Consolidated quarterly report
at March 31 2003
Centrale del Latte di Torino & C. S.p.A. – Gruppo CLT
Via Filadelfia 220
10137 Turin - Italy
Tel. 011 3240200 - Fax 011 3240300
e-mail: posta @centralelatte.torino.it
Paid-up share capital Euro 20.600.000
Turin Company register no. 631/77
VAT no IT 0193425001
1. Consolidated financial statements
Consolidated balance sheetpage 2
Consolidated income statementpage 3
- Notes to the financial statements
Introduction page 4
Consolidation area and evaluation criteria page 4
Comments on the income statement page 5
Consolidated financial position page 7
3. Comments on operations page 8
4. Future trendspage 11
- Parent company financial statements
Balance sheet page 12
Income statement page 13
- Significant events after the close of the quarter page 14
- Consolidated financial statements
1.1Consolidated balance sheet
March 31 2003 / March 31 2002 / December 31 2002Fixed assets
Tangible fixed assets / 27,707,223 / 17.756.299 / 28.137.727
Intangible fixed assets / 22,353,378 / 14.951.616 / 22.766.115
Investments and securities / 1,789,949 / 1.849.216 / 1.850.292
Total fixed assets / 51,850,551 / 92.8% / 34.557.131 / 96.% / 52.754.134 / 91.3%
Working capital
Trade receivables / 18,896,843 / 12,225,108 / 20,553,028
Inventories / 2,798,613 / 1,529,263 / 2,555,089
Receivables from controlling companies / - / 96,836 / -
Other current assets / 8,042,047 / 5,372,055 / 9,026,377
Prepaid expenses and accrued income / 317,980 / 476,414 / 368,739
Trade payables / (17,018,369) / (12,862,149) / (20,163,186)
Other payables / (7,361,172) / (4,242,685) / (5,874,078)
Taxes payable / (347,803) / (382,654) / (501,790)
Accrued expenses and deferred income / (1,289,729) / (990,371) / (935,136)
Net working capital / 4,038,410 / 7.2% / 1,221,818 / 3.4% / 5,029,045 / 8.7%
TOTAL CAPITAL EMPLOYED / 55,888,961 / 100.0% / 35,778,948 / 100.,0% / 57,783,179 / 100.0%
Reserves for long-term liabilities
Reserve for employee severance indemnity / 3,560,066 / 2,228,920 / 3,551,501
Other provisions / 296,095 / 25,000 / 320,812
Provision for deferred taxes / 661,083 / 272,233 / 661,083
Total long-term liabilities and reserves / 4,517,244 / 8.1% / 2,526,153 / 7.1% / 4,533,396 / 7.8%
Posizione finanziaria
Cash, banks and securities / (3,132,594) / (17,039,235) / (1,205,554)
Treasury stock / (315,369) / (430,527) / (343,259)
Payables to banks / 363,214 / 720,750 / 3,170,933
Medium/long-term financing / 16,431,088 / 11,209,166 / 13,705,528
Net financial position / 13,346,338 / 23.9% / (5,539,846) / -15.5% / 15,327,649 / 26.5%
Shareholders' equity
Share capital / 20,600,000 / 20,600,000 / 20,600,000
Reserves / 14,087,199 / 15,839,753 / 15,945,106
Income (loss) for the year / (*) 446,026 / (**) 678,031 / (**) (1,563,321)
Total shareholders' equity / 35,133,225 / 62.9% / 37,117,783 / 103,.7% / 34,981,786 / 60.5%
Capital and reserves attributable to minority interests / 2,892,154 / 5.2% / 1,674,857 / 4.7% / 2,940,349 / 5.1%
TOTAL OWN AND MINORITIES CAPITAL EMPLOYED / 55,888,961 / 100.0% / 35,778,948 / 100.0% / 57,783,179 / 100.0%
(*) Before tax
(**) After tax
1.2 Consolidated income statement
1st Qtr 2003 / 1st Qtr 2002 / December 31 2002Value of production
Revenues from sales and services / 23,825,057 / 99.6% / 16,857,413 / 98.9% / 92,051,758 / 99.7%
Change in inventories / (32,083) / -0.1% / (9,302) / -0.1% / (324,357) / -0.4%
Other income and revenues / 128,875 / 0..5% / 204,046 / 1.,2% / 633,517 / 0.7%
Value of production / 23,921,849 / 100.0% / 17,052,157 / 100,0% / 92,360,917 / 100,0%
