HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
(COURTESY TRANSLATION FOR THE CONVENIENCE OF INTERNATIONAL READERS)
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CONTENTS
CORPORATE DETAILS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
CORPORATE GOVERNANCE BODIES AT 30TH JUNE 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
THE BRUNELLO CUCINELLI GROUP AT 30TH JUNE 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
GROUP STRUCTURE AT 30TH JUNE 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
CONSOLIDATED INTERIM REPORT ON OPERATIONS AT 30TH JUNE 2015
COMPANY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
SUMMARY DATA AT 30TH JUNE 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
THE GROUP’S RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ANALYSIS OF REVENUES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
– REVENUES BY DISTRIBUTION CHANNEL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
– REVENUES BY GEOGRAPHICAL AREA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
– REVENUES BY PRODUCT LINE AND END CUSTOMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ANALYSIS OF THE INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
– OPERATING RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
– NET FINANCIAL EXPENSE, TAXATION AND NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ANALYSIS OF BALANCE SHEET AND FINANCIAL ITEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
– NET WORKING CAPITAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
– FIXED ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
–CAPEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
– NET DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
– SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ECONOMIC AND FINANCIAL RATIOS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
INFORMATION ON CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
PERFORMANCE OF THE COMPANY’S SHARE ON THE BORSA ITALIANA S.P.A. ELECTRONIC STOCK
EXCHANGE (MTA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
SIGNIFICANT EVENTS DURING THE PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
FINANCIAL RISK MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SIGNIFICANT SUBSEQUENT EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
BUSINESS OUTLOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS AT 30TH JUNE 2015
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
CONSOLIDATED INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
CONSOLIDATED CASH FLOW STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
NOTES TO THE FINANCIAL STATEMENTS
BASIS OF PREPARATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
CONSOLIDATION SCOPE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ACCOUNTING STANDARDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION . . . . . . . 59
COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED INCOME STATEMENT . . . . . . . . . . . . . . . . . . . . . . . 78
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
CERTIFICATION PURSUANT TO ARTICLE 81-TER OF CONSOB REGULATION NO. 11971
OF 14TH MAY 1999 AS AMENDED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
REVIEW REPORT OF THE AUDITORS ON THE CONDENSED CONSOLIDATED HALF-YEAR
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CORPORATE DETAILS
Registered office of the Holding Company
Brunello Cucinelli S.p.A.
Via dell’Industria 5, frazione Solomeo
Corciano – Perugia – Italy
Legal information 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/eng/
Nature does nothing in vain
— ARISTOTLE —
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CORPORATE GOVERNANCE BODIES AT 30TH JUNE 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
Executive director
Executive director
Director
Director
Director
Independent director
Independent director
Independent director
(1) Appointed by shareholders at the ordinary general meeting of 23rd April 2014; will remain in office until the date of the shareholders’ meeting called to
approve the financial statements for the year ending 31st December 2016.
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
THE BRUNELLO CUCCINELLI GROUP AT 30TH JUNE 2015
Brunello Cucinelli
S.p.A.
100%
100%
Brunello Cucinelli
Europe S.r.l.
Brunello Cucinelli
Retail Spain SL
Brunello Cucinelli
Retail Deutschland
G.m.b.H.
Brunello Cucinelli
Austria Gmbh
95%(*) 98%(*)
Brunello Cucinelli
Suisse S.A.
98%(*)
Brunello Cucinelli
France S.a.r.l.
70%
98%
98%
(*)
98%
(*)
(*)
Brunello Cucinelli
England, Ltd.
70%
Brunello Cucinelli
Belgium S.p.r.l.
100% 51%
SAM Brunello
Cucinelli Monaco
68,67% 70%
75% 68,4%
Brunello Cucinelli
Hong Kong, Ltd.
51%
Brunello Cucinelli
Brasil, LTDA
98%
Brunello Cucinelli
G.m.b.H.
Brunello Cucinelli
Netherlands B.V.
Brunello Cucinelli
Hellas S.A.
51%
98%
2%
Brunello Cucinelli
Japan Co. Ltd.
Max Vannucci
S.r.l.
(*)
Pinturicchio S.r.l.
SAS White Flannel
(*) The remaining percentage is held by Brunello Cucinelli S.p.A.
5
51%
70%
Brunello Cucinelli
Lessin (Sichuan)
Fashion Co. Ltd.
Brunello Cucinelli
Lessin (Macau)
Fashion Co. Ltd.
Brunello Cucinelli
Canada Limited
Brunello Cucinelli
USA Inc.
70%
Cucinelli Holding
Co LLC
51%
Brumas Inc.
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
GROUP STRUCTURE AT 30TH JUNE 2015
Company name
Registered office
Brunello Cucinelli S.p.A.
Brunello Cucinelli USA, Inc.
Cucinelli Holding Co, LLC
Brunello Cucinelli Europe S.r.l.
Brumas Inc.
Brunello Cucinelli Suisse S.A.
Brunello Cucinelli Retail Spain SL
Brunello Cucinelli GmbH
Brunello Cucinelli France Sarl
Brunello Cucinelli Belgium S.p.r.l.
Max Vannucci S.r.l.
Brunello Cucinelli Japan Co., Ltd.
Brunello Cucinelli Retail Deutschland GmbH
Brunello Cucinelli Netherlands B.V.
Brunello Cucinelli Lessin (Sichuan) Fashion Co., Ltd .
Brunello Cucinelli Hellas S.A.
Brunello Cucinelli Austria GmbH
Brunello Cucinelli England Ltd.
Brunello Cucinelli Hong Kong Ltd.
Brunello Cucinelli Lessin (Macau) Fashion Co., Ltd .
Pinturicchio S.r.l.
Brunello Cucinelli Brasil Ltda.
SAS White Flannel
SAM Brunello Cucinelli Monaco
Brunello Cucinelli Canada Limited
Corciano, frazione Solomeo (PG) – Italy
New York – USA
New York – USA
Corciano, frazione Solomeo (PG) – Italy
New York – USA
Lugano – Switzerland
Madrid – Spain
Munich – Germany
Paris – France
Brussels – Belgium
Perugia – Italy
Tokyo – Japan
Munich – Germany
Amsterdam – Holland
Chengdu – China
Athens – Greece
Vienna – Austria
London – United Kingdom
Hong Kong
Macau
Carrara – Italy
San Paolo – Brazil
Cannes – France
Principality of Monaco
Vancouver – Canada
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
DISTRIBUTION
The Group offers its products on the market through a number of different distribution channels.
From the standpoint of the end user, the Group is present on the market as follows:
–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 have an equity interest in the Group
company running the DOS, thereby bringing in their specific experience of the market. From 1st September
2014 the retail channel also includes the sales points in the Japanese department stores which are operated
under the Group’s responsibility using direct staff employed there;
–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, which consists of independent multibrand stores and dedicated spaces in
department stores (shop-in-shops). In this channel the Group uses intermediaries represented by independent
multibrand stores for sales to end users, i.e. department stores, 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 30th June 2015,
31st December 2014 and 30th June 2014:
Boutiques
30th June 2015
31st December 2014
30th June 2014
RETAIL
79
71
65
WHOLESALE MONOBRAND
36
34
37
The following table provides an analysis of the location of boutiques by geographical area at 30th June 2015:
DOS
WHOLESALE MONOBRAND
TOTAL
Italy
Europe
North
America
Greater
China
Rest of the
World (RoW)
Total
13
26
20
16
4
79
4
20
1
3
8
36
17
46
21
19
12
115
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The following figure sets out the DOS and monobrand boutiques at 30th June 2015 together with their
geographical location:
Greater China
Europe
North America
20 DOS
1 WHS MONOBRAND
26 DOS
1 Austria; 2 Belgium; 5 France;
5 Germany; 1 Greece; 1 Netherlands;
5 Spain; 4 Switzerland; 2 United Kingdom
16 DOS
3 WHS MONOBRAND
20 WHS MONOBRAND
1 Azerbaijan; 6 Russia;
1 France; 1 Germany; 1 Lithuania;
2 Switzerland; 3 Ukraine; 1 Romania;
1 Turkey; 1 Bulgaria; 1 Kazakhstan;
1 Denmark
Italy
13 DOS
4 WHS MONOBRAND
Rest of World (RoW)
4 DOS
1 Latin America; 3 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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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CONSOLIDATED INTERIM REPORT ON OPERATIONS AT 30TH JUNE 2015
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 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
ability to “listen to” the market and its new trends. The result is a line of casual chic prêt-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.
PRODUCT
The daily alchemy between tradition and research as a trail-blazer for new creations
The collections assert a new balance in the 2015 spring/summer and 2015-2016 fall/winter seasons, where the luxury
of refined materials is exalted by creativity and workmanship to dress the man and the woman for all occasions,
from business dress to jet-setting elegance and above all around that casual attitude associated with knitwear that has
always defined the Brunello Cucinelli character. Lifestyle from gym to dinner where the exploration of the various
nuances and ways of wearing and matching clothes aims at a complete style for everyday wear.
A tight bond between craftsmanship and research across all the various types from men’s suits to knitwear,
from informal items to elegance for the evening. Precious fibers and natural materials blend together or are
reinvented by means of original processes, tested within an attentive mingling of tradition and research that
moves our creations.
Knitwear is once again the star of the collections and a fundamental pivot of the look with new elements, yarns
and innovative techniques extending the line and multiplying the combinations. The noble fiber of cashmere
becomes a meeting point of modern elegance, in a balance between identity and innovation.
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
VISUAL MERCHANDISING
In keeping with the changes in the collections, moving in the direction of modern taste, a significant development
in visual merchandising criteria has been seen over the past year.
A move has been made from research to the creation, design and production of unique items capable of narrating
and expressing the theme of the collections, in harmony in their colors, shapes and materials.
From the tale of the world that is told in Solomeo, visual merchandising develops a new form of setting that is
directly connected with the product. Presentation becomes a harmonic sounding board where the constant exchange
of materials, ideas and creations produces new and unique articles, which renew themselves spontaneously with
the evolution of taste and the collections.
The display and settings define a line of continuity that makes every display window, boutique and environment
a unique item, a place where the creative spirit can be recognized, perfectly placed within the brand’s philosophy
and traditions.
A young and qualified team structured on a geographical basis looks after the features and needs of every single
boutique as it does those of the multibrand stores. From the sales campaign to displaying the collections it
responds reactively and consistently to creative stimuli and the specific requirements of spaces, cultures and
tastes.
The organization is responsible for:
– development of store design and display systems in harmony with the brand’s image;
– coordinated management of merchandising and assortments consistent with the reference market;
– harmonization of communication and of visual elements in each store.
COMMUNICATION
The attention placed by the Italian and international media on the elements making up the identity of the Solomeo
company is once again proven, a “young” identity but one solidly rooted in the traditional values for which we
want to be the “guardian” for future generations.
The brand image arises directly from the philosophy underlying the “Humanistic Enterprise” project, based on
the timeless values of the dignity of man and work, and demonstrates the commitment that actively links the
Company to the culture of craftsmanship, landscape and art to be found in Umbria.
The specific attention given to all the various operations that accompany the presentation of the collections responds
to the idea of the brand’s own elegance, which renews itself thanks to a skillful balance of tradition and innovation.
An agile, young and reactive communications office has grown at the Solomeo headquarters over the seasons to
the point of achieving a high level of specialization that organically covers all the stages involved in presenting
the collections, talking in a direct and immediate manner about the environment and the philosophy of which it
represents the cradle.
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
DISTRIBUTION
The brand reached an important symbolical goal in 2014: over 100 monobrand boutiques located in key points
throughout the world spread the products and values that grow in Solomeo, while constantly maintaining the
character of exclusivity and rarity for the diffusion of a product that is increasingly “unique” in being associated
with savoir-faire and Italian and Umbrian artisan tradition.
Expansion
The Company continues to spread its presence throughout the world in a balanced and attentive manner, with
new boutiques strategically placed in the heart of Europe in Vienna, Frankfurt, Düsseldorf and Montecarlo, in the
large oriental metropolises of Seoul, Singapore, Hanoi and Shanghai and in the symbolic cities of America, Aspen,
Atlanta and San Francisco.
Consolidation and enlargement
Directly operated stores (DOS), partnerships and joint ventures contribute to defining the variety of operations
taking place on a global scale, enabling the Company to closely follow its diffusion and presence at that level
and responding with key operations for consolidating and enlarging on the central fashion markets such as Paris,
New York, Beverly Hills, Rome, London, Shanghai, Beijing and Tokyo, to name but a few of the most significant
locations.
115
36
105
102
34
37
Total monobrand
boutiques
79
71
65
WHS monobrand
Retail DOS
30th June 2015
31st December 2014
30th June 2014
– The retail channel consists of the monobrand stores and DOS (directly operated stores), some of which are
operated in partnership with experts at the location. From 1st September 2014 the retail channel also includes
the sales points in the Japanese department stores which are operated under the Group’s responsibility using
direct staff employed there;
– The wholesale monobrand channel refers to monobrand boutiques which for strategic reasons are operated
through consolidated commercial relationships with local operators;
– The wholesale multibrand channel consists of approximately 650 selected multibrand customers.
The world’s most prestigious department stores form part of the multibrand network, with increasingly important
dedicated spaces.
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
PRODUCTION
Responding to the gracious and constant growth in the diffusion of the product throughout the world is a constant
emphasis on the quality of the work, in line with the brand’s “Humanistic Enterprise” philosophy, which has
always sought the first real source of creativity in the dignity of work. The enlargement of the Company’s business
complex has enabled it to unite all the different departments in the green area lying at the foot of the Solomeo
hill, thus enhancing the value of the cohesion and harmony to be found in the process of creating the collections.
The close relationship that binds the Company to over 300 small and tiny Italian manufacturing craftwork firms
has enabled a perfect matching of intent to be created in terms of the quality of the workmanship, a quality that has
grown over time into strong loyalty and mutual trust.
The extremely high proportion of façonisti situated in Umbria, around 80%, enables the management of production
to be perfectly coordinated and above all allows the Company to keep complete control of all the stages of production
with an attention to detail, always one of the brand’s winning elements.
The new balance and interpenetration between creations of a casual nature and sartorial elements enables the
Cucinelli brand to spread its artisan and innovative character across all its products, from clothing to accessories,
blending the features of every type into a unique image.
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
THE SOLOMEO SCHOOL
The Crafts School opened in September 2013 provides a series of courses on the crafts inherent in the
Company’s activities, such as the techniques of knitting or cutting and assembling organized and supported
by the Company.
A new 24-month course on tailoring began in July 2014, another symbolic discipline of that Italian excellence and
handicraft renowned throughout the world, while a new course on knitting techniques will begin in September 2015.
The School then provides a series of courses dedicated to the craft-based and traditional arts and disciplines such as
horticulture, gardening and the masonry arts, fostered and supported by the “Brunello e Federica Cucinelli” Foundation.
All the School’s courses take place in the ancient hamlet, inside or close to the castle which is now discovering
a new life. After its first existence in olden days, linked to an important past, and its reconstruction as the
headquarters of a modern Italian business, the Hamlet of Solomeo is now looking towards the future as a place
for teaching young people.
