The EXOR board of directors’ meeting, chaired by John Elkann, met today in Turin and approved the consolidated financial statements and the draft separate financial statements at December 31, 2009 which will be submitted for approval to the stockholders’ meeting set for April 29, 2010 in first call (and April 30 in second call).
EXOR’s Net Asset Value (NAV) at December 31, 2009 is € 5,737 million, increasing € 2,769 million (+93.3%) compared to € 2,968 million at March 1, 2009 (the effective date of the merger with IFIL). The composition of NAV and its trend compared to the MSCI World Index is as follows.
The EXOR Group closes the year 2009 with a loss of € 388.9 million; the year 2008 ended with a consolidated profit of € 435.4 million, of which € 301.8 million was attributable to owners of the parent and € 133.6 million to Non-controlling interests of the subsidiary IFIL (merged on March 1, 2009).
This is a negative change in the consolidated result of € 824.3 million due to the net decrease in the results of investment holdings (-€ 655.3 million), the reduction in the net financial result (-€ 155.5 million) and other net changes (-€ 13.5 million).
The consolidated equity attributable to owners of the parent at December 31, 2009 is € 5,305.4 million (€ 3,615.6 million at December 31, 2008). The positive change of € 1,689.8 million is mainly due to the merger by incorporation of the subsidiary IFIL (+€ 1,706.2 million), the consolidated loss for the year 2009 (‑€ 388.9 million) and other net changes (+€ 372.5 million).
The consolidated net financial position of the “Holdings System” at December 31, 2009 shows a positive balance of € 51.6 million and an increase of € 63.1 million compared to the negative balance at the end of 2008 (-€ 11.5 million). The increase is primarily the result of the disposal of 0.66% of Intesa Sanpaolo capital stock (+€ 217.2 million), dividends received from investment holdings (+€ 40.5 million), dividends distributed by EXOR S.p.A. (-€ 81.6 million), investments made during the year (-€ 42.4 million) and the purchase of treasury stock (‑€ 42 million).
As concerns the separate financial statements of EXOR S.p.A., the year 2009 closes with a profit of € 88.8 million. In 2008, the last year ended previous to the merger with IFIL, EXOR had reported a profit of € 49.1 million. For purposes of comparison with the 2009 figures, a pro-forma income statement has been drawn up for 2008 (prepared by aggregating the line items in the EXOR and IFIL income statements and eliminating income and expenses arising from transactions between the two companies, mainly dividends distributed by IFIL to EXOR and expenses/income on the loan made by IFIL to EXOR) which shows a pro-forma profit for the year 2008 of € 333 million. The negative change of € 244.2 million between the 2008 pro-forma profit (€ 333 million) and the 2009 profit (€ 88.8 million) arises principally on account of lower dividends from investment holdings (-€ 135.7 million) and lower gains on the disposal of Intesa Sanpaolo stock (-€ 145.8 million).
The board of directors voted to put forward a motion to the stockholders’ meeting for the distribution of dividends of € 0.27 per each ordinary share, € 0.3217 per each preferred share and € 0.3481 per each savings share for a maximum total of € 67.9 million to be drawn from the profit for the year 2009. The proposed dividends are payable to the shares outstanding, excluding the shares held directly by EXOR S.p.A. at the ex-dividend date. The ex-dividend date is May 24, 2010 and the dividends will be paid starting from May 27, 2010.
Performance of Investee
Considering that all the listed investment holdings have already published their figures for the year 2009, the following is a brief commentary on the performance of EXOR’s principal unlisted investment holdings: C&W Group and Alpitour. The EXOR 2009 annual report, which will be posted on the corporate websitewww.exor.com, presents the comments on the performance of all the principal Investee Companies.
C&W Group, Inc. (The “Group”)
Global real estate markets faced significant challenges in 2009, which had an adverse impact on the Group’s revenues. However, as the year progressed, there were signs of stabilization in most markets with modest recovery in some areas. After experiencing year-over-year declines in revenues for the first nine months of 2009, the Group’s business activities increased in Q4 2009, as compared with Q4 2008, with commission and service fee revenues, which exclude reimbursed costs - managed properties and other costs, increasing 11% to US $410.4 million in the fourth quarter of 2009.
