ANNUAL REPORT 202
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SAFILO GROUP S.p.A.
Consolidated Financial Statements Safilo Group S.p.A.
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Consolidated Financial Statements Safilo Group S.p.A.
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Contents
SAFILO GROUP
Group profile
4
History of the Group
5
Group structure
7
Critical factors for the Group's success
8
Primary Group processes and activities
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SAFILO GROUP S.P.A. - CONSOLIDATED FINANCIAL STATEMENTS AS OF 31 DECEMBER 2023
Board of Directors, Committees and Auditors
24
Chief Executive Officer’s letter
26
Summary of key consolidated performance indicators
28
Report on operations
Group economic performance
31
Condensed balance sheet
37
Financial situation
40
Main critical risk factors for the Group
42
Human resources and environment
49
Safilo on the stock exchange and investor relations
53
Corporate Governance
56
Other information
70
Reconciliation of the parent company's net profit and
71
shareholders' equity with the consolidated balances
Significant events after year-end
72
Financial statements and Notes to the consolidated financial statements
Consolidated balance sheet
74
Consolidated income statement
76
Consolidated statement of comprehensive income
77
Consolidated statement of cash flows
78
Consolidated statement of changes in equity
79
General information
80
Summary of accounting principles adopted
80
Risk management
101
Notes to the consolidated balance sheet
110
Notes to the consolidated income statement
135
Transactions with related parties
142
Contingent liabilities
144
Commitments
145
Subsequent events
145
Significant non-recurring events and transactions
145
Transactions resulting from unusual and/or abnormal operations
145
Appendix
Information requested by art. 149-duodecis of the Regulation
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on Issuers by Consob
Attestation of the consolidated financial statements pursuant to art. 154-bis of
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Report of Independent Auditors
148
SAFILO GROUP S.p.A. – DRAFT STATUTORY FINANCIAL STATEMENTS AT 31 DECEMBER
2023
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Consolidated Financial Statements Safilo Group S.p.A.
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GROUP PROFILE
Established in 1934 in Italy’s Veneto region, Safilo Group is one of the eyewear
industry’s key players in the design, manufacturing and distribution of optical
frames, sunglasses, sports eyewear, goggles and helmets. The Group designs
and manufactures its collections by blending stylistic, technical and industrial
innovation with quality and skilful craftsmanship. Research and development
and design have always been the Group’s cornerstones: thanks to its constant
experimentation with new materials and shapes, and to its specific skills and
savoir-faire, Safilo sets the latest eyewear fashion trends worldwide and plays a
key role in the global eyewear industry.
Safilo manages a portfolio of proprietary and licensed brands, which are selected
based on their competitive positioning and international prestige by way of a
consumer segmentation strategy.
Distribution takes place through sales to multiple channels, including opticians,
retail chains, specialist shops and a fast growing direct to consumer (D2C)
platform.
With an extensive global presence, Safilo’s business model enables it to monitor
its entire production and distribution chain, from research and development in
five prestigious design studios, located in Padua, Milan, New York, Hong Kong
and Portland, to its company-owned production facilities
qualified manufacturing partners, to planning, programming and purchasing,
quality control, marketing and communications,
product offers the perfect fit and meets the highest quality standards.
Safilo has core strengths in product development and design, this activity is
conducted by a significant organization of designers able to ensure the continual
stylistic and technical innovation which has always been a distinguishing feature
of the Group.
The key factors of success which provide Safilo with a distinctive identity in the
world’s eyewear industry are represented by its diverse brand portfolio with
innovation and quality of its products, its coverage of the marketplace by way
of a worldwide sales, distribution and customer service network, and the diverse
nature of its offer in terms of clientele and target markets.
Consolidated Financial Statements Safilo Group S.p.A.
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HISTORY OF THE GROUP
Safilo was founded in
1934
The first commercial
subsidiaries were
opened in Europe and
the USA in the 1980s
The first commercial
subsidiary was opened
in the Far East in the
1990s
Delisting and leveraged
buy-out (2001 -2002)
Safilo was founded in 1934 when Guglielmo Tabacchi assumed control over the
company “Società Azionaria
produced lenses and frames. This company had been founded in 1878 in
northeast Italy with its production unit in Calalzo di Cadore (Belluno), the region
that houses the eyewear district. In 1964 the second production unit in Santa
cellulose frames was transferred there. In the Seventies the production unit in
Calalzo di Cadore was extended and the offices in Padua were opened, the latter
currently serve as the secondary office and main distribution centre for the
Group.
In the 1980s, the first commercial subsidiaries were opened in Belgium, Spain,
Germany and France. From 1983 to 1986, a controlling interest was acquired in
Starline Optical Corp. (now Safilo USA Inc.), a leading U.S. commercial firm
active in the eyewear industry that had been a
products in the United States since 1962.
The industrial development plan was implemented in 1989 when the production
facility in Longarone (Belluno) was built. In 2001, the automated distribution
centre was inaugurated in the Padua headquarters.
Over the last 20 years the Group has pursued a strategy to strengthen and
expand the distribution network by opening subsidiaries in the most promising
geographic regions. In order to implement this strategy, relationships with the
Group’s clients have been constantly strengthened.
In 1994, Safilo Far East, the distribution branch in Hong Kong was established,
thereby opening the gateway to the Asian and Australian markets. At the end
of the Nineties, the Group’s presence in Europe was further strengthened by
Switzerland, and in the rest of the world in Australia, South Africa, Japan, Brazil,
India, Singapore, Hong Kong and Malaysia. In 2004, a branch was opened in
Shenzhen - China, one of the markets with great growth potential.
manufacturer of sports eyewear. The acqu
American company Smith Sport Optics Inc. added a range of sports goggles to
the Group collections.
In July 2001, Vittorio Tabacchi acquired a majority stake in the Company and
launched a public takeover bid through a special-purpose vehicle. After the
leveraged buy out.
Consolidated Financial Statements Safilo Group S.p.A.
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In 2005 Safilo Group
was back on the Stock
Exchange
In 2010 the entry of
new reference
shareholder, HAL
Holding N.V.
The acquisition of the
Polaroid Eyewear
business
The acquisition of the
Privè Revaux business
and of the digital e-
commerce Blenders
Eyewear business
On 14 September 2005, further to a resolution by an extraordinary shareholders’
meeting, the parent company changed its name from Safilo Holding S.p.A. to
Safilo Group S.p.A.
On 9 December 2005, the shares of Safilo Group S.p.A. were listed on the Milan
Stock Exchange.
In March 2010, a capital increase of the parent company was concluded, and
led to the entry of HAL Holding N.V., an international investment company, as
the new reference shareholder.
HAL is a strong partner for the Group, and has had a presence in the eyewear
retail sales sector since 1996.
On 3 April 2012, the Group completed the acquisition of the Polaroid Eyewear
business, a world leader in optics and polarized lens technology and a global
eyewear manufacturer and distributor, with a strong and recognizable market
positioning.
On 10 February 2020, the Group completed the acquisition of the 61,34% stake
in the Miami based Company Privé Goods LLC. Privé Revaux was built on a
shared passion for style and quality with the goal of disrupting the eyewear
industry and making premium, quality eyewear products accessible to everyone.
On 1 June 2020, the Group completed the acquisition of the 70% stake in the
California company Blenders Eyewear LLC. Blenders Eyewear has an advanced
e-commerce platform with unique direct-to-consumer skills, that will foster and
accelerate the Group’s e-commerce and omni-channel strategy.
Consolidated Financial Statements Safilo Group S.p.A.
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GROUP STRUCTURE
Consolidated Financial Statements Safilo Group S.p.A.
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CRITICAL FACTORS FOR THE GROUP’S SUCCESS
Safilo Group’s
business model is
based on product
quality, a portfolio of
prestigious brands,
production flexibility,
international
distribution
capabilities, and
product diversity
The Group owes its success to a number of areas of strength, which, taken
together, distinguish it within the worldwide eyewear industry:
- design excellence, innovation and product quality: the Group’s products are
highly appreciated by eyewear resellers and by the consumer due to their
superior quality and their innovation in both materials and design. The Group
sees quality to be key to success in the market and in effectively managing
its brand portfolio;
- a prestigious brand portfolio across market segments: the Group manages a
portfolio of brand names focusing on long-term brand partnerships;
- production flexibility: for a number of years, the Group has been engaged in
rationalising its organisation and production processes in order to increase
efficiency and productivity and to reduce total production times. The use of
outsourcing also provides the necessary flexibility in production in order to
manage peaks and troughs in demand;
- global distribution platform and territorial coverage: the Group’s logistics
platform represents a key competitive advantage in supporting the business
model thanks, above all, to the high level of coverage of all of the world’s
main markets. This plays a significant role both in supporting development
strategies worldwide for fashion’s leading labels and in enhancing the brand
portfolio in local markets. With an extensive wholly owned netwo
rk of
subsidiaries in 40 countries and more than 50 distribution partners in 70
countries, Safilo’s- well-established traditional wholesale distribution model is
able to reach approximately 100,000 selected points of sale all over the
world. The Group ensures its market presence through a mixed distribution
model comprising direct management and indirect management, through
exclusive agreements with independent distributors;
- excellence in customer service: the Group features: (i) a large, expert sales
force able to cover the entire market; (ii) a team of key account managers
dedicated to assisting the main distribution chains; and (iii) modern, multi-
language call centres to manage orders and customer service, using
specialised software, which enables creating precise customer profiles to
personalise the services even further;
- diversification in revenues: diversification in the portfolio of proprietary and
licensed brands and in the target markets and consumer segments concerned
enables the Group both to mitigate the risks related to potential slowdowns
in the performance of specific markets and the general risk of changes in
customer buying habits, as well as to take advantage of opportunities in
emerging markets and customer segments.
Consolidated Financial Statements Safilo Group S.p.A.
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PRIMARY GROUP PROCESSES AND ACTIVITIES
Manufacturing and
distribution chain
On the basis of the success factors described above and in an attempt to
effectively manage risk, Safilo Group directly controls the entire production-
distribution chain; which is divided into the following phases and processes:
R&D is based on
product design and
the development of
new materials and
production processes
Manufacturing is
planned on the basis
of information that is
gathered internally
and externally.
Internal production is
carried out in its
factories in Italy,
China and the USA
Research, development and design
Research and development mainly focuses on two types of activities:
- Product Creation and Design;
- Research and Development of new materials, technologies, production
processes and tools/machinery.
A new Product Creation Department was created in late 2014 with the purpose of
bridging the gap between Designers and Product Supply. Its mission is to drive
the development of the most unique and desirable eyewear
collections by
combining product development, innovation and the coordination of the
multifunctional process from design to manufacturing.
Research and development of materials, production processes, technologies and
instruments/machinery
Research and development of materials, product and processes aims, on one
hand, to improve the technical characteristics of the products and, on the other,
to develop innovations of the production process which increase its effectiveness,
efficiency, quality and speed to market.
Planning, programming and purchases
The Planning Office uses the information that has been collected internally and
externally to define the production needs on a weekly basis.
Demand Planning aims at forecasting future turnover in units by product. In order
to ensure all business plans are aligned to the same targets, Demand Planning
also manages the Group’s Sales & Operations Planning process, in which all key
planning risks and opportunities are proactively highlighted and addressed.
The Global Sourcing Department is mainly responsible for buying raw materials,
components and equipment to feed internal production needs. The Sourcing
organization purchases also finished goods (frames and sunglasses).
In order to ensure the quality of raw materials, semi-finished and finished goods,
the Group carefully selects suppliers and evaluates them on an ongoing basis
Consolidated Financial Statements Safilo Group S.p.A.
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Quality in terms of
product safety and
compliance with the
strictest international
regulations and
customer
expectations: the
necessary conditions
to compete
based on their delivery times and their ability to ensure certain quality standards,
as well as on their available production capacity and cost competitiveness.
The provisioning is done both in Europe and in other markets. Since the acquisition
of a majority stake in Lenti S.r.l. in 1996, Safilo has the know-how to produce
lenses for high-end sunglasses in-house.
Manufacturing and quality control
Safilo products are produced both within the facilities of the Group and by third
parties. Safilo directly produces sunglasses, prescription frames and ski goggles in
its facilities in Italy, China and the U.S..
Quality
Quality for Safilo Group has always taken an approach which goes beyond the
very “tangible” aspect and beyond the objective compliance of the product,
through the increasingly intensive interpretation of the “perceived” aspect as a
key element for the customer’s absolute satisfaction.
Creating, designing, engineering, manufacturing and distributing products of high
quality, both objective and perceived, complying with the most demanding
international regulation and standards have always had a key place within the
strategy and the objectives of the Group.
Quality management has evolved from a strong, practical and effective attention
to the single product to an increasingly holistic philosophy, integrating the quality
discipline into the culture and activities of the whole organization. The
fundamental step change goes from defect detection to defect prevention.
The respect of any international regulation is considered a “given”. Safilo Group
leverages quality as a competitive lever by constantly challenging the “status quo”
in terms of performance, durability, reliability and perceived quality. This is true
both for products manufactured in-house and those created at suppliers, whether
they supply components, semi-finished goods or finished products.
Safilo’s Quality System is ISO 9001:2015 certified, the last certification renewal
was issued in December 2021 and is valid until December 2024.
Marketing actions are
defined at global
level on the basis of
medium-long term
plans
Marketing and Communication
Marketing and Communication campaigns to support Safilo’s brand portfolio are
one of the key factors to the Group’s success.
The main objectives of the Group marketing strategies include:
- ensuring the right positioning of all brands in portfolio by deeply
understanding each brand’s unique DNA and bringing that to life through
communication campaigns with unexpected creativity and clear
Consolidated Financial Statements Safilo Group S.p.A.
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Marketing actions are
addressed to
consumers on one
hand and to sales
points of customers
and the Group on the
other (trade
marketing)
Corporate
communication
objectives of awareness, consideration and conversion to cover the
different consumer targets;
- ensuring the development of Safilo’s proprietary brands, through an
effective marketing-
mix and appropriate investments in product,
communication and trade marketing activities through its proprietary
direct-to-consumer e-commerce platforms;
- to communicate the distinctive brand equity of each brand in terms of
design and product technology in the different categories (prescription
glasses, sunglasses, sports products).
The Group develops specific marketing plans for each brand in its portfolio,
adopting different strategies and actions in order to ensure the best positioning
for each one. For licensed brands, the Group works in close synergy with its
licensors.
Marketing and communications activities mainly consist of direct consumer
campaigns and trade marketing activities focused on campaigns done in
partnership with optician customers.
Consumer-oriented activities account for the major part of the Group’s marketing
and advertising investment, and the main outlets are digital and social media, out
of home, influencer marketing, sponsorships, and public relations with journalists
and opinion leaders in the fashion, entertainment and sports industries. Digital
marketing has become an increasingly important communication tool and will
continue to be so thanks to its enhanced targeting capabilities
, also in
consideration of the changing media consumption habits of our consumers.
Trade marketing actions focus on the main chains’ and customers’ points of sale
and are of fundamental importance to guide the final customer’s choice and to
build up customer loyalty. To this purpose, Safilo recently launched its new B2B
platform “You & Safilo” dedicated to opticians. Furthermore, Safilo developed
specific trade and communication initiatives to support online customers and
internet pure players.
The main objective of Safilo’s corporate communication is to develop
communication plans to build and strengthen the Group’s identity and reputation
for increased visibility among Safilo’s internal and external stakeholders.
Safilo’s corporate communication is rooted in the Group’s values and is mainly
performed through the Group’s website safilogro
up.com, its social media
platforms, internal communication, as well as media relation plans for effective
press coverage both on and offline.
The Group operates in
40 countries through its
own extensive
subsidiary network
Sales and Distribution
Safilo Group sells its products with an extensive subsidiary network in around 40
countries in North and Latin America, Europe, Middle East and Africa, Asia Pacific
and China and a network of more than 50 independent distribution partners
Consolidated Financial Statements Safilo Group S.p.A.
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covering the other countries. Safilo reaches nearly 100,000 points of sale all over
the world including opticians, optometrists, ophthalmologists, distribution chains,
department stores, specialised retailers, licensors’ own stores, duty free shops
and sports shops.
Over recent years the Group has opened showrooms in prestigious locations in
Milan, New York, London, Paris, Barcelona, Madrid, New Delhi, Miami, Sao Paolo,
Dubai and Mexico City to present products to its retail partners.
The distribution
network
EUROPE
ASIA - PACIFIC
NORTH AMERICA
REST OF WORLD
Safilo’s distribution network is present in North America, Europe, Asia-Pacific,
and Rest of World.
Below is a brief description of the regional divisions:
Europe.
The main centre is in Padua in Italy. The Group’s European clientele
is very varied: in Italy, the majority of customers are independent opticians, in
the UK they are mainly chain stores, while in Germany the main customers are
buying groups and distribution chains. The Group directly distributes its products
to 26 European countries. In those countries where the Group has no sales
branches, long-standing relationships have been est
ablished with local
distributors.
Asia - Pacific
. The Group covers the wholesale distribution of sunglasses and
prescription frames through a direct presence with sales branches in the main
markets (China,
Hong Kong, Japan, South Korea, Singapore, Malaysia, and
Australia) and in partnership with local distributors in all the other markets
(Thailandia, Indonesia, Philippines, Taiwan, Vietnam, Cambodia, New Zealand,
Mongolia, Nepal and Myanmar).
North America.
The Group covers the USA and Canada, headquartered in
New Jersey, USA. Marketing and distribution in the USA is implemented through
the following four main distribution channels:
(i)
opticians, ophthalmologists and
optometrists;
(ii)
department stores and chains;
(iii)
sports stores and (
iv
) a fast
growing D2C platform for some specific brands.
Rest of the World.
The commercial structure comprises mainly the Group’s
business in Latin America and India, Middle East & Africa with affiliates in India,
Brazil, South Africa, Dubai and Mexico and a distributor presence in the remaining
markets.
Consolidated Financial Statements Safilo Group S.p.A.
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The Group’s own and licensed brands
The proprietary
portfolio includes both
Safilo and licensed
brands
New Licensing
agreements and early
renewals for the Group
The Group’s brand portfolio encompasses a well balanced set of Own Core
Brands, with collections of optical frames, sunglasses, sports goggles and
helmets, as well as licensed brands for prescription frames and sunglasses.
With more than 30 brands, Safilo’s portfolio covers all consumer segments: from
Fashion Luxury –with Boss, Carolina Herrera, Isabel Marant, Missoni, PORTS,
Moschino and Etro – to Lifestyle – with Carrera, Dsquared2, Eyewear by David
Beckham, Marc Jacobs, Levi’s, Tommy Hilfiger, Tommy Jeans, Kate Spade New
York, Banana Republic, Fossil, HUGO,
Juicy Couture, Liz Claiborne, Love
Moschino, M Missoni, Pierre Cardin, rag&bone and Stuart Weitzman – and Sports
& Outdoor – with Smith and Under Armour – to the fast-growing Mass Cool
segment – with Blenders, havaianas, Polaroid, Privé Revaux and Seventh Street.
In 2023 the Group added new strategic licensing agreements and confirmed key
partnerships with brands already in portfolio. During 2023, Safilo announced the
following new license agreements and anticipated renewals.
In term of new licenses the Group signed the following two agreements:
- in June a global and exclusive licensing agreement for the design,
manufacturing, and distribution of Etro Italian luxury brand with a
historical heritage of excellence and quality. The first collection, both
sunglasses and optical, will be presented for the Spring-Summer 2024
season;
- in September a new agreement for the design, manufacturing and
distribution of Stuart Weitzman branded sunglasses and optical eyewear
collections. The first eyewear collection, which includes both sunglasses
and optical, will be presented in North America for the Fall/Winter 2024
season.
In term of anticipated renewals the Group signed the following five agreements:
- In June there were two early renewals one related to Kate Spade New
York eyewear licensing agreement for the exclusive design,
manufacturing and distribution of optical frames, readers and
sunglasses for women as well as optical frames for girls and the second
one related to the global licensing agreement with Tommy Hilfiger for
the design, manufacturing and distribution of sunglasses and optical
eyewear collections;
- in July there were two other early renewals one related to the global
eyewear licensing agreement that include design, manufacturing and
distribution of Fossil optical frames and sunglasses for men and women
and the second one related to the licensing agreement for the design,
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manufacturing and distribution of havaianas branded optical frames and
sunglasses;
- in September there was the renewal of a global licensing agreement for
the design, manufacturing and distribution of Juicy Couture branded
optical frames and sunglasses for women and optical frames for girls
and teens.
Today, the Group’s brand portfolio counts more than 30 brands
(own and
licensed brands).
Own Core Brands
Safilo’s Own Core Brands are of high strategic importance for the Group’s future
development and objectives
, each playing a key role in the respective market
segment.
Synonymous with pioneering design and outstanding quality Carrera is a
statement brand since 1956 for people who live by their own rules, continuously
defying themselves and proudly approaching life standing out from the crowd.
Carrera Collection is composed by three main product families: CARRERA FLAG,
the boldest expression of Carrera inspired by the archives with an eye on fashion
and always one step ahead,
CARRERA SIGNATURE, the brand’s evolution
combining classic shapes with a dash of urban lifestyle and CARRERA ACTIVE, a
line that reinterprets the brand’s roots in sports with a streetstyle attitude.
Polaroid Eyewear
is a worldwide leader in eyecare and optics and a pioneering
international eyewear brand that owes its name to the invention that changed
the world of technology and optics: polarized lenses. Polaroid, since it was
established by Edwin Land in 1937, has strengthened its reputation as a leading
brand in polarized lenses. Today, Polaroid produces and distributes its polarized
sunglasses, optical frames, clip-ons and suncovers
TM
worldwide through its
owner subsidiaries and its network of exclusive distributors.
Seventh Street
is an optical specialist brand. Its collection offers a wide range of
easy-to-wear, well designed frames with high value for money and optimal
comfort and fit, guaranteed by Safilo’s quality and know-how. Its offer is varied
and complete in terms of materials, shapes, constructions, colors and sizes and
is designed for men, women and teenagers looking for a functional and
qualitative but also good-looking frame.
Originating from Sun Valley, Idaho, Smith was founded in 1965 with the invention
of the first snow goggle featuring a sealed thermal lens and breathable vent
foam. With more than 50 years of innovation and design experience, Smith is
widely known today as an industry leader that pioneers advanced eyewear and
helmets that incorporate dynamic technologies, optimized performance and
clean styling to fuel fun beyond walls. Smith seeks to power thrilling experiences
in snow, surf, bike, fish and
peak performance outdoor adventures with a
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comprehensive collection that exudes modern style and vibrant personality. To
Smith, the experience is everything.
Blenders Eyewear
was founded in 2012 by Chase Fisher in San Diego. Blenders
produces a wide range of men's and women's sunglasses, blue light glasses and
snow goggles. Driven by a company-wide motto of "life in forward motion," its
products are predicated upon a bold aesthetic that emphasizes progressive
colorways aimed at an active lifestyle demographic. Now a talented team of
spunky and spirited designers, photographers, and communicators, Blenders is
one of America's fastest-growing eyewear brands.
Privé Revaux Eyewear
was built on a shared passion for style and quality with
the goal of making it accessible in ways never seen until now. Serial entrepreneur
David Schottenstein took aim at disrupting the eyewear market, and he enlisted
an elite team around him to ensure the brand’s success. With the help of celebrity
visionaries Jamie Foxx, Hailee Steinfeld, Ashley Benson and Jeremy Piven, as
well as VP of Celebrity Relations Dave Osokow and Creative Directors Rob
Zangardi and Mariel Haenn, they’ve done just that. Privé Revaux is the only
company to deliver the unique combination of celebrity-
inspired style and
durability at an unprecedented price point, giving people freedom of expression
through hundreds of design options. They’re a one-stop-shop for all eyewear
needs, from sunglasses to corrective lenses to accessories.
Safilo’s own core
brand portfolio also includes other minor brands, mainly
intended for the North American market, such as Adensco, Chesterfield, Elasta
and Emozioni.
Consolidated Financial Statements Safilo Group S.p.A.
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Licensed brands
A very prestigious
brand portfolio
Each of the licensed brands is designed and positioned with a specific market
segment and target consumer in mind. Safilo Group's portfolio of licensed brands
is one of the most broad and diversified in the eyewear market. Numerous
fashion houses rely on the Group, many of them for world-renowned global
brands,others operating in certain countries only. The Group’s licences are ruled
by exclusive contracts that provide for royalties and marketing contributions to
the
licensors, calculated as a percentage of net sales generated from the
collections and with minimum annual guaranteed amounts. In many cases, such
guaranteed amounts are based on a percentage of the turnover achieved by the
licensed brand in the previous year.
Below is a summary and a brief description of Safilo’s licensed brands:
Banana Republic.
Modern, covetable style for professional men and women.
Dedicated to helping customers achieve professionally and personally, Banana
Republic offers versatile work wear that can be styled for any occasion – from
desk to dinner. Collections include clothing, accessories and eyewear designs
at accessible prices. Banana Republic inspires living everyday life with style.
The eyewear collection offers optical frames and sunglasses for women and
men, a modern and fresh style with a noticeable quality and characteristic
details. Eyewear designs are trend right and effortlessly stylish at an accessible
price point.
BOSS.
BOSS is for those who lead a self-determined life with style, passion,
and purpose. The collections offer dynamic, modern designs to form a
complete wardrobe for the inspirational BOSS of today.
Carolina Herrera.
Carolina Herrera is well known in the world of fashion for
luxury and sophistication founded on elegance and modernity. Since starting
**
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in New York in 1981, thanks to a global approach, Herrera has generated an
international following and experienced many memorable moments in the
world of fashion, dressing incredible women worldwide: royalty, first ladies,
global celebrities, award-winning actresses. For over 40 years, continually
exceeding the limits of style with her mixture of modern and classic, she has
demonstrated that sensuality and femininity are the perfect combination, along
with a contemporary touch.
David Beckham.
David Beckham, global icon recognized for his style, curates
Eyewear by David Beckham, a collection of timeless frames made from the
very finest materials, combining an effortless, British style and attitude with a
vintage spirit. His exacting taste and eye for detail have brought together an
exceptional contemporary aesthetic with traditional craftsmanship. The b
rand
reflects David’s vision, with a constant dedication to design and utmost quality.
"My own style journey has taught me the power of simplicity and the
importance of detail and craftsmanship." – David Beckham
DSQUARED2
. Individual, daring and creative, Dsquared2’s approach to fashion
is a distinct mix of heritage Canadian iconography, modern Italian tailoring and
playful sensuality. Founded by brothers Dean and Dan Caten in 1995, the
brand’s collections are a seamless melding of contrasts: sporty and glamorous,
laidback and extravagant, and masculine and feminine. The Dsquared2 ready
to wear collections are produced in Italy, giving rise to the brand’s motto of
“Born in Canada, Made in Italy”.
Etro.
Founded in 1968 in Milan by Gerolamo Etro, today Etro is a lifestyle luxury
brand whose heritage of excellence and quality is reflected in a complete and
transversal range of Ready-to-Wear men and women, Accessories, Home,
Fragrance and Etro Kids, announced in May 2023. Etro is a luxury brand that
owns a rich history in reinterpreting beauty standards and it is recognized for
its iconic patterns.
Fossil.
Fossil takes inspiration from the typical mid-1920’s design, combining it
with the desires of the modern customer. This “modern vintage” philosophy
hints at classical, but at the same time contemporary, aesthetics. The collection
targets customers who are searching for trendy glasses with neat and colored
shapes. Sunglasses are young, sporty and easy to wear, with polarized lenses
and flexible hinges. On the other hand, prescription frames offer a wide range
of styles, both for men and women, in materials such as metal and acetate.
havaianas.
Havaianas has been spreading the Brazilian spirit all around the
world since 1962, with its iconic rubber sole and infamous bright and joyful,
summer-infused designs. The brand is now sold in over 100 countries
worldwide with over 400 new models and designs each year, and continues to
be made in its birthplace Brazil. Today, the ‘original’ flip-flop brand is known
globally for comfort, Brazilian summer, freedom and its exciting partnerships.
Consolidated Financial Statements Safilo Group S.p.A.
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18
HUGO
. The HUGO collection is created for the rule-breakers who go their own
way, offering contemporary pieces like denim, jersey, dresses, and outerwear,
with individuality and attitude.
Isabel Marant
. More than twenty-five years after the brand’s creation, its
fundamentals are still the same: Isabel Marant remains the most unruly of the
great French fashion houses. In the lockstep world of Parisian fashion, this
designer stands out a
s a veritable troublemaker. With a love for materials that
live and travel, she draws inspiration from across the world to irreverently
refresh urban clothing. While some dream of iconic women in glossy
magazines, Isabel dresses women for their real lives – walking down the street
or zipping off on a scooter. Not a single item leaves her workshop without first
being tried on. A happy mixture of unbridled creativity, selfless seduction and
a tireless pursuit of pleasure, Isabel Marant’s Maison is an ode to the sublime
chaos of life. Know-how driven, Isabel has always promoted handmade work.
Juicy Couture.
From the streets of New York, London and Seoul to the beaches
of Malibu, the Juicy girl celebrates life and lives every day with a touch of
irreverence. Her bold spirit, coveted style and vibrant attitude brings a shine
to the world. Embracing its Los Angeles heritage, Juicy discovers the couture
in the every day, and delivers an element of surprise in all its designs from the
iconic track athleisure apparel, fragrance, accessories, footwear and of course
on trend optical and sun eyewear for women, teens and girls.
kate Spade New York.
Founded in New York in 1993, Kate Spade is a brand
that is strongly rooted in optimistic femininity, joy, and style. Kate Spade
appeals to empowered women across generations and time zones who want
to live their lives to the fullest. The eyewear collection reflects these values
through the use of playful colors, prints, and patterns which are applied to
easily wearable modern shapes and beautiful styles. Signature branding is
thoughtfully integrated throughout all designs for a delightful surprise.
LEVI’S®
The Levi’s® brand epitomizes classic American style and effortless
cool. Since their invention by Levi Strauss & Co. in 1873, Levi’s jeans have
become one of the most recognizable garments of clothing in the world—
capturing the imagination and loyalty of people for generations. Today, the
Levi’s brand portfolio continues to evolve through a relentless pioneering and
innovative spirit that is unparalleled in the apparel industry. Their range of
leading jeanswear and accessories are available in more than 110 countries.
Designed with the fashion forward consumer in mind, Levi’s® eyewear is a
perfect lifestyle complement to apparel, allowing consumers to express their
authentic self.
Liz Claiborne.
Liz Claiborne was founded on a big aspiration to make fashion
accessible to all. The brand is the original style authority for strong, spirited
women at work and in life. The Liz Claiborne woman is modern, vivacious,
strong, graceful, and she truly aspires to be a better version of herself. She
loves clothes but doesn’t have the time or inclination to chase fashion. The
eyewear collection offers optical frames and sunglasses that are classic and
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
19
functional with feminine details, color and a signature sense of style. Affordable
quality, effortless style and versatility.
Marc Jacobs
. For over 30 years, Marc Jacobs has invigorated the fashion
world by challenging convention and creating things we love to wear. The
brand continues its legacy as rebellious, irreverent, and original while
maintaining a distinct authenticity that’s rooted in the philosophy of merging
the everyday and the extraordinary. Explore the world of Marc Jacobs today.
Missoni
. Tied to the aesthetic innovation and technical invention that have
always changed the identity of knitwear, Missoni is one of the best known,
loved and recognized fashion and design brands in the world. Missoni style is
the result of a partnership between two people. In 1953 Ottavio and Rosita
decided to set u
p a knitwear business and were soon at the cutting edge of
Italian fashion. Missoni inaugurated and affirmed an unmistakable way of
dressing and living: with a colourful “put-together” of zigzag motifs, stripes,
waves and slub yarns in a patchwork of geometric and floral jacquard. Under
the creative direction of Angela Missoni since 1997, Missoni is now one of the
best representatives of Italian fashion and design excellence around the world
and continues to influence the contemporary lifestyle with its pioneering multi-
coloured aesthetic vision.
M Missoni
. Margherita Maccapani Missoni, scion of the knitwear dynasty and
creative director of the M Missoni brand since 2018, looked deep into the family
company’s archives to deliver a distinctive, contemporary line up, refreshed
through its signature colourful graphic designs. The M Missoni mission is to
remix, re-use and respect, taking the codes of something special and iconic
and playing with it to create a new aesthetic. Margherita has taken the hidden
gems, the forgotten stories, the unsung lyrics, the scraps from the cutting room
floor and rewoven them into a new story. M Missoni presents an alternative
voice in the Missoni world. A voice for the free spirited, a voice for the
irreverent, a voice for the playful. It takes the Missoni codes and fabrics and
repurposes them. Scarves become dresses, home fabrics become coats,
vintage logos become new badges of honour.
Moschino and Love Moschino.
Italian luxury brand Moschino was
founded in 1983 by Franco Moschino and rose to the forefront of the
international fashion scene through his ironic, tongue-in-cheek designs.
In 2013, Jeremy Scott was appointed Creative Director and the brand hit
a new high with his unexpected original de
signs that paid homage to
Franco Moschino’s original concepts but were infused Scott’s unique
vision and sartorial wit. The sexy, surprising, and at times irreverent
style, typical of Jeremy Scott’ genius characterize all its high-quality and
premium garments and accessories.
Pierre Cardin.
“The clothing I prefer is the one I create for a life that does not
yet exist, the world of tomorrow.” Pierre Cardin has been not only a stylist, but
one of the greatest visionaries of the history: a designer, a man of art, a
diplomat, a businessman. Established in 1950, Pierre Cardin’s world is made
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
20
from multiple things, it is protean as well as avant-gardist. Fashion,
accessories, jewellery, fragrances, furniture, theatre costumes, tableware, and
even Maxim’s restaurants. Geometric shapes related to the blending of
traditional and new synthetic fabrics to create unique and inimitable lines,
recognized all around the world. Each of his collections is an evidence of a
fierce appetite for experimentation.
PORTS.
PORTS was founded in Toronto, Canada in 1961 by visionary
entrepreneur, Luke Tanabe. One of the first to adopt the revolutionary jet set
lifestyle, PORTS appealed to those who understood it was possible to travel,
dream and work all at once: breakfast in the Sahara then dinner in New York.
With this inner essence of “Global Soul, Urban Spirit,” PORTS soon became
synonymous with cutting-edge fashion, design excellence and a free nomadic
spirit. In 1993, PORTS and became the first high-end fashion brand to land in
China. With its international image, PORTS rapidly become the first choice for
many elite women in China. In 1999, PORTS also introduced the eyewear
category: the simple and elegant eyewear collections are widely renowned and
respected in the Chinese fashion glasses industry.
rag&bone
. Established in 2002, rag & bone was born out of a desire to create
masterfully constructed clothing. Rooted in British heritage and imbued with a
New York edge, the brand is known for innovative yet wearable clothing that
redefines effortless, urban style. Quality guaranteed rag & bone is dedicated
to craftsmanship, innovation, and timeless style. Each collection is designed in
New York and produced by some of the oldest and most supremely skilled
manufacturers around the world. Since the brand’s inception, the focus has
been, and always remains, on creating the highest quality goods. British,
Americana, Military, Sport. These are the four major codes of our brand. As
constants throughout all of our collections, rag & bone will contrast and explore
these motivations as we build a brand language recognized and respected by
our customers and the marketplace.
Stuart Weitzman
. Since 1986, Stuart Weitzman has been inspired by women
who are confident, sexy, bold — and, above all, strong. The New York City-
based global luxury footwear brand combines its artisanal Spanish
craftsmanship and its precisely engineered fit to create shoes that empower
every woman to stand strong. Stuart Weitzman is part of the Tapestry portfolio
— a global house of brands committed to stretching what’s possible. Stuart
Weitzman is known for creating stylish, comfortable, high-quality shoes that
inspire confidence and just like footwear, eyewear is an emotional, everyday
accessory. Its goal is to infuse our signature values into eyewear and create
accessories that help our consumers look and feel their best.
Tommy Hilfiger.
With a brand portfolio that includes TOMMY HILFIGER
and TOMMY JEANS, Tommy Hilfiger is one of the world’s most
recognized premium designer lifestyle groups. Its focus is designing and
marketing high-quality men’s tailored clothing and sportswear, women’s
collection apparel and sportswear, kidswear, denim collections,
underwear (including robes, sleepwear and loungewear), footwear and
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
21
accessories. Through select licensees, Tommy Hilfiger offers
complementary lifestyle products such as eyewear, watches, fragrance,
swimwear, socks, small leather goods, home goods and luggage. The
TOMMY JEANS product line consists of jeanswear and footwear for men
and women, accessories, and fragrance. Merchandise under the TOMMY
HILFIGER and TOMMY JEANS brands is available to consumers
worldwide through an extensive network of TOMMY HILFIGER and
TOMMY JEANS retail stores, leading specialty and department stores,
select online retailers, and at tommy.com.
Under Armour.
Under Armour, Inc., headquartered in Baltimore,
Maryland and founded in 1996, is a leading inventor, marketer and
distributor of branded athletic performance apparel, footwear and
accessories. Powered by one of the world's largest digitally connected
fitness and wellness communities, Und
er Armour's innovative products
and experiences are designed to help advance human performance,
making all athletes better. Under Armour’s vision is to inspire you with
performance solutions you never knew you needed and can’t imagine
living without. Under Armour is about energy and passion. An obsession
with being better, stronger, and more focused on your goals than anyone
else out there. It’s about an athlete’s relentless will to succeed. Under
Armour has a star-studded lineup of sponsored brand ambassadors
including Dwayne “The Rock” Johnson, Steph Curry, Tom Brady, Bryce
Harper and Jordan Spieth.
Consolidated Financial Statements Safilo Group S.p.A.
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22
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
23
REPORT ON OPERATIONS
AND
CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2023
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
24
BOARD OF DIRECTORS, COMMITTEES AND AUDITORS
Board of Directors
(1)
Chairman
Eugenio Razelli
Chief Executive Officer
Angelo Trocchia
Non-executive Director
Jeffrey A. Cole
Non-executive Director
Melchert Frans Groot
Non-executive Director
Robert Polet
Non-executive, Independent Director
Ines Mazzilli
Non-executive, Independent Director
Matthieu Brisset
Non-executive, Independent Director
Irene Boni
Non-executive Director
Katia Buja
Non-executive, Independent Director
Cinzia Morelli-Verhoog
Board of Statutory Auditors
(2)
Chairman
Maria Francesca Talamonti
Standing Statutory Auditor
Roberto Padova
Standing Statutory Auditor
Bettina Solimando
Alternate Statutory Auditor
Tina Marcella Amata
Alternate Statutory Auditor
Marco Michielon
Supervisory Committee
(3)
Chairman
Bettina Solimando
Ines Mazzilli
Giorgia Canova
Control and Risk Committee
(3)
Chairman
Ines Mazzilli
Melchert Frans Groot
Matthieu Brisset
Sustainability Committee
(3)
Chairman
Eugenio Razelli
Angelo Trocchia
Katia Buja
Vladimiro Baldin
Andrea Grassin
(5)
Marco Cella
Alberto Macciani
Remuneration and Nomination Committee
(3)
Chairman
Cinzia Morelli-Verhoog
Jeffrey A. Cole
Irene Boni
Transactions with Related Parties Committee
(3)
Chairman
Ines Mazzilli
Matthieu Brisset
Cinzia Morelli Verhoog
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
25
Independent Auditors
(4)
PricewaterhouseCoopers S.p.A.
(1) Appointed by the Shareholders' Meeting held on April 29, 2021.
(2) Appointed by the Shareholders' Meeting held on April 27, 2023.
(3) Appointed by the Board of Directors' Meeting held on April 29, 2021.
(4) Appointed by the Shareholders' Meeting held on April 27, 2023 for the financial years from 2023 to 2031.
(5) Appointed by the Board of Directors' Meeting held on December 13, 2023.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
26
CHIEF EXECUTIVE OFFICER’S LETTER
Dear Shareholders,
in a complex year like 2023, in which a tense and unstable geopolitical and macroeconomic environment
added to our direct challenges, it was particularly important for us to achieve a level of revenue very
close to the strong performance recorded in 2022, when growth, compared to pre-pandemic 2019, was
+12%.
North America, continued to be affected by the prudent attitude of the main eyewear distribution channels
and by an unfavourable sun season, while in Europe, the incredible job of our teams allowed us to
overcome the decline of the business in the former GrandVision chains further demonstrating the
resilience of our Group and the value of a strategy that sees our customers as the focus of the entire
company.
In 2023 we had to take another look at our industrial footprint in light of a brand portfolio that was no
longer aligned with the know-how present in the historic Longarone plant. The project was complex, but
we managed to reach the conditions for the best possible outcome, with the disposal of the plant and
the full employment of all the workers, also allowing for the preservation of the sector’s existing know-
how.
In the year we achieved a long series of early renewals which involved both the core brands, from Kate
Spade and Tommy Hilfiger, to the early renewal of BOSS and HUGO in January this year, and many other
important partnerships. We also signed two new agreements, with Etro and Stuart Weitzman, adding to
what is today a rich and complementary license portfolio, with unprecedented visibility, of around 6 years.
This was a very important achievement for us, which sits alongside the solid and long-lasting growth of
our home brands, an almost unique portfolio in the industry, which, in 2023, at approximately 44% of
our sales, progressed on our mid-term target of reaching over 50% by 2027.
From an economic standpoint, our performance was characterized by the significant improvement of the
adjusted gross margin, close to the Group’s historical highs, which we decided to reinvest in those projects
instrumental to the growth of the company in the long term. Notwithstanding the inflationary pressures
and an unfavourable operating leverage, we progressed with the investments envisaged in our business
plan, closing the year with an adjusted EBITDA margin not far from the 2022 level, the best in the last
seven years. The adjusted net profit, on the other hand, contracted mainly due to the revaluation of the
options on minority interests.
The past year was above all one in which we returned to a positive cash generation, the first after many
years.
In 2023, our sustainability strategy also reached another accomplishment through the presentation of
our medium-term objectives, an official commitment also for our scope 1, 2 and 3 greenhouse gas
reduction targets, which we decided to validate with the Science Based Target initiative, receiving a
positive response this February.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
27
We look to 2024, We look to the year with confidence, hoping that both our challenges and the
opportunities arising from the continuous growth of our portfolio of home brands and core licenses will
find their place in a more stable international scenario.
We therefore continue to work, focused on our main objective: the growth and sustainability of our
business in the long term.
Angelo Trocchia
Chief Executive Officer
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
28
SUMMARY OF KEY CONSOLIDATED PERFORMANCE INDICATORS
Economic data (Euro million)
2023
%
2022
%
Net sales
1,024.7
100.0
1,076.7
100.0
Cost of sales
(439.0)
(42.8)
(479.3)
(44.5)
Gross profit
585.7
57.2
597.4
55.5
Ebitda
62.9
6.1
96.8
9.0
Ebitda pre non-recurring items
92.0
9.0
101.2
9.4
Operating profit
7.7
0.7
48.5
4.5
Operating profit pre non-recurring items
49.6
4.8
53.5
5.0
Group profit/(loss) before taxes
(19.5)
(1.9)
64.1
6.0
Profit/(Loss) attributable to the Group
(24.6)
(2.4)
54.2
5.0
Profit/(Loss) attributable to the Group pre non-recurring items
14.0
1.4
58.3
5.4
Economic data (Euro million)
Fourth
quarter
2023
%
Fourth
quarter
2022
%
Net sales
239.6
100.0
245.4
100.0
Gross profit
134.8
56.2
139.1
56.7
Ebitda
4.9
2.0
13.3
5.4
Ebitda pre non-recurring items
16.5
6.9
15.9
6.5
Balance sheet data (Euro million)
December
31, 2023
%
December
31, 2022
%
Total assets
855.5
100.0
960.3
100.0
Total non-current assets
307.8
36.0
361.6
37.7
Net invested capital
478.5
55.9
552.3
57.5
Net working capital
260.0
30.4
292.3
30.4
Net financial position
(82.7)
(9.7)
(113.4)
(11.8)
Net financial position pre IFRS 16
(43.7)
(5.1)
(69.6)
(7.3)
Group Shareholders' equity
379.2
44.3
409.9
42.7
Financial data (Euro million)
2023
2022
Cash flow from operating activities
47.7
9.2
Cash flow from investing activities
(8.6)
(15.7)
Cash flow from financing activities
(40.5)
(16.8)
Closing net financial indebtedness (short-term)
74.9
77.7
Free cash flow
29.1
(16.5)
Capital expenditure
13.3
16.0
Earnings/(Losses) per share (in Euro)
2023
2022
Earnings/(Losses) per share - basic
(0.060)
0.131
Earnings/(Losses) per share - diluted
(0.059)
0.130
Group Shareholders' equity per share
0.917
0.991
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
29
Group personnel
December
31, 2023
December
31, 2022
Punctual at period end
3,828
4,442
Average
4,168
4,435
Share and market data (in Euro)
December
31, 2023
December
31, 2022
Share price at the end of the financial year
0.91
1.52
Maximum share price of the financial year
1.63
1.66
Minimum share price of the financial year
0.71
1.14
No. shares in share capital at 31 December
413,745,466
413,687,781
Stock Market value at the end of the financial year
378,163,356
629,632,803
Adjusted performance indicators
Adjusted performace indicators exclude the effect of items not related to the ordinary operations which
may have an impact on the quality of earnings such as restructuring costs, non recurring costs and
legal litigations, impairments when impairment is the result of a non-recurring event.
Adjusted indicators exclude the following non-recurring items:
• in 2023, the adjusted economic results exclude non-recurring costs for Euro 41.9 million at
the EBIT (operating profit) level, Euro 29.1 million at the EBITDA level and Euro 16.0 million
at the gross profit level, mainly related to the disposal of the Longarone plant, to some
other restructuring costs, and in the fourth quarter, also to the termination of activities
related to exiting licensed brands and to a partial write-down of some intangible assets
related to a previous acquisition;
• in 2022, the adjusted economic results excluded net non-recurring costs for Euro 5.0 million
(Euro 4.4 million at the EBITDA level), due to some special projects costs and restructuring
expenses, partially offset by the release of a restructuring provision. In fourth quarter 2022,
the adjusted EBITDA excluded non-recurring cost for Euro 2.7 million.
The table below summarizes the reconciliation between the economic indicators and their adjusted
value pre-non-recurring items:
2023
2022
(Euro million)
Gross
profit
Ebitda
Operating
profit
Profit/(Loss)
attributable
to the Group
Ebitda
Operating
profit
Profit/(Loss)
attributable
to the Group
Economic
indicators
585.7
62.9
7.7
(24.6)
96.8
48.5
54.2
Restructuring costs
and other non
recurring costs
16.0
29.1
41.9
41.9
4.4
5.0
5.0
Tax effect on non
recurring items
(3.2)
(0.9)
Economic
indicators pre non
recurring items
601.8
92.0
49.6
14.0
101.2
53.5
58.3
Consolidated Financial Statements Safilo Group S.p.A.
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30
Alternative performance indicators definition
Certain “alternative performance indicators”, which are not foreseen in the IFRS accounting principles
and are applied to the financial statements being audited, have been used in this Report. Their meaning
and content is given below:
• “EBITDA” stands for Earnings Before Interest, Taxes, Depreciation and Amortisation and is
also stated before impairment losses to intangible assets such as goodwill;
• "EBIT" stands for Earnings Before Interest and Taxes and is also stated as "Operating
profit/(Loss)";
• “Capital expenditure” refers to purchases of tangible and intangible fixed assets;
• “Net invested capital” refers to the sum of shareholders’ equity of the Group and minority
interests and the “Net financial position” (see below);
• "Free Cash Flow" means the sum of cash flow from/(for) operating activities, the cash flow
from/(for) investing activities and the cash payments for the principal portion of IFRS 16
lease liabilities;
• “Net working capital” means the sum of inventories, trade receivables and trade payables;
• "Net financial position" means the sum of bank borrowings, short, medium and long-term
borrowings, net of cash held on hand and at bank. This indicator does not include the
valuation of derivative financial instruments and the liability for options on non-controlling
interests;
• “Financial leverage” is the ratio between “Net financial position” and “EBITDA”.
It should be noted that:
• certain figures in this report have been subject to rounding adjustments. Accordingly,
figures shown for the same category presented in different tables may vary slightly and
figures shown as totals in certain tables may not be algebraic sums of the figures which
precede them;
• the percentage variations and incidences in the tables have been calculated on the basis of
data expressed in thousands and not those which are shown, rounded to the nearest million.
Following the entry into force on March 18, 2016 of the Italian Legislative Decree no. 25 of 15 February
2016, which eliminates, in accordance with the European Union’s Transparency Directive, the obligation
to publish interim management statements, the Group releases on a voluntary basis a trading update
for the first and third quarters showing only the main financial KPIs.
Disclaimer
This report and, in particular, the section entitled “Significant events after the year-end and outlook”
contains forward looking statements based on current expectations and projects of the Group in relation
to future events. Due to their specific nature, these statements are subject to inherent risks and
uncertainties, as they depend on certain circumstances and facts, most of which being beyond the control
of the Group. Therefore actual results could differ, even to a significant extent, with respect to those
reported in the statements.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
31
REPORT ON OPERATIONS
GROUP ECONOMIC PERFORMANCE
Consolidated income statement
2023
2022
Change
(Euro million)
%
%
%
Net sales
1,024.7
100.0
1,076.7
100.0
-4.8%
Cost of sales
(439.0)
(42.8)
(479.3)
(44.5)
8.4%
Gross profit
585.7
57.2
597.4
55.5
-2.0%
Selling and marketing expenses
(428.8)
(41.8)
(420.5)
(39.1)
-2.0%
General and administrative expenses
(138.1)
(13.5)
(128.4)
(11.9)
-7.5%
Other operating income/(expenses)
(11.2)
(1.1)
(0.1)
(0.0)
n.s.