15
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
INTRODUCTION
This Half-year Financial Report at 30th June 2015 has been drawn up pursuant to Legislative Decree no. 58/1998 as
amended and the Issuers’ Regulations published by Consob. The Half-year Report has been prepared in accordance
with the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board
(“IASB”) and adopted by the European Union and in accordance with IAS 34 Interim Financial Reporting, applying
the same accounting principles as those used to prepare the consolidated financial statements at 31st December 2014.
SUMMARY DATA AT 30TH JUNE 2015
The following tables provide: (i) a summarized consolidated income statement for the six months ended 30th June
2015 with comparative figures for the six months ended 30th June 2014, (i) a consolidated balance sheet reclassified
by sources and applications at 30th June 2015 with comparative figures at 31st December 2014 and (iii) figures for
capital expenditure and operating cash flows for the six months ended 30th June 2015 with comparative figures for the
six months ended 30th June 2014.
Summarized consolidated income statement
Six months ended 30th June
(In thousands of Euro)
Change
2015
%
2014
%
Revenues
200,648
100.0%
177,030
100.0%
23,618
+13.3%
EBITDA (1)
33,384
16.6%
30,618
17.3%
2,766
+9.0%
Operating income
24,852
12.4%
24,296
13.7%
556
+2.3%
Net income for the period
15,513
7.7%
15,625
8.8%
(112)
-0.7%
Normalized revenues
(2)
200,648
100.0%
176,275
100.0%
24,373
+13.8%
Normalized EBITDA
(2)
33,384
16.6%
29,863
16.9%
3,521
+11.8%
24,852
12.4%
23,541
13.4%
1,311
+5.6%
15,513
7.7%
15,107
8.6%
406
+2.7%
Normalized operating income (2)
Normalized net income for the period
(2)
2015 vs. 2014 2015 vs. 2014 %
(1) We define EBITDA as operating income before depreciation and amortization. EBITDA defined in this way is a measure used by our management to
monitor and assess our 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 income. Since the composition of EBITDA is not regulated by the accounting principles adopted, the
means of calculating this figure used by us might not be consistent with that used by others and might therefore not be comparable.
(2) The “normalized” figures for revenues, EBITDA, operating income and net income for the period exclude the capital gain of € 755 thousand recognized on
the sale of a property from the results for the six months ended 30th June 2014.
16
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Consolidated balance sheet reclassified by sources and applications:
At
(In thousands of Euro)
30th June 2015
Change
31st December
2014
2015 vs. 2014
2015 vs. 2014 %
Net working capital
122,523
97,507
25,016
+25.7%
Fixed assets
128,740
114,592
14,148
+12.3%
Other non-current assets/(liabilities)
Net invested capital
Net debt
5,878
862
5,016
>+100.0%
257,141
212,961
44,180
+20.7%
78,281
42,636
35,645
+83.6%
(3)
Shareholders’ equity
178,860
170,325
8,535
+5.0%
Sources of funding
257,141
212,961
44,180
+20.7%
(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:
At
(In thousands of Euro)
Change
30 June 2015
30 June 2014
2015 vs. 2014
2015 vs. 2014 %
Capex (4)
20,683
22,433
(1,750)
-7.8%
Cash flows from (used by) operating activities
(7,043)
(7,639)
596
-7.8%
th
(4) Capex refers to gross investments in intangible, tangible and financial fixed assets.
17
th
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
THE GROUP’S RESULTS FOR THE SIX MONTHS ENDED 30TH JUNE 2015
The sales trend in the first half of the year confirms the highly positive atmosphere surrounding the brand,
identified as the expression of absolute luxury, which is founded on exclusivity, uniqueness, supreme quality,
craftsmanship and a Made in Italy product, all within a prêt-à-porter proposal and a sophisticated concept of
contemporary lifestyle.
The decisions taken by local customers and top-end tourists confirm their tendency to purchase unique and
exclusive products, with the events of a macro-economic, political and monetary nature that have characterized
the past few months having a completely marginal effect.
We are experiencing a further rise in the quest for products of the utmost quality, a blend of creativity and Italian
artisan handwork, that is being made by the “sophisticated” luxury customer, whose basic principle remains the
search for exclusivity of both the product offer and the “limited” presence in the most prestigious streets and
locations.
The brand’s contemporary lifestyle proposal satisfies these needs, which are themselves a bedrock and an integral
part of the business’s DNA, thereby supporting the results achieved and sustaining expected growth.
The Group posted revenues of € 200,648 thousand for the six months ended 30th June 2015, a rise of 13.3% over
the corresponding period of the previous year.
Revenues for the first half of 2014 were affected by the income arising from the sale of a property to the parent
Fedone S.r.l. (in turn controlled by Cav. Lav. Brunello Cucinelli), not situated in the proximity of the Company’s
manufacturing and logistical facilities, which led to a capital gain of € 755 thousand, recognized as other income.
Excluding the effect of this transaction revenues rose by 13.8%.
The Group posted net revenues of € 200,332 thousand for the half year, a rise of 13.9% over the figure of €
175,811 thousand at 30th June 2014.
EBITDA reached € 33,384 thousand at 30th June 2015, or 16.6% of revenues, an increase of 11.8% compared
to normalized EBITDA of € 29,863 thousand for the six months ended 30th June 2014 (17.5% of revenues). The
first half of 2015 was characterized by a decrease of production costs for raw materials and outsourced work as a
percentage of revenues, arising mostly from changes between the quarters and the higher proportion of revenues
generated by the retail distribution channel where the development and expansion of the directly operated sales
points however led to an increase in rental expense and payroll costs as a percentage of revenues compared to the
first half of 2014, thereby offsetting the effect.
18
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Net income of € 15,513 thousand for the six months ended 30th June 2015, corresponding to 7.7% of revenues,
posted an increase of € 406 thousand or 2.7% over the normalized figure for the first half of 2014.
Depreciation and amortization represented a higher percentage of revenues in the first half of 2015 compared to
the first half of 2014 as a result of the considerable investments made by the Company.
The results of the individual quarters are affected by the timing of deliveries and whether these fall at the end
of one quarter or the beginning of the next, making a reading of the half-year’s results representative of the
changes underlying the business. 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. Consequently, any analysis of interim results and
financial and profitability indicators cannot be considered as fully representative, and it is therefore not advisable
to consider the period indicators as a proportional share of the full year.
19
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
ANALYSIS OF REVENUES
The Group’s consolidated turnover for the first half of the year amounted to € 200,332 thousand, a rise of 13.9%
over the same period in 2014. The sales trend not only confirms the solidity of the business’s development path
but further testifies to the stability of the trend in the growth of purchases on all the international markets, with
local customers and top-end tourist flows being increasingly less subject to market volatility and macroeconomic
dynamics.
At constant exchange rates, meaning at the same average rates as those used for the first six months of 2014,
revenues would have risen by 9.3%.
200.3
192.1
175.8
+13.9%
+9.3%
30TH June 2015 constant exchange rates
30th June 2015
30th June 2014
The overall increase in net revenues amounted to € 24,521 thousand at current exchange rates (+13.9%), mainly
due to organic growth in the retail channel arising from the development of existing boutiques, the opening of
new direct boutiques (DOS) in all geographical areas and the growth of the wholesale monobrand and multibrand
channel compared to the corresponding six months of the previous year.
20
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
REVENUES BY DISTRIBUTION CHANNEL
Increases in revenues were posted in all distribution channels in the first half of 2015, as a consequence of the results
achieved by the existing boutiques and locations, the new selected openings and the Group’s presence in the most
prestigious spaces in the Luxury Department Stores.
The following table provides details of the net revenues earned by the Group in the six months ended 30th June
2015 and 2014, analyzed by distribution channel.
Six months ended 30th June
(In thousands of Euro)
Change
2015
%
2014
%
Retail
84,768
42.3%
62,350
35.5%
22,418
+36.0%
Wholesale monobrand
21,960
11.0%
21,833
12.4%
127
+0.6%
Wholesale multibrand
93,604
46.7%
91,628
52.1%
1,976
+2.2%
200,332
100.0%
175,811
100.0%
24,521
+13.9%
Total
200.3
2015 vs. 2014 2015 vs. 2014 %
175.8
93.6
42.3%
46.7%
91.6
Total
22.0
WHS Multibrand
21.8
84.7
WHS Monobrand
62.4
30th June 2015
11.0%
Retail DOS
30th June 2014
First half of 2015
21
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
RETAIL
Net revenues of € 84,768 thousand were generated by the retail channel, representing an increase of € 22,418
thousand or 36.0% over the corresponding previous period.
In the six months ended 30th June 2015 the retail channel represented 42.3% of the Group’s net revenues, an
increase over the figure of 35.5% for the first half of 2014.
Direct boutiques, of which there were sixty five at 30th June 2014, rose to seventy nine at 30th June 2015, an increase
of fourteen consisting of eleven openings and three conversions of sales points previously operated as wholesale
monobrand, to which should be added the effect of the conversion of the thirteen Japanese sales points to direct
operations on 1st September 2014. The number of direct sales points increased by eight units in the first six months
of 2015 compared to 31st December 2014.
Like-for-like (comparable store sales), calculated as the increase in revenues at constant exchange rates in the
DOS existing at 1st January 2014, amounted to 5.1% in the first 33 weeks of the year (the period between 1st
January and 16th August 2015).
WHOLESALE MONOBRAND
Net revenues earned through the wholesale monobrand channel amounted to € 21,960 thousand, an increase of
€ 127 thousand over the six months ended 30th June 2014, corresponding to 0.6%. Excluding the effect of the
conversions to the direct channel, the net revenues of the wholesale monobrand channel rose by 4.1%.
In the six months ended 30th June 2015 net revenues from the sales made by the wholesale monobrand channel
represented 11.0% of the total, a slight fall compared to the figure of 12.4% for the first half of 2014.
Sales points, of which there were thirty seven at 30th June 2014, fell by one in number at 30th June 2015. Compared
to 30th June 2014 there were two openings and three conversions to DOSs of the Japanese boutiques previously
operated as wholesale monobrand. During the first six months of 2015 there was an increase of two in the number
of wholesale monobrand stores compared to the situation at 31st December 2014.
WHOLESALE MULTIBRAND
Net revenues earned through the wholesale multibrand channel amounted to € 93,604 thousand (an increase of
€ 1,976 thousand over the six months ended 30th June 2014), corresponding to a rise of 2.2% over the same period
in 2014. Net revenues in this channel fell from 52.1% of the total in the six months ended 30th June 2014 to 46.7%
in the first half of 2015.
Performance compared to the first half of 2014 was affected by the development in the way in which the business
in Japan is operated. On 1st September 2014 the 13 boutiques situated in the most important Luxury Department
Stores were transferred from wholesale multibrand operations to the retail channel.
22
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
REVENUES BY GEOGRAPHICAL AREA
The Brunello Cucinelli Group achieved considerable growth in all international markets in the first six months of
2015; these represented 81.6% of net revenues for the period and posted an increase of 17.1% over the corresponding
period of 2014. The Italian market also posted an interesting and significant rise of 1.8% in revenues, with healthy
and sustainable results. The following table provides details of revenues for the six months ended 30th June 2015
analyzed by geographical area, with comparative figures for the corresponding period of the previous year.
Six months ended 30th June
(In thousands of Euro)
2015
%
Change
2014
%
2015 vs. 2014
2015 vs. 2014 %
Italy
36,906
18.4%
36,260
20.6%
646
+1.8%
Europe
63,213
31.6%
60,048
34.2%
3,165
+5.3%
North America
69,692
34.8%
55,416
31.5%
14,276
+25.8%
Greater China
11,867
5.9%
10,367
5.9%
1,500
+14.5%
Rest of the (RoW)
Total
18,654
9.3%
13,720
7.8%
4,934
+36.0%
200,332
100.0%
175,811
100.0%
24,521
+13.9%
200.3
18.6
11.9
13.7
175.8
10.4
69.7
9.3%
55.4
Total
5.9%
18.4%
34.8%
31.6%
ROW
63.2
60.0
Greater China
N. America
Europe
36.9
36.3
30th June 2015
Italy
30th June 2014
1st half of 2015
23
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The following is an analysis of the increase in net revenues by geographical area.
Italy
Net revenues for “Italy” represented 18.4% of total revenues (20.6% in the same period of the previous year),
posting an interesting increase of € 646 thousand in absolute terms, or 1.8%, over the period ended 30th June 2014
(€ 36,906 thousand in 2015 and € 36,260 thousand in 2014).
The Italian market confirmed the positive growth seen over the past few quarters, thanks in particular to the monobrand
and multibrand boutiques in the main cities and resorts. There was sustained top-end tourist flow in our boutiques and
luxury multibrand stores, which taken together with purchases made by local customers supported the results achieved.
Top-end Asian tourist flow confirmed its importance for the domestic market, with further increases occurring over the
past few months.
There were thirteen boutiques in the direct monobrand network at 30th June 2015, while the number of boutiques in
the wholesale monobrand channel remained unchanged at four.
Europe
Net revenues for “Europe” represented 31.6% of total revenues (34.2% in the same period of the previous year),
rising by € 3,165 thousand in absolute terms, or 5.3%, from € 60,048 thousand to € 63,213 thousand.
Sales on the European market confirm the solid demand coming from both local customers and international
tourists while top-end tourist flow remains essentially constant, as always less susceptible to the volatility caused by
macroeconomic changes and currency fluctuations. These dynamics find support in the behavior of the tourist, who
is accustomed to purchasing exclusive items in all the main global locations.
The sales results therefore reflect growth in existing spaces, with purchasing habits as always favoring the
continent’s leading cities and most prestigious resorts accompanied by the positive contribution made by the five
selected openings taking place in the first six months of 2015, of which the direct stores in Monte Carlo and Via
Rue François 1er, Paris are worthy of note.
Results in Russia showed themselves solid, also the case in previous quarters, as were orders for the recent
collections.
Tourist flows of top-end Asian consumers towards the most exclusive locations were positive, increasing even
further over earlier quarters.
There were twenty six boutiques in the direct monobrand network at 30th June 2015 and twenty in the wholesale
monobrand channel network.
24
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
North America
Net revenues for “North America” represented 34.8% of total revenues (31.5% in the same period of the previous
year), rising by € 14,276 thousand, or 25.8%, from € 55,416 thousand to € 69,692 thousand.
Sales rose in both the direct channel, characterized by the Group’s presence in the most prestigious locations,
and the wholesale multibrand channel, with a presence in the leading Luxury Department Stores. There was
significant growth in the direct channel with a rise in revenues in the existing boutiques, driven by important sellouts and the positive contribution made by the five new openings taking place over the past 12 months (including
San Francisco in September 2014 and New York Soho in March 2015).
With a rising demand for exclusive prêt-à-porter items, the Luxury Department Stores increased their offer
for top-end customers allocating some of their most prestigious selling spaces to the Brunello Cucinelli brand.
There were twenty one boutiques in the monobrand network at 30th June 2015.
Greater China
Net revenues for “Greater China” represented 5.9% of total revenues (5.9% in the same period of the previous
year), rising by € 1,500 thousand (+14.5%) from € 10,367 thousand to € 11,867 thousand.
