Considering that all the listed subsidiaries and associates have already published their accounting data for the year 2013, only a brief commentary is presented here on the performance of C&W Group, EXOR’s principal unlisted subsidiary. The EXOR 2013 Annual Report, which will be posted on the corporate website www.exor.com, presents comments on the performance of all the principal subsidiaries and associates.
C&W Group
In 2013, C&W Group capitalized on the market’s strength to post double-digit commission and service fee revenue (“net revenue”) growth across all regions and nearly all service lines, including Capital Markets, Valuation & Advisory, Corporate Occupier & Investor Services and Global Consulting, supported by continued investment in its strategic service lines across key global markets.
Net revenue growth was led by Corporate Occupier & Investor Services (“CIS”), as property under management globally as of year-end 2013 exceeded 1 billion square feet for the first time. On July 1, the firm acquired the Singapore-based company Project Solution Group, which makes the firm a market leader in project management services in Asia Pacific. CIS also had a number of notable wins during 2013 from world-class organizations such as Citigroup, DLF, British Airways and The Port Authority of New York & New Jersey.
Performance in Valuation & Advisory’s business was driven by a record global value of appraisals completed, which exceeded $1 trillion for the second consecutive year. In addition, both Capital Markets and Leasing executed record transaction volumes globally, which included numerous high profile assignments.
C&W Group reported double-digit gross revenue growth of 21.9%, or 22.8% excluding the impact of foreign exchange, to $2,498.6 million, as compared with $2,050.1 million for the prior year, while net revenue increased 13.2%, or 14.3% excluding the impact of foreign exchange, to $1,808.5 million, as compared with $1,597.0 million for the prior year period.
Operating expenses for the year ended December 31, 2013 increased $110.3 million, or 12.7%, to $979.4 million, as compared with $869.1 million for the prior year, primarily due to increases in employment-related expenses and other direct costs in line with Group’s revenue growth and strategic plan initiatives.
Also included in operating expenses for the current year are certain acquisition and non-recurring reorganization-related charges of approximately $4.6 million, which are excluded from Adjusted EBITDA.
At the operating level, C&W Group’s income rose $10.0 million, or 12.6%, to $89.1 million for the full year 2013, as compared with $79.1 million in the prior year. Adjusted EBITDA (which removes the impact of acquisition-related charges of $2.0 million and non-recurring reorganization-related charges of $9.0 million) was $130.1 million for the current year, representing an increase of $2.4 million over EBITDA of $127.7 million for 2012 (which was not impacted by such charges). EBITDA as reported decreased to $119.1 million.
Adjusted income attributable to owners of the parent, which excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges, as well as certain non-recurring income tax benefits, increased $8.0 million, or 30.8%, to $34.0 million, as compared with Adjusted income attributable to owners of the parent of $26.0 million for the prior year. The income attributable to owners of the parent, as reported, decreased to $28.7 million for the year ended December 31, 2013, from $43.2 million in the prior year.
C&W Group’s net financial position improved $91.3 million to a positive $3.9 million (principally cash in excess of debt) as of December 31, 2013, as compared with a negative $87.4 million (principally debt in excess of cash) as of December 31, 2012.
Significant Events
Mandatory conversion of preferred and savings shares
The meeting of the board of directors of EXOR S.p.A. held on February 11, 2013 put forward a motion to the shareholders to convert the Company’s preferred and savings shares into ordinary shares.
The conversion had the intention of simplifying the capital structure and governance of the Company, creating conditions for greater transparency and eliminating the classes of shares that had very limited trading volumes, replacing them with ordinary shares, which, thanks to the conversion, will benefit from greater liquidity and create advantages for all shareholders.
The proposals were approved by the special meetings of the preferred and savings shareholders and the general meeting of the shareholders (in extraordinary session) respectively on March 19, and March 20, 2013.
The conversions were executed on June 24, 2013, following the ex-dividend date for the 2012 dividends.
As from that same date, the share capital of EXOR S.p.A. is composed of 246,229,850 ordinary shares of par value €1 each for a total of €246,229,850.
Purchase of treasury stock
Within the framework of the treasury stock buyback program resolved by the board of directors’ meeting on May 29, 2012 and subsequently modified on February 11, 2013 by the board of directors’ meeting which increased the maximum amount authorized by the buyback program from €50 million to €200 million, in the first half of 2013 EXOR purchased 3,790,857 ordinary shares (2.36% of the class) at the average cost per share of €21.96 for a total of €83.3 million, 823,400 preferred shares (1.07% of the class) at the average cost per share of €21.66 for a total of €17.8 million, in addition to 184,100 savings shares (2.01% of the class) at the average cost per share of €21.83 for a total of €4 million. The overall investment was €105.1 million.
On December 31, 2013, following the mandatory conversion of the preferred and savings shares into ordinary shares, carried out on June 24, 2013, EXOR S.p.A. held 23,883,746 ordinary treasury shares (9.7% of the class) at the average cost per share of €14.41 for a total of €344.1 million.
Investment in Almacantar
On April 4, 2013 and May 2, 2013 EXOR S.A. paid in to Almacantar respectively £8 million (€9.4 million) and £4 million (€4.7 million) against the remaining amount due on the capital increase by Almacantar S.A. that was fully subscribed to in 2011 but had not been entirely paid.
On July 5, 2013, EXOR S.A. paid in to Almacantar the remaining balance of £19.2 million (€22.3 million).
In order to ensure additional financial resources for new investments, on July 11, 2013 EXOR S.A. subscribed to a new capital increase for an equivalent amount of £50 million (€57.9 million). Following this transaction, EXOR S.A. holds approximately 38.29% of Almacantar S.A. share capital.
