ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
(COURTESY TRANSLATION FOR THE CONVENIENCE OF INTERNATIONAL READERS)
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CONTENTS
LETTER TO THE SHAREHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CORPORATE DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
CORPORATE GOVERNANCE BODIES AT 31ST DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
THE BRUNELLO CUCINELLI GROUP AT 31ST DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
GROUP STRUCTURE AT 31ST DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
DISTRIBUTION NETWORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
BOARD OF DIRECTORS’ REPORT ON OPERATIONS
COMPANY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
SUMMARY DATA AT 31ST DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
THE GROUP’S RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ANALYSIS OF REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
– REVENUES BY DISTRIBUTION CHANNEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
– REVENUES BY GEOGRAPHICAL AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
– REVENUES BY PRODUCT AND END CUSTOMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ANALYSIS OF THE INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
– OPERATING RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
– NET FINANCIAL EXPENSE, TAXATION AND NET PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ANALYSIS OF KEY BALANCE SHEET AND FINANCIAL ITEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
– NET WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
– FIXED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
–CAPEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
– NET DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
– SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ECONOMIC AND FINANCIAL INDICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
INFORMATION ON CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
PERFORMANCE OF THE COMPANY’S SHARE ON THE BORSA ITALIANA S.P.A.
ELECTRONIC STOCK EXCHANGE (MTA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SIGNIFICANT EVENTS DURING 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
INFORMATION ON SIGNIFICANT NON-EU COMPANIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
PRINCIPAL RISKS AND UNCERTAINTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
RESEARCH AND DEVELOPMENT ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
FINANCIAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SIGNIFICANT SUBSEQUENT EVENTS SINCE 31ST DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
BUSINESS OUTLOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED 31ST DECEMBER 2015
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
CONSOLIDATED INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
CONSOLIDATED CASH FLOW STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
CONSOLIDATION SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ACCOUNTING STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
CHANGES IN ACCOUNTING STANDARDS, NEW ACCOUNTING STANDARDS, CHANGES
IN ACCOUNTING ESTIMATES AND RECLASSIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
TRANSLATION OF FINANCIAL STATEMENTS IN A CURRENCY OTHER THAN THE EURO AND ITEMS
IN FOREIGN CURRENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION . . . . . . . 84
COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . 106
FINANCIAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
OTHER INFORMATION
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
SIGNIFICANT SUBSEQUENT EVENTS SINCE 31ST DECEMBER 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
COMPENSATION OF THE BOARD OF DIRECTORS AND THE BOARD OF STATUTORY AUDITORS . . . . . . . . . . . . . 125
DISCLOSURES PURSUANT TO ARTICLE 149-DUODECIES OF THE ISSUERS’ REGULATIONS . . . . . . . . . . . . . . 126
BALANCES OR TRANSACTIONS DERIVING FROM ATYPICAL OR UNUSUAL OPERATIONS . . . . . . . . . . . . . . . 126
CERTIFICATION PURSUANT TO ARTICLE 154-BIS OF LEGISLATIVE DECREE NO. 58
OF 24TH FEBRUARY 1998 (CONSOLIDATED FINANCE LAW) AND ARTICLE 81-TER OF CONSOB
REGULATION NO. 11971 OF 14TH MAY 1999 AS AMENDED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
REPORT OF THE EXTERNAL AUDITORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
LETTER TO THE SHAREHOLDERS
Dear Shareholders,
We have recently come to the end of our fourth year together. For us, this short space of time has been extremely
important because it has allowed us to share the philosophy we have always cherished at Solomeo with others,
and build upon it. The results achieved over these years have rewarded the way we have worked hard together
to realise our values, our rhythm and our drive to bring about “gracious, solid and just” growth which seeks to
provide and protect the moral and economic dignity of work, which we believe is the fundamental root of life,
creativity and production.
Our company history is relatively recent, but the project we have taken on has reflected our fundamental
motivations from the very start, and continues to do so: we have decided to work and create in a beautiful location
in Umbria, Italy, which we can identify as “ours”. At the beginning, this meant the fourteenth century castle in an
old hamlet, but in more recent years our growth has meant that we have expanded into new spaces surrounded by
nature and a green area on the slopes of the Solomeo hill, in the rolling Umbrian countryside.
The respect which all the company’s “thinking beings” share has stayed the same since the very beginning: we
believe that ensuring the dignity of work is a prerequisite in ensuring product quality. For us this means offering
fair employment conditions and making sure that there is time for the soul to be nourished, thereby valuing
quality work on a par with quality time spent with the family, while relaxing and in rest. We believe that it is
impossible to produce beautiful things unless beauty itself is cultivated, both individually and communally, in the
context of appropriate timeframes and relationships. This is the backdrop for the principle which has guided us,
and continues to inspire us, since the beginning. We call it “Humanist Capitalism” and it is about striving for
graciousness in growth, in a way which respects individuals and nurtures Beauty.
We are convinced that the dignity of work, and the creativity which arises from it, can never represent an ultimate
goal. It is therefore not a “value” – in the highest sense of the term – which can be defined or commercially
exchanged. The dignity of work and creativity are the fruit of ongoing day-to-day commitment, and the slow
accretion of an awareness which respects all individuals and all their time, thereby ensuring that the appropriate
time and care can be spent on all “values”.
Now the castle where we started is a space dedicated to young people who want to learn our work. We hope that
they will continue to follow a path which links work, humans and creativity in a true and faithful way. The hamlet
of Solomeo is home to a theatre, a library which is always open to all comers, and to cultural festivals through
the summer.
The highlight of the past year was the confirmation that revenues and profit margins are growing. The Spring
Summer 2016 collections achieved “excellent” results, the sales campaign for the winter 2016 collections is
coming to a very positive conclusion, with critical acclaim from both multibrands and the specialist press.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Our task is now, and has always been, to gather together all the stimuli, inspiration and directions which we pick
up from the physical and digital worlds around us, and to translate them into reality through our company. Our
view is increasingly that the physical and digital worlds are a single integrated whole, and our aim in this context
is to become Web artisans and humanists, and to create a Great Internet Project, along the lines of bespoke
tailoring: with significant artisan skill and – we hope – creativity.
It seems to us that a new sun is rising over our beloved Italy, warming our souls: this sun is a new state of mind, a
willingness to take on new projects with the confidence brought by an awareness of what “made in Italy” means
to the rest of the world. We are proud of our country. In concrete terms, we are living our lives with a positive
attitude, believing in the construction of a new future based on the reawakening of great ideals.
Solomeo, 10th March 2016
Brunello Cucinelli
Chairman of the Board of Directors and CEO
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CORPORATE DETAILS
Registered office of the Holding Company
Brunello Cucinelli S.p.A.
Via dell’Industria, 5, frazione Solomeo
Corciano – Perugia
Legal data of the Holding Company
Approved share capital € 13,600,000
Subscribed and fully paid-up share capital € 13,600,000
Perugia Companies Register no. 01886120540.
Official website http://investor.brunellocucinelli.com/en/
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CORPORATE GOVERNANCE BODIES AT 31ST DECEMBER 2015
Board of Directors
Brunello Cucinelli (1)
Moreno Ciarapica (1)
Riccardo Stefanelli (1)
Giovanna Manfredi (1)
Camilla Cucinelli (1)
Giuseppe Labianca (1)
Candice Koo (1)
Andrea Pontremoli (1)
Matteo Marzotto (1)
Lead Independent Director
Andrea Pontremoli
Control and Risks Committee
Andrea Pontremoli
Matteo Marzotto
Candice Koo
Chairman
Remuneration Committee
Matteo Marzotto
Andrea Pontremoli
Candice Koo
Chairman
Board of Statutory Auditors
Gerardo Longobardi (1)
Alessandra Stabilini (1)
Lorenzo Lucio Livio Ravizza (1)
Guglielmo Castaldo (1)
Francesca Morbidelli (1)
Chairman
Standing auditor
Standing auditor
Substitute auditor
Substitute auditor
External Auditors
Reconta Ernst &Young S.p.A.
Manager in charge of preparing
the corporate accounting documents
Moreno Ciarapica
Chairman and CEO
Director with powers
Director with powers
Director
Director
Director
Independent director
Independent director
Independent director
(1) Appointed at the ordinary shareholders’ meeting of 23rd April 2014; will remain in office until the shareholders’ meeting called to approve the financial
statements for the year ending 31st December 2016.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
THE BRUNELLO CUCINELLI GROUP AT 31ST DECEMBER 2015
Brunello Cucinelli
S.p.A.
100%
100%
Brunello Cucinelli
Europe S.r.l.
Brunello Cucinelli
Retail Spain SL
95%
Brunello Cucinelli
Retail Deutschland
G.m.b.H.
70%
Brunello Cucinelli
Austria Gmbh
Brunello Cucinelli
England, Ltd.
98%
(*)
98%
Brunello Cucinelli
Suisse S.A.
98%(*)
Brunello Cucinelli
France S.a.r.l.
(*)
98%(*)
Brunello Cucinelli
G.m.b.H.
98%(*)
Brunello Cucinelli
Netherlands B.V.
(*)
75% 70,3%
Brunello Cucinelli
Hong Kong, Ltd.
51% 100%
Brunello Cucinelli
Brasil, LTDA
98% 70%
Brunello Cucinelli
Lessin (Macau)
Fashion Co. Ltd.
Brunello Cucinelli
Canada Limited
Brunello Cucinelli
USA Inc.
70%
51%
Cucinelli Holding
Co LLC
Brumas Inc.
70%
51%
Brunello Cucinelli
Hellas S.A.
Brunello Cucinelli
Belgium S.p.r.l.
100% 51%
Max Vannucci S.r.l.
SAM Brunello
Cucinelli Monaco
68,67% 98%(*)
Pinturicchio S.r.l.
SAS Brunello
Cucinelli France
Resort
2%
Brunello Cucinelli
Japan Co. Ltd.
Brunello Cucinelli
Lessin (Sichuan)
Fashion Co. Ltd.
70%
70%
SAS White Flannel
(*) The remaining percentage is held by BRUNELLO CUCINELLI S.p.A..
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
GROUP STRUCTURE AT 31ST DECEMBER 2015
Company name
Registered office
Brunello Cucinelli S.p.A.
Corciano, frazione Solomeo (PG) – Italy
Brunello Cucinelli USA, Inc.
New York – USA
Cucinelli Holding Co, LLC
New York – USA
Brunello Cucinelli Europe S.r.l.
Corciano, frazione Solomeo (PG) – Italy
Brumas Inc.
New York – USA
Brunello Cucinelli Suisse SA
Lugano – Switzerland
Brunello Cucinelli Retail Spain SL
Madrid – Spain
Brunello Cucinelli GmbH
Munich – Germany
Brunello Cucinelli France Sarl
Paris – France
Brunello Cucinelli Belgium Sprl
Brussels – Belgium
Max Vannucci S.r.l.
Corciano (PG) – Italy
Brunello Cucinelli Japan Co. Ltd
Tokyo – Japan
Brunello Cucinelli Retail Deutschland GmbH
Munich – Germany
Brunello Cucinelli Netherlands B.V.
Amsterdam – Holland
Brunello Cucinelli Lessin (Sichuan) Fashion Co. Ltd.
Chengdu – China
Brunello Cucinelli Hellas S.A.
Athens – Greece
Brunello Cucinelli Austria GmbH
Vienna – Austria
Brunello Cucinelli England Ltd
London – United Kingdom
Brunello Cucinelli Hong Kong Ltd
Hong Kong
Brunello Cucinelli Lessin (Macau) Fashion Co. Ltd.
Macau
Pinturicchio S.r.l.
Carrara – Italy
Brunello Cucinelli Brasil LTDA
San Paolo – Brazil
SAS White Flannel
Cannes – France
SAM Brunello Cucinelli Monaco
Principality of Monaco
Brunello Cucinelli Canada Limited
Vancouver – Canada
SAS Brunello Cucinelli France Resort
Courchevel – France
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
DISTRIBUTION NETWORK
The Group offers its products on the market through a number of different distribution channels.
From the standpoint of the end customer the Group is present on the market through:
–the retail distribution channel, namely the direct distribution channel, for which the Group uses the services
of Directly Operated Stores or DOS. In certain countries local operators also hold an interest in the Group
company running the DOS, thereby contributing their specific market experience. From 1st September 2014
the retail channel also includes the sales points managed under the Group’s responsibility and using direct
staff positioned in the Japanese department stores;
–the wholesale monobrand channel, consisting of monobrand stores operated under commercial distribution
agreements. The Group uses intermediaries represented by monobrand stores for sales to end users, with the
result that in this case these are the Group’s customers;
– the wholesale multibrand channel, consisting of independent multibrand stores and dedicated spaces within
department stores (shop in shop). In this channel, the Group uses intermediaries represented by independent
multibrand stores (or department stores) for sales to end users, with the result that in this case these are the
Group’s customers.
The Group uses a network of agents and distributors for sales to a number of monobrand and multibrand
wholesale customers.
For all distribution channels the Group ensures that the brand image and the Brunello Cucinelli style are
transmitted in the areas and stores dedicated to the sale of its products.
A summary is provided below of the Brunello Cucinelli Group’s Monobrand sales network at 31st December 2015,
31st December 2014 and 31st December 2013:
Distribution channel
31st December 2015
31st December 2014
31st December 2013
RETAIL
81
71
61
WHOLESALE MONOBRAND
36
34
37
117
105
98
36
34
81
37
Total
monobrand stores
71
61
WHS monobrand
Retail DOS
31st December 2015
31st December 2014
31st December 2013
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The following table provides an analysis of the location of points of sale by geographical area at 31st December 2015:
DOS
WHOLESALE MONOMARCA
TOTAL
Italy
Europe
North
America
11
27
21
Greater
Rest of the
China World (RoW)
16
6
Total
81
6
18
1
3
8
36
17
45
22
19
14
117
The figure below sets out the DOS and wholesale monobrand points of sale at 31st December 2015 together with
their geographical location:
Greater China
Europe
North America
21 DOS
1 WHS MONOBRAND
27 DOS
1 Austria; 2 Belgium; 6 France;
5 Germany; 1 Greece; 1 Netherland;
5 Spain; 4 Switzerland; 2 UK
16 DOS
3 WHS MONOBRAND
18 WHS MONOBRAND
1 Azerbaijan; 6 Russia; 1 France;
1 Germany; 1 Lithuania; 1 Switzerland;
2 Ukraine; 1 Romania; 1 Turkey;
1 Kazakhstan; 1 Denmark;
1 Bulgaria
Italy
11 DOS
6 WHS MONOBRAND
Rest of World (RoW)
6 DOS
1 Latin America; 5 Asia Pacific;
8 WHS MONOBRAND
2 Latin America; 4 Asia Pacific;
2 Middle East
From 1st September 2014 the revenues of the 13 Japanese sales points, which are located inside the department
stores operated under the Group’s responsibility, employing direct staff, are included in the retail channel.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
BOARD OF DIRECTORS’ REPORT ON OPERATIONS
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
A POEM TO THE DIGNITY OF NATURE
– In the fourth century before Christ, the Greek philosopher Theophrastus, who was also the first botanist,
began his History of plants, which is also a history of medicine.
– One day, towards the end of the thirteenth century, Giotto painted the miracle of the spring and other
masterpieces in the Upper Basilica in Assisi. It shows a monk bending down to the ground, drinking from a
spring gushing out of a rock.
– One clear night in the sixteenth century, on a beautiful hillside in Arcetri near Florence, Galileo Galilei
looked through his telescope and examined the firmament to discover the secrets of the heavens.
– Towards the end of the eighteenth century, Jean Jacques Rousseau was wandering alone through the woods
on the Île de St-Pierre in Switzerland, and he fell into a state of rapture in front of a humble borage flower. He
called it his “rural delirium”.
– In 1901, a scientist, Hugo de Vries, was the first to coin the term “genetic mutation” which was to revolutionise
the whole study of Nature.
Theophrastus’ and the little Franciscan monk’s nature is Natura naturans, nature untouched by the hand of man,
which nourishes and heals without asking anything in return, as exalted centuries later by Giordano Bruno and
Baruch Spinoza. Natura Scientiae is that of Galileo and de Vries. It was born with the Renaissance and it lives on
today, with ever greater importance; Natura sentimentalis is the nature of Rousseau, and many others: Charles
Dickens, Alessandro Manzoni, di Huī Zōng, Mark Twain, Katsushika Hokusai, Edgar Allan Poe, and all of us.
As symbols, the quoted examples allow us to enter directly into contact with the deep meanings of things: in this
case, with the meaning of Nature.
Forever split between the physical and the divine, and always influenced by changing historical and cultural
attitudes, Nature has always been the ultimate immanent reference point of man, who depends on it, in life as in
death, individually and collectively.
Through time, but also beyond time, again and again man has researched, feared, desired, and loved this great
godhead and mother which created, fed, nourished and struck him down in fury. From the Renaissance onwards,
man, in his pride, has wanted to research it, has begun to uncover its mysteries and has succeeded in modifying
it more wholly.
From passive to active. Man, who suckles on milk from his mother’s breast for the first years of his life, becomes
a protagonist when he grows up, and his sacred duty is now to keep mother nature alive, in order that he himself
can survive.
Perhaps before, when he could only submit to life’s rhythms and realities, man, who was both subject and son,
and completely unaware of the future, lived in a kind of serene state in respect of the superhuman order, to which
he fully submitted.
In the modern era, the progress he has made has changed this relationship completely and he is being pushed
towards taking a massive responsibility, as well as posing a huge ethical problem.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
How should he manage the new possibilities afforded by modifying Nature’s internal workings? How far is
it legitimate or even useful to go? We do not yet know the answer to this question, but we do know that it will
decide whether we will lead lives full of beauty, or die dramatically. The tower of Babel is the story of people who
became lost in their excessive audacity in searching for the truth. It is a vigorous image, which still has great
relevance and evocative force even when it is taken out of its religious context.
We must seek inspiration in natural laws which reflect the necessity of existence. According to Aristotle, Nature “does
nothing in vain” and by extension, never does anything superfluous. Even the exuberant plumage of a peacock with
its quivering, bold colours has a reason and a purpose. Returning to Giotto’s monk, we can imagine a journey which
takes us step by step from the spring in the rock, along a tiny rivulet, then a gurgling brook which becomes a majestic
river in its valley, and lastly flows on into the infinite ocean. This journey may last thousands of kilometres, but every
single bend and meander along its route is essential, economical and efficient. It is the same for us. Choosing to
believe that the tools of today’s technology are our enemies is just an excuse, because we will always be the ones
who choose how to use those tools in a useful and efficient manner for the purposes of furthering progress.
When he said that Beauty will save the world, Prince Myshkin was ridiculed, but as with so many other visionaries
who were humiliated by their contemporaries, he was right. Beauty will save the world: all we need to do is
save beauty, and we can do this with simplicity and ethics, by courageously and lovingly observing Nature and
learning from it.
Brunello Cucinelli
Nature does nothing in vain
— ARISTOTLE —
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
COMPANY INFORMATION
OUR COMPANY
Brunello Cucinelli S.p.A. is a company registered as a legal entity under the laws of the Republic of Italy and
has its registered office at Via dell’Industria 5, Corciano – Frazione Solomeo (PG), Italy.
The Group’s product range focuses on a single brand: Brunello Cucinelli, internationally recognized as one
of the finest examples of absolute luxury, combining exclusive “Made in Italy” features with the ability to
innovate and identify new trends.
The brand’s distinctive elements are quality, craftsmanship, creativity, exclusivity, and beauty, plus a remarkable
desire to “listen to” the market and its new trends. The result is a line of casual chic prèt-à-porter products
that satisfy the tastes of young and less-young customers while retaining value over time. Merging old and
new, business goals and human needs: the secret of a company whose innovative capacity is looked upon with
interest from all sides as well as being a case study in modern economy illustrated at prestigious universities.
THE GREAT INTERNET PROJECT: HUMANIST WEB ARTISANS
For a long time, we have been following the growth and development of online markets and channels and we are
conscious of their existing and growing importance. We see the Internet as an epoch-changing invention which
has changed mankind.
Voltaire said that “if you do not wish to accept the changes brought about during your time, you may come off
worst”. We are convinced of this. We would nevertheless like to research and explore a unique aspect of the way in
which we approach and take advantage of digital developments. This has led to the concept of being cutting-edge
and unique in the way in which we implement our philosophy, by becoming “humanist web artisans”.
This is why we launched what we call our Great Internet Project in 2014. The bulk of this will be completed by
the end of 2016, with an overall project end date of 2018.
The Great Internet Project is being tailored like a bespoke suit, with the same care and workmanship which
distinguishes our collections. It has dual significance in today’s world: it constitutes a modern communication and
online sales tool, and it is an updated nervous system uniting all the points of contact of our company, now that it
has grown so large.
The first project stream will lead to a renewal of our online presence by the end of this year, and to a new e-commerce
project. This will be wholly independent and based on our resources and infrastructure, which will be strengthened
to match. The planned upgrades include building a logistics unit within the Solomeo industrial complex, as well
as an operating structure in the U.S.A. to support the important North American market. This will allow us to
support growth over future years. The new ecommerce operations will coexist in an integrated manner with the
monobrand boutiques, thereby generating significant commercial and operational synergies. The content, narrative
and commercial services we will present to our internet users will be inspired by our business philosophy and
heritage, and will make our online experience exclusive and unique.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The second project stream will be dedicated to the renewal of what we call our company nervous system, and it
has already had its first successes over the course of 2015. We introduced new integrated point of sale systems into
our boutiques in Europe and North America and we completed a new Enterprise Resource Planning system which
has already been implemented in some of our most important markets. Between now and the end of the plan we will
roll out the use of these new management systems to all the markets where we operate.
THE COLLECTIONS
The 2016 collections met with very high approval from customers and staff. Casual elegance meets a wide range
of lightweight textiles and knitted, luxury yarns.
Our artisan pieces have absorbed technological innovations and represent a perfect balance of tradition and
innovation. Pure, sophisticated textiles give life to understated luxury with an authentic and original soul featuring
soft shapes and tones inspired by natural colours.
The boundary between sport casual and distinguished refinement has been broken down within a harmonious
and contemporary style that has always characterised the brand. The artisan approach creates collections with a
unique feel, combining high-end knitwear and formal style in clothing which can be worn on any occasion, from
free time to gala evenings and from business meetings to informal get togethers.
Detail-oriented, high-quality workmanship has been applied throughout the collections to bring together fine
materials and signature Cucinelli elements in a refined way.
16
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Soft cashmere knitwear is key to the collections. It is the ultimate expression of the casual attitude which defines
the Brunello Cucinelli character: from jacket-style cardigans to knits which can be worn as exquisite outerwear.
The yarns are inspired by the world of tailoring and bring added refinement and exclusivity.
Knitwear from gym to dinner, has daytime dynamism and evening style and is to be experienced for its allenveloping sense of well-being for any occasion from formal elegance to day-to-day living.
VISUAL MERCHANDISING
Visual merchandising has always been an extremely important area for our company.
As a summary of the key principles behind the brand identity since inception, and as an expression of new trends,
visual merchandising aims to highlight the products using lifestyle cues which the Italian company promotes
around the world.
Working closely with the styling office, the visual merchandising team develops window display concepts,
images and presentations supporting the brand image in all the boutiques in the major cities worldwide.
Research and implementation work together in a continuously reviewed cycle which breathes life into a modern
universe of ideas, creations and unique pieces which are continuously changing as the style of the individual
collections changes, but in a way which is recognisably true to the company’s style DNA.
The Umbrian countryside display: The Bird House
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The organization is responsible for:
– development of store design and display systems in harmony with the brand’s image;
– development of themes and window set design to match the mood of the collections;
– harmonization of communication and the visual choices across each individual boutique;
– internal outfitting and regular changes to the window displays in the monobrand boutiques;
– specific support for the multibrand boutiques.
COMMUNICATION
We use a carefully selected network of PR companies and press offices in more than 11 countries to maintain
significant levels of coverage within the international and national media and communicate the “message” in a
simple but efficient manner, fully respecting different cultures.
The brand’s heritage, philosophy, company culture, and Italian lifestyle have always been the focal points of our
well established communication strategy. We are never aggressive, and we have a broad presence with the ability
to use traditional channels and the most up to date channels without spreading ourselves too thinly.
Our significant expansion in retail has shortened our route to market: now events, trunk shows, presentations and
one-to-one meetings all constitute an important, incisive and personalised way of communicating the message
and the company philosophy.
The great literary classics: Don Quixote and the windmills
18
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
MORAL AND ECONOMIC DIGNITY OF WORK AND CREATIVITY: SPACE AND TIME
More than thirty years after moving into the restored fourteenth century Solomeo castle, the company is still
faithful to the fundamental principles governing its foundation: product quality is a function of the “moral and
economic dignity of work”, which allows every individual to express their own creativity at the same time as
sharing common responsibility equally. Symbolically, workers have never been asked to punch in or out and
closing time has always been an invitation to them make the most of personal time with family, friends and their
own values.
The physical workplace is a reflection of the values which govern the relationships between the workers. The
current facilities have been further expanded to allow for the gracious growth of the next four to five years, and
they can now accommodate all the employees on a single site at the foot of the Solomeo hill where everyone is
given appropriate space and a view of nature all around. At the same time, the new canteen-restaurant caters for
all employees and serves genuine local products.
Our chain of production has great value, in that it has linked the company for many years to over 300 Italian
businesses and micro enterprises – which are predominantly (around 80%) Umbrian – allowing us to disseminate
the fundamental principles of dignity of work, encouraging our partners to participate in the idea of nurtured
creativity in Solomeo. The environment, employment terms and timetables must reflect this fundamental dignity
in order to allow the product to express creativity and quality.
Since 2013 there has been a greater emphasis on the generations to come: the new Skills and Crafts School in
the castle, which used to be the company headquarters, is dedicated to re-injecting dignity into the manual and
artisan trades which give the Made in Italy brand the value it has. The passionate young people attending the
school learn the techniques and take their first steps on a traditional path which is essential both to Italy and to the
company, which then ratifies the value of their work, dedication and personal growth.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
INVESTMENTS
The year which has just finished was the final one in the “Major three year Investment Project” 2013-2015.
This was undertaken to ensure exclusive positioning and presence in the most important locations, expand the
production infrastructure in Solomeo and develop the company’s technological, computer and internet systems.
This significant investment programme, totalling € 120.7 million, of which € 40.8 million were invested in 2015,
has strengthened and consolidated the company’s structural medium-long term growth fundamentals, and has
further heightened the prestige and allure of the brand.
The goal of our marketing investments has been to develop our exclusive presence in the most important capitals,
cities and prestige resorts worldwide, and € 71.7 million were invested over the three-year period (of which
€ 25.3 million were invested in 2015), in opening exclusive boutiques on the most important luxury goods streets.
A key emphasis within the marketing investments has been to increase the size of a number of sales spaces in
current stores, to increase prestige space within Luxury Department Stores and to enlarge and restore a number
of significant boutiques in the knowledge of the fundamental importance of showing our collection in modern,
contemporary spaces, in line with its status as the expression of everyday luxury.
The investments in production and logistics over the three-year period have allowed us to expand the Solomeo
facility, which is now fully operational with the capacity to meet the company’s expected growth needs for the
next 4 to 5 years, at the same time as creating a working environment which is able to add value to and satisfy
the needs of the company workforce.
The project for the development of the technological platform and the management of the internet presence is
included in the investments dedicated to production, logistics and IT/Digital (for a total of € 49.0 million over the
three-year period, of which € 15.5 million were in 2015), and investments will continue this year as part of the
“Great Internet Project” for the three-year period from 2014-2016.