Costs of production
Services / (5,362,588) / -22.4% / (3,710,613) / -21.8% / (21,986,380) / -23,8%
Raw materials / (13,429,087) / -56.1% / (9,714,341) / -57.0% / (53,562,874) / -58,0%
Other operating costs / (281,466) / -1.2% / (245,203) / -1,4% / (570,504) / -0,6%
Added value / 4,848,709 / 20.3% / 3,382,001 / 19,8% / 16,241,158 / 17,6%
Personnel costs / (2,522,311) / -10..5% / (1,700,897) / -10,0% / (9,268,842) / -10,0%
Gross operating margin / 2,326,398 / 9.7% / 1,681,104 / 9,9% / 6,972,318 / 7,5%
Writedown of accounts receivable / (72,598) / -0.,3% / (53,742) / -0,3% / (136,174) / -0,1%
Depreciation and amortisation of fixed assets / (1,378,423) / -5.8% / (1,009,193) / -5,9% / (6,272,315) / -6,8%
Provisions for contingencies / (1,283) / 0.0% / (25,000) / -0,1% / (55,781) / -0,1%
Operating income / 874,095 / 3,7% / 593,169 / 3,5% / 508,047 / 0,6%
Writedown of treasury stock in portfolio / (27,890) / -0.1% / 47,351 / 0.3% / (39,736) / 0.0%
Writedown of investments / (60,493) / -0.3% / (35,548) / -0.2% / (35,548) / 0.0%
Interest and financial income / 16,611 / 0.1% / 111,692 / 0.7% / 427,057 / 0.5%
Financial charges / (282,764) / -1.2% / (177,678) / -1.0% / (982,483) / -1.1%
Extraordinary income / 89,473 / 0.4% / 882,578 / 5.2% / 1,167,359 / 1.3%
Extraordinary expense / (211,200) / -0.9% / (439,446) / -2.6% / (1,821,221) / -2.0%
Income (loss) before taxes / 397,832 / 1.7% / 982,117 / 5,8% / (776,525) / -0.8%
Income taxes for the period / - / 0.0% / - / 0.0% / (801,215) / -0.9%
Prepaid (deferred) taxes / - / 0.0% / - / 0.0% / (391,873) / -0.4%
Accruals for tax regulations / - / 0.0% / - / 0.0% / - / 0.0%
Net total income (loss) / 397,832 / 1,7% / 982,117 / 5,8% / (1,969,612) / -2,1%
Minority interest income (loss) / (48,194) / -0.2% / 1,537 / 0.0% / (406,292) / -0.4%
Net income (loss) for year / 446,026 / 1.9% / 980,581 / 5.8% / (1,563,320) / -1.7%
2.Notes to the financial statements
2.1Introduction
This quarterly report has been prepared in accordance with Article 82 of Consob resolution no. 11971 dated May 14 1992, supplemented by resolution no. 12475 of April 6 2000.
The quarterly report for the period ended March 31 2003 covers the pre-tax results for the quarter in question with a comparison with the same period in 2002 and the results for the full year ended December 31 2002.
2.2Consolidation area and evaluation criteria
The consolidation area includes the situation at December 31 2002 as regards the Parent company, Centrale del Latte di Torino & C. S.p.A. and its subsidiary companies Centro Latte Rapallo S.p.A. and CLAV Finanziaria S.p.A. (consolidated results) - the CLT Group. Following the merger of Centrale Latte Vicenza S.p.A. through incorporation in CLAV Industria S.p.A. on October 24 2002, the consolidated financial statements prepared by CLAV Finanziaria S.p.A. include the results for the year of the new company now known as Centrale del Latte di Vicenza S.p.A. (hereinafter CLAV).
As for the financial statements of CLAV Finanziaria S.p.A. and CLAV, it proved impossible to draw up the period accounts for the previous operating year as the former two companies were in fact formed in January 2002, while in the case of CLAV, drafting the period report a posteriori would not have ensured sufficient and fair information.
Accordingly, the results for the fourth quarter of the previous year relate solely to the consolidated financial statements of Centrale del Latte di Torino & C. S.p.A. and Centro Latte Rapallo S.p.A., which was the company’s only subsidiary at the time.
