2010
Annual Report
1836
marzot to group
TessutiMarzottoFabrics
Archivio
DALSASSO production since 1831
CoperteLanerossiBlankets
[[Summary ] Summary] [Summary] General information General information General information
Marzotto group Marzotto group Consolidated Marzotto group Consolidated financial statements Consolidated financial statements financial statements
General information Marzotto Group’s highlights
7
Company officers and Shareholders
8
Notice of meeting
9
Report on group operation Group business units
13
Group structure by business unit
14
Significant events during the financial year
16
Income statement
22
Balance sheet and financial position
25
Performance of the Group’s business sectors
28
Shareholdings
36
Other information
38
Significant events after the closing of the financial year
44
Outlook and information on the trend for the current financial year
45
Group consolidated financial statements
Marzotto S.p.A. Marzotto S.p.A. Financial Statements Marzotto S.p.A. Financial Statements Financial Statements
Balance sheet
48
Income statement
49
Cashflow statement
50
Table of changes in the Shareholders’ equity accounts
51
Notes to the financial statements
52
Report of independent auditors
92
Report on Parent Company operations Subsidiaries and affilated companies
96
Significant events during the financial year
97
Income statement
101
Balance sheet and financial position
103
Other information
105
Outlook and information on the trend for the current financial year
108
Resolutions proposals to the Shareholders’ Meeting pursuant to Art. 2364 of the Italian Civil Code
109
Financial statements of the Parent Company Balance sheet
4 4
112
Income statement
113
Cashflow statement
114
Table of changes in net shareholders’ equity
115
Notes to the financial statements
116
Report of independent auditors
150
Report of the Board of Statutory Auditors
152
Reclassified financial statements of Subsidiaries
154
Proposal for approval to the Shareholders’ Meeting, pursuant to Art. 2364 of the Italian Civil Code
163
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[General information] Marzotto group consolidated financial statements Report on Group’s operations Consolidated financial statements
Marzotto S.p.A. financial statements Report on the Company’s operations Company financial statements
annual report 2010
5
[Highlights Marzotto group*] Net revenues by business sector
2010
(in millions of euro) Fabrics
219.9
var. %
177.2
24.1%
Woollen Yarns
43.2
39.2
10.2%
Linen Yarns
36.1
28.3
27.6%
Silk
20.3
0.0
n.c. 1.6%
Other Activities
Revenues’s percentage composition by business sector
2009
12.9
12.7
Adjustment
(16.0)
(12.5)
Group
316.4
244.9
Year 2010 Other Activities 1%
29.2%
Year 2009 Other Activities 2%
Silk 6% Linen Yarns 11%
Fabrics 69%
Woollen Yarns 13%
Operating income by sector
(in millions of euro)
Linen Yarns 11% Woollen Yarns 16%
2010
2009
change %
Fabrics
9.4
(7.0)
n.c.
Woollen Yarns
0.7
(1.6)
n.c.
(1.3)
(10.3)
-87.4%
0.0
=
n.c.
(1.7)
(1.4)
-21.4%
7.1
(20.3)
Linen Yarns Silk Other Activities (1) Group
Main economic, financial and equity data
Fabrics 71%
(in millions of euro) Revenues Operating Income EBITDA
(2)
EBITDA (%ge) Net income Group's shareholders' equity Net financial debt Investments Number of active employees as of 31 December (3)
2010
2009
n.c.
2008
316.4
244.9
325.1
7.1
(20.3)
0.9
25.5
(0.3)
24.3
8.0%
-0.1%
7.5%
0.7
(26.7)
4.0
130.2
165.7
139.7
51.9
80.5
129.4
8.8
12.7
16.9
3,179
3,029
3,363
(*) In 2010 the Ratti group was consolidated at 33% for 10 months. (1). Including consolidation entries and adjustments (2). Operating result + Ordinary depreciation and amortization + Bad debt. (3). The 2008/2009 employees of the Linificio group have been reclassified as needed to present a like-for-like comparison with 2010, as they were previously recognized on a Full Time Equivalent basis.
General information
7
[Company officers and Shareholders] Company officers
in office at 31 December 2010 Board of Directors Chairman Antonio Favrin (1) Deputy Chairman Andrea Donà dalle Rose (1) Board Members Ferdinando Businaro Matteo Marzotto Chief Executive Officer and General Manager Sergio Tamborini (1) 1. Members of Executive Committee
Board of statutory auditors Acting Auditors Michele Paolillo - President Pietro Paolo Piccinelli Franco Corgnati Substitute Auditors Francesco Saltarelli Lorenzo Lago Indipendent auditors
8
Reconta Ernst & Young S.p.A.
Shareholders
December 31, 2010: the total capital share is euro 65,005,047, divided into 65,005,047 ordinary shares with a par value of 1 euro each.
As of December 31, 2010 the following are the main Shareholders of Marzotto S.p.A., directly or indirectly owning voting shares (1): Shareholders Wizard S.r.l. 1. Ordinary shares owned indicated as % of the fully paid share capital.
8
General information
%ge 99.79
[Marzotto S.p.A. – Reports and financial statements as of 31 December 2010] Notice of ordinary shareholders’ meeting published in “Finanza e Mercati” on 9 April 2011
The Shareholders of MANIFATTURA LANE GAETANO MARZOTTO & FIGLI S.p.A. are called to the ordinary Meeting in Milan, Via Filippo Turati n. 16/18, at the company’s registered offices, in first call on 29 April at 12:00 a.m. and, if necessary, in second call on 30 April 2011 at 12:00 a.m., same location, to discuss and resolve on the following Agenda x Financial statements as of 31 December 2010. Pertaining resolutions. x Appointment of the independent auditors and their compensation. Pertaining resolutions. The holders of ordinary shares who meet the conditions of the law and have complied with the requirements of article 2370 of the Italian Civil Code at least two business days prior to the date of the meeting are entitled to attend the meeting. The documentation concerning the agenda, as required by the Bylaws and the governing law, will be made available to the public at the Company’s registered and administrative offices pursuant to the law. Shareholders are entitled to obtain a copy. The meeting will be held according to the provisions of the regulations approved by the Meeting on 11 May 2001, which will be available at the Company’s registered office. Milan, 29 March 2011 For the Board of Directors The Chairman ing. Antonio Favrin
Si ha motivo di ritenere che l’Assemblea si terrà in seconda convocazione il 9 maggio 2007 alle ore 10.00 in Milano, Via Palestro n. 2, presso lo Spazio Eventi del “Centro Svizzero”.
General information
9
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General information Marzotto group consolidated financial statements [Report on Group’s operations] Consolidated financial statements
Marzotto S.p.A. financial statements Report on the Company’s operations Company financial statements
annual report 2010
11
[Report on operations] Group activities
As of 31 December 2010, the Marzotto Group is organized into the following business units:
Woollen and cotton fabrics Woollen Yarns Linen Yarns Silk Other operations
The Fabrics sector includes the manufacturing and distribution of woollen and cotton fabrics for clothing, with the following brands: - Marzotto and Lanerossi: leading collection by sales volume worldwide featuring a strong product research, aimed at designers and international markets; - Guabello: one of the exclusive names of the Italian textile tradition. It offers a luxurious collection in a contemporary style, where wool is paired with selected fabrics such as silk and cashmere; - Marlane: a men’s collection focused on the current market trends, combining trendy products and quality with highly competitive service and price; - Tallia di Delfino: it is an important historic brand specialized in the production of woolen fabrics for high-end and luxury menswear; - Estethia / G.B.Conte: these are women’s collections. The first one is a young and dynamic collection, characterized by quality and attention to market trends; the second one specializes in carded and worsted patterned fabrics for outerwear, boiled wool and jersey; - Tessuti di Sondrio: a leading brand and collection in terms of image for cotton and linen fabrics in the high-end segment. In 2008 the historic brand Dal Sasso was acquired, a brand active in the wool sportswear market niche, with the goal of making it part of the “life-style” project in Sondrio (elegant sportswear). To complete the product range, in 2009 the NTB Nuova Tessilbrenta brand (cotton and cotton blend fabrics for sportswear) was acquired. The Woollen Yarns sector manufactures and distributes combed and carded wool knitwear yarns under the Lanerossi, Folco and Martex brands. Operations are carried out by the Filivivi Group, 50%-owned by the Parent company in joint-venture with Manifattura Lane Folco S.r.l. (Verzoletto group), which is consolidated according to the proportional method.
13
The Linen Yarns sector is leader in the production of “long-fiber” linen yarns through the Linificio e Canapificio Nazionale Group, which is 100% controlled by the Parent company Marzotto S.p.A. Linificio has recently made some investments in the weaving business, in order to complete its range of products adding to its historic yarns also linen fabrics. Starting from 2010, the Marzotto group is involved also in the silk industry thanks to Ratti, in which the parent company Marzotto S.p.A. recently acquired a 33.36% stake. The Ratti group is a leader in the design and manufacturing of printed fabrics, solid and yarn dyed fabrics for clothing (shirts, ties, intimates, swimwear) and home decor, and in the production and distribution of finished products, mainly men and women accessories (such as ties and scarves). Finally, the Other Operations sector includes coordination and service activities performed in favour of the operating sectors, real estate management, and management of non-consolidated equity investments and the integrated management and waste and wastewater treatment activities on behalf of third parties.
Report on Group’s Operations
13
[Structure of the Marzotto group by sector - December 31, 2010] Marzotto group
Fabrics
Wool Yarns 50.00% [1]
Marzotto Fabrics Division
Filivivi S.r.l.
Guabello Fabrics Division
Filivivi Asia Pacific Ltd
Marlane Fabrics Division
Uab Lietvilna
100.00%
Estethia/Conte Division
Sc Rolana Tex S.r.l.
100.00%
100.00%
14
Tessuti di Sondrio Division
Linen Yarns Marzotto/Lanerossi Blankets Division 100.00%
100.00%
100.00%
Fratelli Tallia di Delfino S.p.A.
Linificio e Canapificio Naz.le S.p.A.
Novà Mosilana a.s.[2]
99.97%
AB Liteksas
100.00%
Marzotto Int.Trading Shanghai Ltd
100.00%
Marzotto Textiles Usa Inc.
[2]
[2]
[2]
Filature De Lin Filin S.A.
100.00%
Lin Naturel S.A.
100.00%
Ghiaie Idroenergia S.r.l.
[3]
100.00%
Licana S.p.A. (in liquidation)
100.00%
Uab Lietlinen
100.00%
50.00%
Uab Linestus
Silk
Other activities 33.36% [1]
Ratti S.p.A.
Creomoda S.a.r.l.
Immobiliare Isola S.r.l.
95.00%
Ambiente Energia S.r.l.
100.00%
100.00%
Collezioni Grandi Firme S.p.A.
100.00%
Marzotto Textile N.V.
100.00%
Ratti Usa Inc.
100.00%
Mascioni S.p.A.
28.35%
15
Ratti Int.Trading (Shanghai) Co.Ltd
S.C. Textrom S.r.l. (in liquidation)[4]
100.00%
Aree Urbane S.r.l. (in liquidation)
32.50%
100.00%
Mediterranean Wool Ind. S.A.E.
30.00%
Marzotto S.p.A. Consolidated Companies Other Shareholdings [1] Consolidated pro-quota. [2] Controlled by Marzotto Textile N.V. [3] Incorporated by transferring a business unit (effective December 1, 2010). [4] No more in liquidation from february 2011.
[Main events in 2010] Marzotto S.p.A.’s share capital increase
On December 22, 2009, the extraordinary shareholders’ meeting of Marzotto S.p.A. adopted a resolution for a paid increase of the share capital, at par and indivisible, from euro 73,986,302 to euro 123,977,047 (euro 49,990,745), by issuing 49,990,745 new ordinary shares with a par value of 1 euro each, all bearing the same characteristics of the existing shares. The resolution was recorded at the Milan’s Companies Register on December 29, 2009. The increase was fully paid by the shareholder Wizard S.r.l. on December 22, 2009 and therefore the share capital of the Parent Company went on that date from euro 73,986,302 to euro 123,817,451. On February 15, 2010 the option period ended, following which 24,005 Marzotto shares were subscribed by the minority shareholders. Since some shareholders exercised their pre-emption rights on un-opted shares, on February 24, 2010 the remaining 135,591 shares were paid up and therefore, the share capital of the Parent Company is, as of that date, euro 123,977,047 (fully paid).
Operation Ratti
Following Consob’s favorable opinion issued on March 3, 2010, upon execution of the optional share capital increase reserved to existing shareholders, and of the reserved share capital increase, implemented on March 5, 2010 by full payment of 20,805,000 euro by the new investors, Marzotto and Faber Five hold each a 33.36% shareholding in the share capital of Ratti S.p.A., a company in the Como area, leader in the silk industry and listed at the Milan Stock Exchange. The share capital increases were part of a financial and equity reorganization plan for Ratti and the implementation of reorganization and development plan to be carried out with the support of the new investors. For Marzotto, the addition of Ratti represents an industrial diversification operation in a sector collateral to its historic “core businesses” such as yarns, linen and menswear woollen fabric thereby completing the range of product offered by the group of noble fibers of the textile industry by adding a new sector, silk and womenswear fabrics, and this should open new markets and research opportunities. Besides the possible production and market synergies, the challenge will be bringing industrial and management culture to a company which has always been strongly focused on design research and “craftsmanship”. The Ratti group financial statements have been incorporated in the consolidated annual report of Marzotto beginning in 2010, with the proportional method (at 33.36%), in virtue of the joint control held by Marzotto and Faber Five. In these consolidated financial statements the pro-quota income data affect the data for the period March-December (10 months), whereas for the balance sheet portion we considered the pro-quota data as of December 31, 2010.
16
Egypt wool-combing plant
On June 3, 2010, in execution of the preliminary stock purchase agreement signed on October 28, 2009, Marzotto S.p.A. acquired 30% of the share capital of Mediterranean Wool Industries Co. (MWI) S.A.E., a corporation registered in Egypt whose business purpose is the processing of textile fibers (combing, carbonization, other processes) at a newly built factory in Sadat City (Egypt). This joint-venture is the result of a cooperation agreement with the Schneider group, an important and well known player in the industry. The recent events in Egypt led to the postponement of the time frames set out in the original business plan, but based on the current social and political situation of the Country, we estimate that the Company will complete the start-up process and will run at full capacity by 2011.
Report on Group’s operations
[Main events in 2010] Demerger of Immobili e Partecipazioni S.p.A.
On June 24, 2010 a demerger deed was executed at Marzotto S.p.A. for the transfer of the total shareholding in Immobili e Partecipazioni S.p.A. to a newly incorporated company, named “Nuova Immobiliare S.p.A.”, owned by the same shareholders of Marzotto S.p.A. During the tax year 2008 and also in 2009, the major part of non-core real estate assets of the Group was gradually transferred to the subsidiary Immobili e Partecipazioni (from the companies Marzotto S.p.A. and Linificio e Canapificio Nazionale S.p.A.), in order to achieve the separation of non-strategic business to better focus the management and financial resources of the Marzotto group on its corebusiness. The demerger deed became effective on July 1, 2010. On the same date, the share capital of the demerged company Marzotto S.p.A. was subsequently decreased, from 123,977 thousand to euro 65,005 thousand (and therefore for total 58,972 thousands of euro), by cancelling the corresponding number of shares. The effect on the consolidated Group’s equity was instead 38,159 thousands of euro.
Liquidation of Aree Urbane
During the month of August 2010 the subsidiary Aree Urbane S.r.l. was placed in liquidation. Afterwards, at the end of December 2010, the shareholders of Aree Urbane have received a proposal to purchase their shares, pending completion of a due diligence process, or, alternatively, the main real estate area in Rome. Due to the size of these proposals, which are still being verified, and due to the results of the actions taken by the appointed Liquidator during the first months of management, we have no reason to believe that the rights of satisfaction of the creditors may be jeopardized and likewise of Marzotto S.p.A. towards Aree Urbane.
Ghiaie Idroenergia/ Sale of LCN power plants
Effective December 1, 2010 the company Ghiaie Idroenergia S.r.l. was incorporated (controlled at 100% by Linificio S.p.A.) through the assignment of the business unit dedicated to the production of electric power (including an hydro-electric plant located in the area of the Villa D’Almè factory, which was composed by two hydro-electric power plants and their accessories). During the month of May 2010, an agreement was signed for the sale of the above mentioned company to a third party, Fonti Prealpi S.p.A. As of December 31, 2010 Linificio S.p.A. had received from Fonti Prealpi partial payments for a total of 8 million euro, as advance payments on the sale of Ghiaie Idroenergia. The sale of the shareholding was then completed on January 28, 2011 for a total amount, including the mentioned advance payments received in 2010, of 17.0 million euro.
Marzotto becomes the sole shareholder of Tallia di Delfino
On July 7, 2008 Marzotto S.p.A., through the subscription of a reserved share capital increase of 3,500,000 euro, acquired a 70% interest in the share capital of Fratelli Tallia di Delfino S.p.A. The Investment agreement executed between Marzotto S.p.A. and Appia S.r.l. also entailed the payment to Tallia di Delfino, from Appia S.r.l., of any loss in excess for the period between January 1, 2008 and July 7, 2008, in relation to an amount established by the parties; this agreement also provided for a combination of put and call options, which would have enabled Marzotto S.p.A. to redeem, at the end of 2012, the remaining shares (equal to 30%), therefore reaching a 100% stake in the share capital of Tallia. The recorded loss in excess was only partially offset by Appia, who remained debtor for the remaining amount equal to 1,060 thousands of euro. To recover this amount Tallia di Delfino S.p.A. took legal steps.
Report on Group’s operations
17
[Main events in 2010] On November 25, 2009, the extraordinary Shareholders’ Meeting of Tallia di Delfino S.p.A., pursuant to article 2447 of the Italian Civil Code, approved a resolution to bring the share capital to zero and its reconstitution through a share capital of 3,000,000 euro, subscribed by Marzotto S.p.A. for 2,100,000 euro and by Appia S.r.l. for 900,000 euro. Since Appia did not exercise its option right, on January 15, 2010 Marzotto became the sole shareholder of Tallia. On December 15, 2010, in order to resolve the still pending matters, the parties involved (Fratelli Tallia di Delfino S.p.A., Marzotto S.p.A. and Appia S.r.l.) entered into a private deed for the cancellation of the Investment Agreement and offsetting their mutual debits and credits open at that date. Among the consequences of this agreement, was the transfer at par value to Marzotto S.p.A. of the above mentioned credit owed to Tallia by Appia, this credit line item was off-set at the same time with part of Marzotto’s debts due to Appia, as defined in the Investment Contract of 2008 as payment amount for the 30% acquisition from minority investors. On December 31, 2010, due to the operating loss of the subsidiary and taking into account also the fact that Marzotto renounced its pre-emption right on 30% of the share capital and in view of all the above, Marzotto S.p.A. has made a shareholder payment on capital account in Tallia di Delfino S.p.A. for 2,000,000 euro, made by converting part of the financial credit towards the same company.
Dividend stripping
During the tax year 2010 the Company was notified of an entry in the tax litigation list and the pertaining payment request for a total of 28.2 million euro, subsequently reduced to 16.2 thanks to the steps taken by the competent Bodies based on appeals presented by the involved Corporations. In addition to the decrease in the amount, the payment request has been suspended, and therefore it will be discussed at the hearing set for May 10, 2011. This litigation, as already widely explained in the Annual Report for the previous years, involves the companies Marzotto S.p.A. and Valentino Fashion Group S.p.A. jointly and severally, and for 1/3 and 2/3 respectively of the mentioned amount due to the Tax Authority following the proportional partial demerger completed in 2005. Consequently and following the determination received in 2011 from the Tax Collector, the resulting liability has been adjusted in the 2010 financial statements of Marzotto, compared to the amount in the 2009 financial statements, with an effect on the income of another 1.0 million euro.
18
Report on Group’s operations
[Report on operation] Economic situation/ industry trend (1)
The entire Italian Textile-Fashion industry has begun 2010 with a new pace, an indication of the great ability to react of this industry: all the main monitored variables show, overall, a restart of business after the halt experienced in 2009.
Textile
After the heavy standstill during the serious economic recession, in 2010 the Italian Textile industry sees again a positive trend, together with other upstream sectors of the Textile-Fashion industry, thanks to the recovery of the world economy. Italian textile companies, strengthened by the selective process of strategic repositioning seen in the last years, were ready to profit from the global economic recovery, counting on specific assets of “Made in Italy” such as flexibility, fast response to the market also for small quantities, excellent quality, know-how and innovation ability. For all the micro-sectors which make up the textile industry, and according to the first estimates for 2010, for the industry turnover it is estimated an annual recovery of +11.8%. Also the value of production has recovered in 2010 by double-digit rates (+13.9%). The greatest stimulus for the industry came from exports: the good kick-start of world trading, joined by the most internationalized Italian companies, has been the driving force to regain ground. Nonetheless, the restart of production was not enough to fill in the gap to pre-recession levels: the average plant utilization did not reach the before the crisis level, and there were also tensions on the employment market. The most negative trends were felt once again by the cotton and linen textile sector. Against this backdrop, the Fabrics sector of the Marzotto group recorded better performances than the industry average, with a significant increase of sales that, compared to 2009 recorded overall a 24.1% increase, therefore making a full recovery to the before the crisis level. The recovery of the cotton fabrics was even more significant, since at the end of the year the turnover increased by 29.5% compared to the previous year.
Woollen spinning
Similarly, also the macro-sector of spinning immediately picked-up the restart of the world economic cycle, showing a recovery of the sector’s activities: according to the preliminary estimates (2) prepared by SMI-ATI, sales have finally returned to the black, reaching a growth rate of 13.1%. We point out, however, that the positive results of 2010 emerge from the comparison with the worst results ever experienced in the sector: the sector turnover, even if in recovery compared to 2009, is still below the 2008 levels. Taking into consideration also the gap with the levels of the past, there were also critical situations on the employment front: both the cotton sector and the woolen sector showed decreases in the number of employees. Turnover of the combed wool spinning division showed an up and down recovery (from -2.5% during the first quarter to +7.7% in the second quarter), settling to an estimated +11.7% for the third quarter of 2010. Production has registered average increased from +4.5% during the first two quarters to +17.0% in the third quarter of the year. (2) Also the worsted wool spinning division showed a recovery of turnover, markedly more significant (+ 22.2% in the first quarter, + 29.7% in the second quarter, + 32.5% estimated for the third (2) quarter of 2010). The average utilization rate of production plants for the third quarter is estimated above 60.0% (2); the employment trend is still negative (-4.1% in the first quarter, -3.3% in the second quarter, -1.1% estimated for the third quarter).(2) Within these market trends, the turnover of the Woollen Yarns sector (Filivivi group) showed a 10.2% increase on the turnover of the previous year. This value, taking into account the reduction of sales due to the simplification of the range of products offered, is adjusted to +13.0% compared to the previous year.
(1). Source Smi-Centro Studi; Smi on ISTAT figures and Economic Surveys (2). Source Smi-Ati, period January-September 2010 Report on Group’s operations
19
[[Report Report on on operation operation]] Linen Yarns and Fabrics Income statement and balance sheet highlights
The trend in the linen marketofofthe theGroup’s last years, affected the increase of offer from China at Thenegative table below contains summaries main incomebystatement, balance sheet, unprofitable for items all thefor products ofended the linen sector, which and financialprices position the year on December 31,marked 2010. the scene in the two-year period 2008-2009, in 2010 has seen a slight improvement. The 2010 figures take into account also the statement of assets and liabilities and income of the Ratti Competition remains very strong, both due to the still weak demand, and to more and more outsourcing Group, consolidated at 33.36% starting from the acquisition date (March 2010). by companies downstream in the clothing industry. In this economic situation the clothing manufactures reserve for domestic suppliers the most qualified market segment, both for product and service. This sector must compete with the direct and indirect cost structures of emerging Countries, especially (in millions of euro) 2010 2009 change change % China. Consolidated net revenues 316.4 244.9 71.5 + 29.2% The tension is especially high for the most undifferentiated products and particularly for the fabrics that Operating 7.1 (20.3) scope of 27.4 are appliedIncome to the imported finished products, therefore reducing the business European n.c. % of net revenues 2.3% (8.3%) manufacturers. (2) 25.5 are the players (0.3) that can 25.8 n.c. InEBITDA the competitive outlook of this sector, the winners however count on % of net revenues 8.0% (0.1%) traditional competitive factors such as price, quality and range of products, as well as on new factors that are becoming of service: Income before more taxes and more necessary such as speed and quality 1.1 (35.5) simply put, 36.6on the n.c. competitiveness of the whole company, not just the product. % of net revenues 0.3% (14.5%) The further market penetration of products from Asian countries, characterized by extremely convenient Group net income 0.7 (26.7) 27.4 n.c. prices, hasrevenues emphasized the criticality of the requirements of0.2% Italian quality products, which is excellent % of net (10.9%) service: excellent means both a fast order cycle, and assortment and personalization of products offered to the client, for his satisfaction and fidelity. Price remains an important factor on which we continue to65.5 work with 112.0 a careful costs(46.5) reduction policy, Net working capital - 41.5% with the production repositioning and reorganization to achieve better competitiveness, efficiency and Net employed capital 182.1 246.2 (64.1) - 26.0% quality. Net financial position
51.9
80.5
(28.6)
- 35.5%
(3.9)
- 30.7%
Against thisFlow backdrop, the increase in the value of the turnover in the Linen29.3 Yarns sectorn.c. for Free Cash before dividends 28.4 indicated(0.9) the year 2010 compared to 2009 was +27.6% due to effect of volumes +24.4% for yarns and +282% for fabrics, with an increase of the market share, despite the competitors. Investments for the period
Silk sector 20
Active staff: persons
8.8 3,179
12.7 3,029
150
+ 5.0%
In reference to the manufacturing sector, and specifically the Textile/Clothing and Fashion sector, we point out that the favorable trend has affected more significantly the downstream sectors of the industry compared to the upstream sectors, where the Ratti group operates. They were also affected the most by strong tensions and increases of prices of raw materials. 2010 2009 change ROI
3.3%
-7.9%
11.2%
39.9%
48.6%
-8.7%
94.4%
47.3%
47.1%
140
154
-14
113
145
-32
After 2008 and 2009 invested whichcapital) were particularly rough due to the economic crisis that affected the whole (Operating results / Average ROE economy, 2010, still within an uncertain economic situation, has proven to be a year of leveling world 0.5% -17.5% 18.0% (Netduring result / Average net shareholders' equity) off, the first six months still quite cautious, while the second six months showed a modest ROS recovery. 2.3% -8.3% 10.6% (Operating results / Net revenues)
Borrowing/Equity (Net financial position / Net shareholders' equity)
Financial coverage rate of Assets (Fixed assets+M/L term provisions / Net sharehlds eq.+M/L term fin. payab.)
Inventory rotation index (Net inventory / COGS x 360)
Number of days of credit to clients (Gross trade receivables / Net revenues x 360 days)
(1). Revenues from sales and services – Operating costs. (2). Operating result + ordinary depreciation and amortization + bad debt. Report Reporton onGroup’s Group’s operations operations
[Report on operation] Income statement and balance sheet highlights
The table below contains summaries of the Group’s main income statement, balance sheet, and financial position items for the year ended on December 31, 2010. The 2010 figures take into account also the statement of assets and liabilities and income of the Ratti Group, consolidated at 33.36% starting from the acquisition date (March 2010).
(in millions of euro)
2010
2009
Consolidated net revenues
316.4
244.9
Operating Income
7.1
(20.3)
% of net revenues
2.3%
(8.3%)
EBITDA (2) % of net revenues
25.5 8.0%
Income before taxes
1.1
% of net revenues
0.3%
(0.3)
change
change %
71.5
+ 29.2%
27.4
n.c.
25.8
n.c.
36.6
n.c.
27.4
n.c.
(0.1%) (35.5) (14.5%)
Group net income
0.7
(26.7)
% of net revenues
0.2%
(10.9%)
65.5
112.0
(46.5)
- 41.5%
Net employed capital
182.1
246.2
(64.1)
- 26.0%
Net financial position
51.9
80.5
(28.6)
- 35.5%
Free Cash Flow before dividends
28.4
(0.9)
29.3
Net working capital
Investments for the period Active staff: persons
8.8
12.7
3,179
3,029
2010
2009
(3.9) 150
n.c.
- 30.7% + 5.0%
21 ROI (Operating results / Average invested capital)
ROE (Net result / Average net shareholders' equity)
ROS (Operating results / Net revenues)
Borrowing/Equity (Net financial position / Net shareholders' equity)
Financial coverage rate of Assets (Fixed assets+M/L term provisions / Net sharehlds eq.+M/L term fin. payab.)
Inventory rotation index (Net inventory / COGS x 360)
Number of days of credit to clients (Gross trade receivables / Net revenues x 360 days)
(1). Revenues from sales and services – Operating costs. (2). Operating result + ordinary depreciation and amortization + bad debt. Report on Group’s operations
change
3.3%
-7.9%
11.2%
0.5%
-17.5%
18.0%
2.3%
-8.3%
10.6%
39.9%
48.6%
-8.7%
94.4%
47.3%
47.1%
140
154
-14
113
145
-32
[Report on operation] Income statement
As of December 31, 2010 the Group’s net result was 0.7 million euro, compared to a result of -26.7 million the year before. Summarized consolidated income statement data for the period, compared to those of the year 2009, (1) are as follows : 2010
(in millions of euro)
Net revenues
316.4
Cost of goods sold
22
244.9
100.0%
(248.7)
(78.6%)
(212.9)
Gross income
67.7
21.4%
32.0
13.1%
Product development and marketing costs
(39.5)
(12.4%)
(32.4)
(13.3%)
General and administrative costs
(86.9%)
(21.1)
(6.7%)
(19.9)
(8.1%)
Operating income
7.1
2.3%
(20.3)
(8.3%)
Non-recurring income/(charges)
(3.1)
(1.0%)
4.0
1.3%
Net financial charges Dividends from non consolidated equity investments and equity valuations Other financial income/charges
(2.8)
Income before taxes Taxes
(0.3)
8.8
3.6%
Income before activities held for sale
0.8
0.3%
(26.7)
(10.9%)
Result from activities held for sale
(0.1)
(0.1%)
=
=
Group net income
0.7
0.2%
(26.7)
(10.9%)
EBIT
Net revenues
2009
100.0%
(5.1)
(2.1%)
(25.4)
(10.4%)
(0.9%)
(4.4)
(1.8%)
0.5
0.1%
(1.4)
(0.6%)
(0.6)
(0.2%)
1.1
0.3%
(2)
=
(4.3)
(1.7%)
(35.5)
(14.5%)
The Group’s revenues increased overall by 29.2%, a significant and sharp recovery compared to the previous year (on a like-for-like basis, excluding the Ratti group, +21.2%), such to recover the heavy contraction of 2009 bringing the Group’s turnover back to the 2008 levels before the crisis. The increase affected all the Group’s sectors: compared to 2009, Fabrics increased by 24.1%, or +42.7 million; Linen Yarns increased their turnover by 7.8 million, or 27.6%; finally Woollen Yarns increased by 4.0 million (pro-quota) or 10.2%. The pro-quota contribution of the Silk sector (Ratti group for 10 months) was 20.3 million.
by sector
(in millions of euro)
2010
2009
Textile Sector
312.0
98.6%
240.9
98.4%
Fabrics
219.9
69.5%
177.2
72.4%
Woollen Yarn (pro-quota)
43.2
13.7%
39.2
16.0%
Linen Yarn
36.1
11.4%
28.3
11.6%
Silk (pro-quota)
20.3
6.4%
=
Inter-company sales
(7.5)
(2.4%)
(3.8)
(1.6%)
Other Operations
12.9
4.1%
12.7
5.2%
324.9
102.7%
253.6
103.6%
Aggregate total Inter-company sales
(8.5)
(2.7%)
Consolidated total
316.4
100.0%
of which: Italy
119.4
of which: Other markets
197.0
(8.7)
=
(3.6%)
244.9
100.0%
37.7%
91.8
37.5%
62.3%
153.1
62.5%
(1). In 2010 the Ratti Group is consolidated at 33.36% for 10 months. The Filivivi Group is consolidated pro-quota (50.00%) both in 2010 and in 2009. (2). Result gross of financial income and charges and of income taxes. (3). Compared to 2009, the main currencies of the Group had the following values compared to the euro: GBP – British pound: 0.858 (average 2010); 0.891 (average 2009) JPY – Japanese yen: 116.455 (average 2010); 130.234 (average 2009) USD – US Dollar: 1.327 (average 2010); 1.393 (average 2009) CZK – Czech crown: 25.294 (average 2010); 26.455 (average 2009) Report on Group’s operations
[Report on operation] [Report on operation]
by geographical area by geographical area
Operating profit Operating profit
by business sector by business sector
The volumes increase affected proportionally all the different reference markets, as shown in the table below showing the geographical distribution all of net comparedmarkets, to the previous year: The volumes increase affected proportionally the revenues different reference as shown in the table below showing the geographical distribution of net revenues compared to the previous year: (in millions of euro)
2010
(in millions of euro) Italy
119.42010
37.7%
91.82009
2009 37.5%
Italy Germany
119.4 59.4
37.7% 18.8%
91.8 41.1
37.5% 16.8% 16.8% 30.8%
Germany Other European countries
59.4 87.3
18.8% 27.6%
41.1 75.5
Other America European countries North
87.3 6.1
27.6% 1.9%
75.5 3.0
30.8% 1.2%
North America Asia
6.1 32.8
1.9% 10.4%
3.0 26.6
1.2% 10.9%
Asia countries Other
32.8 11.4
10.4% 3.6%
26.6 6.9
10.9% 2.8%
Other countries Consolidated total
11.4 316.4
3.6% 100.0%
6.9 244.9
2.8% 100.0%
Consolidated total
316.4
100.0%
244.9
100.0%
The significant recovery of the turnover, which implied better capacity utilization and the subsequent improvement margin,of has possible a significant improvement the Group’s current profitability, The significantofrecovery themade turnover, which implied better capacity of utilization and the subsequent which had been jeopardized 2009 following the unfavorable economic situation caused by profitability, the serious improvement of margin, has in made possible a significant improvement of the Group’s current international crisis. which had been jeopardized in 2009 following the unfavorable economic situation caused by the serious international crisis. The programs implemented to recover logistic and production efficiency, the interventions on the product’s industrialization, in the reorganization delocalization plans of production The programs implementedthe to progress recover logistic and productionand efficiency, the interventions on the and logistics some sectors have contributed to improving the margins, enabling the of operating result to product’sinindustrialization, thealso progress in the reorganization and delocalization plans production and reach 7.1inmillion euro (recovering milliontocompared 2009). logistics some sectors have also +27.4 contributed improvingtothe margins, enabling the operating result to reach 7.1 million euro (recovering +27.4 million compared to 2009). The contribution of each activity sector to the Group’s operating result was as follows: The contribution of each activity sector to the Group’s operating result was as follows: 2010
2009
(in millions of euro)
Amount 2010 % of revenues
Amount 2009 % of revenues
(in millions of euro) Textile Sector
Amount 8.8
Amount (18.9) % of revenues (7.8%)
% of revenues 2.8%
Textile Sector Fabrics Fabrics Yarns (pro-quota) Woollen
8.8 9.4 9.4 0.7
2.8% 4.3% 4.3% 1.5%
(18.9) (7.0) (7.0) (1.6)
(7.8%) (3.9%) (3.9%) (4.0%)
Woollen Yarns (pro-quota) Linen Yarns Linen Yarns Silk (pro-quota)
0.7 (1.3) (1.3) 0.0
1.5% (3.5%) (3.5%) =
(1.6) (10.3) (10.3) =
(4.0%) (36.5%) (36.5%) =
Silk (pro-quota) Other Operations Other Operations Adjustments
0.0 (1.5) (1.5) (0.2) (0.2) 7.1
= n.s. n.s.=
= (0.9) (0.9) (0.5) (0.5) (20.3)
= n.s. n.s. =
Adjustments Total Total
7.1
2.3%= 2.3%
(20.3)
= (8.3%) (8.3%)
Non-recurring income Non-recurring and charges income and charges
The item non-recurring income and charges were -3.1 million euro, compared to -5.1 million the year before. The item non-recurring income and charges were -3.1 million euro, compared to -5.1 million the year before. In 2010 this item refers almost entirely to the costs to implement the Industrial Plan, with reference in particular to item the reorganization of the subsidiary Linificio e Canapificio Nazionale S.p.A. and to a smaller In 2010 this refers almost entirely to the costs to implement the Industrial Plan, with reference in extent, to to some for the industrial reorganization carried out at theNazionale Fabrics sector particular the work reorganization of the subsidiary Linificio e Canapificio S.p.A.plants. and to a smaller extent, to some work for the industrial reorganization carried out at the Fabrics sector plants.
Financial charges Financial charges
Net financial charges of the Group were 2.8 million euro (0.9% on revenues), and may be compared to 4.4 the year before revenues). Net million financial charges of the(1.8% Groupon were 2.8 million euro (0.9% on revenues), and may be compared to 4.4 million the year before (1.8% on revenues). The improvement is almost entirely due to the positive effect of volumes, thanks to the share capital increase carried out the end ofto 2009 the effect beginning of 2010thanks by the to Shareholders for total The improvement is between almost entirely due the and positive of volumes, the share capital 50 millioncarried euro. out between the end of 2009 and the beginning of 2010 by the Shareholders for total increase 50 million euro.
Report on Group’s operations Report on Group’s operations
23
[Report on operation] Net income from shareholding
The items dividends, equity valuation and other financial income/(charges) were overall -0.1 million euro, an improvement of 5.6 million euro on the previous year. The 2009 balance, 5.7 million, included the write-down of the shareholding in Aree Urbane S.r.l. following two share capital increases during the year to cover the losses of the associated company, for total 2.8 million euro; the item also included the adjustment of the discount of the financial credit toward the same Aree Urbane S.r.l. This credit, receivable in the medium-long term, had therefore been shown pursuant to the reference accounting principles.
Income taxes
Beginning in the tax year 2008, the companies Marzotto S.p.A., Immobili e Partecipazioni S.p.A., Linificio e Canapificio Nazionale S.p.A. and Licana S.p.A. (in liquidation), as well as, since 2009 Tallia di Delfino S.p.A., Immobiliare Isola S.r.l. and Ambiente Energia S.r.l., all chose the national tax consolidation regime, for which the parent company is the holding Wizard S.r.l., and its effects are reflected in the results as of 31 December 2010. The 2010 balance includes I.R.A.P. taxes for 1.7 million, compared to 2.7 the year before (this amount included also 1.2 million euro on the capital gains from the real estate transferred to the subsidiary Immobili e Partecipazioni S.p.A.).
Net profit
Net income is 0.7 million euro, compared to -26.7 million in the year 2009, with a total change shown below of +27.4 million, mainly due to the recovery of the profitability explained above:
(in millons of euro)
change in operating income
2.0
change in net financial charges
1.6
change in income from shareholdings
1.9
change in other financial income (charges)
24
Total
Report on Group’s operations
27.4
change in non-recurring income (charges)
3.7 36.6
change in income taxes
(9.1)
Total changes versus the comparison period
27.4
[Report on operation] Capital structure and financial position
The Group’s capital structure and financial position as of December 31, 2010 are summarized in the table below (1): (in millions of euro)
12.31.10
12.31.09
Net trade receivable
89.9
90.0
Other receivables
13.8
16.3
Inventory
96.8
Short-term non-financial payables A) Net working capital B) Assets/liabilities held for sale Receivables beyound 12 months Equity investments Tangible fixed assets Intangible fixed assets
(135.0)
91.2 (85.5)
65.5
112.0
5.1
32.0
27.9
28.0
9.6
7.5
111.2
121.6
12.2
11.0
C) Net fixed assets D) Employee severance fund, reserves, and other non-financial M/L term payables E) Deferred taxes reserve
160.9
168.1
(41.4)
(38.5)
F) Invested capital net of current liabilities (A+B–C–D-E)
182.1
(8.0)
(27.4) 246.2
Covered by: Short-term financial payables Cash and short-term financial receivables Medium/long term financial payables Medium/long term financial receivables G) Net borrowing
225.2
134.4
(161.2)
(104.1)
7.8
70.1
(19.9)
(19.9)
51.9
80.5
H) Group shareholders' net equity
130.2
165.7
I) Total (G+H) as in F
182.1
246.2
Net invested capital
Net invested capital as of December 31, 2010, net of current liabilities, is 182.1 million euro (2009: 246.2 million). The -64.1 change is mostly due to the reduction in net working capital and the Assets/liabilities held for sale.