In line with our philosophy of being “humanist web artisans” with a correspondingly exclusive internet presence,
this project is of fundamental, strategic importance for our communications as well as our e-commerce sales.
The completion of the “Great Internet Project” will strengthen the management of our online boutique and
the logistics units at the Solomeo base, thereby offering a personalised service to each of our end customers,
requiring a significant commitment both from a human resources and investment perspective.
20
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
INTRODUCTION
This Financial Report as of 31st December 2015 has been prepared pursuant to Legislative Decree no. 58/1998 as
amended and the Issuers’ Regulations published by Consob. This Report has been prepared in accordance with the
International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and adopted by the European Union.
SUMMARY DATA AT 31ST DECEMBER 2015
The following tables provide: (i) a summarized consolidated income statement for the year ended 31st December 2015
with comparative figures for the year ended 31st December 2014, (ii) a consolidated balance sheet reclassified by
source of funds and assets at 31st December 2015 with comparative figures at 31st December 2014 and (iii) figures for
capital expenditure and operating cash flows for the year ended 31st December 2015 with comparative figures for the
year ended 31st December 2014.
Summarized consolidated income statement:
Year ended 31st December
(In thousands of euro)
2015 % of revenues
Revenues
Change
2014 % of revenues
2015 vs. 2014 2015 vs. 2014 %
414,937
100.0%
357,383
100.0%
57,554
+16.1%
69,124
16.7%
63,041
17.6%
6,083
+9.6%
Operating profit (loss)
50,975
12.3%
49,329
13.8%
1,646
+3.3%
Net profit for the year
32,949
7.9%
31,787
8.9%
1,162
+3.7%
414,937
100.0%
356,628
100.0%
58,309
+16.4%
69,124
16.7%
62,286
17.5%
6,838
+11.0%
50,975
12.3%
48,574
13.6%
2,401
+4.9%
32,949
7.9%
31,269
8.8%
1,680
+5.4%
EBITDA (1)
Revenues (2)
EBITDA
(2)
Operating profit (2)
Net profit for the year
(2)
(1) EBITDA is defined as operating profit before depreciation and amortization. EBITDA defined in this way is a measure used by management to monitor and
assess the Group’s operating performance. EBITDA is not an accounting measure in the context of IFRS and accordingly should not be considered as an
alternative for assessing trends in the Group’s operating profit. Since the composition of EBITDA is not regulated by the accounting standards adopted, the
means of calculating this figure used might not be consistent with that used by others and might therefore not be comparable.
(2) The “normalised” data relating to Revenues, EBITDA, Operating profit and Net profit for the year have been shown to adjust for the effect of the capital gain
accounted for on 31st December 2014, which related to the sale of a building (€ 755 thousand).
21
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Consolidated balance sheet reclassified by sources and applications:
Year ended
(In thousands of euro)
31st December 2015
Change
31st December 2014
2015 vs. 2014
2015 vs. 2014 %
Net working capital
112,331
97,507
14,824
+15.2%
Fixed assets
137,953
114,592
23,361
+20.4%
Other non-current assets/(liabilities)
Net invested capital
Net debt
2,906
862
2,044
>+100.0%
253,190
212,961
40,229
+18.9%
56,412
42,636
13,776
+32.3%
Equity
196,778
170,325
26,453
+15.5%
Sources of funding
253,190
212,961
40,229
+18.9%
(3)
(3) Net debt is calculated as the sum of cash and cash equivalents, current financial assets, non-current financial liabilities, the fair value of hedging instruments
and other non-current financial assets.
Other summary data:
Year ended
(In thousands of euro)
Change
31 December 2015
31 December 2014
2015 vs. 2014
2015 vs. 2014 %
Investments (4)
40,833
39,338
1,495
+3.8%
Cash flow from operating activities
35,877
13,771
22,106
> +100.0%
st
st
(4) Capex relates to gross investments in Intangible and Tangible assets and to net investments in Financial Assets.
22
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
THE GROUP’S RESULTS FOR 2015
The Group earned revenues of € 414,937 thousand in 2015, representing an increase of 16.1% over the previous
year. It should be noted that the prior year was positively affected by the sale of a building to the controlling
shareholder Fedone S.r.l. (which was in turn controlled, as at the sale date, by Cav. Lav. Brunello Cucinelli).
This building was not in the proximity of the Company’s manufacturing and logistical facilities and its sale
led to a capital gain of € 755 thousand, which was recognised as other income. Reversing out the effect of this
transaction, the increase in Revenues amounted to 16.4%.
Net revenues for the year ended 31st December 2015 rose to € 414,151 thousand, an increase of +16.4% over the
figure of € 355,909 thousand for the year ended 31st December 2014.
2015 EBITDA was € 69,124 thousand, which equated to 16.7% of Revenues, and an increase of 11.0% compared
with the normalised prior year figure of € 62,286 thousand, which equated to 17.5% of Revenues.
It should be noted that the 2015 financial year was marked by a reduction, in percentage terms, of the cost of
production of raw materials and outsourced work. This was primarily as a result of the quarterly trends and the
higher incidence of revenues generated by the retail distribution channel, where the increase in directly managed
points of sale correspondingly generated a higher percentage of rental and staff costs compared to the prior year,
thereby offsetting the effect.
The Net profit as at 31st December 2015 was € 32,949 thousand, which equated to 7.9% of Revenues and was
an increase in absolute terms of € 1,680 thousand compared to the normalised value in 2014, when it reached
€ 31,269 thousand which equated to +8,8% of Revenues.
The higher percentage of depreciation and amortization should be noted compared to 31st December 2014, as a
result of the significant investments made by the Company.
SEASONALITY OF SALES
While not showing sharp seasonal or cyclical variations in total annual sales, the Group’s business is affected in
the course of the various quarters of the year by revenues and costs arising mainly from industrial operations that
are not perfectly homogeneous.
In addition, the luxury market in which the Group operates is subject, at the sales channel level, to seasonality
phenomena that have an impact on its economic results.
A principal seasonality phenomenon is linked to the selling methods of the wholesale monobrand and wholesale
multibrand distribution channels, which have a concentration of revenues in the first and third quarter of each
year; turnover is concentrated in January-March for the spring/summer collection and in July-September for the
fall/winter collection, although for the latter a significant amount of goods are delivered as early as the second
quarter, as is by now the consolidated request arriving from the international clientele.
As for the retail channel, the Group’s sales are concentrated primarily in the last quarter of each year, characterized
by the sale of products with higher unitary value.
Consequently, the Group’s interim results may not uniformly contribute to the formation of the results and cash
flows of each year.
23
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
ANALYSIS OF REVENUES
The Group’s consolidated turnover for 2015 amounted to € 414,151 thousand, a rise of 16.4% over 2014. On a
like-for-like basis (meaning at constant exchange rates, namely the same average rates as those used in 2014),
revenues would have been € 389,722 thousand, an increase of +9.5%.
The sales trends confirm and support the “gracious” and “sustainable” long term growth rate targeted by the
company as a result of its solid business model and the allure and contemporary appeal of the brand, which is
positioned at the highest luxury goods level.
The fundamental building blocks supporting the company remain strong: uncompromising quality in the
choice of raw materials, excellent artisan skills and craftsmanship, an exclusive prêt-à-porter proposition and a
contemporary lifestyle image which is a watchword for Made in Italy authenticity.
The achievement of the results would not have been possible without the fact that the owners, workers and
stakeholders all share the same values: of “dignity, tolerance and humanity” which are what make the business
strategy sustainable.
The exclusivity and excellence of the products, which have always been at the heart of the collections, is the basis
which has made the results possible, with especially significant sales growth in the main global capitals and resorts
which benefit from both tourist flows and local customers.
The international markets have reached 82.9% of total net revenues, with growth of +19.4%, which was accompanied
by very positive results on the Italian market (17.1% of net revenues), where sales grew by +3.6%. The European
market, including Italy, accounted for 48.3% of the total at the end of 2015.
414.2
389.7
355.9
+9.5%
31st December 2015 at costant exchange rates
+16.4%
31st December 2015
31st December 2014
24
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
REVENUES BY DISTRIBUTION CHANNEL
In the 2015 financial year, all channels showed increases in revenues thanks to the results achieved in existing
boutiques and locations, selected new openings and the Group’s presence in the most prestigious spaces of
luxury department stores.
The following table shows the net revenues generated by the Group in the 2015 financial year, by distribution channel.
Year ended 31st December
(In thousands of euro)
Retail
Wholesale Monobrand
Change
2015
weight %
2014
weight %
2015 vs. 2014 2015 vs. 2014 %
193,174
46.6%
148,486
41.7%
44,688
+30.1%
33,388
8.1%
30,873
8.7%
2,515
+8.1%
Wholesale Multibrand
187,589
45.3%
176,550
49.6%
11,039
+6.3%
Total
414,151
100.0%
355,909
100.0%
58,242
+16.4%
414.2
355.9
187.6
176.5
45.3%
46.6%
33.4
30.9
193.2
Total
WHS monobrand
148.5
WHS monobrand
8.1%
Retail DOS
31st December 2015
31st December 2014
31st December 2015
RETAIL
The net revenue generated by the retail channel were € 193,174 thousand, which was an increase of € 44,688 thousand
or 30.1% more than in the prior year, and the results were very positive both for Autumn/Winter 2015 and for the start
of Spring/Summer 2016.
The retail channel represented 46.6% of the Group’s net revenues for the year ended 31st December 2015, an increase
over the figure of 41.7% for the year ended 31st December 2014.
The direct store network has grown to 81 boutiques (71 boutiques as at 31st December 2014). 12 boutiques were
opened and 2 “Second Tier” locations were converted from the direct monobrand channel to the wholesale channel in
September 2015.
Like-for-like growth (comparable store sales), calculated as the rise in revenues at constant exchange rates at the DOS
existing at 1st January 2014, amounted to 5.4% (for the period between 1st January 2015 and 31st December 2015).
Like-for-like growth (comparable store sales) for the current year, again at constant exchange rates relating to the DOS
existing at 1st January 2014, amounted to 4.1% in the first few weeks of the year (for the period between 1st January 2016
and 28th February 2016).
25
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
WHOLESALE MONOBRAND
Net revenues arising from sales made through the wholesale monobrand channel amounted to 8.1% of total net
sales, which was lower than the 8.7% recorded in 2014. In absolute terms, revenues reached € 33,388 thousand, a
decrease of € 2,515 thousand, or +8.1%, compared with the year ended 31st December 2014.
The 34 points of sale at 31st December 2014 grew to 36 at 31st December 2015. The results were principally driven
by existing store performance, and the two net openings recorded a positive impact.
WHOLESALE MULTIBRAND
The wholesale multibrand channel earned revenues of € 187,589 thousand (up by € 11,039 thousand on 2014,
representing an increase of +6.3%).
The proportion of revenues represented by this channel fell from 49.6% in the year ended 31st December 2014
to 45.3% in 2015.
The latter part of the financial year returned very positive growth, with the euro/foreign currency exchange rate
adding a positive effect. The fact that the first nine months of the year had been held back by the basis effect
of the conversion to direct management of the 13 dedicated spaces in Luxury Department Stores in Japan from
1st September 2014, also added to the growth.
The order pipeline for the Spring/Summer 2016 collection has been developing positively, with a trend in “resort”
deliveries which reinforced the growth over the last quarter of 2015.
26
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
REVENUES BY GEOGRAPHICAL AREA
The results achieved in 2015 indicate significant growth in all of the international markets, as a whole representing
82.9% of net revenues, where there was an overall increase of +19.4% over 2014; there was also an interesting and
significant rise of +3.6% in revenues on the Italian market, pointing to healthy and sustainable results.
The following table provides details of revenues for the year ended 31st December 2015 analysed by geographical area,
with comparative figures for the previous year.
Year ended 31st December
(In thousands of euro)
2015
Italy
weight %
2014
Change
weight %
2015 vs. 2014
2015 vs. 2014 %
70,994
17.1%
68,494
19.2%
2,500
+3.6%
Europe
128,978
31.2%
116,699
32.8%
12,279
+10.5%
North America
156,595
37.8%
122,883
34.5%
33,712
+27.4%
Greater China
25,738
6.2%
20,872
5.9%
4,866
+23.3%
Rest of the World (RoW)
Total
31,846
7.7%
26,961
7.6%
4,885
+18.1%
414,151
100.0%
355,909
100.0%
58,242
+16.4%
414.2
31.9
25.7
355.9
26.9
20.9
156.6
122.9
Total
129.0
7.7%
17.1%
6.2%
ROW
116.7
Greater China
N. America
71.0
31st December 2015
68.5
Europe
Italy
31st December 2014
37.8%
31.2%
31st December 2015
The following is an analysis of the increase in net revenues by geographical area.
Italy
Net revenues for “Italy” represented 17.1% of total revenues (19.2% in the previous year), posting significant
growth in absolute terms of € 2,500 thousand, or +3.6%, over the year ended 31st December 2014 (€ 70,994
thousand in 2015 and € 68,494 thousand in 2014).
27
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The performance in the main cities and resorts was solid, both in monobrand and multibrand boutiques, in
particular thanks to the constant flow of high-end foreign visitors who were attracted by the top quality products,
beauty and excellence of our country.
LFL growth was positive in the existing boutique network, not just as a result of tourism flows but also as a result
of solid demand from local customers; the first sell-out numbers for the Spring/Summer 2016 collection have
also been very positive.
The monobrand network at 31st December 2015 consisted of 17 boutiques, of which 11 were directly managed,
and 6 were wholesale monobrand (at the end of 2014, the monobrand network consisted of 16 boutiques of which
12 were direct and 4 were wholesale monobrand).
Europe
Net revenues for “Europe” represented 31.2% of net revenues (32.8% in the previous year), rising by € 12,279 thousand
in absolute terms, or +10.5%, from € 116,699 thousand to € 128,978 thousand.
The 2015 financial year was characterised by several trends, including increasing tourism flows which benefited
the main European Capitals and the most important resorts, the resilience of local demand, and the constant
increase in demand for artisan, exclusive products.
Solid results were achieved in all European countries, including Eastern Europe, Russia and the former USSR.
The sell out by existing boutiques confirmed the positive numbers; LFL performance by the existing boutiques,
together with the contribution from the new and exclusive direct monobrand new openings all contributed to
the results achieved in 2015. The multibrand channel grew, with the presence of the brand in boutiques and
prestigious, selected sales locations.
On 31st December 2015, the direct network consisted of 27 boutiques (22 on 31st December 2014); the wholesale
monobrand network counted 18 boutiques (19 on 31st December of the previous year).
North America
Net revenues for “North America” represented 37.8% of net revenues (34.5% in the previous year), rising by
€ 33,712 thousand, or +27.4%, from € 122,883 thousand to € 156,595 thousand.
The increase in sales, which saw excellent results across all the distribution channels (monobrand and multibrand),
was driven by the increasing demand from local customers and sophisticated tourists, as well as being positively
impacted by the currency exchange effect.
The development of the turnover in the Retail monobrand channel was boosted by the sell-out at existing boutiques,
which reported LFL growth, and by the contributions from the selected new openings in 2015.
The performance of the multibrand channel is being driven by the increased sales from exclusive and prestige spaces
in the Luxury Department Stores, which are increasingly focused on satisfying the requirements of the highest level
customers searching for “unique and exclusive” products.
The monobrand network had 22 boutiques on 31st December 2015 (18 on 31st December 2014).
28
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Greater China
Net revenues for “Greater China” represented 6.2% of net revenues (5.9% in the previous year), rising by
€ 4,866 thousand (+23.3%) from € 20,872 thousand to € 25,738 thousand.
The sell-out by the network of existing boutiques was up, with significant growth in LFL performance in the
direct channel and very positive results for sales of the new Spring/Summer 2016 collection.
The turnover trend demonstrates significant appeal in the wealthy, sophisticated Asian customer base which seeks
clothing products of the highest quality, artisan production, craftsmanship and above all, exclusivity.
On 31st December 2015, the total network included 19 monobrand boutiques (unchanged on 31st December 2014).
Rest of the world
Net revenues for the “Rest of the World” increased by +18.1% over the previous year, rising from € 26,961 thousand
to € 31,846 thousand.
The increase on the previous year was supported by good sales developments by the existing boutiques, by
new openings and by the conversion of the Japanese business to direct management, which positively affected
revenue growth, particularly in the first half of the year, with a gradual normalisation of the trend in the second
half. It should be noted that the three wholesale monobrand boutiques were converted into direct stores on
1st September 2014 and the 13 dedicated spaces located in the most important luxury department stores passed
from being wholesale multibrand operations to the retail channel on that date.
The monobrand network had 14 boutiques on 31st December 2015 (11 on 31st December 2014).
REVENUES BY PRODUCT AND BY END CUSTOMER
The following is a graphical representation of the Brunello Cucinelli Group’s revenues for the year ended
31 December 2015, analyzed by product line and by end customer:
15.4%
32.8%
84.6%
31st December 2015
67.2%
Clothing
Women
Accessories
Man
31st December 2015
29
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
ANALYSIS OF THE INCOME STATEMENT
Set out below is a graphical representation of the income statement for the year ended 31st December 2015,
representing the Group’s performance for 2015:
(15.8%)
414.9
(48.2%)
(18.0%)
(1.3%)
16.7%
(4.4%)
(5.6)
69.1
(18.1)
12.3%
(1.2%)
11.1%
(3.2%)
51.0
(4.8)
46.1
(13.2)
Net
Financial
Expense
Pre-Tax
Profit
Taxation
7.9%
(65.5)
(200.1)
(74.7)
Revenues
Row
Materials
Services
Payroll
Other Costs EBITDA Depreciation Operating
and
Profit
Amortization
32.9
Net
Profit
OPERATING RESULTS
The following table provides a summary of operating profitability (EBITDA) and operating profit:
Year ended 31st December
(In thousands of euro)
Operating profit (loss)
Change
2015
% of
revenues
2014
normalised (2)
% of
revenues
2015 vs. 2014
2015 vs. 2014 %
50,975
12.3%
48,574
13.6%
2,401
+4.9%
+ Amortisation/Depreciation
18,149
4.4%
13,712
3.8%
4,437
+32.4%
EBITDA (1)
69,124
16.7%
62,286
17.5%
6,838
+11.0%
(1) EBITDA is defined as operating profit before depreciation and amortization. EBITDA defined in this way is a measure used by management to monitor and assess
the Group’s operating performance. EBITDA is not an accounting measure in the context of IFRS and accordingly should not be considered as an alternative for
assessing trends in the Group’s operating profit. Since the composition of EBITDA is not regulated by the accounting standards adopted, the means of calculating
this figure used might not be consistent with that used by others and might therefore not be comparable.
(2) The Operating profit and EBITDA balances as at 31st December 2014 have been normalised to reverse out the effect of the capital gain realised in the prior
year (€ 755 thousand). This was done to ensure comparability with the 2015 financial year.
30
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
In accordance with the requirements of Consob Resolution no. 15519 of 27th July 2006, items of profit or loss
arising from non-recurring events or transactions, if significant, must be reported separately in management’s
comments and in the financial disclosures.
The Group earned EBITDA of € 69,124 thousand in 2015, representing 16.7% of revenues and an increase of
11.0% over the corresponding figure for the previous year.
It should be noted that the 2015 financial year was marked by a reduction, in percentage terms, of the cost of
production of raw materials and outsourced work. This was primarily as a result of the quarterly trends and the
higher incidence of revenues generated by the retail distribution channel, where the increase in directly managed
points of sale correspondingly generated a higher percentage of certain operating expenses, including rental
and staff costs.
The Group earned EBITDA of € 50,975 thousand in 2015, representing 12.3% of revenues and an increase of
4.9% over the corresponding figure for the previous year. The significant impact of depreciation and amortization
should be noted. It is a consequence of the investments undertaken and represents 4.4% of the Revenues in 2015,
compared to 3.8% in 2014 (and an increase in absolute value of € 4,437 thousand).
The following table sets out in graphical form the trends in the Group’s EBITDA and operating profit for the
years ended 31st December 2015 and 31st December 2014:
EBITDA (€ m)
69.1
EBITDA (%)
Operating Profit (€ m)
Operating Profit (%)
51.0
48.6
12.3%
13.6%
31st December 2015
31st December 2014
normalised
62.3
16.7%
17.5%
31st December 2015
31st December 2014
normalised
As highlighted above, EBITDA was 17.5% on a normalised basis in 2014 and 16.7% in 2015, which equated to
an increase in absolute value of € 6,838 thousand.
The economic trends which characterised 2015 were particularly marked by a higher percentage of net Revenues
from the retail distribution channel as a percentage of the total for the period (46.6% as at 31st December 2015,
compared to 41.7% as at 31st December 2014). The increased percentage weight of the retail channel is a result
of organic growth in existing retail boutiques (like for like growth of 5.4%) and the development of the store
network, which grew overall in number by 10 units over the period.
The expansion in the sales network in 2015 generated higher operating costs in a number of areas, in particular
rental costs (which, in addition to the new openings and to the conversion of boutiques, was driven by the increases
as a result of the repositioning and expansion of some of the most important boutiques, by the renegotiation of
leases on expiry, by the opening of the new Tokyo show-room and the repositioning of the important New York
show-room) and staff costs, relating principally to sales staff increases.
31
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The trends described above led to:
1. a reduction in percentage terms of the weight of the cost of production of raw materials and outsourced work
(35.6% as at 31st December 2015 compared to 37.1% as at 31st December 2014).
Year ended 31st December
(In thousands of euro)
2015 % of revenues
Costs for raw materials and
consumables
79,617
Change in inventories
Outsourced work
Total
Change
2014 % of revenues
2015 vs. 2014
2015 vs. 2014 %
21.7%
2,236
+2.9%
19.2%
77,381
(14,083)
-3.4%
(26,092)
-7.3%
12,009
-46.0%
82,338
19.8%
81,387
22.8%
951
+1.2%
147,872
35.6%
132,676
37.1%
15,196
+11.5%
2. an increase in percentage terms of the weight of rental expenses on Revenues (10.5% as at 31st December 2015
compared to 8.1% as at 31st December 2014).
Year ended 31st December
(In thousands of euro)
Lease expense
Change
2015
% of revenues
2014
% of revenues
2015 vs. 2014
2015 vs. 2014 %
43,515
10.5%
29,055
8.1%
14,460
+49.8%
3. an increase in percentage terms of the weight of staff expenses (18.0% as at 31st December 2015 compared
to 17.4% as at 31st December 2014), which totalled € 74,668 thousand, compared with € 62,273 thousand in the
prior year, or growth of € 12,395 thousand in absolute value. Full Time Equivalents (FTEs) totalled 1,364.8 on
31st December 2015, compared with 1,240.8 on 31st December 2014 (+124.0) which was principally the result of
the increase in sales staff as a result of the expansion of directly managed sales boutiques.
74.7
1,364.8
1,240.8
62.3
470.8
462.0
Total
Payroll costs (€m)
18.0%
17.4%
Payroll costs (%)
844.1
735.3
Managers
and middle management
Office and sales staff
49.9
31st December 2015
31st December 2014
31st December 2015
43.5
Factory workers
31st December 2014
32
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The main other operational expenditure items are described briefly as follows:
– The weight in percentage terms, of commissions and accessory costs, being the commissions payable to the
network of agents, were stable compared with 2014 (3.2% in 2015, 3.2% in 2014);
– Advertising and other marketing costs, which rose by € 3,723 thousand in absolute terms (+19.0%) but
remained constant as a percentage of revenues (5.6% in 2015 and 5.5% in 2014). These costs relate to the
promotional activities carried out by the Group to disseminate its image and philosophy throughout the world
(more specifically these are costs mainly incurred for the production of catalogues, advertising campaigns and
fairs and exhibitions organized in Italy and abroad);
– Transport and duties, which amounted to 3.7% of revenues in 2015, a reduction compared with the figure
of 4.2% in 2014;
– Credit card charges, which rose by 31.8% over 2014, a figure which is strictly connected with the growth in
the retail channel.
The following table provides a summary of these items for 2015 and 2014 together with their percentage as a
proportion of revenues.
Year ended 31st December
(In thousands of euro)
2015 % of revenues
Change
2014 % of revenues
2015 vs. 2014 2015 vs. 2014 %
Commissions and accessory charges
13,208
3.2%
11,588
3.2%
1,620
+14.0%
Advertising and other commercial expenses
23,285
5.6%
19,562
5.5%
3,723
+19.0%
Transport and duties
15,158
3.7%
15,108
4.2%
50
+0.3%
Credit card charges
3,639
0.9%
2,761
0.8%
878
+31.8%
33
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NET FINANCIAL EXPENSE, TAXATION AND NET PROFIT
Net financial expense amounted to € 4,832 thousand for the year ended 31st December 2015, of which financial
expenses were € 29,938 thousand and financial income was € 25,106 thousand.
Net financial expense increased as a percentage of sales revenues over 2014, closing at 1.2% in 2015 compared
to 0.8% in 2014.
While reference should be made to the notes to the financial statements for further details of the items included in
financial income and expense, the following table sets out the overall result of financial management, separating out
the effect of exchange differences and the fair value measurement of derivative contracts from changes in financial
income and expense:
Year ended 31st December
(In thousands of euro)
2015 % of revenues
Change
2014 % of revenues
2015 vs. 2014 2015 vs. 2014 %
Loan interest
1,042
0.2%
1,168
0.3%
(126)
-10.8%
Other net (income)/expense
1,052
0.3%
456
0.2%
596
>+100.0%
Financial (income)/expense
2,094
0.5%
1,624
0.5%
470
+28.9%
Foreign exchange (gains)/losses
1,582
0.4%
840
0.2%
742
+88.3%
Financial (income)/expense arising from
adjusting derivatives to fair value
1,156
0.3%
439
0.1%
717
>+100.0%
Total net financial expense
4,832
1.2%
2,903
0.8%
1,929
+66.4%
Income taxes for the year amounted to € 13,194 thousand and represented 28.6% of pre-tax consolidated profit.
The Group earns the majority of its taxable profit in Italy and has elected the “taxation for transparency” option
(taxation in Italy using the tax rates applicable in Italy) for taxable profits earned in the “privileged tax system
countries” in which it operates.
In the light of the above, net profit for the year closed at € 32,949 thousand, or 7.9% of Revenues, which
represents an increase of € 1,680 thousand or +5.4% compared with the normalised 2014 figure.
The following table provides an analysis of net profit for the year between the portion attributable to the owners
of the parent and the portion attributable to non-controlling interests:
(In thousands of euro)
Net profit (loss) attributable to parent’s shareholders
Net profit (loss) attributable to non-controlling interests
Net profit for the year
31st December 2015
31st December 2014
33,338
33,060
(389)
(1,273)
32,949
31,787
The balance relating to minority interests in Group companies showed an improvement, but was still negative,
at € 389 thousand, principally because of the negative results at subsidiaries which are in the start-up phase and
undertaking major marketing initiatives.
34
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
ANALYSIS OF KEY BALANCE SHEET AND FINANCIAL ITEMS
Set out in the following are comments on the main items included in the balance sheet reclassified by sources and
applications at 31st December 2015, together with comparative figures at 31st December 2014.