Sale of investment in SGS S.A.
On June 10, 2013 EXOR S.A. finalized the agreement signed on June 2, 2013 for the sale of its entire investment in SGS S.A. (15% of share capital) to Serena S.à.r.l., a wholly-owned subsidiary of Groupe Bruxelles Lambert (GBL) at a price per share of CHF 2,128, for a total equivalent amount of more than €2 billion.
The sale forms part of the strategy of continual portfolio evaluation and optimization; the proceeds will be used to take advantage of new investment opportunities consistently with EXOR’s investment strategy.
EXOR realized a net gain on the sale at consolidated level of €1,534 million.
Fiat Industrial and CNH Global merger
The deed for the merger of Fiat Industrial S.p.A. with and into CNH Industrial N.V. and the deed for the merger of CNH Global N.V. with and into CNH Industrial N.V. were executed on September 27 and 28, 2013, respectively. The integration of these two companies was completed on September 29, 2013.
At closing, CNH Industrial issued 1,348,867,772 common shares which were allotted to Fiat Industrial and CNH Global shareholders on the basis of the established exchange ratios. In particular, Fiat Industrial shareholders received one CNH Industrial common share for each Fiat Industrial ordinary share held and CNH Global shareholders received 3.828 CNH Industrial common shares for each CNH Global common share held.
Also in this context, CNH Industrial issued 474,474,276 special voting shares (non-tradable) which were allotted to eligible Fiat Industrial and CNH Global shareholders who had elected to receive special voting shares in connection with the closing of the merger.
On September 30, 2013 CNH Industrial N.V. common shares began trading on the New York Stock Exchange and the MTA market managed by Borsa Italiana S.p.A.
EXOR with its 366,927,900 Fiat Industrial ordinary shares received 366,927,900 CNH Industrial common shares and the same number of special voting shares. At December 31, 2013 EXOR thus holds directly a 27.18% stake and 40.22% of the voting rights.
EXOR 2013-2020 bond issue and cancellation of a part of the EXOR 2007/2017 bond issue
On November 12, 2013 EXOR issued non-convertible bonds for €200 million maturing November 12, 2020 through a private placement to qualified institutional investors.
The bonds, admitted to listing on the Regulated Market of the Luxembourg Stock Exchange, were rated “BBB+” by Standard & Poor’s. The bonds were issued at a price of 99.053% and pay a fixed annual coupon of 3.375%. Net proceeds will be used for EXOR’s general corporate purposes and in order to extend the average maturity of its debt.
Following purchases on the market for a nominal €60 million of its outstanding €750 million 5.375% bonds due 2017 listed on Luxembourg Stock Exchange, EXOR completed the cancellation of the nominal amount purchased on December 17, 2013. As a result of the cancellation, the outstanding aggregate nominal amount of the bonds issued of €750 million is now €690 million.
Criminal case relative to the contents of the press releases issued by IFIL and Giovanni Agnelli e C. on August 24, 2005
The Court of Appeals, in its decision handed down on February 21, 2013, completely acquitted, because the alleged criminal acts were not committed, EXOR S.p.A. and Giovanni Agnelli e C.
On December 17, 2013, the Italian Supreme Court annulled the February 21, 2013 judgment of the Turin Court of Appeal on the positions of Gianluigi Gabetti and Franzo Grande Stevens, without referring the case back to the lower court for a re-hearing, on the grounds that the offense is now statute-barred.
The board of directors was informed that Shahriar Tadjbakhsh, EXOR’s Chief Operating Officer, will be stepping down from his role at the company. He will continue in his current functions through early July. The Board of Directors thanked Mr. Tadjbakhsh for his contribution to the development of EXOR and wished him every success in the next phase of his career.
Corporate Governance
The board of directors has approved the “Report on the Company’s Corporate Governance and Ownership Structure” which will be published at the same time as the 2013 Annual Report”, on the website www.exor.com, according the time limits laid down by law.
Treasury Stock Resolution
The meeting of the board of directors resolved to propose to the shareholders’ meeting the renewal of the authorization for the purchase and disposal of EXOR treasury stock. Under the authorization the Company may purchase on the market, for 18 months from the date of the shareholders’ resolution, shares for a maximum number such as not to exceed the limit set by law, for a maximum disbursement of €450 million, at a price not less than or more than 10% of the trading price recorded by the stock in the stock market session of the day prior to each single operation. The authorization request for the purchase of treasury stock is considered necessary, among other things, to continue in the efficient management of capital and with a view towards investments, to fulfill the obligations arising from the conversion or exchange of debt instruments with equity instruments, as well as to establish compensation plans based on financial instruments and possibly effect exchanges of stock.
Issue of Bonds The board of directors, within the framework of the strategy already undertaken to extend its debt and provide EXOR with new financial resources for the furtherance of its business, also approved the possibility of issuing one or more bonds by March 31, 2015 for a total amount of not more than €1 billion, or the equivalent in another currency, to be placed with institutional investors either as a public offering or directly as a private placement. Following this decision, which ensures EXOR flexibility, the company will each time evaluate the opportunities offered by the market and establish the maturity date and amounts of the possible issues. The minutes of the resolutions approved by the board of directors regarding the issue of bonds will be made available to the public at its offices and at Borsa Italiana and can be consulted on the website www.exor.com, according to the time limits laid down by law.
Business Outlook
EXOR S.p.A. expects to report a profit for the year 2014.
At the consolidated level, the year 2014 will show a profit which, however, will largely depend upon the performance of the principal subsidiaries and associates.
The executive responsible for the preparation of EXOR S.p.A.’s financial reports, Enrico Vellano, declares, in accordance with article 154 bis, paragraph 2 of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the results documented in the books, accounting and other records.
