ANNUAL REPORT 2022
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 2022
Board of Directors, Committees and Auditors
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Chief Executive Officer’s letter
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Summary of key consolidated performance indicators
26
Report on operations
Group economic performance
29
Condensed balance sheet
35
Financial situation
38
Main critical risk factors for the Group
40
Human resources and environment
46
Safilo on the stock exchange and investor relations
50
Corporate Governance
53
Other information
68
Reconciliation of the parent company's net profit and
69
shareholders' equity with the consolidated balances
Significant events after year-end
70
Financial statements and Notes to the consolidated financial statements
Consolidated balance sheet
72
Consolidated income statement
74
Consolidated statement of comprehensive income
75
Consolidated statement of cash flows
76
Consolidated statement of changes in equity
77
General information
78
Summary of accounting principles adopted
78
Risk management
97
Notes to the consolidated balance sheet
106
Notes to the consolidated income statement
131
Transactions with related parties
137
Contingent liabilities
140
Commitments
140
Subsequent events
141
Significant non-recurring events and transactions
141
Transactions resulting from unusual and/or abnormal operations
141
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
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SAFILO GROUP S.p.A. – DRAFT STATUTORY FINANCIAL STATEMENTS AT 31 DECEMBER 2022
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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 and network of
qualified manufacturing partners, to planning, programming and purchasing,
quality control, marketing and communications, Safilo ensures that every
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
strong brands in all relevant market segments, its excellence in design,
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 when Guglielmo Tabacchi assumed control over the
company “Società Azionaria Fabbrica Italiana Lavorazione Occhiali” which
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
Maria di Sala (Venice) was inaugurated and the production of acetate and
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 distributor of the Group’s
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
markets with the final aim of directly controlling distribution in the main
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
opening subsidiaries in the United Kingdom, Greece, Austria, Portugal and
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.
In 1996 Safilo acquired a business unit of Carrera GmbH, a specialised
manufacturer of sports eyewear. The acquisition in the same year of the
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
takeover bid was completed, Safilo S.p.A. was delisted in December 2001,
almost 14 years after it was first listed in 1987 and then was object of a
leveraged buy out.
Consolidated Financial Statements Safilo Group S.p.A.
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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 network 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.
Consolidated Financial Statements Safilo Group S.p.A.
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Marketing actions are
defined at global
level on the basis of
medium-long term
plans
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
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
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 safilogroup.com, its social media
Consolidated Financial Statements Safilo Group S.p.A.
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platforms, internal communication, as well as media relation plans for effective
press coverage both on and offline.
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
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.
Safilo’s distribution network is geographically organised in regions, which
respectively cover 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 established with local
distributors.
Asia - Pacific
. The APAC business region manages 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
covering the USA and Canada, headquartered in New Jersey,
USA. Marketing and distribution in the USA is implemented through three 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.
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
Licensing agreements
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, Jimmy Choo, Isabel Marant,
Missoni, PORTS, Moschino – to Lifestyle – with Carrera, Chiara Ferragni,
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 and rag&bone –
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 2021 and 2022 the Group added new strategic licensing agreements and
confirmed key partnerships with brands already in portfolio. In 2021 Safilo
announced new licensing agreements with Dsqaured2, Carolina Herrera, and
Chiara Ferragni while in 2022 announced the renewal of the rag & bone five-year
licensing agreement for men’s and women’s sunglasses and optical frames.
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.
Consolidated Financial Statements Safilo Group S.p.A.
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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
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
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.
**
Consolidated Financial Statements Safilo Group S.p.A.
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Carolina Herrera.
Carolina Herrera is well known in the world of fashion
for luxury and sophistication founded on elegance and modernity. Since
starting 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.
Chiara Ferragni.
the brand Chiara Ferragni was launched in 2013 as a
fashion yet hip shoe brand, from an idea of Chiara Ferragni, Muse, Creative
Director and CEO of the brand. In few seasons the brand evolved towards
a complete total look featuring aside from shoes, garments and
accessories adorned with a renowned eye logo. In 2016 the brand moved
its first ste ps towards a global expansion, launching pop-up stores such
as: Le Bon Marchè in Paris, LuisaViaRoma in Florence, Apropos in Cologne,
Breeze Center in Taiwan, Selfridges in London. Moreover, the brand
empowered its distribution from July 2017 with the opening of its own
flagship stores in the heart of the most fashionable cities: Milan, Paris,
Shanghai and Hong Kong. Chiara Ferragni is a brand of sharing, happiness,
positive values and good vibes, both in the real and digital universe. Chiara
Ferragni women are international, dynamic, cool, modern, and strong.
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”.
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,
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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.
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.
Jimmy Choo
. Jimmy Choo is a leading global luxury brand with an
empowered sense of glamour and a playfully daring spirit. Known for its
confident, fashion-forward style and exceptional craftsmanship, Jimmy
Choo has become a pioneer in the art of celebrity dressing and red-carpet
style. Women’s shoes remain the core of the product offer, alongside
handbags, small leather goods, scarves, sunglasses, eyewear, belts,
fragrance and men’s shoes. CEO Hannah Colman and Creative Director
Sandra Choi together share a vision to create one of the world’s most
treasured luxury brands. Jimmy Choo has a global store network
encompassing more than 200 stores and is present in the most prestigious
department and specialty stores worldwide. Jimmy Choo is part of the
Capri Holdings Limited global fashion luxury group publicly listed on the
New York Stock Exchange under the ticker CPRI.
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,
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
18
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 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
Consolidated Financial Statements Safilo Group S.p.A.
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19
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 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
Consolidated Financial Statements Safilo Group S.p.A.
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20
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.
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 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.
_________________________________________________________________________
21
REPORT ON OPERATIONS
AND
CONSOLIDATED FINANCIAL STATEMENTS
AS OF 31 DECEMBER 2022
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
22
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
Carmen Pezzuto
Standing Statutory Auditor
Roberto Padova
Standing Statutory Auditor
Bettina Solimando
Alternate Statutory Auditor
Marzia Barbara Reginato
Alternate Statutory Auditor
Marco Prandin
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
Fabio Roppoli
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
Independent Auditors
Deloitte & Touche S.p.A.
Consolidated Financial Statements Safilo Group S.p.A.
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23
(1) Appointed by the Shareholders' Meeting held on April 29, 2021.
(2) Appointed by the Shareholders' Meeting held on April 28, 2020.
(3) Appointed by the Board of Directors' Meeting held on April 29, 2021.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
24
CHIEF EXECUTIVE OFFICER’S LETTER
Dear Shareholders,
starting from 2019, Safilo embarked on an ambitious strategic turnaround journey to re-establish the
Group as a healthy and competitive player in the attractive eyewear sector. We are proud of the effective
progress made so far by Safilo, notwithstanding challenging years of global health and economic crises
which have required us to face reality with great pragmatism, often making difficult choices.
We look to 2022 as the year in which we completed our first, fundamental turning point, fully overcoming
important portfolio challenges thanks to a particularly strong organic growth, especially of our main home
brands, the acquisition of two American brands in 2020, which have also allowed us to strengthen our
digital business and capabilities at a crucial time in the market, and thanks to the entry of new license
partnerships.
The strong top line recovery recorded in the last two years has seen us close 2022 with a business growth
of 4.2% at constant exchange rates compared to 2021 and 12% compared to 2019. Sales performance
was even stronger at the organic business level – net of the effects of new and exiting brands - equal to
a growth of 7.7% versus the year before and to an impressive almost +22% compared to the pre-
pandemic year.
In 2022 our revenues reached 1,076.7 million euros, exceeding the goal of our previous Plan to return
the Group to around one billion sales by 2024, and allowing us to improve margins more rapidly.
Our gross margin significantly increased in 2022, reaching 55.5% of sales from 51.7% in 2021 and 50.8%
in 2019. A very meaningful improvement for us, to which the early completion of the cost of goods sold
saving plan gave a great contribution. Together with the overheads saving program, already concluded
in 2021, the Group thus achieved its 45 million euros cost reduction program by 2022, two years ahead
of plan.
All this allowed us to reach an adjusted EBITDA of 101.2 million euros, up 24.2% compared to 2021 and
54% compared to 2019, recovering a margin on sales of 9.4%, also in this case reaching the target range
we had set ourselves for 2024.
Last year, our operating performance improved despite the high inflationary context - which we managed
to counter through effective pricing strategies and a richer sales mix - and notwithstanding the significant
acceleration of investments to support the growth of our brands, modernization of our business
intelligence processes, and digital transformation projects.
Finally, we closed the year with an adjusted net profit of 58.3 million euros, also thanks to a lighter
financial structure, which benefited from the significant debt reduction following the capital increase that
we successfully concluded in November 2021, while in September 2022, we refinanced the Group debt,
extending its duration and providing us with ample financial resources to support our growth in the years
to come.
Thinking now ahead, while we maintain a cautious approach to the current year, which began in the
wake of concerns regarding consumption trends in an uncertain and potentially volatile macroeconomic
environment, we are, on the other hand, confident of the Group’s medium-term growth prospects. A new
chapter in our story has begun, a new phase of development that will continue to leverage the multiple
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
25
drivers underpinning the long-term growth of the eyewear sector, and build on the main strategic choices
we initiated 4 years ago.
Our medium-term ambitions therefore remain focused on our strong brand portfolio to effectively reach
a broad audience of target consumers, powered by the sustained growth of our home brands, to be
achieved organically but also via new acquisitions, and complemented by a diversified set of licensed
brands.
It will be essential to continue to maintain a balanced business, aiming for a home brands portfolio that
by 2027 accounts for more than 50% of our revenues and that decisively shapes the development of our
geographical and distribution channel mix. For this reason, in the coming years, we expect more
significant growth in North America and emerging markets, just as we expect our business to grow more
in the sports channel dedicated to outdoor products, and in all the online channels that we have
successfully developed in recent years, from B2C to revenue through internet pure players, to our
innovative B2B platforms which will continue to put our Customer First.
Our portfolio strategies will keep leveraging two main enablers of growth. On the one hand, the 360°
digital transformation, which we accelerated already last year to equip the company with the latest
technologies in terms of business intelligence and data analytics, and which will see us further investing
in particular in the coming two years. On the other hand, our growing commitment to developing a
sustainable business.
Also on this front, 2022 represented a year of important results, thanks to a reduction of around 46% in
scope 1 and 2 CO2 emissions compared to 2021 and of around 57% compared to 2019, and new
investments in photovoltaics and renewable energy. Starting from these achievements, today we want
to set our medium-long term sustainability goals and objectives.
Angelo Trocchia
Chief Executive Officer
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
26
SUMMARY OF KEY CONSOLIDATED PERFORMANCE INDICATORS
Economic data (Euro million)
2022
%
2021
%
Net sales
1,076.7
100.0
969.6
100.0
Cost of sales
(479.3)
(44.5)
(467.8)
(48.3)
Gross profit
597.4
55.5
501.8
51.7
Ebitda
96.8
9.0
79.3
8.2
Ebitda pre non-recurring items
101.2
9.4
81.5
8.4
Operating profit
48.5
4.5
26.1
2.7
Operating profit pre non-recurring items
53.5
5.0
32.9
3.4
Group profit before taxes
64.1
6.0
34.8
3.6
Profit attributable to the Group
54.2
5.0
21.3
2.2
Profit attributable to the Group pre non-recurring items
58.3
5.4
27.4
2.8
Economic data (Euro million)
Fourth
quarter 2022
%
Fourth
quarter 2021
%
Net sales
245.4
100.0
232.2
100.0
Gross profit
139.1
56.7
120.9
52.0
Ebitda
13.3
5.4
10.9
4.7
Ebitda pre non-recurring items
15.9
6.5
12.7
5.5
Balance sheet data (Euro million)
December 31,
2022
%
December 31,
2021
%
Total assets
960.3
100.0
937.8
100.0
Total non-current assets
361.6
37.7
373.6
39.8
Net invested capital
552.3
57.5
460.0
49.1
Net working capital
292.3
30.4
214.9
22.9
Net financial position
(113.4)
(11.8)
(94.0)
(10.0)
Net financial position pre IFRS 16
(69.6)
(7.3)
(52.8)
(5.6)
Group Shareholders' equity
409.9
42.7
326.7
34.8
Financial data (Euro million)
2022
2021
Cash flow from operating activities
9.2
17.3
Cash flow from investing activities
(15.7)
(9.8)
Cash flow from financing activities
(16.8)
2.1
Closing net financial indebtedness (short-term)
77.7
99.0
Free cash flow
(16.5)
(2.7)
Capital expenditure
16.0
20.1
Earnings/(Losses) per share (in Euro)
2022
2021
Earnings per share - basic
0.131
0.071
Earnings per share - diluted
0.130
0.070
Group Shareholders' equity per share
0.991
0.790
Group personnel
December 31,
2022
December 31,
2021
Punctual at period end
4,442
4,545
Average
4,435
4,818
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
27
Share and market data (in Euro)
December 31,
2022
December 31,
2021
Share price at the end of the financial year
1.52
1.58
Maximum share price of the financial year
1.66
1.79
Minimum share price of the financial year
1.14
0.70
No. shares in share capital at 31 December
413,687,781
413,555,769
Stock Market value at the end of the financial year
629,632,803
653,418,115
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 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;
• in 2021, the adjusted economic results excluded non-recurring costs for Euro 23.8 million
(Euro 10.9 million at the gross profit level, and Euro 19.2 million at the EBITDA level),
mainly related to the closure of the Ormož production plant in Slovenia, and also a non-
recurring income of Euro 17 million due to the release, booked in the second quarter of
2021, of a provision for risks and charges in relation to an investigation by the French
Competition Authority. The release was a result of the positive outcome, without sanctions,
of this investigation. In fourth quarter 2021, the adjusted EBITDA excluded non-recurring
costs for Euro 1.8 million (Euro 0.7 million at the gross profit level).
The table below summarizes the reconciliation between the economic indicators and their adjusted
value pre-non-recurring items:
2022
2021
(Euro million)
Ebitda
Operating
profit
Profit
attributable
to the
Group
Ebitda
Operating
profit
Profit
attributable
to the
Group
Economic indicators
96.8
48.5
54.2
79.3
26.1
21.3
Restructuring costs and other non
recurring costs
4.4
5.0
5.0
19.2
23.8
23.8
Income for release provision on
France Antitrust litigation
-
-
-
(17.0)
(17.0)
(17.0)
Tax effect on non recurring items
(0.9)
(0.6)
Economic indicators pre non
recurring items
101.2
53.5
58.3
81.5
32.9
27.4
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
28
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.
_________________________________________________________________________
29
REPORT ON OPERATIONS
GROUP ECONOMIC PERFORMANCE
Consolidated income statement
2022
2021
Change
(Euro million)
%
%
%
Net sales
1,076.7
100.0
969.6
100.0
11.1%
Cost of sales
(479.3)
(44.5)
(467.8)
(48.3)
-2.5%
Gross profit
597.4
55.5
501.8
51.7
19.1%
Selling and marketing expenses
(420.5)
(39.1)
(363.0)
(37.4)
-15.8%
General and administrative expenses
(128.4)
(11.9)
(119.6)
(12.3)
-7.4%
Other operating income/(expenses)
(0.1)
(0.0)
6.9
0.7
-101.1%
Operating profit
48.5
4.5
26.1
2.7
85.8%
Gains/(losses) on liabilities for options on non-controlling
interests
31.2
2.9
32.2
3.3
-3.3%
Financial charges, net
(15.5)
(1.4)
(23.5)
(2.4)
34.0%
Profit before taxation
64.1
6.0
34.8
3.6
84.2%
Income taxes
(11.8)
(1.1)
(14.8)
(1.5)
20.3%
Net profit
52.3
4.9
20.0
2.1
161.4%
Net profit/(loss) attributable to minority interests
(1.8)
(0.2)
(1.2)
(0.1)
-45.3%
Net profit attributable to the Group
54.2
5.0
21.3
2.2
154.6%
EBITDA
96.8
9.0
79.3
8.2
22.1%
DEPRECIATION & AMORTIZATION
48.4
53.2
NON RECURRING ITEMS ON EBITDA
(4.4)
(2.2)
Economic indicators pre non-recurring items
2022
%
2021
%
Change
Gross Profit pre non-recurring items
597.6
55.5
512.6
52.9
16.6%
EBIT pre non-recurring items
53.5
5.0
32.9
3.4
62.8%
EBITDA pre non-recurring items
101.2
9.4
81.5
8.4
24.2%
Net profit attributable to the Group pre non-
recurring items
58.3
5.4
27.4
2.8
112.6%
In 2022, the Group recorded a significant improvement of all the main economic
metrics, both thanks to the growth in revenues driven by an increase in volumes
and the positive dynamics in terms of price/mix, and thanks to the completion,
during the year, of the structural cost of goods sold savings plan. These levers
allowed Safilo to effectively counter the inflationary pressures that followed one
another during the year, significantly increasing both transport costs and energy
expenses. 2022 also recorded stronger marketing investments to support the
growth of home brands, as well as an increase in software-as-a-service investments
dedicated to the Group's technological and digital development.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
30
In 2022, gross profit reached Euro 597.4 million, posting a growth of 19.1%
compared to 2021, and bringing the margin on sales to 55.5%, an improvement of
380 basis points compared to the margin of 51.7% recorded in 2022 (up 16.6%
and 260 basis points respectively compared to the adjusted gross profit and margin
in 2021).
In 2022, selling, general and administrative expenses increased by 13.7% compared
to 2021, mainly due to the aforementioned increases in marketing investments and
those related to software-as-a-service projects, accounted in the income statement
under EDP costs, according to the 2021 IFRIC agenda. The latter, in particular,
increased from Euro 3.4 million in 2021 to Euro 9.7 million in 2022.
Adjusted EBITDA amounted to Euro 101.2 million, equal to a 9.4% margin on
sales (10.3% ex IFRIC SaaS impact). Adjusted EBITDA was up 24.2% compared to
the Euro 81.5 million recorded in 2021, while the margin improved by 100 basis
points compared to the 8.4% of the previous year. Foreign exchange impacts, while
not material at EBITDA level in absolute amounts, diluted EBITDA margins by
approximately 80 basis points.
Adjusted EBIT was equal to Euro 53.5 million, up 62.8% compared to the adjusted
EBIT of Euro 32.9 million recorded in 2021, while the adjusted EBIT margin grew
by 160 basis points, from 3.4% to 5.0%.
Below the operating result, the main components which contributed to the Group's
net result were:
- a positive accounting effect equal to Euro 31.2 million (Euro 32.2 million in 2021)
as a result of the reduced liability for put & call options on non-controlling interests
due to the revision of the related financial plans and to the increase of Safilo’s
controlling stake in Privé Revaux from 64.2% to 82.8%;
- net financial charges of Euro 15.5 million, down 34% compared to the Euro 23.5
million recorded in 2021, mainly thanks to the repayment of the Shareholder Loan
following the capital increase completed at the end of 2021.
In 2022, the adjusted Group net profit was equal to Euro 58.3 million compared
to Euro 27.4 million recorded in 2021. The adjusted net margin moved from 2.8%
to 5.4% of sales.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
31
Consolidated income statement
Fourth
quarter
2022
Fourth
quarter
2021
Change
(Euro million)
%
%
%
Net sales
245.4
100.0
232.2
100.0
5.7%
Gross profit
139.1
56.7
120.9
52.0
15.1%
EBITDA
13.3
5.4
10.9
4.7
21.9%
Economic indicators pre non-recurring items
Fourth
quarter
2022
%
Fourth
quarter
2021
%
Change
%
EBITDA pre non-recurring items
15.9
6.5
12.7
5.5
25.3%
In fourth quarter 2022, the economic performance of the Group was
characterized by a significant improvement in the gross margin, mainly due to a
richer sales mix by distribution channel, while the more contained performance
of sales in the American market reduced the operating leverage to support the
growth of investments in marketing, IT and digital transformation projects, which
Safilo continued to pursue also in the last quarter of the year.
In fourth quarter 2022, gross profit stood at Euro 139.1 million, up 15.1%
compared to fourth quarter 2021, while the gross margin grew by 470 basis
points, from 52.0% to 56.7% of sales (up 14.6% and 440 basis points
respectively, versus fourth quarter 2021 adjusted gross profit and margin).
In fourth quarter 2022, the adjusted EBITDA amounted to Euro 15.9 million,
up 25.3% compared to fourth quarter 2021, while the adjusted EBITDA margin,
equal to 6.5% of sales, increased by 100 basis points compared to the 5.5%
margin posted in fourth quarter 2021.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
32
Net sales by geographical area
Full year
(Euro million)
2022
%
2021
%
Change
at
current
forex %
Change at
constant
forex %
Europe
424,9
39,5
378,5
39,0
12,3%
12,0%
North America
497,7
46,2
466,2
48,1
6,8%
-4,7%
Asia Pacific
57,7
5,4
52,6
5,4
9,8%
3,4%
Rest of the world
96,4
8,9
72,4
7,5
33,1%
21,1%
Total
1.076,7
100,0
969,6
100,0
11,1%
4,2%
In 2022, Safilo's net sales amounted to Euro 1,076.7 million, up 11.1% at
current exchange rates and 4.2% at constant exchange rates compared to
Euro 969.6 million recorded in 2021.
In the year, organic
1
sales grew by +7.7% at constant exchange rates. Own
brands represented an important driving force behind the Group’s overall
performance, in particular Smith, which with another strong increase in
sales confirmed its position as one of the leading brands in the rapidly
growing segment and distribution channel of outdoor eyewear and sports
products. Carrera and Polaroid also posted yet another year of double-digit
growth, broad based by distribution channel and product category, with
Carrera far exceeding pre-pandemic levels. At the end of the year, the sales
of own brands accounted for around 42% of the Group’s business.
Safilo’s licensed business also delivered very solid growth in the year, thanks
to the positive development achieved by the eyewear collections of its
leading licensed brands, and to the inclusion of new licenses in the portfolio
which effectively contributed to offset the sales recorded in 2021 with the
discontinued business.
In terms of the main product categories, 2022 confirmed the good recovery
of the sunglass business, the equally good resilience of prescription frames
sales, growing respectively by 9.0% and 2.0% at an organic level, and the
further acceleration of Smith’s snow goggles and snow and bike helmets,
which led the annual growth of the so called ‘Other’ product category to a
+22.0%.
During the year, Safilo's online sales, consisting of the direct to consumer
(D2C) business and sales made through internet pure players (IPPs),
accounted for 15% of the Group's business, up approximately 4% compared
to the previous year.
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
By geographical area, Europe remained the key growth driver in 2022, with
the main markets of the area and the surging business in Turkey and
Poland, contributing to the upside in revenues of 12.3% at current exchange
rates, +12.0% at constant exchange rates and +16.1% at the organic sales
level.
During the year, the North American market benefited from the
strengthening of the dollar against the euro, closing up 6.8% at current
exchange rates. The performance at constant exchange rates, in total down
by 4.7%, was instead flattish versus 2021 at the organic sales level (-0.3%),
reflecting a challenging basis of comparison, especially in the second half of
the year.
