n&w global vending s.p.a. - evoca group · 2018. 5. 31. · n&w global vending s.p.a. –...

N&W Global Vending S.p.A. Quarterly Report

Q2 2017 – Period ended June 30th, 2017

N&W Global Vending S.p.A. – Quarterly Report – Q2 2017

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N&W Global Vending S.p.A.

Table of Contents

General Information ................................................................................................................................... 3

Presentation of Financial Data .................................................................................................................... 4

Key Figures and Highlights .......................................................................................................................... 6

Business Review ......................................................................................................................................... 8

Financial Review ......................................................................................................................................... 9

Material Risk Factors and Material Recent Developments ........................................................................ 11

Condensed Consolidated Statement of Comprehensive Income for the Three and Six Month Period Ended June 30

th, 2017 (unaudited) ...................................................................................................................... 12

Condensed consolidated balance sheet at June 30th

, 2017 (unaudited) .................................................... 14

Condensed consolidated statement of Cash Flows for the Period Ended June 30th

, 2017 (unaudited) ...... 15

Condensed consolidated statement of changes in equity for the period ended June 30th

, 2017 (unaudited) ................................................................................................................................................................. 16

Notes to the Condensed Consolidated Financial Statements .................................................................... 17


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General Information

N&W Global Vending S.p.A. (previously LSF9 Canto Investments S.p.A.) and its

subsidiaries (together with the Company, “the Group”) is the leading manufacturer in

Europe of coffee, other hot and cold beverage and food vending machines based on units

sold, with a particular focus on espresso coffee and a rapidily developing presence in

coffee machins for the OCS and food service agreemens. The Group designs, engineers,

develops, manufactures, customizes, assembles and distributes a broad range of vending

and coffee machines.

The Group sells its products under six main brands: Necta, Wittenborg, Saeco, Gaggia,

Ducale and SGL. Machines include small table-top to large free standing models utilizing

both pay and non-pay solutions and are primarly designed the workplace, including offices,

factories, schools, shopping centers, airports, train stations, gas stations, hospitals, hotels

and restaurants.

The Group operates seven manufacturing plans in Italy and one in Romania, all with

flexible assembly operations, and has a commercial arrangement with an additional

manufacturing plant in China.

The Group operates in nearly all major international markets maintaining relationships

with direct customers or, alternatively, through a network of dealers and its commercial

subsidiaries located in Italy, Denmark, UK, France, Germany, Austria, Poland, Spain,

Belgium, Brazil, Argentina, Australia, Singapore, Russia, Romania and Portugal.

As part of the strategy to strengthen its product offering, on March 14th

, 2017 the Company

finalized the acquisition of Saeco Vending S.p.A. and its subsidiaries, creating a more

holistic product platform that addressed the need of the existing N&W customer base. The

acquisition of Saeco for a total consideration of Euro 54 million was funded by placing a

further tranche of Euro 70 million of Senior Secured Notes due 2023.

On June 6th

, 2017 the Company acquired the entire share capital of Ducale Macchine da

Caffè S.r.l., a company based in Parma (Italy) with a long established history as an

innovative manufacturer of coffee and vending machines. With this acquisition the

Company intends to strengthen its competitive position by increasing the current ranges of

hot drink vending machines with models from the Ducale range. The Ducale acquisition

was funded through group cash and Revolving Facility for a total consideration of Euro

19.7 million.

On June 15th

, 2017 the Company signed an agreement to create a joint venture to acquire

100% of Les Entreprises Cafection Inc. (“Cafection”), the leading manufacturer of bean-to-

cup machines for OCS market in North America (“Cafection Transaction”). N&W will

own a 67% stake in the JV, while the current Cafection owner will retain a 33% stake. The

joint venture will continue with the well-known “Cafection” brand and will be based in


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Quebec City and represents for the Company the ideal platform for the expansion of

N&W’s espresso coffee technology into the North American market.

On June 29th

, 2017 the Company issued Euro 40 million of 7% Temporary Senior Secured

Notes due 2023 (“the Temporary Notes”) which, were subsequently exchanged for a tap

issuance of the existing 7% Senior Secured Notes due 2023 in connection with the

completion of the Cafection Transaction.

Presentation of Financial Data

The figures presented in this Noteholder report have been prepared on the following basis:

for the three, six and twelve months ended June 30th

, 2017: the consolidated results

of the Company under the current ownership, including the results of Saeco

Vending S.p.A. and its subsisdiaries since March 14th

, 2017 and the results of

Ducale Macchine da Caffè S.r.l. since June 6th

, 2017;

for the three months ended June 30th

, 2016: the consolidated results of the

Company under the current ownership, excluding Saeco Group and Ducale

Macchine da Caffè S.r.l.;

for the six months ended June 30th

, 2016 and FY 2016: the aggregation of the

consolidated results of the Company under the previous ownership from January

1st, 2016 until March 22

nd, 2016 and the consolidated results of the Company under

the current ownership from March 23rd

, 2016 until June 30th

, 2016 and December

31st, 2016, respectively (“Pro forma”).

