ANNUAL REPORT 2013
Translation from the original Italian text
[Summary] General information
Marzotto group
General information Marzotto Group's highlights
7
Corporate management 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
19
Income statement
21
Balance sheet and financial position
24
Performance of the Group's business sectors
27
Investments in subsidiaries and associates
35
Other information
38
Subsequent events
44
Outlook and information on the trend for the current financial year
45
Group consolidated financial statements
Marzotto S.p.A.
Consolidated Statements of financial position
48
Consolidated Statements of income and comprehensive income
49
Consolidated Statements of cash flows
50
Consolidated Statements of changes in equity
51
Notes to the financial statements
52
Report of independent auditors
95
Report on Parent Company operations Subsidiaries and associated companies Significant events during the financial year Income statement
98 99 102
Balance sheet and financial position
105
Investments in subsidiaries and associates
106
Other information
114
Subsequent events
119
Outlook and information on the trend for the current financial year
120
Board of Directors proposal, pursuant to Art. 2364 of the Italian Civil Code
121
Financial statements of the Parent Company Company Statements of financial position
124
Company Statements of income and comprehensive income
125
Company Statements of cash flows
126
Company Statements changes in equity
127
Notes to the financial statements
128
Report of independent auditors
169
Report of the Board of Statutory Auditors
170
Reclassified financial statements of Subsidiaries
172
Resolution of the Shareholder, pursuant to Art. 2364 of the Italian Civil Code
183
3
Annual Report 2013
General information
Marzotto group Report on the Group’s operations Consolidated financial statements
Marzotto S.p.A. Report on the Company’s operations Company financial statements
Sole 24 Ore” del 5 aprile 2007
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”.
5
[Marzotto Group’s highlights] Main economic, financial and equity data
2013
(in milions of euro) Net revenues Result of ordinary operations EBITDA
(1)
EBITDA (%ge) Net income
change %
338.5
334.3
1.3%
13.8
12.6
9.5%
29.4
28.2
4.2%
8.7%
8.4%
0.2%
(33.7)
2.7
99.3
141.8
-30.0%
Net financial debt
90.5
101.6
-10.9%
Investiments
18.8
18.9
-0.5%
3,505
3,479
0.7%
Shareholders'equity
Nunber of active employees as of 31 December
Net revenues by business sector
2012
2013
(in milions of euro) Textiles
2012
n.c.
change %
264.7
262.0
1.0%
Wool Yarns
46.0
44.5
3.4%
Linen Yarns
37.1
34.7
6.9%
Silk
34.3
34.6
-0.9%
16.9
16.6
1.8%
Other Operations Adjustment/reclassifications
(2)
Group
2013
(60.5)
(58.1)
n.s.
338.5
334.3
1.3%
2012
Revenues’ percentage composition by business sector
Profit from core businesses by business sector
(in milions of euro)
2013
2012
change %
Textiles
14.2
14.4
-1.4%
Wool Yarns
(0.7)
(1.1)
-36.4%
Linen Yarns
(2.5)
(2.8)
-10.7%
2.0
2.4
-16.7%
(0.3)
-366.7%
Silk Other Operations/Other Group
(3)
0.8 13.8
12.6
9.5%
(1). Profit (loss) from core businesses + Ordinary amortization and depreciation + Losses on receivables. (2). Including reclassification revenues Wool Yarn Sector in line “Result from activities held for sale”. (3). Including consolidation entries and adjustments / reclassification Wool Yarn Sector in line “Result from activities held for sale”
General information
7
[Corporate management and shareholders] Corporate management
in office at 31 december 2013 Board of Directors Chairman Antonio Favrin
(1)
Deputy Chairman Andrea Donà dalle Rose
(1)
Board Members Ferdinando Businaro Rosanna Donà dalle Rose Vittorio Marzotto Chief Executive Officer and General Manager Sergio Tamborini
(1)
1. Members of Executive Committee
Board of statutory auditors Acting Auditors Michele Paolillo - President Franco Corgnati Federico Giorgione Substitute Auditors Marco Della Putta Francesca Cecchin Indipendent auditors Reconta Ernst & Young S.p.A.
Shareholders
As of 31.12.2013 the total capital share is euro 65.005.047. As of 31 December 2013 the following are the main Shareholders of Marzotto S.p.A., directly or indirectly owning voting shares
(1)
:
Shareholder Wizard S.r.l. 1. Ordinary shares owned indicated as % of the fully paid share capital.
Offices
Administrative office: Largo S. Margherita, 1 – 36078 Valdagno (VI) Registered office: Via Turati 16/18 - 20121 Milano
8
General information
%le 100.00
[Marzotto S.p.A. – Reports and financial statements as of 31 December 2013] Convening of the ordinary shareholders’ meeting
The Shareholders of Marzotto S.p.A. are called to the Ordinary Meeting in Valdagno, Largo S. Margherita 1, at the administration office of the Company, in first call on 29 April 2014 at 12:00 p.m. and in second call on 16 May 2014, same location and same time, to resolve on the following Agenda
Financial statements as at 31 December 2013, Report by the Board of Directors, Report by the Board of Auditors, Report by the Independent Auditing Firm; presentation of the consolidated financial statements as at 31 December 2013 for the Marzotto Group and related reports. Pertaining resolutions. Appointment of the party appointed to perform the statutory audit of the accounts and determination of their fees. Pertaining resolutions.
All shareholders who meet the conditions of the law and have complied with the requirements of the second paragraph 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.
Valdagno, 08 April 2014
for the Board of Directors The Chairman Antonio Favrin
General information
9
Annual Report 2013
General information Marzotto group Report on the Group’s operations Consolidated financial statements
Marzotto S.p.A. Report on the Company’s operations Company financial statements
Sole 24 Ore” del 5 aprile 2007
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”.
11
[Report on operations] Group activities
The Marzotto Group is organized into the following business units:
Fabrics Woollen Yarns Linen Yarns Silk Other operations
The Fabrics sector includes the manufacturing and distribution of woollen and cotton fabrics for clothing and furnishing, 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 brands 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 historic brand specialized in the production of woollen fabrics for highend and luxury menswear; Estethia / G.B.Conte: Estethia: a dynamic collection of combed fabrics, crepe, monostretch and bistretch, solid colours and printed fabrics with innovative finishing showing high quality and research; G.B. Conte: a collection specialised in carded and combed 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, identified for its elegant, sophisticated sportswear in wool and cotton/wool, complementary to the Sondrio “lifestyle” project. NTB Nuova Tessilbrenta (brand acquired in 2009) completes the product range with cotton and cotton blend fabrics for (men’s and women’s) sportswear. - Velluto: in 2012, Marzotto extended its range by entering the velvet segment with the acquisition of the brands “Redaelli Velluti”, “Redaelli 1893”, “Niedieck” and “Christoph Andreae”. The Redaelli brand, intended for the clothing and furnishing market, has a formal, elegant flavour; the Niedieck brand, on the other hand, falls into the sportswear segment of sporty/elegant clothing. 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 the Verzoletto group, which is consolidated according to the proportional method. 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. Today, Linificio produces and distributes yarns and fabrics made of linen fibres. The Marzotto group is involved in the silk industry thanks to Ratti, in which the parent company Marzotto S.p.A. acquired in 2010 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). The Other Operations sector includes mainly coordination and strategic direction activities, as well as service activities (administration and finance, legal and investors’ relations, human resources management, information technology) performed centrally in favor of the operating sectors. In this sector we also include the results of the management of the wastewater treatment plant in Schio, the renewable energies activities, and the Group’s non-consolidated shareholdings.
Marzotto group Report on operations
13
[Structure of Marzotto group by business units dated 31 December 2013] Marzotto S.p.A.
Textiles
Wool Yarns 50.00% [1]
Marzotto Fabrics Division
Filivivi S.r.l.
Estethia/G.B. Conte Division
Filivivi Asia Pacific Ltd
100.00%
Tessuti di Sondrio Division
Uab Lietvilna
100.00%
Textile Furnishing Division
Sc Rolana Tex S.r.l.
100.00%
Velluto Division
Linen Yarns 100.00%
100.00%
Biella Manifatture Tessili S.r.l.
Linificio e Canapificio Naz.le S.r.l.
Guabello Division
Filature De Lin Filin S.A.
100.00%
Tessuti Marlane Division
Lin Naturel S.A.
100.00%
Tallia di Delfino Division
Licana S.p.A. in liquidation
100.00%
Uab Lietlinen
100.00%
100.00%
Novà Mosilana a.s.
99.97%
AB Liteksas
[2]
50.00%
100.00%
Marzotto Int.Trading Shanghai Ltd [2]
100.00%
14
[2]
Marzotto Textiles Usa Inc. [2]
100.00%
Sametex spol s r.o.
100.00%
Girmes Intern. GmbH
100.00%
Marzotto Textile Czech Rep.
Marzotto Group Report on Operations
Uab Linestus
Silk
Other operations 33.36% [1]
Ratti S.p.A.
Le Cotonerie S.r.l.
100.00%
Creomoda S.a.r.l.
95.00%
Ambiente Energia S.r.l.
100.00%
Ratti Usa Inc.
100.00%
Marzotto Textile N.V.
100.00%
Ratti Int.Trading (Shanghai) Co.Ltd
100.00%
Mascioni S.p.A.
28.35%
S.C. Textrom S.r.l.
100.00%
Aree Urbane S.r.l. (in liquidation)
32.50%
Mediterranean Wool Ind. S.A.E.
30.00%
Pettinatura di Verrone S.r.l.
15.00%
Marzotto S.p.A. Consolidated companies Other shareholdings
[1] Consolidated pro-quota [2] Controlled by Marzotto Textile N.V.
Marzotto Group Report on Operations
15
[Report on operations] Introduction
Shareholders, The consolidated financial statements for the Marzotto Group close the year 2013 with a net loss of Euro 33,706 thousand, mainly due to the non-recurring events, as will be explained below, and net revenues of Euro 338,516 thousand. The Marzotto Group’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. We would refer you to the explanatory notes for comments on the results of the financial statements. Below, please find the information on the Group’s position and future prospects, as well as that required by current legislation. The economic and financial data given in these financial statements are significantly influenced by the separate presentation of the Filivivi Group amongst non-current assets and liabilities held for sale, due to the sale carried out at the end of February 2014, in application of IFRS 5. Please also note that the economic items relating to the Filivivi Group for the year and, for comparative purposes, the previous year, have been stated separately in the line “Net profit/(loss) from discontinued operations”.
16
Marzotto group Report on operations
[Report on operations] Economic situation/industrial trend (1)
The year 2013 also confirms a negative trend for the Italian textile industry, albeit with some attenuation of degrowth rates: as compared with the -3.2% recorded for 2012, a -2.4% is forecast for this year. An initial analysis of performance shows that the Italian textile industry is gradually seeing some relief in the negative trend, with an improvement in sales both on the domestic market and the export market, closing the year with comprehensive turnover of approximately Euro 7.8 billion. In the textile segments, the most significant contribution was made by wool weaving, which accounts for 36.8% of the segment sales, followed by cotton weaving, with 23.2% and jersey weaving with a 19% share. In moving our attention towards the geographic outlet, export sales, which account for 55.4% of turnover from the textile industry this year, achieved turnover of more than Euro 4.3 billion, showing an attenuation to the negative trends (-1.4% on 2012). Domestic demand also shows signs of recovery, giving rise to turnover of Euro 3.5 billion (-3.7% on 2012), in this case too, showing a slowing to the rate of decline. In analysing the export flows, the main target countries are Germany, accounting for 11.3% of export turnover and Romania with 7.7%, followed by France with 7.3%. Against this trend of exports, imports instead show a 3.2% rise. In examining the markets of origin of imported fabrics, the main suppliers are China (with approximately 25.9% of the total imported), followed by Turkey (with approximately 21.1%) and the Czech Republic (with approximately 6.6%). Despite this dichotomous trend of export flows and import flows, the segment in any case records a positive trade balance for the fifth year running, equal to 2.4 billion. The slow but progressive improvement of the trend characterising weaving is also seen from the value of production, which, in standing at around Euro 6.1 billion, notes a less severe negative growth rate than 2012, estimated at around -1.8%. As confirmation of the data shown here, the trend of domestic demand (estimated from “apparent consumption”) has recorded an increase of around 0.2%, in clear juxtaposition with the negative change of around -10% booked for 2012. Within this general scenario, which reveals how Italian weaving as a whole, although maintaining a negative trend, is experiencing a progressive improvement in market performance, it would appear to be reasonable to expect a change in pace for 2014, able to take the segment back to positive results. The initial economic forecasts on data for the first half of 2014 in the Textile-Fashion segment suggest a reversal of trend (+2.1%), also for companies involved upstream in the supply chain (+0.4%). The domestic demand is also expected to be positive, with growth rates of +1.4%. As concerns short-term expectations monitored by sector studies, most operators are not expecting any major changes in the market situation and are basically looking at stability in the recession context seen in 2013.
(1). Source SMI - Centro Studi (December 2013); SMI on ISTAT data and Internal surveys.
Marzotto group Report on operations
17
[Report on operations] Group trend
Despite the difficult economic context, in 2013, on a consolidated level the Marzotto Group totaled an increase in turnover (+1.3%) deriving from the solid holding forth of revenues in all segments in which the Group operates. Consolidated net revenues amount to Euro 338.5 million. After the first signs of economic uncertainty seen during the first quarter, as from the following months, these have made way for shy signs of recovery that have become progressively more visible during the year. On a geographic level, we note a downturn to sales made on the Italian market (-3.3%), where the Group covers 32.4% of the total turnover, offset by a clear improvement in turnover achieved in other European countries (+2.6%), accounting for 46.9% of Group revenues and North America (+29.7%), accounting for 4.5% of the consolidated turnover. The results achieved in Asia remain basically stable, where the Group obtains approximately 12.2% of revenues and Other Countries, where the Group obtains 4.0% of its total turnover. The holding forth of turnover trends has had a positive impact on the gross margin, which stabilised at around Euro 76.3 million, with an incidence of 22.5% on turnover and an increase on last year of Euro 2.3 million. Non-recurring operations have had a major impact on this year, with a negative effect for Euro 19.3 million on Group results. Consequently, EBIT shows a negative change for Euro 17.7 million, going from 12.2 million in 2012 to -5.5 million in 2013. Below are explanations of the events that have gone towards to determining them. Financial operations have also had a negative impact on the result, recording a negative Euro 20.7 million. The area analysed is particularly influenced by a major write-down of Euro 14.7 million, of a financial receivable due from an affiliate, as explained below. Despite the unusual period events, which had a negative impact on the consolidated economic result (of -33.7 million euros), the action taken by the Group has enabled an improvement to be achieved to net financial debt, in the amount of Euro 11.1 million.
18
Marzotto group Report on operations
[Significant events during the financial year] Before moving onto discuss the business of your Group in FY 2013, we would first note the highlights the year just ended and this year.
Praia dispute
Beginning in 1999, some former employees and heirs of former employees at the 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 1960s 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. After the Judge of the same Court rejected three requests by the Examining Judge to close the case, in October 2009 and February 2010, the prosecution issued notices of completion of preliminary investigations, also for environmental crimes. In March 2011 Marzotto was served the summons, pursuant to Art. 83 of the Italian Code of Criminal Procedure, of the responsible officer who, according to the ordinary proceedings, even if he did not commit crime, he is jointly responsible for the payment of damages, if any, as of today not assessed. In October 2013, the Court ordered an appraisal, the results of which, in March 2014, are as yet unknown. The proceedings are in the investigation stages. In November 2013, by agreement with ENI S.p.A., (jointly obliged as previous owner), all financial claims lodged by natural persons involved in the criminal proceedings and all those of former workers or heirs of former workers who took civil action from 2006 to 2008 against the Company, claiming compensation for damages allegedly suffered following occupational sickness, were settled. Following an ordinance of the mayor of Praia a Mare in January 2007, Marzotto S.p.A. was supposed to begin characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have currently been suspended pending cautionary proceedings, despite the fact that the Company, to this end, renewed its request for release from seizure in November 2013. During the year, net charges were booked for Euro 9.3 million, as detailed below.
Dividend stripping
During the year2010, in relation to the dispute pending before Cassation against sentence no. 78/2010 issued by the 4th chambers of the Regional Tax Commission of Venezia-Mestre on 21/09/2010, Marzotto S.p.A. has been 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, namely Marzotto S.p.A. and, by virtue of the partial proportional spin-off of July 2005, Valentino Fashion Group S.p.A., jointly and respectively 1/3 and 2/3 of said liability towards the tax authority. At the request of Marzotto S.p.A., in October 2011 the request to allow for payment by instalments was granted, with payment thus divided up into 48 monthly instalments. In January 2014, Marzotto S.p.A. and Valentino Fashion Group S.p.A. stipulated a settlement agreement to define, amongst other aspects, their joint liability to make payment of said tax notice and the lawsuit in question. Under this agreement, Marzotto S.p.A. paid the tax payable as a lump sum, thereby benefiting from the 2014 Stability Law, releasing Valentino Fashion Group S.p.A. from its obligations, which, in turn, waived all claims made against Marzotto S.p.A., abandoning all civil proceedings brought before the Court of Milan. During the year analysed, net non-recurring charges were booked for Euro 10 million.
Aree Urbane
In November 2012, Marzotto S.p.A. and the shareholders Prelios and Telecom stipulated an agreement aimed at defining guidelines to conduct to be held in restoring “Aree Urbane S.r.l. in liquidazione” to performing status. The effect of this agreement was subject to a condition precedent, an essential condition to restoring the affiliate to performing status, which envisaged reaching an agreement with the chosen banks to refinance the past-due debt of Aree Urbane. As this condition was not met, the shareholders expressed their intention to offer the banks an “ordered” liquidation of Aree Urbane, as there was no longer any interest in pursuing the business. It was considered prudent to write down the residual amount of the receivable due from the affiliate, of Euro 14.7 million.
Marzotto group Report on operations
19
[Report on operations] Income statement and balance sheet highlights
The statement below gives the operating results. Please note that for 2013, and for comparative purposes for 2012 too, the pro-quota economic result achieved by the Filivivi Group is specified separately in the line “Result of assets held for sale”.
(3)
change
338.5
334.3
4.2
+ 1.3%
13.8
12.6
1.2
+ 9.5%
1.2
+ 4.2%
(in millions of euro)
2013
Consolidated net revenues Profit from core businesses % of net revenues
(1)
4.1%
2012
3.8%
EBITDA (2) % of net revenues
29.4
Income before taxes
(26.2)
6.8
% of net revenues
(7.7%)
2.0%
Result from activities held for sale % of net revenues
8.7%
(2.2) (0.6%)
change %
28.2 8.4%
(3.0)
(33.0) 0.8
n.c. - 26.7%
(0.9%)
Group net income
(33.7)
2.7
% of net revenues
(10.0%)
0.8%
(36.4)
n.c.
77.8
122.1
(44.3)
- 36.3%
Net employed capital
189.8
243.4
(53.6)
- 22.0%
Net financial position
90.5
101.6
(11.1)
+ 10.9%
Net working capital
Investments for the period Active staff: persons
18.8
18.9
3,505
3,479
2013
2012
(0.1)
- 0.5%
26
+ 0.7%
change
ROI
6.4%
5.7%
0.7%
ROE
-28.0%
1.9%
-29.9%
ROS Debt/Equity Financial coverage rate of assets Inventory rotation index Number of days of credit to clients
4.1%
3.8%
0.3%
91.1%
71.7%
19.5%
110.1%
92.4%
17.7%
152
162
-10
85
97
-12
Legend: ROI: Operating results / Average invested capital ROE: Net results / Average shareholders’equity ROS: Result from core businesses / Net revenues Debt / Equity: Net financial position / Net shareholders’equity Rate of financial coverage of Fixed Assets: Fixed assets + ML term funds / Shareholders’equity + ML term financial borrowing Stock rotation index: Net inventory / Cost of goods sold x 360 days Credit days to customers: 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. 20
Marzotto group Report on operations
[Report on operations] Income statement
As of 31 December 2013 the Group’s net result was 33,7 million euro loss, with a -36.4 million difference compared to the +2,7 million recorded in 2012. Summarized consolidated income statement data for the period, compared to those of the year 2012, are as follows (1): 2013
(in millions of euro)
338.5
Cost of sales
(262.2)
(77.4%)
(260.3)
Gross income
76.3
22.6%
74.0
22.1%
R&D and marketing costs
(42.1)
(12.4%)
(41.3)
(12.3%)
General and administrative costs
(20.4)
(6.1%)
(20.1)
(6.0%)
12.6
100.0%
334.3
100.0% (77.9%)
Profit from core businesses
13.8
4.1%
Non-recurring income/(charges)
(19.3)
(5.7%)
Operating income
(5.5)
(1.6%)
Net financial charges
(4.9)
(1.5%)
(3.8)
(1.1%)
Equity valuations
3.8%
(0.4)
(0.1%)
12.2
3.7%
(1.4)
(0.3%)
(1.4)
(0.5%)
Other financial income/charges
(14.4)
(4.3%)
(0.2)
(0.1%)
Income before taxes
(26.2)
(7.7%)
6.8
2.0%
(5.3)
(1.6%)
(1.1)
(0.3%)
(31.5)
(9.3%)
5.7
1.7%
(2.2)
(0.7%)
(3.0)
(0.9%)
(33.7)
(10.0%)
2.7
0.8%
Taxes Income before activities held for sale Result from activities held for sale Group net income
Net revenues (2)
2012
Net revenues
Consolidated turnover is up on that recorded for 2012 (+1.3%). The change recorded derives from the fact that turnover basically held out in all segments in which the business is present, albeit with different dynamics in relation to the geographic outlet market. In detail, wool and cotton fabrics close the year with an increase in turnover of 1%, equal to 2,7 million; wool yarns increase by 3.4%, equal to Euro 1.5 million (pro-quota 50%); linen yarns close the year with a + 7.0% and equal to 2,4 million euros; silk weaving totalled net revenues that were basically even (-0.9% equal to -0.3 million euros). Below is a brief presentation of the breakdown of net revenues by sector and geographical area, as compared with the same results of the last year.
by sector
2013
(in millions of euro)
2012
Textile Sector
371.3
109.7%
367.0
109.8%
Textiles
264.7
78.2%
262.0
78.4%
Wool Yarn (pro-quota)
46.0
13.6%
44.5
13.3%
Linen Yarn
37.1
11.0%
34.7
10.4%
Silk (pro-quota) Inter-company sales Other Operations Aggregate total Inter-company sales
(3)
34.3
10.1%
34.6
10.3%
(10.8)
(3.2%)
(8.8)
(2.6%)
16.9
5.0%
16.6
5.0%
388.2
114.7%
383.6
114.8%
(49.7)
(14.7%)
Consolidated total
338.5
100.0%
of which: Italy
109.9
of which: Other markets
228.6
(49.3)
(14.8%)
334.3
100.0%
32.4%
113.7
34.0%
67.6%
248.8
66.0%
(1). The Ratti Group is consolidated with the proportional method at 33.36%; costs and revenues relating to the Filivivi Group, for the portion due to the Group, equal to 50%, have been reclassified to “Result from discontinued operations”, in application of IFRS 5. (2). Compared to 2012, the main foreign currency of interest for the Group had the following trends compared to the euro: GBP – British pound: 0.849 (average 2013); 0.811 (average 2012); JPY – Japanese Yen 129.660 (average 2013); 102.621 (average 2012); USD – US Dollar 1.328 (average 2013); 1.286 (average 2012); CZK – Czech Crown 25.987 (average 2013); 25.146 (average 2012). (3). Includes the reclassification of revenues from the wool yarns segment to “Result from discontinued operations”.
Marzotto group Report on operations
21
[Report on operations] Below is a brief representation of the geographic breakdown of net revenues as compared with last year’s results. As mentioned, domestic demand has dropped by 3.3%; the improvements achieved on the outlet export markets are important, in particular in Other European Countries +2.6% and in North America +29.7%. Turnover on the Asian market is stable.
by geographical area
2013
(in millions of euro)
109.9
32.4%
113.7
34.0%
Other European countries
158.7
46.9%
154.7
46.3%
North America
15.3
4.5%
11.8
3.5%
Asia
41.2
12.2%
41.0
12.3%
Other countries Total
Operating profit
2012
Italy
13.4
4.0%
13.1
3.9%
338.5
100.0%
334.3
100.0%
The Result from the Group’s core business stands at Euro 13.8 million (+1.2 million on the 12.6 million of end 2012). The Fabrics Segment books a result of Euro 14.2 million, in line with the 2012 figure of Euro 14.4 million. The economic figure achieved is still suffering the negative contribution made by the Velvet business recently acquired. The Woollen Yarns and Linen Yarns segments remain negative but do show some signs of recovery, respectively booking + 36.4% and + 10.7%. The Silk division records a reduction of 16.6%.
by business sector
2013 (in millions of euro)
Amounts
Amounts
13.0
3.5%
12.9
Textiles
14.2
5.4%
14.4
5.5%
Wool Yarns (pro-quota)
(0.7)
(1.5%)
(1.1)
(2.5%)
Linen Yarns
(2.5)
(6.7%)
(2.8)
(8.1%)
2.0
5.8%
2.4
6.9%
(0.3)
n.s.
(1.4)
n.s.
Other Operations Adjustments/reclassifications Total
(1)
1.1 13.8
= 4.0%
Marzotto group Report on operations
3.5%
1.1 12.6
= 3.8%
In the year in question, non-recurring events has a negative balance for Euro 19.3 million. More specifically, this item includes:
provisions made for Extraordinary charges on the business plan, for Euro 0.4 million, relate to costs for the reorganisation and increased efficiency of production departments, as well as to charges connected with decommissioned plants and areas;
expenses for the Praia dispute, for Euro 9.3 million, against costs incurred during the year and other legal charges and expenses forecast for the coming years.
Dividend Stripping expenses, for approximately Euro 10 million. These charges include the write-down of the receivable due from Valentino Fashion Group S.p.A., deriving from the Dividend Stripping dispute and in application of the agreement stipulated during the 2005 spinoff of the clothing BU. A transaction made by the parties in January 2014 means that this receivable has been completely written-down.
(1). Includes the reclassification of revenues from the wool yarns segment to “Result from assets held for sale”
22
%ge
Textile Sector
Silk (pro-quota)
Non recurring income and charges
2012 %ge
[Report on operations] Financial charges
The balance of financial operations as at 31 December 2013 is negative for Euro 4.9 million (-1.5% net revenues), worsening by 30.8%. This change is partly determined by the effect of financial exchange differences (in particular on a debt position in foreign currency held by the subsidiary Filin S.A.) and partly by an increase in average debt for 2013 as compared with 2012, faced with a greater spread between rates receivable on deposits and rates payable on loans.
Valuations at equity
Dividends from non-consolidated equity investments and equity measurements include the economic impact of the measurement using the equity method, of equity investments in affiliates. With this method, their book value has been adjusted to incorporate the period results of the subsidiaries.
Other income and financial charges
Other financial income and charges includes the write-down applied to the financial receivable due from Aree Urbane S.r.l. in liquidation for Euro 14.7 million.
Income taxes
Beginning in the tax year 2008, the companies Marzotto S.p.A., Immobili e Partecipazioni S.r.l., Linificio e Canapificio Nazionale S.r.l. and Licana S.p.A. (in liquidation), with renewal for the three years 2011-2013, as well as, beginning in 2009 Biella Manifatture Tessili S.r.l. (formerly Tallia di Delfino S.p.A.), Le Cotonerie S.r.l. (formerly Immobiliare Isola S.r.l.) and Ambiente Energia S.r.l., with renewal for the three years 2012-2014, chose the national tax consolidation regime, for which the parent company of Marzotto S.p.A. is the holding Wizard S.r.l., and its effects are also reflected in the results as of 31 December 2013. Immobili e Partecipazioni S.r.l., following the partial proportional spin-off of Wizard in 2012, left the tax consolidation (with effect as from 01 January 2012). The 2013 balance of the Marzotto Group includes IRAP taxes for 2.5 million euros (1.9 million the year before), and additional income taxes for 1.3 million euros (0.4 million in 2012). In 2011, in application of legislation governing the carrying forward of previous tax losses for IRES, deferred tax assets that the Company and/or the IRES tax consolidation considered as able to be recovered were considered in the total amount of approximately Euro 8.0 million. This situation was updated considering the economic results of the companies adhering to the tax consolidation at end 2013, provisioning further deferred tax assets in the total amount of Euro 1.4 million.
Net result
The above analysis reveals a negative net period result for Euro 33,7 million as compared with a positive result for Euro 2,7 million for FY 2012, making for an overall change of -36.4 million. The change is shown in the table below:
(in millons of euro)
change in profit from core businesses change in non-recurring income (charges) change in net financial charges change in income from shareholdings
0.0 (14.2)
Total
(33.0)
change in result from activities held for sale Total changes versus the comparison period
Report on operations
(1.1)
change in other financial income (charges) change in income taxes
Marzotto group
1.2 (18.9)
(4.2) 0.8 (36.4)
23
[Report on operations] Company’s balance sheet and financial position
The Group’s capital structure and financial position as of 31 December 2013 are summarized in the table below:
(in millions of euro)
Net trade receivable Other receivables
31.12.13 (1) 31.12.13 (2) 70.7 82.4
31.12.12 81.1
18.1
19.6
28.3
Inventory
111.0
127.1
133.5
Commercial suppliers
(85.6)
(94.8)
(89.3)
Other payables
(36.4)
(37.2)
A) Net working capital
77.8
97.1
B) Assets/liabilities held for sale
(0.6)
=
=
Receivables beyound 12 months
25.0
27.0
31.2
Equity investments Tangible fixed assets Intangible fixed assets
(31.5) 122.1
6.6
6.6
8.3
110.9
115.8
116.8
8.1
13.0
12.9
C) Net fixed assets D) Employee severance fund, reserves, and other non-financial M/L term payables E) Deferred taxes reserve
150.6
162.4
169.2
(32.4)
(35.0)
(41.8)
F) Invested capital net of current liabilities (A+B–C–D-E)
189.8
217.7
243.4
Short-term financial payables
163.0
191.0
194.9
Cash and short-term financial receivables
(75.5)
(75.7)
(82.8)
(5.6)
(6.8)
(6.1)
Covered by:
Medium/long term financial payables
3.1
3.2
4.4
Medium/long term financial receivables
(0.1)
(0.1)
(14.9)
G) Net borrowing
90.5
118.4
101.6
H) Group shareholders' net equity
99.3
99.3
141.8
189.8
217.7
243.4
I) Total (G+H) as in F
Net invested capital
Before reclassification to discontinued operations of the assets and liabilities relating to the Filivivi Group, invested capital came to Euro 217.7 million, recording a decline of Euro 25.7 million. Net of operating liabilities, following the reclassification pursuant to IFRS 5, as at the reporting date, net invested capital came to Euro 189,8 million, down 53.6 million on end 2012. This change is therefore due for Euro 27.9 million to the above reclassification and Euro 25.7 million to the major changes made to net working capital (of which approximately Euro 10 million for the write-down of the receivable due from Valentino Fashion Group S.p.A.), only partially offset by the reduction recorded in medium/long-term provisions.
(1). The Ratti Group is consolidated pro-quota (33.36%); assets and liabilities of the Filivivi Group (50%) are reclassified to “Assets/liabilities held for sale” in compliance with IFRS 5. (2). The Ratti group is consolidated pro-quota (33.36%); the Filivivi Group is consolidated pro-quota (50%), in continuity with FY 2012.
24
Marzotto group Report on operations
[Report on operations] Net working capital
Net working capital is 77.8 million euro, compared to 122,1 million euro for 2012, a 44.3 million euro decrease on end 2012. This change is due for Euro 19.3 million to the reclassification of the Filivivi Group (pro quota). In detail, the change includes a reduction in sundry receivables for approximately Euro 10 million connected with the mentioned write-down of the receivable due from Valentino Fashion Group and Euro 22.5 million the reduction in the value of final inventories, of which Euro 16.1 million for the reclassification of the Filivivi Group. The residual change is basically connected with the period use of the stocks accumulated the previous year. Trade receivables are down by Euro 10.4 million on end 2012 (of which Euro -11.7 million represents the portion of Filivivi); the increase seen within the same scope is mainly due to the reduced impact of the without recourse factoring transfer as compared with last year (21.7 million in 2013, 22.8 million in 2012).
Net fixed assets
The balance of Net fixed assets as of 31 December 2013, overall, changed by -18.6 million euro compared to FY 2012 (of which 11.9 million relating to the Filivivi Group).
Fixed assets
Tangible and intangible fixed assets, net of amortisation/depreciation, is down by Euro 10.7 million (0.9 million within the same scope). Gross investments (net of divestments) made during the year come to Euro 18.8 million (18.9 million in 2012), of which Euro 17.9 million for tangible assets and 0.9 million for intangible assets (2012 investments: 17.9 million in tangible assets and 1.0 million in intangible assets). 2013
(in millions of euro)
2012
Textile Sector
17.4
92.6%
17.7
93.7%
Textiles
14.1
75.0%
14.0
74.1%
1.1
5.9%
1.0
5.3%
0.8
4.3%
0.8
4.2%
1.4
7.4%
1.9
10.1%
Wool Yarns (pro-quota) Linen Yarns Silk (pro-quota)
(1)
Other Operations Total
(1)
1.4
7.4%
1.2
6.3%
18.8
100.0%
18.9
100.0%
Investments for the Fabrics sector were mostly for refurbishment and modernization measures of plants and machinery, in particular in the spinning, weaving and finishing departments of the Brno factory in the Czech Republic and Mongrando (Biella), in carrying out the program to enhance the efficiency of processing, as well as update and bring machinery and buildings up to code. For the Filivivi Group, the project continues to extend the Romanian plants, whilst for Linen Yarns, investments particularly involve the Tunisian branch. Investments made in the Silk Segment mainly relate to the strengthening of the ink-jet printing department and the purchase of miscellaneous printing equipment.
(1). The Filivivi group is consolidated pro-quota (50%); the Ratti group is consolidated pro-quota (33.36%).
Marzotto group Report on operations
25
[Report on operations] Net borrowing
As at 31 December 2013, net financial debt comes to Euro 90,5 million, down Euro 11.1 million on last year (of which 27.9 million relating to the Filivivi Group). As of 31 December 2013 the debt rate index (1) of the Group represents approximately 47,7% of net invested capital (41,7% at the end of last year). The analysis of changes of 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 Adjustments to income line items
2013
2012
(33.7)
2.7
0.7
(2.7)
Depreciation, amortization and write-downs
14.9
14.7
Provision and use of reserve
12.7
(1.7)
Cash Flow
(5.4)
13.0
Change in trade receivables
(1.0)
(4.2)
Change in inventory
6.3
(2.0)
Change in trade payables
2.2
(22.8)
2.1
(16.0)
(18.8)
(18.9)
Cash Flow from current assets Investment in tangible and intangible fixed assets Disposals of tangible and intangible fixed assets Acquisitions/change in shareholdings
0.3
0.2
=
(1.5)
Cash Flow from investments
(18.5)
(20.2)
Free Cash Flow
(16.4)
(36.2)
=
(3.6)
Conversion differences from net borrowing and minority interests Change in consolidation area
27.9
=
Free Cash Flow before dividends
11.5
(39.8)
=
(4.5)
Shareholders' dividends Capital increase in Parent company
(0.4)
Change in net financial position for the year
11.1
= (44.3)
Initial net borrowing
(101.6)
(57.3)
Final net borrowing
(90.5)
(101.6)
As at the reporting date, net financial debt was Euro 90.5 million, showing an improvement of Euro 11.1 million on last year. More specifically, cash flow from current operations generates positive flows for Euro 2.1 million (against use of Euro 16 million recorded in 2012). This performance is due for -5.4 million euros to income management, offset by +7.5 million euros generated by working capital, of which +6.3 million euros for changes to inventories (due to increased sales in the last quarter of 2013 as compared with the same period of 2012) and +2.2 million euros for changes to trade payables. Last year, this latter item had recorded a negative change of Euro 22.8 million against a reduction in trade payables, as the impact of a different seasonal trend in purchases and consequence of the choices to integrate the production process upstream towards provisioning markets. Investments use cash for Euro 18.5 million (more or less in line with the 2012 figure, excluding acquisitions made that same year). Finally, the separate presentation of the assets and liabilities of the Filivivi Group has had a positive impact in the amount of Euro 27.9 million on the Group’s net financial debt.
Net shareholders’ equity
The Group’s shareholders’ equity at year end comes to Euro 99,3 million (-42,5 on 31 December 2012). The capitalization index (2), calculated as ratio between shareholders’ equity and net invested capital, is down from 58.3% in 2012 to 52.3% at the end of 2013.
(1). Ratio between Net borrowing and Capital employed net of current liabilities. (2). Ratio between Shareholders’ equity and Capital employed net of current liabilities.
26
Marzotto group Report on operations
[Report on operations] Analysis by business sector
Fabrics
We would now like to report on the trend of the Group’s business segments. The main indicators for the Fabrics Sector are summarized below: (in millions of euro)
Consolidated net revenues (1)
2012
change
change %
264.7
262.0
2.7
+ 1.0%
Profit from core businesses
14.2
14.4
(0.2)
- 1.4%
% of net revenues
5.4%
5.5%
(0.1%)
Operating income
14.6
13.7
0.9
% of net revenues
5.5%
5.2%
0.3%
122.7
129.2
Consolidated net invested capital Investment for the period Active staff at 31 December: persons
Net revenues
2013
14.1
14.0
2,096
2,052
+ 6.6%
(6.5)
- 5.0%
0.1
+ 0.7%
44
+ 2.1%
Net revenues for Fabrics show a 1% increase, going from 262 million in 2012 to Euro 264,7 million as at this reporting date. This positive change is due to the fact that on the one hand, average prices have held firm, and on the other, we have seen an increase in quantities. More specifically, the volumes placed show the following trends with respect to last year: +1.1% for Wool Fabrics, +7.8% for Cotton Fabrics, +10.8% for Furnishing Fabrics. Below is a breakdown of revenues according to brand:
by brand
2013
(in millions of euro)
Marzotto and Lanerossi Fabrics
2012
106.0
40.0%
111.1
42.4%
Guabello Fabrics
33.8
12.8%
35.7
13.6%
Tallia di Delfino
25.1
9.5%
23.3
8.9%
Marlane Fabrics
30.2
11.4%
31.5
12.0%
Estethia/G.B. Conte
8.5
3.2%
8.3
3.2%
Tessuti di Sondrio
38.2
14.4%
36.8
14.1%
Other
22.9
8.7%
15.3
5.8%
Total
264.7
100.0%
262.0
100.0%
The table below, which instead shows the breakdown by geographical area, shows how the reduction of the percentage incidence of the Italian market as compared with the export market continues; this phenomenon had already been noted last year. The reduction in turnover seen on the Italian (-6.41%) and German (-9.36%) markets is offset by the clear improvement recorded elsewhere in Europe (+12.45%). The results achieved in Asia remain basically stable, where the Group has approximately 13.3% of its total turnover.
by geographical area
2013
(in millions of euro)
Italy
2012
73.0
27.6%
78.0
29.8%
Germany
49.4
18.7%
54.5
20.8%
Other European countries
84.0
31.7%
74.7
28.5%
North America
11.0
4.2%
7.9
3.0%
Asia
35.3
13.3%
35.2
13.4%
Other countries Total
12.0
4.5%
11.7
4.5%
264.7
100.0%
262.0
100.0%
(1). Including revenues towards other sectors of the Group for 5.0 million (2012: 4.9 million). Marzotto group Report on operations
27
[Report on operations] Fabrics Fabrics
Analysis by business sector
Result from ordinary operations
The result from ordinary operations is basically in line with the results achieved in 2012 and comes to Euro 14.2 million. The segment divisions show improving trends on FY 2013, from the +5% for Biella Manifatture Tessili S.r.l. (where only Marlane records a drop of approximately 5%, easily offset by the positive trends enjoyed by Guabello and Tallia di Delfino), to the +30% of Tessuti di Sondrio. Performance continues to be negative for the Velvet start-up although improvements are forecast as from FY 2014. The data shows that turnover is holding strong, also thanks to the careful attention paid to product prices and mix, and we continue to experience difficulty in maintaining volumes. This has resulted in plants not being used to full capacity, particularly due to the problems encountered in some markets (Italy first and foremost) and the repositioning choices made by some clients. As concerns fixed, commercial and general product costs, their percentage incidence of net revenues remains basically in line with 2012, thanks to cut-backs implemented and synergies achieved. This action has, on the one hand, enabled an improvement in the competitiveness of the costs of production and, on the other, the meeting the demands of an increasingly complex market with a varied offer of collections, without overlays, and products for different targets, focusing on specific “Made in Italy” assets such as flexibility, market response speed, even for small lots, customer service and excellent quality, know-how and innovation capacity. Important steps also continued to improve the productivity of the weaving and finishing processes, thanks to carefullyfocused multi-year investment plans, organization changes and training interventions to improve efficiency and decrease machine times, as well as improve quality.