Safilo reported very positive sales trends also in the Rest of the World,
composed of the business in the IMEA (India, Middle East and Africa) and
Latin American countries, as well as in Asia and Pacific, with the two areas
respectively up 33.1% and 9.8% at current exchange rates, +21.1% and
+3.4% at constant exchange rates, and +17.0% and +13.1% at the organic
sales level.
Fourth quarter
(Euro million)
2022
%
2021
%
Change at
current
forex %
Change at
constant
forex %
Europe
92,2
37,6
87,4
37,6
5,5%
5,1%
North America
114,3
46,6
111,0
47,8
3,0%
-7,5%
Asia Pacific
16,4
6,7
15,4
6,6
6,5%
3,3%
Rest of the world
22,5
9,2
18,4
7,9
22,1%
10,5%
Total
245,4
100,0
232,2
100,0
5,7%
-0,6%
In fourth quarter 2022, Safilo's net sales amounted to Euro 245.4 million, up
5.7% at current exchange rates and substantially in line with the business
recorded in fourth quarter 2021 at constant exchange rates (-0.6% reported
and +0.7% at the organic sales level). The quarter confirmed the strength of
the Group’s business in Europe, which grew by 5.5% at current exchange
rates, +5.1% at constant exchange rates and by a resilient +8.5% at the
organic sales level notwithstanding the significant and expected contraction of
the revenues generated through the GrandVision chain.
In North America, total sales were up 3.0% at current exchange rates and
down 7.5% at constant exchange rates. At the organic level, the business
softened by 4.7% mainly due to the tough comps base with the +19.7%
recorded in fourth quarter 2021 vs 2019, and a softer US wholesale demand
in the entry and mid-tier price points, while the premium and upper-end
segments continued to hold up well. On the other hand, Smith posted a
double-digit growth in the quarter, recovering the large part of the logistics
delays impacting deliveries in the US sport shops channel in third quarter, and
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
34
Blenders also returned to growth posting a positive quarter, with its online
business back to a double-digit upside.
Fourth quarter sales trends remained supportive in Asia and Pacific, up 6.5%
at current exchange rates, +3.3% at constant exchange rates and +4.4% at
the organic level, as well as in the Rest of the World thanks to a solid business
development in IMEA, and the new brands in the portfolio well supporting
growth in the key Latin American markets (+22.1% at current exchange rates,
+10.5% at constant exchange rates and +0.4% at the organic level).
The charts below summarize the breakdown of net sales by product category
for the full year and for the fourth quarter 2022 compared to the previous
year:
40%
49%
11%
Full Year 2021
Prescription Frames Sunglasses Other
43%
41%
16%
Fourth Quarter 2021
Prescription Frames Sunglasses Other
40%
47%
13%
Full Year 2022
Prescription Frames Sunglasses Other
41%
39%
20%
Fourth Quarter 2022
Prescription Frames Sunglasses Other
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
35
CONDENSED BALANCE SHEET
The table below shows the highlights from the balance sheet as at 31 December 2022 compared with
those of 31 December 2021:
Balance sheet
December 31,
2022
December 31,
2021
Change
(Euro million)
Trade receivables
214.0
173.5
40.5
Inventory, net
259.0
234.4
24.6
Trade payables
(180.7)
(193.1)
12.4
Net working capital
292.3
214.9
77.4
Tangible assets
109.1
115.6
(6.5)
Right of Use assets
39.0
36.9
2.1
Intangible assets
133.0
141.7
(8.7)
Goodwill
34.9
32.9
2.0
Non-current assets held for sale
2.3
2.3
-
Net fixed assets
318.3
329.4
(11.1)
Employee benefit liability
(14.0)
(19.0)
5.0
Other assets / (liabilities), net
(24.8)
(17.8)
(6.9)
Put&Call liability on minority interest
(19.5)
(47.4)
27.9
NET INVESTED CAPITAL
552.3
460.0
92.3
Cash in hand and at bank
77.7
99.0
(21.3)
Short term borrowings
(30.0)
(20.0)
(10.0)
Short-term Lease liabilities
(9.1)
(8.2)
(0.8)
Long term borrowings
(117.3)
(131.8)
14.5
Long-term Lease liabilities
(34.7)
(32.9)
(1.8)
NET FINANCIAL POSITION
(113.4)
(94.0)
(19.4)
Group Shareholders' equity
(409.9)
(326.7)
(83.2)
Non-controlling interests
(29.0)
(39.3)
10.3
TOTAL SHAREHOLDERS' EQUITY
(438.9)
(366.1)
(72.8)
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
36
Net working
capital
Net working capital at 31 December 2022 amounts to Euro 292.3 million compared
with Euro 214.9 million of the previous year.
Net working capital
(Euro million)
December 31, 2022
December 31, 2021
Change
Trade receivables, net
214.0
173.5
40.5
Inventories
259.0
234.4
24.6
Trade payables
(180.7)
(193.1)
12.4
Net working capital
292.3
214.9
77.4
% on net sales
27.1%
22.2%
The key driver of the increase in the net working capital dynamic was the increase
in trade receivables which, in addition to the growth of the business, was also
impacted by around Euro 10 million of anticipated payments from customers at the
end of 2021. The working capital of the year was furthermore characterized by an
increase in inventories, and a decrease in trade payables.
Fixed assets and investments in tangible and intangible fixed assets
Net fixed assets total Euro 318.3 million at the end of 2022 compared to Euro
329.4 million in 2021.
The decrease of net fixed assets is mainly due to the ordinary depreciation of the
tangible and intangible assets.
The Group’s operating investments of the year total Euro 16 million (Euro 20.1
million in 2021). The investments were focused on the maintenance of its product
supply and logistics network and to the Group Digital Transformation systems.
The allocation of the Group operating investments breaks down as follows:
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
37
5.2
7.0
0.7
2.9
0.2
16.0
7.8
7.7
0.2
4.3
0.1
20.1
Headquarters Production
factories
Europe Americas Far East Total
investments
2022 2021
INVESTMENTS BREAKDOWN
44%
17%
39%
Production facilities
Information technology
Others
2022 - INVESTMENT BY NATURE
38%
31%
31%
Production facilities
Information technology
Others
2021 -INVESTMENT BY NATURE
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
38
FINANCIAL SITUATION
The main items of the net financial position at 31 December 2022 as well as free cash flow figures are
reported below in comparison with the previous year.
Net financial position
Net financial debt
December 31,
2022
December 31,
2021
Change
(Euro million)
Current portion of long-term borrowings
(30.0)
(20.0)
(10.0)
Short-term lease liability IFRS 16
(9.1)
(8.2)
(0.8)
Cash and cash equivalents
77.7
99.0
(21.3)
Short-term net financial position
38.7
70.8
(32.1)
Long-term borrowings
(117.3)
(131.8)
14.5
Long-term financial lease liability IFRS 16
(34.7)
(32.9)
(1.8)
Long-term net financial position
(152.1)
(164.7)
12.7
TOTAL NET FINANCIAL POSITION
(113.4)
(94.0)
(19.4)
TOTAL NET FINANCIAL POSITION PRE IFRS 16
(69.6)
(52.8)
(16.8)
As at 31 December 2022, the Group's net debt stood at Euro 113.4 million (Euro
69.6 million pre-IFRS 16, corresponding to a financial leverage, also pre IFRIC
SaaS, of 0.7x), slightly better than the position of Euro 115.4 million reported at
the end of September 2022 and slightly above Euro 94.0 million recorded at the
end of 2021.
The key components of the Group’s net debt at the end of December 2022 were
the following:
- a long-term debt position of Euro 152.1 million, made of bank loans for
Euro 117.3 million, related to the new Credit Facility signed in
September 2022, and an IFRS-16 effect for Euro 34.7 million;
- a short-term debt position of Euro 39.1 million, made of bank loans for
Euro 30.0 million, related to the new Credit Facility, and an IFRS-16
effect for Euro 9.1 million;
- a cash position of Euro 77.7 million.
The above loans are subject to operating and financial covenants which the
Group complied with as at December 2022.
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.
_________________________________________________________________________
39
Free cash flow
Free cash flow
2022
2021
Change
(Euro million)
Cash flow from operating activities
9.2
17.3
(8.1)
Cash flow from investing activities
(15.7)
(9.8)
(5.9)
Cash flow from repayment principal portion of IFRS 16 lease
liabilities
(10.0)
(10.3)
0.2
Free cash flow
(16.5)
(2.7)
(13.8)
In 2022, the Group's Free Cash Flow was negative of Euro 16.5 million compared
to the negative Free Cash Flow of Euro 2.7 million recorded in 2021.
Safilo closed the year with a positive cash flow from operating activities of Euro
9.2 million, which reflected, on the one hand, a significant positive cash flow from
operating activities before changes in working capital, equal to Euro 71.5 million,
thanks to the strong economic improvement recorded by the Group in the year,
on the other hand, a cash absorption of Euro 62.4 million due to changes in
working capital.
On this front, the Group recorded an increase in trade receivables which, in
addition to the growth of the business, was also impacted by around Euro 10
million of anticipated payments from customers at the end of 2021. The working
capital of the year was furthermore characterized by an increase in inventories,
and a decrease in trade payables due to mix effects in the overall payables base
as certain operating expenses with lower standard payment terms rebounded in
the year.
In 2022, the cash flow for investments amounted to Euro 15.7 million, for activities
related to the maintenance of the industrial plants, and to the digital
transformation systems and processes on which the Group continues to work.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
40
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;
- 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).
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
41
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 implementation 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.
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;
- 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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
42
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 governance 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 catastrophes, 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
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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
43
Impacts of Russia’s invasion of Ukraine and Macroeconomic environment
During the second half of February 2022 conflict broke out in the Ukraine. The
world continues to focus on the recent events in Ukraine 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 imposed 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, also taken in consideration that Safilo’s net sales and assets in
Russia and Ukraine accounted for respectively around 2% of the Group’s total
revenues and around 3% of the Group’s total net assets.
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
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 term
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
that as explained here follow are duly mitigated by the Group enterprise risk
management approach.
Financial risks
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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
44
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 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.
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
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
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
45
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
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.
_________________________________________________________________________
46
HUMAN RESOURCES AND THE ENVIRONMENT
Human Resources
At the end of 2022, the Group had 4,442 employees compared with 4,545 at the
end of 2021, with a decrease of 103 employees mainly driven by the reduction
of the workforce in the production factories, following the completion of the
restructuring process of the Longarone plant.
The allocation of the Group workforce by business area breaks down as follows:
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
883
2,224
1,335
4,442
867
2,395
1,283
4,545
Padua
headquarters
Production
factories
Commercial
subsidiaries
Total
December 31, 2022 December 31, 2021
19.9%
50.1%
30.1%
Padua
headquarters
Production
factories
Commercial
subsidiaries
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
47
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.
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.
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
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
48
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, the 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 2022, the stabilization of ERP SAP systems continued through constant
internalization of evolution and maintenance processes as well as the
consolidation of hardware platforms and monitoring/support processes.
The SAP roll-out projects in EMEA continued with important implementations in
Germany, Austria, Poland, France, Belgium, the Netherlands.
Furthermore, the SAP implementation had been started for Safilo USA and
Canada, though the adoption of SAP S/4 - RISE Edition. Based on this decision,
Safilo will be the first Company in EyeWear Industry running on Cloud ERP,
opening a completely new and relevant phase for modern Business application
running.
The Digital Transformation of Sales platforms through SalesForce continued
through the release of Product Increments into the B2B (You&Safilo) and CRM
areas and the progressive adoption of new Salesforce automation tool named
COMPASS in EMEA markets. Aiming to continuously improve the Service level to
the Customers, the Omnia platform had been launched, to share product
catalogs, sales support materials, etc.
New important improvements have been made to Business Intelligence and Data
Analytics platforms enriching them with cross-system Data (SAP Business
Technology Platform, SAP Business Warehouse) and by launch new data
visualization dashboards (Tableau). A very important training program had been
applied to extend the Data Analysts skills and users of Business Dashboards.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
49
In continuity with previous years the modernization of productivity tools
continued in 2022 through the dotation of new Personal Computers equipped
with modern security technologies and collaboration/communication tools. In
Padua headquarters and other sites, more powerful and high-quality connections
had been deployed to empower users productivity, both in remote and on-site
working.
In the end investments have been made to improve cybersecurity and service
level monitoring. About CyberSec most relevant enhancements are related to
Multi Factor Authentication, Vunerability&Penetration tests, Phishing Campaigns,
Personal Computers encription.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
50
SAFILO IN THE STOCK EXCHANGE AND INVESTOR RELATIONS
Safilo in the stock exchange
During 2022, the dialogue with the financial community was constantly delivered
by Safilo team, notwithstanding highly unfavourable financial markets, following
mounting inflationary pressures combined with interest rate rises, the
consequences of the war in Ukraine, as well as fears in consumption trends. The
US markets suffered particularly badly in 2022, with stocks and bonds falling
double digits (around -20% for the S&P and -12.4% for the bond market), while
in Europe, the Stoxx Europe 600 was down around 13%, the CAC40 around -
10%, the DAX around -12% and the FTSE MIB -13%.
This negative markets context was particularly severe in the first half of the year,
when Safilo's shares declined by 21.4%, broadly in line with the performance of
the main indices, while outperforming the fashion luxury sector (DB World Luxury
Index was down almost 31%).
In the second half of the year trends turned positive for equity markets, in
particular in Europe, where consumption trends continued to surprise positively,
while US markets remained substantially flattish as the Fed kept raising interest
rates, pushing back market’s expectations for potential rate cut at the turn of the
year.
Safilo’s shares had a remarkable recovery in the second semester, up 23% over
the July-December period, almost fully closing the first semester gap and ending
the last trading day of the year at Euro 1.52, down 3.3% compared to the last
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
51
trading session of the previous year, in which the stock recorded a total annual
return of +119.1%.
Following the significant improvement of its 2021 results, in 2022 Safilo’s
economic and financial performance marked another important stepchange,
which became particularly evident with the publication of the Group’s first
semester 2022 results at the beginning of August, reporting strong and better-
than-expected second quarter results and with the full year guidance provided
by the Group confirming the achievement of its Business Plan’s FY24 sales and
EBITDA targets two years in advance, despite Covid-related lockdowns and a
challenging macro environment.
2022 was a year of progress for Safilo also in terms of its commitment on
Sustainability, with a number of new partnerships signed during the year. In July,
the Group announced that it joined The Fashion Pact, a global coalition of
eminent companies in the fashion and textile industry, all committed to a
common core of key environmental goals in three areas: stopping global
warming, restoring biodiversity and protecting the oceans. In the year Safilo also
announced it continued to expand the use of sustainable materials by introducing
Eastman Tenite Renew, and then becoming the first player in the market to adopt
Tritan™ Renew Polarized lenses, all part of a broad range of sustainable materials
now offered at scale by Eastman.
Among the most meaningful events that marked Safilo’s business development
and its performance in the stock market in the second half of the year, at the
end of September, there was the announcement of the signing of a new financing
agreement for Euro 300 million and the repayment of the existing bank debt,
while the beginning of November saw the usual release of the third quarter
trading update. Following the latter event, notwithstanding another solid set of
economic results, broadly in line or slightly better than expected, Safilo’s share
price lost some ground in the very days after the release, mainly due to a more
cautionary cues by the Group with respect to the macro picture, especially in the
US. The stock’s performance recovered well during the rest of November, closing
the month up almost 8% compared to the end of October.
Safilo’s engagement activities with investors were mostly undertaken following
the release of the Group’s results and they continued to focus around the
ongoing participation to some of the main equity investment conferences -
namely the Italian Investment Conference organized in May by Unicredit and
Kepler Cheuvreux, the European Branded Goods Conference organized in
September by Mediobanca, and the Italian Champions Conference organized in
December by Equita - and ad hoc roadshows specifically organised for Safilo with
the support of the Group’s key brokers.
At the end of December 2022, Safilo's capitalization was not too far from the one
recorded at the end of 2021, at around Euro 630 million (ca Euro 650 million at
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
52
the end of 2021 from ca Euro 297 million at the end of 2020 and ca Euro 415
million at the end of 2019), with 3 brokers with a Buy recommendation on the
stock, and 5 recommending to Hold it. In 2022, the average daily volumes on
the stock were around 0.8 million.
Financial calendar
Board of Directors’ meetings for 2023:
26 January Preliminary sales for the Fourth quarter and full year 2022
9 March Draft Financial Statements for 2022
27 April Shareholders’ Meeting for the approval of the Financial Statements 2022
3 May Trading update on the First quarter 2023 KPIs
2 August Interim Report on Operations for the Second quarter and First half 2023
3 November Trading update on the Third quarter and first Nine months 2023 KPIs
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
53
CORPORATE GOVERNANCE
Corporate bodies and officers
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.
_________________________________________________________________________
54
Information on shareholders (pursuant to Article 123-bis, paragraph 1, of Italian
Consolidated Finance Act)
The following chart shows owners of Safilo Group S.p.A. ordinary shares with
shareholdings exceeding 5% of share capital as at 31 December 2022.
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 January
1, 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 strategic 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. 49.83%
(through
Multibrands Italy
B.V.)
BDL Capital
Manageent
14.99%
Rest of the
market 35.18%
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
55
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
system 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 administrative 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
appropriate management and control bodies of both concerned companies
(including, as far as the Company is concerned, the Control and Risk Committee
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
56
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 2022 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 2022 the Company does not possess own shares.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
57
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
President & CEO of Fiamm, a leading
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
of the Unilever Ice Cream business
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
B.V. in late 1996 in partnership
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
58
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 a 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 2020 he was appointed as
Chairman of ARAG S.r.l.. In December
2019 he was appointed Vice-
President of Texa S.p.A.. 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).
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.
with HAL INVESTMENTS of
Rotterdam, the Netherlands.
Cole National was acquired in
October 2004 by Luxottica, an
eyewear company based 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,
a USA based sunglass brand. 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.
_________________________________________________________________________
59
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
Malaysia, 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
Rituals B.V., 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 founder 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
2016 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 Development. 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.
_________________________________________________________________________
60
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 Process 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.
_________________________________________________________________________
61
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 digital. 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 she 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 and Hype.
Matthieu Brisset
(Non-Executive Independent Director)
Born 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
recently, 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 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.
_________________________________________________________________________
62
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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
63
Below is the composition of the Corporate Committees of Safilo Group S.p.A. as at 31 December 2022 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
Fabio Roppoli
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.
_________________________________________________________________________
64
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 28 April 2020 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 2022.
Carmen Pezzuto
(Chairman)
Roberto Padova
(Standing Statutory Auditor)
Bettina Solimando
(Standing Statutory Auditor)
Born in Sacile (UD) in 1967,
she is a graduate in Economics
and Commerce of Cà Foscari
University in Venice. She has
been registered with the
Padova Charted Accountants’
and Auditors’ Register since
1993. She is a standing
statutory auditor for industrial,
commercial and service
companies.
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.
_________________________________________________________________________
65
Corporate Governance Report
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.
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.
_________________________________________________________________________
66
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 July 17, 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.
The Audit Company
The Shareholders Assembly of 15
th
April 2014 entrusted Deloitte & Touche
S.p.A. with the mandate of auditing the separate and consolidated financial
statements from 2014 to 2022.
Given the approaching deadline, during the first months of 2022 Safilo
launched the procedure for the selection of the new Audit Company, to be
entrusted with the related role for the nine-year period 2023-2031. As a result
of the selection procedure carried out by Safilo’s internal structure and by the
Board of Statutory Auditors, the Board of Statutory Auditors, in its role as
Internal Control and Audit Committee, drafted and submitted to the Board of
Directors its reasoned proposal pursuant to Article 16, paragraph 2, of EU
Regulation No. 537/2014, so as to allow the Shareholders’ Meeting called to
approve the 2022 financial statements to resolve upon the assignment of the
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
67
related role. For further details, please refer to the illustrative report on the
agenda of the Shareholders’ Meeting to be held on 27 April 2023, drawn up
pursuant to Article 125-ter of the TUF and published within the deadline and in
the manner required by the law.
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 April 27
th
2015, the Board of Directors appointed as manager responsible
for drawing up corporate financial reporting documents (hereinafter “Financial
Reporting Manager”), the Chief Financial Officer Gerd Graehsler 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.
_________________________________________________________________________
68
OTHER INFORMATION
No atypical and/or unusual transactions, as defined by Consob Communication
6064293 dated July 28
th
, 2006, were undertaken during 2022.
In compliance with applicable legislative and regulatory requirements, the Board
of Directors of November 5
th
, 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 as of December 31, 2022.
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.
_________________________________________________________________________
69
RECONCILIATION OF THE PARENT COMPANY’S NET PROFIT AND SHAREHOLDERS’ EQUITY
WITH THE CONSOLIDATED BALANCES
(Euro million)
Equity as of
December 31,
2022
Net
profit/(loss)
of the year
2022
Equity as of
December 31,
2021
Net
profit/(loss)
of the year
2021
Balances as per Safilo Group S.p.A.'s
statutory financial statements
415.2
(11.9)
426.3
(11.2)
Contribution of consolidated companies
1,105.3
3.1
1,085.8
35.6
Elimination of the book value of
consolidated subsidiaries
(1,044.8)
44.3
(1,074.8)
-
Goodwill
33.8
-
31.8
(1.0)
Liability for options on non-controlling
interests
(19.5)
31.2
(47.4)
32.2
Elimination of dividends paid within the
Group
-
(13.4)
-
(33.5)
Elimination of intercompany gains within
the Group
(2.2)
0.2
(2.4)
0.2
Elimination of intercompany profits
included in inventory
(47.3)
(2.5)
(45.7)
(1.2)
Other consolidated entries
(1.6)
1.3
(7.6)
(1.1)
Total
438.9
52.3
366.0
20.0
Equity attributable to minority interests
29.0
(1.8)
39.3
(1.3)
Total attributable to the Group
409.9
54.2
326.7
21.3
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
70
SIGNIFICANT EVENTS AFTER THE YEAR-END
Events after the year end
On 26 January 2023, the Group communicated that the Board of Directors on 9 March 2023 will also
approve its medium-term economic and financial targets, which the management will present to the
market on the following day during a Capital Market Day to be held in Milan. With regards to the ongoing
strategic analyses and taking into consideration the evolution of the product portfolio, the economic
context, the competitive dynamics and a persistent production overcapacity, the Group, in reiterating the
importance of the Santa Maria di Sala and Bergamo production sites, of the Padua logistic centre, and
the company's creative capabilities, has initiated an exploration of alternative solutions for its Longarone
plant.
In March 2023, the Group has 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,
with Chase Fisher, minority shareholder, founder and CEO of the company.
These events have been considered a “non-adjusting subsequent event” and hence have not affected
the financial statements as at 31 December 2022.