Operating profit
7.7
0.7
48.5
4.5
-84.2%
Gains/(losses) on liabilities for options on non-controlling
interests
(7.9)
(0.8)
31.2
2.9
-125.3%
Financial charges, net
(19.2)
(1.9)
(15.5)
(1.4)
-23.9%
Profit/(Loss) before taxation
(19.5)
(1.9)
64.1
6.0
-130.3%
Income taxes
(6.6)
(0.6)
(11.8)
(1.1)
43.7%
Net profit/(loss)
(26.1)
(2.5)
52.3
4.9
-149.8%
Net profit/(loss) attributable to minority interests
(1.4)
(0.1)
(1.8)
(0.2)
20.5%
Net profit/(loss) attributable to the Group
(24.6)
(2.4)
54.2
5.0
-145.5%
EBITDA
62.9
6.1
96.8
9.0
-35.1%
Amortization and depreciation
55.2
48.4
NON RECURRING ITEMS ON EBITDA
(29.1)
(4.4)
Economic indicators pre non-recurring items
2023
%
2022
%
Change
%
Gross profit adjusted pre non-recurring items
601.8
58.7
597.6
55.5
0.7%
EBIT adjusted pre non-recurring items
49.6
4.8
53.5
5.0
-7.4%
EBITDA adjusted pre non-recurring items
92.0
9.0
101.2
9.4
-9.1%
Net profit/(loss) attributable to the Group adjusted
pre non-recurring items
14.0
1.4
58.3
5.4
-76.0%
Throughout the entire 2023, Safilo's operating performance was characterized by
two very distinct dynamics.
On one hand, the significant improvement, in all quarters, of the gross margin, an
important result achieved thanks to an effective pricing policy, a more favourable
channel mix, the higher efficiency of some procurement activities and to the decline
of transport costs which had most impacted the Group in 2022.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
32
On the other, below gross margin, the operating leverage continued to have a
negative impact, influenced by higher personnel costs due to salary inflation, as well
as by the investments in marketing and IT and digital projects, which management
implemented in line with the medium-term Group Business Plan, with the aim of
progressively strengthening home brands and the company's IT and digital
infrastructure.
2023 closed for Safilo with net sales of Euro 1,024.7 million, down 2.3% at constant
exchange rates and 4.8% at current exchange rates compared to Euro 1,076.7
million recorded in 2022.
In the year, organic
1
sales, which represent the most significant indicator of the
underlying business performance, recorded a deviation of 1.3%, further
approaching the level of revenues recorded in the previous year, despite the
headwinds represented by the continuing weakness of the North American market,
and the over 60% drop in revenues recorded in the former GrandVision chains. Net
of the latter effect, the Group's organic performance was up 1.7%, thanks to the
good performance of home brands, in particular Carrera and Polaroid, which grew
well for the second consecutive year, and Blenders, back to growth after the post-
pandemic sales normalization in online channels. 2023 also continued to highlight
Smith's excellent development in the direct-to-consumer (DTC) channel, which
allowed the brand to return to growth in the second half of a year which, for the
sports sector, was influenced by a business slowdown in physical stores.
The above-described dynamics allowed Safilo to increase both the weight of its
home brands portfolio, which came to represent 44% of sales (
excluding the business
attributable to the production supply contract with Kering Eyewear)
from 42% in the
previous year, and that of the business in online channels, which rose to 16% of
revenue from 15% in 2022.
On the licensed brands front, 2023 further confirmed BOSS and Tommy Hilfiger’s
collections as key points of reference in the eyewear landscape, while among the
most recent partnerships, Carolina Herrera, which joined Safilo’s portfolio in 2022,
and David Beckham, a brand launched for the very first time in eyewear in 2020
and already one of the Group’s core brands, stood out for their double-digit
performances.
In 2023, the Group’s operating performance was significantly impacted by non-
recurring costs mainly related to the disposal of the Longarone plant, and, in the
fourth quarter, also to the termination of activities related to existing licensed
brands and to a partial write-down of some intangible assets related to a previous
acquisition. The impact of such costs stood at Euro 16.0 million at the gross profit
level, Euro 29.1 and 41.9 million at the EBITDA and EBIT level respectively. The
adjusted results exclude non-recurring items.
1
Organic sales include only the proprietary brands and not terminated licenses, present in both of the compared
periods, excluding the business attributable to the production supply contract with Kering Eyewear.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
33
The adjusted gross profit equalled Euro 601.8 million, slightly up, by 0.7%
compared to 2022, while the adjusted gross margin improved by 320 basis points,
from 55.5% to 58.7%.
Selling, general and administrative expenses increased by 1.7%, with a significant
increase of their incidence on sales mainly due to higher personnel cost and to the
marketing and IT investments.
The adjusted EBITDA equalled Euro 92.0 million and a margin on sales of 9.0%,
down respectively 9.1% and 40 basis points compared to 2022.
The adjusted EBIT equalled Euro 49.6 million and a margin on sales of 4.8%,
down respectively 7.4% and 20 basis points compared to 2022.
The Group's adjusted net result, equal to Euro 14.0 million, was down 76.0%
compared to 2022, particularly affected by the revaluation, already accounted for
in the first half of the year, of the liability for options on the interests in Blenders,
in relation to the extension of the second and third tranche of the related put and
call options. In the year, the overall impact of the valuations of the liability for
options on minority interests amounted to a loss of Euro 7.9 million, which compared
with the profit of Euro 31.2 million recorded in 2022. Net financial charges also
increased during the year, from Euro 15.5 million to Euro 19.2 million, mainly due
to the increase in interest rates.
Consolidated income statement
Fourth
quarter
2023
Fourth
quarter
2022
Change
(Euro million)
%
%
%
Net sales
239.6
100.0
245.4
100.0
-2.4%
Gross profit
134.8
56.2
139.1
56.7
-3.1%
EBITDA
4.9
2.0
13.3
5.4
-63.3%
Economic indicators pre non-recurring items
Fourth
quarter
2023
%
Fourth
quarter
2022
%
Change
%
Gross Profit adjusted pre non-recurring items
142.6
59.5
139.2
56.7
2.4%
EBITDA adjusted pre non-recurring items
16.5
6.9
15.9
6.5
3.8%
In fourth quarter 2023, Safilo’s net sales stood at Euro 239.6 million, marking the
best performance at constant exchange rates of the year, equal to a growth of 2.0%
(-2.4% at current exchange rates), while the improvement, also net of sales in the
former GrandVision chains, stood at +3.6%.
In fourth quarter 2023, Safilo's adjusted gross margin continued to improve year-
on-year, going from 56.7% to 59.5%, thanks above all to a particularly favourable
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
34
channel mix, due to the excellent progress in the quarter of the direct-to-consumer
(DTC) channel. The adjusted gross profit amounted to Euro 142.6 million, up 2.4%
compared to fourth quarter 2022.
The adjusted EBITDA was equal to Euro 16.5 million and a margin on sales of
6.9%, up respectively by 3.8% and 40 basis points compared to fourth quarter 2022.
Net sales by geographical area
Full year
(Euro million)
2023
%
2022
%
Change at
current
forex %
Change at
constant
forex %
North America
452.9
44.2
497.7
46.2
-9.0%
-6.4%
Europe
411.8
40.2
424.9
39.5
-3.1%
-0.6%
Asia Pacific
59.9
5.8
57.7
5.4
3.9%
9.1%
Rest of the world
100.1
9.8
96.4
8.9
3.8%
3.9%
Total
1,024.7
100.0
1,076.7
100.0
-4.8%
-2.3%
In 2023, sales trends by geographical area were characterized for Safilo by the
aforementioned weakness of the North American market, which, after a subdued 2022
closing and a prudent start to the new year by the traditional eyewear channels,
highlighted the greatest difficulties during the second and third quarters. To suffer the
most were, in particular, the contemporary segment, where the Group's offering is
more concentrated, and the sunglass product category, due to a not favourable
summer season. During the year, after the significant growth during the pandemic
years, Smith's sports business was instead penalized by the continuous destocking by
physical stores, especially of products dedicated to the bike segment. In the United
States, 2023 saw the growth of DTC sales, both for Blenders, following the success of
the exclusive collaboration launched in the last quarter of the year with the American
football icon nicknamed "Coach Prime", and for Smith, which today generates in the
channel almost 40% of its North American business.
In 2023, Safilo’s sales in North America amounted to Euro 452.9 million, down 6.4% at
constant exchange rates (-9.0% at current exchange rates) compared to Euro 497.7
million recorded in 2022 (-3.7% at organic level).
In Europe, Safilo almost completely recovered the sharp decline in business in the
former GrandVision chains following their integration in EssilorLuxottica’s network, thus
closing the year substantially stable compared to the strong growth sales of 2022.
In the year, Europe’s organic performance, also excluding the GrandVision effect,
amounted to a growth of approximately 7%, reflecting the good progress recorded by
the main markets of the area, in particular Italy and France, where the Group continued
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
35
to strengthen its commercial partnerships through the development of its You&Safilo
digital platform.
The year was also characterized by the excellent growth of Turkey, Hungary and
Poland, markets in which Safilo has invested in recent years through the creation of
direct commercial operations.
In 2023, Safilo’s sales in Europe stood at Euro 411.8 million, recording a performance
of -0.6% at constant exchange rates and -3.1% at current exchange rates compared
to Euro 424.9 million recorded in 2022 (-1.3% at organic level).
In the year, Asia and Pacific and Rest of the World’s emerging markets grew to 15.6%
of the Group's total turnover, from the 14.3% in the previous year, thanks to the good
progress of the business in both regions, in line with the development plans by
geographical area envisaged in the Group's medium-term objectives.
In 2023, Safilo’s sales in Asia and Pacific reached Euro 59.9 million, up 9.1% at constant
exchange rates and 3.9% at current exchange rates, compared to Euro 57.7 million
recorded in 2022, while in the Rest of the World the year closed at Euro 100.1 million,
up 3.9% at constant exchange rates and 3.8% at current exchange rates, compared
to Euro 96.4 million recorded in 2022.
Key drivers of the positive performance were, in particular, BOSS, Ports and Polaroid in
China and Hong Kong, and the strong development of Smith in both Australia and
Japan, while Carrera and Tommy Hilfiger were the undisputed drivers of the double-
digit growth recorded in the year by India and the Middle East.
Fourth quarter
(Euro million)
2023
%
2022
%
Change at
current
forex %
Change at
constant
forex %
North America
111.9
46.7
114.3
46.6
-2.2%
3.0%
Europe
90.7
37.9
92.2
37.6
-1.7%
2.5%
Asia Pacific
16.2
6.8
16.4
6.7
-0.9%
4.5%
Rest of the world
20.8
8.7
22.5
9.2
-7.5%
-6.6%
Total
239.6
100.0
245.4
100.0
-2.4%
2.0%
The fourth quarter was characterized by improved trends in the North
American market, where sales stood at Euro 111.9 million, up 3.0% at constant
exchange rates (-2.2% at current exchange rates), mainly thanks to the
aforementioned growth of Blenders and Smith in their DTC channels. In the
traditional channels of independent opticians and chains, the eyewear business
was more stable than in the previous quarters of the year thanks to an easier
comparison base, while Smith’s sales in physical sports shops were affected
by a slow start to the winter season.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
36
In Europe, fourth quarter sales, equal to Euro 90.7 million, were back to a
positive performance, up 2.5% at constant exchange rates compared to the
same quarter of 2022 (-1.7% at current exchange rates), while the progress,
net of the business in the former GrandVision chains, accelerated from +1%
in third quarter to around +6% in fourth quarter.
On the emerging markets front, in fourth quarter the Group's sales recorded
progress again in Asia and Pacific, reaching Euro 16.2 million and a growth of
4.5% at constant exchange rates (-0.9% at current exchange rates), while
revenues in the Rest of the World, equal to Euro 20.8 million, recorded a
decline of 6.6% at constant exchange rates (-7.5% at current exchange rates),
entirely due to a challenging comparison base for the Brazilian market. On the
other hand, the main markets in the Middle East continued to grow in the
quarter.
The charts below summarize the breakdown of net sales by product category
for the full year and for the fourth quarter 2023 compared to the previous year:
41%
39%
20%
Fourth Quarter 2022
Prescription Frames Sunglasses Other
40%
47%
13%
Full Year 2022
Prescription Frames Sunglasses Other
38%
45%
17%
Fourth Quarter 2023
Prescription Frames Sunglasses Other
38%
49%
13%
Full Year 2023
Prescription Frames Sunglasses Other
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
37
CONDENSED BALANCE SHEET
The table below shows the highlights from the balance sheet as at 31 December 2023 compared with
those of 31 December 2022:
Balance sheet
December 31,
2023
December 31,
2022
Change
(Euro million)
Trade receivables
203.1
214.0
(11.0)
Inventory, net
229.0
259.0
(30.0)
Trade payables
(172.1)
(180.7)
8.6
Net working capital
260.0
292.3
(32.4)
Tangible assets
88.7
109.1
(20.3)
Right of Use assets
34.0
39.0
(5.0)
Intangible assets
108.1
133.0
(24.9)
Goodwill
33.7
34.9
(1.2)
Net assets/(liabilities) held for sale
-
2.3
(2.3)
Net fixed assets
264.5
318.3
(53.8)
Employee benefit liability
(9.7)
(14.0)
4.2
Other assets / (liabilities), net
(15.5)
(24.8)
9.3
Liability for options on non-controlling interests
(20.8)
(19.5)
(1.2)
NET INVESTED CAPITAL
478.5
552.3
(73.8)
Cash in hand and at bank
74.9
77.7
(2.8)
Short term borrowings
(30.3)
(30.0)
(0.3)
Short-term Lease liabilities
(9.6)
(9.1)
(0.6)
Long term borrowings
(88.3)
(117.3)
29.0
Long-term Lease liabilities
(29.4)
(34.7)
5.4
NET FINANCIAL POSITION
(82.7)
(113.4)
30.7
Group Shareholders' equity
(379.2)
(409.9)
30.7
Non-controlling interests
(16.6)
(29.0)
12.4
TOTAL SHAREHOLDERS' EQUITY
(395.8)
(438.9)
43.1
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
38
Net working
capital
Net working capital at 31 December 2023 amounts to Euro 260.0 million compared
with Euro 292.3 million of the previous year.
Net working capital
Of which
(Euro million)
December 31,
2023
December 31,
2022
Change
Translation
exchange
difference
Change
excluding
translation
exchange
difference
Trade receivables, net
203.1
214.0
(11.0)
(4.6)
(6.3)
Inventories
229.0
259.0
(30.0)
(7.3)
(22.7)
Trade payables
(172.1)
(180.7)
8.6
2.8
5.8
Net working capital
260.0
292.3
(32.4)
(9.1)
(23.2)
% on net sales
25.4%
27.1%
In the year, the cash flow from operating activities benefitted of cash generation of
Euro 23.2 million (excluding the translation difference effect) at the net working
capital level.
The key driver of the decrease in the net working capital dynamic was the decrease
in trade receivables which in particular benefitted from the good cash collection,
which was in turn supported by the excellent performance of the direct-to-consumer
(DTC) business in the fourth quarter.
The working capital of the year was furthermore characterized by a decrease in
inventories and in trade payables.
Fixed assets and investments in tangible and intangible fixed assets
Net fixed assets total Euro 264.5 million at the end of 2023 compared to Euro
318.3 million in 2022.
The decrease of net fixed assets equal to 53.8 million Euro is mainly due to the
depreciation of the tangible and intangible assets equal to 55.2 million Euro, to
capital expenditure of 13.3 million Euro and to divestments, mainly related to the
disposal of the Longarone plant, of 10.5 million Euro.
The Group’s operating investments of the year equal to Euro 13.3 million (Euro 16
million in 2022), were focused on the maintenance of its product supply and
logistics network and on the Group IT and Digital Transformation projects.
The allocation of the Group operating investments breaks down as follows:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
39
44%
17%
39%
Production facilities
Information technology
Others
2022 - INVESTMENT BY NATURE
3,9
6,1
0,4
2,6
0,3
13,3
5,2
7,0
0,7
2,9
0,2
16,0
Headquarters Production
factories
Europe Americas Far East Total
investments
2023 2022
INVESTMENTS BREAKDOWN
46%
13%
41%
Production facilities
Information technology
Others
2023 - INVESTMENT BY NATURE
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
40
FINANCIAL SITUATION
The main items of the net financial position at 31 December 2023 as well as free
cash flow figures are reported below in comparison with the previous year.
Net financial position
Net financial debt
December
31, 2023
December
31, 2022
Change
(Euro million)
Current portion of long-term borrowings
(30.3)
(30.0)
(0.3)
Short-term lease liability IFRS 16
(9.6)
(9.1)
(0.6)
Cash and cash equivalents
74.9
77.7
(2.8)
Short-term net financial position
35.0
38.7
(3.7)
Long-term borrowings
(88.3)
(117.3)
29.0
Long-term financial lease liability IFRS 16
(29.4)
(34.7)
5.4
Long-term net financial position
(117.7)
(152.1)
34.4
TOTAL NET FINANCIAL POSITION
(82.7)
(113.4)
30.7
TOTAL NET FINANCIAL POSITION PRE IFRS 16
(43.7)
(69.6)
25.9
Group net debt
As at 31 December 2023, the Group's net debt decreased to Euro 82.7 million
(Euro 43.7 million pre-IFRS 16, corresponding to a financial leverage, also pre
IFRIC SaaS, of 0.48x), from Euro 113.4 million (Euro 69.9 million pre-IFRS 16)
reported at the end of December 2022.
The key components of the Group’s net debt at the end of December 2023 were
the following:
- a long-term debt position of Euro 117.7 million, made of bank loans for
Euro 88.3 million, related to the Credit Facility signed in September
2022, and an IFRS-16 effect for Euro 29.4 million;
- a short-term debt position of Euro 39.9 million, made of bank loans for
Euro 30.3 million, related to the Credit Facility, and an IFRS-16 effect
for Euro 9.6 million;
- a cash position of Euro 74.9 million.
The above loans are subject to operating and financial covenants which the
Group complied with as at December 2023.
The Group net financial position reported in the above table does not include the
valuation of derivative financial instruments and the option liability on the non-
controlling interests.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
41
Free cash flow
Free cash flow
2023 2022 Change
(Euro million)
Cash flow from operating activities
47.7
9.2
38.6
Cash flow from investing activities
(2.7)
(15.7)
13.0
Cash flow from repayment principal portion of IFRS 16 lease
liabilities
(10.0)
(10.0)
0.1
Free cash flow before acquisitions/disposals
35.1
(16.5)
51.6
Cash flow for acquisitions minority interests
(5.9)
-
(5.9)
Free cash flow
29.1
(16.5)
51.6
Thanks to a positive cash generation also in the fourth quarter, equal to Euro 13.3
million, Safilo closed 2023 with a Free Cash Flow of Euro 29.1 million compared
to the cash absorption of Euro 16, 5 million recorded in 2022.
In the year, the cash flow from operating activities grew to Euro 47.7 million,
thanks to a cash generation of Euro 21.5 million at the working capital level. The
latter in particular benefitted from the decrease in inventory and the good cash
collection, which was in turn supported by the excellent performance of the direct-
to-consumer (DTC) business in the fourth quarter.
In 2023, the cash flow for investment activities was characterized, on the one
hand, by a capital expenditure of Euro 13.3 million, while, on the other, by the
sales consideration for the disposal of the Longarone plant, equal to around Euro
11 million, which partially counterbalanced the total cash-out of around Euro 16
million connected to the deal, mainly accounted for in the cash flow from operating
activities before the change in working capital.
2023 Free Cash Flow included the payment of Euro 5.9 million made in the third
quarter to exercise the first option on an additional 10% of Blenders non-
controlling interests, increasing its controlling stake from 70.0% to 80.0%. Before
this acquisition, Free Cash Flow for the year amounted to Euro 35.1 million.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
42
MAIN CRITICAL RISK FACTORS FOR THE GROUP
The Group implements the measures deemed to be appropriate to contrast any
foreseen risks and uncertainties arising from its business. The risks are both
internal and external and are explained below. The Group has an enterprise risk
management approach in place to monitor the key risks and develop action plans
to mitigate them.
Internal risks
Strategic risks
The Group could be unable:
- to take advantage of business opportunities in the market segments
and geographic areas in which it operates;
- to allocate the resources to the most profitable and potential markets,
or to more economically beneficial initiatives;
-
to build, develop and protect its brands and patents;
-
to maintain and develop the licence contracts required for its business
and fulfil the relative obligations and commitments;
- to contrast the competition maintaining and strengthening its own
distribution and sales networks;
- to launch innovative products on the market that meet consumer
tastes and are in tune with fashion trends.
Operating risks
The Group business is subject to:
- the risk of being unable to
organise and coordinate integrated
supply/production/logistics and commercial processes in order to
provide a rapid response to the needs of increasingly attentive and
discerning customers;
- the risk of being unable to identify and purchase raw materials, semi-
finished and finished products compliant with the Group’s quality
standards;
-
the operational risks of industrial facilities, distribution centres and
supplier relationships;
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
43
- the risk of non-compliance with internal control procedures as well as
the Italian and foreign legislation that are applicable to the Group (for
example local tax laws).
Pandemic operating risks
The spread of the Covid 19 pandemic in 2020, led to a focus on the risk related
to the business impacts coming from such pandemic and the redefinition of the
scope of some risks already identified.
After the spread of the Covid 19 pandemic the Group has implemented a set of
procedure and action plans primarily focused on the health and safety of all its
employees, based on the implement
ation of the safety and prevention
regulations provided by government protocols. Equally important for Safilo has
been to implement an action plan to guarantee the business continuity, ensuring
production and service levels and implementing smart working solutions for
office staff. Safilo thanks to this set of procedure and action plans can face and
guarantee the business continuity in case of any future pandemic scenario in
term of new upsurge of Covid-19 variants.
Cyber security
The main risks related to cyber security refer to possible cases of fraud and
cyberattacks, which are generally conducted against companies with increasing
frequency and complexity. The protection of the integrity, availability and
confidentiality of data and information is a primary objective of the Group ICT
function and digital strategy.
In the last years, Safilo has accelerated the adoption of new technologies and
services that allowed users to work remotely with ease, and new digital services
and general enhancements at both the infrastructure and application levels.
In addition, Safilo continues the transformation plan of the Group core systems
towards the adoption of SAP S/4 HANA as cloud-based, unified and distributed
ERP with the disposal of legacy systems in different European subsidiaries.
The Group continued the work undertaken to ensure the best protection of ICT
systems and data, to monitor risks associated with cyber threats and to increase
security through initiatives involving technology, systems, processes and human
resources.
In particular, in 2023 the Group has updated the Security Roadmap of
technological and countermeasures information aimed to guarantee an efficient
organizational setup and protecting and responding capabilities to digital threats
in the near future. The new activities mainly consist on the following strategic
points:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
44
- Convergence to a single uniform and centralized technological layout
for all entities of the group. Regardless of the geography or company
to which they belong, all entities in the group will have the same shared
services, technology and capabilities, interconnected together. Starting
from the introduction of the new next gen Firewalls, the Group is also
working to converge to unique identity, detection and response layers.
- Convergence of Incident Response Teams: the objective is to change
the current setup that see two different outsourced Incident Response
Team services active 24/7 that support the identification and resolution
of security incidents.
During 2024, the two IRTs serving the
geographical areas of the Americas and Europe + Asia, will be unified
into a single global team, making incident resolution management more
efficient and reducing the response time.
- Increase the awareness program dedic
ated to Safilo users which
involves the execution of simulated "phishing" campaigns aimed at
raising awareness among users, and the periodic sending of "safety
pills" to provide them with advice, suggestions, recommendations and
reminders on security threats, the correct use of company devices, and
good practices for the use and management of company data.
-
Continue the execution of Attack & Response exercises, aimed to
simulate malicious activities and to proactively identifying system
vulnerabilities and related mitigation actions (“Vulnerability Assessment
& Penetration Test”), or at reducing the risk of possible fraud when
using services online.
- Identify new AI-based technologies aimed at protecting new capabilities
that have emerged over the last few years and which will become widely
used in our operations.
External risks
Business risks
In terms of business risks, the Group is exposed to:
- actions implemented by competitors and the possible entry of new
market players;
- the loss of licenses;
- the effects of the macro-economic and political and social environment,
in terms of consumers’ buying power, loyalty and buying trends;
- changes in national and international regulations that could hamper the
Group’s competitive position;
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
45
- climatic conditions, such as very bad weather in the spring or summer
which could drastically reduce sales of sunglasses or warm winter
conditions with respect to the sale of snow products;
- health epidemics and pandemics,
could reduce demand for and
constrain supply of the Group’s products;
- the diffusion of alternative products and solutions to correct eyesight,
other than glasses, for example, laser surgery.
Climate Change
Safilo considers the relevance of the climate change in its management system
and monitors the related risks.
Climate Change is declined by Safilo in the management system and risks
identified with respect to environmental topics. The gover
nance of climate
change topics, as well as environmental matters, is entrusted to the Board of
Directors with the consultative support of the Sustainability Committee in
defining the related guidelines, as well as the Control and Risks Committee with
reference to the management of related risks.
As regards the risks related to climate change, in the short to medium term,
there are no significant risks related to the production processes or markets in
which the Group operates. The Group is focused on the risks related to climate
change with regards to the potential impacts in the medium-long term. The
climate change risks identified by the Group are related to the improper
management of energy and emission sources, to risks related to regulation
changes associated with the fight against climate change and physical risks, such
as risks arising from the progressive change of climate conditions related to long-
term variations (chronic risks) and from extreme weather events (acute risks)
that expose the Group to damage or destruction of “tangible capital” as industrial
buildings, plants machineries and infrastructures, potential interruptions of
essential supplies, and potential reduction of production capacity. With reference
to physical risks, the Group’s plants, located in different countries (Italy, China,
and the USA), together with the extensive supplier network, guarantee an excess
capacity to mitigate, if necessary, the production volumes of other sites impacted
by extreme weather events or natural catastro
phes, mitigating the climate
change risks and related financial implications.
Regarding environmental responsibility risks and the transitory risks related to
regulation changes associated with the fight against climate change, the Group
monitors these risks and implement the necessary actions to mitigate them. In
term of actions to mitigate environmental risks, the Group obtained sustainability
and energy management system certifications, implemented initiatives aimed at
improving the energy efficiency of Italian production plants and headquarters,
and started the transition to a sustainable mobility of the company car fleet, with
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
46
benefits in terms of lower energy consumption and the consequent costs and
emissions reduction. In 2022 Safilo has signed, for the Italian Legal Entities, an
agreement of energy supplied will be 100% coming from renewable sources,
certified, as account of up-to-date consumption, through the cancellation of the
GO guarantees of origin. Furthermore, during 2022, Safilo has continued to
renew its effort in ascertaining climate change risks by promoting an initial
screening of the impact generated by indirect emissions that occur in an
organisation’s value chain – so activities that they do not own or control.
Impacts of Russia’s invasion of Ukraine
During the second half of February 2022 conflict broke out in the Ukraine. The
world continues to focus on the Ukraine conflict and the devastating impact they
have had on the people in that region, their safety and well being continues to
be the primary concern of all of us.
The Group has reviewed its critical risks also with regards to the macro-economic
and geo-political implications related to Russia’s invasion of Ukraine and the
sanctions impos
ed against Russia and Belarus considering the significant
business challenges and the high degree of uncertainty and knock-on effects.
The outcome of the risk assessment performed has substantially confirmed the
limited exposure to financial and business impacts for the Group related to this
specific risk.
Safilo has continued to operate in full control of its local subsidiary, in term of
business continuity there is no risk considering that the Group manufacturing
and logistics infrastructures are not located in the area involved in the conflict.
As eyewear products are assimilated to medical devices
Safilo commercial
business with local customers has not been affected by the limitation imposed
by the sanctions against Russia and Belarus.
Macroeconomic environment
The macroeconomic environment, resulting from a combination of remaining
pandemic-related effects and geopolitical risks consequents to Russia’s invasion
and to Israel and Hamas conflict, represented an extraordinary circumstance that
had direct and indirect repercussions on economic activity and has created a
general environment of uncertainties regarding future developments, with
significant challenges in terms of foreseen risks.
The Group has implemented all the measures deemed to be appropriate to
contrast such uncertainces that may affect both internal and external risks such
as business risks but also financial risks, credit risks, market risks, liquidity risks
Consolidated Financial Statements Safilo Group S.p.A.
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47
that as explained here follow are duly mitigated by the Group enterprise risk
management approach.
Financial risks
The Group pays
constant attention to
financial risk
management
The Group constantly monitors the financial risk it is exposed to in order to assess
in
advance any possible negative impact and to undertake any corrective
measures aimed at mitigating or correcting the risks.
The Group is exposed to a variety of risks of a financial nature: credit risk, market
risks and liquidity risk, which are centrally and locally managed on the basis of
strict financial planning processes, credit and hedging policies which may also
entail the use of derivatives in order to minimise the effects deriving from
fluctuations in exchange rates (especially of the American dollar) and interest
rates.
Credit risks
The Group minimizes
risk through
instruments to control
customer insolvency
The Group strives to reduce risk deriving from the insolvency of its customers as
much as possible, by adopting credit policies intended to focus sales on reliable
and solvent customers. Specifically, credit management procedures, which
include the evaluation of information available on customers’ solvency and the
analysis of historical data series, combined with assigned exposure limits per
customer and the strict control of compliance with payment terms, enable the
mitigation of credit risk. Credit exposure is, moreover, divided among a large
number of counterparties and clients.
Significant exposures for which the Group identifies situations of objective, total
or partial, non-
recoverability, taking also into consideration any guarantees
obtained and the costs and expenses of recovery, are typically written off
individually.
It is deemed that the maximum theoretical exposure to credit risk is represented
by the book value of the financial assets in the financial statement.
Market risks
Market risks can be divided into the following categories:
Exchange rate risk
Exchange rate risk.
The Group operates on an international level and is therefore
exposed to exchange rate risk.
The Group holds shares in subsidiaries in countries not belonging to the Euro
area; as a result, the variations of shareholders’ equity deriving from fluctuations
in exchange rates between the local currency and the Euro are booked into a
Consolidated Financial Statements Safilo Group S.p.A.
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48
Changes in fair value
risk
Interest rate risk
reserve of the consolidated shareholders’ equity denominated “translation
difference reserve”.
Some companies operate in currencies other than the local currency, in this case
mainly in relation to the U.S. dollar.
The Group constantly tries to reduce the effects deriving from currency
fluctuations trying to couple as much as possible sales and purchases in the same
foreign currency, thus implementing a sort of “natural hedging”.
Net currency exposures can be typically hedged using forward contracts (“plain
vanilla”) whose duration is generally less than twelve months. Information on
the fair value and on the method of accounting of derivatives is given in the
notes to the financial statements.
Changes in fair value risk.
The Group holds some assets and liabilities subject to
changes in value over time depending on the fluctuations of the market where
they are traded.
Interest rate risk.
Borrowing from banks exposes the Group to the risk of
variations in the interest rates. Specifically, loans at variable rates determine the
risk of a change in cash flows.
The Group regularly assesses its overall exposure to the risk of interest rate
fluctuations and can typically manage such risk through the use of derivatives,
such as interest rate swaps (I.R.S.) concluded with primary financial institutions.
Liquidity risk
The Group
constantly monitors its
cash flows
This risk could generate the inability to find, at economic conditions, the financial
resources needed to sustain operations within the necessary timeframe. Cash
flows, borrowings and company liquidity are constantly monitored at central level
by the Group treasury in order to ensure effective and efficient management of
the financial resources.
Consolidated Financial Statements Safilo Group S.p.A.
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49
HUMAN RESOURCES AND THE ENVIRONMENT
Human Resources
The Group’s workforce At the end of 2023, the Group had 3,828 employees compared with 4,442 at the
end of 2022, with a decrease of 614 employees.
The decrease is mainly driven by the reduction of the workforce in the production
factories, following the disposal of the Longarone plant finalised on 31 October
2023 with the signing of the deeds for the transfer of the industrial assets of the
Longarone plant to Thelios S.p.A., a player in the eyewear sector and part of the
LVMH Group, and Innovatek S.r.l., an Italian eyewear contractor manufacturer.
The agreement has guaranteed the full employment of all the workers, allowing
for the preservation of the sector’s existing know-how thanks to the effective
support of the local public institutions and the trade unions, to reach the
conditions for the best possible outcome.
The allocation of the Group workforce by business area breaks down as follows:
899
1,588
1,341
3,828
883
2,224
1,335
4,442
Padua headquarters Production factories Commercial subsidiaries Total
December 31, 2023 December 31, 2022
23.5%
41.5%
35.0%
Padua headquarters
Production factories
Commercial subsidiaries
Consolidated Financial Statements Safilo Group S.p.A.
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50
Learning &
Development – a key
focus area for Safilo
Talent Acquisition
Ethics and Integrity
Safilo invests in talent management, including learning and training. Learning &
development initiatives designed to foster the personal and professional growth
of individuals are important elements of Safilo’s focus in this area, rooted in
product and customer centricity, teamwork, entrepreneurialism and
accountability for results.
To ensure the right capabilities are on board to deliver its strategic plan, Safilo’s
talent acquisition programs focus on attracting leaders and individuals with the
right skills and values. Safilo believe that diversity is a source of wealth and
creativity and promote an inclusive working environment where differences are
welcomed, creating value, and where everyone’s talent and merit are rewarded
and valued.
These important values are formalized in Safilo’s Worldwide Business Conduct
Manual – “The Safilo Way”. The Group aim is to establish corporate policies to
help people to act with integrity, accountability and transparency in line with the
Group’s principles.
Safety at work
Safilo Group has an
ongoing commitment to
the achievement of
occupational health and
safety objectives
Safilo is committed to safeguarding the health and safety of its employees,
external collaborators, visitors, customers and communities. Health and safety
procedures are designed to allow employees to work safely in any corporate
environment, office, factory or warehouse.
In 2011 the Group undertook the certification process of its "health and safety"
management system according to the international standard OHSAS 18001: 2007
in all production sites and at the group headquarters. The certifications obtained
with leading accredited bodies (DNV GL Business Assurance) were, after passing
the controls / audits required by the legislation, successfully renewed in
2017/2018.
With the publication of the new international standard ISO 45001: 2018 which
replaces and integrates BS OHSAS 18001: 2007, in 2020 the Group activated the
complex procedure of transition to the new legislation, which has been
successfully completed for all offices and plants of Safilo S.
p.A. and Safilo
Industrial S.r.l., Lenti S.r.l. and Safilo Eyewear Industries Ltd.
The certification testifies to the correct and careful application of the provisions
of the Organization, Management and Control Model adopted pursuant to
Legislative Decree 231/01, with specific regard to Special Part "C" - Crimes
relating to health and safety in the places of work.
In line with the requirements of the international standard, "Occupational health
and safety management systems - ISO 45001: 2018, Safilo has an ongoing
commitment to conducting initiatives aimed at safeguarding the health and
safety of its employees, reducing workplace risks and ensuring a prompt and
effective response in the event of an emergency.
Consolidated Financial Statements Safilo Group S.p.A.
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51
Social and environmental responsibility
Safilo Group is aware of
its social and
environmental
responsibility
Since Safilo S.p.A. achieved the SA8000 Certification in 2012, an internal Supply
Chain Committee, composed of the Director Global Sourcing, Management
System Compliance Manager and the Global Quality Assurance Director, has
monitored the conformity level of the supply chain at the global level with the
social responsibility principles adopted by the Group.
The SA8000 Certification has been successively obtained also for the Italian
production plants of Safilo Industrial S.r.l. and Lenti S.r.l..
All the Italian production plants of the Group, have a system in line with the
SA8000 Social Accountability Management System Standard, which certifies that
Safilo's business system complies with the principles of social responsibility
(freedom of association, human rights, ban on forced labour, health and safety
in the workplace, transparency).
In 2018 all the sites started a new certification cycle valid until 2021, with the
planning of periodic surveillance audits as required by the standard.
In October 2020, t
he renewal of the SA8000 certification was successfully
completed for the Italian plants of Safilo Industrial S.r.l. and Lenti S.r.l., and for
the Milan showroom and Padua headquarters.
The new certificate will expire in
January 2024.
ICT – Information Systems
During 2023, both the consolidation and new development activities of the ERP
systems continued, through the continuation of the internalization of
maintenance processes and monitoring.
The SAP roll-out projects in EMEA continued with an important one-off
implementation of the new SAP S4 for Fashion infrastructure. Safilo selected the
Cloud version on RISE – AWS. The market chosen for the start-up had been
Safilo Middle East, which gave the opportunity to verify the operating functions,
reducing to a minimum risks of Business Disruption.
The implementation of SAP continued in North America, too. As for EMEA by
adoption of SAP S4 – RISE Edition. Safilo is therefore the first company in the
EyeWear Industry to run ERP processes on Cloud. The live processes had been
managed from January 2023 on Safilo Canada, and subsequently between April
and October 2023 on Safilo USA. A new significant phase confirmed in terms of
modernization of business applications.
Consolidated Financial Statements Safilo Group S.p.A.
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52
The Digital Transform
ation of sales platforms through SalesForce continued
through the migration of the platform from the CloudCraze version to Lighting.
Also new releases and new Product Increments had been deployed on all
channels: B2B (You&Safilo), CRM and Salesforce Automation (COMPASS). As
part of the continuous improvement of customer service, new support platforms
for the commercial network had been developed and released.
Continuous improvements have been made on the Business Intelligence and
Data Analytics platforms both through the enrichment of the available databases
and development and adoption of new Dashboards (Tableau). Development
continued both on the Vertical Business Services and, above all, on the Cross-
Departmental contents.
In continuity with what was started in previous years, the modernization of
individual productivity tools continued in 2023 through the purchase, setting and
distribution of new Personal Computers equipped with modern security
technologies, improving collaboration and efficiency. In Padua headquarter and
other offices/plants, the communication and storage technologies of data and
documents had been improved, to allow increasingly effective work.
Strong acceleration regarding CyberSecurity area by adoption of Multi Factor
authentication systems, End Point Protection and important investments in new
generation Firewalls.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
53
SAFILO IN THE STOCK EXCHANGE AND INVESTOR RELATIONS
Safilo in the stock exchange
Global stock markets closed 2023 with significant annual gains, mainly driven by
a shift in interest rate expectations following data showing inflation falling faster
than expected in western economies. The MSCI World index increased by around
22% in 2023, while Europe’s continent-wide Stoxx 600 index gained almost 13%,
the FTSE MIB +28%, the CAC 40 +16.5% and the DAX around 20%.
On the contrary, 2023 was a difficult year for Safilo in the stock exchange, which
followed the +119% surge posted by the share in 2021 and the slight decline
recorded in 2022 (-3%), when it outperformed the heavy drops recorded by the
FTSE mid-cap index and by fashion-luxury stocks.
After reaching the high of the year on 24 January, at Euro 1.626, Safilo stock
dropped by around 9% on the day after the release of the Group’s preliminary
results falling short of expectations due to a weakening US market in Q4, and
the announcement of the mandate to explore alternative solutions for the
Longarone plant.
Safilo presented the Group’s medium-term targets in March 2023, a month which
was eventually dominated by fears that the confirmed failure of the US Silicon
Valley Bank could spread to the global financial system. The business plan targets
did not entail s
ignificant changes to Safilo’s equity story, as the expected
improvement in margins was substantially in line with the key brokers’ medium-
term assumptions, while short-term uncertainties remained the key topics driving
the stock performance.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
54
Main areas of focus during the second quarter were the Group’s Q1 trading
update, with results in line with market consensus, but growing macro concerns
on the sustainability of consumption in Europe and on the low visibility in the US
weighing, in particular, on small and mid-cap stocks. These topics overshadowed
the Group’s positive news flow related to the early renewals of two of Safilo’s
most important licenses, Kate Spade and Tommy Hilfiger, and the signing of a
new partnership with Etro, while the announcement of the exit of Jimmy Choo
at the end of the year did not trigger significant reactions.
In the end, Safilo’s shares closed the first half of the year at a price of Euro 1.24,
down around 18% compared to the end of 2022.
The month of July was rich in announ
cements for the Company, from the
advanced state of negotiations in place for the sale of the Longarone plant, to
the resignation of the CFO and his immediate replacement with an internal
appointment, to three additional license renewals (Juicy Couture, Fossil and
havaianas) and the release, at the very beginning of August, of H1 results. The
latter were highlighted by the market as mixed: weaker than expected in terms
of sales, due to poor North America market conditions, but solid on operating
profitability and free cash flow and with the expectation of H2 to become more
supportive. H1 net profit was also spotted as below market assumptions, due to
higher financial charges and tax, along with a realignment of minorities.
Safilo’s share dropped sharply during the third quarter, down almost 32% versus
the end of June, amid the group's exit from the mid-cap index and the significant
investment outflows recorded in September by the Italian PIRs (Individual
Savings Plans mainly composed of small/mid caps).
Sell-
side analysts and shareholders alike were prone to explain the sharp
correction suffered by the stock with the specific pinch suffered by small/mid
caps due to an uncertain economic situation, within the spectrum of an economic
slowdown.
In Q4, Safilo’s news flow centred around the finalization of the transfer of the
Longarone plant, the confirmation of the CEO for another 3-year mandate and
the release in November of the Q3 trading update, which showed a gradual
improvement, expected to amplify in Q4.
Safilo’s shares closed the year at a price of Euro 0.914, recovering around 8%
compared to the end of September, ultimately down 40% compared to
December 2022.
At the end of the year, the sell-side coverage of Safilo’s equity story was enriched
by the initiation, with a Hold rating and a Euro 0.99 target price, by Stifel, a U.S.
headquartered investment banking powerhouse focused on mid-market
companies. At the end of December, there were 3 BUY and 3 HOLD
recommendations on Safilo’s stock, with an average target price of Euro 1.2.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
55
Investor relations
In 2023, Safilo’s investor engagement was, on one side, stimulated by the
presentation, in March, of the Group’s new medium-term targets, while, on the
other, partially constrained by the announ
ced project to disinvest from the
Longarone plant, which somewhat limited communication activities during the
most critical negotiation phases.
The Capital Market Day (CMD) organized in person in the Group’s Milan offices
was a key event for the Company to further strengthen its relationship with its
existing and potential shareholders, who also had the opportunity to meet a part
of Safilo’s leadership team directly involved in presenting their specific areas of
responsibility. This also responded to one o
f the financial community’s
desiderata, as direct interactions with Groups’ key managers are always
suggested and highly appreciated. The CMD was soon followed by a Company
roadshow in the Group’s key financial markets of Milan, Paris and London, where
the majority of Safilo’s shareholders are also based. The Group also had the
opportunity to more proactively open the dialogue with US investors, feeding
their interest in Safilo’s equity story through the organization of a day in New
York supported by a new local broker.
Furthermore, in 2023, Safilo strengthened its dialogue with proxy advisors and
some of its most important shareholders on the front of the Group’s
compensation practices, in order to gather and analyse areas of concern which
had emerged and to start addressing the suggested improvements.
Finally, on the ESG front, in order to meet the request of some of the Group’s
stockholders, Safilo, for the very first time, responded to the Carbon Disclosure
Project (CDP) 2023 climate change questionnaire. CDP is the gold standard for
corporate environmental reporting, fully aligned with the Task Force on Climate-
related Financial Disclosures (TCFD) recommendations. Reporting the Group’s
environmental data through CDP should enable it to protect and improve its
reputation, uncover risks and opportunities, and track and benchmark progress.
Financial calendar
Board of Directors’ meetings for 2024:
30 January Preliminary sales for the Fourth quarter and full year 2023
14 March Draft Financial Statements for 2023
24 April Shareholders’ Meeting for the approval of the Financial Statements 2023
7 May Trading update on the First quarter 2024 KPIs
1 August Interim Report on Operations for the Second quarter and First half 2024
7 November Trading update on the Third quarter and first Nine months 2024 KPIs
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
56
CORPORATE GOVERNANCE
Corporate bodies and officers
Safilo Group S.p.A.
adopt the traditional
governance system
The Corporate Governance model adopted by Safilo aims to ensure transparent
and responsible business operations, significantly contributing to medium and
long-term value creation, in compliance with the principles of the Corporate
Governance Code for Listed Companies issued by the Corporate Governance
Committee. Safilo adopted the traditional governance system which includes:
- the Shareholders’ Meeting: a corporate body that expresses the wishes
of shareholders through resolutions;
- the Board of Directors: responsible for strategic management in pursuit
of the corporate goals and for supervising the implementation of the
strategic guidelines;
- the Board of Statutory Auditors: responsible for ensuring compliance
with the applicable laws and regulations and the articles of association
as well as management control;
Safilo also engaged an Independent Audit Company to perform the statutory
and legal auditing tasks.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
57
Information on shareholders (pursuant to Article 123-bis, paragraph 1, of Italian
Consolidated Finance Act)
Shareholding structure
of Safilo Group S.p.A.
The following chart shows owners of Safilo Group S.p.A. ordinary shares with
shareholdings exceeding 5% of share capital as at 31 December 2023.
Management and
coordination activities
In accordance with IFRS 10 HAL Holding N.V. (through Multibrands Italy B.V.) is
deemed to have control over Safilo Group S.p.A. and, accordingly, is required to
consolidate the Company in its consolidated financial statements as from 1
January 2014 (even though the ownership interest of HAL Holding N.V. in Safilo
Group S.p.A. is below 50%). However, Safilo Group S.p.A. is still deemed not to
be subject to the direction and coordination activity (as such activity is defined
under Articles 2497 et seq. of the Civil Code) by other entities, including HAL
Holding N.V., since there are not the presumptions that typically have been
considered relevant by the doctrine and practice.
As a matter of fact, the presumption set forth by Article 2497-sexies of the Civil
Code – unless it is proved otherwise, whereby a company is deemed to be under
the direction and coordination of the entity which is bound to consolidate same
company in its financial statements – can be rebutted in the case at issue for the
following main reasons:
(i) Safilo Group S.p.A. can autonomously define its general strate
gic and
operative guidelines and has independent authority to negotiate with customers
and suppliers; its decision making process is therefore carried out independently
from the decision making process of HAL Holding N.V.;
(ii) the Company is managed by a Board of Directors the majority of whose
members are not members of corporate bodies of HAL Holding N.V. or its
subsidiaries. Moreover, the Board of Directors also has a sufficient number of
HAL Holding
N.V. 49.84%
(through
Multibrands Italy
B.V.)
BDL Capital
Manageent
14.99%
Rest of the
market 35.17%
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
58
independent directors to ensure that their opinions have a significant impact on
its own judgment and decisions;
(iii) the Company is not subject to any centralized management approach by HAL
Holding N.V. which, indeed, according to the report of its Executive Board, has
not developed a central risk management system, thus allowing each investee
company, including the Company, to have its own financial structure and be
responsible for evaluating and managing its own risks. Moreover, since HAL
Holding N.V. (a) has not included Safilo Group in its management reporting
syst
em which monitors the performance of the investee companies and,
therefore, (b) has no instruction rights with respect to the governance of the
Company, HAL Holding N.V. will continue to include the financial results of the
Group in the segment “quoted minority interests” of its accounts;
(iv) although a member of the Executive Board of HAL Holding N.V. is also a
member of the Board of Directors of the Company, the information he
periodically obtains in this capacity is never – and will never be - used for the
preparation of the consolidated financial statements of HAL Holding N.V. so as
to preserve confidentiality and to allow the Company to operate independently
from any of its shareholders. Accordingly, the risk management and internal
control systems of the Company with respect to financial reporting risks are
neither monitored nor managed by HAL Holding N.V..
For the sake of completeness and in the interest of transparency, the
consolidation of the Group in the consolidated financial statements of HAL
Holding N.V., as requested by the IFRS no. 10, may have a material impact on
both companies in terms of accounting reconciliation and consolidation
requirements. The Company has therefore agreed with HAL Holding N.V. on
certain procedures for the exchange of information which allow the latter to
comply with its (statutory) obligations in preparing its consolidated financial
statements on a timely basis while avoiding any interference with the Company’s
accounting standards and relevant interpretations, its ad
ministrative and
accounting system, as well as its internal control system.
In order to make the aforesaid exchange of information more efficient and
expeditious, HAL Holding N.V. and the Company, among other things, have (a)
set up a procedure aimed at ensuring, to the maximum possible extent permitted
by accounting laws and regulations applicable to each of them, that their financial
statements are based on materially the same accounting policies or, whenever it
is not possible to fully converge the accounting principles of the Company and
HAL Holding N.V., at making the necessary (accounting) adjustments to the
consolidated financial statements of the Company to be reflected in the
consolidated group reporting of HAL Holding N.V., (b) agreed to review the effect
of any newly issued accounting standards (if any) with the objective to converge,
where practically and legally possible, the implementation of these new
standards in the financial statements of both the Company and HAL Holding N.V.,
and (c) jointly hired an independent financial expert who, through access to the
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
59
Share transfer
restrictions
Restrictions on the
right to vote and
special rights
Shareholders’
Agreements relevant
for the purposes of
Article 122 of the CFA
Company’s own shares
appropriate management and control bodies of both concerned companies
(including, as far as the Company is concerned, the Control and Risk Committee
and the external auditing firm), is required to reach his own assessments and
form an opinion on any accounting/financial matters relating to the Company
which should be taken into account in the consolidation process. This activity of
the financial expert (which is not to be deemed as an audit or review of the
accounts of the Company) will allow HAL Holding N.V. to comply with IFRS in
consolidating its ownership interest in the Company while preserving, at the
same time, the current risk management and internal control systems of the
Company from any external influence (thus rebutting also any presumption of
direction and coordination of HAL Holding N.V. over the Company).
As at 31 December 2023 there were no restrictions of share transfer.
The Articles of Association do not provide restrictions to the right to vote and the
Company has not issued shares with special controlling rights.
The Company does not have knowledge of any shareholders’ agreements
pursuant to Article 122 of the CFA.
The Shareholders’ Meeting has neither delegated the power to increase the
share capital nor authorized purchases of own shares.
As at 31 December 2023 the Company does not possess own shares.
