PRESS RELEASE – THE BOD OF THE ITWAY GROUP APPROVES THE FINANCIAL STATEMENTS AS AT DECEMBER 31, 2017
- Total revenue totalling Euro 44.6 million, after the disposal of Business-e for Euro 31.1 million
- Net result for the period Euro 717 thousand compared with Euro -62 thousand a year earlier
- Consolidated EBITDA Euro -1.4 million of which Euro -1.3 million related to the disposed of Business-e subsidiary
- Improvement in the Group Net Financial Position Euro-6.8 million Vs Euro -21.3 million as at 31.12.2016
- Net result of the Parent Company Itway totalling Euro 717 thousand compared with Euro -64 thousand in the same period of 2016
- Improvement in the Net Financial Position of the Parent Company Itway Spa: Euro -7.0 million Vs. -16.3 million a year earlier
Ravenna, March 29, 2018 – The Board of Directors of Itway S.p.A., a company listed on the Star segment of Borsa Italiana, which is active in the IT sector, at the March 2016, 2018 board meeting adjourned to March 29, 2018, as already communicated to the market, approved the financial statements as at December 31, 2017 and the individual financial statements to submit to the shareholders’ meeting.
In 2017 Itway there was the continuation of the strategic re-positioning of the Group that started in past fiscal years following the sale in 2016 to the Esprinet Group of the value added IT distribution activities related to wholesale marketing to System Integrators and Value Added Resellers of hardware, software and various services in Italy, Spain and Portugal. In particular, in 2017 there was a further disposal, completed in November 2017, whereby all of the share capital of the Business-e S.p.A subsidiary was sold to Maticmind S.p.A, a company also operating in the IT sector, for an agreed price of Euro 12,335,526 (of which Euro 6.6 million was already received). This transaction was already communicated to the market with press releases on October 16, 2017 and November 8, 2017.
The sale of the division allowed to strengthen capital in addition to have a more efficient allocation of Group resources, exploiting this way a structure that is strategically oriented towards technological and product innovation.
Andrea Farina, President and Chief Executive Officer of Itway stated:
“The 2017 fiscal period that just ended was complex and full of events that integrate the strategic project that started in the two previous years to re-position the Group. Following the sale of Business-e, in 2018 the industrial and organizational structure of the Itway Group will be focused on the development of the VAR SBU and the VAS SBU with an integrated offer of consulting, engineering and manufacturing services in the higher value added ICT sectors — Cloud Computing, IoT, Big Data e Managed Security Services –in Italy and in the foreign countries where the Group is present. The international presence that we have, the renewed flexibility and the farsightedness will allow the Group to seize new future challenges.”
The Itway Group operates in three main types of activities: 1) value added distribution of “best of breed” software technology (the best among what is available, at all moments, on the market) in Greece and Turkey; 2) offer of services and consultancy aimed at training and supporting companies in the fields of Cybersecurity, IT security, Managed Security Services; 3) and in the innovative and emerging Cloud Computing, Internet of Things, Big Data and Blockchain. The main Strategic Business Units (SBU) are in charge of these sectors: the VAD SBU (Value Added Distribution), the VAR SBU (Value Added Reseller) and the VAS SBU (Value Added Services).
ANALYSYS OF THE OPERATING RESULTS, FINANCIAL POSITION AND CASH FLOWS OF THE GROUP IN 2017
Following are the main consolidated economic indicators for the fiscal period ended December 31, 2017 compared with those of the previous fiscal period and with the new operating perimeter highlighted (Total Group includes the business unit sold, the results of the disposed Business-e subsidiary alone and the net result corresponding to the new consolidation perimeter).
|Euro Million||Total Group||Business-e||Net Itway Group||Total Group||Business-e||Italy, Iberica VAD unit||Net Itway Group|
In relation to the perimeter of the Group corresponding to the assets that remained within Itway, consolidated Revenue totalled Euro 31.1 million, in growth of 6.1% with Euro 29.3 million in 2016
EBITDA was a negative Euro 0.1 million compared with a positive Euro 0.3 million in 2016; EBIT in 2017 was a negative Euro -1.0 million, broadly steady year on year. The Result before taxes was a negative Euro -2.8 million compared with a negative Euro -0.6 million in the same period of 2016.