The 40% holding in Frascheri S.p.A. has not been consolidated on a line by line basis as it does not meet the criteria established by Italian regulations.
Evaluation criteria.
The evaluation criteria and the accounting principles adopted to prepare the financial statements of Centrale del Latte di Torino & C. S.p.A. , Centro Latte Rapallo S.p.A. and CLAV Finanziaria S.p.A. are the same as those used in previous years.
2,3Comments on the income statement
The income statement for the Group at the end of the firs quarter of 2003, with the inclusion of CLAV in the consolidation area the Group gross operating margin (EBITDA) rose to di 2,326 milion Euros, this corresponds to 9.7% of the net revenues, against 1,681 milion Euros (9.9% net revenues)in the prior year.The operating income (EBIT) was 836thousand Eurosor 3.5%, against 593thousand Euros in the first quarter (3,5%).
The net result before tax and minority interests was a income of 446 mila Euroagainst 980 mila Eurosin the prior year.This reduction is to attribute to extraordinary income and expenses recorded by the Parent company in the first quarter 2002, and regarding consultancy services provided by and for the benefit of thirdy parties in relation to the acquisition of “CLAV” (478 thousand Euros income).
Group net revenuesamounted to23,825 milion Eurosagainst16,857 milion Eurosin the prior year, an increase of 41.33%.To provide a clearer picture of revenue trends for the quarter covered by this report,the comparison below only shows consolidated revenues of Centrale del Latte di Torino & C. S.p.A. and Centro Latte Rapallo S.p.A., which reflects a growth of 4.39%, whereas revenues for CLAV are given separately:
1st Qtr 2003 / 1st Qtr 2002 / Change / Values / 1st Qtr 2003 / Changeoverquarter / CLAV / total consolidated / overquarter
Fresh milk / 8,949,364 / 8,703,083 / 246,281 / 2.83% / 1,856,614 / 10,805,978 / 2,102,895 / 24.16%
UHT milk / 3,848,805 / 3,707,976 / 140,829 / 3.80% / 1,824,107 / 5,672,912 / 1,964,936 / 52.99%
Yoghurt / 406,775 / 402,350 / 4,425 / 1.10% / 1,202,489 / 1,609,264 / 1,206,914 / 299.97%
Bulk milk and cream / 618,768 / 556,880 / 61,888 / 11.11% / 6,527 / 625,295 / 68,415 / 12.29%
Other packaged products / 3,772,808 / 3,487,034 / 285,774 / 8.20% / 1,338,800 / 5,111,608 / 1,624,574 / 46.59%
Total / 17,596,520 / 16,857,323 / 739,197 / 4.39% / 6,228,537 / 23,825,057 / 6,967,734 / 41.33%
Ripartizione geografica
During the first quarter 2003 CLT Group confirms its interregional position; the table below shows a breakdown of turnover by geographical area.
Piedmont / Liguria / Veneto / Other / TotaleLatte fresco / 5,913,642 / 50.7% / 3,035,722 / 55.5% / 1,856,614 / 29.8% / - / 10,805,978 / 45.4%
Latte UHT / 3,515,177 / 30.1% / 333,628 / 6.1% / 1,824,107 / 29.3% / - / 5,672,912 / 23.8%
Yogurt / 350,473 / 3.0% / 56,302 / 1.0% / 1,202,489 / 19.3% / - / 1,609,264 / 6.8%
Latte e panna sfusi / 155,495 / 1.3% / - / 0.0% / 6,527 / 0.1% / 463,273 / 625,295 / 2.6%
Altri prodotti confezionati / 1,730,551 / 14.8% / 2,042,257 / 37.3% / 1,338,800 / 21.5% / - / 5,111,608 / 21.5%
Totale / 11,665,338 / 100.0% / 5,467,909 / 100.0% / 6,228,537 / 100.0% / 463,273 / 23,825,057 / 100.0%
% sul totale / 49.0% / 23.0% / 26.1% / 1,9% / 100.0%
Fresh milk and UHT milk.In terms of volume, fresh and UHT milk sales remained essentially stable.
Yogurt. The yoghurt segment showed growth of 300% over the same period last year as a result of CLAV’s excellent position in terms of turnover and market share. The wieght of this segment as a percentage of total consolidated turnover now at l6,8% .
