholding tax payable
1,897
3,410
‘Irap’ regional tax payable
1,391
2,210
Other taxes payable, including VAT payable
13,914
9,482
Total
30,477
17,707
Provident and social security institutions
This account, the balance of which at December 31, 2010 amounts to Euro 18,266 thousand, represents amounts payable to provident and social security institutions, which, for the Italian operating companies, are represented primarily by payables to the National Social Insurance Institute
(INPS), the National Insurance Institute for Industrial Accidents (INAIL), and second-pillar pension schemes designated by employees.
Other payables
Other payables, amounting to Euro 30,681 thousand as at December 31, 2010, include primarily
amounts due to employees (vacation earned as yet to be settled, etc.), as analyzed in the table below:
12.31.2010
12.31.2009
Due to employees
19,389
16,294
Other
11,292
8,019
Total
30,681
24,313
143
4.5 ACCRUED EXPENSES AND DEFERRED INCOME
12.31.2010
12.31.2009
Accrued expenses
5,529
11,796
Deferred income
24,761
10,082
Total
30,290
21,878
Deferred income reflects primarily (Euro 12.3 million) among the other things the accounting
policy for contract work, whereby the margin is spread over five years in order to allocate to each
period the effective net revenues; also encompassed therein is deferred income relating to the capital contributions received by certain Presswork Division companies (Euro 2.5 million).
Accrued expenses include primarily accruals for payroll remuneration and charges.
4.6 MEMORANDUM ACCOUNTS
The memorandum accounts are presented at the foot of the consolidated balance sheet to which
reference should be made.
Sureties have been given in the amount of Euro 1.8 million and Euro 2 million to unrelated customers and Simest, respectively.
Commitments for derivatives relate to the following: Interest Rate Swap agreements entered into by the
subsidiaries MA and MAC (notional amount totaling Euro 25 million at December 31, 2010; fair value
at December 31, 2010 show a loss of Euro 0.2 million) in a design to swap into fixed interest rates the
floating rates attached to certain medium-term loans and financing, and foreign currency purchases
(corresponding value: Euro 18.5 million) forward agreements entered into by Delfo Polska in a design
to mitigate exposure to foreign exchange risk arising from steel supplies denominated in Euro.
5 NOTES TO THE CONSOLIDATED INCOME STATEMENT ACCOUNTS FOR THE YEAR
ENDED December 31, 2010
Before turning to analyze the individual consolidated income statement accounts, it should be
noted that the results of operations are examined and discussed, as required by Article 2428.1 of
the Italian Civil Code, in the Report of Operations.
In view of the detailed disclosure and Notes to the Consolidated Balance Sheet accounts presented
earlier, only the more significant consolidated income statement lines are analyzed below.
5.1 Revenues
Revenues from sales
In the year to December 31, 2010, the CLN Group captured sales revenue in the amount of Euro
1,700,886 thousand.
The Group reaches across differing business lines and operates in disparate geographic regions. Set
out below is the breakdown of revenues by business line:
144
F/Y 2010
Revenues from the sale of steel
Revenues from the sale of pressed parts
Revenues from the sale of wheels
Total
F/Y 2009
346,782
246,949
1,119,008
960,806
235,096
204,777
1,700,886
1,412,532
Set out below is the breakdown of revenues by geographic region:
F/Y 2010
F/Y 2009
Italy
521,943
386,948
EU-27 member States (excluding Italy)
813,467
883,792
Rest of the world
365,476
141,792
1,700,886
1,412,532
Total
Looking at FY2010 sales revenue hiked across the EU-27 landscape (excluding Italy), sales revenue from
France came to Euro 262 million; sales revenue from Germany came to Euro 122 million; sales revenue
from Spain came to Euro 44 million, and sales revenue from the UK came to Euro 19 million.
Looking at FY2010 sales hiked across the rest of the world, sales revenue from Argentina came to
Euro 66 million; sales revenue from Brazil came to Euro 110 million, and; sales revenue from South
Africa came to Euro 71 million. Further information about sales revenue growth can be found in
the Report on Operations.
