The Board of Directors of IFIL, which met today in Turin under the chairmanship of Gianluigi Gabetti, examined the results for the first half of 2003.
First half performance
The first half of 2003 ended with a consolidated net loss of € 45 million, compared to a net profit of € 59 million for the corresponding period of 2002, which however had benefited from significant gains realized by the subsidiary Worms & Cie on the sale of investments.
Consolidated shareholders’ equity of the Group grew (€ 3,636 million at June 30, 2003 compared to € 2,708.1 million at December 31, 2002) mainly as a result of IFI’s contribution to IFIL of the investments in Fiat, SANPAOLO IMI, Juventus and Soiem under the Group’s Reorganization Plan.
A better consolidated net financial position was reported by the “Holdings System” which showed a net debt position of € 419.1 million at June 30, 2003 (compared to € 484.1 million at December 31, 2002).
Lastly, the parent company, IFIL S.p.A., posted a higher profit for the first half of 2003, reaching € 60.8 million (€ 48.7 million in the first six months of 2002).
Significant events in the first months of 2003
In April, IFI and IFIL executed the Reorganization Plan of the Group announced on March 3. Implemented for the purpose of strengthening IFIL’s role as the operating holding company of the Group, increasing the solid financial and asset base and simplifying the capital structure, the plan involved:
1) the contribution to IFIL of the investments held by IFI in Fiat S.p.A., SANPAOLO IMI S.p.A., Juventus Football Club S.p.A. and Soiem S.p.A. against a capital increase by IFIL reserved for IFI;
2) the subsequent voluntary conversion of IFIL savings shares to IFIL ordinary shares based upon a conversion ratio of 17 IFIL ordinary shares for every 20 IFIL savings shares, without payment of any cash settlement. The transaction was concluded on May 12 with the conversion of 87.69% of the savings capital stock.
The voluntary tender offer for the residual shares of La Rinascente was also concluded during the first half. The offer made by Eurofind (a subsidiary jointly owned by IFIL and the Auchan Group) was completed at the end of February and led to a total outlay of € 60.9 million, as well as the delisting of all categories of La Rinascente stock from the Stock Exchange.
In May, the Worms & Cie Group paid dividends of € 1.5 per share (of which extraordinary dividends were € 0.9 per share), bringing cash inflows of € 83.9 million to the IFIL Group.
The Board of Directors of IFIL, which met on June 27, voted to increase the capital stock of the company by a maximum par value of € 386,321,490 through the issue of a maximum 386,321,490 ordinary shares of par value of € 1 each, with normal dividend rights, to be offered on a preemptive basis to the shareholders at a ratio of 57 new ordinary shares for every 100 IFIL ordinary or savings shares held. The capital increase transaction ended with a 100% subscription of the shares offered and with no need for the involvement of the underwriting syndicate and raised a total capital of € 504 million for IFIL.
After agreeing with the objectives and manner of implementing the plan to turn around Fiat, the Board of Directors of IFIL decided to take part in the subsidiary’s capital increase, subscribing to 108,921,627 Fiat ordinary shares for an investment of € 549.6 million. IFIL today holds 30.06% of the ordinary capital stock and 30.09% of the preferred capital stock of Fiat.
In August, IFIL sold a 25% stake in Sifalberghi to the Accor Group at a price of € 32 million, realizing a gain of € 23 million (€ 25.1 million on consolidation).
On August 31, 2003, after concluding these transactions, the consolidated net financial position of the “Holdings System” showed a debt position of € 459.5 million.
Moreover, within the framework of the Company's compensation policy, the Board of Directors of IFIL drew up a stock option plan that will be added to the other plans set up in the past. The new plan calls for granting ordinary shares of treasury stock to the directors of the Company up to a maximum of 700,000 shares.
Finally, on September 5, the Italian Stock Exchange admitted IFIL shares for listing on the Midex, the index for listed mid-cap companies. IFIL’s entry to the Midex, which will become effective beginning next Monday September 22, affirms the achievement of certain of the principal objectives stated in the Group’s recent Reorganization Plan and now allows the Company to gain greater visibility with Italian and foreign mutual funds and institutional investors.
Performance of the major Group companies
Despite weak markets, the Fiat Group bettered its basic economic and financial parameters in the first half of the year, taking great strides towards its objectives to recover profitability and reduce indebtedness. Among the most important events which marked the first half were the presentation of the industrial and financial Plan to relaunch the Group, the Fiat S.p.A. capital increase and the following disposals: Toro Assicurazioni, FiatAvio (in progress), Fraikin, IPI and the majority interest in Fidis Retail Italia.
Worms & Cie ended the first half of the year by displaying a profit, although it was lower than in 2002 when significant gains from sales had been realized. Among Worms & Cie’s investments, the excellent performance by SGS stands out; this Swiss company, world leader in the sector for quality verification and certification, upwardly revised its operating income projections for the next years.
The Rinascente Group, despite weak domestic demand, reached important results in the first six months of 2003, increasing sales and improving operating income. Moreover, Rinascente continued the program to transfer all the operational and managerial supports to the divisions so that, through greater accountability, they can attain the maximum level of efficiency.
Juventus Football Club, in the period January 1, – June 30, 2003, reported better results in terms of both revenues and net profit, thanks to the brilliant sports results achieved last season and the sale of a stake in the subsidiary Campi di Vinovo.
Lastly, with regard to NHT - New Holding for Tourism, the weak demand and seasonal trend of the first half, which traditionally limits the profitability of this sector in the first six months of the year, affected the net result, causing it to post results similar to those reported for the same period of 2002, despite higher sales and operating income.
The unrelenting negative international economic situation will continue to influence the consolidated result for the current year. Nevertheless, the efforts in progress to turn around Fiat and IFIL’s balanced investment portfolio – about one-third of which is concentrated in the automotive sector and about two-thirds in diversified businesses – constitute genuine premises for a recovery of the Group’s growth.
A favorable contributory factor to this prospect for development is also the new organizational structure of the Company; IFIL will be able to count on a more solid asset and financial base and will act in its capacity as the operating holding company of the Group.
As for the year 2003, the parent company, IFIL S.p.A., based on the date available to date, is expected to report a profit.