N&W acquisition has been recorded using the acquisition method of accounting, in

accordance with the International Financial Reporting Standards as adopted by the

European Union (“IFRS”). Although the purchase accounting requirement has no impact

on the Company’s business or cash flow, it adversely impacts the Company’s reported

IFRS gross margin and EBITDA for the period between the N&W acquisition - occurred in

March 2016- and June 30th

, 2017.

This presentation enables the Noteholders to view the business as a whole, and provides

meaningful and relevant financial information that is useful in evaluating the Company

ongoing operations, in the same manner as management views and operates the business.

This report does not include pro forma information regarding the Cafection Transaction,

which was completed in July 2017.

Three months ended June 30th

, 2017 pro forma consolidated results of the Company with

Saeco are located in “N&W Financial Performance” file uploaded in

https://investors.nwglobalvending.com/dashboard/Quarterly-reports.

https://investors.nwglobalvending.com/dashboard/Quarterly-reports


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Important Notice

In this report, the terms “Group,” “we,” “us” and “our” refer to the Issuer and its

subsidiaries.

This report may contain “forward looking statements” within the meaning of the U.S.

federal securities laws and the securities laws of certain other jurisdictions. In some cases,

these forward looking statements can be identified by the use of forward looking

terminology, including the words “aims,” “anticipates,” “believes,” “continue,” “could,”

“estimates,” “expects,” “forecasts,” “future,” “guidance,” “intends,” “may,” “ongoing,”

“plans,” “potential,” “predicts,” “projects,” “seek,” “should,” “target,” “will,” “would” or,

in each case, their negative or other variations or comparable terminology or by

discussions of strategies, plans, objectives, targets, goals, investments, future events,

beliefs or intentions. These forward looking statements are based on plans, estimates and

projections as they are currently available to our management. Such forward looking

statements are not guarantees of future performance and are subject to, or are based on, a

number of factors, assumptions and uncertainties that could cause actual results to differ

materially from those described in the forward looking statements. Due to such

uncertainties and risks, readers are cautioned not to place undue reliance on such forward

looking statements. Any forward looking statements are only made as at the date hereof

and, except to the extent required by applicable law or regulation, we undertake no

obligation to publicly update or publicly revise any forward looking statement, whether as

a result of new information, future events or otherwise.

All figures presented in this report are based on our consolidated management accounts

and are unaudited. The financial information herein includes certain non-IFRS measures

that we use to evaluate our economic and financial performance. These measures include,

among others, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Operating

Profit Before Exceptional Items. The non-IFRS measures may not be comparable to

similarly titled measures of other companies and have limitations as analytical tools and

should not be considered in isolation or as a substitute for analysis of our operating results

as reported under IFRS.


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Key Figures and Highlights

Q2 2017 compared to Q2 2016

Second quarter 2017 Revenue of N&W Group was Euro 101 million, Euro 21.2 million

better than the same period of 2016 thanks to: i) better sales performances of N&W Group

old perimeter for Euro 2 million thanks to the good performance of small-medium sized

customers (Euro +2.8 million: Euro 0.7 million in Western Europe and Euro 2.1 in the rest

of the world especially Romania, Asia, Russia, Africa&Middle East), partially offset by the

underperformance of two of our four largest key customers for Euro 0.8 million; ii) Saeco

contribution for Euro 18.3 million and iii) Ducale contribution for Euro 0.9 million.

For the three month period ended June 30th

, 2017 Adjusted EBITDA is Euro 2.7 million

better than the same period last year thanks to Saeco and Ducale contribution respectively

for Euro 2.5 million and Euro 0.2 million while the N&W Group old perimeter is

substantially in line with 2016 EBITDA performances despite a negative impact of the

exchange difference (Euro 0.6 million).

Operation profit of the second quarter 2017 is impacted by the amortisation of the

intangible assets arising from the Purchase Price Allocation following N&W acquisition

(Euro 9.3 million).

Cash flow from operating activities for the second quarter 2017 is Euro 6.1 million

higher than same period 2016 mainly thanks to N&W old perimeter better performances

for Euro 5.5 million, and Saeco&Ducale contribution for Euro 0.6 million.

(€ thousands) June 30, June 30, June 30, June 30, June 30, December 31,

2017 2016 2017 2016 2017 2016

Results Pro forma Pro forma Pro forma

Revenue 100,950 79,779 187,795 159,189 328,170 299,564

Adjusted EBITDA* 22,572 19,914 43,510 39,922 79,156 75,568

Adjusted EBITDA margin** 22.4% 25.0% 23.2% 25.1% 24.1% 25.2%

Operation profit/(loss) 6,901 12,314 14,663 27,854 (9,915) 3,276

Profit/(loss) for the period (3,513) (4,577) (3,867) (7,362) (38,297) (41,792)

Cash flow

Cash at the beginning of period 62,991 42,326 51,089 48,088 39,645 48,088

Net cash flow from operating activities 14,124 8,052 21,374 13,690 65,673 57,990

Net cash flow from investing activities (25,310) (3,524) (83,089) 241,865 (98,327) 226,627

Of which: capital expenditures (3,478) (3,524) (6,405) (6,428) (13,409) (13,432)

Of which: Acquisition (19,585) - (72,198) 248,292 (86,198) 234,292

Of which: Tax settlement (2,247) - (4,485) - 1,281 5,766

Net cash flow from financing activities *** 30,150 (7,208) 92,581 (263,998) 74,963 (281,615)

Cash at the end of period **** 81,954 39,645 81,954 39,645 81,954 51,089

Financial Position

Net debt***** 436,778 360,779

Net debt / Adjusted EBITDA ****** 5.1 4.8

(*)

(**) We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.