Net working capital
Net working capital is 65.5 million euro, compared to 112.0 million euro at the end of 2009, a -46.5 million euro change. The effect of the pro-quota consolidation of Ratti is +3.1 million euro. This decrease in Net working capital was affected by the factoring “without recourse” operation (15.2 million euro as of 31 December 2010), carried out at the end of the year with a primary financial institution, which allowed to contain the increase of trade receivables following the significant increase of the turnover. During 2010 in all the sectors of the Group we continued the plan to decrease inventory volumes, these actions counterbalanced the impact on inventory levels of the sharp recovery of sales and the increase of raw materials prices. The increase in the item inventory compared to the previous year, +5.6 million, was mostly affected by the change in the consolidation basis following the consolidation of Ratti (+4.2 million pro-quota), as well as by the cost increase of raw materials, which alone affects for more than 6.0 million euro the balances as of 31 December. The change in Net working capital is also due to the increase of short-term non-financial liabilities, following the higher trade payables following the turnover increase, and the effect of some nonrecurring operation, among them the advance payments in relation to the above mentioned sale of the company Ghiaie Idroenergia (advance payments received in 2010 for 8 million euro).
(1). The Filivivi group is consolidated pro-quota (50.00%) in both periods; the Ratti group is consolidated at 33.36% for 2010 only; 2010 considers the demerger of Immobili e Partecipazioni S.p.A. effective from 1st July. Report on Group’s operations
25
[Report on operation] Net fixed assets
The balance of net fixed assets as of December 31, 2010, as a whole, decreased by 7.2 million euro compared to 2009. The inclusion of the Ratti group affects it for +7.1 million euro (pro-quota), while the stake held in Mediterranean Wool Industries affects it for +2.0 million euro. The “Assets/liabilities held for sale” decrease compared to the previous year by -26.9 million euro: this change is mainly due to the exclusion from the consolidation area of Immobili e Partecipazioni S.p.A., following the above mentioned demerger operation (with an effect of total -27.7 million euro), partially off-set by the reclassification of Net assets of the company Ghiaie Idroenergia, transferee of the hydroelectric plants of Linificio S.p.A. which were transferred to a third party in 2011 (5.1 million euro).
Fixed assets
In particular the item Tangible and intangible fixed assets, net of amortization, decreased by 9.2 million euro. Investments for the year were a total of 8.8 million (12.7 million in 2009) and referred for 8.4 million to tangible assets and for 0.4 million to intangible assets (12.1 million and 0.6 million respectively in 2009). 2010
(in millions of euro)
2009
Textile Sector
7.3
83.0%
11.7
92.1%
Fabrics
3.6
40.9%
4.8
37.8%
0.6
6.8%
0.7
5.5% 48.8%
Woollen Yarns (pro-quota)
(1)
2.4
27.3%
6.2
(1)
0.7
8.0%
=
=
Other Operations
1.5
17.0%
1.0
7.9%
Total
8.8
100.0%
12.7
100.0%
Linen Yarns Silk (pro-quota)
Investments in the Fabrics sector referred mainly to completion and modernization projects in the weaving departments of the Italian factories, in order to improve productivity and the quality of production.
26
With reference to the Linen Yarns, the investments referred in particular to actions taken to the creation of the second power plant in Villa d’Almè.
(1). The Filivivi group is consolidated pro-quota (50%); the Ratti group is consolidated pro-quota (33.36%) Report on Group’s operations
[Report on operation] Net borrowing
As of December 31, 2010 net borrowing was 51.9 million euro, decreasing by 28.6 million compared to 80.5 million the year before. As of December 31, 2010 the debt rate index (1) of the Group represents approximately 28.5% of net invested capital (32.7% at the end of last year). The analysis of the changes in net borrowing during the year, duly compared with the same period the year before, is shown in the following statement: (in millions of euro)
Net income
2010
2009
0.7
(26.7)
Depreciation, amortization and write-downs
16.3
19.5
Provision and use of reserve(2)
(2.3)
(19.1)
Cash Flow Change in trade receivables
14.7
(26.3)
1.6
14.0
Change in inventory
(0.4)
29.4
Change in trade payables
27.6
(16.8)
Cash Flow from current assets
43.5
0.3
Investment in tangible and intangible fixed assets
(8.8)
(12.7)
0.5
11.5
Disposals of tangible and intangible fixed assets Acquisitions/change in shareholdings
(12.4)
=
Cash Flow from investments
(20.7)
(1.2)
22.8
(0.9)
Free Cash Flow Conversion differences from net borrowing and minority interests Free Cash Flow before dividends Shareholders' dividends
5.6 28.4
= (0.9)
=
=
0.2
49.8
Change in net financial position for the year
28.6
48.9
Initial net borrowing
(80.5)
(129.4)
Final net borrowing
(51.9)
(80.5)
Capital increase in Parent company
Cash-flow for 2010, positive for 28.6 million euro (in 2009 positive for 48.9 million, influenced for 49.8 million euro by the share capital increase paid by the Shareholders). In 2010 cash-flows from operations were positive and were 30.4 million euro (2009: 6.8 million), while cash-flows from extraordinary operations were negative for 7.6 million (in 2009 negative for 7.7 million). In 2010 cash-flow from extraordinary operation was affected by the payments in relation to the above mentioned acquisitions of Ratti and Mediterranean Wool Industries, for total 12.4 million euro, partially off-set by cash-in from the advance payments of the transfer operation of Ghiaie Idroenergia.
Net equity
The Group’s net equity is 130.2 million euro, a 35.5 million decreased compared to December 31, 2009, mainly due to the effects of the demerger operation of Immobili e Partecipazioni S.p.A., on July 1, 2010. (3) The capitalization index , calculated as ratio between shareholders’ equity and net invested capital, further improved from 67.3% in 2009 to 71.5% at the end of 2010.
(1). Ratio between Net borrowing and Capital employed net of current liabilities. (2). 2009: Including approximately 10 million euro in deferred tax receivables referring to the transfer of Immobili e Partecipazioni S.p.A. (3). Ratio between Group’s shareholders’ equity and Invested capital net of current liabilities. Report on Group’s operations
27
[Report on operation] Fabric sector
Analysis by business sector
We now offer an exhaustive analysis of the operating performance of the Group’s various business sectors. The main indicators for the Fabrics Sector are summarized below: 2010
(in millions of euro) (1)
177.2
change %
42.7
+ 24.1%
9.4
(7.0)
16.4
n.c.
% of net revenues
4.3%
(3.9%)
8.2%
EBIT
219.9
change
Operating income
Consolidated net revenues
8.6
(9.8)
18.4
% of net revenues
3.9%
(5.6%)
9.5%
Consolidated net invested capital
95.5
120.9
(25.4)
- 21.0%
3.6
4.8
(1.2)
- 25.0%
Investment for the period Active staff at 31 December: employees
Net revenues
2009
1,937
1,926
n.c.
+ 0.6%
11
Total net revenues for the Fabrics sector were 219.9 million euro, with a 24.1% increase on the previous year, fully recovering the sharp decrease suffered in 2009 following the heavy contraction due to the world economic crisis what affected also the Textile sector, and bringing sales volumes back to prerecession levels. Also cotton fabrics showed a sharp recovery, benefiting from the effects of the acquisition of the Dal Sasso and Nuovatessilbrenta brands, acquired to improve the product offer in market niches contiguous to the historical brand Tessuti di Sondrio.
28
by brand
2009
Marzotto and Lanerossi Fabrics
93.6
42.6%
79.5
44.9%
Guabello Fabrics
33.1
15.0%
27.6
15.6%
Tallia di Delfino
13.8
6.3%
7.8
4.3%
Marlane Fabrics
24.8
11.3%
19.6
11.1%
Estethia/G.B. Conte Tessuti di Sondrio
by geographical area
2010
(in millions of euro)
8.0
3.6%
5.4
3.0%
36.9
16.8%
28.5
16.1%
Other
9.7
4.4%
8.8
5.0%
Total
219.9
100.0%
177.2
100.0%
2010
(in millions of euro)
2009
Italy
73.5
33.4%
60.5
34.1%
Germany
52.0
23.6%
39.1
22.1%
Other European countries
57.3
26.1%
49.6
28.0%
3.3
1.5%
2.8
1.6%
25.1
11.4%
20.4
11.5%
North America Asia Other countries Total
8.7
4.0%
4.8
2.7%
219.9
100.0%
177.2
100.0%
(1). Including revenues towards other sectors of the Group for 4.8 million (2010) and 2.4 million (2009). Report on Group’s operations
Fabric Sector Settore Tessuti Operating profit
[Report on operation] Analisys by Business Sector
Operating Operating profit profit recovered recovered sharply sharply compared compared to to last last year year (+16.4 (+16.4 million), million), mainly mainly thanks thanks to to the the increase increase in in production and sales, enabling the capacity utilization which affected in a positive manner the production and sales, enabling the capacity utilization which affected in a positive manner the sales sales margins. margins. Actions Actions taken taken to to consolidate consolidate and and develop develop the the business business continued continued also also in in 2010, 2010, together together with with structural structural interventions such such as as reviewing reviewing the the costs costs structures structures and and searching searching for for new new synergies synergies within within the the Group, Group, all all interventions contributed to to the the substantial substantial recovery recovery of of profitability profitability of of operations operations achieved achieved during during the the year. year. contributed
Invested capital
Invested capital capital was was 95.5 95.5 million million euro, euro, and and it it decreased decreased compared compared to to last last year year (120.9 (120.9 million), million), mainly mainly due due Invested to the the decrease decrease of of working working capital. capital. to The The actions actions to to control control and and curb curb working working capital, capital, which which have have also also achieved achieved an an important important result result in in inventory management, have also enabled to control the increase of inventory levels, which inventory management, have also enabled to control the increase of inventory levels, which increased increased less than than proportionally proportionally compared compared to to the the recovery recovery of of the the turnover turnover and and the the increase increase of of prices prices of of raw raw less materials. materials. Trade Trade receivables receivables benefited benefited from from the the effects effects of of the the factoring factoring “without “without recourse” recourse” operation operation carried carried out out by by Marzotto S.p.A., valid from December 31, 2010 for 15.2 million euro. Marzotto S.p.A., valid from December 31, 2010 for 15.2 million euro. In In 2010 2010 investments investments in in equipment equipment and and machinery machinery continued, continued, especially especially with with reference reference to to the the completion completion and modernization programs in the weaving departments of Italian and foreign factories, and modernization programs in the weaving departments of Italian and foreign factories, to to maintain maintain high productivity productivity and and production production quality quality standards, standards, as as well well as as the the adjustment adjustment and and bringing bringing the the plants plants up up high to code. code. to
Forecasts
The The great great trend trend of of the the turnover turnover and and the the orders orders received received in in the the first first months months of of 2011 2011 lead lead us us to to believe believe there will will be be aa further further improvement improvement of of volumes volumes and and margins margins during during the the year, year, compared compared to to the the previous previous there year. year. The The turnover turnover performance performance during during the the first first two two months months is is positive positive (compared (compared to to the the two-month two-month period period in in 2010 the the improvement improvement is is approximately approximately +29%), +29%), while while new new orders orders received received as as of of today today shows shows an an approx. approx. 2010 +50% increase, increase, both both as as quantity quantity and and as as value, value, compared compared to to the the counter counter season. season. +50% However, there there are are still still some some uncertainly uncertainly factors, factors, such such as as the the stability stability of of the the consumption consumption recover, recover, and and However, the inflation inflation dynamics dynamics created created by by the the steep steep increases increases of of raw raw materials, materials, which which make make it it harder harder to to forecast forecast the the the continuation continuation of of such such aa favorable favorable trend, trend, and and as as of of today today it it is is difficult difficult to to measure measure revenues revenues and and operating profitability for the second half of the year. operating profitability for the second half of the year. In In 2011 2011 the the research research actions actions to to find find new new effective effective actions actions and and synergies synergies within within the the Group Group continue continue as as well, also thanks to structural actions and new solutions, for the optimization of the cost structures well, also thanks to structural actions and new solutions, for the optimization of the cost structures based based on the the levels levels at at which which the the reference reference markets markets will will settle. settle. on Financial Financial dynamics dynamics are are still still monitored monitored very very closely, closely, in in particular particular controlling controlling working working capital capital exposure. exposure.
Report on on Group’s Group’s Report operations operations
29
[Report on operation] Woollen Yarn Sector
Analysis by Business Sector
The main indicators of the Woollen Yarns sector (1) are summarized below: (in millions of euro)
Consolidated net revenues (2)
2009
change
change %
43.2
39.2
4.0
Operating income
0.7
(1.6)
2.3
% of net revenues
1.5%
(4.0%)
5.5%
EBIT
+ 10.2% n.c.
0.3
(2.1)
2.4
% of net revenues
0.7%
(5.4%)
6.1%
Consolidated net invested capital
26.5
28.3
(1.8)
- 6.4%
0.7
(0.1)
- 14.3%
7
+ 2.0%
Investment for the period Active staff at 31 December: employees
Net revenues
2010
0.6 352
345
n.c.
Turnover of the Woollen Yarns sector increased as value by +10.2% compared to the previous year. Within this sector, the macro sector of spinning has immediately picked-up the recovery of the economic cycle, with a recovery of the industry activities which, according to the early estimates of the industry studies, has shown a turnover growth rate of approximately 13%. Against this backdrop, the Group’s size and structure have helped to further strengthen the leadership of Filivivi, carrying out the marketing strategies which allowed on one side to promptly react to the raw materials cost increase and on the other side to step in to renegotiate the payment terms with customers, with the subsequent selection of customers and minor effects on margins.
by geographical area 30
2009
15.0
34.7%
13.0
0.8
1.9%
1.1
2.8%
21.2
49.0%
17.7
45.1%
North America
0.3
0.7%
0.2
0.5%
Asia
3.8
8.8%
5.2
13.3%
Italy Germany Other European countries
Other countries Total
Operating result
2010
(in millions of euro)
33.2%
2.1
4.9%
2.0
5.1%
43.2
100.0%
39.2
100.0%
The operating result for the year is positive and amounts to +0.7 million, a marked improvements on 2009 (-1.6 million). Despite the strong turbulence in the reference markets, the Group scored good income performances, a result of the actions taken both within production, where the industrial and logistics reorganization continued, as well as within sales, with a prompt reaction to the market disturbances due to the heavy shifts in the costs of raw materials. In 2010 the sector continued the activities to streamline and make more flexible the production capacity, finding new synergies within the Group, aimed at the optimization of sales and logistics structures and at the saturation of general and fixed costs.
(1). The Filivivi group is consolidated pro-quota (50%). (2). Including revenues from other sectors of the Group for 1.7 million (2010) and 0.7 million (2009). Report on Group’s operations
[Report on operation] Analysis by Business Sector
Invested capital
Invested capital used in the sector, equal to 26.5 million, decreased compared to the previous year (28.3 million). This result was affected in particular by the curbing of Working capital (20.1 million against 21.2 at the end of last year), a modest increase compared to the turnover increase. This result is due to the actions taken to control trade receivables, which allowed to reduce the average days to collect, and inventory levels, whose growth was monitored compared to the increase in raw material prices, which had an effect on year-end balances for almost 5 million euro.
Forecasts
Considering the present market trend, the trend of raw materials prices, of orders received and the sales strategies applied, we estimate that the turnover of the Woollen Yarns sector for 2011 will increase compared to the previous year. New orders received in the first two months of 2011 compared to the same period of 2010 shows a further improving trend. Wool prices are an important element of the cost of the product, and during the first months of 2011 are still increasing, and this will necessarily affect sales prices to customers. Against this backdrop, and given all the above, we forecast that the actions taken in 2011 will allow us to further improve the economic and financial results for Filivivi. The industrial flexibility achieved, together with the completion of the Group’s synergies, the streamlining of the range of products and the above mentioned selection of customers, activities that we are continuing in 2011, let us forecast a possible improvement of the operating result for this year. Also in this business sector the actions to curb working capital continue, leading us to believe it will be possible to further decrease net borrowing.
31
Report on Group’s operations
[Report on operation] Linen Yarns Sector
Analysis by Business Sector
Linificio e Canapificio Nazionale group
Below are the main indicators of the Linificio e Canapificio Nazionale group for 2010. (in millions of euro)
Consolidated net revenues (1) Operating income % of net revenues EBIT
2009
change
change %
36.1
28.3
7.8
+ 27.6%
(1.3)
(10.3)
9.0
+ 87.4%
(3.5%)
(36.5%)
33.0%
(2.9)
0.2
(3.1)
(8.0%)
0.8%
(8.8%)
Group net income
(2.5)
0.4
(2.9)
Consolidated net invested capital
29.1
42.2
(13.1)
- 31.0%
(3.8)
- 61.3%
% of net revenues
Investments for the period Active staff at 31 December: employees
Net revenues
2010
2.4 627
6.2 669
n.c. n.c.
- 6.3%
-42
The year 2010 saw for the Linificio e Canapificio Nazionale group an important improvement of turnover, overall equal to +27.6% compared to the previous year. In 2010 we have seen linen products being used again both for clothing and home decoration, especially in the main market, the domestic market. From the second half of 2009 the company has approached the market more aggressively and dynamically: this policy has given the expected results in 2010 and, in terms of consolidated sales volumes, the company saw a 24.4% increase for yarns and a 282% increase for fabrics compared to the previous year, increasing its market share at the expense of its competitors. From the fourth quarter of 2010 the consolidation policy of the regained business positions is continuing with newfound intensity, focusing on increasing sales prices to obtain better sale margins.
32
by geographical area
2009
Italy
23.7
65.6%
16.1
56.9%
Other European countries
11.5
31.9%
11.1
39.2%
North America
0.1
0.3%
=
Asia
0.7
1.9%
1.0
Other countries Total
EBIT
2010
(in millions of euro)
= 3.5%
0.1
0.3%
0.1
0.4%
36.1
100.0%
28.3
100.0%
Operating loss in 2010 was limited to -1.3 million euro, compared to -10.3 million at the end of 2009, heavily influenced by the turnover decrease, to the persistent strong pressures of competitors and mostly to the consumption decrease in the markets that traditionally used linen products. In 2009 the sector intensified the activity to rationalize the industrial and production structure in order to face the markets with better service quality and with more competitive prices; in particular, we have tried to identify possible synergies with the Marzotto group to redefine the overall production structure. In the same way, the activities to review the product offered, the reorganization of the sales network and of the logistic structures have continued. This turnaround phase, which entailed a deep revision of its production, logistic and sales structures in 2009, continued in 2010, allowing Linificio, together with the improvement of the turnover, a significant recovery of the operating profitability.
(1). Including revenues from other sectors of the Group for 1.1 million (2010) and 0.7 million (2009). Report on Group’s operations
[Report on operation] Analysis by Business Sector
Management is continuing the implementation of the guidelines of the Industrial plan: the operations to reorganize the production, industrial, sales and general structure continued, and at the same time investments have been made to reach the goals that were set. EBIT was negative for 2.9 million, still affected by non-recurring charges linked to the implementation of the Industrial plan, and it may be compared to +0.2 million in 2009, which included the capital gains following the sale of a portion of the Villa d’Almè factory (10.8 million euro); net of the extraordinary items of 2009, also EBIT improves sharply (+11.7 million euro) compared to the previous year.
Invested capital
Invested capital once again decreased significantly (from 42.2 million euro in 2009 to 29.1 million at the reference date of this document). Also in this business sector the working capital, which decreased by 15.6 million euro on 2009, was affected in particular by a sharp decrease in inventory levels (in quantity of over 40%): in the year 2010 the Company continued the destocking activities of immobilized assets, while maintaining the high quality of service and time-to-market. Short term non-financial liabilities increased mostly due to the advance payments received for the sale of the hydroelectric plants of Villa d’Almè (8.0 million), which was actually executed at the end of January 2011. In fact, on 1 December 2010 the new company Ghiaie Idroenergia S.r.l. was incorporated. To this company were transferred both the exploitation rights of the concession granted to the Company for the production of hydroelectric power and the relevant operations of catchment, screening and intake, placed upstream of both plants (the original “Ghiaie” plant and a second plant named “Ponte della Regina” which enabled the optimization of the exploitation of this concession). During the month of May 2010 a third party had already given a first confirmation down-payment for the sale of this Company in the amount of 3.0 million euro; at the end of December 2010 a second down-payment was received for an additional amount of 5.0 million. At the end of the year the company Ghiaie Idroenergia is consolidated but it has been reclassified among “Assets held for sale”.
Net borrowing
The Group’s net financial position improved compared to the previous year, as debt went from 5.1 million at the end of 2009 to 5.5 million in liquid assets as of December 31, 2010. This improvement was affected by the cash-in from the above mentioned operation to dispose of the non-core business assets in Villa d’Almè.
Forecasts
The recovery signs seen in the second half of 2010, are being confirmed during the first months of this year: as things stand, the orders received show a situation of consumption recovery and the consolidation of the client base. In 2011 the reorganization of the industrial structure of the Company continues, in order to adapt to the different market conditions, also through the research of synergies and efficiencies within the Marzotto group. The financial control of cash flows is still closely monitored, in order to finance business as well as to support the undergoing company reorganization. At the of January 2011 the sale deed of the Company Ghiaie Idroenergia was executed, from Linificio e Canapificio Nazionale to a third party, with a corresponding cash-in of additional 9 million euro (for total 17 million euro received).
Report on Group’s operations
33
[Report on operation]
Analysis by Business Sector
Silk Sector Ratti group
(in millions of euro)
Consolidated net revenues
Marzotto
Ratti group
Mar./Dec.
Jan./Dec.
2010
2010
20.3
EBIT
71.0
0.2
0.1
% of net revenues
0.8%
0.1%
Group net income
(0.2)
(1.2)
7.0
20.9
Consolidated net invested capital Investments for the period
0.7
Active staff at 31 December: employees
170
2.1 510
Profit and financial performance of the Ratti group are consolidated in the Marzotto group on a proportional basis (33.36% starting from the acquisition date, March 2010).
Net revenues
In 2010 the Ratti group’s turnover was 71.0 million euro (20.3 million the portion attributable to Marzotto, for the period 5 march 2010 – 31 December 2010), compared to 70.0 million of the 2009. Net revenues by geographical area as of December 31, 2010 are shown below:
by geographical area (in millions of euro)
34
Marzotto
Ratti group
Mar./Dec. 2010
Jan./Dec. 2010
Italy
7.9
38.9%
27.7
39.0%
Other European countries
6.1
30.0%
22.3
31.4%
North America
2.4
11.8%
8.3
11.7%
Asia
3.3
16.3%
10.8
15.2%
Other countries
0.6
3.0%
1.9
2.7%
20.3
100.0%
71.0
100.0%
Total
Operating result
The Group’s operating result was break-even (0.2 million euro, 0.0 million the portion attributable to Marzotto), which can be compared to a loss of approximately 3.0 million at the end of 2009.
Net borrowing
Also thanks to the interventions on the capital made by the Shareholders during the month of March 2010, the Group ended 2010 with a net financial position positive for 6.1 million euro (pro-quota Marzotto approximately 2.0 million).
Forecasts
After leveling-off in 2010, the year 2011 is set to be the year of the recovery of orders and turnover for the textile industry and in particular for the silk industry. In the international economic situation there still however risks and uncertainties both inside and outside the industry, such as the big increase of prices of raw materials, the performance of foreign exchange markets and the costs of energy. The recent earthquake in Japan, which alone represents approximately 11% of the turnover of luxury goods sector to which the Ratti group refer, remains an element whose effects will be assessed in the coming months. In this situation the Group continues to implement the plans and actions of reorganization and strengthening of its structures, according to the Industrial plan 2011-2013, with the goal to further improve its industrial efficiency levels, market strategies effectiveness and therefore its profitability. In line with the strategy to recover market shares, we point out that the Group has started 2011 with st new orders received well over 1 January 2010, and as of today orders received and turnover are significantly higher than the same period of last year.
Report on Group’s operations
[Report on operation] Other operations
Analysis by Business Sector
2010
(in millions of euro) (1)
2009
change
change %
12.9
12.7
0.2
+ 1.6%
Operating income
(1.5)
(0.9)
(0.6)
- 66.7%
EBIT
(2.0)
(1.7)
(0.3)
- 17.6%
Net revenues
Net financial revenues: (2)
7.2
(5.3)
12.5
- financial charges
(0.3)
(2.2)
1.9
+ 86.4%
Income before taxes
4.9
(9.2)
14.1
n.c.
0.5
+ 50.0%
4
+ 4.5%
- from equity investments
Investments for the period
1.5
1.0
Active staff at 31 December: employees
93
89
n.c.
The “Other Operations” section includes general corporate functions, namely setting strategic guidelines and providing coordination services, as well as administrative, financial and information technology services, on behalf of the operating sectors. It also refers to the management of real estate not used for industrial activities, to the water treatment plant in Schio and to nonconsolidated shareholdings owned by the Group. The operating loss for 2010 is attributable to the costs incurred by the corporate structure and not charged back to the Group divisions, since they were not directly attributable to them. Among net financial revenues for the year 2009 are included the effects of write-downs of consolidated shareholdings, which were canceled upon consolidation.
35
(1). (2). Report on Group’s operations
Including revenues from other sectors of the Group for 8.3 million (2010) and 8.7 million (2009). Including equity valuations of companies not consolidated with the line-by-line method.
[Shareholdings] Shareholdings in Subsidiaries
Below we provide a summary of the performance of the main direct Subsidiaries (consolidated in the Group income statement), as well as of the most important Group affiliated companies and other significant shareholdings of the Group.
The Filivivi, the Linificio e Canapificio Nazionale and the Ratti groups have been discussed in the comments on the Business Sectors.
Fratelli Tallia di Delfino S.p.A. In 2008 the Parent Company acquired a 70% shareholding of the Tallia shares: this is an historical company based in Strona (in the Biella area), specialized in menswear fabrics, it manufactures and sells woollen fabrics for high-end and luxury menswear, and it is part of the Group’s “brand strategy” to protect a high-end product segment and effort to complete its range of products offered with a highend, high quality and highly recognizable product. The actions to balance the financial stability continued in 2010, in order to achieve a more effective costs structure while maintaining high level quality, creative content and customer service. The results achieved, also thanks to the effects of the synergies within the Group, together with a significant increase of sales volumes, have enables to widely recover from the negative performance in 2009, reestablishing in 2010 the conditions for low operating costs, which will come to full effect in 2011. Net revenues increased compared to the previous year by 77%, reaching 13.8 million euro (7.8 million in 2009), and the Company reached in 2010 the operating break-even. The difficult financial situation of the Subsidiary, also considering the renunciation by Marzotto of the pre-emption right on 30% of the share capital, has prompted the Parent Company to make a shareholder payment on capital account for 2,000,000 euro made at the end of December 2010, by converting part of the financial credit towards Tallia. As already mentioned in “Main events of the year”, during the month of January 2010 Marzotto became the sole shareholder of Tallia di Delfino S.p.A., therefore becoming its sole Parent Company.
36
At the end of 2010, the shareholder Marzotto has approved the transfer of a business unit to the benefit of Tallia di Delfino S.p.A., the business unit corresponds to the business identified as the brands Guabello and Marlane; the resulting Company will be named “Biella Manifatture Tessili S.p.A.” and will be 100% controlled by Marzotto S.p.A. Tallia di Delfino is subject to management and coordination by the Parent Company.
Marzotto Textile N.V. The company was incorporated on 19 April 2005, following the demerger from Marzotto International N.V., through the contribution of the shareholdings pertaining to the Textile business unit, at the end of 2010, it directly controls the foreign companies Novà Mosilana a.s., AB Liteksas (important production plants located in the Czech Republic and in Lithuania respectively), Marzotto International Trading Shanghai Co. LTD (a representation company established in 2005 to monitor the Far East markets) and Marzotto Textiles USA Inc. (a company established on 2 January 2008 for marketing and sale activities in the North American markets for the fabrics and home linen sector).
Report on Group’s operations
[Shareholdings] Shareholdings in Affiliates Mascioni S.p.A. (MI) Share capital euro 5.000.000
In the following pages we report on the main non-consolidated shareholdings:
Equity investments no. of shares owned
2010
2009
28.35%
28.35%
283,500
283,500
Marzotto S.p.A. book value
4.0 euro/milion
4.0 euro/milion
consolidated book value
6.9 euro/milion
6.8 euro/milion
net equity pro-quota
6.9 euro/milion
6.8 euro/milion
Mascioni S.p.A. is a leader on the international markets in high-end fabric enhancing Production and its turnover went from 41.9 million in 2009 to 51.6 million euro in 2010 (+23%). The net result, 2.0 million, is positive once again, achieving a significant recovery on the result of -6.8 million in the year 2009. Turnover in the first two months of 2010 amounted to 8.4 million euro, a 16.4% increased on the same period the year before.
Aree Urbane S.r.l. (MI) Share capital euro 100.000
2010
2009
32.50%
32.50%
Marzotto S.p.A. book value
0.0
0.0
consolidated book value
0.0
0.0
Equity investments
The company was established in October 2002 as part of a project aimed at increasing the value and therefore the sale appeal of some real estate properties held by Marzotto S.p.A. It has been placed in liquidation in August 2010 following the failed share capital increase proposed by its Shareholders. The intermediate balance sheet as of September 2010 delivered to the Liquidator pursuant to article 2487 bis paragraph 3, showed a steady value of the real estate properties, compared to the end of 2009 (in the Financial Statement as of December 31, 2009 the real estate inventory managed by Aree Urbane were valued at 157.1 million). At the end of December 2010, the Shareholders have received a proposal of purchase of their shares, pending completion of the due diligence, or, alternatively, of the main real estate area in Rome. Due to the size of these proposals, which are still being verified, and due to the results of the actions taken by the appointed liquidator during the first months of management, we have no reason to believe that the rights of satisfaction of the creditors may be jeopardized and likewise from Marzotto S.p.A. towards Aree Urbane.
Report on Group’s operations
37
[Other information] Industrial relation Fabrics
On June 23, 2010, the new supplementary labor agreement for the Guabello – Marlane was subscribed; this agreement subjects the payment of a portion of the yearly bonus to reaching the company’s operating profit goal. Along the same line, on July 16, 2010 the supplementary labor agreement of the Tessuti di Sondrio division was renewed and, afterwards, on September 15, 2010, for the Company F.lli Tallia di Delfino S.p.A. On September 1, 2010, for the benefit of the Marzotto Fabrics Division (Valdagno factory), the union agreement for the renewal of the solidarity contract was subscribed, beginning on September 7, 2010 and until September 6, 2011, involving 316 employees. On November 19, 2010 the deadline indicated by the procedure for laying-off employees with extended unemployment benefits was extended to April 30, 2011 as the final date for the procedure, as per the agreement on June 18, 2009. In fact, as of November 2010, 44 employees were still active out of the 109 redundancies at Marzotto Fabrics Division and Main Office. On December 10, 2010, an agreement was reached with the Labor Unions to layoff with extended unemployment benefits 27 employees of F.lli Tallia di Delfino, including 22 employees who were already placed under the biennial Extraordinary Redundancy Fund program (CIGS) when the departments in which they were working were closed, and 5 more employees from other departments (thermal plant and looms’ cleaning), which were scheduled to stop their activities.
Woollen Yarns
Linen Yarns 38
Report on Group’s operations
(1) The Filivivi group , in the month of December reached an agreement with the Labor Unions for the employees working at the Alte Ceccato factory. This agreement grants Extraordinary Redundancy Fund benefits (CIGS) to 8 office employees at the main offices, and a defensive solidarity contract for the production employees. The agreement, valid for twelve months, is valid from 1 January 2011. The Italian factories in Alte Ceccato and Piovene Rocchette (Vi) adopted Ordinary Temporary Unemployment Benefits Programs (CIG).
As for the Linen Yarns sector, in reference to the Industrial and production structure reorganization, we point out that in 2010:
On February 8, 2010 Linificio S.p.A., at the Fossalta di Portogruaro site, used the Redundancy Fund Program (CIG) for 82 employees and revoked the mobility allowance procedure for another 134 employees after the Ministry of Labor approved the extension of the Extraordinary Redundancy Fund Program;
on July 13, 2010 Linificio S.p.A., due to the continuing of the negative economic situation has begun the layoff procedure for 269 employees of which 63 in Villa d’Almè and 206 in Fossalta di Portogruaro (of which 129 were already receiving Extraordinary Redundancy Fund benefits CIGS, procedure which was set to expire on October 12, 2010);
on September 27, 2010 at the Ministry for social policies, Linificio S.p.A. agreed with the Ministry the Extraordinary Redundancy Fund CIGS procedure effective from 1 October 2010 for 77 employees in force in Fossalta di Portogruaro and the recourse to the Redundancy Fund CIG effective from 13 October 2010 for 12 months for 129 employees currently in the Extraordinary Redundancy Fund (CIGS) program in Fossalta di Portogruaro. Moreover, starting from 11 October 2011 they agreed to use the Extraordinary Redundancy Fund program (CIGS) for 24 months for 63 employees at Villa d’Almè while at the same time guaranteeing the occupation for 35 employees;
on October 18, 2010 Linificio S.p.A. has agreed with the Labor Unions the mobility allowance procedure for a maximum of 61 employees, 9 of which were office employees and 52 were factory workers;
on December 7, 2010 Linificio S.p.A. has agreed with the Labor Unions the mobility allowance procedure for a maximum of 50 employees, 16 of which were office employees and 34 factory workers.
(1).
Figures at 100%.
[Other information] Silk
Finally, in the Silk sector (1), we point out that during the year the constant dialogue with the Labor Unions and the workers’ representatives has continued, in order to better manage the consequences on the employees of the measures necessary to respond to the general market conditions. Please remember that Ratti S.p.A., pursuant to the reorganization plan implemented:
on January 9, 2009 it signed the agreement for the mobility allowance procedure for 50 employees (the procedure ended on September 30, 2010);
on February 26, 2010 it completed the unions consultation process to place into the Ordinary Redundancy Fund (CIG) starting from 1 February 2010, for 13 weeks, a maximum of 491 employees at the Guanzate (CO) location, modulated by reducing the weekly working hours;
on April 29, 2010 it completed the unions consultation process to place into the Ordinary Redundancy Fund Program, starting from May 3, 2010, for 13 weeks, a maximum of 488 employees at the Guanzate (CO) location, modulated by reducing the weekly working hours;
on July 22, 2010 it completed the unions consultation process to place into the Ordinary Redundancy Fund Program, starting from 6 September 2010, for 4 weeks, a maximum of 476 employees at the Guanzate (CO) location, modulated by reducing the weekly working hours;
on September 28, 2010 it completed the unions consultation process to place into the Ordinary Redundancy Fund Program, starting from October 4, 2010 until December 4, 2010, a maximum of 474 employees at the Guanzate (CO) location, modulated by reducing the weekly working hours;
on December 29, 2010 it began the unions consultation process to request the Extraordinary Redundancy Fund (CIGS) program due to the Company’s crisis. On January 20, 2011 an agreement was signed with the labor unions to use the Extraordinary Redundancy Fund starting from February 7, 2011 for 12 months (until February 6, 2012) for a maximum of 477 employees. On January 24, 2011 the Lombardy Region has declared successfully fulfilled and completed the joint examination of the above request for the Extraordinary Redundancy Fund (CIGS) program due to the Company’s crisis.
We also would like to point out that the company Collezioni Grandi Firme S.p.A. (Ratti group):
Training and development of human resources
on May 14, 2010 it completed the unions consultation process to place into the Special Ordinary Redundancy Fund (CIG in deroga), starting from May 14 until September 30, 2010, for a maximum of 36 employees at the Guanzate (CO) location, modulated by reducing the weekly working hours up to a 60% maximum of the regular working hours; on September 22, 2010 it completed the unions consultation process to place into the Special Ordinary Redundancy Fund (CIG in deroga), starting from October 1 until December 31, 2010, for a maximum of 35 employees at the Guanzate (CO) location, modulated by reducing the weekly working hours up to a 60% maximum of the regular working hours.
Marzotto considers training a key factor to increase and keep up-to-date its managers’ skills and technical knowledge. This is why we created Marzotto Training, the space for ongoing training within the Company. Marzotto, through various training instruments (indoor, outdoor, on the job), has made efforts to improve the performance and the individual and community skills: in addition to programs for the the individual (master, specialization courses) we have organized events involving communities strategic to the business (area finance, sales, fashion designers) in order to increase the tolls available to remain competitive. We have boosted our Corporate Intranet, personalizing the contents in areas targeted to the different professional figures in the Company. In 2010 the economic investment for training was approximately 250,000 euro, using inter-professional funds such as Fondimpresa and Fondirigenti, for total 1,940 hours of training, not including work safety training. Professional training programs focused on work safety were also offered within the Group, involving about 220 people. About 200 employees for 8 hours each were trained on the company’s risks and the applicable regulations. A new project was started for the integration of 10 engineering graduates, in the production plants of the Parent Company, to help recruiting new talented people, relaunching the Corporate Brand and developing specific and technical projects in the production areas.
(1). Report on Group’s operations
Figures at 100%.
39
[Other information] Employees by sector (1)
The number of (active) employees of the Group as of December 31, 2010 was 3,480 employees (1), of which 1,712 working in Italy (total 3,233 employees as of December 31, 2009, of which 1,621 in Italy). Active staff went from 3,029 at the end of 2009 to 3,179 as of December 31, 2010. The increase in the number of employees during the year (+150 employees) can basically be explained with the inclusion of the Ratti group in the consolidation (+170 employees pro-quota), while in the other sectors there were no noteworthy changes. Year-end staff at 12.31.2010
2009
60.9%
1,926
63.6%
1,937
60.7%
2,029
64.4%
Woollen Yarns
352
11.1%
345
11.4%
347
10.9%
349
11.1%
Linen Yarns
627
19.7%
669
22.1%
636
19.9%
693
22.0%
Silk
170
5.4%
=
=
183
5.7%
=
=
3,086
97.1%
2,940
97.1%
3,103
97.2%
3,071
97.5%
93
2.9%
89
2.9%
91
2.8%
79
2.5%
3,179
100.0%
3,029
100.0%
3,194
100.0%
3,150
100.0%
Total Textile Sector Other Operations
Total Laid off/dismissed
Total staff year end
Active employees by Country (1)
301
204
214
254
3,480
3,233
3,408
3,404
Year-end staff at 12.31.2010
Average staff
at 12.31.2009
2010
2009
1,413
44.4%
1,450
47.9%
1,544
48.3%
1,497
47.5%
Czech Republic
886
27.9%
857
28.3%
880
27.6%
899
28.6%
Lithuania
349
11.0%
354
11.7%
314
9.8%
378
12.0%
Romania
106
3.3%
94
3.1%
102
3.2%
94
3.0%
Tunisia
415
13.1%
264
8.7%
344
10.8%
271
8.6%
10
0.3%
10
0.3%
10
0.3%
11
0.3%
3,179
100.0%
3,029
100.0%
3,194
100.0%
3,150
100.0%
Italy
Other countries
Total
Research and development
2010
1,937
Textiles
40
Average staff
at 12.31.2009
Research and development mainly focused on research and technology innovation to improve the quality standards and production processes, research for new fabrics and the improvement of the flexibility of customer service.
(1). The Filivivi group staff are considered pro-quota at 50%; the Ratti group staff are considered pro-quota (33.36%). The 2009 Linificio group staff have been recalculated as needed on a like-for-like basis with 2010, as they were previously recognized on a Full Time Equivalent basis.