Other revenues and income
Other revenues and income as at December 31, 2010 amount to Euro 219,463 thousand (December
31, 2009: Euro 121,027 thousand):
F/Y 2010
Scrap and rejects sold
F/Y 2009
102,488
56,512
583
354
1,696
446
Tooling, equipment and other
114,696
63,715
Total
219,463
121,027
Fixed asset disposals
Rental income
On the one hand, the year-on-year steep uplift in revenues from scrap sales stems from bolt-on
volumes machined and, in part, from the upward route tracked by the average price of scrap over
the last twelve months. The year-on-year increase in revenues from the sale of tooling and equipment arises from or relates to certain meaningful dies and forged parts realized by the Presswork
Division’s French, German and South American subsidiaries and billed to customers.
145
5.2 production costs
Raw materials, ancillary materials, consumables and goods for resale purchased.
The balance on this account line, Euro 1,221,624 thousand, is detailed as follows (all amounts in
thousands of Euro):
F/Y 2010
Raw materials
F/Y 2009
1,099,688
707,958
Ancillary materials and consumables
23,891
94,833
Goods for commercialization
78,071
40,316
Other purchases
19,974
25,468
1,221,624
868,575
Total
Driving through the year-on-year meaningful increase in raw material purchasing costs were bolton volumes purchased (as opposed to the bearish destocking policy followed the year before) and,
not least, from average steel prices in 2010 that soared from the year before.
Service costs
As analyzed below, service costs for fiscal 2010 amount to Euro 190,040 thousand:
F/Y 2010
F/Y 2009
Freight
43,775
32,753
Maintenance
24,995
19,012
Energy and other utilities
30,046
24,248
Legal, advisory and auditing
6,477
7,819
Insurance
2,863
3,387
Technical consultancy
3,857
3,612
Fees to directors
4,012
2,598
704
608
3,007
2,837
591
332
69,713
56,231
190,040
153,437
Fees to statutory auditors
Postage, telephone and fax
Advertising and promotion
Machining outsourced and other service costs
Total
Mainly explaining the Euro 37 million year-on-year increase are bolt-on volumes machined and
shipped and, by way of attendant consequence, bolt-on service costs in terms of freight, energy
and other utilities, and machining outsourced. Bolt-on use of the production lines led to bolt-on
maintenance costs.
Expenses relating to the use of third party assets
As analyzed below, expenses relating to the use of third party assets for fiscal 2010 amount to Euro
13,427 thousand:
146
F/Y 2010
Hire, lease and rental expense
F/Y 2009
10,532
13,050
Other
2,895
1,122
Total
13,427
14,172
Personnel expenses
F/Y 2010
Salaries and wages
Social security contributions
Employee termination indemnities
Reserve for severance indemnities and similar
obligations
Other personnel expenses
Total
F/Y 2009
189,720
164,082
56,123
53,294
6,857
6,907
650
1,393
23,296
8,376
276,646
234,052
The average number of employees in 2010 is reported below on a comparative basis with the year
before:
F/Y 2010
Managers and supervisors
F/Y 2009
216
227
Clerks
2.120
1,789
Workers
6.418
5,358
Total
8.754
7,374
Temporary labor as at December 31, 2010 equates 1.089 units (246 at 31, December 2009). With
reference to the closing balance number, as at 31 December the overall headcount was 8.508 units
(7.988 as at December 2009). This overall increase (both average and closing figures) is due particularly to the perimeter variation with admission in 2010 of MWPT Group (Russia), South Africa
operations and Japan and Malaysia (overall impact of about 1.017 units).
Depreciation and write-downs
The information by the four sub-headings required is presented in the consolidated income statement.
Other operating expenses
Other operating expenses, amounting to some Euro 14,417 thousand, are detailed as follows:
F/Y 2010
Taxes and duties (other than income taxes)
F/Y 2009
10,304
7,762
322
97
Other
3,791
12,348
Total
14,417
20,207
Scholarships and membership fees
147
5.3 FINANCIAL INCOME AND EXPENSES
Income from investments
Encompassed within “Income from investments” are the dividend payouts received by the Group
from subsidiaries not consolidated.
