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2009 "Gruppo Coin" Annual Report
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ANNUAL REPORT 2009
ENGLISH VERSION
GRUPPO COIN SpAVia Terraglio, 17
VENEZIA MESTRE (VE)
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DEAR SHAREHOLDERS,
2009 was a very important year for the Coin Group, a year of challenges and of new activities. We have accelerated the implementation of our business model and, thanks to the success of the new Coin and OVS formulas, our constant focus on the company processes and extension of the store network, we obtained excellent financial and operating results, even though the period was marked by a general and serious contraction in consumption.The acquisition of Upim, which was formally sealed in December 2009, transformed the Coin Group into Italy’s largest Clothing Retailer. Thanks to this operation, there was a major development of the store network, which was already considerable.
Consolidated Own Brand Revenues of EUR 1,257.6 million were up by 7.2% compared to the previous year. Gross Operating Margin was EUR 149.5 million (12.5% of net sales), an increase of 11.9% compared to 2008. The Net Result was a profit of EUR 44.3 million, a 16.0% improvement on 2008.
Let’s now look together at the highlights of this eventful year. In 2009, we completed the plan for integration of the Melablu network, with the conversion of 48 stores to the OVS Industry format and the closure, in April 2009, of the Melablu central headquarters. In the converted stores, there was an increase in sales of about 50%. This success confirms the effectiveness of the OVS Industry formula which ever increasingly crosses different segments in terms of age and social status and is now a truly competitive player in both the metropolitan panorama and the context of small- and medium-sized enterprises.The old Oviesse is quickly and ever-increasingly becoming OVS Industry, a new concept which combines an aspirational purchase experience at an attractive price, with fashion and convenience within a redesigned space, inspired by the architecture of industry. A way of creating fashion culture and an attempt to
“WITH COURAGE AND A VISION OF THE FUTURE, THAT IS HOW THE COIN GROUP HAS RESPONDED
TO THE CHALLENGE OF CHANGE”
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STEFANO BERALDOCEO Gruppo Coin
offer quality products to broad customer categories. In 2009, a further 16 stores were restructured with the OVS Industry formula. Since reopening, they have recorded 15% sales growth. At the end of January 2010, the direct stores renovated in the OVS Industry style total 155 (49% of all direct stores). The concept of Work in Progress guides my idea of business. A worksite which is always open, which never stops to rest on its laurels and which is constantly asking itself how it can improve, make progress and grow.
Coin, the historic brand which gives the Group its name, enhanced its range in 2009 with the inclusion in its sales outlets of fashion brands, many of them “in concession”. The Coin brand itself was re-launched, after the initial steps in 2008, with restyling of the Milan “Piazza 5 Giornate” headquarters and now, alongside the traditional “house brands”, Coin offers a very rich selection of brands which can meet the requirements of the customers of a sophisticated Department Store.There are still some stores to be re-launched and many other fashion brands to add. But the road taken is the right one, as is demonstrated by the economic results of the restructured branches, considerably higher than the average results obtained up to 2007.If the brands were once reluctant to enter Coin, we now note with satisfaction that some are unable to enter at the moment due to saturation of space.Finally, the acquisition of Upim, with which I decided to open this message.On 17 December 2009, the Coin Group reached an agreement for the purchase of 100% of the company capital of Upim Srl, present al over Italy with 135 direct stores with the Upim brand and 15 stores with the BluKids brand, as well as a franchising network with more than 200 stores. With Upim, we are acquiring an excellent network of commercial locations in the hearts of cities and the chance to play an important role in the non-food Retail sector, increasing the profitability of our business and optimising our resources and skills.
I would like to end this message with some thanks: over these years, I have witnessed a team spirit develop, from the store staff to the main managerial team, all focusing on obtaining the important results that this difficult year 2009 brought. I send all of you my sincere thanks.
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MAIN FIGURES
GRUPPO COIN 2009
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RASSEGNA STAMPAcreatività Lorenzo Petrantoni
consegna lunedì 17 maggio
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RASSEGNA STAMPAcreatività Lorenzo Petrantoni
consegna lunedì 17 maggio
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KEY EVENTS
GRANDE APERTURA A BUDAPEST PER COIN ED OVS. Paris Hilton madrina dell'evento
3 settembre 2009
9 NUOVE APERTURE COIN
114 NUOVE APERTURE OVS
OVS INDUSTRY INAUGURA IL SUO PRIMO STORE IN CINA A SHANGHAI. 26 ottobre 2009
DEMOCRATIC
Prende il via il progetto democratic wear coin con una proposta di capi limited edition
disegnati da giovani creativi in vendita a 10 euro
ACQUISIZIONENEGOZI MELABLU
E DEMI negozi Melablu e DEM, recentemente acquisiti
vengono convertitinel formato OVS industry
PRIMO CONTEMPORARY SHOP BABY ANGEL A MILANO IN LARGO LA FOPPA.
Dal 15 settembre al 1° ottobre una nuova idea per portare la moda tra la gente
11 settembre 2009
KIDDY CITNY PER OVS INDUSTRY: L’ARTE NON CONVENZIONALE
ENTRA IN NEGOZIO.
L’artista berlinese ha dipinto col suo stile, unico ed originale,‟ muri
e vetrate dello store OVS di Milano San Babila
8 settembre 2009
COIN RINNOVA LA COLLABORAZIONE CON WHITE CLUB.
A partire dal 24 febbraio, in concomitanza con la fiera del White all’interno dello store di Milano,piazza Cinque Giornate sono state messe in vendita le creazioni della collezione P/E 09 di cinque talentuosi designer: Steinunn, Mikio Sakabe, Paolo Errico, Kaviar Gauche e Jean Pierre Braganza
18 febbraio 2009
COINCASADESIGN 2009 È FIRMATA 5.5.
Dopo una squadra di designer italiani nel 2007, anno del debutto di Coincasadesign, delle Front,
le quattro affascinanti designer svedesi e dei giovani allievi de L’Ecal di Losanna nel 2008,
è la volta della Francia.
22 aprile 2009
GRUPPO COIN ACQUISISCE IL 100% DEL CAPITALE SOCIALE DI UPIM
17 dicembre 2009
OVS E TELETHON: INSIEME PER IL SOSTEGNO ALLA RICERCAOVS ha rinnovato per il quarto anno consecutivo il proprio impegno a sostegno della ricerca confermando la partnership alla Maratona Telethon 2009.
GRAND OPENING IN BUDAPEST FOR COIN AND OVS Paris Hilton sponsors the event
3 September 2009
9 NEW COIN OPENINGS
114 NEW OVS OPENINGS
OVS INDUSTRY OPENS ITS FIRST STOREIN CHINA IN SHANGHAI 26 October 2009
DEMOCRATIC
The Coin democratic wear project startswith a range of limited edition clothing items
designed by young designers on sale for 10 Euro
ACQUISITIONOF THE MELABLU
AND DEM STORESThe Melablu and DEM stores
recently acquired are converted
into the OVS industry format
FIRST CONTEMPORARY BABY ANGEL SHOP IN MILANIN LARGO LA FOPPA
From 15 September to 1 October, a new idea for bringing fashion to the people
11 September 2009
KIDDY CITNY FOR OVS INDUSTRY: NON-CONVENTIONAL ART
ENTERS THE STORE
The Berlin artist has painted walls and windows, in the OVS store in Milan “San Babila”
in his unique and original style
8 September 2009
COIN RENEWS ITS COLLABORATION WITH WHITE CLUB
From 24 February, concurrently with the White Trade Fair in the Milan Piazza Cinque Giornate storethe Spring/Summer 09 collections created by five talented designers -Steinunn, Mikio Sakabe, Paolo Errico, Kaviar Gauche and Jean Pierre Braganza- went on sale
18 February 2009
COINCASADESIGN 2009 DESIGNED BY 5.5
After a team of Italian designers in 2007,the year in which Coincasadesign made its debut, then the Front,
a group of four charming Swedish designersand the young pupils of the Ecal Art School in Lausanne in 2008,
now it's France’s turn.
22 April 2009
GRUPPO COIN ACQUIRES 100% OF THE COMPANY CAPITAL OF UPIM
17 December 2009
OVS AND TELETHON: TOGETHER SUPPORTING RESEARCH
OVS for the fourth year running has renewed its undertaking to support research,confirming its partnershipwith the Telethon 2009 Marathon.
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KEY EVENTS
GRANDE APERTURA A BUDAPEST PER COIN ED OVS. Paris Hilton madrina dell'evento
3 settembre 2009
9 NUOVE APERTURE COIN
114 NUOVE APERTURE OVS
OVS INDUSTRY INAUGURA IL SUO PRIMO STORE IN CINA A SHANGHAI. 26 ottobre 2009
DEMOCRATIC
Prende il via il progetto democratic wear coin con una proposta di capi limited edition
disegnati da giovani creativi in vendita a 10 euro
ACQUISIZIONENEGOZI MELABLU
E DEMI negozi Melablu e DEM, recentemente acquisiti
vengono convertitinel formato OVS industry
PRIMO CONTEMPORARY SHOP BABY ANGEL A MILANO IN LARGO LA FOPPA.
Dal 15 settembre al 1° ottobre una nuova idea per portare la moda tra la gente
11 settembre 2009
KIDDY CITNY PER OVS INDUSTRY: L’ARTE NON CONVENZIONALE
ENTRA IN NEGOZIO.
L’artista berlinese ha dipinto col suo stile, unico ed originale,‟ muri
e vetrate dello store OVS di Milano San Babila
8 settembre 2009
COIN RINNOVA LA COLLABORAZIONE CON WHITE CLUB.
A partire dal 24 febbraio, in concomitanza con la fiera del White all’interno dello store di Milano,piazza Cinque Giornate sono state messe in vendita le creazioni della collezione P/E 09 di cinque talentuosi designer: Steinunn, Mikio Sakabe, Paolo Errico, Kaviar Gauche e Jean Pierre Braganza
18 febbraio 2009
COINCASADESIGN 2009 È FIRMATA 5.5.
Dopo una squadra di designer italiani nel 2007, anno del debutto di Coincasadesign, delle Front,
le quattro affascinanti designer svedesi e dei giovani allievi de L’Ecal di Losanna nel 2008,
è la volta della Francia.
22 aprile 2009
GRUPPO COIN ACQUISISCE IL 100% DEL CAPITALE SOCIALE DI UPIM
17 dicembre 2009
OVS E TELETHON: INSIEME PER IL SOSTEGNO ALLA RICERCAOVS ha rinnovato per il quarto anno consecutivo il proprio impegno a sostegno della ricerca confermando la partnership alla Maratona Telethon 2009.
GRAND OPENING IN BUDAPEST FOR COIN AND OVS Paris Hilton sponsors the event
3 September 2009
9 NEW COIN OPENINGS
114 NEW OVS OPENINGS
OVS INDUSTRY OPENS ITS FIRST STOREIN CHINA IN SHANGHAI 26 October 2009
DEMOCRATIC
The Coin democratic wear project startswith a range of limited edition clothing items
designed by young designers on sale for 10 Euro
ACQUISITIONOF THE MELABLU
AND DEM STORESThe Melablu and DEM stores
recently acquired are converted
into the OVS industry format
FIRST CONTEMPORARY BABY ANGEL SHOP IN MILANIN LARGO LA FOPPA
From 15 September to 1 October, a new idea for bringing fashion to the people
11 September 2009
KIDDY CITNY FOR OVS INDUSTRY: NON-CONVENTIONAL ART
ENTERS THE STORE
The Berlin artist has painted walls and windows, in the OVS store in Milan “San Babila”
in his unique and original style
8 September 2009
COIN RENEWS ITS COLLABORATION WITH WHITE CLUB
From 24 February, concurrently with the White Trade Fair in the Milan Piazza Cinque Giornate storethe Spring/Summer 09 collections created by five talented designers -Steinunn, Mikio Sakabe, Paolo Errico, Kaviar Gauche and Jean Pierre Braganza- went on sale
18 February 2009
COINCASADESIGN 2009 DESIGNED BY 5.5
After a team of Italian designers in 2007,the year in which Coincasadesign made its debut, then the Front,
a group of four charming Swedish designersand the young pupils of the Ecal Art School in Lausanne in 2008,
now it's France’s turn.
22 April 2009
GRUPPO COIN ACQUIRES 100% OF THE COMPANY CAPITAL OF UPIM
17 December 2009
OVS AND TELETHON: TOGETHER SUPPORTING RESEARCH
OVS for the fourth year running has renewed its undertaking to support research,confirming its partnershipwith the Telethon 2009 Marathon.
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HISTORICAL TREND
N° EMPLOYEES
5,618
2005
6,091
2006
6,424
2007
6,537
2008
7,140
9,910
2009
EBITDA (€ mln)
92.3
2005
114.7
2006
144.6
2007
133.7
2008
149.5
2009
SELLING AREA (sqm)
SALES PERFORMANCE (€ mln)
1,257.6
1,173.41,181.9
1,057.5
1,116.7
900
950
1000
1050
1100
1150
1200
1250
1300
1350
2005 2006 2007 2008 2009
N° STORES
2005 2006 2007 2008 2009
NET PROFIT (€ mln)
43.5
38.2
44.3
-4.5
10.3
2006
430,976
2005
414,559
2009
729,000
2008
541,752 546,000
2007
455,469
2007
394
2008
499
2009
690
2005
344
2006
358
540
after UPIM acquisition
after UPIM acquisition
after UPIM acquisition
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HISTORICAL TREND
N° EMPLOYEES
5,618
2005
6,091
2006
6,424
2007
6,537
2008
7,140
9,910
2009
EBITDA (€ mln)
92.3
2005
114.7
2006
144.6
2007
133.7
2008
149.5
2009
SELLING AREA (sqm)
SALES PERFORMANCE (€ mln)
1,257.6
1,173.41,181.9
1,057.5
1,116.7
900
950
1000
1050
1100
1150
1200
1250
1300
1350
2005 2006 2007 2008 2009
N° STORES
2005 2006 2007 2008 2009
NET PROFIT (€ mln)
43.5
38.2
44.3
-4.5
10.3
2006
430,976
2005
414,559
2009
729,000
2008
541,752 546,000
2007
455,469
2007
394
2008
499
2009
690
2005
344
2006
358
540
after UPIM acquisition
after UPIM acquisition
after UPIM acquisition
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BOARD OF DIRECTORS
Andrea Carrara Chairman Stefano Beraldo Managing Director
Eric Bouchez Director Marta Coin Director
Piero Coin Director Roberto Ferraresi Director
Vittorio Levi Director
Michel M. Paris Director
Raffaele R. Vitale Director
BOARD OF STATUTORY AUDITORS
David Reali Chairman
Roberto Cortellazzo Wiel Permanent Statutory Auditor
Carlo Hassan Permanent Statutory Auditor
Andrea Chiaravalli Substitute Statutory Auditor
Giuseppe Dolcetti Substitute Statutory Auditor
INDEPENDENT AUDITOR
PricewaterhouseCoopers S.p.A.
BOARD OF DIRECTORS
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GRUPPO COIN
REPORT ON OPERATION 23
FINANCIAL STATEMENTS AT 31 JANUARY 2010
CONSOLIDATED FINANCIAL STATEMENTS:
• Consolidated balance sheet 46
• Consolidated profit & loss account 47
• Changes in consolidated net equity 48
• Consolidated cash flow summary 49
• Changes in Group net equity 50
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 53
Basis of consolidation 56
Accounting policies and standards 57
Analysis of consolidated balance sheet items 67
Comment on the main items of the consolidated profit and loss account 99
Correlated parties 104 RECONCILIATION BETWEEN NET EQUITY AND CONSOLIDATED NET PROFIT WITH HOLDING 106
STATEMENT OF THE GROUP’S COMPOSITION 106
APPENDICES TO THE CONSOLIDATED FINANCIAL STATEMENTS 107
CONTROLLED COMPANIES FINANCIAL STATEMENTS 113
DECLARATION BY THE MANAGER RESPONSIBLE 131
AUDITING FIRM REPORT 135
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REPORT ON OPER ATIONS AT 31 JANUARY 2010
(FINANCIAL YEAR 2009)
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GRUPPO COIN
REPORT ON OPER ATIONS AT 31 JANUARY 2010(FINANCIAL YEAR 2009)
The financial year just ended was characterised by certain growth factors which involved the main business areas and which are a fundamental basis for the development of sales and the Coin Group results, as follows: - conversion of the former Melablu and DEM network into OVS industry stores - network development and restructuring of stores with the new OVS industry format - gradual improvement of the Coin range with a constant increase in the presence of third party brands, many of which are managed with the Concessions formula - Business to Business - acquisition of UPIM.
Though the market was characterised by a negative trend, the gradual implementation of this development strategy and the constant focus on the company processes, with the objective of improving management efficiency, enabled the Group to successfully deal with the external dynamics and close this financial year with broadly satisfactory results. Consolidated total building sales of 1,257.6 million Euro (which include sales of partners within our Coin stores) has increased by 7.2% compared to the previous year; EBITDA amounted to 149.5 million Euro (12.5% of net sales), increased of 11.9% compared to 2008 (when it was 133.7 million Euro and 11.7% of net sales). Net Profit amounted to 44.3 million Euro, increased of +16% compared to 2008 (38.2 million Euro). With regard to the financial dynamics, net financial debt as of 31 January 2010 amounted to 347.6 million Euro; if the financial effects deriving from the UPIM acquisition (merged company’s indebtedness and related managers’ capital increase) are excluded, the Group Net Financial Position would be -264.4 million Euro. The Cash Flow from ordinary operations, a positive figure of 34.4 million Euro, is much higher than the previous year, when it was a negative figure 57.5 million Euro as of 31 January 2009.In an uncertain macro economic environment, management of Gruppo Coin preferred control leveragecurrent assets avoiding the formation of inventories at end of season even in the face of reduced pressures on sales; this choice may have influenced trends in revenues but also led to an improvement in stock rotation and then in the working capital.
Conversion of the former Melablu and DEM network into OVS industry stores The integration plan for the Melablu network was substantially completed in 2009 with the conversion of 48 stores to the OVS industry format and with the closure, in April 2009, of the Melablu central headquarters. Growth in sales recorded in the converted stores (about +50%) was especially significant; it is worth underlining how this growth occurred uniformly in the various types of stores, which means both in the conversions of positions inside shopping centres and in upmarket neighbourhoods and stores located in small to medium-sized towns; this confirms the multiple value of the OVS industry formula, which is capable of satisfying the tastes and needs of the various types of customers. The conversion process led to an immediate alignment of the costs of products and collections with the OVS industry costs, and a clear improvement in the margin. Further synergy was created in terms of structure costs with the closure, in April 2009, of the operating headquarters of the former Melablu network.The results for the financial year just ended only partly reflect the contributions deriving from the converted stores network because, on the one hand, the worksite activities for the restructuring of the stores led, on average, to a loss of three weeks of sales per store and, on the other hand, the stores were only reopened with the new OVS industry format for part of the 2009 financial year. In the current financial year (1 February 2010 - 31 January 2011), all the benefits will be fully implemented and we can reasonably believe that EBITDA arising from all the converted stores will be equal to twice the EBITDA in 2009. In August 2009, 7 stores acquired from the DEM chain were also converted; here again, the transformation of the sales outlets to the OVS industry format led to sustained growth in sales and profitability in line with Melablu converted performance stores.
Opening of new stores and restructuring of stores with the new OVS industry formatIn accordance with the development strategies implemented since 2006 and on the basis of the positive results obtained, re-conversion of the Oviesse stores to the new OVS industry format also continued throughout the financial year just ended. In 2009, 16 stores were restructured, after being closed for three weeks for work, they reopened with the OVS industry format and recorded growth in sales of more than 15%. As of 31 January 2010, there are 155 direct stores which present the OVS industry format (representing 49% of the total number of direct stores ) while the remaining 159 stores making up the Oviesse direct network still present the old image. In the 2010 financial year, the conversion activity will be trimmed back compared to the last three years (about 20 stores restructured a year) before gaining momentum again as soon as the reopening is completed of the 64 formerly Upim stores as OVS industry stores.
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The worth of this strategic line is based on the following elements:- the important expected growth in turnover; in this sense it is worth underlining that the
already renovated stores were chosen on the basis of technical/operating elements (renewal of leasing contract, status of the store in terms of technical systems and time elapsing since the last renovation) and do not necessarily represent those “most suitable” or with the greatest sensitivity to the new format in terms of sales growth; implicitly, we therefore believe that by implementing the OVS industry format in the remaining stores we will witness a growth in turnover in line with the one achieved so far;
- the standardisation of the set-up of the new OVS industry format that has allowed a constant industrialisation of the conversion process and thus a reduction in investment costs and in the average worksite terms, leading to an improved project pay-back.
Gradual improvement of the Coin range with a constant increase in the presence of brands, many of which are managed with the ‘Concessions’ formula In the last twelve months, the positive effects of the Coin brand re-launch plan have become gradually more visible. In the previous financial year, with the reopening of our flagship store ‘Piazza 5 Giornate’ in Milan, our sign took the first steps on the road that should lead Coin to the forefront of the fashion world, with the possibility of offering the brands shop windows and store spaces that are among the most innovative and popular with customers who are always looking for innovations and special products in every season. This process was further consolidated over the course of 2009 with the entry, both as concessions and with alternative commercial formulas, of various brands, adding to the product range which, alongside our house-brands, creates a modern and diversified collection which can meet the needs and desires of customers in a modern department store. The results attained only partly show the positive steps taken to date. Indeed, on the one hand it is necessary to consider that not all the stores of the Coin network were renovated (at least 15 stores remain to be re-launched) and on the other, the commercial agreements and the introduction of new and constantly evolving brands (in 2010 an additional increase in franchised spaces is forecast); to demonstrate the success of the path followed, it is worth highlighting how the financial results of the renovated branches that feature a mixed range in line with the objectives set for the Coin sign, are notably greater than the average obtained until 2007.
Business to BusinessDuring 2009 the Group started an activity aiming at grasping the development opportunities in the Business to Business segment with the objective of becoming a clothing supplier for leading large-scale retail groups by exploiting its ability in developing collections and the financial advantages deriving from the volumes purchased. With the season autumn-winter 2009 the sale began to the first Italian customer and at the same time additional agreements were reached with Italian and foreign operators with the aim of starting to supply the first products for the current season. The results attained to date are still marginal but are expected to grow starting from 2010.
UPIM acquisitionOn 17 December 2009 Gruppo Coin reached an agreement with a consortium consisting of Investitori Associati, Pirelli RE, Deutsche Bank and the Borletti Family for the acquisition of 100% of the share capital of Upim S.r. l .Upim, with net sales of about 430 million Euro, operates in Italy with 135 direct stores with the Upim brand and 15 stores with the BluKids brand, as well as a franchise network comprising more than 200 stores. The acquisition represents an extraordinary opportunity as it will enable us to: - extend the current Group formats to a network of further complementary locations, most of which are very high-quality; - acquire a clear position of leadership in the clothing sector in Italy; - increase the Group’s operating efficiency, optimising the resources and the skills available; - acquire the intangible wealth deriving from Upim’s history and expertise.On 28 January 2010, the process for the acquisition of 100% of the company capital of Upim Srl by Gruppo Coin S.p.A. was concluded; pursuant to the agreement signed on 17 December 2009 between Gruppo Coin S.p.A. and Carpaccio Investimenti S.p.A. on the one side and Rinascente Upim S.r. l . on the other, the acquisition took place without disbursement of cash and with the issue by Gruppo Coin S.p.A. of 7,948,132 new shares in favour of Dicembre 2007 S.p.A. (the vehicle company controlled by the consortium of sellers), for the contribution in kind of a share representing 75.65% of the share capital of Upim Srl; for the remaining 24.35% of the share capital of Upim Srl, Gruppo Coin transferred Dicembre 2007 S.p.A. a total of 2,558,426 ordinary shares already held in portfolio on a trade-in basis. Upon the conclusion of the transaction, Dicembre 2007 S.p.A. held 7.343% of the shares of Gruppo Coin.
Pursuant to articles 2343 and 2440 of the Italian civil code, the Transferee submitted Gruppo Coin SpA an estimate report on the Upim stake, issued on 30 December 2009 by Mr. Alberto Borelli as an expert appointed by the Court of Venice. The report confirmed that the value of the Upim stake is at least equal to the nominal amount and the premium of the increase of the Share Capital of Gruppo Coin S.p.A., resolved to assist the transfer of the Upim stake (“UPIM Capital Increase”). A copy of this estimate report was made available to the public according to the legal terms and methods.
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In addition, pursuant to art. 2441, 6th paragraph of the Italian civil code, and 158, 1st paragraph, leg. decree 158/1998, on 8 January 2010 the Auditing Company PricewaterhouseCoopers SpA confirmed the fairness of the issue price of the ordinary shares to be issued as part of the Upim Capital Increase. A copy of the opinion of fairness was also made available to the public according to the legal terms and methods.
Concerning the same transaction, and particularly with reference to the financial aspects, the following points are highlighted:a) to support the acquisition transaction, the reference shareholder of Gruppo Coin, Carpaccio Investimenti S.p.A., disbursed a subordinated shareholder loan in favour of the transaction on 28 January 2010, for a total amount of Euro 28,500,000 for a duration of 5 years at a rate of 4.5% a year. b) to support the economic and financial sustainability of the transaction, the Managing Director and some managers of Gruppo Coin and its subsidiaries signed a separate paid share capital increase with exclusion of the subscription right, pursuant to art. 2441, paragraph 8, reserved for them and with respect to which 3,000,000 new ordinary shares were issued.c) with the aim of providing Gruppo Coin with the financial resources necessary to support the investments requested for the integration of the Upim network, the terms and conditions of the loans granted to Gruppo Coin were renegotiated and amended, in accordance with the financing banks. These amendments, which conform to the new corporate, economic and financial structure of the group, include: - three new lines of credit of which:
•a Revolving Credit Facility for Euro 55,000,000,•two Medium Term Lines for a total of Euro 100,900,000;
- the maintenance of the currently existing lines of credit:•a medium long term line of credit consisting of 2 tranches: one of Euro 88,952,000 (Term Loan A) and one of Euro 122,692,000 (Term Loan B),•a medium long term revolving line of credit for a maximum amount of Euro 170 million;
- adjustment of the spreads to the changed market conditions; - review of the financial covenants stated in the contract, which were adjusted to the new corporate, economic and financial structure of the group; - confirmation of the maturity of the lines of credit on 24 April 2012.
Due to the acquisition of Upim, according to the Sitaricerca surveys concerning the period from January to November 2009, Gruppo Coin has a market share of 5.57% (4.65% when excluding the Upim network), thus asserting the leasing position held by our Group in the clothing market in Italy.
In this consolidated annual report, the results of UPIM Srl as at 31 January 2010 are included in the Consolidated Financial and Equity Situation and in the Net Financial Position, while the acquisition made at the closure of the year had no impact on the results of 2009.
