• 2017 revenues of Euro 324,0 million, are +12,4% related to organic growth versus 2016 revenues of Euro 288,1 million. At same forex rates, 2017 revenue growth is +13,2 % compared to 2016
• Heating Division: revenues of Euro 274,0 million (+9,7 % versus 2016 Euro 249,8 million) driven by emerging markets China and Turkey
• Smart Gas Metering Division: revenues of Euro 49,5 million (+31,1%, versus 2016 Euro 37,7 million) confirm SIT’s competitive position in the Italian market
• EBITDA Adjusted of Euro 45,8 million, with an organic growth of 2,7% versus 2016 of Euro 44,6 million, lower than the increase in revenues, suffering extra costs due to the strong increase in demand
• Accelerated capex plan for over 15 million Euro was launched to increase capacity output of approx. 30% to restore regular deliveries and production efficiencies and satisfy the increasing market demand. Planned capex will progressively become effective starting from second half of 2018
• Adjusted Net income of Euro 8,0 million with an increase of 6,3 million Euro, +365% versus 2016 of Euro 1,7 million confirms positive effects of post listing capital structure and improved conditions on new financing facilities
• Net financial position at December 31, 2017 of Euro 65,1 million versus Euro 124,8 million at December 31, 2016
• 2017 cash flow from operations of Euro 24,2 million after capex of Euro 17,3
• Mandate to the Chairman to call the Shareholder Meeting for April 26, 2018
• Proposal of a dividend distribution of Euro 0,25 per share correspondent to the present date to Euro 985.566

***

Padova, March 20, 2018

• – APPROVAL OF SIT S.P.A DRAFT FINANCIAL STATEMENTS AND DRAFT CONSOLIDATED FINANCIAL STATEMENTS AS OF 31 DECEMBER 2017

The Board of Directors of SIT S.p.A. (“SIT” or the “Company”), ISIN code IT0005262149, listed on the AIM Italia segment of the Italian Stock Exchange, has approved the 2017 draft Consolidated Financial Statements recording a significant organic growth in line with the development projects for all the Company’s business lines.

In 2017 SIT has totaled sales for 324,0 million Euro, with an increase of 12,4% versus previous year. Adjusted EBITDA is equal to 45,8 million Euro, up 2,7% against 2016 (44,6 million Euro). Net income, Adjusted for the fair value accounting effects of the reverse merger with the SPAC Industrial Stars of Italy 2, is 8,0 million Euro with an increase of 6,3 million Euro (+365%) versus last year.

“During 2017 – underlined SIT Executive Chairman Federico de’ Stefani – our Group achieved more than satisfactory results in terms of both revenues and operating profits. Such positive outcome enables us to be optimistic about the coming months. Thanks to this additional performance SIT achieved in 2017 a compound annual growth rate for the last 5 years of 7,7% in terms of revenues and 8,7% in terms of EBITDA Adjusted. We are confident in implementing an important capex plan in the second half of this year, in order to increase our production capacity by 30%, to satisfy, among others, the growing Chinese demand, that has become the world’s leading market for domestic boilers. While 2017 was the year of our Company’s listing on the AIM segment of the Italian Stock Exchange – following the merger with the Spac Industrial Stars of Italy 2 -, we are confident to conclude in the next months the transition to the main Italian Stock Exchange (Mercato Telematico Azionario), ensuring to our projects and results wider visibility towards markets and investors”.

KEY FINANCIALS

(Euro.000)	2017	%	2016	%	diff%
Revenues	323.958	100,0%	288.138	100,0%	12,4%
EBITDA Adjusted1	45.847	14,2%	44.622	15,5%	2,7%
EBITDA	44.093	13,6%	43.212	15,0%	2,0%
EBITA	31.446	9,7%	29.752	10,3%	5,7%
EBIT	25.171	7,8%	23.477	8,1%	7,2%
Net Income Adjusted2	7.994	2,5%	1.720	0,6%	365%
Net Income	(23.327)	-7,2%	1.720	0,6%	n/a
Net Income of the Group	(23.327)	-7,2%	1.740	0,6%	n/a
Cash flow from operations	24.228		40.697
Net financial position	65.105		124.773

 

In 2017 SIT accounted revenues for 324,0 million Euro, with an organic growth of 12,4% (+35,8 million Euro) versus previous year (Euro 288,1 million Euro). On a same forex base 2017 growth is

+13,2 % versus last year.

