poltrona frau s.p.a. · pdf filenemo s.r.l. 49%. poltrona frau s.p.a. _____annual financial...
TRANSCRIPT
Poltrona Frau S.p.A.
Annual Financial Report as at 31 December 2013
Poltrona Frau S.p.A.
Annual Financial Report as at 31 December 2013
These financial statements are available on the Company‟s
website www.poltronafraugroup.com,
in the Investor Relations section
Poltrona Frau S.p.A.
Registered office: Turin, Via Vincenzo Vela no. 42
Operational and administrative offices: Tolentino (MC), Via Sandro Pertini, 22
Share capital: Euro 35,068,789.75 fully paid
Tax Code and VAT Number: 05079060017
Registered with the Turin Chamber of Commerce – R.E.A. no. 682039
CONTENTS
Annual Financial Report
SUMMARY DATA AND GENERAL INFORMATION 6
Corporate bodies 6
Summarised financial statements of Poltrona Frau Group 7
Summarised financial statements of Poltrona Frau S.p.A 9
Group operating companies as at 31 December 2013 11
Ownership and shares held by directors and
statutory auditors 12
Stock ratings during the year and financial
communications 14
MANAGEMENT REPORT 17
Poltrona Frau Group profile 19
Analysis of annual revenues of the Group by business
segment and geographical area 26
Comment on key items in the income statement and
statement of financial position of the Poltrona Frau Group 28
Comment on key items in the income statement and
statement of financial position of Poltrona Frau S.p.A. 33
Reconciliation between the result for the period and
Group shareholders' equity of Poltrona Frau S.p.A. 37 Business outlook 39 Subsequent events 40 Corporate Social Responsibility 43 Corporate Governance System 76
POLTRONA FRAU GROUP CONSOLIDATED FINANCIAL
STATEMENTS AS AT 31 DECEMBER 2013 81
Consolidated Statement of Financial Position 83
Consolidated Income Statement 85
Consolidated Statement of Comprehensive Income 86
Consolidated Statement of Cash Flows 87
Consolidated Statement of Changes in Equity 88
Notes to the Financial Statements 89
Accounting principles and policies 91
Subsequent events 158
Attestation on the consolidated financial statements
pursuant to Article 81-ter of Consob Regulations no. 11971
of 14 May 1999, as amended and supplemented 159
Independent auditors‟ report 160
POLTRONA FRAU S.P.A. FINANCIAL STATEMENTS AS AT 31
DECEMBER 2013 163
Statement of financial position 165
Income Statement 166
Statement of Comprehensive Income 167
Statement of Cash Flows 168
Statement of Changes in Equity 169
Notes to the Financial Statements 170
Accounting principles and policies 171
Information pusruant to Article 149-duodecies of the
Consob Issuers' Regulation 210
Share-based payment 211
Report of the Board of Statutory Auditors 215
Attestation on the separate financial statements pursuant
to Article 81-ter of Consob Regulation no. 11971 of 14 May
1999, as amended and supplemented 218
Independent auditors‟ report 219
Financial statements as at 31 December 2013 - proposed
resolution 221
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
3
NOTICE OF CALL TO THE GENERAL
SHAREHOLDERS‟ MEETING
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
4
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
5
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
6
SUMMARY DATA AND GENERAL INFORMATION
CORPORATE BODIES
Board of Directors (1)
Chairman Franco Moschini
Deputy Chairman Matteo Cordero di Montezemolo
Chief Executive Officer Dario Rinero
Directors Tommaso Beolchini (2)
Innocenzo Cipolletta (2) (3)
Luca Cordero di Montezemolo (2)
Libero Milone (2) (3)
Mario Paolo Moiso (2)
Lorenzo Romani (2) (5)
Luigi Sala (2)
Irene Tinagli (2) (3)
Board of Statutory Auditors (1)
Chairman Mario Stefano Luigi Ravaccia
Standing Auditors Alfonso Donadio
Barbara Zanardi
Alternate Auditors Nazareno Minnozzi
Gianluca Settepani
Independent auditors (4) Reconta Ernst & Young S.p.A.
Committees Internal Control and Corporate Governance Committee
Libero Milone (2) (3) – Chairman
Mario Paolo Moiso (2)
Innocenzo Cipolletta (2) (3)
Compensation Committee
Innocenzo Cipolletta (2) (3) – Chairman
Tommaso Beolchini (2)
Libero Milone (2) (3)
Related Party Transactions Committee
Innocenzo Cipolletta (2) (3) – Chairman
Irene Tinagli (2) (3)
Libero Milone (2) (3)
Lead Independent Director Innocenzo Cipolletta (2) (3)
(1) Appointed by the Shareholders‟ Meeting of 27 April 2012 and in office until approval of the financial statements of the Parent Poltrona Frau S.p.A. for the
year ending 31 December 2014
(2) Non-executive director
(3) Independent director pursuant to the Corporate Governance Code
(4) Remains in office until approval of the financial statements of the Parent Poltrona Frau S.p.A. for the year ending 31 December 2014
(5) On 4 February 2014, and following the resignation of Lorenzo Romani, Mr. Matteo Facoetti was co-opted until the next shareholders‟ meeting
SUMMARISED FINANCIAL STATEMENTS OF THE POLTRONA FRAU GROUP (*)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
7
Consolidated Income Statement
(in thousands of Euro) Year 2013 Year 2012
Sales revenue 265,359 238,497
Other revenues and income 7,485 8,491
Revenues 272,844 246,988
Costs for raw materials and consumable (194,588) (175,453)
Personnel costs (46,239) (45,503)
EBITDA (1) 32,017 26,032
EBITDA % 11.7% 10.5%
Non-recurring costs (4,171) (3,906)
Amortization, depreciation, provisions and impairment (7,587) (6,593)
Operating Income 20,259 15,533
Operating Income % 7.4% 6.3%
Financial charges, net and gains/losses from investments (8,527) (6,674)
Income before taxes 11,732 8,859
Income before taxes % 4.3% 3.6%
Current, prepaid and deferred taxes (7,199) (4,060)
Profit (or Loss) from continuing operations 4,533 4,799
Profit (or Loss) from discontinuing operations - (3,675)
Profit (loss) for the year 4,533 1,124
(1) EBITDA represents operating income before amortisation, depreciation, allocations, impairment and non-recurring
costs. Identified in this way EBITDA is not an IFRS accounting measure and accordingly the criterion used by the
Poltrona Frau Group to calculate this item is not necessarily the same as that used by other companies and is
therefore not comparable.
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and
comparability with those of the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
8
Statement of consolidated invested capital
(in thousands of Euro) 31 December
2013
31 December
2012
Applications
Net working capital 24,552 32,727
Fixed assets and other non-current assets 151,948 149,935
Non-current liabilities (33,287) (33,279)
Assets/(liabilities) held for sale - 500
Net invested capital 143,213 149,883
Sources
Net financial position 69,340 79,073
Shareholders‟ equty 73,873 70,810
Total souces of funds 143,213 149,883
Key consolidated financial statement ratios
Year 2013 Year2012
Economic and financial ratios
Third party funds / own funds ratio 0.94 1.12
Financial leverage ratio (1) 2.17 3.04
Net financial position as a percentage of revenues 25.4% 32.0%
Net working capital as a percentage of revenues 9.0% 13.3%
ROI (2) 14.1% 10.4%
ROE (3) (5) 6.1% 1.6%
Tax rate (4) (5) 61.4% 45.8%
Growth ratios
Revenues 10.5% (1.8%)
EBITDA 23.0% 1.7%
Operation income 30.4% (17.5%)
Income before taxes (5) 32.4% (24.1%)
Profit for the year (5) 303.3% (75.8%)
(1) Ratio between net financial position and EBITDA.
(2) Ratio between operating income and net invested capital.
(3) Ratio between profit for the year and shareholders‟ equity.
(4) Ratio between current, prepaid and deferred tax and income before tax.
(5) The ratios relative to 31 December 2012 have been re-stated in order to render them homogeneous and comparable
with that reported during the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
9
SUMMARISED FINANCIAL STATEMENTS OF POLTRONA FRAU S.P.A. (*)
Income Statement - separate financial statements
(in thousands of Euro) Year 2013 Year 2012
Sales revenue 135,025 106,202
Other revenues and income 9,660 11,478
Revenues 144,685 117,680
Costs for raw materials and consumable (105,277) (84,678)
Personnel costs (23,211) (22,379)
EBITDA (1) 16,197 10,623
EBITDA % 11.2% 9.0%
Non-recurring costs (4,171) (1,924)
Amortization, depreciation, provisions and impairment (4,241) (3,821)
Operating Income 7,785 4,878
Operating Income % 5.4% 4.1%
Financial charges, net and gains/losses from investments (4,633) (5,873)
Income before taxes 3,152 (995)
Income before taxes % 2.2% (0.8%)
Current, prepaid and deferred taxes (2,961) (1,005)
Profit (loss) for the year 191 (2,000)
(1) EBITDA represents operating income before amortisation, depreciation, allocations, impairment and non-recurring
costs. Identified in this way EBITDA is not an IFRS accounting measure and accordingly the criterion used by Poltrona
Frau to calculate this item is not necessarily the same as that used by other companies and is therefore not
comparable.
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and
comparability with those of the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
10
Statement of invested capital - separate financial statements
(in thousands of Euro) 31 December
2013
31 December
2012
Applications
Net working capital 21,364 13,963
Fixed assets and other non-current assets 91,683 96,182
Non-current liabilities (7,620) (7,742)
Net invested capital 105,427 102,403
Sources
Net financial position 67,268 62,809
Shareholders‟ equty 38,159 39,594
Total souces of funds 105,427 102,403
Key separate financial statement ratios
Year 2013 Year2012
Economic and financial ratios
Third party funds / own funds ratio 1.76 1.59
Financial leverage ratio (1) 4.15 5.91
Net financial position as a percentage of revenues 46.5% 53.4%
Net working capital as a percentage of revenues 14.8% 11.9%
ROI (2) 7.4% 4.8%
ROE (3) (5) 0.5% n/a
Tax rate (4) (5) (6) 93.9% n/a
Growth ratios
Revenues 22.9% (3.4%)
EBITDA 52.5% (3.0%)
Operation income 59.6% 33.3%
Income before taxes (5) (6) n/a n/a
Profit for the year (5) (6) n/a n/a
(1) Ratio between net financial position and EBITDA.
(2) Ratio between operating income and net invested capital.
(3) Ratio between profit for the year and shareholders‟ equity.
(4) Ratio between current, prepaid and deferred tax and income before tax.
(5) This ratio is not calculated if the income figure is negative or is not representative of the trend in the ratio.
(6) The ratios relative to 31 December 2012 have been re-stated in order to render them homogeneous and comparable
with that reported during the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
11
GROUP OPERATING COMPANIES AS AT 31 DECEMBER 2013
Poltrona Frau S.p.A.
Cap Design S.p.A.100%
Diecidieci S.r.l.100%
Cassina S.p.A.100%
Cassina France S.A.
100%
Cassina Shanghai Trading Co. Ltd.
100%
Frau France S.a.r.l.100%
Poltrona Frau UK Ltd.
100%
PF Deutschland GmbH100%
Meno Warehandels GmbH 60%
Zhejiang Casanova Furn.
Ltd. 49%
Poltrona Frau (Asia Pacific) PTE
Ltd. 100%
PFG North America Inc.
100%
Cassina Pacific Ltd.
100%
PF Emirates Interiors LLC
49%
KBR Sarl 20%
Casa Décor Private Ltd.
50%
Artelux S.A.100%
Cassina IXC Ltd.12%
Frau USA Corp.83%
Spazio Washington LLC
100%
Alias S.p.A.49%
Nemo S.r.l.49%
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
12
OWNERSHIP AND SHARES HELD BY DIRECTORS AND STATUTORY AUDITORS
The investments in Poltrona Frau S.p.A., as stated in the Members‟ Register and based on any notifications received,
were as follows at 31 December 2013.
Direct Shareholder Nationality Number of
shares
% ordinary
share capital
Charme Investments S.C.A. (1) (2) Luxembourg 71,895,074 51.3%
Moschini S.r.l. (3) Italy 10,285,626 7.3%
DIVERSITA sarl Luxembourg 5,621,474 4.0%
Invesco Ltd. U.K. 3,345,440 2.4%
Treasury shares 1,858,231 1.3%
Other shareholders with holdings of less than 2% of the capital 47,269,314 33.7%
Total 140,275,159 100.0%
(1) Charme Investments S.C.A. is a partnership limited by shares subject to Luxembourg law and having registered office in 18
Rue de l'Eau L-1449, Luxembourg, whose sole general partner, and hence controlling member, is Charme Management S.r.l.,
having registered office in Via Santa Margherita 4, Milan. At 31 December 2013 no natural or legal person controlled Charme
Management S.r.l., whose capital is owned indirectly (50%) by Luca Cordero di Montezemolo and by Matteo Cordero di
Montezemolo, with the remaining 50% owned by a company registered under Luxembourg law owned by three international
businessmen.
(2) At 31 December 2013 the share capital of Charme Investments S.C.A. was owned directly and indirectly by Luca Cordero di
Montezemolo (14.5%), Matteo Cordero di Montezemolo (13.4%), Franco Moschini (15.7%), Charme Management S.r.l.
(10.0%) and other minority shareholders with a holding of 46.4%.
(3) A company controlled by Franco Moschini, Chairman of the Board of Directors of Poltrona Frau S.p.A., who holds 95% of its
capital.
51%
7%
4% 3%
1%
34%
Charme InvestmentsS.C.A.
Moschini S.r.l.
DIVERSITA Sarl
Invesco Ltd.
Treasury shares
Other shareholders withholdings of less than 2%of the capital
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
13
It is hereby noted, pursuant to article 79 of the “Regolamento Emittenti” (Issuers‟ Regulations) relating to the shares
of Poltrona Frau S.p.A. and its subsidiaries held by members of the management and control bodies, by managers
with strategic responsibilities and by non legally separated spouses and underage children, directly or through
subsidiaries, trust companies or intermediaries, that Mr. Franco Moschini owns approximately 7.3% of the shares of
Poltrona Frau S.p.A. through Moschini S.r.l., of whose capital he holds 95%; he additionally owns 15.7% of Charme
Investments S.C.A. As regards other members of the Board of Directors, as at 31 December 2013, Mr. Dario Rinero
owned 855,777 shares, equal to 0.61% of capital, Mr. Matteo di Montezemolo owned 50,000 shares, equal to 0.04%
of share capital and Luca di Montezemolo owned 45,000 shares, a stake of 0.03%.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
14
STOCK RATINGS DURING THE YEAR AND FINANCIAL COMMUNICATIONS
Poltrona Frau is a joint stock Italian company having its registered office in via Vincenzo Vela 42, Turin. It has a fully
subscribed and paid-up share capital of Euro 35.1 million consisting of 140,275,159 ordinary shares with a nominal
value Euro 0.25 each. The Parent Poltrona Frau S.p.A. has been listed on the STAR segment of the Borsa Italiana
Electronic Stock Market (code ISIN IT 0004114846) since the middle of November 2006.
The following table sets out the market performance of the Poltrona Frau share in 2013.
A. 14 March. Publication of FY2012 financial results.
B. 14 May. Publication of 1Q 2013 financial results.
C. 06 August. Publication of 1H 2013 financial results.
D. 04 November. Publication of 9M 2013 financial results.
E. 05 February 2014. Press release relative to the acquisition by Haworth of 58.6% of the share capital of
Poltrona Frau S.p.A.
The average volume of shares traded on the market in all of 2013 was around 238,000 shares per day. The market
capitalisation of the Poltrona Frau Group - based on the average share price recorded at the beginning of March,
equal to Euro 2.94 - is approximately Euro 412 million.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
15
Chester manufacturing, Poltrona Frau
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
16
Chester manufacturing, Poltrona Frau
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
17
Poltrona Frau S.p.A.
Management Report
as at 31 December 2013
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
18
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
19
POLTRONA FRAU GROUP PROFILE
Mission and values
Mission
To guarantee the excellence and quality of our
products through ongoing research and innovation in
all phases of the production process, concordant with
our vocation as designers that understand Italian
tradition and style.
Values
In 2009, the Group formalised the seven key values
that guide the activities of the Poltrona Frau Group‟s
companies and employees.
Sense of responsibility – Work to maintain the
promises and commitments we have made and inspire
a sense of responsibility in individuals as we strive to
meet our goals.
Leadership - Display leadership in every role and
mission to satisfy the requirements and promote the
interests of the stakeholders (shareholders, clients,
suppliers, institutions, environment), guarantee the
development of collaborators and respect for the
communities involved.
Quality and design – Focus on the total quality of
materials, products and services to guarantee the
highest canons of beauty, luxury and perfection,
synonymous with the finest Italian traditions.
Focus on people - Create a pleasant and peaceful
working environment, respect and motivate people
offering them training and development
opportunities.
Integrity – Pursue and maintain high ethical
standards, openly and honestly expressing our ideas.
Focus on safety and the environment to guarantee
sustainable growth.
Teamwork – Work with team spirit, share both our
successes and the errors we have committed to
ensure continuous improvement and effective
communication at all levels.
Change and innovation – Work with passion, always
finding better and innovative solutions, and be ready
to face new challenges and promote change.
History
A story that goes back to 1912 with the founding of
Poltrona Frau, and which continued with the creation
of Cassina in 1927 and Cappellini in 1946.
2005 saw the birth of the Poltrona Frau Group,
international leader in the high-end furnishings
sector, which includes Poltrona Frau, Cassina and
Cappellini. Over the years Poltrona Frau Group has
confirmed its ability to interpret, but above all to
anticipate, the evolution of contemporary living.
Thanks to the far-sightedness of entrepreneurs and
managers who, down the years, have understood the
importance of being bold, of continuous experiment,
and of challenging the rules, the Group is now a point
of reference in the high-end furniture market for the
most important international designers and
architects.
1912 Founding of Poltrona Frau
Renzo Frau files the trademark at the Chambers of
Commerce in Turin. This year also saw the launch of
the historic Chester model which, with its “plissé”
processing, still symbolises the unique handcrafting
expertise of Poltrona Frau to this day.
1927 Founding of Cassina
Cassina, founded in Meda by Cesare and Umberto
Cassina in 1927, introduced Italy to industrial design
in the 1950‟s. Acting as a genuine trailblazer, at this
complex time rich in creative ferment Cassina was the
first company to focus on research and innovation,
envisaging new forms together with important
architects and designers.
1946 Founding of Cappellini
Founded in 1946, and currently considered a symbol
of avant-garde contemporary design as well as a
launching pad for the greatest international
designers, Cappellini produces innovative furnishings
of very high quality.
1962 Franco Moschini joins Poltrona Frau
Poltrona Frau is purchased by Nazareno Gabrielli and
managed by Franco Moschini, the current chairman.
1963 Poltrona Frau moves from Turin to Tolentino
with 6 craftsmen
1984 Creation of the Car – Luxury in Motion division
Poltrona Frau designs the interiors of the Thema 8:32
with Ferrari engine.
1984 Creation of the Contract – Luxury Interiors
division
Poltrona Frau furnishes Spoleto theatre hall.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
20
1990 Franco Moschini acquires 100% of Poltrona
Frau
2003 The Charme fund acquires 30% of Poltrona Frau
October 2004 Charme increases its stake to 60%
The new strategic development industrial plan is
presented with the Montezemolo family‟s Charme
fund increasing its stake to 60%.
December 2004 Poltrona Frau acquires 100% of
Cappellini
Poltrona Frau acquires 100% of Cappellini, a company
known throughout the world for its innovation and
talent in launching some of the best-known designers
in the world, such as Tom Dixon, Jasper Morrison and
Marc Newson.
2005 Poltrona Frau acquires 80% of Cassina
Poltrona Frau acquires Cassina, the company which,
thanks to its incredible design expertise, has done
most to make Italian contemporary design famous
across the world.
July 2006 Charme increases its stake in Poltrona Frau
to 75%
November 2006 Poltrona Frau Group, IPO in the Star
segment of Borsa Italiana
Poltrona Frau becomes the Poltrona Frau Group and is
listed on Borsa Italiana attracting around Euro 2
billion of demand following an offering of Euro 150
million.
2007 Joint venture PF Emirates
Launch of PF Emirates, a joint venture between PFG
and Mubadala in the United Arab Emirates, and the
opening of the first Group flagship store in Abu Dhabi.
2008 Joint venture Casa Décor
Launch of Casa Decor, a joint venture between
Poltrona Frau Group and Tata Group in India, leading
to the opening of the first Group flagship store in
2010 in Mumbai.
2009 Launch of Milano Design Village at the Fuori
Salone, which welcomes over 50,000 visits.
2010 Photovoltaic in Tolentino
Launch of the new 18,000-module photovoltaic plant
with a 1.4 megawatt capacity at the Tolentino plants,
which today produces around 1,680,000 k/h per year.
December 2010 Cassina becomes 100% owned by
PFG
May 2011 Strategic agreement signed with Haworth
for the US
2012 Centenary of Poltrona Frau
April 2013 Poltrona Frau Group returns to the Salone
del Mobile Rho Fiera
June 2013 Acquisition of the brand Simon
Poltrona Frau Group, through Cassina S.p.A., acquires
the Simon Gavina brand from Estel S.r.l.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
21
Business model and strategy
Business Model
The organization of the Poltrona Frau Group is
characterized by an organisational structure which
aims to guarantee a high level of independence and
autonomy for the three brands (Poltrona Frau, Cassina
e Cappellini) as well as the three business divisions
(Residential, Luxury in Motion and Luxury Interiors) as
well as by a management team composed of the CEO
and top executives whose task is to guide the Group
towards the attainment of the objectives of the
industrial plan. More specifically, the structure is
made up of the following roles:
– Residential Brand Directors for the Poltrona
Frau, Cassina and Cappellini brands who
primarily oversee the development process of
new products, worldwide marketing and
promotional initiatives and as well as
management of the Italy and EMEA (Europe,
Middle East and Africa) markets;
– Overseas Residential Market Directors, who
are responsible for commercial development
in three distinct areas: Americas, Asia and
Oceania, Greater China and India;
– Luxury in Motion and Luxury Interiors
Directors who manage the worldwide
development of their respective business
divisions.
The activities of the above figures are supported by a
centralised structure at Group level, overseen by:
– Chief Corporate Officer (CCO) for staff
activities transversal to the company, such as
administration, finance and control, human
resources, legal and general affairs and IT
services;
– Chief Operating Officer (COO) for activities of
a business nature, such as purchases,
production, logistics and quality for all the
Group plants.
–
Competitive strategy
The Group is the result of a strategic programme that
was established with the shareholders in late 2003
and implemented by the Poltrona Frau management,
which has developed through the strengthening and
the greater internationalisation of the company‟s
activities, the acquisition of Cappellini in December
2004, assuming control of Cassina in June 2005, and
the listing of Parent Poltrona Frau on the Borsa di
Milano in late 2006.
With the development of this programme Poltrona
Frau has implemented, with notable advantages in
terms of timing, a different competitive model to
those pursued by its competitors until now, acting as
an aggregating entity in a highly fragmented sector
and launching an innovative development process. In
particular, the development of the above programme
has enabled the Group to:
- have the use of three highly prestigious
brands (Poltrona Frau, Cassina and
Cappellini), each with a clear identity, which
allow the Group to cover the various product
styles (classical, modern and innovative) in
the high-end furnishing segment without
any overlapping;
- benefit, in the Residential segment, from the
thoroughness of its range (sofas, armchairs,
furniture, chairs, tables, beds and office
furniture), with a relevant presence of iconic
designer products (including Poltrona Frau‟s
Vanity Fair, the Cassina LC4 chaise-longue by
Le Corbusier, Pierre Jeanneret, Charlotte
Perriand, the S Chair by Tom Dixon produced
by Cappellini) which constitute a base of
long sellers that has no equal in the target
market;
- develop a strong area presence across the
world with around 70 mono-brand and
multi-brand Group stores opened with
selected partners and 24 DOS, or Directly
Owned Stores in prime locations in major
Italian and international cities;
- maintain consolidated long-term commercial
relations with a select network of multi-
brand distributors at world level, thus
ensuring a direct and distinctive presence in
the main world markets;
- strengthen its role as a leading global
operator in the Luxury Interiors division and
to boast an expert organisation that is able
to compete at international level for
prestigious contracts, designing the interiors
of important architectural works, hotels and
the showrooms of some of the most
prestigious fashion labels;
- acquire the right to use some of the most
significant designs of ingenious designers –
such as Le Corbusier, Charles Rennie
Mackintosh, Gio Ponti, Vico Magistretti,
Gaetano Pesce, Philippe Starck, Jasper
Morrison, Tom Dixon, Piero Lissoni, Pierluigi
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
22
Cerri and Giulio Cappellini - and architects –
such as Renzo Piano, Norman Foster, Herzog
& de Meuron, Santiago Calatrava and Frank
O. Gehry – which represent the history of
design and architecture at world level, as
well as its present and future. This has made
it possible to create a particularly broad
catalogue of products that can respond to
the most advanced aesthetic and
technological trends of the market;
- expand the company‟s know-how –
combining specific artisanal expertise,
product development expertise, knowledge of
industrialisation and distinctive material
expertise – and therefore become a
privileged contact for the most prominent
designers and architects at global level, and
a creator of exclusive products with strong
experiential content.
In 2009, following an important change in top
management and the arrival of the new CEO, Dario
Rinero, a reorganisation and strategic plan was
developed in two separate phases.
The first phase, carried out in 2009-2010, made it
possible to reduce and streamline costs, create
synergies and simplify the structure of the Group, in
order to improve its profitability.
During this phase, designed to support the growth of
turnover, a new operational model was introduced,
new distribution channels were opened, and the
Luxury Interiors and Luxury in Motion divisions were
further developed. With the ultimate goal of
improving margins, the structure of the supply chain
was reviewed, fixed costs were reduced and
purchasing and logistics activities were centralised.
Lastly, the restructuring of Cappellini and the
centralisation of all Group support figures, together
with a series of interventions regarding the cost of
personnel and the elimination of activities not strictly
related to the core business, made it possible to
improve efficiency and reduce costs for the entire
Group.
The second phase, which began in 2011, focused on
the growth and development of the Top Line in the
various Business segments and on continuous
improvement of the margin.
The strong growth in 2012-2013 of the Luxury in
Motion division, along with the positive performance
of the Luxury Interiors division, was a great
satisfaction that rewarded the efforts and
organizational decisions that were adopted by the
Group. In 2013, the Residential segment also began to
grow due to careful sales policies which aimed to
increase the number of sales points and, in particular,
the presence of products of the three brands within
the most distant markets that have the highest
growth potential (in particular the area of Greater
China).
Management‟s priority remains the ongoing
improvement of margins, leveraging a reduction in
the cost of production in the Residential segment,
and focusing Luxury Interiors activities on contracts
with higher margins and better risk management. The
Group therefore tends to prefer smaller but highly
prestigious contracts such as development of the
international retail network for luxury brands or
luxury boutique hotels, theatres and auditoriums.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
23
Photo by Karl Lagerfeld of LC2 armchairs by Le Corbusier, Pierre Jeanneret, Charlotte Perriand
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
24
Treasury shares and shares or quotas of controlling companies
At 31 December 2013 the Company held 1,858,231 treasury shares, equal to approximately 1.3% of share capital as
follows:
Number of
treasury shares
Average
purchase/sale
price
Value (in
Euro/000)
Treasury shares at 1 January 2013 1,036,671 0.890 923
Shares sold during the year (966,668) 0.876 (846)
Shares bought during the year 1,788,228 1.311 2,344
Treasury shares as at 31 December 2013 1,858,231 1.303 2,421
Stock option plans
Please refer to the Annex to the Annual Financial
Report.
Scope of consolidation
In addition to carrying out significant production and
marketing activities Poltrona Frau S.p.A. is an
investment holding company, also carrying out the
strategic direction and coordination of the Group and
the activities conducted by the companies it controls.
The consolidated financial statements for 2013
include the financial statements of the Parent
Poltrona Frau S.p.A. and those of the companies in
which it has direct or indirect control as defined by
IAS 27 Consolidated and Separate Financial
Statements.
In relation to the comparison between the scope of
consolidation as at 31 December 2013 and that at 31
December 2012, the following should be noted:
a) The entry of Nemo S.r.l., a company that is 49%
controlled by Cassina S.p.A. following the
conferment in February 2013 of the investment
of Artelux S.A. - owned by Cassina – into Nemo
S.r.l.. By means of this operation, the transfer
operation for the light division of the Group,
initiated in 2012, was completed;
b) In the month of June, the liquidation process for
the subsidiary Beijing Casanova Furniture Design
Co. Ltd. was completed;
c) Transfer of 51% of the Chinese subsidiary
Zheijang Casanova Furniture Ltd. to the Chinese
company Wenzhou Opal Furniture Co. Ltd..
Following this operation, the company was
consolidated with the equity method;
d) Acquisition - on the part of the subsidiary
Poltrona Frau Group North America Inc. – of the
remaining 70% of the company Spazio
Washington LLC from Variant Inc.
The subsidiaries included in the scope of consolidation
at 31 December 2013 are as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
25
(*)Company placed under liquidation
Company name Registered office Direct parent % held
% held
by
Group
Cap Design S.p.A. Meda, Milan – I Poltrona Frau S.p.A. 100% 100%
Cassina S.p.A. Meda, Milan – I Poltrona Frau S.p.A. 100% 100%
Cassina France S.A. Paris – France Cassina S.p.A. 100% 100%
Cassina Pacific Ltd Hong Kong – People‟ s
Rep. of China Cassina S.p.A. 100% 100%
Cassina Shanghai Trading Co. Ltd Shanghai – People‟ s Rep.
of China Cassina S.p.A. 100% 100%
DieciDieci S.r.l. Bologna – I Poltrona Frau S.p.A. 100% 100%
Frau U.S.A. Corporation New York - USA Poltrona Frau S.p.A. 83% 83%
Frau France S.a.r.l. Paris . F Poltrona Frau S.p.A. 100% 100%
Meno Warehandels GmbH (*) Vienna – Austria Poltrona Frau S.p.A. 60% 60%
Poltrona Frau Deutschland GmbH Munich – Germany Poltrona Frau S.p.A. 100% 100%
Poltrona Frau Group North America Inc. New York – USA Cassina S.p.A. 100% 100%
Poltrona Frau PTE Ltd. Singapore – S Poltrona Frau S.p.A. 100% 100%
Poltrona Frau UK Ltd. London – UK Poltrona Frau S.p.A. 100% 100%
Spazio Washington LLC Washington - USA Poltrona Frau Group
North America Inc 100% 100%
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
26
ANALYSIS OF ANNUAL REVENUES OF THE GROUP BY
BUSINESS SEGMENT AND GEOGRAPHICAL AREA
The business segments through which the Group
works have been determined on the basis of the
reporting used by the Group‟s Chief Executive Officer
to take strategic decisions. This reporting, which
reflects the Group‟s current organisational and
corporate structure, is based on business segments
distinguished by the brands through which the Group,
by means of its companies, characterises its products
and manages its activities. Each brand benefits from
a highly specific product/market relationship with its
own strong features highly distinct from the others,
strictly connected with their individual history and
values, which responds to the need to diversify by
having a range of products which, while all belonging
to the luxury furnishing sector, have markets with
characteristics which are completely autonomous and
distinctive. More specifically, three main segments
have been identified (Poltrona Frau, Cassina and
Cappellini).
Sector of activity
(in thousands of Euro) 2013
Incidence %
on total
revenues
2012
Incidence %
on total
revenues
Variations Variations %
Poltrona Frau 159,243 58.4% 131,624 53.4% 27,619 21.0%
Cassina 110,400 40.5% 110,274 44.6% 126 0.1%
Cappellini 11,663 4.3% 12,877 5.2% (1,214) (9.4%)
Eliminations (8,462) (3.2%) (7,787) (3.2%) (675) 8.7%
Total revenues 272,844 100.0% 246,988 100.0% 25,856 10.5%
The Group believes that it is also useful to provide additional information regarding the three business segments in
which it works (Residential, Luxury in Motion1 and Luxury Interiors2) as well as revenues by geographical area. In
further detail, four main geographical areas have been identified: Italy, EMEA (which includes all the European
countries - with the exception of Italy - and Middle Eastern and African countries), the Americas (mostly the United
States) and Asia and Oceania
Geographic Segment
(in thousands of Euro) 2013
Incidence %
on total
revenues
2012
Incidence %
on total
revenues
Variations Variations %
Italy 109,961 40.4% 91,186 36.9% 18,775 20.6%
EMEA 102,968 37.7% 92,564 37.5% 10,404 11.2%
Americas 26,788 9.8% 34,180 13.8% (7,392) (21.6%)
Asia and Oceania 33,127 12.1% 29,058 11.8% 4,069 14.0%
Total revenues 272,844 100.0% 246,988 100.0% 25,856 10,5%
Business segment
(in thousands of Euro) 2013
Incidence %
on total
revenues
2012
Incidence %
on total
revenues
Variations Variations %
Residential 150,606 55.2% 143,205 58.0% 7,401 5.2%
Luxury Interiors 52,663 19.3% 50,813 20.6% 1,850 3.6%
Luxury in Motion 69,575 25.5% 52,970 21.4% 16,605 31.3%
Total revenues 272,844 100.0% 246,988 100.0% 25,856 10.5%
1 The Interiors segment is now called Luxury in Motion.
2 The Contract segment is now called Luxury Interiors.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
27
Some comments are shown below regarding sales
revenues developed in 2013 by sectors of activity, the
geographical areas and the business segments as per
above.
Poltrona Frau Segment
2013 revenues showed a 21.0% increase compared to
the previous year, due to the combined effect of the
increase recorded in the three segments (Luxury in
Motion: +31.4%, Luxury Interiors: +21.1% and
Residential: +12.0%).
The Luxury Interiors segment highlighted important
growth due to the acquisition and initiation of
important job orders; the Luxury in Motion segment
continues to report significant growth, in line with
the growth of past quarters and primarily due to the
contribution of certain important customers (Maserati
and the Jaguar- Land Rover Group); the increase
reported in the Residential segment, in particular,
benefited from the positive trend of the domestic
market and in certain major European countries, the
strong growth in the Greater China and India regions
as well as the sales of standard catalogue products
led by the Luxury Interiors segment.
Cassina Segment
The increase in revenues of circa 0.1% in 2013 with
respect to the same period of the previous year was
primarily due to the growth of revenues in residential
business (+4.0%) while the Luxury Interiors segment
reported lower revenues with respect to 2012
following different stages of progress in the primary
job orders.
The increase reported in the Cassina Residential
segment during 2013 was particularly significant; this
was primarily due to significant growth in Asia
(+19%) and the positive result of Italy (+7%).
Cappellini Segment
2013 revenues recorded a decrease of 9.4% with
respect to the same period of the previous year,
attributable entirely to the Residential segment given
that Cappellini does not operate in other segments.
This result was primarily due to lower sales generated
in the EMEA region.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
28
COMMENT ON KEY ITEMS IN THE INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION OF THE POLTRONA
FRAU GROUP
Revenues
In 2013, the Group recorded a 10.5% increase in revenues, following the excellent performance of the Luxury in
Motion segment (31.3%) and the positive performances within the Residential (+5.2%) and Luxury Interiors (+3.6%)
segments.
Further details by individual business sector may be found in the paragraph “Analysis of annual revenues of the
Group by business segment and geographical area”.
EBITDA
The increase in EBITDA – from Euro 26.0 million in 2012 to Euro 32.0 million in 2013 – is due to the following
effects.
(millions of Euro)
EBITDA 2012 26.0
Effect of sales volumes 7.3
Effect of contribution margin (0.5)
Effect of discretionary costs (S&M) (2.3)
Effect of fixed, structu andral costs 1.5
EBITDA 2013 32.0
The effect of sales volumes, positive by approximately Euro 7.3 million, is primarily due to the important increase
which was recorded in the Residential segment (for Euro 3.9 million) and in the Luxury in Motion segment (for Euro
3.0 million) as well in the Luxury Interiors segment (for Euro 0.4 million).
The negative contribution margin effect, amounting to approximately Euro 0.5 million, is primarily due to Luxury in
Motion segment (negative by circa Euro 1.1 million); this was primarily due to a different sales mix which was
partially compensation by the positive margin of the Luxury Interiors segment, a further confirmation of the careful
policy of selection of the job orders.
Discretionary costs increased by circa Euro 2.3 million following major investments in marketing expenses in support
of revenue growth.
Fixed and structural costs decreased by circa Euro 1.5 million with respect to 2012; this was primarily due to the
continual search for synergies and efficiencies in order to decrease basic structural costs of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
29
The following table summarises EBITDA by business segment:
Sector of activity
(in thousands of Euro) 2013
Incidence %
on revenues
in the
segment
2012
Incidence %
on revenues
in the
segment
Variations Variations
%
Poltrona Frau 15,725 9.9% 10,968 8.3% 4,757 43.4%
Cassina 16,391 14.8% 14,788 13.4% 1,603 10.8%
Cappellini (99) (0.9%) 276 2.1% (375) (135.9%)
EBITDA 32,017 11.7% 26,032 10.5% 5,985 23.0%
The increase in EBITDA in the Poltrona Frau segment is mainly attributable to higher sales volumes generated in the
three business segments and the decreased fixed and structural costs; these effects were partially offset by an
increase in marketing investments (which increased by Euro 0.4 million).
The improvement in Cassina‟s profitability is mostly the result of greater sales volumes in the Residential segment
and better profitability recorded in both the Residential and Luxury Interiors segments; these positive effects were
partially absorbed by the increase in marketing investments (which increased by Euro 1.8 million).
The negative profitability of Cappellini is entirely attributable to the decrease in volumes recorded during the course
of 2013.
Operating income
The operating result improved from Euro 15.5 in 2012 to Euro 20.3 million in 2013; this was primarily due to the
significant improvement in EBITDA described above; in addition, increased amortization equal to Euro 1.8 million and
primarily related to investments realized in 2013, as well as write-downs for Euro 0.2 million relative to the closing
of the Naples store of Poltrona Frau S.p.A., should also be noted.
As of 31 December 2013, an item of non-recurring nature – equal to circa Euro 4.2 million,–and ascribable to the
variable compensation due to the CEO - was booked according to international accounting principle IFRS 2; this was
related to the operation for transfer of the Group, as described in full detail in the paragraph “Subsequent events”.
As of 31 December 2012, the item included the charges sustained for the restructuring operation, totalling Euro 3.9
million.
Income before taxes
The 2013 income before taxes was around Euro 11.7 million, compared to roughly Euro 8.9 million profit achieved in
2012. The increase is attributable to the factors described above.
During the course of 2013, write-downs were implemented in affiliated companies and joint ventures; this was due
to the valuation of the investments using the equity method for an amount totalling Euro 3.6 million.
Profit/(Loss) for the year
The 2013 profit for the year was around Euro 4.5 million, compared to roughly Euro 1.1 million achieved in 2012. As
of 31 December 2013, taxes amounted to Euro 7.2 million compared to Euro 4.1 million in the previous year.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
30
Comments on changes in net assets and financial items
Net working capital
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Trade receivables 54,628 52,110 2,518
Inventory 65,572 53,989 11,583
Trade payables (70,857) (59,197) (11,660)
Other current assets/(liabilities) (24,791) (14,175) (10,616)
Net working capital 24,552 32,727 (8,175)
The increase in trade receivables – totalling Euro 2.5 million – is primarily due to an increase reported in all business
segments as of 31 December 2013 and lower, in percentage terms, to the double digit increase of revenues due to a
careful credit management policy.
The increase in inventories as of 31 December 2013 and with respect to 31 December 2012 was equal to Euro 11.6
million; this increase is almost exclusively due to the increase in revenues within the Luxury in Motion segment.
The increase in trade payables as at 31 December 2013 is due to a stronger focus on payment terms to suppliers and
to higher purchasing volumes linked to the revenue growth.
Other current assets/(liabilities) increased, primarily as a result of increased liabilities booked in the financial
statements and ascribable to increased tax payables (totalling Euro 3 million), the current payable relative to the
payment for the acquisition of the Simon trademark (totalling Euro 2.1 million) and the variable compensation
booked on the basis of the previously illustrated IFRS 2 (Euro 4.2 million).
Fixed assets and other long-term assets
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Intangible assets 89,037 86,127 2,910
Tangible fixed assets 39,480 40,214 (734)
Other non-current assets 23,431 23,594 (163)
Fixed assets and other long-term assets 151,948 149,935 2,013
Intangible fixed assets include the balances of the financial statement items "goodwill", "trademarks with indefinite
useful lifetimes", and "other intangible assets". The increase is primarily due to the acquisition of the Simon brand
which occurred during the course of 2013 at a contractually defined price (Euro 2.3 million) as well as the booking
of the goodwill resulting from the operation itself (Euro 0.7 million).
The decrease in intangible assets with respect to 31 December 2012 is primarily due to the effects deriving from the
de-consolidation of the Chinese subsidiary Zhejiang Casanova Furniture Ltd., as well as the amortization of the year;
these effects were partially compensated by the investments made during the year and pertaining to improvements
in the plant of Lentate sul Seveso (MB) – where the Cassina and Cappellini research centres were transferred – as
well as by the realization of exhibition centres used for the Salone Internazionale del Mobile (International Furniture
Fair) of Rho Fiera which were considered light constructions.
The “Other non-current assets” illustrated above are reported net of the financial items re-classified within the Net
Financial Position; these decreased, with respect to 31 December 2012, primarily as a result of the write-downs
booked in affiliated companies, joint ventures and in other investments following the valuation of these investments
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
31
with the equity method; this was partially compensated by the revaluation of the minority investment in Cassina IXC
Ltd. which was booked in the financial statements.
Long-term liabilities
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Employee benefits 5,778 5,450 328
Provisions for risks and charges 3,756 5,092 (1,336)
Deferred tax liabilities 22,395 22,183 212
Other non-current liabilities 1,358 554 804
Long-term liabilities 33,287 33,279 8
Provisions for risks and charges primarily decreased as a result of the implementation of the restructuring plan which
affected the Parent Poltrona Frau S.p.A. and other companies of the Group, as illustrated in detail in the Annual
Financial Report of 31 December 2012.
The increase in “Other non-current liabilities” is primarily ascribable to the booking – as stipulated in the company
branch sales contract undersigned in 2013 between Estel Group S.r.l. and Cassina S.p.A. – of the variable price quota
that is proportional to the revenues generated in the next five years by the Simon brand.
Shareholders‟ equity
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Share capital 34,604 34,810 (206)
Reserves and Profits (losses) of previous year 35,048 35,016 32
Profit of the year 4,582 1,250 3,332
Total Group shareholders' equity 74,234 71,076 3,158
Minority interest (361) (266) (95)
Shareholders‟ equity 73,873 70,810 3,063
The increase in shareholders‟ equity is primarily due to the positive result of 2013.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
32
Net financial position
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Current payables to banks (34,794) (32,755) (2,039)
Current portion of medium-long term borrowings (16,686) (13,082) (3,604)
Other financial liabilities (690) (1,360) 670
Current payables (52,170) (47,197) (4,973)
Medium-long-term financial borrowings (39,134) (46,263) 7,129
Total debt, gross (91,304) (93,460) 2,156
Cash and cash equivalents 20,638 9,068 11,570
Other financial assets 1,326 5,319 (3,993)
Net financial position (69,340) (79,073) 9,733
The net financial position recorded improvement of around Euro 9.7 million compared to 31 December 2012 as a
result of contrasting elements, which may be summarised as follows:
(i) with a plus sign:
potential cash flow (EBITDA) for the period of Euro 32 million;
a benefit of Euro 2.4 million deriving from the application of the method of consolidation by the
equity method following the transfer of 51% of the Chinese subsidiary Zhejiang Casanova
Furniture Ltd.;
a reduction in net operating working capital of around Euro 4 million (an amount not including the
non-recurring component of Euro 4.2 million);
other changes totalling Euro 0.3 million.
(ii) with a minus sign:
the payment of compensation to Group employees following the launch of the restructuring plan,
agency indemnities and other payments totalling Euro 2.0 million;
net investments in fixed assets for the year amounting to Euro 12.5 million;
net financial charges and taxes booked within the income statements for a total of Euro 12.1
million Euro;
investments in shareholdings of Euro 0.9 million relating to share capital increases;
the acquisition of treasury shares during the year for a total of Euro 1.5 million.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
33
COMMENT ON KEY ITEMS IN THE INCOME STATEMENT AND STATEMENT OF FINANCIAL POSITION OF POLTRONA
FRAU S.P.A.
Revenues
The year just ended showed an approximate 22.9% increase in revenues with respect to 2012; this increase is
primarily due to the strong growth in the Luxury in Motion (+42.3%) as well as the positive trend in the other two
business segments: Residential (+11.2%) and Luxury Interiors (+7.8%).
Two summary tables below show the breakdown of revenues by geographical area and by business segment:
(in thousands of Euro) 2013
Incidence %
on total
revenues
2012
Incidence %
on total
revenues
Variations Variations %
Italy 79,635 55.1% 67,949 57.7% 11,686 17.2%
EMEA 47,299 32.7% 31,907 27.1% 15,392 48.2%
Americas 7,267 5.0% 7,970 6.8% (703) (8.8)%
Asia and Oceania 10,484 7.2% 9,854 8.4% 630 6.4%
Total revenues 144,685 100.0% 117,680 100.0% 27,005 22.9%
(in thousands of Euro) 2013
Incidence %
on total
revenues
2012
Incidence
% on total
revenues
Variations Variations
%
Residential 65,339 45.1% 58,782 50.0% 6,557 11.2%
Luxury in Motion 65,366 45.2% 45,931 39.0% 19,435 42.3%
Luxury Interiors 13,980 9.7% 12,967 11.0% 1,013 7.8%
Total revenues 144,685 100.0% 117,680 100.0% 27,005 22.9%
The year 2013 reported growth in the Residential segment in many geographical areas: the increase in the EMEA
area was particularly significant (+19.2%) as well as that of Italy which still represents more than 50% of revenues
in the Residential segment. This performance went against the trend of the general Italian furnishings market which
reported a decrease in sales of 0.1% with a national market that decreased by 3.2% compared to the 2.4% increase
in exports (Source: Centro StudiCosmit/FederLegno).
The positive trend of sales realized in the Luxury in Motion and Luxury Interiors segments allowed the year to close
with an overall significant level of growth.
EBITDA
The increase in EBITDA – from Euro 10.6 million in 2012 to Euro 16.2 million in 2013 – is due to the following
effects:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
34
(millions of Euro)
EBITDA 2012 10.6
Effect of sales volumes 6.9
Effect of contribution margin (1.5)
Effect of discretionary costs (S&M) (0.3)
Effect of fixed and structural costs 0.5
EBITDA 2013 16.2
The effect of sales volumes, positive by approximately Euro 6.9 million, is primarily due to the important increase
which was recorded in the Luxury in Motion segment (for Euro 3.4 million) and in the Residential segment (for Euro
3.2 million) as well in the Luxury Interiors segment (for Euro 0.3 million).
The negative contribution margin effect, amounting to approximately Euro 1.5 million, was primarily due to a
worsening in the Residential segment as a result of a less favourable sales mix and the presence of certain important
supplies characterized by a lower level of profitability.
Discretionary costs increased by circa Euro 0.3 million following major investments in marketing expenses in support
of revenue growth.
Fixed and structural costs decreased by circa Euro 0.5 million with respect to 2012; this was primarily due to the
continual search for synergies and efficiencies in order to decrease basic structural costs.
Operating income
The operating result reported net income of Euro 7.8 million compared to a positive result of Euro 4.9 million
reported in 2012. It should be noted that the 2013 result is penalized by costs of non-recurring nature linked to the
variable compensation of the CEO, as described above and totalling Euro 4.2 million.
As of 31 December 2012, a non-recurring amount of Euro 3.9 million should be noted in connection with a
restructuring operation implemented the past year.
Income before taxes
Income before taxes recorded a positive result of Euro 3.2 million, compared to a negative result of Euro 1 million in
2012. In 2013, charges on investments showed a net result of Euro 3.2 million, compared to Euro 2.7 million in 2012.
Profit/(Loss) for the year
There was a profit of Euro 0.2 million in 2013 compared to a loss of Euro 2 million in 2012. Income taxes came to
Euro 3.0 million, compared to Euro 1.0 million as at 31 December 2012.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
35
Comments on changes in net assets and financial items
Net working capital
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Trade receivables 37,008 31,322 5,686
Inventory 37,540 24,501 13,039
Trade payables (41,556) (35,001) (6,555)
Other current assets/(liabilities) (11,628) (6,859) (4,769)
Net working capital 21,364 13,963 7,401
The increase in trade receivables is almost entirely due to the increase in revenues during 2013.