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ECONOMIC RESULTS
This document provides, in addition to the usual financial indicators envisaged by the IFRS, some alternative performance indicators which help obtain a better overview of the Group’s economic and financial management.The 2009 consolidated economic results, which don’t include Upim Srl, reclassified with respect to the financial statements drawn up in accordance with international accounting principle and compared with the results of the previous year, can be summarized as follows (million Euro):
The following main changes result from a comparison of the two periods:- Group total building sales (which include sales of partners within our Coin stores), increased
of 7.2%. - Consolidated net sales, amounting to 1,197.8 million Euro, increased compared to the previous
year of 4.6%. In 2009, Gruppo Coin consolidated its leadership in the Italian apparel market, achieving market share of 4.65% (source Sitaricerca period January – December 2009) or 5.57% considering the share of Upim (4.41% in 2008).
- EBITDA totalled 149.5 million Euro (12.5% on net sales) increased of 11.9% compared to the same period of 2008 (133.7 million Euro and 11.7% on net sales).
- Amortisation and depreciation, amounting to 57.4 million Euro, higher than 2008 (51.2 million Euro) in relation to the investments for the conversions of ex Melablu ed ex Dem stores in OVS industry stores, for the opening of new OVSindustry e Coin stores, and for the refurbishing of Oviesse stores with the new OVS industry format.
- Net financial charges, amounting to 18.6 million Euro (19.0 million Euro in 2008) may be broken down as follows 17.8 million Euro of interest expense, costs and fees on loans (compared to 26.4 million Euro in 2008) and positive exchange differences of 0.8 million Euro, they were 7.5 million Euro in 2008 (of which 6.6 million Euro connected to the account effect of the fair value measurements of the forward hedging transactions on interest rates and on Euro/US$ exchange rate).
- Taxes amounted to 29.3 million Euro; The Group’s tax rate (understood to be the incidence of taxes on the pre-tax result) is equal to 39.8%, stable compared to 2008.
- Net profit amounted to 44.3 million Euro (3.7% on net sales) increased compared to the previous year, when it was 38.2 million Euro (3.3% on net sales).
(a) Group total building sales include concession’s partner sales in Coin stores. (b) EBITDA includes reclassification of the exchange-rate differences emerging from exchange-rate risk hedging activity effected on purchases of goods.In FY 2009 results reclassification amounts to a positive value of 4.5 million (negative value of 5.6 million in theFY 2008 results).(c) EBITDA and EBIT are to be considered reclassified on the basis of management criteria. Non-recurring income and charges are excluded; both are included in the consolidated accounts of operating income and costs.(d) Relate to income from refunds and indemnity for 1.2 million Euro and impairment participation charge for 1.2 million Euro.
Group total building Net Sales (a)
yoy change %
Net sales
yoy change %.
EBITDA (b) (c)
yoy change %
Depreciation
EBIT (b) (c)
yoy change %
Net financial income/(charges)
Operating result
Non recurring income/(charges) (d)
Pre-tax profit
Income taxes
Net profit
1,257.6
7.2%
1,197.8
4.6%
149.5
11.9%
(57.4)
92.1
11.7%
(18.6)
73.6
0.0
73.6
(29.3)
44.3
100.0
12.5
(4.8)
7.7
(1.5)
6.1
0.0
6.1
(2.4)
3.7
2009
€ mln % on NS
Change
1,173.4
-0.7%
1,145.4
-2.3%
133.7
-7.6%
(51.2)
82.5
-17.9%
(19.0)
63.5
(0.1)
63.4
(25.2)
38.2
100.0
11.7
(4.5)
7.2
(1.7)
5.5
0.0
5.5
(2.2)
3.3
84.3
52.4
15.9
(62)
9.6
0.4
10.1
0.1
10.2
(4.0)
6.1
2008
€ mln % on NS € mln
ANNUAL REPORT 2009
28
ANNUAL REPORT2009
The Group’s consolidated results reported in the previous table, were reclassified compared to the balance sheet drawn up in compliance with the international accounting standards with reference to:- impact on the goods purchase price due to changes in Euro/US$ exchange rate versus the actual
exchange rate paid as evidenced in the forward hedging contracts that were specifically entered into in order to guarantee purchase price stability;
- non-recurring items: the above-mentioned non-recurring items were reclassified from the components that make up the EBITDA to non-recurring revenues and charges with the purpose to provide a true and fair presentation of the financial situation and the economic results of the Gruppo Coin for the year 2009.
The following table shows the different breakdown of the EBITDA calculated in accordance with the international accounting standards and the EBITDA reported in the Profit and Loss Account of the ordinary management, previously shown:
A Operating result
B of which non-recurring charges/(income)
C of which foreign currency hedging charges/(income)
D Depreciation
E = A+D: EBITDA
F = E+B-C: ordinary EBITDA
88.8
(1.2)
(4.5)
57.4
146.2
149.5
88.0
0.1
5.6
51.2
139.2
133.7
0.8
(1.3)
(10.1)
6.2
7.1
15.9
2009 2008 ChangeECONOMIC RESULTS (€ mln)
ANNUAL REPORT 2009
29
ANNUAL REPORT2009
OVIESSE
Note: Data on table above refer to Oviesse brand and then include revenues and Ebit of Oviesse Spa, Oviesse Franchising Spa and Oviesse d.o.o. net of intercompany. (a) EBITDA and EBIT are to be considered reclassified excluding non-recurring charges.
Net Sales
yoy change %
EBITDA (a)
yoy change %
Depreciation
EBIT (a)
870.6
8.3%
141.7
4.5%
(41.3)
100.4
100.0
16.3
(4.7)
11.5
2009
€ mln % on NS
Change
803.7
-2.1%
135.6
-1.2%
(34.3)
101.3
100.0
16.9
(4.3)
12.6
66.9
6.0
(6.9)
(0.9)
2008
€ mln % on NS € mln
Net sales for the Oviesse brand as of 31 January 2010, 870.6 million Euro (+8.3% compared to 2008), have benefited from the results of the conversion of the formerly Melablu and DEM stores and the positive sales trends in the stores restructured and reopened with the OVS industry formula but are penalised in part by sales in the affiliation channel which fell in 2009, in line with the general decline in clothing in Italy.EBITDA amounted to 141.7 million Euro, increased by 4.5% compared to 2008. As already illustrated, the brand’s results benefited only in part from the positive results of the formerly Melablu and Dem stores, while they were penalised by the period of inactivity at these stores (no sales for three weeks, but overheads were still incurred) when work to convert them to OVS industry stores was taking place. At the end of the financial year, Oviesse had 314 direct stores in Italy (252 on 31 January 2009) and 5 abroad, 69 franchising stores in Italy (61 on 31 January 2009) and 58 franchising stores abroad (38 last year). On the basis of the ‘Sitaricerca’ figures for the period January-November 2009, the ‘new’ Oviesse has a market share of 3.63% (3.46% in 2008), confirming our brand as the leader in the clothing market in Italy.
ANNUAL REPORT 2009
30
ANNUAL REPORT2009
COIN
Note: Data on table above refer to Coin brand and then include revenues and Ebit of Coin Spa and Coin Franchising Spa net of intercompany. (a) Total building sales include concession’s partner sales in Coin stores. (b) EBITDA and EBIT are to be considered reclassified excluding non-recurring charges.
Total building net sales (a)
yoy change %
Net sales
yoy change %
EBITDA (b)
yoy change %
Depreciation
EBIT (b)
378.8
3.0%
319.0
-6.1%
8.8
n.a
(16.0)
(7.2)
100.0
2.8
(5.0)
(2.3)
2009
€ mln % on NS
Change
367.7
1.9%
339.7
-3.2%
(0.9)
n.a
(15.0)
(16.0)
100.0
(0.3)
(4.4)
(4.7)
11.1
(20.7)
9.8
(1.0)
8.8
2008
€ mln % on NS € mln
In 2009, total building net sales recorded in the COIN stores were 378.8 million Euro, an increase of +3.0% compared to the previous year. The gradual increase in the sales of concession brands in Coin direct stores, whose sales are not included in the COIN accounts figures, contributed to the result.In line with the decision to assign more concession areas to the Brands, for the second year running, the number of square metres dedicated to selling our House Brands has been reduced and, as a result, House Brand sales have also fallen. EBITDA amounted to 8.8 million Euro (2.8% of Net Sales), an increase on the 2008 result, which was negative for 0.9 million Euro.At the end of the financial year, the Coin brand had 46 direct stores (43 on 31 January 2009), 5 outlet stores, 2 direct stores abroad, 24 franchising stores in Italy (25 on 31 January 2009) and 11 franchising stores abroad. On the basis of the ‘Sitaricerca’ figures for the period January-November 2009, the market share for the Coin brand was 1.02%, a higher figure than for the same period last year, when it was 0.97%.
ANNUAL REPORT 2009
31
ANNUAL REPORT2009
GRUPPO COIN S.P.A.
Gruppo Coin S.p.A. is a holding company charged with the strategic management, control and coordination of the Group companies. Some operating activities which are not strictly linked to the specific situations of the various subsidiary companies are managed directly by the parent company, which permits the achievement of economies of scale. The main activities centralised by Gruppo Coin S.p.A., which are provided to the subsidiaries, are as follows: the centralised treasury department, charged with managing and optimising financial flows and requirements; the administration and tax departments; the legal department; management and development of store networks; Information Technology; logistics and supply chain activities.
In the financial year 1 February 2009 – 31 January 2010, the parent company recorded revenues of 77.4 million Euro, mainly regarding services provided to subsidiaries. The financial year ended with a net profit of 25.9 million Euro (it was of 8.0 million Euro in 2008). Shareholders’ Equity of Gruppo Coin S.p.A. as at 31 January 2010 amounted to 296.6 million Euro (216.1 million Euro as at 31 January 2009).
OTHER ACTIVITIES:
OBS
Oriental Buying Service Ltd, a company having its seat in Hong Kong, works on the Far East markets (mainly China, Bangladesh and India and in general outside Europe), as agent for the Group. It is in charge of selecting suppliers, supporting production and monitoring, using its own structures, to ensure that costs and quality are in line with Group standards. In line with the plan for increasing imports from countries with competitive production costs and to diversify the countries of origin of the goods, over the last few years the company has continuously expanded its organisation. In financial year 2009 OBS Ltd. achieved net profit of 8.6 million Euro (5.7 million Euro in 2008).
PADANA S.R.L. INTO LIQUIDATION
Following the negative results obtained by the format, the company was put into liquidation during 2009 and definitively liquidated at the end of January 2010; the four Yo.Vi. sales outlets specialised in kid and teen fashion, were transferred to Oviesse. Worth noting is that assets to be distributed emerged from the liquidation for a total of Euro 322 thousand.
BR AND ZERO S.P.A.
The company, constituted in 2008, started during the 2008 period the management of licences and the sub-license of the Love Therapy brand at a global level, with the stylistic collaboration of Elio Fiorucci. . The negative period result is Euro 225,000.
BUSINESS TO BUSINESS
The Group began an activity aiming at grasping the development opportunities in the Business to Business segment with the objective of becoming a clothing supplier for leading large-scale retail groups by exploiting its ability in developing collections, privileged access to supplies and its important international sourcing platform. Therefore, the company COSI – Concept of Style Italy S.p.A. was established to start operations with some important Italian companies; the financial year was influenced by the start-up phase and closed with a negative result for Euro 331 thousand.
GRUPPO COIN UNGHERIA
Gruppo Coin Ungheria Kft operates in Budapest through a sales outlet that markets Coin and Oviesse products. During the financial year, the company that controls 75% of Four Corners Kft, which manages additional Oviesse stores, carried out a depreciation of the latter as a consequence of the losses incurred by the subsidiary, for which the transfer to the local minority shareholder is expected during 2010. For this reason, Four Corners Kft was not consolidated in these financial statements.
ANNUAL REPORT 2009
32
ANNUAL REPORT2009
INVESTED CAPITAL AND NET EQUIT Y
The following paragraphs compare the most significant elements of the consolidated financial position, including Upim srl, as at 31st of January 2010 to the same elements as at 31st January 2009 (in million Euro):
Jan 31st2010
Jan 31st 2009
Receivables
Inventory
Payables
Net Operating Working Capital
Other assets and liabilities
Net Working Capital
Tangible and Intangible assets
Net deferred taxes
Other long-term assets and liabilities
Pension fund and other provision funds
Net Capital Employed
Net equity
Net financial debt
TOTAL FINANCIAL SOURCES
75.0
260.1
(428.4)
(93.2)
(76.7)
(169.9)
1.083.6
(29.0)
5.7
(91.1)
799.2
451.7
347.6
799.2
53.5
234.0
(325.0)
(37.5)
(59.2)
(96.6)
879.8
(66.1)
4.9
(76.6)
645.3
369.5
275.8
645.3
21.5
26.1
(103.4)
(55.8)
(17.5)
(73.3)
203.8
37.1
0.8
(14.5)
153.9
82.2
71.7
153.9
Change
The trade payables do not include about Euro 31.2 million of payables to Upim S.r. l . suppliers that were past due for more than 60 days as at 31 January 2010 and that, also in consideration of the limited time elapsing between the day in which the management of the company by the group began and the end of the year, were not regularly paid. In this report this amount was considered as financial debt and was included in the financial position, while it retained its nature of trade payable in the accounting schedules and in the supplementary notes (as at 31 January 2009 the trade payables considered as financial debt amounted to Euro 25 million).
ANNUAL REPORT 2009
33
ANNUAL REPORT2009
For a better understanding of the evolution of the items of the financial equity situation, given the same scope, we hereby report the values as at 31 January 2010, rectified with the aim of excluding any impact deriving from the acquisition of Upim S.r. l . (in million Euro):
Jan 31st2010
proformaJan 31st
2009
Receivables
Inventory
Payables
Net Operating Working Capital
Other assets and liabilities
Net Working Capital
Tangible and Intangible assets
Net deferred taxes
Other long-term assets and liabilities
Pension fund and other provision funds
Net Capital Employed
Net equity
Net financial debt
TOTAL FINANCIAL SOURCES
57.9
224.6
(319.8)
(37.3)
(58.3)
(95.6)
879.6
(67.8)
4.7
(65.5)
655.4
391.0
264.4
655.4
53.5
234.0
(325.0)
(37.5)
(59.2)
(96.6)
879.8
(66.1)
4.9
(76.6)
645.3
369.5
275.8
645.3
4.3
(9.4)
5.2
0.1
0.9
1.0
(0.2)
(1.7)
(0.2)
11.1
10.0
21.5
(11.5)
10.0
Change
The net working capital as at 31 January 2010 is Euro - 37.3 million, basically unchanged compared to Euro -37.5 million as at 31 January 2009. Worth highlighting is the fact that, despite an increase in net turnover of 4.6%, the working capital remains stable. This is due to the constant effort made to optimise stocks and to the commitment of the last two years to contain the end-of-season product queues.Furthermore, as already shown in the 2008 report, given the uncertain macro economic context, the management of Gruppo Coin preferred to control the lever of the working capital by avoiding the formation of end-of-season stocks, also due to a reduced push for sales; this choice, though possibly affecting the revenue performance, has led to an improvement in the rotation of stocks and thus of the Group’s working capital.
ANNUAL REPORT 2009
34
ANNUAL REPORT2009
FINANCIAL MANAGEMENT
The net financial position trend is shown in the Financial Management Statement that follows, which is reclassified according to management principles (in million Euro):
2009 2008
EBITDA
Net Working Capital variation
Capex
Disinvestments
OPER ATING CASH FLOW
Financial charges
Severance indemnity payment
Tax payment
Others
NET CASH FLOW (before derivatives effects)
MtM derivatives (b)
NET CASH FLOW (before acquisitions)
Acquisitions (a)
NET CASH FLOW
149.5
(1.0)
(59.7)
2.2
91.0
(15.7)
(7.2)
(22.5)
(11.2)
34.4
(22.9)
11.5
(83.2)
(71.7)
133.7
(51.4)
(74.3)
0.2
8.2
(19.9)
(8.0)
(23.0)
(14.8)
(57.5)
30.3
(27.2)
(22.0)
(49.2)
15.9
50.4
14.6
1.9
82.8
4.2
0.8
0.5
3.6
91.9
(53.2)
38.7
(61.2)
(22.5)
Change
(a) Melablu in 2008, UPIM and management capital reserved effect in 2009;(b) NFP at year end was affected positively the measurement to Mark to mark the derivatives in dollars; the variation of this post, which influence the change in the NFP, must be regarded as a mere accounting issues and therefore should not be taken into account in evaluating the operating cash flow.
In 2009, the Group generated Operating Cash Flow of 91 million Euro, a good improvement on the 2008 figure of 8.2 million Euro. This result is mainly due to careful management of the current operating capital which, as stated, remains stable, even though it was a year of development of sales and store floor space managed. Investments, 59.7 million Euro (aligned to annual depreciation values), were mainly dedicated to network growth, especially the conversion of the former Melablu and Dem stores, the restructuring of 16 stores reopened with the OVS industry formula and the restructuring of a Coin store (Varese).
Consolidated net financial debt on 31 January 2010 amounts to 347.6 million Euro. 83.2 million Euro of this can be attributed to the Upim acquisition (in million Euro):
Jan 31st2010
Jan 31st2009
Cash & cash equivalents and net short-term financial assets
Short-term bank debt
Short-term financial credits/debts on derivatives
Short-term financial amounts payable to other financial creditors
Short-term net financial position
Medium-term bank debt
Medium-term parent company debt
Medium-term financial credits/debts on derivatives
Medium-term financial amounts payable to other financial creditors
Middle/long term financial position
Net financial position
118.7
(121.7)
3.6
(36.4)
(35.8)
(273.8)
(28.5)
4.0
(13.5)
(311.8)
(347.6)
65.2
(113.2)
19.1
(40.2)
(69.1)
(209.7)
0.0
11.4
(8.4)
(206.7)
(275.8)
53.5
(8.5)
(15.5)
3.8
33.3
(64.1)
(28.5)
(7.4)
(5.0)
(105.1)
(71.7)
Change
ANNUAL REPORT 2009
35
ANNUAL REPORT2009
With rectified values, the financial debt of the Group as at 31 January 2010 would have been equal to Euro 264.4 million, down by Euro 11.5 million compared to 31 January 2009. The following table shows the detail of net debt adjusted to exclude the effects related to the acquisition of Upim (in million Euro):
Jan 31st2010
proformaJan 31st
2009
Cash & cash equivalents and net short-term financial assets
Short-term bank debt
Short-term financial credits/debts on derivatives
Short-term financial amounts payable to other financial creditors
Short-term net financial position
Medium-term bank debt
Medium-term controlled debt
Medium-term financial credits/debts on derivatives
Medium-term financial amounts payable to other financial creditors
Middle/long term financial position
Net financial position
65.4
(118.7)
3.5
(4.5)
(54.3)
(201.4)
0.0
4.0
(12.7)
(210.1)
(264.4)
65.2
(113.2)
19.1
(40.2)
(69.1)
(209.7)
0.0
11.4
(8.4)
(206.7)
(275.8)
0.2
(5.5)
(15.5)
35.7
14.9
8.3
0.0
(7.4)
(4.3)
(3.4)
11.5
Change
ANNUAL REPORT 2009
36
ANNUAL REPORT2009
ECONOMIC SITUATION AND GENER AL MARKET OF REFERENCE
In Europe and in Italy in particular, the main macroeconomic indicators show, for the year just ended, one of worst recessions ever. During 2009, due to the crisis, whose signals were already clear in the last part of 2008, the rate of unemployment showed a constant rise, which in January 2010 reached 8.6%; GDP dropped by 4.5%, while the rate of inflation increased by 0.8%.
Following this trend, promotional pressure also grew to reach 38% of items sold (with sales, various discounts, etc.), compared to 37% in 2008.
The provisional data from Sitaricerca for 2009 referred to the overall performance of consumption in the textile industry shows a decrease of 4.8 for quantity and 3.5 for value.
Finally, the contraction in the textile – clothing market mostly hit traditional stores and hypermarkets.
ANNUAL REPORT 2009
37
ANNUAL REPORT2009
* Liquidation procedure of Padana Srl started on 13.01.2010 and concluded on 31.01.2010
Liquidation procedure of Wandar S.r. l . has been started in 2005.
THE GROUP STRUCTURE
Oviesse S.p.A.
Coin S.p.A
Wandar S.r.l.into liquidation
Upim S.r.l.
OviesseFranchising S.p.A..
CoinFranchising S.p.A.
Gruppo CoinDepartment Stores
d.o.o. Srbija
COSI - Conceptof Style Italy S.p.A.
GRUPPO COIN S.p.A.
100%
100%
100%
100%
100%
100%
100%100%
Brand Zero S.p.A.100%
Oviesse d.o.o.Slovenija
100%
Gruppo CoinInternational S.A.
Luxembourg
100%
Cosi (Shangai)Company Limited
100%
Gruppo CoinUngheria K.f.t.
100%
100%
Four Corners K.f.t. Ungheria
75%
Oriental BuyingServices Ltd Hong Kong
Obs India PrivateLtd - India
Cosi International LtdHong Kong
Obs Retail LtdHong Kong
100%
100%
100%
ANNUAL REPORT 2009
38
ANNUAL REPORT2009
MANAGEMENT OF MARKET RISK
Market risks include effects that market changes could have on the company’s commercial activity, which has proven to be sensitive to changes in consumer shopping choices.Positive results could be influenced by, among other items, the business panorama, interest rates, taxes, local economic conditions, uncertainty regarding future economic prospects, and the movement toward other goods and services in shopping choices. Consumer preference and economic conditions could change from time to time in each market in which we operate.We need to be able to resist deflationary pressure on prices due to an increase in competition and changes in consumer choices, which could have negative effects on the financial situation and economic results.
MANAGEMENT OF FINANCIAL RISK AND OPER ATING RISK
Throughout its commercial activities the Group is exposed to market risk in connection with fluctuations in interest rates, in exchange rates and in the prices of goods. The risk from variations in prices and cash flow is part of the business and can only be partly reduced through risk management policies.
Credit risk
Credit risk represents the exposure of the Group to potential losses deriving from the failure of counterparties to honour their obligations.As of 31 January 2010 there was no significant concentration of credit risk with such risk mitigated by the fact there are a large number of clients. To reduce risk, the Group generally obtains guarantees in the form of guarantees against credit granted for merchandise suppliers.The financial position is shown in the balance sheet net of write-downs for counterparty default, calculated on the basis of the information available on the clients and taking into account historical factors.
Liquidity risk
Liquidity risk represents the degree to which financial resources may be difficult to access. At the present time, the Group believes it has sufficient financial resources and lines of credit in place to allow it to carry out all foreseeable financial needs.
Risk of price fluctuation and cash flow
The margins of the Group are influenced by fluctuations in the price of goods. A cut in the sale price of an article generally results in lower operating results if it is not accompanied by a corresponding cut in the cost of purchase.In addition, the cash flow position of the Group is exposed to risk from exchange rate and interest rate fluctuations on the market. In more detail , exchange rate risk comes from operations carried out by the Group in currencies that are not the euro; the Group buys a significant part of the goods in currencies that are linked to the US$.Fluctuations in interest rates impact the market value of the debt of the Group and increase net financial write-downs.
ANNUAL REPORT 2009
39
ANNUAL REPORT2009
OBJECTIVES AND POLICIES WHEN MANAGING FINANCIAL RISKS
Treasury activities are carried out centrally by Gruppo Coin S.p.A., which is the sole representative of the group when dealing with credit institutions. Intergroup transactions are carried out at market conditions.Gruppo Coin S.p.A. follows guidelines for financial activities which foresee provisions made to cover fluctuations in the US$ exchange rate and in interest rates through derivatives contracts, principally on the request of and for its operating subsidiaries.
Derivative contracts
Nominal value of financial derivatives contractsThe nominal value of a derivative contract is taken to be the market value of each contract. Contracts in other currencies have been calculated in euros at the exchange rate on the last day of the financial year.
Management of interest-rate risk Gruppo Coin S.p.A. has stipulated some derivatives contracts to manage interest- rate risk. Among these, we have the Interest-Rate Swaps and the Interest- Rate Collars contracts. In the case where interest rate rises are not expected to be excessive and in order not to pay an excessive level of fixed-rate charges on the debt, the following structure has been put in place:
a) payment of a fixed rate, called Cap, if the market rate goes above a certain level;b) payment of market rates between the Cap or ceiling and a lower level, or Floor;c) payment of a fixed rate above the Floor if the market rate falls below the Floor.
Management of exchange-rate riskGruppo Coin has put in place several types of contract to manage exchange-rate risk. These contracts are principally used to insure against rises in foreign currencies such as the US$.
Gruppo Coin also uses Options contracts to guard against a risk of foreign currency appreciation. These contracts give you the right but not the obligation to buy should the market direction go in the opposite direction of the risk coverage
INVESTMENTS AND DEVELOPMENT
In the period under analysis, the Group invested 53.5 million Euro in tangible fixed assets and 6.2 million Euro in intangible fixed assets essentially regarding stores acquisition and refurbishing.During the year, 69 new Oviesse-branded DOS were opened (including 51 former Melablu stores) of which 1 in Slovenia and 1 in Hungary , 6 new Coin stores, of which 1 in Slovenia and 1 in Hungary.
ANNUAL REPORT 2009
40
ANNUAL REPORT2009
STAFF
During the 2009 period a series of organisational interventions was carried out, to support reaching principal business objectives:- Identification of a new organisation for the areas dedicated to developing assortments, to
strengthen the ability to create distinctive House Brand collections by acquiring new skills concerning the product and achieving additional synergies between Coin and Oviesse with regards to the range of suppliers (particularly through the OBS organisation).
- Enhancing the internal skills supporting foreign development.- Multiple interventions on the Coin and Oviesse direct network to contain labour costs in line
with sales trends, organising the work in a way to achieve efficiency through flexibility.- Optimising of assets and the cost of central facilities.
Training has been particularly concentrated on the sales network: in Oviesse, the reorganisation of the Job Master has been completed, which is for apprentice sales outlet directors (which has about 70 apprentices involved each year) and other professionals in the sales outlets; in Coin a specific training activity has begun aimed at utilising the abilities of sales formulas with specific reference to the area of service to clientele. In the Product and Purchases area, a new “Retail School” was established that will follow the fundamental phases of skill enhancement for collaborators, both for the new entry plans and for overall continuous refreshers courses.Important actions were taken for the development of Industrial Relations to encourage growth processes and reorganisation requirements, as in the case of the acquisition of Melablu, which saw the arranged closure of the site and the reorganisation of the store opening hours. A relevant contribution was provided to the negotiation between Confcommercio and trade unions that have allowed the conclusion of the Employment Pact, the new agreement to facilitate and simplify the use of apprentices in businesses and for reforming the system of bilateralism.
The average age has decreased by 2 months, arriving at 38 years and 5 months, contextually to average years of service which has gone from 12 and six months to 11 years and ten months.The incidence of female employment is at 80.8% of the total, and the level of school attendance has also risen by 4%: university and high school graduates now make up 67% of the employed staff.During the year 1,849 contracts have been activated.