For the Board of Directors
Chief Executive Officer
Angelo Trocchia
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
71
FINANCIAL STATEMENTS AND NOTES TO
THE CONSOLIDATED FINANCIAL STATEMENTS
as of 31 December 2022
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
72
Consolidated financial statements
Consolidated balance sheet
(Euro/000)
Notes
December
31, 2022
of which
related
parties
December
31, 2021
of which
related
parties
ASSETS
Current assets
Cash and cash equivalents
4.1
77,710
99,002
Trade receivables
4.2
214,034
328
173,548
321
Inventory
4.3
258,980
234,430
Derivative financial instruments
4.4
698
1,503
Other current assets
4.5
44,878
53,406
Total current assets
596,300
561,888
Non-current assets
Tangible assets
4.6
109,088
115,613
Right of Use assets
4.7
38,997
36,918
Intangible assets
4.8
132,993
141,659
Goodwill
4.9
34,895
32,861
Deferred tax assets
4.10
36,274
37,441
Derivative financial instruments
4.4
780
-
Other non-current assets
4.11
8,623
9,070
Total non-current assets
361,649
373,563
Non-current assets held for sale
4.6
2,320
2,320
TOTAL ASSETS
960,268
937,771
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
73
(Euro/000)
Notes
December
31, 2022
of which
related
parties
December
31, 2021
of which
related
parties
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Borrowings
4.12
30,000
20,000
Lease liabilities
4.12
9,051
8,247
Trade payables
4.13
180,701
83
193,082
23
Tax payables
4.14
22,492
17,420
Derivative financial instruments
4.4
7,656
545
Liability for options on non-controlling interests
4.18
6,195
-
Other current liabilities
4.15
47,291
-
55,562
-
Provisions
4.16
9,166
15,776
Total current liabilities
312,552
310,632
Non-current liabilities
Borrowings
4.12
117,329
-
131,798
-
Lease liabilities
4.12
34,727
32,917
Employee benefit obligations
4.17
13,975
18,995
Provisions
4.16
14,512
15,144
Deferred tax liabilities
4.10
12,863
13,031
Derivative financial instruments
4.4
-
-
Liability for options on non-controlling interests
4.18
13,349
47,406
Other non-current liabilities
4.19
2,041
1,760
Total non-current liabilities
208,796
261,052
TOTAL LIABILITIES
521,348
571,684
Shareholders' equity
Share capital
4.20
384,846
384,820
Share premium reserve
4.21
692,521
692,458
Retained earnings and other reserves
4.22
(722,392)
(771,812)
Cash flow hedge reserve
4.23
780
-
Income/(Loss) attributable to the Group
54,160
21,275
Total shareholders' equity attributable to the Group
409,915
326,741
Non-controlling interests
29,005
39,346
TOTAL SHAREHOLDERS' EQUITY
438,920
366,087
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
960,268
937,771
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
74
Consolidated income statement
(Euro/000)
Notes
2022
of which
related
parties
2021
of which
related
parties
Net sales
5.1
1,076,745
1,204
969,584
32,653
Cost of sales
5.2
(479,296)
(467,824)
Gross profit
597,450
501,760
Selling and marketing expenses
5.3
(420,488)
(74)
(363,033)
(1,350)
General and administrative expenses
5.4
(128,426)
(30)
(119,552)
(20)
Other operating income/(expenses)
5.5
(78)
6,900
Operating profit/(loss)
48,458
26,075
Gains/(losses) on liabilities for options on non-
controlling interests
5.6
31,191
32,249
Financial charges, net
5.7
(15,512)
-
(23,500)
(6,280)
Profit/(Loss) before taxation
64,136
34,824
Income taxes
5.8
(11,788)
(14,795)
Profit/(Loss) of the period
52,349
20,029
Profit/(Loss) attributable to:
Owners of the parent
54,160
21,275
Non-controlling interests
(1,811)
(1,246)
Earnings/(Losses) per share - basic (Euro)
5.9
0.131
0.071
Earnings/(Losses) per share - diluted (Euro)
5.9
0.130
0.070
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
75
Consolidated statement of comprehensive income
2022
2021
(Euro/000)
Notes
Net profit (loss) for the period (A)
52,349
20,029
Gains/(Losses) that will not be reclassified subsequently to profit or loss:
- Remeasurements of post employment benefit obligations
2,750
661
- Other gains/(losses)
-
-
Total gains/(Losses) that will not be reclassified subsequently to profit or loss:
2,750
661
Gains/(Losses) that will be reclassified subsequently to profit or loss:
- Gains/(Losses) on cash flow hedges
4.23
780
-
- Gains/(Losses) on exchange differences on translating foreign operations
4.22
17,023
30,575
Total gains/(losses) that will be reclassified subsequently to profit or loss:
17,803
30,575
Other comprehensive income/(loss), net of tax (B)
20,553
31,236
TOTAL COMPREHENSIVE INCOME/(LOSS) (A)+(B)
72,903
51,265
Attributable to:
Owners of the parent
72,918
49,346
Non-controlling interests
(16)
1,919
TOTAL COMPREHENSIVE INCOME/(LOSS)
72,903
51,265
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
76
Consolidated statement of cash flows
(Euro/000)
Notes
2022
2021
A - Opening net cash and cash equivalents (net financial
indebtedness - short term)
4.1
99,002
85,966
B - Cash flow from (for) operating activities
Net profit/(loss) for the period (including minority interests)
52,349
20,029
Depreciation and amortization
4.6 - 4.8
38,064
43,319
Right of Use depreciation IFRS 16
4.7
10,326
9,893
Non-monetary changes related to liabilities for options on non-controlling
interests
(31,191)
(32,249)
Other items
(9,067)
(23,258)
Interest expenses, net
5.7
5,912
12,052
Interest expenses on lease liabilities IFRS 16
5.7
1,862
1,548
Income tax expenses
5.8
11,788
14,795
Flow from operating activities prior to movements in working capital
80,043
46,130
(Increase) Decrease in trade receivables
(36,222)
6,886
(Increase) Decrease in inventory, net
(17,618)
(25,820)
Increase (Decrease) in trade payables
(14,842)
6,270
(Increase) Decrease in other receivables
8,467
(6,201)
Increase (Decrease) in other payables
(2,138)
(1,967)
Interest expenses paid
(4,266)
(5,314)
Interest expenses paid on lease liabilities IFRS 16
(1,862)
(1,548)
Income taxes paid
(2,405)
(1,141)
Total (B)
9,156
17,295
C - Cash flow from (for) investing activities
Investments in property, plant and equipment
(12,733)
(13,216)
Net disposals of property, plant and equipment and assets held for sale
196
10,192
(Purchase)/Disposal of subsidiary (net of cash acquired/disposed)
-
-
Purchase of intangible assets, net of disposals
(3,131)
(6,736)
Total (C)
(15,669)
(9,759)
D - Cash flow from (for) financing activities
Proceeds from borrowings
147,001
-
Repayment of borrowings
4.12
(153,000)
(119,602)
Repayment of principal portion of lease liabilities IFRS 16
(10,026)
(10,263)
Increase in share capital, net of transaction costs
89
133,057
Dividends paid
(875)
(1,121)
Total (D)
(16,811)
2,072
E - Cash flow for the period (B+C+D)
(23,324)
9,608
Translation exchange differences
2,032
3,428
Total (F)
2,032
3,428
G - Closing net cash and cash equivalents (net financial indebtedness
- short term) (A+E+F)
4.1
77,710
99,002
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
77
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, 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
(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, 2021
349,943
594,277
64,784
-
(865,752)
143,252
39,047
182,299
Profit/(Loss) for the period
-
-
-
-
21,275
21,275
(1,246)
20,029
Other comprehensive income
(loss) for the period
-
-
27,410
-
661
28,071
3,165
31,236
Total comprehensive
income (loss) for the
period
-
-
27,410
-
21,937
49,346
1,919
51,265
Increase in share capital, net
of transaction costs
34,877
98,180
-
-
-
133,057
-
133,057
Dividends distribution
-
-
-
-
-
-
(1,121)
(1,121)
Changes of non-controlling
interests of subsidiaries
acquired
-
-
-
-
478
478
(478)
-
Net increase in the Reserve
for share-based payments
-
-
-
-
647
647
-
647
Changes in other reserves
-
-
-
-
(40)
(40)
(21)
(61)
Consolidated net equity at
December 31, 2021
384,820
692,458
92,193
-
(842,730)
326,741
39,346
366,087
Consolidated Financial Statements Safilo Group S.p.A.
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78
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 Mercato Telematico Azionario (MTA) of the Italian Stock Exchange (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 2022 to 31 December 2022 and also presents comparative data related to the
financial period from 1 January 2021 to 31 December 2021.
These financial statements were approved by the Board of Directors on 9 March 2023.
The consolidated 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.
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 during the preparation of these consolidated
financial statements in a consistent manner for both financial years presented and on the basis of the going concern
assumption.
The consolidated financial statements for the year ended 31 December 2022 and 31 December 2021 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”).
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
79
The consolidated 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 2.21 “Use of estimates”.
Accounting standards, amendments and interpretations effective as of 1 January 2022
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 2021 have been applied.
Furthermore, the Group has adopted the following new standards and amendments, effective from 1 January
2022:
- on 14 May 2020, the IASB published the following amendments called: Amendments to IFRS 3 Business
Combinations, Amendments to IAS 16 Property, Plant and Equip.ment and Amendments to IAS 37
Provisions, Contingent Liabilities and Contingent Assets, Annual Improvements 2018-2020.
The Group has complied with these new amendments in preparing this report, their application had no 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 2023 that have not been early adopted by
the Group in preparing this report:
- 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. The changes
come into effect from 1 January 2023;
- 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. The changes come into effect from 1 January
2023.
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:
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
80
- 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 aims to clarify how to classify debts and other short or long-
term liabilities. The changes come into effect from 1 January 2024;
- on September 22, 2022, the IASB publish 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 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 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 model 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.
In compliance with paragraph 85 of IAS 1 some dedicated items have been introduced on the face of the
statements of the financial position and on the profit and loss 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 section “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 Profit and Loss;
- “Non-monetary changes related to liabilities for options on non-controlling interests" in the statement of
cash flow.
2.3 Consolidation method and consolidation area
The Group’s consolidated financial statements as of 31 December 2022 include the parent company, Safilo Group
S.p.A., and 46 subsidiaries accounted for on a line-by-line basis, with the parent company holding, directly or
indirectly, the majority of voting rights. During 2022 the Group’s consolidation area changed as follows:
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
81
- On 14 January 2022 David Schottenstein, Board member and CEO of Privé Goods LLC (Privé Revaux)
resigned and left the Company. Following this event and pursuant to the contractual terms of the
acquisition the Group has exercised its call option on the non-controlling interests held by David
Schottenstein increasing its controlling stake in Privé Revaux from 64.2% to 81.9% in exchange for a
nominal amount. During 2022 some other Company equity holders and employees have resigned
increasing the Group controlling stake to 82.8%;
- On 1 December 2022 the liquidation of the company Safilo Korea Ltd, owned at 51% by Safilo Far East
Ltd, has been completed and the company has been de-registered.
At 31 December 2022 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. - Rotterdam (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 Trading Shenzen Limited- Shenzen (RC) (in liquidation)
CNY
2.481.000
100,0
Safilo Eyewear (Shenzen) Company Limited - (RC)
CNY
46.546.505
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 d.o.o. Ormož - Ormož (SLO) (in liquidation)
EUR
563.767
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
8.430
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
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
82
Safilo Middle East FZE - Dubai (UAE)
AED
3.570.000
100,0
Privè Goods LLC. - Delaware (USA)
USD
19.919.335
82,8
Privè Capsules LLC - Delaware (USA)
USD
-
82,8
Blenders Eyewear LLC - Delaware (USA)
USD
1.000
70,0
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
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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
83
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
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.
Investments in other companies
Investments in other companies representing “available-for-sale financial assets” are valued at their fair value and
gains and losses arising from changes in the fair value are assigned directly to shareholders’ equity until sale. Total
gains and losses are charged to the statement of operations of the year in which the sale took place, unless an AFS
financial asset has accumulated a significant or prolonged decrease of its
fair value.
In this case, the accumulated
losses in the fair value reserve of shareholders’ equity is recognized in the statement of operations.
2.4 Segment information
Information according to business sector and geographic area is given pursuant to IFRS 8 – Operating Segments.
The criteria applied for the identification of the segments depend on how management organizes the Group and
attributes managerial responsibilities. After the divestiture of the Group’s remaining retail operations in 2019,
business sector information is provided solely for the Wholesale sector.
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
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
84
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 2022 and 31 December 2021 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.
As of
(Apprec.)
/Deprec.
Average for
(Apprec.)/Depr
ec.
Currency
Code
December 31,
2022
December 31,
2021
%
2022
2021
%
US Dollar
USD
1,0666
1,1326
-5,8%
1,0531
1,1827
-11,0%
Hong-Kong Dollar
HKD
8,3163
8,8333
-5,9%
8,2451
9,1932
-10,3%
Swiss Franc
CHF
0,9847
1,0331
-4,7%
1,0047
1,0812
-7,1%
Canadian Dollar
CAD
1,4440
1,4393
0,3%
1,3695
1,4826
-7,6%
Japanese Yen
YEN
140,6600
130,3800
7,9%
138,0274
129,8767
6,3%
British Pound
GBP
0,8869
0,8403
5,6%
0,8528
0,8596
-0,8%
Swedish Krown
SEK
11,1218
10,2503
8,5%
10,6296
10,1465
4,8%
Australian Dollar
AUD
1,5693
1,5615
0,5%
1,5167
1,5749
-3,7%
South-African
Rand
ZAR
18,0986
18,0625
0,2%
17,2086
17,4766
-1,5%
Russian Ruble
RUB
78,4308
85,3004
-8,1%
73,5002
87,1527
-15,7%
Brasilian Real
BRL
5,6386
6,3101
-10,6%
5,4399
6,3779
-14,7%
Indian Rupee
INR
88,1710
84,2292
4,7%
82,6864
87,4392
-5,4%
Singapore Dollar
SGD
1,4300
1,5279
-6,4%
1,4512
1,5891
-8,7%
Malaysian Ringgit
MYR
4,6984
4,7184
-0,4%
4,6279
4,9015
-5,6%
Chinese Renminbi
CNY
7,3582
7,1947
2,3%
7,0788
7,6282
-7,2%
Korean Won
KRW
1.344,0900
1.346,3800
-0,2%
1.358,0734
1.354,0570
0,3%
Mexican Peso
MXN
20,8560
23,1438
-9,9%
21,1869
23,9852
-11,7%
Turkish Lira
TRY
19,9649
15,2335
31,1%
17,4088
10,5124
65,6%
Dirham UAE
AED
3,9171
4,1595
-5,8%
3,8673
4,3436
-11,0%
Polish Zloty
PLN
4,6808
4,5969
1,8%
4,6861
4,5652
2,6%
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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
85
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:
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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
86
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.
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.
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Trademarks
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.
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
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 for 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) making them coincide with the Business Units,
on the basis of geographical aggregations 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.
Consolidated Financial Statements Safilo Group S.p.A.
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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.
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
Consolidated Financial Statements Safilo Group S.p.A.
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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
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.
Consolidated Financial Statements Safilo Group S.p.A.
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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.
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.
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.
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.
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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 from purchase. The items included in the net cash and cash equivalents are measured
at fair value and the relative changes are recognized in the income statement. Bank overdrafts are posted under
current liabilities.
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 4.16 “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.
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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.
2.15 Provisions for risks and charges
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.
2.16 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;
• Blenders Eyewear LLC the put and call options 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.
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 at year end on the basis
of updated business plans.
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
the Group sells its eyewear products directly to its customers through its online sales channel, mainly in the North
America market.
Consolidated Financial Statements Safilo Group S.p.A.
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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 Royalties
The Group recognises royalty income and 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.
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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 remaining pandemic-related effects and
geopolitical risks consequents to Russia’s invasion 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
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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 CGUs, 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.
If the need to reduce the value of the stock should arise following these analyses, management proceeds
with the appropriate write-downs.
Consolidated Financial Statements Safilo Group S.p.A.
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•
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, which may decrease due to the scenario described
in the note related to subsequent events.
•
(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;
• 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;
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• the fair value of stock options is calculated using the Black & Scholes model.
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.
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 2022 and
31 December 2021:
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
98
December 31, 2022
December 31, 2021
(Euro/000)
Ageing of trade receivables
Nominal
value
trade
receivables
Allowance
for bad
and
doubtful
debts
Net value
value trade
receivables
Nominal
value
trade
receivables
Allowance
for bad
and
doubtful
debts
Net value
value trade
receivables
Overdue and impaired
up to 3 months
933
(933)
-
947
(947)
-
3 to 6 months
1,001
(1,001)
-
775
(775)
-
6 to 9 months
2,327
(2,327)
-
1,587
(1,587)
-
from 9 to 12 months
424
(424)
-
1,703
(1,703)
-
from 12 to 24 months
1,522
(1,522)
-
5,858
(5,858)
-
over 24 months
4,602
(4,602)
-
4,909
(4,909)
-
Grand total
10,809
(10,809)
-
15,779
(15,779)
-
Overdue and not impaired
up to 1 month
16,789
16,789
11,207
11,207
from 1 to 3 months
6,871
6,871
8,237
8,237
3 to 6 months
4,511
4,511
6,000
6,000
6 to 9 months
2,262
2,262
1,044
1,044
from 9 to 12 months
970
970
722
722
from 12 to 24 months
2,374
(429)
1,945
518
(291)
227
over 24 months
95
(95)
-
53
(53)
-
Grand total
33,872
(524)
33,348
27,780
(344)
27,436
Neither overdue nor impaired
181,078
(392)
180,685
146,751
(639)
146,112
Grand total
225,758
(11,725)
214,033
190,309
(16,762)
173,548
At 31 December 2022 past due receivables for which no allowance for bad debts was considered, as the Group
considered them fully collectible, amounted to 31,421 thousand Euro (compared to 27,780 thousand Euro at 31
December 2021). Of these, receivables that were more than 12 months past due amounted to 2,468 thousand Euro
(compared to 571 thousand Euro at 31 December 2021) but accounted for 1.1% of the Group’s total trade
receivable compared to 0.3% 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 2022 the provision for doubtful accounts
includes a credit loss allowance of 0.9 million Euro (1.0 million Euro at 31 December 2021) 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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
99
In 2022, fluctuations in the exchange rates of the main currencies have been more relevant than in the previous
year, as they were significantly affected by the general macroeconomic context.
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 2022 net sales of around 45,815
thousand Euro (around 42,428 thousand Euro in 2021) and in a decrease or an increase of the net profit of the
Group of around 3,399 thousand Euro (around 516 thousand Euro in 2021). 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 2022 net sales of around 5,176 thousand Euro
(3,582 thousand Euro in 2021) and in a decrease or an increase of the net profit of the Group of around 1,057
thousand Euro (466 thousand Euro in 2021).
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 2022 and 31
December 2021:
(Euro/000)
December 31, 2022
December 31, 2021
USD
289,995
219,866
HKD
77,609
73,532
CNY
77,486
72,048
GBP
4,995
3,742
CAD
21,238
20,424
CHF
1,572
12,097
BRL
14,249
7,812
EUR
(59,224)
(50,212)
Other currencies
11,000
6,778
Total
438,920
366,087
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 45,286 thousand Euro
(about 37,845 thousand Euro in 2020), of which about 1,406 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.
_________________________________________________________________________
100
The table below summarizes the financial assets and liabilities of the Group per currency at 31 December 2022 and
31 December 2021:
(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
(Euro/000)
December 31, 2021
Euro
US Dollar
Other
currencies
Total
Cash in hand and at bank
38,687
37,744
22,571
99,002
Trade receivables, net
62,526
66,898
44,124
173,548
Derivative financial instruments
1,503
-
-
1,503
Other current assets
18,359
23,122
11,925
53,406
Total current financial assets
121,074
127,764
78,620
327,458
Derivative financial instruments
-
-
-
-
Other non-current assets
4,334
861
3,875
9,070
Total non-current financial assets
4,334
861
3,875
9,070
Trade payables
87,108
84,372
21,602
193,082
Short-term borrowings
20,000
-
-
20,000
Lease liabilities
2,940
3,444
1,863
8,247
Derivative financial instruments
545
-
-
545
Tax payables and other current liabilities
31,851
21,864
19,267
72,982
Total current financial liabilities
142,444
109,680
42,732
294,856
Long-term borrowings
131,798
-
-
131,798
Lease liabilities
4,245
26,635
2,037
32,917
Derivative financial instruments
-
-
-
-
Liabilities for options on non-controlling interests
-
47,406
-
47,406
Other non-current liabilities
810
684
266
1,760
Total non-current financial liabilities
136,853
74,725
2,303
213,881
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
101
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 2022 the floating interest-bearing loans of the Group’s total borrowings were hedged by interest
rate swap contracts for an amount of 80,000 thousand Euro (54% of outstanding borrowings), at the 31 December
2021 the floating interest-bearing loans were not hedged.
The table below summarizes the breakdown by maturity date of the nominal value (gross of 4,671 thousand Euro
of transaction costs) for the floating and fixed interest-bearing loans, as at 31 December 2022 and 31 December
2021:
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
December 31, 2021
Floating
Fixed
Total
(Euro/000)
within 1 year
20,000
-
20,000
between 1 and 2 years
43,000
-
43,000
between 3 and 5 years
90,000
-
90,000
beyond 5 years
-
-
-
Total
153,000
-
153,000
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
102
The following table summarizes the main characteristics of the most significant variable and fixed rate medium and
long term borrowings outstanding at 31 December 2022 and 31 December 2021:
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
December 31, 2021
Currency
Nominal
interest rate
Nominal
value
Book
value
Expiry
(Euro/000)
Term Loan Facility
Euro
Euribor
45,000
44,258
30 June 2023
SACE Term Loan Facility
Euro
Euribor
108,000
107,540
30 June 2026
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) 2022 annual financial charges, on a pre-tax basis, respectively of 231 thousand Euro and 98
thousand Euro (immaterial impact at 31 December 2021).
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, 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 bank loans
300,000
152,000
148,000
Total
317,611
152,000
165,611
December 31, 2021
Credit lines
granted
Uses
Credit lines
available
(Euro/000)
Credit lines on bank accounts and short-term bank loans
17,555
-
17,555
Credit lines on long-term loans
228,000
153,000
75,000
Total
245,555
153,000
92,555
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 150,000 thousand Euro, a Revolving Credit
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
103
Facility of 75,000 thousand Euro and a Capex Facility line of 75,000 thousand Euro, for a total amount equal to
300,000 thousand Euro (used for 152,000 thousand Euro at 31 December 2022).