Invested capital
Invested capital, of Euro 122,7 million, shows a decline of 6.5 million on the figure recorded for 2012. The change recorded is mainly due to a reduction in working capital of Euro 7.5 million, due to the increased short-term non-financial liabilities. Trade receivables are slightly down on last year, despite the reduction in the “without recourse” factoring quota on last year (18.3 million as compared with last year’s 18.7). In 2013 investments in equipment and machinery continued to maintain high productivity and production quality standards, as well as the adjustment and bringing the plants up to code; in all, for the whole of the Fabrics segment in Italy and abroad, investments totalled approximately 14.0 million euro.
28
Marzotto group Report on operations
[Report on operations] Woollen Yarn Sector
Analysis by business sector
The main indicators for the Woollen Yarns (in millions of euro)
(1)
Sector are summarized below: 2013
2012
change
change %
Consolidated net revenues (2)
46.0
44.5
1.5
+ 3.4%
Profit from core businesses
(0.7)
(1.1)
0.4
+ 36.4%
(1.5%)
(2.5%)
1.0%
(0.9)
(2.4)
1.5
(2.0%)
(5.4%)
3.4%
27.4
27.4
=
1.0
0.1
+ 10.0%
2
+ 0.6%
% of net revenues Operating income % of net revenues Consolidated net invested capital Investment for the period Active staff at 31 December: persons
1.1 315
313
+ 62.5%
=
Net revenues
Turnover for the Woollen Yarns segment was up by 3,4% on last year (+2.1% quantitative increase), mainly due to an increase in the domestic market, as shown by the table below:
by geographical area
(in millions of euro)
Italy Germany Other European countries
2013
2012
17.4
37.8%
14.7
0.8
1.7%
0.7
33.0% 1.6%
19.1
41.5%
20.5
46.1%
North America
0.3
0.7%
0.4
0.9%
Asia
5.8
12.6%
5.6
12.6%
Other countries Total
2.6
5.7%
2.6
5.8%
46.0
100.0%
44.5
100.0%
Result from ordinary operations
The result from ordinary operations achieved during the year, although still negative, is improving and now comes to -0,7 million euros (-1.1 million in 2012).
Invested capital
Invested capital used in the segment, equal to Euro 27,4 million (pro quota), is in line with the figures recorded in 2012 (2012 invested capital of 27.4 million). Period investments particularly include those made in the development of the Romanian company Rolana Tex S.r.l. Please also note that in 2013, yarn production for weaving was brought completely up to standard at the new Romanian plant of Calea Nationala (Botosani).
Net financial position
The net financial position is negative, going from Euro 26.3 million in 2012 to 28.0 million at end 2013 (pro quota), thereby booking a change of 1.7 million. Net debt to shareholders (1) at market conditions totals Euro 8.0 million (4 million is the share pertaining to Marzotto).
Forecasts
Considering the current market trends and price trends of raw materials, the Group’s 2014 turnover is expected to be basically in line with that of the year just ended. This forecast is supported by the trend of orders acquired during the first two months of 2014 as compared with the same period of 2013.
(1). The Filivivi group figures shown are considered at 50% (the joint-venture is consolidated pro-quota at 50%). (2). Including revenues towards other sectors of the Group for 4.3 million (2013) and 2.6 million (2012). Marzotto group Report on operations
29
[Report on operations] Linen Yarns Sector
Analysis by business sector
Linificio e Canapificio Nazionale group
The main figures of the Linificio e Canapificio Nazionale group of 2013 are shown below. (in millions of euro)
Consolidated net revenues (1) Profit from core businesses
2012
change
change %
37.1
34.7
2.4
+ 7.0%
(2.5)
(2.8)
0.3
+ 10.7%
(6.7%)
(8.1%)
1.4%
(2.7)
(3.5)
0.8
+ 22.9%
(7.3%)
(10.1%)
Group net income
(3.8)
(2.7)
(1.1)
- 40.7%
Consolidated net invested capital
36.5
39.9
(3.4)
- 8.5%
0.0
+ 0.0%
% of net revenues Operating income % of net revenues
Investments for the period Active staff at 31 December: persons
Net revenues
2013
0.8 776
0.8 809
- 4.1%
-33
2013 saw the Linificio e Canapificio Nazionale Group book an increase to turnover both in value terms (37.1 million, +7.0% on FY 2012) and in quantitative terms (+3.8% on linen yarns and +11.1% on linen fabrics). Below is a breakdown of revenues by geographical area, which shows how for the Linen Segment, the increase on last year is a consequence of a recovery of sales relating to the domestic market, against a reduction of European results.
by geographical area
2012
Italy
21.7
58.5%
18.8
54.2%
Other European countries
13.2
35.6%
14.1
40.6%
North America
0.2
0.5%
0.2
0.6%
Asia
1.5
4.0%
1.3
3.7%
Other countries Total
Operating income
2013
(in millions of euro)
0.5
1.4%
0.3
0.9%
37.1
100.0%
34.7
100.0%
The result from ordinary operations is basically in line with that recorded last year (-2.5 million as compared with the -2.8 million of FY 2012); instead, the operating result has improved (-2.7 million) on the -3.5 million recorded in the comparative period.
(1). Including revenues towards other sectors of the Group for 1.7 million (2013) and 1.4 million (2012). 30
Marzotto group Report on operations
[Report on operations] Linen Yarns Sector Linificio e Canapificio Nazionale group
Analysis by business sector As concerns the Tunisian subsidiary Filin SA, in 2013 restructuring began of the senior management organisation of the plant; this resulted in significant improvements to industrial performance, also assisted by a greater control by the parent company. A Tunisian production manager has been identified to deal with operative site management, reporting directly to the central technical manager of the Linificio Group, in turn appointed General Manager. The union problems, which had led to 6 days of strikes in 2013, followed by a further 6 days during the early months of 2014, were positively solved with the stipulation, thanks to the mediation of the central structures of Linificio, of a three-year agreement involving variable salary increased, measured to seniority and presence, and the freezing of any other claim for the entire duration of the agreement. The Lithuanian plant has instead continued to record significant improvements, both in terms of efficiency and product quality; the Italian plant devoted to the production of very fine thread counts, special yarns and samples of new products, operated fully for the whole of 2013. FY 2013 recorded a trend that can only be described as “swings and roundabouts”; during the first half, the market stagnated considerably, resulting in a major decline to deliveries with respect to the same period of last year; this initial stage was then followed by a basic recovery to sales that, combined with an aggressive commercial policy attacking both traditional markets and emerging ones, such as India and Turkey, enabled us to compensate for the initial gap. In the second half of 2013, action was also taken as envisaged by the three-year business plan; these began having their first positive effects as from the latter months of the year. The result therefore benefited from a complete saturation of plants, the greater productivity of the Tunisian plant and the first effects of increased efficiency in the consumption of raw materials.
Invested capital
Invested capital, net of current liabilities, is Euro 36.5 million, down Euro 3.4 million on 2012. We specifically note the reduction in the value of closing inventories for Euro 4.9 million, as an effect of the year’s consumption of stocks accrued the previous year. Period investments come to Euro 0.8 million and are compared with the 0.8 million of FY 2012.
Net financial position
The Group’s net financial position has reduced, going from cash available of 1.4 million as of 31 December 2012 to debt of 0.2 million at the end of 2013. The financial position is influenced by the negative self-financing of the year, mainly due to the negative income booked.
Marzotto group Report on operations
31
[Report on operations] Analysis by business sector
Silk Sector (1) Ratti group
(in millions of euro)
Consolidated net revenues Profit from core businesses % of net revenues Operating income
2013
2012
34.3
34.6
change
change %
(0.3)
- 0.9% - 16.7%
2.0
2.4
(0.4)
5.8%
6.9%
(1.1%)
1.8
2.1
(0.3)
% of net revenues
5.2%
6.1%
(0.9%)
Consolidated net invested capital
13.7
13.0
0.7
+ 5.4%
1.4
1.9
(0.5)
- 26.3%
4
+ 2.1%
Investment for the period Active staff at 31 December: persons
191
187
- 14.3%
Profit and financial performance of the Ratti group are consolidated in the Marzotto group on a proportional basis (33.364%) for FY 2013 too.
Net revenues
During the financial year, the Ratti group turnover was 102.8 million euro (34.3 million the portion pertaining to Marzotto), compared to 103.7 million (34.6 pro-quota) for 2012. This change is the balance of a reduction in sales on the domestic market, partially offset by growth on the export markets, as seen from the breakdown of net revenues according to geographical area shown below:
by geographical area
(in millions of euro)
2012
Italy
10.7
31.2%
11.9
34.4%
Other European countries
14.2
41.4%
13.3
38.4%
North America
4.1
12.0%
3.9
11.3%
Asia
4.4
12.8%
4.5
13.0%
Other countries
0.9
2.6%
1.0
2.9%
34.3
100.0%
34.6
100.0%
Total
Result from ordinary operations
2013
In 2013, the Group achieved a result of ordinary operation in increase by +6.0 million (+2.0 million increase pro-quota Marzotto) compared to the +7.1 million profit (+2.4 million the quota pertaining to Marzotto) of 2012. The Textile-fashion segment closed 2013 with a slight downturn to revenues, specifically suffering the major decline in consumption in the apparel segment and national domestic consumption. This situation is partially offset by the strong hold of silk and exports to emerging countries, where the gaining strength of the middle classes is focusing on a demand for high quality products. In this context, the Ratti Group has consolidated its strong growth of the previous two years, continuing to invest in technology, innovation and product development, in line with its mediumterm strategic plans. Investments made in tangible fixed assets, of Euro 3.8 million (1.3 the share pertaining to Marzotto) specifically regarded the strengthening of the ink-jet printing department and the purchase of miscellaneous printing equipment (Euro 1.7 million), improvements and extensions to the industrial building of Guanzate and the development of a new washing plant.
Net invested capital
Net operating capital is up on last year, mainly due to the reduction in short-term non-financial liabilities.
Net financial position
The Net Financial Position has declined, going from +1.4 million euros at end 2012 to basically break-even in 2013. The change is mainly the result of investments made that, if added to outlays for the distribution of dividends as resolved in 2012, neutralise the positive cash flow deriving from the core business.
(1). Data for the Ratti group is consolidated at 33.36%. 32
Marzotto group Report on operations
[Report on operations] Silk Sector
Analysis by business sector
Ratti group
Please note that during FY 2013, the subsidiary C.G.F. S.p.A. was merged by acquisition by the parent company Ratti S.p.A., with retroactive accounting and tax effect as at 01 January 2013.
Forecasts
Marzotto group Report on operations
The start-up of FY 2014 suggests that the sector is looking at a partial recovery. Some factors of uncertainty do, however, remain, both within and externally to the sector, with specific reference to political stability, the trend of financial markets and the evolution of consumer expectations in the Mediterranean. Although mitigated with respect to last year, these elements make the continuous monitoring of each reference market essential.
33
[Report on operations] Other operations
Other operations
Analysis by business sector
2013
(in millions of euro)
2012
change
change %
Net revenues (1)
16.9
16.6
0.3
+ 1.8%
Profit from core businesses
(0.3)
(1.4)
1.1
+ 78.6%
(19.7)
(3.3)
Operating income
(16.4)
>100% + 48.7%
Net financial revenues: (2)
5.8
3.9
1.9
- financial charges
(35.7)
(1.6)
(34.1)
>100%
Income before taxes
(49.6)
(1.0)
(48.6)
>100%
1.5
(0.1)
+ 6.7%
- from equity investments
Investments for the period Active staff at 31 December: persons
1.4 127
118
9
- 7.6%
The Other Operations sector includes mainly coordination and strategic direction activities, as well as service activities (administration and finance, legal and investors’ relations, human resources management, information technology) performed centrally in favour of the operating sectors. This sector also includes the results of management of the waste water treatment plant in Schio, the renewal energies activities, and non-consolidated shareholdings owned by the Group. The operating loss for 2013 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. The 2013 balance as concerns financial expenses includes a further write-down of the financial receivable due from Aree Urbane for a total of Euro 14.7 million, in addition to a write-down of the investments in Linificio S.r.l. for 11.9 million and in Filivivi for a further Euro 7.0 million.
(1). Including revenues towards other sectors of the Group for 10.4 million (2013) and 10.3 million (2012). (2). Including equity valuations of companies not consolidated with the line-by-line method.
34
Marzotto group Report on operations
[Investments in subsidiaries and associates] 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.
Biella Manifatture Tessili S.r.l. (formerly Tallia di Delfino S.p.A.)
In subscribing a reserved share capital increase of Euro 3,500,000, July 2008 saw Marzotto S.p.A. acquire a 70% stake in the share capital of Fratelli Tallia di Delfino S.p.A. and as from 30 July 2008, the Company has been subject to the management and coordination of its parent company. At the extraordinary shareholders’ meeting of 25 November 2009, called for the provisions pursuant to Art. 2447 of the Italian Civil Code, the share capital was zeroed and at the same time restored to Euro 200,000 by means of the issue of 200,000 shares, each worth a nominal value of 1 euro and unitary premium of 14 euros, for a total of 3,000,000 euros. Marzotto S.p.A. has subscribed its 70% share and, by virtue of the failure of Appia S.r.l. to exercise its stock options, as from 15 January 2010 it has become the sole shareholder of Tallia. Thereafter, with the extraordinary shareholders’ meeting of 26 April 2011, a share capital increase was resolved, which was fully subscribed, by means of the conferral by Marzotto of the business unit referred to as “Lanifici Biellesi”, corresponding to the Guabello and Marlane business. The operation took effect on 01 May 2011. At the same time, the Company changed its name to “Biella Manifatture Tessili S.p.A.”. This operation has concentrated the textile activities of the Marzotto Group around the Biella area in one single corporate hub, to take advantage of all possible actions to increase the system as a whole. In operative terms, the operation enabled completion of the synergies initiated in relation to the industrial, logistic, managerial and human resource processes. Thanks to the relevant synergies existing between Guabello, Marlane and Tallia, there’s a structural and functional bond between them which ensures competitive and efficiency advantages for the respective products which, since they are complementary, have enabled us to offer the market a complete range of “Made in Biella” articles. At the same time, the operation has enabled us to seize the opportunities to enhance and better develop the different brands, creating a strong group in its size, strengthened by belonging to the wool district and therefore benefiting for the quality and product recognition typical of the Made in Biella, exploiting the added value deriving from the fact that it is part of the wool-making district par excellence. The positive effects of the operation, seen in FY 2011 despite the very negative outlook and the continued severe world crisis, were also seen in the year just ended. Biella Manifatture Tessili has managed to maintain turnover basically in line with last year, going from Euro 90.8 million in 2012 to Euro 89.5 million in 2013 and a core business result that stands at Euro 6.1 million (Euro 6.3 million in 2012). In FY 2013, the subsidiary changed its business name from Biella Manifatture Tessili S.p.A. to Biella Manifatture Tessili S.r.l.
Marzotto Textile N.V. and subsidiaries
Marzotto group Report on operations
Incorporated on 19 April 2005 following the demerger operation from Marzotto International N.V., by transferring the shareholdings pertaining to the Textile business sector, at the end of 2010 it controls directly the foreign companies Novà Mosilana a.s. and AB Liteksas (important production facilities located in the Czech Republic and Lithuania respectively), Marzotto International Trading Shanghai Co. LTD (Sales representation company established in 2005 to monitor the Far East markets) and Marzotto Textiles Usa Inc. (Incorporated on 02 January 2008 to carry out sale activities in the North American markets for the fabrics and home décor sectors).
35
[Investments in subsidiaries and associates] Sametex Spol s r.o.
The Czechoslovakian company was acquired by Marzotto as part of the “Velvet project” on 01 August 2012. It produces velvet fabrics for the international market. The Company was subjected to bankruptcy proceedings early 2012 after long-standing economic and financial difficulties connected with the events of the Italian parent company “Redaelli Tessuti S.r.l in liquidazione e concordato preventivo”. In FY 2013, restructuring continued to allow normal business to resume. At the start of the year, the Court of Usti Nad Labem approved the restructuring plan submitted by the parent company, which was thereafter implemented in February 2013. By resolution issued in April by the Czechoslovakian court, the subsidiary Sametex was released from insolvency proceedings.
Marzotto Textile Cz s r.o.
The Czechoslovakian company Marzotto Textile CZ was established on 10 June 2013. The company provides technical consulting services.
Girmes International G.m.b.H
Girmes was acquired by Marzotto under the scope of the “Velvet operation”; it distributes velvet fabrics internationally. As part of the rationalisation undertaken to restore economic management conditions for the activities relating to the new Velvet business, the cut-backs and simplification of the logistic and distribution activities of Girmes was evaluated in order to exploit the synergies that the existing Italian structures can allow in the mentioned areas. As from FY 2013, Girmes provides representation and commercial intermediation for the parent company Marzotto S.p.A.
Finvel S.r.l.
Again under the scope of the Velvet project, late 2012, Marzotto took over 100% of the shares in Finvel S.r.l., a small textile company based in Lecco and specialised in marketing warped velvet for home furnishings and clothing, founded in 2011 with a view to continuing the work of Redaelli Velluti. The aims of the purchase of shares by Marzotto were to take over the order book and know-how developed internally. By notary deed dated December 2013, a merger by acquisition was finalised of Finvel S.r.l. by Marzotto S.p.A., with retroactive accounting and tax effect as at 01 January 2013.
Shareholdings in Affiliates
In the following pages we report on the main non-consolidated shareholdings:
Mediterranean Wool Industries CO. S.A.E. (ET) Share capital U$ 10,000,000
Equity investments no. of shares owned
2013
2012
30.00%
30.00%
30,000
30,000
Marzotto Spa book value
2.0 euro/million
2.0 euro/million
consolidated book value
1.5 euro/million
1.8 euro/million
During FY 2010, Marzotto S.p.A. acquired 30% of the share capital of Mediterranean Wool Industries Co. (MWI) S.A.E., a company incorporate in Egypt whose business purpose is the processing of textile fibres (combing, carbonization, other processes) at a newly built factory in Sadat City (Egypt); this is the result of a cooperation agreement with the Schneider group, an important and well known player in the industry. The factory full capacity operation was postponed to the end of 2011 due to the country’s socialpolitical situation, in view of which, Marzotto has decided to undertake a five year insurance policy to protect the Group from any possible negative impact which may arise mainly from expropriation actions, currency restrictions, wars and civil unrest. FY 2013 saw the Company record a loss, connected with the failure to use production plant capacity to the full. In application of the reference accounting standards, the equity investment was measured as equity and its values were therefore adjusted accordingly.
36
Marzotto group Report on operations
[Investments in subsidiaries and associates] Mascioni S.p.A. (MI) Share capital euro 5,000,000
Equity investments no. of shares owned
2013
2012
28.35%
28.35%
283,500
283,500
Marzotto S.p.A. book value
4.0 euro/million
4.0 euro/million
consolidated book value
3.4 euro/million
4.8 euro/million
The 2013 draft financial statements of the affiliate Mascioni S.p.A., leader on the international markets in high-end fabric enhancing production, recorded a loss of Euro 4.9 million (loss of Euro 4.7 million in 2012). Turnover was Euro 46.1 million, up 5.4% on last year, with basically the same weight on turnover according to the method and increase in clothing. Turnover towards the parent company Zucchi S.p.A. had increased particularly (+45%). The Net Financial Position had worsened, going fro 5.0 million in 2012 to 7.8 million this year. In application of the reference accounting standards, the equity investment was measured as equity and its values were therefore adjusted accordingly to incorporate the period loss.
Aree Urbane S.r.l. (MI) Share capital euro 100,000
2013
2012
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. Last year, Marzotto S.p.A. and the shareholders Prelios and Telecom stipulated an agreement aimed at defining guidelines to conduct to be held in restoring “Aree Urbane S.r.l. in liquidazione” to performing status. The effect of this agreement was subject to a condition precedent, an essential condition to restoring the affiliate to performing status, which envisaged reaching an agreement with the chosen banks to refinance the past-due debt of Aree Urbane. The above condition is not met this year, making it effectively difficult to pursue the affiliate’s business. In view of the current situation and for the lack, as at the date on which these financial statements are prepared, of any favourable prospects, the Company has chosen to fully write-down the receivable due from the affiliate, equal to Euro 14.7 million.
Pettinatura di Verrone Share capital euro 3,000,000
Equity investments no. of shares owned
2013
2012
15.00%
15.00%
1
1
Marzotto S.p.A. book value
1.5 euro/million
1.5 euro/million
consolidated book value
1.6 euro/million
1.5 euro/million
In September 2012, together with Loro Piana ed Ermenegildo Zegna, Marzotto acquired a 15% share in Pettinatura di Verrone, a Biella-based company specialised in super-fine, cashmere and vicuña wool combing, heading the Schneider group, which controls it with a 55% share. Focusing on a high quality product, Pettinatura di Verrone targets a niche market that does not directly suffer the competition of the companies based in emerging countries, at the same time striving to optimise the value of “Made in Italy”. The 2013 draft financial statements of the affiliate show net revenues of Euro 7.8 million, making for an improvement on last year (revenues of Euro 4.3 million in 2012) and a net result of +0.2 million euros (net result basically at break-even in 2012).
Marzotto group Report on operations
37
[Other information]
38
Industrial relations Fabrics
On 11 December 2013, the agreement was signed for the transfer of the business unit from the affiliate Filivivi S.r.l. to Marzotto S.p.A. (with effect as at 02 January 2014) of the “Yarns Unit”. This BU includes all plants, machinery, assets and staff of the dye area, reconditioning and some complementary offices based in Piovene Rocchette (VI). More specifically, 23 people were transferred and included in the Marzotto workforce, of whom 14 classified as blue-collar workers and 9 as white-collar workers/middle management. On 31 October 2013, Biella Manifatture Tessili S.r.l. began mobility proceedings to make up to 24 workers redundant (of whom 5 were white-collar workers and 19 blue-collar workers) of the plants of Mongrando and Strona, both in the province of Biella. These proceedings were concluded with the trade union agreement signed on 07 November 2013 and which established that these redundancies would be made by 31 December 2014. On 28 August 2013, an agreement was reached on the reorganisation of work in the weaving department of Valdagno, with the transfer of assignments of Picanol looms from 12 to 15 looms per weaver. This agreement achieved the objective of increasing productivity and was together with some technical and organisational interventions useful to supporting product performance and quality. A similar agreement was reached at Nova Mosilana in Brno (Czech Republic). On 26 November 2012, consultation began for renewing the Company Supplementary Agreement (or 2nd level contract) valid for 2013, 2014 and 2015 for workers of the Valdagno plant (BMP division and central staff). On 18 January 2013, an agreement was reached with the national representatives of the textile segment trade unions present. Thereafter, consultation began for the renewal of the supplementary contracts for the Sondrio plant and the plants of Mongrando and Strona of Biella Manifatture Tessili S.r.l.
Woollen Yarns
In July 2013, Filivivi S.r.l. achieved the objective of the second year of concession of the extraordinary redundancy fund (CIGS) for workers of the plant of Piovene Rocchette (VI), which had ceased operating in July 2012. In order to obtain this concession, the number of workers already assigned to CIGS had to be reduced to an established percentage. This objective was also achieved thanks to specific placement supported by the outplacement programmes. Production staff in force at the Verrone (Biella) office worked reduced hours from 04 February 2013 until 31 December, using a defensive solidarity contract. In November, trade union consultations began with a view to the sale and conferral of the “Yarns Unit” business units of Piovene Rocchette to Marzotto S.p.A. and the Verrone plant to the newlyestablished company “Tintoria di Verrone S.r.l.”.
Linen Yarns
To the benefit of staff and in protection of employment at the production plant of Villa D’Almè (BG), a defensive solidarity agreement was stipulated with reduced working hours. Coordination, guidance and support continued of trade union relations in the subsidiary Filin S.A. based in Tunisia, by the parent company Linificio and Canapificio Nazionale, with a view to locally consolidating conditions and useful practices to help ensure a positive development of relations between the parties.
Ratti Group
In 2013, a project was completed that had been initiated by the Group in previous years. This aimed to integrate all Italian companies into a single legal entity at the Guanzate headquarters, thereby consequently making cut-backs on the commercial, industrial and creative structure. On 23 July 2013, the trade union information procedure was begun for the transfer of the business, involving the merger by acquisition of the subsidiary Collezioni Grandi Firme S.p.A. by Ratti S.p.A., as from 01 October 2013. On 30 August 2013, a trade union agreement was reached to standardise contracts, taking the employees of Collezioni Grandi Firme S.p.A. classified on the Service Providing collective national employment contract to the Textile collective national employment contract used in Ratti S.p.A. The latter period of 2013 saw use of the ordinary redundancy fund in the weaving department. Use of this instrument was agreed through the stipulation of a trade union agreement with RSU to manage the reduced working hours for a group of 34 workers from 21 October 2013 to 18 January 2014. Use of the ordinary redundancy fund was applied to a total of 30 workers for 1,330 hours and authorised by INPS on 26/11/2013.
Marzotto group Report on operations
[Other information] Training and development of human resources
Marzotto considers continuous training a key factor to increase and keep up-to-date its managers’ skills and technical knowledge of its collaborators. In 2013, Marzotto S.p.A. invested 1,206 hours in training (apart from training on safety), using inter-professional funds such as Fondimpresa and Fondirigenti. Marzotto has further developed the “Young Project”, the progression involving the inclusion of young graduates in the Operations and Sales areas. Having started off in 2010 with the “Young Engineers Project”, it continued with the “Young Sales Project” in 2012; today Marzotto numbers 10 engineers hired and another 5 on traineeships within the Group plants, to develop specific, innovative projects in the production areas and 4 young sales staff studying and developing the market. All engineers and sales staff of the Young Project participate in specifically-planned training activities to develop their skills and professional and managerial capacity. Marzotto has continued to invest in the development of individual and community competences and performance: alongside interventions aimed at the individual (masters, specialisation courses), specific training programmes have also been organised involving some strategic communities for the business (sales area, fashion designers and “young talents”). In 2013, the main training initiatives were as follows: training in accordance with the State-Regions agreement Italian Legislative Decree no. 81/08, involving 125 blue-collar workers, white-collar workers and middle management; 35 persons appointed, 17 blue-collar workers who had not yet attended the course, 17 logistics operators, for a total of 194 workers involved (from the GMF Fabrics Division, Furnishing, Staff, Estethial GB Conte, Piovene warehouse); 238 people were trained in Sondrio, 92 in Mongrando and 74 in Strona on all levels; course for workers operating forklift trucks for 9 employees of Valdagno; course for workers in charge of operating mobile elevating working platforms for 10 employees of Valdagno and 2 of Mongrando; training course for all Group senior management; in Mongrando, fire-fighting updates were performed for 24 employees and training for first aid operators for a further 15 people. At the subsidiary Novà Mosilana A.S., all employees are trained twice a year in safety, protection of health and fire prevention, in compliance with local legislation. During the year, 75 employees also participated in foreign language (English, Italian) courses and 29 employees attended management and accounting courses. A training cycle was also begun for 73 workers on production, quality and planning, for a total of 2,190 hours. In the Ratti Group, 2013 investments in training totalled approximately 400 hours, using the interprofessional funds Fondimpresa and Fondirigenti. Training courses were run for all employees to improve foreign languages and increase IT skills, as well as to improve negotiations in the SALES area. An in-house technical textile training school was also established for all our Creative workers, involving both time spent in the production departments and specific classroom routes, taught by internal and external staff. Ratti has been collaborating with the most important national and international fashion and design schools for some years now, running study grants and projects. In 2013, 15 students were admitted for traineeships. Finally, we have also continued to focus on some of the company potential with external masters.
Marzotto group Report on operations
39
[Other information] Employees by sector (1)
The number of employees (workforce, including employees under Extraordinary Redundancy Fund/not in service) of the Group as of 31 December 2013 was 3,551 (1), of whom 1,423 working in Italy (total 3.528 employees as of 31 December 2012, of which 1,399 in Italy). Active staff went from 3.479 at the end of 2012 to 3,505 as of 31 December 2013. Year-end staff at 31.12.2013 Textiles
2013
2012
2,096
59.8%
2,052
59.0%
2,096
59.8%
1,994
Wool Yarns
315
9.0%
313
9.0%
315
9.0%
345
9.9%
Linen Yarns
776
22.1%
809
23.2%
785
22.4%
833
24.0%
Silk Total Textile Sector Other Operations Total Total staff year end
Active employees by Country (1)
57.4%
191
5.5%
187
5.4%
190
5.4%
185
5.3%
3,378
96.4%
3,361
96.6%
3,386
96.6%
3,357
96.6%
127
3.6%
118
3.4%
121
3.4%
116
3.4%
3,505
100.0%
3,479
100.0%
3,507
100.0%
3,473
100.0%
Laid off/dismissed
46
49
50
90
3,551
3,528
3,557
3,563
Year-end staff
Average staff
at 31.12.2013
at 31.12.2012
Italy
1,377
39.3%
1,350
38.8%
1,375
39.2%
1,377
39.7%
Czech Republic
1,027
29.3%
998
28.7%
1,012
28.9%
947
27.3%
Lithuania
382
10.9%
380
10.9%
384
10.9%
373
10.7%
Romania
163
4.6%
150
4.3%
162
4.6%
153
4.4%
Tunisia
542
15.5%
574
16.5%
553
15.8%
608
17.5%
Other countries Total
Research and development
Average staff
at 31.12.2012
2013
2012
14
0.4%
27
0.8%
21
0.6%
15
0.4%
3,505
100.0%
3,479
100.0%
3,507
100.0%
3,473
100.0%
Research and development activities referred mostly to research and technology innovation to improve the quality standards of the production processes, new products research and improvement of the flexibility of customer service. The main actions undertaken were: Marzotto – GMF Division The Division continued with intense research aimed at finalising innovative technical solutions for the development of new fabrics with unique blends and matches for use in the clothing market, enabling a significant increase in the technical/technological contents with respect to current production. More specifically, the priority objectives of the activity were the development of coupled fabrics, mixed stretch fabrics and natural wool-based water-repellent technical fabrics. The Division has also implemented a research and development programme on the study and experimentation of innovative technical solutions aimed at increasing the efficiency of the production process through the implementation of new software solutions. Marzotto – Blankets Division Research focused on new fabrics in noble materials (cashmere and pure wool) with a high degree of resistance to rubbing, pilling and washing and the use and working of new materials such as linen, alpaca and new fabrics based on new blends.
(1). The employees of the Filivivi group are considered pro-quota at 50%; the employees of the Ratti group are considered proquota (33.36%). 40
Marzotto group Report on operations
[Other information] Research and development
Marzotto – Estethia/GB Conte Division Business is focused on the development of new solutions seeking to create new product ranges. More specifically: -
new cotton-based fabrics that are extremely light with far finer thread counts; new linen-based coupled fabrics characterised by new treatments and finishes; new jersey fabrics characterised by three-dimensional effects and depth; new fabrics created with new types of yarns, including coupled with jersey for the completion of new items dedicated to the mid-season; - new, innovative dye and finishing treatments for the development of unique délavé effects.
Marzotto – Tessuti Sondrio Division Division research and development was carried out in relation to the different fabric treatment stages and the preparatory techniques for the different finishing processes. Biella Manifatture Tessili Research and development focused on the evolution and identification of alternative, innovative solutions for products and fabrics intended for ranges and niches in the reference clothing market. Technical solutions and design and construction methods have also been developed to guarantee the optimisation of industrial activities and the related qualitative and aesthetic value of the finished product. Linificio e Canapificio Nazionale Linificio research and development focused on new manufacturing processes with the aim of producing linen yarns mixed with noble fibres such as cashmere, alpaca and mohair. New manufacturing methods have been identified that can process this mix, guaranteeing the characteristics and performance of the linen yarns. Linificio has also been involved in developing new research methods for the classification of linen even after chemical treatment. This research and development saw Linificio also involved in projects joint-financed by Italian and European funds “BioInNano”, “GreenMade”, “Silk BioTech” and “Bio Nano-Sol”. The aim of these projects is to develop innovative, multifunctional textile materials for applications ranging from traditional clothing to technical-protective clothing, fabrics for home furnishings and yarns used in knitwear. Ambiente Energia Ambiente Energia has devoted its time to researching systems by which to reduce and filter odour, aimed at eliminating it and therefore collecting waste the composition of which means that it is subject to this type of problem. Ambiente Energia has sought out solutions to monitor and keep control of the development of ammonium in the biological plant and significantly reduce the quantity of nickel and other metals from the sludge produced by the plant, thereby making it “non-hazardous” and consequently able to be conferred to less expensive Italian landfills. Ratti Research and technological innovation are focused on improving quality standards by studying new printing and finishing technologies and on researching new fabrics. In this context, the needs for service and flexibility demanded by customers become particularly important, above all as concerns the speed in delivering products and high quality. Study and research into the production of a microbiotic and antibacterial silk yarn (Silk bio tech) continue particularly.
Marzotto group Report on operations
41
[Other information] Risks management (IFRS 7)
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.
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.
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.
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: (thousands of euro)
2013
2012
Financial assets available for sale
=
Financial assets at fair value carried on Income statement
=
= =
Financing and credits
89,430
130,168
Cash and cash equivalents on hand
75,490
82,827
Other
160
160
Total
165,080
213,155
Trade receivables aging at the date of the financial statements was: 2013 (thousands of euro)
gross
Current
63,005
Overdue from 0 to 90 days Overdue over 90 days Total
2012 fund
gross
fund
(5,316)
67,451
(5,391)
11,368
(526)
15,574
(720)
2,500
(1,571)
5,702
(2,898)
76,873
(7,413)
88,727
(9,009)
The information on guarantees given and received is contained in the section Contractual commitments and guarantees (memorandum accounts of the group note). The information on the provisions for bad debt is indicated in point 3.2 of the group note. 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, 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.
42
Marzotto group Report on operations
[Other information] 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.
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 Company 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 Group does not enter into term or option exchange rate contracts for speculative purposes. The hedged cash flows are expected within the next 12 months. 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 Group exposure to the exchange rate risk at the date of the financial statements. 2013
(thousands of euro) Trade receivables
Usd
2012 Jpy
Usd
Jpy
13,394
460,228
7,961
7,577
147,448
3,746
52,473
Trade payables
(3,996)
(697,578)
(5,371)
(663,659)
Total
16,975
(89,902)
6,336
(209,988)
Short term financial assets and cash and cash equivalents
401,198
Interest rate risk The Group’s borrowing is mostly concentrated on variable interest rate. Considering the present financial structure of the Group, in case of an increase in the interest 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 2012, it would have involved higher net financial charges for approximately 507 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 analyzed when the price lists are prepared. At that same time, the net demand generated by the purchase budget are covered 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.
Marzotto group Report on operations
43
[Subsequent events] As part of the strategic choices made by the Group, on 02 January 2014, Marzotto S.p.A. acquired 50% of the lithuanian company Uab Lietvilna, the dying and reconditioning business unit in Piovene Rocchette (VI) and a quote of 50% in the share capital of the newly-established Tintoria di Verrone S.r.l., from the joint venture company Filivili S.r.l. By notary deed dated 24 February 2014, Marzotto S.p.A. sold its stake in Filivivi S.r.l., operating in the wool yarns segment, equal to 50% of the share capital, to Fraver S.p.A., which now holds the entire capital. At the date of this document, there are no further significant events to report after the close of the year.
44
Marzotto group Report on operations
[Performance news and outlook for the current year] The initial economic forecasts on data for the first half of 2014 in the Textile-Fashion segment suggest a reversal of trend (+2.1%), also for companies involved upstream in the supply chain (+0.4%). The domestic demand is also expected to be positive, with growth rates of +1.4%. As concerns short-term expectations monitored by sector studies, most operators are not expecting any major changes in the market situation and are basically looking at stability in the recession context seen in 2013. The first results of the various sectors for 2014 should be considered in this background: (in millions of euro)
02.2014
02.2013
Textile Sector
49.0
100.2%
42.9
99.3%
Textiles
36.7
75.1%
33.4
77.3%
Wool Yarns (pro-quota)
2.0
4.1%
=
=
Linen Yarns
5.5
11.2%
4.9
11.3% 10.7%
Silk (pro-quota)
4.8
9.8%
4.6
Other Operations
2.5
5.1%
2.6
6.0%
Aggregate total
51.5
105.3%
45.5
105.3%
Inter-company sales
(2.6)
(5.3%)
(2.3)
(5.3%)
Consolidated total
48.9
100.0%
43.2
100.0%
Group turnover as at 28 February 2014 showed a 13% increase on the turnover for the same period of 2013.
Valdagno (VI), 27 March 2014 THE BOARD OF DIRECTORS
(1). In 2014, this considers the new scope comprising Tintoria Piovene, Tintoria di Verrone (50%) and UAB Lietvilna (50%); the Filivivi Group is considered as a third party for 2013 too. Marzotto group Report on operations
45
Annual Report 2013
General information Marzotto group Report on the Group’s operations
Consolidated financial statements
Marzotto S.p.A. Report on the Company’s operations Company financial statements
Sole 24 Ore” del 5 aprile 2007
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”.
47
Financial Statements
[Consolidated Statements of financial position] 31.12.2013
(thousands of euro)
Partial
31.12.2012 Total
Partial
Total
1. Non-current assets 1.1 Property, plant and equipment
109,653
115,554
1.2 Civil buildings
1,202
1,202
1.3 Goodwill, trademarks and other intangible assets
8,124
12,908
1.4 Equity Investments
6,446
8,145
1.5 Other investments
160
160
1.6 Long-term receivables
518
5,899
1.7 Deferred tax assets 1.8 Long-term financial receivables third parties Long-term financial receivables associates
24,451 105 =
Total non-current assets 2. Non-current assets held for sale
25,334 84
105
14,827
14,911
150,659
184,113
41,418
50
3. Current assets 3.1 Inventories 3.2 Trade receivables third parties Trade receivables associates 3.3 Other receivables Other receivables associates 3.4 Current financial assets, cash and cash equivalents third parties Current financial assets, cash and cash equivalents associates
110,967 69,460 1,275
70,735
18,072 =
Total current assets
1,388
81,107
26,903 18,072
72,486 3,004
133,456 79,719
1,349
28,252
79,941 75,490
2,886
82,827
275,264
325,642
467,341
509,804
4.1 Share capital and reserves
133,002
139,093
4.2 Income/(Loss) for the year
(33,706)
Total assets 4. Shareholders' equity
Group shareholders' equity
2,718
99,296
4.3 Non controlling interests Total shareholders' equity
141,811
=
=
99,296
141,811
33,489
34,870
5. Non-current liabilities 5.1 Long-term provisions 5.2 Other long-term payables
431
8,492
5.3 Deferred tax liabilities
4,021
4,545
5.4 Long-term financial payables
3,118
4,383
Total non-current liabilities
41,059
52,290
41,993
=
6. Non-current liabilities held for sale 7. Current liabilities 7.1 Trade payables and other payables third parties Trade payables and other payables associates 7.2 Current financial payables Total current liabilities
48
120,343 1,702
118,533 122,045 162,948
2,260
120,793 194,910
284,993
315,703
Total shareholders' equity and liabilities
467,341
509,804
Net financial debt
(90,471)
(101,555)
Marzotto Group Consolidated financial statements
[Consolidated Statement of income and comprehensive income]
Financial Statements
Year 2012 (3)
Year 2013 (thousands of euro) 8.