The ordinary shareholders' meeting of the subsidiary Safilo S.p.A., held on 27
April 2023, unanimously resolved to authorize the purchase and disposal of
ordinary shares of the parent company Safilo Group S.p.A., inter alia to service
the Stock Option Plan 2023-2025,
of Safilo Group S.p.A. and Safilo S.p.A.,
proposed by the Board of Directors held on March 9, 2023, for a maximum
number of 16,000,000 shares equal to approximately 3.9% of the shares
currently issued by Safilo Group S.p.A.. The authorisation for the purchase of the
parent company’s shares is granted for the maximum duration allowed by law,
provided for by article 2359-bis, paragraph 2 and by article 2357, paragraph 2,
of the Italian Civil Code for a period of eighteen months, starting from the
approval of the resolution. The shareholders’ meeting of the subsidiary Safilo
S.p.A. also gave the mandate to the Sole Director to identify, for the purpose of
the purchase, the amount of shares to be purchased prior to the commencement
of each purchase programme as well as the unit price, which may not, in any
case, be 10% lower in minimum and 10% higher in maximum with respect to
the official price recorded by Safilo Group’s share on the Euronext Milan market
organised and managed by Borsa Italiana S.p.A. on the trading day prior to that
on which the purchase transaction will be carried out.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
60
The Board of Directors
The Board of Directors plays an essential role in corporate governance. It is vested with power over the
strategic and control guidelines. In addition to the powers granted to it by law and the Articles of
Association, the Board holds exclusive authority over the most important decisions from an economic and
strategic point of view, as well as in terms of their structural influence on management.
The Board of Directors which currently holds office has been appointed by the Shareholders’ Meeting held
on 29 April 2021 and will remain in office until the date of the Shareholders’ Meeting called for the
approval of the financial statements at 31 December 2023.
Eugenio Razelli
(Chairman)
Angelo Trocchia
(Chief Executive Officer)
Jeffrey A. Cole
(Non-Executive Director)
Born in Genova, on June 18, 1950. He
graduated in Electrical Engineering
from Genova University. He began his
career in Fiat Auto and Zanussi and
became CEO of Gilardini Industriale in
1983. Subsequently, he held positions
of growing responsibility with Comind
(General Manager of Stars and
Politecna) and Magneti Marelli. In
particular, in the Components Sector
of the Fiat Group he held the positions
of General Manager of the Electronic
Components Division, of Executive
Vice President Manufacturing of the
Electromechanical Components
Group and, later on, of General
Manager of this same Group. In 1991
he was appointed President of the
Engine Control Systems. He moved to
Pirelli Cavi in 1993 as Vice President
Manufacturing and was later
appointed President & CEO of Pirelli
Cable North America. Upon his return
to Italy in 1997 he continued to work
at Pirelli Cavi first serving as Senior
Executive Vice President, Telecom
Division and then as Senior Executive
Vice President, Energy Division. From
2001 to 2003 he held the position of
Born in Formia (Latina) on April 27,
1963.
Angelo Trocchia was formerly
Chairman and Chief Executive
Officer of Unilever Italia from 2013
to 2018. After an MBA at the
STOA'/MIT in Naples and a PHD in
aeronautical engineering at the
University La Sapienza in Rome, he
began, in 1991, an international
career in Unilever, where he held
various roles of increasing
responsibility in supply chain and
sales. Until February 2013 he was
the Chief Executive Officer of the
Unilever Business in Israel, where he
delivered two important acquisitions
in the Ice Cream and Salty Snack
Fields, as well as significant growth
in the Personal Care business. He
also played a key role in leading the
local company towards a brand-new
organizational set-up. Previous roles
in Unilever include the General
Management of the Frozen Foods
business,
including the sale of
Findus Group to a private equity
fund and the management of the
whole transition process. Before
that, he served as General Manager
Born in Cleveland, Ohio - USA,
on May 20, 1941. He graduated
from Harvard College and
Harvard Business School. He
was Chairman and CEO, from
1983 to 2003, of Cole National
Corporation, a leading optical
retailer in North America and a
leading provider of managed
vision care service, as well as
owning the gift store chain
“Things Remembered”, with
sales, including franchisees, of
over $1 billion. Major brands
included Pearle Vision, Sears
Optical, Target Optical, Cole
Managed Vision Care and
Things Remembered. Cole
National also owned a minority
interest in optical retailer,
Pearle Europe B.V., now
GrandVision B.V.. He built the
strategic platform of Cole
National through acquisitions
and internal growth including
the start-up of Pearle Europe
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
61
President & CEO of Fiamm, a leading
company in the market of batteries.
From May 2003 to March 2005 he was
Senior Vice President for Business
Development of Fiat S.p.A. in charge
of Mergers and Acquisitions,
Innovation and ICT strategies. From
April 2005 to June 2015 he was
President and Chief Executive Officer
of Magneti Marelli. Today he is
Industrial Advisor of FSI and, since
June 2022, he is a Board Member of
ART Spa. He is also President and
Board Member
of Motor Valley
Accelerator. In July 2020 he became
a Board Member of the start-up
Easyrain i.S.p.A. and in December
2019 he was appointed Vice-
President of Texa S.p.A.. In addition,
in July 2023 he was appointed as a
Board Member of Tatuus Racing.
From 2005 to 2011 he was President
of the Italian Association of the
Automotive Industry (ANFIA) that has
been representing since 1912 the
whole automotive sector in Italy; and
from 2006 to 2011 Member of the
Board of CONFINDUSTRIA (General
Confederation of the Italian
Industry). Since 2009 he has been
Vice President of OICA (International
Organization of Motor Vehicle
Manufacturers) and from 2009 to
2011 President of FEDERVEICOLI, the
Federation of the Italian Motor
Vehicles and Components
Associations of the transport sector,
established after an agreement
among ANCMA (National Association
for the Bicycle, Motorcycle and
Accessory Industry), ANFIA and
UNACOMA (Italian Farm Machinery
Manufacturers Association).
of the Unilever Ice Cream business
in the Czech Republic and he also led
the Italian Ice Cream business,
which accounts for more than 40%
of the total Italian business turnover.
B.V. in late 1996 in partnership
with HAL INVESTMENTS of
Rotterdam, the Netherlands.
Cole National was acquired in
October 2004 by Luxottica, an
eyewear company ba
sed in
Milan, Italy. He served as a
member of the Grandvision B.V.
Supervisory Board, a leading
eyewear retailer, from 1996
until august 2021, when the
company was sold to Essilux.
He is a board member of RĒVO
and he is a Director of Europa
Eyewear and
Eyebobs, US
based optical and reading glass
companies. He is a trustee of
the Cole Eye Institute of the
Cleveland Clinic one of the top
ranked eye research and
treatment centers in the USA.
He has been the founder and
principal shareholder of
numerous companies in the
USA and has served on the
Board of Directors at various
times of 12 publicly traded
companies in the USA.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
62
Melchert Frans Groot
(Non-Executive Director)
Born in The Hague, Netherlands, on
October 22, 1959.
In 1984 he
graduated in Civil Engineering from
the Technical University of Delft,
and subsequently gained a Master’s
in Business Administration from
Columbia University in New York.
After his first work
experience with
Philips, in 1989 he joined HAL
Holding N.V. where he is the
Chairman of the Executive Board
since October 2014.
Presently he is
also Vice-
chairman of the
Supervisory Board of Royal Vopak
N.V. (non-
executive), member of
the Supervisory Board
of Anthony
Veder N.V. (non-
executive) and
Chairman of the Board of Directors
of Chile Holding Optico S.A. the
holding company of Rotter y Krauss
Lta. (non-executive).
In the past,
he
held important roles in different
companies of the HAL Group among
these, he was CEO of Pearle Europe
B.V. (2001-
2003) and GrandVision
S.A. (2005-
2006), Supervisory
Board member of Pearle Europe
B.V. (1996 – 2010),
Chairman of
Supervisory Board of GrandVision
S.A. (2004 – 2010), Supervisory
Board member of GrandVision N.V.
(2010- 2021)
and Chairman of the
Supervisory
Board of Audionova
B.V. (2011-2014).
Robert Polet
(Non-Executive Director)
Born in Kuala Lumpur, Malaysia,
on July 25, 1955.
He was, from
2004 to 2011, Chairman and Chief
Executive Officer of the
Management Board of the Gucci
Group contributing to the
successful consolidation and
growth of the Group and its
brands.
He previously spent 26
years in the Unilever Group where
he was
President of Unilever’s
Worldwide Ice Cream and Frozen
Foods division, a $ 7.8 billion
business consisting of over 40
operating companies.
Prior to that
position, he
worked in a variety of
executive roles within Unilever,
including Chairman of Unilever
Ma
laysia, Chairman of Van den
Bergh’s and Executive Vice
President of Unilever’s European
Home and Personal Care division.
He is also a non-executive Director
of Philip Morris International Inc.
and non-
executive Chairman of
SFMS B.V. and Arica Holding B.V..
Cinzia Morelli-Verhoog
(Non-executive Independent
Director)
Born in Premosello, Italy on January
28, 1960. She is the fo
under of The
Marketing Capability Academy, a
Dutch company advising companies
on how to increase the
effectiveness of their marketing
strategies and return on
investments. She graduated in
modern languages from the State
University of Milan. From 2004 to
2
016 she held various positions in
Heineken NV including:
International Portfolio Manager,
Regional Marketing Manager
Europe, Global Commercial
Strategy Director, Senior Director
Global Marketing Capabilities and
finally Senior Director Global
Marketing Dev
elopment. In the
past, she worked for Reckitt &
Colman and ReckittBenckiser
(London), IDV Diageo (Turin),
Capgemini (Frankfurt, Milan
London), Benckiser Italiana S.p.A.
(Milan) and Richardson
Vicks/Procter & Gamble (Milan and
Rome). Since 2022, she
is
independent non-
executive director
of NeoDecorTech.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
63
Ines Mazzilli
(Non-executive Independent Director)
Katia Buja
(Non-executive Director)
Born in Milan on May 5, 1962, she graduated in Business
Administration, major in Finance, from Bocconi
University in
Milan, attended a Management Course at the INSEAD
University in France and attended the Director’s Program
Enhancing the Skills of Corporate and Financial Governance
from SDA Bocconi School of Management in Milan. In 2019-
2022 she served as non-
executive independent Director of
the Board of Directors of Assicurazioni Generali S.p.A. and
member of its Risk and Control Committee and Related Party
Transactions Committee. In 2022 she served as member of
its Remuneration and Appointments Committee.
In 2018-2021 she served as non-
executive independent
Director of the Board of Directors of Saipem S.p.A. and has
been the President of its Audit and Risk Committee. Since
2016 she is member of the Advisory Council and Senior
Advisor (external) for GENPACT. She has more than 30 years
of experience in a variety of senior finance management
positions. She previously worked for 23 years in HEINEKEN.
In 1993, she joined the Italian Operating Company as
Planning & Control Manager and she was Finance Director
2001-2005. In 2006-
2010, she was Senior Finance Director
of the Western Europe Region. In 2010-
2015, she has been
Senior Finance Director of the Global Business Services,
responsible for Business Partnering to Global Business
Services, HEINEKEN Global Shared Services in Kraków, Global
Process and Control Improvement and Global Finance
Business Process Management. In 2015-
2016, she has been
Senior Director Global Finance Processes & Internal Control,
responsible for HEINEKEN Global Shared Services, Global
Pro
cess and Control Improvement and Global Finance
Business Process Management. Prior to joining HEINEKEN,
she spent the early part of her career, from 1987 to 1993, in
senior finance jobs in Elizabeth Arden, being part of Eli Lilly
first, and Unilever after.
She started her career in banking.
She is active in a variety of roundtables with multinationals
and since 2014 member of the Advisory Board of Corso di
Laurea Magistrale in Economia e Legislazione d’impresa,
University of Pavia, Italy.
Born in Padua, Italy on January 20,
1966,
she graduated in Law from the
University of Padua and is qualified to
practice the profession of lawyer. She
has spent her entire professional career
in the Safilo Group with increasing
responsibilities until becoming Group
General
Counsel in 2005, dealing with
the legal and corporate aspects of the
listed parent company and the Italian
and foreign subsidiaries, leading a team
of internal lawyers.
Previously she worked for some law
firms and notaries.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
64
Irene Boni
(Non-Executive Independent Director)
Born in Sassuolo (Modena), Italy, on
February 9, 1981. She graduated in
Economics in 2004 from the Alma Mater
Studiorum University of Bologna, Italy,
and has a Master in Business
Administration from Columbia
University in New York, USA. She is the
Chief Executive Officer of Talent
Garden, a European leading player
focusing on Digital Education. Irene is
also a Senior Advisor, Digital
Transformation and E-
commerce with
an international background and strong
experience in d
igital. She supports
executives, entrepreneurs and investors
to identify and unleash the growth
potential of companies, exploiting
technological and process innovation.
After starting her career with Procter &
Gamble and McKinsey & Co., from 2010
to 2019 s
he worked at YOOX Group,
then YOOX NET-A-
PORTER Group
covering roles of increasing
responsibility (Corporate Development,
Operations, Technology, Organization
and Human Resources). She
was a
member of the Innovation Advisory
Board of Vodafone Italia and of the
Altagamma Luxury Consumer Advisory
Board. Currently she is the Chief
Executive Officer of Talent Garden, a
member of Angels4Women and
independent director of Edizione
Holding, Laminam,
Fondazione AGO
Modena Fabbriche Culturali E.T.S. and
Hype, and non-
indipendent director of
Hyper Island.
Matthieu Brisset
(Non-Executive Independent Director)
B
orn in Paris, France, on March 2,
1972.
He graduated in 1995 from Ecole
Polytechnique in France.
He is an
experienced executive in the luxury
sector, with
strong financial experience
and strong proven experience in B2B and
B2C luxury brand management. From
2008 to 2020 he held various roles at
LVMH Louis Vuitton Moët Hennessy,
where he notably served as Chief
Executive Officer of Loro Piana and, most
recentl
y, Senior Vice President Strategy
& Development, Moët Hennessy.
Previously, from 1995 to 2008 he held
various roles at JPMorgan Investment
Banking.
He is the Founder and
President of Bespoke Advisory Partners,
a consulting firm and a Senior Advisor of
the Boston Consulting Group. He is
currently non-
executive member of the
Board of Directors of EXA MP S.r.l. He
was previously Vice President of the
Board of Directors of MonteNapoleone
District and, among others, a member of
the Board of Directors of Editions
Assouline and of the Supervisory Board
of Royal van Lent.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
65
Corporate committees
The Board of Directors has set three internal Committees and one mixed-composition Committee
(including management and directors) having the duty to support the Board in the evaluations and the
decisions relating to, respectively:
- the internal control and risk management system and the approval of the periodical financial
and non-financial reports (Control and Risk Committee);
- the pursuit of the Group’s sustainable success (Sustainability Committee, including members of
the Board of Directors and managers of the Group);
- both the remuneration and nomination themes (Remuneration and Nomination Committee);
- the approval of Transactions with Related Parties (Transactions with Related Parties Committee).
The Board of Directors has also appointed a Supervisory Committee pursuant to Legislative Decree No.
231/2001 which: i) supervises 231 Model operations and compliance with provisions therein; ii) evaluates
the necessity to update the 231 Model; iii) carries out controls with access to all documentation needed.
Below is the composition of the Corporate Committees of Safilo Group S.p.A. as appointed by the Board
of Directors meeting held on 29 April 2021:
Supervisory Committee
Chairman
Bettina Solimando
Ines Mazzilli
Giorgia Canova
Control and Risk Committee
Chairman
Ines Mazzilli
Melchert Frans Groot
Matthieu Brisset
Sustainability Committee
Chairman
Eugenio Razelli
Angelo Trocchia
Katia Buja
Vladimiro Baldin
Andrea Grassini
Marco Cella
Alberto Macciani
Remuneration and Nomination Committee
Chairman
Cinzia Morelli-Verhoog
Jeffrey A. Cole
Irene Boni
Transactions with Related Parties Committee
Chairman
Ines Mazzilli
Matthieu Brisset
Cinzia Morelli Verhoog
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
66
The Board of Statutory Auditors
The Board of Statutory Auditors oversees compliance with laws, regulations and Articles of Association,
with principles of good management and, especially, the adequacy of the administrative, organizational
and accounting structure adopted as well as its actual operations and the adequacy and efficiency of the
risk management and control system.
The Board of Statutory Auditors currently in office has been appointed by the Shareholders’ Meeting held
on 27 April 2023 and will remain in office for three years until the date of the Shareholders’ Meeting called
for the approval of the financial statements at 31 December 2025.
Maria Francesca
Talamonti
(Chairman)
Roberto Padova
(Standing Statutory Auditor)
Bettina Solimando
(Standing Statutory Auditor)
Born in Rome in 1978, she is a
graduate in Economics and
Commerce of L.U.I.S.S.
University in Rome. She has
been registered with the Rome
Charted Accountants’ Register
since 2006 and with the Legal
Auditors Register since 2007.
She is a statutory auditor for
various Companies in the
sector of energy, investments
and digital technologies.
Born in Rome in 1956, he is a
graduate in Law of Roma
University. He has been a
member of the Bar Association
of Rome since 1985. He is a
statutory auditor and member
of the Supervisory Committee
(Lgs. Decree 231/2001) for
companies operating in the
industrial, energy and medical
devices sector.
Born in San Severo (FG) in
1974, she is a graduate in
Economics and Commerce of
Verona University. She has
been registered with the
Verona Chartered Accountants’
and Auditors’ Register since
2002. She is a statutory
auditor for industrial and
commercial companies.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
67
Corporate Governance Report
Governance is based on
the criteria of the
Corporate Governance
Code for Listed
Companies
The complete version of
the report on corporate
governance can be
found in the Corporate
Governance section of
the site
www.safilogroup.co
m
The Board of Directors has aligned the corporate governance system of the
Company and of the Group to the principles and reccomendations of the
Corporate Governance Code for listed companies of Borsa Italiana S.p.A.
(hereinafter "Code").
The complete version of the report on corporate governance is available on the
Company website (www.safilogroup.com
), as well as in a printed version at the
Company headquarters.
The Company adopts a traditional governance method in that:
- the Company’s management body is the Board of Directors,
- the supervisory body which ensures compliance with the law, the Articles
of Association and correct administration principles is the Board of
Statutory Auditors.
An independent audit company performs the legal auditing tasks.
Corporate governance, in accordance with the Articles of Association and in
line with current legislation and regulations, and as provided by the Code is
entrusted to the following bodies.
Appointing Board of
Directors
The Board of Directors
The Board of Directors is appointed and replaced in compliance with article 14
and 15 of the Articles of Association, published on the website in the section
Governance/Governance System/Articles of Association
and corporate
documents, and should be referred to for details.
In particular, the members of the Board of Directors are appointed by the
Shareholders’ on the basis of lists presented by the shareholders, to allow:
(i) that minority shareholders are represented by one member on
the Board of Directors; and
(ii) the balanced representation of genders (masculine or feminine)
in compliance with applicable law.
The Board of Directors is invested with the widest possible powers for the
ordinary and extraordinary administration of the Company, excluding only
those powers that by law are the prerogative of the Shareholders' Meeting.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
68
Appointing auditors
The Board of Statutory Auditors
The Board of Statutory Auditors is appointed and replaced in compliance with
article 27 of the Articles of Association, published on the website in the section
Governance/Governance System/Articles of Association
and corporate
documents, and should be referred to for details.
In particular, the auditors are appointed by the Shareholders’ Meeting on the
basis of lists presented by the shareholders, to allow minority shareholders to
appoint a statutory auditor and a substitute auditor.
The Board of Statutory Auditors ensures compliance with the law and the
Articles of Association as well as with the principles of correct administration.
It also monitors the adequacy of the Company’s organisation structure, for
those matters of its responsibility as well as the internal control system and
risks management and the administration and accounts system in order to
verify the reliability of the same to correctly represent company facts, on the
effective implementation of the corporate governance rules contained in the
Code and the adequacy of the dispositions given by the Company to its
subsidiaries, in compliance with article 114, paragraph 2 of the Consolidated
Financial Act.
As established by the Legislative Decree 39/2010, as amended by Legislative
Decree no. 135 of 17 July 2016, the Board of Statutory auditors, serving as the
Internal Control and Audit Committee as required by that legislation, is
responsible to make a reasoned proposal to the Shareholders’ Meeting for the
appointment of the independent audit company.
The Board of Statutory Auditors, as part of its legal responsibilities, checks the
correct application of the criteria and procedures to control independence that
are adopted by the Board of Directors to appraise the independence of its
members; the outcome of the control is notified to the market every year, as
part of the corporate governance report or in the Auditors’ report to the
Shareholders’ Meeting.
PricewaterhouseCoopers
appointed until 2031
The Audit Company
The Audit Company is the external supervisory body appointed by the
Shareholders' Meeting with the mandate of auditing the Safilo Group S.p.A.
separate and consolidated financial statements.
The Shareholders' Meeting held on 27 April 2023, upon proposal of the Board
of Statutory Auditors, apponted PricewaterhouseCoopers S.p.A. as external
Audit Company for the financial years from 2023 to 2031. The Partner
responsible for the mandate is Mr. Filippo Zagagnin.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
69
Appointment of the
financial reporting
manager
Financial reporting manager
The Financial Reporting Manager must prepare the adequate administration
and accounts procedures for drafting the annual financial statements, the
consolidated financial statements and any other financial communications
and/or documents, and he must certify that the procedures:
- are adequate taking into account the characteristics of the company;
- have been effectively applied during the period relative to the annual
financial statement, the consolidated financial statement and any other
financial communication or document.
For the assessment of the adequacy of the administrative and accounting
procedures the Company has opted for applying a theoretic reference model
issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO) that is universally recognised and is the most accredited.
The activities required to assess the adequacy and
effectiveness of the
procedures and processes that generate financial statement are as follows:
- identifying the control systems necessary to reduce the identified risks;
- carrying out the control tests;
- implementing corrective actions that may be required to adapt the control
system.
On 9 July 2023, following the resignation of Mr. Gerd Graehsler, Group Chief
Financial Officer and Manager Responsible for the preparation of the company’s
financial documents, the Board of Directors appointed as new Manager
Responsible (hereinafter “Financial Reporting Manager”) Michele Melotti , new
Group Chief Financial Officer, after receiving the favourable opinion of the
Board of Auditors - who possesses the professional requisites, including specific
skills as well as many years of experience in accounting and financial matters,
required for the performance of the tasks assigned. Moreover, it has been
established that the manager thus appointed will hold office until his
resignation or revocation by the Board of Directors.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
70
OTHER INFORMATION
Atypical and/or unusual
transactions
Related party
transactions
Research and
development
No atypical and/or unusual transactions, as defined by Consob Communication
6064293 dated 28 July 2006, were undertaken during 2023.
In compliance with applicable legislative and regulatory requirements, the Board
of Directors of 5 November 2010 approved the "Regulations for the transactions
with related parties", to govern transactions of major strategic, economic, capital
or financial
significance for the Company, including those undertaken with
related parties, to assure their transparency and material and procedural
correctness. Our related party transactions are neither atypical nor unusual and
occur in the ordinary course of our business. Management believes that these
transactions are fair to the Group. Transactions with related parties, are on an
arm’s length basis, according to the nature of the transaction, sale of products
or provision of services.
For further details regarding the related party transactions, please refer to note
6 to the Consolidated Financial Statements.
The Group’s research and development focuses on materials, production
processes and the improvement of technical characteristics of the products, and
on innovations of the production process which increases its effectiveness,
efficiency, quality and speed to market. Expenditure on research is expensed as
incurred.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
71
RECONCILIATION OF THE PARENT COMPANY’S NET PROFIT AND SHAREHOLDERS’ EQUITY
WITH THE CONSOLIDATED BALANCES
(Euro million)
Equity as of
December 31,
2023
Net
profit/(loss)
of the year
2023
Equity as of
December 31,
2022
Net
profit/(loss)
of the year
2022
Balances as per Safilo Group S.p.A.'s
statutory financial statements
408.0
(7.5)
415.2
(11.9)
Contribution of consolidated companies
1,050.3
(2.0)
1,105.3
3.1
Elimination of the book value of
consolidated subsidiaries
(1,034.1)
(0.1)
(1,044.8)
44.3
Goodwill
32.6
0.0
33.8
0.0
Liability for options on non-controlling
interests
(20.8)
(7.9)
(19.5)
31.2
Elimination of dividends paid within the
Group
-
(16.7)
-
(13.4)
Elimination of intercompany gains
within the Group
(1.3)
0.8
(2.2)
0.2
Elimination of intercompany profits
included in inventory
(36.2)
9.1
(47.3)
(2.5)
Other consolidated entries
(2.7)
(1.9)
(1.6)
1.3
Total
395.8
(26.1)
438.9
52.3
Equity attributable to minority interests
16.6
(1.4)
29.0
(1.8)
Total attributable to the Group
379.2
(24.6)
409.9
54.2
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
72
SIGNIFICANT EVENTS AFTER THE YEAR-END
Subsequent to 31 December 2023 through the approval date of this report, no significant events occurred
which would have impacted the financial and economic results shown pursuant to IAS 10 Events after
the reporting period.
For the Board of Directors
Chief Executive Officer
Angelo Trocchia
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 73
FINANCIAL STATEMENTS AND NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
as of 31 December 2023
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 74
Consolidated financial statements
Consolidated balance sheet
(Euro/000)
Notes
December
31, 2023
of which
related
parties
December
31, 2022
of which
related
parties
ASSETS
Current assets
Cash and cash equivalents
4.1
74,898
77,710
Trade receivables
4.2
203,075
382
214,034
328
Inventory
4.3
228,991
258,980
Derivative financial instruments
4.4
585
698
Other current assets
4.5
40,119
44,878
Total current assets
547,667
596,300
Non-current assets
Tangible assets
4.6
88,750
109,088
Right of Use assets
4.7
33,988
38,997
Intangible assets
4.8
108,117
132,993
Goodwill
4.9
33,682
34,895
Deferred tax assets
4.10
35,320
36,274
Derivative financial instruments
4.4
271
780
Other non-current assets
4.11
7,668
8,623
Total non-current assets
307,795
361,649
Non-current assets held for sale
4.6
-
2,320
TOTAL ASSETS
855,462
960,268
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 75
(Euro/000)
Notes
December
31, 2023
of which
related
parties
December
31, 2022
of which
related
parties
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Borrowings
4.12
30,250
30,000
Lease liabilities
4.12
9,643
9,051
Trade payables
4.13
172,107
33
180,701
83
Tax payables
4.14
23,382
22,492
Derivative financial instruments
4.4
3,909
7,656
Liability for options on non-controlling interests
4.18
-
6,195
Other current liabilities
4.15
40,772
47,291
Provisions
4.16
9,017
9,166
Total current liabilities
289,081
312,552
Non-current liabilities
Borrowings
4.12
88,345
117,329
Lease liabilities
4.12
29,359
34,727
Employee benefit obligations
4.17
9,734
13,975
Provisions
4.16
9,443
14,512
Deferred tax liabilities
4.10
10,291
12,863
Derivative financial instruments
4.4
-
-
Liability for options on non-controlling interests
4.18
20,770
13,349
Other non-current liabilities
4.19
2,653
2,041
Total non-current liabilities
170,596
208,796
TOTAL LIABILITIES
459,676
521,348
Shareholders' equity
Share capital
4.20
384,858
384,846
Share premium reserve
4.21
27,388
692,521
Retained earnings and other reserves
4.22
(8,668)
(722,392)
Cash flow hedge reserve
4.23
271
780
Income/(Loss) attributable to the Group
(24,649)
54,160
Total shareholders' equity attributable to the Group
379,200
409,915
Non-controlling interests
16,586
29,005
TOTAL SHAREHOLDERS' EQUITY
395,786
438,920
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
855,462
960,268
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 76
Consolidated income statement
(Euro/000)
Notes
2023
of which
related
parties
2022
of which
related
parties
Net sales
5.1
1,024,732
1,287
1,076,745
1,204
Cost of sales
5.2
(438,997)
(479,296)
Gross profit
585,735
597,450
Selling and marketing expenses
5.3
(428,780)
(52)
(420,488)
(74)
General and administrative expenses
5.4
(138,080)
(50)
(128,426)
(30)
Other operating income/(expenses)
5.5
(11,214)
(78)
Operating profit
7,661
48,458
Gains/(losses) on liabilities for options on non-
controlling interests
5.6
(7,895)
31,191
Financial charges, net
5.7
(19,223)
(15,512)
Profit/(Loss) before taxation
(19,456)
64,136
Income taxes
5.8
(6,633)
(11,788)
Profit/(Loss) of the period
(26,089)
52,349
Profit/(Loss) attributable to:
Owners of the parent
(24,649)
54,160
Non-controlling interests
(1,440)
(1,811)
Earnings/(Losses) per share - basic (Euro)
5.9
(0.060)
0.131
Earnings/(Losses) per share - diluted (Euro)
5.9
(0.059)
0.130
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 77
Consolidated statement of comprehensive income
2023 2022
(Euro/000)
Notes
Net profit (loss) for the period (A)
(26,089)
52,349
Gains/(Losses) that will not be reclassified subsequently to profit or loss:
- Remeasurements of post employment benefit obligations
(330)
2,750
Total gains/(Losses) that will not be reclassified subsequently to profit or loss:
(330)
2,750
Gains/(Losses) that will be reclassified subsequently to profit or loss:
- Gains/(Losses) on cash flow hedges
4.23
(510)
780
- Gains/(Losses) on exchange differences on translating foreign operations
4.22
(16,832)
17,023
Total gains/(losses) that will be reclassified subsequently to profit or loss:
(17,342)
17,803
Other comprehensive income/(loss), net of tax (B)
(17,671)
20,553
TOTAL COMPREHENSIVE INCOME/(LOSS) (A)+(B)
(43,760)
72,903
Attributable to:
Owners of the parent
(41,709)
72,918
Non-controlling interests
(2,051)
(16)
TOTAL COMPREHENSIVE INCOME/(LOSS)
(43,760)
72,903
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 78
Consolidated statement of cash flows
(Euro/000)
Notes
2023 2022
A - Opening net cash and cash equivalents
4.1
77,710
99,002
B - Cash flow from (for) operating activities
Net profit/(loss) for the period (including minority interests)
(26,089)
52,349
Depreciation and amortization
4.6 - 4.8
44,877
38,064
Right of Use depreciation IFRS 16
4.7
10,345
10,326
Non-monetary changes related to liabilities for options on non-controlling
interests
7,895
(31,191)
Other items
(9,662)
(9,067)
Interest expenses, net
5.7
8,974
5,912
Interest expenses on lease liabilities IFRS 16
5.7
1,745
1,862
Income tax expenses
5.8
6,633
11,788
Flow from operating activities prior to movements in working capital
44,718
80,043
(Increase) Decrease in trade receivables
6,335
(36,222)
(Increase) Decrease in inventory, net
22,652
(17,618)
Increase (Decrease) in trade payables
(5,751)
(14,842)
(Increase) Decrease in other receivables
7,702
8,467
Increase (Decrease) in other payables
(9,432)
(2,138)
Interest expenses paid
(8,050)
(4,266)
Interest expenses paid on lease liabilities IFRS 16
(1,745)
(1,862)
Income taxes (paid)/received
(8,717)
(2,405)
Total (B)
47,712
9,156
C - Cash flow from (for) investing activities
Investments in property, plant and equipment
(10,527)
(12,733)
Net disposals of property, plant and equipment and assets held for sale
10,513
196
Acquisition of minorities (in subsidiaries)
(5,948)
-
Purchase of intangible assets, net of disposals
(2,686)
(3,131)
Total (C)
(8,648)
(15,669)
D - Cash flow from (for) financing activities
Proceeds from borrowings
-
147,001
Repayment of borrowings
4.12
(30,000)
(153,000)
Repayment of principal portion of lease liabilities IFRS 16
(9,956)
(10,026)
Increase in share capital, net of transaction costs
39
89
Dividends paid
(552)
(875)
Total (D)
(40,469)
(16,811)
E - Cash flow for the period (B+C+D)
(1,405)
(23,324)
F - Translation exchange differences
(1,407)
2,032
Total (F)
(1,407)
2,032
G - Closing net cash and cash equivalents (A+E+F)
4.1
74,898
77,710
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 79
Consolidated statement of changes in equity
(Euro/000)
Share
capital
Share
premium
reserve
Translation
diff.
reserve
Cash
flow
hedge
reserve
Retained
earnings
and other
reserves
Total
Non-
controlling
interests
Total
equity
Consolidated net equity at
January 1, 2023
384,846
692,521
107,421
780
(775,653)
409,915
29,005
438,920
Profit/(Loss) for the period
-
-
-
-
(24,649)
(24,649)
(1,440)
(26,089)
Other comprehensive income
(loss) for the period
-
-
(16,221)
(510)
(330)
(17,060)
(611)
(17,671)
Total comprehensive
income (loss) for the
period
-
-
(16,221)
(510)
(24,979)
(41,709)
(2,051)
(43,760)
Cover previous years losses
carried forward
-
(665,160)
-
-
665,160
-
-
-
Increase in share capital, net
of transaction costs
12
27
-
-
-
39
-
39
Dividends distribution
-
-
-
-
-
-
(552)
(552)
Changes of non-controlling
interests of subsidiaries
acquired
-
-
-
-
9,282
9,282
(9,282)
-
Net increase in the Reserve
for share-based payments
-
-
-
-
459
459
-
459
Changes in other reserves
-
-
-
-
1,213
1,213
(533)
680
Consolidated net equity at
December 31, 2023
384,858
27,388
91,200
271
(124,517)
379,200
16,586
395,786
(Euro/000)
Share
capital
Share
premium
reserve
Translation
diff.
reserve
Cash
flow
hedge
reserve
Retained
earnings
and other
reserves
Total
Non-
controlling
interests
Total
equity
Consolidated net equity at
January 1, 2022
384,820
692,458
92,193
-
(842,730)
326,741
39,346
366,087
Profit/(Loss) for the period
-
-
-
-
54,160
54,160
(1,811)
52,349
Other comprehensive income
(loss) for the period
-
-
15,228
780
2,750
18,758
1,796
20,553
Total comprehensive
income (loss) for the
period
-
-
15,228
780
56,910
72,918
(16)
72,903
Increase in share capital, net
of transaction costs
26
63
-
-
-
89
-
89
Dividends distribution
-
-
-
-
-
-
(876)
(876)
Changes of non-controlling
interests of subsidiaries
acquired
-
-
-
-
9,419
9,419
(9,419)
-
Net increase in the Reserve
for share-based payments
-
-
-
-
748
748
-
748
Changes in other reserves
-
-
-
-
-
-
(31)
(31)
Consolidated net equity at
December 31, 2022
384,846
692,521
107,421
780
(775,653)
409,915
29,005
438,920
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 80
1. General information
1.1 General information
Established in 1934 in Italy’s Veneto region, Safilo Group is one of the eyewear industry’s principal players in the
design, manufacturing and distribution of optical frames, sunglasses, sports eyewear, goggles and helmets.
The holding company, Safilo Group S.p.A., is a joint stock company established in Italy on 14 October 2002
registered with the Business and Trade registry of Vicenza and with the head office in Padua, Settima Strada 15,
Italy.
Safilo Group S.p.A. is listed on the Euronext Milan of the Italian Stock Exchange organized and managed by Borsa
Italiana S.p.A., (code SFL
IT0004604762).
Following the Group’s financial restructuring, which was completed in the first quarter of 2010 with the share-
capital increase, Multibrands Italy B.V. (a subsidiary of HAL Holding N.V.) became the parent company’s leading
shareholder.
According to IFRS 10 HAL Holding N.V. is deemed to have control over Safilo Group S.p.A. and accordingly is
required to consolidate Safilo Group S.p.A. in its financial statements as from 1 January 2014 (even though its
ownership interest of HAL Holding N.V. in the company Safilo Group S.p.A. is below 50%). HAL Holding is fully
owned by HAL Trust, listed on NYSE Euronext of the Amsterdam Stock Exchange.
These consolidated financial statements are reported in thousands of Euro. The consolidated financial information
relates to the period from 1 January 2023 to 31 December 2023 and also presents comparative data related to the
financial period from 1 January 2022 to 31 December 2022.
These financial statements were approved by the Board of Directors on 14 March 2024.
The English version of the consolidated financial statements of Safilo Group S.p.A. constitute a non-official version
that has been translated from the Italian original solely for the convenience of international readers. The Italian
version shall always prevail in case of any discrepancy or inconsistency between Italian version and its English
translation. Even if this English version, for the convenience of international readers, contains also the ESEF
information as specified in the ESEF regulatory technical standards (Delegated Regulation (EU) 2019/815), the
legally required ESEF-format is published and filed in Italian language in accordance to the Law.
The companies included in the consolidation area are listed in paragraph 2.3 “Scope of consolidation and
methodology”.
2. Summary of accounting principles adopted
2.1 Accounting policies
The accounting policies described here below have been applied for the preparation of the present report and
comply with those adopted for the financial report as of 31 December 2022. The new amendments and accounting
standards, described below, have not had any significant impacts on this report. The consolidated financial
statements are based on the going concern assumption, despite a context still characterized by considerable
uncertainty, the Group, taking into account its financial solidity, the actions undertaken to mitigate risks and its
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 81
business model, believes that there are no elements that may rise any uncertainty on the going concern
assumption, in accordance with paragraph 25 of IAS 1.
The consolidated financial statements for the year ended 31 December 2023 and 31 December 2022 were prepared
in accordance with IFRSs issued by the International Accounting Standard Board (“IASB”) and endorsed by the
European Commission, as well as with the measures enacted to implement article 9 of Legislative Decree no.
38/2005. IFRSs include also all the interpretations of the International Financial Reporting Interpretations
Commitee (“IFRIC”), previously called Standing Interpretations Commitee (“SIC”).
The consolidated financial statements were prepared in accordance with “cost” criteria with the exception of some
financial assets and liabilities, including derivative instruments, for which the “fair value” criterion was adopted.
Preparation of the annual report in accordance with IFRSs requires management to make estimates and
assumptions that may affect the amounts reported in the financial statements and explanatory notes. Actual results
may differ from these estimates. The areas of the financial statements that are most affected by such estimates
and assumptions are listed in section 2.23 “Use of estimates”.
Accounting standards, amendments and interpretations effective as of 1 January 2023
Except for what is described below about those accounting policies which changed due to new accounting
standards and new IFRIC interpretations, in preparing these consolidated financial statements the same accounting
principles and criteria of the consolidated financial statements as at 31 December 2022 have been applied.
Furthermore, the Group has adopted the following new standards and amendments, effective from 1 January
2023:
- on 18 May 2017 and 25 June 2020 , the IASB published respectively the IFRS 17 Insurance Contracts and
its Amendments;
- on 9 December 2021, the IASB published the amendments to IFRS 17 Insurance contracts: Initial
Application of IFRS 17 and IFRS 9 – Comparative Information;
- on 12 February 2021, the IASB published the amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2: Disclosure of Accounting policies, Amendments to IAS 8 Accounting
policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;
- on 7 May 2021, the IASB published the amendments to IAS 12 Income Taxes: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction;
- on 23 May 2023, the IASB published the amendments to IAS 12 Income taxes International Tax Reform
– Pillar Two Model Rules.
With reference to the Pillar Two Model Rules, effective from 1 January 2024 Safilo Group, as Multinational Group
of enterprises that – together with its indirect reference shareholder HAL Holding N.V. – meets the 750 million
euro annual consolidated revenue threshold in at least two of the four preceding years, falls within the application
of the Pillar Two income taxes provided for by the Council Directive (EU) 2022/2523 enacted in Italy by Legislative
Decree 209/2023, aimed at ensuring a global minimum level of taxation for multinational enterprise groups and
large-scale domestic groups in the European Union.
In accordance with paragraph 4.A of IAS 12 that provides for a temporary exception to such Principle in relation
to the accounting and disclosure of information on deferred tax assets and liabilities arising from the jurisdictional
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 82
implementation of the Pillar Two Model Rules, in the current financial statements no information are communicated
and no deferred assets and liabilities are recorded in relation to the income taxes deriving from the implementation
of the Pillar Two Model Rules.
The Group has complied with the above new amendments in preparing this report, their application had no
significant impact on the Group consolidated financial statements.
Accounting standards, amendments and interpretations issued and endorsed by the European Union but not
effective for the reported period and not early adopted by the Group
At the date of this report the following amendments have been endorsed by the European Union applicable to the
Group and effective for annual periods beginning on or after 1 January 2024 that have not been early adopted by
the Group in preparing this report:
- on 23 January 2020, the IASB published an amendment called “Amendments to IAS 1 Presentation of
Financial Statements: Classification of Liabilities as Current or Non-current”. On 31 October 2022 the IASB
published an amendment called “Amendments to IAS 1 Presentation of Financial Statements: Non-Current
Liabilities with Covenants”. The documents aim to clarify how to classify debts and other short or long-
term liabilities. The changes come into effect from 1 January 2024;
- on 22 September 2022, the IASB published the amendment to IFRS 16 Lease Liability in a Sale and
Leaseback. The document aims to clarify how a seller-lessee subsequently measures sale and leaseback
transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The changes come
into effect from 1 January 2024.
The Group will comply with these new standards and amendments based on their relevant effective dates, and
their application is not expected to have any material impact on the Group consolidated financial statements.
Accounting standards, amendments and interpretations not yet completed and endorsed by the European Union
In addition, the European Union has not yet completed its endorsement process for the following standards and
amendments at the date of this report:
- on 25 May 2023 the IASB published amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures: Supplier Finance Arrangements. The changes will come into effect from 1
January 2024;
- on 15 August 2023 the IASB published amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rates: Lack
of Exchangeability.
The Group will comply with these new standards and amendments based on their relevant effective dates when
endorsed by the European Union and it will evaluate their potential impacts on the consolidated financial
statements.
2.2 Format of financial statements
Safilo presents the income statement by function (so-called “cost of sales”). This is considered to be more
representative with respect to presentation by type of expenses, as it conforms more closely to the internal
reporting and business model and is in line with international practice in the eyewear sector.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 83
For the balance sheet, a distinction is made in the assets and liabilities between current and non-current as
described in paragraphs 60 and following of IAS 1. The indirect method for the cash flow statement was used.
Therefore, the net profit of the period is adjusted by the effects of non-monetary transactions, changes in working
capital and cash flows from investing and financing activities.
In compliance with paragraph 85 of IAS 1 some dedicated items have been introduced on the face of the balance
sheet and on the income statement to separately disclose the balances related to the financial liability for the
options on non-controlling interests of some investments and its related fair value changes to profit and loss:
- “Liabilities for options on non-controlling interests” in the sections “Current and Non current liabilities” of
the statement of the financial position;
- “Gains/(losses) on liabilities for options on non-controlling interests” in the section related to the
“Financial income/(charges)” of the income statement;
- “Non-monetary changes related to liabilities for options on non-controlling interests" in the statement of
cash flows.
2.3 Consolidation method and consolidation area
The Group’s consolidated financial statements as of 31 December 2023 include the parent company, Safilo Group
S.p.A., and 43 subsidiaries accounted for on a line-by-line basis, with the parent company holding, directly or
indirectly, the majority of voting rights. During 2023 the Group’s consolidation area changed as follows:
- on 6 April 2023 the liquidation of the company Safilo Trading (Shenzhen) Co. Ltd. (PRC) has been
completed and the company has been de-registered;
- on 30 June 2023 pursuant to the contractual terms of the acquisition the Group has exercised the first
tranche of its put and call option on 5.7% of non-controlling interests increasing its controlling stake in
Privé Revaux from 82.8% to 88.5%;
- on 1 August 2023 pursuant to the contractual terms of the acquisition the Group has exercised the first
tranche of its put and call option on 10% of non-controlling interests increasing its controlling stake in
Blenders LLC from 70.0% to 80.0%;
- on August 2023 the liquidation of the company Safilo Eyewear (Shenzhen) Co. Ltd. (PRC) has been
completed and the company has been de-registered;
- on 24 November 2023 the liquidation of the company
Safilo d.o.o. (Ormož) has been completed and the
company has been de-registered.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 84
At 31 December 2023 the direct and indirect holdings included in the scope of consolidation under the line-by-line
method, in addition to the parent company Safilo Group S.p.A., were the following:
Currency Share capital % interest held
ITALIAN COMPANIES
Safilo S.p.A. – Padua
EUR
66.176.000
100,0
Lenti S.r.l. – Bergamo
EUR
500.000
100,0
Safilo Industrial S.r.l. - Padua
EUR
41.634.703
100,0
FOREIGN COMPANIES
Safilo International B.V. - Amsterdam (NL)
EUR
24.165.700
100,0
Safilo Benelux S.A. - Zaventem (B)
EUR
560.000
100,0
Safilo Espana S.L. - Madrid (E)
EUR
3.896.370
100,0
Safilo France S.a.r.l. - Paris (F)
EUR
960.000
100,0
Safilo Gmbh - Cologne (D)
EUR
511.300
100,0
Safilo Nordic AB - Taby (S)
SEK
500.000
100,0
Safilo CIS - LLC - Moscow (Russia)
RUB
10.000.000
100,0
Safilo Far East Ltd. - Hong Kong (RC)
HKD
49.700.000
100,0
Safint Optical Investment Ltd - Hong Kong (RC)
HKD
10.000
100,0
Safilo Hong-Kong Ltd – Hong Kong (RC)
HKD
100.000
100,0
Safilo Singapore Pte Ltd - Singapore (SGP)
SGD
400.000
100,0
Safilo Optical Sdn Bhd – Kuala Lumpur (MAL)
MYR
100.000
100,0
Safilo Eyewear (Shanghai) Co Ltd - (RC)
CNY
1.000.000
100,0
Safilo Eyewear (Suzhou) Industries Limited - (RC)
CNY
129.704.740
100,0
Safilo Hellas Ottica S.a. – Athens (GR)
EUR
489.990
100,0
Safilo Nederland B.V. - Bilthoven (NL)
EUR
18.200
100,0
Safilo South Africa (Pty) Ltd. – Bryanston (ZA)
ZAR
3.583
100,0
Safilo Austria Gmbh -Traun (A)
EUR
217.582
100,0
Safilo Japan Co Ltd - Tokyo (J)
JPY
100.000.000
100,0
Safilo Do Brasil Ltda – Sao Paulo (BR)
BRL
197.135.000
100,0
Safilo Portugal Lda – Lisbon (P)
EUR
500.000
100,0
Safilo Switzerland AG – Zurich (CH)
CHF
1.000.000
100,0
Safilo Polska sp. z.o.o. - Warsaw (PL)
PLN
50.000
100,0
Safilo India Pvt. Ltd - Bombay (IND)
INR
42.000.000
100,0
Safilo Australia Pty Ltd.- Sydney (AUS)
AUD
3.000.000
100,0
Safilo UK Ltd. - London (GB)
GBP
250
100,0
Safilo America Inc. - Delaware (USA)
USD
8.419
100,0
Safilo USA Inc. - New Jersey (USA)
USD
23.289
100,0
Safilo Services LLC - New Jersey (USA)
USD
-
100,0
Smith Sport Optics Inc. - Idaho (USA)
USD
12.087
100,0
Solstice Marketing Corp. – Delaware (USA)
USD
1.000
100,0
Safilo de Mexico S.A. de C.V. - Distrito Federal (MEX)
MXP
10.035.575
100,0
Safilo Canada Inc. - Montreal (CAN)
CAD
100.000
100,0
Canam Sport Eyewear Inc. - Montreal (CAN)
CAD
199.975
100,0
Safilo Optik Ticaret Limited Şirketi - Istanbul (TR)
TRL
1.516.000
100,0
Safilo Middle East FZE - Dubai (UAE)
AED
3.570.000
100,0
Privè Goods LLC. - Delaware (USA)
USD
19.919.335
88,5
Privè Capsules LLC - Delaware (USA)
USD
-
88,5
Blenders Eyewear LLC - Delaware (USA)
USD
1.000
80,0
PorSa Eyewear (Xiamen) Co Ltd.- (RC)
CNY
1.000.000
100,0
Investments in subsidiaries
The companies in which the Group exercises control (“subsidiary companies”), as defined in IFRS 10, either due to
direct shareholdings or by indirectly holding the majority of the voting rights, having the power to determine even
indirectly the financial and managerial choices of the companies and thus obtaining the relative benefits regardless
of the relationships deriving from the share ownership, are consolidated using the line-by-line method. Potential
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 85
exercisable voting rights existing at the balance sheet date are considered in order to determine control. The
subsidiary companies are consolidated from the date on which control is assumed and are deconsolidated from the
date when control ceases.
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is measured as the fair value of the assets transferred, the liabilities
incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any
asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as
incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group
recognizes any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets. The excess of the consideration transferred, the amount of any
non-controlling interest in the acquiree and the acquisition date fair value of any previous equity interest in the
acquiree over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If
this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the
difference is recognized directly in the consolidated statement of income.
With regards to the accounting for transactions and events that result in a change in the Group’s interest in its
subsidiaries and the attribution of a subsidiary’s losses to non-controlling interests, IAS 27 (revised 2008) specifies
that once control has been obtained, further transactions whereby the parent entity acquires additional equity
interests from non-controlling interests, or disposes of equity interests without losing control are transactions with
owners and therefore shall be accounted for as equity transactions. It follows that the carrying amounts of the
controlling and non-controlling interests must be adjusted to reflect the changes in their relative interests in the
subsidiary and any difference between the amount by which the non-controlling interest is adjusted and the fair
value of the consideration paid or received is recognized directly in equity and attributed to the owners of the
parent. There is no consequential adjustment to the carrying amount of goodwill and no gain or loss is recognized
in profit or loss.
Upon consolidation, the amounts resulting from intra-group operations between consolidated companies are
eliminated, in particular in relation to receivables and payables at the balance sheet date, costs and revenues as
well as financial income and charges. In addition, gains and losses between the subsidiary companies that are fully
consolidated are also eliminated.
The accounting principles adopted by the subsidiary companies have been modified where necessary, to comply
with those adopted by the parent company.
Non-controlling interests and the amount of net profit attributable to them are shown separately under “Non-
controlling interests” and “Profit for the period attributale to non-controlling interests” in the consolidated balance
sheet and income statement, respectively.
All consolidated subsidiaries close their fiscal year on December 31, with the exception of Safilo India Pvt Ltd. which
closes its financial year on 31 March, and economic and financial statements are then prepared by the subsidiary
in order to allow the Parent Company to prepare the consolidated financial statements as of December 31.
Investments in associated companies
The holdings in companies/entities in which a significant influence is exercised (“associated companies”), that is
presumed to exist when the percentage held is between 20% and 50%, are valued under the “equity” method.