The employment level for the Coin Group as at 31 January 2009 was 5,945 average Eqft. The comparison with the levels at the end of the previous year is shown below:
Jan 31st 2010 Jan 31st 2009
Number of employees
of which working abroad
Average number of employees
of which working abroad
Average number of employees
of which working abroad
7,140
270
7,045
250
5,945
250
6,537
186
6,537
190
5,641
179
Note: The details indicated above do not include in 2009 the staff of Upim srl, which had 2,770 employees at 31 January 2010, and in he staff of Tre.Bi. S.p.A. and its which had 435 employees at 31 January 2009.
The increase of employees abroad is connected mainly to the opening of direst stores.
RISKS REL ATED TO ENVIRONMENTAL POLICY
In conformity with what is indicated in article 2428, paragraph 2 of the civil code, the Group specifies that it carries out its own activity in full respect of the dispositions regarding environment and hygiene in the work place.
ANNUAL REPORT 2009
41
ANNUAL REPORT2009
SECURIT Y POLICY DOCUMENT – LEGISL ATIVE DECREE 30 JUNE 2003 NO. 196
The Group fully observed the fulfilments indicated by privacy regulations giving adequate instructions in the area of internal controls system. We have adjusted to the minimum security measures indicated, adopting the model security policy document provided by the Legislative Decree.
RESEARCH AND DEVELOPMENT
During the year, no research and development activities were carried out. However, a certain number of employees are constantly involved in creating and developing the collections, with the objective of ensuring an exclusive offer consistent with the positioning of the two brands.
STAKES HELD IN GRUPPO COIN S.P.A. BY MEMBERS OF CORPOR ATE BODIES
In accordance with Consob regulation no. 11971 we report stakes held in Gruppo Coin S.p.A. by members of corporate bodies, as amended by schema 3) of attached 3C) of the previous regulation:
TR ANSACTIONS WITH REL ATED PARTIES
In application of the CONSOB resolution no. 15519 of 27 July 2006, the consolidated financial statements of the parent company show the amounts of the individual items that relate to transactions put in place with related parties (if relevant).In addition, the explanatory notes provide the information required by the CONSOB communication no. 6064293 of 28 July 2006 and the details of the relations held with related entities.
RECONCILIATION OF NET EQUIT Y AND THE CONSOLIDATED RESULT WITH THOSE OF THE PARENT COMPANY
The reconciliation statement between the period result and net equity of the Group with the analogous values of the parent company required by the CONSOB communication no. 6064293 of 28 July 2006 is reported in the explanatory notes to the consolidated financial statements.
No.Of sharesowned atthe end of
previous year
No. Of share owned at the end of
current yearName andsurname
Beraldo Stefano
Coin Marta
Pampani Fabio
Sama Francesco
Zoppas Giovanni
Gruppo Coin S.p.A.
Gruppo Coin S.p.A.
Gruppo Coin S.p.A.
Gruppo Coin S.p.A.
Gruppo Coin S.p.A.
--
100
2,033
--
--
1,738,361
--
323,717
151,196
202,065
1,738,361
100
325,750
151,196
202,065
--
--
--
--
--
Company
No. Of sharebought during
the year
No. Ofshare sold
duringthe year
ANNUAL REPORT 2009
42
ANNUAL REPORT2009
SIGNIFICANT EVENTS SUBSEQUENT TO THE CLOSURE OF THE YEAR
No significant events occurred after the closure of the year.
FORESEEABLE EVOLUTION OF OPER ATIONS
Upim integration planThrough the acquisition transaction, the integration with Upim aims to exploit the intangible wealth developed over the years by the acquired company, which is a fundamental element to further expand the economic success of the Group.This intangible capital is represented by the wealth of educational, strengthening and growing knowledge on the commercial sector that makes up the know-how of the acquired company, and particularly by the internal divisions dedicated to the study and design of sales outlets as well as the surveying of evolving consumer trends.These assets can be combined with the knowledge and technical skills already present in Gruppo Coin, leading to significant advantages in terms of distribution techniques and creating those synergies that led to the acquisition.The first few months of 2010 saw the start of all the activities connected with the relaunch of the UPIM network, from the initial transformation of stores to interventions on merchandising and sourcing activities. In parallel , the management was acquired of all the operating processes of the newly purchased company with the aim of integrating the activities of support to the store network and the affiliation within the operating structures already present in the head office of Gruppo Coin in Venice-Mestre, as fast as possible and approximately by the summer of 2010.The plan to relaunch Upim Srl was disclosed to and discussed with national trade union organisations. An agreement for its implementation was reached in February.On 12 March 2010, after just three weeks of work, the first OVS industry store was reopened in Mugnano in the Province of Naples; as of today, 16 stores have been reopened with the OVS industry formula. The first signals relating to the sales trend are more than satisfactory, both with respect to our best expectations and in comparison with sales growth in the first 15 formerly Melablu stores converted last year.On 7 April , as the result of Upim conversion plan a Coin store was opened in Lecco; the next day, the second converted store was opened in Reggio Calabria and on 13 April the third store opened in Pisa. Overall , by the end of April , 6 ex-Upim stores will have been restructured and reopened with the Coin format. Even in this case the first sales and customer results have been very positive. Upon completion of this first reconversion phase, the second phase began with the closure, in the first week of April , of another 13 UPIM stores that, following renovation, will reopen within the first 15 days of May with the OVS industry formula.In addition to the activities of rationalisation of the operating site and the conversion of stores by adopting our formats, various actions were started to improve the product and collection assortments proposed in the Upim network; the initial effects will be visible starting from the autumn winter 2010 range.
Sales trend in the first part of the yearAll Group’s brands keep performing positive like for like sales, despite the poor economic scenario.
p. the Board of Directors CEO Stefano Beraldo
ANNUAL REPORT 2009
43
ANNUAL REPORT2009
ANNUAL REPORT 2009
44
ANNUAL REPORT2009
ANNUAL REPORT 2009
45
ANNUAL REPORT2009
CONSOLIDATED FINANCIAL STATEMENTS
ANNUAL REPORT 2009
46
ANNUAL REPORT2009
CONSOLIDATED BAL ANCE SHEET (thousand of Euro)
Jan 31st2010
Jan 31st2009 (*)
Current assets
Cash and cash equivalents
Trade receivables
Inventories
Financial assets
Current tax assets (A)
Other receivables
CURRENT ASSETS
Non current and fixed assets
Property, plant and equipment
Intangible fixed assets
Goodwill
Equity investments
Financial assets
Other receivables
NON-CURRENT ASSETS
TOTAL ASSETS
118,715
75,035
260,139
6,985
3,760
40,176
504,810
320,978
502,254
259,638
722
4,532
5,679
1,093,803
1,598,613
1
2
3
4
5
6
7
8
9
10
11
12
65,217
53,528
234,006
22,597
3,105
22,408
400,861
255,021
502,511
121,305
955
12,126
4,917
896,835
1,297,696
NoteASSETS
Jan 31st2010
Jan 31st2009 (*)
Current liabilities
Financial liabilities
Due to suppliers
Current tax liabilities (B)
Other payables
CURRENT LIABILITIES
Non current liabilities
Financial liabilities (C)
Employees’ termination indemnity provisions
Provisions for risks and charges
Current tax liabilities
NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET EQUITY
Share Capital
Reserves for purchase of treasury shares
Other reserves
Net result for the year
TOTAL NET EQUIT Y
TOTAL LIABILITIES AND NET EQUIT Y
130,336
459,595
1,242
119,405
710,578
316,267
75,357
15,715
29,036
436,375
1,146,953
14,309
0
393,053
44,298
451,660
1,598,613
13
14
15
16
17
18
19
20
21
22
23
131,937
350,000
2,828
81,855
566,620
218,846
61,950
14,661
66,113
361,570
928,190
13,214
(2,576)
320,705
38,163
369,506
1,297,696
NoteLIABILITIES AND NET EQUIT Y
(A) Including 1,963 thousand Euro as at 31/01/10 towards parent companies.(B) Including 2,679 thousand Euro as at 31/01/09 towards parent companies.(C) Including 28,500 thousand Euro as at 31/01/10 towards parent companies.(*) for comparative purposes it is reported that some values of the consolidated financial statements for 2008 were restated following the finalization of the Purchase Price Allocation Tre.Bi. S.p.A. and its subsidiaries (the Group Tre.Bi), now incorporated into Oviesse SpA after the merger accounting with effect from February 1,2009.
ANNUAL REPORT 2009
47
ANNUAL REPORT2009
CONSOLIDATED PROFIT & LOSS ACCOUNT(thousand of Euro)
REVENUES
Other operating income and revenues
of which non-recurring
TOTAL REVENUES
Purchase of raw materials, consumables and goods
Personnel expenses
of which non-recurring
Amortisation, depreciation and write-downs of fixed assets
Other operating costs:
Costs for services (D)
of which non-recurring
For use of third party assets
of which non-recurring
Writedowns and provisions
of which non-recurring
Other operating costs
of which non-recurring
Change in inventories
NET RESULT BEFORE NET FINANCIAL CHARGES AND TAXES
Financial income
Financial charges
Exchange differences
Income (charges) from equity investments
PRE-TAX NET RESULT FOR THE YEAR
Income taxes
NET RESULT
EARNING PER SHARE (EURO)
base
diluted
Jan 31st2010
Jan 31st2009
1.197.792
58.006
1.184
1.255.798
533.539
232.120
0
57.418
160.645
0
148.978
0
4.302
0
19.824
0
10.165
88.807
392
(18.170)
3.715
(1.182)
73.562
(29.264)
44.298
0.34
0.34
24
25
26
27
28
29
30
31
32
33
34
1.145.370
43.441
300
1.188.811
547.307
202.801
0
51.186
161.112
0
128.132
0
4.587
450
15.827
0
(10.110)
87.969
1.299
(28.218)
2.339
0
63.389
(25.226)
38.163
0.29
0.29
Note
(D) Including 25,636 thousand Euro as at 31/01/2010 towards related parties.
ANNUAL REPORT 2009
48
ANNUAL REPORT2009
STATEMENT OF COMPREHENSIVE INCOME(thousand of Euro)
NET PROFIT (A)
Profit/(loss) directly registered to reserve of cash flow hedge
Taxes of entry registered to reserve of cash flow hedge
Profit/(loss) actuarial to ESI
Taxes profit/(loss) actuarial to ESI
Profit/(loss) directly registered to conversion reserve
TOTAL OTHER COMPREHENSIVE INCOME (B)
TOTAL COMPREHENSIVE INCOME FOR THE YEAR (A) + (B)
Jan 31st2010
Jan 31st2009
44,298
(21,789)
5,992
(146)
40
(1,104)
(17,007)
27,291
38,163
30,939
(8,509)
(2,020)
556
1,673
22,639
60,802
ANNUAL REPORT 2009
49
ANNUAL REPORT2009
CONSOLIDATED CASH FLOW SUMMARY(thousand of Euro)
OPER ATING ACTIVITIES
Net profit/ (loss) for the period
Provisions for income taxes
Changes for:
Assets depreciation and write-offs
Net capital gains/ (losses) on assets
Writedowns of equity investments in subsidiaries
Net financial income/ (charges)
Gain/ (losses) on exchange rate differences and derivatives
Fair value profit/ (loss) of derivatives
Provisions
Utilisation of funds
CASH FLOW FROM OPER ATING ACTIVITIESBEFORE CHANGES IN CIRCUL ATING CAPITAL
Cash flow generated by changes in circulating capital
Payment of taxes
Net received/(paid) interest
Foreign exchanges
Other changes
CASH FLOW FROM OPER ATING ACTIVITIES
INVESTING ACTIVITIES
(Investments) in fixed assets
Disposals in fixed assets
Change in equity investments in subsidiaries
Cash out for business combination net of
cash acquired including costs accessories
CASH FLOW FROM INVESTING ACTIVITIES
FINANCING ACTIVITIES
Change in financial assets/ liabilities
Right issues
(Purchase) of treasury shares
CASH FLOW FROM FINANCING ACTIVITIES
INCREASE/(DECREASE) OF LIQUIDITY
NET LIQUIDITY OPENING BALANCE
NET LIQUIDITY CLOSING BALANCE
2009 2008
44,298
29,264
57,418
(39)
1,182
18,746
(7,782)
3,099
1,284
(15,829)
131,641
(20,509)
(22,467)
(15,701)
8,152
(293)
80,823
(59,658)
2,183
266
42,755
(14,454)
(18,422)
10,530
(4,979)
(12,871)
53,498
65,217
118,715
38,163
25,226
51,186
16
0
25,901
5,233
(6,554)
2,967
(13,952)
128,186
(42,332)
(22,990)
(19,860)
(5,599)
806
38,211
(74,264)
227
(316)
(16,287)
(90,640)
63,778
0
(2,576)
61,202
8,773
56,444
65,217
34
28
33
33
33
33
18-19
18-19
2-3-5-6-12-14-15-16-20
7-8-9
7-8-9
10
1
4-11-13-17
21-23
22
Note
ANNUAL REPORT 2009
50
ANNUAL REPORT2009
CH
AN
GE
S I
N G
RO
UP
NE
T E
QU
ITY
(th
ou
sa
nd
Eu
ro)
BA
LA
NC
ES
AS
OF
31
.01
.20
08
At
tr
ibu
tio
n t
o r
es
er
ve
of
FY
20
07
re
su
lt
Re
cla
ss
ifie
d f
or
lo
ss
es
co
ve
rag
e
of
th
e p
are
nt
co
mp
an
y
Pu
rch
as
e o
f t
rea
su
ry
sh
are
s
Ne
t i
nc
om
e (
los
s)
Ot
he
r m
ov
em
en
ts
Re
su
lt a
t 3
1.1
.20
09
BA
LA
NC
ES
AS
OF
31
.01
.20
09
At
tr
ibu
tio
n t
o r
es
er
ve
of
FY
20
08
re
su
lt
Ch
an
ge
in
co
ns
oli
da
tio
n r
es
er
ve
Pu
rch
as
e o
f t
rea
su
ry
sh
are
s
Iss
ua
nc
e o
f 7
,94
8,1
32
ne
w s
ha
res
an
d
as
sig
ne
me
nt
of
2,5
58
,42
6 o
rdin
ar
y s
ha
res
ho
ld b
y G
ru
pp
o C
oin
S.p
.A.a
ga
ins
t t
he
in
-kin
d
co
nt
rib
ut
ion
of
Up
im S
rl
(28
.01
.20
10
)
Iss
ua
nc
e o
f 3
,00
0,0
00
ne
w o
rdin
ar
y s
ha
res
res
er
ve
d t
o s
om
e m
an
ag
er
s o
f G
ru
pp
o C
oin
an
d i
ts
su
bs
idia
rie
s (
28
.01
.20
10
)
Ne
t i
nc
om
e (
los
s)
Ot
he
r m
ov
em
en
ts
Re
su
lt a
t 3
1.1
.20
10
BA
LA
NC
ES
AS
OF
31
.01
.20
10
Sh
are
Ca
pit
al
Le
ga
lre
se
rv
eS
ha
re p
rem
ium
re
se
rv
e
Sh
are
ho
lde
rs’
pa
ym
en
ts
in
st
oc
k a
cc
ou
nt
Ot
he
r r
es
er
ve
s:
Ca
sh
flo
wh
ed
ge
res
er
ve
Ac
tu
ari
al
ga
ins
/(l
os
se
s)
res
er
ve
Co
nv
ers
ion
res
er
ve
Tre
su
ry
sh
are
sN
et
nc
om
e(l
os
s)
Min
ori
ty
int
ere
st
Tot
al
Tot
al
Re
ta
ine
de
ar
nin
gs
Co
ns
oli
da
tio
n
res
er
ve
13,2
14
13,2
14
79
5
30
0
14,3
09
0
0
40
3
40
3
241
,719
241
,719
41
,03
1
10
,23
0
29
2,9
80
3,0
00
(3,0
00
) 0
0
(816
)
22
,43
0
22
,43
0
21
,614
(15
,79
7)
(15
,79
7)
5,8
17
1,6
04
(1,4
64
)
(1,4
64
)
140
(10
6)
(10
6)
34
(63
0)
1,6
73
1,6
73
1,0
43
(1,1
04
)
(1,1
04
)
(61
)
0
(2,5
76
)
(2,5
76
)
(4,9
79
)
7,5
55
0
43
,54
2
(43
,54
2)
38
,16
3
38
,16
3
38
,16
3
(38
,16
3)
44
,29
8
44
,29
8
44
,29
8
0
0
0
311
,28
0
0
0
(2,5
76
)
38
,16
3
22
,63
9
60
,80
2
36
9,5
06
0
(69
)
(4,9
79
)
49
,38
1
10,5
30
44
,29
8
(17
,00
7)
27
,29
1
451
,66
0
311
,28
0
0
0
(2,5
76
)
38
,16
3
22
,63
9
60
,80
2
36
9,5
06
0
(69
)
(4,9
79
)
49
,38
1
10,5
30
44
,29
8
(17
,00
7)
27
,29
1
451
,66
0
9,6
55
43
,54
2
3,0
00
56
,19
7
37
,76
0
93
,95
7
(8)
(8)
(69
)
(77
)
ANNUAL REPORT 2009
51
ANNUAL REPORT2009
ANNUAL REPORT 2009
52
ANNUAL REPORT2009
OVS SHANGHAI
ANNUAL REPORT 2009
53
ANNUAL REPORT2009
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
ANNUAL REPORT 2009
54
ANNUAL REPORT2009
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
STRUCTURE AND CONTENT OF YEAR-END FINANCIAL STATEMENTS
In accordance with Regulation no. 1606/2002 issued by the European Parliament and the European Council and adopted with Legislative Decree no. 38/2005 for the report closed on 31 January 2010 the Group has adopted the International Financial Accounting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and endorsed by the European Commission. For the purposes of this document, the term IFRS will be use to encompass Internazional Accounting Standards (IAS), as well as all the interpretation documents of International Financial Reporting Interpretations Committee (“IFRIC”), including those previously issued by Standing Interpretations Committee (“SIC”).
The consolidated financial statements of the Gruppo Coin as at 31 January 2009 have been prepared in compliance with the “Regulation containing implementation provisions for Italian Legislative Decree no. 58 of 24 February 1998, regarding issuers” (CONSOB regulation n. 11971 of 14 May 1999, and subsequent changes and integrations).
The consolidated financial statements of the Gruppo Coin composed of the Balance Sheet, the Profit and Loss Account, the Cash Flow Statement, the Statement of changes in equity and the Explanatory Notes, are presented in Euro (rounded up to the nearest thousand) as the current currency used in the economies in which the Group mainly operates, unless otherwise indicated. As regards the basis of presentation of the accounting statements, the Company has chosen to adopt balance sheet and income statement formats with the following characteristics: - Balance sheet – assets and liabilities are analysed by maturity, breaking down the relevant current and non-current items into assets and liabilities expiring within one year and after one year; - Profit and loss account – it is a vertical statement based on the type-of-expenditure analysis; - Cash Flow summary– it highlights cash flows coming from operating, financing and investment activity, using indirect method.
These notes provide a detail of the amounts shown in the Gruppo Coin consolidated financial statements through the analysis, the changes that have occurred in the year and the related comment. The notes are complemented by additional information deemed necessary to provide a true and fair presentation of the financial situation and the economic results of the Gruppo Coin.Details of changes in assets and liabilities were included only where significant.
Please refer to the Directors’ Report on Operations for information relating to the nature of the business activity, significant events occurring after the balance sheet date.
The financial statements are audited by the independent auditor PricewaterhouseCoopers S.p.A..
ANNUAL REPORT 2009
55
ANNUAL REPORT2009
Registred LocationCompanies Shares Capital % Ownership
Italians Companies
Gruppo Coin S.P.A.
Coin S.P.A.
Coin Franchising S.P.A
Oviesse S.P.A.
Oviesse Franchising S.P.A.
Upim S.R.L.
Brand Zero S.P.A.
Cosi - Concept Of Style Italy S.P.A.
Foreign companies
Gruppo Coin International S.A.
Oviesse D.O.O.
Oriental Buying Services Ltd
Obs India Private Ltd
Cosi International Ltd
Cosi Shanghai Company Ltd
Gruppo Coin Ungheria K.F.T.
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Lussemburgo
Slovenia
Hong Kong
Delhi - India
Hong Kong
Shanghai
Budapest -Ungheria
14,308,744.40
10,000,000
200,000
20,015,500
1,000,000
5,154,264
200,000
120,000
1,505,000
300,000
585,000
15,000,000
10,000
1,000,000
50,000,000
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
HKD
INR
HKD
RMB
HUF
Parent Company
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
CONSOLIDATION AREA
The following table shows the list of companies that were included in the consolidation using the “line-by-line” method:
The consolidated financial statements relate to the accounting period 1 February 2009 – 31 January 2010Where necessary, the financial statements used for the preparation of the consolidated financial statements have been appropriately reclassified and adjusted to bring them in line with the Group’s accounting policies.
ANNUAL REPORT 2009
56
ANNUAL REPORT2009
BASIS OF CONSOLIDATION
The consolidated financial statements include the financial statements of the companies of the Gruppo Coin S.p.A. and of those undertakings over which the group has the right to exercise control. The meaning of control is not restricted to the concept of legal ownership. Control exists when the Group has the right, either directly or indirectly, to direct the financial and operating policies of another undertaking with a view to gaining economic benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements starting from the date when the group gains control over the subsidiaries until such control ceases to exist.Companies not significant that are in liquidation or that are not material have been excluded from the consolidated financial statements. Their impact on the total assets and liabilities, the financial position and the economic result of the Group is not significant.Subsidiary companies excluded from the consolidation area have been valued using the equity method and included under “Equity investments”.
The main consolidation criteria adopted are listed below:• the book value of investments in subsidiaries that are consolidated using the “lineby-
line” method is eliminated, upon consolidation, against the related net equity, the assets and liabilities of the subsidiaries as well as their revenues, income and costs having been consolidated using the “line-by-line” method regardless of the stake held;
• intercompany balances and transactions as well as any unrealised income and expenses (except for any intercompany losses that provide evidence of an impairment of the asset transferred) arising on intercompany commercial or financial transactions are eliminated in full ;
• accounting for acquisitions of subsidiaries by the Group is based on the purchase method set forth in international financial reporting standard IFRS 3 Business Combinations. The cost of an acquisition is considered to be its fair value on the date of the exchange of the assets transferred, the liabilities incurred or the equity instruments issued by the acquirer in exchange for control of the acquire. This cost is increased by any costs which are directly attributable to the acquisition. According to the purchase method, the cost of the business combination is recognised by the acquirer as an asset from the acquisition date, through recognition of the fair value of the assets acquired and the liabilities and contingent liabilities assumed and recognition of goodwill measured as the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities. If the cost of the acquisition is lower than the identifiable assets acquired, the difference is recognized in profit and loss;
• any increases/decreases in the consolidated companies’ net equity that are attributable to results generated after the acquisition date of the investment are recorded, upon elimination, in a specific equity reserve called “Retained earnings/(losses) carried forward”;
• any dividends distributed by group companies are eliminated from the profit and loss account upon consolidation;
• the surplus of the purchase cost of minorities compared with the book value of shareholders’ equity pertaining to third parties was recorded directly under shareholders’ equity in the absence of any specific indication concerning this matter by international accounting standards.
Financial statements in foreign currencies
The financial statements of foreign subsidiaries denominated in currencies other than the Euro are converted by applying to assets and liabilities the exchange rate in force at the end of the quarter and to P&L items the average exchange rates for the period. Net equity is shown at the historical exchange rates conventionally identified as being the exchange rates in force at the end of the first financial year after the subsidiary’s inclusion in the consolidation area.The exchange differences due to the conversation of financial statements expressed in a foreign currency are directly attributed to net equity.
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ACCOUNTING POLICIES AND STANDARDS
The new accounting policies and standards adopted by the Group are shown below.
All items included in the financial statements have been valued by taking into account the prudence, accruals and going concern concepts of accounting.
Goodwill
Goodwill is carried at cost less any accumulated impairment losses. Goodwill acquired in a business combination is the excess of the cost of the business compared to minority in the fair value of net assets, liabilities and contingent liabilities recognized.Goodwill is not amortised but it is subject to impairment tests according to the provisions of IAS 36 (Impairment of assets) on an annual basis or where events or circumstances lead the group to believe that there may be an impairment loss. After the initial book entry, good will is valued at cost less accumulated losses in value.
Intangible fixed assets
Intangible assets are recorded at cost, net of amortisation calculated using the straight-line method over their expected useful lives and any permanent losses in value. The useful life is reviewed annually. In particular:
Brands – The brands resulting from the business combinations are recognized at fair value on the date of the business combinations, according to the purchase method. They are not amortised as their useful lives are indefinite, but they are subject to impairment tests as required by IAS 36 (Impairment of Assets) annually or whenever circumstances indicate that impairment might exist. After initial recognition, the brands are carried at cost less any accumulated impairment losses.
Authorisations (licenses) – The licenses resulting from the business combinations are recognized at fair value on the date of the business combinations, according to the purchase method. After initial recognition, the licenses are carried at cost less any accumulated impairment losses. The amortisation is carried out on a straight line basis over their useful lives that starting from 2006, has been defined of 40 years.The value of commercial licenses is submitted to impairment test on a yearly basis therefore, when this test should highlight in certain positions recoverable amounts below book value, in occasion of the preparation of the balance sheet for the following financial year, the determined loss will be recorded into the income statement. Furthermore the recovery value of the assets is checked yearly and adjusted, to consider possible changes in its own value.Please refer to note 8 “intangible fixed assets” to have the description of the criteria used to define useful life and recovery value at the end of the useful life.
Software – Costs of software licences, including any ancillary costs, are capitalised and included in the financial statements net of any accumulated impairment losses. The amortisation rate used is 20%.
Other intangible assets - Other intangible assets are entered under assets when they are identifiable, controlled by the Group, able to provide future economic benefits and their cost can be reliably determined. These assets are measured at their acquisition cost and amortised on a straight line basis over their useful lives. The value of the franchising network, recognized following the business combination, is amortised on the basis of a useful life of 20 years.
Tangible fixed assets
Property plant and equipment are measured at acquisition cost, including directly attributed accessory charges (those resulting from business combinations are recognized at fair value on the date of the business combination) net of amortization and accumulated impairment losses. Land is not amortised even if acquired at the same time as the building. Depreciation is accounted for starting from the month in which the tangible fixed asset is ready for use.Depreciation is charged monthly on a straight-line basis using rates that allow the tangible assets to be depreciated over their useful life or, in case of disposal, up to the last month of use.
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Buildings
Temporary constructions
Plant and equipment for lifting, loading, unloading, weighing, etc.