Amounts
Net revenues third parties
%age
332,766
Net revenues associates
Amounts
98.3
%age
328,181
98.2
5,750
1.7
6,154
1.8
Totale net revenues
338,516
100.0
334,335
100.0
9.
(256,906)
(75.9)
(257,402)
(77.0)
(5,228)
(1.5)
(2,944)
(0.9)
Cost of sales third parties Cost of sales associates
10. Gross income
76,382
22.6
73,989
22.1
11. R&D and marketing costs
(42,109)
(12.4)
(41,279)
(12.3)
12. General and administrative costs
(20,425)
(6.1)
(20,143)
(6.0)
13. Other income and charges
(19,340)
(5.7)
(323)
(0.1)
(5,492)
(1.6)
12,244
3.7
(4,950)
(1.5)
(3,834)
(1.1)
14. Operating income 15. Net financial charges third parties Net financial charges associates 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 19. Income before taxes 20. Taxes 21. Net income from continuing operations 22. Net profit/(loss) from discontinued operations 23. Net income (before non controlling interests) 24. Income attributable to non-controlling interests 25. Group net income (1) 26. Fair Value adjustments
27. Other adjustments
(1)
Items that will be reclassified subsequently to profit or loss 28. IAS 19 adjustments (1) Items that will not be reclassified subsequently to profit or loss 29. Group total comprehensive income for the period 30. Base income per ordinary share (in euro) (2)
20
=
66
(1,359)
(0.3)
(1,456)
= (0.5)
=
=
=
=
(14,441)
(4.3)
(175)
(0.1)
(26,222)
(7.7)
6,845
2.0
(5,248)
(1.6)
(1,157)
(0.3)
(31,470)
(9.3)
5,688
1.7
(2,236)
(0.7)
(2,970)
(0.9)
(33,706)
(10.0)
2,718
0.8
=
=
=
=
(33,706)
(10.0)
2,718
0.8
(1,956)
(0.5)
2,057
0.5
(6,826)
(2.0)
679
0.2
(8,782)
(2.5)
2,736
0.8
419
0.1
419 (42,069)
(441)
(0.1)
(441)
(0.1)
5,013
1.5
0.1 (12.4)
(0.52)
0.04
1. Components recognized in equity. 2. Refers to the annual average number of ordinary shares of the Parent Company in circulation. 3. Expenses and revenues relating to Filivivi group have been classified under "Net result from discontinued operations".
Marzotto Group Consolidated financial statements
49
Financial Statements
[Consolidated Statements of cash flows]
(thousands of euro)
2012 (2)
2013
Income before taxes (including non controlling interests) (1) Amortisation, depreciation and impairment Change in provisions
(26,222)
6,845
14,862
15,681
595
(Gains)/losses on disposal of fixed assets
(691)
(475)
1,681
1,714
Net profit/(loss) from discontinued operations
(2,236)
(2,970)
Income taxes paid
(3,796)
(4,524)
Change in inventories
22,489
(3,049)
Change in trade receivables and other receivables third parties
(6,722)
(2,534)
117
(168)
46,537
(13,171)
Investments valued at equity
Change in trade receivables and other receivables associates Change in trade payables and other payables third parties Change in trade payables and other payables associates Change in other long term receivables and payables Operating cash flow (A) Investments in intangible and tangible fixed assets Disposals in intangible and tangible fixed assets (Investments in) /disposals of other equity investments Cash flow from investments (B) Translation exchange differences and other equity changes (C)
(163) (14,911)
671 (8,783)
31,540
(18,288)
(18,778)
(19,234)
989
609
=
(1,462)
(17,789)
(20,087)
(2,666)
862
Change in scope of consolidation (D)
=
(2,241)
Cash flow before dividends (A+B+C+D)
11,084
(39,754)
Dividends paid
(4,550)
Increase in capital share of Parent Company Change in net financial position Change in long-term financial payables Change in current financial payables third parties Change in current financial payables associates Change in long-term financial receivables third parties
=
=
11,084
(44,304)
(1,265)
(1,495)
(31,962)
5,171
=
=
(21)
(15)
14,827
(132)
Total change in current financial assets, cash and cash equivalent
(7,337)
(40,775)
Cash and current financial assets - beginning of the period
82,827
123,602
Cash and current financial assets - end of the period
75,490
82,827
Change in long-term financial receivables associates
1. It includes interests paid and received in the amount of 1,634 and 4,945 k euro respectively. 2. The Year 2012 has been reclassified in accordance with IFRS 5.
50
(7,526)
Marzotto Group Consolidated financial statements
[Consolidated Statement of changes in equity]
Financial Statements
Fair (thousands of euro) Balance as at 31.12.2011
Profits
Group
Share
Legal
Transl.
value
IAS 19
Other
carried
Group
s/holders'
capital
reserve
reserve
reserve
reserve
reserves
forward
result
equity
65,005
15,000
9,585
(1,920)
503
16,224
22,984
Net income for the year 2012 Other total profit/ (losses)
2,718
(1)
Total other income/charges
13,967
=
=
665
2,057
(441)
14
665
2,057
(441)
14
141,348 2,718 2,295
=
2,718
5,013
Allocation of net income: dividends
(4,550)
carried forward
19,259
Balance as at 31.12.2012
65,005
15,000
10,250
137
62
35,497
(5,292) 13,142
Net income for the year 2013 Other total profit/ (losses)
(1)
Total other income/charges Changes in capital
=
=
(6,859)
(1,956)
419
33
(6,859)
(1,956)
419
33
(2)
(4,550) (13,967) 2,718
= 141,811
(33,706)
(33,706)
(33,706)
(42,069)
(8,363) =
(446)
(446)
Allocation of net income: dividends
=
carried forward Balance as at 31.12.2013
65,005
15,000
3,391
(1,819)
481
35,084
2,718
(2,718)
=
15,860
(33,706)
99,296
1. Profits and Losses of the Comprehensive Income Statement recognized in the Shareholders’ Equity. 2. Share grouping.
Marzotto Group Consolidated financial statements
51
Introduction
[Notes to the consolidated financial statements]
Information on the Marzotto group
Marzotto S.p.A. is a joint stock company established in Italy with Milan Companies House. The Company’s registered office is at 16/18 Via Turati, Milan; its administrative offices are at 1 Largo S. Margherita, Valdagno (VI). Marzotto S.p.A., its subsidiaries and companies under joint control (hereinafter defined as the “Marzotto Group”) are mainly involved in the development, production and distribution of wool and cotton fabrics, wool yarns, linen yarns and silk. The Marzotto group’s consolidated financial statements 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.
Publication
Publication of these financial statements was authorised by the resolution of the Board of Directors of Marzotto S.p.A. dated 27 March 2014.
Management and coordination activities
The parent company is subject to the management and coordination of Wizard S.r.l. (Valdagno).
Discontinued Operation
As part of the Group’s strategic choices, on 24 February 2014, Marzotto S.p.A. sold its stake in Filivivi S.r.l., operating in the wool yarns segment, equal to 50% of the share capital, to Fraver S.p.A., which now holds the entire capital. In accordance with IFRS 5, the sale specified is classed as a “Discontinued Operation” with the consequent separate presentation in the consolidated financial statements of the values connected with the discontinued assets and liabilities from operating assets and liabilities.
Compliance with IFRS/IAS
These consolidated financial statements have been prepared in compliance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and approved by the European Union, as well as with the orders issued in implementation of Italian Legislative Decree no. 38/2005. IFRS also means all revised international accounting standards (IAS) and all interpretations by the International Financial Reporting Interpretations Committee (IFRIC), previously named the Standing Interpretations Committee (SIC).
Financial statements
The Consolidated Financial Statements consist of the Consolidated Balance Sheet, the Consolidated Statement of period profit/(loss) and other items of the consolidated statement of comprehensive income, the Consolidated Cash flow statement, the Consolidated Statement of Changes in Shareholders’ Equity and the relevant explanatory notes. More specifically:
for the Consolidated 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;
for the Consolidated Statement of profit/(loss) and other items of the Consolidated statement of comprehensive income, costs are allocated according to their intended purpose;
for the Consolidated Cash flow statement we have used the indirect method.
Unless otherwise specified, all figures stated in the financial statements and explanatory notes are in thousands of euros.
52
Marzotto Group Consolidated financial statements
Introduction
[Notes to the consolidated financial statements] Moreover, the representation of the transfer described above (Discontinued operation) has had the following effect:
for 2013 and, for comparative purposes for 2012, the items of cost and income relating to the discontinued operations have been classified under “Net result of assets held for disposal”;
current and non-current assets relating to the discontinued operations have been reclassified as at 31 December 2013 to “Non-current assets held for sale” on the Balance Sheet;
liabilities (excluding shareholders’ equity) relating to the discontinued operations have been reclassified as at 31 December 2013 to “Non-current liabilities held for sale” on the Balance Sheet;
cash flows relating to the discontinued operations have been described in the notes to the financial statements.
In short, the consolidated financial statements of the Marzotto Group entail the consolidation of both operating assets destined to remain within the Group after the above sale (“continuing operations”) and those set to leave it (the “discontinued operations”), reported separately.
Going concern
The consolidated financial statements as at 31 December 2013 have been prepared on the basis of the business as a going concern.
Change in accounting standards
The accounting principles adopted are comparable to those used as of 31 December 2012, except for the adoption of the following new or revised IFRS or IFRIC:
Marzotto Group Consolidated financial statements
IAS 1 Presentation of Financial Statements – Presentation of other items in comprehensive income. This amendment to IAS 1 changes how other items presented in OCI are grouped. The items that are potentially re-classifiable (or “recyclable”) to profit or loss (for example upon cancellation or liquidation) should be presented separately from those that will never be reclassified. This amendment refers only to the presentation and has no effect on the Group financial position or profit.
IAS 12 Income taxes – Recovery of underlying assets. The amendment introduces a rebuttable presumption that the deferred taxes on real estate investments measured based on the fair value according to IAS 40 should be calculated based on the fact that the book value will be recovered through recovered sale. In addition, it introduces the request that the calculation of deferred taxes on assets that cannot be depreciated measured according to the cost method as defined by IAS 16, be always measured based on the sale of the asset. The amendment will be effective for tax years beginning on or after 01 January 2013.
IFRS 7 - Disclosures - Offsetting financial assets and liabilities. These changes require the entity to provide a disclosure on offsetting rights and related agreements (e.g. guarantees). The disclosure will provide the reader of the financial statements with useful information by which to evaluate the effect of the offsetting agreements on the entity’s financial position. The new information is required for all financial instruments concerned by offsetting in accordance with IAS 32 Financial instruments: presentation. The disclosure is also required for financial instruments subject to executive offsetting framework agreements or similar, regardless of whether or not they are offset in accordance with IAS 32. These amendments did not affect the Group’s financial position or profit.
53
54
Introduction
[Notes to the consolidated financial statements]
Going concern
The principles that were issued as of the date of the Group financial statements but not yet effective are indicated below. This list contains principles and interpretation that the Group reasonably expects will be applicable in the future. The Group intends to adopt these principles when they become effective.
Marzotto Group Consolidated financial statements
IFRS 10 – Consolidated Financial Statements. IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation – Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities, including ‘special purpose entities’. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled and, therefore, must be consolidated by the Parent Company. This principle is effective for annual periods beginning on or after 01 January 2014.
IFRS 11 Joint Arrangements. IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Nonmonetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. For joint operations which respect the joint venture definition must be accounted for using the equity method. The application of this principle will affect the Consolidated Financial Statements for the deconsolidation of the Ratti Group and their accounting based on the equity method, which will impact the exposure of the financial position, the economic result and the cash flows of this Group. This principle is effective for annual periods beginning on or after 01 January 2014. It is estimated that the impact of IFRS 11 on this year (which will be the comparative year in the financial statements as at 31 December 2014), will entail a reduction in revenues of Euro 34,292 thousand and a reduction in the operating result of Euro 1,841 thousand, insofar as the result of the joint ventures will hereinafter be presented separately from the operating result. Current assets and liabilities will respectively reduce by Euro 24,146 thousand and Euro 16,153 thousand, whilst the impact on non-current assets will be Euro 11,535 thousand and non-current liabilities will reduce by Euro 5,856 thousand.
IAS 27 Separate financial statements (revised in 2011). Following the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for investments in subsidiaries, joint ventures and associates in separate financial statements. The amendments become effective for annual periods beginning on or after 01 January 2014.
IAS 28 Investments in associates (revised in 2011). Following the new IFRS 11 and IFRS 12, IAS 28 was renamed Investments in associates and joint ventures, and it describes the application of the equity method for joint ventures, in addition to associates. The amendments become effective for annual periods beginning on or after 01 January 2014.
IAS 32 - Offsetting financial assets and liabilities. The changes clarify the meaning of “currently has a legally enforceable right of set-off”. The changes also clarify the application of the offsetting criterion of IAS 32 in the event of regulation systems (such as, for example, centralised offsetting rooms), which apply gross, non-simultaneous settlement mechanisms. These changes should not affect the Group’s financial position or results and shall come into force for years starting on 01 January 2014 or thereafter.
IFRS 12 Disclosure of Interests in Other Entities. IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This principle is effective for annual periods beginning on or after 01 January 2014.
Introduction
[Notes to the consolidated financial statements]
Identification of the segments
The information by sector is primarily organized by product line. The following product lines are identified:
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, velvet fabric production), in Tunisia (linen spinning and weaving), in Lithuania (linen spinning, wool spinning, blankets), in the Czech Republic (woollen spinning and weaving and velvet fabric production), in Romania (wool spinning), as well as by qualified contractors. Furthermore, the Group operates in the textile machinery sector in the linen area (through Linificio e Canapificio Nazionale S.r.l.). The information is presented secondarily by geographical area.
Marzotto Group Consolidated financial statements
55
Basis of consolidation
[Notes to the consolidated financial statements] The following companies are part of the scope of consolidation: 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; 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; 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 Biella Manifatture Tessili S.r.l.
Reg. office Milan (I)
Le Cotonerie S.r.l.
Milan (I)
Share Capital Currency 1,000.00 K EUR 15.00 K EUR
% Ownership 2013 2012 100.00 100.00 100.00
Ambiente Energia S.r.l.
Schio (I)
100.00 K EUR
100.00
100.00
Sametex Spol s r.o.
Kraslice (CZ)
343,691.00 K CZK
100.00
100.00
Girmes International G.m.b.h.
Nettetal (DE)
800.00 K EUR
100.00
100.00
Marzotto Textiles Czech Republic s r.o. (1)
Praga (CZ)
200.00 K CZK
100.00
=
Marzotto Textile N.V. and its subsidiaries: Novà Mosilana a.s.
Amsterdam (NL)
45.00 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)
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)
1,726.40 K LTL
50.00
50.00
Brno (CZ)
AB Liteksas
Kaunas (LT)
Marzotto Int.Trad. (Shanghai) Ltd.
Shanghai (RPC)
Marzotto Textiles USA Inc.
Wilmington (USA)
Linificio e Canapificio Nazionale S.r.l. and its subsidiaries: Filature de Lin Filin S.A. UAB Lietlinen UAB Linestus Licana S.p.A. in liquidazione
Fara Gera d'Adda (I)
120.00 K EUR
100.00
100.00
Lin Naturel S.A.
Chbedda (TN)
100.00 K TND
100.00
100.00
11,115.00 K EUR
33.36
33.36
(2)
Ratti S.p.A. and its subsidiaries: Creomoda S.a.r.l.
Guanzate (I)
10.00 K TND
31.70
31.70
Ratti USA Inc.
New York (USA)
Sousse (TN)
500.00 K USD
33.36
33.36
Ratti Int. Trading (Shanghai) Co. Ltd
Shanghai (RPC)
110.00 K EUR
33.36
33.36
Textrom S.r.l.
Cluj - Napoca (RO)
0.20 K RON
33.36
33.36
1. Established on 10/06/2013. 2. 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.
56
Marzotto Group Consolidated financial statements
100.00
Basis of consolidation
[Notes to the consolidated financial statements] Operating Companies consolidated at equity: % Ownership
Share Company
Reg. office
Mascioni S.p.A.
Milan (I)
Mediterranean Wool Industries Co. S.A.E.
Sadat City (ET)
Pettinatura di Verrone S.r.l.
Verrone (I)
Capital
Currency
2013
2012
5,000.00 K EUR
28.35
28.35
10,000.00 K USD
30.00
30.00
3,000.00 K EUR
15.00
15.00
Operating Companies classified among non-current assets held for sale: Share
% Ownership
Reg. office
Aree Urbane S.r.l. in liquidazione
Milan (I) ()
100.00 K EUR
32.50
32.50
Milan (I)
15,000.00 K EUR
50.00
50.00
15,711.00 K LTL
50.00
50.00
10.00 K HKD
50.00
50.00
14,138.20 K RON
50.00
50.00
(1)
Filivivi S.r.l. and its subsidiaries: UAB Lietvilna
Kaunas (LT)
Filivivi Asia Pacific Ltd.
Hong Kong (HK)
Sc Rolana Tex S.r.l.
Botosani (RO)
Capital
Currency
Company
2013
2012
1. Group consolidated pro quota in accordance with IFRS 5 (joint management of the Parent Company and Fraver S.p.A.).
Marzotto Group Consolidated financial statements
57
Basis of consolidation Consolidation principles
Business combinations
[Notes to the consolidated financial statements] The following consolidation principles were adopted: a)
For the financial statements of subsidiaries and affiliated companies, the same accounting principles as the Parent Company have been used; 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 shareholdings held by the Parent Company against the relevant shareholders’ equity, attributing their current value at the date in which control was acquired to the single items of assets and liabilities and of potential liabilities. Any remaining difference in the positive is recorded under the item “Goodwill” in non-current assets.
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.
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 01 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
Marzotto Group Consolidated financial statements
Basis of consolidation Conversion of accounts carried in foreign currencies
[Notes to the consolidated financial statements] The presentation currency adopted by the Group is the euro, which is also the functional currency of the parent company Marzotto S.p.A. As at the closing date, the accounts of foreign companies carried in functional currencies that differ from the euro, are converted into the presentation currency as follows:
assets and liabilities are converted using the exchange rates in force as at the year end date; items of the income statement are converted using average period exchange rates.
Any exchange differences emerging from this conversion process are accrued into a separate item of equity (Conversion reserve) until disposal of the foreign company. The exchange rates applied for the conversion of the financial statements of the companies included in the consolidation are given in the table below: Currency (units per 1 euro)
2013
2012
% change
- for the profit and loss account (average prevailing exchange rates for the year) CZK
Czech Crown
LTL
Lithuanian Litas
25.987
25.146
3.3
3.453
3.453
=
CNY
China Renmimbi
8.165
8.109
0.7
TND
Tunisian Dinar
2.159
2.007
7.6
RON
New Leu
(0.9)
HKD
Hong Kong Dollar
USD
USA Dollar
4.419
4.458
10.302
9.973
3.3
1.328
1.286
3.3
9.0
- for the balance sheet (year-end prevailing exchange rates)
Marzotto Group Consolidated financial statements
CZK
Czech Crown
27.427
25.151
LTL
Lithuanian Litas
3.453
3.453
=
CNY
China Renmimbi
8.349
8.221
1.6
TND
Tunisian Dinar
2.267
2.046
10.8
RON
New Leu
4.471
4.445
0.6
HKD
Hong Kong Dollar
10.693
10.226
4.6
USD
USA Dollar
1.379
1.319
4.5
59
Valuation criteria
[Notes to the consolidated financial statements]
Valuation criteria
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 undefined Civil buildings 33 years/undefined 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
60
1.3 Goodwill, trademarks and other intangible assets
Intangible assets with a “finite useful life” are recognised 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
In application of the reference accounting standards (IAS 36), the Group verifies, at each financial statements’ date, if there is any indication of lasting reduction in value for all assets. If these indications exist, an estimate is prepared of the value that can be recovered on the asset, i.e. the greater of the fair value of an asset or cash generating unit, less the costs of sale, and its use value. In determining its use value, estimated future cash flow is discounted to current value, using a gross tax rate that reflects current market appraisals of the value of the money and specific risks of the asset. 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.
Marzotto Group Consolidated financial statements
Valuation criteria
[Notes to the consolidated financial statements]
1.5 Other investments
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 recognised 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. At the date of each annual report, the Group verifies if there is any indication of permanent value reduction for equity investments and makes the appropriate adjustments, as described above.
1.8 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 recognised 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 Inventories
Inventory of raw materials, semi-finished goods and finished goods is carried at the lower between the cost of purchase or production and the estimated net realizable value, using the average weighted cost criteria to determine the cost. The stock valuation includes direct material and labour costs and indirect costs (variable and fixed), due 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. The adjustment to the estimated realizable value is recognised in special adjustment reserves.
3.4 Current financial assets, cash and cash equivalents
Financial assets held for trading are recognized at the fair value shown 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. A financial asset (or, if applicable, a portion of a financial asset or portion of a group of similar financial assets) is cancelled from the balance sheet when:
Marzotto Group Consolidated financial statements
the rights to receive financial flows from the asset expired; the Group has transferred the right to receive financial flows from the asset or has taken over the contractual obligation to pay them fully and without delay to a third party and (a) it has basically transferred all risks and benefits of the ownership of the financial asset or (b) it has not transferred nor retained basically all risks and benefits of the asset, but it has transferred the control of the same.
61
Valuation criteria
[Notes to the consolidated financial statements]
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 recognised as a financial charge. Defined contribution plans Defined contribution plans are post-employment benefits plans on which basis the entity pays fixed contributions to a separate entity and shall have no legal or implicit obligation to pay additional contributions. The contributions to be paid into defined contribution plans are recorded as a cost in the result of the period in which they are incurred. Contributions paid in advance are recorded amongst assets to the extent to which the advance payment will determine a reduction in future payments or a refund. Defined benefits plans The amount payable for staff termination indemnity comes under the scope of defined benefits pension plans, which are plans based on the working life of employees and on the remuneration received by the employee during a pre-determined period of service. More specifically, the liability relating to the staff termination indemnity of staff is booked at its actuarial value, insofar as it can be classified as employee benefits due according to a defined provision plan. The booking of defined provision plans requires an estimate using actuarial techniques of the amount of the provisions accrued by employees in exchange for his work during the current and previous years, and the discounting of these provisions in order to determine the current value of the company’s commitments (IAS 19). According to Law no. 296/06, effective from 30 June 2007, the Staff termination indemnities accrued after 01 January 2007 must be paid in an appropriate treasury fund opened with INPS (National Institute for Social Protection) or, according to the instructions of the employee, to the selected fund. With these payments, the item relating to staff termination indemnities is no longer affected by accruals, contrary to staff termination indemnities accrued by 31 December 2006, which therefore come under the scope of defined benefits pension plans. In June 2012, IAS 19 was amended to provide for the recording of changes to actuarial gains/losses of defined benefits plans and, therefore, including employee termination indemnities, amongst items of the Statement of Comprehensive Income, as from 01 January 2013. The Group has decided to apply this amendment early, as from the financial statements as at 31 December 2012.
62
Marzotto Group Consolidated financial statements
Valuation criteria
[Notes to the consolidated financial statements]
5.4 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 actual interest rate method.
6. Non-current liabilities held for sale
The groups of assets and liabilities whose value will be recovered mostly through sale rather than through the continuous use are shown separately from other assets and liabilities in the Balance Sheet. The groups of non-current assets and liabilities classified as held for sale are shown at the lower between the book value and the fair value net of sale’s costs.
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 Current 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 recognised 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 recognised 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 recognised 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 recognised 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 recognised 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 recognised 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.
Marzotto Group Consolidated financial statements
63
64
Valuation criteria
[Notes to the consolidated financial statements]
8. Revenues
Depending on the type of transaction, revenues are recognised based on specific criteria indicated below: revenues from the sale of goods are recognised when the significant risks and benefits of ownership are transferred to the purchaser (typically at the time of shipment); revenues for services provided are recognised based on the status of completion basis of the assets.
15. Financial charges, net
Financial revenues and charges are recognised 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 recognised 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 based on estimates of taxable income and according to law. Deferred and advance income taxes are calculated on the temporary differences between the recorded asset values and the respective recognized 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. In addition deferred tax receivables and payables are set aside following the adjustments made, upon consolidation, to the financial statements of the companies of the Group.
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. 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 Administrators 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. At the date of each annual report, the Group verifies if there’s any indication of permanent value reduction for all non-financial assets. Goodwill and other intangible assets with an indefinite useful life are subject to review each year to identify any decrease in value. The recoverable value of non-current assets is typically established in reference to the use value, based on the present value of financial flows expected from the continuous use of the asset. This verification involves also the choice of an adequate discount rate to calculate the present value of the expenses financial flows.
Marzotto Group Consolidated financial statements
Other information
Other information consolidation
Tax
[Notes to the consolidated financial statements] Effective from the year 2008 Marzotto S.p.A., Immobili e Partecipazioni S.r.l., 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. In 2011, these companies renewed their acceptance also for the three years 2011-2013. Since 2009 also the subsidiaries Biella Manifatture Tessili S.r.l., Ambiente Energia S.r.l. and Le Cotonerie S.r.l. (former Immobiliare Isola S.r.l.) are part of the Domestic Tax Consolidation, with renewal for the three years 2012-2014. Following the spin-off of Wizard S.r.l. in the favour of Witch S.r.l. in FY 2012, Immobili e Partecipazioni S.r.l., a subsidiary of Witch S.r.l., left the tax consolidation of Wizard S.r.l., as they no longer met the requirements lad down by legislation governing participation in the tax consolidation. Adhesion to the tax consolidation of Wizard S.r.l. is governed by a specific regulation in force for the entire period for which the option is valid. Economic relations for the tax consolidation are regulated as follows: subsidiaries which have positive taxable income for the years concerned pay Wizard S.r.l. the greater tax due by it; companies consolidated with negative taxable income receive compensation amounting to 100% of the tax saving achieved on a group level from Wizard S.r.l. This compensation is due when effectively used by Wizard S.r.l. if Wizard S.r.l. and the subsidiaries should not renew the domestic tax consolidation option, or if the requirements to continue to apply it should be forfeited prior to the end of the three years for which the option is valid, the tax losses that can be reported as resulting from the declaration are allocated proportionally to the companies that produced them. Early termination of the tax consolidation agreement or failure to renew it shall not have any penalty for the participating companies. In 2013 Marzotto S.p.A. and its affiliate Filivivi S.r.l. renewed the tax transparency regime for the three year period 2013 – 2014 - 2015.
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 consolidated Statement of period profit/(loss) and other items of the consolidated comprehensive income statement, the consolidated Cash flow statement and the Table of Changes in consolidated Shareholders’ Equity, as well as in the notes, are expressed in thousands of euros. 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: main events of the 2013 financial year; events after the close of the financial year; foreseeable development of operations; risk factors (IFRS 7); other relevant information on operating performance and the balance sheet structure.
Marzotto Group Consolidated financial statements
65
Balance Sheet
[Notes to the consolidated financial statements] Please note that following the reclassification of assets and liabilities of the discontinued operations, highlighted above, in compliance with IFRS 5, the equity balances are not directly comparable with those of last year. The tables below are in thousands of euros.
1.1) Property, plant and machinery 1.2) Civil buildings
Amounts to:
2013
2012
110,855
116,756
Change (5,901)
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 31/12)
1,343
125,100
305,803
10,958
15,749
2,767
461,720
Depreciation funds
(140)
(64,631)
(254,801)
(10,357)
(15,035)
=
(344,964)
1,203
60,469
51,002
602
713
2,767
116,756
Balances as at 31.12.2012 Movements during the year: Original cost: acquisitions
=
2,337
14,359
756
378
72
17,902
exchange rate differences
=
(4,321)
(8,155)
(122)
(396)
(67)
(13,061)
up for sale
=
(2,127)
(14,062)
(218)
(503)
(78)
(16,988)
other reclassifications
=
=
(3,268)
(378)
563
133
(2,950)
disposals
=
(20)
(16,373)
(311)
(407)
=
(17,111)
reclassification to fixed assets
Depreciation funds: depreciation for the year exchange rate differences
=
(2,558)
(10,500)
(706)
(362)
=
(14,126)
(1)
1,907
6,254
120
343
=
8,623 12,049
reclassification to fixed assets up for sale
=
311
11,135
211
392
=
other reclassifications
=
=
3,175
415
(538)
=
3,052
disposals
=
9
16,011
303
386
=
16,709
Total movements for the year Original cost (at exchange rate of 31/12) Depreciation funds Balances as at 31.12.2013
(1)
(4,462)
(1,424)
70
(144)
60
(5,901)
1,343
120,969
278,304
10,685
15,384
2,827
429,512
(141)
(64,962)
(228,726)
(10,014)
(14,814)
=
(318,657)
1,202
56,007
49,578
672
569
2,827
110,855
“Acquisitions” refers for Euro 16,860 thousand to continuing operations and Euro 1,042 thousand to discontinued operations. The main changes relate to the acquisitions made by Marzotto S.p.A. (Euro 2,958 thousand), Ambiente Energia S.r.l. (Euro 303 thousand), Novà Mosilana a.s. (Euro 5,147 thousand), Biella Manifatture Tessili S.r.l. (Euro 4,109 thousand), the Filivivi group (Euro 1,042 thousand), the Linificio group (Euro 714 thousand), the Ratti group (Euro 1,227 thousand) and other Group companies. The sale of assets during the year involved booking net capital gains gross of tax of Euro 691 thousand (of which gains of Euro 710 thousand and losses of 19 thousand). As at 31 December 2013, the fixed assets of the subsidiary Filature de Lin Filin S.A. (Tunisia), consolidated on a line-by-line basis, were encumbered by mortgages to guarantee a bank loan of Euro 2,500 thousand. As at 31 December 2013, the fixed assets of the Company Ratti S.p.A., consolidated on a proportional basis, were encumbered by a mortgage to guarantee a bank loan for 6,667 thousand euro.
66
Marzotto Group Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements]
1.3) Goodwill, trademarks and other intangible assets
2013 Amounts to:
Change
12,908
(4,784)
made up as follows:
Description (1)
A)
B)
C)
D)
E)
F) fixed assets
Research,
Ind. patent
Concessions,
development
and
licenses,
Other
Intangible
and
intellectual
trade-marks
intangible
being
advertising
property
and
fixed
developed and
costs
rights
similar rights
assets
advances
=
5,273
Depreciation funds
=
(3,461)
Balances as at 31.12.2012
=
1,812
acquisitions
=
883
exchange rate differences
=
Original cost
2012
8,124
Goodwill
9,230
Total
1,891
1,146
359
17,899
(204)
(438)
(888)
=
(4,991)
9,026
1,453
258
359
12,908
35
=
208
(249)
877
(100)
=
=
(99)
=
(199)
Movements during the year: Original cost:
reclassification to fixed assets up for sale
=
(705)
(4,769)
=
(705)
(17)
(6,196)
disposals/depreciations
=
(76)
=
=
(2)
=
(78)
reversal due to amort. being completed
=
=
=
=
=
=
=
for the year
=
(570)
(31)
=
(135)
=
(736)
exchange rate differences
=
86
=
=
67
=
153
up for sale
=
611
27
=
679
=
1,317
disposals/depreciations
=
76
=
=
2
=
78
Amortisation:
reclassification to fixed assets
=
=
=
=
=
=
=
Total movements for the year
reversal due to amort. being completed
=
205
(4,738)
=
15
(266)
(4,784)
Original cost (1)
=
5,275
4,496
1,891
548
93
12,303
Depreciation funds
=
(3,258)
(208)
(438)
(275)
=
(4,179)
Balances as at 31.12.2013
=
2,017
4,288
1,453
273
93
8,124
1. Original cost of the assets being depreciated.
“Acquisitions” refers for 714 thousand to continuing operations and 163 thousand to discontinued operations. Concessions, licences, trademarks and similar rights includes the values of the Guabello trademarks for Euro 2,300 thousand, Tallia di Delfino for Euro 1,170 thousand, the value of the velvet trademarks “Redaelli Velluti”, “Redaelli 1893”, “Niedieck”, “Christoph Andreae” and of the Marzotto Group trademark. The value of the Folco and Lanerossi trademarks (Euro 3,611 thousand) has been reclassified to discontinued operations. The trademarks, which are considered intangible assets with an undefined useful life, are not amortised but rather are regularly impairment tested in compliance with IAS 36. 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 impairment tests performed at the end of 2013 have not shown any significant indication of lasting reduction in value for trademarks.
Marzotto Group Consolidated financial statements
67
Balance Sheet
[Notes to the consolidated financial statements] Goodwill, acquired through the combination of businesses, refers for Euro 1,283 thousand to the purchase of Ratti S.p.A. and for Euro 167 thousand to the purchase of the “Logistics Services” BU of Piovene. In compliance with international accounting standards, this item is not subject to amortisation, but rather to annual impairment testing. This analysis is carried out by comparing the book value of goodwill with the greater of the value in use and fair value. An impairment test was made to check if there was any lasting reduction in value in reference to the amount of Euro 1,283 thousand, recorded under “Goodwill” concerning the operation of acquisition of a 33.36% interest in the share capital of Ratti S.p.A. (company under joint control), recognised according to the purchase method, without any specific instruction by the international accounting principles. More specifically, the carrying amount of Ratti has been compared with the fair value, determined on the basis of the stock market list price of the Ratti security as at 31 December 2013. This comparison has not revealed any permanent loss of value. During the first months of 2014 there were not significant events to lead us to believe that the financial statements value suffered a further permanent reduction in value. However, the estimate of the recoverable value of the CGU is discretionary and subject to the use of estimates by the management. In fact there are several factors connected to the difficult market situation which may require a new calculation of the value of goodwill. The Company will monitor closely the circumstances and events which may cause a new assessment of losses of value. Below are the changes made to the following items, before reclassification to discontinued operations: Industrial patent rights and rights to use intellectual works for Euro 883 thousand, mainly relating to software and EDP applications; Other intangible fixed assets for Euro 208 thousand, mainly incurred by the parent company; Fixed assets under construction and down-payments at year end had been capitalised (and not depreciated) for Euro 93 thousand, mainly in connection with software project development costs incurred 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.
68
Marzotto Group Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements]
1.4) Investments valued at equity
Amounts to:
2013
2012
6,446
Change
8,145
(1,699)
made up as follows:
Description
A)
B)
C)
Gruppo
Mediterranean
Pettinatura di
Mascioni
Wool Ind.
Verrone
Original cost
Total
4,034
2,027
1,527
806
(252)
3
557
4,840
1,775
1,530
8,145
acquisitions
=
=
=
=
disposals
=
=
=
=
(1,393)
(319)
31
(1,681)
=
=
=
=
(18)
=
=
(18)
(1,411)
(319)
31
(1,699)
4,034
2,027
1,527
7,588
Adjustment to equity Balances as at3 31.12.2012
7,588
Movements during the year: Original cost:
Adjustment to equity: accrued pro-quota profit/(loss) pro-quota dividends paid in 2013 reclassification Total movements for the year Original cost Adjustment to equity Balances as at 31.12.2013
(605)
(571)
34
(1,142)
3,429
1,456
1,561
6,446
The Group has equity investments in the following related companies: Gruppo Mascioni S.p.A., Mediterranean Wool Industries Co. S.A.E. and Pettinatura di Verrone S.r.l. The value of the above investments has been adjusted following their measurement using the equity method.
1.5) Other investments
2013 Amounts to:
2012
Change
160
160
=
211
280
(69)
=
=
=
Adjustment for permanent decreases in value
(51)
(51)
=
Balances as at 01.01
160
229
(69)
made up as follows: Description Original cost Adjustment to fair value
Movements during the year: Original cost: acquisitions
=
=
=
exits from portfolio
=
(69)
69
decreases for exits from the portfolio
=
=
=
adjustment to the fair value at the period end date
=
=
=
=
(69)
69
211
211
=
=
=
=
Alignements for differences impairment
(51)
(51)
=
Balances as at 31.12
160
160
=
Adjustment to fair value
Total movements for the year Original cost Adjustment to fair value
Marzotto Group Consolidated financial statements
69
Balance Sheet
[Notes to the consolidated financial statements]
1.6) Long-term receivables
Amounts to:
2013
2012 518
Change
5,899
(5,381)
made up as follows: Due from Tax Authorities
14
11
3
Other receivables
504
5,888
(5,384)
Total
518
5,899
(5,381)
The reduction in Other receivables for Euro 5,384 thousand is mainly relating to the write-down of the receivable due from Valentino Fashion Group S.p.A., recognised following the judgement issued by the Regional Tax Commission in Venice on 21 September 2010 on dividend stripping, and in application of the agreements taken upon the demerger of the clothing sector in 2005. Please refer to note 6.1 below for more details.
1.7) Deferred tax assets
2013 Amounts to:
2012
Change
24,451
25,334
(883)
3,250
3,706
(456) (415)
made up as follows: Depreciation of inventory Depreciation of receivables
2,046
2,461
Accrual for risks and charges
5,412
5,070
342
Forex
1,011
170
841
Tax losses
9,583
9,744
(161)
Other temporary differences
3,149
4,183
(1,034)
24,451
25,334
(883)
Total
The item refers to deferred tax assets (prepaid taxes) due beyond the year. They refer for 14,738 thousand euro to the Parent Company (2012: 11,468 thousand 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 Biella Manifatture Tessili S.r.l. (3,821 thousand euro), by the Linificio e Canapificio Nazionale S.p.A. group (3,512 thousand euro) and by the Ratti group (2,530 thousand euro). Taking into consideration the new Italian regulations on the unlimited carry forwards of tax losses, the forecast of the business performance and the participation in the domestic tax consolidation of the parent company Wizard S.r.l. of the Italian companies of the group, the Administrators have decided to record the advance taxation in connection with the losses that may be carried forward by the Companies. Deferred tax receivables on non-deductible financial charges and on tax losses are a total of Euro 1,957 thousand.
