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RECORDATI ANNOUNCES SALES AND MARGIN GROWTH IN THE FIRST HALF 2018. REVENUES +6.9%, OPERATING INCOME +14.1%, NET INCOME +11.7%

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RECORDATI ANNOUNCES SALES AND MARGIN GROWTH IN THE FIRST HALF 2018. REVENUES +6.9%, OPERATING INCOME +14.1%, NET INCOME +11.7%.  

  • Consolidated revenues € 696.1 million, +6.9%.
  • EBITDA (1) € 260.0 million, +16.1%
  • Operating income € 231.9 million, +14.1%.
  • Net income € 164.2 million, +11.7%.
  • Net financial position (2):  net debt of € 556.4 million.
  • Shareholders' equity € 927.2 million.

Milan, 26 July 2018 – The Board of Directors of Recordati S.p.A. approved the Group's consolidated results for the first half 2018 prepared in accordance with International Accounting Standards and International Financial Reporting Standards (IAS/IFRS) and in particular as per IAS 34 requirements for interim reporting. These financial statements will be available today at the company's offices and on the company's website (www.recordati.com) and can also be viewed on the authorized storage system 1Info (www.1Info.it). The independent auditors' report on the consolidated condensed half-year financial statements will be available within the legal deadline at the company's offices and on the company's website (www.recordati.com) and can also be viewed on the authorized storage system 1Info (www.1Info.it).

Financial highlights

  • Consolidated revenues in the first half of 2018 are € 696.1 million, up by 6.9% compared to the same period of the preceding year. International sales grow by 8.2%.
     
  • EBITDA (1), at 37.4% of sales, is € 260.0 million, an increase of 16.1% over the same period of the preceding year.
     
  • Operating income, at 33.3% of sales, is € 231.9 million, an increase of 14.1%.
     
  • Net income, at 23.6% of sales, is € 164.2 million, an increase of 11.7% over the first half of 2017.
     
  • Net financial position (2) at 30 June 2018 records a net debt of € 556.4 million compared to net debt of € 381.8 million at 31 December 2017. During the period own shares were purchased for an overall disbursement of € 169.8 million, dividends were distributed for an amount of € 87.1 million. Furthermore, the Italian company Natural Point S.r.l. was acquired for a value of € 75 million. Shareholders' equity is € 927.2 million.

             

(1) Operating income before depreciation, amortization and write down of both tangible and intangible assets.
(2) Cash and short-term financial investments less bank overdrafts and medium/long-term loans which include the measurement at fair value of hedging derivatives.

Corporate development news

In April an agreement with Mylan for the acquisition of the rights to Cystagon® (cysteamine bitartrate), indicated for the treatment of proven nephropathic cystinosis in children and adults, for certain territories, including Europe, was concluded. The product was previously commercialized by Orphan Europe (a Recordati group company) under license from Mylan. The definitive acquisition of the rights allows the Group to continue offering this life-saving treatment to patients.

In June Recordati acquired 100% of the share capital of Natural Point S.r.l., an Italian company, based in Milan, active in the food supplements market. The company realized sales of € 15 million in 2017 and has an excellent profitability profile. The signing and closing of the transaction took place at the same time. Natural Point was established in 1993 with the objective of promoting a culture of healthy use of food supplements. It offers a wide portfolio of very efficacious supplements in highly bioavailable formulations, produced with safe active ingredients, to improve health and well-being. The company's main product is a particular formulation of magnesium carbonate and citric acid that has the characteristic of being easily assimilated into the body, apart from its having an agreeable flavor.

Management Comments

"The financial results obtained in the first half of the year confirm the continued growth of the Group, with further improvement of its profitability", declared Andrea Recordati, CEO. "In addition, important initiatives for the future development of the group were concluded. The definitive acquisition of the rights to Cystagon® from Mylan allows us to continue and expand the development of this product and to ensure the availability of this life-saving treatment to patients. The acquisition of Natural Point represents a good opportunity to enhance our presence in the market for food supplements and the Natural Point brands are a valid addition to our portfolio in Italy", continued Andrea Recordati. "The growth of Group's business continued during July and for the full year 2018, we confirm the objective to achieve sales ranging from € 1,350 million to € 1,370 million, EBITDA of between € 490 and € 500 million, EBIT of between € 430 and 440 million and net income of between € 310 and 315 million."