Other financial income
F/Y 2010
Interest income-banks
F/Y 2009
98
61
375
246
Other
2,768
850
Total
3,241
1,157
From securities classified under fixed assets
Interest expense and other financial charges
F/Y 2010
Interest expense-banks
F/Y 2009
9,133
10,879
Other commission and interest expense
15,314
20,694
Total
24,447
31,573
Explaining the year-on-year improvement in net financial charges is the level of average financial
indebtedness for FY2010, which was sizeably lower than the like-for-like average figure for FY2009
and the like-for-like year-end figure for FY2010. Particularly impacting the latter was the consolidation, with regard only to the balance sheet for the month of December, of the Russian operations
of the Wheels Division (impact on debt at December in the amount of Euro 36 million negative).
Adjustments to the value of financial assets
Revaluations and Write-downs of investments comprise the portion of the net result of the companies accounted for under the equity method.
148
5.4 extraordinary income and expenses
Extraordinary income
F/Y 2010
F/Y 2009
Gain on disposals
2,084
33,287
Out-of-period income
1,894
4,202
Other
702
9,056
Total
4,680
46,545
The gain on disposals recognized in FY2010 mainly relates to gains arising on the disposal of tooling and equipment to unrelated parties.
Looking back to FY2009, the gain on disposals mainly related to:
■ Euro 16.8 million gain arising on sale of the mutual investment fund units held and classified
by CLN under financial fixed assets;
■ Euro 13 million gain arising on disposal by Gianetti S.p.A. of the building at Rho;
■ Euro 3.3 million gain arising on disposal of the building at Aprilia previously held by MA and
CLN Sud.
Extraordinary expenses
F/Y 2010
F/Y 2009
Loss on disposals
836
1,027
1,354
37
Other
21,030
45,045
Total
23,220
46,109
Taxes relative to prior periods
Other extraordinary expenses recognized in FY2010 mainly include:
■
business reorganization and restructuring expenses in the amount of Euro 5.3 million. Provision
was made for those expenses as a result of the programs launched by Company Management to
streamline production at the production sites (mainly Italian production sites) where production
declines were deemed to be permanent in nature. More pointedly, the provision related to the following: in the amount of Euro 2 million, to the Automotive Division; in the amount of Euro 1.4
million, to the Wheels Division, and; in the amount of Euro 1.9 million to the SSC Division.
■ Items of goodwill (consolidation differences) written down in the amount of Euro 12.5 million to reflect permanent impairment losses, of which Euro 10.2 million relating to the Italian production sites of the Presswork Division and Euro 2.3 million relating to the Russian
production site of the Wheels Division.
Looking back to FY2009, other extraordinary expenses included:
■ business reorganization and restructuring expenses in the amount Euro 17.9 million. Provision was
made for those expenses as a result of the programs launched by Company Manager to streamline
production at the sites where production declines were deemed to be permanent in nature. More
pointedly, the provision related to the following: in the amount of Euro 10 million, to the Automo149
tive Division (Euro 6.7 million for the French production sites and Euro 3.3 million for the Italian
production sites); in the amount of Euro 4.3 million, to the Wheels Division (Euro 1.2 million for
the French production site, and the remainder for the Italian production sites), and in the amount
of Euro 3.6 million, to the SSC Division (entirely attributable to the Italian production sites).
■ Intangible assets and items of property, plant and equipment written down in the amount
of Euro 15.7 million to reflect permanent impairment losses. The write-downs related to the
production site at Fontanellato (Euro 6.7 million), the production site at Bologna (Euro 2.5
million), the production site at Racconigi (Euro 0.7 million), the production site at Rivoli
(Euro 0.9 million) and the production site at Brescia (Euro 4.9 million).
■ Provisions for fiscal risk in respect of the South American companies (Euro 5 million)..