1.8) Long-term financial receivables
2013 Amounts to:
2012
Change
105
14,911
(14,806)
=
14,827
(14,827)
made up as follows: Receivables due from associates Guarantee deposits (financial)
105
84
21
Total
105
14,911
(14,806)
As at 31 December 2012, Receivables from affiliated companies refer to a shareholders’ loan granted to Aree Urbane S.r.l. in liquidation. During the year, shareholders expressed their intention to propose an “ordered” liquidation of the affiliate with the Credit Institutes, no longer having any interest in pursuing the business. The Company has therefore considered it appropriate to write-down the receivable due from the affiliate, of Euro 14.7 million, in full. 70
Marzotto Group Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements]
2. Non-current assets held for sale
Amounts to:
2013
2012
41,418
Change 50
41,368
made up as follows: Land and buildings
1,817
=
1,817
Plant and machinery
3,067
50
3,017
7
=
7
99
=
99
4,879
=
4,879
16,133
=
16,133
Equipment Other tangible fixed assets Intangible assets Inventory Other activities
15,416
=
15,416
Total
41,418
50
41,368
As mentioned previously, non-current assets or groups of assets and liabilities whose book value will be recovered mainly through sale rather than ongoing use (discontinued operations) are recognised separately from other assets and liabilities in the Balance sheet. The above assets are valued at the lower between their book value and the fair value less foreseeable sale costs. Any losses are noted directly on the income statement. The figures given in the table above are Euro 41,418 thousand for assets belonging to the Filivivi Group. This reclassification had become necessary due to the sale made in February 2014, as described previously. 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) Inventories
2013 Amounts to:
2012
Change
110,967
133,456
(22,489)
Raw, ancillary and consumable materials
33,005
40,395
(7,390)
Unfinished, semi-finished goods and work in progress
38,849
41,457
(2,608)
and can be broken down as follows:
Finished products and goods for resale Total
39,113
51,604
(12,491)
110,967
133,456
(22,489)
Warehouse inventory is indicated at the lower between the purchase or production cost, determined using the weighted average cost method, and the estimated net sale value, as indicated in point 3.1 of the valuation criteria. In this regard, please note that the Group companies implement a disposal procedure for obsolete products, mainly seasonal fashion items that have been left unsold, using stock sales; goods that are still held as inventories at year end are suitable written-down, bringing their value into line with their presumed realisation value. Inventories shows a net decrease of Euro 22,489 thousand on last year. This change relates for Euro 16,133 thousand to the reclassification of warehouse inventories of the Filivivi Group to discontinued operations and for Euro 6,356 thousand to the significant slowing to sales archived during the fourth quarter 2012, which resulted in accumulated inventories. As from the second quarter of 2013, the market showed clear signs of recovery, which allowed inventories to be used. The increased order book seen at end FY 2013 as compared with the same period of 2012 and the related provisioning needs have only partially compensated for the change booked. This item is broken down according to business segment as follows at the reporting date: Fabric inventories: Euro 88,930 thousand (88,821 thousand at 31 December 2012); Linen Yarns inventories: Euro 14,693 thousand (19,600 thousand at 31 December 2012); Silk inventories: Euro 7,344 thousand (7,554 thousand at 31 December 2012).
Marzotto Group Consolidated financial statements
71
Balance Sheet
[Notes to the consolidated financial statements]
3.2) Trade receivables
2013 Amounts to:
2012
70,735
Change
81,107
(10,372)
and refers to: 2013 Amount
2012 %age
Amount
%age
Active customers receivables
73,833
100.0
83,095
100.0
– Bad debt provision
(4,811)
(6.5)
(5,060)
(6.1)
= Net active customers receivables
69,022
93.5
78,035
93.9
3,040
100.0
5,632
100.0
(2,602)
(85.6)
(3,949)
(70.1)
438
14.4
1,683
29.9
1,275
100.0
1,388
100.0
Total face value of receivables
78,148
100.0
90,116
100.0
– Bad debt provision
(7,413)
(9.5)
(9,009)
(10.0)
Net receivables from customers
70,735
90.5
81,107
90.0
Bad debt – Bad debt provision = Net bad debt Due from associates
Trade receivables, before being reclassified to discontinued operations, came to Euro 82,438 thousand, showing a rise of Euro 1,331 thousand, in line with the increased turnover booked during the year. Trade receivables, after the reclassification envisaged by IFRS 5 (for 11,703 thousand), total Euro 70,735 thousand, net of the provision for doubtful debt of Euro 7,413 thousand (provision of Euro 9,009 thousand at 31 December 2012). This provision has been calculated considering the historic data relating to losses on receivables and on the basis of estimated losses in connection with challenged receivables and/or past-due receivables. To complete our information, please note that as at the reporting date, the effect deriving from the transfer of receivables with without recourse clauses (including the effect of receivables to be repaid included in payables) is Euro 30,980 thousand, slightly up on the transfer performed in 2012 (Euro 28,333 thousand). We believe that the book value of the trade receivables reflects their fair value. Trade receivables by geographical area are shown in the table below:
Italy Towards clients Towards associates Gross receivables
36,847
Other North America European Countries 23,108 4,525
Other Countries
Asia
Total
2,953
9,440
1,195
=
=
=
80
76,873 1,275
38,042
23,108
4,525
2,953
9,520
78,148
Trade receivables due from affiliates and joint control companies refer to: 2013 Filivivi Group Mediterranean Wool Industries CO. S.A.E. Ratti Group Mascioni S.p.A. Total
2012
Change
723
800
80
60
20
470
527
(57)
2
1
1
1,275
1,388
(113)
Trade receivables due from affiliates and joint ventures result from business relations and are subject the regular market conditions.
72
Marzotto Group Consolidated financial statements
(77)
Balance Sheet
[Notes to the consolidated financial statements]
3.3) Other receivables
2013 Amounts to:
2012
Change
18,072
28,252
(10,180)
10,165
14,579
(4,414)
6,401
9,925
(3,524) (1,345)
made up as follows: Due from Tax Authorities Other receivables Other receivables due from parent companies
=
1,345
Other receivables due from associates
=
4
(4)
1,506
2,398
(892)
18,072
28,252
(10,180)
Accrued income and prepaid expenses Total
As at the reporting date, Other receivables, before reclassification to discontinued operations (Euro 1,498 thousand), came to Euro 19,570 thousand and recorded a reduction of Euro 8,682 thousand. Following the reclassification in accordance with IFRS 5, the amount of this item is Euro 18,072 thousand.
Receivables due from Tax Authorities refer to: 2013 Added value tax Other taxes and interest Total
3,188
2012
Change
4,076
(889)
6,977
10,503
(3,525)
10,165
14,579
(4,414)
In detail, Receivables due from the Tax Authorities for VAT, Euro 3,188 thousand, are Euro 321 thousand for the Linificio Group, Euro 309 thousand for the parent company, Euro 775 thousand for Novà Mosilana a.s., Euro 105 thousand Sametex Spol s r.o., Euro 152 thousand AB Liteksas, Euro 301 thousand Biella Manifatture Tessili S.r.l., Euro 197 thousand Ambiente Energia S.r.l., Euro 1,026 thousand the Ratti Group and Euro 2 thousand, other group companies. Other tax and interest, for Euro 6,977 thousand, includes IRAP receivables (Euro 534 thousand), income tax (Euro 4,252 thousand), IRES rebate for the deductibility of IRAP on the cost of labour (Euro 456 thousand) and a receivable (Euro 355 thousand) deriving from greater offsetting collections and late payment interest paid in relation to the debt repayment plan for dividend stripping, as defined in sentence no. 242/2012 of the Milan Provincial Tax Commission, by virtue of which the repayment plan was defined. Other receivables included, as at 31 December 2012, Euro 6,210 thousand for the short-term portion of the receivable due from Valentino Fashion Group S.p.A. arising from the dividend stripping dispute and in application of the agreement stipulated during the 2005 spin-off of the clothing BU. In January 2014, Marzotto S.p.A. and Valentino Fashion Group S.p.A. stipulated a settlement agreement to define, amongst other aspects, their joint liability to make payment of said tax notice and the lawsuit in question. Under this agreement, Marzotto S.p.A. paid the tax payable as a lump sum, thereby benefiting from the 2014 Stability Law, releasing Valentino Fashion Group S.p.A. from its obligations, which, in turn, waived all claims made against Marzotto S.p.A., abandoning all civil proceedings brought before the Court of Milan. In line with this transaction, the Company has written-off the receivable that was previously recorded.
Marzotto Group Consolidated financial statements
73
Balance Sheet
[Notes to the consolidated financial statements] This item also includes the fair value measurement of forward contracts hedging exchange rates, for Euro 457 thousand. Please also note that Other receivables due from the parent company included Euro 1,345 thousand in relation to the Domestic Tax Consolidation due from the parent company Wizard S.r.l.
3.4) Current financial assets, cash and cash equivalents
2013 Amounts to:
2012
75,490
Change
82,827
(7,337)
(526)
and refers to: Financial assets Securities in portfolio Due from associates Other financial receivables
=
526
2,870
2,886
(16)
280
820
(540)
72,210
78,564
(6,354)
Cash Bank and post-office accounts Cash and cash equivalent on hand Total
131
31
99
75,490
82,827
(7,337)
The total amount of the Marzotto Group’s Short-term financial assets and cash and cash equivalents is Euro 75,490 thousand (Euro 82,827 thousand as at 31 December 2012). Financial receivables due from affiliates include receivables due from the affiliate Filivivi S.r.l. for the portion not eliminated with the proportional consolidation (2,000 thousand euro) and the affiliate Mediterranean Wool Industries Co. S.A.E. (870 thousand euro). The item Securities portfolio refers to stake held in a mutual fund. Cash and cash equivalents, of Euro 72,341 thousand, include demand deposits and other shortterm, highly-liquid financial investments. The values stated can be converted readily into cash and are subject to insignificant risk of value. We believe that the book value of the cash and cash equivalents and short-term financial assets is in line with their fair value as at the reporting date.
74
Marzotto Group Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements]
4. Shareholders’ equity
Below are the comments on the main items of Shareholders’ equity and the relevant changes:
Share capital Number of Shares Ordinary shares Total
Share capital
Share capital
Share capital
at 31.12.2012
change
at 31.12.2013
65,005,047
=
65,005,047
65,005,047
=
65,005,047
Please note that during the first few months of 2013, the parent company implemented the share grouping project resolved by the extraordinary shareholders’ meeting held on 10 September 2012. At the same time, the indication of the nominal value of the shares in issue was eliminated, in accordance with the combined provisions of Art. 2328, paragraph two, no. 5 and 2346, paragraph three of the Italian Civil Code, and the Articles of Association were amended. Grouping took place at a ratio of one new securitised share per 13,001 existing dematerialised shares and upon annulment of the smallest number of shares necessary to allow for the regrouping.
Legal reserve Balances equity as at 31 December 2012
15,000
+/- change Total
= 15,000
The Legal Reserve was not changed during the year. The Conversion reserve has declined by Euro 6,859 thousand and now totals Euro 3,391 thousand. In order 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 Company uses the following instruments: foreign currency loans; forward sales and purchases in foreign currency; foreign currency options at fixed exchange rates. These operations come under the scope of “cash flow hedges” insofar as they are stipulated to cover a risk of change in cash flows deriving both from an existing asset or liability and a future operation. As established by international accounting standards, the portion of the gain or loss relating to the measurement of such derivatives (mark to market) has been booked net of the tax effect, amongst the items of the statement of comprehensive income, as the effectiveness of the cover guaranteed by these financial instruments has been proven. The fair value reserve includes the fair value of said operations, net of the tax effect, which as at the reporting date comes to Euro -1,819 thousand. The gain or loss recorded under shareholders’ equity is booked to the income statement when the operation hedged affects it.
Marzotto Group Consolidated financial statements
75
Balance Sheet
[Notes to the consolidated financial statements] Other reserves and profits carried forward 2013
2012
Change
Reserve viz. art. 55 Pres. Decree 917/86
88
88
Capital grants
62
62
=
563
563
=
Realignment reserve viz. Law 342/2000 Revaluation reserve Profit carried forward Other reserves IAS 19 reserve
(1)
=
6,357
6,357
=
17,611
18,195
(584)
5,381
5,381
=
481
62
419
20,060
15,721
4,339
822
2,272
(1,450)
51,425
48,701
2,724
Difference of Companies consolidated on a line-by-line basis Difference of Companies consolidated on an equity basis Total
Below is a reconciliation of shareholders’ equity and the result of the Parent Company with the corresponding consolidated values: 2013 Income Marzotto S.p.A.
Consolidated financial statements
Net equity
60,093
2,854
110,030
Elimination of shareholdings consolidated line-by-line
26,209
49,838
10,655
41,503
Valuations at equity
(1,361)
(560)
(1,462)
810
(11,436)
=
(9,856)
=
Elimination of intercompany capital gains
496
(9,665)
310
(10,161)
Other
(40)
(410)
217
(371)
(33,706)
99,296
2,718
141,811
Total
Marzotto Group
Income
(47,574)
Intercompany dividends
76
2012 Net equity
Balance Sheet
[Notes to the consolidated financial statements]
5.1) Long-term provisions
Amounts to:
2013
2012
33,489
Variazioni
34,870
(1,381)
and refers to:
2013
2012
due to
Change
Provision for staff term.indemnities Amounts to:
Accruals
Utilisation
Change area
Exch. Diff.
13,207
15,888
(2,681)
3,448
(4,272)
=
(1,857)
Marzotto S.p.A.
7,624
8,327
(703)
1,991
(2,694)
=
=
B.M.T. S.r.l.
and refer to:
2,240
2,367
(127)
707
(834)
=
=
Ambiente Energia S.r.l.
149
146
3
33
(30)
=
=
AB Liteksas
100
118
(17)
=
(17)
=
=
=
1,706
(1,706)
507
(356)
=
(1,857)
603
707
(104)
125
(229)
=
=
2,491
2,518
(27)
85
(112)
=
=
Filivivi Group Linificio Group Ratti Group
Staff termination indemnity reflects the indemnity calculated in accordance with current legislation, accrued by employees as at 31 December 2006 and which will be liquidated upon his leaving. Where specific conditions apply, it may be partially advanced to the employee during the course of his working life. The Staff termination indemnities, calculated according to the current law, is treated from an accounting point of view as a defined benefit and as such it is recalculated at the end of each period according to a statistic-actuarial criteria which takes into account also the effects of the financial actualization. This liability has been calculated according to the actuarial criteria of the “Unitary Credit Method” which “considers each working period as the source of one additional unit of right to the benefits and measures each unit separately to calculate the final obligation”. The following parameters are used: annual discounting rate 4.5%, annual inflation rate 2%. The booking of employee benefits is in accordance with IAS 19 for defined benefits plans; the company has decided to apply the amendments made by IAS 19 early, as from the financial statements as at 31 December 2012, with the consequent noting of changes in actuarial gains/losses amongst other items of the statement of comprehensive income, whilst financial gains/losses are noted on the income statement. According to Law no. 296/06, effective from 30 June 2007, the Staff termination indemnities accrued after 01 January 2007 must be paid in an appropriate treasury fund opened with INPS (National Institute for Social Protection) or, according to the instructions of the employee, to the selected fund. With these payments, the item for Staff Termination is no longer affected by provisions.
Pension Amounts to:
2013
2012 757
Change 790
(33)
The provision refers to a partially reversible supplementary retirement fund set up in favour of a former director of the Company. Last year, the provision was recalculated following the death of the primary beneficiary, recording the excess part on the income statement and discounting the remaining value of the annuity according to the actuarial tables used for the secondary beneficiary.
Marzotto Group Consolidated financial statements
77
Balance Sheet
[Notes to the consolidated financial statements] due to
2013
2012
Change
19,525
18,192
1,333
7,104
(4,462)
=
(1,310)
Agents' severance pay provision
4,402
5,215
(813)
95
(230)
=
(678)
Legal risk fund
3,386
3,639
(253)
30
(259)
=
(25)
Restructuring and relocation provisions
3,273
792
2,482
3,273
(184)
=
(608)
1,562
1,562
=
=
=
=
=
6,902
6,985
(83)
3,706
(3,789)
=
=
Other provisions Amounts to:
Accruals
Utilisation
Exch. Diff.
Ch. area
and refer to:
Tax provisions Other provisions for risk/charges
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 existing 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 review of the provisions 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 reorganisation plan of some production operations. The tax provision includes accruals made to cover losses that may be incurred by the company in connection with tax liabilities. Among other provisions for risks and charges are included foreseeable risks following operations in relation to the company Aree Urbane S.r.l., in addition to expenses in reference to the legal action pertaining to the former Praia a Mare factory.
Praia a Mare
With reference to the Praia a Mare dispute, as mentioned in the Report on Operations, beginning in 1999, some former employees and heirs of former employees at the 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 1960s 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. In November 2013, by agreement with ENI S.p.A., all financial claims lodged by natural persons involved in the criminal proceedings and all those of former workers or heirs of former workers who took civil action from 2006 to 2008 against the Company, claiming compensation for damages allegedly suffered following occupational sickness, were settled. Following an ordinance of the mayor of Praia a Mare in January 2007, Marzotto S.p.A. was supposed to begin characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have currently been suspended pending cautionary proceedings, despite the fact that the Company, to this end, renewed its request for release from seizure in November 2013.
78
Marzotto Group Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements]
5.2) Other long term payables
Amounts to:
2013
2012
Change
431
8,492
(8,061)
and refers to: Payables due to Inland Revenue
422
8,473
(8,051)
Payables due to social security institutions
9
19
(10)
Other payables
=
=
=
431
8,492
(8,061)
Total
As at 31 December 2012, the item Payables due to Inland Revenue includes the medium-long term portion, for 7,818 thousand, of the amount due for the Dividend Stripping litigation. This debt position has been classified entirely amongst current liabilities of Other payables due to Inland Revenue, insofar as it was extinguished upon payment of the amount due in January 2014. Please refer to the comments given in note 6.1 for more information.
5.3) Deferred taxes liabilities
2013 Amounts to:
2012
Change
4,021
4,545
(524)
3,789
4,427
(638)
232
118
114
4,021
4,545
(524)
and can be broken down as follows: Tangible and intangible assets differences Other temporary differences Total
This item includes deferred taxes reported by the consolidated companies, mainly attributable to the difference between depreciation and amortisation based on tax rates and on the useful life of the asset.
5.4) Long term financial payables
2013 Amounts to:
2012
Change
3,118
4,383
(1,265)
and can be broken down as follows: Secured financing received
3,107
4,245
(1,139)
Non-secured financing received
=
127
(127)
Other medium/long-term debt
11
11
=
3,118
4,383
(1,265)
Total
Medium/long-term financial payables are financial liabilities due to banks and other lenders beyond twelve months. As at the reporting date, the portion due within twelve months is reclassified to current financial liabilities. The debt shown, Euro 3,118 thousand, is Euro 326 thousand for the residual portion of the 2009 loan stipulated by the subsidiary Filin S.A., backed by collateral and Euro 2,781 thousand the residual portion (pertaining to the Group) of a loan contract stipulated by the company as a joint venture with Ratti S.p.A., backed by collateral. The item Due to other lenders medium/long-term refers to interest-bearing security deposits.
Marzotto Group Consolidated financial statements
79
Balance Sheet
[Notes to the consolidated financial statements]
6) Non-current liabilities held for sale
Amounts to:
2013
2012
Change
41,993
=
41,993
9,114
and can be broken down as follows: Trade payables
9,114
=
Other payables
807
=
807
3,930
=
3,930
Funds and medium/long term debts Financial payables Totale
7.1) Trade payables and other payables
28,142
=
28,142
41,993
=
41,993
2013 Amounts to:
2012
Change
122,045
120,793
1,252
83,735
86,746
(3,011)
1,328
1,316
12
584
1,241
(657)
11,555
10,787
768
3,810
3,811
(1)
12,425
11,721
704
6,377
2,038
4,339
and can be broken down as follows: Trade payables Trade payables due to associates Advance payments received Payables due to Inland Revenue Payables due to social security institutions Payables due to employees Other payables Other payables due to associates Other payales due to parent companies Accrued liabilities and deferred income Total
374
547
(173)
=
397
(397)
1,856
2,189
(333)
122,045
120,793
1,252
The balance of Trade payables, before reclassification to discontinued operations (9,114 thousand), is Euro 92,849 thousand and increases by Euro 6,103 thousand, mainly in connection with the greater value of the order book acquired as at the reporting date as compared with the same period of 2012; this has required greater provisions. Trade payables are due within the year and pertaining to debts for the purchase of goods and services.
Amounts due to affiliates and joint control companies refer to: 2013 Mediterranean Wool Industries
2012
Change
225
157
68
Pettinatura di Verrone
279
468
(189)
Filivivi Group
798
657
141
26
34
(8)
1,328
1,316
12
Ratti Group Total
Advance payments from customers are advances received from customers on supplies.
80
Marzotto Group Consolidated financial statements
Balance Sheet
[Notes to the consolidated financial statements] Payables due to Tax Authorities can be broken down as follows: 2013
2012
Change
Taxes withheld
2,598
2,412
186
Income taxes
1,809
1,370
439
871
1,956
(1,085)
94
52
42
6,184
4,997
1,187
11,555
10,787
768
Regional manufacturing tax Value added tax Other amounts due to Inland Revenue Total
Other payables to the Tax Authorities refer for Euro 4,781 thousand to the amount recorded by the parent company as due to Equitalia Nord deriving from the litigation 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 31/12/2010 a provision for 16,240 thousand euro had been set aside. At the request of the Company, in October 2011 the request to pay in instalments was accepted and the payment was divided in 48 monthly instalments, the first of which was due at the end of October 2011. The Company has requested to the appropriate Authorities an amendment, because it considered wrong the criteria used to calculate the items “portion for arrears interests” and “portion collection compensation” included in the above repayment plan. By sentence no. 242/2012, the Milan Provincial Tax Commission declared that the “share of late payment interest” and the “part share of collection fees” for a total of Euro 808 thousand, was not due. The residual debt, recalculated by virtue of said sentence and still recorded as at the reporting date, was recalculated on the basis of that due following the benefits assigned by Law no. 147 of 27 December 2013, Art. 1 (2014 Stability Law) and thereafter paid on 28 January 2014.
Payables due to social security institutions refer to: 2013 INPS ENASARCO Other Italian institutions Foreign social security agencies Total
2012
Change
2,661
2,515
9
11
146 (2)
593
639
(46)
547
646
(99)
3,810
3,811
(1)
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.
Marzotto Group Consolidated financial statements
81
Balance Sheet
[Notes to the consolidated financial statements] Payables due to employees can be broken down as follows: 2013 December salaries paid in January
3,023
(97)
29
55
(26)
8,733
8,175
557
737
468
269
12,425
11,721
704
Miscellaneous amounts due Total
Change
2,926
Staff termination indemnities paid after year-end Deferred salaries
2012
The item Other payables due to affiliates refers to the amount due from Filivivi S.r.l. (tax transparency). Other third party payables includes Euro 400 thousand a payable due to Appia S.r.l. as compensation for the debt/credit positions of Marzotto S.p.A., Biella Manifatture Tessili S.p.A. (formerly F.lli Tallia di Delfino S.p.A.) and Appia S.r.l. Sundry third party payables also includes the fair value measurement of forward contracts hedging exchange rates, for Euro 3,244 thousand. Other payables due to parent companies refer to payables for the Domestic Tax Consolidation, equal to Euro 397 thousand and due to Wizard S.r.l. Accrued liabilities and deferred income include Euro 1,184 thousand contributions on capital account, resolved by local public entities in favour of the subsidiary Filature De Lin Filin S.A.
7.2) Current financial payables
2013 Amounts to:
2012
162,948
Change
194,910
(31,962)
and can be broken down as follows: Trade advances received Non-secured financing received
12,697
12,272
425
147,262
179,572
(32,310)
Secured financing received Other amounts due to third parties Total
=
=
=
2,989
3,066
(77)
162,948
194,910
(31,962)
Third party payables refer Euro 141 thousand to the fair value of IRS of the Ratti Group and Euro 848 thousand to other financial payables.
Net financial position
2013 Amounts to:
2012
(90,471)
Change
(101,555)
11,084
and can be broken down as follows: 1.8 Long term financial receivables
105
14,911
(14,806)
3.4 Current financial assets
75,490
82,827
(7,337)
5.4 Long term financial payables
(3,118)
(4,383)
1,265
7.2 Current financial payables
(162,948)
(194,910)
31,962
Total
(90,471)
(101,555)
11,084
As shown in the table given, the Net Financial Position shows an improvement of Euro 11,084 thousand. The change recorded during the period is mainly due to the reclassification of financial assets and liabilities of the Filivivi Group to discontinued operations. The Net Financial Position prior to this reclassification is Euro 118,429 thousand.
82
Marzotto Group Consolidated financial statements
Balance Sheet
Contractual commitments and guarantees (Memorandum Accounts)
[Notes to the consolidated financial statements] Memorandum accounts and commitments at 31 December 2013 are commented below:
“Guarantees to third parties” were given:
by the Parent Company in favour of the subsidiary Biella Manifatture Tessili S.r.l. for 29,000 thousand euro for lines of credit; by the Parent Company in favour of the subsidiary Biella Manifatture Tessili S.r.l. for 14,200 thousand euro for transfers of receivables without recourse; by the Parent Company in favour of the subsidiary Linificio e Canapificio Nazionale S.r.l. for 7,000 thousand euro for transfers of receivables without recourse; by the Parent Company in favour of the Company Mediterranean Wool Industries Co. S.A.E. to cover financing received for 1,650 thousand euro; in favour of the Parent Company as a guarantee for service contracts for 17 thousand euro and for miscellaneous securities for 19 thousand euro; in favour of other Subsidiaries/Affiliated Companies to guarantee miscellaneous securities for 377 thousand euro.
“Guarantees received from third parties” were given:
in favour of the Subsidiaries/Affiliates for 300 thousand euro as a guarantee for miscellaneous securities; in favour of the Parent Company as a guarantee for trade receivables for 383 thousand euro and for miscellaneous securities for 187 thousand euro; in favour of the Ratti Group for Euro 66 thousand for utilities and the Silkbiotech project.
“Other Guarantees to third parties” were given:
in favour of the Subsidiaries/Affiliates for 13,402 thousand euro as a guarantee for miscellaneous securities.
The “Foreign currency/interest rates hedging contracts” refer to contracts for term purchase for 62,669 thousand euro and contracts for term sale for 23,257 thousand euro. As of 31 December 2013, the commitments for contracts for the term sale of foreign currency (on receivables, orders received and future orders) were 27,135 thousand US dollars, for a total value of 20,350 thousand euro, 400 thousand British pounds, for a total value of 466 thousand euro, 321,710 thousand Japanese yen, for a total value of 2,441 thousand euro. Contracts for the term purchase of foreign currency were 1,100,000 thousand Czech crowns, for a total value of 42,338 thousand euro, 26,850 thousand AUD for a total value of 19,115 thousand euro and 5,500 thousand RON for a total value of 1,216 thousand 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 2,731 thousand euro, was established based on the quotes given by the banks. There are also existing option contracts to hedge currency exchange risks for notional 24,900 thousand USD, for a total value of 18,751 thousand euro and 945,000 thousand JPY for a total value of 7,411 thousand euro, for which the fair value is Euro 427 thousand. Ratti S.p.A. has some Interest Rate Swap hedging contracts with a notional of 2,711 thousand euro. As of 31 December 2013, the fair value of this instrument is positive for 141 thousand euro.
Marzotto Group Consolidated financial statements
83
Income statements
[Notes to the consolidated financial statements]
8. Net revenues
Net revenues by sector are detailed below: 2013 Textiles
2012
% change
264,732
262,004
Wool yarns (pro-quota)
46,005
44,487
3.4
Linen yarns
37,070
34,660
7.0
Silk (pro-quota)
34,292
34,610
(0.9)
Other operations Eliminations/adjustments Total
1.0
16,932
16,644
1.7
(60,515)
(58,070)
4.2
338,516
334,335
1.3
Net revenues went from Euro 334,335 thousand to Euro 338,516 thousand, totalling an increase of 1.3% on last year. This positive change is mainly due to the recovery of demand on the Group’s reference markets. More specifically, whilst domestic demand is down 3.3% on 2012, turnover elsewhere in Europe and North America booked respective increases of 2.6% and 29.7%. The item “Net revenues” includes the following other income: 2013 Amounts to:
2012
% change
17,302
16,636
4.0
1,278
1,006
27.1
228
=
=
15,796
15,630
1.1
17,302
16,636
4.0
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.
9. Cost of sales
2013 Amounts to:
2012
% change
(262,134)
(260,346)
0.7
(11.9)
and refers to: Raw materials consumption
(107,954)
(122,589)
Third party production
(13,701)
(12,745)
7.5
In house manufacturing
(86,939)
(85,027)
2.2
Purchase of finished and semi-finished products
(27,167)
(22,082)
23.0
1,277
5,742
(77.8) n.c.
Change in stock of finished and semi-finished products Commercial exchange differences
(1,893)
127
Other logistic and industrial costs
(25,758)
(23,772)
8.4
(262,134)
(260,346)
0.7
Total
The increase seen in the cost of goods sold is related to the improved turnover booked in 2013.
84
Marzotto Group Consolidated financial statements
Income statements
[Notes to the consolidated financial statements] Trade exchange rate differences are detailed below: Trade exchange rate differences Amounts to:
2013
2012
% change
(1,893)
127
(992)
246
(3,610)
792
2,709
(911)
(1,893)
127
n.c.
and refers to: Exchange rate on cash from customers in foreign currency Exchange rate gains on payments to suppliers in foreign currency Exchange rate on extinguishing of trade financing in foreign currency Total
11. R&D and marketing costs
Amounts to:
n.c.
2013
2012
(42,109)
(41,279)
% change
(12,127)
(12,227)
(0.8)
(1,590)
(1,844)
(13.8)
(14,726)
(14,525)
1.4 18.6
2.0
and refers to: Variable sales costs Losses, write-down, accounts receivables Product research and development Advertising, marketing and public relations
12. General and administrative costs
Marzotto Group Consolidated financial statements
(2,643)
(2,229)
Other fixed sales and marketing costs
(11,023)
(10,454)
5.4
Total
(42,109)
(41,279)
2.0
2013
2012
(20,425)
(20,143)
Amounts to:
% change 1.4
85
Income statements
[Notes to the consolidated financial statements]
13. Other income and charges
Amounts to:
2013
2012
(19,340)
% change
(323)
n.c.
and refers to: Gain on disposal of tangible and intangible assets
655
503
Loss on disposal of tangible and intangible assets
(19)
(19)
Extraordinary charges for industrial plan Allocation/use to legal risk fund and future charges Allocation/use to restructuring and relocation fund
(394)
(671)
(9,316)
(2,496)
(263)
=
Charges "Dividend Stripping"
(9,096)
=
Contingent assets/liabilities
793
970
Other income/charges Total other income/charges
(1,700)
1,390
(19,340)
(323)
n.c.
The net balance of extraordinary management shows expenses for Euro 19,340 thousand, which are juxtaposed with Euro -323 thousand in 2012. In detail:
86
Marzotto Group Consolidated financial statements
the provisions made for Extraordinary charges on the business plan, for Euro 394 thousand, relate to costs for the reorganisation and increased efficiency of production departments, as well as to charges connected with decommissioned plants and areas;
the allocation/use of the legal risk fund includes legal charges and expenses relating to current lawsuits expected to be incurred in the forthcoming years, as well as uses made during the year;
Dividend Stripping charges includes the write-down of the receivable due from Valentino Fashion Group S.p.A., deriving from the Dividend Stripping dispute, as described in note 3.3;
contingent assets/liabilities refer mostly to amounts recovered from bad debts and provision set aside erroneously in previous years.
Income statements
[Notes to the consolidated financial statements]
14. Operating income
2013 Amounts to:
2012
(5,492)
% change
12,244
n.c.
and refers to: Textiles
14,619
13,712
6.6
(929)
(2,421)
(61.6)
(2,733)
(3,489)
(21.7)
1,841
2,095
(12.1)
(19,715)
(3,336)
n.c.
1,425
5,683
(74.9)
(5,492)
12,244
n.c.
Wool yarns (pro-quota) Linen yarns Silk (pro-quota) Other operations Eliminations/Adjustments Total
Below are the details on labour costs and depreciation and amortisation included in the Operating income calculation. Labour costs:
Amounts to:
2013
2012
% change
(86,746)
(82,181)
5.6
and refers to: Textiles
(56,613)
(51,906)
9.1
Wool yarns (pro-quota)
(5,809)
(6,262)
(7.2)
Linen yarns
(6,118)
(6,524)
(6.2)
Silk (pro-quota)
(8,855)
(8,479)
4.4
Other operations
(9,351)
(9,010)
3.8
(86,746)
(82,181)
5.6
Total
The number of active employees had the following trend: Year End Staff 31.12.2013 Blue-collar workers White-collar workers Managers Total
Average
31.12.2012
% change
2013
2012
% change
2,764
2,766
(0.1)
2,770
2,821
746
724
3.0
747
705
(1.8) 6.0
41
38
7.9
40
37
8.1
3,551
3,528
0.7
3,557
3,563
(0.2)
Amortisation and depreciation was as follows:
Amounts to:
2013
2012
(14,863)
(14,795)
(736)
(653)
(14,127)
(14,142)
% change 0.5
and refers to: amortization of intangible fixed assets depreciation of tangible fixed assets
Marzotto Group Consolidated financial statements
87
Income statements
15. Financial charges, net
[Notes to the consolidated financial statements] 2013 Amounts to:
2012
(4,930)
% change
(3,768)
30.8
and refers to: Financial income Interests received from associates
20
66
(69.7)
Interests received from banks
1,574
2,901
(45.7)
Interests received from other
96
154
(38.0)
Exchange rate gains on financial transactions Total financial income
74
396
(81.3)
1,764
3,517
(49.8)
Financial charges Interest payable to associates Interests payable to banks
=
=
=
(4,265)
(4,797)
(11.1) n.c.
Interests payable to other creditors
(24)
=
Bank charges
(776)
(742)
4.5
Exchange rate losses on financial transactions
(973)
(785)
24.0
(656)
(961)
(31.7)
Total financial charges
Other financial charges
(6,694)
(7,285)
(8.1)
Total
(4,930)
(3,768)
30.8
The balance of financial operations as at 31 December 2013 is negative for Euro 4,930 thousand, worsening by 30.8%. Interest received from affiliates refers to the amounts recognised by Mediterranean Wool Industries for Euro 20 thousand. In 2012, interest paid by affiliates respectively came to Euro 35 thousand (Filivivi Group) and Euro 31 thousand (Mediterranean Wool Industries Co. S.A.E.).
16. Dividends from unconsolidated shareholdings and valuations to equity
2013 Amounts to:
2012
(1,359)
% change
(1,456)
(6.7)
and refer to: Dividends Wool Street Investments Pty Ltd.
=
6
Emittente Titoli S.p.A.
4
=
Total dividends
4
6
(1,394)
(1,419)
=
(47)
31
4
=
=
Total valuations at equity
(1,363)
(1,462)
(6.8)
Total
(1,359)
(1,456)
(6.7)
(33.3)
Valuations at equity Mascioni S.p.A. Mediterranean Wool Industries Co. S.A.E. Pettinatura di Verrone S.r.l. Other companies
The above investment is measured according to the equity method; consequently, its book value has been aligned to equity, incorporating the period results.
88
Marzotto Group Consolidated financial statements
Income statements
[Notes to the consolidated financial statements]
18. Other financial income and charges
Amounts to:
2013
2012
% change
(14,441)
(175)
=
14
(14,695)
=
>100.0%
and refers to: Exchange difference sale participation Wool Street Investments Pty Ltd. Write down receivable Aree Urbane Gain on sale of securities
172
=
65
(152)
Adjustment TFR IAS 19 Other income Total
17
(37)
(14,441)
(175)
>100.0%
The balance of Other financial income and charges, of Euro 14,441 thousand, includes Euro 14,695 thousand for the impairment of the receivable due from the affiliate Aree Urbane S.r.l. in liquidation, by virtue of the presumed realisation value that is basically null (see comments under note 1.8).
20. Income taxes
2013 Amounts to:
2012
% change
(5,248)
(1,157)
(4,419)
(3,106)
>100.0
and refer to: Current taxes Deferred taxes receivable Deferred taxes payable Taxes prior years Total
(86)
770
(644)
(510)
(99)
1,689
(5,248)
(1,157)
>100.0
Estimated taxes for 2013 are negative for 5,248 thousand euro; the ratio to income before taxes is 20.0%. Deferred tax payables and receivables refer to temporary differences in the book value and the tax value. The amount for Taxes prior years refers mainly to the posting of advance taxes on losses carried forward of Italian companies and they have been entered based on the evaluation of their recoverability, pursuant to the new regulations that provide for their unlimited reporting. The reconciliation of the theoretical tax rate with the effective tax rate on income before taxes is set out in the table below. 2013 Amount Pre-tax profit Theoretical taxes Taxes on the taxable amount at a reduced tax rate Tax on utilization of fiscal lossess
Marzotto Group Consolidated financial statements
2012 %age
Amount
(26,222)
%age
6,845
7,211
27.5
(1,882)
27.5
114
0.4
473
(6.9)
4
=
11
(0.2)
IRAP
(2,419)
(9.2)
(1,845)
27.0
Taxes on losses for the year
(1,136)
(4.3)
(482)
7.0
Taxes on non-deductible capital losses
(7,025)
(26.8)
=
=
Taxes prior years
(76)
(0.3)
1,894
(27.7)
Other differences
(1,921)
(7.3)
674
(9.8)
Total taxes
(5,248)
(20.0)
(1,157)
16.9
89
Income statements
[Notes to the consolidated financial statements]
22. Net result of assets held for disposal
Amounts to:
2013
2012
(2,236)
(2,970)
46,005
44,487
(42,420)
(41,201)
% change (24.7)
and refers to: Net revenues Cost of goods sold Gross margin Commercial / general costs Other income and charges Operating income
Consolidated financial statements
(4,910)
(251)
(1,301)
(1,447)
(2,925)
(1,091)
(1,119)
Income before taxes
(2,538)
(4,044)
Net income
Marzotto Group
3,286
(4,781)
Financial charges Taxes
90
3,585
302
1,074
(2,236)
(2,970)
(24.7)
Other information
Shareholdings held directly or indirectly by the Parent Company
[Notes to the consolidated financial statements] 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 2013. All shareholdings represent ownership:
% group Company name
Head office
Direct investor
% owned
Biella Manifatture Tessili S.r.l.
Milan (I)
Marzotto S.p.A.
100.00%
owned
Le Cotonerie S.r.l.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Ambiente Energia S.r.l.
Schio (I)
Marzotto S.p.A.
100.00%
100.00%
Sametex Spol s r.o.
Kraslice (CZ)
Marzotto S.p.A.
100.00%
100.00%
Girmes International G.m.b.h.
Nettetal (DE)
Marzotto S.p.A.
100.00%
100.00%
Marzotto Textiles Czech Republic s r.o.
Praga (CZ)
Marzotto S.p.A.
100.00%
100.00%
Aree Urbane S.r.l. in liquidazione
Milan (I)
Marzotto S.p.A.
32.50%
32.50%
Pettinatura di Verrone S.r.l.
Verrone (I)
Marzotto S.p.A.
15.00%
15.00%
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.
100.00%
100.00%
100.00%
100.00%
100.00%
Amsterdam (NL)
Marzotto S.p.A.
Novà Mosilana a.s.
Brno (CZ)
Marzotto Textile N.V.
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%
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%
UAB Lietvilna
Linificio e Canapificio Nazionale S.r.l.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Filature de Lin Filin S.A.
Chbedda (TN)
Linificio e Canapificio Nazionale S.r.l.
100.00%
100.00%
UAB Lietlinen
Kaunas (LT)
Linificio e Canapificio Nazionale S.r.l.
100.00%
100.00%
UAB Linestus
Kaunas (LT)
UAB Lietlinen
50.00%
50.00%
Licana S.p.A. in liquidazione
Fara Gera d’Adda (I)
Linificio e Canapificio Nazionale S.r.l.
100.00%
100.00%
Lin Naturel S.A.
Chbedda (TN)
Linificio e Canapificio Nazionale S.r.l.
100.00%
100.00%
33.36%
33.36%
Ratti S.p.A.
Guanzate (I)
Marzotto S.p.A.
Creomoda S.a.r.l.
Soussa (TN)
Ratti S.p.A.
95.00%
31.70%
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.
Cluj - Napoca (RO)
Ratti S.p.A.
100.00%
33.36%
Marzotto Group Consolidated financial statements
91
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.
Related party transactions are detailed in the table below: Receivables and payables existing with related companies as at 31 December 2013 Receivables Company
Trade
Immobili e Partecipazioni S.r.l.