Miscellaneous machinery, apparatus and equipment
Special internal communication and remote signalling devices
Furnishing
Alarm systems
Specific plant for bars, restaurant and staff cafeterias
Bar, restaurant and cafeteria equipment
Furniture and ordinary office machinery
Electromechanical and electronic office machinery
Cash register
Vehicles and internal means of transport
3 – 6%
10%
7.5%
15%
25%
15%
30%
8%
25%
12%
20%
20%
20%-25%
The depreciation rates used are as follows:
Ordinary maintenance costs are charged in full to the profit and loss account of the year in which they are incurred.Improvements to leasehold property are shown under tangible fixed assets based on the nature of the cost incurred. The depreciation period corresponds to the estimated useful life of the asset or the unexpired term of the lease (generally 12 years), whichever is the shorter.Assets held under finance leases, through which all the risks and rewards incident to ownership are transferred to the Group, are recognized as tangible assets at their current value or, if lower, at the present value of minimum payments due for the lease with the contra entry being the financial liability towards the lessor.The liability is progressively reduced according to the capital repayment schedule included in the contractually agreed upon instalments, while the value of the asset which is recognized under tangible assets is amortised systematically based on its expected useful life.
Impairment of intangible and tangible fixed assets
IAS 36 provides for the assessment of any impairment losses in tangible and intangible fixed assets where impairment indicators arise indicating that a possible impairment may exist. This occurs at least once a year for goodwill and other intangible assets with an indefinite useful life or for authorisations (licenses) and assets which are not available for use.The recoverability of the amounts recorded is tested by comparing the carrying amount with the higher of the fair value (current realizable value) minus the cost of sales and the asset’s value in use. Value in use is defined by discounting the expected cash flows created by the asset .For the purpose of establishing if impairments have occurred, assets are analysed starting from the lowest level for which independent cash flows can be separately identified.The single Coin and Oviesse brand shops have been identified as being the cash generating units within the Group.If the recoverable value of an asset is lower than its book value, the latter is written down to the recoverable value. This reduction represents an impairment loss that is charged to the profit and loss account.If an indicator of reversal exists, the recoverable value of the asset is recalculated and the book value is increased to such higher amount.The increase in the book value cannot nevertheless exceed the net book value that the fixed asset would have had if the impairment had not occurred. The reversal of goodwill impairment losses is not allowed.
Financial assets
Financial assets, all but derivatives, are recorded under both current and fixed assets depending on their maturity and when they are expected to be converted in monetary assets. Financial assets include Investments in other undertakings (other than subsidiaries and associated companies), derivatives and receivables, as well as the availability and cash equivalents.
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For valuation purposes, the Group breaks down financial assets into the following categories: financial assets valued at fair value recorded in the profit and loss account, receivables and loans, financial assets to be held to maturity and financial assets available for sale. The decision regarding the classification of the various financial assets at the time of their initial recording rests with the Directors who, at each balance sheet date, verify that the original classification still applies.
a) Financial assets valued at fair value through profit and loss
This category includes both financial assets held for trading and derivative instruments that do not qualify for the application of hedge accounting.
b) Receivables and loans
Receivables and loans are represented by non-derivative financial assets with fixed or determinable expiration dates. These are included under current assets except for the part expiring after more than one year from the balance sheet date, which is classified under non-current assets.
c) Financial assets held to maturity
Financial assets to hold to maturity are represented by non-derivative assets with fixed or determinable payments and fixed expiration dates that the Group intends to hold till maturity. Assets are classified as current or non-current depending on whether they are expected to be realised within maximum 12 months after the balance sheet date.
d) Financial assets available for sale
Financial assets available for sale represent a residual category made up of non-derivative financial instruments that are allocated to this category by the Directors or that cannot be allocated to any of the other financial asset categories described above. These assets are included under non current assets unless the Directors intend to sell them within 12 months after the balance sheet date.
Financial assets, regardless of their classification, are initially recorded at fair value increased where applicable, by any ancillary purchase costs.Financial assets are written off when the rights to receive the cash flows associated with the financial assets have expired or have been assigned to third parties and the group has substantially transferred also all the risks and rewards of ownership.
After their initial recording, financial assets valued at fair value though profit and loss and financial assets available for sale are recorded at fair value. In the first case, any changes in fair value are recorded in the profit and loss account of the period to which they relate, in the second they are recorded in shareholders’ equity (reserve for available-for-sale assets). This reserve is recognised in the profit and loss account only when the financial asset is actually transferred or, in case of negative changes, when the loss in value temporarily charged to equity is not expected to be recovered.
Lastly, receivables and loans, as well as financial assets held to maturity, after their initial recording, are recorded in the accounting records at amortised cost, using the effective interest rate method. Any impairment losses are charged to the profit and loss account as a contra item of the related asset. The impairment loss is reversed and the asset restated to its previous value when the circumstances that had caused the write-down cease to exist.
As far as derivative financial instruments are concerned please refer to the specific paragraph below.
Inventor y
The balance of inventory at year end is stated at the lower of purchase cost and net realisable value. Purchase cost is calculated using the weighted average cost for the period of formation. The cost is also increased by the additional expenses directly related to purchases of goods.Goods relating to the collections are depreciated based on their presumed ability to realize future through the inclusion of a special fund.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and bank balances except for what indicated on note 1 “Cash and Bank”.Foreign currencies in hand are valued at year-end exchange rates.
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Provision for risks and charges
Provisions for risks and charges include the following provisions, divided according to type:
Provision for retirement pay and similar obligations - this includes mainly the liabilities and rights accrued by former Standa’s employees and the employees of Oriental Buying Services Ltd and OBS India Private Ltd. with regard to supplementary welfare contracts; the liability relating to these defined-benefit plans is calculated on the basis of actuarial assumptions and the amount stated in the financial statements is the present value of the Group’s liability.
Other provisions for risks and charges - These are amounts accrued in respect of current obligations which are expected to require the use of resources the amount of which can be reasonably and reliably estimated. The provision represents the best estimate of the costs expected to be incurred to settle the current obligation in full .
The risks of occur a reportable liabilities shall be subject to disclosure in the notes and shall not perform any provision.
Severance indemnity provision
Post-employment benefits are defined on the basis of plans that can be classified as “defined contribution” or “defined benefit”, depending on their features.Defined-benefit plans such as the employment termination indemnity fund accrued before the budget law for 2007 came into effect are those plans where the guaranteed benefits are paid to the employees at the termination of their employment. The liability connected with defined-benefit plans is calculated, as for the pension fund described previously, on the basis of actuarial assumptions and is recognised on an accrual basis in line with the labour service required to obtain the benefits. The liability is valued on an annual basis by independent actuaries.The employee termination indemnity fund and the pension funds mentioned above, calculated according to an actuarial method, require that the amount accrued during the year be recorded in the profit and loss account under “labour cost” while the notional financial charge is entered among net financial income (charges). Actuarial profits and losses reflecting the effects of the changes in the actuarial assumptions are recognised entirely in the Shareholders’ Equity items for the year in which they arise.From 1 January 2007, the Budget Law for 2007 and its implementation decrees have changed the provisions regarding the employment termination indemnity fund, introducing, among the various changes, the employees’ right to choose where to allocate their termination indemnity fund accrued. The choice had to be made by 30 June 2007. More specifically, the employees can decide whether to allocate the new flows of employee termination indemnity fund to a pension scheme of their choice or to keep it within the company (in which case, the employer shall pay the termination indemnity fund contributions into a specific treasury account set up with INPS).As a result of these changes, the employment termination indemnity fund accrued until the date of the employees’ choice (defined-benefit plans) was once again subject to an actuarial valuation by independent actuaries. Future salary increases were not taken into account. The amounts of employee termination indemnity fund accrued since the date of the employees’ choice and, in any case, since 30 June 2007, are deemed as “defined contribution” and therefore follow the same accounting treatment as that adopted for all the other contributions paid.
Financial payables
Financial payables are initially recorded at fair value, net of any transaction costs incurred to obtain the loans. They are subsequently stated at amortised cost; any difference between the amount received (net of transaction costs) and the total amount of repayments is recorded in the profit and loss account according to the duration of the loan, using the effective interest rate method (amortized cost). Upon transition to the new international accounting standards, this required the reclassification of the ancillary costs on the medium-long term loans capitalised under other intangible fixed assets as a set-off against the related loan and the recalculation of the amortisation plan of the loan using the internal rate of return calculated by taking into account such costs. Financial payables are classified as current liabilities unless the Group has the unrestricted right to repay the liability after more then 12 months after the accounting year end; in such case, only the amount of loans payable due within 12 months after that date is classified as current liability.
Financial derivative instruments
Derivative instruments are asset and liabilities measured at fair value.The Group uses financial derivative instruments to hedge foreign exchange or interest rate risks.
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In line with the provisions of IAS 39, financial derivative instruments can be accounted for according to the method established for hedge accounting only when: - at the inception of the hedge, the hedging relationship is formally designated and documented; - the hedge is expected to be highly effective; - the effectiveness can be reliably measured; - the hedge is highly effective throughout the various accounting periods for which it is designated.
When the derivative instruments meet the criteria for hedge accounting the following accounting treatment is applied: - if the derivatives hedge the change in fair value of assets or liabilities subject to hedging (fair value hedge, e.g. hedging of changes in fair value of fixed-rate assets/liabilities), the derivatives are carried at fair value and the effects are entered in the profit and loss account. Consistently, assets or liabilities subject to hedging are adjusted to take into account the changes in fair value connected with the hedged risk;
- if the derivatives hedge the change in cash flow of assets or liabilities subject to hedging (cash flow hedge, e.g. hedging of cash flow fluctuations of assets/liabilities due to the floating of interest rates), the changes in fair value of the derivatives are initially included in the shareholders’ equity and subsequently entered in the profit and loss account, in line with the economic effects generated by the hedged transaction.
If hedge accounting cannot be applied, the profits or losses from the fair value measurement of the derivative instrument are immediately entered in the profit and loss account.
Revenues and costs
Revenues are recognised to the extent in which it is probable that the economic benefits associated with the sale of goods or the provision of services will be obtained by the Group and that the related amount can be reliably determined. Revenues are entered at the fair value of the amount received or owed, taking into account the value of any commercial discounts, rebates or premiums granted.
Revenues from sales and services are entered when the relevant risks and benefits characterising the ownership or the completion of the provision are effectively transferred. Costs are recognised when they refer to goods or services sold or consumed during the year. In the case of multiannual costs, the costs are allocated on a systematic basis.
Income and costs of leasing
Income and costs due to operating leasing agreements are recognised at constant rates based on the duration of the contracts they refer to. Potential fees are recognised as income in the periods in which they are obtained.
Income taxes
Current taxes on the income for the year are calculated applying the rates in effect on the taxable income estimated in a reasonable way, in accordance with the tax provisions in effect. The amount due, net of payments on account and withheld, is entered in the item “Liabilities for current taxes”. (or in “Current tax assets” when the advance payments and withholdings exceed the estimated liability).
Assets for prepaid taxes and liabilities for deferred taxes are calculated on the basis of the temporary taxable differences between the book value of assets and liabilities and their tax value, except for goodwill not deductible for tax purposes, and are classified among non-current assets and liabilities. Income taxes are recorded in the profit and loss account, except for those connected with items directly credited or debited to the shareholders’ equity, in which case the tax effect is directly recognised in the shareholders’ equity Prepaid taxes are accounted for only when the recovery in future years is likely. The value of prepaid taxes is reassessed at every period closure and is reduced to the extent in which it is no longer likely that enough taxable income will be available in the future for the credit to be partially or totally used. Prepaid taxes and deferred taxes are calculated using the tax rates which are expected to be applicable in the year when the tax assets will be generated or the tax liabilities discharged, on the basis of the tax rates in effect, those issued and those virtually issued as at the financial statements date.
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The Italian companies of the Group, except for Wandar S.r. l . in liquidation and Upim srl, opted for the domestic tax consolidation on the basis of the offer made by the consolidating company Giorgione Investimenti S.p.AThe option lasts for three years and it was renewed on 8 July 2009.The relations arising from the adoption of the consolidation are regulated by specific contractual agreements approved and signed by all the companies involved.
Exchange differences
Transactions denominated in a foreign currency are recorded at the exchange rate of the day in which the transaction was carried out. Monetary assets and liabilities in a foreign currency are converted into Euro applying the current exchange rate at the year end, with the effect entered in the profit and loss account under financial income and charges.
Dividends
Dividends are entered in the balance sheet at the date of acceptance of the shareholders’ meeting resolution.
Basic earnings per share
Basic earnings per share are calculated by dividing the Group’s profit by the weighted average number of ordinary shares outstanding during the financial year. The Gruppo Coin calculates the diluted earnings per share using the same procedure applied for the basic earnings per share.
Use of estimates
When drafting financial statements and the relevant notes in application of International Accounting Standards, estimates and assumptions must be made that have an effect on the values of assets and liabilities in the financial statements and on the information relating to potential assets and liabilities at the date of the financial statements. Final results could differ from the estimates made. Estimates are used to record credit risk provisions, stock obsolescence, amortisations, depreciations of assets, staff benefits, restructuring funds, taxes, other risk provisions and evaluations of derivative instruments. Estimates and assumptions are reviewed periodically and the effects of any change are reflected immediately in the Profit and Loss Account.
Other information
Segment reporting: notwithstanding the application of the IFRS 8 standard starting from 1 February 2009, the Group identified the operating segments associated with the segment reporting, in the three main following signs, based on the qualitative and quantitative elements established by the same standard: - Oviesse - Coin - Upim (starting from 31 January 2010)
Application of IFRS Policies
The economic-financial results of the Group during 2009 and for the comparison period were prepared according to International Financial Reporting Standards (IFRS), approved by the European Union and in force at the date of preparation of this document.
There are not new IFRS and amendments to those applicable to the Group, with effect from 2009, which appear to be significant. In particular:- IAS 1 (revised) – Presentation of Financial Statements: according to the reviewed standard, all the variations generated by transactions with shareholders must be listed in a statement of changes in the shareholders’ equity. On the other hand, all the variations generated with third parties must be reported in a single overall profit and loss account statement or in two separate statements consisting of the profit and loss account and a statement of the other overall profit and loss account components, which must comprise all revenue and cost items, including the reclassification adjustments that are not accounted for in the profit for the year as requested or allowed by the other IFRS. The Group has applied the reviewed version of the standard since 1 February 2009 in a retrospective manner, highlighting the variations generated by the transactions with third parties in two statements called “Consolidated profit and loss account” and “Overall consolidated profit and loss account” respectively. The Group consequently amended the presentation of the Statement of changes in the shareholders’ equity.
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- IFRS 8 – Operating segments This policy requires that the information reported in the Sector informative report be based on elements utilised by management to make appropriate operating decisions; consequently the identification of operating segments should be carried out based on internal reporting that is regularly revised by management in order to allocate resources to different segments and in order to analyse performance. The Group considers that the information given is adequate to meet the requirements of this policy.- IAS 23 – Financial charges: the standard removes the option to immediately post the financial charges incurred with respect to assets for which a long time normally elapses to make the asset ready for use or sale, in the profit and loss account. The Group applied the standard prospectively from 1 February 2009 without any significant impact being generated in the period.- Amendment to IFRS 7 – Financial instruments: supplementary information: the amendment, which must be applied starting from 1 January 2009, was issued to increase the level of information requested in case of measurement at fair value and to strengthen the standards enforced on the subject of information on the risks of liquidity of the financial instruments. In particular, the amendment requires that information be provided as to the determination of the fair value of financial instruments by hierarchical measurement level. The adoption of this standard did not have any effect on the measurement and recognition of the accounting items and only influenced the type of information presented in the notes.
The following accounting standards, amendments and interpretations, reviewed also following the annual Improvement process 2008 conducted by IASB, are applicable for the first time from 1 January 2009, though not pertinent to the Group: • amendment to IFRS 2 – Vesting conditions and cancellation;• amendment to IAS 32 – Financial instruments: presentation;• IFRIC 13 – Customer Loyalty Programmes;• IFRIC 15 – Construction contracts;• IFRIC 16 – Coverage of foreign company shareholding;• minor changes to IFRS (“Improvements to IFRS”).It is noted that Group has not taken in advance accounting principles, interpretations and amendments have been approved by the European Union but that will come into force after December 31, 2009 the following: • in 10 January 2008, the IASB issued an updated version of the IFRS 3- Business combinations, and amended the IAS 27- Consolidated and separate financial statements The modified policies in the IFRS 3 regard, in the case of the acquisition in stages of subsidiary companies, the elimination of the obligation to evaluate the single assets and liabilities of the subsidiaries at the fair value in every successive acquisition. in the updated version of the policy it is provided that all costs related to the business combination are attributed to the income statement and that, at the date of acquisition, the liabilities for payments subject to terms and conditions are recognised. In the amendment of the IAS 27, instead, the IASB established that any modifications in the profit-sharing share which does not constitute a loss of control should have a counterpart in net equity. The amendment to the IAS 27 furthermore requires that all losses attributable to minority shareholders be allocated at the rate of minority net equity, even when they exceed their rate of attributed share capital of the investment. This variation is applicable prospectively starting from 1 January 2010.• IFRS 5 – Non-current assets held for sale and discontinued operations: the modification, which is to be applied prospectively starting from 1 January 2010, establishes that if a company is committed to a disposal plan which brings about the loss of control of the holding stake, all of the assets and liabilities of the subsidiary should be reclassified among assets held for sale, even if after the disposal of the company it will still hold a minority stake in the subsidiary.• amendment to IFRS 1 – First adoption of the International Financial Reporting Standard;• amendment to IAS 39 – Financial instruments: recognition and measurement;• amendment to IFRIC 9 – Redetermination of the value of implicit derivatives;• amendment to IAS 32 – Classification of rights issues;• IFRIC 17 – Distribution of non-cash assets to owners;• IFRIC 18 – Transfers of assets from customers.
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SEGMENTAL REPORTING
Starting from the year 2009, the accounting standard IFRS 8 “Operating segments” applies, which supersedes IAS 14 standard “Segment reporting”. According to the new standard, segment reporting must be represented on the basis of the elements used by the management to take operating decisions and provide financial investors with significant data on corporate operations. Based on internal reports periodically reviewed by the management, the Group’s activity was identified in a main segment represented by the activity related to the sign.
At 31 January 2010 the Group’s operating activities can be broken down into three main brands: - Oviesse - Coin - Upim
The remainder is represented by service companies.
It is noted that UPIM had no economic impact, since the acquisition was completed at the end of the financial year.
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The results analysed by brand at 31 January 2010 are as follows (million Euro):
Ledgeraccount
Ledgeraccount
870.6
732.4
138.2
(41.3)
96.9
867.6
867.6
476.7
39.9
319.0
311.1
7.9
(16.0)
(8.1)
306.3
306.3
124.6
10.1
Managementaccount
Oviesse Coin
Managementaccount
Reclas.(a)
Reclas.(a)
Net Sales
Operating costs
EBITDA
Depreciation
EBIT
Total Assets
Total Liabilities
Net Equity
Intangible/fixed assets
investments
3.5
(3.5)
(3.5)
0.9
(0.9)
(0.9)
870.6
728.9
141.7
(41.3)
100.4
867.6
867.6
476.7
39.9
319.0
310.2
8.8
(16.0)
(7.2)
306.3
306.3
124.6
10.1
Ledgeraccount
Ledgeraccount
8.2
8.1
0.2
(0.1)
(14.1)
(14.0)
(1.2)
(15.2)
107.8
107.8
48.4
9.7
316.9
316.9
149.5
Management account
Management account
Other and not allocated UPIM
Reclas. (b)
Reclas. (b)
Net Sales
Operating costs
EBITDA
Depreciation
EBIT
Net financial income/(charges)
OPERATING RESULT
Non recurring income/(charges)
PRE-TAX PROFIT/(LOSS)
Income taxes
NET PROFIT/(LOSS)
Total Assets
Total Liabilities
Net Equity
Intangible/fixed assets
investments
(1.2)
1.2
1.2
4.5
5.7
(1.2)
4.5
8.2
9.2
(1.0)
(0.1)
(1.1)
(18.6)
(19.7)
(19.7)
107.8
107.8
48.4
9.7
316.9
316.9
149.5
Ledgeraccount
1,197.8
1,051.6
146.2
(57.4)
88.8
(14.1)
74.7
(1.2)
73.6
(29.3)
44.3
1,598.6
1,598.6
799.2
59.7
Total
Management account
Reclas. (a.b)
3.3
(3.3)
(3.3)
4.5
1.2
(1.2)
1,197.8
1,048.3
149.5
(57.4)
92.1
(18.6)
73.6
73.6
1,598.6
1,598.6
799.2
59.7
(a) EBITDA includes reclassification of the exchange-rate differences emerging from exchange-rate risk hedging activity effected on purchases of goods. For accounting purposes these items have been classified under financial income and charges. As at 31 Jan 2010 reclassification amounts to a value of 4,5 million of Euro.(b) EBITDA and EBIT are to be considered reclassified excluding non-recurring charges ( this value amounts to 1,2 million as at 31 Jan 2010).
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The results analysed by brand at 31 January 2009 are as follows (million Euro):
Note:The reclassification of operating costs in the not allocated column include the net balance of income and non-recurring charges.
Ledgeraccount
Ledgeraccount
2.0
3.2
(1.2)
(1.8)
(3.0)
(24.6)
(27.6)
(27.6)
165.3
165.3
55.1
10.9
1,145.4
1,006.2
139.2
(51.2)
88.0
(24.6)
63.4
63.4
(25.2)
38.2
1,292.9
1,292.9
620.3
74.3
Managementaccount
Other and not allocated Total
ManagementaccountReclas. Reclas.
Net Sales
Operating costs
EBITDA
Depreciation
EBIT
Net financial income/(charges)
OPERATING RESULT
Non recurring income/(charges)
PRE-TAX PROFIT/(LOSS)
Income taxes
NET PROFIT/(LOSS)
Total Assets
Total Liabilities
Net Equity
Intangible/fixed assets
investments
0.1
(0.1)
(0.1)
(5.6)
(5.7)
(0.1)
(5.6)
(5.5)
5.5
5.5
(5.6)
(0.1)
0.1
2.0
3.1
(1.1)
(1.8)
(2.9)
(19.0)
(21.9)
(0.1)
(22.0)
165.3
165.3
55.1
10.9
1,145.4
1,011.7
133.7
(51.2)
82.5
(19.0)
63.5
(0.1)
63.4
1,292.9
1,292.9
620.3
74.3
Ledgeraccount
Ledgeraccount
803.7
663.3
140.4
(34.3)
106.0
817.3
817.3
448.9
44.3
339.7
339.7
(0.0)
(15.0)
(15.0)
310.3
310.3
116.3
19.1
Managementaccount
Oviesse Coin
ManagementaccountReclas.
Reclas.
(4.7)
4.7
4.7
(0.9)
0.9
0.9
803.7
668.0
135.6
(34.3)
101.3
817.3
817.3
448.9
44.3
339.7
340.6
(0.9)
(15.0)
(16.0)
310.3
310.3
116.3
19.1
Net Sales
Operating costs
EBITDA
Depreciation
EBIT
Total Assets
Total Liabilities
Net Equity
Intangible/fixed assets
investments
ANNUAL REPORT 2009
67
ANNUAL REPORT2009
ANALYSIS OF CONSOLIDATED BAL ANCE SHEET ITEMS
The content and the changes occurring in primary items vs. financial statements for the year ending on 31 January 2009 are detailed below (unless otherwise specified, amounts are shown in thousand Euro).
COMMENT TO THE MAIN ASSET ITEMS
BUSINESS COMBINATIONS
Tre.Bi. S.p.A. acquisition
As indicated in the balance year ended January 31, 2009, please note that on 15 December 2008, Oviesse S.p.A. completed the acquisition of 100% of the capital of Tre.Bi. S.p.A. . Said acquisition took place according to what is provided by the “Business combinations” IFRS international accounting policy, and as such, was accounted for according to the purchase method. It is noted that based on what is allowed by the IFRS 3, the initial accounting of the aforementioned business combination was determined temporarily. The limited period of time that passed between the acquisition date—15 December 2008—and the preparation of the Financial Statements at 31 January 2009 did not, in fact, allow for concluding all of the activities necessary for proceeding with the completion of the business combination; consequently, at 31 January 2009, part of the cost of the business combination was not allocated to the assets acquired and, so, this portion of the cost was registered at the initial accounting as goodwill . At the end of the 2009 period and within twelve months from the acquisition date, the “Purchase Price Allocation” process was definitively completed.Furthermore, on 1 March 2009 Oviesse S.p.A. proceeded to the merger of Tre.Bi. S.p.A. and its subsidiaries. The transaction became fiscally effective as of 1 February 2009.
For comparative purposes, it is hereby specified that some figures in the consolidated financial statements for the year 2008 were reviewed compared to those examined by the Shareholders’ meeting of 25 May 2009, following the definitive accounting of the corporate aggregation commented herein.Here below are the differences in the consolidated financial statement of the balance sheet arising from the above:
Jan 31st2010
re-esposed
Jan 31st2009
published
Cash and cash equivalents
Trade receivables
Inventories
Financial assets
Current tax assets
Other receivables
Property, plant and equipment
Intanbigle fixed assets
Goodwill
Equity investments
TOTAL ASSETS
65,217
53,528
234,006
34,723
3,105
27,325
255,021
502,511
121,305
955
1,297,696
0
0
294
0
0
0
(694)
10,854
(5,688)
0
4,766
65,217
53,528
233,712
34,723
3,105
27,325
255,715
491,657
126,993
955
1,292,930
ChangeASSET
ANNUAL REPORT 2009
68
ANNUAL REPORT2009
Jan 31st2010
re-exposed
Jan 31st2009
published
Financial liabilities
Due to suppliers
Current tax liabilities
Other payables
Employee termination indemnity provision
Provisions for risks and charges
Current tax liabilities
TOTAL LIABILITIES
NET EQUIT Y
TOTAL LIABILITIES AND NET EQUIT Y
350,783
350,000
2,828
81,855
61,950
14,661
66,113
928,190
369,506
1,297,696
0
0
0
0
0
1,358
3,408
4,766
0
4,766
350,783
350,000
2,828
81,855
61,950
13,303
62,705
923,424
369,506
1,292,930
ChangeLIABILITIES AND NET EQUIT Y
The main variation compared to the provisional allocation lies in the recognition of the fair value of the administrative authorisations (licences) regarding some sales outlets for Euro 10,854 thousand and the related fiscal effect (deferred taxes for Euro 3,408 thousand).The definitive accounting of the corporate aggregation led to the recognition of goodwill for Euro 23,710 thousand, calculated as follows:
Compared to the goodwill entered in the Consolidated Financial Statements for the year 2008 following the provisional accounting of the corporate aggregation (equal to Euro 29,398 thousand), the definitive goodwill is Euro 5,688 lower, as illustrated in the comparisons reported in the aforementioned statements.
Upim S.r. l . acquisition
As indicated in the Annual Report under “Acquisition of Upim” in which refers to a description of the transaction, please note that on January 28, 2010, Gruppo Coin SpA has completed the acquisition of 100% capital Upim Srl. According to standard IFRS 3 “Business combination”, this acquisition also led to a corporate aggregation, which as such was accounted for according to the “purchase method”.According to the provisions of IFRS 3 and considering that the acquisition of Upim S.r. l . was completed at the end of 2009, the initial accounting of the aforementioned corporate aggregation was calculated provisionally. As a result, the Goodwill was calculated on the basis of the provisional and partial identification of the fair value of the acquired assets, liabilities and potential liabilities.Within twelve months from the acquisition date, the accounting of the aforementioned corporate aggregation will be completed definitively by identifying and measuring the acquired assets and liabilities.