5.5 INCOME TAXES
As analyzed in the table below, the balance on this account is represented by current and deferred income taxes, net. Current income taxes relate to ‘Ires’ corporation tax or equivalent taxes for the foreign
companies and, for the Italian companies only, to ‘Irap’ regional tax on manufacturing activities.
(Accounts in Euro/’000):
F/Y 2010
‘Ires’ and other corporation taxes
F/Y 2009
25,368
17,493
2,922
983
Total Current taxes
28,290
18,476
Deferred tax assets
(4,166)
(13,788)
Total Income taxes
24,124
4,688
‘Irap’
When excluding the ‘Irap’ regional tax charge, the tax rate 2010 for the Group was 51% and, as
such, very high. Impacting harshly the tax rate was the write-down of investments (Euro 6.7 million, not tax deductible, related fiscal impact estimated to stand around Euro 2 million) and the fact
that no provision had been made for deferred tax assets on losses for the year originating from the
Italian and French subsidiaries (tax asset estimated to stand around Euro 6 million), given that it
was probable that the temporary difference would not reverse in the foreseeable future.
5.6 audit fees (art. 2427 c.c)
Audit fees for the audit of the consolidated financial statements for FY 2010 amounted to Euro
34,000 (*).
(*) Excluding the amounts paid for the audit of the statutory financial statements of the subsidiaries of the group.
150
By Order of the Board of Directors
Chairman
Anna Reinaudo
151
152
CONSOLIDATED CASH FLOW STATEMENT (Accounts in Euro/’000)
12.31.2010
A)
Cash and cash equivalents at beginning of the year
(459,574)
(624,729)
Operating income
89,068
(43,692)
Depreciation and amortization
89,276
89,499
302
(10,822)
Taxation
(24,124)
(4,688)
Change in reserves for risks and future charges
(19,331)
(648)
Cash flow generated by (used in) operations before
change in working capital
135,191
29,649
Change in working capital
(14,214)
153,148
Cash flow generated by (used in) operations
120,978
182,797
Capital investments toward intangible assets and items
of property, plant and equipment
(61,060)
(30,400)
-
71,044
(1,865)
(31,455)
(62,925)
9,189
58,053
191,986
(22,688)
(29,692)
Adjustments to the value of financial assets
(6,779)
(19,333)
Extraordinary income/(expenses)
(5,950)
(3,732)
Cumulative translation adjustment
12,135
(3,476)
Dividends
(1,411)
(1,175)
Capital contribution
35,000
65,000
489
9,374
Change in deferred taxation
B)
C)
12.31.2009
Disposals for FY2009
Change in financial activities
D)
Cash flow generated by (used in) investing activities
E)
Free Cash Flow
Financial income/(expenses)
Other changes in capital
F)
Cash flow generated by (used in) funding activities
10,796
16,966
G)
Net change in monetary funds
68,850
208,952
(56,600)
(43,797)
(447,326)
(459,574)
Change in the scope of consolidation
H)
Cash and cash equivalents at end of the year
The breakdown of Cash and Cash Equivalents at end of the year can be found in the Report on
Operations.
Also encompassed within the change in the scope of consolidation for FY2010 is the impact on
Group net financial indebtedness arising on the acquisition of Group MWPT, RK Excel Japan/
Malaysia and the South African operations of the Presswork Division.
Looking back to FY1009, the change in the scope of consolidation arose from the acquisition of
Group ICL, Wagon and WM.
153
154
COMPANIES CONSOLIDATED LINE-BY-LINE
Registered
office
Business
Share capital
Parent company
% parent
ownership
Note 1
Caselette
(Turin, Italy)
Sheet steelwork and
trading
Euro
235,000,000
Canessa S.p.A
Fontanellato
(Parma, Italy)
Sheet steelwork and
trading
Euro
27,300,000
100.00
Canessa Slovakia
s.r.o.
Kosice
Slovakia
Sheet steelwork and
trading
Euro
10,000,000
100.00
MW Italia S.p.A.
Rivoli (Turin,
Italy)
Production and sale of
steel wheels
Euro
40,000,000
97.50
Ceriano
Gianetti Ruote S.p.A. Laghetto
(Milan, Italy)
steel wheels
Euro
11,615,676
97.50
CLN S.p.A.