NET WORKING CAPITAL
The net working capital of the Brunello Cucinelli Group at 31st December 2015 and 31st December 2014 may be
analyzed as follows:
(In thousands of euro) Trade receivables
31st December 2015
31st December 2014
45,628
45,051
Inventories
143,957
125,114
Trade payables
(68,826)
(62,185)
(8,428)
(10,473)
112,331
97,507
Other current assets/(liabilities), net
Net working capital
Net working capital for the year ended 31st December 2015 rose by € 14,824 compared to the year ended
31st December 2014. The change is principally a function of the following:
– “Trade receivables” which grew by € 577 thousand, and accounted for 11.0% of Net Revenues over the last
12 months compared with 12.7% for the prior year;
– “Inventories” which grew by € 18,843 thousand, and accounted for 34.8% of Net Revenues over the last
12 months compared with 35.2% as at 31st December 2014; It should be noted that the growth in the “Inventory”
balance is mainly the result of the year’s 12 new directly managed points of sale which have been referred to
several times above, as well as business development over the period;
– “Trade payables” which grew by € 6,641 thousand, and accounted for 16.6% of Net Revenues over the last
12 months compared with 17.5% for the prior year; given the same payment conditions to suppliers, this
balance has grown in line with the purchase of raw materials, outsourced work and particularly significant
investments made during November and December;
– “Other net liabilities” which were € 8,428 thousand as at 31st December 2015 compared with € 10,473
thousand in the prior year; the decrease in this balance was the result of many factors: € 2,617 thousand of the
reduction related to fair value movements on derivative instruments to hedge exchange rate risk in relation to
commercial transactions in foreign currency.
35
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
With reference to the fair value of hedging instruments relating to exchange rate risk, it should be noted that the
Group accounting policy follows the “Cash Flow Hedge” rules, which provide for the fair value to be booked
as an asset or liability item on the Balance Sheet (Asset or Liabilities for current financial instruments), with a
corresponding balancing reserve in Shareholders’equity to reflect the effective component of the change in fair
value of derivatives, which will be reversed through revenues in the income statement at the point when the
transaction being hedged is recognised for accounting purposes.
With detailed reference to “Inventories”, raw materials rose by € 2,868 thousand from € 25,576 thousand at
31st December 2014 to € 28,444 thousand at 31st December 2015, while finished and semi-finished goods
increased by € 15,975 thousand from € 99,538 thousand at 31st December 2014 to € 115,513 thousand at
31st December 2015, principally as a result of the increase in size of the monobrand network mentioned above.
(In thousands of euro) Raw materials
31st December 2015
31st December 2014
28,444
25,576
Finished and Semi-finished goods
115,513
99,538
Inventories
143,957
125,114
FIXED ASSETS
Fixed assets at 31st December 2015 and 31st December 2014 may be analyzed as follows:
(In thousands of euro) Intangible assets
Property, plant and equipment
Financial fixed assets
Fixed assets
31st December 2015
31st December 2014
31,479
29,649
101,045
80,157
5,429
4,786
137,953
114,592
Fixed assets at 31st December 2015 totalled € 137,953 thousand compared to € 114,592 thousand at 31st December
2014, an increase of € 23,361 thousand or +20.4%.
More specifically, intangible assets increased by € 1,830 thousand, property, plant and equipment by € 20,888 thousand
and non-current financial assets by € 643 thousand, the latter mainly relating to the guarantee deposits paid on signing
the lease agreements for the monobrand stores opened in 2015.
36
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CAPEX
Over the 2015 financial year, the Group carried out Capex investments totalling € 40,833 thousand, of which €
7,797 thousand were intangible assets, € 32,340 thousand were tangible assets and € 696 thousand were financial
fixed assets (guarantee deposits).
The table below shows Group Capex broken down by category for the years ending 31st December 2015 and
31st December 2014:
31st December 2015
(In thousands of euro) Capex in intangible assets
Investments in property, plant and equipment
Capex in financial fixed assets (*)
Total capex
31st December 2014
7,797
7,551
32,340
30,651
696
1,136
40,833
39,338
(*) Net guarantee deposits (balance of net payments made and reimbursements received).
The most significant investments were for the opening and structuring of points of sale, to a large extent due
to the entry into the consolidation scope of SAM Brunello Cucinelli Monaco which manages the Monte Carlo
boutique and the opening of new stores directly operated by the Group in Europe, North America and the Rest
of the World.
Further important investments were made in regard to the acquisition of a real estate complex in Avenza in the
Municipality of Carrara where the Brunello Cucinelli Group (through the Pinturicchio S.r.l. subsidiary) carries
out menswear production.
Further investments were made in the Information Technology sector, totalling € 4,599 thousand, of which €
3,034 thousand were included in intangible fixed assets and € 1,565 thousand in tangible fixed assets.
The following is a graphical representation of the capital expenditure made by the Group in 2015, analyzed
by investment type:
6.1%
20.1
0.7
Exclusive
sales point
Financial
Investments
4.5
25.3
Key money
TOTAL
COMMERCIAL
INVESTMENTS
3.7%
9.8%
15.5
40.8
TOTAL INVESTMENTS
IN PRODUCTION,
LOGISTICS
AND IT/DIGITAL
TOTAL
INVESTMENTS
37
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NET DEBT
The following table provides details of net debt at 31st December 2015 and 31st December 2014.
(In thousands of euro) 31st December 2015
31st December 2014
Current bank debt
47,782
48,709
434
344
Current liabilities – derivative financial instruments
Other current financial liabilities
1,405
1,682
Current debt (1)
49,621
50,735
Long-term loans – non-current portion
52,742
42,450
2,210
3,130
Non-current financial payables
Non-current debt
(1)
Total gross debt
- Current financial assets
- Current assets – derivative financial instruments
- Cash and Cash equivalents
Net debt (1)
54,952
45,580
104,573
96,315
(86)
(44)
-
-
(48,075)
(53,635)
56,412
42,636
(1) Current and non-current debt are not IFRS accounting measures. The way in which the Group calculates this figure may not be consistent with that used by
others and may therefore not be comparable.
As at 31st December 2015, the Brunello Cucinelli Group’s net debt amounted to € 56,412 thousand, compared
with € 42,636 thousand as at 31st December 2014.
The increase, amounting to € 13,776 in absolute value, related to:
– the investment trends which were marked by a significant investment programme undertaken during the year
under review (€ 40.8 million in 2015 and € 39.3 million in 2014);
– the developments in operational management which were characterised by continued growth in sales volumes
and the increase in the number of sales boutiques (overall growth of 12 units) as well as the trends affecting
net working capital, as described above;
– business seasonality and the corresponding recurring seasonality in net debt, which has always been higher
at the end of quarters two and three (30th June 2015 indebtedness of € 78,281 thousand and 30th September
indebtedness of € 83,704 thousand), only to fall again in quarter four.
In addition:
– in this respect, in order to reformulate its long-term debt to interest rates that are more advantageous than those
existing previously, over the course of 2015 (and already in 2014) the Group took out new loans amounting to €
39.4 million and extinguished loans for a total of € 27.9 million; more specifically, new loans of € 26.4 million
taken out during the year were utilized to make early repayment of outstanding liabilities, obtaining even
more favourable terms;
– the balance included in “Other current financial payables” principally relates to financial liabilities in respect
of the valuation as at 31st December 2015 of the put option for the acquisition of the minority in Brunello
Cucinelli Japan Ltd. and to the acquisition of the minorities in Brunello Cucinelli Lessin (Macau);
38
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
– the balance included in “Non current financial payables” principally relates to financial liabilities in respect of
the loan obtained from the minority shareholder of the subsidiary Brunello Cucinelli Hong Kong Ltd. to the
extent of the portion attributable; the reduction in the balance compared with the prior year was a consequence
of expiry of the put option in respect of the minority shareholder of Brunello Cucinelli England Ltd.,
which is discussed further in “Significant events during 2015”.
SHAREHOLDERS’ EQUITY
The following tables provides details of shareholders’ equity at 31st December 2015 and 31st December 2014:
(In thousands of euro) Share capital
Reserves
Net profit (loss) attributable to parent’s shareholders
Shareholders’ equity attributable to owners of the parent
Total equity attributable to non-controlling interests
Total equity
31st December 2015
31st December 2014
13,600
13,600
143,295
118,097
33,338
33,060
190,233
164,757
6,545
5,568
196,778
170,325
Share capital at 31st December 2015 consisted of 68,000,000 fully paid ordinary shares amounting to
€ 13,600 thousand.
The Brunello Cucinelli S.p.A. shareholder structure as at 31st December 2015, as compiled from the communications
sent to the Company and to Consob, and from other communications to the market, is set out below:
Shareholder
Fedone S.r.l.
Number of shares
% of ordinary capital
38,760,000
57.00%
FMR LLC
3,933,758
5.79%
Ermenegildo Zegna Holditalia S.p.A.
2,040,000
3.00%
Fundita S.r.l.
1,360,000
2.00%
Other shareholders
21,906,242
32.21%
Total
68,000,000
100.00%
Reference should be made to the specific schedule and note 12 for a full description of changes in
shareholders’ equity.
In conclusion, as stated in the section “Significant events during 2015”, on 29th January 2015 Fedone S.r.l.
announced that it had sold 3,494,000 of the shares of Brunello Cucinelli S.p.A., corresponding to 5.14% of its
share capital, through an accelerated book building offering reserved for institutional investors. As part of the
same transaction Fundita S.r.l. sold 350,000 shares to Fedone, and on the completion of the operation Fedone
S.r.l. and Fundita S.r.l. hold 57% and 2% respectively of the share capital of Brunello Cucinelli S.p.A..
39
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
RECONCILIATION BETWEEN NET EQUITY AND NET PROFIT OF THE PARENT AND
CONSOLIDATED EQUITY AND NET PROFIT
The following is a reconciliation between the net equity and net profit of the parent and consolidated net equity
and net profit as of and for the year ended 31st December 2015:
(In thousands of euro)
31st December 2015
Equity
Financial statements of the parent
Difference between the net equity of consolidated investments and the carrying
amount of these investments
Elimination of intragroup transactions
Elimination of dividends
Tax effect of consolidation adjustments
Other
Total attributable to the owners of the parent
Net equity and net profit attributable to non-controlling interests
Total consolidated financial statements
Net profit
198,787
38,653
3,498
(1,735)
(21,852)
(6,334)
-
(547)
9,800
3,301
-
-
190,233
33,338
6,545
(389)
196,778
32,949
40
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
ECONOMIC AND FINANCIAL INDICES
The main economic and financial indices for the Brunello Cucinelli Group for the periods under consideration
are as follows.
PROFITABILITY INDICES
The following table sets out changes in the main profitability indicators for the years ended 2015 and 2014, with an
indication of the normalized figures in consideration of the non-recurring expenses referred to on several occasions.
31st December 2015
31st December 2014
ROE – Net profit for the year / Average equity in the year
17.95%
19.85%
ROI – Operating profit / Average net invested capital in the year
21.87%
25.99%
ROS – Operating profit / Revenues
12.28%
13.62%
BALANCE SHEET SOLIDITY RATIOS
A solidity analysis is designed to assess the Brunello Cucinelli Group’s ability to maintain a constant balance in
the medium to long period between outgoing cash flows, arising from the repayment of sources, and incoming
cash flows, arising from the monetary recovery of applications, to avoid disturbing the economic balance of
operations.
Ratio – Net equity / Total assets
Ratio – Total current assets / Total current liabilities
31st December 2015
31st December 2014
47.87%
46.19%
176.03%
171.86%
41
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
ROTATION INDICES
Receivables turnover
Revenues / Average trade receivables
Average collection days for trade receivables
(Average trade receivables / Revenues) * 360
Payables turnover
(Costs for raw materials and consumables + Costs for services) /
Average trade payables
Average payment days for trade payables
(Average trade payables / (Costs for raw materials and consumables
net of changes in inventory + Costs for services)) * 360
Average days in inventory
((Average inventories – average advances) / Revenues))*360
31st December 2015
31st December 2014
9.2 times
8.1 times
39.3
44.6
4.1 times
3.6 times
84.3
88.6
116.7
110.8
INFORMATION ON CORPORATE GOVERNANCE
Pursuant to article 123-bis of the consolidated finance law (TUF) the Company is required to prepare an annual
report on corporate governance and ownership structures containing a general description of the governance
system adopted by the Brunello Cucinelli Group and its ownership structure, including the main governance
practices applied and the characteristics of its risk management and internal control system in relation to its
financial reporting process.
Such Report, approved by the Board of Directors at its meeting of 10th March 2016, may be consulted in the
Governance section of the Company’s website www.brunellocucinelli.it.
42
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
PERFORMANCE OF THE COMPANY’S SHARE LISTED ON THE BORSA
ITALIANA S.P.A. ELECTRONIC STOCK EXCHANGE (MTA)
On 31st December 2015, the final trading day for the year, the official closing price of the Brunello Cucinelli
share was € 16.32 (+110.6% compared to the € 7.75 per share set for the IPO, -11.9% compared to the price
of € 18.53 at the end of 2014). The market capitalisation on 31st December 2015 was € 1,109,760 thousand.
The following table provides details of the company’s share price and performance between 1st January 2015 and
31st December 2015:
Euro
Date
IPO price
7.75
-
Minimum price
(1)
15.38
22-Dec-15
Maximum price (1)
20.14
27-Jan-2015
Closing price
16.32
30-Dec-2015
Capitalization
1,109,760,000
30-Dec-2015
25,772,000
30-Dec-2015
420,599,040
30-Dec-2015
Number of outstanding shares
Free float
(1) Minimum and maximum prices recorded during daily trading which therefore do not coincide with the official reference prices for the day.
20
18
16
14
12
10
8
6
4
2
December-15
November-15
October-15
September-15
Price per share
August-15
July-15
June-15
May-15
April-15
March-15
February-15
0
January-15
Price per share – euro
22
43
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
SIGNIFICANT EVENTS DURING 2015
Finalization of the purchase of the property complex from Spring Immobiliare S.r.l. as part of the
agreements with d’Avenza Fashion S.p.A.
On 15th January 2015 the Company finalized the purchase from Spring Immobiliare S.r.l. (a company belonging
to the group of which d’Avenza Fashion S.p.A. forms part), at a price of € 2,770,000, of the property complex
located in the Avenza district in the Municipality of Carrara, where the Brunello Cucinelli Group produces
menswear (through the subsidiary Pinturicchio S.r.l.). This acquisition completes the implementation of the
agreements originally reached with d’Avenza Fashion S.p.A..
Increase in share capital by Brunello Cucinelli Lessin Sichuan Fashion Co., Ltd.
In January, March and September 2015 the Company made capital payments respectively of 30 million, 25 million
and 10 million Renminbi (RMB) as part of a fully reserved increase in the share capital of Brunello Cucinelli
Lessin Sichuan Fashion Co., Ltd. totalling 100 million RMB (the company’s share capital will therefore rise from
100 million RMB to 200 million RMB). On completion of the entire capital payment, the Company’s interest in
Brunello Cucinelli Lessin Sichuan Fashion Co., Ltd. will rise to 75.5%. This operation forms part of the logic
of support and development of the Chinese market, which has considerable importance for the Company from a
prospective standpoint.
Sale of the Company’s shares by Fedone S.r.l.
On 29th January 2015 Fedone S.r.l., the Company’s controlling shareholder, sold 3,494,000 of the Company’s
shares, corresponding to 5.14% of its share capital, through an accelerated book building offering reserved for
institutional investors. BofA Merrill Lynch acted as sole bookrunner for the placement. As part of the same
transaction Fundita S.r.l. sold 350,000 shares to Fedone, and on the completion of the operation Fedone S.r.l. and
Fundita S.r.l. hold 57% and 2% respectively of the share capital of Brunello Cucinelli S.p.A.. As announced to the
market on the same date, Fedone confirms its commitment to remain the controlling shareholder of the Company
in the very long term.
Formation of SAM Brunello Cucinelli Monaco
On 6th February 2015 the formation of SAM Brunello Cucinelli Monaco was completed. The Company has a
68.67% interest in this new company, while an independent third party holds a further 30%. On 18th April 2015,
the new Monaco – Monte Carlo boutique was opened.
Formation of Brunello Cucinelli Canada Limited
Brunello Cucinelli Canada Limited was formed on 9th February 2015. The Company holds a 70% interest in the
new entity with the remaining 30% held by IMC Retail Inc. (a company headed by Mr. Massimo Ignazio Caronna,
a former partner of the Brunello Cucinelli Group in Cucinelli Holding Co., LLC). Brunello Cucinelli Canada
Limited runs the monobrand store which was opened in Vancouver in the second half of 2015, and is also in
charge of managing the Brunello Cucinelli multibrand business in Canada.
44
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Capital increase for Brunello Cucinelli Brasil, Ltda.
In May 2015 the Brazilian subsidiary, Brunello Cucinelli Brasil, Ltda., increased its capital by Reais 2,400,000
(which equated to € 698 thousand). The capital increase was for the purpose of supporting the start up phase of
the subsidiary, which manages the monobrand shop in Sao Paulo’s famous Cidade Jardim shopping mall.
New agreement with Brunello Cucinelli (England) Ltd.
In September 2015 the Brunello Cucinelli Group and Mr Charles Rambaud, managing director of Brunello
Cucinelli (England) Ltd. and owner of 30% of the capital in that company, signed an agreement amending the put
and call option contract entered into when Brunello Cucinelli (England) Ltd. was acquired. The new agreement
only allows for a call option which the Brunello Cucinelli Group can exercise in certain circumstances, including
on the fifth and tenth anniversaries of the new agreement.
Formation of SAS Brunello Cucinelli France Resort
In September 2015, SAS Brunello Cucinelli France Resort (70% owned and controlled by Brunello Cucinelli
Europe S.r.l. and 30% owned by an independent third party) was founded to perform local management services
for the direct monobrand boutiques.
Acquisition of 49% of the capital of Brunello Cucinelli Lessin (Macau) Fashion Co., Ltd.
On 29th December 2015, the Company acquired a stake of 49% of the capital in Brunello Cucinelli Lessin
(Macau) Fashion Co., Ltd. from Lessin Group Macau Co. Ltd.. The agreed consideration was HK$ 2,879,316.
In this way, the Company has acquired the entirety of the Macau-based subsidiary’s capital.
Option to sell shares of Brunello Cucinelli Japan Co. Ltd.
On 31st December 2015 the conditions specified in the “Shareholders’ Agreement” between the Company and Itochu
Corporation, whereby Itochu Corporation which is a minority shareholder in Brunello Cucinelli Japan Co. Ltd. has
gained the right to exercise a put option over all or part of the shares which it owns in such company (amounting to
25% of the capital). As a result of this, on 31st December 2015, the Group ascribed a value to the above-mentioned
option by entering into a short-term debt of € 993 thousand, to be repaid during the 2016 financial year.
45
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
RELATED PARTY TRANSACTIONS
Reference should be made to the notes to these consolidated financial statements for a detailed description of
related-party transactions conducted in 2015.
Pursuant to Consob Resolution no. 17221 of 12th March 2010, it is hereby stated that in the year ended
31st December 2015 the Group did not carry out any significant transactions with related parties or any which
have materially affected the Group’s financial position or results.
INFORMATION ON SIGNIFICANT NON-EU COMPANIES
The parent company Brunello Cucinelli S.p.A. directly or indirectly controls 5 companies (Brunello
Cucinelli USA, Inc., Cucinelli Holding LLC, Brunello Cucinelli Suisse S.A., Brunello Cucinelli Lessin (Sichuan)
Fashion Co., Ltd. and Brunello Cucinelli Japan Co., Ltd) formed and governed by the laws of countries that
are not European Union member states (“Significant non-EU Companies” as defined by Consob Resolution
no. 16191/2007 as amended).
In this respect it is noted that:
– all these companies draft a statement of account for the purposes of preparing the consolidated financial
statements; the balance sheet and income statement of such companies are made available to the shareholders
of Brunello Cucinelli S.p.A. within the time period and by the means required by applicable rules;
– Brunello Cucinelli S.p.A. has received the bylaws as well as the composition and powers of the corporate bodies;
– the Significant non-EU Companies: i) provide the parent’s external auditors with all of the information
needed to audit the parent’s annual and interim financial statements; ii) have an administrative and accounting
system suitable for ensuring that the parent’s management, control body and external auditors obtain the data
concerning their results, financial position and cash flows required for the preparation of the consolidated
financial statements.
For the purposes of fulfilling its legal obligations, the control body of Brunello Cucinelli S.p.A. has verified the
suitability of the administrative and accounting system for regularly providing the management and external
auditors of Brunello Cucinelli S.p.A. with the income statement, balance sheet and financial data required for
preparing the consolidated financial statements and the effectiveness of the information flow by means of
meetings with the external auditors and the manager in charge of preparing the corporate accounting documents.
46
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
PRINCIPAL RISKS AND UNCERTAINTIES
MARKET RISKS
Risks related to strong competition on the Brunello Cucinelli Group’s market
The luxury market and, especially, the absolute luxury sector in which the Brunello Cucinelli Group operates,
is highly competitive. It cannot be excluded that new brands or brands currently sold in segments of the luxury
market other than the one in which the Brunello Cucinelli Group is positioned will in the future be positioned in
the absolute luxury sector, thereby becoming the Company’s direct competitors.
Risks related to sale of the Brunello Cucinelli Group’s products on an international basis
The Group sells its products all over the world, specifically in Europe, North America, Japan, Greater China.
The Group’s presence on several international markets exposes it to risks related, among other things, to the
geopolitical and macroeconomic conditions of the countries in which it operates and to possible changes in same.
Sales could be influenced by a variety of events, such as market instability, natural disasters or socio-political
upheaval (for example: terrorist attack, coup d’état, armed conflict). The occurrence of these events, difficult to
predict, could negatively influence the demand for luxury goods in a certain country or cause a reduction in the
flow of tourists, thereby causing negative effects on the Group’s business and growth prospects.
Risks related to changes in the national and international legal framework in which the
Brunello Cucinelli Group operates
The Group is subject to laws applicable to the products it produces and/or markets in the various jurisdictions
in which it operates. Laws protecting consumer, industrial and intellectual property rights and safeguarding
competition and the health and safety of workers and the environment are especially important.
The enactment of new laws or changes to current laws could force the Group to adopt stricter standards, which
could require costs to adapt production facilities or product characteristics, or could limit the Group’s performance,
with consequent negative effect on its growth prospects. Specifically, in relation to commercial distribution in
countries other than Italy, the Group’s products may be subject to the application of customs duties and/or to
protectionist laws regarding the importation of products in such countries.
OPERATING RISKS
Risks related to the continuity of craftsmanship and artisanal skills
One of the distinctive characteristics of Brunello Cucinelli products is the high level of craftsmanship involved in
the production process, made possible thanks to constant training conducted in the Company and to the extensive
know-how it has acquired. Although the Group promotes the development of artisan production techniques at
a regional level, it cannot be ruled out that the number of people specializing in this type of production may
decrease in the future.
47
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Risks related to the supply of raw materials (in particular cashmere) and to increases in their prices
The principal raw materials used by the Brunello Cucinelli Group are yarns (especially cashmere yarns), textiles,
and hides. The supply of cashmere is subject to various factors beyond the Group’s control, some of which
are unforeseeable. For example climatic conditions in regions (above all, Mongolia) that supply raw cashmere,
changes in the way goats are raised in such regions and goat diseases or epidemics may affect the supply of
cashmere and, therefore, its price.
If there were a decrease in the supply of cashmere or an increase in demand and a consequent increase in its
price, the Group could have difficulty in obtaining supplies in the medium term and would be forced to incur an
increase in costs for purchases of this raw material.
Risks related to the sale of the Group’s products through the retail channel
The risks related to management of existing directly operated stores (DOS) are linked mainly to possible
difficulties in renewing leases, higher rents, revocation or non-renewal of commercial licenses (where required)
and lower sales.
As for the opening of new DOS, the increases in fixed costs connected with the new openings may not be
accompanied by a sufficient increase in revenues. In the Company’s competitive scenario, the possibility of
expanding the DOS network depends on the ability to obtain affordable spaces in locations that the Group deems
strategic. There is strong competition among retail operators to obtain commercial spaces in the most prestigious
locations of the world’s largest cities. Therefore, when looking for new spaces, the Group might have to compete
with other retail operators (including in the same sector) with economic and financial resources similar to or
greater than its own.
Risks related to relations with façonisti
The Brunello Cucinelli Group’s products are created by qualified laboratories outside the Group known as
façonisti. Relations between the Company and the majority of the façonisti with which the Group has worked
for many years are not governed by long-term agreements but instead by orders assigned to them, as is standard
practice in the sector. Any sudden termination of relations with a significant number of façonisti, or a situation in
which multiple façonisti fail to respect production schedules (to the extent agreed) on multiple occasions, could
negatively affect the Group’s business. In addition, it cannot be excluded that some of the façonisti may in the
future default on their obligations or terminate relations with the Company without notice.
Risks related to the defense of industrial and intellectual property rights
The protection of the Brunello Cucinelli brand and of other intellectual property rights is fundamental to the
its positioning on the luxury market, especially in the absolute luxury sector where the Group operates. The
brand’s value could be compromised if its protection, or protection of the design of the Group’s products, were
impracticable or particularly difficult.
Although the Company invests heavily to protect its brand and intellectual property rights, as well as the design
of some of its most successful products worldwide, it cannot be excluded that its actions may be unable to prevent
imitations of the brand and of the Group’s products. In addition, if the Group wishes to expand its business to
countries in which the Brunello Cucinelli brand is not yet registered, any prior use and/or registration of the brand
(or of brands mistakable for it) by third parties could limit (or block) the Group’s business in such countries. Lastly,
the laws of numerous foreign countries do not protect intellectual property rights with the same strictness as Italian
law or the law of other European Union nations.
48
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Risks connected with the perception of new trends
The sector in which the Brunello Cucinelli operates is characterized by changes in trends, tastes and lifestyles and
customer purchasing habits which may also be of a sudden nature.
The Company is therefore subject to the risk that it may not always be able to perceive the demands of fashion
or to translate them adequately when styling, designing and developing the end product. This situation could
accordingly jeopardize the success of collections.
For a description of the complete Risk Management System, reference should be made to the specific description
in the Annual Report on Corporate Governance and Ownership Structures.
RESEARCH AND DEVELOPMENT ACTIVITIES
The Company constantly invests in research and development to create new products that satisfy the demands
of its customers as well as to reinforce the know-how it has developed over the years. As always, research and
testing on materials and in the production of prototypes is of great importance.
In 2015, the Company incurred € 6,139 thousand in costs for personnel devoted to research and development,
fully expensed during the year.
FINANCIAL RISK MANAGEMENT
Financial risks are managed on the basis of guidelines set by the Board of Directors. The aim is to ensure a liability
structure that remains balanced with the composition of assets to maintain adequate balance sheet solvency.
The Group is exposed to various types of financial risk linked to its core business. More specifically, the Group is
simultaneously exposed to market risk (interest rate risk and currency risk), liquidity risk and credit risk.
Interest rate risk
It is the Company’s policy to cover exposure regarding the portion of medium- and long-term debt with respect
to market risk due to interest rate changes. To manage such risk, the Company uses derivative instruments such
as interest rate swaps (in some cases with caps).
49
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Currency risk
The Company is exposed to changes in the exchange rate for currencies (primarily the US dollar) in which sales
are made to affiliates and third-party customers. This risk exists in the eventuality that the amount of revenues in
euro may decrease in the event of unfavourable fluctuations in the exchange rate, thereby preventing the desired
margin from being achieved.
To limit its exposure to exchange rate risk deriving from its business activities, the Company enters into derivative
contracts (forward sale currency contracts) that predefine the conversion rate or a range of conversion rates
at future dates.
The forward contracts are stipulated when seasonal price lists in foreign currency are defined, based on estimated
sales and considering the expected collection date of the sales invoices at the expiry date of the derivative.