In line with the dynamics of the first quarter, the first half of 2015 saw an essential “normalization” of growth
trends, with the rise in turnover being driven by the performance of the existing boutique network which has
remained unchanged over the past 12 months.
Revenue dynamics point to a growth in sales not only in mainland China but also in the other areas of Greater
China, including Hong Kong, where the Group’s exclusive presence and the purchases made by the most
sophisticated top-end customers supported sales.
The number of boutiques and selling spaces remained unchanged during the first half of 2015, consisting of
sixteen direct monobrand boutiques and three wholesale monobrand boutiques.
25
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Rest of the World
Net revenues for the “Rest of the World” in the first six months of 2015 increased by 36.0% over the corresponding
period of the previous year, rising from € 13,720 thousand to € 18,654 thousand.
Performance compared to the first half of 2014 was affected by the development of the way the business is
operated in Japan and the conversions that have taken place in what for us for us is the leading country in the Rest
of the World, and on 1st September 2014 the three wholesale monobrand boutiques were converted to direct stores
and the thirteen dedicated spaces situated in the country’s leading Luxury Department Stores were transferred
from wholesale multibrand operations to the retail channel.
These conversions and transfers affected the results for the first half of 2015, which was characterized by the
deliveries of the spring/summer collection to wholesale monobrand and multibrand customers (sell-in revenues),
while the same deliveries to the sales points in the first half of this year contribute “as sell-out revenues of the
converted spaces” to sales for the first six months of 2015.
There were twelve monobrand stores at 30th June 2015, with the only opening over the past 12 months taking
place in Singapore.
REVENUES BY PRODUCT LINE AND END CUSTOMER
The following is a graphical representation of the composition of the Brunello Cucinelli Group’s revenues for the
six months ended 30th June 2015, analyzed by product line and end customer:
32.3%
15.5%
67.7%
84.5%
Clothing
Women
Accessories
Men
30th June 2015
30th June 2015
26
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
ANALYSIS OF THE INCOME STATEMENT
Set out below is a graphical representation of the income statement for the six months ended 30th June 2015,
representing the Group’s performance for the period:
(14.5%)
(49.9%)
(17.9%)
(0.9%)
16.6%
(4.3%)
(1.9)
33.4
(8.5)
12.4%
(1.3%)
11.1%
(3.4%)
24.9
(2.5)
22.3
(6.8)
7.7%
(29.2)
200.6
(100.2)
(36.0)
Revenues
Materials
Services
Payroll
Other costs EBITDA Depreciation Operating Net
income
financial
and
expense
amortization
Income
before
taxation
Taxation
15.5
Net
income
OPERATING RESULTS
The following table provides a summary of operating income and operating profitability (EBITDA):
Six months ended 30th June
(In thousands of Euro)
2015 % of revenues
Operating income
+ Depreciation and amortization
EBITDA
(1)
Change
2014 % of revenues
normalized (2)
2015 vs. 2014 2015 vs. 2014 %
24,852
12.4%
23,541
13.4%
1,311
+5.6%
8,532
4.3%
6,322
3.6%
2,210
+35.0
33,384
16.6%
29,863
16.9%
3,521
+11.8%
(1) EBITDA is calculated as operating income before depreciation and amortization. EBITDA defined in this way is a measure used by Company management
to monitor and assess operating performance. EBITDA is not an IFRS accounting measure and accordingly should not be considered as an alternative for
assessing trends in the Group’s operating income. Since the composition of EBITDA is not regulated by the Group’s accounting principles, the way in which
the Group calculates this figure may not be consistent with that used by others and may therefore not be comparable.
(2) The “normalized” figures for operating income and EBITDA for the six months ended 30th June 2014 exclude the capital gain of € 755 thousand recognized
in the first half of 2014 to enable a homogenous and consistent comparison to be made with the figures for the current period.
27
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
EBITDA reached € 33,384 thousand at 30th June 2015, or 16.6% of revenues, an increase of 11.8% compared to
normalized EBITDA for the corresponding period in 2014 (17.5% of revenues).
The first half of 2015 was characterized by a decrease in production costs for raw materials and outsourced
work as a percentage of revenues, arising mostly from changes between the quarters and the higher proportion
of revenues generated by the retail distribution channel where the development and expansion of the directly
operated sales points however led to an increase in rental expense and payroll costs as a percentage of revenues,
thereby offsetting the effect.
Operating income amounted to € 24,852 thousand in the six months ended 30th June 2015, representing 12.4%
of revenues, an increase of 5.6% over the normalized figure for the corresponding period in 2014 . As a result
of the investments made depreciation and amortization had a significant effect, representing 4.3% of revenues
in the six months ended 30th June 2015 compared to 3.6% in the first six months of 2014 (an increase of € 2,210
thousand in absolute terms).
The following table sets out in graphical form trends in the Group’s EBITDA and operating income for the
six months ended 30th June 2015 and 30th June 2014:
EBITDA (€ m)
EBITDA (%)
Operating income (€ m)
24.9
33.4
Operating income (%)
23.5
29.9
16.6%
16.9
30th June 2015
30th June 2014 ADJ
12.4
13.4
30th June 2015
30th June 2014 ADJ
As shown above EBITDA fell from a normalized 16.9% in the first half of 2014 to 16.6% in the first half of 2015,
increasing in absolute terms by € 3,521 thousand.
The economic dynamics that characterized the first half of 2015 consisted first and foremost in an increase in the
net revenues posted by the retail distribution channel as a proportion of total net revenues for the period (42.3%
for the six months ended 30th June 2015 against 35.5% at 30th June 2014) . This increase is due to organic growth
in existing boutiques (like-for-like of 5.1%) and the development of the store network which, compared to the
first half of 2014, increased by a total of 29 units (13 openings together with the new way in which the business is
operated in Japan, which led to the conversion of 3 wholesale monobrand boutiques to direct stores and the direct
management of 13 dedicated spaces situated in the most important Luxury Department Stores).
Commercial expansion in the first half of 2015 accordingly led to an increase in certain operating costs as a percentage
of revenues, and more specifically rental expense (which in addition to the openings and conversions of boutiques
was affected by the increases generated by the repositioning and extension of some of the more important boutiques,
the renegotiation of expiring contracts, the opening of the new show-room in Tokyo and the repositioning of the
key show-room in New York) and payroll costs resulting from an increase in the workforce, mostly in sales staff.
28
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The above changes led to the following:
1. a decrease in costs for raw materials and consumables and outsourced manufacturing costs as a percentage
of total revenues (36.1% for the six months ended 30th June 2015 compared to 40.0% at 30th June 2014);
this figure is affected by the fact that revenues and costs are not perfectly homogenous during the various
quarters of the year. The corresponding figure for costs for raw materials and consumables and outsourced
manufacturing costs for the year ended 31st December 2014 was 37.1%.
Six months ended 30th June
(In thousands of Euro)
2015 % of revenues
Costs for raw materials and consumables
Change in inventories
42,145
Change
2014 % of revenues
21.0%
40,029
2015 vs. 2014 2015 vs. 2014 %
22.6%
2,116
+5.3%
(12,952)
-6.5%
(11,813)
-6.7%
(1,139)
+9.6%
Outsourced manufacturing costs
43,253
21.6%
42,526
24.0%
727
+1.7%
Total
72,446
36.1%
70,742
40.0%
1,704
+2.4%
2. an increase in rental expense as a percentage of total revenues (11.1% for the six months ended 30th June
2015 compared to 7.1% at 30th June 2014) and by € 9,367 thousand in absolute terms over the first half of the
previous year. The corresponding figure for the year ended 31st December 2014 was 8.1%.
Six months ended 30th June
(In thousands of Euro)
2015 % of revenues
Rental expense
21,996
11.0%
Change
2014 % of revenues
12,629
7.1%
2015 vs. 2014 2015 vs. 2014 %
9,367
+74.2%
3. an increase in payroll costs as a percentage of total revenues (17.9% in the six months ended 30th June 2015
compared to 16.6% at 30th June 2014), which amounted to € 35,956 thousand compared to € 29,397 thousand
in the corresponding period in the previous year, representing a rise of € 6,559 thousand in absolute terms.
There were 1,352.0 full time equivalent staff (FTE) at 30th June 2015 compared to 1,170.7 at 30th June 2014
(+181.3), with the rise mainly due to the increase in sales personnel resulting from the expansion of the
directly operated sales point network. The percentage of total revenues for the year ended 31st December 2014
was 17.4%.
29
ctory workers
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
1352.0
36.0
29.4
1170.7
467.7
Total
459.0
Payroll costs (€m)
Payroll costs (%)
17.9%
16.6%
30th June 2015
30th June 2014
834.1
Managers and middle
management
Managers and middle
management Office and
sales staff
Factory workers
670.2
50.2
41.5
30th June 2015
30th June 2014
Having looked at the main changes taking place in production costs, rental expense and payroll costs, brief
comments follow on the other main items making up operating costs:
– commissions and accessory costs, being the commissions payable to the network of agents, which were in line
with the first half of 2014 (3.3% in 2015, 3.3% in 2014);
– advertising and other marketing costs, which rose by 6.6% and represented 4.8% of revenues in the six
months ended 30th June 2015 compared to 5.1% at 30th June 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 incurred for the production of catalogues, advertising campaigns and fairs and
exhibitions organized in Italy and abroad). Communication and image costs amounted to 5.5% of revenues in
the year ended 31st December 2014;
– transport and duties, which amounted to 3.7% of revenues in 2015, a decrease over the figure of 4.5% in 2014;
– credit card charges, which rose by 31.5% over the first half of 2014, a figure closely linked to the growth in
the retail channel.
The following table provides a summary of these items for the first six months of 2015 and 2014 together with
their percentage of revenues.
Six months ended 30th June
(In thousands of Euro)
2015 % of revenues
Change
2014 % of revenues
2015 vs. 2014 2015 vs. 2014 %
Commissions and accessory costs
6,616
3.3%
5,770
3.3%
846
+14.7%
Advertising and other marketing expenses
9,641
4.8%
9,046
5.1%
595
+6.6%
Transport and duties
7,457
3.7%
7,908
4.5%
(451)
-5.7%
Credit card charges
1,573
0.8%
1,196
0.7%
377
+31.5%
30
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NET FINANCIAL EXPENSE, TAXATION AND NET INCOME
Net financial expense amounted to € 2,542 thousand for the six months ended 30th June 2015, of which financial
expense of € 18,261 thousand and financial income of € 15,709 thousand.
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 for financial management, separating
out the effect of exchange differences and the fair value measurement of derivative contracts from changes in
financial income and expense:
Six months ended 30th June
(In thousands of Euro)
2015 % of revenues
Change
2014 % of revenues
2015 vs. 2014 2015 vs. 2014 %
Loan interest
544
0.3%
438
0.2%
106
+24.2%
Other net (income)/expense
262
0.1%
515
0.3%
(253)
-49.1%
Financial (income)/expense
806
0.4%
953
0.5%
(147)
-15.4%
1,202
0.5%
207
0.1%
995
>+100.0%
534
0.4%
128
0.1%
406
>+100.0%
2,542
1.3%
1,288
0.7%
1,254
+97.4%
Foreign exchange (gains)/losses
Financial (income)/expense arising from
adjusting derivatives on loans to fair value
Total net financial expense
Income taxes for the period amounted to € 6,797 thousand and represented 30.5% of pre-tax consolidated income.
This percentage, showing a slight improvement over the corresponding period in the previous year, benefits in
part from the new criterion for calculating the IRAP tax charge. The Group earns the majority of its taxable profit
in Italy and has elected for the “taxation for transparency” option (taxation in Italy using the tax rates applicable
in Italy) for the taxable profits earned in the “privileged tax system countries” in which it operates.
In the light of the above, net income for the period closed at € 15,513 thousand, or 7.7% of revenues, showing an
increase of € 406 thousand, or 2.7%, compared with the normalized figure for the first half of 2014.
The following table provides an analysis of net income for the period between the portion attributable to the
owners of the parent and the portion attributable to non-controlling interests:
30th June 2015
30th June 2014
Net income attributable to owners of the parent
17,449
16,618
Net income attributable to non-controlling interests
(1,936)
(993)
Net income for the period
15,513
15,625
(In thousands of Euro)
The net income attributable to non-controlling interests, a loss of €1,936 thousand, is significantly effected by the
negative results of the subsidiaries that are heavily involved in key commercial initiatives and are in the midst of
their start-up phase.
31
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
ANALYSIS OF 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 30th June 2015 together with comparative figures at 31st December 2014 and 30th June 2014.
NET WORKING CAPITAL
The net working capital of the Brunello Cucinelli Group at 30th June 2015, 31st December 2014 and 30th June
2014 may be analyzed as follows:
(In thousands of Euro)
30th June 2015
Trade receivables
31st December 2014
30th June 2014
64,913
45,051
60,112
Inventories
141,852
125,114
107,278
Trade payables
(59,823)
(62,185)
(62,501)
Other current assets/(liabilities), net
(24,419)
(10,473)
(8,163)
Net working capital
122,523
97,507
96,726
Given the “seasonality” referred to above, the following comments on net working capital compare the situation
at 30th June 2015 with that at 30th June 2014 for a better understanding of the main changes that have occurred.
Net working capital at 30th June 2015 rose by € 25,797 thousand over the balance at 30th June 2014. This difference
mainly arises from the combined effect of the following:
– An increase in “Inventories” by € 34,574 thousand, with the period end balance equivalent to 37.3% of net
revenues for the past 12 months (35.2% at 31st December 2014 ). This is principally due to the addition of 29
directly operated sales points over the past 12 months, as discussed elsewhere in these financial statements,
as well as business development over the period.
– An increase in “Other net liabilities” of € 8,163 thousand at 30th June 2014 to € 24,419 thousand at 30th June
2015; of this, €6,656 thousand is due to the fair value measurement of the derivative instruments hedging the
currency risk arising from commercial transactions not carried out in Euro.
The Group uses cash flow hedge accounting to account for the derivative instruments hedging currency risk, by
which the fair value of these instruments is recognized as an asset or a liability (“Derivative instruments – current
assets” or “Derivative instruments – current liabilities”) with the counter-entry made to an equity reserve for the
gain or loss in fair value of the derivative instruments that are determined to be an effective hedge; this gain or
loss is reclassified into profit or loss, as revenues, on recognition of the hedged transactions.
Regarding “Inventories”, raw materials rose by € 2,421 thousand from € 24,531 thousand at 30th June 2014 to €
26,952 thousand at 30th June 2015, while finished and semi-finished goods increased by € 32,153 thousand from
€ 82,747 thousand at 30th June 2014 to € 114,900 thousand at 30th June 2015, mainly due to the above-mentioned
growth in the monobrand store network.
32
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
(In thousands of Euro)
30th June 2015
31st December 2014
30th June 2014
Raw materials
26,952
25,576
24,531
Finished and semi-finished goods
114,900
99,538
82,747
Inventories
141,852
125,114
107,278
“Trade receivables” (€ 64,913 thousand at 30th June 2015 compared to € 60,112 thousand at 30th June 2014) rose
by € 4,801 thousand. This difference is exclusively due to the translation into Euro of the balances expressed in
foreign currency; while the nominal value of these balances was essentially unchanged, they were affected by the
various period-end exchange rates applied at 30th June 2015 compared to 30th June 2014.