Subsidiaries
MW France S.A.
Tergnier
(France)
steel wheels
Euro
15,191,155
97.50
MW Romania S.A.
Dragasani
(Romania)
steel wheels
New Leu
29,323,712
96.10
MW Deutschland
GmbH
Pluderhausen
(Germany)
Sale of steel wheels
Euro
100,000
97.50
D.R. S.a.r.l.
Pontcharra
(France)
Euro
50,000
97.50
Sanremo Radaelli
S.r.l.
Brivio (Lecco,
Italy)
Production and sale
of motorbike steel/
aluminum wheel rims
Euro
88,000
97.50
MWPT BV
Amsterdam
(Netherlands)
Holding company
Euro
20,000
67.76
MW Eurodisk LLC
Kingisepp
(Russia)
steel wheels
Ruble
344,684,877
67.76
Ruble
216,627,000
67.76
MW Eurodisk Trade Kingisepp
LLC
(Russia)
155
Registered
office
Business
Share capital
% parent
ownership
Subsidiaries
MW Poland S.P.
zo.o.
Warsaw
(Poland)
Production and
trading of steel wheels
Production and sale
Excel Rim Co. LTD Tokio (Japan) of motorbike steel/
aluminium wheel rims
Production and sale
Penang
of motorbike steel/
Excel Rim Sdn Bhd
(Malaysia)
aluminum wheel rims
MW Lublin S.P.
Lublin
Production and
z.o.o.
(Poland)
trading of steel wheels
Melfi
MA S.p.A.
(Potenza,
Holding company
Italy)
Wagon Automotive Fiano (Turin, Sheet steelwork and
S.r.l.
Italy)
assemblies
Zloty
50,000
97.50
Yen
10,000,000
82.97
MYR
10,800,802
45.63
Zloty
45,888,000
97.50
Euro
100,000,000
100.00
Euro
1,000,000
100.00
Chiasso
(Italy)
Villers la
Montagne
(France)
Aulnay sous
Bois (France)
Sheet steelwork and
assemblies
Euro
5,000,000
100.00
Sheet steel presswork,
and assemblies
Euro
10,249,995
100.00
Sheet steel presswork
and assemblies
Euro
15,000,000
100.00
MA Automotive
Deutschland
GmbH
Treuen
(Germany)
and assemblies
Euro
10,000,000
100.00
UM Corporation
S.a.s
Biache
Saint Vaast
(France)
and assemblies
Euro
7,000,000
60.00
8,000
100.00
2,400,000
100.00
26,741,757
82.79
5,850,000
60.00
29,510,000
100.00
Wm S.r.l.
Eurostamp S.a.s.
MA France S.a.s.
IDEST S.a.r.l.
MA Automotive
Argentina S.A.
Administration,
Aulnay sous
commercial and other Euro
Bois (France)
services
Buenos Aires Sheet steel presswork
Pesos
(Argentina) and assemblies
MA Automotive do Porto Real
Brasil L.t.d.a.
(Brazil)
and assemblies
Reais
Coskunoz MA
Otomotiv A.S.
Bursa
(Turkey)
and assemblies
New
Turkish
Lira
Immobilière
de Viller
Villers la
Montagne
(France)
Real estate
management
Euro
156
List of significant equity investments
Registered
office
Business
Share capital
% parent
ownership
DP Metal
Tychy
Processing Sp. Z.o.o. (Poland)
Sheet steelwork and
trading
Zloty
50,000
100,00
Zaklady Wyrobow
Kielce
Metalowych S.H.L.
(Poland)
S.A.
Real estate
management
Zloty
27,000,000
99,34
Delfo Polska S.A.
Tychy
(Poland)
and assemblies
Zloty
500,000
100,00
M.A.C. S.p.A.
Chivasso
(Turin, Italy) and assemblies
Euro
21,939,974
100,00
Nuova Sall S.p.A.