The table below summarizes the financial assets and liabilities of the Group by maturity, undiscounted and inclusive
of the interest payments, at 31 December 2022 and 31 December 2021:
(Euro/000)
December 31, 2021
within 1
year
between 1
and 2
years
between 3
and 5 years
beyond 5
years
Total
Cash in hand and at bank
99,002
-
-
-
99,002
Trade receivables, net
173,548
-
-
-
173,548
Derivative financial instruments
1,503
-
-
-
1,503
Other current assets
53,406
-
-
-
53,406
Other non-current assets
-
4,163
4,159
748
9,070
Total financial assets
327,459
4,163
4,159
748
336,529
Trade payables
193,082
-
-
-
193,082
Tax payables
17,420
-
-
-
17,420
Borrowings
20,000
41,798
90,000
-
151,798
Interest payments
4,127
3,397
3,726
-
11,249
Lease liability
8,247
6,817
14,372
11,729
41,164
Derivative financial instruments
545
-
-
-
545
Other current liabilities
55,562
-
-
-
55,562
Liabilities for options on non-controlling interests
-
15,802
31,604
-
47,406
Other non-current liabilities
-
1,076
684
-
1,760
Total financial liabilities
298,983
68,889
140,386
11,729
519,986
(Euro/000)
December 31, 2022
within 1
year
between 1
and 2 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.
_________________________________________________________________________
104
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
Investments
and non-
listed
financial
assets at
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
Financial assets available for sale
-
-
-
-
-
-
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
Financial instruments
Financial instruments at fair
value through
Financial
instrument
s at
amortised
cost
Investme
nts and
non-listed
financial
assets at
cost
Current
value at
Dec. 31,
2021
Fair value
at Dec. 31,
2021
(Euro/000)
Income
Statement
Other
comprehensive
income (OCI)
ASSETS
Cash in hand and at bank
-
-
99.002
-
99.002
99.002
Trade receivables, net
-
-
173.548
-
173.548
173.548
Derivative financial instruments
1.503
-
-
-
1.503
1.503
Financial assets available for sale
-
-
-
-
-
-
Other current assets
-
-
53.406
-
53.406
53.406
Other non-current assets
-
-
9.070
-
9.070
9.070
Total assets
1.503
-
335.026
-
336.529
336.529
LIABILITIES
Borrowings
-
-
151.798
-
151.798
151.798
Lease liability
-
-
41.164
-
41.164
41.164
Derivative financial instruments
545
-
-
-
545
545
Other current liabilities
-
-
55.562
-
55.562
55.562
Liabilities for options on non-
controlling interests
47.406
-
-
-
47.406
47.406
Other non-current liabilities
-
-
1.760
-
1.760
1.760
Total liabilities
47.951
-
250.283
-
298.234
298.234
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
105
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 2022, split by
hierarchical level of the fair value.
(Euro/000)
Level 1
Level 2
Level 3
Total
Derivative financial instruments
-
1,478
-
1,478
Total assets
-
1,478
-
1,478
Derivative financial instruments
-
(7,656)
-
(7,656)
Liability for options on non-controlling interests
-
-
(19,545)
(19,545)
Total liabilities
-
(7,656)
(19,545)
(27,200)
In 2022 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.
_________________________________________________________________________
106
4. Notes to the consolidated balance sheet
4.1 Cash and cash equivalents
(Euro/000)
December 31, 2022
December 31, 2021
Cash and cash equivalents
77,710
99,002
This account totals 77,710 thousand Euro compared to 99,002 thousand Euro at 31 December 2021 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 2022, about 35% of the cash balance resided in the Italian companies, about 33% in the US
entities, 18% in the European entities, while the remaining 13% 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, 2022
December 31, 2021
Gross value trade receivables
225,758
190,309
Allowance for doubtful accounts (-)
(11,725)
(16,762)
Net value
214,034
173,548
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, 2022
Addition
Use/Release
(-)
Transl. diff.
December 31, 2022
Allowance for doubtful accounts (-)
16,762
1,550
(6,975)
388
11,725
(Euro/000)
January 1,
2021
Addition
Use/Release
(-)
Transl.
diff.
December 31,
2021
Allowance for doubtful accounts (-)
17,092
3,015
(3,365)
20
16,762
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
107
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
1,550 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 6,975 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 2022 the provision for doubtful accounts
includes a credit loss allowance of 0.9 million Euro (1.0 million Euro at 31 December 2021) 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, 2022
December 31, 2021
Raw materials
74,277
70,819
Work in progress
5,212
6,854
Finished goods
238,766
224,884
Gross inventories
318,255
302,556
Provision for obsolete inventories (-)
(59,274)
(68,127)
Total
258,980
234,430
In order to deal with obsolete or slow-moving stock, a specific provision has been allocated, calculated on the basis
of the possibility for future sale of finished goods and use of raw materials and semi-finished products. This item is
charged in the income statement in “cost of sales” (note 5.2).
The movements in the period are shown below:
(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
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
108
(Euro/000)
January 1,
2021
Posted to income
statement
Transl. diff.
December 31,
2021
Inventory gross value
284,759
4,866
12,931
302,556
Provision for obsolete inventories (-)
(87,475)
20,954
(1,606)
(68,127)
Total net
197,285
25,820
11,325
234,430
4.4 Derivative financial instruments
The following table summarizes the amounts of financial instruments:
(Euro/000)
December 31, 2022
December 31, 2021
Current assets:
- Foreign currency contracts - Fair value through P&L
698
1,503
Non-current assets:
- Interest rate swaps - cash flow hedge
780
-
Current liabilities:
- Foreign currency contracts - Fair value through P&L
(7,656)
(545)
Total Net
(6,177)
958
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 6,958 thousand Euro
(positive for 958 thousand Euro at 31 December 2021).
The following table summarizes the characteristics and fair value of foreign currency forward contracts:
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
December 31, 2021
Fair value
(Euro/000)
Maturity
Notional amount
Assets
Liabilities
Fair value hedge
within 1 year
137,511
1,503
545
Total forward contracts
137,511
1,503
545
The net market value of interest rate swap (IRS) contracts was positive for 780 thousand Euro, according to the
mark to market valuation provided by the banks and other primary financial data provider. The Group’s policies for
managing interest rate risk is designated to hedge of the exposure to variability in future interest cash flows given
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
109
this, the related hedging effect must be suspended in the cash flow reserve and recognised 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 in place as at 31 December 2022
(no contracts in place as at 31 December 2021):
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, 2022
December 31, 2021
VAT receivable
9,772
11,815
Income tax receivables
17,169
19,023
Prepayments and accrued income
9,398
11,999
Other receivables
8,539
10,569
Total
44,878
53,406
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 9,398 thousand Euro compared to 11,999 thousand Euro at 31
December 2021, and mainly relate to royalties and advertising expenses for 4,917 thousand Euro, prepaid insurance
for 546 thousand Euro and other prepaid expenses for 3,935 thousand Euro.
Other current receivables amounted to 8,539 thousand Euro, compared to 10,569 thousand Euro of 31 December
2021. The balance mainly includes deposit payments due within 12 months and other receivables related to the
ordinary business.
It is considered that the book value of the other current assets is approximately equal to their fair value.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
110
4.6 Tangible assets
The table below summarises the changes in the tangible assets:
(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)
(0)
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)
0
794
310,582
Net value
115,613
(6,771)
(200)
(0)
446
109,088
(Euro/000)
January 1,
2021
Increase
Decrease
Reclass.
Transl.
diff.
December
31, 2021
Gross value
Land and buildings
129,950
1,510
(15,753)
(124)
3,327
118,911
Plant and machinery
191,400
4,818
(23,096)
41
2,836
175,998
Equipment and other assets
151,913
6,855
(28,767)
114
6,097
136,213
Advance payments
169
33
(118)
(41)
1
43
Total
473,431
13,216
(67,734)
(10)
12,261
431,164
Accumulated depreciation
Land and buildings
62,035
5,128
(10,891)
-
1,398
57,670
Plant and machinery
159,058
7,497
(22,210)
-
1,923
146,267
Equipment and other assets
123,517
12,093
(28,682)
-
4,686
111,613
Total
344,610
24,718
(61,783)
-
8,006
315,551
Net value
128,821
(11,502)
(5,950)
(10)
4,254
115,613
Investments in tangible assets in the financial period amount to 12,733 thousand Euro (13,216 thousand Euro in
the previous year), and refer to:
- Euro 7,014 thousand in the production facilities, mainly for the purchase and production of equipment for
new models;
- Euro 2,879 thousand in the U.S. companies;
- Euro 1,994 thousand in the Italian distribution centre mainly for the upgrade of logistic equipment;
- the remaining part in the other companies of the Group.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
111
Non-current assets held for sale
As 31 December 2022 the item equal to 2,320 thousand Euro includes an industrial real estate location near the
Longarone production site, which had been downsized in 2020. It is measured at fair value determined on the basis
of an independent appraisal by a third-party.
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,
2022
Increase
Decrease
Reclass.
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
(Euro/000)
January 1,
2021
Increase
Decrease
Reclass.
Transl.
diff.
December 31,
2021
Gross value
Buildings Right of Use
48,678
3,085
(5,448)
-
3,134
49,449
Other assets Right of Use
8,377
3,212
(2,936)
-
11
8,664
Total
57,054
6,297
(8,384)
-
3,145
58,112
Accumulated depreciation
Buildings Right of Use
13,914
7,390
(5,203)
-
862
16,964
Other assets Right of Use
4,332
2,503
(2,615)
-
11
4,230
Total
18,246
9,893
(7,818)
-
873
21,194
Net value
38,808
(3,596)
(566)
-
2,272
36,918
Investments in Right of Use in the financial period amount to 10,877 thousand Euro (6,297 thousand Euro in the
previous year) related for the building to the opening of some Blenders retail store locations and 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.
_________________________________________________________________________
112
4.8 Intangible assets
The following table shows changes in intangible assets:
(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
(Euro/000)
January 1,
2021
Increase
Decrease
Reclass.
Transl.
diff.
December
31, 2021
Gross value
Software
93,614
6,224
(3,960)
9
1,417
97,304
Trademarks and licenses
141,532
242
-
-
7,159
148,933
Other intangible assets
29,367
370
(1,164)
-
2,083
30,656
Total
264,512
6,836
(5,124)
9
10,659
276,893
Accumulated amortization
Software
76,893
7,195
(3,867)
-
1,121
81,342
Trademarks and licenses
36,491
6,714
-
-
471
43,675
Other intangible assets
6,283
4,693
(1,157)
-
397
10,216
Total
119,667
18,601
(5,024)
-
1,989
135,233
Net value
144,846
(11,765)
(100)
9
8,670
141,659
Investments in intangible fixed assets made during the year amount to 3,308 thousand Euro (6,836 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.
The reduction of investments compared to previous year is mainly relate to “software” and is due to the
implementation of the latest-generation integrated information system (ERP) which is cloud-based and hence
structured as a software-as-a-service (SaaS) agreement. Safilo has therefore expensed the related amount of 9,703
thousand Euro 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.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
113
Depreciation and Amortization
Depreciation and amortization for tangible and intangible assets is allocated over the following income statement
items:
(Euro/000)
Notes
2022
2021
Cost of sales
5.2
12,536
17,396
Selling and marketing expenses
5.3
3,220
3,400
General and administrative expenses
5.4
22,308
22,523
Amortization and depreciation
38,064
43,319
Cost of sales - Right of Use depreciation
5.2
1,197
1,121
Selling and marketing expenses - Right of Use depreciation
5.3
4,813
4,401
General and administrative expenses - Right of Use depreciation
5.4
4,317
4,372
Depreciation Right of Use - IFRS 16
10,326
9,893
Total
48,390
53,212
Amortization and depreciation equal 38,064 thousand Euro (43,319 thousand Euro in the previous period). The
decrease for 5,255 thousand Euro mainly affected the “cost of sales” and is due to the reshaping of the Group’s
industrial capacity according to the restructuring plan of the Group’s manufacturing footprint. In the previous period
the item was affected by non-recurring tangible assets write-downs equal to 4,573 thousand Euro in the cost of
sales, mainly related to the closure of the Slovenian plant in Ormož at the end of June 2021 and to the termination
of activities related to the exiting licensed brands.
The item general and administrative expenses include amortization for 8,625 thousand Euro (8,698 thousand Euro
in the previous period) related to the intangible assets (mainly trademarks and distributor relationships) identified
in the Purchase Price Allocation of the two acquisitions Privé Revaux and Blenders Eyewear, executed in 2020.
Management carefully examined the recoverability of the assets identified in the Purchase Price Allocation of the
two newly acquired companies. As a result of this analysis, it was concluded that there were no specific impairment
indicators for the assets identified in the Purchase Price Allocation of the two acquisitions.
The Right of Use depreciations in 2022 are equal to 10,326 thousand Euro (9,893 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 and charged to income, costs for research and development amounting to
14,420 thousand Euro (13,924 thousand Euro in the previous year).
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 fast growing
brands, they will enable the whole Group to compete more effectively in the fast growing digital sales and
communication channels. The allocation to a single CGU is consistent with the approach adopted for the preparation
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
114
of the previous year financial statements and has been designed to appropriately reflect the Group’s strategy and
business model. The single CGU structure appropriately reflects the high level of interdependence of the functions
of the Group. Specifically 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 following table shows changes in Goodwill:
(Euro/000)
January 1,
2022
Increase
Decrease
Transl. diff.
December 31,
2022
Goodwill
32,861
-
-
2,033
34,895
(Euro/000)
January 1,
2021
Increase
Decrease
Transl. diff.
December 31,
2021
Goodwill
30,331
-
-
2,531
32,861
In 2022 the item recorded an increase of 2,033 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 9 March 2023 the Board of Directors has approved the 2023-2027 Group Business Plan and the related financial
projections. 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 cash outflows and
related cost savings that are expected to arise from future restructuring initiatives which an entity has not yet
committed/announced before the date of the impairment test (31 December 2022), and those pertaining to
estimated future cash flows that are expected to arise from improving or enhancing asset performance. Accordingly,
neither potential new acquisitions, nor the implications of the mandate given by the Board of Directors to the
management on 26 January 2023 to explore alternative solutions for the Longarone plant, have 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 2023-2027 business plan are:
• Sales growth through a solid and balanced business portfolio by brand, geographical area and distribution
channel, which maximizes customer service and meets the needs of the different consumer segments;
• Margin expansion behind further improvement in the gross margin, 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:
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
115
• 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 2022
is consistent with the criteria used for the 2021 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 or Russia-Ukraine conflict, with uncertainties instead being
reflected in the cash flows. Specific risk premium has been reduced considering the last years Group
performance and the capability to meet in advance the 2020-2024 Plan targets;
• 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 2027.
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, 2022
December
31, 2021
December
31, 2022
December
31, 2021
Safilo Group
10.12%
7.93%
2.07%
1.90%
The execution of the impairment test resulted in a cover compared to the net invested capital including goodwill as
of 31 December 2022.
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 2022, including
goodwill, EBITDA and related cash flows could be reduced by 30% or WACC could be increased by +3,0%.
After completing the process described, management concluded that no impairment loss needs to be recognized
at the date of 31 December 2022.
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.
During the year 2022 Safilo Group’s stock market capitalization has always been above the book value of
shareholder equity.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
116
Management believe that the assumptions incorporated in the Financial Projections 2023-2027 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, 2022
December 31, 2021
Deferred tax assets
191,262
191,580
Valuation Allowance (-)
(154,989)
(154,139)
Net deferred tax assets
36,273
37,441
Deferred tax liabilities
(12,863)
(13,031)
Total net
23,410
24,410
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 2022 amounts to 154,989 thousand Euro (154,139 thousand Euro at 31
December 2021). 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,
2022
Income
Statement
Equity
Transl.
diff.
December
31, 2022
- Tax losses carried forward
116,259
2,623
-
544
119,426
- Inventories
25,947
(3,037)
-
1,037
23,947
- Taxed provisions
11,192
(4,150)
(81)
297
7,258
- Intangible assets
2,339
434
-
6
2,779
- Tangible assets
10,736
(6,222)
-
42
4,556
- Taxed financial interests
15,560
825
-
39
16,424
- Other temporary differences
9,547
6,526
-
799
16,872
- Total deferred tax assets
191,580
(3,001)
(81)
2,764
191,262
- Valuation allowance of deferred tax assets on tax losses
(108,505)
(2,805)
-
(289)
(111,599)
- Valuation allowance of deferred tax assets on other
temporary differences
(45,634)
2,579
(16)
(318)
(43,389)
- Total allowance on deferred tax assets
(154,139)
(226)
(16)
(607)
(154,989)
Total net
37,441
(3,227)
(98)
2,157
36,273
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
117
Deferred tax liabilities
Posted to
(Euro/000)
January 1,
2022
Income
Statement
Equity
Transl.
diff.
December 31,
2022
- Depreciation differences
3,097
4,594
-
453
8,144
- Goodwill
2,059
343
-
111
2,513
- Inventories
150
6
-
11
167
- Receivables and payables
386
(45)
-
43
384
- Other temporary differences
7,339
(6,102)
-
418
1,655
Total
13,031
(1,204)
-
1,036
12,863
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 119,426 thousand Euro. These deferred
tax assets have been written down by a valuation allowance of 111,599 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)
2024
38
10
2025
4,742
1,579
2026
4,267
1,406
2027
1,128
362
2028
31
11
2029
868
291
2030
427
144
2031
9
3
Unlimited
455,768
110,835
Other tax losses relating local taxes:
Various
4,787
Total
467,279
119,426
Valuation Allowance (-)
(111,599)
Total deferred tax assets on losses carried forward
7,827
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, 2022
December 31, 2021
Deferred tax assets
- recoverable within one year
20,074
20,347
- recoverable beyond one year
16,199
17,094
Total
36,273
37,441
Deferred tax liabilities
- recoverable within one year
(555)
(571)
- recoverable beyond one year
(12,308)
(12,459)
Total
(12,863)
(13,031)
Total net
23,410
24,410
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
118
4.11 Other non-current assets
The table below shows details of non-current assets:
(Euro/000)
December 31, 2022
December 31, 2021
Long-term guarantee deposits
2,199
1,682
Other long-term receivables
4,172
4,128
Long-term tax receivables
2,251
3,260
Total
8,623
9,070
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 liability
This item breaks down as follows:
(Euro/000)
December 31, 2022
December 31, 2021
Short-term portion of long-term bank loans
30,000
20,000
Short-term borrowings
30,000
20,000
Long-term bank loans
117,329
131,798
Long-term borrowings
117,329
131,798
Short-term portion of financial lease liability IFRS 16
9,051
8,247
Long-term portion of financial lease liability IFRS 16
34,727
32,917
Financial lease liability IFRS 16
43,778
41,164
Total
191,107
192,962
Borrowings
On 29 September 2022, the Group has signed a new financing agreement for a total of Euro 300,000,000, maturing
in September 2027 (the "New Financing Agreement") and consisting of a Term Loan Facility of Euro 150,000,000,
a Revolving Credit Facility of Euro 75,000,000 and a Capex Facility Line of Euro 75,000,000.
The utilisation of the new Term Loan facility permitted the simultaneous early repayment of the entire bank debt
previously represented by the Term Loan Credit Facility signed in 2018 with maturity June 2023 (equal to 35,000
thousand Euro in June 2022), and by the SACE Term Loan Credit Facility signed in 2020, with maturity June 2026
(equal to 108,000 thousand Euro in June 2022).
Consolidated Financial Statements Safilo Group S.p.A.
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119
The New Financing Agreement, signed with a pool of banks consisting of BNP Paribas Italian Branch, Banca
Nazionale del Lavoro S.p.A., ING Bank N.V. Milan Branch, Intesa Sanpaolo S.p.A., and Unicredit S.p.A, therefore
extends the duration of the Group's debt and provides the financial resources needed to support the growth of
Safilo in the years to come.
At 31 December 2022 the Group has bank loans for a total amount of 147,329 thousand Euro of which 30,000
thousand Euro classified as short-term and 117,329 thousand Euro as long-term (151,798 thousand Euro as at 31
December 2021 of which 20,000 thousand Euro classified as short-term and 131,798 thousand Euro as long-term).
The breakdown of bank loans by facility is detailed as follows:
- 150,000 thousand Euro related to the new Term Loan Facility and 2,000 thousand Euro related to the
partial initial 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 4,671 thousand Euro, bringing
their combined net value to 147,329 thousand Euro (151,798 thousand Euro as at 31 December 2021);
- The Group’s new Revolving Credit Facility (75,000 thousand Euro) has not been drawn as at 31 December
2022 (no amount drawn also as at 31 December 2021 under the previous revolving credit facility).
The Term Loan Facility, matures in September 2027, with a repayment profile in ten semi-annual instalments starting
from June 2023.
These committed, unsubordinated and unsecured facility agreements are subject to customary operating and
financial covenants. At 31 December 2022 the Group complies with all the outstanding covenants.
In 2022 total interest expenses on borrowings are 6,509 thousand Euro (12,376 thousand Euro in 2021) of which
figurative interest, calculated according to amortized cost method, are 1,531 thousand Euro (808 thousand in 2021).
Here below we report the maturity analysis of the nominal value of the long-term bank loans, gross of 4,671
thousand Euro of transaction costs (1,202 thousand Euro in 2021):
(Euro/000)
December 31, 2022
December 31, 2021
From 1 to 2 years
30,000
43,000
From 2 to 3 years
30,000
36,000
From 3 to 4 years
30,000
36,000
From 4 to 5 years
32,000
18,000
Beyond 5 years
-
-
Total
122,000
133,000
The Group, as at 31 December 2022, 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).
Consolidated Financial Statements Safilo Group S.p.A.
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120
Financial Lease liability
The IFRS 16 financial lease liability, as at 31 December 2022, amounts to 43,778 thousand Euro of which 9,051
thousand Euro as short term, and 34,727 thousand Euro as long term.
Here below we report the maturity analysis of the long term IFRS 16 financial lease liability:
(Euro/000)
December 31, 2022
December 31, 2021
From 1 to 2 years
8,047
6,817
From 2 to 3 years
6,160
5,717
From 3 to 4 years
5,139
4,679
From 4 to 5 years
4,730
3,975
Beyond 5 years
10,652
11,729
Total
34,727
32,917
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,
2022
December 31,
2021
Change
(Euro/000)
A Cash
77,710
99,002
(21,292)
B Cash equivalents
-
-
-
C Other current financial assets
-
-
-
D Liquidity (A + B + C)
77,710
99,002
(21,292)
E Current financial debt (including debt instruments, but
excluding current portion of non-current financial debt)
-
-
-
F Current portion of non-current financial debt
(39,051)
(28,247)
(10,804)
G Current financial indebtedness (E + F )
(39,051)
(28,247)
(10,804)
H Net current financial indebtedness (G - D)
38,659
70,755
(32,096)
I Non-current financial debt (excluding current portion and debt
instruments)
(152,057)
(164,715)
12,658
J Debt instruments
-
-
-
K Non-current trade and other payables
-
-
-
L Non-current financial indebtedness (I + J + K)
(152,057)
(164,715)
12,658
M Total financial indebtedness (H + L)
(113,398)
(93,960)
(19,438)
The Group Net financial debt reported in the above table does not include the valuation of derivative financial
instruments 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 2022 the indirect or contingent indebtedness of the Group,
includes "liabilities for options on non-controlling interests” equal to 19,545 thousand of Euro (47,406 thousand
Euro as at 31 December 2021) 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 13,975 thousand Euro as disclosed in note 4.17, and “provisions for risks”
Consolidated Financial Statements Safilo Group S.p.A.
