Creative concept
Flexibility and dynamism
Positioned for change
Expanding the range
Practical, almost artistic minimalism, to achieve clarity and understanding of the data by using just two colours for the entire work. Inside, the concepts’ abstract representations express Sabaf’s personality – figures that blend, transform, break the patterns enhanced by the two-tone essentiality and the combination of unique materials.
All Creative Agency
Continuity and specialisation
Overcoming limits
Adapting to change
INDEX INTRODUCTION TO THE ANNUAL REPORT........................................................................................................................................10
Key performance indicators in summary (KPI).................................................................................................................. 12
Products and markets..............................................................................................................................................................................18
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION..........................................................................26
Methodological note................................................................................................................................................................................. 27
Letter from the Chief Executive Officer to stakeholders.........................................................................................28
Business model, strategic approach and sustainable creation of value...................................................30
Strategic approach and creation of value......................................................................................................................30
Sustainable value creation.............................................................................................................................................30
Values, vision and mission..............................................................................................................................................30
Business model.......................................................................................................................................................................33
Materiality analysis...............................................................................................................................................................42
Corporate Governance, Risk Management and Compliance.............................................................................. 44
Corporate Governance..................................................................................................................................................................44
Risk Management............................................................................................................................................................................. 57
Compliance............................................................................................................................................................................................ 59
Sabaf and employees...............................................................................................................................................................................62
Risks .............................................................................................................................................................................................................. 62
Personnel management policy.............................................................................................................................................. 62
The people of the Sabaf Group............................................................................................................................................... 63
Recruitment policy........................................................................................................................................................................... 66
Personnel training.............................................................................................................................................................................70
Internal Communication.............................................................................................................................................................70
Diversity and equal opportunities......................................................................................................................................... 71
Working hours and hours of absence............................................................................................................................... 72
Remuneration, incentive and enhancement systems........................................................................................ 73
Occupational health and safety and working environment........................................................................... 76
Industrial relations............................................................................................................................................................................80
Business climate analysis............................................................................................................................................................. 81
Disciplinary measures and disputes................................................................................................................................... 83
Sabaf and environment......................................................................................................................................................................... 84
Risks ..............................................................................................................................................................................................................84
Health and safety, environmental and energy policy...........................................................................................84
Environmental impact................................................................................................................................................................... 85
Environmental investments......................................................................................................................................................89
Disputes.....................................................................................................................................................................................................89
Sabaf, the management of product quality and customer relations...........................................................90
Risks ..............................................................................................................................................................................................................90
Quality management policy.....................................................................................................................................................90
Sabaf and supply chain management......................................................................................................................................92
Risks .............................................................................................................................................................................................................. 92
Supply chain management policy....................................................................................................................................... 92
Sabaf, Public Administration and Community.................................................................................................................94
Sabaf and shareholders..........................................................................................................................................................................95
Sabaf and lenders........................................................................................................................................................................................97
Sabaf and competitors............................................................................................................................................................................97
REPORT ON OPERATIONS..............................................................................................................................................................................108 CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018...........................................................................120 SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018.........................................................................................164 REPORT ON REMUNERATION......................................................................................................................................................................214
Flexibility and dynamism
Flexibility and dynamism are Sabaf’s two great qualities. It means reacting to market variables and events quickly and efficiently, adapting to the changing operating environment.
SABAF . ANNUAL REPORT 2018
Introduction to the Annual Report
Key performance indicators in summary (KPI)............................................... 12 Products and markets.........................................................................................................18
10
INTRODUCTION TO THE ANNUAL REPORT
The publication of the Annual Report of the Sabaf Group, now in its fourteenth
public interest entities (EIPRs) to communicate non-financial and diversity
edition, confirms the Group’s commitment, undertaken since 2005, to an in-
information starting with the 2017 financial statements. As a public-inter-
tegrated reporting of its economic, social, and environmental performance.
est entity, Sabaf prepared for the second year the consolidated disclosure of non-financial information presenting the chief policies practiced by the
One of the first international-level companies to embrace the trend of inte-
company, the management models, the risks, the activities performed by the
grated reporting, Sabaf intends to continue on the path it has undertaken,
Group during 2018, and the related performance indicators as pertains to the
inspired by the recommendations contained in the international Framework
issues expressly referred to by Legislative Decree no. 254/2016 (environmen-
on sustainability reporting of the International Integrated Reporting Council
tal, social, personnel-related, respect for human rights, struggle against cor-
(IIRC), aware that integrated, complete, and transparent reporting can benefit
ruption) and to the extent needed to ensure understanding of the company’s
both the companies themselves, through better understanding of the articu-
activity, its trend, its results, and the impacts it produces.
lation of strategy and greater internal cohesion, and the community of investors, who will more clearly grasp the linkage between strategy, governance,
The Group’s commitment was also confirmed by the “Oscar di Bilancio” award
and corporate performance.
for the fourth time (previously in 2004, 2013 and 2017), a historic contest promoted and organised by the Italian Public Relations Federation (FERPI),
The Annual Report provides an overview of the Group’s business model
which for over fifty years has been awarding prizes to the most virtuous
and the process of creating corporate value. The Business Model and the
businesses in financial reporting and in dealing with all stakeholders. In the
main results achieved (Summary Key Performance Indicators) are presented
2018 edition, Sabaf won the Oscar in the category of Small Listed Companies
from the perspective of capital used (financial, social and relational, human,
on the grounds of “having created financial statements that stand out for
intellectual, infrastructural and natural) to create value over time, generat-
their ability to effectively and comprehensively represent the economic data
ing results for the business, with positive impacts on the community and
of the company’s performance together with a description of the company’s
stakeholders as a whole. The “non-financial indicators” include the results
programme and philosophy. The initial dashboard is extremely effective and
achieved in managing and exploiting intangible assets, the main driver that
guides the reading of the document allowing you to understand the infor-
allows the corporate strategy’s ability to create value in a perspective of me-
mation in a concise and clear way, thanks to the help of graphs and tables
dium to long-term sustainability to be monitored.
for the aggregation of economic and non-economic data. The presence of tables comparing data over a three-year period is also important: it reinforces
Sabaf also adopts a virtuous approach with regard to compliance with the
the understanding of company data and its trend. The decision to direct the
new regulatory obligations on non-financial reporting. On 30 December 2016,
graphics of the document towards the concept of “growth” that accompanies
Legislative Decree 254 came into force, which, in implementation of Direc-
the reading of the concept represented in the company data is innovative and
tive 2014/95/EU on Non-financial and diversity information, requires relevant
original”.
11
12
€/000
15,614
1
2018
20,000
2017
14,835
€/000
20,000
NET FINANCIAL DEBT
DIVIDENDS PAID OUT
SHAREHOLDERS’ EQUITY
ROCE (RETURN ON CAPITAL EMPLOYED)
INVESTED CAPITAL
NET PROFIT
WORKING CAPITAL
PRE-TAX PROFIT
EBIT
25,533 12.9
12,446 9,009 46,084 135,835 112,309 23,458 9.2 5,467
€/000 €/000 €/000 €/000 €/000 €/000 €/000 €/000 €/000 % €/000
5,386
115,055
140,588
50,753
14,835
17,804
18,117
30,955
12,530
2016 25,365
150,223
2017
130,978
6,071
9.5
53,524
119,346
172,870
58,307
15,614
20,960
16,409
29,959
150,642
2018
EBITDA
SALES REVENUES
SABAF . ANNUAL REPORT 2018
Key performance indicators in summary (KPI) 1
ECONOMIC CAPITAL
NET PROFIT
2016
9,009
€/000
In September 2018, Okida joined the Sabaf Group. The KPIs listed in this section include Okida only for data relating to economic capital
20,000
INTRODUCTION TO THE ANNUAL REPORT
HUMAN CAPITAL
AVERAGE AGE OF PERSONNEL
LEVEL OF EDUCATION
LEAVING TURNOVER
(sum of employee age/total employees at 31/12)
(number of graduates/ total employees at 31/12)
YEARS
%
2018
39.7
59.6
11.1
9.1
22.3
2017
39.0
57.3
13.3
10.4
19.8
2016
38.6
57.2
15.4
8.5
15.7
INVESTMENTS IN TRAINING/ TURNOVER
HOURS OF STRIKE FOR INTERNAL CAUSES
%
N°
N°
2018
0.33
0
760
66.6
33.4
2.76
2017
0.28
0
756
65.6
34.4
2.50
0.23
0
736
65.5
34.5
3.28
INJURY FREQUENCY RATE
INJURY LOST DAY RATE
2016
(number of injuries (excluding injuries while travelling to/from work) x 1,000,000/ total hours worked)
(days of absence (excluding injuries while travelling to/from work) x 1,000/total hours worked)
(employees resigned and dismissed/total employees at 31/12)
HOURS OF TRAINING PER EMPLOYEE
%
%
HOURS
TOTAL EMPLOYEES %
(hours of training/ average employees)
ILLNESS RATE (hours of illness/total hours worked)
%
JOBS CREATED (lost)
N°
2018
23.49
0.17
4
2017
14.68
0.13
2
2016
9.21
0.04
-23 13
SABAF . ANNUAL REPORT 2018
RELATIONAL CAPITAL
VALUE OF GOODS AND SERVICES OUTSOURCED: brass moulding and aluminium die-casting €/000
VALUE OF GOODS AND SERVICES OUTSOURCED: other processing €/000
2,762 2,761
6,798 6,506
2,635
5,172 10,000
%
10,000
CUSTOMER WASTE (charges from customers
AVERAGE TURNOVER BY CUSTOMER
and credit notes to customers for returns/turnover)
(total turnover/number of customers) €/000
0.09 0.09
353 366
0.09
382 1
500
PERCENTAGE OF TURNOVER FROM NEW CUSTOMERS
PERCENTAGE OF TOP 10 CUSTOMERS
(turnover from new customers/turnover) %
%
0.97 0.76
45 46
1.01
47 2
100
CUSTOMER COMPLAINTS
PERCENTAGE OF TOP 20 CUSTOMERS %
N°
65
398
65
335
67
395 500
100
NUMBER OF ANALYSTS WHO FOLLOW THE SECURITY CONTINUOUSLY
TURNOVER FROM CERTIFIED SUPPLIERS (turnover from certified suppliers/purchases) %
N°
71.7 70.9
1
68.1
1 100
14
2
10
INTRODUCTION TO THE ANNUAL REPORT
LAWSUITS FILED AGAINST GROUP COMPANIES N°
TURNOVER PERCENTAGE OF SUPPLIERS IN THE PROVINCE OF BRESCIA %
3
30.8
4
30.4
4
36.2 10
100
2018
Key
2017
2016
PRODUCTIVE CAPITAL
93,802
93,967
11,467
REAL INVESTMENT/ TURNOVER
%
9.1
11,762
0.9
QUANTITIES SOLD OF LIGHT ALLOY VALVES ON TOTAL VALVES AND THERMOSTATS 10
7.5
13,944
8.8
100
90.1
87.8
80.8
2
1.1
1.0
QUANTITIES SOLD OF HIGH ENERGY EFFICIENCY BURNERS ON TOTAL BURNERS 100
%
120,950
20,000
%
€/000
150,000
IT BUDGET (investments + current expenditure) /TURNOVER %
TOTAL NET INVESTMENTS
€/000
FIXED ASSETS
21.9
19.7
Key
14.5
2018
2017
2016
15
SABAF . ANNUAL REPORT 2018
ENVIRONMENTAL CAPITAL BRASS
ALUMINIUM ALLOYS
10,000
STEEL
10,000
MATERIALS USED (t)
1,000
789
540
697
SIMILAR TO URBAN
7,831
HAZARDOUS WASTE
6,703
10,000
7,861
7,631
7,250
NON-HAZARDOUS WASTE
10,000
WASTE (t)
500
8,070
186
189
2,434
152
2,095
2,210
6,008
6,201
2018
Key
m3x1,000
NATURAL GAS CONSUMPTION
30,225
4,059
30,841
3,432
27,189 10,000
%
ENVIRONMENTAL CURRENT EXPENDITURE/TURNOVER AT 31/12
18,520 20,078
0.44
17,111
0.43
0.39
20,000
1
%
ENVIRONMENTAL INVESTMENTS/ TURNOVER AT 31/12
kg/€
TOT WASTE/VALUE OF PRODUCTION
0.18
0.22
0.02
0.21
0.53
0.21 1
1
Key
16
2016
100,000
t
CO2 EMISSIONS
2017
MWh
ELECTRICITY CONSUMPTION
3,918
5,453
2018
2017
2016
INTRODUCTION TO THE ANNUAL REPORT
INTELLECTUAL CAPITAL
2018
2017
2016
€/000
340
337
231
%
1.3
1.4
1.5
%
2.5
2.5
2.3
INVESTMENTS IN INTANGIBLE ASSETS/TURNOVER
%
0.4
0.6
0.4
CURRENT EXPENDITURE ON QUALITY/TURNOVER
%
0.17
0.20
0.24
INVESTMENTS ON QUALITY/TURNOVER
%
0.06
0.12
0.10
VALUES OF WASTE/TURNOVER
%
0.60
0.74
0.87
%
0.69
0.83
0.96
NUMBER OF SAMPLES FOR CUSTOMERS
N°
1,244
1,245
1,154
NUMBER OF CODES PROVIDED TO THE FIRST 10 CUSTOMERS
N°
1,939
1,620
2,303
CAPITALISED INVESTMENTS IN RESEARCH AND DEVELOPMENT
HOURS DEDICATED TO THE DEVELOPMENT OF NEW PRODUCTS/HOURS WORKED HOURS DEDICATED TO PROCESS ENGINEERING/HOURS WORKED (hours dedicated to orders for the construction of new machines for new products or to increase production capacity/total hours worked)
(production waste/turnover)
IMPACT OF QUALITY COSTS/TURNOVER (production waste + charges and returns from customers/turnover)
17
SABAF . ANNUAL REPORT 2018
Products and markets Historically, the Sabaf Group is one of the world’s leading manufacturers of
The range of hinges and burners also includes products for the profession-
components for household gas cooking appliances, with a market share of
al sector.
about 40% in Europe and over 10% worldwide. In recent years, the Group expanded its product range to include hinges for
The reference market is represented by manufacturers of household appli-
various types of household appliances (ovens, dishwashers and washing
ances and in particular of kitchens, hobs and ovens. Most of sales are made
machines) and, with the acquisition of Okida in September 2018, electronic
by the supply of original equipment, while sales of spare parts are negligible.
components (electronic control boards, timers, display units and power units for ovens, hoods, refrigerators, freezers and vacuum cleaners).
The 2018-2022 Business Plan On 13 February 2018, the BoD of Sabaf S.p.A. approved the 2018-2022 Busi-
With regard to the organic component, the Plan set an annual growth target
ness Plan.
for revenue ranging from 4% to 6%, with the aim of achieving a turnover target
The underlying objective of the Plan is to undertake a renewed path of growth,
of € 180-200 million in 2022.
both organic and through acquisitions: an acquisition policy that can also increase the product range in sectors adjacent to the current ones, taking full
The Group also assesses growth opportunities through acquisitions, which,
advantage of the potential of the Sabaf Group.
based on the objectives of the Business Plan, could generate additional revenues ranging from € 70 to € 100 million at the end of the five-year period.
As a whole, the Business Plan defines a revenue target ranging from € 250 to € 300 million, accompanied by a gross profitability (EBITDA%) of more than 20% and supported by an investment plan of up to € 230 million.
GROWTH
REVENUE
ORGANIC
€ 200 - 230 mil by 2020
compound annual growth rate (CAGR) ranging from 4% to 6% (€ 180 – 200 mil of revenue by 2022)
THROUGH ACQUISITIONS
€ 250 - 300 mil by 2022
(€ 70 – 100 mil of revenue by 2022)
65% TO 100%
(IN 2022 COMPARED TO 2017) 0
of revenue
200
>20%
100
TOP-LINE GROWTH FROM
300
EBITDA
2017 2020 2022
18
INTRODUCTION TO THE ANNUAL REPORT
Valves and thermostats
These are the components that, by mixing the gas with air and burning the gases used, produce one or
gas to the covered (of the oven or grill) or uncovered burners; the thermostats are characterised by the presence of a thermoregulator to keep the chosen temperature constant.
These are the components that allow movement and balancing when opening and closing the oven door, washing machine door or dishwasher door.
Electronic components
more flame rings.
The Group also produces and markets a wide range of accessories, which integrate the offer of the main product lines.
These are components such as electronic control boards, timers and display and power units for ovens, refrigerators, freezers, hoods and other products.
37,789
36,160
2014
12,928
20,251 12,288
13,741
13,577
6,963
7,946
0
0 Professional burners
Electronic components
Accessor & other revenues
Special burners
Standard burners
Thermostats
Brass taps
0
Light alloy taps
0 Professional burners
Electronic components
Hinges
Accessor & other revenues
Special burners
Standard burners
Thermostats
Brass taps
Light alloy taps
Electronic components
0
2,289 Professional burners
Hinges
Accessor & other revenues
Special burners
Standard burners
Thermostats
Brass taps
Light alloy taps
0 Professional burners
Electronic components
Hinges
Accessor & other revenues
Special burners
Standard burners
Thermostats
Brass taps
Light alloy taps
10,596
12,689 8,424
12,613 5,079
7,699
9,007
8,905
7,376
5,991
4,327
5,331 Professional burners
Electronic components
Hinges
Accessor & other revenues
Special burners
Standard burners
Thermostats
Light alloy taps
34,006 21,622
21,215 15,267
15,422 10,436 6,521
4,327 Brass taps
2015
27,184
27,585
30,000 25,000 20,000 15,000 10,000 0
5,000
2016
37,338
2017
33,784
41,070
39,351
39,368
2018
Mgl â‚Ź
32,393
35,000
37,615
40,000
SALES BY PRODUCT FAMILY
Hinges
Accessories
These are the components that regulate the flow of
Hinges
Burners
The product range
Sales of light alloy valves have now almost completely replaced brass valves.
The product family with the highest growth rates is that of special burners,
Continuous improvements in the production process allowed competitive-
where innovation has been strongest in recent years.
ness to be further enhanced.
There was a good increase in sales of hinges, benefiting from solid partner-
In recent years, sales of thermostats have been affected by a physiological
ships with the main customers and the development of new products that
drop in their use in ovens and by the difficulties of the main end market (North
anticipated market requirements.
Africa).
Starting from 2016, the Group entered the professional burners sector,
Standard burners are the most popular products, also produced in Turkey
through the acquisition of A.R.C. This is a business that, thanks to its integra-
and Brazil.
tion with Sabaf, offers excellent prospects for further development. 19
SABAF . ANNUAL REPORT 2018
The industrial footprint SABAF S.P.A.
FARINGOSI HINGES S.R.L.
ARC S.R.L.
Valves and thermostats
Oven hinges
Professional burners
Standard burners
Hinges for washing machines
REVENUE € 5.3 MILLION
Special burners
REVENUE € 10.4 MILLION
22 EMPLOYEES
REVENUE € 110.1 MILLION
49 EMPLOYEES
547 EMPLOYEES
SABAF DO BRASIL LTDA
SABAF TURCHIA
Standard burners
Standard burners
Special burners
REVENUE € 19.5 MILLION
REVENUE € 13.2 MILLION
100 EMPLOYEES
88 EMPLOYEES NEW
OKIDA Electronics for household appliances
SABAF APPLIANCE COMPONENTS (KUNSHAN) CO. LTD
ARC HANDAN JV Professional burners wok
Wok burners REVENUE € 0.9 MILLION 8 EMPLOYEES
REVENUE € 4.0 MILLION € 2 94 EMPLOYEES
€
2 3
20
150.6
908
million
persons
2018 GROUP TURNOVER
EMPLOYEES OF THE GROUP AT 31.12.2018 3
as from September 2018 including temporary personnel (with temporary work contract or similar)
INTRODUCTION TO THE ANNUAL REPORT
THE REFERENCE MARKETS In Western Europe, which accounts for about half of the final destination mar-
However, the level of saturation is often lower in other markets. The higher
ket for Sabaf products, the saturation level reached by cooking appliances
economic development rates and the more favourable demographic trend
(the portion of families of household appliances) is close to 100%. There-
compared to Western Europe are creating great opportunities for groups
fore, purchases of new appliances are mainly represented by replacement
such as Sabaf, which can both work with multinational manufacturers of
purchases. The move, purchase or renovation of a house often provide oppor-
household appliances and support local producers.
tunities to purchase a new cooking appliance. Therefore, the market trend is directly affected by the general economic trend and in particular by the levels of disposable income for households, consumer confidence and the trend in real estate activity.
COUNTRIES AND CUSTOMERS 4 COUNTRIES
56
2018
100
CUSTOMERS 5
1000
59 400 2017
2018
339 2017
In line with the followed commercial policies, most of the active commercial relations are characterised by relations consolidated over the long term. There are 32 customers with annual sales of more than € 1 million (as in 2017). The distribution by class of turnover is as follows: 2018
2017
> € 5,000,000
7
7
from € 1,000,001 to € 5,000,000
25
25
from € 500,001 to € 1,000,000
20
16
from € 100,001 to € 500,000
64
52
< € 100,000
351
310
in euro
In addition to the management structure at the Ospitaletto headquarters, the commercial network is based on the subsidiaries in Brazil, Turkey, the USA and China. There are 9 agency relationships, mainly relating to non-European markets.
4 5
Data processed considering also Okida. The Sabaf Group’s share of international sales (excluding Italy and Western Europe) rose from 61.7% in 2013 to 70.8% in 2018 With sales over € 1,000
21
SABAF . ANNUAL REPORT 2018
Sabaf’s international development: challenges and opportunities ANALYSIS OF THE SCENARIO
PERFORMANCE DATA 6
ITALY In the last ten years, the production of household appliances in Italy has been strongly reduced: some players left the sector and others relocated part of their activities to Turkey and Eastern Europe. There are still manufacturers focused mainly on the up-market or on special products, strongly dedicated to exports, which continue
to show excellent results. The importance of the Italian market for Sabaf is consequently lower than in the past. The majority (estimated at approximately 80%) of Sabaf’s sales in Italy are destined for household appliances exported by our customers.
31,579 | 21.0%
36,523 | 24.3%
36,365 | 27.8%
41,244 | 29.9%
42,277 | 31.0%
2018
2017
2016
2015
2014
WESTERN EUROPE The same trend that characterised Italy was also seen in the other Western European countries: in Western Europe,
up-market products remain high, where Sabaf is significantly increasing its share.
12,337 | 8.2%
11,678 | 7.8%
8,553 | 6.5%
7,438 | 5.4%
2018
2017
2016
2015
8,716 | 6.4%
2014
EASTERN EUROPE AND TURKEY Turkey is now the state where the largest number of household appliances are produced. In this context, the opening of a production plant in Turkey and the acquisition of Okida Elektronik (September 2018) are key elements in support of the growth strategy. Sabaf estimates that about 75% of sales in Turkey are exported by our customers (mainly in Europe); however, the Turkish domestic market is of increasing importance: the average age of the population, the number of new households and the increase in income are converging indica46,301 | 30.7%
2018
6
22
Sales by geographical area (€/000) and percentage incidence on Group sales
42,824 | 28.5%
2017
tors of a growing demand for durable goods. Contingent factors such as the currency crisis of 2018 can lead to temporary reversals of this trend. The Group’s strategy is to further develop its activities in Turkey in the coming years. The Group is also active in other Eastern European markets, where it intends to conclude new partnership agreements with customers and strengthen those already in place.
34,123 | 26.1%
35,125 | 25.5%
36.198 | 26,6%
2016
2015
2014
INTRODUCTION TO THE ANNUAL REPORT
ANALYSIS OF THE SCENARIO
PERFORMANCE DATA 6
NORTH AMERICA AND MEXICO Sabaf’s presence in North America is relatively recent, but sales and market share have been growing steadily in recent years. Future plans also include the develop-
ment of products co-designed with major customers and a more direct coverage on the market, possibly also through a production site.
15,071 | 10.0%
12,735 | 8.5%
11,304 | 8.6%
2018
2017
2016
9,603 | 7.0%
2015
7,044 | 5.2%
2014
SOUTH AMERICA For future development, Sabaf can count on a consolidated production presence (a factory in Brazil has been operating since 2001). The Sabaf Group believes that the development potential of this area is still extremely interesting, considering the significant size of the market and the demographic growth trends.
The product range for the local market was recently expanded, with the production of special burners in Brazil, also to meet the specific nature of demand. Other markets of great interest to the Group are those in the Andean area.
25,461 | 16.9%
22,938 | 15.3%
20,847 | 15.9%
20,815 | 15.1%
18,324 | 13.4%
2018
2017
2016
2015
2014
MIDDLE EAST AND AFRICA Sabaf has a long-standing presence and reputation in the Middle East and Africa. The social, political and economic difficulties of the area inevitably condition the performance on these markets. 12,303 | 8.2%
2018
13,009 | 8.6%
2017
The Group also considers the Middle East and Africa among the most promising markets in the medium term, also in view of demographic trends and the growing rate of urbanisation.
11,698 | 8.9%
2016
16,759 | 12.1%
16,871 | 12.4%
2015
2014
ASIA AND OCEANIA China, with its production of about 26 million hobs per year, is the most important market in the world. The Group, aware that it offers high quality products that are increasingly competitive compared to those supplied by local competitors, aims to establish long-term partnerships with the main Chinese hob manufacturers.
Another market with great potential is the Indian market, for which Sabaf developed a range of dedicated burners. The results achieved on these two markets are still marginal but growth in these areas remains a strategic priority for the Group.
7,590 | 5.0%
10,516 | 7.0%
8,088 | 6.2%
7,019 | 5.0%
6,907 | 5.0%
2018
2017
2016
2015
2014 23
Positioned for change
Change is inevitable, it means growing and evolving within one’s environment. Sabaf’s approach is to see market challenges as new opportunities and conscientiously tackle risk by transforming threats into prospects. 24
25
SABAF . ANNUAL REPORT 2018
Consolidated disclosure of non-financial information (prepared pursuant to Article 4 of Legislative Decree 254/2016)
Methodological note........................................................................................................... 27 Letter of the Chief executive officer to the stakeholders........................28 Business model, strategic approach and sustainable creation of value.............................................................................30 Corporate Governance, Risk Management and Compliance............ 44 Sabaf and employees.........................................................................................................62 Sabaf and environment................................................................................................... 84 Sabaf, the management of product quality and customer relations.................................................................................................... 90 Sabaf and supply chain management.................................................................92 Sabaf, Public Administration and Community............................................. 94 Sabaf and shareholders....................................................................................................95 Sabaf and lenders..................................................................................................................97 Sabaf and competitors......................................................................................................97
26
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Methodological note PREPARATION CRITERIA
REPORTING BOUNDARY
The consolidated disclosure of non-financial information of the Sabaf Group
The reporting boundary of qualitative and quantitative data and information
(hereinafter also referred to as the “Disclosure”), prepared in accordance with
contained in the Consolidated Non-Financial Disclosure of the Sabaf Group
Art. 4 of Legislative Decree 254/2016 as amended (hereinafter also referred
refers to the performance of the Sabaf Group (hereinafter also referred to as
to as the “Decree”), contains information (policies practised, risks and related
“Group” or “Sabaf”) for the year ended 31 December 2018 with reference to
management methods, management models and performance indicators)
companies consolidated on a line-by-line basis, with the exception of:
on environmental, social, personnel, human rights and anti-corruption issues,
- Okida Elektronik, a company over which the Group acquired control in
to the extent necessary to ensure understanding of the activities carried out
September 2018. This company is included in the reporting boundary of
by the Group, its performance, results and impact. Each section also de-
the consolidated financial statements as from 4 September 2018 but was
scribes the main risks, generated or suffered, related to the above issues and
not included in the reporting boundary of the Disclosure because, despite
deriving from the Group’s activities.
the data collection integrating process has been initiated, at the date of preparation, not all the information required is yet available. Note also that
The Sabaf Group identified the new GRI Sustainability Reporting Standards
the extension of the reporting boundary to Okida would not have had a
(hereinafter also referred to as “GRI Standards”) defined by the Global Re-
significant impact, given the size of the Company (11% of the total number
porting Initiative (GRI) in 2016 as the “reference standard” for fulfilling the
of Group employees) and the date from which it became part of the Group;
obligations of Legislative Decree 254/2016, as the most widely recognised
- Sabaf Immobiliare s.r.l., a company without employees active in the man-
and internationally disseminated Guidelines. Starting with the current finan-
agement of industrial buildings of Ospitaletto, rented to the parent compa-
cial year, Sabaf made the transition from GRI G4 Guidelines to GRI Standards. This Disclosure is prepared according to the “in accordance - core” reporting option. The process of defining the contents and determining the relevant
ny Sabaf S.p.A., and owner of some housing units for sale; - Sabaf Appliance Components Trading Ltd, companies whose liquidation process is being completed.
aspects, also in relation to the areas envisaged by the Decree, was based on the principles envisaged by GRI Standards (materiality, stakeholder inclusiveness, sustainability context, completeness, comparability, accuracy, timeliness, clarity, reliability and balance). To help readers find the information in the document, the GRI Content Index is at the bottom of the disclosure.
