The Board of Directors of IFIL, which met today in Turin under the chairmanship of Gianluigi Gabetti, approved the consolidated financial statements and the draft statutory financial statements at December 31, 2004 which will be submitted to the Stockholders’ Meeting convened on May 18, 2005 in first call and on May 20, 2005 in second call.
The IFIL Group ended the year 2004 with a consolidated net income of € 119 million, which compares with a loss of € 45 million in the prior year. The result principally stems from the gains realized on the sales of the investments in Eurofind Food and in Club Méditerranée (respectively, € 586.3 million and € 26.4 million), as well as the share of the results of the holdings, which show a loss of € 402 million.
The goal of reducing debt was reached and surpassed: the consolidated net financial position of the “holdings system” is a cash position of € 683.2 million at December 31, 2004, with an improvement of € 917.9 million compared to the indebtedness position of € 234.7 million at the end of 2003. Consolidated stockholders’ equity at the end of 2004 is € 3,916.8 million. This is a slight decrease compared to the end of 2003 (€ 3,953.9 million) partly on account of dividends paid by IFIL S.p.A in 2004.
IFIL S.p.A. reported net income of € 80.2 million, with an increase of € 7.5 million compared to € 72.7 million (approx. +10%) reported in 2003. Statutory stockholders’ equity at the end of 2004 amounts to € 3,204.9 million and is higher than at the end of 2003 (€ 3,194.4 million).
The Board of Directors voted to put forward a motion to the Stockholders’ Meeting to pay dividends of € 0.0683 per each ordinary share and € 0.089 per each savings share, for a total maximum amount of € 74.3 million (+11,4% compared to the prior year). The ex-coupon date is May 23, 2005 and dividends will be paid starting from May 26, 2005.
Lastly, the Board voted to put forward a motion to the Stockholders’ Meeting to renew the authorization for the purchase and disposition of treasury stock. In particular, the authorization vests the Board with the right to purchase on the market, for 18 months from the date of the stockholders’ resolution, up to a maximum of 90 million ordinary and/or savings shares for a maximum outlay of € 300 million, at a price of not less and not more than 15% of the market price of the stock in the trading session on the day before each single transaction. The purchases may be made to intervene in the eventuality of fluctuations in the market prices of the shares beyond normal variations associated with stock market performance and in conformity with market practice. The shares purchased under the authorization could also service the stock options of employees and directors of the Company and the Companies of the Group and also be used for possible share exchanges. IFIL, also through the subsidiary Soiem, currently holds 14,596,040 ordinary treasury shares, equal to 1.41% of the class of stock and 1.36% of capital stock.
Major events in 2004
The most important events which marked 2004 were the change in management at Fiat and monetization of the investment in Rinascente.
The change in management at Fiat was the starting point for an extensive restructuring effort. The change, planned and organized by Fiat management, encompassed the entire Group, starting from the Auto Sector. The holding company defined a clear-cut industrial perimeter and gave itself a more streamlined organization, while Fiat Auto adopted a more efficient structure which favors the responsibilization of management and rapidity in decision-taking. The resolution of the alliance with General Motors also made it possible to bring in cash resources and restored the strategic liberty necessary for the company to plan for its future development.
In the second half of December, after obtaining authorization from the competent antitrust authority, the IFIL Group sold 50% of the capital stock of Eurofind Food to the Auchan Group for € 1,062.9 million, with a gain on consolidation of € 586.3 million. The sale of Rinascente’s food business to Auchan – followed by the signing of the agreement for the sale by auction of the textile sector in the early months of 2005 which attracted the most important Italian and foreign industry and financial operators – made it possible to monetize as best as possible the progress achieved inside the individual divisions during many years of work, securing a sizable cash inflow for IFIL and ensuring excellent prospects of growth for the companies of the retail group.
As for Worms & Cie, the start of the process to monetize Permal and the restructuring of the industrial activities of the paper sector constitute the first steps in the strategy drafted by the new management of the company which will continue in the upcoming months.
Special attention has been set aside for the tourism sector where IFIL conducted three important deals: the sale of Club Méditerranée, participation in the project for the privatization of Sviluppo Italia Turismo and the strategic and organizational review of Alpitour with a view toward recovering margins of operational efficiency and develop an offering centered on Italian tourism products.
Subsequent events
As mentioned earlier, on March 13, 2005 an agreement was reached for the sale of the 99.09% stake in La Rinascente S.p.A., the company heading the textile activities of the Rinascente Group. As a result of this deal, the IFIL Group will receive net proceeds for a total of approx. € 530 million and record a gain on consolidation of more than € 450 million.
Bonds falling due
As provided by Borsa Italiana S.p.A. regulations, mention is made of € 200 million in bonds that fall due in December 2005.
Business outlook
For 2005, IFIL S.p.A. is expected to report a profit.
Moreover, considering the forecasts formulated by the major holdings and the other estimates currently available (including that one related to the gain on the sale of La Rinascente S.p.A.), the 2005 consolidated financial statements of the IFIL Group are also expected to show a profit.
Information on the status of the implementation of the systems and procedures for the application of international accounting principles (Consob communication No. DME/5015175 dated March 10, 2005)
As provided by Regulation No. 1606 dated July 19, 2002 of the European Union, starting in 2005 the IFIL Group will draw up its consolidated financial statements in compliance with the international accounting principles (IFRS/IAS) approved by the European community.
In particular, the IFIL Group will adopt international accounting principles beginning from the consolidated quarterly report at March 31, 2005.
The audit firm, Deloitte & Touche S.p.A., has been assigned the following additional audit work with regard to the accounting data prepared in accordance with international accounting principles:
- audit of the opening consolidated balance sheet at January 1, 2004;
- limited review of the consolidated accounting data at June 30, 2004;
- limited review with agreed testing procedures of the accounting data at March 31, 2004 and September 30, 2004;
- audit of the consolidated financial statements at December 31, 2004.