Reported below is the information requested by the international accounting standard IFRS 3 with regard to aggregation.
Net fair value acquired
Business combination costs
GOODWILL
(4,273)
19,437
23,710
ANNUAL REPORT 2009
69
ANNUAL REPORT2009
Entities partecipating in the combination
The entities involved in the aggregation are Gruppo Coin S.p.A., as purchasing entity, and Upim S.r. l . as acquired company. Reported below is a table regarding the acquired entity, stating the percentage of equity instruments with voting right acquired directly by Gruppo Coin S.p.A.:
At the acquisition data, Upim S.r. l . had 149 stores (of which 15 Blukids), 30% of which had a Class A location, for a total of more than 210,000 square meters of sales area.
Business combination cost
The cost of the corporate aggregation equals Euro 55,061 thousand and comprises the total fair value of the issued and assigned equity instruments and the costs directly attributable to the corporate aggregation, as detailed below.
Ancillary operating costs mainly refer to due diligence costs and notary and legal fees.
Company nameRegistredLocation Shares Capital % Ownership
Upim S.r. l . Ve-Mestre 5,154,264.00 a 100%
- cash *
additional costs
BUSINESS COMBINATION COST
49,381
5,680
55,061
* The purchase price is determined by n. 7,948,132 new shares issued and No 2,558,426 shares allotted to the member exchange in December 2007 SpA at Euro 4.70 per share equal to official market value of the day January 28, 2010.
(in thousand Euro)
ANNUAL REPORT 2009
70
ANNUAL REPORT2009
Intangible assets
Goodwill
Other intangible assets
Financial assets
Inventories
Trade receivable and other receivables
Cash equivalents
Net tax assets
Severance indemnity provision
Provision for risk and charges
Bank debts
Debts payable to other financial creditors
Trade payables and other payables
TOTAL ASSETS AND LIABILITIES
GOODWILL ELIMINATION
ADJUSTED NET EQUIT Y
62,196
44,563
3,408
33
35,558
34,622
42,755
38,778
(17,988)
(7,574)
(105,336)
(747)
(168,977)
(38,709)
(44,563)
(83,272)
Book values at the acquisition date
Since the acquisition was perfected on 28 January 2010, the consolidated financial statements of Gruppo Coin only include the equity data of Upim S.r. l . as at 31 January 2010, when the latter closed a financial period of 4 months, from 1 October 2009 to 31 January 2010.The effect on the cash flow of the year deriving from the corporate aggregation was an increase in acquired cash and cash equivalents for Euro 42,755 thousand, since at the end of the financial periods the accessory costs associated with the transaction had not yet been paid.The revenue and the gross operating margin of the entity resulting from the aggregation, assuming the start of the financial period (1 February 2009) to which these financial statements refer as the acquisition date, according to IFRS 3, would amount to Euro 1,671.1 million and Euro 124.8 million, respectively.
Fair value of assets, liabilities and potential liabilities acquired
As stated above, given the short time passed between the acquisition and the preparation of the Financial Statements, the net fair value of the assets and liabilities of Upim could not be calculated. Therefore, the provisional allocation is based on the accounting values of Upim S.r. l . on the acquisition date, as suitably calculated on the basis of the international accounting standards (“IFRS”) adopted by Gruppo Coin. The fair value of the acquired net assets equals Euro 83,272 thousand and is broken down as follows (data in thousands of Euro):
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71
ANNUAL REPORT2009
Account net equity on the date of acquisition
Assumption of liabilities
TOTAL ASSETS AND LIABILITIES ACQUIRED
Goodwill elimination
NET EQUIT Y RECTIFIED ON THE DATE OF ACQUISITION
Interests of minority
NET FAIR VALUE NOTICED ON THE DATE OF ACQUISITION
Business combination cost
GOODWILL (BADWILL)
(37,962)
(747)
(38,709)
(44,563)
(83,272)
-
(83,272)
55,061
138,333
(in thousand Euro)
This goodwill represents the future economic benefits resulting from the corporate aggregation, mainly due to the wealth of expertise and skills developed by Upim throughout the years; these represent a potential contribution to future profitability and the generation of cash flow for Gruppo Coin, deriving from the ability to satisfy customers’ needs, and quantifiable in terms of increased profitability and cash flow that will be generated as a result of the transaction.The future economic benefits are guaranteed by a set of commercial strategies and information that Upim holds with regard to the merchandised products and customers’ requirements, which it has created and developed throughout its history to assert itself and achieve the loyalty of new customers and markets. This intangible wealth of practical knowledge summarises the commercial know-how of the acquired company.As specified above, the net fair value of the acquired assets was calculated only provisionally; therefore, the respective values that will be calculated at the time of the definitive accounting as well as the value attributed to the goodwill may significantly deviate from the values recorded on the date of these financial statements.
Acquisition of business units
On 23 June 2009, Oviesse S.p.A. acquired a company branch targeting the retail sale of non-food products, of which 6 DEM brand outlets located in Veneto are part. Also for this acquisition, which led to a corporate aggregation, accounting followed the “purchase method”. The cost of the corporate aggregation was equal to a collection of Euro 35 thousand paid by the Seller to Oviesse S.p.A., which did not give rise to accessory costs.
The following shows the assets and liabilities definitively determined compared to values defined in the first interim accounts and highlighted in the consolidated financial statements closed on 31 July 2009 (thousands of euros):
The comparison between the cost of the business (collection of 35 thousand Euro) and the fair value of net assets acquired is not found then any goodwill .
Fixed and Intangible assets
Severance indemnity provision
Other payables to employees
TOTAL ASSETS AND LIABILITIES ACQUIRED
Final fair value
Fair value recordedtemporarily at the
acquisition date
776
(719)
(92)
(35)
305
(719)
(92)
(506)
Recognised start-up following the business combination
A comparison between the cost of the corporate aggregation and the profit-sharing portion of the purchaser in the net fair value of the assets and liabilities revealed a residual provisional goodwill of Euro 138,334 thousand, as specified in the table below:
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72
ANNUAL REPORT2009
CURRENT ASSETS
The balance is represented by liquid funds at the year end and can be analysed as follows(thousand Euro):
Cash and cash equivalents are made up of cash, cheques and cash equivalents deposited at the Headoffice and the DOS network stores. The significant increase is mainly due to the consolidation of Upim S.r. l . , whose cash and cash equivalents reach Euro 42,755 thousand. Reference is also made to the previous paragraph “Acquisition of Upim S.r. l . ” for an analysis of the cash flow deriving from the corporate aggregation.
The analysis of trade receivables at 31 January 2010 and 2009 is as follows (thousand Euro):
Receivables in litigation are totally written off.
1 Cash and cash equivalents
Previous year
Increase
118,715
65,217
53,498
2 Trade receivables
Previous year
Increase
75,035
53,528
21,507
Jan 31st2010
Jan 31st2009
1) Bank and postal deposits
2) Cheques
3) Cash on hand
TOTAL
111,875
3
6,837
118,715
60,127
0
5,090
65,217
51,748
3
1,747
53,498
Change.
Jan 31st2010
Jan 31st2009
Trade receivables
Receivables for retail sales
Wholesale cust. goods
Due from Fididalia SpA
Wholesale cust. non goods
Receivables in dispute
Subsidiaries
SUBTOTAL
(provision for bad and doubtful debts)
TOTAL
2,219
75,419
170
11,114
7,938
1,338
98,198
(23,163)
75,035
1,434
45,050
350
10,370
7,757
147
65,108
(11,580)
53,528
785
30,369
(180)
744
181
1,191
33,090
(11,583)
21,507
Change.
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73
ANNUAL REPORT2009
The change in the provision for bad and doubtful debts is mainly attributable to an accrual of 3,418 thousand Euro and an utilisation of 4,505 thousand Euro and also for including Upim srl in consolidation for 12,670 thousand Euro.During the 2008 financial year there were accrual of 2,750 thousand Euro and an utilisation of 1,493 thousand Euro and inclusion in consolidation of Tre.Bi. S.p.A. for 804 thousand Euro.Provisions concern receivables vs. franchisees or commercial partners for which payment could be difficult, due to litigations or mostly for insolvency procedures of the clients.
The book value of trade receivables is considered to be the same as their fair value.
This item includes goods stored at warehouses and sale stores at the balance sheet date. The increase in value comes from to the consolidation of Upim S.r. l . on 31 January 2010.The amount shown is basically in line with the value that would be obtained by valuing the inventory at market value at the financial year end and is net of a provision 39,899 thousand Euro (of which 16,150 regarding UPIM) for slow-moving stock (23,292 thousand Euro at the end of previous year).
Changes in inventory for the period July 2009 – January 2010 have been estimated (7,816 thousand Euro, 6,974 Euro as of January 31, 2009) as the Group carries out the stock count in June every year. Given the aforesaid provision, the trend in the changes in inventory is in line with the trend of the sector.
The amount shown at the end of last financial year refers exclusively to the registration of the market value of derivative financial instruments. For further information about derivative financial instruments see the paragraph “Management of financial risk”.
3 Inventories
Previous year
Increase
260,139
234,006
26,133
4 Financial assets
Previous year
Decrease
6,985
22,597
15,612
5 Current tax assets
Previous year
Increase
3,760
3,106
654
31 Januar y 2009
Provision for the period
Change in consolidation area
Utilization
31 Januar y 2010
Depreciation found
Inventoriesfound Total
23,292
11,103
16,150
(10,646)
39,899
6,974
12,940
--
(12,098)
7,816
30,266
24,043
16,150
(22,744)
47,715
ANNUAL REPORT 2009
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ANNUAL REPORT2009
These are mostly credits for advanced taxes and other amounts receivable from tax authorities for withheld taxes. As at 31 January 2010, the advances paid during 2009 are higher than the accrued Ires tax; consequentially, the exceeding amount equal to Euro 1,963 thousand was posted under Assets for current taxes, as a receivable from Giorgione Investimenti S.p.A. Gruppo Coin S.p.A., Coin S.p.A., Oviesse S.p.A., Oviesse Franchising S.p.A., Coin Franchising S.p.A., Brand Zero S.p.A. and C.O.S.I . S.p.A. exercised the option for the purpose of adhesion to the tax consolidation, with the company Giorgione Investimenti S.p.A. as the consolidating party. By virtue of the option, specific agreements were formalised between the specified companies, which govern the relevant behaviour and provide for the transfer of Ires credits/ debts via Gruppo Coin S.p.A.
Other receivables can be analysed as follows:
“Receivables from others” refers primarily to receivables from social security institutions, advances to suppliers and deliverer. The significant increase in this heading is attributable primarily to the acquisition of Upim.The item “Prepayments – Other” includes the current portion of the prepayments on financial commissions (1,443 thousand Euro) incurred to obtain the mid/long-term revolving line of credit in April 2007. This line of credit will be better illustrated in the next paragraph “Net financial position. The accruals of these costs refer to the subsequent year. The same item includes prepaid expenses on advertising (1,176 thousand Euro) and 858 thousand Euro related to technical performance during a renovation project involving a new store in Milan.
6 Other receivables
Previous year
Increase
40,176
22,408
17,768
Jan 31st2010
Jan 31st2009
Receivables from others
Other receivables
Insurance receivables
Other amounts due from employees
Accrued income and prepaid expenses
Lease rentals and shared running expenses
Insurance
Interest on guarantee deposits
Other
TOTAL
4,431
1,158
1,977
26,206
303
171
5,930
40,176
1,977
1,886
1,526
13,106
320
175
3,418
22,408
2,454
(728)
451
13,100
(17)
(4)
2,512
17,768
Change
ANNUAL REPORT 2009
75
ANNUAL REPORT2009
Balance as at 31/01/2009
Increaseduring year
Decreaseduring year
Depreciationfor the period
Balance as at 31/01/2010
Buildings held underleasing contracts
Original cost
Depreciation
Net
Lands held underleasing contracts
TOTAL
7,800
(1,170)
6,630
7,400
14,030
--
--
--
--
--
--
--
--
--
--
--
(234)
(234)
--
(234)
7,800
(1,404)
6,396
7,400
13,796
NON CURRENT ASSETS
Appendix 2 displays, for each item, historical cost, accumulated depreciation, changes occurring during the year and final balances.
Increases in fixed assets for the period, amounting to 53,472 thousand Euro, related mainly to: - modernization, restoration and re-qualification of the sale network stores; - purchase of furniture and furnishings for the sale network to furnish newly-opened stores and the renovated ones.
The increase in the “Real estate and buildings” item regards, other than improvements to leasehold property attributed to this category, interventions on the property at the Venezia- Mestre headquarters. Improvements to leasehold property relates mainly to restoration works carried out to leasehold stores. As shown in attachment 2 the increase in the item is due to change in the consolidation on Upim Srl determining an impact on this item of 62.196 million Euro. The most significant decreases concerned part of the headquarters, the sales points undergoing rebuilding, rather than closures/disinvestments. According to IAS 36, for business that has indicators of impairment, the Group has assessed the recoverability of the related assets using the discounted cash flow method. These assessments have led to write downs for impairment losses in the year of 780 thousand Euro (of which 704 thousand Euro relating to depreciation arising from the results of impairment testing of 2009 Oviesse SpA).
The item ‘real estate and buildings’ included under ‘Buildings, plants and machinery’ is made up as follows:
7 Property, plant and equipment
Previous year
Increase
320,978
255,021
65,957
8 Intangible fixed assets
Previous year
Decrease
502,254
502,511
257
Intangible fixed assets as at 31 January 2010 mainly included the following assets, net of the amortisation for the year, deriving from 1) the acquisition of the control of Gruppo Coin S.p.A. obtained in May 2005 by Bellini Investimenti S.p.A., now called Gruppo Coin S.p.A. and 2) Tre.Bi S.p.A. acquisition and subsidiaries on 15 December 2008 : - Brand Coin equal to 61.4 million Euro, with endless useful life; - Brand Oviesse equal to 216.5 million Euro, with endless useful life; - Franchising network equal to 37.7 million Euro to be amortized in 20 years; - Coin stores local goodwill equal to 55.8 million Euro, to be amortized in 40 years; - Oviesse stores local goodwill equal to 109.6 million Euro (of which 10.7 million Euro regarding ex Tre.Bi. S.p.A. stores), to be amortized in 40 years.
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ANNUAL REPORT2009
With regard to the useful life of the business authorisations, it is reminded that their validity is estimated to be equal to 40 years, on the basis of the historical analyses performed within the Group.Note the insignificance of the deadline attributable to the duration of leasing contracts. In fact, the lessee is protected by market practice and by specific legal provisions together with a further strategy to gradually expand the network implemented by the Group which usually renews leasing contracts before their natural expiry. All these elements have led, in time, to a subsequent, almost total, pursuit of a renewal policy.
We point out that has been defined a “residual value” at the end of the useful life, not subject to depreciation, equal to 18 monthly lease rent, as representative of the terminal value to be recognized to the landlord if the rent would not renewed for causes not attributable to Gruppo Coin.
The item industrial patents and know-how mainly includes costs for investments in software programmes (€ 12,983 million). The period increase regards the implementation of a new automated logistic system in order to respond in an even timelier manner to the multiple variables that are demonstrated in the Group’s segment.
In compliance with the provisions of IAS 36, where an indicator of impairment exists, the Group tests its businesses for impairment using the discounted cash flow method. These valuations have led to write-downs for impairment losses of 978 thousand Euro.
Impairment test
As provided for by IAS 36, the Group tests goodwill for impairment once a year or more frequently where there are indicators of impairment. The recoverable value of the cash generating units to which the single goodwill amounts have been attributed is tested by assessing their value in use and/or their fair value.
Impairment test of start-up and other intangible fixed assets with indefinite life Consistent with what is indicated by IAS 36, the start-up and the Coin and Oviesse brands underwent impairment tests proceeding with the determination of the value in use for each brand as previously defined in the explanatory notes.In the specific case, the CGU to which the start-up for the verification of any impairment is attributed is constituted by the Oviesse brand.The main assumptions used in arriving at the calculation of the value in use of the cash generating units relate to the discount rate and the growth rate. In particular, the Group has adopted discount rates that reflect the current market valuations of the value of money and that take into account the specific risks associated with the single cash generating units.The recoverable value of these assets has been calculated with reference to their ‘value in use’, calculated using a discount rate equal to 8.20% and a growth rate for the period following the three-year budget at 1.5%.Based on the analysis carried out, the start-up and the brands do not prove to have undergone any impairment.The Group provided for carrying out a sensitivity analysis, assuming an increase of discounting back rate of 1.5%, all other conditions being unvaried. The results of these models pointed out potential depreciations.
ANNUAL REPORT 2009
77
ANNUAL REPORT2009
Impairment test of administrative authorisations regarding sales outletsAdministrative authorisations regarding Coin and Oviesse sales outlets underwent impairment tests proceeding to the determination of the value in use for each sales outlet. The main assumptions utilised in the determination of the value in use regard the discounting back rate and the growth rate. In particular, the post-tax discount rate utilised is 8.20% and no growth rate was indicated for the period following the budget. During the current period, the administrative authorisations regarding 3 cash generating units of the Oviesse segment.
Results of impairment test are summarized in the following table, where write off and revaluation posted on 2009 and included in “depreciation and write off” are detailed per segment (in thousand Euro):
The item relates to the goodwill deriving from the acquisition of the control of Gruppo Coin S.p.A. obtained in May 2005 by Bellini Investimenti S.p.A., now called Gruppo Coin S.p.A. for Euro 97,595,000 and to goodwill related to the business combination of the Tre.Bi. Group for Euro 23,710,000, and to the temporarily determined goodwill related to the business combination of Upim srl for Euro 138,333,000 as better described in the initial paragraph on business combinations.
Intangible assets
Periodic writedowns
TOTAL INTANGIBLE ASSETS
Tangible assets
Periodic writedowns
TOTAL TANGIBLE ASSETS
Oviesse Totale
(978)
(978)
(704)
(704)
(978)
(978)
(704)
(704)
9 Goodwill
Previous year
Increase
259,638
121,305
138,333
ANNUAL REPORT 2009
78
ANNUAL REPORT2009
This item is made up as follows:
The decrease compared with the previous period is attributable to the C.O.S.I . S.p.A. and Gruppo Coin Ungheria Kft companies, which by 2009 are included in the consolidation, and to the Gruppo Coin Department Store d.o.o. formed in Serbia and 100% owned by the parent.
The amount indicated refers to the recognition of the market value of derivative financial instruments accounted in hedge accounting expired for more than 12 months. For more details, refer to the “Exposure and financial risk management”.
10 Equity investments
Previous year
Decrease
722
955
233
11 Financial assets
Previous year
Decrease
4,532
12,126
7,594
12 Other receìvables
Previous year
Decrease
5,679
4,917
762
Wandar S.r. l . in liquidation
Gruppo Coin Ungheria Kft
C.O.S.I . S.p.A.
Marciana Finanziaria S.p.A.
Centomilacandele S.c.p.A.
Le Porte Franche Gestione S.c.a.r. l .
Gruppo Coin Dep. Store d.o.o.
Idroenergia s.c.a r. l .
Consorzio Remedia
Consorzio Operatori Piacenza
Consorzio Operatori Meraville
TOTAL
Jan 31st2010
Book value
Jan 31st2009
Book value
511
--
--
74
81
1
50
1
1
1
2
722
511
199
120
74
50
1
--
--
--
--
--
955
Company name
ANNUAL REPORT 2009
79
ANNUAL REPORT2009
Other receivables can be analysed as follows:
Collateral deposits relate mainly to the deposits paid in respect of lease and utility agreements.
Receivables for wholesale sales relate to sums due by associated companies expiring after more than one year.
Note the prepayment relating to financial charges incurred in obtaining revolving credit lines referring to the loan contract stipulated in April 2007 and to the new revolving credit line obtained in January 2010 regarding the acquisition of Upim. The amount shown includes costs for commissions and consultancy services. For details in relation to these funds, see the next paragraph “Net financial position”.
The amount highlighted represents short-term payables due to banks (121.7 million Euro), due to leasing companies and others financial bakers (4.7 million Euro), and to subsidiaries under liquidation (0.5 million Euro) and derivative instruments (3.4 thousands Euro). Further information about the present loan will be found on “Net Financial Position” paragraph.
These represent current payables outstanding for the supply of goods, fixed assets and services. The trade payables balance includes all payables vs. foreign suppliers (mainly from Asia) for 65,516 thousand Euro; the balance also includes payables denominated in foreign currency (mostly US$) of 58,841 thousand US$, and payments on account of 7,422 thousand US$.The increase from January 31, 2009 is due to the inclusion of Upim Srl in consolidation.
Jan 31st2010
Jan 31st2009
Other receivables
Due from taxes authorization
Security deposits
Dues from customers not for goods m/l term
Deferral financial exp. m/l term
TOTAL
203
3,556
148
1,772
5,679
390
2,582
848
1,097
4,917
(187)
974
(700)
675
762
Change
Jan 31th2010
Jan 31st2009
Current tax liabilities
Amounts due to taxation authorities for current year taxes
TOTAL
1,242
1,242
2,828
2,828
(1,586)
(1,586)
Change
CURRENT LIABILITIES
13 Financial liabilities
Previous year
Decrease
130,336
131,937
1,601
14 Trade payables
Previous year
Decrease
459,595
350,000
109,595
15 Current tax liabilities
Previous year
Decrease
1,242
2,828
1,586
ANNUAL REPORT 2009
80
ANNUAL REPORT2009
The amount shows the tax liabilities of foreign companies operating and the balance of the IR AP (Italian Regional Business Tax) debt. As at 31 January 2009 the item included the debt to Giorgione Investments SpA for 2,679 thousand Euro relating to the contract for fiscal consolidation, while as at 31 January 2010 there are advances made during 2009 than the amount of IRES matured, so the surplus was exposed between the current tax assets (see also note 5).Finally, there are no pending disputes between the Financial Administration and the Group’s companies. Furthermore, on 29 March 2010 an inquiry was started by the Inland Revenue Regional Directorate with reference to the financial period ended on 30 September 2008, towards Upim S.r. l . As of the date of these statements, no remarks or findings have emerged that are such to give rise to the need for the allocation of provisions. In any case, it is highlighted that, with regard to the Upim acquisition transaction, the seller has provided some guarantees in this respect
Other payables at 31 January 2010 and at 31 January 2009 can be analysed as follows:
Amounts due to personnel relate to sums matured and due to employees but not yet paid at 31 January 2010. The significant increase was mainly due to inclusion in the consolidation of Upim Srl, to the new stores opening, and to the higher MBO / bonuses accrued in comparison with the previous year.
16 Other payables
Previous year
Decrease
119,405
81,855
37,550
Jan 31st2010
Jan 31st2009
Other payables
Due to employees for holiday leave
Other amounts due to employees
Due to directors, statutory auditors and shareholders
Amounts due to parent companies
Other payables
Due to Social Security
VAT payables
Other tax payables
Other payables - due to customers
Accruals and deferred income
Leasing instalment accruals/deferrals
Utilities accruals and deferrals
Insurance accruals/deferrals
Other accruals/deferrals
TOTAL
7,746
23,362
967
281
14,850
9,278
42,297
5,251
662
5,997
3,623
254
4,837
119,405
5,638
15,833
1,020
284
4,590
6,393
28,492
3,440
626
4,756
6,855
147
3,781
81,855
2,108
7,529
(53)
(3)
10,260
2,885
13,805
1,811
36
1,241
(3,232)
107
1,056
37,550
Change
ANNUAL REPORT 2009
81
ANNUAL REPORT2009
The increase in “Other” payables is attributable to the inclusion of Upim S.r. l . in the consolidation area and mainly derives from aligning the lease agreements featuring increasing instalments across the duration of the same agreement (Euro 9,998 thousand). The “Other” payables also include advances from customers for the booking of goods and purchases of notes for Euro 3,144 thousand (Euro 2,624 thousand in the previous year).
Amounts payable to pension and social security agencies are mostly represented by sums due to INPS.
At the date of the present report Gruppo Coin shows amounts due to VAT related to retail and franchising sales, and for a little part due to for the supply of goods and services.
The item Other tax payables carries payables for employee IRPEF, payables to tax offices and payables for withholding taxes to be paid.
The significant decrease in users is due to the estimated adjustments that had not yet been formalized by the suppliers at the end of 2008 and during the year 2009 were accounted for and paid.
With regard to the item “Accrued liabilities and deferred income – other sundry”, this includes 2,001 thousand Euro (1,997 thousand Euro in the previous year) referring to accrued liabilities for local taxes.
As provided for by the Financial Agreements stated in the Framework Contract concerning the acquisition of Upim S.r. l . signed on 17 December 2009, Carpaccio Investimenti S.p.A., Coin Gruppo’s reference shareholder, disbursed a subordinated shareholder loan on 28 January 2010, in favour of the transaction for a total amount of Euro 28,500 thousand for 5 years at a rate of 4.5% a year.The highlighted amount refers to non-current payables to bank institutes (Euro 273.8 million), the parent company Carpaccio Investimenti S.p.A. (Euro 28.5 million), leasing companies (Euro 13.5 million) and for derivative financial instruments (Euro 0.4 million).
Further information about the present loan agreement will be found on “Net Financial Position” paragraph.
The balance of “financial liabilities” includes debts to leasing companies which are listed below the summary data on the balance sheet (in thousands of Euro). The short-term part of the liabilities is included in current liabilities.
NON CURRENT LIABILITIES
17 Financial liabilities
Previous year
Decrease
316,267
218,846
97,421
Within 1 year
1 to 5 years
More than 5 years
TOTAL
5,138
12,499
2,128
19,765
4,466
11,440
2,070
17,976
3,515
9,051
35
12,601
3,044
8,388
34
11,466
Minimum paymentfor financial leasing Capital
31/1/2010 31/1/201031/1/2009 31/1/2009
ANNUAL REPORT 2009
82
ANNUAL REPORT2009
The reconciliation between minimum payments to the financial leasing company and the present value (capital value) is as follows:
The Group has leased buildings, machinery and furnishings. The average life of financial leasing agreements is 8 years.Interest rates are fixed at the closing of the agreements and are indexed to Euribor 3 months. All the leasing agreements can be paid in constant instalments and recalculation of original plan is not foreseen in the agreement.All the agreements are denominated in Euro.Liabilities vs. financial leasing companies are granted to the lessor by the rights on the leased property.
Net financial position
At 31 January 2010 indebtedness amounts to 316.3 million Euro.