(***) Cash Flow from financing activities includes interest payment.

(****)

(*****)

(******) Adjusted EBITDA for the twelve months ended June 30, 2017 pro forma for the ratio calculation is €86.2 million (€75.6 million N&W + €7.8 million Saeco + €2.8 million Ducale).

For the six months endedFor the three months ended For the twelve months ended

We define Adjusted EBITDA as net profit (loss) plus income tax expense, net financial income (expense), depreciation, amortization, special costs and the Real/Euro foreign exchange

adjustment. We present non-IFRS measures because we believe they and similar measures are widely used by certain investors, securities analysts and other interested parties as

supplemental measures of performance and liquidity and are intended to assist in the analysis of our operating results, profitability and ability to service debt. Adjusted EBITDA is not a

measure of financial performance under IFRS and should not be considered in isolation or as an alternative to any other measures of performance derived in accordance with IFRS. Adjusted

EBITDA, as presented in this Report, may not be comparable to similarly titled measures reported by other companies. You are encouraged to evaluate these adjustments and the reasons

we consider them appropriate for supplemental analysis.

Cash at the end of June 2017 and December 2016 includes Euro 1 million relating to N&W purchase price held in escrow account to cover possible purchaser's warranty claims under the

acquisition agreement of N&W Group and June 2017 also includes Euro 40 million of Senior Secured Notes issued to fund Cafection Transaction and to repay the outstanding Revolving

Credit Facility.

Net Debt consists of Senior Secured Notes, Second Lien Notes (together the "Notes"), Revolving facility and €0.3 million of other debt, less cash and cash equivalents, net of escrow

account of Euro 1 million and excluding accrued interests on the Notes and on Revolving facility .


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The ratio of Net Debt to Adjusted EBITDA is equal to 5.1 as of June 30th

, 2017.

Q2 2017 YTD compared to Q2 2016 YTD

For the six-month period ended June 30th

, 2017 Revenue are Euro 28.6 million higher than

the same period last year thanks Saeco and Ducale contribution respectively for Euro 24.7

million and Euro 0.9 million and better sales performances of N&W Group old perimeter

for Euro 3 million; revenue are characterized by a strong performance with small-medium

sized customers, partially offset by the underperformance of few key customers.

Adjusted EBITDA Euro 3.6 million better than 2016 thanks to Saeco and Ducale

contribution while N&W Group confirms its previous year performances, notwithstanding

the negative exchange difference of Euro 0.7 million.

Cash flow from operating activities Euro 7.7 million better than 2016 benefits from

better working capital performances and less special costs in N&W old perimeter for Euro

7.1 million and from Saeco and Ducale contribution for a total of Euro 0.6 million.

LTM June 2017 compared to LTM December 2016

For the twelve months ended June 30th

, 2017 our Revenue and Adjusted EBITDA are

respectively Euro 28.6 million and Euro 3.6 million higher than December 2016 results

thanks to Saeco contribution and better performances of N&W Group old perimeter.

The result for the twelve months ended June 30th

, 2017 reflects the impact of the purchase

price allocation finalized in December 2016.


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Business Review

For the six-month period ended June 30th

, 2017 performance of Western European

countries (comprising Italy, France, Spain, UK, Germany, Nordics and other Western

European countries) registered an increase of Euro 10.8 million versus 2016 thanks to

Saeco contribution for Euro 10.7 million and Ducale contribution for Euro 0.9 million that

compensate the shortfall occurred in N&W Group old perimeter especially in Italy, Spain

and Nordics areas. The sales level in those countries has been characterised by the increase

of small-medium customers (+1.9% or Euro 1.7 million better than the first semester of

2016) and by the underperformance of one of our four largest key customers (-15% or

Euro 2.5 million below the six months of 2016).

Performance of the rest of the world has shown an overall increase of Euro 17.8 million

(+70%) versus the first semester 2016 thanks both to i) the very positive performances in

Asia & Pacific (mainly China and Singapore), East Europe (mainly Romania and Russia)

and Africa & Middle East, only partially offset by the shortfall occurred in North America

for the N&W old perimeter and ii) to Saeco contribution of Euro 14 million.

Included in revenue arising from the six months of 2017 of Euro 187.8 million (2016: Euro

159.2 million) are revenue of approximately Euro 29.1 million (Euro 31.5 million in 2016)

