INTERIM MANAGEMENT REPORT
AT 31 MARCH 2024
CONTENTS
- GENERAL INFORMATION
- Corporate officers and information
- Group Structure
- Landi Renzo Group Financial Highlights
- Significant events during the period
- DIRECTORS' OBSERVATIONS ON BUSINESS PERFORMANCE
- Performance and notes on the main changes in the consolidated financial statements as at 31 March 2024
- Significant events after the end of the quarter and likely future developments
- INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 MARCH 2024
- General accounting standards and consolidation principles
- Consolidated Statement of Financial Position
- Consolidated Income Statement
- Consolidated Statement of Comprehensive Income
- Consolidated Cash Flow Statement
- Consolidated Statement of Changes in Shareholders' Equity
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1. GENERAL INFORMATION
1.1. CORPORATE OFFICERS AND INFORMATION
On the date this Interim Management Report was drafted, the company officers were as follows:
Board of Directors | |
Executive Chairman | Stefano Landi |
Vice Chairman | Sergio Iasi |
Chief Executive Officer | Annalisa Stupenengo |
Director | Silvia Landi |
Director | Massimo Lucchini |
Director | Andrea Landi |
Independent Director | Pamela Morassi |
Independent Director | Sara Fornasiero (*) |
Independent Director | Anna Maria Artoni |
Board of Statutory Auditors | |
Chairman of the Board of Statutory Auditors | Fabio Zucchetti |
Statutory Auditor | Luca Aurelio Guarna |
Statutory Auditor | Diana Rizzo |
Alternate Auditor | Luca Zoani |
Alternate Auditor | Gian Marco Amico di Meane |
Control, Risks and Sustainability Committee | |
Chairperson | Sara Fornasiero |
Committee Member | Sergio Iasi |
Committee Member | Anna Maria Artoni |
Appointment and Remuneration Committee | |
Chairperson | Pamela Morassi |
Committee Member | Massimo Lucchini |
Committee Member | Anna Maria Artoni |
Committee for Transactions with Related Parties | |
Committee Member | Sara Fornasiero |
Committee Member | Pamela Morassi |
Committee Member | Anna Maria Artoni |
Supervisory Board (Italian Legislative Decree | |
231/01) | |
Chairperson | Jean-Paule Castagno |
Board Member | Domenico Sardano |
Board Member | Filippo Alliney |
Independent Auditing Firm | PricewaterhouseCoopers S.p.A. |
Financial Reporting Manager | Paolo Cilloni |
(*) The Director also holds the office of Lead Independent Director | |
Registered office and company details | |
Landi Renzo S.p.A. | |
Via Nobel 2/4 | |
42025 Corte Tegge - Cavriago (RE) - Italy | |
Tel. +39 0522 9433 |
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Fax +39 0522 944044
Share capital: Euro 22,500,000
Tax ID and VAT Reg. No. IT00523300358
This report is available online at: www.landirenzogroup.com
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1.2. | GROUP STRUCTURE | ||||
% stake at 31 March 2024 | |||||
Description | Registered Office | Direct | Indirect | Notes | |
investment | investment | ||||
Parent Company | |||||
Landi Renzo S.p.A. | Cavriago (Italy) | Parent Company | |||
Companies consolidated using the line-by-line method | |||||
Landi International B.V. | Amsterdam (The Netherlands) | 100.00% | |||
Landi Renzo Polska Sp.Zo.O. | Warsaw (Poland) | 100.00% | (1) | ||
LR Industria e Comercio Ltda | Rio de Janeiro (Brazil) | 99.99% | |||
Beijing Landi Renzo Autogas System Co. Ltd | Beijing (China) | 100.00% | |||
L.R. Pak (Pvt) Limited | Karachi (Pakistan) | 70.00% | |||
Landi Renzo Pars Private Joint Stock Company | Tehran (Iran) | 99.99% | |||
Landi Renzo RO S.r.l. | Bucharest (Romania) | 100.00% | |||
Landi Renzo USA Corporation | Wilmington - DE (USA) | 100.00% | |||
AEB America S.r.l. | Buenos Aires (Argentina) | 96.00% | |||
Officine Lovato Private Limited | Mumbai (India) | 74.00% | |||
OOO Landi Renzo RUS | Moscow (Russia) | 51.00% | |||
SAFE&CEC S.r.l. | San Giovanni Persiceto (Italy) | 51.00% | |||
SAFE S.p.A. | San Giovanni Persiceto (Italy) | 100.00% | (2) | ||
IMW Industries LTD | Chilliwak (Canada) | 100.00% | (2) | ||
IMW Industries del Perù S.A.C. | Lima (Peru) | 100.00% | (3) | ||
IMW Industries LTDA | Cartagena (Colombia) | 100.00% | (3) | ||
IMW Energy Tech LTD | Suzhou (China) | 100.00% | (3) | ||
IMW Industries LTD Shanghai | Shanghai (China) | 100.00% | (3) | ||
Metatron S.p.A. | Castel Maggiore (Italy) | 100.00% | |||
Metatron Control System (Shanghai) | Shanghai (China) | 84.00% | (4) | ||
(*) | |||||
Associates and subsidiaries consolidated using the equity method | |||||
Krishna Landi Renzo India Private Ltd Held | Gurugram - Haryana (India) | 51.00% | (5) | ||
Other minor companies |
Landi Renzo VE.CA.