For the year ended December 31, 2009, gross revenues, including reimbursed costs - managed properties and other costs, totaled US $1,548.2 million, a reduction of 15.6% as compared with the same period in 2008. Commission and service fee revenues, which exclude reimbursed costs - managed properties and other costs, were US $1,201.5 million, for the year ended December 31, 2009, a reduction of 20% as compared to the same period in 2008. Resulting from the decline in revenues, commission expense for 2009 decreased US $117.3 million, or 24%, to US $377.8 million, down from US $495.1 million for 2008.
The Group reported a net operating loss of US $114.4 million and US $14.4 million in the years ended December 31, 2009 and 2008, respectively. The operating profit for both periods was adversely impacted by certain non-recurring/incremental charges and restructuring charges totaling US $114.1 million for 2009 and US $18.7 million for 2008. These charges included non-cash impairment charges for intangible assets of US $76.7 million, restructuring charges in connection with cost reduction actions of US $29.9 million and costs associated with the relocation of the Group’s world headquarters of US $7.5 million for 2009 and non-cash impairment charges for intangible assets of US $10.9 million and restructuring charges in connection with cost reduction actions of US $7.8 million for 2008. Excluding the impact of these charges in both years, the Group’s operating profit/(loss) would have been US $(0.3) million in 2009 and US $4.3 million in 2008. Additionally, excluding the impact of these charges in both years, the reduction in operating expenses during the year would have been US $178.2 million (-18%).
For the year ended December 31, 2009, the Group incurred a consolidated loss of US $127.0 million attributable to owners of the parent (consolidated loss of 2008 was US $29.6 million). Excluding the after-tax effect of the non-recurring/incremental and restructuring charges, the net losses attributable to owners of the parent for 2009 and 2008 would have been US $32.2 million and US $14.0 million, respectively.
The significant restructuring actions put into place will be fully realized in the current year. The challenges of 2010 will be mitigated by the restructuring efforts and the arrival of Glenn Rufrano as the new Chief Executive Officer.
Despite the difficult economic scenario which had a considerable effect also on the tourism sector, the year 2008-2009 ended with revenues of € 1,090.2 million compared to € 1,237.3 million in the prior year, posting a better trend than the market. The contribution margin for the year is € 197.9 million (€ 209.6 million for the year ended October 31, 2008), registering 18.2% as a percentage of sales and an improvement over 16.9% in the prior year. EBITDA is substantially in line with last year at € 41.7 million compared to € 43.7 million last year. The EBITDA margin rose considerably from 3.5% to 3.8%.
For the year ended October 31, 2009, the operating profit is € 17.5 million compared to € 21.8 million in the prior year. The consolidated net profit of the Group is € 2.3 million while the corresponding 2007/2008 profit was € 3 million. As for the financial situation, the consolidated net financial position posted a further and notable improvement reaching € 66.5 million, almost double that of € 33.6 million at October 31, 2008 even though there were significant investments.
Merger of the subsidiary IFIL and change of name
The merger by incorporation of the subsidiary IFIL in IFI, which changed its name to EXOR, became effective on March 1, 2009.
Financing granted to C&W Group
In its meeting held on March 25, 2009, the EXOR S.p.A. board of directors approved a 3-year subordinated credit line to C&W Group for $50 million, drawn down for $40 million, or € 27.8 million, at December 31, 2009. The transaction guarantees EXOR an interesting return in line with market rates. The purpose of the credit line is to strengthen the subsidiary's financial structure and also enable it to seize any opportunities for growth. At expiration on May 30, 2012, in the event of non-payment, EXOR will have the right to convert the loan to shares of the subsidiary C&W Group Inc. at a price equal to the lowest of the valuations made quarterly by an independent third party over the period of the credit line, discounted by 30%.
Sale of Intesa Sanpaolo stock
During 2009, EXOR S.p.A. sold 78,000,000 Intesa Sanpaolo ordinary shares (0.66% of the class) on the market for proceeds of € 217.2 million and a net loss on consolidation of € 15.4 million (a net gain of € 21.7 million in the separate financial statements).
During the first quarter of 2010, 30,000,000 Intesa Sanpaolo ordinary shares (0.25% of the class) were also sold on the market for proceeds of € 90 million and a gain on consolidation of € 0.6 million (€ 14.8 million in the separate financial statements).