REPORTING PROCESS
This Disclosure was approved by the Board of Directors on 26 March 2019
The preparation of the Group’s consolidated disclosure of non-financial infor-
and will be prepared annually. In accordance with one of the options envisaged by Art. 5 of Legislative Decree 254/2016, it constitutes a separate report from the Report on operations.
mation was based on a structured reporting process that involved all Italian and foreign structures, departments and companies responsible for the relevant areas and the related data and information that are the subject matter of the Group’s non-financial reporting. They were asked to contribute to the identification and evaluation of significant projects/initiatives to be described in the document and to data collection, analysis and consolidation phase, each for its own area of competence. In particular, the data and information included in this Disclosure derive from the company information system used for the management and accounting of the Group and from a non-financial reporting system (data collection sheets) specifically implemented to meet the requirements of Legislative Decree 254/2016 and GRI Standards. In order to ensure the reliability of the information contained in the Disclosure, directly measurable quantities have been included, limiting the use of estimates as much as possible. Calculations are based on the best information available or on sample surveys. The estimated quantities are clearly indicated as such. The economic and financial data and information are derived from the Consolidated Financial Statements at 31 December 2018.
27
SABAF . ANNUAL REPORT 2018
Letter from the Chief Executive Officer to stakeholders Dear shareholders and stakeholders,
After all, last year, two of our long-standing European customers, Candy and Gorenje, were acquired by major Chinese
In 2018, Sabaf once again achieved excellent results, in line
players, while one of our first customers underwent significant
with the company’s historical trends.
downturns in the European market, as well as a contraction in
Results achieved thanks to the Group’s solid competitive po-
demand in the Turkish and Middle Eastern markets.
sition and the launch of the 2018-2022 business plan. A plan presented a year ago, which envisages a path of growth both
These are all signs of confirmation of an increasingly complex
organic and through acquisitions, through an acquisition policy
global market that requires capacity for continuous change
that can also increase the product range in sectors adjacent to
and permanent adaptation to the demand requirements.
the current ones.
In other words, our future requires flexibility and dynamism,
The first step in this strategy of development and diversifica-
understood not only as mental, collective and individual atti-
tion of the product range was, in recent months, the acquisi-
tudes, but also as the adaptation of processes to the specific
tion of Okida Elektronik, whose performance not only helps to
demands of the market and its particular characteristics. This
strengthen the Group’s already interesting growth prospects
involves expanding the range of our products, but also over-
but also boosts its innovative capacity.
coming our technical and structural limitations in order to cre-
In terms of production, remember that in 2018, Sabaf reached
ate customised and complex solutions.
the goal of 500 million burners: a result that confirms our lead-
The customer increasingly demands quick and tailor-made
ership in the field of components for gas cookers.
responses, which forces us to learn to live within a continu-
A continuous technological and innovative development that
ous innovation. Therefore, ad hoc solutions and customised
in recent weeks was characterised by the strengthening of
products are needed in order to meet the changing demands
the Group’s technical and commercial relationships with ma-
of the market: their design capacity implies less rigid, faster
jor global players, the most important of which are historical
processes and a general orientation towards change for which
partners of Sabaf. With them we further strengthen our rela-
everyone must feel responsible and invested with for what of
tionship of mutual trust, based on respect, quality of service
direct concern. The competitive bar rises, and only those who
and - precisely - innovation. These are customers who have
can adapt - namely the most flexible, fast and dynamic - can
decided to increase supplies from Sabaf through new projects
build a solid and successful future.
that will be implemented in the next two to three years.
28
They are the prerequisite and guarantee necessary for organic
Today’s big numbers are the sum of many different orders: it
growth and strengthening of our historical business.
is no longer enough to start the machines and have the prod-
These projects will lead to significant increases in our sales in
ucts in the catalogue; they need to provide customers with
the profitable North American market. A market that, for some
tailor-made solutions. It is a process that also involves individ-
years now, has shown double-digit growth rates with renewed
ual responsibilities and attitudes at the heart of which people
attention from manufacturers of household appliances in the
remain fundamental. We continue to give them priority, but we
selection of their supplier partners.
also ask each of them to adapt to permanent changes. A com-
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
mitment to which Sabaf intends to give due recognition with
Finally, I would like to point out that in 2018 Sabaf won again the
training, incentive and enhancement systems.
“Oscar di bilancio” in the category of “Small Listed Companies”.
Change, but in the awareness of our past and of a history that
It is an award that we had already received in 2004, 2013 and
has allowed us to become a leading Group in the sector: there-
2017: we know that transparent and comprehensive communi-
fore, we will continue, as we have always done, to invest in qual-
cation makes investor relations easier, but also helps to create
ity and innovation.
good internal cohesion.
We also know that the growing markets coincide more and
“Born to burn” is the slogan of our new advertising campaign
more with those of distant countries, where the demograph-
launched in early 2019. We hope that our passion will also burn
ic and economic development are higher than in our country:
the stages of further growth.
North and South America, India, China. We will take advantage
We must overcome doubts and fears and have the courage and
of all the opportunities, possibly even setting up foreign produc-
curiosity to explore new opportunities in order to be able to cap-
tion units to complement those already existing in Turkey, Brazil
ture the richness that the new can bring.
and China. Production in Italy remains predominant and central, related to a competitiveness that must be sought every day
The Group has the characteristics, the strengths and the people
through efficiency, quality, production excellence, the lowering
to do so.
of the break-even point. Within a Country where it is certainly not easy to do business. All this with a view to long-term sustainability, which has always been part of our business philosophy.
Pietro Iotti
29
SABAF . ANNUAL REPORT 2018
Business model, strategic approach and sustainable creation of value Strategic approach and creation of value SUSTAINABLE VALUE CREATION For the Sabaf Group, respect for business ethics and socially responsible
of harmony and the sharing of values with its stakeholders: compliance with
behaviour are the fundamental elements of its business model. Accordingly,
common values increases mutual trust, encourages the development of
the Group developed a strategy and a governance model that can guarantee
common knowledge, and therefore contributes to the containment of trans-
sustainable growth over time.
action costs and control costs; in essence, it benefits the Group and all its
The Sabaf Group is aware that sustainable growth depends on the degree
stakeholders.
VALUES, VISION AND MISSION Sabaf takes the Person as its original value and therefore as the fundamen-
implies an a priori renunciation of all choices that do not respect the physical,
tal criterion of every choice: this results in an entrepreneurial vision that en-
cultural and moral integrity of the Person, even if such decisions can be effi-
sures dignity and freedom to the Person within shared rules of behaviour.
cient, economically convenient and legally acceptable. Respecting the value
The centricity of the Person represents a universal value, i.e. a hyper-stan-
of the Person means that, first of all, the dimension of the category of Being
dard applicable without differences in time and space. In compliance with
in relation to Doing and Having is the overriding consideration, and therefore
this universal value, the Sabaf Group operates by promoting cultural diversity
implies the protection and enhancement of the “essential” manifestations ex-
through the criterion of equity in space and time. Such a moral commitment
pressing the fullness of the Person.
The Charter of Values of Sabaf The Charter of Values is the governance tool through which the Sabaf Group clearly explains the Company’s values, standards of behaviour and commitments in relations with its stakeholders – shareholders, employees, customers, suppliers, lenders, the Public Administration, the community and the environment. The spirit of the Charter is to reconcile the principles of economic management with ethics based on the centricity of Man, as an essential condition for the sustainable growth of business in the long term. Sustainable growth, intended as the ability to combine at the same time: • economic sustainability, i.e. operate in such a way that company choices increase the value of the company not only in the short term but above all are able to guarantee business continuity in the long term through the application of an advanced model of corporate governance; • social sustainability, i.e. promote ethical behaviour in business and reconcile the legitimate expectations of the various stakeholders in accordance with common shared values; • environmental sustainability i.e. produce by minimising the direct and indirect environmental impacts of its production activities to preserve the natural environment for the benefit of future generations in compliance with current laws on the subject. The Charter aims to give a vision of ethics, focusing mainly on positive and just actions to be taken and not only on incorrect behaviour to be avoided. This vision is the basis for a positive use of freedom by decision-makers, where ethical references guide decisions in a manner consistent with the Group’s culture of social responsibility. The Sabaf Group aims to develop a process based on people being given a sense of responsibility within shared rules of behaviour with which to voluntarily comply. According to this approach, it is still imperative to comply absolutely with the law and regulations in force in Italy and in the other countries where the Group operates, as well as with all the internal regulations of the Group and the values declared in the Charter. The Charter of Values also represents a reference document as part of the Organisation, Management and Control Model pursuant to Legislative Decree 231/2001 and, as such, sets out a series of general rules of behaviour Group employees are required to comply with.
30
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Table summarising the Policies of the Sabaf Group with reference to the contents of Legislative Decree 254/2016 as amended
TOPIC ENVISAGED BY LEGISLATIVE DECREE 254/2016
REFERENCE POLICIES
ENVIRONMENT Basic principles • Raise staff awareness and train the personnel to promote environmental awareness • Minimise direct and indirect environmental impacts • Adopt a precautionary approach to environmental impacts • Encourage the development and diffusion of environmentally friendly technologies and products • Define environmental objectives and improvement programmes • Search for the right balance between economic objectives and environmental sustainability
• Charter of Values • Manual of the Integrated Management System of Health and Safety, Environment and Energy in compliance with ISO 14001, ISO 50001 and OHSAS 18001 standards
HUMAN RIGHTS Basic principles • Adopt socially responsible behaviour • Promote respect for the fundamental human rights of workers in all countries where the Group operates • Avoid all forms of discrimination and favouritism in respect of employment and occupation • Enhance and respect diversity
• Charter of Values • Manual of the Social Responsibility Management System in compliance with SA8000 Standard
PERSONNEL Basic principles • Encourage continuous learning, professional growth and knowledge sharing • Provide clear and transparent information on the tasks to be carried out and the position held • Encourage teamwork and the dissemination of creativity in order to allow the full expression of individual skills • Adopt criteria of merit and competence in employment relationships • Encourage the involvement and satisfaction of all the personnel
• Charter of Values • Manual of the Social Responsibility Management System in compliance with SA8000 Standard
PERSONNEL / HEALTH AND SAFETY Basic principles • Reach working standards that guarantee health and maximum safety, also through the modernisation and continuous improvement of workplaces • Minimise any form of exposure to risks at work • Disseminate the culture of risk prevention through systematic and effective training • Promote the protection not only of oneself, but also of colleagues and third parties • Encourage the diffusion of products with security systems
• Charter of Values • Manual of the Integrated Management System of Health and Safety, Environment and Energy in compliance with ISO 14001, ISO 50001 and OHSAS 18001 standards
ANTI-CORRUPTION Basic principles • Raise awareness among all those who work for Sabaf so that they behave correctly and transparently in the performance of their activities • Comply with local anti-corruption regulations
• Group Anti-Corruption Policy • Organisation, management and control Model pursuant to Legislative Decree 231/2001
SOCIAL / SUPPLY CHAIN Basic principles • Ensure absolute impartiality in the choice of suppliers • Establish long-term relationships based on fairness in negotiations, integrity and contractual fairness
• Charter of Values
31
SABAF . ANNUAL REPORT 2018
The Charter of Values and the Anti-Corruption Policy are applied and dissem-
Farginosi Hinges s.r.l. adopts a Health and Safety management system certi-
inated in all Group companies.
fied and compliant with OHSAS 18001 standard. In any case, the ISO 14001, OSHAS 18001, ISO 50001 and SA8000 standards
Sabaf S.p.A. adopts a Social Responsibility Management System certified
are sources of reference and inspiration for the entire Group.
and compliant with the SA8000 standard and an integrated management system of Health and Safety, Environment and Energy certified and compliant
The Organisation, Management and Control Mode pursuant to Legislative De-
with ISO 14001, ISO 50001 and OHSAS 18001 standards.
cree 231/2001 is adopted by Sabaf S.p.A. and Faringosi Hinges s.r.l.
Vision Combine business decisions and results with ethical values by going beyond family capitalism and opting for a managerial rationale oriented not only towards the creation of value but also towards the respect of values.
Mission Consolidate the technological and market leadership in the design, production and distribution of the entire range of components for household gas cooking appliances through constant attention to innovation, safety and the enhancement of internal expertise. Associate the growth of company services with social and environmental sustainability, promoting an open dialogue with the legitimate expectations of stakeholders.
32
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
BUSINESS MODEL Strategic pillars of Sabaf’s Business Model In line with its shared values and mission, Sabaf believes that there is a successful industrial and cultural model to be consolidated both through organic growth and growth through acquisitions. The distinctive features of the Sabaf model are set below:
Innovation Innovation represents one of the essential elements of Sabaf’s industrial model and one of its main strategic levers. Thanks to continuous innovation, the Group has managed to achieve excellent results, identifying technological and production solutions that are among the most advanced and effective currently available and establishing a virtuous circle of continuous improvement of processes and products, until acquiring technological competence with characteristics that are difficult to match for competitors. The know-how acquired over the years in the development and internal production of machinery, tools and presses, which is integrated synergistically with the know-how in the development and production of our products, represents the critical success factor of the Group. With the acquisition of Okida, Sabaf has also acquired a strong electronic know-how that, together with the traditional and strong mechanical skills, can further expand the business spaces for the Group. The investments in innovation allowed the Group to become a world leader
Success on international markets and partnerships with multinational groups Sabaf pursues its growth through its success in international markets by trying to replicate its industrial model in emerging countries and adapting it to the local culture. In line with its reference values and mission, the Group is seeking to bring know-how and cutting-edge technologies to these countries, operating in full respect of human rights and the environment and in compliance with the United Nations Code of Conduct for Transnational Corporations. This choice is driven by the awareness that only by operating in a socially responsible way it is possible to ensure long-term development of industrial experience in emerging markets. The Group also intends to further strengthen its collaboration with customers and its position as sole supplier of a complete range of products in the cooking components market, also thanks to its ability to adapt production processes to specific customer needs and provide an increasingly wide range of products.
Widening the range of components
in a highly specialised sector and to achieve high levels of technological de-
and development through acquisitions
velopment, specialisation and production flexibility over time. The production
The continuous expansion of the range aims to increase customer loyalty
sites in Italy and abroad are designed to guarantee products according to
through the widest satisfaction of market requirements. The possibility of
the highest levels of technology available today and represent a cutting-edge
offering a complete range of components is an additional distinguishing fea-
model both for environmental protection and safety of the employees.
ture for Sabaf compared to its competitors. In order to sustain a dynamic
Eco-efficiency
growth path, the Group intends to extend its product range to other components for household appliances. This expansion is pursued both through
Sabaf’s product innovation strategy is based on the search for improved en-
internal research and through growth through acquisitions, assessing oppor-
vironmental performance. Attention to environmental issues is reflected both
tunities for partnerships and acquisitions of other companies. Examples of
in innovative production processes that have a lower energy impact in the
this are the acquisition of a controlling share in A.R.C. s.r.l. in 2016 and 100%
manufacture of products, and, above all, in the design of eco-efficient products
in Okida in 2018, through which Sabaf entered the professional burners and
during their daily use. Innovation efforts are directed towards the development
electronic components for household appliance sectors.
of burners that reduce fuel consumption (natural gas or other gases) and emissions (carbon dioxide and carbon monoxide, in particular) in users.
Safety Safety has always been one of the essential elements of Sabaf’s business project. Safety for Sabaf is not just a matter of complying with existing standards but a management philosophy oriented towards the continuous improvement of its performance, in order to guarantee the end user an increasingly safe product. In addition to investing in research and development of new products, the Group has chosen to play an active role in disseminating a safety culture: Sabaf has long been promoting the introduction of regulations worldwide - in the various institutional venues - that make it compulsory to adopt products with thermoelectric safety devices. Sabaf also promoted the ban on the use of zamak (zinc and aluminium alloy) for the production of gas valves for cooking, in consideration of the intrinsic danger. To date, the use of
Enhancement of intangible assets and of its intellectual capital Sabaf carefully monitors and increases the value of its intangible assets: the high technical and professional competence of the people who work there, the image synonymous with quality and reliability, the reputation of a company attentive to social and environmental issues and the requirements of its stakeholders. The promotion of the idea of work and relations with stakeholders as a passion for a project based on common values in which everyone can recognise themselves symmetrically represents not only a moral commitment, but the real guarantee of enhancement of intangible assets. In this perspective, the sharing of values represents the link between the promotion of a corporate culture oriented towards social responsibility and the enhancement of its intellectual capital.
zamak is still permitted in Brazil, Mexico and other South American countries, limiting business opportunities in the valves segment for Sabaf.
33
SABAF . ANNUAL REPORT 2018
· Invested capital € 172,870,000 · Market capitalisation at 31 December /Shareholders’ Equity 1.44
· Advanced education: employees with a degree or diploma 59.6% · Training hours by employee 22.3 · Investments in training
Human capital
· Employees 760
BUSINESS APPROACH
· Shareholders’ Equity € 119,347,000
Economic capital
· Net financial debt € 53,524,000
INNOVATION, ENHANCEMENT OF INTERNAL RESOURCES AND CONTINUOUS LEARNING
INTERNATIONALISATION
· Production sites 6 · Real investment on turnover 7.5% · Value of property, plant and equipment € 75,168,000
· Brass 789t · Aluminium alloys 7,831t · Steel 7,861t · Electricity consumed 30,255MWh · Natural gas consumed 3,918,000m3 · Water used 139,840m3
· Hours dedicated to the development of new products 1.3% · Hours dedicated to process engineering 2.5%
1
34
data includes Okida only as far as economic capital is concerned
DISTINCTIVE FEATURES
in the province of Brescia 30.8%
INTERNAL AND VERTICALISED PRODUCTION OF
VALVES AND THERMOSTATS
PRODUCTS
· Purchases from suppliers
Relational capital
· No. of Customers 371
Productive capital
10 customers 45%
Environmental capital
· Turnover from the top
Intellectual capital
Business model
1
on turnover 0.33%
BURNERS
MACHINERY, TOOLS AND PRESSES BASED ON SPECIFIC KNOW-HOW
HINGES
Human capital Relational capital
COMPONENTS AND PRODUCTS
Productive capital
SUSTAINABILITY
Environmental capital
QUALITY, INTERNAL AND EXTERNAL SAFETY, ECO-COMPATIBILITY
Economic capital
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
· Sales revenue +0.3% · EBITDA as a percentage of sales 19.9%
· No. of new employees 90 · Leaving turnover 10% · Strike hours on hours worked 0.07% · Injury frequency rate 23.5 · Injury lost day rate 0.17
· Average turnover by customer €353,000 · Customer complaints 398 · Lawsuits filed against Group companies 3 · No. of samples for customers 1,244
· Burners sold No. of Parts 34,657,000 · High efficiency burners 21.9% · Valves and thermostats sold No. of Parts 19,393,000 · Light alloy valves and thermostats sold 90.6%
· Waste to value of production 0.22 · CO2 emissions 18,520t
ELECTRONIC COMPONENTS
Intellectual capital
ACCESSORIES · No. of Patents 48 · No. of codes provided to the first 10 customers 1,939 · Impact of quality current expenditure on turnover 0.17%
35
SABAF . ANNUAL REPORT 2018
GENERATED AND DISTRIBUTED ECONOMIC VALUE The analysis of the determination and distribution of economic value among stakeholders, prepared in accordance with the indications of the GRI is shown below. The table was prepared distinguishing between three levels of economic value. The generated one, the distributed one and the one retained by the Group. The economic value represents the overall wealth created by Sabaf, which is then distributed among the various stakeholders: suppliers (operating costs), employees, lenders, shareholders, public administration and community (external perks).
2018
2017
CHANGE
ECONOMIC VALUE GENERATED BY THE GROUP
160,054
155,408
4,646
Revenue
150,642
150,223
419
3,298
3,325
(27)
373
214
159
Value adjustments
1,600
1,474
126
Bad debt provision
(421)
(93)
(328)
Exchange rate differences
5,384
274
5,110
28
(12)
40
(850)
0
(850)
0
3
(3)
ECONOMIC VALUE DISTRIBUTED BY THE GROUP
137,515
133,063
4,452
Remuneration of suppliers
90,219
88,636
1,583
667
580
87
34,840
35,328
(488)
Remuneration of lenders
1,206
804
402
Remuneration of shareholders 2
6,071
5,386
685
Remuneration of the Public Administration 3
5,163
2,888
2,275
16
21
(5)
ECONOMIC VALUE RETAINED BY THE GROUP
22,539
22,345
194
Depreciations and amortisation
12,728
12,826
(98)
Provisions
155
26
129
Use of provisions
(71)
(36)
(35)
9,727
9,529
198
(thousands of Euro)
Other income Financial income
Income/expenses from the sale of property, plant and equipment and intangible assets Value adjustments to property, plant and equipment and intangible assets Profits/losses from equity investments
of which for environmental expenses Remuneration of employees
External perks
Reserves
2 3
36
The amount is estimated on the basis of the proposed dividend Includes deferred taxes
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Sabaf 4.0 “Industry 4.0” indicates the fourth industrial revolution, i.e., the one
in an increasingly volatile market.
that will lead to a production almost entirely based on the use of
Our goal is to make the data resulting from these integrations avail-
intelligent machines, interconnected and connected to the Internet.
able and usable in real time to the people directly involved in the pro-
However, these machines are not yet able to work alone: because a
cesses, because it is only the knowledge of man that can guarantee
more powerful data processing and storage capacity will have to be
the true revolution 4.0, especially in a verticalised and integrated re-
combined with a better efficiency in obtaining value. Today, only 1% of
ality like Sabaf. We must learn to use all this to the best of our ability
the data collected is used by companies to refine their processes on
to achieve higher performance, saving time, waste, costs and energy.
the basis of the information available.
We must all become the minds of new and powerful processes. Sa-
For us, who have been on the road to Industry 4.0 for about ten years,
baf’s knowledge, its history, tradition, skills and new frontiers of work.
through the use of robots and the ability of the different work phases
Here is what “Industry 4.0” means to us.
to communicate with each other, the new frontier is to achieve greater flexibility, to respond faster and with high quality standards to cycles
Sabaf and the lean philosophy Japanese model, lean production, total quality. These are the for-
times, everyone must make every effort to do excellently what they
mulas by which the manufacturing industry tries to keep up with the
already know how to do well. Everyone is invited to bring out their
times, with the global challenges that make the market uncertain and
own skills and to share their experience and knowledge with others.
competitive advantages not acquired forever. Sabaf has been com-
We are aware that every resource that is misused or not used is a
mitted to the philosophy of continuous improvement for some time
wasted resource, whether it is energy, time, people, intelligence or
and applies, both in the factory and in the office, many techniques
raw materials.
typical of lean manufacturing and lean office. This is a necessary
Finally, we know that continuous improvement implies people’s
way not to lose market share in a reality made complicated by the dif-
propensity to change, as Charles Darwin taught us: it is not the stron-
ficult economic moment, not only for the household appliances sec-
gest or the smartest species to survive, but the one that best adapts
tor. We also know that continuous improvement is an objective that
to change.
must concern everyone, at all levels. If we want to keep up with the
The acquisition of Okida On 4 September 2018, the Turkish company Okida Elektronik joined
expanding the product range in components for household applianc-
the Sabaf Group. The acquisition was carried out through the Turkish
es and the acquisition of e-skills.
subsidiary Sabaf Turkey for 70% and directly by Sabaf S.p.A. for the
Over the years, the Company has been characterised by a constant
remaining 30%.
growth and a profitability stable at levels of excellence. In 2018, Okida
Okida was founded in Istanbul in 1987 by Mr. Gurol Oktug and is a
achieved sales of € 11.1 million, of which 40% directly abroad.
leader in Turkey in the design, manufacture and sale of electronic con-
At 31 December 2018, the Company had 94 employees (59 men and
trol boards, timers, display and power units for ovens, hoods, vacuum
35 women), 15 of whom were in Research and Development. The av-
cleaners, refrigerators and freezers.
erage age of the personnel is 35 years old.
The acquisition of Okida represented the first step towards the implementation of the 2018-2022 Business Plan, in line with the strategy of
37
SABAF . ANNUAL REPORT 2018
GOVERNANCE OF SOCIAL RESPONSIBILITY AND STAKEHOLDER ENGAGEMENT Social responsibility in business processes
To transform the values and principles of sustainable development into intervention choices and management activities, Sabaf applies a structured methodology, the key factors of which are as follows:
1
2
3 An internal control system capable of monitoring
Sharing values, mission
Training
and sustainability
and communication.
strategy.
risks (including social, environmental and reputational risks) and verifying the implementation of commitments to stakeholders.
4
5
6
Key performance
A clear and complete
indicators (KPIs), which
reporting system, able
can monitor economic,
to effectively inform
social and environmental
the different categories
performance.
of stakeholders.
A stakeholder engagement system, to compare with the expectations of all stakeholders and to receive useful feedback for continuous improvement.
The precautionary approach The awareness of the social and environmental aspects that accom-
cifically the main risks of the different operating dimensions.
pany the Group’s activities, together with the consideration of the im-
Detailed information on the internal control system and on the risk
portance of a cooperative approach with stakeholders and the Group’s
management system is provided in the next paragraph. “Corporate
good reputation, has led Sabaf to adopt a precautionary approach in
Governance, Risk Management and Compliance”.
managing the economic, social and environmental variables that it has to manage on a daily basis. To this end, the Group analysed spe-
38
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Stakeholder engagement Sabaf is committed to constantly strengthening the social value of its busi-
aging opportunities for discussion in order to identify lawful expectations,
ness activities through careful management of relations with stakeholders.
increase trust in the Company, manage risks and identify new opportunities.
The Group intends to establish an open and transparent dialogue, encourCUSTOMERS
COMMUNITY
EMPLOYEES
PUBLIC ADMINISTRATION
SHAREHOLDERS
COMPETITORS
ENVIRONMENT
LENDERS
SUPPLIERS
arising from these activities are reported in the following paragraphs.