Lovato do Brasil Ind Com de Equipamentos para Gas Ltda
EFI Avtosanoat-Landi Renzo LLC
Metatron Technologies India Plc
Detailed notes on investments:
- Held indirectly through Landi International B.V.
- Held indirectly through SAFE&CEC S.r.l.
- Held indirectly through IMW Industries LTD
- Held indirectly through Metatron S.p.A.
- Company joint venture
- Not consolidated as a result of their irrelevance
Caracas (Venezuela) | 100.00% | (6) |
Curitiba (Brazil) | 100.00% | (6) |
Navoiy Region (Uzbekistan) | 68.45% | (5) (6) |
Mumbai (India) | 100.00% (4) (6) |
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1.3. LANDI RENZO GROUP FINANCIAL HIGHLIGHTS
(Thousands of Euro) | ||||
Q1 2023 | % | |||
ECONOMIC INDICATORS FOR THE FIRST QUARTER | Q1 2024 | (restated) | Change | |
Revenue | 68,772 | 71,168 | -2,396 | -3.4% |
Adjusted gross operating profit (EBITDA) (1) | -466 | -961 | 495 | 51.5% |
Gross operating profit (EBITDA) | -1,624 | -2,091 | 467 | 22.3% |
Net operating profit (EBIT) | -5,578 | -6,284 | 706 | 11.2% |
Earnings before taxes (EBT) | -8,988 | -10,057 | 1,069 | 10.6% |
Net profit (loss) for the Group and minority interests | -8,989 | -9,939 | 950 | 9.6% |
Adjusted Gross Operating Profit (EBITDA) / Revenue | -0.7% | -1.4% | ||
Gross Operating Profit (EBITDA) / Revenue | -2.4% | -2.9% | ||
Net profit (loss) for the Group and minority interests / Revenue | -13.1% | -14.0% |
(Thousands of Euro) | |||
STATEMENT OF FINANCIAL POSITION | 31/03/2024 | 31/12/2023 | 31/03/2023 |
Net fixed assets and other non-current assets | 140,449 | 142,475 | 153,003 |
Operating capital (2) | 63,950 | 52,683 | 61,969 |
Non-current liabilities (3) | -12,429 | -12,549 | -11,462 |
NET INVESTED CAPITAL | 191,970 | 182,609 | 203,510 |
Net financial position (4) | 130,021 | 112,405 | 107,373 |
Net Financial Position - adjusted (5) | 117,108 | 98,592 | 93,429 |
Shareholders' equity | 61,949 | 70,204 | 96,137 |
BORROWINGS | 191,970 | 182,609 | 203,510 |
(Thousands of Euro) | |||
31/03/2023 | |||
KEY INDICATORS | 31/03/2024 | 31/12/2023 | (restated) |
Operating capital / Turnover (rolling 12 months) | 21.2% | 17.4% | 20.0% |
Adjusted net financial position / Shareholders' equity | 1.89 | 1.40 | 0.97 |
Adjusted net financial position (5) / Adjusted EBITDA (rolling | |||
12 months) | 15.59 | 14.05 | 8.03 |
Personnel (peak) | 952 | 964 | 942 |
(Thousands of Euro) | |||
31/03/2023 | |||
CASH FLOWS | 31/03/2024 | 31/12/2023 | (restated) |
Gross operational cash flow | -16,885 | -5,632 | -13,585 |
Cash flow for investment activities | -1,536 | -9,134 | -1,913 |
Gross FREE CASH FLOW | -18,421 | -14,766 | -15,498 |
Non-recurring expenditure for voluntary resignation incentives | 0 | -1,334 | -230 |
Net FREE CASH FLOW | -18,421 | -16,100 | -15,728 |
Repayment of leases (IFRS 16) | -964 | -3,808 | -887 |
Overall cash flow | -19,385 | -19,908 | -16,615 |
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- The data does not include the recognition of non-recurring costs. As EBITDA is not identified as an accounting measure under IAS/IFRS, it may be calculated in different manners. EBITDA is a measure used by the company's management to monitor and evaluate its operating performance. Management believes that EBITDA is an important parameter to measure the company's operating performance, as it is not influenced by the effects of the different criteria for determining the tax base, the amount and characteristics of invested capital and relative amortisation and depreciation policies. The company's way of calculating EBITDA may not be the same as the methods adopted by other companies/groups, and therefore its value may not be comparable with the EBITDA calculated by others.
