B&C Speakers Group
Interim Financial Report
as of 30 June 2024
Prepared in conformity with the International Financial Reporting Standards endorsed by the European Union
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Contents
THE B&C SPEAKERS GROUP - Corporate bodies | 3 |
Introduction to the consolidated interim financial report at 30 June 2024 | 4 |
Report on operations for the half ending on 30 June 2024 | 5 |
Condensed consolidated interim financial statements at 30 June 2024 | 14 |
Notes to the condensed consolidated interim financial report at 30 June 2024 | |
prepared in conformity with the IFRSs adopted by the European Union | 18 |
Certification of the Condensed Consolidated Interim Financial Statements under the | |
terms of Art. 154-bis of Italian Legislative Decree 58/98 | 43 |
Independent Auditors' Report | 44 |
The present file is available on the Internet at the address:
www.bcspeakers.com
B&C Speakers S.p.A.
Registered Office in Bagno a Ripoli (FI), Italy at Via Poggiomoro 1
Paid-up share capital of € 1,100,000
Florence Business Register - Tax ID 01398890481
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THE B&C SPEAKERS GROUP - Corporate bodies
Board of Directors | |
Chairperson: | Roberta Pecci |
Chief Executive Officer: | Lorenzo Coppini |
Director: | Alessandro Pancani |
Director: | Francesco Spapperi |
Independent Director: | Raffaele Cappiello |
Independent Director: | Marta Bavasso |
Independent Director: | Valerie Sun |
Board of Auditors | |
Chairperson: | Riccardo Foglia Taverna |
Statutory Auditor: | Giovanni Mongelli |
Statutory Auditor: | Sara Nuzzaci |
Alternate Auditor: | Irene Mongelli |
Alternate Auditor: | Diana Rizzo |
Financial Reporting Manager
Francesco Spapperi
Independent auditing firm
PricewaterhouseCoopers S.p.A.
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Introduction to the consolidated interim financial report at 30 June 2024
INTRODUCTION
The Consolidated Interim Financial Report at 30 June 2024 (hereafter, also "Interim Report"), was prepared in line with Italian Legislative Decree 58/1998, as amended, and with the CONSOB Issuers Regulations.
The Interim Report consists of the report on operations, which contains the Directors' observations on operating trends and business developments during the first half of 2024, and the condensed consolidated interim financial statements.
The present condensed consolidated interim financial statements for the B&C Speakers Group at 30 June 2024 were prepared pursuant to the International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and endorsed by the European Union and were drawn up in conformity with IAS 34 "Interim Financial Reporting". These condensed consolidated interim financial statements therefore do not include all the information required of the annual financial statements and must be read together with the annual financial statements prepared for the financial year ended 31 December 2023.
The present report has been drawn up also in accordance with Italian Legislative Decree 58/1998, and with the Regulation for Issuers published by CONSOB.
During the first half of 2024, the Parent Company continued its buyback programme, involving treasury shares, in accordance with the resolution passed by the Shareholders' Meeting held on 29 April 2024, which renewed the mandate to purchase treasury shares for another 12 months. At 30 June 2024, it held 6,574 treasury shares, equal to 0.06% of the share capital. The weighted average purchase price of shares in the portfolio is € 16.17.
At the date of this report (September 2024), the number of Treasury shares owned has changed with respect to 30 June 2024 and amounts to 17,118, equal to 0.16% of the share capital. For your information we can note that the Parent Company B&C Speakers S.p.A. is controlled by R&D International S.r.l. which performs work of direction and coordination.
The equity interest held by the holding Research & Development International S.r.l. represented, at 30 June 2024, 54.00% of the share capital; further information on relations with the holding are contained in the rest of the report.
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Report on operations for the half ending on 30 June 2024
The B&C Group is an international leader in the production and marketing of top-quality professional speakers. Due to the nature and type of this activity, this sector is the sole area of business for the Group, which operates both nationally and internationally.
Products are manufactured and assembled at the Italian sites of the Parent Company and of the subsidiary Eighteen Sound S.r.l., and at the production plants of the foreign subsidiaries Eminence Speaker LLC (based in Eminence, Kentucky, USA) and B&C Speakers (Dongguan) Electronic Co. Ltd. (based in Dongguan, China).
Production and distribution of Ciare branded products takes place through Eighteen Sound S.r.l.
Distribution in the US market is handled through the American subsidiary B&C Speakers NA LLC, which also offers support services for sales to local customers.