“Trade payables”, which mainly relate to the parent company (and are therefore expressed in Euro and not affected
by the period end exchange rate), were effectively in line with business trends, amounting to € 59,823 thousand at
30th June 2015 and € 62,501 thousand at 30th June 2014.
FIXED ASSETS
Fixed assets at 30th June 2015, 31st December 20134and 30th June 2014 may be analyzed as follows:
30th June 2015
31st December 2014
30th June 2014
Intangible assets
32,579
29,649
30,233
Property, plant and equipment
90,376
80,157
69,823
(In thousands of Euro)
Financial fixed assets
Fixed assets
5,785
4,786
3,972
128,740
114,592
104,028
Fixed assets amounted to € 128,740 thousand at 30th June 2015 compared to € 114,592 thousand at 31st December
2014, representing a net increase of € 14,148 thousand, or 12.3%.
More specifically, intangible assets rose by € 2,930 thousand, property, plant and equipment by € 10,219 thousand
and non-current financial assets by € 999 thousand, mainly due to the guarantee deposits paid on entering rental
agreements for the monobrand stores opened in 2015.
33
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CAPEX
The Group made capital expenditure of € 20,683 thousand in fixed assets in the half-year ended 30th June 2015,
of which € 4,602 thousand in intangible assets, € 14,970 thousand in property, plant and equipment and € 1,111
thousand in financial fixed assets (guarantee deposits).
The following table sets out by type and category the capital expenditure made by the Group in the six months
ended 30th June 2015, the year ended 31st December 2014 and the six months ended 30th June 2014.
(In thousands of Euro)
30th June 2015
31st December 2014
30th June 2014
4,602
7,551
6,004
14,970
30,651
15,846
Capex in intangible assets
Capex in property, plant and equipment
Capex in financial fixed assets
Total capex
1,111
1,459
583
20,683
39,661
22,433
The most significant investments were made for the opening and structuring of boutiques, to a large extent
regarding the entry into the consolidation scope of SAM Brunello Cucinelli Monaco, which will run the boutique
in Monte Carlo, and the openings of the new directly operated stores in Europe, North America and the Rest of
the World.
Other significant investments regarded the purchase of the property complex in the Avenza district of the Municipality
of Carrara, in which the Brunello Cucinelli Group produces menswear through its subsidiary Pinturicchio S.r.l..
Further investments totaling € 1,592 thousand were made in information technology, of which € 1,379 thousand
is recognized as intangible assets and € 231 thousand as property, plant and equipment.
Below is a graphical representation of the capital expenditure made by the Group in the first half of 2015,
analyzed by investment type:
7.4%
3.4
10.7
Exclusive sales
points
1.1
Financial
investments
3.0
14.8
Key money
Total
commercial
investments
Investments in
buildings for
production and
logistics
34
2.9%
10.3%
2.5
5.9
20.7
Other
investments
Total
investments in
production and
logistics
Total
investments
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NET DEBT
The following table provides details of net debt at 30th June 2015, 31st December 2014 and 30th June 2014.
(In thousands of Euro)
30th June 2015
31st December 2014
30th June 2014
Current bank debt
75,561
48,709
54,726
369
344
275
Derivative instruments - current liabilities
Other current financial liabilities
1,596
1,682
146
Current debt (1)
77,526
50,735
55,147
Long-term loans - non-current portion
54,897
42,450
30,767
Non-current financial liabilities
Non-current debt (1)
Total gross debt
- Current financial assets
- Derivative instruments - current assets
- Cash and cash equivalents
Net debt (1)
3,134
3,130
3,858
58,031
45,580
34,625
135,557
96,315
89,772
(96)
(44)
(38)
–
–
–
(57,180)
(53,635)
(43,626)
78,281
42,636
46,108
(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.
At 30th June 2015 the net debt of the Brunello Cucinelli Group had increased by € 35,645 thousand over the
balance at 31st December 2014.
In this respect, in order to rearrange its medium-long term debt to obtain interest at more advantageous rates than
before, the Group took out new loans totaling € 27.3 million and extinguished loans totaling € 21.7 million in the
first half of 2015, a practice it had already followed at 31st December 2014. More specifically, of the new loans
taken out in the first half of 2015 an amount of € 5.0 million was used to make early repayment of previously
contracted debt, obtaining more favorable conditions.
The balance of net debt 30th June 2015 was affected by the following factors:
– the significant investment program carried out during the period (expenditure of € 20.7 million in the first six
months of 2015 and € 37.9 million over the past 12 months);
– trends in operations, as always characterized by growth in business volumes and affected by the development
of the sales point network (which increased overall by 29 units, with 13 openings and the introduction of
the new business model in Japan which led to 3 conversions from wholesale monobrand and the direct
management of points in 13 Luxury Department Stores), as well as the changes discussed earlier that
affected movements in net working capital;
– the seasonality of changes in net debt, which has always been higher at the end of the second and third quarters
of the year (30th June and 30th September), falling back again in the fourth quarter (31st December).
“Non-current financial liabilities” consist of the liability arising from the possibility that the minority shareholders
in Brunello Cucinelli England Ltd. may exercise their put option, and the liability arising from the loan obtained
from the minority shareholder of the subsidiary Brunello Cucinelli Hong Kong Ltd., to the extent of the portion
attributable.
35
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
SHAREHOLDERS’ EQUITY
The following tables provides details of shareholders’ equity at 30th June 2015, 31st December 2014 and 30th June
2014:
(In thousands of Euro)
30th June 2015
Share capital
Reserves
13,600
13,600
13,600
118,097
120,176
17,449
33,060
16,618
173,065
164,757
150,394
5,795
5,568
5,434
178,860
170,325
155,828
Net income for the period attributable to
non-controlling interests
Shareholders’ equity attributable to noncontrolling interests
30th June 2014
142,016
Net income for the period attributable to
owners of the parent
Shareholders’ equity attributable to
owners of the parent
31st December 2014
The Company’s share capital at 30th June 2015 amounted to € 13,600 thousand, was fully paid-up and consisted
of 68 ,000 ,000 ordinary shares .
On the basis of the notifications received by the Company and by Consob and the other announcements made
to the market, the shareholders of Brunello Cucinelli S .p .A. were as follows at 30th June 2015:
Shareholder
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%
Capital Research and Management Company
1,394,000
2.05%
Fundita S .r .l .
1,360,000
2.00%
Fedone S.r.l.
Other shareholders
20,512,242
30.16%
Total
68,000,000
100.0%
A full description of changes in shareholders’ equity may be found in the specific schedule in the financial
statements and in note 11.
As stated below in the section “Significant events during the period”, on 29th January 2015 Fedone S.r.l. announced
that it had completed the sale of 3,494,000 of the shares of Brunello Cucinelli S.p.A., corresponding to 5.14% of the
Company’s 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 S.r.l.. Following this 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..
36
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
RECONCILIATION BETWEEN NET EQUITY AND NET INCOME OF THE PARENT AND
CONSOLIDATED NET EQUITY AND NET INCOME
The following is a reconciliation between the net equity and net income of the parent and consolidated net
equity and net income as of and for the six months ended 30th June 2015:
30th June 2015
(In thousands of Euro)
Net 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 income attributable to non-controlling interests
Consolidated financial statements
37
Net income
183,228
23,428
1,714
(3,069)
(21,511)
(5,993)
–
(51)
11,012
3,477
(1,378)
(343)
173,065
17,449
5,795
(1,936)
178,860
15,513
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
ECONOMIC AND FINANCIAL RATIOS
The main economic and financial ratios for the Brunello Cucinelli Group for the periods under consideration are
as follows.
PROFITABILITY RATIOS
The following table sets out changes in the main profitability ratios for the six months ended 30th June 2015
and 2014.
30th June 2015
30th June 2014
8.90%
10.38%
ROI – Operating income/Average net invested capital in the period
10.57%
13.38%
ROS – Operating income/Revenues
12.39%
13.72%
ROE – Net income for the period/Average equity in the period
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 cash outflows, caused by the repayment of sources, and cash inflows, arising
from the monetary recovery of applications, to avoid disturbing the economic balance of operations.
Net equity /Total assets
Total current assets/Total current liabilities
30th June 2015
30th June 2014
41.85%
45.39%
157.49%
160.39%
30th June 2015
30th June 2014
3.7 times
3.4 times
49.3
52.6
2.1 times
1.8 times
77.1
108.7
119.7
102.6
ROTATION INDICES
Receivables turnover – Revenues/Average trade receivables
Average collection days in trade receivables – (Average trade
receivables/Revenues)*180
Payables turnover – (Costs for raw materials and consumables +
Costs for services)/Average trade payables
Average payment days in trade payables – (Average trade payables/
(Costs for raw materials and consumables net of changes in inventory
+ Costs for services))*180
Average days in inventory – Inventories – advances/Revenues
38
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
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 information on 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 2015, may be consulted in the
Governance section of the Company’s website www.brunellocucinelli.it.
39
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
PERFORMANCE OF THE COMPANY’S SHARE ON THE BORSA ITALIANA
S.P.A. ELECTRONIC STOCK EXCHANGE (MTA)
On 30th June 2015, the final trading day for the half year, the official closing price of the Brunello Cucinelli share
was € 16.80 (+116.8% compared to the € 7.75 per share set for the IPO, -9.3% compared to the price of € 18.53 at
the end of 2014). Market capitalization at 30th June 2015 was € 1,142,000 thousand.
The following table provides details of the company’s share price and the share’s performance between 1st January and
30th June 2015:
Euro
Data
7.75
–
15.77
29-Jun-15
IPO price
Minimum price
(1)
Maximum price
(1)
20.14
27-Jun-15
16.80
30-Jun-15
1,142,400,000
30-Jun-15
25,772,000
30-Jun-15
432,969,600
30-Jun-15
Official price
Capitalization
Number of outstanding shares
Free float
(1):Minimum and maximum prices recorded during daily trading which therefore do not necessarily coincide with the official reference prices for the day.
21
20
19
18
17
16
15
13
12
11
10
9
8
7
6
5
4
3
2
1
Price per share (Euro)
40
29-Jun
24-Jun
19-Jun
16-Jun
8-Jun
11-Jun
3-Jun
29-May
26-May
21-May
18-May
8-May
13-May
5-May
29-Apr
24-Apr
21-Apr
16-Apr
8-Apr
13-Apr
1-Apr
27-Mar
24-Mar
19-Mar
16-Mar
6-Mar
11-Mar
3-Mar
26-Feb
23-Feb
18-Feb
13-Feb
5-Feb
10-Feb
2-Feb
28-Jan
23-Jan
20-Jan
15-Jan
7-Jan
12-Jan
0
2-Jan
Price per share - Euro
14
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
SIGNIFICANT EVENTS DURING THE PERIOD
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 2015 and March 2015 the Company made capital payments of 30 million and 25 million Renminbi (RMB)
respectively as part of a fully reserved increase of the share capital of Brunello Cucinelli Lessin Sichuan Fashion Co.,
Ltd. totaling 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 increase to 75.5%. This operation forms part of the logic of providing support and development
on the Chinese market, which has considerable importance for the Company from a prospective standpoint.
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 the new entity, while an independent third party holds 30%. The new boutique in Monaco –
Monte Carlo was opened on 18th April 2015.
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 S.r.l.. Following this 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 has
confirmed its commitment to remain the controlling shareholder of the Company in the very long term.
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 will run the monobrand store to be opened in Vancouver in the second half of 2015 and will also
be in charge of managing the Brunello Cucinelli multibrand business in Canada.
Increase in share capital by Brunello Cucinelli Brasil Ltda.
In May 2015 the Brazilian subsidiary Brunello Cucinelli Brasil Ltda. increased its share capital by Reais 2,400,000
(equivalent to € 698 thousand). The aim of the capital increase is to support the subsidiary, which operates the
monobrand store in the well-known Cidade Jardim shopping mall in San Paolo, during its start-up phase.
41
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
RELATED PARTY TRANSACTIONS
A detailed description of the related party transactions carried out in the first half of 2015 may be found in the
notes to the condensed consolidated half-year financial statements.
FINANCIAL RISK MANAGEMENT
Details of financial risk management are provided in the section “Other information” of the notes, to which reference
should be made.
SIGNIFICANT SUBSEQUENT EVENTS
No significant events occurred during the period between the balance sheet date of this interim report and the date
on which it was approved by the Board of Directors.
BUSINESS OUTLOOK
We are very satisfied with this first half of the year. We see these numbers as “excellent”, and since two thirds
of the year have already gone by we can envisage a beautiful year end. We are about to complete the significant
2013-15 three-year investment plan, which has enabled us to strengthen our company for the years to come.
The spring/summer 2016 sales campaign is drawing to a close, reporting particularly positive results. Collections
have received excellent feedback. Based upon this, we can envisage a very interesting 2016 too, with double-digit
growth.
We are deeply convinced, with a sense of responsibility but also with extreme serenity, that our Company’s
business strategy – based on apparel products featuring high quality, craftsmanship, manual work, exclusivity,
elegance and contemporary character –will still be the keystone making our Made in Italy always appreciated,
sought after and leading worldwide.