June 30, June 30, June 30, June 30,

(€ thousands) 2017 2016 2017 2016

Pro forma Pro forma

Revenue by geography 100,950 79,779 187,795 159,189

Italy 26,933 25,650 51,622 51,823

France 12,339 10,371 26,528 22,908

Spain 7,237 5,865 13,410 12,179

UK 2,913 2,802 5,819 5,612

Germany 5,772 3,386 10,409 7,083

Nordics 4,725 5,884 10,747 12,221

Other Europe 14,166 11,234 26,072 21,992

East Europe 9,543 3,438 15,557 7,561

Africa & Middle East 2,260 1,106 3,808 1,882

Asia & Pacific 5,365 2,039 8,667 3,240

North America 4,059 3,264 5,976 6,074

Central & South America 5,637 4,740 9,179 6,614

Revenue by line of business 100,950 79,779 187,795 159,189

Vending 55,247 49,971 107,341 100,756

H&C 37,293 36,181 73,360 73,027

S&F 13,822 12,858 27,990 26,103

C&B 626 932 1,191 1,626

Horeca & Liquid 15,627 10,255 27,274 19,460

OCS 11,177 2,619 15,675 4,660

Accessories & Spares 18,899 16,934 37,505 34,313

For the three months ended For the six months ended


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which arose from sales to the two Group’s largest customers. No single customer

contributed 10% or more to Group’s revenue during the six months period 2017 or 2016.

Vending

During the first six months 2017 revenue are Euro 6.6 million higher than the same period

2016 thanks to i) Euro 1 million of good results in Germany, Holland, France, Belgium,

East Europe, Brazil and North America that compensate the underperformance of the rest

of the world, ii) Saeco impact for Euro 4.8 million, and iii) Ducale impact for Euro 0.8

million.

Horeca

Revenue increased of Euro 7.8 million or by 40% during the six months as compared to the

same period in 2016 thanks to i) Euro 4.4 million better results in N&W Group old

perimeter characterized by the excellent performance in Asia, France, Germany and Spain

and the good results in all the markets partially offset by the underperformance of a couple

of key customers and ii) Saeco contribution for Euro 3.4 million.

OCS

The revenue increase of Euro 11 million during the six months as compared to the same

period in 2016 is totally attributable to Saeco contribution for Euro 13 million,

compensating the decrease driven by the underperformance of a key customer in N&W old

perimeter.

Accessories and Spares

During the first six months 2017 revenue are Euro 3.2 million better than the same period

2016 thanks to Saeco and Ducale contribution respectively for Euro 3.5 million and Euro

0.1 million that compensate the underperformance driven by some key customers in N&W

old perimeter.

Financial Review

Operating profit

For the six months ended June 30th

2017 the Operating profit at Euro 14.7 million has been

impacted mainly by: i) the amortisation of the intangible assets arisen by the purchase price

allocation following N&W Group acquisition for Euro 18.7 million, ii) contribution of

Saeco Group for Euro 2.7 million, iii) contribution of Ducale for Euro 0.2 millionand and

iv) a negative exchange difference of Euro 1.6 million. Excluding the above mentioned

items the Operating Profit would be Euro 32.1 million, Euro 4.2 million better than 2016.

During first semester 2017 the impact of non recurring items is minor if compared to the

same period last year and is equal to an expense of Euro 1.9 million, including mainly

costs related to the Saeco Group acquisition, consultancies for the issuance of the Senior

Secured Notes for Cafection Transaction, efficiencies projects and charges for Italian short


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time working contracts. First semester 2016 was including costs related to N&W Group

acquisition occurred on March 22nd

, 2016 (mainly concentrated in the second quarter

2016).

In the first semester 2017 operating profit is also impacted by negative exchange

differences for Euro 1.6 million (on Brazilian Real of Euro 0.9 million and on American

Dollar for Euro 0.5 million). The Brazilian exchange difference is largely due to a

translation effect (mostly unrealized) arising from the conversion of intercompany trade

payables; in the first semester 2016 the Group recorded a positive exchange difference of

Euro 1.4 million (mainly driven by Brazilian real – Euro 1.7 million).

Financial results and taxation

Net financial expenses decreased by Euro 4.2 million to Euro 18.7 million for the first

semester 2017 from Euro 22.9 million for the first semester 2016. This decrease results

from the new financing structure which has been put in place since the N&W Acquisition.

In 2017 Euro 18.7 million include mainly Euro 17.2 million interests on Senior Secured

and Second Lien notes, Euro 0.7 million amortisation of financing fees, Euro 0.3 million

interests and commitment fees on Revolving Facility and other financial costs.

In 2016 Euro 22.9 million included Euro 15.2 million related to the old facilities (Senior

and Mezzanine) together with 7.6 million of Bridge and Revolving interests.

Income taxes expense for the first semester 2017 reflects the tax benefit recognised to the

Italian companies having a high level of equity and the impact of purchase price allocation;

2016 June figures were impacted by Italian tax audit (Euro 12 million) and did not include

purchase price effects.

Cash flow statement

For the first six months 2017, net cash flow from operating activities was Euro 21.4

million, compared to Euro 13.7 million for the same period 2016. The increase of 7.7

million is due to i) better N&W old perimeter performances for Euro 6.2 million, ii) due to

Saeco contribution for Euro 1.1 million and iii) Ducale contribution for Euro 0.4 million.

Working capital performances of N&W Group old perimeter are confirmed with Trade

Working Capital on LTM revenue at the end of June 2017 at 14.6% vs 15% at the end of

June 2016.

For the six month period ended June 30th

, 2017 the net cash used in investing activities is

equal to Euro 83.1 million and corresponds to i) Euro 52.6 million related to Saeco

acquisition (Euro 54.1 price paid less Euro 1.5 million of cash acquired) ii) Euro 19.6

million related to Ducale acquisition finalized in June 2017 (Euro 19.7 price paid less Euro

0.1 million of cash acquired) iii) Euro 6.4 million to net capital expenditures (of which

Euro 0.9 million from Saeco) iv) Euro 4.5 million refer to the payments of the installments

related to the Italian tax settlement.