After these sales, EXOR holds 10,000,000 Intesa Sanpaolo ordinary shares (0.08% of the class).
Buyback of treasury stock
Under the treasury stock buyback Program approved by the board of directors on March 25, 2009, during 2009, EXOR purchased 2,550,000 ordinary shares (1.59% of the class) at an average cost per share of € 11.6 and a total of € 29.6 million, 1,605,000 preferred shares (2.09% of the class) at an average cost per share of € 6.67 and a total of € 10.7 million and also 208,400 savings shares (2.27% of the class) at an average cost per share of € 8.26 and a total of € 1.7 million.
During the first quarter of 2010, purchases were also made for 434,000 ordinary shares (0.27% of the class) at the average cost per share of € 11.83 and a total of € 5.1 million, 396,000 preferred shares (0.52% of the class) at an average cost per share of € 6.67 and a total of € 2.6 million and also 11,400 savings shares (0.12% of the class) at an average cost per share of € 8.93 and a total of € 0.1 million. The overall investment in 2009 and 2010 amounts to € 49.9 million and basically reaches the Program’s maximum disbursement amount of € 50 million.
Subscriptions to Banijay Holding capital stock increases
On July 27, 2009, EXOR S.A. subscribed to 61,818 Banijay Holding shares for an equivalent amount of € 6.2 million and on December 2, 2009 another 60,101 shares for a total equivalent amount of € 6 million for two distinctive capital increases. Following these transactions, EXOR S.A. holds 334,419 Banijay Holding shares equal to 17.08% of capital stock and 17.17% of voting rights and has its own representative on the board of directors of the company. The investment is part of the total commitment undertaken in May 2008 to invest € 42.5 million in the company (of which € 33.5 million has already been paid in).
Purchases of Fiat savings stock
In September and October, EXOR S.p.A. purchased 2,338,629 Fiat savings shares (2.93% of the class) from Fondazione Giovanni Agnelli for a total investment of € 13 million.
EXOR S.p.A. currently holds 332,587,447 Fiat ordinary shares (30.45% of the class), 31,082,500 Fiat preferred shares (30.09% of the class) and 2,338,629 Fiat savings shares (2.93% of the class). The investment represents 28.7% of current Fiat capital stock overall.
As a result of investment commitments in the NoCo B L.P. limited partnership, which groups a series of funds managed by Perella Weinberg Partners L.P., during the year 2009, EXOR S.A. invested $2.7 million (€ 1.7 million) and € 1.9 million in the Perella Weinberg Real Estate I fund. Subsequently, following the liquidation of the Perella Weinberg Alpha Cap and ADS funds, the NoCo B L.P. limited partnership reimbursed EXOR S.A. a total equivalent amount of approximately $11.8 million (€ 8.2 million).
During the first quarter of 2010, furthermore, another $9.3 million (€ 6.6 million) was invested in the NoCo B L.P. limited partnership.
The board of directors approved the “Report on corporate governance and the shareholder structure” which will be posted on the website” www.exor.com.
Treasury stock resolution
The board of directors passed a resolution to put forward a motion to the stockholders’ meeting to renew the authorization for the purchase and disposition of treasury stock. This authorization would allow the company to purchase treasury stock on the market, for a period of 18 months from the resolution passed by the stockholders’ meeting, up to a maximum of 38 million ordinary and/or preferred and/or savings stock for a maximum disbursement of € 450 million, at a price of not less or not more than 10% of the reference price recorded by the stock in the stock market trading session of the day prior to each single purchase transaction. The authorization request to purchase treasury stock is considered opportune, among other things, for purposes of efficient capital management as well as from an investment standpoint and also for any equity-based compensation plans and carrying out stock exchanges, if any.
As established by existing regulations, the EXOR 2006-2011 bonds of nominal value € 200 million will mature in June 2011.
For the year 2010, EXOR S.p.A. expects to report a profit.
On the consolidated level, the year 2010 should show an improvement in the economic results which, however, will largely depend on the performance of the principal investment holdings.
Change of calendar
The Board of Directors called to approve the interim results at March 31, 2010, originally expected on May 13, 2010, will be held on May 11, 2010.
The manager responsible for the preparation of the corporate financial reports, Aldo Mazzia, attests, pursuant to paragraph 2, article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the accounts, books and records.