The increase in inventories of Euro 13 million is almost exclusively due to the increase in revenues within the Luxury
in Motion segment during 2013 (Euro 10,1 million).
The increase in trade payables is primarily due to higher volumes realized during the year as well as greater focus on
payment terms with suppliers.
Other current assets/(liabilities) include the balances of the financial statement items “other current assets”, “tax
payables” and “other current liabilities”. The increase is primarily linked to the variable compensation booked on the
basis of the previously illustrated IFRS 2.
The incidence of net working capital with respect to annual revenues, as of 31 December 2013, amounted to around
14.8% compared to roughly 11.9% at the end of 2012.
Fixed assets and other long-term assets
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Intangible assets 6,110 6,088 22
Tangible fixed assets 25,558 25,676 (118)
Other non-current assets 60,015 64,418 (4,403)
Fixed assets and other long-term assets 91,683 96,182 (4,499)
Intangible assets include the balances of the financial statement items "goodwill" and " intangible fixed assets". It
should be noted that intangible assets include the trademark “Frau”, owned by the company and whose value is
equal to Euro 3.3 million.
The item “Other non-current assets” primarily decreased as a result of write-downs of the investments held by the
Parent following impairment tests.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
36
Long-term liabilities
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Employee benefits 3,050 2,824 226
Provisions for risks and charges 2,141 2,305 (164)
Deferred tax liabilities 1,964 2,104 (140)
Other non-current liabilities 465 509 (44)
Long-term liabilities 7,620 7,742 (122)
Provisions for risks and charges primarily decreased as a result of the implementation of the restructuring plan which
affected the Parent Poltrona Frau S.p.A. and other companies of the Group, as illustrated in detail in the Annual
Financial Report of 31 December 2012.
Shareholders‟ equity
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Share capital 34,604 34,810 (206)
Reserves 6,199 7,619 (1,420)
Profits (losses) of previous year (2,835) (835) (2,000)
Profits of the year 191 (2,000) 2.191
Shareholders‟ equity 38,159 39,594 (1,435)
Net financial position
(In thousands of Euro) 31 december
2013
31 december
2012 variation
Current payables to banks (15,671) (17,299) 1,628
Current portion of medium-long term borrowings (7,249) (5,388) (1,861)
Other financial liabilities (41,476) (24,582) (16,894)
Current payables (64,396) (47,269) (17,127)
Medium-long-term financial borrowings (20,987) (24,392) 3,405
Total debt, gross (85,383) (71,661) (13,722)
Cash and cash equivalents 13,292 3,291 10,001
Other financial assets 4,823 5,561 (738)
Net financial position (67,268) (62,809) (4,459)
The net financial position worsened by circa Euro 4.5 million compared to 31 December 2012 as a result of
contrasting elements, which may be summarised as follows:
(i) with a plus sign:
potential cash flow (EBITDA) for the period of Euro 16.2 million;
financing granted in 2013 to companies of the Group and totalling Euro 3.4 million;
Dividends collected from the company Poltrona Frau PTE Ltd. for Euro 1.9 million;
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
37
(ii) with a minus sign:
the increase of circa Euro 11.6 million in net working capital (amount decreased by a non-recurring
item totalling Euro 4.2 million);
the payment of compensation to Parent's employees following the launch of the restructuring plan,
agency indemnities and other payments totalling Euro 0.7 million;
net investments in fixed assets for the year amounting to Euro 4.2 million;
investments in shareholdings of Euro 1.3 million relating to share capital increases
net financial charges and taxes booked within the income statements for a total of Euro 6.3
million;
the purchase of treasury shares during the year for a total of Euro 1.5 million;
other changes totalling Euro 0.4 million.
RECONCILIATION BETWEEN THE RESULT FOR THE PERIOD AND GROUP SHAREHOLDERS‟ EQUITY OF POLTRONA FRAU
S.P.A.
(in thousands of Euro)
Shareholders‟
equity at 31
December
2013
Profit (Loss)
for the year
2013
Shareholders‟
equity at 31
December
2012 (*)
Profit (Loss)
for the year
2012 (*)
Shareholders‟ equity of Poltrona Frau S.p.A. 38,159 191 39,594 (2,000)
Portion of the profit (loss) of investments 11,861 3,292 8,569 761
Elimination of intra-Group dividends (6,265) (1,900) (4,365) -
Elimination of intra-Group profits and losses included in
inventories (1,553) (211) (1,342) (263)
Write-down of investments in subsidiaries 38,953 3,091 35,862 2,921
Impairment of consolidation goodwill (1,902) - (1,902) -
Impairment of IUL intangibles held for sale (2,960) - (2,960) -
Net merger surplus (deficit) 2,676 - 2,676 -
Reserve – adjustment to fair value of AFS financial assets (5,800) - (6,554) -
Reserve arising from purchase of subsidiaries 1,838 - 1,838 -
Actuarial profits /(Loss) from definite benefits plans in
subsidiaries (204) - (37) -
Other minor adjustments (569) 119 (303) (169)
Total Group shareholders‟ equity 74,234 4,582 71,076 1,250
Total minority interest (361) (49) (266) (126)
Total consolidated shareholders‟ equity 73,873 4,533 70,810 1,124
(*) Values as at 31 December 2012 were restated to ensure their alignment and comparability with those of the
current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
38
Significant, non-recurring, abnormal and/or unusual transactions
Pursuant to Consob Resolution no. 15519 of 27 July 2006 concerning the format of financial statements, the costs
linked to the variable compensation of the CEO, totalling Euro 4.2 million, are recorded in relation to the effects
resulting from events or transactions which are non-recurring or from transactions or facts which do not occur
frequently as part of normal operations.
Further details relative to that reported as of 31 December 2012, refer to note 33 “Restructuring costs”.
Going concern, risks and uncertainties
The consolidated financial statements have been prepared on the assumption that the Group will continue trading as
a going concern given the excellent economic/financial trend of 2013 and because, despite the economic context
remains weak and uncertain, the Group believes that there are no material uncertainties relating to its ability to
continue operating for the foreseeable future, also by virtue of the operating directions identified earlier, currently
being put into practice, to adapt to the changed trend in demand and to the industrial and financial flexibility of the
Group itself.
Financial risk management
Please see the paragraph in the Notes to the Consolidated Financial Statements, “Main risks and uncertainties to
which Poltrona Frau S.p.A. and the Group are exposed”.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
39
BUSINESS OUTLOOK
It is the intention of the Poltrona Frau Group to maintain and strengthen even further its position as leader in the
top range furnishing market for the home, for the office, for travel and for places of hospitality and leisure; in order
to attain this objective, it initiated, during the course of 2013, a process of organizational change which aimed to
refocus the commercial networks within the most mature geographical areas (Italy and EMEA) by brand and no
longer by area. On the other hand, the previous organization was maintained in the Americas and in the Asian
continent since it was deemed the most suitable for attaining the growth objectives.
On 20 June 2013, an agreement for the acquisition of the historical brand Simon, a part of the Estel S.r.l. Group, was
undersigned with effectiveness as of 1 July 2013; this brand has become part of the Cassina collection, thereby
expanding the latter‟s collection through a portfolio of excellent products by designers and architects such as Carlo
Scarpa, Marcel Breuer and Kazuhide Takahama which will reinforce certain product series such as tables, containers,
tables and office furnishings.
Cassina is aiming – through its integration with Simon products, whose production will remain in Italy – for
revenues of Euro 15 million over the next five years, with an increasing contribution beginning even from the current
year. The price paid for the acquisition of the brand was Euro 2.1 million plus a variable portion linked to revenues
generated in the next five years.
On 5 November 2013, the remaining 70% of the company Spazio Washington LLC was acquired from Variant Inc. at
a price equal to the Net Equity Value on 31 October 2013 plus goodwill equal to USD 40 thousand. The company
manages the Group DOS of Washington.
The year 2013 reported signs of recovery in the Residential segment, even if still not across all geographical areas.
The domestic market reported growth of 9.7%; this was also due to sales of residential products in special Luxury
Interiors projects; positive growth was also reported in the Asia and Oceania market (+12.4%), particularly in the
Chinese market; despite several quarters of difficulties, the "EMEA" department also reported a return of growth
(+6.2%).
The objective of the Luxury Interiors segment is to maintain sustainable growth in the medium-term, reduce risks
and improve the overall profitability of the business, thanks to the position of international leadership now held by
the Group. In particular, the decision to refocus on significantly developing the furnishing business at top level retail
sale points for the most important international fashion groups is perfectly in line with the above objectives. The
results of 2013 confirmed this strategy, reporting an increase in revenues of circa 3.6% as well as a significant
improvement in profit margins.
The Luxury in Motion segment, however, continues its highly extensive penetration of the global market, though the
project times are rather long. The 31.3% growth recorded in 2013, following on from the already significant increase
achieved the previous year, confirms that the strategic decisions taken during the last few years were in the right
direction and also offer a future outlook of significant growth.
Group management actions, strategies and the results delivered are the subject of constant analysis, calculations and
updates in order to take account of the rapid evolution taking place in the macroeconomic situation. The 2013
results of the Poltrona Frau Group are very positive and there are no elements at present which may prevent the
Group from achieving even better economic-financial results in 2014.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
40
SUBSEQUENT EVENTS
On 4 February 2014 - a closing date for the Italian stock exchange – the contract for the acquisition, on the part of
Haworth, of 58.6% of the share capital of Poltrona Frau S.p.A. held by the shareholders Charme Investments e
Moschini S.r.l..
Haworth, with a registered office in Holland (Michigan, USA), was founded in 1948 by the Haworth family which still
retains 100% of its capital. Haworth is the global leader in the planning and production of flexible and sustainable
work environments, with product lines that include moveable walls, furnishing systems, seating systems, floating
floors and communication technologies. With more than 1.4 billion USD in revenues in 2013, as well as 6,000
employees and more than 600 dealers across the world, the company, as of 2011, has already been the partner of
Poltrona Frau Group for distribution within its official channel in North America. Haworth is headed by the Italian
citizen Franco Bianchi, President and CEO as of 2005.
Completion of this operation – forecasted for the end of April 2014 is conditional upon the approval of the German
anti-trust authorities.
Following the completion of the operation, Haworth – either directly or through a fully owned Italian company – will
promote a mandatory total tender offer on the remaining portion of the share capital of Poltrona Frau S.p.A., in
accordance with Article 106 of Legislative Decree no. 58 of 1998 (the “Offer”), at a price of Euro 2.96 per share; this
corresponds to the price which will be paid to the shareholders of reference Charme Investments and Moschini S.r.l..
Haworth intends to pursue the delisting of the shares of Poltrona Frau S.p.A..
In connection with the completion of the operation, Charme Investments and Moschini S.r.l. have granted Haworth a
sales option (the “Option”), which can be exercised at the end of the tender offer, and on the basis of which Haworth
will retain the right, but not the obligation, to sell - to each of the two selling shareholders - a share quota in the
company of 4.2% (and therefore overall 8.4%) of the share capital, and at the same price per share paid by Haworth
during the tender offer (€ 2.96).
As part of the Operation, Haworth will also acquire –from the shareholders - 98% of the share capital of the
company owning the Meda plants which were leased to the Group; the overall price will be circa Euro 1.9 million,
equal to the book value of the investment itself and less than the value of the real estate properties valuated by
independent experts, net of payables.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
41
Poltrona Frau stand – Salone del Mobile 2013
Cassina stand – Salone del Mobile 2013
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
42
Cappellini stand – Salone del Mobile 2013
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
43
CORPORATE SOCIAL RESPONSIBILITY
The brands and business segments
Group brands: Poltrona Frau, Cassina, Cappellini
The creation of the Group was inspired by a strategy
based on the desire to preserve the distinctive value
of each brand, each of which benefits from a highly
specific product/market relationship, strictly
connected with its history and values. The Poltrona
Frau Group brands - Poltrona Frau, Cassina and
Cappellini - also have distinctive philosophies and
approaches to the market.
Poltrona Frau: Luxury, heritage, craftwork, exclusive
raw materials, historical archive, style and glamour:
modern craftwork.
Cassina: History of design, craftwork combined with
industry, catalogue of primary historical and modern
designers: industrialisation of design.
Cappellini: Modern design, aesthetic research and
innovation, innovative materials: cutting edge of
design.
The Residential segment comprises the design,
production and distribution of standard high-end
furniture catalogue products (sofas, armchairs,
furniture, chairs, tables, beds and furnishings) aimed
at retail customers and a select business clientele.
Residential - Poltrona Frau
Poltrona Frau, among the leaders in the top range
furnishing sector, is a highly traditional brand
founded in Italy in 1912. Poltrona Frau produces and
distributes exclusive high-quality products (of both
classic and contemporary design), with a strong retail
presence (more than 40 monobrand stores in Italy and
overseas, 7 of which directly managed – DOS – in
prime locations in Milan, Rome, Bologna, Tolentino,
Paris, New York and Los Angeles) and direct control
over the entire production cycle, which involves
numerous handicraft phases. The Poltrona Frau brand
is distinguished by its high content of style and
glamour, combined with a considerable respect for
tradition and a historical archive created from 1912
onwards. Classical products and modern products live
side by side in Poltrona Frau, satisfying the needs of
an exclusive international set of customers who put
the values of durability, elegance and recognition at
the heart of their selection criteria. Poltrona Frau has
always been known for its high degree of
craftsmanship, attention to detail and the use of
high-quality materials.
Poltrona Frau‟s historical collection consists of
products created between 1912 and 1934. These
include classic pieces of furniture such as the Vanity
Fair armchair (1930) and the Chester sofa (1912),
long sellers with which the company is identified at
international level. The historic collection is joined by
a wide range of contemporary products with greater
design content. Poltrona Frau is also active in the
production and distribution of high-end office
furniture.
Over time Poltrona Frau has developed specific skills
in the processing of leather, for which it has
established its own quality standard, agreed upon and
shared with its select group of suppliers and
identified with the “Pelle Frau®”, trademark, a
guarantee of top quality and durability. The company
uses full grain leather in more than 120 colours.
In March 2013, following the conclusion of the
initiatives relative to the Centennial celebrated in
2012, the Poltrona Frau Museum was inaugurated in
Tolentino. The company exhibition area, designed by
Michele De Lucchi, is part of an industrial building of
Poltrona Frau in Tolentino. It includes a collection of
original materials and documents which illustrate the
history and growth of the company. A museum which
represents a homage to the territory where
leatherworking is a consolidated tradition.
Residential – Cassina
Founded by Cesare and Umberto Cassina in 1927,
Cassina inaugurated industrial design in Italy in the
1950‟s.
Cassina, as a true trail blazer, was the first company –
in that complex and agitated period - to adopt an
attitude of research and innovation by involving
important architects and designers in imagining new
forms and, in particular, transforming their intuitions
into reality, a characteristic which still characterizes
the company. The identify of Cassina, true to itself, is
an original combination of technological attitude that
is closely related to a long-standing handicraft
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
44
tradition. The company, in fact, retains its historical
heart, carpentry, and spreads its executive excellence
throughout the work while continuing to be the
centre of all processing.
Cassina has received four Compasso d‟Oro awards,
one of which in 1991 for its contribution to industrial
design. In 1964, through the acquisition of the rights
to reproduction of four models designed by Le
Corbusier (still living) along with Pierre Jeanneret and
Charlotte Perriand, the Cassina “I Maestri” Collection
was started; in subsequent years, it retained
worldwide exclusivity - by working in close contact
with heirs and official foundations – of the
furnishings of some of the most famous architects of
the 20th century (Gerrit T. Rietveld, Charles R.
Mackintosh, E. Gunnar Asplund, Frank Lloyd Wright,
Charlotte Perriand and Franco Albini). A passionate
historical reconstruction which manages to reach the
innovative heart of each project and give it value,
even in light of the most advanced technological
solutions.
There are many Italian and international architects
and designers who collaborated, and collaborate, with
the company for the Cassina I Contemporary
Collection, including Gaetano Pesce, Vico Magistretti,
Gio Ponti, Mario Bellini, Rodolfo Dordoni, Philippe
Starck and Piero Lissoni. A tension of stimulating
ideas from which Cassina always extracts the best.
With a transversal culture of absolute quality which
renders each Cassina piece unique.
The Cassina brand has a strong retail presence
worldwide with its DOS (Directly Owned Stores) in
Milano, Meda, Paris, London and New York (2).
In June 2013, Poltrona Frau Group announced the
acquisition – through the company Cassina – of
Simon, a historical Italian design brand founded by
Dino Gavina and Maria Simoncini, from Estel S.r.l.: a
positive story for the valorisation of the Italian design
industry. A combination which tells the industrial
story of two companies and pioneering entrepreneurs
that today share an experimental spirit and represent
the expression of a relationship between culture and
production. The catalogue of excellent of
SimonCollezione, included within the Cassina I
Contemporary Collection, includes important
designers such as Carlo Scarpa, Marcel Breuer and
Kazuhide Takahama.
Residential – Cappellini
Cappellini began its activities in 1946 and today is a
high-profile business in the luxury furnishing sector,
thanks to its important catalogue of international
designers and its production of pieces of great state-
of-the-art creativity, reputation and fame. Over the
past 30 years the company has taken an attentive
approach towards seeking out and selecting young
high-potential emerging designers, in effect acting as
a springboard for significant international talent in
modern design. The company‟s image is closely linked
to the world of experimentation and design research;
factors which have made the Cappellini brand an
ever-present household name across the globe.
Cappellini has a selective but important presence in
the DOS in Milan, Paris and New York and in a
number of monobrand stores in some of the leading
cities in the world (e.g. Brussels and Manila), as well
as a widespread presence in the best multibrand
design stores. Some of its products are displayed in
the most important museums in the world, for
example the MoMA in New York, the Centre
Pompidou in Paris and the V&A in London.
Cappellini is one of the most representative brands of
contemporary design, and pays special attention to
aesthetic research and innovation, which are pursued
by surveying new trends in living and the use of
innovative materials.
The Residential segment is further divided into the
“Collezione” and “Sistemi” catalogues, which
represent an organic set of products covering the
needs of modern living in a broad and detailed
manner.
The “Collezione” catalogue contains sofas, armchairs,
chairs, tables, beds, wardrobes and cupboards,
bookcases, shelving and small cabinets: extremely
well-known and easily recognisable products (such as
Tom Dixon‟s S-Chair) as well as products for daily use.
Certain products in the “Collezione” catalogue are
also realised in limited editions and are presented at
international fairs. These limited series enable the
reputation of the Cappellini brand to grow
throughout the world and also act as products sought
out by customers and collectors due to the potential
increase in their value over time.
The “Sistemi” catalogue gathers together a wide
variety of furnishing solutions for domestic use and
for office projects or other arrangements of furniture
for the supply segment - cabinets, wardrobes and
cupboards, bookcases and shelving systems. The
quality of the products, the constant innovation of
content and design, the versatility of the products
and the variety of finishes represent the most
distinctive features of the “Sistemi” catalogue:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
45
constant research aimed at proposing an innovative
and complete furnishing project to the market.
Cappellini‟s activities in the Residential segment have
made its collaboration with emerging designers a
distinctive element in its pursuit of the innovation of
shapes and materials in the furnishing sector. Many
of the designers who started out work by
collaborating with Cappellini today represent the
cutting edge in architecture and international design
and constitute a creative heritage and one also of
image, with positive commercial repercussions for the
company.
The term Luxury Interiors denotes the supply of high-
quality made-to-measure furniture for public spaces
and the general public (theatres, auditoriums,
cinemas, hotels, restaurants and airports).
In fact the Luxury Interiors division provides
comprehensive assistance and offers turnkey solutions
for interior decorating projects with services that
range from planning and technical planning
assistance, technical designs, production and logistics,
right through to installation and quality controls
throughout the entire process. Operating in various
parts of the world, the Luxury Interiors division
develops, designs and produces every element of an
interior design: made-to-measure furnishings (FF&E),
windows and doors, masonry and glass constructions,
flooring, lighting and customised finishes. This
division of the Group is also responsible for
supervising the entire project, logistics, services and
customers formalities, installation of the furnishings
and the after-sales service.
The Group‟s Luxury Interiors segment covers two core
businesses, the first connected with the Poltrona Frau
world, one of the world‟s leading manufacturers of
seating with work under contract for theatres,
concert halls, interiors for aircraft and cruise ships,
buildings, embassies, luxury hotels and many other
public and private communal spaces. The second,
associated with Cassina, mainly produces made-to-
measure designs for turnkey interiors projects. The
company is consolidated in particular in the
hospitality and retail sectors.
Luxury Interiors – Poltrona Frau
The Poltrona Frau Luxury Interiors division, flanked by
designers from all over the world to jointly develop
special furnishings for theatres, auditoriums,
museums, airports, hotels and restaurants. Its all-
round skills are the result of strong crafting
experience and expert use of innovative materials and
technologies. A high-level company, founded on the
great tradition of “made-to-measure” that dates back
to the 1930s when Poltrona Frau was the furnishings
supplier for round-trip and transatlantic cruise ships.
Today, an international partner par excellence,
Poltrona Frau‟s Luxury Interiors division is capable of
pursuing the architect‟s personal design philosophy
and responding to all product, service and regulatory
requirements. Over 500 projects in more than 20
countries, with 20 collections of customisable small
armchairs, 1,200 compliance certifications, to match
the dreams, ideas and challenges of the most
demanding international architects.
Luxury Interiors – Cassina
Cassina‟s Luxury Interiors segment was established
between the 1950s and 1960s as a venture that led to
the creation of furnishings for other celebrated cruise
ships such as the Andrea Doria, Raffaello and
Michelangelo. In this period, as a true pioneer in
interiors for communal areas, Cassina Luxury Interiors
fine-tuned the made-to-measure design concept. An
approach that combines craftsmen‟s expert hands and
attention to detail with production processes and
technologies on an industrial scale. Hundreds of
hotels, bars, restaurants and residences. A division
was created in the 1990s, as part of the Luxury
Interiors segment, which is dedicated to providing
design and realisation services for the furnishing of
top level retail sales points. Today the division
expertly covers multiple sectors. From retail to
museums, the offices of government institutions to
hospitality. A presence consolidated in venues ranging
from art and culture, politics and enterprise, to travel
and lifestyle. With the capacity to intervene in
historic contexts of long-standing tradition, but also
in the most advanced, experimental and futuristic
architectural projects.
Lastly, with reference to the Luxury in Motion
segment, in recent decades Poltrona Frau has
developed considerable know-how in fitting out
leather interiors for top range cars, yachts, trains and
helicopters and for the first class section of leading
airlines.
Poltrona Frau entered the Car-Luxury in Motion
segment in 1984 with the design of the leather
interior of the Lancia Thema 8:32. In terms of its
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
46
partnership with Ferrari the key year was 1998, a year
in which Poltrona Frau produced the interiors of the
new 456M model developed by the Maranello
manufacturers.
So, from the Residential setting the leather has
subsequently been used for cars, trains, airlines and
ships. One of its strengths is the way it lends itself to
co-design projects, which combine innovation and
hand craftsmanship, a capacity that encourages
technological partnerships and research and
development.
The Luxury in Motion segment of Poltrona Frau works
on the development, production and marketing of
products, almost exclusively in leather, which are
mainly used for interiors in the automotive sector.
In recent years the Luxury in Motion division has
established partnerships with some of the leading
manufacturers in the sector such as: Ferrari, Bugatti,
Maserati, Lancia, BMW, Mini, Alfa Romeo, Fiat,
Volkswagen Group, Chrysler. Poltrona Frau‟s
partnerships also involve other sectors such as
yachting (the Ferretti Group, with companies such as
Pershing and Riva), trains (Nuovo Trasporto
Viaggiatori - NTV) and helicopters for some of the
most important names in the world in the various
sectors. The division is also involved in “in the air”
projects, comprising the fitting out of the first-class
cabins on the world‟s leading airlines (Etihad, the
flagship airline of the United Arab Emirates).
The Poltrona Frau Luxury in Motion division is
headquartered exclusively in the Tolentino plants,
where the co-design and production offices are to be
found, and in Detroit, where Poltrona Frau produces
interiors for Chrysler.
Pelle Frau® leather is the key factor in the Luxury in
Motion production, the primary ingredient. It
represents much more than a mere design material:
skins and leather are “material icons” to be used as a
symbol of elegance, prestige and quality. Poltrona
Frau‟s Luxury in Motion division has gradually
developed exclusive processing of bovine skins in a
constant exchange of ideas and experiences with the
furnishing sector. The feel, colours and atmospheres
of a living room have also been transferred to travel,
in compliance with expected use, regulations and the
most demanding technical specifications of car
manufacturers.
Only leather able to guarantee waterproof, moisture
transmission, wear resistant and stain resistant
characteristics are defined as Pelle Frau®.
The Luxury in Motion division is a development of the
Poltrona Frau brand to another business segment. This
has offered the opportunity to increase brand
awareness, especially in emerging countries (e.g.
China) where luxury car interiors are directly
associated with the brand itself.
The Group is active in various countries across the
world both through the sales network and thanks to
the joint ventures and commercial agreements it has
established over the years.
More specifically, the Group‟s two joint ventures are:
PF Emirates: established in April 2007 with
Mubadala Development Company PJSG, it has
enabled the retail sector to open the first
Poltrona Frau Group multibrand store in Abu
Dhabi in November 2008, followed in 2012 by the
opening of the Group‟s first multi-brand store in
Dubai; as regards the Luxury Interiors division,
the agreement made it possible to act as the
exclusive supplier for high-profile contract
projects developed in the Emirates;
Casa Décor: this company, founded in 2008 and
the result of a joint venture between the Poltrona
Frau Group and the Indian Group TATA, aims on
the one hand to be an exclusive vehicle for the
development of the Group‟s brands on the Indian
market and, on the other hand, to develop
industrial partnerships with the TATA Group. This
has allowed the opening of two Group multi-
brand stores, the first in Mumbai in 2010 and the
second in New Delhi in 2012
The Group also stipulated important commercial
agreements, in particular that signed with Haworth in
2011, a world leader in the design and production of
flexible and sustainable working environments for the
office segment in the US, with over 600 dealers. This
agreement has the objective to enable further
development of the geographical presence in the US,
thanks to the comprehensive distribution network of
the American brand which adds its own office
products to those of the Poltrona Frau Group.
Research and development
Research and development acts as the main source of
technological and stylistic innovation for the product
range of Group companies.
More specifically, the research and development
carried out by each company of the Group, fully
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
47
consistent with its respective business model,
concentrates on the following activities:
- definition of the product development plan;
- realisation of the style models, internally and
in conjunction with designers;
- design and industrialisation of the products in
respect of the defined forms of style and cost
and time targets assigned.
New products are developed in compliance with the
requisites of quality and in accordance with the
international standards for the sector.
The aim of the resources invested in the research and
development process is to provide a constant
improvement of the Group‟s specific skills, a means by
which the Group can distinguish itself from its
competitors, in particular:
- a direct and complementary relationship with
leading designers, a factor which enables the
Group to bring engineering activities forward
to the stage at which the style models are
realised;
- craftsmanship in working and in the use of
materials (leather, fabric, wood);
- ability to combine the working of top quality
products with constant technological and
processing innovation, using technologies and
computer tools which are on the cutting edge
on the market (such as 3D modelling, rapid
prototyping, injection, aesthetic finishing).
In addition, research and development activities make
use of an internal testing laboratory of the highest
level, which uses dedicated tools and resources for
laboratory tests carried out on materials, semi-
finished goods and finished goods (performance
testing, dynamic and static stress testing,
temperature testing, etc.).
The collaboration already established or being
established with certain Italian universities provides a
contribution to keeping the process of exchange with
the research and innovation sectors at a high level,
especially as far as the following are concerned:
- stylistic and formal research;
- new ways of modelling and 3D structural
analysis;
- research and testing of new materials;
- research and testing of new technologies and
production processes.
All the activities have the aim, besides that of testing
new materials and technologies, of also optimising
the time-scale required for the development cycle of
new products in order to maintain a competitive
advantage over competitors in terms of time-to-
market.
The external costs of research and development
recognised in the income statement in 2013
amounted to Euro 144 thousand, while development
costs capitalised during the year totalled Euro 1,682
thousand.
CSR ACTIVITIES
CSR governance
The Poltrona Frau Group three-year Corporate
Responsibility plan identifies four main action areas:
the pursuit of excellence and product innovation;
making the environment a part of the business
culture;
playing an active role in the development of the
local communities;
working as a team and developing talent.
In 2012, the Poltrona Frau Group performed a specific
assessment on the issues of Corporate Responsibility,
aimed at strengthening its monitoring of the four
main areas identified in the plan.
In accordance with the three-year Corporate
Responsibility plan, the Group completed an
assessment in line with the ISO 26000 Guidelines
which support organisations in the phases of
integration, implementation and promotion of socially
responsible conduct. The guidelines classify social
responsibility issues into seven categories and, for
each one, defines „issues‟ and “action required”. The
assessment made it possible to carry out a gap
analysis to identify the improvement actions required
also as regards the updating of the Corporate
Responsibility plan.
The Group has also continued with its process of
system certification.
To date Poltrona Frau holds the certifications ISO
9001, ISO 14001, OHSAS 18001, ISO/TS 16949;
Cassina holds the certifications ISO 9001, ISO 14001
and OHSAS 18001; Cappellini holds the certifications
ISO 9001 and ISO 14001.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
48
Stakeholder mapping
The Poltrona Frau Group interacts with its
stakeholders on a daily basis, who can be classified
into four groups:
• Governance: managing bodies; shareholders
including the Charme fund, majority shareholder;
• Market: suppliers of raw materials, foundations
and third parties; clients, including general
contractors, resellers and end customers;
designers and architects; trade associations;
banks;
• Community: public entities, including local
authorities; media; national and international
institutions;
• Collaborators: employees; agents; unions.
For the various stakeholders with whom the Group
interacts, a series of initiatives has been launched
that will be outlined in greater detail in the chapters
Profits, Planet and People.
Related party transactions
Group companies conduct intragroup and related
party transactions for goods and services under
normal market terms and conditions. This trading
relates mainly to transactions of a commercial nature,
as well as to administrative, financial and general
services.
Details may be found in note 42 “Related party
transactions” to the consolidated financial
statements.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
49
GranTorino, designer: Jean-Marie Massaud, Poltrona Frau
Dalia, designer: Marcel Wanders, Cappellini
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
50
MyWorld by Philippe Starck, Cassina I Contemporanei Collection
Oblong System, designer: Jasper Morrison, Cappellini
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
51
THE MARKET
Activities and business segments -
Results and projects
In 2013 the Group earned 55.2% of its consolidated
revenues in the Residential segment, 19.3% in the
Luxury Interiors segment and the remaining 25.5% in
the Luxury in Motion segment.
The commercial structure of Group companies covers
all the main geographical markets and over 65
countries, with a network of more than 70 single
brand stores and more than 1,000 multi-brand
dealers.
As at 31 December 2013, the Group had 889
employees. The Group‟s manufacturing structure
consists of two main facilities in Italy: one in the
Marche region at the Parent‟s site in Tolentino (MC)
and one in the Brianza district at the historic site of
Cassina in Meda (MB). It also has one facility in
Detroit (USA).
Residential
During the year the Group‟s three main brands
presented their Residential market products at the
Salone del Mobile (International Furniture Fair) of Rho
Fiera. Poltrona Frau Group has decided to return to
the fair as a sign of commitment to its partners and
to present new collections to a qualified public in
both consolidated as well as emerging markets.
This also demonstrated the Group‟s intention to
“support the system” and actively support the Italian
furnishings and design industry.
The public had the opportunity to discover an area
organized as a Campus: three unique and different
buildings which reflect the identity of each brand as
well as a common lounge area that reflects the
significant facets of each.
Below is a description of the most prominent
products marketed by the three Group brands.
Antohn: Jean-Marie Massaud designs a comfortable
sofa which speaks of elegance and relaxation. Broad
and generous cushions. A thick padding and soft
covering in leather. A significant sofa and the same
time light in frame. Almost suspended from the
ground by means of its thin T-shaped aluminium
supports which, located in the central area of the
structure, are invisible to the eye.
GranTorino: Incisive in effect, compact volumes, light
structure. Jean-Marie Massaud is inspired by the
world of saddlery and designs GranTorino. Great
freedom of expression. A sofa system which, in its
most original and valuable version, combines Cuoio
Saddle® Extra and cloth. The leather, cut and moulded
by hand, closely follows the lines and geometries of
the seating.
Letizia: Elegance, style, 1950‟s atmosphere. A project
which triggers and incorporates the creative ferment
of an age. Designed in 1954 by Gastone Rinaldi with
the name of DU55P, Letizia has currently been re-
edited by Poltrona Frau. Empty and full, sensual and
soft lines. The seating is welcoming and comfortable.
The back acquires new elasticity. The supports, slim
and streamlines, are well calibrated with the
bodywork.
Mamy Blue: An armchair to read, dream, meditate.
Snug and sensual as a song, Mamy Blue was designed
for relaxation and reading. The round and springy
forms evoke the dynamic and sophisticated design of
Carlo Mollino. Roberto Lazzeroni valorises them with
the wise use of materials.
MyWorld: “We live in a schizophrenic world. Let‟s
assume that MyWorld is a cocoon, a nest, a world
where we can be egocentric and comfortably
commune with our shadow or collect some snatches
of news from the world, that is said to be real.”
Philippe Starck. MyWorld is a living system, an
invitation to comfort and, at the same time, a call for
connection, a challenge which reflects the needs and
habits of a world that is constantly changing and in
which work and free time play an essential role.
P22: Patrick Norguet debuts in his first collaboration
with Cassina and presents a contemporary lounge
armchair which stands out for its comfort. P22 is a
contemporary interpretation of the classic bergère
and becomes a modern tribute to what the Cassina
brand represents.
Motek: The technology of the car industry in an
innovative chair which evokes the elegance of
Japanese origami. Luca Nichetto continues his
partnership with Cassina and designs a chair with
marked lines, for the home or the office, and which
draws inspiration from the Orient.
TL3 table: The vertical raiser as the recurring theme in
the poetics of Franco Albini. The design of the original
table – created by Albini in 1953 – is the origin of the
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
52
new edition of a series of tables that are proposed
with different forms, sizes and finishings.
Dalia: Designed by Marcel Wanders, Dalia is a poetic
and contemporary armchair which evokes the form of
the colourful flower of its name. Of small size, it
offers a pleasing comfort from its padding and
turnable base.
Oblong System: A series of chairs created by Jasper
Morrison that are free and which can be assembled,
providing the possibility of creating bifacial
compositions. With respect to the previous
Superoblong, it has no zippers and is enriched by
numerous modules that are capable of composing
countless and highly colourful compositions.
Candy Shelf: An evolution of the Candy mini tables,
Candy Collection – presented by Sylvain Willenz –
explores the beauty and simplicity of the construction
materials on a small scale. These libraries make clear
reference to the furniture of the 1960‟s through the
use of a structure of suspended tables with opposing
finishings and colours.
TREZ: An armchair of Zanini de Zanine, it is a highly
graphical design that is inspired from Brazilian
culture. A re-interpretation of the work of two great
artists of reference within the plastic arts world. A
courageous and eclectic mix, a striking and original
sculptural form.
Luxury Interiors
The main aim of the division is to maintain a
sustainable growth in the mid-term, improving
margins and improving risk management. For this
reason the division has decided to once again closely
focus on developing the business of furnishing high-
level retail stores for the most important international
fashion groups, as well as focusing on the
development of luxury hotel boutiques. The Luxury
Interiors division‟s main projects in 2013 included:
Hospitality: Cassina Luxury Interiors supplied all the
furnishing for the rooms and suites of the Peninsula
Hotel of Hong Kong, as part of a program for
relaunching the facilities by presenting a new concept
for a hotel room which is characterized by avant-
garde design and technology. This prestigious chain
therefore inaugurated a new era of customized
accommodations: the rooms present distinctive
elements of classic modernity, partaking in the design
principles of simplicity and elegance with ample use
of refined materials. Cassina Luxury Interiors was
selected as the sole supplier due to its handicraft
know-how and its capacity to transfer an aesthetic
combining design and practicality within its
furnishings.
Retail: the famous fashion brand Versace celebrates a
new concept for its mono-brand stores and does so by
choosing Cassina Luxury Interiors.
The first store of the new avenue was opened in Paris,
in Avenue Montaigne, and which, as a domino,
initiates the restyling of the other Versace boutique
stores across the globe.
Tradition, opulence, dynamism and contemporeaneity
characterize this new Versace concept which, in Paris,
covers a space of 350 sq.m. with marble mosaics,
brass and perspex.
In October 2013, the new concept store in Rome was
inaugurated within the worldly Piazza di Spagna. The
boutique has mosaic flooring which is inspired from
the Byzantine churches of the 19th century,
contrasting with the surrounding plastic and metallic
materials. Cassina Luxury Interiors will partner with
the Versace brand during new openings for 2014.
Auditorium: The restructuring of the Kimbell Museum,
located in Texas, was the work of several planners.
Within the pavilion that was re-designed by the
architect Renzo Piano, there is an auditorium with
300 seats, custom-sized, and realized by Poltrona
Frau Luxury Interiors. Located in the western part of
the building, the pavilion doubles the surface area of
the museum and is consistent with the form of the
original structure which contains the permanent
collection. Glass, cement and wood are the materials
which characterize the structure of the Plan and
which, surrounded by elms and red oaks, is an
expression of simplicity and lightness.
Theatre: The National Theatre of Bahrain resurrects
the typical architecture of Arab palaces: it is
organized around a central empty area and built near
the sea. The internal patio is majestic and includes a
majestic auditorium with 750 seats. Poltrona Frau
Luxury Interiors has been selected to realize the seats
which are specifically designed by AS Architecture
Studio Paris in order to offer greater visibility and
encircle the stage, thereby bringing the audience
closer to the performance. Conceived as a functional
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
53
space, the theatre will be used for conferences,
theatre shows, rehearsals and official ceremonies.
Special Projects: Restoration of the prestigious Park
Avenue Armory involved the historic armory that was
entirely built in 1881. This building, located in the
heart of Manhattan and covering 16,000 square
meters, will be prepared and customized in order to
host a unique exhibition area within the city of New
York. Cassina Luxury Interiors is involved in the
transformation of 18 rooms, creating customized
furnishings that were designed by the innovative
Swiss architects Jacques Herzog and Pierre de Meuron
of Herzog & de Meuron. When the ambitious
restructuring project is complete, New York will serve
as a cultural centre that is unique around the world
and capable of bringing together history and design.
Finally, during the week of the “Salone del Mobile” in
Milan, Luxury Interiors was the protagonist of the
event “Multiplicities by Zaha Hadid”, an
event/installation where sounds, forms and colours
are multiplied. The exhibition includes the Array chair
designed by Zaha Hadid for Poltrona Frau Contract
and the Zephyr sofa created by Cassina Luxury
Interiors for the famous designer, as well as the Liquid
Glacial and Mercuric collections of tables by Zaha
Hadid Architects.
Luxury in Motion
For thirty years the Luxury in Motion division of
Poltrona Frau has worked with clients that lead the
way in their respective sectors - Ferrari, Maserati,
BMW, Fiat, Lancia and Alfa Romeo in the car
segment, the Ferretti Group in the yachting segment,
Singapore Airline and Etihad in the aeronautics sector
and NTV in the railway industry.
In 2013 the partnership with Chrysler - which began
in 2011 - was consolidated by producing the
dashboard, interiors and seats of the new Chrysler
300 Luxury Series.
The Poltrona Frau Group was also chosen, at the start
of 2012, by Volkswagen for the fitting out of the
Phaeton Exclusive concept car with Pelle Frau®. The
seats are covered in Beige Silkway leather, as are the
door inserts, hat rack and the central armrest
between the front seats. A model which, in the month
of June 2013, Volskswagen Import China launched in
the Chinese market at the 2013 International Auto
Show in Shenzhen-Honk Kong-Macao.
This important agreement joins the deal signed with
the Fiat-Chrysler Group for overseas platforms and
the partnership initiated in 2009 with Jaguar Land
Rover, owned by Indian group Tata, for whom
Poltrona Frau has produced leather interiors for the
Jaguar XK, X152 coupé and spider as well as for the
new Range Rover.
During the year, the collaboration with the
Volkswagen Group continued (with the trademarks
VW, Audi and Porsche) in addition to the one with
Maserati. Luxury in Motion is the supplier of Pelle
Frau® for the latter‟s new Quattroporte and Ghibli.
In yachting, the collaboration with the Ferretti Group
evolved in 2013 with the production of a line of
suitcases and items for the Riva brand.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
54
Peninsula Hotel, Hong Kong
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
55
Kimbell Museum, Texas
Showroom Versace, Avenue Montaigne - Paris
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
56
Maserati Quattroporte
Ethiad
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
57
Support for the sales network
In 2013, 9 showrooms were opened, 4 of which in China.
Shanghai
DOS - Meda
GroupWashington
Beijing
Beijing
Wien
Group Group
San FranciscoDoha
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
58
Initiatives and projects in support of the market
During the course of 2013, many initiatives were
implemented by the three Brands with respect to the
market. The most significant ones are reported below.
Cassina kicked off the year 2013 with the launch of
the prestigious artistic project Karl Lagerfeld
photographie Cassina. This was the first time that Karl
Lagerfeld has chosen to carry out a photographic
project for a furniture brand. A great lover of design
and one of the most influential aesthetes of our time,
he approached the theme thanks to the artistic
project assigned by Cassina, letting his favourite
objects parade in front of the lense. The partnership
with Cassina was a natural development of his
passion for beautiful and timeless furniture. Cassina
has chosen to share the backstage of this exceptional
photographic shoot as well as the passion of Karl
Lagerfeld for the collections of Cassina in a video
which is made available on the dedicate website
(which at the end of the year attained close to
350,000 page views).
At the end of January, the showroom of Cassina in
Paris was transformed into an art gallery and
presented the authentic photographic tableaux of
Karl Lagerfeld, “gigantic portraits” of the Cassina
furniture. Paris marked the first step of a series of
cultural activities for 2013 with the opening of this
eagerly awaited exhibition. In April – at the time of
the Salone del Mobile - Karl Lagerfeld realized
scenery which animated the historical showroom of
Via Durini.
Again at the time of the Salone del Mobile, the first
floor of the Cassina showroom was transformed into
an experimental laboratory through the collaboration
with carlorattiassociati, an architectural firm which
operates between Turin and Boston.
The Our Universe project brought together seven
conceptual furniture prototypes which were
developed in order to investigate and narrate the
impact of digital and technological progress on design
furniture for the home. The interaction with Cassina
involves responding to this new way of living,
exploring and experimenting further in order to
produce this furniture in the future, in collaboration
with carlorattiassociati.
In addition, in the month of September, the
showroom of Milan hosted the global presentation of
the acquisition of the historical brand Simon on the
part of Cassina. The event included a cultural
exhibition for the design community as well as a press
conference and a series of meetings with the
commercial network.
Cassina shares its passion with Louis Vuitton for
Charlotte Perriand, one of the most pioneering
architects from the 20th Century, with a
comprehensive project which kicked off in Miami
during Design Miami/Art Basel Miami Beach 2013
with the exhibition “Charlotte Perriand – A Modernist
Pioneer, from Avant-garde Design to Photography”:
an encounter which combined furnishings, fashion
and photography to honour this magnificent
contemporary legend.
At the same time, a limited edition (1000 pieces) of
the LC4 CP chaise-longue of Le Corbusier, Pierre
Jeanneret, Charlotte Perriand, as an homage of
Cassina to Charlotte Perriand for the occasion of the
2014 Louis Vuitton Icôns Collection of.
The LC4 CP is highly innovative thanks to the
workmanship of the self-supporting mattress which
has been developed using Cassina‟s industrial know-
how and Louis Vuitton‟s expertise in saddler
craftsmanship: the natural cow hide leather supplied
by Louis Vuitton‟s tannery is attached directly to the
structure, and the contrasting dark brown saddle-
leather has been applied for the foot and headrest.
Characteristic Louis Vuitton details can be particularly
recognised in the yellow stitching of the natural
saddle leather and the elegant leather headrest straps
which recall the workmanship of the Louis Vuitton
signature handbags.
In the month of June, Poltrona Frau presented “Pausa
di Luce” in its showroom in Milan: the new project
between Luce della Vite e Poltrona Frau for “Casa di
Luce”.
“Pausa di Luce” is the armchair created by Poltrona
Frau for Casa di Luce, a project created by Lamberto
Frescobaldi in 2009 in order to celebrate the exclusive
and elegant style of this great wine with creations
that are rigorously Made in Italy and which are
inspired by Luce and strengthen its personality,
uniqueness and prestige.
The armchair “Pausa di Luce” was made available only
upon request for a selected number of Poltrona Frau
showrooms in Italy (Milan and Rome), in Asia (Tokyo,
Taipei, Hong Kong and Shanghai) and the US (New
York, Miami and San Francisco).
Luce and Poltrona Frau were ambassadors for Italian
excellence in the world, even with an international
road show where “Pausa di Luce” was the protagonist
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
59
of a series of events which were held between
October and November within the primary Poltrona
Frau showrooms in the world. The month of
November was the opportunity for a visit of the
primary Italian retailers of Poltrona Frau at the Luce
delle Vite estate in Montalcino.
During the design week in New York, in May, Poltrona
Frau presented two important projects within the
showroom in Wooster Street in Soho.
- “Barrique: the third life of wood”, in
collaboration with San Patrignano, resulted in a
collection of furnishings and accessories
designed by famous Italian and international
designers that were realized by the young
members of the San Patrignano community.
- The second project, “Wasteless”, is the result of
the collaboration – for the third consecutive year
– with the Parsons School of New York and with
the 15 students of the Product Design class. The
focus provided to students was to create objects
and small furnishing accessories by utilizing
portions of Pelle Frau® that were rejected by the
production process.
Two projects which confirmed the commitment of
Poltrona Frau to the issues of social responsibility and
sustainability. Intelligence of the hands by valorising
the handicrafts excellence and the involvement of
youth in the creation of design objects.
The Asian market was an important stage of the Jean-
Marie Massaud World Tour Design Exhibition. During
the course of the Asian tour, which included the cities
of Singapore and Taiwan, events were organized in
collaboration with local partners within the
showrooms of Poltrona Frau for the presentation of
the Archibald Special Edition. Designed by Poltrona
Frau in collaboration with the designer and
exclusively for the Asian market.
Luft is the new armchair of Walter Maria de Silva, the
director of the Design Volkswagen Group, in
collaboration with Audi design. A rigorous rendering
and balanced synthesis between high level
handicrafts and the tradition of Poltrona Frau with
the technology and innovation that characterizes
Audi design. Luft is the synthesis of two approaches,
even in the processing which integrates techniques of
the Residential segment with those of Luxury in
Motion.
The Luft armchair was presented in the month of
November within the showroom of Milan and in the
presence of numerous important guests.
During the course of the year, Poltrona Frau has
implemented a series of initiatives which aim to
valorise and optimally support its sales channels, such
as:
- "Excellent Shop” initiatives targeting the Italian
Frau Centres and Spaces-. A competition between the
Italian Frau Centres and Spaces which aimed to
award excellence in the preparation and presentation
of brands.
- The sales initiative “Essence of beauty” launched in
Italy and within the primary countries of the EMEA
region through the presentation of a Vanity Fair with
two “naked” structures of the same armchair for the
purposes of highlighting the unique and exclusive
peculiarities of the handicrafts processing of Poltrona
Frau.
- The opening of three new "Frau Spaces" (shops in
branded shops within multi-brand stores) in Italy
(Forlì, Bologna, Rome) and four in Europe.
Finally, a true partnership was established between
the Marangoni Institute and Cappellini. Excellent in
the schools of fashion and excellence in the world of
international design. The Marangoni Institute chose
Cappellini and the artistic direction of Giulio
Cappellini in order to furnish spaces for their students
from around the world, ranging from classrooms to
lounge areas: the comfortable Pebble sofas, the Inout
benches, the rigorous Fronzoni tables, the Julie, Lotus
and Crossoft mini-armchairs, the Sunset armchairs
and the Tate chairs and stools. Up until this point, the
affected centres were Milan, London, Paris, New York,
Shanghai, Mumbai and Chongqing.
During the Designer Days in Paris, in the month of
June, Cappellini presented the installation
“Metaforma” by Matali Crasset in its showroom.
The web and advertising campaigns
In 2013 the Poltrona Frau Group confirmed the two
advertising campaigns for Poltrona Frau and Cassina,
and its commitment to increasingly strategic digital
communications.
During 2013 Poltrona Frau continued its press
advertising campaign produced by Saffirio Tortelli
Vigoriti, entitled: “Poltrona Frau, l‟intelligenza nelle
mani” (“Poltrona Frau, the intelligence in our hands”)
which was started in 2011.
The stars of the campaign were the sewings,
finishings, stitching, details, folds and wrinkles of the
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
60
leather. The photo camera entered into the product in
order to narrate the knowledge and culture which lies
behind each individual detail. It is in these details, in
fact, that one recognizes the top Italian quality.