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Net cash from financing activities is equal to Euro 92.6 million for the first six months

2017. This comprises Euro 72 million of cash in from the placement of a further tranche of

Euro 70 million of Senior Secured Notes to fund the Saeco acquisition, net of Euro 10.8

million as repayment of Revolving facility together with a tranche of Euro 40 million of

the Temporary Notes placed in an escrow account as at June 30th

, 2017 that were utilized

to fund Cafection Transaction in July 2017 and to repy the outstanding Revolving Credit

Facility.

Material Risk Factors and Material Recent Developments

Cafection Joint Venture and Bond issuance

Cafection Transaction was completed on July 11th

, 2017 and the cash consideration for

approx. Euro 30 million was funded through the Temporary Notes released from escrow

and automatically exchanged for an equal aggregate principal amount of notes under the

existing Senior Secured Notes’ indenture containing identical terms, other than issue date

and issue price, and constituting part of the same series as the existing Senior Secured

Notes.

SGL production transfer

On July 13th, 2017 SGL, the Company’s subsidiary based in Piemonte, announced the

relocation of its production activity to other plants of the Group. The relocation provides a

collective redundancy procedure involving 98 SGL employees.


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Condensed Consolidated Statement of Comprehensive Income for the Three and Six

Month Period Ended June 30th

, 2017 (unaudited)

(All amounts in € thousands unless indicated otherwise)


2017 2016 2017 2016

Proforma Proforma

Continuing operations

Revenue from Sales 100,950 79,779 187,795 159,189

Cost of Sales (75,414) (51,406) (140,587) (101,902)

Gross profit 25,536 28,374 47,209 57,287

Sales & Marketing (9,843) (7,486) (18,248) (14,919)

Logistic (1,873) (1,579) (3,585) (3,113)

Administrations (3,881) (3,155) (7,224) (6,288)

Operating Exchange Difference (1,669) 1,385 (1,612) 1,440

Total operating costs (17,265) (10,835) (30,668) (22,880)

Restructuring income/(expenses) - 16 - (11)

Other expenses (1,369) (5,241) (1,878) (6,542)

Operating profit 6,901 12,314 14,663 27,854

Finance Income 189 108 325 281

Finance costs (10,048) (7,159) (19,040) (23,172)

Profit/(Loss) before income tax (2,958) 5,264 (4,052) 4,963

Income tax expense (556) (9,841) 184 (12,325)

Loss for the period (3,513) (4,577) (3,867) (7,362)

Consolidated comprehensive income:


Items that may be reclassified subsequently to the Income Statement

Cash Flow Hedge 274 106 504 400

Exchange differences on translating foreign operations (328) 1,322 (246) 430

Income Tax related to the above component (58) (26) (112) (96)

Other comprehensive income/expense for the period, net of income tax (112) 1,402 146 734

TOTAL COMPREHENSIVE LOSS FOR THE PERIOD (3,626) (3,175) (3,722) (6,628)



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A reconciliation of Adjusted EBITDA (segment profit) to loss for the period is provided as

follows:


2016 2017 2016 2017

Pro forma Pro forma


Income taxes 9,841 556 12,325 (184)

EBT 5,264 (2,958) 4,963 (4,052)

Net Financial Costs 7,050 9,859 22,890 18,715

EBIT 12,314 6,901 27,854 14,663

* Depreciation 1,814 1,928 3,591 3,617

* Amortisation (1) 1,836 11,264 3,637 22,419

Special costs 5,224 1,369 6,554 1,878

Inventory revaluation - - - -

Exchange Difference on BRL (1,276) 1,111 (1,713) 933

Adjusted EBITDA (2) 19,914 22,572 39,922 43,510

(1)

(2)Euro 3,337 and Euro 221 are respectively Saeco and Ducale contribution from acquisition date


For the six months ended June 30th, 2017 amortization includes Euro 18,661 PPA impact


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Condensed consolidated balance sheet at June 30th

, 2017 (unaudited)


As at As at

June 30, December 31,

2017 2016

ASSETS

Intangible assets 671,075 649,650

Property, plant and equipment 44,789 38,014

Available-for-sale investments 6 6

Receivable and other non-current assets 2,088 1,887

Deferred tax assets 25,070 18,461

Total non-current assets 743,029 708,018

Cash and cash equivalents 81,954 51,089

Trade receivables, net 99,365 66,056

Inventories,net 60,153 39,423

Other receivables 3,771 3,706

Tax receivables 9,221 8,384

Derivative financial instruments 119 -

Total current assets 254,583 168,658

TOTAL ASSETS 997,612 876,676

SHAREHOLDERS' EQUITY AND LIABILITIES

Share Capital 41,138 41,138

Other Reserves 187,391 214,704

Loss for the period (3,867) (27,521)

