2014 - Annual Report

Transcription

2014 ANNUAL REPORT
General Information
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General Information
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Table of Contents
Table of Contents
GENERAL INFORMATION ......................................................................................................................................... 5
CORPORATE BOARDS AND AUDITORS ..................................................................................................................................7
SHARE CAPITAL AND OWNERSHIP.........................................................................................................................................8
MARCOLIN GROUP STRUCTURE AS AT DECEMBER 31, 2014............................................................................................10
MARCOLIN GROUP STRUCTURE AS AT MARCH 27, 2015...................................................................................................11
THE MARCOLIN GROUP ........................................................................................................................................................12
THE GROUP'S FINANCIAL HIGHLIGHTS................................................................................................................................13
GROUP REPORT ON OPERATIONS ...................................................................................................................... 17
BUSINESS PERFORMANCE ...................................................................................................................................................17
INCOME STATEMENT HIGHLIGHTS.......................................................................................................................................25
SALES REVENUES..................................................................................................................................................................27
STATEMENT OF FINANCIAL POSITION HIGHLIGHTS ...........................................................................................................32
MARCOLIN S.P.A. REPORT ON OPERATIONS ..................................................................................................... 41
INCOME STATEMENT HIGHLIGHTS.......................................................................................................................................42
SALES REVENUES..................................................................................................................................................................43
STATEMENT OF FINANCIAL POSITION HIGHLIGHTS ...........................................................................................................47
SUBSIDIARIES AND JOINT VENTURES .................................................................................................................................51
ASSOCIATES ...........................................................................................................................................................................55
MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP AND THE COMPANY ARE EXPOSED..................................57
OTHER INFORMATION ...........................................................................................................................................................60
SUBSEQUENT EVENTS AND BUSINESS OUTLOOK ............................................................................................ 67
NOTICE OF CALLING TO GENERAL MEETING ..................................................................................................... 69
PROPOSED RESOLUTION ..................................................................................................................................... 70
CONSOLIDATED FINANCIAL STATEMENTS OF THE MARCOLIN GROUP ......................................................... 71
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ....................................................................................................73
INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME ..........................................................................74
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY.....................................................................................................75
CONSOLIDATED STATEMENT OF CASH FLOWS .................................................................................................................76
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ...............................................................................................77
ANALYSIS OF CONSOLIDATED FINANCIAL POSITION.........................................................................................................97
INDEPENDENT AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS ........................................... 125
MARCOLIN S.P.A FINANCIAL STATEMENTS. ..................................................................................................... 127
STATEMENT OF FINANCIAL POSITION ............................................................................................................................... 129
INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME ........................................................................ 130
STATEMENT OF CHANGES IN EQUITY ............................................................................................................................... 131
STATEMENT OF CASH FLOWS ............................................................................................................................................ 132
NOTES TO THE SEPARATE FINANCIAL STATEMENTS ...................................................................................................... 133
INDEPENDENT AUDITORS' REPORT ON THE SEPARATE FINANCIAL STATEMENTS .................................................... 173
BOARD OF STATUTORY AUDITORS' REPORT ................................................................................................................... 177
RECLASSIFIED FINANCIAL STATEMENTS OF SUBSIDIARIES ......................................................................... 182
SIGNIFICANT RESOLUTIONS PASSED AT GENERAL MEETING ...................................................................... 193
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Marcolin Group
GENERAL INFORMATION
MARCOLIN S.p.A.
Headquarters, Executive Management
and Business Offices in
Z.I. Villanova, 4
32013 Longarone (Belluno)
Share Capital Euro 32,312,475.00 Fully Paid In
R.E.A n. 64334
Tax and Companies Register
n. BL 01774690273
VAT n. 00298010257
Single-Member Company
Tel +39.0437.777111
Fax +39.0437.777282
www.marcolin.com
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Marcolin Group
CORPORATE BOARDS AND AUDITORS
Board of Directors
1
Vittorio Levi
Giovanni Zoppas
Antonio Abete
Francesco Capurro
Cirillo Coffen Marcolin
Roberto Ferraresi
Violaine Odile Marie Grison
Emilio Macellari
Frédéric Jaques Mari Stévenin
Franck Raymond Temam
Raffaele Roberto Vitale
Board of Statutory Auditors
1
Chairman
Acting Auditor
Acting Auditor
Alternate Auditor
Alternate Auditor
David Reali
Mario Cognigni
Diego Rivetti
Alessandro Maruffi
Rossella Porfido
Internal Audit Committee
2
Chairman
Internal Auditor
Internal Auditor
Vittorio Levi
Roberto Ferraresi
Supervisory Body
Chairman
C.E.O. and General Manager
Director
Director
Director
Director
Director
Director
Director
Director
Director
2
Chairman
Supervisor
Supervisor
Federico Ormesani
David Reali
Independent Auditors
3
PricewaterhouseCoopers S.p.A.
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1 Term of office ends on the date of the Shareholders’ Meeting called to approve the annual financial statements for the year ended December 31, 2015
(according to Shareholders’ Resolution of April 30, 2013).
2 Board of Directors' appointment of April 30, 2013.
3 Term of engagement: 2013, 2014 and 2015 (according to Shareholders’ Resolution of April 30, 2013).
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General Information
SHARE CAPITAL AND OWNERSHIP
In 2013 Marcolin S.p.A. ("Marcolin") and the direct parent company, Cristallo S.p.A. ("Cristallo"), a company
indirectly controlled by investment funds managed by PAI Partners, were involved in a reverse merger whereby
Cristallo was incorporated into Marcolin.
In December 2012 Cristallo purchased from Marcolin's former shareholders 48,842,131 shares representing
78.601% of Marcolin S.p.A.'s share capital, for a price of 4.25 euros per share (with a total payment of euro
207,579,057), financed with a short-term credit facility (for euro 87,500,000) and equity for euro 160,740,000
(from the financial resources made available by the sole shareholder, Marmolada S.p.A., through the subscription
and payment of two subsequent capital increases with additional paid-in capital).
As a result of the change of control, since Marcolin was listed on the electronic share market (Mercato Telematico
Azionario - MTA) segment of the Italian stock exchange, Cristallo had to launch a mandatory full public tender
offer ("Offer") under Legislative Decree 58/1998 ("T.U.F." Consolidated Finance Act) Articles 102 and 106, first
paragraph, as subsequently integrated and amended, and under the Issuers' Regulations, for a maximum of
13,297,244 ordinary Marcolin shares representing 21.399% of Marcolin S.p.A.’s share capital (the offering
prospectus was approved with Consob Resolution n. 18421 of December 21, 2012).
The acceptance period began on January 7, 2013 and ended on February 1, 2013. On the closing date of the
Offer, 10,367,974 shares (corresponding to 77.971% of the public offer and 16.685% of the subscribed paid-in
share capital of Marcolin) were tendered.
Those shares, added to the Marcolin shares already owned by Cristallo S.p.A. and the treasury shares (681,000,
corresponding to 1.096% of capital), resulted in Cristallo owning 59,891,105 shares, equal to 96.382% of the
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Issuer's share capital, on the Offer payment date of February 8, 2013.
Therefore, under Consolidated Finance Act Article 108, first paragraph, the legal conditions were present for the
obligation to buy, and right to buy, the remaining 2,248,260 outstanding shares not tendered into the Offer,
corresponding to 3.618% of the Issuer's share capital.
In accordance with the offering memorandum and the notice published on February 7, 2013, and in compliance
with Article 41, paragraph 6 of CONSOB's Issuer Regulations, the Bidder applied the joint procedure to execute
the obligation to buy and the right to buy, and thus to buy the remaining Marcolin shares, for a total joint
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procedure price of euro 9,555,147.50.
As a result of those events, Cristallo owned 100% of Marcolin's share capital. Therefore, under Borsa Italiana
Provision n. 7645 of February 7, 2013, the delisting of the Issuer's shares from the electronic share market was
arranged for February 14, 2013.
Cristallo financed the procedure (for euro 53,619,037) with liquid resources of euro 29,669,093 and additional
equity of euro 27,300,000, again made available by the sole shareholder, Marmolada S.p.A., through another
capital increase.
During the year, procedures for the merger of Cristallo into Marcolin commenced within the scope of an extensive
reorganization and optimization plan for the business, industrial and strategic purposes of the Group of which
Cristallo and Marcolin are part. In contrast to a direct merger, the reverse merger enabled Marcolin to retain its
own business and legal relationships, with significant savings in terms of costs and organizational demands.
The main objective of the merger, which was part of the reorganization and restructuring plan described in the
public offering prospectus, was to shorten the chain of command in order to improve flexibility and operational
efficiency, reduce corporate and administrative expenses, and rationalize the financial indebtedness involving the
Group companies, and thus achieve greater financial stability.
The merger, expressly required under financing agreements, was a condition for the medium/long-term credit
facilities foreseen under the Senior Term and Revolving Facilities Agreement of October 14, 2012, as those credit
facilities could be issued solely upon the effective completion of the merger.
Since Cristallo used bank loans to finance the original acquisition of Marcolin (indebtedness that was assumed by
the surviving company), the merger is legally defined as a "merger as a result of acquisition with debt", so the
procedures set forth in Italian Civil Code 2501-bis and 2501-quinquies were followed.
On June 26, 2013, Marcolin S.p.A.'s Board of Directors presented the plan of merger through absorption of
Cristallo S.p.A. into Marcolin S.p.A., and the Directors' Report on the merger plan prepared in accordance with the
Italian Civil Code; on July 8, 2013 Marcolin's Extraordinary General Meeting approved the merger plan as well as
new By-Laws that used the current text of the absorbed entity.
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The price of euro 4.25 per share corresponds to the contractual value of Marcolin's shares for Cristallo's acquisition in December 2012.
Since this procedure follows a mandatory public tender offer, in compliance with Consolidated Finance Act Article 108, third paragraph, the price
offered for each remaining share was the public offer price, i.e. euro 4.25 for each of the remaining outstanding shares.
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Marcolin Group
The deed of merger was stipulated on October 28, 2013 and became effective for tax, accounting and legal
purposes on the same date.
The merger took place by assigning the shares of the surviving company, originally owned by the absorbed entity
(98.9% of the share capital), to Marmolada S.p.A., Cristallo's sole shareholder. Since the remaining 1.1%
consisted of treasury shares, the transaction did not require any swap ratio.
The merger resulted in the cancellation of all Cristallo's shares, as the Marcolin shares were assigned to the sole
shareholder, Marmolada, except for the treasury shares, which were canceled at the end of October.
The Extraordinary General Meeting of October 31, 2013 canceled the 681,000 treasury shares owned by Marcolin
by transferring the nominal value directly to the sole Shareholder, and eliminating the nominal value of the
Company's shares in accordance with Italian Civil Code Article 2436, paragraphs 2 and 3.
*****
As a result of the merger, on December 31, 2013 the Parent Company's share capital was euro 32,312,475.00,
fully paid-in, comprised of 61,458,375 ordinary shares, without par value. On that date the share capital was
wholly owned by the sole shareholder, Marmolada S.p.A., a single-member company based in Milan.
After the above-described transactions, Marcolin shares retained normal dividend rights and they continue to be
encumbered by liens (previously claimable by the Financing Banks).
At the end of 2013, Marcolin issued bond notes, secured by collateral for the same amount of the obligations
assumed with the bondholders, including a lien on the shares of the Issuer, Marcolin, representing 100% of share
capital. This transaction and the related guarantees are described herein.
No changes occurred as at December 31, 2014 that changed the composition of equity, which therefore is in line
with the equity composition reported at December 31, 2013.
*****
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General Information
MARCOLIN GROUP STRUCTURE AS AT DECEMBER 31, 2014
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Marcolin Group
MARCOLIN GROUP STRUCTURE AS AT MARCH 27, 2015
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General Information
THE MARCOLIN GROUP
Marcolin, a well-established company based in Longarone (Belluno) in the Italian eyewear district, is a
designer, manufacturer and distributor of eyewear products. As a renowned leader in the global
eyewear business, Marcolin stands out for its premium quality products, design skills, production
capabilities, attention to detail and first-rate distribution.
In 2014 the Marcolin group sold an estimated 15 million pairs of eyeglasses and sunglasses
worldwide, with sales exceeding euro 360 million.
At the end of 2013 Marcolin acquired the Viva International group (hereinafter also “Viva”), one of the
most important international eyewear groups, by acquiring from the American group HVHC Inc. a
100% stake in Viva Optique, Inc. (the group's parent company based in New Jersey, with branches in
New York and Miami).
The Viva International group, with some 8.5 million eyewear items sold, 300 employees and sales of
nearly $190 million dollars (55% of which in the United States), was the ninth largest eyewear
company in the world and the second largest in the United States, where it had an especially strong
position in the “vision” segment.
With a network of more than 160 agents operating on the American market and a brand portfolio that
included Guess, Guess by Marciano, Gant, Harley Davidson, and other brands targeted specifically to
the U.S. "diffusion" market, Viva controlled affiliates in major countries of strategic interest (with
subsidiaries in France, the United Kingdom, Hong Kong and Brazil, and partnerships in Mexico,
Australia and Germany).
In 2014 Marcolin successfully moved forward with the Viva integration plan, which entailed
reorganizing distribution networks on an international scale, reviewing logistic flows, improving the
efficiency of business structures in the countries present, and consequentially revising the cost
structures. Those activities were completed according to schedule in the initial months of 2015;
currently the rationalization of the corporate structure is being completed, after which the Group's
structure will be definitive.
Thanks to Viva's products and markets complementing those of the Marcolin group, Viva integration
has improved Marcolin's standing as a highly global eyewear company in terms of its brand portfolio,
products, geographic presence and markets.
In 2014, combined with Viva, the Marcolin group had sales exceeding euro 360 million and some
1,500 employees (including 570 in the American affiliates), plus a widespread, well-structured network
of independent agents.
Today Marcolin has a strong brand portfolio, with a good balance between luxury and mainstream
("diffusion") products, men's and women's products, and eyeglass frames and sunglasses.
The luxury segment includes glamorous fashion brands such as Tom Ford, Tod’s, Balenciaga,
Roberto Cavalli, Montblanc and the recent additions Zegna, Agnona and Pucci (whose distribution will
commence in 2015); the diffusion segment includes Diesel, Swarovski, DSquared2, Just Cavalli,
Timberland, Cover Girl, Kenneth Cole New York and Kenneth Cole Reaction.
Viva International has added to this portfolio the brands Guess, Guess by Marciano, Gant, Harley
Davidson, and other brands targeted specifically to the U.S. market.
The house brands are WEB, National and Marcolin.
The Viva acquisition has bolstered Marcolin’s distribution capacity on the American market. The Group
is now present in all major countries across the world through direct affiliates, partnerships (joint
ventures) and exclusive distribution agreements with major players.
*****
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Marcolin Group
THE GROUP'S FINANCIAL HIGHLIGHTS
Sales revenues by geographical area (destination market)
2014
2013
Pro Forma *
Sales and adjusted EBITDA (euro/millions)
excluding non-current costs incurred for extraordinary transactions
Equity (euro/millions)
Net financial debt (euro/millions)
* with a constant perimeter, including the Viva group for 12 months
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General Information
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Marcolin Group
GROUP
REPORT ON OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2014
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Report on operations for the year ended December 31, 2014
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Marcolin Group
GROUP REPORT ON OPERATIONS FOR THE YEAR ENDED DECEMBER 31,
2014
Consistently with previous periods, the Annual Financial Report for the year ended December 31,
2014 (which includes the consolidated financial statements of the Marcolin group and the separate
financial statements of Marcolin S.p.A.) was prepared in conformity with the valuation and
measurement criteria established by the international accounting standards (IAS/IFRS) adopted by the
European Commission with Regulation 1606/2002, Article 6, of the European Parliament and of the
Council of July 19, 2002 on the application of international accounting standards, and with the
measures enacting Legislative Decree n. 38/2005.
BUSINESS PERFORMANCE
The eyewear industry
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Global economic growth accelerated at the end of summer and beginning of fall, driven by the United
States and China in particular. However, the advanced economies of the euro area, lacking the
structural reforms to promote growth and employment, remained on the brink of a recession
accompanied by deflation.
Italy's economy remained stable, although with very low domestic demand and production.
Thanks to exports, which reached new records near the end of the year assisted by a stronger U.S.
dollar and low oil prices, Italian eyewear production grew by 9.4% from 2013.
Exports of eyeglass frames, sunglasses and lenses rose by 11.8% year on year, a record high.
This positive trend affected primarily large companies, which are better structured to seize
opportunities quickly, whereas small and medium enterprises (SMEs and craft enterprises) benefited
to a lesser extent, as they require more effort to cope with the difficult situation due to inherent
limitations mainly related to their size, and are less organized and flexible with respect adapting to
market changes.
Overall, in 2014 the number of businesses remained the same as that of the previous year; for every
business that closed down, a new business entered the market, demonstrating renewed vitality in the
industry.
Employment rose by an annual 2.3% (excluding employees with temporary contracts).
In fact, the eyewear industry is experiencing a reshoring phenomenon, i.e. manufacturing activities are
returning to Italy: in reaction to the inflation in China but also stimulated by the need to be closer to the
market with greater manufacturing flexibility, and to meet the demands expressed by the clientele for
high-end, prestigious, high-quality products made in Italy.
In this record year for Italian eyewear exports, both Europe and the United States were experiencing
full recovery for the second year in a row.
Europe, which had good results in 2013 only for some countries, presents some important
turnarounds (Spain, Portugal, Greece), with resumed growth for eyewear exports. Europe remains the
major export market, accounting for nearly 50% of the total and having double-digit annual growth.
Exports to the United States, which account for nearly 30% of the total, had nearly double-digit growth
(9.6%) for both eyeglass frames and sunglasses. Exports to North America increased by practically
13%.
Exports to Asia, up by 15% from 2013, had the highest growth.
Although the levels remain low, Italian eyewear exports to emerging markets remain positive, both in
the established eyewear markets and in "new" markets, in the context of a continuously evolving
global scenario.
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Source: ANFAO – Associazione Nazionale Fabbricanti Articoli Ottici (Italian Association of Eyewear Article Manufacturers) – Annual Report
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*****
Introduction
In the above-described scenario, 2014 was for Marcolin a year of important events and extraordinary
transactions that impacted the corporate and organizational aspects of the Group, and which were
reflected in the annual financial and business performance.
During the year Marcolin implemented its plan to integrate the Viva International group, acquired at the
end of 2013 through Marcolin USA with a 100% stake in the group's parent company, Viva Optique,
Inc.
The Viva group integration process was immediately initiated in early 2014, beginning with the
rationalization and consolidation of the business on an international level (distribution and logistics in
primis), and proceeding with the organizational and corporate restructuring, accompanied by a
revision of cost structures.
The integration plan entailed incurring non-recurring costs, but the operational and cost synergies that
had been identified at the time of the Viva acquisition were effectively realized. Currently, the
synergies are estimated to arrive at euro 10 million annually, some of which were already realized in
2014.
The integration plan is concluding in the initial months of 2015, perfectly on schedule.
In addition, some important investments were made in 2014, especially in products and the brand
portfolio but also in the area of distribution and organization.
Activities to develop the license portfolio resulted in the announcement of new agreements with
important groups in the luxury segment (Zegna, Agnona, Pucci) and the relaunching of Web, the
house brand, which played a significant role in the comeback of the domestic market.
Additional activities were carried out to develop new markets, including through partnerships under
joint-venture agreements (in China, Russia and Northern Europe).
Due to their scale, such transactions, particularly those referring to Viva integration, impacted
significantly the results of operations of the companies involved. For this reason, the annual
performance is presented along with the Group's normalized results, i.e. those excluding the nonrecurring costs incurred in the year, including in the comparison with the previous year.
Moreover, due to the need to present homogeneous data for the two years, pro-forma information
consolidating the Viva group for 12 months is provided for 2013 in order to provide comparability with
the same consolidation perimeter of 2014 ("pro-forma" shall mean Viva International for 12 months).
*****
Viva integration
On the path of growth pursued by Marcolin, Viva integration has turned the Group into a true global
player by expanding its scale, geographical presence, brand portfolio and product range.
The complementarity of the brands managed, completion of the "diffusion" product range and the
balance achieved between men's and women's products and between eyeglass frames and
sunglasses are among the strategic factors behind the important acquisition. Moreover, Viva's strong
presence in the overseas market has made Marcolin stronger in North America by enabling it to cover
one third of the market, while maintaining a focus on the Far East and Europe.
Thanks to the complementarity of the reciprocal distinctive characteristics and expertise, the Viva
acquisition and integration has created an important, globally competitive eyewear company: by
bringing its know-how and background to a wider scale, Marcolin offers significant added value to the
market in terms of both product range and global distribution.
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Marcolin Group
Integration of the Viva group was one of the most important projects carried out in 2014, and is now
practically concluded. In early 2015 the final operations planned in the United States will be carried
out, ending the rationalization of the distribution network, logistics, cost structure and organizational
and corporate structures.
The timetable being observed will enable important synergies to unfold within the Marcolin group
starting in 2015; at least in the countries in which integration was first implemented, some synergies
were already achieved near the end of 2014, and account for some euro 3.6 million.
Now that the integration process is almost finished, the synergies are exceeding those originally
budgeted, and are estimated to reach euro 10 million.
The synergies derive from rationalization of the organizational and corporate structures, including
logistics, but also from opportunities ensuing from the integration of the sales and distribution networks
on an international scale.
During the year activities planned to integrate the foreign affiliates of Marcolin and Viva in countries in
which both groups already existed were carried out, beginning with the strategic affiliates in North
America, the United Kingdom and Hong Kong, and then in France and Brazil in the second half of
2014.
In early 2014, Marcolin had already separated the key functions that had been centered at the
organization of the former shareholder, HVHC, Inc.
As noted, the plan to rationalize the sales force was implemented in the United States first, and was
continued throughout the first half of 2014. The plan to integrate information technology processes and
systems, necessary for the achievement of the planned synergies, was immediately begun with the
assistance of international collaborators.
The reorganization process then involved all countries in which companies of both the Viva group and
the Marcolin group co-existed, in the order of Far East countries, the United Kingdom, France, Brazil
and South American countries.
In July a new company structure was set up in Hong Kong, with the objective of combining the
distribution of Marcolin and Viva products through a new organization operating directly in the Far
East.
That organization, established in July 2014 through a transfer of Viva Hong Kong's operating
business, was the object of a subsequent business transfer by Marcolin S.p.A., which continued to
serve the Asian market directly until the end of the year, when it transferred the entire Asia Pacific
Distribution business to the new structure (taking effect on January 1, 2015).
Due to a sales decline that prevented it from breaking even, Viva Hong Kong had accumulated losses
and was burdened by some impaired accounts (referring to the Australian joint venture and associate
Viva Brazil) and some pending disputes.
Within the scope of the complex organizational and corporate restructuring process required for
Viva/Marcolin integration, it was considered opportune to identify and carve out the viable operating
division of Viva Hong Kong, and transfer it to the newly established Hong Kong branch of Marcolin UK
Ltd. The transfer took place at the beginning of July.
After absorbing the business division relating to Viva products, the Hong Kong branch's mission
included the distribution of Marcolin products in the same areas of the Far East, with clear advantages
in terms of economies of scale and cost and top -line synergies.
In fact, previously Marcolin S.p.A., which used to distribute its products directly in the Far East, had to
import the products into Italy to the logistical center in Longarone and then send them out again to
clients and distributors in Asia, a costly and time-consuming process.
Instead the Hong Kong branch sources directly from Chinese suppliers thanks to the size and scale
achieved, thereby saturating overheads by distributing into outlying markets autonomously and fully
exploiting the cost benefits arising on operational gearing to improve sales.
The transactions made it possible to create the Group's third sales hub, due to the critical mass
represented by the sales of Marcolin and Viva brands, enabling to invest in structures and means to
better penetrate markets cost-effectively as a result of the streamlining and synergies realizable from
the new size.
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Afterward, in order to adapt to the Marcolin group's sales and logistical organization, the operational
divisions of Viva Eyewear UK Ltd (domestic and international distributor of Viva products) were
transferred to Marcolin UK Ltd (domestic market) and Marcolin S.p.A. (international market for
distribution to Italy, the rest of Europe, and the other non-EU countries to which Viva UK had
exported).
The business transfers, which took place at the beginning of September, considerably downsized the
U.K. company (which retained only some non-operating activities), whose operating structures
became redundant, allowing to realize the cost synergies planned. Activities formerly performed by
Viva UK are now carried out by Marcolin UK and Marcolin S.p.A., with minimum costs compared to
before the transfer.
In early 2015, as part of the reorganization, the business division dealing with distribution of Marcolin
products in South America (excluding Brazil) was transferred from the former Marcolin USA, Inc. (now
Marcolin USA Eyewear, Corp.) to Marcolin S.p.A. The transfer completed the redistribution of
international markets in accordance with the Group's plans for the geographical hubs and a new sales
organization.
The transactions described above (Marcolin S.p.A.'s acquisition of the “international” business division
and Marcolin UK Ltd's acquisition of the “domestic” division, and the transfer of the “Asia Pacific
Distribution” division from Marcolin S.p.A. to subsidiary Marcolin UK Ltd) are linked, being part of a
plan to reorganize and establish three geographical hubs (Europe, USA and Far East), from which the
Group may benefit from considerable cost and top-line synergies (the latter of which are difficult to
quantify in advance).
*****
Concerning the French market, on October 31, 2014 Marcolin France Sas acquired Viva France Sas
(formerly owned by Viva Eyewear UK Ltd), the distributor of Viva products in France.
This transaction, a step toward the subsequent merger of Viva into Marcolin France (by way of the
“dissolution sans liquidation” of Viva France and “trasmission universelle du patrimoine de Viva France
à Marcolin France”, effective on January 1, 2015), had the stated objective of reducing and
streamlining the structures and related costs by integrating the two businesses into one organization
with a sole management, in order to manage, including prospectively, the related market more
efficiently and effectively.
Through the merger, the operations, assets and liabilities of the absorbed company continue to
survive in the acquirer.
A similar transaction took place in Brazil, where two identical sales organizations existed, one for the
distribution of Marcolin products (Marcolin do Brasil Ltda) and the other for the distribution of Viva
products (Viva Brasil Comercio Produtos Opticos Ltda).
In this case as well, after Marcolin do Brasil acquired all Viva Brasil shares (at the end of December), it
initiated a merger to absorb such company (which took place on January 1, 2015).
Similarly to the French market, in Brazil the business management was assigned to a newly appointed
manager with extensive experience in the eyewear industry, in order to fully exploit cost and top-line
synergies that only full integration of the two structures would allow.
*****
As noted, in North America integration started immediately with the sales organization and
rationalization of the sales force, with the objective of reassigning products and markets according to a
single, coordinated logic in order to optimize the distribution of Marcolin and Viva products.
In October the switch to a new SAP system (Group ERP) was completed, which resulted in the full
replacement of the information systems formerly used by Viva, and operating procedures and
processes were revised in the light of the larger Group.
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Marcolin Group
On January 1, 2015 the corporate restructuring was in effect by way of the dissolution and absorption
of American companies Marcolin USA, Inc., Viva Europa, Inc., Viva International, Inc. and Viva IP,
Corp. into Viva Optique, Inc. (the effective time and date of the merger was as of the close of business
on December 31, 2014). Viva Optique's name was changed to Marcolin USA Eyewear, Corp.
A plan to streamline the logistics structures in North America, which will reduce the number of plants
currently operating, is being developed. When the Scottsdale, Arizona location is closed down, the
U.S. market will be served by the establishment in Somerville, New Jersey. In 2015, the operations of
Viva Canada will be evaluated to complete the organizational and corporate rationalization process.
*****
Once Viva and Marcolin are fully integrated, the Group's business operations will be concentrated into
three geographical hubs:
• the U.S. hub, directed by Marcolin USA Eyewear, Corp. (sole legal entity, which will focus on
distribution in the North and Central American markets);
• the European hub, directed by Marcolin S.p.A., which will address the European rim and its
complementary and neighboring countries (in terms of both geography and business, such as
South America and the Middle East), including through direct affiliates and joint ventures;
• the Asian hub, where companies have been set up to manage the Far East markets, distant and
difficult to penetrate. Indeed, only by operating there directly may such markets be developed (as
noted, the business divisions dealing with the distribution of Viva products in the Far East, and
then the division dealing with Marcolin product distribution division in Asia Pacific were transferred
to the Marcolin UK Ltd Hong Kong branch).
The reorganization entailed overhauling the logistical flows on an international scale through the
establishment of the three main hubs (for distribution management) in order to render the integrated
logistics more agile and efficient, thereby reducing costs, shortening the distance to the end customer,
and consequently improving the effectiveness of response to the market.
*****
Products and licenses
Within the scope of its brand portfolio consolidation and development, the Marcolin group moved
forward with the following activities in 2014, which were dedicated to both licensed brands and house
brands:
•
•
•
an important strategic alliance was created at the end of 2013 with the stipulation of licenses for
prestigious eyewear brands Ermenegildo Zegna and Agnona. The licensing agreement has a tenyear duration and involves the exclusive design, manufacturing and global distribution of
sunglasses and eyeglass frames. Marcolin's high quality and design standards will be combined
with the exclusive style and international appeal of the Zegna group brands, renowned throughout
the world as an example of Italian excellence. The strength of the Marcolin-Zegna partnership is a
dual project focused on product innovation for the Zegna brand and development of the women's
segment for Agnona, which Marcolin's core competencies can offer to the Belluno group through
its distribution network, presence in American markets recently expanded with the Viva
acquisition, and ability to penetrate emerging markets assisted by partnerships and exclusive
distribution agreements (in China and the Middle East). The initial Ermenegildo Zegna and
Couture collections were launched in January 2015;
an exclusive worldwide license agreement was stipulated with Emilio Pucci, a classic, highly
prestigious fashion and luxury brand for more than sixty years; the five-year, renewable license
took effect in January 2015;
early license renewals were stipulated for the Timberland brand and, pursuant to previous
contractual negotiations, the Tom Ford license was extended;
21
•
•
•
•
•
long-term licensing agreements with Skechers USA, Harley-Davidson and M.lle Catherine
Deneuve were renewed; they had initially been stipulated through Viva International partnerships,
which are now extended to Marcolin;
Marcolin renewed its licensing agreement with Procter & Gamble for the design, manufacturing
and distribution of the Covergirl Eyewear brand in the American market;
the Diesel brand license was also extended; moreover, Diesel communicated its intention to stop
selling apparel with the 55 DSL brand, so Marcolin ceased production of 55 DSL models, while
continuing to distribute the products in stock until December 2014;
a similar agreement to extent the duration of a license was reached during the year for the
Swarovski brand;
in October an agreement concerning one of the Group's most important licenses was revised to
provide for less royalty and advertising payments from 2015 until the license expiration, in
exchange for a lump-sum payment of transaction fees.
The Marcolin group pursued an important initiative to rationalize and optimize its product collections.
Part of the Swarovski brand collection was repositioned in order to offer a product with a more
balanced price/quality ratio, partly drawing on imports from Asian markets; this was very well received
by the market, and boosted the sales.
With respect to product innovation, Tom Ford introduced a new collection in metal, the "Essential" line,
combining Italian design and production capabilities with Marcolin's special expertise. Sales of the
Essential line commenced in February 2014 and contributed to the important sales growth realized by
the brand in 2014.
Diesel's new "Denim Eye" line, designed in 2013 with an exclusive Marcolin patent, was put on the
market. Conceived for young consumers by combining the brand image with Marcolin's expertise and
production capacity, it was extremely well received by the market.
The relaunching of the house brand, WEB, continued with a "Made in Italy" eyeglass frame collection
positioned in a highly competitive price range. It is a service product created with the specialized skills
of the internal product development structures, saturating their costs, and the manufacturing capability
of the eyewear district. Its success was behind the comeback of the domestic market, which grew
significantly in 2014, especially considering the difficulties persisting due to the crisis that has been
present for years.
Balenciaga was relaunched, after the fashion house's designer was changed, with a sophisticated and
elegant collection having great complexity, which was presented to a group of selected retailers. It was
extremely successful in the international markets.
In general, a great effort was made to enhance the collections, expand the eyeglass frame segment
and add new lines and new products. The design and product departments were directly involved with
exceptional designing activities aimed to adapt the collections to more international (Asian-fitting)
distribution, with stylish and exclusive designs while improving the capacity to produce the new
models and focusing on opportunities deriving from the availability of new, original materials.
*****
Sales activities
Sales activities aimed to strengthen relationships with the distribution network continued in 2014, with
the objective of greater penetration into the markets sustaining the Group's growth.
Within the scope of the Viva integration plan, the foregoing sections describe the rationalization of the
distribution networks and international sales organizations (establishment of the new Hong Kong
branch that will manage distribution of Viva and Marcolin products, Marcolin/Viva integration in the
United States, France and Brazil, the closing of Viva UK's operating activities, which were transferred
to Italy and to the pre-existing U.K. branch of Marcolin, all of which were carried out in 2014, and the
transfer of the Latin American business to the Parent Company, which will take effect in early 2015).
22
Marcolin Group
In order to manage distribution directly in mainland China, at the end of 2014 a joint venture was set
up with the Gin Hong Yu International Co. Ltd group (Ginko Group), a well-known and respected
business operating in the Chinese eyewear market.
Distribution operations will be managed by Ginlin Optical Shanghai Ltd Co., based in Shanghai, a
subsidiary controlled indirectly (through Ging Hong Lin International Co. Ltd), by way of joint
ownership by Marcolin S.p.A. and the Ginko group.
Still regarding the Group's international development, a joint venture was set up with Sover-M, a wellestablished, prestigious company operating in the eyewear business in Russia, for the distribution of
all Marcolin and Viva products.
The Italian Parent Company controls 51% of Sover-M. Sover-M's shares were acquired in December
2014.
In Europe, an affiliate was started up in Frösundaviks (Stockholm), Sweden. Marcolin Nordic began
operating at the end of February 2015, and its mission is to manage the Nordic market (Denmark,
Finland, Norway, Iceland and Sweden) closely and effectively in order to distribute there all brands in
the Marcolin/Viva portfolio.
Much attention was dedicated to the reorganization of the Italian sales network. When a new Italian
Sales Director with a proven track record in the industry joined Marcolin in 2013, a review of the sales
force was begun that led to a reorganization of the independent agents, an important step for
relaunching on the domestic market.
In parallel, a thorough review of the affiliates' sales organization was performed (which led to a change
in the management of the Brazilian affiliate at the beginning of 2014). Those initiatives continued
during the year within the scope of the Viva integration process, beginning with the review of the
distribution network and sales force, with the objective of maximizing the distribution synergies
possible and promoting cost efficiencies.
New, prestigious offices were located in strategic countries (France, Brazil, Hong Kong) in
consideration of the need to provide support to sales that have grown considerably as a result of Viva
integration.
In the marketing area, some collections and parts of collections were repositioned in term of product
and price. Price lists for the public were reviewed on one hand and margins for the distribution network
on the other. Revisions were implemented to support volumes, focusing specifically on collections that
are more sensitive to the market demand curve.
*****
Logistics and organizational activities
The Group's reorganization process was carried out in the logistical area as well.
Investments continued to be made in resources and systems in the production and sales planning
areas, strengthening the central supply chain management function in order to better handle the
integrated logistics.
The objective is to achieve better allocation of resources by way of more careful and more rational
demand planning, exploiting upstream and downstream synergies.
As a result, the organizational activities (focusing on planning processes, which led to the creation of
the demand planning function) enabled to improve internal efficiency, effectiveness in responding to
the market and customer service, with positive effects on sales and key performance indicators.
With respect to resources and systems, the new ERP (SAP) system was successfully implemented
internationally at all Viva companies: in Hong Kong, France, Brazil, through the operations integrating
Viva businesses into the Marcolin ones; in the United States, SAP roll-out was completed in October
23
at Viva Optique Inc.'s U.S. affiliate, an achievement attained with a minimal impact on the business
and on market service.
*****
Marcolin is preparing to double its Italian manufacturing operation with the purchase of a new 3,500
square meter factory in Longarone (Fortogna locality), in the heart of the eyewear district, close to its
historic headquarters. This will benefit employment levels by dedicating important resources to
production.
The project will be executed from the second half of 2015 (Marcolin’s new acetate division in Fortogna
will become operational by the summer of 2015), and will ensure the production expansion necessary
to meet the demands arising from both the new brands added to the brand portfolio and the structural
expansion of some markets. Consistently with the Company's medium/long-term growth plans, the
operation aims to create value by maximizing the opportunities offered by the development of the
high-end collections that have always represented Marcolin's design concept.
The production layout of the Longarone plant (currently housing the acetate production, which will be
transferred to Fortogna) will be changed by overhauling the Metal, Product Development and
Prototype divisions. It will cost some euro 4.5 million (partly for the purchase of the Fortogna factory,
and the rest to transfer and outfit the new acetate division in Fortogna, renew the floor space that will
be made available in Longarone, and purchase plant and machinery to expand production capacity).
This opportunity will enable to immediately undertake the business plan necessary to promote the
Group's growth, and to obtain savings from the insourcing of production beginning in the second half
of 2015.
Reasons for which the consolidation and development of its production capacity in Italy are important
to Marcolin include:
• reduced dependence on external suppliers, which will enable to shorten the manufacturing lead
time, and thus increase the ability to seize market opportunities (and improve the time to market);
• made in/made out realignment according to the eyewear industry standards (and those of the
main competitors);
• expansion of the capacity to produce more Italian-made products, which are increasingly
perceived as having added value by the Italian and international clientele;
• as an essential condition for managing the inflation risk in the Chinese sourcing market,
production insourcing will allow greater control of production factors, and not only in terms of costeffectiveness.
*****
The Asian suppliers were reviewed and monitored from a quantitative and qualitative point of view
(quality, reliability and service), in light of the particular social and economic dynamics characterizing
that sourcing market.
In 2014, thanks to the critical mass deriving from the higher volumes sourced after the Viva
acquisition, it was possible to contain the impact of the current inflation in China on the product cost.
A new company will be established in China that shall monitor the production of Chinesemanufactured products, perform quality control and check production work in progress for all the
Group's companies that source from that market: Marcolin S.p.A., Marcolin USA Eyewear Corp., and
Marcolin (UK) Hong Kong Branch.
The new company, Marcolin Technical Services (Shenzhen) Co. Ltd, is owned directly by Marcolin
S.p.A. and is based in Shenzhen, Guangdong Province, China. It has been operating since mid 2015,
providing technical services regarding production, such as supplier selection in China, quality control
and monitoring of production work in progress, and general manufacturing-related services.
*****
24
Marcolin Group
Lastly, concerning organizational restructuring, the management team was consolidated and
increased in 2014, consistently with the projects and challenges that have involved the Group in the
past and will continue to do so in the future.
The Group underwent a comprehensive reorganization process, with changes made in top and middle
management from recruiting from the outside and using internal mobility.
*****
INCOME STATEMENT HIGHLIGHTS
In order to provide comparability between 2014 and the prior year, the 2013 values presented
hereinafter were obtained by summing up the Marcolin group's results with those of the Viva group for
the period of January to December 2013 (2013 pro forma).
In fact, the information presented in the 2013 consolidated financial statements included Viva's income
statement results from the acquisition date (December 3, 2013) to the annual closing date, whereas
the statement of financial position as at December 31, 2013 already fully consolidated the Viva group,
so the key financial ratios were not truly meaningful.
For this reason, the 2013 pro-forma accounts presented herein for comparison purposes include the
Viva International group results for the entire 12 months.
*****
As noted, in 2014 Marcolin was involved in many new projects and activities of consolidation and
especially of development and global reorganization at all levels.
Accordingly, 2014 must be considered a year of strong change, in which many activities were
introduced that will bring returns only in the future.
The activities carried out had a significant impact on the results of the year, requiring the 2014
financial statements to be interpreted in the light of such extraordinary events.
The organizational activities are described previously herein, particularly the Marcolin/Viva integration
process, and the sales-related activities, with the rationalization of the distribution networks on an
international scale and continued restructuring of the brand portfolio thanks to the stipulation of new
prestigious licensing agreements that will bring important results in terms of future sales and margins.
As a result of the extraordinary activities in progress, particularly those referring to Viva integration, the
income statement results were adversely affected by some non-recurring events, which need to be
highlighted.
For all the foregoing reasons, where significant, the main changes of the year are also reported herein
by showing the impact of the extraordinary activities and thus of the non-recurring costs, also
providing comparability, with the same consolidation perimeter, of the 2014 data with the 2013 data,
by presenting “normalized” income for both years.
Upon completion of the Viva integration process, an estimated euro 10.0 million in cost synergies will
be realized, exceeding those originally estimated.
The synergies, euro 3.6 million of which were realized in 2014, will fully benefit future years starting
from 2015 in an amount of euro 10.0 million.
*****
The following table summarizes the Group’s key performance indicators.
25
As noted, the pro-forma data includes the full contribution of Viva International for 12 months, and so
is comparable with the corresponding results of 2014.
Year
2010
Net
Sales
205.7
YOY
14.0%
2011
224.1
9.0%
34.2
15.3%
28.9
12.9%
21.0
9.4%
2012
214.0
(4.5)%
11.2
5.2%
11.0
5.1%
6.0
(euro/000.000)
% of
EBITDA revenue
29.9 14.6%
% of
EBIT revenue
24.9 12.1%
% of
Net Result revenue
18.6
9.0%
ROS
ROI
ROE
12.1%
28.6%
23.7%
12.9%
29.5%
22.2%
2.8%
5.1%
5.2%
3.8%
2013
*
212.3
(0.8)%
15.9
7.5%
10.0
4.7%
12.0
5.7%
4.7%
2.6%
5.6%
2013
2014
**
346.3
362.1
61.8%
4.6%
28.5
29.4
8.2%
8.1%
19.2
19.9
5.6%
5.5%
(8.6)
0.4
(2.5)%
0.1%
5.6%
5.5%
5.0%
4.8%
(4.0)%
0.2%
EBITDA: is EBIT before amortization, depreciation and annual allowance for doubtful debts
EPS: Earnings per share = Net result/number of shares
ROS: Return on sales = EBIT/Net sales
ROE: Return on equity = Net result/ Net Equity
* Viva consolidated 1 month
** Pro-forma (Viva consolidated 12 month)
The net revenues of 2014 were euro 362.1 million, compared to the euro 346.3 million of 2013 (proforma).
Ebitda was euro 29.4 million, or 8.1% of sales (2013 pro-forma: euro 28.5 million, corresponding to
8.2% of sales).
Ebit was euro 19.9 million, or 5.5% of sales (2013 pro-forma: euro 19.2 million, 5.6% of sales).
As noted, the Group’s margins were greatly influenced by non-recurring transactions; in 2014, the
costs of those transactions reduced Ebitda by euro 14.5 million (in 2013, including the costs of the
absorbed company, Cristallo, the Ebitda decrease was nearly euro 10.4 million).
In order to better understand the business performance, those effects, mainly referring to costs
incurred for Viva integration, must be eliminated.
The following costs were involved:
•
•
•
•
euro 9.4 million incurred for the Viva integration process, reported primarily by subsidiaries Viva
Optique, Inc. (USA), Viva Eyewear (UK) Ltd, Viva France, Viva Brasil and Viva Hong Kong, and by
the Parent Company, Marcolin S.p.A.; most costs were incurred for termination of redundant
personnel, severance benefits paid to employees, restructuring of the sales force particularly
regarding terminated or revised agency agreements, and legal, corporate, organizational and
logistics consulting services and other professional services rendered by third parties to assist the
integration process;
euro 2.0 million in extraordinary expenses deriving from ad-personam agreements for changes in
top management positions and mobility within the scope of organizational changes;
euro 2.7 million in non-recurring expenses referring to the renewal and development of new
licenses for brands that have not generated revenues yet, including Zegna, Agnona and Pucci;
other non-recurring costs of euro 0.4 million.
Excluding the effects of the transactions described above, the 2014 normalized ("adjusted") Ebitda is
euro 43.8 million (12.1% of sales), against the 2013 pro-forma amount of euro 38.8 million (11.2% of
sales).
Excluding such effects, the 2013 adjusted Ebit (Operating Income) is euro 34.6 million (9.5% of sales),
against the 2013 pro-forma amount of euro 30.6 million (8.8% of sales).
The normalized (adjusted) key performance indicators, filtered of the effects of the non-recurring costs,
are as follows:
26
Marcolin Group
Economic indicators - adjusted
2014
2013
euro
(euro/000)
% of revenue
euro
% of revenue
Ebitda
43,831
12.1%
26,227
12.4%
Operating income - Ebit
34,554
9.5%
21,361
10.1%
2014
2013 *
euro
(euro/000)
Ebitda
Operating Income - Ebit
% of revenue
43,831
34,554
12.1%
9.5%
euro
38,841
30,640
% of revenue
11.2%
8.8%
* Pro-forma (Viva consolidated 12 month)
SALES REVENUES
Due to Viva consolidation on the acquisition date of December 3, 2013, the 2013 sales data included
Viva solely for the month of December.
The (pro-forma) aggregate net revenues including the Viva International group data for the entire 12
months of 2013 were euro 346.3 million for the combined Group, compared to euro 362.1 million for
2014.
The euro 15.8 million difference year on year corresponds to an increase of 4.6%.
7
At constant exchange rates, the increase is 5.1%.
The Group continued to invest in brands and in its sales organization under a medium-term strategy,
even in difficult markets, where it has decided to keep pace with demand in the short term instead of
saturating customers with products, and to focus on credit quality.
In an irregular year, the sales revenues were impacted favorably by the sales realized on new brands
(Balenciaga, Web).
The Group's performance in its markets was also affected by the activities added within the scope of
the Marcolin/Viva integration plan, especially the sales force reorganization, which involved practically
all the Group's strategic markets, except perhaps Italy.
The revenues obtained in 2014 by Marcolin reflect the sales growth in Europe (especially in Italy,
Spain and Portugal, but also in Germany and Belgium), where a 4.8% increase is reported year-onyear (or euro 6.0 million), in North America (up euro 2.8 million), and in some emerging markets; likefor-like, sales in Asia and the Rest of the World grew by euro 7.0 million from the previous year.
The following table sets forth the sales revenues by geographical area.
