2012 Half year financial report

In the first half of 2012, the Group’s overall debt increased by €/000 7,153, from €/000 499,461 to €/000 506,614. Net of the fair value measurement of financial derivatives to hedge the exchange risk and interest rate risk, and the adjustment of relative hedged items, as of 30 June 2012 total financial debt of the Group increased by €/000 3,558.

Financial liabilities as of 30
June 2012
Financial liabilities as of 31
December 2011
Change
In thousands of Euros  Current Non Current Total Current Non Current Total Current Non Current Total
Gross financial debt 123,579 367,765 491,344 170,261 317,525 487,786 (46,682) 50,240 3,558
Fair Value of hedging derivatives 15,270 15,270 11,675 11,675   3,595 3,595
Total 123,579 383,035 506,614 170,261 329,200 499,461 (46,682) 53,835 7,153
 

The Group’s net debt amounted to €/000 384,004 as of 30 June 2012 compared to €/ 000 335,899 as of 31 December 2011, as can be seen in the table on Net Debt included in the financial statements.

The attached tables summarise the breakdown of financial debt as of 30 June 2012 and as of 31 December 2011, as well as changes for the period.

In thousands of Euros Book value
As of
31.12.2011
Repayments New
issues 
Reclassification
to the current
portion
Exchange
delta 
Other
changes 
Book value
As of
30.06.2012
Non-current portion:
Bank financing 112,768 68,780 (15,621) 560 (2,903) 163,5844
Bonds 191,859 849 192,708
Other medium-/long-term loans:
- of which leasing 6,745 (463) 6,282
- of which amounts due to other
lenders
6,153 (962) 5,191
Total other loans 12,898 (1,425) 11,473
Total 317,525 68,780 (17,046) 560 (2,054) 367,765


In thousands of Euros Book value
As of
31.12.2011
Repayments  New
issues 
Reclassification
to the current
portion
Exchange
delta 
Other
changes 
Book value
As of
30.06.2012
Current portion:
Current account overdrafts 85 1,765 1,850
Current account payables 22,864 16,149 122 39,135
Bonds - -
Payables due to factoring companies 20,085 12,741 32,826
Current portion of medium-/long-term
loans:
- of which leasing 894 (442) 463 915
- of which due to banks 122,428 (93,119) 15,621 47 44,977
- of which amounts due to other
lenders
3,905 (991) 962 3,876
Total other loans 127,227 (94,552) 17,046 47 49,768
Total 170,261 (94,552) 30,655 17,046 122 47 123,579
 

The breakdown of the debt is as follows:

In thousands of Euros  Book value
as of 30.06.2012
Book value
as of 31.12.2011
Par value
as of 30.06.2012
Par value
as of 31.12.2011
Bank financing
249,546 258,145 253,287 259,031
Debenture loan
192,708 191,859 201,799 201,799
Other medium-/long-term loans:
- of which leasing 7,197 7,639 7,197 7,639
- of which amounts due to other lenders 41,893 30,143 41,893 30,143
Total other loans 49,090 37,782 49,090 37,782
Total 491,344 487,786 504,176 498,612

The table below shows the debt servicing schedule as of 30 June 2012:

In thousands of Euros  Par value
as of
30.06.2012
Amounts
falling due
within 12
months
Amounts
falling due
after 12
months
Amounts falling due in

    2nd half
of 2013
2014 2015 2016 Beyond
Bank financing 253.287 86.226 167.061 14.499 26.745 89.339 19.483 16.995
- including opening of credit lines and bank overdrafts 40.985 40.985





- of which medium/long-term bank loans 212.302 45.241 167.061 14.499 26.745 89.339 19.483 16.995
Debenture loan 201.799
201.799


150.000 51.799
Other medium-/long-term loans:







- of which leasing 7.197 915 6.282 473 5.809


- of which amounts due to other lenders 41.893 36.702 5.191 659 1.630 1.639 312 951
Total other loans 49.090 37.617 11.473 1.132 7.439 1.639 312 951
Total 504.176 123.843 380.333 15.631 34.184 90.978 169.795 69.745
 

The following table analyses financial debt by currency and interest rate.

In thousands of Euros Book value
as of 31.12.2011
Book value
as of 30.06.2012
Notional value
as of 30.06.2012
Applicable
interest rate
Euro 438.248 437.302 449.331 4,53%
Indian Rupee
12.069 19.514 19.969 10,53%
Indonesian Rupiah
1.619 3.115 3.115 8,00%
US Dollar
17.003 5.163 5.163 2,14%
Vietnamese Dong
14.605 22.095 22.443 17,22%
Japanese Yen
4.242 4.155 4.155 1,90%
Total currencies other than Euro
49.538 54.042 54.845 11,68%
Total 487.786 491.344 504.176 5,31%
 

Medium and long-term bank debt amounts to €/000 208,561 (of which €/000 163,584 non-current and €/000 44,977 current) and consists of the following loans:

  • a €/000 85,714 medium-term loan from the European Investment Bank to finance Research & Development investments planned for the period 2009-2012. The loan will fall due in February 2016 and has an initial amortisation quota of 14 six-monthly instalments to be repaid at a variable rate equal to the six-month Euribor plus a spread of 1.323%. The contractual terms envisage loan covenants but exclude guarantees. It should be noted that, with reference to the 2011 period, these parameters were comfortably met. An interest rate swap was taken out on the loan to hedge the interest rate risk (for more details, see attachment F);
  • a medium-term revolving syndicated loan of €/000 57,326 (nominal value of €/000 60,000) granted in December 2011 and finalised in January 2012, as suspension conditions had been met. The loan, of a total value of €/000 200,000, is for 4 years and was undersigned to refinance the existing equivalent loans which are near maturity. The contractual terms envisage loan covenants but exclude guarantees. It should be noted that, in reference to the first half of 2012, these parameters were comfortably met;
  • a medium-term revolving syndicated loan of €/000 765 (nominal value of €/000 1,000) granted by Monte dei Paschi di Siena in December 2011 and finalised in January 2012, as suspension conditions had been met. The loan, of a total value of €/000 40,000, is for 18 month minus one day and was undersigned to refinance the existing equivalent loans which are near maturity;
  • a €/000 14,971 (nominal value of €/000 15,000) loan from Mediobanca and Banca Intesa San Paolo, syndicated to a small pool of banks, maturing in December 2012. The loan package consisted of an initial instalment of €/000 150,000 which has been fully drawn on (as of 30 June 2012 €/000 15,000 was still due) and a second instalment of €/000 100,000 to be used as a credit line, which the Parent Company waived in advance of maturity, in January 2012. Guarantees are not issued. However in line with market practice, some financial parameters must be complied with. It should be noted that, in reference to the first half of 2012, these parameters were comfortably met;
  • a €/000 9,375 five-year unsecured loan from GE Capital Interbanca stipulated in September 2008;
  • €/000 4,275 of loans from various banks pursuant to Italian Law no. 346/88 on subsidised applied research;
  • a €/000 1,350 eight-year subsidised loan from ICCREA in December 2008 granted under Italian Law100/90;
  • €/000 19,392 (nominal amount €/000 19,847) medium-term loan for USD/000 29,000 granted byInternational Finance Corporation (a World Bank member) to the subsidiary Piaggio Vehicles PrivateLimited on which interest matures at a variable rate increased by a margin. The loan will fall due on 15July 2019 and has an amortisation quota of six-monthly instalments from January 2014. A guaranteehas been provided by the Parent Company and, in line with market practice, some financial parametersmust be met. It should be noted that, in reference to the first half of 2012, these parameters werecomfortably met. Cross currency swaps were taken out on the loan to hedge the exchange risk andinterest rate risk (for more details, see attachment F);
  • €/000 15,393 (nominal value €/000 15,741) medium-term loan for USD/000 19,680 granted byInternational Finance Corporation to the subsidiary Piaggio Vietnam on which interest matures at avariable rate increased by a margin. The loan will fall due on 15 July 2018 and has an amortisationquota of six-monthly instalments from July 2014. A guarantee has been provided by the ParentCompany and, in line with market practice, some financial parameters must be met. It should benoted that, in reference to the first half of 2012, these parameters were comfortably met. Crosscurrency swaps were taken out on the loan to hedge the exchange risk and interest rate risk (for moredetails, see attachment F).     

The item Bonds for €/000 192,708 (nominal value of €/000 201,799) refers to:

  • €/000 141,281 (nominal value of €/000 150,000) relative to a high-yield debenture loan issued on 4December 2009 for a nominal amount of €/000 150,000, falling due on 1 December 2016 and with asemi-annual coupon with fixed annual nominal rate of 7%. Standard & Poor’s and Moody’s confirmedtheir ratings in 2011 of BB with a negative outlook and Ba2 with a stable outlook;
  • €/000 51,427 (nominal value of €/000 51,799) relative to a private debenture loan (US PrivatePlacement) issued on 25 July 2011 for $/000 75,000 wholly subscribed by an American institutionalinvestor, payable in 5 annual portions from July 2017, with a semi-annual coupon with fixed annualnominal rate of 6.50%. As of 30 June 2012, the fair value measurement of the debenture loan wasequal to €/000 64,385. Cross currency swaps were taken out on this loan to hedge the exchange riskand interest rate risk (for more details, see attachment F).

The items Medium/long term bank debt and Bonds include loans treated, in accounting terms, on an amortised cost basis (revolving loans, Mediobanca/Intesa syndicate, International Finance Corporation loans, high-yield debenture loan and private debenture loan). According to this criterion, the nominal amount of the liability is decreased by the amount of relative costs of issue and/or stipulation, in addition to any costs relating to refinancing of previous liabilities. The amortisation of these costs is determined on an effective interest rate basis, and namely the rate which discounts the future flows of interest payable and reimbursements of capital at the net carrying amount of the financial liability.
Some liabilities were recognised at fair value, with relative effects recognised as profit and loss.
Medium-/long-term payables due to other lenders equal to €/000 16,264 of which €/000 11,473 due after the year and €/000 4,791 as the current portion, detailed as follows:

  • a property lease for €/000 7,197 granted by Unicredit Leasing (non-current portion equal to €/000 6,282);
  • subsidised loans for a total of €/000 9,067 provided by the Italian Ministry of Economic Development and Italian Ministry of Education using regulations to encourage exports and investment in research and development (non-current portion of €/000 5,191).

Financial advances received from factoring companies and banks, on the sale of trade receivables with recourse, total €/000 32,826.