(Euro.000)	2017	%	2016	%	diff	diff %
Heating	273.997	84,6%	249.790	86,7%	24.207	9,7%
Smart Gas Metering	49.459	15,3%	37.740	13,1%	11.719	31,1%
Product sales	323.455	99,9%	287.530	99,8%	35.925	12,5%
Service sales	502	0,1%	608	0,2%	(106)	-17,4%
Total revenues	323.958	100%	288.138	100%	35.820	12,4%

 

Revenues of the Heating Division are Euro 274,0 million, up +9,7 % (+24,2 million Euro) versus 2016 (Euro 249,8 million).

The main markets that have driven growth are China (+36,7%) due to the transition so called “from coal to gas” of energy sources and Turkey (+26,6%) thanks to strict regulation introduction changes (ErP – Energy Related Products directive adoption) plus the demand by important OEMs located in the country.

The Smart Gas Metering Division posted 2017 revenues of Euro 49,5 million with a 31,1% increase versus 2016 revenues of 37,7 million Euro. The 2017 sales confirmed the ongoing trend in the massive rollout implementation of the Residential smart gas meters and SIT’s competitive  position in the Italian market.

2017 Adjusted EBITDA is equal to 45,8 million Euro, up 2,7% versus 2016 (Euro 44,6 million).  Trend in 2017 Adjusted EBITDA, lower than the revenue increase, suffering the extra costs and temporary inefficiencies due to production capacity constraints following the strong increase in demand in certain product families.

Extra costs in Service costs are related to urgent deliveries by air freight to reduce lead time to customers while alternative routings in manufacturing, less efficient then standard processes, have negative impact on Personnel expenses. Higher sales volumes to certain customers have increased rebates and quantity related discounts as established in client contracts. Conservative provisions on potential quality claims by certain customers and penalties for delivery delays have been accounted for.

External factors that have negative impact on 2017 Adjusted EBITDA versus 2016 are forex rates that account for net -1,0 million Euro. On the same forex rate, 2017 Adjusted EBITDA would be Euro 46,8 million (with an increase of 4,9% versus previous year).

Due to increase in volumes SIT has launched an accelerated capex plan for over 15 million Euro to increase capacity output of approx. 30% opening bottle necks to restore regular deliveries and production efficiencies. Planned capex will progressively become effective starting from the second half of 2018.

2017 EBIT is equal to Euro 25,2 million versus Euro 23,5 million of 2016 with an increase of 7,2%.

2017 Adjusted Net income of Euro 8,0 million with an increase of 6,3 million Euro, +365% versus 2016 of Euro 1,7 million confirms positive effects of post listing capital structure and improved conditions on new financing facilities. During 2017, existing shareholder loan was completely reimbursed without penalties and existing senior financial agreement was refinanced with new senior facilities, without security package, that have improved economic conditions.

Details of financial charges are reported in the following table:

Euro.000	2017	2016	diff
Net financial charges – Reported	46.968	19.722	27.246
Fair value accounting effect of merger	31.321	–
Net financial charges – Adjusted	15.647	19.722	(4.075)
Reported financial charges include:
Write off of amortized cost	7.509	4.289
Unwinding of interest rate swaps	1.989	–
Net financial charges – normalized*	6.149	15.433	(9.284)

(*) reported financial charges reflect one off charges due to 2016 and 2017 reimbursements

 

2017 Net loss of Euro 23,3 million is due to non-recurring, non-cash, accounting charges (Euro (31,3 million), for the fair value accounting of the reverse merger with SPAC Industrial Stars of Italy 2, effective from July 20, 2017. The amount is calculated as the difference between the market value of SIT shares on the merger date and the fair value of the SPAC’s assets and liabilities incorporated by SIT. The item is accounted in financial charges and has a related reserve in equity.