STAKEHOLDER ENGAGEMENT INITIATIVES UNDERTAKEN
Meetings with employees Meetings with trade unions
Customer Satisfaction Survey
Questionnaire Regular meetings
Questionnaire dedicated to financial analysts and investment fund managers Meetings with ethical fund managers
and Public Administration
Employees Employee satisfaction survey and climate analysis
Competitors
are described below (generally every two or three years). The relevant issues
market and the intensity of their relations with the latter. The Annual Report
Lenders
the basis of their business characteristics, the characteristic aspects of the
Community
The initiatives for involving each stakeholder that are carried out periodically
Shareholders
social and environmental performance achieved during the year.
vides a summary representation of Sabaf’s main stakeholders, identified on
Suppliers
social and environmental reporting processes. The “stakeholder map” pro-
Customers
is the preferred communication tool for presenting the significant economic,
STAKEHOLDER
The identification of stakeholders is an essential starting point for defining
Multi-stakeholder meetings Dialogue with universities
Regular dialogue
In 2018, in addition to the stakeholder engagement activities that take place on an ongoing basis, employee satisfaction and corporate climate was analysed in Sabaf S.p.A. 39
SABAF . ANNUAL REPORT 2018
Sabaf complies with the Code of Conduct of CECED Sabaf complied with the code of conduct of CECED (The European Committee of Manufacturers of Domestic Equipment), an association representing over 280 companies in the household appliances industry.
The CECED Code of Conduct confirms the commitment of the Eu-
The signatory companies also undertake to raise awareness among
ropean household appliance industry to ethical and fair behaviour.
their suppliers of the principles of the Code of Conduct and encour-
The Code aims to promote fair and sustainable standards in work-
age them to pursue them. They also require that the same principles
ing conditions and environmental protection to support fair com-
be proposed to the whole supply chain through the latter.
petition in global markets. The Annual Report of Sabaf is also the tool through which the Group The producers complying with the Code commit themselves volun-
reports year by year on the practical implementation of the princi-
tarily to implement decent working conditions, which include com-
ples of the Code and the progress achieved, as specifically required
pliance with common standards regarding minimum age, working
of the companies complying with it.
hours, hygiene and safety conditions, respect for freedom of association and collective bargaining, as well as respect for environmental standards.
40
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Sabaf complies with the Global Compact In April 2004, Sabaf complied formally with the Global Compact,
an integral part of our strategy, culture and day-to-day operations,
the United Nations initiative for companies that commit to up-
and we also commit to explicitly declare our commitment to all
holding and promoting the ten universally accepted principles of
employees, partners, customers and the general public.
human rights, labour rights, environmental protection and anti-cor-
The consolidated disclosure of non-financial information sets out
ruption. With the publication of the 2018 Annual Report, we renew
in detail the actions taken by the Sabaf Group in support of the
our commitment to making the Global Compact and its principles
ten principles.
THE 10 PRINCIPLES OF THE GLOBAL COMPACT Human rights 1
Principle I Businesses should support and respect the protection of internationally proclaimed human rights; and Principle II make sure that they are not - even if indirectly - complicit in human rights abuses.
2
Labour 3
Principle III Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. Principle IV The elimination of all forms of forced and compulsory labour.
5
4
Principle V The effective abolition of child labour. Principle VI The elimination of discrimination in respect of employment and occupation,
6
Environment 7
Principle VII Businesses should support a precautionary approach to environmental challenges and Principle VIII undertake initiatives to promote greater environmental responsibility; and
9
8
Principle IX encourage the development and diffusion of environmentally friendly technologies.
Fight against corruption Principle X Businesses should work against corruption in all its forms, including extortion and bribery.
10
41
SABAF . ANNUAL REPORT 2018
MATERIALITY ANALYSIS The GRI Standards require that the contents of the Consolidated disclosure
It is noted that in defining material aspects, the following topics are consid-
of non-financial information be defined on the basis of a materiality analysis.
ered preconditions for operating and are therefore considered very important
In compliance with the requests of GRI Standards, Sabaf has started since
for both Sabaf and its stakeholders:
2014 a process of identifying the (relevant) material aspects to be reported,
a) creation and distribution of sustainable value over time (Economic Per-
i.e. those aspects:
formance GRI 201);
- of significant economic, environmental or social impact for Sabaf’s business
b) a transparent and effective governance system to support business (Governance structure GRI 102-18);
- that could substantially affect the assessments and decisions of stake-
c) constant attention to compliance with the law in the performance of its activities 4 (Anti-Corruption GRI 205 e Environmental Compliance GRI 307).
holders. From this perspective, materiality takes into consideration not only the point of view of the organisation but also that of stakeholders. The most relevant aspects were updated in 2017 and confirmed in 2018, taking into account the business priorities and the development of the external scenario.
Materiality matrix 5
5
VERY SIGNIFICANT
7
11 8
6 4
9
1 10
SIGNIFICANT
SIGNIFICANCE FOR STAKEHOLDERS
3
2
13 12
SIGNIFICANT
VERY SIGNIFICANT
SIGNIFICANCE FOR SABAF
This includes the fight against corruption, which is an essential aspect of managing the Group’s business and therefore included in the preconditions, and is discussed in this document in the section “Corporate Governance, Risk Management and Compliance” 5 Only the topics considered relevant by the organisation and subject matter of reporting are represented 4
42
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Material aspects MATERIAL ASPECT
IMPORTANCE OF THE ASPECT FOR SABAF
LINK TO THE ASPECTS OF GRI STANDARDS
Personnel training
Training activities with the aim of guaranteeing the continuous professional growth of employees
Training and education GRI 404
Sabaf
Industrial relations
Relations between Sabaf and the internal trade union representatives, based on the principles of transparency and mutual correctness
• Freedom of Association and Collective Bargaining GRI 407 • Labour Management Relations GRI 402
Sabaf
Trade unions
3
Remuneration and incentive policy
Definition of fixed and variable components of remuneration for employees Incentive system based on the achievement of pre-established targets in order to pursue company targets
• Market presence GRI 202 • Training and education GRI 404
Sabaf
Trade unions
4
Emissions into the atmosphere, waste and management of environmental impacts
Definition of monitoring and reduction activities of emissions of polluting substances into the atmosphere and of waste generated by the production processes of Sabaf
• Energy GRI 302 • Emissions GRI 305 • Effluents and waste GRI 306
Sabaf
Suppliers
5
Research and innovation of products and processes also with reference to safety and environmental performance
Identification of new technological and production solutions (also with a special attention to safety and environmental performance) that allow the Group to strengthen its leadership in the industrial sector to which it belongs
Customer Health and Safety GRI 416
Sabaf
Customers
6
Partnership with multinational groups
Sabaf’s opening to strategic collaborations with the main players in the sector
**
Sabaf
7
Organic growth and growth through acquisitions
Boost the Group’s expansion, both through organic growth and through acquisitions, maintaining the excellence of its economic results and preserving its financial solidity.
Employment GRI 401
Sabaf
8
Customer satisfaction and customer support
Ability to respond effectively to customer expectations, at all stages of the relationship (from design to after-sales service)
**
Sabaf
9
Production quality and efficiency
Search for better product or process performance and solutions in terms of environmental impact Designing new eco-efficient products
Please refer to aspects 4 and 5
Sabaf
10
Management of relations with suppliers, supplier assessment and contractual conditions
Sabaf’s commitment to defining a relation with the supply chain based on the principles of fairness in negotiations, integrity and contractual fairness Sharing corporate values with suppliers Sabaf defines minimum criteria for the creation of a lasting relationship with suppliers, based on the principles of social responsibility
Supplier Social Assessment GRI 414
Sabaf
Suppliers
11
Health and safety of personnel and contractors
Management, in compliance with the regulations on occupational health and safety, of topics related to the health and safety of workers: training, prevention, monitoring, improvement objectives.
Occupational Health and Safety GRI 403
Sabaf
Suppliers
12
Diversity and equal opportunities
Commitment to ensuring equal opportunities for women and protected categories
Diversity and Equal Opportunity GRI 405
Sabaf
Protection of Human and Workers’ Rights
Protection of human rights as provided for in the “Universal Declaration of Human Rights” and the principles laid down in the conventions of the International Labour Organisation. Socially responsible management of work processes and working conditions in the supply chain according to the requirements of the SA8000 standard
• Non-discrimination GRI 406 • Supplier Social Assessment GRI 414
Sabaf
ID 1
2
13
INTERNAL IMPACTS
EXTERNAL IMPACTS*
Suppliers
* Reporting is not extended to the external boundary ** With regard to these aspects (not directly related to a Material Topic envisaged by the GRI Standards Guidelines), Sabaf indicates in the document the adopted management approach
43
SABAF . ANNUAL REPORT 2018
Corporate Governance, Risk Management and Compliance Corporate Governance OVERVIEW
The corporate governance model of Sabaf has always been based on a strict separation between the shareholding structure and management of the Company and of the Group. This model was confirmed also following the changes in the shareholding structure in 2016 and 2017, where, however, the Saleri family is the reference shareholder.
44
The purpose of this section of the file is to highlight the choices made
Finally, a further comparison is provided on the composition and opera-
by Sabaf and the peculiarities of its governance system, revised in the
tion of the Board of Directors, using the data provided by the 2018 Italia
light of the new features introduced by the Corporate Governance Code.
Board Index Observatory, published by Spencer Stuart, which analyses
Where possible, a comparison with other listed companies is also provid-
the characteristics and operation of the Boards of Directors of the top
ed, using the information collected by Assonime in its document Notes
100 listed Italian (industrial and financial) companies in order of capital-
and Studies “Corporate Governance in Italy: self-discipline, remuneration
isation as of February 2018, as well as providing a comparison with the
and compliance-or-explain”, published in January 2019 and concerning
main European and non-European countries.
the Corporate Governance reports for the 2017 financial year of 225 list-
The information below is a summary but does not replace the “Report on
ed Italian companies, available at 15 July 2018, 91% of which (i.e. 205
corporate governance and ownership structure” prepared by the Issuer
companies) has formally chosen to comply with the Corporate Gover-
pursuant to Art. 123-bis of the TUF for 2018 and available on the Com-
nance Code. The benchmark used below takes into account, where avail-
pany’s website: www.sabaf.it, under the section Investors/Corporate
able, a panel of “non-financial” companies only.
Governance.
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
SABAF S.p.A.
100%
100%
ITALIAN SUBSIDIARIES
Faringosi Hinges s.r.l.
Sabaf do Brasil Ltda
100%
Sabaf Immobiliare s.r.l.
100%
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki (Turchia) 70%
ARC s.r.l.
30%
Okida Elektronik Sanayi ve Ticaret Anonim Ĺžirketi, (Turchia)
The Group operates through manufacturing and commercial companies in Italy and abroad, wholly or partially controlled by the Parent
100%
Sabaf US Corp.
100%
Sabaf Appliance Components Trading Ltd (Cina)
100%
Sabaf Appliance Components Ltd (Cina)
Company. Specifically: a) Production activity is carried out by: - the Parent Company Sabaf S.p.A., valves and burners, - the Italian company FaringosiHinges, hinges for household appliances, - the subsidiary in Brazil, burners,
FOREIGN SUBSIDIARIES
70%
- the subsidiary in Turkey, burners, - the subsidiary Sabaf Appliance Components in China, burners (production started in 2015), - the subsidiary ARC s.r.l., professional burners (acquired in 2016) and that controls ARC Handan, a joint venture set up to develop the production and sales of professional burners in China - the subsidiary Okida (acquired in 2018), electronic control boards, timers, display and power units for ovens , hoods, vacuum cleaners,
51%
Handan ARC Burners Co., Ltd (Cina)
refrigerators and freezers. b) The subsidiary Sabaf US carries out commercial supporting activities. c) The subsidiary Sabaf Appliance Components Trading (China) is going into liquidation. d) The company Sabaf Immobiliare is engaged in the management of the real estate assets.
Manufacturing company
Company gone into liquidation
Trading company
45
SABAF . ANNUAL REPORT 2018
THE GOVERNANCE STRUCTURE Sabaf adopted a traditional model of management and control, character-
This model is supplemented, in accordance with the provisions of the Corpo-
ised by the presence of:
rate Governance Code the Company complied with, by: a) the Committees set up by the Board of Directors within its members, each
- Shareholders’ Meetings (ordinary and extraordinary) called to pass resolutions pursuant to the laws in force and the Company’s Bylaws;
one with proposal and advisory functions on specific matters and without decision-making powers, such as: - Control and Risk Committee that also takes on the functions of the Relat-
- Board of Statutory Auditors, in charge of supervising: (i) compliance with
ed-Party Committee;
the law and Articles of Incorporation and adherence to principles of proper
- Remuneration and Nomination Committee that takes on the functions en-
management in the performance of corporate activities; (ii) the adequa-
visaged by the Remuneration Committee and integrates them with those
cy of the Company’s organisational structure, internal control and risk
relating to the appointment and composition of the control bodies indicat-
management system and administrative/accounting system; (iii) the pro-
ed by the Code;
cedures for effective implementation of the corporate governance rules envisaged in the Corporate Governance Code; (iv) risk management; (v) the
b) the Internal Audit department in charge of checking the operation and adequacy of the internal control and risk management system.
regulatory audit of the accounts and the independence of the auditing firm; Finally, the Group’s administration and control model is completed by the - Board of Directors, in charge of company administration and management of Company operations.
presence of the Supervisory Body, set up following the adoption of the organisation, management and control model pursuant to Legislative Decree 231/2001, adopted by Sabaf since 2006.
The Governance Structure
SHAREHOLDERS’ MEETING
SUPERVISORY BODY
BOARD OF STATUTORY AUDITORS
REMUNERATION
BOARD OF DIRECTORS
AND NOMINATION COMMITTEE
CONTROL AND RISK COMMITTEE
INTERNAL AUDIT DEPARTMENT
(ALSO RELATED-PARTY COMMITTEE)
OUTSOURCING
CHIEF EXECUTIVE OFFICER Director in charge of the Internal Control System
KEY Organisational carry-overs
46
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
BOARD OF DIRECTORS The Board of Directors currently in office is composed of 9 members6 including: (i) 3 executive directors, (ii) 2 non-executive director and (iii) 4 non-executive and independent directors.
OFFICE
EXECUTIVE DIRECTORS
Chairman
MEMBERS
Chief Executive Officer
Pietro Iotti
Executive Director
Gianluca Beschi
Vice Chairman
Composition of the Board of Directors
Giuseppe Saleri
SABAF
ASSONIME AVERAGE 2018
44%
37%
22%
42%
33%
22%
Nicla Picchi
6 7
Director
Daniela Toscani
Director
Stefania Triva
Director
Renato Camodeca 7
Director
Alessandro Potestà
Director
Claudio Bulgarelli
INDEPENDENT DIRECTORS PURSUANT TO TUF AND CODE
NON-EXECUTIVE DIRECTORS
Executive Directors Non-Executive Directors Independent Directors pursuant to TUF and Code
Lead Independent Director
The Curriculum Vitae of the individual members are available on the Company’s website Renato Camodeca resigned on 23 January 2019. The BoD appointed by co-optation Carlo Scarpa
47
SABAF . ANNUAL REPORT 2018
Composition of the Board of Directors
Giuseppe Saleri Founder of Sabaf, of which he acquired full ownership in 1993. Promoter of listing on the stock exchange in 1998.
Degree in Law, Partner of Studio Picchi & Associati where he works as a lawyer. In Sabaf since 2006, he is also Chairman of SB 231 of Sabaf S.p.A. and of the subsidiary Faringosi-Hinges. He has been chairman of
in several industrial companies. In Sabaf since 2017, he holds the position of Chief Executive Officer.
Daniela Toscani
EXE DIR CUT I E C TO VE R
Mechanical Engineer, holds positions of increasing responsibility
I
Pietro Iotti
NT E ND OR E T EP EC D N DIR
F EXECUTIVE CHIE FFICER O
the Control and Risk Committee since 2015.
R
VIC
Nicla Picchi
E IND EPE CHA ND EN IRM TD IR AN EC TO
AN M IR A CH
Degree in business finance, she has gained many professional experiences in the field of finance and held positions of increasing responsibility in many financial and industrial companies; she joined the BoD of Sabaf in 2018.
Gianluca Beschi Certified public accountant, at Sabaf since 1997 as Investor Relations Manager and Head of Management Control. He has been holding the position of Director of Administration, Finance and Control since 2012.
48
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Claudio Bulgarelli Degree in Mechanical Engineering, entrepreneur,
NO N-E DIR XEC EC UT TO IV R E
chairman of Fintel srl , joined the BoD of Sabaf in 2018.
NT NDE PE TOR C DE IN DIRE
Renato Camodeca He is a university professor of economics, a former member of the Boards of Statutory Auditors and of the Supervisory Boards of listed and unlisted companies.
INDE P E N DE DI R E C TO NT R
Stefania Triva Entrepreneur, since 2014 she has been holding the position of Chairman and CEO of Copan Italia S.p.A., she joined the BoD of Sabaf in 2018.
VE UTI EC EX OR N- ECT NO DIR
Alessandro PotestĂ Degree in Economics and Commerce, he held management positions in investments and Corporate Development. Today, he is Senior Portfolio Manager at Quaestio Capital Management SGR S.p.A.
49
SABAF . ANNUAL REPORT 2018
Policy on the composition of corporate bodies On 26 March 2018, the Board of Directors of Sabaf S.p.A. adopted a
The Policy sets out the following characteristics for the composi-
Policy on the composition of the Corporate Bodies
tion of each of the two bodies:
This Policy sets out the Company’s guidelines on the characteris-
1. Independence
tics considered functional to ensuring an optimal composition of
2. Independence
the corporate bodies (Board of Directors and Board of Statutory
3. Training and professional experience
Auditors), with the aim of guiding the names put forward by the
4. Gender
Shareholders when renewing the Corporate Bodies, so that the ben-
5. Age and seniority in office
efits that can derive from a balanced composition of the Board and
6. Numbers
Board of Statutory Auditors inspired by criteria of diversity are taken
The Policy on the composition of the Corporate Bodies is published
into consideration.
on the Company’s website and described in the Report on corporate governance and ownership structure, in compliance with the provisions of art. 123-bis, (2), (d-bis) of the Consolidated Law on Finance.
Average age of directors
Number of meetings (2016-2018)
Overall average age:
9 9.8
2016
Sabaf 60 years old vs 56.4 years old Assonime
56%
9
2017
10.3
2018
22%
22%
2017 50-60
11
Average attendance at the Meetings (2016-2018) 8
2016
OVER 60
10.2
40-50
95%
92%
95%
92%
2018 SABAF
92%
ASSONIME AVERAGE
Observations
8
50
56% of the members of the Board in office are between 50 and 60 years
the attendance of the Sabaf directors at the Board meetings in the last
old; the average age is slightly higher than the average of the Assonime
three years is greater than that of the Assonime panel.
sample (60 vs 56.4 years old).
The meetings were attended by the Board of Statutory Auditors and -
In 2018, the Board of Sabaf met on 11 occasions (slightly above the
occasionally - the managers of Sabaf, who were invited to attend and
Assonime average), with an average attendance rate of 96%. In general,
report on specific issues on the agenda.
Assonime panel including financial companies
96%
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Average size of the BoD
Average number of meetings of the BoD
12
15
10
USA
UK
SWEDEN
NORWAY
FINLAND
DENMARK
SPAIN
GERMANY
FRANCE
BELGIUM
0
Average Age of Directors
% of Women in the BoD
70
50.0%
60
56 Media
50
40.0% 32% Media
0
USA
UK
SWEDEN
NORWAY
FINLAND
DENMARK
NETHERLAND
SPAIN
GERMANY
FRANCE
BELGIUM
ITALY
USA
10.0%
SABAF
20.0%
UK
SWEDEN
NORWAY
FINLAND
DENMARK
SPAIN
GERMANY
FRANCE
BELGIUM
ITALY
SABAF
30
NETHERLAND
30.0%
40
10
ITALY
2
SABAF
USA
UK
SWEDEN
NORWAY
FINLAND
4
0
20
8.9 Media
8 6
DENMARK
NETHERLAND
SPAIN
GERMANY
FRANCE
ITALY
SABAF
5
BELGIUM
10.6 Media
NETHERLAND
10
0
Average number of Independent Directors
The comparison was carried out using the data provided by the 2018 Italia Board Index Observatory, published by Spencer Stuart, which analyses the characteristics and operation of the Boards of Directors
10
of the top 100 listed Italian (industrial and financial) companies in order of capitalisation as of February 2018, as well as providing a comparison with the main European and non-European countries.
0
USA
During the financial year, the Board of Directors carried out its assessUK
SWEDEN
NORWAY
FINLAND
DENMARK
SPAIN
GERMANY
FRANCE
BELGIUM
ITALY
SABAF
5
NETHERLAND
5.95 Media
ment of the size, membership (including professional competences, managerial skills and seniority) and operation of the Board of Directors and its Committees, opting for the self-assessment of individual directors, coordinated by the Lead Independent Director. The results of the assessment were generally positive, and were discussed at the Board of Directors’ meeting of 23 January 2019.
SABAF
SOUTH EUROPE
NORTH EUROPE
ANGLO-SAXON COUNTRIES
Source: Spencer Stuart - Italia Board Index 2018
51
SABAF . ANNUAL REPORT 2018
BOARD OF STATUTORY AUDITORS The Board of Statutory Auditors, appointed by the Shareholders’ Meeting on 8 May 2018 for the period 2018 to 2020, is composed of 3 members9 with an average age of 52 years old (lower than the Assonime average, 55.9 years old). All members of the Board of Statutory Auditors are between 50 and 60 years old. The Chairman of the Board of Statutory Auditors is the expression of the minority list.
OFFICE
MEMBERS
Age of statutory auditors
Chairman
Alessandra Tronconi
Standing Auditor
Mauro Vivenzi
Standing Auditor
Luisa Anselmi
Overall average age: Sabaf 52 years old vs 55.9 years old Assonime
100% 0%
0%
OVER 60
50-60
40-50
Overall average age: 52 years old
Number of meetings (2016-2018) 2016
9.9
6
7
2017
Observations In line with the average of the Assonime sample, the Board of Stat-
10.1
utory Auditors of Sabaf met 11 times in 2018. 11
2018
The average attendance of members at meetings was 97% in the period 2016 to 2018 (97% in 2018), in line or higher than that of other
Average attendance at the Meetings (2016-2018)10
listed companies of the research. In general, the commitment of the Board of Statutory Auditors of Sabaf is achieved not only by carrying out checks and attending the
94% 96%
2016
in the meetings of the Board of Directors and of the Control and Risk 96% 100%
2017
9 10
52
Committee, in the half-yearly collective meetings with the Control Bodies and individual meetings with the independent auditors.
96% 97%
2018 SABAF
periodic meetings required by law, but also by involving all members
ASSONIME AVERAGE
The Curriculum Vitae of each statutory auditor is available on the Company’s website. Assonime panel including financial companies.
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
CONTROL AND RISK COMMITTEE The Control and Risk Committee currently in office, set up within the Board, is composed of 3 members, in line with the vast majority of cases in the Assonime sample (3 members, 76% in cases). In line with the choice made by about 57% of the Assonime panel, the CRC of Sabaf is made up exclusively of independent directors. The Committee was also assigned the functions pertaining to the Related-Party Committee.
OFFICE
Chairman
MEMBERS
Nicla Picchi
Number of meetings (2016-2018) 2016 2017
Member
Daniela Toscani
Member
Renato Camodeca
5
6.5
5
6.6 6.6 7
2018
SABAF
ASSONIME AVERAGE
Observations In 2018, the Committee met on 7 occasions (Assonime average: 7.7 meetings), in line with the average of the Assonime panel.
REMUNERATION AND NOMINATION COMMITTEE The Remuneration and Nomination Committee, set up within the Board, comprises three non-executive members, the majority of them independent (in line with the choice made by 43% of the Assonime panel), with the knowledge and experience in accounting, finance and remuneration policies that is deemed adequate by the Board of Directors.
OFFICE
Chairman
MEMBERS
Renato Camodeca
Number of meetings (2016-2018) 11 3.8
5
2016 4.1
10
2017
Member
Stefania Triva
Member
Alessandro Potestà
2018
SABAF
4.1
7
ASSONIME AVERAGE
Observations In the last three years, the Committee met a number of times higher than the Assonime average. In particular, in the last financial year the Committee met 7 times with the aim of, among other things, analysing the final results of the managerial incentive plan (MBO) for 2017 and preparing the plan for 2018, analysing the final results of the long-term incentive plan (LTI) for the three-year period 2015 to 2017 and preparing the regulations relating to the long-term incentive plan through the assignment of free shares (“Stock Grant Plan”).
11
Assonime panel referred only to the Remuneration Committee
53
SABAF . ANNUAL REPORT 2018
GOVERNANCE OF SUSTAINABILITY Sabaf has always believed that social and environmental aspects are an
Within the SA 8000 Certified System, Sabaf S.p.A., in addition to having iden-
integral part of the Group’s strategy and, as such, are the responsibility of
tified a Head of Social Responsibility Management System, created a Social
the Board of Directors.
Performance Team (SPT) made up of Representatives of the Social Responsibility Department and some Workers’ Representatives for Social Responsi-
With reference to the governance of these topics, at the meeting of the Board
bility, to whom the following tasks are also assigned:
of Directors on 3 August 2017, which, among other things, granted powers
• encourage a constant dialogue between the Workers and the Company
to executive directors following the appointment of the new Chief Executive Officer, it was confirmed that the criteria for implementing Corporate Social Responsibility (“CSR”) are the responsibility of the Board itself.
Management; • identify and assess the risks related to the aspects of Ethics and Social Responsibility; • monitor the activities carried out in the workplace and check the imple-
In order to show the commitment with regard to sustainability issues, Sabaf
mentation and effectiveness of the Social Responsibility System.
S.p.A. has adopted a Social Responsibility System in 2005 that complies with the international standard SA8000 and, also starting from that same
All Sabaf employees, as part of their responsibilities and competences, are
year, Sabaf publishes its economic, social and environmental sustainability
required to implement CSR every day in the performance of their activities.
performance jointly in its Annual Report.
Social Business Responsibility
DEVELOPMENT INTANGIBLE ASSETS
Economic Sustainability
Environmental Sustainability
Social Sustainability
54
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
INTERNAL AUDIT AND SUPERVISORY BODY Internal Audit On 8 May 2018, the Board of Directors, subject to the favourable opinion of
The Head of the Internal Audit department is responsible for verifying that
the Control and Risk Committee, as well as after hearing the Board of Statu-
the internal control and risk management system is working properly. He/
tory Auditors, renewed the engagement of an independent external compa-
She reports hierarchically to the Board of Directors and is not responsible for
ny, Protiviti s.r.l., to carry out the functions of the Internal Audit Department
any operational areas and remains in office for the entire term of the Board
for the period from 2018 to 2020. It then identified Emma Marcandalli, the
that appointed him/her.
company’s Managing Director, as Head of that department. This choice is related to the greater skills and efficiency that an external subject specialised in internal control issues can guarantee, also taking into account the size of the Sabaf Group.
Supervisory Body The appointment of the Supervisory Body was renewed on 8 May 2018 by the Board of Directors of Sabaf for the period 2018 to 2020; it is composed of a non-executive and independent member and an external member.
OFFICE
MEMBERS
Chairman
Nicla Picchi
Member
Emma Marcandalli
Also Head of Internal Audit. Representative of the Company that manages Internal Audit activities on an outsourcing basis.
Also a member of the Board of Directors, as independent director (Vice Chairman)
During 2018, the Supervisory Body of Sabaf met 5 times, asking the Company’s management to attend the meetings in order to carry out in-depth analysis on specific aspects.