Report on Group’s operations
[Other information] Praia
Between 1999 and 2001, some former employees and heirs of former employees at the Parent company’s Praia a Mare plant filed a motion with the Attorney General through the Court of Paola, seeking criminal action against the persons in charge of the plant from the Seventies through 2004, allegedly for functional omissions that, because of work safety conditions there, would have been the cause of death and serious health problems to some employees and in reference to the are outside the factory, would have caused its pollution and contamination. After the Judge of the Court of Paola rejected two requests by the Examining Judge to close the case, in October 2009 the prosecution issued 14 notices of completion of the preliminary investigations, and their notification was repeated in February 2010. As of today the Parent company, with the favorable opinion of a reputable law firm, believes that compensation claim for damages in favor of a third party will not be assessed. Some former employees or heirs of former employees as indicated above, in October 2006 and in 2008, have also begun civil proceedings against the Parent company asking for compensation for the alleged damages due to work-related illnesses. As of today the disputes are at various progress levels since the claims were made subsequently. In any case, the technical appraisals so far completed, examined by technical experts and legal counsels for the Parent company, appear to exclude, so far, any particular liability of the Company in the reported illnesses. For none of the claims has been made any further preliminary investigation and therefore, save any different assessment following the investigations that are still underway, there are no objective element that lead us to believe the Parent company may suffer any liability. Following an ordinance of the mayor of Praia a Mare in January 2007, Marzotto S.p.A. was supposed to begin a series of characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have been suspended pending cautionary proceedings. As things stand, the costs for the possible soil reclamation are estimated anyway to be less than the possible sale value of the affected area.
41
Report on Group’s operations
[Other information] Risk management
The Group manages the risk factors that may influence the business performance through actions and procedures. Below, we will analyze the risk factors distinguishing between external (contextual) risks and internal (processing) risks.
External risks (contextual risks)
General economic situation risks The Group products are addressed to markets subject to demand cycles and are influenced by the general economic situation. It cannot be not excluded the substantial decreases in consumption levels, with effects in all markets/products, may significantly affect the economic, financial and equity situation of the Group, even if the diversification of markets and of the products and brands portfolio that we have attained reduces the risk exposure compared to companies whose offer is more concentrated. Risks related to competition in the sectors of the Group’s operations The Group operates in a competitive environment; it is possible that the competition pressure due to a drop in demand translates to pressure on prices. Part of the product offered by the Group, especially in the less differentiated sectors of woollen and linen yarns, is interchangeable with products offered by our main competitors and therefore, in such cases, price is a significant sales factor. Should there be a particularly significant drop in volume and/or sale prices, the Group believes that there are actions that can be taken to cut its own cost structure, in order in minimize the possible negative effects on the economic, financial and equity situation.
Internal risks (processing risks)
Risks related to financing sources and liquidity risk The effects of the possible turmoil in the global financial system could represent a risk factor in relation to the possibility of obtaining further financial means at the current conditions. However the Group believes that the present debt structure, in particular the availability of lines committed in the medium/long term, the financial resources immediately available (deposits) and the lines of credits not yet used, will limit the negative impacts of a possible difficulty in obtaining credit. Exchange rate risk Considering the Group’s exposure to exchange rates fluctuations in foreign currency operations (purchases/sales in non-euro markets), we carry out hedging operations to determine the exchange rate based on estimates of sales and purchases volumes and the currency exchange rate considered when the price lists are prepared. Specifically, the Group uses the following hedging instruments:
42
- foreign currency loans; - term sales and purchases in foreign currency; - foreign currency options at fixed exchange rates. These hedging instruments are agreed upon with highest rated banks. Since the consolidated balance sheet is expressed in euro, the fluctuations of the exchange rates used to convert data of the subsidiaries, which were originally in a foreign currency, could impact the economic, financial and equity situation of the Group. The risk that the conversion differences have a significant impact appears limited. Credit risk The credit risk is essentially reduced also considering the type of customers, which are diversified and not significantly concentrated in the new outlet markets. This risk is handled through the actions of a specific office in the company, Credit management, and also through an insurance coverage policy with a primary insurance company.
Report on Group’s operations
[Other information] Interest rate risk The Group’s borrowing is mostly concentrated on variable tax rate. The effects of the possible further turmoil, already experienced in the banking system, could potentially represent a risk in relation to the cost of obtaining the financial resource. The considerable reduction of the reference rates has offset more than proportionally the average increase in the spreads recognized to the financing banking institutions in the recent past. The Group constantly monitors this risk and we do not believe that, given the present debt level (which has strongly improved), this risk is significant in terms of possible effects. Risk in relation to the environmental policy The activities of the Group are subject to laws and regulations (local, national and international) on the environment. In particular, the production plants are affected by regulations on atmospheric emissions, waste management and water waters management, especially because we have dyeing and purification plants. The organization is constantly committed to respecting environmental stands in compliance with the environmental regulations in force in each local area in reference to the specific activities. New investments are been considered, also in view of the environmental impact, the potential savings in resources and energy consumption during operations as well as the reduction of total waste material produced.
43
Report on Group’s operations
[Significant event after the close of the year] Sale of Ghiaie Idroenergia
On 28 January 2011 the sale to a third party of the Company Ghiaie Idroenergia S.r.l. (Linificio group) was executed, with the collection of 9.0 million euro in full payment of the operation (another 8.0 million had already been cashed in 2010 as a down payment).
Transfer to Tallia di Delfino S.p.A.
At the end of 2010, Marzotto approved an operation for the transfer to Tallia di Delfino S.p.A. of the business unit corresponding to the business identified as the Guabello and Marlane brands; the resulting Company will be named “Biella Manifatture Tessili S.p.A.” and will be 100% controlled by Marzotto S.p.A. The reasons for this transfer are the need to gather the textile activities in the Biella area in one single corporate hub, in order to take advantage of the possible synergies to increase the system effectiveness and to seize the opportunity for the valorization and strengthening of each brand, taking advantage of the quality and product identity typical of the Made in Biella products, which is enabled by belonging to the Biella area. st This operation will be effective on 1 May 2011.
44
Report on Group’s operations
[Performance news and outlook for the current year] The positive trend of sales and orders received during the first months of 2011 lead us to believe that it will be possible during this year to see a further improvement of volumes and margins of the Group compared to last year. The trend of the expected turnover for the first two months confirms this expectation, with almost a 30% increase on a like-for-like basis (excluding Ratti), while current orders campaigns show as of today an even more substantial improvement, in all the business sectors of the Group. While in the macro-economic scenario there are still instability and fragility factors, the most serious threat to the Textile industry in 2011 comes from the procurement markets: the record price increases which began last year do not show any sign of slowing down, and this is made more serious by the difficulty in obtaining raw materials. For several reasons, these increases do not appear to be slowing down in the short term, and they will end up having a substantial effect on corporate margins. In addition to some recovery signs already apparent, there are still weakness elements of macro-economic nature, on the international markets but even more so on the domestic market: the difficulty in the recovery of consumption due to unemployment and the reduced purchase power, a general lack of confidence mood, and on the exterior the performance of foreign currency markets, or the possible inflation dynamics created by the high increase of raw material prices just to name a few. The continuation of these uncertainty elements does not make it easy to predict if the favorable trend shown by the Group in the results for the first months of 2011 will continue; however we predict that the results of the year 2011 will be better than the results of 2010. The activities to identify and implement actions to reach higher efficiency levels and recover productivity continue, in order to contain and manage at best the impact of the above mentioned situations. In reference to medium term plans, management is carefully and constantly monitoring the markets to optimize all costs as a function of the settlement in the end markets, while at the same time taking full advantage of the synergies within the Group, also thanks to the recent strengthening and development investments, like Egypt and Ratti. The medium term plans also include the search for the Group of internationalization opportunities, especially in reference to the markets in China, India and South America. The strong tendency to monitor capital employed in production and especially working capital (in particular receivables and inventory), to streamline the financial resources used in the business. The first results of the sectors for 2011 in reference to the turnover of the two-month period January and February should be viewed in this context: (in millions of euro)
02.2011
02.2010
Textile Sector
46.3
98.7%
33.4
97.9%
Fabrics
33.0
70.3%
25.5
74.8%
Woollen Yarns (pro-quota)
6.0
12.8%
4.4
12.9%
Linen Yarns
5.0
10.7%
4.1
12.0%
Silk (pro-quota)
3.3
7.0%
=
=
(1.0)
(2.1%)
(0.6)
(1.8%)
Inter-company sales
2.0
4.3%
2.1
6.2%
Aggregate total
Other Operations
48.3
103.0%
35.5
104.1%
Inter-company sales
(1.4)
(3.0%)
(1.4)
(4.1%)
Consolidated total
46.9
100.0%
34.1
100.0%
of which: Italy
18.0
38.4%
13.2
38.7%
of which: Other markets
28.9
61.6%
20.9
61.3%
The Group’s turnover as of February 28, 2011, compared to the same period last year, increased by approximately 37.5% (increasing by 28.6% on a like-for-like basis, excluding the associated company Ratti). This change is the result of an approximately 29% increase in the fabrics sector and an increase of approximately 36% and 22% respectively for the Woollen and Linen yarns. Valdagno (VI), March 29, 2011 THE BOARD OF DIRECTORS
Report on Group’s operations
45
1836
marzot to group
General information Marzotto group consolidated financial statements Report on Group’s operations
[Consolidated financial statements]
Marzotto S.p.A. financial statements Report on the Company’s operations Company financial statements
annual report 2010
47
Financial statements
[Consolidated Balance Sheet] 12.31.2010
(k euro)
Partial
12.31.2009 Total
Partial
Total
1. Non-current assets 1.1 Property, plant and machinery 1.2 Civil real estate 1.3 Goodwill, trademarks and other intangible assets 1.4 Shareholdings valued at equity 1.5 Other equity investments
109,846
120,037
1,325
1,610
12,156
10,953
9,404
7,302
227
199
1.6 Medium/long-term receivables
11,453
8,929
1.7 Deferred tax assets
16,461
1.8 Medium/long-term financial receivables third parties Medium/long-term financial receivables affiliates Total non-current assets 2. Non-currents assets held for sale
160,872
19,084
168,114
63
48
19,840
19,840
180,775
188,002
6,197
31,997
3. Current assets 3.1 Inventory
96,811
91,254
3.2 Trade receivables third parties
88,968
89,201
917
806
Trade receivables affiliates 3.3 Other receivables Other receivables affiliates
11,802 1,987
3.4 Short term financial assets and cash and cash equivalents third parties
2,475
158,723
Short term financial assets and cash and cash equivalents affiliates
197,541 102,158
2,452
2,000
361,660
301,699
548,632
521,698
4.1 Share capital and reserves
129,491
192,383
4.2 Income/(Loss) for the year
681
Total current assets Total assets
48
13,805 200,485
4. Shareholders' equity
Group shareholders' equity
(26,697)
130,172
4.3 Minority interests Total shareholders' equity
165,686
=
=
130,172
165,686
5. Non-current liabilities 5.1 Long-term reserves 5.2 Other medium/long-term payables 5.3 Deferred tax liabilities 5.4 Medium/long-term financial payables Total non-current liabilities 6. Non-current liabilities held for sale
42,866
53,111
22
39
6,496
49,384
12,820
65,970
7,779
70,069
57,163
136,039
1,036
=
134,159
84,915
7. Current liabilities 7.1 Trade payables and other payables third parties Trade payables and other payables affiliates 7.2 Short-term financial payables Total current liabilities
863
610
225,239
134,448
360,261
219,973
Total shareholders' equity and liabilities
548,632
521,698
Net financial debt
(51,940)
(80,471)
Consolidated financial statements
Financial statements
[Comprehensive Consolidated Income Statement] Year 2010
(k euro) 8.
Amount
Net revenues third parties
Year 2009 %age
Amount
%age
314,588
99.4
243,806
1,805
0.6
1,143
0.5
Totale net revenues
316,393
100.0
244,949
100.0
9.
(247,998)
(78.4)
(212,446)
(86.7)
(728)
(0.2)
(467)
(0.2)
Net revenues affiliates Cost of goods sold third parties Cost of goods sold affiliates 10. Gross income
99.5
67,667
21.4
32,036
13.1
11. Product development and marketing costs
(39,446)
(12.4)
(32,400)
(13.3)
12. General and administrative costs
(21,088)
(6.7)
(19,931)
(8.1)
(3,162)
(1.0)
3,971
1.3
(2,884)
(0.9)
13. Other income and charges 14. EBIT 15. Net financial charges third parties Net financial charges affiliates 16. Dividends from non consol. equity investments and valuations at equity 17. Valuation of equity investments held for sale 18. Other financial income and charges 20. Taxes
23. Net income (before minority shareholders) 24. Income attributable to minority shareholders 25. Group net income 26. Fair value adjustments
(1.9)
=
238
0.1
(1,431)
=
(252)
22. Net profit/ (loss) from assets held for sale
(4,582)
35
1,048
21. Net income (incl. income attributable to minority shareholders)
(2.1) (10.4)
577 (651)
19. Income before taxes
(5,071) (25,366)
= (0.2) 0.3
=
0.1 (0.6) =
(4,313)
(1.7)
(35,454)
(14.5)
=
8,757
3.6
796
0.3
(26,697)
(10.9)
(114)
(0.1)
=
=
682
0.2
(26,697)
(10.9)
=
=
=
681
0.2
(26,697)
(10.9)
(236)
(0.1)
3,148
1.3
(1)
27. Other adjustments
2,040
0.7
(270)
(0.1)
28. Group net income total
2,485
0.8
(23,819)
(9.7)
29. Base income per ordinary share (in euro)
(1)
0.01
(0.36)
1. Referred to the yearly average of the Parent Company's outstanding ordinary shares (n. 94,225,677).
Consolidated financial statements
49
Financial statements
[Consolidated cash flow statement] 2010
(k euro)
Partial
Income before taxes (including minority interests)
(1)
Partial
Total
1,047
(35,454)
Amortisation and depreciation, and write-downs
19,614
23,247
Withdrawals from/allocations to provision
(3,965)
(7,926)
(Capital gain)/losses on disposal of fixed assets
(2,089)
(4,776)
Changes in valuation at equity of associated companies
(574)
Result from valuation of equity investments held for sale
(114)
1,436 =
Income Taxes paid
(3,999)
Changes in inventory
(1,108)
29,338
2,615
12,897
Changes in trade receivables and other receivables third parties Changes in trade receivables and other receivables affiliates Changes in trade payables and other payables third parties
8,873
(968)
378
(446)
29,675
(17,959)
Changes in trade payables and other payables affiliates
(572)
201
Changes in medium/long-term other financial receivables and payables
(420)
(94)
Change in consolidation structure
(2)
708
Operating cash flow (A) Disposals in intangible and tangible fixed assets (Investments in) /disposals of other equity investments Change in scope of consolidation
=
(2)
(12,713)
2,327
16,322
(12,350)
= (25,844)
(2)
(D)
1,009 9,119
Cash flow before dividends (A+B+C+D) Dividends to shareholders
2,728 129
10,128
=
25,480 =
Increase in capital share of Parent Company
160
Change in net financial position
= 160
49,831
(63,004)
(15,697)
Changes in short-term financial payables third parties
89,870
(6,010)
1,394
=
Changes in medium and long-term financial receivables affiliates Change in scope of consolidation
(2)
(15)
4
= 3,132
Changes in short-term financial receivables and cash and cash equivalent
49,831 52,184
Changes in medium and long-term financial payables
Changes in medium and long-term financial receivables third parties
129 2,353
25,640
Changes in short-term financial payables affiliates
23,937
(881)
(7,019)
Changes in exchange rate and other equity changes (C)
11,013
(504)
(8,802)
Cash flow from investments (B) Change in scope of consolidation
31,276 41,196
Investments in intangible and tangible fixed assets
50
2009 Total
(171) 31,377 57,017
=
(21,874) 30,310
Cash and short-term financial receivables - initial
104,158
73,848
Cash and short-term financial receivables - final
161,175
104,158
1. It includes interests paid and received in the amount of 1,754 and 3,666 k euro respectively. 2. Acquisition of Ratti S.p.A. and demerger of Immobili e Partecipazioni S.p.A.
Consolidated financial statements
Financial statements
[Statement of changes in consolidated shareholders’ equity] Fair Share
Profits
Transl.
value
Other
carried
Group
reserve
reserves
forward
result
18,516
23,036
(k euro)
capital
reserve
reserve
Balances as at 12.31.2008
73,986
14,797
8,823
(3,449)
Net income for the year 2009
Share capital increase
3,965 (26,697)
Other total profit/ (losses) Total other income/charges
Group
Legal
=
=
(119)
3,148
(151)
(119)
3,148
(151)
Capital
Result
s/holders' and res. of of third equity
th. parties
139,674
=
parties
=
(26,697)
(26,697)
49,831
(23,819)
equity
139,674 (26,697)
2,878 =
Total s/holders'
2,878 =
=
(23,819)
49,831
49,831
=
=
Allocation of 2008 profit: to dividends carried forward Balances as at 12.31.2009
123,817
14,797
14,129
(10,164)
32,494
12,872
8,704
(301)
2,419
(236)
(379)
2,419
(236)
(379)
Net income for the year 2010 Total other income/charges Demerger
= 165,686
681
Other total profit/ (losses) Share capital increase
(3,965) (26,697)
=
=
=
681
160
= =
=
681
681
1,804
1,804
2,485
=
=
160
(58,972)
17,310
3,503
165,686
2,485 160
(38,159)
(38,159)
=
=
Allocation of 2009 profit: to dividends carried forward Balances as at 12.31.2010
203 65,005
15,000
(30,761) 11,123
(537)
18,664
3,861
26,697
=
20,236
681
130,172
= =
=
130,172
51
Consolidated financial statements
Introduction
[Notes to the consolidated financial statements]
Accounting principles
The Marzotto group’s consolidated financial statements for the year ending on 31 December 2010 include the financial statements of the Parent Company Marzotto S.p.A. and of its subsidiaries and the Group’s shareholding stake in companies under joint control and in affiliated companies.
Compliance with IFRS/IAS
These consolidated financial statements have been prepared in compliance with the International Financial Reporting Standards (IAS/IFRS) and the relevant interpretations by the International Accounting Standards Board (IASB) approved by the European Commission and adopted by legislative decree 38/2005. The accounting principles adopted are comparable to those used as of 31 December 2009, except for the adoption of the following new or revised IFRS or IFRIC:
52
x
IFRS 2 – Share-based payments (Revised) – not applicable.
x
IFRS 3R – Business combinations (Revised) and IAS 27/R Consolidated and Separate Financial Statements (Revised). These two principles were approved in June 2009. IFRS 3 (Revised) introduces a number of important changes in the accounting for business combinations that will impact the amount of goodwill recognized, the reported results in the period that an acquisition occurs and future reported results. IAS 27 (Revised) requires that a change in a parent’s ownership interest in a subsidiary that does not result in loss of control be accounted for as an equity transaction. Therefore these transactions will no longer create goodwill, nor profits or losses. In addition, the revised principle changes the accounting treatment in the event of the loss of control in a subsidiary. The changes introduced in IFRS 3R and IAS27R did not affect the financial position or the profit.
x
IAS 39 – Financial instruments: recognition and measurement – Eligible Hedged Items – Not applicable.
x
IFRIC 17 – Distributions of Non-cash Assets to Owners – Not applicable.
x
IFRIC 18 – Transfers of Assets from Customers – Not applicable.
The International Accounting Standards Board and the IFRIC issued new principles and interpretations that will become effective after the date of these financial statements. The Group has not adopted in advance any of these principles and interpretations. The main effects expected from the application of these principles and interpretations are the following:
Consolidated financial statements
x
IAS 24 – Related party financial statements disclosure. On November 4, 2009 the International Accounting Standards Board (IASB) has issued the revision to IAS 24 – Related party financial statements disclosure. The changes adopted with the IAS 24 revision simplify the definition of “related party” and remove some inconsistencies and exempt government related entities from some disclosure requirements on the operations with related parties. Companies will apply IAS 24 and the changes to IFRS 8 at the latest beginning from the date of their first tax year starting after December 31, 2010. We do not anticipate that the adoption of this amendment will significantly impact the financial statements.
x
IFRS 9 – Financial instruments. The principles, applicable from 1 January 2013, represents the first part of a multi-phase process that will completely replace IAS 39 introduces new requirements for classifying and measuring financial assets and for the derecognition of financial assets and financial liabilities. In particular for financial assets it uses a single approach based on the management of financial instruments (its business model) and the contractual cash flow characteristics of the financial assets to establish the measurement basis, replacing the different rules provided by IAS 39. For financial liabilities instead, the main change introduced refers to the accounting treatment of changes in fair value for a financial liability designated as at fair value through profit or loss, if that is attributable to changes in the credit risk of the liability. According to the new principles these changes shall be presented in other comprehensive income (losses) and no longer shown in the profit and loss. At the date of these financial statements the European Union bodies had not yet complete the approval process to adopt the new principle.
[Notes to the consolidated financial statements] On May 6, 2010, IASB issued a set of improvements to IFRS, which will be effective from 1 January 2011; below are the improvements that will change the presentation, recognition and measurement of the balance sheet items, omitting those that will only involve changes in wording or editorial changes with minimum accounting impact, or those affecting principles or interpretations nor applicable by the Group: x
IFRS 3 – Business combinations. The amendment clarifies that third parties interests that do grant their holders the right to a proportional share of the net assets of the subsidiary must be measured either at fair value or according to the applicable accounting principles. Therefore, for example, a stock-option plan given to the employees must be measured, in case of business combinations, according to the rules of IFRS 2 and the equity share of a convertible bond instrument must be measured according to IAS 32. In addition, the Board has given more information on share based payment plans which have been replaced within a business combination, adding specific guidelines for their proper accounting.
x
IFRS 7 – Financial instruments: additional information. The amendment points out the interaction between quality and quantity of additional information required by this principle in reference to the nature and scope of the risks involved in the financial instruments. This should help the users of the financial statements to connect the information given and to get a general description of the nature and scope of the risks involved in the financial instruments. In addition, the information disclosure requirement on financial assets that have expired but have been renegotiated or depreciated and of the fair value of collaterals.
x
IAS 1 – Presentation of Financial Statements. With this amendments is it required that the reconciliation of the changes of each item of shareholders’ equity be presented in the notes or in the financial statements.
x
IAS 34 – Interim financial reporting – Not applicable. 53
Management and coordination
The Parent company is registered in Italy and is subject to the management and coordination of Wizard S.r.l (Rome).
Publication
The publication of these financial statements has been authorized by the Board of Directors on 29 March 2011.
Consolidated financial statements
Accounting principles Financial statements
[Notes to the consolidated financial statements] The consolidated Financial Statements consist of the Balance Sheet, the Income Statement, the Cash Flow Statement, the Statement of Changes in Shareholders’ Equity and the relevant explanatory notes. With regard to the presentation of the financial statements, the Group has made the following choices:
x for the Balance Sheet we have indicated separately current and non-current assets and current and non-current liabilities. Current assets are expected to be realized, transferred or consumed during the regular operating cycle of the Group; current liabilities are those that are expected to be paid off during the regular operating cycle of the Group or in the twelve months following the close of the period;
Sectors’ identification
x
for the Income Statement the costs analysis is based on the destination of the costs;
x
for the Cash Flow Statement we have used the indirect method.
The information by sector is primarily organized by product line. The following product lines are identified: x x x x x
Fabrics; Woollen Yarns; Linen Yarns; Silk; Other Operations.
These operations are carried out in several factories located in Italy (woollen and cotton weaving, wool and linen spinning, silk making), in Tunisia (linen spinning and weaving), in Lithuania (linen spinning, wool spinning, blankets), in the Czech Republic (woollen spinning and weaving), in Rumania (wool spinning), as well as by qualified contractors. 54
Furthermore, the Group operates in the textile machinery sector in the linen area (through Linificio e Canapificio Nazionale S.p.A.). The information is presented secondarily by geographical area.
Consolidated financial statements
Consolidation scope and principles
[Notes to the consolidated financial statements] The following companies are part of the scope of consolidation:
x subsidiary companies in which the Group directly or indirectly holds the majority of the share capital or of the shares with voting rights, or which are managed by the Group, are consolidated with the “line-by-line method”. Subsidiaries are consolidated line by line starting from the date in which the control begins and until the moment when the control is transferred outside the Group;
x Companies controlled by the Group directly or indirectly jointly with other parties (jointventures) are consolidated according the so-called “proportional method”, showing line-by-line assets, liabilities, revenues and costs proportionally to the equity stake held. The balance sheet and income statement data of the joint-venture are included in the consolidated statement starting from the date in which the joint control begins and until the date that such controls ends; x
affiliated companies, in which the Group directly or indirectly exercises significant influence, that are consolidated with the “equity method” by which profits and losses attributable to the Group are recognized each year on an accrual basis. The portion attributable to the Group of the profit of the affiliated companies is recorded in a specific line item in the income statement, starting from the date in which a significant influence is exercised and until the influence stops.
Operating Companies consolidated on a line-by-line basis: Company
Registered office
Immobili e Partecipazioni S.p.A.
(1)
Share Capital
Valdagno (I)
Fratelli Tallia di Delfino S.p.A.
Milan (I)
Immobiliare Isola S.r.l.
Vicenza (I)
Ambiente Energia S.r.l.
Schio (I)
Marzotto Textile N.V. and its subsidiaries: Novà Mosilana a.s.
Amsterdam (NL) Brno (CZ)
AB Liteksas
Kaunas (LT)
Marzotto Int.Trad. (Shanghai) Ltd.
Shanghai (RPC)
Marzotto Textiles USA Inc.
Wilmington (USA)
% Ownership Currency
2010
2009
5,400.00 K EUR
=
140.00 K EUR
100.00
70.00
15.00 K EUR
100.00
100.00
100.00 K EUR
100.00
100.00
45.40 K EUR
100.00
100.00
1,095,000.00 K CZK
100.00
100.00
41,000.00 K LTL
99.97
99.97
1,001.46 K CNY
100.00
100.00
410.00 K USD
100.00
100.00
Milan (I)
15,000.00 K EUR
50.00
50.00
UAB Lietvilna
Kaunas (LT)
15,711.00 K LTL
50.00
50.00
Filivivi Asia Pacific Ltd.
Hong Kong (HK)
10.00 K HKD
50.00
50.00
Filivivi S.r.l. (2) and its subsidiaries:
Sc Rolana Tex S.r.l. Linificio e Canapificio Nazionale S.p.A. and its subsidiaries: Filature de Lin Filin S.A.
Botosani (RO)
14,138.20 K RON
50.00
50.00
Milan (I)
27,648.00 K EUR
100.00
100.00
Chbedda (TN)
14,000.00 K TND
100.00
100.00
Kaunas (LT)
29,120.00 K LTL
100.00
100.00
Kaunas (LT)
863.20 K LTL
50.00
50.00
Licana S.p.A. in liquidation
Fara Gera d'Adda (I)
120.00 K EUR
100.00
100.00
Lin Naturel S.A.
Chbedda (TN)
3,200.00 K TND
100.00
100.00
10.00 K EUR
100.00
=
11,115.00 K EUR
33.36
=
UAB Lietlinen UAB Linestus
Ghiaie Idroenergia S.r.l.
(3)
Villa d'Almè (I)
(4)
Ratti S.p.A. and its subsidiaries:
Guanzate (I)
Creomoda S.a.r.l.
Akouda (TN)
9.50 K TND
31.70
=
Collezione Grandi Firme S.p.A.
Guanzate (I)
5,416.00 K EUR
33.36
=
Ratti USA Inc.
New York (USA)
500.00 K USD
33.36
=
Ratti Int. Trading (Shanghai) Co. Ltd
Shanghai (RPC)
110.00 K EUR
33.36
=
0.20 K RON
33.36
=
Textrom S.r.l. in liquidation
(5)
Cluj (Ro)
1. Until June 30, 2010 (demerger Marzotto S.p.A. of July 1, 2010). 2. Group consolidated pro-quota (combined management by Parent Company and Manifattura Lane Folco S.r.l.). 3. Incorporated by transferring a business unit (effective December 1, 2010). 4. Group acquired on March 5 2010 and consolidated pro-quota since it is jontly managed by the Parent Company and Faber Five S.r.l. 5. Since February 2011 the company is no more in liquidation.
Consolidated financial statements
100.00
55
Consolidation scope and principles
[Notes to the consolidated financial statements] Operating Companies consolidated at equity: % Ownership
Share Company
Registered office
Mascioni S.p.A.
Milan (I)
Mediterranean Wool Ind. Co. S.A.E. La Vecchia S.c.a.r.l.
(1)
(1)
Sadat City (ET)
Capital
Currency
2010
2009
5,000.00 K EUR
28.35
10,000.00 K USD
30.00
=
100.00 K EUR
33.00
33.00
Fossalta di P. (I)
28.35
1. Shareholding acquired on June 3, 2010. 2. Consolidated on a net equity basis by Linificio e Canapificio Nazionale S.p.A.
Operating Companies classified among non-current assets held for sale: % Ownership
Share Company
Registered office
Capital
Currency
Consolidated financial statements
2009
Aree Urbane S.r.l.
Milan (I)
100.00 K EUR
32.50
32.50
F.lli Tallia di Delfino Shanghai Trad. Ltd.
Shanghai (RPC)
200.00 K EUR
=
100.00
During the Financial year Aree Urbane S.r.l. has been placed in liquidation.
56
2010
Ratti Group
On March 5, 2010 the acquisition operations of the Ratti S.p.A. group were executed, in compliance with the agreements between the investors Marzotto S.p.A. and Faber Five S.r.l. (company in which the Chairman, Ing. A. Favrin holds a stake) on one side and Ratti S.p.A. and Donatella Ratti on the other. The operation, in relation to the wider reorganization plan of Ratti, was subject to Consob’s authorization regarding the application of the exemption from the obligation to launch a public purchase offer pursuant to article 49, paragraph 1, letter B), of Consob regulation no. 11971/1999. Consob’s favorable opinion was issued on March 3, 2010. Upon execution of the optional share capital increase reserved to the existing shareholders, and of the reserved share capital increase, completed on March 5, 2010 by full payment of 20,805,000 euro by the new investors, Marzotto and Faber Five have become holders each of a 33.36% stake in the share capital of Ratti. The process to measure the current value of the acquired assets and liabilities is still underway. The difference between the price paid and the net value of the acquired assets based on the historic values at the acquisition date has been recognized under goodwill which, according to IFRS 3, is to be considered temporary. Acquisition of Ratti S.p.A. Tangible and intangible fixed assets Financial fixed assets Net working capital Subtotal assets Medium/long term provisions Net financial position Net assets acquired Good-will temporarily attributed to the acquisition Total
book values 7,013
definitive values 7,013
43
43
2,241
2,241
9,297
9,297
(2,987)
(2,987)
2,809
2,809
9,119
9,119 1,283 10,402
57 Share capital increase Total
10,402 10,402
Mediterranean Wool Industries Co. (MWI) S.A.E.
On June 3, 2010, in execution of the preliminary stock purchase and sale agreement signed on October 28, 2009, Marzotto S.p.A. acquired 30% of the share capital of Mediterranean Wool Industries Co. (MWI) S.A.E., a corporation registered in Egypt whose business purpose is the processing of textile fibers (combing, carbonization, other processes) at a newly built factory in Sadat City (Egypt). This joint-venture is the result of a cooperation agreement with the Schneider group, an important and well known player in the industry, should complete the start-up process and run at full capacity by 2011.
Demerger of Immobili e Partecipazioni S.p.A.
On June 24, 2010 a demerger deed was executed for Marzotto S.p.A. for the transfer of the total shareholding in Immobili e Partecipazioni S.p.A. to a newly incorporated company, named “Nuova Immobiliare S.p.A.”, owned by the same Shareholders of Marzotto S.p.A. The demerger deed became effective on 1st July 2010.
Transfer of Ghiaie Idroenergia S.r.l.
On 1st December 2010 the business unit “hydro-electric power plant” of Linificio e Canapificio Nazionale S.p.A. was transferred to the newly incorporated company Ghiaie Idroenergia S.r.l.
F.lli Tallia di Delfino S.p.A.
During the year Marzotto S.p.A. came to hold 100% of the share capital of F.lli Tallia di Delfino S.p.A. In 2009 the Company was already consolidated on a line-by-line basis at 100%, with a financial liability towards minority shareholders.
Consolidated financial statements
Consolidation scope and principles Consolidation principles
[Notes to the consolidated financial statements] The following consolidation principles were adopted: a) For the financial statements of subsidiaries and affiliated companies have been used the same accounting principles of the Parent Company; adjustments have been adopted to make comparable lines influenced by different accounting principles. b) Assets and liabilities, revenues and costs of the consolidated companies are recognized according to the line-by-line method, eliminating the book value of the shareholdings held by the Parent Company against the relevant shareholders’ equity. c) Receivables and payables, revenues and costs among consolidated companies are eliminated. d) Earnings of significant size included in goods in stock from transactions between Group companies are eliminated. e) Dividends paid out by companies consolidated according to the line-by-line method are eliminated in the Income statement, which recognizes the results realized in the year. f) The portion of shareholders’ equity attributable to minority interests is shown in a separate item in the Balance sheet; the Income statement shows the result for the financial year attributable to minority interests. g) The translation into euro, the Parent company’s currency, of financial statements in other currencies is carried out by applying to assets and liabilities the prevailing exchange rate at the accounting period end-date and to the income statement items the average exchange rates for the period. The relevant exchange rate differences are recognized as a change in shareholders’ equity.
Business combinations
When IFRS where first adopted, based on the provisions of IFRS 1, the Group decided not to apply IFRS 3 retroactively to business combinations created before 1st January 2004. The cost of a business combination includes the liabilities borne or taken over by the purchaser in exchange for the control of the acquired company. The cost of a business combination is allocated by recognizing, at the date of the acquisition, the fair value of assets, liabilities and contingent liabilities identifiable at the purchase. The positive difference between the purchase cost and the portion of the fair value of assets, liabilities and contingent liabilities identifiable at the purchase is shown as goodwill in the assets. Should the difference be negative, it is recognized directly in the income statement. If the initial accounting for a business combination can be determined only provisionally, the adjustments to the provisional values are recognized within twelve months from the purchase date.
58
Exchange rates
The following exchange rates were used to translate into euro the financial statements in foreign currencies of the subsidiaries: Currency (units per 1 euro)
2010
2009
% change
- for the profit and loss account (average prevailing exchange rates for the year) CZK
Czech Crown
25.261
26.456
LTL
Lithuanian Litas
3.453
3.453
=
CNY
China Renmimbi
9.061
9.335
(2.9)
TND
Tunisian Dinar
1.896
1.883
0.7
RON
New Leu
4.211
4.244
(0.8)
10.265
11.351
(9.6)
1.314
1.409
(6.8)
25.240
26.400
(4.4)
3.453
3.453
= (10.3)
HKD
Hong Kong Dollar
USD
USA Dollar
(4.5)
- for the balance sheet (year-end prevailing exchange rates)
Consolidated financial statements
CZK
Czech Crown
LTL
Lithuanian Litas
CNY
China Renmimbi
8.822
9.835
TND
Tunisian Dinar
1.902
1.898
0.2
RON
New Leu
4.262
4.236
0.6
10.335
11.119
(7.0)
1.328
1.434
(7.4)
HKD
Hong Kong Dollar
USD
USA Dollar
Valuation criteria
[Notes to the consolidated financial statements] The most significant valuation criteria adopted when preparing the financial statements are described as follows:
1.1 Real estate, plants and machinery 1.2 Civil real estate
Real estate, plants and machinery are carried at historical cost, including directly attributable accessory costs. Land, both vacant and annexed to residential or industrial buildings, has not been amortized since its useful life is indefinite. Some assets that had been revaluated in previous periods, are shown at the revaluated amount, considered their deemed cost on the transition date to IAS. Assets acquired through business combination operations are recognized at fair value defined provisionally at the acquisition date and adjusted, if necessary, within the following twelve months. Maintenance and repair expenses that do not increase the value or prolong the remaining useful life of assets are recognized as expenses in the period in which they are incurred. Tangible assets are shown net of accumulated depreciation and any reductions in value, determined in accordance with the methods described below. Depreciation is straight-line, based on the estimated useful life of the asset. The estimated useful life of the main real estate, plant and machinery is as follows: Land indefinite Civil buildings 33 years / indefinite Industrial buildings 10/33 years Plant and machinery: - Textile 8 years - Corrosive environment textile 5/6 years - Other 7/25 years Industrial and commercial equipment 4/7 years Other assets: - Electronic office machines 5 years - Office furniture and fixtures 7/8 years - Vehicles 4 years
1.3 Goodwill, trademarks and other intangible
Intangible assets with a “finite useful life” are recognized at cost, determined according to the methods prescribed for tangible assets, and shown net of accumulated amortization and any permanent reductions in value, determined according to the methods described below. Intangible assets with “indefinite useful life” (e.g. trademarks) are not amortized. Intangible assets acquired through business combination operations are recognized at fair value defined provisionally at the acquisition date and adjusted, if necessary, within the following twelve months.
Value reductions
For each accounting period, tangible and intangible assets with a “finite useful life” are analyzed to identify any indicators of value reduction; in this case an estimate is made of their estimated recoverable value (the greater of the net sales price and its value in use). The recoverable value of the intangible asset with an “indefinite useful life” is estimated for each accounting period. A reduction in value is recognized in the Income statement when the book value of the asset, or of the related cash generating unit, to which it is allocated, is greater than the estimated recoverable value. Reductions in value are written back if the reasons for the devaluation are no longer present.
Consolidated financial statements
59
Valuation criteria
60
[Notes to the consolidated financial statements]
1.5 Other shareholdings
Shareholdings in companies other than subsidiaries and affiliates are valued at fair value, charging any profits or losses directly to shareholders’ equity. At the time of their sale, such accumulated profits and losses are recognized in the Income statement. When their fair value cannot be reliably determined, shareholdings in other companies are valued at cost adjusted for reductions in value in any, and their effect is recognized in the Income statement.
1.8 Medium-long term financial assets
Financial assets are initially carried at their nominal value, representative of the fair value, and later recognized at the lower between the book value and the estimated sale value.
2. Non-current assets held for sale
Assets or groups of assets and liabilities which value will be recovered mainly through sale rather than ongoing use are recognized separately from other assets and liabilities in the Balance sheet. Non-current assets or groups of assets and liabilities held for sale are recognized at the lower between the book value and the fair value net of the costs of sale.
3.1 Inventory
Inventory is carried at the lower between the cost of purchase or production and the estimated net realizable value. The cost of purchase is determined according to the methods described for fixed assets. The cost of production includes direct and indirect variable and fixed costs attributable to production.
3.2 Trade receivables 3.3 Other receivables
Trade receivables due within standard business terms and other operating receivables (other receivables) are not discounted and are carried at nominal value net of any write-downs. Adjustments to the estimated realizable value are recognized in a special adjustment reserve.
3.4 Short-term financial assets and cash and cash equivalents
Financial assets held for trading are carried at fair value recognized in the Income statement. Cash and cash equivalents are made up of cash in hand, i.e. cash that is readily available or on a very short term, successfully, and without collection expenses.
5.1 Long-term provisions
Provisions to long-term reserves are recognized when there is a legal or implicit obligation towards a third party and it is likely that there will be an outlay of resources the amount of which can be reliably estimated. If the effect is significant, the provisions are determined by discounting the expected future financial flows at a pre-tax discount rate that reflects the current market value of the cost of money in relation to time. When the amount is discounted, the increase in the provision due to the passing of time is recognized as a financial charge. Liabilities for staff termination indemnities and for pension liabilities are evaluated also taking into consideration the results of the application of IAS 19.
Consolidated financial statements
5.4 Medium/long-term financial payables
Financial liabilities, except for derivatives, are initially carried at fair value net of directly attributable transaction costs. Thereafter, they are valued at the amortized cost, using the effective interest rate method.
6. Non-current liabilities held for sale
Groups of assets and liabilities the value of which will be recovered mainly through sale rather than ongoing use are recognized separately from other assets and liabilities in the Balance sheet. Non-current groups of assets and liabilities held for sale are recognized at the lower of book value and fair value net of the costs of sale.
7.1 Trade payables and other payables
Trade payables due within standard business terms, and other operating payables, are not discounted and are carried at nominal value.
7.2 Short-term financial payables
Financial liabilities, except for derivatives, are carried at fair value net of directly attributable transaction costs.
Derivative financial instruments
Derivatives are carried at fair value. They are designated as hedging instruments when the relationship between the derivative and the underlying instrument is formally documented and the effectiveness of the hedge, which is verified periodically, is adequate. When the derivatives cover the risk of change in fair value of the underlying instruments (fair value hedge), they are carried at fair value, and the difference is recognized in the Income statement; consistently, the underlying instruments are adjusted to reflect the change in fair value associated with the hedged risk, and the difference is also recognized in the Income statement. When the derivatives cover the risk of changes in cash flows from the underlying instruments (cash flow hedge), the changes in fair value are initially recognized in shareholders’ equity and later in the Income statement, consistently with the effects produced by the hedging transaction. Changes in the fair value of derivatives that do not satisfy the conditions for being qualified as hedges are recognized in the Income statement.