Operating costs.Notwithstanding the inclusion of the CLAV financial statements the quarter covered by this report does not reveal any particularly critical situations in the operating area. The percentage incidence of operating costs on net turnover is essentially stable if only the two companies based in Piedmont and Liguria are considered for comparative purposes. This, despite increases in advertising and marketing activities to support the new biological agriculture product line and for the relaunch of and support for CLAV trademarks and products that contributed to the rise in incidence of services costs to 22.4% compared with 21.8% for the same period last year.
Instead there was a marked increase in consolidated amortisation on account of both higher capital expenditure by the Parent company during the previous year and amortisation relating to part of the merger loss attributed to CLAV trademarks.
Extraordinary expensesinclude costs about the application of the disposition of fiscal law december 27, 2002 no. 289.
Financial income. Use of cash funds and the sale of securities in portfolio to finalise the acquisition of CLAV led to a reduction in interest income from 111 thousand euros at March 31 2002 to 16 thousand at March 31 2003.
Adjustments to financial fixed assets
During the quarter covered by this report the Parent company wrote down the value of treasury stock in portfolio, evaluated at the average price in the month of March equal to 2.092 euros. The total value recorded for treasury stock in portfolio amounts to 315,369 euros.
The adjustments fo financial assetsinclude a writedown of the investment in Frascheri S.p.A. equal to 40% of the loss reported in the 2002 financial statements for this associated company. This writedown amounted to 60,493 euros and has been charged to this quarter.
2.4 Financial position
The net financial position of the Group at March 31 2003, as briefly described in the table below, shows an improvement against the first quarter 2002, with an increase of cash and a displacement of the debt from short to long term.
Consolidated financial position
March 31 2003 / March 31 2002 / December 31 2002Liquid assets / 3,122,851 / 10,810,107 / 1,205,554
Securities not included in financial fixed assets / - / 6,229,128 / -
Treasury stock / 325,113 / 430,527 / 343,259
Total liquid assets / 3,447,964 / 17,469,762 / 1,548,813
Payables to Banks / (363,214) / (720,750) / (3,170,933)
Medium/long term financing / (16,431,088) / (11,209,166) / (13,705,528)
(16,794,302) / (11,929,916) / (16,876,461)
Net financial position / (13,346,338) / 5,539,846 / (15,327,648)
3. Comments on operations
To give a clearer picture of performance, a summary of operating results is given below for the Group and each of its member companies.
3.1 Centrale del Latte di Torino & C,S.p.A.:
Income statement
1st Qtr 2003 / 1st Qtr 2002 / December 31 2002Value of production
Revenues from sales and services (*) / 13,889,309 / 98.8% / 13,175,099 / 98.3% / 51,295,140 / 99.4%
Change in inventories / 51,035 / 0.4% / 26,681 / 0.2% / (194,115) / -0.4%
Other income and revenues / 116,990 / 0.8% / 197,570 / 1.5% / 513,737 / 1.0%
Value of production / 14,057,335 / 100.0% / 13,399,350 / 100.0% / 51,614,762 / 100.0%
Gross operating margin / 1,715,860 / 12.2% / 1,127,911 / 8.4% / 4,449,140 / 8.6%
Operating income / 808,598 / 5.8% / 430,928 / 3.2% / 617,044 / 1.2%
Income (loss) before taxes / 464,558 / 3.3% / 829,657 / 6.2% / 699,799 / 1.4%
(*) Sales revenues include inter-group
Net financial position