- This is calculated as the difference between Trade Receivables, Inventories, Contract Work in Progress, Other Current Assets and Trade Payables, Tax liabilities, Other Current Liabilities (net of payables for the purchase of equity investments).
- These are calculated by totalling Deferred Tax Liabilities, Defined Benefit Plans for employees and Provisions for Risks and Charges.
- The net financial position is calculated in accordance with the provisions of Consob Communication DEM/6064293 of 28 July 2006 as amended (as most recently amended on 5 May 2021, to adopt the new ESMA recommendations 32-232-1138 of 4 March 2021).
- Not including the effects of the adoption of IFRS 16 - Leases, the fair value of derivative financial instruments and the commitment to the acquisition of equity investments.
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1.4. SIGNIFICANT EVENTS DURING THE PERIOD
- On 23 January 2024, the Board of Directors of Landi Renzo S.p.A. approved the 2024-2028 Business Plan, drafted with the support of a leading strategic consulting firm.
- On 8 March 2024, the Board of Directors of Landi Renzo S.p.A. revised the calendar of board and shareholders' meetings for the approval of the financial data at 31 December 2023 (as well as for the approval of the first 2024 quarterly report). These changes were required as it was necessary to redefine the medium/long-term loan agreements with financial institutions, activities carried out with the support of Mediobanca as financial advisor, with the duty of supporting the Company in the analysis of the Group's economic and financial situation and providing assistance in the formulation of a financial structure reorganisation and optimisation strategy. In this context, the Board of Directors also examined the unaudited preliminary results at 31 December 2023 in terms of Revenue, Adjusted EBITDA and the Net Financial Position.
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2. DIRECTORS' OBSERVATIONS ON BUSINESS PERFORMANCE
In the course of the first quarter of 2024, the global economy continued to show limited growth outlooks, also as a result of the continuation of the Russia-Ukraine and Israel-Hamas conflicts. In particular, geopolitical tensions in the Red Sea area, and the resulting increased risks for sea transport from and to the Suez Canal, triggered changes in international trade routes, with significant impacts on transport costs and procurement timing. This international context has had considerable effects on the supply side and on production and consumer prices, contributing towards keeping inflationary pressure levels high and, as a result, preventing central banks from relaxing their monetary policies adopted to limit inflation.
Gas and energy price tensions caused by the Russia-Ukraine conflict and the resulting sudden change in procurement methods by a number of countries have now been overcome, although potential tensions remain in the market, which continues to be characterised by high volatility and higher prices than in the past.
Despite this complex scenario, the energy transition process continues to be at the heart of the agendas of all of the main governments worldwide, becoming a key point in the development strategies of many countries. Indeed, the initial effects are beginning to be seen of the strong legislative pressure towards decarbonisation, as set forth in European and American programmatic instruments (National Recovery Plans and RepowerEU, and the Inflation Reduction Act, respectively) where, in the energy realm, strong growth is planned in biomethane and hydrogen as well as the relative value chains.
Specifically hydrogen, despite longer development times than initially expected, continues to play a central role in the energy transition process, including through technologies in which the Landi Renzo Group decided to invest some time ago, like the enabling components for the development of the hydrogen combustion engine and compression to 900 bars.
The Landi Renzo Group's entire range is aimed at offering on one hand technological solutions for the infrastructure required to exploit natural gas, biomethane and hydrogen and on the other hand technologies for transforming mobility towards more sustainable models or generally intended for the decarbonisation of passenger and cargo transport. Indeed, all of the various forms of gas, in addition to biomethane and hydrogen, represent energy sources that reduce emissions compared to conventional sources, with different levels of penetration depending on geographical area and application type.