Translation of items in foreign currency
The financial statements of each consolidated company are prepared using the currency of the economy in which the company operates. In such cases, all transactions in currencies other than the unit of account are recorded at the exchange rate prevailing on the transaction date. Monetary assets and liabilities denominated in currencies other than the unit of account are later adjusted by the exchange rate prevailing at the end-date of the accounting period.
Contributions
Contributions from both government agencies and private third parties are carried at fair value when there is the reasonable certainty that they will be received and the prescribed conditions for obtaining them are satisfied. Contributions received for specific expenses are recognized among other liabilities and credited to the Income statement on a straight-line basis throughout the same period in which the related costs accrue. Contributions received for specific assets the value of which is stated among tangible and intangible assets, are shown among liabilities and credited in the Income statement in relation to the depreciation period for the assets to which they refer. Contributions during the accounting period are fully recognized in the Income statement at the time the conditions for recognizing them are satisfied.
Fair value
The fair value values used to prepare the financial statements, referred to the valuation of term purchases and sale of foreign currency and to foreign exchange options, were established based on the rates from the banking system. There were no transfers among the levels of the fair value hierarchy.
Consolidated financial statements
61
Valuation criteria
[Notes to the consolidated financial statements]
8. Revenues
Depending on the type of transaction, revenues are recognized based on specific criteria indicated below: x revenues from the sale of goods are recognized when the significant risks and benefits of ownership are transferred to the purchaser (typically at the time of shipment); x revenues for services provided are recognized on a percentage of completion basis.
15. Financial charges, net
Financial revenues and charges are recognized on the basis of accrued interest on the net value of the relevant financial assets and liabilities using the actual interest rate.
16. Dividends
Dividends are recognized when the right to receive payment is established. Dividends payable to third parties are shown as changes in net equity on the date they are approved by the Shareholders’ Meeting of the Parent company.
20. Taxes
Current income taxes for the financial year are determined on the basis of estimates of taxable income and according to law. Deferred and advanced income taxes are calculated on the temporary differences between the balance sheet values carried and the recognized corresponding values for tax purposes, applying the tax rate in effect at the date the temporary difference will be reversed, calculated on the basis of the tax rates provided for by the law or substantially in force at the accounting reference date. The asset entry for advance tax payments is made when recovery is likely, that is when it is estimated that in the future there will be taxable amounts sufficient to recover the asset. The ability to recover assets for advance taxes is reassessed at the end of each accounting period. Deferred tax credits and liabilities are also set aside as a result of adjustments made to the financial statements of Group companies at the time of consolidation.
29. Base profit per share
The profit per share is calculated dividing the profit attributable to the holders of ordinary shares of the Parent Company by the weighted average of the outstanding ordinary shares during the period.
Use of estimates
In application of IFRS, preparing the consolidated financial statements requires the use of estimates and assumptions that affect the values of balance sheet assets and liabilities and the relevant information, as well as potential assets and liabilities at the reference date. Estimates and their underlying assumptions are based on past experience and on other factors that are deemed reasonable in each case. Actual results may differ from these estimates. The estimates and assumptions are reviewed periodically and the effects of each change are reflected in the Income statement. A significant discretionary valuation is required from the directors to establish the amount of deferred tax assets that may be entered. They have to estimate the likely time of occurrence and the amount of future profit subject to tax as well as a planning strategy for future taxes. Estimates are used to record provisions for bad debt, for inventory obsolescence, depreciation, employees’ benefits, provisions for risks and liabilities, and to allocate the cost of the recent acquisitions of companies.
62
Consolidated financial statements
Other information
Other information
[Notes to the consolidated financial statements] To prepare the Consolidated Financial Statements for printing and to make them easier to read, all figures in the consolidated Balance sheet, the Income statement, the Cash flow statement and the Table of Changes in Shareholders’ Equity, as well as in the notes, are expressed in thousands of euro (also shown hereinafter, in short, as “k euro”). For an easier comparison, the previous year figures have been reclassified as needed, and adequate information has been provided. Please refer to the report on operations for further information regarding: x main events of the 2010 financial year; x events after the close of the financial year; x foreseeable operating developments; x other relevant information on operating performance and the balance sheet structure.
63
Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements]
1.1) Property, 1.1) Property, plant and and plant machinery machinery 1.2) Civil Civil 1.2) real real estate estate
Net balance
2010
2009
111,171
121,647
Change (10,476)
broken down as follows: A)
B)
C)
D)
E)
F) Tangible
Description
Civil
Industrial
Plant
Industrial
Other
fixed assets
land and
land and
and
and comm.
tangible
under cons./
buildings
buildings
machinery
equipment
fixed assets
advances
Total
Original cost (at exchange rate of 12/31)
1,916
118,441
298,366
11,042
16,080
3,074
448,919
Depreciation funds
(306)
(48,587)
(254,162)
(10,315)
(13,902)
=
(327,272)
1,610
69,854
44,204
727
2,178
3,074
121,647
acquisitions
=
1,400
3,723
330
283
2,678
8,414
exchange rate differences
=
1,322
2,243
44
105
5
3,719
Balances as of 12.31.2009
Movements during the year: Original cost:
reclassification to fixed assets up for sale change in scope of consolidation
(1)
other reclassifications
=
4,041
(214)
=
(4)
(2,309)
1,514
(153)
(6,094)
10,620
797
2,833
71
8,074
=
1,688
(200)
(22)
(1,177)
(289)
=
(305)
(113)
(21,839)
(1,185)
(1,574)
(101)
(25,117)
depreciation for the year
(14)
(3,129)
(11,351)
(604)
(681)
=
(15,779)
exchange rate differences
(1)
(482)
(1,717)
(43)
(85)
=
(2,328)
=
(1,195)
(1,670)
=
3
=
(2,862)
(5)
590
(8,095)
(622)
(2,643)
=
(10,775)
disposals Depreciation funds:
reclassification to fixed assets up for sale
64
change in scope of consolidation
(1)
other reclassifications
=
=
(463)
=
463
=
=
193
118
21,703
1,145
1,505
=
24,664
Total movements for the year
(285)
(1,854)
(7,260)
(160)
(972)
55
(10,476)
Original cost (at exchange rate of 12/31)
1,458
120,685
292,699
11,006
16,546
3,129
445,523
Depreciation funds
(133)
(52,685)
(255,755)
(10,439)
(15,340)
=
(334,352)
1,325
68,000
36,944
567
1,206
3,129
111,171
disposals
Balances as at 12.31.2010
1. Acquisition of Ratti S.p.A. and demerger Marzotto S.p.A.
The acquisitions were made by Marzotto S.p.A. (1,740 k euro), Ambiente Energia S.r.l. (1,232 k euro), Novà Mosilana a.s. (1,285 k euro), F.lli Tallia di Delfino S.p.A. (458 k euro), Filivivi group (601 k euro), Linificio group (2,398 k euro), Ratti group (557 k euro) and other companies of the group. The reclassification to Non-current assets held for sale (1,348 k euro) refers to fixed assets transferred to Ghiaie Idroenergia S.r.l. (5,611 k euro) and the value of the decommissioned industrial site in Praia a Mare (CS) (4,263 k euro). The shareholding in Ghiaie Idroenergia S.r.l. was sold in January 2011. The change in the scope of consolidation (-2,701 k euro) refers to the acquisition of Ratti S.p.A. (6,958 k euro) and to the demerger of Marzotto S.p.A. through the transfer to Nuova Immobiliare S.p.A. (a company outside the Marzotto group) of the total shareholding held in Immobili e Partecipazioni S.p.A. (-9,659 k euro). The sale of fixed assets during the year has generated net capital gain before taxes for 1,872 k euro (capital gains for 1,913 k euro and capital losses for -41 k euro), which have been recognized under the line items Other income and charges. Fixed assets under construction and advances as of 31 December 2009 have been mostly reclassified in their appropriate categories. Those existing as of 31 December 2010 refer for 981 k euro to Ambiente Energia S.r.l., for 805 to companies of the Linificio group and for 569 k euro to the Parent company. As of December 31, 2010 the fixed assets of the Companies consolidated on a line-by-line basis were encumbered by mortgages to guarantee a loan for 2,500 k euro obtained by the subsidiary Filature de Lin Filin s.a. (Tunisia). Consolidated financial statements
1.3) 1.3) Goodwill, Goodwill, trademarks trademarks and other other and intangible assets assets intangible
2010
2009
12,156
Net balance
Change
10,953
1,203
made up as follows: A)
B)
C)
Research,
Description (1)
D)
E)
F)
G)
Ind. patent Concessions,
Intangible
Formation
development
and
licenses,
Other
and
and
intellectual
trade-marks
intangible
being
improvement
advertising
property
and
fixed
developed and
costs
costs
rights
assets
advances
similar rights Goodwill
fixed assets
Total
=
=
4,396
8,906
=
1,038
846
15,186
Depreciation funds
=
=
(3,149)
(174)
=
(910)
=
(4,233)
Balances as of 12.31.2009
=
=
1,247
8,732
128
846
10,953
acquisitions
=
=
187
=
=
14
187
388
exchange rate differences
=
=
58
=
=
(8)
(2)
48
(90)
61
73
=
=
90
(134)
1,804
90
(444)
(759)
(13)
=
(89)
(12)
998
=
385
910
=
1,724
=
12
2,225
=
=
(833)
(18)
=
45
=
(1,342)
for the year
=
=
(440)
(28)
=
(68)
=
(536)
exchange rate differences
=
=
(40)
=
=
8
=
(32)
87
(61)
61
=
=
(87)
=
=
(87)
445
775
1
=
86
=
1,220
=
(385)
(867)
=
(437)
=
=
(1,689) 65
=
=
833
18
=
(45)
=
806
=
1
(42)
(40)
1,287
(54)
51
2,663
=
2
4,032
8,875
1,724
1,090
897
16,620
Depreciation funds
=
(1)
(2,827)
(183)
(437)
(1,016)
=
(4,464)
Balances as at 12.31.2010
=
1
1,205
8,692
1,287
74
897
12,156
Original cost
Movements during the year: Original cost:
reclassifications disposals/depreciations change in scope of consolidation reversal due to amort. being completed Amortisation:
(2)
reclassifications disposals/depreciations change in scope of consolidation (2) reversal due to amort. being completed Total movements for the year Original cost
(1)
1. Original cost of the assets being depreciated. 2. Acquisition of Ratti S.p.A.
The category Concessions, licenses, trademarks and similar rights includes the value of Guabello (2,300 k euro) and Folco trademarks, the latter for the part not eliminated in the proportional consolidation (3,611 k euro), and Tallia di Delfino (1,170 k euro). The impairment test on the trademarks value is performed establishing their use value according to the method of comparable royalty rates. The cash flows are discounted at a discount rate equal to the current interest rate without market risk, in relation to a time frame consistent with the duration of flows (10 years), plus the risk coefficient specific to the activity. The item Goodwill includes the temporary value of the Purchase Price Allocation of Ratti S.p.A. (1,283 k euro).
Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements] During the year, costs were capitalised as follows: C) Industrial patent and intellectual property rights for 187 k euro, basically regarding software and EDP applications. F) Other intangible fixed assets for 14 k euro, mainly in relation to costs borne by the Parent company. G) Intangible fixed assets being developed and advance payments for 187 k euro, mainly in relation to software development costs borne by the Parent Company. Research and development expenses paid during the year, pertaining to product innovation and applications for the rationalization of production and logistics, have been charged to the income statement.
66
Consolidated financial statements
1.4) Shareholdings valued at equity
2010
2009
9,404
Net balance
Change
7,302
2,102
made up as follows:
Description
A)
B)
B)
Mascioni
Mediterranean
La Vecchia
S.p.A.
Wool Ind.
S.c.a.r.l.
Total
Original cost
4,034
=
451
4,485
Adjustment to equity
2,798
=
19
2,817
Balances as of 12.31.2009
6,832
=
470
7,302
acquisitions
=
2,027
=
2,027
disposals
=
=
=
=
569
=
5
574
=
=
=
=
=
(499)
Movements during the year: Original cost:
Adjustment to equity: accrued pro-quota profit/(loss) pro-quota dividends paid in 2009 effect of change in shareholders' equity reclassification Total movements for the year
(499) =
=
=
=
70
2,027
5
2,102
Original cost
4,034
2,027
451
6,512
Adjustment to equity
2,868
=
24
2,892
Balances as at 12.31.2010
6,902
2,027
475
9,404
The amounts refer to the equity method valuation of Mascioni S.p.A. group, La Vecchia S.c.a.r.l., which is consolidated by the Linificio e Canapificio Nazionale S.p.A. group and Mediterranean Wool Industries Co. S.A.E. The increases refer to the acquisition of 30% of the share capital of Mediterranean Wool Industries Co. (MWI) S.A.E. (on June 3, 2010).
1.5) Other shareholdings
2010
2009
Change
227
199
250
247
3
=
=
=
Adjustment for permanent decreases in value
(51)
(51)
=
Balances as of 12.31
199
196
3
Net balance
28
made up as follows: Description Original cost Adjustment to fair value
Movements during the year: Original cost acquisitions disposal change in consolidation area
43
3
40
(21)
=
(21)
6
=
6
Adjustment to fair value decreases for disposals
=
=
=
alignment to fair value
=
=
=
Total movements during the year
28
3
25
278
250
28
=
=
=
Adjustments for permanent decreases in value
(51)
(51)
=
Balances as at 12.31
227
199
28
Original cost Adjustment to fair value
Consolidated financial statements
67
Balance Sheet
[Notes to the consolidated financial statements]
1.6) Other medium/long-term receivables
Net balance
2010
2009
11,453
Change
8,929
2,524
made up as follows: Due from Tax Authorities Other receivables Total
10
10
=
11,443
8,919
2,524
11,453
8,929
2,524
The item Other receivables includes 10,943 k euro of the credit towards Valentino Fashion Group S.p.A., recognized following the decision of the Regional Tax Commission of Venice on September 21, 2010 on “dividend stripping”, and in application for the agreements executed upon the demerger of the clothing business unit in 2005.
1.7) Deferred tax assets
2010
2009
Change
16,461
19,084
(2,623)
Depreciation of inventory
3,911
4,185
(274)
Depreciation of receivables
2,016
1,827
189
Accrual for risks and charges
5,475
5,707
(232)
Net balance made up as follows:
Forex Other temporary differences Total
272
38
234
4,787
7,327
(2,540)
16,461
19,084
(2,623)
The item refers to deferred tax assets (prepaid taxes) due beyond the year.
68
They refer for 11,332 k euro to the Parent Company (2009: 10,440 k euro), for the relevant comments please refer to the notes on the Financial Statements of the Parent Company. The remaining deferred tax assets refer mainly to the temporary difference recognized by the Linificio e Canapificio Nazionale S.p.A. group (2,608 k euro) and by the Filivivi S.r.l. group (1,656 k euro). Given the poor business performance, the Directors have deemed prudent not to include the expected taxation due on the taxable losses resulting from the national tax consolidation (of about 2.4 million euro). No deferred tax assets were entered on losses generated before the companies of the group participated in tax consolidation or transparency agreements.
1.8) Medium/long-term financial receivables
2010 Net balance
2009
Change
19,903
19,888
15
19,840
19,840
=
made up as follows: Receivables due from affiliates Guarantee deposits (financial) Total
63
48
15
19,903
19,888
15
Receivables from affiliates refer to a shareholder’s loan granted to Aree Urbane S.r.l. which, in view of the longer terms expected for the repayment, has been discounted. As indicated in the Report on operations, this receivable is expected to be recovered.
Consolidated financial statements
2. Non-current assets held for sale
2010
2009
Change
6,197
31,997
(25,800)
33
2,879
(2,846)
Plant and machinery
3,314
1,430
1,884
Other tangible fixed assets
2,310
=
2,310
540
27,688
(27,148)
6,197
31,997
(25,800)
Net balance made up as follows: Land and buildings
Other activities Total
The item includes non-current assets, the book value of which will be recovered mainly through sale rather than through continual use. Assets for sale are valued at the lower between their book value and the fair value net of sale costs. The amount includes 6,154 k euro in assets of Ghiaie Idroenergia S.r.l., company in which during the year the business unit “hydro-electric power plant” of Linificio e Canapificio Nazionale S.p.A. was transferred, and it was then sold to third party in January 2011. In 2009 the amount shown under Land and buildings and machinery included assets pertaining to the Praia a Mare (CS) factory (4,263 k euro). These assets have been reclassified under Tangible assets. In 2009 the item Other assets pertained to assets transferred from Marzotto S.p.A. and Linificio e Canapificio Nazionale S.p.A. to Immobili e Partecipazioni S.p.A. and included mainly real estate in: Schio (VI), Noventa Vicentina (VI), Mortara (PV) and Fossalta di Portogruaro (VE), which were no longer included in the Group’s consolidation after the demerger of Immobili e Partecipazioni S.p.A. The Group is implementing a program to sell the assets within the scheduled timeframe. The time needed to complete the sales is not different than the time typically needed to sale this type of assets (medium-large industrial buildings). The undergoing negotiations confirm that the recognized values are recoverable. The item also includes the shareholding in the associated company Aree Urbane S.r.l., still recorded at the value of 1 euro, which is the lowest between the book value, calculated with the equity method at the date of the transaction, taking into account the cancellation of profits within the Group, and the relevant fair value at the date of the financial statements.
3.1) Inventory
2010
2009
Change
96,811
91,254
5,557
Raw, ancillary and consumable materials
29,882
27,175
2,707
Unfinished, semi-finished goods and work in progress
31,810
26,556
5,254
Finished products and goods for resale
35,119
37,523
(2,404)
96,811
91,254
5,557
Amount to and can be broken down as follows:
Total
Inventory is shown at the lower between the purchase or production cost and the estimated net sale value, as indicated in point 3.1 of the valuation criteria. As of December 31, 2010 inventory refers for 65,478 k euro to the Fabrics sector, for 16,133 k euro to the Woollen Yarns sector and for 10,964 k euro to the Linen Yarns sector and for 4,236 k euro to the Silk sector (as of December 31, 2009 59,150, 14,055, 18,049 and 0 k euro respectively).
Consolidated financial statements
69
Balance Sheet
[Notes to the consolidated financial statements]
3.2) Trade receivables
2010
2009
89,885
Amount to
Change
90,007
(122)
refer to: 2010 Amount
2009 %age
Amount
%age
Active customers receivables
92,101
100.0
91,222
100.0
– Bad debt provision
(4,662)
(5.1)
(4,256)
(4.7)
= Net active customers receivables
87,439
94.9
86,966
95.3
6,216
100.0
6,441
100.0
(4,687)
(75.4)
(4,206)
(65.3)
1,529
24.6
2,235
34.7
917
100.0
806
100.0
Bad debt – Bad debt provision = Net bad debt Due from affiliates Total face value of receivables
99,234
100.0
98,469
100.0
– Bad debt provision
(9,349)
(9.4)
(8,462)
(8.6)
Net receivables from customers
89,885
90.6
90,007
91.4
The bad debt provision is calculated based on the historical results. The overdue receivables provision is measured with a specific analysis of receivables and past-due receivables. As of December 31, 2010 trade receivables for approximately 15.2 million euro had been factored “without recourse” to a primary financial institution. Trade receivables by geographical area is shown in the table below:
Other European North America Countries 56,106 31,134 1,459
Italy
70
Towards clients
Asia
Other Countries
Total
4,142
5,476
Towards affiliates
917
=
=
=
=
98,317 917
Gross receivables
57,023
31,134
1,459
4,142
5,476
99,234
Trade receivables due from affiliates refer to: 2010
2009
Change
Filivivi Group
393
806
Ratti Group
524
=
524
Total
917
806
111
3.3) Other receivables
2010 Net balance
2009
13,789
(413)
Change
16,280
(2,491)
made up as follows: Due from Tax Authorities
7,236
5,546
1,690
Other receivables
5,558
10,001
(4,443)
Accrued income and prepaid expenses Total
Consolidated financial statements
995
733
262
13,789
16,280
(2,491)
Receivables due from Tax authorities refer to: 2010
2009
Change
Added value tax
2,163
2,094
69
Other taxes and interest
5,073
3,452
1,621
Total
7,236
5,546
1,690
Receivables due from Tax Authorities for VAT refers for 219 k euro to the Linificio group, for 93 k euro to the Parent company, for 684 k euro to Nova Mosilana a.s., for 605 to F.lli Tallia di Delfino S.p.A., for 314 k euro to Ambiente Energia S.r.l., for 149 k euro to the Ratti group and for 99 k euro to Filivivi group. The item Other receivables includes 1,987 k euro for receivables from the parent company Wizard S.r.l. in reference to the Domestic Tax Consolidation. The item also includes the fair value of the term operations on exchange rates, if positive.
3.4) Short term financial assets and cash and cash equivalents
Amount to
2010
2009
161,175
104,158
Change 57,017
and refer to: Financial assets 522
515
7
Due from affiliates
Securities in portfolio
2,452
2,000
452
Other financial receivables
1,613
546
1,067
156,539
101,077
55,462
49
20
29
161,175
104,158
57,017
Cash Bank and post-office accounts Cash and cash equivalent on hand Total
Financial receivables due from affiliates refer to receivables due from the affiliate Filivivi S.r.l. for the portion not eliminated with the proportional consolidation (2,000 k euro) and the affiliated Mediterranean Wool Industries Co. S.A.E. (452 k euro). Other financial receivables include the financial receivable from Immobili e Partecipazioni S.p.A. (1,394 k euro). The item Securities portfolio refers to stake held in a mutual fund. The item Bank and post office accounts includes liquidity investments by the parent Company in banks for 125,000 k euro.
Consolidated financial statements
71
Balance Sheet
4. Net shareholders’ equity
[Notes to the consolidated financial statements] Below are the comments on the main items of Shareholders’ equity and the relevant changes:
Share capital Number of Shares
Share capital
Share capital
Share capital
Share capital
at 12.31.2009
increase
decrease
at 12.31.2010
Ordinary shares Total
123,817,451
159,596
(58,972,000)
65,005,047
123,817,451
159,596
(58,972,000)
65,005,047
The share capital of the Parent Company at December 31, 2010, fully subscribed and paid up, consists of shares with a nominal value of 1 euro each. On December 22, 2009 the Extraordinary Shareholders’ meeting of Marzotto S.p.A. approved a paid increase of the share capital, at par and indivisible, from euro 73,986,302 to euro 123,977,047 (euro 49,990,745), by issuing 49,990,745 new ordinary shares with a par value of 1 euro each, all bearing the same characteristics of the existing shares. The resolution was recorded at the Milan’s Companies Register on December 29, 2009. The increase was fully paid by the shareholder Wizard S.r.l. on December 22, 2009 and therefore the share capital of the parent company went from euro 73,986,302 to euro 123,817,451. On February 15, 2010 the option period ended, following which 24,005 Marzotto shares were subscribed by minority shareholders. Since some shareholders exercised their pre-emption rights on un-opted shares, on February 24, 2010 the remaining 135,591 shares were paid up and therefore, the share capital of the Parent Company is, as of that date, euro 123,977,047 (fully paid). On June 24, 2010 a demerger deed was executed at Marzotto S.p.A. for the transfer of the total shareholding in Immobili e Partecipazioni S.p.A. to a newly incorporated company, named “Nuova Immobiliare S.p.A.”, owned by the same Shareholders of Marzotto S.p.A. The demerger deed became effective on 1st July 2010. On the same date, the share capital of the demerged company Marzotto S.p.A. was subsequently decreased, from 123,977,047 euro to 65,005,047 euro (and therefore for 58,972,000 euro), by cancelling the corresponding number of shares, and subsequently amending the By-laws of the demerged company.
72
Legal reserve Balances equity as at December 31 2009 +/- change Total
14,797 203 15,000
During the year a portion of the 2009 profit of Marzotto S.p.A. (203 k euro) was included in Legal reserve. The Conversion reserve increased by 2,419 k euro.
To face exchange rate risks involved in purchases and sales in other currencies, the Group’s companies carry out operations to establish in advance the exchange rates on estimated volumes (cash flow hedging). In particular, the Group uses the following instruments: x x x
foreign currency loans; forward sales and purchases in foreign currency; foreign currency options at fixed exchange rates.
The reserve includes the fair value of these transactions, net of the effect of taxes, for the part not allocated to the Income statement.
Consolidated financial statements
Other reserves and profits carried forward 2010
2009
Change
Reserve viz. art. 55 Pres. Decree 917/86
88
133
Capital grants
62
62
=
563
844
(281)
6,357
9,537
(3,180)
35,753
19,784
15,969
5,381
5,381
=
(11,598)
5,386
(16,984)
Realignment reserve viz. Law 342/2000 Revaluation reserve Profit carried forward Other reserves
(45)
Difference of Companies consolidated on a line-by-line basis Difference of Companies consolidated on an equity basis Total
2,294
4,239
(1,945)
38,900
45,366
(6,466)
The effect on Shareholders’ equity of the line-by-line consolidation of the group Linificio e Canapificio Nazionale S.p.A. was 5,620 k euro and refers to the allocation of the current value of assets for the share owned by Linificio e Canapificio Nazionale S.p.A. before the date of the acquisition on 1st October 2007 (IFRS 3 – acquisition of control in stages), and it is included in the item Other reserves.
Below is a reconciliation of shareholders’ equity and the result of the Parent Company with the corresponding consolidated values: 2010 Income Marzotto S.p.A. Elimination of shareholdings consolidated line-by-line Valuations at equity Intercompany dividends Elimination of intercompany capital gains Other Total
Consolidated financial statements
2009
Net equity
Income
Net equity
3,153
116,710
4,064
172,581
16,264
21,176
5,803
27,137
569
2,868
(1,441)
2,798
(19,722)
=
(10,000)
=
399
(10,018)
(25,437)
(36,186)
18
(564)
314
(644)
681
130,172
(26,697)
165,686
73
Balance Sheet
[Notes to the consolidated financial statements]
5.1) Long-term provisions
Amount to
2010
2009
42,866
Change
53,111
(10,245)
and refer to:
2010
2009
due to
Change
Provision for staff term.indemnities
Accruals
Utilisation
Exch. Diff.
Change area
20,796
19,461
1,335
3,908
(5,126)
=
2,553
10,392
11,020
(628)
2,417
(3,045)
=
=
1,143
1,428
(285)
185
(470)
=
=
179
184
(5)
33
(38)
=
=
1,954
2,041
(87)
403
(490)
=
=
Linificio Group
4,639
4,788
(149)
749
(898)
=
=
Ratti Group
2,489
=
2,489
121
(185)
=
2,553
Amounts to and refer to: Marzotto S.p.A. F.lli Tallia di Delfino S.p.A. Ambiente Energia S.r.l. Filivivi Group
The debt for Staff termination indemnities as of December 31, 2010 was calculated considering the results of the application of the method required by IAS 19 (future inflation rate 2.0%, actualization rate 4.3%).
Pension
2010
Amounts to:
74
2009
1,371
Change
1,423
(52)
The provision refers to a supplementary retirement fund set up in favour of a former director of the Parent company. The fund is calculated by taking the current value of the life annuity based on actuarial tables in use.
2010
2009
due to
Change
Other provisions
Accruals
Utilisation
Exch. Diff.
Change area
20,699
32,227
(11,528)
2,441
(14,933)
=
964
Agents' severance pay provision
4,976
4,704
272
139
(259)
=
392
Legal risk fund
4,054
4,946
(892)
=
(892)
=
=
638
531
107
371
(264)
=
=
Tax provisions
1,502
14,594
(13,092)
=
(13,092)
=
=
Other provisions for risk/charges
9,529
7,452
2,077
1,931
(426)
=
572
Amounts to and refer to:
Restructuring and relocation provisions
The agents’ indemnity reserve has been allocated to cover potential liabilities from the termination of agency contracts. The reserve was adjusted to take into account foreseeable potential liabilities in connection with contracts outstanding at the end of the financial year. The litigation risk reserve is allocated to cover liabilities that may arise from litigation or other disputes. It includes an estimate of charges from litigation arising during the year and a provision for the estimate of cases which arose in previous years, updated based on the indications of our internal and external legal experts.
Consolidated financial statements
The restructuring and relocation provisions are allocated mainly to offset planned charges and costs related to the industrial reorganization plan of some production operations. The tax reserve includes provisions to cover losses by group companies that may arise from tax liabilities. In reference to the dispute following the audit notice issued in December 1996 by the Inland Revenue’s Valdagno Office for alleged irregularities in the tax treatment of the 1990 acquisition of usage rights of shares, as of December 31, 2009 a provision for 13,092 k euro had been set aside. Following the second decision of the Regional Tax Commission in Venice on September 21, 2010, the above mentioned provision was utilized in compensation of the recognition of the Due to Tax Authorities for 16,240 k euro. The difference refers to the new calculation of the tax payable (capital, penalty and interest). Likewise, as already mentioned, following demerger agreements in 2005, there’s an amount receivable from Valentino Fashion Group S.p.A. of 10,943 k euro. The reserve for other risks and charges includes, among other items, foreseeable risks on operations carried out by the company Aree Urbane S.r.l.
Praia a Mare
Between 1999 and 2001, some former employees and heirs of former employees at the Parent company’s Praia a Mare plant filed a motion with the Attorney General through the Court of Paola, seeking criminal action against the persons in charge of the plant from the Seventies through 2004, allegedly for functional omissions that, because of work safety conditions there, would have been the cause of death and serious health problems to some employees and in reference to the area outside the factory, would have caused its pollution and contamination. After the Judge of the Court of Paola rejected two requests by the Examining Judge to close the case, in October 2009 the prosecution issued 14 notices of completion of the preliminary investigations, and their notification was repeated in February 2010. As of today the Parent company, with the favorable opinion of a reputable law firm, believes that compensation claim for damages in favor of a third party will not be assessed. Some former employees or heirs of former employees as indicated above, in October 2006 and in 2008, have also begun civil proceedings against the Parent company asking for compensation for the alleged damages due to work-related illnesses. As of today the disputes are at various progress levels since the claims were made subsequently. In any case, the technical appraisals so far completed, examined by technical experts and legal counsels for the Parent company, appear to exclude, so far, any particular liability of the Company in the reported illnesses. For none of the claims has been made any further preliminary investigation and therefore, save any different assessment following the investigations that are still underway, there are no objective element that lead us to believe the Parent company may suffer any liability. Following an ordinance of the mayor of Praia a Mare in January 2007, Marzotto S.p.A. was supposed to begin a series of characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have been suspended pending cautionary proceedings. As things stand, the costs for the possible soil reclamation are estimated anyway to be less than the possible sale value of the affected area.
Consolidated financial statements
75
Balance Sheet
[Notes to the consolidated financial statements]
5.2) Other medium-long term payables
Amount to
2010
2009 22
Change 39
(17)
refer to:
5.3) Deferred taxes payables
Payables due to social security institutions
22
39
(17)
Total
22
39
(17)
2010 Amount to
2009
Change
6,496
12,820
(6,324)
6,235
9,241
(3,006)
=
3,327
(3,327)
and can be broken down as follows: Tangible and intangible assets differences Income deffered taxation Other temporary differences Total
261
252
9
6,496
12,820
(6,324)
This item includes deferred taxes reported by the consolidated companies, mainly attributable to the difference between depreciation and amortization based on tax rates and on the useful life of the asset. The item Tangible and intangible assets differences includes the deferred tax liabilities allocated to assets of the excess cost following the acquisition operations (2,701 k euro).
5.4) Medium/long term financial payables
2010 Amount to
2009
7,779
Change
70,069
(62,290)
and can be broken down as follows:
76
Secured financing received
1,500
2,000
(500)
Non-secured financing received
5,948
67,737
(61,789)
Other medium/long-term debt Total
331
332
(1)
7,779
70,069
(62,290)
The item includes bank loans and other medium-term loans. Amounts due within twelve months are reclassified under short-term financial payables. During the year the subsidiary Filin S.A. obtained a medium/long term loan for the face value of 2,500 k euro supported by collateral (mortgage). The loan is still open for 1,500 k euro. The item Other medium/long-term debt refers mainly to subsidized loans.
6) Non current liabilities held for sale
Consolidated financial statements
The item refers to the total liabilities of Ghiaie Idroenergia S.r.l., the company in which the business unit “hydro-electric power plant” of Linificio e Canapificio Nazionale S.p.A. was transferred during the year, and which was sold to a third party in January 2011.
7.1) Trade payables and other payables
2010 Amount to
2009
Change
135,022
85,525
49,497
23,342
and can be broken down as follows: Trade payables
83,117
59,775
Trade payables due to affiliates
317
207
110
Advance payments received
691
441
250
Payables due to Inland Revenue
22,332
5,901
16,431
3,875
5,337
(1,462)
Payables due to employees
11,793
10,621
1,172
Other payables
11,521
1,647
9,874
Payables due to social security institutions
Accrued liabilities and deferred income Total
1,376
1,596
(220)
135,022
85,525
49,497
Trade payables are due within the year and pertaining to debts for the purchase of goods and services. Amounts due to affiliates refer to: 2010 Filivivi Group Ratti Group Total
2009
Change
260
207
53
57
=
57
317
207
110
Advance payments from customers are advances received from customers. Payables due to Tax Authorities can be broken down as follows:
77
2010
2009
Change
Taxes withheld
2,054
2,306
Income taxes
1,667
833
834
Regional manufacturing tax
1,815
2,213
(398)
Value added tax Other amounts due to Inland Revenue Total
(252)
38
15
23
16,758
534
16,224
22,332
5,901
16,431
The item Other amounts due to Inland Revenue refers for 16,240 k euro to the debts recognized following the second decision the Regional Tax Commission (CTR) of Venice (fourth degree) given on September 21, 2010 on “Dividend Stripping”. As already explained, following the 2005 demerger agreements, we have recorded a corresponding receivable from Valentino Fashion Group S.p.A. in the amount of 10,943 k euro. Payables due to social security institutions refer to: 2010 INPS
2009
Change
2,569
4,161
(1,592)
23
32
(9)
Other Italian institutions
631
591
40
Foreign social security agencies
652
553
99
3,875
5,337
(1,462)
ENASARCO
Total
Amounts due to social security institutions reflect non-matured positions at the end of the financial year, regularly paid upon maturity. The item “Other amounts due to Italian Social Security Institutions” includes amounts due to Supplementary retirement funds.
Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements] Payables due to employees can be broken down as follows: 2010 December salaries paid in January
60
92
=
92
7,613
6,865
748
454
182
272
11,793
10,621
1,172
Miscellaneous amounts due Total
Change
3,574
Staff termination indemnities paid after year-end Deferred salaries
2009
3,634
Other payables refer to: 2010 Other amounts due to affiliates Other amounts due to third parties Total
2009
Change
174
403
(229)
11,347
1,244
10,103
11,521
1,647
9,874
The item Other payables due to affiliates refers to Filivivi S.r.l. (tax transparency). Other payables due to third parties include 913 k euro of fair value for forward operations on exchange rates, as well as 8,000 k euro as an advance paid by the promissory buyers of the total stake held by Linificio e Canapificio Nazionale S.p.A. in Ghiaie Idroenergia S.r.l. The item includes also payables to the Parent company Wizard S.r.l. for the domestic tax consolidation for 372 k euro. Other Accrued liabilities for 1,171 k euro refer to capital contributions received by the subsidiary Filin S.A. from public entities for investments. 78
7.2) Short-term financial payables
Amount to
2010
2009
225,239
134,448
Change 90,791
and can be broken down as follows: Trade advances received Non-secured financing received
13,331
21,022
(7,691)
209,282
109,362
99,920
=
500
(500)
2,626
3,564
(938)
225,239
134,448
90,791
Secured financing received Other amounts due to third parties Total
Payables to Others refer for 2,000 k euro to financial payables to Shareholders of affiliated companies, for the portion not eliminated with the proportional consolidation and for 626 k euro to other financial payables.
Net financial position
2010
2009
(51,940)
(80,471)
28,531
19,903
19,888
15
161,175
104,158
57,017
(7,779)
(70,069)
62,290
7.2 Short-term financial payables
(225,239)
(134,448)
(90,791)
Total
(51,940)
(80,471)
28,531
Amount to
Change
and can be broken down as follows: 1.8 Medium-long term financial receivables 3.4 Short-term financial assets and cash and cash equivalents 5.4 Medium-long term fiancial payables
The improvement of the net financial position is due self-financing flows and also to operations of receivables assignment carried out during the year. Consolidated financial statements
Contractual commitments and guarantees (Memorandum Accounts)
Memorandum accounts and commitments at December 31, 2010 are commented below: “Guarantees to third parties” were given: x x x
in favor the affiliated company Filivivi S.rl. for 10,000 k euro; the line of credit has not been used yet; in favor of other Subsidiaries/Affiliates as a guarantee for miscellaneous securities for 52 k euro and as a guarantee for financing received for 1,650 k euro; in favor of the Parent Company as a guarantee for service contracts for 6 k euro and for miscellaneous securities for 60 k euro.
“Guarantees received from third parties” were given: x x
in favor of the Subsidiaries/Affiliates for 2,500 k euro as a guarantee on the above mentioned line of credit and 56 k euro as a guarantee of miscellaneous securities; in favor of the Parent Company as a guarantee for trade credits (303 k euro), service contracts (123 k euro) and miscellaneous securities (594 k euro).
“Other Guarantees to third parties” were given: x
in favor of the Subsidiaries/Affiliates for 14,093 k euro as a guarantee for miscellaneous securities.
The “Foreign currency/interest rates hedging contracts” refer to contracts for term purchase for 42,154 k euro and contracts for term sale for 18,553 k euro. As of December 31, 2010 the off-balance sheet commitments for contracts for the term sale of foreign currency (on receivables, orders received and future orders) were 18.1 million US dollars, for a total value of 13,495 k euro, 1.750 million British pounds, for a total value of 2,037 k euro, 370 million Japanese yen, for a total value of 3,021 k euro. Contracts for the term purchase of foreign currency were 1,045 million Czech crowns, for a total value of 41,443 k euro and 1 million Australian dollar for a total value of 711 k euro. The fair value of the contracts for the term sale and purchase of foreign currency at the end of the period, negative and equal to 386 k euro, was established based on the quotes given by the banks. Also there are hedging contracts with primary financial institutions to cover the exchange rate risk for notional 1.350 million US dollar, for a total value of 1,024 k euro: their fair value is equal to -12 k euro. F.lli Tallia di Delfino S.p.A. has an Interest Rate Swap hedging contract on notional 1,250 k euro. As of December 31, 2010 the fair value of this instrument is a loss of 24 k euro. Ratti S.p.A. has Interest Rate Swap hedging contract on notional 3,300 k euro. As of December 31, 2010 the fair value of this instrument is a profit of 17 k euro.
Consolidated financial statements
79
Income statement
[Notes to the consolidated financial statements]
8. Net revenues
Net revenues by sector are detailed below: 2010 Woollen fabrics
2009
% change
219,934
177,150
24.2
Woollen yarns (pro-quota)
43,249
39,195
10.3
Linen yarns
36,055
28,331
27.3
Silk (pro-quota)
20,273
=
+100,0
Others Eliminations/adjustments Total
12,938
12,754
1.4
(16,056)
(12,481)
28.6
316,393
244,949
29.2
Revenues of the “Silk” sector refer to the Ratti group (owned at 33.364%) and earned from March 5, 2010 until December 31, 2010. The item “Net revenues” includes the following other income: 2010 Amounts to
2009
% change
14,997
9,023
66.2
883
1,204
(26.7)
=
=
=
14,114
7,819
80.5
14,997
9,023
66.2
and refers to: Real estate income Contribution to operating expenses Other revenues and miscellaneous income Total
The item Other revenues and miscellaneous income mainly refers to the sale of semi-finished goods, manufacturing, and other ordinary services provided.
80
9. Cost of goods sold
2010
2009
% change
(248,726)
(212,913)
16.8
Raw materials consumption
(99,050)
(75,999)
30.3
Third party production
(11,536)
(8,138)
41.8
In house manufacturing
(90,119)
(79,727)
13.0
Purchase of finished and semi-finished products
(25,477)
(6,496)
+ 100,0 (94.6)
Amounts to and refers to:
Change in stock of finished and semi-finished products
(950)
(17,618)
Commercial exchange differences
292
(3,010)
n.c.