The 2013 campaign included six parties, each
dedicated to a model: Vanity Fair, Archibald, John-
John, Ginger, Lelit, Pillow. Sofas, armchairs, beds:
undisputed renditions of a brand and of values which
overall express craftsmanship, design, tradition and
innovation.
The campaign photographs were produced by
photographer Giovanni Gastel.
Cassina continued with the advertising campaign “il
design prima di tutto” (“design first”). The 2013
campaign focused on five products: the LC4 chaise-
longue and the LC2 armchair by Le Corbusier, Pierre
Jeanneret and Charlotte Perriand, which highlights
the new range of colours, the Maralunga sofa by Vico
Magistretti, and the Toot and Moov sofas designed by
Piero Lissoni. The campaign depicts the two products
in homes that are undergoing renovation, underlining
how they will be the main attractions of the future
home, with everything else of secondary importance.
Again for Cassina, the significant collaboration with
Karl Lagerfeld resulted in an important integrated
promotional project in France which included the
following: a photographic exhibition within the Paris
showroom, advertising within the newspapers Le
Figaro and Le Monde with ad hoc visuals, a web plan
on Youtube and on Le Figaro.it in order to make the
video of the backstage of the photographic service of
Karl Lagerfeld go viral.
During 2013 the Group strategy of increasing its
presence in digital channels continued.
The presence of the Group within the various Digital
channels has continued to grow, both in terms of
visitors as well as fans, thereby representing the most
rapid way to communicate.
The web sites have now reached 3 million page views,
which the Youtube channels recorded 450,000
visitors; ever since the Apps were created, they have
been downloaded 50,000 times and Facebook-Twitter
and Pinterest now count more than 50,000 followers,
thereby reaching more than 15 million potential
customers.
For the purposes of updating both the technologies
and the communication style, Poltrona Frau Group
has initiated a project to change the web platform
and completely restyle the websites.
In order to meet the demand of the expanded number
of connectivity devices, a responsive design
technology was adopted: the web sites will respond
by adapting themselves to the devices which are
being used by the visitors. There will therefore be an
optimal visualization for connections via PC, tablet or
smartphone.
The new structure will allow for more rapid Web
surfing due to both the conceptual re-designing of
the web sites as well as international tools for
accelerated viewing (CDN); all of this is implemented
in order to more effectively meet the informational
needs of both potential customers as well as sector
professionals and employees.
The product sheet has also been re-designed in order
to allow for simple conversion into a pdf format that
contains all the primary information. This tool is
particularly useful in the showrooms since it reduces
the use of printed brochures and the product sheet
can be sent by email or printed if necessary but
without useful accumulations of pre-printed
documentation.
The first site that went live was Cappellini and, in the
first months of 2014, the sites of Poltrona Frau,
Cassina and of the Group will go live.
Finally, in support of the opening of the Poltrona Frau
Museum, a dedicated website was created in order to
narrate the emotional story of the last 100 years. Not
only is logistical information provided but there is
also the opportunity to visit a part of the exhibition
area through a virtual tour. Videos and images
complete the offer of emotional contents linked to
the initiative.
Awards
Poltrona Frau won the Wallpaper* Design Award 2014
with the GranTorino by Jean-Marie Massaud. In
London, an extremely select panel comprising the
editorial team of Wallpaper*, Victoria Beckham, Spike
Jonze, Thaddaeus Ropac, Michael Chow, Ron Gilad
and Thom Mayne, awarded the GranTorino sofa
designed by Jean-Marie Massaud, the prestigious
Wallpaper* Design Award 2014 for the category “Best
Room Mates”.
Each January sees the magazine Wallpaper, an
authoritative international point of reference in the
design, fashion and lifestyle segment, assign the
Design Awards, namely the "best of" of design,
architecture and fashion, evaluating the very best
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
61
creativity has to offer for the previous twelve months
and thereby decreeing the products and designs that
will set the trend worldwide.
Combating counterfeits
The Poltrona Frau Group continued with the activities
it launched in 2012 to defend designs against
counterfeiting, with particular reference to the
Poltrona Frau and Cassina brands, which own the
reproduction rights for some of the most important
architects of modern design.
Legal action continued in 2013 both in Europe (where
reference regulations and legal theory on this issue is
now consolidated) and in Italy, awaiting the 2014
deadline (result of the “Mille Proroghe” Decree of
2012) when the European directive on design
copyright will finally enter into force.
Actions for the seizure and destruction of counterfeit
furniture took place in Europe with the aim of
protecting copyright and safeguarding the Group‟s
products against counterfeiting.
On 18 April 2013, the Court of Appeals of Milan,
following up on the sentence of the Court of Bologna
of 2012, newly and definitively recognized, for all
legal purposes, the protection of copyright and
intellectual property rights of creative nature, even
with regard to design works. The rights of Cassina, the
Le Corbusier foundation and the heirs of the co-
authors were recognized with respect to a renowned
Tuscan manufacturer which operates throughout
Europe and who was reproducing the most iconic
pieces of the famous Swiss, and naturalized French,
architect and designer.
Following the presentation of the document
“Manifesto” to the institutions during a concluding
convention which brought together all the best ideas
which emerged from the project Be Original of Elle
Decor Italia, the second half of 2013 witnessed the
launch of the second phase of the initiative. The
project‟s objective is to act as the spokesperson of all
parties in Italy interested in the protection of
creativity and originality and well as in the combat of
counterfeiting of industrial design: institutions,
companies, designers and the entire Italian furniture
sector.
From 21 to 28 October 2013, the companies of the
Poltrona Frau Group were featured – along with the
primary furniture companies that are most affected
by counterfeiting – within the shop windows of La
Rinascente of Milan – Cassina with the iconic
Maralunga sofa of Vico Magistretti and Cappellini S-
Chair of Tom Dixon. At the same time, an online
catalogue dedicated to design icons was launched,
serving as a tool through which the consumer can
become informed on the identity and originality of a
product.
The US market is also fully involved in the defence
against counterfeiting with targeted market
initiatives.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
62
Poltrona Frau Showroom, Beijing
Cassina Showroom, Beijing
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
63
Poltrona Frau Group Showroom, Doha
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
64
THE ENVIRONMENT
In 2013 the Poltrona Frau Group continued with its
commitment to reducing its environmental impact,
focusing particularly on reducing its carbon dioxide
emissions through the production of renewable
energy, streamlining the logistics system and
minimising the car journeys made by its employees.
Production and energy consumption
The 2010 installation of the photovoltaic plant at the
Tolentino site produced 1,433,605 kWh of electricity
in 2013 (compared to a nominal installation capacity
of 2,100,000 kWh), avoiding the atmospheric
emission of 900 tonnes of CO2. Comprising 18,000
photovoltaic modules, the plant is perfectly
integrated with the roofs of the production site to
reduce landscape impact to a minimum. Consumption
at the Meda site decreased compared to 2012, using
1,780,752 kWh during 2013. The data for the Detroit
plant are in line with those recorded in 2012.
Electricity consumption (kWh) 2011 2012 2013
Tolentino 1,500,000 1,599,064 1,881,000
Meda 2,012,606 2,099,258 1,780,752
Detroit n/a 726,960* 746,000
* activities relating to the period April-December 2012
At the Meda plant the replacement of the diesel fuel
boilers with more efficient condensation boilers
fuelled by natural gas became effective in 2013; this
decision brought CO2 emissions to zero, a process that
began in 2011. As illustrated in the table below, the
consumption of diesel fuel – which had fallen by 65%
between 2012 and 2011 – is equal to zero. At the
same time, following the activation of the new
boilers, there were increases in natural gas
consumption at the Meda site.
* activities relating to the period April-December 2012. Adjusted
figure
Over the last year, natural gas consumption at the
Tolentino site increased considerably compared to
2012.
This was due to the installation of the heating system
within the new Historical Museum inaugurated at the
end of 2012. As described above, the increase in gas
consumption recorded at the Meda site was linked to
the replacement of the diesel fuel boilers.
Natural gas consumption (m3) 2011 2012 2013
Tolentino 384,799 346,536 382,000
Meda 181,962 246,528 283,304
Detroit* n/a 203,825 110,153
* activities relating to the period April-December 2012. Adjusted figure
Diesel fuel consumption (lt.) 2011 2012 2013
Meda 81,000 28,000 0
Detroit* n/a 0* 0
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
65
Production of waste
The production of non-hazardous waste at the
Group‟s Italian production sites has increased in the
last year.
At the Meda site, and following a particularly onerous
2012 whose causes are due to the initiation of certain
important activities (Logistics for Luxury Interiors,
R&D prototypes office, Engineering Services offices of
Cassina and Cap Design, Lighting Divisions Office)
within the Lentate site sul Seveso site, resulting in the
disposal – during the woryard and installation
activities – of significant quantities of materials and
semi-processed products, normal levels were restored
in 2013.
Production of non-hazardous waste at the Tolentino
site increased by approximately 15%, from 298
tonnes in 2012 to 350 tonnes in 2013. This increase is
largely associated with the growth of the Luxury in
Motion division.
Non-hazardous waste (Tonnes) 2011 2012 2013
Tolentino 249 298 350
Meda 601 671 469
Detroit n/a 431* 62
* activities relating to the period April-December 2012
In 2011 the reason for the increase in hazardous
waste at the Meda site was due to reorganisation of
the plant, which led to the disposal of large quantities
of semi-processed and stored materials. The 2012 and
2013 figures shows that the situation has returned to
normal, in line with previous years.
At the Tolentino site, the hazardous waste produced
in 2013 decreased considerably compared to the
previous year, largely due to the important R&D work
which led to the replacement of solvent-based
adhesives with water-based products that are not
dangerous. The increase in the figure for the Detroit
plant is linked to waste disposal activities for non-
compliant materials (specifically glue).
Hazardous waste (Tonnes) 2011 2012 2013
Tolentino 9.70 11.9 8.7
Meda 5 1.07 1.02
Detroit n/a 0.5* 13
* activities relating to the period April-December 2012
Water consumption
The Tolentino site maintained its consumption levels
of the previous two years. The Meda site, however,
increased its water consumption by circa 13%. On the
contrary, the Detroit site reduced its consumption by
circa 40%.
Water consumption (m3) 2011 2012 2013
Tolentino 6,500 6,600 6,600
Meda 5,625 5,438 6,313
Detroit n/a 3,341* 1,869
* activities relating to the period April-December 2012. Adjusted figure.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
66
Poltrona Frau Archive
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
67
As part of its logistics activities, the Poltrona Frau
Group initiated two important initiatives during the
course of 2013, the first at the Group level and the
second focused on the production site of Meda.
Bringing the logistics hub closer
The closer distance of the logistics hub to the
transportation carriers led to an energy “savings” that
can be quantified as 45,000 km less that are travelled
each year by transportation vehicles which transport
our products to the sorting hub. These activities were
initiated in September and the estimated impact for
2013 is therefore equal to 15,000 km less.
Insourcing of contractors
During the course of 2013, the insourcing of
contractors for Meda was implemented for the
Cassina plant. By identifying a contractor which has
begun to directly operate within one of our
production plants, it is possible to save an additional
2,000 km/year (the estimate was made by comparing
the previously optimized data of 2012).
Streamlining logistics
In 2013 the project - launched in 2011 - to
streamline the process of the delivery of the products
to the Group (inbound logistics) by leather suppliers,
important partners for the entire Group, continued. By
a process that involved listening to the requirements
of its suppliers, the Group took control of inbound
logistics, previously managed by each single supplier
using their own means, and centralised it.
Using a single carrier led to a reduction in costs for
both suppliers and the Group, and at the same time a
reduction in environmental impact, optimising
transport deliveries.
Both in 2012 and 2011, this process led to a
reduction in the number of journeys made, the
equivalent of 60,000 km, corresponding to a 53-tonne
reduction in CO2.
Minimising the amount of car journeys made by
employees
The expansion of the videoconferencing infrastructure
and related incentive scheme even in 2013 further
contributed to reducing carbon dioxide emissions.
As well as generating savings from an economic point
of view, linked to the elimination of travel costs,
using this technology also prevented the atmospheric
emission of around 800 tonnes of CO2 in 2013 (in
2012 the total was 700 tonnes).
The use of videoconferencing also reduces the risks
that are intrinsically linked to travel, particularly by
car, increases the quality of the work and makes it
easier for employees to reconcile work with their
private lives.
Sustainable paper consumption
The Poltrona Frau Group has already initiated, as of
2012, a project to encourage a “sustainable paper
consumption environment”. In particular:
- It has encouraged its staff to use digital
means - “read, send and archive documents
digitally”
- It has eliminated “single function” devices,
adopting only “multipurpose” devices and at
the same time reducing the quantity of
equipment on Company premises
- It has chosen ENERGY STAR® devices
- It has chosen devices that use solid ink
cartridge technology.
In particular, the solid ink technology used (Xerox-
ColorQube) eliminates the use of toner, typical of
classic multipurpose laser machines, adopting tank-
free wax cartridges.
The environmental impact calculated in terms of the
“Total waste produce from printing 22,000 sheets per
month over 4 years” equals 90% less waste compared
to a multipurpose colour-equivalent laser (37 kg vs.
370 kg).
New “green” Data Center of Poltrona Frau
During the course of 2013, Poltrona Frau initiated a
project for restructuring the Data Center in Tolentino.
The project also took in account, in particular,
consumption in addition to elements of continuity
and security.
A decision was therefore made to utilize closets that
are capable of optimizing the flow of air generated by
the “air conditioners” within the closet itself. The
system aspirates the hot air produced by the servers
in the back, then cools it and discharges it to the
front of the servers in order for it to be collected by
the cooling fans of the servers themselves.
The uninterrupted power suppliers were also renewed
by integrating and optimizing them within the
solution.
In connection with these activities, a strategy of
consolidation of the servers themselves was
implemented though virtualization.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
68
This strongly contributed to improving the efficiency
of the Tolentino Data Center, both from an energetic
and a management/operational perspective.
The consolidation of the servers, along with the use of
more efficient devices which regulate operations and
start-up based on the real needs of the Data Center,
will allow for 40% savings in kWh/year and in CO2
consumption.
HR Portal
As part of a strategy to reduce the use of paper, the
Group has introduced an HR Platform that is used to
not only manage payrolls and attendance but also -
for e.g. - manages the flow of authorizations and
publishes payslips, W-2 forms, forms in general and
company communications. This led to the following:
- A more efficient and rapid process
- No more need to print and fill out printed
forms for justifications which, within the
authorization process, could also be printed
multiple times per request
- No more need to print payslips, W-2 forms,
and forms in general.
Certifications
The Poltrona Frau Group has also continued the
process of certification in 2013.
The certifications obtained by the Group guarantee
improved organization and performance –
objectifying production methods, prerequisites and
qualitative standards - and are synonymous of the
commitment to the environment and to the health
and safety of its employees.
The Poltrona Frau Group obtained, and commits to
maintaining, the following system certifications over
the years.
Poltrona Frau has the complete set of certifications:
QUALITY Management System Certification
pursuant to norm UNI EN ISO 9001 for the
Residential, Luxury Interiors and Luxury in Motion
segments
QUALITY Management System Certification for
the AUTOMOTIVE SECTOR pursuant to norm
ISO/TS 16949 for the Luxury in Motion segment
ENVIRONMENTAL Management System
Certification pursuant to norm UNI EN ISO 14001
for the Residential, Luxury Interiors and Luxury in
Motion segments
WORKPLACE HEALTH AND SAFETY Management
System Certification pursuant to international
norm BS OHSAS 18001 for the Residential,
Luxury Interiors and Luxury in Motion segments
Poltrona Frau, having obtained and effectively
integrated the certification of its Quality,
Environment and Safety Systems, constantly and
carefully pursues its goal of constant improvement of
its activities. This objective is a distinctive element
and competitive edge for the Organisation itself.
The company obtained - in September 2012 , the
centennial anniversary of its founding – a
certification relative to the Worker Health and Safety
Management System pursuant to OHSAS 18001.
This was the last step in a process which began in the
1990‟s and in which, as of the 2000‟s, TUV Italia
confirmed or assigned the complete set of
certifications to the company.
During the course of 2013, Cassina also obtained the
complete set of certifications:
QUALITY Management System Certification
pursuant to norm UNI EN ISO 9001 for the
Residential and Luxury Interiors segments
ENVIRONMENTAL Management System
Certification pursuant to norm UNI EN ISO 14001
for the Residential and Luxury Interiors segments
WORKPLACE HEALTH AND SAFETY Management
System Certification pursuant to international
norm BS OHSAS 18001 for the Residential and
Luxury Interiors segments
Following the attainment – during the course of 2013
– of the BS OHSAS 18001 certification, in October
Cassina S.p.A. was awarded with the Certificate for
Excellence, created by Certiquality, a Certification
Institute which follows and assesses the company
during this significant growth period.
This important recognition awards those
organizations which, after obtaining and efficiently
integrating the certifications for the Quality,
Environment and Safety Systems, constantly and
carefully pursue the goal of constant improvement of
operational activities. This objective is a distinctive
element and competitive edge for the Organisation
itself.
Delivery of the Certificate for Excellence for Cassina
S.p.A. serves as a stimulus for continuous
improvement for the company.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
69
Cappellini, as of today‟s date, has obtained the
following certifications:
QUALITY Management System Certification
pursuant to norm UNI EN ISO 9001 for the
Residential segment
ENVIRONMENTAL Management System
Certification pursuant to norm UNI EN ISO 14001
for the Residential segment
Both certifications were obtained in 2012.
As of 2011, Cappellini has decided to initiate an
important process of certification of the Greenguard
product.
Greenguard is a program of voluntary certification for
controlling emissions which is based on the most
rigorous standards in the world.
The Greenguard certification trademark is recognized
by more than 400 codes, programs and international
rating systems, including LEED® - Leadership in
Energy and Environmental Design – a system for
certification of buildings which is applied in more
than 140 countries in the world.
The program requires the execution of testing on a
quarterly basis on certified products and materials.
The tests include both the control of total emissions
as well as the auditing of emissions of more than 350
individual compounds.
Companies which select Greenguard select to offer
their customers maximum guarantees in relation to
the control of emissions as well as products designed
with maximum attention to health and wellbeing.
At this time, the Cappellini products which are
Greenguard certified are as follows:
Tate color, Lotus, Wanders Tulip, Dalia, Capo, Hi pad,
Low pad, Sunset, Supersoft, Elan, Gambetta.
Finally, and with regard to the production site in
Detroit, Poltrona Frau plans to obtain the ISO/TS
16949 certification for May 2014.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
70
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
71
PEOPLE
The Poltrona Frau Group focuses close attention on
people, represented by its employees and the
communities in which it works. During the year the
Group launched various initiatives focused on its staff
and the company, promoting the creation of a design
culture and supporting local or humanitarian
initiatives.
Employees
At international level, the number of Group employees
has decreased significantly from 972 in 2012 to 889
in 2013. This decrease is mainly attributable to the
fact that the Shengzhou site is no within the scope of
consolidation in addition to being due to the decrease
in volumes in the last months of the year of the
Detroit plant.
In Italy, the Group‟s workforce has remained
essentially unchanged over the last three years, from
723 staff in 2011 to 733 in 2012, reaching 740
employees at the end of 2013, up 1% on the previous
year.
Group composition at global level
2011 2012 2013
No. Women % Men % No. Women % Men % No. Women % Men %
Executives 37 0 0% 37 100% 29 0 0% 29 100% 28 1 4% 27 96%
Middle
managers
394
158
40%
236
60% 71 21 30% 50 70% 70 18 26% 52 74%
White-
collar
workers
338 176 52% 162 48% 338 175 52% 163 48%
Blue-collar
workers 485 155 32% 330 68% 534 168 31% 366 69% 453 138 30% 315 70%
Total 916 313 34% 603 66% 972 365 38% 607 62% 889 332 37% 557 63%
Group composition at national level
2011 2012 2013
No. Women % Men % No. Women % Men % No. Women % Men %
Executives 28 0 0% 28 100% 23 0 0% 23 100% 23 1 4% 22 96%
Middle
managers 53 15 28% 38 72% 49 14 29% 35 71% 50 12 24% 38 76%
White-
collar
workers
253 122 48% 131 52% 252 136 54% 116 46% 252 135 54% 117 46%
Blue-collar
workers 389 107 28% 282 73% 409 112 27% 297 73% 415 115 28% 300 72%
Total 723 244 34% 479 66% 733 262 36% 471 64% 740 263 36% 477 64%
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
72
As regards Italy, the restructuring and re-
organizational process, which began in January and
continued throughout 2013, affected the company
organization, particularly the sales structures of the
Group without significantly affecting, however, the
historical trend in turnover.
The company turnover rate, calculated as the
algebraic sum of the number of people joining and
leaving during the year divided by the average
number of employees, was in fact lower compared to
the previous two years.
In 2011 the turnover was 14%, in line with the
14.4% of the subsequent year 2012 while during
2013 the company turnover rate slightly decreased to
10.3%.
The number of years‟ service with the company
remains unchanged compared to 2012, standing at 13
years in 2013. There has been a slight increase in the
number of employees hired with permanent contracts
compared with 2012, standing at 97.3% compared to
95.1% the year before. Likewise, the average age of
employees increased from 41.5 in 2012 to 43 in 2013.
The staff composition by gender in 2013 was 36%
women and 64% men, exactly in line with the
percentages of the previous year.
The number of hours of strikes in Italy during 2013
was 1,270, approximately 1.7 hours per employee.
The number of hours used from the temporary
unemployment scheme in 2013 was 22,407.05, or
approximately 3.8 working days per employee.
Accidents, although not serious in nature, drastically
decreased during 2013 in the Tolentino site due to
the commitment and growing focus placed on
training and communication while they increased in
the Meda site due to the timing linked to deliveries of
orders for the sector.
With regard to the Detroit site, the reporting of the
last two years highlights the fact that no accidents
occurred in either 2012 or 2013
Accident indices for Meda site
Meda site 2011 2012 2013
Frequency index [1] 15.8 4.69 27.20
Severity index [2] 0.16 0.14 0.19
Occurrence rate [3] 2.5 0.74 4.23
Number of accidents 7 2 11
Accident indices for Tolentino site
Tolentino site 2011 2012 2013
Frequency index [1] 10.82 14.87 5.04
Severity index [2] 0.15 0.46 0.05
Occurrence rate [3] 1.7 2.51 0.89
Number of accidents 8 12 4
[1] Frequency index: this index represents the ratio between the number of accidents, excluding those while travelling, occurring in a year and
the total number of workable hours in that year. This figure is then multiplied by 1,000,000 to make it more comprehensible.
[2] Severity index: this is the ratio between the number of days of absence from work in a year, excluding those due to accidents occurring while
travelling, and the total number of workable hours in that year. This figure is then multiplied by 1,000 to make it more comprehensible.
[3] Occurrence rate: this is the ratio between the annual number of accidents, excluding those while travelling, and the number of employees.
The result is then multiplied by 100.
The process launched in recent years of the
Performance Management & Development, the tool
that makes it possible to develop a business culture
targeted at performance and which provides the input
for enhancing and improving the skills of the
company population, has continued. The Group also
strengthened its compensation system, developing a
stronger connection between the performance of
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
73
each employee and the bonuses granted to them
through the MBO process.
Finally, various initiatives were launched that involved
the entire company population, such as the
implementation of workflow management to manage
and approve attendance as well as to justify absences
as well as an increase in job posting initiatives
dedicated to internal staff.
With regard to training and the specific theme
pertaining to “Safety training” which deals with the
mandatory basic themes of “Personnel training” and
“First Aid”, it is hereby reported that the hours
dedicated in 2013 were 5,662 for a total of 673
participations while in 2012 they totalled 2,565 for a
total of 670 participations.
Technical/managerial training included topics such as
foreign languages, MS Office, Time Management and
the management of organizational behaviours; in
2013, it involved 105 participants for a total of 1510
hours of disbursed training, an increase with respect
to 2012.
Lastly, as confirmation of the close bond between
Poltrona Frau and the Marche region, the agreement
signed between Poltrona Frau and the IPIA Institute
(Professional Institute for Industry and Craft) - in
honour of Renzo Frau with a ceremony in December
2012 - also continued in 2013; IPIA has centres in
Sarnano, Tolentino and San Ginesio - the agreement
concerns the company‟s plan to host students as part
of the alternating study/work training courses.
This will allow students to gain experience in the
company‟s working environment and to better
understand the production mechanisms. The company
aims to play an active role in the training of future
craftsmen, supporting a project able to promote the
trades and in particular enhance the skills of young
people.
Internal communications
The Poltrona Frau Group utilizes different tools in
order to guarantee communications within the
company and between departments and across levels.
Even during the course of 2013, the meetings
established by the Group during the course of the
previous years continued. First of all, the contact
meetings – half-yearly appointments in which the
entire company population of Meda and Tolentino
directly meet with the CEO in order to be updated on
company trends and on the relevant issues of the
Group. Secondly, the management meetings, annual
meetings dedicated to all of company management
and where mid-level managers and executives
exchange information on the progress o the Group
and on future company strategies.
Social and solidarity initiatives
Again in 2013 various activities were completed in
support of the culture of design, aiming to preserve
and promote the creations of designers past and
present.
Cassina was actively involved in cultural initiatives to
promote the authentic value of design and to reveal
its creative history.
In the month of March, the Company participated as
a sponsor in the exhibition “Charlotte Perriand et le
Japon”, within the Musée d‟Art Moderne di Saint
Etienne. A few models were lent and certain
furnishing elements were reconstructed.
The historical exhibition, “Proposition d‟une synthèse
des arts Le Corbusier, Fernand Léger, Charlotte
Perriand” was reconstructed for the first time due to
the contribution of Cassina, presented in Tokyo in
1955 by Charlotte Perriand. A 400 sq.m.
reconstruction which occupied the central area of the
Musée d‟Art Moderne.
Cassina has continued to promote the cultural values
of furniture by means of the partnership with the
Triennale Design Museum, now in its sixth edition, at
the time of the exhibition “The influenza syndrome”.
Upon invitation from the Triennale to the leading
companies of Italian design, Cassina created the
installation “An extraordinary anomaly” which was
entrusted to the architect Mario Bellini: a cube of 3
sq.m. completely filled with 30 abstract white LC2
armchairs of Le Corbusier, Pierre Jeanneret. Charlotte
Perriand illustrated the visionary productive strategy
of Cassina when, in 1964, it acquired the exclusive
global rights of the production and distribution of
these masterpieces of modernity. Mario Bellini
emphasized the modernity of the new creativity of Le
Corbusier and the co-authors, beginning with the
ideological force of the original project and its
application as a constant representation of the Italian
production process. Small models of iconic products,
positions amongst the LC2 armchairs, were utilized as
references for the production of Cassina which
instinctively followed the great intuition of Le
Corbusier.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
74
In the month of April, during the Salone del Mobile,
the travelling exhibition “Bracciodiferro”, Gaetano
Pesce – Alessandro Mendini, 1971 – 1975, was held.
The exhibition was hosted initially in the 15th century
Library of Santa Maria Incoronata in Milan, managed
by Anty Pansera in collaboration with Maria Teresa
Chirico, and promoted by Fragile with the support of
Cassina. The exhibited pieces from the Historical
Archive of Cassina included: the Golgotha chair of
Gaetano Pesce, the Terra chair and the Monumentino
da Casa chair of Alessandro Mendini.
In June, Cassina had the honour of witnessing the
first authentic reconstruction of the Cabanon, the
summer house designed by Le Corbusier, and
exhibited within the Le Corbusier exhibit: “An Atlas of
Modern Landscapes” managed by The Museum of
Modern Art di New York. The Cabanon arrived at the
MoMA as a loan from Cassina in order to highlight
the efforts of the brand in preserving the assets of the
great architectural masters.
Cassina was a partner in the exhibition Le Corbusier
et la question du brutalisme at the J1 during the
event “Marseille European Capital of Culture 2013”.
The Company lent a series of furnishing from the Le
Corbusier, Pierre Jeanneret, and Charlotte Perriand
collections for the common areas of the exhibition.
Poltrona Frau has always been active in supporting
cultural and training initiatives. During the course of
2013, it supported, in particular, the following: the
NEMETRIA training centre of Foligno, which each year
organizes the Ethics and Economics Conference, as
well as the Festival Armonie della Sera, managed by
the Marche Music Association of Maestro Marco
Sollini. In addition, it was a technical sponsor for the
“Giornate Internazionali del Pio Manzù” (International
Days of Pio Manzù) in Rimini as well as the “Festival
dei Due Mondi” (Festival of Two Worlds) in Spoleto.
In particular, in the month of May, Poltrona Frau
participated in the “Notte dei Musei” (Museum
Night), with the extraordinary nighttime opening of
the Poltrona Frau Museum. The project of Michele De
Lucchi narrates the history of the company and the
product through videos, furnishings, materials and
archived documents.
Finally, Cappellini participated as a sponsor of the
exhibition “Warhol” in Milan within Palazzo Reale. A
greater monographic exhibition dedicated to Andy
Warhol. Five InOut sofa‟s of Jean-Marie Massaud and
ten Mr B. chairs of Francois Azambourg were the
protagonists of the exhibition and were usable by
visitors. Their lucid lacquered colours and accentuated
forms clearly refer to the distinctive elements of
American Pop Art.
During the course of the year, the Poltrona Frau
Group supported different solidarity initiatives; in
particular, the companies of the Group participated,
by supplying their products, in the sixth edition of
Love Design, a charity event in Milan in November.
Love Design is an important fund-raising event which
was created in 2003 and sponsored by Airc
(Associazione Italiana per la Ricerca Cancro, “Italian
Association for Cancer Research”) and Adi
(Associazione per il Disegno Industriale, “Association
for Industrial Design”), for the best in Italian
oncological research. The 2013 edition reported
23,000 visitors.
The Group is also careful in selecting suppliers that
are sensitive to the issue of sustainability. For e.g., at
Christmas, was selected a partner which collaborated
with ActionAid, the international NGO which combats
poverty and hunger in the most marginalized
communities, in the project “I DONI CON IL CUORE”
(GIFTS OF THE HEART). Each Christmas gift contained
a heart-shaped card with a description of the project:
guaranteeing, for six months, a daily meal to children
between the ages of 6 and 36 months and resident in
the villages of Paudi Bhuyan in eastern India.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
75
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
76
THE CORPORATE GOVERNANCE SYSTEM
Poltrona Frau S.p.A. is an issuer of shares listed on
the STAR segment of the Borsa Italiana S.p.A.
electronic stock market. The complete framework of
the company‟s corporate governance system is
analytically described in the “Report on corporate
governance and ownership structures” prepared in
accordance with Art. 123-bis of Legislative Decree
no. 58/1998 (hereinafter also “Consolidated
Finance Act”) and approved by Poltrona Frau‟s
Board of Directors on 14 March 2013.
The information shown below intends to provide a
summary of the report, taking into account the
minimum content required by the aforementioned
regulation and recommendations provided by the
Borsa Italiana Corporate Governance Code, with
which Poltrona Frau complies.
The Report on corporate governance and ownership
structures, published together with management‟s
report on operations, is available from the Investor
Relations / Governance section on the company‟s
website:
http://www.poltronafraugroup.com.
Compliance with the Borsa Italiana S.p.A. Corporate
Governance Code and Poltrona Frau S.p.A.‟s Code of
Ethics.
In line with the values confirmed in the Code of
Ethics are the principles which Poltrona Frau
pursues in outlining an administrative and control
structure suited to its dimensions and the
complexity of its operating structure, in adopting
an adequate and effective internal control system,
in communicating with shareholders and other
stakeholders, taking particular care to update
available information on the company‟s website.
The Poltrona Frau Report on Corporate Governance
acknowledges the recommendations of the Borsa
Italiana Regulations, adapting them to the
company, interpreting them in terms of
organisational and dimension-related issues, and
enhancing them at the same time. Following the
adoption of the provisions outlined by the
Regulations, the Board of Directors introduced a
series of principles designed to strengthen the
provisions laid down by the Regulations, and more
specifically:
(i) the Board of Directors maintains a
position of absolute centrality in the
company‟s Corporate Governance
system, with broad expertise, also in
terms of the organisation of the
company and the Group and the
internal control system;
(ii) the most relevant transactions of the
company and its subsidiaries are
subject to the approval of the Board,
which pays particular attention to
situations in which directors have a
direct or indirect interest, and
operations with related parties;
(iii) a central role has been reserved to the
Board of Directors as regards the
definition of sustainability policies, to
whom, among other things, the
Sustainability Report is submitted for
approval
The Corporate Governance structure
Poltrona Frau‟s Corporate Governance structure is
based on the traditional model, which - with the
role of the Shareholders‟ Meeting unchanged –
assigns the management of the business to the
Board of Directors, supervisory functions to the
Board of Statutory Auditors and the legal auditing
of the accounts to the Independent Auditors hired
by the Shareholders‟ Meeting.
The Board of Directors, appointed by the
shareholders in an ordinary general meeting on 27
April 2012, is made up of 11 members, three of
whom are independent directors in accordance
with the requirements of the Corporate Governance
Code and the Borsa Italiana Regulations.
The model also clearly distinguishes between the
functions of the Chairman, the Vice Chairman and
the CEO who, as established by the Articles of
Association, are responsible for representing the
Company.
The Board has created three internal committees
which have consultancy and proposal functions:
the Internal Control and Corporate Governance
Committee, the Appointments and Compensation
Committee and the Related Party Transactions
Committee.
As well as being able to offer the Board
consultancy and proposals with regard to the
internal control system, the Internal Control and
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
77
Corporate Governance Committee must also
supervise the observance and periodic updating of
the corporate governance rules and the respect for
any codes of conduct adopted by the company and
its subsidiaries. The Appointments and
Compensation Committee carries out consultancy
and proposal functions. More specifically, it makes
proposals to the Board of Directors regarding the
appointment and remuneration of the Chief
Executive Officers and other directors with specific
titles, periodically evaluates the criteria adopted for
the remuneration of directors with strategic
responsibilities, and provides the Board of Directors
with recommendations regarding the use of stock
option plans and other incentive systems based on
shares, remuneration policy in general and the
annual remuneration report.
The Related Party Transactions Committee has
consultancy, proposal and supervisory functions
with regard to Transactions with Related Parties, in
accordance with Consob Regulation no. 17221 of
12 March 2010, as amended. During the year the
three committees met six times, three times and
once, respectively.
Internal Audit activities were assigned to the
independent auditing company Protiviti S.r.l as of
the month of January 2013. The Board of Directors
appointed – following approval from the Internal
Control and Corporate Governance Committee –
Mr. Giacomo Galli, Managing Director of Protiviti,
as the Internal Audit Manager.
During the year of reference of the report, and as of
the date of his appointment, the Internal Audit
Manager:
• had direct access to all information that
could be useful for implementing his task;
• reported on his work periodically to the
Internal Control and Corporate Governance
Committee as well as the Board of Statutory
Auditors.
During the course of 2013, in particular, the
Internal Audit Manager:
• planned the auditing activities in relation
to the adequacy and effectiveness of the internal
control and corporate governance system in
addition to drafting the Audit Plan approved by the
Internal Control and Corporate Governance
Committee on 5 March 2013;
• reported on the outcomes of all auditing
operations which were implemented through the
delivery of auditing reports to the members of the
Internal Control and Corporate Governance
Committee;
• periodically reported on his activities as
well as on defined action plans; provided an
evaluation – for those processes subject to auditing
activities – on the suitability of the internal control
system and sent them to the Internal Control and
Corporate Governance Committee as well as the
Director entrusted with the internal control system
and to the Supervisory Body for the auditing
operations that are relevant on the basis of
Legislative Decree 231/2001;
• supported the executive entrusted with the
reporting of administrative/accounting processes -
as well as during the implementation of auditing
and monitoring activities for the Internal Control
System that are correlated to financial reporting –
in order to meet the financial statement
certification requirements pursuant to Law
262/2005.
As regards the Organisational Model pursuant to
Leg. Decree 231/01, until now applied exclusively
to Poltrona Frau S.p.A., it was subject to a review
and integration process which ended in November
2013. Again in 2013 the training and updating of
company staff was initiated. The application of the
Organisational Model is also expected to be
extended to the two main subsidiaries: Cassina
S.p.A. and Cap Design S.p.A. within the first half-
year of 2014.
The figure below shows the company‟s governance
structure as at 13 March 2014 in graph form:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
78
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
79
Disclosures pursuant to the privacy law
It is hereby confirmed that pursuant to Legislative Decree no. 196 of 30 June 2003, as amended, the data
security plan has been voluntarily updated and lodged at the Company‟s administrative offices.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
80
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
81
Poltrona Frau S.p.A.
CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
82
Living area with Cappellini novelties for 2013
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
83
Consolidated Statement of Financial Position
ASSETS (thousands of Euro)
Note 31 december
2013
31 december
2012 (*)
NON-CURRENT ASSETS
Goodwill 1 18,121 17,465
Brands with indefinite useful life 2 66,120 63,820
Other intangible assets 3 4,796 4,842
Tangible fixed assets 4 39,480 40,214
Investments in associates and joint venture companies 5 9,782 10,380
Other investments 6 3 136
Financial assets available for sale 7 2,133 1,344
Other non-current assets 8 9,055 7,443
of which from related parties 42 6,390 3,600
Deferred tax assets 9 6,472 6,457
TOTAL NON-CURRENT ASSETS 155,962 152,101
CURRENT ASSETS
Inventory 10 65,572 53,989
Trade receivables 11 54,628 52,110
of which from related parties 42 3,948 4,766
Other current assets 12 7,743 14,264
of which from related parties 42 977 4,942
Derivative financial instruments 13 46 15
Cash and cash equivalents 14 20,638 9,068
TOTAL CURRENT ASSETS 148,627 129,446
Assets held for sale 15 - 1,072
TOTAL ASSETS 304,589 282,619
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
84
Consolidated Statement of Financial Position
LIABILITIES (thousands of Euro)
Note 31 december
2013
31 december
2012 (*)
Share capital
34,604 34,810
Share premium reserve
1,238 2,530
Fair value reserve
1,213 459
Other reserves
5,927 6,607
Profits (losses) of previous year
26,670 25,420
Group's share of profit/(loss) 4,582 1,250
TOTAL GROUP SHAREHOLDERS' EQUITY 74,234 71,076
MINORITY INTEREST
Minority interest's share of capital and reserves
(312) (140)
Minority interest's share of profit/(loss) (49) (126)
TOTAL MINORITY INTEREST (361) (266)
TOTAL SHAREHOLDERS' EQUITY 16 73,873 70,810
NON-CURRENT LIABILITIES
Medium-long term borrowings 17 43,148 48,429
Employee benefits 18 5,778 5,450
Provisions for risks and charges 19 3,756 5,092
Deferred tax liabilities 20 22,395 22,183
Other non-current liabilities 21 1,358 554
TOTAL NON-CURRENT LIABILITIES 76,435 81,708
CURRENT LIABILITIES
Trade payables 22 70,857 59,197
of which from related parties 42 1,481 973
Due to banks and other loans 23 51,480 45,837
Tax payables 24 5,557 2,513
Derivative financial instruments 25 690 1,360
Other current liabilities 26 25,697 20,622
of which from related parties 42 4,828 132
TOTAL CURRENT LIABILITIES 154,281 129,529
Liabilities held for sale 27 - 572
TOTAL LIABILITIES 230,716 211,809
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 304,589 282,619
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
85
Consolidated Income Statement Note
31 december
2013
31 december
2012 (*) (thousands of Euro)
Revenues fron sales
265,359 238,497
of which from related parties 42 31,954 32,378
Other revenues and income
7,485 8,491
of which from related parties 42 1,273 1,465
REVENUES 28 272,844 246,988
Costs of raw material and consumables 29 (113,845) (96,340)
Costs for services 30 (83,810) (78,270)
of which from related parties 42 (2,793) (1,503)
of which non-recurring from related parties (4,171) -
Personnel costs 31 (46,239) (45,503)
Other operating costs 32 (1,104) (843)
Restructuring costs 33 - (3,906)
of which non-recurring
- (3,906)
Amortization or depreciation 34 (7,587) (6,568)
Adjustment of asset of value and other provisions 35 - (25)
TOTAL OPERATING COSTS (252,585) (231,455)
OPERATING INCOME 20,259 15,533
Interest in profit (loss) of associates and joint venture companies accounted for by using the
equity method 36 (3,628) (858)
Financial charges 37 (6,374) (7,303)
Financial income 37 1,475 1,487
INCOME BEFORE TAXES 11,732 8,859
Income taxes 38 (7,199) (4,060)
PROFIT / (LOSS) FROM CONTINUING OPERATIONS 4,533 4,799
Profit / (loss) from discontinued operations 39 - (3,675)
PROFIT / (LOSS) FOR THE YEAR 4,533 1,124
Profit/loss for the year attributable to:
Owners of the company
4,582 1,250
Minority interests (49) (126)
Earnings (loss) per share (Euro) 40 0.03 0.01
Diluted earnings (loss) per share (Euro) 40 0.03 0.01
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
86
Consolidated Statement of Comprehensive Income Note
31 december
2013
31 december
2012 (*) (thousands of Euro)
PROFIT FOR THE YEAR 4,533 1,124
Items that may be reclassified subsequently to profit and loss
Profit / (loss) on fair value of available-for-sale financing assets
754 (38)
Profit / (loss) on exchange differences on translating foreign operations
(381) (258)
Total items that may be reclassified subsequently to profit and loss, net of taxes 373 (296)
Items that will not be reclassified subsequently to profit and loss
Remeasurements of post-employment benefit obligations
(382) (238)
Total items that will not be reclassified subsequently to profit and loss, net of taxes (382) (238)
TOTAL ITEMS OF COMPREHENSIVE INCOME, NET OF TAXES (9) (534)
TOTAL COMPREHENSIVE INCOME 4,524 590
Of which attributable to:
Owners of company
4,573 716
Minority interests (49) (126)
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
87
Consolidated Cash Flow Statement (thosands of Euro)
Note 31 december
2013
31 december
2012 (*)
NET CASH FLOW FROM OPERATING ACTIVITIES
Profit / (loss) for the year
4,533 1,124
Adjustments to reconcile profit (loss) for the year with the cash flow generated (used in )
by operationg activities:
Amortization or depreciation 34 7,338 6,568
Provisions and write-downs
4,425 456
Change in fair value of financial instruments 13/25 (701) 218
Allocations to provisions for personnel 18/19 246 2,623
Payments relating to employee severance indemnity 18 (445) (486)
Payments relating to other provisions and incentives 19 (1,129) (137)
Capital loss (gains) on sale of non-current assets
(7) (124)
Change in deferred tax assets and liabilities 9/20 307 361
Taxes paid in the year
(2,152) (5,956)
Change in operative assets and liabilities
Change in trade receivables 11 (2,518) 6,810
Change in inventory 10 (11,583) 4,217
Change in trade payables 22 11,660 542
Other - net
11,166 1,480
NET CASH FLOW GENERATED (USE IN) BY OPERATING ACTIVITIES (A) 21,140 17,696
CASH FLOW FROM INVESTMENT ACTIVITIES
Sale of tangible and intangible fixed assets
33 195
Purchase of tangible fixed assets 4 (6,727) (8,713)
Purchase of intangible assets 1/2/3 (5,743) (3,759)
Change in scope of consolidation tangible and intangible fixed assets 3/4 2,561 -
Change in scope of consolidation investments in associated and joint venture companies 5 (699) -
Investments acquisition/capital increase in associated and joint venture companies 5 (927) (725)
Net change in other non-current assets/liabilities
1,040 146
NET CASH FLOW GENERATED (USED IN) BY INVESTMENT ACTIVITIES (B) (10,462) (12,856)
CASH FLOW FROM FINANCING ACTIVITIES
Medium-long-term borrowings 17 12,300 3,000
Repayment of medium-long-term borrowings 17 (14,169) (13,127)
Interest paid in the year 37 (3,390) (3,877)
Interest earned in the year 37 6 70
Net change in other short/medium-term financial liabilities
7,791 6,359
Sale of treasury shares 16 846 957
Purchase of treasury shares 16 (2,344) (1,026)
NET CASH FLOW GENERATED (USED IN) BY FINANCING ATIVITIES (C) 1,040 (7,644)
TOTAL CASH FLOWS (D=A+B+C) 11,718 (2,804)
TRANSLATION EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENT (E) (148) (50)
NET CASH AND CASH EQUIVALENTS FROM ASSETS AVAILABLE FOR SALE (F) - 114
NET CASH AND CASH EQUIVALENTS AT THE BEGINNIG OF YEAR (G) 9,068 12,036
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (H=D+E-F+G) 20,638 9,068
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
88
Consolidated Statement of Changes in Equity
(thousand of Euro) Share
capital
Share
premium
reserve
Retained
earning
(*)
Translation
reserve
Fair Value
Reserve
Other
reserve
(*)
Total Minority
Interest
Total
Sharesholde
rs' Equity
Balance at 31 December 2011 34,816 2,593 25,420 483 497 8,215 72,024 (1,627) 70,397
Increase in share capital
Allocation of loss for the prior year
Dividend distribution
Purchase of treasury shares (273) (753)
(1,026)
(1,026)
Sale of treasury shares 267 690
957
957
Recognition of stock option plan
costs 140 140
140
Change in scope of consolidation
Other changes
(1,735) (1,735) 1,487 (248)
Total comprehensive income
1,250 (258) (38) (238) 716 (126) 590
Balance at 31 December 2012 34,810 2,530 26,670 225 459 6,382 71,076 (266) 70,810
Increase in share capital
Allocation of loss for the prior year
Dividend distribution
Purchase of treasury shares (447) (1,897)
(2,344)
(2,344)
Sale of treasury shares 241 605
846
846
Recognition of stock option plan
costs 86 86
86
Change in scope of consolidation
Other changes
(3) (3) (46) (49)
Total comprehensive income
4,582 (381) 754 (382) 4,573 (49) 4,524
Balance at 31 December 2013 34,604 1,238 31,252 (156) 1.213 6,083 74,234 (361) 73,873
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability with those of the
current year following the application of the new IAS 19 on the part of the Group.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
89
NOTES TO THE FINANCIAL STATEMENTS
FORMAT AND CONTENT
Poltrona Frau S.p.A., founded in 1912, is one of the main Italian groups and international leader in the design
and top range furnishing sectors, which has created around its historical furnishing brand a genuine “Design
hub”, having the aim of combining the autonomy and specificity of each of the brands and respective business
histories which make up the Group with a unitary vision of growth and penetration abroad, promotion and
commercial strategies.
The Board of Directors of the Company approved the publication of the consolidated financial statements of
Poltrona Frau S.p.A. for the year ended 31 December 2013 within the meaning of IAS 10 on 13 March 2014.
The Company has its registered offices in Via Vincenzo Vela 42, Turin.
The consolidated financial statements of the Poltrona Frau Group for the year ended 31 December 2013 have
been prepared in accordance with the International Financial Reporting Standards (hereafter also “IFRS”) issued
by the International Accounting Standards Board (“IASB”) and adopted by the European Union in accordance
with the procedure stated in article 6 of Regulation (EC) no. 1606/2002 of the European Parliament and of the
Council of 19 July 2002 and the provisions issued to implement article 9 of Legislative Decree no. 38/2005.
The Group applied the same accounting principles as for the previous year except for the classification of
actuarial profits/losses deriving from the calculation of Employee benefits. These actuarial profits/losses are
now booked under “Other items of the Statement of Comprehensive Income”, in accordance with the provisions
of the new IAS 19. For more details, refer to that specified in the subsequent paragraph “New accounting
principles and amendments as well as interpretations effective as of 1 January 2013 and adopted by the
Group”.
A summary statement of the changes applied to the data relative to 31 December 2012, and linked to the entry
into force of IAS 19, are summarized below:
Consolidated statement of financial position 31.12.2012
(restated) 31.12.2012 variation
Share capital 34,810 34,810 -
Share premium reserve 2,530 2,530 -
Reserve for fair value adjustment of financial assets available for sale 459 459 -
Other reserves 6,607 6,748 (141)
Profit / (loss) of previous years 25,420 25,517 (97)
Profit / (loss) of the Group 1,250 1,012 238
Shareholders‟ equity of the Group 71,076 71,076 -
Minority interest‟s capital and reserves (140) (140) -
Monority interest‟s Profit / (loss) (126) (126) -
Shareholders‟ equity of minority interests (266) (266) -
Shareholders‟ equity 70,810 70,810 -
Consolidated income statement 31.12.2012
(restated) 31.12.2012 variation
Financial charges (7,303) (7,631) 328
Income before taxes 8,859 8,531 328
Income taxes (4,060) (3,970) (90)
Profit (or loss) of the year 1,250 1,012 238
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
90
The consolidated financial statements have been prepared on a cost basis, with the exception of derivative
financial assets and “available-for-sale financial assets” which are measured at fair value. The consolidated
financial statements have been prepared on the going concern assumption, since despite the difficult economic
and financial situation the Group believes that there are no material uncertainties relating to its ability to
continue operating for the foreseeable future, also by virtue of the steps being taken to adapt to the changed
trend in demand and to the industrial and financial flexibility of the Group itself.