7
Currency
Sym bol
Closing exchange rate
12/31/2014 12/31/2013
Australian Dollar
Brasilian Real
Canadian Dollar
Sw iss Franc
Remimbi
English Pound
Hong Kong Dollar
Japanese Yen
Mexican Pesos
Russian Rublo
USA Dollar
AUD
BRL
CAD
CHF
CNY
GBP
HKD
JPY
MXN
RUB
USD
1.483
3.221
1.406
1.202
7.536
0.779
9.417
145.230
17.868
72.337
1.214
1.542
3.258
1.467
1.228
8.349
0.834
10.693
144.720
18.073
45.325
1.379
Change
Average exchange rate
2014
2013
(3.9)%
1.472
1.378
(1.1)%
3.121
2.869
(4.1)%
1.466
1.368
(2.1)%
1.215
1.231
(9.7)%
8.186
8.165
(6.6)%
0.806
0.849
(11.9)% 10.302 10.302
0.4% 140.306 129.663
(1.1)% 17.655 16.964
59.6% 50.952 42.337
(12.0)%
1.329
1.328
Change
6.8%
8.8%
7.1%
(1.3)%
0.3%
(5.1)%
0.0%
8.2%
4.1%
20.3%
0.0%
27
Net Sales by geographical area
Net sales like for like
Increase (decrease)
2014
Turnover
(euro/000)
2013
% on Turnover
% on
total
total
Turnover
Change
2014
Turnover
Increase (decrease)
2013
% on
total
Turnover
% on
total
Turnover
Change
Pro-forma
Europe
130,406
36.0%
91,414
43.1%
38,992
42.7%
130,406
36.0%
124,402
35.9%
6,004
4.8%
U.S.A.
140,187
38.7%
61,421
28.9%
78,766
128.2%
140,187
38.7%
137,341
39.7%
2,846
2.1%
Asia
30,701
8.5%
23,130
10.9%
7,571
32.7%
30,701
8.5%
27,289
7.9%
3,412
12.5%
Rest of World
60,839
16.8%
36,362
17.1%
24,477
67.3%
60,839
16.8%
57,229
16.5%
3,610
6.3%
212,327 100.0%
149,806
70.6%
346,262 100.0%
15,872
4.6%
Total
362,133 100.0%
362,133 100.0%
Although Europe was affected by the Viva integration process and fluctuating markets, with uneven
trends and growth rates, it represented Marcolin's main market in terms of annual growth (with sales
up by euro 6.0 million or 4.8%).
As noted, the sales and distribution organization in Europe and particularly in Italy underwent
important rationalization processes in 2014, which is to be considered a year of considerable
reorganization in this sense.
Some geographic areas performed very well, especially Italy, where sales rose by 21.8%; other
countries that performed well are Spain (+23.5%) and Portugal (+21.6%), with Belgium and Germany
lagging behind.
France, suffering from an adverse economy, presents less favorable results, as does to a certain
extent the United Kingdom (which was more exposed to discontinuity caused by Viva integration).
Europe accounted for 36.0% of the Group's total net revenues in 2014, in line with the 35.9% of 2013
(with a constant perimeter).
The U.S. market was positive, with sales up by euro 2.8 million from 2013 (a 2.1% increase, or 2.7%
at constant exchange rates).
Management focused on this market due to its expanding economy, a springboard for current and
prospective sales.
The performance of this market was affected by Marcolin/Viva integration in terms of operating
systems and operations (with the new ERP system implemented in October) and in terms of the
distribution network reorganization (sales force restructuring).
Sales in Asia also grew, consistently with the positive trend for the Far East markets.
The annual increase was 12.5%, representing euro 3.4 million of the total increase reported (with a
constant perimeter).
The Group is continuing to expand in Asia with investments in the sales structure and extension of its
distribution network, in a market characterized by high growth potential. The activities carried out to
strengthen the Group's structures in Asia, including the establishment of an important organizational
structure that will unite the distribution of Viva and Marcolin products (Marcolin UK Ltd - Hong Kong
Branch) in the Far East, and other important partnerships with renowned industry players, were
designed to promote growth in that geographical area.
In the Rest-of-World segment, sales rose by 6.3%, or euro 3.6 million, assisted by favorable market
trends in the Middle East.
These are emerging markets with interesting growth potential, focused on in order to find distribution
partners in which to invest for better penetration in a strategic area.
The Americas, Far East and some areas of the Rest of the World, including the Middle East, represent
strategic markets for the Group due to their growth trends and because the buying patterns of the
consumers there involve the fashion and luxury segment, in which Marcolin is specialized.
American markets are highly stimulated by the strong presence assured by Viva, a critical success
factor for Marcolin's geographical expansion and increase in scale, especially in view of the expanding
economy and stronger U.S. dollar.
28
Marcolin Group
The European market, which performed well in 2014, although with various intensities (with certain
countries being particularly affected by weak domestic demand, especially France and the United
Kingdom), should benefit from Marcolin's sales initiatives undertaken to shore up weak markets and to
find more extensive forms of collaboration, including joint ventures, to take on more effectively
Northern Europe (with Marcolin Nordic) and Eastern Europe (with Sover-M in Russia), where Marcolin
had not been present directly.
Russia is a separate matter, where serious political difficulties and social tensions that worsened in the
last few months of the year have hampered eyewear exports to that country. The close partnership
there will enable Marcolin to remain in a market that would be difficult to preserve on its own.
Other initiatives are being considered to expand the Group's presence in other geographical areas
with high growth potential.
*****
The consolidated income statement highlights are set forth below.
In the following table, the income statement results are not comparable, because Viva's results of
2013 refer to solely one month of operation.
Consolidated income statement
(euro/000)
2014
euro
2013
% of revenue
euro
% of revenue
Net revenues
362,133
100.0%
212,327
100.0%
Gross profit
216,773
59.9%
130,444
61.4%
Ebitda
29,384
8.1%
15,875
7.5%
19,932
5.5%
9,959
4.7%
Financial income and costs
Profit before taxes
Net profit for the year
(euro/000)
(12,830)
(3.5)%
(21,769)
(10.3)%
7,102
2.0%
(11,810)
(5.6)%
407
0.1%
(12,011)
(5.7)%
% of revenue
euro
2014
euro
2013
% of revenue
Ebitda
43,831
12.1%
26,227
12.4%
34,554
9.5%
21,361
10.1%
The following table sets forth the pro-forma information including Viva results for the entire 12 months
of 2013 in order to provide comparability with the same consolidation perimeter of 2014.
Consolidated income statement
(euro/000)
2014
euro
2013 *
% of revenue
euro
% of revenue
Net revenues
362,133
100.0%
346,262
100.0%
Gross profit
216,773
59.9%
212,913
61.5%
Ebitda
29,384
8.1%
28,489
8.2%
19,932
5.5%
19,238
5.6%
Profit before taxes
(12,830)
(3.5)%
(24,568)
(7.1)%
7,102
2.0%
(5,330)
(1.5)%
407
0.1%
(8,556)
(2.5)%
29
(euro/000)
Ebitda
Operating Income - Ebit
2014
euro
2013 *
% of revenue
43,831
34,554
12.1%
9.5%
euro
38,841
30,640
% of revenue
11.2%
8.8%
* Pro-forma (Viva consolidated 12 month)
As shown by the key performance indicators, gross profit is 59.9% of sales, down in terms of
percentage of sales by 1.6% (61.5% for 2013).
The euro 3.9 million increase in gross profit is attributable to higher volumes relating to higher sales,
and lower prices resulting from the price repositioning conducted in 2014 on certain collections and
parts of collections.
The activities, implemented to rationalize the price structure and stimulate demand for basic products
in particular, successfully increased the annual sales volumes.
The increase in volumes sold enabled to absorb more overheads, thereby containing the effect on
margins of the price revisions made to the diffusion collection during the year.
Thanks in part to the critical mass made possible from access to Chinese sourcing markets combining
Marcolin and Viva volumes, the product costs remained fairly constant from 2013 to 2014, containing
the impact of the inflation caused by labor unrest on the Group's cost of sales.
*****
In a highly irregular year featuring important investments, the Group continued to invest in advertising
and marketing to promote the brands it handles, including both portfolio and house brands. Although
in some cases the volumes were not at full capacity, Marcolin is aware of the importance of ongoing
advertising and promotional support.
The advertising expenditure, along with inadequate absorption of the guaranteed minimum royalties
required under certain licensing agreements due to irregular revenue streams, affected the gross
profit, which should therefore not be considered typical.
Pursuant to certain operations and agreements stipulated during the year, in 2015 it will be possible to
improve the profitability of some licenses, thanks to better absorption of royalties and advertising
contributions which in 2014 were not fully saturated by the sales realized.
*****
In the second half of the year business accelerated due to the unfolding of the benefits of the
rationalization and development activities undertaken at the end of 2013 and throughout 2014.
Ebitda is euro 29.4 million (8.1% of sales), compared to the euro 28.5 million of 2013 (pro-forma, 8.2%
of sales).
Ebit is euro 19.9 million (2013 pro-forma: euro 19.2 million), representing 5.5% of sales (5.6% in
2013).
The performance indicators are greatly affected by non-recurring events both for 2014 and 2013, so
they have been normalized to provide margins that disregard the negative effects of the discontinuing
organizational and corporate rationalization activities.
In summary, adjusted Ebitda is euro 43.8 million, compared to the euro 38.8 million of 2013 (proforma, including Viva for 12 months), and represents 12.1% of sales (11.2% in 2013).
Adjusted Ebit is euro 34.6 million (9.5% of sales), compared to the euro 30.6 million of 2013 (proforma, 8.8% of sales).
The net profit for the year is euro 0.4 million, compared to a net loss of euro 8.6 million for 2013 (pro forma). It is affected considerably by the financial items that result in a net cost of euro 12.8 million for
the year (2013: pro-forma net cost of euro 24.6 million).
30
Marcolin Group
Such net cost, the 2014 balance between finance costs of euro 31.0 million and financial income of
euro 18.2 million, was influenced by the following:
•
•
•
•
•
interest payments of euro 17.0 million on the bond notes issued by Marcolin S.p.A., paid
semiannually in May and November;
reversal of bond issue costs, accounted for under IFRS with the financial method of amortized
cost over the life of the bond notes (maturing November 2019), for euro 1.4 million;
net interest costs of euro 1.3 million, including euro 0.9 million in bank interest expense referring to
the Parent Company, Marcolin S.p.A., and euro 0.4 million referring to subsidiaries;
additional finance costs regarding actualization and translation differences of euro 1.3 million,
including euro 0.6 million referring to the Parent Company;
financial discounts of euro 2.0 million, nearly entirely attributable to foreign subsidiaries.
The Group’s foreign currency exchange in 2014 resulted in a net loss of euro 2.6 million (including fair
value measurement of currency hedges in place at the end of the year, and currency translation
adjustments to end-of-period trade receivables and payables).
Foreign currency exchange regarding the Parent Company's revenues and expenses was balanced,
with an immaterial net gain. Currency differences of foreign subsidiaries resulted in a net loss of euro
1.2 million, largely attributable to those affiliates located in countries with currency strains.
Additional financial income is reported for end-of-period adjustments to a receivable due to Marcolin
S.p.A. from Marcolin USA denominated in U.S. dollars, which increased due to the appreciation of the
U.S. dollar.
*****
Income tax expense is euro 6.7 million, compared to the euro 3.2 million for 2013 (pro-forma).
Marcolin S.p.A., together with the parent company, Cristallo S.p.A. (absorbed through a reverse
merger) and its subsidiaries Eyestyle Retail S.r.l. and Eyestyle.com S.r.l., had opted for the Italian tax
consolidation regime for IRES (corporate income tax) purposes for 2013, 2014 and 2015, which
recognized Marmolada S.p.A. as the parent company.
On June 13, 2014, pursuant to the Italian Income Tax Code ("TUIR"), Presidential Decree no. 917,
Article 117 et seq. of December 22, 1986, the ultimate parent company, 3 Cime S.p.A. notified the
Italian Revenue Office of its adoption of the Italian tax consolidation regime with its subsidiaries,
including Marcolin S.p.A., for years 2014, 2015 and 2016. Accordingly, the tax consolidation in effect
in 2013 was replaced with an identical agreement with 3 Cime S.p.A., which involved terminating the
previous agreement and stipulating a new one for the new three-year period.
From the current year to December 31, 2016, the tax consolidation regime will enable each participant
(including the Company), by way of partial recognition of the group's tax burden, to optimize the
financial management of corporate income tax, for example by netting taxable income and tax losses
within the tax group.
The Parent Company's current taxes amount to euro 1.6 million, consisting mainly of Marcolin S.p.A.'s
IRAP (regional business tax) and IRES expense.
The affiliates contribute net current tax expense of euro 2.7 million, referring largely to the American
subsidiaries.
The consolidated tax expense is affected by deferred tax, including the allocation of deferred tax
assets on the net losses of some companies (including Marcolin USA, Inc.), whose recognition is
based on the expectation of future taxable profits according to the business plans prepared.
*****
31
STATEMENT OF FINANCIAL POSITION HIGHLIGHTS
The consolidated net financial position as at December 31, 2014 compared to the previous year is set
forth below.
Net invested capital
(euro/000)
Trade receivables
Inventories
Trade payables
Operating working capital
Other receivables
Other payables
Net working capital
Non-current receivables
Equity investments and other financial assets
Property, plant and equipement
Intangible assets
Goodwill
Fixed assets
Provisions
Current financial payables
Non-current financial payables
Gross financial indebtedness
Cash and cash equivalents
Non-current financial receivables
Net financial position
Equity
12/31/2014
12/31/2013
66,890
100,075
(102,322)
64,643
14,099
(30,960)
47,782
39,382
1,877
24,657
37,213
278,010
381,138
(10,032)
418,887
41,353
199,152
240,504
(38,975)
(5,455)
196,074
222,813
55,123
68,301
(65,263)
58,161
13,994
(21,229)
50,926
31,931
2,030
22,957
29,341
266,833
353,091
(22,870)
381,147
17,707
195,891
213,597
(40,294)
(7,132)
166,172
214,976
The net financial indebtedness at the reporting date is set forth below against the corresponding data
of 2013:
Net financial position / (indebtedness)
12/31/2014
12/31/2013
36,933
7,497
(40,021)
38,536
8,890
(17,626)
Current portion of long-term borrowings
Long-term borrowings
(1,332)
(199,152)
(81)
(195,891)
Total
(196,074)
(166,172)
(euro/000)
Financial receivables
Short-term borrowings
The Group's net financial position is indebtedness of euro 196.1 million, compared to the euro 166.2
million indebtedness of 2013, an increase of euro 29.9 million.
At the end of 2013, Marcolin's debt was restructured, partly as a result of the former parent Cristallo's
assumption of its debt.
In November 2013, Marcolin announced a bond issue reserved for institutional investors for a nominal
amount of euro 200 million.
Given the favorable financial market conditions for this type of financing and the persistent credit
crunch, the bond issue represented a useful funding instrument which, together with the senior
revolving credit facility associated with the overall financing transaction, enabled the Company to
32
Marcolin Group
efficiently restructure its medium-term debt, assuring the Group financial stability and funding of
working capital and demands in general, including those related to investments in development.
Part of the funding was used to help finance the Viva acquisition (which took place in December 2013)
The non-convertible senior-secured notes have a fixed coupon of 8.50%, payable semiannually in May
and November. The issue, arranged by major banks, was listed on the Luxembourg Stock Exchange
for trading on the regulated MTF Market, and in Italy on Borsa Italiana S.p.A. for trading on the
multilateral Extra MOT Pro Professional Segment.
The notes, resolved upon with a notarial deed dated October 31, 2013, were issued on November 14,
2013 and have a maturity date of November 15, 2019, although they are callable after 3 years.
The notes are secured by collateral (pledges, mortgages and special liens) and personal guarantees
provided by Marcolin, some subsidiaries (Marcolin UK Limited, Marcolin France S.a.s., Marcolin
Deutschland Gmbh, Marcolin USA, Inc.), and the sole shareholder Marmolada, as explained in the
Notes to the Financial Statements.
The notes were classified as non-current liabilities net of the transaction costs (totaling euro 10.1
million) accounted for with the amortized cost criteria.
Within the scope of the refinancing transaction, a super senior revolving credit facility was granted, for
a maximum amount of euro 25 million, by Banca IMI S.p.A., IKB Deutsche Industriebank AG, Natixis
S.A., UniCredit S.p.A. and Goldman Sachs, to be used for ordinary cash flow demands. The credit
facility had been used for euro 20.0 million at the end of 2014.
In 2014, the Company was granted a 48-month credit line from Unicredit S.p.A. to cover cash flow
needs associated with investments in joint ventures in China and Russia, which are expected to be
drawn on at the end of 2014 and beginning of 2015.
The credit line is for euro 5.0 million, 50% of which is backed with an irrevocable guarantee from
SACE S.p.A. (Gruppo Cassa Depositi e Prestiti), granted specifically to fund Italian companies that
invest directly or indirectly in projects aimed to make their businesses more international.
The credit line was granted in a committed form, and is unsecured by collateral.
It will be repaid over a 48-month period, with deferred quarterly installments. It is priced at market
conditions for similar facilities.
The financial liabilities include amounts due to the HVHC, Inc. group (an investor in the former
Marcolin USA, Inc., now Marcolin USA Eyewear, Corp.), some of which are short-term and some
medium/long term, due in 2 years (recognized as non-current financial liabilities); both are discounted
in accordance with the applicative accounting standards.
The debt-to-equity ratio at December 31, 2014 is 0.88 (0.77 in 2013).
*****
The composition of net working capital, in comparison with the previous financial year, is detailed in
the following table.
Net working capital
12/31/2014
12/31/2013
(euro/000)
Inventories
Trade receivables
Trade payables
Other current assets and liabilities
Total
100,075
68,301
66,890
(102,322)
(16,861)
55,123
(65,263)
(7,235)
47,782
50,926
With reference to the different items that make up net working capital:
33
•
•
•
the value of inventories rose by euro 31.8 million compared to the previous year (U.S. dollar
appreciation accounts for more than euro 4.0 million of this). The increase in closing inventories is
attributable to an increase in “current” finished product inventories, due to the higher sales and
management's decision to improve customer service by reducing delivery time and investing in
supplies of continuing products (to be “never out of stock”). In contrast, inventories of products
from former collections (obsolete and slow-moving stock) fell considerably from those of 2013.
The inventory increase is also attributable to the discontinuity represented by products with new
brands, particularly Zegna and Pucci, which will be launched shortly, and to the increase in
collections offered and models produced;
although trade receivables were higher than in the previous year, they were largely affected by the
increased sales, and particularly by the acceleration of business at the end of 2014 due to a
concentration of deliveries at the end of the year. Credit quality remained consistent with that of
recent years. In 2014 the recent improvement in the average collection period, or "days sales
outstanding" (DSO), lost momentum, but the extreme emphasis on credit management and client
selection made it possible to keep the DSO (up by 2 days) under control even with difficult
markets and rising sales;
the balance of trade payables at the end of 2014 was affected by the inventory increase and by
the recognition of payables due to some licensors under important license renewals that were
stipulated in the year but will affect the accounts of 2015. Excluding this effect in order to make
comparison between the two years more meaningful, the average payment period, or "days
payable outstanding" (DPO), for trade payables improved considerably year-on-year. Some of the
improvement is due to the adjustment of payment terms for suppliers shared by Marcolin and Viva
to the longest time period between the two.
With a constant perimeter, the working capital-to-sales ratio is 0.15 (in line with the pro-forma 2013
ratio).
*****
Among the non-current assets, in line with the previous year, goodwill was euro 278.0 million (euro
189.7 million of the Parent Company, arising on the reverse merger with Cristallo S.p.A., and the
remainder arising on the acquisition of Viva International). Since it is considered an asset with an
infinite useful life, it is not amortized.
At December 31, 2013 the total amount was euro 266.8 million.
In 2013 the Group accounted for provisional goodwill arising on the Viva International acquisition; it
was calculated it on the basis of IFRS 3, "Business Combinations”.
The 2014 goodwill includes translation differences emerging on the appreciation of the U.S. dollar.
The item was reviewed for impairment; the related assumptions and results are described in the
Marcolin group's notes to the consolidated financial statements.
*****
The Marcolin group's net indebtedness increased by euro 29.9 million. It was impacted by the
following variations (the 2013 data includes the Viva accounts for one month):
34
Marcolin Group
Cash Flow
(euro/000)
12/31/2014
12/31/2013
7,102
8,958
15,046
(8,914)
22,192
(11,810)
5,411
17,075
1,034
11,709
Movements in Working Capital
Reversal of Funds
Income taxes paid
Interest paid
Net cash flows provided by operating activities
(4,127)
(6,892)
(3,609)
(18,253)
(10,688)
(14,818)
(1,938)
(17,452)
(22,499)
Investing activities
(Purchase) of property, plant and equipment
Proceeds from the sale of property, plant and equipment
(Purchase) of intangible assets
(Acquisition) of investment - Marcolin e Viva
(Acquisition) of investment - Sover M
Net cash (used in) investing activities
(6,179)
755
(6,742)
(4,958)
(1,530)
(18,655)
(2,645)
(1,512)
(127,745)
(131,902)
Adjustments to other non-cash items
(2,492)
5,524
Financing activities
Net proceeds from/(repayments of) borrowings
Other cash flows from financing activities
Net cash from/(used in) financing activities
Net increase/(decrease) in cash and cash equivalents
Effect of foreign exchange rate changes
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
26,497
26,497
(5,338)
3,736
38,536
36,933
91,620
51,300
142,920
(5,958)
(707)
45,200
38,536
Operating activities
Profit before income tax expense
Depreciation, amortization and impairments
Accruals to provisions other accruals
CF from operating activities before changes in WC, tax and int.
The annual cash flow was affected by the Viva integration process, for which non-recurring costs of
euro 9.4 million were incurred in the year.
Financing activities associated with the bond issue used cash flows of euro 20.3 million for interest
(euro 17.0 million) and transaction costs, some of which were paid in early 2014 (euro 3.3 million).
Cash flows of euro 1.5 million were used for investments in new joint ventures near the end of the
year.
Non-recurring cash outflows include transaction fees paid to renegotiate some important licensing
agreements in the year.
Other cash flows were used to meet the contractual obligations stipulated with the HVHC, Inc. group,
regarding the payment of the outstanding balance for the Viva acquisition in January, and the payment
of the first deferred loan installment in December (totaling euro 5.0 million).
*****
The annual capital expenditures amounted to euro 12.9 million (euro 6.2 million for property, plant and
equipment and euro 6.7 million for intangibles), compared to euro 4.2 million in 2013 (pro-forma).
35
12.31.2014
12.31.2013
(euro/000)
Land and buildings
1,361
350
Plant and machinery
1,391
610
Industrial equipement
1,208
462
Stand and commercial equipement
314
338
Hardware
907
394
Office furniture and furnishings
287
197
Other
711
295
Total
6,179
2,645
Intangible assets
12.31.2014
12.31.2013
(euro/000)
Software
3,633
771
Other
3,109
741
Total
6,742
1,512
The 2014 capital expenditures regarded mainly industrial plant and machinery for the Parent
Company's upgrading purposes, and manufacturing equipment (such as molds) to develop new
product collections.
Investments were made to adjust and rationalize the existing business software, especially of the
Parent Company, whereas in the United States important investments were made to implement the
new ERP (SAP) in Viva Optique, Inc. pursuant to the Viva/Marcolin integration plan.
A new warehouse automation system was purchased by Viva Optique in Somerville, New Jersey,
where distribution to North American markets will be concentrated.
In October the Parent Company put a downpayment on the purchase of a new manufacturing plant in
Fortogna, for which the outstanding balance was paid in early 2015 with a notarial deed.
A factory in Longarone formerly owned by associate Finitec in liquidation was purchased (before the
end of the liquidation process in 2014). Its designation as space to assist Marcolin S.p.A.'s growth is
currently being evaluated.
Leasehold improvements were made by the American subsidiary in Somerville, and investments were
made in the new headquarters of Marcolin France, which was transferred to new, prestigious premises
during the year.
*****
A Statement of Financial Position summary presenting current and non-current assets and liabilities is
shown below:
36
Marcolin Group
Statement of financial position
12/31/2014
12/31/2013
386,593
233,725
620,318
360,223
194,416
554,639
222,813
-
214,976
-
220,200
177,305
219,259
120,405
620,318
554,639
(euro/000)
Assets
Non-current assets
Current assets
Total assets
Net equity
Equity attributable to Group
Non-controlling interests
Liabilities
Non-current liabilities
Current liabilities
Total Liabilities and Equity
The balances therein and the changes in equity are included in the notes to the consolidated financial
statements.
*****
Additional information and comments on the financial statement results are reported in the notes to the
consolidated financial statements.
37
Marcolin S.p.A
MARCOLIN S.P.A.
REPORT ON OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 2014
39
40
Marcolin S.p.A
MARCOLIN S.P.A. REPORT ON OPERATIONS
Pursuant to the October 2013 merger with the former parent company, Cristallo S.p.A., the Company's
income statement and financial position results include Cristallo's figures for 2013, from the effective
8
merger date until December 31, 2013.
The continuity principle of Assirevi OPI Document n. 2 was adopted for the merger, i.e. significance
was given to the pre-existence of the control relationship between the Companies involved in the
merger and the cost incurred by Cristallo S.p.A. for the original acquisition of the Marcolin group.
Accordingly, on the effective merger date, the current values of the assets and liabilities and related
goodwill of Marcolin S.p.A., which had been reflected in the purchase price of the 100% stake owned
directly by Cristallo S.p.A., emerged in the separate financial statements of Marcolin S.p.A., the
surviving company, to the extent allocated to the assets, liabilities and goodwill in the consolidated
financial statements of Cristallo (now the Marcolin group) as at the same date.
In other words, the merger resulted in the alignment of the Group’s consolidated financial statements
as at the merger date with the post-merger separate financial statements of the surviving company,
thereby realizing “legal consolidation”.
*****
As described in the section dedicated to the Marcolin group, in the past year Marcolin S.p.A. was
involved in many new projects and activities of consolidation and development, which led to global
reorganization at all departmental levels.
2014 was a year characterized by discontinuity, change, and investments in initiatives that will bring
full returns only in the future.
In this scenario, the non-recurring activities undertaken at the end of 2013 and especially in 2014 had
a significant impact on the results of the year, requiring the Parent Company's financial statements for
the year ended December 31, 2014 to be interpreted in the light of the extraordinary events of the
year.
Accordingly, where significant, the main changes of the year are also reported herein net of the impact
of the non-recurring transactions (even in the comparison with 2013) in order to provide comparability,
with the same consolidation perimeter, of the 2014 data with the 2013 data, by presenting
"normalized" income.
*****
8
The Cristallo-Marcolin merger took effect on October 28, 2013 for accounting and tax purposes.
41
INCOME STATEMENT HIGHLIGHTS
The following table sets forth Marcolin S.p.A.'s key performance indicators:
Year
(euro/000.000)
2010
2011
2012
2013
2014
Net Sales
126.5
142.6
128.0
123.4
150.4
YOY
12.3%
12.7%
(10.3)%
(3.6)%
21.9%
EBITDA
20.1
27.4
9.6
8.1
16.1
% of
revenue
15.9%
19.2%
7.5%
6.6%
10.7%
EBIT
18.2
31.8
6.2
3.8
10.5
% of
revenue
14.4%
22.3%
4.9%
3.1%
7.0%
Net Result
11.4
24.1
4.9
(8.5)
4.5
% of
revenue
9.0%
16.9%
3.8%
(6.9)%
3.0%
In summary, the income statement presents:
•
•
•
•
•
•
sales revenues of euro 150.4 million (euro 123.4 million in 2013);
Ebitda of euro 16.1 million, corresponding to 10.7% of sales (euro 8.1 million in 2013, 6.6% of
sales);
Ebit of euro 10.5 million, corresponding to 7.0% of sales (euro 3.8 million in 2013, 3.1% of sales);
a net profit of euro 4.5 million (compared to a net loss of euro 8.5 million for 2013);
net financial indebtedness of euro 116.7 million (compared to indebtedness of euro 102.1 million
as at December 31, 2013);
equity of euro 213.1 million, in line with the euro 213.9 million of 2013.
The Parent Company reports 2014 sales revenues up by 21.7% (euro 27.0 million), with satisfactory
results across all geographical areas.
The sales growth was generated by the Rest of the World (+43.4%), the United States (+40.6%),
European markets (+14.4%), and even Asian markets, which increased their sales by 8.7%.
Although the margins were affected by the non-recurring items explained herein, they increased
substantially, being driven by higher sales, investment and development activities and rationalization
and reorganization activities initiated in 2013 and continued throughout 2014.
As explained for the Group, in order to better understand the 2014 business performance of Marcolin
S.p.A., certain non-recurring events that impacted the margins should be taken into account.
The normalized (adjusted) key performance indicators, filtered of the effects of the non-recurring costs,
are as follows.
(euro/000)
Ebitda
Operating income - EBIT
2014
euro
22,253
16,688
2013
% of
revenue
14.8%
11.1%
euro
16,257
13,057
% of
revenue
13.2%
10.6%
In detail, the non-recurring costs were as follows:
•
9
euro 1.9 million for the Viva integration process; the amount consists of distribution and logistics
costs incurred for the sales reorganization described in the Group Report on Operations, and
9
costs for legal, administrative, tax and organizational services assisting such activities;
The reasons for and content of the non-recurring transactions directly involving the Parent Company are fully described in the Group Report on
Operations. They refer to 1) the acquisition of the International Distribution business division from Viva Eyewear (UK) Ltd, 2) the transfer of the
Asia Pacific Distribution business division to Marcolin UK Ltd - Hong Kong Branch, 3) acquisition of the Latin America Distribution business
division from Marcolin USA, Inc.
42
Marcolin S.p.A
•
•
extraordinary expenses deriving from ad-personam agreements referring to changes in top
management positions and mobility within the scope of organizational changes, totaling euro 1.6
million;
non-recurring expenses referring to collection development, promotional and marketing activities
and the implementation of the organization dealing with new licenses for brands that have not
generated revenues yet, including Zegna, Agnona and Pucci, for an amount of euro 2.7 million;
Excluding the effects of the non-recurring transactions, the 2013 adjusted Ebitda is euro 22.3 million,
equal to 14.8% of sales (euro 16.2 million, 13.2% of sales in 2013), whereas the adjusted Ebit is
nearly euro 16.7 million, 11.1% of sales (euro 13.1 million and 10.6% of sales in 2013).
SALES REVENUES
The 2014 sales revenues were euro 150.4 million, compared to the euro 123.4 revenues of 2013, up
by a substantial euro 27.0 million (21.9%) from the prior year.
10
At constant exchange rates, the increase is 5.1%.
The Parent Company's revenues from sales to third parties were euro 94.9 million in 2014, compared
to euro 80.6 million in 2013, up by euro 14.2 million or 18.0%.
The following table sets forth Marcolin S.p.A.'s sales revenues by geographical segment:
Net sales by geographical
area
2014
2013
Increase (decrease)
Turnover
% on total
Turnover
% on total
Turnover
Change
Europe
U.S.A.
70,784
28,585
47.1%
19.0%
61,874
50.2%
16.5%
8,910
8,254
14.4%
40.6%
Asia
Rest of World
25,006
26,045
16.6%
17.3%
23,009
18,160
18.6%
14.7%
1,997
7,885
8.7%
43.4%
150,420
100.0%
123,374
100.0%
27,047
21.9%
(euro/000)
Total
20,331
The Company continued to invest in brands and in its sales organization under a medium-term
strategy, even in difficult markets, where it has decided to keep pace with demand in the short term
instead of saturating customers with products, and to focus on credit quality.
In a year featuring discontinuity for some brands, the sales revenues were impacted favorably by the
sales realized on new brands (Balenciaga, Web).
The Parent Company's performance benefited from the Marcolin/Viva integration process, particularly
from the reorganization of the sales and logistical activities based on a rational design consistently
with the Group's structure (this will be completed in the initial months of 2015).
In 2014 Marcolin S.p.A. centralized the distribution to international clients that had previously been
served by Viva Eyewear (UK) Ltd, and to key clients that need to be handled directly from Longarone
due to their nature and significance, and for reasons of interdependence.
10
Currency
Sym bol
12/31/2014 12/31/2013
Australian Dollar
Brasilian Real
Canadian Dollar
Sw iss Franc
Remimbi
English Pound
Hong Kong Dollar
Japanese Yen
Mexican Pesos
Russian Rublo
USA Dollar
AUD
BRL
CAD
CHF
CNY
GBP
HKD
JPY
MXN
RUB
USD
1.483
3.221
1.406
1.202
7.536
0.779
9.417
145.230
17.868
72.337
1.214
1.542
3.258
1.467
1.228
8.349
0.834
10.693
144.720
18.073
45.325
1.379
Cha nge
2014
2013
(3.9)%
1.472
1.378
(1.1)%
3.121
2.869
(4.1)%
1.466
1.368
(2.1)%
1.215
1.231
(9.7)%
8.186
8.165
(6.6)%
0.806
0.849
(11.9)% 10.302 10.302
0.4% 140.306 129.663
(1.1)% 17.655 16.964
59.6% 50.952 42.337
(12.0)%
1.329
1.328
Change
6.8%
8.8%
7.1%
(1.3)%
0.3%
(5.1)%
0.0%
8.2%
4.1%
20.3%
0.0%
43
*****
Marcolin S.p.A.'s revenue performance in 2014 reflects sales growth across all markets.
Although Europe was affected by fluctuating markets, with very uneven trends and growth rates, it
represented Marcolin's main market in terms of annual growth (with sales up by euro 8.9 million or
14.4%).
As noted, the sales and distribution organization in Europe and particularly in Italy underwent
important rationalization processes in 2014, a year of considerable reorganization in this sense.
Some geographic areas performed very well, especially Italy, where sales rose by an annual 49%;
other countries that performed well are Spain (+46%), Portugal (+37%), Greece (+42%) and Belgium
(+19%).
Europe accounted for 47.1% of the Group's total net revenues in 2014, compared to 50.2% in 2013.
Important growth was also achieved in the United States (+36%) and Brazil (+84%) in the year.
The foregoing table presenting sales by geographical segment shows the United States as having
some of the highest growth (sales there rose by euro 8.3 million, or 40.6%).
Management focused on this market thanks to its expanding economy, a springboard for prospective
sales.
As noted, the American market was affected by Marcolin/Viva integration, due to the reorganization of
the distribution network (sales force restructuring under one management and coordination unit for the
two main American companies). Marcolin collections, particularly the luxury brands but also products
in which Marcolin has invested heavily such as Swarovski and Timberland, are benefiting substantially
from top-line synergies thanks to the use of Viva's sales organization and its widespread presence in
North American markets.
Sales in Asia grew consistently with the positive trend in the Far East markets.
The annual increase was 8.7%, representing euro 2.0 million of the total increase reported from 2013.
As noted, the Company is continuing to expand in Asia, and for this reason it has invested in the
creation of local business structures, in a geographical area characterized by high growth potential.
The activities carried out to strengthen the structures in the Far East, including the establishment of an
important organization that will combine the distribution of Viva and Marcolin products (Marcolin UK
Hong Kong Branch) and other important partnerships with renowned industry players, were designed
to promote growth in that geographical area.
In the Rest-of-World segment, sales rose by 43.4%, or euro 7.9 million.
These are emerging markets with interesting growth potential, focused on in order to find distribution
partners in which to invest for better penetration in a strategic area.
In the Rest of the World, South Korea (+46%) and the United Arab Emirates (+37%) performed
extremely well.
*****
The European market, which performed well in 2014, although with various intensities (with certain
countries being particularly affected by weak domestic demand, especially France and the United
Kingdom), should benefit from Marcolin's sales initiatives undertaken to shore up weak markets and to
find more extensive forms of collaboration, including joint ventures, to take on more effectively
Northern Europe (with Marcolin Nordic) and Eastern Europe (with Sover-M in Russia), where Marcolin
had not been present directly.
Russia is a separate matter, where serious political difficulties and social tensions that worsened in the
last few months of the year have hampered eyewear exports to that country.
The close partnership there will enable Marcolin to remain in a market that would be difficult to
preserve on its own.
44
Marcolin S.p.A
The Americas, Far East and some areas of the Rest of the World, including the Middle East, represent
strategic markets for the Marcolin due to their growth trends and because the buying patterns of the
consumers there involve the fashion and luxury segment, in which Marcolin is specialized.
As noted, American markets are highly stimulated by the strong presence assured by Viva, a critical
success factor for Marcolin's geographical expansion and increase in scale, especially in view of the
expanding economy and stronger U.S. dollar.
*****
The Company's income statement highlights are reported hereunder.
Ebitda is euro 16.1 million (10.7% of sales), compared to the 2013 amount of euro 8.1 million (6.6% of
sales); Ebit is euro 10.5 million, 7.0% of sales, compared to the euro 3.8 million for 2013 (3.1% of
sales).
As noted, the 2013 and 2014 results were influenced by exceptional events, so the margins have been
"normalized" in order to present the business performance without the non-recurring costs deriving
from the organizational and corporate rationalization activities.
The adjusted Ebitda is euro 22.3 million, compared to the euro 16.3 million of 2013, and represents
14.8% of sales (13.2% in 2013).
Adjusted Ebit is euro 16.7 million (11.1% of sales), compared to the euro 13.1 million of 2013 (10.6%
of sales).
Income statement
(euro/000)
Revenues
2014
euro
2013
% of revenue
euro
% of revenue
150,420
100.0%
123,374
100.0%
Gross profit
66,366
44.1%
56,398
45.7%
Ebitda
16,110
10.7%
8,119
6.6%
Operating profit - EBIT
10,545
(823)
7.0%
3,820
3.1%
(0.5)%
(14,053)
(11.4)%
Profit before taxes
9,722
6.5%
(10,234)
(8.3)%
4,483
3.0%
(8,515)
(6.9)%
According to the key performance indicators, gross profit is 44.1% of sales, down as a percentage of
sales by 1.6% from 2013 (45.7%).
The euro 10.0 million increase in gross profit is attributable to the price repositioning conducted at the
end of 2013, which was successful in that the adverse effects of the price reductions were offset by
higher volumes in 2014, and other positive effects attributable to brand mix and geographical area.
The product costs remained fairly consistent with those of the previous year, thanks to activities
undertaken to contain the impact on margins of inflation, especially in the sourcing markets (China).
The margins were also affected by costs of investments made to relaunch collections and enhance the
designs of the new brands, and advertising costs incurred by the Company to promote its sales, even
when the revenues were not at full capacity.
Despite the impact of the reorganization and sales development, which have not fully produced
returns on the top line yet, operating income was a positive euro 10.5 million (7.0% of sales),
compared to the euro 3.8 million of 2013 (3.1% of sales).
45
The net profit for the year is euro 4.5 million (3.0% of sales), compared to a net loss of euro 8.5 million
for 2013.
It includes net finance costs of euro 0.8 million, compared to the net finance costs of euro 14.1 million
incurred in 2013.
Marcolin S.p.A.'s net finance costs, resulting from finance costs of euro 23.9 million and financial
income of euro 24.7 million, were influenced by the following:
•
•
•
•
interest payments of euro 17.0 million on the bond notes, paid semiannually in May and
November;
reversal of bond issue costs, accounted for under IFRS with the financial method of amortized
cost over the life of the bond notes (maturing November 2019), for euro 1.4 million;
net interest costs of euro 0.9 million on bank loans;
additional net finance costs regarding actualization, translation differences and financial discounts,
totaling euro 0.6 million.
The Parent Company's foreign currency exchange in 2014 resulted in a net loss of euro 1.4 million
(including the fair value measurement of currency hedges in place at the end of the year), referring
entirely to currency translation adjustments made to receivables and payables at the end of the year.
Foreign currency exchange referring to income and expenses (foreign exchange differences on trade
transactions) was balanced, with an immaterial net gain.
Additional financial income of euro 12.3 million is reported referring to end-of-period adjustments of a
receivable due from Marcolin USA denominated in U.S. dollars, which increased due to the
appreciation of the U.S. dollar.
*****
including Marcolin S.p.A., for 2014, 2015 and 2016. Accordingly, the tax consolidation in effect in 2013
was replaced with an identical agreement with 3 Cime S.p.A., which involved terminating the previous
agreement and stipulating a new one for the new three-year period.
financial management of corporate income tax, for example by netting taxable income and tax losses
within the tax group.
The income tax expense is euro 5.2 million, compared to euro 1.7 million for 2013.
The Parent Company's current taxes amount to euro 1.6 million, consisting mainly of Marcolin S.p.A.'s
IRAP (regional business tax) and IRES expense.
The tax expense was affected by the allocation of deferred tax assets on net losses of euro 2.3 million,
whose recognition is based on the expectation of future taxable profits according to the business plans
prepared by the Company (the 2013 amount was euro 3.9 million, reported as income from
participation in Italian tax consolidation).
*****
46
Marcolin S.p.A
STATEMENT OF FINANCIAL POSITION HIGHLIGHTS
The Parent Company's financial position as at December 31, 2014 is presented below in comparison
with the corresponding results of the previous year:
(euro/000)
Trade receivables
Inventories
Trade payables
Operating working capital
Other receivables
Other payables
Net working capital
Non-current receivables
Equity investments and other financial assets
Intangible assets
Goodwill
Fixed assets
Provisions
Current financial payables
Non-current financial payables
Gross financial indebtedness
Non-current financial receivables
Net financial position
Equity
12/31/2014
12/31/2013
69,053
63,061
(98,380)
33,733
7,582
(14,478)
26,837
16,722
64,494
19,867
19,113
189,722
309,918
(7,020)
329,735
57,412
196,386
253,798
(28,947)
(108,190)
116,662
213,073
43,954
36,407
(41,740)
38,621
9,491
(7,901)
40,211
13,115
62,776
18,609
12,874
189,722
297,096
(21,325)
315,983
23,862
190,865
214,728
(105,619)
(6,985)
102,124
213,858
The net financial indebtedness at December 31, 2014 is set forth below against the corresponding
data of 2013:
12/31/2014
12/31/2013
Current financial receivables
18,879
118,257
(56,080)
(1,332)
(196,386)
6,686
105,917
(23,781)
(81)
(190,865)
Total net financial indebtedness
(116,662)
(102,124)
(euro/000)
The Company's net financial position is indebtedness of euro 116.7 million, compared to the euro
102.1 million indebtedness of 2013, an increase of euro 14.6 million.
Pursuant to the transactions described in the first section of this document, the size and structure of
the Company's indebtedness changed dramatically during 2013.
Due to the merger absorbing Cristallo, the December 31, 2013 balance reflects Marcolin's assumption
of Cristallo's existing indebtedness as at October 28, 2013 (incurred for the 2012 acquisition of
47
Marcolin from the former Shareholders, and affected by outflows for the mandatory and residual public
11
tender offers launched by Cristallo on the Marcolin shares).
As noted, in November Marcolin issued bond notes, subscribed for a nominal amount of euro 200
million, whose proceeds were used partly to restructure the pre-existing debt, with principal
repayments of euro 110.0 million, and partly to finance the indirect Viva acquisition (of December
2013). Marcolin financed Marcolin USA's acquisition of Viva Optique, Inc. with a loan of $ 125 million,
at a fixed interest rate of 8.60%.
The notes, maturing in November 2019, were classified as non-current liabilities net of the transaction
costs (totaling euro 10.1 million) accounted for with the amortized cost method.
Within the scope of the refinancing transaction, a super senior revolving credit facility was granted, for
a maximum amount of euro 25 million, by Banca IMI S.p.A., IKB Deutsche Industriebank AG, Natixis
S.A., UniCredit S.p.A. and Goldman Sachs, to be used for ordinary cash flow demands. The credit
facility had been used for euro 20.0 million at the end of 2014.
In 2014, the Company was granted a credit line from Unicredit S.p.A. to cover cash flow demands
associated with investments in joint ventures in China and Russia, which were expected to be drawn
on at the end of 2014 and beginning of 2015.
The credit line of euro 5.0 million, granted to fund Italian companies that invest directly or indirectly in
projects aimed to make their businesses more international, has an irrevocable guarantee on 50%
from SACE S.p.A. (Gruppo Cassa Depositi e Prestiti).
The credit line was granted in a committed form, and is unsecured by collateral. It will be repaid over a
48-month period, with deferred quarterly installments.
The increase in net financial indebtedness was affected by the following transactions:
•
•
•
the Company incurred costs of euro 3.3 million for payment of the 2014 bond transaction
expenses;
transaction fees were paid to renegotiate some important licensing agreements in the year, as
referred to in the Group Report on Operations;
non-recurring costs of euro 1.9 million for the Viva integration plan were incurred in the year by the
Parent Company.
More information on the cash generated by operating activities is reported notes to the financial
statements.
The debt-to-equity ratio at December 31, 2014 is 0.55 (compared to 0.48 at December 31, 2013).
Net
financial
(euro/000.000)
position
Net equity
2010
(17.3)
75.4
2011
(13.6)
93.2
2012
(14.9)
92.0
2013
(102.1)
213.9
2014
(116.7)
213.1
The level of indebtedness is the ratio between net financial position and equity.
Year
11
Level of indebtedness
(0.23)
(0.15)
(0.16)
(0.48)
(0.55)
On December 31, 2012, Cristallo's net indebtedness was euro 80.9 million (net of the costs deferred under the amortized cost method), plus
liquidity of euro 31.8 million, used for the cash outflows of the public tender offers on the Marcolin shares. The expenditure incurred by Cristallo
financed by bank loans to execute the public tender offers was euro 29.7 million. On October 28, 2013, Cristallo's net financial indebtedness was
euro 86.4 million.