Group Net Financial Position
|Thousands of Euro||31/12/2017||31/12/2016|
|Cash on Hand||440||1,523|
|Current financial assets||1,428||–|
|Current financial liabilities||(9,667)||(22,164)|
|Current net financial position||(6,987)||(18,158)|
|Non current financial assets||2,098||500|
|Non current financial liabilities||(1,899)||(3,642)|
|Non current net financial position||199||(3,142)|
|Total net financial position||(6,788)||(21,300)|
The Financial Position as of December 31, 2017 totalled approx. Euro -6.8 million compared with Euro -21.3 million at December 31, 2016, improving by approx. Euro 14 million mainly as a result of:
- The receipt of the first tranche from Maticmind
- The deconsolidation of financial payables belonging to the disposed subsidiary Business-e
- Payment of a significant share of account receivables in force as of December 31, 2016 with the business units sold in 2016, which allowed paying back the relative bank advances and due to the sale of Business-e S.p.A..
Current liabilities furthermore include two Iccrea medium-term loans, for a total of Euro 912 thousand, for which the covenants were breached and that are therefore currently classified as short term, even though the parameters are currently being redefined in order to maintain the original status of medium-term.
The digital market in Italy in 2017 grew +2.3% (compared with 1.8% in 2016) with the innovative Digital Enablers sectors continuing to expand. These are the segments in which the Group made important investments over the past five years and is well positioned. Assinform forecasts for 2016-2019 continue to indicate an expansion in the different sectors with double digit growth rates [Cybersecurity (+11.9%), Cloud Computing (+19.8%), IoT (+14.3), Big Data (+23.1%)]
Market Positioning: The Itway Group during the fiscal year continued to invest in the markets of Cybersecurity, Cloud Computing, IoT and Big Data that are all related and correlated. Furthermore, it continued to reposition on new product lines in order to replace low margin lines with those with higher value added that also allow for a lower use of working capital.
Performance of the Business Areas
Sector performance: Value Added Distribution (VAD)
In the Value Added Distribution sector the Group operates in Greece and Turkey in the distribution of specialized hardware and software products, certification services on distributed software technologies and pre- and post-sale technical assistance for clients that are System Integrators and Value Added Resellers that sell products directly to end clients.
Following are the main economic indicators of the VAD SBU, compared with those of the previous fiscal year; in the Italy and Iberica VAD Transaction column are the data of the business units sold in the previous fiscal year, as already indicated:
|(Thousands of Euro)||December 31 2017||December 31 2016|
|Net Itway VAD||Net Itway VAD||Italy, Iberica VAD transaction||Total Itway VAD|
|Result before taxes||1,782||1,548||1,264||2,812|
|Result for the period||1,369||1,116||261||1,377|
The Turkish subsidiary confirmed once again the development prospects of the Country and ended the fiscal period with revenue volumes and profitability in line with the same period of 2016. The results for the period were however impacted by the performance of the Turkish Lira exchange rate, which lost approx. 23% of its value against the Euro compared with 2016. Therefore, in local currency terms, results would show a revenue increase of 16% and a growth in the Result for the period of 22% and a net profit of over Euro 1 million.
The performance of the Greek subsidiary was in line with 2016 and, despite the continued delicate situation of the Country, is consolidating the results achieved in the past fiscal years ending the period with a net profit of over Euro 300 thousand.
Sector performance: Value Added Reseller SBU
Through the Value Added Reseller SBU, the Group operates in the following market segments:
- Distribution and integration of products and services for logical security of information systems;
- Professional services and provider of solutions and software technologies for e-business ;
- Professional service of system integrators and centralization of applications .
Following is the brief income statement of the VAR SBU, compared with the previous fiscal year. The data refer to the Business-e subsidiary, 100% of which was sold to Maticmind in November 2017.
|Thousands of Euro||31/12/2017||31/12/2016|
|Result before taxes||(2,072)||528|
|Result for the period||(2,072)||214|
Business-e, a leader in Italy in the Cybersecurity sector, after its sale has continued its growth within the Maticmid S.p.A. group with which Itway has in place industrial agreements for the future on Cybersecurity that also involve 4Science (Data Curation and Big Data), with the VAR SBU and iNebula (Cloud Computing and IoT) of the VAS SBU.