No exceptions were made to the application of IFRS in the preparation of these consolidated financial
statements.
The consolidated income statement is presented using a classification based on the nature of expenses; as of 31
December 2012 it includes the item “restructuring costs”, in which costs of a non-recurring nature connected
with the project for reorganising the Poltrona Frau Group are classified in order to achieve a better
understanding and measurability of the actual performance of ordinary operations. The Consolidated Statement
of Financial Position is classified into current/non-current assets and liabilities, while the consolidated cash
flow statement is presenting using the indirect method.
The consolidated financial statements are presented in Euro and all amounts are rounded to thousands of Euro
unless otherwise stated.
Lastly, with reference to Consob Regulation no. 15519 of 27 July 2006 concerning the format of financial
statements the following sub-items have been presented if material: in the consolidated statement of financial
position, the consolidated income statement and the consolidated cash flow statement the amounts of any
balances or transactions with related parties; in the consolidated income statement any income or expense
(positive and/or negative) deriving from events or transactions which are non-recurring or from transactions or
facts which do not occur frequently in the course of normal operations. These latter items are presented under
the income or expense items to which they refer.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
91
ACCOUNTING PRINCIPLES AND POLICIES
Principles of consolidation
The financial position of the Poltrona Frau Group includes that of Poltrona Frau S.p.A. and of the companies
over which it exercises control. The definition of control is not based solely on the concept of legal ownership.
Control exists when the Group has the direct or indirect power to govern the financial and operating policies of
an entity so as to obtain benefits from its activities. In general, control is presumed to exist when the Group
has a direct or indirect holding of more than half the voting rights, also taking into account those that are
potentially exercisable immediately. The financial statements of the subsidiaries are included in the
consolidated financial statements with effect from the date on which control is assumed and up to the date on
which such control ceases to exist. The portions of shareholders‟ equity and the result attributable to minority
interests are indicated separately, respectively in the Statement of Financial Position, Consolidated Income
Statement and Consolidated Statement of Comprehensive Income.
The main consolidation criteria adopted were as follows:
for investments consolidated according to the line-by-line method, the book value of individual
consolidated investments is eliminated with a balancing entry in the related shareholders‟ equity on
takeover of the assets, liabilities, costs and revenues of the subsidiaries, regardless of the extent of the
investment, and the percentage of capital and reserves of minority interests in the subsidiaries and the
minority interests share of profit or loss for the year of subsidiaries are identified separately in the
consolidated statement of financial position and consolidated income statement;
all balances and significant transactions between group companies are netted, as are profits and losses
(the latter if they do not represent a value actually lower than that of the asset sold), deriving from
intragroup trading or financial transactions not yet realised with regard to third parties;
increases/decreases in shareholders‟ equity of consolidated companies that are attributable to results
achieved after the date of acquisition of the investment are recognised to a specific shareholders‟
equity reserve, “Retained profit (loss)”, at the time of netting;
dividends distributed by the Group companies are eliminated from the income statement at the time of
consolidation.
Consolidation of foreign operations
The financial statements of each Group company are prepared in the currency of the country in which
they operate (the operating currency);
all assets and liabilities of foreign operations recorded in currency other than the Euro and included in
the scope of consolidation are translated at the exchange rate as at the financial reporting date (the
current exchange rate method). Income and costs are translated at the average exchange rate for the
year. Translation differences resulting from the application of this method are recognised under Other
items of the Statement of Comprehensive Income, and accrued in a specific reserve under shareholders‟
equity until disposal of the investment.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
92
INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
This item includes investments in associates and joint ventures. Investments are accounted for using the equity
method.
The consolidated financial statements include the Group‟s share of the results of investments in associates and
joint ventures, accounted for using the equity method, with effect from the date on which significant influence
or joint control begins until the moment in which such significant influence or joint control ceases to exist.
Intragroup profits not yet realised with regard to third parties are eliminated to the extent of the Group‟s
percentage investment. Intragroup losses not yet realised with regard to third parties are also eliminated if they
do not represent a value actually lower than that of the asset sold.
Any losses exceeding the shareholders‟ equity are recognised to the financial statements to the extent that the
investing company is committed to compliance with legal or implicit obligations of the investee or in any event
to covering its losses.
Associates
Associates are companies in which the Group exercises significant influence, but not control or joint control,
over the financial and operating policies.
Joint ventures
Companies in which the Group‟s governance powers over the operating and financial policies call for
unanimous consent of other parties exercising common control are considered joint ventures. Investments in
joint ventures are consolidated according to the equity method, adopting accounting principles standardised to
those of the Group.
BUSINESS COMBINATIONS
Business combinations are recognised using the acquisition method. Under this method, the consideration
transferred in a business combination is measured at fair value, which is calculated as the sum of the
acquisition-date fair values of the assets transferred and the liabilities incurred by the Group and the equity
interests issued in exchange for control of the acquired business. Any accessory costs of acquisition are
generally recognised as an expense as incurred.
As at the date of acquisition, assets identifiable as acquired and liabilities assumed are recognised at their fair
value at the acquisition date.
Goodwill is calculated as the sum of amounts transferred to the business combination, the value of the
shareholders‟ equity pertaining to minority interests and the fair value of any investment previously held in the
acquired company, less the fair value of the net assets acquired and liabilities assumed as at the acquisition
date. If the value of assets acquired and liabilities assumed as at the acquisition date exceeds the sum of
amounts transferred, the value of shareholders‟ equity pertaining to minority interests and the fair value of any
investment previously held in the acquired company, this excess is recognised immediately to the income
statement as income deriving from the completed transaction.
The portions of shareholders‟ equity pertaining to minority interests as at the acquisition date can be measured
at fair value or pro rata on the value of the net assets recognised for the acquired company. The choice of
measurement method is decided on a transaction-by-transaction basis.
Any amounts subject to conditions envisaged in the business combination agreement are measured at fair value
as at the date of acquisition and included in the value of amounts transferred to the business combination for
the purpose of calculating goodwill. Any subsequent changes in this fair value are recognised to the Income
Statement.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
93
Scope of consolidation
In relation to the comparison between the scope of consolidation as at 31 December 2013 and that at 31
December 2012, the following should be noted:
a) The entry of Nemo S.r.l., a company 49% owned by Cassina S.p.A., and founded as part of the operation for
transfer of the light division of the Group and which was initiated in 2012 and completed in the first
quarter of 2013 with the transfer - in February 2013 – of the investment of Artelux S.A. in Nemo S.r.l. on
the part of Cassina S.p.A.;
b) In the month of June, the process for liquidation of the subsidiary Beijing Casanova Furniture Design Co.
Ltd. was completed;
c) Transfer of 51% of the Chinese subsidiary Zheijang Casanova Furniture Ltd. to the Chinese company
Wenzhou Opal Furniture Co. Ltd.. Following this operation, the company was consolidated with the equity
method;
d) Acquisition – on the part of the subsidiary Poltrona Frau Group North America Inc. – of the remaining 70%
of the company Spazio Washington LLC from Variant Inc.;
e) During the course of 2013, the change in the majority quota held in the company Frau U.S.A. Corporation –
from 67% to 83%, following the underwriting of a share capital increase on the part of only Poltrona Frau
S.p.A.. - should be noted.
The subsidiaries included in the scope of consolidation at 31 December 2013 are as follows:
Company name Registered office Curren
cy
Share capital
(in currency
units)
Direct Parent % held % held by
Group
Cap Design S.p.A. Meda, Milan – I Euro 4,000,000 Poltrona Frau S.p.A. 100% 100%
Cassina S.p.A. Meda, Milan – I Euro 15,975,422 Poltrona Frau S.p.A. 100% 100%
Cassina France S.A. Paris – F Euro 400,000 Cassina S.p.A. 100% 100%
Cassina Pacific Ltd. Hong Kong – People's
Rep. of China HKD 1,000,000 Cassina S.p.A. 100% 100%
Cassina Shanghai Trading Co. Ltd Shanghai - People's
Rep. of China RMB 950,760 Cassina S.p.A. 100% 100%
DieciDieci S.r.l. Bologna – I Euro 91,800 Poltrona Frau S.p.A. 100% 100%
Frau U.S.A. Corporation New York – USA USD 100 Poltrona Frau S.p.A. 83% 83%
Frau France S.a.r.l. Paris – F Euro 920,960 Poltrona Frau S.p.A. 100% 100%
Meno Warehandels GmbH(*) Vienna – A Euro 35,000 Poltrona Frau S.p.A. 60% 60%
Poltrona Frau UK Ltd. London– UK GBP 2,100,000 Poltrona Frau S.p.A. 100% 100%
Poltrona Frau PTE Ltd. Singapore – S SGD 174,142 Poltrona Frau S.p.A. 100% 100%
Poltrona Frau Group North America Inc. New York – USA USD 102,000 Cassina S.p.A. 100% 100%
Poltrona Frau Deutschland GmbH Munich– G Euro 60,000 Poltrona Frau S.p.A. 100% 100%
Spazio Washington LLC Washington - USA USD 230,888 Poltrona Frau Group
North America Inc. 100% 100%
(*)Company placed under liquidation
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
94
Investments in associates and joint ventures, accounted for using the equity method, and in other companies
accounted for at cost or fair value are the following:
Company name Registered office Currency
Share capital
(in currency
units)
Investing company % held
% held
by
Group
INVESTMENTS IN ASSOCIATES
K.B.R. S.a.r.l. Tunis – Tunisia TND 18,000 Poltrona Frau S.p.A. 20% 20%
Alias S.p.A. Grumello del Monte – I Euro 510,308 Cassina S.p.A. 49% 49%
Nemo S.r.l. Milan – I Euro 100,000 Cassina S.p.A. 49% 49%
INVESTMENTS IN JOINT VENTURES
PF Emirates Interiors LLC Abu Dhabi – UAE AED 10,000,000 Poltrona Frau S.p.A. 49% 49%
Casa Décor Private Ltd. Mumbai – India INR 273,377,660 Poltrona Frau S.p.A. 50% 50%
Zhejiang Casanova Furniture Co. Ltd. (*) Zhejiang – People's Rep. of
China RMB 41,295,502 Poltrona Frau S.p.A. 49% 49%
INVESTMENTS IN OTHER COMPANIES MEASURED AT COST (CELI AND FONDAZIONE) AND AT FAIR VALUE (CASSINA IXC)
Celi S.p.A. (**) Stroncone – I Euro 2,363,837 Poltrona Frau S.p.A. 5% 5%
Cassina IXC Ltd. Tokyo – J Yen 400,294 Cassina S.p.A. 12% 12%
Fondazione Studio – Museo Vico Magistretti Milan – Italy Euro 248,500 Cassina S.p.A. 0.4% 0.4%
(*)Company accounted for using the equity method from 2013
(**)Company placed under liquidation
The accounting principles used in the preparation of the consolidated financial statements for the year ended
31 December 2013 are consistent with those used for the previous year, other than the matters reported in the
paragraph “Accounting principles, amendments and interpretations effective as of 1 January 2013” which
follows after the summary of the main accounting policies adopted by the Group set out below.
Goodwill
The goodwill arising on the acquisition of subsidiaries or associates or joint ventures is initially recognised at
cost, representing the excess of the purchase cost over the share pertaining to the acquiree of the fair value of
the identifiable assets acquired and the liabilities and contingent liabilities assumed of the companies
purchased. Any negative difference (“negative goodwill”) is recognised in profit or loss immediately on
acquisition.
The goodwill relating to investments in associates and joint ventures is included in the carrying value of those
investments.
After initial recognition goodwill is reduced for any impairment losses; impairment testing is carried out once a
year and more frequently if any events or changes occur which could lead to impairment losses arising.
For the purpose of impairment testing the goodwill acquired in business combinations is allocated at the
acquisition date to each of the Group‟s cash-generating units (or groups of units) which are considered to be
the beneficiaries of the synergic effects of the acquisition, irrespective of the allocation of other assets or
liabilities to these units (or groups of units).
If goodwill is allocated to a cash-generating unit (or group of units) part of whose assets are disposed of, the
goodwill associated with the assets disposed of is taken into consideration in the calculation of any gain or loss
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
95
on disposal. In these cases the goodwill disposed of is measured as the proportion of the amounts relating to
the assets disposed of compared to the assets still held with reference to the same unit.
On first-time application of IFRS the Group elected not to apply IFRS 3 Business Combinations retrospectively
to acquisitions of companies occurring prior to 1 January 2004; as a consequence, the goodwill arising from
acquisitions occurring before the date of transition to IFRS was kept at the previous value determined in
accordance with Italian accounting principles, subject to impairment testing and the recognition of any
impairment losses.
Other intangible assets
Separately acquired intangible assets are recognised as such at cost if it is probable that the use of the assets
will generate future economic benefits and if the cost of the asset can be measured reliably. Intangible assets
acquired in business combinations are recognised at their fair value at the acquisition date if this can be
measured reliably.
Internally generated intangible assets, excluding development costs, are not capitalised and are recognised as
an expense in the period they are incurred.
Intangible assets may have finite useful lives or indefinite useful lives. The Group has the following classes of
intangible assets whose useful lives are determined as follows:
– brands with indefinite useful life
– development costs with finite useful life
– industrial patents and intellectual property rights with finite useful life
– concessions, licences and similar rights with finite useful life
After initial recognition, intangible assets with finite useful lives are recognised at cost less accumulated
amortisation and impairment losses. The amortisation period and method used are reviewed at the end of each
financial year or more frequently if necessary.
The amortisation periods used for intangible assets with finite useful lives are as follows:
– development costs 5 years
– industrial patents and intellectual property rights 10 years
– concessions, licences and similar rights 3 years
In addition to undergoing this process of amortisation over their useful lives, intangible assets with finite useful
lives are also subject to impairment testing if there are indications that they may be impaired.
After initial recognition, intangible assets with indefinite useful lives are not amortised and are recognised at
cost less any accumulated impairment losses. Intangible assets with indefinite useful lives undergo impairment
testing once a year and more frequently at an individual level or at cash-generating unit level if any events or
changes occur which could lead to impairment losses arising.
Research and development expenditure
Expenditure on research is recognised directly as an expense in the period it is incurred.
Development costs incurred in connection with a specific project are only capitalised if the Group can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or
sale, its intention to complete the intangible asset and use or sell it to third parties, how it will generate
probable future economic benefits, the availability of technical, financial or other resources to complete the
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
96
development, its ability to measure reliably the expenditure attributable to the intangible asset during its
development and the existence of a market for the goods and services deriving as an output from the intangible
asset or if it is to be used internally the usefulness of the intangible asset. The development costs capitalised
comprise only the expenditure that is directly attributable to the development process.
After initial recognition capitalised development expenditure is recognised at cost less accumulated
amortisation and any impairment losses determined by the means described for intangible assets with finite
useful lives.
Tangible fixed assets
Tangible fixed assets are stated at acquisition cost less accumulated depreciation and any accumulated
impairment losses. Depreciation is charged on a straight line basis over the estimated useful life of an asset.
Depreciation of an asset begins when it is available for use, namely when it enters the Group‟s production cycle,
and is charged on a straight line basis over the estimated useful life of the asset, taking account of its residual
value. The depreciation periods used, which reflect the useful lives generally attributable to the various classes
of assets and which are unchanged compared to the previous year, are as follows:
– buildings from 10 to 33 years
– plant and machinery 8 years
– industrial and commercial equipment 4 years
– other from 4 to 8 years
Land is not depreciated as it has an unlimited useful life.
The carrying amount of tangible fixed assets is subject to impairment testing if events or changes indicate that
the carrying amount may not be recoverable according to the established depreciation plan. If indications of
this nature exist and if the carrying amount exceeds estimated realisable value, the assets or the cash-
generating units to which the assets have been allocated are written down to reflect their realisable value.
The residual value of an asset, its useful life and the methods used are reviewed on an annual basis and
adjusted if necessary at the end of each year.
Assets acquired under finance and operating leases
Finance leases, which transfer substantially all the risks and rewards incidental to ownership of the leased asset
to the Group, are capitalised as part of tangible fixed assets, starting from the initial date of the lease, and
recognised at the fair value of the leased asset or, if lower, the present value of the lease payments. A liability
of the same amount is also recognised, which is gradually reduced on the basis of the repayment plan by the
capital portion included in the contractual instalments.
Lease instalments are divided between a capital portion and an interest portion in order to obtain a constant
interest rate on the balance of the residual liability (the capital portion). The interest portion is recognised in
the income statement. Assets are depreciated using the criteria and useful lives described in the previous
paragraph “Tangible fixed assets”.
Leases where the lessor keeps substantially all the typical risks and rewards of ownership are accounted for as
operating leases. Operating lease payments are recognised as an expense over the lease term.
Any sale and leaseback transactions where the “repurchase” of the originally owned asset - by means of a lease
arrangement - is carried out under a finance lease are recognised for accounting purposes as a financing
transaction. The assets involved in this transaction remain in the Group‟s balance sheet with continuity of
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
97
accounting treatment and a liability is recognised as a counter-entry to the cash flows arising from the sale.
Any gain arising on sale is recognised in profit or loss on an accrual basis. This leads to the recognition of
deferred income and the gradual release of the balance to income over the lease term.
Impairment
At each reporting date the Group reviews the book value of its tangible and intangible assets with a finite
useful life to determine whether there are any impairment indicators. If there are any such indicators,
impairment testing is performed on the total recoverable amount of the assets concerned is estimated the
extent of impairment. Where the recoverable value of an asset cannot be estimated individually, the Group
estimates the recoverable value of the cash generating unit in which the asset is included.
The total recoverable amount equals the higher between the fair value less costs to sell and the value in use. In
the absence of a binding agreement to sell, the fair value is estimated on the basis of the values quoted on an
active market, recent transactions or the best information available to reflect the amount that the company
could receive from sale of the asset.
In the assessment of value in use, the estimated future cash flows are discounted at the current value using a
rate net of taxes that reflects the current market assessment of the value of money and the asset-specific risks.
If the recoverable amount of an asset (or cash generating unit) is estimated as lower than the book value, the
book value of the asset is reduced to the lower recoverable value. The impairment amount is recognised to the
income statement.
If there is no longer any reason for the write-down to be continued, the book value of the asset (or cash
generating unit) is increased to the new book value deriving from an estimation of its recoverable value, but
not beyond the net carrying amount that would have applied to the asset had no impairment been recognised.
The restored value is recognised to the income statement.
Goodwill and infinite-life intangible assets are impairment tested each year, or more frequently if there should
be any indication that the asset is impaired.
Available for sale financial assets
Available-for-sale financial assets are financial instruments specifically designated to this category, or which
cannot be classified under any of the previous categories, included among non-current assets unless
management intends to sell them in the twelve months following the closing date of the financial statements.
The available-for-sale financial assets, comprising investments in other companies and other non-current
financial assets, are recognised at fair value with the effects recorded in shareholders‟ equity. If there is any
objective sign of persistent or significant impairment, the impairment loss must be recognised to the income
statement even if the financial asset has not been sold. When the fair value cannot be reliably measured, the
investments are accounted for at cost, adjusted for any impairment.
Other non-current assets
Loans and receivables classifies as non-current assets are measured at amortised cost. Receivables due after
more than one year, non-interest bearing receivables and receivables bearing interest below market rates are
discounted using market rates.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
98
Inventories
Inventories are measured at the lower of purchase or production cost and net realisable value, which is the
amount that the Group expects to obtain from a sale in the ordinary course of business. The weighted average
cost formula is used. The weighted average cost includes the attributable accessory costs for purchases of the
period. The measurement of inventories includes the direct cost of materials and labour and production
overheads. Provisions are recognised for materials, finished goods, spare parts and other items considered
obsolete or slow-moving, taking account of their expected future use and realisable value.
Contract work is measured on the basis of the percentage of completion, which is determined as the ratio
between the costs for the contract incurred at the balance sheet date and total estimated costs, and is stated
net of any on-account payments billed to customers. Losses on such contracts are fully recognised as an
expense as soon as they become known.
Trade receivables
Trade receivables are measured at fair value identified as nominal value less any impairment losses, accounted
for by providing an allowance for doubtful accounts. Trade receivables due beyond normal commercial terms
and which do not bear interest are discounted. Receivables subject to non-recourse factoring are removed from
the financial statements when all risks related to the transfer of the receivable fall on the factoring company.
Cash and cash equivalents
Cash and cash equivalents are measured at nominal value or amortised cost depending on their nature.
Assets held for sale
Assets held for sale include assets (or disposal groups) whose carrying amount will be recovered principally
through a sale transaction rather than through continuing use. Assets held for sale are measured at the lower
of their carrying amount and fair value less costs to sell.
Long-term borrowings
Long-term borrowings are initially recognised at fair value plus transaction costs; they are subsequently
measured at amortised cost, being their initial amount less any repayments of principal, adjusted (up or down)
on the basis of the amortisation (using the effective interest method) of any differences between their initial
amount and their value at due date.
Employee benefits
Benefits ensured to employees which are paid on or after the completion of employment by means of defined
benefit plans (the employees‟ leaving entitlement - trattamento fine rapporto - for Italian employees) are
recognised in the period when the rights vest.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
99
Liabilities arising from defined benefit plans, net of any plan assets, are calculated on the basis of actuarial
assumptions and are recognised on an accrual basis consistent with the service which needs to be provided to
obtain the benefits; the valuation of liabilities is performed by independent actuaries.
As previously reported, actuarial gains/losses as of 1 January 2013 are booked under “Other items of the
Statement of Comprehensive Income”, in accordance with the provisions of the new IAS 19.
Other employee benefits
As required by IFRS 2 (Share-based Payment) stock options granted to employees are measured at their fair
value at the grant date using certain models which take into account factors and elements (the exercise price
of the option, the life of the option, the current price of the underlying shares, the risk-free interest rate for an
investment for the life of the option) in force at the grant date.
If the right becomes exercisable after a certain period and/or on the occurrence of certain performance
conditions (the vesting period) then the total value of the options is allocated on a temporal basis over this
period and recognised in a specific item of equity with counter-entry “Personnel costs” in the income statement
(being a payment in kind to the employee having the aim of creating loyalty and encouraging business
performance).
At the end of each year the previously calculated fair value of each option is not revised or updated but
remains acquired in equity on a definitive basis; an updating is however made at that date of the estimate of
the number of options which will vest until expiry (and hence the number of employees who will be entitled to
exercise those options). The changes in estimate are recognised as increases or decreases of the equity account
with a counter-entry being made to “Personnel costs” in the income statement.
On the expiry of an option the amount stated in the equity account is reclassified in the following way: the
portion of the equity account relating to exercised options is reclassified to the “Share premium reserve” while
the portion relating to unexercised options is reclassified to the account “Retained profit (loss)”.
Cash-settled share-based payment plans for employees are initially recognised at fair value at the grant date
using an actuarial calculation and taking account of the formula for determining the resale price to the
company and the terms and conditions which govern the granting of the instrument. This fair value is expensed
over the vesting period with the recognition of a corresponding liability. The liability is remeasured at each
reporting date until and including the date of settlement, with any changes in fair value recognised in profit or
loss.
The Group has elected to use the exemptions provided in paragraph 25B of IFRS 1 and has therefore not applied
IFRS 2 to stock option plans granted before 7 November 2002, also in consideration of the fact that there have
been no changes to the terms and conditions of these plans.
Provisions for risks and charges
Provisions for risks and charges regard costs and charges of a determinate nature whose existence is certain or
probable but whose amount or date of occurrence is uncertain at the balance sheet date. Provisions are
recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are measured as the best estimate of the expenditure that the Group would have to pay to settle the
obligation or transfer it to third parties at the balance sheet date. Where the time value of money is material,
the amount of a provision is the present value of the expected future cash flows discounted using a pre-tax
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
100
rate that reflects current market assessments of the time value of money. When a present value calculation is
performed, the increase in the provision arising from the passage of time is recognised as a financial charge.
Trade payables and other current liabilities other than financial instruments
Trade payables whose due date is within normal commercial terms are initially recognised at cost (identified as
their nominal value) and are not discounted.
Derivative financial instruments
The Group uses derivative financial instruments such as interest rate swaps and forward currency contracts to
hedge the risks resulting mainly from fluctuations in interest rates and foreign exchange rates. These derivative
financial instruments are initially recognised at fair value at the date on which the contract is entered; the fair
value is then subsequently periodically remeasured. Instruments are classified as assets when fair value is
positive and as liabilities when it is negative.
Any gains or losses arising from changes in the fair value of derivatives which do not qualify for hedge
accounting are recognised directly in profit or loss for the period.
The fair value of forward currency contracts is calculated by referring to current forward foreign exchange rates
included in contracts having a similar maturity profile. The fair value of interest rate swap contracts is
calculated by referring to the market value of similar instruments.
Revenue recognition
Revenues are recognised to the extent that it is probable that economic benefits will flow to the Group and the
amount of revenue can be measured reliably. The following specific policies must be satisfied before revenue
may be recognised in the income statement:
Sale of goods
Revenues from the sale of goods are recognised in the income statement when the risks and rewards of ownership of the goods have transferred to the buyer; this generally occurs on the despatch of the goods. Revenues are stated net of discounts and allowances.
Provision of services
Revenues from the rendering of services are recognised as the services are provided.
Financial income
Financial income is recognised by accruing interest income relating to the period (carried out using the
effective interest method. The effective interest rate is the rate that exactly discounts estimated future cash
flows through the expected life of the financial instrument to the net carrying amount of the financial asset).
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
101
Dividends
Dividends are recognised when the shareholders‟ right to receive payment has vested.
Financial charges and income
Borrowing costs incurred for investments in assets which normally take a determinate period of time to get
ready for their intended use or sale are capitalised and depreciated over the useful life of the class of assets to
which they refer.
All other financial charges are recognised as an expense in the period in which they are incurred.
Income taxes
Current taxes
Current tax assets and liabilities for the current year or for previous years represent the amount that the Group
expects to recover from or pay to the tax authorities. The rates and tax laws used for calculating these amounts
are those enacted at the balance sheet date.
Deferred taxes
Deferred tax assets and liabilities are calculated using the liability method on the temporary differences
between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax assets
are also recognised for unused tax losses.
Deferred tax liabilities are recognised for all taxable temporary differences except in the following cases:
– when deferred tax liabilities arise from the initial recognition of goodwill or an asset or liability in a
transaction which is not a business combination and which, at the time of the transaction, affects neither
accounting profit nor taxable profit or loss;
– for taxable temporary differences associated with investments in subsidiaries, associates or joint ventures,
where the reversal of the temporary differences can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and for the carry forward of unused
tax losses to the extent that it is probable that future taxable profit will be available against which the
deductible temporary difference and unused tax losses can be utilised except in the following cases:
– when deferred tax assets connected with deductible temporary difference arise from the initial recognition
of an asset or liability in a transaction which is not a business combination and which, at the time of the
transaction, affects neither accounting profit nor taxable profit or loss;
– for deductible temporary differences associated with investments in subsidiaries, associates or joint
ventures, deferred tax assets are recognised to the extent that it is probable that the deductible temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
102
Deferred tax assets are recognised when their recovery is considered probable on the basis of the expected
future availability of taxable profit sufficient to realise the deferred tax assets. The recoverability of deferred
tax assets is reviewed at each reporting date.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on current tax rates and those that have been enacted or
substantively enacted by the balance sheet date.
Income taxes relating to items that are recognised directly in equity are themselves recognised directly in
equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current
tax assets against current tax liabilities and if the deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same taxation authority on the same taxable entity.
Translation of items in foreign currency
The Group has adopted the Euro as its functional and presentation currency. Transactions in foreign currency
are initially recognised at the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at the
exchange rate at the balance sheet date.
Any exchange differences are recognised in profit or loss other than exchange differences arising on a monetary
item that forms part of a net investment in a foreign operation. These differences are initially recognised in the
statement of comprehensive income and then recognised in profit or loss on the disposal of the net investment.
Taxes and tax credits attributable to exchange differences on monetary items are also recognised in the
statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the initial recognition of the transaction. Non-monetary items that are measured
at fair value are translated using the exchange rate at the date when the fair value was determined.
Treasury shares
Treasury shares are stated as a deduction from equity. More specifically, the nominal value of own shares is
accounted for as a deduction from issued share capital while any excess of the purchase amount over the
nominal value is accounted for as a deduction from “Other reserves”.
Derecognition of financial instruments
Financial instruments are derecognised when the Group no longer holds the contractual rights to the
instruments. This usually occurs when the instrument is sold or when the cash flows generated by the
instrument pass through an independent third party.
Specific estimates and assumptions
The preparation of financial statements and related notes in accordance with IFRS requires the Company to
make estimates and assumptions that affect the amounts of assets and liabilities in the financial statements
and the disclosure of contingent assets and liabilities at the date of those statements. The estimates and
assumptions used are based on experience and other factors considered significant. The actual results could
however deviate from these estimates.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
103
Estimates are used to calculate the allowance for doubtful accounts receivable, inventory obsolescence,
depreciation, amortisation, impairment losses, employee benefits, restructuring provisions, taxation, other
allocations, provisions and valuations of derivative instruments.
Estimates and assumptions are reviewed periodically and the effects of any changes are recognised immediately
in the income statement in the year in which the estimate is reviewed if the review affects that year only, or
also in subsequent years if the review affects both the current year and future years. In this context, the
situation resulting from the current economic and financial crisis has led to the need to make going outlook
assumptions that are characterised by significant uncertainty, and therefore it cannot be excluded that, next
year, the results could be different from those forecast, with an impact that cannot be foreseen today but
which could prove significant on the book value of the related items, compared to that represented in this
report.
There were no estimates which include an elevated risk that – within the subsequent year – significant value
adjustments to assets within the financial statements will occur.
Earnings per share
Earnings per share are calculated by dividing the profit for the year attributable to the Company‟s ordinary
shareholders by the weighted average number of ordinary shares outstanding during the period.
For the purpose of calculating diluted earnings per share the weighted number of ordinary shares outstanding
is adjusted for the effects of all dilutive potential ordinary shares. The Group‟s profit or loss is also adjusted for
the effects of the conversion of these shares net of the tax effect.
New accounting principles, amendments and interpretations effective as of 1 January 2013 and adopted by the
Group
Amendments to IAS 1 - Presentation of Financial Statements. On 16 June 2011, the IASB published this
amendment which requires the grouping of all items presented within the statement of comprehensive
income depending on whether they can be subsequently booked within the income statement. This
amendment was also incorporated by FASB in order to obtain comparability between international
accounting principles (IFRS) and US accounting principles (US GAAP). The adoption of this amendment
had limited effects on information relative to Other overall profits/(losses) reported in these financial
statements;
IAS 12 – Deferred Tax - Recovery of Underlying Assets. This amendment clarifies the calculation of
deferred taxes on real estate assets measured at fair value. The amendment introduces the rebuttable
assumption that the book value of a real estate investment - measured at fair value according to IAS
40 - will be recovered through a sale and, as a result, the relative deferred taxation should be valuated
on a sale basis. This assumption refuted if the real estate investment can be depreciated and held with
the objective of substantially utilizing over time all the benefits which are derived from the real estate
investment itself rather than realizing these benefits through a sale. The amendment had no effect on
the financial position or on the results or financial reporting of the Group;
Amendments to IAS 19 - Employee Benefits. On 16 June 2011, the IASB published the amended version
of IAS 19. The most important changes concerned the elimination of the option known as the “corridor
method” for the recording of actuarial profits and losses (not utilized by the Poltrona Frau Group), the
presentation of changes in assets and liabilities deriving from defined-benefit plans - including their
re-determination within the statement of comprehensive income – and a greater request for
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
104
information relative to the characteristics and risks of defined benefit plans for companies. The
amendments aim to supply the reader of financial statements with a clearer picture of the company‟s
obligations in relation to defined benefit plans and how the latter can influence future economic
performance, cash flows and the net financial position of the Group. In accordance with the transition
rules pursuant to IAS 19 under paragraph 173, the Group has applied this amendment to IAS 19 in a
retrospective manner as of 1 January 2013 by adjusting the opening values of the statement of
financial position of 1 January 2012 and 31 December 2012 as well as the economic values of 2012, as
if the amendment had always been applicable;
IFRS 13 – Fair value measurement. On 12 May 2011, IASB issued, in accordance with FASB, a guide for
fair value measurements. It was concluded that the adoption of this new principle does not involve
significant effects on the financial statements;
IFRS 7 – Financial Instruments - Disclosures. On 16 December 2011, IASB and FASB issued joint
provisions on disclosures that must be provided in the case of compensation of financial assets with
financial liabilities. The requested information must be supplied retroactively. It was concluded that the
adoption of this new principle does not involve significant effects on the financial statements.
On 17 May 2012 the IASB issued a series of amendment to the IFRS (“Annual Improvements to IFRSs -
2009-2011 Cycle”); those which are applicable to the Group are cited below while also not considering
those which only resulted in terminological changes and with minimum effects on accounting:
IAS 1 – Presentation of Financial Statements: this amendment clarifies the modalities of presentation
of comparative information in the case that a company modifies its accounting principles and
implements a retrospective restatement of items or a re-classification, as well as in cases where the
company supplies additional reports on financial situations compared to that required by the principle.
This amendment was applied at the time of the retrospective restatement of financial data in reference
to the application of the amendment to IAS 19;
IAS 16 – Property, Plant and Equipment: the amendment clarifies that spare parts and substitute
equipment must only be capitalized if they comply with the definition of "Property, plant and
equipment”, otherwise they must be classified as Inventories;
IAS 32 – Financial instruments: Presentation: this amendment eliminates the inconsistency between
IAS 12 – Income Taxes and IAS 32 in relation to the booking of taxes derived from distributions to
shareholders by stating that the latter must be booked within the income statement to the extent that
the distribution refers to proceeds generated from operations that were originally booked within the
income statement.
IFRS and IFRIC accounting principles, amendments and interpretations that have been ratified by the EU but
which are not yet applicable except through early adoption
On 12 May 2011, the IASB issued IFRS 10 - Consolidated Financial Statements, which replaces SIC 12 -
Consolidation - Special Purpose Entities and parts of IAS 27 - Consolidated and Separate Financial
Statements, which will be renamed “Separate Financial Statements” and will govern the accounting of
investments in the separate financial statements. The competent bodies of the European Union have
completed the process of ratification of this principle, postponing the date of its application to 1
January 2014, but allowing, in any case, and early adoption as of 1 January 2013. The Group is
evaluating the effects of adopting this new principle;
On 12 May 2011 the IASB issued IFRS 11 - Joint Arrangements, which replaces IAS 31 - Interests in
Joint Ventures and SIC 13 - Jointly-controlled Entities: Non-monetary Contributions by Venturers. The
new standard – without prejudice to the criteria for identifying the presence of joint control – supplies
criteria for the accounting of joint venture agreements that are based on the rights and obligations
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
105
deriving from these agreements rather than on their legal form, and also establishes the equity method
as the only method for booking investments in joint ventures within the consolidated financial
statements. The competent bodies of the European Union have completed the process of ratification of
this principle, postponing the date of its application to 1 January 2014, but allowing, in any case, an
early adoption as of 1 January 2013. The Group is evaluating the effects of adopting this new principle,
and which are not expected to be significant;
On 12 May 2011 the IASB issued IFRS 12 - Disclosure of Interests in Other Entities, a new and
complete standard on the additional information to be provided for each type of investment, including
in subsidiaries, joint ventures, associates, special purpose entities and other companies not
consolidated. The competent bodies of the European Union have completed the process of ratification
of this principle, postponing the date of its application to 1 January 2014;
On 16 December 2011 the IASB issued a number of amendments to IAS 32 - Financial Instruments:
Presentation, to clarify the application of certain criteria for the offsetting of financial assets and
liabilities included in IAS 32. The amendments must be applied from financial years beginning on or
after 1 January 2014, with effects backdated.
As of the date of these financial statements, the competent bodies of the European Union had not yet
completed the ratification process which is necessary for the adoption of the following accounting principles
and amendments:
On 12 November 2009, the IASB published IFRS 9 – Financial instruments; the same principle was
subsequently amended. This principle – which must be applied as of 1 January 2015 in a retrospective
manner – represents the first part of a process in phases whose purpose is to entirely replace IAS 39
and introduce new criteria for the classification and valuation of financial assets and liabilities. In
particular, and with regard to financial assets, the new principle utilizes a single approach that is based
on the modalities for managing financial instruments as well as on the characteristics of the
contractual cash flows of the financial assets themselves in order to determine their valuation
criterion, thereby replacing the different rules pursuant to IAS 39. With regard to financial liabilities,
on the other hand, the primary modification which occurred concerned the accounting treatment of
changes in fair value of a financial liability which was designed as valuated at fair value through the
income statement, and in the case that these changes were due to a change in the credit rating of the
liability itself. According to the new principle, these changes must be booked under Other
comprehensive income / (losses) and will no longer be applied within the income statement;
On 20 May 2013, the IASB issued IFRIC 21 – Levies, an interpretation of IAS 37 - Provisions,
Contingent Liabilities and Contingent Assets. IFRIC 21 clarifies when an entity should book a liability
for the payment of taxes imposed by the government, with the exception of those already regulated by
other principles (e.g. IAS 12 – Income Taxes). IAS 37 establishes the criteria for recognition of a
liability, one of which is the existence of a current obligation for the company as the result of a past
event (known as the binding event). The interpretation clarifies that the binding event, which results in
a liability for the payment of a tax, is described in the regulations of reference from which the payment
is derived. IFRIC 21 is effective for years starting on 1 January 2014;
On 29 May 2013, IASB issued an amendment to IAS 36 - Recoverable Amount Disclosures for Non-
Financial Assets, which regulates disclosures on the recoverable amounts of assets which were subject
to impairment if this amount is based on the fair value net of sales costs. The amendments must be
applied retroactively as of the years starting on 1 January 2014. Early adoption is allowed for periods in
which the entity has already applied IFRS 13;
On 27 June 2013, IASB issued certain minor amendments relative to IAS 39 – Financial instruments:
Recognition and Measurement, titled “Novation of Derivatives and Continuation of Hedge Accounting”.
These amendments allow for the continuation of hedge accounting in the case that a derivative
financial instrument, designated as a hedging instrument, is novated following the application of the
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
106
law or regulations in order to replace the original counterparty and guarantee the fulfilment of the
assumed obligation if certain conditions are met. The same amendment will also be included in IFRS 9
- Financial instruments. The amendments must be applied retroactively as of the years starting on 1
January 2014;
IAS 28 (2011) Investments in Associates and Joint Ventures. Following the new IFRS 11 Joint
arrangements and IFRS 12 - Disclosure of Interests in Other Entities, IAS 28 was renamed Investments
in associates and joint ventures; it describes the application of the equity method for investments in
joint ventures and associates. The amendments are effective for the years starting on 1 January 2014
or later.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
107
MAIN RISKS AND UNCERTAINTIES TO WHICH POLTRONA FRAU S.P.A. AND THE GROUP ARE EXPOSED
The operational management of all cash flows connected with the application of the “guidelines for financial
risk management” approved by the Board of Directors of Poltrona Frau S.p.A. is the exclusive responsibility of
the Group‟s Central Treasury, located in the Parent, for all Italian subsidiaries. For the foreign subsidiaries of
Poltrona Frau S.p.A. the financial requirements and the relative risks are managed by the individual companies
on the basis of guidelines established by the Group‟s administration, finance and control manager and approved
by the Chief Executive Officer.
The objective of the financial management guidelines of the Poltrona Frau Group is to identify the reference
ambit of financial instrument operations, ensure there is the required segregation between operating and
control functions and enable the main financial risks to be measured and monitored. The following are
therefore defined in this context:
the delegated powers and the general orientation of financial management of the Group: the financial
instruments negotiable by the Finance Area are determined together with the respective system of
operating limits;
the organisational structure for financial operations and the mission and responsibilities of the
organisational units involved.
To this end, it is the duty of the AF&C Area to align the management and control of the main financial risks to
which the Group is exposed, arising from normal business operations, to the business objectives as established
in the budget plan and medium-long term plan approved by the Board of Directors. These risks are as follows:
Liquidity Risk is defined as the risk of the lack of funds to sufficient to settle financial obligations
punctually and economically at their due dates.
Interest Rate Risk is defined as the risk that changes in the interest rate curve may lead to changes (i)
in results and cash flows, (ii) the value of assets and liabilities and, (iii) in the last instance, the value of
the business.
Currency Risk is defined as the risk that changes in foreign exchange rates may cause changes in
results and cash flows, the value of assets and liabilities.
Financial Counterparty Risk is defined as the risk that the creditworthiness of a financial counterparty
may deteriorate or that the counterparty may become insolvent.
The main financial instruments used are the following:
medium and long term funding with multi-year repayment plans to hedge investments in fixed assets;
short term funding, subject to collection advances on the trade receivables portfolio and with-recourse
sales of trade receivables to fund working capital.
The average cost of debt is generally linked to trends in the 3M and 6M EURIBOR rate plus a spread which
mainly depends on the type of financial instrument used. In general the margins applied are in line with best
market practices.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
108
In relation to financial instruments booked within the statement of financial position at fair value, IFRS 7
requires that these values must be classified on the basis of a hierarchy of levels which reflect the significance
of the inputs utilized in determining the fair value. The following levels can be distinguished:
Level 1 – quotes from an active market for the assets or liabilities subject to valuation;
Level 2 – inputs other than the quotes pursuant to the previous point, and which are directly observable (prices)
or indirectly observable in the market (derived from prices);
Level 3 – inputs which are not based on observable market data.
The following table highlights the financial instruments for the separate financial statements and for the
consolidated financial instruments which are valuated at fair value as of 31 December 2013 and 31 December
2012 on the basis of the hierarchic level of fair value valuation.
31 December 2013
Separate financial statements (in thousands of Euro) Level 1 Level 2 Level 3
Financial assets at fair value booked within the income statement
Derivative financial instruments - 25 -
Total assets - 25 -
Financial liabilities at fair value booked within the income statement
Derivative financial instruments - 299 -
Total Liabilities - 299 -
31 December 2012
Separate financial statements (in thousands of Euro) Level 1 Level 2 Level 3
Financial assets at fair value booked within the income statement
Derivative financial instruments - 15 -
Total assets - 15 -
Financial liabilities at fair value booked within the income statement
Derivative financial instruments - 598 -
Total Liabilities - 598 -
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
109
31 December 2013
Consolidated financial statements (in thousands of Euro) Level 1 Level 2 Level 3
Financial assets available for sale
Investments valuated at FV with contra-entry as comprehensive profits /
(losses) 2,133 - -
Financial assets at fair value booked within the income statement
Derivative financial instruments - 46 -
Total assets 2,133 46 -
Financial liabilities at fair value booked within the income statement
Derivative financial instruments - 690 -
Total Liabilities - 690 -
31 December 2012
Consolidated financial statements (in thousands of Euro) Level 1 Level 2 Level 3
Financial assets available for sale
Investments valuated at FV with contra-entry as comprehensive profits /
(losses) 1,344 - -
Financial assets at fair value booked within the income statement
Derivative financial instruments - 15 -
Total assets 1,344 15 -
Financial liabilities at fair value booked within the income statement
Derivative financial instruments - 1,360 -
Total Liabilities - 1,360 -
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
110
Management of interest rate risk
The interest rate risk to which Group companies is exposed has its origin in its net debt with the banking
industry, which also includes debt due to lessors under finance lease contracts outstanding at the balance sheet
date.
The Group‟s policy is to hedge cash flow risk on interest rates with reference exclusively to medium/long-term
loans. Hedging is carried out by means of derivate contracts having simple structures, typically using interest
rate swaps (“plain vanilla derivatives”) or caps, which convert floating rate to fixed rate. When it is believed
that interest rates will tend to fall significantly in the short term, the inclusion of other variables is considered
(the introduction of thresholds) to reduce the fixed rate. Please refer to notes 13 and 25 for details of hedging
contracts in place as at 31 December 2013.
The short-term portion due to banks, which is used mainly to fund working capital needs, is not hedged against
interest rate risk.
Total interest expense is therefore affected by changes in interest rates. The following table sets out the
potential impact on consolidated interest expense of changes in the average reference rate represented by 3M
EURIBOR rate, with respect to the average rate for 2013, with all the other variables remaining unchanged.
Interest rate
Change
3M EURIBOR
Effect on consolidated
interest expense
(millions of Euro)
EURIBOR (0.2%) 0.13
0.0% 0.0
0.2% (0.13)
The figures relating to the prior year are as follows:
Interest rate
Change
3M EURIBOR
Effect on consolidated
interest expense
(millions of Euro)
EURIBOR (0.2%) 0.13
0.0% 0.0
0.2% (0.13)
The following table sets out the potential impact on interest expense in the separate Financial Statements of
changes in the average reference rate represented by the 3M EURIBOR rate, with respect to the average rate for
2013, with all the other variables remaining unchanged.
Interest rate
Change
3M EURIBOR
Effect on separate interest
expense
(millions of Euro)
EURIBOR
(0.2%) 0.13
0.0% 0.0
0.2% (0.13)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
111
The figures relating to the prior year are as follows:
Interest rate
Change
3M EURIBOR
Effect on separate interest
expense
(millions of Euro)
EURIBOR (0.2%) 0.12
0.0% 0.0
0.2% (0.13)
Management of credit risk
The Group deals with a selected clientele for the residential segment consisting mainly of single brand
distributors (who only sell Group products) and multi-brand dealers, principally located in leading Italian and
international cities, and for the Luxury Interiors segment consisting of large contractors and public bodies
(embassies, ministries, museums, certain prestigious automobile constructors). As things currently stand
customers are only required to provide collateral as a guarantee in a limited number of cases.
The credit management department has made it possible to more accurately monitor the critical factors that
emerged following the credit restrictions recorded in the financial markets. This allowed the Group to minimise
losses on receivables and cut past due credit positions.
In the event of the insolvency of the counterparty the maximum credit risk for the Group‟s other financial
assets, which consist of cash and cash equivalents, available-for-sale financial assets and certain derivative
instruments, is equal to the carrying amount of these assets.
Lastly, note that as at the closing date of the financial statements the past due position accounts for 22.8% of
total exposure to customers, in line with the figures reported in the previous year. This percentage was
essentially unchanged with respect to the past year despite the growth in overall exposure. The incidence of
past due amounts is primarily due to certain Luxury Interiors receivables which, as a result of their nature, have
collection times subject to specific issues attributable to management of the contract and are therefore not
easily predictable.
Risks related to the presence of the Group in emerging markets
The Group does business in various emerging countries through joint ventures and agreements of a commercial
nature. The Group‟s exposure to trends in these countries has increased recently, in particular regarding the
joint venture PF Emirates LCC which operates in the United Arab Emirates. The occurrence of unfavourable
political or economic developments in this area, including economic crises or political instability, could in the
future affect the Group‟s business prospects, as well as its results and/or financial situation.
Management of liquidity risk
A part of the revenues earned by the Group has a high level of seasonality, with contracts being completed
mostly in the second half of the year. This revenue seasonality, associated with a greater concentration of
communication and marketing costs in the first half of the year (connected in particular with the Salone
Internazionale del Mobile of Milan), usually causes the absorption of funds in the first three quarters of the
year and a considerable generation of cash only in the fourth quarter.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
112
The Group manages liquidity by the controlling the elements making up operational working capital and in
particular customer receivables and supplier payables. The Parent also uses the non-recourse sale of receivables
in the Luxury In Motion sector (in particular those arising from sales of leather upholstery for the automotive
sector) and those arising with primary Luxury Interiors customers, as a means of increasing cash and reducing
bank exposure. In addition, the negotiation of payment terms with suppliers allows the duration of the
absorption of funds to be partially reduced.
The Group obtains credit facilities with banks to deal with the need for cash for managing working capital.
These facilities can be used for cash, are good until cancelled and are available mostly in the form of umbrella
facilities for mixed use, including the issue of guarantees. The Group also has credit facilities for the issuing of
commercial guarantees. At 31 December 2013 the Group‟s use of these facilities, including guarantees, was
around 35%.
Given the matters discussed above it is considered that the Group‟s liquidity risk is currently modest.
Management of currency risk
The Group develops around 31.9% of its revenues in countries outside the Euro area and a portion of these
revenues is denominated in US dollars or local currencies tied to trends in the US dollar. On the other hand the
Group is only marginally exposed to movements in foreign currencies other than the US dollar.