Due to the application of the equity method, the value of the investment is aligned to the shareholders’ equity that
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 86
is adjusted, where necessary, to reflect the application of the IFRS approved by the European Commission, and
includes the recording of any goodwill identified at the moment of acquisition. The share of gains/losses realized
by the associated companies after the acquisition is recorded on the income statement, while the share of
movements of reserves after the acquisition is recorded in the equity reserves. When the share of losses of the
Group in an associated company is equal to or exceeds its holding in the associated company, taking into account
all receivables not guaranteed, the value of the investment is fully written down and the Group does not record
further losses above its share, except where the Group has the obligation to cover these losses. Gains and losses
not realized that are generated on operations with associated companies are eliminated for the part pertaining to
the Group.
2.4 Segment information
Information according to business sector and geographic area is given pursuant to IFRS 8 – Operating Segments.
The criteria applied for identifying the operating sector are inspired by the methods through which management,
at the highest decision-making level, manages the Group and reviews the operating results for the purposes of
adopting decisions regarding the resources to be allocated and evaluating of the results themselves. Following the
sale of the Group's residual retail business during 2019, information by business sector is provided at the level of
the Group as a whole.
The grouping by geographic area depends on the location of the registered head office of each Group company,
therefore, the sales identified in accordance with this segmentation are determined by origin of invoicing and not
by target market.
2.5 Conversion of financial statements and transactions into currencies other than Euro
Foreign currency transactions are converted into the functional currency using the exchange rates prevailing on the
date of the transaction. Exchange rate gains and losses resulting from such transactions and from the translation
of assets and liabilities in foreign currencies at the exchange rates at end of the year are accounted for in the
income statement.
The rules for the conversion of financial statements of companies expressed in currencies different from the Euro
are the following:
• assets and liabilities are converted using the exchange rates prevailing on the balance sheet date;
• costs, revenues, income and charges are converted at the average exchange rate of the period;
• the “translation difference reserve” includes foreign exchange differences generated from the conversion
of the opening shareholders’ equity and the movements during the year at a rate different from that at
the end of the year;
• the goodwill and fair value adjustments related to the acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and translated at the exchange rate at the end of the period.
The exchange rates applied in the conversion of financial statements prepared in currencies other than Euro at 31
December 2023 and 31 December 2022 are detailed in the following table; appreciation (figures with a minus sign
in the table below) indicates an increase in the value of the currency against the Euro.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 87
As of
(Apprec.)/
Deprec.
Average for
(Apprec.)/
Deprec.
Currency Code
December 31,
2023
December 31,
2022
%
2023
2022
%
US Dollar
USD
1.1050
1.0666
3.6%
1.0813
1.0531
2.7%
Hong-Kong Dollar
HKD
8.6314
8.3163
3.8%
8.4650
8.2451
2.7%
Swiss Franc
CHF
0.9260
0.9847
-6.0%
0.9718
1.0047
-3.3%
Canadian Dollar
CAD
1.4642
1.4440
1.4%
1.4595
1.3695
6.6%
Japanese Yen
YEN
156.3300
140.6600
11.1%
151.9903
138.0274
10.1%
British Pound
GBP
0.8691
0.8869
-2.0%
0.8698
0.8528
2.0%
Swedish Krown
SEK
11.0960
11.1218
-0.2%
11.4788
10.6296
8.0%
Australian Dollar
AUD
1.6263
1.5693
3.6%
1.6288
1.5167
7.4%
South-African Rand
ZAR
20.3477
18.0986
12.4%
19.9551
17.2086
16.0%
Russian Ruble
RUB
99.9723
78.4308
27.5%
92.4381
73.5002
25.8%
Brasilian Real
BRL
5.3618
5.6386
-4.9%
5.4010
5.4399
-0.7%
Indian Rupee
INR
91.9045
88.1710
4.2%
89.3001
82.6864
8.0%
Singapore Dollar
SGD
1.4591
1.4300
2.0%
1.4523
1.4512
0.1%
Malaysian Ringgit
MYR
5.0775
4.6984
8.1%
4.9320
4.6279
6.6%
Chinese Renminbi
CNY
7.8509
7.3582
6.7%
7.6600
7.0788
8.2%
Korean Won
KRW
1,433.660
1,344.090
6.7%
1,412.880
1,358.0734
4.0%
Mexican Peso
MXN
18.7231
20.8560
-10.2%
19.1830
21.1869
-9.5%
Turkish Lira
TRY
32.6531
19.9649
63.6%
25.7597
17.4088
48.0%
Dirham UAE
AED
4.0581
3.9171
3.6%
3.9710
3.8673
2.7%
Polish Zloty
PLN
4.3395
4.6808
-7.3%
4.5420
4.6861
-3.1%
2.6 Tangible assets
Tangible fixed assets are assessed at purchase or production cost, net of accumulated depreciation and of any
possible loss in value. The cost includes all charges directly incurred in bringing assets to their current location and
condition. Costs incurred after purchase of assets are recorded only if they increase the future economic benefits
of the asset they refer to.
Charges incurred for the maintenance and repairs of ordinary and/or cyclical nature are directly charged to the
income statement of the period in which the costs are incurred. The capitalization of costs relating to the expansion,
modernization or improvement of proprietary structural assets or of those used by third parties, is made only when
they satisfy the requirements to be separately classified as an asset or part of an asset. The book value is adjusted
for depreciation on a systematic basis, over the useful life.
Capitalized costs for leasehold improvements are attributed to the category of the assets they refer to and are
depreciated over the shorter of either the remaining duration of the rental contract or the remaining useful lifetime
of the assets improved.
When circumstances indicate that there may be a permanent impairment in value, an estimate is made of the
recoverable amount of the asset, and any loss is recorded in the income statement. When the reasons for the
previously recognized impairment no longer exist, the book value of the asset is restated through profit or loss, up
to the value at which the asset would have been recognized in the absence of impairment and net of amortization.
Depreciation of tangible assets is calculated on a straight-line basis over the estimated useful lifetime of the asset,
in accordance with the following depreciation rates:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 88
Category
Useful lifetime in years
Buildings
15-40
Plant, machinery and equipment
3-15
Furniture, office equipment and vehicles
3-8
Land is not depreciated.
When the asset to be depreciated is composed of separately identifiable elements whose useful lifetime differs
significantly from that of the other parts of the asset, the depreciation is made separately for each part of the asset,
with the application of the “component approach” principle.
The remaining value of the assets and their useful lifetime are reviewed at the end of each financial year. The
capital gains or losses from the sale of the fixed assets are posted to the income statement and valued as the
difference between the sale proceeds and the net book value.
2.7 Right of Use
Assets held through lease contracts (both finance and operating) are recognized according to the IFRS 16 standard,
which provide a definition of leases based on the control (right of use) of an asset considering: identification of the
asset, right to replace it, right to obtain all economic benefits and the right to manage the use of the asset. The
standard establishes a model to recognize and measure lease contracts for the lessee through the posting of the
asset (also in operating leases) offset by a financial debt. Assets held through lease contracts, are recognized as
assets of the Group at the present value of their contractual lease payments. The corresponding liability due to the
lessor is recorded on the financial statements under financial debts. The assets are depreciated over the duration
of the lease contract.
The Group has elected to apply the exemptions stated by the Standard that allow to keep leases off balance if they
have an initial contractual duration of less than or equal to 12 months (IFRS16.5-a) or if they refer to a low-value
asset (IFRS16.5-b), according to these exemptions these contracts are still recorded as lease and rent expenses on
a straight-line basis in the income statement over the duration of the lease contract.
Management considered the clarifications included in the “IFRIC Agenda Decision” of November 2019 relating to
the determination of the lease term. In particular, it was considered that:
- the buildings in which the manufacturing plants are located are all owned by the Group;
- the contracts for the properties in which the main office locations and logistic centers are located were recently
signed and have a residual duration which is still significant;
- the contracts relating to the properties in which the office locations of lesser importance are located have
characteristics for which their abandonment would not entail a “more than insignificant penalty”.
These considerations led to the confirmation of the lease terms previously identified on the basis of the remaining
contractual durations.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
89
2.8 Intangible assets
Intangible assets consist of clearly identifiable non-monetary assets, without any physical substance and
capable of generating future economic benefits. These assets are recognized at purchase and/or production
cost, including the costs of bringing the asset to its current use, net of accumulated amortization and any
impairment. Amortization begins when the asset is available for use and is allocated in equal instalments over
the course of its useful life.
When circumstances indicate that there may be an impairment loss, an estimate is made of the recoverable
amount of the asset, and any impairment is recognized through the income statement. When the reasons for
the previously recognized impairment no longer exist, the book value of the asset is restated through the
income statement, up to the value at which the asset would have been recognized in the absence of impairment
and net of amortization.
Goodwill
Goodwill is measured as the excess of the aggregate of the consideration transferred in the business
combination, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
identifiable assets acquired and the liabilities assumed. If the net of the acquisition-date amounts of the
identifiable assets acquired and liabilities assumed exceeds the aggregate of the consideration transferred, the
amount of any non-controlling interest in the acquiree and the fair value of the acquirer's previously held
interest in the acquiree (if any), the excess is recognized immediately in profit or loss as a bargain purchase
gain. Non-controlling interest is initially measured either at fair value or at the non-controlling interest’s
proportionate share of the acquiree's identifiable net assets. The selection of the measurement method is
made on a transaction-by transaction basis. Goodwill is not amortised but is tested for impairment at least
once a year or whenever there are any impairment indicators. After initial recognition, goodwill is valued at
cost, net of any accumulated impairment.
When a company or a business unit previously purchased is sold and that acquisition led to goodwill, in
measuring the gain or loss on the sale, consideration is given to the corresponding residual value of goodwill.
Goodwill and fair value adjustments generated from the acquisition of a foreign company are recorded in the
relative foreign currencies and are converted at the exchange rate at the end of the period.
Trademarks and licenses
Trademarks are recorded at cost. They have a definite useful lifetime and are recorded at cost net of any
accumulated amortization. Amortization is calculated on a straight-line basis allocating the cost of trademarks
over the relative useful lifetime generally between 15 and 20 years, determined on the basis of independent
analyzes and market benchmarks. The useful life and residual value are reviewed at each end of the period.
If necessary, the occurrence of changes in the useful life or residual value is recognized prospectively as a
change in accounting estimates.
Software
All software licenses purchased are capitalized on the basis of the costs incurred for their acquisition and in
bringing them to their current condition. Amortization is calculated on a straight-line basis over their estimated
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________
90
useful lifetime (between 3 to 5 years). The costs associated with the development and maintenance of software
programs are posted to the income statement of the period in which they were incurred. The costs directly
associated with the production of unique and identifiable software products controlled by the Group are
recorded as intangible fixed assets on the balance sheet only if the following conditions are respected: the
costs can be reliably calculated, the Group has the technical and financial resources to complete the products
and intends to conclude such activities, the technical feasibility of the products is guaranteed and the use of
the products will generate probable future economic benefits for more than one year. Direct costs include
costs relating to employees developing the software as well as any appropriate share of general costs.
Software as a service (‘SaaS’) arrangements
Following the IFRIC’s agenda decision guidance published in April 2021 related to the capitalization of costs of
configuring or customizing software applications under ‘Software as a Service’ (‘SaaS’) arrangements, the
Group, starting from the 2021 Annual Report, has changed its accounting policy related to the capitalization
of these costs. For those software as a service arrangements (Saas) where the Group does not have control
of the developed software, the costs of configuring or customizing software applications under SaaS are not
capitalized as intangible assets but posted to income statement in the operating expenses.
2.9 Impairment of non-financial assets
Assets with an indefinite useful life are not subject to amortization but undergo an impairment test at least on an
annual basis to monitor whether their book value has been reduced.
Assets subject to amortization undergo impairment tests when events or circumstances arise that indicate that the
book value cannot be recovered. In both cases any loss in value is posted for the share of book value exceeding
the recoverable value. This value is the higher of either the fair value of the asset net of the costs for sale or its
value for use. If the value in use of an asset cannot be established individually, the recoverable value of the unit
that generates cash flows (so-called "cash generating unit” or CGU) to which the asset belongs must be established.
Assets are grouped at the level of the cash generating units (CGU) that are the base for interpreting the Group
performance. The Group then discounts to present value the future estimated cash flows generated by these CGUs
by applying a discount rate that reflects the current time value for money and the specific risks associated with the
business.
When a loss on an asset, other than goodwill, no longer exists or is reduced, the book value of the asset or cash-
generating unit is increased to the new estimated recoverable value, which cannot exceed the value that would
have been established if there had been no loss due to reduction in value.
A reversal of loss in value is calculated according to the revaluation model and recorded in the income statement
in accordance with the provisions of IAS 16.
2.10 Financial instruments
All the financial assets recognized that fall within the scope of application of IFRS 9 must subsequently be recognized
at amortized cost or at fair value on the basis of the entity's business model for the management of financial assets
and characteristics relating to contractual cash flows of the financial activity.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 91
Specifically:
• Debt instruments held in the context of a business model whose objective is the possession of financial assets
aimed at collecting contractual cash flows, and which have cash flows represented solely by capital payments and
interest on the principal amount to be returned, are subsequently valued at amortized cost;
• Debt instruments held in the context of a business model whose objective is achieved both through the collection
of contractual cash flows and through the sale of financial assets, and which have cash flows represented solely by
capital payments and interest on amount of the capital to be repaid, are subsequently measured at fair value with
changes recorded in the other components of the comprehensive income statement (FVTOCI);
• All other debt instruments, including the liability for options on non-controlling interests, and investments in equity
instruments are subsequently measured at fair value, with changes recognized in profit (loss) for the year (FVTPL).
Notwithstanding the foregoing, the Group may make the following irrevocable selection/designation upon initial
recognition of a financial asset:
• The Group may make an irrevocable choice to present subsequent changes in the fair value of an investment in
equity instruments that are neither held for trading nor a potential consideration recognized by a purchaser in a
business combination transaction in the other components of the comprehensive income statement;
• The Group may irrevocably designate an investment in debt instruments that meets the amortized cost or FVTOCI
criteria as measured at fair value, with changes recognized in profit (loss) for the year (FVTPL) if this eliminates or
reduces significantly an accounting asymmetry.
During the current year, the Group has not designated any investments in debt instruments that meet the amortized
cost or FVTOCI criteria as measured at fair value recorded in profit (loss) for the year.
When an investment in a debt instrument measured as FVTOCI is eliminated, the cumulative gain (loss) previously
recognized under the other components of the comprehensive income statement is reclassified from equity to profit
(loss) for the year through a correction from reclassification. On the other hand, when an investment in a
representative instrument of capital designated as valued FVTOCI is eliminated, the cumulative gain (loss)
previously recognized among the other components of the comprehensive income statement is subsequently
transferred to retained earnings without passing through the income statement. Debt instruments subsequently
valued at amortized cost or FVTOCI are subject to impairment.
IFRS 9 introduced the classification and measurement of financial liabilities with reference to the recognition of fair
value changes attributable to changes in the credit risk of the issuer, for financial liabilities designated by the Group
as FVTPL. In particular, IFRS 9 requires that changes in the fair value of financial liabilities that are attributable to
changes in the credit risk of these liabilities are presented in the other components of the comprehensive income
statement, unless the recognition in the other components of the comprehensive income statement do not originate
or increase an accounting asymmetry in profit (loss) for the year. Changes in fair value attributable to the credit
risk of a financial liability are not subsequently reclassified to profit (loss) for the year but are instead transferred
to retained earnings when the liability is de-recognized.
Borrowings are initially recognized at fair value less any transaction costs. After initial recognition, they are
recognized at amortized cost; all differences between the amount financed (net of initial transaction costs) and the
face value are recognized in profit or loss over the duration of the loan using the effective interest method. If there
is a significant variation in the expected cash flow that can be reliably estimated by management, the value of the
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 92
loans is recalculated to reflect the expected change in the cash flow. The value of the loans is recalculated on the
basis of the discounted value of the new expected cash flow and the internal rate of return.
Borrowings are classified under current liabilities unless the company has an unconditional right to defer the
payment for at least twelve months after the balance sheet date, and are removed from the balance sheet when
they expire and the Group has transferred all risks and obligations relating to the instrument.
Derivative instruments
All derivative financial instruments are measured at fair value, in accordance with IFRS 9. When the financial
instruments possess the characteristics required to be recorded according to hedge accounting, the following
accounting procedures are applied:
•
Fair value hedge
– if a derivative financial instrument is designated as a hedge for the exposure of changes
in the current value of an asset or liability on the financial statements attributable to a specific risk that
can determine effects on the income statement, the profit or loss after the initial valuation of the fair value
of the hedge instruments is recognized in the income statement. The profit or loss on the hedged item,
related to the hedged risk, changes the book value of that item and is recognized in the income statement.
•
Cash flow hedge
– if a derivative financial instrument is designated as a hedge for the exposure of changes
in the cash flows of an asset or liability recorded on the financial statements or of an operation considered
highly probable and which may have effects on the income statement, the effective portion of the profits
or losses of the financial instrument is recognized in an equity reserve. The cumulative profits or losses
are reversed from equity and recorded in the income statement in the same period as the operation that
is hedged. The profits or losses associated with a hedge or with that part of the hedge that has become
ineffective, are immediately recorded in the income statement. If a hedge instrument or a relation of a
hedge is closed, but the hedged operation has not yet been realized, the cumulative profits and losses,
up to that moment recorded in equity, are recognized in the income statement when the relative operation
is realized. If the operation hedged is no longer considered probable, the profits or losses not yet realized
in equity are recognized immediately in the income statement.
IFRS 9 requires that the expenses and income deriving from hedges are recognized as an adjustment to the initial
carrying amount of the non-financial elements hedged (basis adjustment). In addition, transfers from the hedging
reserve to the initial carrying amount of the hedged item are not reclassified adjustments based on IAS 1
Presentation of Financial Statements. The hedging income and losses subject to the basis adjustment are
categorized as amounts that will not subsequently be reclassified to profit or loss or to the other elements of the
comprehensive income statement. This is consistent with the practice of the Group prior to the adoption of IFRS 9.
In line with previous years, when a forward contract is used in a cash flow hedge or fair value hedge relationship,
the Group has designated the change in fair value of the entire forward contract, including the forward points, as
a hedging instrument.
When option contracts are used to hedge highly probable scheduled transactions, the Group only designates the
intrinsic value of the options as a hedging instrument. Based on IFRS 9, changes in the time value of options
relating to the hedged item are recognized in the other elements of the comprehensive income statement and are
accumulated in the equity reserve. The amounts accumulated in equity are either reclassified to profit or loss for
the period when the hedged item influences the profit (loss) for the period or removed directly from equity and
included in the carrying amount of the non-financial item. IFRS 9 requires that the accounting treatment related to
the unspecified time value of an option be applied retrospectively.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 93
If hedge accounting cannot be applied, the profits or losses deriving from the fair value of the derivative financial
instruments are immediately recognized in the income statement.
2.11 Inventory
Inventories are measured at the lower of either the purchase or production cost and the net realizable value. The
cost of raw materials and purchased finished products is calculated using the “weighted average cost” method or
the standard cost where it approximates actual cost. The cost of semi-finished products and internally produced
finished products includes raw material, direct labor costs and the indirect costs allocated based on normal
production capacity.
The net realizable value is determined on the basis of the estimated selling price under normal market conditions,
net of direct sales costs.
Allowances for obsolete and slow-moving goods are calculated for raw materials and semi-
finished products on the base of their future use in the production process and for finished goods on the base of
their future recoverability through the sale, taking into account market trends, consumer demand, past experience,
historical results achieved and the recoverability of the goods value in ordinary market conditions. Against the value
of stock as determined above, provisions are made in order to take account of obsolete or slow-moving stock.
2.12 Trade receivables and trade payables
Trade receivables are initially classified on the financial statements at their current value and subsequently
recalculated with the “amortized cost” method, net of any write-downs for loss in value. A provision for doubtful
accounts is allocated when there is evidence that the Group may not succeed in collecting the original amount due.
The provisions allocated for doubtful accounts are recorded in the income statement. Trade receivables are
reviewed and assessed for impairment based on the model of expected losses using reasonable and supportable
available information in accordance with the requirements of IFRS 9 to determine the credit risk of the respective
items at the date they were initially recognized. According to the analysis performed, in consideration of the Group's
business characteristics and the evaluation of the trading policies currently in use the Group accrues an additional
credit loss allowance that covers the potential additional credit risk expected on the amount overdue and not
impaired and on the amount not overdue.
The Group from time to time also transfers some trade receivables to factoring companies. In case such receivables
represent legally sold credit, that do not comply with all the conditions of IFRS 9, they are not removed from the
balance sheet, but are maintained on the financial statement with a contra entry as a financial debt towards the
factoring company.
Trade payables are initially classified on the financial statements at their current value and subsequently
recalculated with the “amortized cost” method. Trade and other payables are presented as current liabilities unless
payment is not due within 12 months after the reporting period.
2.13 Cash in hand and at bank
Cash and cash equivalents include cash, bank deposits on demand and other highly liquid short-term investments
available within three months. Bank overdrafts are posted under current liabilities.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 94
2.14 Employee benefits
Pension plans
The Group recognizes different forms of defined benefit plans and defined contribution plans, in line with the local
conditions and practices in the countries in which it carries out its activities. The premiums paid for defined
contribution plans are recorded in the income statement for the part matured in the year. The defined benefit plans
are based on the working life of the employees and on the remuneration received by the employee during a
predetermined period of employment.
The obligation of the company to finance the defined benefit plans and the annual cost recognized in the income
statement are determined by independent consultants using the “projected unit credit” method. The related costs
are recorded in the income statement on the basis of the estimated employment period of employees. The Group
recognises all the actuarial gains and losses in equity, via the consolidated statement of comprehensive income, in
the year in which these arise.
The employee severance fund of Italian companies (“TFR”) has always been considered to be a defined benefit
plan however, following the changes to the discipline that governs the employment severance fund introduced by
Italian law no. 296 of 27
th
December 2006 (“Financial Law 2007”) and subsequent Decrees and Regulations issued
in the first months of 2007, Safilo Group, on the basis of the generally agreed interpretations, has decided that:
• the portion of the employee benefit liability accruing from 1
st
January 2007, whether transferred to selected
pension funds or transferred to the treasury account established with INPS, must be classified as a “defined
contribution plan”;
• the portion of the employee benefit liability accruing as of 31 December 2006, must be classified as a
“defined benefit plan” requiring actuarial valuations that exclude future increases in salaries.
For an analysis of the accounting effects deriving from this decision, see paragraph 4.17 “Employees benefits”.
Remuneration plans under the form of share capital participation
The Group recognizes additional benefits to some employees through "equity settled" type stock options. In
accordance with IFRS 2 - Share-based payments, the current value of the stock options determined at the vesting
date through the application of the "Black & Scholes" method is recognized in the income statement under personnel
costs in constant quotas over the period between the vesting date of the stock options and the maturity date,
counterbalanced by an equity reserve.
The effects of the vesting conditions not related to the market are not taken into consideration in the fair value of
the vested options but are material to measurement of the number of options which are expected to be exercised.
At the balance sheet date the Group revises its estimates on the number of options which are expected to be
exercised. The impact of the revision of the original estimates is recognized in profit or loss over the maturity
period, with a balance entry in equity reserves.
When the stock option is exercised, the amounts received by the employee, net of the costs directly attributable to
the transaction, are credited to share capital for an amount equal to the par value of the issued shares and to the
share premium reserve for the remaining part.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 95
2.15 Provisions for risks
The Group records provisions for risks and charges when:
• it has a legal or constructive obligation to third parties;
• it is probable that it will be necessary to use resources of the Group to settle the obligation;
• a reliable estimate of the amount can be made;
• changes in estimates are recorded in the income statement of the period in which the changes occur.
The item includes also the product warranty provision to cover the estimated cost of product warranties.
Management establishes the amount of this provision on the basis of past trends relating to the frequency and
average cost of under-warranty repairs and replacement in accordance with the law. These warranties are standard
warranties on quality defectives in accordance with the law.
2.16 Liabilities for options on non-controlling interests
Pursuant to the contractual terms, the non-controlling interests held by the minority equity holders of the
subsidiaries Privé Goods LLC and Blenders Eyewear LLC are subject to customary reciprocal put and call options.
More specifically, the put and call options for:
• Privé Goods LLC may be exercised in each of the years 2023 and 2024 for one third of the minority interests
and in 2025 for the remaining portion, at a price calculated as a function of a specific multiple applicable
to the value of the EBITDA of the company achieved in the fiscal year preceding that of exercise of the
relative option and adjusted to take into account the net financial position of the Company. On 30 June
2023, the Group exercised the first tranche of the option;
• Blenders Eyewear LLC the put and call options originally may be exercised in each of the years 2023 and
2024 for one third of the minority interests and in 2025 for the remaining portion, at a price calculated as
a function of a specific multiple applicable to the value of the arithmetic average of the EBITDA of the
company achieved over the last two consecutive fiscal years preceding that of exercise of the relative
option and adjusted to take into account the net financial position of the company. In March 2023, the
Group agreed an extension of the second and third tranche of the put and call options on the non-
controlling interest in Blenders, from 2024 and 2025 to 2026 and 2027 respectively. On 1 August 2023,
the Group exercised the first tranche of the option on 10% of the minority shareholdings.
These options generated liabilities for options on non-controlling interest in the Group consolidated financial
statements at the acquisition date valued at their fair value using a discounted cash-flow approach based on the
business plans underlying the acquisitions. The value of the liabilities is regularly updated on the basis of updated
business plans, any liability fair value change is reported in the financial item “Gains/(losses) for options on non-
controlling interests” in the income statement.
2.17 Revenue recognition
The Group’s primary revenue segment is the selling of eyewear products in the wholesale channel through its
subsidiary network and a network of independent distribution partners. Moreover, for certain brands in its portfolio
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 96
the Group sells its eyewear products directly to its customers through its online sales channel, mainly in the North
America market.
Revenues include the fair value of the sale of goods and services, less VAT, returns and discounts. In particular,
the Group recognizes the revenues when the control over goods sold is transferred to the customer, assumed at
the shipment date, in accordance with the sales terms agreed.
According to the standard contractual conditions applied by the Group, customers may have a right of return. If
the sale includes the right for the client to return unsold goods, at the time of sale, a liability is recognized and a
corresponding adjustment of revenues for the goods whose return is estimated. The Group recognised expected
returns from sales of products by reducing revenue and recognised the cost relating to these returns by reducing
cost of sales. In accordance with IFRS 15, the Group recognises the amount corresponding to the sales value of
expected returns in the item Trade Payables and the amount corresponding to the cost of the products in the item
Inventory.
Based on historical experience and specific knowledge of customers, the Group estimates the amount of returns
expected to be received on the entire portfolio using the expected value method. Warranty terms coincide with
regulatory requirements and warranties cannot be sold or extended separately, as such, they are not capable of
generating separate revenues. There are no services associated to the sale of goods to customers.
The contracts with customers may recognize to the customer the right to incentives for the marketing and
advertising activity performed by them on behalf of Safilo. The Group concluded that, according to IFRS 15 criteria,
these are consideration paid to customer for distinct services and, as a consequence, recognizes them as expenses.
This item does not include transportation costs charged to customers which have been classified as a reduction of
the respective cost item.
2.18 Public contributions
The Group recognizes public contributions when there is reasonable certainty that they will be received and that
the conditions required for the contribution have been or will be respected.
The contributions received are recorded in the income statement for the time required to relate them to the relative
costs and they are considered as deferred income.
2.19 Royalty expenses
The Group recognizes royalty expenses in accordance with the accrual principle and in compliance with the
substance of the contracts agreed.
2.20 Dividends
Dividends are recorded when the right of the Shareholders to receive the payment arises, which normally occurs
when the Shareholders' meeting resolves the distribution of dividends. The distribution of dividends is therefore
recorded as a liability on the financial statements in the period in which the distribution is approved by the
Shareholders' meeting.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 97
2.21 Income taxes
Income taxes include all taxes calculated on the taxable profits of the companies of the Group. Income taxes are
recognized on the income statement, with the exception of those relating to accounts that are directly credited or
debited to equity, in which case the tax effect is recognized directly in equity. Taxes not related to income (e.g.
property taxes) are recorded within operating costs.
Income tax expense also includes any provisions to cover risks arising from disputes over taxes inclusive of amounts
related to taxes due and any penalties.
Deferred taxes are calculated on fiscal losses that can be carried forward and all the temporary differences between
the carrying amount of an asset or liability in the statement of financial position and its tax bases. Deferred tax
assets are recognized only for those amounts where it is probable there will be future taxable income allowing for
recovery of the amounts.
Current and deferred tax assets and liabilities are offset when the income tax is applied by the same tax authority
and when there is a legal right to offsetting. The deferred tax assets and liabilities are measured at the tax rates
that are expected to apply to the period when the asset is realized or the liability is settled, based on tax rates/laws
that have been enacted or substantively enacted by the end of the reporting period in the countries in which the
Group operates.
2.22 Earnings per share
Basic
Basic earnings per share are calculated by dividing the profit or loss of the Group by the weighted average number
of ordinary shares outstanding during the year.
Diluted
In order to calculate the diluted earnings per share, the weighted average number of shares outstanding is adjusted
for the dilution potential on ordinary shares (e.g. for stock options and convertible bonds), while the profit or loss
of the Group is adjusted to take into account the effects, net of income taxes, of the conversion.
2.23 Use of estimates
The preparation of the consolidated financial statements requires the Directors to apply accounting standards and
methods that, in some circumstances, are based on difficult and subjective valuations and estimates based on past
experience and assumptions which are from time to time considered reasonable and realistic according to the
relative circumstances. The application of these estimates and assumptions affects the amounts posted in the
financial statements, such as the balance sheet, the income statement, the cash flow statement and the notes
thereto. Actual results of the balances on the financial statements, resulting from the above-mentioned estimates
and assumptions, may differ from those reported on the financial statements due to the uncertainty which
characterizes the assumptions and the conditions on which the estimates are based.
The macroeconomic environment, resulting from a combination of geopolitical risks consequents to the still ongoing
Ukraine - Russian invasion and to the Israel and Hamas conflict represented an extraordinary circumstance that
had direct and indirect repercussions on economic activity and has created a general environment of uncertainty.
Also environmental responsibility risks and the transitory risks related to the regulation changes associated with the
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 98
fight against the “climate change” may have an impact in term of future uncertainty. Financial statements
assumptions and estimates have taken into consideration the uncertainties deriving from the above circumstances.
For more details see also the Report on Operations on the paragraph related to the “Main critical risk factors for
the Group”.
The accounting standards that are more subject to the directors’ estimates and for which a change in the underlying
conditions or the assumptions may have a significant impact on the consolidated financial statements of the Group
are described briefly below.
•
Goodwill
: in accordance with the accounting standards adopted for the preparation of the financial
statements, the Group tests goodwill at least once a year in order to ascertain the existence of any loss in
value to be recorded in the income statement. In particular, the test results in the determination of the
fair value allocated to the cash-generating units. This value is determined according to their current value
in use. The assessment process of the impairment test is complex and is based on assumptions concerning,
among other things, the forecast of expected cash flows of the CGU, the determination of appropriate
discounting rates (WACC) and long-term growth (g-rate). These estimates depend on factors that may
change over time with consequent effects, which may be significant, compared to the Directors’
assessments. Consistent with the indications of the main regulators, to meet the difficulties of making
accurate estimates of future flows, the Directors performed their estimate considering independent
sources and analysts’ projections and carried out the test performing some sensitivity analyses relating to
the main inputs of the calculation. In addition, it is considered also the identified potential impact of the
climate change on the estimated cash flows. As suggested by regulators and standard setters, the
uncertainties have been reflected in the estimate of cash flows, rather than adding a risk premium to the
discount rate.
•
Write-down of fixed assets
: in accordance with the accounting standards applied by the Group, the fixed
assets are verified to ascertain if there has been a loss in value which is recorded by means of a write-
down, when it is considered there will be difficulty in recovering the relative net book value through use.
The verification of the existence of such difficulty requires the Directors to make valuations based on the
information available within the Group and from the market, as well as historical experience. In addition,
when it is deemed that there may be a potential loss in value, the Group determines this using the most
appropriate technical valuation methods available. Proper identification of the indicators of contingent
impairment as well as the estimates used to determine them depend on factors which may vary over time,
influencing the Directors’ measurements and estimates.
•
Allowance for bad or doubtful debts
: the allowance for bad or doubtful debts reflects management’s best
estimate regarding losses concerning the credit portfolio towards the final client. This estimate is based
on the losses expected by the Group, determined on the basis of past experience for similar credits, current
and historic overdue, careful monitoring of credit quality and projections regarding the economic and
market conditions. Management in its estimate considered also the economic conditions present in the
various markets in which the Group operates and the consequent possible future losses on debts originated
by contingent situations in those markets.
•
Allowance for inventory obsolescence
: the Group produces and sells goods subject to changes in market
trends and consumer demand, consequently a significant level of judgment is required in determining the
appropriate write-down of inventories based on sales forecasts. The inventory of finished products which
are obsolete or slow moving are regularly subjected to specific assessment tests, which take into
consideration past experience, historic results and the probability of sale under normal market conditions.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 99
If the need to reduce the value of the stock should arise following these analyses, management proceeds
with the appropriate write-downs.
•
Product warranty provision:
when a product is sold, the Group estimates the relative costs of performing
work under warranty and allocates a provision on the basis of historic information and a series of statistical
data regarding the nature, frequency and the average cost of such work. The Group works constantly to
minimize the costs of work performed under guarantee and to improve the quality of its products. The
warranty provision is dependent on the amount of sales.
•
(Contingent) liabilities
: the Group is subject to legal and tax actions regarding different types of problems;
due to uncertainties relating to proceedings and the complexity of such proceedings, management consults
its lawyers, and other legal and fiscal experts, and when expenditure is considered probable and the
amount can be reasonably estimated, adequate funds are allocated.
•
Pension plans
: the companies of the Group participate in pension plans, the costs of which are calculated
by the management, with the assistance of the Group’s actuarial consultants, on the basis of statistical
assumptions and assessment factors regarding in particular the discount rate to be used, relative mortality
and resignation rates.
•
Deferred taxes
: deferred tax assets are accounted for on the basis of the expectations of future taxable
income. The assessment of the recoverability of deferred tax assets derives from specific assumptions
about the probability that taxable income will be realized in future years and that these are sufficient to
allow the recovery of deferred tax assets. These valuations are based on assumptions that may not even
be realized or are realized to an insufficient extent compared to what is necessary to fully recover the
deferred tax assets recorded in the financial statements, and therefore their variation could have significant
effects on the valuation of deferred tax assets.
•
Leases:
the calculation of the value of the right of use assets arising from lease contracts, and of the
related financial liabilities, represents a significant Management's estimate. In particular, a high level of
judgment is applied in the determination of the lease term and in the calculation of the incremental
borrowing rate. The determination of the lease term takes into consideration the contractual terms while,
with reference to the renewal clauses, the Group applies a genera "no renewal" rule. The incremental
borrowing rate is built considering the asset type, the jurisdiction in which it is obtained and the currency
of the contract.
•
Options on minority interests:
the contractual purchase terms of some investments in subsidiaries also
included reciprocal put and call options on the non-controlling interests, for which the Group has
recognized a liability whose valuation is highly dependent on the expectations of management regarding
the future performance of the acquired companies.
2.24 Fair value estimates
The fair value of the financial instruments traded on an active market is based on the listed price at the balance
sheet date. The fair value of the financial instruments not traded on an active market is calculated in accordance
with valuation techniques and models that are widely used in financial sectors and in particular:
• the fair value of interest rate swaps is calculated on the basis of the current value of future cash flows;
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 100
• the fair value of the forward currency hedging contracts is determined on the basis of the current value
of the differences between the contracted forward exchange rate and the spot market rate at the balance
sheet date;
• the fair value of stock options is calculated using the Black & Scholes model.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 101
3. Risk management
The operations of Safilo Group are subject to various financial risks, in particular:
• credit risks, related to normal business relations with clients and to financial assets in the financial
statements;
• market risks (mainly interest and exchange rate risks), since the Group operates internationally and uses
financial instruments that generate interest;
• liquidity risks, concerning the ability to promptly find resources on financial markets under normal market
conditions when needed.
The Group constantly monitors the financial risks to which it is exposed, in order to assess potentially negative
effects in advance and to take appropriate corrective measures with the aim of eliminating or, at least, limiting the
negative effects deriving from the risks in question. The assessment of financial risks has been influenced by the
macroeconomic environment, resulting from a combination of remaining pandemic-related effects and geopolitical
risks consequents to Russia’s invasion in Ukraine and to the Israel and Hamas conflict.
The risks to which the Group is exposed are managed centrally on the basis of hedging policies that may also
include the use of derivative instruments with the aim of minimizing the effects deriving from exchange rate
(especially in relation to the US dollar) and interest rate fluctuations.
Credit risks
The Group strives to reduce risk deriving from the insolvency of its customers through rules ensuring that sales are
made to reliable and solvent customers. The relative assessment is based on information regarding the solvency of
customers and statistical historical data. However, credit risk is mitigated by the fact that credit exposure is spread
over a very large number of clients.
The markets economic and financial conditions have accentuated the risk of potential insolvency, in a differentiated
way according to the categories of customers and geographical areas such as emerging markets. In reaction to this
changed context, the Group strengthened the policies described and maintained constant monitoring of the
individual credit positions.
Positions of a significant amount for which the Group recognizes that total or partial recovery will be effectively
impossible, also taking into account any guarantees obtained, as well as the charges and expenses that will have
to be sustained for the attempted credit recovery, are subject to individual write-down. In compliance with IFRS 9,
management has also considered potential risks associated with specific categories of customers or certain
geographic areas.
The Group’s theoretical maximum exposure to the credit risk at the date of the balance sheet is represented by the
book value of the financial assets.
As required by IFRS 7, paragraph 36, the table below analyses the age of receivables as of 31 December 2023 and
31 December 2022:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 102
December 31, 2023
December 31, 2022
(Euro/000)
Ageing of trade receivables
Nominal
value
Allowance
Net value
Nominal
value
Allowance
Net value
Overdue and impaired
up to 3 months
497
(497)
-
933
(933)
-
3 to 6 months
1,042
(1,042)
-
1,001
(1,001)
-
6 to 9 months
1,358
(1,358)
-
2,327
(2,327)
-
from 9 to 12 months
676
(676)
-
424
(424)
-
from 12 to 24 months
2,252
(2,252)
-
1,522
(1,522)
-
over 24 months
3,920
(3,920)
-
4,602
(4,602)
-
Grand total
9,744
(9,744)
-
10,809
(10,809)
-
Overdue and not impaired
up to 1 month
12,063
12,063
16,789
16,789
from 1 to 3 months
5,502
5,502
6,871
6,871
3 to 6 months
6,533
6,533
4,511
4,511
6 to 9 months
1,796
1,796
2,262
2,262
from 9 to 12 months
582
582
970
970
from 12 to 24 months
1,071
(410)
660
2,374
(429)
1,945
over 24 months
310
(310)
-
95
(95)
-
Grand total
27,856
(720)
27,136
33,872
(524)
33,348
Neither overdue nor impaired
175,994
(55)
175,939
181,078
(392)
180,685
Grand total
213,594
(10,519)
203,075
225,758
(11,725)
214,033
At 31 December 2023 past due receivables for which no allowance for bad debts was considered, as the Group
considered them fully collectible, amounted to 27,856 thousand Euro (compared to 33,872 thousand Euro at 31
December 2022). Of these, receivables that were more than 12 months past due amounted to 1,381 thousand Euro
(compared to 2,468 thousand Euro at 31 December 2022) but accounted for 0.7% of the Group’s total trade
receivable compared to 1.1% in the previous year.
In accordance with the requirements of IFRS 9, the Group has assessed the existing trade receivables for
impairment based on the model of expected losses, as at 31 December 2023 the provision for doubtful accounts
includes a credit loss allowance of 0.8 million Euro (0.9 million Euro at 31 December 2022) that covers the potential
additional credit risk expected on the amount overdue and not impaired and on the amount not past due.
Market risks
Market risks can be divided into the following categories:
Exchange rate risk
The Group operates internationally and is therefore exposed to risks deriving from variations in exchange rates that
may influence the value of its shareholders’ equity and financial results.
In 2023, fluctuations in the exchange rates of the main currencies have been less relevant than in the previous
year, when they were significantly affected by the general macroeconomic context.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 103
The Group tries to reduce the effects deriving from currency fluctuations by means of a “natural hedging” between
revenues and costs denominated in the same foreign currency (mainly in US dollar). The remaining exposure can
be hedged with currency forward contracts (“plain vanilla”) always expiring in less than 12 months.
As far as sensitivity analysis is concerned, an increase or decrease of 10% of Euro against the US Dollar and the
Hong Kong Dollar would result respectively in a decrease or an increase of the 2023 net sales of around 42,033
thousand Euro (around 45,815 thousand Euro in 2022) and in a not material impact on the net result of the Group
(around 3,399 thousand Euro in 2022). While an increase or decrease of 10% of Euro against currencies that
showed a relevant variation (Brazilian Real, Turkish Lira, Russian Ruble and South Africa Rand) would result overall
in a decrease or an increase of the 2023 net sales of around 4,991 thousand Euro (5,176 thousand Euro in 2022)
and in a decrease or an increase of the net profit of the Group of around 814 thousand Euro (1,057 thousand Euro
in 2022).
Furthermore, the Group owns shareholdings in subsidiaries located in areas outside the European Monetary Union,
the variations in the net assets, deriving from fluctuations in the exchange rates of the local currency against the
Euro, are recorded in a reserve of the consolidated shareholders’ equity named “translation reserve”.
The table below summarizes the net financial assets of the Group per currency at 31 December 2023 and 31
December 2022:
(Euro/000)
December 31, 2023
December 31, 2022
USD
272,869
289,995
HKD
76,287
77,609
CNY
76,491
77,486
GBP
1,157
4,995
CAD
22,538
21,238
CHF
1,797
1,572
BRL
20,330
14,249
EUR
(87,106)
(59,224)
Other currencies
11,423
11,000
Total
395,786
438,920
In terms of translation risk related to the conversion of the equity of the companies in foreign currencies other than
the Euro, the sensitivity analysis shows that a possible revaluation or devaluation of 10% of Euro against those
currencies, would respectively cause a decrease or increase in Group net equity of about 43,899 thousand Euro
(about 45,286 thousand Euro in 2022), of which about 2,106 thousand Euro related to currencies that showed a
relevant variation (Brazilian Real, Turkish Lira, Russian Ruble and South Africa Rand).
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 104
The table below summarizes the financial assets and liabilities of the Group per currency at 31 December 2023
and 31 December 2022:
(Euro/000)
December 31, 2023
Euro
US Dollar
Other currencies
Total
Cash in hand and at bank
16,421
34,194
24,284
74,899
Trade receivables, net
65,269
75,547
62,258
203,074
Derivative financial instruments
585
-
-
585
Other current assets
13,078
14,870
12,171
40,119
Total current financial assets
95,353
124,611
98,713
318,677
Derivative financial instruments
271
-
-
271
Other non-current assets
5,623
344
1,702
7,668
Total non-current financial assets
5,894
344
1,702
7,939
Trade payables
73,817
81,368
16,922
172,106
Short-term borrowings
30,250
-
-
30,250
Lease liabilities
2,803
4,660
2,180
9,643
Derivative financial instruments
3,909
-
-
3,909
Liabilities for options on non-controlling interests
-
-
-
-
Tax payables and other current liabilities
26,146
20,063
17,946
64,155
Total current financial liabilities
136,925
106,091
37,047
280,063
Long-term borrowings
88,345
-
-
88,345
Lease liabilities
3,591
24,096
1,671
29,359
Derivative financial instruments
-
-
-
-
Liabilities for options on non-controlling interests
-
20,770
-
20,770
Other non-current liabilities
2,379
246
28
2,653
Total non-current financial liabilities
94,316
45,113
1,699
141,127
(Euro/000)
December 31, 2022
Euro
US Dollar
Other currencies
Total
Cash in hand and at bank
28,049
26,304
23,357
77,710
Trade receivables, net
70,038
83,974
60,020
214,032
Derivative financial instruments
698
-
-
698
Other current assets
15,606
15,955
13,317
44,878
Total current financial assets
114,392
126,233
96,694
337,318
Derivative financial instruments
780
-
-
780
Other non-current assets
5,314
492
2,817
8,623
Total non-current financial assets
6,094
492
2,817
9,403
Trade payables
73,140
88,592
18,969
180,700
Short-term borrowings
30,000
-
-
30,000
Lease liabilities
2,371
4,328
2,351
9,051
Derivative financial instruments
7,656
-
-
7,656
Liabilities for options on non-controlling interests
-
6,195
-
6,195
Tax payables and other current liabilities
30,133
19,618
20,032
69,783
Total current financial liabilities
143,300
118,734
41,351
303,385
Long-term borrowings
117,330
-
-
117,330
Lease liabilities
3,522
28,457
2,748
34,727
Derivative financial instruments
-
-
-
-
Liabilities for options on non-controlling interests
-
13,349
-
13,349
Other non-current liabilities
1,170
679
192
2,041
Total non-current financial liabilities
122,021
42,486
2,940
167,447
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 105
Changes in fair value risk
The Group holds some assets that are subject to variations in value over time according to the variations of the
market on which they are traded.
With regard to trade payables and receivables and other current and non-current assets, it is assumed that their
book value is approximately equal to their fair value.
Interest rate risk
Borrowing exposes the Group to the risk of variations in interest rates. In particular, floating-rate borrowings are
subject to a cash flow risk.
The Group constantly monitors its exposure to changes in interest rates, and manages this risk through interest
rate swaps (IRSs). The interest rate swap contracts are stipulated with primary financial institutions and, at the
beginning of the hedge, the formal designation is made and the documentation relating to the hedge is prepared.
At 31 December 2023 the floating interest-bearing loans of the Group’s total borrowings were hedged by interest
rate swap contracts for an amount of 64,000 thousand Euro (52% of outstanding borrowings), at the 31 December
2022 the floating interest-bearing loans were hedged for 80,000 thousand Euro (54% of outstanding borrowings)
The table below summarizes the breakdown by maturity date of the nominal value (gross of 3,405 thousand Euro
of transaction costs) for the floating and fixed interest-bearing loans, as at 31 December 2023 and 31 December
2022:
December 31, 2023
Floating
Fixed
Total
(Euro/000)
within 1 year
30,250
-
30,250
between 1 and 2 years
30,500
-
30,500
between 3 and 5 years
61,250
-
61,250
beyond 5 years
-
-
-
Total
122,000
-
122,000
December 31, 2022
Floating
Fixed
Total
(Euro/000)
within 1 year
30,000
-
30,000
between 1 and 2 years
30,000
-
30,000
between 3 and 5 years
92,000
-
92,000
beyond 5 years
-
-
-
Total
152,000
-
152,000
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 106
The following table summarizes the main characteristics of the most significant variable and fixed rate medium and
long term borrowings outstanding at 31 December 2023 and 31 December 2022:
December 31, 2023
Currency
Nominal
interest rate
Nominal
value
Book
value
Expiry
(Euro/000)
Term Loan Facility
Euro
Euribor
120,000
116,595
30 June 2027
Capex Facility line
Euro
Euribor
2,000
2,000
30 June 2027
December 31, 2022
Currency
Nominal
interest rate
Nominal
value
Book
value
Expiry
(Euro/000)
Term Loan Facility
Euro
Euribor
150,000
145,329
30 June 2027
Capex Facility line
Euro
Euribor
2,000
2,000
30 June 2027
As far as sensitivity analysis is concerned, a positive (negative) variation of 50 bps in the level of the short-term
interest rates applied to the unhedged portion of the floating-rate borrowings would have had an impact in term of
greater (lower) 2023 annual financial charges, on a pre-tax basis, of 339 thousand Euro (231 thousand Euro impact
at 31 December 2022).
Liquidity risk
This risk could affect the inability to find the necessary financial resources to support the operating activities at
favorable market terms within the necessary timeframe. The Group companies’ cash flows, borrowing requirements
and liquidity are constantly monitored at central level by the Group’s Treasury in order to ensure an effective and
efficient use of the available cash.
The following table details the credit lines granted to the Group, utilizations and net available amounts:
December 31, 2023
Credit lines
granted
Uses
Credit lines
available
(Euro/000)
Credit lines on bank accounts and short-term bank loans
17,631
-
17,631
Credit lines on long-term bank loans
270,000
122,000
148,000
Total
287,631
122,000
165,631
December 31, 2022
Credit lines
granted
Uses
Credit lines
available
(Euro/000)
Credit lines on bank accounts and short-term bank loans
17,611
-
17,611
Credit lines on long-term loans
300,000
152,000
148,000
Total
317,611
152,000
165,611
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 107
The credit lines on loans are related to the committed, unsubordinated and unsecured new financing agreement
with maturity September 2027 consisting of a Term Loan Facility of 120,000 thousand Euro, a Revolving Credit
Facility of 75,000 thousand Euro and a Capex Facility line of 75,000 thousand Euro, for a total amount equal to
270,000 thousand Euro (used for 122,000 thousand Euro at 31 December 2023).
The table below summarizes the financial assets and liabilities of the Group by maturity, undiscounted and inclusive
of the interest payments, at 31 December 2023 and 31 December 2022:
(Euro/000)
December 31, 2023
within 1
year
between 1
and 2 years
between 3
and 5 years
beyond 5
years
Total
Cash in hand and at bank
74,898
-
-
-
74,898
Trade receivables, net
203,074
-
-
-
203,074
Derivative financial instruments
585
271
-
-
856
Other current assets
40,119
-
-
-
40,119
Other non-current assets
-
7,358
249
61
7,668
Total financial assets
318,676
7,629
249
61
326,615
Trade payables
172,106
-
-
-
172,106
Tax payables
23,382
-
-
-
23,382
Borrowings
30,250
29,365
58,980
-
118,595
Interest payments
8,142
6,107
6,107
-
20,355
Lease liability
9,643
7,415
15,903
6,041
39,002
Derivative financial instruments
3,909
-
-
-
3,909
Other current liabilities
40,773
-
-
-
40,773
Liabilities for options on non-controlling interests
-
-
20,770
-
20,770
Other non-current liabilities
-
2,520
27
107
2,653
Total financial liabilities
288,205
45,406
101,787
6,147
441,545
(Euro/000)
December 31, 2022
within 1
year
between 1
and 3 years
between 3
and 5 years
beyond 5
years
Total
Cash in hand and at bank
77,710
-
-
-
77,710
Trade receivables, net
214,034
-
-
-
214,034
Derivative financial instruments
698
-
780
-
1,478
Other current assets
44,878
-
-
-
44,878
Other non-current assets
-
4,795
3,700
128
8,623
Total financial assets
337,320
4,795
4,480
128
346,723
Trade payables
180,701
-
-
-
180,701
Tax payables
22,492
-
-
-
22,492
Borrowings
30,000
27,600
89,730
-
147,330
Interest payments
8,186
6,462
8,798
-
23,446
Lease liability
9,051
8,047
16,029
10,652
43,778
Derivative financial instruments
7,656
-
-
-
7,656
Other current liabilities
47,291
-
-
-
47,291
Liabilities for options on non-controlling interests
6,195
6,675
6,675
-
19,545
Other non-current liabilities
-
1,444
283
314
2,041
Total financial liabilities
311,572
50,227
121,514
10,966
494,279
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 108
Classification of financial assets and liabilities
The table below shows the financial instruments reported on the balance sheet, according to the analyses requested
by IFRS 7, with indication of the valuation criteria applied and, in the case of “financial instruments measured at
fair value”, the impact on the income statement or the shareholders' equity. If applicable, the last column of the
table shows the fair value of the financial instrument.