Other 57
Payables
Financial =
Total 6
Trade 63
Other
Financial
6
1
Total =
7
Revenues, income, costs and charges with related companies for the year 2013 Revenues and other income Company Immobili e Partecipazioni S.r.l.
Directors and Statutory Auditors
Products
Services =
106
Finance
Costs and charges Total
10
Products 116
Services =
Finance
35
Total =
35
Amounts paid to the Directors and Statutory Auditors of the Marzotto Group: Office (thousands of euro)
Directors
2013 remuneration
Auditors 866
Total 108
974
Other information
During the financial year there were not atypical or unusual transactions.
Events after the date of these financial statements
As part of the strategic choices made by the Group, on 02 January 2014, Marzotto S.p.A. acquired 50% of the Lithuanian company Uab Lietvilna, the dying and reconditioning business unit in Piovene Rocchette (VI) and a 50% stake in the share capital of the newly-established Tintoria di Verrone S.r.l., from the joint venture company Filivivi S.r.l. By notary deed dated 24 February 2014, Marzotto S.p.A. sold its stake in Filivivi S.r.l., operating in the wool yarns segment, equal to 50% of the share capital, to Fraver S.p.A., which now holds the entire capital. As concerns this year’s economic trend, initial forecasts on data for the first half of 2014 in the Textile-Fashion segment suggest a reversal of trend (+2.1%), also for companies involved upstream in the chain (+0.4%). The domestic demand is also expected to be positive, with growth rates of +1.4%. As concerns short-term expectations monitored by sector studies, most operators are not expecting any major changes in the market situation and are basically looking at stability in the recession context seen in 2013. Within this context, the Group has recorded an 13.0% increase in turnover during the first two months of 2014 as compared with the same period of 2013. There are no other significant events to report that could affect the financial statements and their information.
Segment reporting 92
Marzotto Group Consolidated financial statements
The tables below provide segment reporting information.
Other information
Segment reporting 2013
[Notes to the consolidated financial statements] (thousands of euro) Segment reporting Income statment Other revenues Inter-sector revenues
Textiles
Wool
Linen
yarns
yarns
Eliminations
Total
255,871
41,742
35,198
34,213
4,852
(33,360)
338,516
8,861
4,263
1,872
79
12,080
(27,156)
=
Totale revenues
264,732
46,005
37,070
34,292
16,932
(60,516)
338,516
(250,113)
(46,934)
(39,803)
(32,451)
(36,647)
61,941
(344,008)
(10,002)
(779)
(2,051)
(1,038)
(1,434)
1,218
(14,087)
(675)
(251)
(269)
(12)
=
345
(862)
14,619
(929)
(2,733)
1,841
(19,715)
1,425
(5,492)
=
=
=
=
=
=
(4,930)
=
=
=
=
=
=
(1,359)
Financial charges net Dividends from non cons. equity invest. and valuation at equity Other financial income/charges Pre-tax profit
=
=
=
=
=
=
(14,441)
=
=
=
=
=
=
(26,222)
Taxes
=
=
=
=
=
=
(5,248)
Net profit
=
=
=
=
=
=
(31,470)
=
=
=
=
=
=
(2,236)
=
=
=
=
=
=
(33,706)
Net profit/loss for discontinued operations Net profit (before minority shareholders) Minority shareholders Net profit
=
=
=
=
=
=
=
=
=
=
=
=
=
(33,706)
Segment reporting Balance sheet Assets by segment Equity investments in associate companies Non-allocated assets Total assets Shareholders' equity Liabilities by segment Non-allicated liabilities Total liabilities and shareholders' equity Investments
Textiles
Wool
Linen
yarns
Other
yarn
Silk
operations
Eliminations
229,398
44,689
49,398
27,000
183,600
(154,688)
385,299
=
=
=
=
6,446
=
6,446
Total
=
=
=
=
=
=
75,596
229,398
44,689
49,398
27,000
190,046
(154,688)
467,341
=
=
=
=
=
=
99,296
106,707
17,306
12,887
13,319
29,867
21,894
201,979
=
=
=
=
=
=
166,066
106,707
17,306
12,887
13,319
29,867
21,894
467,341
14,145
1,124
767
1,341
1,415
=
18,792
Information by
Consolidated financial statements
operations
Sector costs of which depreciation & amortization of which other non monetary costs Operating income
Marzotto Group
Other Silk
Other Europ.
North
Countries
America
109,937
158,659
15,287
41,178
13,455
338,516
Fixed assets
322,677
130,523
119
269
13,753
467,341
Investments
9,641
8,703
=
=
448
18,792
geographical area
Italy
Revenues
Other Asia
Countries
Total
93
Other information
Segment reporting 2012
[Notes to the consolidated financial statements] (thousands of euro) Segment reporting Income statment Other revenues
Textiles
Wool
Linen
yarns
yarns
Other Silk
operations
Eliminations
41,905
33,242
34,545
6,293
(38,861)
334,335
4,793
2,583
1,418
65
10,351
(19,209)
=
Inter-Sector revenues Total revenues
262,004
44,487
34,660
34,610
16,644
(58,070)
334,335
Sector costs
(248,292)
(46,908)
(38,149)
(32,515)
(19,980)
63,753
(322,091)
(9,618)
(762)
(2,179)
(1,005)
(1,239)
52
(14,751)
(452)
(223)
(129)
(89)
7
=
(886)
of which depreciation & amortisation of which other non monetary costs Operating income
13,712
(2,421)
(3,489)
2,095
(3,336)
5,684
12,244
Financial charges net
=
=
=
=
=
=
(3,768)
Dividends from non cons. equity invest. and valuation at equity
=
=
=
=
=
=
(1,456)
Other financial income/charges
=
=
=
=
=
=
(175)
Pre-tax profit
=
=
=
=
=
=
6,845 (1,157)
Taxes
=
=
=
=
=
=
Net profit
=
=
=
=
=
=
5,688
=
=
=
=
=
=
(2,970)
=
=
=
=
=
=
2,718
Net profit/loss for discontinued operations Net profit (before minority shareholders) Minority shareholders Net profit
=
=
=
=
=
=
=
=
=
=
=
=
=
2,718
Segment reporting Balance sheet Assets by segment
Textiles
Wool
Linen
yarns
yarns
Other operations
Eliminations
228,331
46,195
56,330
28,006
189,044
(143,986)
403,921
=
=
=
=
8,145
=
8,145
Equity investments in associate companies Non-allocated assets
Silk
=
=
=
=
=
=
97,738
46,195
56,330
28,006
197,189
(143,986)
509,804
=
=
=
=
=
=
141,811
99,131
18,765
16,432
15,011
33,375
(14,014)
168,700
=
=
=
=
=
=
199,293
Total liabilities and shareholders' equity
99,131
18,765
16,432
15,011
33,375
(14,014)
509,804
Investments
13,962
969
839
1,940
1,469
=
19,179
Shareholders' equity Liabilities by segment Non-allicated liabilities
Information by
Other Europ.
North
Countries
America
113,703
154,739
11,867
40,971
13,055
334,335
Fixed assets
423,278
67,739
155
420
18,212
509,804
Investments
9,969
8,796
=
=
414
19,179
geographical area
Italy
Revenues
Other Asia
Countries
Valdagno (VI), 27 March 2014 For the Board of Directors
Marzotto Group Consolidated financial statements
Total
228,331
Total assets
94
Total
257,211
Total
[Report of indipendent Auditors]
95
Annual Report 2013
General information Marzotto group Report on the Group’s operations Consolidated financial statements
Marzotto S.p.A. Report on the Company’s operations Company financial statements
Sole 24 Ore” del 5 aprile 2007
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”.
97
[Subsidiaries and associated companies - 31 December 2013] Marzotto S.p.A.
50.00% [1]
100.00%
Filivivi S.r.l.
Biella Manifatture Tessili S.r.l.
100.00%
Filivivi Asia Pacific Ltd
100.00%
Le cotonerie S.r.l.
100.00%
Uab Lietvilna
100.00%
Ambiente Energia S.r.l.
100.00%
Sc Rolana Tex S.r.l.
100.00%
Sametex spol s r.o.
100.00%
Girmes Intern. GmbH
100.00%
Marzotto Textile Czech Rep.
100.00%
Marzotto Textile N.V.
100.00%
Linificio e Canapificio Naz.le S.r.l. Filature De Lin Filin S.A.
100.00%
Lin Naturel S.A.
100.00%
Licana S.p.A. (in liquidation)
100.00%
Uab Lietlinen
100.00%
100.00%
Novà Mosilana a.s.
Uab Linestus
99.97%
AB Liteksas
Ratti S.p.A.
100.00%
Marzotto Int.Trading Shanghai Ltd
100.00%
Marzotto Textiles Usa Inc.
50.00%
33.36% [1]
Creomoda S.a.r.l.
95.00%
Ratti Usa Inc.
100.00%
Mascioni S.p.A.
28.35%
Ratti Int.Trading (Shanghai) Co.Ltd
100.00%
Aree Urbane S.r.l. (in liquidation)
32.50%
S.C. Textrom S.r.l.
100.00%
Mediterranean Wool Ind. S.A.E.
30.00%
Pettinatura di Verrone S.r.l.
15.00%
Subsidiaries companies Associates companies
[1] Consolidated pro-quota
98
Marzotto S.p.A. Report on the Company’s operations
[Significant events during the financial year] Shareholders, The financial statements for the year ended on 31 December 2013 submitted herewith for your approval close recording income of Euro 174,801 thousand and a loss of Euro 47,574 thousand, mainly due to non-recurring events as explained below. 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. We would refer you to the explanatory notes for comments on the results of the financial statements. Below, please find the information on the company’s position and future prospects, as well as that required by current legislation. Before moving onto discuss the business of your Company in FY 2013, we would first note the key events that took place in the year just ended and this year.
Praia dispute
Beginning in 1999, some former employees and heirs of former employees at the 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 1960s 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. After the Judge of the same Court rejected three requests by the Examining Judge to close the case, in October 2009 and February 2010, the prosecution issued notices of completion of preliminary investigations, also for environmental crimes. In March 2011 Marzotto was served the summons of the responsible officer who, according to the ordinary proceedings, even if he did not commit crime, he is jointly responsible for the payment of damages, if any, as of today not assessed. In October 2013, the Court ordered an appraisal, the results of which, in March 2014, are as yet unknown. The proceedings are in the investigation stages. In November 2013, by agreement with ENI S.p.A., all financial claims lodged by natural persons involved in the criminal proceedings and all those of former workers or heirs of former workers who took civil action from 2006 to 2008 against the Company, claiming compensation for damages allegedly suffered following occupational sickness, were settled. Following an ordinance of the mayor of Praia a Mare in January 2007, Marzotto S.p.A. was supposed to begin characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have currently been suspended pending cautionary proceedings, despite the fact that the Company, to this end, renewed its request for release from seizure in November 2013. During the year, net charges were booked for Euro 9.3 million, as detailed below.
Dividend stripping
During FY 2010, in relation to the dispute pending before Cassation against sentence no. 78/2010 issued by the 4th chambers of the Regional Tax Commission of Venezia-Mestre on 21/09/2010, Marzotto S.p.A. has been 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, namely Marzotto S.p.A. and, by virtue of the partial proportional spin-off of July 2005, Valentino Fashion Group S.p.A., jointly and respectively 1/3 and 2/3 of said liability towards the tax authority. At the request of Marzotto S.p.A., in October 2011 the request to allow for payment by instalments was granted, with payment thus divided up into 48 monthly instalments. In January 2014, Marzotto S.p.A. and Valentino Fashion Group S.p.A. stipulated a settlement agreement to define, amongst other aspects, their joint liability to make payment of said tax notice and the lawsuit in question. Under this agreement, Marzotto S.p.A. paid the tax payable as a lump sum, thereby benefiting from the 2014 Stability Law, releasing Valentino Fashion Group S.p.A. from its obligations, which, in turn, waived all claims made against Marzotto S.p.A., abandoning all civil proceedings brought before the Court of Milan. During the year analysed, net non-recurring charges were booked for Euro 10 million.
Marzotto S.p.A. Report on the Company’s operations
99
[Significant events during the financial year] Aree Urbane
In November 2012, Marzotto S.p.A. and the shareholders Prelios and Telecom stipulated an agreement aimed at defining guidelines to conduct to be held in restoring “Aree Urbane S.r.l. in liquidazione” to performing status. The effect of this agreement was subject to a condition precedent, an essential condition to restoring the affiliate to performing status, which envisaged reaching an agreement with the chosen banks to refinance the past-due debt of Aree Urbane. As this condition was not met, the shareholders expressed their intention to offer the banks an “ordered” liquidation of Aree Urbane, as there was no longer any interest in pursuing the business. It was considered prudent to write down the residual amount of the receivable due from the affiliate, of Euro 14.7 million.
Share grouping
During the first few months of 2013, the Company implemented the share grouping project resolved by the extraordinary shareholders’ meeting held on 10 September 2012. At the same time, the indication of the nominal value of the shares in issue was eliminated, in accordance with the combined provisions of Art. 2328, paragraph two, no. 5 and 2346, paragraph three of the Italian Civil Code, and the Articles of Association were amended. Grouping took place at a ratio of one new securitised share per 13,001 existing dematerialised shares and upon annulment of the smallest number of shares necessary to allow for the regrouping. The shares not grouped were annulled and monetised without reducing the share capital, at the value of Euro 3.80 per share, withdrawing the relevant amounts from the equity reserves.
100
Marzotto S.p.A. Report on the Company’s operations
[Report on the Company’s operations] The table below contains summaries of the Company’s main income statement, balance sheet, and financial position items for the year ended on 31 December 2013.
(in millions of euro)
2013
2012
Consolidated net revenues
174.8
164.9
Profit from core businesses % of net revenues
(1)
EBITDA (2) % of net revenues Income before taxes % of net revenues Net income % of net revenues
1.6
(0.2)
0.9%
(0.1%)
5.9
4.2
3.4%
2.6%
(47.4) (27.1%)
0.3
change
change %
9.9
+ 6.0%
1.8
n.c.
1.7
+ 40.5%
(47.7)
n.c.
(50.5)
n.c.
0.2%
(47.6)
2.9
(27.2%)
1.7%
3.8
18.4
(14.6)
Net employed capital
142.6
171.9
(29.3)
- 17.0%
Net financial position
82.5
61.9
20.6
+ 33.3%
0.5
+ 16.7%
Net working capital
Investments for the period Active staff: persons
3.5
3.0
722
703
2013
2012
ROI
1.0%
ROE ROS
19
+ 2.7%
change
-0.1%
1.1%
-56.0%
2.6%
-58.6%
0.9%
-0.1%
1.0%
Debt/Equity
137.3%
56.3%
81.0%
Financial coverage rate of assets
230.7%
164.7%
66.0%
Inventory rotation index Number of days of credit to clients
- 79.3%
88
88
=
123
117
6
Legend: ROI: Operating results / Average invested capital ROE: Net results / Average shareholders’equity ROS: Operating results / Net revenues Debt / Equity: Net financial position / Net shareholders’equity Rate of financial coverage of Fixed Assets: Fixed assets + ML term funds / Shareholders’equity + ML term financial borrowing Stock rotation index: Net inventory / Cost of sales x 360 days Credit days to customers: 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. Marzotto S.p.A. Report on the Company’s operations
101
[Report on the Company’s operations] Income statements
The income statement is summarized below. 2013
(in millions of euro)
174.8
Cost of sales
(138.9)
(79.5%)
(132.6)
Gross income
35.9
20.5%
32.3
19.6%
R&D and marketing costs
(20.2)
(11.6%)
(18.3)
(11.1%)
General and administrative costs
(14.1)
(8.0%)
(14.2)
(8.6%)
1.6
0.9%
(0.2)
(0.1%)
Profit from core businesses
100.0%
164.9
100.0% (80.4%)
Non-recurring income/(charges)
(19.5)
(11.1%)
(2.0)
(1.3%)
Operating income
(17.9)
(10.2%)
(2.2)
(1.4%)
(3.1)
(1.8%)
(2.8)
(1.7%)
7.2
4.1%
5.4
3.3%
Net financial charges Dividends Other financial income/charges
(26.6)
(15.2%)
(7.0)
(4.0%)
=
=
(47.4)
(27.1%)
0.3
0.2%
Result from valuation of investments held for sale Income before taxes Taxes Net income
Net revenues
2012
Net revenues
(0.1)
=
(0.2)
(0.1%)
2.6
1.5%
(47.6)
(27.2%)
2.9
1.7%
Net revenues went from Euro 164.9 million to Euro 174.8 million, totalling an increase of 6% on last year. This positive change is mainly due to the recovery of demand on the Company’s reference markets. More specifically, whilst domestic demand recorded a slight reduction (-3.4%), elsewhere in Europe, a clear improvement was seen (+ 10.8%). Albeit for a less significant absolute value, sales in North America (+48.7%) and Asia (+3.8%) rose. The increase seen in the cost of goods sold is basically related to the improved turnover booked in 2013. Below is a breakdown according to sector and geographical area:
by sector
(in millions of euro)
Textiles Other Operations Aggregate total Inter-company sales Total of which: Italy of which: Other markets
by geographical area
(in millions of euro)
95.5%
156.4
13.3
7.6%
13.6
8.2%
180.3
103.1%
170.0
103.1%
(5.5)
(3.1%)
174.8
100.0%
54.2 120.6
(5.1)
94.9%
(3.1%)
164.9
100.0%
31.0%
56.1
34.0%
69.0%
108.8
66.0%
2013
2012 31.0%
56.1
34.0%
Other European Countries
87.2
49.9%
78.7
47.7%
5.8
3.3%
3.9
2.4%
19.0
10.9%
18.3
11.1%
8.6
4.9%
7.9
4.8%
174.8
100.0%
164.9
100.0%
Other Countries Total
Report on the Company’s operations
167.0
54.2
Asia
Marzotto S.p.A.
2012
Italy North America
102
2013
[Report on the Company’s operations] Result from ordinary operations
The above analyses show an operating result from the Company’s core business that is a great improvement of the figures booked for last year, equal to Euro 1.6 million (operating result of -0.2 million in 2012). The best performance achieved during the year is due to an increase in turnover (+6%) mainly due to a recovery of export sales, also thanks to a policy that pays attention to prices an product mixes and the choices to reposition some clients considered to be at risk. Action has also been taken to improve the competitiveness of the costs of production and meet the demands of an increasingly complex market with a varied offer and products for different targets, focusing on specific “Made in Italy” assets such as flexibility, market response speed, even for small lots, customer service and excellent quality, know-how and innovation capacity. Important steps were taken also to improve the productivity of the weaving and finishing processes, thanks to carefully-focused multi-year investment plans, organization changes and training interventions to improve efficiency and decrease machine times, as well as improve quality.
Non recurring income and charges
As at the reporting date, the net balance of non-recurring operations is negative for euro 19.5 million and includes:
business plan expenses for approximately Euro 0.3 million, allocated against costs for reorganisations of production departments and expenses connected with decommissioned areas and plants; expenses connected with the fulfilment of the “Praia” transaction during the financial year for approximately Euro 2.7 million; provisions made to the provision for legal disputes for approximately Euro 6.6 million, allocated for expenses estimated as likely to be incurred over the forthcoming years for disputes underway; dividend stripping expenses for approximately Euro 9 million, to close the liability due to the Tax Authority and the dispute involving Valentino Fashion Group to collect the receivable due.
Financial charges, net
In FY 2013, the Company booked net financial expense for Euro 3.1 million, as compared with financial expense for Euro 2.8 million last year. This change is basically due to the increased average debt for 2013 as compared with 2012, faced with the greater difference between active rates on deposits and negative rates on loans.
Dividends from shareholdings
Dividends collected by the parent company in 2013 from subsidiaries and joint ventures amount to Euro 7.2 million, against dividends collected for Euro 5.4 million last year. In detail, dividends collected relate to the foreign subsidiaries Novà Mosilana (Czech Republic) and AB Liteksas (Lithuania), received by the direct parent company Marzotto Textile NV for Euro 4.3 million and the Italian subsidiary Biella Manifatture Tessili S.r.l. for Euro 2 million and the subsidiary, by means of joint ventures, Ratti S.p.A., for Euro 0.9 million.
Other financial income and charges
The balance of Other financial income and charges, of Euro 26.6 million, includes Euro 14.7 million for the impairment of the receivable due from the affiliate Aree Urbane S.r.l. in liquidation, by virtue of the estimated presumed realisation value that is basically null and Euro 11.9 million for the write-down of the equity investment held in Linificio e Canapificio Nazionale S.r.l. due to permanent loss of value, in application of IAS 39.
Marzotto S.p.A. Report on the Company’s operations
103
[Report on the Company’s operations] Income taxes
Beginning in the tax year 2008, the companies Marzotto S.p.A., Immobili e Partecipazioni S.r.l., Linificio e Canapificio Nazionale S.r.l. and Licana S.p.A. (in liquidation), with renewal for the three years 2011-2013, as well as, beginning in 2009 Biella Manifatture Tessili S.r.l. (formerly Tallia di Delfino S.p.A.), Le Cotonerie S.r.l. (formerly Immobiliare Isola S.r.l.) and Ambiente Energia S.r.l., with renewal for the three years 2012-2014, chose the national tax consolidation regime, for which the parent company is the holding Wizard S.r.l., and its effects are also reflected in the results as of 31 December 2013. Immobili e Partecipazioni S.r.l., following the spin-off of Wizard in 2012, left the tax consolidation (with effect as from 01 January 2012). 2013 income tax was -0.2 million as compared with +2.6 million euros last year. The 2013 balance includes IRAP taxes for 1.4 million (0.9 million the year before), and additional income taxes for -0.2 million (+0.3 million in 2012).
Net result
The above analysis reveals a negative net period result for Euro 47.6 million as compared with a positive result for Euro 2.9 million for FY 2012. The year examined therefore archives a negative change of -50.5 million, detailed below: (in millons of euro)
change in profit from core businesses change in non-recurring income (charges) change in net financial charges change in income from shareholdings change in other financial income (charges) change in Result from valution of investments held for sale Total change in income taxes Total changes versus the comparison period
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Marzotto S.p.A. Report on the Company’s operations
1.8 (17.5) (0.3) 1.8 (26.5) (7.0) (47.7) (2.8) (50.5)
[Report on the Company’s 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 2012:
(in millions of euro)
Net trade receivable Other receivables Inventory
31.12.2013
31.12.2012
56.6
50.3
6.3
15.0
33.9
32.5
Commercial suppliers
(71.1)
(61.9)
Other payables
(21.9)
(17.5)
A) Net working capital
3.8
18.4
B) Assets/liabilities held for sale
5.9
=
14.8
16.8
113.1
137.2
27.4
27.6
Receivables beyond 12 months Equity investments Tangible fixed assets Intangible fixed assets
2.5
2.4
C) Net fixed assets
157.8
184.0
D) Employees severance fund, reserves, and other non-financial M/L term payables
(22.6)
(28.5)
E) Deferred taxes reserve F) Invested capital net of current liabilities (A+B+C–D-E)
(2.3)
(2.0)
142.6
171.9
Short-term financial payables
142.9
144.6
Cash and short-term financial receivables
(57.9)
(65.9)
Covered by:
Medium/long term financial payables
=
=
Medium/long term financial receivables
(2.5)
(16.8)
G) Net borrowing
82.5
61.9
H) Net equity
60.1
110.0
142.6
171.9
I) Total (G+H) as in F
Net invested capital
Invested capital, net of current liabilities, is Euro 142.6 million, down Euro 29.3 million on end 2012. This change relates to the major changes made to the net working capital and fixed assets, only partially offset by the reduction recorded in medium/long-term provisions. More specifically, net working capital is down Euro 14.6 million, of which approximately Euro 10.0 million due to the write-down of the receivable due from Valentino Fashion Group S.p.A. The change seen in fixed assets, equal to Euro 26.2 million, mainly refers to the change recorded in “Equity investments” for Euro 24.1 million, relating for 12.9 million to changes made to the equity investment in Filivivi S.r.l. (of which Euro 7 million to bring the book value into line with the presumed realisation value and Euro 5.9 million as reclassification from “equity investments” to “assets held for sale” in line with the operation implemented in 2014) and for Euro 11.9 million to the write-down of the equity investment in Linificio S.r.l. The effect of these actions has only partly been offset by the increase seen in the Sametex investment (approximately 0.7 million) and other minorities.
Net borrowing
The Company’s net financial debt records a worsening on last year, going from net debt of 61.9 million to net debt of Euro 82.5 million.
Net shareholders’ equity
As at the reporting date, the Company’s shareholders’ equity totalled Euro 60.1 million, down on end 2012, which was Euro 110 million. The change booked is due to the negative result achieved of -47.6 million euros. To aid comprehension of the Company’s equity position, we should point out that the index measuring the ratio of own funds and net invested capital has reduced, going from 64.0% at end 2012 to 42.1% at end 2013.
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[Investments in subsidiaries and associates] Partecipazioni
Below are the main news and information on the performance of Subsidiaries and Affiliates. The relations with controlled and associated Companies, and with related parties are presented in the financial statements and the relevant commentary notes.
Shareholdings in Subsidiaries
The main figures of the Linificio e Canapificio Nazionale group of 2013 are shown below.
(in millions of euro)
Consolidated net revenues (1) Profit from core businesses
2012
change
change %
37.1
34.7
2.4
+ 7.0%
(2.5)
(2.8)
0.3
+ 10.7%
(6.7%)
(8.1%)
1.4%
(2.7)
(3.5)
0.8
+ 22.9%
(7.3%)
(10.1%)
Group net income
(3.8)
(2.7)
(1.1)
- 40.7%
Consolidated net invested capital
36.5
39.9
(3.4)
- 8.5%
0.0
+ 0.0%
% of net revenues Operating income % of net revenues
Investments for the period Active staff at 31 December: persons
Net revenues
2013
0.8 776
0.8 809
- 4.1%
-33
Net revenues went from Euro 34.7 to 37.1 million, showing an increase of 7.0% on last year. This increase is mainly due to the greater quantity listed on the market, in particular linen yarns record +4%, whilst linen fabrics are +11%. An analysis of the geographic breakdown of net revenues booked during the year show a significant recovery to domestic demand (+15.4%).
by geographical area
2012
Italy
21.7
58.5%
18.8
54.2%
Other European countries
13.2
35.6%
14.1
40.6%
North America
0.2
0.5%
0.2
0.6%
Asia
1.5
4.0%
1.3
3.7%
Other countries
0.5
1.4%
0.3
0.9%
37.1
100.0%
34.7
100.0%
Total
Operating income
2013
(in millions of euro)
The operating result as at 31 December 2013 is negative for Euro 2.7 million as compared with -3.5 million euros last year. Despite staying negative, this result has improved 22.9% with an incidence on net income from sales of -7.3% (-10.1% in 2012). The difference mainly relates to the greater gross margin, which shows an 8.3% incidence on revenues (7.2% in 2012), whilst commercial, general and administrative costs are instead basically in line with the data recorded last year.
(1). Including revenues towards other sectors of the Group for 1.7 million (2013) and 1.4 million (2012).
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Marzotto S.p.A. Report on the Company’s operations
[Investments in subsidiaries and associates] Invested capital
Invested capital, net of current liabilities, is Euro 36.5 million, down Euro 3.4 million on end 2012. This change is basically due to the management of current assets/liabilities (expressed by net operating capital) and changes to fixed assets. In detail, the reduction booked by net working capital, for Euro 0.5 million, is due to the following factors: a reduction in the value of final inventories for Euro 4.9 million and a reduction in sundry receivables for Euro 1.2 million, partially offset by the decline in short-term liabilities for Euro 3.3 million and an increase in trade receivables for Euro 2.3 million. The change totalled by fixed assets is instead mainly connected with period amortisation/depreciation, only partially offset by investments made (investments were Euro 0.8 million in 2013). To complete our information, please note that this year was also affected by factoring operations. The effect deriving from receivables transferred without recourse, as at the reporting date, is Euro 1.1 million, in line with the transfers made last year (Euro 1.2 million).
Net borrowing
The Group’s net financial debt records a reduction of Euro 1.6 million, going from liquidity of 1.4 million and net debt of Euro 0.2 million. This change is mainly due to the result of current operations.
Marzotto S.p.A. Report on the Company’s operations
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[Investments in subsidiaries and associates] Shareholdings in Subsidiaries
Below is a summary on the shareholdings in other subsidiaries:
Biella Manifatture Tessili S.r.l.
In subscribing a reserved share capital increase of Euro 3,500,000, July 2008 saw Marzotto S.p.A. acquire a 70% stake in the share capital of Fratelli Tallia di Delfino S.p.A. and as from 30 July 2008, the Company has been subject to the management and coordination of its parent company.
(formerly Tallia di Delfino S.p.A.)
At the extraordinary shareholders’ meeting of 25 November 2009, called for the provisions pursuant to Art. 2447 of the Italian Civil Code, the share capital was zeroed and at the same time restored to Euro 200,000 by means of the issue of 200,000 shares, each worth a nominal value of 1 euro and unitary premium of 14 euros, for a total of 3,000,000 euros. Marzotto S.p.A. has subscribed its 70% share and, by virtue of the failure of Appia S.r.l. to exercise its stock options, as from 15 January 2010 it has become the sole shareholder of Tallia. Thereafter, with the extraordinary shareholders’ meeting of 26 April 2011, a share capital increase was resolved, which was fully subscribed, by means of the conferral by Marzotto of the business unit referred to as “Lanifici Biellesi”, corresponding to the Guabello and Marlane business. The operation took effect on 01 May 2011. At the same time, the Company changed its name to “Biella Manifatture Tessili S.p.A”. This operation has concentrated the textile activities of the Marzotto Group around the Biella area in one single corporate hub, to take advantage of all possible actions to increase the system as a whole. In operative terms, the operation enabled completion of the synergies initiated in relation to the industrial, logistic, managerial and human resource processes. Thanks to the relevant synergies existing between Guabello, Marlane and Tallia, there’s a structural and functional bond between them which ensures competitive and efficiency advantages for the respective products which, since they are complementary, have enabled us to offer the market a complete range of “Made in Biella” articles. At the same time, the operation has enabled us to seize the opportunities to enhance and better develop the different brands, creating a strong group in its size, strengthened by belonging to the wool district and therefore benefiting for the quality and product recognition typical of the Made in Biella, exploiting the added value deriving from the fact that it is part of the wool-making district par excellence. The positive effects of the operation, seen in FY 2011 despite the very negative outlook and the continued severe world crisis, were also seen in the year just ended. Biella Manifatture Tessili has managed to maintain turnover basically in line with last year, going from Euro 90.8 million in 2012 to Euro 89.5 million in 2013 and a core business result that stands at Euro 6.1 million (Euro 6.3 million in 2012). In FY 2013, the subsidiary changed its business name from Biella Manifatture Tessili S.p.A. to Biella Manifatture Tessili S.r.l.
Marzotto Textile NV
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Marzotto S.p.A. Report on the Company’s operations
Incorporated on 19 April 2005 following the demerger operation from Marzotto International N.V., by transferring the shareholdings pertaining to the Textile business sector, at the end of 2010 it controls directly the foreign companies Novà Mosilana a.s. and AB Liteksas (important production facilities located in the Czech Republic and Lithuania respectively), Marzotto International Trading Shanghai Co. LTD (Sales representation company established in 2005 to monitor the Far East markets) and Marzotto Textiles Usa Inc. (Incorporated on 02 January 2008 to carry out sale activities in the North American markets for the fabrics and home décor sectors).
[Investments in subsidiaries and associates] Sametex Spol s r.o.
The Czechoslovakian company was acquired by Marzotto as part of the “Velvet project” on 01 August 2012. It produces velvet fabrics for the international market. The Company was subjected to bankruptcy proceedings early 2012 after long-standing economic and financial difficulties connected with the events of the Italian parent company “Redaelli Tessuti S.r.l in liquidazione e concordato preventivo”. In FY 2013, restructuring continued to allow normal business to resume. At the start of the year, the Court of Usti Nad Labem approved the restructuring plan submitted by the parent company, which was thereafter implemented in February 2013. By resolution issued in April by the Czechoslovakian court, the subsidiary Sametex was released from insolvency proceedings.
Marzotto Textile Cz s r.o.
The Czechoslovakian company Marzotto Textile CZ was established on 10 June 2013. The company provides technical consulting services.
Girmes Int. G.m.b.h.
Girmes was acquired by Marzotto under the scope of the “Velvet operation”; it distributes velvet fabrics internationally. As part of the rationalisation undertaken to restore economic management conditions for the activities relating to the new Velvet business, the rationalisation and simplification of the logistic and distribution activities of Girmes was evaluated in order to exploit the synergies that the existing Italian structures can allow in the mentioned areas. As from FY 2013, Girmes provides representation and commercial intermediation for the parent company Marzotto S.p.A.
Finvel S.r.l.
Marzotto S.p.A. Report on the Company’s operations
Again under the scope of the Velvet project, late 2012, Marzotto took over 100% of the shares in Finvel S.r.l., a small textile company based in Lecco and specialised in marketing warped velvet for furnishing and clothing, founded in 2011 with a view to continuing the work of Redaelli Velluti. The aims of the purchase of shares by Marzotto were to take over the order book and know-how developed internally. By notary deed dated December 2013, a merger by acquisition was finalised of Finvel S.r.l. by Marzotto S.p.A., with retroactive accounting and tax effect as at 01 January 2013.
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[Investments in subsidiaries and associates] Shareholdings in Affiliates
The main figures of the Filivivi Group (1) are summarized below:
(in millions of euro)
2013
2012
change
change %
Consolidated net revenues (2)
46.0
44.5
1.5
+ 3.4%
Profit from core businesses
(0.7)
(1.1)
0.4
+ 36.4%
(1.5%)
(2.5%)
1.0%
(0.9)
(2.4)
1.5
(2.0%)
(5.4%)
3.4%
27.4
27.4
=
1.0
0.1
+ 10.0%
2
+ 0.6%
% of net revenues Operating income % of net revenues Consolidated net invested capital Investment for the period Active staff at 31 December: persons
1.1 315
313
=
Net revenues
The Filivivi Group turnover, Euro 46 million, booked an increase of 3.4% on last year (net income Euro 44.5 million in 2012). The improved performance seen is partly due to the production of pure wool yarn for weaving now being fully up and running.
by geographical area
(in millions of euro)
Italy Germany Other European countries
2013 17.4
2012 37.8%
14.7
33.0%
0.8
1.7%
0.7
1.6%
19.1
41.5%
20.5
46.1%
North America
0.3
0.7%
0.4
0.9%
Asia
5.8
12.6%
5.6
12.6%
Other countries Total
2.6
5.7%
2.6
5.8%
46.0
100.0%
44.5
100.0%
Result from ordinary operations
The Group result from ordinary operations, although still negative and standing at -0.7 million euros, does record an improvement on end 2012 (+36.4%). The improvement in the income is due to both the increased turnover (+3.4%) and the completion of the production offshoring that had begun in previous years and continued during the year.
Invested capital
Invested capital, net of current liabilities, is Euro 27.4 million (pro quota), in line with end 2012. This balance is due to the reduction recorded in net working capital, due to the ever-attentive management of inventories and collections, offset by the reduction in medium/long-term provisions, which drop following envisaged uses during the year as employees leave.
Net borrowing
Net borrowing as at 31 December 2013 is Euro 28.0 million (pro quota), an improvement of Euro 1.7 million on last year. This change is mainly due to the negative cash flow of operations.
(1). The Filivivi group figures shown are considered at 50% (the joint-venture is consolidated pro-quota at 50%). (2). Including revenues towards other sectors of the Group for 4.3 million (2013) and 2.6 million (2012).
110
+ 62.5%
Marzotto S.p.A. Report on the Company’s operations
[Investments in subsidiaries and associates] Shareholdings in Affiliates
The equity investment in Ratti is considered pro quota at 33.36% as from the acquisition date (March 2010).
(in millions of euro)
2012
change
change %
34.3
34.6
(0.3)
- 0.9%
Profit from core businesses
2.0
2.4
(0.4)
- 16.7%
% of net revenues
5.8%
6.9%
(1.1%)
Operating income
1.8
2.1
(0.3)
% of net revenues
5.2%
6.1%
(0.9%)
Consolidated net invested capital
13.7
13.0
0.7
+ 5.4%
1.9
(0.5)
- 26.3%
4
+ 2.1%
Investment for the period Active staff at 31 December: persons
Net revenues
2013
Consolidated net revenues
1.4 191
187
- 14.3%
During the financial year, the Ratti group sales revenue were 102.8 million euro (34.3 million the portion pertaining to Marzotto), compared to 103.7 million (34.6 pro-quota) for 2012. This change is the balance of a reduction in sales on the domestic market, partially offset by growth on the export markets, as seen from the breakdown of net revenues according to geographical area shown below.
by geographical area
2013
(in millions of euro)
2012
Italy
10.7
31.2%
11.9
34.4%
Other European countries
14.2
41.4%
13.3
38.4%
North America
4.1
12.0%
3.9
11.3%
Asia
4.4
12.8%
4.5
13.0%
Other countries Total
0.9
2.6%
1.0
2.9%
34.3
100.0%
34.6
100.0%
Result from ordinary operations
The result from ordinary operations is euro 6.0 million (2.0 million the share pertaining to Marzotto), as compared with 7.1 million (2.4 the share pertaining to Marzotto) recorded in 2012.
Net invested capital
Net operating capital is up on last year, mainly due to the reduction in short-term non-financial liabilities. Fixed assets are basically stable and include investments for a total of 4.1 million (down 1.7 million on last year) in relation specifically to the strengthening of the ink-jet printing department, adjustments/bringing up to standard of plants and the acquisition of miscellaneous equipment in the printing departments.
Net financial position
Marzotto S.p.A. Report on the Company’s operations
The Net Financial Position has declined, going from +1.4 million euros at end 2012 to basically break-even in 2013. The change is mainly the result of investments made that, if added to outlays for the distribution of dividends as resolved in 2012, neutralise the positive cash flow deriving from the core business.
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[Investments in subsidiaries and associates] Shareholdings in Affiliates Mediterranean Wool Industries CO. S.A.E. (ET) Share capital U$ 10,000,000
Below is a summary on the shareholdings in other affiliated companies:
Equity investments no. of shares owned Marzotto Spa book value
2013
2012
30.00%
30.00%
30,000
30,000
2.0 euro/million
2.0 euro/million
During FY 2010, Marzotto S.p.A. acquired 30% of the share capital of Mediterranean Wool Industries Co. (MWI) S.A.E., a company incorporate in Egypt whose business purpose is the processing of textile fibres (combing, carbonization, other processes) at a newly built factory in Sadat City (Egypt); this is the result of a cooperation agreement with the Schneider group, an important and well known player in the industry. The factory full capacity operation was postponed to the end of 2011 due to the country’s socialpolitical situation, in view of which, Marzotto has decided to undertake a five year insurance policy to protect the Group from any possible negative impact which may arise mainly from expropriation actions, currency restrictions, wars and civil unrest. FY 2013 saw the Company record a loss, connected with the failure to use production plant capacity to the full. In application of the reference accounting standards, the equity investment was measured as equity and its values were therefore adjusted accordingly.
Mascioni S.p.A. (MI) Share capital euro 5,000,000
2013
2012
Equity investments
28.35%
28.35%
no. of shares owned
283,500
283,500
4.0 euro/million
4.0 euro/million
Marzotto S.p.A. book value
The 2013 draft financial statements of the affiliate Mascioni S.p.A., leader on the international markets in high-end fabric enhancing production, recorded a loss of Euro 4.9 million (loss of Euro 4.7 million in 2012). Turnover was Euro 46.1 million, up 5.4% on last year, with basically the same weight on turnover according to the method and increase in clothing. Turnover towards the parent company Zucchi S.p.A. had increased particularly (+45%). The Net Financial Position had worsened, going from 5.0 million in 2012 to 7.8 million this year. In application of the reference accounting standards, the equity investment was measured as equity and its values were therefore adjusted accordingly to incorporate the period loss.