Specifically, the Company sets its selling prices in euro and calculates the corresponding prices in foreign
currency by applying the forward exchange rate..
Liquidity risk
Liquidity risk is the risk arising from a lack of the funds required to meet the Group’s commitments and financial
needs in the short term. The main factors determining the Group’s degree of liquidity are on the one hand the
funds generated or absorbed by operating and investing activities, and on the other the expiry and renewal dates
of its debt or the liquidity of its financial deposits and market conditions.
The Company manages liquidity risk by strictly controlling the elements comprising working capital and, in
particular, trade receivables and trade payables.
The Company strives to obtain good cash generation in order to settle trade payables without jeopardizing the
short-term balance of its treasury and to avoid criticalities and strains of available cash.
Credit risk
Credit risk is the Company’s exposure to potential losses arising from the failure by counterparties to meet
their obligations.
The Company’s exposure to credit risk relates to sales in the wholesale multibrand channel and the wholesale
monobrand channel; in the retail channel the risk is limited to sales managed by the landlord which owns the
walls of the mall and directly manages sales within the boutiques; the remainder of the turnover comes from the
pure retail channel with payments in cash or by credit or debit card.
The Company generally prefers to do business with customers with which it has solid, long-term relations. When
customers request extended payment terms, it is the Company’s policy to conduct a credit check by means of
information obtainable from specialized agencies and by studying and analyzing data on the performance of
established customers. In addition, balances are constantly monitored during the year in order to ensure timely
action and reduce the risk of loss.
For a detailed analysis of financial risks, reference should be made to the notes to these financial statements.
50
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
SIGNIFICANT SUBSEQUENT EVENTS SINCE 31ST DECEMBER 2015
Sale of a boutique
On 28th January 2016, the Company entered into a contract for the sale of a business line represented by the retail
sales of products carried out by the Company in a boutique in Italy.
A sale price of € 765 thousand was agreed, and in line with IFRS 5, this amount was included in the balance sheet
under “Assets held for sale” in these accounts as at 31st December 2015.
In the context of this transaction, the Company booked € 95 thousand in the form of a repayment of the guarantee
deposit paid by the Company to the landlord to guarantee the undertakings given on signing the lease.
BUSINESS OUTLOOK
The highly positive results achieved in 2015 represent a further milestone reached by the Company in its growth
path which is underpinned by the robust principles which run through our DNA, in the quest for economic and
moral dignity for all who work, directly and indirectly with the company, and for the end customer.
2015 was also an extremely important year from the perspective of the positioning of the brand, which is becoming
ever more closely identified as the representative of absolute luxury, thanks to its exclusivity which is based on
product craftsmanship, artisanship and made in Italy.
Knowing the appeal and allure of the Brunello Cucinelli “world”, and the customer trends at the top end – where
unique products are sought out by buyers who know about and are motivated by the production process, and are
willing to pay a fair price for them – we believe that 2016 will also be “very positive” and highly satisfactory.
We will therefore continue along our sustainable growth path with healthy profits, and growth in absolute and
percentage margin as a result of the significant investments which we undertook during the 2013-2015 three-year period
to reinforce the Company’s fundamentals by doubling the size of the Solomeo factory and increasing the brand’s
prestige further.
In the light of these considerations, and despite the investment plans in place to sustain the Great Internet Project,
as well as the opening of selected, exclusive boutiques, we believe that from 2016 onwards we will gradually be
able to begin the process of cash generation, with a positive and progressive impact on the net financial position.
Cav. Lav. Brunello Cucinelli
Chairman of the Board of Directors
51
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
FINANCIAL STATEMENTS AT 31st DECEMBER 2015
52
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31ST DECEMBER 2015
(In thousands of euro)
NOTE 31st December
2015
of which with 31st December
related parties
2014
of which with
related parties
NON-CURRENT ASSETS
Intangible assets
1
31,479
Property, plant and equipment
2
101,045
14,212
80,157
11,475
Other non-current financial assets
3
5,429
32
4,786
32
Deferred tax assets
23
29,649
15,678
13,307
153,631
127,899
4
143,957
125,114
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Inventories
Trade receivables
5
45,628
Tax receivables
6
2,157
1,023
Other receivables and current assets
7
15,843
14,873
Other current financial assets
8
86
44
9
48,075
53,635
10
961
495
256,707
240,235
Cash and Cash equivalents
Current assets – derivative financial instruments
TOTAL CURRENT ASSETS
Non current assets held for sale
TOTAL ASSETS
11
21
45,051
765
-
411,103
368,134
31
53
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
(In thousands of euro)
NOTE 31st December
2015
of which with 31st December
related parties
2014
of which with
related parties
EQUITY
EQUITY ATTRIBUTABLE TO SHAREHOLDERS
OF PARENT COMPANY
Share capital
12
13,600
13,600
Share premium reserve
12
57,915
57,915
Other reserves
12
85,380
60,182
Profit attributable to shareholders of parent company
12
33,338
33,060
190,233
164,757
TOTAL EQUITY ATTRIBUTABLE TO
SHAREHOLDERS OF PARENT COMPANY
NON-CONTROLLING INTERESTS
Capital and reserves attributable to non-controlling
interests
12
6,934
6,841
Net profit (loss) attributable to non-controlling interests
12
(389)
(1,273)
6,545
5,568
196,778
170,325
TOTAL EQUITY ATTRIBUTABLE TO
NON-CONTROLLING INTERESTS
TOTAL EQUITY
NON-CURRENT LIABILITIES
Liabilities for employee benefits
13
3,033
3,310
Provisions for risks and charges
14
648
947
Non-current bank debt
15
52,742
42,450
Non-current financial payables
16
1,799
2,663
Other non-current liabilities
17
7,486
4,908
Deferred tax liabilities
23
2,370
3,280
Non-current liabilities – derivative financial instruments
10
412
467
68,490
58,025
TOTAL NON-CURRENT LIABILITIES
CURRENT LIABILITIES
Trade payables
18
68,826
Current bank debt
19
47,782
1,767
62,185
48,709
Current financial payables
20
1,405
1,682
Tax payables
21
1,575
1,152
Current liabilities – derivative financial instruments
10
4,182
6,244
Other current liabilities
22
22,065
19,812
TOTAL CURRENT LIABILITIES
145,835
139,784
TOTAL LIABILITIES
214,325
197,809
TOTAL EQUITY AND LIABILITIES
411,103
368,134
625
54
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CONSOLIDATED INCOME STATEMENT FOR THE YEAR ENDED
31ST DECEMBER 2015
Year ended 31st December
(In thousands of euro)
NOTE
2015
Net revenues
24
Other operating income
24
414,937
357,383
25
(65,534)
(22) (51,289)
(85)
Revenues
Costs for raw materials and consumables
of which with
related parties
2014
of which with
related parties
414,151
31
355,909
21
786
36
1,474
792
Costs for services
26
(200,060)
(2,535) (176,131)
(1,743)
Payroll costs
27
(74,668)
(395) (62,273)
(253)
Other operating costs
28
(4,791)
(3,379)
(7)
Own work capitalized
29
843
1,021
Depreciation
30
(18,149)
(13,712)
Value adjustments to assets and other provisions
31
Total operating costs
Operating profit (loss)
Financial expense
32
Financial income
33
Pre-tax profit (loss)
Income taxes
23
Net profit (loss) for the year
(1,603)
(2,291)
(363,962)
(308,054)
50,975
49,329
(29,938)
(10,642)
25,106
7,739
46,143
46,426
(13,194)
(14,639)
32,949
31,787
Net profit (loss) attributable to parent’s shareholders
12
33,338
33,060
Net profit (loss) attributable to non-controlling interests
12
(389)
(1,273)
Basic earnings per share
34
0.49026
0.48618
Diluted earnings per share
34
0.49026
0.48618
55
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
YEAR ENDED 31ST DECEMBER 2015
Year ended 31st December
(In thousands of euro)
NOTE
Net profit (loss) for the year (A)
2015
2014
32,949
31,787
1,364
(806)
(23)
(3,604)
Other items of comprehensive income:
Other items of comprehensive income that will later be reclassified
on the income statement:
Cash flow hedges
12
Income taxes
12
(23)
991
(46)
(2,613)
1,410
1,807
131
(102)
Remeasurement of defined benefit plans (IAS 19)
192
(141)
Tax effect
(61)
39
Effect of changes in cash flow hedge reserve
Translation differences on foreign financial statements
Other items of comprehensive income that will not later be reclassified
on the income statement:
Total other comprehensive income net of tax effect (B)
Total comprehensive income net of tax (A) + (B)
12
1,495
(908)
34,444
30,879
34,750
31,764
(306)
(885)
Attributable to:
Shareholders of parent company
Non-controlling interests
56
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED
31ST DECEMBER 2015
Year ended 31st December
(In thousands of euro)
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit for the year
Adjustments to reconcile net profit to cash flows from operating activities:
Depreciation, amortization and write-downs
Allocation to provisions for employee benefits
Allocation to provisions for risks and charges / inventory obsolescence / bad debts
Changes in other non-current liabilities
Losses (gains) on disposal of fixed assets
Payments from provision for employee benefits
Payments from provisions for risks and charges
Net change in deferred tax assets and liabilities
Change in fair value of financial instruments
Changes in operating assets and liabilities:
Trade receivables
Inventories
Trade payables
Other current assets and liabilities
NET CASH FROM OPERATING ACTIVITIES (A)
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in property, plant and equipment
Investments in intangible assets
Investments in financial assets
Acquisition of SAS White Flannel, net of cash acquired
Acquisition of Pearl Flannel S.p.r.l., net of cash acquired
Acquisition of business from d'Avenza Fashion S.p.A., net of cash acquired
Acquisition of BC England Ltd., net of cash acquired
Acquisition of 49% of Brunello Cucinelli Marittima S.r.l.
Disposal of property, plant and equipment and key money
NET CASH USED IN INVESTING ACTIVITIES (B)
CASH FLOWS FROM FINANCING ACTIVITIES
Long-term loans received
Repayment of long-term loans
Drawdowns/(Repayments) of short-term loans
Net change in short-term loans
Net change in long-term loans
Capital increase, capital payments by shareholders and other changes in equity
Dividends paid
NET CASH FROM FINANCING ACTIVITIES (C)
TOTAL CASH FLOWS (D=A+B+C)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (E)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR (F)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (G=D+E+F)
Additional information:
Interest paid
Income tax paid
NOTE
2015
2014
12
32,949
31,787
18,149
58
1,620
2,011
42
(134)
(354)
(3,214)
(2,607)
13,712
170
1,999
2,447
(673)
(178)
(130)
(2,611)
3,728
(603)
(14,083)
1,549
494
35,877
(2,113)
(25,945)
(6,664)
(1,758)
13,771
(32,340)
(7,797)
(696)
260
(40,573)
(29,601)
(4,351)
(1,369)
(549)
(443)
(84)
2,464
(33,933)
39,430
(27,923)
11,690
(16,047)
(1,061)
444
(8,435)
(1,902)
(6,598)
1,038
53,635
48,075
80,120
(42,641)
8,028
(6,132)
(1,025)
3,518
(7,955)
33,913
13,751
1,208
38,676
53,635
2,577
17,192
2,079
17,765
9
9
57
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR
ENDED 31ST DECEMBER 2015
(In thousands of euro)
1st January 2015
Share
capital
Legal
reserve
13,600 2,720
Share Additional Translation
premium
paid-in
reserve
reserve
capital
Other
Reserves
Net profit
for the
year
Total equity
attributable to
shareholders
of the parent
company
Total equity
attributable to
non-controlling
interests
Total equity
57,915
56,283
33.060
164.757
5.568
170.325
33,338
33,338
(389)
32,949
1,413
82
1,495
-
1,179
Net profit for the year
Other profits (losses)
Total comprehensive income
1,336
-
-
-
-
1,336
77
33,338
34,751
(307)
34,444
Allocation of net profit
33,060 (33,060)
77
-
-
-
Dividends paid
(8,160)
(8,160)
(275)
(8,435)
-
611
611
1,039
1,039
139
1,178
(2,144)
(2,144)
810
(1,334)
Capital payments by
non-controlling interests
Change in minority ownership
of Brunello Cucinelli
(England) Ltd in respect of
removal of put option
Change in consolidation
scope and operations under
common control
Other changes
31st December 2015
(In thousands of euro)
1st January 2014
(10)
13,600 2,720
Share
capital
Legal
reserve
13,600 2,361
(10)
(1)
(11)
2,515
80,145
33,338
190,233
6,545
196,778
Share Additional Translation
premium
paid-in
reserve
reserve
capital
Other
Reserves
Net profit
for the
year
Total equity
attributable to
shareholders
of the parent
company
Total equity
attributable to
non-controlling
interests
Total equity
57,915
37,942
30,476
142,054
3,160
145,214
33,060
33,060
(1,273)
31,787
57,915
-
-
(240)
Net profit for the year
Other profits (losses)
Total comprehensive income
Allocation of net profit
1,419 (2,715)
-
-
-
-
(1,296)
388
(908)
33,060
31,764
(885)
30,879
30,117 (30,476)
-
-
-
(7,480)
(475)
(7,955)
-
3,519
3,519
(1,583)
249
(1,334)
1,419 (2,715)
359
Dividends paid
(7,480)
Capital payments by
non-controlling interests
Change in consolidation
scope and operations under
common control
(1,583)
Other changes
31st December 2014
2
13,600 2,720
57,915
-
1,179
56,283
33,060
2
-
2
164,757
5,568
170,325
58
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED 31st DECEMBER 2015
59
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
1. BASIS OF PREPARATION
1.1 CONTENT AND FORMAT OF CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance with the International Financial Reporting
Standards (IFRS) issued by the International Accounting Standards Board (IASB), adopted by the European
Union and in effect at the date of the financial statements. The notes to the consolidated financial statements have
been supplemented by the additional information required by Consob and the instructions issued by Consob in
implementation of article 9 of Legislative Decree no. 38/2005 (Resolutions 15519 and 15520) of 27th July 2006
and communication DEM/6064293 of 28th July 2006, pursuant to article 78 of the Issuers’ Regulations, the EC
document of November 2003 and, where applicable, the Italian civil code.
The consolidated financial statements at 31st December 2015, approved by the Board of Directors on 10th March 2016,
include the consolidated statement of financial position, the consolidated income statement, the consolidated statement
of comprehensive income, the consolidated cash flow statement and the consolidated statement of changes in equity.
The items in the consolidated statement of financial position are presented in order of liquidity, where:
– non-current assets reflect items that are typically realized after twelve months and include intangible assets,
property, plant and equipment and financial assets;
– current assets include items that are typically realized within twelve months;
– non-current liabilities consist of items falling due after twelve months, including borrowings, provisions and the
employees’ termination indemnity (TFR);
– current liabilities include payables falling due within twelve months, including the short-term portion of longterm loans, provisions and the employees’ termination indemnity (TFR).
The format for the consolidated income statement classifies costs by the nature of the expense.
The consolidated cash flow statement was prepared under the indirect method and is presented in accordance with
IAS 7, classifying cash flows by operating activities, investing activities and financing activities.
The consolidated financial statements have been prepared based on a historical cost basis, except in the case of
derivatives, other financial assets, and available-for-sale assets which are recognized at fair value.
As regards Consob Resolution no. 15519 of 27th July 2006 and Communication DEM6064293 of 28th July 2006,
the financial statements provide information on significant related party transactions for the purposes of a more
complete disclosure.
60
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
2. CONSOLIDATION SCOPE
The consolidated financial statements consist of the statements of financial position, operating performance and
cash flows of the parent company Brunello Cucinelli S.p.A. and its Italian and foreign subsidiaries (together
identified as the Brunello Cucinelli Group) as of and for the year ended 31st December 2015.
The consolidated financial statements have been prepared on the basis of the statements of account of the
Company and those of its subsidiaries, adjusted to comply with IFRS.
Control is obtained when the Group is exposed, or has rights to, variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the investee. More specifically, the
Group has control over an entity if and only if it has all of the following:
– power over the investee (meaning it has existing rights that give it the current ability to direct the relevant
activities i.e. the activities that significantly affect the investee’s returns);
– exposure, or rights, to variable returns from its involvement with the investee;
– the ability to use its power over the investee to affect the amount of its returns.
If the Group holds less than the majority of the voting rights (or similar rights) it considers all the facts and
circumstances relevant for establishing whether it controls an investee, including:
– contractual agreements with other holders of voting rights;
– rights resulting from contractual agreements;
– the Group’s voting rights and potential voting rights.
The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control. The Group consolidates a subsidiary from the date it gains control
until the date it ceases to control that subsidiary. The assets, liabilities, income and expenses of the subsidiary
acquired or disposed of during the year are included in the Group’s comprehensive income from the date on
which it gains control until the date it no longer exerts control over that subsidiary.
All intercompany balances and transactions, including any unrealized profits or losses deriving from transactions
with companies of the Brunello Cucinelli Group, are eliminated.
Acquisitions of subsidiaries are recognized under the purchase method, which involves allocation of the
cost of the business combination to the fair value of the assets, liabilities, and contingent liabilities acquired
at the acquisition date and the inclusion of the result of the acquired company from the acquisition date to
the end of the year.
Profits and equity attributable to non-controlling interests represent the part of profit or loss and equity relating to
the net assets not held by the parent company’s shareholders and are shown in the consolidated income statement,
the consolidated statement of comprehensive income and the consolidated statement of financial position
separately from profits and equity attributable to the shareholders of the parent company.
61
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
At 31st December 2015, the Brunello Cucinelli Group did not hold any investments in associates (associated
companies in which the Group holds at least 20% of the voting rights or exercises significant influence, but
not control or joint control, over financial and operating policies) or joint ventures (defined as a contractual
arrangement whereby two or more parties undertake an economic activity that is subject to joint control within
the meaning of IAS 11).
The following table provides summarized information on subsidiaries at 31st December 2015, consisting of the
company’s name, registered office and percentage of share capital held directly and indirectly by the Brunello
Cucinelli Group.
Company name Registered office
Currency
Brunello Cucinelli USA, Inc.
Brewster (NY) – USA US dollar
Brunello Cucinelli Europe S.r.l.
Corciano (PG) – Italy
Euro
Share capital
currency
Percentage of control
Direct
1,500
100.00%
100,000
100.00%
Brunello Cucinelli Belgium S.p.r.l.
Brussels – Belgium
Euro
20,000
Brunello Cucinelli France S.a.r.l.
Paris – France
Euro
200,000
2.00%
Euro
200,000
2.00%
Indirect
100.00%
98.00%
Brunello Cucinelli GmbH
Munich – Germany
Brumas Inc.
Brewster (NY) – USA US dollar
5,000
51.00%
Cucinelli Holding Co. LLC
Brewster (NY) – USA US dollar
1,182,967
70.00%
Brunello Cucinelli Retail Spain S.L. Madrid – Spain
Brunello Cucinelli Suisse S.A.
Euro
Lugano – Switzerland Swiss franc
200,000
5.00%
95.00%
200,000
2.00%
98.00%
Max Vannucci S.r.l.
Perugia – Italy
Euro
Brunello Cucinelli Japan Co. Ltd
Tokyo – Japan
Japanese yen
Brunello Cucinelli Retail
Deutschland GmbH
Munich – Germany
Euro
200,000
118,000
Brunello Cucinelli Netherlands B.V. Amsterdam – Holland Euro
200,000
2.00%
70.30%
330,000,000
Brunello Cucinelli Lessin (Sichuan)
Fashion Co. Ltd.
Chengdu – China
RMB
165,000,000
Brunello Cucinelli Hellas S.A.
Athens – Greece
Euro
24,000
Brunello Cucinelli Austria GmbH
Vienna – Austria
Euro
35,000
Brunello Cucinelli England Ltd.
London – United
Kingdom
British pound
51.00%
75.00%
70.00%
2.00%
700
Hong Kong dollar
2,000,000
51.00%
Macau
MOP
5,000,000
100.00%
Pinturicchio S.r.l.
Carrara – Italy
Euro
100,000
2.00%
98.00%
Brunello Cucinelli Brasil LTDA
San Paolo – Brazil
BRL
8,700,000
Cannes – France
Euro
50,000
SAM Brunello Cucinelli Monaco
Principality of Monaco Euro
150,000
Brunello Cucinelli Canada Limited
Vancouver – Canada
SAS Brunello Cucinelli France Resort Courchevel – France
Euro
100
50,000
98.00%
70.00%
Brunello Cucinelli Lessin (Macau)
Fashion Co., Ltd.
SAS White Flannel
98.00%
51.00%
Brunello Cucinelli Hong Kong Ltd. Hong Kong
Canadian dollar
98.00%
98.00%
2.00%
70.00%
68.67%
70.00%
70.00%
62
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The main changes taking place in the consolidation scope in 2015 were as follows:
– on 6th February 2015 the formation of SAM Brunello Cucinelli Monaco was completed. The Company has a
68.67% interest in this new company, while an independent third party holds a further 30%;
– Brunello Cucinelli Canada Limited was formed on 9th February 2015. The Company holds a 70% interest in the
new entity with the remaining 30% held by IMC Retail Inc. (a company headed by Mr. Massimo Ignazio Caronna,
a former partner of the Brunello Cucinelli Group in Cucinelli Holding Co., LLC);
– in September 2015, SAS Brunello Cucinelli France Resort ( 70% owned and controlled by Brunello Cucinelli
Europe S.r.l. and 30% owned by an independent third party) was founded.
The new subsidiaries are consolidated on a line-by-line basis.
Apart from the above there were no other changes to the consolidation scope compared to the year ended
31st December 2014.
It should also be noted here that 2015 saw a capital increase in Brunello Cucinelli Lessin Sichuan Fashion Co.,
Ltd, the acquisition of the minority shares in Brunello Cucinelli Lessin (Macau) Fashion Co., Ltd, and agreement
on the accounting value of the minority shareholder’s put option on Brunello Cucinelli Japan Co.Ltd, in which
the Group already owned a controlling stake. These companies had already been consolidated line by line in
previous financial years, and consequently these transactions did not change the scope of consolidation.
63
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
3. ACCOUNTING STANDARDS
INTRODUCTION
The consolidated financial statements have been prepared based on a historical cost basis, except in the case
of derivatives and available-for-sale financial assets which are recognized at fair value.
The consolidated financial statements are presented in Euro, and all values are rounded to thousands of Euro
unless otherwise stated.
DISCRETIONAL ASSESSMENTS AND VALUATIONS AND SIGNIFICANT ACCOUNTING ESTIMATES
The preparation of the Brunello Cucinelli Group’s consolidated financial statements requires the Company’s
directors to make discretional measurements, estimates and assumptions that affect the amounts of revenues,
expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. The actual
results could differ from these estimates. The main processes used in making such discretional estimates and
measurements relate to the recognition and measurement of the following items.
Deferred tax assets
Deferred tax assets are recognized for deductible temporary differences between the carrying amounts of assets
and liabilities in the financial statements and their corresponding tax bases and unused tax losses to the extent
that it is probable that sufficient taxable profit will be available against which these losses can be utilized. A
discretional assessment is required by the directors to determine the amount of deferred tax assets that can be
recognized, which is based on an estimate of the likely timing and amount of future taxable profits.
Liabilities for employee benefits (the employees’ termination indemnity or “TFR”) and the agents’
supplementary termination indemnity provision
The employees’ termination indemnity (TFR) and the agents’ supplementary termination indemnity provision for
the Group’s Italian companies are measured using actuarial valuations. These valuations require assumptions to
be made about discount rates, staff turnover (for the TFR) and mortality rates. Because of the long-term nature of
these plans, these estimates are subject to a significant degree of uncertainty.
Allowance for doubtful debts
The allowance for doubtful debts represents management’s best estimate, on the basis of information available at
the date of preparation of the financial statements, of the amount required to adjust receivables to their estimated
realizable value.
64
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Useful lives of tangible and intangible fixed assets and impairment testing
The depreciation and amortization of property, plant and equipment and intangible assets with a finite useful
life and the forward-looking data used for impairment testing require discretional estimates to be made by the
directors. Such estimates are reviewed at every year end to ensure that the carrying amounts reflect the best
estimates of the costs to be incurred by the Group, and in case of significant discrepancies the amounts are
revised and updated.
Reference should be made to the paragraph “Impairment” below for a discussion of impairment testing.
Derivatives
The measurement of derivative instruments recognized as assets and liabilities requires the use of estimates
and assumptions. The way in which fair value is determined and the risk inherent in derivative contracts to
hedge currency risk and interest rate risk is managed are illustrated in the specific paragraph on “Derivative
instruments” of these notes. The estimates and assumptions considered are reviewed constantly and the
effects of any changes are recognized immediately.
Estimates and assumptions are made by directors with the support of the company functions and, where
appropriate, of independent professionals, and are reviewed from time to time.
BUSINESS COMBINATIONS AND GOODWILL
Business combinations are recorded under the purchase method. This requires a fair value calculation of the
identifiable assets (including intangible assets not previously recognized) of the acquired company.
The goodwill acquired in a business combination is initially measured at cost represented by the excess of the
consideration transferred plus the amount of any non-controlling interest over the fair value of the identifiable
assets acquired and the liabilities assumed by the Group.
For purposes of the fairness analysis, the goodwill acquired in a business combination is allocated on the
acquisition date to the Group’s individual cash generating units or groups of cash generating units that are
expected to benefit from the synergies of the combination, regardless of whether other Group assets or liabilities
are assigned to such units or groups of units. Each unit or group of units to which goodwill is allocated:
a) represents the lowest level in the Group at which the goodwill is monitored for purposes of internal management;
b) is not larger than the segments identified on the basis of the format used for presentation of the Group’s disclosure
of operating segments pursuant to IFRS 8 Operating Segments.
When goodwill is part of a cash generating unit (a cash generating unit group) and some of such unit’s internal assets
are sold, the goodwill associated with the sold assets is included in the carrying amount of the asset to calculate the
gain or loss deriving from the sale. The goodwill sold under these circumstances is measured on the basis of the
values of the sold asset and of the portion of the asset remaining.
65
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
When the sale regards a subsidiary, the difference between the selling price and the net assets plus accumulated
exchange differences and goodwill is recognized through profit or loss.
No goodwill was recorded in the consolidated financial statements of the Brunello Cucinelli Group for the year
ended 31st December 2015.
COMMON CONTROL TRANSACTIONS
Business combinations involving entities under common control are not accounted for in accordance with
IFRS 3 Business Combinations, which specifically excludes them. In consideration of the purely organizational
aims of such transactions, and in application of the Group’s applicable accounting policy, these are recorded
on the basis of the existing carrying amounts of the companies involved, without measuring the effects of
the business combinations.
INTANGIBLE ASSETS
Intangible assets are recognized in assets at purchase cost when it is probable that the use of the asset will
generate future economic benefits and when the cost of the asset can be reliably determined.
Intangible assets acquired by means of business combinations are recognized at fair value at the acquisition
date, if such value can be reliably determined. Internally produced intangible assets are not capitalized and are
recognized in the income statement in the year in which the relevant costs were incurred.
Intangible assets with finite useful lives are amortized on a straight line basis over those lives and are tested for
impairment whenever there are indications of a possible impairment loss, following the rules described below.
Remaining useful lives are reviewed at the end of each year or more frequently if necessary. Changes in expected
useful life or the ways in which the Group obtains future economic benefits linked to the intangible asset are
recognized by changing the amortization period and/or method and are treated as changes in accounting estimate.
The amortization of intangible assets with finite lives is recognized in the income statement in the cost category
consistent with the function of the intangible asset.