2017 cash flow from operations is equal to Euro 24,2 million after capex of Euro 17,3 million. Current cash flow is equal to 48,1 million Euro while changes in working capital burns cash for 6,5 million Euro due to increase in Account Receivables because of the end of period growth in sales.

Net financial position at December 31, 2017 stands at Euro 65,1 million versus Euro 124,8 million at December 31, 2016 with an improvement of 59,7 million Euro.

***

II  – DIVIDEND

The Board of Directors will propose the distribution of a gross dividend of Euro 0,25 for each of the shares currently in circulation (excluding treasury shares) for a total amount of Euro

5.985.566. The dividend will be paid with coupon, record and payment date respectively of May 7, 8 and 9 2018.

***

III  – CALL OF SIT SHAREHOLDERS MEETING FOR APPROVAL OF 2017 FINANCIAL STATEMENTS

The Board of Directors gave mandate to the Chairman to call on April 26, 2018, the Shareholders Meeting to discuss and consider, among others, the approval of the 2017 Financial Statements.

Complete notice of the Shareholders Meeting call, in addition to the Board of Directors report on the agenda of the Shareholders Meeting and all mandatory documentation required by law will  be made available c/o the Company and on the company website www.sitgroup.it, at the following section \Investor Relations\Shareholder meeting\.

IV  – SUSPENSION OF THE EXERCISE OF THE SIT S.P.A.’S WARRANTS

We also inform SIT Warrant’s owners that as a result of the resolution of the call of the Ordinary Shareholder’s meeting to approve SIT S.p.A.’s Financial Statements at December 31st, 2017, in compliance with the article 3.6 of the SIT S.p.A.’s Warrant Regulation, the exercise of the SIT Warrants is suspended from the March 20th, 2018 (excluded) up to the day of the Shareholder’s Meeting (included), and in any case up to the day of the coupon date resolved by the Shareholder’s Meeting (excluded).

***

SIT develops and manufactures measuring devices and systems for the safety, comfort and performance of domestic gas equipment and collective catering facilities. SIT also operates in the Smart Gas Metering business, producing a new generation of remotely controlled meters with real-time consumption reading and communication.

SIT is a Group composed of Production Companies located in Italy, Mexico, Holland, Romania and China, as well as a worldwide commercial network which covers all the markets of reference.

Sit S.p.A. Paul Fogolin Investor Relator E. paul.fogolin@sitgroup.it	UBI Banca S.p.A. (Nomad) Marco Germano E. marco.germano@ubibanca.it    T. +39 02 7781 4651	Lifonti&Company Media relations SIT Group T. 02 7788871 Alessandro Pavesi
T. +39 049 829 3111		M. 335 6256204
		E. alessandro.pavesi@lifonti.it
		Luca Ricci Maccarini
		M. 349 7668028
		E. luca.maccarini@lifonti.it

 