Total shareholders' equity 224,662 228,321

Non-current financial indebtness 511,552 391,713

Provision for post-employment benefits 14,736 12,358

Deferred tax liabilities 82,801 88,016

Non-current tax payables 15,765 20,147

Other non-current payables 1,000 1,000

Non-current payables to leasing companies 195 51

Provisions 6,261 6,668

Total non-current liabilities 632,312 519,954

Current financial indebtness 8,286 16,025

Payables to related parties 11 11

Trade payables 91,098 74,484

Current tax payables 17,836 14,309

Other current payables 23,321 23,099

Derivative financial instruments 88 473

Total current liabilities 140,639 128,401

TOTAL LIABILITIES 772,950 648,355

TOTAL SHAREHOLDERS' EQUITY AND LIABILITIES 997,612 876,676


15


Condensed consolidated statement of Cash Flows for the Period Ended June 30th

,

2017 (unaudited)



2017 2016 2017 2016

Pro forma Pro forma

Cash flows from operating activities

Cash generated from operations 14,693 8,947 23,033 16,008

Income taxes paid (570) (895) (1,659) (2,318)

Net Cash Flows from operating activities 14,124 8,052 21,374 13,690

Cash flows from investing activities

Net additions to tangible and intangible assets (3,478) (3,524) (6,405) (6,428)

Tax settlement (2,247) - (4,485) 0

Saeco acquisition - - (52,613)

Ducale acquisition (19,585) - (19,585) -

Equity injection, net of N&W purchase price - - - 248,292

Net Cash Flows (utilised)/from investing activities (25,310) (3,524) (83,089) 241,865

Cash flows from financing activities

Interests paid (19,097) (7,208) (17,971) (20,719)

Other finance cash-flows 49,247 - 110,551 (243,279)

Net Cash Flows (utilised)/from in financing activities 30,150 (7,208) 92,581 (263,998)

Net increase/(decrease) in cash and cash equivalents 18,964 (2,679) 30,866 (8,443)

Cash and cash equivalents at start of period 62,991 42,326 51,089 48,088

Cash and cash equivalents at end of period 81,954 39,645 81,954 39,645



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Condensed consolidated statement of changes in equity for the period ended June

30th

, 2017 (unaudited)


Balance at January 1, 2016 50 - - - - - - - 50


Other comprehensive income for the period, net of income tax (575) (1,383) (328) (2,286)

Total Comprehensive Loss for the period - (575) (1,383) (328) - - - (27,521) (29,807)

Increases 41,088 216,896 257,984

Recognition of share based payment. 96 96

Balance at December 31, 2016 41,138 (575) (1,383) (328) 96 216,896 - (27,521) 228,321

Balance at January 1, 2017 41,138 (575) (1,383) (328) 96 216,896 - (27,521) 228,322


Other comprehensive income for the period, net of income tax 391 (246) 145

Total Comprehensive Loss for the period 391 (246) (3,867) (3,723)

Transfer to accumulated loss (27,521) 27,521 -

Recognition of share based payment. 64 64

Balance at June 30, 2017 41,138 (184) (1,629) (328) 160 216,896 (27,521) (3,867) 224,662

Share

based plan

Other

Reserves

Other components of comprehensive

income

Share

Capital

Cash Flow

Hedge

Foreing

Currency

Translation

Reserve

Actuarial

gains/losses

Share

based plan

Other components of

comprehensive income

Share

Capital

Cash Flow

Hedge

Foreing

Currency

Translation

Reserve

Actuarial

gains/losses

Loss for

the periodTotal Equity

Other

Reserves

Loss for

the periodTotal Equity

Accumulated

losses

Accumulated

losses


17


Notes to the Condensed Consolidated Financial Statements


1 – Basis of preparation

N&W Global Vending S.p.A. (hereinafter also the “Company”) is a joint-stock company

established in Italy on October 27th

, 2005 and indirectly controlled by “Lone Star

Investment Fund”, which acquired the N&W Group on March 22nd

, 2016.

N&W Global Vending S.p.A. and its subsidiaries (together with the Company, “the

Group”) is the leading manufacturer in Europe of coffee, other hot and cold beverage and

food vending machines based on units sold, with a particular focus on espresso coffee and

a rapidily developing presence in coffee machins for the OCS and food service agreemens.

The Group designs, engineers, develops, manufactures, customizes, assembles and

distributes a broad range of vending and coffee machines.

The Group operates seven manufacturing plans in Italy and one in Romania, all with

flexible assembly operations, and has a commercial arrangement with an additional

manufacturing plant in China.

The Group operates in nearly all major international markets maintaining relationships

with direct customers or, alternatively, through a network of dealers and its commercial

subsidiaries located in Italy, Denmark, UK, France, Germany, Austria, Poland, Spain,

Belgium, Brazil, Argentina, Australia, Singapore, Russia, Romania and Portugal.

As part of the strategy to strengthen its product offering, on March 14th

, 2017 the Company

has finalized the acquisition of Saeco Vending S.p.A. and its subsidiaries and on June 6th

,

2017 the Company has acquired the entire share capital of Ducale Macchine da Caffè S.r.l..

On July 11th

, 2017 the Company finalized the acquisition of Cafection Group.