Gains or losses on the sale of an intangible asset are measured as the difference between the net proceeds from the
sale and the carrying amount of the asset and are recognized in the income statement at the time of sale.
66
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The estimated useful lives of intangible assets with finite lives are as follows:
Years
Trademarks
18
Key money
Based on lease term
Software
2-3
Licenses
5
Other intangible assets
3-12
Key money
This intangible asset consists of amounts paid by the Group to assume leases for commercial property in
prestigious locations. The amounts also include the initial direct costs incurred for the negotiation and stipulation
of lease agreements. Such costs are capitalized by virtue of expected incremental revenues deriving from the
possibility of operating in prestigious locations.
Key money is amortized over the lease term (for retail channel stores) or over the term of the affiliation agreement
(for wholesale monobrand channel stores).
Concessions, licenses and trademarks
These intangible assets consist of the costs incurred for the registration of Group trademarks.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment acquired separately is recognized at historical cost, inclusive of accessory costs
directly attributable and necessary for commissioning of the asset for its intended use. This cost includes expenses
for spare parts for machinery and equipment, recognized when incurred, if conforming to measurement criteria.
With reference to buildings, cost is represented by fair value calculated at the date of transition to IFRS
(1st January 2008), as permitted by IFRS 1, and is shown net of depreciation and any impairment.
Property, plant and equipment acquired by means of business combinations is recognized at fair value calculated
at the acquisition date.
Maintenance and repair costs, other than costs that increase the value and/or extend the remaining useful life of
assets, are expensed as incurred; otherwise they are capitalized.
Property, plant and equipment is shown net of accumulated depreciation and of any impairment, calculated by
the methods described below. Depreciation is charged on a straight line basis over the estimated useful life of the
asset, which is reviewed annually; changes are made as necessary with prospective application.
67
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The estimated useful lives of the main categories of property, plant and equipment are as follows:
Years
Buildings
(of which leasehold improvements)
33
Based on lease term
Plant and machinery
8
Industrial and commercial equipment
4
Other assets
4-8
If components of property, plant and equipment have different useful lives they are recognized separately. Land,
with or without buildings, is recognized separately and is not depreciated because it has an indefinite useful life.
The carrying amount of property, plant and equipment is tested for impairment by following the rules described
below if events or changes in the situation indicate that this amount cannot be recovered.
At the time of sale or when no future economic benefits are expected from its use, the asset is derecognised and
any gain or loss (calculated as the difference between disposal value and the carrying amount) is recognized in
profit or loss in the year of derecognition.
Historical collection
For each collection the Company keeps one example of every article considered important and sellable. The
design department uses these products as a source of inspiration when creating new collections.
These assets are classified as property, plant and equipment, recognized at historical cost of production, and are
not depreciated because they have an indefinite useful life.
The value increases of such assets are recognized in profit or loss as own work capitalized.
Impairment
At year-end, the Group considers whether there are any indicators of impairment of intangible assets and of
property, plant and equipment. If such indicators are found, an impairment test is conducted.
If the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable
amount. The recoverable amount is the higher of the fair value less costs to sell of an asset or cash generating
unit and its value in use, and is calculated for each asset except when such asset generates cash flows that are not
largely independent of those generated by other assets or groups of assets, in which case the Group estimates the
recoverable amount of the cash generating unit to which the asset pertains.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
In calculating value in use, the Group discounts the current value of estimated future flows by using a pre-tax
discount rate that reflects market estimates of the time value of money and the specific risks of the asset.
For purposes of estimating value in use, future cash flows are taken from the business plans approved by the
Board of Directors, which constitute the Group’s best forecast of economic conditions in the plan period. Plan
projections normally cover three years; the long-term growth rate used to estimate the terminal value of the
asset or unit is normally lower than the average long-term growth rate for the industry, country, or reference
market. Future cash flows are estimated by making reference to current conditions: therefore, the estimates do not
consider benefits deriving from future reorganizations to which the Company is not yet committed or future
investments to improve or optimize the asset or the unit.
If the carrying amount of an asset or cash generating unit exceeds its recoverable amount, the asset has suffered
an impairment and is consequently written down to the recoverable amount.
Impairments to operating assets are reported in the income statement in the cost categories consistent with the
function of the impaired asset. At year end, the Group also considers whether there are any indicators of reductions
in losses recognized following previous impairment tests and, if so, it makes a new estimate of the recoverable
amount. An impairment loss may only be reversed if there have been changes in the estimates used to calculate
the asset’s recoverable amount after the latest recognition of impairment. In such case, the asset’s carrying
amount is written up to its recoverable amount, but such increased amount may not exceed the carrying amount
that would have been calculated, net of depreciation/amortization, if no impairment loss had been recognized in
previous years. Reversals of impairment losses are recognized as income in profit or loss. After the reversal of
an impairment loss, the depreciation/amortization charged on the asset is adjusted in future periods in order to
write-off the new carrying amount, less any residual values, on a straight line basis over its remaining useful life.
Impairment losses recognized for goodwill cannot be subsequently reversed.
NON CURRENT ASSETS HELD FOR SALE
Non current assets held for sale are classified as such if the carrying amount of the asset will be recovered primarily
through a sale transaction rather than its continued use. For this to occur, the asset must be available for immediate
sale in its present condition, subject to the standard conditions for the sale of such assets and the sale must
be highly probable.
After their initial classification, non current assets held for sale are measured at the lower of carrying amount – if it
had not been classified as held for sale – and fair value less costs to sell.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
LEASING
The definition of a contractual agreement as a leasing transaction (or containing a lease) is based on the substance
of the agreement and requires an assessment of whether the fulfilment of the agreement is dependent on the use of
one or more specific activities or whether the agreement transfers the right to use such activities. The assessment
of whether an agreement contains a lease or not is made at the beginning of the agreement.
The group as lessee
A lease contract is classified as a finance lease or operating lease at the inception of the lease. A lease that transfers
to the group substantially all the risks and rewards deriving from the ownership of the leased asset is classified
as a finance lease.
Finance leases are capitalised at the date of inception of the lease at the fair value of the leased property or, if
lower, at the present value of the lease payments. Lease payments are allocated between principal and interest,
allowing for the application of a constant rate of interest on the remaining balance of the debt. Borrowing costs
are charged to the income statement.
Leased assets are depreciated over their estimated useful life. However, where there is reasonable certainty that
the Group will obtain ownership of the asset at the end of the contract, the asset is depreciated over the shorter of
the estimated useful life of the asset or the term of the lease.
An operating lease is a lease that is not identified as a financial lease. Operating lease payments are recognised as
expenses in the income statement in a straight line over the duration of the contract.
The group as lessor
Leases that leave the group substantially all the risks and rewards deriving from the ownership of the leased asset
are classified as operating leases. The initial costs of entering into the contract are added to the carrying amount
of the leased asset and recognised according to the duration of the contract on the same basis as lease income.
Contingent lease income is recognised as revenue in the period in which it matures.
FINANCIAL ASSETS AND OTHER NON-CURRENT ASSETS
These assets are measured using the amortized cost criterion by using the effective discount rate method net of
any provision for impairment.
Amortized cost is calculated by considering any purchase discount or premium and includes fees that are an
integral part of the effective interest rate and transaction costs.
Receivables with maturity exceeding one year that are non-interest bearing or earn interest below market rate are
discounted by using interest rates in line with the market.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
INVENTORIES
Inventories are measured at the lower of purchase and/or production cost, calculated by means of the weighted
average cost method, and net realizable value. Purchase cost includes relative ancillary costs for purchases in the
period. Production cost includes directly attributable costs and a portion of indirect costs reasonably attributable
to the products. Net realizable value consists of the estimated selling price less estimated completion costs and
estimated selling costs.
Where necessary, an allowance for obsolescence is established for materials or products, in view of their expected
use and realizable value.
TRADE RECEIVABLES AND OTHER RECEIVABLES AND CURRENT ASSETS
Trade receivables and other receivables and current assets are initially recognized at fair value, which generally
corresponds to nominal value and are subsequently measured at amortized cost and written down in case of
impairment. They are also adjusted to their expected realizable value, if lower, via a specific allowance
for doubtful debts.
Receivables in currencies other than the Euro are recognized at the exchange rate at the transaction date and then
translated at the exchange rate at year-end. Gains or losses on translation are recognized in profit or loss.
If trade receivables and other receivables and current assets have credit terms beyond the normal and do not
generate interest, an analytic discount process is applied based on assumptions and estimates.
OTHER FINANCIAL ASSETS (CURRENT AND NON-CURRENT)
Other financial assets are initially recognized at fair value and subsequently measured at amortized cost.
A financial asset (or, were applicable, part of a financial asset or part of a group of similar financial assets) is
derecognised when:
– the rights to receive cash flows from the asset have expired;
– the Group retains the right to receive cash flows from the asset, but has assumed a contractual obligation to
pay all such flows immediately to a third party;
– the Group has transferred rights to receive cash flows from the asset and (a) has substantially transferred all
of the risks and benefits of ownership of the financial asset or (b) has not substantially transferred all of the
risks and benefits of the asset but has transferred control of same.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Where the Group has transferred rights to receive cash flows from the asset but has not transferred or retained
substantially all of the risks and benefits or has not lost control of same, the asset is recognized to the extent of
the Group’s residual interest in the asset. A residual interest that takes the form of a guarantee on the transferred
asset is valued at the lower of the initial carrying amount of the asset and the maximum price that the Group might
be required to pay.
If the residual interest takes the form of an option issued and/or acquired on the transferred asset (including cash
settled or similar options), the Group’s interest corresponds to the amount of the transferred asset that the Group may
repurchase. Nevertheless, in case of a put option issued on an asset measured at fair value (including cash settled or
similar options), the Group’s residual interest is limited to the lesser of the fair value of the transferred asset and the
exercise price of the option.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and demand and short-term deposits (the latter with original
maturity not beyond three months). Cash and cash equivalents are recognized at nominal value and at the spot
exchange rate at year-end if in foreign currency.
FINANCIAL PAYABLES
Loans are initially recognized at the fair value of the amounts borrowed, less ancillary loan charges.
After the initial recognition, loans are measured at amortized cost by using the effective interest rate method.
Any gain or loss is recognized through profit or loss when the liability is extinguished, in addition to by means
of amortization.
PROVISIONS
The Group makes provisions for risks and charges when there is a present obligation (legal or constructive) arising
from a past event, when it is probable that there will be an outflow of resources to settle the obligation and when a
reliable estimate can be made of the amount of the obligation.
When the Group believes that an allocation to provisions for risks and charges will be partially or totally reimbursed
(for example, in case of risks covered by insurance policies), the indemnity is recognized specifically and separately in
assets if (and only if) reimbursement is virtually certain. In such case, the cost of any provision is recognized in profit
or loss net of the amount recognized for the indemnity.
If the effect of discounting of the cash value is significant, provisions are discounted by using a pre-tax discount rate
that reflects, where appropriate, the specific risks of the liability. When discounting is performed, the increase in the
allocation due to the passage of time is recognized as financial expense.
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LIABILITIES FOR EMPLOYEE BENEFITS
Post-employment benefits are defined on the basis of programs which, even if not yet formalized, according to
their characteristics are classified as “defined benefit” and “defined contribution” programs.
Italian law (article 2120 of the civil code) prescribes that all employees shall receive an indemnity (the
employees’ termination liability or the TFR) on the termination of employment. The indemnity is calculated
on the basis of certain items making up the employee’s annual salary for each year of service (appropriately
revalued) and the number of years of service. Under Italian law, the liability for this indemnity is recognized as
the undiscounted accrued amount at the date of the financial statements, as if all employees were to terminate
employment on such date.
In considering the Italian TFR, the International Financial Reporting Interpretations Committee (IFRIC) of the
International Accounting Standards Board (IASB) concluded that under IAS 19 the liability must be calculated
under the Projected Unit Credit Method (“PUCM”), by which the liability for accrued benefits must reflect the
expected employment termination date and must be discounted.
The actuarial assumptions and their effects take into consideration the regulatory changes introduced by the Italian
government, which provided employees the option of transferring their accrued TFR to INPS (the national social
security organization) or to supplementary pension funds from 1st July 2007.
The Group’s net obligation deriving from defined benefit plans is calculated by estimating the amount of the future
benefit that employees have accrued in exchange for the years of service, and this benefit is discounted to present
value. Actuarial gains and losses from defined benefit plans, accumulated up to the previous year and reflecting the
effects deriving from changes in the actuarial assumptions used, are recognized in profit or loss.
The actuarial estimate of the liability was calculated by an independent actuary.
The Group has no other defined benefit pension plans.
The Group’s obligation deriving from defined benefit plans is limited to the payment of contributions to the state
entity or separate entity (supplementary pension scheme or fund) and is calculated on the basis of the contributions
due on an accruals basis.
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FINANCIAL INSTRUMENTS
Financial instruments are initially recognized at fair value and after initial recognition are measured by category
as required by IAS 39.
For financial assets, this treatment is based on the following classifications:
– Financial assets at fair value through profit or loss;
– Held-to-maturity investments;
– Loans and receivables;
– Available-for-sale financial assets.
There are only two categories for financial liabilities:
– Financial liabilities recognized at fair value through profit or loss;
– Liabilities at amortized cost.
The methods for calculating the fair value of such financial instruments for accounting or reporting purposes are
summarized below, with reference to the principal categories of financial instruments to which they are applied:
– derivatives: adequate pricing models are adopted based on market values of interest rates and exchange rates;
– non-listed financial receivables and payables: the discounted cash flow method is applied to financial
instruments with maturity exceeding 1 year, that is cash flows are discounted to present value in view of
current interest rates and credit rating;
– listed financial instruments: the market value on the reference date is used.
Derivatives
The Brunello Cucinelli Group uses derivative financial instruments only for purposes of hedging financial risks
deriving from changes in exchange rates on business transactions in foreign currency and from changes in interest
rates on bank debt.
In line with the requirements of IAS 39, derivatives may be treated as hedges only when:
– there is formal designation and documentation of the hedge relationship when the hedge commences;
– the hedge is expected to be highly effective;
– the effectiveness can be reliably measured; and
– the hedge is highly effective throughout the various designated accounting periods.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
All derivatives are measured at fair value. When the derivatives satisfy hedge accounting requirements, the
following accounting treatment is applied:
Fair value hedge – if a derivative is designated to hedge exposure to changes in the fair value of an asset or a
liability through profit or loss. Gains and losses from subsequent measurements of the fair value are recognized
through profit or loss, as are gains and losses on the hedged item.
Cash flow hedge – if a derivative is designated to hedge exposure to changes in the cash flows of an asset or a
liability or of a highly probable transaction that may have effects on the income statement, the effective portion of
the gains or losses on the financial instrument is recognized in equity. Accumulated gains or losses are reclassified
from equity to profit or loss in the same period in which the hedge transaction is recognized; the gain or loss
associated with a hedge, or the part of the hedge that has become ineffective, is recognized in profit or loss when
the ineffectiveness is identified.
The Group applies cash flow hedge accounting to stabilize cash flows related to loans and, to hedge revenues
in foreign currency. Consequently, the effective component of the change in fair value of derivatives negotiated
to hedge highly probable foreign currency transactions is allocated to a specific reserve in equity. When the
hedged transaction takes place, the amounts recognized in the reserve are reclassified to revenues in the income
statement. The ineffective component of this change in fair value is recognized in financial income and expense
in the income statement. In accordance with the methods adopted for accounting for hedged items, changes in
fair value subsequent to the occurrence of hedged transactions are recognized in financial income and expense
in the income statement.
If hedge accounting cannot be applied, the effects deriving from the fair value measurement of the derivative are
recognized directly in profit or loss.
REVENUES AND COSTS
Revenues and costs are stated on an accrual basis when their measurement generates an asset or a liability pursuant
to the IFRSs. Revenues and income, stated net of returns, discounts, allowances and bonuses, are recognized at
fair value to the extent that such value can be reliably determined and to the extent it is probable that the related
economic benefits will be obtained.
FINANCIAL INCOME AND EXPENSE
Financial income and expense are recognized on an accruals basis as the interest accruing on the net value of the
relative financial assets and liabilities, calculated using the effective interest rate.
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
INCOME TAXES
Current taxation
Current income taxes are based on an estimate of taxable profit and are calculated by applying the tax legislation
in force in countries in which the Brunello Cucinelli Group conducts its business. Current tax liabilities are
calculated by applying the tax rates that have been enacted or substantially enacted by the balance sheet date.
Current tax payables are classified in balance sheet net of any advance tax payments made.
Deferred taxation
Deferred taxes are calculated on the deductible temporary differences (which give rise to deferred tax assets)
and taxable temporary differences (which give rise to deferred d tax liabilities) at year end between the carrying
amounts of assets and liabilities and their tax bases.
Deferred tax assets are recognized to the extent that it is probable that there will be adequate taxable profit against
which temporary differences and deferred tax assets and liabilities can be utilized.
Deferred tax assets are reviewed at each year end and written down to the extent it is no longer probable that there
will be adequate taxable profit to enable all or part of such assets to be recovered.
Deferred tax assets that have not been recognized are reviewed at each year end and recognized to the extent it
has become probable that there will be adequate taxable profit to enable such deferred tax assets to be recovered.
Deferred tax assets and liabilities are calculated on the basis of the tax rates that are expected to apply to the year
in which such assets are realized or such liabilities are settled, based on tax rates (and tax laws) in force as well
as those already enacted or substantially enacted by the balance sheet date.
Deferred tax assets and liabilities are recognized through profit or loss, except for those relating to items
recognized directly in equity, in which case deferred taxes are recognized in equity.
Deferred tax assets and liabilities are offset when they relate to the same taxation authority and when there is a
legally enforceable right to set off current tax assets against current tax liabilities.
Deferred tax assets and deferred tax liabilities are classified as non-current assets and liabilities.
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EARNINGS PER SHARE
Basic earnings per share are calculated by dividing the Group’s profit by the weighted average of shares
outstanding during the year. To calculate diluted earnings per share, the weighted average of shares outstanding
is adjusted by assuming the conversion of all potential shares with dilutive effect. Likewise, net profit is adjusted
to consider the effects (net of taxes) of conversion.
Diluted earnings per share coincide with basic earnings per share because there are no outstanding shares or
options other than ordinary shares.
OPERATING SEGMENTS
For the purposes of IFRS 8 Operating Segments, the Group’s business is conducted in a single operating segment.
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4. CHANGES IN ACCOUNTING STANDARDS, NEW ACCOUNTING
STANDARDS, CHANGES IN ACCOUNTING ESTIMATES AND
RECLASSIFICATIONS
4.1 ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS EFFECTIVE
FROM 1ST JANUARY 2015
The Group has adopted a number of accounting standards and amendments which have been in force since the
financial year starting on 1st January 2015. The Group has not adopted any other standards, interpretations or
amendments which have been published, but which have not yet entered into force.
The nature and impact of each new accounting standard and amendment is described below. Although these new
standards and amendments were applied for the first time in 2015, they did not have any material impact on the
Group consolidated financial statements. The nature and impact of each new standard/amendment is listed below:
Amendments to IAS 19 Defined Benefit Plans: Employee Contributions
IAS 19 requires an entity to consider the contributions made by employees or third parties when accounting for
defined benefit plans. If the contributions are linked to service, they should be allocated to the service period as
a negative benefit. This amendment clarifies that if the amount of the contributions is independent of the number
of years of service, the entity is permitted to recognize these contributions as a reduction in the service cost in
the period in which the service is rendered instead of allocating them to the service period. This amendment is
applicable to periods beginning on or after 1st July 2014. The amendment is not relevant for the Group as none of
the entities comprising it has plans which allow for contributions by employees or third parties.
Annual project to improve IFRSs – 2010-2012 Cycle
With the exception of the improvements to IFRS 2 Share-based Payments which apply to transactions with a
grant date beginning on 1st July 2014, these amendments have been in force since 1st July 2014, and the Group
has applied them for the first time in these consolidated financial statements. They include:
IFRS 2 Share-based Payments – This amendment is applicable prospectively and clarifies various issues relating
to the definition of performance and service conditions that represent vesting conditions. The clarifications
are consistent with the way in which the Group was already identifying performance and service conditions
that represent vesting conditions in prior reporting periods. Furthermore, the group granted no payments in
the second half of 2014. As a result, these improvements had no impact on the Group’s financial statements or
the accounting standards.
IFRS 3 Business Combinations – This amendment is applicable prospectively and clarifies that all agreements
for contingent consideration classified as liabilities (or assets) arising from business combinations must be
subsequently measured at fair value through profit or loss whether or not this consideration falls within the scope
of IAS 39. This is consistent with the Group’s accounting principles and therefore this amendment has no impact
on the Group’s accounting principles.
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IFRS 8 Operating Segments – These amendments are applicable prospectively and clarify that:
– An entity must make disclosure of the assessments made by management in applying the aggregation
criteria provided in paragraph 12 of IFRS 8, including a brief description of the operating segments that
have been aggregated/combined and the economic characteristics (for example sales and gross margins)
used to assess whether the segments are ‘similar’.
– A reconciliation is only needed to be disclosed between segment assets and total assets if the reconciliation is
reported to the chief operating decision maker, similar to the disclosure for segment liabilities.
IAS 16 Property, plant and equipment and IAS 38 Intangible Assets – The amendment is applicable retrospectively
and clarifies that in IAS 16 and IAS 38 an asset can be revalued using observable data either by adjusting
the asset’s gross carrying amount to the market value, or by determining the market value of the net carrying
amount and adjusting the gross carrying amount pro rata to it such that the net carrying amount equals the
market value. In addition, accumulated amortization is the difference between the gross carrying amount and
the carrying amount of the asset. This amendment has not had any impact on write ups booked by the Group
in the reporting period.
IAS 24 Related Party Disclosures – The amendment is applicable retrospectively and clarifies that a management
entity (an entity that provides key management personnel services) is a related party subject to the related party
disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for
management services. This amendment does not apply to the Group as it does not receive management services
from other entities.
Annual project to improve IFRSs – 2011-2013 Cycle
These amendments have bee in force since 1st July 2014 and the Group applied them for the first time in these
consolidated financial statements. They include:
IFRS 3 Business combinations – This amendment is applicable prospectively and clarifies with reference to the
scope exceptions of IFRS 3 that:
– Not just joint ventures, but also joint arrangements are beyond the scope of IFRS 3.
– This exclusion from the scope only applies to the booking of the joint arrangement in the financial statements.
The Company is not a joint arrangement and this amendment is therefore not relevant to the Group or to
its subsidiaries.
IFRS 13 Fair Value measurement – This amendment is applicable prospectively and clarifies that the portfolio
exception in IFRS 13 can be applied not only to financial assets and liabilities but also to other contracts falling
within the scope of IAS 39. The Group does not apply the portfolio exception permitted under IFRS 13.
IAS 40 Investment Property – The description of ancillary services in IAS 40 differentiates between investment
property and owner-occupied property (for example property, plant and machinery). This amendment is applicable
prospectively and clarifies that IFRS 3 is used to determine whether a transaction is the purchase of an asset or a
business combination and not the description of ancillary services contained in IAS 40. When defining whether
a transaction represented the acquisition of an asset or a business, the Group relied on IFRS 3 and not IAS 40 in
previous periods. This amendment therefore has no impact on the Group’s accounting principles.
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4.2 ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS THAT HAVE BEEN
PUBLISHED BUT WHICH ARE NOT YET IN FORCE
The paragraphs below illustrate the standards and interpretations which had been published but which were not
in force on the date of preparation of the Group consolidated financial statements, and which the Group believes
may lead to an impact on the financial position, results and reporting. The Group intends to adopt these standards
when they become effective.
IFRS 9 Financial instruments – In July 2014, the IASB adopted IFRS 9 Financial Instruments, which replaced IAS
39 Financial Instruments: Recognition and Measurement, and all previous versions of IFRS 9. IFRS 9 covers all
three of the aspects relating to the project on the accounting for financial instruments: classification and valuation,
loss of value and hedge accounting. IFRS 9 is applicable for years beginning on or after 1st January 2018;
early application is permitted. With the exception of hedge accounting, retrospective application of the standard
is required but it is not mandatory to provide comparative disclosures. With regard to hedge accounting, the
standard applies prospectively as a general principle, with a few limited exceptions.
The Group will adopt the new standard from its effective date. During 2015, the Group conducted a preliminary
analysis of the impact of all three of the aspects covered by IFRS 9. This preliminary analysis was based on the
currently available information and may be subject to changes following analysis in greater detail and further
information to be made available to the Group in the future. Overall, the Group does not anticipate significant
impacts on its financial statements and net assets.
In particular, with regards to Hedge Accounting, the Group believes that all its current hedging relationships
which are currently designated as effective will continue to qualify for hedge accounting in accordance with
IFRS 9. Given that IFRS 9 does not amend the general principle whereby a company can book effective hedging
relationships, the Group does not anticipate significant impacts from the application of this standard. The Group
will evaluate in greater detail in the future whether it should change the way it accounts for the time value of
options, forward points and the difference between the interest rates on two different currencies.
IFRS 15 Revenue from Contracts with Customers – IFRS 15 was issued in May 2014 introduces a new five-stage
model applicable for revenue from contracts with customers. IFRS 15 requires revenue to be recognized for the
amount that reflects the consideration to which an entity believes it is entitled in exchange for the transfer of
goods or services to a customer.
The new standard will replace all current requirements on revenue recognition to be found in IFRSs. The standard
is applicable for years beginning on or after 1st January 2018, with a fully or modified retrospective approach.
Early application is permitted.
The Group plans to apply the new standard from the mandatory effective date. In the course of 2015, the Group
carried out a preliminary assessment of the effects of IFRS 15. This may change following the more detailed
assessment which is currently being carried out. Furthermore, the Group is considering the clarifications issued
by the IASB in the July 2015 exposure draft, and will asset all subsequent developments.
Amendments to IFRS 11 Joint control agreements: Accounting for Acquisitions of Interests – The amendments to
IFRS 11 require a joint operator to account for the acquisition of an interest in a joint operation that is a business
to apply the relevant principles for business combinations in IFRS 3. The amendments also clarify that in the case
of retaining joint control, the interest previously held in a joint operation is not subject to remeasurement on the
acquisition of an additional interest in the same joint operation. In addition, an exclusion from the scope of IFRS
11 has been added that clarifies that the amendments do not apply if the parties that share control, including the
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ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
entity that prepares the financial statements, are under the common control of the same ultimate parent company.
The amendments are applicable to the acquisition of an initial interest in a joint operation and the acquisition of an
additional interest in the same joint operation. The amendments must be applied prospectively for years beginning
on or after 1st January 2016 and early application is permitted. No effect on the Group’s consolidated financial
statements is expected to arise from the application of these amendments.
IFRS 16 Leasing – On 13rd January 2016, the IASB published the new accounting standard on Leasing which
replaces the requirements introduced over 30 years ago, which were no longer considered fit for purpose; this is
an important revision to the way in which companies represent leases in their financial statements. The new IFRS
16 will become effective on 1st January 2019 but early application is permitted for companies which also apply
IFRS 15 – Revenue from contracts with customers. In summary, the principle provides for a singe accounting
model for both financial and operating leasing whereby assets are booked at a value equal to the lease payments
due over the term of the contract.
Amendments to IAS 16 and to IAS 38: Clarification of Acceptable Methods of Depreciation and Amortisation –
The amendments clarify the principle contained in IAS 16 and IAS 38 that revenues reflect a model of economic
benefits that are generated by the operations of a business (of which the asset forms part) rather than the economic
benefits that are consumed by using the asset. It follows from this that a method based on revenues cannot be
used for depreciating property, plant and equipment and may only be used in very limited circumstances for the
amortization of intangible assets. The amendments must be applied prospectively for years beginning on or after
1st January 2016 and early application is permitted. No effect on the Group’s consolidated financial statements is
expected to arise from the application of these amendments as the Group does not use methods based on revenues
to depreciate or amortize its non-current assets.