(in million Euro)
Minimum payments for financial leasing
(Future financial expenses)
PRESENT VALUE OF FINANCIAL LEASING DEBTS
Jan 31st2010
Jan 31st2009
19,765
(1,789)
17,976
12.601
(1.135)
11.466
Cash & Cash equivalents and net short term financial assets
Assets derivatives
Short-term bank debts
Short term debt vs collateral companies
Liabilities derivatives
Short term financial amounts payable to other
financial creditors
SHORT-TERM NET FINANCIAL POSITION
Long term debt vs parent company
Assets derivatives
Liabilities derivatives
Medium-term bank debt
Medium term financial amounts payable to
other financial creditors
MIDDLE/LONG TERM FINANCIAL POSITION
NET FINANCIAL POSITION
Jan 31st2010
Jan 31st2009
118.7
7.0
(121.7)
(0.5)
(3.4)
(4.7)
(4.6)
(28.5)
4.5
(0.4)
(273.8)
(13.5)
(311.7)
(316.3)
65.2
22.6
(113.2)
(0.6)
(3.5)
(14.6)
(44.1)
12.1
(0.7)
(209.7)
(8.4)
(206.7)
(250.8)
53.5
(15.6)
(8.5)
0.1
0.1
9.9
39.5
(28.5)
(7.6)
0.3
(64.1)
(5.1)
(105.0)
(65.5)
Change
Note: the net financial position does not include commission incurred to obtain the revolving lines of credit classified under “Other current and non-current receivables” (3.2 milion Euro as at 31 January 2010 e 1.6 million Euro as at 31 January 2009).
ANNUAL REPORT 2009
83
ANNUAL REPORT2009
Coin and Oviesse signed some financial agreements that amended the terms and conditions of the loans granted with the contract dated 24 April 2007. Among other things, the new agreements provide for:1. the granting of three new lines of credit, of which: - a Revolving Credit Facility for Euro 55,000,000; - two Medium-term lines for a total of Euro 100,900,000;2. keeping the other existing lines of credit; 3. the adjustment of the spreads to the changed market conditions;4. the confirmation of the maturity of the lines of credit on 24 April 2012, except for the subordinated facility, equals to Euro 7 million maturing on 24 September 2012.
At the same time as the Coin Group and Oviesse signed the new loan contracts, Carpaccio Investimenti and financing banks agreed some amendments to existing contracts. These changes have not affected the autonomy of the contract with the confirmation of the non-enforceability of the cross-default clauses referred to failure of Giorgione Investimenti and Carpaccio Investimenti to abide by the contract undersigned by Gruppo Coin & Oviesse.
The credit facilities that the Group can draw on under the Facility Agreement comprise:
(i) A medium-to-long term credit facility for a maximum of Euro 211.6 million as at 31.01.10, made up of two tranches (A and B) with the following characteristics:
(a) a credit line denominated as “Facility A”, whose total maximum amount is Euro 88.9 million as at 31.01.10, to be repaid in accordance with the following plan:
(b) a credit line denominated as “Facility B”, whose total maximum amount is currently Euro 122.7 millions (including 49,1 million Euro regarding the line of credit al lowed to Oviesse S.p.A.), to be repaid in a single instalment on April 24th, 2012.
(ii) A new medium-to-long term credit line denominated as “Facility C”, whole total maximum amount is Euro 93.9 million to be repaid in a single instalment on April 24th, 2012.
(iii)A new medium-to-long term credit line denominated as “Subordinated Facility”, whole total maximum amount is Euro 7.0 million to be repaid in a single instalment on September 24th, 2012.
At 31 January 2010 Gruppo Coin has completely used the medium-to-long term credit facilities A, B, C and Subordinated Facility.
(iv)A medium-to-long term revolving credit facility for a total maximum amount of 170 million Euro to be used by Gruppo Coin to meet cash flow and working capital needs in the ordinary course of business and to pay interests, fees and expenses due under the Facility Agreement, available until April 24th, 2012.(v) A new medium-to-long term revolving credit facility for a total maximum amount of 55 million Euro to be used by Gruppo Coin to meet cash flow and working capital needs in the ordinary course of business and to pay interests, fees and expenses due under the Facility Agreement, available until April 24th, 2012.
30 April 2010
31 October 2010
30 April 2011
31 October 2011
24 April 2012
17,790,437.68
17,790,437.68
17,790,437.68
17,790,437.68
17,790,437.68
Date Amount to be repaid (Euro)
ANNUAL REPORT 2009
84
ANNUAL REPORT2009
As at 31 January 2010 these credit facilities had been used for an amount equal to Euro 392.6 million.The average monthly basic interest rate on lines of credit paid to the Group existing as at 31st January 2010 is equal to 2.817 %.You are referred to the Management report and the chapter entitled “Management of financial risks” for information on the policies to hedge the risk of changes in rates of interest implemented by Gruppo Coin for the whole Group.
CovenantsIn this regard, financial agreements signed on 28.01.2010 have maintained good forecasts of the previous Facility Agreement which provides for, inter alia, customary representations and warranties as well as undertakings to be given by the beneficiary companies which are in line with banking market practice for facilities of a similar amount and nature. In particular, the Facility Agreement envisages the observance of certain financial ratios (financial covenants) to be calculated on a quarterly basis at consolidated level (and hence with reference to Giorgione and its subsidiaries, including Gruppo Coin and the other companies in the Group). The financial ratios include, amongst others, ‘net interest cover’ (ratio between adjusted gross operating margin and adjusted net financial expense), ‘cash flow cover’ (ratio between adjusted cash flow and adjusted debt servicing), ‘ leverage’ (ratio between net financial position and EBITDA) and ‘capital expenditures’ (amount of investments in tangible fixed assets). Values of financial parameters were adjusted to the new corporate, economic and financial group structure.Furthermore, the Group has a contractual obligation based on which the revolving facility (total maximum amount of 170 million Euro) should not be higher than Euro 10 million for at least 5 consecutive days during the period from 1 April 2009 to 31 March 2010 (clean down obligation). This value will became Euro 20 million during the period from 1 April 2010-31 March 2011 and Euro 15 million from 1 April 2011-31 March 2012.Based on an initial estimate for calculating the covenants, it is reported that all required parameters are respected.The Facility Agreement also provides that the beneficiary companies must undertake some obligations relating to companies in the Group including an undertaking not to grant real or personal security (other than that expressly permitted) in favor of third parties and the obligation not to incur further debt (other than that expressly permitted).
Cross default and change of controlAccording to policy, the Loan Contract contains a change of control clause according to which the (direct or indirect) loss of possession of the absolute majority of the share capital of Carpaccio Investimenti S.p.A. by the Fondi PAI or the fact that Carpaccio Investimenti S.p.A. does not possess the absolute majority of the shares of Gruppo Coin S.p.A. would result in the cancellation and obligation to return the lines of credit granted to the Group according to the Loan Contract, immediately. It should also be noted that, in line with standard practice, the Facility Agreement includes a cross default clause concerning the parent and its subsidiaries. In one of these events (not subsequently remedied) the contract would allow the lending banks to demand repayment of the Group all the lines of credit granted to the Group itself under the loan agreement or acceleration of such a repayment. As already said the new loan contract has completely eliminated the cross-default events related defaulted parent company of Gruppo Coin SpA.
SecurityThe signing of the financing agreements involved the integration of the package of guarantees to support bond repayment of credit lines provided to the Group. In particular, in addition to confirming the pledge on the banks of 100% of share in Coin and 100% in Oviesse (both owned by Gruppo Coin) and 100% of the quotas in Oviesse Franchise (owned by Oviesse), 100% of the shares of Oriental Buying Services Ltd and 100% of the stake in Upim Srl (both owned by Gruppo Coin Spa) were pledged in favour of banks. The previous pledge on the intellectual property rights linked to the brands owned by the Group was extended to also include the Upim, Ovs Industry and Gruppo Coin Spa brands. The pledges of the insurance policies and corporate assets with a unit value of more than Euro 2,000 were confirmed. The voting right and the other administrative and equity rights regarding the shares and stakes subject to pledge are granted to the pledger until an event of non-fulfilment occurs pursuant to the Loan Agreement, in which case the right shall be transferred to the creditor banks. The obligation of repayment of the lines of credit disbursed to Carpaccio Investimenti under the new Loan Agreement is guaranteed also by the pledge in favour of the financing banks of 69.304 % of the shares of Gruppo Coin S.p.A.
18 Employee termination indemnity provisions
Previous year
Decrease
75,357
61,950
13,407
ANNUAL REPORT 2009
85
ANNUAL REPORT2009
This amount represents the funds set aside by the Group for severance indemnities accrued by employees. Such provision is calculated on the basis of actuarial expectations and is posted by accruals in line with the work to be rendered in order to enjoy the benefits.Please note that from 1 January 2007, the Financial Law and its implementing decrees have introduced changes in the regulation of termination indemnity, including the choice of the subordinate employees on the allocation of their termination indemnity maturing. In particular, new flows of termination indemnity may be directed to the employee pension schemes selected or maintained in the company (in which case it will pay severance pay contributions to a treasury account set up at INPS).
As at 31 January 2010, actuarial assumptions concerning the ESI, took into consideration the effects deriving from the change in its governance by the Law of 27th December 2006 (“Financial Law 2007”) and subsequent Decrees and regulations issued during 2007. On the basis of such changes: - ESI quotas accruing since 1st January 2007, both in the case of the option for forms of
supplementary pension and in the case of allocation to the Treasury Fund at INPS, can be treated as contribution payments to the Defined Contributions Plans and recorded accordingly;
- the ESI accrued up to 31 December 2006, on the other hand, continues to be treated asDefined Benefits Plans and recorded according to the provisions of IAS 19 for this type of Plans.
The working assumptions taken as references are set forth below:
Demographic assumptions: - death probabilities are those established for the Italian population by Istat (Italian Central Statistics Institute) during 2002 as categorised by gender; - disability probabilities are those adopted in the INPS (Italian Social Security Institution) model for 2010 projections as categorised by gender. Such probabilities are built by starting from age and gender based distribution of pensions paid as at 1st January applicable from 1984, 1985, 1986 for staff working in the credit business; - the retirement time of the general working population is assumed to be upon reaching the first retirement requirement applicable for the Mandatory General Insurance; - the probability of abandonment of the working activities due to causes other than death was established, based on the statistics supplied by the Group, at an annual rate of 10.00%, except Upim S.r. l . for which for 2010 has been suggested a frequency of 15.00%; - the advancement probability has been assumed at a value equal to 3.00% year on year.
Economic and financial assumptions:The economic and financial scenario referred to for evaluation is described in the table below:
The reference used for valuing the discounting rate is the Iboxx Eurozone Corporates AA index with duration between 5 and 7 years.
The major movements occurred during the year are highlighted below:
4.15%
2.00%
3.00%
Technical annual rate of discounting
Annual inflation rate
Annual rate of increase in severance indemnities
N.B. The assumption on the annual rate of increase in termination indemnity refers only to Group companies with fewer than 50 employees
VALUE AT 31 JANUARY 2009
Increase in the period
Actuarial profit / loss
Consolidation area variation
Decrease due to disbursements / transfers for the year
VALUE AT 31 JANUARY 2010
61,950
2,819
146
18,486
(8,044)
75,357
ANNUAL REPORT 2009
86
ANNUAL REPORT2009
During 2009 average staff number (excluding Upim acquired on 28 January) has been so composed: 86 managers, 6,710 employees, 249 workers.At 31 January 2010 the Group staff (including Upim) included 103 managers, 9,548 employees, 259 workers.
Below is an overview of the provision for risks and charges:
Broken down as follows:
This is mainly a pension fund for former Standa employees acquired together with this line of business. Such funds are designed to be paid out when the employee retires. Similarly to the severance indemnity, also the value of this fund is calculated on actuarial basis with the “unit credit projection” method.
The reserve is allocated for potential risks concerning disputes with suppliers, referring to the marketing of products (it also includes the estimated legal expenses), Public Institutions, former employees and third parties for various reasons, in addition to a provision of 490 thousands Euro allocated against potential risks of losses associated with returns of goods from associated companies; such goods, after having been taken over, will be written down. Finally, with the inclusion in the consolidation of Upim Srl an amount equal to 7,574 thousand Euro was allocated against mainly related to legal disputes with staff, tenants, landlords and others to charge local taxes for previous years and charges for restructuring store network.The outcome of these risks cannot be defined with certainty and the provision represents therefore a prudent estimation of hypothetical cost at the year-end
19 Provisions for risks and charges
Previous year
Decrease
15,715
14,661
1,054
19 Pension Funds
Previous year
Decrease
239
245
6
19 Other Provisions
Previous year
Decrease
15,476
14,416
1,060
20 Deferred tax liabilities
Previous year
Decrease
29,036
66,113
37,077
VALUE AT 31.01.2009
Provisions for the period
Consolidation area variation
Decrease in the period
VALUE AT 31.01.2010
Provisions forrisks and charges
Pensionfounds
Otherprovisions
14,661
1,283
7,574
(7,803)
15,715
245
9
0
(15)
239
14,416
1,274
7,574
(7,788)
15,476
ANNUAL REPORT 2009
87
ANNUAL REPORT2009
The balance is broken down as follows:
The taxes advanced on fiscal losses refer to the losses suffered by the subsidiary Coin before adhering to the fiscal consolidation, and the subsidiary Upim S.r. l .
Finally, following the acquisition of Upim S.r. l . , prepaid taxes were recorded, amounting to 38,778 thousand Euro.
Deferred tax liabilities relating to the greater value in the financial statements of intangible fixed assets derive mainly from their recording at fair value on the basis of the purchase method carried out during business combination with Gruppo Coin and Tre.Bi.
27.50%
27.50%
27.50%
27.50%
27.50%
31.40%
27.50%
27.50%
27.50%
27.50%
31.40%
27.50%
27.50-31.40%
27.50-31.40%
27.50-31.40%
31.40%
27.50%
27.50%
31.40%
27.50%
Deferred tax assets
Fondi per svalutazione merci
Provision for local taxes
Accrued directors’ and auditors fees
that will become deductible in the
following year
Provisions for contingencies and charges
Write-down of receivables
Temporarly undeductible amortisation
Write-down of assets
Tax losses
Fair value of derivatives
Incentives
Lease contract temporarly differences
Financial costs
Others
TOTAL DEFFERED TAX ASSETS
Deferred tax liabilities
Brands and other Intangibile assets
(franchising,and local goodwill)
Gain on building sold
Leasing on head office building
Severance pension indemnity
complying IAS 19
Fair value of derivatives
Software and other depreciation
Other small items
TOTAL (DEFERRED) TAX LIABILITIES
NET (DEFERRED) TAX ASSETS
51,348
3,846
432
15,446
21,640
5,214
31,497
49,986
0
1,266
9,998
9,395
3,341
203,409
(239,044)
(4,931)
(13,706)
(7,997)
(8,555)
0
(527)
(274,760)
(71,351)
8,631
624
119
3,422
2,931
0
347
822
1,887
581
0
0
914
20,278
(69,401)
(1,621)
(2,839)
(2,026)
(8,848)
(727)
(929)
(86,391)
(66,113)
14,121
1,058
119
4,248
5,951
1,637
8,662
13,746
0
348
3,139
2,584
939
56,552
(75,093)
(1,490)
(4,304)
(2,199)
(2,352)
0
(150)
(85,588)
(29,036)
30,662
2,268
435
12,443
10,658
0
1,261
2,988
6,860
2,112
0
0
3,197
72,884
(220,995)
(5,162)
(9,042)
(7,369)
(32,174)
(2,317)
(3,346)
(280,405)
(207,521)
27.50%
27.50%
27.50%
27.50%
27.50%
31.40%
27.50%
27.50%
27.50%
27.50%
27.50%
27.50%
27.50-31.40%
27.50-31.40%
31.40%
31.40%
27.50%
27.50%
31.40%
27.50%
Temporar y differences
31-Jan-10Tax effect31-Jan-09%
Tax effect31-Jan-10 %
Temporar ydifferences31-Jan-09
ANNUAL REPORT 2009
88
ANNUAL REPORT2009
NET SHAREHOLDERS EQUIT Y
The net shareholders’ equity amounts to 451.7 million Euro. The changes occurred in the items that make up the net equity, are illustrated in detail in the previous chart.
21 Share capital
The share capital of Gruppo Coin S.p.A. is equal to 14,308,744.40 Euro consisting of 143,087,444 ordinary shares for a face value of € 0.10 each. The increase is attributable to the issuance of Gruppo Coin SpA to:
1) 7,948,132 shares in favour of Dicembre 2007 S.p.A. (a vehicle company controlled by the consortium of sellers) following the contribution in kind of a share accounting 75.65% of the share capital of Upim S.r. l . . According to the corporate understandings contained in the framework contract signed on 17 December 2009, the shares held by Dicembre 2007 S.p.A. (including the own shares already held in the portfolio (2,558,426) transferred on a trade-in basis to Dicembre 2007 S.p.A. for the remaining 24.35% of the share capital of Upim S.r. l .) , are subject to an non transferability constraint for 24 months;
2) 3,000,000 new ordinary shares. As described in the report on operations, to support the economic and financial sustainability of the “UPIM” acquisition transaction, the Managing Director and some managers of Gruppo Coin and its subsidiaries signed a separate paid share capital increase with exclusion of the subscription right, pursuant to art. 2441, paragraph 8, reserved for them and with respect to which 3,000,000 new ordinary shares. Based on IFRS 2 and with the support of appraisals by independent experts, the fair value of these tools assigned at the date of measurement was calculated at Euro 3.51 per share, 0.10 of which nominal. Furthermore, these shares are subject to special conditions, such as: - an independent ISIN code; - clause of non-transferability to third parties outside the economic sphere of those concerned, until 28 January 2011;- deferred redemption until 29 January 2011; consequently the managers shall not have the right to dividends until approval of the financial statements by the shareholders’ meeting on 31 January 2011, while they shall have the right to vote;- admission to listing in the regulated market from February 2011.
22 Own shares
On 25 July 2008, the Shareholders’ Meeting of Gruppo Coin S.p.A. agreed to authorise the acquisition and to the following assignment, in one or more times, on a rotating basis, of treasury shares for a maximum of 3,964,179 ordinary Company shares, with a nominal value of Euro 0.10 each, corresponding to 3% of the share capital of Gruppo Coin S.p.A., at a unitary price neither higher nor lower than 10% regarding the reference price registered by the stock on the automated stock market on the day before the acquisition.Within the Upim S.r. l . acquisition transaction, the shares in portfolio, equal to 2,558,426 ordinary shares, were assigned to the company Dicembre 2007 S.p.A. on a trade-in basis against the acquisition of 24.35% of the share capital of Upim S.r. l . Thus, as at 31 January 2010 the company did not hold any own shares.
23 Reserves
Reserves are broken down as follows:
Share-premium reserveThe premium reserve, equal to Euro 293.0 million, derives from the capital increases carried out on 18 May 2005 and 20 July 2005. The same was also increased following the purchase of minority interests at the time of the merger in December 2006.The increase of Euro 51.3 million in the Share Premium Reserve recorded in 2009 was calculated as so: - assignation of 2,558,426 own shares to trade in 24.35% of the share capital of Upim S.r. l . at
the price of 4.70 Euro for a total of Euro 12,025 thousand, net of the value already entered inthe accounts of Euro 7,555 thousand, and therefore a value of Euro 4,470 thousand.
- Capital increase with 7,948,132 new shares against the transfer of 75.65% of the sharecapital of Upim S.r. l . at the price of 4.70 Euro with a premium of 4.60 Euro for a total of Euro36,561 thousand.
- Increase in managers capital of 3,000,000 shares at the price of 3.51 Euro with a premium of3.41 Euro for a total of Euro 10,230 thousand.
ANNUAL REPORT 2009
89
ANNUAL REPORT2009
Other reserveThis item, equal to Euro 100.1 million, mainly includes profits carried forwards for Euro 94.0 million and the effects of the accounting of the actuarial profits concerning the pension fund, the cash flow hedge reserve and the conversion reserve directly in the shareholders’ equity. For more details on the movements of the year, reference is made to the statement of changes in the consolidated shareholders’ equity accounts.
It shows the following changes in cash flow hedge reserve:
It shows the following changes in retained actuarial earnings / (losses):
VALUE AT THE BEGINNING OF THE FINANCIAL YEAR
Release to sales cost of share related to instruments for which
the report failed to cover
Deferred tax effect
Release to change in inventories of share related to instruments
for which the report failed to cover
Deferred tax effect
Release to P&L of fair value on instruments for which the report
failed to cover
Deferred tax effect
Changes in fair value on Forward coverage
Deferred tax effect
Release to P&L of share paid on differential
Deferred tax effect
Release to P&L of fair value on instruments for which the report
failed to cover
Changes in fair value on IRS coverage
Deferred tax effect
Total changes
VALUE AT THE END OF THE FINANCIAL YEAR
2009 2008
21,614
(2,675)
736
(765)
210
(222)
61
(17,683)
4,863
2,350
(646)
-
(2,795)
769
(15,797)
5,817
(816)
-
-
(945)
260
-
-
33,118
(9,107)
(45)
12
-
(1,191)
328
22,430
21,614
(in thousand Euro)
VALUE AT THE BEGINNING OF THE FINANCIAL YEAR
Changes in severance indennity in accordance with IAS 19
Deferred tax effect
Total changes
VALUE AT THE END OF THE FINANCIAL YEAR
2009 2008
140
(146)
40
(106)
34
1.604
(2.020)
556
(1.464)
140
(in thousand Euro)
ANNUAL REPORT 2009
90
ANNUAL REPORT2009
GUAR ANTEES, UNDERTAKINGS, AND RISKS
Equipment held under leasing contracts
At January 31st 2010 leasing contracts were in place for cars (98 thousand Euro for instalments yet to fall due and € 2 thousand for redemption).
Unsecured guarantees and guarantees issued to third parties
These are entered for a total of € 59,641 thousand, granted on Group’s behalf by banks or insurance companies mainly as surety for Italian rental contracts.They include 2,066 thousand euro, which represents a year’s rent estimated to be the risk against ex-Standa contracts whose total value, which is covered by guarantees, is equal to 15,493 thousand euro until December 2013.
Other obligations
Tenancy obligations are posted for the payment of rents of outlets and deposits to be paid for contracts falling due, with or without termination clause. In most of the lease agreements this corresponds to a period of 12 months. The obligation corresponds to one year of rents and equals to 183.1 million Euro.
Undertakings of business unit disposal
They amount to Euro 10,000,000 thousand and concern the equivalent of the preliminary contract for the transfer of a company branch stipulated on 22 December 2006 by Upim. Notwithstanding any different agreement between the parties, the preliminary contract provides for the obligation for the Company to sell and for the obligation for the buyer to purchase the company branch - constituted by the beneficial right on the property, furniture, fittings, equipment and system within the property, authorisations issued by the competent Administrative Authority, goodwill and utilities - by and not after 28 February 2009. To date the transaction has not yet been perfected.Concerning the non fulfilment by the counterparty of the obligations under the preliminary contract, Upim S.r. l . , through its attorneys, has filed a summons at the Court of Milan to have its rights acknowledged at the appropriate levels. The first hearing was set for 25 May 2010, even if negotiations are currently under way to reach a consensual solution.
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MANAGEMENT OF FINANCIAL RISK
The Group operates in the field of commercial activities, both retail and wholesale, with exposure to market risks relating to changes in interest rates and exchange rates.The Group’s treasury activity is centred on the parent company Gruppo Coin S.p.A., which acts as the sole interlocutor, for all the companies in the group, with credit institutes. Intergroup relations are governed by special contracts at market conditions.
The risk of changes in financial flows can only be partly mitigated by using appropriate risk management policies.Gruppo Coin S.p.A. adopts guidelines concerning financial activities that envisage the stipulation of derivative financial instruments in order to reduce exchange rate risks against the US dollar and risks due to changes in interest rates.
The following section provides quality and quantity reference information about the incidence of such risks on the Gruppo Coin.The quantitative data reported below have no value as a forecast. In particular the sensitivity analyses cannot reflect the complexity and correlated reactions of the markets that may derive from each assumed change.
Credit risk
The credit risk is the Group exposure to the risk of potential losses deriving from failure by the counterparty to fulfil its obligations (This risk regards especially Coin S.p.A., Coin franchising S.p.A., Oviesse Franchising S.p.A and Upim S.r. l).
As at 31 January 2010, there are no major credit risk concentrations as such risk is mitigated by the fact that credit exposure is spread over a large number of customers mainly located in Italy, while only 13.5% is related to customers located abroad.In order to reduce the credit risk, the Group generally obtains guarantees for the loans granted in relation to the supply of goods: as at 31 January 2010 the overall amount of guarantees amounted to 47.7 million Euro (22.8 million Euro as at 31 January 2009).
Financial assets, related to trade receivables, are posted in the balance sheet net of the depreciation calculated on the basis of the risk of the counterparty’s default as established in the light of the available information on customer solvency and historical data. Individually significant positions with an objective condition of partial or total uncollectability have been written down individually.Reserves have been set aside on a collective basis for receivables that are not the object of individual write-down, after taking into account historical experience and statistics.As at 31 January 2010 trade receivables, amounting to a total 75.0 million Euro (they were 53.5 million Euro as at 31 January 2009), include 23.2 million Euro relating to receivables subject to individual write-down (7.8 million Euro as at 31 January 2009); the following analysis is made on the residual amount for expired amounts (in million Euro):
Jan 31st2010
Jan 31st2009Guarantees Guarantees
Expired receivables
within 3 months
3 to 6 months
more than 6 months
TOTAL
26.2
5.2
11.7
43.2
20.9
2.3
2.2
25.4
10.4
1.3
4.6
16.2
7.1
0.6
0.2
7.9
(in thousand Euro)
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ANNUAL REPORT2009
(*) This value has been calculated by applying the forward curve at 31.01.09 to the loan depreciation plan. Concerning to the Revolving it’s assumed an average utilization of 75%.Furthermore, the aggregate includes the nominal interest value for leasing
(*) This value has been calculated by applying the forward curve at 31.01.09 to the loan depreciation plan. Concerning to the Revolving it’s assumed an average utilization of 40 %.Furthermore, the aggregate includes the nominal interest value for leasing contracts and the value from future flows generated by derivative contracts that, at the balance sheet date, had a negative fair value.
Within 6months
1 to 5years
6 to 12months
Maturity
More than5 years
Trade payables
Financial payables vs banks
Financial payables vs parent company
Financial payables vs others
Financial charges vs banks (*)
456.7
104.4
0.0
2.5
10.2
--
273.8
28.5
13.5
25.6
2.9
17.3
0.0
2.2
9.3
--
--
--
--
--
31 Januar y 2010
Liquidity risk
The liquidity risk stems from the risk of difficulties in finding financial resources.The two main factors that determine the Group’s liquidity situation are, on one hand, resources generated or absorbed by operating and investment activities, and, on the other, the characteristics of the expiry and renewal of the debt and market conditions.The Group has adopted a series of policies and processes aimed at optimising the management of financial resources, reducing the liquidity risk:1. centralised management of collection and payment flows; 2. maintaining of an adequate level of available liquidity;3. obtaining of adequate lines of credit;4. monitoring of perspective liquidity conditions, in relation to the corporate planning process.
The maturities of the Group’s debts reported at the closing date of financial years 2009 and 2008 are reported below (in millions of Euro):
Trade payables
Financial payables vs banks
Financial payables vs others
Financial charges vs banks (*)
350.0
95.8
13.1
6.6
--
209.7
8.4
22.8
--
17.4
1.5
5.8
--
--
--
--
31 Januar y 2009
Management believes that the funds and credit lines currently available, in addition to those that will be generated by operating activity, will allow the Group to satisfy its requirements deriving from investment activity, the management of working capital and the reimbursement of debts at their natural expiry.