The Group covers its Euro/dollar exchange risk exposure to the US subsidiaries by entering into forward
contracts or FX collars. If the Luxury Interiors segment has contracts with fees of significant amounts expressed
in foreign currency, then the use of hedging contracts is assessed on each occasion, according to whether or
not any contract costs are denominated in foreign currency (natural hedging). The consolidated financial
statements are accordingly not significantly affected by changes in the Euro/dollar exchange rate.
The following table provides a summary of the potential effect on the profit before taxes in 2013 in the
consolidated and separate financial statements of changes in the Euro/dollar exchange rate, calculated on the
net average exposure of financial assets and liabilities expressed in said currency. Figures are stated in millions
of Euro.
Currency Euro/dollar exchange rate Effect on consolidated
income before taxes
USD 1.28 0.23
1.33 0.0
1.38 (0.21)
Currency Euro/dollar exchange rate Effect on separate
income before taxes
USD 1.28 0.16
1.33 0.0
1.38 (0.15)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
113
Capital management
The Group‟s primary objective is to ensure that a constant balance is maintained between profitability ratios
(the Group‟s ability to generate profits), liquidity ratios (the Group‟s ability to convert the profits generated into
cash flows), solidity ratios (the Group‟s ability to maintain a liability structure consistent with the asset
structure) and growth ratios (the Group‟s ability to ensure constant growth of revenues without causing the
overall capital solidity to deteriorate).
With reference to capital management in particular, the Group believes that it is fundamental to maintain a
high level of capital solidity to maximise its credit rating and therefore be able to obtain short and medium-
long term credit facilities to support its growth plans under the best economic conditions.
The Group manages its capital structure and amends it on the basis of changes in economic conditions - those
of the Group and those of the market - and the objectives set in budgets and the three year plan. To maintain
or adjust its capital structure the Group may revise its dividend policy, sell treasury shares or issue new equity
instruments.
No changes were made to objectives, policies or procedures in 2012 or 2013.
The Group constantly verifies its capital solidity by means of the debt ratio (the ratio between interest-bearing
debt and equity) and the financial leverage ratio (the ratio between interest-bearing debt and the EBITDA of
the previous 12 months). The Group‟s policy is designed to keep the former ratio in a range between 1 and 1.5
and the latter in a range between 2 and 3, consistent with the consolidated three year plan approved by the
Board of Directors.
The Group includes in net debt all its exposures - short or medium-long term - towards the banking world,
including leasing companies, net of cash and other financial assets. Equity consists of all items in shareholders‟
equity pertaining to the Parent.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
114
Separate Financial Statements (in thousands of Euro) 31 December 2013 31 December 2012
Interest-bearing debt, gross 85,383 71,661
Cash and other financial assets (18,115) (8,852)
Net debt 67,268 62,809
Share capital 34,604 34,810
Reserves and profit or loss for the year 3,555 4,784
Shareholders‟ equity 38,159 39,594
Debt ratio (net debt / Shareholders‟ equity) 1.76 1.59
Financial leverage ratio (net debt / EBITDA) 4.15 5.91
Consolidated Financial Statements (in thousands of Euro) 31 December 2013 31 December 2012
Interest-bearing debt, gross 91,304 93,460
Cash and other financial assets (21,964) (14,387)
Net debt 69,340 79,073
Share capital 34,604 34,810
Reserves and profit or loss for the year 39,630 36,266
Group shareholders‟ equity 74,234 71,076
Debt ratio (net debt / Group shareholders‟ equity) 0.93 1.11
Financial leverage ratio (net debt / EBITDA) 2.17 3.04
Risks and pending disputes
On 3 October 2011, Cassina S.p.A. received a communication from BNL S.p.A. regarding a request made by PEO
for enforcement of a performance bond for Rial (Qatar) 23,382,148 (amounting to approximately Euro 4.7
million) issued by the Commercial Bank of Qatar in favour of PEO on behalf of Cassina, and counter-guaranteed
by BNL.
Cassina deemed this enforcement to be wholly illegitimate given that, inter alia, the contract to which the
guarantee refers was terminated by mutual consent in March 2010. Cassina S.p.A. promptly submitted an
urgent appeal to the Court of Monza to prevent any compensation claims against the company. The Court
suspended the payment and the claim. As a result of this enforcement order - later confirmed in favour of the
company, also in appeal - Cassina S.p.A. started the relevant legal proceedings against PEO before the Court of
Desio (MB), to obtain full settlement of the price of the works performed. Subsequently, in January 2012, the
PEO launched legal proceedings at the Court of Doha against the Commercial Bank of Qatar and against
Cassina S.p.A. as the guaranteed party. In the meantime, by final sentence dated 30 January 2013, the Court of
Desio announced: (i) its own lack of jurisdiction in the legal proceedings instigated by Cassina; (ii) its
jurisdiction to decide the ancillary proceedings brought against BNL for pronouncement that all performance
bonds were extinguished along with all related obligation to pay commissions. It is expected that the sentence
regarding relations with BNL will be issued not earlier than 2015. As regards the case based in Qatar, Cassina‟s
defence lawyers in Qatar are unable to express a plausible indication of when the dispute will end, as from
January 2012 to date the proceedings have been subject to mere technical adjournments to allow for the
frequency of international notifications, without ever discussing the merits of the case.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
115
On 26 July 2010 Cassina S.p.A. was served two assessment notices in respect of IRAP, VAT and IRES in relation
to findings for the 2006 fiscal year. The only significant point arising in the assessment report regards the
management fee charged to the Company by Poltrona Frau S.p.A.; a challenge has been made on the question
whether an amount of Euro 2.3 million pertains to the company and is reasonable, and hence whether it can be
charged against taxable income. In the light of the considerable factors it has available to defend this fiscal
treatment, the company filed an appeal against the two assessment notices on 7 February 2011. The Provincial
Tax Commissions of Milan and Turin upheld these appeals, accepting the company‟s defence arguments in full.
The Revenue Office has filed appeals. The appeals filed with reference to the sentences of the Provincial Tax
Commission of Milan were admitted by the Regional Tax Commission of Milan. The Company will appeal to the
Court of Cassation. The date of the hearings for the appeal filed by the Revenue Office and relative to the
sentence of the Provincial Tax Commission of Turin has not yet been set.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
116
BUSINESS COMBINATIONS
With regard to business combinations arranged during the year, see note 1 of this report.
SEGMENT REPORTING
The business segments through which the Group works have been determined on the basis of the reporting
used by the Group‟s Chief Executive Officer to take strategic decisions. This reporting, which reflects the
Group‟s current organisational and corporate structure, is based on business segments distinguished by the
brands through which the Group, by means of its companies, characterises its products and manages its
activities. Each brand benefits from a highly specific product/market relationship with its own strong features
highly distinct from the others, strictly connected with their individual history and values, which responds to
the need to diversify by having a range of products which, while all belonging to the luxury furnishing sector,
have markets with characteristics which are completely autonomous and distinctive.
Certain information on these segments is as follows:
Poltrona Frau: the Parent‟s brand, which does business in the top range furnishing sector, produces and
distributes products of exceptional quality, distinguished mainly by their classical style. Poltrona Frau
activities are divided into three main segments: (i) Residential, i.e. the creation, production and distribution
of top range furnishing products for selected customers for use in the home and the office, and (ii) Luxury
Interiors, which consists of the supply of quality furnishings for public and common spaces (“furnishings”),
and (iii) Luxury in Motion, i.e. the fitting out of the interiors of top range cars, aircraft, helicopters and
boats.
Cassina: a company acquired by Poltrona Frau in June 2005, it produces and sells sofas, divans, tables,
chairs, cabinets and beds, for both the residential and office world. Cassina represents an important
element of diversification within the Group, thanks to its catalogue of extraordinary products bearing the
names of some of the most important historical and modern designers. Cassina is also considered a
reference point for the realisation of Luxury Interiors concerning the environment (including showrooms
and hotels) and, where specifically requested, yachts and cruise liners.
Cappellini: the company joined the Group in December 2004; it operates in the residential segment, with
products of contemporary and cutting edge design distinguished by the constant search for innovative
materials.
The following tables provide disclosures for 2013 and 2012 relating to the above-mentioned operating
segments.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
117
2013 (thousands of Euro) Poltrona Frau Cassina Cappellini Cancellations
Consolidated
total
Revenues
Total Revenues 159,243 110,400 11,663 (8,462) 272,844
Results
Segment costs (152,317) (96,210) (12,520) 8,462 (252,585)
Segment results 6,926 14,190 (857) - 20,259
Net financial income (charges) (2,411) (2,406) (82) - (4,899)
Profit /(loss) from associates and JV accounted for by using the
equity method (3,628) - - - (3,628)
Income before taxes 887 11,784 (939) - 11,732
Income taxes (7,199)
Net result 4,533
2013 (thousands of Euro) Poltrona Frau Cassina Cappellini
Consolidated
total
Total segment assets 137,297 140,375 26,917 304,589
Total segment liabilities 118,459 105,561 6,696 230,716
Investments in
· Tangible fixed assets 3,247 3,116 364 6,727
· Intangible fixed assets 1,378 4,164 201 5,743
Amortisation/depreciation and write-downs (4,628) (2,201) (758) (7,587)
Costs of non-recurring nature (4,171) (4,171)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
118
2012 (thousands of Euro) Poltrona Frau Cassina Cappellini Cancellations Consolidated
total
Revenues
Total Revenues 131,624 110,274 12,877 (7,787) 246,988
Results
Segment costs (126,894) (98,903) (13,445) 7,787 (231,455)
Segment results 4,730 11,371 (568) - 15,533
Net financial income (charges) (3,404) (2,383) (29) (5,816)
Profit /(loss) from associates accounted for by using the equity
method (858) - - - (858)
Income before taxes 468 8,988 (597) - 8,859
Income taxes (4,060)
Net result from functioning assets 4,799
Net result from assets held for sale (3,675)
Net Result 1,124
2012 (thousands of Euro) Poltrona Frau Cassina Cappellini
Assets/ liabilities
held for sale
Consolidated
total
Total segment assets 121,261 144,362 15,924 1,072 282,619
Total segment liabilities 103,874 102,979 4,384 572 211,809
Investments in
· Tangible fixed assets 1,914 1,036 283 - 3,233
· Intangible fixed assets 4,692 3,925 96 - 8,713
Amortisation/depreciation and write-downs (4,290) (1,542) (736) - (6,568)
Restructuring costs (1,923) (1,875) (108) - (3,906)
Value losses (25) - - - (25)
Further details of the above data can be found in the paragraph “Analysis of annual revenues of the Group by
business segment and geographical area” in the Management Report.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
119
COMMENTS ON ITEMS IN THE STATEMENT OF FINANCIAL POSITION
The values as at 31 December 2012 were restated to ensure their consistency and comparability with those of
the current year. This restatement was required due to the classification of actuarial profit/loss resulting from
the calculation of Employee benefits. These actuarial profits /losses are now recognised under "Other items of
the Statement of Comprehensive Income", pursuant to provisions set out by new IAS 19 standard.
1. GOODWILL
This item may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Acquisition of the Cassina Group – portion allocated to the Cassina
segment 15,398 15,398 -
Other goodwill 2,723 2,067 656
Total Goodwill 18,121 17,465 656
On 20 June 2013, an agreement was signed, effective from 1 July 2013, for the acquisition of the Simon brand
Business Unit, a company of the Estel Group, which became part of the Cassina collection. With this
acquisition, Cassina expanded its collection thanks to a portfolio of excellent products by such reputed
designers and architects as Carlo Scarpa, Marcel Breuer and Kazuhide Takahama. These products will enhance a
number of product ranges, for example tables, container units, seating and office furniture.
The acquisition price for the Business Unit was agreed upon by the parties divided in a fixed amount, added
with the amount for the valuation of inventories, and a variable amount, which will be determined according to
turnover generated by the sale of products under the Simon brand over the 5 years after 1 July 2013, the
effective date.
This transaction falls within the definition of a business combination according to the provisions of IFRS 3
“Business Combinations”, and as such was accounted for using the purchase price allocation. This transaction is
analysed hereunder:
(in thousands of Euro)
Purchase cost 3,158
Fair value of assets acquired 2,479
Positive goodwill 679
The positive goodwill, resulting from the difference between the business combination cost and fair value of
the acquired assets at the acquisition date, amounting to Euro 679 thousand, was recognised in the assets of
the Consolidated Statement of Financial Position under item Goodwill.
Impairment test
Intangible fixed assets with indefinite useful life, represented by the goodwill and the Group‟s brands which are
classified in the respective balance sheet captions, underwent impairment testing at 31 December 2013.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
120
The Group identified cash-generating units with the business sectors for which disclosures are required as
primary segments, which correspond to the “Poltrona Frau”, “Cassina” and “Cappellini” brands. For the purpose
of impairment testing, a portion of the value of intangible fixed assets with indefinite useful life was then
allocated to each segment/cash-generating unit.
In operational terms impairment testing was conducted on the carrying amount of each cash-generating unit
by referring to the net invested capital of each unit, which corresponds to its operating assets less operating
liabilities.
The recoverability of the values recognised was verified by comparing the net book value of each cash-
generating unit against the current value of cash flows estimated as deriving from continuous use of the assets
that make up those cash-generating units and their attributable end value. The only exception is the
"Cappellini" CGU, where net book value was compared with fair value less cost to sell, by reason of the fact
that the latter is higher than the value in use.
The main assumptions used to calculate the recoverable value (value in use) refer to:
a) estimated future cash flows from operations;
b) the discount rate;
c) the final growth rate.
With regard to point a), the Group made an assumption of the likely business outlook, for impairment testing
purposes only, for 2014-2016, presented at the Board of Directors‟ meeting held on 13 March 2014.
The discount rates used represent current market assessments of the time value of money and the risks specific
to the business‟s specific activities. In response to the above, in particular, in relation to the phase of recession
affecting the domestic market, it should be noted that said rates also include a country risk premium calculated
analytically for each of the three cash-generating units, taking into account the geographical breakdown of the
volume of business realised by said units. In particular, the following discount rates representative of the
unlevered cost of risk capital were used:
CGU “Poltrona Frau segments”: 9.7%;
CGU “Cassina segment”: 9.7%;
CGU “Cappellini segment” 11.3%;
In the impairment test the end value was determined using a “g rate” of 1%.
The main assumptions used for the "Cappellini Segment" to calculate the recoverable value (fair value less cost
to sell) relate to:
a) the estimate of future revenues attributable to the brand;
b) the discount rate;
c) the final growth rate;
d) Royalties rate (4.7%).
With regard to point a), the Group made an assumption of the likely future revenue, for impairment testing
purposes only, for 2014-2016, presented at the Board of Directors‟ meeting held on 13 March 2014.
The discount rate used represents current market assessments of the time value of money and the risks specific
to the business‟s specific activities. In response to the above, in particular, in relation to the phase of recession
affecting the domestic market, it should be noted that said rate also includes a country risk premium calculated
analytically for the cash-generating unit, taking into account both the geographical breakdown of the volume
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
121
of business realised by said unit and an additional risk equal to 0.5%. In particular, the following discount rate
representative of the unlevered cost of risk capital was used:
CGU “Cappellini segment” 11.8%.
In the impairment test the end value was determined using a “g rate” of 1%.
In the absence of both a binding sell and buy agreement and an active market, the CGU was valued according
to a generic market participant. In particular, the "Cappellini Segment" is mainly composed of the brand and
only performs activities connected with projects and design. In this context, a market participant would
recognise that the price of the Cappellini segment is the brand fair value calculated according to the income
approach, with the Royalties method (i.e. the discount of the flows of royalties that the market would have
been willing to pay to the owner of the brand) as well as the accounting value of the other assets and
liabilities.
The recoverable value of the "Cappellini Segment", estimated as fair value less cost to sell, is higher than the
value in use.
The impairment testing of all goodwill at 31 December 2013 confirmed the carrying amounts. As at 31
December 2013, there were no accumulated losses on goodwill recorded in the financial statements.
In addition, also based on indications in the Bank of Italy-Consob-ISVAP joint document no. 4 of 4 March 2010,
the Group arranged the preparation of a sensitivity analysis of the test results against the changes in basic
assumptions affecting the value in use of the cash-generating units, though no further impairment indicators
emerged.
Given that the recoverable value was determined on the basis of estimates, the Group cannot guarantee that -
in view of the uncertainty regarding developments in the current global crisis - no need will arise in the future
to review these estimates. The Group will maintain a constant watch over developments in the situation in
order to review the assumptions underlying the estimates made if appropriate.
2. BRANDS WITH INDEFINITE USEFUL LIFE
Brands with indefinite useful life may be analysed as follows at 31 December 2013 and at the end of the
previous year:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Frau 3,316 3,316 -
Cassina 56,000 56,000 -
Cappellini 4,504 4,504 -
Simon 2,300 - 2,300
Total Brands with indefinite useful life 66,120 63,820 2,300
Appraisals were conducted by independent third parties of the brands Frau, Cassina and Cappellini as support
for the assessments made by the Company‟s directors and impairment testing was performed as at 31
December 2013 on the carrying amounts to identify any impairment losses.
Compared to reports for 2012, it is worth noting that in 2013 the Simon brand was acquired at a price finalised
under contract.
As at 31 December 2013, there were no accumulated losses on brands with an indefinite life recorded in the
financial statements.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
122
3. OTHER INTANGIBLE ASSETS
Other intangible fixed assets may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro)
31 December
2013
31 December
2012 change
Development costs 3,139 2,719 420
Industrial patents and intellectual property rights 1,117 1,163 (46)
Concessions, licences and similar rights 366 242 124
Others 174 718 (544)
Total Other intangible fixed assets 4,796 4,842 (46)
Changes during the year in the items making up other intangible fixed assets were as follows:
(in thousands of Euro)
Capitalised
development
costs
Industrial
patents
Concessions,
licences and
similar rights
Others Total
Net book value as at 31 December 2012 2,719 1,163 242 718 4,842
Purchases 1,682 942 117 23 2,764
Amortisation or depreciation (1,088) (1,162) (10) (106) (2,366)
Reclassifications (175) 192 - - 17
Exchange differences and other movements 1 (18) 17 (461) (461)
Net book value as at 31 December 2013 3,139 1,117 366 174 4,796
The increase of "Capitalised development costs" and "Industrial patents and intellectual property rights" relates
to investments made by the Parent and the major subsidiaries over the year for the creation of prototypes of
new products and expenditure incurred to protect and register patents, as well as costs connected with the
purchase and implementation of management software.
The item “Exchange differences and other movements” includes the effects of application of the equity method
for consolidation following the disposal of 51% of the Chinese subsidiary Zhejiang Casanova Furniture Ltd..
4. TANGIBLE FIXED ASSETS
Tangible fixed assets may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Land and buildings 24,984 26,225 (1,241)
Plant and machinery 9,812 9,913 (101)
Industrial and commercial equipment 1,848 974 874
Others 2,697 2,887 (190)
Assets under construction and advances 139 215 (76)
Total Tangible fixed assets 39,480 40,214 (734)
The following table provides details of the historical cost and accumulated depreciation of tangible fixed assets
at 31 December 2013 and 31 December 2012:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
123
(in thousands of Euro) Land and
buildings
Plant and
machinery
Industrial
and
commercial
equipment
Other assets
Assets
under
constr. and
advances
Total
Cost at 31 December 2012 39,269 22,981 14,974 12,682 215 90,121
Acc. depreciation at 31 December 2012 (13,044) (13,068) (14,000) (9,795) - (49,907)
Net book value as at 31 December 2012 26,225 9,913 974 2,887 215 40,214
Cost at 31 December 2013 38,581 24,366 16,109 13,106 139 92,301
Acc. depreciation at 31 December 2013 (13,597) (14,554) (14,261) (10,409) - (52,821)
Net book value as at 31 December 2013 24,984 9,812 1,848 2,697 139 39,480
Changes during the year ended 31 December 2013 in tangible fixed assets were as follows:
(in thousands of Euro) Land and
buildings
Plant and
machinery
Industrial
and
commercial
equipment
Other assets
Assets
under
constr. and
advances
Total
Net book value as at 31 December 2012 26,225 9,913 974 2,887 215 40,214
Purchases 2,518 1,594 1,382 901 332 6,727
Disposals (26) (26)
Amortisation or depreciation (1,715) (1,659) (527) (1,071) (4,972)
Write-downs (249) (249)
Reclassifications (87) 146 180 127 (383) (17)
Exchange differences and other movements (1,708) (182) (161) (121) (25) (2,197)
Net book value as at 31 December 2013 24,984 9,812 1,848 2,697 139 39,480
The increase in “Land and Buildings” refers to improvements at the Lentate sul Seveso (MB) building, to which
the Cassina and Cappellini engineering research centres were transferred, and partly to the creation of
exhibition stands at the Salone Internazionale del Mobile held at Rho Fiera and considered light constructions.
The increases, recorded in 2013, in the other items of tangible fixed assets relate to operating investments.
The item “Exchange differences and other movements” includes the effects of application of the equity method
for consolidation following the disposal of 51% of the Chinese subsidiary Zhejiang Casanova Furniture Ltd.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
124
5. INVESTMENTS IN SUBSIDIARIES AND JV
Changes in "Investments in subsidiaries and joint ventures", in the year ended 31 December 2013, were as
follows:
(in thousands of Euro)
31
December
2012
Capital
increases
Revaluations
(Write-downs)
Change in the
scope of
consolidation
31
December
2013
Associates
Alias S.p.A. 4,000 - - - 4,000
Spazio Washington LLC 40 - - (40) -
Nemo S.r.l. - - 345 500 845
Total Associates 4,040 - 345 460 4,845
Joint ventures
PF Emirates Interiors LLC 5,890 - (1,365) - 4,525
Casa Décor Private Ltd. 450 374 (824) - -
Zhejiang Casanova Furniture Co. Ltd. - 553 (880) 739 412
Total Joint Ventures 6,340 927 (3,069) 739 4,937
Investments in subsidiaries and JV 10,380 927 (2,724) 1,199 9,782
The following table provides the figures for shareholders‟ equity and profit (loss) for the year as stated in the
most recently approved financial statements of investee companies as at 31 December 2012, or as at 31
December 2013 if available because already approved by the competent management body, with a comparison
with their carrying amounts in the consolidated financial statements at 31 December 2013:
(in thousands of Euro) % holding Shareholders‟
equity
Group‟s portion
of shareholders‟
equity
Value as at
31 December
2013
Higher (lower)
shareholders‟
equity value
Associates
Alias S.p.A. 49% 917 449 4,000 (3,551)
Nemo S.r.l. 49% 1,725 845 845 -
Total Associates 4,845
Joint ventures
PF Emirates Interiors LLC 49% 9,234 4,525 4,525 -
Casa Décor Private Ltd. 50% (1,541) (771) - (771)
Zhejiang Casanova Furniture Co. Ltd. 49% 840 412 412 -
Total joint ventures 4,937
Investments in subsidiaries and JV 9,782
Revaluations and write-downs of investments in associates and joint ventures arise from the effect of using the
equity method of accounting and reflect the results of these companies.
Nemo S.r.l. was included starting from the 2013 financial year. It is 49% owned by Cassina S.p.A. and
established as part of the disposal of the Group lighting division carried out with the transfer of the investment
in Artelux S.A. by Cassina S.p.A. to Nemo S.r.l. in February 2013.
Furthermore, as part of the streamlining and reorganisation of the Group, in February 2013, 51% of the Chinese
subsidiary Zhejiang Casanova Furniture Ltd. was sold to the Chinese company Wenzhou Opal Furniture Co. Ltd.
Following this transaction the company was consolidated using the equity method.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
125
Lastly, it should be noted that the subsidiary Poltrona Frau Group North America Inc. acquired 70% of the
company Spazio Washington LLC from Variant Inc. at a price equal to the Net Equity Value on 31 October 2013
added by a goodwill of around USD 40 thousand. The company Spazio Washington LLC is now consolidated by
using the line-by-line method.
The higher carrying amount of the investment in Alias over the Group‟s share of its equity, calculated on the
basis of Italian accounting principles, is supported by contractual agreements reached with Akron Design S.r.l.
on the sale of the majority holding. In particular, taking into account the losses of the last two years and the
difficult economic context characterised by the phase of recession affecting Italy and various other European
countries, in which the company‟s business developed considerably, the book value of the investment at 31
December 2013 remained the same as that recorded in 2012, retaining alignment with the minimum value of
the put option, i.e. without taking into account the earn-out in consideration of a business plan which was
revised significantly downward, envisaged contractually in favour of the subsidiary Cassina S.p.A. and
exercisable in 2015.
The higher value compared to the shareholders' equity of the investment in the joint venture Casa Décor Private
Ltd., equal to Euro 0.8 million, relates to the adjustment of this company according to the equity method. As at
31 December 2013, the portion of the equity account relating to the joint venture is negative and the related
amount was allocated to a special provision for risks. Reference should also be made to note 19 “Provisions for
risks and charges”.
6. OTHER INVESTMENTS
Changes in Other investments in the year ended 31 December 2013 were as follows:
(in thousands of Euro)
31
December
2012
Acquisitions -
Share capital
increases
Revaluations
(Write-downs)
Change in the
scope of
consolidation
31
December
2013
Other investments
Celi S.p.A. 133 - (133) - -
Fondazione Vico Magistretti 3 - - - 3
Other investments 136 - (133) - 3
During 2013, by reason of losses incurred, the company Celi S.p.A. filed in a creditors' arrangement at the Court
of Terni and the investment cost was fully written-down.
7. AVAILABLE FOR SALE FINANCIAL ASSETS
“Available for sale financial assets” includes in investment in Cassina IXC (listed on the JASDAQ, Tokyo). In
accordance with the requirements of IAS 39, the change in the Euro/yen exchange rate during the year and its
adjustment to the share price have been credited to an appropriate shareholders‟ equity reserve.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
126
8. OTHER NON-CURRENT ASSETS
Details of receivables from others due after 12 months at 31 December 2013 and 31 December 2012 are as
follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Guarantee deposits 5,041 5,277 (236)
Other items 4,014 2,166 1,848
Total other non-current assets 9,055 7,443 1,612
“Guarantee deposits” include a deposit of Euro 3,600 thousand paid in January 2006 by the subsidiary Cassina
S.p.A. to the affiliate PF Real Estate S.r.l., as discussed in note 42 “Related party transactions”. The remainder of
the item relates mainly to guarantee deposits paid in respect of leases for stores in New York managed by US
subsidiaries.
Compared with 31 December 2012, “Other items” increased mainly as a result of the financial receivable due to
the Parent Poltrona Frau S.p.A. from the company Zhejiang Casanova Furniture Ltd. (Euro 2.1 million). This
position was no longer eliminated following the disposal of 51% of the subsidiary to the Chinese company
Wenzhou Opal Furniture Co. Ltd.
This item includes the financial receivable of roughly Euro 0.8 million arising on the sale of the subsidiary IL
America Inc. and the financial receivable of Euro 0.4 million paid to Milano Progetti S.r.l. following the
enforcement of a surety of this amount by the Court of Como in relation to the closing of the creditors‟
arrangement of Cappellini S.p.A., of which Cap Design S.p.A. was the guarantor. In addition, this item includes
the financial receivable of Euro 700 thousand due from Nemo S.r.l. following the sale of the Nemo business
unit finalised by Cassina S.p.A. in December 2012.
9. DEFERRED TAX ASSETS
The following table provides the balance and composition by nature of deferred tax assets at 31 December
2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Taxed provisions 2,755 3,103 (348)
Amortisation or depreciation 377 366 11
Fair value of derivative contracts 246 246 -
Margins in inventory 903 1,049 (146)
Valuation exchange difference 72 138 (66)
Loss carry forwards in foreign subsidiaries 1,707 1,437 270
Other items 412 118 294
Total deferred tax assets 6,472 6,457 15
“Taxed provisions” relate to accruals to the allowance for doubtful accounts, the inventory obsolescence
provision and the provisions for risks and charges which are not deductible for fiscal purposes.
“Amortisation or depreciation” consists mainly of deferred tax assets recognised for temporary differences
between the carrying amount of intangible assets for fiscal purposes which are capitalised and then deducted
from income as amortisation over a period of years and their nil carrying amount in the financial statements
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
127
prepared for IFRS purposes in which they are fully expensed in the year in which the expenditure is incurred.
The item also includes deferred tax assets relating to temporary differences arising from the use of different
amortisation rates for tax purposes and in the consolidated financial statements.
“Fair value of derivative contracts” relates to the effects of accounting in profit or loss for the fair value of
derivatives contracts entered into by the Parent and the subsidiary Cassina S.p.A.
“Margins in inventory” consists of the deferred tax effect arising from the reversal of margins in inventory
arising from intragroup transactions.
“Loss carry forwards in foreign subsidiaries” partly refer to the tax losses recordable by the foreign subsidiaries
for an unlimited period and to deferred tax assets recognised by the subsidiary Poltrona Frau Group North
America Inc. as a result of the temporary differences arising from the costs incurred for the opening of DOS
operating in the US market.
“Other items” consists mainly of deferred tax assets recognised on differences arising on the translation of
items in foreign currency and balances for entertainment expenses.
10. INVENTORIES
Inventories may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Raw materials 30,674 20,191 10,483
Semi-finished goods 6,137 5,336 801
Finished goods 21,295 19,027 2,268
Contract work in progress 7,063 8,045 (982)
Advances 403 1,390 (987)
Total Inventories 65,572 53,989 11,583
The increase in inventories as at 31 December 2013, compared to prior year, amounts to around Euro 11.6
million. This increase is almost entirely due to the increased inventories in the Luxury in Motion segment (Euro
11.1 million).
Set out below is the balance of inventories together with the amount of the provision for obsolescence
allocated in the financial statements at 31 December 2013, in order to adjust the value of inventories to
presumed recoverable value:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Inventories, gross 69,652 57,344 12,308
Provision for obsolescence (4,080) (3,355) (725)
Total Inventories 65,572 53,989 11,583
Changes in the provision for obsolescence over the year ended 31 December 2013 compared to the previous
year are as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
128
(in thousands of Euro)
31 December 2012 3,355
Accrual 1,056
Utilisation (189)
Reclassifications (135)
Exchange differences and other movements (7)
31 December 2013 4,080
The accrual for the year is the result of a careful policy in assessing the risk of the need to write-down raw
materials and finished goods having particularly low rotation indices, also taking the current market situation
into consideration.
The utilisation is primarily attributable to the subsidiary Cassina S.p.A., due to the disposal of obsolete goods
covered by the provision.
11. TRADE RECEIVABLES
Trade receivables may be analysed as follows at 31 December 2013 and at 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Due from third party customers 52,598 50,793 1,805
Due from associates and JV 2,030 1,317 713
Total Trade receivables 54,628 52,110 2,518
The increase in trade receivables is mainly due to the higher revenues recorded by all the business sectors at 31
December 2013, particularly in the Luxury in Motion segment. Note that at the end of the year non-recourse
factoring totalled around EUR 24.1 million, compared to Euro 19.8 million as at 31 December 2012.
Set out below is the balance of trade receivables at 31 December 2013 together with the allowance for
doubtful accounts at this date, which has been made to adjust the nominal value of receivables to their
estimated realisable value:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Due from customers 57,593 55,225 2,368
Allowance for doubtful accounts (2,965) (3,115) 150
Total Trade receivables 54,628 52,110 2,518
Changes in the allowance for doubtful accounts in 2013 are as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
129
(in thousands of Euro)
31 December 2012 3,115
Accrual 399
Utilisation (546)
Exchange effect (3)
31 December 2013 2,965
The accrual for the year is the result of careful analysis by the Credit Management Department in assessing
insolvency risk, promptly applied on the basis of each credit position and taking the current market situation
into consideration.
The utilisation primarily relates to the Parent for the final closure of positions provisioned in previous years, as
well as to the company Cassina S.p.A., due to the write-off of disputed receivables.
There are no receivables whose contractual term exceeds 5 years.
12. OTHER CURRENT ASSETS
"Other current assets" may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Tax receivables 2,839 5,385 (2,546)
Other assets 4,904 8,879 (3,975)
Total Other current assets 7,743 14,264 (6,521)
"Tax receivables" may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
VAT receivables 200 1,064 (864)
Foreign tax receivables 768 584 184
Other receivables 1,871 3,737 (1,866)
Total tax receivables 2,839 5,385 (2,546)
The change in VAT receivables mainly refers to Cassina S.p.A..
The change in Other receivables primarily relates to IRES tax receivables resulting from the tax consolidation
recognised as at 31 December 2012, and amounting to Euro 1.7 million.
“Other assets” may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Advances to suppliers for services 690 1,731 (1,041)
Prepayments and accrued income 1,536 529 1,007
Current financial receivables 1,280 5,304 (4,024)
Others 1,398 1,315 83
Total Other current assets 4,904 8,879 (3,975)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
130
The item "Current financial receivables" mainly includes the short-term loan disbursed by the Parent to the PF
Emirates joint venture, equal to roughly Euro 0.9 million (Euro 4.9 million as at 31 December 2012) and the
reclassification of the short-term portion of the loans to IL America Inc. and Milano Progetti S.r.l.
“Others” refers to various types of minor receivables referring mainly to the Parent and to Cassina S.p.A.
13. DERIVATIVE INSTRUMENTS
Derivative instruments, amounting to Euro 46 thousand at 31 December 2013, include the fair value of
contracts hedging Euro v. US Dollar exchange rate risk with respect to trade flows deriving from the American
market.
From an accounting standpoint the gains or losses arising on the measurement at fair value of these derivative
financial instruments are recognised directly in profit or loss.
Details are shown below of outstanding contracts at 31 December 2013 and 31 December 2012, (amounts are
stated in thousands of Euro):
(in thousands of Euro) 31 December 2013 31 December 2012
Held in the name of Type Expiry date Notional Fair value Notional Fair value
Poltrona Frau S.p.A. Collar Export (Cassa di Risparmio Fabriano
and Cupramontana) 28/06/2013
- - 38 15
Poltrona Frau S.p.A. Collar Export (Veneto Banca) 28/05/2014 363 25 - -
Cassina S.p.A. Collar Export (Goldman Sachs) 28/05/2014 363 21 - -
726 46 38 15
Reference should also be made to note 25 “Derivative instruments”.
14. CASH AND CASH EQUIVALENTS
The balance on this item represents cash in hand and cash equivalents at the balance sheet date.
(in thousands of Euro) 31 December
2013
31 December
2012 change
Bank deposits 20,424 8,988 11,436
Cash in hand and valuables 214 80 134
CASH AND CASH EQUIVALENTS 20,638 9,068 11,570
Reference should be made to the consolidated cash flow statement for details of the sources and applications
which have given rise to the change in this balance as at 31 December 2013. The increase reported over the
year is primarily related to significant proceeds collected in the last days of the year.
15. ASSETS HELD FOR SALE
This item relates to all assets and liabilities connected with the company Artelux S.A., with reference to the
disposal of the "Nemo" BU occurred in 2012.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
131
The disposal transaction of the Group lighting division was completed in the first quarter of 2013 with the
transfer, by Cassina S.p.A., of the investment in Artelux S.A. to Nemo S.r.l. in February 2013.
16. SHAREHOLDERS' EQUITY
This item may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Share capital 34,604 34,810 (206)
Share premium reserve 1,238 2,530 (1,292)
Fair value reserve 1,213 459 754
Other reserves 5,927 6,607 (680)
Profit (loss) of previous periods 26,670 25,420 1,250
Group‟s share of profit/(loss) 4,582 1,250 3,332
Total Group shareholders‟ equity 74,234 71,076 3,158
Minority interest‟s share of capital and reserves (312) (140) (172)
Minority interest‟s share of profit/(loss) (49) (126) 77
Total minority interest (361) (266) (95)
TOTAL SHAREHOLDERS‟ EQUITY 73,873 70,810 3,063
The share capital consists of 140,275,159 ordinary shares with a nominal value of Euro 0.25 each. As resolved
by the Shareholders‟ Meeting of the Parent, held on 22 April 2013, the loss for the year, amounting to Euro
2,159,787, was carried forward.
The decrease in share capital and share premium reserve is the result of the purchase/sale of treasury shares,
including the part to service the exercise of stock option rights, totalling Euro 1,498 thousand.
The change in the fair value reserve, in which adjustments to the fair value of available-for-sale financial assets
are recognised, regards the change in the fair value of the minority interest in Cassina IXC Ltd.
The change in negative item "Minority interest‟s share of capital and reserves" is due to the increase in the
consolidation percentage of Frau U.S.A.. Corporation, from 67% as at 31 December 2012 to 83% as at 31
December 2013, results from the subscription of a capital increase by the only Company Poltrona Frau S.p.A..
Other reserves may be analysed as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
132
(in thousands of Euro) 31 December
2013
31 December
2012 change
Legal reserve 571 571 -
Extraordinary reserve 3,535 3,535 -
Consolidation profits (losses) brought forward 2,776 2,776 -
Stock option reserve 663 577 86
Translation reserve (156) 225 (381)
First-time adoption of IFRS reserve (294) (294) -
Provision for remeasurement of post-employment benefit obligations (523) (141) (382)
Others (645) (642) (3)
Total Other reserves 5,927 6,607 (680)
In accordance with IFRS 2, the stock option plan reserve consists of the corresponding entry in equity of the
cost, equal to the fair value of the options at grant date, which is recognised in profit or loss over the period in
which the exercising conditions vest.
The translation reserve, which includes exchange differences arising from the translation of assets and
liabilities at different exchange rates, through shareholders‟ equity and the income statement, fell mainly due
to the performance of the EUR/USD exchange rate.
The item Provision for remeasurement of post-employment benefit obligations include the actuarial gains and
losses resulting from the calculation of post-employment benefits according to provisions set forth by the new
IAS 19.
Reference should be made to the consolidated Statement of changes in equity for details of such changes
during the periods ended 31 December 2013 and 31 December 2012.
The tax effect related to the components in the Statement of comprehensive income is reported hereunder:
31 December 2013 31 December 2012
(in thousands of Euro)
Gross
amount
(Charge)/
Tax
benefit
Net
amount
Gross
amount
(Charge)/
Tax
benefit
Net
amount
Profit / (loss) on fair value of available-for-sale financial
assets 789 (35) 754 (46) 8 (38)
Profit / (loss) on exchange differences on translating
foreign operations (381) - (381) (258) - (258)
Actuarial profit (loss) on defined benefit plans (527) 145 (382) (328) 90 (238)
17. MEDIUM/LONG-TERM BORROWINGS
Medium-long-term borrowings, which amounted to Euro 43,148 thousand as at 31 December 2013 (Euro
48,429 as at 31 December 2012), consist of the non-current portion of loans from banks and financial
institutions and amounts due to other lenders recognised in the consolidated financial statements as the result
of using the financial method to account for lease arrangements.
Medium-long term borrowings may be analysed as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
133
Ref. (in thousands of Euro)
31 December
2013
31 December
2012
a) Banca delle Marche loan to Poltrona Frau S.p.A. - 393
b) Banca Popolare di Ancona loan to Cap Design S.p.A. - 1,070
c) Syndicated loan to Poltrona Frau S.p.A. 11,175 14,380
d) Syndicated loan to Cassina S.p.A. 23,522 30,050
e) Carilo loan to Poltrona Frau S.p.A. 334 537
f) Banco Popolare loan to Poltrona Frau S.p.A. 1,236 2,250
g) Centrobanca loan to Cassina S.p.A. 4,270 -
h) Banca Popolare di Sondrio loan to Poltrona Frau S.p.A. 1,903 -
i) Carilo loan to Poltrona Frau S.p.A. 284 -
j) Unicredit loan to Poltrona Frau S.p.A. 4,963 -
Bank loans 47,687 48,680
Finance leases 12,147 12,831
Total medium-long term borrowings 59,834 61,511
Less current portion (16,686) (13,082)
Non-current portion of medium-long-term loans 43,148 48,429
The decrease in the item Bank loans relates to portions repaid, in the year in question, of loans in place as at 31
December 2012. This decrease is partly offset by other loans supplied by various banks.
Details of bank loans to Group companies are as follows:
a) a loan made to the Parent by Banca delle Marche expiring on 30 June 2013;
b) a loan disbursed to Cap Design S.p.A. in December 2008 expiring on 31 December 2013, used to finance
the purchase of industrial machinery;
c, d) with the aim of rescheduling the repayment dates of medium-term debt and consolidating a large part
of short term credit lines, in July 2010 the Group signed two syndicated loan agreements, with the funds
being disbursed to the Parent and Cassina S.p.A., for a total of Euro59 million, with BNL (as agent bank),
Unicredit, Intesa Sanpaolo, Popolare di Sondrio, UGF and Banca Popolare di Verona. By entering these
agreements the Group was able to make early settlement of the outstanding loans with these banks.
These loans, which are repayable on a six-monthly basis from June 2011 to 30 June 2016, are unsecured,
and accordingly not supported by any guarantees, and provide for certain specific financial ratios to be
observed, such as that between the consolidated net financial position and consolidated equity and that
between the consolidated net financial position and consolidated EBITDA, which are calculated and
checked on annually on the basis of the figures stated in the consolidated financial statements. In
addition, as is normal for transactions of this nature, the agreements provide for restrictions and
commitments including limits on granting guarantees (negative pledges), on the sale of strategic assets,
on making investments and on extraordinary financial transactions.
These ratios, restrictions and commitments had all been observed at the balance sheet date.
e) in July 2010, Cassa di Risparmio di Loreto disbursed a loan of Euro 1 million to the Parent which is
repayable in monthly instalments and expires on 27 July 2015;
f) in March 2012, Banco Popolare disbursed a loan to the Parent for Euro 3 million, expiring on 31 March
2015, with a 70% counter-guarantee from Sace since the loan is for the promotion of group brands on
the international market and development of the Middle East market;
g) in June, Centrobanca disbursed a loan to Cassina S.p.A. for Euro 5,000 thousand, expiring on 15
September 2016. This is an unsecured loan and accordingly not supported by any guarantees, and it is
subject to specific covenants based on the consolidated debt/equity ratio and the consolidated
debt/EBITDA ratio, audited annually.
At the reporting date, compliance with these ratios were fulfilled.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
134
h) in March, Banca Popolare di Sondrio disbursed a loan to Poltrona Frau S.p.A. for Euro 2,000 thousand,
expiring on 30 April 2018. This is an unsecured loan and accordingly not supported by any guarantees;
i) in November 2013, Cassa di Risparmio di Loreto disbursed a loan of Euro 300 thousand to the Parent
which is repayable in monthly instalments and expires on 21 May 2015;
j) in December, Unicredit disbursed a loan to Poltrona Frau S.p.A. for Euro 5,000 thousand, expiring on 31
December 2018. This is an unsecured loans and accordingly not supported by any guarantees, and it is
subject to specific covenants based on the consolidated debt/equity ratio and the consolidated
debt/EBITDA ratio, audited annually.
At the reporting date, compliance with these ratios were fulfilled.
Reference should also be made to note 23 “Due to banks and other lenders”.
The amounts due as lease payments arise from the use of the financial method to account for assets acquired
under lease arrangements and represent the remaining liability to leasing companies at the balance sheet date.
These liabilities relate mainly to lease agreements entered into by the Parent for the construction of a
photovoltaic plant in 2010 on the roof of the facility in Tolentino (MC), and industrial buildings in Tolentino,
including plant and machinery, which were completed during 2009 and which have enabled the Group to
combine at one single production site activities and deposits previously located externally; these are intended
for use as the warehouse of the residential segment, the production department and warehouse of the Luxury
in Motion segment and the production department, warehouse and offices of the Luxury Interiors segment.
18. EMPLOYEE BENEFITS
The following changes took place during the year ended 31 December 2013 in Employee benefits:
(in thousands of Euro)
Actuarial valuation of “Employee benefits” at 31 December 2012 5,450
Service Cost
Interest Cost 184
Benefits paid (445)
Actuarial gains (losses) 527
Actuarial valuation of “Employee benefits” as at 31 December 2013 5,716
Other staff provisions 62
Total provisions for staff as at 31 December 2013 5,778
With regard to the TFR (Italian employees‟ leaving entitlement), as a result of legislative changes in previous
years that affected this benefit, the Group continued to record the obligation on amounts accrued as at 31
December 2006 in accordance with the rules for defined benefit plans, whilst the obligation on amounts
accrued from 1 January 2007 and payable to the supplementary benefits plan or to the INPS Treasury Fund
were recorded on the basis of contributions due for the period.
Employees‟ leaving entitlement falls under defined benefit plans. This liability was calculated using the
Projected Unit Cost Method, under which the liability for the acquired benefits reflects the expected date of
leaving employment and is discounted to present value. The economic-financial assumptions underlying the
actuarial evaluations can be summarised as follows: expected rate of inflation 2%, discount rate 2.5%, future
salary increases 3% and annual frequency of resignations/dismissals 3%.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
135
The decrease in provisions for personnel is mainly due to the benefits paid during the year as a result of normal
staff turnover.
Disclosures are provided below as required under the new international accounting standard IAS 19, in
particular the results of the sensitivity analysis performed on each actuarial assumption at year end, with an
indication of the effects that would have resulted from changes in the actuarial assumptions that might
reasonably have been made at that date, in absolute terms.
Sensitivity analysis of the main actuarial benchmarks on
figures as at 31 December 2013 (in thousands of Euro)
Poltrona Frau
S.p.A.
Cap Design
S.p.A. Cassina S.p.A. Group
+1% on the turnover rate 3,047 153 2,512 5,712
-1% on the turnover rate 3,053 154 2,515 5,722
+1/4% on the annual inflation rate 3,095 156 2,544 5,795
-1/4% on the annual inflation rate 3,006 151 2,483 5,640
+1/4% on the annual discount rate 2,985 150 2,468 5,603
-1/4% on the annual discount rate 3,118 158 2,560 5,836
Details are provided below of the contribution for the next period (Service cost) with an indication of the
average financial duration of the commitment for defined benefit plans.
Poltrona Frau
S.p.A.
Cap Design
S.p.A. Cassina S.p.A. Group
Service Cost - - - -
Plan duration 9.5 11.4 8.1 8.9
19. PROVISIONS FOR RISKS AND CHARGES
The balance of Euro 3,756 thousand at 31 December 2013 (Euro 5,092 thousand at 31 December 2012) may be
analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Agents‟ indemnity 1,468 1,653 (185)
Restructuring provision 490 2,396 (1,906)
Other provisions 1,798 1,043 755
Total Provisions for risks and charges 3,756 5,092 (1,336)
Changes in the provisions during 2013 were as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
136
(in thousands of Euro) Agents‟
indemnity
Restructuring
provision Other provisions Total
Balance as at 31 December 2012 1,653 2,396 1,043 5,092
Accrual 222 - 1,011 1,233
Utilisation (407) (577) (145) (1,129)
Redemption - (1,045) (13) (1,058)
Reclassifications - (284) (98) (382)
Balance as at 31 December 2013 1,468 490 1,798 3,756
The provisions for risks and charges consist mainly of the following categories of accrual:
the agents‟ indemnity is accrued annually on the basis of the commissions payable to the agents of the
Parent and other consolidated companies and calculated in accordance with prevailing legislation;
the restructuring provision decreased as a result of implementation of the restructuring plan that mainly
affected the Parent and the subsidiary Cassina S.p.A., as already extensively discussed in the Annual
Financial Report as at 31 December 2012.
The item "Other provisions" increased primarily due to the allocation of Euro 0.8 million related to the
adjustment to shareholders' equity of the joint venture Casa Décor Private Ltd. The remaining portion,
amounting to Euro 0.2 million, is attributable to potential tax liabilities incurred during 2013.
20. DEFERRED TAX LIABILITIES
The following table sets out the balances at 31 December 2013 and 31 December 2012 analysed by the nature
of the underlying temporary differences:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Purchase accounting 17,584 17,584 -
Finance leases 889 953 (64)
Reversal of the amortisation of goodwill and trademarks and the
depreciation of land 3,266 3,223 43
Accelerated amortisation/depreciation 19 24 (5)
Actuarial valuation of the TFR 57 219 (162)
Others 580 180 400
Total Deferred tax liabilities 22,395 22,183 212
The balance at 31 December 2013 consists mainly of the following items:
“purchase accounting”. The balance relates to the deferred taxation calculated on the difference
between the carrying amount at fair value of the net assets acquired in business combinations and
their tax base;
“finance leases”. This item relates to the tax effect arising from accounting for assets acquired in
leasing using the financial method;
“reversal of depreciation and amortisation”. This balance regards the reversal on preparing the
consolidated financial statements of the depreciation of tangible fixed assets and the amortisation of
intangible fixed assets recorded in the annual financial statements and recognised for fiscal purposes;
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
137
“accelerated amortisation/depreciation”. In this case deferred taxation arises from accelerated
depreciation not recognised for accounting purposes and recorded solely in income tax returns;
“actuarial evaluation of TFR (Italian employees‟ leaving entitlement) ”. As discussed earlier, for the
purposes of IFRS, in the consolidated financial statements TFR is measured by calculating the liability
to employees using actuarial assumptions and then discounting that liability. This accounting
treatment gives rise to differences with respect to the amounts recognised for tax purposes, requiring
in turn the recognition of deferred taxation.