Distribution on the Brazilian market is done through the subsidiary B&C Speakers Brasil Ltda, while starting in 2024, distribution on the Chinese market is also done through the local subsidiary B&C Speakers (Dongguan) Electronic Co. Ltd.
Highlights
In the tables below we present the economic and financial highlights of the half-year period:
Income statement highlights | ||
(€ thousands) | 1st half | 1st half |
2024 | 2023 | |
Revenues | 51,247 | 48,542 |
Ebitda | 11,480 | 12,059 |
Ebit | 10,191 | 11,024 |
Net profit | 11,833 | 8,138 |
Balance sheet highlights | ||
(€ thousands) | 30 June | 31 December |
2024 | 2023 | |
Non current Assets | 14,923 | 14,602 |
Non current liabilities | 10,897 | 13,262 |
Current assets | 74,092 | 71,746 |
Current liabilities | 27,822 | 26,876 |
Net working Capital | 46,270 | 44,870 |
Net Equity | 50,296 | 46,210 |
Cash flow statement highlights | ||
(€ thousands) | 1st half | 1st half |
2023 | 2022 | |
Operating cash flow | 7,988 | 8,940 |
Cash flow from investing activities | (1,304) | (563) |
Cash flow from financial activities | (10,720) | (11,728) |
Cash flow for the period | (4,037) | (3,351) |
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Net financial position | ||
(€ thousands) | 30 June | 31 December |
2024 | 2023 | |
Current net financial position | 8,202 | 10,029 |
Total net financial position | (1,807) | (652) |
Share performance
The B&C Speakers S.p.A. shares are listed on the Mercato Telematico Azionario organised and managed by Borsa Italiana S.p.A.
At 28 June 2024 (the last open market day of the half), the reference price for B&C Speakers S.p.A. (BEC) shares stood at € 15.10 and consequently market capitalisation amounted to about € 166.1 million.
The following shows the share performance of B&C Speakers SpA during the period from January - August 2024.
Macroeconomic Situation
At the beginning of 2024, signs of a stronger global economy were seen, which were stronger in the area of services. In the United States, consumption continued to be particularly strong and employment grew in excess of expectations. On the other hand, aggregate demand remained weak in China, in part due to the continued real estate crisis.
At the beginning of 2024, GDP in the Eurozone continued to stagnate due to industrial weakness, in the face of signs of recovery in the services sector. The downward trend in consumer inflation continued, above all with respect to non-energy industrial goods and food products.
The cost of credit remained high, holding back demand for business and household loans. The high perceived risk for banks contributed to keeping the criteria for loans restrictive.
Based on the most recent estimates issued by the IMF, in 2024 global GDP will continue to grow by just over 3 percent, in part held back by restrictive monetary policies. Tensions in the Middle East have only had limited impacts on international exchange, at least for the moment. The most recent estimates found in the latest Bank of Italy Economic Bulletin suggest that
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international commerce will grow by 2.4 percent. Nonetheless, risks for the global economy are still significant, associated with the possible worsening of ongoing conflicts.
Industry scenario
Following the COVID-19 crisis, the professional audio sector is experiencing an extremely rapid recovery in its reference market, with a surge of live events and concerts.
Given this situation, the first half of 2024 confirmed the positive trends seen in the sector. Additionally, prospects in the next three years remain positive, with very interesting growth levels.
Group economic performance
Overall economic performance in the first half of 2024 continued to improve with respect to the first half of 2023. This was reflected in the Group's performance, which saw growth during the half in question compared to the first half of 2023. Additionally, note the number of new orders received during the half, which continued to grow with respect to the same period in 2023.
To better present the trend in operations in relation to the first half of financial year 2024 compared with the same period of the previous year, a table showing these results is provided below:
Economic trends - Group B&C Speakers | ||||
(€ thousands) | 6 months | Incidence | 6 months | Incidence |
2024 | 2023 | |||
Revenues | 51,247 | 100.00% | 48,542 | 100.0% |
Cost of sales | (32,041) | -62.52% | (30,468) | -62.8% |
Gross margin | 19,207 | 37.48% | 18,073 | 37.2% |
Other revenues | 159 | 0.31% | 170 | 0.3% |
Cost of indirect labour | (3,428) | -6.69% | (2,490) | -5.1% |
Commercial expenses | (640) | -1.25% | (479) | -1.0% |
General and administrative expenses | (3,818) | -7.45% | (3,216) | -6.6% |
Ebitda | 11,480 | 22.40% | 12,059 | 24.8% |
Depreciation and Amortization | (1,289) | -2.52% | (1,035) | -2.1% |
Writedowns | - | 0.00% | 0 | 0.0% |
Earning before interest and taxes (Ebit) | 10,191 | 19.89% | 11,024 | 22.7% |
Writedown of investments in non controlled associates | - | 0.00% | - | 0.0% |
Financial costs | (659) | -1.29% | (981) | -2.0% |
Financial income | 994 | 1.94% | 785 | 1.6% |
Earning before taxes (Ebt) | 10,526 | 20.54% | 10,828 | 22.3% |
Income taxes | 1,202 | 2.35% | (2,715) | -5.6% |
Profit for the year | 11,728 | 22.89% | 8,113 | 16.7% |
Minority interest | 0 | 0.00% | 0 | 0.0% |
Group Net Result | 11,728 | 22.89% | 8,113 | 16.7% |
Other comprehensive result | 105 | 0.20% | 26 | 0.1% |
Total Comprehensive result | 11,833 | 23.09% | 8,138 | 16.8% |
Note:
This interim report presents and comments on certain financial figures and certain reclassified schedules not defined within the IFRS.