The fair value of loans corresponds to their face value as at 31.01.2010.
Within 6months
1 to 5years
6 to 12months
Maturity
More than5 years
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Derivative instruments
Here below the composition of derivatives:
Interest rate risk
The Group’s treasury uses external financial resources under the form of debt. Changes in market interest rate levels influence the cost of the loan, therefore having an impact on the level of the Group’s financial charges. To cope with these risks, the Group used derivative rate instruments (Interest rate swaps and Interest Rate Collars contracts) with the aim of mitigating, at economically acceptable conditions, the potential incidence of the variability of interest rates on the economic result.Contracts existing as at 31.01.2010 are presented in detail in the following tables:
Interest rate swaps – coverage cash flow
Interest rate collar – speculative
Future contracts- coverage cash flow
Future contracts and Option- speculative
TOTAL
Corrent quote:
Interest rate swaps – coverage cash flow
Interest rate collar – speculative
Future contracts- coverage cash flow
Future contracts and Option- speculative
TOTAL CURRENT QUOTE
Non current quote:
Interest rate swaps – coverage cash flow
Future contracts- coverage cash flow
TOTAL NON CURRENT QUOTE
0.0
0.0
9.7
1.8
11.5
0.0
0.0
5.2
1.8
7.0
0.0
4.5
4.5
(2.8)
(1.0)
0.0
0.0
(3.8)
(2.4)
(1.0)
0.0
0.0
(3.4)
(0.4)
0.0
(0.4)
2009
Assets Liabilities
0.0
0.0
29.1
5.6
34.7
0.0
0.0
17.0
5.6
22.6
0.0
12.1
12.1
(2.4)
(1.9)
0.0
0.0
(4.3)
(1.7)
(1.9)
0.0
0.0
(3.6)
(0.7)
0.0
(0.7)
2008
Assets Liabilities(in million Euro)
DateDerivative contracts Interest rate
weighted average MaturityFair Value as at
31/01/10
Interest rate swap (IRS)
Interest Rate Collar
Interest rate swap (IRS)
16 July 2007
18 June 2009
4.76%
5.25%
2.46%
31/7/2010
31/7/2010
24/4/2012
(1,107,376)
(1,023,590)
(1,699,141)
DateDerivative contracts Nominal value as
at 31/01/09Nominal value as
at 31/01/10Fair Value as at
31/01/10
Interest rate swap (IRS)
Interest Rate Collar
Interest rate swap (IRS)
16 July 2007
18 June 2009
62,062,500
62,062,500
0
53,906,250
53,906,250
38,009,931
(1,107,376) *
(1,023,590)
(1,699,141) *
TABLE 1: interest rate risk (Euro)
TABLE 2: existing derivatives(Euro)
(*) These contracts are accounted under hedge accounting.
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Interest rate collar contracts are based on:
1. payment of a fixed rate called Cap if the market rate exceeds such level;2. payment of the market rate if it rages between the Cap and a lower level (Floor);3. payment of a fixed rate higher than the floor if the market rate drops below the floor
Only operations that exceed the constraints imposed by IAS 39 are registered according to hedge accounting rules.
The interest rate collar stipulated on 16 July 2007, were considered speculative for accounting purposes.Interest Rate Swap contracts underwritten on 16 July 2007 and on 18 June 2009 were instead recorded following the methodology of hedge accounting.
The periods in which it is presumed that financial flows will have an impact on the profit and loss account, are summarised in the enclosed statement:
The amount recorded in Shareholders’ equity at the end of FY 2009 is equal to 2.8 million Euro.
Profit and loss account impact
NotionalValue
Within 3months
3 to 6months
6 to 12months
More tha 12 monthsFair Value
Interest Rate Swap contracts 91.9 -0.8 -0.7 -0.9 -0.4-2.8
31 Januar y 2010
(in million Euro)
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ANNUAL REPORT2009
Sensitivity analysis
For the Coin Group variable interest financial instruments concern loans payable. A sensitivity analysis follows illustrating the effects caused on the profit and loss account by an assumed shifting of the curves of +40 or -40 basis points with respect to the curve of forward rates assumed as at 31/01/2010. This instantaneous and unfavourable (favourable) assumed change in the short term interest rates level applicable to financial liabilities at a variable rate would result in a greater net pre-tax charge, on an annual basis, of around 1.93 million Euro (i .e. a lower charge of 2.82 million Euro). This analysis is based on the assumption of a generalised and instantaneous change in the reference interest rates level, a level measured on homogeneous categories. A homogeneous category is defined on the basis of the currency in which financial assets and liabilities are denominated. The same simulation carried out on 31 January 2009 would have caused higher charges for 1.05 million Euro and lower charges for 1.25 million Euro.
The table above includes the impact on the profit and loss account of the interest on loans, excluding the impact of derivatives, which is illustrated in the table below; the impact of the changes in interest rates on the fair value of derivatives and the consequent effects on the profit and loss account and on the shareholders’ equity as at 31 January 2010 and 31 January 2009 are as follows:
Change on financial charges effectP&L effect
- 40 bps + 40 bpsbase
Sensitivity analysis at 31/01/10
Sensitivity analysis at 31/01/09
(13.18)
(7.93)
(17.93)
(10.23)
(16.00)
(9.18)
(in million Euro)
Change on financial charges effectP&L effect
- 40 bps + 40 bps
Sensitivity analysis at 31/01/10
Sensitivity analysis at 31/01/09
(0.05)
(0.34)
0.05
0.34
(in million Euro)
Change on cash flow hedge reserve effectequity effect
- 40 bps + 40 bps
Sensitivity analysis at 31/01/10
Sensitivity analysis at 31/01/09
(0.94)
(0.34)
0.93
0.34
(in million Euro)
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ANNUAL REPORT2009
Exchange rate risk
The Group is exposed to risks arising from changes in exchange rates, which may affect its performance and value of equity. In particular, where the Group companies incur costs denominated in currencies other than the change in exchange rates may affect the operating results of these companies.The applied methodology envisages, whenever possible, neutralisation of economic effects deriving from exchange changes through derivative instruments (future hedging operations and options). These operations are carried out by the Finance Division of Gruppo Coin with the banking system and are reflected on the Companies in the Group that therefore sustain their economic effects. The only exchange rate to which the Group is significantly exposed is the EUR/USD, in relation to purchases in dollars made by Italian companies on the Far East market and on other markets in which the dollar is the reference currency for commercial exchanges.The exchange rate change can result in the creation or verification of positive or negative exchange rate differences.The Group makes a hedging operation that is underway of highly probable, although not yet acquired, orders, pursuing the management objective of minimising the risks to which the Group is subject.
Details follow of the various types of contracts on currencies for managing the exchange rate risk stipulated by Gruppo Coin:
Forward Contracts are used to protect against the risk of a rise in the foreign currency (US Dollar). Similarly, option contracts are also used to protect against an appreciation of the foreign currency.The options used are collar plain vanilla or knock in collar. In both cases, purchases of call options and sales of put options are matched with the same maturities and the same amounts. The structures enable the Coin Group to purchase currency not below a certain exchange rate (call option exercise exchange rate) and the counterparty is allowed to sell not above a certain exchange rate (put option exercise exchange rate or value of the knock in the other case). The two exercise exchange rates have different values and so they create a “collar” within which neither option is exercised and so it is possible to purchase at market value.The following table summarises the amounts of the exchange rates forward contracts and of the other exchange rate management instruments.
Futures:
During 2009 the nature and the structure of exposures to the exchange rate risk and the hedging policies followed by the Group did not change significantly with respect to the previous financial year.
Futures contracts
Option contracts
Nominal value as at 31/01/2010
Nominal value as at 31/01/2009
397.0
10.0
365.0
14.0
(in million USD)
MaturityOperation date Amount (USD) Strike priceFair Value as
at 31/01/2010Amount (Euro)
From 30/04/2008
to 08/01/2010
From 01/02/2010
to 12/12/2011
397,000,000 From 1.3136
to 1.5248
11,397,163284,261,779
MaturityAmount (USD) PremiumEquivalent in euro as at 31/01/2010
Fair Value as at31/01/2010
10,000,000 From 09/02/2010
to 07/09/2010
0 7,160,246 94,548
Options:
ANNUAL REPORT 2009
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ANNUAL REPORT2009
Sensitivity analysis
During 2009 the nature and the structure of exposures to the exchange rate risk and the hed-ging policies followed by the Group did not change significantly with respect to the previous financial year. - la perdita potenziale a conto economico di fair value degli strumenti finanziari derivati di- the potential loss of fair value of derivative financial instruments for the management of the
exchange rate risk held by the Group as at 31 January 2010, as a result of an assumed depreciation of around 5% in the exchange rates of the main foreign currencies against the Euro, would be equal to around 1.63 million Euro (compared with a positive change of 1.81 million Euro if the change were favourable). For currency options, the valuation model assumes that market volatility at the end of the year remains unchanged.
Same valuation as referred to 31.01.2009 would imply a negative change for € 2.03 mln in the p&l statement and a positive one for € 2.25 mln.
- instead, regarding derivative financial instruments in hedge accounting, the effects on netequity of an appreciation/depreciation of 5% EUR/USD exchange rate are reported below:
Limiting the analysis of the effects on the income statement but extending the sensitivity analysis to all the flows subject to fluctuations linked with the Euro/US Dollar exchange rate and keeping the variability interval unchanged, the hypothesis of a depreciation at 31 January 2010 would cause a total loss of 1.52 million Euro (or an improvement of 1.54 million Euro if favourable).Once again, the same valuation referred to 31 January 2009 would lead to a negative change in the profit and loss account of 1.6 million Euro and to a favourable change of 0.9 million Euro.
Change on financial charges effect P&L effect
- 5% + 5%
Sensitivity analysis at 31 Jan. 10
Sensitivity analysis at 31 Jan. 09
1.81
2.25
(1.63)
(2.03)
(in million Euro)
Change on cash flow hedge reserve effectequity effect
- 5% + 5%
Sensitivity analysis at 31 Jan. 10
Sensitivity analysis at 31 Jan. 09
13.16
12.79
(11.91)
(11.57)
(in million Euro)
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ANNUAL REPORT2009
Classification of financial assets and liabilities
Upon completion of the reporting on financial risks, shown below is reconciliation between classes of financial assets and liabilities as identified in the financial equity situation of the Group and the types of financial assets and liabilities identified on the basis of IFRS 7 requirements:
The general criterion used to calculate the fair value is the current values of the future cash flows expected for the instrument being measured. The liabilities concerning the bank debt are measured according to the “amortised cost” criterion.The trade payables and receivables were assessed at the book value as this is considered to be close to the current value.The financial leases were measured at cost, since they are not within the sphere of application of IAS 39.
Current assets
Cash and banks
Trade receivables
Financial assets (a)
Non current assets
Trade receivables
Financial assets (a)
Current liabilities
Financial liabilities
Trade payables
Non current liabilities
Financial liabilities
Fair value assets to P&L
Receivablesand loans
Assets held until maturity
Assets avaiable for sale
Fair valueliabilities to P&L
Liabilities valued at depreciation
cost Liabilities valued accordingIAS 17 Total
-
-
6,985
-
4,532
-
-
-
118,715
75,035
-
147
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,387 (b)
-
443
-
-
-
-
-
122,483
459,595
302,314
-
-
-
-
-
4,466
-
13,510
118,715
75,035
6,985
147
4,532
130,336
459,595
316,267
(a) of which 10,831 thousand Euro recorded to Net equity into cash flow hedge reserve.(b) of which (2,807) thousand Euro recorded to Net equity into cash flow hedge reserve.
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ANNUAL REPORT2009
COMMENT ON THE MAIN ITEMS OF THE CONSOLIDATED PROFIT & LOSS ACCOUNT
We now detail some items of the P&L account (amounts are stated in € ‘000).
REVENUES
24 Revenues from ancillar y sales and services
The breakdown of amounts for ancillary sales and service is as follows:
At a domestic level 54.1% of retail sales were made in Northern Italy, 27.5% in Central Italy, and 18.4 % in Southern Italy and its islands.
25 Other revenues and operating income
The significant increase in rents and leases is primarily attributable to the new concession contracts relating to Coin concluded during the year.Income from services mainly refers to professional services, recovery of transportation costs, charges of payroll costs and other services.The item “Others” includes 1,184 thousand Euro relating to the reimbursement made by the former majority shareholder Fincoin of part of the costs for transactions regarding the transfer of the German shareholding; the reimbursement was paid following the contractual warranties issued during the transfer of Gruppo Coin.
The same item also includes rebates and round-offs for 461 thousand Euro, compensation for loss of goodwill for 528 thousand Euro, refund from lessors for 1,313 thousand Euro and reimbursements related to training costs for 517 thousand Euro.The posted revenues are net of V.A.T.
Revenues for retail sales
VAT on retail sales
Net Sales
Revenues from sales to franchisee and wholesale
Subtotal net sales
Revenues for services
TOTAL
Jan 31st2010
Jan 31st2009
1,336,651
(223,626)
1,113,025
84,354
1,197,379
413
1,197,792
1,258,621
(210,733)
1,047,888
97,117
1,145,005
365
1,145,370
78,030
(12,893)
65,137
(12,763)
52,374
48
52,422
Change
Rental and leasing income
Revenues from provision of services
Compensation for damages
Capital gains from disposal of assets
Other
TOTAL
Jan 31st2010
Jan 31st2009
31,385
17,767
407
41
8,406
58,006
23,953
13,314
1,083
83
5,008
43,441
7,432
4,453
(676)
(42)
3,398
14,565
Change
ANNUAL REPORT 2009
100
ANNUAL REPORT2009
26 Purchases of raw materials and consumables
Purchases of raw and secondary materials, consumables and merchandise mainly consist of purchases of products for retailing and amount to 533,539 thousand euros.The equivalent value in euro of purchases from abroad, mainly in US dollars, including additional charges, amounts to 280,439 thousand euros.
27 Payroll and related costs
The increase in staff costs is mainly due to personnel in the new stores and the average change in the MBO.
28 Depreciation and write off of assets
Note that the amount relating to the write-downs of tangible and intangible fixed assets, in the references annexes was included in values relating to the “Write-downs / disposals” column. Impairments refer to activities as a result of devalued assets for impairment and as a result of the closure of stores.
Salaries and wages
Social security charges
Staff leaving indemnity
Personnel expenses - other costs
TOTAL
Jan 31st2010
Jan 31st2009
169,615
50,976
10,749
780
232,120
147,297
44,907
10,049
548
202,801
22,318
6,069
700
232
29,319
Change
Amortisation and write-downs of intangible assets
Depreciation and write-downs of property, plant and equipment
Other write-downs of fixed assets
TOTAL
Jan 31st2010
Jan 31st2009
8,828
44,702
3,888
57,418
7,779
38,506
4,901
51,186
1,049
6,196
(1,013)
6,232
Change
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29 Other operating costs: - for services
Costs for acquired services, which reflect outsourced services, are broken down as follows:
30 Other operating costs: - for use of leasehold property
The detail of costs for use of leasehold property was as follows:
The item “Rents payable and related costs” mainly includes tenancies and condominium charges of the sales network. Rental contracts were stipulated at market value and terms.
31 Other operating costs: - depreciations and provisions
The detail is as follows:
Rents payable and related costs
Leasing of plants, equipment and motor vehicles
TOTAL
Jan 31st2010
Jan 31st2009
147,845
1,133
148,978
127,184
948
128,132
20,661
185
20,846
Change
Allow. for doubtful debts
Allocations for risks
Allocations for company reorganisation
TOTAL
Jan 31st2010
Jan 31st2009
3,418
884
0
4,302
2,750
1,387
450
4,587
668
(503)
(450)
(285)
Change
Advertising
Utilities
Others retail store costs
Outside professional & advisory services
Staff travel and related items
Insurance
Maintenance, cleaning and security
Other services
Costs For Services - Remuneration Of Directors And
Statutory Auditors
Directors’ emoluments
TOTAL
Jan 31st2010
Jan 31st2009
21,797
35,226
35,924
17,360
13,398
2,358
29,987
3,636
304
655
160,645
27,312
34,786
33,675
16,624
12,924
2,239
29,449
3,162
285
656
161,112
(5,515)
440
2,249
736
474
119
538
474
19
(1)
(467)
Change
ANNUAL REPORT 2009
102
ANNUAL REPORT2009
32 Other operating costs: - other operating costs
Other operating costs are broken down as follows:
Other operating costs include besides, costs for administrative expenses, transactions and charities to non governmental organisations.
33 Financial income and (charges)
Financial income
Material and equipment
Taxes and duties
Equity capital losses
Other operating costs
TOTAL
Jan 31st2010
Jan 31st2009
8,233
7,269
2
4,320
19,824
6,786
6,345
49
2,647
15,827
1,447
924
(47)
1,673
3,997
Change
Interest income on bank c/a
Miscellaneous financial income
Income from subsidiaries and associated companies
Income from measurement of derivatives at fair value
TOTAL
Jan 31st2010
Jan 31st2009
180
205
7
0
392
747
70
0
482
1.299
(567)
135
7
(482)
(907)
Change
Interest payable to subsidiaries
Interest expense on bank c/a
Financial charges on loans
Financial charges on other financial creditors
Charges from measurement of derivatives at fair value
Other financial charges
TOTAL
Jan 31st2010
Jan 31st2009
5
277
12,298
3,023
1,097
1,470
18,170
16
22
20,780
4,387
1,018
1,995
28,218
(11)
255
(8,482)
(1,364)
79
(525)
(10,048)
Change
Financial charges
Financial charges to other financial creditors include 2,573 thousand Euro deriving from the actuarial calculation of the severance indemnity provision. The remaining amount is related to borrowing costs related to leasing contracts.
Other financial charges include 503 thousand Euro related to the existing loan.
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ANNUAL REPORT2009
Exchange rate differences
Positive exchange differences
Positive exchange differences not realized
Negative exchange differences
Negative exchange differences not realized
Losses due to advanced closed on currency derivates
Fair value derivatives on exchange differences
Fair value derivatives on hedge accounting
TOTAL
Jan 31st2010
Jan 31st2009
11,304
20
(3,152)
(390)
0
(4,067)
0
3,715
6,362
366
(9,686)
(2,275)
11,741
(4,169)
2,339
4,942
(346)
6,534
(390)
2,275
(15,808)
4,169
1,376
Change
Shareholding income/(charge)
The item includes the charges to be incurred, equal to Euro 1,182 thousand by Gruppo Coin Ungheria KFT as a consequence of the transfer of the investment in Four Corners KFT to a local minority shareholder, expected for 2010.
34 Operating income taxes
The balance is broken down as follows:
Below is the reconstruction of the effective tax rate (thousand of Euro):
Corporate income Tax (IRES)
Regional Tax on productive activities (IR AP)
Foreign taxes
Deferred Taxes
TOTAL
12,861
8,695
136
7,572
29,264
IRES
Income before taxes
Taxes at referring rate
Tax effect for permanent differences
Other differences
Total
TOTAL IRES
IR AP
Operating result
Staff charges
Net value of production
Taxes at referring rate
Tax effect for permanent differences
Amount deducted
Total
TOTAL IR AP
TOTAL IRES AND IR AP
73,562
20,230
1,839
(949)
21,120
88,807
232,120
320,927
12,516
(853)
(3,519)
8,144
27.5%
2.50%
-1.30%
28.7%
3.9%
-0.27%
-1.10%
2.53%
21,120
8,144
29,264
ANNUAL REPORT 2009
104
ANNUAL REPORT2009
Profit /Loss per share
The profit per ordinary share of Gruppo Coin S.p.A. is calculated by dividing the profit / loss for the period by the weighted average number of corporate outstanding shares in the same period, excluding own shares. The weighted average number of outstanding shares was 130,426,143.
The diluted profit per share of Gruppo Coin S.p.A. is calculated with the same criteria used for the standard profit per share.
35 Correlated parties
As at 31 January 2010 the following operations were underway with other correlated parties –as defined in Consob Communications no. 97001574 of 20th February 1997, no. 98015375 of 27th February 1998 and no. 2064231 of 30th September 2002, in which, amongst other things, reference is made to International Accounting Standard IAS 24.
(in thousand Euro)
Parent company
Tax consolidation payables
Giorgione Investimenti S.p.A.
TOTAL
1,963
1,963
Giorgione Investimenti S.p.A.
TOTAL
--
--
--
--
Receivables
Trade Financial
281
281
--
--
Payables
Trade FinancialReceivables/payables
Unconsolidated subsidiaries
Wandar S.r. l . (winding up)
Four Corners Kft
OBS Retail Ltd
TOTAL
4
1,321
13
1,338
--
--
--
--
Receivables
Trade Financial
649
--
--
649
544
--
--
544
Payables
Trade FinancialInternal receivables/payables
Wandar S.r. l . (winding up)
Four Corners Kft
TOTAL
3
1,180
1.183
7
4
11
Revenues
Sales andservices
Financialrevenues
--
--
--
5
5
Charge
Charges for services
Financial charges
Internal revenues/charges
ANNUAL REPORT 2009
105
ANNUAL REPORT2009
Correlated entities
TOTAL
74
74
--
--
Receivables
Trade Financial
257
257
--
--
Payables
Trade FinancialReceivables/Payables
Correlated entities
TOTAL
70
70
For services
26,840
26,840
Purchasing ofservices, loans
and othersRevenues/Charges
Related entities
The above-mentioned relations fall within the company’s usual commercial operations.Revenues concern some provisions of administrative services.Cost for rent, of 1,180 thousand Euro, refer to the rental contract of a commercial property for Coin located in Milan leased by the company DUEC S.r. l . , belonging to the Coin family.
The costs for utilities, amounting to 25,636 thousand euro are for the supply of electricity by the company Centomilacandele scpa.
Note that these operations, all governed by market conditions, refer to operations with companies referring directly or indirectly to shareholders, without this giving rise to any conflicts of interest.
As far as remunerations are concerned, including non-monetary ones, and the relevant fees paid to board members and auditors, reference should be made to the appropriate statement included in the notes to the consolidated financial statements.
ADDITIONAL INFORMATION
Events and significant extraordinar y transactions
According to the requirements of Consob communication no. DEM/6064293 of 28th July 2006, the economic impacts of events and extraordinary transactions equal to net income of 1,184 thousand Euro in FY2009 and charges of 150 thousand Euro during FY 2008 are summarised below:
Refunds and indemnities
Charges due to company reorganization
TOTAL
Jan 31st2010
Jan 31st2009
1,184
0
1,184
300
(450)
(150)
Other non recurrent revenues (Charges)
Derivative transactions from atypical and/or unusual operations
In accordance with the CONSOB Communication of 28 July 2006, it is detailed that during the 2009 period, the Group did not bring into being atypical and/or unusual operations, as defined by the Communication itself.
ANNUAL REPORT 2009
106
ANNUAL REPORT2009
RECONCILIATION OF CONSOLIDATED NET EQUIT Y AND NET PROFIT WITH THE HOLDING
STATEMENT OF THE GROUP’S COMPOSITION
List of companies included in the consolidation with the integral method:
List of shareholdings valued with the shareholders’ equity method:
Registered officeCompany Share capital % Ownership
Italian companies
Gruppo Coin S.P.A.
Coin S.P.A.
Coin Franchising S.P.A
Oviesse S.P.A.
Oviesse Franchising S.P.A.
Upim S.R.L.
Brand Zero S.P.A.
Cosi - Concept Of Style Italy S.P.A.
Foreign companies
Gruppo Coin International S.A.
Oviesse D.O.O.
Oriental Buying Services Ltd
Obs India Private Ltd
Cosi International Ltd
Cosi Shanghai Company Ltd
Gruppo Coin Ungheria K.F.T.
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Ve - Mestre
Luxembourg
Slovenia
Hong Kong
Delhi - India
Hong Kong
Shanghai
Budapest - Hungary
14,308,744.40
10,000,000
200,000
20,015,500
1,000,000
5,154,264
200,000
120,000
1,505,000
300,000
585,000
15,000,000
10,000
1,000,000
50,000,000
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
HKD
INR
HKD
RMB
HUF
Parent company
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Registered officeCompany Share capital % Ownership
Wandar S.r. l . (winding up)
Gruppo Coin Dep. Store D.O.O.
OBS Retail Ltd
Four Corners K.F.T
Ve - Mestre
Belgrade - Serbia
Hong Kong
Budapest - Hungary
49,200
50,000
10,000,000
58,800,000
EUR
EUR
HKD
HUF
100%
100%
100%
75%
Balance sheet of Gruppo Coin S.p.A. at 31.1.2010
drawn up in compliance with IFRS
Consolidated companies net equity
Exclusion of internal dividends
Exclusion of internal profits not realized without tax effect
Foreign exchange related to balance conversion in foreign currency
Consolidated balance sheet of Gruppo Coin S.p.A. at 31.1.2010
drawn up in compliance with IFRS
Profit(loss)
Netequity
25,902
61,027
(42,725)
94
0
44,298
296,586
155,363
0
(228)
(61)
451,660
(thousand Euro)
ANNUAL REPORT 2009
107
ANNUAL REPORT2009
APPENDICES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following documents contain additional information accompanying consolidated financial statements for the year ended January 31, 2010.
Appendix:
- n. 1 Intangible fixed assets as at 31 January 2010 - n. 2 Tangible fixed assets as at 31 January 2010 - n. 3 Intangible fixed assets as at 31 January 2009 - n. 4 Tangible fixed assets as at 31 January 2009 - n. 5 Controlled companies financial statements
ANNUAL REPORT 2009
108
ANNUAL REPORT2009
APPENDIX N.1
Intangible fixed assetsThe breakdown of and the changes occurring in these assets during the year were as follows (in € ‘000):
Industrial patents and similar rights
original cost
depreciation
amortization
NET
Concessions, licenses and brands
original cost
depreciation
amortization
NET
Goodwill
original cost
depreciation
amortization
NET
Work in progress fixed assets
and payments on account
original cost
depreciation
amortization
NET
Other intangible assets
original cost
depreciation
amortization
NET
Total
original cost
depreciation
amortization
NET
46,379
0
(35,772)
10,607
463,219
(4,413)
(11,110)
447,696
121,305
0
0
121,305
1,014
0
0
1,014
54,883
0
(11,689)
43,194
686,800
(4,413)
(58,571)
623,816
52,419
0
(39,436)
12,983
465,895
(5,158)
(14,317)
446,420
259,638
0
0
259,638
270
0
0
270
89,377
(5,511)
(41,285)
42,581
867,599
(10,669)
(95,038)
761,892
6,040
0
0
6,040
888
0
0
888
0
0
0
0
200
0
0
200
72
0
0
72
7,200
0
0
7,200
0
0
0
0
(626)
(355)
30
(951)
0
0
0
0
(1,014)
0
0
(1,014)
(122)
0
50
(72)
(1,762)
(355)
80
(2,037)
0
0
(3,664)
(3,664)
0
0
(2,070)
(2,070)
0
0
0
0
0
0
0
0
0
0
(3,094)
(3,094)
0
0
(8,828)
(8,828)
0
0
0
0
2,414
(390)
(1,167)
857
138,333
0
0
138,333
70
0
0
70
34,544
(5,511)
(26,552)
2,481
175,361
(5,901)
(27,719)
141,741
Status at31/01/2009
Status at31/01/2010Acquisitions
Disposals/writedowns Amortization
Change inconsolidation
Upim
Changes occured during the year
(a) (1)
(2)
(*)
(a) Restatement of opening balances for 5,166 thousand euro following the cocnlusion of the Purchase Price Allocation of Tre.Bi. S.p.A. and its subsidiaries, now incorporated into Oviesse SpA accounting with effect from 01.02.2009. (*) This value includes for 1,014 thousand Euro intangible in process as at 31/01/09 reclassified to the specific asset categories for the year 2009. (1) Including 43 thousand Euro related to writedowns during the year due to store wind-up.(2) Including 978 thousand Euro related to depreciated assets as a result of impairment testing.