Financial instruments
Financial instruments at fair
value through
Financial
instruments
at amortised
cost
Current
value at
Dec. 31,
2023
Fair value
at Dec.
31, 2023
(Euro/000)
Income
Statement
Other
comprehensive
income (OCI)
ASSETS
Cash in hand and at bank
-
-
74,898
74,898
74,898
Trade receivables, net
-
-
203,075
203,075
203,075
Derivative financial instruments
585
271
-
855
855
Other current assets
-
-
40,119
40,119
40,119
Other non-current assets
-
-
7,668
7,668
7,668
Total assets
585
271
325,760
326,615
326,615
LIABILITIES
Borrowings
-
-
118,595
118,595
118,595
Lease liability
-
-
39,002
39,002
39,002
Derivative financial instruments
3,909
-
-
3,909
3,909
Other current liabilities
-
-
40,772
40,772
40,772
Liability for options on non-controlling
interests
20,770 - - 20,770 20,770
Other non-current liabilities
-
-
2,653
2,653
2,653
Total liabilities
24,680
-
201,023
225,702
225,702
Financial instruments
Financial instruments at
fair value through
Financial
instruments
at
amortised
cost
Current
value at
Dec. 31,
2022
Fair value
at Dec. 31,
2022
(Euro/000)
Income
Statement
Other
comprehensive
income (OCI)
ASSETS
Cash in hand and at bank
-
-
77,710
77,710
77,710
Trade receivables, net
-
-
214,034
214,034
214,034
Derivative financial instruments
698
780
-
1,478
1,478
Other current assets
-
-
44,878
44,878
44,878
Other non-current assets
-
-
8,623
8,623
8,623
Total assets
698
780
345,244
346,722
346,722
LIABILITIES
Borrowings
-
-
147,329
147,329
147,329
Lease liability
-
-
43,778
43,778
43,778
Derivative financial instruments
7,656
-
-
7,656
7,656
Other current liabilities
-
-
47,291
47,291
47,291
Liability for options on non-controlling interests
19,545
-
-
19,545
19,545
Other non-current liabilities
-
-
2,041
2,041
2,041
Total liabilities
27,200
-
240,439
267,639
267,639
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 109
Hierarchical levels of the fair value measurement
Financial instruments reported in the balance sheet valued at the fair value, according to IFRS 13, are classified in
the three-level hierarchy that reflects the significance of the input used in determining the fair value.
The three
levels of fair value of the hierarchy are:
• Level 1 – if the instrument is quoted in an active market;
• Level 2 - if the fair value is measured based on valuation techniques for which all significant inputs are
based on observable market data, other than quotations of the financial instrument;
• Level 3 – if the fair value is calculated based on valuation techniques for which any significant input is not
based on observable market data.
The following table shows the liabilities and assets valued at their fair value at 31 December 2023, split by
hierarchical level of the fair value.
(Euro/000)
Level 1
Level 2
Level 3
Total
Derivative financial instruments
-
855
-
855
Total assets
-
855
-
855
Derivative financial instruments
-
(3,909)
-
(3,909)
Liability for options on non-controlling interests
-
-
(20,770)
(20,770)
Total liabilities
-
(3,909)
(20,770)
(24,680)
In 2023 there have been no transfers from level 1 to level 2 and from level 2 to level 3 and vice versa.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 110
4. Notes to the consolidated balance sheet
4.1 Cash and cash equivalents
(Euro/ 000)
December 31, 2023
December 31, 2022
Cash and cash equivalents
74,898
77,710
This account totals 74,898 thousand Euro compared to 77,710 thousand Euro at 31 December 2022 and represents
the momentary availability of cash invested at market rates. The book value of the available liquidity is aligned with
its fair value at the reporting date. The related credit risk is very limited as the counterparties are leading banks.
As of 31 December 2023, about 26% of the cash balance resided in the Italian companies, about 34% in the North
America entities, 19% in the European entities, while the remaining 21% was attributable to several other Group
entities.
Management has established policies to make existing cash readily available for any need of the Group.
4.2 Trade receivables
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
Gross value trade receivables
213,594
225,758
Allowance for doubtful accounts (-)
(10,519)
(11,725)
Net value
203,075
214,034
The allowance for doubtful accounts includes the provision for insolvency posted on the income statement under
the item "general and administrative expenses" (note 5.4).
The following table shows changes in the allowance for doubtful accounts:
(Euro/000)
January 1,
2023
Addition
Use/Release (-)
Transl. diff.
December
31, 2023
Allowance for doubtful accounts (-)
11,725
2,048
(3,053)
(200)
10,519
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 111
(Euro/000)
January 1, 2022
Addition
Use/Release
(-)
Transl. diff.
December 31, 2022
Allowance for doubtful accounts (-)
16,762
1,550
(6,975)
388
11,725
In accordance with the requirements of IFRS 9, the Group has reviewed and assessed the overdue trade receivables
for impairment and, according to the analysis performed, has accrued an allowance for doubtful accounts equal to
2,048 thousand Euro, also in consideration of the current and prospective risk on the global markets under the
ongoing macro economic scenario. The decrease of the period equal to Euro 3,053 thousand is mainly related to
the use of the allowance to cover the impact of the write-off of the already impaired accounts receivables considered
as definitively not recoverable.
In accordance with the requirements of IFRS 9, the Group has assessed the existing trade receivables for
impairment based on the model of expected losses, as at 31 December 2023 the provision for doubtful accounts
includes a credit loss allowance of 0.8 million Euro (0.9 million Euro at 31 December 2022) that covers the potential
additional credit risk expected on the amount overdue and not impaired and on the amount not past due.
The Group has no particular concentration of credit risk, as its credit exposure is spread over a large number of
clients and geographies. The carrying amount of the trade receivables, is considered to be approximately equal to
their fair value.
Further information about the impairment of trade receivables and the Group’s exposure to credit risk can be found
in note 3 paragraph “Credit risks”.
4.3 Inventories
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
Raw materials
51,588
74,277
Work in progress
3,335
5,212
Finished goods
228,158
238,766
Gross inventories
283,081
318,255
Provision for obsolete inventories (-)
(54,090)
(59,274)
Total
228,991
258,980
In order to deal with obsolete or slow-moving stock, a specific provision has been allocated, calculated for raw
materials and semi-finished products on the base of their future use in the production process and for finished
goods on the base of their future recoverability through the sale, taking into account market trends, consumer
demand, past experience, historical results achieved and the recoverability of the goods value in ordinary market
conditions. The effects of the termination of some licenses were also considered. This item is charged in the income
statement in “cost of sales” (note 5.2).
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 112
The movements in the period are shown below:
(Euro/000)
January 1,
2023
Posted to income
statement
Transl. diff.
December 31,
2023
Inventory gross value
318,255
(26,632)
(8,542)
283,081
Provision for obsolete inventories (-)
(59,274)
3,980
1,205
(54,090)
Total net
258,980
(22,652)
(7,338)
228,991
(Euro/000)
January 1,
2022
Posted to income
statement
Transl. diff.
December 31,
2022
Inventory gross value
302,556
8,500
7,199
318,255
Provision for obsolete inventories (-)
(68,127)
9,118
(266)
(59,274)
Total net
234,430
17,618
6,933
258,980
4.4 Derivative financial instruments
The following table summarizes the amounts of financial instruments:
(Euro/000)
December 31, 2023
December 31, 2022
Current assets:
- Foreign currency contracts - Fair value through P&L
585
698
Non-current assets:
- Interest rate swaps - cash flow hedge
271
780
Current liabilities:
- Foreign currency contracts - Fair value through P&L
(3,909)
(7,656)
Total Net
(3,054)
(6,177)
The market value of the forward contracts is calculated using the present value of the differences between the
contractual forward exchange rate and the market forward exchange rate. At the reporting date, the Group had
contracts for hedging against exchange rate fluctuations for a negative net market value of 3,324 thousand Euro
(negative for 6,958 thousand Euro at 31 December 2022).
The following table summarizes the characteristics and fair value of foreign currency forward contracts:
December 31, 2023
Fair value
(Euro/000)
Maturity
Notional amount
Assets
Liabilities
Fair value hedge
within 1 year
189,530
585
(3,909)
Total forward contracts
189,530
585
(3,909)
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 113
December 31, 2022
Fair value
(Euro/000)
Maturity
Notional amount
Assets
Liabilities
Fair value hedge
within 1 year
198,947
698
(7,656)
Total forward contracts
198,947
698
(7,656)
The net market value of interest rate swap (IRS) contracts was positive for 271 thousand Euro. The Group’s policies
for managing interest rate risk are designated to hedge of the exposure to variability in future interest cash flows
given this, the related hedging effect must be suspended in the cash flow reserve and recognized in profit or loss
in subsequent years when the expected flows actually emerge.
The following table summarizes the characteristics and fair value of IRS contracts:
December 31, 2023
Fair value
(Euro/000)
Maturity
Notional amount
Assets
Liabilities
Cash flow hedge
2025
64,000
271
-
Total IRS contracts
64,000
271
-
December 31, 2022
Fair value
(Euro/000)
Maturity
Notional amount
Assets
Liabilities
Cash flow hedge
2025
80,000
780
-
Total IRS contracts
80,000
780
-
4.5 Other current assets
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
VAT receivable
7,670
9,772
Income tax receivables
19,307
17,169
Prepayments and accrued income
6,452
9,398
Other receivables
6,689
8,539
Total
40,119
44,878
Income tax receivables are mainly related to tax credits and advance payments made during the financial year
which will be offset against the related tax payables.
Prepayments and accrued income amounted to 6,452 thousand Euro compared to 9,398 thousand Euro at 31
December 2022, and mainly relate to royalties and advertising expenses, prepaid insurance and other prepaid
expenses.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 114
Other current receivables amounted to 6,689 thousand Euro, compared to 8,539 thousand Euro of 31 December
2022. The balance mainly includes deposit payments due within 12 months and other receivables related to the
ordinary business.
These other current receivables are expected to be recovered in the coming months and are reasonably certain in
term of fulfillment conditions. It is considered that the book value of the other current assets is approximately equal
to their fair value.
4.6 Tangible assets
The table below summarises the changes in the tangible assets:
(Euro/000)
January
1, 2023
Increase Decrease Reclass.
Reclass.
assets held
for sale
Transl.
diff.
December
31, 2023
Gross value
Land and buildings
121,200
2,305
(14)
(845)
(13,162)
(1,815)
107,669
Plant and machinery
176,106
1,385
(2,910)
418
(39,756)
(1,668)
133,574
Equipment and other assets
122,299
6,838
(628)
474
(4,356)
(3,325)
121,301
Advance payments
65
-
(18)
(47)
-
-
-
Total
419,670
10,527
(3,571)
-
(57,274)
(6,808)
362,545
Accumulated depreciation
Land and buildings
61,078
5,102
(3)
17
(9,072)
(781)
56,341
Plant and machinery
149,674
5,506
(2,405)
-
(35,824)
(1,227)
115,724
Equipment and other assets
99,830
9,936
(591)
(17)
(4,756)
(2,672)
101,730
Total
310,582
20,544
(2.999)
-
(49.652)
(4,680)
273,795
Net value
109,088
(10,017)
(572)
-
(7,622)
(2,128)
88,750
(Euro/000)
January 1,
2022
Increase Decrease Reclass.
Transl.
diff.
December
31, 2022
Gross value
Land and buildings
118,911
2,816
(465)
(135)
74
121,200
Plant and machinery
175,998
2,337
(1,951)
-
(277)
176,106
Equipment and other assets
136,213
7,559
(23,051)
135
1,443
122,299
Advance payments
43
22
-
-
-
65
Total
431,164
12,733
(25,467)
-
1,239
419,670
Accumulated depreciation
Land and buildings
57,670
3,519
(618)
376
130
61,078
Plant and machinery
146,267
5,347
(1,738)
-
(202)
149,674
Equipment and other assets
111,613
10,638
(22,911)
(376)
865
99,830
Total
315,551
19,504
(25,267)
-
794
310,582
Net value
115,613
(6,771)
(200)
-
446
109,088
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 115
Tangible assets in the financial period record an increase for new investments equal to 10,527 thousand Euro, a
decrease for depreciation and write-down equal to 20,544 thousand Euro, a net decrease for disposal equal to 572
thousand Euro and for the reclassification to assets held for sale equal to 7,622 thousand Euro.
Investments in tangible assets in the financial period equal to 10,527 thousand Euro (12,733 thousand Euro in the
previous year), are related to:
- Euro 6,069 thousand in the production facilities, mainly for the purchase and production of equipment for
new models;
- Euro 2,619 thousand in the U.S. companies, mainly for fixtures in retail stores of Blenders and logistic
equipment in the Denver distribution centre;
- Euro 1,265 thousand in the Italian distribution centre mainly for the upgrade of logistic equipment;
- the remaining part in the other companies of the Group.
On the base of the analyses performed, management believes that for the tangible assets on hand as at 31
December 2023 there are no indicators of loss of value.
Non-current assets held for sale
The balance related to the reclassification to "Assets held for sale" refers to the assets of the italian production
plant sited in Longarone.
As at 31 December 2022 the item was equal to 2,320 thousand Euro and was related to the real estate of one of
the two industrial units of the Longarone production site, which had been downsized in 2020.
In 2023 the Group in consideration of the product portfolio evolution and of the persistent production overcapacity
has announced the intention to dispose the entire Longarone production site and the advanced negotiations with
Thelios S.p.A., a player in the eyewear sector and part of the LVMH Group, and with Innovatek S.r.l., an Italian
eyewear contractor manufacturer.
In line with IFRS 5 all fixed assets of the Longarone production site that were subject to these two negotiations
have been reclassified as “assets held for sale”, for a total net book value of 7,622 thousand Euro.
On 31 October 2023 the Group announced the signing of the deeds for the transfer of the industrial assets of the
Longarone plant to Thélios S.p.A. and Innovatek S.r.l..
The operation has been finalised for a sale consideration of 10.7 million Euro, against which the Group sold fixed
assets for a total net book value of 9.9 million Euro after having recognized write-downs of fixed assets equal to
approximately 3.2 million Euro. The operation also involved the transfer of liabilities relating to personnel, for
defined benefit plan liabilities and payroll accruals, equal to approximately 5.8 million Euro and non-recurring costs
connected to the deal equal to approximately 10 million Euro.
Despite the complex situation, the agreement has guaranteed the full employment of all the workers, allowing for
the preservation of the sector’s existing know-how thanks to the effective support of the local public institutions
and the trade unions, to reach the conditions for the best possible outcome.
Following the completion of the disposal plan of Longarone site at 31 December 2023 the Group doesn’t report any
residual amount in the item “assets held for sale”.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 116
4.7 Right of Use assets
The table below summarises the changes in the Right of Use assets, mainly related to real estate rent contracts
and to long term operating lease contracts for company cars.
(Euro/000)
January 1,
2023
Increase Decrease Transl. diff.
December
31, 2023
Gross value
Buildings Right of Use
58,742
3,748
(4,908)
(1,552)
56,031
Other assets Right of Use
8,127
2,869
(2,351)
(77)
8,568
Total
66,869
6,617
(7,258)
(1,629)
64,599
Accumulated depreciation
Buildings Right of Use
24,074
8,120
(4,836)
(620)
26,738
Other assets Right of Use
3,798
2,225
(2,100)
(50)
3,874
Total
27,872
10,345
(6,936)
(670)
30,611
Net value
38,997
(3,728)
(322)
(959)
33,988
(Euro/000)
January 1,
2022
Increase Decrease Transl. diff.
December 31,
2022
Gross value
Buildings Right of Use
49,449
8,556
(1,600)
2,337
58,742
Other assets Right of Use
8,664
2,322
(2,865)
7
8,127
Total
58,112
10,877
(4,465)
2,345
66,869
Accumulated depreciation
Buildings Right of Use
16,964
8,097
(1,606)
619
24,074
Other assets Right of Use
4,230
2,229
(2,664)
3
3,798
Total
21,194
10,326
(4,270)
622
27,872
Net value
36,918
551
(195)
1,723
38,997
Investments in Right of Use in the financial period amount to 6,617 thousand Euro (10,877 thousand Euro in the
previous year) related for the building to the opening of one new Blenders retail store, by the ordinary renewal of
some locations of the commercial subsidiaries and for the other assets to the renewal of the expired operating
lease contracts for company cars.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 117
4.8 Intangible assets
The following table shows changes in intangible assets:
(Euro/000)
January
1, 2023
Increase Decrease Reclass.
Reclass.
assets
held for
sale
Transl.
diff. December
31, 2023
Gross value
Software
100,520
1,705
(87)
(9)
(217)
(638)
101,275
Trademarks and licenses
154,909
772
-
-
-
(3,424)
152,257
Other intangible assets
32,387
343
(233)
-
-
(1,004)
31,493
Total
287,817
2,820
(319)
(9)
(217)
(5,066)
285,026
Accumulated amortization
Software
87,839
5,495
24
(9)
(193)
(598)
92,558
Trademarks and licenses
51,332
7,933
-
-
-
(591)
58,674
Other intangible assets
15,653
10,904
(233)
-
-
(648)
25,677
Total
154,824
24,332
(209)
(9)
(193)
(1,836)
176,909
Net value
132,993
(21,513)
(110)
-
(24)
(3,229)
108,117
(Euro/000)
January 1,
2022
Increase Decrease Reclass.
Transl.
diff.
December
31, 2022
Gross value
Software
97,304
2,685
(149)
11
670
100,520
Trademarks and licenses
148,933
241
-
-
5,736
154,909
Other intangible assets
30,656
382
(156)
-
1,504
32,387
Total
276,892
3,308
(305)
11
7,910
287,817
Accumulated amortization
Software
81,342
6,092
(16)
11
410
87,839
Trademarks and licenses
43,675
7,229
-
-
427
51,332
Other intangible assets
10,216
5,239
(115)
-
313
15,653
Total
135,233
18,560
(130)
11
1,150
154,824
Net value
141,659
(15,252)
(175)
-
6,761
132,993
Intangible assets in the financial period record an increase for new investments equal to 2,820 thousand Euro, a
decrease for depreciation and write-down equal to 24,332 thousand Euro, a net decrease for disposal equal to 110
thousand Euro and for reclassification to assets held for sale equal to 24 thousand Euro.
The item trademarks and licenses mainly includes the value of proprietary brands acquired from third parties during
business combinations and valued in the purchase price allocation of such transactions. These brands have a finite
useful life and are amortized over a useful life between 15 and 20 years, determined on the basis of independent
analyzes and market benchmarks. On the base of the analyses performed, management believes that for the
intangible assets on hand as at 31 December 2023 there are no indicators of loss of value.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 118
Investments in intangible assets made during the year amount to 2,820 thousand Euro (3,308 thousand Euro in
the previous year). The investments mainly relate to the continuing implementation of the integrated information
system (ERP) in the Group’s subsidiaries and to the digital transformation projects.
Investments of 11,740 thousand Euro (9,703 thousand Euro in the previous year) relating the implementation of
cloud-based software-as-a-service (SaaS) agreements, have been expensed as EDP service costs, in line with the
accounting policy introduced by the Group in 2021 to comply with the guidelines of the IFRIC agenda on SaaS
arrangements published in April 2021.
Depreciation and Amortization
Depreciation and amortization for tangible and intangible assets is allocated over the following income statement
items:
(Euro/000)
Notes
2023
2022
Var.
Cost of sales
5.2
13,737
12,536
1,201
Selling and marketing expenses
5.3
3,756
3,220
536
General and administrative expenses
5.4
27,384
22,308
5,076
Amortization and depreciation
44,877
38,064
6,813
Cost of sales - Right of Use depreciation
5.2
1,221
1,197
25
Selling and marketing expenses - Right of Use depreciation
5.3
4,677
4,813
(136)
General and administrative expenses - Right of Use depreciation
5.4
4,447
4,317
130
Depreciation Right of Use - IFRS 16
10,345
10,326
19
Total
55,222
48,390
6,832
Amortization and depreciation equal 44,877 thousand Euro (38,064 thousand Euro in the previous period). The
increase for 6,813 thousand Euro is mainly due to non-recurring tangible assets write-downs equal to 12,812
thousand Euro that have affected the item “cost of sales" for 4,147 thousand Euro mainly related to the write-down
of the Longarone plant assets at their recoverable value through the sale, in the context of the transaction described
in the Note 4.6 paragraph “Non-current assets held for sale”, and the item “general and administrative” for 8,665
thousand Euro related to the partial write-down of some intangible assets identified in the purchase price allocation
of a previous business combination. These non-recurring write-downs were partially offset by a reduction in the
ordinary amortization and depreciation.
The Right of Use depreciations in 2023 are equal to 10,345 thousand Euro (10,326 thousand Euro in the previous
year).
The Group does not recognize as intangible assets the research and development costs related to both technological
and production process developments and product design.
During the year the Group incurred costs for research and development equal to 14,000 thousand Euro (14,420
thousand Euro in the previous year).
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 119
4.9 Goodwill
The item refers to goodwill which arose from the acquisitions in 2020 of Privé Revaux and Blenders. A single CGU
has been identified, representing the whole Group, to which the entire amount of goodwill has been allocated: this
allocation is consistent with the strategy underlying the acquisitions, that, beyond the acquisition of two new brands,
will enable the whole Group to compete more effectively in the fast-growing digital sales and communication
channels. The identification of a single CGU is consistent with the strategic vision that the directors have of the
Group and reflects the way in which management monitors operations and makes decisions on the maintenance
or sale of assets and with the high level of interdependence of the cash in flows of the Group. Strategy, goal setting,
operations management, as well as reporting and incentive systems are managed at a corporate level, leaving to
the local units deployment and tailoring to the specific market. The allocation to a single CGU is consistent with the
approach adopted for the preparation of the previous year financial statements.
The following table shows changes in Goodwill:
(Euro/000)
January 1,
2023
Increase Decrease Transl. diff.
December
31, 2023
Goodwill
34,895
-
-
(1,213)
33,682
(Euro/000)
January 1,
2022
Increase Decrease Transl. diff.
December 31,
2022
Goodwill
32,861
-
-
2,033
34,895
In 2023 the item recorded a decrease of 1,213 thousand Euro due to foreign currency translation.
Impairment test
The approach followed and the assumptions made to perform the impairment test are described below.
For the unique identified CGU of the Group, the recoverable amount is based on its value in use determined based
on estimated future cash flow projections.
On 14 March 2024 the Board of Directors has approved the 2024-2028 Financial Projections that confirms the main
goals and strategies defined in the Group Business Plan presented to the markets on 10 March 2023. For the
purposes of the impairment test, these financial projections take the requirements of IAS 36 into consideration,
specifically those that require that the estimate of future cash flows excludes those cash flows that are expected
to arise from improving or enhancing asset performance. Accordingly, potential new acquisitions effect included in
the Financial projection 2024-2028, have not been considered for the purposes of the impairment test.
In estimating the growth in the plan period, the Group has taken into consideration both its own internal
expectations as well as indications obtained from independent external sources.
The main objectives and strategies underlying Safilo’s 2024-2028 business plan are:
• Sales growth, which maximizes customer service and meets the needs of the different consumer segments;
• Margin expansion and a more flexible operating cost structure;
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 120
• Positive cash flow generation that feeds and supports the Group's organic and external growth.
The Group’s strategies will continue to leverage two main enablers:
• the end-to-end Digitalization of its business model, with the aim of transversally enhancing data analytics,
optimizing processes, operations and time to market;
• a Sustainability roadmap in support of the Group’s business targets, driven through an agenda of clear and
shared objectives.
The impairment test methodology used for the execution of the impairment test at the date of 31 December 2023
is consistent with the criteria used for the 2022 financial statements and considers the following factors:
• Management used the most recent information available to calculate the WACC (weighted average cost of
capital), in particular: risk free rate, market risk premium, beta, specific risk premium for Safilo, Cost of debt
(including lease liabilties), debt/equity structure. As recommended by regulators, the WACC has not been
adjusted for the macroeconomic enviroment with uncertainties instead being reflected in the cash flows;
• the growth rates for the years following the plan’s horizon (“g” rate) have been analytically reviewed for each
single country in which the Group operates in, and have been adapted to the rate of inflation expected by
analysts for 2028.
To calculate the present value, the future cash flows thus obtained were discounted to their present value at a
discount rate (WACC) as at the test’s date of reference that took into account the specificities of each geography
where the Group operates. The cash flows generated after the horizon considered were determined on the basis
of perpetual growth rates considered adequate with reference to the economic conditions of the country of
reference.
The following table summarizes the WACC and “g” rates used by the Group for the impairment test:
Key assumptions
"WACC" discount rate
Growth rate "g"
December
31, 2023
December
31, 2022
December
31, 2023
December
31, 2022
Safilo Group
8.55%
10.12%
2.13%
2.07%
The impairment test carried out did not highlight any loss in value.
Management has performed sensitivities to test the cover of Net Invested Capital based on different scenarios
where key parameters like WACC and Free Cash Flows have been progressively modelled. With reference to the
break-even level: to obtain an enterprise value equal to the net invested capital as of 31 December 2023, including
goodwill, EBITDA and related cash flows could be reduced by 55% or WACC could be increased by +6.5%.
After completing the process described, management concluded that no impairment loss needs to be recognized
at the date of 31 December 2023.
Management has used the most reliable information available at this moment. In monitoring the goodwill value,
management has taken into consideration also exogenous factors, such as the stock market capitalization, which
is higher than the Group's net equity. The stock market valuation in general may be subject to different expectations
and various fluctuations and hence in practice different valuation methods exist, such as those based on expected
cash flows.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 121
Management believe that the assumptions incorporated in the Financial Projections 2024-2028 underlying the
impairment test are reasonable and that the Group has the necessary skills and resources to meet planned goals.
4.10 Deferred tax assets and deferred tax liabilities
The following table shows the amounts of deferred tax assets and liabilities, net of the write-downs applied:
(Euro/000)
December 31, 2023
December 31, 2022
Deferred tax assets
199,207
191,262
Valuation Allowance (-)
(163,887)
(154,989)
Net deferred tax assets
35,320
36,273
Deferred tax liabilities
(10,291)
(12,863)
Total net
25,029
23,410
The deferred tax assets, net of deferred tax liabilities, have been reviewed and reduced by a valuation allowance
in relation to some Group companies to the extent it is no longer probable that sufficient taxable profit will be
available to allow the benefit of part or all of the deferred tax assets to be utilized. The valuation allowance for
deferred tax assets as of 31 December 2023 amounts to 163,887 thousand Euro (154,989 thousand Euro at 31
December 2022). This valuation allowance can be reversed in future years to the extent that it is probable that
taxable profits will be available against which the deductible temporary differences and tax losses can be utilized.
The table below provides details of the items generating temporary differences on which deferred tax assets and
liabilities were calculated.
Deferred tax assets
Posted to
(Euro/000)
January 1,
2023
Income
Statement
Equity
Transl.
diff.
December 31,
2023
- Tax losses carried forward
119,426
13,039
-
(311)
132,154
- Inventories
23,947
(2,907)
-
(297)
20,743
- Taxed provisions
7,258
472
(145)
(7)
7,578
- Intangible assets
2,779
31
-
(3)
2,807
- Tangible assets
4,556
(819)
-
37
3,774
- Taxed financial interests
16,424
2,039
-
(4)
18,459
- Other temporary differences
16,872
(2,772)
(42)
(367)
13,692
- Total deferred tax assets
191,262
9,084
(187)
(952)
199,207
- Valuation allowance of deferred tax assets on tax losses
(111,599)
(14,271)
-
171
(125,699)
- Valuation allowance of deferred tax assets on other
temporary differences
(43,389)
5,164
144
(105)
(38,187)
- Total allowance on deferred tax assets
(154,989)
(9,108)
144
66
(163,887)
Total net
36,273
(24)
(43)
(886)
35,320
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 122
Deferred tax liabilities
Posted to
(Euro/000)
January 1,
2023
Income
Statement
Equity
Transl.
diff.
December 31,
2023
- Depreciation differences
8,144
(2,883)
-
(188)
5,073
- Goodwill
2,513
556
-
(99)
2,970
- Inventories
167
(54)
-
12
125
- Receivables and payables
384
(42)
-
(8)
334
- Other temporary differences
1,655
183
-
(49)
1,789
Total
12,863
(2,240)
-
(332)
10,291
The table below shows the Group’s total unused tax losses available for carry-forward by expiration date, the related
deferred tax assets and the valuation allowance amounts. The deferred tax assets calculated on the tax losses
available for carry-forward of some Group companies amount to a total of 132,154 thousand Euro. These deferred
tax assets have been written down by a valuation allowance of 125,699 thousand Euro, since at present their
recovery via the generation of future taxable profit is not considered probable.
Expiration date
Tax losses
Tax benefit
(Euro/000)
2025
4,145
1,360
2026
3,549
1,169
2027
1,047
328
2029
28
9
2030
781
257
2031
467
147
2032
8
3
Unlimited
514,091
124,773
Other tax losses relating local taxes:
Various
4,109
Total
524,116
132,154
Valuation Allowance (-)
(125,699)
Total deferred tax assets on losses carried forward
6,455
The following table shows deferred tax assets and liabilities split between the portion due within one year and the
portion due after more than one year.
(Euro/000)
December 31, 2023
December 31, 2022
Deferred tax assets
- recoverable within one year
23,367
20,074
- recoverable beyond one year
11,952
16,199
Total
35,320
36,273
Deferred tax liabilities
- recoverable within one year
(462)
(555)
- recoverable beyond one year
(9,829)
(12,308)
Total
(10,291)
(12,863)
Total net
25,029
23,410
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 123
4.11 Other non-current assets
The table below shows details of non-current assets:
(Euro/000)
December 31, 2023
December 31, 2022
Long-term guarantee deposits
1,183
2,199
Other long-term receivables
5,388
4,172
Long-term tax receivables
1,097
2,251
Total
7,668
8,623
Long-term guarantee deposits mainly refer to security deposits for leasing contracts related to buildings used by
some of the Group’s companies.
Other long-term receivables mainly refer to the cash consideration for the disposal of the office real estate near the
Padua Headquarters, finalised in 2021. The receivable has been discounted to its present value and will be collected
through monthly instalments along a four year payment period according to the contract.
Long-term tax receivables mainly refer to VAT and other income tax receivables of some Group companies.
It is considered that the book value of the other non-current assets is approximately equal to their fair value.
4.12 Borrowings and Lease liabilities
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
Short-term portion of long-term bank loans
30,250
30,000
Short-term borrowings
30,250
30,000
Long-term bank loans
88,345
117,329
Long-term borrowings
88,345
117,329
Short-term portion of financial lease liability IFRS 16
9,643
9,051
Long-term portion of financial lease liability IFRS 16
29,359
34,727
Financial lease liability IFRS 16
39,002
43,778
Total
157,597
191,107
Borrowings
At 31 December 2023 the Group has bank loans for a total amount of 118,595 thousand Euro of which 30,250
thousand Euro classified as short-term and 88,345 thousand Euro as long-term (147,329 thousand Euro as at 31
December 2022 of which 30,000 thousand Euro classified as short-term and 117,329 thousand Euro as long-term).
The breakdown of bank loans by facility is detailed as follows:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 124
- 120,000 thousand Euro related to the Term Loan Facility and 2,000 thousand Euro related to the partial
drawn of the Capex Facility Line. Both facilities are carried at amortized cost, meaning that the total
outstanding transaction costs are amortized along the duration of the facility and reported as reduction of
the par values. This reduces the amount of the two facilities by 3,405 thousand Euro, bringing their
combined net value to 118,595 thousand Euro (147,329 thousand Euro as at 31 December 2022);
- The Group’s Revolving Credit Facility (75,000 thousand Euro) has not been drawn as at 31 December 2023
(no amount drawn also as at 31 December 2022).
The above facilities are part of the financing agreement signed by the Group on 29 September 2022 for a total
outstanding amount at 31 December 2023 of Euro 270,000,000, maturing in September 2027 and consisting of a
Term Loan Facility of Euro 120,000,000, a Revolving Credit Facility of Euro 75,000,000 and a Capex Facility Line of
Euro 75,000,000.
These committed, unsubordinated and unsecured facility agreements are subject to customary operating and
financial covenants, based on the ratio net debt/EBITDA adjusted. At 31 December 2023 the Group complies with
all the outstanding covenants.
In 2023 total interest expenses on borrowings are 10,037 thousand Euro (6,509 thousand Euro in 2022) of which
figurative interest, calculated according to amortized cost method, are 1,266 thousand Euro (1,531 thousand in
2022).
The Term Loan Facility, matures in September 2027, with a repayment profile in ten semi-annual instalments starting
from June 2023. Here below we report the maturity analysis of the nominal value of the long-term bank loans, gross
of 3,405 thousand Euro of transaction costs (4,671 thousand Euro in 2022):
(Euro/000)
December 31, 2023
December 31, 2022
From 1 to 2 years
30,500
30,000
From 2 to 3 years
30,500
30,000
From 3 to 4 years
30,750
30,000
From 4 to 5 years
-
32,000
Beyond 5 years
-
-
Total
91,750
122,000
The Group, as at 31 December 2023, has no financial borrowings in currencies other than Euro, details on the
Group’s exposure to interest rate and liquidity risks arising from borrowings are set out in the paragraphs relating
to risk management (see note 3).
Financial Lease liability
The IFRS 16 financial lease liability, as at 31 December 2023, amounts to 39,002 thousand Euro of which 9,643
thousand Euro as short term, and 29,359 thousand Euro as long term.
Here below we report the maturity analysis of the long term IFRS 16 financial lease liability:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 125
(Euro/000)
December 31, 2023
December 31, 2022
From 1 to 2 years
7,415
8,047
From 2 to 3 years
6,221
6,160
From 3 to 4 years
5,218
5,139
From 4 to 5 years
4,465
4,730
Beyond 5 years
6,041
10,652
Total
29,359
34,727
Net Financial Position
The following table shows the breakdown of net financial debt. This has been calculated consistently with the ESMA
communication 32-382-1138 issued on 4 March 2021 implementing the European regulation UE 2017/1129 and in
line with the CONSOB attention notice 5/21 of 29
April 2021.
Net financial debt
December 31,
2023
December 31,
2022
Change
(Euro/000)
A Cash
74,898
77,710
(2,811)
B Cash equivalents
-
-
-
C Other current financial assets
-
-
-
D Liquidity (A + B + C)
74,898
77,710
(2,811)
E Current financial debt (including debt instruments, but
excluding current portion of non-current financial debt)
-
-
-
F Current portion of non-current financial debt
(39,893)
(39,051)
(843)
G Current financial indebtedness (E + F )
(39,893)
(39,051)
(843)
H Net current financial indebtedness (G - D)
35,005
38,659
(3,654)
I Non-current financial debt (excluding current portion and debt
instruments)
(117,704)
(152,057)
34,353
J Debt instruments
-
-
-
K Non-current trade and other payables
-
-
-
L Non-current financial indebtedness (I + J + K)
(117,704)
(152,057)
34,353
M Total financial indebtedness (H + L)
(82,699)
(113,398)
30,699
The Group Net financial debt reported in the above table does not include the valuation of derivative financial
instruments (negative for 3.054 thousand Euro as at 31 December 2023) and the liabilities for options on non-
controlling interests described respectively in note 4.4 and 4.18 of this report.
In compliance with the ESMA communication 32-382-1138 of 4 March 2021 and the Consob attention notice 5/21
of 29 April 2021, it is specified that at 31 December 2023 the indirect or contingent indebtedness of the Group,
includes "liabilities for options on non-controlling interests” equal to 20,770 thousand of Euro as disclosed in note
4.18.
In compliance with the same communication, it is specified that the balance sheet also presents a liability for
“employee benefit obligations” equal to 9,734 thousand Euro as disclosed in note 4.17, and “provisions for risks”
for a total of 18,460 thousand Euro as disclosed in note 4.16.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 126
4.13 Trade payables
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
Trade payables for:
Purchase of raw materials
25,055
25,383
Purchase of finished goods
63,007
64,066
Supplies from subcontractors
3,682
3,322
Tangible and intangible assets
1,895
2,816
Commissions
2,333
4,443
Royalties
12,333
10,776
Advertising and marketing costs
13,336
11,351
Services
43,113
49,251
Sales returns liabilities (Refund Liability)
7,353
9,295
Total
172,107
180,701
Sales returns liabilities refer to the amount accrued against the risk of returns of products sold and delivered to
customers that, based on the relevant trade terms, might be returned. This sum is charged to the income statement
and is deducted directly from sales. The refund liability refers to well identified items and customers and
management has elements to estimate the liability with a high level of reliability.
4.14 Tax payables
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
Income tax payables
14,120
12,964
VAT payables
4,463
3,820
Other taxes payables
4,799
5,709
Total
23,382
22,492
At 31 December 2023 tax payables amounted to Euro 23,382 thousand (compared to Euro 22,492 thousand at 31
December 2022). Of this sum Euro 14,120 thousand referred to income tax for the period, Euro 4,463 thousand to
VAT payables and Euro 4,799 thousand to taxes withheld, current and local taxes.
The provision for the year’s current income tax is shown in note 5.8 concerning income tax.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 127
4.15 Other current liabilities
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
Payables to personnel and social security institutions
26,039
31,918
Agent fee payables
200
173
Payables to pension funds
1,109
1,370
Accrued advertising and sponsorship costs
743
781
Accrued interests on long-term loans
89
53
Other accruals and deferred income
8,563
9,422
Other current liabilities
4,030
3,574
Total
40,772
47,291
Payables to personnel and social security institutions mainly refer to salaries and wages for December and for
holidays accrued but not taken at the reporting date.
4.16 Provisions
This item breaks down as follows:
(Euro/000)
January
1, 2023
Increase Decrease Reclass
Transl.
diff.
December
31, 2023
Product warranty provision
5,706
366
(2,677)
-
(58)
3,337
Agents' severance indemnity
2,396
243
(647)
-
-
1,992
Other provisions for risks and charges
6,410
1,762
(1,812)
(2,250)
5
4,114
Provisions for risks - long term
14,512
2,370
(5,136)
(2,250)
(53)
9,443
Product warranty provision
2,167
2
(113) - (67) 1,989
Provision for corporate restructuring
1,296
9,062
(9,760)
-
-
597
Other provisions for risks and charges
5,704
219
(1,740) 2,250
(1) 6,431
Provisions for risks - short term
9,166
9,282
(11,613)
2,250
(68)
9,017
Total
23,678
11,653
(16,749) - (121) 18,460
(Euro/000)
January 1,
2022
Increase Decrease
Transl.
diff.
December 31,
2022
Product warranty provision
5,764
561
(707)
89
5,706
Agents' severance indemnity
2,736
230
(571)
1
2,396
Other provisions for risks and charges
6,645
2,143
(2,437)
59
6,410
Provisions for risks - long term
15,144
2,934
(3,715)
149
14,512
Product warranty provision
1,978
124
(22)
87
2,167
Provision for corporate restructuring
7,795
1,296
(7,795)
-
1,296
Other provisions for risks and charges
6,004
728
(1,035)
8
5,704
Provisions for risks - short term
15,776
2,147
(8,852)
95
9,166
Total
30,921
5,081
(12,567)
244
23,678
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 128
The product warranty provision was recorded against the costs to be incurred for the replacement of products sold
before the balance sheet date, estimated on the base of historical information and of some statistical data regarding
the nature, frequency and average cost of the warranty substitutions.
The agents’ severance indemnity was created against the risk deriving from the payment of indemnities in the case
of termination of the agency agreement. This provision has been calculated based on existing laws at the balance
sheet date considering all the future expected financial cash outflows.
Provision for corporate restructuring includes the estimated liability arising from the reorganization projects under
way. The balance was mainly related to the Italian companies restructuring plan, the increase of the period equal
to Euro 9,062 thousand refers to the disposal plan of the entire Longarone production site announced in March
2023, this amount has been reported as a non-recurring expense in the item “other operating expenses”. With the
finalization of the deal in October 2023 the provision has been fully utilized, the residual balance as at 31 December
2023 is related to some minor restructuring projects still in place.
Provisions for other risks and charges refer to the best estimate made by management of the liabilities to be
recognized in relation to proceedings arisen against suppliers, tax authorities and other counterparts.
The estimate of the above-mentioned allowances takes into account, where applicable, the opinion of legal
consultants and other experts, the company’s past experience and others’ in similar situations, as well as the
intention of the company to take further actions in each case. The provision in the consolidated financial statements
is the sum of the individual accruals made by each company of the Group.
The above-mentioned allowances are considered adequate to cover the existing risks.
4.17 Employee benefit obligations
This item breaks down as follows:
(Euro/000)
December 31, 2023
December 31, 2022
Defined contribution plan
12
15
Defined benefit plan
9,722
13,959
Total
9,734
13,975
During the financial years under analysis, the item related to defined benefit plans showed the following
movements:
(Euro/000)
January 1,
2023
Addition
Actuarial
(gains)/losses
Uses
Reclass.
liabilities
held for
sale
Transl.
diff.
December
31, 2023
Defined benefit plan
13,959
976
287
(901)
(4,579)
(20)
9,722
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 129
(Euro/000)
January 1,
2022
Addition
Actuarial (gains)/losses
Uses
Transl.
diff.
December
31, 2022
Defined benefit plan
18,979
644
(2,850)
(2,813)
(1)
13,959
The reclassification to 'Liabilities held for sale' refers to the employee benefit liability of the Longarone production
site, which was disposed during the year. The decrease of 901 thousand Euros during the period is attributed to
the uses for the ordinary termination.
This item refers to different forms of defined benefit and defined contribution pension plans, in line with the local
conditions and practices in the countries in which the Group carries out its business.
The employee severance fund of Italian companies (“TFR”), which constitutes the main part of the balance related
the defined benefit plan, has historically been considered to be a defined benefit plan. However, following the
changes in legislation governing the employment severance fund introduced by Italian law no. 296 of 27 December
2006 (“Financial Law 2007”) and subsequent Decrees and Regulations issued in the first months of 2007, Safilo
Group, on the basis of generally agreed interpretations, has considered that the portion of the employee benefit
liability accrued from 1 January 2007, whether transferred to selected pension funds or transferred to the treasury
account established with INPS, is classified as a “defined contribution plan” while the portion of the employee
benefit liability accrued as of 31 December 2006 is classified as a “defined benefit plan” requiring actuarial valuations
that exclude future increases in salaries. The employee severance fund of Italian companies (“TFR”) has no plan
assets at its service.
Actuarial estimates used for calculating the employee severance liability accrued up to 31 December 2006 are based
on a system of assumptions based on demographic parameters, economic parameters and financial parameters.
The demographic parameters are normally summarized in tables based on samples from different institutes (ISTAT,
INAIL, INPS, Italian General Accounts Office, etc.). The economic parameters principally refer to long-term inflation
rates and the financial yield rate, crucial for the valuation of amounts accrued in the reserve for termination benefits.
The main financial parameter is given by the discount rate. The annual discount rate used to calculate the present
value of the obligation was derived by the Iboxx Corporate AA index with a duration comparable to the duration of
the collective of workers covered by the assessment.
The principal assumptions used for the purpose of the actuarial valuations as at 31 December 2023 and 31
December 2022 are summarized here follow:
2023
2022
Discount rate
3.08%
3.63%
Inflation rate
2.00%
2.30%
Rate of benefit increase
3.00%
3.23%
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 130
Below depicts the sensitivity of the Group’s defined benefit obligations to changes in the principal assumptions.
(Eur/000)
Assumption
Change
Increase
Decrease
Inflation
1,00%
363
(347)
Discount rate
1,00%
(530)
591
Life expectancy
1 year
(18)
18
The amounts related to defined benefit plans recorded in the statement of comprehensive income can be divided
as follows:
(Euro/000)
2023
2022
Service cost
(552)
(531)
Interest cost
(424)
(113)
Actuarial gain/(loss)
(287)
2,850
Total
(1,262)
2,206
4.18 Liabilities for options on non-controlling interests
(Euro/000)
January 1,
2023
Increase
Decrease
Reclass.
Transl.
diff.
December
31, 2023
Short term - liabilities for options on non-
controlling interests
6,195
-
(5,948)
(248)
-
-
Long term - liabilities for options on non-
controlling interests
13,349
7,895
-
248
(721)
20,770
19,545
7,895
(5,948)
-
(721)
20,770
The amount equal to 20,770 thousand Euro of long-term liability refers to the put and call options liability on the
non-controlling interests of the business combinations finalised in 2020 in Privé Goods LLC and Blenders Eyewear
LLC.
Pursuant to the contractual terms the non-controlling interests held by the minority equity holders of these two
investments are subject to customary reciprocal put and call options. More specifically, the put and call options
were to be exercised in each of the years 2023 and 2024 for one third of the minority interests and in 2025 for the
remaining portions.
In the first half of 2023 the Group has already finalised the exercise of the first option on Privé Revaux non-
controlling interests, following this event pursuant to the contractual terms the Group has increased its controlling
stake in Privé Revaux from 82.8% to 88.5% in exchange for a nominal amount. On Blenders non-controlling
interests, the exercise of the first option on an additional 10% of the interests, that has increased the Group
controlling stake from 70% to 80%, has been finalised in the third quarter of 2023 in exchange for an amount of
5,948 thousand Euro.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 131
In March 2023, the Group has also agreed an extension of the second and third tranche of the put and call options
on the non-controlling interest in Blenders, from 2024 and 2025 to 2026 and 2027 respectively.
Following the above extension, the option fair value liability recorded an increase equal to 7,895 thousand Euro
reported as financial loss in the item “Gains/(losses) for options on non-controlling interests” in the income
statement. Furthermore, the value of the liability was adjusted for a translation difference due to the Euro/US
exchange rate fluctuation and for the accretion consequent to the financial discounting of the long-term debt.
4.19 Other non-current liabilities
Movements in the item were as follows:
(Euro/000)
January 1,
2023
Increase
Decrease
Reclass.
Transl.
diff.
December
31, 2023
Other non current liabilities
2,041
634
-
-
(23)
2,653
2,041
634
-
-
(23)
2,653
The “other non-current liabilities” include the estimate of the tax liability equal to 2,215 thousand Euro (compared
to 960 thousand Euro as at 31 December 2022) accrued according to the IFRIC 23, on the basis of the assessment
of the limited uncertain tax treatment identified within the Group.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 132
SHAREHOLDERS’ EQUITY
Shareholders’ equity is the value contributed by the shareholders of Safilo Group S.p.A. (the share capital and the
share premium reserve), plus the value generated by the Group in terms of profit gained from its operations (profit
carried forward and other reserves). On 31 December 2023, Group shareholders’ equity totaled 379,200 thousand
Euro versus Euro 409,915 thousand Euro on 31 December 2022.
4.20 Share capital
At 31 December 2023 the share capital of the Parent Company, Safilo Group S.p.A., amounts to Euro 384,857,848
consisting of no. 413,745,466 ordinary shares with no par value (413,687,781 ordinary shares as at 31 December
2022). In 2023 new ordinary shares equal to a number of 57,685 were issued, resulting from the execution of a
share capital increase to the service of the stock option plan named “Stock Option Plan 2017 – 2020”.
4.21 Share premium reserve
At 31 December 2023, the share premium reserve of the parent company, Safilo Group S.p.A. totaled Euro
27,388,371 (compared to Euro 692,520,684 at the end of the previous year). The decrease equal to Euro
665,132,313 is due to its utilization to integrally cover the losses carried-forward resolved with the shareholders’
approval of the 2022 statutory report, net of the increase for the above new shares issued.
4.22 Retained earnings and other reserves
This item includes both the reserves of the subsidiary companies generated after their inclusion in the consolidation
area and the translation differences deriving from the translation into Euro of the financial statements of
consolidated companies denominated in other currencies.
During the year, the movements of the item “retained earnings and other reserve” mainly refer to:
- an decrease of 16,832 thousand Euro due to the translation differences coming from the translation of the
subsidiaries’ financial statements into Euro;
- an increase of 459 thousand Euro related to the cost of the period of the stock option plans in place;
- a decrease of 330 thousand Euro due to the actuarial valuation, net of the tax effect, of the employee
termination indemnities of defined benefit plans;
- an increase of 680 thousand Euro mainly related to transactions with minority interests.
The Group has distributed dividends to the minority interests of the subsidiary Blenders Eyewear LLC equal to 552
thousand Euro, this amount has reduced the equity related to the non-controlling interests.
4.23 Cash flow hedge reserve
The cash flow hedge reserve equal to 271 thousand Euro refers to the current value of derivative instruments
related to interest rate swap contracts that cover the variable interest rate risk on future financial interest payments.
4.24 Stock option plans
As at 31 December 2023 the Group has in place the following Stock Option Plans: 2017-2020, 2020-2022 and the
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 133
new 2023-2025 Plan.
The first Plan was deliberated by the Ordinary Shareholders’ meeting held on 26 April 2017, in which the
Shareholders approved the issue of up to 2,500,000 (adjusted after the 2018 capital increase to 2,891,425) new
ordinary shares to be offered to directors and/or employees of the Company and its subsidiaries.
The 2020-2022 Plan was deliberated by the Ordinary Shareholders’ Meeting held on 28 April 2020, in which the
Shareholders approved the issue up to 7,000,000 new ordinary shares to be offered to directors and/or employees
of the Company and its subsidiaries.