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121
for a total of 23,678 thousand Euro as disclosed in note 4.16.
4.13 Trade payables
This item breaks down as follows:
(Euro/000)
December 31, 2022
December 31, 2021
Trade payables for:
Purchase of raw materials
25,383
26,309
Purchase of finished goods
64,066
77,072
Supplies from subcontractors
3,322
5,118
Tangible and intangible assets
2,816
2,812
Commissions
4,443
3,508
Royalties
10,776
10,193
Advertising and marketing costs
11,351
9,371
Services
49,251
48,809
Sales returns liabilities (Refund Liability)
9,295
9,891
Total
180,701
193,082
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.
The book value of the trade payables is considered to be approximately the same as their fair value.
4.14 Tax payables
This item breaks down as follows:
(Euro/000)
December 31, 2022
December 31, 2021
Income tax payables
12,964
8,051
VAT payables
3,820
3,325
Other taxes payables
5,709
6,044
Total
22,492
17,420
At 31 December 2022 tax payables amounted to Euro 22,492 thousand (compared to Euro 17,420 thousand at 31
December 2021). Of this sum Euro 12,964 thousand referred to income tax for the period, Euro 3,820 thousand to
VAT payables and Euro 5,709 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.
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122
4.15 Other current liabilities
This item breaks down as follows:
(Euro/000)
December 31, 2022
December 31, 2021
Payables to personnel and social security institutions
31,918
37,239
Agent fee payables
173
97
Payables to pension funds
1,370
1,282
Accrued advertising and sponsorship costs
781
1,451
Accrued interests on long-term loans
53
14
Other accruals and deferred income
9,422
11,325
Other current liabilities
3,574
4,153
Total
47,291
55,562
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. It is considered that the book value of the “other current
liabilities” approximates their fair value.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
123
4.16 Provisions
This item breaks down as follows:
(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
(Euro/000)
January 1,
2021
Increase
Decrease
Transl.
diff.
December 31,
2021
Product warranty provision
5,736
71
(113)
70
5,764
Agents' severance indemnity
2,931
352
(548)
1
2,736
Other provisions for risks and charges
5,657
1,944
(960)
4
6,645
Provisions for risks - long term
14,324
2,366
(1,621)
75
15,144
Product warranty provision
1,012
1,070
(229)
125
1,978
Provision for corporate restructuring
11,592
7,047
(10,845)
-
7,795
Other provisions for risks and charges
25,910
709
(20,641)
26
6,004
Provisions for risks - short term
38,514
8,826
(31,715)
151
15,776
Total
52,838
11,192
(33,335)
226
30,921
The product warranty provision was recorded against the costs to be incurred for the replacement of products sold
before the balance sheet date.
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 communicated in 2019 with the
new Group Business Plan 2020-2024. The decrease of the period equal to Euro 7,795 thousand refers to the
utilization for the completion of the 2019 restructuring plan. The decrease of the period includes also the release
of the residual excess provision equal to Euro 3,600 thousand that has been reported as a non-recurring income in
the item “other operating income”.
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 increase
of the period is related to risks of litigation in place in the Italian subsidiaries and in some Group subsidiaries.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
124
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, 2022
December 31, 2021
Defined contribution plan
15
16
Defined benefit plan
13,959
18,979
Total
13,975
18,995
During the financial years under analysis, the item related to defined benefit plans showed the following
movements:
(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
(Euro/000)
Balance at
January 1,
2021
Addition
Actuarial (gains)/losses
Uses
Transl.
diff.
Balance at
December
31, 2021
Defined benefit plan
23,346
456
(783)
(4,054)
15
18,979
The decrease of the period equal to 2,813 thousand Euro is mainly related to the completion of the restructuring
process at the Italian plant in Longarone.
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 decided that:
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
125
• 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, must be classified as a “defined
contribution plan”;
• the portion of the employee benefit liability accrued as of 31 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 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 2022 and 31
December 2021 are summarized here follow:
2022
2021
Discount rate
3,63%
0,44%
Inflation rate
2,30%
1,75%
Rate of benefit increase
3,23%
2,81%
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%
556
(529)
Discount rate
1,00%
(811)
908
Life expectancy
1 year
(46)
46
The amounts related to defined benefit plans recorded in the statement of comprehensive income can be divided
as follows:
(Euro/000)
2022
2021
Service cost
(531)
(443)
Interest cost
(113)
(12)
Actuarial gain/(loss)
2,850
783
Total
2,206
328
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
126
4.18 Liabilities for options on non-controlling interests
Movements in the item were as follows:
(Euro/000)
January
1, 2022
Increase
Decrease
Reclass.
Transl.
diff.
December
31, 2022
Short term - liabilities for options on non-
controlling interests
-
-
-
6,195
-
6,195
Long term - liabilities for options on non-
controlling interests
47,406
-
(31,191)
(6,195)
3,330
13,349
47,406
-
(31,191)
-
3,330
19,545
The amount equal to 19,545 thousand Euro, of which 6,195 thousand Euro as short-term liability, (47,406 thousand
Euro as at 31 December 2021) refers to the put and call options liability on the non-controlling interests of the two
business combinations finalised in 2020 of the Miami-based eyewear company Privé Goods LLC and of the California
eyewear company 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 may
be exercised in each of the years 2023 and 2024 for one third of the minority interests and in 2025 for the remaining
portions, at a price calculated as a function of a specific multiple applicable to the value of the EBITDA of the
respective companies achieved over the contractual period preceding that of exercise of the relative option and
adjusted to take into account the net financial position of the Company.
These options were valued at their fair value at the acquisition date, using a discounted cash-flow approach based
on the business plans underlying the two acquisitions
and recorded as a non-current liability.
During 2022, according to the contractual terms, the Group has early exercised the call option on Privé Revaux
non-controlling interests held by David Schottenstein (Board member and CEO of the Company) and by some other
minor employees that have resigned in the period. Following this event pursuant to the contractual terms the Group
has exercised its call option on their non-controlling interests increasing its controlling stake in Privé Revaux from
64.2% to 82.8% in exchange for a nominal amount.
Following the above partial early exercise of the Privé Revaux call option and for the effect of the 2022 forecast
revision of the two investments, the fair value liability recorded a reduction equal to 31,191 thousand Euro reported
as financial gain in the item “Gains/(losses) for options on non-controlling interests” in the income statement.
In consideration of the significant decrease of the value of the option, the management carefully examined the
recoverability of the assets identified in the Purchase Price Allocation of the two newly acquired companies. As a
result of this analysis, it was concluded that, despite the reshaping of the forecasts, there were no specific
impairment indicators for the assets identified in the Purchase Price Allocation of the two acquisitions.
Furthermore, the value of the liability was adjusted for the translation difference due to the Euro/USD exchange
rate fluctuation and for the accretion consequent to the financial discounting of the long-term debt.
Consolidated Financial Statements Safilo Group S.p.A.
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127
4.19 Other non-current liabilities
Movements in the item were as follows:
(Euro/000)
January
1, 2022
Increase
Decrease
Reclass.
Transl.
diff.
December
31, 2022
Other non current liabilities
1,760
344
(123)
-
61
2,041
1,760
344
(123)
-
61
2,041
The “other non-current liabilities” include also the estimate of the tax liability equal to 960 thousand Euro accrued
according to the new 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.
_________________________________________________________________________
128
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 2022, Group shareholders’ equity totaled 409,915 thousand
Euro versus Euro 326,741 thousand Euro on 31 December 2021.
4.20 Share capital
At 31 December 2022 the share capital of the Parent Company, Safilo Group S.p.A., amounts to Euro 384,846,311
consisting of no. 413,687,781 ordinary shares with no par value (413,555,769 ordinary shares as at 31 December
2021). In 2022 new ordinary shares equal to a number of 132,012 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 2022, the share premium reserve of the parent company, Safilo Group S.p.A. totalled Euro
692,520,684 (compared to Euro 692,457,846 at the end of the previous year).
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”.
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 increase of 17,023 thousand Euro due to the translation differences coming from the translation of the
subsidiaries’ financial statements into Euro;
- an increase of 748 thousand Euro related to the cost of the period of the stock option plans in place;
- an increase of 2,750 thousand Euro due to the actuarial valuation, net of the tax effect, of the employee
termination indemnities of defined benefit plans;
- a decrease of 31 thousand Euro mainly related to transactions with minority interests.
4.23 Cash flow hedge reserve
The cash flow hedge reserve 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 2022 the Group has in place the following Stock Option Plans: 2017-2020 and the 2020-2022
Plans.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
129
The first Plan was deliberated by the Extraordinary Meetings 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 were deliberated by the Extraordinary Meeting held on 28 April 2020 in which the Shareholders
approved the issue up to 7,000,000 new ordinary shares without par value to be offered to directors and/or
employees of the Company and its subsidiaries.
These Plans, designed to incentivise and retain directors and/or employees, is carried out through the grant, in
different tranches, of options entitling the beneficiary to subscribe to one of the foregoing ordinary Company shares,
issued for cash and without any all-or-none clause, excluding all pre-emptive rights pursuant to article 2441,
paragraph four, second sentence of the Italian Civil Code.
The options attributed by those plans will mature when both the following vesting conditions are met: the
continuation of the individual’s employment relationship on the options’ vesting date, and the achievement of
differentiated performance objectives for the period of each tranche commensurate with consolidated EBIT, for the
2020-2022 Plan this second economic performance vesting condition is not applicable.
Information relating to the tranches of the Stock Options Plans granted on 31 December 2022 are shown below.
Grant date
No. of options
Fair value in
Euro
Maturity
Stock Option Plan 2017-2020
Third tranche
30/04/19
773,205
0,18
31/05/27
Stock Option Plan 2020-2022
First tranche
31/07/20
3,527,699
0,18
30/06/28
Second tranche
11/03/21
3,816,124
0,27
30/06/29
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
Risk
free
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%
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
130
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 2014-2016
Outstanding at the beginning of the period
242,080
8.39
Granted
-
-
Forfeited
-
-
Exercised
-
-
Expired
(242,080)
8.39
Outstanding at period-end
-
-
Stock Option Plan 2017-2020
Outstanding at the beginning of the period
1,036,118
0.68
Granted
-
-
Forfeited
(130,902)
0.68
Exercised
(132,011)
0.68
Expired
-
Outstanding at period-end
773,205
0.68
Stock Option Plan 2020-2022
Outstanding at the beginning of the period
7,743,184
0.76
Granted
-
-
Forfeited
(399,362)
0.73
Exercised
-
-
Expired
-
-
Outstanding at period-end
7,343,823
0.76
During the year, 242,080 options of the first tranche of the Plan 2014-2016 have expired, and 132,011 options of
the third tranche of the Plan 2017-2020 have been exercised, in the same period 530,264 options have been
forfeited, of which 130,902 of the Plan 2017-2020 and 399,362 of the Plan 2020-2022.
The options outstanding of the third tranche of the Plan 2017-2020, equal to 773,205 options, are exercisable until
31 May 2027, the first and the second tranche of the Plan 2020-2022, equal respectively to 3,527,699 and to
3,816,124 options, are exercisable until 30 June 2028 and 30 June 2029 respectively.
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 773,205.
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 4.4 years, while 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 5.5 and 6.5 years respectively.
The adoption of these plans has affected the income statement for the period for a cost of 748 thousand Euro (647
thousand Euro at 31 December 2021).
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
131
5. Notes to the consolidated income statement
5.1 Net sales
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, 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.
2022 Group sales amounted to 1,076,745 thousand Euro, showing an increase of 11.1% compared to the previous
year (969,584 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)
2022
2021
Purchase of raw materials and finished goods
375,240
360,298
Capitalisation of costs for increase in tangible assets (-)
(2,955)
(3,774)
Change in inventories
(17,618)
(25,820)
Wages and social security contributions
80,826
88,473
Subcontracting costs
13,201
16,832
Amortization and depreciation
12,536
17,396
Depreciation Right of Use - IFRS 16
1,197
1,121
Rental and operating leases
1,574
1,460
Offset Rental and operating leases - IFRS 16
(1,276)
(1,181)
Utilities, security and cleaning
9,699
6,037
Other industrial costs
6,871
6,982
Total
479,296
467,824
Cost of sales increased by Euro 11,471 thousand (or 2.5%), from Euro 467,824 thousand in 2021, to Euro 479,296
thousand in 2022. Wages and social security contributions decreased by Euro 7,647 thousand (or 8.6%) from Euro
88,473 thousand to Euro 80,826 thousand in 2022, benefitting from the savings provided by the reshaping of the
Group’s industrial capacity according to the restructuring plan of the Group’s manufacturing footprint, with the
closure of the Slovenian plant in Ormož effective from 1 July 2021, aiming for its realignment to the current
production needs.
Amortization and depreciation decreased by Euro 4,861 thousand (or 27.9%) from Euro 17,396 thousand in 2021
to Euro 12,536 thousand in 2022.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
132
Changes in inventories can be broken down as follows:
(Euro/000)
2022
2021
Finished products
(13,331)
(29,116)
Work-in-progress
1,594
1,681
Raw materials
(5,882)
1,875
Total
(17,618)
(25,560)
5.3 Selling and marketing expenses
This item breaks down as follows:
(Euro/000)
2022
2021
Payroll and social security contributions
108,220
98,263
Sales commissions
49,821
44,585
Royalty expenses
60,225
56,118
Advertising and promotional costs
134,574
110,437
Amortization and depreciation
3,220
3,400
Depreciation Right of Use - IFRS 16
4,813
4,401
Logistic costs
34,203
28,943
Consultants fees
1,504
1,190
Rental and operating leases
8,111
7,125
Offset Rental and operating leases - IFRS 16
(5,570)
(5,681)
Utilities, security and cleaning
1,126
1,125
Provision for risks
358
65
Other sales and marketing expenses
19,884
13,064
Total
420,488
363,033
Selling and marketing expenses increased by Euro 57,455 thousand (or 15.8%), from Euro 363,033 thousand in
2021 to Euro 420,488 thousand in 2022. This was due to the significant recovery of sales activity exceeding to the
level pre Covid-19 pandemic with the consequent increase of payroll and social security contributions by Euro 9,957
thousand (or 10.1%), sales commissions by Euro 5,236 thousand (or 11.7%), advertising and promotional costs
by Euro 24,137 thousand (or 21.9%), royalty expenses by Euro 4,107 thousand (or 7.3%) and logistic costs by
Euro 5,260 thousand (or 18.2%).
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
133
5.4 General and administrative expenses
This item breaks down as follows:
(Euro/000)
2022
2021
Payroll and social security contributions
48,896
47,765
Allowance and write-off of doubtful accounts
(898)
1,540
Amortization and depreciation
22,308
22,523
Depreciation Right of Use - IFRS 16
4,317
4,372
Professional services
15,073
13,963
Rental and operating leases
5,651
5,579
Offset Rental and operating leases - IFRS 16
(4,972)
(4,748)
EDP costs
25,482
17,835
Insurance costs
2,187
2,161
Utilities, security and cleaning
4,059
3,120
Taxes (other than on income)
1,489
1,555
Other general and administrative expenses
4,835
3,889
Total
128,426
119,552
General and administrative expenses increased by Euro 8,874 thousand (or 7.4%), from Euro 119,552 thousand in
2021 to Euro 128,426 thousand in 2022. This was mainly due to an increase EDP expenses by Euro 7,647 thousand
(or 42.9%), from Euro 17,835 thousand in 2021 to Euro 25,482 thousand for 2022. The increase of the EDP
expenses is mainly related to the investments in software for the digital transformation.
Payroll and social security contributions increased by Euro 1,131 thousand (or 2.4%), from Euro 47,765 thousand
in 2021 to Euro 48,896 thousand in 2022.
General and administrative expenses on the other side have also benefitted, compared to the previous period, from
bad debt related expenses which decreased for an amount equal to Euro 2,438 thousand.
Depreciation and amortization decreased by 215 thousand Euro, from 22,523 thousand in 2021 to Euro 22,308
thousand in 2022.
Average number of employees
The average number of employees by rank is shown below:
2022
2021
Executives
93
100
Clerks and middle management
2,152
2,188
Factory workers
2,190
2,530
Total
4,435
4,818
The reduction of the average number of employees by 383 is mainly due to the restructuring of the Group’s
manufacturing footprint which involved the closure of the Slovenian production site in Ormož in 2021 and the
reorganization of the Italian factory in Longarone.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
134
5.5 Other operating income (expenses)
This item breaks down as follows:
(Euro/000)
2022
2021
Losses on disposal of assets
(31)
(378)
Other operating expenses
(11,079)
(16,289)
Gains on disposal of assets
268
219
Other operating income
10,764
23,347
Total
(78)
6,900
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.
During the 2022 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.
During the previous period under “other operating expenses” non-recurring costs of Euro 12,921 thousand were
accounted for the closure, starting from the end of June 2021, of the Ormož production plant in Slovenia. “Other
operating income” in 2021 included a non-recurring income of Euro 17,000 thousand due to the release of a
provision for risks and charges booked in 2015 in relation to an investigation by the French Competition Authority.
The release had been motivated by the positive outcome, without sanctions, of this investigation.
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 finalised in 2020 (for more details
see the note 4.18).
As at 31 December 2022 management has reperformed the fair value calculation of these liabilities and adjusted
their value recording a gain for its reduction equal to 31,191 thousand Euro (a gain of 32,249 thousand Euro in the
previous period). This calculation behind the lower valuation of the liability has been performed on the basis of
updated business plans, reflecting reduced net sales and EBITDA projections for the two investments and following
the early exercise of the call option on Privé Revaux non-controlling interests held by David Schottenstein (Board
member and CEO of the Company) and by some other minor employees that have resigned in the period.
Considering the latest value of the liability of 19,545 thousand Euro at 31 December 2022 and the potential changes
outlined in the section Subsequent Events of the annual report, the magnitude of the gains of 2022 and 2021 and
related impacts on the income statement, cannot be expected to recur in the same magnitude in future years.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
135
5.7 Financial charges, net
This item breaks down as follows:
(Euro/000)
2022
2021
Nominal interest expenses on loans
4,978
5,288
Nominal Interest expenses on shareholder loan
-
6,280
Figurative interest expenses on loans
1,531
808
Interest expenses on operating leases - IFRS 16
1,862
1,548
Bank commissions
7,271
6,796
Negative exchange rate differences
48,632
27,845
Other financial charges
937
613
Total financial charges
65,210
49,177
Interest income
596
323
Positive exchange rate differences
46,700
24,485
Other financial income
2,402
869
Total financial income
49,698
25,676
Total financial charges, net
15,512
23,500
Total net financial charges decreased by Euro 7,988 thousand from Euro 23,500 thousand in 2021 to Euro 15,512
thousand in 2022. Excluding the accounting effect of the IFRS 16 interest expenses equal to Euro 1,862 thousand,
interest on loans decreased by Euro 5,867 thousand, from Euro 12,375 thousand in 2021 to Euro 6,509 thousand
in 2022, benefitting from the shareholder loan reimbursement at the end of October 2021, thanks to the proceeds
of the share capital increase finalised in 2021. Net exchange rate differences are equal to a loss of Euro 1,933
thousand in 2022 (a loss of Euro 3,360 thousand in 2021).
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)
2022
2021
Current tax
(9,764)
(10,872)
Deferred tax
(2,023)
(3,924)
Total
(11,788)
(14,795)
Income taxes decreased by 3,007 thousand Euro from an expense of 14,795 thousand Euro in 2021 to an expense
of 11,788 thousand Euro in 2022.
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.
_________________________________________________________________________
136
(Euro/000)
%
2022
%
2021
Profit before taxation
100%
64,136
100%
34,824
Income tax benefit (expense) at statutory rate
-24.0%
(15,393)
-24.0%
(8,358)
Taxes relating to prior years
0.3%
184
-7.3%
(2,525)
Foreign tax rate differential
-2.8%
(1,801)
-6.7%
(2,334)
Non taxable income
13.6%
8,716
40.6%
14,144
Non deductible costs
-4.6%
(2,973)
-8.6%
(2,998)
Non-recognition of new DTAs and write-off of existing DTAs
-16.2%
(10,403)
-28.5%
(9,922)
Benefit arising from unrecognized DTAs of prior years
15.1%
9,686
1.9%
665
Deferred tax expense for changes in tax rate
-0.1%
(35)
0.0%
(10)
Tax credit and tax relief
0.0%
-
0.0%
10
Other differences
0.4%
231
-10.0%
(3,467)
Total
-18.4%
(11,788)
-42.5%
(14,795)
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 certain relevant non-taxable income items that have
positively affected the result before tax of the period, mainly related to the gain on the liabilities for options on
non-controlling interests.
5.9 Earnings per share
The calculation of basic and diluted earnings per share is shown in the tables below:
Basic
2022
2021
Profit/(Loss) for ordinary shares (in Euro/000)
54,160
21,275
Average number of ordinary shares (in thousands)
413,599
298,364
Earnings/(Losses) per share - basic (in Euro)
0.131
0.071
Diluted
2022
2021
Profit/(Loss) for ordinary shares (in Euro/000)
54,160
21,275
Average number of ordinary shares (in thousands)
413,599
298,364
Dilution effects:
- stock option (in thousands)
3,831
3,522
Total
417,430
301,886
Earnings/(Losses) per share - diluted (in Euro)
0.130
0.070
5.10 Dividends
The parent company Safilo Group S.p.A. did not distribute dividends to shareholders during 2022.
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
137
5.11 Segment information
Following the divestiture of the Group’s retail operations in 2019, from the 2019 financial statements going onwards,
the Group considers the Wholesale segment as its 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 identified in
accordance with this segmentation 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)
2022
2021
December 31,
2022
December 31,
2021
Italy
(1)
220.641
212.739
105.147
113.559
Europe
(2)
242.305
199.633
2.830
2.778
America
(3)
564.020
513.167
183.960
187.226
Asia
(4)
49.780
44.045
30.033
32.555
Total
1.076.745
969.584
322.120
336.118
(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.
_________________________________________________________________________
138
The tables below shows the operating and financial figures determined by related party transactions as of 31
December 2022 and 31 December 2021.
Related parties transactions
(Euro/000)
Relationship
December 31
2022
December 31
2021
Receivables
Companies controlled by HAL Holding N.V.
(a)
328
321
HAL Investments B.V.
(a)
-
-
Total
328
321
Payables
Companies controlled by HAL Holding N.V.
(a)
53
23
HAL Investments B.V.
(a)
30
-
Total
83
23
Related parties transactions
(Euro/000)
Relationship
2022
2021
Revenues
Companies controlled by HAL Holding N.V.
(a)
1,204
32,653
Total
1,204
32,653
Operating expenses
Companies controlled by HAL Holding N.V.
(a)
74
1,350
HAL Investments B.V.
(a)
30
20
Financial expenses
Multibrands Italy B.V.