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Marzotto S.p.A. Report on the Company’s operations
[Investments in subsidiaries and associates] Aree Urbane S.r.l. (MI) Share capital euro 100,000
Equity investments Marzotto S.p.A. book value
2013
2012
32.50%
32.50%
0.0
0.0
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 to its Shareholders. Last year, Marzotto S.p.A. and the shareholders Prelios and Telecom stipulated an agreement aimed at defining guidelines to conduct to be held in restoring “Aree Urbane S.r.l. in liquidazione” to performing status. The effect of this agreement was subject to a condition precedent, an essential condition to restoring the affiliate to performing status, which envisaged reaching an agreement with the chosen banks to refinance the past-due debt of Aree Urbane. The above condition is not met this year, making it effectively difficult to pursue the affiliate’s business. In view of the current situation and for the lack, as at the date on which these financial statements are prepared, of any favourable prospects, the Company has chosen to fully write-down the receivable due from the affiliate, equal to Euro 14.7 million.
Pettinatura di Verrone Share capital euro 3,000,000
Equity investments no. of shares owned Marzotto S.p.A. book value
2013
2012
15.00%
15.00%
1
1
1.5 euro/million
1.5 euro/million
In September 2012, together with Loro Piana ed Ermenegildo Zegna, Marzotto acquired a 15% share in Pettinatura di Verrone, a Biella-based company specialised in super-fine, cashmere and vicuña wool combing, heading the Schneider group, which controls it with a 55% share. Focusing on a high quality product, Pettinatura di Verrone targets a niche market that does not directly suffer the competition of the companies based in emerging countries, at the same time striving to optimise the value of “Made in Italy”. The 2013 draft financial statements of the affiliate show net revenues of Euro 7.8 million, making for an improvement on last year (revenues of Euro 4.3 million in 2012) and a net result of +0.2 million euros (net result basically at break-even in 2012).
Marzotto S.p.A. Report on the Company’s operations
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[Other information] Employees
As of 31 December 2013 the active employees of the Company were 726, compared to 705 the previous year. Year-end staff
at 31.12.2012
Textiles
609
84.3%
598
85.1%
610
84.5%
597
Other Operations
113
15.7%
105
14.9%
112
15.5%
103
14.7%
Total
722
100.0%
703
100.0%
722
100.0%
700
100.0%
Laid off/dismissed Total
Industrial relations
Average staff
at 31.12.2013
2013
2012
4
2
3
1
726
705
725
701
85.3%
On 11 December 2013, the agreement was signed for the transfer of the “Tintoria di Piovene” BU from the affiliate Filivivi S.r.l. to Marzotto S.p.A. (with effect as at 02 January 2014). This BU includes all plants, machinery, assets and staff of the dye area, reconditioning and some complementary offices based in Piovene Rocchette (VI). More specifically, 23 people were transferred and included in the Marzotto workforce, of whom 14 classified as blue-collar workers and 9 as white-collar workers/middle management. On 28 August 2013, an agreement was reached on the reorganisation of work in the weaving department of Valdagno, with the transfer of assignments of Picanol looms from 12 to 15 looms per weaver. This agreement achieves the objective of increasing productivity and was together with some technical and organisational interventions useful to supporting product performance and quality. In 2012, consultation began for renewing the Company Supplementary Agreement (or 2nd level contract) valid for 2013, 2014 and 2015 for workers of the Valdagno plant (BMP division and central staff). On 18 January 2013, an agreement was reached with the national representatives of the textile segment trade unions present. During the year, consultation began for renewing the supplementary contracts for the Sondrio plant.
Training and development of human resources
Marzotto considers continuous training a key factor to increase and keep up-to-date its managers’ skills and technical knowledge of its collaborators. In 2013, Marzotto S.p.A. invested 1,206 hours in training (apart from training on safety), using inter-professional funds such as Fondimpresa and Fondirigenti. Marzotto has further developed the “Young Project”, the route involving the inclusion of young graduates in the Operations and Sales areas. Having started off in 2010 with the “Young Engineers Project”, it continued with the “Young Sales Project” in 2012; today Marzotto numbers 10 engineers hired and another 5 on traineeships within the Group plants, to develop specific, innovative projects in the production areas and 4 young sales staff studying and developing the market. All engineers and sales staff of the Young Project participate in specifically-planned training activities to develop their skills and professional and managerial capacity. Marzotto has continued to invest in the development of individual and community competences and performance: alongside interventions aimed at the individual (masters, specialisation courses), specific training programmes have also been organised involving some strategic communities for the business (sales area, fashion designers and “young talents”).
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Marzotto S.p.A. Report on the Company’s operations
[Other information] Research and development
Research and development activities referred mostly to research and technology innovation to improve the quality standards of the production processes, new products research and improvement of the flexibility of customer service. The main actions undertaken were: Marzotto – Gmf Division The Division continued with intense research aimed at finalising innovative technical solutions for the development of new fabrics with unique blends and matches for use in the clothing market, enabling a significant increase in the technical/technological contents with respect to current production. More specifically, the priority objectives of the activity were the development of coupled fabrics, mixed stretch fabrics and natural wool-based water-repellent technical fabrics. The Division has also implemented a research and development programme on the study and experimentation of innovative technical solutions aimed at increasing the efficiency of the production process through the implementation of new software solutions. Marzotto – Lanerossi Blankets Division Research focused on new fabrics in noble materials (cashmere and pure wool) with a high degree of resistance to rubbing, pilling and washing and the use and working of new materials such as linen, alpaca and new fabrics based on new blends. Marzotto – Estethia/GB Conte Division Business is focused on the development of new solutions seeking to create new product ranges. More specifically: new cotton-based fabrics that are extremely light with far finer thread counts; new linen-based coupled fabrics characterised by new treatments and finishes; new jersey fabrics characterised by three-dimensional effects and depth; new fabrics created with new types of yarns, including coupled with jersey for the completion of new items dedicated to the mid-season; new, innovative dye and finishing treatments for the development of unique délavé effects.
Marzotto – Tessuti Sondrio Division Division research and development was carried out in relation to the different fabric treatment stages and the preparatory techniques for the different finishing processes.
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115
[Other information] Risk factors (IFRS 7)
The Company acts to identify and assess risk, thereafter implementing procedures for managing any risk factors that may influence company results. Below, we will analyze the risk factors distinguishing between external (contextual) risks and internal (processing) risks.
External risks (contextual risks)
Risks connected with the economic outlook The Company products are addressed to markets subject to demand cycles and are influenced by the general economic trend. Major downturns in consumption levels can have a considerable impact on the Company’s economic, equity and financial position. In order to mitigate the possible negative impact, the Company has a flexible structure, outsourcing part of production and splitting sales over a fleet of clients diversified according to products/trademarks and markets. Risks related to competition in the sectors of the Company’s operations The Competitive 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 Company, especially in the more basic part, 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 Company 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 Company 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 used, will limit the negative impacts of a possible difficulty in obtaining credit. 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. The commercial credit risk is essentially reduced also in view of the type of customers, which are diversified and not significantly concentrated in the new outlet markets. Through a specific department, the Company adopts procedures for verifying the credit rating of its customers when they request extended payments. Exposure is regularly monitored and suitable action is taken to combat delays, minimise exposure and reduce the risk of loss. The credit risk is also hedged using suitable insurance cover. As concerns the financial credit risk, 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 Company to the credit risk. At the end of the year the exposure was as follows: (thousands of euro)
116
Marzotto S.p.A. Report on the Company’s operations
2013
2012
Financial assets held for sale
=
=
Financial assets at fair value carried in the income statement
=
=
Financing and credits
65,389
87,363
Cash and cash equivalent
57,901
65,900
Other
98
98
Total
123,388
153,361
[Other information] Trade receivables aging at the date of the financial statements was: 2013 (thousands of euro) Current Overdue from 0 to 90 days
gross
gross
fund
27,328
(2,178)
24,384
(2,324)
5,919
(273)
4,121
(289)
585
(801)
1,159
(834)
33,832
(3,252)
29,664
(3,447)
Overdue over 90 days Total
2012 fund
Interest rate risk The Company is exposed to the risk of volatility of interest rates associated both with liquid funds and loans. The effects of the possible 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 Company constantly monitors this risk and we do not believe that, this risk is significant in terms of possible effects. Exchange rate risk The Company also operates on markets not using the euro and is therefore potentially subject to changes in exchange rates. 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 Company 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. 2013 (thousands of euro) Trade receivables Short term financial assets, cash and cash equivalents
Marzotto S.p.A. Report on the Company’s operations
Usd 10,460
2012 Czk 367,152
Usd 7,135
Czk 362,224
7,577
147,448
3,746
52,473
Trade payables
(3,536)
(679,449)
(4,972)
(652,742)
Total
14,501
(164,849)
5,909
(238,045)
117
[Other information] Environmental risk and safety The Company manages the environmental risk and safety with suitable staff training according to new legislation and by introducing systems to prevent and improve health and safety at work. In terms of safety, the Company invests constantly in protecting and ensuring the safety of the workplace, both inside and outside the production facilities. 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. Please note that under the scope of its business, no damages have been caused to the environment, nor have any sanctions applied for environmental crimes and/or damages. Please also note that there have been no incidents at work that were sufficiently severe as to cause grievous bodily harm or permanent injury to staff. Price risk The Company is exposed to the risk of changes in the prices of the raw materials and auxiliary materials used in production. This risk mainly lies in the difficulty in rapidly transferring any increase in the cost of provisioning to sale prices and in the need to keep sufficient stocks in order to constantly supply the production process. In order to cope with these risks, when preparing the budget and connected economic planning, the Management defines net requirements, which are covered by placing orders with suppliers in order to stabilise the price of raw materials and auxiliary materials. Adoption of organizational model pursuant to Italian Legislative Decree no. 231 of 08 June 2001 Activities continue on updating the organizational model adopted previously in order to prevent crimes from being committed by mapping out sensitive areas and associated risks, defining training/communication processes and defining a disciplinary/sanction system. Considering the type of production and the financial structure, there are no other significant risks.
118
Marzotto S.p.A. Report on the Company’s operations
[Subsequent events] Filivivi
Please note that as part of the strategic choices made by the Group, on 02 January 2014, Marzotto S.p.A. acquired 50% of the Lithuanian company Uab Lietvilna, the dying and reconditioning business unit in Piovene Rocchette (VI) and a 50% stake in the share capital of the newly-established Tintoria di Verrone S.r.l., from the joint venture company Filivivi S.r.l. By notary deed dated 24 February 2014, Marzotto S.p.A. sold its stake in Filivivi S.r.l., operating in the wool yarns segment, equal to 50% of the share capital, to Fraver S.p.A., which now holds the entire capital.
Marzotto S.p.A. Report on the Company’s operations
119
[Performance news and outlook for the current year] The initial economic forecasts on data for the first half of 2014 in the Textile-Fashion segment suggest a reversal of trend (+2.1%), also for companies involved upstream in the chain (+0.4%). The domestic demand is also expected to be positive, with growth rates of +1.4%. As concerns short-term expectations monitored by sector studies, most operators are not expecting any major changes in the market situation and are basically looking at stability in the recession context seen in 2013. Within this context, your company has recorded an 11% increase in turnover during the first two months of 2014 as compared with the same period of 2013, going from Euro 20.3 million to 22.5 million, as shown in the table below: (in millions of euro)
Textiles Other Operations
02.2014 21.6
02.2013 19.0
96.0%
93.6%
1.9
8.4%
2.1
10.3%
Subtotal
23.5
104.4%
21.1
103.9%
Inter-company sales
(1.0)
Total
22.5
(4.4%) 100.0%
(0.8) 20.3
(3.9%) 100.0%
Valdagno (VI), 27 March 2014 THE BOARD OF DIRECTORS
120
Marzotto S.p.A. Report on the Company’s operations
[Proposals to the Shareholders’ Meeting] Shareholders, We invite you to approve the presented financial statements and propose to cover the loss for the year in the amount of euro 47,574,100.99 as follows: Euro 6,357,076.33 by using the Revaluation reserve pursuant to Law 342/2000; Euro 88,366.07 by using the reserve pursuant to Art. 55 of Italian Presidential Decree no. 917/1986; Euro 563,336.63 by using the reserve pursuant to Art. 14 of Law no. 342/2000 included in Sundry Reserves; Euro 22,222,936.96 by using profits carried forward from previous years, of which Euro 2,732,345.98 with the tax suspension restriction pursuant to Law 266/2005. We propose carrying the remaining Euro 18,342,385.00 forward.
After these uses, said reserves will total zero and the previous years’ losses, net of profits carried forward, will come to Euro 25,014,962.55.
Valdagno (VI), 27 March 2014 THE BOARD OF DIRECTORS
Marzotto S.p.A. Report on the Company’s operations
121
Annual Report 2013
General information Marzotto group Report on the Group’s operations Consolidated financial statements
Marzotto S.p.A. Report on the Company’s operations
Company financial statements
Sole 24 Ore” del 5 aprile 2007
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”.
123
Financial Statements
[Company Statement of financial position]
31.12.2013 (thousands of euro)
Partial
31.12.2012
Total
Partial
Total
1. Non-current assets 1.1 Property, plant and machinery
26,216
26,432
1.2 Civil buildings
1,200
1,200
1.3 Goodwill, trademarks and other intangible assets
2,498
2,365
113,107
137,238
1.5 Other investments 1.6 Long-term receivables 1.7 Deferred tax assets 1.8 Long-term financial receivables third parties Long-term financial receivables subsidiaries and associates
43
5,311
14,738
11,468
55 2,400
Total non-current assets 2. Non-currents assets held for sale
61 2,455
16,730
16,791
160,257
200,805
5,900
=
3. Current assets 3.1 Inventories 3.2 Trade receivables third parties Trade receivables subsidiaries and associates 3.3 Other receivables third parties Other receivables subsidiaries and associates 3.4 Current financial assets, cash and cash equivalents third parties Current financial assets, cash and cash equivalents subs. and associates
33,913 30,580 26,028
56,608
4,409 1,874
Total current assets
24,081
50,298
13,893 6,283
46,952 10,949
32,542 26,217
1,070
14,963
45,926 57,901
19,974
65,900
154,705
163,703
320,862
364,508
4.1 Share capital and reserves
107,667
107,176
4.2 Income/(Loss) for the year
(47,574)
Shareholders' equity
60,093
110,030
24,074
22,130
=
7,828
787
540
Total assets 4. Shareholders' equity
2,854
5. Non-current liabilities 5.1 Long-term provisions 5.2 Other long-term payables 5.3 Deferred tax liabilities 5.4 Long-term financial payables
11
11
Total non-current liabilities
24,872
30,509
6. Current liabilities 6.1 Trade payables and other payables third parties Trade payables and other payables subsidiaries and associates 6.2 Current financial payables third parties Current financial payables subsidiaries and associates Total current liabilities
124
61,246 31,796
52,216 93,042
130,471 12,384
27,146
79,362
140,064 142,855
4,543
144,607
235,897
223,969
Total shareholders' equity and liabilities
320,862
364,508
Net (financial debt)/cash
(82,510)
(61,927)
Marzotto S.p.A. Company financial statements
[Company Statements of income and comprehensive income]
Financial Statements
Year 2013 (thousand euro) 7.
Amount
Net revenues third parties
Amount
%age
161,753
92.5
153,497
13,048
7.5
11,386
6.9
Total net revenues
174,801
100.0
164,883
100.0
8.
(110,055)
(63.0)
(110,384)
(66.9)
(28,871)
(16.5)
(22,188)
(13.5)
Gross income
35,875
20.5
32,311
19.6
10. R&D and marketing costs
(20,203)
(11.6)
(18,272)
(11.1)
11. General and administrative costs
(14,060)
(8.0)
(14,191)
(8.6)
12. Other income and charges
(19,500)
(11.1)
(2,080)
(1.3)
(17,888)
(10.2)
(2,232)
(1.4)
(3,425)
(2.0)
(3,057)
(1.9)
282
0.2
252
0.2
7,175
4.1
5,391
3.3
(7,015)
(4.0)
=
=
(26,530)
(15.2)
(72)
(47,401)
(27.1)
282
Net revenues subsidiaries and associates Cost of sales third parties Cost of sales subsidiaries and associates 9.
Year 2012 %age
13. Operating income 14. Net financial charges third parties Net financial charges subsidiaries and associates 15. Dividends 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
(1)
(1)
Items that will be reclassified subsequently to profit and loss 23. IAS 19 adjustments
(1)
Items that will not be reclassified subsequently to profit and loss 24. Total comprehensive income for the period
93.1
= 0.2
(173)
(0.1)
2,572
1.5
(47,574)
(27.2)
2,854
1.7
(2,204)
(1.3)
1,163
=
=
(2,204)
(1.3)
0.7
(183)
(0.1)
980
0.6
243
0.1
=
=
243
0.1
=
=
3,834
2.3
(49,535)
(28.3)
1. Components recognized in equity.
Marzotto S.p.A. Company financial statements
125
Financial Statements
[Company Statements of cash flows]
(thousands of euro)
2013
Income before taxes (1) Amortisation, depreciation and inpairment
282
15,434
3,563
Change in provisions
(174)
(1,345)
Gain/(losses) on disposal of fixed assets
(131)
(106)
Net profit/(loss) from discontinued operations Income taxes paid
7,015 (540)
= (1,015)
Change in inventories
(1,371)
Change in trade receivables and other receivables third parties
10,071
3,935
Change in trade receivables and other receivables subsidiaries and associates
(2,702)
2,456
Change in trade payables and other payables third parties
14,648
(3,341)
Change in trade payables and other payables subsidiaries and associates Change in long-term other financial receivables and payables Extraordinary operations Operating cash flow (A) Investments in intangible and tangible fixed assets Disposals in intangible and tangible fixed assets Investments in equity investments Extraordinary operations Cash flow from investments (B) Translation exchange differences and other equity changes (C) Extraordinary operations (D)
850
4,646
(796)
(15,646)
(9,037)
=
=
(16,151)
(4,554)
(3,493)
(3,008)
190 (723)
Disposals of other equity investments
40
144 (1,736) 64
=
=
(3,986)
(4,536)
(446)
=
=
=
(20,583)
(9,090)
Dividends paid
=
(4,550)
Increase in share capital of Parent Company
=
=
(20,583)
(13,640)
Cash flow before dividends (A+B+C+D)
Change in net financial position Change in long-term financial payables Change in current financial payables third parties Change in current financial payables subsidiaries and associates Change in long-term financial receivables third parties Change in long-term financial receivables subsidiaries and associates Extraordinary operations
=
=
(9,593)
(7,758)
7,841
(110)
6
(3)
14,330
(2,035)
=
=
Total Change in current financial assets, cash and cash equivalent
(7,999)
(23,546)
Cash and current financial assets - beginning of the period
65,900
89,446
Cash and current financial assets - end of the period
57,901
65,900
1. Including interest paid and received rispettivamente for 4,138 and 1,347 k euro.
126
20112
(47,401)
Marzotto S.p.A. Company financial statements
[Company Statements of changes in equity]
Financial Statements
Reserve viz. Revalua-
Total
Fair
art.55
Share
tion
Legal
value
Pr.Dec.
Capital
IAS 19
(in thousand euro)
capital
reserve
reserve
reserve
917/86
grants
reserve reserves
Balances as at 31.12.2011
65,005
6,357
15,000
(1,110)
88
62
313
Sundry 7,339
Profits
Income
share-
carried
for the
holders'
forward
year
equity
(5,292)
110,746
2,854
2,854
22,984
Net income for the year 2012 Other total profit/(losses)
(1)
Total other income/charges
1,163 =
=
=
1,163
(183) =
=
(183)
980 =
=
2,854
3,834
Allocation of net income: dividends
(4,550)
carried forward
(5,292)
Balances as at 31.12.2012
65,005
6,357
15,000
53
88
62
130
7,339
13,142
Net income for the year 2013 Other total profit/(losses)
(1)
Total other income/charges Changes in capital
(2,204) =
=
=
(2,204)
(4,550) 5,292
=
2,854
110,030
(47,574)
(47,574)
(47,574)
(49,535)
243 =
=
243
(2)
(1,961) = 44
= (446)
(402)
Allocation of net income: carried forward Balances as at 31.12.2013
65,005
6,357
15,000
(2,151)
88
62
373
7,383
2,854
(2,854)
=
15,550
(47,574)
60,093
1. Profits and Losses of the Comprehensive Income Statement recognized in Shareholders’ Equity.
Marzotto S.p.A. Company financial statements
127
Introduction
[Notes to the Company’s financial statements]
General information
Marzotto S.p.A. is a joint stock company established in Italy with Milan Companies House. The Company’s registered office is at 16/18 Via Turati, Milan; its administrative offices are at 1 Largo S. Margherita, Valdagno (VI). The Company manufactures and distributes wool fabrics at its plants in Valdagno (VI), velvet in Guanzate (CO) and cotton fabrics in Sondrio. The Company also coordinates the operations of foreign subsidiaries and of qualified subcontractors. The distribution logistics business performed on behalf of the Group companies and third parties, are concentrated at the Piovene Rocchette (VI) plant.
Management and coordination activities
Marzotto S.p.A. is subject to the management and coordination of Wizard S.r.l. (Valdagno); below please find the summary of the basic data from the last approved financial statements.
Balance sheet
31.12.2012
31.12.2012
(thousands of euro) B) Fixed assets C) Current assets Total Assets
165,011 3,973 168,984
A) Shareholders' equity D) Accounts payable Total Liabilities
Income statement
167,495 1,489 168,984
Year 2012
(thousands of euro) A) Value of production B) Cost of goods sold Difference between value and cost of goods sold (A+B) C) Financial income and charges
= (236) (236) 22
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
= (70,814) (71,028) 23 (71,005)
Publication
To represent the results of the Group as a whole, the Company, who holds controlling interests, 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 27 March 2014.
Financial statements
The Financial Statements consist of the Balance Sheet, the Statement of period profit/(loss) and other items of the statement of comprehensive income, the comprehensive 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:
128
Marzotto S.p.A. Company financial statements
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;
for the Statement of period profit/(loss) and other items of the statement of comprehensive income, costs are allocated according to their intended purpose;
for the Cash flow statement we have used the indirect method.
Introduction
Accounting principles
[Notes to the Company’s financial statements] Marzotto S.p.A.’s financial statements for FY 2013 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 31 December 2012, except for the adoption of the following new or revised IFRS or IFRIC:
IAS 1 Presentation of Financial Statements – Presentation of other items in comprehensive income. This amendment to IAS 1 changes how other items presented in OCI are grouped. The items that are potentially re-classifiable (or “recyclable”) to profit or loss (for example upon cancellation or liquidation) should be presented separately from those that will never be reclassified. This amendment refers only to the presentation and has no effect on the Group financial position or profit.
IAS 12 Income taxes – Recovery of underlying assets. The amendment introduces a rebuttable presumption that the deferred taxes on real estate investments measured based on the fair value according to IAS 40 should be calculated based on the fact that the book value will be recovered through recovered sale. In addition, it introduces the request that the calculation of deferred taxes on assets that cannot be depreciated measured according to the cost method as defined by IAS 16, be always measured based on the sale of the asset. The amendment will be effective for tax years beginning on or after 01 January 2013.
IFRS 7 - Disclosures - Offsetting financial assets and liabilities. These changes require the entity to provide a disclosure on offsetting rights and related agreements (e.g. guarantees). The disclosure will provide the reader of the financial statements with useful information by which to evaluate the effect of the offsetting agreements on the entity’s financial position. The new information is required for all financial instruments concerned by offsetting in accordance with IAS 32 Financial instruments: presentation. The disclosure is also required for financial instruments subject to executive offsetting framework agreements or similar, regardless of whether or not they are offset in accordance with IAS 32. These amendments did not affect the Group’s financial position or profit.
The principles that were issued as of the date of these financial statements but not yet effective are indicated below. This list contains principles and interpretation that the Company reasonably expects will be applicable in the future. The Company intends to adopt these principles when they become effective.
Marzotto S.p.A. Company financial statements
129
Introduction
130
Marzotto S.p.A. Company financial statements
[Notes to the Company’s financial statements]
IFRS 10 – Consolidated Financial Statements. IFRS 10 replaces the portion of IAS 27 Consolidated and Separate Financial Statements that addresses the accounting for consolidated financial statements. It also addresses the issues raised in SIC-12 Consolidation – Special Purpose Entities. IFRS 10 establishes a single control model that applies to all entities, including ‘special purpose entities’. The changes introduced by IFRS 10 will require management to exercise significant judgement to determine which entities are controlled and, therefore, must be consolidated by the Parent Company. This principle is effective for annual periods beginning on or after 01 January 2014.
IFRS 11 Joint Arrangements. IFRS 11 replaces IAS 31 Interests in Joint Ventures and SIC-13 Jointly-controlled Entities - Nonmonetary Contributions by Venturers. IFRS 11 removes the option to account for jointly controlled entities using proportionate consolidation. For joint operations which respect the joint venture definition must be accounted for using the equity method. The application of this principle will affect the Consolidated Financial Statements for the deconsolidation of the Ratti Group and their accounting based on the equity method, which will impact the exposure of the financial position, the economic result and the cash flows of these groups. This principle is effective for annual periods beginning on or after 01 January 2014.
IAS 27 Separate financial statements (revised in 2011). Following the new IFRS 10 and IFRS 12, what remains of IAS 27 is limited to accounting for investments in subsidiaries, joint ventures and associates in separate financial statements. The amendments become effective for annual periods beginning on or after 01 January 2014.
IAS 28 Investments in associates (revised in 2011). Following the new IFRS 11 and IFRS 12, IAS 28 was renamed Investments in associates and joint ventures, and it describes the application of the equity method for joint ventures, in addition to associates. The amendments become effective for annual periods beginning on or after 01 January 2014.
IAS 32 Offsetting financial assets and liabilities - Changes to IAS 32 The changes clarify the meaning of “currently has a legally enforceable right of set-off”. The changes also clarify the application of the offsetting criterion of IAS 32 in the event of regulation systems (such as, for example, centralised offsetting rooms), which apply gross, non-simultaneous settlement mechanisms. These changes should not affect the Group’s financial position or results and shall come into force for years starting on 01 January 2014 or thereafter.
IFRS 12 Disclosure of Interests in Other Entities. IFRS 12 includes all of the disclosures that were previously in IAS 27 related to consolidated financial statements, as well as all of the disclosures that were previously included in IAS 31 and IAS 28. These disclosures relate to an entity’s interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are also required. This principle is effective for annual periods beginning on or after 01 January 2014.
Valuation criteria
[Notes to the Company’s financial statements]
Valuation criteria
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
undefined 33 years/undefined 10/33 years 8 years 5/6 years 7/25 years 4/7 years 5 years 7/8 years 4 years
1.3 Goodwill, trademarks and other intangible assets
Intangible assets with a “finite useful life” are recognised 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
The Company verifies, at each financial statements’ date, if there is any indication of lasting reduction in value for all assets. If these indications exist, an estimate is prepared of the value that can be recovered on the asset, i.e. the greater of the fair value of an asset or cash generating unit, less the costs of sale, and its use value. In determining its use value, estimated future cash flow is discounted to current value, using a gross tax rate that reflects current market appraisals of the value of the money and specific risks of the asset. 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.
1.5 Shareholdings
Shareholdings in controlled, jointly controlled and affiliated companies that represent lasting investments are shown at the cost of acquisition or establishment, insofar as it is representative of the fair value. The Company verifies, at each financial statements’ date, if there is any indication of lasting reduction in value for all shareholdings as compared with the value at which they were first booked. Shareholdings in controlled, jointly controlled and affiliated companies that represent lasting investments therefore maintain the value at which they were first booked, unless impairment is recorded. 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 recognised 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.
Marzotto S.p.A. Company financial statements
131
Valuation criteria
[Notes to the Company’s financial statements] In particular, shareholdings in subsidiary and affiliated companies are impairment tested at least once a year; this test requires an estimate of the value that can be recovered on the asset, namely the greater of the fair value of an asset or cash generating unit, less the costs of sale, and its use value.
1.8 Long term financial assets
Financial assets are initially carried at the value sustained, representative of the fair value, and later recognized at the lower between the book value and the estimated sale value (IAS 39).
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 recognised separately from other assets and liabilities in the Balance sheet. Non-current assets or groups of assets and liabilities held for sale are recognised at the lower between the book value and the fair value net of the costs of sale.
3.1 Inventories
Inventory of raw materials, semi-finished goods and finished goods is carried at the lower between the cost of purchase or production and the estimated net realizable value, using the average weighted cost criteria to determine the cost. The stock valuation includes direct material and labour costs and indirect costs (variable and fixed), due 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 (fair value). The adjustment to the estimated realizable value is recognised in a special adjustment reserve.
3.4 Current financial assets, cash and cash equivalents
Financial assets held for trading are recognized at the fair value shown 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. A financial asset (or, if applicable, a portion of a financial asset or portion of a group of similar financial assets) is cancelled from the balance sheet when:
5.1 Long-term provisions
132
Marzotto S.p.A. Company financial statements
the rights to receive financial flows from the asset expired;
the Company has transferred the right to receive financial flows from the asset or has taken over the contractual obligation to pay them fully and without delay to a third party and (a) it has basically transferred all risks and benefits of the ownership of the financial asset or (b) it has not transferred nor retained basically all risks and benefits of the asset, but it has transferred the control of the same.
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 recognised as a financial charge.
Valuation criteria
[Notes to the Company’s financial statements] Defined contribution plans Defined contribution plans are post-employment benefits plans on which basis the entity pays fixed contributions to a separate entity and shall have no legal or implicit obligation to pay additional contributions. The contributions to be paid into defined contribution plans are recorded as a cost in the result of the period in which they are incurred. Contributions paid in advance are recorded amongst assets to the extent to which the advance payment will determine a reduction in future payments or a refund. Defined benefits plans The amount payable for staff termination indemnity comes under the scope of defined benefits pension plans, which are plans based on the working life of employees and on the remuneration received by the employee during a pre-determined period of service. More specifically, the liability relating to the staff termination indemnity of staff is booked at its actuarial value, insofar as it can be classified as employee benefits due according to a defined provision plan. The booking of defined provision plans requires an estimate using actuarial techniques of the amount of the provisions accrued by employees in exchange for his work during the current and previous years, and the discounting of these provisions in order to determine the current value of the company’s commitments (IAS 19). According to Law no. 296/06, effective from 30 June 2007, the Staff termination indemnities accrued after 01 January 2007 must be paid in an appropriate treasury fund opened with INPS (National Institute for Social Protection) or, according to the instructions of the employee, to the selected fund. With these payments, the item relating to staff termination indemnities is no longer affected by accruals, contrary to staff termination indemnities accrued by 31 December 2006, which therefore come under the scope of defined benefits pension plans. In June 2012, IAS 19 was amended to provide for the recording of changes to actuarial gains/losses of defined benefits plans and, therefore, including employee termination indemnities, amongst items of the Statement of Comprehensive Income, as from 01 January 2013. The Company has decided to apply this amendment early, as from the financial statements as at 31 December 2012.
5.4 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 actual 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 Current financial payables
Financial liabilities, except for derivatives, are carried at fair value net of directly attributable transaction costs.
Marzotto S.p.A. Company financial statements
133
Valuation criteria
134
[Notes to the Company’s financial statements]
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 recognised 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 recognised 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 recognised 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 recognised 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 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 recognised 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 recognised 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.
Marzotto S.p.A. Company financial statements
Valuation criteria
[Notes to the Company’s financial statements]
7. Revenues
Depending on the type of transaction, revenues are recognised based on specific criteria indicated below: revenues from the sale of goods are recognised when the significant risks and benefits of ownership are transferred to the purchaser (typically at the time of shipment); revenues for services provided are recognised based on the status of completion basis of the assets.
14. Financial charges, net
Financial revenues and charges are recognised 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 recognised 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 based on estimates of taxable income and according to law. Deferred and advance income taxes are calculated on the temporary differences between the recorded asset values and the respective recognized 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. 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 Administrators 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. At the date of each annual report, the Company verifies if there’s any indication of permanent value reduction for all non-financial assets. Goodwill and other intangible assets with an indefinite useful life are subject to review each year to identify any decrease in value. The recoverable value of non-current assets is typically established in reference to the use value, based on the present value of financial flows expected from the continuous use of the asset. This verification involves also the choice of an adequate discount rate to calculate the present value of the expenses financial flows.
Marzotto S.p.A. Company financial statements
135
Valuation criteria
Other information Tax consolidation
[Notes to the Company’s financial statements] Effective from the year 2008 Marzotto S.p.A., Immobili e Partecipazioni S.r.l., Linificio e Canapificio Nazionale S.r.l. 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. In 2011, these companies renewed their acceptance also for the three years 2011-2013. Since 2009 also the subsidiaries Biella Manifatture Tessili S.r.l., Ambiente Energia S.r.l. and Le Cotonerie S.r.l. (former Immobiliare Isola S.r.l.) are part of the Domestic Tax Consolidation, with renewal for the three years 2012-2014. Following the spin-off of Wizard S.r.l. in the favour of Witch S.r.l. in FY 2012, Immobili e Partecipazioni S.r.l., a subsidiary of the latter Company, left the tax consolidation of Wizard S.r.l., as they no longer met the requirements lad down by legislation governing participation in the tax consolidation. Adhesion to the tax consolidation of Wizard S.r.l. is governed by a specific regulation in force for the entire period for which the option is valid. Economic relations for the tax consolidation are regulated as follows: subsidiaries which have positive taxable income for the years concerned pay Wizard S.r.l. the greater tax due by it; companies consolidated with negative taxable income receive compensation amounting to 100% of the tax saving achieved on a group level from Wizard S.r.l. This compensation is due when effectively used by Wizard S.r.l.; if Wizard S.r.l. and the subsidiaries should not renew the domestic tax consolidation option, or if the requirements to continue to apply it should be forfeited prior to the end of the three years for which the option is valid, the tax losses that can be reported as resulting from the declaration are allocated proportionally to the companies that produced them. Early termination of the tax consolidation agreement or failure to renew it shall not have any penalty for the participating companies. In 2013 Marzotto S.p.A. and its affiliate Filivivi S.r.l. renewed the tax transparency regime for the three year period 2013 – 2014 - 2015.
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 Statement of period profit/(loss) and other items of the comprehensive income statement, 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 euros. 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: main events of the 2013 financial year; events after the close of the financial year; foreseeable development of operations (IFRS 7); other relevant information on operating performance and the balance sheet structure.
136
Marzotto S.p.A. Company financial statements
Valuation criteria Velvet division
[Notes to the Company’s financial statements] As part of the strategies to extend and diversify the range of textile products, in 2012 the Company entered the velvet segment through the acquisition from Redaelli Velluti S.r.l. “in liquidazione e concordato preventivo” of certain tangible and intangible assets; these included the historic brands “Redaelli Velluti” (or “Redaelli 1893”), “Niedieck” and “Christoph Andreae”, the historical archives, specific machinery of interest for the production of velvet fabrics and the totalitarian share of the German company Girmes International G.m.b.h. (commercial company) and the Czechoslovakian company Sametex Spol s r.o. (production company). At the time of acquisition, both companies were in serious economic and financial difficulty, to the extent that it was difficult to actually pursue the company business. In FY 2013, these subsidiaries were restructured to allow normal business to resume. Specifically with reference to the subsidiary Sametex, at the start of the year, the Court of Usti Nad Labem approved the restructuring plan submitted by the parent company, which was thereafter implemented in February 2013. By resolution issued in April by the Czechoslovakian court, the subsidiary Sametex was released from insolvency proceedings. And with notary deed dated December 2013, the merger by acquisition took place of the subsidiary Finvel S.r.l., purchased late 2012 and specialised in the marketing of warped velvet for furnishing and clothing, by Marzotto S.p.A., with retroactive accounting and tax effect as at 01 January 2013.
Other operations
Marzotto S.p.A. Company financial statements
As part of a strategic Group choice, on 24 February 2014, Marzotto S.p.A. sold its 50% stake in Filivivi S.r.l. In accordance with IFRS 5, the sale specified is classed as non-current asset held for sale, with the consequent separate statement in the financial statements of the parent company.
137
Balance Sheet
[Notes to the Company’s financial statements] The tables below are in thousands of euros.
1.1) Property, plant and machinery 1.2) Civil building
2013 Amounts to:
2012
27,416
Change
27,632
(216)
broken down as follows: A)
B)
C)
D)
E)
F) Tangible
Descrizione
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
1,334
39,896
123,978
3,641
4,587
853
174,289
Depreciation funds
(134)
(26,903)
(111,651)
(3,468)
(4,501)
=
(146,657)
1,200
12,993
12,327
173
86
853
27,632
Balances as at 31.12.2012 Movements during the year: Original cost: acquisitions
=
297
2,606
167
146
(258)
2,958
reclassification
=
=
78
=
=
=
78
operazioni straordinarie
=
=
6
6
13
=
25
gross disposal
=
=
(14,667)
(232)
(264)
=
(15,163)
depreciation for the year
=
(896)
(2,096)
(95)
(46)
=
(3,133)
reclassification
=
=
=
=
=
=
=
operazioni straordinarie
=
=
(1)
(2)
(4)
=
(7)
gross disposal
=
=
14,549
232
245
=
15,026
Depreciation funds:
Total movements for the year Original cost Depreciation funds Balances as at 31.12.2013
=
(599)
475
76
90
(258)
(216)
1,334
40,193
112,001
3,582
4,482
595
162,187
(134)
(27,799)
(99,199)
(3,333)
(4,306)
=
(134,771)
1,200
12,394
12,802
249
176
595
27,416
Assets under construction and advances received as of 31 December 2013 have been partially reclassified in their respective categories. The sale of dismissed assets during the year led to net capital gains before taxes for Euro 131 thousand, that were attributed to the item Other income and charges. As of 31 December 2013 the fixed assets of the Company were not encumbered by mortgages or third party liens. During the year the following costs were capitalised:
138
Marzotto S.p.A. Company financial statements
Land and industrial buildings for Euro 297 thousand. These charges mainly refer to incremental expenses on industrial buildings for adjustments and energy saving interventions and works to bring them up to standard; Plants and machinery for Euro 2,606 thousand. These charges relate Euro 150 thousand to plants and machinery for weaving, Euro 1,121 thousand to machinery and plants for finishing, Euro 394 thousand to winding and twisting machines, Euro 252 thousand for the replacement of yarns inventories, Euro 379 thousand investments in energy saving and bringing up to standard and Euro 108 thousand to plants and machinery for the automatic warehouse of Piovene Rocchette (VI); Industrial and commercial equipment for Euro 167 thousand. These investments relate Euro 39 thousand to the textile segment and Euro 128 thousand to other activities. Other assets for Euro 146 thousand, relating Euro 88 thousand to electronic data processing machines, Euro 20 thousand to vehicles, Euro 22 thousand to office machinery and Euro 16 thousand to internal means of transport.
Balance Sheet
[Notes to the Company’s financial statements]
1.3) Goodwill, trademarks and other
2013 Amounts to:
2012
2,498
Change 2,365
133
made up us follows:
intangible assets
Description (1)
A)
B)
Ind. patent
Concessions,
C)
D)
E) Intangible
and
licenses,
Other
intellectual
trade-marks
intangible
being
property
and
fixed
developed and
rights
similar rights
assets
advances
Goodwill
fixed assets
Total
2,483
773
167
100
291
3,814
Accumulated depreciation
(1,262)
(187)
=
=
=
(1,449)
Balances as at 31.12.2012
1,221
586
167
100
291
2,365
535
Original cost
Movements during the year: Original cost: acquisitions
741
18
=
=
(224)
disposals/depreciations
=
=
=
=
=
=
reversal due to amort. being completed
=
=
=
=
=
=
(380)
(22)
=
=
=
(402)
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 31.12.2013
361
(4)
=
=
(224)
133
3,224
791
167
100
67
4,349
(1,642)
(209)
=
=
=
(1,851)
1,582
582
167
100
67
2,498
1. Original cost of the assets still being depreciated.
During the year the following expenses were capitalised:
Industrial patent rights and rights to use intellectual works for Euro 741 thousand, mainly software and EDP applications; Concessions, licences, trademarks and similar rights for Euro 18 thousand; Fixed assets under construction and down-payments for Euro 67 thousand for costs relating to the development of software projects.