48
Marcolin S.p.A
*****
The composition of net working capital, in comparison with the previous year, is set forth in the
following table:
Net working capital
(euro/000)
12/31/2014
12/31/2013
63,061
69,053
(98,380)
(6,896)
36,407
43,954
(41,740)
1,591
26,837
40,211
Inventories
Trade receivables
Trade payables
Other current assets and liabilities
Net working capital
With respect to the various items that make up net working capital:
•
•
•
the value of inventories rose by euro 26.7 million compared to the previous year. The increase in
closing inventories is attributable to an increase in “current” finished product inventories due to the
higher sales, management's decision to improve customer service by reducing delivery time and
increasing the supplies of continuing products (to be “never out of stock”), and the increase in
models and designs within the collections produced. In contrast, inventories of products from noncurrent collections fell considerably from those of 2013. The inventory increase is also attributable
to the discontinuity represented by products with new brands, particularly Zegna and Pucci, which
will be launched shortly;
trade receivables (up by euro 25.1 million) were affected primarily by the sales growth. The
increase in trade receivables is due particularly to the acceleration of business at the end of 2014,
caused by a concentration of deliveries at the end of the year. The credit quality of receivables
due from third parties remained consistent with that of recent years. In 2014 the recent
improvement in the average collection period, or "days sales outstanding" (DSO), lost momentum,
but the extreme emphasis on credit management and client selection made it possible to keep the
DSO, which rose slightly, under control even in the most difficult markets;
the balance of trade payables at the end of 2014 was affected by the inventory increase and by
the recognition of payables due to some licensors under important license renewals that were
stipulated in the year but will affect the accounts of 2015. Excluding this effect in order to make
comparison between the two years more meaningful, the average payment period, or "days
payable outstanding" (DPO), for trade payables improved considerably year-on-year.
With a constant perimeter, the working capital-to-sales ratio is 0.14 (the same as the pro-forma ratio of
2013).
*****
Among the non-current assets, in line with the previous year, the Parent Company recognized
goodwill of euro 189.7 million at the end of 2014 (arising on the reverse merger with Cristallo S.p.A.)
as an asset with an indefinite useful life, and thus not amortized.
Goodwill was reviewed for impairment. The related assumptions and results are described in the notes
to the separate financial statements of Marcolin S.p.A.
The annual capital expenditures regarded mainly industrial plant and machinery for upgrading
purposes, and manufacturing equipment (such as molds) to develop new product collections.
Investments in intangibles were made to upgrade and rationalize the existing business software, in
addition to other investments related to the renewal of certain licenses, as reported at the beginning of
this document.
In October a downpayment (of euro 0.4 million) was put on the purchase of a new manufacturing plant
in Fortogna, for which the outstanding balance was paid in early 2015 with a notarial deed.
49
In addition, a factory in Longarone formerly owned by associate Finitec in liquidation was purchased
(before the end of the liquidation process in 2014); its designation as space to assist Marcolin S.p.A.'s
growth is currently being evaluated.
*****
A Statement of Financial Position summary presenting current and non-current assets and liabilities is
shown below:
Statement of financial position
12/31/2014
12/31/2013
Assets
Non-current assets
418,107
394,719
Current assets
169,790
107,499
Total assets
587,897
502,218
Net equity
213,073
213,858
Current liabilities
208,909
209,890
165,915
78,470
Total liabilities and equity
587,897
502,218
(euro/000)
Liabilities
An analysis of the main changes therein is provided in the notes to the separate financial statements.
*****
50
Marcolin S.p.A
SUBSIDIARIES AND JOINT VENTURES
Pursuant to the December 2013 acquisition of Viva International, in 2014 the Marcolin group
underwent a thorough reorganization process that involved all countries in which companies of both
the Viva group and the Marcolin group co-existed, in the order of the United States, Far East
countries, the United Kingdom, France, Brazil and South American countries.
The Group's structure has changed profoundly since the end of 2013 and will continue to do so at the
beginning of 2015, when the final corporate transactions will be completed, particularly in the United
States, France and Brazil (absorption mergers).
While the Report on the Operations of the Marcolin group describes such process, some information
on the operations that involved Marcolin S.p.A.'s direct and indirect subsidiaries and associates is
reported in this section.
The performance of the related companies is summarized briefly hereunder.
The financial statement results of the subsidiaries as at December 31, 2014 compared to December
31, 2013 are reported extensively at the end of this document.
*****
Marcolin France Sas
Marcolin France Sas (Paris) is 76.9%-owned by Marcolin S.p.A and 23,1%-owned by Marcolin
International B.V. It distributes Marcolin products in France, and in 2014 it produced sales revenues of
euro 18.5 million (euro 19.8 million in 2013).
Marcolin France Sas reports a net loss of euro 0.2 million for 2014 (net loss of euro 0.3 million for
2013).
Viva France Sas
In 2014 Viva France, which distributes Viva brand products in France, produced sales revenues of
euro 18.6 million (euro 17.5 million in 2013).
Wholly owned by Viva Eyewear (UK) Ltd, the stake was sold on October 31 to Marcolin France Sas.
The transaction, a step toward the subsequent merger of Viva France into Marcolin France (by way of
the “dissolution sans liquidation” of Viva France and “trasmission universelle du patrimoine de Viva
France à Marcolin France”, effective on January 1, 2015), had the objective of reducing and
streamlining the structures and related costs of the two French companies by integrating the
businesses into one organization with a sole management, in order to manage the related market
more efficiently and effectively.
Through the merger, the operations, assets and liabilities of the absorbed company continue to
survive within the acquirer.
Marcolin Iberica S.A.
Marcolin Iberica S.A., located in Barcelona, is wholly owned by Marcolin S.p.A.
A distributor of Marcolin products in Spain and Andorra, in 2014 it produced sales revenues of euro
8.1 million (euro 6.2 million in 2013) in those countries.
It reports a net profit of euro 0.2 million for 2014 (net loss of euro 0.2 million for 2013).
Marcolin Deutschland Gmbh
Marcolin Deutschland Gmbh, Ludwigsburg, distributor for the German market (wholly owned by
Marcolin S.p.A.) produced sales revenues of euro 7.5 million in 2014 (euro 6.9 million in 2013) in
Germany.
It reports a net loss of euro 0.2 million for 2014 (net profit of euro 0.4 million for 2013).
51
Marcolin Schweiz Gmbh
Marcolin Schweiz Gmbh, based in Fuellinsdorf (wholly owned by Marcolin S.p.A.), produced sales
revenues of euro 2.0 million in 2014 (euro 2.0 million also in 2013), mainly in Switzerland.
It broke even in 2014 (as in 2013).
Marcolin Benelux Sprl
Marcolin Benelux Sprl (Faimes), wholly owned by Marcolin S.p.A., produced sales revenues of euro
5.0 million in 2013 in Belgium (euro 4.3 million in 2013) in Belgium, Luxembourg and the Netherlands.
It broke even in 2014 (net loss of euro 0.1 million for 2013).
Marcolin Portugal-Artigos de Optica Lda
Marcolin Portugal-Artigos de Optica Lda is based in Lisbon and is 99.82%-owned by Marcolin S.p.A.
In 2014 it produced sales revenues of euro 1.8 million (euro 1.4 million in 2013).
It reports a net profit of euro 0.1 million for 2014 (it broke even in 2013).
Marcolin (UK) Ltd
Marcolin U.K. Ltd, based in Thatcham, Berkshire, wholly owned by Marcolin S.p.A., produced sales
revenues of euro 6.1 million in 2014 (euro 5.5 million in 2013) in the United Kingdom and Ireland.
It reports a net profit of euro 0.3 million for 2014 (net profit of euro 0.8 million for 2013).
Viva Eyewear UK Ltd
Viva Eyewear U.K. Ltd, domestic and international distributor of Viva products, is wholly owned by the
former Viva Europa (now Marcolin USA Eyewear, Corp.).
In 2014 it produced sales of euro 19.9 million (euro 26.7 million in 2013). The annual decrease is
attributable to the September transfer of its business divisions (international and domestic distribution)
to Marcolin S.p.A. and Marcolin UK Ltd.
Under the Marcolin group's sales reorganization plan, Viva Eyewear UK Ltd’s operating divisions were
transferred to Marcolin UK (domestic market) and Marcolin S.p.A. (international market, for distribution
in Italy, the rest of Europe and non-EU countries to which Viva UK had exported).
The business transfers, completed on September 1, considerably downsized the U.K. company,
whose operating structures became redundant, allowing to realize important cost synergies (the
activities formerly performed by Viva UK are now carried out by Marcolin UK and Marcolin S.p.A., with
minimum costs compared to the pre-transfer situation).
Moreover, as part of the international distribution reorganization required for Viva/Marcolin integration,
on January 1 Marcolin S.p.A. transferred the "Asia Pacific Distribution" business division (distribution
of Marcolin products in the Far East) to Marcolin UK Ltd.
The transactions described above (Marcolin S.p.A.'s acquisition of the “international” business division
and Marcolin UK Ltd's acquisition of the “domestic” division), and Marcolin S.p.A.'s subsequent
transfer of the “Asia Pacific Distribution” division are linked, being part of a sophisticated
reorganization plan to set up three geographical hubs (for Europe, USA and the Far East), from which
the Group may benefit from considerable cost and top-line synergies (the latter of which are
unspecified as they are difficult to quantify in advance).
The euro 12 million profit of 2014 (euro 1.8 million in 2013) is largely attributable to non-recurring
capital gains deriving from corporate transactions carried out during the year within the scope of the
plan to integrate Viva into Marcolin, i.e. the transfer of the business divisions (international and
domestic distribution) and the sale of the stakes in Viva France and Viva do Brasil.
52
Marcolin S.p.A
Marcolin USA, Inc.
Marcolin USA, Inc. (based in Scottsdale, Arizona), 89.90%-owned by Marcolin S.p.A., along with Viva
Optique, Inc. is the Group's most important affiliate.
It produced sales revenues of $ 101.6 million in 2014 (equivalent to euro 76.5 million), compared to $
92.3 million in 2013 (euro 69.5 million), primarily in the United States, Canada and South America
(excluding Brazil).
It reports a net loss of euro 4.0 million for 2014 (net profit of euro 2.7 million for 2013). The 2014 result
is affected by borrowing costs on the loan stipulated with Marcolin S.p.A. to acquire the Viva
International group in December 2013.
The operating income of 2014 is a net loss of 2.7 million (-3.6% of revenues), compared to the
operating income of euro 5.5 million for 2013 (7.9% of net revenues).
Viva Optique, Inc.
In 2014 Viva Optique, Inc., based in Somerville, New Jersey, produced revenues of $ 100.7 million
(euro 75.8 million), compared to the $ 107 million of 2013 (euro 80.6 million).
As noted, in December 2013 the Viva International group, a major player in the American eyewear
market, was acquired though Marcolin USA, Inc., which bought the entire shareholding of the parent,
Viva Optique, Inc.
In North America integration started in early 2014, beginning with the sales organization and
rationalization of the sales force, with the objective of reassigning products and markets according to a
unitary logic in order to optimize the distribution of Viva and Marcolin products in the various markets.
In October the switch to a new SAP system (Group ERP) was completed, which resulted in the entire
replacement of the information systems formerly used by Viva, and the operating procedures and
processes were revised considering the larger Group.
On January 1, 2015 the corporate restructuring took effect by way of the dissolution and absorption of
American companies Marcolin USA, Inc., Viva Europa, Inc., Viva International, Inc. and Viva IP, Corp.
into Viva Optique, Inc., effective as of the close of business on December 31, 2014. The name of the
surviving company, Viva Optique, was then changed to Marcolin USA Eyewear, Corp.
Viva Canada Inc.
Viva Canada Inc. is wholly owned by Marcolin USA Eyewear, Corp.
In 2014 it produced sales of euro 5.7 million (euro 6.1 million in 2013), realizing a net loss of euro 1.0
million (net loss of euro 0.6 million in 2013).
The last company of the Viva group to be integrated into the Marcolin group, Viva Canada's business
will be evaluated in 2015 to complete the rationalization process of the organizational structures and
the sales and logistical restructuring in North America.
Marcolin Do Brasil Ltda
Marcolin Do Brasil Ltda, based in Barueri, 99.9%-owned by Marcolin S.p.A., produced sales revenues
of euro 6.2 million (euro 5.8 million in 2013) in the Brazilian market.
It reports a net loss of euro 1.8 million for 2014 (net loss of euro 0.9 million for 2013).
Viva Brasil Comércio Produtos Opticos Ltda
In 2014 the company produced sales of euro 4.8 million (euro 5.2 million in 2013), realizing a net loss
of euro 1.1 million (loss of euro 0.8 million in 2013).
Viva Brasil Comércio Productos Opticos Ltda was 50%-owned by Viva Eyewear UK Ltd and 50%owned by Viva Eyewear HK Ltd.
Within the scope of Viva/Marcolin integration, a transaction similar to the one in France took place in
Brazil, where two identical sales organizations existed, one for the distribution of Marcolin products
53
(Marcolin do Brasil Ltda) and the other for the distribution of Viva products (Viva Brasil Comercio
Produtos Opticos Ltda).
In this case as well, after the new parent Marcolin do Brasil acquired all Viva Brasil shares (at the end
of December), it initiated a merger to absorb such company (which took place on January 1, 2015).
Similarly to the French market, in Brazil the business management was assigned to a newly appointed
manager with extensive experience in the eyewear industry, in order to fully exploit cost and top-line
synergies that only full integration of the two structures would allow.
Marcolin Asia HK Ltd
Marcolin Asia Ltd Hong Kong (wholly owned by Marcolin International B.V.), based in Hong Kong,
produced sales revenues of euro 6.9 million in 2014 (euro 2.7 million in 2013).
It reports a net profit of euro 1.5 million for 2014 (net profit of euro 1.0 million for 2013).
Viva Eyewear H.K. Ltd and Marcolin UK Ltd Hong Kong Branch
Viva Eyewear HK Ltd (wholly owned by Viva Eyewear UK Ltd) produced sales of euro 3.5 million in
2014 (euro 6 million in 2013), and a net loss of euro 0.6 million (as in 2013).
As noted, in July a new organization was set up in Hong Kong, with the objective of combining the
distribution of Marcolin and Viva products in the Far East.
That organization, established in July 2014 through a transfer of Viva Hong Kong's operating division,
was the object of a subsequent business transfer by Marcolin S.p.A., which continued to serve the
Asian market directly until the end of the year, when it transferred the entire Asia Pacific business to
the new organization (effective January 1, 2015).
Due to a sales decline that prevented it from absorbing enough costs to break even, Viva Hong Kong
had accumulated losses and was burdened by some unresolved situations with the Australian and
Brazilian subsidiaries as well as some pending disputes.
Within the scope of the organizational and corporate restructuring process required for Viva/Marcolin
integration, it was considered opportune to identify and carve out the viable operating division of Viva
Hong Kong and transfer it to the newly established Hong Kong branch of Marcolin UK Ltd. The
transfer took place in July 1, 2014.
After absorbing the business division relating to Viva products, the Hong Kong branch was also
designated to distribute Marcolin products in the same areas of the Far East, with clear advantages in
terms of economies of scale and cost and top-line synergies.
In fact, previously Marcolin S.p.A., which used to distribute its products directly in the Far East, had to
import the products into Italy to the logistical center in Longarone and then send them out again to
clients and distributors in Asia, a costly and time-consuming process.
Instead, the Hong Kong branch sources directly from Chinese suppliers thanks to the size and scale
achieved, thereby saturating overheads by distributing into outlying markets autonomously and fully
exploiting the cost benefits arising on operational gearing to improve sales.
Eyestyle Trading (Shanghai) Co. Ltd
This company was established in February 2013.
Eyestyle Trading (Shanghai) Co. Ltd (wholly owned by Marcolin S.p.A.) reports a net loss of euro 0.1
million for 2014 (it broke even in 2013).
It has been reorganized to assist the importing and distribution of the Zegna line to the Zegna
boutiques in China, starting in February 2015.
Marcolin Technical Services Co. Ltd
For the Asia Pacific area, a new company will be established in China that shall monitor the production
of Chinese-manufactured products, perform quality control and check production work in progress for
the Group's companies (Marcolin S.p.A., Marcolin USA Eyewear, Corp., and Marcolin UK Hong Kong
Branch).
The new company, Marcolin Technical Services (Shenzhen) Co. Ltd, will be owned directly by
54
Marcolin S.p.A
Marcolin S.p.A. and based in Shenzhen, Guangdong Province, China. It will be operational in mid
2015, providing technical services regarding production, such as supplier selection in China, quality
control and monitoring of production work in progress, and general manufacturing-related services.
Marcolin International B.V.
Marcolin International B.V. (Amsterdam), wholly owned by Marcolin S.p.A., reports a net loss of euro
0.1 million for 2014 (net loss of euro 0.1 million for 2013).
It does not perform operating activities.
Eyestyle Retail Srl
Eyestyle Retail, based in Milan, runs the Marcolin store in downtown Milan, a prestigious showcase
completing the Group's business activity with a direct retail approach a year ago.
It serves as a direct contact with the retail market that enables to test Marcolin and Viva collections
directly with the consumer and obtain useful information for understanding consumer tastes and
trends.
It reports a net loss of euro 0.3 million for 2014 (net loss of euro 0.4 million in 2013, its start-up year).
Eyestyle.com Srl
Eyestyle.com, based in Longarone (Belluno), was founded in March 2012, when it started to develop
the web portal dedicated to sales of sunglasses, eyeglass frames, optical products and materials and
similar products
The operation produced a net loss of euro 0.2 million in 2014 (net loss of euro 0.2 million in 2013 as
well).
ASSOCIATES
Ging Hong Lin International Co. Ltd and Ginlin Optical Shanghai Co. Ltd
With the objective of managing distribution directly in mainland China, a joint venture was set up with
the Gin Hong Yu International Co. Ltd group, a well-known and respected business operating in the
Chinese eyewear market, in the second half of 2014.
The operation will be managed by Ginlin Optical Shanghai Ltd Co., based in Shanghai, a company
fully controlled by Gin Hong Lin International Co. Ltd.
The Hong Kong company is 50%-owned by Marcolin S.p.A.
Sover-M ZAO
Still regarding the Group's international development, a joint venture was set up with Sover-M, a wellestablished, prestigious company operating in the eyewear business in Russia, for the distribution of
all Marcolin and Viva products. Sover-M's shares were acquired in December 2014.
The Italian Parent Company controls 51% of Sover-M.
Marcolin Nordic AB
In Europe, at the beginning of 2015 a new affiliate was started up in Frösundaviks (Stockholm),
Sweden.
Marcolin Nordic began operating at the end of February 2015, and its mission is to manage closely
and directly the Nordic market (Denmark, Finland, Norway, Iceland and Sweden) in order to distribute
all brands in the Marcolin/Viva portfolio there.
Its structure will have branches operating in the main countries of interest.
Viva Deutschland Gmbh
55
In November 2014 the Marcolin group stipulated an agreement with Viva Deutschland Gmbh to extend
the (Guess and Gant) product distribution agreement expiring in December 31, 2014 to December 31,
2015 for Germany, Austria and Switzerland.
Consequently, the joint venture with Viva UK Eyewear Ltd will continue operating until the new
expiration of the distribution agreement renewed, as will subsidiaries Viva Schweiz AG and Viva
Eyewear Brillenvertriebs Gmbh, whereas Viva Nederland B.V. will be put into liquidation.
Viva Eyewear Australia Pty Ltd
This company is a joint venture between Viva HK (50%) and General Optical (distributor of optical
products in the Australian market).
In March 2014, Viva HK formally notified General Optical that it would not renew the distribution
agreement expiring on June 30, 2014. The company was then put into liquidation. Liquidators were
appointed on February 5, 2015.
Finitec S.r.l.
This company, which handled contract manufacturing, was put into liquidation pursuant to a resolution
of the Extraordinary General Meeting held on May 6, 2011.
In 2014 the liquidation process of Finitec S.r.l. in liquidation was completed. On October 30, 2014,
shareholder Marcolin was assigned assets of euro 240 thousand deriving from the liquidation.
Marcolin purchased from Finitec an idle building (next to the Parent Company's historical headquarters
in Longarone), which will soon be used to expand the floor space dedicated to the business activity.
*****
56
Marcolin S.p.A
MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP AND THE
COMPANY ARE EXPOSED
Economic risks and competitive risks associated with the sectors in which the Group and the
Company operate
The financial position and performance of the Marcolin group and Marcolin S.p.A. are influenced by
macroeconomic factors of the various countries in which they operate. Economic recession has been
present on an international level for the past few years, which has caused some major markets to
contract, in some cases to record minimums. Recently, some economies have shown signs of
significant improvement and have resumed growth; others are still in recession and continue to
experience slow growth or even stagnation.
In this critical moment it is difficult to predict the size and duration of economic cycles and make
forecasts of future demand in the various countries; it is certain that, at least in the near future, the
economies of certain countries will continue to have slow growth.
Significant declines in consumer spending showing up across markets and product lines could impact
the Group's and the Company's financial position and performance, although the diversification of our
markets and the Marcolin product/brand portfolio limits such risk considerably compared to companies
that are more concentrated in certain markets or segments.
The balance achieved in 2014 by Marcolin with the Viva acquisition not only expands the possibilities
to grow in markets having higher growth than Europe (particularly Viva's American markets, where
much of the product is offered), it also accelerates the sales channel diversification (balance between
eyeglass frames and sunglasses, luxury and diffusion, men's and women's), thereby reducing the risk
of potential contraction of sales volumes due to economic recession.
Other uncertain factors could create negative consequences for the Group's and the Company's
performance, such as rising energy prices and/or fluctuating raw material prices, but in such
circumstances the effects could be transferred to sales prices, eliminating or at least limiting the
impact on performance and thus on self-financing capability.
If sales volumes and/or selling prices were to fall significantly, the Group and the Company are able to
implement actions in the short term to contain their cost structures in order to minimize any effects on
financial position and performance.
The tough economies/financial situations of some markets may lead to greater risks regarding the
collection of trade receivables, at least in the most troubled situations.
For this purpose, within the scope of its policy to manage risks regarding customer accounts, the
Company has set up an internal credit management department headed by a designated manager,
which takes every action to manage credit risk at the time of customer evaluation and at delivery,
sending payment notices for delinquent accounts and monitoring new accounts, risky accounts, and
sales credit and payment extensions granted, in collaboration of the sales functions.
Cash flow risk
At the end of 2013 the Parent Company's financial structure changed significantly due to the
transactions described herein.
The bond issue of November 2013 completely changed Marcolin's funding activities, which had been
through the ordinary financial market, i.e. short-term and medium/long-term loans with major banks,
often with bilateral agreements.
The bond issue refinanced the existing debt, providing the Group and the Company with conditions of
relative stability at least until the notes mature at the end of 2019.
The transaction involved a super senior revolving credit facility to be used to manage the timing
mismatch between receipts and payments, and cash requirements for normal operating activities such
as those involving ordinary investments.
The credit facility, a total of euro 25 million, expandable by an additional euro 5 million, is considered
adequate to support the Group's and the Company's ordinary funding needs.
57
On December 31, 2014 additional undrawn credit facilities totaling some euro 16 million were present
at major banks, consisting of revolving credit available for short-term cash flow requirements.
At the end of 2014 and beginning of 2015, the Parent Company accessed forms of financing through
leasing and factoring to assist investments in new projects and manage working capital.
Any significant, sudden reductions of sales volumes could have negative effects on the ability to
generate cash flow from its operating activities. In the current circumstances the Group and the
Company expect to maintain an adequate capacity to generate cash flows though operating activities.
The Marcolin group plans to meet its cash requirements for repayment of its financial debts due and
for the approved budget by using cash flows from operating activities (annual self-financing), cash and
bank balances, use of the aforementioned revolving credit facility, use of credit lines currently
available, and funding through leasing and factoring.
Currency and interest rate risks
The Marcolin group and Marcolin S.p.A. operate in various markets throughout the world and thus are
exposed to market risks connected with fluctuations of foreign exchange rates and interest rates.
Exposure to currency risk arises from the different geographic locations of its manufacturing and
commercial activities. The Group and the Company are primarily exposed to fluctuations of the U.S.
dollar on supplies received from Asia and on sales conducted on the U.S. dollar market.
The cash flows deriving from such transactions partly offset each other, creating natural hedging on
this currency, so the risk is more limited and manageable.
In 2014, due to Viva/Marcolin integration, the Group's and Parent Company's distribution and logistical
flows changed dramatically, resulting in a need to overhaul the comprehensive structure and control
systems and set up effective monitoring tools.
In keeping with its risk management policies, the Marcolin group and Marcolin S.p.A. use hedging
instruments to manage risks of adverse exchange rate and interest rate fluctuations (currency
forwards, on the basis of budget forecasts monitored during the year).
With respect to interest rate risk, the Marcolin group uses types of financing mainly with fixed interest
rates, the bond notes in particular (which have a fixed interest rate of 8.50%).
Therefore, changes in market interest rates should not significantly affect current borrowing costs.
An analytical description of the Group’s risks and hedging instruments is provided in the notes to the
financial statements.
Licensing risks
The markets in which the Group and the Parent Company operate are highly competitive in terms of
product quality, innovation and business conditions.
Marcolin's success is partially due to its capacity to introduce products with innovative and new
designs, its continuous search for new materials and modern productive processes and its ability to
adapt to consumers’ changing tastes, anticipating fashion shifts and reacting to such shifts in a timely
manner.
The Company has signed long-term licensing agreements that enable it to produce and distribute
eyeglass frames and sunglasses under trademarks owned by third parties. If in the long-term the
Group and the Company were unable to maintain or renew their licensing agreements at market
conditions, or if they were unable to stipulate new licensing agreements for other successful labels,
the growth prospects and operating results of the Marcolin group and Marcolin S.p.A. could be
negatively impacted.
For this reason the Group and the Company work constantly toward renewing existing licenses and
procuring new licenses in order to maintain their long-term prospects.
In 2014 these activities produced positive results, as described in the Group Report on Operations.
Many initiatives were carried out successfully in terms of extending license durations and acquiring
new, prestigious licenses (Zegna and Pucci) in addition to those brought by Viva in 2013 (Guess in
primis).
58
Marcolin S.p.A
Moreover, all licensing agreements require payment of annual minimum guaranteed royalties (the
“guaranteed minimum”) to the licensor, even if the sales should fall below certain thresholds, with
possible negative effects on the Group’s financial position and performance.
The Group and the Company monitor these situations closely in order to safeguard the business
performance when overheads are not adequately absorbed by sales revenues.
In 2014, initiatives regarding the revision of minimum guaranteed royalties due over the term of the
licensing agreement were successfully implemented, as described in the Group Report on Operations.
Supplier risks
The Group and the Company use contract manufacturers and third-party suppliers to manufacture
and/or process some of their products.
The use of contract manufacturers and third-party suppliers involves additional risks, such as
cancellation and/or termination of contracts, poor quality in the supplies and services provided and
delivery delays.
Delays or defects of products supplied by third parties, or the cancellation or termination of supplier
contracts without having adequate alternative sourcing available, could have a negative impact on the
Group’s business operations, financial position and performance.
Contract manufacturers and third-party suppliers, located mainly in Italy and Asia, are submitted to
continuous controls by the responsible functions to verify compliance with quality and service
standards, including those relating to delivery timing and methods, and fair prices with respect to
target margins.
The Group and the Company manage this risk by constantly monitoring the sourcing markets, also in
order to identify alternative manufacturers and suppliers in case of temporary or structural difficulties
with the current suppliers.
In 2014 the Asian suppliers were reviewed and monitored from a quantitative and qualitative point of
view (quality, reliability and service), in light of the particular social and economic dynamics
characterizing that sourcing market.
For the Asia Pacific area, a new company was set up in China that shall monitor the production of
Chinese-manufactured products, perform quality control and check production work in progress for the
Group's companies, specifically Marcolin S.p.A., Marcolin USA Eyewear, Corp., and Marcolin (UK)
Hong Kong Branch.
The new company, Marcolin Technical Services (Shenzhen) Co. Ltd, will be established and owned
directly by Marcolin S.p.A. and will be based in Shenzhen, Guangdong Province, China. It will be
operational in mid 2015, providing technical services regarding production, such as supplier selection
in China, quality control and monitoring of production work in progress, and general manufacturingrelated services.
Marcolin started up a manufacturing project aimed to double its Italian manufacturing operation with
the purchase of a new 3,500 square meter factory in Longarone (Fortogna locality), in the heart of the
eyewear district. From the second half of 2015 the factory will ensure the new production capacity
necessary to meet the demands arising from both the new brands added to the brand portfolio and the
structural expansion of some markets.
Reasons for which the consolidation and development of its production capacity in Italy are important
to Marcolin include reduced dependence on external suppliers (both Italian and Asian), which will
enable to shorten the manufacturing lead time and thus increase the ability to seize market
opportunities (and improve the time to market), and the possibility to manage the inflation risk
regarding the Chinese sourcing market, as production insourcing will result in greater control of
production factors.
*****
59
OTHER INFORMATION
Human resources
Marcolin considers the value of human resources to be a critical success factor. Training and
personnel enhancement constitute an investment in the Group’s and the Company's business
consolidation and development.
In 2014 the Company increased the awareness of corporate values and launched a plan to evaluate
qualifications and technical skills in line with the corporate vision.
The values on which the Group is building its future are based on the concept of active, effective
contributions from our people, teamwork, and the satisfaction of customer demands through wellinformed decision-making, relying on excellent skills and know-how and constantly keeping an eye
and ear out for external changes.
The Company worked on plans to reinforce and implement the corporate values in order to
incorporate them more profoundly into the set of tools used to achieve business results.
This objective was pursued through an engagement and performance survey, and through action
plans managed within each department (the Murmur plan).
2014 was a year of feedback and corrective measures, featuring job rotation at the headquarters and
effective support to the main corporate areas, in terms of new hires and development plans to meet
the Group's changing demands.
During the year the Group and the Company continued to recruit and hire competent, motivated
personnel with leadership qualities and potential in line with the career paths.
In 2014 Marcolin worked intensely on the company integration process within the scope of the
Viva/Marcolin integration plan, as described in the Group Report on Operations.
*****
On December 31, 2014, the Group had 1,505 employees (1,481 at the end of 2013), as presented
below.
The table presents the employees in service as at December 31, 2014, excluding independent agents
that work exclusively for the Group and the Company.
The annual increase is not influenced by the inclusion of Viva in the consolidation perimeter at the end
of 2013, because the related employees are already included in the 2013 data.
Employees
Category
Managers
Staff
Manual workers
Total
Final number
12/31/2014
57
854
594
1,505
12/31/2013
68
882
531
1,481
The annual increase of 102 employees against a decrease of 78 results in a net increase of 24
employees.
The increase is attributable mainly to hiring in the manufacturing divisions and quality control areas at
the Longarone facility in order to deal with peak periods and better manage product quality, a critical
success factor, by insourcing quality control.
60
Marcolin S.p.A
The reduction ensued from the Viva integration process, and refers largely to the downsizing of the
sales force conducted by the American companies of the Group. Other affiliates involved in the
reorganization process were Viva Eyewear UK, Viva France, Viva Hong Kong and Viva Brazil.
On December 31, 2014, Marcolin S.p.A. had 709 employees (620 in 2013) in the following categories:
Employees
Final number
Category
12/31/2014
12/31/2013
Managers
15
13
238
456
214
393
Staff
Manual workers
Total
709
620
The data includes the temporary workers employed to meet the demand peaks. As noted, the
increase is attributable mainly to the higher number of employees at the manufacturing divisions and
quality control area in Longarone.
The logistics function and product engineering department were also expanded.
Italian and second-level collective bargaining agreements
The Company signed the new supplementary agreement (expired on December 31, 2013), which will
be in effect until December 31, 2015.
The focus was on improvement of measures aimed to balance work and personal life (part-time and
flexible hours) and optimal use of initiatives to cover production peaks in line with market demands
(planned overtime incentives).
Moreover, performance bonuses were reviewed in accordance with the new parameters of the Group.
Employee welfare and assistance to families
In 2013 Marcolin S.p.A. participated in a bid for "Conciliazione dei tempi di vita e di lavoro" (Work-Life
Balance) subsidies called by the Ministry of Family Policy.
Total subsidies of euro 285,870 were granted, of which euro 114,348 already paid.
From June 2013 the subsidies enabled to provide a tangible contribution to the reimbursement of
costs incurred by Marcolin employees for services assisting a work-life balance (babysitting, daycare,
after-school, services for the elderly).
2014 was an important year for the definition of the first employee welfare plan, which uses the
Company's distinct formula of a separate, customized plan created for each employee.
Its objective is to meet the needs of the employees and their families. It originates from a survey that
investigated the necessities reported by the employees, and was built on the basis of the survey
results.
The welfare plan will be implemented in 2015.
Research and development
The Company continued with its research and development activities in 2014.
Research and development activities are carried out by the Parent Company, Marcolin S.p.A., through
two divisions.
The first division works in close partnership with licensors to come up with new collections, hone style
and research new materials for sunglasses and eyeglass frames.
The second division, which works closely with the first, oversees the subsequent development of
collections and manufacturing of products.
61
In 2010, the research, development and innovation project “Industria 2015” -- New Technologies for
Made in Italy, from the District to the Production Line was launched: Eyewear and industrial
innovation, Objective B Area, Project Number MI00153. The purpose of the project was to create a
platform for supply chain integration that operates on the technical and operational aspects of the
companies, which should encourage the competitive and technological development of Italian
eyewear business systems. The platform should enable marketing and supply chain events to be
communicated quickly to the entire production process, and any critical issues leading to changes in
supply chain planning to be made visible rapidly to all interested parties. The platform will also create
interactive communications between the various parties in the supply chain.
Under the Ministry of Economic Development decree n. 00098MI01 dated December 21, 2013,
expenses of euro 13,747,949 and total facilities of euro 4,247,627 were granted. Marcolin S.p.A.'s
share of investments is euro 849,686.49 with a total contribution to expenses of euro 182,790.90, and
it sustained costs as expected in the financial plan.
In 2014 Marcolin S.p.A. performed research and development activities for technological innovation,
focusing on a project considered particularly innovatory, carried out in Longarone and entitled
“R&D activities aimed at implementing new technical solutions for products and processes enabling to
create new articles for the 2015-2016 collections of its own line and of the various brands managed.
The Company incurred R&D costs of 4,033,955 for such projects in 2014”.
The innovations should lead to good results in terms of sales with a favorable impact on the
Company's business.
With regards to accounting treatment for Research and Development costs, in compliance with Italian
Civil Code Article 2426 point 5, Italian accounting standard n. 24 issued by the Italian Councils of
Certified Accountants as updated by the Italian Accounting Board, and Presidential Decree 917/86
Article 108 (Italian Tax Code) and subsequent amendments, the cost incurred for research and
development was considered an annual expense recognized entirely in the income statement.
While full regulatory discretion is acknowledged in the opportunity to expense all costs in the year or
through an amortization scheme with a maximum duration of five years, it was decided not to
capitalize such costs because even though they regard applied research and precompetitive
development designated to create a new and improved product or production process, the prudence
concept prevailed, also considering the fact that recovery of R&D costs through future revenues (a
requirement for R&D capitalization) requires a highly subjective and aleatory evaluation.
Related party transactions
Related party transactions, including intra-Group transactions, cannot be defined as either atypical or
unusual, as they are part of the Group companies’ normal business activities.
Such transactions take place on an arm’s length basis, taking into account the nature of the goods and
services supplied.
Detailed information on related party transactions is provided in the notes to the consolidated financial
statements and in the notes to the separate financial statements of Marcolin S.p.A.
Treasury shares
On December 31, 2012, Marcolin S.p.A. owned 681,000 treasury shares, for a nominal value of euro
354,120 (the carrying amount, entered at purchase cost, was euro 947 thousand), representing 1.1%
of Marcolin S.p.A.’s share capital.
At the Extraordinary General Meeting of October 31, 2013, with the vote of the sole Shareholder
representing all shares with voting rights, a resolution was passed that canceled all treasury shares
owned by the Company, transferring the nominal value directly to the sole Shareholder, and
eliminating the nominal value of the Company's shares in accordance with Italian Civil Code Article
2346, paragraphs 2 and 3, and changing the By-Laws accordingly.
No other Group company owns shares of Marcolin S.p.A.
Personal data protection
62
Marcolin S.p.A
Pursuant to Legislative Decree 196/03, known as the “Personal Data Protection Code,” activities were
implemented to evaluate the data protection systems of the Group companies subject to such
legislation.
The activities found substantial compliance with the legislative requirements for the protection of the
personal data processed by such companies, including the preparation of the Security Planning
Document, which is constantly updated.
Branches
Marcolin S.p.A. operates from its headquarters in Longarone and with qualified contract
manufacturers.
The operational premises are as follows:
its headquarters in Longarone (Belluno), in zona industriale Villanova n. 4 (registered office,
executive offices and operations);
a logistics center and warehouse in Longarone (Belluno), in zona industriale Villanova n. 20 H;
a showroom and representative office in Milan, in corso Venezia, n. 36;
the former Finitec premises in zona industriale Villanova S.N. (not currently operational);
non-operational premises in Via Noai, 31, Vallesella locality of Domeggie di Cadore (Belluno).
In 2015 the new factory in the Fortogna locality of Longarone will become operational.
The factory, which was purchased in January 2015 from third parties, will begin operating by summer.
*****
63
Marcolin Group
SUBSEQUENT EVENTS
NOTICE OF CALLING TO GENERAL MEETING
PROPOSED RESOLUTION
65
Financial Statement for the year ended December 31,2014
66
Marcolin Group
SUBSEQUENT EVENTS AND BUSINESS OUTLOOK
According to recent forecasts for the Italian economy, the long period of crisis that began in 2008 may
be ending, with possible recovery in GDP and employment.
The economic indicators present fairly stable domestic demand and output in Italy, thanks to the
impetus given by world trade, which is encouraging for recovery prospects. Reforms aiming for growth
by promoting employment and investments are also playing a role. Consumer confidence could
accelerate this process, including the positive expectations for Expo 2015, which could help boost
business and enable stable recovery.
With respect to international macroeconomics, a combination of apparently long-lasting factors is
shaping the global outlook, including the depreciation of the euro against the dollar, the steep decline
of oil prices, the reduction of medium/long-term interest rates and easier access to credit after the
recent credit crunch.
This situation will benefit European countries, which remains our main market.
Moreover, thanks to the favorable economic situation in North America and in emerging countries that
have arrived on the international scene, and despite the difficulties of the Russian and Brazilian
markets, the international scenario is certainly encouraging.
For Marcolin, after two years dedicated to repositioning, reorganization and above all development
activities, the current year will bring consolidation and additional growth due the unfolding of the
positive effects of the successful initiatives, particularly Viva integration, which is being completed in
these first few months of 2015.
Indeed, Viva integration is successfully being completed in these initial months of 2015 after engaging
Marcolin throughout 2014 as a top priority to optimize the complementary aspects of the two Groups
and to release synergies that will enable to face market challenges with greater competitiveness and
focus.
Events of early 2015 include the aforementioned Marcolin/Viva mergers in France and Brazil, the
streamlining of the business and corporate structures in the United States through the termination of
the Arizona operation and the integration of the North American companies into a single structure,
Marcolin USA Eyewear Corp.
To complete the distribution and logistics reorganization, the transfer of the “Asia Pacific” division from
Marcolin S.p.A. to Marcolin UK Ltd Hong Kong Branch and the transfer of the “Latin America”
distribution division from Marcolin USA to the Italian Parent Company took effect on January 1, 2015
and March 1, 2015, respectively.
As a result of the new organization of resources and means obtained by the Group at the end of the
process, the full effects of the expansion will contribute to sustain and stimulate our Company's
business, thanks also to the oil price slump and euro depreciation.
The strategy for the Italian eyewear industry and for Marcolin remains one of internationalization,
having the capacity to seize opportunities offered on international markets.
After the activities in Russia, Northern Europe and China, more initiatives are in progress to
strengthen the sales presence in strategic markets, both in Europe and in the Rest of the World,
through partnerships with renowned local players.
Among the priorities for 2015, following the startup of the Swedish affiliate in February 2015, this year
the Middle East, Brazil and Turkey are likely candidates for additional ventures after those arranged
successfully in 2014.
The Marcolin Group has achieved a strongly balanced product offering (between luxury and diffusion,
men's and women's lines, and eyeglasses and sunglasses) and geographical presence, also thanks to
Viva's widespread presence in America and dominance of the vision segment and mainstream brands.
67
The important scale and balance achieved in the organizational structure are strengths that will enable
the Group to pursue more effectively the consolidation of its existing brand portfolio and the launching
of new licenses, in keeping with the Group's growth targets in strategic markets, particularly in the
more dynamic areas (United States, Middle East, Far East and emerging markets).
Marcolin's strategy includes a larger focus on innovation, certified quality, and exclusive and original
designs that add value and convey added value.
Aware that recovery must take place here, and of the favor with which international consumers
increasingly look upon high-end and luxury Italian-made goods, in 2015 Marcolin decided to invest in a
new manufacturing plant that will enable to reorganize the production and logistics space in
Longarone, in order to foster market growth and reduce dependence on Asian suppliers.
Milan; March 27, 2015
for the Board of Directors
C.E.O
Giovanni Zoppas
68
Marcolin Group
NOTICE OF CALLING TO GENERAL MEETING
The Marcolin S.p.A. Shareholders are hereby called to the General Meeting to be held in Milan, corso
Venezia n. 36 on April 23, 2015 at 10:00 a.m. at a first calling, and April 30, 2015, same place and
same time, at a second calling, to discuss and resolve upon the following
Agenda
•
•
•
Annual Financial Statements for the year ended December 31, 2014, Board of Directors'
Report, Board of Statutory Auditors' Report, Independent Auditors' Report;
Presentation of the Marcolin group's Consolidated Statements for the year ended December
31, 2014 and related Reports;
Resolutions thereon.
Shareholders satisfying the legal conditions and complying with the requirements set out in Italian Civil
Code Article 2370 at least two business days before the date of the meeting are entitled to attend the
General Meeting.
The General Meeting may be attended through electronic means of communication enabling
participation in discussions and equal information for all attendees, in accordance with Article 12.3 of
the Corporate By-Laws currently in effect.
the Chairman
Vittorio Levi
69
PROPOSED RESOLUTION
Shareholders,
The Financial Statements of Marcolin S.p.A. submitted to you present a true and fair view of the
Company's financial position, financial performance and cash flows for the year.
Therefore, we request the Company's sole Shareholder, Marmolada S.p.A., to approve the proposed
Financial Statements for the year ended December 31, 2014.
We also propose to allocate the Company's net profit for the year of euro 4,483,252 as follows:
-
euro 224,163 to the legal reserve;
euro 4,259,089 to retained earnings.
Consequently, after such allocations, the amounts of those reserves will be as follows:
-
Legal reserve: euro 4,077,295;
Retained earnings: euro 106,745,082.
the Chairman
Vittorio Levi
70
Marcolin Group
CONSOLIDATED FINANCIAL STATEMENTS
OF THE MARCOLIN GROUP
FOR THE YEAR ENDED
DECEMBER 31, 2014
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
CONSOLIDATED INCOME STATEMENT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT OF CASH FLOWS
71
72
Marcolin Group
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(euro/000)
Notes
12/31/2014
12/31/2013
Restated *
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
1
Intangible assets
2
Goodwill
2
Investments in subsidiaries and associates
3
Deferred tax assets
4
Other non-current assets
5
Non-current financial assets
6
Total non-current assets
CURRENT ASSETS
Inventories
7
Trade receivables
8
Other current assets
9
Current financial assets
10
Cash and bank balances
11
Total current assets
24,657
37,213
278,010
1,877
38,536
846
5,455
386,593
22,957
29,341
266,833
2,030
31,060
870
7,132
360,223
100,075
80,576
14,099
2,042
36,933
233,725
68,301
71,827
13,994
1,759
38,536
194,416
TOTAL ASSETS
620,318
554,640
32,312
151,994
3,853
50,447
(17,086)
407
32,312
151,994
3,853
43,638
(4,811)
(12,011)
EQUITY
Share capital
Additional paid-in capital
Legal reserve
Other reserves
Retained earnings (losses)
Profit (loss) for the year
12
Non-controlling interests
886
TOTAL EQUITY
-
222,813
214,975
13
14
4
15
199,152
8,919
7,387
4,742
220,200
195,891
18,287
1,127
3,954
219,259
16
17
18
28
19
102,322
41,353
14,799
5,004
13,827
177,305
65,263
17,707
21,287
4,640
11,508
120,406
TOTAL LIABILITIES
397,505
339,664
TOTAL LIABILITIES AND EQUITY
620,318
554,640
LIABILITIES
NON-CURRENT LIABILITIES
Non-current financial liabilities
Non-current provisions
Deferred tax liabilities
Other non-current liabilities
Total non-current liabilities
CURRENT LIBILITIES
Trade payables
Current financial liabilities
Current provisions
Tax liabilities
Other current liabilities
Total current liabilities
(*) Some values of the 2013 consolidated financial statements of the Marcolin group have been restated with respect to those
previously published as a result of completion of the purchase price allocation process for the Viva group, which was acquired
on December 3, 2013.