(a)
-
6,280
Total
104
7,650
(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 of HAL Holding N.V., the reference shareholder of Safilo Group, in
the 2021 comparative period mainly referred to the retail companies belonging to the GrandVision Group, with
which Safilo carried out commercial transactions in line with market conditions. The significant decrease in 2022 of
the transaction with such related parties is due to the fact that on 1 July 2021, HAL Holding N.V., completed the
sale of its 76.72% ownership interest in GrandVision N.V. to EssilorLuxottica S.A.. Following this event, the retail
companies belonging to the GrandVision Group starting from 1 July 2021 ceased to be a related party. The amount
reported as transactions with related parties in 2022 refers to transaction with a minor retail chain not having been
included in the GrandVision transaction perimeter and thus still belonging to HAL Holding N.V..
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
139
The balance reported with Multibrands Italy B.V. in 2021 comparative period referrred to the interest accrued on
the shareholder loan, entered into between Safilo S.p.A. and Multibrands Italy B.V. on 6 February 2020 for a total
amount of Euro 90 million. This loan has been fully reimbursed at the end of October 2021, ahead of the contractual
maturity date of 31 December 2026, thanks to the proceeds of the share capital increase finalised in 2021.
The remuneration of the Group’s Directors, Statutory Auditors and Strategic Management is reported below:
(Euro/000)
2022
2021
Directors
- Salaries and short term compensations
3,769
3,745
- Non monetary benefits
28
22
- Other compensations
87
87
- Indemnity for end of position or cessation of employment relationship
-
-
- Fair value of equity compensations
252
237
Statutory auditors
- Fixed compensations and compensations for participation in committees
303
304
Managers with strategic responsabilities
- Salaries ad short term compensations
719
735
- Non monetary benefits
11
11
- Other compensations
3
53
- Fair value of equity compensations
52
51
- Indemnity for end of position or cessation of employment relationship
-
-
Total
5,224
5,244
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
140
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.
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,
2022
December 31,
2021
(Euro/000)
within 1 year
89.045
68.743
between 1 and 3 years
162.074
145.189
between 3 and 5 years
42.147
105.250
beyond 5 years
12.913
17.555
Total
306.180
336.737
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
141
9. Subsequent events
In the period following 31 December 2022, as disclosed in the paragraph “Significant events after the year-end and
outlook” included in the Report on operatios, the following events have incurred:
- on 26 January 2023, the Group communicated that the Board of Directors on 9 March 2023 will also
approve its medium-term economic and financial targets, which the management will present to the
market on the following day during a Capital Market Day to be held in Milan. With regards to the ongoing
strategic analyses and taking into consideration the evolution of the product portfolio, the economic
context, the competitive dynamics and a persistent production overcapacity, the Group, in reiterating the
importance of the Santa Maria di Sala and Bergamo production sites, of the Padua logistic centre, and the
company's creative capabilities, has initiated an exploration of alternative solutions for its Longarone plant;
- in March 2023, the Group has 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,
with Chase Fisher, minority shareholder, founder and CEO of the company.
These events have been considered a “non-adjusting subsequent event” and hence have not affected the financial
statements as at 31 December 2022.
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 2022 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.
_________________________________________________________________________
142
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 2022 and 2021 relating to the audit and other audit related services rendered
by the same Audit company.
(Eur/000)
Audit Company
Safilo Group's company which
received services
2022
2021
Audit
Deloitte & Touche S.p.A.
Holding Company - Safilo Group S.p.A.
61
72
Deloitte & Touche S.p.A.
Subsidaries
146
136
Network Deloitte & Touche S.p.A.
Subsidaries
1,050
923
Attestation
Deloitte & Touche S.p.A.
Holding Company - Safilo Group S.p.A.
60
50
Deloitte & Touche S.p.A.
Subsidaries
19
23
Network Deloitte & Touche S.p.A.
Subsidaries
-
-
Other services
Deloitte & Touche S.p.A.
Holding Company - Safilo Group S.p.A.
-
20
Deloitte & Touche S.p.A.
Subsidaries
-
-
Network Deloitte & Touche S.p.A.
Subsidaries
3
2
Total
1,339
1,227
Consolidated Financial Statements Safilo Group S.p.A.
_________________________________________________________________________
143
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 Gerd Graehsler, 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 2022 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 2022 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 2022:
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.
9 March 2023
The Chief Executive Officer The manager responsible for preparing the
company’s financial statements
Angelo Trocchia Gerd Graehsler
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
144
REPORT OF INDEPENDENT AUDITORS
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona
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Tel: +39 049 7927911
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INDEPENDENT AUDITOR’S REPORT
PURSUANT TO ARTICLE 14 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010
AND ARTICLE 10 OF THE EU REGULATION 537/2014
To the Shareholders of
Safilo Group S.p.A.
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Opinion
We have audited the consolidated financial statements of Safilo Group S.p.A. and its subsidiaries (the
“Group”), which comprise the consolidated statement of financial position as at December 31, 2022 and
the consolidated statement of income, consolidated statement of comprehensive income, consolidated
statement of changes in equity and consolidated statement of cash flows for the year then ended, and
notes to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at December 31, 2022, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International
Financial Reporting Standards as adopted by the European Union and the requirements of national
regulations issued pursuant to art. 9 of Italian 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 the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of Safilo Group
S.p.A. (the “Company”) in accordance with the ethical requirements applicable under Italian law to the
audit of the financial statements. We believe that the 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 judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
2
Inventory provisioning
Description of the key
audit matter
The consolidated balance sheet shows inventories for Euro 259 million, net
of an obsolescence provision of Euro 59.2 million, as disclosed in note 4.3.
The Group manufactures and sells goods which are subject to changes in
market trends and in customers’ demand, consequently a significant level of
Management’s judgement is required to determine the appropriate
inventory provision based on sales forecasts, considering also the
termination of some licenses.
We considered the amount of the obsolescence provision, even in terms of
the economic impact, its relevance to the inventory balance, which as of
December 31, 2022 represents about 27% of consolidated assets, and the
subjectivity of the estimates, consequently we assessed that the
determination of the obsolescence reserve represents a key audit matter for
the audit of Safilo Group’s consolidated financial statements.
Audit procedures
performed
We preliminarily analyzed the principles and criteria applied by the Group to
determine the obsolescence provision which mainly include considerations
about commercial policies, sales forecasts and the historical usage of stock.
We performed, among others, the following audit procedures, supported by
the information technology experts belonging to our network:
• understanding of the relevant controls designed and implemented by
Safilo Group in the process of determining the inventory provisioning;
• analysis of the reasonableness of the main assumptions adopted by the
Group to classify the products on the basis of commercial strategies and
their permanence in the production cycle, the related sales forecasts, and
analysis of the algorithms and criteria applied in the calculation. In this
context we also analyzed the historical usage of stock and performed a
retrospective review of the estimate;
• test of the correct execution of the calculation of the provision based on
the policies adopted by Group Management;
• analysis of the integrations of the provision deriving from specific events
(e.g. termination of licences);
• review of the variations of the obsolescence reserve through analysis of
main dynamics affecting it, by obtaining, where necessary, adequate
supporting documentation.
3
Impairment test
Description of the key
audit matter
The consolidated balance sheet includes tangible assets for Euro 109.1
million, rights of use for Euro 39 million, intangible assets for Euro 133
million and goodwill for Euro 34.9 million. This goodwill, recognized in 2020
subsequently the acquisition of the subsidiaries Privé Goods LLC and
Blenders Eyewear LLC, is allocated to the single CGU identified by the
Directors and represented by the Group as a whole, as disclosed in note 4.9.
As required by IAS 36, goodwill is not amortized and it is subject to an
impairment test performed at least on an annual basis, which compares the
recoverable value of the CGU - based on the value in use methodology - and
the carrying value as of December 31, 2022 which included goodwill,
tangible assets, rights of use and intangible assets allocated to the CGU.
The impairment test as of December 31, 2022 was performed by the
Directors based on financial projections for the period 2023-2027, approved
on March 9, 2023 as described in note 4.9.
In note 2.23 the Directors explain how the process of performing the
impairment test is complex and it is based on assumptions related, among
others, to the expectations in term of cash flows for the CGU and the
determination of appropriate discount rates (WACC) and long-term growth
(g-rate). The Directors also prepared some sensitivity analysis, the results of
which are illustrated in note 4.9.
We considered the significance of the amount of the tangible assets, rights
of use, intangible assets and goodwill, collectively representing about 33% of
consolidated assets as at December 31, 2022, the subjectivity of the
estimates underlying the determination of the cash flows for the CGU and
the key variables of the impairment test, consequently we assessed that the
impairment test represents a key audit matter for the audit of Safilo Group’s
consolidated financial statements.
Audit procedures
performed
We preliminarily analyzed the methodology and assumptions used by
Management to perform the impairment test.
We performed, among others, the following audit procedures, supported by
the experts belonging to our network:
• understanding of the relevant controls designed and implemented by
Safilo Group related the process of performing the impairment test;
• obtaining the sources of information used and analysis of the main
assumptions adopted by the Directors to elaborate the expectations in
terms of cash flows, also using industry data and researches with
reference to the expected trend in revenues and margins, comparison
with analysts’ expectations and obtaining information from Group
Management;
4
• analysis of the actual results obtained by the Group compared to the
expectations, in order to investigate the nature of the variations and
evaluate the reliability of the planning process;
• analysis of the reasonableness of the discount rates (WACC) and long
term growth (g-rate);
• test of the clerical accuracy of the model used to calculate the value in
use for the CGU;
• test of the accuracy of the determination of the carrying value of the CGU
and comparison with the recoverable value resulting from the
impairment test;
• test of the sensitivity analysis prepared by Group Management.
Finally we verified the appropriateness and the compliance of the disclosure
on the impairment test provided by the Group to the requirements of IAS 36.
Responsibilities of the Directors and the Board of Statutory Auditors for the Consolidated Financial
Statements
The Directors are responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with International Financial Reporting Standards as adopted by the European
Union and the requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree
no. 38/05, and, within the terms established by law, for such internal control as the Directors determine
is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless they have identified the existence of the
conditions for the liquidation of the Company or the termination of the business or have no realistic
alternatives to such choices.
The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the
Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated 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 the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
5
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain 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 the
override of internal control;
• obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors;
• conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the 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 the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern;
• evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation;
• obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance, identified at an appropriate level as required by
ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence applicable in Italy, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence, and
where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditors’ report.
6
Other information communicated pursuant to art. 10 of the EU Regulation 537/2014
The Shareholders' Meeting of Safilo Group S.p.A. has appointed us on April 15, 2014 as auditors of the
Company for the years from December 31, 2014 to December 31, 2022.
We declare that we have not provided prohibited non-audit services referred to in art. 5 (1) of EU
Regulation 537/2014 and that we have remained independent of the Company in conducting the audit.
We confirm that the opinion on the financial statements expressed in this report is consistent with the
additional report to the Board of Statutory Auditors, in its role of Audit Committee, referred to in art. 11
of the said Regulation.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Opinion on the compliance with the provisions of the Delegated Regulation (EU) 2019/815
The Directors of Safilo Group S.p.A. are responsible for the application of the provisions of the European
Commission Delegated Regulation (EU) 2019/815 with regard to the regulatory technical standards on
the specification of the single electronic reporting format (ESEF - European Single Electronic Format)
(hereinafter referred to as the “Delegated Regulation”) to the consolidated financial statements as at
December 31, 2022, to be included in the annual financial report.
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 700B in order to
express an opinion on the compliance of the consolidated financial statements with the provisions of the
Delegated Regulation.
In our opinion, the consolidated financial statements as at December 31, 2022 have been prepared in
XHTML format and have been marked up, in all material respects, in accordance with the provisions of
the Delegated Regulation.
Due to certain technical limitations, some information contained in the explanatory notes to the
consolidated financial statements, when extracted from XHTML format in an XBRL instance, may not be
reproduced in the same way as the corresponding information displayed in the consolidated financial
statements in XHTML format.
Opinion pursuant to art. 14 paragraph 2 (e) of Legislative Decree 39/10 and art. 123-bis, paragraph 4, of
Legislative Decree 58/98
The Directors of Safilo Group S.p.A. are responsible for the preparation of the report on operations and
the report on corporate governance and the ownership structure of Safilo Group as at December 31,
2022, including their consistency with the related consolidated financial statements and their compliance
with the law.
7
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to
express an opinion on the consistency of the report on operations and some specific information
contained in the report on corporate governance and the ownership structure set forth in art. 123-bis,
no. 4 of Legislative Decree 58/98, with the consolidated financial statements of Safilo Group as at
December 31, 2022 and on their compliance with the law, as well as to make a statement about any
material misstatement.
In our opinion, the above-mentioned report on operations and some specific information contained in
the report on corporate governance and the ownership structure are consistent with the consolidated
financial statements of Safilo Group as at December 31, 2022 and are prepared in accordance with the
law.
With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10,
made on the basis of the knowledge and understanding of the entity and of the related context acquired
during the audit, we have nothing to report.
Statement pursuant to art. 4 of the Consob Regulation for the implementation of Legislative Decree 30
December 2016, no. 254
The Directors of Safilo Group S.p.A. are responsible for the preparation of the non-financial statement
pursuant to Legislative Decree 30 December 2016, n. 254.
We verified the approval by the Directors of the non-financial statement.
Pursuant to art. 3, paragraph 10 of Legislative Decree 30 December 2016, no. 254, this statement is
subject of a separate attestation issued by us.
DELOITTE & TOUCHE S.p.A.
Signed by
Carlo Pergolari
Partner
Padova, Italy
March 15, 2023
As disclosed by the Directors in paragraph 1 “General Information”, the accompanying consolidated
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. This
independent auditor’s report has been translated into the English language solely for the convenience of
international readers. Accordingly, only the original text in Italian language is authoritative.
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
152
DRAFT STATUTORY FINANCIAL STATEMENTS
Safilo Group S.p.A
at 31 DECEMBER 2022
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
153
Contents
SAFILO GROUP S.P.A. - STATUTORY FINANCIAL STATEMENTS AT 31 DECEMBER 2022
Directors operations report
Introduction
155
Subsidiaries
155
Dealings with subsidiaries
155
Significant events after year-end
158
Statutory financial statements
Balance sheet
160
Income statement
161
Statement of comprehensive income
161
Statement of cash flows
162
Statement of changes in equity
163
Notes to the statutory financial statements
General information
164
Summary of accounting principles adopted
164
Use of estimates
168
Notes to the balance sheet
169
Notes to the income statement
181
Commitments
183
Subsequent events
183
Significant non-recurring events and transactions
184
Transactions resulting from unusual and/or abnormal operations
184
Transactions with related parties
184
Resolution regarding the result of the year
184
Resolution regarding regarding the covered of losses carried forward from previous financial
years
184
Appendix
Information pursuant to art. 149-duodecies of the
185
CONSOB Issuers' Regulation
Certification of the Annual Report pursuant to article 81-ter of
186
CONSOB Regulation 11971 of 14
th
May 1999 as amended
Report of the Board of Statutory Auditors
187
Report of Independent Auditors
196
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
154
REPORT ON OPERATIONS
Safilo Group S.p.A
at 31 DECEMBER 2022
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
155
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 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)
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
156
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.
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 2021
Financial year 2021
Receivables
Payables
Income/
Costs
(Thousand of Euro)
Recharges
Safilo S.p.A.
860
(20.776)
709
(262)
Subsidiaries held by Safilo S.p.A.
Lenti S.r.l.
1.162
-
-
-
Safilo Industrial S.r.l.
26.486
-
317
-
Safilo USA Inc.
16
-
16
-
Other Subsidiaries held by Safilo S.p.A.
82
(55)
82
-
Total
28.606
(20.831)
1.125
(262)
The receivable from the subsidiary Safilo S.p.A. is mainly referred to the 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 2,051 thousand to payables to the subsidiary for services rendered;
- for Euro 2,502 thousand to payable to Safilo S.p.A. for advances received;
- for Euro 16,223 thousand to the VAT credit transferred by Safilo S.p.A. to the parent company as a
result of the Group VAT Liquidation mechanism.
The income from the subsidiary Safilo S.p.A. mainly refers to the charges made for the legal and tax services and
the chargeback of some insurance and consultancy costs.
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
157
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 subsidiary held by Safilo S.p.A. relate to the
recharge of the costs for the seconded staff and the chargeback of some insurance and consultancy costs.
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
158
Significant events after the year-end
On 26 January 2023, the Group communicated that the Board of Directors on 9 March 2023 will also approve its
medium-term economic and financial targets, which the management will present to the market on the following
day during a Capital Market Day to be held in Milan. With regards to the ongoing strategic analyses and taking into
consideration the evolution of the product portfolio, the economic context, the competitive dynamics and a
persistent production overcapacity, the Group, in reiterating the importance of the Santa Maria di Sala and Bergamo
production sites, of the Padua logistic centre, and the company's creative capabilities, has initiated an exploration
of alternative solutions for its Longarone plant.
In March 2023, the Group has 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, with Chase Fisher,
minority shareholder, founder and CEO of the company.
For the Board of Directors
Chief Executive Officer
Angelo Trocchia
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
159
FINANCIAL STATEMENTS AND NOTES
TO THE FINANCIAL STATEMENTS
at 31 DECEMBER 2022
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
160
Statutory Financial Statements
Balance Sheet
(Euro)
Notes
December 31,
2022
December 31,
2021
ASSETS
Current assets
Cash and cash equivalents
4.1
865,512
1,363,709
Trade receivables
4.2
1,008,563
1,143,381
Other current assets
4.3
29,190,402
35,049,074
Total current assets
31,064,477
37,556,164
Non-current assets
Right of Use
4.4
313,380
163,705
Investment in subsidiaries
4.5
414,415,074
414,126,481
Other non-current assets
4.7
1,529,539
1,169,567
Total non-current assets
416,257,993
415,459,753
Total assets
447,322,470
453,015,917
(Euro)
Notes
December 31,
2022
December 31,
2021
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Trade payables
4.8
3,916,220
3,940,264
Tax payables
4.9
299,821
387,941
Other current liabilities
4.10
25,416,735
21,037,843
Lease liabilities
4.11
116,887
79,718
Total current liabilities
29,749,663
25,445,766
Non-current liabilities
Lease liabilities
4.11
208,762
87,443
Employee benefit obligations
4.12
149,047
134,976
Provisions
4.13
2,000,000
1,000,000
Total non-current liabilities
2,357,809
1,222,419
Total liabilities
32,107,472
26,668,185
Shareholders' equity
Share Capital
4.14
384,846,311
384,819,909
Share premium reserve
4.15
692,520,684
692,457,846
Retained earnings/(losses) and other reserves
4.16
(650,305,943)
(639,720,437)
Net (loss) for the year
(11,846,054)
(11,209,586)
Total shareholders' equity
415,214,998
426,347,732
Total liabilities and shareholders' equity
447,322,470
453,015,917
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
161
Income Statement
(Euro)
Notes
2022
2021
Net sales
5.1
956,134
1,082,047
Gross profit
956,134
1,082,047
General and administrative expenses
5.2
(10,382,685)
(7,945,002)
Other operating income/(expenses)
5.3
(2,700,806)
(4,111,676)
Operating profit (loss)
(12,127,357)
(10,974,631)
Financial charges, net
5.5
(78,668)
442,509
Profit (loss) before tax
(12,206,025)
(10,532,122)
Income taxes
5.6
359,971
(677,464)
Net (loss) for the year
(11,846,054)
(11,209,586)
Statement of comprehensive Income
(Euro)
2022
2021
Net (loss) for the year
(11,846,054)
(11,209,586)
Actuarial gains (loss)
31,588
(7,461)
Total comprehensive (loss)
(11,814,466)
(11,217,047)
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
162
Statement of Cash Flows
(Euro)
2022
2021
A - Opening net cash and cash equivalents (net financial
indebtedness - short term)
1,363,709
3,054,393
B - Cash flow from (for) operating activities
Net (loss) for the period
(11,846,054)
(11,209,587)
Depreciation IFRS16
131,659
130,816
Stock Options figurative cost
303,309
287,292
Net changes in provision for risks
1,000,000
1,000,000
Other non-monetary P&L items
46,992
624,145
Interest expenses on lease liabilities IFRS 16
12,956
8,020
Income tax expenses
(359,972)
677,464
Income (loss) from (for) operating activities prior
to movements in working capital
(10,711,110)
(8,481,850)
(Increase) Decrease in trade receivables
134,818
359,785
(Increase) Decrease in other receivables
5,451,932
(8,455,435)
Increase (Decrease) in trade payables
(24,044)
76,211
Increase (Decrease) in other payables
4,696,406
(24,113,752)
Interests expenses paid
(12,956)
(8,020)
Total (B)
(464,954)
(40,623,061)
C - Cash flow from (for) investing activities
(Investments) disinvestments in subsidiaries
-
(94,000,000)
Total (C)
-
(94,000,000)
D - Cash flow from (for) financing activities
Repayment of principal portion lease liabilities IFRS 16
(122,483)
(124,656)
Increase in share capital, net of transaction costs
89,240
133,057,033
Total (D)
(33,243)
132,932,377
E - Cash flow for the period (B+C+D)
(498,197)
(1,690,684)
F - Closing net cash and cash equivalents (net financial
indebtedness - short term) (A+E)
865,512
1,363,709
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
163
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 1, 2021
349,943,373
594,277,350
3,007,774
(517,859,528)
(125,508,415)
303,860,554
Previous year’s (loss) allocation
-
-
-
(125,508,415)
125,508,415
-
Capital increase, net of
transaction costs
34,876,537
98,180,496
-
-
-
133,057,033
Net increase in the reserve for
shared-based payments
-
-
-
647,193
-
647,193
Total comprehensive (loss) for
the period
-
-
-
(7,461)
(11,209,586)
(11,217,047)
Shareholders' equity as at
December 31, 2021
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
-
-
-
-
-
-
Capital and reserve increase for
shared-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
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
164
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 Mercato Telematico Azionario (MTA) of the Italian Stock Exchange.
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
2022 to 31 December 2022 and also presents comparative data related to the financial period from 1 January 2021
to 31 December 2021.
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 9 March 2023.
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 during the preparation of these financial
statements in a consistent manner for both financial years presented and on the basis of the going concern
assumption.
The financial statements for the year ended 31 December 2022 and 31 December 2021 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 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
Statutory Financial Statements of Safilo Group S.p.A.
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165
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 2022
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 financial statements as at 31 December 2021 have been applied.
Furthermore, the company has adopted the following new standards and amendments, effective from 1 January
2022:
- on 14 May 2020, the IASB published the following amendments called: Amendments to IFRS 3 Business
Combinations, Amendments to IAS 16 Property, Plant and Equipment and Amendments to IAS 37
Provisions, Contingent Liabilities and Contingent Assets, Annual Improvements 2018-2020.
Their application had no impact on the company 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 Company
At the date of this report the following amendments have been endorsed by the European Union applicable to the
company and effective for annual periods beginning on or after 1 January 2023 that have not been early adopted
by the company in preparing this report:
- 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. The changes
come into effect from 1 January 2023;
- 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. The changes come into effect from 1 January
2023.