Sector performance: Activities of the Parent Company and other Start-up sectors
After the sale of the Italian distribution activities to Esprinet S.p.A., Itway has assumed the role of parent company listed on Borsa Italiana S.p.A. that supplies services of different nature to the operational subsidiaries and includes new sectors, described below, which are investing in the realization of products and tat are in an operational and commercial start-up phase.
These sectors, related but that do not coincide with the historical ones (VAD and VAR) still, do not yet make a relevant contribution to the consolidated results but they are important in terms of strategy to strengthen and diversify the business segments
These new innovative sectors, still in the start-up phase, are:
- In the cloud information services: “Managed Services” for SMEs in Network and Cloud environment in areas of Security, Storage Management, Business Continuity, Green IT, Energy Recovery, Intelligent Analysis of video-surveillance, Internet of Things platform
During the period further services were developed that relate to more administrative aspects and that were thought for professional and accounting firms. This expansion was made possible thanks to the introduction in iNebula (the company of the Group that covers “in the cloud” services) of the specific know how of some professional and technical experts that came from the cloud services for professionals sector and that had gained important experience specialized companies. This also allowed to also expand, in addition to the previously described sectors, to the area of Process Governance with proprietary and high value added services and know-how.
- Assisted services in N+SOC e MSSP solutions, to check networks;
- Information Technology for Science: ICT for Cultural Heritage and Data Curation services, in the start-up phase. The reference market is worth Euro 4 billion in Europe and there are slightly more than 10 players specialized in this sector at a global level
ANALYSIS OF OPERATING RESULTS, FINANCIAL POSITION AND CASH FLOWS OF THE PARENT COMPANY ITWAY SPA
For the parent company Itway SpA, the fiscal year as at December 31, 2017 ended with a Net Result of Euro 717 thousand, compared with Euro -64 thousand in the previous year.
EBIT came in at a negative Euro 2,182 thousand compared with a positive Euro 602 thousand in the previous year.
Net Financial Position of the Parent Company
|Thousands of Euro||31/12/2017||31/12/2016|
|Cash on hand||129||119|
|Current financial liabilities||(8,171)||(14,529)|
|Current net financial position||(7,230)||(14,013)|
|Non current financial assets||2,098||500|
|Non current financial liabilities||(1,899)||(2,845)|
|Non current financial position||199||(2,345)|
|Total net financial position||(7,031)||(16,358)|
Also the net financial position of the parent company Itway S.p.A. as of December 31, 2017 improved by approx. Euro 9.3 million compared with December 31, 2016 as it received a significant portion of account receivables of the business units sold in 2016 and that were in force as of December 31, 2016, which allowed to pay back the related bank advances.
Current financial liabilities for the time being include a medium-term Iccrea financing for Euro 267 thousand, for which the terms of the covenants were not observed and is therefore classified as short term. The parameters are currently being redefined in order to maintain the original status of medium term.
Expired debt positions of Itway S.p.A. and of the Itway Group, divided by type (financial, account, tax, social security and towards employees) and the eventual related reaction initiatives of creditors (solicitation, interruption of supply, injunctions, etc.)
As of December 31, 2017 expired financial positions of the parent company Itway totalled Euro 6.9 million, which the expired financial positions of the Itway Group totalled Euro 7.7 million. Talks with Banks have been opened to re-define the terms and conditions to remodulate financial indebtedness.
The parent company as of December 31, 2017 has expired account indebtedness towards suppliers of approx. Euro 2.5 million (of which approx. Euro 0.4 million for amounts being contested by debtors, also through legal procedures) and an indebtedness towards tax authorities for VAT debt expired as of December 31, 2017 totalling approx. Euro 0.35 million related to debt not paid at their natural expiry and that are expected to be paid by the terms foresees by regulations in force.
The Itway Group as of December 31, 2017 had an expired account indebtedness towards suppliers of the Companies of the Group totalling approx. Euro 6.8 million (of which approx. Euro 2.1 million for amounts being contested by the debtors, also through legal proceedings) and an indebtedness towards tax authorities for VAT debt that expired as of December 31, 2017 totalling approx. Euro 0.35 million related to debt not paid at the natural expiry during the 2016 fiscal year but that is expected to be paid within the terms foreseen by regulations in force.