Cav. Lav. Brunello Cucinelli
Chairman of the Board of Directors and CEO
42
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CONDENSED CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS AT 30TH JUNE 2015
43
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 30TH JUNE 2015
NOTE
30th June 2015
Related 31st December 2014
parties
Intangible assets
1
32,579
29,649
Property, plant and equipment
2
90,376
12,510
80,157
11,475
69,823
9,992
Other non-current financial assets
3
5,785
32
4,786
32
3,972
41
(In thousands of Euro)
Related
parties
30th June 2014
Related
parties
NON-CURRENT ASSETS
Deferred tax assets
22
TOTAL NON-CURRENT ASSETS
30,233
18,475
13,307
12,890
147,215
127,899
116,918
125,114
107,278
CURRENT ASSETS
Inventories
4
141,852
Trade receivables
5
64,913
Tax receivables
6
1,637
1,023
2,496
Other current receivables and assets
7
14,010
14,873
12,652
Other current financial assets
8
96
44
38
Cash and cash equivalents
9
57,180
53,635
43,626
Derivative instruments – current assets
10
7
45,051
31
60,112
481
495
200
TOTAL CURRENT ASSETS
280,169
240,235
226,402
TOTAL ASSETS
427,384
368,134
343,320
44
6
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
(In thousands of Euro)
SHAREHOLDERS’ EQUITY
SHAREHOLDERS’ EQUITY
ATTRIBUTABLE TO OWNERS OF
THE PARENT
Share capital
Share premium reserve
Other reserves
Net income for the period attributable to
owners of the parent
TOTAL SHAREHOLDERS’ EQUITY
ATTRIBUTABLE TO OWNERS OF
THE PARENT
SHAREHOLDERS’ EQUITY
ATTRIBUTABLE TO NONCONTROLLING INTERESTS
Capital and reserves attributable to noncontrolling interests
Net income for the period attributable to
non-controlling interests
TOTAL SHAREHOLDERS’ EQUITY
ATTRIBUTABLE TO NONCONTROLLING INTERESTS
TOTAL SHAREHOLDERS’ EQUITY
NON-CURRENT LIABILITIES
Employees’ termination indemnities
Provisions for risks and charges
Non-current bank debt
Non-current financial liabilities
Other non-current liabilities
Deferred tax liabilities
Derivative instruments – non-current
liabilities
TOTAL NON-CURRENT LIABILITIES
CURRENT LIABILITIES
Trade payables
Current bank debt
Current financial liabilities
Tax payables
Derivative instruments – current liabilities
Other current liabilities
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL SHAREHOLDERS’ EQUITY
AND LIABILITIES
NOTE
30th June 2015
11
11
11
13,600
57,915
84,101
13,600
57,915
60,182
13,600
57,915
62,261
17,449
33,060
16,618
173,065
164,757
150,394
7,731
6,841
6,427
(1,936)
(1,273)
(993)
5,795
5,568
5,434
178,860
170,325
155,828
12
13
14
15
16
22
3,137
671
54,897
2,832
6,677
2,112
3,310
947
42,450
2,663
4,908
3,280
3,286
813
30,767
3,529
3,823
3,786
10
302
467
329
70,628
58,025
46,333
11
17
18
19
20
10
21
59,823
75,561
1,596
13,628
7,506
19,782
177,896
248,524
427,384
45
Related
parties
243
31st December
2014
62,185
48,709
1,682
1,152
6,244
19,812
139,784
197,809
368,134
Related
parties
625
30th June 2014
62,501
54,726
146
5,214
484
18,088
141,159
187,492
343,320
Related
parties
1,365
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED
30TH JUNE 2015
Six months ended 30th June
(In thousands of Euro)
NOTE
2015
Net revenues
23
Other operating income
23
Revenues
Costs for raw materials and consumables
Related
parties
2014
200,332
6
175,811
6
316
19
1,219
772
200,648
177,030
24
(29,193)
(12) (28,216)
Related
parties
(33)
Costs for services
25
(100,217)
(1,032) (87,151)
(879)
Payroll costs
26
(35,956)
(145) (29,397)
(123)
Other operating costs
27
(2,112)
(1,272)
(6)
Own work capitalized
28
558
457
Depreciation and amortization
29
(8,532)
(6,322)
Impairment of assets and other allocations
30
(344)
(833)
(175,796)
(152,734)
24,852
24,296
Total operating costs
Operating income
Financial expense
31
(18,261)
(3,036)
Financial income
32
15,719
1,748
22,310
23,008
(6,797)
(7,383)
15,513
15,625
Income before taxation
Income taxes
22
Net income for the period
Net income for the period attributable to owners of the
parent
11
17,449
16,618
Net income for the period attributable to non-controlling
interests
11
(1,936)
(993)
Basic earnings per share (Euro)
33
0.25660
0.24438
Diluted earnings per share (Euro)
33
0.25660
0.24438
46
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX
MONTHS ENDED 30TH JUNE 2015
Six months ended 30th June
(In thousands of Euro)
2015
2014
15,513
15,625
Items that may be reclassified subsequently to profit or loss
1,069
(451)
Gains/(losses) on cash flow hedges
(522)
(917)
143
252
Total gains/(losses) on cash flow hedges
(379)
(665)
Exchange differences on translating foreign operations
1,448
214
114
(69)
Employees’ termination indemnities (IAS 19 revised)
157
(95)
Tax effect
(43)
26
Net income for the period (A)
Other components of comprehensive income:
Tax effect
Items that will not be reclassified to profit or loss
Total other gains/(losses) net of tax (B)
1,183
(520)
16,696
15,105
Owners of the parent
18,501
16,091
Non-controlling interests
(1,805)
(986)
Total comprehensive income net of tax (A) + (B)
Attributable to:
47
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS
ENDED 30TH JUNE 2015
Six months ended 30th June
(In thousands of Euro)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income for the period
Adjustments to reconcile net income for the period to cash flows from (used in) operating activities:
Depreciation and amortization
Provisions for employees’ termination indemnities
Provisions for risks and charges / inventory obsolescence / doubtful accounts
Change in other non-current liabilities
(Gains)/losses on the disposal of fixed assets
Payment of termination indemnities
Payment of provisions for risks and charges
Net change in deferred tax assets and liabilities
Change in fair value of financial instruments
Change in operating assets and liabilities:
Trade receivables
Inventories
Trade payables
Other current assets and liabilities
NET CASH (USED IN) OPERATING ACTIVITIES (A)
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment
Additions to intangible assets
Additions to 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 the business from d'Avenza Fashion S.p.A., net of cash acquired
Disposal of property, plant and equipment and key money
NET CASH (USED IN) INVESTING ACTIVITIES (B)
CASH FLOWS FROM FINANCING ACTIVITIES
Disbursement of long-term loans
Repayment of long-term loans
Net change in short-term financial liabilities
Net change in long-term financial liabilities
Dividends paid
Change in shareholders’ equity
NET CASH FROM FINANCING ACTIVITIES (C)
TOTAL CASH FLOW (D=A+B+C)
EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (E)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD (F)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD (G=D+E+F)
Additional information:
Interest paid
Income tax paid
48
2015
2014
15,513
15,625
8,532
9
335
1,377
29
(25)
–
(6,109)
590
6,322
115
675
1,767
(722)
(101)
(130)
(2,595)
813
(19,719)
(12,957)
(6,978)
12,360
(7,043)
(17,313)
(11,668)
(1,960)
1,533
(7,639)
(14,970)
(4,602)
(1,111)
–
–
–
479
(20,204)
(14,913)
(2,804)
(531)
(549)
(443)
(84)
2,063
(17,261)
27,255
(21,658)
32,344
30
(8,209)
47
29,809
2,562
983
53,635
57,180
39,888
(13,308)
7,817
–
(7,955)
3,335
29,777
4,877
73
38,676
43,626
1,191
1,472
892
7,793
–
–
Additional
paid-in
capital
1,179
Translation
reserve
–
2,496
49
–
–
(240)
–
(33)
(38)
57,915
(233)
59,574
2,720
30,117
(7,480)
30th June 2014
13,600
359
(734)
(734)
37,942
Other
reserves
Other changes
Change in consolidation scope (SAS White
Flannel)
Operation under common control (Brunello
Cucinelli Belgium S.p.r.l.)
Payments made by non-controlling interests
(Brunello Cucinelli Lessin (Sichuan) Fashion
Co., Ltd. and Brunello Cucinelli Japan Co., Ltd.)
Dividends paid
Allocation of net income
207
–
57,915
Total comprehensive income
–
2,361
207
–
13,600
Other gains/(losses)
Net income for the period
31st December 2013
Translation
reserve
(In thousands of Euro)
Additional
paid-in
capital
Legal
reserve
Share
capital
30th June 2015
Share
premium
reserve
1
78,885
2,720
13,600
Other changes
17,449
16,618
(30,476)
16,618
16,618
30,476
Net income
for the
period
150,394
(38)
–
(233)
–
(7,480)
–
16,091
(527)
16,618
142,054
Total Group
equity
173,065
1
57,915
(2,034)
(8,160)
–
18,501
1,052
17,449
164,757
Total Group
equity
–
(2,034)
Operation under common Control (Brunello
Cucinelli Lessin (Sichuan) Fashion Co., Ltd.)
(33,060)
17,449
17,449
33,060
Net income
for the
period
Third party share capital paid-in (SAM
Brunello Cucinelli Monaco)
33,060
(8,160)
Allocation of net income
(265)
(265)
56,283
Other
reserves
Dividends paid
1,317
–
57,915
Share
premium
reserve
Total comprehensive income
–
2,720
Legal
reserve
1,317
–
13,600
Share
capital
Other gains/(losses)
Net income for the period
31st December 2014
(In thousands of Euro)
5,434
–
167
232
3,336
(475)
–
(986)
(7)
(993)
3,160
Total noncontrolling
interests’
equity
5,795
–
47
2,034
(49)
–
(1,805)
131
(1,936)
5,568
Total noncontrolling
interests’
equity
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY FOR THE SIX
MONTHS ENDED 30TH JUNE 2015
155,828
(38)
167
(1)
3,336
(7,955)
–
15,105
(520)
15,625
145,214
Total
shareholders’
equity
178,860
1
47
–
(8,209)
–
16,696
1,183
15,513
170,325
Total
shareholders’
equity
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTES TO THE FINANCIAL STATEMENTS
50
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
1. BASIS OF PREPARATION
1.1 CONTENTS AND FORMAT OF THE CONSOLIDATED FINANCIAL STATEMENTS
These condensed consolidated half-year financial statements have been prepared in accordance with article 154ter of Legislative Decree no. 58 of 24th February 1998 (the Consolidated Finance Act or TUF) as amended and
were approved by the Company’s board of directors on 26th August 2015.
The condensed consolidated half-year financial statements at 30th June 2015 consist of the consolidated statement of
financial position, consolidated income statement, consolidated statement of comprehensive income, consolidated
statement of cash flows and consolidated statement of changes in shareholders’ equity.
The consolidated statement of financial position at 31st December 2014 and the consolidated income statement for
the six months ended 30th June 2014 are provided for comparative purposes.
The currency used is the Euro and all amounts are rounded to thousands of Euro unless otherwise stated.
The consolidated statement of financial position is presented with an increasing liquidity financial classification
where:
– non-current assets comprise asset balances with a realization cycle of over twelve months and consist of
intangible assets, property, plant and equipment and financial assets;
– current assets comprise asset balances with a realization cycle of up to twelve months;
– non-current liabilities comprise liabilities to be settled after more than twelve months, including financial
liabilities, provisions for risks and charges and the Italian employees’ termination indemnity (TFR);
– current liabilities comprise liabilities to be settled within twelve months, including the short-term portion of
long-term loans, provisions for risks and charges and the Italian employees’ termination indemnity (TFR).
Expenses in the consolidated income statement are presented using a classification based on their nature.
The consolidated cash flow statement has been prepared using the indirect method and is presented in accordance
with IAS 7, classifying cash flows between those arising from operating, investing and financing activities.
With reference to Consob Resolution no. 15519 of 27th July 2006 and Communication no. DEM 6064293 of 28th
July 2006, significant related party balances and transactions are presented in the financial statements to provide
users with more complete information.
1.2 STATEMENT OF COMPLIANCE WITH IFRS
The condensed consolidated half-year financial statements for the six months ended 30th June 2015 have been
prepared in accordance with IAS 34 Interim Financial Reporting. The condensed consolidated half-year financial
statements do not include all the disclosures required for annual statements and as a result should be read in
conjunction with the Group’s annual consolidated financial statements for the year ended 31st December 2014.
51
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
2. CONSOLIDATION SCOPE
The condensed consolidated half-year financial statements consist of the financial position, results and cash flows
of the parent company Brunello Cucinelli S.p.A. and its Italian and non-Italian subsidiaries, identified as a whole
as the Brunello Cucinelli Group, as of and for the six months ended 30th June 2015.
The consolidated financial statements have been prepared from the accounting situations of the Company and its
subsidiaries, adjusted as necessary to comply with IFRS.
Control is obtained if the Company 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 controls an investee if and only if it has:
– power over the investee (meaning existing rights that give it the current ability to direct the relevant activities of
the investee);
– exposure, or rights, to variable returns from involvement with the investee; and
– the ability to use 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 the investee, including:
– contractual agreements with other holders of voting rights;
– rights deriving 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 consolidation of an investee begins on the date the Group
obtains control of an investee and ceases when the Group loses that control. The assets, liabilities, income and
expenses of the investee acquired during a period are included in the consolidated statement of comprehensive
income from the date on which the Group obtains control of an investee to the date on which the Group no longer
exercises that control.
All intragroup balances and transactions, including any unrealized profits and losses arising from transactions
with companies of the Brunello Cucinelli Group, are eliminated.
Acquisitions of subsidiaries are accounted for using the purchase method, which involves allocating the cost
of the business combination to the fair value of the assets, liabilities and contingent liabilities acquired at the
acquisition date and including the results of the acquired company from the acquisition date to the balance
sheet date.
The profits and equity of non-controlling interests represent the portion of profit or loss or equity relating to net
assets not held by the Group and are shown as a distinct item in the consolidated income statement, the consolidated
statement of comprehensive income and the consolidated statement of financial position, separate from the Group’s
profits and equity.
At 30th June 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 exerts significant influence, but not
control or joint control, over financial and operational policies) or joint ventures (defined as a contractual
52
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
arrangement whereby two or more parties undertake an economic activity that is subject to joint control within
the meaning of IFRS 11).
The following table summarizes information for subsidiaries at 30th June 2015, providing the company’s name,
its registered office and the percentage of share capital directly or indirectly held 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
Brunello Cucinelli Belgium S.p.r.l.
Brussels – Belgium
Brunello Cucinelli France Sarl
Capital in
currency units
Percentage holding
Direct
Indirect
1,500
100%
Euro
100,000
100%
Euro
20,000
Paris – France
Euro
200,000
2.00%
98.00%
Brunello Cucinelli GmbH
Munich – Germany
Euro
200,000
2.00%
98.00%
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 SL
Madrid – Spain
Euro
200,000
5.00%
95.00%
Brunello Cucinelli Suisse S.A.
Lugano – Switzerland
Swiss franc
200,000
2.00%
98.00%
100.00%
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
Brunello Cucinelli Netherlands B.V.
Amsterdam – Holland
Euro
200,000
2.00%
Brunello Cucinelli Lessin (Sichuan)
Fashion Co., Ltd.
Chengdu – China
RMB
155,000,000
68.40%
Brunello Cucinelli Hellas S.A.
Athens – Greece
Euro
24,000
35,000
Brunello Cucinelli Austria GmbH
Vienna – Austria
Euro
Brunello Cucinelli England Ltd.
London – United
Kingdom
Pound sterling
Brunello Cucinelli Hong Kong Ltd.
Hong Kong
Hong Kong dollar
Brunello Cucinelli Lessin (Macau)
Fashion Co., Ltd.
Macau
MOP
118,000
180,000,000
51.00%
75.00%
70.00%
98.00%
51.00%
2.00%
700
98.00%
70.00%
2,000,000
51.00%
5,000,000
51.00%
Pinturicchio S.r.l.
Corciano (PG) – Italy
Euro
100,000
2.00%
98.00%
Brunello Cucinelli Brasil Ltda.
San Paolo – Brazil
BRL
8,700,000
98.00%
2.00%
SAS White Flannel
Cannes – France
Euro
50,000
SAM Brunello Cucinelli Monaco
Principality of Monaco Euro
150,000
Brunello Cucinelli Canada Limited
Vancouver – Canada
Canadian dollar
100
70.00%
68.67%
70.00%
The only changes in the consolidation scope taking place in the first half of 2015 arose from the formation of SAM
Brunello Cucinelli Monaco and Brunello Cucinelli Canada Limited.
53
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
3. ACCOUNTING STANDARDS
3.1INTRODUCTION
The condensed consolidated half-year financial statements for the six months ended 30th June 2015 have been
prepared in accordance with IAS 34 Interim Financial Reporting. The accounting principles and policies used
by the Group in the preparation of the condensed consolidated half-year financial statements at 30th June 2015
are consistent with those used to prepared the annual consolidated financial statements at 31st December 2014
and reflect the adoption of any new or revised standards issued by the International Accounting Standards Board
(IASB) or interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC),
applied from 1st January 2015 as discussed below.