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 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”. The document aims to clarify
how to classify debts and other short or long-term liabilities. The changes come into effect from 1 January
2023;
- On September 22, 2022, the IASB publish 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.
Statutory Financial Statements of Safilo Group S.p.A.
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166
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.
2.3 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 after purchase. The items included in the net cash and cash equivalents are
measured at fair value and the relative changes are recognised in income. Bank overdrafts are posted under current
liabilities.
2.4 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.
2.5 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.
2.6 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:
• 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”.
Statutory Financial Statements of Safilo Group S.p.A.
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167
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.
2.7 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.
2.8 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.
2.9 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
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.
Statutory Financial Statements of Safilo Group S.p.A.
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168
2.10 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 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 remaining pandemic-related effects and
geopolitical risks consequents to Russia’s invasion 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 (please also refer to the climate
change disclosure risk assessment reported in the main critical risk factors for the group section of the consolidated
management report). Financial statements assumptions and estimates have taken into consideration the
uncertainties deriving from the above circumstances.
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.
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169
4. Notes to the balance sheet
4.1 Cash and cash equivalents
This item totals Euro 865,512 (compared to Euro 1,363,709 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 1,008,563 (against Euro 1,143,381 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, 2022
December 31, 2021
Trade receivables from subsidiaries
- Safilo S.p.A.
611,362
727,484
- Safilo Industrial S.r.l.
252,416
317,116
- Lenses S.r.l.
42,178
1,000
- Safilo Optyl Doo
-
1,000
- Safilo Benelux
4,200
4,350
- Safilo GmbH
5,700
4,350
- Safilo France
6,200
5,350
- Safilo Nordic
10,284
3,377
- Safilo Hellas
-
1,000
- Safilo UK
4,193
6,411
- Safilo Nederland
4,200
4,350
- Safilo Austria
4,200
4,350
- Safilo Portugal
4,200
7,047
- Safilo Switzerland
4,207
3,378
- Safilo Espana
5,700
4,350
- Safilo Optical Trade
4,189
3,236
- Safilo USA Inc.
12,461
15,971
- Smith Usa
6,480
5,993
- Safilo Canada
5,715
4,408
- Prive Goods LLC
1,062
1,000
- Blenders Eyewear LLCs
2,991
3,501
- Safilo Far East
8,410
6,982
- Safilo Australia
3,992
4,058
- Safilo South Africa
4,223
3,320
Total
1,008,563
1,143,381
Statutory Financial Statements of Safilo Group S.p.A.
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170
4.3 Other current assets
This item breaks down as follows:
(Euro)
December 31, 2022
December 31, 2021
VAT receivables
6,028,155
8,630,596
Tax receivables and advance payments
65,937
59,818
Prepayments and accrued income
38,030
37,931
Other receivables from subsidiaries - Safilo S.p.A.
35,475
132,131
Other receivables from subsidiaries - Safilo Industrial S.r.l.
23,005,881
26,168,925
Other receivables
16,924
19,673
Total
29,190,402
35,049,074
The VAT credit refers to the amount of VAT arising from Group VAT calculation. During year 2022 Safilo Group
S.p.A. received a VAT reimbursement of Eur 4,500,000 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, 2022
Balance at
December 31, 2022
(Euro)
Increase
Decrease
Gross value
Buildings Rights of Use
119,170
135,201
(119,170)
135,201
Other assets Rights of
Use
352,264
163,130
(155,070)
360,324
Total
471,434
298,331
(274,240)
495,525
Accumulated
depreciation
Buildings Rights of Use
104,643
34,343
(119,170)
19,816
Other assets Rights of
Use
203,086
97,316
(138,073)
162,329
Total
307,729
131,659
(257,243)
182,145
Net book value
163,705
166,672
(16,997)
313,380
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
171
4.5 Investments in subsidiaries
This item amounts to Euro 414,415,074 (compared to Euro 414,126,481 of previous year).
In consideration of the difference between the value of the investment in Safilo S.p.A and the relative value of the
shareholders' equity, 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.
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 9 March 2023 the Board of Directors has approved the 2023-2027 Group Business Plan and the related financial
projections. 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 cash outflows and
related cost savings that are expected to arise from future restructuring initiatives which an entity has not yet
committed/announced before the date of the impairment test (31 December 2022), and those pertaining to
estimated future cash flows that are expected to arise from improving or enhancing asset performance. Accordingly,
neither potential new acquisitions, nor the implications of the mandate given by the Board of Directors to the
management on 26 January 2023 to explore alternative solutions for the Longarone plant, have 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 2023-2027 business plan are:
• Sales growth through a solid and balanced business portfolio by brand, geographical area and distribution
channel, which maximizes customer service and meets the needs of the different consumer segments;
• Margin expansion behind further improvement in the gross margin, 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 2022
is consistent with the criteria used for the 2021 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 or Russia-Ukraine conflict, with uncertainties instead being
reflected in the cash flows; Specific risk premium has been reduced considering the last years Group
performance and the capability to meet in advance the 2020-2024 Plan targets;
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
172
• 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 2027.
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,
2022
December 31,
2021
December 31,
2022
December 31,
2021
Safilo Group
10.12%
7.93%
2.07%
1.90%
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.
After completing the process described, management concluded that no impairment loss needs to be recognized
at the date of 31 December 2022.
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.
During year 2022 Safilo Group’s stock market capitalization has been always above the book value of shareholders’
equity.
Management believe that the assumptions incorporated in the Financial Projections 2023-2027 underlying the
impairment test are reasonable and that the Group has the necessary skills and resources to meet planned goals
considering that an appropriate execution risk of the plan has been embedded in the WACC used for the test.
The following tables show the movements that occurred during the 2022 and during the previous financial year:
(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
Statutory Financial Statements of Safilo Group S.p.A.
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173
(Euro)
% of share
capital
Balance at
January 1,
2021
Increase
(Decrease)
Impairment
Balance at
December 31,
2021
Safilo S.p.A.
95.201
316,427,044
94,000,000
-
410,427,044
Contribution for stock options to
subsidiaries
3,338,371
359,899
-
3,698,270
Safilo de Mexico
0.001
521
-
-
521
Safilo Portugal
0.1
500
-
-
500
Safilo Benelux
0.005
146
-
-
146
Total
319,766,582
94,359,899
-
414,126,481
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 2021
Euro 66,176,000 i.v.
Shareholders’ equity at 31
st
December 2021
Euro 249,202,592
Net loss for the financial year 2021
Euro (12,805,421)
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 domestic 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/loss of the participating entities.
As of 31 December 2022, Deferred Tax Assets, amounting to Euro 99,180,540, 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.
_________________________________________________________________________
174
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 2022:
Impact to
(Euro)
Balance at
January, 1
2022
Income
Statement
Equity
Receivables/
Payables due to
tax consolidation
Balance at
December, 31
2022
Tax losses Safilo Group S.p.A.
17,384,242
-
-
2,522,320
19,906,562
Tax losses from Safilo S.p.A.
64,726,149
-
-
(21,676)
64,704,473
Tax losses from Lenti S.r.l.
23,990
-
-
(850)
23,140
Tax losses from Safilo industrial S.r.l.
10,478,636
-
-
2,809,620
13,288,256
Tax losses before the tax consolidation
192,629
-
-
-
192,629
Interest expenses not deducted carryforward
505,548
(185,183)
-
-
320,365
Other temporary differences
277,483
(8,247)
-
-
269,236
Provision for Risks
240,000
240,000
-
-
480,000
Other temporary differences
(4,543)
422
-
-
(4,121)
Total deferred tax assets
93,824,134
46,992
-
5,309,414
99,180,540
Valuation allowance of deferred tax assets
(93,824,134)
(46,992)
-
(5,309,414)
(99,180,540)
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
(Euro)
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
59,729,128
14,334,991
2022
22,304,475
5,353,074
Total
408,010,131
97,922,431
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 1,529,539 (compared to Euro 1,169,567 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.
_________________________________________________________________________
175
4.8 Trade payables
The following table shows a breakdown of the trade payables and the payables to subsidiaries:
(Euro)
December 31, 2022
December 31, 2021
Trade payables for services
1,511,288
1,833,800
Trade payables to subsidiaries:
Safilo S.p.A.
2,346,409
2,051,351
Safilo Far East Ltd.
58,523
55,113
Total
3,916,220
3,940,264
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 2022, this item amounted to Euro 299,821 (compared to Euro 387,941 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 2023.
4.10 Other current liabilities
This item breaks down as follows:
(Euro)
December 31, 2022
December 31, 2021
Payables to personnel and social security institutions
2,514,091
2,303,582
Payables to pension provisions
5,753
5,608
Other current liabilities
7,880
3,997
Accrued expenses
42
43
Other payables to subsidiaries - Safilo S.p.A.
22,888,969
18,724,613
Total
25,416,735
21,037,843
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.
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176
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, 2022
Increase
Decrease
Balance at
December 31, 2022
Lease liabilities IFRS 16
167,160
298,330
(139,842)
325,648
Of which:
Short term liability
87,442
208,762
Long term liability
79,718
116,887
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,
2022
Transfer
P&L
accounting
provision
Actuarial
gains/(losses)
Release
Provision
transfer
Balance at
December
31, 2022
Defined benefit plan
134,976
35,430
10,229
(31,588)
-
-
149,047
Defined contribution plan
-
80,968
231,354
-
-
(312,322)
-
Total
134,976
116,398
241,583
(31,588)
-
(312,322)
149,047
Changes during the year
(Euro)
Balance at
January 1,
2021
Transfer
P&L
accounting
provision
Actuarial
gains/(losses)
Release
Provision
transfer
Balance at
December
31, 2021
Defined benefit plan
118,761
-
8,938
7,461
(184)
-
134,976
Defined contribution plan
31,802
-
174,870
-
-
(206,672)
-
Total
150,563
-
183,808
7,461
(184)
(206,672)
134,976
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.
_________________________________________________________________________
177
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 Provisions
As of 31 December 2022, this item amounts to Euro 2,000,000 (compared to Euro 1,000,000 of previous year) and
refers to the estimated liability for a long-term incentive for top management.
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 2022, shareholders' equity amounts to Euro 415,214,998, against Euro 426,347,732 of previous
year.
4.14 Share capital
At 31 December 2022 the share capital of Safilo Group S.p.A. amounts to Euro 384,846,311 (compared to Euro
384,819,909 at the end of the previous year) consisting of no. 413,687,780 ordinary shares with no par value
(413,555,769 ordinary shares as at 31 December 2021).
In 2022 new ordinary shares equal to a number of 132,011 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 26,402.
4.15 Share premium reserve
At 31 December 2022 the share premium reserve of Safilo Group S.p.A. amounts to Euro 692,520,684 (compared
to Euro 692,457,846 at the end of the previous year).
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 62,838.
Statutory Financial Statements of Safilo Group S.p.A.
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178
4.16 Retained earnings and other reserves
This account breaks down as follows:
(Euro)
December 31, 2022
December 31, 2021
Legal reserve
3,007,774
3,007,774
Stock option reserve
1,439,907
1,255,663
Reserve for actuarial gain (losses) of defined benefit plan
1,378
(30,209)
Losses carried forward
(654,755,002)
(643,953,665)
Total
(650,305,943)
(639,720,437)
Equity accounts - possible use and distribution
The table below shows the possible use and distribution of equity accounts:
(Euro)
Amount
Possible use
Share Capital
384,846,311
Share premium reserve
692,520,684
A - B - C (*)
Legal reserve
3,007,774
B
Stock option reserve
1,439,907
Reserve for actuarial gain (losses) of defined benefit plan
1,378
Losses carried forward
(654,755,002)
Loss for the year
(11,846,054)
Total
415,214,998
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 2022 the Group has in place the following Stock Option Plans: the 2017-2020 and the 2020-
2022 Plans.
The first Plan was deliberated by the Extraordinary Meetings 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 Extraordinary Meeting held on 28 April 2020 in which the Shareholders
approved the issue up to 7,000,000 new ordinary shares without par value to be offered to directors and/or
employees of the Company and its subsidiaries.
These Plans, designed to incentivize and retain directors and/or employees, is carried out through the grant, in
different tranches, of options entitling the beneficiary to subscribe to one of the foregoing ordinary Company shares,
issued for cash and without any all-or-none clause, excluding all pre-emptive rights pursuant to article 2441,
paragraph four, second sentence of the Italian Civil Code.
The options attributed by those plans will mature when both the following vesting conditions are met: the
continuation of the individual’s employment relationship on the options’ vesting date, and the achievement of
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
179
differentiated performance objectives for the period of each tranche commensurate with consolidated EBIT, for the
2020-2022 Plan this second economic performance vesting condition is not applicable.
Information relating to the tranches of the Stock Options Plans granted on 31 December 2022 are shown below.
Grant date
No. of options
Fair value in Euro
Maturity
Stock Option Plan 2017-2020
Third tranche
30/04/19
773.205
0,18
31/05/27
Stock Option Plan 2020-2022
First tranche
31/07/20
3.527.699
0,18
30/06/28
Second tranche
11/03/21
3.816.124
0,27
30/06/29
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%
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 2014-2016
Outstanding at the beginning of the period
242.080
8,39
Granted
-
-
Forfeited
-
-
Exercised
-
-
Expired
(242.080)
8,39
Outstanding at period-end
-
-
Stock Option Plan 2017-2020
Outstanding at the beginning of the period
1.036.118
0,68
Granted
-
-
Forfeited
(130.902)
0,68
Exercised
(132.011)
0,68
Expired
-
Outstanding at period-end
773.205
0,68
Stock Option Plan 2020-2022
Outstanding at the beginning of the period
7.743.184
0,76
Granted
-
-
Forfeited
(399.362)
0,73
Exercised
-
-
Expired
-
-
Outstanding at period-end
7.343.823
0,76
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
180
During the year, 242,080 options of the first tranche of the Plan 2014-2016 have expired, and 132,011 options of
the third tranche of the Plan 2017-2020 have been exercised, in the same period 530,264 options have been
forfeited, of which 130,902 of the Plan 2017-2020 and 399,362 of the Plan 2020-2022.
The options outstanding of the third tranche of the Plan 2017-2020, equal to 773,205 options, are exercisable until
31 May 2027, the first and the second tranche of the Plan 2020-2022, equal respectively to 3,527,699 and to
3,816,124 options, are exercisable until 30 June 2028 and 30 June 2029 respectively.
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 773,205.
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 4.4 years, while for the first and the second tranche of the Plan 2020-2022 the average exercise
prices are equal to respectively 0.63 and 0.87 Euro with a remaining contract life of 5.5 and 6 years.
The adoption of these plans has affected the income statement for the period for a cost of 304 thousand Euro (287
thousand Euro at 31 December 2021).
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
181
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 956,134.
5.2 General and administrative expenses
(Euro)
2022
2021
Payroll and social security contributions
4,645,693
2,944,805
Corporate compliance costs
331,417
313,950
Remuneration to directors and statutory auditors
2,525,376
2,356,507
Consultancies and professional services
1,180,295
785,062
Cost of services provided by Safilo S.p.A.
224,486
242,360
Other administrative and general expenses
343,758
171,502
Provisions (Long Term Incentive)
1,000,000
1,000,000
Depreciation
131,659
130,817
Total
10,382,685
7,945,003
The following table illustrates the average number of employees divided by category:
2022
2021
Executives
8
7
Clerks and middle management
11
10
Total
19
17
5.3 Other operating income (expenses)
This item amounts to Euro 2,700,806 and mainly refers to costs incurred for business development operations.
5.4 Gains (losses) on equity investments in subsidiaries
In 2022 no write-down was made as the value of the investment. The investments were subject to impairment
test. See note 4.5
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
182
5.5 Financial charges
This item breaks down as follows:
(Euro)
2022
2021
Interest expense
12,956
8,020
Bank charges and commissions
1,307
1,470
Negative exchange rate differences
67,116
23,520
Other financial charges
672
-
Total financial charges
82,051
33,010
Interest income
274
-
Positive exchange rate differences
3,109
13,786
Dividends
-
5,600
Other financial income
-
456,133
Total financial income
3,383
475,519
Total financial income (charges), Net
(78,668)
442,509
5.6 Income taxes
This item breaks down as follows:
(Euro)
2022
2021
Current taxes
359,971
849,632
Deferred taxes
-
(1,527,095)
Total
359,971
(677,463)
Current taxes, negative for Euro 359,971, mainly refer to the income from tax consolidation benefited by that the
company 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)
%
2022
%
2021
Profit (loss) before taxation
100%
(12,206,025)
100%
(10,532,123)
Theoretical Taxes
-24.0%
2,929,446
-24.0%
2,527,710
Not deductible costs
0.2%
(27,751)
0.4%
(42,767)
Costs booked to equity reduction and fully deducted
-
-
-4.30%
456,000
Income from tax fiscal unity
-2.9%
359,971
-8.1%
849,632
Non-recognition of new DTAs and write-off of existing DTAs
23.8%
(2,909,033)
41.5%
(4,472,461)
Other differences
-0.1%
7,337
-0.04%
4,423
Total
-2.9%
359,971
6.4%
(677,463)
Statutory Financial Statements of Safilo Group S.p.A.
_________________________________________________________________________
183
5.7 Earnings (losses) per share
The calculation of basic and diluted earnings per share is shown in the tables below:
(Euro)
2022
2021
Profit (loss) on ordinary shares
(11,846,054)
(11,209,586)
Average number of ordinary shares
413,598,538
298,364,436
Earnings (loss) per basic share (in Euro)
(0.03)
(0.04)
Diluted
(Euro)
2022
2021
Profit (loss) on ordinary shares
(11,846,054)
(11,209,586)
Portion reserved for preferred shares
-
-
Profit (loss) in the income statement
(11,846,054)
(11,209,586)
Average number of ordinary shares
413,598,538
298,364,436
Dilution effects:
- stock option
3,831,321
3,521,845
Total
417,429,859
301,886,281
Earnings (loss) per share diluted in Euro
(0.03)
(0.04)
6. Commitments
The Company had no purchase commitments at the reporting date.
7. Subsequent events
In the period following 31 December 2022, as disclosed in the paragraph “Significant events after the year-end and
outlook” included in the Report on operatios, the following events have incurred that might have an impact on the
data contained in this document.
On 26 January 2023, the Group communicated that the Board of Directors on 9 March 2023 will also approve its
medium-term economic and financial targets, which the management will present to the market on the following
day during a Capital Market Day to be held in Milan. With regards to the ongoing strategic analyses and taking into
consideration the evolution of the product portfolio, the economic context, the competitive dynamics and a
persistent production overcapacity, the Group, in reiterating the importance of the Santa Maria di Sala and Bergamo
production sites, of the Padua logistic centre, and the company's creative capabilities, has initiated an exploration
of alternative solutions for its Longarone plant.
In March 2023, the Group has 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, with Chase Fisher,
minority shareholder, founder and CEO of the company.
These events have been considered a “non-adjusting subsequent event” and hence have not affected the financial
statements as at 31 December 2022.
_________________________________________________________________________
184
8. Significant non-recurring events and transactions
During 2022 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 2022 the Company did not put in place any unusual
and/or atypical operations, as defined in this Communication.
10. Transactions with related parties
The remuneration of the Company’s Directors, Statutory Auditors and Strategic Management is reported below
(Euro)
2022
2021
Directors
- Salaries and short term compensations
3,711,480
3,690,916
- Non monetary benefits
27,617
21,835
- Other compensations
86,804
86,930
- Fair value of equity compensations
252,392
236,791
Statutory auditors
- Fixed compensations and compensations for participation in committees
143,000
143,000
Managers with strategic responsibilities
- Salaries and short term compensations
718,613
735,375
- Non monetary benefits
11,481
11,370
- Other compensations
3,174
53,011
- Fair value of equity compensations
51,509
50,501
Total
5,006,070
5,029,729
Resolution regarding the result for the year
We submit for your approval the financial statements for the financial year ending on 31 December 2022, drafted
according to the IFRS International Accounting Standards, and recommend that the loss of the year, amounting to
Euro 11,846,054, be covered with the Stock option reserve (amount Euro 1,439,907), the reserve for actuarial
gain (losses) of defined benefit plan (TFR) (amount Euro 1,378) and the Share premium reserve (amount Euro
10,404,769).
Resolution regarding the covered of losses carried forward from previous financial years
We propose that losses carried-forward equal to Euro 654,755,002 is integrally covered by using the capital reserve
“Share premium reserve” for the amount of Euro 654,755,002.
For the Board of Directors
Chief Executive Officer
Angelo Trocchia
_________________________________________________________________________
185
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 2022 relating to the audit and other audit related services rendered by the
same Audit firm.
Euro
2022
Audit
61.000
Other services
60.000
Totale
121.000
_________________________________________________________________________
186
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 Gerd Graehsler, 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 2022 financial year.
It is also certified that the annual report at 31
st
December 2022:
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.
9 March 2023
The Chief Executive Officer The manager responsible for preparing the
company’s financial statements
Angelo Trocchia Gerd Graehsler
_________________________________________________________________________
187
REPORT OF THE BOARD OF STATUTORY AUDITORS
_________________________________________________________________________
188
REPORT OF THE BOARD OF STATUTORY AUDITORS
To the Shareholders’ Meeting of Safilo Group S.p.A.
on the financial year 2022
pursuant to art. 153 T.U.F. and art. 2429 co. 2, C.C.
Dear Shareholders,
during the financial year ended 31 December 2022, the Board of Statutory Auditors of Safilo Group S.p.A.
carried out the supervision activity required by law, in accordance with the requirements of the Civil Code,
articles 148 and following of T.U.F., the Legislative Decree no.39 of 27 January 2010 as modified from the
Legislative Decree 17 July 2016 no.135 and the Legislative Decree 254/2016, considering also the
recommendations included in Consob’s Communications on company controls and the activities of the Board
of Statutory Auditors, as well as principles of conduct of the Board of Statutory Auditors recommended by
the
Consiglio Nazionale dei Dottori Commercialisti e degli Esperti Contabili
(Italian national council of
graduate accountants and accounting experts).
As premise, it should be noted that the Board of Statutory Auditors of Safilo Group S.p.A. has been appointed
by the Shareholders' Meeting held on 28 April 2020 and is in charge until the approval of the financial
statements as at 31 December 2022.
As regards the methods employed by the Board of Statutory Auditors to carry out its institutional activities,
it confirms the following:
- it monitored compliance with the law and by laws;
- it attended the Shareholders’ Meeting and all the meetings of the Board of Directors held during this
year, and obtained from the Directors quarterly reports on activities carried out and significant
operations executed by the company or its subsidiaries and verified that the aforesaid operations
were coherent with the assumed deliberations and in respect for the principles of correct
management;
- it monitored, within our area of responsibility, the organisational adequacy of the company, its respect
for the principles of correct management and the organisational evolution of the Group;
- it monitored the operation of the administrative and accounting system, in order to assess its
adequacy for management requirements and its reliability for the reporting of business operations.