73
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
Notes
2014
%
2013
%
(euro/000)
NET REVENUES
21
362,133
100.0%
212,327
100.0%
COST OF SALES
22
(40.1)%
59.9%
(81,883)
130,444
(38.6)%
GROSS PROFIT
DISTRIBUTION AND MARKETING EXPENSES
(145,360)
216,773
23
(169,250)
(46.7)%
(101,688)
(47.9)%
24
(31,711)
(8.8)%
(20,707)
(9.8)%
4,928
1.4%
3,221
1.5%
205
0.1%
120
0.1%
GENERAL AND ADMINISTRATION EXPENSES
Other operating income / expenses:
- other operating income
26
- impairement / reversals of equity investments
- other operating expenses
TOTAL OPERATING INCOME / EXPENSES
EFFECTS OF ACCOUNTING FOR ASSOCIATES
OPERATING INCOME - EBIT
Financial income and costs:
(1,014)
4,120
3
205
19,932
18,203
- financial costs
TOTAL FINANCIAL INCOME AND COSTS
PROFIT BEFORE TAXES
(euro/000)
NET PROFIT FOR THE YEAR
(1,432)
1,909
(0.7)%
0.9%
0.1%
5.5%
(12)
9,959
(0.0)%
2,886
1.4%
5.0%
(8.6)%
(24,655) (11.6)%
(12,830)
(3.5)%
(21,769)
7,102
28
(10.3)%
2.0%
(11,810)
(5.6)%
(6,695)
(1.8)%
(201)
(0.1)%
-
0.0%
-
0.1%
(12,011)
407
2014
2013
407
(12,011)
Other items that will not subsequently
be reclassified to profit or loss:
Effect (actuarial gains/losses) on defined benefit plans,
net of taxes of euro 90 thousand
(236)
Other effects
(265)
TOTAL OTHER ITEMS THAT WILL NOT SUBSEQUENTLY
RECLASSIFIED TO PROFIT OR LOSS
(501)
122
122
Other items that will be
subsequently reclassified to profit or loss
Change in foreign currency translation reserve
7,045
(2,592)
TOTAL OTHER ITEMS THAT WILL BE
SUBSEQUENTLY RECLASSIFIED TO PROFIT OR LOSS
7,045
(2,592)
TOTAL CONSOLIDATED COMPREHENSIVE INCOME FOR THE YEAR
6,952
(14,481)
74
4.7%
(31,033)
Profit attributable to non-controlling interests
(0.3)%
1.1%
27
- financial income
Income tax expense
61.4%
0.0%
(5.7)%
Marcolin Group
December 2012
Capital increase of February 6,2013
Allocation of 2012 profit
Merger impact
Capital increase of November 29, 2013
Capital increase of December 3, 2013
Capital and reserves net
total
Period result
Profit/(loss) for the
year
Retained
earnings/(losses)
Other reserves
S.holders deposit in
s/capital
Legal Reserve
Share capital
(euro/000)
Additional paid-in
capital
Other reserves
Total
Non-controlling interests in
equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
1,200
159,660
-
-
-
-
-
(4,811)
156,049
-
156,049
-
-
-
27,300
-
-
-
-
27,300
-
27,300
-
-
-
-
-
-
(4,811)
4,811
-
-
-
31,112
(7,666)
3,853
(27,300)
-
-
-
-
-
-
-
-
-
-
24,000
-
-
-
-
24,000
-
24,000
-
-
-
22,108
-
-
-
-
22,108
-
22,108
- Period result
-
-
-
-
-
-
-
(12,011)
(12,011)
-
(12,011)
- Other components of comprehensive income
-
-
-
-
(2,592)
122
-
-
(2,470)
-
(2,470)
Total comprehensive income
December 2013
32,312
151,994
3,853
46,108
(2,592)
(2,592)
122
122
(4,811)
(12,011)
(12,011)
-
(14,481)
Change in consolidation perimeter
- Period result
- Other components of comprehensive income
Total comprehensive income
December 2014
32,312
151,994
3,853
46,108
7,045
7,045
4,454
-
(12,011)
(265)
(265)
(17,086)
12,011
407
407
407
(14,481)
214,975
407
6,544
6,952
221,927
886
886
214,975
886
407
6,544
6,952
222,813
(236)
(236)
(114)
75
CONSOLIDATED STATEMENT OF CASH FLOWS
N o t es
2014
2013
(euro/000)
OPERATING ACTIVITIES
Profit for the period
Depreciation and amortization
Provisions
1.2
407
8,958
(12,011)
5,411
(2,806)
14.17
2,216
Income tax expense
28
6,695
201
Accrued interest expense
27
12,830
19,881
(8,914)
Cash generated by operations
22,192
11,709
1,034
(1,300)
(Increase) decrease in trade receivables
8
(10,553)
(Increase) decrease in other receivables
9
(2,653)
(Increase) decrease in inventories
7
(27,821)
3,717
(11,260)
16
33,787
(Decrease)/increase in other liabilities
15.19
3,113
(Use) of provisions
14.18
(6,892)
(Decrease) increase in trade payables
(Decrease)/increase in current tax liabilities
28
-
(88)
(931)
(3,574)
(1,383)
(2,492)
5,524
Income taxes paid
(3,609)
(1,938)
Interest paid
(18,253)
(17,452)
Cash used for current operations
(35,373)
(28,685)
Net cash from /(used in) operating activities
(13,181)
(16,975)
(6,179)
(2,615)
INVESTING ACTIVITIES
1
1
2
Net cash outflow on business combinations net of the liquidity acquired (Marcolin Group)
755
(6,742)
-
Net cash outflow on business combinations net of the liquidity acquired (Viva)
(4,958)
Net cash outflow on business combinations net of the liquidity acquired (SoverM)
(1,530)
Net cash from /(used in) investing activities
(18,655)
(30)
(1,512)
(53,619)
(74,126)
(131,902)
FINANCING ACTIVITES
Loans granted
- Increase
- Decrease
6
Net increase (decrease) in bank borrow ings
Loans taken out
- new loans
- repayments
Capital increase
-
-
1,676
1,600
(7,448)
1,934
13.17
47,190
(14,921)
252,600
(164,514)
-
51,300
Net cash from /(used in) financing activities
26,497
142,920
(5,338)
(5,958)
Effect of foreign exchange rate changes
Cash and cash equivalents at beginning of year
3,736
38,536
(707)
45,200
Cash and cash equivalents at end of year
36,933
38,536
76
Marcolin Group
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Introduction
In 2013 Marcolin S.p.A. and the parent company, Cristallo S.p.A., were involved in a reverse merger whereby
Cristallo was incorporated into Marcolin.
In December 2012 Cristallo purchased from Marcolin's former shareholders 78.6% of Marcolin S.p.A.'s share
capital, for a price of euro 4.25 per share (with a total payment of euro 207,579,057), financed with a short-term
credit facility (for euro 87,500,000) and equity for euro 160,740,000 (from the financial resources made available
by the sole shareholder, Marmolada S.p.A., through the subscription and payment of two subsequent capital
increases with additional paid-in capital).
offer ("Offer") of the remaining ordinary Marcolin shares outstanding, representing 21.4% of the Issuer's share
capital (the offering prospectus was approved by Consob Resolution on December 21, 2012).
The acceptance period began in January 2013 and ended in February 2013.
On the closing date of the Offer, shares corresponding to approximately 78.0% of the shares involved in the
public offer and 16.7% of Marcolin's share capital were tendered.
Those shares, added to the Marcolin shares already owned by Cristallo and the treasury shares (corresponding to
1.1% of capital), resulted in Cristallo owning 59,891,105 shares, equal to 96.4% of the Issuer's share capital, on
12
the Offer payment date.
obligation to buy, and right to buy, the remaining outstanding shares not tendered into the Offer, corresponding to
3.6% of the Issuer's share capital.
Cristallo financed the procedure with liquid resources of euro 29,669,093 and additional equity of euro
27,300,000, made available by the sole shareholder, Marmolada S.p.A., through another capital increase.
During the year, procedures for the merger of Cristallo into Marcolin commenced within the scope of an extensive
Cristallo and Marcolin are part. The reverse merger enabled Marcolin to retain its own business and legal
relationships, with significant savings in terms of costs and organizational demands compared to a direct merger.
Group companies, thereby resulting in greater financial stability.
Cristallo S.p.A. into Marcolin S.p.A., as well as the Directors' Report on the merger plan prepared in accordance
with the Italian Civil Code; on July 8, 2013 Marcolin's extraordinary General Meeting approved the merger plan as
well as new By-Laws that used the current text of the absorbed entity.
The merger resulted in the cancellation of all Cristallo's shares, assigning the Marcolin shares to the sole
shareholder, Marmolada, except for the treasury shares, which were canceled at the end of October 2013.
12
The price of euro 4.25 per share coincided with the contractual valuation of Marcolin shares for the December 2012 acquisition.
77
The Extraordinary General Meeting of October 31, 2013 canceled the 681,000 treasury shares owned by the
Parent Company, transferring the nominal value directly to the sole Shareholder, and eliminating the nominal
value of the Company's shares in accordance with Italian Civil Code Article 2436, paragraphs 2 and 3.
*****
78
Marcolin Group
General Information
The explanatory notes set out below form an integral part of the annual Consolidated Financial
Statements of the Marcolin group and were prepared in accordance with the accounting documents
updated to December 31, 2014.
For the purpose of providing exhaustive financial information, the Report on the Operations of the
Marcolin group and Marcolin S.p.A. has been prepared, which contains additional information
regarding the main events of the year, subsequent events, business outlook and other important
financial and operational information of the business.
The consolidated financial statements were prepared on the basis of the going-concern assumption,
the accrual basis of accounting and the historical cost basis, revised as required for the measurement
of certain financial instruments (with the exception of some revaluations performed in previous
periods).
The consolidated financial statements for the year ended December 31, 2014 include the financial
statements of the Parent Company, Marcolin S.p.A., and those of its Subsidiaries and well as the
Group's interests in jointly controlled entities and in Associates.
Marcolin S.p.A. is incorporated under Italian law, listed in the Belluno Companies Register with no.
01774690273, and has shares that until February 14, 2013 were traded in Italy on the Mercato
Telematico Azionario (electronic stock exchange) organized and managed by Borsa Italiana S.p.A.
Marcolin S.p.A. is the Parent Company of the Marcolin group, which operates in Italy and abroad in
the design, manufacturing and distribution of prescription frames and sunglasses, including by way of
direct and indirect management of affiliates and partnerships started up located in major countries of
interest worldwide, and through the management of qualified contract manufacturers.
The addresses of the locations from which the Parent Company's main operations are performed are
listed in the Report on Operations. The addresses of the subsidiaries and associates are as follows.
Company
Headquarters
Address
Marcolin do Brasil Ltda
Marcolin Deutschland Gm bh
Marcolin Gm bH
Marcolin Iberica SA
Marcolin International BV
Marcolin Portugal Lda
Marcolin UK Ltd
Marcolin Usa Inc
Marcolin France Sas
Eyestyle Retail Srl
Eyestyle.com Srl
Hong Kong
Faimes, Benelux
Barueri - SP, Brasil
Ludwigsburg, Germany
Fullinsdorf, Switzerland
Barcellona, Spagna
Am sterdam , Olanda
Lisbona, Portugal
Newbury, Uk
New York, Usa
Parigi, France
Milano, Italy
Longarone, Italy
Units 2207-11, Tower I, Level 22 - Metroplaza, 223 Hing Fong Road - Kwai Fong, N.T.
Rue al Cadorette, 2 - 4317
Av Tamboré, 1180 - 06460-000
Monreposstrasse, 55
Rheinstrasse, 26 - 4414
Juan De Austria, 116 - 4a Planta - 08018
Herikerbergweg 238
Rua Jose Travassos, 15/B 1600-410
Building 107 - New Greenham Park-RG19 6HN
232 Madison Avenue Lbby - NY 10016
45, rue Saint Sébas tien - 75011
Cors o Venezia, 36 - 20121
Zona Industriale Villanova, 4 - 32013
Eyestyle Trading (Shanghai) Co Ltd
Shangai, China
Viva Optique Inc d/b/a Viva International Group Somerville, Usa
Unit 313, no.555 Anyuan Road, Jingan Dis trict
Route 22 wes t, 3140 - 08876 NJ
Viva Europa Inc
Viva IP Inc
Viva Canada Inc
Viva France Sas
Viva Eyewear Hong Kong Ltd
Viva Italia Srl
Viva International Inc d/b/a Viva Japan
Viva Eyewear UK Ltd
Joint Ventures
Viva Optique de Mexico SA de CV
Viva Deutschland Gm bh
Viva Eyewear Brillenvertriebs Gm bh
Viva Nederland B.V.
Viva Schweiz AG
Sover - M ZAO
Gin Hong Lin Intenational Co Ltd
New Jersey, USA
New Jersey, USA
Sao Paulo, Bras il
New Brunswick, Canada
Pontault Combault, France
New Territories, Hong Kong
Operations Ceas ed
Operations Ceas ed
North Yorkshire, UK
3140 Route 22 West, Som erville, NJ 08876
3140 Route 22 West, Som erville, NJ 08876
Rua Um bú, 219 Térreo, Alphaville, 13098/325 Cam pinas, SP
671 Malenfant Blvd., Dieppe, NB, E1A 5T8
18 rue de Prè des Anulnes, Z.I. des Arpents, 77340 Pontault Com bault
Workshop A-E, 8th Floor, Block 1, Kwai Tak Industrial Centre, Nos. 15-33 Kwai Tak Street, Kwai Chung
Edo, Mexico
Schwaebisch Gmund, Germ any
Mondsee, Austria
Rijswijk, Netherlands
Wallis, Switzerland
Rosebery NSW, Australia
Moscow, Russia
Hong Kong
Boulevard Toluca No. 128, Col. San Andres Atoto, C.P. 53500, Naucalpan, Edo
Oderstrasse 2, Schwaebisch Gmund
Herzog-Odilo-Str. 101/16, 5310 Mondsee (Landesgericht Wels FN 246984 m)
Amperelaan 4C, Rijswijk
3951 Agarn, Wallis
110 Dalm eny Avenue, Ros ebery NSW2018
Building 1, 8 Bolshoy Chudov Pereulok
Ocean Centre 609, Harbour City 5, Canton Road Ts t Kowloon
1-2 Milner Court, Hornbeam Square South, Hornbeam Busines s Park, Harrogate, North Yorkshire, HG2 8NB
Presentation currency
These financial statements are presented in the Parent Company's presentation currency (Euro).
79
For the sake of a clear understanding of these consolidated financial statements, the amounts in the
Statement of Financial Position, Income Statement, Cash flow Statement, Statement of Changes in
Equity and explanatory Notes are presented in thousands of Euros. As a result of presenting the
amounts in thousands of Euros, immaterial differences in the totals may emerge due to rounding off.
Italian tax consolidation
Article 117 et seq of December 22, 1986, the ultimate parent company, 3 Cime S.p.A. notified the
agreement and stipulating a new agreement for the three-year period.
financial management of corporate income tax (IRES), for example by netting taxable income and tax
losses within the tax group.
Tax consolidation transactions are summarized below:
• in years with taxable income, the subsidiaries pay 3 Cime S.p.A. the additional tax due to the
tax authorities;
• the consolidated companies with negative taxable income receive from 3 Cime S.p.A. a
payment corresponding to 100% of the tax savings realized, accounted for on an accruals
basis;
• The payment is made only at the time of actual use by 3 Cime S.p.A. for itself and/or for other
Group companies;
• if 3 Cime S.p.A. and the subsidiaries do not renew the tax consolidation option, or if the
requirements for continuance of tax consolidation should fail to be met before the end of the
three-year period in which the option is exercised, tax loss carryforwards resulting from the tax
return are split up proportionally among the companies that produced them.
Issuance
The financial statements were authorized for issue by the Board of Directors on March 27, 2015.
ACCOUNTING STANDARDS
Basis of preparation
The consolidated financial statements were prepared according to the International Accounting
Standards/International Financial Reporting Standards (IAS/IFRS) issued by the International
Accounting Standards Board (IASB) and approved by the European Union.
The IFRS include all the revised international accounting standards (IAS) and all the interpretations of
the International Financial Reporting Interpretations Committee (IFRIC), the former Standing
Interpretations Committee (SIC).
The accounting policies adopted to prepare the consolidated financial statements for the year ended
December 31, 2014 are the same as those used in the prior year except as regards the adoption of
the following new or revised IFRS or IFRIC.
Accounting standards, amendments and interpretations effective from January 1, 2014
Application of the following new IFRS standards and/or standards revised by the International
Accounting Standards Board and IFRIC interpretations became mandatory in 2014.
Description
80
Approved as of the date of
Effective date of the standard
Marcolin Group
this document
IFRS 10 - "Consolidated Financial Statements"
December 2012
Annual periods beginning on or after January 1,
2014
IFRS 11 - "Joint Arrangements"
December 2012
2014
IFRS 12 - "Disclosures of Interests in Other Entities"
December 2012
2014
April 2013
2014
IAS 27 (revised 2011) "Separate financial
statements"
December 2012
2014
IAS 28 (revised 2011) "Associates and joint
ventures"
December 2012
2014
December 2012
2014
Amendments to IFRS 10,
"Consolidated financial statements", IFRS 12 and IAS
27 for investment entities
November 2013
2014
Amendments to IAS 36, "Impairment of assets"
December 2013
2014
Amendments to IFRS 10, 11 and 12
on transition guidance
Amendment to IAS 32,
"Financial instruments: Presentation",
financial assets and financial liabilities
on
offsetting
Amendment to IAS 39
"Financial
instruments:
Recognition
and
measurement", on novation of derivatives and hedge
accounting
December 2013
2014
June 2014
2014
IFRIC 21, "Levies"
The adoption of the accounting standards, amendments and interpretations listed in the table above
did not have any material effects on the Marcolin group's financial position or performance.
Accounting standards, amendments and interpretations not applicable yet and not adopted
early by the Group for the annual period beginning January 1, 2014
The following IFRSs, interpretations, amendments to existing standards and interpretations, or special
provisions contained in the standards and interpretations approved by the IASB, and information with
respect to their adoption in Europe as at the date of approval of the consolidated financial statements,
are set forth below:
Description
Amendment to IAS 19 regarding defined
benefit plans
Annual improvements cycles 2010-2012
and 2011-2013
Amendment to IAS 16 "Property, plant
and equipment" and IAS 38 "Intangible
assets"
Amendment to IFRS 11, "Joint
arrangements" on acquisition of an
interest in a joint operation
IFRS 14 "Regulatory deferral accounts"
IFRS 9 "Financial instruments"
Approved as of the
date of this document
No
Annual periods beginning on or after July 1, 2014
No
No
Annual periods beginning on or after January 1, 2016
No
No
No
81
IFRS 15 "Revenue from
contracts with customers"
Amendments to IAS 27,
"Separate financial statements"
on the equity method
Amendments to IFRS 10, "Consolidated
financial statements" and IAS 28,
"Investments in associates and joint
ventures"
No
No
No
No accounting standards and/or interpretations with mandatory application in annual periods
beginning after December 31, 2014 were adopted early.
The Marcolin group is evaluating the effects of the application of the above new standards, which are
not currently considered to cause an impact.
Financial statement format
The consolidated financial statements consist of the Statement of Financial Position, Income
Statement, Statement of Comprehensive Income, Statement of Cash Flows, Statement of Changes in
Equity and the related explanatory Notes.
In order to provide comparability, the previous period data was restated as necessary, with
explanations given of the restatements. Some entries are described to provide a better understanding
of certain accounts, where needed.
The Company and the Group prepared the financial statements on the basis of the following
accounting policies.
Statement of Financial Position
Assets and liabilities are classified separately as either current or non-current as envisaged by IAS 1.
An asset is classified as current when it satisfies any of the following criteria:
(a) it is expected to be realized in, or is intended for sale or consumption in, the entity’s normal
operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is expected to be realized within twelve months from the end of the reporting period; or
(d) it is cash or a cash equivalent.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
(a) it is expected to be settled in the entity’s normal operating cycle;
(b) it is held primarily for the purpose of being traded;
(c) it is due to be settled within twelve months from the end of the reporting period; or
(d) the entity does not have an unconditional right to defer settlement of the liability for at least twelve
months after the end of the reporting period.
All other liabilities are classified as non-current.
As necessary, in accordance with IFRS 5, assets (and related liabilities) for which the book value will
be recovered mainly through sale rather than continuing use are classified as “assets held for sale”
and “liabilities relating to assets held for sale”.
Income statement
Costs are classified by function, stating separately the cost of sales, marketing and distribution
expenses and administration expense in order to provide readers with more meaningful and relevant
information than the alternative classification of costs by nature, in view of the business sector.
In addition, it was decided to present two separate statements: the Income Statement and the
Statement of Comprehensive Income.
Statement of Changes in Equity
82
Marcolin Group
The statement was prepared presenting items in individual columns with reconciliation of the opening
and closing balances of each item forming equity.
Statement of Cash Flows
Cash flows from operating activities are presented using the indirect method.
Based on this approach, the net profit for the year was adjusted to account for the effects of non-cash
items on operating, investing and financing activities.
Segment reporting
Segment information was prepared on the basis of the geographical areas in which the Group
operates, through its companies, by identifying the geographical areas as the primary segments of
business.
Basis of consolidation
The scope of consolidation includes direct and indirect subsidiaries.
Below is a list of the companies consolidated on a line-by-line basis and, for the sake of
comprehensive disclosure, a list of the companies accounted for using the equity method.
A summary of the 2014 reclassified financial statements of the subsidiaries (Income Statement and
Statement of Financial Position), in comparison with the corresponding results of the previous year, is
provided at the end of this Annual Report.
83
List of Subsidiaries and Associates
Company
Currency
Share capital
Equity
Net profit / (loss)
Consolidation
method
% ownership
Direct
Indirect
100.00%
Marcolin GmbH
Marcolin Iberica SA
Marcolin UK Ltd
Marcolin Usa Inc
Marcolin France Sas
Eyestyle Retail Srl
Eyestyle.com Srl
Viva Optique Inc d/b/a Viva International Group
HKD
EUR
BRL
EUR
CHF
EUR
EUR
EUR
GBP
USD
EUR
EUR
EUR
CNY
USD
1,539,785
280,000
9,575,240
300,000
200,000
487,481
18,151
420,000
850,000
775,100
1,054,452
200,000
150,000
2,917,723
121,472,262
45,273,880
440,304
1,763,556
1,427,518
60,680
3,358,197
-1,321,426
8,962
997,334
74,541,463
3,029,156
572,364
355,544
1,697,444
115,651,236
15,396,083
6,964
-5,506,365
-241,168
-35,574
236,883
-93,155
102,140
230,412
-7,163,109
-153,943
-289,300
-204,334
-931,388
-6,713,452
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Full
Viva Europa Inc
Viva IP Inc
Viva Canada Inc
Viva France Sas
Viva Italia Srl
Viva International Inc d/b/a Viva Japan
Viva Eyewear UK Ltd
Joint Ventures
Viva Optique de Mexico SA de CV
Viva Deuts chland Gmbh
Viva Eyewear Brillenvertriebs Gm bh
Viva Nederland B.V.
Viva Schweiz AG
Sover - M ZAO
Gin Hong Lin Intenational Co Ltd
USD
USD
BRL
CAD
EUR
HKD
EUR
YEN
GBP
0
10,000
798,560
347,640
37,000
486,369
845,600
0
0
0
8,758
-5,286,154
209,276
558,364
56,133,720
43,051
-38,576,022
18,032,513
0
0
-3,362,497
-1,491,196
-744,670
-5,825,633
-1,882
0
9,682,684
Full
Full
Full
Full
Full
Full
Full
Full
Full
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
MXN
EUR
EUR
EUR
CHF
AUD
RUB
HKD
3,694,685
25,000
35,000
18,000
100,000
1,000,000
306,000
19
28,430,647
217,245
73,351
37,897
284,213
2,369,282
130,893,000
19
5,133,754
567,245
38,351
19,897
133,952
-906,845
0
0
Equity
Equity
Equity
Equity
Equity
Equity
Full
Full
50.00%
50.00%
50.00%
50.00%
50.00%
50.00%
100.00%
99.90%
100.00%
100.00%
100.00%
100.00%
99.82%
100.00%
89.90%
76.89%
100.00%
100.00%
100.00%
0.10%
10.10%
23.11%
100.00%
51.00%
50.00%
The following changes since December 31, 2013 are reported:
• Sover-M, a Russian company, has been included in the consolidation perimeter;
• Ging Hong Lin International Co. Ltd was not consolidated because it was founded on
December 31, 2014 and had no assets until that date. The line-by-line consolidation method
will be used because the conditions for control as per the new international accounting
standards (IFRS 11) are present.
Basis of consolidation
The consolidation method adopted is as follows:
• the equity method is used to consolidate the companies in which the Group has more than
20% ownership ("associates") or over which the Group has significant influence even in
another way; due to the use of the equity method, the carrying amount of the investee is
aligned with the equity adjusted, as necessary to reflect the adoption of the IFRS approved by
the European Commission and, includes the recognition of any goodwill identified at the time
of the acquisition. The interest in the profits/losses realized by the associate after the
acquisition date is recognized in the income statement, whereas the interest in changes in
reserves after the acquisition date is recognized in the equity reserves. If the Group’s interest
in the losses of an associate is equal to or in excess of its interest in the associate itself, taking
into account all unsecured receivables, the value of the associate is written off and the Group
does not recognize additional losses with respect to those attributable to it except and to the
extent that the Group is required to answer for them. Unrealized profits and losses on
transactions with associates are eliminated on the basis of the Group’s interest therein;
• companies are consolidated on a line-by-line basis when the Group exercises control over
them ("subsidiaries") by virtue of direct or indirect ownership of the majority of shares with
voting rights or by exercise of dominant influence expressed by the power to govern, whether
directly or indirectly, the company’s financial and operating policies, obtaining the related
benefits regardless of any equity ownership. Any potential voting rights exercisable at the
reporting date are considered for the purpose of determining control. Subsidiaries are
84
Marcolin Group
•
•
•
•
•
•
consolidated from the date on which control is gained and are deconsolidated on the date
from which such control ceases;
the financial statements of the subsidiaries, associates and joint ventures are incorporated
using the accounting policies of the Parent Company; consolidation adjustments are made as
necessary to create consistency between items influenced by the application of different
accounting policies;
on consolidation, balances and transactions between consolidated subsidiaries are eliminated
in full, i.e. receivables and payables outstanding at the end of the period, expenses and
income, finance costs and financial income. Significant profits and losses realized between
fully consolidated subsidiaries are also eliminated in full;
significant profits included in products in stock originating from intercompany transactions are
eliminated;
any non-controlling interests in equity or net profit/(loss) are stated separately as noncontrolling interests under the consolidated equity;
dividends distributed by fully consolidated companies are eliminated from the income
statement, which incorporates the net profits or losses realized by such companies;
financial statements presented in a different functional currency from that of the Parent
Company are translated into euros by applying the current exchange rates in force on the
reporting date to assets and liabilities, and the average exchange rates for the reporting period
to revenues, costs, income and expenses. The related currency exchange differences are
13
recognized in the changes in equity.
The following table lists the exchange rates used for translation:
Currency
Sym bol
12/31/2014 12/31/2013
Australian Dollar
Brasilian Real
Canadian Dollar
Sw iss Franc
Remimbi
English Pound
Hong Kong Dollar
Japanese Yen
Mexican Pesos
Russian Rublo
USA Dollar
AUD
BRL
CAD
CHF
CNY
GBP
HKD
JPY
MXN
RUB
USD
1.483
3.221
1.406
1.202
7.536
0.779
9.417
145.230
17.868
72.337
1.214
1.542
3.258
1.467
1.228
8.349
0.834
10.693
144.720
18.073
45.325
1.379
Change
2014
2013
(3.9)%
1.472
1.378
(1.1)%
3.121
2.869
(4.1)%
1.466
1.368
(2.1)%
1.215
1.231
(9.7)%
8.186
8.165
(6.6)%
0.806
0.849
(11.9)% 10.302 10.302
0.4% 140.306 129.663
(1.1)% 17.655 16.964
59.6% 50.952 42.337
(12.0)%
1.329
1.328
Change
6.8%
8.8%
7.1%
(1.3)%
0.3%
(5.1)%
0.0%
8.2%
4.1%
20.3%
0.0%
Business combinations
The Group's business combinations are accounted for with the acquisition method in accordance with
IFRS 3, "Business Combinations".
The cost of an acquisition is the fair value, at the control transfer date, of assets acquired, liabilities
assumed, and equity instruments issued in exchange for the control of the acquired entity.
Based on the acquisition method, the cost of the business combination is allocated to the identifiable
acquired net assets, at the acquisition date, through the fair value measurement of the assets
acquired and liabilities and contingent liabilities assumed, and goodwill is recognized to the extent of
the excess of the business combination cost over the acquirer's interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities recognized. If the initial accounting for a business
combination can be determined only provisionally, adjustments to the values initially attributed are
13
Translation of foreign-currency financial statements
Financial statements presented in a different functional currency are translated into euros in accordance with IAS/IFRS as follows:
•
assets and liabilities are translated at the current exchange rates in force on the reporting date;
•
revenues, costs, income and expenses are translated at the average exchange rate for the reporting period, considered to be a reasonable
approximation of the actual exchange rates of the dates of the transactions;
•
currency exchange differences arising from translation of opening equity and the annual changes in equity are recognized in the “foreign
currency translation reserve” under “other reserves”.
85
made within twelve months of the acquisition date. Non-controlling interests are recognized at the fair
value of the net acquired assets.
When a business combination is achieved in stages with subsequent share purchases, each stage is
measured separately based on the cost and fair value of the assets, liabilities and contingent liabilities
at each transaction date to determine the amount of any difference.
If a subsequent acquisition enables to obtain control of an entity, the previously owned interest is
restated based on the fair value of identifiable assets, liabilities and contingent liabilities, determined at
the date on which control was obtained.
With respect to the Group's business combinations:
• the balances of the combination with the Viva group, recognized provisionally as at December
31, 2013, were finalized in 2014;
• due to the time of acquisition (December 2014) and lack of relevant detailed information to
fully determine the values, the aggregation of Sover-M was treated as provisional, and thus
will be finalized in the financial statements for the year ended December 31, 2015.
SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted to prepare the consolidated financial statements are
described hereunder:
Property, plant, and equipment ("PP&E" or "tangible assets")
Property, plant, and equipment are recorded at their acquisition or production cost, inclusive of
ancillary costs incurred to bring the assets to working condition for their intended use, excluding land
and buildings for which the deemed cost model was used on the transition date or business
combination date based on the market value determined through an appraisal performed by an
independent qualified appraiser.
PP&E are stated net of depreciation except for land, which is not depreciated, and net of any
impairment losses.
Costs incurred for routine and/or cyclical maintenance and repairs are recognized directly in the
income statement of the period in which they are incurred. Costs concerning the extension, renovation
or upgrading of owned or leased assets are capitalized to the extent that they can be separately
classified as an asset or part of an asset. The carrying value is adjusted by depreciation using the
straight-line method calculated on the basis of estimated useful life.
If the depreciable asset consists of distinctly identifiable components with useful lives that differ
significantly from the other components of the asset, each component of the assets is depreciated
separately, according to the component approach.
Profits and losses deriving from the sale of assets or groups of assets are determined by comparing
the sale price with the relevant net book value.
Government grants relating to tangible assets are recorded as deferred revenues and credited to the
income statement over the depreciation period for the assets concerned.
Finance costs relating to purchases of a fixed asset are charged to the income statement, unless they
are directly attributable to the acquisition, construction or production of an asset which justifies
capitalizing them.
Assets held under finance leases are recognized as tangible assets against the related liability. The
lease payment is broken down into a finance cost, recognized in the income statement, and
repayment of principal, recognized as a reduction of the relevant financial liability.
Leases in which the lessor does not transfer substantially all the risks and rewards incidental to legal
ownership are classified as operating leases. Lease payments under operating leases are recognized
in the income statement on a straight-line basis over the duration of the operating lease.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, using
the depreciation rates listed below:
86
Marcolin Group
Category
Buildings
Non-operating machinery
Depreciable equipment
Operating machinery
Exhibition stands
Electronic machines
Vehicles
Trucks
Depreciation Rate
3%
10%
40%
15.5%
12%
27%
20%
25%
20%
Intangible assets
Intangible assets consist of controllable, non-monetary assets without physical substance that are
clearly identifiable and able to generate future economic benefits. These assets are recognized at
purchase and/or production cost, inclusive of directly attributable expenses to bring the asset to
working condition for its intended use, net of accumulated amortization (except for those assets with
an indefinite useful life) and any impairment losses. Amortization commences when the asset is
available for use and is systematically distributed over the asset’s useful life.
If there is any indication that the assets have suffered an impairment loss, the recoverable amount of
the asset is estimated and any impairment loss is recognized in the income statement. If an
impairment loss subsequently reverses, the carrying amount of the asset is increased to the net
carrying value that the asset would have had if there had been no impairment loss and if the asset had
been amortized, recognizing the reversal of the impairment loss as income.
Goodwill
Goodwill is recognized at cost less any impairment losses.
Goodwill acquired in a business combination is represented by the excess of the cost of the
combination over the acquirer's interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities recognized.
Goodwill is not amortized, but it is reviewed for impairment annually, and whenever events or
circumstances give rise to the possibility of an impairment loss, the recoverable amount is reviewed in
accordance with IAS 36 ("Impairment of Assets"). If the recoverable amount is less than its carrying
amount, goodwill is reduced to its recoverable amount. If goodwill has been allocated to a cashgenerating unit that is partially disposed of, the goodwill associated with the unit disposed of is
included in the determination of any gain or loss on disposal.
Trademarks and licenses
Trademarks and licenses are recognized at cost.
They have a finite useful life and are recognized at cost net of accumulated amortization. Amortization
is calculated on a straight-line basis so as to allocate the cost of trademarks and licenses over their
remaining useful lives.
If, aside from amortization, impairment should emerge, the asset is written down accordingly; if the
reasons for the writedown should cease to exist in future financial years, the carrying amount of the
asset is increased to the net carrying value that the asset would have had if there had been no
impairment loss and if the asset had been amortized.
Trademarks are amortized on a straight-line basis over their estimated useful lives, ranging from 15 to
20 years.
Software
Software licenses acquired are capitalized on the basis of the costs incurred for their purchase and the
costs necessary to make them serviceable. Amortization is calculated on a straight-line basis over
their estimated useful lives (ranging from 3 to 5 years). Costs associated with software development
and maintenance are recognized as costs in the period they are incurred.
The direct costs include the costs for the personnel to develop the software.
87
Research & development costs
Research and development costs for new products and/or processes are recognized as an expense
as incurred unless they meet the conditions for capitalization under IAS 38.
Impairment of tangible and intangible assets
IAS 36 requires impairment testing of tangible and intangible assets when there is any indication that
those assets have suffered an impairment loss.
For intangible assets with an indefinite life, such as goodwill, testing for impairment is performed at
least annually. The recoverable amount is determined by comparing the carrying amount of the asset
with its fair value less costs to sell and value in use, whichever is greater. Value in use is determined
on the basis of the present value of estimated future cash flows from operating activities. For purposes
of impairment testing, assets are grouped at the lowest levels for which there are separately
identifiable cash flows (cash-generating units).
If an asset’s recoverable value is less than its carrying value, the carrying value is reduced to its
recoverable value. This reduction is an impairment loss that is recognized as an expense immediately.
If there are indications that an impairment loss should be reversed, the recoverable amount of the
asset is recalculated and the carrying value is increased to that new value. The increased carrying
value must not exceed the net carrying value the asset would have had without any impairment loss.
An impairment loss with respect to goodwill may not be reversed.
Financial derivatives
Derivative financial instruments are used by the Group solely for hedging purposes, in order to reduce
Companies' exposure to currency risks.
All financial derivatives are measured at fair value, in compliance with IAS 39. Under IAS 39, financial
derivatives qualify for hedge accounting only if, at the inception of the hedge, there is formal
designation and documentation of the hedging relationship, the hedge is expected to be highly
effective, the effectiveness of the hedge can be reliably measured and the hedge is highly effective
throughout the financial reporting periods for which the hedge was designated.
If the hedge is effective, the following accounting policies apply:
Fair value hedge – If a financial derivative is designated as a hedge of the exposure to changes in fair
value of a recognized asset or liability due to a particular risk, and could affect profit or loss, the gain
or loss from remeasuring the hedging instrument at fair value is recognized in the income statement.
The hedged item is adjusted to fair value for the portion of risk hedged, and the adjustment is
recognized in profit or loss;
Cash flow hedge – If a financial derivative is designated as a hedge of the exposure to the future cash
flow variability of a recognized asset or liability, the effective portion of changes in fair value of the
financial derivative is recognized directly in equity. The cumulative gain or loss is reversed from equity
and recognized in profit or loss in the period in which the hedged transaction is recognized. The profit
or loss associated with a hedge (or part of a hedge) that has become ineffective is entered in the
income statement immediately. If a hedged instrument or a hedging relationship is terminated, but the
hedged transaction has not occurred yet, the cumulative gain or loss that has remained recognized in
equity from the period when the hedge was effective is reclassified into profit or loss when the forecast
transaction occurs. If the forecast transaction is no longer expected to occur, the related cumulative
gain or loss that has remained recognized in equity is immediately recognized in the income
statement;
If hedge accounting cannot be applied, the gains or losses arising on changes in the fair value of the
financial derivative are recognized immediately in the income statement.
Fair value measurement
The Group measures financial instruments (derivatives) at their fair values at the end of each reporting
period.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Fair value measurement assumes that a transaction to sell an asset or to transfer a liability takes
place:
in the principal market for the asset or liability; or
in absence of a principal market, the most advantageous market for the asset or liability.
88
Marcolin Group
The principal market or most advantageous market must be accessible to the Group.
The fair value of an asset or liability is measured adopting assumptions that market participants would
use to determine the price of the asset or liability, assuming that they act to best satisfy their economic
interest.
Fair value measurement of a non-financial asset considers a market participant's capacity to generate
economic benefits from the highest and best use of the asset or from the sale to another participant
that can obtain its highest and best use.
The Group uses valuation techniques appropriate in the circumstances and for which sufficient data
are available to measure fair value, maximizing the use of relevant observable inputs and minimizing
the use of unobservable inputs.
All assets and liabilities for which fair value is measured or stated in the financial statements are
categorized into the following levels of the fair value hierarchy:
• Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities that the entity
can access at the measurement date;
• Level 2 - inputs other than quoted market prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly;
• Level 3 - valuation techniques for which the inputs are unobservable for the asset or liability.
The fair value measurement is categorized entirely in the same level of the fair value hierarchy of the
lowest level input used for measurement.
For recurring assets and liabilities, the Group determines whether there have been any transfers
between levels of the fair value hierarchy and reviews the categorization (based on the lowest level
input that is significant to the entire measurement) at the end of each reporting period.
Inventories
Inventories are stated at the lower of average purchase or production cost and the corresponding
estimated realizable value based on market prices. Estimated realizable value represents the
estimated selling price in normal market conditions less all direct selling costs.
Purchase cost was adopted for products purchased for resale and for materials directly or indirectly
used, purchased and used in the production process, whereas production cost was adopted for
finished and semi-finished products.
Purchase cost is determined on the basis of the cost actually incurred, inclusive of directly attributable
ancillary costs, including transport and customs expenses and excluding trade discounts.
Production cost includes the cost of materials used, as defined above, and all directly and indirectly
attributable manufacturing costs.
Obsolete and slow-moving inventories are written down to reflect their useful life or realizable value.
Financial assets – Loans and receivables
Trade receivables, current loan receivables and other current receivables with fixed maturities,
excluding those assets arising on financial derivatives and all financial assets for which prices on an
active market are unavailable and whose fair value cannot be determined reliably, are stated at
amortized cost calculated using the effective-interest method. Financial assets without fixed maturities
are stated at cost. Receivables maturing after more than a year that do not accrue interest or that
accrue interest at below-market rates are discounted using market rates and recognized as noncurrent assets. Reviews are carried out regularly to determine the presence of any objective evidence
that the financial assets taken individually or within a group of assets may have suffered an
impairment loss. If such evidence exists, the impairment loss is shown as a cost in the income
statement for the period.
Trade receivables are adjusted to their realizable value by means of a provision for irrecoverable
amounts when there are objective indications that the Group will not be able to collect the receivable
at its original value.
Cash and bank balances include cash, demand deposits at banks and other highly liquid short-term
investments, i.e. with an original duration of up to three months, and are stated at the amounts actually
on hand at the reporting date.
89
Assets held for sale and related liabilities
These items include non-current assets (or disposal groups of assets and liabilities) whose carrying
value will be recovered mainly through sale rather than through continuing use. Assets held for sale
(or disposal groups) are recognized at their net carrying value or fair value less costs to sell, whichever
is less.
If those assets (or disposal groups) should cease to be classified as assets held for sale, the amounts
are not reclassified or presented for comparative purposes with the classification in the most recent
Statement of Financial Position.
Equity
Share capital
Share capital consists of the subscribed and paid-up capital.
Direct issue costs of new share issues are classified as a direct reduction of equity after deferred
taxes.
Treasury shares
Treasury shares are shown as a deduction of equity. The original cost of treasury shares and
revenues arising on subsequent sale are recognized as changes in equity. The nominal value of the
treasury shares owned is directly deducted from share capital, while the value exceeding the nominal
value is used to reduce the treasury share reserve included in the retained earnings/(losses) reserves.
Share-based payments (stock option plan)
Currently there are no such payments.
Employee benefits
Post-employment benefit plans are classified, according to their characteristics, as either defined
contribution plans or defined benefit plans.
Defined benefit plans, such as that of the "fondo trattamento di fine rapporto" ("TFR", severance
indemnity provision) in place until the 2007 Italian Financial Law became effective, are plans under
which guaranteed employee benefits are paid upon termination of employment. The defined benefit
plan obligation is determined on the basis of actuarial assumptions and is recognized on an accruals
basis consistently with the employment service necessary to obtain the benefits; the obligation is
measured annually by independent actuaries.
The benefits accrued in the year, determined with actuarial methodology, are recognized in the
income statement with the personnel costs, whereas the notional interest cost is recognized in net
financial
income/(costs).
Actuarial gains and losses from changes in actuarial assumptions are recognized directly in the equity
of the year they emerge, in accordance with Revised IAS 19, effective from January 1, 2013.
On January 1, 2007, the 2007 Financial Law and related enactment decrees brought significant
changes to employee severance indemnity regulations, including the possibility for the employee to
choose, by June 30, 2007, how to allocate his or her accruing benefits. New accruing severance
indemnities may be assigned by the employee to selected pension funds or kept within the company
(in the latter case the company will pay the severance pay contributions into a treasury account held at
the INPS).
Pursuant to these changes, the severance indemnity provision accrued up to the date of the
employee's decision (defined benefit plans) was recalculated by independent actuaries, excluding the
component of future salary raises. Severance indemnities accruing from the date of the employee's
decision, and in any case from June 30, 2007, are considered a defined contribution plan, so the
accounting treatment is similar to that in effect for all other contribution payments.
Provisions for risks and charges
Provisions for risks and charges consist of allowances for present obligations (either legal or
constructive) toward third parties that arise from past events, the settlement of which will probably
require an outflow of financial resources, and the amount of which can be estimated reliably.
Provisions are stated at the discounted best estimate of the amount the company should pay to settle
the obligation or to transfer it to third parties as at the reporting date.
Changes in estimates are reflected in the income statement of the period in which the change occurs.
90
Marcolin Group
Risks for which the emergence of a liability is merely possible are identified in the section relating to
commitments and guarantees without making any allowances for them.
Trade payables and other non-financial liabilities
Payables with settlement dates that are consistent with normal terms of trade are not discounted to
present value and are recorded at their face value.
Financial liabilities
Borrowings (loans) are initially recognized at cost, corresponding to the fair value of the liability less
their transaction costs.
They are subsequently measured at amortized cost; any difference between the amount financed (net
of transaction costs) and the nominal value is recognized in the income statement over the life of the
loan, using the effective interest method. If there is a change in the anticipated cash flows and
management is able to estimate them reliably, the value of borrowings is recalculated to reflect such
changes.
Loans are classified among current liabilities if they mature in less than 12 months from the end of the
reporting period and if the Group does not have an unconditional right to defer their payment for at
least 12 months.
Loans are derecognized when they are paid off or when all risks and costs associated with them have
been transferred to third parties.
Revenues and income
Revenues are measured at their fair value net of returns, sales, discounts, allowances, and bonuses.
The Group recognizes sales revenues when all risks and rewards of ownership of the goods are
effectively transferred to the customers under the terms of the sales agreement.
The revenues are recognized net of an allowance representing the best estimate of lost margin due to
any product returns from customers. The allowance is calculated based on past experience.
Revenues are stated net of returns, discounts, vouchers, bonuses and taxes directly connected with
the sale of the goods and supply of the services.
Revenues from services are recognized by reference to the state of completion of the transaction at
the end of the reporting period.
Interest income is accrued on a time basis by reference to the effective interest rate applicable to the
related asset.
Dividends are recognized when the shareholder’s rights to receive payment are established. This
normally occurs when the dividend distribution resolution is approved at the General Meeting.
Cost of sales
The cost of sales includes the cost of producing or acquiring the goods and products sold. It includes
all the costs of materials, processing, and expenses directly associated with production. It also
includes the depreciation of buildings, plant and equipment, the amortization of the intangible assets
used in production and inventory impairment losses.
Royalties
The Group accounts for royalty expense on an accruals basis according to the substance of the
agreements stipulated.
Other costs
The costs are recognized according to the relevance and matching principles.
Interest is accounted for according to the accrual concept on the basis of the interest rate established
by contract. If not established by contract, interest is recognized using the effective interest method,
i.e. using the interest rate that makes all inflows and outflows of a specific transaction financially
equivalent.
91
Translation of foreign currency amounts
Transactions in currency other than the Euro are translated into local currency using the exchange
rates in force on the transaction date. Foreign exchange differences realized in the period are
recognized in the income statement.
Foreign currency receivables and payables are adjusted at the exchange rate in force on the reporting
date, recognizing the entire amount of profit or loss arising on exchange as financial income or finance
costs in the income statement.
Income tax expense
Income taxes are stated in the income statement, except for those regarding items recognized directly
in equity, for which the tax effect is also recognized directly in equity.
Deferred taxes are calculated on the temporary differences generated between the value of the assets
and liabilities reported in the financial statements and the value attributed to those assets and liabilities
for tax purposes.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realized.
Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available
against which they may be recovered. The carrying value of deferred tax assets is reviewed at the end
of each reporting period and, as necessary, is reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the asset to be recovered. Any such
reductions are reversed if the conditions causing them should cease to exist.
Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to
apply when the assets are realized or the liabilities are settled, considering the tax rates in force and
those that have been enacted or substantially enacted by the reporting date.
Other taxes not relating to income, such as property and equity taxes, are included in the operating
items.
92
Marcolin Group
FINANCIAL RISK FACTORS
Financial risks
Financial risk management is an integral part of the Marcolin group’s activities and is performed
centrally by the Parent Company based on strategies to cover specific areas, i.e. through hedges of
foreign exchange risks and risks deriving from fluctuations of interest rates.
The Group also uses some derivative instruments to minimize the impact of such risks on its results.
Although the derivatives were designated exclusively to hedge against the risk of exchange rate
variability on purchases from suppliers in U.S. dollars, they do not qualify for hedge accounting
because they do not fully meet the strict requirements, including formal ones, of the applicable
accounting standard.
Currency risk
The Group operates on an international level, so it is exposed to foreign exchange risk (particularly as
regards the U.S. dollar). Currency risk is managed centrally by the Parent Company, which examines
and monitors fluctuations in the balances of its various foreign currency items in order to evaluate
whether to apply hedges through dealings on the derivatives market.