On 27 April 2023 the Ordinary Shareholders’ Meeting approved the Stock Option Plan 2023-2025 which provides
for the assignment of a maximum of 22,000,000 options (corresponding to a maximum number of 22,000,000
ordinary shares of the Company) in favour of executive directors who are also employees and other employees of
the Company and/or other companies within the Group.
Information relating to the tranches of the Stock Options Plans granted on 31 December 2023 are shown below.
Grant date
No. of options
Fair value in
Euro
Maturity
Stock Option Plan 2017-2020
Third tranche
30 April 2019
643,413
0.18
31 May 2027
Stock Option Plan 2020-2022
First tranche
31 July 2020
2,895,376
0.18
30 June 2028
Second tranche
11 March 2021
3,106,148
0.27
30 June 2029
Stock Option Plan 2023-2025
First tranche
11 September 2023
7,640,000
0.28
30 June 2031
The fair value of the stock options was estimated on the vesting date based on the Black-Scholes model.
The main market inputs of the model used are shown below:
Share price
at grant date
Exercise
price in Euro
Expected
volatility
Free risk
rate
Stock Option Plan 2017-2020
Third tranche
0.81
0.68
36.20%
0.087%
Stock Option Plan 2020-2022
First tranche
0.63
0.63
47.78%
-0.392%
Second tranche
0.93
0.87
45.67%
-0.290%
Stock Option Plan 2023-2025
First tranche
0.93
0.97
38.20%
3.010%
The table below shows the changes in the stock option plans which occurred during the year:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 134
No. of options
Average
exercise price
in Euro
Stock Option Plan 2017-2020
Outstanding at the beginning of the period
773,205
0.68
Granted
-
-
Forfeited
-
-
Exercised
(57,686)
0.68
Expired
(72,107)
0.68
Outstanding at period-end
643,413
0.68
Stock Option Plan 2020-2022
Outstanding at the beginning of the period
7,343,823
0.76
Granted
-
-
Forfeited
(709,976)
0.87
Exercised
-
-
Expired
(632,322)
0.63
Outstanding at period-end
6,001,524
0.76
Stock Option Plan 2023-2025
Outstanding at the beginning of the period
-
-
Granted
7,940,000
0.97
Forfeited
(300,000)
0.97
Exercised
-
-
Expired
-
-
Outstanding at period-end
7,640,000
0.97
During the year, a total of 704,429 options expired, of which 72,107 from the third tranche of the Plan 2017-2020
and 632,322 of the Plan 2020-2022 and 57,686 options of the Plan 2017-2020 were exercised. Additionally,
1,009,976 options were forfeited of which 709,976 of the Plan 2020-2022 and 300,000 of the Plan 2023-2025, in
the period 7,940,000 options of the Plan 2023-2025 were granted.
The options outstanding of the third tranche of the Plan 2017-2020, equal to 643,413 options, are exercisable until
31 May 2027, the first and the second tranche of the Plan 2020-2022, equal respectively to 2,895,376 and to
3,106,148 options, are exercisable until 30 June 2028 and 30 June 2029 respectively, the first tranche of the Plan
2023-2025 equal to 7,640,000 is exercisable until 30 June 2031.
At the date of the approval of these financial statements the options vested and exercisable still outstanding are
the one related to the Plan 2017-2020 equal to 643,413.
The exercise price for the options of the third tranche of the Plan 2017-2020 is equal to 0.68 Euro with a remaining
contract life of 3.4 years, for the first and the second tranche of the Plan 2020-2022 the exercise prices are equal
to respectively 0.63 and 0.87 Euro with a remaining contract life of 4.5 and 5.5 years respectively, while for the
first tranche of the Plan 2023-2025 the exercise prices is equal to 0.97 Euro
with a remaining contract life of 7.5.
The adoption of these plans has affected the income statement for the period for a cost of 459 thousand Euro (748
thousand Euro in 2022).
No changes or cancellations have been occurred on the above described Plans.
5. Notes to the consolidated income statement
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 135
5.1 Net sales
The Group’s primary revenues are the selling of eyewear products in the wholesale channel through its subsidiary
network and a network of independent distribution partners. Moreover, the Group sell its eyewear products directly
to its customers through its online sales channel for some brands of its portfolio, mainly in the North America
market.
2023 Group sales amounted to 1,024,732 thousand Euro, showing a decrease of 4.8% compared to the previous
year (1,076,745 thousand Euro).
For a discussion on sales trends and the disaggregated sales by geographical regions, reference should be made
to the report on operations section of the Group’s economic results.
5.2 Cost of sales
This item breaks down as follows:
(Euro/000)
2023
2022
Purchase of raw materials and finished goods
311,125
375,240
Capitalisation of costs for increase in tangible assets (-)
(3,001)
(2,955)
Change in inventories
22,652
(17,618)
Wages and social security contributions
73,511
80,826
Subcontracting costs
9,357
13,201
Amortization and depreciation
13,737
12,536
Depreciation Right of Use - IFRS 16
1,221
1,197
Rental and operating leases
1,387
1,574
Offset Rental and operating leases - IFRS 16
(1,288)
(1,276)
Utilities, security and cleaning
5,940
9,699
Other industrial costs
4,355
6,871
Total
438,997
479,296
Cost of sales decreased by Euro 40,299 thousand (or 8.4%), from Euro 479,296 thousand in 2022, to Euro 438,997
thousand in 2023. Wages and social security contributions decreased by Euro 7,315 thousand (or 9.1%) from Euro
80,826 thousand to Euro
73,511 thousand in 2023, benefitting from the savings provided by the reshaping of the
industrial capacity according to the Group manufacturing footprint. Amortization and depreciation increased by Euro
1,201 thousand (or 9.6%) from Euro 12,536 thousand in 2022 to Euro 13,737 thousand in 2023. The item was
affected by non-recurring tangible assets write-downs equal to 4,147 thousand Euro mainly related to the write-
down of the Longarone plant assets.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 136
Changes in inventories can be broken down as follows:
(Euro/000)
2023
2022
Finished products
8,259
(13,331)
Work-in-progress
1,682
1,594
Raw materials
12,711
(5,882)
Total
22,652
(17,618)
5.3 Selling and marketing expenses
This item breaks down as follows:
(Euro/000)
2023
2022
Payroll and social security contributions
116,217
108,220
Sales commissions
43,749
49,821
Royalty expenses
61,178
60,225
Advertising and promotional costs
132,476
134,574
Amortization and depreciation
3,756
3,220
Depreciation Right of Use - IFRS 16
4,677
4,813
Logistic costs
37,647
34,203
Consultants fees
1,552
1,504
Rental and operating leases
7,995
8,111
Offset Rental and operating leases - IFRS 16
(5,515)
(5,570)
Utilities, security and cleaning
1,425
1,126
Provision for risks
1,423
358
Other sales and marketing expenses
22,199
19,884
Total
428,780
420,488
Selling and marketing expenses increased by Euro 8,292 thousand (or 2.0%), from Euro 420,488 thousand in 2022
to Euro 428,780 thousand in 2023. This was due to the increase of payroll and social security contributions by Euro
7,998 thousand (or 7.4%), logistic costs by Euro 3,444 thousand (or 10.1%) and other sales and marketing
expenses by 2,315 thousand Euro (or 11.6%), partially offset by a decrease of the sales commissions by Euro 6,071
thousand (or -12.2%), and advertising and promotional costs by Euro 2,099 thousand (or -1.6%).
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 137
5.4 General and administrative expenses
This item breaks down as follows:
(Euro/ 000)
2023
2022
Payroll and social security contributions
49,327
48,896
Allowance and write-off of doubtful accounts
504
(898)
Amortization and depreciation
27,384
22,308
Depreciation Right of Use - IFRS 16
4,447
4,317
Professional services
15,051
15,073
Rental and operating leases
6,083
5,651
Offset Rental and operating leases - IFRS 16
(5,036)
(4,972)
EDP costs
28,964
25,482
Insurance costs
1,951
2,187
Utilities, security and cleaning
3,412
4,059
Taxes (other than on income)
1,035
1,489
Other general and administrative expenses
4,959
4,835
Total
138,080
128,426
General and administrative expenses increased by Euro 9,654 thousand (or 7.5%), from Euro 128,426 thousand in
2022 to Euro 138,080 thousand in 2023. This was mainly due to an increase of EDP expenses by Euro 3,482
thousand (or 13.7%), from Euro 25,482 thousand in 2022 to Euro 28,964 thousand in 2023.
The increase of the EDP expenses is mainly related to the cost incurred for the implementation of the latest
generation integrated information system (ERP) which are cloud-based and hence structured as a software as-a-
service (SaaS) agreement. Safilo has therefore fully expensed the related amount of 11,740 thousand Euro (9,703
thousand Euro in the previous year) as EDP service costs, in line with the accounting policy introduced by the Group
in 2021 to comply with the guidelines of the IFRIC agenda on SaaS arrangements published in April 2021.
Depreciation and amortization increased by 5,076 thousand Euro, from 22,308 thousand in 2022 to Euro 27,384
thousand in 2023. This was mainly due to the non-recurring amortization of 8,665 thousand Euro related to the
partial write-down of some intangible assets identified in the purchase price allocation of a previous business
combination.
Average number of employees
The average number of employees by rank is shown below:
2023 2022
Executives
85
93
Clerks and middle management
2,054
2,152
Factory workers
2,029
2,190
Total
4,168
4,435
The reduction of the average number of employees by 267 is mainly due to the restructuring of the Group’s
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 138
manufacturing footprint with the disposal of the Longarone production site at the end of October 2023.
5.5 Other operating income (expenses)
This item breaks down as follows:
(Euro/000)
2023
2022
Losses on disposal of assets
(403)
(31)
Other operating expenses
(16,842)
(11,079)
Gains on disposal of assets
988
268
Other operating income
5,043
10,764
Total
(11,214)
(78)
Other operating income and expenses include cost and revenue components either not related to the Group’s
ordinary operations or that are considered by management to be of non-recurring nature.
The item “other operating expenses” is mainly related to the non-recurring costs (excluding the inventory
obsolescence accruals and the write-down of the fixed assets) incurred for the disposal of Longarone plant to third
parties, the termination of some exiting licensed brands and some other restructuring expenses.
During the previous period under “other operating expenses” non-recurring costs of Euro 7,969 thousand were
accounted for mainly related to some special projects and restructuring expenses, “Other operating income”
includes a non-recurring income of Euro 3,600 thousand due to the release of an excess restructuring provision in
relation to the completion of the restructuring plan announced in 2019.
5.6 Gains (losses) on liabilities for options on non-controlling interests
The item refers to the gain or loss deriving from the changes in the fair value of the liability related the the put and
call options on the non-controlling interests of the two business combinations finalized in the first half of 2020 (for
more details see the note 4.18).
As at 31 December 2023 the fair value of the liability following the extension of the second and third tranche of the
put and call options on the non-controlling interest in Blenders, from 2024 and 2025 to 2026 and 2027 respectively,
recorded an increase equal to 7,895 thousand Euro reported as financial loss in this item of the income statement
(a gain of 31,191 thousand Euro in the previous period).
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 139
5.7 Financial charges, net
This item breaks down as follows:
(Euro/000)
2023
2022
Nominal interest expenses on loans
(8,771)
(4,978)
Figurative interest expenses on loans
(1,266)
(1,531)
Interest expenses on operating leases - IFRS 16
(1,745)
(1,862)
Bank commissions
(7,379)
(7,271)
Other financial charges
(1,425)
(937)
Total financial charges
(20,586)
(16,578)
Interest income
1,063
596
Other financial income
2,737
2,402
Total financial income
3,800
2,998
Positive exchange rate differences
19,971
46,700
Negative exchange rate differences
(22,407)
(48,632)
Total exchange rate differences, net
(2,437)
(1,933)
Total financial charges, net
(19,223)
(15,512)
Total net financial charges increased by Euro 3,710 thousand from Euro 15,512 thousand in 2022 to Euro 19,223
thousand in 2023. Excluding the accounting effect of the IFRS 16 interest expenses equal to Euro 1,745 thousand,
interest on loans increased by Euro 3,529 thousand, from Euro 6,509 thousand in 2022 to Euro 10,037 thousand
in 2023. Net exchange rate differences are equal to a loss of Euro 2,437 thousand in 2023 (a loss of Euro 1,933
thousand in 2022).
The items “figurative interest expenses on loans” is related to the additional figurative interest component calculated
according to the amortised cost method on the basis of the effective interest rate including any transaction costs.
5.8 Income taxes
This item breaks down as follows:
(Euro/000)
2023
2022
Current tax
(8,849)
(9,764)
Deferred tax
2,216
(2,023)
Total
(6,633)
(11,788)
Income taxes decreased by 5,155 thousand Euro from an expense of 11,788 thousand Euro in 2022 to an expense
of 6,633 thousand Euro in 2023.
The taxes for the year can be reconciled with the theoretical taxes that would be expected at consolidated level as
follows:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 140
(Euro/000)
%
2023
%
2022
Profit before taxation
100%
(19,456)
100%
64,136
Income tax benefit (expense) at statutory rate
-24.0%
4,669
-24.0%
(15,393)
Taxes relating to prior years
-6.6%
1,286
0.3%
184
Foreign tax rate differential
-5.7%
1,104
-2.8%
(1,801)
Non taxable income
2.4%
(469)
13.6%
8,716
Non deductible costs
15.2%
(2,957)
-4.6%
(2,973)
Non-recognition of new DTAs and write-off of existing DTAs
101.4%
(19,720)
-16.2%
(10,403)
Benefit arising from unrecognized DTA of prior years
-52.7%
10,250
15.1%
9,686
Deferred tax expense for changes in tax rate
-0.6%
112
-0.1%
(35)
Tax Credit and tax relief
-0.1%
19
0.0%
0
Other differences
4.8%
(926)
0.4%
231
Total
34.1%
(6,633)
-18.4%
(11,788)
Theoretical income taxes are calculated at 24.0 % on the consolidated result before tax. This percentage represents
the statutory corporate income tax rate (IRES) applicable at the Italian holding company level.
The Group’s effective tax rate was primarily affected by the write down of deferred tax assets mainly related to
the Italian legal entities with a further increase of the deferred tax assets valuation allowance
.
Potential exposure to Pillar Two Model Rules impact
The exposure to the Pillar Two income taxes of the Global Minimum Tax derives from the level of effective taxation
realized in each jurisdiction in which the entities of the Multinational Group (and any joint ventures) are present;
such level of effective taxation depends on numerous factors, also interconnected between them, such as in
particular the profit there generated, the nominal tax rate level, the tax rules for the calculation of the taxable
income, the existence, form and benefiting of incentives or other tax benefits applicable in the specific jurisdiction.
Considering the novelty and complexities in calculating the effective taxation level, for the first years of
implementation (that is for periods starting before December 31, 2026 and ending not after than June 30, 2028)
the Pillar Two rules provide for the possibility of applying a simplified regime mainly based on accounting information
available for each relevant jurisdiction (so called transitional regime, with safe harbors predominantly based on
Country-by-Country Report (CbCR) data, hereinafter also referred to as “transitional CbCR safe harbors”) and based
on which the reduction of the implementation costs and the reduction to nil of the Pillar Two taxes in case of
meeting of one of the three provided tests.
Taking into account the known or reasonably estimable information at the reporting date, even if such information
do not currently reflect all specific regulations
of the Pillar Two Model Rules connected to the localization and
operations of all the entities of the Safilo Group in all the single jurisdictions in which the same operates, and
considering that at the reporting date there is information that is not known or reasonably estimable, the Safilo
Group exposure in the jurisdictions in which it operates to Pillar Two income taxes arising from such legislation at
the reporting date, also based on the transitional CbCR safe harbors, is valued as not material.
In particular, based on information known or reasonably estimable:
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 141
• with reference to the majority of the entities of the Safilo Group, that are located in jurisdictions that meet
at least one of the three tests provided for by the transitional CbCR safe harbors, the conditions for the non-
application of the Pillar Two income taxes are met, and
• for the remaining entities of the Safilo Group, that are located in jurisdictions that do not meet any of the
three tests provided for by the transitional CbCR safe harbors, the exposure is not material, since the level of the
effective taxation in such jurisdictions proxies the minimum rate of 15% or the potential estimated impact on the
profits in such jurisdictions (in particular in the United Arab Emirates) is not material in relation to the total profits
of the Safilo Group.
The Safilo Group, with the support of external consultants, is getting organized and prepared for the compliance
fulfilments connected to the Pillar Two Model Rules, also with the objective of managing the exposure in the future
years, by the setting up of adequate systems and procedures aimed at:
• the identification, localization and characterization, also ongoing, of all entities of the Safilo Group relevant
for the Pillar Two model rules purposes, and
• computing the simplified tests (so called transitional CbCR safe harbors) for each of the relevant
jurisdictions, with the aim of benefiting of the relevant advantages in terms of reduction of the fulfilments costs
and of the reduction to nil of the Pillar Two taxes, and
• performing the complete and detailed calculations of the amounts relevant as requested by the Pillar Two
for any jurisdictions that might not meet any of the above mentioned tests.
Since the Pillar Two Model Rules are not effective at the financial year reporting date, no current tax expense
related to the Pillar Two income taxes are recorded.
5.9 Earnings per share
The calculation of basic and diluted earnings per share is shown in the tables below:
Basic
2023
2022
Profit/(Loss) for ordinary shares (in Euro/000)
(24,649)
54,160
Average number of ordinary shares (in thousands)
413,733
413,599
Earnings/(Losses) per share - basic (in Euro)
(0.060)
0.131
Diluted
2023
2022
Profit/(Loss) for ordinary shares (in Euro/000)
(24,649)
54,160
Average number of ordinary shares (in thousands)
413,733
413,599
Dilution effects:
- stock option (in thousands)
3,553
3,831
Total
417,286
417,430
Earnings/(Losses) per share - diluted (in Euro)
(0.059)
0.130
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 142
5.10 Dividends
The parent company Safilo Group S.p.A. did not distribute dividends to shareholders during the period.
5.11 Segment information
Following the divestiture of the Group’s retail operations in 2019, the Group considers a sole operating segment.
Below we report the geographical segment information. It should be noted that the grouping by geographic area
depends on the location of the registered head office of each Group company; therefore, the sales such identified
are determined by origin of invoicing and not by target market as disclosed in the “Report on Operations”. Non-
current assets do not include derivative financial instruments and deferred tax assets.
Breakdown of revenues and non-current assets by geographic area
Revenue from external customers Non-current assets
(Euro/000)
2023
2022
December 31,
2023
December 31,
2022
Italy
(1)
213,610
220,641
83,274
105,296
Europe
(2)
240,643
242,305
6,081
2,830
America
(3)
517,078
564,020
157,462
183,960
Asia
(4)
53,400
49,780
25,388
30,033
Total
1,024,732
1,076,745
272,204
322,120
(1) Operating companies with registered head office in Italy.
(2) Operating companies with registered head office in European countries (other than Italy), United Arab Emirates and in South Africa.
(3) Operating companies with registered head office in USA, Canada, Mexico and Brazil.
(4) Operating companies with registered head office in the Far East, Australia and India.
6. Transactions with related parties
In compliance with applicable legislative and regulatory requirements, on 23 March 2007 the parent company’s
Board of Directors passed a resolution indicating and adopting a number of guidelines to govern transactions of
major strategic, economic, capital or financial significance for the Company – including those undertaken with
related parties. The aim of the guidelines is to establish competences and responsibilities concerning significant
transactions and to assure their transparency and material and procedural correctness. Our notion of related party
is based on the definition given in IAS 24.
Following the resolution CONSOB 17721 of 12 March 2010, as amended by Resolution No. 17389 of 23 June 2010,
the Board of Directors of 5 November 2010 approved the "Regulations for the transactions with related parties",
which replaces those guidelines, by adopting procedures that ensure transparency and fairness and procedural
related party transactions.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 143
The tables below shows the operating and financial figures determined by related party transactions as of 31
December 2023 and 31 December 2022.
Related parties transactions
(Euro/000)
Relationship
December 31
2023
December 31
2022
Receivables
Companies controlled by HAL Holding N.V.
(a)
382
328
Total
382
328
Payables
Companies controlled by HAL Holding N.V.
(a)
23
53
HAL Investments B.V.
(a)
10
30
Total
33
83
Related parties transactions
(Euro/000)
Relationship
2023
2022
Revenues
Companies controlled by HAL Holding N.V.
(a)
1,287
1,204
Total
1,287
1,204
Operating expenses
Companies controlled by HAL Holding N.V.
(a)
52
74
HAL Investments B.V.
(a)
50
30
Total
102
104
(a) Companies controlled by Group's reference Shareholder
Transactions with related parties, including intercompany transactions, involve the purchase and sale of products
and provision of services on an arm’s length basis, similarly to what is done in transactions with third parties.
With regards to the table above, the companies controlled by HAL Holding N.V. refers to transaction with a minor
retail chain belonging the Group’s reference shareholder.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 144
The remuneration of the Group’s Directors, Statutory Auditors and Strategic Management is reported below:
(Euro/000)
2023
2022
Directors
- Salaries and short term compensations
3,165
3,769
- Non monetary benefits
35
28
- Other compensations
88
87
- Indemnity for end of position or cessation of employment relationship
-
-
- Fair value of equity compensations
204
252
Statutory auditors
- Fixed compensations and compensations for participation in committees
243
303
Managers with strategic responsabilities
- Salaries ad short term compensations
446
719
- Non monetary benefits
14
11
- Other compensations
-
3
- Indemnity for end of position or cessation of employment relationship
-
-
- Fair value of equity compensations
25
52
Total
4,221
5,224
7. Contingent liabilities
The Group does not have any significant contingent liabilities not covered by adequate provisions. Nevertheless, as
of the balance sheet date, various legal actions involving the parent company and certain Group companies were
pending and mainly against sales representatives. These actions are considered to be groundless and/or their
eventual negative outcome cannot be determined at this stage.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 145
8. Commitments
Licensing agreements
At the balance sheet date, the Group had contracts in force with licensors for the production and sale of sunglasses
and frames bearing their trademark. The contracts generally establish minimum guaranteed for royalties and
advertising expenses.
Commitments related to these minimum guaranteed, estimated on the basis of information available at the
reporting date, are summarized detailed by maturity as follow:
Licensing commitments
December 31,
2023
December 31,
2022
(Euro/000)
within 1 year
75,682
89,045
between 1 and 3 years
147,502
162,074
between 3 and 5 years
128,418
42,147
beyond 5 years
156,059
12,913
Total
507,661
306,180
The increase of the commitments amounts compared to 31 December 2022, mainly in the maturities beyond 3
years is due to the renewal of some license agreements signed in the period.
9. Subsequent events
Subsequent to 31 December 2023 through the approval date of this report, no significant events occurred which
would have impacted the financial and economic results shown pursuant to IAS 10 - Events after the reporting
period.
10. Significant non-recurring events and transactions
At the balance sheet date the Group did not undertake any significant non-recurring transactions pursuant to the
Consob Communication dated 28 July 2006.
11. Transactions resulting from unusual and/or abnormal operations
Pursuant to Consob Communication of 28 July 2006, in 2023 the Group did not put in place any unusual and/or
atypical operations, as defined in the said Communication.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 146
APPENDIX
INFORMATION REQUESTED BY ART. 149-DUODECIES OF THE REGULATION ON ISSUERS ISSUED BY
CONSOB.
The following table, prepared in accordance with Art. 149-duodecies of the Regulation on Issuers issued by Consob,
reports the amount of fees charged in 2023 and 2022 relating to the audit and other audit related services rendered
by the same Audit company.
The Shareholders' Meeting held on 27 April 2023, upon proposal of the Board of Statutory Auditors, appointed
PricewaterhouseCoopers S.p.A. as external Audit Company for the financial years from 2023 to 2031. The 2022
fees, shown in the table, referred to the auditing firm Deloitte & Touche whose assignment ended with the approval
of the financial statements for the 2022 financial year.
(Eur/000)
Audit Company
(*)
Safilo Group's company which
received services
2023
2022
Audit
PricewaterhouseCoopers S.p.A.
Holding Company - Safilo Group S.p.A.
170
61
PricewaterhouseCoopers S.p.A.
Subsidaries
119
146
Network PricewaterhouseCoopers S.p.A.
Subsidaries
1,096
1,050
Attestation
PricewaterhouseCoopers S.p.A.
Holding Company - Safilo Group S.p.A.
26
60
PricewaterhouseCoopers S.p.A.
Subsidaries
19
19
Network PricewaterhouseCoopers S.p.A.
Subsidaries
-
-
Other
services
PricewaterhouseCoopers S.p.A.
Holding Company - Safilo Group S.p.A.
-
-
PricewaterhouseCoopers S.p.A.
Subsidaries
-
-
Network PricewaterhouseCoopers S.p.A.
Subsidaries
-
3
Total
1,430
1,339
(*) in 2022 the entity that provided the audit services was Deloitte & Touche S.p.A and its network.
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 147
ATTESTATION OF THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ART. 154-BIS OF
LEGISLATIVE DECREE 58/98
1. The undersigned Angelo Trocchia, as Chief Executive Officer, and Michele Melotti, as the manager responsible
for preparing Safilo Group S.p.A.’s financial statements, hereby attest, having also taken into consideration the
provisions of Article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree 58 of 24 February 1998:
• the adequacy with respect to the company structure and
• the effective application,
of the administrative and accounting procedures for the preparation of the consolidated financial statements for
the 2023 fiscal year.
2.
The assessment of the adequacy of the administrative and accounting procedures used for the preparation of
the statutory financial statements at 31 December 2023 was based on a process defined in accordance with the
theorical reference model CoSO Report – Internal Control Integrated Framework, an internationally generally
accepted reference framework.
3. The undersigned also attest that:
3.1 the consolidated financial statements for the year ended on 31 December 2023:
a) have been prepared in accordance with International Financial Reporting Standards, as endorsed by the
European Union through Regulation (EC) 1606/2002 of the European Parliament and Council, dated 19 July 2002;
b) correspond to the amounts shown in the Company’s accounts, books and records;
c) provide a fair and correct representation of the financial conditions, results of operations and cash flows of the
Company and its consolidated subsidiaries.
3.2 The report on operations includes a reliable operating and financial review of the Company and of the Group
as well as a description of the main risks and uncertainties to which they are exposed.
14 March 2024
The Chief Executive Officer The manager responsible for preparing the
company’s financial statements
Angelo Trocchia Michele Melotti
Consolidated Financial Statements Safilo Group S.p.A.
_____________________________________________________________________ 148
REPORT OF INDEPENDENT AUDITORS
pwc
Independent
auditori
report
in
accordance
with
article
14
of
Legislative
Decree
No.
39
of27January
2010
and
article
10
of
Regulation
(EU)
No.
537/2014
To
thè
shareholders
of
Safilo
Group
SpA
Report
on
thè
Audit
ofthe
Consolidated
Financial
Statements
Opinion
We
bave
audited
thè
Consolidated
financial
statements
of
Safilo
Group
(thè
Group),
which
comprise
thè
Consolidated
balance
sheet
as
of
31
December
2023,
thè
Consolidated
income
statement,
thè
Consolidated
statement
of
comprehensive
income,
Consolidated
statement
of
changes
in
equity,
Consolidated
statement
of
cash
flows
for
thè
year
then
ended,
and
notes
to
thè
Consolidated
financial
statements,
including
material
accounting
policy
information.
In
our
opinion,
thè
Consolidated
financial
statements
give
a
true
and
fair
view
of
thè
financial
position
of
thè
Group
as
of
31
December
2023,
and
of
thè
result
of
its
operations
and
cash
flows
for
thè
year
then
ended
in
accordance
with
International
Financial
Reporting
Standards
as
adopted
by
thè
European
Union,
as
well
as
with
thè
regulations
issued
to
implement
article
9
of
Legislative
Decree
No.
38/05.
Basisfor
Opinion
We
conducted
our
audit
in
accordance
with
International
Standards
on
Auditing
(ISA
Italia),
Our
responsibilities
under
those
standards
are
further
described
in
theAuditor
’
s
Responsibilities
for
thè
Audit
ofthe
Consolidated
Financial
Statements
section
of
this
report.
We
are
independent
of
Safilo
Group
SpA
pursuant
to
thè
regulations
and
standards
on ethics
and
independence
applicable
to
audits
of
financial
statements
under
Italian
law.
We
believe
that
thè
audit
evidence
we
bave
obtained
is
sufficient
and
appropriate
to
provide
a
basis
for
our
opinion.
Key
Audit
Matters
Key
audit
matters are
those
matters
that,
in
our
professional
judgement,
were
of
most
significance
in
our
audit
of
thè
Consolidated
financial
statements
of
thè
current
period.
These
matters
were
addressed
in
thè
context
of
our
audit
of
thè
Consolidated
financial
statements
as
a
whole,
and
in
forming
our
opinion
thereon,
and
we
do
not
provide
a
separate
opinion
on
these
matters.
PriceiuaterhouseCoopers
SpA
Sede
legale:
Milano
20145
Piazza
Tre
Torri
2
Tel.
02
77851
Fax
02
7785240
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Sociale
Euro
6.890.000,00
i.v.
C.F.
e
P.IVA
e
Reg.
Imprese
Milano
Monza
Brianza
Lodi
12979880155
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al
n°
119644
del
Registro
dei
Revisori
Legali
-
Altri
Uffici:
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071
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Tel.
080
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035
229691
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Italia
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Pochetti
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Torino
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Palestre
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Trento
38122
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della
Costituzione
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Tel.
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Piazza
Pontelandolfo
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Tel.
0444
393311
www.pwc.com/it
JL
pwc
Key
Audit
Matters
Auditing
procedures
performed
in
response
to
key
audit
matters
Recoverability
of
thè
value
of
goodwill
Note
4.9
to
thè
Consolidated
financial
statements
The
Consolidated
financial
statements
of
Safilo
Group
SpA
include
goodwill
amounting
to
Euro
33.7
million.
The
Group
tests
thè
recoverability
of
thè
value
of
goodwill
for
impairment
at
least
annually.
For
thè
purposes
of
impairment
testing,
goodwill
was
allocated
to
thè
cash-generating
unit
(CGU)
identified
by
management.
To
estimate
thè
recoverable
amount
of
thè
CGU,
management
calculated
value
in
use
using
thè
discounted
cash
flow
method:
value
in
use
was
determined
as
thè
sum
of
thè
present
value
of
thè
cash
flows
for
thè
years
of
explicit
forecast
horizon
(2024-2028)
and
a
terminal
value
obtained
applying
a
long-term
growth
rate
to
thè
last
year
of
thè
business
pian.
The
recoverable
value
thus
obtained
was
compared
with
thè
carrying
amount.
As
part
of
our
audit
of
thè
Consolidated
financial
statements
as
of
31
December
2023,
we
focused
on
this
itera
in
consideration
of
thè
fact
that
thè
recoverability
of
these
values
is
verified
by
management
based
on
assumptions
that
are
sometimes
complex
and
that
by
nature
involve
thè
use
of
management's
judgement,
specifically
with
reference
to
thè
estimation
of
thè
future
cash
flows
and
thè
determination
of
thè
long-term
growth
rates
and
discount
rates
applied.
As
part
of
our
audit
of
thè
Consolidated
financial
statements
as
of
31
December
2023,
we
performed
thè
procedures
illustrated
below.
We
obtained
thè
exercise
prepared
by
management
to
determine
thè
recoverable
amount
of
thè
cash
generating
unit,
approved
by
thè
board
of
directors
on
14
March
2024.
Our
audit
approach
was
based
on
thè
analysis
of
thè
method
used
by
management
to
prepare
thè
impairment
test
and
included
thè
following
procedures:
•
we
understood
and
evaluated
thè
Group's
internai
control
over
thè
process
of
testing
thè
recoverability
of
goodwill;
•
we
analysed
thè
reasonableness
of
thè
considerations
made
by
management
regarding
thè
level
at
which
goodwill
is
tested
for
impairment;
•
we
analysed
thè
reasonableness
of
thè
assumptions
underlying
thè
forecasts
in
terms
of
estimated
future
cash
flows,
in
light
of
past
results
and
comparing
thè
growth
rates
used
by
management
with
external
sources.
With
thè
support
of
valuation
experts
from
thè
PwC
network,
we
verified
that
thè
methodologies
used
for
thè
impairment
test
were
consistent
with
international
financial
reporting
standards
as
adopted
by
thè
European
Union
("EU
IFRS")
and
with
prevailing
valuation
practice.
Moreover,
thè
key
valuation
parameters
adopted
were
analysed
in
terms
of
reasonableness.
With
specific
reference
to
thè
methods
of
calculation
of
discount
rates
and
medium/long-term
growth
rates,
we
verified
their
consistency
with
thè
provisions
of
EU
2
of
8
JL
pwc
IFRS,
with
prevailing
practice
and
with
available
market
data.
Moreover,
we
analysed
thè
sensitivity
analyses
prepared
by
management.
We
verified
thè
mathematica!
accuracy
of
thè
calculation
of
thè
impairment
test
and
thè
accuracy
of
thè
carrying
amount
of
thè
CGU,
in
accordance
with
IAS
36,
as
of
31
Decemher
2023
that
was
used
for
comparison
with
vaine
in
use.
Finally,
our
procedures
included
an
analysis
of
thè
explanatory
notes
to
thè
Consolidated
financial
statements
to
assess
thè
adequacy
and
completeness
of
disclosures.
Key
Audit
Matters
Auditing
procedures
performed
in
response
to
key
audit
matters
Recoverability
of
thè
value
of
inventories
Note
4.3
to
thè
Consolidated
financial
statements
The
Consolidated
financial
statements
of
Safilo
Group
SpA
include
inventories
for
Euro
229
million,
net
of
an
obsolescence
provision
amounting
to
Euro
54
million.
To
estimate
thè
provision,
management
considers
market
trends
and
consumer
demand
and
formulates
thè
consequent
sales
forecasts,
also
considering
thè
effects
of
thè
end
of
some
licenses.
The
inventories
of
obsolete
or
slow
moving
finished
products
are
periodically
subjected
to
specific
valuation
tests,
taking
into
account
past
experience,
historic
results
and
thè
probability
of
sale
under
normal
market
conditions.
If
thè
need
to
reduce
thè
value
of
thè
stock
should
arise
following
these
analyses,
management
posts
thè
appropriate
write-downs.
We
considered
thè
determination
of
thè
obsolescence
provision
a
key
audit
matter
as
it
is
an
estimate
characterised
by
complexity
and
uncertainty,
which
requires
a
high
degree
of
judgment
on
thè
part
of
management.
As
part
of
our
audit
activity
of
thè
Consolidated
financial
statements
as
of
31
Decemher
2023,
we
performed
thè
procedures
illustrated
below.
•
we
bave
examined
thè
principles
and
criteria
applied
by
thè
Group
for
thè
write-down
of
inventories,
which
mainly
consider
commercial
policies,
sales
forecasts
and
historical
trends
in
inventory
consumption;
•
we
understood
and
evaluated
thè
Group's
internai
control
over
thè
inventory
write-down
process,
including
thè
related
IT
environment;
•
we
analysed
thè
reasonableness
of
thè
main
assumptions
adopted
by
thè
Group
to
classify
thè
items
on
thè
basis
of
thè
commercial
strategies
and
thè
respective
sales
forecasts,
as
well
as
thè
algorithms
and
criteria
applied
for
thè
calculation
of
thè
obsolescence
provision.
In
this
context,
thè
historical
trend
of
thè
use
of
stocks
was
also
analysed;
3
of
8
pive
•
we
verified
thè
mathematica!
accuracy
of
thè
calculation
of
thè
obsolescence
provision
based
on
thè
Group's
policies;
•
we
analysed
thè
additions
to
thè
provision
resulting
from
specific
phenomena
(e.g.
conclusion
of
licensing
agreements);
•
we
analysed
thè
movement
of
thè
provision,
examining
thè
main
dynamics
that
determined
it
and
obtaining,
where
necessaiy,
adequate
supporting
documentation.
Finally,
our
procedures
included
an
analysis
of
thè
explanatory
notes
to
thè
Consolidated
financial
statements
to
assess
thè
adequacy
and
completeness
of
disclosures.
Key
Audit
Matters
Auditing
procedures
performed
in
response
to
key
audit
matters
Other
Matters
The
Consolidated
financial
statements
of
Safilo
Group
for
thè
year
ended
31
Decomber
2022
bave
been
audited
by
other
auditors
who,
on
15
March
2023,
expressed
an
unqualified
opinion
on
thè
Consolidated
financial
statements.
Responsibilities
of
thè
Directors
and
thè
Board
ofStatutoi
’
y
Auditors
for
thè
Consolidated
Financial
Statements
The
directors
are
responsible
for
thè
preparation
of
Consolidated
financial
statements
that
give
a
trae
and
fair
view
in
accordance
with
International
Financial
Reporting
Standards
as
adopted
by
thè
European
Union,
as
well
as
with
thè
regulations
issued
to
implement
article
9
of
Legislative
Decree
No.
38/05
and,
in
thè
terms
prescribed
by
law,
for
such
internai
control
as
they
determine
is
necessary
to
enable
thè
preparation
of
Consolidated
financial
statements
that
are
free
from
material
misstatement,
whether
due
to
fraud
or
error.
The
directors
are
responsible
for
assessing
thè
Group
’
s
ability
to
continue
as
a
going
concern
and,
in
preparing
thè
Consolidated
financial
statements,
for
thè
appropriate
application
of
thè
going
concern
basis
of
accounting,
and
for
disclosing
matters
related
to
going
concern.
In
preparing
thè
Consolidated
financial
statements,
thè
directors
use
thè
going
concern
basis
of
accounting
unless
they
either
intend
to
liquidate
Safilo
Group
SpA
or
to
cease
operations,
or
bave
no
realistic
alternative
but
to
do
so.
The
board
of
statutory
auditors
is
responsible
for
overseeing,
in
thè
terms
prescribed
by
law,
thè
Group
’
s
financial
reporting
process.
4
of
8
Auditor
’
s
Responsibililiesfor
theAudit
of
thè
Consolidated
Financial
Statements
Our
objectives
are
to
obtain
reasonable
assurance
about
whether
thè
Consolidated
bilanciai
statements
as
a
whole
are
free
from
material
misstatement,
whether
due
to
fraud
or
error,
and
to
issue
an
auditor
’
s
report
that
includes
our
opinion.
Reasonable
assurance
is
a
high
level
of
assurance
but
is
not
a
guarantee
that
an
audit
conducted
in
accordance
with
International
Standards
on
Auditing
(ISA
Italia)
will
always
detect
a
material
misstatement
when
it
exists.
Misstatements
can
arise
from
fraud
or
error
and
are
considered
material
if,
individually
or
in
thè
aggregate,
they
could
reasonably
be
expected
to
influence
thè
economie
decisions
of
users
taken
on
thè
basis
of
thè
Consolidated
financial
statements.
As
part
of
our
audit
conducted
in
accordance
with
International
Standards
on
Auditing
(ISA
Italia),
we
exercised
professional
judgement
and
maintained
professional
scepticism
throughout
thè
audit.
Furthermore:
•
we
identified
and
assessed
thè
risks
of
material
misstatement
of
thè
Consolidated
financial
statements,
whether
due
to
fraud
or
error;
we
designed
and
performed
audit
procedures
responsive
to
those
risks;
we
obtained
audit
evidence
that
is
sufficient
and
appropriate
to
provide
a
basis
for
our
opinion.
The
risk
of
not
detecting
a
material
misstatement
resulting
from
fraud
is
higher
than
for
one
resulting
from
error,
as
fraud
may
involve
collusion,
forgery,
intentional
omissions,
misrepresentations,
or
thè
override
of
internai
control;
•
we
obtained
an
understanding
of
internai
control
relevant
to
thè
audit
in
order
to
design
audit
procedures
that
are
appropriate
in
thè
circumstances,
but
not
for
thè
purpose
of
expressing
an
opinion
on
thè
effectiveness
of
thè
Group
’
s
internai
control;
•
we
evaluated
thè
appropriateness
of
accounting
policies
used
and
thè
reasonableness
of
accounting
estimates
and
related
disclosures
made
by
thè
directors;
•
we
concluded
on
thè
appropriateness
of
thè
directors
’
use
of
thè
going
concern
basis
of
accounting
and,
based
on
thè
audit
evidence
obtained,
whether
a
material
uncertainty
exists
related
to
events
or
conditions
that
may
cast
significant
doubt
on
thè
Group
’
s
ability
to
continue
as
a
going
concern.
If
we
conclude
that
a
material
uncertainty
exists,
we
are
required
to
draw
attention
in
our
auditor
’
s
report
to
thè
related
disclosures
in
thè
Consolidated
financial
statements
or,
if
such
disclosures
are
inadequate,
to
modify
our
opinion.
Our
conclusions
are
based
on
thè
audit
evidence
obtained
up
to
thè
date
of
our
auditor
’
s
report.
However,
future
events
or
conditions
may
cause
thè
Group
to
cease
to
continue
as
a
going
concern;
•
we
evaluated
thè
overall
presentation,
structure
and
content
of
thè
Consolidated
financial
statements,
including
thè
disclosures,
and
whether
thè
Consolidated
financial
statements
represent
thè
underlying
transactions
and
events
in
a
manner
that
achieves
fair
presentation;
•
we
obtained
sufficient
appropriate
audit
evidence
regarding
thè
financial
information
of
thè
entities
or
business
activities
within
thè
Group
to
express
an
opinion
on
thè
Consolidated
financial
statements.
We
are
responsible
for
thè
direction,
supervision
and
performance
of
thè
group
audit.
We
remain
solely
responsible
for
our
audit
opinion
on
thè
Consolidated
financial
statements.
We
communicated
with
those
charged
with
governance,
identified
at
an
appropriate
level
as
required
by
ISA
Italia
regarding,
among
other
matters,
thè
planned
scope
and
timing
of
thè
audit
and
significant
audit
findings,
including
any
significant
deficiencies
in
internai
control
that
we
identified
during
our
audit.
5
of
8
JL
pwc
We
also
provided
those
charged
with
governance
with
a
statement
that
we
complied
with
thè
regulations
and
standards
on
ethics
and
independence
applicable
under
Italian
law
and
communicated
with
them
all
relationships
and
other
matters
that
may
reasonably
be
thought
to
bear
on
our
independence,
and
where
applicable,
actions
taken
to
eliminate
thè
related
risks,
or
safeguards
applied.
From
thè
matters
communicated
with
those
charged
with
governance,
we
determined
those
matters
that
were
of
most
significance
in
thè
audit
of
thè
Consolidated
financial
statements
of
thè
current
period
and
are
therefore
thè
key
audit
matters.
We
described
these
matters
in
our
auditor
’
s
report.
Additional
Disclosures
required
by
Artide
io
ofRegulation
(EU)
No.
537/2014
On
27
Aprii
2023,
thè
shareholders
of
Salilo
Group
SpA
in
generai
meeting
engaged
us
to
perform
thè
statutory
audit
of
thè
Company
’
s
and
thè
Consolidated
financial
statements
for
thè
years
ending
31
December
2023
to
31
December
2031.
We
declare
that
we
did
not
provide
any
prohibited
non-audit
Services
referred
to
in
article
5,
paragraph
1,
of
Regulation
(EU)
No.
537/2014
and
that
we
remained
independent
of
thè
Company
in
conducting
thè
statutory
audit.
We
confirm
that
thè
opinion
on
thè
Consolidated
financial
statements
expressed
in
this
report
is
consistent
with
thè
additional
report
to
thè
board
of
statutory
auditors,
in
its
capacity
as
audit
committee,
prepared
pursuant
to
article
11
of
thè
aforementioned
Regulation.
Report
on
Compliance
with
other
Laws
and
Regulations
Opinion
on
compliance
with
thè
provisions
ofCommission
Delegated
Regulation
(EU)
No.
2019/815
The
directors
of
Safilo
Group
SpA
are
responsible
for
thè
application
of
thè
provisions
of
Commission
Delegated
Regulation
(EU)
No.
2019/815
concerning
regulatory
technical
standards
on
thè
specification
of
a
single
electronic
reporting
format
(ESEF
-
European
Single
Electronic
Format)
(hereinafter,
thè
“
Commission
Delegated
Regulation
”
)
to
thè
Consolidated
financial
statements
as
of
31
December
2023,
to
be
included
in
thè
animai
report.
We
bave
performed
thè
procedures
specified
in
auditing
standard
(SA
Italia)
No.
700B
in
order
to
express
an
opinion
on
thè
compliance
of
thè
Consolidated
financial
statements
with
thè
provisions
of
thè
Commission
Delegated
Regulation.
In
our
opinion,
thè
Consolidated
financial
statements
as
of
31
December
2023
bave
been
prepared
in
XHTML
format
and
bave
been
marked
up,
in
all
significant
respects,
in
compliance
with
thè
provisions
of
thè
Commission
Delegated
Regulation.
Due
to
certain
technical
limitations,
some
information
included
in
thè
notes
to
thè
Consolidated
financial
statements
when
extracted
from
thè
XHTML
format
to
an
XBRL
instance
may
not
be
6
of
8
pwc
reproduced
in
an
identical
manner
with
respect
to
thè
corresponding
information
presented
in
thè
Consolidated
financial
statements
in
XHTML
format.
Opinion
in
accordance
with
Artide
14,
paragraph
2,
letter
e),
of
Legislative
Decree
No.
39/10
and
Artide
123-bis,
paragraph
4,
of
Legislative
Decree
No.
58/98
The
directors
of
Safilo
Group
SpA
are
responsible
for
preparing
a
report
on
operations
and
a
report
on
thè
corporate
governance
and
ownership
structure
of
thè
Safilo
Group
as
of
31
December
2023,
including
their
consistency
with
thè
relevant
Consolidated
financial
statements
and
their
compliance
with
thè
law.
We
bave
performed
thè
procedures
required
under
auditing
standard
(SA
Italia)
No.
720B
in
order
to
express
an
opinion
on
thè
consistency
of
thè
report
on
operations
and
of
thè
specific
information
included
in
thè
report
on
corporate
governance
and
ownership
structure
referred
to
in
article
123-bis,
paragraph
4,
of
Legislative
Decree
No.
58/98,
with
thè
Consolidated
financial
statements
of
thè
Safilo
Group
as
of
31
December
2023
and
on
their
compliance
with
thè
law,
as
well
as
to
issue
a
statement
on
material
misstatements,
if
any.
In
our
opinion,
thè
report
on
operations
and
thè
specific
information
included
in
thè
report
on
corporate
governance
and
ownership
structure
mentioned
above
are
consistent
with
thè
Consolidated
financial
statements
of
Safilo
Group
as
of
31
December
2023
and
are
prepared
in
compliance
with
thè
law.
With
reference
to
thè
statement
referred
to
in
article
14,
paragraph
2,
letter
e),
of
Legislative
Decree
No.
39/10,
issued
on
thè
basis
of
our
knowledge
and
understanding
of
thè
Company
and
its
environment
obtained
in
thè
course
of
thè
audit,
we
bave
nothing
to
report.
Statement
in
accordance
with
article
4
of
Consob
’
s
Regulation
implementing
Legislative
Decree
No.
254
of
30
December
2016
The
directors
of
Safilo
Group
SpA
are
responsible
for
thè
preparation
of
thè
non-financial
statement
pursuant
to
Legislative
Decree
No.
254
of
30
December
2016.
We
bave
verified
that
thè
directors
approved
thè
non-financial
statement.
7
of
8
JL
pwc
Pursuant
to
article
3,
paragraph
10,
of
Legislative
Decree
No.
254
of
30
December
2016,
thè
non-
financial
statement
is
thè
subject
of
a
separate
statement
of
compliance
issued
by
ourselves.
Padua,
22
March
2024
PricewaterhouseCoopers
SpA
Signed
by
Filippo
Zagagnin
(Partner)
This
independent
auditor
’
s
report
has
been
translated
into
thè
English
language
solelyfor
thè
convenience
ofinternational
readers.
Accordingly,
only
thè
originai
text
in
Italian
language
is
authoritative.
8
of
8
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 157
STATUTORY FINANCIAL STATEMENTS
Safilo Group S.p.A
at 31 DECEMBER 2023
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 158
Contents
SAFILO GROUP S.P.A. - STATUTORY FINANCIAL STATEMENTS AT 31 DECEMBER 2023
Directors operations report
Introduction
160
Subsidiaries
160
Dealings with subsidiaries
160
Significant events after year-end
162
Statutory financial statements
Balance sheet
164
Income statement
165
Statement of comprehensive income
165
Statement of cash flows
166
Statement of changes in equity
167
Notes to the statutory financial statements
General information
168
Summary of accounting principles adopted
168
Use of estimates
173
Notes to the balance sheet
174
Notes to the income statement
187
Commitments
190
Subsequent events
190
Significant non-recurring events and transactions
190
Transactions resulting from unusual and/or abnormal operations
190
Transactions with related parties
191
Resolution regarding the result of the year
192
Appendix
Information pursuant to art. 149-duodecies of the CONSOB Issuers' Regulation
193
Certification of the Annual Report pursuant to article 81-ter of CONSOB Regulation 11971 of
14
th
May 1999 as amended
194
Report of the Board of Statutory Auditors
195
Report of Independent Auditors
208
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 159
REPORT ON OPERATIONS
Safilo Group S.p.A
at 31 DECEMBER 2023
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 160
DIRECTORS OPERATIONS REPORT
Introduction
Safilo Group S.p.A. was incorporated on 14
th
October 2002. It is the holding company of Safilo Group and performs
planning and coordination activities, as defined in article 2497 et seq. of the Italian Civil Code, for the following
member companies:
- Safilo S.p.A., directly controlled;
- Lenti S.r.l., 100% of the share capital indirectly controlled through Safilo S.p.A;
- Safilo Industrial S.r.l., 100% of the share capital indirectly controlled through Safilo S.p.A.
As allowed by article 40.2/bis of Legislative Decree 127 of 9
th
April 1991, the annual Financial Statements and
Directors’ Report are submitted together with the consolidated Financial Statements and the Directors’ Report on
the consolidated Financial Statements; the information required by article 2428 of the Civil Code is therefore
contained in the Directors’ Report on the consolidated Financial Statements.
