Annual Report Sustainability Report 20 1 8
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Annual Report Sustainability Report 20 1 8 Annual Report Sustainability Report 2018 Annual Report March 6, 2019 ITALMOBILIARE Società per Azioni Head Office: Via Borgonuovo, 20 20121 Milan - Italy Share Capital € 100.166.937 Milan Companies Register Translation from the Italian original version which remains the definitive one. Contents PRESENTATION General information Letter to the Stakeholders 6 Our investments 10 Net Asset Value 14 Corporate bodies 18 Notice of Call 26 ANNUAL REPORT Italmobiliare Group Directors' report General overview 32 Italmobiliare 41 Sirap 47 Italgen 51 Caffè Borbone 55 Tecnica Group 58 Iseo 60 Other activities 61 Human resources 64 Transactions with related parties 64 Disputes and pending proceedings 65 Outlook 67 Italmobiliare Group - Consolidated financial statements as at and for the year ended December 31, 2018 Financial statements 70 Notes 75 Annex 149 Declaration of manager in charge of financial reporting 152 Report of the Independent Auditors 153 Italmobiliare S.p.A. Directors' report General overview 163 Transactions with related parties 172 Report on Corporate Governance and ownership structure 177 Italmobiliare S.p.A. - Separate financial statements as at and for the year ended December 31, 2018 Financial statements 216 Notes 220 Proposal for the approval of the separate financial statements and the allocation of the year's earnings 262 Annexes 263 Declaration of manager in charge of financial reporting 271 Report of the Board of Statutory Auditors 272 Report of the Independent Auditors 283 SUSTAINABILITY REPORT 2018 - CONSOLIDATED NON-FINANCIAL STATEMENT IN ACCORDANCE WITH THE LEGISLATIVE DECREE NO. 254/2016 Methodology 292 1.Italmobiliare Group 296 Italmobiliare S.p.A. 296 Ethics and Integrity 298 Governance and Risk Management 301 Sustainability Management 306 2.Italmobiliare Group: economic responsibility 308 Economic performance of Italmobiliare Group 308 Value generated and distributed 308 Sustainable investments 309 3.Italmobiliare Group: environmental responsibility 312 Environmental management policies of Sirap 314 Energy consumption and emissions of Sirap 315 Management of the water resources by Sirap 317 Materials and packaging of Sirap 318 Environmental management policies of Italgen 319 Energy consumption and emissions of Italgen 320 Management of water resources by Italgen 321 Environmental management policies of Caffè Borbone 322 Materials and packaging of Caffè Borbone 323 4.Italmobiliare Group: Business Management 324 Human Resource Management 324 Diversity, equal opportunities and well-being 325 Valorization and Development of Human Capital 327 Health and Safety of Employees 328 Products, services and customer care 332 Quality of products and services 332 Attention towards customers / investors 334 Responsible procurement practices 335 Responsibility towards the community 337 Initiatives and sponsorship 337 Annex 339 Global Reporting Initiative Content Index 352 Report of the Independent Auditors 362 Letter to the Shareholders 2018 was another year of intense activity that saw us continue to build and develop the company’s investment portfolio. The acquisitions we completed during the year through constructive relations with outstanding companies and entrepreneurs confirmed and consolidated our role as a strategic partner and long-term investor, able to provide managerial and industrial expertise as well as financial resources. Despite business and financial conditions that, contrary to the positive forecasts at the beginning of 2018, proved to be some of the most difficult of recent years, we can take satisfaction in our work. The search for interesting, dynamic activities led us to analyze numerous dossiers, as a result of which we identified a number of valid diversification and development opportunities. The new investments were finalized with the formulation of specific targeted solutions on a basis of exclusivity, an approach consistent with our industrial and entrepreneurial vision. In this way, in just over twelve months, we reached agreements for four acquisitions: Tecnica Group, acquired at the end of 2017, was joined in 2018 – for investments totaling an overall amount of around 180 million euro – by a majority holding in Caffè Borbone (one of Italy’s leading producers and distributors of coffee pods and capsules) and a qualified minority stake in Iseo (active in mechatronic access control systems and present on the main European markets). Toward the end of the year, negotiations went ahead for the acquisition of a minority shareholding in Autogas Nord (a leading Italian LPG distributor); the transaction was completed in early January 2019, for an additional investment of approximately 60 million