The condensed consolidated half-year financial statements do not include all the disclosures required for annual
statements and as a result should be read in conjunction with the Group’s annual consolidated financial statements
for the year ended 31st December 2014.
There have been no changes in the process for determining the estimates and assumptions used in preparing the
annual financial statements.
The Group has not early adopted any new standards, interpretations or revised standards that have been issued
but are not yet effective.
3.2 CHANGES IN ACCOUNTING STANDARDS, NEW ACCOUNTING STANDARDS, CHANGES IN
ESTIMATE AND RECLASSIFICATIONS
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 defined
benefit plans are accounted for. When contributions are linked to service, they must be attributed to the service
period as negative benefits. The 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.
IFRIC 21 Levies
IFRIC 21 is effective for years beginning on or after 1st January 2015 and is applicable retrospectively. The
interpretation applies to all levies imposed by governments which do not fall within the scope of other standards
(such as IAS 12 Income Taxes) and to fines or other penalties that are imposed for breaches of the legislation.
The interpretation clarifies that an entity should not recognize a liability before the obliging event occurs which
triggers the payment, in accordance with applicable law. The interpretation also clarifies that the liability only
accrues progressively if the obliging event occurs over a period of time prescribed by law.
For payments which fall due only on exceeding a minimum threshold, the liability is only recognized on
reaching that threshold. The interpretation requires an entity to apply the same recognition principles in its
interim financial statements.
54
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Annual improvements to IFRSs 2010-2012 cycle
These improvements are effective from 1st July 2014 and are not expected to have a material effect for the Group.
They consist of the following:
IFRS 2 Share-based Payment – This amendment is applicable prospectively and clarifies various issues relating
to the definition of a performance condition and a service condition that represent vesting conditions, specifying
amongst other things the following:
– a performance condition must contain a service condition;
– a performance target must be met while the counterparty is rendering service;
– a performance target may relate to the operations or activities of an entity, or to those of another entity in the
same group;
– a performance condition may be a market or non-market condition;
– if the counterparty, regardless of the reason, ceases to provide service during the vesting period, the service
condition is not satisfied.
IFRS 3 Business Combinations – This amendment is applicable prospectively and clarifies that all agreements for
contingent consideration in a business combination must be subsequently measured at fair value through profit or
loss whether or not this consideration falls within the scope of IFRS 9 (or IAS 39).
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 on either gross or net book value at the observable
dates. In addition, accumulated depreciation/amortization is the difference between the gross carrying amount
and the carrying amount of the asset.
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 related party
disclosures. In addition, an entity that uses a management entity is required to disclose the expenses incurred for
management services.
55
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Annual improvements to IFRSs 2011-2013 cycle
These improvements are effective from 1st July 2014 and are not expected to have a material effect for the Group.
They consist of the following:
IFRS 3 Business Combinations – This amendment is applicable prospectively and clarifies with reference to the
scope exceptions of IFRS 3 that:
– joint arrangements, and not only joint ventures, are outside the scope of IFRS 3;
– the scope exception applies only to the accounting in the financial statements of the joint arrangement itself.
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 IFRS 9 (or IAS 39).
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.
3.3 DISCRETIONAL MEASUREMENTS AND SIGNIFICANT ACCOUNTING ESTIMATES
The preparation of the condensed consolidated half-year financial statements requires the parent 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 estimates and discretional
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 for 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 and mortality rates. Because of the long-term nature of these
plans, these estimates are subject to a significant degree of uncertainty.
56
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
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.
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.
Derivative instruments
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.
3.4 TRANSLATION OF FINANCIAL STATEMENTS IN A CURRENCY OTHER THAN THE EURO AND
ITEMS IN FOREIGN CURRENCY
The condensed consolidated half-year 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, under 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 period.
Exchange differences arising from translation are recognized directly in equity and presented in a separate
reserve. On the disposal of a foreign company, the cumulative exchange differences in equity are recognized in
profit or loss.
57
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
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):
Average exchange rates
Closing exchange rates
30th June 2015
30th June 2014
30th June 2015
31st December 2014
30th June 2014
US dollar
1.11579
1.370346
1.1189
1.2141
1.3658
Swiss franc
1.05673
1.221451
1.0413
1.2024
1.2156
134.20424
140.4028
137.01
145.23
138.44
Renmimbi (yuan)
6.940806
8.449966
6.9366
7.5358
8.4722
British pound
0.732325
0.821344
0.7114
0.7789
0.8015
Hong Kong dollar
8.651698
10.629172
8.674
9.417
10.5858
Real
3.310148
3.149871
3.4699
3.2207
3.0002
Canadian dollar
1.377364
(*)
1.3839
(*)
(*)
Japanese yen
(*) Exchange rate not used in the period stated.
3.5 SEASONALITY OR CYCLICITY OF INTERIM OPERATIONS
While not showing sharp seasonal or cyclical variations in total annual sales, the Brunello Cucinelli Group’s
business is affected in the course of the year by revenues and costs arising from industrial operations that
are not perfectly homogeneous. In addition, the market in which the Group operates is subject to seasonality
phenomena typical of retail sales.
For these reasons any analysis of the half-year results and economic, balance sheet and financial ratios is not
fully representative and it would be inappropriate to consider the half-year indices as a proportional share of the
whole year.
58
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
4. COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
NOTE 1. Intangible assets
The composition of intangible assets at 30th June 2015 with comparative figures at 31st December 2014 is as follows:
(In thousands of Euro)
30th June 2015
31st December 2014
Change
3,092
1,837
1,255
28,920
26,797
2,123
222
204
18
Concessions, trademarks, licenses and
similar rights
Key money
Other intangible assets
Assets under formation and advances
Total intangible assets
345
811
(466)
32,579
29,649
2,930
Details of the cost, accumulated amortization and net book value of intangible assets at 30th June 2015 with
comparative figures at 31st December 2014 are as follows:
30th June 2015
(In thousands of Euro)
31st December 2014
Cost
Accum.
amort.n
Net book
value
Cost
Accum.
amort.n
Net book
value
6,642
(3,550)
3,092
5,025
(3,188)
1,837
43,793
(14,873)
28,920
39,357
(12,560)
26,797
Other intangible assets
685
(463)
222
615
(411)
204
Assets under formation and advances
345
–
345
811
–
811
51,465
(18,886)
32,579
45,808
(16,159)
29,649
Concessions, trademarks, licenses and similar
rights
Key money
Total intangible assets
This item amounting to € 32,579 thousand at 30th June 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 the existing contracts or by obtaining the withdrawal of the lessees in order to enter new agreements with
the lessors.
59
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The following tables provide changes in the individual items of intangible assets for the half-year to 30th June 2015:
(In thousands of Euro)
Concessions, licenses,
trademarks and
similar rights
Key money
Other intangible
assets
Assets under
formation and
advances
Total intangible
assets
1st January 2015
1,837
26,797
204
811
29,649
Purchases
1,237
2,949
70
346
4,602
Net decreases
–
–
–
–
–
Translation differences
–
673
–
7
680
Change in consolidation
scope
–
–
–
–
–
379
440
–
(819)
–
Amortization charge
(361)
(1,939)
(52)
–
(2,352)
30th June 2015
3,092
28,590
222
675
32,579
Reclassifications
Increases in the first half of 2015 consist mainly of key money paid by the Brunello Cucinelli Group for a total
of € 2,949 thousand.
The items “Concessions, licenses, trademarks and similar rights” and “Assets under formation and advances”
include increases totaling € 1,379 thousand relating to investments made in information technology systems.
There was no indication during the period that any intangible assets were impaired.
NOTE 2. Property, plant and equipment
The composition of property, plant and equipment at 30th June 2015 with comparative figures at 31st December
2014 is as follows:
30th June 2015
31st December 2014
Change
2,965
2,026
939
Buildings
39,554
37,563
1,991
Leasehold improvements
(In thousands of Euro)
Land
30,624
24,467
6,157
Plant and machinery
3,838
3,867
(29)
Industrial and commercial equipment
1,726
1,602
124
Historical collection
2,187
1,813
374
Other assets
7,165
6,917
248
Assets under construction and advances
2,317
1,902
415
90,376
80,157
10,219
Total property, plant and equipment
60
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Details of the cost, accumulated depreciation and net book value of property, plant and equipment at 30th June
2015 with comparative figures at 31st December 2014 are as follows:
30th June 2015
(In thousands of Euro)
Land
31st December 2014
Cost
Accum.
dep.n
Net book
value
Cost
Accum.
dep.n
Net book
value
2,965
–
2,965
2,026
–
2,026
Buildings
43,714
(4,160)
39,554
41,096
(3,533)
37,563
Leasehold improvements
50,952
(20,328)
30,624
41,626
(17,159)
24,467
Plant and machinery
9,785
(5,947)
3,838
9,298
(5,431)
3,867
Industrial and commercial equipment
3,519
(1,793)
1,726
3,040
(1,438)
1,602
Historical collection
Other assets
Assets under construction and advances
Total property, plant and equipment
2,187
–
2,187
1,813
–
1,813
14,284
(7,119)
7,165
13,077
(6,160)
6,917
2,317
–
2,317
1,902
–
1,902
129,723
(39,347)
90,376
113,878
(33,721)
80,157
Changes in the net book value of property, plant and equipment for the half-year to 30th June 2015 were as
follows:
(In thousands of Euro)
Land
Buildings
Leasehold
improvements
1st January 2015
2,026
37,563
24,467
3,867
1,602
1,813
6,917
1,902
80,157
939
2,365
7,158
435
454
374
952
2,293
14,970
Net decreases
–
–
–
–
(42)
–
(104)
–
(146)
Translation differences
–
–
1,226
34
6
–
229
80
1,575
Change in consolidation
scope
–
–
–
–
–
–
–
–
–
–
181
(1,958)
–
– (1,010)
–
(6,180)
2,317
90,376
Purchases
Plant and Industrial and
machinery
commercial
equipment
Reclassifications
–
253
1,524
–
–
Depreciation
–
(627)
(3,751)
(498)
(294)
2,965
39,554
30,624
3,838
1,726
30th June 2015
61
Historical collection
2,187
7,165
Other Assets under
assets construction
and advances
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
In the first half of 2015 the Brunello Cucinelli Group made investments of € 14,970 thousand in property, plant
and equipment, consisting principally of the following:
– expenditure of € 7,918 thousand arising mainly from the opening of directly operated stores and wholesale
monobrand stores (above all concentrated in Europe, the USA and Greater China) and improvements to these;
– expenditure of € 1,406 thousand mainly relating to the purchase of furniture and fittings for the new factory,
new equipment for the “menswear” project at the Carrara factory (sewing machines, fabric cutting machines,
etc.), computers and office machines and motor vehicles, as well as to equipment for developing the
information technology system (€ 213 thousand);
– expenditure for the purchase of the property located in the Avenza district in the Municipality of Carrara
where the Brunello Cucinelli Group (through its subsidiary Pinturicchio S.r.l.) produces menswear, as well
as for the work carried out on the production facilities and the construction of the new factory for production
and logistics, located in Solomeo, for a total of € 3,353 thousand.
– expenditure of € 2,293 thousand on assets under construction, of which € 2,286 thousand relating to
expenditure incurred in the six months ended 30th June 2015 by the subsidiaries managing the Brunello
Cucinelli boutiques.
There was no indication during the period that any items of property, plant and equipment were impaired.
NOTE 3. Other non-current financial assets
The composition of other non-current financial assets at 30th June 2015 with comparative figures at 31st December
2014 is as follows:
30th June 2015
31st December 2014
Change
Guarantee deposits
5,785
4,786
999
Total other non-current financial assets
5,785
4,786
999
(In thousands of Euro)
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 of € 1,111 thousand
for the period is due to the opening of new stores.
62
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 4. Inventories
The composition of inventories al 30th June 2015 with comparative figures at 31st December 2014 is as follows:
30th June 2015
31st December 2014
Change
26,952
25,576
1,376
9,870
8,763
1,107
Finished goods and merchandise
105,030
90,775
14,255
Total inventories
141,852
125,114
16,738
(In thousands of Euro)
Raw materials and consumables
Work in progress and semi-finished goods
The increase in inventories, which mainly relates to finished goods, is essentially due to an increase in the number
of stores over 31st December 2014. Detailed comments on changes in working capital can be found in the report
on operations.
NOTE 5. Trade receivables
At 30th June 2015 trade receivables amounted to € 64,913 thousand compared to € 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 all fall due in the short term.
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-collectibility risk identified in these receivables.
Changes in the allowance for doubtful debts for the six months ended 30th June 2015, with a comparison for the
year ended 31st December 2014, are as follows:
30th June 2015
31st December 2014
1,814
1,358
Allocations
630
1,339
Utilizations
(190)
(883)
Allowance for doubtful debts
2,254
1,814
(In thousands of Euro)
Allowance for doubtful debts – 1st January
The allocations and utilizations for the period are included under the line item “Impairment of assets and other
provisions” in the income statement.
63
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 6. TAX RECEIVABLES
Tax receivables at 30th June 2015 with comparative figures at 31st December 2014 are as follows:
30th June 2015
31st December 2014
Change
IRES corporate income tax receivables
30
–
30
IRAP regional production tax receivables
18
–
18
Other tax receivables
1,589
1,023
566
Total tax receivables
1,637
1,023
614
(In thousands of Euro)
Tax receivables amounted to € 1,637 thousand at 30th June 2015. The balance mainly relates to the subsidiaries
Brunello Cucinelli USA, Inc., Brunello Cucinelli France Sarl, SAS White Flannel and Brunello Cucinelli Hong
Kong Ltd. and a receivable of € 711 thousand recognized at 31st December 2013 by the parent company following
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 fact that IRAP regional production tax charged on the costs incurred
for employees and similar personnel was not originally deductible for IRES purposes; this was subsequently
permitted by a provision of the Tax Revenue Office of 17th December 2012 implementing article 2 of Decree Law
no. 201 of 2011 (the Monti decree).
NOTE 7. Other current receivables and assets
Other current receivables and assets were as follows at 30th June 2015 together with comparative figures at 31st
December 2014:
30th June 2015
31st December 2014
Change
918
4,709
(3,791)
Due from others
7,710
6,180
1,530
Prepayments and accrued income
(In thousands of Euro)
Due from the tax authorities
4,445
2,917
1,528
Advances to suppliers
315
487
(172)
Due from agents
622
580
42
14,010
14,873
(863)
Other current receivables and assets
Other current receivables and assets, amounting to € 14,010 thousand at 30th June 2015 and € 14,873 at 31st
December 2014, consist mainly of (i) amounts due from the Italian tax authorities for VAT and from non-Italian
tax authorities, (ii) prepayments and accrued income, mostly arising from advance payments made for catalogues
for the spring/summer collection, which will be delivered in the second half of the year and from operating
lease instalments, (iii) receivables for amounts collected by credit card before the balance sheet date but not yet
credited to the Group’s bank accounts at that date and (iv) amounts advanced by the parent company to sales
agents for commissions.