Other logistic and industrial costs
(21,886)
(21,925)
(0.2)
(248,726)
(212,913)
16.8
Total
Trade exchange rate differences are detailed below: Trade exchange rate differences Amount to
2010
2009
% change
292
(3,010)
300
(914)
(314)
765
n.c.
and refer to: Exchange rate on cash from customers in foreign currency Exchange rate on payments to suppliers in foreign currency Exchange rate on the extinguishing of trade financing in foreign currency Total Consolidated financial statements
306
(2,861)
292
(3,010)
n.c.
11. Marketing and product development costs
Amount to
2010
2009
(39,446)
(32,400)
% change 21.7
(12,728)
(8,918)
42.7
(2,502)
(2,412)
3.7
(12,830)
(10,581)
21.3
(1,963)
(2,330)
(15.8)
and refer to: Variable sales costs Losses, write-down, accounts receivables Product research and development Advertising, marketing and public relations Other fixed sales and marketing costs Total
12. General and administrative costs
Amount to
13. Other income and charges
Amount to
(9,423)
(8,159)
15.5
(39,446)
(32,400)
21.7
2010
2009
(21,088)
(19,931)
2010
% change
2009
5.8
% change
(3,162)
(5,071)
Disposal tangible and intangible asssets
1,913
5,163
Contingent assets
1,416
551
Use of the relocation/restructuring reserve
232
992
Other income
915
807
4,476
7,513
(41)
(387)
(338)
(1,665)
(83)
(950)
(37.6)
and refer to: Other income
Total other income Other charges Disposal of tangible and intangible assets Accruals for the relocation/restructurig reserve Charges other social operations Accruals for legal reserve
81
(1,288)
(614)
=
(125)
Contingent liabilities
(751)
(349)
Extraordinary charges for "Dividend stripping"
(968)
=
(2,731)
(3,609)
Charges for Verrone - Chbedda fires
Extraordinary charges for industrial plan
(1,438)
(4,885)
Total other charges
Other charges
(7,638)
(12,584)
Total
(3,162)
(5,071)
(37.6)
The item refers to non-recurring charges and income. The Extraordinary charges for industrial refer mainly to the cost of shutting down production departments. Capital gains on asset sales refer to the sale of residential land and plant and machinery no longer in use.
Consolidated financial statements Consolidated financial statements
Income statement
[Notes to the consolidated financial statements]
14. EBIT
2010 Amounts to
2009
% change
3,971
(25,366)
>100.0
8,598
(9,840)
n.c.
293
(2,116)
n.c.
(2,882)
219
n.c.
169
=
>100.0
and refers to: Woollen fabrics Woollen yarns (pro-quota) Linen yarns Silk (pro-quota) Others Eliminations/Adjustments Total
(2,036)
(1,685)
20.8
(171)
(11,944)
(98.6)
3,971
(25,366)
>100.0
Below are the details on labour costs and depreciation & amortization included in the EBIT calculation. Labour costs:
Amount to
2010
2009
(79,570)
(72,491)
% change 9.8
and refer to: Woollen fabrics
82
(50,865)
(48,865)
4.1
Woollen yarns (pro-quota)
(7,524)
(7,699)
(2.3)
Linen yarns
(6,867)
(9,417)
(27.1)
Silk (pro-quota)
(6,509)
=
n.c.
Others
(7,805)
(6,510)
19.9
(79,570)
(72,491)
9.8
Total
The item also includes labour costs included among non-recurring expenses.
The number of active employees had the following trend: Average 12.31.2010 Blue-collar workers White-collar workers Managers Total
12.31.2009
% change
2010
2009
% change
2,770
2,626
5.5
2,690
2,780
(3.2)
670
570
17.5
677
588
15.1
40
37
8.1
41
36
13.9
3,480
3,233
7.6
3,408
3,404
0.1
Amortization was as follows:
Amounts to
2010
2009
(16,307)
(19,174)
and refers to: amortization of intangible fixed assets depreciation of tangible fixed assets
Consolidated financial statements
(541)
(691)
(15,766)
(18,483)
% change (15.0)
15. Financial charges, net
2010 Amount to
2009
(2,849)
% change
(4,344)
(34.4)
(85.3)
and refers to:
Financial income Interests received from affiliates Interests received from banks
35
238
1,691
1,095
54.4
31
66
(53.0)
Interests received from other (customers, Inland Revenue, etc.) Exchange rate gains on financial transactions
Total financial income
87
3,981
(97.8)
1,844
5,380
(65.7)
(3,574)
(4,618)
(22.6)
(198)
(347)
(42.9)
Financial charges Interests payable to banks Interests payable to other creditors Bank charges
(668)
(445)
50.1
Exchange rate losses on financial transactions
(253)
(4,314)
(94.1)
Total financial charges
(4,693)
(9,724)
(51.7)
Total
(2,849)
(4,344)
(34.4)
Interests received from affiliates refer to the amount paid as interest by Filivivi S.r.l. (Filivivi group) for 35 k euro (2009: 67 k euro Filivivi group and 171 k euro Aree Urbane S.r.l.)
16. Dividends from unconsolidated shareholdings and valuations to equity
2010 Amount to
2009 577
% change
(1,431)
n.c.
83
and refer to: Dividends Emittente Titoli S.p.A.
3
Other companies
=
5 =
Total dividends
3
5
569
(1,441)
(40.0)
Valuations at equity Mascioni S.p.A. Other companies
Consolidated financial statements Consolidated financial statements
5
5
Total valuations at equity
574
(1,436)
n.c.
Total
577
(1,431)
n.c.
Income statement
[Notes to the consolidated financial statements]
18. Other financial income and charges
Amounts to
2010
2009
(651)
% change
(4,313)
(84.9)
and refers to: Capital gain on sale of Emittente Titoli S.p.A. shares Discounting of receivable from Aree Urbane S.r.l. Fair value of unhedged forward foreign exchange operations without underlying Adjustment TFR IAS 19
102
=
=
(1,227)
(696)
(179)
(20)
(86)
=
(2,828)
Devaluation Aree Urbane S.r.l. shareholding Other income Total
(37)
7
(651)
(4,313)
(84.9)
This item includes the fair value of forward hedging on exchange rates in relation to operations for which there is no longer the same underlying amount (due to a projected decrease in orders and changes in the mix of currencies of ordered goods from foreign currency to euro).
20. Income taxes
2010 Amount to
2009
% change
(252)
8,757
>100.0
and refer to: Current taxes
84
(3,676)
(6,929)
Deferred taxes receivable
444
15,074
Deferred taxes payable
354
395
Taxes prior years
2,626
217
Total
(252)
8,757
>100.0
Estimated taxes for 2010 are 252 k euro; the ratio to income before taxes is 24.1%. In 2009 taxes were 8,757 k euro. The amount for Taxes prior years refers mainly to the utilization of tax losses carried forward, recognized through the domestic tax consolidation, on which no taxes had been set aside as a prudent assessment of the Directors in view of the performance of the business, as well as due to other considerations, based on new elements gathered, as far as the taxability of some of the income items. The reconciliation of the theoretical tax rate with the effective tax rate on income before taxes is set out in the table below. 2010 Amount Pre-tax profit
Amount
1,048
%age
(35,454)
Theoretical taxes
(288)
27.5
9,750
27.5
Taxes on the taxable amount at a reduced tax rate
1,151
(109.8)
390
1.1
91
(8.6)
2,508
7
(1,673)
159.6
(2,734)
(7.7)
Tax on utilization of fiscal lossess IRAP Dividends taxes Taxes on losses for the year
Consolidated financial statements
2009 %age
(131)
12.5
1
=
(1,476)
140.8
(1,580)
(4.5) 0.6
Taxes prior years
2,620
(250.0)
208
Other differences
(546)
52.1
214
0.6
Total taxes
(252)
24.1
8,757
24.7
Other information
Risks management (IFRS 7)
[Notes to the consolidated financial statements] Credit risk Credit risk is the risk that a customer or one of the parties in a financial instrument may cause a financial loss by not complying with an obligation and it pertains mainly to trade receivables and financial investments of the Group. x
Trade receivables The credit risk is partly essentially reduced considering the type of customers, which are diversified and not significantly concentrated in the new outlet markets. The risk is handled through an insurance coverage policy managed by a specific function in the company, together with the sales organizations. The Group uses also on a regular basis specialized agencies to obtain business information to know in detail the geographical areas served.
x
Financial investments The Group limits its exposure to credit risk by investing exclusively in high liquidity securities and only with high credit rating parties.
The book value of financial assets represents the maximum exposure of the Group to the credit risk. At the end of the year the exposure was as follows: 2010
2009
Financial assets available for sale
=
=
Financial assets at fair value carried on Income statement
=
=
Financing and credits
135,030
135,104
Cash and cash equivalents on hand
161,175
104,158
Other
227
199
Total
296,432
239,461
85
The trade receivables aging at the date of the financial statements was: 2010 gross
2009 fund
gross
fund
Current
72,847
(3,927)
73,685
Overdue from 0 to 90 days
17,456
(776)
14,585
(703)
8,014
(4,646)
9,393
(4,206)
98,317
(9,349)
97,663
(8,462)
Overdue over 90 days Total
(3,553)
The information on guaranties given and received is contained in the section Contractual commitments and guarantees (memorandum accounts). The information on the provisions for bad debt is indicated in the note 3.2). Liquidity risk The liquidity risk is the risk that the Group cannot meet the obligations arising out of financial liabilities. The Group however believes that the current debt structure and level, the available financial resources (deposits) and the unused bank loans, they all limit the negative effects of possible difficulties in obtaining credit. The contract due dates of the financial liabilities are indicated in the relevant notes.
Consolidated financial statements
Other information
[Notes to the consolidated financial statements] Market risk Market risk is the risk that the fair value or the future cash flow of a financial instrument might change following variations in the market prices, of exchange rates, tax rates or quotations of the instruments representing the capital. x
Exchange rate risk Considering the Group’s exposure to exchange rates fluctuations in foreign currency operations, we carry out hedging operations to determine the exchange rate based on estimates of sales and purchases volumes and the currency exchange rate considered when the price lists are prepared. Specifically, the Group uses the following hedging instruments: foreign currency loans; term sales and purchases in foreign currency; foreign currency options at fixed exchange rates. These hedging instruments are agreed upon with highest rated banks. The Group does not enter into term or option exchange rate contracts for speculative purposes. The hedged cash flows are expected within the financial year. The impact of the conversion in foreign currencies on the subsidiaries’ own capitals is recorded under a separate item in the shareholders’ equity. With reference to the most significant currencies, the table below shows the Company exposure to the exchange rate risk at the date of the financial statements. 2010 Usd
Usd
Jpy
Trade receivables
8,760
330,933
5,372
Short-term financial assets and cash
3,281
60,837
164
=
(3,999)
(649,101)
(2,058)
(511,470)
Trade payables
86
2009 Jpy
Short-term financial payables Total
x
198,113
=
=
=
=
8,042
(257,331)
3,478
(313,357)
Interest rate risk The Group’s borrowing is mostly concentrated on variable tax rate. Considering the present financial structure and debt level of the Group, in case of an increase in the tax rate within the limits of the range that we can expect at the moment (0.5%) it would not significantly affect the group (in theory, in 2010, it would have involved higher net financial charges for approximately 250 k euro). The effects of the recent problems in the banking system could be a potential risk factor in reference to the cost of financing. The Group monitors constantly this potential risk.
Other risks The risk of price increase for raw materials, if significant, is considered when the price lists are prepared. At that same time, the net demand generated by the purchase budget are covered as much as possible by placing the orders with the suppliers, in order to minimize the effect on the income statement should the raw materials costs increase during the year. Considering the type of production and the financial structure, there are no other significant risks.
Consolidated financial statements
Shareholdings held directly or indirectly by the Parent Company
Below is the list of shareholdings in which the Parent Company directly or indirectly holds more than 10% of the voting shares as at 31 December 2010. All shareholdings represent ownership: % group
Company name
Head office
Direct investor
Immobili e Partecipazioni S.p.A.
Valdagno (I)
Marzotto S.p.A.
100.00%
100.00%
F.lli Tallia di Delfino S.p.A.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Immobiliare Isola S.r.l.
Vicenza (I)
Marzotto S.p.A.
100.00%
100.00%
Ambiente Energia S.r.l.
Schio (I)
Marzotto S.p.A.
100.00%
100.00%
Aree Urbane S.r.l. in liquidation
Milan (I)
Marzotto S.p.A.
32.50%
32.50%
Mediterranean Wool Industries Co. S.A.E.
Sadat City (ET)
Marzotto S.p.A.
30.00%
30.00%
Mascioni S.p.A.
Milan (I)
Marzotto S.p.A.
28.35%
28.35%
Marzotto Textile N.V.
% owned
owned
Amsterdam (NL)
Marzotto S.p.A.
100.00%
100.00%
Novà Mosilana a.s.
Brno (CZ)
Marzotto Textile N.V.
100.00%
100.00%
AB Liteksas
Kaunas (LT)
Marzotto Textile N.V.
99.97%
99.97%
Marzotto Int. Trad. (Shanghai) Co. Ltd.
Shanghai (RPC)
Marzotto Textile N.V.
100.00%
100.00%
Marzotto Textiles USA Inc.
Wilmington (USA)
Marzotto Textile N.V.
100.00%
100.00%
Filivivi S.r.l.
Milan (I)
Marzotto S.p.A.
50.00%
50.00%
UAB Lietvilna
Kaunas (LT)
Filivivi S.r.l.
100.00%
50.00%
Filivivi Asia Pacific Ltd
Hong Kong (HK)
Filivivi S.r.l.
100.00%
50.00%
Sc Rolana Tex S.r.l.
Botosani (RO)
Filivivi S.r.l.
100.00%
50.00%
Linificio e Canapificio Nazionale S.p.A.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Filature de Lin Filin S.A.
Chbedda (TN)
Linificio e Canapificio Nazionale S.p.A.
100.00%
100.00%
UAB Lietlinen
Kaunas (LT)
Linificio e Canapificio Nazionale S.p.A.
100.00%
100.00%
UAB Linestus
Kaunas (LT)
UAB Lietlinen
50.00%
50.00% 100.00%
Licana S.p.A. in liquidation
Fara Gera d’Adda (I)
Linificio e Canapificio Nazionale S.p.A.
100.00%
La Vecchia S.c.a.r.l.
Fossalta di P. (I)
Linificio e Canapificio Nazionale S.p.A.
33.00%
33.00%
Lin Naturel S.A.
Chbedda (TN)
Linificio e Canapificio Nazionale S.p.A.
100.00%
100.00%
Ghiaie Idroenergia S.r.l.
Villa d'Almè (I)
Linificio e Canapificio Nazionale S.p.A.
100.00%
100.00%
33.36%
33.36%
Ratti S.p.A.
Guanzate (I)
Marzotto S.p.A.
Creomoda S.a.r.l.
Akouda (TN)
Ratti S.p.A.
95.00%
31.70%
Collezione Grandi Firme S.p.A.
Guanzate (I)
Ratti S.p.A.
100.00%
33.36%
Ratti USA Inc.
New York (USA)
Ratti S.p.A.
100.00%
33.36%
Ratti Int. Trading (Shanghai) Co. Ltd
Shanghai (RPC)
Ratti S.p.A.
100.00%
33.36%
Textrom S.r.l. in liquidation (1)
Cluj (RO)
Ratti S.p.A.
100.00%
33.36%
1. The company is no more in liquidation from February 2011.
Consolidated financial statements Consolidated financial statements
87
Other information
Related parties
[Notes to the consolidated financial statements] It is in the economic interest of the Parent Company to carry out operations with related parties, to realize the existing synergies within the Group, especially with reference to the integration of production and sales, the efficient use the acquired knowledge, the rationalization of the use of central structures and financial resources. All relations with subsidiaries, affiliated companies and related parties, both those relating to the exchange of goods and services, and to financial operations, are governed by normal market conditions. The relations with subsidiaries have been eliminated from the consolidated financial statements. The relations with affiliated companies are shown in the financial statements and the relevant notes. Effective from the year 2008 Marzotto S.p.A., Immobili e Partecipazioni S.p.A., Linificio e Canapificio Nazionale S.p.A. and Licana S.p.A. in liquidation, have all agreed to the Domestic Tax Consolidation, the parent company for it is Wizard S.r.l. From 2009 also the subsidiaries F.lli Tallia di Delfino S.p.A., Ambiente Energia S.r.l. and Immobiliare Isola S.r.l. have agreed to the Domestic Tax Consolidation. In 2010 also Nuova Immobiliare S.p.A. is included, the company that benefited of the Marzotto S.p.A. demerger of July 1, 2010. In 2010 Marzotto S.p.A. and the associated Filivivi S.r.l. have renewed the fiscal transparency regime for the three year period 2010 – 2011 - 2012. During the year other related parties have performed services in favor of the Parent company for not significant amounts. Also during the year the Parent Company has assigned to a related party an investment property (non-core business).
88
Other information
During the financial year there were not atypical or unusual transactions.
Segment reporting
The tables below provide segment reporting information.
Consolidated financial statements
Other information
Segment reporting 2010
[Notes to the consolidated financial statements] (k euro) Segment reporting
Woollen
Linen
Income statment
Fabrics
yarns
yarns
Silk
Other revenues
215,136
41,596
34,982
20,246
Others 4,607
Eliminations (174)
Total 316,393
4,798
1,653
1,073
27
8,331
(15,882)
=
Total revenues
219,934
43,249
36,055
20,273
12,938
(16,056)
316,393
Sector costs of which depreciation & amortisation of which other non monetary costs
(211,336)
(42,956)
(38,937)
(20,104)
(14,974)
15,885
(312,422)
(10,014)
(1,160)
(3,202)
(738)
(875)
(679)
(254)
(498)
(17)
Inter-Sector revenues
EBIT Financial charges net Dividends from non cons. equity invest.and valuation at equity
(2,882)
169
(318)
13 (2,036)
= (171)
(16,307) (1,435)
8,598
293
=
=
=
=
=
=
(2,849)
3,971
=
=
=
=
=
=
577
Other financial income/charges
=
=
=
=
=
=
(651)
Pre-tax profit
=
=
=
=
=
=
1,048
Taxes
=
=
=
=
=
=
(252)
Net profit
=
=
=
=
=
=
796
Profit/loss for ceased operations
=
=
=
=
=
=
(114)
=
=
=
=
=
=
682
Net profit (before minority shareholders)
Minority shareholders
=
=
=
=
=
=
(1)
Net profit
=
=
=
=
=
=
681
90 Segment reporting
Woollen Fabrics
yarns
yarns
Silk
Others
Assets by segment Equity investments in associate companies Non-allocated assets
191,681
44,059
56,717
19,020
185,111
(138,438)
358,150
=
=
475
=
8,929
=
9,404
=
181,078
Total assets Shareholders' equity Liabilities by segment Non-allocated liabilities Total liab. and s/holders' equity Investments
geographical area
Eliminations
Total
=
=
=
=
=
191,681
44,059
57,192
19,020
194,040
=
=
=
=
=
=
96,170
17,577
28,085
12,063
34,091
(2,544)
185,442
=
=
=
=
=
=
233,018
96,170
17,577
28,085
12,063
34,091
(2,544)
548,632
3,585
627
2,444
702
1,444
Information by
Consolidated financial statements
Linen
Balance Sheet
Other Europ. North Italy
Countries
America
(138,438)
=
548,632 130,172
8,802
Other Asia
Countries
Total
Revenues
119,417
146,674
6,091
32,788
11,423
316,393
Fixed assets
446,698
82,661
145
321
18,807
548,632
Investments
6,405
1,957
=
=
440
8,802
Segment reporting 2009
(k euro) Segment reporting
Woollen
Income statment
Fabrics
Other revenues
174,750
yarns
Linen yarns
38,459
Others
27,672
Eliminations
4,068
=
Total 244,949
2,400
736
659
8,686
(12,481)
=
Total revenues
177,150
39,195
28,331
12,754
(12,481)
244,949
Sector costs
(186,990)
(41,311)
(28,112)
(14,439)
537
(270,315)
(11,518)
(1,959)
(4,061)
(1,176)
(460)
(19,174)
(862)
(502)
(426)
20
=
(9,840)
(2,116)
219
=
=
=
=
=
(4,344) (1,431)
Inter-Sector revenues
of which depreciation & amortisation of which other non monetary costs EBIT Financial charges net
(1,685)
(11,944)
(1,770) (25,366)
Dividends from non consolidated equity investments and valuation at equity
=
=
=
=
=
Other financial income/charges
=
=
=
=
=
(4,313)
Pre-tax profit
=
=
=
=
=
(35,454)
Taxes
=
=
=
=
=
8,757
Net profit (before minority shareholders)
=
=
=
=
=
Minority shareholders
=
=
=
=
=
Net profit
=
=
=
=
=
Segment reporting
Linen
yarns
yarns
Others
66,523
205,730
(122,285)
=
470
6,832
=
7,302
=
=
=
=
124,046
196,380
44,002
66,993
212,562
(122,285)
521,698
=
=
=
=
=
165,686
75,500
15,696
24,850
37,632
(2,183)
151,495
=
=
=
=
=
204,517
75,500
15,696
24,850
37,632
(2,183)
521,698
4,800
687
6,234
992
=
12,713
Fabrics
Assets by segment
196,380
44,002
Equity investments in associate companies
=
Non-allocated assets
=
Shareholders' equity Liabilities by segment Non-allocated liabilities Total liab. and s/holders' equity Investments
= (26,697)
Woollen
Balance Sheet
Total assets
(26,697)
Information by geographical area
Eliminations
Total 390,350
Other Europ.
North
Countries
America
91,819
116,621
3,009
26,579
6,921
244,949
Fixed assets
423,297
80,858
112
151
17,280
521,698
Investments
8,525
1,703
=
=
2,485
12,713
Italy Revenues
Other Asia
Countries
Total
Valdagno (VI), March 29, 2011 THE BOARD OF DIRECTORS
Consolidated financial statements
91
[Report of indipendent Auditors]
92
93
1836
marzot to group
General information Marzotto group consolidated financial statements Report on Group’s operations Consolidated financial statements
Marzotto S.p.A. financial statements [Report on the Company’s operations] Company financial statements
annual report 2010
95
[Main eventsand in 2010 ] Companies - December 31, 2010] affiliated [Subsidiaries Share capital increase of Marzotto S.p.A.
On February 15, 2010 the option period ended, following which 24,005 Marzotto shares were 100.00% subscribed exercised their pre-emption Filivivi S.r.l. by minority shareholders. Since some shareholders Fratelli Tallia di Delfino S.p.A. rights on unopted shares, on 24 February 2010 the remaining 135,591 shares were paid up and therefore, the share capital of the Parent Company was, as of that date, euro 123,977,047 (fully paid). 100.00% 100.00% Filivivi Asia Pacific Ltd Immobiliare Isola S.r.l.
50.00% [1]
Operation Ratti
100.00%
96
On December 22, 2009, the extraordinary shareholders’ meeting of Marzotto S.p.A. adopted a resolution Marzotto S.p.A. for a paid increase of the share capital, at par and indivisible, from euro 73,986,302 to euro 123,977,047 (euro 49,990,745), by issuing 49,990,745 new ordinary shares with a par value of 1 euro each, all bearing the same characteristics of the existing shares. The resolution was recorded at the Milan’s Companies Register on December 29, 2009. The increase was fully paid by the shareholder Wizard S.r.l. on December 22, 2009, date on which the share capital reached euro 123,817,451.
Following Consob’s favorable opinion issued on March 3, 2010, upon execution of the optional 100.00% share 100.00% Energia S.r.l. Uabcapital Lietvilna increase reserved to existing shareholders, and of the Ambiente reserved share capital increase, implemented on March 5, 2010 by full payment of 20,805,000 euro by the new investors, Marzotto and 100.00%shareholding in the share capital of Ratti S.p.A., a company in the Como FaberTex FiveS.r.l. hold each a 33.36% Sc Rolana area, leader in the silk industry and listed at the Milan Stock Exchange. The share capital increases were part of a financial and equity reorganization plan for Ratti and the implementation of reorganization and development plan to be carried out with the support of the new investors.
For Marzotto, the addition of Ratti represents an industrial diversification operation in a sector collateral 100.00% to its historic “core businesses” such as yarns, linen and menswear woollen fabric thereby completing Marzotto Textile N.V. Linificio e Canapificio Naz.le S.p.A. the range of product offered by the group on the noble fibers of the textile industry by adding a new sector, silk and women’ wear fabrics, and this should open new markets and research opportunities. 100.00% 100.00% Novà will Mosilana a.s. industrial and Filature De Lin Filin S.A. Besides the possible production and market synergies, the challenge be bringing management culture to a company which has always been strongly focused on design research and 99.97% “craftsmanship”. 100.00% AB Liteksas Lin Naturel S.A.
100.00% 100.00% On June 3, 2010, purchase and sale agreement signed Egypt wool-combing Int.Trading Shanghai Ltdon October Ghiaie Idroenergia S.r.l. in execution of the preliminary stockMarzotto 28, 2009, Marzotto S.p.A. acquired 30% of the share capital of Mediterranean Wool Industries Co. plant
(MWI) S.A.E., a corporation registered in Egypt whose business purpose is the processing of textile fibers 100.00% 100.00% (combing, carbonization, other processes) at a newly built factory in Sadat City Usa (Egypt). Licana S.p.A. (in liquidation) Marzotto Textiles Inc. This joint-venture is the result of a cooperation agreement with the Schneider group, an important and 33.00% well known player in the industry. La Vecchia S.c.a.r.l. The recent events in Egypt entailed the postponement of the time frames set out in the original business 100.00% 28.35% plan, but based on the current social and political situation of the Country, we estimate that the Mascioni S.p.A. Uab Lietlinen Company will complete the start-up process and will run at full capacity by 2011. 50.00%
Uab Linestus
33.36% [1]
Aree Urbane S.r.l. (in liquidation)
32.50%
Mediterranean Wool Ind. S.A.E.
30.00%
Ratti S.p.A. 95.00%
Creomoda S.a.r.l.
100.00%
Collezioni Grandi Firme S.p.A. Ratti Usa Inc.
100.00%
Ratti Int.Trading (Shanghai) Co.Ltd
100.00%
S.C. Textrom S.r.l. (in liquidation)
100.00%
Report on the Company’s operations
[2]
Subsidiary companies Affiliated companies
[1] Consolidated pro-quota. [2] No more in liquidation from february 2011.
[Main events in 2010] Share capital increase of Marzotto S.p.A.
On December 22, 2009, the extraordinary shareholders’ meeting of Marzotto S.p.A. adopted a resolution for a paid increase of the share capital, at par and indivisible, from euro 73,986,302 to euro 123,977,047 (euro 49,990,745), by issuing 49,990,745 new ordinary shares with a par value of 1 euro each, all bearing the same characteristics of the existing shares. The resolution was recorded at the Milan’s Companies Register on December 29, 2009. The increase was fully paid by the shareholder Wizard S.r.l. on December 22, 2009, date on which the share capital reached euro 123,817,451. On February 15, 2010 the option period ended, following which 24,005 Marzotto shares were subscribed by minority shareholders. Since some shareholders exercised their pre-emption rights on unopted shares, on 24 February 2010 the remaining 135,591 shares were paid up and therefore, the share capital of the Parent Company was, as of that date, euro 123,977,047 (fully paid).
Operation Ratti
Following Consob’s favorable opinion issued on March 3, 2010, upon execution of the optional share capital increase reserved to existing shareholders, and of the reserved share capital increase, implemented on March 5, 2010 by full payment of 20,805,000 euro by the new investors, Marzotto and Faber Five hold each a 33.36% shareholding in the share capital of Ratti S.p.A., a company in the Como area, leader in the silk industry and listed at the Milan Stock Exchange. The share capital increases were part of a financial and equity reorganization plan for Ratti and the implementation of reorganization and development plan to be carried out with the support of the new investors. For Marzotto, the addition of Ratti represents an industrial diversification operation in a sector collateral to its historic “core businesses” such as yarns, linen and menswear woollen fabric thereby completing the range of product offered by the group on the noble fibers of the textile industry by adding a new sector, silk and women’ wear fabrics, and this should open new markets and research opportunities. Besides the possible production and market synergies, the challenge will be bringing industrial and management culture to a company which has always been strongly focused on design research and “craftsmanship”.
Egypt wool-combing plant
97
On June 3, 2010, in execution of the preliminary stock purchase and sale agreement signed on October 28, 2009, Marzotto S.p.A. acquired 30% of the share capital of Mediterranean Wool Industries Co. (MWI) S.A.E., a corporation registered in Egypt whose business purpose is the processing of textile fibers (combing, carbonization, other processes) at a newly built factory in Sadat City (Egypt). This joint-venture is the result of a cooperation agreement with the Schneider group, an important and well known player in the industry. The recent events in Egypt entailed the postponement of the time frames set out in the original business plan, but based on the current social and political situation of the Country, we estimate that the Company will complete the start-up process and will run at full capacity by 2011.
Report on the Company’s operations
[Main events in 2010] Demerger of Immobili e Partecipazioni S.p.A.
On June 24, 2010 a demerger deed was executed at Marzotto S.p.A. for the transfer of the total shareholding in Immobili e Partecipazioni S.p.A. to a newly incorporated company, named “Nuova Immobiliare S.p.A.”, owned by the same Shareholders of Marzotto S.p.A. During the tax year 2008 and also in 2009, the major part of non-core real estate assets of the Group was gradually transferred to the subsidiary Immobili e Partecipazioni (from the companies Marzotto S.p.A. and Linificio e Canapificio Nazionale S.p.A.), in order to achieve the separation of non-strategic business to better focus the management and financial resources of the Group on its core-business. The demerger deed became effective on 1st July 2010. On the same date, the share capital of the demerged company Marzotto S.p.A. was subsequently decreased, from 123,977 thousand to euro 65,005 thousand (and therefore for total 58,972 thousands of euro), by cancelling the corresponding number of shares.
Liquidation of Aree Urbane
During the month of August 2010 the subsidiary Aree Urbane S.r.l. was placed in liquidation. Afterwards, during the month of December 2010, the shareholders of Aree Urbane have received a proposal of purchase of their shares, pending completion of the due diligence, or, alternatively, of the main real estate area in Rome. Due to the size of these proposals, which are still being verified, and due to the results of the actions taken by the appointed liquidator during the first months of management, we have no reason to believe that the rights of satisfaction of the creditors may be jeopardized and likewise from Marzotto S.p.A. towards Aree Urbane.
Marzotto becomes the sole shareholder of Tallia di Delfino 98
On July 7, 2008 Marzotto S.p.A., through the subscription of a reserved share capital increase of 3,500,000 euro, acquired a stake equal to 70% of the share capital of Fratelli Tallia di Delfino S.p.A. The Investment agreement executed between Marzotto S.p.A. and Appia S.r.l. also entailed the payment to Tallia di Delfino, from Appia S.r.l., of any loss in excess for the period between st 1 January 2008 and 7 July 2008, in relation to an amount established by the parties; this agreement also provided for a combination of put and call options, which would have enabled Marzotto S.p.A. to redeem, at the end of 2012, the remaining shares (equal to 30%), therefore reaching a 100% stake in the share capital of Tallia. The recorded loss in excess was only partially offset by Appia, who remained debtor for the remaining amount equal to 1,060 thousands of euro. To recover this amount Tallia di Delfino S.p.A. took legal steps.
Report on the Company’s operations
[Main events in 2010] On November 25, 2009, the extraordinary Shareholders’ Meeting of Tallia di Delfino S.p.A., pursuant to article 2447 of the Italian Civil Code, approved a resolution to bring the share capital to zero and its reconstitution through a share capital of 3,000,000 euro, subscribed by Marzotto S.p.A. for 2,100,000 euro and in option to Appia S.r.l. for 900,000 euro. Since Appia did not exercise its option right, on January 15, 2010 Marzotto became the sole shareholder of Tallia. Finally, on December 15, 2010, in order to resolve the still pending matters, the parties involved (Fratelli Tallia di Delfino S.p.A., Marzotto S.p.A. and Appia S.r.l.) entered into a private deed for the cancellation of the Investment agreement and the off-setting of their mutual debits and credits open at that date. Among the consequences of this agreement, was the transfer at par value to Marzotto S.p.A. of the above mentioned credit owed to Tallia by Appia, this credit line item was off-set at the same time with part of Marzotto’s debts due to Appia, as defined in the Investment Contract of 2008 as payment amount for the 30% acquisition from minority investors. On December 31, 2010, due to the operating loss of the subsidiary and taking into account also the fact that Marzotto renounced its pre-emption right on 30% of the share capital and in view of all the above, Marzotto S.p.A. has made a shareholder payment on capital account in Tallia di Delfino S.p.A. for 2,000,000 euro, made by converting part of the financial credit towards the same company.
Dividend stripping
During the tax year 2010 Marzotto S.p.A. was notified of an entry in the tax litigation list and the pertaining payment request for a total of 28.2 million euro, subsequently reduced to 16.2 thanks to the steps taken by the competent Bodies based on appeals presented by the involved Corporations. In addition to the decrease in the amount, the payment request has been suspended, and therefore it will be discussed at the hearing set for May 10, 2011. This litigation, as already widely explained in the Annual Report for the previous years, involves the companies Marzotto S.p.A. and Valentino Fashion Group S.p.A. jointly and severally, and for 1/3 and 2/3 respectively of the mentioned amount due to the Tax Authority, following the proportional partial demerger completed in 2005. Consequently and following the determination received in 2011 from the Tax Collector, the resulting liability has been adjusted in the 2010 financial statements of Marzotto S.p.A., compared to the amount in the 2009 financial statements, with an effect on the income of another 1.0 million euro.
Report on the Company’s operations
99
[Report on operations] Income statement and balance sheet highlights
The table below contains summaries of the Company’s main income statement, balance sheet, and financial position items for the year ended on December 31, 2010.
(in millions of euro)
2010
2009
Net revenues
207.1
174.9
Operating Income (1) % of net revenues
(0.4%)
(6.3%)
2.6%
(2.4%)
Income before taxes
2.2
13.1
% of net revenues
1.1%
5.4
% of net revenues
(4.2)
+ 18.4%
10.2
- 92.7%
9.6
n.c.
(10.9)
- 83.2%
(0.9)
- 22.0%
7.5%
3.2
4.1
1.5%
2.3%
(4.4)
change %
32.2
31.5
(35.9)
n.c.
Net employed capital
150.7
218.8
(68.1)
- 31.1%
Net financial position
34.0
46.2
(12.2)
- 26.4%
(2.3)
- 54.8%
Net working capital
Investments for the period Active staff: persons
1.9
967
2010
2009
change
-5.4%
4.9%
2.2%
2.9%
-0.7%
-0.4%
-6.3%
5.9%
29.1%
26.8%
2.4%
160.2%
83.4%
76.9%
ROE (Net result / Average net shareholders' equity)
ROS (Operating results / Net revenues)
Borrowing/Equity (Net financial position / Net shareholders' equity) (Fixed assets+M/L term provisions / Net sharehlds eq.+M/L term fin. payab.)
- 0.9%
(9)
-0.4%
(Operating results / Average invested capital)
Financial coverage rate of Assets
4.2
958
ROI
Inventory rotation index (Net inventory / COGS x 360)
Number of days of credit to clients (Gross trade receivables / Net revenues x 360 days)
(1). Revenues from sales and services – Operating costs. (2). Operating result + ordinary depreciation and amortization + bad debt. Report on the Company’s operations
(11.0)
EBITDA (2) % of net revenues
Net income
100
(0.8)
change
83
90
-7
116
151
-35
[Report on operations] Marzotto S.p.A.’s financial statements have been prepared in compliance with the International Financial Reporting Standards (IAS/IFRS) and the related interpretations by the International Accounting Standards Board (IASB), approved by the European Commission and incorporated in Italian law by Italian Legislative Decree 38/2005.
Income statement
The income statement is summarized below, duly compared with the 2009 results: 2010
(in millions of euro)
Net revenues
207.1
Cost of goods sold
(169.3)
(81.8%)
(148.6)
Gross income
37.8
18.2%
26.3
15.0%
Product development and marketing costs
(24.5)
(11.8%)
(23.8)
(13.6%)
General and administrative costs
100.0%
174.9
100.0% (85.0%)
(14.1)
(6.8%)
(13.5)
(7.7%)
Operating income
(0.8)
(0.4%)
(11.0)
(6.3%)
Non-recurring income/(charges)
(0.8)
(0.4%)
31.7
18.2%
EBIT
(1.6)
(0.8%)
20.7
11.9%
Net financial charges
(1.6)
(0.7%)
(2.2)
9.5
4.6%
10.0
5.7%
(4.1)
(2.0%)
(15.4)
(8.8%)
Dividends from non-consolidated shareholdings Other financial income/charges
Net revenues
2009
(1.3%)
Income before taxes
2.2
1.1%
13.1
7.5%
Taxes
1.0
0.4%
(9.0)
(5.2%)
Company net income
3.2
1.5%
4.1
2.3%
Net revenues in total were 207.1 million euro, and they increased overall by 18.4% compared to 2009, extensively recovering the heavy decrease of last year following the serious crisis that affected the world’s economy. This increase is attributable both to the woollen fabrics sector (+16.2% as value), and to the cotton fabrics sector (+29.5% compared to last year; this result was achieved also thanks to the acquisitions of 101 the Dal Sasso and Nuovatessilbrenta brands, which have allowed to enter new niches in markets close to the historical Tessuti di Sondrio).
by sector
(in millions of euro)
Textile Sector Other Operations Aggregate total Inter-company sales Consolidated total of which: Italy of which: Other markets
by geographical area
(in millions of euro)
Italy Other European Countries North America Asia Other Countries Total
Report on the Company’s operations
2010
2009
202.6
97.8%
170.0
10.1
4.9%
11.0
6.3%
212.7
102.7%
181.0
103.5%
(5.6)
(2.7%)
207.1
100.0%
70.7 136.4
(6.1)
97.2%
(3.5%)
174.9
100.0%
34.1%
63.9
36.5%
65.9%
111.0
63.5%
2010
2009
70.7
34.1%
63.9
36.5%
103.5
50.0%
85.7
49.0%
3.1
1.5%
2.5
1.5%
21.4
10.3%
18.1
10.3%
8.4
4.1%
4.7
2.7%
207.1
100.0%
174.9
100.0%
[Report on operations] Operating result
The Company’s operating result was -0.8 million euro, with a positive change of 10.2 million compared to the 11.0 million loss of 2009. This result was achieved thanks to the considerable recovery of the turnover, which has allowed for a better use of the production capacity and therefore to increase the margins. The unfavorable trend of the world economy had an strong impact of the 2009 profitability, due to the decrease of the production and sales volumes; the actions decided in 2009 to streamline the costs as a function of the readjustment of the reference markets, which during the last year had not yet absorbed the margins’ decrease, continued in 2010, when it was finally possible to notice more clearly their positive effect on the Company’s profits.
Non-recurring income and charges
The balance between non-recurring income and charges was negative for 0.8 million euro.
Dividends from shareholdings
Dividends received in 2010 by the Company were a total of 9.5 million euro (received from Marzotto Textile NV) compared to 10.0 million received in 2009 (in reference to the distribution by the subsidiary Linificio e Canapificio Nazionale S.p.A. of a portion of the cash available from the sale to a third party of the Villa d’Almè factory).
Other financial income and charges
The item Other financial income and charges shows a negative balance of 4.1 million, compared to an amount of -15.4 million in 2009.
In 2009 (when it was positive for 31.7 million) this item had been substantially affected by the capital gains from the transfer of non-core business real estate to the subsidiary Immobili e Partecipazioni S.p.A., for total 30.1 million euro.
The 2010 balance was mostly affected by the depreciation of the subsidiary F.lli Tallia di Delfino S.p.A. (-3.6 million euro), following the lasting substantial losses suffered by this company during the year. As explained, at the end of the month of December 2010 the difficult financial situation of the subsidiary, taking into account the renunciation by Marzotto of the pre-emption rights on 30% of the share capital, has led the same Parent Company afterwards to make a shareholder payment on capital account for 2,000,000 euro, which was carried out though the conversion of a portion of the financial receivable from Tallia.