During this activity, it relied on the information supplied by the executive Director in charge of the
internal control system, on information obtained as part of the regular participation to the activities
of the Control Risk Committee, on examination of reports prepared by the Head of the Internal Audit
function on the adequacy of administrative and accounting procedures pursuant to Law 262/05 and
on the outcome of related tests carried out, together with the information obtained during periodic
meetings with the auditing firm Deloitte & Touche S.p.A. which reported on the outcome of systematic
checks and on the proper keeping of accounting records. We have no particular comments to make
in this respect;
- not having been appointed to perform an analytical inspection of the content of the financial
statements, we verified the general structure of the financial statements and consolidated financial
_________________________________________________________________________
189
statements, drawn up in compliance with IAS/IFRS international accounting principles, and of the
respective management reports through direct checks and using specific information supplied by the
auditing company;
- it verified that the impairment test had been carried out for items subject to evaluation in the
consolidated financial statements, and in the statutory financial statements.
- it monitored, to the best of our knowledge, the Directors did not infringe the provisions of article
2423 paragraph 4 of the Civil Code in the Notes to the Financial Statements;
- it verified that, following adoption of its own “Internal Dealing Code”, the Company has set up specific
operational and management procedures for any communications from “relevant” parties;
- it verified that, pursuant to the provisions of Legislative Decree No. 231 of 8 June 2001, the company
has equipped itself with an Organisation, Management and Control Model that complies with the
Confindustria
Guidelines and fulfils the requirements of the aforementioned legislative decree,
disseminated the Code of Ethics and established a Supervisory Committee that reported to the Control
and Risk Committee and the Board of Directors on its activities. The necessary actions and measures
have been taken to ensure that the organisational model remains appropriate and up-to-date for the
purpose of fulfilling its functions and complying with new regulatory requirements;
- we have verified that the company has complied with the provisions of law 15/11/2017 n. 179
concerning Whistleblowing, adopting its Worldwide Business Conduct Manual (WBCM) and related
reporting system of alleged violations to the same.
In accordance with the aforementioned Consob communications, the Board hereby provides the following
information:
1. Events incurred during the year: the events characterizing the 2022 financial year that had an impact
on the group's economic performance are illustrated in the management report in the consolidated
financial statements and in the separate financial statements.
As far as the Board is responsible, it should be noted in particular that:
• in September 2022, the Group entered into a new loan agreement for a total of Euro 300,000,000
expiring in September 2027, consisting of a Term Loan line of Euro 150,000,000, a Revolving line
of Euro 75,000,000 and a Capex line of Euro 75,000,000; the impacts of the refinancing on the
Group's net financial position are illustrated in detail in the appropriate paragraph of the explanatory
notes to the consolidated financial statements;
• with reference to the risk of pandemics, the Group has implemented a series of procedures and
action plans to guarantee the health and safety of all employees and consequently the continuity
of the business;
• with reference to the risk associated with the Russia/Ukraine conflict, the Group confirmed the
limited exposure to financial and business impacts related to this context, also in consideration of
the fact that Safilo's net sales and operations in Russia and Ukraine respectively represent
approximately 2% of the Group's total revenues and 3% of its shareholders' equity of the Group;
• at the balance sheet date, the company has not carried out any significant transactions applicants
pursuant to the Consob Communication of July 28, 2006.
2. Events after the year end: in the specific paragraph of the Report on Operations of the consolidated
and statutory financial statements, to which reference should be made, in the appropriate paragraph
_________________________________________________________________________
190
of the report on operations of the consolidated and statutory financial statements, to which reference
should be made for details, events classified as "subsequent non-adjusting event" and therefore not
considered in the financial statements as at 31.12.2022 are reported, which pertain to:
• the communication on the approval by the Board of Directors on 9 March 2023 of the medium-
term economic-financial objectives, which management presented to the market on 10 March 2023
during a Capital Market Day held in Milan;
• the exploration of alternative solutions for the Longarone plant which is no longer considered
strategic for the Group in the light of the evolution of the product portfolio, the economic context,
competitive dynamics and persistent production overcapacity;
• the agreement, reached in March 2023, on the extension of the second and third tranches of the
put and call options on the minority stake in Blenders, from 2024 and 2025 to 2026 and 2027
respectively, with the minority shareholder, founder and director company delegate. In this regard,
it should be noted that the net result as at 31.12.2022 was affected by the profit deriving from
changes in the fair value of the liability relating to the option in question as detailed in notes 4.18
and 5.6 of the consolidated financial statements.
3. The significant economic, financial and capital operations carried out by the company and its subsidiaries
were executed in accordance with the law and company by laws. Based on the information acquired,
the Board was able to ascertain that they were not manifestly imprudent or risky, that they did not
result in a conflict of interest and did not compromise the integrity of the company’s assets.
4. It has been ascertained that no atypical and/or unusual operations, as defined by Consob
communication DEM/6064293 of 28 July 2006, were carried out within the group or with related or third
parties, having found confirmation of this in the information supplied by the Board of Directors and the
Auditing Firm.
Furthermore, the Board ascertained that the standard operating procedures in force within the Group
guarantee that all commercial operations with related parties take place according to market conditions.
5. The Board of Statutory Auditors verified the effective implementation and concrete functioning of the
Related Party Transactions Procedure adopted by the Company, attending the meetings of the
Transactions with Related Parties Committee.
6. The Board believes that the information presented by the Directors in their report on operations and
explanatory notes in respect of the operations mentioned in paragraphs 1, 2, 3 and 4 are adequate.
7. The reports prepared by the audit firm Deloitte & Touche S.p.A., issued on 15 March 2022, regarding
the individual and consolidated balance sheet of Safilo Group S.p.A. as of 31 December 2022 do not
contain significant findings and/or disclosure requests. The auditing firm issued its assessment of the
_________________________________________________________________________
191
consistency of the Management Report with the relevant financial statements without any observations
and/or objections.
With reference to the compliance of the consolidated financial statements with the Delegated Regulation
EU 2019/815 of the European Commission on regulatory technical standards relating to the
specifications of the single electronic communication format (ESEF - European Single Electronic Format),
the auditing firm issued its favorable opinion, and in particular that the consolidated financial statements
have been prepared in XHTML format and have been marked in all significant aspects in compliance
with the ESEF Delegated Regulation.
On 15 March 2023, the auditing company also issued its additional report for the Internal Control and
Audit Committee, pursuant to art. 11 of EU Regulation 537/2014 on which the board has no observations
to communicate.
8. During 2022, no reports were made to the Board of Statutory Auditors under article 2408 of the Civil
Code, and no complaints were submitted by shareholders.
9. During 2022, Safilo Group S.p.A. has appointed to Deloitte & Touche S.p.A. engagement other than to
perform the legal audit of the statutory and consolidated financial statements. In the appendix to the
consolidated financial statement is reported, in accordance with the principle 149-Duodecies of the
Issuers' Regulations, the statement of the fees recognized for the year to Deloitte & Touche S.p.A. and
its network for statutory audit and other services provided by the same Independent Auditor to the
company and to the Group. In accordance with the article 17, ninth paragraph, of the Legislative Decree
39/2010, the Independent Auditor has regularly communicated to the Board of Statutory Auditors
additional engagements to those of auditing the accounts, obtaining the relative authorization from the
Board after assessment of possible risks for the independence of the Auditor.
10. During the 2022 financial year, the Board of Statutory Auditors expressed its opinion when required by
current laws.
11. On November 29, 2022, the Board, following a specific selection procedure, issued its "
Reasoned opinion
of the Board of Statutory Auditors of Safilo Group S.p.A. for the appointment of the statutory auditor
for the period 2023-2031 and approval of the related fee, - pursuant to articles 13, paragraph 1, and
17, paragraph 1, of Legislative Decree no. 39 of 27 January 2010 as amended, respectively, by articles
16 and 18 of Legislative Decree no. 135 of 17 July 2016, by art. 16 of the European Regulation n.
537/2014 of the European Parliament and of the Council of 16 April 2014
”.
12. On 22 February 2023, the Board, as the outgoing body, based on the rules of conduct of the board of
statutory auditors of listed companies of the National Council of Chartered Accountants and Accounting
_________________________________________________________________________
192
Experts of 26/4/2018 issued the document entitled "
Guidelines relating to the new Board of Statutory
Auditors of Safilo Group Spa which will be elected at the next shareholders' meeting
”.
13. The Board of Statutory Auditors verified the accuracy of the criteria and assessment procedures
employed by the Board of Directors to assert the independence of its members.
14. The Board of Statutory Auditors verified the correctness of the assessment criteria and procedures
adopted by the Board of Directors to assess the absence of subjection to the Direction and Coordination
activity by any other entities, including Hal Holding N.V..
15. The Board of Statutory Auditors carried out the self-assessment process of its members, also verifying
their possession of the requisites of integrity and independence, as well as compliance with the
provisions on the accumulation of offices contained in art. 148bis, c.2, of the TUF and in the articles
144-duodecies and following of the Issuers' Regulation; to the Report on Corporate Governance and
Ownership Structures for the year 2022, approved by the Board of Directors of the 9 March 2023, the
list of offices held by the members of the Board of Statutory Auditors at the date of issue of the Report
is attached, drawn up in compliance with attachment 5 bis of the Issuers' Regulation.
16. During 2022 financial year, the following were held: 1 (one) meeting of the Shareholders' Meeting, 8
(eight) meetings of the Board of Directors and 9 (nine) meetings of the Board of Statutory Auditors,
which the board regularly attended in its entirety composition. Furthermore, it is noted that the Control
and Risk Committee met 5 (five) times, the Sustainability Committee met 3 (three) times, while the
Remuneration and Appointments Committee met 2 (two) times and the Transactions with Related
Parties Committee met 1 (once) once, with the constant participation of the entire Board of Statutory
Auditors (unless the justified absence of a single member).
17. The Board believes that the principles of correct administration have been constantly observed as
confirmed by the information obtained from the managers of the various administrative functions, from
the Internal Audit function and during the periodic meetings held with the Independent Auditors.
18. The Board gathered information about and monitored the company’s organisational structure to the
extent of our responsibilities.
19. Based on the analyses performed and the information obtained during meetings with the Director in
charge of the internal control system and risk management, with the Manager in charge of preparing
the accounting documentation and during meetings of the Control Risk Committee, the Sustainability
Committee and the Supervisory Board, the Board verified the adequacy and reliability of the internal
control system and risks management.
20. The Board verified the adequacy of the administrative and accounting system and the reliability of the
same in correctly representing business operations.
_________________________________________________________________________
193
21. The Board verified the adequacy of the manner in which the parent company hands down instructions
to its main subsidiaries.
22. During systematic meetings between the Board of Statutory Auditors and the Auditing Firm under art.
150, paragraph 2, Legislative Decree 58/1998, no significant findings emerged.
23. The Remuneration Report is prepared pursuant to art. 84 quarter of the Issuers’ Regulations and to
Consob resolution No. 11971/1999 and subsequent amendments, and is structured in two sections: the
first section which contains the remuneration policy for the year 2023 and will be submitted to the
shareholders' meeting, and the second section which describes the methods by which the remuneration
policy in force for the financial year 2022 has been implemented, providing a summary of the
remuneration paid.
24. The 2022 Report on Corporate Governance and Ownership Structure prepared by the Board of Directors
contains a description of the governance of the Company and the Group that appears to be in line with
the principles of the Self-Regulation Code and the Issuers’ Regulations. This Report also presents
information on the ownership structure pursuant to art. 123 bis of the TUF (consolidated finance act).
The Board of Statutory Auditors monitored implementation of the corporate governance rules, based
on the Corporate Governance Code promoted by Borsa Italiana in the version in force from 1 January
2021, in the terms illustrated within the 2022 Report on Corporate Governance and Ownership
Structure.
25. The Chief Executive Officer and the Manager responsible for preparing the company’s financial
statements provided the statements required by article 154-bis, paragraph 5, regarding the financial
statements and consolidated financial statements in accordance with the model provided in appendix
3c-ter of the Issuers’ Regulations.
26. Impairment Test: with regard to the verification process carried out on the items subject to evaluation,
the outcome of the impairment test did not reveal the need for an impairment. On 9 March 2023, the
Board of Directors approved the Group Business Plan 2023-2027 and the related financial projections
which were used to determine the cash flow projections considered for the purposes of the test. In
estimating growth over the period of the plan, the Group took into consideration both its own internal
expectations and the indications obtained from independent external sources.
The strategic objectives of the 2023-2027 Plan, the complex assessment process, as well as the
assumptions on which the impairment test is based are illustrated in the Explanatory Notes to the
Consolidated Financial Statements, note 4.9.
During 2022, the value of the Company which can be deducted from the prices of the Stock Market has
always been higher than the value of its assets.
_________________________________________________________________________
194
The Board of Directors believes that the assumptions incorporated in the financial projections approved
for the impairment test are reasonable, also taking into account all the other elements and parameters
considered in the impairment test execution.
27. Based on the same Financial Projection for the period 2023 – 2027 approved by the Board of Directors
on 9 March 2023, the impairment test, in the separate financial statement of Safilo Group S.p.a., on the
equity investment value in Safilo S.p.a. did not result in any impairment loss, as described in the note
4.5 of the Notes to the separate financial statement.
28. The Board also took note about the topics described in the "Key Audit Matters" paragraph included in
the report of Independent Auditor.
29. Consolidated Non-Financial Information Statement: the Board verified the compliance with the provisions
pursuant to the Legislative Decree 30 December 2016 no.254, regarding the consolidated non-financial
information statement of Safilo Group S.p.A. and its subsidiaries (hereinafter NFD).
The Board of Statutory Auditors finds that the Company, in its capacity as Parent Company, has
prepared, following the issue of Legislative Decree 30 December 2016, n. 254 ("Implementation of
directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014, amending
directive 2013/34/EU as regards the disclosure of non-financial information and information on diversity
by certain companies and certain large groups" - the "Decree"), the 2022 Consolidated Non-Financial
Information Statement of the Safilo Group as required by Articles 3 and 4 of the Decree and by the
"Global Reporting Initiative Sustainability Reporting Standards" (hereinafter GRI Standards), defined in
2016 and subsequently updated in 2021 by the GRI - Global Reporting Initiative - identified by the
directors as a reporting standard.
The Board of Statutory Auditors supervised compliance with the provisions established by the Decree
in the preparation of the NFS, ascertaining that the same allows the understanding of the business
activity, its performance, its results and the impact produced by the same, and that relations in
regarding environmental, social, personnel-related issues, respect for human rights, the fight against
active and passive corruption, taking into account the activities and characteristics of the company, in
compliance with the provisions of art. 3 of the aforementioned legislative decree.
The Board of Statutory Auditors also acknowledged that, pursuant to art. 3 paragraph 10, the Company
Deloitte & Touche S.p.A., the entity in charge of auditing the Group's financial statements, issued on
15 March 2023 a specific Report on the Consolidated Non-financial Information Statement attesting the
compliance of the information provided in this Document with Articles 3 and 4 of the Decree and the
GRI Standards.
_________________________________________________________________________
195
30. The Board confirms that no omissions, irregularities or wrongful actions emerged from our supervisory
activities that would need to be reported to the Supervisory Bodies or Shareholders.
To conclude, the Board expresses its approval, to the extent of its responsibilities, of the 2022 financial
statements as presented by the Board of Directors, with the Report on Operations, and of Directors’ proposal
to cover the loss for the year of Euro 11,846,054 as formulated by the Directors. He also expresses his
assent to the proposal to cover the losses carried forward for Euro 654,775,002 as formulated by the
Directors.
Padua, 15 March 2023
THE BOARD OF STATUTORY AUDITORS
Signed by
Carmen Pezzuto Chairman
Roberto Padova Regular auditor
Bettina Solimando Regular auditor
This report has been translated into the English language solely for the convenience of international readers.
_________________________________________________________________________
196
REPORT OF INDEPENDENT AUDITORS
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona
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© Deloitte & Touche S.p.A.
Deloitte & Touche S.p.A.
Via N. Tommaseo, 78/C int. 3
35131 Padova
Italia
Tel: +39 049 7927911
Fax: +39 049 7927979
www.deloitte.it
INDEPENDENT AUDITOR’S REPORT
PURSUANT TO ARTICLE 14 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010
AND ARTICLE 10 OF THE EU REGULATION 537/2014
To the Shareholders of
Safilo Group S.p.A.
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Safilo Group S.p.A. (the “Company“), which comprise the
statement of financial position as at December 31, 2022, and the statement of income, statement of
comprehensive income, statement of changes in equity and statement of cash flows for the year then
ended, and notes to the financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position
of the Company as at December 31, 2022, and of its financial performance and its cash flows for the year
then ended in accordance with International Financial Reporting Standards as adopted by the European
Union and the requirements of national regulations issued pursuant to art. 9 of Italian 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 the Auditor’s Responsibilities for the Audit
of the Financial Statements section of our report. We are independent of the Company in accordance
with the ethical requirements applicable under Italian law to the audit of the financial statements. We
believe that the 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 judgment, were of most significance in our
audit of the financial statements of the current period. These matters were addressed in the context of
our audit of the financial statements as a whole and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
2
Impairment of the equity investment in Safilo S.p.A.
Description of the key
audit matter
The balance sheet includes the equity investment in Safilo S.p.A. (the
“subsidiary”) amounting to Euro 414.4 million. As disclosed in Note 4.5., in
order to confirm the evaluation of the equity investment as at December 31,
2022 the Directors have submitted the equity investment to impairment
test. Since Safilo S.p.A. is the operating company of the Safilo Group, the
impairment test has been derived from the one performed for the purposes
of evaluating the goodwill recognized in the consolidated financial
statements and therefore it is based on the financial projections for the
period 2023-2027 approved by the Directors on March 9, 2023.
In note 3, the Directors explain that the impairment test represents a
complex process and it is based on assumptions related, among others, to
the expectations in terms of cash flows, the determination of appropriate
discount rates (WACC) and of long-term growth (g-rate).
Considering the relevance of the value of the investment, which represents
about 93% of the Company’s assets as of December 31, 2022, the
subjectivity of the estimates underlying the determination of the key
variables of the impairment test, the difference between the value of the
investment and the net equity of the investee and the negative results
registered by the subsidiary in the last years, we assessed that the
impairment of the equity investment in the subsidiary company represents a
key audit matter for the audit of Safilo Group’s financial statements.
Audit procedures
performed
We preliminarily analyzed the methodology and assumptions used by
Management to perform the impairment test.
We performed the following audit procedures, supported by the experts of
our network:
• detection and understanding of the relevant controls designed by the
Company in the process of performing the impairment test;
• obtaining the sources of information and analysis of the main
assumptions adopted by the Directors to elaborate the expectations in
terms of cash flows, also using industry data and researches with
reference to the expected trend in revenues and margins, comparison
with analysts’ expectations and obtaining information from Management;
• analysis of the actual results obtained compared to the expectations, in
order to investigate the nature of the variations and evaluate the
reliability of the planning process;
• analysis of the reasonableness of the discount rates (WACC) and long-
term growth (g-rate);
3
• test of the accuracy of the determination of the carrying value and
comparison with the recoverable value resulting from the impairment
test.
Finally we verified the appropriateness and the compliance of the disclosure
on the impairment test provided by the Directors to the requirements of
IAS 36.
Responsibilities of the Directors and the Board of Statutory Auditors for the Financial Statements
The Directors are responsible for the preparation of financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the European Union and the
requirements of national regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05 and,
within the terms established by law, for such internal control as the Directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to
fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless they have identified the existence of the conditions for the
liquidation of the Company or for the termination of the operations or have no realistic alternative to
such choices.
The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the
Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
• identify and assess the risks of material misstatement of the financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain 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 the override of internal
control;
4
• obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control;
• evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors;
• conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the 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 the related disclosures in the financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our
auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern;
• evaluate the overall presentation, structure and content of the financial statements, including the
disclosures, and whether the financial statements represent the underlying transactions and events in
a manner that achieves fair presentation.
We communicate with those charged with governance, identified at an appropriate level as required by
ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant
ethical requirements regarding independence applicable in Italy, and to communicate with them all
relationships and other matters that may reasonably be thought to bear on our independence and,
where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that
were of most significance in the audit of the financial statements of the current period and are therefore
the key audit matters. We describe these matters in our auditors’ report.
Other information communicated pursuant to art. 10 of the EU Regulation 537/2014
The Shareholders' Meeting of Safilo Group S.p.A. has appointed us on April 15, 2014 as auditors of the
Company for the years from December 31, 2014 to December 31, 2022.
We declare that we have not provided prohibited non-audit services referred to in art. 5 (1) of EU
Regulation 537/2014 and that we have remained independent of the Company in conducting the audit.
We confirm that the opinion on the financial statements expressed in this report is consistent with the
additional report to the Board of Statutory Auditors, in its role of Audit Committee, referred to in art. 11
of the said Regulation.
5
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Opinion on the compliance with the provisions of the Delegated Regulation (EU) 2019/815
The Directors of Safilo Group S.p.A. are responsible for the application of the provisions of the European
Commission Delegated Regulation (EU) 2019/815 with regard to the regulatory technical standards on
the specification of the single electronic reporting format (ESEF – European Single Electronic Format)
(hereinafter referred to as the “Delegated Regulation”) to the financial statements as at December 31,
2022, to be included in the annual financial report.
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 700B in order to
express an opinion on the compliance of the financial statements with the provisions of the Delegated
Regulation.
In our opinion, the financial statements as at December 31, 2022 have been prepared in XHTML format
in accordance with the provisions of the Delegated Regulation.
Opinion pursuant to art. 14, paragraph 2 (e), of Legislative Decree 39/10 and art. 123-bis, paragraph 4, of
Legislative Decree 58/98
The Directors of Safilo Group S.p.A. are responsible for the preparation of the report on operations and
the report on corporate governance and ownership structure of Safilo Group S.p.A. as at December 31,
2022, including their consistency with the related financial statements and its [their] compliance with the
law.
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to
express an opinion on the consistency of the report on operations and some specific information
contained in the report on corporate governance and ownership structure set forth in art. 123-bis, n. 4
of Legislative Decree 58/98 with the financial statements of Safilo Group S.p.A. as at December 31, 2022
and on their compliance with the law, as well as to make a statement about any material misstatement.
In our opinion, the above-mentioned report on operations and information contained in the report on
corporate governance and ownership structure are consistent with the financial statements of Safilo
Group S.p.A. as at December 31, 2022 and are prepared in accordance with the law.
With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10,
made on the basis of the knowledge and understanding of the entity and of the related context acquired
during the audit, we have nothing to report.
DELOITTE & TOUCHE S.p.A.
Signed by
Carlo Pergolari
Partner
Padova, Italy
March 15, 2023
6
As disclosed by the Directors in the paragraph 1 “General Information” the accompanying 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. This
independent auditor’s report has been translated into the English language solely for the convenience of
international readers. Accordingly, only the original text in Italian language is authoritative.
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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