64
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 8. Other current financial assets
Other current financial assets amounting to € 96 thousand at 30th June 2015 relate to accrued income on outstanding
loans at period end.
NOTE 9. Cash and cash equivalents
Cash and cash equivalents were as follows at 30th June 2015 together with comparative figures at 31st December
2014:
(In thousands of Euro)
Bank and post office deposits
30th June 2015
31st December 2014
Change
56,964
53,202
3,762
193
158
35
23
275
(252)
57,180
53,635
3,545
Cash and other valuables
Checks
Total cash and cash equivalents
The above balances 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 on cash and cash equivalents is limited because this
item refers mainly to deposits held 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 six months ended 30th June 2015.
NOTE 10. Derivative instruments
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).
65
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The following is noted for outstanding financial instruments at 30th June 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 “derivative instruments – current assets”, “derivative instruments - current liabilities”
and “derivative instruments – non-current liabilities at 30th June 2015 are set out below, with comparative figures at
31st December 2014.
30th June 2015
31st December 2014
Change
481
495
(14)
– 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
–
–
–
481
495
(14)
(7,137)
(5,900)
(1,237)
(369)
(344)
(25)
–
–
–
(7,506)
(6,244)
(1,262)
–
–
–
(302)
(467)
165
–
–
–
(302)
(467)
165
(In thousands of Euro)
Current assets for derivative instruments hedging currency
risk currency risk
Current assets for derivative instruments hedging interest
rate risk: interest rate risk
Total derivative instruments – current assets
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 derivative instruments – current liabilities
Non-current liabilities for derivative instruments hedging
currency risk
Non-current liabilities for derivative instruments hedging
interest rate risk
– Non-current liabilities for derivative instruments hedging
interest rate risk accounted for using hedge accounting
– Non-current liabilities for derivative instruments hedging
interest rate risk not accounted for using hedge accounting
Total derivative instruments – non-current liabilities
66
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The contractual features and the relative fair value of derivative financial instruments hedging interest rate
risk at 30th June 2015 and 31st December 2014 are as follows:
Derivative instruments hedging interest rate risk accounted for using hedge accounting
Fair value
31st December 2014
Fair value
30th June 2015
Counterparty
Type
Start date
Expiry date
MPS
IRS
31/12/2009
31/12/2015
Notional
capital
(Euro/000)
Current
portion
Noncurrent
portion
Current
portion
Noncurrent
portion
962
(8)
–
(16)
–
BNL
IRS
12/01/2010
31/12/2018
3,272
(56)
(80)
(59)
(106)
Intesa Sanpaolo
Fix Payer Swap 12/01/2010
31/12/2018
3,272
(56)
(80)
(59)
(106)
UBI Banca
IRS
21/05/2010
11/05/2015
1,000
–
–
(1)
–
Cassa di Risp. Di Parma e
Piacenza
IRS
19/08/2010
19/08/2015
2,000
(1)
–
(2)
–
Deutsche Bank
IRS
11/04/2013
31/03/2016
1,600
(1)
–
(2)
–
Banco Popolare
IRS
31/07/2013
15/06/2018
2,000
(14)
(10)
(14)
(14)
BNL
IRS
31/05/2014
31/05/2019
20,000
(67)
(51)
(67)
(82)
UniCredit
IRS
30/06/2014
28/06/2019
10,000
(52)
(50)
(54)
(73)
Banco Popolare
IRS
31/07/2014
15/06/2019
5,000
(23)
(14)
(20)
(22)
UniCredit
IRS
31/10/2014
31/10/2018
10,000
(40)
(27)
(33)
(48)
BNL
IRS
31/12/2014
31/12/2019
7,380
(17)
(3)
(15)
(14)
MPS
IRS
29/01/2015
31/03/2020
5,000
(11)
4
–
–
Cariparma
IRS
31/03/2015
31/12/2019
2,800
(4)
4
–
–
Banca Popolare Ancona
(UBI)
IRS
08/04/2015
08/04/2019
3,000
(4)
2
–
–
Intesa Sanpaolo
IRS
30/06/2015
30/06/2020
5,000
(15)
3
–
–
Cariparma
IRS
08/10/2014
31/03/2015
1,000
–
–
(2)
(2)
Derivative instruments –
current liabilities
(369)
Derivative instruments –
non-current liabilities
(344)
(302)
67
(467)
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The contractual features and the relative fair value of derivative financial instruments hedging currency risk
at 30th June 2015 and 31st December 2014 are as follows:
Negative fair value
(In thousands of Euro)
Positive fair value
30th June 2015
31st December
2014
US dollar
30th June 2015
31st December
2014
(6,041)
(5,473)
98
–
Swiss franc
(110)
(29)
59
–
British pound
(418)
(110)
–
–
(21)
–
187
495
Hong Kong dollar
Japanese yen
(255)
(277)
37
–
Renminbi
(202)
–
1
–
(90)
(11)
99
–
(7,137)
(5,900)
481
495
Canadian dollar
Total
As required by IFRS 13 a calculation was made of the CVA (credit value adjustment) and DVA (debit value
adjustment) for the outstanding derivative financial instruments but the result obtained was not material in terms
of recognizing the effects in these financial statements.
NOTE 11. Capital and reserves
Share capital at 30th June 2015 consisted of 68,000,000 fully paid ordinary shares having a total nominal value
of € 13,600 thousand.
Shareholders’ equity at 30th June 2015 amounted to € 178,860 thousand, an increase of € 8,535 thousand over
31st December 2014.
Changes in equity during the half year arose mainly from comprehensive income for the period 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 23 April 2015.
A dividend of € 7,480 thousand was approved in the corresponding period of the previous year.
Full details of changes in equity for the periods ended 30th June 2015 and 30th June 2014 can be found in the
consolidated statement of changes in equity.
68
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Other reserves at 30th June 2015 with comparative figures at 31st December 2014 are as follows:
(In thousands of Euro)
30th June 2015
31st December 2014
Change
2,720
2,720
–
84,037
55,748
28,289
3,060
3,060
–
Legal reserve
Extraordinary reserve
Revaluation reserve
(2,812)
(2,433)
(379)
IFRS first-time application reserve
Cash flow hedge reserve
(804)
(804)
–
Reserve for actuarial gains/losses
(308)
(422)
114
Translation reserve
2,496
1,179
1,317
Consolidated retained earnings
(4,288)
1,134
(5,422)
Total other reserves
84,101
60,182
23,919
NOTE 12. 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 (revised as of 1st January 2013).
The following table sets out the movements in liabilities for employee benefits for the period ended 30th June 2015 with
comparative figures for the year ended 31st December 2014:
(In thousands of Euro)
Present value of the obligation at the beginning of the period/year
Revaluation as per article 2120 of the Italian civil code
Benefits paid
Change in consolidation scope
Financial (income)/expense
30th June 2015
31st December 2014
3,310
2,854
52
87
(25)
(178)
–
323
(43)
83
Actuarial (gains)/losses
(157)
141
Present value of the obligation at the end of the period/year
3,137
3,310
69
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The main assumptions used in the calculation of the present value of the Italian employees’ termination liability
were as follows:
Financial and economic assumptions
30th June 2015
31st December 2014
Annual discount rate
2.49%
2.02%
Inflation rate
1.75%
1.75%
Expected staff turnover rate
8.80%
8.80%
Advances rate
1.00%
1.00%
30th June 2015
31st December 2014
Demographic factors
Mortality rates
TABLE RG48
Retirement age
65 years
Turnover rate and advances on the employees’ termination indemnity
30th June 2015
31st December 2014
Advances rate
1%
1%
Turnover rate
8.80%
8.80%
Workforce
The following table sets out the average number of employees by category, expressed in terms of full time
equivalent:
Managers and middle managers
Office and sales staff
Factory workers
Total workforce
70
30th June 2015
31st December 2014
50.2
43.5
834.1
735.3
467.7
462.0
1,352.0
1,240.8
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 13. 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 six months ended 30th June
2015 with comparative figures for the year ended 31st December 2014:
30th June 2015
31st December 2014
831
831
Allocations
76
256
Utilizations
–
(130)
(363)
(126)
Agents’ supplementary termination indemnity provision – end of
period/year
544
831
Other provisions for risks and charges
116
116
11
–
671
947
(In thousands of Euro)
Agents’ supplementary termination indemnity provision –
1st January
Recognized actuarial (gain)/loss
Exchange difference
Total provisions for risks and charges
The main assumptions used in the actuarial calculation of the agents’ supplementary termination indemnity were
as follows:
30th June 2015
31st December 2014
Turnover rate – voluntary
6.00%
6.00%
Turnover rate – employer initiated
3.00%
3.00%
Discount rate
2.49%
1.85%
71
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 14. Non-current bank debt
Non-current bank debt consists of long-term loans.
The following table provides details of the Brunello Cucinelli Group’s outstanding loans at 30th June 2015,
showing the portion due within 12 months, within 5 years and after 5 years:
Description
Due date
Balance at 30th
June 2015
Portion due
within
12 months
Portion due
within 5 years
Portion due
after 5 years
Cassa di Risparmio di Lucca, Pisa e Livorno
31-Jul-15
131
131
–
–
Cariparma
19-Aug-15
105
105
–
–
Banca Toscana
31-Dec-15
148
148
–
–
Deutsche Bank
31-Mar-16
400
400
–
–
Banco Popolare
15-Jun-18
1,500
500
1,000
–
UniCredit
31-Oct-18
9,950
–
9,950
–
BNL
31-Dec-18
4,225
770
3,455
–
Banca Popolare di Spoleto
31-Mar-19
2,109
552
1,557
–
Banca Popolare di Ancona (UBI group)
08-Apr-19
2,991
738
2,253
–
BNL
28-May-19
15,872
4,000
11,872
–
Banco Popolare
15- Jun-19
4,978
1,250
3,728
–
UniCredit
30- Jun-19
7,956
2,000
5,956
–
Cariparma
31-Dec-19
2,644
589
2,055
–
BNL
31-Dec-19
6,626
1,476
5,150
–
MPS
31-Mar-20
4,728
1,000
3,728
–
Intesa Sanpaolo
30- Jun-20
4,975
1,000
3,975
–
SMBC
31-Jul-15
5,839
5,839
–
–
BNP
08-Aug-15
1,825
1,825
–
–
CIC Lyonnaise de Banque
15-Apr-17
246
132
114
–
HSBC
01-Oct-17
188
84
104
–
77,436
22,539
54,897
–
Total non-current bank debt
72
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 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..
Loan
Reference date
Parameter
Unicredit
Annual (at 31st December)
Net financial position /
shareholders’ funds
<1.00
Unicredit
Annual (at 31st December)
Net financial position / EBITDA
<1.50
BNL
Annual (at 31 December)
Net financial position / EBITDA
<1.00
BNL
Annual (at 31 December)
Net financial position / equity
<0.75
Cassa di Risparmio di Parma
Annual (at 31st December)
Net financial position / EBITDA
<1.00
Cassa di Risparmio di Parma
Annual (at 31 December)
Net financial position / equity
<0.75
Banca Intesa
Annual (at 31st December)
Net financial position / equity
<1.00
Banca Intesa
Annual (at 31 December)
Net financial position / EBITDA
<1.50
UBI Banca
Annual (at 31st December)
Net financial position / equity
<1.00
UBI Banca
Annual (at 31 December)
Net financial position / EBITDA
<1.50
Unicredit
Annual (at 31st December)
Net financial position /
shareholders’ funds
<1.00
Unicredit
Annual (at 31st December)
Net financial position / EBITDA
<1.50
st
st
st
st
st
73
Limit
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Net debt
The following table sets out details of the Brunello Cucinelli Group’s net debt at 30th June 2015 together with
comparative figures at 31st December 2014:
30th June 2015
31st December 2014
(193)
(158)
B. Cash equivalents
(56,987)
(53,477)
C. Cash and cash equivalents (A)+(B)
(57,180)
(53,635)
(In thousands of Euro)
A. Cash
D. Current financial receivables
(96)
(44)
75,561
48,709
1,965
2,026
G. Current payables (E)+(F)
77,526
50,735
H. Net current debt (G) + (D) + (C)
20,250
(2,944)
I. Non-current bank debt
54,897
42,450
3,134
3,130
K. Net non-current debt (I)+(J)
58,031
45,580
L. Net debt (H) + (K)
78,281
42,636
E. Current bank debt
F. Other current financial payables
J. Other non-current payables
Comments on the above are provided in the report on operations.
NOTE 15. Non-current financial payables
Non-current financial payables amounted to € 2,832 thousand at 30th June 2015. Of this total, € 1,047 thousand
refers to the measurement of the put option for the purchase of the non-controlling portion of Brunello Cucinelli
(England) Ltd. and € 1,785 thousand to the loan taken out by the subsidiary Brunello Cucinelli Hong Kong with
the non-controlling shareholder .
NOTE 16. Other non-current liabilities
Other non-current liabilities at 30th June 2015 amounted to € 6,677 thousand compared to € 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.
74
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 17. Trade payables
The composition of trade payables at 30th June 2015 with comparative figures at 31st December 2014 is as follows:
30th June 2015
31st December 2014
Change
Trade payables to third party suppliers
59,823
62,185
(2,362)
Total trade payables
59,823
62,185
(2,362)
(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 18. Current bank debt
The composition of current bank debt at 30th June 2015 with comparative figures at 31st December 2014
is as follows:
30th June 2015
31st December 2014
Change
Current portion of long-term loans
22,539
28,314
(5,775)
Bank advances on bills and invoices
50,772
18,389
32,383
2,250
2,006
244
75,561
48,709
26,852
(In thousands of Euro)
Bank overdrafts and cash repayable on
demand
Total current bank debt
Bank advances refer to cash advanced on trade invoices for financing operating activities.
The current portion of long-term loans refers to the portion of bank loans falling due within 12 months.
NOTE 19. Current financial payables
Current financial payables at 30th June 2015 amount to € 1,596 thousand and mainly relate to the debt
for the purchase of 45% of SAS White Flannel (€ 1,500 thousand) and accrued expenses on outstanding
loans.
(In thousands of Euro)
30th June 2015
31st December 2014
Change
1,558
1,552
6
38
130
(92)
1,596
1,682
(86)
Current financial payables
Accrued loan interest
Total current financial payables
75
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 20. Tax payables
Tax payables at 30th June 2015 amounted to € 13,628 thousand, compared to € 1,152 thousand at 31st December
2014, of which € 6.3 million was paid in July 2015 in accordance with current legislation.
NOTE 21. Other current liabilities
The composition of other current liabilities at 30th June 2015with comparative figures at 31st December 2014 is as
follows:
(In thousands of Euro)
30th June 2015
31st December 2014
Change
Due to agents
4,642
5,459
(817)
Due to others
4,748
6,232
(1,484)
Due to employees
5,517
3,719
1,798
Social security payables
2,237
3,012
(775)
Due to the tax authorities for VAT
1,901
629
1,272
737
761
(24)
19,782
19,812
(30)
Accrued expenses and deferred income
Total other current liabilities
Other current liabilities consist of: (i) accrued commissions due by the Group to agents but not yet paid at the
balance sheet date, (ii) balances due to employees for June wages and salaries, paid during the first few days of
July, (iii) the accrual for vacation leave vested but not yet taken, (iv) social security charges on remuneration and
(v) amounts due to the tax authorities for VAT.