These amounts are defined below in compliance with the provisions in CONSOB Communication (DEM 6064293) of 28 July 2006, as subsequently amended (CONSOB Communication 0092543 of 3 December 2015, implementing the ESMA/2015/1415 guidelines).
The alternative performance indexes listed below should be used as additional information with respect to that foreseen in the IFRS, to assist the users of the financial report to better comprehend the Group's economic, capital and financial performance. Please note that the adjustment methods used by the Group to calculate these figures have remained constant over the years. We also note that they could differ from methods used by other companies.
EBITDA (earnings before interest taxes depreciation and amortisation) is defined by the Issuer's Directors as the "before-tax and financial income and expenses", as resulting from the consolidated income statement gross of amortisation/depreciation,
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provisions and writedowns as resulting from the aforesaid consolidated income statement. EBITDA is a measure that the Issuer uses to monitor and assess the Group's operating performance.
EBIT (earnings before interest and taxes) represents the consolidated profit/loss before taxes, financial expenses and income as shown in the income statement tables prepared by the Directors in drawing up the financial statements in accordance with the IASs/IFRSs.
EBT (earnings before taxes) represents the consolidated profit/loss before taxes as shown in the income statement tables prepared by the Directors in drawing up the consolidated financial statements in accordance with the IASs/IFRSs.
Revenue
New orders received, which continued to grow during the first half of 2024, made it possible to reverse the trend in revenues seen in the first half of the year, allowing the Group to achieve revenues of € 51.2 million during the half, up by 5.6% with respect to the same period in 2023.
The new subsidiaries contributed € 6.3 million to sales during the quarter.
Growth in turnover was in large part driven by European and North American customers.
Below is a full breakdown by geographic area for the first half of 2024, compared with the same period in 2023 (amounts in €):
Geographical Area | 1st half 2024 | % | 1st half 2023 | % | Change | Change % |
Latin America | 4,004,485 | 7.8% | 3,946,663 | 8.1% | 57,822 | 1% |
Europe | 24,766,440 | 48.3% | 23,128,674 | 47.6% | 1,637,766 | 7% |
Italy | 3,663,457 | 7.1% | 3,513,022 | 7.2% | 150,435 | 4% |
North America | 10,822,330 | 21.1% | 8,913,217 | 18.4% | 1,909,114 | 21% |
Middle East & Africa | 378,655 | 0.7% | 836,642 | 1.7% | (457,987) | -55% |
Asia & Pacific | 7,611,750 | 14.9% | 8,203,644 | 16.9% | (591,894) | -7% |
Total | 51,247,118 | 100.0% | 48,541,862 | 100.0% | 2,705,257 | 5.57% |
Cost of sales
This category includes raw materials (purchasing, processing by third parties and changes in inventories), the cost of personnel directly involved in the production process, transport costs and the costs for commissions payable, customs duties and other direct costs of lesser importance.
During the first six months of 2024, the cost of sales remained substantially unchanged in terms of its impact on revenues with respect to the same period in 2023, going from 62.8% to 62.5%. This trend is due to: (i) a recovery of margins on the variable part of the cost of sales, due to normalisation of raw materials costs, which allowed an improvement of 2.3 margin points compared to the first half of the previous year, (ii) a drop of 1.7 percentage
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points as a result of the increased cost of personnel following the integration of the two new subsidiaries, and (iii) an increase in the impact of customs duties, which led to a loss of margin of about 0.3 percentage points.
Indirect Personnel
This category refers to costs for office staff, executives and workers not associated with the production process.