The Company has a specific policy in place for managing currency risk. This activity makes it possible
to keep under control the main currency positions not covered by natural hedging.
According to the sensitivity analysis performed, a change in exchange rates should not significantly
impact the Group’s consolidated financial statements.
Details of the hedging contracts in place on the reporting date are as follows.
Currency hedges
(euro/000)
Type
Financial Institution
Notional
Currency forward purchase
Veneto Banca
1,000
Veneto Banca
1,000
Currency
Maturity date
Mark to Market
USD
03.25.2015
94
USD
05.28.2015
89
The Group is exposed mainly with the U.S. dollar on purchases of finished and semi-finished products
from suppliers in the Far East, net of the cash flows from sales conducted in U.S. dollar markets.
The hedging instruments in place on December 31, 2014 have a fair value of euro 183 thousand,
accounted for in "short-term borrowings" in these financial statements.
To determine the fair value of the currency forwards purchased, the Group used valuation techniques
that are appropriate in the circumstances and for which sufficient information is available on the
market. Level 2 inputs of the fair value hierarchy defined by IFRS 7 are used in the valuation
techniques.
For the currency derivatives, the potential decrease in the fair value of the currency forwards held by
the Group as at December 31, 2014, due to a hypothetical sudden adverse change of 5% in the Euroto-Dollar exchange rate (depreciation of the Dollar), would be euro 78 thousand. Conversely, the
potential increase in fair value arising on appreciation of the Dollar would be euro 87 thousand.
Interest rate risk
As a result of the fixed-rate euro 200 million bond issue subscribed in November 2013, the Group's
debt structure changed significantly, and the Group now has low interest rate risk.
The section on liquidity risk provides a quantitative analysis of the Group's exposure to cash flow risk
relating to interest rates on loans.
Information on outstanding loans is provided subsequently in these notes.
93
Interest rate sensitivity analysis
Interest rate sensitivity analysis was performed, assuming a 25 basis-point increase and a 10 basispoint decrease of the Euribor/Swap yield curves, published by Reuters for December 31, 2014. In this
manner, the Group determined the impact that such changes would have on income and on equity.
The sensitivity analysis excluded financial instruments that are not exposed to significant interest rate
risk, such as short-term trade receivables and payables.
The interest on bank borrowings was recalculated using the above assumptions and the investment
position in the year, recalculating the higher/lower annual finance costs.
For cash and bank balances, the average balance of the period was calculated using the book values
at the beginning and end of the year. The effect on income of a 25 basis-point increase/10 basis-point
decrease in the interest rate from the first day of the period was calculated on the amount thus
determined.
According to the sensitivity analysis performed on the basis of the above criteria, the Group is
exposed to interest rate risk on its expected cash flows. If interest rates should rise by 25 basis points,
income would decrease by euro 116 thousand due to higher interest expense with banks and third
parties with respect to the increase in financial income on bank accounts.
If interest rates should fall by 10 basis points, income would increase by euro 46 thousand.
Credit risk
The Group has no significant concentration of credit risk. Receivables are recognized net of
writedowns for risk of counterparty default, calculated based on available information regarding the
customer’s solvency and any useful statistical records.
Guidelines have been implemented for managing customer credit, supervised by the designated
business function (Credit Management), to ensure that sales are conducted only with reasonably
reliable and solvent parties, and through the setting of differentiated credit exposure ceilings.
Receivables and other current assets are set forth below by the main areas in which the Group
operates in order to evaluate country risk.
Receivables by geographical area and other current assets
12/31/2014
12/31/2013
Italy
Rest of Europe
19,969
18,907
17,577
19,141
North America
26,959
25,854
Rest of World
29,653
21,919
(euro/000)
Total
94,157
85,821
Liquidity risk
Prudent management of liquidity risk entails keeping a sufficient level of liquidity and having sources of
funding available to meet working capital requirements by means of adequate credit lines.
Due to the dynamic nature of its business, the Group has always preferred the flexibility of obtaining
funding through the use of credit lines. As noted in the Report on Operations, since 2013 the Parent
Company has had a revolving credit facility of nominal euro 25 million available for short-term cash
flow requirements.
At present, based on its available sources of funding and credit facilities, the Group considers its
access to funding to be sufficient for meeting the financial requirements of ordinary operations and for
the capital expenditures planned.
The types of credit lines available and the base rate on the reference date are reported herein.
Liquidity analysis
Liquidity analysis was performed on loans and trade payables. Principal repayments and nondiscounted interest were specified by time brackets. Future interest amounts were determined using
94
Marcolin Group
forward interest rates taken from the spot-rate curve published by Reuters at the end of the reporting
period.
None of the cash flows included in the table were discounted.
Within 1 year
From 1 to 3
years
Loans and bonds (excluding capital
lease)
40,227
4,478
193,107
-
Interest expense on loans and bonds
17,486
34,252
34,101
-
1,126
1,566
(euro/000)
Capital lease
Trade payables
From 3 to 5 More than 5
years
years
-
102,322
-
-
-
-
Fair value measurement of loans
For the fair value measurement of loans, future cash flows were estimated using implicit forward
interest rates from the yield curve of the measurement date, and the latest Euribor fixing was used to
calculate the current coupon.
The values calculated in this manner were discounted based on discount factors related to the
different maturities of such cash flows.
Borrowings-maturity
(euro/000)
Within 1
year
Credit lines used
Loans
2,283 -
8,951
Other financiers
6,472
From 1 to 3
years
-
From 3 to 5 More than
years
5 years
-
-
0
4,163
Credit lines used
Loans
8,951
2,283
712
191,017
Intercompany
12/31/2013
Total
202,363
-
191,017
213,597
15,039
17,707
4,162
-
-
712
-
15,039
21,244
2,450
1,250
-
24,944
Other financiers
5,070
3,537
191,914
-
200,521
12/31/2014
41,353
-
240,504
5,988
193,164
USE OF ESTIMATES
The preparation of consolidated financial statements requires making estimates that could affect the
carrying value of some assets, liabilities, income and expenses, and disclosures concerning
contingent assets and liabilities at the reporting date.
Estimates were used mainly to determine the recoverability of intangible assets, the useful lives of
tangible assets, the recoverability of receivables (including deferred tax assets), the valuation of
inventories and the recognition or measurement of provisions.
The estimates and assumptions are based on data that reflect currently available information.
The estimates and assumptions that involve a significant risk of changes in the carrying values of
assets and liabilities are described hereunder.
Goodwill
Pursuant to IAS 36, the Group performs impairment tests annually.
Recoverable values are calculated based on "value in use".
The calculations require using estimates of the future performance of the cash-generating units
(CGUs) to which goodwill belongs (business plan forecasts), the discount rate (WAAC) and the
prospective growth rate to be applied to the forecast cash flows (“g” rate).
95
Impairment of non-current assets
When there is indication that the net carrying value could exceed the recoverable value, non-current
assets are reviewed to determine whether they have suffered impairment losses, in accordance with
the accounting standards adopted. The recoverable amount is analyzed by comparing the carrying
amount of the asset with its fair value less costs to sell and value in use, whichever is greater.
If any such indication exists, management is required to perform subjective evaluations based on
information available within the Group and on the market, and based on the management's
knowledge.
If indications of impairment should exist, the Group calculates the potential impairment using the
valuation techniques it considers to be the most appropriate.
Proper identification of impairment indications and estimates of potential impairment are dependent on
factors that may vary over time, affecting the measurements and estimates made by management.
Provision for doubtful debts
The provision for doubtful debts reflects management’s estimates of future losses on trade
receivables. The Group estimates the provision for doubtful debts on the basis of expected losses,
determined according to knowledge of the customer, past experience for similar receivables, current
and historic past-due receivables, losses and collected receivables, careful monitoring of credit quality
and forecasts of economic and market conditions.
Provision for inventory impairment
The provision for inventory impairment reflects management’s estimates regarding the losses
expected by the Group, determined on the basis of past experience and both past and anticipated
market trends.
Deferred tax assets
Recognition of deferred tax assets is based on expectations of profits in future years.
Estimates of future earnings used to recognize deferred tax assets are dependent on factors that may
vary over time and significantly affect estimates of deferred tax assets.
96
Marcolin Group
ANALYSIS OF CONSOLIDATED FINANCIAL POSITION
Comments and the most significant changes in the items compared to the consolidated financial
statements for the year ended December 31, 2014 are described hereunder (the amounts are in
thousands of euros, unless specified otherwise).
BUSINESS COMBINATIONS
Acquisition of Viva International group
As described in the Report on Operations, in December 2013 the Marcolin group, through Marcolin
USA, Inc., acquired the Viva International group, one of the most important eyewear businesses in the
U.S. market.
The acquisition date is December 3, 2013.
After carrying out the preliminary and preparatory activities, the acquisition, which received antitrust
approval from the U.S. Federal Trade Commission, was completed by Marcolin USA, Inc., which
became the owner of the entire share capital of Viva Optique, Inc. (Parent Company of the acquired
group) as at December 31, 2013.
According to IFRS 3, "Business Combinations", this acquisition consisted of a business combination,
and as such was accounted for with the acquisition method.
As permitted by IFRS 3, given the significance of the acquisition and the proximity to the 2013
reporting date, the initial accounting for the business combination was determined only provisionally in
the financial statements for the year ended December 31, 2013, and goodwill was determined on the
basis of provisional, partial identification of the fair values of the acquired assets, liabilities and
contingent liabilities.
During 2014, the above business combination was definitively accounted for with respect to the
identification and measurement of the assets and liabilities acquired.
The business combination disclosures required by IFRS 3 are provided hereunder.
Combining entities
The combining entities are Marcolin USA, Inc., the acquirer, and the Viva International group, the
acquiree group of companies.
The following table sets forth the acquired companies and the percentage of equity instruments with
voting rights acquired directly by Marcolin USA, Inc. as at December 31, 2013:
Com pany
Viva IP Inc
Viva International Inc - in liquidazione
Viva Europa Inc
Viva Canada Inc
Viva Optique de México SA de CV
Miracle Optics Inc - in liquidazione
Viva Eyew ear UK Ltd
Viva Italia Srl - in liquidazione
Viva Eyew ear Hong Kong Ltd
Viva Brasil Comércio de Produtos Opticos Ltd
Viva France Sas
Viva Eyew ear Australia Pty Ltd
Viva Schw eiz AG
Viva Netherlands B.V.
Viva Deutschland Gmbh
Viva Eyew ear Brillenvertriebs Gmbh
Registered
Offices
U.S. (New Jersey)
U.S. (New Jersey)
U.S. (New Jersey)
U.S. (New Jersey)
Canada
Messico
U.S. (California)
UK
Italia
Hong Kong
Brasile
Francia
Australia
Svizzera
Paesi Bassi
Germania
Austria
Currency Share Capital
USD
USD
USD
USD
CAD
MXN
USD
GBP
EUR
HKD
BRL
EUR
AUD
CHF
EUR
EUR
EUR
121,872,715
10,000
347,640
3,694,685
93,600
100
798,560
37,000
1,000,000
50,000
18,000
25,000
35,000
% ow nership
Direct Indirect
100%
100%
100%
100%
100%
50%
100%
100%
100%
100%
100%
50%
50%
50%
50%
50%
97
Cost of business combination
The cost of the business combination was euro 117.297 million, represented by the sum of acquiree
equity instruments acquired.
It is detailed below (amounts in thousands of euros):
(curr/000)
Corresponding amount paid by Marcolin USA Inc. at closing on Dec.3, 2013
Other corresponding amounts paid by Marcolin USA Inc. at closing on Dec.3, 2013
Price paid though 3Cime SpA at closing on Dec.3, 2013
Deferred price to be paid to HVHC Inc. after Dec.31, 2013
Purchase price
EUR
USD
85,689
1,841
22,095
7,672
117,297
116,348
2,500
30,000
10,417
159,266
Transaction costs were recognized in the income statement of the year they were incurred (in
accordance with the applicable accounting standard).
Fair value of acquired assets, liabilities and contingent liabilities
The fair value of the net acquired assets is euro 38.977 million, detailed as follows (in thousands of
euros):
98
Marcolin Group
(curr/000)
Assets
Non-current assets
Property, plant, and equipment
Intangible assets
Goodw ill
Investments
Deferred tax assets
Definitive
Fair Value
EUR
Definitive
Fair Value
USD
3,184
9,383
1,950
9,846
24,363
4,323
12,740
Carrying Value in
Viva Goup
Statem ents
EUR
Carrying Value in
Viva Goup
Statem ents
USD
2,648
13,368
33,080
3,724
14,781
65,793
1,950
3,005
89,254
5,056
20,069
89,334
2,648
4,080
121,189
21,187
22,462
1,483
13,404
58,536
82,899
28,767
30,499
2,014
18,200
79,480
112,560
25,865
23,114
1,483
13,404
63,866
153,120
35,119
31,384
2,014
18,200
86,717
207,906
2,069
2,809
2,069
2,809
634
326
560
3,589
861
442
761
4,873
184
1,939
4,191
250
2,632
5,691
Current liabilities
Trade payables
Current liabilities
Current tax liabilities
18,420
675
11,901
2,443
25,011
916
16,159
3,317
18,420
675
5,378
2,443
25,011
916
7,302
3,317
Total liabilities
Acquired net assets
6,895
40,334
43,923
38,977
9,362
54,765
59,638
52,922
6,895
33,811
38,002
115,118
9,362
45,908
51,599
156,307
Current assets
Inventories
Trade and other receivables
Total assets
Liabilities
Goodwill recognized pursuant to the business combination
Goodwill of euro 78.320 million (as at December 3, 2013) emerged as the difference between the cost
of the business combination and the acquirer's interest in the net fair value of the acquired assets and
liabilities, as shown in the table below:
(curr/000)
Net fair value at acquisition date
Minority interest
Net fair value acquisition date
Purchase price
Goodw ill
EUR
USD
38,977
38,977
117,297
52,922
52,922
159,266
78,320
106,343
The goodwill represents the future economic benefits arising from the business combination, due
primarily to the Viva group's legacy of expertise and know-how developed over the years; they form a
potential contribution to future earnings and generation of cash flows deriving from the ability to satisfy
customer demands, quantifiable in terms of higher profitability and cash flows.
99
-
Future economic benefits are assured by the Viva group's collective business strategies and
information regarding licensor relationships, relationships with the distribution network in the American
market, products distributed and customer demands, implemented in the past in order to gain esteem
and win over new customers and markets. This intangible legacy of practical knowledge summarizes
the business know-how of the group acquired.
Acquisition of Sover-M
On December 15, 2014 in Moscow, Marcolin SpA signed a joint-venture agreement with Victoria
Chizhova, Founder and General Manager of Sover-M, a well-established business operating in the
Russian eyewear market
As of December 31, 2014 Marcolin controlled 51% of Sover-M, based in Moscow. The Russian
company's share capital on that date was 306 thousand rubles, and its equity was 130.893 million
rubles. The financial statements are presented in Russian rubles.
Goodwill recognized pursuant to the business combination
Goodwill of euro 610 thousand (as at December 31, 2014) emerged as the difference between the
cost of the business combination and the acquirer's interest in the net fair value of the acquired assets
and liabilities, resulting from the difference between the euro 1.532 million price paid and the
corresponding interest in equity of euro 922 thousand, translated at the December 31, 2014 exchange
rate.
The goodwill represents the future economic benefits arising from the business combination, due
primarily to the company's legacy of expertise and knowledge of the local market.
The joint venture is part of Marcolin's international expansion plan, which by increasing the distribution
of its products in Russia to satisfy customer demands, creates the basis for direct, effective
management of the Russian market, representing a potential contribution to future profitability and to
the generation of cash flows, quantifiable in terms of higher earnings and cash flows.
The fair value of the net acquired assets was determined only provisionally, so the respective
definitive values and value attributed to goodwill could differ from the values reported at this reporting
date.
1. PROPERTY, PLANT, AND EQUIPMENT
The composition of and annual changes in the item are set forth below:
Land and
buildings
Plant and
machinery
Industrial and
commercial
equipment
Other PP & E
Assets under
contrstruction
13,907
1,361
50
(1,358)
215
4,688
1,391
(979)
0
973
1,208
1
(794)
50
3,286
1,558
(440)
(1,205)
149
103
661
(60)
-
Total
(euro/000)
Net value at beginning of 2014
Increases
Decreases
Depreciation
Translation difference
Fair Value revaluations
Im pairment
Reclassification and other
movements
Net value at end of 2014
(34)
14,141
14
5,114
114
1,552
(123)
3,225
1
22,957
6,179
(450)
(4,336)
414
1
(79)
625
(108)
24,657
The Group's 2014 capital expenditures totaled euro 6.179 million:
•
•
•
100
the increase of euro 1.361 million for land and buildings refers primarily to the Fintec building
purchased for euro 380 thousand and to office renovation totaling euro 600 thousand by
Marcolin France, Marcolin Brazil and Marcolin UK HK Branch;
plant and machinery purchases of euro 1.391 million refer to industrial plant and machinery
purchased by the Parent Company to renew production lines;
equipment purchases of euro 1.208 million refer mainly to the Parent Company;
Marcolin Group
•
•
other purchases totaling euro 1.558 million, mainly consist of computer hardware for euro 907
thousand, office furniture for euro 287 thousand and exhibition stands for 314 thousand;
the euro 661 thousand increase in assets under construction and advances refers largely to
the downpayment of euro 380 thousand on the Fortogna building; the rest refers to advances
for plant and equipment purchases.
Depreciation is euro 4.336 million and consists of:
• euro 2.031 million recognized in the components of cost of sales;
• euro 819 thousand recognized in distribution and marketing expenses;
• euro 1.486 million recognized in general and administration expenses.
The undepreciated values of property, plant and equipment and their accumulated depreciation as at
December 31, 2014 are shown in the following table:
Land and
buildings
Plant and
machinery
Industrial and
commercial
equipment
Other PP & E
29,128
(14,987)
19,682
(14,568)
14,412
(12,860)
12,726
(9,501)
625
76,573
(51,916)
14,141
5,114
1,552
3,225
625
24,657
Total
Goodwill
29,341
10,552
(28)
(4,571)
266,833
-
107
1,862
610
10,569
(48)
210
57
37,213
(3)
278,010
Assets under
contrstruction
Total
(euro/000)
Undepreciated value
Accumulated depreciation
Net Value
2. INTANGIBLE ASSETS AND GOODWILL
The composition of and changes in this item are set forth below:
Software
Concessions,
licenses and
trademarks
Other
Intangible assets
under formation
and advances
1,567
3,633
(16)
(1,143)
25,983
10
(277)
1,744
6,792
(3,151)
46
117
(12)
-
(142)
0
1,266
2,907
6,807
(14,802)
12,180
Intangible assets and goodwill
(euro/000)
Increases
Decreases
Amortization
Increases from Business
Combination (Sover-M)
Reclassification and other
movements
630
12,000
18,015
The annual increase of euro 10.552 million is attributable mainly to the following:
• other intangible assets include, among the other, lump sums paid by the Parent Company to
some licensors to extend licenses;
• software of euro 3.633 million for new business application and their implementation, euro 922
thousand of which refers to the Parent Company and euro 2.711 million to Viva Optique.
Amortization is euro 4.571 million and consists of:
- euro 60 thousand recognized in the components of cost of sales;
- euro 4.009 million recognized in distribution expenses;
- euro 798 thousand recognized in general and administration expenses.
The unamortized value of intangible assets and goodwill and their accumulated amortization as at
101
(euro/000)
Undepreciated value
Net Value
Total
Software
Concessions,
licenses and
trademarks
17,504
(10,696)
17,260
(5,080)
6,807
12,180
Other
Intangible assets
under formation
and advances
12/31/2014
Goodwill
29,121
(11,106)
210
-
64,095
(26,882)
278,010
-
18,015
210
37,213
278,010
Goodwill, which is affected by translation differences attributable to the Viva International acquisition,
increased by euro 610 thousand in the year (for provisional goodwill regarding the new acquisition of
Sover-M in Russia).
Goodwill was tested for impairment to assess the fairness of the carrying amount as at December 31,
2014.
The recoverable amount of goodwill was estimated using the Marcolin group's value in use, and was
taken as the enterprise value emerging from the application of the unlevered free cash flow method to
the projected cash flows of the Marcolin group's continuing operation (including Viva International cash
flows).
The following assumptions were made to determine value in use:
•
•
•
•
the cash-generating unit was identified in the Marcolin group (cash flows from projected
operating/financing activities of Marcolin S.p.A. and its Italian and foreign subsidiaries); The
new organizational structure resulting from Viva International integration represents the full
integration of all Viva structures into Marcolin; Viva's previous structures lost their identity in
the integration process through acquisitions, mergers and business division transfers
conducted within the vast international reorganization of the Group, which is now managed as
a single unit coordinated by the Parent Company using a centralized model;
the main data sources used were the Group's 2015 - 2017 business plan projections, the
consolidated financial statements for the year ended December 31, 2013, the draft financial
statements for the year ended December 31, 2014, and the 2015 Budget; the 2015 - 2017
business plan was approved by the Parent Company's Board of Directors on February 26,
2015;
the terminal value was calculated by capitalizing the available cash flow expected perpetually
from 2018 (estimated on the basis of the last year in the business plan, given an increase in
the "g" rate from the last year stated). It has been assumed that it will grow at a "g" rate of
2.3%, conservatively considering the inflation projections for the countries in which Marcolin is
present. The terminal value was adjusted to account for the Parent Company's transfer of the
provision for severance indemnities;
the cash flow discount rate (WAAC) is 8.8%, calculated in line with the Capital Asset Pricing
Model (CAPM) used for valuation in doctrine and in standard practice. This rate reflects
current market estimates referring to: 1) the cost of capital for debt (Kd = 3.0%, after taxes); 2)
the expected return on the risk capital invested in Marcolin (Ke = 9.6%), weighted considering
the source of the Group's main cash flows. Weighted Kd/Ke was determined under the
applicable accounting standards by considering the average financial structure of Marcolin's
main comparables, assuming that the value of the entity's projected cash flows does not
derive from its specific debt/equity ratio.
Based on the results of the analysis performed, goodwill did not suffer any impairment losses.
Moreover, sensitivity analysis was performed on the Group's enterprise value, determined with the
previously described methods, assuming:
• changes in WAAC;
• changes in the g rate.
In this case, a half-percentage point increase in WAAC would result in a euro 41 million decrease in
the enterprise value (given the same g), whereas a half-percentage point decrease in the g rate would
102
Marcolin Group
result in an euro 37.9 million decrease in the enterprise value (given the same WAAC). In both cases
no impairment losses would affect the Profit and Loss.
In the case of conservative 100 bp reductions of WAAC and the "g" rate, the impairment test and
sensitivity analysis results produced recoverable amounts in line with the invested capital presented at
December 31, 2014 for the Marcolin group, without any impairment losses, even considering the
combined reduction of such parameters.
In addition, a stress test was performed assuming higher capital expenditures than those budgeted,
and estimating possible cash outflows that the Group could incur to renew certain licenses upon their
expiration.
The stress test confirmed that the coverage amounts remain positive, with broad safety margins.
Accordingly, it is reasonable to conclude that the carrying value of goodwill stated in the December 31,
2014 financial statements is consistent with its fair value.
Concessions, licenses and trademarks include the Web trademark. This asset, which was obtained in
November 2008 for euro 1.8 million and whose purchase price was determined by an independent
professional appraiser, is amortized over 18 years.
Concessions, licenses and trademarks also include euro 10 million for an option that will enable the
Group to extend a licensing agreement beyond its expiration date (2015) to December 2022. This cost
will be amortized over 7 years starting from 2016.
3. INVESTMENTS IN ASSOCIATES
The investments in associates, totaling euro 1.877 million, consist primarily of investments in noncontrolled companies of the Viva group, including euro 799 thousand in Viva Australia (a 50%-owned
distributor), euro 796 thousand in Viva Mexico (50%-owned), euro 118 thousand in Viva Schweiz and
euro 109 thousand in Viva Germany (50%-owned).
4. DEFERRED TAX ASSETS AND LIABILITIES
The net deferred tax assets as at December 31, 2014 are euro 31.149 million (euro 26.902 million in
2013), the balance of euro 38.536 million in deferred tax assets and euro 7.387 million in deferred tax
liabilities.
The amount is primarily attributable to the Parent Company, for euro 9.555 million (euro 11.331 million
in 2013), followed by Marcolin U.S.A. for euro 8.381 million (euro 6.385 million in 2013), Viva group
subsidiaries for euro 10.032 million (euro 1.328 million in 2013) and Marcolin France for euro 1.278
million (euro 1.431 million in 2013).
The amount refers to:
• euro 18.711 million (euro 2.023 million referring to the Parent Company) in temporary
differences generated between the value of the assets and liabilities reported in the financial
statements and the value attributed to those assets and liabilities for tax purposes;
• euro 12.438 million (euro 7.534 million referring to the Parent Company) in deferred tax assets
recognized on tax losses generated in periods before 2014. Recognition of deferred tax assets
was made possible by the prospect of realizing the assets due to the expectation of future
taxable profits according to the business plans prepared by the Group.
More information is provided in Note 28, regarding income taxes.
5. OTHER NON-CURRENT ASSETS
103
The balance at December 31, 2014 is euro 846 thousand (euro 870 thousand in 2013), and refers
primarily to prepaid commissions on the Parent Company's euro 25 million senior revolving credit
facility.
6. NON-CURRENT FINANCIAL ASSETS
This item amounted to euro 5.455 million on December 31, 2014, and refers primarily to:
• euro 5.232 million for a loan granted by the Parent Company to a third party, on which interest
accrues at market rates and whose repayments are due from January 1, 2013 (in semiannual
installments until 2022);
• the remaining balance on a similar loan granted by Marcolin USA is recognized among current
financial assets because the repayments commenced in 2013 and will end in 2015.
7. INVENTORIES
Inventories are detailed below:
Inventories
12/31/2014
12/31/2013
Finished goods
96,745
76,400
Raw material
17,927
10,509
Work in progress
11,633
9,991
Gross inventory
Inventory provision
126,305
(26,230)
96,901
(28,600)
Net inventory
100,075
68,301
(euro/000)
Net inventories rose by euro 31.774 million from the previous year. The increase in closing inventories
is attributable to an increase in “current” finished product inventories, due to higher sales and
management's decision to improve customer service by reducing delivery time and investing in
supplies of continuing products (to be “never out of stock”). In contrast, inventories of products from
former collections (obsolete and slow-moving stock) fell considerably from those of 2013. The
inventory increase is also attributable to discontinuity represented by products with new brands,
particularly Zegna and Pucci, which will be launched shortly, and to the expansion of collections
offered and models produced;
The euro 29.404 million increase in gross inventories is attributable to:
• finished products, up by euro 20.345 million due to articles of new collections and new brands,
mainly in the luxury segment, in order to satisfy the order increase;
• raw materials and semi-finished goods, up by euro 7.418 million to satisfy the order increase
and improve service;
• work in progress, up by euro 1.642 million, reflecting the greater production needed to meet
the order increase.
The inventory impairment provision provides adequate coverage for obsolete and slow-moving
inventory, taking into account the composition of and possibility to sell such inventory.
The inventory impairment provision has fallen as a percentage of gross inventories due to the
scrapping of obsolete components.
8. TRADE RECEIVABLES
The composition of the trade receivables is as follows
104
Marcolin Group
Trade receivables
12/31/2014
12/31/2013
Gross trade receivables
86,374
77,818
Provision for bad debts
(5,798)
(5,991)
Net trade receivables
80,576
71,827
(euro/000)
Gross trade receivables rose by euro 8.556 million. They were largely affected by the increased sales,
and particularly by the acceleration of business at the end of 2014 due to a concentration of deliveries
at the end of the year. Credit quality remained consistent with that of recent years. In 2014 the recent
improvement in the average collection period, or "days sales outstanding" (DSO), lost momentum, but
the extreme emphasis on credit management and client selection made it possible to keep the DSO,
up by 2 days, under control even with difficult markets and rising sales.
The amount of receivables recognized was not discounted, since all receivables are due within 12
months.
Trade receivables not past-due are set forth below by geographical area (IFRS 7) below:
Receivables not overdue by geographical area
12/31/2014 12/31/2013
(euro/000)
Italy
Rest of Europe
11,382
13,546
8,560
12,428
North America
Rest of World
Total
16,516
23,497
64,941
18,325
16,756
56,070
The following table shows the undisputed trade receivables due and past due (in an aging analysis):
Ageing analysis of trade receivables not protested
Gross
Provision
Net value
(euro/000)
December 31, 2013
Not past due
Past due by less than 3 months
Past due by 3 to 6 months
Past due by more than 6 months
56,070
13,235
3,097
2,888
(146)
(372)
(721)
(1,571)
55,924
12,862
2,376
1,316
Total
75,289
(2,810)
72,479
64,941
11,336
3,762
3,482
83,521
(34)
(428)
(573)
(2,178)
(3,213)
64,907
10,909
3,189
1,304
80,308
December 31, 2014
Not past due
Total
In some markets in which the Group operates, receivables are regularly collected after the date
stipulated by contract, without this necessarily indicating collection issues or financial difficulties.
Consequently, there are trade receivable balances that were not considered impaired even though
they were past due.
The balance of these trade receivables is set forth in the table below by past-due category:
105
Trade receivables overdue but not impaired
12/31/2014 12/31/2013
(euro/000)
10,324
12,862
4,213
3,693
14,536
16,555
Total
For the sake of exhaustive disclosure, an aging analysis of disputed receivables and the related
writedowns is set forth below:
Ageing analysis of protested trade receivables
(euro/000)
Gross value
Provision
Net value
December 31, 2013
210
(210)
-
2,367
(2,329)
38
Total
December 31, 2014
2,577
(2,539)
38
139
(98)
41
2,714
(2,487)
227
Total
2,853
(2,586)
268
The changes in the provision for doubtful debts are set forth below:
12/31/2014
12/31/2013
Opening amount
Increases from Business Combination (Viva)
Provisions
Use / reversal
Reclassification and others
5,991
494
(660)
(370)
344
4,731
1,062
450
(730)
612
(134)
Period end Total
5,798
5,991
(euro/000)
The provision for doubtful debts decreased by euro 192 thousand from the prior year. The provision is
deemed adequate for presenting receivables at their estimated realizable value given their
composition and age and the related guarantees.
Some trade receivables are covered by the types of guarantees typically used for sales on
international markets.
9. OTHER CURRENT ASSETS
The composition of other current assets is shown below:
Other receivables
12/31/2014
12/31/2013
Tax credits
8,414
6,765
Other receivables
3,660
6,225
Other
2,024
1,004
14,098
13,994
(euro/000)
Total other receivables
106
Marcolin Group
This item, euro 14.099 million (euro 13.994 million in 2013), presents a decrease of euro 105
thousand from the prior year.
As noted, in 2014 Marcolin S.p.A. and Italian companies Eyestyle Retail and Eyestyle.com adopted
the Italian tax consolidation regime for corporate income tax (IRES) purposes, which recognizes 3
Cime S.p.A. as the ultimate parent company. The balance of other receivables consists mainly of
receivables of euro 2.597 million due from 3 Cime S.p.A. for the tax consolidation income accrued on
the annual tax losses considered recoverable.
Tax credits increased by euro 1.649 million mainly on account of the higher tax advances paid during
the year by Marcolin USA and Viva Optique.
10. CURRENT FINANCIAL ASSETS
This item, euro 2.042 million at December 31, 2014 (euro 1.759 million in 2013), includes the euro
1.859 million portion currently due on a loan granted by Marcolin USA to a third party on which interest
accrues at market rates, and the euro 182 thousand mark-to-market value of the hedging instruments
used by the Parent Company.
11. CASH AND BANK BALANCES
This item represents the value of cash deposits and highly liquid financial instruments, i.e. those with a
maturity of up to three months.
It fell by euro 1.602 million in the period.
The change in this item is described in the consolidated statement of cash flows, which provides
information on the 2014 movements in cash and bank balances.
12. EQUITY
The Parent Company’s share capital is euro 32,312,475 and is composed of 61,458,375 ordinary
shares without par value.
The composition of share capital did not change in 2014.
The consolidated statement of changes in equity provides more detailed information on this item.
13. NON-CURRENT FINANCIAL LIABILITIES
This item, euro 199.152 million, was euro 195.891 million at the end of 2013; it has increased by euro
3.261 million.
The difference is due primarily to an increase in financial payables of euro 1.994 million, and euro
1.267 million for the annual deferred transaction cost on the bond issue (under the amortized cost
method).
The liability consists mainly of the bond notes issued by the Parent Company, subscribed for a
14
nominal euro 200 million in 2013.
14
The notes, which have a six-year maturity and provide for voluntary early redemption, were issued in a single tranche on November 14, 2013.
The key features are summarized below:
Purchasers: the notes may be offered and placed (1) in the United States, solely with qualified institutional buyers pursuant to Rule 144A of the
U.S. Securities Act; (2) in Europe and in Italy solely with qualified investors pursuant to Directive 2003/71/EC, as subsequently amended and
integrated, Italian Legislative Decree 58/1998 and CONSOB Regulation 11971/1999 for Issuers, unless in circumstances which are exempt from
public offer rules.
Listing: (1) on the Luxembourg Stock Exchange for trading on the Euro MTF Market, and (2) with Borsa Italiana S.p.A. for trading on the extramot
pro multilateral trading facility.
Issue Price: 100% (one hundred percent) of the nominal value of the notes, plus any accrued interest from the issue date.
Maturity Date: November 15, 2019.
107
The notes issued, maturing in 2019, were classified as medium/long-term liabilities, and the related
payable was accounted for in accordance with IAS 39 (amortized cost) in order to defer the
transaction costs pertaining to future periods and to recognize them with the effective interest rate
method.
As noted, within the scope of the refinancing transaction, a super senior revolving credit facility was
granted, for a maximum amount of euro 25 million, by Banca IMI S.p.A., IKB Deutsche Industriebank
AG, Natixis S.A., UniCredit S.p.A. and Goldman Sachs, to be used for ordinary cash flow demands.
The credit facility had used for euro 20 million at the end of 2014. With respect to this financing, costs
(totaling euro 635 thousand) were deferred, including euro 108 thousand pertaining to 2014.
Ministry of productive
activities (technological
innovation)
BOND
Intesa San Paolo S.p.A.,
Goldman Sachs
International, IKB
Deutsche Industrie Bank
AG, Natixis S.A., Unicredit
S.p.A.
Unicredit S.p.A.
Currency
Original
amount
(euro)
Residual
amount
(euro)
Maturity date
Interest
rate
euro
793,171
165,087
06.26.2016
1.012%
euro
euro
euro
200,000,000
20,000,000
5,000,000
200,000,000
20,000,000
5,000,000
11.14.2019
06.03.2019
12.31.2018
8.5%
Notes
Subsidized loan obtained
under the law 46/82, repayable
in 10 annual installments from
June 26, 2007
Bond issued the 14th
November 2013 - Half-yearly
interests in 15th of May and
15th of November
Super Senior RCF - Revolving
Eurib or 1/2/3
facility agreement - Euro
months +
25.000.000 - signed the 18th
spread 4%
November 2013
Eurib or 3
months +
spread
Loan guaranteed by SACE,
granted on December 18,
2014, repayable in 16 quarterly
installments from March 31,
2015
For the sake of exhaustive disclosure, the net financial position is set forth below. More information is
provided in the Report on Operations.
12/31/2014
12/31/2013
Financial receivables
36,933
7,497
(40,021)
(1,332)
(199,152)
38,536
8,890
(17,626)
(81)
(195,891)
Total
(196,074)
(166,172)
(euro/000)
In additional to the commitments described subsequently (see Note 20), for the Revolving Credit
Facility commitments to comply with financial covenants exist at a consolidated level for Marcolin
S.p.A. and its subsidiaries. According to an analysis conducted at the time of preparation of this report,
the covenants were complied with as at December 31, 2014.
Form: notes issued in registered form represented by (1) a global certificate representing the notes issued pursuant to Regulation S of the 1933
U.S. Securities Act, and (2) a global certificate representing the notes issued pursuant to Rule 144A of the 1933 U.S. Securities Act.
Interest Rate: annual fixed rate of 8.5% (eight point five percent), payable semi-annually.
Interest Payment Dates: May 15 and November 15 of each year, from May 15, 2014 to the maturity date.
108
Marcolin Group
14. NON-CURRENT PROVISIONS
15
This item amounts to euro 8.919 million (euro 18.287
million.
million in 2013), a decrease of euro 9.368
The amounts of the long-term provisions and the relevant changes are shown below:
Long term provision
(euro/000)
Provision for severance employee
indemnities
Provision for agency
terminations
Provision for
other risks
Total
3,391
83
(122)
326
-
1,711
0
(67)
35
37
(25)
13,186
1,089
(12,147)
20
1,402
18,287
1,172
(12,335)
361
57
1,377
3,551
8,919
12/31/2013
Allowances
Use / reversal
Actuarial loss / (gain)
Other changes
12/31/2014
3,678
1,690
The employee severance indemnity provision ("TFR") recognized in the Parent Company's financial
16
statements for euro 3.269 million , was measured with an actuarial calculation at the end of the
17
year.
The additional information required under Revised IAS 19 is provided hereunder:
• sensitivity analysis of each significant actuarial assumption at the end of the year, showing
effects of changes in actuarial assumptions reasonably possible at that date, in absolute
terms;
• next year's service cost;
• the average vesting period of the defined benefit obligation;
• payments foreseen under the plan.
Sensitivity analysis
DBO* at 12/31/2014
Inflation rate +0.25%
Inflation rate - 0.25%
Actuarial rate +0.25%
Actuarial rate - 0.25%
Turnover rate -1%
Turnover rate +1%
3,717
3,619
3,590
3,749
3,636
3,703
* Defined Benefit Obligation
Next year service cost
Vesting period
2015 Service Cost
Resting period
15
0.00
9.2
It is affected by reclassification, specifically for euro 1.154 million from a provision for risks and charges deemed non-current.
16
The provision consists of the benefits that accrued to employees until December 31, 2006 to be paid upon or subsequent to termination of
employment: the TFR accruing from January 1, 2007 is treated as a defined contribution plan. By paying the contributions into (public and/or
private) social security funds, the Company complies with all relevant obligations.
17
The parameters used for the actuarial calculation are: 1) mortality rate: Table RG 48 of the Public Accounting Office; 2) disability rates: INPS
table by age and gender; 3) personnel turnover rates: 5%; 4) frequency of severance payments: 2%; 5) discount/interest rate: 0.91%; 6) TFR
growth rate: 1.95% for 2015, 1.2% for 2016, 1.5% for 2017 and 2018, 2% for 2019 on; 7) inflation rate: 1.95% for 2015, 2.4% for 2016, 2.625% for
2017 and 2018, 3% for 2019 on.
109
Years
Payments foreseen
1
2
3
4
5
343
246
227
235
202
The provision for agency termination presents the liability with respect to agents, and is calculated in
accordance with the applicable regulations.
Finally, the provision for other risks presents the estimated amount, in a medium/long-term time
horizon, of the potential losses regarding some licenses, calculated on the basis of future earnings
projections, given the expected turnover growth and related contractual obligations. The provision was
used following to the materialization of the conditions for its adjustment, on the basis of the best
available information.
15. OTHER NON-CURRENT LIABILITIES
At the end of the period the amount of other non-current liabilities was euro 4.742 million (compared to
the euro 3.954 million of 2013), an increase of euro 788 thousand year on year, primarily concerning
other non-trade payables due after 12 months by Viva Optique.
16. TRADE PAYABLES
The following table sets forth the trade payables by geographical area:
Trade payables by geographical area
12/31/2014
12/31/2013
Italy
Rest of Europe
30,654
17,939
9,946
8,554
North America
19,047
20,708
(euro/000)
Rest of World
Total
42,652
102,299
17,509
64,711
The euro 37.059 million increase in trade payables is attributable to the inventory increase of the last
quarter of the year, supporting the sales growth.
The average payment period for suppliers, or days payable outstanding (DPO), improved
considerably, in the Parent Company's case from 114 to 141 days.
The recognized trade payables were not subject to discounting, as the amount is a reasonable
representation of their fair value in consideration of the fact that there are no payables due beyond the
short term.
In compliance with the disclosure requirements of IFRS 7, it is reported that on December 31, 2014
there were no past-due trade payables, excluding the accounts being disputed by the Company with
suppliers, which are of immaterial amounts.
17. CURRENT FINANCIAL LIABILITIES
110
Marcolin Group
The current financial liabilities amount to euro 41.353 million (compared to the euro 17.707 million of
2013), up by euro 17.708 million year on year.
The item includes:
• euro 35.532 million in short-term borrowings from banks (euro 11.233 million in 2013);
• euro 3.185 million due to other financiers, primarily the interest accrued on the bond notes;
• euro 2.606 in other financial payables due within 12 months, including euro 1.685 million for
financial liabilities with the HVHC, Inc. group for the acquisition of Viva, owed by Marcolin USA
Inc.
The following table presents the maturities of the financial payables, which are classified as either
current financial liabilities or non-current financial liabilities.
Borrowings-maturity
(euro/000)
Within 1
year
From 1 to 3
years
years
5 years
Total
Credit lines used
15,039
-
-
-
15,039
Loans
24,944
21,244
2,450
1,250
-
Other financiers
5,070
3,537
191,914
-
200,521
12/31/2014
41,353
-
240,504
5,988
193,164
The disclosures regarding the hedges in place on December 31, 2014 are presented below. All the
agreements in effect were stipulated by the Parent Company, Marcolin S.p.A.
Financial liabilities at fair value through profit and loss
During the year, the Parent Company stipulated derivative contracts regarding the U.S. dollar
exchange rate with Veneto Banca Holding to mitigate the risk of exchange rate variability, some of
which were still in effect on the reporting date.
The fair value of such instruments on December 31, 2014 was a positive euro 182 thousand.
Although the derivatives were designated exclusively to hedge against the risk of exchange rate
variability on purchases from suppliers in U.S. dollars, they do not qualify for hedge accounting
because they do not fully meet the strict requirements, including formal ones, of the applicable
accounting standard.
On the reporting date, no derivatives to hedge against interest rate risk were in place.
18. CURRENT PROVISIONS
The table below presents the most significant changes of the year:
Current provisions
Provisions for sales returns
Other provisions
Total
16,704
4,583
550
21,287
550
(2,645)
(422)
(2,745)
67
(5,390)
(355)
48
(1,342)
(1,294)
(euro/000)
12/31/2013
Allowances
Use /reversal
Other changes
12/31/2014
13,686
1,113
14,799
The provisions for sales returns reflect the estimate made, on the basis of the best available
information, of potential losses emerging on product returns from customers and product warranties,
for euro 13.686 million.
111
Apart from the Parent Company, the provisions were reported mainly by Viva Optique, Marcolin U.S.A.
and Marcolin France.
The other provisions, which totaled euro 1.113 million, refer to potential risks originating mainly from:
1) legal obligations; 2) the current portion of potential losses regarding some licenses, calculated on
the basis of earnings projections, given the expected business growth and related contractual
obligations.
19. OTHER CURRENT LIABILITIES
Below are the details of the other liabilities:
12/31/2014
12/31/2013
(euro/000)
Payables to personnel
Social security payables
Other accrued expenses and deferred income
Total
11,073
8,666
2,276
2,212
479
630
13,827
11,508
The other current liabilities consist primarily of euro 11.073 million due to personnel (euro 8.666 million
in 2013) and euro 2.276 million in social security (euro 2.212 million in 2013).
20. COMMITMENTS AND GUARANTEES
Guarantees associated with the bond issue
With a notarial deed dated October 31, 2013, the Board of Directors passed a resolution to issue nonconvertible senior-secured notes; with a determination deed drawn up by a specifically designated
director on November 7, 2013, and in implementation of the Board of Directors' mandate of October
31, 2013, the terms and conditions for the issuance of notes of nominal euro 200,000,000 were
established.
The notes are secured by collateral provided by the Issuer, controlling shareholder Marmolada S.p.A.
and some subsidiaries of the Issuer to discharge the payment obligations assumed by the Issuer with
the bondholders:
• a pledge over the shares of the Issuer representing 100% (one hundred percent) of share
capital;
• a pledge over the Issuer's intellectual property rights;
• a security assignment over insurance policy receivables due to the Issuer;
• a security assignment over trade receivables due to the Issuer;
• a security assignment over receivables due to the Issuer by Marcolin USA, Inc. originating
from loans granted to provide the company with the financing necessary to pay the purchase
price/acquire the share capital of Viva Optique Inc.;
• a pledge over all Marcolin (UK) Limited shares owned by the Issuer;
• a pledge over all Marcolin France S.a.s. shares owned by the Issuer;
• a pledge over all Marcolin (Deutschland) Gmbh shares owned by the Issuer;
• a pledge over all Marcolin USA, Inc. shares owned by the Issuer;;
• a pledge over all shares of Viva Optique Inc., directly controlled by Marcolin USA, Inc., owned
by Marcolin USA, Inc.;
• a pledge over 65% of the shares of Viva Europa Inc., controlled indirectly by the Issuer,
through Viva Optique Inc.;
• a pledge over 65% of the shares of Viva Eyewear Ltd (UK), controlled indirectly by the Issuer,
through Viva Europa Inc.;
• a security agreement over all material assets of Marcolin USA, Inc.;
• a security agreement over all material assets of Viva Optique, Inc.
112
Marcolin Group
Licenses
The Group has contracts in effect to use trademarks owned by third parties for the production and
distribution of eyeglass frames and sunglasses.
Those contracts require payment of guaranteed minimum royalties over the duration of the contracts;
at December 31, 2014 these future commitments amounted to euro 323.395 million (euro 328.847
million in 2013), including euro 57.464 million falling due within the next year.
Guaranteed minimum Royalties due
31.12.2014
31.12.2013
(euro/000)
Within one year
In one to five years
After five years
Total
57,464
58,930
222,444
43,487
323,395
216,222
53,695
328,847
Rent and leases
Details of the rent and operating lease commitments are shown below, in accordance with IAS 17:
Commitments
(euro/000)
12/31/2014
12/31/2013
2,053
3,826
1,266
7,145
2,059
3,649
444
6,152
961
514
807
678
Rent due
Within one year
After five years
Total
Operating lease payments
Within one year
After five years
Total
1,475
1,485
Total commitments
8,620
7,637
-
-
The rent commitments refer mainly to the office leases of the American companies.