102
Also in 2009 this item included depreciation of shareholdings: they referred to the subsidiary Tallia di Delfino for -3.7 million euro; -7.3 million referred to the alignment for the shareholding in Linificio e Canapificio Nazionale S.p.A. following the sale of the Villa d’Almè building, which had involved writing off the higher values recognized upon the acquisition of Linificio; finally the alignment to the initial book values of Aree Urbane, whose value had been adjusted following two share capital operations during the year to cover the losses (2.8 million).
Income taxes
The 2009 income taxes were 1.0 million euro, compared to -9.0 million the previous year. They refer for 1.4 million to current IRAP taxes (in 2009 they were 2.1 million, and this amount included 1.2 million for taxes due on the capital gains from the transfer of real estate assets to the subsidiary Immobili e Partecipazioni S.p.A.). In 2010 the Company also recorded tax receivables pertaining to the utilization by the domestic tax consolidation of prior years’ tax losses. As a reminder, starting in 2008, the companies Marzotto S.p.A., Immobili e Partecipazioni S.p.A., Linificio e Canapificio Nazionale S.p.A. and Licana S.p.A. (in liquidation), as well as, starting in 2009 F.lli Tallia di Delfino S.p.A., Immobiliare Isola S.r.l. and Ambiente Energia S.r.l., have chosen the domestic tax consolidation regime, for which the Parent Company is Wizard S.r.l. In 2009 the item was mostly the result of the tax pressure from the operation to transfer and sell the non-core business real estate assets carried out during the year, which was off-set at tax consolidation level Wizard S.r.l. using the tax losses carried forward and current.
Report on the Company’s operations
[Report on operations] Company’s balance sheet and financial position
The Company’s balance sheet and financial position is summarized in the table below, compared with the corresponding amounts as of 31 December 2009:
(in millions of euro)
12.31.2010
12.31.2009
61.4
67.5
Net trade receivable Other receivables Inventory Short-term non-financial payables A) Net working capital B) Assets/liabilities held for sale Receivables beyond 12 months Equity investments Tangible fixed assets Intangible fixed assets
4.3
3.9
39.1
37.1
(109.2)
(77.0)
(4.4)
31.5
=
4.3
22.4
19.3
122.7
167.7
33.9
32.8
4.1
4.4
C) Net fixed assets D) Employees severance fund, reserves, and other non-financial medium/long term payables E) Deferred taxes reserve
183.1
224.2
(25.3)
(25.3)
(2.7)
(15.9)
F) Invested capital net of current liabilities (A+B+C–D-E)
150.7
218.8
Covered by: Short-term financial payables Cash and short-term financial receivables Medium/long term financial payables Medium/long term financial receivables G) Net borrowing
Net invested capital
203.5
110.3
(149.6)
(111.0)
= (19.9)
66.8 (19.9)
34.0
46.2
H) Net equity
116.7
172.6
I) Total (G+H) as in F
150.7
218.8
Invested capital, net of current liabilities, is 150.7 million euro (2009: 218.8 million). The decrease of the Working capital (-35.9 million euro), was affected by the factoring “without recourse” operation (15.2 million euro as of December 31, 2010), carried out at the end of the year with a primary financial institution, which allowed to contain the increase of trade receivables following the significant increase of the turnover. On the other hand, the increase of inventory’s usage compared to last year (+2.0 million), was definitely contained compared to the considerable increase of the volumes and prices of raw material. This containment was possible thanks to the positive effect of the plans to control the inventory at hand for all businesses. The change in Working capital has also been affected by short term non-financial liabilities, due to the higher trade payables in relation to the increase of turnover, and the recording of the amount Due to tax authorities in reference to the “dividend stripping” dispute, which has previously been included in the medium/long term funds (at the end of 2010 the liability is 16.2 million, of which 2/3 are also included in Other receivables since they pertain to the Company Valentino Fashion Group S.p.A. as per the agreements reached after the demerger). The decrease of Net fixed assets (-41.1 million) is almost entirely attributable to the item Shareholdings (-45.0 million), due to the exclusion from the scope of consolidation of Immobili e Partecipazioni S.p.A. st following the above mentioned demerger operation on 1 July 2010. This item also includes the change due to the acquisition of shareholdings in Ratti S.p.A. and Mediterranean Wool Industries for total 12.4 million euro. Also 2010 investments in core-business sectors continued, with investments to improve productivity, quality, customer service and environmental safety (for total 1.9 million euro, compared to 4.2 million in 2009).
Report on the Company’s operations
103
[Report on operations] Net borrowing
The net financial position at the end of 2010 shows significant improvement (+12.2 million euro) compared to the prior year (2010: 34.0 million euro, compared to 46.2 million at the end of 2009). It has been affected in particular by the effects of the actions to control and manage the working capital, among which we point out the operation of factoring “without recourse”. Extraordinary operations contributed with a cash out of 14.4 million euro, in reference to the above mentioned acquisitions of Ratti and Mediterranean Wool Industries, and to the recapitalization of Tallia di Delfino S.p.A.
Net shareholders’ equity
Net shareholder’s equity went from 172.6 million in 2009 to 116.7 million in 2010, and it was affected in particular by the demerger Immobili e Partecipazioni S.p.A. (-59.0 million) approved by the Shareholders’ meeting on April 19, 2010, and fully effective from July 1, 2010. The Company’s capitalization index (ratio between equity and net invested capital) remains therefore basically unchanged, from 78.9% at the end of 2009 to 77.4% at the end of 2010.
104
Report on the Company’s operations
[Other information] Employees
The number of employees of the Company as of December 31, 2010 was 966 employees, in line with the previous year (967 at the end of 2009). Year-end Staff
at 12.31.2010 Textile Sector Other Operations Total Laid off/dismissed Total
Industrial relations
879
91.8%
Average Staff
at 12.31.2009 893
92.3%
2010 884
2009 92.0%
933
92.0%
79
8.2%
74
7.7%
77
8.0%
81
8.0%
958
100.0%
967
100.0%
961
100.0%
1,014
100.0%
8
=
8
=
966
967
969
1,014
On June 23, 2010, the new supplementary labour agreement for the Guabello – Marlane was subscribed; this agreement subjects the payment of a portion of the yearly bonus to reaching the company’s operating profit goal. Along the same line, on July 16, 2010 the supplementary labour agreement of the Tessuti di Sondrio division was renewed. st
On 1 September 2010, for the benefit of the Marzotto Fabrics Division (Valdagno factory), the union agreement for the renewal of the solidarity contract was subscribed, beginning on September 7, 2010 and until September 6, 2011, involving 316 employees. On November 19, 2010 the deadline indicated by the procedure for laying-off employees with extended unemployment benefits was extended to April 30, 2011 as the final date for the procedure, as per the agreement on June 18, 2009. In fact, as of November 2010, 44 employees were still active out of the 109 redundancies at Marzotto Fabrics Division and Main Office.
Training and development of human resources
Marzotto considers training a key factor to increase and keep up-to-date its managers’ skills and technical knowledge. This is why we created Marzotto Training, the space for ongoing training within the 105 Company. Marzotto, through various training instruments (indoor, outdoor, on the job), has made efforts to improve the performance and the individual and community skills: in addition to programs for the individual (master, specialization courses) we have organized events involving communities strategic to the business (area finance, sales, fashion designers) in order to increase the tolls available to remain competitive. We have boosted our Corporate Intranet, personalizing the contents in areas targeted to the different professional figures in the Company. In 2010 the economic investment for training was approximately 250,000 euro, using inter-professional funds such as Fondimpresa and Fondirigenti, for total 1,940 hours of training, not including work safety training. Professional training programs focused on work safety were also offered within the Group, involving about 220 people. About 200 employees for 8 hours each were trained on the company’s risks and the applicable regulations. A new project was started for the integration of 10 engineering graduates, in the production plants of the Parent Company, to help recruiting new talented people, relaunching the Corporate Brand and developing specific and technical projects in the production areas.
Privacy Planning Document
Pursuant to the provisions of rule 26 of Attached document B to Law Decree 196 dated June 30, 2003, we inform you that the Security Policy Document is regularly updated in compliance with the law.
Research and development
Research and development activities were mostly in reference to technological research and activity to improve the quality and production standards, research of new fabrics and improvement of the customer service flexibility.
Report on the Company’s operations
[Other information] Shareholdings
In reference to the performance of the main direct subsidiaries (whose financial statements’ highlights are attached hereto), as well as shareholdings in associated companies and other shareholdings held by the Company, please refer to the Report of the Consolidated Financial Statements. The relations with controlled and associated Companies, and with related parties are presented in the financial statements and the relevant commentary notes.
Praia
Between 1999 and 2001, some former employees and heirs of former employees at the Parent company’s Praia a Mare plant filed a motion with the Attorney General through the Court of Paola, seeking criminal action against the persons in charge of the plant from the Seventies through 2004, allegedly for functional omissions that, because of work safety conditions there, would have been the cause of death and serious health problems to some employees and in reference to the are outside the factory, would have caused its pollution and contamination. After the Judge of the Court of Paola rejected two requests by the Examining Judge to close the case, in October 2009 the prosecution issued 14 notices of completion of the preliminary investigations, and their notification was repeated in February 2010. As of today the Company, with the favorable opinion of a reputable law firm, believes that compensation claim for damages in favor of a third party will not be assessed. Some former employees or heirs of former employees as indicated above, in October 2006 and in 2008, have also begun civil proceedings against the Company asking for compensation for the alleged damages due to work-related illnesses. As of today the disputes are at various progress levels since the claims were made subsequently. In any case, the technical appraisals so far completed, examined by technical experts and legal counsels for the Company, appear to exclude, so far, any particular liability of the Company in the reported illnesses. For none of the claims has been made any further preliminary investigation and therefore, save any different assessment following the investigations that are still underway, there are no objective element that lead us to believe the Company may suffer any liability. Following an ordinance of the mayor of Praia a Mare in January 2007, the Company was supposed to begin a series of characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have been suspended pending cautionary proceedings. As things stand, the costs for the possible soil reclamation are estimated anyway to be less than the possible sale value of the affected area.
106
Report on the Company’s operations
[Significant events after the close of the year] Transfer to Tallia di Delfino S.p.A.
At the end of 2010, Marzotto approved an operation for the transfer to Tallia di Delfino S.p.A. of the business unit corresponding to the business identified as the Guabello and Marlane brands; the resulting Company will be named “Biella Manifatture Tessili S.p.A.” and will be 100% controlled by Marzotto S.p.A. The reasons for this transfer are the need to gather the textile activities in the Biella area in one single corporate hub, in order to take advantage of the possible synergies to increase the system effectiveness and to seize the opportunity for the valorization and strengthening of each brand, taking advantage of the quality and product identity typical of the Made in Biella products, which is enabled by belonging to the Biella area. st This operation will be effective on 1 May 2011.
107
Report on the Company’s operations
[Performance news and outlook for the current year] The great trend of the turnover and the orders received in the first months of 2011 lead us to believe there will be a further improvement of volumes and margins for the Company compared to the previous year. The turnover performance during the first two months confirms this outlook, while the current orders received show an increase for all the business sectors of Marzotto. While in the macro-economic scenario there are still instability and fragility factors, the most serious threat to the Textile industry in 2011 comes from the procurement markets: the record price increases which began last year do not show any sign of slowing down, and this is made more serious by the difficulty in obtaining raw materials. For several reasons, these increases do not appear to be slowing down in the short term, and they will end up having a substantial effect on corporate margins. In addition to some recovery signs already apparent, there are still weakness elements of macroeconomic nature, both on the domestic and the international markets: the difficulty in the recovery of consumption due to unemployment and the reduced purchase power, a general lack of confidence mood, and on the exterior the performance of foreign currency markets, or the possible inflation dynamics created by the high increase of raw material prices just to name a few. The continuation of these uncertainty elements does not make it easy predict if the favorable trend shown by Marzotto in the results for the first months of 2011 will continue; however we predict that the results of the year 2011 will be better than the results of 2010. The activities to identify and implement actions to reach higher efficiency levels and recover productivity continue, in order to contain and manage at best the impact of the above mentioned situations. In reference to medium term plans, management is carefully and constantly monitoring the markets to optimize all costs as a function of the settlement in the end markets, while at the same time taking full advantage of the synergies within the Group, also thanks to the recent strengthening and development investments, like Egypt and Ratti. The medium term plans also include the Company’s search for internationalization opportunities, especially in reference to the markets in China, India, South America. The strong tendency to monitor capital employed in production and especially working capital (in particular receivables and inventory) continues, to streamline the financial resources used in the business. 108
The first results of the Company for 2011 in reference to the turnover of the two-month period should be viewed in this context:
(in millions of euro)
02.2011
02.2010
31.8
97.9%
23.7
1.6
4.9%
1.6
6.6%
Subtotal
33.4
102.8%
25.3
104.1%
Inter-company sales
(0.9)
Total
32.5
100.0%
of which: Italy
12.3
of which: Other markets
20.2
Fabrics Other Operations
(2.8%)
(1.0)
97.5%
(4.1%)
24.3
100.0%
37.8%
8.4
34.6%
62.2%
15.9
65.4%
The Company’s turnover as of February 28, 2011, compared to the same period of last year, increased by approximately 34%.
Valdagno (VI), March 29, 2011 THE BOARD OF DIRECTORS
Report on the Company’s operations
[Proposals to the Shareholders’ Meeting] Shareholders, we suggest to allocate the profit for the year for euro 3,152,931.67 as follows: -
to Profits carried forward from previous years for euro 3,152,931.67
After this allocation, the reserve’s total amount will be: -
Profits carried forward from previous years euro 30,140,875.55;
In reference to the appointment of the independent auditors, the Board of Statutory Auditors of the Company has presented a motivated proposal to appoint the auditing company Reconta Ernst & Young S.p.A. for the three-year period 2011-2012-2013.
Valdagno (VI), March 29, 2011 THE BOARD OF DIRECTORS
109
Report on the Company’s operations
1836
marzot to group
General information Marzotto group consolidated financial statements Report on Group’s operations Consolidated financial statements
Marzotto S.p.A. financial statements Report on the Company’s operations
[Company financial statements]
annual report 2010
111
Financial statements
[Balance Sheet of the Company] 12.31.2010
(k euro)
Partial
12.31.2009
Total
Partial
Total
1. Non-current assets 1.1 Property, plant and machinery
32,540
31,330
1.2 Civil real estate
1,322
1,447
1.3 Goodwill, trademarks and other intangible assets
4,166
4,347
122,689
167,737
1.5 Other equity investments 1.6 Medium/long-term receivables
11,020
1.7 Deferred tax assets
11,332
1.8 Medium/long-term financial receivables third parties Medium/long-term financial receivables subsidiaries and affiliates Total non-current assets 2. Non-currents assets held for sale
8,899 183,069
10,440
224,200
54
43
19,840
19,840
202,963
244,083
=
4,263
3. Current assets 3.1 Inventory
39,081
3.2 Trade receivables third parties
42,548
55,467
18,846
11,965
Trade receivables subsidiaries and affiliates 3.3 Other receivables third parties Other receivables subsidiaries and affiliates
37,131
4,304 =
3.4 Short-term financial assets and cash and cash equivalents third parties
3,902 104,779
12
108,477
135,445
92,676
14,110
18,369
254,334
219,522
457,297
467,868
4.1 Share capital and reserves
113,557
168,517
4.2 Income/(Loss) for the year
3,153
4,064
116,710
172,581
Short-term financial assets and cash and cash equivalents subs. and affiliates Total current assets Total assets 4. Shareholders' equity
112
Shareholders' equity 5. Non-current liabilities 5.1 Long-term reserves 5.2 Other medium/long-term payables 5.3 Deferred tax liabilities 5.4 Medium/long-term financial payables Total non-current liabilities
26,700
39,825
22 1,258
39 27,980
1,355
41,219
11
66,786
27,991
108,005
6. Current liabilities 6.1 Trade payables and other payables third parties Trade payables and other payables subsidiaries and affiliates 6.2 Short-term financial payables third parties Short-term financial payables subsidiaries and affiliates Total current liabilities
79,697
51,784
29,443
25,163
190,909
91,943
12,547
18,392
312,596
187,282
Total shareholders' equity and liabilities
457,297
467,868
Net (financial debt)/cash
(34,018)
(46,193)
Financial Statements of the Company
Financial statements
[Comprehensive Income statement of the Company] Year 2010
(k euro) 7.
Net revenues third parties Net revenues subsidiaries and affiliates
Year 2009 %age
192,925
Amount
93.2
%age
165,388
94.6
14,186
6.8
9,532
5.4
Total net revenues
207,111
100.0
174,920
100.0
8.
(126,523)
(61.2)
(102,932)
(58.9)
(42,820)
(20.7)
(45,702)
(26.1)
Cost of goods sold third parties Cost of goods sold subsidiaries and affiliates
9.
Amount
Gross income
37,768
18.2
26,286
15.0
10. Product development and marketing costs
(24,494)
(11.8)
(23,754)
(13.6)
11. General and administrative costs
(14,054)
(6.8)
(13,548)
(7.7)
(820)
(0.4)
31,762
18.2
(1,600)
(0.8)
20,746
11.9
(1,641)
(0.7)
(2,804)
(1.6)
24
=
574
0.3
9,539
4.6
10,005
5.7
12. Other income and charges 13. EBIT 14. Net financial charges third parties Net financial charges subsidiaries and affiliates 15. Dividends from non-consolidated shareholding 16. Valuation of equity investments held for sale 17. Other financial income and charges 18. Income before taxes 19. Taxes 20. Net income 21. Fair value adjustments 22. Other adjustments 23. Total net profit/ (loss)
=
=
(4,141)
=
(2.0)
(15,430)
(8.8)
2,181
1.1
13,091
972
0.4
(9,027)
(5.2)
3,153
1.5
4,064
2.3
(209)
(0.1)
2,695
1.6
(3)
=
1
=
1.4
6,760
3.9
2,941
=
7.5
113
Financial Statements of the Company
Financial statements
[Cash flow statement of the Company] 2010 Partial
sources/(uses) in k euro Income before taxes
(1)
Partial
Total
2,181
Amortisation and depreciation, and write-downs Withdrawals from/allocations to provisions
10,280
13,091 18,946
919
(2,617)
Capital gain/(losses) on disposal of fixed assets
(1,951)
Income Taxes paid
(3,949)
Changes in inventory
(1,950)
9,350
Changes in trade receivables and other receivables third parties
11,201
(1,983)
Changes in trade receivables and other receivables subsidiaries and affiliates
(6,869)
1,475
Changes in trade payables and other payables third parties
14,576
(8,043)
4,280
(299)
Changes in trade payables and other payables subsidiaries and affiliates Changes in medium long-term other financial receivables and payables Extraordinary operations
(3,516) 5,299
(17) =
Operating cash flow (A)
=
Disposals in intangible and tangible fixed assets Investments in equity investments Disposals of other equity investments Extraordinary operations
(1,872)
(30,055)
(3,727)
1,994
5,108 (8,270)
123
=
=
= (16,686)
Changes in exchange rate and other equity changes (C)
=
Extraordinary operations (D)
=
Cash flow before dividends (A+B+C+D)
(7,376) =
=
=
12,015
Dividends to shareholders
=
Increase in share capital of Parent Company
(11,103)
160
49,831
12,175 (66,775)
(16,668)
Changes in short-term financial payables third parties
98,966
(3,270)
Changes in short-term financial payables subsidiaries and affiliates
(5,845)
6,860
(11)
4
Changes in medium and long-term financial receivables subsidiaries and affiliates
=
Extraordinary operations
=
Changes in short-term financial receivables and cash and cash equivalent
49,831 38,728
Changes in medium and long-term financial payables
Changes in medium and long-term financial receivables third parties
=
=
160
Change in net financial position
(29,631)
(4,214)
(16,931)
Cash flow from investments (B)
12,813
(76) 21,221 28,701
Investments in intangible and tangible fixed assets
114
2009 Total
(171) 26,335 38,510
=
(13,245) 25,483
Cash and short-term financial receivables - initial
111,045
85,562
Cash and short-term financial receivables - final
149,555
111,045
1. Including interest paid and received respectively for 3,017 and 1,799 k euro.
Financial Statements of the Company
Financial statements
[Statement of changes in shareholders’ equity of the Company] Reserve viz. Revalua-
Total
Fair
art.55
Profits
Income
share-
for the
holders'
Share
tion
Legal
value
Pr.Dec.
Capital
Sundry
carried
(k euro)
capital
reserve
reserve
reserve
917/86
grants
reserves
forward
Balances as at 12.31.2008
73,986
9,537
14,797
1,520
23,036
(3,016)
133
62
Net income for the year 2009 Total other income/charges
2,695 =
=
=
2,695
1 =
=
=
1
7,015 (915) 9,537
14,797
Other total profit/ (losses)
(321)
133
62
7,620
Share capital increase Demerger
(209) =
7,015 11,080
=
12,872
4,064
172,581
3,153
3,153
=
=
(209)
3,153
2,941
(3) =
=
=
(3)
(212)
160 (58,972)
160 (3,180)
(45)
(281)
3,506
(58,972)
Appropr. of 2009 profits:
=
brought forward Balances as at 12.31.2010
6,760
(10,165)
Net income for the year 2010 Total other income/charges
4,064
49,831
2008 loss coverage 123,817
4,064 2,696
49,831
Capital contribution reserve Balances as at 12.31.2009
equity 108,975
4,064
Other total profit/ (losses) Share capital increase
year (11,080)
203 65,005
6,357
15,000
3,861 (530)
88
62
7,339
20,236
(4,064) 3,153
= 116,710
115
Financial Statements of the Company
Introduction
Accounting principles
[Notes to the Company's financial statements] Marzotto S.p.A.’s financial statements have been prepared in compliance with the International Financial Reporting Standards (IAS/IFRS) and the related interpretations by the International Accounting Standards Board (IASB), approved by the European Commission and incorporated in Italian law by Italian Legislative Decree 38/2005. The accounting principles adopted are comparable to those used as of December 31, 2009, except for the adoption of the following new or revised IFRS or IFRIC: x
IFRS 2 – Share-based payments (Revised) – not applicable.
x
IFRS 3R – Business combinations (Revised). IFRS 3 (Revised) introduces a number of important changes in the accounting for business combinations that will impact the amount of goodwill recognized, the reported results in the period that an acquisition occurs and future reported results.
x
IAS 39 – Financial instruments: recognition and measurement – Eligible Hedged Items – Not applicable.
x
IFRIC 17 – Distributions of Non-cash Assets to Owners – Not applicable.
x
IFRIC 18 – Transfers of Assets from Customers – Not applicable.
The International Accounting Standards Board and the IFRIC issued new principles and interpretations that will become effective after the date of these financial statements. The Company has not adopted in advance any of these principles and interpretations. The main effects expected from the application of these principles and interpretations are the following: x
IAS 24 – Related party financial statements disclosure. On November 4, 2009 the International Accounting Standards Board (IASB) has issued the revision to IAS 24 – Related party financial statements disclosure. The changes adopted with the IAS 24 revision simplify the definition of “related party” and remove some inconsistencies and exempt government related entities from some disclosure requirements on the operations with related parties. Companies will apply IAS 24 and the changes to IFRS 8 at the latest beginning from the date of their first tax year starting after December 31, 2010. We do not anticipate that the adoption of this amendment will significantly impact the financial statements.
x
IFRS 9 – Financial instruments. The principles, applicable from January 1, 2013, represents the first part of a multi-phase process that will completely replace IAS 39 introduces new requirements for classifying and measuring financial assets and for the derecognition of financial assets and financial liabilities. In particular for financial assets it uses a single approach based on the management of financial instruments (its business model) and the contractual cash flow characteristics of the financial assets to establish the measurement basis, replacing the different rules provided by IAS 39. For financial liabilities instead, the main change introduced refers to the accounting treatment of changes in fair value for a financial liability designated as at fair value through profit or loss, if that is attributable to changes in the credit risk of the liability. According to the new principles these changes shall be presented in other comprehensive income (losses) and no longer shown in the profit and loss. At the date of these financial statements the European Union bodies had not yet complete the approval process to adopt the new principle.
116
Financial Statements of the Company
[Notes to the Company's financial statements] On May 6, 2010, IASB issued a set of improvements to IFRS, which will be effective from January 1, 2011; below are the improvements that will change the presentation, recognition and measurement of the balance sheet items, omitting those that will only involve changes in wording or editorial changes with minimum accounting impact, or those affecting principles or interpretations nor applicable by the Group: x
IFRS 3 – Business combinations. The amendment clarifies that third parties interests that do grant their holders the right to a proportional share of the net assets of the subsidiary must be measured either at fair value or according to the applicable accounting principles. Therefore, for example, a stock-option plan given to the employees must be measured, in case of business combinations, according to the rules of IFRS 2 and the equity share of a convertible bond instrument must be measured according to IAS 32. In addition, the Board has given more information on share based payment plans which have been replaced within a business combination, adding specific guidelines for their proper accounting.
x
IFRS 7 – Financial instruments: additional information. The amendment points out the interaction between quality and quantity of additional information required by this principle in reference to the nature and scope of the risks involved in the financial instruments. This should help the users of the financial statements to connect the information given and to get a general description of the nature and scope of the risks involved in the financial instruments. In addition, the information disclosure requirement on financial assets that have expired but have been renegotiated or depreciated and of the fair value of collaterals.
x
IAS 1 – Presentation of Financial Statements. With this amendments is it required that the reconciliation of the changes of each item of shareholders’ equity be presented in the notes or in the financial statements.
x
IAS 34 – Interim financial reporting – Not applicable.
117
Financial Statements of the Company
Introduction
Management and coordination activities
[Notes to the Company's financial statements] Marzotto S.p.A. is registered in Italy and subject to the management and coordination of Wizard S.r.l. (Rome); below please find the summary of the basic data from the last approved financial statements of Wizard S.r.l.
Balance sheet (k euro) B) Fixed assets C) Current assets Total Assets
12.31.2009 299,128 7,681 306,809
Income statement (k euro)
12.31.2009 A) Shareholders' equity D) Accounts payable Total Liabilities
301,518 5,291 306,809
Year 2009
A) Value of production B) Cost of goods sold Difference between value and cost of goods sold (A+B) C) Financial income and charges
= (192) (192) (162)
D) Adjustment to value of financial assets E) Other income and charges Income before taxes (A+B+C+D+E) Income taxes Profit (loss) for the year
= (541) (895) 770 (125)
Publication
The Company has controlling interests and therefore has prepared, together with the company’s financial statements, the Group’s consolidated financial statements. The publication of these financial statements has been authorized by the Board of Directors on March 29, 2011.
Financial statements
The Financial Statements consist of the Balance Sheet, the Income Statement, the Cash flow statement, the Statement of Changes in Shareholders’ Equity and the relevant explanatory notes. With regard to the presentation of the financial statements, the Company has made the following choices: x for the Balance Sheet we have indicated separately current and non-current assets and current and non-current liabilities. Current assets are expected to be realized, transferred or consumed during the regular operating cycle of the Company; current liabilities are expected to be paid off during the regular operating cycle of the Company or in the twelve months following the close of the period; x for the Income statement the costs analysis is based on the destination of the costs; x for the Cash flow statement we have used the indirect method.
Operations
The Company manufactures and distributes wool and cotton fabrics at its plants in Valdagno (Vicenza), Mongrando (Biella), Piovene Rocchette (Vicenza) (wool fabrics) and Sondrio (cotton fabrics). The Company also coordinates the operations of foreign subsidiaries and of qualified subcontractors.
118
Financial Statements of the Company
Valuation criteria
[Notes to the Company's financial statements] The most significant valuation standards adopted in preparing the financial statements are indicated below:
1.1 Real estate, plants and machinery 1.2 Civil real estate
Real estate, plants and machinery are carried at historical cost, including directly attributable accessory costs. Land, both vacant and annexed to civil or industrial buildings, has not been amortized since its useful life in indefinite. Some assets that had been revaluated in previous periods, are shown at the revaluated amount, considered their deemed cost on the transition date to IAS. Maintenance and repair expenses that do not increase the value or prolong the remaining useful life of assets are recognized as expenses in the period in which they are incurred. Tangible assets are shown net of accumulated depreciation and any reductions in value, determined in accordance with the methods described below. Depreciation is straight-line, based on the estimated useful life of the asset. The estimated useful life of the main real estate, plant and machinery is as follows: Land Civil buildings Industrial buildings Plant and machinery: - Textile - Corrosive environment textile - Other Industrial and commercial equipment Other assets: - Electronic office machines - Office furniture and fixtures - Vehicles
indefinite 33 years / indefinite 10/33 years 8 years 5/6 years 7/25 years 4/7 years 5 years 7/8 years 4 years 119
1.3 Goodwill, trademarks and other intangible fixed assets
Intangible assets with a “finite useful life” are recognized at cost, determined according to the methods prescribed for tangible assets, and shown net of accumulated amortization and any permanent reductions in value, determined according to the methods described below. Intangible assets with “indefinite useful life” (e.g. trademarks) are not amortized.
Value reduction
For each accounting period, tangible and intangible assets with a “finite useful life” are analyzed to identify any indicators of value reduction; in this case an estimate is made of their estimated recoverable value (the greater of the net sales price and its value in use). The recoverable value of the intangible asset with an “indefinite useful life” is estimated for each accounting period. A reduction in value is recognized in the Income statement when the book value of the asset, or of the related cash generating unit, to which it is allocated, is greater than the estimated realizable value. Reductions in value are written back if the reasons for the devaluation are no longer present.
Financial Statements of the Company
Valuation criteria
[Notes to the Company's financial statements]
1.5 Shareholdings
Shareholdings in controlled, jointly controlled and affiliated companies that represent lasting investments are shown at the cost of acquisition or establishment. Shareholdings in other companies are valued at fair value, charging any profits or losses directly to shareholders’ equity. At the time of their sale, such accumulated profits and losses are recognized in the Income statement. When their fair value cannot be reliably determined, shareholdings in other companies are valued at cost adjusted for reductions in value, with the difference recognized in the Income statement. When dividends on shareholdings are distributed from profits generated before the acquisition, they are deducted from the cost of the shareholding. The Company verifies, at each financial statements’ date, if there is any indication of lasting reduction in value for all shareholdings. In particular, shareholdings in subsidiary and affiliated companies are checked for possible losses of value at least yearly; this check requires an estimate of the use value of the unit generating financial flows to which we attribute the cost of the shareholding, which is based in turn on the estimate of the financial flows expected from the unit and on their discount based on an adequate discount.
1.8 Medium-long term financial assets
Financial assets are initially carried at their nominal value, representative of the fair value, and later recognized at the lower between the book value and the estimated sale value.
2. Non-current assets held for sale
Assets or groups of assets and liabilities whose value will be recovered mainly through sale rather than ongoing use are recognized separately from other assets and liabilities in the Balance sheet. Non-current assets or groups of assets and liabilities held for sale are recognized at the lower between the book value and the fair value net of the costs of sale.
3.1 Inventory
Inventory is carried at the lower between the cost of purchase or production and the estimated net realizable value. The cost of purchase is determined according to the methods described for fixed assets. The cost of production includes direct and indirect variable and fixed costs attributable to production.
3.2 Trade receivables 3.3 Other receivables
Trade receivables due within standard business terms and other operating receivables (other receivables) are not discounted and are carried at nominal value net of any write-downs. Adjustments to the estimated realizable value are recognized in a special adjustment reserve.
3.4 Short-term financial assets and cash and cash equivalents
Cash and cash equivalents are made up of cash in hand, i.e. cash that is readily available or on a very short term, successfully, and without collection expenses.
5.1 Long-term provisions
Provisions to long-term reserves are recognized when there is a legal or implicit obligation towards a third party and it is likely that there will be an outlay of resources the amount of which can be reliably estimated. If the effect is significant, the provisions are determined by discounting the expected future financial flows at a pre-tax discount rate that reflects the current market value of the cost of money in relation to time. When the amount is discounted, the increase in the provision due to the passing of time is recognized as a financial charge. Liabilities for staff termination indemnities and for pension liabilities are evaluated also taking into consideration the results of the application of IAS 19.
120
Financial Statements of the Company
[Notes to the Company's financial statements] 5.4 Medium/long-term financial payables
Financial liabilities, except for derivatives, are initially carried at fair value net of directly attributable transaction costs. They are later measured using the effective interest rate method.
6.1 Trade payables and other payables
Trade payables due within standard business terms, and other operating payables, are not discounted and are carried at nominal value.
6.2 Short-term financial payables
Financial liabilities, except for derivatives, are carried at fair value net of directly attributable transaction costs.
Derivative financial instruments
Derivatives are carried at fair value. They are designated as hedging instruments when the relationship between the derivative and the underlying instrument is formally documented and the effectiveness of the hedge, which is verified periodically, is adequate. When the derivatives cover the risk of change in fair value of the underlying instruments (fair value hedge), they are carried at fair value, and the difference is recognized in the Income statement; consistently, the underlying instruments are adjusted to reflect the change in fair value associated with the hedged risk, and the difference is also recognized in the Income statement. When derivatives cover the risk of changes in cash flows from the underlying instruments (cash flow hedge), the changes in fair value are initially recognized in the shareholders’ equity and later in the Income statement, consistently with the effects produced by the hedging transaction. Changes in the fair value of derivatives that do not satisfy the conditions for being qualified as hedges are recognized in the Income statement.
Translation of items in foreign currency
Transactions in foreign currencies are recorded at the exchange rate prevailing on the day of the transaction. At the closing date, trade and financial receivables and payables are adjusted to the exchange rate at end 121 of the year. The instruments used to hedge the exchange rate risk, in relation to specific assets and liabilities or groups of assets and liabilities, are shown in the income statement on an accrual basis.
Contributions
Contributions from both government agencies and private third parties are carried at fair value when there is the reasonable certainty that they will be received and the prescribed conditions for obtaining them are satisfied. Contributions received for specific expenses are recognized among other liabilities and credited to the Income statement on a straight-line basis throughout the same period in which the related costs accrue. Contributions received for specific assets whose value is stated among tangible and intangible assets, are shown among liabilities and credited in the Income statement in relation to the depreciation period for the assets to which they refer. Contributions during the accounting period are fully recognized in the Income statement at the time the conditions for recognizing them are satisfied.
Fair value
The fair values used to prepare the financial statements, referred to the valuation of term purchases and sale of foreign currency and to foreign exchange options, were established based on the rates from the banking system. There were no transfers among the levels of the fair value hierarchy.
Financial Statements of the Company
Valuation criteria
[Notes to the Company's financial statements]
7. Revenues
Depending on the type of transaction, revenues are recognized based on specific criteria indicated below: x revenues from the sale of goods are recognized when the significant risks and benefits of ownership are transferred to the purchaser (typically at the time of shipment); x revenues for services provided are recognized on a percentage of completion basis.
14. Financial charges, net
Financial revenues and charges are recognized on the basis of accrued interest on the net value of the relevant financial assets and liabilities using the actual interest rate.
15. Dividends
Dividends are recognized when the right to receive payment is established. Dividends payable to third parties are shown as changes in net equity on the date they are approved by the Shareholders’ Meeting.
19. Taxes
Current income taxes for the financial year are determined on the basis of estimates of taxable income and according to law. Deferred and advance income taxes are calculated on the temporary differences between the balance sheet values carried and the recognized corresponding values for tax purposes, applying the tax rate in effect at the date the temporary difference will be reversed, calculated on the basis of the tax rates provided by the law or substantially in force at the accounting reference date. The asset entry for advance tax payments is made when recovery is likely, that is when it is estimated that in the future there will be taxable amounts sufficient to recover the asset. The ability to recover assets for advance tax payments is reassessed at the end of each accounting period.
Use of estimates
In application of IFRS, preparing the financial statements requires the use of estimates and assumptions that affect the values of balance sheet assets and liabilities and the relevant information, as well as potential assets and liabilities at the reference date. Estimates and their underlying assumptions are based on past experience and on other factors that are deemed reasonable in each case. Actual results may differ from these estimates. The estimates and assumptions are reviewed periodically and the effects of each change are reflected in the Income statement. A significant discretionary valuation is required from the Directors to establish the amount of deferred tax assets that may be posted. They have to estimate the likely time of occurrence and the amount of future profit subject to tax as well as a planning strategy for future taxes. Estimates are also used to record provisions for bad debt, for inventory obsolescence, amortization and depreciation, employee benefits, provisions for risks and charges.
Other information
To prepare the Consolidated Financial Statements for printing and to make them easier to read, all figures in the consolidated Balance sheet, the Income statement, the Cash flow statement and the Table of Changes in Shareholders’ Equity, as well as in the notes, are expressed in thousands of euro (also shown hereinafter, in short, as “k euro”).
122
For an easier comparison, the previous year figures have been reclassified as needed, and adequate information has been provided. Please refer to the report on operations for further information regarding: x main events of the 2010 financial year; x events after the close of the financial year; x foreseeable operating developments; x other relevant information on operating performance and the balance sheet structure.
Financial Statements of the Company
Balance Sheet
[Notes to the Company's financial statements]
1.1) 1.1) Property, plant and machinery machinery 1.2) 1.2) Civil Civil real real estate estate
2010 Net balance
2009
33,862
Change
32,777
1,085
broken down as follows: A)
B)
C)
D)
E)
F) Tangible
Description
Civil
Industrial
Plant
Industrial
Other
fixed assets
land and
land and
and
and comm.
tangible
under cons./
buildings
buildings
machinery
equipment
fixed assets
advances
Total
Original cost
1,753
43,213
139,566
5,435
7,649
187
197,803
Depreciation funds
(306)
(26,757)
(125,497)
(5,154)
(7,312)
=
(165,026)
1,447
16,456
14,069
281
337
187
32,777
=
204
1,011
26
127
372
1,740
Balances as at 12.31.2009 Movements during the year: Original cost: acquisitions reclassification to fixed assets up for sale gross disposals
=
4,095
4,082
=
=
=
8,177
(304)
(2)
(8,786)
(674)
(1,361)
=
(11,127)
(14)
(1,191)
(3,188)
(127)
(138)
=
(4,658)
Depreciation funds: depreciation for the year reclassification to fixed assets up for sale
=
(1,216)
(2,698)
=
=
=
(3,914)
193
=
8,641
673
1,360
=
10,867
Total movements for the year
(125)
1,890
(938)
(102)
(12)
372
1,085
Original cost
1,449
47,510
135,873
4,787
6,415
559
196,593
(127)
(29,164)
(122,742)
(4,608)
(6,090)
=
(162,731)
1,322
18,346
13,131
179
325
559
33,862
gross disposals
Depreciation funds Balances as at 12.31.2010
Assets under construction and advances received as of December 31, 2009 have been almost completely reclassified in their respective categories. The sale of dismissed assets during the year led to the recognition of net capital gains before taxes for 1,734 k euro (capital gains 1,744 k euro and capital losses -10 k euro), that were attributed to the item Other income and charges. The fund “Reclassification to fixed assets up for sale” includes the values of the decommissioned industrial building in Praia a Mare (CS) (net book value of 4,263 k euro), reclassified from said line item to Tangible assets. For these assets depreciation has been suspended. As of December 31, 2010 the fixed assets of the Company were not encumbered by mortgages or third party liens. During the year the following costs were capitalized: B)
Industrial land and buildings for 204 k euro for incremental expenses on industrial buildings.
C) Plants and machinery For 1,011 k euro referred for 962 k euro to the textiles sector and for 49 k euro to other activities.
Financial Statements of the Company
D)
Industrial and commercial equipment for 26 k euro referred to the textiles sector.
E)
Other assets for 127 k euro referred to office machinery.