Amendments to IAS 27: Equity Method in Separate Financial Statements – The amendments will allow entities
to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate
financial statements. Entities already applying IFRSs which decide to change their accounting principle to using
the equity method in their separate financial statements must apply the change retrospectively. In the case of the
first-time adoption of IFRSs, an entity that decides to use the equity method in its separate financial statements
must apply it from the date of transition to IFRSs. The amendments are applicable for years beginning on or after
1st January 2016 and early application is permitted. No effect on the Group’s consolidated financial statements is
expected to arise from the application of these amendments.
Amendments to IFRS 10 and to IAS 28: Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture – The amendments address the conflict between IFRS 10 and IAS 28 with reference to the
loss of control in a subsidiary which is sold or transferred to an associate or joint venture. The amendments
clarify that the profit of loss resulting from the sale or transfer for the business assets, as defined in IFRS 3,
between an investor and an affiliate or a joint venture must be fully recognised. Any profit or loss arising from
the sale or transfer of non business assets are furthermore only recognised to the extent of the stake held by
third parties in the affiliate or joint venture. These amendments must be applied prospectively, and are in force
for years beginning on or after 1st January 2016 and early adoption is permitted. It is not anticipated that these
amendments will have any impact on the Group.
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Annual project to improve IFRSs – 2012-2014 Cycle
These amendments are applicable to periods beginning on or after 1st January 2016. They include:
IFRS 5 Non-current Assets Held for Sale and Discontinued Operations – The assets (or disposal groups) are
generally disposed of by sales or distributions to the shareholders. The amendment clarifies that alternating
between one or the other type of disposal should not be considered a new disposal plan, but is rather the extension
of the original plan. There is therefore no change to the application of the requirements of IFRS 5. The amendment
must be applied prospectively.
Amendments to the IAS 1 Disclosure Initiative – The amendments to IAS 1 Presentation of Financial Statements are
more clarifications than significant amendments to some of the existing IAS 1 requirements. The amendments clarify:
– The materiality requirement in IAS 1.
– The fact that specific lines in the profit and loss account for the year, or other items in the statement of
comprehensive income, or the statement of financial position may be disaggregated.
– That companies have flexibility in arranging the order in which the notes to the financial statements
are presented.
– That the share of other items of comprehensive income relating to associated and joint ventures accounted for
using the equity method must be presented in aggregate in a single line, and classified under the items which
are not subsequently reclassified to the income statement.
Furthermore, the modifications clarify the requirements to be applied when sub totals are shown in the profit and
loss account for the year or in other items of comprehensive income or in the statement of financial position. These
amendments are applicable for years beginning on or after 1st January 2016 and early application is permitted.
No impact on the Group is anticipated from the application of these amendments.
82
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
5. TRANSLATION OF FINANCIAL STATEMENTS IN A CURRENCY OTHER
THAN THE EURO AND ITEMS IN FOREIGN CURRENCY
The consolidated financial statements are presented in euro, the functional and presentation currency adopted
by the Company. Each Group entity establishes its own functional currency, which it uses to measure the items
included in the individual financial statements. Transactions in foreign currency are initially recognized at
the exchange rate (referring to the functional currency) at the transaction date. Monetary assets and liabilities
denominated in foreign currency are translated to the functional currency at the exchange rate ruling at the
balance sheet date.
All exchange differences are recognized in profit or loss. Non-monetary items, measured at historic cost in
foreign currency, are translated at the exchange rates at the date of the initial recognition of the transaction.
The financial statements of foreign companies being consolidated are translated into euro using the current
exchange rate method by which balance sheet items are translated using the exchange rate at the balance sheet
date and income statement items are translated using the average exchange rate for the year.
Exchange differences arising from translation are recognized directly in equity and presented in a separate reserve.
On the sale of a foreign company, the cumulative exchange differences in equity are recognized in profit or loss.
The following table sets out the exchange rates used for calculating the amounts in euro that are expressed in
foreign currency in the financial statements of subsidiaries (currency amount per euro):
US dollar
Swiss franc
Japanese yen
RMB
British pound
Average exchange rates
Closing exchange rates
31st December 2015
31st December 2014
31st December 2015
31st December 2014
1.109512
1.3285
1.0887
1.2141
1.067857
1.214622
1.0835
1.2024
134.314023
140.306117
131.07
145.23
6.973325
8.185746
7.0608
7.5358
0.72585
0.80612
0.73395
0.7789
Hong Kong dollar
8.601409
10.302461
8.4376
9.417
Real
3.700435
3.121129
4.3117
3.2207
1.41856
(*)
1.5116
(*)
Canadian dollar
(*) Exchange rate not used in the period stated.
83
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
6. COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
NOTE 1. Intangible assets
The composition of intangible assets at 31st December 2015 with comparative figures at 31st December 2014
is as follows:
(In thousands of euro)
31st December 2015
31st December 2014
Change
3,982
1,837
2,145
27,245
26,797
448
201
204
(3)
Concessions, licenses, trademarks and similar rights
Key money
Other intangible assets
Assets under construction and advances
Total intangible assets
51
811
(760)
31,479
29,649
1,830
Details of cost, accumulated amortization and the net book value of intangible assets 31st December 2015 with
comparative figures at 31st December 2014 are as follows:
31st December 2015
(In thousands of euro)
Cost
Concessions, licenses, trademarks
and similar rights
Key money
Other intangible assets
Assets under construction and advances
Total intangible assets
Accum.
depn.
31st December 2014
Net book
value
Cost
Accum.
depn.
Net book
value
8,542
(4,560)
3,982
5,025
(3,188)
1,837
44,251
(17,006)
27,245
39,357
(12,560)
26,797
725
(524)
201
615
(411)
204
51
-
51
811
-
811
53,569
(22,090)
31,479
45,808
(16,159)
29,649
This item amounting to € 31,479 thousand at 31st December 2015 consists mainly of the key money paid to
obtain the availability under lease arrangements of commercial properties situated in prestigious locations either
by taking over existing contracts or by obtaining the withdrawal of the lessees in order to enter new agreements
with the lessors.
84
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The following tables provide changes in the individual items of intangible assets for the years ended
31st December 2015 and 31st December 2014:
(In thousands of euro)
Concessions, licenses,
trademarks and
similar rights
Key money
Other intangible
assets
Assets under
construction
and advances
Total intangible
assets
1st January 2015
1,837
26,797
204
811
29,649
Purchases
3,113
4,522
110
52
7,797
-
-
-
-
-
Net decreases
13
501
-
7
521
Value adjustments
Translation differences
-
(199)
-
-
(199)
Change in consolidation
scope
-
-
-
-
-
379
440
-
(819)
-
-
(750)
-
-
(750)
(1,360)
(4,066)
(113)
-
(5,539)
3,982
27,245
201
51
31,479
(In thousands of euro)
Concessions, licenses,
trademarks and
similar rights
Key money
Other intangible
assets
Assets under
construction
and advances
Total intangible
assets
1st January 2014
1,106
25,071
175
200
26,552
Purchases
Reclassification for
fund transfers
Reclassifications for assets
classified as held for sale
Depreciation
31st December 2015
1,608
1,819
120
804
4,351
Net decreases
-
-
-
-
-
Translation differences
1
198
-
7
206
Change in consolidation
scope
-
3,200
-
-
3,200
Reclassification for fund
transfers
-
200
-
(200)
-
Depreciation
(878)
(3,691)
(91)
-
(4,660)
31st December 2014
1,837
26,797
204
811
29,649
The increases in the 2015 financial year principally comprise the Key Money recognised by the Brunello
Cucinelli Group, for a total of € 4,522 thousand. Furthermore, € 3,034 thousand relate to investments made in the
information technology systems, which have been capitalised under the items “Concessions, licenses, trademarks
and similar rights”, “Other intangible fixed assets” and “Assets under formation and advances”.
The “Value adjustments” made during the 2015 financial year totalled € 199 thousand of accounting write-downs
booked to reflect the recoverable amount relating to Intangible Assets as at 31st December 2015. There was no
indication during the accounting period that any intangible assets were further impaired.
85
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
“Reclassifications for assets classified as held for sale” refer to the sale of the business unit which closed on
28th January 2016. Please refer to “Significant subsequent events since 31st December 2015” in the Report on
Operations for more details on the transaction.
In accordance with IAS 36 Impairment of Assets management carried out an assessment of the recoverability of
the assets of the following legal entities:
– Brunello Cucinelli Retail Spain SL;
– Brunello Cucinelli Netherland B.V.;
– Brunello Cucinelli (England) Ltd;
– Brunello Cucinelli Lessin (Sichuan) Fashion Co. Ltd
– Brunello Cucinelli Japan Co. Ltd
The Group identified the cash generating units as the legal entity, namely the smallest group of assets generating
incoming cash flows. Management reached its conclusions on the estimate of recoverable amount by using
the value in use calculated under the unlevered discounted cash flow method. The main assumptions used in
calculating recoverable value were as follows:
– estimated future operating flows;
– discount rate;
– final growth rate.
All the assets subjected to impairment testing at 31st December 2015 confirmed their carrying amounts in the
financial statements, also after sensitivity testing.
NOTE 2. Property, plant and equipment
The composition of property, plant and equipment at 31st December 2015 with comparative figures at 31st December 2014
is as follows:
31st December 2015
31st December 2014
Change
3,409
2,026
1,383
Buildings
39,214
37,563
1,651
Leasehold improvements
37,032
24,467
12,565
Plant and machinery
4,041
3,867
174
Industrial and commercial equipment
1,801
1,602
199
Historical collection
2,187
1,813
374
Other assets
8,413
6,917
1,496
Assets under construction and advances
4,948
1,902
3,046
101,045
80,157
20,888
(In thousands of euro)
Land
Total property, plant and equipment
86
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Details of cost, accumulated depreciation and the net book value of property, plant and equipment at
31st December 2015 with comparative figures at 31st December 2014 are as follows:
31st December 2015
(In thousands of euro)
Cost
Land
Accum.
depn.
31st December 2014
Net book
value
Cost
Accum.
depn.
Net book
value
3,409
-
3,409
2,026
-
2,026
44,006
(4,792)
39,214
41,096
(3,533)
37,563
Leasehold improvements
59,755
(22,723)
37,032
41,626
(17,159)
24,467
Plant and machinery
10,237
(6,196)
4,041
9,298
(5,431)
3,867
Industrial and commercial equipment
3,878
(2,077)
1,801
3,040
(1,438)
1,602
Historical collection
2,187
-
2,187
1,813
-
1,813
16,026
(7,613)
8,413
13,077
(6,160)
6,917
Buildings
Other assets
Assets under construction and advances
Total property, plant and equipment
4,948
-
4,948
1,902
-
1,902
144,446
(43,401)
101,045
113,878
(33,721)
80,157
Property, plant and equipment at 31st December 2015 amounted to € 101,045 thousand and mainly consists of the
production and logistics factory situated at the Company’s main location, leasehold improvements at stores and
plant, machinery and equipment used for production and logistics.
Changes in the net book value of property, plant and equipment for the years ended 31st December 2015 and
31st December 2014 were as follows:
(In thousands of euro)
Land
Buildings
Leasehold
improvements
1st January 2015
2,026
37,563
24,467
3,867
Purchases
1,383
2,657
17,588
1,119
Net decreases
-
-
(21)
Translation differences
-
-
1,536
Plant and Industrial and
machinery
commercial
equipment
Historical
collection
Other
assets
Assets under
construction
and advances
Total
property,
plant and
equipment
1,602
1,813
6,917
1,902
80,157
942
374
3,366
4,911
32,340
-
(74)
-
(207)
-
(302)
46
3
-
207
114
1,906
Change in consolidation
scope
-
-
-
-
-
-
-
-
-
Value adjustments
-
-
(268)
(1)
-
-
(162)
-
(431)
Reclassification
for fund transfers
-
253
1,319
25
(1)
-
383
(1,979)
-
-
-
-
(15)
- (2,091)
-
(12,610)
4,948
101,045
Reclassifications
for assets classified
as held for sale
-
-
(15)
-
-
Depreciation
-
(1,259)
(7,574)
(1,015)
(671)
3,409
39,214
37,032
4,041
1,801
31st December 2015
2,187
8,413
87
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
(In thousands of euro)
Land
Buildings
Leasehold
improvements
Plant and Industrial and
machinery
commercial
equipment
1st January 2014
2,321
11,108
18,870
2,546
Historical
collection
Other
assets
Assets under
construction
and advances
Total
property,
plant and
equipment
624
1,556
4,126
18,029
59,180
-
10,027
10,547
1,661
1,477
257
3,952
1,797
29,718
(295)
(758)
(162)
(32)
(70)
-
(151)
-
(1,468)
Translation differences
-
-
1,378
50
7
-
141
93
1,669
Change in consolidation
scope
-
-
353
454
-
-
126
-
933
Value adjustments
(823)
-
-
-
-
-
(823)
-
213
(18,017)
-
- (1,490)
-
(9,052)
1,902
80,157
Purchases
Net decreases
-
-
Reclassification for
fund transfers
-
17,717
87
-
-
Depreciation
-
(531)
(5,783)
(812)
(436)
2,026
37,563
24,467
3,867
1,602
31st December 2014
1,813
6,917
In 2015 the Brunello Cucinelli Group made investments of € 32,340 thousand in property, plant and equipment,
consisting principally of the following:
– investments of € 17,588 thousand in the item “leasehold improvements” arose mainly from the opening
of directly operated stores and wholesale monobrand stores (above all concentrated in Europe, the North
America and Japan) and improvements made to these;
– investments totalling € 8,319 thousand relating to the purchase of the property complex located in the Avenza
district in the Municipality of Carrara, where the Brunello Cucinelli Group produces menswear (through
the subsidiary Pinturicchio S.r.l.), and to modifications to the manufacturing facilities and the construction
of a new production and logistics factory, located at Solomeo; € 1,383 thousand was booked under the item
“Land”, € 2,657 thousand under “Buildings” and € 4,279 under “Assets under construction and advances”;
– investments totalling € 5,801 thousand, mainly for investments relating to the Information Technology
systems renewal project (€ 1,565 thousand) and to the purchase of furniture and fittings, new machinery and
vehicles;
– further fixed asset investments include € 632 thousand relating to costs incurred by subsidiaries managing the
Brunello Cucinelli branded boutiques.
There was no indication during the year that property, plant and equipment was impaired. The line item “Value
adjustments” stated in the above table of changes for the year provides the residual net book value of leasehold
improvements which were repositioned and extended in 2015.
88
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 3. Other non-current financial assets
The composition of other non-current financial assets at 31st December 2015 with comparative figures at
31st December 2014 is as follows:
(In thousands of euro)
31st December 2015
31st December 2014
Change
Guarantee deposits
5,429
4,786
643
Total other non-current financial assets
5,429
4,786
643
Other non-current financial assets consist of guarantee deposits which mainly relate to amounts paid by the
Brunello Cucinelli Group on signing lease agreements for monobrand stores. The increase for the period is due
to the opening of new stores.
NOTE 4. Inventories
The composition of inventories at 31st December 2015 with comparative figures at 31st December 2014 is as
follows:
(In thousands of euro)
Raw materials and consumables
Work in progress and semi-finished goods
31st December 2015
31st December 2014
Change
28,444
25,576
2,868
8,488
8,763
(275)
Finished goods and merchandise
107,025
90,775
16,250
Total inventories
143,957
125,114
18,843
The Group does not recognize an inventory obsolescence provision as its stock management policies provide for
an efficient process of selling residual items for every season.
The increase in inventories, which mainly relates to finished products, is principally the result of the increase
in directly managed sales boutiques, with ten new openings over the last 12 months, as well as to the general
developments in the business over the period.
Detailed comments on changes in working capital may be found in the report on operations.
NOTE 5. Trade receivables
At 31st December 2015 trade receivables amounted to € 45,628 thousand compared with € 45,051 thousand at
31st December 2014. Detailed comments on changes in working capital may be found in the report on operations.
Trade receivables represent amounts due for the supply of goods and services and are all collectible in the short
term, as a result of which their carrying value was the same as their fair value at the date of preparation of these
financial statements.
89
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The amount by which receivables in the financial statements have been written down is a reasonable estimate
of the impairment arising from the specific non-collectability risk identified in these receivables.
Changes in the allowance for doubtful debts for the year ended 31st December 2015, compared with the
previous year, are as follows:
31st December 2015
31st December 2014
1,814
1,358
Allocations
930
1,339
Utilizations
(774)
(883)
31 December
1,970
1,814
(In thousands of euro)
Value on 1st January
st
The allocations to and utilizations for the period are included under the line item “Value adjustments to assets and
other provisions” in the income statement. Over the 2015 financial year, no new credit losses were taken through
the income statement in addition to the usage of the existing allowance for doubtful debts which amounted
to 0.19% of the Net Revenues for the period.
NOTE 6. Tax receivables
Tax receivables at 31st December 2015 with comparative figures at 31st December 2014 are as follows:
(In thousands of euro)
IRES corporate income tax receivables
IRAP regional production tax receivables
31st December 2015
31st December 2014
Change
67
-
67
402
-
402
Other tax receivables
1,688
1,023
665
Total tax receivables
2,157
1,023
1,134
Tax receivables amounted to € 2,157 thousand at 31st December 2015. This amount relates to:
– The parent company in respect of an IRAP receivable generated by the higher instalments paid compared with
the balance owed (which is determined at year end) and the receivable booked on 31st December 2013; this
receivable of € 711 thousand relates to the filing of an application for the refund of IRES corporate income
tax and IRPEF personal income tax, and the related surcharges, paid as the result of the failure to deduct IRAP
regional production tax relating to the costs incurred for employees and similar personnel as permitted by the
provision of the Tax Revenue Office of 17st December 2012 in application of Article 2 of Decree Law no. 201
of 2011 (the Monti decree);
– to the controlled subsidiaries Brunello Cucinelli USA Inc., Brunello Cucinelli France S.a.r.l., Brunello
Cucinelli Japan Ltd, SAS White Flannel and Brunello Cucinelli Hong Kong.
90
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 7. Other receivables and current assets
Other receivables and current assets at 31st December 2015 with comparative figures at 31st December 2014 are
as follows:
(In thousands of euro)
VAT receivables
31st December 2015
31st December 2014
Change
5,958
4,709
1,249
Other receivables
6,178
6,180
(2)
Prepayments and accrued income
2,839
2,917
(78)
450
487
(37)
418
580
(162)
15,843
14,873
970
Advances to suppliers
Due from agents
Total other receivables and current assets
VAT receivables amounted to € 5,958 thousand at 31st December 2015 compared to € 4,709 thousand at
31st December 2014. The receivable balance is based on the fact that the parent company avails itself of the
possibility granted by Presidential Decree no. 633 of 26th October 1972 to be qualified as a “habitual exporter”.
The status of habitual exporter allows the Company to buy or import goods and services without paying value
added tax up to a set ceiling, the “plafond”, determined as the limit of the amount of transactions carried out
with countries outside Italy in the previous calendar year. The Group usually exceeds the annual plafond due to
the constant growth of its turnover; as a result, the purchases made in the final quarter of the year to produce the
spring/summer collection tend to include a VAT charge, which leads to a VAT debit balance at the end of the year.
This balance then reduces in the first few months of the following year when the spring/summer collection is
billed and the annual VAT ceiling is simultaneously re-established.
Other receivables mainly consist of balances settled by credit cards towards the end of the year for which payment
has not yet been credited to the relevant bank accounts.
Prepayments and accrued income mostly arise from payments made in advance for catalogues for the
spring/summer collection, which will be delivered in the following half year, and operating lease instalments.
Advances to suppliers principally regard façonisti, the outsourced producers of the Brunello Cucinelli Group’s products.
Accounts receivable from agents primarily relate to the sale of samples to the Group sales network. It should
be noted that samples are the key tool allowing the sales network to undertake sales promotional activities with
the customer base.
91
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 8. Other current financial assets
At 31st December 2015, Other current financial assets totalled € 86 thousand. This amount relates to accrued
income on outstanding loans at year end.
NOTE 9. Cash and cash equivalents
Cash and cash equivalents were as follows at 31st December 2015 together with comparative figures at
31st December 2014:
31st December 2015
31st December 2014
Change
47,692
53,202
(5,510)
Cash and other valuables
214
158
56
Cheques
169
275
(106)
48,075
53,635
(5,560)
(In thousands of euro)
Bank and post office deposits
Total cash and cash equivalents
The above values can be readily converted into cash and are subject to an insignificant risk of change in value.
The Brunello Cucinelli Group believes that the credit risk related to cash and cash equivalents is limited because
this item refers mainly to deposits in various domestic and foreign banks.
Reference should be made to the cash flow statement for details of the sources and applications that generated
changes in cash and cash equivalents in the year ended 31st December 2015.
NOTE 10. Derivatives
The Brunello Cucinelli Group enters into certain derivative contracts to hedge the interest rate risk on its bank
debt and the foreign exchange risk on sales made in currencies other than the euro.
The Company takes these contracts out solely for hedging purposes, as the Group’s financial management policy
does not permit trading in financial instruments for speculative purposes. Derivative financial instruments meeting
the requirements of international accounting standards are accounted for using hedge accounting. Changes in the
fair value of derivative financial instruments not qualifying for hedge accounting under international accounting
standards are recognized in profit or loss in the relevant reporting period.
The interest rate and currency derivatives used by the Company are over the counter (OTC) instruments, meaning
those negotiated bilaterally with market counterparties, and the determination of the relative current value is based
on valuation techniques that use observable input parameters (such as rate curves, foreign exchange rates, etc.)
as a reference market (level 2 of the fair value hierarchy included in IFRS 7).
92
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The following is noted for outstanding financial instruments at 31st December 2015:
– all financial instruments at fair value form part of Level 2 (the same situation existed in 2014);
– there were no transfers from Level 1 to Level 2 or vice versa in 2015;
– there were no transfers from Level 3 to other levels or vice versa in 2015.
Derivatives are measured by taking as a reference the interest rates and yield curves observable at commonly
quoted intervals.
Details of the composition of “current assets – derivative financial instruments” and “current liabilities – derivative
financial instruments” at 31st December 2015 are set out below, with comparative figures at 31st December 2014.
(In thousands of euro)
Current assets for derivative instruments hedging
currency risk
31st December 2015
31st December 2014
Change
961
495
466
-
-
-
Current assets for derivative instruments hedging
interest rate risk:
- Current assets for derivative instruments hedging interest
rate risk accounted for using hedge accounting
- Current assets for derivative instruments hedging interest
rate risk not accounted for using hedge accounting
-
-
-
961
495
466
(3,748)
(5,900)
2,152
(434)
(344)
(90)
-
-
-
(4,182)
(6,244)
2,062
-
-
-
- Non-current liabilities for derivative instruments hedging
interest rate risk accounted for using hedge accounting
(412)
(467)
55
- Non-current liabilities for derivative instruments hedging
interest rate risk not accounted for using hedge accounting
-
-
-
(412)
(467)
55
Total current assets – derivative financial instruments
Current liabilities for derivative instruments hedging
currency risk
Current liabilities for derivative instruments hedging
interest rate risk:
- Current liabilities for derivative instruments hedging
interest rate risk accounted for using hedge accounting
- Current liabilities for derivative instruments hedging
interest rate risk not accounted for using hedge accounting
Total current liabilities – derivative financial instruments
Non-current liabilities for derivative instruments hedging
currency risk
Non-current liabilities for derivative instruments hedging
interest rate risk:
Total non-current liabilities –
derivative financial instruments
93
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The contractual features and the relative fair value of derivative financial instruments hedging interest rate risk at
31st December 2015 and 31st December 2014 are as follows:
Derivative instruments hedging interest rate risk accounted for using hedge accounting
Notional
capital
(Euro/000)
Fair Value
31st December 2015
Fair Value
31st December 2014
current
portion
non current
portion
current
portion
non current
portion
Counterparty
Type
Expiry
date
UBI Banca
IRS
11-may-15
1,000
-
-
(1)
-
Cassa di Risp. Di Parma e
Piacenza
IRS
19-aug-15
2,000
-
-
(2)
-
MPS
IRS
31-dec-15
962
-
-
(16)
-
Deutsche Bank
IRS
31-mar-16
1,600
-
-
(2)
-
Banco Popolare
IRS
15-jun-18
2,000
(13)
(7)
(14)
(14)
Unicredit
IRS
31-oct-18
10,000
(59)
(69)
(33)
(48)
BNL
IRS
31-dec-18
3,272
(52)
(63)
(59)
(106)
Intesa Sanpaolo
Fix Payer Swap
31-dec-18
3,272
(52)
(63)
(59)
(106)
Banca Popolare Ancona
IRS
08-apr-19
3,000
(7)
(4)
-
-
Bnl
IRS
31-may-19
20,000
(80)
(68)
(67)
(82)
Banco Popolare
IRS
15-jun-19
5,000
(25)
(20)
(20)
(22)
Unicredit
IRS
28-jun-19
10,000
(56)
(52)
(54)
(73)
Bnl
IRS
31-dec-19
7,380
(24)
(20)
(15)
(14)
Cariparma
IRS
31-dec-19
2,800
(7)
(4)
-
-
Mps
IRS
31-mar-20
5,000
(15)
(10)
-
-
Intesa Sanpaolo
IRS
30-jun-20
5,000
(19)
(14)
-
-
Unicredit
IRS
30-sept-20
6,500
(25)
(18)
-
-
Deutsche Bank
IRS
31-mar-15
1,000
-
-
(2)
(2)
Liabilities for current derivative
instruments
Liabilities for non-current
derivative instruments
(434)
(344)
(412)
(467)
94
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The contractual features and the relative fair value of derivative financial instruments hedging currency risk
at 31st December 2015 and 31st December 2014 are as follows:
(In thousands of euro)
Negative Fair value
Positive fair value
31st December 2015 31st December 2014
US dollar
31st December 2015 31st December 2014
(3,347)
(5,473)
237
-
(4)
(29)
86
-
British pound
-
(110)
109
-
Japanese yen
(295)
-
-
495
Hong Kong dollar
(77)
(277)
-
-
Renminbi
(25)
-
47
-
Swiss franc
Canadian dollar
Total
-
(11)
482
-
(3,748)
(5,900)
961
495
The following table sets out the carrying amount of outstanding financial instruments (current and non-current
loans) stated in the balance sheet, comparing them with fair value.
(In thousands of euro)
Non-current bank debt
31st December 2015
Fair value
31st December 2015
Carrying amount
93,409
92,459
As required by IFRS 13 a calculation was made of the credit value adjustment and debit value adjustment for the
outstanding derivative financial instruments but the result obtained was not material in terms of recognizing the
effects in the financial statements.
NOTE 11. Non current assets held for sale
Non current assets held for sale of € 765 thousand, relate to the 28th January 2016 disposal of a business line
involved in the retail sales of products carried out by the Company in a boutique in Italy. The book value on
31st December 2015 is the same as the sale price.
95
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 12. Capital and reserves
Share capital at 31st December 2015 consisted of 68,000,000 fully paid ordinary shares amounting to
€ 13,600 thousand.
Shareholders’ equity at 31st December 2015 amounted to € 196,778 thousand, an increase of € 26,453 thousand
over 31st December 2014.