Subsidiaries
Safilo Group S.p.A. owns 95.201% of the share capital of subsidiary Safilo S.p.A.. The remainder is owned by Safilo
S.p.A. in own shares.
The subsidiary Safilo S.p.A. is a wholesaler of prescription frames, sunglasses and sports articles sold under its own
brands and licensed brands of international prestige.
Dealings with subsidiaries
The Company joined the tax consolidation programme in the capacity of parent company, while Safilo S.p.A., Lenti
S.r.l. and Safilo Industrial S.r.l. joined in the capacity of subsidiaries. Moreover, Safilo Group S.p.A., acting in the
capacity of parent company, Safilo S.p.A. and Safilo Industrial S.r.l., acting in the capacity of subsidiaries, subscribed
to the VAT offsetting procedure laid down by the Ministerial Decree of 13
th
December 1979 (known as “Group VAT
mechanism”).
Dealings with the other companies in the Group are carried out at arm's length principle, and no atypical and/or
unusual operations with them took place during the year.
Financial year 2023
Financial year 2023
Receivables
Payables
Income/
Costs
(Thousand of Euro)
Recharges
Safilo S.p.A.
696
(29,958)
660
(259)
Subsidiaries held by Safilo S.p.A.
Lenti S.r.l.
756
-
27
-
Safilo Industrial S.r.l.
20,953
-
241
-
Safilo USA Inc.
11
-
11
-
Other Subsidiaries held by Safilo S.p.A.
94
-
94
-
Total
22,509
(29,958)
1,033
(259)
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 161
The receivable from the subsidiary Safilo S.p.A. mainly refers to recharges made for legal and tax services performed
by the company and regulated by a service contract.
Payables to the subsidiary Safilo S.p.A. refer:
- for Euro 27,650 thousand to the VAT credit transferred by Safilo S.p.A. to the parent company as a
result of the Group VAT Liquidation mechanism.
- for Euro 2,308 thousand to payables to the subsidiary for services rendered.
The revenues from the subsidiary Safilo S.p.A. mainly refer to charges made for legal and tax services and the
chargeback of some insurance and consultancy costs.
The costs charged by the subsidiary Safilo S.p.A. mainly refer to services performed on behalf of the parent
company.
The receivables from the subsidiary Lenti S.r.l. refer to
the transfer of tax and withholding taxes, as part of the tax
consolidation programme.
The receivables from the subsidiary Safilo Industrial S.r.l. refer to the transfer of VAT debit, as a result of the Group
VAT Liquidation mechanism.
The receivables/payables and the related income/costs from other subsidiaries held by Safilo S.p.A. relate to the
chargeback of some insurance and consultancy costs.
Financial year 2022
Financial year 2022
Receivables
Payables
Income/
Costs
(Thousand of Euro)
Recharges
Safilo S.p.A.
647
(25,235)
611
(239)
Subsidiaries held by Safilo S.p.A
Lenti S.r.l.
1,563
-
42
-
Safilo Industrial S.r.l.
23,258
-
246
-
Safilo USA Inc.
12
-
13
-
Other Subsidiaries held by Safilo S.p.A.
90
(59)
82
-
Total
25,570
(25,294)
994
(239)
The receivable from the subsidiary Safilo S.p.A. mainly refers to recharges made for legal and tax services performed
by the company and regulated by a service contract.
Payables to the subsidiary Safilo S.p.A. refer:
- for Euro 22,880 thousand to the VAT credit transferred by Safilo S.p.A. to the parent company as a
result of the Group VAT Liquidation mechanism.
- for Euro 2,355 thousand to payables to the subsidiary for services rendered.
The revenues from the subsidiary Safilo S.p.A. mainly refer to charges made for legal and tax services and the
chargeback of some insurance and consultancy costs.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 162
The costs charged by the subsidiary Safilo S.p.A. mainly refer to services performed on behalf of the parent
company.
The receivables from the subsidiary Lenti S.r.l. refer to the transfer of tax and withholding taxes, as part of the tax
consolidation programme.
The receivables from the subsidiary Safilo Industrial S.r.l. refer to the transfer of VAT debit, as a result of the Group
VAT Liquidation mechanism.
The receivables/payables and the related income/costs from other subsidiaries held by Safilo S.p.A. relate to the
chargeback of some insurance and consultancy costs.
Significant events after the year-end
Subsequent to 31 December 2023 through the approval date of this report, no significant events occurred which
would have impacted the financial and economic results shown pursuant to IAS 10 Events after the reporting period.
For the Board of Directors
Chief Executive Officer
Angelo Trocchia
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 163
FINANCIAL STATEMENTS AND NOTES TO THE FINANCIAL STATEMENTS
at 31 DECEMBER 2023
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 164
Statutory Financial Statements
Balance Sheet
(Euro)
Note
December 31, 2023
December 31, 2022
ASSETS
Current assets
Cash and cash equivalents
4.1
852,292
865,512
Trade receivables
4.2
1,343,208
1,008,563
Other current assets
4.3
26,484,223
29,190,402
Total current assets
28,679,723
31,064,477
Non-current assets
Right of Use
4.4
226,532
313,380
Investment in subsidiaries
4.5
414,473,273
414,415,074
Deferred tax assets
4.6
-
-
Other non-current assets
4.7
737,880
1,529,539
Total non-current assets
415,437,685
416,257,993
TOTAL ASSETS
444,117,408
447,322,470
(Euro)
Note
December 31, 2023
December 31, 2022
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables
4.8
4,196,545
3,916,220
Tax payables
4.9
304,818
299,821
Other current liabilities
4.10
28,984,609
25,416,735
Provisions
4.13
2,250,000
-
Lease liabilities
4.11
106,494
116,887
Total current liabilities
35,842,466
29,749,663
Non-current liabilities
Lease liabilities
4.11
131,963
208,762
Employee benefit obligations
4.12
150,308
149,047
Provisions
4.13
-
2,000,000
Total non-current liabilities
282,271
2,357,809
TOTAL LIABILITIES
36,124,737
32,107,472
Shareholders' equity
Share Capital
4.14
384,857,848
384,846,311
Share premium reserve
4.15
27,388,371
692,520,684
Retained earnings/(losses) and other reserves
4.16
3,259,596
(650,305,943)
Net (loss) for the year
(7,513,144)
(11,846,054)
TOTAL SHAREHOLDERS' EQUITY
407,992,671
415,214,998
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
444,117,408
447,322,470
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 165
Income Statement
(Euro)
Notes
2023
2022
Net sales
5.1
996,457
956,134
Gross profit
996,457
956,134
General and administrative expenses
5.2
(9,212,192)
(10,382,685)
Other operating income/(expenses)
(13,428)
(2,700,806)
Operating profit (loss)
(8,229,163)
(12,127,357)
Financial charges, net
5.3
(12,861)
(78,668)
Profit (loss) before tax
(8,242,024)
(12,206,025)
Income taxes
5.4
728,880
359,971
Net (loss) for the year
(7,513,144)
(11,846,054)
Statement of comprehensive Income
(Euro)
2023
2022
Net (loss) for the year
(7,513,144)
(11,846,054)
Actuarial gains (loss)
251,821
31,588
Total comprehensive (loss)
(7,261,323)
(11,814,466)
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 166
Statement of cash flows
Statement of Cash Flows
(Euro)
2023
2022
A - Opening net cash and cash equivalents
865,512
1,363,709
B - Cash flow from (for) operating activities
Net profit/(loss) for the period
(7,513,144)
(11,846,054)
Depreciation and amortization IFRS16
121,125
131,659
Stock Options figurative cost
185,580
303,309
Net changes in provision for risks
1,000,000
1,000,000
Other non monetary P&L items
66,241
46,992
Interest expenses on lease liability IFRS 16
11,634
12,956
Income tax expenses
(728,879)
(359,972)
Income (loss) from (for) operating activities prior
to movements in working capital
(6,857,444)
(10,711,110)
(Increase) Decrease in trade receivables
(334,645)
134,818
(Increase) Decrease in other receivables
4,134,242
5,451,932
Increase (Decrease) in trade payables
280,325
(24,044)
Increase (Decrease) in other payables
2,858,410
4,696,406
Interests expenses paid
(11,634)
(12,956)
Total (B)
69,254
(464,954)
C - Cash flow from (for) investing activities
(Investments) disinvestments in subsidiaries
-
-
Total (C)
-
-
D - Cash flow from (for) financing activities
Repayment lease liability IFRS 16
(121,470)
(122,483)
Increase in share capital, net of transaction costs
38,996
89,240
Total (D)
(82,474)
(33,243)
E - Cash flow for the period (B+C+D)
(13,220)
(498,197)
F - Closing net cash and cash equivalents (A+E)
852,292
865,512
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 167
Statement of Changes in Equity
(Euro)
Share
Capital
Share
premium
reserve
Legal
reserve
Other
reserves and
retained
earnings
Result for
the period
Total
shareholders'
equity
Shareholders' equity
as at January 01, 2022
384,819,910
692,457,846
3,007,774
(642,728,211)
(11,209,586)
426,347,733
Previous year’s loss
allocation
-
-
-
(11,209,586)
11,209,586
-
Capital increase, net of
transaction costs
-
-
-
-
-
-
Net increase in the
Reserve for share-based
payments
26,402
62,838
-
592,493
-
681,733
Total comprehensive
(loss) for the period
-
-
-
31,588
(11,846,054)
(11,814,466)
Shareholders' equity
as at December 31,
2022
384,846,312
692,520,684
3,007,774
(653,313,716)
(11,846,054)
415,215,000
Previous year’s loss
allocation
-
(10,404,769)
-
(1,441,285)
11,846,054
-
Resolution regarding the
covered of losses from
previous year
-
(654,755,002)
-
654,755,002
-
-
Net increase in the
Reserve for share-based
payments
11,536
27,458
-
-
-
38,994
Total comprehensive
(loss) for the period
251,821
(7,513,144)
(7,261,323)
Shareholders' equity
as at December 31,
2023
384,857,848
27,388,371
3,007,774
251,822
(7,513,144)
407,992,671
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 168
1. General information
1.1 General information
The holding company, Safilo Group S.p.A., is a joint stock company established in Italy on 14 October 2002
registered with the Business and Trade registry of Vicenza and with the head office in Padua, Settima Strada 15,
Italy.
Safilo Group S.p.A.
is listed on Euronext Milan of the Italian Stock Exchange organized and managed by Borsa
Italiana S.p.A., (code SFL IT0004604762).
Following the Group’s financial restructuring, which was completed in the first quarter of 2010 with the share-
capital increase, Multibrands Italy B.V. (a subsidiary of HAL Holding N.V.) became the parent company’s leading
shareholder.
According to IFRS 10 HAL Holding N.V., is deemed to have control over Safilo Group S.p.A. and accordingly is
required to consolidate Safilo Group S.p.A. in its financial statements as from 1 January 2014 (even though its
ownership interest of HAL Holding N.V. in the company Safilo Group S.p.A. is below 50%). HAL Holding is fully
owned by HAL Trust, listed on NYSE Euronext of Amsterdam Stock Exchange.
These financial statements are reported in Euro. The financial information relates to the period from 1 January
2023 to 31 December 2023 and also presents comparative data related to the financial period from 1 January 2022
to 31 December 2022.
Safilo Group S.p.A. is the holding company of the Safilo Group, and during the year it continued in the management
of its shareholdings, as well as in the coordination activity towards the subsidiaries.
These financial statements were approved by the Board of Directors on 14 March 2024.
The financial statements of Safilo Group S.p.A. constitute a non-official version which has not been prepared in
accordance with the provisions of the Commission Delegated Regulation (EU) 2019/815.
2. Summary of accounting principles adopted
2.1 Accounting policies
The accounting policies described here below have been applied for the preparation of the present report and
comply with those adopted for the financial report as of 31 December 2022. The new amendments and accounting
standards, described below, have not had any significant impacts on this report. The financial statements are based
on the going concern assumption, despite a context still characterized by considerable uncertainty, the company,
taking into account its financial solidity, the actions undertaken to mitigate risks and its business model, believes
that there are no elements that may rise any uncertainty on the going concern assumption, in accordance with
paragraph 25 of IAS 1.
The financial statements for the year ended 31 December 2023 and 31 December 2022 were prepared in
accordance with IFRSs issued by the International Accounting Standard Board (“IASB”) and endorsed by the
European Commission, as well as with the measures enacted to implement article 9 of Legislative Decree no.
38/2005. IFRSs include also all the interpretations of the International Financial Reporting Interpretations Commitee
(“IFRIC”), previously called Standing Interpretations Commitee (“SIC”).
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 169
The financial statements were prepared in accordance with “cost” criteria with the exception of financial assets
available-for-sale and some financial assets and liabilities, including derivative instruments, for which the “fair value”
criterion was adopted.
Preparation of the annual report in accordance with IFRSs requires management to make estimates and
assumptions that may affect the amounts reported in the financial statements and explanatory notes. Actual results
may differ from these estimates. The areas of the financial statements that are most affected by such estimates
and assumptions are listed in section 3 “Use of estimates”.
Accounting standards, amendments and interpretations effective as of 1 January 2023
Except for what is described below about those accounting policies which changed due to new accounting standards
and new IFRIC interpretations, in preparing these consolidated financial statements the same accounting principles
and criteria of the consolidated financial statements as at 31 December 2022 have been applied.
Furthermore, the company has adopted the following new standards and amendments, effective from 1 January
2023:
- on 18 May 2017 and 25 June 2020 , the IASB published respectively the IFRS 17 Insurance Contracts and
its Amendments;
- on 9 December 2021, the IASB published the amendments to IFRS 17 Insurance contracts: Initial
Application of IFRS 17 and IFRS 9 – Comparative Information (issued on 9 December 2021);
- on 12 February 2021, the IASB published the amendments to IAS 1 Presentation of Financial Statements
and IFRS Practice Statement 2: Disclosure of Accounting policies, Amendments to IAS 8 Accounting
policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates;
- on 7 May 2021, the IASB published the amendments to IAS 12 Income Taxes: Deferred Tax related to
Assets and Liabilities arising from a Single Transaction;
- on 23 May 2023, the IASB published the amendments to IAS 12 Income taxes International Tax Reform
– Pillar Two Model Rules.
With reference to the Pillar Two Model Rules, effective from 1 January 2024 Safilo Group, as Multinational Group
of enterprises that – together with its indirect reference shareholder HAL Holding NV – meets the 750 million euro
annual consolidated revenue threshold in at least two of the four preceding years, falls within the application of the
Pillar Two income taxes provided for by the Council Directive (EU) 2022/2523 enacted in Italy by Legislative Decree
209/2023, aimed at ensuring a global minimum level of taxation for multinational enterprise groups and large-scale
domestic groups in the European Union.
In accordance with paragraph 4.A of IAS 12 that provides for a temporary exception to such Principle in relation to
the accounting and disclosure of information on deferred tax assets and liabilities arising from the jurisdictional
implementation of the Pillar Two Model Rules, in the current financial statements no deferred assets and liabilities
are recorded in relation to the income taxes deriving from the implementation of the Pillar Two Model Rules.
The Group has complied with the above new amendments in preparing this report, their application had no
significant impact on the Group consolidated financial statements.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 170
Accounting standards, amendments and interpretations issued and endorsed by the European Union but not
effective for the reported period and not early adopted by the company
At the date of this report the following amendments have been endorsed by the European Union applicable to the
Group and effective for annual periods beginning on or after 1 January 2024 that have not been early adopted by
the Group in preparing this report:
- on 23 January 2020, the IASB published an amendment called “Amendments to IAS 1 Presentation of
Financial Statements: Classification of Liabilities as Current or Non-current”. On 31 October 2022 the IASB
published an amendment called “Amendments to IAS 1 Presentation of Financial Statements: Non-Current
Liabilities with Covenants”. The documents aim to clarify how to classify debts and other short or long-
term liabilities. The changes come into effect from 1 January 2024;
- on 22 September 2022, the IASB published the amendment to IFRS 16 Lease Liability in a Sale and
Leaseback. The document aims to clarify how a seller-lessee subsequently measures sale and leaseback
transactions that satisfy the requirements in IFRS 15 to be accounted for as a sale. The changes come
into effect from 1 January 2024.
The company will comply with these new standards and amendments based on their relevant effective dates, and
their application is not expected to have any material impact on the financial statements.
Accounting standards, amendments and interpretations not yet completed and endorsed by the European Union
In addition, the European Union has not yet completed its endorsement process for the following standards and
amendments at the date of this report:
- on 25 May 2023 the IASB published amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures: Supplier Finance Arrangements. The changes will come into effect from 1
January 2024;
- on 15 August 2023 the IASB published amendments to IAS 21 The Effects of Changes in Foreign Exchange
Rates: Lack
of Exchangeability.
The company will comply with these new standards and amendments based on their relevant effective dates when
endorsed by the European Union and it will evaluate their potential impacts on the financial statements.
2.2 Format of financial statements
Safilo Group presents the income statement by function (so-called “cost of sales”). This is considered to be more
representative with respect to presentation by type of expenses, as it conforms more closely to the internal reporting
and business management methods and is in line with international practice in the eyewear sector.
For the balance sheet, a distinction is made in the assets and liabilities between current and non-current as
described in paragraphs 51 and following of IAS 1. The indirect method for the cash flow statement was used.
Therefore, the net profit of the period is adjusted by the effects of non-monetary transactions, changes in working
capital and cash flows from investing and financing activities.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 171
2.3 Right of Use
Assets held through lease contracts (both finance and operating) are recognized according to the IFRS 16 standard,
which provide a definition of leases based on the control (right of use) of an asset considering: identification of the
asset, right to replace it, right to obtain all economic benefits and the right to manage the use of the asset. The
standard establishes a model to recognize and measure lease contracts for the lessee through the posting of the
asset (also in operating leases) offset by a financial debt. Assets held through lease contracts, are recognized as
assets of the company at the present value of their contractual lease payments. The corresponding liability due to
the lessor is recorded on the financial statements under financial debts. The assets are depreciated over the
duration of the lease contract.
The company has elected to apply the exemptions stated by the Standard that allow to keep leases off balance if
they have an initial contractual duration of less than or equal to 12 months (IFRS16.5-a) or if they refer to a low-
value asset (IFRS16.5-b), according to these exemptions these contracts are still recorded as lease and rent
expenses on a straight-line basis in the income statement over the duration of the lease contract.
2.4 Cash in hand and at bank
Cash and cash equivalents include cash, bank demand deposits and other highly liquid short-term investments that
can be unwound within three months.
2.5 Trade receivables and other receivables
Trade receivables are initially recognised on the statement of financial position at their current value and
subsequently recalculated according to the amortised cost method, net of any impairments.
A provision for doubtful accounts is accrued when there is evidence that the Company will not succeed in collecting
the original amount due. The provisions accrued for doubtful accounts are recognised in profit or loss.
2.6 Investments in associates (financial assets)
As required by IAS 36,
the equity investment in the subsidiary Safilo S.p.A. is tested for impairment when internal
or external factors exist that could represent impairment indicators.
2.7 Provisions for risks
The Group records provisions for risks and charges when:
• it has a legal or constructive obligation to third parties;
• it is probable that it will be necessary to use resources of the Group to settle the obligation;
• a reliable estimate of the amount can be made;
changes in estimates are recorded in the income statement of the period in which the changes occur.
2.8 Employees benefits
The employee severance fund of Italian companies (“TFR”) has always been considered to be a defined benefit
plan however, following the changes to the discipline that governs the employment severance fund introduced by
Italian law no. 296 of 27
th
December 2006 (“Financial Law 2007”) and subsequent Decrees and Regulations issued
in the first months of 2007, Safilo Group, on the basis of the generally agreed interpretations, has decided that:
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 172
• the portion of the employee benefit liability accruing from 1
st
January 2007, whether transferred to selected
pension funds or transferred to the treasury account established with INPS, must be classified as a “defined
contribution plan”;
• the portion of the employee benefit liability accruing as of 31
st
December 2006, must be classified as a
“defined benefit plan” requiring actuarial valuations that exclude future increases in salaries.
For an analysis of the accounting effects deriving from this decision, see paragraph 4.12 “Employees benefits”.
Remuneration plans under the form of share capital participation
The company recognizes additional benefits to some employees and consultants through "equity settled" type stock
options. In accordance with IFRS 2 - Share-based payments, the current value of the stock options determined at
the vesting date through the application of the "Black & Scholes" method is recognized in the income statement
under personnel costs in constant quotas over the period between the vesting date of the stock options and the
maturity date, counterbalanced by an equity reserve.
The effects of the vesting conditions not related to the market are not taken into consideration in the fair value of
the vested options but are material to measurement of the number of options which are expected to be exercised.
At the balance sheet date the company revises its estimates on the number of options which are expected to be
exercised. The impact of the revision of the original estimates is recognized in profit or loss over the maturity
period, with a balance entry in equity reserves. When the stock option is exercised, the amounts received by the
employee, net of the costs directly attributable to the transaction, are credited to share capital for an amount equal
to the par value of the issued shares and to the share premium reserve for the remaining part.
2.9 Revenue recognition
Revenues include the fair value of the sale of services, net of VAT and any discounts. The company recognises
revenues for billed services in the financial year in which the service is provided.
2.10 Income taxes
Income taxes are recognised on the income statement, with the exception of those relating to accounts that are
directly credited or debited to equity, in which case the tax effect is recognised directly in equity.
Deferred taxes are calculated on tax losses and all the temporary differences between the tax basis of an asset or
liability and their book value. Deferred tax assets are recognised only for those amounts where it is likely there will
be future taxable income allowing for recovery of the amounts.
Current and deferred tax assets and liabilities are offset when the income tax is applied by the same tax authority
and when there is a legal right to offsetting.
2.11 Earnings per share
Basic
Basic earnings per share are calculated by dividing the profit or loss of the company by the weighted average
number of ordinary shares outstanding during the financial year, excluding any treasury shares.
Diluted
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 173
Diluted earnings per share are calculated by dividing the profit or loss of the Company by the weighted average
number of ordinary shares outstanding during the year. In order to calculate the diluted earnings per share, the
weighted average number of shares outstanding is adjusted in respect of the dilutive potential ordinary share (stock
options and convertible bonds), while the profit or loss of the Company is adjusted to take into account the effects,
net of income taxes, of the conversion.
2.12 Translation of balances in foreign currency
Foreign currency transactions are translated into Euro using the exchange rates in effect at the date of the
transaction. Foreign exchange gains and losses resulting from the close of such transactions and from translation
of the monetary assets and liabilities in foreign currencies at the exchange rates at end of the year are recognised
in profit or loss.
3. Use of estimates
The preparation of the consolidated financial statements requires the Directors to apply accounting standards and
methods that, in some circumstances, are based on difficult and subjective valuations and estimates based on past
experience and assumptions which are from time to time considered reasonable and realistic according to the
relative circumstances. The application of these estimates and assumptions affects the amounts posted in the
financial statements, such as the balance sheet, the income statement, the cash flow statement and the notes
thereto. Actual results of the balances on the financial statements, resulting from the above-mentioned estimates
and assumptions, may differ from those reported on the financial statements due to the uncertainty which
characterizes the assumptions and the conditions on which the estimates are based.
The macroeconomic environment, resulting from a combination of geopolitical risks consequents to the still ongoing
Ukraine - Russian invasion and the Israel-Gaza crisis represented an extraordinary circumstance that had direct and
indirect repercussions on economic activity and has created a general environment of uncertainty. Also
environmental responsibility risks and the transitory risks related to the regulation changes associated with the fight
against the “climate change” may have an impact in term of future uncertainty. Financial statements assumptions
and estimates have taken into consideration the uncertainties deriving from the above circumstances. For more
details see also the consolidation Report on Operations on the paragraph related to the “Main critical risk factors
for the Group”. The accounting standards that are more subject to the directors’ estimates and for which a change
in the underlying conditions or the assumptions may have a significant impact on the consolidated financial
statement are described briefly below.
Equity investments
: in accordance with the accounting standards adopted for the preparation of the financial
statements, the company tests the equity investments for potential impairment when internal or external factors
exist that represent impairment indicators. Any loss in value resulting from the test is recorded in the income
statement. In particular, the test is derived by properly adjusting the outcome of the impairment test executed at
consolidated level. The assessment process of the impairment test is complex and is based on assumptions
concerning, among other things, the forecast of expected cash flows, the determination of appropriate discounting
rates (WACC) and long-term growth (g-rate). These estimates depend on factors that may change over time with
consequent effects, which may be significant, compared to the Directors’ assessments. Consistent with the
indications of the main regulators, to meet the difficulties of making accurate estimates of future flows, the Directors
performed their estimate considering independent sources and analysts’ projections and carried out the test
performing some sensitivity analyses relating to the main inputs of the calculation. In addition, it is considered also
the identified potential impact of the climate change on the estimated cash flows. As suggested by regulators and
standard setters, the uncertainties have been reflected in the estimate of cash flows, rather than adding a risk
premium to the discount rate.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 174
4. Notes to the balance sheet
4.1 Cash and cash equivalents
This item totals Euro 852,292 (compared to Euro 865,512 of previous year) and represents the momentary
availability of cash. The book value of the available liquidity is aligned with its fair value at the reporting date and
the related credit risk is very limited as the counterparts are primary banks.
4.2 Trade receivables
Trade receivables totals Euro 1,343,208 (against Euro 1,008,563 of previous year). They refer to amounts charged
by Safilo Group S.p.A. to its subsidiaries (mainly Safilo S.p.A. and Safilo Industrial S.r.l. for legal and tax services).
The book value of the trade receivables is kept approximately equal to the fair value and payment terms are aligned
with the market
benchmarks.
(Euro)
December 31, 2023
December 31, 2022
Trade receivables
5,050
-
Trade receivables from subsidiaries
- Safilo S.p.A.
660,384
611,362
- Safilo Industrial S.r.l.
546,367
252,416
- Lenses Srl
26,826
42,178
- Safilo Benelux
4,200
4,200
- Safilo GmbH
5,700
5,700
- Safilo France
6,200
6,200
- Safilo Nordic
8,900
10,284
- Safilo Hellas
500
-
- Safilo UK
6,700
4,193
- Safilo Nederland
4,700
4,200
- Safilo Austria
4,200
4,200
- Safilo Portugal
4,700
4,200
- Safilo Switzerland
6,233
4,207
- Safilo Espana
5,700
5,700
- Safilo Optical Trade
6,173
4,189
- Safilo USA Inc.
11,000
12,461
- Smith Usa
7,000
6,480
- Safilo Canada
5,200
5,715
- Safilo Polska
5,078
-
- Prive Goods LLC
500
1,062
- Blenders Eyewear LLCs
3,000
2,991
- Safilo Far East
497
8,410
- Safilo Australia
4,200
3,992
- Safilo South Africa
4,200
4,223
Total
1,343,208
1,008,563
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 175
4.3 Other current assets
This item breaks down as follows:
(Euro)
December 31, 2023
December 31, 2022
VAT receivables
5,913,991
6,028,155
Tax receivables and advance payments
72,631
65,937
Prepayments and accrued income
33,617
38,030
Other receivables from subsidiaries - Safilo S.p.A.
35,475
35,475
Other receivables from subsidiaries - Safilo Industrial S.r.l.
20,406,519
23,005,881
Other receivables
21,989
16,924
Total
26,484,223
29,190,402
The VAT credit refers to the amount of VAT arising from Group VAT calculation. During year 2023 Safilo Group
S.p.A. received a VAT reimbursement of Eur 4,000,000 from the Tax Authority.
The item receivables from Safilo Industrial S.r.l. mainly refer to the VAT debt position transferred by the subsidiary
itself according to the Group VAT settlement procedure mentioned.
4.4 Right of Use assets
Below the summary of the rights of use divided by category: real estate rent contracts and long-term operating
lease contracts for company cars.
Balance at
January 1,
2023
Balance at
December 31,
2023
(Euro)
Increase
Decrease
Gross value
Buildings Rights of Use
135,201
-
-
135,201
Other assets Rights of Use
360,324
34,277
(91,733)
302,868
Total
495,525
34,277
(91,733)
438,069
Accumulated depreciation
Buildings Rights of Use
19,816
33,800
53,616
Other assets Rights of Use
162,329
87,325
(91,733)
157,921
Total
182,145
121,125
(91,733)
211,537
Net book value
313,380
(86,848)
-
226,532
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 176
4.5 Investments in subsidiaries
This item amounts to Euro 414,473,273 (compared to Euro 414,415,074 of previous year).
The following tables show the movements that occurred during the 2023 and during the previous financial year:
(Euro)
% of share
capital
Balance at
January 1,
2023
Increase
(Decrease)
Impairment
Balance at
December 31,
2023
Safilo S.p.A.
95.201
410,427,044
-
-
410,427,044
Contribution for stock options to
subsidiaries
3,986,863
58,198
-
4,045,062
Safilo de Mexico
0.001
521
-
-
521
Safilo Portugal
0.1
500
-
-
500
Safilo Benelux
0.005
146
-
-
146
Total
414,415,074
58,198
-
414,473,273
(Euro)
% of share
capital
Balance at
January 1,
2022
Increase
(Decrease)
Impairment
Balance at
December 31,
2022
Safilo S.p.A.
95.201
410,427,044
-
-
410,427,044
Contribution for stock options to
subsidiaries
3,698,270
288,592
-
3,986,863
Safilo de Mexico
0.001
521
-
-
521
Safilo Portugal
0.1
500
-
-
500
Safilo Benelux
0.005
146
-
-
146
Total
414,126,481
288,592
-
414,415,074
The key information for the subsidiary Safilo S.p.A. is summarised as follows:
Name
Safilo S.p.A. – Società Azionaria Fabbrica Italiana Lavorazione Occhiali
Registered office
Z.I. Settima Strada, 15 (Padova)
Share capital at 31
st
December 2023
Euro 66,176,000 i.v.
Shareholders’ equity at 31
st
December 2023
Euro 201,597,397
Net loss for the financial year 2023
Euro (39,302,588)
In consideration of the difference between the value of the investment in Safilo S.p.A and the contribution to the
consolidated financial statements of its net assets, the management subjected the book value of the investment to
an impairment test.
Impairment test
The approach followed and the assumptions made to perform the impairment test are described below.
Since Safilo S.p.A. operationally heads the entire Safilo Group, the impairment test of this investment was derived
from the one performed for the purposes of the consolidated financial statements.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 177
For the unique identified CGU of the Group, the recoverable amount is based on its value in use determined based
on estimated future cash flow projections.
On 14 March 2024 the Board of Directors has approved the 2024-2028 Financial Projections that confirms the main
goals and strategies defined in the Group Business Plan presented to the markets on 10 March 2023. For the
purposes of the impairment test, these financial projections take the requirements of IAS 36 into consideration,
specifically those that require that the estimate of future cash flows excludes those cash flows that are expected
to arise from improving or enhancing asset performance. Accordingly, potential new acquisitions effect included in
the Financial projection 2024-2028, have not been considered for the purposes of the impairment test.
In estimating the growth in the plan period, the Group has taken into consideration both its own internal
expectations as well as indications obtained from independent external sources.
The main objectives and strategies underlying Safilo’s 2024-2028 business plan are:
• Sales growth which maximizes customer service and meets the needs of the different consumer segments;
• Margin expansion and a more flexible operating cost structure;
• Positive cash flow generation that feeds and supports the Group's organic and external growth.
The Group’s strategies will continue to leverage two main enablers:
• the end-to-end Digitalization of its business model, with the aim of transversally enhancing data analytics,
optimizing processes, operations and time to market;
• a Sustainability roadmap in support of the Group’s business targets, driven through an agenda of clear and
shared objectives.
The impairment test methodology used for the execution of the impairment test at the date of 31 December 2023
is consistent with the criteria used for the 2022 financial statements and considers the following factors:
• Management used the most recent information available to calculate the WACC (weighted average cost of
capital), in particular: risk free rate, market risk premium, beta, specific risk premium for Safilo, Cost of debt
(including lease liabilties), debt/equity structure. As recommended by regulators, the WACC has not been
adjusted for the macroeconomic enviroment with uncertainties instead being reflected in the cash flows;
• the growth rates for the years following the plan’s horizon (“g” rate) have been analytically reviewed for each
single country in which the Group operates in, and have been adapted to the rate of inflation expected by
analysts for 2028.
To calculate the present value, the future cash flows thus obtained were discounted to their present value at a
discount rate (WACC) as at the test’s date of reference that took into account the specificities of each geography
where the Group operates. The cash flows generated after the horizon considered were determined on the basis
of perpetual growth rates considered adequate with reference to the economic conditions of the country of
reference.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 178
The following table summarizes the WACC and “g” rates used by the Group for the impairment test:
Key assumptions
"WACC" discount rate
Growth rate "g"
December
31, 2023
December
31, 2022
December
31, 2023
December
31, 2022
Safilo Group
8.55%
10.12%
2.13%
2.07%
The execution of the impairment test resulted in a cover compared to the net invested capital including goodwill as
of 31 December 2023.
Management has performed sensitivities to test the cover of Net Invested Capital based on different scenarios
where key parameters like WACC and Free Cash Flows have been progressively modelled. With reference to the
break-even level: to obtain an enterprise value equal to the net invested capital as of 31 December 2023, including
goodwill, EBITDA and related cash flows could be reduced by 55% or WACC could be increased by +6.5%.
After completing the process described, management concluded that no impairment loss needs to be recognized
at the date of 31 December 2023.
Management has used the most reliable information available at this moment. In monitoring the goodwill value,
management has taken into consideration also exogenous factors, such as the stock market capitalization. The
stock market valuation in general may be subject to different expectations and various fluctuations and hence in
practice different valuation methods exist, such as those based on expected cash flows.
Management believe that the assumptions incorporated in the Financial Projections 2024-2028 underlying the
impairment test are reasonable and that the Group has the necessary skills and resources to meet planned goals.
1. 4.6 Deferred tax assets
Deferred tax assets refer to the taxes calculated on tax losses that may be recovered in future financial years and
temporary differences between the carrying value of assets and liabilities and their tax value. Deferred tax assets
on tax losses are booked only if there is a reasonable likelihood that they may be recovered through future
taxable income.
Starting from 1
st
January 2006 the Company joined the tax consolidation programme in the capacity of parent
company. The subsidiaries participating in the program are Safilo S.p.A., Safilo Industrial S.r.l. and Lenti S.r.l. (both
100% owned by Safilo S.p.A). The effect of this option allows calculation of a single Group taxable income,
corresponding to the algebraic sum of the taxable income of the participating entities.
As of 31 December 2023, Deferred Tax Assets, amounted to Euro 113,326,512, results fully written down, based
on the same considerations performed by the management in the previous fiscal year, which are still valid.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 179
The following table illustrates the breakdown of accounts on which the tax prepayments and adjustment reserve
with reversal of the associated deferred tax assets at 31 December 2023:
Impact to
(Euro)
Balance at
January, 1
2023
Income
Statement
Equity
Receivables/
Payables due to
tax consolidation
Balance at
December, 31
2023
Tax losses Safilo Group S.p.A.
19,906,562
-
-
1,626,662
21,533,224
Tax losses from Safilo S.p.A.
64,704,473
-
-
9,332,079
74,036,552
Tax losses from Lenti S.r.l.
23,140
-
-
-
23,140
Tax losses from Safilo industrial S.r.l.
13,288,256
-
-
3,608,102
16,896,357
Tax losses before the tax consolidation
192,629
-
-
-
192,629
Interest expenses not deducted
carryforward
320,365
(320,365)
-
-
-
Other temporary differences
269,236
(161,118)
-
-
108,118
Provision for Risks
480,000
60,000
-
-
540,000
Other temporary differences
(4,121)
612
-
-
(3,508)
Total deferred tax assets
99,180,540
(420,871)
-
14,566,843
113,326,512
Valuation
allowance of deferred tax assets (99,180,540) 420,871 - (14,566,843) (113,326,512)
Total deferred tax assets, net
-
-
-
-
-
The following table shows the tax losses carried forward deriving from the Group national tax consolidation:
Financial Year
Tax losses
Tax benefit
Before 2014
91,351,812
21,924,435
2015
27,352,290
6,564,550
2016
8,642,688
2,074,245
2017
34,213,659
8,211,278
2018
26,884,736
6,452,337
2019
55,513,664
13,323,279
2020
82,017,679
19,684,243
2021
59,378,384
14,250,812
2022
21,698,117
5,207,548
2023
61,652,280
14,796,547
Total
468,705,308
112,489,274
In accordance with Art. 84 of TUIR, all tax losses can be carried forward without time limitation, in order to offset
future taxable income to an extent not greater than 80% of the taxable income for each single fiscal year.
4.7 Other non-current assets
This item totals Euro 737,880 (compared to Euro 1,529,539 of previous year) and mainly refers to withholding
taxes from the subsidiary Lenti S.r.l. arising from the tax consolidation programme.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 180
4.8 Trade payables
The following table shows a breakdown of the trade payables and the payables to subsidiaries:
(Euro)
December 31, 2023
December 31,
2022
Trade payables for services
1,902,402
1,511,288
Trade payables to subsidiaries:
Safilo S.p.A.
2,294,143
2,346,409
Safilo Far East Ltd
-
58,523
Total
4,196,545
3,916,220
The item payables to service providers mainly refers to consultancies for
business development
operations.
The item payable to Safilo S.p.A. mainly refers to accounting and administrative services provided by the subsidiary
to the parent company.
4.9 Tax payables
As of 31 December 2023, this item amounted to Euro 304,818 (compared to Euro 299,821 of previous year) and
referred to IRPEF withholdings on wages and salaries and independent contractors’ compensation withholdings for
the month of December, that were paid in January 2024.
4.10 Other current liabilities
This item breaks down as follows:
(Euro)
December 31, 2023
December 31, 2022
Payables to personnel and social security institutions
1,294,445
2,514,091
Payables to pension provisions
10,332
5,753
Other current liabilities
15,628
7,880
Accrued expenses
36
42
Other payables to subsidiaries - Safilo S.p.A.
27,664,168
22,888,969
Total
28,984,609
25,416,735
The item other payable to subsidiary Safilo S.p.A. mainly refers to the transfer of the VAT credit within the Group
VAT settlement procedure.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 181
4.11 Lease liabilities
Below the summary of the lease liabilities for Rights of Use assets mainly related to real estate rental contracts
and long-term operating lease contracts for company cars.
(Euro)
Balance at
January 1,
2023
Increase Decrease
Balance at
December 31,
2023
Lease liabilities IFRS 16
325,648
34,279
(121,470)
238,457
Of which:
Short term liability
208,762
106,494
Long term liability
116,887
131,963
4.12 Employee benefits obligations
During the financial year under review, the item showed the following movements:
Changes during the year
(Euro)
Balance at
January 1,
2023
Transfer
Posted to
income
statement
Actuarial
gains/(losses)
Provision
transfer
Balance at
December 31,
2023
Employee Benefits
149,047
683
8,619
(8,041)
-
150,308
Defined contribution
plans
- - 235,886 -
(235,886)
-
Total
149,047
683
244,505
(8,041)
(235,886)
150,308
Changes during the year
(Euro)
Balance at
January 1,
2022
Transfer
Posted to
income
statement
Actuarial
gains/(losses)
Provision
transfer
Balance at
December 31,
2022
Employee Benefits
134,976 35,430 10,229 (31,588) - 149,047
Defined contribution
plans
80,968 231,354 -
(312,322)
-
Total
134,976
116,398
241,583
(31,588)
(312,322)
149,047
Following the spin-off of 1 January 2017 which implied the transfer of some employees from Safilo S.p.A, the company
Safilo Group S.p.A is also subject to the changes made to the regulations governing the employment severance fund
introduced by Law no. 296 of 27
th
December 2006 (“Financial Law 2007”) and subsequent Decrees and Regulations
issued in the first months of 2007. Safilo Group S.p.A, on the basis of generally agreed interpretations, has decided
that:
• the portion of the employee benefit liability accrued from 1
st
January 2007, whether transferred to selected
pension funds or transferred to the treasury account established with INPS, must be classified as a “defined
contribution plan”;
• the portion of the employee benefit liability accrued as of 31
st
December 2006 must be classified as a
“defined benefit plan” requiring actuarial valuations that exclude future increases in salaries.
The employee severance fund of Italian companies (“TFR”) has no plan assets at its service. Actuarial estimates
used for calculating the employee severance liability accrued up to 31
st
December 2006 are based on a system of
assumptions based on demographic parameters, economic parameters and financial parameters.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 182
The demographic parameters are normally summarized in tables based on samples from different institutes (ISTAT,
INAIL, INPS, Italian General Accounts Office, etc.).
The economic parameters principally refer to long-term inflation rates and the financial yield rate, crucial for the
valuation of amounts accrued in the reserve for termination benefits.
The main financial parameter is given by the discount rate. The annual discount rate used to calculate the present
value of the obligation was derived by the Iboxx Corporate AA index with a duration comparable to the duration of
the collective of workers covered by the assessment.
4.13 Risks Provisions and charges
As of 31 December 2023, this item amounts to Euro 2,250,000 (compared to Euro 2,000,000 of previous year) and
refers to the estimated liability for a long-term incentive for top management.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 183
SHAREHOLDERS’ EQUITY
The shareholders' equity is both the value contributed by the shareholders of Safilo Group S.p.A. (share capital and
share premium reserve) plus the value generated by the Group in terms of profit gained from its operations (profit
carried forward and other reserves).
On 31 December 2023, shareholders' equity amounts to Euro 407,992,671, against Euro 415,214,998 of previous
year.
4.14 Share capital
At 31 December 2023 the share capital of Safilo Group S.p.A. amounts to Euro 384,857,848 (compared to Euro
384,846,311 at the end of the previous year) consisting of no. 413,745,466 ordinary shares with no par value
(413,687,780 ordinary shares as at 31 December 2022).
In 2023 new ordinary shares were issued, resulting from the execution of a share capital increase to the service of
the stock option plan named “Stock Option Plan 2017 – 2020”.
The increase for the period, due to the capital increase resulting from the execution of a share capital increase to
the service of the stock option plan named “Stock Option Plan 2017 – 2020” amounts to Euro 11,536.
4.15 Share premium reserve
At 31 December 2023 the share premium reserve of Safilo Group S.p.A. amounts to Euro 27,338,371 (compared
to Euro 692,520,684 at the end of the previous year).
The movement of the period is due to the coverage of previous losses for Euro 654,755,002 and the exercise of
the right of stock option by some directors, according to the stock option plan called Stock Option Plan 2017 -
2020", is equal to Euro 27,458
4.16 Retained earnings and other reserves
This account breaks down as follows:
(Euro)
December 31, 2023
December 31, 2022
Legal reserve
3,007,774
3,007,774
Stock option reserve
106,379
1,439,907
Reserve for actuarial gain (losses) of defined benefit plan
8,043
1,378
Losses carried forward
137,400
(654,755,002)
Total
3,259,596
(650,305,943)
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 184
Equity accounts - possible use and distribution
The table below shows the possible use and distribution of equity accounts:
(Euro)
Amount
Possible use
Share Capital
384,857,848
Share premium reserve
27,388,371
A - B - C (*)
Legal reserve
3,007,774
B
Stock option reserve
106,379
Reserve for actuarial gain (losses) of defined benefit plan
8,043
Losses carried forward
137,400
Net (loss) for the year
(7,513,144)
Total
407,992,671
A = for capital increase
B = to hedge against losses
C = for distribution to shareholders
(*) Fully available for capital increases and to hedge against losses. For other uses, it is necessary to adjust (also through transfer from the share
premium reserve) the legal reserve to 20% of the share capital
Stock option plans
As at 31 December 2023 the Group has in place the following Stock Option Plans: 2017-2020, 2020-2022 and the
new 2023-2025 Plan.
The first Plan was deliberated by the Ordinary Shareholders’ meeting held on 26 April 2017, in which the
Shareholders approved the issue of up to 2,500,000 (adjusted after the 2018 capital increase to 2,891,425) new
ordinary shares to be offered to directors and/or employees of the Company and its subsidiaries.
The 2020-2022 Plan was deliberated by the Ordinary Shareholders’ Meeting held on 28 April 2020, in which the
Shareholders approved the issue up to 7,000,000 new ordinary shares to be offered to directors and/or employees
of the Company and its subsidiaries.
On 27 April 2023 the Ordinary Shareholders’ Meeting approved the Stock Option Plan 2023-2025 which provides
for the assignment of a maximum of 22,000,000 options (corresponding to a maximum number of 22,000,000
ordinary shares of the Company) in favour of executive directors who are also employees and other employees of
the Company and/or other companies within the Group.
Information relating to the tranches of the Stock Options Plans granted on 31 December 2023 are shown below.
Grant date
No. of options
Fair value in
Euro
Maturity
Stock Option Plan 2017-2020
Third tranche
30 April 2019
643,413
0.18
31 May 2027
Stock Option Plan 2020-2022
First tranche
31 July 2020
2,895,376
0.18
30 June 2028
Second tranche
11 March 2021
3,106,148
0.27
30 June 2029
Stock Option Plan 2023-2025
First tranche
11 September 2023
7,640,000
0.28
30 June 2031
The fair value of the stock options was estimated on the vesting date based on the Black-Scholes model.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 185
The main market inputs of the model used are shown below:
Share price
at grant date
Exercise
price in Euro
Expected
volatility
Free risk
rate
Stock Option Plan 2017-2020
Third tranche
0.81
0.68
36.20%
0.087%
Stock Option Plan 2020-2022
First tranche
0.63
0.63
47.78%
-0.392%
Second tranche
0.93
0.87
45.67%
-0.290%
Stock Option Plan 2023-2025
First tranche
0.93
0.97
38.20%
3.010%
The table below shows the changes in the stock option plans which occurred during the year:
No. of options
Average
exercise price
in Euro
Stock Option Plan 2017-2020
Outstanding at the beginning of the period
773,205
0.68
Granted
-
-
Forfeited
-
-
Exercised
(57,686)
0.68
Expired
(72,107)
0.68
Outstanding at period-end
643,413
0.68
Stock Option Plan 2020-2022
Outstanding at the beginning of the period
7,343,823
0.76
Granted
-
-
Forfeited
(709,976)
0.87
Exercised
-
-
Expired
(632,322)
0.63
Outstanding at period-end
6,001,524
0.76
Stock Option Plan 2023-2025
Outstanding at the beginning of the period
-
-
Granted
7,940,000
0.97
Forfeited
(300,000)
0.97
Exercised
-
-
Expired
-
-
Outstanding at period-end
7,640,000
0.97
During the year, a total of 704,429 options expired, of which 72,107 from the third tranche of the Plan 2017-2020
and 632,322 of the Plan 2020-2022 and 57,686 options of the Plan 2017-2020 were exercised. Additionally,
1,009,976 options were forfeited of which 709,976 of the Plan 2020-2022 and 300,000 of the Plan 2023-2025, in
the period 7,940,000 options of the Plan 2023-2025 were granted.
The options outstanding of the third tranche of the Plan 2017-2020, equal to 643,413 options, are exercisable until
31 May 2027, the first and the second tranche of the Plan 2020-2022, equal respectively to 2,895,376 and to
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 186
3,106,148 options, are exercisable until 30 June 2028 and 30 June 2029 respectively, the first tranche of the Plan
2023-2025 equal to 7,640,000 are exercisable until 30 June 2031.
At the date of the approval of these financial statements the options vested and exercisable still outstanding are
the one related to the Plan 2017-2020 equal to 643,413.
The exercise price for the options of the third tranche of the Plan 2017-2020 is equal to 0.68 Euro with a remaining
contract life of 3.4 years, for the first and the second tranche of the Plan 2020-2022 the exercise prices are equal
to respectively 0.63 and 0.87 Euro with a remaining contract life of 4.5 and 5.5 years respectively, while for the
first tranche of the Plan 2023-2025 the exercise prices is equal to 0.97 Euro
with a remaining contract life of 7.5.
The adoption of these plans has affected the income statement for the period for a cost of 185 thousand Euro (304
thousand Euro of previous year).
There have been no changes or cancellations to the above plans.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 187
5. Notes to the income statement
5.1 Service revenues
The company, as Group's financial holding company, does not have revenues from the sale of goods, but only
revenues for administrative, legal and tax services provided to the subsidiaries during the year, which amount to
Euro 996,457.
5.2 General and administrative expenses
This item breaks down as follows:
(Euro)
2023
2022
Payroll and social security contributions
4,084,150
4,645,693
Corporate compliance costs
391,464
331,417
Remuneration to directors and statutory
auditors
1,862,943
2,525,376
Consultancies and professional services
1,151,849
1,180,296
Cost of services provided by Safilo S.p.A.
247,555
224,486
Other administrative and general expenses
353,115
343,758
Provisions (Long Term Incentive)
1,000,000
1,000,000
Depreciation
121,116
131,659
Total
9,212,192
10,382,685
The following table illustrates the average and punctual number of employees:
2023
2022
Punctual at 31 December
21
20
Annual avarage
20
19
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 188
5.3 Financial charges
This item breaks down as follows:
(Euro)
2023 2022
Interest expense (11,634) (12,956)
Bank charges and commissions (1,200) (1,307)
Other financial charges (5,268) (672)
Total financial charges (18,102) (14,935)
Interest income 6,462 274
Dividends 26 -
Total financial income (charges), Net 6,488 274
Negative exchange rate differences
(1,247)
(67,116)
Positive exchange rate differences - (3,109)
Total exchange rate differences, net
(1,247) (64,007)
Total financial charges, net (12,861) (78,668)
5.4 Income taxes
This item breaks down as follows:
(Euro)
2023
2022
Current taxes
728,880
359,971
Deferred taxes
-
-
Total
728,880
359,971
Current taxes, negative for Euro 728,880, mainly refer to the income from tax consolidation that the company
has made with reference to the use of its losses against the taxable income of the subsidiary Lenti S.r.l. and, to
a lesser extent, to adjustments made in the determination of the taxable income of previous years. There is no
effect on profit and loss deriving from deferred taxes considering that the whole amount of deferred tax assets
is still fully written down.