123
Balance Sheet
[Notes to the Company's financial statements]
1.3) 1.3) Goodwill, Goodwill, trademarks trademarks and other and other intangible assets assets intagible
2010 Net balance
Change 4,347
(181)
made up us follows:
Description Original cost
2009 4,166
(1)
Accumulated depreciation Balances as at 12.31.2009
A)
B)
Ind. patent
Concessions,
C)
D) Intangible
and
licenses,
Other
intellectual
trade-marks
intangible
fixed assets being
property
and
fixed
developed and
rights
similar rights
assets
advances
Total
2,123
2,784
86
793
5,786
(1,179)
(189)
(71)
=
(1,439)
944
2,595
15
793
4,347
132
Movements during the year: Original cost: acquisitions disposals/depreciations reversal due to amort. being completed
119
=
=
13
=
=
=
=
=
(323)
(45)
=
=
(368)
(269)
(29)
(15)
=
(313)
=
=
=
=
=
323
45
=
=
368
(150)
(29)
(15)
13
(181)
Amortisation: for the year disposals/depreciations reversal due to amort. being completed Total movements for the year Original cost
(1)
Depreciation funds Balances as at 12.31.2010
124
1,919
2,739
86
806
5,550
(1,125)
(173)
(86)
=
(1,384)
794
2,566
=
806
4,166
1. Original cost of the assets still being amortised.
The category Concessions, licenses, trademarks and similar rights includes the value of Guabello trademark (2,300 k euro). The impairment test on the trademark’s value is performed establishing its use value according to the method of comparable royalty rates. The cash flows are discounted at a discount rate equal to the current interest rate without market risk, in relation to a time frame consistent with the duration of flows (10 years, given the historicity of the trademark), plus the risk coefficient specific to the activity. During the year, costs were capitalized as follows: A) Industrial patent and intellectual property rights for 119 k euro, basically regarding software and EDP applications. D) Intangible fixed assets being developed and advance payments for 13 k euro. At year end 806 k euro were mainly capitalized (and not amortized), mainly in relation to software development costs. Research and development expenses paid during the year, pertaining to product innovation and applications for the rationalization of production and logistics, have been charged to the income statement.
Financial Statements of the Company
[Notes to the Company's financial statements] 1.5) Shareholdings
2010
2009
122,689
Net balance
Change
167,737
(45,048)
made up as follows:
Description Original cost
A)
B)
C)
Shareholdings
Shareholdings
Shareholdings
in
in
in
Subsidiaries
Affiliates
other companies
Total
150,605
16,949
234
=
=
(51)
(51)
150,605
16,949
183
167,737
acquisitions
6,036
12,429
2
18,467
disposals
(900)
=
(21)
(921)
(58,958)
=
=
(58,958)
(3,636)
=
=
(3,636)
=
=
=
=
(57,458)
12,429
(19)
(45,048)
93,147
29,378
215
122,740
=
=
(51)
(51)
93,147
29,378
164
122,689
Adjust. for permanent decrease in value Balances as at 12.31.2009
167,788
Movements during the year: Original cost:
extraordinary operation devaluation Adjustment to fair value adjustments Total movements for the year Original cost Adjust. for permanent decrease in value Balances as at 12.31.2010
The increase in Shareholdings refers: for 2,500 k euro to a Shareholder’s capital contribution for Immobili e Partecipazioni S.p.A. (June 28, 2010); for 1,536 k euro to the Fair Value of 30% of the share capital of F.lli Tallia di Delfino S.p.A. acquired during the year; for 2,000 k euro to a Shareholder’s capital contribution for said company (December 31, 2010); for 10,402 k euro to the acquisition of 33.364% of the Ratti Group (March 5, 2010); for 2,027 k euro to the acquisition of 30% of the share capital of Mediterranean Wool Industries Co. (MWI) S.A.E. (June 3, 2010). The decrease refers to non-exercise of the option right by the minority shareholder Appia S.r.l. and to the subsequent renunciation to exercise the pre-emption right by Marzotto S.p.A. Also in reference to the shareholding in F.lli Tallia di Delfino S.p.A. we point out that on December 15, 2010, in order to settle the still pending matters, the subscribers of the Investment Agreement of July 7, 2008 (Marzotto S.p.A./Appia S.r.l./F.lli Tallia di Delfino S.p.A.) have decided to terminate this agreement (please refer to “Main events of 2010” of the Report of the Company’s operations). On June 24, 2010 the demerger deed of Marzotto S.p.A. was executed, assigning the whole shareholding in Immobili e Partecipazioni S.p.A. (58,958 keuro) to a newly incorporated company named “Nuova Immobiliare S.p.A.”, owned by the same shareholders as Marzotto S.p.A. The deed became effective from July 1, 2010. Following the lasting loss of value, the Company has written-down the shareholding in F.lli Tallia di Delfino S.p.A. (3,636 k euro). The impairment test on the value of assets is performed using the Discounted Cash Flow method applied to each Cash Generating Unit. For the calculation of their value, the projection of cash flows from the economic/financial plan was used. The values recognized in the financial statements appear recoverable.
Financial Statements of the Company
125
Balance Sheet
1.6) Other medium/long-term receivables
[Notes to the Company's financial statements] 2010 Net balance
2009
11,020
Change
8,899
2,121
made up as follows: Amount due from tax authorities
10
10
=
Other receivables
11,010
8,889
2,121
Total
11,020
8,899
2,121
The item Other receivables includes 10,943 k euro in receivables from Valentino Fashion Group S.p.A., which was recorded following the decision of the Supreme Court of Cassation of Venice dated September 21, 2010 on “dividend stripping”, and in application for the agreements executed upon the demerger of the clothing business unit in 2005 (please refer to 5.1 Long-term provisions).
1.7) Deferred tax assets
2010 Net balance
2009
11,332
Change
10,440
892
made up as follows: Depreciation of inventory
2,265
2,037
228
Depreciation of receivables
1,463
1,514
(51)
Accrual for risk and charges
4,320
4,178
142
247
=
247
Fair value of forward operations on exchange rates Other temporary differences Total
3,037
2,711
326
11,332
10,440
892
The item refers to deferred tax assets (prepaid taxes) due beyond the year. 126
The change is attributable to 4,537 k euro in provisions, 3,060 k euro in utilizations for the year, and -585 k euro to adjust the final tax balance to income tax statements, to tax rates changes and other changes. Deferred tax credits allocated against these temporary differences correspond to the proportion that can reasonably be recovered over a period of about 3 years.
1.8) Medium/long-term financial receivables
2010 Net balance
2009
Change
19,894
19,883
11
19,840
19,840
=
54
43
11
19,894
19,883
11
made up as follows: Receivables due from affiliates Guarantee deposits (financial) Total
Receivables from affiliated companies refer to a shareholders’ loan granted to Aree Urbane S.r.l. which has been discounted following the longer terms foreseen for the repayment. As indicated in the Report on operations, this receivable is expected to be recovered.
Financial Statements of the Company
[Notes to the Company's financial statements] 2. Non-current assets held for sale
2010
2009
Change
=
4,263
(4,263)
Land and buildings
=
2,879
(2,879)
Plant and machinery
=
1,384
(1,384)
Total
=
4,263
(4,263)
Net balance made up as follows:
The 2009 amount of items Land and buildings and Plant and machinery (4,263 k euro) includes values referring to the site in Praia a Mare (CS). These assets have been reclassified among Tangible assets. The item also includes the shareholding in the affiliated company Aree Urbane S.r.l., booked at the value of 1 euro corresponding to the lower between the book value, calculated with the equity method at the date of the change taking into account the elimination of the profits within the group, and the relevant fair value at the date of the financial statement.
3.1) Inventory
2010 Amount to
2009
Change
39,081
37,131
1,950
11,071
10,673
398
9,961
8,521
1,440
and can be broken down as follows: Raw, ancillary and consumable materials Unfinished and semi-finished goods and work in progress Finished products and goods for resale Total
18,049
17,937
112
39,081
37,131
1,950
Inventory is indicated at the lower between the purchase or production cost and the estimated net sale value, as indicated in point 3.1 of the valuation criteria.
3.2) Trade receivables
2010
2009
61,394
Amount to
Change
67,432
(6,038)
and refer to: 2010
2009
Amount
%age
Amount
%age
Active customers receivables
45,775
100.0
58,185
100.0
– Bad debt provision
(3,648)
(8.0)
(3,814)
(6.6)
= Net active customers receivables
42,127
92.0
54,371
93.4
2,239
100.0
2,994
100.0
(1,818)
(81.2)
(1,898)
(63.4)
421
18.8
1,096
36.6
17,277
100.0
10,354
100.0
Bad debt – Bad debt provision = Net bad debt Receivables from subsidiaries Receivables from affiliates
1,569
100.0
1,611
100.0
Total face value of receivables
66,860
100.0
73,144
100.0
– Bad debt provision
(5,466)
(8.2)
(5,712)
(7.8)
Net trade receivables
61,394
91.8
67,432
92.2
The bad debt provision for active customers receivables is calculated based on historic results. The bad debt provision for defaulting accounts is measured with a specific analysis of each account. As of December 31, 2010 receivables for approximately 15.2 million euro were factored “without recourse” to a primary financial institution. Trade receivables by geographical area are shown in the table below: Italy Towards customers Towards subsidiaries Towards affiliates Net trade receivables Financial Statements of the Company
26,006 5,023
Other European North America Countries 15,797 827 12,207
45
Other Countries
Asia
Total
1,815
3,569
48,014
2
=
17,277
1,569
=
=
=
=
1,569
32,598
28,004
872
1,817
3,569
66,860
127
Balance Sheet
[Notes to the Company's financial statements] Trade receivables due from subsidiaries refer to: 2010 Novà Mosilana a.s.
5,243
173
145
28
45
9
36
2
1
1
343
65
278
=
24
(24)
4,176
3,089
1,087
504
230
274
17,277
10,354
6,923
Marzotto Textiles USA Inc. Marzotto Int. Trading Shanghai Ambiente Energia S.r.l. Immobili e Partecipazioni S.p.A. Linificio Group Total
Change
6,791
AB Liteksas
F.lli Tallia di Delfino S.p.A.
2009
12,034
Trade receivables due from affiliates refer to: 2010
2009
Change
Filivivi Group
786
1,611
Ratti Group
783
=
783
1,569
1,611
(42)
Total
3.3) Other receivables
2010 Net balance
2009
4,304
(825)
Change
3,914
390
made up as follows
128
Due from Tax Authorities
2,760
1,840
920
Other receivables
1,073
1,712
(639)
Accrued income and prepaid expenses Total
471
362
109
4,304
3,914
390
Receivables due from Tax authorities refer to: 2010 Added value tax Income taxes IRAP
Change 182
(89)
373
373
=
1,800
963
837
35
35
=
=
2
(2)
Interest due Credits for taxes withheld Other items Total
2009 93
459
285
174
2,760
1,840
920
Other receivables refer to: 2010
Change
395
479
Due from employees
361
406
(45)
Other receivables
317
827
(510)
1,073
1,712
(639)
Total
Financial Statements of the Company
2009
Due from State pension funds
(84)
[Notes to the Company's financial statements] 3.4) Short term financial assets and cash and cash equivalents
2010
2009
Change
149,555
111,045
38,510
Due from subsidiaries
9,658
14,369
(4,711)
Due from affiliates
4,452
4,000
452
Other financial receivables
1,399
5
1,394
134,035
92,664
41,371
11
7
4
149,555
111,045
38,510
Amount to and refer to: Financial assets
Cash Bank and post-office accounts Cash and cash equivalent on hand Total
Financial receivables due from subsidiaries refer to: 2010 Marzotto Textile N.V. Novà Mosilana a.s.
2009
Change
61
597
(536)
2,395
4,125
(1,730) (92)
Marzotto Textiles USA Inc. Ambiente Energia S.r.l. Immobili e Partecipazioni S.p.A.
23
115
209
=
209
=
3,587
(3,587)
F.lli Tallia di Delfino S.p.A.
6,970
5,945
1,025
Total
9,658
14,369
(4,711)
Financial receivables due from subsidiaries include giro accounts held at market conditions. 129
Financial receivables due from affiliates refer to: 2010 Filivivi S.r.l. Mediterranean Wool Industries Co. S.A.E. Total
2009
Change
4,000
4,000
=
452
=
452
4,452
4,000
452
Financial receivable due from Filivivi S.r.l. refers to a shareholders’ loan. Other financial receivables refers for 1,394 k euro to the financial receivable due from Immobili e Partecipazioni S.p.A. The item Bank and post office accounts includes liquidity investments in banks for 125,000 k euro.
Financial Statements of the Company
Balance Sheet
4. Net shareholders’ equity
[Notes to the Company's financial statements] Below are the comments on the main items of Shareholders’ equity and the relevant changes:
Share Capital Number of Shares
Share capital
Share capital
Share capital
Share capital
at 12.31.2009
increase
decreasse
at 12.31.2010
Ordinary shares Total
123,817,451
159,596
(58,972,000)
65,005,047
123,817,451
159,596
(58,972,000)
65,005,047
As of December 31, 2010 the share capital, fully subscribed and paid up, consists of shares with a nominal value of 1 euro each. On December 22, 2009 the Extraordinary Shareholders’ meeting of Marzotto S.p.A. approved a paid increase of the share capital, at par and indivisible, from euro 73,986,302 to euro 123,977,047, equal to euro 49,990,745, by issuing 49,990,745 new ordinary shares with a par value of 1 euro each, all bearing the same characteristics of the existing shares. The resolution was recorded at the Milan’s Companies Register on December 29, 2009. The increase was fully paid by the shareholder Wizard S.r.l. on December 22, 2009 and therefore the share capital of the Parent Company went from euro 73,986,302 to euro 123,817,451. On February 15, 2010 the option period ended, following which 24,005 Marzotto shares were subscribed by minority shareholders. Since some shareholders exercised their pre-emption rights on unopted shares, on February 24, 2010 the remaining 135,591 shares were paid up and therefore, the share capital of the Parent Company is, as of that date, euro 123,977,047 (fully paid). On June 24, 2010 a demerger deed was executed at Marzotto S.p.A. for the transfer of the total shareholding in Immobili e Partecipazioni S.p.A. to a newly incorporated company, named “Nuova Immobiliare S.p.A.”, owned by the same Shareholders of Marzotto S.p.A. The demerger deed became effective on 1st July 2010. On the same date, the share capital of the demerged company Marzotto S.p.A. was subsequently decreased, from 123,977,047 euro to 65,005,047 euro (and therefore for 58,972,000 euro), by cancelling the corresponding number of shares, and subsequently amending the By-laws of the demerged company.
130
Revaluation reserves Balances equity as at December 31, 2009 scission 01/07/2010
9,537 (3,180)
Total
6,357
The revaluation performed in 2005 pursuant to Law 266/05, for the amount of 3,184 k euro net of alternate tax, was recognized for tax purposes only and at the end of the year, due to disposals, it is 2,732 k euro. Legal reserve Balances equity as at December 31, 2009
14,797
+/- change Total
203 15,000
During the year the Legal Reserve included part of the 2009 profit (203 k euro). To face exchange rate risks involved in purchases and sales in other currencies, the company carries out operations to establish in advance the exchange rates on estimated volumes (cash flow hedging). In particular, the Group uses the following instruments: x foreign currency loans; x forward sales and purchases in foreign currency; x foreign currency options at fixed exchange rates. The reserve includes the fair value of these transactions, net of the effect of taxes (234 k euro), for the part not allocated to the Income statement.
Financial Statements of the Company
[Notes to the Company's financial statements] Other reserves
2010
2009
Change
Reserve viz. art. 55 Pres. Decree 917/86
88
133
Capital grants
62
62
=
563
844
(281)
Realignment reserve viz. Law 342/2000
(45)
FTA reserve
(239)
(239)
=
Capital contribution reserve
7,015
7,015
=
Profits carried forward Total
20,236
12,872
7,364
27,725
20,687
7,038
The Capital contribution reserve refers to the transfer of the business unit of the Treatment plant in Schio (VI) to Ambiente Energia S.r.l. (1st July 2009).
Civil and tax regulations to which share capital and reserves outstanding at December 31, 2010 are subject to, in case of reimbursement
Description
Capital
Capital and
Total amount
reserves which
reserves which
of reserves
represent
are not income
and undistributed
income
for the Company
profits
for the Company
or Shareholder
131
Total
Share capital
=
1,326
63,679
Monetary revaluation reserve
=
6,357
=
6,357
15,000
=
=
15,000
(530)
=
=
(530) 88
Legal reserve Fair value reserve Reserve viz. art. 55 Pres. Decree 917/86 Capital grants Realignment reserve viz. art. 14 Law 342/2000
65,005
=
88
=
62
=
=
62
=
563
=
563
FTA reserve
(239)
=
=
(239)
Capital contribution reserve
7,015
=
=
7,015
Profits carried forward Total
Capital and reserves with tax constraints
4,099
=
20,236
12,433
63,679
113,557
The equity constraint as at December 31, 2010 can be broken down as follows: x x
Capital and reserves with statutory constraints
16,137 37,445
the equity constraint for IRES purposes amounts to 2,036 k euro, consisting of the tax reversal made in 2004 and higher tax amortization than accounting amortization in 2007; the equity constraint for IRAP purposes amounts to 2,782 k euro, consisting of (I) the tax reversal made in 2004, (II) the accelerated depreciation deducted for tax purposes in previous tax periods offbalance sheet and later shown in a net equity reserve for the purpose in suspension of taxes solely for IRAP purposes, and (III) higher tax amortization than accounting amortization in 2007.
The constraint on the use of capital and reserves at December 31, 2010 pursuant to article 2445 of the Italian Civil Code, amounts to 75,461 k euro and includes 65,005 k euro in share capital, 6,537 k euro in revaluation reserves, and 4,099 k euro in Profits carried forward. The constraint on use as per article 2430 of the Italian Civil Code regards the entire legal reserve, amounting to 15,000 k euro at December 31, 2010. The reserves and retained and constrained earnings as per articles 6 and 7 of Legislative Decree 38/2005 (IAS/IFRS reserves) amount to -55 k euro.
Financial Statements of the Company
Balance Sheet
[Notes to the Company's financial statements]
5.1) Long-term provisions
Amount to
2010
2009
26,700
Change
39,825
(13,125)
and refer to:
Provision for staff termination indemnities
2010
2009
10,392
Amounts to
Change
11,020
(628)
the change is due to: Accrual in income statement
2,417
2,294
123
Disbursements for terminations
(732)
(1,545)
813
Disbursements for advances
(256)
(351)
95
0.50% contributions on accruals for the year
(142)
(121)
(21)
Transfer to other reserves/other companies
(1,743)
(1,923)
180
(45)
(42)
(3)
Adjustment as per IAS 19
(127)
35
(162)
Total
(628)
(1,653)
1,025
Transfer to tax authorities for personal income taxes ("IRPEF")
The debt for Staff termination indemnities as of December 31, 2009 was calculated considering he results of the application of the method required by IAS 19 (future inflation rate 2.0%, discount rate 4.3%).
Pension
2010
Amounts to
132
2009
1,371
Change
1,423
(52)
The provision refers to a supplementary retirement fund set up in favour of a former director of the Parent company. The fund is calculated by taking the current value of the life annuity based on actuarial tables in use.
2010
2009
due to
Change
Other provisions Amount to
Accrual 14,937
27,382
Utilization
(12,445)
1,915
(14,360)
and refer to: Agents' severance pay provision
3,456
3,481
(25)
85
(110)
Legal risk fund
3,987
4,879
(892)
=
(892)
Restructuring and relocation provisions
513
444
69
300
(231)
Tax provisions
1,474
14,566
(13,092)
=
(13,092)
Other provisions for risk/charges
5,507
4,012
1,495
1,530
(35)
The agents’ indemnity reserve has been allocated to cover potential liabilities from the termination of agency contracts. The reserve was adjusted to take into account foreseeable potential liabilities in connection with contracts outstanding at the end of the financial year. The litigation risk reserve is allocated to cover liabilities that may arise from litigation or other disputes. It includes an estimate of charges from litigation arising during the year and a provision for the estimate of cases which arose in previous years, updated based on the indications of our internal and external legal experts. The restructuring and relocation provisions are allocated mainly to offset planned charges and costs related to the industrial reorganization plan of some production operations. The tax reserve includes provisions to cover potential losses by the company that may arise from tax liabilities.
Financial Statements of the Company
[Notes to the Company's financial statements] In reference to the dispute following the audit notice issued in December 1996 by the Inland Revenue Valdagno Office for alleged irregularities in the tax treatment of the 1990 acquisition of usage rights of shares as of December 31, 2009 a provision for 13,092 k euro had been set aside. Following the second decision of the Regional Tax Commission in Venice on September 21, 2010, the above mentioned provision was utilized in compensation of the recognition of the Due to Tax Authorities for 16,240 k euro. The difference refers to the new calculation of the tax payable (capital, penalty and interest). Likewise, as already mentioned, following demerger agreements in 2005, there’s an amount receivable from Valentino Fashion Group S.p.A. in the amount of 10,943 k euro. The reserve for other risks and charges includes, among other items, foreseeable risks on operations carried out by the company Aree Urbane S.r.l.
Praia a Mare
Between 1999 and 2001, some former employees and heirs of former employees at the Company’s Praia a Mare plant filed a motion with the Attorney General through the Court of Paola, seeking criminal action against the persons in charge of the plant from the Seventies through 2004, allegedly for functional omissions that, because of work safety conditions there, would have been the cause of death and serious health problems to some employees and in reference to the are outside the factory, would have caused its pollution and contamination. After the Judge of the Court of Paola rejected two requests by the Examining Judge to close the case, in October 2009 the prosecution issued 14 notices of completion of the preliminary investigations, and their notification was repeated in February 2010. As of today the Company, with the favorable opinion of a reputable law firm, believes that compensation claim for damages in favor of a third party will not be assessed. Some former employees or heirs of former employees as indicated above, in October 2006 and in 2008, have also begun civil proceedings against the Company asking for compensation for the alleged damages due to work-related illnesses. As of today the disputes are at various progress levels since the claims were made subsequently. In any case, the technical appraisals so far completed, examined by technical experts and legal counsels for the Company, appear to exclude, so far, any particular liability of the Company in 133 the reported illnesses. For none of the claims has been made any further preliminary investigation and therefore, save any different assessment following the investigations that are still underway, there are no objective element that lead us to believe the Company may suffer any liability. Following an ordinance of the mayor of Praia a Mare in January 2007, Marzotto S.p.A. was supposed to begin a series of characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have been suspended pending cautionary proceedings. As things stand, the costs for the possible soil reclamation are estimated anyway to be less than the possible sale value of the affected area.
Financial Statements of the Company
Balance Sheet
5.2) Other medium-long term payables
[Notes to the Company's financial statements] 2010
2009
Change
22
Amount to
39
(17)
refer to:
5.3) Deferred taxes payables
Payables due to social security institutions
22
39
(17)
Total
22
39
(17)
2010 Amount to
2009
Change
1,258
1,355
(97)
1,258
1,290
(32)
and can be broken down as follows: Tangible and intangible assets differences Other temporary differences Total
=
65
(65)
1,258
1,355
(97)
This item includes deferred taxes reported by the Company, mainly attributable to the difference between depreciation and amortization based on tax rates and on the useful life of the asset. The change is attributable to 40 k euro in provisions, 136 k euro in utilizations for the year, and -1 k euro to adjust the final tax balance to income tax statements, to tax rates changes and other changes.
5.4) Medium/long term financial payables
2010
2009 11
Amount to
Change
66,786
(66,775)
and can be broken down as follows:
134
Secured financing received
=
=
=
Non-secured financing received
=
66,755
(66,755)
Due to other lenders
11
31
(20)
Total
11
66,786
(66,775)
As of December 31, 2010 there’s no financing due beyond 12 months. The item Due to other lenders medium/long-term refers to interest-bearing security deposits.
6.1) Trade payables and other payables
2010
2009
Change
109,140
76,947
32,193
Trade payables
47,588
37,020
10,568
Trade payables due to subsidiaries
28,358
20,876
7,482
Trade payables due to affiliates
607
410
197
Advance payments received
511
347
164
Amount to and can be broken down as follows:
Payables due to Inland Revenue
19,323
4,058
15,265
Payables due to social security institutions
2,410
2,471
(61)
Payables due to employees
7,924
7,083
841
Other payables
1,833
722
1,111
130
2,147
(2,017)
=
923
(923)
Other payables due to affiliates
347
807
(460)
Accrued liabilities and deferred income
109
83
26
109,140
76,947
32,193
Other payables due to parent companies Other payables due to subsidiaries
Total
Trade payables are due within the year and pertaining to debts for the purchase of goods and services.
Financial Statements of the Company
[Notes to the Company's financial statements] Trade payables due to subsidiaries refer to: 2010 Novà Mosilana a.s.
2009
Change
25,757
19,404
387
308
79
Marzotto International Trading (Shanghai) Co. Ltd
90
80
10
Marzotto Textiles USA Inc.
45
96
(51)
Immobili e Partecipazioni S.p.A.
=
2
(2)
Ambiente Energia S.r.l.
1
1
=
1,729
764
965
AB Liteksas
F.lli Tallia di Delfino S.p.A. Linificio Group Total
6,353
349
221
128
28,358
20,876
7,482
Amounts due to affiliates refer to: 2010 Ratti Group Mascioni S.p.A.
2009
Change
86
=
86
1
1
=
Filivivi Group
520
409
111
Total
607
410
197
Advance payments from customers are payments in advance received from customers on supplies. Payables due to Tax Authorities can be broken down as follows: 2010
2009
Change
135
Regional manufacturing tax
1,414
2,101
(687)
Withholding taxes
1,300
1,541
(241)
351
399
(48)
Other amounts due
16,258
17
16,241
Total
19,323
4,058
15,265
Regional IRPEF surcharge
The item Other amounts due to Tax Authorities refers for 16,240 k euro to the amount payable following the 2nd decision of the Regional Tax Commission (CTR) of Venice (fourth degree) issued on September 21, 2009 on “Dividend Stripping”. As already explained, following the demerger agreements of 2005, an amount receivable from Valentino Fashion Group S.p.A. for 10,943 k euro has been entered.
Payables due to social security institutions refer to: 2010 INPS for current taxes
2009
Change
1,938
1,977
(39)
INPS early pensions and redundancy
46
87
(41)
ENASARCO for current taxes
10
19
(9)
416
388
28
2,410
2,471
(61)
Due to other institutions Total
Amounts due to social security institutions reflect non-matured positions at the end of the financial year, regularly paid upon maturity. The item Due to other Institutions includes amounts due to Supplementary retirement funds.
Financial Statements of the Company
Balance Sheet
[Notes to the Company's financial statements] Payables due to employees can be broken down as follows: 2010 December salaries paid in January
2009
Change 333
1,734
1,401
66
=
66
Deferred salaries for vacation days accrued and not taken
1,772
1,534
238
Deferred salaries for other deferrals
4,303
4,097
206
49
51
(2)
7,924
7,083
841
Staff termination indemnities paid after year-end
Other items Total
Other payables refer to: 2010
2009
Change
Down payments
118
131
(13)
Other payables due to parent companies
130
2,147
(2,017)
Other payables due to subsidiaries Other payables due to affiliates Other amounts due to third parties Total
=
923
(923)
347
807
(460)
1,715 2,310
591
1,124
4,599
(2,289)
The item Other payables due to parent companies refers to the amount payable towards the Parent company Wizard S.r.l. for the domestic tax consolidation. The item Other payables due to subsidiaries referred to F.lli Tallia di Delfino S.p.A. for 900 k euro following the failure to exercise its option right by the minority shareholder Appia S.r.l. and the subsequent decision not to exercise its pre-emption rights by Marzotto S.p.A., the amount payable to F.lli Tallia di Delfino S.p.A. has been off-set with the line item Shareholdings (refer to point 1.5 of these notes).
136
The item Other payables due to affiliates refers to Filivivi S.r.l. (tax transparency). Other amounts due to third parties include 848 k euro of fair value on forward agreements and 400 k euro payable to Appia S.r.l., to off-set the payables/receivables between Marzotto S.p.A., F.lli Tallia di Delfino S.p.A. and Appia S.r.l. as provided for by the mentioned private deed.
6.2) Short-term financial payables
2010 Amount to
2009
203,456
Change
110,335
93,121
and can be broken down as follows: Trade advance payments received Non-secured financing received Payables due to subsidiaries Total
3,652
2,961
691
187,257
88,982
98,275
12,547
18,392
(5,845)
203,456
110,335
93,121
Financial payables due to subsidiaries refer to: 2010 AB Liteksas Ambiente Energia S.r.l. Linificio Group Total
Financial Statements of the Company
2009
Change
4,176
6,952
(2,776)
=
315
(315)
8,371
11,125
(2,754)
12,547
18,392
(5,845)
[Notes to the Company's financial statements] Net financial position
2010
2009
(34,018)
(46,193)
12,175
19,894
19,883
11
149,555
111,045
38,510
(11)
(66,786)
66,775
6.2 Short-term financial payables
(203,456)
(110,335)
(93,121)
Total
(34,018)
(46,193)
12,175
Amount to
Change
and can be broken down as follows: 1.8 Medium-long term financial receivables 3.4 Short-term financial assets and cash and cash equivalents 5.4 Medium-long term financial payables
The improvement of the net financial position is due self-financing flows and also to operations of receivables assignment carried out during the year.
Contractual commitments and guarantees (Memorandum Accounts)
Memorandum accounts and commitments at December 31, 2010 are commented below: “Guarantees to third parties” were given to: x in favor of the affiliated company Filivivi S.r.l. for 10,000 k euro: the line of credit has not been used; x in favor of other Affiliates as a guarantee for financing received for 1,650 k euro; x in favor of the Company as a guarantee for service contracts for 6 k euro and for miscellaneous securities for 60 k euro.
The “Guarantees received from third parties” were given in favor of the Company to cover trade receivables (303 k euro), service agreements (123 k euro) and miscellaneous securities (594 k euro).
The “Foreign currency/interest rates hedging contracts” refer to contracts for term purchase for 42,154 k euro and contracts for term sale for 13,391 k euro. As of December 31, 2010 the off-balance sheet commitments for contracts for the term sale of foreign currency (on receivables, orders received and future orders) were 12.250 million US dollars, for a total value of 9,056 k euro, 1.750 million British pounds, for a total value of 2,037 k euro, 280 million Japanese yen, for a total value of 2,298 k euro. Contracts for the term purchase of foreign currency were 1,045 million Czech crowns, for a total value of 41,443 k euro and 1 million Australian dollar for a total value of 711 k euro. The fair value of the contracts for the term sale and purchase of foreign currency at the end of the period, negative and equal to 264 k euro, was established based on the quotes given by the banks.
Financial Statements of the Company
137
Income statement
[Notes to the Company's financial statements]
7. Net revenues
Net revenues by sector are detailed below: 2010 Textile Sector Others Cancellations/adjustments Total
2009
% change
202,562
169,984
19.2
10,156
11,052
(8.1)
(5,607)
(6,116)
(8.3)
207,111
174,920
18.4
Operating sectors’ revenues include invoices for raw materials and semi-finished goods to the subsidiaries Novà Mosilana a.s. and AB Liteksas, which they transformed into finished goods. The item Net revenues includes the following other income: Other income
2010
2009
% change
15,792
13,556
16.5
1,167
1,469
(20.6)
=
=
=
Other revenues and miscellaneous income
14,625
12,087
21.0
Total
15,792
13,556
16.5
Amounts to and refers to: Real estate income Contribution to operating expenses
The item Other revenues and miscellaneous income mainly refers to the sale of semi-finished goods, manufacturing, and other ordinary services provided.
138
8. Cost of goods sold
2010 Amounts to
2009
% change
(169,343)
(148,634)
13.9
and refers to: (53,651)
(38,428)
39.6
Third party production
Raw materials consumption
(8,619)
(7,138)
20.7
In house manufacturing
(34,803)
(32,035)
8.6
Purchase of finished and semi-finished products
(63,601)
(50,503)
25.9
1,553
(6,695)
+100.0
402
(2,295)
+100.0
(10,624)
(11,540)
(7.9)
(169,343)
(148,634)
13.9
Change in stock of finished and semi-finished products Commercial exchange rate differences Other logistic and industrial costs Total
Trade exchange rate differences are detailed below: Commercial exchange rate differences Amounts to
2010
2009
% change
402
(2,295)
366
102
(879)
(16)
n.c.
and refers to: Exchange rate on cash from customers in foreign currency Exchange rate on payments to suppliers in foreign currency Exchange rate on the extinguishing of trade financing in foreign currency Total
Financial Statements of the Company
915
(2,381)
402
(2,295)
n.c.
10. Marketing and product development costs
Amount to
2010
2009
(24,494)
(23,754)
% change 3.1
(6,978)
(5,663)
23.2
and refer to: Variable sales costs Losses and write-down of trade debtors, business information
(1,261)
(982)
28.4
Product research and development
(8,625)
(9,307)
(7.3)
Advertising, marketing and public relations
(1,683)
(1,950)
(13.7)
Other fixed sales and marketing costs
(5,947)
(5,852)
1.6
(24,494)
(23,754)
3.1
Total
11. General and administrative costs
Amount to
12. Other income and charges
Amount to
2010
2009
(14,054)
(13,548)
% change
2010
2009
3.7
% change
(820)
31,762
1,744
3,560
=
30,055
n.c.
and refer to: Other income Disposal of tangible and intangible assets Net capital gain on transfer Contingent assets
850
471
Use of the relocation/restructuring reserve
232
589
Other income Total other income
132
18
2,958
34,693
139
Other charges Disposal tangible and intangible assets
(10)
(44)
Contingent liabilities
(418)
(169)
Extraordinary charges for industrial plan
(646)
(1,106)
Allocation to restructuring and relocation fund
(300)
=
(83)
(950)
Other social operations Charges "Dividend Stripping" Allocation to legal risk fund and future charges Other charges Total other charges Total
(968)
=
(1,106)
(502)
(247)
(160)
(3,778)
(2,931)
(820)
31,762
n.c.
The item refers mainly to non-recurring charges and income. Extraordinary business plan charges are mainly attributable to the cost of reorganization and efficiency production departments. The net capital gain following the transfer refer to the non-core real estate assets transferred to Immobili e Partecipazioni S.p.A. (on 1st October 2009).
13. EBIT
2010 Amounts to
2009
% change
(1,600)
20,746
n.c.
646
(9,574)
n.c.
and refers to: Textile Sector
Financial Statements of the Company
Other Activities
(2,246)
30,320
n.c.
Total
(1,600)
20,746
n.c.
Income statement
[Notes to the Company's financial statements] Below are the details on labour costs and depreciation and amortization included in the EBIT calculation.
Labour costs
Amounts to
2010
2009
% change
(41,604)
(40,103)
3.7
5.1
and refers to: (29,095)
(27,691)
Social security contributions
Wages and salaries
(9,217)
(8,847)
4.2
Staff termination indemnities
(2,342)
(2,294)
2.1
Pension funds and similar liabilities Other labour costs
(82)
(84)
(2.4)
(868)
(1,187)
(26.9)
The number of active employees had the following trend: Average 12.31.2010
12.31.2009
% change
2010
2009
% change
Blue-collar workers
649
660
(1.7)
654
697
(6.2)
White-collar workers
291
282
3.2
289
294
(1.7)
26
25
4.0
26
23
13.0
966
967
(0.1)
969
1,014
(4.4)
Managers Total
Total labour cost increased by 3.7% and the average staff decreased by 4.4%. Year-end staff decreased by 0.1%.
140
Annual per employee labour costs for workers increased in consequence of contract renewals during the year.
Amortization was as follows: Amortization and depreciation Amount to
2010 (4,971)
2009 (6,096)
and refer to: amortization of intangible fixed assets depreciation of tangible fixed assets
Financial Statements of the Company
(313)
(383)
(4,658)
(5,713)
% change (18.5)
[Notes to the Company's financial statements] 14. Financial charges, net
2010 Amount to
2009
% change
(1,617)
(2,230)
(27.5)
190
570
(66.7)
70
305
(77.0)
1,523
1,030
47.9
45
9
>100.0
1,828
1,914
(4.5)
and refer to: Financial income Interest received from subsidiaries Interest received from affiliates Interest received from banks Other financial income Total financial income Financial charges Interest payable to subsidiaries
(236)
(302)
(21.9)
(2,663)
(3,476)
(23.4)
Bank services
(373)
(241)
54.8
Other financial charges
(173)
(125)
38.4
Total financial charges
(3,445)
(4,144)
(16.9)
Total
(1,617)
(2,230)
(27.5)
Interest payable to banks
Interest received from subsidiaries are detailed as follows: 2010 Amount to
2009
% change
190
570
(66.7)
26
7
> 100.0 (12.7)
and can be broken down as follows: Immobili e Partecipazioni S.p.A. F.lli Tallia di Delfino S.p.A.
145
166
Ambiente Energia S.r.l.
=
1
n.c.
Marzotto Textile N.V.
4
7
(42.9)
14
383
(96.3)
1
6
(83.3)
190
570
(66.7)
Novà Mosilana a.s. Marzotto Textiles USA Inc. Total
Interest received from affiliates: 2010 Amount to
2009
% change
70
305
(77.0)
=
171
n.c.
and can be broken down as follows: Aree Urbane S.r.l.
Financial Statements of the Company
Filivivi S.r.l.
70
134
(47.8)
Total
70
305
(77.0)
141
Income statement
[Notes to the Company's financial statements] Interest payable to subsidiaries: 2010 Amount to
2009
% change
(236)
(302)
(21.9)
n.c.
and can be broken down as follows: Immobili e Partecipazioni S.p.A.
=
(4)
Novà Mosilana as
(5)
=
n.c.
Ambiente Energia S.r.l.
(6)
=
n.c.
(144)
(152)
(5.3)
(81)
(146)
(44.5)
(236)
(302)
(21.9)
Linificio Group AB Liteksas Total
15. Dividends from shareholdings
2010 Amount to
2009
9,539
% change
10,005
(4.7)
and refer to: Dividends from subsidiary companies Marzotto Textile N.V.
9,536
=
=
10,000
=
=
Linificio e Canapificio Nazionale S.p.A. Dividends from affiliated companies Mascioni S.p.A. Dividends from other companies Emittente Titoli S.p.A. Total dividends
3
5
9,539
10,005
(4.7)
142
17. Other financial income and charges
2010 Amount to
2009
(4,141)
% change
(15,430)
(73.2)
and refer to: Capital gain shareholding Emittenti Titoli S.p.A. Discount of receivable from Aree Urbane S.r.l. Fair value of exchange rates forward operations without an underlying amount Adjustement TFR IAS 19
102
=
=
(1,227)
(602)
(311)
(5)
(65)
(3,636)
(3,725)
Write-down shareholding Linificio e Can. Nazionale S.p.A.
=
(7,274)
Write-down shareholding Aree Urbane S.r.l.
=
(2,828)
(4,141)
(15,430)
Write-down shareholding F.lli Tallia di Delfino S.p.A.
Total
(73.2)
This item includes the fair value of forward hedging on exchange rates in relation to operations for which there is no longer the same underlying amount (due to a projected decrease in orders and changes in the mix of currencies of ordered goods from foreign currency to euro). The write-down of the shareholding in F.lli Tallia di Delfino S.p.A. is due to the lasting loss of value of the company (see point 1.5).
Financial Statements of the Company
[Notes to the Company's financial statements] 19. Income taxes
2010
2009 972
Amount to
% change
(9,027)
>100.0
and refer to: Current taxes
(1,759)
(7,340)
971
(2,012)
Deferred taxes receivable Deferred taxes payable Previous years taxes Total
(47)
145
1,807
180
972
(9,027)
>100.0
Estimated taxes for 2010 are 972 k euro, in consequence of the registration of deferred taxes receivable and previous year taxes. The amount for Previous years taxes refers mainly to the utilization of tax losses carried forward, recognized through the domestic tax consolidation, on which no taxes had been set aside as a prudent assessment of the Directors. The reconciliation of the theoretical tax rate with the effective tax rate on income before taxes is set out in the table below. 2010 Amount Pre-tax profit
2009 %age
Amount
2,181
%age
13,091
Theoretical taxes
(600)
(27.5)
(3,600)
(27.5)
Taxes for exempt dividends
2,492
114.3
2,614
20.0
Taxes on deductible interest paid Write-off of non-deductibles World Domestic Consolidation IRAP
(456)
(20.9)
(909)
(7.0)
(1,000)
(45.9)
(3,802)
(29.1)
553
25.4
1,094
8.4 143
(1,351)
(61.9)
(2,101)
Previous years taxes
1,807
82.8
180
1.4
Taxes for other differences
(473)
(21.7)
(2,503)
(19.1)
972
44.6
(9,027)
(69.0)
Total taxes
(16.1)
In 2009 IRAP included tax calculated on the capital gain from the transfer of the non-core real estate assets to Immobili e Partecipazioni S.p.A.