1st Qtr 2003 / 1st Qtr 2002 / December 31 2002Liquid assets / 2,608,612 / 6,910,996 / 387,187
Treasury stock / 315,369 / 430,527 / 343,259
2,923,981 / 7,341,523 / 730,446
Payables to Banks / (27,601) / (209,829) / (2,217,807)
Medium/long term financing / (10,673,935) / (10,432,838) / (7,657,441)
(10,701,536) / (10,642,667) / (9,875,249)
Net financial position / (7,777,555) / (3,301,144) / (9,144,803)
3.2 Centro Latte Rapallo S.p.A.:
Income statement
1st Qtr 2003 / 1st Qtr 2002 / December 31 2002Value of production
Revenues from sales and services (*) / 5,490,963 / 99.7% / 5,390,492 / 100.2% / 21,864,260 / 99.6%
Change in inventories / 6,308 / 0.1% / (35,982) / -0.7% / (25,916) / -0.1%
Other income and revenues / 8,916 / 0.2% / 26,365 / 0..5% / 108,743 / 0.5%
Value of production / 5,506,187 / 100.0% / 5,380,875 / 100.0% / 21,947,087 / 100.0%
Gross operating margin / 426,877 / 7.8% / 553,761 / 10.3% / 1,547,273 / 7.1%
Operating income / 217,896 / 4.0% / 306,723 / 5.7% / 671,358 / 3.1%
Income (loss) before taxes / 193,447 / 3.5% / 287,891 / 5.4% / 593,008 / 2.7%
(*) Sales revenues include inter-group
Net financial position
1st Qtr 2003 / 1st Qtr 2002 / December 31 2002Liquid assets / 174,755 / 825,374 / 547,990
174,755 / 825,374 / 547,990
Payables to Banks / (251,565) / (482,356) / (290,934)
Medium/long term financing / (597,153) / (776,327) / (597,153)
(848,718) / (1,258,683) / (888,087)
Net financial position / (673,963) / (433,309) / (340,097)
3.3 Centrale del Latte di Vicenza S.p.A. (consolidated):
Income statement
1st Qtr 2003 / December 31 2002Value of production
Revenues from sales and services (*) / 6,228,537 / 101.3% / 25,874,046 / 100.3%
Change in inventories / (89,427) / -1.5% / (104,326) / -0.4%
Other income and revenues / 10,640 / 0.2% / 31,548 / 0.1%
Value of production / 6,149,750 / 100.0% / 25,801,268 / 100.0%
Gross operating margin / 182,379 / 3.0% / 971,124 / 3.8%
Operating income / (203,493) / -3.3% / (1,046,203) / -4.1%
Income (loss) before taxes / (225,421) / -3.7% / (1,811,227) / -7.0%
(*) Sales revenues include inter-group
(**) Net of minority interests
Net financial position
1st Qtr 2003 / December 31 2002Liquid assets / 349,228 / 270,378
349,228 / 270,378
Payables to Banks / (84,048) / (953,126)
Medium/long term financing / (5,160,000) / (5,160,000)
(5,244,048) / (6,113,126)
Net financial position / (4,894,820) / (5,842,748)
4. FUTURE TRENDS
It is expected that results for the second quarter of 2003 will be in line with those reported for the quarter covered by this report, on the wave of the relaunch of sales and marketing activities for Centrale del Latte di Vicenza S.p.A. and business and sales strategies already implemented in other Group companies.
5. Parent company financial statements
5.1Parent company balance sheet
March 31 2003 / March 31 2002 / December 31 2002Fixed assets
Tangible fixed assets
Intangible fixed assets / 10,151,101 / 12,684,240 / 10,716,279
Investments and securities / 1,779,227 / 2,309,275 / 1,906,288
Total fixed assets / 32,606,663 / 25,907,747 / 32,667,156
Working capital / 44,536,992 / 96.1% / 40,901,262 / 97.8% / 45,289,722 / 95.1%
Trade receivables
Inventories / 10,612,367 / 10,597,448 / 11,644,002
Receivables from controlling companies / 1,428,759 / 1,260,802 / 1,201,944
Other current assets / - / 96,836 / -
Prepaid expenses and accrued income / 4,923,766 / 4,635,766 / 5,648,738
Trade payables / 118,940 / 394,870 / 177,655
Other payables / (9,430,776) / (11,195,585) / (11,252,628)
Taxes payable / (4,571,974) / (3,716,329) / (3,975,786)
Accrued expenses and deferred income / (220,118) / (89,857) / (234,345)