76
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 22. Taxation
DEFERRED TAX ASSETS AND LIABILITIES
The composition of deferred tax assets and liabilities at 30th June 2015, with comparative figures at 31st
December 2014, was as follows:
30th June 2015
31st December 2014
Change
Deferred tax assets
18,475
13,307
5,168
Deferred tax liabilities
(2,112)
(3,280)
1,168
(In thousands of Euro)
INCOME TAXES
The composition of the income tax charge in the consolidated income statement is as follows:
(In thousands of Euro)
30th June 2015
30th June 2014
Change
Current taxation
12,919
9,981
2,938
Net deferred tax (income)/expense
(6,122)
(2,598)
(3,524)
–
–
–
6,797
7,383
(586)
Prior year taxation
Income taxes in the consolidated income
statement
Income taxes in comprehensive income
(100)
(278)
178
Total income taxes
6,697
7,105
(408)
In accordance with paragraph 16A(c) of IAS 34 the Group has presented the most significant items of the Group’s
income tax charge, considering this information useful for an understanding of the total balance reported in the
condensed consolidated half-year financial statements.
77
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
5. COMMENTS ON THE MAIN ITEMS OF THE CONSOLIDATED INCOME
STATEMENT
NOTE 23. Revenues
The composition of revenues for the six months ended 30th June 2015 with comparative figures for the six months
ended 30th June 2014 is as follows:
(In thousands of Euro)
Net revenues
30th June 2015
30th June 2014
Change
200,332
175,811
24,521
316
1,219
(903)
200,648
177,030
23,618
Other operating income
Total revenues
Net revenues are earned from the sale of clothing and accessories of the Brunello Cucinelli Group.
Detailed comments may be found in the report on operations.
Net revenues may be analyzed by geographical area as follows:
Six months ended 30th June
(In thousands of Euro)
Italy
Change
2015
%
2014
%
2015 vs. 2014
2015 vs. 2014 %
646
1.8%
36,906
18.4%
36,260
20.6%
(1)
63,213
31.6%
60,048
34.2%
3,165
5.3%
North America (2)
69,692
34.8%
55,416
31.5%
14,276
25.8%
Europe
Greater China (3)
11,867
5.9%
10,367
5.9%
1,500
14.5%
Rest of the World (RoW) (4)
18,654
9.3%
13,720
7.8%
4,934
36.0%
200,332
100.0%
175,811
100.0%
24,521
13.9%
Total
(1) “Europe” refers to the member states of the European Union (excluding Italy), San Marino, Monaco, Switzerland, Liechtenstein, Norway, the Russian Federation,
the Ukraine, Turkey, Uzbekistan, Kazakhstan, Georgia, Serbia and Montenegro, Azerbaijan, Andorra, Armenia, Belarus and Romania.
(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.
Net revenues may be analyzed by distribution channel as follows:
Six months ended 30th June
(In thousands of Euro)
Change
2015
%
2014
%
2015 vs. 2014
2015 vs. 2014 %
Retail
84,768
42.3%
62,350
35.5%
22,418
36.0%
Wholesale monobrand
21,960
11.0%
21,833
12.4%
127
0.6%
Wholesale multibrand
Total
93,604
46.7%
91,628
52.1%
1,976
2.2%
200,332
100.0%
175,811
100.0%
24,521
13.9%
Reference should be made to the report on operations for comments on revenue performance.
78
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 24. Costs for raw materials and consumables
The composition of costs for raw materials and consumables for the six months ended 30th June 2015 with
comparative figures for the six months ended 30th June 2014 is as follows:
(In thousands of Euro)
30th June 2015
30th June 2014
Change
42,145
40,029
2,116
(12,952)
(11,813)
(1,139)
29,193
28,216
977
Costs for raw materials and consumables
Change in inventories
Total costs for raw materials and consumables
NOTE 25. Costs for services
The composition of costs for services for the six months ended 30th June 2015 with comparative figures for the
six months ended 30th June 2014 is as follows:
(In thousands of Euro)
30th June 2015
30th June 2014
Change
Outsourced work
43,253
42,526
727
Commissions and accessory charges
6,616
5,770
846
Advertising and other commercial expenses
9,641
9,046
595
Transport and duties
7,457
7,908
(451)
21,996
12,629
9,367
Credit card charges
1,573
1,196
377
Other general expenses
1,778
1,520
258
Miscellaneous consultancy
2,849
2,545
304
Directors’ and statutory auditors’ fees
1,058
893
165
Maintenance services
1,809
1,300
509
636
667
(31)
Lease expense
Insurance
Energy, telephone, gas, water, postal costs
Total costs for services
1,551
1,151
400
100,217
87,151
13,066
NOTE 26. Payroll costs
The composition of payroll costs for the six months ended 30th June 2015 with comparative figures for the six
months ended 30th June 2014 is as follows:
30th June 2015
30th June 2014
Change
28,189
22,696
5,493
Social charges
6,332
5,507
825
Employees’ termination indemnity
1,062
984
78
(In thousands of Euro)
Wages and salaries
Other payroll costs
373
210
163
Total payroll costs
35,956
29,397
6,559
79
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 27. Other operating costs
The composition of other operating costs for the six months ended 30th June 2015 with comparative figures for the six
months ended 30th June 2014 is as follows:
(In thousands of Euro)
30th June 2015
30th June 2014
Change
Taxes and duties
957
607
350
Membership subscriptions
133
106
27
Ordinary capital losses
Miscellaneous operating costs
Total other operating costs
35
35
–
987
524
463
2,112
1,272
840
NOTE 28. Own work capitalized
Own work capitalized amounting to € 558 thousand relates mainly to production costs incurred to develop the
historical collection. The balance for the six months ended 30th June 2014 was € 457 thousand.
NOTE 29. Depreciation and amortization
The composition of depreciation and amortization for the six months ended 30th June 2015 with comparative
figures for the six months ended 30th June 2014 is as follows:
(In thousands of Euro)
30th June 2015
30th June 2014
Change
2,352
2,373
(21)
Amortization of intangible assets
Depreciation of property, plant and equipment
6,180
3,949
2,231
Total depreciation and amortization
8,532
6,322
2,210
The increase in depreciation is in line with the investments made by the Group.
NOTE 30. Impairment of assets and other allocations
Impairment of assets and other allocations (€ 344 thousand in the first half of 2015 and € 833 thousand in the first
half of 2014) relate to allocations to the allowance for doubtful debts and the agents’ supplementary termination
indemnity provision.
80
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
NOTE 31. Financial expense
The composition of financial expense for the six months ended 30th June 2015 with comparative figures for the
six months ended 30th June 2014 is as follows:
30th June 2015
30th June 2014
Change
Mortgage loan interest
544
438
106
Interest expense on advances and discounting
invoices
322
411
(89)
72
61
11
Realized exchange losses
9,386
1,088
8,298
Unrealized exchange losses
7,275
555
6,720
568
143
425
(In thousands of Euro)
Bank interest
Financial expense on derivative financial
instruments
Miscellaneous financial expense
Total financial expense
94
340
(246)
18,261
3,036
15,225
NOTE 32. Financial income
The composition of financial income for the six months ended 30th June 2015 with comparative figures for the six
months ended 30th June 2014 is as follows:
(In thousands of Euro)
30th June 2015
Bank interest
Realized exchange gains
Unrealized exchange gains
Financial income on derivative financial
instruments
Miscellaneous income
Total financial income
30th June 2014
Change
185
275
(90)
13,702
1,141
12,561
1,757
295
1,462
34
15
19
41
22
19
15,719
1,748
13,971
NOTE 33. Basic and diluted earnings per share
Basic earnings per share was calculated by dividing net income for the six months attributable to the ordinary
shareholders of the Brunello Cucinelli Group by the weighted average number of outstanding ordinary shares during
the period.
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.
81
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
The following table sets out net income and the information on shares used to calculate basic and diluted earnings
per share:
30th June 2015
30th June 2014
17,449
16,618
Number of ordinary shares at the end of the period
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)
0.25660
0.24438
Diluted earnings per share (Euro)
0.25660
0.24438
Net income attributable to owners of the parent (thousands of Euro)
NOTE 34. 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 30 th June 2015 compared with the situation at 30 th June 2014
is as follows:
30th June 2015
30th June 2014
Change
Assets with third parties
21
32
(11)
Total commitments and risks
21
32
(11)
(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.
OTHER INFORMATION
SEGMENT INFORMATION
For the purposes of IFRS 8 Operating Segments the Group’s business is conducted in a single operating
segment which consists of the creation, development and productions of products bearing the “Brunello
Cucinelli” brand name.
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.
82
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
Details of the Brunello Cucinelli Group’s transactions and balances with related parties as of and for the six
months ended 30th June 2015 are as follows:
(In thousands of Euro)
Net
revenues
Other Costs for raw
materials
operating
income
MO .AR .R . S .n .c .
12
Costs for Payroll costs
services
89
Giovannino Cucinelli
AS .VI .P .I .M . Gruppo Cucinelli
1
3
Società Agricola Semplice Solomeo
2
307
8
180
Total related parties
Total consolidated financial
statements
Proportion %
7,649
141
4,362
49
3
5
32
1
498
21
2
2
6
4
Socrate S.r.l.
Brunello Cucinelli family
Trade
payables
1
Bartolomeo S.r.l.
Fondazione Brunello Cucinelli
Trade
receivables
270
ASD Castel Rigone
Fedone S.r.l.
Other
Property,
plant and non-current
financial
equipment
assets
181
2
30
145
6
19
12
1,032
145
12,510
32
7
243
200,332
316
29,193
100,217
35,956
90,376
5,785
64,913
59,823
0.00%
6.01%
0.04%
1.03%
0.40%
13.84%
0.55%
0.01%
0.41%
More specifically:
– MO.AR.R. S.n.c.: business transactions with MO.AR.R. S.n.c., of which Enzo Cucinelli, Cav Lav. Brunello
Cucinelli’s brother, holds 50% of the capital, regard: (i) purchases of decorating materials used for fitting out
exhibitions and fairs and (ii) capital expenditure for the furnishing of the new stores and offices;
– Giovannino Cucinelli: Giovannino Cucinelli is Cav. Lav. Brunello Cucinelli’s brother. Costs for services
include expenses for the installation, maintenance and routine repair of plumbing and air conditioning systems;
expenditure incurred for the installation and extraordinary maintenance of these systems are capitalized in
property, plant and equipment;
– AS.VI.P.I.M. Gruppo Cucinelli: the association conducts surveillance of all of the facilities located in Solomeo
and used by the Group for its business. Cav. Lav. Brunello Cucinelli and the Group are both members;
– Fedone S.r.l.: in December 2014 the company completed a merger with the direct subsidiary Parmenide S.r.l.
and accordingly Fedone S.r.l. took over the lease agreement for the two buildings situated in Solomeo;
– Bartolomeo S.r.l.: this company, formed in 2011, whose shareholders are Fedone S.r.l. and Cav. Lav. Bru¬nello
Cucinelli, provides gardening and ordinary maintenance services to the Group;
– Fondazione Brunello Cucinelli: other operating income includes the rentals for the Theatre and the
Accademia;
– 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.
83
HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
SIGNIFICANT SUBSEQUENT EVENTS
Reference should be made to the report on operations for significant events occurring after the reporting date
of these condensed consolidated financial statements.
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. and its direct and indirect subsidiaries for the six months ended 30th June 2015 amounted to
€ 456 thousand.
The accrued compensation relating to the Board of Statutory Auditors of Brunello Cucinelli S.p.A. for the six
months ended 30th June 2015 amounted to € 101 thousand.
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 capital solvency.
The Brunello Cucinelli Group is exposed to various types of financial risk 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.
INTEREST RATE RISK
It is the Company’s policy to cover the exposure of the medium- and long-term portion of its debt to market risk arising
from interest rate changes. To manage such risk, the Company uses derivative instruments such as interest rate swaps
(in some cases with caps).
CURRENCY RISK
The Company is exposed to changes in the exchange rates for currencies (primarily the US dollar) in which sales
are made to affiliates and third-party customers. This risk exists from the possibility that the equivalent amount
of revenues in Euro may decrease in the event of adverse fluctuations in the exchange rate, thereby reducing the
desired margin.
To limit its exposure to exchange rate risk deriving from its business activities, the Brunello Cucinelli Group
stipulates derivative contracts (forward currency sale contracts) that predefine the conversion rate or a range of
conversion rates at future dates.
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The forward contracts are stipulated when seasonal price lists in foreign currency are defined, basing these on
estimated sales and considering the expected collection date of the sales invoices as the expiration date of the
contract. Specifically, the Company sets its selling prices in Euro and calculates the corresponding prices in
US dollars by applying the forward exchange rate.
LIQUIDITY RISK
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 shortterm balance of its treasury and to avoid criticalities and strains of available cash.
CREDIT RISK
Credit risk regards the Company’s exposure to potential losses deriving from a default by third parties of their
obligations.
The Brunello Cucinelli Group’s exposure to commercial credit risk refers only to sales made to the wholesale
multibrand channel and to the wholesale monobrand channel, as the remaining turnover refers to sales made in the
retail channel where payment is in cash or by credit or debit card.
The Brunello Cucinelli Group generally prefers to do business with customers with whom it has solid, long-term
relations. When customers request extended payment terms, it is the Company’s policy to conduct a credit check by
obtaining information from specialized agencies and studying and analyzing data on the performance of established
customers. In addition, the receivables balance is constantly monitored during the year in order to guarantee timely
action and to reduce the risk of losses.
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
Chairman of the Board of Directors and CEO
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CERTIFICATION PURSUANT TO 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.,
certify the following, taking into account the provisions of article 154-bis, paragraphs 3 and 4 of Legislative
Decree no. 58 of 24th February 1998:
• the adequacy in relation to the characteristics of the business and
• the effective application of the administrative and accounting procedures for the preparation of the
condensed consolidated half-year financial statements during the first half of 2015.
2. No significant matters arose from applying the administrative and accounting procedures for the preparation
of the condensed consolidated financial statements at 30th June 2015.
3. We also certify that:
3.1The condensed consolidated financial statements:
a) have been prepared in accordance with the international accounting standards approved by the
European Community pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and
of the Council of 2002;
b) agree with the balances on the books of account and the accounting records;
c) provide a true and fair view of the financial position of the issuer and the set of companies included
in the consolidation and of the results of their operations and their cash flows.
3.2The interim report on operations includes a reliable analysis of the key events that took place during the
first six months of the year and their impact on the condensed consolidated half-year financial statements,
together with a description of the main risks and uncertainties for the remaining six months. The interim
report on operations also includes a reliable analysis of the information on significant related party
transactions.
26th August 2015
Cav. Lav. Brunello Cucinelli
Chairman of the Board of Directors
and Managing Director
Moreno Ciarapica
Manager in charge of preparing the
corporate accounting documents
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HALF-YEAR FINANCIAL REPORT AT 30TH JUNE 2015
REVIEW REPORT OF THE AUDITORS ON THE CONDENSED CONSOLIDATED
HALF-YEAR FINANCIAL STATEMENTS
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