Changes in equity during 2015 arise from the total results for the year and the distribution of a dividend of
€ 8,160 thousand approved by the general meeting of the shareholders of the parent Brunello Cucinelli S.p.A. on
23rd April 2015.
A dividend of € 7,480 thousand was approved for the previous year.
Details of changes in equity for the years ended 31st December 2015 and 31st December 2014 can be found in the
consolidated statement of changes in equity.
The share premium reserve was € 57,915 and is net of the listing costs incurred during the 2012 financial year
which were allocated against Shareholders’ equity pro rata to the ratio between the number of new shares issued
and the number of shares in existence following the IPO, in accordance with IAS 32.
Other shareholders’ equity reserves at 31st December 2015 with comparative figures at 31st December 2014 are
as follows:
31st December 2015
31st December 2014
Change
2,720
2,720
-
84,037
55,748
28,289
3,060
3,060
-
(2,479)
(2,433)
(46)
IFRS first-time application reserve
(796)
(804)
8
Reserve for IAS 19 effects
(299)
(422)
123
(In thousands of euro)
Legal reserve
Extraordinary reserve
Revaluation reserve
Cash flow hedge reserve
Translation reserve
2,515
1,179
1,336
Consolidated retained earnings
(3,378)
1,134
(4,512)
Other reserves
85,380
60,182
25,198
It should be noted that the “IFRS first-time application reserve”, amounting to € 8 thousand, relates to the
recalculation of deferred taxation for IRES purposes, based on the new provisions set out in the Stability Law.
Furthermore, the changes in the “Cash flow hedge reserve”, of € 46 thousand, and the changes to the “Reserve for
IAS 19 effects” of € 123 thousand and the “IFRS first-time application reserve” of € 8 thousand are all reflected
in the Statement of Comprehensive Income.
Equity attributable to non-controlling interests at 31st December 2015 was € 6,545 thousand compared to
€ 5,568 thousand in the prior year, and represents minority interests in the Group’s controlled subsidiaries.
96
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 13. Liabilities For Employee Benefits
This item consists exclusively of the termination indemnity due to employees of the Group’s Italian companies as
provided by article 2120 of the Italian civil code (the Trattamento di Fine Rapporto or TFR). This liability is discounted
to present value by the means described in IAS 19.
The following table sets out the movements in liabilities for employee benefits for the year ended 31st December 2015
with comparative figures for the year ended 31st December 2014:
(In thousands of euro)
31st December 2015
31st December 2014
3,310
2,854
85
87
(134)
(178)
-
323
(27)
83
Present value of the obligation at the beginning of the year
Revaluation as per article 2120 of the Italian Civ. Cod.
Benefits paid
Change in consolidation scope
Financial (income) expense
Actuarial (gains) losses
(201)
141
Present value of the obligation at the end of the year
3,033
3,310
The main assumptions used in the calculation of the present value of the Italian employees’ termination liability
were as follows:
Financial and assumptions
31st December 2015
31st December 2014
Annual discount rate
2.38%
2.02%
Inflation rate
1.50%
1.75%
Expected staff turnover rate
8.80%
8.80%
Advances rate
1.00%
1.00%
31st December 2015
31st December 2014
Demographic assumptions
Mortality
TABLE RG48
Retirement age
65 years
Turnover rate and advances on the employees’ termination indemnity
31st December 2015
31st December 2014
Advances rate %
1%
1%
Turnover rate %
8.80%
8.80%
97
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The Company performed a sensitivity analysis on the actuarial assumptions used to determine the liability at
31st December 2015. In particular, all other things being equal, a change of +10% in the discount rate used
would result in a decrease of € 35 thousand in the liability while a change of –10% would result in an increase
of € 36 thousand in the liability.
Workforce
The following table sets out the average number of employees by category, expressed in terms of full
time equivalent:
31st December 2015
Managers and middle managers
Office and sales staff
Factory workers
Total workforce
31st December 2014
49.9
43.5
844.1
735.3
470.8
462.0
1,364.8
1,240.8
NOTE 14. Provisions for risks and charges
Provisions for risks and charges relate mainly to the agents’ supplementary termination indemnity provision,
calculated in accordance with Italian legislation (article 1751-bis of the civil code) and discounted to present value
as required by IAS 37.
The following table sets out the movements in provisions for risks and charges for the year ended 31st December 2015
with comparative figures as of 31st December 2014:
31st December 2015
31st December 2014
Agents’ supplementary termination indemnity provision – 1st January
831
831
Allocations
398
256
Utilizations
(354)
(130)
Recognized actuarial (gain) / loss
(357)
(126)
(In thousands of euro)
Agents’ supplementary termination indemnity provision – 31 December
518
831
Other provisions for risks and charges
130
116
Total provisions for risks and charges
648
947
st
The main assumptions used in the actuarial calculation of the agents’ supplementary termination indemnity were
as follows:
31st December 2015
31st December 2014
Turnover rate – voluntary
6.00%
6.00%
Turnover rate – employer initiated
3.00%
3.00%
Discount rate
2.26%
1.85%
98
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 15. Non-current bank debt
Non-current bank debt consists of variable interest long-term loans.
The following table provides details of the Brunello Cucinelli Group’s outstanding loans at 31st December 2015,
showing the portion due within 12 months, within 5 years and after 5 years:
Description
(In thousands of euro)
Due date
Residual on Share subsequent
yr.
31st December 2015
Share within
5 years
Share more
than 5 years
Deutsche Bank
31-Mar-16
133
133
–
-
Banco Popolare
15-Jun-18
1,250
500
750
-
Unicredit
31-Oct-18
9,959
-
9,959
-
Bnl
31-Dec-18
3,843
770
3,073
-
Banca Popolare di Spoleto
31-Mar-19
1,835
556
1,279
-
Banca Popolare Ancona
08-Apr-19
2,624
742
1,882
-
Bnl
28-May-19
13,900
4,001
9,899
-
Banco Popolare
15-Jun-19
4,358
1,250
3,108
-
Unicredit
30-Jun-19
6,953
2,000
4,953
-
Cariparma
31-Dec-19
2,350
589
1,761
-
Bnl
31-Dec-19
5,892
1,476
4,416
-
Mps
31-Mar-20
4,233
1,000
3,233
-
Banca Intesa
30-Jun-20
4,480
1,000
3,480
-
Unicredit
30-Sep-20
6,142
1,300
4,842
-
CiC Lyonnaise de Banque
15-Apr-17
180
134
46
-
HSBC
01-Oct-17
Total long-term bank debt
143
82
61
-
68,275
15,533
52,742
-
99
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
The following table shows the contractual limits of parameters set out in the loan covenants. These are calculated
on an annual basis by referring to the consolidated financial statements of Brunello Cucinelli S.p.A. These
covenants were satisfied at 31st December 2015.
Loan
Reference date
Parameter
Unicredit
Annual (at 31st December)
Net financial position /
Shareholders’ funds
<1.00
Annual (at 31st December)
Net financial position /
EBITDA
<1.50
Annual (at 31st December)
Net financial position /
EBITDA
<1.00
Annual (at 31st December)
Net financial position /
Equity
<0.75
Annual (at 31st December)
Net financial position /
EBITDA
<1.50
Annual (at 31st December)
Net financial position /
Equity
<1.00
Annual (at 31st December)
Net financial position /
EBITDA
<1.50
Annual (at 31st December)
Net financial position /
Equity
<1.00
Annual (at 31st December)
Net financial position /
EBITDA
<1.00
Annual (at 31st December)
Net financial position /
Equity
<0.75
BNL
Banca Intesa
Ubi Banca
Cassa di Risparmio di Parma
Limit
Net debt
The following table sets out details of the Brunello Cucinelli Group’s net debt at 31st December 2015 together
with comparative figures at 31st December 2014:
31st December 2015
31st December 2014
(214)
(158)
B. Other cash equivalents
(47,861)
(53,477)
Cash and cash equivalents (A) + (B)
(48,075)
(53,635)
(86)
(44)
47,782
48,709
1,839
2,026
(In thousands of euro)
A. Cash
D. Current financial receivables
E. Current bank debt
F. Other current financial payables
G. Current payables (E) + (F)
49,621
50,735
1,460
(2,944)
52,742
42,450
2,210
3,130
K. Net non-current debt (I) + (J)
54,952
45,580
L. Net debt (H) + (K)
56,412
42,636
H. Net current debt (G) + (D) + (C)
I. Non-current bank debt
J. Other non-current payables
100
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 16. Non-current financial payables
Non-current financial payables totalling € 1,799 thousand at 31st December 2015 refer to the loan entered into by
the subsidiary Brunello Cucinelli Hong Kong Ltd. in respect of its minority shareholder.
NOTE 17. Other non-current liabilities
Other non-current liabilities at 31st December 2015 amount to € 7,486 thousand compared with € 4,908 thousand at
31st December 2014. The balance refers to amounts due after 12 months arising from the normalization of the rental
payments for certain monobrand stores and showrooms in accordance with IAS 17. The increase compared to the
prior year balance was predominantly a function of the new lease contracts entered into in 2015.
31st December 2015
31st December 2014
Change
Deferred rent as per IAS 17
7,486
4,908
2,578
Total other non-current liabilities
7,486
4,908
2,578
(In thousands of euro)
NOTE 18. Trade payables
The composition of trade payables at 31st December 2015 with comparative figures at 31st December 2014 is
as follows:
31st December 2015
31st December 2014
Change
Trade payables to third party suppliers
68,826
62,185
6,641
Total trade payables
68,826
62,185
6,641
(In thousands of euro)
Trade payables represent amounts due for the supply of goods and services. Detailed comments on changes in
working capital may be found in the report on operations.
NOTE 19. Current bank debt
The composition of current bank debt at 31st December 2015 with comparative figures at 31st December 2014
is as follows:
(In thousands of euro)
Bank advances on bills and invoices
Bank overdrafts and cash repayable on
demand
Short-term loans
31st December 2015
31st December 2014
Change
8,392
18,389
(9,997)
-
2,006
(2,006)
23,857
14,028
9,829
Current portion of long-term loans
15,533
14,286
1,247
Total current financial payables
47,782
48,709
(927)
101
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Bank advances refer to cash advanced on unaccepted trade bills and invoices which is required to finance
operating activities.
The item “Short-term loans” refers to loans to be repaid within 12 months, entered into by the foreign, controlled
subsidiaries.
The current portion of long-term loans refers to the portion of bank loans falling due within 12 months.
NOTE 20. Current financial payables
Current financial payables at 31st December 2015 amount to € 1,405 thousand and mainly relate to the debt for
the purchase of the minority stake in Brunello Cucinelli Lessin (Macau) Fashion Co. Ltd., the valuation of the
put option held by the minority shareholder in Brunello Cucinelli Japan Co. Ltd. and to the accrued liabilities on
outstanding loans.
(In thousands of euro)
Current financial payables
Accrued loan interest
Total current financial payables
31st December 2015
31st December 2014
Change
1,335
1,552
(217)
70
130
(60)
1,405
1,682
(277)
NOTE 21. Tax payables
Tax payables at 31st December 2015 amounted to € 1,575 thousand, essentially in line with the balance of € 1,152
thousand at 31st December 2014. This item consists mainly of the parent company’s liabilities for IRES and IRAP
tax and the liability for current taxes taken to the consolidation by subsidiaries.
(In thousands of euro)
Current IRES corporate income tax payables
Current IRAP regional production tax payables
Other tax payables
Total tax payables
31st December 2015
31st December 2014
Change
1,235
234
1,001
5
293
(288)
335
625
(290)
1,575
1,152
423
La Current IRES and IRAP payables at 31st December 2015 and 2014 consist of the liability payable by the Group
for current income taxes.
Other tax payables at 31st December 2015 consist of the liability for current income taxes of the Group’s foreign subsidiaries, and relate to Brunello Cucinelli USA Inc, Brunello Cucinelli GmbH, Brunello Cucinelli Suisse
S.A., Brunello Cucinelli Retail Deutschland GmbH, Brunello Cucinelli Canada Limited and SAS Brunello
Cucinelli France Resort.
102
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 22. Other current liabilities
The composition of other current liabilities at 31st December 2015 with comparative figures at 31st December 2014
is as follows:
31st December 2015
31st December 2014
Change
Due to agents
4,519
5,459
(940)
Due to others
7,131
6,232
899
Due to employees
4,305
3,719
586
Social security payables
3,217
3,012
205
VAT payables to tax authorities
1,668
629
1,039
Accrued expenses and deferred income
1,225
761
464
22,065
19,812
2,253
(In thousands of euro)
Total other current liabilities
Amounts due to agents relate to accrued commissions payable by the Brunello Cucinelli Group to its agents but
not yet paid at the balance sheet date.
Amounts due to others regard advances that the Company receives before shipping goods to certain customers,
mostly situated in countries outside the European Union and North America.
Amounts due to employees consist of balances payable for December wages and salaries, paid during the first
few days of January, and the accrual for vacation leave vested but not yet taken, while social security payables
relate to contributions due on December wages and salaries and on the wages earned in December but paid out
in the first days of January.
NOTE 23. Taxation
DEFERRED TAX ASSETS AND LIABILITIES
The composition of deferred tax assets and liabilities at 31st December 2015 with comparative figures at
31 st December 2014 is as follows:
(In thousands of euro)
31st December 2015
31st December 2014
Change
Deferred tax assets
15,678
13,307
2,371
Deferred tax liabilities
(2,370)
(3,280)
910
The increase in deferred tax assets is mainly due to the tax effect of the elimination of intragroup margins in inventories and the recognition of deferred taxation on the tax losses of subsidiaries (principally Brunello Cucinelli
Lessin (Sichuan) Fashion Co. Ltd., still at the start-up stage). Deferred tax assets are recognized to the extent that
it is probable that sufficient taxable profit will be available against which temporary deductible differences and
carried forward tax assets and liabilities can be utilized.
103
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Details of net deferred taxes at 31st December 2015 and 2014 are set out in the following table:
Year ended 31st December
(In thousands of euro)
Statement of
financial position
2015
Amortization of intangible assets
Depreciation of tangible fixed assets
Allowance for doubtful debts
IAS 39 – Arrangement fees
Fair value of derivatives
Equity
2014
2015
2014
289
252
134
101
(418)
(494)
495
447
48
124
27
39
(12)
(10)
904
938
47
51
IAS 39 – Amortized cost
(6)
(8)
TFR per IAS 19
48
114
139
139
Listing costs
2014
(1,001) (1,290)
Leasing IAS 17 – instalment normalization
Agents’ indemnity per IAS 37
2015
Income statement
(23)
(61)
991
39
(9)
33
2
(14)
(5)
23
411
1,031
(620)
(619)
4,866
1,991
1,638
Elimination of intragroup gains
9
9
Deferred taxation on tax losses
4,519
2,761
1,758
1,170
51
(254)
305
(283)
(87)
(140)
53
47
Gains and losses on unrealized exchange
differences
Deferred capital gains
Transactions taxed on a cash basis
Taxation of foreign controlled subsidiaries
(57)
(66)
5
3
1
34
106
(83)
(79)
11
15
1.898
(1.340)
367
192
214
130
528
(186)
Deferred tax (income) expense
Deferred taxation recognized in equity
(84)
Exchange rate differences and
consolidation scope changes
Deferred tax assets (liabilities), net
2014
(552)
750
Option to sell minority shares of Brunello
Cucinelli England Ltd.
Other
2015
(11)
6,858
Elimination of intragroup margins in
inventory
Exchange rate
differences
and consolidation
scope changes
560
(135)
3,060
2,615
23
(2)
305
(388)
1,030
13,308 10,027
Presented in the statement of financial
position as follows:
Deferred tax assets
15,678 13,307
Deferred tax liabilities
(2,370) (3,280)
Deferred tax assets, net
13,308 10,027
104
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
INCOME TAXES
The composition of the income tax charge in the consolidated income statement is as follows:
31st December 2015
31st December 2014
Change
Current taxation
16,397
17,312
(915)
Deferred taxation
(3,060)
(2,615)
(445)
(143)
(58)
(85)
13,194
14,639
(1,445)
84
(1,030)
1,114
13,278
13,609
(331)
(In thousands of euro)
Prior year taxes
Income taxes in the consolidated
income statement
Income taxes in comprehensive income
Total income taxes
The following is a reconciliation between the nominal rate and the effective rate for the Brunello Cucinelli Group
for the years ended 31st December 2015 and 31st December 2014:
(In thousands of euro)
Year ended 31st December
2015
2014
Pre-tax profit
46,143
46,426
IRES rate in effect for the year
27.50%
27.50%
(12,689)
(12,767)
Income taxes charged with different rates (IRAP)
(2,408)
(2,869)
Effect of different tax rate for foreign companies
(79)
(709)
Theoretical tax charge
Prior year taxes
Other changes
Total tax charge in the income statement
Effective tax rate
143
58
1,839
1,648
(13,194)
(14,639)
28.59%
31.53%
105
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
7. COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED INCOME
STATEMENT
NOTE 24. REVENUES
The composition of Revenues for the year ended 31st December 2015 with comparative figures for the year ended
31st December 2014 is as follows:
(In thousands of euro)
Net revenues
31st December 2015
31st December 2014
Change
414,151
355,909
58,242
Other operating income
Total Revenues
786
1,474
(688)
414,937
357,383
57,554
Net revenues are earned from the sale of clothing and accessories of the Brunello Cucinelli Group.
The item “Other operating income” refers mainly to rental receipts and insurance repayments; it should be noted
that this item included a capital gain of € 755 thousand generated by the sale of a property to the controlling
shareholder Fedone S.r.l. (which was in turn controlled by Cav. Lav. Brunello Cucinelli); this building was not in
the proximity of the Company’s manufacturing and logistical facilities.
Revenues may be analysed by geographical area as follows:
Year ended 31st December
(In thousands of euro)
2015
Italy
weight %
2014
Change
weight %
2015 vs. 2014
2015 vs. 2014 %
70,994
17.1%
68,494
19.2%
2,500
+3.6%
Europe (1)
128,978
31.2%
116,699
32.8%
12,279
+10.5%
North America (2)
156,595
37.8%
122,883
34.5%
33,712
+27.4%
Greater China (3)
25,738
6.2%
20,872
5.9%
4,866
+23.3%
Rest of the World (RoW)
Total
(4)
31,846
7.7%
26,961
7.6%
4,885
+18.1%
414,151
100.0%
355,909
100.0%
58,242
+16.4%
(1) “Europe” refers to the member states of the European Union (excluding Italy), San Marino, Monaco, Switzerland, Liechtenstein, Norway, Russian Federation,
Ukraine, Turkey, Uzbekistan, Kazakhstan, Georgia, Serbia, Montenegro, Azerbaijan, Andorra, Armenia and Belarus.
(2) “North America” refers to the United States of America and Canada.
(3) “Greater China” refers to the People’s Republic of China, Hong Kong, Macau and Taiwan.
(4) “Rest of the World” refers to all the other countries where the Group makes sales, other than the above.
106
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Revenues may be analysed by distribution channel as follows:
Year ended 31st December
(In thousands of euro)
Retail
Change
2015
weight %
2014
weight %
2015 vs. 2014
2015 vs. 2014 %
193,174
46.6%
148,486
41.7%
44,688
+30.1%
Wholesale Monobrand
33,388
8.1%
30,873
8.7%
2,515
+8.1%
Wholesale Multibrand
187,589
45.3%
176,550
49.6%
11,039
+6.3%
Total
414,151
100.0%
355,909
100.0%
58,242
+16.4%
Reference should be made to the report on operations for comments on revenue performance.
NOTE 25. Costs for raw materials and consumables
The composition of costs for raw materials and consumables for the year ended 31st December 2015 with
comparative figures for the year ended 31st December 2014 is as follows:
(In thousands of euro)
Costs for raw materials and consumables
Change in inventories
Total costs for raw materials and consumables
31st December 2015
31st December 2014
Change
79,617
77,381
2,236
(14,083)
(26,092)
12,009
65,534
51,289
14,245
Reference should be made to the report on operations for comments on revenue performance.
NOTE 26. Costs for services
The composition of costs for services for the year ended 31st December 2015 with comparative figures for the
year ended 31st December 2014 is as follows:
(In thousands of euro)
31st December 2015
31st December 2014
Change
Outsourced work
82,338
81,387
951
Commissions and accessory charges
13,208
11,588
1,620
Advertising and other commercial expenses
23,285
19,562
3,723
Transport and duties
15,158
15,108
50
Lease expense
43,515
29,055
14,460
Credit card charges
3,639
2,761
878
Other general expenses
2,802
2,793
9
Outsourced services and miscellaneous consultancy
6,106
5,680
426
Directors’ and statutory auditors’ fees
2,115
1,731
384
Maintenance services
3,344
2,706
638
Insurance
1,261
1,188
73
Energy, telephone, gas, water, postal costs
Total costs for services
3,289
2,572
717
200,060
176,131
23,929
Reference should be made to the report on operations for comments on trends in costs.
107
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 27. Payroll costs
The composition of payroll costs for the year ended 31st December 2015 with comparative figures for the year
ended 31st December 2014 is as follows:
31st December 2015
31st December 2014
Change
Wages and salaries
58,578
48,277
10,301
Social charges
12,893
11,229
1,664
2,283
2,132
151
Other payroll costs
914
635
279
Total payroll costs
74,668
62,273
12,395
(In thousands of euro)
Employees’ termination indemnity
Further details of payroll costs can be found in the report on operations.
NOTE 28. Other operating costs
The composition of other operating costs for the year ended 31st December 2015 with comparative figures for the
year ended 31st December 2014 is as follows:
(In thousands of euro)
Taxes and duties
Membership subscriptions
Ordinary capital losses
Losses on bad debts
31st December 2015
31st December 2014
Change
1,925
1,258
667
283
259
24
64
100
(36)
-
2
(2)
Miscellaneous operating costs
2,519
1,760
759
Total other operating costs
4,791
3,379
1,412
NOTE 29. Own work capitalized
Own work capitalized representing internal costs for increases in fixed assets (€ 843 thousand in 2015 and
€ 1,021 thousand in 2014) relates to production costs incurred to develop the historical collection and internal costs
incurred for the development of IT software and the internal fit out of the Group’s boutiques.
108
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 30. Depreciation
The composition of depreciation and amortization for the year ended 31st December 2015 with comparative figures
for the year ended 31st December 2014 is as follows:
(In thousands of euro)
31st December 2015
31st December 2014
Change
5,539
4,660
879
Amortization of intangible assets
Depreciation of property, plant and equipment
12,610
9,052
3,558
Total depreciation and amortization
18,149
13,712
4,437
Reference should be made to the report on operations for comments on revenue performance.
NOTE 31. Value adjustments to assets and other provisions
Value adjustments to assets and other provisions (€ 1,603 thousand in 2015 and € 2,291 thousand in 2014) relate
to accruals to the allowance for doubtful debts and the agents’ supplementary termination indemnity provision and
write-downs of the residual net book value of the Key money and the capitalised leasehold improvements on the
repositioning and enlargement of the Group’s stores and showrooms.
NOTE 32. Financial expense
The composition of financial expense for the year ended 31st December 2015 with comparative figures for the year
ended 31st December 2014 is as follows:
(In thousands of euro)
Mortgage loan interest
Interest expense on advances and discounting invoices
Bank interest
31st December 2015
31st December 2014
Change
1,042
1,168
(126)
853
751
102
209
151
58
24,540
4,839
19,701
Unrealized exchange losses
1,620
2,682
(1,062)
Financial expense on derivative financial instruments
1,207
465
742
Realized exchange losses
Miscellaneous financial expense
Total financial expense
467
586
(119)
29,938
10,642
19,296
109
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 33. Financial income
The composition of financial income for the year ended 31st December 2015 with comparative figures for the year
ended 31st December 2014 is as follows:
(In thousands of euro)
31st December 2015
31st December 2014
Change
359
467
(108)
22,843
4,628
18,215
1,735
2,053
(318)
51
26
25
Bank interest
Realized exchange gains
Unrealized exchange gains
Financial income on derivative financial instruments
Miscellaneous income
Total financial income
118
565
(447)
25,106
7,739
17,367
NOTE 34. Basic and diluted earnings per share
Basic earnings per share is calculated by dividing net profit for the year attributable to the ordinary shareholders
of the Brunello Cucinelli Group by the weighted average number of outstanding ordinary shares during the year.
There is no difference between basic earnings per share and diluted earnings per share as there are no convertible
bonds or other financial instruments with dilutive effects.
The payment of dividends for the year must be approved by shareholders in a general meeting and accordingly a
liability has not been recognized for this matter in the consolidated financial statements of the Brunello Cucinelli
Group at 31st December 2015; the same situation held at 31st December 2014.
The following table sets out net profit and the information on shares used to calculate basic and diluted
earnings per share:
31st December 2015
31st December 2014
33,338
33,060
Number of ordinary shares at the end of the year
68,000,000
68,000,000
Weighted average number of ordinary shares used to calculate basic
earnings per share
68,000,000
68,000,000
Weighted average number of ordinary shares used to calculate diluted
earnings per share
68,000,000
68,000,000
Basic earnings per share (euro)
0.49026
0.48618
Diluted earnings per share (euro)
0.49026
0.48618
Net profit attributable to owners of the parent (thousands of euro)
110
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
NOTE 35. Commitments and risks
Commitments and risks consist of the assets owned by the Brunello Cucinelli Group held at third party premises.
The composition of this item at 31st December 2015, compared with the situation at 31st December 2014, is as
follows:
31st December 2015
31st December 2014
Change
Assets with third parties
20
23
(3)
Total commitments and risks
20
23
(3)
(In thousands of euro)
Assets with third parties mainly relate to operating machines and electronic equipment lent at no charge to workshops
and outside companies that use them to produce and supply the Group with clothing articles and services.
FINANCIAL RISK MANAGEMENT
The Brunello Cucinelli Group is exposed to varying degrees to financial risks arising from its core business. More
specifically, the Group is simultaneously exposed to market risk (interest rate risk and currency risk), liquidity
risk and credit risk.
Financial risks are managed on the basis of guidelines set by the Board of Directors. The aim is to ensure a liability
structure that remains balanced with the composition of assets to maintain adequate balance sheet solvency.
The financing instruments most often used are:
– long-term loans with multi-year repayment schedules to fund investments in capital assets;
– short-term loans and bank overdrafts to finance working capital.
In addition, the Brunello Cucinelli Group enters financial instrument contracts hedging the risk of fluctuations in
interest rates, which could affect long-term debt servicing costs, and foreign exchange rates, which could affect
the Group’s results.
The average cost of debt is based on 3-month and 6-month Euribor, plus a spread that depends on the financing
instrument used and on the Company’s rating.
The Brunello Cucinelli Group uses derivatives to hedge interest rate and foreign exchange rate risks.
The Group does not use derivatives for speculative purposes.
111
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
INTEREST RATE RISK
The Brunello Cucinelli Group manages interest rate risk by considering its overall exposure: as part of its
general policy of optimising financial resources, the Group looks for balance through the use of less onerous
forms of financing.
It is the Company’s policy to hedge exposure regarding the portion of long-term debt with respect to market
risk due to interest rate changes. To manage such risk, the Company uses derivative instruments such as
interest rate swaps (in some cases with caps).
At 31st December 2015 there were 15 positions regarding interest rate swap derivatives (2 of which with
caps) to hedge the risk of a potential increase in the cost of servicing bank debt due to fluctuations in market
rates. The notional value of these positions was € 66.4 million with a negative fair value of approximately
€ 846 thousand.