Net working capital / (1,066,604) / (874,094) / (870,331)
TOTAL CAPITAL EMPLOYED / 1,794,360 / 3.9% / 1,109,857 / 2.2% / 2,339,248 / 4.9%
Reserves for long-term liabilities / 46,331,351 / 100.0% / 42,011,119 / 100.0% / 47,628,971 / 100.0%
Reserve for employee severance indemnity
Other provisions / 1,712,410 / 1,607,721 / 1,671,495
Provision for deferred taxes / - / - / 26,000
Total long-term liabilities and reserves / 1,712,410 / 3.7% / 1,607,721 / 3.8% / 1,697,495 / 3.6%
Posizione finanziaria
Cash, banks and securities / (2,608,612) / (6,910,996) / (387,187)
Treasury stock / (315,369) / (430,527) / (343,259)
Payables to banks / 27,601 / 209,829 / 2,217,807
Medium/long-term financing / 10,673,935 / 10,432,838 / 7,657,441
Net financial position / 7,777,555 / 16.8% / 3,301,144 / 7.9% / 9,144,803 / 19.2%
Shareholders' equity
Share capital / 20,600,000 / 20,600,000 / 20,600,000
Reserves / 15,814,478 / 15,814,478 / 15,814,478
Income (loss) for the year / (*) 426,908 / (**) 687,775 / (**) 372,196
Total shareholders' equity / 36,841,386 / 79.5% / 37,102,253 / 88.3% / 36,786,674 / 77.2%
TOTAL OWN AND MINORITIES CAPITAL EMPLOYED / 46,331,351 / 100.0% / 42,011,118 / 100.0% / 47,628,971 / 100.0%
(*) Before tax
(**) After tax
5.2 Parent company income statement
1st Qtr 2003 / 1st Qtr 2002 / December 31 2002Value of production
Revenues from sales and services / 13,889,309 / 98.8% / 13,175,099 / 98.3% / 51,295,140 / 99.4%
Change in inventories / 51,035 / 0.4% / 26,681 / 0.2% / (194,115) / -0.4%
Other income and revenues / 116,990 / 0.8% / 197,570 / 1.5% / 513,737 / 1.0%
Value of production / 14,057,335 / 100.0% / 13,399,350 / 100.0% / 51,614,762 / 100.0%
Costs of production
Services / (2,817,836) / -20.0% / (2,667,240) / -19.9% / (11,044,095) / -21.4%
Raw materials / (8,124,642) / -57.8% / (8,263,902) / -61.7% / (31,042,010) / -60.1%
Other operating costs / (74,032) / -0.5% / (126,407) / -0.9% / (352,823) / -0.7%
Added value / 3,040,825 / 21.6% / 2,341,802 / 17.5% / 9,175,833 / 17.8%
Personnel costs / (1,324,965) / -9.4% / (1,213,891) / -9.1% / (4,726,694) / -9.2%
Gross operating margin / 1,715,860 / 12.2% / 1,127,911 / 8.4% / 4,449,140 / 8.6%
Writedown of accounts receivable / (46,123) / -0.3% / (11,137) / -0.1% / (53,663) / -0.1%
Depreciation and amortisation of fixed assets / (861,139) / -6.1% / (685,847) / -5.1% / (3,752,433) / -7.3%
Provisions for contingencies / - / 0.0% / - / 0.0% / (26,000) / -0.1%
Operating income / 808,598 / 5.8% / 430,928 / 3.2% / 617,044 / 1.2%
Writedown of treasury stock in portfolio / (27,890) / -0.2% / 47,351 / 0.0% / (39,736) / 0.0%
Writedown of investments / (60,493) / -0.4% / (35,548) / 0.0% / (35,548) / 0.0%
Interest and financial income / 12,028 / 0.1% / 101,877 / 0.8% / 451,979 / 0.9%
Financial charges / (182,740) / -1.3% / (158,084) / -1.2% / (609,737) / -1.2%
Extraordinary income / 23,559 / 0.2% / 882,578 / 6.6% / 990,751 / 1.9%
Extraordinary expense / (146,153) / -1.0% / (439,446) / -3.3% / (674,954) / -1.3%
Income (loss) before taxes / 426,908 / 3.0% / 829,657 / 6.2% / 699,799 / 1.4%
Income taxes for the period / - / 0.0% / - / 0.0% / (337,813) / -0.7%
Prepaid (deferred) taxes / - / - / - / 0.0% / 10,210 / 0.0%
Net total income (loss) / 426,908 / 3.0% / 829,657 / 6.2% / 372,196 / 0.7%
6. SIGNIFICANT EVENTS AFTER THE CLOSE OF THE QUARTER
No significant facts have occurred after the end of the quarter.
Turin, May 13 2003 Chairman of the Board of Directors
Luigi LUZZATI
1
Centrale del Latte di Torino & C. S.p.A. – Quarterly report at March 31 2003