Financial Statements of the Company
Other information Risks management (IFRS 7)
[Notes to the Company's financial statements] Credit risk Credit risk is the risk that a customer or one of the parties in a financial instrument may cause a financial loss by not complying with its obligation and it pertains mainly to trade receivables and financial investments of the Company. x
Trade receivables The credit risk is partly essentially reduced considering the type of customers, which are diversified and not significantly concentrated in the new outlet markets. The risk is handled through an insurance coverage policy managed by a specific function in the company, together with the sales organizations. The Company also uses on a regular basis specialized agencies to obtain business information and to know in detail the geographical areas served.
x
Financial investments The Company limits its exposure to credit risk by investing exclusively in high liquidity securities and only with high credit rating parties.
The book value of financial assets represents the maximum exposure of the Group to the credit risk. At the end of the year the exposure was as follows: 2010
2009
Financial assets held for sale
=
=
Financial assets at fair value carried in the income statement
=
=
96,612
100,128
149,555
111,045
Financing and credits Cash and cash equivalent Other
164
183
Total
246,331
211,356
The trade receivables aging at the date of the financial statements was:
144
2010 gross Current
2009 fund
gross
fund
39,952
(3,139)
49,817
Overdue from 0 to 90 days
6,477
(509)
8,388
(535)
Overdue over 90 days
1,585
(1,818)
2,974
(1,898)
48,014
(5,466)
61,179
(5,712)
Total
(3,279)
The information on guarantees given and received is contained in the section Contractual commitments and guarantees (memorandum accounts). The information on the provisions for bad debt is indicated in the note 3.2). Liquidity risk The liquidity risk is the risk that the Company cannot meet the obligations arising out of financial liabilities. The Company however believes that the current debt structure and level, the available financial resources (deposits) and the unused bank loans, they all limit the negative effects of possible difficulties in obtaining credit. The contract due dates of the financial liabilities are indicated in the relevant notes.
Financial Statements of the Company
[[Notes to the Company's financial statements] Market risk Market risk is the risk that the fair value or the future cash flows of a financial instrument might change following variations in the market prices, of exchange rates, tax rates or quotations of the instruments representing the capital. x
Exchange rate risk Considering the Company’s exposure to exchange rates fluctuations in foreign currency operations, we carry out hedging operations to determine the exchange rate based on estimates of sales and purchases volumes and the currency exchange rate considered when the price lists are prepared. Specifically, the Group uses the following hedging instruments: foreign currency loans; forward sales and purchases in foreign currency; foreign currency options at fixed exchange rates. These hedging instruments are agreed upon with highest rated banks. The Company does not enter into forward or optional exchange rate contracts for speculative purposes. The hedged cash flows are expected within the financial year. With reference to the most significant currencies, the table below shows the Company exposure to the exchange rate risk at the date of the financial statements. 2010 Usd
2009 Czk
Usd
Czk
Trade receivables
7,119
298,620
3,611
175,604
Short term financial assets and cash and cash equivalents
2,883
60,462
164
108,907
(2,972)
(637,028)
(2,062)
(502,902)
7,030
(277,946)
1,713
(218,391)
Trade payables Total
x
Interest rate risk The Company’s borrowing is mostly concentrated on variable tax rate. Considering the present financial structure and debt level of the Company, in case of an increase in the tax rate within the limits of the range that we can expect at the moment (0.5%) it would not significantly affect the group (in theory, in 2010, it would have involved higher net financial charges for approximately 170 k euro). The effects of the recent problems in the banking system could be a potential risk factor in reference to the cost of financing. The Company monitors constantly this potential risk.
Other risks The risk of price increase for raw materials, if significant, is analyzed when the price lists are prepared. At that same time, the net demand generated by the purchase budget are covered as much as possible by placing the orders with the suppliers, in order to minimize the effect on the income statement should the raw materials costs increase during the year. Considering the type of production and the financial structure, there are no other significant risks.
Financial Statements of the Company
145
Other information
Related parties
[[Notes to the Company's financial statements] It is in the economic interest of the single participating entities to carry out operations with related parties. All relations with subsidiaries, affiliated companies and related parties, both those relating to the exchange of goods and services, and to financial operations, are governed by normal market conditions. The relations with subsidiary and affiliated companies are shown in the financial statements and the relevant notes. The data referring to the analysis of the relation with subsidiary and affiliated companies are shown in the tables below:
Receivables and payables existing with Group Companies as at 31 December 2010 Receivables Company
Trade
F.lli Tallia di Delfino S.p.A.
Other
Total
Trade
Other
Financial
Total
4,176
=
6,970
11,146
1,729
=
=
343
=
209
552
1
=
=
1
=
=
61
61
=
=
=
=
12,034
=
2,395
14,429
25,757
=
=
25,757
173
=
=
173
387
=
4,176
4,563
2
=
=
2
90
=
=
90
45
=
23
68
45
=
=
45
504
=
=
504
349
=
8,371
8,720
Filivivi Group
786
=
4,000
4,786
520
348
=
868
Ratti Group
783
=
=
783
86
=
=
86
Mascioni S.p.A.
=
=
=
=
1
=
=
1
Aree Urbane S.r.l.
=
=
19,840
19,840
=
=
=
=
Ambiente Energia S.r.l. Marzotto Textile N.V. Novà Mosilana a.s. AB Liteksas Marzotto Int. Tr. Shanghai Co. Ltd Marzotto Textiles U.S.A. Inc. Linificio Group
146
Payables
Financial
1,729
Mediterranean Wool Ind. Co. S.A.E.
=
=
452
452
=
=
=
=
Wizard S.r.l.
=
=
=
=
=
130
=
130
18,846
=
33,950
52,796
28,965
478
12,547
41,990
Total
Revenues, income, costs and charges with the Group Companies for the year 2010 Revenues and other income Company
Products
F.lli Tallia di Delfino S.p.A.
Services
Finance
Costs and charges Total
Products
Services
Finance
Total
5,735
2,628
145
8,508
2,068
758
=
2,826
Ambiente Energia S.r.l.
5
280
=
285
=
2
6
8
Marzotto Textile N.V.
=
=
4
4
=
=
=
=
Novà Mosilana a.s.
34
1,432
14
1,480
41,112
164
5
41,281
AB Liteksas
49
51
=
100
1,777
1
81
1,859
=
=
=
=
=
90
=
90
41
=
1
42
=
299
=
299
Marzotto Int. Tr. Shanghai Co. Ltd Marzotto Textiles U.S.A. Inc. Linificio Group
8
523
=
531
854
1
144
999
Filivivi Group
988
1,585
70
2,643
(4,302)
619
=
(3,683)
Ratti Group
74
391
372
=
763
29
45
=
Mascioni S.p.A.
=
10
=
10
=
1
=
1
Aree Urbane S.r.l.
=
=
=
=
=
=
=
=
7,251
6,881
234
14,366
41,538
1,980
236
43,754
Total
Effective from the year 2008, the Company has adopted the Domestic Tax Consolidation for which the Parent company is Wizard S.r.l. In 2010 Marzotto S.p.A. and its affiliate Filivivi S.r.l. have renewed the domestic tax consolidation regime for the three-year period 2010 - 2011 - 2012. During the year other related parties have provided their services in favour of the Company for nonsignificant amounts. Also during the year the Company has transferred, at market values, to a third party, a non-instrumental real-estate asset (non-core).
Financial Statements of the Company
[Notes to the Company's financial statements] Directors and Statutory Auditors
Remuneration paid to the Directors and Statutory Auditors of Marzotto S.p.A. (pursuant to Consob resolution 11971 of 14 May 1999) Office (k euro)
Directors
2010 remuneration
Independent Auditors
Auditors
Total
632
689
57
Remuneration due for the financial year for services provided by the Independent Auditors (pursuant to Consob resolution 11971 of 14 May 1999) (k euro)
Marzotto S.p.A.
Auditing services Other services
Subsidiaries
Total
66
191
257
1
=
1
Other information
During the financial year there were not atypical or unusual transactions.
Shareholdings held directly or indirectly by the Company
Below is the list of shareholdings in which Marzotto S.p.A. directly or indirectly holds more than 10% of the voting shares as at December 31, 2010. All shareholdings represent ownership:
% direct owned
% Marzotto S.p.A. owned
Company name
Head office
Direct investor
F.lli Tallia di Delfino S.p.A.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Immobiliare Isola S.r.l.
Vicenza (I)
Marzotto S.p.A.
100.00%
100.00% 100.00%
Ambiente Energia S.r.l.
Schio (I)
Marzotto S.p.A.
100.00%
Aree Urbane S.r.l.
Milan (I)
Marzotto S.p.A.
32.50%
32.50%
Mascioni S.p.A.
Milan (I)
Marzotto S.p.A.
28.35%
28.35%
Mediterranean Wool Industries Co. S.A.E.
Sadat City (ET)
Marzotto S.p.A.
30.00%
30.00%
Marzotto Textile N.V.
Amsterdam (NL)
Marzotto S.p.A.
100.00%
100.00%
Nová Mosilana a.s.
Brno (CZ)
Marzotto Textile N.V.
100.00%
100.00%
AB Liteksas
Kaunas (LT)
Marzotto Textile N.V.
99.97%
99.97%
Marzotto Inter. Tr. (Shanghai) Co. Ltd.
Shanghai (RPC)
Marzotto Textile N.V.
100.00%
100.00%
Marzotto Textiles USA Inc.
Wilmington (USA)
Marzotto Textile N.V.
100.00%
100.00%
Filivivi S.r.l.
Milan (I)
Marzotto S.p.A.
50.00%
50.00%
UAB Lietvilna
Kaunas (LT)
Filivivi S.r.l.
100.00%
50.00%
Filivivi Asia Pacific Ltd
Hong Kong (HK)
Filivivi S.r.l.
100.00%
50.00%
Sc Rolana Tex S.r.l.
Botosani (RO)
Filivivi S.r.l.
100.00%
50.00%
Linificio e Canapificio Nazionale S.p.A.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Filature de Lin Filin S.A.
Chbedda (TN)
Linificio e Canapificio N. S.p.A.
100.00%
100.00%
UAB Lietlinen
Kaunas (LT)
Linificio e Canapificio N. S.p.A.
100.00%
100.00%
UAB Linestus
Kaunas (LT)
UAB Lietlinen
Licana S.p.A. in liquidation
Fara Gera d'Adda (I)
Linificio e Canapificio N. S.p.A.
50.00%
50.00%
100.00%
100.00%
La Vecchia S.c.a.r.l.
Fossalta di Portogruaro (I)
Linificio e Canapificio N. S.p.A.
33.00%
33.00%
Lin Naturel S.A.
Chbedda (TN)
Linificio e Canapificio N. S.p.A.
100.00%
100.00%
Ghiaie Idroenergia S.r.l.
Villa d'Almè (I)
Linificio e Canapificio N. S.p.A.
100.00%
100.00%
33.36%
33.36%
Ratti S.p.A.
Guanzate (I)
Marzotto S.p.A.
Creomoda S.a.r.l.
Akouda (TN)
Ratti S.p.A.
95.00%
31.70%
Collezione Grandi Firme S.p.A.
Guanzate (I)
Ratti S.p.A.
100.00%
33.36%
Ratti USA Inc.
New York (USA)
Ratti S.p.A.
100.00%
33.36%
Ratti Int. Trading (Shanghai) Co. Ltd
Shanghai (RPC)
Ratti S.p.A.
100.00%
33.36%
Cluj (RO)
Ratti S.p.A.
100.00%
33.36%
Textrom S.r.l. in liquidation
(1)
1. Company is no more in liquidation from february 2011.
At the end of these notes we provide further details on the Shareholdings held by the Company. Financial Statements of the Company
147
Shareholdings
[Notes to the Company's financial statements]
(k euro)
Situation as at 12.31.2009 Pro-quota (1)
Net
Number
%
value
net
book
of shares
owned
owned
of share
equity
value
(+/–)
Gross book value AdjustIncreases
Decreases
ments
100
100.00
45
65,997
34,897
=
=
=
=
5,400,000
100.00
5,400
62,756
56,458
(5,400,000)
2,500
(58,958)
=
140,000
70.00
140
1,295
3,000
=
3,536
(4,536)
=
Immobiliare Isola S.r.l.
1
100.00
15
18
26
=
=
=
=
Ambiente Energia S.r.l.
1
100.00
100
8,048
8,010
=
=
=
=
27,648,000
100.00
Marzotto Textile N.V. Immobili e Partecipazioni S.p.A. F.lli Tallia di Delfino S.p.A.
Linificio e Canapificio Nazionale S.p.A.¬ Shareholdings in subsidiaries Mascioni S.p.A. Aree Urbane S.r.l.
(2)
=
=
=
=
=
=
=
=
=
=
=
91,250,000
10,402
=
=
=
Società Editrice Il Mulino S.p.A.
70,500
3.00
Next Technology Tecnotessile S.r.l.
19,968
Ritex S.c.a.r.l.
11,716
Emittenti Titoli S.p.A.
38,000
1.
=
4,034
(230)
50.00
Total equity investments
= =
10,015
1
Shareholdings in other companies
= (63,494)
33
=
Consorzio Ivrea Energia
= 6,036
1,417
Filivivi S.r.l.
Fil. Tess. Tollegno S.p.A.
= (5,400,000)
32.50
Mediterranean Wool Industries Co. S.A.E.
Sobifils S.p.A.
48,214 150,605
28.35
=
Wool Street Investments Pty Ltd.
37,057 175,171
1
Ratti S.p.A.
Alto Tirreno Cosentino S.p.A.
27,648 33,348
283,500
=
=
=
=
30,000
2,027
=
=
7,500
5,402
12,915
=
=
=
=
8,950
15,187
16,949
91,280,000
12,429
=
=
35
49
66
=
=
=
=
1.57
10
7
10
=
=
=
=
0.65
3
3
6
=
=
=
=
0.46
20
29
21
(38,000)
=
(21)
=
Shareholding in affiliates
148
Nominal
of shares
Number Description
Changes during the year 2010
12,500
5.06
12
3
14
=
=
=
=
100,000
10.10
60
163
63
=
=
=
=
600
5.00
6
89
1
35
2
=
=
2,270
0.01
1
3
1
=
=
=
=
1
11.11
1
3
1
=
=
=
=
148
349
183
(37,965)
2
(21)
=
42,446
190,707
167,737
18,467
(63,515)
=
For subsidiary and affiliated companies, the net equity attributable to Marzotto is shown in the Parent Company's Financial Statements, or in the consolidated Financial Statements if prepared.
2.
Financial Statements of the Company
Directors’ report as of September 28, 2010.
[Note al bilancio della Società] Situation as of 12.31.2010 Number Net equity as at
Nominal
Pro-quota (1)
Net
of shares
%
value
net
book
owned
owned
of shares
equity
value
Dec. 2010
100
Dec. 2010
=
Dec. 2010
140,000
Dec. 2010
1
Dec. 2010 Dec. 2010
100.00
Description
45
70,517
34,897
Marzotto Textile N.V.
=
=
=
Immobili e Partecipazioni S.p.A.
100.00
140
2,067
2,000
F.lli Tallia di Delfino S.p.A.
100.00
15
15
26
Immobiliare Isola S.r.l.
1
100.00
100
7,940
8,010
Ambiente Energia S.r.l.
27,648,000
100.00
=
27,648
34,558
48,214
Linificio e Canapificio Nazionale S.p.A.
27,948
115,097
93,147
Shareholdings in subsidiaries
1,417
8,774
4,034
Mascioni S.p.A. Aree Urbane S.r.l.
283,500
28.35
Dec. 2010
1
32.50
33
(728)
=
Dec. 2010
91,250,000
33.36
10,402
8,710
10,402
Ratti S.p.A.
Dec. 2010
30,000
30.00
2,027
2,117
2,027
Mediterranean Wool Industries Co. S.A.E.
Dec. 2010
1
50.00
Dec. 2010
7,500
4,865
12,915
Filivivi S.r.l.
21,379
23,738
29,378
Shareholding in affiliates
Dec. 2009
70,500
3.00
35
51
66
Società Editrice Il Mulino S.p.A.
Dec. 2009
19,968
1.57
10
7
10
Next Technology Tecnotessile S.r.l.
Dec. 2009
11,716
0.65
3
3
6
Ritex S.c.a.r.l.
Dec. 2009
=
=
=
=
=
Emittenti Titoli S.p.A.
Dec. 2009
12,500
5.06
12
7
14
Alto Tirreno Cosentino S.p.A.
Dec. 2009
100,000
10.10
60
163
63
Wool Street Investments Pty Ltd.
Dec. 2009
635
5.00
6
89
3
Sobifils S.p.A.
Dec. 2009
2,270
0.01
1
2
1
Fil. Tess. Tollegno S.p.A.
Dec. 2009
1
11.11
1
1
1
128
323
164
Shareholdings in other companies
Consorzio Ivrea Energia 149
49,455
139,158
122,689
Total equity investments
Valdagno (VI), March 29, 2011 THE BOARD OF DIRECTORS
Financial Statements of the Company
[Report of indipendent Auditors]
150
151
[Report of the Board of Statutory Auditors] [Report of the Board of Statutory Auditors] MANIFATTURA LANE GAETANO MARZOTTO E FIGLI S.p.A. MANIFATTURA LANE GAETANO MARZOTTO E FIGLI S.p.A. Share capital Euro 65,005,047 – Registered office in Milan, Via Filippo Turati 16 ShareRegistered capital Euro – Registered office innumber Milan, Via Filippo Turati 16 at 65,005,047 the Milan Companies Register 00166580241 Registered at the Milan Companies Register number 00166580241 REPORT OF THE BOARD OF STATUTORY AUDITORS REPORT OF THE BOARD OF STATUTORY AUDITORS
TO THE SHAREHOLDERS’ MEETING PURSUANT TO ARTICLE 2429 CIVIL CODE TO THE SHAREHOLDERS’ MEETING PURSUANT TO ARTICLE 2429 CIVIL CODE
Shareholders,
Shareholders,
We hereby report on the supervisory activities performed during the tax year ended on 31 December We hereby report on the supervisory activities performed during the tax year ended on 31 December
2010, as provided by the law and the guidelines issued by the Board of Certified Public Accountants, Book2010, as provided by the law and the guidelines issued by the Board of Certified Public Accountants, Book-
keepers and Accountants.
keepers and Accountants.
The auditing is isthe AuditorsReconta RecontaErnst Ernst&&Young Young S.p.A. The auditing theexclusive exclusivescope scopeof of the the Independent Independent Auditors S.p.A. Supervisory activities Supervisory activities WeWe supervised onon the By-laws and andthe thecorrect correctadministration administration principles. supervised thecompliance compliancewith withthe thelaw law and and the the By-laws principles. WeWe have attended the meetings of ofthe theBoard BoardofofDirectors, Directors,and and confirm have attended theShareholders’ Shareholders’meetings meetings and and the the meetings wewe confirm that based onon the available any law lawor orby-laws by-lawsviolation, violation,nor norany any operation that based the availableinformation, information,we we have have not not found found any operation that was clearly imprudent, interest, or orsuch suchasastotojeopardize jeopardizethe the company’s assets. that was clearly imprudent,risky, risky,ininpotential potential conflict conflict of interest, company’s assets. 152
have collected fromthe theDirectors Directorsand andthe the Management, Management, during onon thethe WeWe have collected from duringthe themeetings, meetings,information information performance operations,itsitsforeseeable foreseeableevolution, evolution, as well in in reference to to performance ofof operations, well as as on onthe themost mostrelevant relevantoperations operations reference characteristics,performed performedby bythe theCompany Company and, and, based wewe don’t have anyany sizesize or or characteristics, based on on the theinformation informationobtained, obtained, don’t have special remark. We haveobtained obtainedinformation information from from the the Supervisory observed anyany special remark. We have SupervisoryBoard Boardand andwe wehave havenot not observed critical situation referencetotothe thecorrect correctimplementation implementation of bebe mentioned in in critical situation in in reference of the the organization organizationthat thatshould should mentioned this report. We have met with the company in charge of auditing the financial statements, and we have not
this report. We have met with the company in charge of auditing the financial statements, and we have not obtained data or information that should be mentioned in this report. We have gathered knowledge and
obtained data or information that should be mentioned in this report. We have gathered knowledge and supervised, to the best of our competence, on the adequacy and the functioning of the company’s
supervised, to the best of our competence, on the adequacy and the functioning of the company’s
organization, also by obtaining information from each subject in charge and we have no particular remark on
organization, also by obtaining information from each subject in charge and we have no particular remark on this matter. We have gathered knowledge and supervised, to the best of our competence, on the adequacy
this matter. We have gathered knowledge and supervised, to the best of our competence, on the adequacy and the functioning of the company’s book-keeping and accounting system, as well as of its reliability to
and the functioning of the company’s book-keeping and accounting system, as well as of its reliability to
correctly portray the operations of the company, by obtaining information from each subject in charge, from
correctly portray the operations of the company, by obtaining information from each subject in charge, from the company in charge of auditing the accounts and the books, and we have no particular remark on this
the company in charge of auditing the accounts and the books, and we have no particular remark on this matter.
matter. We have not received any claim pursuant to article 2408 of the Civil Code and we have not issued any opinion. We have not received any claim pursuant to article 2408 of the Civil Code and we have not issued any opinion.
[Relazione del Collegio Sindacale]
During the supervisory activity, as described above, we have not learnt of any other significant fact such as to require to be mentioned in this report. Financial statements We have examined the draft financial statements for the year ended on 31 December 2010, prepared according to the IAS/IFRS accounting principles, which was made available to us pursuant to article 2429 of the Civil Code. Since we are not responsible for auditing of the financial statements, we have supervised on their general set-up, on their general compliance with the law as concerns its formation and structure and in this regard we have no remarks. We have verified that the financial statements correspond to the facts and information we have obtained in the performance of our duties and in this regard we have no remarks. We have verified the compliance with the law in relation to the preparation of the report on operations and in this regard we have no special remark. To the best of our knowledge, the Directors, in preparing the financial statements, have not infringed the provisions of the law pursuant to article 2423, paragraph four, of the Civil Code. In reference to the consolidated Financial statements as of 31 December 2010, the Statutory Auditors acknowledge that your Company, holding controlling interests, has presented this document, which has been prepared according to international accounting principles. 153
Conclusions Given all of the above, and taking into account the information received from Reconta Ernst & Young S.p.A. and the report they have prepared pursuant to article 14 of Law Decree 39/2010 there are no remarks or reservations, and we invite you to approve the financial statements, as prepared by the Directors and we also express our favorable opinion to their proposal on the allocation of the profit for the year. Milan, 11 April 2011 THE BOARD OF STATUTORY AUDITORS Michele Paolillo - Chairman Franco Corgnati Pietro Paolo Piccinelli
Signed on the original
Balance Sheets
[Reclassified financial statements of Subsidiaries] Marzotto Int. Novà Mosilana a.s.
AB Liteksas
(K Czk)
Trading Shanghai Ltd
(K Ltl) 2010
(K Cny)
2010
2009
2009
2010
2009
740,205
815,984
18,044
19,401
74
102 =
1. Non-current assets 1.1 Property, plant and machinery 1.2 Civil real estate
=
=
=
=
=
811
58
=
=
=
=
1.4 Shareholdings valued at equity
=
=
=
=
=
=
1.5 Other shareholdings
=
=
=
=
=
=
1.6 Other medium/long-term receivables
=
=
=
=
=
=
13,045
6,552
145
117
=
=
1.3 Goodwill, trademarks and other intangible assets
1.7 Deferred tax assets 1.8 Medium/long-term financial receivables Total non-current assets 2. Non-current assets held for sale
143
131
=
=
=
=
754,204
822,725
18,189
19,518
74
102
=
=
=
=
=
=
3. Current assets 3.1 Inventory
514,834
445,546
3,691
3,070
327
292
3.2 Trade receivables
738,454
514,469
7,962
4,368
1,321
1,329
46,436
34,515
204
152
474
233
118,428
162,255
17,240
24,888
696
433
3.3 Other receivables Short-term financial assets and cash and cash 3.4 equivalent on hand Total current assets
1,418,152
1,156,785
29,097
32,478
2,818
2,287
2,172,356
1,979,510
47,286
51,996
2,892
2,389
4.1 Share capital and reserves
1,273,389
1,377,554
41,644
48,211
1,355
1,295
4.2 Income/(Loss) for the year
153,262
96,001
2,500
1,606
1
59
=
=
=
=
=
=
1,426,651
1,473,555
44,144
49,817
1,356
1,354
Total assets 4. Net shareholders' equity
154
4.3 Minority interests Total shareholders' equity 5. Non-current liabilities 5.1 Long-term reserves
=
=
646
487
=
=
5.2 Other medium/long-term payables
=
=
=
=
=
=
35,915
38,879
=
=
=
=
=
=
=
=
=
=
35,915
38,879
646
487
=
= 1,035
5.3 Deferred tax liabilities 5.4 Medium/long-term financial payables Total non-current liabilities 6. Current liabilities 6.1 Trade payables and other payables
599,354
358,169
2,496
1,692
1,536
6.2 Short-term financial payables
110,436
108,907
=
=
=
=
Total current liabilities
709,790
467,076
2,496
1,692
1,536
1,035
2,172,356
1,979,510
47,286
51,996
2,892
2,389
8,135
53,479
17,240
24,888
696
433
Total shareholders' equity and liabilities
Net financial debt
Summary of the financial Statements of Subsidiaries
Income Statements
[Reclassified financial statements of Subsidiaries] Marzotto Int. Novà Mosilana a.s.
AB Liteksas
(K Czk) 2010 7. 9.
(K Ltl) 2009
2010
(K Cny) 2009
2010
2009
Net revenues
2,342,943
1,854,835
26,524
22,554
2,885
2,410
8.
(2,106,068)
(1,665,315)
(22,174)
(19,595)
(2,383)
(2,021)
4,350
2,959
Cost of goods sold
Gross income 10. Product development and marketing costs 11. General and administrative costs 12. Other income and charges
13. EBIT 14. Net financial charges Dividends from non-consolidated equity 15. investments and valuations at equity 16. Other financial income and charges 17. Income before taxes 18. Taxes 19.
Trading Shanghai Ltd
Net income (incl. Income attributable to minority shareholders)
20. Income attributable to minority shareholders 21. Group net income
236,875
189,520
502
389
(7,936)
(8,523)
(376)
(338)
(449)
(28)
(41,634)
(40,028)
(905)
(925)
(30)
(276)
(674) 186,631 (837) =
(7,631) 133,338 (12,218) =
10
1
=
2,845
(224)
1,706
24
85
269
476
=
=
(32) =
7 =
=
=
=
=
=
=
185,794
121,120
3,114
2,182
(8)
92
9
(33)
1
59
(32,532) 153,262
(25,119) 96,001
(614) 2,500
(576) 1,606
=
=
=
=
=
=
153,262
96,001
2,500
1,606
1
59
155
Summary of the financial Statements of Subsidiaries
Balance Sheets
[Reclassified financial statements of Subsidiaries] Immobili e Partecipazioni Marzotto Textile NV
S.p.A. (ex S.r.l.)
(K Euro) 2010
(*)
Gruppo Linificio e Canap. Naz. S.p.A.
(K Euro) 2009
2010
(**)
(K Euro) 2009
2010
2009
1. Non-current assets 1.1 Property, plant and machinery
=
=
=
9,473
17,572
1.2 Civil real estate
=
=
=
1,742
=
1
1.3 Goodwill, trademarks and other intangible assets
=
=
=
=
76
56 483
1.4 Shareholdings valued at equity
24,145
=
=
=
=
488
70,558
66,627
=
=
=
=
1.6 Other medium/long-term receivables
=
=
=
=
354
=
1.7 Deferred tax assets
=
=
=
3
2,608
3,185
1.5 Other shareholdings
1.8 Medium/long-term financial receivables Total non-current assets
=
=
=
=
=
=
70,558
66,627
=
11,218
21,098
27,870
=
=
=
=
6,771
=
2. Non-current assets held for sale 3. Current assets 3.1 Inventory
=
=
=
53,597
10,964
18,049
3.2 Trade receivables
=
=
=
383
14,790
13,358
3.3 Other receivables Short-term financial assets and cash and cash 3.4 equivalent on hand
6
=
=
1,401
9,958
7,716
46
1
=
=
7,751
12,636
Total current assets
52
1
=
55,381
43,463
51,759
70,610
66,628
=
66,599
71,332
79,629
4.1 Share capital and reserves
60,392
66,058
=
62,714
37,022
36,707
4.2 Income/(Loss) for the year
10,125
(61)
=
42
(2,464)
=
=
=
=
=
=
70,517
65,997
=
62,756
34,558
37,057 8,110
Total assets 4. Net shareholders' equity
4.3 Minority interests
156
Total shareholders' equity
350
5. Non-current liabilities 5.1 Long-term reserves
=
=
=
=
8,010
5.2 Other medium/long-term payables
=
=
=
=
=
=
5.3 Deferred tax liabilities
=
=
=
36
69
3,624
5.4 Medium/long-term financial payables Total non-current liabilities 6. Non-current liabilities held for sale
=
=
=
=
1,545
2,136
=
=
=
36
9,624
13,870
=
=
=
=
1,036
= 13,116
7. Current liabilities 7.1 Trade payables and other payables
32
34
=
162
18,970
7.2 Short-term financial payables
61
597
=
3,645
7,144
15,586
Total current liabilities
93
631
=
3,807
26,114
28,702
70,610
66,628
=
66,599
71,332
79,629
=
(3,645)
Total shareholders' equity and liabilities
Net financial debt
(15)
(596)
(*) Financial statements prepared according to Italian accounting principles. (**) Consolidated Financial statements.
Summary of the financial Statements of Subsidiaries
(938)
(5,086)
Income Statements
[Reclassified financial statements of Subsidiaries] Immobili e Partecipazioni Marzotto Textile NV
S.p.A. (ex S.r.l.)
(K Euro) 2010 8.
e Canap. Naz. S.p.A.
2009
2010
2009
2010
=
=
379
9
=
=
=
=
=
=
=
379
=
=
=
=
(57)
(54)
=
=
=
(57) (4)
11. Product development and marketing costs 12. General and administrative costs 13. Other income and charges 14. EBIT 15. Net financial charges 16.
Dividends from non-consolidated equity investments and valuations at equity
10,186
17. Other financial income and charges 18. Income before taxes 19. Taxes Net income (incl. Income attributable to minority shareholders)
2009
36,055
28,331
(31,511)
(33,149)
4,544
(4,818)
(3,285)
(2,791)
(504)
(2,517)
(2,730)
=
1
(1,624)
10,558
(54)
=
(124)
(2,882)
(7)
=
(3)
(136)
(241)
=
=
=
5
5
219
=
=
=
=
(14)
=
10,125
(61)
=
(127)
(3,027)
(17)
=
=
=
169
498
367
10,125
(61)
=
42
(2,529)
350
21. Income attributable to minority shareholders 22. Group net income
(**)
(K Euro)
=
Cost of goods sold
Gruppo Linificio
(K Euro)
Net revenues
10. Gross income
20.
(*)
=
=
=
=
10,125
(61)
=
42
65 (2,464)
= 350
(*) Financial statements prepared according to Italian accounting principles. (**) Consolidated Financial statements.
157
Summary of the financial Statements of Subsidiaries
[Reclassified financial statements of Subsidiaries]
Balance Sheets
Fratelli Tallia
Immobiliare
Marzotto Textiles USA
di Defino S.p.A.
Isola S.r.l. (*)
(K Usd)
(K Euro)
(K Euro)
2010
2009
(*)
2010
2009
2010
2009
1. Non-current assets 1.1 Property, plant and machinery
2
1
5,343
5,692
=
=
1.2 Civil real estate
=
=
=
=
=
=
1.3 Goodwill, trademarks and other intangible assets
1
=
157
281
=
=
1.4 Shareholdings valued at equity
=
=
=
=
=
=
1.5 Other shareholdings
=
=
3
3
=
=
1.6 Other medium/long-term receivables
=
=
19
18
=
=
1.7 Deferred tax assets
=
=
=
=
=
=
1.8 Medium/long-term financial receivables
=
=
=
=
=
=
3
1
5,522
5,994
=
=
=
=
=
=
=
= =
Total non-current assets 2. Non-current assets held for sale 3. Current assets 3.1 Inventory
36
=
5,689
5,165
=
3.2 Trade receivables
14
160
6,341
3,473
=
=
3.3 Other receivables Short-term financial assets and cash and cash 3.4 equivalent on hand
59
=
1,995
3,419
2
1
57
140
915
585
15
17
Total current assets
166
300
14,940
12,642
17
18
169
301
20,462
18,636
17
18
4.1 Share capital and reserves
102
168
2,950
4.2 Income/(Loss) for the year
(31)
(71)
Total assets 4. Net shareholders' equity
158
4.3 Minority interests
7,507
18
22
(883)
(5,657)
(3)
(4)
=
=
=
=
=
=
71
97
2,067
1,850
15
18
5.1 Long-term reserves
=
=
1,624
1,811
=
=
5.2 Other medium/long-term payables
=
=
=
=
=
=
5.3 Deferred tax liabilities
=
=
=
=
=
=
5.4 Medium/long-term financial payables
=
=
396
846
=
=
=
=
2,020
2,657
=
= =
Total shareholders' equity 5. Non-current liabilities
Total non-current liabilities 6. Current liabilities 6.1 Trade payables and other payables
67
39
6,997
5,519
2
6.2 Short-term financial payables
31
165
9,378
8,610
=
=
Total current liabilities
98
204
16,375
14,129
2
=
169
301
20,462
18,636
17
18
26
(25)
(8,859)
(8,871)
15
17
Total shareholders' equity and liabilities
Net financial debt
(*) Financial statements prepared according to Italian accounting principles.
Summary of the financial Statements of Subsidiaries
Income Statements
[Reclassified financial statements of Subsidiaries] Immobiliare
Fratelli Tallia Marzotto Textiles Usa
di Defino S.p.A.(*)
(K Usd)
(K Euro)
2010 7. 9.
2010
(*)
(K Euro) 2009
2010
2009
Net revenues
430
625
16,692
8,880
=
8.
(32)
(143)
(13,053)
(8,868)
=
=
398
482
3,639
=
=
Cost of goods sold
Gross income
12
=
10. Product development and marketing costs
(320)
(444)
(2,630)
(2,563)
=
=
11. General and administrative costs
(106)
(100)
(1,059)
(1,197)
(2)
(4)
12. Other income and charges 13. EBIT 14. Net financial charges 15.
Dividends from non-consolidated equity investments and valuations at equity
16. Other financial income and charges 17. Income before taxes
19.
2009
Isola S.r.l.
18. Taxes Net income (incl. Income attributable to minority shareholders)
20. Income attributable to minority shareholders 21. Group net income
=
=
(516)
(2,600)
=
=
(28)
(62)
(566)
(6,348)
(2)
(4)
(1)
(8)
(243)
(306)
=
=
=
=
=
=
=
=
=
=
(87)
(63)
=
=
(29)
(70)
(896)
(6,717)
(2)
(4)
(2)
(1)
13
1,060
(1)
=
(31)
(71)
(883)
(5,657)
(3)
(4)
= (31)
= (71)
= (883)
= (5,657)
=
=
(3)
(4)
(*) Financial statements prepared according to Italian accounting principles.
159
Summary of the financial Statements of Subsidiaries
Balance Sheets Balance Sheets
[Reclassified financial statements of Subsidiaries] [Reclassified financial statements of Subsidiaries] Ambiente Ambiente Energia S.r.l.
(*)
Energia S.r.l. (K Euro)
(*)
2010 (K Euro) 2009 2010
1. Non-current assets
7,702
1.1 plant and machinery 1.2 Property, Civil real estate
7,702 15
7,023 15
1.2 real estate 1.3 Civil Goodwill, trademarks and other intangible assets
15 1,665
15 1,755
1.3 Goodwill, trademarks and other intangible assets 1.4 Shareholdings valued at equity
7,023
1,665 =
1,755 =
1.4 valued at equity 1.5 Shareholdings Other shareholdings
=
=
1.5 shareholdings 1.6 Other medium/long-term receivables
= 1
=
1.6 Deferred Other medium/long-term receivables 1.7 tax assets
1 =
=
1.7 Medium/long-term Deferred tax assets financial receivables 1.8
= 3
=
1.8 Medium/long-term financial receivables Total non-current assets
3 9,386
= 8,793
Total non-current 2. Non-current assets heldassets for sale
9,386 =
8,793 =
2. Current Non-current assets held for sale 3. assets
=
=
3. 3.1 Current assets Inventory
=
=
3.1 Inventory 3.2 Trade receivables
= 741
= 981
3.2 3.3 Trade Other receivables Short-term financial assets and cash and cash 3.3 Other receivables 3.4 equivalent on hand assets and cash and cash Short-term financial 3.4 equivalent on hand Total current assets
741 368
981 77
368 372
77 318
372 1,481
318 1,376
1,481 10,867
1,376 10,169
10,867
10,169
8,048
8,010
4.1 capital and 4.2 Share Income/(Loss) for reserves the year
8,048 (108)
8,010 38
4.2 for the year 4.3 Income/(Loss) Minority interests
(108) =
current assets TotalTotal assets assets 4. Total Net shareholders' equity 4. 4.1 Net shareholders' equity Share capital and reserves
160
2009
1. 1.1 Non-current Property,assets plant and machinery
38 =
4.3 Minority interests equity Total shareholders'
= 7,940
= 8,048
Total shareholders' 5. Non-current liabilities equity
7,940
8,048
5. 5.1 Non-current liabilities Long-term reserves
194
199
5.1 Long-term reserves 5.2 Other medium/long-term payables
194 =
199 =
5.2 medium/long-term payables 5.3 Other Deferred tax liabilities
= 957
= 1,015
5.3 tax liabilities 5.4 Deferred Medium/long-term financial payables
957 =
1,015 =
5.4 Medium/long-term financial payables Total non-current liabilities
= 1,151
= 1,214
Total non-current liabilities 6. Current liabilities
1,151
1,214
6. 6.1 Current liabilities Trade payables and other payables
1,567
907
6.1 Trade payables and other payables 6.2 Short-term financial payables
1,567 209
907 =
6.2 Short-term financial payables Total current liabilities
209 1,776
= 907
current liabilities TotalTotal shareholders' equity and liabilities
1,776 10,867
907 10,169
Total shareholders' equity and liabilities
10,867
10,169
Net financial debt
166
318
Net financial debt
166
318
(*) Financial statements prepared according to Italian accounting principles. (*) Financial statements prepared according to Italian accounting principles.
Summary of the financial Statementsofofthe Subsidiaries Summary financial Statements of Subsidiaries
Income Statements
[Reclassified financial statements of Subsidiaries]
Ambiente Energia S.r.l.
(*)
(K Euro) 2010 7. 9.
2,897
1,403
8.
(2,771)
(1,107)
Cost of goods sold
Gross income
126
10. Product development and marketing costs
=
296 (22)
11. General and administrative costs
(58)
12. Other income and charges
(87)
(97)
(19)
177
13. EBIT
=
14. Net financial charges
2
(1)
Dividends from non-consolidated equity 15. investments and valuations at equity
=
=
16. Other financial income and charges 17. Income before taxes
19.
2009
Net revenues
18. Taxes Net income (incl. Income attributable to minority shareholders)
20. Income attributable to minority shareholders 21. Group net income
=
=
(17)
176
(91)
(138)
(108)
38
=
=
(108)
38
(*) Financial statements prepared according to Italian accounting principles.
161
Summary of the financial Statements of Subsidiaries
annual report 2010
[Summary of the main resolutions of the Shareholders’ Meeting] The Shareholders’ Meeting on 29 April 2011 has approved: - the Financial Statements and the Report on operations as of 31 December 2010; - to allocate the year’s profit of euro 3,152,931.67 as follows:
–
Profits carried forward from previous years for euro 3,152,931.67;
after this allocation, the reserve’s total amount will be:
–
Profits carried forward from previous years euro 30,140,875.55;
- to appoint as independent auditors for the three-year period 2011-2012-2013 the company Reconta Ernst & Young S.p.A.
163 163
161
Marzotto S.p.A. Subject to Wizard S.r.l. management and coordination activities Tax ID, V.A.T. registration number and Companies Register 00166580241 Administrative office: Largo S. Margherita 1 36078 Valdagno (VI) - Italy Tel. +39 0445 429411 Registered office: Via Turati 16/18 20121 Milan - Italy Tel. +39 02 6570068
165
Argomenti Giugno 2011 printed in Italy