55
SABAF . ANNUAL REPORT 2018
INFORMATION FLOWS The administration and control model of Sabaf operates through a network
Association, the Governance Model and other internal documents, reports
of periodic and systematic information flows between the various corpo-
to the functionally superior body on the activities carried out in the reference
rate bodies.
period and those planned for the following period, any observations noted
Each body, according to the timing and methods defined by the Articles of
and suggested actions.
Information flows within the governance structure
SHAREHOLDERS’ MEETING
Every 6 months, through a Report
Every 3 months, on the occasion of the BoD
At each meeting of the CRC and of the control bodies
BOARD OF STATUTORY AUDITORS
Information on Committee meetings (At the first available meeting of the BoD) Information on activities carried out (At least once a year)
BOARD OF DIRECTORS
SUPERVISORY BODY
REMUNERATION AND NOMINATION
At each meeting of CRC
At each meeting of the SB
Information on Committee meetings (At the first available meeting of the BoD) Report on activities carried out (At least every 6 months)
CHIEF EXECUTIVE OFFICER
INTERNAL AUDIT DEPARTMENT OUTSOURCING
At each meeting of CRC
COMMITTEE
CONTROL AND RISK COMMITTEE
Continuously
Director in charge of the Internal Control System
At each meeting of CRC
KEY Organisational carry-overs Information flows
56
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Risk Management In the course of its business, Sabaf defines its strategic and operational objectives and identifies, assesses and manages risks that could prevent the achievement of these objectives. In recent years, Sabaf has gradually moved closer to the concepts of risk as-
The risk management process includes all the material aspects identified by
sessment and risk management, developing a structured process of periodic
the Group as part of the materiality analysis carried out in accordance with
identification, assessment and management of risks, defined and formalised
the provisions of the GRI Standards.
Organisational Structure Analyses
Risk Catalogue
Operational Guideline: “Process of periodic identification and assessment of Group risks”
RISK MAP
Business Analysis
Risk Assessment Scale
RISK MANAGEMENT FRAMEWORK
in a Guideline of the Corporate Governance Manual.
The Guidelines define the roles and responsibilities of the risk assessment and risk management processes, indicating the subjects to be involved, the frequency of the process and the assessment scales. 11
2 2
3 3
4 4
< € 0.2 mil
€ 0.2 - € 0.5 mil
€ 0.5 - € 1.2 mil
> € 1.2 mil
Limited damage to health / safety / environment
Moderate damage to health / safety / environment
Serious damage to health / safety / environment
Very serious damage to health / safety / environment
Reputational damage
Negligible impacts on stakeholder confidence
Moderate impacts on stakeholder confidence
Significant impacts on stakeholder confidence
Damaged stakeholder confidence
Operational damage
No impact on business processes
Low impacts on efficiency / continuity
Significant impacts on efficiency / continuity
Critical impacts on efficiency / continuity
Once every 3 years or more
Once every 2 years
Once a year
Several times a year
Quality indicators
Unlikely/ Remote
Not very likely
Likely
Very likely
RISK MANAGEMENT LEVEL
Optimal
Adequate (with room for improvement)
To be strengthened
Nonexistent / lacking
ASSESSMENT SCALES
PROBABILITY
IMPACT
Economic-financial losses
HSE
Frequency of occurrence
57
SABAF . ANNUAL REPORT 2018
Each risk is subject to an assessment that is broken down as follows:
In the last quarter of 2018, the Internal Audit Department began the period-
• probability of occurrence foreseeable over a three-year future time horizon;
ic risk assessment process for the identification and assessment of Group
• estimate of the average of the economic-financial impacts, HSE, reputa-
risks, with the broad involvement of certain Parent Company department
tional and operational damage, within the time frame being assessed; • level of risk management and control.
heads, also in their capacity as representatives for the Subsidiaries, each for their respective areas. Along the assessment process, which also involves all the control bodies, the risks take shape and are positioned on the map.
Risk Assessment Process
Internal Audit 1
2 Business Referees
3 Supervisory Body
4
Control and Risk Committee
!
STRATEGIC RISK
Risk Map !
! RISK IN EXECUTION 58
Board of Directors
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Compliance INTEGRATED COMPLIANCE Internal control system
Operating guidelines
AU D
AN
D
CO RR
Corporate Governance Manual
Model 231
FR
Accounting Control Model
T EN ETY NM AF RO ND S VI EN TH A AL
Charter of Values
HE
UP TIO N
QUALITY
Internal Audit Department and Director in charge
Organisational Model Data Protection Quality Management System
System for the management of Social Responsibility
Training and business information
IN
Y AC IV PR
Body of procedures
TE PR LLE OP CT ER UA TY L
Integrated Management System of Health and Safety, Environment and Energy
Integrated audit activities
INFORMATION SECURITY
The risk management activity carried out by Sabaf also takes into account
In particular, Sabaf prepares an integrated and risk-based Audit Plan, broken
compliance requirements in order to achieve the company’s objectives.
down according to specific control objectives (operational risks, compliance
The internal control system is based on the following elements:
risks with Law 262/2005, Legislative Decree 231/2001, GDPS, security of
− organisation of the internal control and risk management system;
company information systems, etc.).
− procedures and mechanisms for the concrete implementation of the con-
The execution of the interventions is assigned, in outsourcing, to a single
trol principles; − continuous verification and monitoring processes carried out at various
structure, the Internal Audit, in turn responsible for reporting the results of the activities carried out to the competent control bodies.
levels of the organisation, both within the company processes and through independent structures.
ALL THIS TRANSLATES INTO AN INTEGRATED COMPLIANCE CULTURE AND TOOLS
59
SABAF . ANNUAL REPORT 2018
Integrated compliance and the Corporate Governance Manual OPERATING GUIDELINES SELF-ASSESSMENT OF THE BOD
Following compliance with the Corporate Governance Code for practices sponsored in this document in its processes, Sabaf adopted a Corporate Governance Manual that regulates prin12
ciples, rules and operating procedures. This Manual, adopted by Board resolution of 19 December 2006, has been updated several times over the years in order to reflect new laws and regulations in Corporate Governance, as well as best practices adopted by the Company over time. The Manual includes some operating guidelines, also approved by the Board of Directors and updated from September 2018, prepared for the purpose of the correct carrying-out of the activities pertaining to Sabaf’s management and control bodies.
REGULATED SUBJECTS
listed companies and in order to internalise the good governance MANAGEMENT, COORDINATION AND CONTROL OF GROUP SUBSIDIARIES MEANS OF COMPLIANCE WITH DISCLOSURE OBLIGATIONS TO STATUTORY AUDITORS PURSUANT TO ART. 150 OF THE TUF ASSESSMENT OF THE GROUP’S INTERNAL CONTROL SYSTEM
PROCESS OF PERIODIC IDENTIFICATION AND ASSESSMENT OF GROUP RISKS
MANAGEMENT OF SIGNIFICANT OPERATIONS IN WHICH DIRECTORS HAVE AN INTEREST
ASSIGNMENT OF PROFESSIONAL MANDATES TO THE INDEPENDENT AUDITORS
Integrated compliance and Legislative Decree 231/2001 In 2006, Sabaf S.p.A. adopted the Organisation, Management and Control
The Company entrusts the Supervisory Body with the task of assessing the
Model, as suggested by Legislative Decree 231/200113, aimed at preventing
adequacy of the Model itself, i.e. its real capacity to prevent offences as well
the commission of specific types of offences by employees and/or collabora-
as to supervise the operation and correct observance of the adopted proto-
tors in the interest or for the benefit of the Company.
cols.
In the following years, the Company, under the supervision of the Supervisory
In 2008, the subsidiary Faringosi Hinges s.r.l. also adopted Model 231 and ap-
Body, promptly responded to the need to adapt the Model and the control
pointed the SB, ensuring, in line with the parent company, its proper updating
structure to the regulatory changes that had occurred from time to time.
and effective operation.
Activities carried out in 2018 SUPERVISORY BODY
• Systematic verifications on the effectiveness and operations of the Model, both through checks carried out by Internal Audit and through conversations with personnel involved in sensitive activities. • Investigation activities regarding the occupational health and safety management processes. • Information and training for employees concerning specific protocols regulated by the Model. • In-depth analyses preparatory to the review and updating of the Model.
12
13
60
The latest version of the document in accordance with the provisions of the Corporate Governance Code, approved by the Board of Directors on 25 September 2018, is available on the Company website, at www.sabaf.it under the Investors - Corporate Governance section The latest version of the document, approved by the Board of Directors on 25 September 2018, available on the Company website, at www.sabaf.it under the Investors - Corporate Governance section
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Integrated compliance and Anti-corruption The Sabaf Group, aware of the negative effects of corrupt practices in business management, is committed to preventing and combating the occurrence of offences in the carrying-out of its activities.
Risk analysis and assessment in case of violation of anti-corruption regulations is included in the annual Risk Assessment process.
Sabaf is committed to preventing unlawful behaviour by disseminating the contents of its Charter of Values (i.e. distributed to all Group employees as well as to commercial agents who operate on behalf of the Group worldwide) and of the Organisation, Management and Control Model pursuant to Legislative Decree 231/2001 (adopted by Sabaf S.p.A. and Faringosi-Hinges s.r.l.).
As further confirmation of its commitment to fight against unlawful behaviour, during 2018, Sabaf adopted a Group Anti-Corruption Policy. The provisions and guidelines set out in the Policy are intended to promote the highest ethical standards in all business relationships in line with national and international best practices. The Anti-Corruption Policy applies globally to Sabaf, to the Group’s subsidiaries and to all of their employees.
The Anti-Corruption Policy identifies some general principles of behaviour (prohibited obligations and behaviour), applicable to all Recipients. Based on activities carried out by Sabaf and inspired by international best practices, rules of behaviour have been developed in the following main areas assessed as potentially exposed to risks of corruption: - Trade relations with intermediaries and agents - Trade relations with customers, suppliers and other third parties - Relations with trade unions and political organisations - Human resource management - Management of gifts and presents, entertainment expenses, donations and sponsorships - Accounting and financial procedures and controls
In 2018, no episodes of corruption have been recorded.
Integrated Compliance and Law 262/2005 Sabaf considers the Internal Control and Risk Management System for
The Group defined its own Accounting Control Model, approved for the
financial information an integral part of its risk management system.
first time by the Board of Directors on 12 February 2008, subsequently
In this regard, Sabaf has integrated the activities relating to the manage-
revised and updated.
ment of the internal control system on financial reporting into its Audit and Compliance process since 2008.
ELEMENTS CHARACTERISING f ad
equa
cy a n d e f fe c
t i ve
ap
pl
ic iod
i
ADMINISTRATIVE AND ACCOUNTING PROCEDURES
AUDIT ACTIVITY
ols.
CONTROL ENVIRONMENT
ntr
Pe r
at
co
Risk Assessment related to economic, equity and financial reporting.
ic
of
as
m ss
e
o nt
on
se
THE ACCOUNTING CONTROL MODEL
No updates to the Accounting Control Model were necessary in 2018.
Internal certifications of completeness and correctness of information.
61
SABAF . ANNUAL REPORT 2018
Sabaf and employees Risks The management of relations with the employees of the Sabaf Group cannot
safety (compliant with OHSAS 18001 standard) for Sabaf S.p.A. and Faringo-
disregard the identification, assessment and management of potential risks.
si Hinges s.r.l., extending their principles and policies to all Group companies,
The relevant risk categories in this area are:
in order to ensure increasingly coordinated and uniform management of as-
Strategic risks, which could affect the achievement of the Group’s develop-
pects relating to relations with employees.
ment objectives, such as the lack of adequate skills, the loss of key resources
In this perspective, at the end of 2018, the Group’s workforce included the
or the difficulty of replacing them.
position of Global Group HR Director.
Legal and compliance risks, related to contractual liabilities, compliance
Sabaf also implements structured policies in the following areas:
with the regulations applicable to the Group and the commitments set out in
• selection and recruitment of personnel;
the Charter of Values, such as the correct application of labour contracts in
• training;
force in the various countries in which the Group operates, health and safety
• internal communication;
regulations, compliance with the criteria of fairness and impartiality in the
• remuneration and incentive systems;
management of human resources.
• company welfare;
Operational risks, which may lead to malfunctions in the carrying-out of cur-
• industrial relations.
rent activities, such as high turnover or conflicting industrial relations.
The combination of these systems and policies enables the Group to fully
In order to deal with these potential risks, the Group adopted certified sys-
manage these risks. The following paragraphs outline, for each of these as-
tems for managing social responsibility (compliant with SA8000 standard)
pects, the characteristics of the “Sabaf model” and the performance achieved.
for the parent company Sabaf S.p.A. and managing occupational health and
Personnel management policy THE SOCIAL RESPONSIBILITY AND HEALTH AND SAFETY MANAGEMENT SYSTEM The commitment of the Sabaf Group to social responsibility and the protection of workers’ health and safety are strategic elements for Sabaf and the achievement of labour standards that guarantee respect for human rights, health and maximum safety is a constant challenge.
state of health, political opinions, race and religious beliefs at all stages of the employment relationship; • adopt criteria of merit and competence in employment relationships, based also on the achievement of collective and personal objectives;
The Group is committed to pursuing the following objectives, which are also set
• avoid all forms of mobbing of workers;
out in the Charter of Values:
• enhance the contribution of human capital in decision-making processes, en-
• promote respect for the fundamental human rights of workers in all countries
couraging continuous learning, professional growth and knowledge sharing;
where the Group operates, as identified in the principles established in the
• provide clear and transparent information on the tasks to be carried out and
SA8000 standard, in the Global Compact and in the Code of Conduct of Ceced,
the position held, the performance of the Group and market developments;
relating to child labour, forced and compulsory labour, occupational health and
• establish a responsible and constructive dialogue with trade unions, foster-
safety, freedom of association and right to collective bargaining, discrimina-
ing a climate of mutual trust in compliance with the principles of fairness
tion, disciplinary procedures, working hours and remuneration criteria;
and transparency, respecting their roles.
• carry out their activities by creating a group of motivated people who can
For this reason, Sabaf S.p.A. adopted and maintains a Social Responsibility
operate in a work environment that encourages and rewards fairness and
Management System that, by integrating with the other management systems
respect for others;
operating in the company (health, safety, environment and energy and quality),
• produce profits without ever losing sight of the respect for the rights of its workers; • identify and analyse potential hazards and risks in business processes, in order to make workplaces safer and more comfortable; • avoid any form of discrimination and favouritism during the recruitment
achieved through the following instruments: • maintaining full compliance with applicable laws, directives, local regulations and other signed requirements (SA8000, Global Compact, Code of Conduct of Ceced);
phase of personnel, whose selection must be made on the basis of the appli-
• the full implementation of the Charter of Values;
cants’ profiles meeting the company’s requirements;
• the prior assessment of human rights, health and safety aspects;
• value and respect diversity, avoiding any form of discrimination in career advancement on the grounds of gender, sexual orientation, age, nationality, 62
constitutes an effective means for constant risk reduction. This objective is
• the development of a process based on people being given a sense of responsibility within shared rules of behaviour.
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Sabaf S.p.A. and the SA8000 Standard Sabaf S.p.A. has been using a Social Responsibility Management Sys-
ing of a commitment to comply with the requirements of the Standard,
tem certified and compliant with the SA8000 standard since March
an integral part of contracts. Audits are also carried out on suppliers.
2009. On 21 May 2018, the Company obtained the renewal of the Certification from IMQ.
To customers, by committing themselves within the household appliance industry to support ethical and fair behaviour, also through
In order that the main stakeholders can actively participate in the implementation of the Social Responsibility System, particular attention was paid to their involvement in the methods described below.
compliance with the code of conduct of CECED. To the institutions, through the commitment to carry out its activities in order to overcome mere compliance with the law.
To Sabaf S.p.A. workers through specific training sessions. Understanding the importance of adopting a Social Responsibility System is also facilitated by sharing information material on company electronic noticeboards, on the HR PORTAL workers’ portal, on the network and on the company website. To the trade unions: through awareness and the convinced involvement of trade union workers’ representatives is fundamental for the full implementation of the System.
To the community: complying with the Global Compact, the United Nations initiative for companies that commit to upholding and promoting the ten principles: human rights, labour, environmental protection and anti-corruption. To be eligible for SA8000 compliance, Sabaf S.p.A. must comply with local, national and other applicable laws, prevailing industry standards, other requirements it complies with, and the principles of many international instruments, including the Universal Declaration
To suppliers, sub-suppliers and sub-contractors, through the sign-
During 2018, no episodes of discrimination were observed at Group level.
of Human Rights, ILO Conventions and United Nations Conventions.
With regard to this last aspect of risks related to suppliers, the SA8000 process involves carrying out a risk analysis and providing a questionnaire for
Through the process envisaged by the SA8000 standard, with regard to Sabaf
suppliers that include the issue of freedom of association and collective bar-
S.p.A., no transactions/activities with a high risk of recourse to child labour
gaining (for further information, refer to the chapter “The SA8000 standard
and forced or compulsory labour or with a high risk of violation of the right
and suppliers”).
of workers to exercise their freedom of association and collective bargaining were identified.
With regards to the other Group companies, there are no structured assessment tools.
The people of the Sabaf Group The Sabaf Group had 760 employees at 31 December 2018 compared to 756 at the end of 2017 (+0.53%). 31.12.2018
31.12.2017
31.12.2016
Sabaf S.p.A. (Ospitaletto, Brescia - Italy)
329
174
503
337
177
514
353
180
533
Faringosi Hinges S.r.l. (Bareggio, Milan - Italy)
22
21
43
22
21
43
21
21
42
A.R.C. s.r.l. 14 (Campodarsego, Padua - Italy)
15
4
19
14
4
18
-
-
-
Sabaf do Brasil (Jundiaí - São Paulo - Brazil)
70
17
87
61
16
77
49
17
66
Sabaf Turkey (Manisa - Turkey)
64
36
100
56
40
96
52
34
86
6
2
8
6
2
8
7
2
9
506
254
760
496
260
756
482
254
736
Sabaf Appliance Components (Kunshan) Co., Ltd. (Kunshan, Jiangsu Province – China) GROUP TOTAL 14
Figures consolidated starting from 2017
63
SABAF . ANNUAL REPORT 2018
As regards the types of contract adopted, there are 734 employees with permanent contracts (97.1%) and 26 with fixed-term contracts and in cross training or apprenticeship (3.4%). 31.12.2018
31.12.2017
31.12.2016
SABAF S.P.A. Permanent
326
171
497
335
177
512
350
180
530
Cross training or apprenticeship
2
1
3
1
0
1
3
0
3
Fixed term
1
2
3
1
0
1
0
0
0
31.12.2018
31.12.2017
31.12.2016
FARINGOSI HINGES S.R.L. Permanent
22
21
43
22
21
43
21
21
42
Cross training or apprenticeship
0
0
0
0
0
0
0
0
0
Fixed term
0
0
0
0
0
0
0
0
0
31.12.2018
31.12.2017
31.12.2016
A.R.C. S.R.L. Permanent
15
4
19
14
4
18
N/A
N/A
N/A
Cross training or apprenticeship
0
0
0
0
0
0
N/A
N/A
N/A
Fixed term
0
0
0
0
0
0
N/A
N/A
N/A
31.12.2018
31.12.2017
31.12.2016
SABAF DO BRASIL Permanent
70
17
87
58
16
74
49
17
66
Cross training or apprenticeship
0
0
0
0
0
0
0
0
0
Fixed term
0
0
0
3
0
3
0
0
0
31.12.2018
31.12.2017
31.12.2016
SABAF TURKEY Permanent
51
32
83
41
29
70
43
31
74
Cross training or apprenticeship
0
0
0
0
0
0
0
0
0
Fixed term
13
4
17
15
11
26
9
3
12
31.12.2018
31.12.2017
31.12.2016
SABAF CHINA Permanent
3
2
5
3
2
5
1
2
3
Cross training or apprenticeship
0
0
0
0
0
0
0
0
0
Fixed term
3
0
3
3
0
3
6
0
6
31.12.2018
31.12.2017
31.12.2016
GROUP TOTAL 487
247
734
473
249
722
464
251
715
Cross training or apprenticeship
2
1
3
1
0
1
3
0
3
Fixed term
17
6
23
22
11
33
15
3
18
506
254
760
496
260
756
482
254
736
Permanent
64
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Temporary personnel (with temporary work contract or similar)
61
60
46
46 15
ANNUAL AVERAGE
14
2018
2017
In 2018, 9 former temporary workers were hired by the companies of the Sabaf Group (4 in 2017). In 2018, Sabaf S.p.A. and A.R.C. s.r.l. hosted all-in-all 15 young people in internships (5 in 2017), including 7 students attending secondary school. In this way, they are offered a first direct contact with the world of work: in this way, they can see the technical knowledge acquired in the classroom applied “on the job”.
Breakdown of personnel by age
Breakdown of the personnel by length of service
31.12.2018
31.12.2017
31.12.2018
31.12.2017
< 30 years old
13.9%
16.0%
< 5 years
26.7%
24.5%
31 – 40 years old
39.9%
40.5%
6 – 10 years
12.9%
18.9%
41 – 50 years old
31.8%
30.7%
11 – 20 years
46.7%
45.1%
over 50 years old
14.4%
12.8%
over 20 years
13.7%
11.5%
TOTAL
100%
100%
TOTAL
100%
100%
The low average age of Group employees (39.7 years old) confirms the strat-
Sabaf is aware of the fundamental importance of having a stable and quali-
egy of hiring young workers, giving priority to training and internal growth
fied workforce that is a key factor in maintaining its competitive advantage.
rather than acquiring skills from outside, also in consideration of the specific nature of Sabaf’s industrial model. The minimum age for Group personnel is 22 years old for Italy, 21 years old for Turkey, 18 years old for Brazil and 29 years old for China.
Breakdown by department 2018
2017
AREA Production
289
158
447
301
172
473
Quality
51
31
82
42
32
74
Research and development
65
1
66
66
2
68
Logistics
33
7
40
26
0
26
Administration
9
27
36
10
25
35
Sales
10
12
22
8
12
20
Services
31
10
41
17
11
28
Purchases
8
5
13
8
4
12
Other
10
3
13
18
2
20
TOTAL
506
254
760
496
260
756 65
SABAF . ANNUAL REPORT 2018
Recruitment policy In order to attract the best resources, the recruitment policy aims to ensure
The assessment of the applicants is based on their skills, training, previous
equal opportunities for all candidates, avoiding any kind of discrimination.
experience, expectations and potential, tailoring them to the specific needs
The selection procedure requires, inter alia:
of the company.
• the selection process to be carried out in at least two stages with two
All new employees of the Group are given the Charter of Values. Sabaf S.p.A.
different contacts;
also delivers a copy of the SA8000:2014 standard, for which the company is
• that at least two applicants be assessed for each position.
certified.
Breakdown by qualification 2018
2017
QUALIFICATION Degree
74
33
107
14.1%
64
29
93
12.3%
High school leaving diploma
257
89
346
45.5%
248
92
340
45.0%
Middle school leaving certificate
174
131
305
40.1%
180
134
314
41.5%
1
1
2
0.3%
4
5
9
1.2%
506
254
760
100%
496
260
756
100%
Elementary school leaving certificate TOTAL
Change in personnel in 2018
SABAF S.P.A.
NEW LEAVING EMPLOYEES EMPLOYEES PROMO31.12.18 31.12.17 TIONS
Managers
10
0
1
0
1
0
10
Managers
1
0
0
0
0
0
1
White collars and Middle Managers
110
6
4
4
1
2
117
White collars and Middle Managers
13
0
0
0
0
0
13
Blue collars and equivalent
394
0
0
10
6
-2
376
Blue collars and equivalent
29
0
0
0
0
0
29
Total
514
6
5
14
8
0
503
Total
43
0
0
0
0
0
43
31.12.17 A.R.C. S.R.L. Managers
66
FARINGOSI HINGES S.R.L.
NEW LEAVING EMPLOYEES EMPLOYEES PROMO31.12.18 31.12.17 TIONS
0
NEW LEAVING EMPLOYEES EMPLOYEES PROMO31.12.18 TIONS
0
0
0
0
0
NEW LEAVING EMPLOYEES EMPLOYEES PROMO31.12.18 TIONS
SABAF DO BRASIL
31.12.17
0
Managers
0
0
0
0
0
0
0
10
0
0
0
0
0
10
White collars and Middle Managers
4
0
0
1
0
0
3
White collars and Middle Managers
Blue collars and equivalent
14
2
0
0
0
0
16
Blue collars and equivalent
67
30
2
21
1
0
77
Total
18
2
0
1
0
0
19
Total
77
30
2
21
1
0
87
NEW LEAVING EMPLOYEES EMPLOYEES PROMO31.12.18 TIONS
31.12.17
NEW LEAVING EMPLOYEES EMPLOYEES PROMO31.12.18 TIONS
SABAF TURCHIA
31.12.17
Managers
3
0
0
0
0
0
3
Managers
1
0
0
0
0
0
1
White collars and Middle Managers
15
4
1
1
2
0
17
White collars and Middle Managers
6
0
0
0
0
0
6
Blue collars and equivalent
78
28
12
23
15
0
80
Blue collars and equivalent
1
0
0
0
0
0
1
Total
96
32
13
24
17
0
100
Total
8
0
0
0
0
0
8
SABAF CINA
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
31.12.17
NEW EMPLOYEES
LEAVING EMPLOYEES
GROUP TOTAL
PROMOTIONS
31.12.18
15
0
1
0
1
0
15
White collars and Middle Managers
158
10
5
6
3
2
166
Blue collars and equivalent
583
60
14
54
22
-2
579
TOTAL
756
70
20
60
26
0
760
Managers
N°
760
756
2018
2017
New employees by age group and gender 2018
2017
DESCRIPTION up to 20 years old
2
0
2
5
2
7
from 21 to 30 years old
22
11
33
32
13
45
from 31 to 40 years old
41
8
49
24
13
37
from 41 to 50 years old
4
0
4
7
2
9
over 50 years old
1
1
2
2
1
3
70
20
90
70
31
101
TOTAL
Resigned during the year by age group and gender 2018
2017
DESCRIPTION up to 20 years old
3
0
3
2
2
4
from 21 to 30 years old
31
7
38
23
7
30
from 31 to 40 years old
17
13
30
24
17
41
from 41 to 50 years old
6
2
8
12
1
13
over 50 years old
3
4
7
9
2
11
60
26
86
70
29
99
TOTAL
Reasons for terminating employment in 2018
35
27
35
Retirement
1
4
5
Termination of the contract
0
2
2
Dismissal
2
33
35
Failure to pass the probationary period
0
9
9
TOTAL
11
75
86
9 5
2 Failure to pass the probationary period
8
Dismissal
Resignations
Termination of the contract
TOTAL
35
Retirement
BLUE COLLARS
DESCRIPTION
Resignations
MANAGERS WHITE COLLARS AND MIDDLE MANAGERS
67
SABAF . ANNUAL REPORT 2018
Leaving turnover rate by geographical area, age group and gender 15 2018
ITALY (SABAF, FARINGOSI AND A.R.C.)