The Group also has guarantees for third parties of euro 162 thousand (euro 161 thousand in 2013).
113
MARCOLIN GROUP CONSOLIDATED INCOME STATEMENT
The Group's consolidated income statement results are presented in comparison with the 2013
results.
Because the Marcolin group acquired control of the Viva group in December 2013, the comparative
figures of these financial statements are not truly meaningful for the purpose of comparison with the
2013 income statement results.
The 2013 figures include the Viva group's results for the month of December (when control was
acquired), and whereas the 2014 figures include the results for the entire year. In order to provide
comparability of the annual income statement data, the Report on Operations presents pro-forma data
on the basis of the same consolidation perimeter; accordingly, the Report on Operations may be
referred to for the description of the 2014 changes compared to the prior year (considering Marcolin
and the Viva group for 12 months, both in 2013 and in 2014).
21. REVENUE
The following table sets forth the 2014 net sales revenue by geographical area:
Net Sales by geographical area
2014
Turnover
(euro/000)
% on
total
2013
Turnover
% on
total
Europe
130,406
36.0%
91,414
43.1%
U.S.A.
140,187
38.7%
61,421
28.9%
Asia
30,701
8.5%
23,130
10.9%
Rest of World
60,839
16.8%
36,362
17.1%
Total
362,133 100.0%
212,327 100.0%
The 2014 revenue is euro 362.133 million, compared to euro 212.327 million for 2013 (including euro
8.163 million referring to the Viva group solely for the month of December).
As noted above, comparison of the 2014 and 2013 revenue with a consistent perimeter may be found
in the Report on Operations.
22. COST OF SALES
The following table shows a detailed breakdown of the cost of sales:
Cost of sales
(euro/000)
Purchase of materials and finished products
Changes in inventories
Cost of personnel
Outsourced processing
Amortization, depreciation and writedowns
Other costs
Total
2014 % of revenue
125,668
(25,398)
19,480
10,478
2,091
13,041
145,360
34.7%
(7.0)%
5.4%
2.9%
0.6%
3.6%
40.1%
2013 % of revenue
51,187
(1,049)
17,474
6,946
2,170
5,154
81,883
24.1%
(0.5)%
8.2%
3.3%
1.0%
2.4%
38.6%
The cost of sales is euro 145.360 million, compared to euro 81.883 for 2013 (including euro 3.429
million referring to the Viva group solely for the month of December)
114
Marcolin Group
The Report on Operations provides the cost of sales in both absolute terms and in comparison with
2013 on the basis of a constant perimeter.
The other expenses refer principally to purchasing charges (transport and customs) and business
consulting services.
23. DISTRIBUTION AND MARKETING EXPENSES
Below is a detailed breakdown of the 2014 distribution and marketing expenses:
Distribution and marketing expenses
2014 % of revenue
(euro/000)
Cost of personnel
Commissions
Amortization
Royalties
Advertising and PR
Other cos ts
Total
59,152
9,831
4,828
44,391
23,845
27,202
169,250
16.3%
2.7%
1.3%
12.3%
6.6%
7.5%
46.7%
2013 % of revenue
30,152
6,229
2,219
33,115
14,839
15,133
101,688
14.2%
2.9%
1.0%
15.6%
7.0%
7.1%
47.9%
They amount to euro 169.250 million, against euro 101.688 million for 2013.
The personnel expenses include non-recurring costs of euro 1.158 million deriving from ad-personam
agreements referring to changes in certain positions, and costs for reorganizing the business
functions.
With respect to advertising and public relations ("PR") expenses, the Group continued to invest in
advertising and marketing to promote the brands it handles, including both portfolio and house brands.
Although in some cases the volumes were not at full capacity, Marcolin is aware of the importance of
ongoing advertising and promotional support, so it maintained its level of advertising expense planned
in 2014 to foster the sales of the brands in the portfolio.
Concerning royalties, in a year of heavy investment in this area, 2014 was impacted by certain
licenses with revenue streams that were not at full capacity (new licenses and/or new collections), so
the guaranteed minimum royalties required under certain licensing agreements were not adequately
absorbed. Pursuant to certain operations and agreements stipulated during the year, in 2015 it will be
possible to improve the profitability of some licenses, thanks to better absorption of royalties and
advertising contributions which in 2014 were not fully saturated by the sales realized.
Other costs include business expenses such as:
•
•
•
•
•
•
•
shipping costs on sales;
marketing expenses incurred for the sales network;
services regarding the sales area;
rent payments;
travel expenses;
telephone and insurance expenses;
entertainment expenses.
24. GENERAL AND ADMINISTRATION EXPENSES
The general and administrative expenses are set forth below:
115
General and administration expenses
(euro/000)
Cost of personnel
Writedowns of receivables
Amortization and writedowns
Other costs
Total
2014
2013
12,685
494
2,039
16,493
31,711
8,387
450
1,077
10,793
20,707
The 2014 general and administrative expenses amount to euro 31.711 million, against euro 20.707
million for 2013 (including euro 1.078 million referring to Viva for the month of December).
The personnel expenses include non-recurring reorganization costs of euro 260 thousand.
The other costs include:
• compensation of directors, statutory auditors, the independent auditing firm and other external
professionals;
• general and administrative services;
• information technology expenses;
• general and administrative consulting services;
• other general and administrative expenses (sundry purchases, telephone expenses,
insurance, travel expenses, rent and rentals).
25. EMPLOYEES
The 2014 average and end-of-period number of employees of the various Group companies (including
the work force on temporary contracts) is broken down below in comparison with the previous year:
Employees
Category
Managers
Staff
Manual workers
Total
Final number
12/31/2014
57
854
594
Average number
12/31/2013
68
882
531
1,505
1,481
2014
61
876
556
2013
54
956
489
1,493
1,499
2014
2013
% sui ricavi
Transport refund
Release of provision
Other income
Total other income
3,069
146
1,713
4,928
1,331
285
1,738
3,354
0.6%
0.1%
0.8%
1.6%
Losses on receivables
Other expenses
(809)
(1,444)
(0.7)%
Total other expenses
(809)
(1,444)
(0.7)%
Total operating income and expenses
4,119
1,909
0.9%
The average number for 2013 refers to a constant perimeter.
26. OTHER OPERATING INCOME AND EXPENSES
The other operating income and expenses are set forth below:
Other operating income and expenses
(euro/000)
The balance of this item is net operating income of euro 4.119 million.
116
Marcolin Group
Other income consists mainly of euro 353 thousand charged to customers for advertising materials,
other charges to customers of euro 570 thousand, contingent gains (unrealized costs regarding
previous periods, costs that were less than the amount originally estimated for them) and insurance
compensation.
Other expenses refer primarily to the lump sum paid by Marcolin USA for costs regarding Viva
integration.
27. FINANCIAL INCOME AND COSTS
The financial income and costs are presented below:
2014
2013
18,203
2,886
Financial costs
(31,033)
(24,655)
Total
(12,830)
(21,769)
(euro/000)
Financial income
The composition of financial income is shown below:
Financial income
2014
2013
-
-
633
468
17,569
2,419
(euro/000)
Interest income
Other income
Gains on currency exchange
Total
18,202
2,886
The composition of finance costs is shown below:
Financial costs
2014
2013
(20,944)
(20,348)
Financial discounts
(2,029)
(909)
Losses on currency exchange
(8,060)
(3,398)
(31,033)
(24,655)
(euro/000)
Interest expense
Total
Financial income and costs result in net finance costs of euro 12.830 million.
This item, the balance between costs of euro 31.033 million and income of euro 18.202 million, was
influenced by the following items:
•
•
profits on currency exchange of euro 17.569 million, including euro 5.250 million in profits on
currency exchange and euro 12.318 million in financial income referring to end-of-period
adjustments to a receivable due to Marcolin S.p.A. from Marcolin USA Corp. denominated in
U.S. dollars, which increased due to the appreciation of the U.S. dollar;
interest expense of euro 20.944 million, consisting of euro 17.000 million on the bond notes
issued by Marcolin S.p.A., paid semiannually in May and November, euro 1.375 million in
reversed bond issue transaction costs, accounted for under IFRS with the financial method of
amortized cost over the life of the bond notes (maturing November 2019), euro 1.310 in net
117
•
•
interest costs (including euro 926 thousand referring to the Parent Company, Marcolin S.p.A.,
and euro 384 thousand referring to subsidiaries), and euro 1.252 million in additional finance
costs regarding actualization and translation differences, including euro 580 thousand
referring to the Parent Company;
the financial discounts totaled euro 2.029 million, nearly entirely attributable to foreign
subsidiaries;
the losses on currency exchange were euro 8.060 million, consisting of euro 7.839 million in
foreign exchange losses (and inclusive of the end-of-period adjustments to items in foreign
currency) and euro 220 thousand in negative translation differences.
Currency exchange differences emerging on trade transactions resulted in a net cost of euro 2.589
million (including euro 1.394 million referring to the Parent Company), to which must be added
additional financial income of euro 12.318 million referring to the aforementioned receivable due to
Marcolin S.p.A. from Marcolin USA Corp.
28. INCOME TAX EXPENSE
Income taxes are euro 6.695 million, including current taxes of euro 4.254 million, deferred taxes of
euro 5.795 million, income from tax consolidation of euro 2.597 million and tax income referring to the
previous period of euro 758 thousand.
Income tax expense
(euro/000)
Current taxes
Deferred taxes
Income from Tax Consolidation
Taxes relating to prior year
Total income taxes
12.31.2014
(4,254)
(5,795)
2,597
758
(6,695)
12.31.2013
(3,616)
(582)
3,998
(2)
(202)
The Parent Company's current taxes of 2014 are euro 1.566 million, and those of foreign subsidiaries
are euro 2.688 million. The Parent Company's deferred taxes are euro 6.861 million, and those of
foreign subsidiaries are euro 1.066 million.
Income from tax consolidation is euro 2.428 million for the Parent Company, euro 74 thousand for
Eyestyle.com and euro 95 thousand for Eyestyle Retail.
The current tax burden was determined on the basis of the taxable income of each company, taking
into account the use of any accumulated tax losses and applying the tax rules and tax rates in force in
each country.
agreement and stipulating a new agreement for the new three-year period.
Deferred tax amounts and the changes therein are presented in the following tables:
118
Marcolin Group
Deferred tax assets
(euro/000)
Tem porary
differences
12/31/2014
Tax on
tam porary
differences
12/31/2014
Tem porary
differences
12/31/2013
Tax on
tem porary
differences
12/31/2013
40,458
24,242
20,474
11,618
8,090
3,500
2,538
2,098
(1,029)
978
879
155
114,001
12,438
8,977
7,029
4,404
2,993
1,120
705
577
(392)
307
329
49
38,536
15,128
11,401
23,791
10,490
8,657
4,266
1,442
2,098
1,254
634
14,241
93,403
5,381
4,375
7,215
3,565
3,030
1,448
396
577
394
206
4,472
31,060
Tem porary
differences
12/31/2014
Tax on
tam porary
differences
12/31/2014
Tem porary
differences
12/31/2013
Tax on
tem porary
differences
12/31/2013
(12,951)
(9,363)
(8,665)
(8,069)
(689)
(598)
(460)
4,592
(36,204)
(3,558)
(15)
(2,946)
(2,219)
53
(197)
53
1,442
(7,387)
(265)
(10,086)
(4,084)
(477)
(804)
(168)
2,521
(13,362)
(35)
152
(1,621)
(182)
(277)
(46)
882
(1,127)
Accumulated tax losses
Grants and compensation deductible on a cash basis
Inventory provisions
Provision for return risks
Intangible assets subject to taxation
Taxed provision for doubtful debts
Unrealized currency exchange differences
Income from CFC (controlled foreign companies)
Non-deductible temporary amortization
Supplementary client indemnity provision
Other
Total deferred tax assets
(euro/000)
Property, plant and equipment and intangible assets
Equity-method accounting of JV and other equity investments
Finance costs deducted on a cash basis
Other
Discounting of receivables/payables to present value
Actuarial gain / losses on TFR under IAS
Intercompany profit
Total deferred tax liabilities
Total deferred assets / liabilities
77,797
31,148
80,041
29,933
29. FINANCIAL INSTRUMENTS BY TYPE
The financial instruments are set forth by uniform category in the table below, which presents their fair
value in accordance with IFRS 7.
interest rates from the yield curve of the reporting date, and the latest Euribor fixing was used to
The hedging agreements used by the Group are classified as O.T.C. (over-the-counter) instruments,
so they do not have a public price available on official exchange markets. Discounted cash flow
models were used to measure such derivatives.
Categories of financial assets
Cash and
bank
balances
Trade
receivables
Financial
assets
80,576
7,497
36,933
Financial assets at fair value through P/L
-
-
-
Held to maturity investments
-
-
-
Financial assets available for sale
-
-
-
80,576
7,497
36,933
(euro/000)
Loans and other financial receivables
Total
119
Categories of financial liabilities
Trade
payables
Financial
liabilities
Bond
Financial liabilities at fair value through P/L
-
-
-
Derivatives used for hedging
-
-
-
102,322
43,918
194,196
-
2,391
-
102,322
46,309
194,196
(euro/000)
Other financial liabilities at amortized cost
Liabilities as under IAS 17
Total
120
Marcolin Group
DISCLOSURE OF ATYPICAL, UNUSUAL AND RELATED-PARTY TRANSACTIONS
The information with respect to atypical and unusual transactions and transactions with related parties
is disclosed in this section.
Significant non-recurring events and transactions
Significant non-recurring events and transactions that impacted the Group’s financial position, financial
performance and cash flows in 2014 have to do with the Viva group integration and reorganization
activities, described in detail in the Report on Operations.
Atypical and unusual transactions
There were no atypical and/or unusual transactions, including with other Group companies, nor were
there any transactions outside the scope of the ordinary business activity in 2014 that could
significantly impact the financial position, financial performance or cash flows of Marcolin S.p.A. and
the Group.
Transactions with related parties with and equity-accounted associates
In addition to the transactions between the consolidated companies, during the year transactions took
place with the equity-accounted associates and other related parties.
They were of a trade nature, conducted on an arm's length basis; the related-party transactions
regarded licensing agreements in particular.
The transactions and outstanding balances with respect to related parties as at December 31, 2014
are shown below, as required by IAS 24:
Company
(euro/000)
Other related parties
Tod's S.p.A
Pai Partners Sas
Coffen Marcolin Family
O.T.B. Group
3 Cime S.p.A.
Total
Expenses
Revenues
Payables
Receivables
2,317
164
703
1,798
4,981
747
8
755
755
80
235
3,495
4,566
238
2
2,597
2,838
Type
Related party
Related party
Related party
Related party
Consolidating
All related party transactions are carried out at arm's length.
The remuneration of the Group's Directors, Statutory Auditors and Strategic Management (Others) is
reported below:
2014
(euro/000)
Base fee
Salaries and benefits
Total
2013
Board of
Directors
Statutory
Auditors
389
674
1,063
100
100
Other
-
Board of
Directors
Statutory
Auditors
Other
368
642
1,010
90
90
-
Other information pursuant to Italian Civil Code Article 2427, point 6 bis
The following table presents the 2014 fees of the auditing firm, Pricewaterhouse Coopers S.p.A., for
audit performed by that firm, as required under Italian Civil Code Article 2427, point 6 bis.
Audit and other services
(euro/000)
Audit
Other consulting services
Total
Am ount
219
96
314
121
SEGMENT REPORTING
The following information is set forth according to the geographical areas in which the Group operates.
Segment reporting is based on aggregation by geographical area according to the location of the
Group's companies.
Accordingly, the sales by geographical segment refer to the source of the sales rather than to the end
market.
Segment reporting
ITALY
Net sales
Intersegment sales
Net sales third parties
Gross profit
In % of net sales
Operating profit
Interes in P / (L) of equity-accountes associated
Assets
Investments in Associates
Liabilities
Capital expenditure
Amortization and depreciation
Other non cash items
2014
2013 *
2014
2013 *
150,531
150,531
66,415
44.1%
9,915
590,806
(376,806)
(5,952)
2,585
123,464
133
123,331
56,426
45.7%
1,744
706
504,675
86
(296,575)
3,936
(4,613)
4,190
37,145
37,145
21,654
58.3%
558
17,696
(13,457)
(434)
(446)
37,297
37,297
22,550
53.3%
1,023
18,666
(11,195)
1
(176)
(17)
50,337
50,337
24,241
48.2%
13,366
46,980
(4,208)
(15,411)
(385)
(779)
53,052
53,052
28,503
53.0%
3,907
25,362
(11,802)
66
(450)
(71)
NORTH AMERICA
(euro/000)
OTHER & CONSOLIDATION
MARCOLIN GROUP
2014
2013 *
2014
2013 *
2014
2013 *
158,059
158,059
82,404
52.1%
(3,612)
192
338,139
951
(176,415)
(4,214)
(3,148)
156,225
156,225
93,804
59.8%
10,377
291,915
(143,046)
384
(3,412)
204
(33,938)
(33,938)
22,059
-65.0%
(296)
(192)
(373,304)
3,257
184,584
1,533
4,366
(157,711)
(133)
(157,578)
(70,839)
-20.2%
(7,093)
(706)
(285,978)
(15)
122,954
192
2,735
83
362,133
362,133
216,773
59.9%
19,932
620,318
212,327
212,327
130,444
61.5%
9,959
554,639
71
(339,664)
4,579
(5,916)
4,389
No secondary segments were identified.
122
REST OF EUROPE
2013 *
Segment reporting
Net sales
Intersegment sales
Net sales third parties
Gross profit
In % of net sales
Operating profit
Interes in P / (L) of equity-accountes associated
Assets
Investments in Associates
Liabilities
Capital expenditure
Amortization and depreciation
Other non cash items
FRANCE
2014
(euro/000)
(397,505)
(9,452)
2,578
Marcolin Group
INDEPENDENT AUDITORS' REPORT
ON THE CONSOLIDATED FINANCIAL
STATEMENTS
123
Independent Auditors' Report
124
Marcolin Group
INDEPENDENT AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL
STATEMENTS
125
126
Marcolin S.p.A.
MARCOLIN S.P.A.
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31, 2014
STATEMENT OF FINANCIAL POSITION
INCOME STATEMENT
STATEMENT OF COMPREHENSIVE INCOME
STATEMENT OF CHANGES IN EQUITY
STATEMENT OF CASH FLOWS
127
128
Marcolin S.p.A.
STATEMENT OF FINANCIAL POSITION
Notes
(euro)
ASSETS
NON-CURRENT ASSETS
Intangible assets
Goodwill
Deferred tax assets
Trade and other receivables
Cash and bank assets
19,867,035
19,112,694
18,608,547
12,874,093
2
3
189,722,123
64,494,172
189,722,123
62,776,456
27
5
16,194,550
527,249
12,479,312
635,365
4
108,189,552
418,107,375
97,623,500
394,719,396
6
63,061,005
36,406,628
7
8
10
70,200,670
7,581,511
10,067,529
46,620,711
9,491,153
8,293,616
9
TOTAL ASSETS
EQUITY
Share capital
Legal reserve
12/31/2013
1
2
CURRENT ASSETS
Inventories
12/31/2014
18,879,129
6,686,481
169,789,844
107,498,589
587,897,219
502,217,985
32,312,475
24,517,276
3,853,132
32,312,475
24,517,276
3,853,132
45,420,428
102,485,993
45,656,915
116,033,529
11
Other reserves
Retained earnings / (losses)
Profit / (loss) for the year
TOTAL EQUITY
4,483,252
(8,515,035)
213,072,557
213,858,292
LIABILITIES
NON-CURRENT LIABILITIES
12
13
196,386,463
5,833,006
190,865,437
17,662,880
27
14
6,639,787
50,000
1,148,159
50,000
208,909,256
209,726,476
CURRENT LIABILITIES
Trade payables
15
98,380,343
41,739,808
Current provisions
16
17
57,412,011
2,335,077
23,862,423
6,328,582
Tax liabilities
27
18
1,506,159
6,281,816
1,734,452
4,967,952
165,915,406
78,633,217
TOTAL LIABILITIES
374,824,662
288,359,693
587,897,219
502,217,985
129
INCOME STATEMENT AND STATEMENT OF COMPREHENSIVE INCOME
Notes
2014
%
2013
%
(euro)
NET REVENUES
20
150,420,471
100.0%
123,373,808
100.0%
COST OF SALES
21
(84,054,391)
(55.9)%
(66,975,552)
(54.3)%
22
(54,010,868)
(35.9)%
(50,239,376)
(40.7)%
GENERAL AND ADMINISTRATIVE EXPENSES
Other operating income and expenses:
-other operating income
-impairement / reversals of equity investments
-other operating expenses
TOTAL OPERATING INCOME / (EXPENSES)
23
25
(12,820,941)
(8.5)%
(11,906,114)
(9.7)%
11,506,656
7.6%
0.0%
(0.3)%
7.3%
10,610,708
(705,501)
(338,348)
9,566,859
8.6%
(0.6)%
(0.3)%
7.8%
GROSS PROFIT
66,366,080
(495,582)
11,011,074
OPERATING PROFIT - EBIT
Financial income and costs:
Financial income
Financial costs
10,545,345
NET PROFIT / (LOSS) FOR THE YEAR
7.0%
56,398,257
3,819,625
27
15.9%
(16.4)%
3,151,905
(17,205,154)
2.6%
(13.9)%
(822,894)
9,722,451
(0.5)%
6.5%
(14,053,249)
(10,233,624)
(11.4)%
(8.3)%
(5,239,199)
(3.5)%
4,483,252
3.0%
1,718,589
1.4%
(8,515,035)
(6.9)%
2014
2013
4,483,252
(8,515,035)
- Effect (actuarial gains/losses) on defined benefit plans,
net of taxes of euro -89.7 thousand in 2014 (euro 46.2
thousand in 2013)
(236,486)
122,075
TOTAL OTHER ITEMS THAT WILL NOT SUBSEQUENTLY
RECLASSIFIED TO PROFIT OR LOSS
(236,486)
122,075
- hedge accounting, net of related tax effect of € 0 million
in 2014 (€ -119.508 in 2013)
-
315,066
TOTAL OTHER ITEMS THAT WILL BE
SUBSEQUENTLY RECLASSIFIED TO PROFIT OR LOSS
-
315,066
4,246,766
(8,077,894)
Other items that will not subsequently be reclassified to
profit or loss:
Other items that will be subsequently reclassified to profit
or loss
TOTAL CONSOLIDATED NET PROFIT FOR THE YEAR
130
3.1%
23,878,744
(24,701,638)
(euro)
45.7%
26
TOTAL FINANCIAL INCOME AND COSTS
PROFIT BEFORE TAXES
Income tax expense
44.1%
Marcolin S.p.A.
Actuarial profit /
(losses) reserve
Retained earning /
(losses)
Profit / (losses) of the year
Total
STATEMENT OF CHANGES IN EQUITY
31,958,355
24,517,276
3,609,506
-
8,376,097
-
(572,750)
18,658,227
5,445,301
91,992,012
354,120
-
243,626
-
-
(8,376,097)
(315,066)
-
5,201,675
92,173,627
(5,445,301)
-
83,836,584
-
-
-
24,000,000
-
-
-
-
-
24,000,000
-
-
-
22,107,590
-
-
-
-
-
(8,515,035)
22,107,590
(8,515,035)
-
-
-
-
-
315,066
122,075
-
-
437,141
-
-
-
-
-
315,066
122,075
-
(8,515,035)
(8,077,894)
32,312,475
24,517,276
3,853,132
46,107,590
-
-
(450,675)
116,033,529
(8,515,035)
213,858,292
32,312,475
-
24,517,276
-
3,853,132
46,107,590
-
-
-
(450,675)
-
(8,515,035)
8,515,035
-
213,858,292
(5,032,501)
4,483,252
Balance as of Januay
1, 2013
Merger impact
Share capital increase
Nov. 29, 2013
Share capital increase
Dec. 3, 2013
- Result of the year
- Other components of
overall result
Total compehensive
income
Balance as of
Decem ber 31, 2013
Balance as of January
1, 2014
Dividends
Other
- Result of the year
- Other components of
overall result
Total compehensive
income
Balance as of
Decem ber 31, 2014
Cash flow hedge
reserve
Other reserves
Additional paid-in
capital
Legal Reserve
Share capital
(euro)
Additional paid-in
capital
Other reserves
-
-
-
-
-
-
-
116,033,529
(8,515,035)
(5,032,501)
-
-
-
-
-
-
-
(236,487)
-
-
-
-
-
-
-
-
(236,487)
-
4,483,252
32,312,475
24,517,276
3,853,132
46,107,590
-
-
(687,162)
102,485,993
4,483,252
-
4,483,252
(236,487)
4,246,765
213,072,557
131
STATEMENT OF CASH FLOWS
2014
N o t es
2013
(euro)
OPERATING ACTIVITIES
Profit for the period
Depreciation and amortization
1.2
4,483,252
5,514,842
6,13,17
130,382
3.17
-
Income tax expense
27
5,239,199
Accrued interest expense
26
26
Provisions
Impairment losses/(reversals) on investments
Cash generated by operations
822,894
(7,829,501)
8,361,068
(8,515,035)
4,157,050
1,405,626
705,501
(1,718,589)
13,404,695
1,221,346
10,660,595
(Increase) decrease in trade receivables
7
(21,133,435)
(Increase) decrease in other receivables
8
(410,088)
(Increase) decrease in inventories
6
(24,322,916)
2,949,712
(13,646,877)
(Decrease) increase in trade payables
15
38,926,573
(Decrease)/increase in other liabilities
14,16
619,106
(Use) of provisions
13,17
(Decrease)/increase in current tax liabilities
(6,641,373)
-
27
Adjustments to other items
(89,839)
Income taxes paid
-
(3,159,924)
(704,748)
415,687
(5,625,390)
1,035,149
144,556
(630,434)
Interest paid
(17,857,193)
(12,421,073)
Cash used for current operations
(30,909,164)
(31,643,341)
Net cash from /(used in) operating activities
(22,548,095)
(20,982,746)
(4,002,767)
(1,894,063)
INVESTING ACTIVITIES
1
1
2
(3,994,819)
(Purchase) of Investments in subsidiaries and associates
3
(1,717,716)
Net cash outflow on business combinations net of the liquidity acquired
124,189
(946,373)
Net cash from /(used in) investing activities
42,460
180,624
(1,715,001)
76,706
(10,537,486)
(3,309,274)
18,031,390
2,321,665
FINANCING ACTIVITES
Net increase / (decrease) in granted loans
12.16
Bank borrow ing:
- (Decrease)
4,10
(21,856)
- Increase
-
(88,069,124)
-
Loans taken out:
- new loans
12.16
42,190,000
252,600,000
- repayments
12.16
(14,921,305)
(163,630,491)
-
24,000,000
Net cash from /(used in) financing activities
Capital increase
45,278,230
27,222,050
12,192,648
2,930,031
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
11
6,686,481
3,756,449
18,879,129
6,686,480
*On September 1, 2014 Marcolin SpA acquired the business unit "International" from Viva Eyewear UK Ltd
132
Marcolin S.p.A.
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
OF MARCOLIN S.P.A. FOR THE YEAR ENDED DECEMBER 31, 2014
Introduction
In December 2012 Cristallo purchased from Marcolin's former shareholders 78.6% of Marcolin S.p.A.'s share
capital, at a price of euro 4.25 per share (total payment of euro 207,579,057), financed with a short-term credit
facility (for euro 87,500,000) and equity for euro 160,740,000 (from the financial resources made available by the
sole shareholder, Marmolada S.p.A., through the subscription and payment of two subsequent capital increases
with additional paid-in capital).
In 2013 Marcolin S.p.A. ("the Company") and its parent company, Cristallo S.p.A., were involved in a reverse
merger whereby Cristallo was incorporated into Marcolin.
offer ("Offer") of the remaining ordinary Marcolin shares outstanding, representing 21.4% of the Issuer's share
capital (the offering prospectus was approved by Consob Resolution on December 21, 2012).
The acceptance period began in January 2013 and ended in February 2013. On the closing date of the Offer,
shares corresponding to approximately 78.0% of the shares involved in the public offer and 16.7% of Marcolin's
share capital were tendered.
Those shares, added to the Marcolin shares already owned by Cristallo S.p.A. and the treasury shares
(corresponding to 1.1% of capital), resulted in Cristallo owning 59,891,105 shares, equal to 96.4% of the Issuer's
18
share capital, on the Offer payment date.
obligation to buy, and right to buy, the remaining outstanding shares not tendered into the Offer, corresponding to
3.6% of the Issuer's share capital.
Cristallo financed the procedure with liquid resources of euro 29,669,093 and additional equity of euro
27,300,000, made available by the sole shareholder, Marmolada S.p.A., through another capital increase.
In 2013, procedures for the merger of Cristallo into Marcolin commenced within the scope of an extensive
Cristallo and Marcolin are part. The reverse merger enabled Marcolin to retain its own business and legal
relationships, with significant savings in terms of costs and organizational demands compared to a direct merger.
Group companies, thereby resulting in greater financial stability.
Cristallo S.p.A. into Marcolin S.p.A., as well as the Directors' Report on the merger plan prepared in accordance
with the Italian Civil Code; on July 8, 2013 Marcolin's extraordinary General Meeting approved the merger plan as
well as new By-Laws that used the current text of the absorbed entity.
18
The price of euro 4.25 per share coincided with the contractual valuation of Marcolin shares for the December 2012 acquisition.
133
The merger resulted in the cancellation of all Cristallo's shares, as the Marcolin shares were assigned to the sole
shareholder, Marmolada, except for the treasury shares, which were canceled at the end of October).
The Extraordinary General Meeting of October 31, 2013 canceled the 681,000 treasury shares owned by the
Company, transferring the nominal value directly to the sole Shareholder, and eliminating the nominal value of the
Company's shares in accordance with Italian Civil Code Article 2436, paragraphs 2 and 3.
The continuity principle of Assirevi OPI Document n. 2 was adopted for the merger, i.e. significance was given to
the pre-existence of the control relationship between the Companies involved in the merger and the cost incurred
by Cristallo S.p.A. for the original acquisition of the Marcolin group.
Accordingly, on the effective merger date, the current values of the assets and liabilities and related goodwill of
Marcolin S.p.A., which had been reflected in the purchase price of the 100% stake owned directly by Cristallo
S.p.A., emerged in the separate financial statements of Marcolin S.p.A., the surviving company, to the extent
allocated to the assets, liabilities and goodwill in the financial statements of Cristallo (now Marcolin) as at the
same date.
In other words, the mergers resulted in the alignment of the financial statements as at the merger date with the
post-merger separate financial statements of the surviving company, thus realizing “legal consolidation”.
*****
134
Marcolin S.p.A.
General Information
The explanatory notes set out below form an integral part of the separate financial statements of
Marcolin S.p.A. and were prepared in accordance with the accounting documents updated to
December 31, 2014.
For the purpose of providing exhaustive financial information, the Report on the Operations has been
prepared, which contains additional information regarding the main events of the year, subsequent
events, business outlook and other important financial and operational information of the business.
Marcolin S.p.A. is incorporated under Italian law, listed in the Belluno Companies Register with n.
01774690273, and has shares that until February 14, 2013 were traded in Italy on the Mercato
Telematico Azionario (electronic stock exchange) organized and managed by Borsa Italiana S.p.A.
Marcolin S.p.A. is the Parent Company of the Marcolin group, which operates in Italy and abroad in
the design, manufacturing and distribution of eyeglass frames and sunglasses, including through
direct and indirect management of business affiliates located in major countries of interest worldwide
and qualified contract manufacturers.
The addresses of the locations from which the Company's main operations are performed are listed in
the Report on Operations.
Pursuant to Article 2497-bis, paragraph 4 of the Italian Civil Code, we note that Marcolin S.p.A. is not
subject to management and coordination activities by any entity.
The financial statements were authorized for issue by the Board of Directors on March 27, 2015.
135
ACCOUNTING STANDARDS
Basis of preparation
The 2014 financial statements were prepared according to the International Accounting
The accounting policies adopted to prepare the financial statements for the year ended December 31,
2014 are the same as those used in the prior year except as regards the adoption of the following new
or revised IFRS or IFRIC.
Accounting standards, amendments and interpretations effective from January 1, 2014
Application of the following new IFRS standards and/or standards revised by the International
Accounting Standards Board and IFRIC interpretations became mandatory in 2014.
Description
IFRS 10 - "Consolidated Financial Statements"
IFRS 11 - "Joint Arrangements"
IFRS 12 - "Disclosures of Interests in Other Entities"
Amendments to IFRS 10, 11 and 12
on transition guidance
IAS 27 (revised 2011) "Separate financial
statements"
IAS 28 (revised 2011) "Associates and joint
ventures"
Amendment to IAS 32,
"Financial instruments: Presentation", on offsetting
financial assets and financial liabilities"
Amendments to IFRS 10,
"Consolidated financial statements", IFRS 12 and IAS
27 for investment entities"
Amendments to IAS 36, "Impairment of assets"
Amendment to IAS 39
‘Financial instruments: Recognition and measurement’,
on novation of derivatives and hedge accounting
IFRIC 21, "Levies"
Approved as of the date
of this document
December 2012
December 2012
December 2012
April 2013
December 2012
December 2012
December 2012
November 2013
December 2013
December 2013
June 2014
The adoption of the accounting standards, amendments and interpretations listed in the table above
did not have any material effects on Marcolin’s financial position or performance.
136
Marcolin S.p.A.
Accounting standards, amendments and interpretations not applicable yet and not adopted
early by the Group for the annual period beginning January 1, 2014
The following IFRSs, interpretations, amendments to existing standards and interpretations, or special
provisions contained in the standards and interpretations approved by the IASB, and information with
respect to their adoption in Europe as at the date of approval of the financial statements, are set forth
below:
Description
Amendment to IAS 19 regarding defined
benefit plans
Annual improvements cycles 2010-2012
and 2011-2013
Amendment to IAS 16 "Property, plant
and equipment" and IAS 38 "Intangible
assets"
Amendment to IFRS 11, "Joint
arrangements" on acquisition of an
interest in a joint operation
IFRS 14 "Regulatory deferral accounts"
IFRS 9 "Financial instruments"
IFRS 15 "Revenue from
contracts with customers"
Amendments to IAS 27,
"Separate financial statements"
on the equity method
Amendments to IFRS 10, "Consolidated
financial statements" and IAS 28,
"Investments in associates and joint
ventures"
Approved as of the
date of this document
No
No
No
No
No
No
No
No
No
No accounting standards and/or interpretations with mandatory application in annual periods
beginning after December 31, 2014 were adopted early.
Marcolin S.p.A. is evaluating the effects of the application of the above new standards, which are not
currently considered to bring impact.
The 2014 financial statements were prepared according to the International Accounting
Regulation no. 1606, enacted by the European Parliament and European Council in July 2002,
provided for the compulsory application of IAS/IFRS to the accounts of companies listed on EU
regulated markets starting from 2005.
The accounting standards used are the same as those used in the previous year.
The financial statements were prepared on the basis of the going-concern assumption, the accrual
basis of accounting and the historical cost basis, revised as required for the measurement of certain
financial instruments (with the exception of some revaluations performed in previous periods).
The currency used in the primary economic environment in which the Company operates ("functional
currency") is the Euro.
137
For the purpose of clarity, the amounts in the Statement of Financial Position, Income Statement,
Statement of Comprehensive Income, Statement of Cash Flows, Statement of Changes in Equity and
explanatory Notes are presented in thousands of Euros, unless specified otherwise.
Financial statement format and significant accounting policies
The Company adopted the following formats for the financial statements.
In summary:
• In the Statement of Financial Position, assets and liabilities are classified separately as either
current or non-current. Current assets are those intended to be realized, sold or consumed in
the Company's normal operating cycle; current liabilities are those expected to be settled
either in the Company's normal operating cycle or within twelve months from the end of the
reporting period;
• in the Income Statement costs are classified by function;
• the Statement of Comprehensive Income is presented separately from the Income Statement,
and the individual items are stated in compliance with Revised IAS 1;
• the indirect method is used for the Statement of Cash Flows, with presentation of cash flows
from operating, investing and financing activities;
• the Statement of Changes in Equity presents separately the profit/(loss) for the year and all
revenues and expenses not recognized in profit or loss, but recognized directly in equity on
the basis of specific IAS/IFRS accounting standards, and presents separately transactions
with Shareholders.
In order to facilitate comparability, the data of the previous was restated as necessary, providing the
related explanations thereof.
The significant accounting policies adopted to prepare the separate financial statements of Marcolin
S.p.A. are as follows:
Property, plant, and equipment ("PP&E" or "tangible assets")
Property, plant, and equipment are recorded at their acquisition or production cost, inclusive of
ancillary costs incurred to bring the assets to working condition for their intended use, excluding land
and buildings for which the deemed cost model was used on the transition date or business
combination date based on the market value determined through an appraisal performed by an
independent qualified appraiser.
PP&E are stated net of depreciation except for land, which is not depreciated, and net of any
impairment losses.
Costs incurred for routine and/or cyclical maintenance and repairs are recognized directly in the
income statement of the period in which they are incurred. Costs concerning the extension, renovation
or upgrading of owned or leased assets are capitalized to the extent that they can be separately
classified as an asset or part of an asset. The carrying value is adjusted by depreciation using the
straight-line method calculated on the basis of estimated useful life.
If the depreciable asset consists of distinctly identifiable components with useful lives that differ
significantly from the other components of the asset, each component of the assets is depreciated
separately, according to the component approach.
Profits and losses deriving from the sale of assets or groups of assets are determined by comparing
the sale price with the relevant net book value.
Government grants relating to tangible assets are recorded as deferred revenues and credited to the
income statement over the depreciation period for the assets concerned.
Finance costs relating to purchases of a fixed asset are charged to the income statement, unless they
are directly attributable to the acquisition, construction or production of an asset which justifies
capitalizing them.
Assets held under finance leases are recognized as tangible assets against the related liability. The
lease payment is broken down into a finance cost, recognized in the income statement, and
repayment of principal, recognized as a reduction of the relevant financial liability.
138
Marcolin S.p.A.
Leases in which the lessor does not transfer substantially all the risks and rewards incidental to legal
ownership are classified as operating leases. Lease payments under operating leases are recognized
in the income statement on a straight-line basis over the duration of the operating lease.
Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, using
the depreciation rates listed below:
Category
Buildings
Light structures
General-purpose machinery
General-purpose plastic machinery
Depreciable equipment
Special-purpose machines
Special-purpose plastic machines
Exhibition stands
Electronic machines
Non-instrumental vehicles
Instrumental vehicles
Depreciation rate
3%
10%
10%
10%
40%
16%
15.5%
12%
27%
20%
25%
20%
Intangible assets
Intangible assets consist of controllable, non-monetary assets without physical substance that are
clearly identifiable and able to generate future economic benefits. These assets are recognized at
purchase and/or production cost, inclusive of directly attributable expenses to bring the asset to
working condition for its intended use, net of accumulated amortization (except for those assets with
an indefinite useful life) and any impairment losses. Amortization commences when the asset is
available for use and is systematically distributed over the asset’s useful life.
If there is any indication that the assets have suffered an impairment loss, the recoverable amount of
the asset is estimated and any impairment loss is recognized in the income statement. If an
impairment loss subsequently reverses, the carrying amount of the asset is increased to the net
carrying value that the asset would have had if there had been no impairment loss and if the asset had
been amortized, recognizing the reversal of the impairment loss as income.
Goodwill
Goodwill is recognized at cost less any impairment losses. Goodwill acquired in a business
combination is represented by the excess of the cost of the combination over the acquirer's interest in
the net fair value of the identifiable assets, liabilities and contingent liabilities recognized.
Goodwill is not amortized, but it is reviewed for impairment annually, and whenever events or
circumstances give rise to the possibility of an impairment loss, the recoverable amount is reviewed in
accordance with IAS 36 ("Impairment of Assets"). If the recoverable amount is less than its carrying
amount, goodwill is reduced to its recoverable amount. If goodwill has been allocated to a cashgenerating unit that is partially disposed of, the goodwill associated with the unit disposed of is
included in the determination of any gain or loss on disposal.
Trademarks and licenses
Trademarks and licenses are recognized at cost. They have a finite useful life and are recognized at
cost net of accumulated amortization. Amortization is calculated on a straight-line basis so as to
allocate the cost of trademarks and licenses over their remaining useful lives.
If, aside from amortization, impairment should emerge, the asset is written down accordingly; if the
reasons for the writedown should cease to exist in future financial years, the carrying amount of the
asset is increased to the net carrying value that the asset would have had if there had been no
impairment loss and if the asset had been amortized.
Trademarks are amortized on a straight-line basis over their estimated useful lives, ranging from 15 to
20 years.
139
Software
Software licenses acquired are capitalized on the basis of the costs incurred for their purchase and the
costs necessary to make them serviceable. Amortization is calculated on a straight-line basis over
their estimated useful lives (ranging from 3 to 5 years). Costs associated with software development
and maintenance are recognized as costs in the period they are incurred.
The direct costs include the costs for the personnel to develop the software.
Research & development costs
Research and development costs for new products and/or processes are recognized as an expense
as incurred unless they meet the conditions for capitalization under IAS 38.
Investments in subsidiaries and associates are valued at acquisition cost net of any impairment
losses.
If the reasons for writedowns made no longer apply, the equity investments are revalued to the extent
of such writedowns.
Impairment of tangible and intangible assets
IAS 36 requires impairment testing of tangible and intangible assets when there is any indication that
those assets have suffered an impairment loss. For intangible assets with an indefinite life, such as
goodwill, testing for impairment is performed at least annually. The recoverable amount is determined
by comparing the carrying amount of the asset with its fair value less costs to sell and value in use,
whichever is greater. Value in use is determined on the basis of the present value of estimated future
cash flows from operating activities. For purposes of impairment testing, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-generating units). If an
asset’s recoverable value is less than its carrying value, the carrying value is reduced to its
recoverable value. This reduction is an impairment loss that is recognized as an expense immediately.
If there are indications that an impairment loss should be reversed, the recoverable amount of the
asset is recalculated and the carrying value is increased to that new value. The increased carrying
value must not exceed the net carrying value the asset would have had without any impairment loss.
An impairment loss with respect to goodwill may not be reversed.
Financial derivatives
Derivative financial instruments are used by the Company solely for hedging purposes, in order to
reduce Company's exposure to currency risks.
All financial derivatives are measured at fair value, in compliance with IAS 39. Under IAS 39, financial
derivatives qualify for hedge accounting only if, at the inception of the hedge, there is formal
designation and documentation of the hedging relationship, the hedge is expected to be highly
effective, the effectiveness of the hedge can be reliably measured and the hedge is highly effective
throughout the financial reporting periods for which the hedge was designated.
If the hedge is effective, the following accounting policies apply:
Fair value hedge – If a financial derivative is designated as a hedge of the exposure to changes in fair
value of a recognized asset or liability due to a particular risk, and could affect profit or loss, the gain
or loss from remeasuring the hedging instrument at fair value is recognized in the income statement.
The hedged item is adjusted to fair value for the portion of risk hedged, and the adjustment is
recognized in profit or loss;
Cash flow hedge – If a financial derivative is designated as a hedge of the exposure to the future cash
flow variability of a recognized asset or liability, the effective portion of changes in fair value of the
financial derivative is recognized directly in equity. The cumulative gain or loss is reversed from equity
and recognized in profit or loss in the period in which the hedged transaction is recognized. The profit
or loss associated with a hedge (or part of a hedge) that has become ineffective is entered in the
income statement immediately. If a hedged instrument or a hedging relationship is terminated, but the
hedged transaction has not occurred yet, the cumulative gain or loss that has remained recognized in
equity from the period when the hedge was effective is reclassified into profit or loss when the forecast
transaction occurs. If the forecast transaction is no longer expected to occur, the related cumulative
gain or loss that has remained recognized in equity is immediately recognized in the income
statement;
140
Marcolin S.p.A.
if hedge accounting cannot be applied, the gains or losses arising on changes in the fair value of the
financial derivative are recognized immediately in the income statement.
Fair value measurement
The Company measures financial instruments (derivatives) at their fair values at the end of each
reporting period.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
Fair value measurement assumes that a transaction to sell an asset or to transfer a liability takes
place:
• in the principal market for the asset or liability;
• or in absence of a principal market, the most advantageous market for the asset or liability.
The principle market or most advantageous market must be accessible to the Company.
The fair value of an asset or liability is measured adopting assumptions that market participants would
use to determine the price of the asset or liability, assuming that they act to best satisfy their economic
interest.
Fair value measurement of a non-financial asset considers a market participant's capacity to generate
economic benefits from the highest and best use of the asset or from the sale to another participant
that can obtain its highest and best use.
The Company uses valuation techniques appropriate in the circumstances and for which
sufficient data are available to measure fair value, maximizing the use of relevant observable inputs
and minimizing the use of unobservable inputs.
All assets and liabilities for which fair value is measured or stated in the financial statements are
categorized into the following levels of the fair value hierarchy:
• Level 1 - quoted (unadjusted) prices in active markets for identical assets or liabilities that the entity
can access at the measurement date;
• Level 2 - inputs other than quoted market prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly;
• Level 3 - valuation techniques for which the inputs are unobservable for the asset or liability.
The fair value measurement is categorized entirely in the same level of the fair value hierarchy of the
lowest level input used for measurement.
For recurring assets and liabilities, the Company determines whether there have been any transfers
between levels of the fair value hierarchy and reviews the categorization (based on the lowest level
input that is significant to the entire measurement) at the end of each reporting period.
Inventories
Inventories are stated at the lower of average purchase or production cost and the corresponding
estimated realizable value based on market prices. Estimated realizable value represents the
estimated selling price in normal market conditions less all direct selling costs.
Purchase cost was adopted for products purchased for resale and for materials directly or indirectly
used, purchased and used in the production process, whereas production cost was adopted for
finished and semi-finished products.
Purchase cost is determined on the basis of the cost actually incurred, inclusive of directly attributable
ancillary costs, including transport and customs expenses and excluding trade discounts.