21. OTHER NON-CURRENT LIABILITIES
Other non-current liabilities may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Long-term deferred income 464 509 (45)
Other minor items 894 45 849
Total Other non-current liabilities 1,358 554 804
“Long-term deferred income” pertains to the reversal of the capital gain realised by the Parent on the sale of a
piece of land intended to be used for the extension of the factory in Tolentino and the construction of an office
building, the subject of a leaseback agreement entered into by the Parent in December 2007, for which work
began in 2008 and was completed in June 2009.
Other minor items reported an increase of Euro 849 thousand, which is mainly due to the recognition, as
specified in the BU sale and purchase agreement signed in 2013 between Estel Group S.r.l. and Cassina S.p.A.,
of the price variable amount proportioned to the turnover which will reported in the next five years by the
Simon brand.
22. TRADE PAYABLES
Trade payables of Euro 70,857 thousand as at 31 December 2013 (Euro 59,197 thousand as at 31 December
2012) consist of payables of a commercial nature arising from transactions with suppliers. These balances are
stated net of any trade discounts and billing adjustments (returns and/or allowances) to the extent these have
been defined with the other party.
This increase, recorded over the year, results from higher purchase volumes.
23. DUE TO BANKS AND OTHER LENDERS
“Due to banks and other lenders” consist of bank overdrafts, advances received from banks, short term
financing and the current portion of medium-long term borrowings.
This item may be analysed as follows at 31 December 2013 and 31 December 2012:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
138
(in thousands of Euro) 31 December
2013
31 December
2012 change
Use of short-term credit facilities 34,794 32,755 2,039
Current portion of medium-long term borrowings 16,686 13,082 3,604
Total due to banks and other lenders 51,480 45,837 5,643
In respect of the line item “Use of short-term credit facilities”, the main instruments used by the Group are
represented by advances given on the presentation of trade bills for collection and export advances, regulated
by market rates applied when the transaction is initiated.
It is worth noting that the increase in the current portion of medium/long-term borrowings, compared to 31
December 2012, is due to new loans granted by various banks to Group companies, which are offset, to a
limited extent, by repayments of portions of some medium/long-term loans falling due.
Further details may be found in note 17 “Medium-long-term borrowings”.
The short-term exposure regarding the utilisation of credit facilities amounting in total to Euro 34,794
thousand as at 31 December 2013 (Euro 32,755 thousand as at 31 December 2012) relates to the following
Group companies:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Cassina S.p.A. 17,104 14,223 2,881
Cassina France S.A. 1 - 1
Cap Design S.p.A. 1,013 794 219
Diecidieci S.r.l. 905 - 905
Frau France S.a.r.l. 1 - 1
Poltrona Frau S.p.A. 15,670 17,299 (1,629)
Poltrona Frau UK Ltd. 10 52 (42)
Spazio Washington LLC 90 - 90
Zhejiang Casanova Furniture Co. Ltd. - 387 (387)
Total Uses of short-term credit facilities 34,794 32,755 2,039
The short-term portion of medium-long term borrowings refers to the following:
(in thousands of Euro)
Portion falling
due within 12
months
Syndicated loan to Poltrona Frau S.p.A. 3,810
Syndicated loan to Cassina S.p.A. 8,017
Carilo loan to Poltrona Frau S.p.A. 209
Banco Popolare loan to Poltrona Frau S.p.A. 987
Centrobanca loan to Cassina S.p.A. 1,420
Banca Popolare di Sondrio loan to Poltrona Frau S.p.A. 392
Carilo loan to Poltrona Frau S.p.A. 199
Unicredit loan to Poltrona Frau S.p.A. 987
Financial lease – Poltrona Frau S.p.A. 665
Total current portion of medium-long term loans 16,686
Reference should be made to note 17 “Medium-long term borrowings” for details of the individual medium-
long term borrowing transactions.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
139
24. TAX PAYABLES
This item consists mainly of amounts due to the tax authorities for tax withheld on payments to employees or
collaborators, VAT payables and income tax payables relating to the year. The item may be analysed as follows
at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Income tax payables 3,809 706 3,103
Other tax payables 1,748 1,807 (59)
Total Tax payables 5,557 2,513 3,044
Other tax payables mainly refer to withholding tax on employee salaries and wages.
The Parent has elected to use the national tax consolidation and the consolidation scope in this respect for the
2013 tax year was unchanged compared to that for the previous year.
25. DERIVATIVE INSTRUMENTS
Details are shown below of outstanding contracts at 31 December 2013 and 31 December 2012, (amounts are
stated in thousands of Euro):
(in thousands of Euro) 31 December 2013 31 December 2012
Held in the name of Type
Maturity
date Notional Fair value Notional Fair value
Poltrona Frau S.p.A. Interest Rate Swap (Banca Nazionale del Lavoro) 31/12/2013 - - 2,000 (68)
Poltrona Frau S.p.A. Interest Rate Swap (Banca Nazionale del Lavoro) 30/06/2016 4,152 (117) 4,675 (209)
Poltrona Frau S.p.A. Interest Rate Swap (Banca Popolare) 30/06/2016 3,559 (99) 4,007 (175)
Poltrona Frau S.p.A. Interest Rate Swap (Unicredit) 30/06/2016 2,966 (83) 3,339 (146)
Cassina S.p.A. Interest Rate Swap (Banca Nazionale del Lavoro) 31/12/2013 - - 2,000 (68)
Cassina S.p.A. Interest Rate Swap (Banca Nazionale del Lavoro) 30/06/2016 7,415 (209) 8,348 (371)
Cassina S.p.A. Interest Rate Swap (Unicredit) 30/06/2016 6,525 (182) 7,346 (323)
24,617 (690) 31,715 (1,360)
These contracts, which were already outstanding at 31 December 2012, represent arrangements entered to
hedge the interest rate risk arising on medium term loans and mainly regard interest rate swaps which envisage
receipt at a floating rate (3M and 6M EURIBOR) and payment at a fixed rate.
From an accounting standpoint the gains or losses arising on the measurement at fair value of these derivative
instruments are recognised directly through profit or loss.
Reference should also be made to note 13 “Derivative instruments” in this respect.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
140
26. OTHER CURRENT LIABILITIES
This item may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Advances from customers 6,101 7,172 (1,071)
Commissions and royalties 3,709 3,583 126
Amounts due to employees 8,246 3,681 4,565
Due to social security organisations 2,203 2,336 (133)
Other payables 5,438 3,850 1,588
Total Other current liabilities 25,697 20,622 5,075
Advances from customers consist of the advances received from customers for the provision of goods and
services and relate mainly to Luxury Interiors segment contracts.
The increase in item "Other payables", totalling Euro 1,588 thousand, is mainly due to the recognition of the
fixed portion of the remuneration agreed between the parties and amounting to Euro 2.1 million, as set forth in
the sale and purchase agreement of the Business Unit, signed between Estel Group S.r.l. and Cassina S.p.A. in
2013.
27. LIABILITIES HELD FOR SALE
Further details may be found in note 15 “Assets held for sale”.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
141
COMMENTS ON ITEMS IN THE CONSOLIDATED INCOME STATEMENT
Comments relating to the Group‟s performance during the year may be found in the respective section of the
Directors‟ Report.
The values as at 31 December 2012 were restated to ensure their alignment and comparability with those of
the current year. This adjustment was necessary by reason of the classification of actuarial profit/loss resulting
from the calculation of Employee benefits. These actuarial profits/losses are now recognised under "Other items
of the Statement of Comprehensive Income", as set forth by new IAS 19.
28. REVENUES
Revenues by type of activity for the year ended 31 December 2013 compared to those for the previous year may
be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Sales revenue 265,359 238,497 26,862
Other revenues and income 7,485 8,491 (1,006)
Total Revenues 272,844 246,988 25,856
Details of revenues by segment and geographical area may be found above in the note “Segment reporting”.
Other revenues and income are of a residual nature and the more significant amounts involved relate to
revenues for assistance, consultancy, the recovery of transport costs and the recovery of advertising
contributions.
29. COSTS FOR RAW MATERIALS AND CONSUMABLES
This item consists of production costs for raw materials, ancillary materials, consumables and goods for resale
and changes in inventories.
Costs for raw materials and consumables increased from Euro 96,340 thousand for the year ended 31 December
2012 to Euro 113,845 million for the year ended 31 December 2013, marking a 2.7% increase as a percentage
of sales revenues compared to the previous year.
Reference should be made to the comments on changes in income provided in the Directors‟ Report for an
analysis of operating profitability.
30. COSTS FOR SERVICES
Costs for services may be analysed as follows for the year ended 31 December 2013, compared to the previous
year:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
142
(in thousands of Euro)
31 December
2013
31 December
2012 change
External processing 25,162 23,700 1,462
Commissions and royalties 8,717 8,466 251
Consulting 6,761 7,994 (1,233)
Communication and marketing 6,036 4,551 1,485
Transport and logistics 9,897 9,460 437
Maintenance 1,874 2,203 (329)
Utility costs 2,487 2,505 (18)
Rental and lease payments 9,800 9,740 60
Other costs for services 13,076 9,651 3,425
Total Costs for services 83,810 78,270 5,540
“Costs for services”, net of non-recurring costs related to the CEO's remuneration, reported 1.7% increase,
mainly due to higher costs incurred for external processing and connected with higher sales volume and
investments recognised under item communication and marketing expenses to support sales. Besides the above
effects, a strong effort in reducing costs is to be noted.
“Other costs for services” mainly relate to travel and entertainment expense incurred, remuneration for
directors and statutory auditors, research and development costs and other minor expenses. This item also
includes the non-recurring cost related to the variable remuneration of the Chief Executive Officer, recognised
in compliance with the IFRS 2 international accounting standard and amounting to around Euro 4.2 million. For
further details reference should be made to the paragraph below "Significant, non-recurring, abnormal and/or
unusual transactions".
31. PERSONNEL COSTS
This item may be analysed as follows for the years ended 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Wages and salaries 33,169 33,278 (109)
Social security and pensions 9,409 8,821 588
TFR charge 1,692 1,692 0
Other personnel costs 1,969 1,712 257
Total Personnel costs 46,239 45,503 736
If compared to the figure as at 31 December 2012, Personnel costs increased by around Euro 0.7 million. The
deconsolidation of the joint venture Zhejiang Casanova Furniture Ltd. should be taken into account which
involved a change in the average number of employees of around 60 units.
Compared to similar areas, a unit increase in labour costs of around 2.9% is reported.
The following table sets out the average number of employees in Group companies at 31 December 2013 and
31 December 2012, broken down into the main categories:
31 December
2013
31 December
2012
Executives 29 32
Middle-management and white-collar workers 394 386
Blue-collar workers 471 539
Total 894 957
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
143
32. OTHER OPERATING COSTS
Other operating costs for the years ended 31 December 2013 and 2012 may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Miscellaneous operating costs 1,391 1,338 53
Bad and doubtful debts 375 396 (21)
Increase of fixed assets for internal work (1,547) (1,603) 56
Taxes and duties 885 712 173
Total Other operating costs 1,104 843 261
33. RESTRUCTURING COSTS
The item as at 31 December 2012 included costs related to the restructuring process started up by the Group
and mainly involving the Parent Poltrona Frau S.p.A. and the subsidiary Cassina S.p.A.. For further details
reference should be made to the Annual Financial Report as at 31 December 2012.
34. AMORTISATION, DEPRECIATION AND WRITE-DOWNS
Amortisation and depreciation for the years ended 31 December 2013 and 2012 may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Amortisation and write-downs of intangible fixed assets 2,366 1,949 417
Depreciation and write-downs of tangible fixed assets 5,221 4,619 602
Total Amortisation, depreciation and write-downs 7,587 6,568 1,019
The increase reported in item "Amortisation, depreciation and write-downs" is related to investments made in
2013. This item as at 31 December 2013 also includes a write-down of Euro 0.2 million related to the closure of
the Poltrona Frau store in Naples.
35. ADJUSTMENT OF ASSET VALUE AND OTHER PROVISIONS
The balance of item "Adjustment of asset value and other provisions" as at 31 December 2013 totals Euro 25
thousand and relates to residual values.
36. INTEREST IN PROFIT (LOSS) OF ASSOCIATES ACCOUNTED FOR BY USING THE EQUITY METHOD
This item consists of the effect of accounting for investments in associates and joint ventures using the equity
method, as discussed in note 5 “Investments in associates and joint ventures” and in note 6 "Other
investments".
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
144
37. FINANCIAL CHARGES AND INCOME
Financial charges and income for the periods ended 31 December 2013 and 2012 may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Charges on derivative instruments 811 882 (71)
Exchange losses 1,123 1,273 (150)
Interest expense, commissions and other financial charges 4,440 5,148 (708)
Total Financial charges 6,374 7,303 (929)
Income from derivative instruments 722 254 468
Exchange gains 427 1,049 (622)
Interest income and other financial income 326 184 142
Total Financial income 1,475 1,487 (12)
Total Financial (Charges) and Income, Net (4,899) (5,816) 917
The financial management, improved if compared to 2012, is primarily attributable to the decrease reported in
item "Interest expense, commissions and other financial charges", connected with the improvement of the
consolidated Net Financial Position as well as higher income resulting from changes in fair value of hedging
contracts.
38. INCOME TAXES
Income tax for the years ended 31 December 2013 and 2012 may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Current taxes 6,747 4,012 2,735
Deferred taxes 452 48 404
Total Income taxes 7,199 4,060 3,139
In addition to the amounts stated in the annual financial statements of the Parent Poltrona Frau S.p.A. and the
other companies included in the consolidation scope, the deferred tax balance also includes the deferred tax
arising from consolidation entries, where applicable, including adjustments made to the amounts stated in the
various annual financial statements (prepared in accordance with the accounting principles of the country in
which the subsidiary is located) in order to align these with the IFRS adopted by the European Union.
A reconciliation between the tax charge in the consolidated financial statements and the theoretical tax charge
calculated on the basis of the IRES (Italian corporate income tax) rate applicable to the Parent for the years
ended 31 December 2013 and 31 December 2012 is as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
145
(in thousands of Euro) 31 December
2013
31 December
2012
Income before taxes 11,732 8,859
IRES (corporate income tax) rate applicable to the year 27.5% 27.5%
Theoretical tax charge 3,226 2,436
Non-recoverable losses for the year of subsidiaries 802 715
Differences arising from the use of different rates – IRAP and others 1,997 568
Other non-deductible costs 1,174 341
Total differences 3,973 1,624
Total Income tax charge 7,199 4,060
Effective tax rate 61.4% 45.8%
The total tax charge is significant mainly due to the inclusion of IRAP regional production tax - a tax calculated
on value added and especially penalising for groups with a high cost of labour and financial debt - as well as
costs which are not deductible for IRES (corporate income tax) purposes.
39. PROFIT / (LOSS) FROM ASSETS HELD FOR SALE
The item "Profit / (Loss) from assets held for sale" as at 31 December 2012, included the breakdown of income
statement items related to the contribution of Artelux S.A. and the "Nemo" BU in the scope of consolidation, in
compliance with provisions set forth by the IFRS 5 accounting standard.
40. EARNINGS PER SHARE
Basic earnings per share has been calculated by dividing the profit for the period attributable to the ordinary
shareholders of the Parent by the weighted average number of ordinary shares outstanding during the period.
There are no differences between diluted earnings per share and basic earnings per share as the dilutive effect
of the potential ordinary shares connected with the stock option plan is not significant.
The information used to calculate earnings per share is as follows:
31 December
2013
31 December
2012
Profit/(loss) attributable to shareholders (Euro/000) (A) 4,582 1,250
Number of ordinary shares at the beginning of the year
140,275,159 140,275,159
Number of ordinary shares at the end of the year
140,275,159 140,275,159
Weighted average number of ordinary shares used for the calculation of basic
earnings per share (B) 140,275,159 140,275,159
Basic earnings (loss) per share (Euro) (C)=(A)/(B) 0.03 0.01
Weighted average number of ordinary shares used for the calculation of diluted
earnings per share
140,275,159 140,275,159
Diluted earnings (loss) per share (Euro)
0.03 0.01
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
146
41. NET FINANCIAL POSITION
In accordance with the requirements of Consob Note no. DEM/6264293 of 28 July 2006 and in compliance with
the CESR Recommendation of 10 February 2005 “Recommendations for the consistent implementation of the
European Commission‟s Regulation on Prospectuses”, it is hereby stated that the Group‟s Net Financial Position
at 31 December 2013 was the following:
(in thousands of Euro) 31 December
2013
31 December
2012 change
A. Cash 214 80 134
B. Cash equivalents 20,424 8,988 11,436
C. Securities held for trading - - -
D. Liquidity (A) + (B) + (C) 20,638 9,068 11,570
E. Current financial receivables 1,326 5,319 (3,993)
F. Current bank borrowings (34,794) (32,755) (2,039)
G. Current portion of non-current debt (16,686) (13,082) (3,604)
H. Other current financial payables (690) (1,360) 670
I. Current financial debt (F)+(G)+(H) (52,170) (47,197) (4,973)
J. Current financial debt, net (I) – (E) – (D) (30,206) (32,810) 2,604
K. Non-current bank borrowings (31,666) (36,265) 4,599
L. Bonds issued - - -
M. Other non-current receivables (payables) (11,482) (12,164) 682
N. Non-current financial debt (K) + (L) + (M) (43,148) (48,429) 5,281
O. Net financial position (J) + (N) (73,354) (81,239) 7,885
Of which:
- due to related parties 938 4,942 (4,004)
- due to third parties (74,292) (86,181) 11,889
The net financial position stated in the above table reconciles with total net consolidated financial debt
presented in the Management Report as follows:
O. Net financial position (J) + (N) (73,354) (81,239) 7,885
Other non-current financial receivables 4,014 2,166 1,848
Total Net financial position (69,340) (79,073) 9,733
The net financial debt recorded improvement of around Euro 9.7 million compared to 31 December 2012 as a
result of contrasting elements, which may be summarised as follows:
(i) with a plus sign:
potential cash flow (EBITDA) for the year, equal to Euro 32 million;
the Euro 2.4 million benefit from application of the equity method for consolidation following
the disposal of 51% of the Chinese subsidiary Zhejiang Casanova Furniture Ltd.;
the reduction of around Euro 4 million in the net working capital (amount less the non-
recurring component equal to Euro 4.2 million);
other changes amounting to Euro 0.3 million.
(ii) with a minus sign:
the payment of compensation to Group employees who left following the launch of the
restructuring plan, agency indemnities and other payments totalling Euro 2.0 million;
net investments in fixed assets for the year, equal to Euro 12.5 million;
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
147
net financial charges and tax charges in the income statement for a total of Euro 12.1 million;
investments in shareholdings totalling Euro 0.9 million, related to share capital increases,
purchase of treasury shares during the year for Euro 1.5 million.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
148
42. RELATED PARTY TRANSACTIONS
Transactions with subsidiaries
The transactions executed form part of normal business operations in relation to the activities typical of each
entity involved, and are agreed and settled at arm‟s length.
The following table shows changes in financial receivables due from subsidiaries at 31 December 2013
compared to the previous year:
(in thousands of Euro) 31 December
2012 increases decreases
exchange
effect
Change in the
scope of
consolidation
31 December
2013
Poltrona Frau (UK) Ltd. 1,050 272 - (22) - 1,300
Zhejiang Casanova Furniture Co. Ltd. 2,090 - - - (2,090) -
Cassina France S.A. 6,000 - - - - 6,000
Total 9,140 272 - (22) (2,090) 7,300
Transactions with associates and joint ventures
Transactions with associates and joint ventures may be summarised as follows:
(in thousands of Euro) 31 December
2013
31 December
2012
GROUP SALES TO:
Associates
Alias S.p.A. - 3
Nemo S.r.l. 143 -
KBR Sarl - -
Spazio Washington LLC - 216
Joint ventures
PF Emirates Interiors LLC 2,851 2,076
Casa Décor Private Ltd. 791 747
Zheijang Casanova Furniture Co Ltd. 209 -
Financial assets available for sale
Cassina IXC Ltd 7,076 7,325
11,070 10,367
OTHER GROUP REVENUES FROM:
Associates
Alias S.p.A. 94 -
Nemo S.r.l. 13 126
Spazio Washington LLC - 4
Joint ventures
PF Emirates Interiors LLC 38 75
Casa Décor Private Ltd. 12 20
Financial assets available for sale
Cassina IXC Ltd 509 -
666 225
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
149
(in thousands of Euro) 31 December
2013
31 December
2012
GROUP COSTS INCURRED WITH:
Associates
Alias S.p.A. 526 481
Nemo S.r.l. 179 -
Joint ventures
PF Emirates Interiors LLC - 1
Casa Décor Private Ltd. 75 7
Zheijang Casanova Furniture Co Ltd. 907 -
Financial assets available for sale
Cassina IXC Ltd 2 6
1,689 495
(in thousands of Euro) 31 December
2013
31 December
2012
TRADE RECEIVABLES OF THE GROUP DUE FROM:
Associates
Alias S.p.A. - 37
KBR Sarl 75 82
Nemo S.r.l. 5 -
Spazio Washington LLC - 97
Joint ventures
PF Emirates Interiors LLC 1,587 665
Casa Décor Private Ltd. 327 443
Zheijang Casanova Furniture Co Ltd. 36 -
Financial assets available for sale
Cassina IXC Ltd 1,033 1,639
3,063 2,963
OTHER RECEIVABLES OF THE GROUP DUE FROM:
Associates
Alias S.p.A. 19 -
Nemo S.r.l. 700 -
Joint ventures
PF Emirates Interiors LLC 938 4,942
Zheijang Casanova Furniture Co Ltd. 2,090 -
Financial assets available for sale
Cassina IXC Ltd - -
3,747 4,942
TRADE PAYABLES OF THE GROUP DUE TO:
Associates
Alias S.p.A. 166 203
K.B.R. S.a.r.l. - 2
Nemo S.r.l. 94 -
Joint ventures
PF Emirates Interiors LLC - 104
Casa Décor Private Ltd. 26 7
Zheijang Casanova Furniture Co Ltd. 213 -
499 316
OTHER PAYABLES OF THE GROUP DUE TO:
Associates
Alias S.p.A. 95 96
Joint ventures
Zheijang Casanova Furniture Co Ltd. 553 -
648 96
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
150
Transactions with other related parties
Details of transactions with other related parties at 31 December 2013 compared to the previous year are as
follows.
a) Gebrüder Thonet Vienna GmbH
The transactions in question refer to royalties paid to the company for the marketing of Thonet brand products
by the Parent. Revenues in the previous year related to the sale of the Thonet brand from subsidiary Meno
Warenhandels GmbH to Gebrüder Thonet Vienna GmbH, an Austrian company attributable to the Chairman of
the Poltrona Frau Board of Directors, Franco Moschini.
The following table provides details of the relations as at 31 December 2012.
(in thousands of Euro) 31 December 2012
Other revenues -
Services 10
31 December 2012
Trade receivables -
Trade payables 10
Records indicated that there are no further transactions with this related party as at 31 December 2013.
b) PF Real Estate S.r.l.
PF Real Estate S.r.l. was formed on 23 December 2005 and is held as to 60% by Charme Investments S.C.A.,
38% by Moschini S.p.A. and the remaining 2% by Mosconi & Associati S.r.l. In December 2005 PF Real Estate
S.r.l. played an active role in the operation the aim of which was to rationalise the real estate assets held by
Cassina S.p.A. This operation to rationalise real estate forms part of the Group‟s policy which is not to maintain
ownership of the real estate assets of Group companies, having amongst other things the objective of
facilitating future investment initiatives.
The subsidiary Cassina S.p.A. has entered an agreement with PF Real Estate S.r.l. to lease the Meda real estate
complex for a monthly instalment today equal to Euro 117 thousand. Cassina S.p.A. paid a guarantee deposit of
Euro 3,600 thousand in respect of this agreement in January 2006 and at 31 December 2013 recognised lease
payments of Euro 1,363 thousand for the period under review (Euro 1,146 thousand at 31 December 2012).
c) Ferrari S.p.A.
Poltrona Frau has long-standing business relations with Ferrari S.p.A., whose Chairman of the Board of
Directors is the Director Luca Cordero di Montezemolo. These relations are carried out under market conditions
and relate to the supply of interiors well as the preparation of customised upholstery. The following table
provides details of transactions and balances with Ferrari S.p.A. for the period under review and the
corresponding period of the previous year:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
151
(in thousands of Euro) 31 December
2013 31 December 2012
Sales 20,793 21,988
Other revenues 544 1,144
Purchases 155 305
Costs for services 191 -
31 December
2013 31 December 2012
Trade receivables 830 1,750
Trade payables 128 206
d) Other minor transactions
Shown below are the balances as at 31 December 2013 compared with the previous period relating to minor
transactions which mainly concern the purchase/sale of products and services with members of the Board of
Directors or companies they own.
(in thousands of Euro) 31 December
2013
31 December
2012
Sales 91 23
Other revenues 63 96
Costs 78 143
31 December
2013
31 December
2012
Trade receivables 75 53
Trade payables 9 64
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
152
For summary purposes the following table provides details of related party transactions and balances as a
percentage of the total item in the financial statements to which they relate:
(in thousands of Euro) 31 December
2013
31 December
2012
Sales revenue from related parties 31,954 32,378
Sales revenue - Consolidated total 265,359 238,497
As a % of the item in the financial statements 12% 14%
Other revenues and income from related parties 1,273 1,465
Other revenues and income - Consolidated total 7,485 8,491
As a % of the item in the financial statements 17% 17%
Costs for raw materials and consumables incurred with related parties 683 789
Costs for raw materials and consumables - Total consolidated 113,845 96,340
As a % of the item in the financial statements 1% 1%
Costs for services incurred with related parties 6,964 1,503
Costs for services - Consolidated total 83,810 78,270
As a % of the item in the financial statements 8% 2%
(in thousands of Euro)
31 December
2013
31 December
2012
Trade receivables from related parties 3,948 4,766
Trade receivables - Consolidated total 54,628 52,110
As a % of the item in the financial statements 7% 9%
Other non-current assets with related parties 6,390 3,600
Other non-current assets - Consolidated total 9,055 7,443
As a % of the item in the financial statements 71% 48%
Other current assets with related parties 977 4,942
Other current assets - Consolidated total 7,743 14,264
As a % of the item in the financial statements 13% 35%
Trade payables due to related parties 1,481 973
Trade payables – Consolidated total 70,857 59,197
As a % of the item in the financial statements 2% 2%
Other current liabilities due to related parties 4,828 132
Other current liabilities - Consolidated total 25,697 20,622
As a % of the item in the financial statements 19% 1%
As regards executives with strategic responsibility, reference is made to the special section of the Annual
Financial Report "Compensation for executives with strategic responsibility".
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
153
43. IVESTMENTS IN JOINT VENTURES
The Parent has a 49% investment in PF Emirates LLC, a jointly controlled entity. The portion of the assets which
Poltrona Frau S.p.A. jointly controls and the portion of the liabilities for which it is jointly responsible, together
with the portion of revenues and costs of the jointly controlled entity, are as follows:
(in thousands of Euro) 31 December
2013
31 December
2012
Non-current assets 849 1,170
Current assets 6,798 8,665
TOTAL ASSETS 7,647 9,835
Shareholders' equity 4,525 5,890
Non-current liabilities 90 103
Current liabilities 3,032 3,842
TOTAL LIABILITIES AND SHAREHOLDERS‟ EQUITY 7,647 9,835
REVENUES 5,569 5,295
OPERATING COSTS (6,381) (5,600)
FINANCIAL CHARGES AND INCOME (53) (53)
INCOME BEFORE TAXES (865) (358)
INCOME TAXES - -
PROFIT (LOSS) FOR THE YEAR (865) (358)
The Parent owns 50% investment in Casa Décor Private Limited, a jointly controlled entity. The portion of the
assets which Poltrona Frau S.p.A. jointly controls and the portion of the liabilities for which it is jointly
responsible, together with the portion of revenues and costs of the jointly controlled entity, are as follows:
(in thousands of Euro) 31 December
2013
31 December
2012
Non-current assets 40 54
Current assets 1,113 2,778
TOTAL ASSETS 1,153 2,832
Shareholders' equity (771) 450
Non-current liabilities 49 61
Current liabilities 1,875 2,321
TOTAL LIABILITIES AND SHAREHOLDERS‟ EQUITY 1,153 2,832
REVENUES 983 2,755
OPERATING COSTS (2,349) (3,097)
FINANCIAL CHARGES AND INCOME (151) (76)
INCOME BEFORE TAXES (1,517) (418)
INCOME TAXES - -
PROFIT (LOSS) FOR THE YEAR (1,517) (418)
Lastly, it is noted that since February 2013 the Parent owns a 49% investment in Zheijang Casanova Furniture
Ltd., joint venture, following the transfer of 51% of the company to the Chinese company Wenzhou Opal
Furniture Co. Ltd. The portion of the assets which Poltrona Frau S.p.A. jointly controls and the portion of the
liabilities for which it is jointly responsible, together with the portion of revenues and costs of the jointly
controlled entity, are as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
154
(in thousands of Euro) 31 December
2013
31 December
2012
Non-current assets 1,200 1,292
Current assets 682 403
TOTAL ASSETS 1,882 1,695
Shareholders' equity 412 361
Non-current liabilities 1,049 1,032
Current liabilities 421 302
TOTAL LIABILITIES AND SHAREHOLDERS‟ EQUITY 1,882 1,695
REVENUES 415 285
OPERATING COSTS (732) (464)
FINANCIAL CHARGES AND INCOME (42) (40)
INCOME BEFORE TAXES (359) (219)
INCOME TAXES - -
PROFIT (LOSS) FOR THE YEAR (359) (219)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
155
COMMITMENTS AND CONTINGENT LIABILITIES
As at 31 December 2013, outstanding sureties totalled Euro 13,837 thousand (Euro 11,208 thousand as at 31
December 2012), mainly pledged in favour of contract segment customers. Moreover, a financial commitment
with respect to the Parent is outstanding for the amount of Euro 1 million, disbursed in favour of Intesa
Shanghai for a credit facility granted to the joint venture Zheijang Casanova Furniture Ltd. At the end of
February the financial liabilities of Zheijang Casanova Furniture Ltd company in favour of Intesa Shanghai was
refunded and the financial commitment expired.
SIGNIFICANT, NON-RECURRING ABNORMAL AND/OR UNUSUAL TRANSACTIONS
Pursuant to Consob Resolution no. 15519 of 27 July 2006 concerning the format of financial statements, in
relation to the effects resulting from events or transactions which are non-recurring, or from transactions, or
facts, which do not occur frequently as part of normal operations, the variable remuneration to the Chief
Executive Officer, amounting to around Euro 4.2 million, is recorded and highlighted pursuant to the IFRS 2
international accounting standard.
The agreement sets out a variable remuneration proportioned to the price of the Company's shares in case of
sale of the same. Upon occurrence of this condition, following the disposal agreed upon on 5 February 2014,
the fair value was measured at closure date by recognising the value in the income statement as defined by
qualifying the instrument as "Share Based Payments Cash Settled".
As regards the non-recurring post recognised as at 31 December 2012, reference is made to Note 33 thereof.
TRANSLATION OF THE FINANCIAL STATEMENTS OF FOREIGN OPERATIONS
The exchange rates used to translate the financial statements of foreign companies into Euro were as follows:
As at 31 December
2013 Average 2013
As at 31 December
2012 Average 2012
US Dollar (USD) 1.379 1.328 1.319 1.285
Pound (GBP) 0.834 0.849 0.816 0.811
Renminbi (CNY) 8.349 8.165 8.221 8.105
Japanese Yen (JPY) 144.720 129.663 113.610 102.492
Dirham (AED) 5.065 4.878 4.846 4.719
Tunisian Dinar (TND) 2.267 2.160 2.046 2.006
Qatari Rial (QAR) 5.022 4.836 4.804 4.678
Indian Rupee (INR) 85.366 77.930 72.560 68.597
Hong-Kong Dollar (HKD) 10.693 10.302 10.226 9.969
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
156
Other information
INVESTMENTS IN ASSOCIATES AS AT 31 DECEMBER 2013 (PURSUANT TO ART. 38.2 OF THE LEGISLATIVE
DECREE 127/91)
List of investments in subsidiaries accounted for using the line-by-line method:
Company name Registered office Direct Parent % held % held
by Group
Cap Design S.p.A. Meda, Milan – I Poltrona Frau S.p.A. 100% 100%
Cassina S.p.A. Meda, Milan – I Poltrona Frau S.p.A. 100% 100%
Cassina France S.A. Paris – F Cassina S.p.A. 100% 100%
Cassina Pacific Ltd. Hong Kong – People‟s
Rep. of China Cassina S.p.A. 100% 100%
Cassina Shanghai Trading Co. Ltd Shanghai - People's
Rep. of China Cassina S.p.A. 100% 100%
DieciDieci S.r.l. Bologna – I Poltrona Frau S.p.A. 100% 100%
Frau U.S.A. Corporation New York – USA Poltrona Frau S.p.A. 83% 83%
Frau France S.a.r.l. Paris – F Poltrona Frau S.p.A. 100% 100%
Meno Warenhandels GmbH (*) Vienna – A Poltrona Frau S.p.A. 60% 60%
Poltrona Frau UK Ltd. London – UK Poltrona Frau S.p.A. 100% 100%
Poltrona Frau PTE Ltd. Singapore – S Poltrona Frau S.p.A. 100% 100%
Poltrona Frau Group North America Inc. New York – USA Cassina S.p.A. 100% 100%
Poltrona Frau Deutschland GmbH Munich – G Poltrona Frau S.p.A. 100% 100%
Spazio Washington LLC Washington - USA Poltrona Frau Group
North America Inc. 100% 100%
(*) Company placed under liquidation in the second half of 2012
List of investments accounted for using the equity method:
Company name Registered office Currency
Share capital
(in currency
units)
Investing company % held
% held
by
Group
INVESTMENTS IN ASSOCIATES
K.B.R. S.a.r.l. Tunis – Tunisia TND 18,000 Poltrona Frau S.p.A. 20% 20%
Alias S.p.A. Grumello del Monte – I Euro 510,308 Cassina S.p.A. 49% 49%
Nemo S.r.l. Milan – I Euro 100,000 Cassina S.p.A. 49% 49%
INVESTMENTS IN JOINT VENTURES
PF Emirates Interiors LLC Abu Dhabi - UAE AED 10,000,000 Poltrona Frau S.p.A. 49% 49%
Casa Décor Private Ltd. Mumbai – India INR 273,377,660 Poltrona Frau S.p.A. 50% 50%
Zhejiang Casanova Furniture Co. Ltd. (*) Zhejiang People's Rep. of
China RMB 41,295,502 Poltrona Frau S.p.A. 49% 49%
(*) Company accounted for using the equity method from 2013
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
157
List of investments in other companies:
Company name Registered office Currency
Share capital
(in currency
units)
Investing company % held
% held
by
Group
INVESTMENTS IN OTHER COMPANIES MEASURED AT COST (CELI AND FONDAZIONE) AND AT FAIR VALUE (CASSINA IXC)
Celi S.p.A. Stroncone – I Euro 2,363,837 Poltrona Frau S.p.A. 5% 5%
Cassina IXC Ltd. Tokyo – J Yen 400,294 Cassina S.p.A. 12% 12%
Fondazione Studio - Museo Vico Magistretti Milan – Italy Euro 248,500 Cassina S.p.A. 0.4% 0.4%
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
158
SUBSEQUENT EVENTS
With reference to events after the end of 2013, see the explanation in the Management Report.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
159
ATTESTATION ON THE CONSOLIDATED FINANCIAL STATEMENTS PURSUANT TO ARTICLE 81-TER OF CONSOB
REGULATION NO. 11971 OF 14 MAY 1999, AS AMENDED AND SUPPLEMENTED
1. The undersigned, Dario Rinero, Chief Executive Officer, and Cesare Parachini, officer responsible for the
preparation of the corporate accounting documents of Poltrona Frau S.p.A., hereby attest, also taking into
account the requirements of article 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of 24
February 1998:
the adequacy with respect to the characteristics of the Group and
the actual application of the administrative and accounting procedures required for the preparation
of the consolidated financial statements during 2013.
2. In this respect the administrative and accounting procedures required for the preparation of the
consolidated financial statements for the year ended 31 December 2013 and the assessment of their
adequacy were carried out on the basis of a process established by Poltrona Frau S.p.A. that is consistent
with the document “Internal Control - Integrated Framework” and also takes into account the document
“Internal Control over Financial Reporting - Management Tools”, both drawn up by the Committee of
Sponsoring Organisations of the Treadway Commission (CoSO), an internationally generally accepted
reference framework.
3. The undersigned moreover attest that:
3.1 The consolidated financial statements for the year ended 31 December 2013:
a) have been prepared in accordance with the applicable international accounting standards recognised
by the European Union pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of
the Council of 19 July 2002;
b) correspond to the amounts stated in the accounting books and records;
c) are suitable for providing a true and fair view of the financial position, results of operations and cash
flows of the issuer and the set of companies included in the consolidation.
3.2 The report on operations includes a reliable analysis of the performance and results of operations, as
well as of the situation of the issuer and the set of companies included in the consolidation, together with
a description of the main risks and uncertainties to which they are exposed.
Milan, 13 March 2014
Officer responsible for the
preparation of the corporate
Chief Executive Officer accounting documents
Dario Rinero Cesare Parachini
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
160
INDEPEN
DE
NT
AUDITORS'
REPORT
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
161
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
162
Poltrona Frau Materials
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
163
Poltrona Frau S.p.A.
FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
164
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
165
Statement of Financial Position (in Euro)
Note 31 december 2013 31 december 2012
(*)
NON-CURRENT ASSETS
Goodwill 1 499,162 499,162
Intanbile assets 2 5,610,954 5,588,724
Tangible fixed assets 3 25,558,139 25,676,107
Investments in subsidiaries, associates and joint venture companies 4 58,314,634 59,330,176
Other investments 5 - 133,337
Other non-current assets 6 3,981,130 3,816,616
of which from related parties 35 3,389,791 3,139,327
Deferred tax assets 7 1,525,914 1,644,452
TOTAL NON-CURRENT ASSETS 95,489,933 96,688,574
CURRENT ASSETS
Inventory 8 37,539,779 24,500,708
Trade receivables 9 37,008,111 31,322,090
of which from related parties 35 10,211,360 10,559,223
Other current assets 10 10,372,298 9,872,384
of which from related parties 35 7,590,307 5,446,228
Derivative financial instruments 11 25,311 15,371
Cash and cash equivalents 12 13,291,663 3,291,141
TOTAL CURRENT ASSETS 98,237,162 69,001,694
TOTAL ASSETS 193,727,095 165,690,268
SHAREHOLDERS' EQUITY
Share capital
34,604,232 34,809,622
Share premium reserve
1,237,854 2,529,888
Other reserves
4,960,999 5,088,875
Profits (losses) of previous year
(2,834,364) (835,047)
Profit/(loss) for the year 190,286 (1,999,317)
TOTAL SHAREHOLDERS' EQUITY 13 38,159,007 39,594,021
NON-CURRENT LIABILITIES
Medium-long term borrowings 14 24,793,765 24,898,999
Employee benefits 15 3,050,007 2,823,602
Provisions for risks and charges 16 2,141,349 2,304,684
Deferred tax liabilities 17 1,963,871 2,103,507
Other non-current liabilities 18 464,336 509,272
TOTAL NON-CURRENT LIABILITIES 32,413,328 32,640,064
CURRENT LIABILITIES
Trade payables 19 41,555,699 35,002,061
of which from related parties 35 940,616 3,262,875
Due to banks and other loans 20 22,919,914 22,686,827
Tax payables 21 4,304,874 1,079,385
Derivative financial instruments 22 298,694 598,080
Other current liabilities 23 54,075,579 34,089,830
of which from related parties 35 46,722,331 26,678,071
TOTAL CURRENT LIABILITIES 123,154,760 93,456,183
TOTAL LIABILITIES 155,568,088 126,096,247
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 193,727,095 165,690,268
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Parent.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
166
Income Statement (in Euro)
Note 31 december 2013 31 december 2012 (*)
Revenues fron sales 135,024,818 106,201,765
of which from related parties 36,203,666 33,202,103
Other revenues and income 9,659,712 11,477,521
of which from related parties 5,343,281 7,080,134
REVENUES 24 144,684,530 117,679,286
Costs of raw material and consumables 25 (69,406,132) (51,831,679)
of which from related parties 35 (1,098,606) (1,122,064)
Costs for services 26 (39,586,799) (32,479,268)
of which from related parties 35 (2,121,253) (2,014,796)
of which non-recurring from related parties (4,171,429) -
Personnel costs 27 (23,211,080) (22,379,060)
Other operating costs 28 (455,306) (366,640)
Restructuring costs 29 - (1,923,896)
of which non-recurring - (1,923,896)
Amortization or depreciation 30 (4,240,284) (3,820,822)
TOTAL OPERATING COSTS (136,899,601) (112,801,365)
OPERATING INCOME 7,784,929 4,877,921
Income (loss) from investments 31 (3,242,289) (2,738,899)
Financial charges 32 (4,018,911) (3,888,678)
Financial income 32 2,627,349 755,399
INCOME BEFORE TAXES 3,151,078 (994,257)
Income taxes 33 (2,960,792) (1,005,060)
PROFIT / (LOSS) FOR THE YEAR 190,286 (1,999,317)
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Parent.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
167
Statement of Comprehensive Income (in Euro)
31 december
2013
31 december
2012 (*)
PROFIT FOR THE YEAR 190,286 (1,999,317)
Items that may be reclassified subsequently to profit and loss, net of taxes
Total items that may be reclassified subsequently to profit and loss, net of taxes - -
Items that will not be reclassified subsequently to profit and loss, net of taxes
Remeasurements of post-employment benefit obligations
(214,297) (160,470)
Total items that will not be reclassified subsequently to profit and loss, net of taxes (214,297) (160,470)
TOTAL ITEMS OF COMPREHENSIVE INCOME, NET OF TAXES (214,297) (160,470)
TOTAL COMPREHENSIVE INCOME (24,011) (2,159,787)
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Parent.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
168
Cash Flow Statement (thousands of Euro)
Note
31
december
2013
31
december
2012 (*)
NET CASH FLOW FROM OPERATING ACTIVITIES
Profit / (loss) for the year
191 (2,000)
Adjustments to reconcile profit (loss) for the year with the cash flow generated (used in ) by operationg
activities:
Amortization or depreciation 30 3,992 3,821
Provisions and write-downs
3,884 1,436
Change in fair value of financial instruments 11/22 (309) 84
Allocations to provisions for personnel 15 98 178
Payments relating to employee severance indemnity 15 (156) (197)
Payments relating to other provisions and incentives 16 (518) (78)
Capital loss (gains) on sale of non-current assets
(7) (92)
Change in deferred tax assets and liabilities 7/17 60 (428)
Taxes paid in the year
(640) (1,175)
Change in operative assets and liabilities
Change in trade receivables 9 (5,686) 6,594
Change in inventory 8 (13,039) (208)
Change in trade payables 19 6,555 2,746
Other - net
4,605 (1,916)
NET CASH FLOW GENERATED (USE IN) BY OPERATING ACTIVITIES (A) (970) 8,765
CASH FLOW FROM INVESTMENT ACTIVITIES
Sale of tangible and intangible fixed assets
33 143
Purchase of tangible fixed assets 3 (2,816) (3,356)
Purchase of intangible assets 2 (1,378) (1,660)
Investments acquisition/capital increase 4 (1,275) (1,133)
Net change in other non current assets/liabilities 3,136 (669)
NET CASH FLOW GENERATED (USED IN) BY INVESTMENT ACTIVITIES (2,300) (6,675)
CASH FLOW FROM FINANCING ACTIVITIES
Medium-long-term borrowings 14 7,300 3,000
Repayment of medium-long-term borrowings 14 (5,605) (5,428)
Interest paid in the year 32 (2,170) (2,069)
Interest earned in the year 32 4 32
Net change in other short/medium-term financial liabilities
15,240 744
Sale of treasury shares 13 846 957
Purchase of treasury shares 13 (2,344) (1,026)
NET CASH FLOW GENERATED (USED IN) BY FINANCING ATIVITIES (C) 13,271 (3,790)
TOTAL CASH FLOWS (D=A+B+C) 10,001 (1,700)
NET CASH AND CASH EQUIVALENTS AT THE BEGINNIG OF YEAR (G) 3,291 4,991
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR (F=D+E) 13,292 3,291
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Parent.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
169
Statement of Changes in Equity (thousand of Euro)
Share
capital
Share premium
reserve
Other
reserve (*)
Net merger
surplus
(deficit)
Retained
earning (*)
Total
Sharesholders'
Equity
Balance at 31 December 2011 34,816 2,593 7,777 (2,667) (836) 41,683
Increase in share capital
Allocation of loss for the prior year
Dividend distribution
Recognition of stock option plan costs 140 140
Purchase of treasury shares (273) (753) (1,026)
Sale of treasury shares 267 690 957
Other changes (1) 1
Total comprehensive income (160) (2,000) (2,160)
Balance at 31 December 2012 34,810 2,530 7,756 (2,667) (2,835) 39,594
Increase in share capital
Allocation of loss for the prior year
Dividend distribution
Purchase of treasury shares
86
86
Sale of treasury shares (447) (1,897)
(2,344)
Recognition of stock option plan costs 241 605
846
Other changes
Total comprehensive income
(214)
191 (23)
Balance at 31 December 2013 34,604 1,238 7,628 (2,667) (2,644) 38,159
(*) In the Annual Financial Report, the values as at 31 December 2012 were restated to ensure their alignment and comparability
with those of the current year following the application of the new IAS 19 on the part of the Parent.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
170
Notes to the Financial Statements
FORMAT AND CONTENT
Poltrona Frau S.p.A., founded in 1912, is a company registered under Italian law having its registered office at
Vincenzo Vela 42, Turin. Poltrona Frau S.p.A., a company listed on the STAR segment of the Milan Stock
Exchange, is the Parent of one of the main Italian groups and is an international leader in the design and top
range furnishing sectors, and has created around its historical furnishing brand a genuine “Design hub”, having
the aim of combining the autonomy and specificity of each of the brands and respective business histories
which make up the Group with a unitary vision of growth and penetration abroad, promotion and commercial
strategies.
The separate financial statements of Poltrona Frau S.p.A. for the year ended 31 December 2013 have been
prepared in accordance with the International Financial Reporting Standards (hereafter also “IFRS”) issued by
the International Accounting Standards Board (“IASB”) and adopted by the European Union in accordance with
the procedure stated in article 6 of Regulation (EC) no. 1606/2002 of the European Parliament and of the
Council of 19 July 2002 and the provisions issued to implement article 9 of Legislative Decree no. 38/2005.
The accounting principles used to prepare the financial statements for the year ended 31 December 2013 are
consistent with those used for the year ended 31 December 2012 except for the classification of actuarial
profits/losses deriving from the calculation of Employee benefits. These actuarial profits/losses are now booked
under “Other items of the Statement of Comprehensive Income”, in accordance with the provisions of the new
IAS 19. For more details, refer to that specified in the subsequent paragraph “Changes in accounting principles
and disclosures”. No derogation to the application of the IFRS was applied when drafting the financial
statements of the year.
A summary statement of the changes applied to the data relative to 31 December 2012, and linked to the entry
into force of IAS 19, are summarized below:
Statement of financial position 31.12.2012
(restated) 31.12.2012 Change
Share capital 34,810 34,810 -
Share premium reserve 2,530 2,530 -
Other reserves 5,089 5,193 (104)
Profit / (loss) of previous years (835) (779) (56)
Profit / (loss) of the year (2,000) (2,160) 160
TOTAL SHAREHOLDERS‟ EQUITY 39,594 39,594 -
Income statement 31.12.2012
(restated) 31.12.2012 Change
Financial charges (3,889) (4,110) 221
Result before taxes (995) (1,216) 221
Income taxes (1,005) (944) (61)
Profit (or loss) of the year (2,000) (2,160) 160
The separate financial statements consist of the Statement of Financial Position, the Income Statement, the
Statement of Comprehensive Income, the Statement of changes in equity and the Cash flow statement,
prepared in accordance with IAS 1, and the notes to the financial statements prepared in accordance with IFRS.
The Income Statement is presented using a classification based on the nature of expenses and, as of 31
December 2012, additionally includes the item “restructuring costs”, in which costs of a non-recurring nature
connected with the project for reorganising the Company are classified in order to achieve a better
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
171
understanding and measurability of the actual performance of ordinary operations. The Statement of Financial
Position is presented in current/non-current assets and liabilities, while the Cash flow statement is presenting
using the indirect method.