2017
DESCRIPTION < 30 years old
0.54%
0.00%
0.35%
0.54%
0.00%
0.35%
from 31 to 40 years old
1.63%
1.52%
1.59%
2.68%
0.99%
2.09%
from 41 to 50 years old
1.09%
0.51%
0.88%
1.61%
0.00%
1.04%
over 50 years old
0.27%
0.51%
0.35%
1.07%
0.00%
0.70%
TOTAL
3.54%
2.53%
3.19%
5.90%
0.99%
4.18%
2018
BRAZIL
2017
DESCRIPTION < 30 years old
17.14%
0.00%
13.79%
9.84%
18.75%
11.69%
from 31 to 40 years old
7.14%
5.88%
6.90%
6.56%
12.50%
7.79%
from 41 to 50 years old
2.86%
0.00%
2.30%
3.28%
0.00%
2.60%
over 50 years old
0.00%
0.00%
0.00%
1.64%
0.00%
1.30%
TOTAL
27.14%
5.88%
22.99%
21.32%
31.25%
23.38%
2018
TURKEY
2017
DESCRIPTION < 30 years old
28.13%
19.44%
25.00%
30.36%
15.00%
23.96%
from 31 to 40 years old
9.38%
25.00%
15.00%
17.86%
32.50%
23.96%
from 41 to 50 years old
0.00%
2.78%
1.00%
5.36%
2.50%
4.17%
over 50 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
TOTAL
37.50%
47.22%
41.00%
53.58%
50.00%
52.09%
2018
CHINA
2017
DESCRIPTION < 30 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
from 31 to 40 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
from 41 to 50 years old
0.00%
0.00%
0.00%
16.67%
0.00%
12.50%
over 50 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
TOTAL
0.00%
0.00%
0.00%
16.67%
0.00%
12.50%
2018
GROUP TOTAL
2017
DESCRIPTION < 30 years old
6.32%
2.76%
5.13%
5.04%
3.46%
4.50%
from 31 to 40 years old
3.36%
5.12%
3.95%
4.84%
6.54%
5.42%
from 41 to 50 years old
1.19%
0.79%
1.05%
2.42%
0.38%
1.72%
over 50 years old
0.20%
0.39%
0.26%
1.01%
0.00%
0.66%
TOTAL
11.07%
9.06%
10.39%
13.31%
10.38%
12.30%
In 2018, turnover was further reduced compared to 2017 and remained at satisfactory levels. At Sabaf Turkey, the Group is experiencing the greatest difficulties in personnel retention, partly because it operates in an area, Manisa, which is experiencing strong industrial development and where new employment opportunities are constantly being offered. The policies on personnel implemented have nevertheless led to a higher level of retention development in Turkey. 15
68
The calculation of the turnover rate considers the employees at 31 December 2018 as the denominator. Retirement and fixed term contracts are excluded for the purposes of the calculation
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Entry turnover rate by geographical area, age group and gender 16 2018
ITALY (SABAF, FARINGOSI AND A.R.C.)
2017
DESCRIPTION < 30 years old
1.09%
1.01%
1.06%
0.27
0.00%
0.17%
from 31 to 40 years old
0.55%
1.01%
0.71%
1.61%
0.00%
1.04%
from 41 to 50 years old
0.27%
0.00%
0.18%
0.54%
0.00%
0.35%
over 50 years old
0.27%
0.50%
0.35%
0.54%
0.50%
0.52%
TOTAL
2.19%
2.51%
2.30%
2.95%
0.50%
2.09%
2018
BRAZIL
2017
DESCRIPTION < 30 years old
2.86%
5.88%
3.45%
26.23%
25.00%
25.97%
from 31 to 40 years old
38.57%
5.88%
32.18%
11.48%
0.00%
9.09%
from 41 to 50 years old
1.43%
0.00%
1.15%
3.28%
0.00%
2.60%
over 50 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
42.86%
11.76%
36.78%
40.98%
25.00%
37.66%
TOTAL
2018
TURKEY
2017
DESCRIPTION < 30 years old
28.13%
22.22%
26.00%
35.71%
27.50%
32.29%
from 31 to 40 years old
18.75%
13.89%
17.00%
19.64%
32.50%
25.00%
from 41 to 50 years old
3.13%
0.00%
2.00%
5.36%
5.00%
5.21%
over 50 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
50.00%
36.11%
45.00%
60.71%
65.00%
62.50%
TOTAL
2018
CHINA
2017
DESCRIPTION < 30 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
from 31 to 40 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
from 41 to 50 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
over 50 years old
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
TOTAL
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
2018
GROUP TOTAL
2017
DESCRIPTION < 30 years old
4.74%
4.33%
4.61%
7.46%
5.77%
6.88%
from 31 to 40 years old
8.10%
3.15%
6.45%
4.84%
5.00%
4.89%
from 41 to 50 years old
0.79%
0.00%
0.53%
1.41%
0.77%
1.19%
over 50 years old
0.20%
0.39%
0.26%
0.40%
0.38%
0.40%
TOTAL
13.83%
7.87%
11.84%
14.11%
11.92%
13.36%
16
The calculation of the turnover rate considers the employees at 31 December 2018 as the denominator
69
SABAF . ANNUAL REPORT 2018
Personnel training Within the Sabaf Group, the professional growth of employees is supported by continuous training. The Group Human Resources Department, having consulted the relevant heads and gathered the training requirements, prepares an annual training plan on the basis of which the specific courses to be carried out are planned. 2018
2017
(hours) Training for new employees, apprentices, training contracts Information systems
4,363
1,299
5,662
5,173
1,538
6,711
51
55
105
309
26
335
Technical Training
2,070
649
2,719
467
69
536
Quality, safety, environment, energy and social responsibility
3,649
1,040
4,689
2,905
540
3,445
Administration and organisation
724
554
1,278
1,246
389
1,635
Foreign languages
1,339
420
1,759
328
152
480
16
-
16
1,522
364
1,886
240
496
736
-
-
-
12,452
4,513
16,963
11,950
3,078
15,028
Hours of training provided by internal trainers
7,239
1,915
9,154
4,501
1,282
5,783
TOTAL
19,691
6,428
26,119
16,451
4,360
20,811
Lean Philosophy/Production/Office Other TOTAL HOURS OF TRAINING RECEIVED
The hours provided by internal trainers also include training given to employees with temporary work contract (equal to 6,571 hours in 2018).
Hours of training per capita received by category 2018
2017
Blue Collars
23.7
15.2
20.8
20.5
8.8
16.5
White collars and Middle Managers
29.8
24.4
27.9
36.1
22.2
31.1
Managers
16.2
51.5
18.5
28.7
50
30.1
TOTAL
24.8
17.5
22.3
23.9
11.9
19.8
In 2018, the total cost incurred for training activities of Group personnel was approximately € 497,000 (approximately € 428,000 in 2017). In addition, there are training costs for temporary personnel, which in 2018 were around € 134,000 (around € 75,000 in 2017).
Internal Communication With the aim of developing a dialogue and continuous involvement between
Sabaf S.p.A. and Faringosi Hinges s.r.l. have an HR PORTAL software, through
the company and its collaborators, Sabaf organises meetings and sharing
which each worker, with personalised access, can consult the documents and
sessions in which the results of projects to improve quality, efficiency and
information published by the company (payrolls, tax and social security data,
productivity are presented, as well as current initiatives in the “industry 4.0”
etc.). Collective communications and agreements in favour of employees are
sector.
also available.
For example, in 2018, Sabaf S.p.A. organised two meetings in which a total of 256 employees took part; Sabaf Turkey organised two meetings in which all
The focus on internal communication uses, among other things, advanced tools
personnel took part.
that can reach all employees, such as wireless network and bulletin boards.
The HR representatives provide assistance to all Group employees on mat-
Systematic meetings in the various departments promote communication
ters relating to the employment relationship.
and involvement of personnel.
70
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Diversity and equal opportunities Sabaf is constantly committed to ensuring equal opportunities for women em-
workers, 1 male employee and 1 male worker), equal to 6.3% of the total (44
ployees, who currently represent 33.4% of the workforce (34.4% in 2017).
contracts in 2017: 5 female employees, 38 female workers, 1 male worker; 34
The Group, in accordance with the organisational and production requirements,
contracts in 2016: 2 female employees, 31 female workers and 1 male worker).
is attentive to the family requirements of its employees. To date, most of the
31 disabled people, 17 of whom are part-time, work in the Group’s Italian com-
demands for reduced working time made by workers have been met. In 2018,
panies. There are 7 agreements with a business co-operative for the placement
there were a total of 48 part-time contracts (6 female employees, 40 female
of personnel belonging to protected categories.
Percentage distribution of employment by gender
2018
2017
Number
%
Number
%
Men
506
66.6
496
65.6
Women
254
33.4
260
34.4
TOTAL
760
100
756
100
Breakdown by category and gender 2018
2017
(%)
Managers
White collars and Middle Managers
< 30 years old
0
0
0
0
0
0
from 31 to 40 years old
0
0
0
0
0
0
from 41 to 50 years old
1
0
1
1
0
1
over 50 years old
1
0
1
1
0
1
Total
2
0
2
2
0
2
< 30 years old
2
2
4
1
2
3
from 31 to 40 years old
5
3
8
5
3
8
from 41 to 50 years old
5
2
7
5
2
7
over 50 years old
2
1
3
2
1
3
Total
14
8
22
13
8
21
< 30 years old
8
2
10
10
3
13
from 31 to 40 years old
21
11
32
20
12
32
14
10
24
14
9
23
Blue-collars from 41 to 50 years old and equivalent over 50 years old
Total
8
2
10
7
2
9
Total
51
25
76
51
27
77
< 30 years old
10
4
14
12
4
16
from 31 to 40 years old
26
14
40
25
15
40
from 41 to 50 years old
20
12
32
19
12
31
over 50 years old
11
3
14
10
3
13
Total
67
33
100
66
34
100
The managers of all Group offices come from a geographical area close to the registered offices in which they operate, with the exception of the production manager at the premises of Sabaf China, who has been living in China for many years.
71
SABAF . ANNUAL REPORT 2018
Non-EU workers 17 2018
2017
BENCHMARK 18
19
24
-
3.3%
4.1%
3.10%
Non-EU workers Percentage over total workers
At 31 December 2018, the Group’s Italian companies included employees of 11 different nationalities.
Working hours and hours of absence The normal weekly working time is 40 hours for the Italian companies and for Sabaf China and 44 hours for Sabaf do Brasil, spread over 5 working days, from Monday to Friday. For Sabaf Turkey, the duration is 45 hours per week, spread over 6 working days. 2018
OVERTIME Average number of employees who have worked overtime per month Number of overtime hours Number of hours per capita per year 20
2017
BENCHMARK 19
White Collars Blue Collars White Collars Blue Collars White Collars Blue Collars 148
396
137
390
16,598
37,016
12,946
31,622
-
-
100
64
82
54
54
66
2018
2017
Average hours of absence per capita
-
BENCHMARK 21
TOTAL HOURS OF ABSENCE Total hours of absence per year
-
27,938
43,409
71,347
29,274
42,621
71,895
-
54.8
170.6
93.4
57.8
163.4
93.7
99.3
2018
2017
ABSENTEEISM RATE (HOURS OF ABSENCE OVER HOURS WORKED) Italy
3.2%
8.5%
4.9%
3.5%
9.0%
5.3%
Brazil
1.3%
6.4%
2.3%
0.0%
1.3%
0.3%
Turkey
1.7%
11.3%
5.4%
1.9%
9.0%
4.8%
China
0.5%
0.0%
0.4%
0.3%
0.1%
0.3%
GROUP TOTAL
2.7%
8.8%
4.7%
2.8%
8.4%
4.6%
2018
2017
BENCHMARK 22
HOURS OF SICK LEAVE Total annual hours of illness
21,033
21,104
42,137
19,019
19,679
38,697
-
Percentage of hours of illness over hours worked
2.0%
4.3%
2.8%
1.8%
3.9%
2.5%
-
Hours of sick leave per capita
41.3
82.9
55.2
37.6
75.4
50.5
44.3
2018
2017 BENCHMARK 23
HOURS OF MATERNITY/PATERNITY LEAVE Total annual hours of maternity/paternity leave
4,813
21,707
26,520
7,941
22,346
30,287
-
Percentage of maternity hours over hours worked
0.5%
4.4%
1.7%
0.8%
4.4%
2.0%
-
9.4
85.3
34.7
15.7
85.7
39.5
16.3
Hours of maternity leave per capita
The high number of hours of maternity leave compared to the industry average reflects a higher percentage of female personnel. 17 18 19 20 21 22 23
72
The figure refers exclusively to the Italian companies of the Group. FEDERMECCANICA, L’industria metalmeccanica in cifre (June 2018) – Lavoratori extracomunitari (2014) http://www.federmeccanica.it FEDERMECCANICA, L’industria metalmeccanica in cifre (June 2018) – Ore pro-capite di lavoro straordinario (2016), http://www.federmeccanica.it in relation to the average number of employees Processing by FEDERMECCANICA, L’industria metalmeccanica in cifre (June 2018) – Ore pro-capite di assenza dal lavoro (2016), http://www.federmeccanica.it FEDERMECCANICA, L’industria metalmeccanica in cifre (June 2018) – Ore pro-capite di assenza dal lavoro (2016), http://www.federmeccanica.it. FEDERMECCANICA, L’industria metalmeccanica in cifre (June 2018) – Ore pro-capite di assenza dal lavoro (2016), http://www.federmeccanica.it
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
2018
2017 % OF WORKERS IN THE WORKFORCE AFTER 12 MONTHS
PARENTAL LEAVES TYPE OF LEAVE Compulsory maternity leave
0
19
19
0
15
15
80%
Early Maternity leave
0
8
8
0
9
9
78%
Voluntary maternity/paternity leave
10
18
28
12
22
34
65%
Breastfeeding
2
8
10
1
11
12
100%
Care for disabled family members (Law 104)
19
9
28
21
10
31
94%
Blood donation
7
1
8
12
2
14
71%
Leave of absence
2
2
4
6
4
10
70%
Extraordinary Leave
7
5
12
6
2
8
38%
OTHER LEAVES
Remuneration, incentive and enhancement systems All Group companies apply local national contracts, supplemented with any
Further information is provided in the notes to the consolidated financial
best deals.
statements.
The employees of Sabaf S.p.A. are classified according to the provisions of
In addition to economic incentives, the incentive system includes company
the National Collective Labour Contract for the metal and engineering indus-
agreements for access to goods or services on favourable terms for all
try, supplemented by second-level negotiations, which include:
employees, regardless of the type of contract.
• contractual minimum
The Group believes that a fundamental element of the incentive system is
• company welfare from National Collective Labour Agreement
represented by the training opportunities provided to employees, including
• productivity or personal bonuses per level,
the possibility to participate in numerous activities organised at the prem-
• production bonus per level,
ises or off-premises.
• fixed performance bonus (part of which includes part of the previous variable bonus) for all levels, • variable performance bonus that is the same for all levels.
73
SABAF . ANNUAL REPORT 2018
LONG-TERM INCENTIVE A long-term incentive plan (stock grant plan) was introduced in 2018, which
MANAGEMENT BY OBJECTIVES (MBO)
envisages the free allocation of shares to parties (directors and employees)
A Group-wide incentive system linked to collective and individual objectives
who hold or will hold key positions for Sabaf S.p.A. and its subsidiaries.
(MBOs) is in place, involving the Chief Executive Officer, executives with stra-
The Plan aims to promote and pursue the involvement of the beneficia-
tegic responsibilities and managers. In 2018, this incentive system involved
ries whose activities are considered relevant for the implementation of the
41 employees of the Group (38 men and 3 women). Further details on the
contents and the achievement of the objectives set out in the 2018 - 2022
MBO mechanisms are described in the Remuneration Report.
Business Plan, foster loyalty development and motivation of managers, by increasing their entrepreneurial approach as well as align the interests of management with those of the Company’s shareholders more closely, with a view to encouraging the achievement of significant results in the economic and asset growth of the Company and of the Group.
The “Premio Produciamo Qualità (PPQ)” (literally, “We produce quality prize”) With the aim of rewarding the contribution of personnel to the achievement of company objectives, in 2016 Sabaf S.p.A. introduced an incentive system related to quality objectives (reduction of waste and rework), production efficiency and precision in carrying out projects. In 2018, improvement targets in these areas were set for 116 people involved in relevant business processes.
WHITE COLLARS
38
4
42
BLUE COLLARS
67
7
74
TOTAL
105
11
116
The initiative was very well received by the employees: in addition to being a tool for steering towards challenging objectives (393 objectives were assigned, achieved or exceeded in 65% of cases), the PPQ stimulated teamwork and favoured the sharing of short- and medium-long term development plans at all company levels.
Variable Performance Bonus (PDRV) The supplementary company contract of Sabaf S.p.A. envisages a variable performance bonus for all employees, also based on quality and productivity indicators. From 2018, the PDRV can be enjoyed in the form of company welfare.
Personnel Participation Bonus (PDP) In 2018, Sabaf S.p.A. introduced a Personnel Participation Bonus (PDP) for all its employees who, through effective participation, help to achieve the company’s objectives. This bonus is paid in the form of company welfare.
The forms of social security in force for all Group employees are those envisaged by the regulations in force in the various Countries in which the Group operates.
74
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Ratio of minimum monthly salary laid down by collective labour agreements to minimum salary paid by Group companies 24
2017
MINIMUM SALARY UNDER COLLECTIVE LABOUR AGREEMENT
MINIMUM SALARY PAID
MINIMUM % INCREASE
Values in euro Sabaf S.p.A.
1,590
1,590
1,814
2,172
14%
37%
Faringosi Hinges s.r.l.
1,590
1,590
1,771
1,771
11%
11%
A.R.C. s.r.l.
1,434
1,434
1,462
1,434
2%
0%
Turkey
308
308
352
352
14%
14%
Brazil
358
358
414
414
15%
15%
China
265
265
356
1,145
34%
332% 25
2018
MINIMUM SALARY UNDER COLLECTIVE LABOUR AGREEMENT
MINIMUM SALARY PAID
MINIMUM % INCREASE
Values in euro Sabaf S.p.A.
1,605
1,605
1,664
1,884
4%
17%
Faringosi Hinges s.r.l.
1,605
1,605
1,785
1,785
11%
11%
A.R.C. s.r.l.
1,605
1,605
1,644
1,705
2%
6%
Turkey
254
254
290
290
14%
14%
Brazil
313
313
353
353
13%
13%
China
259
259
348
1,145
34%
341%
The Group has procedures in place to systematically check the correct hiring and regular contribution of suppliers and contract workers.
Ratio of maximum to average salaries of Group companies 2018
2017
Italy
8.4
9.6
Turkey
13.7
11.5
Brazil
7.0
6.0
China
7.0
7.5
Ratio of average salary of female personnel to average salary of male personnel 2018
2017
White-collars, middle managers and managers
71%
67%
Blue Collars
77%
74%
24 25
Values converted into euro at the annual average exchange rate Data modified compared to consolidated disclosure of non-financial information 2017 due to a publication error
75
SABAF . ANNUAL REPORT 2018
Occupational health and safety and working environment RISKS The health & safety risks to which Sabaf and contractors’ personnel are exposed are essentially linked to the processes at the Group’s production sites: • risks with high associated damage (falls from a height, work in confined spaces); • other risks, with particular relevance in terms of accidents, related to melting tasks (burn, exposure to high temperatures). The Group is also exposed to the risk of failure to adopt measures to bring its procedures and operations into line with current health and safety regulations.
• Organisation: the strong involvement and constant training of department heads and their awareness of obligations and responsibilities led to a clear improvement in all aspects of Health and Safety. In the Group companies based in Italy (Sabaf S.p.A., Faringosi Hinges s.r.l., A.R.C. s.r.l.), the risk assessment is carried out by the Employer through the collaboration of the Occupational Health and Safety Officer and the Corporate Doctor, with the participation of all responsible parties (managers and representatives). The risk assessment process, coordinated by the Safety Office, operates with the help of dedicated software. The involvement of workers is envisaged, both through periodic meetings with safety representatives through the obligation to report possible additional risks. In October 2017, the certification process of the safety management system of Sabaf S.p.A. according to OHSAS 18001:2007 was completed. Following the checks carried out by CSQ (IMQ Certification Body), Sabaf ob-
RISK MANAGEMENT
tained the certificate of compliance with standards. The management system for the health and safety of workers of Faringosi
The Sabaf Group formally defines the responsibilities, criteria and operating
Hinges s.r.l. has been certified according to OHSAS 18001 since February
procedures for identifying and planning prevention measures to eliminate
2012. The system was re-certified by the TUV NORD in February 2018, cer-
and/or mitigate risks, as part of a system that allows the level of safety
tifying the conformity of the system with the reference standards; in fact,
and hygiene to be optimised and constantly improved through preventive
no non-conformity has emerged, but only suggestions for improvement.
actions. During 2017, the Health and Safety operating procedures already in place Also aspects relating to health and safety at work are also addressed using
at Sabaf S.p.A. were implemented in A.R.C. A new assessment of the busi-
a risk-based approach.
ness risk was carried out and the software for managing security aspects was introduced.
Prevention and reduction of risk levels are based on the following factors: With regard to production sites abroad, the Group monitors legislative com• Effective training: all training courses related to health and safety are
pliance through specific audits. It has also implemented a shared manage-
planned and managed by internal personnel and/or external trainers,
ment system for the implementation of actions related to health and safety
with a propensity to teach and with strong experience in the reference
in the workplace.
sector (first aid, fire-fighting, work at height, etc.). Job-specific training
Although the Management Systems have not been certified by an Accredit-
courses have been designed with a propensity to experience, in order to
ed Body, Management Systems have been implemented in foreign factories
make training meetings more effective.
in line with Group policies.
• Cutting-edge plants: continuous investment in increasingly modern and technologically advanced machinery reduced the levels of risk related to ergonomics and manual handling of loads and improved the systems to protect against physical risks.
76
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Number and duration of injuries 2018
2017
BENCHMARK 26
INJURIES AT WORK - GROUP
27
2
29
12
6
18
Italy
8
1
9
6
3
9
-
Brazil
3
0
3
0
0
0
-
China
0
0
0
0
0
0
-
Turkey
16
1
17
6
3
9
-
INJURIES WHILE TRAVELLING TO/FROM WORK - GROUP
1
1
2
3
0
3
Italy
0
0
0
3
0
3
-
Brazil
1
1
2
0
0
0
-
China
0
0
0
0
0
0
-
Turkey
0
0
0
0
0
0
-
TOTAL HOURS OF ABSENCE DUE TO INJURIES - GROUP
1,633.9
137.0
1,770.9
1,720.3
168.5
1,888.8
Italy
1,096.0
24.0
1,120.0
1,348.5
108.5
1,457.0
-
Brazil
110.0
59.0
169.0
0.0
0.0
0.0
-
China
0.0
0.0
0.0
0.0
0.0
0.0
-
Turkey
427.9
54.0
481.9
371.8
60.0
431.8
-
3.21
0.54
2.32
3.42
0.66
2.48
5.3
HOURS OF ABSENCE FROM WORK DUE TO INJURY PER CAPITA 27
Injury frequency rate - Number of injuries (excluding injuries while travelling to/from work) x 1,000,000/ hours worked 2018
2017
GROUP
30.83
5.58
23.49
14.33
15.44
14.68
Italy
13.28
3.83
10.42
9.46
10.93
9.91
Brazil
23.09
0.00
20.13
0.00
0.00
0.00
China
0.00
0.00
0.00
0.00
0.00
0.00
Turkey
121.16
13.38
82.21
52.01
44.16
49.10
Injury lost day rate - (excluding injuries while travelling to/from work) x 1,000/ hours worked 2018
2017
GROUP
0.24
0.02
0.17
0.16
0.06
0.13
Italy
0.25
0.01
0.17
0.14
0.06
0.12
Brazil
0.08
0.00
0.07
0.00
0.00
0.00
China
0.00
0.00
0.00
0.00
0.00
0.00
Turkey
0.37
0.08
0.27
0.42
0.12
0.31
26 27
FEDERMECCANICA, L’industria metalmeccanica in cifre (June 2018) – Ore pro-capite di assenza dal lavoro (2016) , http://www.federmeccanica.it The calculation is based on the average annual personnel
77
SABAF . ANNUAL REPORT 2018
During 2018, there were no particularly serious accidents for Group employ-
In compliance with the laws in force, Group companies prepared and im-
ees and the per capita hours of absence from work due to accidents remained
plemented health supervisory plans for employees, with health inspections
well below the reference benchmark. Indicators in Turkey deteriorated, partly
aimed at the specific risks of the work activities carried out. In particular,
as a result of the start of new productions. Corrective action has been taken
2,872 health inspections were carried out in 2018 (3,108 in 2017).
in good time to combat this phenomenon (training and awareness-raising on the use of personal protective equipment). No cases of occupational disease were reported at Group level in 2018.
Current expenditure for labour protection (amounts in €/000) 2018
2017
Plant, equipment and materials
48
42 119
Personal protective equipment
118
External training
24
16
Advisory services
62
99
Working environment analysis
18
17
Health inspections (including pre-recruitment checks)
44
40
Software and database TOTAL
4
3
318
336
Investments in labour protection (amounts in €/000) 2018
2017
Plant, equipment and materials
488
34
TOTAL
488
34
The commitment to improve risk levels related to manual handling of loads
road markings).
and repetitive movements thanks to an increasingly greater automation of
The significant economic investment made in 2018, in the superfinishing
operations continued also in 2018. Special equipment for transport and stor-
process, has allowed a significant reduction in the level of risk of repetitive
age was also studied, light detectors were installed on forklifts and the in-
movements to be borne by area personnel.
ternal road network of the factories was improved (with new road signs and
Jointly with the 2018 corporate climate analysis, a survey on the per-
Among the positive results, those relating to attention to the person,
ception of work-related stress was carried out in Sabaf S.p.A., taking ad-
awareness of the meaning of one’s role and the expectations of the or-
vantage of the large sample of interviewees. The following dimensions
ganisation towards its activities stand out.
were analysed: • workload, organisation and working environment;
57%
• control/independence of workers; • management support; • support from colleagues;
25%
• management and communication of change in the business context. The summary results express positive values for 57%, neutral values for 25% and critical values for 18%.
18% Critical values
Positive values
• role and awareness of one’s position in the organisation;
Neutral values
• relations and promotion of positive behaviour;
At Sabaf S.p.A., a study was carried out on the seismic vulnerability of build-
A web platform has been implemented to manage the interferential risks re-
ings, which allowed the risk assessment to be revised. During 2019, the path-
lated to the contracting and sub-contracting work for the Ospitaletto site, al-
ways to be followed during evacuation operations will be reviewed.
lowing the immediate registration of contractors and accesses (about 15,000 in 2018).
78
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Sabaf, a health-promoting workplace At the beginning of 2016, Sabaf S.p.A. joined the WHP (Workplace
• improving work organisation and the working environment
Health Promotion) programme, committing itself to implementing
• encouraging personnel to participate in healthy activities
good practices in the field of workplace health promotion. The com-
• promoting healthy choices
pany is committed not only to implementing all measures to prevent
• encouraging personal growth
accidents and occupational diseases but also to offering its workers opportunities to improve their health, reducing general risk factors
The central idea is simple: Sabaf aims to build, through a participatory
and in particular those most involved in the genesis of chronic dis-
process, a context that encourages the adoption of positive behaviour
eases.
and choices for health.
Workplace health promotion is the result of the combined efforts of
The WHP Programme envisages the development of activities (good
employers, workers and the company. The following factors contrib-
practices) in 6 thematic areas and requires the progressive imple-
ute to this promotion:
mentation, year after year, of a minimum number of good practices in the various thematic areas.