Production cost includes the cost of materials used, as defined above, and all directly and indirectly
attributable manufacturing costs.
Obsolete and slow-moving inventories are written down to reflect their useful life or realizable value.
Financial assets – Loans and receivables
Trade receivables, current loan receivables and other current receivables with fixed maturities,
excluding those assets arising on financial derivatives and all financial assets for which prices on an
active market are unavailable and whose fair value cannot be determined reliably, are stated at
amortized cost calculated using the effective-interest method.
Financial assets without fixed maturities are stated at cost.
141
Receivables maturing after more than a year that do not accrue interest or that accrue interest at
below-market rates are discounted using market rates and recognized as non-current assets. Reviews
are carried out regularly to determine the presence of any objective evidence that the financial assets
taken individually or within a group of assets may have suffered an impairment loss. If such evidence
exists, the impairment loss is shown as a cost in the income statement for the period.
Trade receivables are adjusted to their realizable value by means of a provision for irrecoverable
amounts when there are objective indications that the Company will not be able to collect the
receivable at its original value.
Cash and bank balances include cash, demand deposits at banks and other highly liquid short-term
investments, i.e. with an original duration of up to three months, and are stated at the amounts actually
on hand at the reporting date.
Assets held for sale and related liabilities
These items include non-current assets (or disposal groups of assets and liabilities) whose carrying
value will be recovered mainly through sale rather than through continuing use. Assets held for sale
(or disposal groups) are recognized at their net carrying value or fair value less costs to sell, whichever
is less.
If these assets (or disposal groups) should cease to be classified as assets held for sale, the amounts
are not reclassified or presented for comparative purposes with the classification in the most recent
Statement of Financial Position.
Equity
Share capital
Share capital consists of the subscribed and paid-up capital.
Direct issue costs of new share issues are classified as a direct reduction of equity after deferred
taxes.
Treasury shares
Treasury shares are shown as a deduction of equity. The original cost of treasury shares and
revenues arising on subsequent sale are recognized as changes in equity.
The nominal value of the treasury shares owned is directly deducted from share capital, while the
value exceeding the nominal value is used to reduce the treasury share reserve included in the
retained earnings/(losses) reserves.
Share-based payments (stock option plan)
Currently there are no such payments.
Employee benefits
Post-employment benefit plans are classified, according to their characteristics, as either defined
contribution plans or defined benefit plans.
Defined benefit plans, such as that of the "fondo trattamento di fine rapporto" ("TFR", severance
indemnity provision) in place until the 2007 Italian Financial Law became effective, are plans under
which guaranteed employee benefits are paid upon termination of employment. The defined benefit
plan obligation is determined on the basis of actuarial assumptions and is recognized on an accruals
basis consistently with the employment service necessary to obtain the benefits; the obligation is
measured annually by independent actuaries.
The benefits accrued in the year, determined with actuarial methodology, are recognized in the
income statement with the personnel costs, whereas the notional interest cost is recognized in net
financial income/(costs). Actuarial gains and losses from changes in actuarial assumptions are
recognized directly in the equity of the year they emerge, in accordance with Revised IAS 19, effective
from January 1, 2013.
On January 1, 2007, the 2007 Financial Law and related enactment decrees brought significant
changes to employee severance indemnity regulations, including the possibility for the employee to
choose, by June 30, 2007, how to allocate his or her accruing benefits. Accruing severance pay may
be assigned by the employee to selected pension funds or kept within the company (in the latter case
the company will pay the severance pay contributions into a treasury account held at the INPS).
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Marcolin S.p.A.
Pursuant to these changes, the severance indemnity provision accrued up to the date of the
employee's decision (defined benefit plans) was recalculated by independent actuaries, excluding the
component of future salary raises. Severance indemnities accruing from the date of the employee's
decision, and in any case from June 30, 2007, are considered a defined contribution plan, so the
accounting treatment is similar to that in effect for all other contribution payments.
Provisions for risks and charges consist of allowances for present obligations (either legal or
constructive) toward third parties that arise from past events, the settlement of which will probably
require an outflow of financial resources, and the amount of which can be estimated reliably.
Provisions are stated at the discounted best estimate of the amount the company should pay to settle
the obligation or to transfer it to third parties as at the reporting date.
Changes in estimates are reflected in the income statement of the period in which the change occurs.
Risks for which the emergence of a liability is merely possible are identified in the section relating to
commitments and guarantees without making any allowances for them.
Trade payables and other non-financial liabilities
Payables with settlement dates that are consistent with normal terms of trade are not discounted to
present value and are recorded at their face value.
Financial liabilities
Borrowings (loans)e initially recognized at cost, corresponding to the fair value of the liability less their
transaction costs. They are subsequently measured at amortized cost; any difference between the
amount financed (net of transaction costs) and the nominal value is recognized in the income
statement over the life of the loan, using the effective interest method. If there is a change in the
anticipated cash flows and management is able to estimate them reliably, the value of borrowings is
recalculated to reflect such changes.
Loans are classified among current liabilities if they mature in less than 12 months from the end of the
reporting period and if the Company does not have an unconditional right to defer their payment for at
least 12 months.
Loans are derecognized when they are paid off or when all risks and costs associated with them have
been transferred to third parties.
Revenues and income
Revenues are measured at their fair value net of returns, sales, discounts, allowances, and bonuses.
The Company recognizes sales revenues when all risks and rewards of ownership of the goods are
effectively transferred to the customers under the terms of the sales agreement. The revenues are
recognized net of an allowance representing the best estimate of lost margin due to any product
returns from customers. The allowance is calculated based on past experience.
Revenues are stated net of returns, discounts, vouchers, bonuses and taxes directly connected with
the sale of the goods and supply of the services.
Revenues from services are recognized by reference to the state of completion of the transaction at
the end of the reporting period.
Interest income is accrued on a time basis by reference to the effective interest rate applicable to the
related asset.
Dividends are recognized when the shareholder’s rights to receive payment are established. This
normally occurs when the dividend distribution resolution is approved at the General Meeting.
Cost of sales
The cost of sales includes the cost of producing or acquiring the goods and products sold. It includes
all the costs of materials, processing, and expenses directly associated with production. It also
includes the depreciation of buildings, plant and equipment, the amortization of the intangible assets
used in production and inventory impairment losses.
Royalties
The Company accounts for royalty expense on an accrual basis according to the substance of the
agreements stipulated.
143
Other costs
The costs are recognized according to the relevance and matching principles.
Interest is accounted for according to the accrual concept on the basis of the interest rate established
by contract. If not established by contract, interest is recognized using the effective interest method,
i.e. using the interest rate that makes all inflows and outflows of a specific transaction financially
equivalent.
Translation of foreign currency amounts
Transactions in currency other than the Euro are translated into local currency using the exchange
rates in force on the transaction date. Foreign exchange differences realized in the period are
recognized in the income statement.
Foreign currency receivables and payables are adjusted at the exchange rate in force on the reporting
date, recognizing the entire amount of profit or loss arising on exchange as financial income or finance
costs in the income statement.
Income tax expense
Income taxes are stated in the income statement, except for those regarding items recognized directly
in equity, for which the tax effect is also recognized directly in equity.
Deferred taxes are calculated on the temporary differences generated between the value of the assets
and liabilities reported in the financial statements and the value attributed to those assets and liabilities
for tax purposes.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset realized.
Deferred tax assets are recognized to the extent that it is probable that taxable profits will be available
against which they may be recovered. The carrying value of deferred tax assets is reviewed at the end
of each reporting period and, as necessary, is reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the asset to be recovered. Any such
reductions are reversed if the conditions causing them should cease to exist.
Deferred tax assets and deferred tax liabilities are measured at the tax rates that are expected to
apply when the assets are realized or the liabilities are settled, considering the tax rates in force and
those that have been enacted or substantially enacted by the reporting date.
Other taxes not relating to income, such as property and equity taxes, are included in the operating
items.
Italian tax consolidation
agreement and stipulating a new agreement for the new three-year period.
Tax consolidation transactions are summarized below:
in years with taxable income, the subsidiaries pay 3 Cime S.p.A. the additional tax due to the tax
authorities;
the consolidated companies with negative taxable income receive from 3 Cime S.p.A. a payment
corresponding to 100% of the tax savings realized, accounted for on an accruals basis. The payment
is made only at the time of actual use by 3 Cime S.p.A. for itself and/or for other Group companies;
144
Marcolin S.p.A.
if 3 Cime S.p.A. and the subsidiaries do not renew the tax consolidation option, or if the requirements
for continuance of tax consolidation should fail to be met before the end of the three-year period in
which the option is exercised, tax loss carryforwards resulting from the tax return are split up
proportionally among the companies that produced them.
FINANCIAL RISK FACTORS
Market risks
The Company operates on an international level and is exposed to foreign exchange risk (particularly
as regards the U.S. dollar), so one of its objectives is to review and monitor fluctuations in the
balances of its various foreign currency items in order to evaluate whether to apply hedges through
dealings on the derivatives market.
This method makes it possible to keep the main currency positions substantially balanced.
According to the sensitivity analysis performed, a change in exchange rates should not significantly
impact the Company's financial statements.
Details of the hedging contracts in place on the reporting date are as follows.
Currency hedges
(euro/000)
Type
Financial Institution Notional
Veneto Banca
1,000
Veneto Banca
1,000
Currency
Maturity date
Mark to Market
USD
03.25.2015
94
USD
05.28.2015
89
The Company is exposed mainly with the U.S. dollar on sales of finished and semi-finished products
from suppliers in the Far East, net of the cash flows associated with purchases in U.S. dollar markets.
The hedging instruments in place on December 31, 2014 have a fair value of euro 183 thousand,
accounted for in "short-term borrowings" in these financial statements.
To determine the fair value of the currency forwards purchased, the Group used valuation techniques
that are appropriate in the circumstances and for which sufficient information is available on the
market. Level 2 inputs of the fair value hierarchy defined by IFRS 7 are used in the valuation
techniques.
For the currency derivatives, the potential decrease in the fair value of the currency forwards held by
the Company as at December 31, 2014, due to a hypothetical sudden adverse change of 5% in the
Euro-to-Dollar exchange rate (depreciation of the Dollar), would be euro 78 thousand. Conversely, a
potential increase in fair value arising on appreciation of the Dollar would be euro 87 thousand.
In keeping with its strategy, the Company stipulates derivative transactions solely for hedging
purposes. If, however, such transactions do not meet all the conditions necessary to qualify for hedge
accounting laid down in IAS 39, they are not accounted for as hedging transactions.
Interest rate risk
In 2013, the subscription of a euro 200 million bond issue with a fixed interest rate of 8.50% maturing
in 2019, replacing pre-existing variable-rate loans, reduced considerably the Company's exposure to
interest rate risk, which remains only on some short-term credit lines, for immaterial amounts, used by
the Company to meet temporary cash flow requirements.
The section describing liquidity risk provides information on the quantitative analysis of the Company's
exposure to cash flow risk relating to interest rates on loans.
Information on outstanding loans is provided subsequently in these Notes.
Interest rate sensitivity analysis
145
Interest rate sensitivity analysis was performed, assuming a 25 basis-point increase and a 10 basispoint decrease of the Euribor/Swap yield curves, published by Reuters for December 31, 2014. In this
manner, the Company determined the impact that such changes would have had on the income
statement and on equity.
The sensitivity analysis excluded financial instruments that are not exposed to significant interest rate
risk, such as short-term trade receivables and payables.
The interest on bank borrowings was recalculated using the above assumptions and the investment
position in the year, recalculating the higher/lower annual finance costs.
For cash and bank balances, the average balance of the period was calculated using the book values
at the beginning and end of the year. The effect on income of a 25 basis-point increase/10 basis-point
decrease in the interest rate from the first day of the period was calculated on the amount thus
determined.
According to the sensitivity analysis performed on the basis of the above criteria, the Company is
exposed to interest rate risk on its expected cash flows. If interest rates should rise by 25 basis points,
income would decrease by euro 101 thousand due to higher interest expense with banks and third
parties with respect to the increase in financial income on intercompany loans and bank accounts.
If interest rates should fall by 10 basis points, income would increase by euro 40 thousand.
Credit risk
The Company does not have a significant concentration of credit risk. Receivables are recognized net
of writedowns for risk of counterparty default, calculated based on available information regarding the
customer’s solvency and any useful statistical records.
Guidelines and internal policies have been implemented for managing customer credit, supervised by
the designated business function (Credit Management), to ensure that sales are conducted only with
reasonably reliable and solvent parties, and through the setting of differentiated credit exposure
ceilings.
Receivables and other current assets are set forth below by the main areas in which the Company
operates.
Receivables by geographical area
12/31/2014
12/31/2013
(euro/000)
Italy
Rest of Europe
20,138
20,818
19,805
16,676
North America
Rest of World
12,175
24,651
6,125
13,506
Total
77,782
56,112
Liquidity risk
Prudent management of liquidity risk entails keeping a sufficient level of liquidity and having sources of
funding available by means of adequate credit lines.
Due to the dynamic nature of its business, the Company prefers the flexibility of obtaining funding
through the use of credit lines. At present, based on its available sources of funding and credit lines,
the Company considers its access to funding to be sufficient for meeting the financial requirements of
ordinary operations and for the investments envisioned in its business plans and budgets.
The types of credit lines available and the base rate on the reference date are reported subsequently
in these Notes.
Liquidity analysis
Liquidity analysis was performed on loans, derivatives, and trade payables. Borrowings were specified
by time bracket for principal repayments and non-discounted interest. Future interest amounts were
146
Marcolin S.p.A.
determined using forward interest rates taken from the spot-rate curve published by Reuters at the
end of the reporting period.
None of the cash flows included in the table was discounted.
Within 1 year
From 1 to 3
years
Loans and bonds (excluding capital
lease)
57,245
2,500
193,753
-
Interest expense on loans and bonds
17,181
34,119
34,101
-
167
134
(euro/000)
Capital leas e
Trade payables
From 3 to 5 More than 5
years
years
-
-
98,380
-
-
Fair value measurement of loans
For the assessment of the fair value of loans secured, future cash flow was estimated on the basis of
forward interest rate implicit in the interest rate relative to the valuation date and, as regards
calculation of the coupon in progress, the most recent fixing available of the Euribor.
Borrowings-maturity
(euro/000)
Credit lines used
Loans
Other financiers
Intercompany
12/31/2013
Credit lines used
Loans
Other financiers
Intercompany
12/31/2014
Within 1
year
8,951
From 1 to 3
years
-
2
3,439
11,471
23,862
(1)
years
5 years
-
-
-
-
201
-
1
-
200
190,664
-
1
190,664
Total
8,951
1
3,641
202,134
214,728
15,039
-
-
-
15,039
21,243
2,450
1,250
-
24,943
2,435
126
191,914
-
194,475
18,695
57,412
2,577
646
193,810
-
19,341
-
253,798
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates that could affect the
carrying value of some assets, liabilities, income and expenses, and disclosures concerning
contingent assets and liabilities at the reporting date.
Estimates were used mainly to determine the recoverability of intangible assets, the useful lives of
tangible assets, market values used to evaluate impairment, the value of investments in subsidiaries
and associates, the recoverability of receivables (including deferred tax assets), the valuation of
inventory and the recognition or measurement of provisions.
The estimates and assumptions are based on data that reflect currently available information.
Estimates and assumptions that involve a significant risk of changes in the carrying values of assets
and liabilities are described hereunder.
Impairment of non-current assets
When there is indication that the net carrying value exceeds the recoverable value, non-current assets
are reviewed to determine whether they have suffered an impairment loss, in accordance with the
accounting principles adopted.
The recoverable value is represented by the fair value less costs to sell, or value in use, whichever is
greater. The recoverable values were calculated based on value in use. Those calculations require
147
using estimates of future performance, the discount rate and the prospective growth rate to be applied
to the forecast cash flows.
If any such indication exists, management is required to perform subjective evaluations based on
information available within the Company and on the market.
If indications of impairment should exist, the Company calculates the potential impairment using the
valuation techniques it considers to be the most appropriate.
Proper identification of impairment indications and estimates of potential impairment are dependent on
factors that may vary over time, affecting the measurements and estimates made by management.
Deferred tax assets
Recognition of deferred tax assets is based on expectations of profits in future years. Estimates of
future earnings used to recognize deferred tax assets are dependent on factors that may vary over
time and significantly affect estimates of deferred tax assets.
1. PROPERTY, PLANT, AND EQUIPMENT
The composition of and changes in the item for the past two years are set forth below:
Land and buildings
Plant and
machinery
Industrial and
commercial
equipment
Other PP & E
Assets under
contrstruction
Total
11,675
267
(36)
(519)
4,857
693
(954)
1,042
457
(742)
1,635
403
(6)
(396)
159
73
-
19,368
1,894
(42)
(2,611)
(euro/000)
Increases
Decreases
Depreciation
Impairment
-
-
-
-
-
-
Reclassification and other movements
-
83
24
47
(153)
11,387
4,678
781
1,683
79
18,609
Increases
Decreases
Depreciation
Impairment
Reclassification and other movements
11,387
543
(2)
(526)
-
4,678
1,391
(976)
14
781
858
(656)
-
1,683
564
(4)
(461)
-
79
586
(60)
(14)
18,609
3,942
(66)
(2,619)
-
11,403
5,107
983
1,782
591
19,867
The capital expenditures of the year totaled euro 3.942 million (euro 1.894 million in 2013) and were
made for purchases of:
• plant and machinery for euro 1.391 million;
• industrial and commercial equipment for euro 858 thousand;
• hardware and office furniture, included in other PP&E, for euro 564 thousand;
• land and buildings for euro 543 thousand.
The change in assets under construction and advances refers primarily to the downpayment on the
building in Fortogna.
The undepreciated values of property, plant and equipment and their accumulated depreciation as at
Land and buildings
Plant and
machinery
Industrial and
commercial
equipment
Other PP & E
Assets under
contrstruction
Total
Undepreciated value
19,509
(8,106)
19,670
(14,563)
12,955
(11,972)
6,999
(5,216)
591
-
59,724
(39,857)
Net Value
11,403
5,107
983
1,782
591
19,867
(euro/000)
2. INTANGIBLE ASSETS AND GOODWILL
The composition of and changes in this item are set forth below:
148
Marcolin S.p.A.
Software
Concessions,
licenses and
trademarks
Merger impact
Increases
Decreases
Amortisation
Reclassifications and other movements
Other changes
797
642
(384)
131
1,186
Increases
Decreases
Amortisation
Reclassifications and other movements
Other changes
1,186
922
(545)
1,563
(euro/000)
Other
Intangible assets
under formation
and advances
Total
Goodwill
6,386
16
(112)
105
6,395
6,300
(1,050)
5,250
1,554
33
(872)
(236)
(436)
43
15,037
692
(872)
(1,546)
0
(436)
12,874
189,722
189,722
6,395
(116)
6,279
5,250
8,099
(2,230)
-
43
117
(9)
152
12,874
9,138
(9)
(2,891)
19,113
189,722
189,722
11,118
The intangible assets include mainly the amounts recognized as a result of the 2013 merger,
particularly the goodwill of euro 189.722 million.
Goodwill was tested for impairment to evaluate whether its carrying value was consistent with its fair
value at the reporting date.
The recoverable value of goodwill was estimated using the Company’s value in use, and was taken as
the enterprise value emerging from the application of the unlevered free cash flow method to the
projected cash flows in a continuing operation.
The methods and sensitivity analysis used for the test results are described in the subsequent section
on impairment testing.
The impairment test and sensitivity analysis results provided values consistent with the invested
capital presented in the financial statements.
No shortages emerged from the sensitivity analysis; therefore, it is reasonable to conclude that the
carrying value of goodwill in the Company's financial statements is consistent with its fair value, as the
test did not require writing down the value of goodwill in Marcolin S.p.A.'s financial statements.
During the year investments of euro 9.138 million were made (euro 692 thousand in 2013), including
payments by the Company to some licensors.
The purchase cost and accumulated amortization of the intangible assets deducted directly from the
cost are shown in the following table:
(euro/000)
Undepreciated value
Net Value
Software
Concessions,
licenses and
trademarks
8,130
(6,566)
7,437
(1,157)
1,563
6,279
Other
Intangible assets
under formation
and advances
Total
Goodwill
14,934
(3,816)
152
-
30,652
(11,539)
189,722
11,118
152
19,113
189,722
Concessions, licenses and trademarks include the Web trademark.
This asset was obtained in late 2008 for euro 1.800 million after being appraised by an independent
professional, and is amortized over an estimated useful life of 18 years.
Concessions, licenses and trademarks also include euro 5.000 million for an option that will enable the
Company to extend a licensing agreement beyond its expiration date (2015) to December 2022. This
cost will be amortized over 7 years starting from 2016.
149
3. INVESTMENTS IN SUBSIDIARIES AND ASSOCIATES
The investments in directly controlled subsidiaries and associates and their changes for the year are
reported below:
Subsidiaries
12/31/13 *
Merger impact
Writedowns of
the year
Subscription /
disposal
12/31/2014
Marcolin UK Ltd
Marcolin Iberica SA
Marcolin Gmbh
Marcolin Usa Inc
Marcolin France Sas
Marcolin International B.V.
Eyestyle Retail Srl
Eyestyle.com Srl
Sover M ZAO
Ging Hong Lin International Co Ltd
1,161
2,638
3,268
33
0
477
3,402
49,622
731
756
489
115
-
-
-
270
1,533
-
1,161
2,638
3,268
33
477
3,402
49,622
731
756
489
385
1,533
-
Total
62,691
-
-
1,803
64,494
(euro/000)
* during 2013, due to the inverse merge w ith Cristallo, partecipation values w ere updated at their Fair Values at the acquisition date.
At December 31, 2014 management did not find any indications of impairment in the values of the
equity investments.
With respect to Marcolin do Brasil Ltda, whose carrying value diverged from the Parent Company's
equity, integration with Viva Brazil is being completed; the absorption merger took effect for legal
purposes on January 1, 2015. A new General Manager with extensive experience in the eyewear
industry has been hired to pursue the growth of the new entity through the projected synergies, with
the aim of boosting sales and exploiting the operational gearing. Therefore, according to management,
no indications of impairment exist that could require to write down the value of the equity investment.
With respect to Eyestyle Retail Srl, and specifically to the recovery of key money (paid to the previous
lessee for taking over the lease), management verified that the effective rental cost incurred by the
subsidiary (including key money) was consistent with the market rate for the area, where payment of
key money is standard practice and will potentially enable the company to recover the amount when a
new lessee takes over the lease.
Due to its losses, Eyestyle Trading Shanghai was recapitalized with a capital injection of euro 270
thousand.
Information on the investments in associates is shown below:
Associates
(euro/000)
FINITEC Srl in liquidation
Total
12/31/2013
Merger impact
Writedowns of
the year
86
86
(86)
(86)
-
Subscription /
disposal
-
12/31/2014
-
Finitec S.r.l. was put into liquidation pursuant to a resolution of the Extraordinary General Meeting held
on May 6, 2011.
In 2014 the liquidation process of associate Finitec S.r.l. in liquidation was completed. On October 30,
2014, shareholder Marcolin was assigned assets of euro 240 thousand deriving from the liquidation.
150
Marcolin S.p.A.
Marcolin purchased from Finitec an idle building (next to the Company's historical headquarters in
Longorone), which will soon be used to expand the floor space dedicated to the business activity.
Impairment testing
Impairment testing, under IAS 36, is performed at least annually for intangible assets with an indefinite
useful life, such as goodwill. Other intangible assets are tested whenever there are external or internal
indications that they have suffered an impairment loss.
The Group's total goodwill of euro 281.452 million as at December 31, 2014, of which euro 189.722
million refers to the Parent Company, was tested for impairment to assess the fairness of the carrying
amount as at the reporting date.
The new organizational structure resulting from Viva International integration represents the full
integration of all Viva structures into Marcolin; Viva's previous structures lost their identity in the
integration process through acquisitions, mergers and business division transfers conducted within the
vast international reorganization of the Group, which is now managed as a single unit coordinated by
the Parent Company using a centralized model. For this reason goodwill was measured at a Group
level.
The recoverable amount of goodwill was estimated using the Marcolin group's value in use, and was
taken as the enterprise value emerging from the application of the unlevered free cash flow method to
the projected cash flows of the Marcolin group's continuing operation (including Viva International cash
flows).
The following assumptions were made to determine value in use:
•
•
•
•
the cash-generating unit was identified in the Marcolin group (cash flows from projected
operating/financing activities of Marcolin S.p.A. and its Italian and foreign subsidiaries);
the main data sources used were the Group's 2015 - 2017 business plan projections, the
consolidated financial statements for the year ended December 31, 2013, the draft financial
statements for the year ended December 31, 2014, and the 2015 Budget; the 2015 - 2017
business plan was approved by the Parent Company's Board of Directors on February 26,
2015;
the terminal value was calculated by capitalizing the available cash flow expected perpetually
from 2018 (estimated on the basis of the last year in the business plan, given an increase in
the "g" rate from the last year stated). It has been assumed that it will grow at a "g" rate of
2.3%, conservatively considering the inflation projections for the countries in which Marcolin is
present. The terminal value was adjusted to account for the Parent Company's transfer of the
provision for severance indemnities;
the cash flow discount rate (WAAC) is 8.8%, calculated in line with the Capital Asset Pricing
Model (CAPM) used for valuation in doctrine and in standard practice. This rate reflects
current market estimates referring to: 1) the cost of capital for debt (Kd = 3.0%, after taxes); 2)
the expected return on the risk capital invested in Marcolin (Ke = 9.6%), weighted considering
the source of the Group's main cash flows. Weighted Kd/Ke was determined under the
applicable accounting standards by considering the average financial structure of Marcolin's
main comparables, assuming that the value of the entity's projected cash flows does not
derive from its specific debt/equity ratio.
Based on the results of the analysis performed, goodwill did not suffer any impairment losses.
Moreover, sensitivity analysis was performed on the Group's enterprise value, determined with the
previously described methods, assuming:
•
•
changes in WAAC;
changes in the g rate.
151
In this case, a half-percentage point increase in WAAC would result in a euro 41 million decrease in
the enterprise value (given the same g), whereas a half-percentage point decrease in the g rate would
result in an euro 37.9 million decrease in the enterprise value (given the same WAAC). In both cases
no impairment losses would affect the Profit and Loss.
In the case of conservative 100 bp reductions of WAAC and the "g" rate, the impairment test and
sensitivity analysis results produced recoverable amounts in line with the invested capital presented at
December 31, 2014 for the Marcolin group, without any impairment losses, even considering the
combined reduction of such parameters.
In addition, a stress test was performed assuming higher capital expenditures than those budgeted,
and estimating possible cash outflows that the Group could incur to renew certain licenses upon their
expiration.
The stress test confirmed that the coverage amounts remain positive, with broad safety margins.
It is reasonable to conclude that the carrying value of goodwill in the Parent Company's financial
statements is consistent with its fair value.
With respect to the investments in subsidiaries and associates recognized in the separate financial
statements, due to the positive results achieved in the recent past and in light of the 2015 forecast,
management did consider any indications of impairment to exist.
4. NON-CURRENT FINANCIAL ASSETS
Non-current financial assets were euro 108.190 million, compared to euro 97.624 million in 2013.
The 2014 amount consists of:
•
•
euro 102.957 million in loans granted to subsidiary Marcolin USA, Inc. used to finance the
December 3, 2013 acquisition of Viva Optique, Inc.;
a euro 5.000 million loan granted to a third party, accruing interest at market rates, whose
repayment will commence on January 1, 2016 with semiannual installments until 2022.
Mainly, the balance increase is due to end-of-period adjustments to the loan granted to Marcolin USA
Inc. arranged in U.S. dollar.
5. OTHER NON-CURRENT ASSETS
The other non-current assets, euro 527 thousand (euro 635 thousand in 2013), consist mainly of
prepaid transaction costs for the euro 25 million senior revolving credit facility, deferred over the
duration of the financing agreement.
6. INVENTORIES
Inventories are detailed below.
152
Marcolin S.p.A.
Inventories
12/31/2014 12/31/2013
(euro/000)
Finished goods
Raw material
Work in progress
Gross inventory
Inventory provision
Net inventory
49,536
16,294
11,633
32,511
10,509
9,991
77,463
(14,402)
53,012
(16,605)
63,061
36,407
Net inventories rose by euro 26.654 million from the previous year. The increase in closing inventories
is attributable to an increase in “current” finished product inventories due to the higher sales,
management's decision to improve customer service by reducing delivery time and increasing the
supplies of continuing products (to be “never out of stock”), and the increase in models and designs in
the collections produced. In contrast, inventories of products from non-current collections fell
considerably from those of 2013. The inventory increase is also attributable to discontinuity
represented by products with new brands, particularly Zegna and Pucci, which will be launched
shortly.
In detail:
•
•
•
the value of finished products rose by euro 17.025 million;
the value of raw materials rose by euro 5.785 million;
the value of work in progress rose by euro 1.642 million.
7. TRADE RECEIVABLES
The composition of the trade receivables is as follows:
Trade receivables
12/31/2014 12/31/2013
(euro/000)
Gross trade receivables
72,433
48,229
Provision for bad debts
(2,232)
(1,609)
Net trade receivables
70,201
46,621
Trade receivables (up by euro 23.580 million) were affected primarily by the sales growth. The
increase in trade receivables is due particularly to the acceleration of business at the end of 2014,
caused by a concentration of deliveries at the end of the year. The credit quality of receivables due
from third parties remained consistent with that of recent years. In 2014 the recent improvement in the
average collection period, or "days sales outstanding" (DSO), lost momentum, but the extreme
emphasis on credit management and client selection made it possible to keep the DSO, which rose
slightly, under control even in the most difficult markets.
The amount of receivables stated in the financial statements was not discounted, since there are no
long-term receivables or receivables due beyond the short term.
For the purpose of providing the disclosures required by IFRS 7, the trade receivables due are set
forth below by geographical area:
153
Receivables not overdue by geographical area
12/31/2014
12/31/2013
Italy
11,416
9,611
Rest of Europe
24,070
10,815
(euro/000)
North America
Rest of World
Total
666
3,445
16,196
10,326
52,347
34,197
In compliance with IFRS 7, the following table provides an aging analysis of the undisputed trade
receivables:
Aging analysis of trade receivables not in protest
(euro/000)
12/31/2013
Not past due
Total
Gross value
Provision
Net value
34,197
2,852
3,126
7,500
(136)
(240)
(788)
34,197
2,716
2,886
6,712
(1,164)
46,511
47,675
12/31/2014
Not past due
Past due by less thank 3 months
52,347
9,388
1,119
8,250
(251)
(319)
(712)
52,347
9,137
799
7,538
Total
71,103
(1,282)
69,821
In some markets in which Marcolin S.p.A. operates, receivables are regularly collected after the date
stipulated by contract, without this necessarily indicating collection issues or financial difficulties.
Consequently, there are trade receivable balances that were not considered impaired even though
they were past due.
These trade receivables are set forth in the table below by past-due category.
Trade receivables past due but not impaired
(euro/000)
Total
12/31/2014
12/31/2013
3,340
1,208
4,548
2,715
9,602
12,317
For the sake of exhaustive disclosure, an aging analysis of disputed receivables and the related
writedowns is set forth below.
Aging analysis of trade receivable in protest
(euro/000)
12/31/2013
Total
12/31/2014
Total
Gross value
Provision
Net value
37
669
706
(26)
(573)
(599)
11
96
107
103
1,033
1,135
(72)
(878)
(950)
30
155
185
Some trade receivables are covered by the types of guarantees typically used for sales on
international markets.
154
Marcolin S.p.A.
The changes in the provision for doubtful debts are set forth below:
2014
2013
(euro/000)
Opening amount
Provisions
Restore
Uses / reversals
Reclassifications and other changes
1,760
50
Total
(125)
548
1,959
100
(163)
(136)
-
2,232
1,760
Euro 50 thousand was allocated to the provision in the year, and euro 125 thousand of the provision
was used.
In 2014 the previously allocated provision for doubtful debts of Marcolin France was reduced by euro
31 thousand to discount it to present value.
The trade receivables due from directly and indirectly controlled subsidiaries are set forth below:
Receivables due from subsidiaries
(euro/000)
Marcolin UK Ltd
Marcolin Iberica SA
Marcolin Gmbh
Marcolin Usa Inc
Marcolin Internantional B.V.
Marcolin Asia Ltd
Marcolin France Sas
Eyestyle.com Srl
Eyestyle Retail Srl
Viva France Sas
Viva Eyewear UK Ltd
Viva Canada Inc
Viva IP Inc
Total
12/31/2014
12/31/2013
2,183
1,527
1,451
476
1,488
535
11,595
3,612
5,204
8,546
446
744
7
543
11
449
2
38,820
798
736
975
370
1,401
261
5,485
1,470
206
2,611
7,143
445
694
22,595
8. OTHER CURRENT ASSETS
The composition of other current assets is shown below.
12/31/2014 12/31/2013
(euro/000)
Tax credits
Prepaid expenses
Other receivables
Total
4,064
602
2,915
7,582
5,241
409
3,841
9,491
155
The tax credits fell by euro 1.177 million on account of the lower taxes of the year, whereas other
receivables fell by euro 925 thousand primarily as a result of the reduced amount of 2.428 million due
from 3 Cime S.p.A. (compared to the euro 3.816 million of 2013 due from Marmolada, the former
consolidator) pursuant to the Italian tax consolidation agreement signed in 2014.
In fact, in 2014 Marcolin S.p.A. (with its subsidiaries Eyestyle Retail S.r.l. and Eyestyle.com S.r.l.)
adopted the Italian tax consolidation regime for 2014, 2015 and 2016 for corporate income tax (IRES)
purposes, which recognizes 3 Cime S.p.A. as the parent company. The relevant effects are reported
in the financial statement results as at December 31, 2014.
Consequently, net deferred tax was recognized on the allocation of the deferred tax assets on the
losses reported by Marcolin S.p.A. (recognized as income from tax consolidation) based on the
expectation of future taxable profits according to the Company's business plan.
9. CASH AND BANK BALANCES
This item, which amounts to euro 18.879 million, represents the value of cash deposits and highly
liquid financial instruments, i.e. those with a maturity of up to three months.
Cash and bank balances rose by euro 12.193 million from December 31, 2013.
10. CURRENT FINANCIAL ASSETS
This item, euro 10.078 million (8.293 million euro in 2013), consists primarily of the euro 9.885 million
due from Group companies.
The euro 979 thousand due from Marcolin France S.a.s. (recognized in previous periods) had been
fully written down pursuant to the waiver to settle the subsidiary's losses. Given the profits reported
recently by the subsidiary and the outlook for the next few years, it is currently considered likely that
such accounts will be entirely recovered, so the writedowns were reversed.
In early 2014 the Company received a repayment of euro 697 thousand from the subsidiary, after
having received repayments totaling euro 5.414 million in 2011, 2012 and 2013.
The current loan receivables due to Marcolin S.p.A. by subsidiaries and associates are listed below:
•
•
•
•
•
euro 5.836 million due from Marcolin International BV;
euro 3.053 million due from Marcolin U.S.A. Inc.;
euro 282 thousand due from Marcolin France Sas;
euro 596 thousand due from Eyestyle Retail Srl;
euro 119 thousand due from Eyestyle.com Srl.
In accordance with EEC IVth Directive 78/660 Article 43, paragraph 1 no. 13, it is confirmed that as at
December 31, 2014 the accounts did not include any loans to members of administrative,
management, or control bodies, nor any guarantee commitments to any members of administrative,
management, or control bodies, directors or statutory auditors.
11. EQUITY
Marcolin S.p.A.’s share capital is euro 32,312,475.00, composed of 61,458,375 ordinary shares.
The Statement of Changes in Equity provides more detailed information on this item.
156
Marcolin S.p.A.
Item
Uses in previous three years
Amount
Possible use
Available
portion
(euro/000)
Share capital
32,312
Share premium reserve
24,517
A-B-C
Legal reserve
3,853
B
Fair value reserve (First-time adoption or "FTA")
B
FTA reserve
B
Stock Option reserve
Other reserves
45,420
Retained earnings
102,486
A-B-C
208,589
Total
Non-distributable portion under Civil Code Art. 2426, comma 1 n. 5 c.c.
Non-distributable portion under Civil Code Art. 2426
Distributable portion
Restricted portion under TUIR Art.109 paragraph 4/b
Key:
A – to increase share capital
B - to cover losses
- loss coverage
-other
-
-
24,517
600
101,557
126,675
2,609
124,065
C – to distribute to shareholders
D – others
12. NON-CURRENT FINANCIAL LIABILITIES
The item consists of euro 191.931 million regarding the bond notes, accounted for in accordance with
IAS 39 (amortized cost method), and an increase in bank loans, the long-term portion of which is euro
3.676 million.
The net financial position is set forth below. Additional information is provided in the Report on
Operations.
157
12/31/2014
12/31/2013
Current financial receivables
18,879
118,257
(56,080)
(1,332)
(196,386)
6,686
105,917
(23,781)
(81)
(190,865)
Total net financial indebtedness
(116,662)
(102,124)
(euro/000)
The following table presents the maturities of the financial payables, which are classified as current
liabilities and non-current liabilities.
Borrowings-maturity
Within 1
year
(euro/000)
From 1 to 3
years
years
5 years
Total
Credit lines used
15,039
-
-
-
15,039
Loans
21,243
2,450
1,250
-
24,943
2,435
126
191,914
-
194,475
Other financiers
Intercompany
18,695
12/31/2014
-
57,412
646
2,577
193,810
-
19,341
-
253,798
In additional to the commitments described subsequently (see Note 20), for the revolving credit facility,
commitments to comply with financial covenants exist at a consolidated level for Marcolin S.p.A. and
its subsidiaries. According to an analysis conducted at the time of preparation of this report, the
covenants were complied with as at December 31, 2014.
13. NON-CURRENT PROVISIONS
The composition of non-current provisions is shown below:
Long term provision
(euro/000)
01.01.2013
Provisions
Use / reversal
Others
12/31/2013
Provision for severance
employee indemnities
Provision for
agency
terminations
Provision for other
risks
Other provisions
Total
3,386
83
(176)
326
37
3,656
1,254
96
(328)
35
1,057
11,582
(11,582)
-
1,441
250
(570)
1,121
17,662
429
(12,656)
361
37
5,833
The long term provision consists primarily of the employee severance indemnity provision ("TFR") of
euro 3.656 million.
The provision for other risks presents the estimated amount, in a medium/long-term time horizon, of
the potential losses regarding some licenses, calculated on the basis of future earnings projections,
given the expected turnover growth and related contractual obligations. The provision was used for
euro 11.582 million due to the materialization of the conditions for its adjustment, on the basis of the
best available information.
The employee severance indemnity provision ("TFR") recognized in the Company's financial
19
statements for euro 3.656 million , was measured with an actuarial calculation at the end of the year.
20
19
The provision consists of the benefits that accrued to employees until December 31, 2006 to be paid upon or subsequent to termination of
employment: the TFR accruing from January 1, 2007 is treated as a defined contribution plan. By paying the contributions into (public and/or
private) social security funds, the Company complies with all relevant obligations.
20
The parameters used for the actuarial calculation are: 1) mortality rate: Table RG 48 of the Public Accounting Office; 2) disability rates: INPS
table by age and gender; 3) personnel turnover rates: 5%; 4) frequency of severance payments: 2%; 5) discount/interest rate: 0.91%; 6) TFR
158
Marcolin S.p.A.
The additional information required under Revised IAS 19 is provided hereunder:
•
•
•
•
sensitivity analysis of each significant actuarial assumption at the end of the year, showing
effects of changes in actuarial assumptions reasonably possible at that date, in absolute
terms;
next year's service cost;
the average vesting period of the defined benefit obligation;
payments foreseen under the plan.
Sensitivity analysis
DBO* at 12/31/2014
Inflation rate +0.25%
Inflation rate - 0.25%
Actuarial rate +0.25%
Actuarial rate - 0.25%
Turnover rate -1%
Turnover rate +1%
3,717
3,619
3,590
3,749
3,636
3,703
* Defined Benefit Obligation
Next year service cost
Vesting period
2015 Service Cost
Resting period
Years
0.00
9.2
Payments foreseen
1
2
3
4
5
343
246
227
235
202
14. OTHER NON-CURRENT LIABILITIES
This item consists primarily of security deposits due after 12 months from the reporting date.
15. TRADE PAYABLES
The following table sets forth the trade payables by geographical area:
Trade payables by geographical area
12/31/2014
31.12.2012
Italy
30,056
17,846
Rest of Europe
23,665
4,267
North America
Rest of World
8,940
5,688
35,720
13,939
(euro/000)
Total
98,380
41,740
growth rate: 1.95% for 2015, 1.2% for 2016, 1.5% for 2017 and 2018, 2% for 2019 on; 7) inflation rate: 1.95% for 2015, 2.4% for 2016, 2.625% for
2017 and 2018, 3% for 2019 on.
159
The euro 56.641 increase in trade payables is attributable to the loose purchasing policy in place to
deal with the sales and service level growth, involving a clear increase in inventories.
The 2014 end-of-period amount is also affected by the recognition of payables due to some licensors
under important license renewals that were stipulated in the year but will affect the cash flows of 2015.
Excluding this effect in order to make comparison between the two years more meaningful, the
average payment period, or "days payable outstanding" (DPO), for trade payables improved
considerably year-on-year.
The trade payables were not subject to discounting, as the amount is a reasonable representation of
their fair value since there are no payables due after 12 months.
In compliance with the disclosure requirements of IFRS 7, it is reported that on December 31, 2014
there were no past-due trade payables, excluding the accounts being disputed by the Company with
suppliers.
16. CURRENT FINANCIAL LIABILITIES
The amount represents the short-term borrowings of euro 57.412 million, including the euro 35.532
million short-term portion of medium/long-term loans, and other financial payables of euro 18.695
million due within 12 months from the reporting date (all of which due to subsidiaries).
Financial liabilities at fair value through profit and loss
During the year, the Marcolin S.p.A. stipulated derivative contracts on the U.S. dollar exchange rate
with Veneto Banca Holding to protect itself against the risk of exchange rate variability, some contracts
of which were still in effect on the reporting date.
The fair value of such derivatives on December 31, 2014 was euro 182 thousand.
Although the derivatives were designated to hedge against the risk of exchange rate variability on
purchases from suppliers in U.S. dollars, they were not accounted for hedge accounting because they
do not meet the strict requirements, including formal ones, of the applicable accounting standard.
17. CURRENT PROVISIONS
The table below presents the most significant changes of the year in the current provisions:
Current provisions
(euro/000)
Others
Total
01.01.2013
Provision
Use / reversal
Others
6,329
140
(4,542)
6,329
140
(4,542)
-
408
408
12/31/2013
2,335
2,335
The other provisions consist of allowances for risks regarding:
•
•
•
•
160
customer returns and product warranties (euro 1.148 million);
future contingent liabilities of euro 29 thousand;
contingent liabilities arising from legal obligations (euro 155 thousand);
commitments of euro 1.003 million to cover losses of subsidiaries, consisting of euro 902
thousand for Marcolin France and euro 101 thousand for Marcolin Portugal.
Marcolin S.p.A.
18. OTHER CURRENT LIABILITIES
The other current liabilities are as follows.
12/31/2014 12/31/2013
(euro/000)
Payables to personnel
(4,419)
(3,314)
Social security payables
(1,812)
(1,654)
Other accrued expenses and deferred income
Total
(50)
(6,282)
0
(4,968)
The other current liabilities increased from 2013 manly as a result of amounts due to personnel and
the related social security.
19. COMMITMENTS AND GUARANTEES
Guarantees associated with the bond note issue:
With a notarial deed dated October 31, 2013, the Board of Directors passed a resolution to issue nonconvertible senior-secured notes; with a determination deed drawn up by a specifically designated
director on November 7, 2013, and in implementation of the Board of Directors' mandate of October
31, 2013, the terms and conditions for the issuance of notes of nominal euro 200,000,000 were
established.
The notes are secured by collateral provided by the Issuer, controlling shareholder Marmolada S.p.A.
and some subsidiaries of the Issuer to discharge the payment obligations assumed by the Issuer with
the bondholders:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
a pledge over the shares of the Issuer representing 100% (one hundred percent) of share
capital;
a pledge over the Issuer's intellectual property rights;
a security assignment over insurance policy receivables due to the Issuer;
a security assignment over trade receivables due to the Issuer;
a security assignment over receivables due to the Issuer by Marcolin USA, Inc. originating
from loans granted to provide the company with the financing necessary to pay the purchase
price/acquire the share capital of Viva Optique Inc.;
a pledge over all Marcolin (UK) Limited shares owned by the Issuer;
a pledge over all Marcolin France S.a.s. shares owned by the Issuer;
a pledge over all Marcolin (Deutschland) Gmbh shares owned by the Issuer;
a pledge over all Marcolin USA, Inc. shares owned by the Issuer;
a pledge over all shares of Viva Optique Inc., directly controlled by Marcolin USA, Inc., owned
by Marcolin USA, Inc.;
a pledge over 65% of the shares of Viva Europa Inc., controlled indirectly by the Issuer,
through Viva Optique Inc.;
a pledge over 65% of the shares of Viva Eyewear Ltd (UK), controlled indirectly by the Issuer,
through Viva Europa Inc.;
a security agreement over all material assets of Marcolin USA, Inc.;
a security agreement over all material assets of Viva Optique, Inc.
Other commitments:
The Company's other commitments are as follows:
161
Commitments
(euro/000)
Rent due
Within one year
After five years
Total
Operating lease payment
Within one year
After five years
Total
Total commitments
12/31/2014
12/31/2013
172
694
353
1,219
163
82
18
45
0
63
13
97
0
110
1,282
354
245
The Company also has guarantees with third parties of euro 162 thousand (euro 161 thousand in
2013).
Licenses
The Company has contracts in effect to use trademarks owned by third parties for the production and
distribution of eyeglass frames and sunglasses.
Those contracts require payment of guaranteed minimum royalties over the duration of the contracts;
at December 31, 2014 such future commitments amounted to euro 230.447 million (euro 238.711
million in 2013), including euro 39.953 falling due within the next year.