The statutory financial statements have been prepared on a cost basis, with the exception of derivatives which
are measured at fair value. The financial statements are presented in Euro, whilst all other amounts are rounded
to thousands of Euro unless otherwise stated.
Lastly, with reference to Consob Regulation no. 15519 of 27 July 2006 concerning the format of financial
statements the following sub-items have been presented if material: in the statement of financial position, the
income statement and the cash flow statement the amounts of any balances or transactions with related
parties; in the income statement any income or expense (positive and/or negative) deriving from events or
transactions which are non-recurring or from transactions or facts which do not occur frequently in the course
of normal operations. These latter items are presented under the income or expense items to which they refer.
ACCOUNTING PRINCIPLES AND POLICIES
Intangible fixed assets
Separately acquired intangible assets are recognised as such at cost if it is probable that the use of the assets
will generate future economic benefits and if the cost of the asset can be measured reliably. Intangible assets
acquired in business combinations are recognised at their fair value at the acquisition date if this can be
measured reliably.
Internally generated intangible assets, excluding development costs, are not capitalised and are recognised as
an expense in the period they are incurred.
Intangible assets may have finite useful lives or indefinite useful lives. In particular, there are the following
classes of intangible assets whose useful lives are determined as follows:
- brands with indefinite useful life
- development costs with finite useful life
- industrial patents and intellectual property rights with finite useful life
- concessions, licences and similar rights with finite useful life
After initial recognition, intangible assets with finite useful lives are recognised at cost less accumulated
amortisation and impairment losses. The amortisation period and method used are reviewed at the end of each
financial year or more frequently if necessary.
The amortisation periods used for intangible assets with finite useful lives are as follows:
- development costs 5 years
- industrial patents and intellectual property rights 10 years
- concessions, licences and similar rights 3 years
Expenditure on research is recognised directly as an expense in the period it is incurred.
Development costs incurred in connection with a specific project are only capitalised if the company can
demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or
sale, its intention to complete the intangible asset and use or sell it to third parties, how it will generate
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
172
probable future economic benefits, the availability of technical, financial or other resources to complete the
development, its ability to measure reliably the expenditure attributable to the intangible asset during its
development and the existence of a market for the goods and services deriving as an output from the intangible
asset or if it is to be used internally the usefulness of the intangible asset. The development costs capitalised
comprise only the expenditure that is directly attributable to the development process.
After initial recognition capitalised development expenditure is recognised at cost less accumulated
amortisation and any impairment losses determined by the means described for intangible assets with finite
useful lives.
In addition to undergoing this process of amortisation over their useful lives, intangible assets with finite useful
lives are also subject to impairment testing if there are indications that they may be impaired.
After initial recognition, intangible assets with indefinite useful lives are not amortised and are recognised at
cost less any accumulated impairment losses. Intangible assets with indefinite useful lives undergo impairment
testing once a year and more frequently at an individual level or at cash-generating unit level if any events or
changes occur which could lead to impairment losses arising.
Tangible fixed assets
Tangible fixed assets are stated at acquisition cost less accumulated depreciation and any accumulated
impairment losses. Depreciation is charged on a straight line basis over the estimated useful life of an asset.
Depreciation of an asset begins when it is available for use, namely when it enters the production cycle, and is
charged on a straight line basis over the estimated useful life of the asset, taking account of its residual value.
The depreciation periods used, which reflect the useful lives generally attributable to the various classes of
assets and which are unchanged compared to the previous year, are as follows:
- buildings from 10 to 33 years
- plant and machinery from 8 to 11 years
- industrial and commercial equipment 4 years
- other from 4 to 8 years
Land is not depreciated as it has an unlimited useful life.
The carrying amount of tangible fixed assets is subject to impairment testing if events or changes indicate that
the carrying amount may not be recoverable according to the established depreciation plan. If indications of
this nature exist and if the carrying amount exceeds estimated realisable value, the assets or the cash-
generating units to which the assets have been allocated are written down to reflect their realisable value.
The residual value of an asset, its useful life and the methods used are reviewed on an annual basis and
adjusted if necessary at the end of each year.
Assets acquired under finance and operating leases
Finance leases, which transfer substantially all the risks and rewards incidental to ownership of the leased asset
to the Parent, are capitalised as part of tangible fixed assets, starting from the initial date of the lease, and
recognised at the fair value of the leased asset or, if lower, the present value of the lease payments. A liability
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
173
of the same amount is also recognised, which is gradually reduced on the basis of the repayment plan by the
capital portion included in the contractual instalments.
Lease instalments are divided between a capital portion and an interest portion in order to obtain a constant
interest rate on the balance of the residual liability (the capital portion). Financial charges are recognised in the
income statement. Assets are depreciated using the criteria and useful lives described in the previous paragraph
“Tangible fixed assets”.
Leases where the lessor keeps substantially all the typical risks and rewards of ownership are accounted for as
operating leases. Operating lease payments are recognised as an expense over the lease term.
Any sale and leaseback transactions where the “repurchase” of the originally owned asset - by means of a lease
arrangement - is carried out under a finance lease are recognised for accounting purposes as a financing
transaction. The assets involved in this transaction remain in the balance sheet with continuity of accounting
treatment and a liability is recognised as a counter-entry to the cash flows arising from the sale. Any gain
arising on sale is recognised in profit or loss on an accrual basis. This leads to the recognition of deferred
income and the gradual release of the balance to income over the lease term.
Impairment
At each reporting date the Group reviews the book value of its tangible and intangible assets with a finite
useful life to determine whether there are any impairment indicators. If there are any such indicators,
impairment testing is performed on the total recoverable amount of the assets concerned is estimated the
extent of impairment. Where the recoverable value of an asset cannot be estimated individually, the Group
estimates the recoverable value of the cash generating unit in which the asset is included.
The total recoverable amount equals the higher between the fair value less costs to sell and the value in use. In
the absence of a binding agreement to sell, the fair value is estimated on the basis of the values quoted on an
active market, recent transactions or the best information available to reflect the amount that the company
could receive from sale of the asset.
In the assessment of value in use, the estimated future cash flows are discounted at the current value using a
rate net of taxes that reflects the current market assessment of the value of money and the asset-specific risks.
If the recoverable amount of an asset (or cash generating unit) is estimated as lower than the book value, the
book value of the asset is reduced to the lower recoverable value. The impairment amount is recognised to the
income statement.
If there is no longer any reason for the write-down to be continued, the book value of the asset (or cash
generating unit) is increased to the new book value deriving from an estimation of its recoverable value, but
not beyond the net carrying amount that would have applied to the asset had no impairment been recognised.
The restored value is recognised to the income statement.
Goodwill and infinite-life intangible assets are impairment tested each year, or more frequently if there should
be any indication that the asset is impaired.
Investments
Investments in subsidiaries and associates are measured at cost adjusted for any impairment losses calculated
on the basis of appropriate impairment testing.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
174
Other non-current assets
Loans and receivables classifies as non-current assets are measured at amortised cost. Receivables due after
more than one year, non-interest bearing receivables and receivables bearing interest below market rates are
discounted using market rates.
Inventories
Inventories are measured at the lower of purchase or production cost and net realisable value, which is the
amount that the Group expects to obtain from a sale in the ordinary course of business. The weighted average
cost formula is used. The weighted average cost includes the attributable accessory costs for purchases of the
period. The measurement of inventories includes the direct cost of materials and labour and production
overheads. Provisions are recognised for materials, finished goods, spare parts and other items considered
obsolete or slow-moving, taking account of their expected future use and realisable value.
Contract work is measured on the basis of the percentage of completion, which is determined as the ratio
between the costs for the contract incurred at the balance sheet date and total estimated costs, and is stated
net of any obsolescence provisions. Losses on such contracts are fully recognised as an expense as soon as they
become known.
Trade receivables
Trade receivables are measured at fair value identified as nominal value less any impairment losses, accounted
for by providing an allowance for doubtful accounts. Trade receivables due beyond normal commercial terms
and which do not bear interest are discounted.
Cash and cash equivalents
Cash and cash equivalents are measured at nominal value or amortised cost depending on their nature.
Long-term borrowings
Long-term borrowings are initially recognised at fair value plus transaction costs; they are subsequently
measured at amortised cost, being their initial amount less any repayments of principal, adjusted (up or down)
on the basis of the amortisation (using the effective interest method) of any differences between their initial
amount and their value at due date.
Personnel provisions
Benefits ensured to employees which are paid on or after the completion of employment by means of defined
benefit plans (the employees‟ leaving entitlement - trattamento fine rapporto - for Italian employees) are
recognised in the rights vesting period.
Liabilities arising from defined benefit plans, net of any plan assets, are calculated on the basis of actuarial
assumptions and are recognised on an accrual basis consistent with the service which needs to be provided to
obtain the benefits; the valuation of liabilities is performed by independent actuaries.
As previously reported, actuarial gains/losses as of 1 January 2013 are booked under “Other items of the
Statement of Comprehensive Income”, in accordance with the provisions of the new IAS 19.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
175
Other employee benefits
As required by IFRS 2 (Share-based Payment) stock options granted to employees are measured at their fair
value at the grant date using models which take into account factors and elements (the exercise price of the
option, the life of the option, the current price of the underlying shares, the risk-free interest rate for an
investment for the life of the option) in force at the grant date.
If the right becomes exercisable after a certain period and/or on the occurrence of certain performance
conditions (the vesting period) then the total value of the options is allocated on a temporal basis over this
period and recognised in a specific item of equity with counter-entry “Personnel costs” in the income statement
(being a payment in kind to the employee having the aim of creating loyalty and encouraging business
performance).
At the end of each year the previously calculated fair value of each option is not revised or updated but
remains acquired in equity on a definitive basis; an updating is however made at that date of the estimate of
the number of options which will vest until expiry (and hence the number of employees who will be entitled to
exercise those options). The changes in estimates are recognised as increases or decreases of shareholders‟
equity item with a counter-entry being made to “Personnel costs” in the income statement.
On the expiry of an option the amount stated in the equity account is reclassified in the following way: the
portion of the equity account relating to exercised options is reclassified to the “Share premium reserve” while
the portion relating to unexercised options is reclassified to the account “Retained profit (loss)”.
Cash-settled share-based payment plans for employees are initially recognised at fair value at the grant date
using an actuarial calculation and taking account of the formula for determining the resale price to the
company and the terms and conditions which govern the granting of the instrument. This fair value is expensed
over the vesting period with the recognition of a corresponding liability.
The liability is remeasured at each reporting date until and including the date of settlement, with any changes
in fair value recognised in profit or loss.
Trade payables and other current liabilities other than financial instruments
Trade payables whose due date is within normal commercial terms are initially recognised at cost (identified as
their nominal value) and are not discounted.
Provisions for risks and charges
Provisions for risks and charges regard costs and charges of a determinate nature whose existence is certain or
probable but whose amount or date of occurrence is uncertain at the balance sheet date. Provisions are
recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Provisions are measured as the best estimate of the expenditure that the Group would have to pay to settle the
obligation or transfer it to third parties at the balance sheet date. Where the time value of money is material,
the amount of a provision is the present value of the expected future cash flows discounted using a pre-tax
rate that reflects current market assessments of the time value of money. When a present value calculation is
performed, the increase in the provision arising from the passage of time is recognised as a financial charge.
Derivative financial instruments
The Company uses derivative financial instruments such as interest rate swaps and forward currency contracts
to hedge the risks resulting mainly from fluctuations in interest rates and foreign exchange rates. These
derivative financial instruments are initially recognised at fair value at the date on which the contract is
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
176
entered; the fair value is then subsequently periodically remeasured. Instruments are classified as assets when
fair value is positive and as liabilities when it is negative.
Any gains or losses arising from changes in the fair value of derivatives which do not qualify for hedge
accounting are recognised directly in profit or loss for the period.
The fair value of forward currency contracts is calculated by referring to current forward foreign exchange rates
included in contracts having a similar maturity profile. The fair value of interest rate swap contracts is
calculated by referring to the market value of similar instruments.
Revenue recognition
Revenues are recognised to the extent that it is probable that economic benefits will flow to the Company and
the amount of revenue can be measured reliably. The following specific policies must be satisfied before
revenue may be recognised in the income statement:
Sale of goods
Revenues from the sale of goods are recognised at fair value when the risks and rewards of ownership of the assets have transferred to the buyer; this generally occurs on despatch of the goods. Revenues are stated net of discounts and allowances.
Provision of services
Revenues from the rendering of services are recognised as the services are provided.
Dividends
Dividends are recognised when the shareholders‟ right to receive payment has vested.
Financial charges and income
Financial income and charges are recognised on an accrual basis and are calculated on the net amount of the
respective assets and liabilities using the effective interest method.
Income taxes
Current taxes
Current tax assets and liabilities for the current year or for previous years represent the amount that the Group
expects to recover from or pay to the tax authorities. The rates and tax laws used for calculating these amounts
are those enacted at the balance sheet date.
Deferred taxes
Deferred tax assets and liabilities are calculated using the liability method on the temporary differences
between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax assets
are also recognised for unused tax losses.
Deferred tax liabilities are recognised for all taxable temporary differences except in the following cases:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
177
– when deferred tax liabilities arise from the initial recognition of goodwill or an asset or liability in a
transaction which is not a business combination and which, at the time of the transaction, affects neither
accounting profit nor taxable profit or loss;
– for taxable temporary differences associated with investments in subsidiaries, associates or joint ventures,
where the reversal of the temporary differences can be controlled and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences and for the carryforward of unused
tax losses to the extent that it is probable that future taxable profit will be available against which the
deductible temporary difference and unused tax losses can be utilised except in the following cases:
– when deferred tax assets connected with deductible temporary difference arise from the initial recognition
of an asset or liability in a transaction which is not a business combination and which, at the time of the
transaction, affects neither accounting profit nor taxable profit or loss;
– for deductible temporary differences associated with investments in subsidiaries, associates or joint
ventures, deferred tax assets are recognised to the extent that it is probable that the deductible temporary
differences will reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
Deferred tax assets are recognised when their recovery is considered probable on the basis of the expected
future availability of taxable profit sufficient to realise the deferred tax assets. The recoverability of deferred
tax assets is reviewed at each reporting date.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when
the asset is realised or the liability is settled, based on current tax rates and those that have been enacted or
substantively enacted by the balance sheet date.
Income taxes relating to items that are recognised directly in equity are themselves recognised directly in
equity and not in profit or loss.
Deferred tax assets and deferred tax liabilities are offset if there is a legally enforceable right to offset current
tax assets against current tax liabilities and if the deferred tax assets and deferred tax liabilities relate to
income taxes levied by the same tax authority on the same taxable entity.
Translation of items in foreign currency
The Company has adopted the Euro as its functional and presentation currency. Transactions in foreign currency
are initially recognised at the exchange rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currency are translated to the functional currency at the
exchange rate at the balance sheet date.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the initial recognition of the transaction. Non-monetary items that are measured
at fair value are translated using the exchange rate at the date when the fair value was determined.
Treasury shares
Treasury shares are stated as a deduction from equity. More specifically, the nominal value of treasury shares is
accounted for as a deduction from issued share capital while any excess of the purchase amount over the
nominal value is accounted for as a deduction from “Other reserves”.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
178
Derecognition of financial instruments
Financial instruments are derecognised when the Company no longer holds the contractual rights to the
instruments. This usually occurs when the instrument is sold or when the cash flows generated by the
instrument pass through an independent third party.
Use of estimates
The preparation of financial statements and related notes in accordance with IFRS requires the Company to
make estimates and assumptions that affect the amounts of assets and liabilities in the financial statements
and the disclosure of contingent assets and liabilities at the date of those statements. Actual results could
differ from those estimates. Estimates are used to calculate the allowance for doubtful accounts receivable,
inventory obsolescence, depreciation, amortisation, impairment losses, employee benefits, taxation and
provisions for risks and charges. Estimates and assumptions are reviewed periodically and the effects of any
changes are recognised immediately in profit or loss.
The principle measurement process in which the Company used estimates was that regarding impairment
testing.
Changes in accounting principles and disclosures
The accounting principles used in the preparation of the separate financial statements for the year ended 31
December 2013 are consistent with those used in the previous year.
New accounting principles, amendments and interpretations effective as of 1 January 2013 and adopted by the
Parent.
Amendments to IAS 1 - Presentation of Financial Statements. On 16 June 2011, the IASB published this
amendment which requires the grouping of all items presented within the statement of comprehensive
income depending on whether they can be subsequently booked within the income statement. This
amendment was also incorporated by FASB in order to obtain comparability between international
accounting principles (IFRS) and US accounting principles (US GAAP). The adoption of this amendment
had limited effects on information relative to Other overall profits/(losses) reported in these financial
statements;
IAS 12 - Deferred Tax - Recovery of Underlying Assets. This amendment clarifies the calculation of
deferred taxes on real estate assets measured at fair value. The amendment introduces the rebuttable
assumption that the book value of a real estate investment - measured at fair value according to IAS
40 - will be recovered through a sale and, as a result, the relative deferred taxation should be valuated
on a sale basis. This assumption refuted if the real estate investment can be depreciated and held with
the objective of substantially utilizing over time all the benefits which are derived from the real estate
investment itself rather than realizing these benefits through a sale. The amendment had no effect on
the financial position or on the results or financial reporting of the Parent;
Amendments to IAS 19 - Employee Benefits. On 16 June 2011, the IASB published the amended version
of IAS 19. The most important changes concerned the elimination of the option known as the “corridor
method” for the recording of actuarial profits and losses (not utilized by the Poltrona Frau Group), the
presentation of changes in assets and liabilities deriving from defined-benefit plans - including their
re-determination within the statement of comprehensive income – and a greater request for
information relative to the characteristics and risks of defined benefit plans for companies. The
amendments aim to supply the reader of financial statements with a clearer picture of the company‟s
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
179
obligations in relation to defined benefit plans and how the latter can influence future economic
performance, cash flows and the net financial position of the Parent. In accordance with the transition
rules pursuant to IAS 19 under paragraph 173, the Parent has applied this amendment to IAS 19 in a
retrospective manner as of 1 January 2013 by adjusting the opening values of the statement of
financial position of 1 January 2012 and 31 December 2012 as well as the economic values of 2012, as
if the amendment had always been applicable;
IFRS 13 – Fair value measurement. On 12 May 2011, IASB issued, in accordance with FASB, a guide for
fair value measurements. It was concluded that the adoption of this new principle does not involve
significant effects on the financial statements;
IFRS 7 – Financial Instruments - Disclosures. On 16 December 2011, IASB and FASB issued joint
provisions on disclosures that must be provided in the case of compensation of financial assets with
financial liabilities. The requested information must be supplied retroactively. It was concluded that the
adoption of this new principle does not involve significant effects on the financial statements.
On 17 May 2012 the IASB issued a series of amendment to the IFRS (“Annual Improvements to IFRSs -
2009-2011 Cycle”); those which are applicable to the Parent are cited below while also not considering
those which only resulted in terminological changes and with minimum effects on accounting:
IAS 1 – Presentation of Financial Statements: this amendment clarifies the modalities of presentation
of comparative information in the case that a company modifies its accounting principles and
implements a retrospective restatement of items or a re-classification, as well as in cases where the
company supplies additional reports on financial situations compared to that required by the principle.
This amendment was applied at the time of the retrospective restatement of financial data in reference
to the application of the amendment to IAS 19;
IAS 16 – Property, Plant and Equipment: the amendment clarifies that spare parts and substitute
equipment must only be capitalized if they comply with the definition of "Property, plant and
equipment”, otherwise they must be classified as Inventories;
IAS 32 – Financial Instruments: Presentation: this amendment eliminates the inconsistency between
IAS 12 – Income Taxes and IAS 32 in relation to the booking of taxes derived from distributions to
shareholders by stating that the latter must be booked within the income statement to the extent that
the distribution refers to proceeds generated from operations that were originally booked within the
income statement.
IFRS and IFRIC accounting principles, amendments and interpretations that have been ratified by the EU but
which are not yet applicable except through early adoption
On 12 May 2011, the IASB issued IFRS 10 - Consolidated Financial Statements, which replaces SIC 12 -
Consolidation: Special Purpose Entities and parts of IAS 27 - Consolidated and Separate Financial
Statements, which will be renamed “Separate Financial Statements” and will govern the accounting of
investments in the separate financial statements. The competent bodies of the European Union have
completed the process of ratification of this principle, postponing the date of its application to 1
January 2014, but allowing, in any case, and early adoption as of 1 January 2013. The Parent is
evaluating the effects of adopting this new principle;
On 12 May 2011 the IASB issued IFRS 11 - Joint Arrangements, which replaces IAS 31 - Interests in
Joint Ventures and SIC 13 - Jointly-controlled Entities: Non-monetary Contributions by Venturers. The
new standard – without prejudice to the criteria for identifying the presence of joint control – supplies
criteria for the accounting of joint venture agreements that are based on the rights and obligations
deriving from these agreements rather than on their legal form, and also establishes the equity method
as the only method for booking investments in joint ventures within the consolidated financial
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
180
statements. The competent bodies of the European Union have completed the process of ratification of
this principle, postponing the date of its application to 1 January 2014, but allowing, in any case, an
early adoption as of 1 January 2013. The Parent is evaluating the effects of adopting this new principle,
and which are not expected to be significant;
On 12 May 2011 the IASB issued IFRS 12 - Disclosure of Interests in Other Entities, a new and
complete standard on the additional information to be provided for each type of investment, including
in subsidiaries, joint ventures, associates, special purpose entities and other companies not
consolidated. The competent bodies of the European Union have completed the process of ratification
of this principle, postponing the date of its application to 1 January 2014;
On 16 December 2011 the IASB issued a number of amendments to IAS 32 - Financial Instruments:
Presentation, to clarify the application of certain criteria for the offsetting of financial assets and
liabilities included in IAS 32. The amendments must be applied from financial years beginning on or
after 1 January 2014, with effects backdated.
As of the date of these financial statements, the competent bodies of the European Union had not yet
completed the ratification process which is necessary for the adoption of the following accounting principles
and amendments:
On 12 November 2009, the IASB published IFRS 9 – Financial instruments; the same principle was
subsequently amended. This principle – which must be applied as of 1 January 2015 in a retrospective
manner – represents the first part of a process in phases whose purpose is to entirely replace IAS 39
and introduce new criteria for the classification and valuation of financial assets and liabilities. In
particular, and with regard to financial assets, the new principle utilizes a single approach that is based
on the modalities for managing financial instruments as well as on the characteristics of the
contractual cash flows of the financial assets themselves in order to determine their valuation
criterion, thereby replacing the different rules pursuant to IAS 39. With regard to financial liabilities,
on the other hand, the primary modification which occurred concerned the accounting treatment of
changes in fair value of a financial liability which was designed as valuated at fair value through the
income statement, and in the case that these changes were due to a change in the credit rating of the
liability itself. According to the new principle, these changes must be booked under Other
comprehensive income / (losses) and will no longer be applied within the income statement;
On 20 May 2013, the IASB issued IFRIC 21 – Levies, an interpretation of IAS 37 - Provisions,
Contingent Liabilities and Contingent Assets. IFRIC 21 clarifies when an entity should book a liability
for the payment of taxes imposed by the government, with the exception of those already regulated by
other principles (e.g. IAS 12 – Income Taxes). IAS 37 establishes the criteria for recognition of a
liability, one of which is the existence of a current obligation for the company as the result of a past
event (known as the binding event). The interpretation clarifies that the binding event, which results in
a liability for the payment of a tax, is described in the regulations of reference from which the payment
is derived. IFRIC 21 is effective for years starting on 1 January 2014;
On 29 May 2013, IASB issued an amendment to IAS 36 - Recoverable Amount Disclosures for Non-
Financial Assets, which regulates disclosures on the recoverable amounts of assets which were subject
to impairment if this amount is based on the fair value net of sales costs. The amendments must be
applied retroactively as of the years starting on 1 January 2014. Early adoption is allowed for periods in
which the entity has already applied IFRS 13;
On 27 June 2013, IASB issued certain minor amendments relative to IAS 39 – Financial Instruments:
Recognition and Measurement, titled “Novation of Derivatives and Continuation of Hedge Accounting”.
These amendments allow for the continuation of hedge accounting in the case that a derivative
financial instrument, designated as a hedging instrument, is novated following the application of the
law or regulations in order to replace the original counterparty and guarantee the fulfilment of the
assumed obligation if certain conditions are met. The same amendment will also be included in IFRS 9
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
181
- Financial instruments. The amendments must be applied retroactively as of the years starting on 1
January 2014;
IAS 28 (2011) Investments in Associates and Joint Ventures. Following the new IFRS 11 Joint
arrangements and IFRS 12 - Disclosure of Interests in Other Entities, IAS 28 was renamed Investments
in associates and joint ventures; it describes the application of the equity method for investments in
joint ventures and associates. The amendments are effective for the years starting on 1 January 2014
or later.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
182
COMMENTS ON ITEMS IN THE STATEMENT OF FINANCIAL POSITION
The values as at 31 December 2012 were restated to ensure their consistency and comparability with those of
the current year. This restatement was required due to the classification of actuarial profit/loss resulting from
the calculation of Employee benefits. These actuarial profits /losses are now recognised under "Other items of
the Statement of Comprehensive Income", pursuant to provisions set out by new IAS 19 standard.
1. GOODWILL
The balance of this item at 31 December 2013 totalled Euro 500 thousand and refers to goodwill from the
merger of Casanova S.r.l. in 2012.
2. Intangible fixed assets
These may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Development costs 1,335 1,083 252
Industrial patents and intellectual property rights 679 971 (292)
Concessions, licences and similar rights 3,597 3,535 62
Total Other intangible fixed assets 5,611 5,589 22
Changes during the year were as follows:
(in thousands of Euro)
Capitalised
development
costs
Industrial
patents
Concessions,
licences and
similar rights
Total
Net book value at 31 December 2012 1,083 971 3,535 5,589
Purchases 765 551 62 1,378
Disposals - - - -
Reclassifications - 17 - 17
Amortisation or depreciation (513) (860) - (1,373)
Net book value at 31 December 2013 1,335 679 3,597 5,611
Development costs, equal to Euro 1,335 thousand as at 31 December 2013, increased thanks to the creation of
prototypes of new products, mainly related to the residential business (Euro 559 thousand), the Luxury in
Motion business (Euro 123 thousand) and the Luxury Interiors business (Euro 83 thousand).
Industrial patents, amounting to Euro 679 thousand at 31 December 2013, relate to expenditure incurred to
protect and register patents on ornamental models and to the costs connected with the purchase and
implementation of management software. The increase over the year mainly regards the purchase and
development of new software.
Concessions, licences and similar rights consist principally of the “Frau” brand which is owned by the Company
and carried at an amount of Euro 3,316 thousand. This intangible asset is considered to have an indefinite
useful life and is accordingly impairment tested to identify any loss in value. This testing, carried out as at 31
December 2013, did not involve any adjustment to the carrying amount.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
183
3. TANGIBLE FIXED ASSETS
Tangible fixed assets may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Land and buildings 16,164 16,641 (477)
Plant and machinery 6,778 7,203 (425)
Industrial and commercial equipment 1,137 330 807
Other assets 1,390 1,395 (5)
Assets under construction and advances 89 107 (18)
Total Tangible fixed assets 25,558 25,676 (118)
The following table provides details of the cost and accumulated depreciation of tangible fixed assets at 31
December 2013 and 31 December 2012:
(in thousands of Euro) Land and
buildings
Plant and
machinery
Industrial
and
commercial
equipment
Other
assets
Assets
under
constr. and
advances
Total
Cost at 31 December 2012 25,255 14,067 4,707 6,051 107 50,187
Acc. depreciation at 31 December 2012 (8,614) (6,864) (4,377) (4,656) - (24,511)
Net book value at 31 December 2012 16,641 7,203 330 1,395 107 25,676
Cost at 31 December 2013 25,096 14,741 5,789 6,293 89 52,008
Acc. depreciation at 31 December 2013 (8,932) (7,963) (4,652) (4,903) - (26,450)
Net book value at 31 December 2013 16,164 6,778 1,137 1,390 89 25,558
Changes in tangible fixed assets during the year ended 31 December 2013 were as follows:
(in thousands of Euro) Land and
buildings
Plant and
machinery
Industrial
and
commercial
equipment
Other
assets
Assets
under
constr. and
advances
Total
Net book value at 31 December 2012 16,641 7,203 330 1,395 107 25,676
Purchases 571 636
902 426 281 2,816
Disposals - - - (26) - (26)
Amortisation or depreciation (819) (1,100) (275) (425) - (2,619)
Write-downs (249) - - - - (249)
Reclassifications 20 39 180 20 (299) (40)
Net book value at 31 December 2013 16,164 6,778 1,137 1,390 89 25,558
Land and buildings, amounting to Euro 16,164 thousand as at 31 December 2013, consist of buildings owned
and those held under finance leases by Poltrona Frau S.p.A. (factories and offices located in Tolentino - MC).
The increases for the year are attributable to the enlargement of the warehouse for the Luxury in Motion
segment as well as to the completion of the Poltrona Frau Museum at the Tolentino (MC) site, inaugurated in
February 2013.
Plant and machinery, including owned property and those held under finance leases, amount to Euro 6,778
thousand as at 31 December 2013. The plants held under finance leases relate mainly to the integrated
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
184
photovoltaic plant mounted on the roof of the factory at Tolentino (MC) which has a nominal production
capacity of 1.4 Megawatts. Increases over the year are attributable to investments in plant and machinery used
in production.
Industrial and commercial equipment, equal to Euro 1,137 thousand as at 31 December 2013, relates to
investments made for the purchase of moulds and equipment for production purposes, the latter mainly
intended for the new warehouse of the Luxury in Motion segment.
The change in Other assets, which amount to Euro 1,390 thousand, is mostly due to the purchase of furniture,
furnishings and electronic office machines.
4. INVESTMENTS IN SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES
Changes in investments in the year ended 31 December 2013 were as follows:
(in thousands of Euro) 31 December
2012 Increases Decreases Reclassification
31 December
2013
Subsidiaries 57,864 347 (1,469) (737) 56,005
Associates and joint ventures 1,467 928 (822) 737 2,310
Total Investments 59,331 1,275 (2,291) - 58,315
This item represents the Company‟s long-term and strategic investments and is measured on a consistent basis
at the cost of purchase or subscription, including any directly attributable accessory charges.
The Company has no restriction on the availability of any of the investments and are there no option rights or
liens.
As regards subsidiaries, the increases for the year relate to shareholder contributions in favour of Frau U.S.A.
Corporation, amounting to Euro 0.2 million, as well as of Poltrona Frau Singapore LTD., amounting to Euro 0.1
million. As regards associates and joint ventures, the company increased shareholder contributions by Euro 0.4
million in the investee Casa Décor Private Ltd. and by Euro 0.5 million in the company Zheijang Casanova
Furniture Co. Ltd..
In relation to investments owned by Poltrona Frau S.p.A., impairment testing was performed to verify any
impairment of investments in subsidiaries, associates and joint ventures, by comparing their recoverable
amount, net of the financial position at 31 December 2013 (the “economic value”), with related book values as
at 31 December 2013. Based on the outcome of the impairment test, the above-mentioned investments were
written-down for an aggregate value of Euro 2.3 million. This write-down is attributable to the subsidiaries
Frau France S.a.r.l. e Frau U.S.A. Corporation, in the amount of Euro 0.8 million and Euro 0.6 million,
respectively, as well as to the joint venture Casa Décor Private Ltd., in the amount of Euro 0.8 million.
In the reclassified column, the investment in Zhejiang Casanova Furniture Co. Ltd. is divided, net of the
allowance for doubtful accounts, between associates and joint ventures. During 2013, Poltrona Frau S.p.A. sold
51% of the subsidiary Zhejiang to the Chinese company Wenzhou Opal Furniture Co. Ltd.. This company is
therefore no longer controlled by Poltrona Frau S.p.A., but it is considered as a joint venture, pursuant to
contractual agreements.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
185
The main assumptions used by the Parent to calculate the recoverable value (value in use) refer to:
a) Estimated future cash flows from operations;
b) The discount rate;
c) The final growth rate.
With regard to point a), the Parent formed an assumption, for impairment testing purposes only, of the likely
business outlook for 2014-2016, presented at the Board of Directors‟ meeting on 13 March 2014.
The discount rates used represent current market assessments of the time value of money and the risks specific
to the business‟s specific activities. In particular, it was considered appropriate to use a rate representative of
the unlevered cost of risk capital of 9.7%.
In the impairment test the end value was determined using a “g rate” of 1%.
In addition, also based on indications in the Bank of Italy-Consob-ISVAP joint document no. 4 of 4 March 2010,
the Group arranged the preparation of a sensitivity analysis of the test results against the changes in basic
assumptions affecting the value in use of the cash-generating units, though no impairment indicators emerged
other than those stated above.
The following table provides a summary of the investments held at 31 December 2013, showing the figures for
their equity and profit (loss) recorded as at 31 December 2013 (or those relating to the most recently approved
financial statements), their carrying amount, the carrying amount of any provision for investments recognised
as a reduction in the investment and the carrying amount of any provision for investments recognised as a
liability (amounts are stated in thousands of Euro):
Company name Shareholders‟
equity Profit (loss)
%
holding
Company‟s
share of
equity
Value as at
31 December
2013
Provision for
write-down of
investments
Provision for
investment
risks
Frau France S.a.r.l. 996 (187) 100% 996 5,574 (5,195) -
Poltrona Frau U.K. Ltd. (952) (799) 100% (952) 2,157 (1,935) -
Frau USA Corporation 467 (282) 83% 388 999 (601) -
Diecidieci S.r.l. 1,825 786 100% 1,825 497 - -
Poltrona Frau (Asia Pacific) PTE Ltd. 979 580 100% 979 100 - -
Cap Design S.p.A. 3,438 (796) 100% 3,438 19,834 (15,236) -
Cassina S.p.A. 49,072 6,693 100% 49,072 49,751 - -
PF Deutschland GmbH (658) (559) 100% (658) 259 (259) (956)
Meno Warenhandels GmbH 5 (2) 60% 3 6,234 (6,174) -
Total Subsidiaries 55,172 5,434
55,091 85,405 (29,400) (956)
KBR S.a.r.l. - - 20% - 3 (3) -
Total Associates - -
- 3 (3)
PF Emirates Interiors LLC 9,234 (1,765) 49% 4,525 1,020 - -
Zhejiang Casanova Furniture Co. Ltd. 840 (733) 49% 412 4,771 (3,481) -
Casa Décor Private Ltd. (1,541) (3,034) 50% (771) 2,044 (2,044) -
Total joint ventures 8,533 (5,532)
4,166 7,835 (5,525) -
Total 93,243 (34,928) (956)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
186
5. OTHER INVESTMENTS
As at 31 December 2012, this item included investments in the company Celi S.p.A. for a total amount of Euro
133 thousand. During 2013, the company Celi S.p.A. filed in a creditors' arrangement at the Court of Terni and
the investment cost was fully written-down.
6. OTHER NON-CURRENT ASSETS
Details of this item at 31 December 2013 and 31 December 2012 are as follows:
(in thousands of Euro) 31 December 2012 Increases Decreases 31 December 2013
Investments in subsidiaries, associates
and joint ventures 3,140 250 - 3,390
Guarantee deposits 170 6 (2) 174
Other items 507 - (90) 417
Total other non-current assets 3,817 256 (92) 3,981
The increase of Euro 256 thousand is primarily attributable to the increased funding to the subsidiary Poltrona
Frau UK Ltd.. The decreases relate to the partial repayment of a loan to the company IL America Ltd. and the
reclassification of the short-term portion of said loan to the item “Other current assets”.
7. DEFERRED TAX ASSETS
The following table provides the composition of deferred tax assets at 31 December 2013 and 31 December
2012 by the nature of the underlying temporary differences:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Taxed provisions 1,290 1,402 (112)
Temporary differences on fixed assets 146 160 (14)
Other temporary differences 90 82 8
Total Deferred tax assets 1,526 1,644 (118)
Taxed provisions relate to allowances adjusting asset balances (the allowance for doubtful accounts and the
inventory provision) and provisions for risks and charges which are not deductible for fiscal purposes.
Temporary differences on fixed assets relate to the reversal of the gain realised in 2007 on the sale of a piece of
land intended to be used for the extension of the factory in Tolentino, the subject of a leaseback agreement.
Other temporary differences include deferred tax assets arising from the differences in the measurement of
items in foreign currency, the portion of entertainment expenses deductible in the years following the year in
which they are incurred, compensation due to directors which were not paid during the year and expenses that
are tax deductible using the cash criterion.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
187
8. INVENTORIES
Inventories may be analysed as follows for 2013 and 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Raw materials 25,448 15,034 10,414
Semi-finished goods 1,968 1,451 517
Finished goods 7,374 6,437 937
Contract work in progress 2,723 1,455 1,268
Advances 27 124 (97)
Total Inventories 37,540 24,501 13,039
Set out below is the balance of inventories together with the amount of the provision for obsolescence
allocated in the financial statements at 31 December 2013, in order to adjust the value of inventories to
presumed recoverable value:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Inventory, gross 39,625 26,210 13,415
Provision for obsolescence (2,085) (1,709) (376)
Total Inventories 37,540 24,501 13,039
The change in item “Provision for obsolescence” is due to the increase in the provision for write-downs in raw
materials, equal to Euro 276 thousand, and the provision for write-down in finished goods, equal to Euro 100
thousand. The amount of the provision is calculated on the basis of the turnover of raw materials.
9. TRADE RECEIVABLES
Trade receivables may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Due from third party customers 27,650 22,537 5,113
Due from subsidiaries 7,683 7,766 (83)
Due from associates and JV 1,675 1,019 656
Total Trade receivables 37,008 31,322 5,686
The increase in trade receivables is almost exclusively related to item “Due from third party customers”, while
the increase in trade receivables from associates and JVs primarily relates to the company PF Emirates Interiors
LLC..
The Company performed non-recourse factoring of receivables totalling Euro 17.9 million at 31 December 2013
(Euro 14.5 million at 31 December 2012), relating to customers of good standing belonging almost exclusively
to the Luxury Interiors segment.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
188
The allowance for doubtful accounts is considered adequate for reducing the nominal value of receivables to
their realisable value. Detailed below are the receivables stated at their gross value and net of the related
allowance for doubtful accounts:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Due from customers 29,131 23,826 5,305
Allowance for doubtful accounts (1,481) (1,289) (192)
Due from customers 27,650 22,537 5,113
Changes in the allowance for doubtful accounts in 2013 are as follows:
(in thousands of Euro)
Balance at 31 December 2012 1,289
Accrual 362
Utilisation (170)
Balance at 31 December 2013 1,481
The accrual to the allowance is the result of a specific and analytical assessment of the risks of non-collection
of individual receivables. The utilisation for the year is the consequence of the definitive closure of positions for
which an allowance had been recognised in prior years.
There are no receivables whose contractual term exceeds 5 years.
10. OTHER CURRENT ASSETS
Other current assets may be analysed as follows at 31 December 2013 and 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Tax receivables 1,535 3,498 (1,963)
Other receivable due from subsidiaries 2,863 - 2,863
Due from associates and JV 938 4,942 (4,004)
Advances to suppliers for services, commissions and
royalties 314 371 (57)
Prepayments and accrued income and other operating
receivables 862 457 405
Other financial assets from third parties 91 99 (8)
Cash pooling with Group companies 3,769 505 3,264
Total Other current assets 10,372 9,872 500
Tax receivables are composed of VAT receivables and other tax receivables. The latter include the claim for
IRAP reimbursement filed by Poltrona Frau S.p.A. on behalf of Group companies (Euro 1.5 million).
“Other receivables due from subsidiaries” as at 31 December 2013 mainly comprises the amounts due from
Cassina S.p.A. and Diecidieci S.r.l. related to the tax consolidation regime, equal to Euro 2.6 million and Euro 0.3
million, respectively.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
189
“Due from associates and JV” comprise a loan granted to the joint venture PF Emirates Interiors LLC, the
decrease is justified by the repaid amounts in 2013.
“Other financial assets from third parties” comprise the short-term portion of the loan granted to Il America
Ltd.
“Cash pooling with Group companies” represent the financial relations governed by the centralized treasury
procedure, for which the economic conditions are in line with the conditions normally applied by banks.
11. DERIVATIVE INSTRUMENTS
Details are shown below of outstanding contracts at 31 December 2013 and 31 December 2012, (amounts are
stated in thousands of Euro):
(in thousands of Euro) 31 December 2013 31 December 2012
Held in the name of Type Expiry date Notional Fair value Notional Fair value
Poltrona Frau S.p.A.
Collar Export (Cassa di Risparmio
Fabriano e Cupramontana) 28/06/2013 - -
38 15
Poltrona Frau S.p.A. Collar Export (Veneto Banca) 28/05/2014 363 25 - -
363 25 38 15
Derivative instruments, amounting to Euro 25 thousand at 31 December 2013, include the fair value of
contracts hedging Euro v. US Dollar exchange rate risk with respect to trade flows deriving from the American
market.
From an accounting standpoint the gains or losses arising on the measurement at fair value of these derivative
financial instruments are recognised directly in profit or loss.
12. CASH AND CASH EQUIVALENTS
The balance on this item at 31 December 2013 was Euro 13.2 million, compared to Euro 3.3 million at 31
December 2012.
(in thousands of Euro) 31 December
2013
31 December
2012 change
Bank deposits 13,129 3,237 9,892
Cash in hand and valuables 163 54 109
Cash and cash equivalents 13,292 3,291 10,001
The balance on this item represents cash in hand and cash equivalents at the balance sheet date.
Reference should be made to the cash flow statement for details of the sources and applications which have
given rise to the change in this balance at 31 December 2013 and also to the information on the net financial
position contained in the Management Report on the financial statements.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
190
13. SHAREHOLDERS‟ EQUITY
This item may be analysed as follows at 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Share capital 34,604 34,810 (206)
Share premium reserve 1,238 2,530 (1,292)
Legal reserve 571 571 -
Extraordinary reserve 4,861 4,861 -
Other reserves 2,196 2,324 (128)
Merger surplus (deficit) (2,667) (2,667) -
Retained profit (loss) (2,835) (835) (2,000)
Profit / (loss) for the year 191 (2,000) 2,191
TOTAL SHAREHOLDERS‟ EQUITY 38,159 39,594 (1,435)
The share capital consists of 140,275,159 ordinary shares with a nominal value of Euro 0.25 each. As resolved
by the Shareholders‟ Meeting of the Parent, held on 22 April 2013, the loss for the year, amounting to Euro
2,159,787, was carried forward.
The decrease in share capital and share premium reserve is the result of the purchase/sale of treasury shares,
including the part to service the exercise of stock option rights, totalling Euro 1.5 million.
Other reserves may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Stock option reserve 659 573 86
First-time adoption of IFRS reserve 1,326 1,326 -
Provision for remeasurement of post-employment benefit
obligations (319) (105) (214)
Others 530 530 -
Other reserves 2,196 2,324 (128)
In accordance with IFRS 2, the stock option plan reserve consists of the corresponding entry in equity of the
cost, equal to the fair value of the options at grant date, which is recognised in profit or loss over the period in
which the exercising conditions vest. The increase recorded in the year is due to allocation of the portion
accrued in 2013, amounting to Euro 86 thousand.
The item "Provision for remeasurement of post-employment benefit obligations" include the actuarial gains and
losses resulting from the calculation of post-employment benefits according to provisions set forth by the new
IAS 19.
Item “Others” consist of the reserve for accelerated depreciation accrued in previous years and transferred to
available reserves following changes in Italian legislation.
A classification of equity on the basis of the possible utilisation of the accounts is as follows:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
191
(in thousands of Euro) Amount Utilisation
possibilities
Available
portion
Summary of uses during the past
three years
To absorb losses For other
reasons
Share capital 35,069
Nominal value of treasury shares (465)
Total share capital 34,604
Capital reserves
Share premium reserve 3,193 A, B, C 1,238 4,322
Treasury shares exceeding nominal value (1,955)
Total capital reserves 1,238
Revenue reserves
Fair Value adjustment reserve (319)
Legal reserve 571 B 571
Extraordinary reserve 4,861 A, B, C 2,193 949
Merger surplus (deficit) (2,667)
First-time adoption of IFRS reserve 1,326
Stock options reserve 659
Accelerated depreciation reserve 530 A, B, C 530
Retained profit (loss) (2,835) A, B, C
Profit / (loss) for the year 191 191
Total revenue reserves 2,317
Total 38,159 4,723
Non-distributable portion * (7,778)
Available portion remaining -
A = for capital increases B = to absorb losses C = for distribution to
shareholders
* of this Euro 1,335 represents the non-distributable portion covering development costs not yet amortised and Euro 6,443 the portion
of the share premium reserve required to supplement the legal reserve in order to reach one fifth of share capital.
Reference should be made to the Statement of changes in equity for variations in equity accounts during the
years ended 31 December 2013 and 31 December 2012.
The tax effect related to items of the Statement of comprehensive income is analysed hereunder:
31 December 2013 31 December 2012
(in thousands of Euro) Gross value
Tax
(Charge) /
Benefit
Net value Gross value
Tax
(Charge) /
Benefit
Net value
Remeasurement of post-employment benefit
obligations
(296) 82 (214) (221) 61 (160)
14. MEDIUM/LONG-TERM BORROWINGS
“Medium-long term borrowings”, which amounted to Euro 24.8 million as at 31 December 2013 (Euro 24.9
million as at 31 December 2012), consist of the non-current portion of loans from banks and credit institutions
and amounts due to other lenders recognised as the result of using the financial method to account for lease
arrangements.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
192
Medium-long term borrowings may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Financing of leased assets 11,482 12,154 (672)
Amounts due to banks and other lenders 13,312 12,745 567
Total medium/long-term borrowings 24,794 24,899 (105)
Financing of leased assets arises from application of the financial method to account for assets acquired under
lease arrangements and mainly represents the remaining liability to leasing companies at the balance sheet
date. The decrease recorded during the period is mainly attributable to the repayment of current amounts.
Details of Amounts due to banks and other lenders may be analysed as follows at 31 December 2013 and 2012:
Ref. (in thousands of Euro)
31 December
2013
31 December
2012
a) Banca delle Marche loan to Poltrona Frau S.p.A. - 393
b) Syndicated loan to Poltrona Frau S.p.A. 11,175 14,380
c) Carilo loan to Poltrona Frau S.p.A. 334 537
d) Banco Popolare loan to Poltrona Frau S.p.A. 1,236 2,250
e) Banca Popolare di Sondrio loan to Poltrona Frau S.p.A. 1,903 -
f) Carilo loan to Poltrona Frau S.p.A. 284 -
g) Unicredit loan to Poltrona Frau S.p.A. 4,963 -
Bank loans 19,895 17,560
Less current portion (6,583) (4,815)
Non-current portion of due to banks and other loans 13,312 12,745
Details of bank loans to Group companies are as follows:
a) a loan made to the Parent by Banca delle Marche expiring on 30 June 2013;
b) with the aim of rescheduling the repayment dates of medium-term debt and consolidating a large part of
short term credit lines, in July 2010 the Group signed two syndicated loan agreements, with the funds
being disbursed to the Parent and the subsidiary Cassina S.p.A., for a total of Euro 59 million, with BNL (as
agent bank), Unicredit, Intesa Sanpaolo, Popolare di Sondrio, UGF and Banca Popolare di Verona. By
entering these agreements the Group was able to make early settlement of the outstanding loans with
these banks;
c) in July 2010, Cassa di Risparmio di Loreto disbursed a loan of Euro 1 million to the Parent which is
repayable in monthly instalments and expires on 27 July 2015;
d) in March 2012, Banco Popolare disbursed a loan to the Parent for Euro 3 million, expiring on 31 March
2015, with a 70% counter-guarantee from Sace since the loan is for the promotion of group brands on the
international market and development of the Middle East market;
e) in March, Banca Popolare di Sondrio disbursed a loan to Poltrona Frau S.p.A. for Euro 2,000 thousand,
expiring on 30 April 2018. This is an unsecured loan and accordingly not supported by any guarantees;
f) in November 2013, Cassa di Risparmio di Loreto disbursed a loan of Euro 300 million to the Parent which is
repayable in monthly instalments and expires on 21 May 2015;
g) in December, Unicredit disbursed a loan to Poltrona Frau S.p.A. for Euro 5,000 thousand, expiring on 31
December 2018. This is an unsecured loan and accordingly not supported by any guarantees.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
193
Reference should also be made to note 19 “Due to banks and other lenders”.