IMPROVEMENT MEASURES TAKEN IN 2017
Fight against
Food
smoking
Safe
Well-being
and sustainable
and reconciling life
mobility
and work
IMPROVEMENT MEASURES TAKEN IN 2018
Fitness
Fight against
training
addictions
Use of dangerous substances Only materials that fully comply with the requirements of Directive 2002/95/EC (RoHS Directive) which tends to limit the use of hazardous substances such as lead, mercury, cadmium and hexavalent chromium are used for production. 79
SABAF . ANNUAL REPORT 2018
Industrial relations Sabaf complies with the labour laws of the various countries and the conventions of International Labour Organisation (ILO) on Workers’ Rights (freedom
• the establishment of working groups with the aim of improving the involvement of personnel at all levels;
of association and collective bargaining, consultation, right to strike, etc.),
• the continuation of the payment of a variable part of remuneration, the
systematically promoting dialogue between the parties and seeking an ade-
payment of which is related to measurable and verifiable quality and effi-
quate level of agreement and sharing of company strategies by the person-
ciency indicators; data on which dissemination and transparency will be
nel.
maintained; • the possibility of converting all or part of the variable performance bonus
In case of organisational changes, with regard to the minimum notice period,
(PDRV) into welfare.
the Group complies with the provisions of the law and the reference contracts of the various countries. In January 2018, the second level company agreement of Sabaf S.p.A. was
The internal trade union representatives present in Sabaf S.p.A. are FIOM,
renewed, valid until June 2021. The key points of this agreement are set below:
FIM and UILM and in Faringosi Hinges s.r.l. FIM.
• the sharing between the company and trade unions and Unitary Union Rep-
During the year, regular meetings between Management and the Unitary
resentative Body of priorities on which to channel resources and energy in
Union Representative Body took place.
the coming years (producing quality, creating and maintaining efficiency,
In Group companies, 120 employees, or 15.8% of the total, were registered at
becoming more flexible);
December 2018 (136 employees, or 18%, were registered in 2017).
• sharing objectives also through the responsible involvement of personnel; • maintaining fair and transparent industrial relations while respecting individual roles;
Hours of participation in trade union activities during 2018 amounted to 0.27% of the hours worked.
Participation in trade union activities 2018
2017
No. of hours
1,242
1,806
Percentage over hours worked
0.08
0.12
1.6
2.7
No. of hours
1,853
1,689
Percentage over hours worked
0.12
0.11
No. of hours per capita
2.4
2.5
No. of hours
996
1,006
Percentage over hours worked
0.07
0.10
1.3
1.5
No. of hours
4,091
4,501
Percentage over hours worked
0.27
0.29
No. of hours per capita
5.36
6.71
BENCHMARK 28
MEETING
No. of hours per capita LEAVE FOR TRADE UNION DUTIES
STRIKE
No. of hours per capita TOTAL
7.4
In 2018, a total of 7 hours of strike were called out in Sabaf S.p.A. in connection with national problems. During the last three months of the year, Sabaf S.p.A. used now and then the temporary unemployment fund. No strikes were called out and no social safety valves were used in Faringosi Hinges, A.R.C., Sabaf do Brasil, Sabaf Turkey and Sabaf China.
28
80
FEDERMECCANICA, L’industria metalmeccanica in cifre (June 2018) – Ore pro – capite di assenza dal lavoro (2016), http://www.federmeccanica.it
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Business climate analysis The 2018 corporate climate survey project at Sabaf S.p.A. continued the
The analysis was carried out on a sample of 299 employees (59% of workers)
knowledge and listening activities that began in 2012 and continued in 2015,
using a questionnaire filled in anonymously and digitally in the company, as
with the aim of maintaining a level of knowledge of the perceptions and
part of dedicated sessions, with the support of a consulting firm specialised
needs experienced by people belonging to the company.
in human resources. The results were shared with the workers’ representatives and disseminated in the company.
THEMATIC AREAS: Characteristics of the working environment
100%
With regard to the working environment, there is generally a positive perception with choices alternating between “good” and “sufficient”.
INSUFFICIENT
SUFFICIENT
GOOD
48.82%
42.09%
49.49% 39.73%
42.09%
56.57%
57.58% 39.39% 24.92%
8.75% 0.34%
7.41%
1.01%
3.37%
0.34%
0.34%
2.69%
18.18%
17.17%
3.70%
5.05%
19.53%
25.59%
21.21% 6.40%
5.39%
0.34% 0
0.67%
6.73%
20% 10%
53.20%
58.25% 47.81%
41.75%
30%
34.01%
40%
50%
51.18%
60%
58.92%
70%
80%
90%
SERIOUSLY INSUFFICIENT
Business objectives are perceived as fairly clear, values communicated and generally shared. There is satisfaction with what the Company does and with the attention it pays to the needs of its workers.
INTERNAL ROAD TRAFFIC
90%
NOT AT ALL
80%
A LITTLE
70%
70.71% 14.37%
60%
70.71% of responses with a positive value.
SPACE AVAILABLE PER PERSON
ENOUGH A LOT
50%
The result at this dimension is to be considered all-in-all satisfactory with
BUILDING CONDITIONS
40%
Sharing corporate values
CANTEEN
100%
TOILETS (BATHROOMS/ CHANGING ROOMS)
30%
SILENCE
29.29%
56.34%
20%
TEMPERATURE
10%
LIGHTING
0
CLEANING
25.65%
3.65% Critical values
Positive values
81
90%
A LITTLE
70%
seem relatively clear and defined, and there is a strong sense of belonging.
ENOUGH
67.25% A LOT
16.62%
30%
40%
50%
tory with 67.25% of responses with a positive value. Roles and responsibilities
60%
All-in-all, the result at this dimension must also be considered quite satisfac-
NOT AT ALL
80%
Job satisfaction
100%
SABAF . ANNUAL REPORT 2018
32.75%
26.26%
0
10%
20%
50.63%
6.49%
90% 70%
In particular, the behaviour of the heads is considered consistent with the
70.99%
ENOUGH A LOT
26.71%
29.01%
20.82%
44.28%
10%
20%
30%
40%
values declared by the company.
A LITTLE
50%
tionships with their head, having provided positive responses.
60%
The 70.99% of the sample has an overall satisfactory perception of the rela-
NOT AT ALL
80%
Relation with the Head
Positive values
100%
Critical values
0
8.19%
90%
78.65%
20%
17.51%
0
21.35%
10%
30%
40%
50%
38.52%
40.13%
3.84% Critical values
82
ENOUGH A LOT
60%
tionships with their colleagues, having provided positive responses.
A LITTLE
80%
The 78.65% of the sample has an overall satisfactory perception of the rela-
NOT AT ALL
70%
Collaboration and dialogue with colleagues
Positive values
100%
Critical values
Positive values
90%
ENOUGH
64.20%
A LOT
39.73%
35.80% 4.71%
24.47%
31.09%
0
10%
20%
30%
40%
50%
60%
identifying this as an area for improvement.
A LITTLE
80%
Within this dimension, critical elements prevail with 64.20% of the sample
NOT AT ALL
70%
Enhancement, evaluation and incentive
100%
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
90%
ENOUGH
66.33%
60%
responses.
A LITTLE
80%
Within this dimension, the perception is satisfactory with 66.33% of positive
NOT AT ALL
70%
Information and communication
Positive values
100%
Critical values
A LOT
33.67%
28.96%
52.44%
0
10%
20%
30%
40%
50%
13.89%
4.71%
nal health and safety (90.40% give a positive assessment of the interventions
90% 80%
44.19% A LOT
0
10%
20%
30%
40%
dedicated to this area).
ENOUGH
70%
Workers consider Sabaf S.p.A. to be a company that is very attentive to inter-
NOT AT ALL A LITTLE
60%
A very positive fact is certainly the perception of security in the company.
90.40%
50%
Safety
Positive values
100%
Critical values
46.21% 9.60% 8.00% 1.60% Critical values
Positive values
Disciplinary measures and disputes The Group makes use of all the instruments provided for in the contract for compliance with the company rules and social life. At 31 December 2018, 9 disputes were pending (2 with Group employees and 7 with former collaborators). 83
SABAF . ANNUAL REPORT 2018
Sabaf and environment Risks Environmental issues are also managed through a risk-based approach, in
Strategic risks, including collaboration with strategic service providers
line with the UNI EN ISO 14001:2015 standard.
with potential environmental risk (waste collection, cleaning services, maintenances).
Risks of external context (environmental sustainability), concerning the protection of the environment and the territory, through the reduction of en-
Legal and compliance risks, related to compliance with law requirements (au-
vironmental impacts and the containment of the use of natural and energy
thorisations and compliance obligations) and requests of local institutions.
resources. These impacts are considered from the product design stage, through the different stages of its implementation and from a perspective
The following paragraph describes the management methods for these risks.
that considers the whole life cycle of the product.
Health and safety, environmental and energy policy PROGRAMME AND GOALS The Group is committed to the following objectives:
Since 2003, the Environmental Management System of the Ospitaletto pro-
• the prevention of pollution and rationalisation of the use of energy through
duction site (which covers approximately 75% of the Group’s total production)
the continuous improvement of its processes and products; • the efficiency in the use of natural and energy resources during production, with a special reference to water and energy consumption;
has been certified in compliance with ISO 14001. CSQ carried out the monitoring inspection in April 2018, confirming the adequacy of the system to the new ISO 14001:2015 Standard.
• the reduction of the quantity of waste produced and the improvement of its quality in terms of hazardousness and recoverability.
In 2015, the Energy Management System implemented at the premises of Ospitaletto was certified in compliance with the ISO 50001 standard. In No-
Sabaf S.p.A. adopted and maintains an Integrated Management System of
vember 2018, the first three-year period ended and CSQ, during the audit
Health and Safety, Environment and Energy (EHS&En) that, by integrating with
carried out for the re-certification, proposed the renewal of the certificate,
the other Management Systems operating within the company, is an effective
concluding the verification with positive results.
means of pursuing a constant reduction in risks, environmental impacts and energy consumption through the following instruments:
In 2008, Sabaf S.p.A. obtained the Integrated Environmental Authorisation
• the prior assessment of EHS&En aspects in all company processes, with
(IPPC) from the Lombardy Region pursuant to Legislative Decree 59 of 18
particular focus on design, production processes and purchases;
February 2005.
• maintaining full compliance with current law requirements, proactively using them as elements of continuous process monitoring; • a training and information system involving all employees and collaborators.
Dialogue with environmental associations and institutions The Group has long promoted the dissemination of information about the
increasingly characterised, all over the world, by the demand for high power
lower environmental impact of using gas in cooking instead of electricity: in
and many cooking points to prepare meals quickly. Electrically powered hobs
fact, the use of combustible gas for heat production allows higher efficiency
cause peak energy consumption to increase, typically around meal times, fur-
than those obtainable with electric cooking appliances. Moreover, cooking is
ther increasing the demand for electricity.
84
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Process innovation and environmental sustainability METAL WASHING
LIGHT ALLOY VALVES
In the production process of valves, it is essential to wash metals in several
The production of aluminium alloy valves has several advantages compared to
stages. Since 2013, Sabaf S.p.A. has been using a washing system based on
the production of brass valves: elimination of the hot moulding phase of brass,
a modified alcohol, a solvent that is redistillable (and therefore recyclable)
lower lead content in the product, lower weight and consequent reduction in
due to its properties. The environmental impact and operating costs of this
consumption for packaging and transport. In 2018, the process of replacing
solvent have been substantially eliminated, as well as the emission level and
brass valves with light alloy valves continued, representing almost 90% of the
production of special waste.
valves produced.
This efficient and sustainable technology has also been used since 2016 at the Sabaf do Brasil site, while it has recently been installed (2018) in Turkey.
MARKING OF PRODUCTS
For many years, Sabaf has been at the forefront of the market with burners
HIGH EFFICIENCY BURNERS that are characterised by yields significantly higher than standard. Following
The regulations in force require that products be marked with a number of
the launch of the III, AE and AEO Series, in 2012, Sabaf introduced a new
distinctive features. Traditionally, printing has always been done with an ink-
family of high efficiency burners, the HE burners, capable of achieving an
jet system: the system allows printing only three lines, for a preset number of
efficiency of up to 68%. HE burners are also characterised by almost total
characters per line, with an annual operating cost of about € 60,000 for inks,
interchangeability with Series II burners. Over the last few years, the range
solvents and maintenance. Sabaf decided to opt for a fibre optic laser writing
of DCC special burners was completed: they are characterised by an energy
system that allows all the necessary characters to be printed on the prod-
efficiency of over 60%, the highest available on the market today for multiple
ucts without any restrictions. In recent years, with an investment of about €
flame ring burners. Moreover, DCC burners with a brass flame-spreader ring
250,000, all inkjet systems have been replaced with laser fibre optic writing
and efficiency of more than 65% were produced specifically for the Chinese
systems, thus eliminating operating costs.
market, the top of what is currently available on that market. High efficiency burners represent more than 20% of the total burners produced.
Environmental impact MATERIALS USED AND RECYCLABILITY OF PRODUCTS Sabaf’s main product lines - valves, thermostats and burners for gas cooking appliances for domestic use - are characterised by high energy efficiency and optimal use of natural resources. Sabaf products can be easily recycled because they are made almost entirely of brass, aluminium alloys, copper and steel.
valves with aluminium alloy valves. Sabaf products fully comply with the requirements of Directive 2002/95/EC (RoHS Directive) that aims to limit the use of hazardous substances such as lead in the production of electrical and electronic equipment, a category that includes all household appliances including gas cooking appliances (which are equipped with electronic ignition). Moreover, Sabaf products fully comply with the requirements of Directive 2000/53/EC (End of Life Vehicles), i.e. the heavy metal content (lead, mercury, cadmium, hexavalent chromium) is below the limits imposed by the Di-
All Group companies have separate waste collection. MATERIALS USED
The lower consumption of brass is linked to the gradual replacement of brass
rective. With regard to the REACH Regulation (Regulation no. 1907/2006 of
2018 2017 CONSUMPTION (t) CONSUMPTION (t)
18/12/2006), Sabaf is a downstream user of substances and preparations. The products supplied by Sabaf are classified as articles that do not give rise
Brass
789
540
to the intentional emission of substances during normal use, therefore there
Aluminium alloys
7,831
8,070
is no registration of the substances contained in them. Sabaf contacted its
33
91
suppliers to ensure that they fully comply with REACH Regulation and to ob-
7,861
7,631
tain confirmation that they meet their obligations to pre-register and register
137
39
Zamak Steel Cast Iron
100% of brass and about 65% of aluminium alloys used are produced by scrap
the substances or preparations they use. Moreover, Sabaf constantly monitors the legislative changes relating to REACH Regulation, in order to identify and manage any new requirements in this area.
recycling; 35% of aluminium alloys and 100% of steel are produced from ore.
85
SABAF . ANNUAL REPORT 2018
ENERGY SOURCES 29 ELECTRICITY
2018 CONSUMPTION (MWh)
2017 CONSUMPTION (MWh)
2016 CONSUMPTION (MWh)
30,225
30,841
27,189
2018 CONSUMPTION (m 3 x 1000)
2017 CONSUMPTION (m 3 x 1000)
2016 CONSUMPTION (m 3 x 1000)
3,918
4,059
3,432
2018 CONSUMPTION (l x 1000)
2017 CONSUMPTION (l x 1000)
2016 CONSUMPTION (l x 1000)
Total NATURAL GAS Total DIESEL Total TOTAL CONSUMPTION
21
5.5
0
2018 CONSUMPTION GJ
2017 CONSUMPTION GJ
2016 CONSUMPTION GJ
249,866
272,329
234,094
Total
Sabaf S.p.A., Sabaf do Brasil and Sabaf Turkey use natural gas as an energy source for the casting of aluminium and for the firing of enamelled lids. The production of Faringosi Hinges s.r.l. and A.R.C. s.r.l. does not use natural gas as an energy source.
INDICATOR: ENERGY INTENSITY ENERGY INTENSITY
2018 CONSUMPTION
2017 CONSUMPTION
2016 CONSUMPTION
0.460
0.489
0.483
KWh on turnover
ENERGY DIAGNOSIS During 2015, Sabaf S.p.A. and Faringosi Hinges s.r.l. carried out an energy audit, aimed at obtaining an in-depth knowledge of the energy consumption profile of their activities and identifying and quantifying energy saving opportunities.
Main energy sources used
Energy demand analysis by purpose
The main sources used are:
The production processes that absorb the highest energy consumption are
- electricity, for all the equipment with electric power supply present, wheth-
foundry (30% of the total), compressed air production (19% of the total) and
er functional or not to the production process, which covers 70% of the
enamelling (8% of the total).
total energy requirement;
The energy requirement of auxiliary services is mainly attributable to the manage-
- natural gas, related to the operation of both production plants (foundry fur-
ment of the wastewater from the foundry and the enamelling (5% of the total).
naces, washing burners, enamel kilns) and service plants (heating), which
The energy requirement of general services is largely attributable to heating
covers 30% of total energy requirements.
and lighting.
SABAF S.p.A. - INCOMING ENERGY MIX 0% 30%
SABAF S.p.A. - ENERGY DEMAND BY PURPOSE
EE
Process
NG
Auxiliary services
DIESEL OIL
14%
General services
56%
70%
29
86
30%
The factors used to calculate 2017 consumption were published by the Department for Business, Energy & Industrial Strategy (BEIS) in 2015. The updated factors published by the Department for Environment, Food and Rural Affairs (DEFRA) in 2018 were used for 2018 consumption. Following the completion of the data collection system, the consumption of diesel for 2018 also includes the consumption of the company fleet owned by the Group and the consumption of diesel relating to Sabaf S.p.A. In 2017, only the consumption of diesel oil of ARC s.r.l. was considered
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
2019 Objectives 1 Continuation of leak detection and repair and optimisation of process management of compressed air production.
2 Assessment of energy revamping of company wastewater treatment plants.
WATER
2018 2017 CONSUMPTION (m3) CONSUMPTION (m3)
die-casting and enamelling processes in Italy, recovered through a rainwater collection system or taken from the well, at the end of the production processes, is treated in concentration plants that have significantly reduced
From municipal water supply
110,655
81,472
From well
29,185
31,329
optimise water-using processes and improve water management related to
139,840
112,801
the cooling of the company’s die-casting circuit continues.
TOTAL
the quantities of water required and waste produced. The commitment to
For 2019, the Group has set itself the objective of implementing at its BrazilAll the water used in the production processes by Group companies is des-
ian production site a system for recovering industrial water from the process
tined for disposal or internal recycling for reuse in company processes: as
of enamelling covers, which will allow a significant reduction in the use of
a consequence, there is no industrial waste water. The water used in the
water resources.
WASTE Trimmings and waste from the production process are identified and collected separately for recycling or disposal. The risers deriving from aluminium die-casting are intended for direct reuse. The waste for disposal and recycling is summarised below: WASTE (TONS) 2018
% INCIDENCE
2017
% INCIDENCE
Similar to urban
186
2.2
189
2.2
Non-hazardous (disposal)
1,722
20.0
1,810
21.3
Non-hazardous (recycling)
4,286
49.6
4,391
51.8
Tot. non hazardous
6,008
69.6
6,201
73.1
Hazardous (disposal)
992
11.5
952
11.2
Hazardous (recycling)
1,442
16.7
1,143
13.5
Tot. hazardous
2,434
28.2
2,095
24.7
TOTAL
8,628
100
8,485
100
Value of production
38,913
39,602
Tot waste/val. of product
0.22
0.21
Tot. Hazard. waste/val of product
0.06
0.05
87
SABAF . ANNUAL REPORT 2018
During 2018, the incidence of waste on the value of production remained in
ume of about 500 tonnes and an energy consumption equal to 3% of the
line with 2017. The company’s commitment focused on reducing the pro-
total company requirements. The transition from an evaporator to a chem-
duction of hazardous special waste, investing in the search for raw mate-
ical-physical treatment will cancel out the energy impact and reduce the
rials and substances, at the input stage, already not hazardous originally.
volume of waste, in this case solid waste, related to the enamelling process
For 2019, the Group has the objective of modifying the technology for man-
to 10 tonnes per year.
aging wastewater from the process of enamelling covers at the Ospitaletto production site. Currently, the waste generated is liquid, with an annual vol-
No significant spills occurred in 2018.
EMISSIONS INTO THE ATMOSPHERE A large part of atmospheric emissions of the Sabaf Group derives from activities defined as “negligible pollution”. • Three production processes are carried out at Sabaf S.p.A:
• In Faringosi Hinges s.r.l., steel is used as the main raw material for the pro-
1- the production of the components that make up the burners (nozzle
duction of hinges, and is subjected to a series of mechanical processing
holder sumps and flame spreaders) involves the casting and subsequent
and assembly that do not involve any significant emissions.
die-casting of the aluminium alloy, sandblasting of the pieces, a series of mechanical processes with removal of material, washing of some compo-
• In A.R.C. s.r.l., where professional burners are produced through mechanical processing and assembly, no significant emissions are recorded.
nents, assembly and testing. This production process results in the emis-
• The entire burner production process is carried out at Sabaf do Brasil. An
sion of negligible amounts of oily mists, as well as dust and carbon dioxide;
analysis of the internal process shows that there are no significant emis-
2- the production of burner covers, where steel is used as raw material,
sions.
which is submitted to blanking and minting. The semi-finished covers are
• The entire burner production process is carried out at Sabaf Turkey. An
then used for washing, sandblasting, application and firing of enamel, a
analysis of the internal process shows that there are no significant emis-
process that generates the emission of dust;
sions.
3- the production of valves and thermostats, in which mainly aluminium alloy, brass bars and moulded bodies and, to a much lesser extent, steel
• Sabaf China carries out mechanical processing and burner assembly operations. Emissions are completely negligible.
bars are used as raw materials. The production cycle is divided into the following phases: mechanical machining with removal of material of bars
The efficiency level of the purification systems is ensured through their reg-
and moulded parts, washing of semi-finished products and components
ular maintenance and the regular monitoring of all emissions. Monitoring in
obtained in this way, finishing of the coupling surface of bodies and masks
2018 showed that all emissions complied with the limits imposed by the law.
with a diamond tool, assembly and final inspection of the finished product. This process generates negligible oily mists.
CO 2 EMISSIONS (tons) 30 2018
2017
2016
Scope 1 (direct emissions)31
8,022
8,508
6,949
Scope 2 (indirect emissions) location based
10,498
11,570
10,162
Scope 2 (indirect emissions) market based
13,133
N/A
N/A
18,520
20,078
17,111
Total emissions Scope 1+2 (location based)
The use of natural gas to power melting furnaces results in the emission of NOX and SOX into the atmosphere, however these emissions are not significant. Sabaf does not currently contain any substances that damage the atmospheric ozone layer, with the exception of the refrigerant used in some air conditioners (R22), which is managed in compliance with the reference standards.
The factors used for calculating emissions are: - year 2016: Department for Business, Energy & Industrial Strategy (BEIS) in 2015 - Defra 2016 for emissions related to natural gas consumption; - year 2017: Department for Business, Energy & Industrial Strategy (BEIS) in 2015 - Defra 2017 for emissions related to natural gas consumption; - year 2018: Scope 1 fuels and F-GAS: Defra 2018 - Scope 2 Location-based: Terna 2016 - Scope 2 Market-based: AIB 2017, where available, otherwise Terna 2016. 31 the 2017 and 2016 data has been amended from 2017 consolidated disclosure of non-financial information to include information that was not available at the date of the previous statement 30
88
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Environmental investments ENVIRONMENTAL CURRENT EXPENDITURE
(AMOUNTS IN €/000)
2018
2017
Waste disposal
533
511
Advisory services
58
27
Analysis of emissions
20
18
Training
2
2
Plant, equipment and materials
53
22
1
0
667
580
Software and database TOTAL
ENVIRONMENTAL INVESTMENTS
(AMOUNTS IN €/000)
2018
2017
Plant, equipment and materials
268
33
TOTAL
268
33
In 2018, investments were made in: • extraordinary maintenance of atmospheric emission plants in the foundry department; • improvement of waste collection areas within departments, to facilitate a more immediate and correct separation of the various types of waste; • implementation of a modified alcohol washing at Sabaf Turkey and a plant at Sabaf S.p.A.
Disputes In 2018, the Group did not suffer any sanctions related to environmental compliance and no dispute is pending.
89
SABAF . ANNUAL REPORT 2018
Sabaf, the management of product quality and customer relations Risks The new UNI EN ISO 9001:2015 standard with Sabaf complies, introduces
Legal and compliance risks, relating to non-compliance with product reg-
the concept of a “risk-based approach”, which is fundamental for planning
ulations: Sabaf operates in international markets that adopt different laws
the quality management system.
and regulations. The product must therefore comply with the mandatory and voluntary requirements and the organisation must be able to show this
Strategic risks, including intellectual property protection (there is a risk
consistency to the certification bodies responsible for control.
that some Group products, even if under patent protection, may be copied by competitors) and collaboration with critical suppliers.
Quality management policy The Quality Management System has the aim of enabling the achievement of
Group companies that have obtained quality certification according to the
the following objectives:
ISO 9001:2008 standard:
a. increasing customer satisfaction by understanding and meeting their present and future requirements; b. continuous improvement of processes and products, also aimed at protecting the environment and the safety of employees; c. involvement of partners and suppliers in the continuous improvement process, favouring the “comakership” logic; d. valuation of human resources; e. improvement of business performance and of the quality management system based on risk based thinking.
COMPANY
YEAR OF FIRST CERTIFICATION
Sabaf S.p.A.
1993
Faringosi Hinges
2001
Sabaf do Brasil
2008
Sabaf Turkey
2015
During 2018, the Quality Management System was constantly monitored and maintained to ensure the correct implementation and compliance with the requirements of the ISO 9001 standard. As part of the internal audit plan for
In order to contribute consistently to the pursuit of these objectives, the Sabaf
2018, a total of 26 functional areas of offices and production departments were
Group undertakes a series of commitments explicitly stated in the Charter of
checked at the Ospitaletto factory, 14 at Sabaf do Brasil and 14 at Sabaf Turkey.
Values:
The results of these checks did not reveal any critical aspects of the system,
• to act with transparency, correctness and contractual fairness;
which therefore fully complies with the standard.
• to communicate product information in a clear and transparent manner; • to adopt a professional and helpful behaviour towards customers;
With regard to third party inspections of the Quality Management System, in
• not to give gifts to customers that exceed normal courtesy practices and
2018 CSQ (IMQ Certification Body) carried out the annual inspection at the
that may tend to influence their objective assessment of the product;
premises of Ospitaletto and at the factory of Sabaf Turkey, confirming the ad-
• to guarantee high quality standards of the offered products;
equacy of the System and the maintenance of ISO 9001 certification. For the
• to ensure constant attention in technological research in order to offer inno-
Brazilian factory, the next inspection by the certification body is scheduled for
vative products;
2019.
• to collaborate with customer companies to ensure that the end user is fully confident in using the products; • to promote social responsibility actions throughout the production chain;
Note that, with inspections in 2018, the Company adapted the Quality Management System to the new version of the ISO 9001:2015 Standard.
• to listen to customers’ requirements through constant monitoring of customer satisfaction and complaints, if any; • to inform customers of potential risks related to the use of products, as well as the related environmental impact.
90
In September 2018, the TUV NORD certification body carried out the certification audit of the Quality Management System of Faringosi Hinges, in accordance with UNI EN ISO 9001:2015. The intervention ended successfully.
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Quality current expenditure
Investments in quality
(amounts in €/000)
(amounts in €/000)
Product certification
2018
2017
131
106
Certification and quality management system
17
7
Measuring equipment and instruments (purchase)
47
102
Measuring equipment and instruments (calibration)
30
34
Technical standards, software and magazines
3
3
Training
0
3
Tests in external laboratories
36
39
263
294
Total
2018
2017
Measuring equipment and instruments (purchase)
90
182
Total
90
182
Customer Health and Safety Sabaf protects the health of consumers by checking that the materials that
Valves and thermostats are also certified by third parties that guarantee
make up its products comply with the international directives in force (such
compliance with the operating and safety requirements required to be mar-
as REACH and RoHs).
keted on the world market.