These condensed consolidated interim financial statements have been prepared in

accordance with some criteria IAS 34, Interim financial reporting. The condensed

consolidated interim financial statements do not include all the notes of the type normally

included in the annual financial statements. Accordingly, the condensed consolidated

interim financial statements should be read in conjunction with the annual financial

statements for the year ended December 31st, 2016, which have been prepared in

accordance with IFRS.

The figures presented in this noteholder report have been prepared on the following basis:

for the three, six and twelve months ended June 30th

, 2017: the consolidated results

of the Company under the current ownership, including the results of Saeco

Vending S.p.A. and its subsisdiaries since March 14th

, 2017 and Ducale Macchine

da Caffè S.r.l. result since June 6th

, 2017;


18


for the three months ended June 30th

, 2016: the consolidated results of the

Company under the current ownership excluding Saeco Group and Ducale

Macchine da Caffè S.r.l.;

for the six months ended June 30th

, 2016 and FY 2016: the aggregation of the

consolidated results of the Company under the previous ownership from January

1st, 2016 until March 22

nd, 2016 and the consolidated results of the Company under

the current ownership from March 23rd

, 2016 until June 30th

, 2016 and December

31st, 2016 (“Pro forma”), respectively.

The condensed consolidated interim financial statements have been prepared on a going

concern basis, which covers a period of at least twelve months as at the date of the

condensed consolidated interim financial statements.

The Group’s presentation currency is Euro.

Any event and/or transaction significant to an understanding of the changes since June 30th

,

2017 has been included in these consolidated condensed interim financial statements.

2 – Accounting policies

The condensed consolidated interim financial statements have been prepared under the

historical cost convention, except for certain financial instruments that are measured at fair

value.

The accounting policies adopted in the preparation of these condensed consolidated interim

financial statements are consistent with those that were applied in the preparation of the

Group’s financial statements for the year ended December 31st, 2016.

3 – Estimates

The preparation of condensed consolidated interim financial statements requires

management to make judgements, estimates and assumptions that affect the application of

accounting policies and the reported amounts of assets and liabilities, income and expense.

Actual results may differ from these estimates.

In preparing these condensed consolidated interim financial statements, the significant

judgements made by management in applying the Group’s accounting policies and the key

sources of estimation uncertainty were the same as those applied to the consolidated

financial statements for the year ended December 31st, 2016.

4 – Financial risk management and financial instruments

Financial risk factors

The Group’s corporate treasury function provides services to the business, co-ordinates

access to domestic and international financial markets, monitors and manages the financial

risks relating to the operations of the Group. These risks include: credit risk; liquidity risk

and market risk (including interest rate risk, foreign exchange rate risk and price risk).


19


a- Credit risk: the Group exposure and the credit ratings of its counterparties are

continuously monitored and the aggregate value of transactions concluded is spread

amongst approved counterparties. Credit exposure is controlled by counterparty

limits that are reviewed annually.

b- Liquidity risk: the Group has built a liquidity risk management framework for the

management of short, medium and long-term funding. The Group manages

liquidity risk by maintaining adequate reserves, banking facilities and reserve

borrowing, by continuously monitoring forecast and actual cash flows and

matching the maturity profiles of financial assets and liabilities.

c- Market risk (including interest rate risk, foreign exchange rate risk and price

risk). The Group is primarily exposed to the financial risks of changes in foreign

currency exchange rates and interest rates. The Group enters into a variety of

derivative financial instruments to manage its exposure to foreign currency rate

risk. As at June 30th

, 2017 the Group has entered only in short term financial

derivatives contract.

Fair value estimation

The different levels have been defined as follows:

Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level

1);

Inputs other than quoted prices included within level 1 that are observable for the asset

or liability, either directly (that is, as prices) or indirectly (that is, derived from prices)

(Level 2);

Inputs for the asset or liability that are not based on observable market data (that is,

unobservable inputs) (Level 3).

The fair values of financial assets and financial liabilities are determined as follows:

the fair value of financial assets and financial liabilities with standard terms and

conditions and traded on active liquid markets is determined with reference to

quoted market prices;

the fair value of derivative instruments is calculated using quoted prices. Where

such prices are not available, use is made of discounted cash flow analysis using

the applicable yield curve for the duration of the instruments for non-optional

derivatives, and option pricing models for optional derivatives;

foreign currency forward contracts are measured using quoted forward exchange

rates and yield curves derived from quoted interest rates matching maturities of the

contracts;


20


The directors consider that the carrying amounts of all financial assets and financial

liabilites not measured at fair value approximate their fair values.

There were no changes in valuation techniques during the period.

5 – Operating exchange difference

At the end of June 2017, the Group recorded negative operating exchange differences for a

total amount of Euro 1.7 million, while in the same period of 2016 the Company recorded

positive differences for a total amount of Euro 1.4 million. These exchange differences are

largely due, as previously said, to a translation effect (mostly unrealized) arising from the

conversion of intercompany trade payables recorded in our Brazilian subsidiary related to

purchases of products from our Italian subsidiary denominated in Euro.

As of June 30th

, 2017, due to depreciation of the Brazilian Real, the translation of the Euro

denominated intercompany trade payables in our Brazilian subsidiary into Brazilian Real

resulted in a increase of payables with a corresponding unrealized operating exchange loss

of Euro 0.9 million recognized in the income statement of the Brazilian entity. As of June

2016, due to significant appreciation of the Brazilian Real the unrealized operating

exchange profit amounted to Euro 1.7 million.