Regarding the previously mentioned expired commercial positions of Itway SpA and the Itway Group, please not that to date some solicitations have been received but there are no legal procedures or initiatives and no interruption of commercial services has taken place. In particular, regarding the financial indebtedness, the Company and the Group have undertaken a debate with financial creditors aimed at redefining the terms and conditions to remodulate debt.
The Company and the Itway Group as of December 31, 2017 have no social security or debt towards employees not paid at the natural expiry.
Relations with related parties
During the 2017 fiscal period the Group had commercial and financial relationships with related parties. These relationships were part of normal management activity, regulated at market conditions that are established by contract by the parties in line with the standard procedures.
Industrial plan for 2018-2022 and financial plan of Itway Spa for 2018/2019
The Board of Directors of Itway also approved the guide lines of the industrial plan of the Group for the period 2018-2022 and the financial plan for Itway S.p.A. for all of 2019 following the sale of Business-e that was concluded on November 8, 2017. These guidelines foresee that the Group does not exit from the security sector but that it re-positions itself. Furthermore the plan foresees a greater focus on the Be Innova S.r.l. subsidiary and on the iNebula and 4Science start-ups. There will be a continuation of the development of VAD activities in Greece and Turkey, which will serve as international support to the group also in the MEA area and that will allow the parent company to receive dividends from these subsidiaries that enjoy a constant growth both in terms of volumes and in terms of cash flow generated.
In light of the what emerges from the approved financial plan and after having made the necessary checks of future expected cash flows, the Directors have deemed with reasonable certainty that the Company and the Group in the new configuration are able to face their commitments in the 2018-2019 timeframe and therefore confirmed the adoption on the going concern principle in drafting the consolidated financial statements and the separate financial statements of the Parent Company as at December 31, 2017.
Foreseeable evolution of operations
The sale of Business-e S.p.A. that represented an important asset in the strategic vision of the Group, significantly rebalanced the Group’s finances. The 2018-2022 Industrial Plan foresees to develop the security sector: with a re-positioning underway and with a greater focus on the Be Innova subsidiary and the iNebula and 4Science start-ups. It also foresees continuing to develop in Greece and Turkey that will become Countries to support the international development also in the MEA area.
The Parent Company as at December 31, 2017 owns 887,366 own shares (equal to 11.22% of share capital) for a nominal value of Euro 443,683 and a net movement in 2017 of approx. Euro -148 thousand and an overall purchase cost for the shares held in portfolio of Euro 1,386 thousand (equal to the amount reflected in the Own share reserve deducted from net equity of the fiscal period and at a consolidated level). During the 2017 fiscal year, as authorized by the Shareholders meeting of Itway Spa, a total of 200 own shares were purchased (equal to 0.00% of share capital) for a nominal value of Euro 100 and a total of 82,600 shares were sold (equal to 1.04% of share capital) for a nominal value of Euro 41,300.
Proposal for the allocation of the Result of the period
In terms of the allocation of the result reported in the financial statements of the company totalling Euro 716,861, has proposed to allocate 5% or a total of Euro 35,843 for the legal reserve and the remaining Euro 681,018 to the voluntary reserve.
In the same meeting, the Board of Directors approved the Annual Report on Corporate Governance and Assets pursuant to articles 123-bis of Legislative Decree 1998 and 89-bis of Issuers’ Regulation 11971/99 and subsequent amendments.
As foreseen by paragraph 2, art. 154-bis of the T.U.F., the manager mandated to draft the corporate Accounting documents of Itway Group, Sonia Passatempi, declares that the corporate accounting information in this press release corresponds to the documental evidence, financial books and accounting records.
The explanatory report drafted by the Board of Directors pursuant to Article 73 of Issuers’ Regulations will be made available, within the terms foreseen by the law, on the internet site of the Company www.itway .com and in the centralized storage site Bit Market Service, managed by Computershare S.p.A. that can be consulted on www.emarketstorage.com.
Founded in Ravenna on July 4, 1996, Itway S.p.A. is the parent of a group that operates in the IT sector through the planning, production and distribution of technologies and solutions in the cyber security, cloud computing and big data sectors. Since 2001, Itway has been listed on the STAR segment of Borsa Italiana. www.itway.com
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