Goodwill relates to the acquisition of the “Logistics Services” branch of Piovene in 2011. 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. Assets under construction and advances received as of 31 December 2012 have been almost completely reclassified in their respective categories.
Marzotto S.p.A. Company financial statements
139
Balance Sheet
[Notes to the Company’s financial statements]
1.5) Other investments
2013 Amounts to:
2012
113,107
Change
137,238
(24,131)
made up as follows:
Description Original cost
A)
B)
C)
Shareholdings
Shareholdings
Shareholdings
in
in
in other
Subsidiaries
Associates
companies
Total
106,235
30,905
149
=
=
(51)
(51)
106,235
30,905
98
137,238
acquisitions
723
=
=
723
disposal
(40)
=
=
(40)
Adjust. for permanent decrease in value Balances as at 31.12.2012
137,289
Movements during the year: Original cost:
reclassification devaluation Total movements for the year Original cost Adjust. for permanent decrease in value Balances as at 31.12.2013
=
(5,900)
=
(5,900)
(11,899)
(7,015)
=
(18,914)
(11,216)
(12,915)
=
(24,131)
95,019
17,990
149
113,158
=
=
(51)
(51)
95,019
17,990
98
113,107
At first booking, equity investments are valued in application of IAS 27 (consolidated and separate financial statements), IAS 39 (Financial instruments: recognition and measurement) and IFRS 13 (Fair value measurement), suitably supported by an appraisal commissioned of a third party independent professional. Equity investments are valued in continuity and application of IAS 36 (Impairment of assets), on which basis the Company verifies to see if there is any indication of permanent loss of value by the assets. If these indications exist, an estimate is prepared of the value that can be recovered on the asset, i.e. the greater of the fair value of an asset or cash generating unit, less the costs of sale, and its use value. The increases shown under Equity investments in subsidiaries mainly refer: Euro 15 thousand to the payment on capital account into the subsidiary Le Cotonerie S.r.l.; Euro 8 thousand to the establishment of Marzotto Textiles Czech Republic s.r.o.; Euro 700 thousand to the waiver of receivables due from the subsidiary Sametex Spol s.r.o. The reductions recorded under Equity investments in subsidiaries refer: Euro 40 thousand to the merger of Finvel S.r.l. into Marzotto S.p.A. implemented by notary deed dated 09 December 2013 and with retroactive accounting and tax effect as at 01 January 2013; Euro 11,899 thousand to the write-down of the equity investment in Linificio S.r.l. During the year, it was considered appropriate to bring the book value of the equity investment into line with its shareholders’ equity. As concerns changes made to “Equity investments in affiliated companies”, we note that in view of the FY 2014 operation, on the one hand, the investment in Filivivi S.r.l. has been valued at its presumed realisation value, thereby applying impairment in the amount of Euro 7,015 thousand, and on the other, in accordance with the reference standard (IFRS 5), it has been reclassified under assets held for sale.
140
Marzotto S.p.A. Company financial statements
Balance Sheet
1.6) Long-term receivables
[Notes to the Company’s financial statements] 2013 Amounts to:
2012 43
Change
5,311
(5,268)
made up as follows: Amount due from tax authorities
=
=
=
Other receivables
43
5,311
(5,268)
Total
43
5,311
(5,268)
The reduction in Other receivables for Euro 5,268 thousand is mainly relating to the write-down of the receivable due from Valentino Fashion Group S.p.A., recognised following the judgement issued by the Regional Tax Commission in Venice on 21 September 2010 on dividend stripping, and in application of the agreements taken upon the demerger of the clothing sector in 2005. Please refer to note 6.1 below for more details.
1.7) Deferred tax assets
2013 Amounts to:
2012
Change
14,738
11,468
3,270
Depreciation of inventories
1,379
1,340
39
Depreciation of receivables
899
948
(49)
Accrual for risk and charges
4,409
3,695
714
972
110
862 1,704
made up as follows:
Fair value of forward operations on exchange rates Tax losses
5,072
3,368
Other temporary differences
2,007
2,007
=
14,738
11,468
3,270
Total
The item refers to deferred tax assets (prepaid taxes) due beyond the year. The change is also due for 5,948 k euro and 3,179 thousand euro respectively to provisions and utilizations for the year, and for 501 thousand euro to the adjustment of the final tax balance of income taxes and other changes. Taking into consideration the recent regulations on the unlimited carry forwards of tax losses, the forecast of the business performance and the participation in the domestic tax consolidation of the subsidiary Wizard S.r.l., the Administrators have decided to record the advance taxation in connection with the losses that may be carried forward. Deferred tax credits allocated against these temporary differences correspond to the proportion that can reasonably be recovered.
1.8) Long-term financial receivables
2013 Amounts to:
2012
Change
2,455
16,791
(14,336)
made up as follows: Receivables due from associates Receivables due from subsidiaries Guarantee deposits (financial) Total
=
14,695
(14,695)
2,400
2,035
365
55
61
(6)
2,455
16,791
(14,336)
Receivables from affiliated companies refer to a shareholders’ loan granted to Aree Urbane S.r.l. in liquidation. As at the reporting date, this receivable had been adjusted to its presumed realisation value, writing the entire amount down. Receivables from subsidiaries refer to loans assumed by Marzotto S.p.A. when acquiring the subsidiaries Sametex Spol s.r.o. and financial receivables subsequently granted in implementation of the Reorganization Plan.
Marzotto S.p.A. Company financial statements
141
Balance Sheet
2. Non-current assets held for sale
[Notes to the Company’s financial statements] Non-current assets held for sale includes the value of the equity investment held in Filivivi S.r.l. of Euro 5,900 thousand. The Company has reclassified the value in line with the 2014 operation and recorded it at the lesser of book value and presumed realisation value. This valuation has required the application of impairment in the amount of Euro 7,015 thousand.
3.1) Inventories
2013 Amounts to:
2012
33,913
Change
32,542
1,371
and can be broken down as follows: Raw, ancillary and consumable materials
4,671
6,526
(1,855)
Unfinished and semi-finished goods and work in progress
11,121
10,113
1,008
Finished products and goods for resale
18,121
15,903
2,218
33,913
32,542
1,371
Total
Warehouse inventory is indicated at the lower between the purchase or production cost, determined using the weighted average cost method, and the estimated net sale value, as indicated in point 3.1 of the valuation criteria. In this regard, please note that the Company implements a disposal procedure for obsolete products, mainly seasonal fashion items that have been left unsold, using stock sales; goods that are still held as inventories at year end are suitable written-down, bringing their value into line with their presumed realisation value. Inventories shows a net increase of Euro 1,371 thousand on last year. This change reflects the order book at year end, which is higher than the same period of 2012.
3.2) Trade receivables
2013 Amounts to:
2012
56,608
Change
50,298
6,310
and refer to: 2013 Amounts
2012 %ge
Amounts
%ge
Active customers receivables
32,713
100.0
28,298
100.0
– Bad debt provision
(2,236)
(6.8)
(2,231)
(7.9)
= Net active customers receivables
30,477
93.2
26,067
92.1
1,119
100.0
1,366
100.0
(1,016)
(90.8)
(1,216)
(89.0)
103
9.2
403
11.0
23,871
100.0
21,695
100.0
2,100
100.0
2,386
100.0
Bad debt – Bad debt provision = Net bad debt Receivables from subsidiaries Receivables from associates
57
100.0
=
=
59,860
100.0
53,745
100.0
– Bad debt provision
(3,252)
(5.4)
(3,447)
(6.4)
Net trade receivables
56,608
94.6
50,298
93.6
Receivables from associated Total face value of receivables
Trade receivables total Euro 56,608 thousand, net of the provision for doubtful debt of Euro 3,252 thousand (Euro 3,447 thousand at 31 December 2012). This provision has been calculated considering the historic data relating to losses on receivables and on the basis of estimated losses in connection with challenged receivables and/or past-due receivables. This item shows a net increase of Euro 6,310 thousand (+12.5%), mainly in connection with the growth seen in turnover during the last quarter of 2013 as compared with the same period of 2012. To complete our description, please note that as at the reporting date, the effect deriving from the transfer of receivables with without recourse clauses is Euro 16,813 thousand, slightly up on the transfer made in 2012 (Euro 15,912 thousand). We believe that the book value of the trade receivables reflects their fair value. 142
Marzotto S.p.A. Company financial statements
Balance Sheet
[Notes to the Company’s financial statements] Trade receivables by geographic area is as follows:
14,832
Other European Countries 10,570
2,857
1,088
4,485
33,832
Towards subsidiaries
8,158
15,713
=
=
=
23,871
Towards associates
2,020
=
=
=
80
2,100
Italy Towards customers
Towards associated Gross receivables
North America
Other Countries
Asia
Total
57
=
=
=
=
57
25,067
26,283
2,857
1,088
4,565
59,860
Trade receivables due from subsidiaries refer to: 2013 Novà Mosilana a.s.
2012
Change
13,712
14,403
771
598
173
=
109
(109)
AB Liteksas Marzotto Int. Trading Shanghai
(691)
Marzotto Textile NV
1
1
=
Le Cotonerie S.r.l.
1
1
=
74
86
(12)
3
=
3
1,172
205
967
Ambiente Energia S.r.l. Marzotto Textiles Czech Republic s r.o. Sametex Spol s r.o. Girmes International G.m.b.h. Biella Manifatture Tessili S.r.l.
54
48
6
7,714
5,845
1,869
Linificio Group Total
369
399
(30)
23,871
21,695
2,176
Trade receivables due from affiliates and joint ventures refer to: 2013 Filivivi Group Ratti Group Mediterranean Wool Industry Co. S.A.E. Mascioni S.p.A. Total
2012
Change
1,355
1,487
(132)
663
838
(175)
80
60
20
2
1
1
2,100
2,386
(286)
Trade receivables due from affiliates and joint ventures result from business relations and are subject the regular market conditions.
Marzotto S.p.A. Company financial statements
143
Balance Sheet
[Notes to the Company’s financial statements]
3.3) Other receivables
2013 Amounts to:
2012
6,283
Change
14,963
(8,680)
made up as follows: Due from Tax Authorities
2,143
5,495
(3,352)
Other receivables
3,544
8,498
(4,954)
Accrued income and prepaid expenses Total
596
970
(374)
6,283
14,963
(8,680)
Receivables due from Tax Authorities refer to: 2013
2012
Change
Added value tax
226
798
Income taxes
373
1,209
(836)
=
1,115
(1,115)
35
35
=
IRAP Interest due Credits for taxes withheld
(572)
28
15
13
Other items
1,481
2,323
(842)
Total
2,143
5,495
(3,352)
As at the reporting date, Sundry receivables total Euro 6,283 thousand, as compared with the Euro 14,963 thousand of last year. In detail, Other receivables due from the Tax Authorities, for Euro 1,481 thousand, mainly refer: Euro 539 thousand to the residual IRES receivable acquired by Wizard S.r.l. under the scope of the domestic tax consolidation and not yet used in compensation for the payment of taxes; Euro 456 thousand to a receivable deriving from a request for IRES rebate due to deductibility from IRAP of the cost of labour in relation to 2007; Euro 355 thousand to a receivable deriving from greater offsetting of collections and late payment interest paid in relation to the debt repayment plan for dividend stripping, as defined in sentence no. 242/2012 of the Milan Provincial Tax Commission, by virtue of which the repayment plan was defined.
Other receivables refer to: 2013 Due from State pension funds Due from employees Other receivables from parent companies Other receivables from associates
2012
Change
92
112
419
365
(20) 54
1,874
1,062
812
=
8
(8)
Other receivables
1,159
6,951
(5,792)
Total
3,544
8,498
(4,954)
Sundry receivables due from the parent company for Euro 1,874 thousand, due from Wizard S.r.l. deriving from the Domestic Tax Consolidation. Sundry third party receivables included, as at 31 December 2012, Euro 6,210 thousand for the short-term portion of the receivable due from Valentino Fashion Group S.p.A. arising from the dividend stripping dispute and in application of the agreement stipulated during the 2005 spin-off of the clothing BU. A transaction made by the parties in January 2014 means that this receivable has been completely written-down. Please refer to note 6.1 for more information. Sundry third party receivables also includes the fair value measurement of forward contracts hedging exchange rates, for Euro 110 thousand.
144
Marzotto S.p.A. Company financial statements
Balance Sheet
[Notes to the Company’s financial statements]
3.4) Current financial assets, cash and cash equivalents
Amounts to:
2013
2012
Change
57,901
65,900
(7,999)
Due from subsidiaries
6,079
15,088
(9,009)
Due from associates
4,870
4,886
(16)
3
584
(581)
46,936
45,330
1,606
and refers to: Financial assets
Other financial receivables Cash Bank and post-office accounts Cash and cash equivalent on hand Total
13
12
1
57,901
65,900
(7,999)
Financial receivables due from subsidiaries refer to: 2013
2012
Change
Marzotto Textile N.V.
218
165
53
Novà Mosilana a.s.
112
2,088
(1,976) (84)
Marzotto Textiles USA Inc.
12
96
150
150
=
2,614
800
1,814 (862)
Girmes International G.m.b.h. Sametex Spol s r.o. Ambiente Energia S.r.l.
51
913
Finvel S.r.l.
=
220
(220)
Linificio Group
=
673
(673)
Biella Manifatture Tessili S.r.l.
2,922
9,983
(7,061)
Total
6,079
15,088
(9,009)
Financial receivables due from subsidiaries include giro accounts held at market conditions.
Financial receivables due from affiliates refer to: 2013 Filivivi S.r.l. Mediterranean Wool Industries Co. S.A.E. Total
2012
Change
4,000
4,000
=
870
886
(16)
4,870
4,886
(16)
The total amount of the Company’s Short-term financial assets, cash and cash equivalents is Euro 57,901 thousand, as compared with Euro 65,900 thousand last year. Short-term financial assets include financial receivables due from subsidiaries for Euro 6,079 thousand and financial receivables due from affiliates for Euro 4,870 thousand, of which Euro 4,000 thousand are the shareholder loan to Filivivi S.r.l. The change made to the receivable due from Mediterranean Wool Industries, of Euro 16 thousand, relates to the adjustment of the balance in dollars at the spot year end rate. Cash and cash equivalents, of Euro 46,949 thousand, include demand deposits and other shortterm, highly-liquid financial investments. The values stated can be converted readily into cash and are subject to insignificant risk of value. We believe that the book value of the cash and cash equivalents and short-term financial assets is in line with their fair value as at the reporting date.
Marzotto S.p.A. Company financial statements
145
Balance Sheet
[Notes to the Company’s financial statements]
4. Shareholders’ equity
Below are the comments on the main items of Shareholders’ equity and the relevant changes: Share Capital Number of Shares Ordinary shares Total
Share capital
Share capital
Share capital
at 31.12.2012
change
at 31.12.2013
65,005,047
=
65,005,047
65,005,047
=
65,005,047
As at 31 December 2013, the share capital was fully subscribed and paid-up. As mentioned in the Report on Operations, please note that during the first few months of 2013, the Company implemented the share grouping project resolved by the extraordinary shareholders’ meeting held on 10 September 2012. At the same time, the indication of the nominal value of the shares in issue was eliminated, in accordance with the combined provisions of Art. 2328, paragraph two, no. 5 and 2346, paragraph three of the Italian Civil Code, and the Articles of Association were amended. Grouping took place at a ratio of one new securitised share per 13,001 existing dematerialised shares and upon annulment of the smallest number of shares necessary to allow for the regrouping. Revaluation reserves Balances equity as at 31 December 2012
6,357
+/- change Total
= 6,357
The revaluation performed in 2005 pursuant to Law 266/05, for the amount of 3,184 thousand 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 thousand euro. Legal reserve Balances equity as at 31 December 2012
15,000
+/- change Total
= 15,000
The Legal Reserve was not changed during the year. 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 Company uses the following instruments: foreign currency loans; forward sales and purchases in foreign currency; foreign currency options at fixed exchange rates. These operations come under the scope of “cash flow hedges” insofar as they are stipulated to cover a risk of change in cash flows deriving both from an existing asset or liability and a future operation. As established by international accounting standards, the portion of the gain or loss relating to the measurement of such derivatives (mark to market) has been booked net of the tax effect, amongst the items of the statement of comprehensive income, as the effectiveness of the cover guaranteed by these financial instruments has been proven. The fair value reserve includes the fair value of said operations, net of the tax effect, which as at the reporting date comes to Euro -2,151 thousand. The gain or loss recorded under shareholders’ equity is booked to the income statement when the operation hedged affects it.
146
Marzotto S.p.A. Company financial statements
Balance Sheet
[Notes to the Company’s financial statements]
Other reserves
2013
2012
Change
Reserve viz. art. 55 Pres. Decree 917/86
88
88
Capital grants
62
62
=
Realignment reserve viz. Law 342/2000
563
563
=
IAS 19 reserve
373
130
243
Merger surplus
43
=
43
FTA reserve
(239)
(239)
=
Capital contribution reserve
7,015
7,015
=
15,551
13,142
2,409
23,456
20,761
2,695
Profits carried forward Total
=
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. (01 July 2009).
Civil and tax regulations to which share capital and reserves outstanding at 31 December 2013 are subject to, in case of reimbursement
Descrizione Share capital
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
Total
5,792
884
58,329
=
6,357
=
6,357
Legal reserve
15,000
=
=
15,000
Fair value reserve
(2,151)
=
=
(2,151)
=
88
=
88
62
=
=
62 563
Monetary revaluation reserve
Reserve viz. art. 55 Pres. Decree 917/86 Capital grants Realignment reserve viz. art. 14 Law 342/2000 IAS 19 reserve FTA reserve Merger surplus Capital contribution reserve Profits carried forward Total
65,005
=
563
=
373
=
=
373
(239)
=
=
(239)
44
=
=
44
7,015
=
=
7,015
12,818
2,732
=
15,550
38,714
10,624
58,329
107,667
Following the demerger operation carried out in the 2010 tax period, the tax values of the shareholders equity are different than the financial statements values; in particular the tax value of the share capital is higher, by 10,850 k euro, compared to the value shown on the table above, while other reserves show a lower tax value.
Capital and reserves with tax constraints Capital and reserves with statutory constraints
The equity constraint as at 31 December 2013 can be broken down as follows:
the equity constraint for IRES purposes amounts to 825 thousand euro, consisting of the tax reversal made in 2004 and higher tax amortisation than accounting amortisation in 2007;
The constraint on the use of capital and reserves at 31 December 2013 pursuant to article 2445 of the Italian Civil Code, amounts to 75,461 thousand euro and includes 65,005 thousand euro in share capital, 6,357 thousand euro in revaluation reserves, and 2,732 thousand 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 thousand euro at 31 December 2013. The reserves and retained and constrained earnings as per articles 6 and 7 of Legislative Decree 38/2005 (IAS/IFRS reserves) amount to -2,017 thousand euro.
Marzotto S.p.A. Company financial statements
147
Balance Sheet
[Notes to the Company’s financial statements]
5.1) Long-term provisions
Amounts to:
2013
2012
24,074
Change
22,130
1,944
and refer to:
Provision for staff termination indemnities Amounts to:
2013
2012
Change
7,624
8,327
(703)
Accrual in income statement
1,991
2,182
(191)
Disbursements for terminations
(240)
(671)
431
Disbursements for advances
(532)
(309)
(223)
the change is due to:
0.50% contributions on accruals for the year
(117)
(117)
=
Transfer to other reserves/other companies
(1,398)
(1,397)
(1) 17
Transfer to tax authorities for personal income taxes ("IRPEF")
(26)
(43)
Extraordinary operations
=
=
=
Adjustment as per IAS 19
(381)
338
(719)
Total
(703)
(17)
(686)
Staff termination indemnity reflects the indemnity calculated in accordance with current legislation, accrued by employees as at 31 December 2006 and which will be liquidated upon his leaving. Where specific conditions apply, it may be partially advanced to the employee during the course of his working life. The Staff termination indemnities, calculated according to the current law, is treated from an accounting point of view as a defined benefit and as such it is recalculated at the end of each period according to a statistic-actuarial criteria which takes into account also the effects of the financial actualization. This liability has been calculated according to the actuarial criteria of the “Unitary Credit Method” which “considers each working period as the source of one additional unit of right to the benefits and measures each unit separately to calculate the final obligation”. The following parameters are used: annual discounting rate 4.5%, annual inflation rate 2%. The booking of employee benefits is in accordance with IAS 19 for defined benefits plans; the company has decided to apply the amendments made by IAS 19 early, as from the financial statements as at 31 December 2012, with the consequent noting of changes in actuarial gains/losses amongst other items of the statement of comprehensive income, whilst financial gains/losses are noted on the income statement. According to Law no. 296/06, effective from 30 June 2007, the Staff termination indemnities accrued after 01 January 2007 must be paid in an appropriate treasury fund opened with INPS (National Institute for Social Protection) or, according to the instructions of the employee, to the selected fund. With these payments, the item for Staff Termination is no longer affected by provisions.
Pension Amounts to:
2013 757
2012 790
Change (33)
The provision refers to a partially reversible supplementary retirement fund set up in favour of a former director of the Company. Last year, the provision was recalculated following the death of the primary beneficiary, recording the excess part on the income statement and discounting the remaining value of the annuity according to the actuarial tables used for the secondary beneficiary.
148
Marzotto S.p.A. Company financial statements
Balance Sheet
[Notes to the Company’s financial statements] 2013
2012
15,693
13,013
Agents' severance pay provision
2,230
Legal risk fund
2,783
Restructuring and relocation provisions
3,000
due to
Change
Other provisions Amounts to:
Accrual
Utilization
2,680
6,679
2,254
(24)
2,965
(182)
=
3,000
Other
(3,999)
=
49
(73)
=
30
(212)
=
3,000
=
=
and refers to:
Tax provisions
1,474
1,474
=
=
=
=
Other provisions for risk/charges
6,206
6,320
(114)
3,600
(3,714)
=
The agents’ severance pay provision 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 existing at the end of the financial year. The legal risk fund 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 review of the provisions 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 reorganisation plan of some production operations. The tax provisions includes accruals made to cover losses that may be incurred by the company in connection with tax liabilities. Among other provisions for risks and charges are included foreseeable risks following operations in relation to the company Aree Urbane S.r.l., in addition to expenses in reference to the legal action pertaining to the former Praia a Mare factory.
Praia a Mare
With reference to the Praia a Mare dispute, as mentioned in the Report on Operations, beginning in 1999, some former employees and heirs of former employees at the 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 1960s 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. In November 2013, by agreement with ENI S.p.A., all financial claims lodged by natural persons involved in the criminal proceedings and all those of former workers or heirs of former workers who took civil action from 2006 to 2008 against the Company, claiming compensation for damages allegedly suffered following occupational sickness, were settled. Following an ordinance of the mayor of Praia a Mare in January 2007, Marzotto S.p.A. was supposed to begin characterization activities of the area outside the factory in Praia a Mare overlooking the sea: these activities have currently been suspended pending cautionary proceedings, despite the fact that the Company, to this end, renewed its request for release from seizure in November 2013.
Marzotto S.p.A. Company financial statements
149
Balance Sheet
5.2) Other long term payables
[Notes to the Company’s financial statements] 2013
2012
Amounts to:
Change
=
7,828
(7,828)
Payables due to Inland Revenue
=
7,818
(7,818)
Payables due to social security institutions
=
10
(10)
Other payables
=
=
=
Total
=
7,828
(7,828)
and refers to:
As at 31 December 2012, the item Payables due to Inland Revenue includes the medium-long term portion, for 7,818 thousand euro, of the amount due for the Dividend Stripping litigation. This debt position has been classified entirely amongst current liabilities of Other payables due to Inland Revenue, insofar as it was extinguished upon payment of the amount due in January 2014. Please refer to the comments given in note 6.1 for more information.
5.3) Deferred taxes payables
2013 Amounts to:
2012
Change
787
540
247
Tangible and intangible assets differences
435
506
(71)
Other temporary differences
352
34
318
Total
787
540
247
and can be broken down as follows:
This item includes deferred taxes reported by the Company, mainly attributable to the difference between depreciation and amortisation based on tax rates and on the useful life of the asset.
5.4) Long term financial payables
2013 Amounts to:
2012
Change
11
11
=
Secured financing received
=
=
=
Non-secured financing received
=
=
=
Due to other lenders
11
11
=
Total
11
11
=
and can be broken down as follows:
Medium/long-term financial payables are financial liabilities due to banks and other lenders beyond twelve months. The value booked as at the reporting date refers to interest-bearing caution deposits.
150
Marzotto S.p.A. Company financial statements
Balance Sheet
6.1) Trade payables and other payables
[Notes to the Company’s financial statements] 2013 Amounts to:
2012
93,042
Change
79,362
13,680
and can be broken down as follows: Trade payables
39,935
35,626
4,309
Trade payables due to subsidiaries
30,266
24,979
5,287
Trade payables due to associates
775
1,071
(296)
Trade payables due to associated
6
=
6
189
179
10
Payables due to Inland Revenue
7,352
6,749
603
Payables due to social security institutions
1,971
1,961
10
Payables due to employees
7,285
6,341
944
Other payables
4,172
1,091
3,081
=
2
(2)
748
1,094
(346)
Advance payments received
Other payables due to parent companies Other payables due to associates Other payables due to associated
1
=
1
342
269
73
93,042
79,362
13,680
Accrued liabilities and deferred income Total
The balance of Trade payables increases by Euro 4,309 thousand, mainly in connection with the greater value of the order book acquired as at the reporting date as compared with the same period of 2012; this has required greater provisions. Trade payables are all due within the next year.
Trade payables due to subsidiaries refer to: 2013 Novà Mosilana a.s.
2012
Change
25,589
22,716
2,873
1,265
1,343
(78)
Marzotto International Trading (Shanghai) Co. Ltd
89
102
(13)
Marzotto Textiles USA Inc.
74
151
(77) 2,050
AB Liteksas
Sametex Spol s r.o.
2,062
12
Girmes International G.m.b.h.
527
50
477
Biella Manifatture Tessili S.r.l.
145
274
(129)
Linificio group Total
515
331
184
30,266
24,979
5,287
Trade payables due to affiliates and joint ventures refer to: 2013 Ratti Group
2012
Change
57
133
(76)
Pettinatura di Verrone S.r.l.
279
468
(189)
Mediterranean Wool Industry Co. S.A.E.
225
157
68
Filivivi Group
214
313
(99)
Total
775
1,071
(296)
Advance payments from customers are advances received from customers on supplies.
Marzotto S.p.A. Company financial statements
151
Balance Sheet
[Notes to the Company’s financial statements] Payables due to Tax Authorities can be broken down as follows: 2013 Regional manufacturing tax
2012
Change
569
852
(283)
1,565
1,286
279
=
=
=
Other amounts due
5,218
4,611
607
Total
7,352
6,749
603
Withholding taxes Regional IRPEF surcharge
Other payables to the Tax Authorities refer for Euro 4,781 thousand to the amount due to Equitalia Nord deriving from the litigation “dividend stripping” 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 31/12/2010 a provision for 16,240 k euro had been set aside. At the request of the Company, in October 2011 the request to pay in instalments was accepted and the payment was divided in 48 monthly instalments, the first of which was due at the end of October 2011. The Company has requested to the appropriate Authorities an amendment, because it considered wrong the criteria used to calculate the items “portion for arrears interests” and “portion collection compensation” included in the above repayment plan. By sentence no. 242/2012, the Milan Provincial Tax Commission declared that the “share of late payment interest” and the “part share of collection fees” for a total of Euro 808 thousand, was not due. The residual debt, recalculated by virtue of said sentence and still recorded as at the reporting date, was recalculated on the basis of that due following the benefits assigned by Law no. 147 of 27 December 2013, Art. 1 (2014 Stability Law) and thereafter paid on 28 January 2014. Payables due to social security institutions refer to: 2013 INPS for current taxes
Change
1,549
1,537
12
10
31
(21)
8
6
2
404
387
17
1,971
1,961
10
INPS early pensions and redundancy ENASARCO for current taxes Due to other institutions Total
2012
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.
Payables due to employees can be broken down as follows: 2013 December salaries paid in January
8
5
Deferred salaries for vacation days accrued and not taken
1,874
1,630
244
Deferred salaries for other deferrals
3,804
3,435
369
455
47
408
7,285
6,341
944
Total
Company financial statements
(82)
13
Other items
Marzotto S.p.A.
Change
1,221
Staff termination indemnities paid after year-end
152
2012
1,139
Balance Sheet
[Notes to the Company’s financial statements] Other payables refer to: 2013 Down payments
2012
Change
100
100
Other payables due to associated companies
1
=
1
Other payables due to parent companies
=
2
(2)
Other payables due to associates
=
748
1,094
(346)
Other amounts due to third parties
4,072
991
3,081
Total
4,921
2,187
2,734
The item Other payables due to affiliates refers to the amount due from Filivivi S.r.l. (tax transparency). Other third party payables includes Euro 400 thousand a payable due to Appia S.r.l. as compensation for the debt/credit positions of Marzotto S.p.A., Biella Manifatture Tessili S.p.A. (formerly F.lli Tallia di Delfino S.p.A.) and Appia S.r.l. Sundry third party payables also includes the fair value measurement of forward contracts hedging exchange rates, for Euro 3,244 thousand.
6.2) Current financial payables
2013 Amounts to:
2012
142,855
Change
144,607
(1,752)
and can be broken down as follows: Trade advance payments received Non-secured financing received Payables due to subsidiaries Total
6,970
4,317
2,653
123,500
135,747
(12,247)
12,385
4,543
7,842
142,855
144,607
(1,752)
2013
2012
Change
Financial payables due to subsidiaries refer to:
AB Liteksas
4,665
4,543
122
Sametex Spol s r.o.
11
=
11
Novà Mosilana a.s.
9
=
9
7,700
=
7,700
12,385
4,543
7,842
Linificio group Total
Net financial position
2013
2012
(82,510)
(61,927)
(20,583)
2,455
16,791
(14,336)
57,901
65,900
(7,999)
(11)
(11)
=
6.2 Current financial payables
(142,855)
(144,607)
1,752
Total
(82,510)
(61,927)
(20,583)
Amounts to:
Change
and can be broken down as follows: 1.8 Long term financial receivables 3.4 Current financial assets, cash and cash equivalents 5.4 Long term financial payables
As shown in the table given, the Net Financial Position shows an increase in net debt of Euro 20,583 thousand on 31 December 2012. This negative change emerges from the reduction in financial assets for Euro 22,335 thousand, only partially offset by the reduction in financial payables for Euro 1,752 thousand.
Marzotto S.p.A. Company financial statements
153
Balance Sheet
Contractual commitments and guarantees (Memorandum Accounts)
[Notes to the Company’s financial statements] Memorandum accounts and commitments at 31 December 2013 are commented below:
“Guarantees to subsidiary and affiliated Companies” were given:
in favour of the subsidiary Biella Manifatture Tessili S.r.l. for 29,000 thousand euro for lines of credit; in favour of the subsidiary Biella Manifatture Tessili S.r.l. for 14,200 thousand euro for transfers of receivables without recourse; in favour of the subsidiary Linificio e Canapificio Nazionale S.r.l. for 7,000 thousand euro transfers of receivables without recourse; in favour of the Company Mediterranean Wool Industries Co. S.A.E. to cover financing received for 1,650 thousand euro.
“Guarantees to third parties” were given:
in favour of the Company as a guarantee for service contracts for 17 thousand euro and for miscellaneous securities for 19 thousand euro.
“Guarantees received from third parties” were given:
in favour of the Company as a guarantee for trade receivables for 383 thousand euro and for miscellaneous securities for 187 thousand euro.
The “Foreign currency/interest rates hedging contracts” refer to contracts for term purchase for 61,453 thousand euro and contracts for term sale for 11,226 thousand euro. As of 31 December 2013 the off-balance sheet commitments for contracts for the term sale of foreign currency (on receivables, orders received and future orders) were 15,000 thousand US dollars, for a total value of 11,226 thousand euro. Contracts for the term purchase of foreign currency were 1,100,000 thousand Czech crowns, for a total value of 42,338 thousand euro and 26,850 thousand Australian dollars for a total value of 19,115 thousand 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 3,244 thousand euro, was established based on the quotes given by the banks. There are also existing option contracts to hedge currency exchange risks for notional 15,000 thousand USD, for a total value of 11,295 thousand euros and a notional 60,000 thousand JPY for a total value of 483 thousand euros, for which the fair value is positive for Euro 110 thousand.
154
Marzotto S.p.A. Company financial statements
Income statements
[Notes to the Company’s financial statements]
7. Net revenues
Net revenues by sector are detailed below: 2013 Textiles Other operations Cancellations/adjustments Total
2012
% change
166,982
156,364
6.8
13,358
13,596
(1.8)
(5,539)
(5,077)
9.1
174,801
164,883
6.0
Net revenues went from Euro 164,883 thousand to Euro 174,801 thousand, totalling an increase of 6% on last year. This positive change is mainly due to the recovery of demand on the Company’s reference markets. More specifically, whilst domestic demand recorded a slight reduction (-3.4%), elsewhere in Europe, a clear improvement was seen (+ 10.8%). Albeit for a less significant absolute value, sales in North America (+48.7%) and Asia (+3.8%) rose. 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 to be repurchased by the Company. The item Net revenues includes the following other income: Other income Amounts to:
2013
2012
% change
14,596
18,532
(21.2)
771
1,329
(42.0)
=
=
=
13,825
17,203
(19.6)
14,596
18,532
(21.2)
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.
8. Cost of sales
2013 Amounts to:
2012
% change
(138,926)
(132,572)
4.8
and refers to: Raw materials consumption
(45,194)
(52,676)
(14.2)
Third party production
(6,407)
(6,174)
3.8
In house manufacturing
(24,558)
(24,296)
1.1
Purchase of finished and semi-finished products
(52,283)
(37,923)
37.9
3,006
(710)
n.c.
(2,406)
438
+ 100.0
(11,084)
(11,231)
(1.3)
(138,926)
(132,572)
4.8
Change in stock of finished and semi-finished products Commercial exchange rate differences Other logistic and industrial costs Total
The increase seen in the cost of goods sold is basically related to the improved turnover booked in 2013. Trade exchange rate differences are detailed below: Commercial exchange rate differences Amounts to:
2013
2012
% change
(2,406)
438
(1,783)
88
(4,387)
1,214
3,764
(864)
(2,406)
438
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
Marzotto S.p.A. Company financial statements
n.c.
155
Income statements
[Notes to the Company’s financial statements]
10. R&D and marketing costs
Amounts to:
2013
2012
(20,203)
(18,272)
% change 10.6
(5,721)
(5,104)
12.1 (13.2)
and refer to: Variable sales costs Losses and write-down of trade debtors, business information
(761)
(877)
Product research and development
(7,070)
(6,572)
7.6
Advertising, marketing and public relations
(1,561)
(1,318)
18.4
Other fixed sales and marketing costs Total
11. General and administrative costs
Amounts to:
12. Other income and charges
Amounts to:
(5,090)
(4,401)
15.7
(20,203)
(18,272)
10.6
2013
2012
(14,060)
(14,191)
2013
% change (0.9)
2012
% change
(19,500)
(2,080)
130
111
=
(4)
(275)
(314)
>100%
and refers to: Disposal of tangible and intangible assets Loss on disposal of investment Extraordinary charges for industrial plan Allocation/use to restructuring and relocation fund
=
265
Allocation/use to legal risk fund and future charges
(9,316)
(2,356)
Charges "Dividend Stripping"
(9,096)
=
Contingent assets/liabilities
292
876
Other income/charges Total other income/charges
(1,235)
(658)
(19,500)
(2,080)
>100%
The net balance of extraordinary management shows expenses for Euro 19,500 thousand, which are juxtaposed with Euro -2,080 thousand in 2012. In detail, the provisions made for extraordinary charges on the business plan, for Euro 275 thousand, relate to costs for the reorganisation and increased efficiency of production departments, as well as to charges connected with decommissioned plants and areas. The allocation/use of the legal risk fund includes legal charges and expenses relating to current lawsuits expected to be incurred in the forthcoming years, as well as uses made during the year. Dividend Stripping charges includes the write-down of the receivable due from Valentino Fashion Group S.p.A., deriving from the Dividend Stripping dispute and in application of the agreement stipulated during the 2005 spin-off of the clothing BU. A transaction made by the parties in January 2014 means that this receivable has been completely written-down as at the reporting date.
13. Operating income
2013 Amounts to:
2012
% change
(17,888)
(2,232)
>100%
2,509
1,904
31.8
and refers to: Textiles Other operations Total
156
Marzotto S.p.A. Company financial statements
(20,397)
(4,136)
>100%
(17,888)
(2,232)
>100%
Income statements
[Notes to the Company’s financial statements] Below are the details on labour costs and depreciation and amortisation included in the Operating income calculation.
Labour costs
Amounts to:
2013
2012
(35,379)
(33,401)
% change 5.9
and refers to: Wages and salaries
(25,108)
(23,524)
6.7
Social security contributions
(7,817)
(7,284)
7.3
Staff termination indemnities
(1,915)
(1,988)
(3.7)
(83)
(83)
=
(456)
(522)
(12.6)
Pension funds and similar liabilities Other labour costs
The number of active employees had the following trend: Year End Staff 31.12.2013
Average
31.12.2012
% change
2013
2012
% change
Blue-collar workers
445
438
1.6
447
440
1.6
White-collar workers
257
243
5.8
253
237
6.8
24
24
0.0
25
24
4.2
726
705
3.0
725
701
3.4
Managers Total
The total cost of employees has increased by 5.9% against an increase in the average number of active employees of 3.4%.
Amortisation and depreciation was as follows: Ammortization Amounts to:
2013 (3,535)
2012 (3,563)
% change (0.8)
and refers to: amortization of intangible fixed assets depreciation of tangible fixed assets
Marzotto S.p.A. Company financial statements
(402)
(332)
(3,133)
(3,231)
157
Income statements
[Notes to the Company’s financial statements]
14. Financial charges, net
Amounts to:
2013
2012
% change
(3,143)
(2,805)
12.0
303
242
25.2
and refer to: Financial income Interest received from subsidiaries Interest received from associates Interest received from banks Other financial income Total financial income
68
102
(33.3)
959
1,755
(45.4)
80
726
(89.0)
1,410
2,825
(50.1)
Financial charges Interest payable to subsidiaries Interest payable to banks
(89)
(92)
(3.3)
(3,630)
(3,968)
(8.5)
Bank services
(415)
(395)
5.1
Other financial charges
(419)
(1,175)
(64.3)
Total financial charges
(4,553)
(5,630)
(19.1)
Total
(3,143)
(2,805)
12.0
Interest received from subsidiaries is detailed as follows: 2013 Amounts to:
2012
% change
303
242
25.2
67
133
(49.6)
8
14
(42.9)
33
1
>100.0 50.0
and refers to: Biella Manifatture Tessili S.r.l. Ambiente Energia S.r.l. Gruppo Linificio Marzotto Textile N.V. Sametex Spol s r.o. Girmes International G.m.b.h. Novà Mosilana a.s. Marzotto Textiles USA Inc. Totale
3
2
102
74
37.8
3
1
>100.0
86
16
>100.0
1
1
=
303
242
25.2
Interest received from affiliates: 2013 Amounts to:
2012 68
% change 102
(33.3)
and refers to:
158
Marzotto S.p.A. Company financial statements
Mediterranean Wool Industries Co. S.A.E.