15. EMPLOYEE BENEFITS
The following changes took place during the year ended 31 December 2013 in Employee benefits:
(in thousands of Euro)
Net present value of TFR at 31 December 2012 2,824
Transfer Out (12)
Interest Cost 98
Benefits paid (156)
Actuarial gains (losses) 296
Net present value of TFR at 31 December 2013 3,050
With regard to the TFR (Italian employees‟ leaving entitlement), as a result of legislative changes in previous
years that affected this benefit, the Group continued to record the obligation on amounts accrued as at 31
December 2006 in accordance with the rules for defined benefit plans, whilst the obligation on amounts
accrued from 1 January 2007 and payable to the supplementary benefits plan or to the INPS Treasury Fund
were recorded on the basis of contributions due for the period.
Employees‟ leaving entitlement falls under defined benefit plans. This liability was calculated using the
Projected Unit Cost Method, under which the liability for the acquired benefits reflects the expected date of
leaving employment and is discounted to present value. The economic-financial assumptions on which actuarial
evaluations are based, can be summarised as follows: 2% expected inflation rate, 2.5% discount rate, 3%
future wage increases and 3% resignation/dismissal annual rate. The decrease in provisions for personnel is
mainly due to the benefits paid during the year as a result of normal staff turnover.
Disclosures are provided below as required under the new international accounting standard IAS 19, in
particular the results of the sensitivity analysis performed on each actuarial assumption at year end, with an
indication of the effects that would have resulted from changes in the actuarial assumptions that might
reasonably have been made at that date, in absolute terms.
Sensitivity analysis of the main actuarial benchmarks on
figures at 31 December 2013 (in thousands of Euro)
Poltrona Frau S.p.A.
+1% on the turnover rate 3,047
-1% on the turnover rate 3,053
+1% on the annual inflation rate 3,095
-1% on the annual inflation rate 3,006
+1% on the annual discount rate 2,985
-1% on the annual discount rate 3,118
Poltrona Frau S.p.A.
Service Cost -
Plan duration 9.5
Details on the contribution for the next period are provided hereabove, with an indication on the average
financial duration of the commitment for defined benefit plans.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
194
16. PROVISIONS FOR RISKS AND CHARGES
The balance of Euro 2.1 million at 31 December 2013 (Euro 2.3 million as at 31 December 2012) may be
analysed as follows:
(in thousands of Euro) Agents‟ indemnity Restructuring
provision Other provisions Total
Balance at 31 December 2012 1,003 1,148 154 2,305
Accrual 167 - 1,005 1,172
Utilisation (364) (105) (49) (518)
Redemptions - (691) (13) (704)
Reclassifications - (114) - (114)
Balance at 31 December 2013 806 238 1,097 2,141
The provisions for risks and charges as at 31 December 2013 consist mainly of the following allocation types:
The agents‟ indemnity is accrued annually on the basis of the commissions payable to the agents and
calculated in accordance with contractual provisions. The decrease instead relates to uses during the year;
The restructuring provision decreased as a result of implementation of the restructuring plan, as already
thoroughly described in the Annual Financial Report as at 31 December 2012;
Item "Other provisions" increased primarily due to the allocation of Euro 0.9 million for the write-down
attributable to subsidiaries Poltrona Frau Deutschland Gmbh, following the impairment testing performed by
the Parent as at 31 December 2013. The remaining portion, amounting to Euro 0.1 million, is attributable to
potential tax liabilities incurred during the 2013.
17. DEFERRED TAX LIABILITIES
The following table sets out the balances as at 31 December 2013 and 2012 analysed by the nature of the
underlying temporary differences.
(in thousands of Euro) 31 December
2013
31 December
2012 change
Finance leases 736 791 (55)
Reversal of the amortisation of goodwill and
trademarks 1,045 1,045 -
Actuarial valuation of the TFR 66 148 (82)
Others 117 120 (3)
Total Deferred tax liabilities 1,964 2,104 (140)
The balance as at 31 December 2013 consists mainly of the following items:
Finance leases: this item relates to the tax effect arising from accounting for assets acquired in
leasing using the financial method;
Reversal of amortisation: the balance relates to the charge for the amortisation of trademarks, which
is not adopted in the income statement but recognised for fiscal purposes pursuant to article 103,
paragraph 3-bis of Presidential Decree 917/86;
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
195
Actuarial valuation of the TFR: as discussed earlier, the TFR is measured by calculating the liability to
employees using actuarial assumptions and then discounting that liability. This accounting treatment
gives rise to differences with respect to the amounts recognised for tax purposes, requiring in turn
the recognition of deferred taxation;
Other temporary differences: these arise mainly from the translation of items denominated in foreign
currency and the treatment of the gain realised on the sale of a piece of land intended to be used for
the extension of the factory in Tolentino, the subject of a leaseback agreement, which is recognised
on an instalment basis for fiscal purposes.
18. OTHER NON-CURRENT LIABILITIES
The item “Other non-current liabilities” of Euro 464 thousand as at 31 December 2013 (Euro 509 thousand as
at 31 December 2012) relate to the residual portion of the capital gain (originally of Euro 674 thousand)
realised by the Company on the sale of a piece of land intended to be used for the extension of the factory in
Tolentino, the subject of a leaseback agreement.
19. TRADE PAYABLES
Trade payables of Euro 41.6 million as at 31 December 2013 (Euro 35.0 million as at 31 December 2012) consist
of payables of a commercial nature arising from transactions with third party suppliers and, to a lesser extent,
with intragroup suppliers. These balances are stated net of any trade discounts and billing adjustments (returns
and/or allowances) to the extent these have been defined with the other party.
Trade payables may be analysed as follows as at 31 December 2013:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Due to third parties 40,624 31,939 8,685
Due to subsidiaries 670 3,013 (2,343)
Due to associates and JVs 262 49 213
Total Trade payables 41,556 35,001 6,555
20. DUE TO BANKS AND OTHER LENDERS
“Due to banks and other lenders” consist of bank overdrafts, advances received from banks, short term
financing and the current portion of medium-long term loans.
This item may be analysed as follows as at 31 December 2013 and 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Due to banks 14,570 17,288 (2,718)
Current portion of medium-long term loans 7,249 5,388 1,861
Other short term borrowings 1,101 11 1,090
Total due to banks and other lenders 22,920 22,687 233
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
196
In terms of the use of short-term credit facilities, the main instruments used by the Company are the
presentation of bills of exchange for collection and “hot money” loans with extremely short due dates, settled
at the market rates quoted when the transaction is initiated.
21. TAX PAYABLES
This item consists mainly of amounts due to the tax authorities for tax withheld on payments to employees or
collaborators and income tax payables relating to the year.
The balance may be analysed as follows as at 31 December 2013 and 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 change
VAT payables 6 - 6
Income tax payables 3,472 40 3,432
Payables for withholding tax on collaborators‟
earnings 70 78 (8)
Payables for IRPEF personal income tax 757 961 (204)
Total Tax payables 4,305 1,079 3,226
"Income tax payables" as at 31 December 2013 relate to IRES payables amounting to Euro 3.2 million and IRAP
payables totalling Euro 0.3 million.
The company has elected to use the national tax consolidation and the consolidation scope in this respect for
the 2013 tax year was unchanged compared to that for the previous year, including Cassina S.p.A., Cap Design
S.p.A. and Diecidieci S.r.l..
22. DERIVATIVE INSTRUMENTS
Details are shown below of outstanding contracts as at 31 December 2013 and 31 December 2012, (amounts
are stated in thousands of Euro), with the relative fair values:
(in thousands of Euro) 31 December 2013 31 December 2012
Held in the name of Type Expiry date Notional Fair value Notional Fair value
Poltrona Frau S.p.A. Interest Rate Swap (Banca Nazionale del Lavoro) 31/12/2013 2,000 (68)
Poltrona Frau S.p.A. Interest Rate Swap (Banca Nazionale del Lavoro) 30/06/2016 4,152 (117) 4,675 (209)
Poltrona Frau S.p.A. Interest Rate Swap (Banca Popolare) 30/06/2016 3,559 (99) 4,007 (175)
Poltrona Frau S.p.A. Interest Rate Swap (Unicredit) 30/06/2016 2,966 (83) 3,339 (146)
10,677 (299) 14,021 (598)
These contracts, which were already outstanding as at 31 December 2012, represent arrangements entered to
hedge the interest rate risk arising on medium term loans and mainly regard interest rate swaps which envisage
receipt at a floating rate (3M and 6M EURIBOR) and payment at a fixed rate.
From an accounting standpoint the gains or losses arising on the measurement at fair value of these derivative
instruments are recognised directly through profit or loss.
Reference should also be made to note 11 “Derivative instruments” in this respect.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
197
23. OTHER CURRENT LIABILITIES
This item may be analysed as follows as at 31 December 2013, with comparative figures provided for the
previous year:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Due to subsidiaries 732 2,615 (1,883)
Due to social security organisations 1,253 1,202 51
Commissions and royalties 1,614 1,597 17
Due to employees 6,553 2,399 4,154
Other payables 2,746 2,293 453
Cash pooling with Group companies 41,177 23,984 17,193
Total Other current payables 54,075 34,090 19,985
The item "Due to subsidiaries" comprises the amounts due for tax consolidation resulting from the transfer of
tax losses of Cap Design S.p.A., and the amounts due to Group companies for which Poltrona Frau filed in a
claim for IRAP reimbursement. Reference should also be made to note 10 “Other current assets” in this respect.
The item "Due to social security organisations" consists of the social security payables due on the wages and
salaries of personnel and collaborators and represents the liability accrued for the final month of the years
presented.
"Other payables" mainly represent advances from customers amounting to Euro 2 million.
“Cash pooling with Group companies” represent the financial relations governed by the centralized treasury
procedure, for which the economic conditions are in line with the conditions normally applied by banks.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
198
COMMENTS ON ITEMS IN THE INCOME STATEMENT
Further comments on economic data may be found in the respective section of the Management Report on the
financial statements.
The values as at 31 December 2012 were restated to ensure their consistency and comparability with those of
the current year. This restatement was required due to the classification of actuarial profit/loss resulting from
the calculation of Employee benefits. These actuarial profits /losses are now recognised under "Other items of
the Statement of Comprehensive Income", pursuant to provisions set out by new IAS 19 standard.
24. REVENUES
Revenues by type of activity for the years ended 2013 and 2012 may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 Change
Sale of products 135,025 106,202 28,823
Other revenues 9,660 11,478 (1,818)
Total Revenues 144,685 117,680 27,005
Details of revenues by geographical area are set out in the following table:
(in thousands of Euro) Italy EMEA Americas Asia and
Oceania Total
Revenues at 31 December 2013 79,635 47,299 7,267
10,484 144,685
Revenues at 31 December 2012 67,949 31,907 7,970 9,854 117,680
Change 11,686 15,392 (703) 630 27,005
Change % 17.2% 48.2% (8.8%) 6.4% 22.9%
25. COSTS FOR RAW MATERIALS AND CONSUMABLES
This item consists of production costs for raw materials, ancillary materials, consumables and goods for resale
and changes in inventories.
Costs for raw materials and consumables increased from Euro 51.8 million for the year ended 31 December
2012 to Euro 69.4 million for the year ended 31 December 2013, marking a 4% increase as a percentage of
sales revenues, up from 44.0% in 2012 to 48.0% in 2013.
This trend is a result of the different breakdown of sales revenues in the two years compared, which saw a more
significant presence of the Luxury in Motion segment, characterised by lower margins than the residential
segment.
26. COSTS FOR SERVICES
Costs for services may be analysed as follows for the year ended 31 December 2013, compared to the previous
year:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
199
(in thousands of Euro) 31 December
2013
31 December
2012 Change
External processing 13,261 10,561 2,700
Commissions and royalties 5,220 5,003 217
Consulting 1,862 2,129 (267)
Communication and marketing 1,970 1,737 233
Transport and logistics 3,877 3,466 411
Rental and lease payments 1,894 2,166 (272)
Other costs for services 11,503 7,417 4,086
Total Costs for services 39,587 32,479 7,108
The cost of “External processing” decreased as a result of the lower volumes processed during the year.
The decrease in “Commissions and royalties” is attributable to the lower turnover recorded in 2013.
"Other costs for services" equal to Euro 11.5 million are mainly comprised of travel and transfer expenses (Euro
2 million), remunerations granted to Directors and Auditors (Euro 5 million), maintenance costs (Euro 1 million),
utility costs (Euro 1 million) and other sundry expenses (Euro 2.5 million).
Remunerations to Directors and Auditors include the non-recurring cost related to the variable remuneration
of the Chief Executive Officer, recognised in compliance with the IFRS 2 international accounting standard and
amounting to around Euro 4.2 million. For further details reference should be made to the paragraph below
"Significant, non-recurring, abnormal and/or unusual transactions".
27. PERSONNEL COSTS
The item "Personnel costs" consists of costs relating to remuneration, social security charges, allocation to the
Italian employees‟ leaving indemnity (TFR) and other personnel costs.
This item may be analysed as follows for the years ended 31 December 2013 and 31 December 2012:
(in thousands of Euro) 31 December
2013
31 December
2012 Change
Wages and salaries 15,478 15,319 159
Social security and pensions 5,355 4,898 457
Other staff provisions 1,032 1,015 17
Other personnel costs 1,346 1,147 199
Total Personnel costs 23,211 22,379 832
The following table sets out the average number of company employees as at 31 December 2013 and 31
December 2012, analysed by the main categories.
Workforce at year end 31 December
2013
31 December
2012 Change
Executives 19 20 (1)
Middle-management and white-collar workers 167 167 -
Blue-collar workers 263 252 11
Total 449 439 10
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
200
Average workforce 2013 2012 Change
Executives 20 23 (3)
Middle-management and white-collar workers 165 163 2
Blue-collar workers 258 247 11
Total 443 433 10
28. OTHER OPERATING COSTS
Other operating costs of Euro 455 thousand, as at 31 December 2013 (Euro 367 thousand as at 31 December
2012), mainly relate to the accrual for credit risks, trade association costs and other residual cost items of non-
significant amounts.
29. RESTRUCTURING COSTS
During 2012, the Parent started a restructuring process which involved other Group companies as well.
Specifically, “Restructuring costs” (Euro 1.9 million as at 31 December 2012) include staff leaving incentives
paid during the year and charges expected to be incurred on completion of the restructuring process. For
further details, see the thorough discussion in the Annual Financial Report as at 31 December 2012.
30. AMORTISATION, DEPRECIATION AND WRITE-DOWNS
The amortisation of intangible fixed assets, the depreciation of tangible fixed assets and the write-downs of
these assets may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 Change
Amortisation and write-downs of intangible fixed assets 1,373 1,262 111
Depreciation and write-downs of tangible fixed assets 2,868 2,559 309
Total Amortization, depreciation and write-downs 4,241 3,821 420
The increase in amortisation of intangible fixed assets and depreciation of tangible fixed assets is connected
with investments made over the year. As at 31 December 2013, the item also included the write-down,
totalling Euro 0.2 million, related to the closure of the Poltrona Frau store in Naples.
31. PROFIT (LOSS) ON INVESTMENTS
In order to allow a better representation of the contribution of management of investments to the profit (loss)
for the year, provision has been made in the income statement for this section which highlights the
contribution of the individual companies:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
201
(in thousands of Euro) Disposals Write-backs Write-downs Provision for
risks Total
Frau France - - (804) - (804)
Frau USA - - (601) - (601)
Poltrona Frau Deutschland - - - (865) (865)
Beijing Casanova - - (17) - (17)
Total Subsidiaries - - (1,422) (865) (2,287)
PF Emirates Interiors LLC - - - - -
Casa Décor Private Ltd. - - (822) - (822)
Total joint ventures - - (822) - (822)
Celi SpA - - (133) - (133)
Total Other companies - - (133) - (133)
Total profit (loss) on investments - - (2,377) (865) (3,242)
See note 4 and 5 of this document for related comments.
32. FINANCIAL CHARGES AND INCOME
Financial charges and income for the years ended 2013 and 2012 may be broken down as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 Change
Interest expense 1,797 2,069 (272)
Fair value of derivative instruments 317 452 (135)
Actuarial losses 107 127 (20)
Loan commissions 270 190 80
Exchange losses 387 252 135
Other financial charges 1,141 799 342
Total Financial charges 4,019 3,889 130
The balance of Financial charges was essentially in line with the figure recorded as at 31 December 2012.
Financial income for the years 2013 and 2012 may be analysed as follows:
(in thousands of Euro) 31 December 2013 31 December 2012 Change
Dividends from subsidiaries 1,900 - 1,900
Interest income 54 32 22
Fair value of derivative instruments 325 122 203
Other financial income 271 274 (3)
Exchange gains 77 327 (250)
Total Financial income 2,627 755 1,872
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
202
The balance of financial income increased due to the resolution to allocate dividends of the subsidiary Poltrona
Frau PTE Ltd , totalling Euro 1.9 million, and decreased due to the lower exchange gains (mainly connected with
the Euro/USD exchange rate trend).
Reference should also be made to note 11 and note 22 “Derivative instruments” for the Fair value of derivative
instruments.
33. INCOME TAXES
Income taxes for the years 2013 and 2012 may be analysed as follows:
(in thousands of Euro) 31 December
2013
31 December
2012 change
Current taxes 2,876 2,116 760
Deferred taxes 60 (265) 325
Adjustments for prior years 25 (846) 871
Total Income taxes 2,961 1,005 1,956
The following is a reconciliation between the theoretical and actual tax charge:
(in thousands of Euro) 31 December
2013
31 December
2012
Income before taxes 3,152 (995)
IRES (corporate income tax) rate applicable to the year 27.5% 27.5%
Theoretical tax charge 867 (273)
Non-taxable dividends (522) -
IRAP and other taxes relating to the year 1,267 241
Other non-deductible costs 437 341
Write-down of investments 890 753
Other minor differences 22 (57)
Total differences 2,094 1,278
Total Income tax charge 2,961 1,005
Effective tax rate 93.9% n/a
The tax charge as a percentage of the result before tax is not very meaningful since the taxable income is
heavily impacted by the non-deductible write-down of investments of Euro 3.2 million and taxes which have a
different tax base from the result before tax (IRAP and other taxes).
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
203
34. NET FINANCIAL POSITION
In accordance with the requirements of Consob Communication no. DEM/6264293 of 28 July 2006 and in
compliance with the CESR Recommendation of 10 February 2005 “Recommendations for the consistent
implementation of the European Commission‟s Regulation on Prospectuses”, the Company‟s Net Financial
Position at 31 December 2013 was the following:
(in thousands of Euro) 31 December
2013
31 December
2012 Change
A. Cash 163 54 109
B. Cash equivalents 13,129 3,237 9,892
C. Securities held for trading - - -
D. Liquidity (A) + (B) + (C) 13,292 3,291 10,001
E. Current financial receivables 4,823 5,561 (738)
F. Current bank borrowings (15,671) (17,299) 1,628
G. Current portion of non-current debt (7,249) (5,388) (1,861)
H. Other current financial payables (41,476) (24,582) (16,894)
I. Current financial debt (F)+(G)+(H) (64,396) (47,269) (17,127)
J. Current financial debt, net (I) – (E) – (D) (46,281) (38,417) (7,864)
K. Non-current bank borrowings (13,312) (12,745) (567)
L. Bonds issued - - -
M. Other non-current receivables (payables) (11,482) (12,154) 672
N. Non-current financial debt (K) + (L) + (M) (24,794) (24,899) 105
O. Net financial position (J) + (N) (71,075) (63,316) (7,759)
Of which:
due to related parties (36,470) (18,537) (17,933)
due to third parties (34,605) (44,779) 10,174
The net financial position shown in the table above is consistent with total net consolidated financial debt
presented in the Management Report as follows:
O. Net financial position (J) + (N) (71,075) (63,316) (7,759)
Other non-current receivables and other financial assets 3,807 507 3,300
Total Net financial position - Management Report (67,268) (62,809) (4,459)
The net financial position worsened by around Euro 4.5 million over 31 December 2012 as a result of
contrasting elements, which may be summarised as follows:
(i) with a plus sign:
potential cash flow (EBITDA) for the period of Euro 16.2 million;
loans granted during 2013 to Group companies, amounting to Euro 3.4 million;
dividends collected by Poltrona PTE Ltd., equal to Euro 1.9 million;
(ii) with a minus sign:
the increase of roughly Euro 11.6 million of the net operating working capital (amount net of
the non-recurring component, equal to Euro 4.2 million);
the payment of compensation to Parent employees who left following the launch of the
restructuring plan, agency indemnities and other payments totalling Euro 0.7 million;
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
204
net investments in fixed assets for the year, amounting to Euro 4.2 million;
investments of Euro 1.3 million relating to share capital increases;
net financial charges and tax charges in the income statement for a total of Euro 6.3 million;
purchase of treasury shares during the year, for Euro 1.5 million;
other changes for Euro 0.4 million.
35. RELATED PARTY TRANSACTIONS
Transactions with related parties as at 31 December 2013 and 31 December 2012 are as follows:
ASSETS
(in thousands of Euro)
31 December 2013 31 December 2012
Other non-
current
assets
Trade
receivables
Other
current
assets
Other non-
current
assets
Trade
receivables
Other
current
assets
Subsidiaries
Cassina S.p.A. - 1,806 2,589 - 2,368 -
Cassina France S.A. - 78 - - - -
Cassina Shanghai Trading Co. Ltd. - - 91 - - -
Cap Design S.p.A. - 180 1,889 - 292 446
Diecidieci S.r.l. - 765 274 - 377 -
Frau France S.a.r.l. - 1,258 290 - 1,720 -
Frau U.S.A. Corporation - 548 - - 233 -
Meno Warenhandels GmbH - 40 - - 40 -
Poltrona Frau Deutschland GmbH - 163 1,499 - 558 58
Poltrona Frau (UK) Ltd 1,300 793 - 1,050 573 -
Poltrona Frau PTE Ltd. - 53 - - 86 -
Poltrona Frau Group North America Inc. - 1,920 - - 1,512 -
Spazio Washington LLC - 79 - - - -
Zhejiang Casanova Furniture Co. Ltd. - - - 2,090 7 -
Associates
KBR S.a.r.l. - 75 - - 75 -
Spazio Washington LLC - - - - 97 -
Nemo S.r.l. - 1 - - - -
Joint ventures
PF Emirates Interiors LLC - 1,298 938 - 587 4,942
Casa Décor Private Ltd. - 297 - - 261 -
Zhejiang Casanova Furniture Co. Ltd. 2,090 4 - - - -
Transactions with other related parties
Ferrari S.p.A. - 809 - - 1,723 -
Others - 44 20 - 50 -
Total 3,390 10,211 7,590 3,140 10,559 5,446
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
205
LIABILITIES
(in thousands of Euro)
31 December 2013 31 December 2012
Trade
payables
Other
payables
Trade
payables
Other
payables
Subsidiaries
Cassina S.p.A. 47 38,935 1,137 25,915
Cassina France S.A. 1 - 1 -
Cassina Shanghai Trading Co. Ltd. 187 - - -
Cap Design S.p.A. 31 154 268 86
Diecidieci S.r.l. - 2,820 1 597
Frau France S.a.r.l. 91 - 429 -
Poltrona Frau Deutschland GmbH 28 - 32 -
Poltrona Frau (UK) Ltd 37 - 69 -
Poltrona Frau PTE Ltd. 207 - 972 -
Poltrona Frau Group North America Inc. 41 - 26 -
Zhejiang Casanova Furniture Co. Ltd. - - 80 -
Associates
Alias S.p.A. 21 80 46 80
KBR S.a.r.l. - - - -
Nemo S.r.l. 3 - - -
Spazio Washington LLC - - 7 -
Joint ventures
PF Emirates Interiors LLC - - 3 -
Casa Décor Private Ltd. 26 - 7 -
Zhejiang Casanova Furniture Co. Ltd. 212 553 - -
Transactions with other related parties
Ferrari S.p.A. 9 - 66 -
Others - 9 119 -
Total 941 42,551 3,263 26,678
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
206
REVENUES
(in thousands of Euro)
31 December 2013 31 December 2012
Sales and services Other
revenues
Sales and
services
Other
revenues
Subsidiaries
Cassina S.p.A. 2,799 3,985 1,540 4,994
Cassina Shanghai Trading Co. Ltd. 54 29 - -
Cap Design S.p.A. 201 528 112 619
Diecidieci S.r.l. 1,026 22 480 -
Frau France S.a.r.l. 2,253 33 1,255 19
Frau U.S.A. Corporation 703 7 712 3
Frau Arabia FZ–LLC - - 27 -
Poltrona Frau Deutschland GmbH 396 2 223 3
Poltrona Frau (UK) Ltd 381 5 266 1
Poltrona Frau PTE Ltd. - 53 - 108
Poltrona Frau Group North America Inc. 4,404 41 5,028 28
Spazio Washington LLC 44 2
Associates
Spazio Washington LLC - - 216 4
Nemo S.r.l. - 1 - -
Joint ventures
PF Emirates Interiors LLC 2,324 27 778 48
Casa Décor Private Ltd. 607 1 512 12
Zhejiang Casanova Furniture Co. Ltd. 178 - 96 1
Transactions with other related parties
Ferrari S.p.A. 20,768 544 21,934 1,144
Other minor 66 63 23 96
Total 36,204 5,343 33,202 7,080
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
207
COSTS
(in thousands of Euro)
31 December 2013 31 December 2012
Costs for raw
materials
and
consumables
Services
Costs for raw
materials
and
consumables
Services
Subsidiaries
Cassina S.p.A. 124 103 157 21
Cassina Shanghai Trading Co. Ltd. - 318 - -
Cap Design S.p.A. 148 1 121 -
Diecidieci S.r.l. - - 1 -
Frau France S.a.r.l. - 367 8 421
Poltrona Frau Deutschland GmbH 21 208 - 192
Poltrona Frau (UK) Ltd - 186 - 181
Poltrona Frau PTE Ltd. - 596 - 853
Frau Arabia FZ–LLC - - - 27
Poltrona Frau Group North America Inc. - 147 31 117
Associates
Alias S.p.A. 27 - 42 -
Nemo S.r.l. 23 - - -
Joint ventures
Casa Décor Private Ltd. - 19 - 7
Zhejiang Casanova Furniture Co. Ltd. 643 - 581 -
Transactions with other related parties
Ferrari S.p.A. 113 99 181 -
Others - 77 - 196
Total 1,099 2,121 1,122 2,015
The following are noted among the transactions with related parties carried out during 2013 with companies
not belonging to the Group:
Ferrari S.p.A.
Poltrona Frau has long-standing business relations with Ferrari S.p.A., whose Chairman of the Board of
Directors is the Director Luca Cordero di Montezemolo. These relations are carried out under market conditions
and relate to the supply of interiors well as the preparation of customised upholstery.
Others
Minor transactions were entered into with various related parties, for insignificant unitary amounts.
For summary purposes the following table provides details of related party transactions and balances as a
percentage of the total item in the financial statements to which they relate:
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
208
(in thousands of Euro) 31 December 2013 31 December 2012
Sales revenue from related parties 36,204 33,202
Sales revenue - Total 135,025 106,202
As a % of the item in the financial statements 27% 31%
Other revenues from related parties 5,343 7,080
Other revenues - Total 9,660 11,478
As a % of the item in the financial statements 55% 62%
Costs for raw materials and consumables incurred with related parties 1,099 1,122
Costs for raw materials and consumables - Total 69,406 51,832
As a % of the item in the financial statements 2% 2%
Costs for services incurred with related parties 6,293 2,015
Costs for services - Total 39,587 32,479
As a % of the item in the financial statements 16% 6%
(in thousands of Euro) 31 December 2013 31 December 2012
Trade receivables from related parties 10,211 10,559
Trade receivables - Total 37,008 31,322
As a % of the item in the financial statements 28% 34%
Other non-current assets with related parties 3,390 3,139
Other non-current assets - Total 3,981 3,817
As a % of the item in the financial statements 85% 82%
Other current assets with related parties 7,590 5,446
Other current assets - Total 10,372 9,872
As a % of the item in the financial statements 73% 55%
Trade payables due to related parties 941 3,263
Trade payables – Total 41,556 35,001
As a % of the item in the financial statements 2% 9%
Other current liabilities due to related parties 46,722 26,678
Other current liabilities - Total 54,075 34,090
As a % of the item in the financial statements 86% 78%
As regards executives with strategic responsibility, reference is made to the special section of the Annual
Financial Report "Compensation for executives with strategic responsibility".
36. COMMITMENTS AND CONTINGENT LIABILITIES
As at 31 December 2013, there were outstanding sureties granted to third parties amounting to Euro 3.5
million, of which Euro 3.0 million granted to Luxury Interiors segment customers and Euro 0.5 million relating
to rental contracts.
As a result of the centralisation of Group treasury functions in the Company sureties have been pledged for the
credit facilities of subsidiaries in the amount of Euro 2.4 million; subsidiaries had used Euro 0.8 million of these
facilities as at 31 December 2013, of which Euro 0.4 million as endorsement commitments. In addition there
are “umbrella” facilities which may be used by the Italian companies and are hence guaranteed by the
Company, which amount in total to Euro 47 million; subsidiaries had used Euro 9.1 million of these facilities as
at 31 December 2013, of which Euro 2.2 million as endorsement commitments. Moreover, a financial
commitment for the amount of Euro 1 million was disbursed in favour of Intesa Shanghai for a credit facility
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
209
granted to the joint venture Zheijang Casanova Furniture Ltd.. At the end of February the financial liabilities of
Zheijang Casanova Furniture Ltd company in favour of Intesa Shanghai was refunded and the financial
commitment expired.
37. SIGNIFICANT, NON-RECURRING ABNORMAL AND/OR UNUSUAL TRANSACTIONS
Pursuant to Consob Resolution no. 15519 of 27 July 2006 concerning the format of financial statements, in
relation to the effects resulting from events or transactions which are non-recurring, or from transactions, or
facts, which do not occur frequently as part of normal operations, the variable remuneration to the Chief
Executive Officer, amounting to around Euro 4.2 million, is recorded and highlighted pursuant to the IFRS 2
international accounting standard.
The agreement sets out a variable remuneration proportioned to the price of the Company's shares in case of
sale of the same. Upon occurrence of this condition, following the disposal agreed upon on 4 February 2014,
the fair value was measured at closure date by recognising the value in the income statement as defined by
qualifying the instrument as "Share Based Payments Cash Settled".
As regards the non-recurring post recognised as at 31 December 2012, reference is made to Note 29 thereof.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
210
INFORMATION PURSUANT TO ARTICLE 149-DUODECIES OF THE CONSOB ISSUERS‟ REGULATION
The following table, prepared pursuant to article 149-duodecies of the Consob Issuers‟ Regulations, sets out the
fees relating to 2013 for auditing services and services other than auditing provided by the independent
auditors and entities belonging to its network.
Thousands of Euro Firm providing the service Recipient of the service Fees relating to 2013
Audit Reconta Ernst & Young S.p.A. Parent – Poltrona Frau S.p.A. 211
Reconta Ernst & Young S.p.A. Italian subsidiaries 129
Reconta Ernst & Young international
network Foreign subsidiaries 40
Other services Ernst & Young Studio Legale Tributario Parent – Poltrona Frau S.p.A. 11
Total 391
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
211
SHARE-BASED PAYMENT
Stock option plans
On 22 June 2009 the Parent‟s shareholders approved two stock option plans, one of which is reserved for the
Chief Executive Officer and the other for certain of the Poltrona Frau Group‟s directors, employees and
collaborators.
The features of the stock option plan reserved for the Chief Executive Officer are set out in the following table:
Features of the plan
Granting of option rights, not transferable to third parties, for subscribing to the ordinary shares of
Poltrona Frau S.p.A. to be issued in the future or, at the discretion of the Company, for purchasing
treasury shares.
Conditions for exercising options Continuing to hold office as chief executive officer at the exercise dates.
Unit price for subscription/purchase of shares Each option gives the right to subscribe/purchase one ordinary share of the Company at the price of
Euro 0.74.
Exercise period of the options
Up to 31 March 2014 according to the following schedule: one third from 31 March 2010, one third
from 31 March 2011 and one third from 31 March 2012. The plan does not contain any performance
objectives.
Maximum number of options
The plan does not envisage a maximum number of options which may be granted each year. A total
of 1,200,000 options are granted through the plan, which give the right to subscribe/purchase
1,200,000 of the Company‟s ordinary shares.
The features of the stock option plan reserved for certain Poltrona Frau Group directors, employees and
collaborators are set out in the following table:
Features of the plan
Granting of option rights, not transferable to third parties, for subscribing to the ordinary shares of
Poltrona Frau S.p.A. to be issued in the future or, at the discretion of the Company, for purchasing
treasury shares.
Beneficiaries Employees, directors and consultants of the Company and its subsidiaries who have important
positions or functions in the Company or its subsidiaries.
Conditions for exercising options Continuation of an employment relationship, continuation in office as director or continuation as a
consultant at the exercise dates.
Unit price for subscription/purchase of shares Each option gives the right to subscribe/purchase one ordinary share of the Company at the price of
Euro 0.88.
Exercise period of the options
Up to 31 March 2014 according to the following schedule: one third after 12 months from the grant
date, one third after 24 months from the grant date if the beneficiary has achieved the agreed
performance objectives allocated to him/her and one third after 36 months from the grant date if the
beneficiary has achieved the agreed performance objectives allocated to him/her.
Maximum number of options
The plan does not envisage a maximum number of options which may be granted each year. A
maximum number of 2,800,000 options are granted through the plan, which give the right to
subscribe/purchase 2,800,000 of the Company‟s ordinary shares.
A total of 2,230,000 option rights had been assigned at 31 December 2013 (1,316,669 as at 31 December
2012), none of which allocated to members of the Board of Directors (other than those stated above in relation
to the Chief Executive Officer), 610,000 had been granted to executives pursuant to article 152-sexies,
paragraph 1 c)-c.2 of the Issuers‟ Regulation and 420,000 had been granted to other employees and
collaborators of the Parent and its subsidiaries.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
212
Adopting a stock option plan requires the recognition for accounting purposes of a cost equal to the fair value
of the options at the grant date. This cost is recognised over the period during which the conditions vest for the
options to be exercised, with counter-entry to an appropriate equity reserve.
The options have been valued by an independent expert and the main assumptions underlying the calculation
were as follows:
- calculation method: Cox Ross Rubinstein binomial model
- current price of the underlying: Euro 0.831
- option exercise price: Euro 0.88 (Euro 0.74 for the Chief Executive Officer‟s plan)
- expected annual volatility: 30%
- risk-free rate: 3.52%
- payout return: 1.5%
Changes in stock options during 2013 were as follows:
Year ended 31 December 2013 Number of
shares
Average price for
the year Market price
Options outstanding at 1 January 2013 2,516,668 0.88 0.994
Options granted during the period 800,000 1.5 -
(Options exercised during the period) (966,668) 0.88 1.551
(Options expiring during the period) (120,000) - -
Options outstanding at 31 December 2013 2,230,000 1.025 2.35
Compensation for Directors and Statutory Auditors
The following tables provide details of the compensation payable for the year to members of the management
and control bodies and to general managers, as required by Annex 3C, table 1 of the Issuers‟ Regulations.
Board of Directors (thousands of Euro)
First and last name Office held
Period
office
held
Term
expiry
date
Cost of office
held in the
company
preparing the
fin. stats.
Non-
monetary
benefits
Bonuses
and other
incentives
Other
compensation
Franco Moschini Chairman 2013 (1) 29 - - -
Matteo Cordero di Montezemolo Deputy Chairman 2013 (1) - 4 - -
Dario Rinero Chief Executive
Officer 2013 (1) 656 - 4,172 -
Luca Cordero di Montezemolo Director 2013 (1) - - - -
Tommaso Beolchini Director 2013 (1) 11 - - -
Lorenzo Romani Director 2013 (1) (2) - - - -
Libero Milone Director 2013 (1) 21 - - -
Innocenzo Cipolletta Director 2013 (1) 20 - - 10
Mario Paolo Moiso Director 2013 (1) 10 - - 23
Luigi Sala Director 2013 (1) - - - -
Irene Tinagli Director 2013 (1) 12 - - -
1) Appointed at the Shareholders‟ Meeting of 27 April 2012 until approval of the financial statements as at 31 December 2014.
2) On 4 February 2014, after Mr. Lorenzo Romani resigned, Mr. Matteo Facoetti was co-opted until the next Shareholders' Meeting.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
213
Board of Statutory Auditors (thousands of Euro)
First and last name Office held Period office
held
Term
expiry
date
Cost of office
held in the
company
preparing the fin.
stats.
Non-
monetary
benefits
Bonuses
and other
incentives
Other
compensation
Mario Stefano Luigi Ravaccia Chairman 2013 (1) 32 - - -
Alfonso Donadio Standing Auditor 2013 (1) 16 - - -
Barbara Zanardi Standing Auditor 2013 (1) 22 - - -
Nazzareno Minnozzi Alternate Auditor 2013 (1) - - - -
Gianluca Settepani Alternate Auditor 2013 (1) - - - -
(1) appointed at the Shareholders‟ Meeting of 27 April 2012 until approval of the financial statements as at 31 December 2014.
Compensation for executives with strategic responsibility
Executives with strategic responsibility, namely those having the direct and indirect power to plan, manage and
control the Group‟s activities, have been identified as its chief executive officers, general managers and leading
executives. The compensation payable to this group of executives, in relation to the year ended 31 December
2013, amounted to Euro 8,027 thousand (Euro 3,386 thousand as at 31 December 2012), total corporation
costs including the CEO and it relates essentially to short term benefits, as well as amounts recognised
according to the IFRS 2 international accounting standard connected with the disposal of the Group, as widely
discussed in the section "Subsequent events".
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
214
Cassina‟s Carpentry
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
215
REPORT OF THE BOARD OF STATUTORY AUDITORS TO THE POLTRONA FRAU S.P.A. SHAREHOLDERS‟ MEETING PURSUANT TO
ART. 153 OF LEGISLATIVE DECREE 58/1998 AND ART. 2429, PARAGRAPH 3 OF THE ITALIAN CIVIL CODE
Shareholders,
During the year ended 31 December 2013, the Board of Statutory Auditors of Poltrona Frau S.p.A. (“Poltrona
Frau” or the “Company”) performed the supervisory tasks envisaged by law, also taking into account the
principles of conduct recommended by the Italian Accounting Profession and the Consob communications on
corporate governance and Board of Statutory Auditors‟ duties.
Over the course of the year, the Board of Statutory Auditors obtained information for the purpose of its duties
from meetings with the corporate departments, participation in meetings of the Board of Directors and in
meetings of the Internal Control and Corporate Governance Committee meetings, which the Board has always
attended.
In compliance with Consob recommendations and guidance in Communication no. 1025564 of 6 April 2001, as
amended and supplemented by DEM/3021582 of 4 April 2003 and DEM/6031329 of 7 April 2006, we wish to
report the following:
1. The Board of Statutory Auditors supervised compliance with the law, with the Articles of Association
and with the principles of sound management.
2. The Board of Statutory Auditors did not find any atypical and/or unusual transactions performed with
third parties or related parties (including Group companies) during 2013 or after year end.
3. The Board considers that the information provided by the Directors in the Notes to the Financial
Statements as regards intragroup and related party transactions is adequate. In particular, these were
business transactions performed at arm‟s length as part of the company‟s normal business activities.
4. On 26 March 2014 the independent auditors Reconta Ernst & Young S.p.A. issued their report pursuant
to art. 14, Legislative Decree 39/2010, which confirms that the separate and consolidated financial
statements as at 31 December 2013 comply with the International Financial Reporting Standards
(IFRS) endorsed by the European Union and with implementing rules pursuant to art. 9, Legislative
Decree 38/2005, that the statements were prepared with clarity and provide a truthful and accurate
view of the equity, financial and income positions at Company level and at consolidated level for the
Group. The independent auditors also consider that the Management Report and the information
presented in the Corporate Governance Report pursuant to paragraph 1 c), d), f), l) and m) and
paragraph 2 b) of art. 123-bis, Legislative Decree 58/1998 are consistent with the Company‟s separate
financial statements and with the Group‟s consolidated financial statements.
5. No complaints pursuant to art. 2408 of the Italian Civil Code were submitted to the Board of Statutory
Auditors in 2013.
6. No other complaints were received.
7. In 2013 the Company did not confer assignments upon Reconta Ernst & Young S.p.A. other than audit
of the separate and consolidate financial statements, limited review of the interim reports and
verification of correct keeping of the accounts and correct entry of operations in the accounting
records.
8. The Company has assigned legal and fiscal consultancy tasks to other entities associated with the
Reconta Ernst & Young S.p.A. partnership network, for a total amount of Euro 11 thousand.
9. In 2013 the Board of Statutory Auditors issued an opinion to the Board of Directors, pursuant to art.
2389, paragraph 3 of the Italian Civil Code, regarding the remuneration allocated to Directors holding
special offices.
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
216
Note that the remuneration for Executive Directors (art. 2389, paragraph 3, Italian Civil Code) is
established by the Board of Directors after consulting the Board of Statutory Auditors and subject to
preparatory tasks completed by the Compensation Committee, a committee composed of non-
executive directors, most of which are independent. For further details regarding Directors‟
remuneration and the long-term incentive plans, together with the indemnity envisaged for early
termination of office, reference should be made to the remuneration report prepared by the company
pursuant to art. 123-ter, Legislative Decree 58/1998.
10. In 2013 the Company‟s Board of Directors held four meetings, the Internal Control and Corporate
Governance Committee six meetings and the Appointments and Compensation Committee three.
During 2013 the Board of Statutory Auditors held four meetings. In addition, the Board attended: (i)
the General Meeting for approval of the financial statements as at 31 December 2013; (ii) all meetings
of the Board of Directors; (iii) all meetings held in 2013 by the Internal Control and Corporate
Governance Committee; (iv) all meetings held in 2013 by the Appointments and Compensation
Committee.
11. To the extent of its responsibilities, the Board of Statutory Auditors gained insight into and supervised
compliance with the principles of sound management through direct observation, gathering
information from corporate department managers (including the Internal Control Manager), meetings
with the Internal Control and Corporate Governance Committee and managers of the independent
auditors to exchange significant data and information. In particular, with regard to the Board of
Directors‟ decision-making processes, the Board of Statutory Auditors ascertained - also through
attendance at Board of Directors‟ meetings - the compliance with law and the Articles of Association
of the management decisions adopted by the Directors, and verified that the related resolutions were
aided by analyses and opinions produced within the company or, where necessary, by external
professionals - especially with regard to the economic and financial adequacy of the transactions and
that, as a result, these transactions were in the interests of the Company.
12. The Board of Statutory Auditors gained insight into and supervised the adequacy of the Company‟s
organisational structure and related operations, through information gathered from the relevant
departments, meetings with the managers of those departments, meetings with the internal audit and
independent auditors‟ managers, and in this respect has no particular findings to report.
13. The Board of Statutory Auditors assessed and supervised the adequacy of the Company‟s internal
control system, also through: (i) meetings with the Internal Control and Corporate Governance
Committee and (ii) obtaining documents, and found that there were no significant critical points in the
system.
14. The Board assessed and supervised the adequacy of the administrative and accounting system and its
reliability in correctly representing operations, by obtaining information from the managers of the
relevant departments (including the Internal Control Manager), examination of corporate documents
and analysis of the results of tasks performed by the independent auditors Reconta Ernst & Young
S.p.A. The Board also noted the attestations issued by the Chief Executive Officer and the Group‟s
Officer responsible for the preparation of the corporate accounting documents with regard to the
adequacy and effective application in 2013 of the administrative and accounting procedures for
preparation of the separate and consolidated financial statements.
15. The Board of Statutory Auditors supervised the adequacy of instructions issued by the Company to its
subsidiaries, pursuant to art. 114, paragraph 2, Legislative Decree 58/98 and considers them to be
adequate in meeting the disclosure obligations required by law.
16. Through direct verification and information obtained from the independent auditors Reconta Ernst &
Young S.p.A., the Board of Statutory Auditors confirmed compliance with IAS/IFRS and with laws and
regulations governing the presentation and format of the separate financial statements, consolidated
financial statements and the management report.
17. By adopting its own Corporate Governance Code, the Company complies with the principles and
recommendations contained in the Corporate Governance Code prepared by the Committee on
Corporate Governance for Listed Companies of Borsa Italiana. The Company‟s Board of Directors
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
217
(composed of eleven members) includes eight non-executive directors, three of which have been
classified by the Board of Directors as independent. The Appointments and Compensation Committee
and the Internal Control and Corporate Governance Committee have been set up within the Board of
Directors. Both committees are mainly composed of Independent Directors. Again with regard to
Independent Directors, note that the Company has established the role of Lead Independent Director as
the contact and coordinator for reports and input from the Independent Directors, to guarantee
maximum autonomy in Independent Directors‟ opinions on the tasks performed by management.
Amongst other things, the Lead Independent Director has the power to call special meetings of
Independent Directors only to discuss topics relating to management activities or to operations of the
Board of Directors. For further details on the corporate governance of the Company, reference should
be made to the Report prepared and approved by the Directors.
In this respect, note that the Company has fully adopted the criteria established in the Borsa Italiana
Corporate Governance Code with regard to Directors‟ classification as “independent”. Based on
information available to the Company and provided by the Directors, the Board of Directors assessed
the independence requirements at the Board of Directors‟ meeting of 13 March 2014. These assessment
activities were also followed by the Board of Statutory Auditors, which performed the valuations falling
under its own responsibility, and found that the requirements for membership of the Board of Directors
were satisfied.
The Board of Statutory Auditors also verified its own independence, pursuant to art. 148, paragraph 3,
Legislative Decree 58/1998.
To conclude, the Board of Statutory Auditors expresses a positive opinion on the Company‟s Corporate
Governance system.
18. No significant facts emerged from the supervisory and control activities that would be subject to report
to the Supervisory Authorities or of mention in this Report.
19. Having noted the results of the separate financial statements as at 31 December 2013, the Board of
Statutory Auditors raises no objections to the proposed resolution formulated by the Board of Directors
as regards the profit of the year.
Tolentino, 26 March 2014
The Board of Statutory Auditors
Mario Stefano Luigi Ravaccia (signed)
Alfonso Donadio (signed)
Barbara Zanardi (signed)
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
218
ATTESTATION ON THE SEPARATE FINANCIAL STATEMENTS PURSUANT TO ARTICLE 81-TER OF CONSOB
REGULATION NO. 11971 OF 14 MAY 1999, AS AMENDED AND SUPPLEMENTED
1. The undersigned, Dario Rinero, Chief Executive Officer, and Cesare Parachini, officer responsible for the
preparation of the corporate accounting documents of Poltrona Frau S.p.A., hereby attest, also taking into
account the requirements of article 154-bis, paragraphs 3 and 4, of Legislative Decree no. 58 of 24
February 1998:
the adequacy with respect to the characteristics of the Group and
the actual application of the administrative and accounting procedures required for the preparation
of the separate financial statements during 2013.
2. In this respect the administrative and accounting procedures required for the preparation of the financial
statements for the year ended 31 December 2013 and the assessment of their adequacy were carried out
on the basis of a process established by Poltrona Frau S.p.A. that is consistent with the document “Internal
Control - Integrated Framework” and also takes into account the document “Internal Control over Financial
Reporting - Management Tools”, both drawn up by the Committee of Sponsoring Organisations of the
Treadway Commission (CoSO), an internationally-accepted reference framework.
3. The undersigned moreover attest that:
3.1 The separate financial statements for the year ended 31 December 2013:
a) have been prepared in accordance with the applicable international accounting standards recognised
by the European Union pursuant to Regulation (EC) no. 1606/2002 of the European Parliament and of
the Council of 19 July 2002;
b) correspond to the amounts stated in the accounting books and records;
c) are suitable for providing a true and fair view of the financial position, results of operations and cash
flows of the issuer.
3.2 The Management Report includes a reliable analysis of the performance and results of operations, the
position of the issuer and a description of the main risks and uncertainties.
Milan, 13 March 2014
__________________________________ __________________________________
Chief Executive Officer Officer responsible for the
preparation of the corporate
accounting documents
Signed by Dario Rinero Signed by Cesare Parachini
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
219
INDEPENDENT AUDITORS' REPORT
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
220
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
221
FINANCIAL STATEMENTS AS AT 31 DECEMBER 2013 - PROPOSED RESOLUTION
Shareholders,
to conclude our report and trusting in your agreement with the way in which the financial statements for the
year ended 31 December 2013 have been presented and with the principles and policies used we propose that
you adopt the following resolutions:
1. to approve the separate financial statements for the year ended 31 December 2013 and the Management
Report for the year closed at 31 December 2013, as submitted to you;
2. and, as regards profit for the year, amounting to Euro 190,285.40 (one hundred ninety thousand two
hundred eighty-five/40), we propose to allocate 5% to the legal reserve and the remaining amount entirely
to the extraordinary reserve.
Milan, 13 March 2014
On behalf of the Board of Directors
Chief Executive Officer
Dario Rinero
POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
222 POLTRONA FRAU S.P.A.
____________________________________________________________________ANNUAL FINANCIAL REPORT AS AT 31 DECEMBER 2013
222