euro. To respond adequately to the challenges on its core markets, Italmobiliare strengthened its management team, paying particular attention to providing its investees with management and strategic support. During the year, in part thanks to our support for their business development, Caffè Borbone and Tecnica Group outperformed their budget growth projections, and reported significant value creation. Italmobiliare is currently engaged in selecting operations consistent with its mission as an active investor in industrial companies, while investments of a purely financial nature are taking more of a secondary role. Our NAV was 1,421.4 million euro at the end of 2018, against 1,545.2 million at the end of 2017, reflecting the evolution in the quality of the company’s assets. It is important to note that the revaluations of our portfolio companies (with an increase in value of approximately 70 million euro) partly offset the writedowns on our equity investments in listed companies, notably HeidelbergCement and Mediobanca, whose stock prices were at minimum values at the end of the year, although, since then, in this first quarter, they have made a partial recovery. 6 | 2018 Annual Report | Presentation Net Asset Value 2018 Real estate and Investments in listed related activities companies 51.4 million euro 326.0 million euro 2018 Other investments Portfolio Companies 72.8 million euro 1,421.4 497.5 million euro million euro Financial assets, trading and cash Private Equity 344.9 million euro 128.8 million euro Many initiatives were launched and will be carried forward during 2019: chiefly, the consolidation of Caffè Borbone’s growth in Italy on all distribution channels, the continued re-focusing of the Tecnica Group’s portfolio of iconic brands, the implementation of efficiency and development plans at Italgen, Sirap and Iseo and, lastly, support for Autogas Nord, which, through its collaboration with Italmobiliare, has successfully completed the acquisition of Lampogas, positioning itself as a primary player on the Italian LPG distribution market. Constant attention will also be devoted to the horizontal development lines identified with the management teams of all the portfolio companies: the pursuit of operational efficiency, the implementation of marketing and brand enhancement operations, as well as targeted M&A activity, in order to accelerate growth through acquisitions. Finally, we developed effective solutions to manage human resources and attract talents, which will continue this year in parallel with the implementation of management and control systems and the adoption of best corporate governance practices, which have already led the boards of our associates to introduce independent directors, risk monitoring bodies and a range of assessment and audit activities. Risk monitoring, at the level of our overall portfolio, was further strengthened by an analysis to map key factors (regulatory, environmental, market, macro, technological) and formulate appropriate risk mitigation initiatives with the companies’ management teams. The analysis showed that the Italmobiliare portfolio’s overall risk level was in line with global stock indices, with adequate levels of diversification and decorrelation. Also, exposure to the Italy “country risk” was evenly spread: given 60% of investments in companies with registered offices in Italy, the actual geographical distribution of turnover reflects exposure to the Italian market limited to around 40%, with 34% arising from sales in other European countries and 26% in the rest of the world. www.italmobiliare.it | 7 Backed by this analytical assessment of our portfolio, in 2019 we shall maintain a selective approach in our search for new investments – with a priority focus on businesses with an international vocation and high technology content operating in complementary sectors – to confirm a strategic approach guided by our many direct relationships with the most dynamic players in the Italian business community. We should also underline the priority we attach to relations with our investors. As part of our initiatives to support shareholder value, after the 100 million euro voluntary public tender offer of June 2017 and the preceding conversion of savings shares into common shares, the Board of Directors will ask the AGM to cancel almost all the treasury shares held by the company. Finally, with a view to strengthening and improving our reputation in the financial community and fostering livelier trading of Italmobiliare shares, we augmented our Investor Relations activities: our stock is now covered by analysts from several leading brokers and we have begun holding meetings with the top financial players in both Europe and the USA, so that we can share our renewed mission and development goals with a wider and more