Pininfarina Group Annual Financial Report
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PININFARINA GROUP ANNUAL FINANCIAL REPORT AT DECEMBER 31, 2012 Pininfarina S.p.A. – Share Capital: 30,166,652 euros, fully paid-in – Registered Office: 6 Via Bruno Buozzi, Turin Tax I.D. and Registration No. 00489110015, Turin Company Register 1 The financial statements of Pininfarina S.p.A., the Consolidated Financial Statements at December 31, 2012 and the Reports on Operations were approved by the Board of Directors on March 21, 2013. 2 ORDINARY SHAREHOLDERS’ MEETING MAY 6, 2013 The Ordinary Shareholders’ Meeting was convened on May 6, 2013 at 11:00 AM in the “Mythos” Hall, at the offices of Pininfarina S.p.A., 30 Via Nazionale, Cambiano (Turin), on the first calling. AGENDA 1) Approval of the financial statements at December 31, 2012 and applicable resolutions. 2) Compensation Report and resolutions required by Article 123 ter of Legislative Decree No. 58/1998. 3) Award of the assignment to perform statutory independent audits of the financial statements for the nine year period from 2013 to 2021. 3 4 Board of Directors Chairman* Paolo Pininfarina Chief Executive Officer Silvio Pietro Angori Directors Gianfranco Albertini (4) (5) Edoardo Garrone (1) (2) (3) Enrico Parazzini (3) Carlo Pavesio (1) Roberto Testore (1) (2) (3) (1) Member of the Nominating and Compensation Committee (2) Member of the Control and Risk Committee (3) Member of the Committee for Transactions with Related Parties (4) Corporate Accounting Documents Officer (5) Director Responsible for the Internal Control and Risk Management System Board of Statutory Auditors Chairman Nicola Treves Statutory Auditors Giovanni Rayneri Mario Montalcini Alternates Alberto Bertagnolio Licio Guido Giovando Secretary to the Board of Directors Gianfranco Albertini Independent Auditors PricewaterhouseCoopers S.p.A. *Powers Pursuant to Article 22 of the Bylaws, the Chairman is the Company’s legal representative vis-à-vis external parties and in court proceedings. 5 6 CONTENTS Report of the Board of Directors on Operations page 9 Significant Events Occurring Since December 31, 2012 page 16 Assessment of the Company’s Viability as a Going Concern page 24 Motion to Appropriate the Net Profit page 25 Consolidated Financial Statements at December 31, 2012 page 27 Notes to the Consolidated Financial Statements page 34 Other Information page 80 Disclosure Provided Pursuant to Article 149-duodecies of the Issuers’ page 83 Regulations Certification of the Consolidated Financial Statements Pursuant to page 86 Article 154 bis of Legislative Decree No. 58/98 Report of the Board of Statutory Auditors page 87 Report of the Independent Auditors page 89 7 8 REPORT OF THE BOARD OF DIRECTORS ON OPERATIONS Overview The Pininfarina Group On July 2, 2012, Sergio Pininfarina, lifetime member of the Italian Senate and Honorary Chairman of the Pininfarina Group, passed away at his home in Turin. We take this opportunity to remember this entrepreneur, who led his company for so many years, bringing it worldwide to the pinnacle of style, elegance and technological innovation. 2012 was characterized by some significant events that enabled the Company and the Pininfarina Group to report an increase in turnover thanks to the addition of top global customers to its portfolio. One of the reasons for this achievement was the Company’s ability to demonstrate that it has stabilized and strengthened its financial position and shareholders’ equity compared with the recent past, which enabled it to continue operating in an international economic context that remained particularly challenging. It is worth mentioning that the economic events that followed the debt restructuring transaction of 2008 caused losses of such magnitude to cause shareholders’ equity to decrease below the threshold of Article 2446 of the Italian Civil Code. The Shareholders’ Meeting held on February 15, 2012 approved a resolution to bring forward the loss in anticipation of an imminent second restructuring agreement between the Company and the Lender Institutions, which did indeed go into effect on May 1, 2012. The approval of the 2011-2018 Industrial Plan and Financial Plan by the Board of Directors of Pininfarina S.p.A. and the subsequent signing of the new Rescheduling Agreement satisfied the requirements for the Company’s recapitalization (making the actions required by Article 2446 of the Italian Civil Code no longer applicable), reestablishing a balance between the cash flows projected in the new Plans and the repayment of the remaining debt owed to credit institutions. Further to these agreements, Pininfarina S.p.A. recognized a financial gain of 44.8 million euros, which enabled it to report a substantial consolidated net profit of 32.9 million euros (net profit of 31 million euros for the Group’s Parent Company). Turning to the income statement, the acquisition of important multiyear orders produced in 2012 a significant gain in value of production compared with 2011 (+13.2%), attributable mainly to the engineering operations of the Group’s