ANNUAL REPORT 2009
109
ANNUAL REPORT2009
APPENDIX N.2
Tangible fixed assetsThe breakdown of and the changes occurring in these assets during the year were as follows (in € ‘000):
(a) Restatement of opening balances for 694 thousand euro following the cocnlusion of the Purchase Price Allocation of Tre.Bi. S.p.A. and its subsidiaries, now incorporated into Oviesse SpA accounting with effect from 01.02.2009.(*) This value includes for 1,412 thousand Euro intangible in process as at 31/01/09 reclassified to the specific asset categories for the year 2009. (1) Including 2,087 thousand Euro related to writedowns during the year due to store wind-up. (2) Including 780 thousand Euro related todepreciated assets as a result of impairment testing, net of depreciation relating to earlier years. (3) Including assets as at 31/01/09 for 486 thousand euros, year 2009 reclassified to other categories.
Land and buildings
original cost
depreciation
amortization
NET
Plant and equipment
original cost
depreciation
amortization
NETTO
Fix. and fittings, tools and other equip.
original cost
depreciation
amortization
NET
Other assets
original cost
depreciation
amortization
NET
Work in progress fixed assets
and payments on account
original cost
depreciation
amortization
NET
Total
original cost
depreciation
amortization
NET
151,281
(277)
(68,950)
82,054
198,892
(438)
(117,302)
81,152
263,158
(1,217)
(178,861)
83,080
34,314
(2)
(27,280)
7,032
1,703
0
0
1,703
649,348
(1,934)
(392,393)
255,021
11,653
0
0
11,653
12,339
0
0
12,339
27,744
0
0
27,744
2,928
0
0
2,928
490
0
0
490
55,154
0
0
55,154
(1,364)
23
571
(770)
(3,012)
(92)
1,834
(1,270)
(15,359)
818
11,629
(2,912)
(780)
(2)
239
(543)
(1,412)
0
0
(1,412)
(21,927)
747
14,273
(6,907)
0
12
(9,315)
(9,303)
0
76
(13,594)
(13,518)
0
200
(19,923)
(19,723)
0
0
(2,158)
(2,158)
0
0
0
0
0
288
(44,990)
(44,702)
181
0
(11)
170
0
0
0
0
5
0
(4)
1
0
0
0
0
45
0
0
45
231
0
(15)
216
Status at31/01/2009 Acquisitions
Disposals/writedowns Amortization
Change inconsolidation
Gruppo Coin Ungheria KFT
Changes occured during the year
331,119
(8,367)
(191,446)
131,306
226,491
(474)
(144,302)
81,715
426,784
(14,156)
(315,761)
96,867
58,633
(366)
(48,003)
10,264
826
0
0
826
1,043,853
(23,363)
(699,512)
320,978
169,368
(8,125)
(113,741)
47,502
18,272
(20)
(15,240)
3,012
151,236
(13,957)
(128,602)
8,677
22,171
(362)
(18,804)
3,005
0
0
0
0
361,047
(22,464)
(276,387)
62,196
Status at31/01/2010
Change in consolidation
Upim
(a)
(3)
(1)
(2)
(*)
ANNUAL REPORT 2009
110
ANNUAL REPORT2009
APPENDIX N.3
Intangible fixed assets FY 2008The breakdown of and the changes occurring in these assets during the year were as follows (in € ‘000):
Industrial patents and similar rights
original cost
depreciation
amortization
NET
Concessions, licenses and brands
original cost
depreciation
amortization
NET
Goodwill
original cost
depreciation
amortization
NET
Work in progress fixed assets
and payments on account
original cost
depreciation
amortization
NET
Other intangible assets
original cost
depreciation
amortization
NET
Consolidation differences
original cost
depreciation
amortization
NET
Total
original cost
depreciation
amortization
NET
41,454
0
(32,536)
8,918
451,746
(1,514)
(9,123)
441,109
97,595
0
0
97,595
620
0
0
620
51,964
0
(7,748)
44,216
601
0
(601)
0
643,379
(1,514)
(50,008)
592,458
46,198
0
(35,591)
10,607
452,365
(4,413)
(11,110)
436,842
126,993
0
0
126,993
1,014
0
0
1,014
53,679
0
(10,485)
43,194
601
0
(601)
0
680,249
(4,413)
(57,186)
618,650
4,605
0
0
4,605
619
0
0
619
0
0
0
0
1,014
0
0
1,014
621
0
0
621
0
0
0
0
6,859
0
0
6,859
0
0
0
0
0
(2,899)
0
(2,899)
0
0
0
0
(620)
0
0
(620)
0
0
0
0
0
0
0
0
(620)
(2,899)
0
(3,519)
0
0
(3,055)
(3,055)
0
0
(1,987)
(1,987)
0
0
0
0
0
0
0
0
0
0
(2,737)
(2,737)
0
0
0
0
0
0
(7,779)
(7,779)
139
0
0
139
0
0
0
0
29,398
0
0
29,398
0
0
0
0
1,094
0
0
1,094
0
0
0
0
30,631
0
0
30,631
Status at31/01/2008
Status at31/01/2009Acquisitions
Disposals/ writedowns Amortization
Change forTre.Bi.
acquisition
Changes occured during the year
(*)
(*) This value includes for 620 thousand Euro intangible in process as at 31/01/08 reclassified to the specific asset categories for the year 2008.
ANNUAL REPORT 2009
111
ANNUAL REPORT2009
APPENDIX N.4
Tangible fixed assets FY 2008The breakdown of and the changes occurring in these assets during the year were as follows (in € ‘000):
(*) This value includes for 2,756 thousand Euro intangible in process as at 31/01/08 reclassified to the specific asset categories for the year 2008.(1) Including 1,129 thousand Euro related to to writedowns during the year due to store wind-up.(2) Including 879 thousand Euro related to depreciated assets as a result of impairment testing.
Status at31/01/2008
Status at31/01/2009Acquisitions
Disposals/ writedowns Amortization
Change forTre.Bi.
acquisition
Changes occured during the year
Land and buildings
original cost
depreciation
amortization
NET
Plant and equipment
original cost
depreciation
amortization
NET
Fix. and fittings, tools and other equip.
original cost
depreciation
amortization
NET
Other assets
original cost
depreciation
amortization
NET
Work in progress fixed assets
and payments on account
original cost
depreciation
amortization
NET
Total
original cost
depreciation
amortization
NET
131,127
(179)
(60,274)
70,674
178,095
(267)
(105,701)
72,127
235,908
(328)
(169,985)
65,595
30,699
(3)
(25,398)
5,298
2,811
0
0
2,811
578,640
(777)
(361,358)
216,505
18,134
0
0
18,134
18,530
0
0
18,530
29,413
0
0
29,413
3,201
0
0
3,201
1,503
0
0
1,503
70,781
0
0
70,781
(1,155)
(112)
891
(376)
(3,357)
(178)
2,664
(871)
(14,011)
(357)
13,450
(918)
(336)
0
256
(80)
(2,756)
0
0
(2,756)
(21,615)
(647)
17,261
(5,001)
0
14
(8,038)
(8,024)
0
32
(12,192)
(12,160)
0
137
(16,699)
(16,562)
0
1
(1,761)
(1,760)
0
0
0
0
0
184
(38,690)
(38,506)
1,646
0
0
1,646
2,286
0
0
2,286
7,574
0
0
7,574
285
0
0
285
145
0
0
145
11,936
0
0
11,936
149,752
(277)
(67,421)
82,054
195,554
(413)
(115,229)
79,912
258,884
(548)
(173,234)
85,102
33,849
(2)
(26,903)
6,944
1,703
0
0
1,703
639,742
(1,240)
(382,787)
255,715 (1)
(*)
(2)
ANNUAL REPORT 2009
113
ANNUAL REPORT2009
CONTROLLED COMPANIES FINANCIAL STATEMENTS
ANNUAL REPORT 2009
114
ANNUAL REPORT2009
COIN S.p.A.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
351,744
2,173
(21,380)
(19,207)
(645)
(1,916)
(21,768)
0
1,024
(530)
(21,274)
5,297
(15,977)
361,504
(5,817)
(20,025)
(25,842)
(645)
(7,000)
(33,487)
0
1,240
(984)
(33,231)
8,279
(24,952)
(9,760)
7,990
(1,355)
6,635
0
5,084
11,719
0
(216)
453
11,957
(2,983)
8,975
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
89,901
85,848
42,754
0
836
5,038
224,377
12,415
24,938
42,226
110,042
30,744
4,012
224,377
102,403
88,102
44,419
0
980
4,096
240,000
28,392
27,789
29,951
117,013
31,492
5,363
240,000
(12,502)
(2,254)
(1,665)
0
(143)
943
(15,623)
(15,978)
(2,851)
12,275
(6,971)
(748)
(1,351)
(15,623)
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
115
ANNUAL REPORT2009
OVIESSE S.p.A.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
882,932
121,446
(45,625)
75,821
(7,472)
143
68,492
0
2,161
(643)
70,010
(26,267)
43,743
811,354
119,575
(41,577)
77,998
(4,702)
(9,981)
63,315
0
1,827
(346)
64,796
(23,423)
41,372
71,578
1,871
(6,819)
(2,177)
(2,771)
10,125
5,177
0
335
(297)
5,214
(2,844)
2,371
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
298,373
135,895
46,562
35,505
4,097
15,184
535,616
180,830
40,978
51,696
188,136
65,335
8,641
535,616
297,867
141,052
44,776
21,436
3,432
11,783
520,346
177,118
37,774
49,077
188,444
57,721
10,212
520,346
506
(5,157)
1,786
14,068
665
3,401
15,270
3,712
3,203
2,619
(307)
7,614
(1,571)
15,270
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
116
ANNUAL REPORT2009
COIN FR ANCHISING S.p.A.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
5,900
1,053
(33)
1,020
0
(78)
942
0
5
(4)
943
(290)
653
4,270
687
0
687
0
9
696
0
0
(2)
694
(212)
481
1,630
366
(33)
333
0
(88)
246
0
5
(2)
249
(78)
172
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
389
0
6,321
0
0
5
6,715
1,374
0
3,875
72
1,394
0
6,715
0
0
2,731
0
0
0
2,731
721
0
91
68
1,851
0
2,731
389
0
3,590
0
0
5
3,984
653
0
3,783
4
(457)
0
3,984
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
117
ANNUAL REPORT2009
OVIESSE FR ANCHISING S.p.A.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
65,221
1,606
(124)
1,482
(2,977)
(208)
(1,703)
0
29
(32)
(1,706)
449
(1,257)
77,077
7,303
(156)
7,147
(2,977)
(209)
3,961
0
26
(28)
3,959
(1,265)
2,694
(11,855)
(5,697)
32
(5,665)
0
1
(5,664)
0
3
(4)
(5,665)
1,714
(3,951)
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
12,349
0
36,964
0
1,362
17
50,692
18,658
77
16,121
607
15,224
5
50,692
15,264
0
22,593
0
1,821
56
39,734
22,609
261
332
507
16,024
1
39,734
(2,914)
0
14,371
0
(459)
(39)
10,958
(3,951)
(184)
15,789
100
(800)
4
10,958
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
118
ANNUAL REPORT2009
BR AND ZERO S.p.A.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
2,940
(266)
(1)
(267)
0
(11)
(278)
0
23
(53)
(308)
83
(225)
655
(654)
0
(654)
0
(15)
(669)
0
0
0
(669)
77
(592)
2,285
388
(0)
387
0
4
391
0
23
(53)
361
6
367
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
6
0
1,534
85
4
50
1,679
164
12
0
638
861
4
1,679
7
0
540
0
15
46
608
(392)
1
70
408
521
0
608
(1)
0
993
85
(11)
5
1,071
557
11
(7-0)
230
339
4
1,071
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
119
ANNUAL REPORT2009
COSI - CONCEPT OF ST YLE ITALY S.p.A. . .
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009
4,463
(452)
0
(452)
0
5
(447)
0
0
(0)
(447)
116
(331)
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
4
823
1,687
0
1
0
2,515
89
158
29
2,017
202
20
2,515
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
120
ANNUAL REPORT2009
PADANA S.r. l .
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
1,198
(334)
(55)
(389)
(0)
3
(386)
0
85
(37)
(338)
146
(192)
1,528
(2,106)
(198)
(2,304)
(131)
(38)
(2,473)
0
10
(98)
(2,561)
741
(1,820)
(331)
1,772
274
1,915
131
41
2,087
0
75
61
2,223
(594)
1,628
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
0
0
0
0
0
0
0
0
0
0
0
0
0
0
320
230
1,137
484
24
75
2,270
1,624
39
0
348
185
74
2,270
(320)
(230)
(1,137)
(484)
(24)
(75)
(2,270)
(1,624)
(39)
0
(348)
(185)
(74)
(2,270)
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
121
ANNUAL REPORT2009
OVIESSE D.o.o.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
4,935
(849)
(320)
(1,169)
0
(23)
(1,192)
0
0
0
(1,192)
(0)
(1,192)
1,975
(591)
(97)
(688)
0
(11)
(699)
0
0
0
(699)
(0)
(699)
2,961
(258)
(223)
(481)
0
(12)
(493)
0
0
0
(493)
(0)
(493)
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
2,214
1,310
7
0
325
12
3,868
(883)
0
550
166
4,034
1
3,868
1,888
1,021
4
0
247
8
3,168
(399)
0
450
1,025
2,091
1
3,168
326
290
4
0
79
5
700
(484)
0
100
(859)
1,943
0
700
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
122
ANNUAL REPORT2009
GRUPPO COIN INTERNATIONAL S.A.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
0
(8)
0
(8)
0
(0)
(8)
0
0
0
(8)
(0)
(8)
0
(7)
0
(7)
0
(0)
(7)
0
0
0
(8)
(0)
(8)
0
(1)
0
(1)
0
(0)
(1)
0
0
0
(0)
0
0
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
0
0
0
0
19
0
19
18
0
0
1
0
0
19
0
0
0
0
28
0
28
27
0
0
1
0
0
28
0
0
0
0
(9)
0
(9)
(9)
0
0
0
0
0
(9)
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
123
ANNUAL REPORT2009
ORIENTAL BUYING SERVICES LTD.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
15,613
7,914
(98)
7,816
0
827
8,643
0
0
0
8,643
(64)
8,579
14,502
7,291
(132)
7,159
0
(1,268)
5,891
0
0
(20)
5,871
(193)
5,678
1,111
623
34
657
0
2,096
2,752
0
0
20
2,772
129
2,901
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
606
0
2,392
16,966
1,402
137
21,503
20,530
86
0
22
689
176
21,503
753
0
2,151
8,496
2,511
106
14,017
13,015
87
0
0
747
168
14,017
(147)
0
241
8,470
(1,109)
31
7,486
7,516
(2)
0
22
(58)
8
7,486
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
124
ANNUAL REPORT2009
OBS INDIA PRIVATE LTD
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
1,256
202
(49)
153
0
(10)
143
0
0
0
143
(57)
86
1,145
201
(43)
158
0
(6)
152
0
0
0
152
(51)
101
111
1
(6)
(5)
0
(4)
(9)
0
0
0
(9)
(6)
(15)
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
156
0
431
0
72
21
680
444
0
0
0
212
24
680
85
0
316
0
89
18
508
367
78
0
0
49
14
508
71
0
115
0
(17)
2
172
77
(78)
0
0
162
10
172
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
125
ANNUAL REPORT2009
COSI INTERNATIONAL LTD
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
54
(235)
(25)
(260)
0
(1)
(261)
0
0
0
(261)
(0)
(261)
0
(69)
(5)
(74)
0
(0)
(74)
0
0
0
(74)
(0)
(74)
54
(166)
(20)
(186)
0
(1)
(187)
0
0
0
(187)
(0)
(187)
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
169
0
29
0
84
2
284
(338)
0
0
2
612
8
284
93
0
0
0
1
1
95
(84)
0
0
0
164
15
95
76
0
29
0
83
1
189
(254)
0
0
2
448
(7)
189
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
126
ANNUAL REPORT2009
COSI SHANGHAI COMPANY LTD
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009
(32)
0
(32)
0
1
(31)
0
0
0
(31)
(0)
(31)
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
3
0
0
0
106
0
109
74
0
0
0
21
14
109
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
127
ANNUAL REPORT2009
GRUPPO COIN UNGHERIA K.F.T.
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
1,576
(538)
(77)
(615)
0
(153)
(768)
(1,184)
0
0
(1,952)
(14)
(1,966)
1
(41)
0
(41)
0
8
(33)
0
0
0
(33)
(0)
(33)
1,575
(497)
(77)
(574)
0
(161)
(735)
(1,184)
0
0
(1,919)
(14)
(1,933)
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
1,884
1,152
98
0
411
4
3,549
(1,909)
0
3,129
1,970
279
80
3,549
89
0
12
0
66
0
167
140
0
0
0
27
0
167
1,795
1,152
86
0
345
4
3,382
(2,049)
0
3,129
1,970
252
80
3,382
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
128
ANNUAL REPORT2009
WANDAR S.R.L. (WINDING UP)
PROFIT AND LOSS STATEMENT FY 2009
(thousand Euro)
NET REVENUES
Ebitda
Depreciation and amortization
Operating profit
Goodwill depreciation
Net Financial income (charges)
Earnings before non-recurring items and taxes
Adjustments to financial assets value
Non recurring income
Non recurring charges
Pre-tax profit
Income taxes
NET PROFIT
2009 2008
0
(4)
0
(4)
0
5
1
0
0
(0)
1
(8)
(7)
0
(4)
0
(4)
0
16
12
0
0
(1)
11
(14)
(3)
0
0
0
0
0
(11)
(11)
0
0
1
(10)
6
(4)
Change
Net fixed assets
Inventory
Receivables
Financial assets
Available funds
Accruals and deferred charges
TOTAL ASSETS
Net Equity
Severance indemnity and other provisions
Financial liabilities
Trade payables
Other liabilities
Accruals and deferred income
TOTAL LIABILITIES
31/01/2010ASSETS
LIABILITIES AND NET EQUIT Y
31/01/2009
0
0
95
544
0
0
639
488
147
0
0
4
0
639
0
0
98
583
0
0
681
495
175
0
0
11
0
681
0
0
(3)
(39)
0
(0)
(42)
(7)
(28)
0
0
(7)
0
(42)
Change
BAL ANCE SHEET AS AT 31 JANUARY 2010
(thousand Euro)
ANNUAL REPORT 2009
129
ANNUAL REPORT2009
ANNUAL REPORT 2009
130
ANNUAL REPORT2009
ANNUAL REPORT 2009
131
ANNUAL REPORT2009
DECL AR ATION BY THE MANAGER RESPONSIBLE
ANNUAL REPORT 2009
132
ANNUAL REPORT2009
STATEMENT ON THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO
ARTICLE 81/TER OF CONSOB REGULATION NO. 11971 OF 14 MAY 1999 AND
SUBSEQUENT AMENDMENTS AND INTEGRATIONS.
The undersigned:
1. Stefano Beraldo, as managing director, and Giovanni Zoppas, as manager in charge of financial
reporting, of Gruppo Coin S.pA. state, considering the provisions of paragraphs 3 and 4 of
article 154-bis of Legislative decree no. 58 of 24 February 1998:
• the adequacy given the group’s characteristics;
• the effective application of administrative and accounting procedures during 2009 to prepare
the consolidated financial statements.
2. No significant issues arose.
3. Moreover, they state that:
3.1 The consolidated financial statements at 31 January 2010:
a) have been prepared in accordance with the IFRS, and recognized by the Eurpean Union as
requested by Regulation (CE) no. 1606/2002 of European Parliament and of European
Council, as at 19 July 2002, as well as with the regulations issued to implement Legislative
Decree n° 38/2005;
b) comply with the accounting records and entries;
c) it is suitable to give a true and fair view of a the financial position of the issuer and
consolidated companies.
3.2 The Directors’ Report includes a reliable analysis of the performance and result of
management, as well as of the situation of the issuer and the entirety of the companies,
including in consolidation, together with the description of the principal risks and uncertainties
to which they are exposed.
Venice, 14 April 2010
Managing Director Manager in charge of financial reporting
Stefano Beraldo Giovanni Zoppas
ANNUAL REPORT 2009
133
ANNUAL REPORT2009
ANNUAL REPORT 2009
134
ANNUAL REPORT2009
ANNUAL REPORT 2009
135
ANNUAL REPORT2009
AUDITING FIRM REPORT
ANNUAL REPORT 2009
136
ANNUAL REPORT2009
Sede legale e amministrativa: Milano 20149 Via Monte Rosa 91 Tel. 0277851 Fax 027785240 Cap. Soc. 3.754.400,00 Euro i.v., C.F. e P.IVAe Reg. Imp. Milano 12979880155 Iscritta al n. 43 dell’Albo Consob – Altri Uffici: Bari 70124 Via Don Luigi Guanella 17 Tel.0805640211 – Bologna Zola Predosa 40069 Via Tevere 18 Tel. 0516186211 – Brescia 25123 Via Borgo Pietro Wuhrer 23 Tel.0303697501 – Firenze 50121 Viale Gramsci 15 Tel. 0552482811 – Genova 16121 Piazza Dante 7 Tel. 01029041 – Napoli 80121Piazza dei Martiri 30 Tel. 08136181 – Padova 35138 Via Vicenza 4 Tel. 049873481 – Palermo 90141 Via Marchese Ugo 60 Tel.091349737 – Parma 43100 Viale Tanara 20/A Tel. 0521242848 – Roma 00154 Largo Fochetti 29 Tel. 06570251 – Torino 10129Corso Montevecchio 37 Tel. 011556771 – Trento 38100 Via Grazioli 73 Tel. 0461237004 - Treviso 31100 Viale Felissent 90 Tel. 0422696911– Trieste 34125 Via Cesare Battisti 18 Tel. 0403480781 - Udine 33100 Via Poscolle 43 Tel. 043225789 – Verona 37122 Corso Porta Nuova125 Tel.0458002561
AUDITORS’ REPORT IN ACCORDANCE WITH ARTICLE 156 OFLEGISLATIVE DECREE N 58 DATED 24 FEBRUARY 1998 (NOW ARTICLE 14OF LEGISLATIVE DECREE N° 39 DATED 27 JANUARY 2010)
To the shareholders ofGruppo Coin SpA
1 We have audited the consolidated financial statements of Gruppo Coin SpAand its subsidiaries (“Coin Group”) as of 31 January 2010, which comprisethe statement of consolidated financial position, the consolidated incomestatement, the statement of consolidated comprehensive income, thestatement of changes in consolidated shareholders’ equity, the consolidatedcash flow statement and related explanatory notes. The directors of GruppoCoin SpA are responsible for the preparation of these financial statementsin compliance with the International Financial Reporting Standards asadopted by the European Union, as well as with the regulations issued toimplement article 9 of Legislative Decree n° 38/2005. Our responsibility is toexpress an opinion on these financial statements based on our audit.
2 We conducted our audit in accordance with the auditing standards andcriteria recommended by Consob. Those standards and criteria require thatwe plan and perform the audit to obtain the necessary assurance aboutwhether the consolidated financial statements are free of materialmisstatement and, taken as a whole, are presented fairly. An audit includesexamining, on a test basis, evidence supporting the amounts anddisclosures in the consolidated financial statements. An audit also includesassessing the accounting principles used and significant estimates made bythe directors. We believe that our audit provides a reasonable basis for ouraudit opinion.
The audit of the consolidated financial statements as of 31 January 2010has been conducted in accordance with the Law in force during that period.
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For comparative purposes the consolidated financial statements presentcorresponding data of the prior year. As discussed in the explanatory notes,the directors have retrospectively adjusted the comparative data related tothe audited consolidated financial statements of the prior year, on which weissued our auditors’ report on 8 May 2009. The methods used for theretrospective adjustment of the corresponding data of the prior period andthe information presented in the explanatory notes, with regards to changesmade to such data, have been audited by us for the purpose of expressingour opinion on the Coin Group consolidated financial statements as of31 January 2010.
3 In our opinion, the consolidated financial statements of Gruppo Coin SpA asof 31 January 2010 comply with the International Financial ReportingStandards as adopted by the European Union, as well as with theregulations issued to implement article 9 of Legislative Decree n° 38/2005;accordingly, they have been drawn up clearly and give a true and fair viewof the financial position, results of operations and cash flows of Coin Groupfor the period then ended.
4 As indicated in the explanatory notes, based on what is allowed by theIFRS 3, the initial accounting of the acquisition of 100% of the Upim Srlcapital, carried out on 28 January 2010, was determined provisionally. Thedefinitive accounting of the same, with the identification and evaluation ofthe acquired assets and liabilities, shall be completed within 12 monthsfrom the acquisition date.
5 The directors of Gruppo Coin SpA are responsible for the preparation of theDirectors’ Report and for the Report of the Corporate Governance andownership structures published in the section “Corporate Governance” ofthe internet website of Gruppo Coin SpA in accordance with the applicablelaws and regulations. Our responsibility is to express an opinion on theconsistency of the Directors’ Report and of the information provided inaccordance with the article 123-bis, paragraph 1, letters c), d), f), l), m) andparagraph 2, letter b) of the Legislative Decree n° 58/98, presented in theReport of the Corporate Governance and ownership structures, with thefinancial statements, as required by the Law. For this purpose, we haveperformed the procedures required under Auditing Standard n° 001 issuedby the Italian Accounting Profession (CNDCEC) and recommended byConsob. In our opinion the Directors’ Report and the information, providedfor in accordance with the article 123-bis, paragraph 1, letters c), d), f), l),m) and paragraph 2, letter b) of the Legislative Decree n° 58/98 presentedin the Report of the Corporate Governance and ownership structures, are
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consistent with the consolidated financial statements of Gruppo Coin SpAas of 31 January 2010.
Milan, 11 May 2010
PricewaterhouseCoopers SpA
Signed byGiorgio Greco(Partner)
This report has been translated into the English language from the originalwhich was issued in Italian, solely for the convenience of internationalreaders.We have not examined the translation of the financial statements referred toin this report.
ANNUAL REPORT 2009
ENGLISH VERSION
GRUPPO COIN SpAVia Terraglio, 17
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