BALANCE SHEET

Euro.000	31/12/2017	31/12/2016
Goodwill	78.138	78.138
Other intangible assets	73.286	80.715
Property, plant & equipment	47.778	41.913
Investments	54	156
Non-current financial assets	1.551	1.554
Deferred tax assets	8.742	7.505
Non-current assets	209.549	209.981
Inventories	38.130	38.490
Trade receivables	52.126	44.660
Other current assets	6.282	4.585
Tax receivables	3.023	2.370
Other current financial assets	735	383
Cash and cash equivalents	70.024	33.828
Current assets	170.320	124.316
Total assets	379.869	334.297
Share capital	96.149	73.579
Reserves	32.931	(6.056)
Group net profit	(23.327)	1.740
Minority interest net equity	–	–
Shareholders’ Equity	105.753	69.263
Medium/long-term loans and borrowings	121.060	110.056
Other non-current financial liabilities and derivative financial instruments	288	32.745
Provisions for risks and charges	2.897	2.679
Post-employment benefit provision	6.358	6.036
Other non-current liabilities	506	5
Performance Shares financial liabilities	11.500	–
Deferred tax liabilities	20.276	22.225
Non-current liabilities	162.885	173.746
Short-term loans and borrowings	11.537	10.126
Other current financial liabilities and derivative financial instruments	2.979	6.057
Trade payables	68.367	59.965
Other current liabilities	14.792	14.406
Warrant financial liabilities	12.551	–
Tax payables	1.005	734
Current liabilities	111.231	91.288
Total liabilities	274.116	265.034
Total Shareholders’ Equity and Liabilities	379.869	334.297

 

INCOME STATEMENT

Euro.000	2017	2016
Revenues from sales and services	323.958	288.138
Purchase of raw materials, ancillaries, consumables and goods	176.274	149.437
Change in inventories	(733)	(347)
Service costs	37.583	33.534
Personnel expenses	65.491	61.624
Depreciation, amortization and write-downs	19.045	19.977
Provisions	885	281
Other charges (income)	242	155
EBIT	25.171	23.477
Investment income/(charges)	–	–
Financial income	2.892	42
Financial charges	(49.759)	(19.761)
Net exchange gains (losses)	435	1.329
Impairments on financial assets	(101)	(3)
Profit/(loss) before taxes	(21.362)	5.084
Income taxes	(1.965)	(3.364)
Net profit for the year	(23.327)	1.720
Minority interest result	–	(20)
Group net profit	(23.327)	1.740

 

CASH FLOW STATEMENT

Euro.000	2017	2016
Net profit	(23.327)	1.720
Accessory acquisition costs	–	–
Amortization & Depreciation	18.922	19.735
Non-cash adjustments	3.662	3.820
Income taxes	1.965	3.364
Net interest	46.868	19.719
CASH FLOW FROM CURRENT OPERATIONS (A)	48.090	48.358
Changes in assets and liabilities:
Inventories	421	654
Trade receivables	(7.590)	(292)
Trade payables	8.939	9.079
Other assets and liabilities	(4.805)	(4.178)
Income taxes paid	(3.479)	(3.273)
CASH FLOW ABSORBED FROM CHANGES IN WORKING CAPITAL (B)	(6.514)	1.990
Investing activities:
Investments in property, plant & equipment	(16.107)	(8.220)
Other changes in property, plant & equipment	399	445
Investments in intangible assets	(1.628)	(1.267)
Other changes in intangible assets	–	5
Investments in financial assets	–	(122)
Other changes in financial assets	5	8
Acquisition or sale of subsidiaries or business units net of cash and	–	(500)
CASH FLOW FROM INVESTING ACTIVITIES (C)	(17.331)	(9.651)
CASH FLOW FROM OPERATING ACTIVITIES (A + B + C)	24.245	40.697
Financing activities:
Interest paid	(11.116)	(13.121)
Repayment non-current financial payables	(126.333)	(10.400)
Increase (decrease) current financial payables	(2.025)	(982)
New loans	132.206	22.161
Repayment shareholder loans	(24.541)	(25.000)
(Increase) decrease in financial receivables from holding company	(361)	(145)
(Increase) decrease in financial receivables from companies under	19	(70)
Treasury Shares	(661)	–
Translation reserve	(3.644)	(3.424)
Cash liquidity	48.407	–
CASH FLOW FROM FINANCING ACTIVITIES (D)	11.951	(30.981)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (A + B + C	36.196	9.716
Cash & cash equivalents at beginning of the year	33.828	24.112
Increase/(decrease) in cash and cash equivalents	36.196	9.716
Cash & cash equivalents at end of the year	70.024	33.828