6 – Income Tax expense

Income tax expense is recognised based on management’s estimate of the weighted

average annual income tax rate expected for the full financial year. The estimated average

annual tax rate for the year remains unchanged compared to last year.

7 – Property, plant and equipment (Tangible Assets)

During the six months ended June 30th

, 2017, property, plant and equipment increased by

Euro 2.7 million of which Euro 0.6 million from Saeco Group and Euro 0.1 million from

Ducale.

Additions mainly relate to Plants and machinery and refer to the purchase of moulds and

equipments for the production of new models of Necta and Wittenborg vending machines

on the productions sites of Valbrembo and Mapello.

A total net depreciation expense of Euro 3.6 million has been charged in the line “Cost of

sales” in the statement of comprehensive income.

8 – Intangible Assets

During the six months ended June 30th

, 2017 Intangible assets increased by Euro 3.7

million of which Euro 0.3 million from Saeco and mainly consist in R&D costs for the

development of new products and technology solutions and and Euro 0.1 million from

Ducale.

As previously discussed, the acquisition by LSF9 Canto Investments S.p.A. of N&W

Global Vending S.p.A. was consummated on March 22nd

, 2016. The Goodwill arising from


21


such a business combination amount to Euro 348.5 million and represents, amongst other

things, the value of the Company’s market position and reputation, as well as the value of

the Company’s workforce.

The preliminary goodwill arising from Saeco acquisition consummated on March 14th

,

2017 is equal to Euro 16.6 million.

The preliminary goodwill arising from Ducale Macchine da Caffè S.r.l. acquisition

consummated on June 6th

, 2017 is equal to Euro 17.3 million.

Goodwill is not amortized, but tested for impairment annually, as well as whenever there

are events or changes in circumstances (triggering events) which suggest that the carrying

amount may not be recoverable. Goodwill is carried at cost less accumulated impairment

losses.

The preparation of these condensed consolidated interim financial statements reflects the

Purchase Price Allocation (“PPA”) following Saeco Acquisition on March 14th

, 2017 and

Ducale Macchine da Caffè S.r.l. acquisition on June 6th

, 2017. Such PPA represents a

preliminary allocation to be finalized at year end, once information about facts and

circumstances will be definitely obtained.

9 – Inventories

Inventories increased by Euro 20.7 million as compared to December 31st, 2016 mostly

driven by the inclusion of Saeco Group inventory (Euro 13.2 million) and Ducale

inventory (Euro 2.5 million) and by the stocking activities to serve July and August sales in

view of the summer holidays.

10 - Trade Receivables

Compared to December 2016, Trade receivables increased by Euro 33.3 million, Euro 99.4

million as of June 30th

, 2017, compared to Euro 66.1 million as of December 31st, 2016.

This increase is mainly attributable to the inclusion of Saeco trade receivables (Euro 18.1

million), Ducale trade receivables (Euro 2.5 million), as well as different sales phasing and

delays of a few key customers recovered in July.

11 – Profit Participation Loans (“PPL”)

Following the Acquisition, on March 22nd

, 2016 executive and senior employees of the

Company decided to participate to the investment by acquiring a Profit Participation Loans

(PPLs) for an amount of Euro 1,665.

Such PPLs foresee a remuneration linked to an IRR (Internal Rate of Return) realized by

Lone Star Fund IX in respect of its initial investments in the N&W Group and economic

and financial performance.


22


The fair value of the PPLs has been estimated at Euro 615 based on a Monte Carlo

valuation method.

The Company recognised an amount of Euro 64 through the consolidated income

statement for the period January 1st, 2017 until June 30

th, 2017 according to the estimated 5

years maturity period, with a corresponding credit to equity as the Company has no

obligation to settle the liability arising from the PPL arrangement.

12 – Financial indebtedness

The financial indebtedness of the Group mainly consists of the Senior Secured Notes of

Euro 370 million, Euro 40 million Temporary Notes tranche placed in June 2017 to fund

the Cafection Transaction and Second Lien Notes of Euro 100 million.

The current portion of the financial indebtness relates to: i) accrued interests payable of

Senior and Second Lien notes at the next interest payment dates ii) accrued interests related

to the Revolving Credit Facility commitment fee.

13 – Provision for post-employment benefits

The increase in provision for post employment benefits is related to the acquisition of

Saeco Vending S.p.A. and its subsidiaries (Euro 2 million) and to the acquisition of Ducale

(Euro 0.4 million). Provision for post-employment benefits in N&W Group “old

perimeter” is substantially in line with December 2016.

14 – Other non-current payables

Euro 1,000 refer to the residual portion of the purchase price to be paid to N&W Holdings

S.à r.l, the previous owner of N&W Group to be due within 48 months from the acquisition

date and now placed in a bank escrow account.

15 – Provisions

Provisions include Euro 0.2 million deriving from the inclusion of Saeco group.

Since the last annual report, no material changes were noted in other contingencies for the

N&W Group old perimeter. It is not anticipated that any material liabilities will arise from

the contingent liabilities other than those provided for.

n&w global vending s.p.a. - evoca group · 2018. 5. 31. · n&w global vending s.p.a. –...

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