The table below shows the reconciliation between theoretical taxes and the actual tax burden recognised on
the income statement:
(Euro)
%
2023
%
2022
Profit (loss) before taxation
100%
(8,242,024)
100%
(12,206,025)
Theoretical Taxes
-24.0%
1,978,086
-24.0%
2,929,446
Not deductible costs
0.5%
(43,208)
0.2%
(27,751)
Income from tax fiscal unity
-8.8%
726,168
-2.9%
359,971
Non-recognition of new DTAs and write-off of
existing DTAs
23.5%
(1,934,877)
23.8%
(2,909,033)
Other differences
-0.03%
2,712
-0.1%
7,337
Total
-8.84%
728,880
-2.95%
359,971
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 189
Potential exposure to Pillar Two Model Rules impact
The exposure to the Pillar Two income taxes of the Global Minimum Tax derives from the level of effective taxation
realized in each jurisdiction in which the entities of the Multinational Group (and any joint ventures) are present;
such level of effective taxation depends on numerous factors, also interconnected between them, such as in
particular the profit there generated, the nominal tax rate level, the tax rules for the calculation of the taxable
income, the existence, form and benefiting of incentives or other tax benefits applicable in the specific jurisdiction.
Considering the novelty and complexities in calculating the effective taxation level, for the first years of
implementation (that is for periods starting before December 31, 2026 and ending not after than June 30, 2028)
the Pillar Two rules provide for the possibility of applying a simplified regime mainly based on accounting information
available for each relevant jurisdiction (so called transitional regime, with safe harbors predominantly based on
Country-by-Country Report (CbCR) data, hereinafter also referred to as “transitional CbCR safe harbors”) and based
on which the reduction of the implementation costs and the reduction to nil of the Pillar Two taxes in case of
meeting of one of the three provided tests.
Taking into account the known or reasonably estimable information at the reporting date, even if such information
do not currently reflect all specific regulations
of the Pillar Two Model Rules connected to the localization and
operations of all the entities of the Safilo Group in all the single jurisdictions in which the same operates, and
considering that at the reporting date there is information that is not known or reasonably estimable, the Safilo
Group exposure in the jurisdictions in which it operates to Pillar Two income taxes arising from such legislation at
the reporting date, also based on the transitional CbCR safe harbors, is valued as not material.
In particular, based on information known or reasonably estimable:
• with reference to the majority of the entities of the Safilo Group, that are located in jurisdictions that meet
at least one of the three tests provided for by the transitional CbCR safe harbors, the conditions for the non-
application of the Pillar Two income taxes are met, and
• for the remaining entities of the Safilo Group, that are located in jurisdictions that do not meet any of the
three tests provided for by the transitional CbCR safe harbors, the exposure is not material, since the level of the
effective taxation in such jurisdictions proxies the minimum rate of 15% or the potential estimated impact on the
profits in such jurisdictions (in particular in the United Arab Emirates) is not material in relation to the total profits
of the Safilo Group.
The Safilo Group, with the support of external consultants, is getting organized and prepared for the compliance
fulfilments connected to the Pillar Two Model Rules, also with the objective of managing the exposure in the future
years, by the setting up of adequate systems and procedures aimed at:
• the identification, localization and characterization, also ongoing, of all entities of the Safilo Group relevant
for the Pillar Two model rules purposes, and
• computing the simplified tests (so called transitional CbCR safe harbors) for each of the relevant
jurisdictions, with the aim of benefiting of the relevant advantages in terms of reduction of the fulfilments costs
and of the reduction to nil of the Pillar Two taxes, and
• performing the complete and detailed calculations of the amounts relevant as requested by the Pillar Two
for any jurisdictions that might not meet any of the above mentioned tests.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 190
Since the Pillar Two Model Rules are not effective at the financial year reporting date, no current tax expense
related to the Pillar Two income taxes are recorded.
5.5 Earnings (losses) per share
The calculation of basic and diluted earnings per share is shown in the tables below:
Base
(Euro)
2023
2022
Profit (loss) on ordinary shares
(7,513,144)
(11,846,054)
Average number of ordinary shares
413,733,388
413,598,538
Earnings (loss) per basic share (in Euro)
(0.02)
(0.03)
Diluted
(Euro)
2023
2022
Profit (loss) on ordinary shares
(7,513,144)
(11,846,054)
Portion reserved for preferred shares
-
-
Profit (loss) in the income statement
(7,513,144)
(11,846,054)
Average number of ordinary shares
413,733,388
413,598,538
Dilution effects:
- stock option
3,552,807
3,831,321
Total
417,286,195
417,429,859
Earnings (loss) per share diluted (in Euro)
(0.02)
(0.03)
6. Commitments
The Company had no purchase commitments at the reporting date.
7. Subsequent events
Subsequent to 31 December 2023 through the approval date of this report, no significant events occurred which
would have impacted the financial and economic results shown pursuant to IAS 10 Events after the reporting period.
8. Significant non-recurring events and transactions
During 2023 the company did not engage in significant non-recurring transactions pursuant to the CONSOB
Communication of 28
th
July 2006.
9. Transactions resulting from unusual and/or abnormal operations
Pursuant to CONSOB Communication of 28
th
July 2006, in 2023 the Company did not put in place any unusual
and/or atypical operations, as defined in this Communication.
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 191
10. Transactions with related parties
The remuneration of the Company’s Directors, Statutory Auditors and Strategic Management is reported below
(Euro)
2023 2022
Directors
- Salaries ad short term compensations
3,107,183
3,711,480
- Non monetary benefits
35,369
27,617
- Other compensations 88,424
86,804
- Fair value of equity compensations
204,343
252,392
Statutory auditors
- Fixed compensations and compensations for participation in committees
143,000
143,000
Managers with strategic responsibilities
- Salaries ad short term compensations
446,244
718,613
- Non monetary benefits
13,674
11,481
- Other compensations
-
3,174
- Fair value of equity compensations
24,866
51,509
Total
4,063,103
5,006,070
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 192
Resolution regarding the result for the year
We submit for your approval the financial statements for the financial year ending on December 31
st
, 2023,
drafted according to the IFRS International Accounting Standards, and recommend that the loss of the year,
amounting to 7,513,144 Euro be carried forward.
For the Board of Directors
Chief Executive Officer
Angelo Trocchia
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 193
APPENDIX
Information requested by art, 149-duodecies of the Regulation on Issuers issued by Consob
The following table, prepared in accordance with Art, 149-duodecies of the Regulation on Issuers issued by
Consob, reports the amount of fees charged in 2023 relating to the audit and other audit related services rendered
by the same Audit firm.
The Shareholders' Meeting held on 27 April 2023, upon proposal of the Board of Statutory Auditors, appointed
PricewaterhouseCoopers S.p.A. as external Audit Company for the financial years from 2023 to 2031.
(Euro)
2023
Audit
169,800
Other services
26,000
Total
195,800
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 194
Certification of the Annual Report pursuant to article 81-ter of CONSOB Regulation 11971 of 14
th
May
1999 as amended
The undersigned Angelo Trocchia, as Chief Executive Officer, and Michele Melotti, as the manager responsible for
preparing Safilo Group S.p.A.’s financial statements, hereby certify, having also taken into consideration the
provisions of article 154-bis, paragraphs 3 and 4, of Italian Legislative Decree 58 of 24
th
February 1998:
- the adequacy with respect to the company structure and
- the effective application,
of the administrative and accounting procedures for preparation of the annual report during the 2023 financial year.
It is also certified that the annual report at 31
st
December 2023:
a) corresponds to the results documented in the books, accounting and other records;
b) have been prepared in accordance with the International Financial Reporting Standards adopted by the
European Union, as well as with the provisions issued in implementation of article 9 of Legislative Decree
38/2005 and, based on their knowledge, fairly and correctly present the financial position, results of
operations and cash flows of the issuer.
14 March 2024
The Chief Executive Officer The manager responsible for preparing the
company’s financial statements
Angelo Trocchia Michele Melotti
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 195
REPORT OF THE BOARD OF STATUTORY AUDITORS
1
R
EPORT OF THE BOARD OF STATUTORY AUDITORS TO THE
SHAREHOLDERS' MEETING OF SAFILO GROUP S.P.A.
(Pursuant to Article 153 of Legislative Decree No. 58/1998)
Dear Shareholders,
the Board of Statutory Auditors of Safilo Group S.p.A. (hereinafter also "Safilo" or the
"Company"), pursuant to Article 153 of Legislative Decree No. 58/1998 (hereinafter also
"TUF") is required to report to the Shareholders' Meeting convened to approve the financial
statements on the supervisory activity carried out during the year, on any omissions and
censurable facts that may have been detected and on the results of the Company's financial
year.
The Board of Statutory Auditors is also called upon to make any proposals regarding the
budget and its approval, as well as matters within its competence.
This report reports on the activities of Safilo's Board of Statutory Auditors during the year
ended December 31, 2023.
1. B
ACKGROUND
The Board of Statutory Auditors in office as of the date of this report consists of Maria
Francesca Talamonti (chair), Roberto Padova (standing member) and Bettina Solimando
(standing member), appointed by the shareholders' meeting of April 27, 2023; Tina Marcella
Amata and Marco Michielon are alternate auditors.
During the fiscal year ended December 31, 2023, the Board of Statutory Auditors carried out
the supervisory activities required by law (and in particular, by Article 149 of the TUF and
Article 19 of Legislative Decree No. 39/2010), taking into account the principles of conduct
recommended by the National Council of Certified Public Accountants and Accounting
Experts, Consob provisions on corporate controls, and the indications contained in the
Corporate Governance Code of listed companies promoted by Borsa Italiana, to which the
Company has declared to adhere.
Supervisory activities were carried out at the 9 meetings of the Board of Statutory Auditors
held in 2023, attending 9 meetings of the Board of Directors, also participating in the
shareholders' meeting held on April 27, 2023, 5 meetings of the Audit and Risk Committee,
5 meetings of the Compensation Committee, 4 meetings of the Sustainability Committee, 3
meetings of the Related Party Transactions Committee, and 3 meetings of the Supervisory
Board.
On this point, it should be noted that
in order to ensure greater effectiveness of supervisory
activities, the Board has adopted, as an operational practice, that of active participation of
the entire supervisory body in all meetings of endo-committees
.
The Board of Statutory Auditors has met periodically with the auditing firm, and from the
meetings held, there have been no significant reportable facts concerning the auditing
activities, nor have there been any decisive deficiencies concerning the integrity of the
internal control system with regard to the financial reporting process.
2
In this regard, it should be noted that, by a resolution passed by the shareholders' meeting
on April 27, 2023, the independent auditors PricewaterhouseCoopers SpA (hereinafter also
"PwC") were appointed to audit the statutory and consolidated financial statements for the
period 2023- 2031.
It should also be noted that in the course of the supervisory activities carried out and on the
basis of the information also obtained from the auditing company, no omissions, censurable
facts or irregularities or otherwise significant facts were detected that would require
reporting to the supervisory bodies.
2. S
UPERVISORY ACTIVITIES UNDER ARTICLE 149 OF THE TUF.
Pursuant to Article 149 of the TUF, the Board of Statutory Auditors supervises:
− on compliance with the law and statutes;
− on adherence to the principles of proper administration;
− on the adequacy of the company's organizational structure for the aspects under its
responsibility, the internal control system and the administrative-accounting system, as
well as the reliability of the latter in correctly representing operating events;
− on how to concretely implement the corporate governance rules set forth in codes of
conduct drawn up by regulated market management companies or trade associations,
which the company, by means of public disclosures, declares that it complies with;
− on the adequacy of the provisions issued by the company to its subsidiaries pursuant
to Article 114(2) of the TUF.
■
Activities to supervise compliance with the law and statutes
The Board of Statutory Auditors acquired the information instrumental to the performance
of the supervisory duties assigned to it through participation in the meetings of the Board
of Directors and endo-consiliar committees, hearings of the management of the Company and
the Group, meetings with the auditing firm, analysis of the information flows acquired from
the corresponding supervisory bodies of the Group companies and the relevant corporate
structures, and further control activities.
In particular, the Board of Statutory Auditors:
− pursuant to Article 150, paragraph 1 of the TUF, has obtained from the directors, at least
quarterly, information on the activities carried out and on the most significant
economic, financial, and equity transactions carried out by the Company, as well as on
the Group's strategic guidelines. The Board of Statutory Auditors can reasonably assure
that the transactions resolved and implemented comply with the law and the bylaws
and are not manifestly imprudent or risky, or in conflict with resolutions passed by the
Shareholders' Meeting, or such as to compromise the integrity of the Company's assets.
There are also no atypical or unusual transactions;
3
− pursuant to Article 150, paragraph 3 of the TUF, held periodic meetings with
representatives of the auditing firm in order to be able to exchange with it consolidated
data and information relevant to the performance of its duties. In this regard, it is noted
that no relevant data and information emerged that should be reported in this report;
− pursuant to Article 151 paragraph 1 and 2 of the TUF, had exchanges of information
with the Boards of Statutory Auditors of the subsidiaries regarding the activities carried
out during 2023: in particular, the Board points out that the two standing members of
Safilo's Board of Statutory Auditors are also members of the Boards of Statutory
Auditors of the two main subsidiaries, Safilo S.p.A. and Safilo Industrial S.r.l., which
made it easier and more immediate to exchange information;
− received information from the Supervisory Board about its activities, from which there
were no anomalies or significant reprehensible facts;
− Supervised compliance with the privacy provisions of the EU Regulation
No. 2016/679 (so-called GDPR);
− has not received any complaints under Article 2408 of the Civil Code, nor have any
complaints of any kind been filed;
− has not made any reports to Consob under Article 149(3) of the TUF;
− Issued the following opinions:
o pursuant to Article 13 of Legislative Decree No. 39/2010, on the appointment of
PwC as statutory auditor;
o pursuant to art. 154-bis, para. 1, TUF, on the appointment of Michele Melotti as
manager in charge of drafting corporate accounting documents;
− in accordance with the Corporate Governance Code, expressed its opinion (i) on the
approval of the work plan prepared by the head of the internal audit function and (ii) on
the assessment of the results set forth by the independent auditors in the supplementary
report addressed to the supervisory board;
− supervised the fulfillment of requirements related to the "Market abuse" and "Protection
of savings" regulations on corporate disclosure and internal dealing, with particular
reference to the handling of inside information and the procedure for the dissemination
of announcements and information to the public.
Further, the Board of Statutory Auditors, as to corporate bodies and functions, reports that
in financial year 2023:
− the Board of Directors met 9 times;
− the Audit and Risk Committee met 5 times;
− the Remuneration Committee met 5 times;
− the Sustainability Committee met 4 times;
− the Related Party Transactions Committee met 3 times;
− the Supervisory Board met 3 times.
4
■
Supervisory activities on compliance with the principles of proper administration and the
adequacy of the organizational structure
The Board of Auditors:
− acquired knowledge of and supervised, to the extent of its competence, the adequacy of
the Company's organizational structure and compliance with the principles of proper
administration through direct observation, collection of information from the heads of
corporate functions, and meetings with the auditing firm for the purpose of mutual
exchange of relevant data and information, and in this regard has no particular
observations to report, considering the Company's organizational structure to be
substantially adequate to its needs and suitable for ensuring compliance with the
principles of proper administration;
− assessed and supervised the adequacy of the administrative-accounting system, as well
as the reliability of the latter to correctly represent operating events, by obtaining
information from the heads of the respective functions, examining company
documents, and analyzing the results of the work performed by the independent
auditors, and in this regard has no particular observations to report;
− did not find any facts and circumstances involving the unsuitability of the
administrative and accounting system of the non-EU subsidiaries to regularly provide
the management and auditor of the parent company with the income statement, balance
sheet and financial data necessary for the preparation of the consolidated financial
statements, as required by Article 15(1)(c)(ii) of the Market Regulations.
The Board of Statutory Auditors found that adequate documentation supporting the topics
discussed at board meetings is made available to directors and auditors well in advance, in
accordance with the Corporate Governance Code.
On the basis of the information acquired, the Board of Statutory Auditors acknowledges that
management decisions are based on the principle of fair information and reasonableness,
and that the directors have been made aware of the riskiness and effects of the transactions
made.
The Board of Statutory Auditors found no significant atypical and/or unusual transactions,
including intragroup transactions or transactions with intragroup and non-intergroup
related parties.
The Board also assessed the adequacy of the information made within the management
report about the non-existence of significant atypical and/or unusual transactions.
5
■
Supervisory activities on how corporate governance rules are actually implemented
In relation to the provisions of Article 149, paragraph 1, letter c-bis, of the TUF regarding the
supervision by the Board of Statutory Auditors "on the procedures for the concrete
implementation of the corporate governance rules laid down in codes of conduct drawn up by
management companies of regulated markets or by trade associations, which the company, by means
of public disclosures, declares that it complies with," the Board of Statutory Auditors reports that:
− monitored how the corporate governance rules set forth in codes of conduct to which
the Company, by means of public disclosure and on the basis of the "comply or explain"
principle, declares to comply, expressing - from time to time - its recommendations;
− noted that the Report on Corporate Governance and Ownership Structure for 2023, approved
on March 14, 2024, in fulfillment of relevant legal and regulatory obligations, contains
information on the ownership structure, adherence to codes of conduct and compliance
with consequent commitments, highlighting the choices the Company has made in
applying the self-regulatory principles.
The Board of Statutory Auditors further acknowledges:
− that it has ascertained that all of its regular members meet the requirements of
independence, professionalism, honorability and limits to the accumulation of offices
provided for by law, the bylaws and the Corporate Governance Code, as well as the proper
and effective functioning of the body as a whole, formalizing in a report the results of
the self-assessment process carried out and informing the Board of Directors, which has
given notice of them in the Report on Corporate Governance and Ownership Structure;
− that it has ascertained the proper application of the criteria and procedures adopted by
the Board of Directors to assess annually the independence of its independent directors.
In this regard, the Board of Auditors notes that declarations have been received from
the directors, in connection with the periodic assessment to be carried out pursuant to
the Corporate Governance Code, regarding their possession of the independence
requirements set forth in Article 148, paragraph 3, of the TUF (referred to in Article 147-
ter, paragraph 4, of the TUF).
■
Supervisory activities on the adequacy of the arrangements made by the company to its
subsidiaries
Pursuant to Article 114(2) of the TUF: (i) listed issuers shall issue the necessary instructions
for subsidiaries to provide all the news necessary to fulfill the disclosure obligations
required by law; (ii) subsidiaries shall promptly transmit the required news.
The Board of Statutory Auditors monitored the adequacy of the instructions given to the
subsidiaries, having ascertained that the Company is able to promptly and regularly fulfill
the reporting obligations required by law; this was also done by collecting information from
the heads of organizational functions, for the purpose of mutual
6
exchange of relevant data and information. In this regard, there are no particular comments
to report.
■
Intercompany or related party transactions
Pursuant to Article 2391-bis of the Italian Civil Code and Consob Resolution No. 17221 of
March 12, 2010 on Related Party Transaction Regulations (hereinafter also the
"Regulations"), Safilo on November 5, 2010 adopted Regulations governing related party
transactions, most recently updated on July 1, 2021.
The procedure currently in force (hereinafter also referred to as the "Procedure") (i) is
consistent with the principles contained in the Regulations in effect as of the date of this
report and (ii) is published on the Company's website.
During fiscal year 2023, based on the information received, a number of transactions with
related parties, both intercompany and third parties, have been entered into; these
transactions, to the best of our knowledge:
− were carried out in substantial adherence to the Procedure and Regulations;
− appear to have been carried out in
the
interest of the Company, of an ordinary
nature and concluded on terms equivalent to market or standard terms;
− do not include atypical or unusual transactions.
Transactions with related parties are adequately described in the annual and consolidated
financial statements, in which the main income statement and balance sheet balances arising
from transactions with related parties are also reported, including-when present-those
relating to directors, auditors, and key management personnel.
Detailed information on the compensation payable for the year 2023 to members of the
management and control bodies and key management personnel is provided in the
Remuneration Report 2023 prepared in accordance with Article 123-ter of the TUF.
3. S
UPERVISORY ACTIVITIES PURSUANT TO LEGISLATIVE DECREE NO. 39/2010
Pursuant to Legislative Decree No. 39/2010 as amended by Legislative Decree 135/2016
(hereinafter also
"Decree") the Board of Statutory Auditors, identified by the Decree as the Audit Committee,
is responsible for:
− inform the administrative body of the audited entity of the outcome of the statutory
audit and transmit to this body the additional report referred to in Article 11 of EU Reg.
No. 537/2014 (hereinafter also "European Regulation"), together with any comments;
− monitor the financial reporting process and make recommendations or proposals to
ensure its integrity;
− monitor the effectiveness of the firm's internal quality control and risk management
systems and, if applicable, internal audit, with respect to the audited entity's financial
reporting, without violating its independence;
7
− monitor the statutory audit of the annual financial statements and consolidated
financial statements, including taking into account any findings and conclusions of
quality audits conducted by Consob pursuant to Article 26(6) of the European
Regulation, where available;
− verify and monitor the independence of statutory auditors or auditing firms in
accordance with Articles 10, 10-bis, 10-ter, 10-quater and 17 of the Decree and Article 6
of the European Regulations, particularly with regard to the appropriateness of the
provision of non-audit services to the audited entity, in accordance with Article 5 of
those Regulations;
− be responsible for the procedure to select statutory auditors or statutory audit firms and
recommend statutory auditors or statutory audit firms to be appointed pursuant to
Article 16 of the European Regulation.
With reference to the activities under the Decree, the following should be noted.
■
Disclosure to the board of directors on the outcome of the statutory audit and the additional
report referred to in Article 11 of the European Regulation
The Board of Statutory Auditors represents that on March 22, 2024, the auditing firm PwC
issued the supplementary report pursuant to Article 11 of the European Regulations
(hereinafter also "Supplementary Report"), which represents the results of the statutory
audit carried out and includes the declaration on independence referred to in Article 6(2)(a)
of the Regulations, as well as the disclosures required by Article 11 of the Regulations,
without identifying any significant deficiencies.
The Board of Statutory Auditors will inform the Company's Board of Directors about the
results of the statutory audit by forwarding the Additional Report to the Chairman of the
Board of Directors in accordance with Article 19 of the Decree.
■
Supervisory activities on the financial reporting process
The Board of Statutory Auditors has verified the existence of rules and procedures to guard
the process of formation and dissemination of financial information; in this regard, the
Annual Report on Corporate Governance and Ownership Structure defines the reference
guidelines for the establishment and management of the system of administrative and
accounting procedures.
The Board of Statutory Auditors reviewed the procedures related to the preparing of the
Company's statutory and consolidated financial statements, as well as any other financial
communications.
Certifications on the consolidated and the statutory financial statements were issued by the
Chief Executive Officer, the Chairman of the Board of Directors, and the manager
responsible for preparing the Company’s financial statements pursuant to Article 154-bis of
the TUF.
Therefore, the Board of Statutory Auditors expresses an assessment of the adequacy of the
financial reporting process and believes there are no issues to be submitted to the
Shareholders' Meeting.
8
■
Supervisory activities on the effectiveness of internal control, internal audit and risk
management systems
The Board of Statutory Auditors supervised the adequacy and effectiveness of the system
of internal control and risk management ("SCIGR").
The Board of Statutory Auditors met periodically with the Head of Internal Audit, being
informed in relation to (i) the results of audit interventions (aimed at verifying the adequacy
and operation of the internal control system, compliance with the law, procedures and
business processes, (ii) the activity of implementing related improvement plans, and (iii) the
activity of identifying, assessing, managing and monitoring the risks identified within the
company's business model.
The Board has received the plan of audit activities for the year 2023, and has been
periodically updated on the progress of the plan; it has also received the report of the Head
of Internal Audit for the year 2023 on the evaluation of the internal control system, which
shows an opinion on the reliability and suitability of the Group's SCIGR.
In addition, the Board has always attended all meetings of the Audit and Risk Committee,
in the course of which no indicators have emerged to suggest that the Company's SCIGR is
inadequate.
Regarding the proper compliance with the regulations contained in Legislative Decree
231/2001, the Board of Statutory Auditors noted that, during 2023, Safilo's Supervisory Board
reported jointly to the Audit and Risk Committee and the Board of Directors on its activities.
The Board of Statutory Auditors has reviewed the reports of the Supervisory Board on its
activities during 2023, which show that during 2023, no reprehensible facts or violations of
the organizational model were found.
The Board reports that PwC's Additional Report does not reveal any deficiencies in the
internal control system in relation to the financial reporting process such that they should
be reported to the supervisory body.
In light of all of the above, the Board of Statutory Auditors believes that there is no evidence
that the internal control system as a whole is not substantially adequate and effective;
likewise, the Board of Statutory Auditors believes that there are no issues to be submitted to
the Shareholders' Meeting.
■
Supervisory activities on the statutory audit of the annual financial statements and consolidated
financial statements
The accounts have been subjected to the checks required by the regulations by the auditing
firm, which, in the course of its periodic meetings with the Board of Statutory Auditors, has
not pointed out any issues in this regard.
The Board of Auditors analyzed the work carried out by the auditing firm and, in particular,
the methodological framework, the audit approach used for the different significant areas
of the financial statements, and the planning of the audit work.
The Board of Statutory Auditors also shared issues related to business risks with the
auditing firm, thus being able to appreciate the adequacy of the response planned by the
9
auditor in terms of the audit approach with the profiles, structural and risk, of the Company
and the Group.
PwC issued, on March 22, 2024, the Additional Report under Article 11 of the European
Regulations, the report on the audit of the annual financial statements and the report on the
audit of the consolidated financial statements.
As for the last two reports, it is represented that:
o both reports contain: (i) an opinion on the true and fair representation of the
financial position of Safilo and the Group as of December 31, 2023, the results of
operations and cash flows for the year then ended in accordance with the
International Financial Reporting Standards adopted by the European Union, as well
as the measures issued in implementation of Article 9 of the D. Lgs. 38/05; (ii) the
description of any key aspects of the audit and the audit procedures in response to
the key aspects; (iii) the opinion on the consistency of the Directors' Report with the
statutory and consolidated financial statements as of December 31, 2023 and its
compliance with the law; (iv) the opinion on the consistency of certain specific
information in the Report on Corporate Governance and Ownership Structure with the
statutory and consolidated financial statements as of December 31, 2023; (v)
confirmation that the opinion on the statutory financial statements and the opinion
on the consolidated financial statements expressed in the respective reports are in
line with what is indicated in the Additional Report addressed to the undersigned
Board of Statutory Auditors, in its capacity as the Audit Committee, prepared
pursuant to Art. 11 of the European Regulations;
o the aforementioned reports do not contain any remarks or calls for disclosure;
o in its report on the audit of the consolidated financial statements, PwC
acknowledges that it has verified the directors' approval of the non-financial
statement.
■
Audit firm independence oversight activities, particularly with regard to the provision of non-
audit services
The Board of Statutory Auditors supervised, also with reference to the provisions of Article
19 of the D. Legislative Decree 39/2010, on the independence of the auditing firm: in this
regard, it should be noted that during the 2023 financial year PwC provided the parent
company and subsidiaries with services other than auditing in the amount of 45.0 thousand
euros. These assignments were approved in advance by the Board of Statutory Auditors and,
based on the checks carried out, the Board of Statutory Auditors did not consider that there
were any critical issues regarding the independence of the auditing firm.
The fees paid by Safilo Group to the auditing firm PwC and companies belonging to the
PwC network are as follows (amounts in Euro/000):
10
Company and
reporting
period
Auditing
Attestation
services
Other
services
Total
PwC
Network
Safilo Group S.p.A. 2023
Subsidiaries 2023
170
119
-
1.096
26
19
-
-
196
1.234
Total 289
1.096
45 - 1.430
The Board of Auditors considers that the aforementioned fees are appropriate for the size,
complexity and characteristics of the work performed.
The Board also considers the independence requirement of the auditing firm to be met,
which provided, as part of the Additional Report under Article 11 of the European
Regulations issued on March 22, 2024, annual confirmation of independence in accordance
with Article 6(2)(a) of the European Regulations.
4. C
ONSOLIDATED NON-FINANCIAL STATEMENT (DNF)
Safilo, as a public interest entity (PIE) and a large Group, is required to disclose non-financial
information by submitting, in accordance with the provisions of Legislative Decree
254/2016, a consolidated non-financial statement ("DNF").
In compliance with the aforementioned regulations, Safilo Group's DNF has been prepared
to the extent necessary to ensure an understanding of the Group's business, its performance,
results, and impact produced by it, and includes data from the parent company and its
subsidiaries consolidated on a line-by-line basis as of December 31, 2023, and covers the
issues deemed relevant and provided for in Article 3 of Legislative Decree 254/2016.
The DNF was prepared in accordance with the Global Reporting Initiative Sustainability
Reporting Standards defined in 2021 by the Global Reporting Initiative (GRI), according to the
"in accordance" option, as well as the ESMA recommendations and guidelines published on
October 25, 2023.
For 2023, Safilo confirmed the materiality analysis developed in 2019 through formal
approval by the Board of Directors: there were no changes in the organization's sectors,
value chain, and other business relationships since the previous reporting period.
In this regard, the Board of Statutory Auditors monitored compliance with the provisions
set forth in the D. Lgs. 254/2016, within the scope of the powers attributed to it by the system;
in this regard, it is represented that:
− the Board of Statutory Auditors obtained periodic updates regarding the performance
of activities preparatory to the preparation of the DNF;
− pursuant to Article 3, paragraph 10, of Legislative Decree 254/2016 and Article 5 of the
Consob Regulations No. 20267, the Company commissioned PwC to conduct the
limited review of Safilo Group's DNF;
11
− PwC issued a report on March 22, 2024, expressing, on the basis of the procedures
carried out, an opinion of DNF's compliance with the requirements of the Decree and
the GRI Sustainability Reporting Standards.
The Board of Statutory Auditors has not become aware of any violations of the relevant
regulatory provisions and, therefore, expresses an assessment of the adequacy of the
nonfinancial disclosure formation process and believes there are no issues to be submitted
to the Shareholders' Meeting.
5.
STATUTORY FINANCIAL STATEMENTS, CONSOLIDATED FINANCIAL STATEMENTS
AND MANAGEMENT REPORT
Safilo's financial statements, approved by resolution of the Company's Board of Directors
on March 14, 2024, have been prepared in accordance with IAS-IFRS issued by the
International Accounting Standards Board (IASB) and endorsed by the European Union.
With specific regard to the examination of the statutory financial statements for the year
ended December 31, 2023, the consolidated financial statements, and the management
report, the Board of Statutory Auditors reports the following:
− the financial statements were delivered to the Board of Auditors in time to be filed at
the Company's registered office accompanied by this report;
− the Company's financial statements and consolidated financial statements are prepared
in accordance with the structure and formats required by current regulations;
− the financial statements are accompanied by the directors' report on operations, which
summarizes the main risks and uncertainties and gives an account of the foreseeable
development of operations; it complies with current regulations and is consistent with
the resolutions of the administrative body and the results of the financial statements. It
also contains adequate information on the year's activities and intercompany
transactions. The section containing information on related party transactions has been
included, in accordance with IFRS, in the notes to the financial statements;
− the Report on Corporate Governance and Ownership Structure and, pursuant to Article 123-
bis of the TUF, the Report on Remuneration were also prepared;
− the Board of Auditors has verified the correspondence of the financial statements to the
facts and information of which it has become aware as a result of the performance of its
duties, having, therefore, no observations in this regard;
− to the best of the Board of Statutory Auditors' knowledge, the directors, in preparing
the financial statements, have not departed from the provisions of the law pursuant to
Article 2423 of the Civil Code.
6. P
ROPOSAL TO THE ASSEMBLY
The Board of Statutory Auditors is in favor of approving the financial statements as of
December 31, 2023, and has no objections to the proposed resolution submitted by the Board
of Directors to carry forward the loss for the year.
12
7. FINAL CONSIDERATIONS
The Board of Statutory Auditors has no findings to report with regard to the information
obtained and the supervisory activities carried out; it did not find any omissions, censurable
facts or irregularities or circumstances that would require reporting in this report or to the
Supervisory Authority.
* * *
Pursuant to Article 144-quinquiesdecies of the Issuers' Regulations, approved by Consob
Resolution 11971/99, as amended and supplemented, the list of positions held by members of
the Board of Statutory Auditors at companies under Book V, Title V, Chapters V, VI and VII of
the Civil Code is published by Consob on its website (www.consob.it).
Padua, March 22, 2024
For the Board of Statutory Auditors.
Maria Francesca Talamonti (Chairman)
This report has been translated into the English language solely for the convenience of international
readers
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 208
REPORT OF INDEPENDENT AUDITORS
pwc
Independent
auditor
’
s
report
in
accordance
with
article
14
of
Legislative
Decree
No.
39
of
2yJanuary
2010
and
article
10
of
Regulation
(EU)
No.
537/2014
To
thè
shareholders
of
Safilo
Group
SpA
Report
on
thè
Audit
ofthe
Financial
Statements
Opinion
We
have
audited
thè
financial
statements
of
Safilo
Group
SpA
(thè
Company),
which
comprise
thè
balance
sheet
as
of
31
December
2023,
thè
income
statement,
statement
of
comprehensive
income,
statement
of
changes
in
equity,
statement
of
cash
flows
for
thè
year
then
ended,
and
notes
to
thè
financial
statements,
including
material
accounting
policy
information.
In
our
opinion,
thè
financial
statements
give
a
true
and
fair
view
of
thè
financial
position
of
thè
Company
as
of
31
December
2023,
and
of
thè
result
of
its
operations
and
cash
flows
for
thè
year
then
ended
in
accordance
with
International
Financial
Reporting
Standards
as
adopted
by
thè
European
Union,
as
well
as
with
thè
regulations
issued
to
implement
article
9
of
Legislative
Decree No.
38/05.
Basis
for
Opinion
We
conducted
our
audit
in
accordance
with
International
Standards
on
Auditing
(ISA
Italia).
Our
responsibilities
under
those
standards
are
further
described
in
thè
Auditor
’
s
Responsibilities
for
thè
Audit
ofthe
Financial
Statements
section
of
this
report.
We
are
independent
of
thè
Company
pursuant
to
thè
regulations
and
standards
on
ethics
and
independence
applicable
to
audits
of
financial
statements
under
Italian
law.
We
believe
that
thè
audit
evidence
we
have
obtained
is
sufficient
and
appropriate
to
provide
a
basis
for
our
opinion.
Key
Audit
Matters
Key
audit
matters
are
those
matters
that,
in
our
professional
judgement,
were
of
most
significance
in
our
audit
of
thè
financial
statements
of
thè
current
period.
These
matters
were
addressed
in
thè
context
of
our
audit
of
thè
financial
statements
as
a
whole,
and
in
forming
our
opinion
thereon,
and
we
do
not
provide
a
separate
opinion
on
these
matters.
PricewaterhouseCoopers
SpA
Sede
legale:
Milano
20145
Piazza
Tre
Torri
2
Tel.
02
77851
Fax
02
7785240
Capitale
Sociale
Euro
6.890.000,00
i.v.
C.F.
e
P.IVA
e
Reg.
Imprese
Milano
Monza
Brianza
Lodi
12979880155
Iscritta
al
n°
119644
del
Registro
dei
Revisori
Legali
-
Altri
Uffici:
Ancona
60131
Via
Sandro
Tolti
1
Tel.
071
2132311
-
Bari
70122
Via
Abate
Gimma
72
Tel.
080
5640211
-
Bergamo
24121
Largo
Belotti
5
Tel.
035
229691
-
Bologna
40124
Via
Luigi
Carlo
Farini
12
Tel.
051
6186211
-
Brescia
25121
Viale
Duca
d
’
Aosta
28
Tel.
030
3697501
-
Catania
95129
Corso
Italia
302
Tel.
095
7532311
-
Firenze
50121
Viale
Gramsci
15
Tel.
055
2482811
-
Genova
16121
Piazza
Piccapietra
9
Tel.
010
29041
-
Napoli
80121
Via
dei
Mille
16
Tel.
081
36181
-
Padova
35138
Via
Vicenza
4
Tel.
049
873481
-
Palermo
90141
Via
Marchese
Ugo
60
Tel.
091
349737
-
Parma
43121
Viale
Tanara
20/A
Tel.
0521
275911
-
Pescara
65127
Piazza
Ettore
Troilo
8
Tel.
085
4545711
-
Roma
00154
Largo
Pochetti
29
Tel.
06
570251
-
Torino
10122
Corso
Palestre
10
Tel.
011
556771
-
Trento
38122
Viale
della
Costituzione
33
Tel.
0461
237004
-
Treviso
31100
Viale
Felissent
90
Tel.
0422
696911
-
Trieste
34125
Via
Cesare
Battisti
18
Tel.
040
3480781
-
Udine
33100
Via
Poscolle
43
Tel.
0432
25789
-
Varese
21100
Via
Albuzzi
43
Tel.
0332 285039
-
Verona
37135
Via
Francia
21/C
Tel.
045
8263001
-
Vicenza
36100
Piazza
Pontelandolfo
9
Tel.
0444
393311
wav
^
v
.
jn
ve
.
c
o
m/i
t
JL
pive
Key
Audìt
Matters
Auditing
procedures
performed
in
response
to
key
audit
matters
Recoverabilìty
of
thè
value
of
investments
in
subsidiaries
Note
4.5
to
thefinancial
statements
The
Bilanciai
statements
of
Safilo
Group
SpA
include
thè
value
of
thè
investment
in
thè
subsidiary
Safilo
SpA
for
Euro
414
million,
accounting
for
93%
of
total
assets.
In
consideration
of
thè
difference
between
thè
value
of
thè
investment
in
Safilo
SpA
and
thè
contribution
of
its
net
assets
to
thè
Consolidated
financial
statements,
management
tested
thè
investment
for
impairment.
The
entire
Safilo
Group
is
operationally
controlled
by
thè
subsidiary
Safilo
SpA,
therefore
thè
impairment
test
was
derived
from
thè
one
prepared
for
thè
purposes
of
thè
Consolidated
financial
statements,
carried
out
on
thè
basis
of
thè
financial
projections
relating
to
thè
period
2024-2028,
approved
by
thè
board
of
directors
on
14
March
2024.
As
part
of
thè
audit
of
thè
financial
statements
as
of
31
December
2023,
we
focused
on
this
area
of
thè
financial
statements
in
consideration
of
thè
materiality
of
thè
amount
recorded,
also
relative
to
total
assets,
and
thè
elements
of
estimation
inherent
in
thè
assessment
of
thè
recoverability
of
thè
hook
value
of
thè
investment.
As
part
of
our
audit
of
thè
financial
statements
as
of
31
December
2023,
we
performed
thè
procedures
illustrated
below.
We
obtained
thè
exercise
prepared
by
management
for
verifying
thè
recoverable
value
of
thè
equity
investment.
Our
audit
approach
was
based
on
thè
analysis
of
thè
method
used
by
management
to
prepare
thè
impairment
test
and
included
thè
following
procedures:
•
we
understood
and
evaluated
thè
Company's
internai
control
over
thè
process
of
verifying
thè
recoverability
of
thè
equity
investment;
•
we
analysed
thè
reasonableness
of
thè
assumptions
underlying
thè
forecasts
in
terms
of
thè
estimated
future
cash
flows,
in
light
of
past
results
and
comparing
thè
growth
rates
used
by
management
with
external
sources.
With
thè
support
of
PwC
network
valuation
experts,
we
verified
that
thè
methodologies
used
for
thè
impairment
test
were
consistent
with
international
financial
reporting
standards
as
adopted
by
thè
European
Union
("EU
IFRS")
and
with
prevailing
valuation
practice.
Moreover,
thè
key
valuation
parameters
adopted
were
analysed
in
terms
of
reasonableness.
With
specific
reference
to
thè
methods
of
calculation
of
discount
rates
and
medium/long-term
growth
rates,
we
verified
their
consistency
with
thè
provisions
of
EU
IFRS,
with
prevailing
practice
and
with
available
market
data.
We
verified
thè
mathematica!
accuracy
of
thè
calculation
of
thè
impairment
test.
2
of
6
JL
pwc
Key
Audit
Matters
Auditing
procedures
performed
in
response
to
key
audit
matters
Finally,
our
procedures
included
an
analysis
of
thè
explanatory
notes
to
thè
financial
statements
to
assess
thè
adequacy
and
completeness
of
disclosures.
Other
Matters
The
financial
statements
of
Safilo
Group
for
thè
year
ended
31
December
2022
bave
been
audited
by
other
auditors
who,
on
15
March
2023,
expressed
an
unqualified
opinion
on
thè
financial
statements.
Responsibilitìes
ofthe
Directors
and
thè
Board
ofStatutory
Auditors
for
thè
Financial
Statements
The
directors
are
responsible
for
thè
preparation
of
financial
statements
that
give
a
true
and
fair
view
in
accordance
with
International
Financial
Reporting
Standards
as
adopted
by
thè
European
Union,
as
well
as
with
thè
regulations
issued
to
implement
article
9
of
Legislative
Decree
No.
38/05
and,
in
thè
terms
prescribed
by
law,
for
such
internai
control
as
they
determine
is
necessary
to
enable
thè
preparation
of
financial
statements
that
are
free
from
material
misstatement,
whether
due
to
fraud
or
error.
The
directors
are
responsible
for
assessing
thè
Company
’
s
ability
to
continue
as
a
going
concern
and,
in
preparing
thè
financial
statements,
for
thè appropriate
application
of
thè
going
concern
basis
of
accounting,
and
for
disclosing
matters
related
to
going
concern.
In
preparing
thè
financial
statements,
thè
directors
use
thè
going
concern
basis
of
accounting
unless
they
either
intend
to
liquidate
thè
Company
or
to
cease
operations,
or
bave
no
realistic
alternative
but
to
do
so.
The
board
of
statutory
auditors
is
responsible
for
overseeing,
in
thè
terms
prescribed
by
law,
thè
Company
’
s
financial
reporting
process.
3
of
6
pwc
Auditor
’
s
Responsibilitiesfor
theAudit
ofthe
Financial
Statements
Our
objectives
are
to
obtain
reasonable
assurance
about
whether
thè
financial
statements
as
a
whole
are
free
from
material
misstatement,
whether
due
to
fraud
or
error,
and
to
issue
an
auditor
’
s
report
that
includes
our
opinion.
Reasonable
assurance
is
a
high
level
of
assurance
but
is
not
a
guarantee
that
an
audit
conducted
in
accordance
with
International
Standards
on
Auditing
(ISA
Italia)
will
always
detect
a
material
misstatement
when
it
exists.
Misstatements
can
arise
from
fraud
or
error
and
are
considered
material
if,
individually
or
in
thè
aggregate,
they
could
reasonably
be
expected
to
influence
thè
economie decisions
of
users
taken
on
thè
basis
of
thè
financial
statements.
As
part
of
our
audit
conducted
in
accordance
with
International
Standards
on
Auditing
(ISA
Italia),
we
exercised
our
professional
judgement
and
maintained
professional
scepticism
throughout
thè
audit.
Furthermore:
•
we
identified
and
assessed
thè
risks
of
material
misstatement
of
thè
financial
statements,
whether
due
to
fraud
or
error;
we
designed
and
performed
audit
procedures
responsive
to
those
risks;
we
obtained
audit
evidence
that
is
sufficient
and
appropriate
to
provide
a
basis
for
our
opinion.
The
risk
of
not
detecting
a
material
misstatement
resulting
from
fraud
is
higher
than
for
one
resulting
from
error,
as
fraud
may
involve
collusion,
forgery,
intentional
omissions,
misrepresentations,
or
thè
override
of
internai
control;
•
we
obtained
an
understanding
of
internai
control
relevant
to
thè
audit
in
order
to
design
audit
procedures
that
are
appropriate
in
thè
circumstances,
but
not
for
thè
purpose
of
expressing
an
opinion
on
thè
effectiveness
of
thè
Company
’
s
internai
control;
•
we
evaluated
thè
appropriateness
of
accounting
policies
used
and
thè
reasonableness
of
accounting
estimates
and
related
disclosures
made
by
thè
directors;
•
we
concluded
on
thè
appropriateness
of
thè
directors
’
use
of
thè
going
concern
basis
of
accounting
and,
based
on
thè
audit
evidence
obtained,
whether
a
material
uncertainty
exists
related
to
events
or
conditions
that
may
cast
significant
doubt
on
thè
Company
’
s
ability
to
continue
as
a
going
concern.
If
we
conclude
that
a
material
uncertainty
exists,
we
are
required
to
draw
attention
in
our
auditor
’
s
report
to
thè
related
disclosures
in
thè
financial
statements
or,
if
such
disclosures
are
inadequate,
to
modify
our
opinion.
Our
conclusions
are
based
on
thè
audit
evidence
obtained
up
to
thè
date
of
our
auditor
’
s
report.
However,
future
events
or
conditions
may
cause
thè
Company
to
cease
to
continue
as
a
going
concern;
•
we
evaluated
thè
overall
presentation,
structure
and
content
of
thè
financial
statements,
including
thè
disclosures,
and
whether
thè
financial
statements
represent
thè
underlying
transactions
and
events
in
a
manner
that
achieves
fair
presentation.
We
communicated
with
those
charged
with
governance,
identified
at
an
appropriate
level
as
required
by
ISA
Italia,
regarding,
among
other
matters,
thè
planned
scope
and
timing
of
thè
audit
and
significant
audit
findings,
including
any
significant
deficiencies
in
internai
control
that
we
identified
during
our
audit.
We
also
provided
those
charged
with
governance
with
a
statement
that
we
complied
with
thè
regulations
and
standards
on
ethics
and
independence
applicable
under
Italian
law
and
communicated
with
them
all
relationships
and
other
matters
that
may
reasonably
be
thought
to
bear
on
our
independence,
and
where
applicable,
actions
taken
to
eliminate
thè
related
risks,
or
safeguards
applied.
4
of
6
JL
pwc
From
thè
matters
communicated
with
those
charged
with
governance,
we
determined
those
matters
that
were
of
most
significance in
thè
audit
of
thè
financial
statements
of
thè
current
period
and
are
therefore
thè
key
audit
matters.
We
described
these
matters
in
our
auditor
’
s
report.
Additional
Disclosures
required
by
Artide
io
ofRegulation
(EU)
No.
537/2014
On
27
Aprii
2023,
thè
shareholders
of
Safilo
Group
SpA
in
generai
meeting
engaged
us
to
perform
thè statutory
audit
of
thè
Company
’
s
and
Consolidated
financial
statements
for
thè
years
ending
31
December
2023
to
31
December
2031.
We
declare
that
we
did
not
provide
any
prohibited
non-audit
Services
referred
to
in
article
5,
paragraph
1,
of
Regulation
(EU)
No.
537/2014
and
that
we
remained
independent
of
thè
Company
in
conducting
thè
statutory
audit.
We
confirm
that
thè
opinion
on
thè
financial
statements
expressed
in
this
report
is
consistent
with
thè
additional
report
to
thè
board
of
statutory
auditors,
in
its
capacity
as
audit
committee,
prepared
pursuant
to
article
11
of
thè
aforementioned
Regulation.
Report
on
Compliance
with
other
Laws
and
Regulations
Opinion
on
compliance
ivith
thè
provisions
of
Commission
Delegated
Regulation
(EU)
No.
2019/815
The
directors
of
Safilo
Group
SpA
are
responsible
for
thè
application
of
thè
provisions
of
Commission
Delegated
Regulation
(EU)
No.
2019/815
concerning
regulatory
technical
standards
on
thè
specification
of
a
single
electronic
reporting
format
(ESEF
-
European
Single
Electronic
Format)
(hereinafter,
thè
“
Commission
Delegated
Regulation
”
)
to
thè
financial
statements
as
of
31
December
2023,
to
he
included
in
thè
annual
report.
We
bave
performed
thè
procedures
specified
in
auditing
standard
(SA
Italia)
No.
700B
in
order
to
express
an
opinion
on
thè
compliance
of
thè
financial
statements
with
thè
provisions
of
thè
Commission
Delegated
Regulation.
In
our
opinion,
thè
financial
statements
as
of
31
December
2023
bave
been
prepared
in
XHTML
format
in
compliance
with
thè
provisions
of
thè
Commission
Delegated
Regulation.
5
°f
6
Opinion
in
accordance
with
Artide
14,
paragraph
2,
letter
e),
of
Legislative
Decree
No.
39/10
and
Artide
123-bis,
paragraph
4,
of
Legislative
Decree
No.
58/98
The
directors
of
Safilo
Group
SpA
are
responsible
for
preparing
a
report
on
operations
and
a
report
on
thè
corporate
governance
and
ownership
structure
of
Safilo
Group
SpA
as
of
31
December
2023,
including
their
consistency
with
thè
relevant
financial
statements
and
their
compliance
with
thè
law.
We
bave
performed
thè
procedures
required
under
auditing
standard
(SA
Italia)
No.
720B
in
order
to
express
an
opinion
on
thè
consistency
of
thè
report
on
operations
and
of
thè
specific
information
included
in
thè
report
on
corporate
governance
and
ownership
structure
referred
to
in
article
123-bis,
paragraph
4,
of
Legislative
Decree
No.
58/98,
with
thè
financial
statements
of
Safilo
Group
SpA
as
of
31
December
2023
and
on
their
compliance
with
thè
law,
as
well
as
to
issue
a
statement
on
material
misstatements,
if
any.
In
our
opinion,
thè
report
on
operations
and
thè
specific
information
included
in
thè
report
on
corporate
governance
and
ownership
structure
mentioned
above
are
consistent
with
thè
financial
statements
of
Safilo
Group
SpA
as
of
31
December
2023
and
are
prepared
in
compliance
with
thè
law.
With
reference
to
thè
statement
referred
to
in
article
14,
paragraph
2,
letter
e),
of
Legislative
Decree
No.
39/10,
issued
on
thè
basis
of
our
knowledge
and
understanding
of
thè
Company
and
its
environment
obtained
in
thè
course
of
thè
audit,
we
bave
nothing
to
report.
Padua,
22
March
2024
PricewaterhouseCoopers
SpA
Signed
by
Filippo
Zagagnin
(Partner)
This
independent
auditor
’
s
report
has
been
translated
into
thè
English
language
solelyfor
thè
convenience
ofinternational
readers.
Accordingly,
only
thè
originai
text
in
Italian
language
is
authoritative.
6
of
6
Statutory Financial Statements of Safilo Group S.p.A.
_____________________________________________________________________ 215
SAFILO GROUP S.p.A.
Registered Office:
Settima Strada, 15 – 35129 Padua – Italy
Headquarters:
Settima Strada, 15 – 35129 Padua – Italy
Corporate Website:
www.safilogroup.com
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