Conference call

Recordati will be hosting a conference call today 26 July 2018 at 4.00 pm Italian time (3.00 pm London time, 10.00 am New York time). The dial-in numbers are:

Italy                             +39 02 8058811, toll free 800 213 858
UK                                +44 1 212818003, toll free 800 0156384
USA                             +1 718 7058794, toll free 855 2656959
France                        +33 170918703
Germany                   +49 69 255114451

Callers are invited to dial-in 10 minutes before conference time.  If conference operator assistance is required during the connection, please digit * followed by 0 or call +39 02 8061371.  A recording of the conference call will be placed on the website www.recordati.com.

A set of slides which will be referred to during the call will be available on our website www.recordati.com under Investors/Company Presentations.

Recordati, established in 1926, is an international pharmaceutical group, listed on the Italian Stock Exchange (Reuters RECI.MI, Bloomberg REC IM, ISIN IT 0003828271), with a total staff of more than 4,100, dedicated to the research, development, manufacturing and marketing of pharmaceuticals. Headquartered in Milan, Italy, Recordati has operations in the main European countries, in Russia, other Central and Eastern European countries, Turkey, North Africa, the United States of America, Canada, Mexico and in some South American countries.  An efficient field force of medical representatives promotes a wide range of innovative pharmaceuticals, both proprietary and under license, in a number of therapeutic areas including a specialized business dedicated to treatments for rare diseases. Recordati is a partner of choice for new product licenses for its territories. Recordati is committed to the research and development of new specialties with a focus on treatments for rare diseases.  Consolidated revenue for 2017 was € 1,288.1 million, operating income was € 406.5 million and net income was € 288.8 million.

For further information:

Recordati website:  www.recordati.com

Investor Relations                                                                       Media Relations                    
Marianne Tatschke                                                                     Studio Noris Morano                                                           
(39)0248787393                                                                          (39)0276004736, (39)0276004745
e-mail: investorelations@recordati.it                                        e-mail: norismorano@studionorismorano.com
                                                                    

Statements contained in this release, other than historical facts, are "forward-looking statements" (as such term is defined in the Private Securities Litigation Reform Act of 1995). These statements are based on currently available information, on current best estimates, and on assumptions believed to be reasonable. This information, these estimates and assumptions may prove to be incomplete or erroneous, and involve numerous risks and uncertainties, beyond the Company's control. Hence, actual results may differ materially from those expressed or implied by such forward-looking statements. All mentions and descriptions of Recordati products are intended solely as information on the general nature of the company's activities and are not intended to indicate the advisability of administering any product in any particular instance.


RECORDATI GROUP
Summary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IAS/IFRS)
(thousands of €)

INCOME STATEMENT First half 2018 First half 2017 Change %
REVENUE 696,054   650,868   6.9  
  Cost of sales (203,013 ) (196,742 ) 3.2  
GROSS PROFIT 493,041   454,126   8.6  
  Selling expenses (172,793 ) (168,521 ) 2.5  
  Research and development expenses (53,627 ) (47,152 ) 13.7  
  General & administrative expenses (33,140 ) (33,841 ) (2.1 )
  Other income (expenses), net (1,550 ) (1,414 ) 9.6  
OPERATING INCOME 231,931   203,198   14.1  
  Financial income (expenses), net (8,458 ) (6,991 ) 21.0  
PRE-TAX INCOME 223,473   196,207   13.9  
  Provision for income taxes (59,285 ) (49,220 ) 20.4  
NET INCOME 164,188   146,987   11.7  
Attributable to:      
Equity holders of the parent 164,164   146,967   11.7  
Minority interests 24   20   20.0  


EARNINGS PER SHARE First half 2018 First half 2017 Change %
Basic 0.801 0.713 12.3
Diluted 0.785 0.703 11.7

Earnings per share (EPS) are based on average shares outstanding during each year, 205,053,284 in 2018 and 205,984,391 in 2017, net of average treasury stock which amounted to 4.071.872 shares in 2018 and to 3.140.765 shares in 2017.
Diluted earnings per share is calculated taking into account stock options granted to employees.