Indirect personnel costs rose as a percentage of revenues compared to the first six months of 2023, going from 5.1% to 6.7%. In absolute terms, the figure for the first six months of 2024 is up 37% on the first half of 2023, mainly due to the inclusion of the two new subsidiaries in the scope of consolidation.
Commercial expenses
This category refers to costs for commercial consultancy, advertising and marketing, travel and subsistence and other minor charges relating to the commercial sector.
Commercial expenses increased in absolute terms by 33.6% with respect to the first six months of 2023. This increase is mainly due to the inclusion of the two new subsidiaries in the scope of consolidation.
Administrative costs and overheads
Administrative costs and overheads rose by € 603 thousand with respect to the corresponding figure for 2023, also increasing in terms of their impact on revenues, from 6.6% to 7.5%. The increase in administrative costs and overheads is entirely associated with the inclusion of the two new subsidiaries in the scope of consolidation. In fact, with the scope unchanged with respect to the first half of 2023, administrative costs and overheads fell by 4.8%.
EBITDA and EBITDA Margin
As a result of these trends, EBITDA for the first six months of 2024 was € 11.5 million, down by € 0.6 million (-4.8%) with respect to the same period in 2023.
The EBITDA margin for the first six months of 2024 was equal to 22.4% of revenues, compared to 24.8% in the same period in 2023. The dilution of margins is due to the inclusion of the two new subsidiaries, whose margins are lower than those of B&C Speakers. With the same scope as the first half of 2023, the EBITDA margin would be 24.7%.
Depreciation and amortisation
Depreciation and amortisation of property, plant and equipment, intangible assets and rights of use increased compared to the first six months of 2023, amounting to € 1.3 million (€ 1 million in the first six months of 2023). This increase is mainly due to the inclusion of the two new subsidiaries.
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EBIT and EBIT margin
EBIT for the first six months of 2024 amounted to € 10.2 million, down by 7.5% with respect to the same period in 2023 (when the amount was € 11 million). The EBIT margin was 19.9% of revenue (22.7% in the same period of 2023).
Group Net Profit
The Group's net profit at the end of the first half of 2024 amounted to € 11.7 million and represents 22.9% of consolidated revenue, with a total increase of 44.6% compared to the corresponding period in 2023. This trend is in part due to the effects of the tax benefits obtained following the renewal of the Patent Box ruling request filed with the Revenues Agency (which occurred during the half in question with reference to tax period 2020 and the following four tax periods), which led to a positive impact of € 3,957 thousand on the income statement for the year.
Equity and financial trend
Below is the reclassified balance sheet according to the allocation of sources and uses:
Reclassified Balance sheet | 30 June | 31 December | |
(€ thousands) | 2024 | 2023 | Change |
Property, plant & Equipment | 11,044 | 10,798 | 246 |
Inventories | 28,537 | 27,624 | 913 |
Trade receivables | 25,450 | 18,150 | 7,301 |
Other receivables | 3,692 | 5,288 | (1,595) |
Trade payables | (14,944) | (10,824) | (4,120) |
Other payables | (3,685) | (4,489) | 804 |
Working capital | 39,051 | 35,748 | 3,302 |
Provisions | (888) | (2,581) | 1,693 |
Invested net working capital | 49,206 | 43,965 | 5,241 |
Cash and cash equvalents | 10,368 | 14,613 | (4,245) |
Investments in associates | - | - | - |
Goodwill | 2,318 | 2,318 | - |
Short term securities | 7,027 | 6,979 | 48 |
Other financial receivables | 579 | 580 | (1) |
Financial assets | 20,292 | 24,489 | (4,197) |
Invested net non operating capital | 20,292 | 24,489 | (4,197) |
NET INVESTED CAPITAL | 69,498 | 68,454 | 1,044 |
Equity | 50,296 | 46,210 | 4,086 |
Short-term financial borrowings | 9,193 | 11,563 | (2,370) |
Long-term financial borrowing | 10,009 | 10,681 | (672) |
RAISED CAPITAL | 69,498 | 68,454 | 1,044 |
Note:
Fixed Assets: these are defined by the Issuer's Directors as the value of multi-year assets (property, plant and equipment, rights of use and other intangible assets). Net Operating Working Capital is defined by the Issuer's Directors as the value of inventories, trade receivables and other receivables net of debts for supplies and other payables. Funds are the value of bonds linked to employee severance indemnities and director severance pay. Invested net working capital is the value of financial assets and other financial receivables as described above. Raised capital is the value of net equity of the Group and the total indebtedness of the Group.
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