To ensure the safe operation of valves, thermostats and burners, Sabaf car-
Hinges do not pose a significant risk to consumer safety.
ries out leak tests on 100% of its production.
Customer satisfaction The customer satisfaction survey, carried out every two years, is part of
The latest survey, carried out in February 2017, confirmed the positive opin-
the stakeholder engagement activities that Sabaf undertakes in order to
ion of customers by pointing out that the quality of its products and its
constantly improve the quality of the services offered and to respond to
timeliness, professionalism and competence in technical and commercial
customer expectations.
assistance are among its strong points.
Customer complaint handling Sabaf systematically handles all complaints from customers. A specific
The causes of complaints vary from product to product and can be sum-
process is in place and envisages:
marised mainly in:
• analysis of the alleged defect to assess its validity;
• aesthetic defects for the family of covers and burner flame spreaders;
• identification of the causes of the defect;
• size and/or operating anomalies for the family of valves and thermostats;
• corrective actions necessary to prevent or limit the recurrence of the prob-
• die-casting defects for sumps and burner flame spreaders.
lem; • customer feedback through 8D reports (quality management tool that enables a cross-functional team to determine the causes of problems and
398
335
2018
2017
provide effective solutions). The following table shows the trends in terms of the number of customer complaints in the Group.
Disputes
NUMBER OF WELL-FOUNDED CUSTOMER COMPLAINTS
There is no dispute in place. 91
SABAF . ANNUAL REPORT 2018
Sabaf and supply chain management Risks The supply chain presents different types of risks, which must be assessed
Strategic risks related to a socially responsible approach along the supply
and monitored in order to limit the possibility of damage to the company.
chain (quality of supply, respect for the environment, energy consumption and respect for human rights and protection of workers). The definition of
Risks of external context. Considering that a significant (although not pre-
the criticality level, especially environmental and social, derives from a risk
dominant) portion of purchases takes place on international markets, the
assessment that takes into account the type of process, product or service
Group monitors and manages the risk of instability in supplier Countries.
provided and the geographical location of the supplier. Operational risks: including continuity of supplies, assessed by paying attention to the financial sustainability of the suppliers.
Supply chain management policy THE SA8000 STANDARD AND SUPPLIERS
If the law in force already requires Sabaf to meet the minimum requirements,
In 2009, Sabaf S.p.A. obtained the certification of compliance with the re-
environment and social responsibility management are carried out. In 2018,
quirements of the SA8000 (Social Accountability 8000) Standard and, therefore, the Company requires its suppliers to comply, in all their activities, with the principles of the Standard, as a minimum criterion for establishing a lasting relationship based on the principles of social responsibility. Supply contracts include an ethical clause inspired by the SA8000 standard, which commits suppliers to ensure respect for human and social rights and in particular:
the risk is considered to be lower, otherwise periodic audits relating to quality, class A and B suppliers were analysed to cover 95% of the expenditure. This analysis revealed 20 cases of suppliers considered potentially critical, following which 17 audits were carried out (18 in 2017) from which no critical non-conformities were found but only observations. In connection with non-critical non-compliances, the suppliers were asked to take appropriate action.
avoid the employment of persons below the age established by the standard, provide workers with a safe workplace, protect trade union freedom, comply quired by law will be complied with.
RELATIONS WITH SUPPLIERS AND CONTRACTUAL CONDITIONS
In 2017, Sabaf S.p.A. complied with the updating of the SA8000:2014 stan-
Relations with suppliers are based on long-term collaboration and on fairness
dard and asked all suppliers, bound by contract, to act in the same way and
in negotiations, integrity and contractual fairness and the sharing of growth
comply with the latest version of the principles. During the year, Sabaf S.p.A.
strategies.
carried out a risk analysis of the supply chain in line with the requirements of
To encourage the sharing with suppliers of the values that underpin its business
SA8000 in order to prepare an action plan and monitor the suppliers consid-
model, Sabaf has distributed the Charter of Values in a widespread manner.
ered critical for the purposes of the Standard. The analysis was carried out
Sabaf guarantees absolute impartiality in the choice of suppliers and under-
taking into account the geographical location, the sector to which it belongs,
takes to strictly comply with the agreed payment terms.
the type of business and the importance of turnover with regard to Sabaf.
Sabaf requires its suppliers to be able to renew themselves technologically,
A questionnaire was sent out to verify understanding of the standard and
so that the best quality/price ratios can always be proposed, and favours sup-
assess the social responsibility aspects of each supplier. The replies received
pliers who have obtained or are obtaining Quality and Environmental System
did not show any non-compliance.
certifications.
Failure to comply with or to accept the principles of the SA8000 standard may
In 2018, the turnover of suppliers of the Sabaf Group with a Certified Quality
lead to the termination of supply contracts.
System was equal to 71.7% of the total (70.9% in 2017).
with the law on working hours, ensure workers that the minimum salary re-
92
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Purchase analysis As shown in the table below, the Sabaf Group aims to encourage development in the area in which it operates and, therefore, in selecting suppliers, favours local companies. TOTAL 2018 PURCHASES (€/000)
% DOMESTIC PURCHASES
Sabaf S.p.A.
75,086
76.5
Faringosi Hinges s.r.l.
7,320
98.1
A.R.C. s.r.l.
3,465
85.6
Sabaf Turkey
8,555
88.0
Sabaf do Brasil
8,296
86.1
598
97.2
Sabaf China
Territorial distribution of suppliers (amounts in €/000) 2018 TOTAL PURCHASES
2017 %
TOTAL PURCHASES
%
Province of Brescia
31,962
30.8
31,833
30.4
Italy
38,959
37.2
37,189
35.8
EU
11,611
11.2
11,539
11.0
Brazil
7,142
6.9
6,388
6.1
Turkey
7,593
7.3
7,193
6.9
Other
8,427
8.0
8,692
8.3
Total
103,924
100
104,604
100
Most of the purchases outside the European Union come from suppliers
For all Group companies, the main machinery used (die-casting machines,
located in China. Chinese suppliers signed the clause for compliance with
processing and assembly transfer) is supplied by Italy to ensure homoge-
the principles of the SA8000 standard.
neous production processes in terms of quality and safety.
Breakdown of purchases by type (€/000) 2018 TOTAL PURCHASES
2017 %
TOTAL PURCHASES
%
Raw Materials
17,685
17.0
27,302
26.1
Components
44,762
43.1
32,492
31.1
Capital equipment
11,348
10.9
13,604
13.0
Services and other purchases
30,129
29.0
31,205
29.8
103,924
100
104,603
100
Total
Very short payment terms are agreed for artisan and less structured suppliers (mainly 30 days).
Disputes There are no disputes with suppliers. 93
SABAF . ANNUAL REPORT 2018
Sabaf, Public Administration and Community Relations with the Public Administration In line with the reference policy lines, the relations of Sabaf with the Public
At local level, Sabaf has tried to establish an open dialogue with the various
Administration and the Tax Authorities are based on the utmost transpar-
authorities to achieve a shared industrial development.
ency and fairness.
Relations with industrial associations Sabaf S.p.A. is one of the founders of CECED Italia(now APPLiA, the asso-
tions in the household appliances sector.
ciation that develops and coordinates in Italy the study activities promoted
Sabaf S.p.A. has been a member of Associazione Industriale Bresciana
at European level by Ceced (European Committee of Domestic Equipment
(AIB) since 2014, which is a member of the Confindustria system.
Manufacturers) with the related scientific, legal and institutional implica-
Relations with universities and the student world Sabaf S.p.A. systematically organises company visits with groups of stu-
portant conferences in different cities in Italy.
dents and bears witness of best practices on social responsibility at im-
Charitable initiatives and perks The Group’s humanitarian initiatives include support for the Associazione
The donations are intended to support twenty children living in different
Volontari per il Servizio Internazionale (AVSI), a non-governmental, non-profit
Countries of the world at a long distance.
organisation engaged in international development aid projects.
Disputes There are no significant disputes with Public Bodies or other representatives of the community.
94
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Sabaf and shareholders The composition of the share capital THE SHAREHOLDERS ENTERED IN THE SHAREHOLDERS’ REGISTER AT 5 MARCH 2019 WERE
1,805
OF WHOM:
1,513
194
31
67
own up to 1,000 shares
own 1,001 to 5,000 shares
own 5,001 to 10,000 shares
own over 10,000 shares
29.67%
of the share capital is held by shareholders resident abroad.
BODY OF SHAREHOLDERS
34.20%
23.99%
MARKET
GIUSEPPE SALERI S.A.P.A.
4.46%
7.37%
TREASURY SHARES
FINTEL S.R.L.
20.00% QUAESTIO CAPITAL MANAGEMENT SGR
9.98% DELTA LLOYD AM
Investor relations and financial analysts Since its listing on the Stock Exchange (1998), the Company has attributed
to engage in dialogue with financial analysts and institutional investors. In
strategic importance to financial communication. Sabaf’s financial commu-
2018, the Company met with institutional investors as part of roadshows
nication policy is based on the principles of fairness, transparency and con-
organised in Milan and London. Some investors also held meetings with
tinuity, in the belief that this approach allows investors to correctly evaluate
the management at the company headquarters in Ospitaletto, taking the
the Company. In this perspective, Sabaf guarantees maximum willingness
opportunity to visit the production facilities. 95
SABAF . ANNUAL REPORT 2018
Remuneration of shareholders and share performance In 2018, the Sabaf share recorded the highest official price on 9 January
(€ 346,647 in 2017). The performance of the stock in 2018 was affected by
(€ 20.910) and lowest on 2 November (€ 13.027). The average volume
the general weakness of the share prices.
traded was 9,381 shares per day, equal to an average value of € 164,508
2018 PERFORMANCE OF SABAF SHARES (PRICE AND VOLUMES TRADED) 20.78 18.86 16.95 15.03 13.11 11.20
50 K
25 K
0 January 2018
March 2018
May 2018
July 2018
September 2018
November December 2018 2018
SABAF VS. FTSE ITALIA STAR INDEX
0% -10% -20% -30% Sabaf FTSE Italia STAR
May 2018
September 2018
The dividend policy adopted by Sabaf aims to guarantee a valid remuneration of shareholders also through the annual dividend of € 0.55 per share in 2018.
96
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
Socially responsible investments Sabaf shares have frequently been analysed by analysts and managers of SRI funds, who have also invested in Sabaf on several occasions.
Disputes There is no dispute with shareholders.
Sabaf and lenders Relations with credit institutions The 2018-2022 Business Plan envisages the financing of growth also through
Relations with banks have always been based on maximum transparency.
greater use of financial debt, which is expected to remain within the parame-
Relations with institutions that are able to support the Group in all its fi-
ters of absolute security (net financial debt to EBITDA ratio below 2).
nancial needs and to propose solutions in a timely manner to meet specific
At 31 December 2018, the net financial debt was â‚Ź 53.5 million, compared
needs are privileged.
with â‚Ź 25.5 million on 31 December 2017.
Disputes There is no dispute with the lenders.
Sabaf and competitors Trends in the cooking appliance manufacturer sector For years, there has been a clear trend in the sector to outsource the de-
The entry of new players on the international scene has also led to a sit-
sign and production of components to highly specialised suppliers who,
uation of oversupply, which generates strong competitive tensions and is
like Sabaf, are active in the main world markets and are able to provide a
evolving into a greater concentration of the sector. This trend is less evident
range of products that meets the specific requirements of different mar-
for cooking appliances than for other household appliances: in the cooking
kets. Furthermore, the trend towards the internationalisation of production
sector, in fact, design and aesthetics on the one hand and the lower inten-
is accentuated, with production increasingly relocated to countries with low
sity of investments on the other allow the success of even small and highly
labour costs and lower saturation levels.
innovative producers. 97
SABAF . ANNUAL REPORT 2018
Main Italian and international competitors In Italy and Europe, Sabaf estimates to have a market share of more than 40%
Copreci is a cooperative located in Spain in the Basque Country, part of Mon-
in each product segment and is the only company to supply the full range
dragon Cooperative Corporation and represents Sabaf’s main competitor in
of gas cooking components, while its competitors only produce part of the
terms of valves and thermostats.
product range.
Defendi is an Italian company, acquired in 2013 by the German group EGO,
The main competitors of the Sabaf on the international market are Copreci,
and is mainly active in the production of burners in Italy and Brazil.
Defendi and Robertshaw.
Robertshaw is the leading producer of gas components for the North American market.
Main Italian and international competitors VALVES
THERMOSTATS
BURNERS
HINGES
SABAF GROUP Copreci (Spain) Defendi Italy (Italy) Robertshaw (USA) Somipress (Italy) CMI (Italy) Nuova Star (Italy)
2016 and 2017 economic data of the main Italian competitors 32 2017
2016
â‚Ź/000
SALES
EBIT
NET RESULT
SALES
EBIT
NET RESULT
SABAF GROUP
150,223
18,117
14,835
130,978
12,530
9,009
DEFENDI ITALY
56,562
3,516
2,534
54,959
2,316
1,799
SOMIPRESS GROUP
37,797
3,060
1,996
36,972
2,323
1,214
CMI
22,880
560
730
20,516
738
898
NUOVA STAR
33,418
323
189
30,007
174
118
No further information is available on competitors due to the difficulty of finding the data.
Disputes There is a dispute pending against a competitor following an alleged violation of one of our patents. There is also a dispute in place brought by a competitor for alleged infringement of a patent that the Group considers totally groundless. 32
98
Sabaf processing from the financial statements of the various companies. Latest available data
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
99
SABAF . ANNUAL REPORT 2018
100
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
101
SABAF . ANNUAL REPORT 2018
GRI Content Index GRI STANDARD
DISCLOSURE
PAGE (OR DIRECT REFERENCE)
GRI 101: Foundation 2016 General Disclosures ORGANIZATIONAL PROFILE
102-1
Name of the organization
Cover page
102-2
Activities, brands, products, and services
102-3
Location of headquarters
102-4
Location of operations
pages 18-21 Via dei Carpini, 1 25035 Ospitaletto (Brescia) pages 20-23
102-5
Ownership and legal form
pages 44-46; 95
102-6
Markets served
pages 20-23
102-7
Scale of the organization
pages 12-23
102-8
Information on employees and other workers
pages 63-64; 71-72
102-9
Supply chain
pages 92-93
102-10
Significant changes to the organization and its supply chain page 27
102-11
Precautionary Principle or approach
pages 38; 57-58
102-12
External initiatives
pages 30; 40-41;
102-13
Membership of associations
page 94
Statement from senior decision-maker
pages 28-29
STRATEGY
102-14
ETHICS AND INTEGRITY
102-16
Values, principles, standards, and norms of behavior
pages 30-32
GOVERNANCE
GRI 102: General Disclosures 2016
102-18 102-22
Governance structure Composition of the highest governance body and its committees
pages 44-56 pages 46-51
STAKEHOLDER ENGAGEMENT
102-40
List of stakeholder groups
page 39
102-41
Collective bargaining agreements
page 73
102-42
Identifying and selecting stakeholders
page 39
102-43
Approach to stakeholder engagement
page 39
102-44
Key topics and concerns raised
pages 39; 91
REPORTING PRACTICE
102
102-45
Entities included in the consolidated financial statements
pages 20-21; 27
102-46
Defining report content and topic Boundaries
pages 27; 42
102-47
List of material topics
pages 42-43
102-48
Restatements of information
page 27
102-49
Changes in reporting
pages 27; 42
102-50
Reporting period
page 27
102-51
Date of most recent report
Anno 2017
102-52
Reporting cycle
102-53
Contact point for questions regarding the report
102-54
Claims of reporting in accordance with the GRI Standards
page 27 Tel.: +39 030 - 6843001, Fax: +39 030 - 6848249 E-mail: info@sabaf.it page 27
102-55
GRI content index
pages 102-105
102-56
External assurance
pages 99-101
OMISSION
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
GRI STANDARD
DISCLOSURE
PAGE (OR DIRECT REFERENCE)
OMISSION
Material Topics GRI 200 Economic Standards Series ECONOMIC PERFORMANCE
GRI 103: Management Approach 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58
103-3
Evaluation of the management approach
pages 57-58
Direct economic value generated and distributed
page 36
GRI 201: 201-1 Economic Performance 2016
MARKET PRESENCE
GRI 103: Management Approach 2016 GRI 202: Market Presence 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 62-63; 73-74
103-3
Evaluation of the management approach
pages 57-58; 62-63; 73-74
202-1
Ratios of standard entry level wage by gender compared to local minimum wage
page 75
ANTI-CORRUPTION
GRI 103: Management Approach 2016 GRI 205: Anti-Corruption 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 61
103-3
Evaluation of the management approach
pages 57-58; 61
205-3
Confirmed incidents of corruption and actions taken
page 61
GRI 300 Environmental Standards Series ENERGY
GRI 103: Management Approach 2016 GRI 302: Energy 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 84-85; 86-87
103-3
Evaluation of the management approach
pages 57-58; 84-85; 86-87
302-1
Energy consumption within the organization
page 86
302-3
Energy intensity
page 86
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 84-85; 88-89
103-3
Evaluation of the management approach
pages 57-58; 84-85; 88-89
305-1
Direct (Scope 1) GHG emissions
page 88
305-2
Energy indirect (Scope 2) GHG emissions
page 88
EMISSIONS
GRI 103: Management Approach 2016 GRI 305: Emissions 2016
EFFLUENTS AND WASTE
GRI 103: Management Approach 2016 GRI 306: Effluents and Waste 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 84-85; 87-88
103-3
Evaluation of the management approach
pages 57-58; 84-85; 87-88
306-2
Waste by type and disposal method
pages 87-88
ENIVORMENTAL COMPLIANCE
GRI 103: Management Approach 2016 GRI 307: Environmental compliance 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 84-85
103-3
Evaluation of the management approach
pages 57-58; 84-85
307-1
Non-compliance with environmental laws and regulations
page 89
103
SABAF . ANNUAL REPORT 2018
GRI STANDARD
DISCLOSURE
PAGE (OR DIRECT REFERENCE)
OMISSION
GRI 400 Social Standards Series EMPLOYMENT
GRI 103: Management Approach 2016 GRI 401: Employment 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 62-63; 66
103-3
Evaluation of the management approach
pages 57-58; 62-63; 66
401-1
New employee hires and employee turnover
pages 66-69
LABOR/MANAGEMENT RELATIONS
GRI 103: Management Approach 2016 GRI 402: Labor management relations 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 62-63; 80
103-3
Evaluation of the management approach
pages 57-58; 62-63; 80
402-1
Minimum notice periods regarding operational changes
page 80
OCCUPATIONAL HEALTH AND SAFETY
GRI 103: Management Approach 2016 GRI 403: Occupational Health and Safety 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 76-79
103-3
Evaluation of the management approach
pages 57-58; 76-79
403-2
Hazard identification, risk assessment, and incident investigation
pages 76-78
TRAINING AND EDUCATION
GRI 103: Management Approach 2016 GRI 404: Training and Education 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 62-63; 70
103-3
Evaluation of the management approach
pages 57-58; 62-63; 70
404-1
Average hours of training per year per employee
page 70
DIVERSITY AND EQUAL OPPORTUNITY
GRI 103: Management Approach 2016 GRI 405: Diversity and Equal Opportunity 2016
103-1
Explanation of the material topic and its Boundary
103-2
The management approach and its components
103-3
Evaluation of the management approach
405-1
Diversity of governance bodies and employees
pages 42-43 pages 50; 57-58; 62-63; 71-72 pages 50; 57-58; 62-63; 71-72 pages 47-53; 71-72
NON-DISCRIMINATION
GRI 103: Management Approach 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 62-63
103-3
Evaluation of the management approach
pages 57-58; 62-63
Incidents of discrimination and corrective actions taken
page 63
GRI 406: Non-discrimination 406-1 2016
104
H&S indexes on the external workforce currently omitted because data are not available; the data collection system will be updated starting from 2019.
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
GRI STANDARD
DISCLOSURE
PAGE (OR DIRECT REFERENCE)
OMISSION
FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING
GRI 103: Management Approach 2016 GRI 407: Freedom of Association and Collective Bargaining 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 62-63; 80
103-3
Evaluation of the management approach
pages 57-58; 62-63; 80
407-1
Operations and suppliers in which the right to freedom of association and collective bargaining may be at risk
pages 63; 92-93
SUPPLIER SOCIAL ASSESSMENT
GRI 103: Management Approach 2016 GRI 414: Supplier Social Assessment 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 92-93
103-3
Evaluation of the management approach
pages 57-58; 92-93
414-2
Negative social impacts in the supply chain and actions taken
pages 92-93
CUSTOMER HEALTH AND SAFETY
GRI 103: Management Approach 2016 GRI 416: Customer Health and Safety 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 57-58; 90-91
103-3
Evaluation of the management approach
pages 57-58; 90-91
416-1
Assessment of the health and safety impacts of product and service categories
page 91
Topics not covered by the topic-specific Standards PARTNERSHIP WITH MULTINATIONAL GROUPS
GRI 103: Management Approach 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 33; 57-58
103-3
Evaluation of the management approach
pages 33; 57-58
CUSTOMER SATISFACTION AND CUSTOMER SUPPORT
GRI 103: Management Approach 2016
103-1
Explanation of the material topic and its Boundary
pages 42-43
103-2
The management approach and its components
pages 39; 57-58; 91
103-3
Evaluation of the management approach
pages 39; 57-58; 91
105
Expanding the range
Operating in a world market means satisfying diverse customers by listening to their many needs and requirements. With a broad and growing product range, Sabaf competes and achieves remarkable results in every country. 106
107
SABAF . ANNUAL REPORT 2018
Report on operations Business and Financial situation of the Group................................................................ 109 The acquisition of Okida Elektronik............................................................................................112 Risk Factors.....................................................................................................................................................112 Research and development............................................................................................................. 114 Consolidated disclosure of non-financial information................................................ 114 Personnel......................................................................................................................................................... 114 Environment................................................................................................................................................. 114 Corporate governance.......................................................................................................................... 114 Internal control system on financial reporting.................................................................. 114 Model 231......................................................................................................................................................... 114 Personal data protection.....................................................................................................................115 Derivative financial instruments....................................................................................................115 Atypical or unusual transactions...................................................................................................115 Secondary offices.......................................................................................................................................115 Management and coordination.....................................................................................................115 Intra-group transaction and related-party transactions............................................115 Significant events after year-end and business outlook............................................115 Business and financial situation of Sabaf S.p.A.................................................................115 Reconciliation between parent company and consolidated shareholders’ equity and net profit for the period.................117 Use of the longer time limit for calling the shareholders’ meeting..................117
108
REPORT ON OPERATIONS
BUSINESS AND FINANCIAL SITUATION OF THE GROUP (€/000)
2018
%
2017
%
2018-2017 CHANGE
CHANGE %
Sales revenue
150,642
100%
150,223
100%
419
+0.3%
EBITDA
29,959
19.9%
30,955
20.6%
(996)
-3.2%
EBIT
16,409
10.9%
18,117
12.1%
(1,708)
-9.4%
Pre-tax profit
20,960
13.9%
17,804
11.9%
3,156
+17.7%
Profit attributable to the Group
15,614
10.4%
14,835
9.9%
779
+5.3%
Basic earnings per share (€)
1.413
1.323
0.090
+6.8%
Diluted earnings per share (€)
1.413
1.323
0.090
+6.8%
In 2018, the Sabaf Group reported a sales revenue of € 150.6 million, an in-
alent to 19.9% of turnover, compared to € 31 million (20.6% of turnover) in
crease of 0.3% versus the figure of € 150.2 million in 2017 (-2.4% taking into
2017, EBIT reached € 16.4 million, equivalent to 10.9% of turnover, compared
consideration the same scope of consolidation). Profitability continued to be
to € 18.1 million (12.1%) in 2017. Net profit of 2018, equal to € 15.6 million
excellent, albeit slightly down: 2018 EBITDA amounted to € 30 million, equiv-
(10.4% of sales), is 5.3% higher than the € 14.8 million of 2017.
The subdivision of sales revenues by product line is shown in the table below: (€/000)
2018
%
2017
%
CHANGE %
Brass valves
4,327
2.9%
5,991
4.0%
-27.8%
Light alloy valves
37,615
25.0%
39,351
26.2%
-4.4%
Thermostats
6,521
4.3%
7,376
4.9%
-11.6%
Standard burners
39,368
26.1%
41,070
27.3%
-4.1%
Special burners
27,585
18.3%
27,184
18.1%
+1.5%
Accessories and other revenues
15,422
10.3%
15,267
10.2%
+1.0%
130,838
86.9%
136,239
90.7%
-4.0%
5,331
3.5%
5,079
3.4%
+5.0%
Hinges
10,436
6.9%
8,905
5.9%
+17.2%
Electronic components
4,037
2.7%
0
0.0%
150,642
100%
150,223
100%
Total household gas parts Professional gas parts
Total
+0.3%
Product innovation continues to support sales of special and professional
itive trend of the North American market and the launch of new supply con-
burners, while more mature products (brass valves and thermostats) show a
tracts. Following the acquisition of Okida Elektronik, from September 2018
marked decline. Sales of hinges increased significantly, supported by the pos-
the Group is also active in the production and sale of electronic components.
109
SABAF . ANNUAL REPORT 2018
The geographical breakdown of revenues is shown below: (€/000)
2018
%
2017
%
CHANGE %
Italy
31,579
21.0%
36,523
24.3%
-13.5%
Western Europe
12,337
8.2%
11,678
7.8%
+5.6%
Eastern Europe
46,301
30.7%
42,824
28.5%
+8.1%
Middle East and Africa
12,303
8.2%
13,009
8.6%
-5.4%
Asia and Oceania
7,590
5.0%
10,516
7.0%
-27.8%
South America
25,461
16.9%
22,938
15.3%
+11.0%
North America and Mexico
15,071
10.0%
12,735
8.5%
+18.3%
150,642
100%
150,223
100%
+0.3%
Total
The sales analysis by geographical area shows an uneven trend in the various
recorded in European markets, thanks to the consolidation of relationships with
markets in which the Group operates. The best results were achieved on the
major customers and the contribution made by the acquisition in Turkey of Oki-
American continent: sales in North America were sustained by the good perfor-
da; only in Italy sales are down due to the sharp reduction in the production of
mance of consumption; in South America, strong growth rates were recorded
domestic appliances. North Africa and the Middle East have shown signs of
in the Andean countries, which more than offset the effects of the crisis in
weakness, while the Group’s presence on Asian markets is not yet sufficiently
Argentina and a still stagnant demand in Brazil. Satisfactory growth rates were
consolidated.
Average sales prices in 2018 were 0.2% lower compared to 2017.
The ratio of net financial expenses to turnover remained low, equal to 0.6% of turnover. During the year, the Group recorded in the income statement pos-
The effective average purchase prices of the main raw materials (aluminium
itive exchange differences of € 5.4 million, due to fluctuations in exchange
alloys, steel and brass) were on average higher than in 2017, with a negative
rates with the Turkish lira and the U.S. dollar.
impact of 0.7% of sales. Consumption (purchases plus change in inventories) as a percentage of sales was 38.4% in 2018, compared with 38.2% in 2017.