Turin (Italy)
Die production
Euro
1,500,000
51,00
MA Automotive
South Africa (Pty)
Ltd.
IG Tooling and
light engineering
(Pty) Ltd.
Uitenhage
(South
Africa)
Alberton
(South
Africa)
Rosslyn
(South
Africa)
Uitenhage
(South
Africa)
Holding company
Rand
1,001,004
100,00
and assemblies
Rand
4,000
80,00
and assemblies
Rand
1,578,947
100,00
Die production
Rand
301
100,00
MA Automotive
Rosslyn (Oty) Ltd
MA Tool and DIe
(Pty) Ltd
Note 1: Aggregate direct and indirect percentage of ownership (excluding percentage held through associate undertakings)
157
LIST OF COMPANIES CARRIED AT EQUITY
Company
Share capital
Registered office
%
Group
ownership
ITLA S.r.l.
Oggiono (Lecco, Italy)
Euro
2,500,000
51.00
LIMA S.p.A.
Milan (Italy)
Euro
1,560,000
37.48
Metaltranciati S.r.l.
Ozzano dell’Emilia (Bologna,
Italy)
Euro
566,800
48.00
ALMASIDER d.o.o
Kumrovec (Croatia)
Kuna
29,320,000
50.00
Aviscali S.r.l.
Turin (Italy)
Euro
30,000
100.00
O.M.V. S.p.A.
Lesmo (Milan, Italy)
Euro
2,500,000
25.00
Gervasi Polska
Kielce (Poland)
Zloty
4,000,000
35.00
Commerciale
Siderurgica del Sud
Flumeri (Avellino, Italy)
Euro
1,000,000
30.00
JBM – MA
Automotive Private
Limited
Pune (India)
Rupee
608,992,000
50.00
Dorbyl MW
Port Elizabeth (South Africa)
Rand
4,000
48.75
Delna S.p.A.
Brivio (Lecco, Italy)
Euro
2,000,000
31.26
Prorena Ortolano
S.r.l.
Civate (Lecco, Italy)
Euro
1,272,532
51.00
Cellino S.r.l.
Grugliasco (Turin, Italy)
Euro
245,902
39.00
158
List of significant equity investments
LIST OF COMPANIES CARRIED AT COST
Company
Registered office
Share capital
%
Group ownership
90,000
49.00
Emarc S.r.l.
Dragasani (Romania)
Nuovo Leu
Proma Poland
Tychy (Poland)
Zloty
15,500,000
35.00
Ema Polska Sp. Zoo
Kielce (Poland)
Zloty
50,000
49.00
IM S.p.A.
Turin (Italy)
Euro
364,000
20.00
MIM G.m.b.h.
Treuen (Germany)
Euro
450,000
10.00
Etromex SA
San Pedro – Nuovo Leon (Mexico) Pesos
32,500,000
17.85
CSM S.p.A.
Rome (Italy)
Euro
520,000
4.00
A.R. Machine
Teheran (Iran)
Rials
24,444,450
9.75
Rensor Property
(Pty) Ltd.
Alberton (South Africa)
Rand
1,000
80.00
IG Tooling Property
Investments (Pty)
Alberton (South Africa)
Ltd.
Rand
6,000
80.00
Claudlynn InAlberton (South Africa)
vestments (Pty) Ltd.
Rand
1,000
80.00
TESCO GO S.p.A.
Turin (Italy)
Euro
780,000
25.00
E.M.A.R.C S.p.A.
Vinovo (Italy)
Euro
11,500,000
9.25
S.Polo Lamiere
S.p.A.
S.Polo di Torrile (Parma, Italy)
Euro
600,000
15.00
Euro
10,529,796
18.99
Ingnegneria de ProVitoria Gasteiz (Spain)
ductos Metalicos SA
159
160
Sede legale e direzione generale
C.L.N. S.p.A.
C.so Susa 13/15
10040 Casellette (TO)
Tel. 011 9782111
Fax 011 9688972
www.gruppocln.com
Stampa
Musumeci S.p.A.
Quart (Valle d’Aosta)

annual report 2010

Transcription

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