COMPOSITION OF REVENUE First half 2018 First half 2017 Change %
Total revenue 696,054 650,868 6,9
Italy 145,791 142,415 2.4
International 550,263 508,453 8.2

Pending the completion of independent audit.

RECORDATI GROUP
Summary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IAS/IFRS)
(thousands of €)

INCOME STATEMENT Second Quarter 2018 Second Quarter 2017 Change %
REVENUE 329,554   308,928   6.7  
  Cost of sales (93,725 ) (90,933 ) 3.1  
GROSS PROFIT 235,829   217,995   8.2  
  Selling expenses (81,106 ) (79,900 ) 1.5  
  Research and development expenses (25,963 ) (23,985 ) 8.2  
  General & administrative expenses (16,768 ) (16,708 ) 0.4  
  Other income (expenses), net (592 ) (1,475 ) (59.9 )
OPERATING INCOME 111,400   95,927   16.1  
  Financial income (expenses), net (3,602 ) (5,207 ) (30.8 )
PRE-TAX INCOME 107,798   90,720   18.8  
  Provision for income taxes (30,202 ) (22,248 ) 35.8  
NET INCOME 77,596   68,472   13.3  
Attributable to:      
Equity holders of the parent 77,584   68,462   13.3  
Minority interests 12   10   20.0  


COMPOSITION OF REVENUE Second Quarter 2018 Second Quarter 2017 Change %
Total revenue 329,554 308,928 6.7
Italy 66,865 65,692 1.8
International 262,689 243,236 8.0

Pending the completion of independent audit.


RECORDATI GROUP
Summary of consolidated results prepared in accordance with the International Accounting Standards and International Financial Reporting Standards (IAS/IFRS)
(thousands of €)

ASSETS 30.06.2018 31.12.2017
     
Property, plant and equipment 101,182 103,009
Intangible assets 556,210 540,565
Goodwill 601,591 539,871
Equity investments 19,593 24,171
Non-current receivables 5,776 5,944
Deferred tax assets 77,097 69,162
TOTAL NON-CURRENT ASSETS 1,361,449 1,282,722
     
Inventories 193,139 179,100
Trade receivables 264,909 244,117
Other receivables 28,750 39,730
Other current assets 8,368 4,836
Fair value of hedging derivatives (cash flow hedge) 4,169 3,825
Short-term financial investments, cash and cash equivalents 154,632 302,077
TOTAL CURRENT ASSETS 653,967 773,685
TOTAL ASSETS 2,015,416 2,056,407


EQUITY AND LIABILITIES 30.06.2018   31.12.2017  
     
Share capital 26,141   26,141  
Capital in excess of par value 83,719   83,719  
Treasury stock (162,627 ) (17,029 )
Hedging reserve (8,341 ) (5,867 )
Translation reserve (139,411 ) (124,004 )
Other reserves 37,639   40,684  
Retained earnings 925,764   822,154  
Net income for the period 164,164   288,762  
Interim dividend 0   (87,470 )
GROUP SHAREHOLDERS' EQUITY 927,048   1,027,090  
Minority interest 171   147  
SHAREHOLDERS' EQUITY 927,219   1,027,237  
     
Loans due after one year 586,988   612,462  
Employees' termination pay 21,218   21,093  
Deferred tax liabilities 16,379   17,554  
Other non-current liabilities 2,516   2,515  
TOTAL NON-CURRENT LIABILITIES 627,101   653,624  
     
Trade payables 137,420   141,740  
Other payables 83,725   82,779  
Tax liabilities 55,550   24,373  
Other current liabilities 830   486  
Provisions 52,169   48,322  
Fair value of hedging derivatives (cash flow hedge) 9,685   9,559  
Loans due within one year 59,437   51,710  
Bank overdrafts 62,280   16,577  
TOTAL CURRENT LIABILITIES 461,096   375,546  
TOTAL EQUITY AND LIABILITIES 2,015,416   2,056,407  

Pending the completion of independent audit.

DECLARATION BY THE MANAGER RESPONSIBLE FOR PREPARING THE COMPANY'S FINANCIAL REPORTS

The manager responsible for preparing the company's financial reports Fritz Squindo declares, pursuant to paragraph 2 of Article 154-bis of the Consolidated Law on Finance, that the accounting information contained in this press release corresponds to the documental results, books and accounting records.

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