At 31st December 2014 there were 16 positions regarding interest rate swap derivatives (2 of which with caps) to
hedge the risk of a potential increase in the cost of servicing bank debt due to fluctuations in market rates. The
notional value of these positions was € 57.7 million with a negative fair value of approximately € 811 thousand.
The short-term portion of bank debt, used mainly to finance working capital needs, is not covered by an interest
rate hedge.
The cost of bank debt is equal to Euribor for the period plus a spread that depends on the type of credit facility
used. The applied spreads are comparable to the best market standards. The interest rate risk to which the
Brunello Cucinelli Group is exposed derives primarily from its outstanding financial debt.
The Brunello Cucinelli Group’s principal sources of exposure to interest rate risk derive from short-term and
long-term loans and derivative instruments. Even though the Group adopts a precise hedging policy, the potential
effects on 2016 results (2015 for comparative figures) deriving from interest rate risk are
– potential change in financial expense and differential costs for outstanding derivatives in 2015;
– potential change in fair value of outstanding derivatives.
On the other hand potential changes in the fair value of the effective component of outstanding hedging
instruments cause an effect on equity.
The Brunello Cucinelli Group has estimated the potential effects on its 2016 income statement and equity,
calculated with reference to the situation at the end of 2015 (effects on 2015 for comparative figures calculated
with reference to the situation at the end of 2014), produced by a simulation of the change in the yield curve, by
using internal assessment models based on generally accepted principles. More specifically:
– for loans, the effects were estimated by simulating a parallel shift of +100/-30 basis points (+1%/-0.3%) in the
yield curve, applied only to cash flows expected for 2016 (2015 for comparative figures);
– for derivatives, by simulating a parallel shift of +100/-30 basis points (+1%/-0.3%) in the yield curve.
112
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
With reference to the situation at 31st December 2015, a parallel shift of +100 basis points (+1%) in the yield
curve would produce an increase in interest expense of € 454 thousand in 2015, offset for € 435 thousand by an
increase in differentials collected from outstanding derivatives. A parallel shift of -30 basis points (-0.3%) in the
yield curve would produce a decrease in interest expense of € 137 thousand, offset by a reduction € 130 thousand
in differentials collected from outstanding derivatives.
With reference to the situation at 31st December 2014, a parallel shift of +100 basis points (+1%) in the yield
curve would produce an increase in interest expense of € 334 thousand in 2015, offset for € 375 thousand by an
increase in differentials collected from outstanding derivatives. A parallel shift of -30 basis points (-0.3%) in the
yield curve would produce a decrease in interest expense of € 104 thousand, offset for € 112 thousand by a reduction
in differentials collected from outstanding derivatives.
Interest 31st December 2015
Loans
Residual debt
(Euro/000)
Effect on 2016
+100 bps (Euro/000)
Effect on 2016
-30 bps (Euro/000)
Loans payable
92,459
(454)
137
Total loans
92,459
(454)
137
Residual
notional
(Euro/000)
Effect on 2016
+100 bps (Euro/000)
Effect on 2016
-30 bps (Euro/000)
66,379
435
(130)
Derivative instruments
Cash flow hedges
Other derivatives
Total derivative instruments
-
-
-
66,379
435
(130)
(19)
7
TOTAL
Interest 31st December 2014
Loans
Residual debt
(Euro/000)
Effect on 2015
+100 bps (Euro/000)
Effect on 2015
-30 bps (Euro/000)
Loans payable
71,106
(334)
104
Total loans
71,106
(334)
104
Residual
notional
(Euro/000)
Effect on 2015
+100 bps (Euro/000)
Effect on 2015
-30 bps (Euro/000)
57,704
375
(112)
Derivative instruments
Cash flow hedges
Other derivatives
Total derivative instruments
TOTAL
-
-
-
57,704
375
(112)
41
(8)
113
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
With reference to the situation at 31st December 2015, a parallel shift of +100 basis points (+1%) in the yield
curve would produce an increase in the balance sheet carrying amount of outstanding hedging derivatives of
€ 2,191 thousand with an effect solely on equity. A parallel shift of -30 basis points (-0.3%) in the yield
curve would produce an increase in the balance sheet carrying amount of outstanding hedging derivatives of
€ 432 thousand, with an effect solely on equity.
With reference to the situation at 31st December 2014, a parallel shift of +100 basis points (+1%) in the yield
curve would produce an increase in the balance sheet carrying amount of outstanding hedging derivatives of
€ 2,258 thousand with an effect solely on equity. A parallel shift of -30 basis points (-0.3%) in the yield
curve would produce an increase in the balance sheet carrying amount of outstanding hedging derivatives of
€ 363 thousand, with an effect solely on equity.
Sensitivity of fair value of derivatives 31st December 2015
Cash flow hedges
Other derivatives
TOTAL
Notional
value
(Euro/000)
Fair value
(Euro/000)
Net fair
value +100
bps
Effect on
income
statement
+100 bps
e = d-f
Effect on
equity
+100 bps
f
1,345
A
b
c
Change
in net fair
value
+100 bps
d = c-b
66,379
(846)
499
1,345
–
Effect on
income
statement
-30bps
i = h-j
Effect on
equity
-30 bps
g
Change
in net fair
value
-30bps
h = g-b
(1,260)
(414)
–
(414)
Net fair
value
-30 bps
J
–
–
–
–
–
–
–
–
–
–
66,379
(846)
499
1,345
-
1,345
(1,260)
(414)
-
(414)
Effect on
income
statement
-30bps
i = h-j
Effect on
equity
-30 bps
–
363
Sensitivity of fair value of derivatives 31st December 2014
Cash flow hedges
Other derivatives
TOTAL
Notional
value
(Euro/000)
Fair value
(Euro/000)
Net fair
value +100
bps
A
b
c
Change
in net fair
value
+100 bps
d = c-b
57,704
(811)
1,447
2,258
Effect on
income
statement
+100 bps
e = d-f
Effect on
equity
+100 bps
Net fair
value
-30 bps
f
g
Change
in net fair
value
-30bps
h = g-b
–
2,258
(448)
363
J
–
–
–
–
–
–
–
–
–
–
57,704
(811)
1,447
2,258
–
2,258
(448)
363
–
363
The assumptions regarding the range of changes in market parameters used to simulate shocks were formulated
on the basis of an analysis of the trend of such parameters over a 12 month period.
114
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CURRENCY RISK
The Brunello Cucinelli Group is exposed to changes in the exchange rate for currencies (primarily the US dollar)
in which sales are made to affiliates and third party customers. This risk exists in the eventuality that the amount of
revenues in euro may decrease in the event of unfavourable fluctuations in the exchange rate, thereby preventing
the desired margin from being achieved.
To limit its exposure to the currency risk deriving from its business activities, the Brunello Cucinelli Group enters
derivative contracts (forward exchange contracts) that predefine the exchange rate or a range of exchange rates
at future dates.
The forward contracts are stipulated when seasonal price lists in foreign currency are defined, based on estimated
sales and considering the expected collection date of the sales invoices at the expiry date of the derivative.
Specifically, the Company sets its selling prices in euro and calculates the corresponding prices in foreign
currency by applying the forward exchange rate.
Starting in 2010, the Company adopted cash flow hedge accounting to account for derivative contracts hedging
currency risk arising from foreign currency business transactions deemed highly probable. Consequently, the
effective component of the change in fair value of derivatives negotiated to hedge highly probable foreign
currency transactions is allocated to a specific reserve in equity. When the hedged transaction takes place, the
amounts recognized in the reserve are reclassified to revenues in the income statement. The ineffective component
of this change in fair value is recognized in financial income and expense in the income statement. In accordance
with the methods adopted for accounting for hedged items, changes in fair value subsequent to the occurrence of
hedged transactions are recognized in financial income and expense in the income statement.
The aim of the Company’s financial policy is to prevent results from operations from being affected by
fluctuations in exchange rates between the stipulation date of forward contracts and the time of invoicing and
subsequent collection.
During 2015 the Group reclassified as an increase in revenues € 2,203 thousand previously recognized in the cash
flow hedge reserve.
During 2014 the Group reclassified as an increase in revenues € 657 thousand previously recognized in the cash
flow hedge reserve.
The potential effects on the 2015 income statement (2014 for comparative purposes) arising from currency risk are:
– write-up/write-down of asset and liability items expressed in foreign currency;
– change in fair value of outstanding derivatives hedging asset and liability items expressed in foreign currency;
– change in fair value of the ineffective component of outstanding derivatives hedging highly probable
transactions in foreign currency.
The potential effects on the 2016 closing Shareholders’ equity (2015 for comparative purposes) arising from
currency risk are:
– change in fair value of the ineffective component of outstanding derivatives hedging highly probable transactions
in foreign currency.
The Brunello Cucinelli Group has estimated the potential effects on its 2016 income statement and equity,
calculated with reference to the situation at the end of 2015 (2014 for comparative purposes), produced by a
shock on the exchange rate market (with reference to currencies in which the Group has significant exposure at
each closing date), by using internal assessment models based on generally accepted principles.
115
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
FOREIGN CURRENCY EXPOSURE 2015
Exposure of balance sheet items
Assets
Liabilities
Net
(US dollar/000)
SENSITIVITY 2015
Income statement
Euro/US dollar
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
7,706
(2,754)
4.952
(227.4)
227.4
Total exposure of balance sheet items
7,706
(2,754)
4.952
(227.4)
227.4
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(113,100)
Assets
Liabilities
Change in equity
Euro/US dollar
Net
Exposure of balance sheet items
Swiss franc/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
5,194
(5,194)
Income statement
Euro/Swiss franc
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
1
(303)
(302)
13,9
(13,9)
Total exposure of balance sheet items
1
(303)
(302)
13,9
(13,9)
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(5,250)
Assets
Liabilities
Change in equity
Euro/Swiss franc
Net
Exposure of balance sheet items
British pound/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
242
(242)
Income statement
Euro/British pound
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
786
(69)
717
(48,9)
48,9
Total exposure of balance sheet items
786
(69)
717
(48,9)
48,9
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(4,850)
Change in equity
Euro/British pound
+ 5%
(Euro/000)
- 5%
(Euro/000)
330
(330)
116
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Assets
Liabilities
Net
Exposure of balance sheet items
(Japanese yen/000)
Income statement
Euro/Japanese yen
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
3,002
(222.615)
(219,613)
83.8
(83.8)
Total exposure of balance sheet items
3,002
(222.615)
(219,613)
83.8
(83.8)
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(1,460,000)
Assets
Liabilities
Change in equity
Euro/Japanese yen
Net
Exposure of balance sheet items
(Hong Kong dollar/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
557
(557)
Income statement
Euro/Hong Kong dollar
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
-
(1,785)
(1,785)
10.6
(10.6)
Total exposure of balance sheet items
-
(1,785)
(1,785)
10.6
(10.6)
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(27,900)
Assets
Liabilities
Change in equity
Euro/Hong Kong
Net
Exposure of balance sheet items
(Canadian dollar/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
165
(165)
Income statement
Euro/Canadian dollar
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
2,553
(681)
1,872
(61.9)
61.9
Total exposure of balance sheet items
2,553
(681)
1,872
(61.9)
61.9
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(8,550)
Change in equity
Euro/Canadian dollar
+ 5%
(Euro/000)
- 5%
(Euro/000)
283
(283)
117
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Assets
Liabilities
Net
Exposure of balance sheet items
(Renminbi/000)
Income statement
Euro/Renminbi
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
19,388
(2,205)
17,183
(121.7)
121.7
Total exposure of balance sheet items
19,388
(2,205)
17,183
(121.7)
121.7
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(17,600)
Assets
Liabilities
Change in equity,
Euro/Renminbi
Net
Exposure of balance sheet items
(Real/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
125
(125)
Income statement
Euro/Real
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
59
(79)
(20)
0,2
(0,2)
Total exposure of balance sheet items
59
(79)
(20)
0,2
(0,2)
FOREIGN CURRENCY EXPOSURE 2014
Exposure of balance sheet items
Assets
Liabilities
Net
(US dollar/000)
SENSITIVITY 2014
Income statement
Euro/US dollar
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
8,601
(3,655)
4,946
(203.7)
203.7
Total exposure of balance sheet items
8,601
(3,655)
4,946
(203.7)
203.7
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(101,600)
Assets
Liabilities
Change in equity
Euro/US dollar
Net
Exposure of balance sheet items
(Swiss franc/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
4,184
(4,184)
Income statement
Euro/Swiss franc
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
-
(245)
(245)
10.2
(10.2)
Total exposure of balance sheet items
-
(245)
(245)
10.2
(10.2)
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(2,260)
Change in equity
Euro/Swiss franc
+ 5%
(Euro/000)
- 5%
(Euro/000)
94
(94)
118
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Assets
Liabilities
Net
Exposure of balance sheet items
(British pound/000)
Income statement
Euro/British pound
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
319
(42)
277
(17.8)
17.8
Total exposure of balance sheet items
319
(42)
277
(17.8)
17.8
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(3,050)
Assets
Liabilities
Change in equity
Euro/British pound
Net
Exposure of balance sheet items
(Japanese yen/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
196
(196)
Income statement
Euro/Japanese yen
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
31,995
(54,802)
(22,807)
7.9
(7.9)
Total exposure of balance sheet items
31,995
(54,802)
(22,807)
7.9
(7.9)
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(1,181,000)
Assets
Liabilities
Change in equity
Euro/Japanese yen
Net
Exposure of balance sheet items
(Renminbi/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
407
(407)
Income statement
Euro/Renminbi
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
9,022
(8,211)
811
(5.0)
5.0
Total exposure of balance sheet items
9,022
(8,211)
811
(5.0)
5.0
Assets
Liabilities
Net
Exposure of balance sheet items
(Hong Kong dollar/000)
Income statement
Euro/Hong Kong dollar
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
54
(1,548)
(1,494)
7.9
(7.9)
Total exposure of balance sheet items
54
(1,548)
(1,494)
7.9
(7.9)
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(33,300)
Change in equity
Euro/Hong Kong
+ 5%
(Euro/000)
- 5%
(Euro/000)
177
(177)
119
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
Assets
Liabilities
Net
Exposure of balance sheet items
(Canadian dollar/000)
Income statement
Euro/Canadian dollar
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
-
(11)
(11)
0.4
(0.4)
Total exposure of balance sheet items
-
(11)
(11)
0.4
(0.4)
Exposure arising from highly probable
future transactions
Notional
Forward sales (notional amount)
(4,500)
Assets
Liabilities
Change in equity
Euro/Canadian dollar
Net
Exposure of balance sheet items
(Real/000)
+ 5%
(Euro/000)
- 5%
(Euro/000)
160
(160)
Income statement
Euro/Real
+ 5%
(Euro/000)
- 5%
(Euro/000)
Trade payables
-
(19)
(19)
0.3
(0.3)
Total exposure of balance sheet items
-
(19)
(19)
0.3
(0.3)
The assumptions regarding the range of changes in market parameters used to simulate shocks were formulated
on the basis of an analysis of the trend of such parameters with reference to a 30-60-90 day horizon, in line with
the expected length of exposure.
120
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
LIQUIDITY RISK
The Brunello Cucinelli Group manages liquidity risk by keeping strict control of the items making up working
capital and in particular receivables from customers and payables to suppliers.
The Group concentrates on generating a good level of cash in order to use this for the outflows required for
paying suppliers, therefore without impairing the short-term treasury balance and avoiding critical points and
tensions in current liquidity.
The following tables provide a stratification of outstanding liabilities for financial instruments at 31st December 2015
and 2014 by residual duration:
31st December 2015
Financial payables
Capital
(Euro/000)
a
Interest
(Euro/000)
b
Trade payables
(Euro/000)
c
Derivative
instruments
(Euro/000)
d
TOTAL
(Euro/000)
e = a+b+c+d
Due date:
Within 12 months
39,390
714
68,826
432
109,362
Between 1 and 2 years
15,321
486
-
318
16,125
Between 2 and 3 years
26,506
399
-
111
27,016
Between 3 and 5 years
11,242
113
-
(12)
11,343
Between 5 and 7 years
-
-
-
-
-
After 7 years
TOTAL
-
-
-
-
-
92,459
1,712
68,826
849
163,846
Derivative
instruments
(Euro/000)
d
TOTAL
(Euro/000)
e = a+b+c+d
31st December 2014
Financial payables
Capital
(Euro/000)
a
Interest
(Euro/000)
b
Trade payables
(Euro/000)
c
Due date:
28,314
879
62,185
346
91,724
Between 1 and 2 years
Within 12 months
9,433
588
-
264
10,285
Between 2 and 3 years
9,219
474
-
147
9,840
Between 3 and 5 years
24,140
360
-
60
24,560
Between 5 and 7 years
-
-
-
-
-
After 7 years
TOTAL
-
-
-
-
-
71,106
2,301
62,185
817
136,409
The estimate of the future costs implicit in loans and the expected future differentials implicit in the derivative
instruments was determined on the basis of the yield curves of the interest rates at 31st December 2015 and 2014.
121
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CREDIT RISK
Credit risk is the Company’s exposure to potential losses arising from the failure by counterparties to meet
their obligations.
The Brunello Cucinelli Group’s exposure to commercial credit risk relates solely to sales made through the
wholesale multibrand channel and the wholesale monobrand channel, which together represented 53.4% of net
revenues for the year ended 31st December 2015, while the remaining turnover regards sales made through the
retail channel where payment is made in cash or by credit or debit card.
The Brunello Cucinelli Group generally prefers to do business with customers with whom it has established
a consolidated relationship over time. It is the Group’s policy to carry out checks on the relative credit class
for customers requesting extended payment terms, using information obtainable from specialized agencies
and observing and analysing figures for the performance of established customers. In addition, balances are
constantly monitored during the year in order to ensure timely action and reduce the risk of loss. As confirmation
of this policy, reference should be made to the changes in the allowance for doubtful debts for the years ended
31st December 2015 and 2014 set out in note 5.
The carrying amount of trade receivables in the financial statements is stated net of the write-down estimated on
the basis of the risk that the counterparty will fail to meet its obligations, determined by considering the available
information on the solvency of the customer and historical data.
The following tables provide an ageing of trade receivables at 31st December 2015 and 2014:
31st December
Overdue by:
2015
2014
0-90 days
6,622
6,152
91-180 days
3,058
3,514
Over 180 days
TOTAL
5,687
5,153
15.367
14.819
122
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
OTHER INFORMATION
RELATED PARTY TRANSACTIONS
The following tables provide details of transactions and balances with related parties. The companies indicated
have been identified as related parties because they are directly or indirectly connected with the Brunello Cucinelli
Group’s shareholders of reference.
Pursuant to Consob Resolution no. 17221 of 12th March 2010, it is hereby stated that in the year ended
31st December 2015 the Group did not carry out any significant transactions with related parties or any which
have materially affected the Group’s financial position or results.
Details of the Brunello Cucinelli Group’s transactions and balances with related parties as of and for the year
ended 31st December 2015 are as follows:
(In thousands of euro)
Net
revenues
Other
operating
income
MO.AR.R. S.n.c.
Costs for
raw
materials
Costs for
services
14
103
8,324
465
1
4,953
700
Cucinelli Giovannino
AS.VI.P.I.M. Gruppo Cucinelli
ASD Castel Rigone
Fedone S.r.l.
15
1
6
11
7
Socrate S.r.l.
Total consolidated financial
statements
Proportion (%)
694
444
327
490
32
8
560
5
1
11
5
13
2
11
1
30
359
5
395
Prime Service Italia S.r.l.
Total related parties
Trade
payables
1
3
16
4
Società Agricola Semplice
Solomeo
Famiglia Brunello Cucinelli
Property,
Other
Trade
plant and non-current receivables
equipment.
financial
assets
540
7
Bartolomeo S.r.l.
Fondazione Brunello Cucinelli
Payroll
costs
487
31
36
22
2,535
395
14,212
32
21
1,767
414,151
786
65,534
200,060
74,668
101,045
5,429
45,628
68,826
0.01%
4.58%
0.03%
1.27%
0.53%
14.07%
0.59%
0.05%
2.57%
123
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
More specifically:
– MO.AR.R. S.n.c.: commercial relationships with MO.AR.R. company S.n.c., in which Sig. Enzo
Cucinelli, brother of Cav. Lav. Brunello Cucinelli, holds 50% of the share capital, relate to: (i) purchases
of decorating materials used for fitting out exhibitions and fairs and (ii) investments for the furnishing of
the new stores and offices;
– Cucinelli Giovannino: Giovannino Cucinelli is Cav. Lav. Brunello Cucinelli’s brother. Costs for services
includes expenses for the installation, maintenance and routine repair of plumbing and air conditioning
systems; expenditure incurred for the installation and extraordinary maintenance of the above-mentioned
systems are capitalized in property, plant and equipment;
–AS.VI.P.I.M. Gruppo Cucinelli: the association conducts surveillance of all of the structures
located in Solomeo and used by the Group for its business. Cav. Lav. Brunello Cucinelli and the
Group are both members;
– A.S.D. Castel Rigone Associazione Sportiva Dilettantistica: transactions refer only to net revenues and refer
to the supply of kit to the Castel Rigone amateur sports association;
– Fedone S.r.l.: the relationship with the controlling company involves mainly the rental of buildings used by
the Company in the conduct of its business in the local area near the headquarters;
– Bartolomeo S.r.l.: this company, formed in 2011, whose shareholders are Fedone S.r.l. and Cav. Lav. Brunello Cucinelli,
provides gardening and maintenance services to the Group;
– Fondazione Brunello Cucinelli: these relate to insignificant amounts covering the reimbursement of
services performed;
– Prime Service Italia S.r.l.: this company provides transport services on behalf of Group companies;
– Socrate S.r.l.: this company, whose shareholders are Cav. Lav. Brunello Cucinelli and Fedone S.r.l., provides
services for the cleaning of the rooms and factories of the Company’s administrative and production
facility in Solomeo;
– Brunello Cucinelli family: payroll costs consist of the remuneration due to the family of Brunello Cucinelli.
SIGNIFICANT SUBSEQUENT EVENTS SINCE 31ST DECEMBER 2015
Reference should be made to the report on operations for significant events occurring after the reporting date of
these consolidated financial statements.
124
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
COMPENSATION OF THE BOARD OF DIRECTORS AND THE BOARD OF STATUTORY AUDITORS
The accrued compensation paid for any reason and in any form to members of the Board of Directors by
Brunello Cucinelli S.p.A. for the year ended 31st December 2015 amounted to € 914 thousand.
The accrued compensation relating to the Board of Statutory Auditors of Brunello Cucinelli S.p.A. for the year
ended 31st December 2015 amounted to € 146 thousand.
The following table shows the compensation paid for any reason and in any form to members of the Board of Directors
by Brunello Cucinelli S.p.A. and by its direct and indirect subsidiaries for the year ended 31st December 2015:
Board of Directors
Year ended 31st December 2015
(In thousands of euro)
First and last name
Position
Term of Expiry Compensation Compensation
Non- Compensation,
Other
office date
for attendance monetary
bonuses and compensation
at committees benefits other incentives
Brunello Cucinelli
Chairman and managing 1.01-31.12
director
a)
802,400
-
-
-
- 802,400
Moreno Ciarapica
Total
Director
1.01-31.12
a)
2,800
-
-
-
-
2,800
Riccardo Stefanelli Director
1.01-31.12
a)
2,800
-
-
-
-
2,800
Giovanna Manfredi Director
1.01-31.12
a)
2,800
-
-
-
-
2,800
Giuseppe Labianca Director
1.01-31.12
a)
2,800
-
-
-
-
2,800
Camilla Cucinelli
1.01-31.12
a)
2,800
-
-
-
-
2,800
Andrea Pontremoli Independent director
1.01-31.12
a)
22,676
12,500
-
-
-
35,176
Matteo Marzotto
Independent director
1.01-31.12
a)
22,276
10,000
-
-
-
32,276
Candice Koo
Independent director
1.01-31.12
a)
23,076
7,500
-
-
-
30,576
Director
a) Approval of the financial statements for the 2016 year.
The following table sets out the compensation paid to members of the Board of Statutory Auditors for the year
ended 31st December 2015.
Board of Statutory Auditors
Year ended 31st December 2015
(In thousands of euro)
First and last name
Position
Term of office
Expiry date
Emoluments
Total
Gerardo Longobardi
Chairman
1.01-31.12
a)
57,671
57,671
Ravizza Lorenzo Lucio Livio
Standing auditor
1.01-31.12
a)
44,221
44,221
Alessandra Stabilini
Standing auditor
1.01-31.12
a)
43,680
43,680
a) Approval of the financial statements for the 2016 year.
125
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
DISCLOSURES PURSUANT TO ARTICLE 149-DUODECIES OF THE ISSUERS’ REGULATIONS
Type of service
(In thousands of euro)
Entity providing the service
Recipient
Audit
Total
compensation 2015
Auditor of the Parent company
Parent company
333
Attestation services on tax returns Auditor of the Parent company
Parent company
-
Other services
Auditor of the Parent company
Parent company
-
Network of the auditor of the parent company
Parent company
20
Subtotal
Audit
353
i) Network of the auditor of the parent company Subsidiary
ii) Other auditors
Subsidiary
71
189
Subtotal
260
Total
613
BALANCES OR TRANSACTIONS DERIVING FROM ATYPICAL OR UNUSUAL OPERATIONS
Pursuant to Consob Communication no. DEM/6064293 of 28th July 2006 it is hereby stated that the Group has
not carried out any atypical or unusual operations as defined in that Communication.
Cav. Lav. Brunello Cucinelli
The Chairman of the Board of Directors
126
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
CERTIFICATION PURSUANT TO ARTICLE 154-BIS OF LEGISLATIVE DECREE
NO. 58 OF 24TH FEBRUARY 1998 (CONSOLIDATED FINANCE LAW) AND ARTICLE
81–TER OF CONSOB REGULATION NO. 11971 OF 14TH MAY 1999 AS AMENDED
1. The undersigned Cav. Lav. Brunello Cucinelli, as Chairman and Managing Director, and Moreno Ciarapica,
as the manager in charge of preparing the corporate accounting documents of Brunello Cucinelli S.p.A.,
hereby certify, taking into account the provisions of article 154-bis, paragraphs 3 and 4 of Legislative Decree
no. 58 of 24th February 1998:
• their adequacy with respect to the company and
• effective application of the administrative and accounting procedures for the preparation of the annual
consolidated financial statements during the period 1st January 2015 – 31st December 2015.
2. No significant aspects arose from applying the administrative and accounting procedures for the preparation
of the consolidated financial statements as of and for the year ended 31st December 2015.
3. We also certify that:
3.1 the consolidated financial statements:
a) have been prepared in accordance with the international accounting standards adopted by the European
Union pursuant to European Regulation (EC) no. 1606/2002 of the European Parliament and of the
Council of 19th July 2002;
b) agree with the balances on the books of account and the accounting records;
c) are suitable for providing a true and fair view of the assets and liabilities, results and cash flows of the
issuer and the set of companies included in the consolidation.
3.2 The report on operations includes a reliable analysis of the performance and operating result as well as of
the situation of the issuer and the set of companies included in the consolidation, as well as a description
of the main risks and uncertainties to which they are exposed.
10th March 2016
Cav. Lav. Brunello Cucinelli
Chairman of the Board of Directors
Managing Director
Moreno Ciarapica
Manager in charge of preparing
the corporate accounting documents
127
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
REPORT OF THE EXTERNAL AUDITORS
128
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
REPORT OF THE BOARD OF STATUTORY AUDITORS
129
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
130
ANNUAL FINANCIAL REPORT – CONSOLIDATED FINANCIAL STATEMENTS AT 31ST DECEMBER 2015
131