20
31
(35.5)
Filivivi S.r.l.
48
71
(32.4)
Totale
68
102
(33.3)
Income statements
[Notes to the Company’s financial statements] Interest payable to subsidiaries: 2013 Amounts to:
2012
% change
(89)
(92)
(3.3)
=
(10)
n.c.
(5)
(2)
>100.0
and refers to: Novà Mosilana as Gruppo Linificio AB Liteksas
(84)
(80)
5.0
Totale
(89)
(92)
(3.3)
15. Dividends
2013 Amounts to:
2012
% change
7,175
5,391
Marzotto Textile N.V.
4,262
4,472
Biella Manifatture Tessili S.r.l.
2,000
=
913
913
33.1
and refers to: Dividends from subsidiary companies
Dividends from associates companies Ratti S.p.A. Dividends from other companies Wool Street Investments Pty Ltd. Total dividends
16. Result from the measurement of equity investments held for sale
17. Other financial income and charges
=
6
7,175
5,391
2013 Amounts to:
33.1
2012
% change
(7,015)
=
n.c.
Filivivi S.r.l.
(7,015)
=
n.c.
Total
(7,015)
=
n.c.
2012
% change
and refers to:
2013 Amounts to:
(26,530)
(72)
=
14
>100.0
and refers to: Exchange difference sale participation Wool Street Investments Pty Ltd. Discount of receivable from Aree Urbane S.r.l. Adjustement TFR IAS 19 Write down equity investment Linificio e Can. Nazionale S.r.l. Other financial income Totale
(14,695)
=
47
(86)
(11,899)
=
17
=
(26,530)
(72)
>100.0
The balance of Other financial income and charges, of Euro 26,530 thousand, includes Euro 14,695 thousand for the impairment of the receivable due from the affiliate Aree Urbane S.r.l. in liquidation, by virtue of the estimated presumed realisation value that is basically null and Euro 11,899 thousand for the write-down of the equity investment held in Linificio e Canapificio Nazionale S.r.l. due to permanent loss of value, in application of IAS 39.
Marzotto S.p.A. Company financial statements
159
Income statements
[Notes to the Company’s financial statements]
19. Income taxes
2013 Amounts to:
2012
% change
(173)
2,572
(1,621)
(568)
Deferred taxes receivable
1,749
1,483
Deferred taxes payable
(138)
69
Previous years taxes
(163)
1,588
Total
(173)
2,572
>100.0
and refers to: Current taxes
>100.0
Estimated taxes for 2013 are negative for 173 thousand euro, taking into account the posting of deferred tax assets, as mentioned under point 1.7, and prior year taxes. The reconciliation of the theoretical tax rate with the effective tax rate on income before taxes is set out in the table below. 2013 Amount Pre-tax profit Theoretical taxes Taxes for exempt dividends Taxes on deductible interest paid Write-off of non-deductibles World Domestic Consolidation IRAP Previous years taxes Taxes for other differences Total taxes
160
Marzotto S.p.A. Company financial statements
2012 %age
Amount
(47,401)
%age
282
13,035
(27.5)
(78)
1,874
(4.0)
1,338
(27.5) 474.5
=
=
(34)
(12.1)
(12,226)
25.8
=
=
(182)
0.4
286
101.4
(1,406)
3.0
(813)
(288.3)
(163)
0.4
1,588
563.1
(1,105)
2.3
285
101.1
(173)
0.4
2,572
912.2
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 2013 Receivables
Company Biella ManifattureTessili S.r.l.
Trade
Other
7,714
Ambiente Energia S.r.l.
Payables
Financial =
Total
2,922
Trade
10,636
Other
Financial
145
=
Total =
145
74
=
51
125
=
=
=
=
1
=
218
219
=
=
=
=
13,712
=
112
13,824
25,589
=
9
25,598
771
=
=
771
1,265
=
4,664
5,929
Marzotto Int. Tr. Shanghai Co. Ltd
=
=
=
=
89
=
=
89
Marzotto Textiles U.S.A. Inc.
=
=
12
12
74
=
=
74
1,172
=
5,014
6,186
2,062
=
11
2,073
54
=
150
204
527
=
=
527
1
=
=
1
=
=
=
=
369
=
=
369
515
=
7,700
8,215
1,355
=
4,000
5,355
214
748
=
962 54
Marzotto Textile N.V. Novà Mosilana a.s. AB Liteksas
Sametex Spol s r.o. Girmes International G.m.b.h. Le Cotonerie S.r.l. Linificio Group Filivivi Group Ratti Group
663
=
=
663
54
=
=
Mascioni S.p.A.
2
=
=
2
=
=
=
=
Pettinatura di Verrone S.r.l.
=
=
=
=
279
=
=
279
80
=
870
950
225
=
=
225
=
1,874
=
1,874
=
=
=
=
25,968
1,874
13,349
41,191
31,038
748
12,384
44,170
Mediterranean Wool Industries Wizard S.r.l. Total
Revenues, income, costs and charges with the Group Companies for the year 2013 Revenues and other income Company Biella Manifatture Tessili S.r.l.
Products
Services
Finance
Costs and charges Total
Products
Services
Finance
Total
2,814
=
67
2,881
(28,800)
68
=
(28,732)
225
=
8
233
=
5
=
5
=
=
3
3
=
=
=
=
Novà Mosilana a.s.
818
=
86
904
44,094
115
=
44,209
AB Liteksas
544
=
=
544
1,798
1
84
1,883
81
=
=
81
=
190
=
190
=
=
1
1
=
337
=
337
2,378
=
102
2,480
6,063
183
=
6,246
Ambiente Energia S.r.l. Marzotto Textile N.V.
Marzotto Int. Tr. Shanghai Co. Ltd Marzotto Textiles U.S.A. Inc. Sametex Spol s r.o. Girmes International G.m.b.h.
=
=
3
3
1,218
367
=
1,585
Linificio Group
1,318
=
33
1,351
1,060
21
5
1,086
Filivivi Group
3,070
=
48
3,118
944
=
=
944
Ratti Group
1,715
=
=
1,715
30
87
=
117
=
=
20
20
1,141
=
=
1,141
Mediterranean Wool Industries Mascioni S.p.A. Pettinatura di Verrone S.r.l. Total
Marzotto S.p.A. Company financial statements
10
=
=
10
=
=
=
=
=
=
=
=
1,201
=
=
1,201
12,973
=
371
13,344
28,749
1,374
89
30,212
161
Other information
[Notes to the Company’s financial statements] Related party transactions are detailed in the table below:
Receivables and payables existing with related companies as at 31 December 2013 Receivables Company
Trade
Other
Immobili e Partecipazioni S.r.l.
58
Payables
Financial =
Total 6
Trade 64
Other
Financial
6
1
Total =
7
Revenues, income, costs and charges with related companies for the year 2013 Revenues and other income Company Immobili e Partecipazioni S.r.l.
Directors and Statutory Auditors
Products
Services =
74
Finance
Costs and charges Total
10
Products 84
Services =
Finance
35
Total =
35
Remuneration paid to the Directors and Statutory Auditors of Marzotto S.p.A. (pursuant to Consob resolution 11971 of 14 May 1999) Office (thousand of euro) 2013 remuneration
Independent Auditors
Auditing services
Marzotto S.p.A. Company financial statements
Auditors
Total
545
67
612
Remuneration due for the financial year for services provided by the Independent Auditors (pursuant to Consob resolution 11971 of 14 May 1999) (thousand of euro)
162
Directors
Marzotto S.p.A. 74
Subsidiaries 197
Total 271
Other information
[Notes to the Company’s financial statements]
Other information
During the financial year there were not atypical or unusual transactions.
Marzotto S.p.A. Company financial statements
163
Other information
[Notes to the Company’s financial statements]
Events after the date of these financial statements
Please note that as part of the strategic choices made by the Group, on 02 January 2014, Marzotto S.p.A. acquired 50% of the Lithuanian company Uab Lietvilna, the dying and reconditioning business unit in Piovene Rocchette (VI) and a 50% stake in the share capital of the newly-established Tintoria di Verrone S.r.l., from the joint venture company Filivivi S.r.l. By notary deed dated 24 February 2014, Marzotto S.p.A. sold its stake in Filivivi S.r.l., operating in the wool yarns segment, equal to 50% of the share capital, to Fraver S.p.A., which now holds the entire capital. As concerns this year’s economic trend, initial forecasts on data for the first half of 2014 in the Textile-Fashion segment suggest a reversal of trend (+2.1%), also for companies involved upstream in the chain (+0.4%). The domestic demand is also expected to be positive, with growth rates of +1.4%. As concerns short-term expectations monitored by sector studies, most operators are not expecting any major changes in the market situation and are basically looking at stability in the recession context seen in 2013. Within this context, your company has recorded an 11% increase in turnover during the first two months of 2014 as compared with the same period of 2013, going from Euro 20.3 million to 22.5 million. There are no other significant events to report that could affect the financial statements and their information.
164
Marzotto S.p.A. Company financial statements
Investments
[Notes to the Company’s financial statements]
The Company’s direct and indirect investments
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 31 December 2013. All shareholdings represent ownership: % direct
% Marzotto S.p.A.
owned
owned
Company name
Head office
Direct investor
Biella Manifatture Tessili S.r.l.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Le Cotonerie S.r.l.
Milan (I)
Marzotto S.p.A.
100.00%
100.00%
Ambiente Energia S.r.l.
Schio (I)
Marzotto S.p.A.
100.00%
100.00%
Sametex Spol s r.o.
Kraslice (CZ)
Marzotto S.p.A.
100.00%
100.00%
Girmes International G.m.b.h.
Nettetal (DE)
Marzotto S.p.A.
100.00%
100.00%
Marzotto Textiles Czech Republic s r.o.
Praga (CZ)
Marzotto S.p.A.
100.00%
100.00%
Pettinatura Verrone S.r.l.
Verrone (I)
Marzotto S.p.A.
15.00%
15.00%
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.
Marzotto Textile N.V. Nová Mosilana a.s.
Amsterdam (NL) Brno (CZ)
Marzotto S.p.A. Marzotto Textile N.V.
30.00%
30.00%
100.00% 100.00%
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. UAB Lietvilna
Milan (I) Kaunas (LT)
Marzotto S.p.A. Filivivi S.r.l.
50.00% 100.00%
50.00% 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.r.l. Filature de Lin Filin S.A.
Milan (I) Chbedda (TN)
Marzotto S.p.A. Linificio e Canapificio N. S.r.l.
100.00% 100.00%
100.00% 100.00%
UAB Lietlinen
Kaunas (LT)
Linificio e Canapificio N. S.r.l.
100.00%
100.00%
UAB Linestus
Kaunas (LT)
UAB Lietlinen
50.00%
50.00%
Licana S.p.A. in liquidazione
Fara Gera d'Adda (I)
Linificio e Canapificio N. S.r.l.
100.00%
100.00%
Lin Naturel S.A.
Chbedda (TN)
Linificio e Canapificio N. S.r.l.
100.00%
100.00%
Ratti S.p.A. Creomoda S.a.r.l.
Guanzate (I) Sousse (TN)
Marzotto S.p.A. Ratti S.p.A.
33.36% 95.00%
33.36% 31.70%
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.
Cluj - Napoca (RO)
Ratti S.p.A.
100.00%
33.36%
At the end of these notes we provide further details on the Shareholdings held by the Company.
Marzotto S.p.A. Company financial statements
165
Investments
[Notes to the Company’s financial statements]
(thousands of euro)
Situation as at 31.12.2012
Changes during the year 2013
Valore Number Description Marzotto Textile N.V. Biella Manifatture Tessili S.r.l.
Nominal
Pro-quota
Net
Number
of shares
%
value
net
book
of shares
owned
owned
of share
value
(+/–)
equity
(1)
AdjustIncreases
Decreases
ments
100
100.00
45
71,516
34,897
=
=
=
=
1,000,000
100.00
1,000
25,423
14,879
=
=
=
=
Le Cotonerie S.r.l.
1
100.00
15
6
26
=
15
=
=
Ambiente Energia S.r.l.
1
100.00
100
7,889
8,010
=
=
=
=
Finvel S.r.l.
1
100.00
25
81
40
(1)
=
(40)
=
Marzotto Textiles Czech Rep. s r.o.
=
=
=
=
1
8
=
=
Sametex Spol s r.o.
1
13,665
(1,752)
53
=
700
=
=
Girmes International G.m.b.h. Linificio e Canapificio Nazionale S.r.l.
= 100.00
1
100.00
800
(668)
117
=
=
=
=
27,648,000
100.00
27,648
41,326
48,214
=
=
(11,899)
=
43,298
143,821
106,236
=
723
(11,939)
=
283,500
28.35
1,417
6,712
4,034
=
=
=
=
1
32.50
33
(7,276)
=
=
=
=
=
Shareholdings in subsidiaries Mascioni S.p.A. Aree Urbane S.r.l. in liquidazione Pettinatura di Verrone S.r.l. Ratti S.p.A. Mediterranean Wool Industries Co. S.A.E.
1
15.00
450
604
1,526
=
=
=
=
9,125,000
33.36
10,402
13,463
10,402
=
=
=
=
30,000
30.00
2,027
2,214
2,027
=
=
=
=
1
50.00
7,500
1,131
12,915
=
=
(7,015)
=
21,829
16,848
30,904
=
=
(7,015)
=
Società Editrice Il Mulino S.p.A.
70,500
3.00
35
49
66
=
=
=
=
Next Technology Tecnotessile S.r.l.
19,968
1.58
10
8
10
=
=
=
=
Alto Tirreno Cosentino S.p.A.
12,500
5.06
12
24
14
=
=
=
=
Filivivi S.r.l. Shareholding in associates
Sobifils S.p.A. Fil. Tess. Tollegno S.p.A. Consorzio Ivrea Energia Shareholdings in other companies Total equity investments 1.
687
5.00
6
88
6
=
=
=
=
2,270
0.01
1
3
1
=
=
=
=
1
11.11
1
1
1
=
=
=
=
65
173
98
=
=
=
=
65,192
160,842
137,238
723
(18,954)
=
For subsidiary and associates companies, the net equity attributable to Marzotto is shown in the Parent Company's Financial Statements, or in the consolidated Financial Statements if prepared.
166
Gross book value
Marzotto S.p.A. Company financial statements
[Notes to the Company’s financial statements]
Investments
Situation as of 31.12.2013 Number Net equity as at
Nominal
Pro-quota
Net
of shares
%
value
net
book
owned
owned
of shares
Dec. 2013
100
equity
(1)
value
Description
100.00
45
73,699
34,897
Marzotto Textile N.V. Biella Manifatture Tessili S.r.l.
Dec. 2013
1,000,000
100.00
1,000
27,181
14,879
Dec. 2013
1
100.00
15
15
41
Le Cotonerie S.r.l.
Dec. 2013
1
100.00
100
7,641
8,010
Ambiente Energia S.r.l.
Dec. 2013
=
Dec. 2013
1
=
=
=
Finvel S.r.l.
100.00
=
7
14
8
Marzotto Textiles Czech Rep. s r.o.
Dec. 2013
1
100.00
13,665
4,867
753
Sametex Spol s r.o.
Dec. 2013
1
100.00
800
(816)
117
Girmes International G.m.b.h.
Dec. 2013
27,648,000
100.00
27,648
36,283
36,315
Linificio e Canapificio Nazionale S.r.l.
43,280
148,884
95,020
Shareholdings in subsidiaries
Dec. 2013
283,500
28.35
1,417
5,300
4,034
Mascioni S.p.A.
Dec. 2010
1
32.50
33
(7,276)
=
Aree Urbane S.r.l. in liquidazione
Dec. 2013
1
15.00
450
635
1,526
Pettinatura di Verrone S.r.l.
Dec. 2013
9,125,000
33.36
10,402
13,673
10,402
Ratti S.p.A.
Dec. 2013
30,000
30.00
2,027
1,508
2,027
Mediterranean Wool Industries Co. S.A.E.
Dec. 2013
1
50.00
7,500
(266)
5,900
Filivivi S.r.l.
21,829
13,574
23,889
Shareholding in associates
Dec. 2012
70,500
3.00
35
46
66
Società Editrice Il Mulino S.p.A.
Dec. 2012
19,968
1.58
10
8
10
Next Technology Tecnotessile S.r.l.
Dec. 2011
12,500
5.06
12
24
14
Alto Tirreno Cosentino S.p.A.
Dec. 2012
687
5.00
6
89
6
Sobifils S.p.A.
Dec. 2012
2,270
0.01
1
3
1
Fil. Tess. Tollegno S.p.A.
Dec. 2012
1
11.11
1
1
1
Consorzio Ivrea Energia
65
171
98
Shareholdings in other companies
65,174
162,629
119,007
Total equity investments
Valdagno (VI), 27 March 2014 THE BOARD OF DIRECTORS
Marzotto S.p.A. Company financial statements
167
[Report of indipendent Auditors]
169
[Report of the Board of Statutory Auditors] MANIFATTURA LANE GAETANO MARZOTTO E FIGLI S.p.A. Share Capital Euro 65,005,047 – Registered office in Milan, Via Filippo Turati 16 Registered at the Milan Companies Register no. 00166580241 REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE SHAREHOLDERS’ MEETING PURSUANT TO ARTICLE 2429, PARAGRAPH 2, CIVIL CODE Shareholder, we hereby report on the supervisory activities performed during the tax year ended on 31 December 2013, as provided by the law and the guidelines issued by the Board of Certified Public Accountants and Accounting Experts. The auditing is the exclusive scope of the Independent Auditors Reconta Ernst & Young S.p.A.
Supervisory activities We supervised on the compliance with the law and the By-laws and the correct administration principles. We have attended the Shareholders’ meetings and the meetings of the Board of Directors, and we confirm that based on the available information, we have not found any law or by-laws violation, nor any operation that was clearly imprudent, risky, in potential conflict of interest, or such as to jeopardize the company’s assets. We have collected from the Directors and the Management, during the meetings, information on the performance of operations, its foreseeable evolution, as well as on the most relevant operations in reference to size or characteristics, performed by the Company and, based on the information obtained, we don’t have any special remark. 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. In performing its duties as Supervisory Board, no critical issues emerged worthy of report here. We have gathered knowledge and 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 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 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 corporate books, and we have no particular remark on this matter. We have not received any claim pursuant to article 2408 of the Civil Code.
170
[Report of the Board of Statutory Auditors] On 30 December 2013, pursuant to Art. 2441 of the Civil Code, we issued a fairness opinion on the price of issue of the shares in the event of a share capital increase with exclusion of stock options, in view of the resolution passed by the Board of Directors on 18 November 2013 to approve the proposed resolution to increase the share capital in exchange for payment and in a divisible manner, for a total amount, including premium, of Euro 35,000,004.82, with the exclusion of stock options in accordance with Art. 2441, paragraph 5 of the Civil Code, by means of the issue of a total of 1,058 new ordinary shares with no face value, with the same characteristics as those in issue (to be issued with regular use) at an issue price of Euro 33,081.29 per share, to be reserved for subscription by third parties. During the supervisory activity, as described above, there were no atypical or unusual operations with third parties or related parties and we have been informed 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 2013, prepared according to the IAS/IFRS accounting principles, made available to us pursuant to article 2429 of the Civil Code, concerning which we report the following. Since we are not responsible for auditing of the financial statements, we have supervised on their general setup, 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 Group consolidated Financial statements as of 31 December 2013, the Statutory Auditors acknowledge that your Company, holding controlling interests, has presented this document, which has been prepared according to international accounting principles. 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 therefore see no reason not to approve the financial statements for the period ended on 31 December 2013, nor have any objections to the proposed resolutions submitted by the Board of Directors for the allocation of the period result. Milan, 14 April 2014 On behalf of the Board of Statutory Auditors Dott.Michele Paolillo - Chairman Signed on the original
171
Balance Sheets
[Reclassified financial statements of subsidiaries] Marzotto Int. Novà Mosilana a.s.
AB Liteksas
(thousands Czk) 2013
Trading Shanghai Ltd
(thousands Ltl)
2012
2013
(thousands Cny)
2012
2013
2012
1. Non-current assets 1.1 Property, plant and equipment
854,667
825,206
16,829
17,779
44
=
=
=
=
=
=
936
957
69
133
=
=
1.4 Investments valued at equity
=
=
=
=
=
=
1.5 Other investments
=
=
=
=
=
=
1.6 Long-term receivables
=
=
=
=
=
=
9,078
9,549
226
278
=
=
1.2 Civil real estate 1.3 Goodwill, trademarks and other intangible assets
1.7 Deferred tax assets 1.8 Long-term financial receivables
58
1,027
257
=
=
=
=
865,708
835,969
17,124
18,190
44
58
=
=
=
=
=
=
3.1 Inventories
709,332
745,482
6,908
5,473
1,813
1,464
3.2 Trade receivables
738,893
683,499
6,635
8,784
789
649
3.3 Other receivables
68,750
51,097
754
704
110
784
Total non-current assets 2. Non-current assets held for sale 3. Current assets
3.4 Current financial assets, cash and cash equivalent
49,390
101,648
19,390
15,900
875
1,762
1,566,365
1,581,726
33,687
30,861
3,587
4,659
2,432,073
2,417,695
50,811
49,051
3,631
4,717
4.1 Share capital and reserves
1,441,439
1,403,338
41,837
42,010
1,398
1,376
4.2 Income/(Loss) for the year
113,215
130,595
2,490
1,236
69
21
=
=
=
=
=
=
1,554,654
1,533,933
44,327
43,246
1,467
1,397
5.1 Long-term reserves
=
=
1,031
1,000
=
=
5.2 Other long-term payables
=
=
=
=
=
=
Total current assets Total assets 4. Net shareholders' equity
4.3 Non controlling interests Total shareholders' equity 5. Non-current liabilities
5.3 Deferred tax liabilities
43,064
38,185
=
=
=
=
5.4 Long-term financial payables
=
=
=
=
=
=
Total non-current liabilities
43,064
38,185
1,031
1,000
=
= 3,320
6. Current liabilities 6.1 Trade payables and other payables
698,366
613,111
5,453
4,805
2,164
6.2 Current financial payables
135,989
232,466
=
=
=
=
834,355
845,577
5,453
4,805
2,164
3,320
2,432,073
2,417,695
50,811
49,051
3,631
4,717
(130,561)
19,390
15,900
875
1,762
Total current liabilities Total shareholders' equity and liabilities
Net financial debt
172
Summary of the Financial Statements of subsidiaries
(85,572)
Income statements
[Reclassified financial statements of subsidiaries] 3.4528 Novà Mosilana a.s. (thousands Czk) 2013
7. 9.
Marzotto Int.
AB Liteksas
Trading Shanghai Ltd
(thousands Ltl)
2012
2013
(thousands Cny)
2012
2013
2012
Net revenues
2,897,767
2,861,929
39,921
34,826
6,117
9,707
8.
(2,708,078)
(2,663,059)
(34,746)
(31,248)
(5,154)
(8,459)
5,175
3,578
Cost of sales
Gross income 10. Product development and marketing costs 11. General and administrative costs 12. Other income and charges
13. Operating income 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. Net income
189,689
20. Income attrib. to non controlling interests 21. Net income
Summary of the Financial Statements of subsidiaries
963
1,248
(879)
(1,223)
(8,016)
(10,197)
(1,277)
(970)
(38,000)
(37,734)
(1,025)
(1,101)
=
=
(119)
(290)
12
=
1,984
14,077
145,657
165,016
2,754
1,217
96
25
(3,661)
(2,856)
297
271
2
6
=
=
=
=
=
=
=
=
=
=
=
=
141,996
162,160
3,051
1,488
98
31
(28,781) (before non controlling interests)
198,870
(29)
(10)
113,215
130,595
(31,565)
2,490
(561)
1,236
(252)
69
21
=
=
=
=
=
=
113,215
130,595
2,490
1,236
69
21
173
Balance Sheets
[Reclassified financial statements of subsidiaries] Ambiente Energia S.r.l. (*)
Marzotto Textile NV (thousands Euro) 2013
Linificio group (**)
(thousands Euro)
2012
2013
(thousands Euro)
2012
2013
2012
1. Non-current assets 1.1 Property, plant and equipment
=
=
7,283
7,738
13,706
16,186
1.2 Civil real estate
=
=
15
15
=
=
1.3 Goodwill, trademarks and other intangible assets
=
=
1,437
1,478
261
409
1.4 Investments valued at equity
=
=
=
=
=
=
73,942
71,689
=
=
13
13
1.5 Other investments 1.6 Long-term receivables
=
=
1
1
387
395
1.7 Deferred tax assets
=
=
7
7
3,512
4,047
1.8 Long-term financial receivables
=
=
12
12
=
132
73,942
71,689
8,755
9,251
17,879
21,182
=
=
=
=
=
=
3.1 Inventories
=
=
=
=
14,693
19,600
3.2 Trade receivables
=
=
1,372
1,342
13,509
11,207
3.3 Other receivables
6
14
332
300
3,317
4,472
3.4 Current financial assets, cash and cash equivalent
4
10
440
215
10,044
10,632
Total non-current assets 2. Non-current assets held for sale 3. Current assets
Total current assets
10
24
2,144
1,857
41,563
45,911
73,952
71,713
10,899
11,108
59,442
67,093
4.1 Share capital and reserves
69,507
67,111
7,889
8,097
40,060
43,995
4.2 Income/(Loss) for the year
4,192
4,405
(3,777)
(2,670)
=
=
=
=
=
=
73,699
71,516
7,641
7,889
36,283
41,326
Total assets 4. Net shareholders' equity
4.3 Non controlling interests Total shareholders' equity
(248)
(208)
5. Non-current liabilities 5.1 Long-term reserves
=
=
160
159
1,594
1,613
5.2 Other long-term payables
=
=
=
=
431
664
5.3 Deferred tax liabilities
=
=
1,530
1,230
36
32
5.4 Long-term financial payables
=
=
=
=
326
495
Total non-current liabilities
=
=
1,690
1,389
2,387
2,804 14,123
6. Current liabilities 6.1 Trade payables and other payables
35
32
1,517
917
10,826
218
165
51
913
9,945
8,841
253
197
1,568
1,830
20,771
22,964
73,952
71,713
10,899
11,108
59,442
67,093
401
(686)
(227)
1,428
6.2 Current financial payables Total current liabilities Total shareholders' equity and liabilities
Net financial debt
(214)
(155)
(*) Financial statements prepared according to Italian accounting principles. (**) Consolidated Financial statements.
174
Summary of the Financial Statements of subsidiaries
Income statements
[Reclassified financial statements of subsidiaries] Ambiente Energia S.r.l.(*)
Marzotto Textile NV (thousands Euro) 2013 7.
Net revenues 8.
9.
Cost of sales
(thousands Euro)
2012 =
2013
34,660
(3,593)
(2,900)
(34,011)
(32,173)
=
10. Product development and marketing costs
=
=
(56) = (56)
(65)
(14)
(2)
Dividends from non-consolidated equity 15. investments and valuations at equity 16. Other financial income and charges 17. Income before taxes 18. Taxes 19. Net income (before non controlling interests) 20. Income attrib. to non controlling interests 21. Net income
4,262
2012
37,070
=
14. Net financial charges
2013
3,579
=
13. Operating income
(thousands Euro)
2012
4,124
=
12. Other income and charges
(**)
=
Gross income 11. General and administrative costs
Linificio group
679
3,059
2,487
(2)
(39)
(3,335)
(3,084)
(65)
(116)
(102)
(2,239)
(2,208)
=
(99)
(109)
(217)
(684)
314
429
(2,733)
(3,489)
(698)
21
=
=
4,472
531
(17) =
(21) =
=
=
=
=
4,192
4,405
297
408
2 (3,429)
(80) (3,548)
=
=
(545)
(616)
(348)
879
4,192
4,405
(248)
(208)
(3,777)
(2,670)
=
=
4,192
4,405
= (248)
= (208)
=
=
(3,777)
(2,670)
(*) Financial statements prepared according to Italian accounting principles. (**) Consolidated Financial statements.
Summary of the Financial Statements of subsidiaries
175
Balance Sheets
[Reclassified financial statements of subsidiaries] Biella Manifatture Marzotto Textiles USA (thousands Usd) 2013
Tessili S.r.l.(*)
Le Cotonerie S.r.l.
(thousands Euro)
2012
2013
(*)
(thousands Euro)
2012
2013
2012
1. Non-current assets 1.1 Property, plant and equipment
1
1
14,020
13,124
=
=
1.2 Civil real estate
=
=
1,088
=
=
=
1.3 Goodwill, trademarks and other intangible assets
=
1
2,543
2,551
=
=
1.4 Investments valued at equity
=
=
=
=
=
=
1.5 Other investments
=
=
3
3
=
=
1.6 Long-term receivables
=
=
75
75
=
=
1.7 Deferred tax assets
=
=
3,821
4,686
=
=
1.8 Long-term financial receivables
=
=
1
1
=
=
Total non-current assets
1
2
21,551
20,440
=
=
=
=
=
=
=
=
2. Non-current assets held for sale 3. Current assets 3.1 Inventories 3.2 Trade receivables 3.3 Other receivables 3.4 Current financial assets, cash and cash equivalent Total current assets Total assets
=
=
26,380
24,843
=
=
102
203
15,711
17,426
=
=
=
=
2,880
2,291
4
3
81
78
10,748
8,101
14
9
183
281
55,719
52,661
18
12
184
283
77,270
73,101
18
12
4. Net shareholders' equity 4.1 Share capital and reserves
146
95
22,923
21,551
20
11
4.2 Income/(Loss) for the year
21
51
3,994
3,340
(5)
(5)
=
=
=
=
=
=
167
146
26,917
24,891
15
6
5.1 Long-term reserves
=
=
4,471
4,528
=
=
5.2 Other long-term payables
=
=
=
=
=
=
5.3 Deferred tax liabilities
=
=
652
615
=
=
5.4 Long-term financial payables
=
=
=
=
=
=
Total non-current liabilities
=
=
5,123
5,143
=
= 6
4.3 Non controlling interests Total shareholders' equity 5. Non-current liabilities
6. Current liabilities 6.1 Trade payables and other payables 6.2 Current financial payables Total current liabilities Total shareholders' equity and liabilities
Net financial debt
=
11
30,360
23,825
3
17
126
14,870
19,242
=
=
17
137
45,230
43,067
3
6
184
283
77,270
73,101
18
12
64
(48)
(4,121)
(11,140)
14
9
(*) Financial statements prepared according to Italian accounting principles.
176
Summary of the Financial Statements of subsidiaries
Income statements
[Reclassified financial statements of subsidiaries] Biella Manifatture Tessili S.r.l.(*)
Marzotto Textiles Usa (thousands Usd) 2013 7.
Net revenues 8.
9.
Cost of sales
Gross income
(thousands Euro)
2012
448
Le Cotonerie S.r.l.
2013
407
(*)
(thousands Euro)
2012
2013
89,514
90,839
2012 =
=
=
=
(69,557)
(70,512)
=
=
448
407
19,957
20,327
=
=
10. Product development and marketing costs
(311)
(270)
(10,702)
(10,407)
=
=
11. General and administrative costs
(118)
(109)
(2,760)
(3,588)
(5)
(6)
12. Other income and charges 13. Operating income 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. Net income (before non controlling interests) 20. Income attrib. to non controlling interests 21. Net income
5
31
201
24
59
6,696
(3)
(8)
(700)
=
=
=
(131)
=
1
(5)
(5)
(872)
=
=
=
=
=
6,201
=
=
188
21
51
6,184
5,306
(2,190)
(1,966)
=
=
3,994
3,340
(5)
(5)
=
=
21
51
(23)
=
=
(5)
(5)
=
=
=
=
=
=
21
51
3,994
3,340
(5)
(5)
(*) Financial statements prepared according to Italian accounting principles.
Summary of the Financial Statements of subsidiaries
177
Balance Sheets
[Reclassified financial statements of subsidiaries] Girmes International Sametex Spol s r.o.
G.m.b.h.
Finvel S.r.l.
(thousands Czk)
(thousands Euro)
(thousands Euro)
2013
2012
2013
2012
2013
2012
1. Non-current assets 1.1 Property, plant and equipment 1.2 Civil real estate 1.3 Goodwill, trademarks and other intangible assets
244,838
203,875
8
11
=
29
=
=
=
=
=
=
332
19
2
3
=
=
1.4 Investments valued at equity
=
=
=
=
=
=
1.5 Other investments
=
=
=
=
=
=
1.6 Long-term receivables
=
=
=
=
=
=
1.7 Deferred tax assets
=
=
=
=
=
=
1.8 Long-term financial receivables
=
=
=
=
=
=
245,170
203,894
9
14
=
29
=
=
=
=
=
=
3.1 Inventories
76,246
29,896
=
846
=
219
3.2 Trade receivables
56,796
14,957
516
221
=
212
3.3 Other receivables
4,008
5,333
30
114
=
120
13,070
4,843
42
132
=
61
150,120
55,030
588
1,313
=
612
395,290
258,924
597
1,326
=
641
4.1 Share capital and reserves
177,999
(12,714)
(668)
151
=
81
4.2 Income/(Loss) for the year
(44,525)
(31,348)
(148)
(819)
=
=
Total non-current assets 2. Non-current assets held for sale 3. Current assets
3.4 Current financial assets, cash and cash equivalent Total current assets Total assets 4. Net shareholders' equity
4.3 Non controlling interests
=
=
=
=
=
=
133,474
(44,062)
(816)
(668)
=
81
5.1 Long-term reserves
=
=
80
=
=
=
5.2 Other long-term payables
=
=
=
=
=
=
Total shareholders' equity 5. Non-current liabilities
5.3 Deferred tax liabilities
=
=
=
=
=
=
5.4 Long-term financial payables
90,417
=
=
=
=
220
Total non-current liabilities
90,417
=
80
=
=
220
6.1 Trade payables and other payables
74,134
210,021
633
1,294
=
340
6.2 Current financial payables
97,265
92,965
700
700
=
=
171,399
302,986
1,333
1,994
=
340
395,290
258,924
597
1,326
=
641
(174,612)
(88,122)
(658)
=
(159)
6. Current liabilities
Total current liabilities Total shareholders' equity and liabilities
Net financial debt
178
Summary of the Financial Statements of subsidiaries
(568)
Income statements
[Reclassified financial statements of subsidiaries] Girmes International Sametex Spol s r.o.
G.m.b.h.
Finvel S.r.l.
(thousands Czk)
(thousands Euro)
(thousands Euro)
2013 7. 9.
2012
Net revenues
191,831
8.
Cost of sales
Gross income 10. Product development and marketing costs 11. General and administrative costs 12. Other income and charges
13. Operating income 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. Net income (before non controlling interests) 20. Income attrib. to non controlling interests 21. Net income
Summary of the Financial Statements of subsidiaries
2013
2012
2013
51,879
2,785
2,847
(205,896)
(68,222)
(2,019)
(2,208)
(14,065)
(16,343)
2012 =
=
=
=
765
639
=
= =
(3,551)
(1,359)
(717)
(472)
=
(21,982)
(8,493)
(444)
(291)
=
=
(292)
(4,267)
258
(676)
=
=
(39,890)
(30,462)
(138)
(800)
=
=
(4,635)
(886)
(11)
(19)
=
=
=
=
= =
= =
= =
=
=
=
(44,525)
(31,348)
(148)
(819)
=
=
=
=
=
=
=
=
=
(44,525)
(31,348)
(148)
(819)
=
=
=
=
=
=
=
=
(44,525)
(31,348)
(148)
(819)
=
=
179
Balance Sheets
[Reclassified financial statements of subsidiaries] Marzotto Textile Czech Rep. (thousands Czk) 2013
2012
2013
2012
2013
2012
1. Non-current assets 1.1 Property, plant and equipment
=
=
=
=
=
=
1.2 Civil real estate
=
=
=
=
=
=
1.3 Goodwill, trademarks and other intangible assets
=
=
=
=
=
=
1.4 Investments valued at equity
=
=
=
=
=
=
1.5 Other investments
=
=
=
=
=
=
1.6 Long-term receivables
=
=
=
=
=
=
1.7 Deferred tax assets
=
=
=
=
=
=
1.8 Long-term financial receivables
=
=
=
=
=
=
Total non-current assets
=
=
=
=
=
=
=
=
=
=
=
= =
2. Non-current assets held for sale 3. Current assets 3.1 Inventories
=
=
=
=
=
3.2 Trade receivables
1,023
=
=
=
=
=
3.3 Other receivables
53
=
=
=
=
=
3.4 Current financial assets, cash and cash equivalent Total current assets Total assets
633
=
=
=
=
=
1,709
=
=
=
=
=
1,709
=
=
=
=
=
4. Net shareholders' equity 4.1 Share capital and reserves
107
=
=
=
=
=
4.2 Income/(Loss) for the year
270
=
=
=
=
=
4.3 Non controlling interests
=
=
=
=
=
=
377
=
=
=
=
=
5.1 Long-term reserves
=
=
=
=
=
=
5.2 Other long-term payables
=
=
=
=
=
=
Total shareholders' equity 5. Non-current liabilities
5.3 Deferred tax liabilities
=
=
=
=
=
=
5.4 Long-term financial payables
=
=
=
=
=
=
Total non-current liabilities
=
=
=
=
=
=
6. Current liabilities 6.1 Trade payables and other payables 6.2 Current financial payables Total current liabilities Total shareholders' equity and liabilities
Net financial debt
180
Summary of the Financial Statements of subsidiaries
1,332
=
=
=
=
=
=
=
=
=
=
=
1,332
=
=
=
=
=
1,709
=
=
=
=
=
633
=
=
=
=
=
Income statements
[Reclassified financial statements of subsidiaries] Marzotto Textile Czech Rep. (thousands Czk) 2013
7. 9.
2012
Net revenues
5,812
8.
(5,334)
Cost of sales
Gross income 10. Product development and marketing costs 11. General and administrative costs 12. Other income and charges
13. Operating income 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. Net income
(before non controlling interests)
20. Income attrib. to non controlling interests 21. Net income
Summary of the Financial Statements of subsidiaries
478 = (201)
2013 =
2012 =
2013 =
2012 =
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
277
=
=
=
=
=
(7)
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
=
270
=
=
=
=
=
=
=
=
=
=
=
270
=
=
=
=
=
=
=
=
=
=
=
270
=
=
=
=
=
181
[Summary of the main resolutions of the Shareholders’ Meeting] The Shareholder’s Meeting, on 29 april 2014 has adopted the following resolutions: - to approve Marzotto S.p.A. Financial Statements and Report of operation dated 31 December 2013, and also the Financial Statements and the Report of Operation of Marzotto group; - to partially cover the loss for the year in the amount of euro 47,574,100.99 as follows: Euro 6,357,076.33 by using the Revaluation reserve pursuant to Law 342/2000; Euro 88,366.07 by using the reserve pursuant to Art. 55 of Italian Presidential Decree no. 917/1986; Euro 563,336.63 by using the reserve pursuant to Art. 14 of Law no. 342/2000 included in Sundry Reserves; Euro 22,222,936.96 by using profits carried forward from previous years, of which Euro 2,732,345.98 with the tax suspension restriction pursuant to Law 266/2005; to carrying forward the remaining Euro 18,342,385.00; after these uses, said reserves will total zero and the previous years’ losses, net of profits carried forward, will come to Euro 25,014,962.55; - to appoint as independent auditors for the three-year period 2014-2015-2016 the company Reconta Ernst & Young S.p.A. Valdagno, 29 april 2014
183
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
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