Parent Company. Important increases in business activity were also reported in Germany (engineering) and by the Italian industrial design activities. The figure for 2012 is particularly noteworthy because it was achieved during a period that was not conducive to the development of new projects in the automotive sector in most international markets. In 2012, EBITDA were negative and the negative change is even greater when a comparison is made with the corresponding amount in 2011, which, however, included the extraordinary gain generated by the divestment of the interest in the Véhicules Electriques Pininfarina Bolloré joint venture, amounting to 8.9 million euros (significantly higher than the gain of 3.2 million euros earned on the divestment of the interest in the Pininfarina Sverige joint venture). EBIT, while still negative by 8.2 million euros, improved by 0.5 million euros compared with the loss at December 31, 2011. Moreover, there was a clear improvement from the first to the second half of the year. Specifically, the data for the first six months were penalized, in addition to other factors, by extraordinary costs incurred in connection with the achievement of the agreements with the Lender Institutions and issues related to the failure to operate at full capacity, while in the second half of the year, with the start of new activities, the Group saw a steady and important reduction of its losses. Thanks to the abovementioned Rescheduling Agreement, the performance in the financial area was extremely positive, enabling the Group to close the year in the black. 9 The beneficial effects of the Rescheduling Agreement were also reflected on the value of shareholders’ equity (up from 9.6 million euros in 2011 to 39.8 million euros in 2012) and the net financial position (negative by 30.6 million euros in 2012 compared with a negative balance of 77.9 million euros in 2011), while the principal amount of the debt owed to credit institutions decreased by 73.5 million euros. The Group’s composition changed compared with 2011, due to the deconsolidation of the Pininfarina Sverige A.B. joint venture, following the sale of the corresponding equity investment to Volvo Car Company for 30 million euros pursuant to the agreements signed in 2003, and of Matra Automobile Engineering, a French subsidiary that has been dormant since 2008, pending its liquidation, and has become irrelevant in terms of the consolidated financial statements. At December 31, 2012, the Group had 815 employees, compared with 780 a year earlier (+4.5%). Pininfarina S.p.A. The salient events concerning Pininfarina S.p.A. that occurred in 2012 are reviewed below. The Shareholders’ Meeting of February 15, 2012, having been informed that the Company found itself in the situation governed by Article 2446 of the Italian Civil Code, resolved to bring forward the loss at October 31, 2011, amounting to 16.9 million euros. The Rescheduling Agreement executed with the Lender Institutions—effective as of May 1, 2012—made it possible to recognize in the income statement a significant financial gain (44.8 million euros), thereby completing the desired recapitalization and resolving the issues raised by the relevant provisions of the civil code. There are no new developments to report regarding the pending VAT dispute, which started in 2006 and, after making its way through two levels of the judicial system, reached the Supreme Court of Cassation in the spring of 2011. As for compliance with the commitments and restrictions that exist under the current Rescheduling Agreement between Pininfarina S.p.A and the Lender Institutions, all of the relevant covenants were complied with in 2012. Human Resources and the Environment The tables below show the Pininfarina Group’s workforce at December 31, 2012 broken down by business sector and country. Breakdown by Business Sector Engineering Operations Styling Staff functions TOTAL 2012 475 112 103 125 815 2011 433 118 101 128 780 Please note that the number shown for the Operations Sector in 2012 does not include 54 employees transferred to B.C. Finizioni Montaggi Carrozzeria S.r.l., effective April 1, 2011, under a contract to lease certain business operations (57 employees in 2011). However, the total staff at December 31, 2012 does include 107 employees enrolled in the long-term unemployment benefit program activated for termination of business activity (127 employees in 2011). Breakdown by Country Italy Germany Morocco China TOTAL 2012 450 320 34 11 815 2011 461 275 41 3 780 Research Activities In 2012, the Group completed research activities focused on the concept of sustainable mobility (chief among them the HYBUS project, with implementation of the road testing phase) and continued 10 to engage in international collaborative projects, within the framework of E.U. programs, in the following areas: development of specific systems and components for electric vehicles, activities in the aero-acoustic field for the optimization of high energy efficiency aircraft and optimization and finalization of product development processes and methods.