As described in the Annual Financial Report as at 31 December 2023, which should be referenced for further details, on 1 August 2024, as part of and in execution of the financial manoeuvre approved on 17 July 2024 by the Board of Directors:
- GBD - Green by definition S.p.A., Invitalia, as well as, limited to certain conditions, Girefin S.p.A., Gireimm S.r.l. and Itaca GAS S.r.l., shareholders of GBD - Green by definition S.p.A., signed an investment agreement governing, inter alia, the execution of a share capital increase under option for the current shareholders of the Company for a maximum total of Euro 25 million, guaranteed up to Euro 20 million by the majority shareholder GBD - Green by definition S.p.A. and, subject to the execution of the first increase for at least Euro 20 million, a second share capital increase of Euro 20 million reserved to Invitalia, through the issue of unlisted special class shares, increases that will be subject to the approval of the competent corporate bodies.
- the Company and the lending banks (i.e. UniCredit S.p.A., Intesa Sanpaolo S.p.A. and Sagitta SGR S.p.A., the latter having taken over for Banco BPM S.p.A.) signed amendments of the medium/long-term pool loan agreements previously entered into on 29 June 2022 in order to implement the financial manoeuvre. Specifically, the repayment profile the pool loans was amended consistent with the generation of cash flows to service the debt pursuant to the 2024-2028 Business Plan, and the financial parameters set forth therein were reviewed
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accordingly, all with a confirmation of economic conditions in force. These amendmends are subject to the condition subsequent, inter alia, of the completion of the share capital increase under option and the reserved share capital increase within the agreed timeframes.
Following the full payment of the share capital increase under option and the reserved share capital increase, expected by 31 December 2024, the Company will obtain new own funds for a maximum total of Euro 45 million and, in any event, no less than Euro 40 million.
2.1. PERFORMANCE AND NOTES ON THE MAIN CHANGES IN THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 March 2024
The following table sets out the main economic indicators of the Group for the first three months of 2024 compared with the same period in of the previous year.
(Thousands of Euro) | ||||||||
31/03/2024 | 31/03/2023 | |||||||
(restated) | ||||||||
Green | Clean | Landi | Green | Clean | Landi | |||
Tech. | Adjustme | Renzo | Tech. | Adjustme | Renzo | |||
Transportat | Transportat | |||||||
Solutio | nts | Consolida | Solutio | nts | Consolida | |||
ion | ns | ted | ion | ns | ted | |||
Net sales outside the | ||||||||
Group | 51,021 | 17,751 | 68,772 | 48,054 | 23,114 | 71,168 | ||
Intersegment sales | 126 | 0 | -126 | 0 | 145 | 0 | -145 | 0 |
Total Revenues from net | ||||||||
sales and services | 51,147 | 17,751 | -126 | 68,772 | 48,199 | 23,114 | -145 | 71,168 |
Other revenues and | ||||||||
income | 128 | 20 | 148 | 98 | 103 | 201 | ||
Operating costs | -51,183 | -18,329 | 126 | -69,386 | -50,818 | -21,657 | 145 | -72,330 |
Adjusted gross | ||||||||
operating profit | 92 | -558 | 0 | -466 | -2,521 | 1,560 | 0 | -961 |
Non-recurring costs | -802 | -356 | -1,158 | -886 | -244 | -1,130 | ||
Gross operating profit | -710 | -914 | 0 | -1,624 | -3,407 | 1,316 | 0 | -2,091 |
Amortisation, | ||||||||
depreciation and | ||||||||
impairment | -3,285 | -669 | -3,954 | -3,498 | -695 | -4,193 | ||
Net operating profit | -3,995 | -1,583 | 0 | -5,578 | -6,905 | 621 | 0 | -6,284 |
Financial income | 202 | 175 | ||||||
Financial expenses | -2,816 | -2,583 | ||||||
Exchange gains (losses) | 204 | -993 | ||||||
Net income (expenses) | ||||||||
from hyperinflation | -550 | -96 | ||||||
Income (expenses) from | ||||||||
equity investments | -207 | -7 | ||||||
Income (expenses) from | ||||||||
joint ventures measured | ||||||||
using the equity method | -243 | -269 | ||||||
Profit (loss) before tax | -8,988 | -10,057 | ||||||
Taxes | -1 | 118 | ||||||
Net profit (loss) for the | ||||||||
Group and minority | ||||||||
interests, including: | -8,989 | -9,939 | ||||||
Minority interests | -847 | -34 | ||||||
Net profit (loss) for the | ||||||||
Group | -8,142 | -9,905 |
Consolidated revenues for the first three months of 2024 totalled Euro 68,772 thousand, decreasing by Euro 2,396 thousand (-3.4%) compared with the same period of the previous year. The Green Transportation segment recorded revenue up compared with the same period of the previous year (+6.2%) and characterised by an increased incidence of sales in the After Market channel and the Mid & Heavy Duty OEM channel, with resulting positive effects on
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