Guaranteed minimum Royalties due
(euro/000)
Within one year
After five years
Total
162
12/31/2014
12/31/2013
39,953
163,486
27,008
230,447
42,853
167,878
27,980
238,711
Marcolin S.p.A.
INCOME STATEMENT
As described in the Report on Operations, the balances partly include non-recurring costs incurred for
special initiatives undertaken or pursued during the year, such as extraordinary costs for employees
who left the company, consulting services and services associated with the non-recurring transactions
of the year, and costs of investment and development that have not been matched by revenue
streams yet.
The effects of those costs are described in the Report on Operations in order to take them into
account for the purpose of determining normalized income for 2014, comparable with 2013.
The Company's main income statement items and changes therein are described in this section.
20. REVENUE
The following table sets forth the net sales revenues of 2014 by geographical area:
Net sales by geographical
area
(euro/000)
2014
Turnover
2013
Increase (decrease)
% on total
Turnover
% on total
Turnover
Change
Europe
70,784
47.1%
61,874
50.2%
8,910
14.4%
U.S.A.
Asia
Rest of World
28,585
25,006
26,045
19.0%
16.6%
17.3%
20,331
18,160
16.5%
18.6%
14.7%
8,254
1,997
7,885
40.6%
8.7%
43.4%
150,420
100.0%
123,374
100.0%
27,047
21.9%
Total
23,009
The 2014 sales revenues were euro 150.420 million, compared to the euro 123.474 revenues of 2013,
representing a substantial increase of euro 27.046 million (21.9%) from the prior year.
The Report on Operations describes the 2014 performance of sales.
21. COST OF SALES
Below is a detailed breakdown of the cost of sales:
Cost of sales
(euro/000)
Purchase of materials and finished products
Changes in inventories
Cost of personnel
Outsourced processing
Amortization, depreciation and writedowns
Other costs
Total
2014
% sui
ricavi
2013
% sui
ricavi
Incremento
(decremento)
%
74,390
(26,560)
16,455
10,478
2,088
7,204
84,054
49.5%
(17.7)%
10.9%
7.0%
1.4%
4.8%
55.9%
36,457
1,213
16,200
6,946
2,168
3,992
66,976
29.5%
1.0%
13.1%
5.6%
1.8%
3.2%
54.3%
37,933
(27,773)
255
3,532
(80)
3,211
17,079
104.0%
(2290.3)%
1.6%
50.8%
(3.7)%
80.4%
25.5%
The cost of sales rose by euro 17.079 million, and was 55.9% of sales, compared to 54.3% in 2013.
The product costs remained fairly consistent with those of the previous year, thanks to activities
undertaken to contain the impact on margins of inflation, especially in the sourcing markets (China).
The other expenses refer principally to purchasing costs (transport and customs) and business
consulting services.
163
22. DISTRIBUTION AND MARKETING EXPENSES
Below is a breakdown of the distribution and marketing expenses:
Distribution and marketing expenses
(euro/000)
% sui
ricavi
6.0%
2.1%
2.0%
10.0%
10.3%
5.5%
35.9%
2014
9,098
3,189
2,968
15,014
15,439
8,302
54,011
Cost of personnel
Commissions
Amortization
Royalties
Advertising and PR
Other costs
Total
2013
8,111
2,540
1,630
17,189
13,612
7,159
50,239
% sui
ricavi
6.6%
2.1%
1.3%
13.9%
11.0%
5.8%
40.7%
Incremento
(decremento)
988
649
1,338
(2,174)
1,827
1,143
3,771
%
12.2%
25.6%
82.1%
(12.6)%
13.4%
16.0%
7.5%
Distribution and marketing expenses rose by euro 3.771 million (7.5%) from the previous year; the
increase is the result of an increase in advertising and public relations ("PR") expenses, amortization
and other expenses, despite a considerable decrease in royalty expense.
Excluding amortization, the total annual increase is euro 2.433 million.
The other expenses consist primarily of sales expenses, including transport costs, travel expenses,
rent expense and entertainment expenses.
23. GENERAL AND ADMINISTRATION EXPENSES
The general and administrative expenses are set forth below:
General and administration expenses
(euro/000)
2014
5,358
50
459
6,954
12,821
Cost of personnel
Amortization and writedowns
Other costs
Total
% sui
ricavi
3.6%
0.0%
0.3%
4.6%
8.5%
2013
5,217
100
402
6,187
11,906
% sui
ricavi
4.2%
0.1%
0.3%
5.0%
9.7%
Incremento
(decremento)
141
(50)
57
767
915
%
2.7%
(50.0)%
14.1%
12.4%
7.7%
General and administration expenses increased by euro 915 thousand compared to the previous year.
Other expenses, euro 6.954 million (up by euro 767 thousand year on year), refer mainly to:
• compensation for Directors, Statutory Auditors and the independent auditing firm;
• other general and administrative consulting services;
• expenses regarding the Company's information technology systems.
24. EMPLOYEES
The 2014 average and end-of-period number of employees (including the work force on temporary
contracts) is broken down below in comparison with the previous year:
Employees
Category
Managers
Staff
Manual workers
Total
164
Final number
12/31/2014
Average number
12/31/2013
2014
2013
15
13
14
14
238
456
214
393
231
418
212
409
709
620
663
635
Marcolin S.p.A.
25. OTHER OPERATING INCOME AND EXPENSES
The other operating income and expenses are set forth below:
Other operating income and expenses
12/31/2014 12/31/2013
(euro/000)
Transport refund
2,069
Other income
1,737
9,437
8,874
11,507
10,611
Reversals of impairment losses on equity investments
-
(706)
Total reversals of imairment losses on equity investments
-
(706)
-
-
Other expenses
(496)
(338)
Total other expenses
(496)
(338)
11,011
9,567
Total other income
Total other operating income and expenses
The balance of this item is net operating income of euro 11.011 million, compared to net operating
income of euro 9.567 million for 2013 (up by euro 1.444 million).
Other income consists mainly of euro 7.664 million in advertising expenses incurred by the Company
that were charged to other Group companies, compared to euro 6.863 million in 2013.
26. FINANCIAL INCOME AND COSTS
Financial income and costs are set forth below:
2014
2013
(euro/000)
Financial income
Financial costs
Total
23,879
3,152
(24,702)
(17,205)
(823)
(14,053)
The composition of financial income and finance costs is shown below:
Financial income
2014
2013
(euro/000)
Interest income
Other income
8,454
776
83
279
Gains on currency exchange
15,341
2,097
Total
23,879
3,152
165
Financial costs
2014
2013
(20,165)
(14,507)
(119)
(104)
(4,417)
(2,593)
(24,702)
(17,205)
(euro/000)
Interest expense
Financial discounts
Losses on currency exchange
Total
Financial income and costs result in net finance costs of euro 823 thousand, compared to euro 14.053
million for 2013.
Marcolin S.p.A.'s balance between income of euro 23.879 million and costs of euro 24.701 million was
influenced by the following components:
•
•
•
•
interest income from foreign subsidiaries of euro 8.454 million;
profits on currency exchange of euro 15.341 million, including euro 3.022 million in profits on
currency exchange and euro 12.318 million in financial income referring to end-of-period
adjustments to a receivable due to Marcolin S.p.A. from Marcolin USA Corp. denominated in
U.S. dollars, which increased due to the appreciation of the U.S. dollar;
interest expense of euro 20.165 million, consisting mainly of euro 17.000 million on the bond
notes issued by Marcolin S.p.A., paid semiannually in May and November, euro 1.375 million
in reversed bond issue transaction costs, accounted for under IFRS with the financial method
of amortized cost over the life of the bond notes (maturing November 2019), euro 0.926 million
in net interest costs, and euro 0.580 million in additional finance costs regarding actualization
and translation differences;
the losses on currency exchange were euro 4.417 million.
The Company's foreign currency exchange in 2014 resulted in a net loss of euro 1.394 million
(including fair value measurement of currency hedges in place at the end of the year), referring
entirely to currency translation adjustments to receivables and payables at the end of the year.
Foreign currency exchange referring to income and expenses (foreign exchange differences on trade
transactions) was balanced, with an immaterial net gain.
Fair value measurement of currency hedges (on purchases and sales) in place at the end of the year
resulted in a net gain of euro 182 thousand.
27. INCOME TAX EXPENSE
Current tax was determined by applying the tax rates in force to taxable income (profit for the year
determined with the changes generated by the applicative tax rules).
The tax expense is detailed below:
Incom e tax expense
(euro/000)
Current taxes
Deferred taxes
Income from Tax Consolidation
Taxes relating to prior year
Total incom e taxes
2014
(1,566)
(6,860)
2,428
759
(5,239)
2013
(869)
(1,226)
3,816
(2)
1,719
The increase in total income taxes is attributable to the deferred taxes. The deferred taxes and the
changes therein are set forth below:
166
Marcolin S.p.A.
Deferred tax assets
(euro/000)
Tem porary
differences
12/31/2014
%
27,396
13,831
7,906
2,478
2,098
1,509
978
740
155
143
27.5%
27,5%/31,4%
27,5%/31,4%
27.5%
27.5%
27.5%
31.4%
31.4%
31.4%
27,5%/31,4%
Accumulated tax losses
Inventory provisions
Grants and compensation deductible on a cash basis
Income from CFC (controlled foreign companies)
Taxed provision for doubtful debts
Supplementary client indemnity provision
Provision for return risks
Other
Total deferred tax assets
57,234
Tem porary
differences
12/31/2014
%
Finance costs deducted on a cash basis
Land and buildings
Actuarial gain / losses on TFR under IAS
Other
(12,945)
(8,069)
(2,910)
(460)
-
27.5%
27.5%
31.4%
27.5%
31.4%
Total deferred tax liabilities
Total deferred assets / liabilities
7,534
3,917
2,443
682
577
415
307
232
49
41
16,196
(euro/000)
Tax on
tamporary Tem porary
differences differences
12/31/2014
12/31/2014
2,932
16,110
147
1,442
2,098
1,509
1,254
2,667
14,241
177
Tax on
tamporary
differences
% 12/31/2014
27.5%
27,5%/31,4%
27,5%/31,4%
27.5%
27.5%
27.5%
31.4%
31.4%
31.4%
27,5%/31,4%
42,577
806
4,492
40
396
577
415
394
837
4,472
49
12,479
Tax on
tamporary Tem porary
differences differences
12/31/2014
12/31/2014
Tax on
tamporary
differences
% 12/31/2014
(3,560)
(2,219)
(914)
53
-
(311)
(3,134)
(168)
(104)
27.5%
27.5%
31.4%
27.5%
31.4%
(85)
(984)
(46)
(33)
(24,384)
(6,640)
(3,716)
(1,148)
32,850
9,556
38,861
11,331
28. FINANCIAL INSTRUMENTS BY TYPE
The financial instruments are set forth by uniform category in the table below, which presents their fair
value in accordance with IFRS 7.
interest rates from the yield curve of the reporting date, and the latest Euribor fixing was used to
The hedging agreements used are classified as O.T.C. (over-the-counter) instruments, so they do not
have a public price available on official exchange markets. Discounted cash flow models were used to
measure the interest rate swaps.
Categories of financial assets
(euro/000)
Loans and other financial receivables
Trade
receivables
70,201
Financial Cash and bank
assets
balances
118,258
18,879
Financial assets at fair value through P/L
-
-
-
Held to maturity investments
-
-
-
Financial assets available for sale
-
-
-
Total
70,201
118,258
18,879
167
Categories of financial liabilities
Trade
payables
Financial
liabilities
Bond
Financial liabilities at fair value through P/L
-
-
-
Derivatives used for hedging
-
-
-
98,380
59,301
194,196
-
301
-
98,380
59,602
194,196
(euro/000)
Other financial liabilities at amortized cost
Liabilities as under IAS 17
Total
168
Marcolin S.p.A.
INCOME AND EXPENSES WITH SUBSIDIARIES AND ASSOCIATES
The intercompany transactions are mainly of a trade and/or financial nature and are conducted on an
arm's length basis.
The income and expenses with directly controlled subsidiaries are set forth below:
Company
(euro/000)
Revenues from
sales and Other income
services
Company
Marcolin Asia Ltd.
Marcolin (Deutschland) GmbH
Marcolin GmbH
Marcolin Iberica S.A.
Marcolin Benelux S.p.r.l.
Marcolin (UK) Ltd
Marcolin Usa Inc.
Marcolin France SAS
Eyestyle.com
Eyestyle Retail
Viva Optique
Sover M
Total
871
3,644
935
3,863
2,281
845
3,231
28,024
8,425
2,662
43
113
54,936
Financial income
Cost of raw, ancillary
from non-current
and consumable
receivables materials and products
9
159
82
129
134
40
218
404
605
156
10
1,946
8,360
62
4
29
8,454
11
3
6,219
6,233
Cost of
services
12/31/2014
1,812
84
81
52
728
1,464
704
252
5,177
(943)
3,718
1,017
3,993
2,334
833
2,720
35,321
62
8,326
2,818
4
71
(6,347)
53,927
RELATED-PARTY TRANSACTIONS
Related party transactions were of a trade nature, conducted on an arm's length basis, and regarded
licensing agreements in particular.
The transactions and outstanding balances with respect to related parties as at December 31, 2014
are shown below, as required by IAS 24.
Company
(euro/000)
Expenses
Revenues
Payables
Receivables
2,317
747
755
238
164
703
1,798
4,981
8
755
80
235
3,495
4,566
Type
Other related parties
Tod's S.p.A
Pai Patners Sas
Coffen Marcolin Family
Diesel
3 Cime S.p.A.
Total
Related party
- Related party
- Realted party
2 Related party
2,428 Consolidating
2,669
The remuneration of the Directors and Statutory Auditors is reported below (the table does not present
Managers with strategic responsibilities because they are included in the category of the Company's
Directors).
2014
(euro/000)
2013
Board of
Directors
Statutory
Auditors
389
674
1,063
100
100
Base fee
Salaries and benefits
Total
Other
-
Board of
Directors
Statutory
Auditors
Other
368
642
1,010
90
90
-
Atypical and unusual transactions
169
In 2014 there were no atypical and/or unusual transactions, including with other Group companies, nor
were there any transactions outside the scope of the ordinary business activity that could significantly
impact the financial position, financial performance or cash flows of Marcolin S.p.A.
Significant non-recurring events and transactions
Significant non-recurring events and transactions that impacted the Company's financial position,
financial performance and cash flows in 2014 have to do with the Viva group integration and
reorganization activities, described in detail in the Report on Operations.
170
Marcolin S.p.A.
INDEPENDENT AUDITORS' REPORT
ON THE SEPARATE
FINANCIAL STATEMENTS
171
172
Marcolin S.p.A.
INDEPENDENT AUDITORS' REPORT ON THE SEPARATE FINANCIAL
STATEMENTS
173
174
Marcolin S.p.A.
BOARD OF STATUTORY
AUDITORS' REPORT
175
176
Marcolin S.p.A.
BOARD OF STATUTORY AUDITORS' REPORT
FOR THE GENERAL MEETING OF MARCOLIN S.P.A.
PURSUANT TO ITALIAN CIVIL CODE ARTICLE 2429, ARTICLE 2
For the attention of the Sole Shareholder, MARMOLADA S.p.A.
Dear Sir/Madam,
The external audit of the accounts for each of the three years ending December 31, 2013, 2014 and
2015 has been assigned to PricewaterhouseCoopers S.p.A. (the “Independent Auditors”), in
accordance with Italian Legislative Decree 39/2010, Article 14 and Italian Civil Code Articles 2409-bis
et seq., and pursuant to the justified proposal of this Board of Statutory Auditors.
The Board of Directors has provided us with the report on operations and draft financial statements for
the year from January 1, 2014 to December 31, 2014, showing a profit of Euro 4,483,252, approved
on March 27, 2015.
This Board of Statutory Auditors and the Independent Auditors have received a formal waiver of the
terms under Italian Civil Code Article 2429 from the sole shareholder, Marmolada S.p.A.
In November 2013, your Company acquired the entire share capital of U.S. company Viva Optique,
Inc., thereby expanding its size and global business; in conjunction with that acquisition, MARCOLIN
S.p.A. issued and listed a senior backed, non-convertible bond for a total principal amount of Euro 200
million, with a maximum term of 6 years and return rate of 8.5%; the bond is listed on the Luxembourg
stock exchange and on the Extra Mot of the Italian stock exchange. The financial resources deriving
from the bond issue were used by the Company partly to finance the acquisition of Viva Optique and
partly to refinance the Group's debt.
During the year ended on December 31, 2014, we performed the supervisory duties required by law,
in observance of the provisions issued by Consob and also in accordance with the Board of Statutory
Auditors' code of conduct recommended by the Italian association of certified accountants.
With respect to our supervisory duties, we report that:
· we attended the Board of Director meetings and verified the observance of the principles of fair
management, laws and by-laws, and the correct use of the proxies assigned to the Directors;
· the Board of Statutory Auditors attended the General Meetings of Shareholders, which were held in
observance of the law to pass appropriate resolutions;
· the Company's Board of Statutory Auditors held 5 meetings during the year to perform the statutory
controls and to exchange information with the firm responsible for the external audit;
· we obtained the information necessary to perform our general supervisory function by constantly
participating in Board of Director meetings and meeting with management. We also obtained from the
Directors, on a regular basis, information on the activities performed by the executive directors in
execution of the powers assigned to them, on the most significant business, financial and equity
transactions, on related-party transactions including infra-group transactions, and on any atypical or
unusual transactions, in accordance (as necessary) with Italian Legislative Decree 58/1998, Article
150, paragraph 1.
This took place in keeping with the Company's specific corporate governance procedure to ensure that
Directors and Statutory Auditors have at their disposal all information needed to ensure the correct
fulfillment of their duties. Based on the information obtained, we verified that the main operations
carried out by the Company were consistent with the business purpose and with the law and by-laws,
and we can confirm that those operations were not manifestly risky, hazardous, such as to
compromise the integrity of the Company’s net worth, or in contrast to the decisions taken at the
General Meeting or in conflict of interest.
· during the Board of Director meetings we were given periodic and timely information on the activity
performed by the Company and the Subsidiaries, and on the most significant business, financial and
equity transactions, and we verified that those transactions were consistent with the business purpose
and with the law and by-laws, and were not manifestly risky, hazardous, such as to compromise the
integrity of the Company’s net worth, or in contrast to the decisions taken at the General Meeting or in
conflict of interest;
· during the year we met regularly with the Independent Auditors and with other heads of functions; no
matters worthy of note emerged from the meetings.
· the Board of Statutory Auditors attended the Internal Audit Committee meetings;
177
· we found no evidence of atypical or unusual transactions as defined in Consob Communication
6064293 of July 28, 2006;
· we verified that there are no routine intercompany or related-party transactions that are in conflict of
the Company's interest or inconsistent; the intercompany and related-party transactions are described
adequately by the Directors in the Report on Operations and in the explanatory notes; all such
transactions were carried out on an arm's length basis;
· the Company applied the principles regarding procedures that companies must adopt to ensure the
necessary conditions of fairness in the process of carrying out transactions with related parties;
· in light of the information obtained, and by examining the statutory audit minutes book, we also noted
that the Board of Statutory Auditors of the former parent company, Cristallo S.p.A., as within its
competence, performed its supervisory activity in accordance with current legislation and did not
report any anomalies and/or issues;
· we evaluated, as within our competence, the adequacy of the Company’s organizational structure,
internal control system, administrative and accounting systems, and their reliability to accurately
represent business matters, by collecting information from department heads, by meeting with the
Independent Auditors with the reciprocal exchange of data and information, and by attending Internal
Audit Committee meetings, and given the business activity and the size of the Company, we deem the
organization and systems to be adequate;
· we monitored the implementation of organizational measures associated with business
developments;
· we checked the Company's observance of the law and by-laws.
We inspected and obtained information about the organizational and procedural activities
implemented by the Company and its subsidiaries in accordance with Italian Legislative Decree
231/01 on the administrative liability of entities for the crimes contemplated by such legislation (and as
subsequently amended). The Supervisory Body reported on the activity performed during the year
ended December 31, 2014, without finding any wrongdoing or specific violations of the Company’s
and the subsidiaries' Organizational Model.
As noted, PricewaterhouseCoopers S.p.A. audited the Company’s separate financial statements for
the year ended December 31, 2014 and on today's date (after having received the formal waiver of the
terms under Italian Civil Code Article 2429 from the sole shareholder, Marmolada S.p.A.., also to the
benefit of this Board of Statutory Auditors) it submitted an unqualified opinion, stating that the
Company's separate financial statements for the year ended December 31, 2014 were "prepared
clearly and give a true and fair view of the financial position, results of operations and cash flows". The
Independent Auditors also stated that the report on operations is consistent with the separate financial
statements of the Company. The Board of Statutory Auditors performed its supervisory function with
the full collaboration of the corporate boards and adequate documentation was always provided. No
omissions, wrongdoing or irregularities were found.
We checked the accounting policies of the separate financial statements, upon which we agree in that
they correspond to the Italian Civil Code rules and are consistent with those applied in the previous
year.
Intangible assets were recognized and amortized with our consent, as necessary.
On March 27, 2015 the Board of Directors of MARCOLIN S.p.A. approved the draft consolidated
financial statements of MARCOLIN S.p.A. for the year ended December 31, 2014; those financial
statements, drawn up according to IAS/IFRS, were also audited by PricewaterhouseCoopers S.p.A.,
which issued a clean opinion on the true and fair view of the financial position, results of operations
and cash flows of the group.
The Independent Auditors stated that the report on operations is consistent with the consolidated
financial statements of MARCOLIN S.p.A. As within our competence, we acknowledge that the
Directors' report on the consolidated financial statements describes adequately the situation of the
companies of the group, the financial and business matters, the subsequent events, the annual
business performance and the business outlook for the current year.
We reviewed the report to verify compliance with Italian Legislative Decree 127/1991, Article 40, the
correct identification of the consolidated companies in accordance with the international accounting
standards, and the information as per Article 39 of the same Decree.
On the basis of the controls performed, the Board of Statutory Auditors considers the report on
operations to be correct and consistent with the consolidated financial statements.
178
Marcolin S.p.A.
The explanatory notes contain the information required by the international accounting standards,
present the accounting principles and policies adopted, and present the consolidation methods, which
correspond to those used for the previous year.
No claims were made to the Board of Statutory Auditors under Italian Civil Code Article 2408 or of any
other nature.
During the year we issued the opinions requested of the Board of Statutory Auditors in accordance
with the law.
In consideration of the foregoing, pursuant to the supervisory activity performed, and on the basis of
the information exchanged with the Independent Auditors, we are in favor of the approval of the
financial statements and we agree with the Board of Directors' proposal to allocate euro 224,163 to the
legal reserve and to carry forward the residual annual profit of Euro 4,259,089.
April 22, 2015
Dr. David Reali
Dr. Mario Cognigni
Rag. Diego Rivetti
179
Marcolin S.p.A.
FINANCIAL SUMMARY
OF SUBSIDIARIES
181
RECLASSIFIED FINANCIAL STATEMENTS OF SUBSIDIARIES
(euro/000)
2014
(euro/000)
2013
2014
2014
12
Goodw ill
-
-
-
Investments
-
-
4,516
Deferred tax assets
-
-
-
-
-
-
-
-
-
-
-
-
-
-
152
-
Total non current assets
-
-
2013
39
-
Intangible assets
41
(BRL/000)
2013
834
321
378
-
-
-
4,516
1,520
-
-
-
-
122
39
53
4,516
4,516
2,827
500
Inventories
279
167
-
-
4,494
2,053
Trade receivables
624
425
-
-
13,081
11,635
10
67
-
-
1,857
2,156
300
-
9
-
473
-
-
301
-
13
-
3,007
1,213
1,251
-
961
1,013
9
4,526
-
13
4,529
19,905
22,732
-
18,851
19,351
280
280
18
18
9,575
9,575
-
-
4,317
4,317
-
-
25
25
-
-
-
-
-
-
-
-
(4,500)
(4,500)
128
214
(5,564)
(5,450)
2,195
4,695
7
(86)
(93)
(114)
(5,506)
(2,574)
440
433
(1,321)
(1,228)
1,764
7,196
Long-term borrow ings
-
-
-
-
-
-
Long-term provisions
-
-
-
-
718
865
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
718
865
TOTAL ASSETS
Share capital
Legal reserve
Other reserves
Non-controlling interest
TOTAL EQUITY
Trade payables
581
326
11
5,724
16,867
8,783
Short-term borrow ings
-
-
5,836
34
1,520
-
Short-term provisions
-
-
-
-
-
-
24
32
-
-
403
2,148
206
222
-
-
1,460
359
811
580
5,847
5,758
20,251
11,290
811
-
580
-
5,847
-
5,758
-
20,968
-
12,155
-
1,251
1,013
4,526
4,529
22,732
19,351
TOTAL LIABILITIES
(euro/000)
2014
NET REVENUES
(euro/000)
2013
2014
(BRL/000)
2013
2014
2013
4,953
4,313
-
-
19,485
16,505
COST OF SALES
(2,203)
(1,916)
-
-
(9,401)
(6,709)
GROSS PROFIT
2,750
2,397
-
-
10,084
9,796
(2,575)
(2,342)
-
-
(12,488)
(9,941)
(188)
(183)
(32)
(114)
(2,305)
(1,121)
96
98
-
-
(8)
0
96
98
-
-
3
0
(0)
(0)
-
-
(11)
-
83
(30)
(32)
(114)
(4,718)
(1,266)
(58)
(55)
(62)
0
(64)
(725)
9
5
-
-
187
268
(67)
(60)
(62)
0
(251)
(993)
OTHER OPERATING INCOME / EXPENSES
FINANCIAL INCOME AND COSTS
- financial income
- financial costs
PROFIT BEFORE TAXES
25
(86)
(93)
(114)
(4,782)
(1,991)
(18)
-
-
-
(724)
(583)
-
-
-
-
-
-
7
(86)
(93)
(114)
(5,506)
(2,574)
Income tax expenses
182
Marcolin S.p.A.
Marcolin Gm bh
Marcolin Deutschland GmbH
Eyestyle.com Srl
(CHF/000)
(euro/000)
(euro/000)
2014
2013
2014
5
2013
2014
2013
8
3
4
13
-
11
Intangible assets
-
502
724
-
Goodw ill
-
-
-
-
-
-
Investments
-
-
-
-
-
-
Deferred tax assets
-
-
-
-
71
-
-
-
-
-
-
-
-
-
-
-
-
-
12
10
13
11
573
724
Inventories
137
107
614
478
-
-
Trade receivables
291
163
1,455
1,098
9
4
83
TOTAL ASSETS
Share capital
4
15
113
68
305
343
-
1,110
820
38
-
-
378
820
378
-
10
775
787
-
663
673
4,112
4,125
-
2,842
2,853
352
925
-
97
821
200
200
4,650
4,650
150
150
-
-
-
-
-
-
Legal reserve
-
-
-
-
-
-
Other reserves
-
-
-
-
600
600
(104)
(135)
(2,981)
(3,388)
(190)
(0)
(36)
32
(241)
406
(204)
(190)
61
96
1,428
1,669
356
560
-
-
-
0
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0
-
-
587
464
2,291
968
451
461
20
TOTAL EQUITY
Trade payables
-
-
-
-
119
24
25
168
151
-
-
26
20
(281)
(86)
(0)
(221)
89
67
519
151
-
-
726
577
2,698
1,184
570
261
TOTAL LIABILITIES
726
-
577
-
2,698
-
1,184
-
570
-
261
-
787
673
4,125
2,853
925
821
Marcolin Gm bh
Marcolin Deutschland GmbH
(CHF/000)
2014
NET REVENUES
COST OF SALES
Eyestyle.com Srl
(euro/000)
2013
2014
(euro/000)
2013
2014
2013
2,440
2,489
7,509
6,949
0
(1,140)
(1,086)
(3,510)
(3,100)
-
(0)
-
0
(0)
GROSS PROFIT
1,300
1,402
3,998
3,849
(1,141)
(1,163)
(3,895)
(3,159)
(113)
(112)
(179)
(189)
(262)
(203)
(162)
(153)
25
26
91
192
1
5
25
26
91
192
5
5
-
-
-
-
(5)
(0)
4
76
(68)
678
(275)
(261)
(39)
(44)
(119)
(131)
(4)
(0)
0
0
19
19
0
0
- financial costs
(39)
(45)
(138)
(151)
(4)
(0)
PROFIT BEFORE TAXES
- financial income
(36)
32
(187)
547
(279)
(261)
Income tax expenses
-
-
(54)
(140)
74
71
-
-
-
-
-
-
(36)
32
(241)
406
(204)
(190)
183
Eyestyle Retail Srl
Eyes tyle Trading Shanghai Co
(euro/000)
2014
Marcolin Iberica SA
(CNY/000)
2013
2014
2014
-
-
53
-
49
1,035
Goodw ill
-
-
-
-
-
-
Investments
-
-
-
-
-
-
111
-
-
-
168
162
-
-
-
-
-
-
-
-
-
-
-
-
1,316
1,366
-
-
221
212
64
80
-
-
376
265
-
-
-
-
2,665
2,216
550
158
1,643
8
66
55
54
-
155
-
679
926
Deferred tax assets
Inventories
Trade receivables
TOTAL ASSETS
Share capital
-
2013
284
921
Intangible assets
330
(euro/000)
2013
0
-
32
-
633
924
822
668
1,984
-
270
1,636
1,797
1,797
-
642
642
4,711
4,932
-
4,283
4,495
487
200
200
2,918
931
487
-
-
-
-
-
-
Legal reserve
-
-
-
-
98
98
Other reserves
1,000
1,000
-
-
2,737
2,737
(338)
-
(289)
-
(201)
-
(289)
(338)
(931)
(289)
237
(201)
572
862
1,697
642
3,358
3,121
TOTAL EQUITY
-
-
-
-
-
-
4
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4
5
-
-
-
-
Trade payables
801
745
100
-
1,258
942
596
383
-
-
-
-
-
-
-
-
112
91
2
(373)
-
-
50
14
8
15
-
-
154
327
1,407
769
100
-
1,574
1,374
TOTAL LIABILITIES
1,412
-
774
-
100
-
-
1,574
-
1,374
-
1,984
1,636
1,797
642
4,932
4,495
Eyestyle Retail Srl
Eyes tyle Trading Shanghai Co
(euro/000)
2014
Marcolin Iberica SA
(CNY/000)
2013
2014
(euro/000)
2013
2014
2013
NET REVENUES
110
90
-
-
8,071
6,215
COST OF SALES
(61)
(62)
-
-
(3,842)
(3,448)
GROSS PROFIT
49
27
-
-
4,229
2,767
(267)
(340)
-
-
(3,775)
(2,895)
(143)
(125)
(931)
(289)
(352)
(333)
6
0
-
-
132
151
6
0
-
-
132
151
-
-
-
-
(0)
(0)
(355)
(438)
(931)
(289)
233
(310)
(28)
(12)
-
-
(2)
22
0
1
-
-
32
38
- financial income
- financial costs
(29)
(13)
-
-
(34)
(16)
PROFIT BEFORE TAXES
(384)
(450)
(931)
(289)
231
(288)
95
111
-
-
6
86
-
-
-
-
-
-
(289)
(338)
(931)
(289)
237
(201)
Income tax expenses
184
Marcolin S.p.A.
Marcolin France Sas
Marcolin Asia Ltd
(euro/000)
2014
(HK$/000)
2013
2014
7
(euro/000)
2013
2014
2013
432
(0)
-
14
-
1,158
(0)
327
-
1,515
Intangible assets
Goodw ill
247
247
-
-
-
-
-
Investments
2,405
-
-
-
5
5
Deferred tax assets
1,278
1,432
(311)
(311)
-
-
-
-
1,049
1,123
-
-
-
1
-
-
-
-
4,363
1,687
1,064
2,326
19
21
599
466
-
762
71
51
3,267
3,867
86,961
35,523
1,617
1,303
15
Inventories
Trade receivables
281
184
268
372
16
685
3,015
7,128
-
121
-
2,515
1,086
-
2,524
-
75
7,347
11,709
-
8,617
10,305
94,357
95,421
-
39,180
41,506
1,824
1,843
-
1,444
1,465
420
TOTAL ASSETS
Share capital
1,054
1,054
1,540
1,540
420
877
877
-
-
-
-
Legal reserve
115
115
-
-
64
64
Other reserves
1,798
1,798
-
-
-
-
(661)
(318)
28,338
18,205
(577)
(574)
(154)
(343)
15,396
10,133
102
(3)
3,029
3,183
45,274
29,878
9
(93)
-
-
-
-
-
-
-
-
136
-
-
-
-
-
(43)
(43)
-
-
-
-
-
-
-
-
-
-
93
(43)
-
-
Trade payables
5,273
4,240
47,587
8,607
1,799
1,551
1,554
1,041
-
-
-
-
852
666
-
-
-
-
350
433
1,069
659
17
(9)
TOTAL EQUITY
650
742
1,399
2,406
19
17
8,680
7,121
50,055
11,671
1,834
1,558
8,680
-
7,121
-
50,148
-
11,628
-
1,834
-
1,558
-
11,709
10,305
95,421
41,506
1,843
1,465
TOTAL LIABILITIES
Marcolin France Sas
Marcolin Asia Ltd
(euro/000)
2014
(HK$/000)
2013
2014
(euro/000)
2013
2014
2013
NET REVENUES
18,538
19,809
71,262
27,991
1,785
1,377
COST OF SALES
(8,417)
(9,510)
(46,004)
(23,506)
(845)
(724)
GROSS PROFIT
10,121
10,298
25,258
4,485
941
653
(8,969)
(8,893)
(18,320)
(18,360)
(742)
(579)
(177)
(891)
(513)
(4,397)
(3,755)
(132)
(164)
(780)
20,528
28,399
48
109
317
345
20,528
28,399
49
110
(481)
(1,125)
-
-
(1)
(1)
97
112
23,069
10,769
114
5
(97)
(92)
(4,584)
1,367
(10)
(8)
- financial income
- financial costs
PROFIT BEFORE TAXES
Income tax expenses
15
16
(174)
2,382
-
-
(111)
(108)
(4,410)
(1,016)
(10)
(8)
-
21
18,485
12,136
103
(3)
(154)
(364)
(3,089)
(2,002)
(1)
(0)
-
-
-
-
-
-
(154)
(343)
15,396
10,133
102
(3)
185
Marcolin UK Ltd
Marcolin USA Inc
(GBP/000)
2014
Sover - M ZAO
(USD/000)
2013
2014
(RUB/000)
2013
45
Goodw ill
0
0
3,232
3,232
-
-
Investments
-
-
159,694
160,357
-
-
4
4
10,699
9,404
-
-
54
-
-
-
-
-
Deferred tax assets
0
805
2013
134
2,072
Intangible assets
470
7,164
2014
1,779
8
7,523
-
-
-
213
2,684
-
-
2,263
49
181,472
184,006
1,787
-
Inventories
Trade receivables
784
114
19,716
14,545
114,520
-
2,977
686
22,612
19,946
37,155
-
112
17
3,354
4,251
447
-
1,096
2,527
7,484
10,083
184
-
2,525
688
2,258
11,675
-
-
7,494
9,757
-
4,032
4,082
-
55,423
236,896
-
60,500
244,506
152,306
154,093
-
-
TOTAL ASSETS
Share capital
850
850
775
775
306
-
-
72,525
72,525
-
-
Legal reserve
-
-
-
-
-
-
Other reserves
TOTAL EQUITY
-
-
(2,141)
(2,141)
67
-
(83)
1,339
10,545
6,948
130,520
-
(468)
676
(5,376)
3,598
-
-
299
2,865
76,329
81,705
130,893
-
1,018
-
129,003
133,473
-
-
16
-
67
-
-
-
-
-
524
598
2
-
-
-
58
60
-
-
1,034
-
129,652
134,131
2
-
Trade payables
6,713
689
20,201
13,572
15,598
-
441
-
4,259
8,821
2,077
-
466
147
2,804
2,674
-
-
239
169
41
52
2,919
-
565
212
3,609
3,551
2,604
-
8,424
1,216
30,915
28,670
23,198
-
TOTAL LIABILITIES
9,458
-
1,216
-
160,567
-
162,801
-
23,200
-
-
9,757
4,082
236,896
244,506
154,093
-
Marcolin UK Ltd
Marcolin USA Inc
(GBP/000)
2014
NET REVENUES
COST OF SALES
Sover - M ZAO
(USD/000)
2013
2014
(RUB/000)
2013
2014
2013
6,163
4,652
101,655
92,337
-
(3,330)
(2,089)
(49,002)
(40,331)
-
-
GROSS PROFIT
2,833
2,563
52,653
52,006
-
-
(2,650)
(1,479)
(45,199)
(39,330)
-
-
(1,007)
(341)
(4,554)
(4,989)
-
-
487
90
749
(360)
-
-
633
86
945
980
-
-
(146)
4
(197)
(1,339)
-
-
(336)
833
3,648
7,327
-
-
(11)
38
(11,765)
(1,322)
-
-
59
38
491
333
-
-
- financial income
- financial costs
(70)
(1)
(12,256)
(1,655)
-
-
PROFIT BEFORE TAXES
(348)
870
(8,117)
6,005
-
-
(82)
(194)
2,741
(2,407)
-
-
-
-
-
-
-
-
430
676
(5,376)
3,598
-
-
Income tax expenses
186
Marcolin S.p.A.
Viva Optique Inc d/b/a Viva Int.
Group
Viva France Sas
(USD/000)
2014
(EUR/000)
2013
2014
12,459
Goodw ill
88,981
88,981
-
-
-
-
2,323
1,673
-
-
(3,237)
(7,127)
13,996
4,106
319
98
-
-
56
45
29
30
-
-
40
2013
3,152
13,777
Deferred tax assets
28
1,086
2014
Intangible assets
Investments
3,811
(GBP/000)
2013
-
1,181
12
1,500
-
-
-
-
-
-
122,285
111,075
1,462
1,349
(3,237)
(5,615)
Inventories
19,905
22,207
704
2,395
-
4,018
Trade receivables
20,022
8,308
2,887
1,531
12,424
5,330
1,798
2,169
386
223
(4)
307
3,906
(535)
548
-
960
-
2,371
10,085
-
2,865
9,274
4,289
48,002
170,286
-
42,234
153,310
4,525
5,987
-
7,013
8,362
22,655
19,417
-
13,945
8,330
121,472
121,873
37
34
-
-
(7,311)
(7,311)
230
214
821
932
TOTAL ASSETS
Share capital
Legal reserve
Other reserves
-
-
-
-
-
-
64
64
(0)
(18)
(0)
(789)
8,140
4,905
1,037
3,468
7,529
2,383
(2,535)
2,511
(93)
590
9,683
1,488
119,830
122,042
1,210
4,289
18,033
4,013
1,632
2,728
-
-
-
-
3,234
-
-
-
-
67
4,414
2,754
-
-
-
-
5,639
5,324
-
-
-
-
14,918
10,806
-
-
-
67
Trade payables
3,170
TOTAL EQUITY
23,413
8,412
2,786
2,396
627
1,118
5,930
-
-
-
-
8,980
3,946
512
318
-
521
674
1,301
1,071
756
753
286
1,353
873
408
602
5
272
35,538
20,462
4,777
4,073
1,385
4,249
50,456
-
31,268
-
4,777
-
4,073
-
1,385
-
4,316
-
170,286
153,310
5,987
8,362
19,417
8,330
TOTAL LIABILITIES
Viva Optique Inc d/b/a Viva Int.
Group
Viva France Sas
(USD/000)
2014
(EUR/000)
2013
2014
(GBP/000)
2013
2014
2013
NET REVENUES
100,713
107,000
18,607
17,488
16,029
22,674
COST OF SALES
(47,920)
(39,374)
(7,073)
(5,237)
(9,447)
(10,207)
GROSS PROFIT
52,793
67,626
11,534
12,252
6,582
12,467
(57,072)
(55,831)
(8,843)
(8,861)
(5,289)
(8,036)
(6,608)
(6,911)
(2,134)
(2,451)
(1,586)
(2,536)
3,022
2,299
(96)
(29)
10,475
161
3,609
2,434
0
(27)
10,477
161
(588)
(135)
(96)
(2)
(2)
0
(7,865)
7,183
462
911
10,182
2,057
(1,571)
(2,616)
(360)
(159)
414
(104)
427
223
99
-
1,261
22
- financial costs
(1,997)
(2,838)
(459)
(159)
(847)
(126)
PROFIT BEFORE TAXES
(9,181)
4,567
102
752
10,596
1,953
2,467
(2,056)
(195)
(162)
(913)
(465)
-
-
-
-
-
-
(6,713)
2,511
(93)
590
9,683
1,488
- financial income
Income tax expenses
187
Viva Brasil Com ércio Produtos
Opticos Ltda
(HKD/000)
2014
Viva Canada Inc
(REAL/000)
2013
2014
2014
-
23,162
39
810
894
611
420
Goodw ill
-
-
803
811
-
-
2,522
(199)
-
-
-
-
Deferred tax assets
73
2013
Intangible assets
Investments
255
(CAD/000)
2013
597
459
-
-
-
-
-
393
239
328
-
-
-
-
-
-
-
-
-
-
2,761
23,546
1,652
1,779
1,031
1,449
Inventories
Trade receivables
-
10,632
1,908
1,898
1,594
2,107
45,931
26,665
7,683
6,701
663
560
21
457
12
253
31
54
862
4,151
2,528
-
553
-
13,091
17,369
-
2,224
0
889
59,904
62,665
-
59,274
82,820
12,130
13,782
-
11,077
12,856
2,841
3,871
-
3,610
5,058
486
483
799
801
348
219
19,384
19,268
-
-
2,864
2,532
TOTAL ASSETS
Share capital
Legal reserve
Other reserves
-
-
-
-
-
-
(0)
454
-
(118)
0
308
42,089
43,870
(2,722)
(288)
(1,512)
(528)
(5,826)
(5,862)
(3,362)
(2,309)
(1,491)
(882)
56,134
58,213
(5,286)
(1,915)
209
1,649
TOTAL EQUITY
-
-
-
-
-
-
-
252
340
358
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
252
340
358
-
-
2,439
19,342
17,892
14,119
2,718
2,989
-
-
-
-
-
-
3,733
3,422
549
-
905
394
359
450
188
158
7
5
-
1,142
98
136
31
21
6,531
24,356
18,728
14,413
3,662
3,409
6,531
-
24,607
-
19,068
-
14,771
-
3,662
-
3,409
-
62,665
82,820
13,782
12,856
3,871
5,058
Trade payables
TOTAL LIABILITIES
Viva Brasil Com ércio Produtos
Opticos Ltda
(HKD/000)
2014
NET REVENUES
Viva Canada Inc
(REAL/000)
2013
2014
(CAD/000)
2013
2014
2013
36,357
61,829
14,843
14,941
8,403
8,395
COST OF SALES
(24,687)
(36,945)
(6,620)
(5,737)
(3,957)
(3,293)
GROSS PROFIT
11,670
24,884
8,223
9,204
4,446
5,102
(11,105)
(17,508)
(6,675)
(6,417)
(4,164)
(4,429)
(7,578)
(12,640)
(2,457)
(2,860)
(1,204)
(1,426)
1,072
(3)
4
6
0
3
1,149
-
4
15
0
3
- financial income
- financial costs
PROFIT BEFORE TAXES
Income tax expenses
188
(77)
(3)
0
(8)
(0)
(0)
(5,941)
(5,267)
(905)
(67)
(923)
(750)
133
(569)
(1,875)
(1,704)
(296)
(191)
316
0
1,718
-
55
-
(183)
(569)
(3,594)
(1,704)
(351)
(191)
(5,808)
(5,837)
(2,780)
(1,771)
(1,219)
(940)
(18)
(26)
(582)
(538)
(272)
58
-
-
-
-
-
-
(5,826)
(5,862)
(3,362)
(2,309)
(1,491)
(882)
Marcolin S.p.A.
Viva IP Inc
Viva Italia Srl
(USD/000)
2014
Intangible assets
Goodw ill
(EUR/000)
2013
2014
-
2013
-
-
-
-
-
10
10
-
-
Investments
-
-
-
-
Deferred tax assets
-
-
-
-
-
-
37
36
-
-
-
-
10
10
37
36
Inventories
-
-
-
-
Trade receivables
-
-
-
-
-
-
-
-
-
-
6
-
-
-
-
63
10
-
10
6
43
-
63
100
TOTAL ASSETS
Share capital
10
10
846
669
-
-
(775)
(598)
Legal reserve
-
-
28
28
Other reserves
-
-
-
10
(1)
(1)
(54)
(109)
-
-
(2)
99
9
9
43
100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Trade payables
1
1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
1
-
-
1
-
1
-
-
-
10
10
43
100
TOTAL EQUITY
TOTAL LIABILITIES
Viva IP Inc
Viva Italia Srl
(USD/000)
2014
(EUR/000)
2013
2014
2013
NET REVENUES
-
-
-
-
COST OF SALES
-
-
-
-
GROSS PROFIT
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2)
99
-
-
-
99
-
-
(2)
-
-
-
(2)
99
-
-
-
-
- financial income
-
-
-
-
- financial costs
-
-
-
-
PROFIT BEFORE TAXES
-
-
(2)
99
Income tax expenses
-
-
-
-
-
-
-
-
-
-
(2)
99
189
Marcolin S.p.A.
SIGNIFICANT RESOLUTIONS PASSED
AT GENERAL MEETING
191
192
Marcolin S.p.A.
SIGNIFICANT RESOLUTIONS PASSED AT GENERAL MEETING
Resolutions were passed at the Annual General Meeting, held at a first calling on April 23, 2015, to:
•
approve the Company's Separate Financial Statements and Report on Operations for the year
ended December 31, 2014, and the Consolidated Financial Statements for the year ended
December 31, 2014 of the Marcolin Group and the accompanying Report on Operations;
•
allocate the Company's net profit for the year of euro 4,483,252 as follows:
-
euro 224,163 to the legal reserve;
euro 4,259,089 to retained earnings.
Consequently, after such allocations, the amounts of those reserves will be as follows:
-
Legal reserve: euro 4,077,295;
Retained earnings: euro 106,745,082.
Milan; April 23, 2015
the Chairman
Vittorio Levi
193
Marcolin S.p.A.
195
196

2014 - Annual Report

Transcription

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