The tax rate in 2018 was 24.6% (16.2% in 2017, when the Group recorded the “Patent Box” benefit for the three-year period 2015 to 2017). The main
The impact of labour cost on sales decreased from 23.5% to 23.1%, by bene-
tax benefits enjoyed by the Group are shown in Note 31 to the consolidated
fiting from greater automation of production.
financial statements.
The Group’s statement of financial position, reclassified based on financial criteria, is illustrated below: (€/000) Non-current assets Short-term assets
1
Short-term liabilities Working capital
2
3
Short-term financial assets
110
119,527
93,802
92,111
79,314
(32,381)
(28,561)
59,730
50,753
-
67
(6,387)
(4,034)
Net invested capital
172,870
140,588
(9,180)
(5,830)
Medium/long-term net financial position
(44,344)
(19,703)
Net financial debt
(53,524)
(25,533)
Shareholders’ equity
119,346
115,055
Sum of Inventories, Trade receivables, Tax receivables and Other current receivables Sum of Trade payables, Tax payables and Other liabilities 3 Difference between short-term assets and short-term liabilities 2
31.12.2017
Provisions for risks and charges, Post-employment benefits, deferred taxes
Short-term net financial position
1
31.12.2018
REPORT ON OPERATIONS
Cash flows for the financial year are summarised in the table below: (€/000)
2018
2017
Opening liquidity
11,533
12,143
Operating cash flow
25,814
22,779
Cash flow from investments
(11,467)
(13,944)
Free cash flow
14,347
8,835
Cash flow from financing activities
21,579
(6,516)
(24,077)
-
(9,956)
(2,929)
1,893
(610)
13,426
11,533
Okida acquisition Foreign exchange differences due to translation Cash flow for the period Closing liquidity
Net financial debt and liquidity shown in the tables above are defined in com-
The Sabaf Group also carried out organic investments of € 11.5 million: the
pliance with the net financial position detailed in Note 22 of the consolidated
main investments in the financial year were aimed at the further automation
financial statements, as required by CONSOB memorandum of 28 July 2006.
of production of light alloy valves and interconnection of production plants with management systems (Industry 4.0). Other investments were made in
At 31 December 2018, working capital stood at € 59.7 million compared with
the production of presses for new burners. Investments in maintenance and
€ 50.8 million at the end of the 2017: its impact on pro-forma turnover (i.e.
replacement, so that production equipment is kept constantly up to date and
considered the contribution of Okida for the entire financial year 2018) was
efficient, are systematic.
38% (33.8% in 2017). The Group’s financial debt is mainly medium to long-term, the most widely
During the financial year, the Group paid out dividends of € 6.1 million and
used form of financing is unsecured loans repayable in 5 years.
purchased treasury shares for € 2.4 million; the net financial debt was € 53.5 million, versus € 25.5 million in 31 December 2017.
In 2018, the Group invested € 24.1 million to acquire 100% of the Turkish company Okida Elektronik; the purposes of this transaction are closely exam-
Shareholders’ equity totalled € 119.3 million at 31 December 2018; the ratio
ined in the next paragraph of this report.
between the net financial debt and the shareholders’ equity was 0.45 versus 0.22 in 2017.
Economic and financial indicators 2018
2017
ROCE (return on capital employed)
9.5%
12.9%
Dividends per share (€)
0.55 4
0.55
Net debt/EBITDA
1.79
0.82
Net debt/equity ratio
45%
22%
Market capitalisation (31/12)/equity ratio
1.44
2.00
+0.2%
+14.7%
Change in turnover
Please refer to the introductory part of the Annual Report for a detailed examination of other key performance indicators.
4
Proposed dividend
111
SABAF . ANNUAL REPORT 2018
THE ACQUISITION OF OKIDA ELEKTRONIK In September 2018, the Group acquired 100% of Okida Elektronik, a leader
and contractors) and Information Technology risks. The main risks are described in detail below as well as the relevant risk management actions that are currently being implemented.
in Turkey in the design, manufacture and sale of electronic control boards,
Performance of the sector
controls, timers, display units and power units for ovens, hoods, vacuum
The Group’s financial position, results and cash flows are affected by several
cleaners, refrigerators and freezers. The acquisition of Okida represents the first step towards the implementation of the 2018-2022 Business Plan, in line with the strategy of expanding the range of products in components for household appliances and the acquisition of e-skills. Okida was consolidated as from 4 September 2018, contributing € 4 million to 2018 consolidated turnover. The company ended the entire 2018 financial year with sales of € 11.1 million.
RISK FACTORS The results of the risk identification and assessment process carried out in 2018 showed that the Sabaf Group is exposed to certain risk factors, which can be traced back to the macro-categories described below.
factors related to the performance of the sector, including: • General macro-economic performance: the household appliance market is affected by macro-economic factors such as: gross domestic product, consumer and business confidence, interest rate trend, the cost of raw materials, the unemployment rate and the ease of access to credit. • Concentration of the end markets: as a result of mergers and acquisitions, customers have acquired bargaining power. • Stagnation of demand in mature markets (i.e. Europe) in favour of growth in emerging Countries, characterised by different sales conditions and a more unstable macro-economic environment. • Increasing competition, which in some cases imposes aggressive pricing policies. To cope with this situation, the Group aims to retain and reinforce its leader-
Risks of external context Risks deriving from the external context in which Sabaf operates, which could have a negative impact on the economic and financial sustainability of the business in the medium/long-term. The most significant risks in this category are related to general economic conditions, trend in demand and product competition, in addition to the risks related to Sabaf’s presence in Turkey and, more generally, to instability in the emerging countries in which the Group operates.
ship position wherever possible through: • development of new products characterised by superior performance compared with market standards, and tailored to the needs of the customer; • diversification of commercial investments in growing and emerging markets with local commercial and productive investments; • the maintenance of high quality and safety standards, which make it possible to differentiate the product through the use of resources and implementation of production processes that are not easily sustainable by competitors;
Strategic risks Strategic risks that could negatively impact Sabaf’s short to medium term performance, including, for example: the loss of business opportunities in the Chinese market, risks related to the growth through acquisitions and the protection of product exclusivity.
Legal and compliance risks Risks related to Sabaf’s contractual liabilities and compliance with the regulations applicable to the Group, including: Legislative Decree 231/2001, Law 262/2005, HSE regulations, regulations applicable to listed companies, tax regulations, labour regulations, international trade regulations and intellectual property regulations.
Operational risks Risks of suffering losses due to inadequate or malfunctioning processes, human resources and information systems. This category includes financial risks (e.g. losses deriving from the volatility of the price of raw materials used by the Group in its production processes, from fluctuations in exchange rates or from the management of trade receivables), risks related to production processes (e.g. product liability), organisational risks (e.g. loss of key staff and expertise and the difficulty of replacing them, resistance to change by the organisation), risks related to purchases (e.g. relations with suppliers 112
• strengthening of business relations with the main players in the sector; • adoption of a diversification strategy and entry into new segments / business sectors. Instability of Emerging countries in which the Group operates Turkey represents the main production hub of household appliances at the European level; over the years, local industry attracted heavy foreign investments and favoured the growth of important manufacturers. In this context, the Sabaf Group created a production plant in Turkey in 2012 that realises today 10% of total production. In 2018, the Group also acquired 100% of Okida Elektronik, a leader in Turkey in the design, manufacture and sale of electronic control boards for household appliances. With the acquisition of Okida, Turkey represents approximately 15% of the Group’s production and more than 25% of its total sales. The social and political tensions in Turkey over the last few years had no effect on the activities of the Sabaf Group, which continued normally. In consideration of the strategic importance of this Country, the management assessed the risks that could arise from any difficulties/impossibilities of operating in Turkey and envisaged actions to mitigate this risk. More generally, the Group is exposed to risks related to (political, economic, tax, regulatory) instability in some emerging countries where it produces or sells. Any embargoes or major political or economic instability, or changes in the regulatory and/or local law systems, or new tariffs or taxes imposed could negatively affect a portion of Group turnover and the related profitability.
REPORT ON OPERATIONS
Sabaf has taken the following measures to mitigate the above risk factors: • diversifying investments at international level, setting different strategic priorities that, in addition to business opportunities, also consider the dif-
• incorrect assessment of the target companies / incorrect assessment of risks and opportunities for a possible acquisition; • delays or difficulties in integration.
ferent associated risk profiles; • monitoring of the economic and social performance of the target countries, also through a local network of agents and collaborators; • timely assessment of (potential) impacts of any business interruption on the markets of Emerging countries; • adoption of contractual sales conditions that protect the Group (e.g.: advance payments and payments through letters of credit from major banks). Product competition
The Group adopted solutions and instruments to mitigate the above risks, such as: • definition of guidelines / requirements necessary for the identification of target companies; • creation of an internal work team, dedicated to the identification and evaluation of potential targets; • development of guidelines, processes and tools to support the assessment of M&As and subsequent integration activities.
The Sabaf Group’s business model focuses on the production of gas cooking components (valves and burners); therefore, there is the risk of not correctly assessing the threats and opportunities deriving from the competition of al-
Protection of product exclusivity
ternative products (alternative solutions to gas cooking, such as induction),
Sabaf’s business model based the protection of product exclusivity mainly
with the consequence of not adequately making use of any market opportunities and/or suffering from negative impacts on margins and turnover. In recent years, the Group has launched a number of projects aimed at analysing the opportunities and threats related to competition of products other than gas cooking, including: • analysing the possibilities for expansion in the induction hob market, with a focus on technical and commercial feasibility analyses; • development of new gas cooking components able to satisfy the needs that lead some consumers (especially Western consumers) to prefer induction (aesthetic factors, practicality and ease of cleaning, technological integration with electronic components);
on design capacity and the internal production of special machines used in manufacturing processes, thanks to its unique know-how that competitors would find difficult to replicate. There is a risk that some Group products, although patented, will be copied by competitors. Exposure to this risk increased as a result of the opening up of trade in countries where it is difficult to enforce industrial patent rights. Sabaf developed and maintained a structured model to manage innovation and protect intellectual property. Moreover, the Group periodically monitors the patent strategies adopted/to be adopted based on the assessments of cost/opportunity.
• evaluation of M&A operations, also in sectors adjacent to the traditional Sabaf sector. Loss of business opportunities in the Chinese market With a production of over 20 million hobs per year, China is one of the world’s most important markets. After many years of commercial presence only, in 2015 Sabaf started the on-site production of a special burner for the Chinese market. However, there is a risk that Sabaf’s investments in the opening of its Chinese headquarters and the start of production will not generate - at least in the short/medium term - an adequate economic return. To support the development of the Group’s Chinese subsidiary and ensure the economic return on the investments made, Sabaf is carrying out the following actions: • developing a strategic/operational plan suitable for using growth opportunities offered by the local market; • continuing to develop product lines in accordance with the needs of the Chinese market and in compliance with local regulations; • adopting and maintaining a quality-price mix in line with the expectations of potential local customers.
Financial risks The Sabaf Group is exposed to a series of financial risks, due to: • Commodity price volatility: Sabaf uses metals and alloys in its production processes, the prices of which are generally negotiated semi-annually or annually; as a result, Group companies may not be able to immediately pass on to customers changes in the prices of commodities that occur during the year, which has an impact on profitability. • Exchange rate fluctuation: the Group carries out transactions primarily in euro; however, transactions also take place in other currencies, such as the U.S. dollar, the Brazilian real, the Turkish lira and the Chinese renminbi. in particular, since turnover in US dollars accounted for about 16% of consolidated turnover, the possible depreciation against the euro and the real could lead to a loss in competitiveness on the markets in which sales are made in that currency (mainly South and North America). • Trade receivable: the high concentration of turnover on a small number of customers generates a concentration of the respective trade receivables, with a resulting increase in the negative impact on economic and financial results in the event of insolvency of any one of them. In particular, given the structural difficulties of the household appliance sector in mature markets, it is possible that situations of financial difficulty and insolvency among
Growth through acquisitions
customers could arise.
The strategic plan developed by the Group’s management includes the pos-
For more information on financial risks and the related management meth-
sibility of growth through acquisitions, also in related sectors. This strategic
ods, see Note 35 of the consolidated financial statements as regards disclo-
choice involves specific risk profiles for Sabaf, due to:
sure for the purposes of IFRS 7. 113
SABAF . ANNUAL REPORT 2018
RESEARCH AND DEVELOPMENT
PERSONNEL
The most important research and development projects carried out in 2018
In 2018, the Sabaf Group suffered no on-the-job deaths or serious accidents
were as follows:
that led to serious or very serious injuries to staff for which the Group was
Gas parts • various models of customised burners are being developed mainly for North America; • innovative technical solutions that make it easier for users to clean burners are being tested;
definitively held responsible, nor was it held responsible for occupational illnesses of employees or former employees or causes of mobbing. For all other information, please refer to the Consolidated disclosure of non-financial information.
• a project is underway to create a multiposition valve.
ENVIRONMENT
Hinges
In 2018 there was no:
• a damping unit fitted in the oven was developed to provide a soft close effect using just one damping unit for the kitchen; • damping unit fitted in the oven was developed that allows to have both a soft close and a soft open effect; • a horizontal axis hinge was developed for covers used in the semi-professional sector; • a hidden cam hinge for oven doors with a damping unit fitted in the oven was developed.
• damage caused to the environment for which the Group was held definitively responsible; • definitive fines or penalties imposed on the Group for environmental crimes or damage. For all other information, please refer to the Consolidated disclosure of non-financial information.
CORPORATE GOVERNANCE
Electronic components
For a complete description of the corporate governance system of the Sabaf
• an advanced IOT electronic control system for hoods was developed;
Group, see the report on corporate governance and on the ownership struc-
• a platform for electronic control with touch interface was created for
ture, available in the Investor Relations section of the company website.
up-market refrigerators and freezers; • an innovative electronic control platform for electric ovens is being developed. The improvement in production processes continued throughout the Group, accompanied by the development and internal production of machinery, tools and presses. Development costs to the tune of € 340,000 were capitalised, as all the conditions set by international accounting standards were met; in other cases, they were charged to the income statement.
INTERNAL CONTROL SYSTEM ON FINANCIAL REPORTING The internal control system on financial reporting is described in detail in the report on corporate governance and on ownership structure. With reference to the “conditions for listing shares of parent companies set up and regulated by the law of states not belonging to the European Union” pursuant to articles 36 and 39 of the Market Regulations, the Company and its subsidiaries have administrative and accounting systems that can provide the public with the accounting situations prepared for drafting the consolidated report of the companies that fall within the scope of this regulation and
CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION
can regularly supply management and the auditors of the Parent Company
Starting from 2017, the Sabaf Group publishes the consolidated disclosure
pendent auditor as well as continuous information on the composition of the
of non-financial information required by Legislative Decree no. 254/2016 in a report separate from this Management Report. The consolidated disclosure of non-financial information provides all the information needed to ensure understanding of the Group’s activities, performance, results and impact, with particular reference to environmental, social and personnel aspects, respect for human rights and the fight against active and passive corruption, which are relevant considering the Group’s activities and characteristics.
with the data necessary for drafting the consolidated financial statements. The Sabaf Group has also set up an effective information flow to the indecorporate bodies of the subsidiaries, together with information on the offices held, and requires the systematic and centralised gathering as well as regular updates of the formal documents relating to the articles of association and granting of powers to corporate bodies. The conditions exist as required by article 36, letters a), b) and c) of the Market Regulations issued by CONSOB. During the year, the Group acquired Okida Elektronik, a company based in Turkey, and is fully integrating its financial reporting system.
The consolidated disclosure of non-financial information is included in the same file in which the management report, the consolidated financial statements, the separate financial statements of the parent company Sabaf S.p.A. and the remuneration report are published. It should be noted that since 2005, the Sabaf Group has drawn up an Annual Report on its economic, social and environmental sustainability performance.
114
MODEL 231 The Organisation, Management and Control Model, adopted pursuant to Legislative Decree 231/2001, is described in the report on company governance and on the ownership structure, which should be reviewed for reference.
REPORT ON OPERATIONS
PERSONAL DATA PROTECTION During 2018, Sabaf S.p.A. updated its personal data management and pro-
INTRA-GROUP TRANSACTIONS AND RELATED-PARTY TRANSACTIONS
tection system, adopting an Organisational Model consistent with the provi-
The relationships between the Group companies, including those with the
sions of European Regulation 2016/679 (General Data Protection Regulation
parent company, are regulated under market conditions, as well as the re-
- GDPR). Specific projects are being implemented for all Group companies for
lationships with related parties, defined in accordance with the accounting
which the GDPR is applicable.
standard IAS 24. The details of the intra-group transactions and other relat-
DERIVATIVE FINANCIAL INSTRUMENTS
ed-party transactions are given in Note 36 of the consolidated financial statements and in Note 37 of the separate financial statements of Sabaf S.p.A.
For the comments on this item, please see Note 35 of the consolidated financial statements.
ATYPICAL OR UNUSUAL TRANSACTIONS Sabaf Group companies did not execute any unusual or atypical transactions in 2018.
SIGNIFICANT EVENTS AFTER YEAR-END AND BUSINESS OUTLOOK The start of 2019 shows signs of a slowdown in demand in some of the main markets in which the Group operates, including Turkey. For 2019 the Group estimates that it will be able to achieve sales ranging
SECONDARY OFFICES Neither Sabaf S.p.A. nor its subsidiaries have secondary operating offices.
from € 160 to € 165 million and a gross operating profit (EBITDA %) of more than 20%.
MANAGEMENT AND COORDINATION
These forecasts assume a macroeconomic scenario not affected by unpre-
Sabaf S.p.A. is not subject to management and coordination by other companies.
figures might diverge from forecasts.
dictable events. If the economic situation were to change significantly, actual
Sabaf S.p.A. exercises management and coordination activities over its Italian subsidiaries, Faringosi Hinges s.r.l., Sabaf Immobiliare s.r.l. and A.R.C. s.r.l.
BUSINESS AND FINANCIAL SITUATION OF SABAF S.P.A. 2018
2017
CHANGE
% CHANGE
Sales revenue
110,065
115,687
(5,622)
-4.9%
EBITDA
13,644
17,477
(3,833)
-21.9%
EBIT
5,543
8,050
(2,507)
-31.1%
Pre-tax profit (EBT)
9,227
9,072
155
+1.7%
Net Profit
8,040
8,001
39
+0.5%
(€/000)
The reclassification based on financial criteria is illustrated below: 31.12.2018
31.12.2017
96,495
89,361
5,367
1,848
64,927
58,875
(25,626)
(23,643)
Working capital 8
39,301
35,232
Provisions for risks and charges, Post-employment benefits, deferred taxes
(3,278)
(2,637)
Net invested capital
138,885
123,804
Short-term net financial position
(12,056)
(15,239)
Medium/long-term net financial position
(33,789)
(16,478)
Net financial position
(45,845)
(31,717)
Shareholders’ equity
92,040
92,087
(€/000) Non-current assets 5 Non-current financial assets Short-term assets
6
Short-term liabilities
5 6 7 8
7
Excluding Financial assets Sum of Inventories, Trade receivables, Tax receivables and Other current receivables Sum of Trade payables, Tax payables and Other liabilities Difference between short-term assets and short-term liabilities
115
SABAF . ANNUAL REPORT 2018
Cash flows for the financial year are summarised in the table below:
(€/000)
2018
2017
Operating cash flow
2,697
1,797
Cash flow from investments
8,796
12,554
Free cash flow
(15,219)
(9,319)
Free cash flow
(6,423)
3,235
Cash flow from financing activities
5,685
(2,335)
Cash flow for the period
(738)
900
Closing liquidity
1,959
2,697
Net financial debt and the net short-term financial position shown in the ta-
The actual tax burden related to 2018 was 12.9% (11.8% in 2017).
bles above are defined in compliance with the net financial position detailed
Net profit was € 8 million euro, or 7.3% of turnover (substantially unchanged
in Note 22 of the separate financial statements, as required by the CONSOB
from 2017, when it represented 6.9% of turnover).
memorandum of 28 July 2006. In 2018, Sabaf S.p.A. invested over € 8 million in plant and equipment. The The 2018 financial year ended with a decrease in turnover of 4.9% compared
main investments in the financial year were aimed at increasing the produc-
with 2017. The sales analysis by product category shows a marked decrease
tion capacity of special burners, at the further automation of production of
in more mature products (brass valves and thermostats), while more inno-
light alloy valves and interconnecting production plants with management
vative product families (light alloy valves and special burners) show an im-
systems (Industry 4.0). Other investments were made in the production of
proved performance. The decrease in sales had a negative impact on gross
presses for new burners. Investments in maintenance and replacement, so
operating profitability: EBITDA was € 13.6 million, or 12.4% of turnover (€ 17.5
that production equipment is kept constantly up to date and efficient, are
million in 2017, or 15.1%).
systematic.
EBIT of 2018 was € 5.5 million, or 5% of turnover (€ 8.1 million in 2017, or 7%).
At 31 December 2018, working capital stood at € 39.3 million compared with € 35.2 million at the end of the previous year: its percentage impact on turn-
The impact of the labour costs on sales increased from 24.8% to 25.8%.
over stood at 35.7% from 30.5% at the end of 2017.
Net finance expense as a percentage of turnover was minimal, at 0.8%, given the low level of financial debt and the low interest rates.
The net financial debt was € 45.8 million, compared with € 31.7 million on 31 December 2017.
During 2018, the Company received dividends of € 3 million from the subsidiary Sabaf Immobiliare and € 1.3 million from the new investee Okida Elek-
At the end of the year, the shareholders’ equity amounted to € 92 million,
tronik.
compared with € 92.1 million in 2017. The net financial debt/shareholders’ equity ratio was 49.8%, 34% at the end of 2017.
116
REPORT ON OPERATIONS
RECONCILIATION BETWEEN PARENT COMPANY AND CONSOLIDATED SHAREHOLDERS’ EQUITY AND NET PROFIT FOR THE PERIOD Pursuant to the CONSOB memorandum of 28 July 2006, a reconciliation statement of the result of the 2018 financial year and Group shareholders’ equity at 31 December 2018 with the same values of the parent company Sabaf S.p.A. is given below:
31.12.2018
31.12.2017
Prof it for the year
Shareholders’ equity
Prof it for the year
Shareholders’ equity
Profit and shareholders’ equity of parent company Sabaf S.p.A.
8,040
92,039
8,001
92,087
Equity and consolidated company results
15,324
113,123
7,971
74,144
640
(83,622)
682
(48,596)
55
(1,818)
(241)
(1,763)
(8,005)
(427)
(1,497)
(817)
Other adjustments
(256)
51
0
0
Minority interests
(184)
(1,644)
(81)
(1,460)
15,614
117,702
14,835
113,595
Description
9
Elimination of the carrying value of consolidated equity investments Put option on A.R.C. minorities Intercompany eliminations
Profit and shareholders’ equity attributable to the Group
USE OF THE LONGER TIME LIMIT FOR CALLING THE SHAREHOLDERS’ MEETING Pursuant to the second paragraph of Article 2364 of the Italian Civil Code, in consideration of the need to consolidate the financial statements of Group companies and to prepare all supporting documentation, the directors intend to use the longer time limits granted to companies required to prepare the consolidated financial statements for calling the ordinary shareholders’ meeting to approve the 2018 financial statements. The Shareholders’ Meeting will be convened on a single date for 7 May 2019.
Proposal for approval of the separate financial statements and proposed dividend While thanking employees, the Board of Statutory Auditors, the independent auditors, and the Supervisory Authorities for their effective collaboration, we ask the shareholders to approve the financial statements for the year ended 31 December 2018, with the proposal to allocate the profit for the year of € 8,040,215 in the following manner: • a dividend of € 0.55 per share to be paid to shareholders as from 29 May 2019 (ex-date 27 May 2019 and record date 28 May 2019). With regard to treasury shares, we invite you to allocate an amount corresponding to the dividend on the shares held in portfolio on the ex-date to the Extraordinary Reserve; • the remainder to the Extraordinary Reserve. Ospitaletto, 26 March 2019 The Board of Directors
9
Figures adjusted to allocate the consolidation difference to the equity of the acquired companies
117
Continuity and specialisation
We do not know the future, but we are preparing to face it by improving skills and increasing knowledge and experience daily. Knowledge allows us to continue production with an ever-increasing specialisation. 118
119
SABAF . ANNUAL REPORT 2018
Consolidated financial statements at 31 December 2018 Group structure and corporate bodies................................................................ 121 Consolidated statement of financial position............................................... 122 Consolidated income statement............................................................................. 123 Consolidated statement of comprehensive income............................... 124 Statement of changes in consolidated shareholders’ equity........... 124 Consolidated cash flow statement......................................................................... 125 Explanatory Notes............................................................................................................... 126 Certification of the Consolidated Financial Statements....................... 155 Independent auditor’s report on the Consolidated Financial Statements at 31 December 2018.................................................... 156
120
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Group structure and Corporate bodies Group structure Parent company:
SABAF S.p.A.
Subsidiaries and equity interest owned by the Group Companies consolidated on a line-by-line basis Faringosi Hinges s.r.l.
100%
Sabaf Immobiliare s.r.l.
Sabaf do Brasil Ltda.
100%
A.R.C. s.r.l.
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki (Sabaf Turkey)
100% 70%
Okida Elektronik Sanayi ve Tickaret A.S 100%
100%
Non-consolidated companies
Sabaf Appliance Components Trading (Kunshan) Co., Ltd. (in liquidation)
100%
Sabaf US Corp.
100%
Sabaf Appliance Components (Kunshan) Co., Ltd.
100%
Handan ARC Burners Co., Ltd.
35.5%
Board of Directors Chairman
Giuseppe Saleri
Director
Alessandro PotestĂ
Vice Chairman*
Nicla Picchi
Director*
Carlo Scarpa
Chief Executive Officer
Pietro Iotti
Director*
Daniela Toscani
Director
Gianluca Beschi
Director*
Stefania Triva
Director
Claudio Bulgarelli
Board of Statutory Auditors Chairman
Alessandra Tronconi
Statutory Auditor
Luisa Anselmi
Statutory Auditor
Mauro Vivenzi
* independent directors
Independent Auditor EY S.p.A.
121
SABAF . ANNUAL REPORT 2018
Consolidated statement of financial position NOTES
31.12.2018
31.12.2017
Property, plant and equipment
1
70,765
73,069
Investment property
2
4,403
5,697
(€/000) ASSETS NON-CURRENT ASSETS
Intangible assets
3
39,054
9,283
Equity investments
4
380
281
Non-current financial assets
10
120
180
Non-current receivables
5
188
196
Deferred tax assets
21
4,617
5,096
119,527
93,802
TOTAL NON-CURRENT ASSETS CURRENT ASSETS Inventories
6
39,179
32,929
Trade receivables
7
46,932
42,263
Tax receivables
8
4,466
3,065
Other current receivables
9
1,534
1,057
Current financial assets
10
3,511
67
Cash and cash equivalents
11
13,426
11,533
109,048
90,914
0
0
228,575
184,716
11,533
11,533
Retained earnings, Other reserves
90,555
87,227
Profit for the year
15,614
14,835
Total equity interest of the Group
117,702
113,595
TOTAL CURRENT ASSETS ASSETS HELD FOR SALE TOTAL ASSETS SHAREHOLDERS’ EQUITY AND LIABILITIES SHAREHOLDERS’ EQUITY Share capital
12
Minority interests TOTAL SHAREHOLDERS’ EQUITY
1,644
1,460
119,346
115,055
NON-CURRENT LIABILITIES Loans
14
42,406
17,760
Other financial liabilities
15
1,938
1,943
Post-employment benefit and retirement reserves
16
2,632
2,845
Provisions for risks and charges
17
725
385
Deferred tax liabilities
21
Total non-current liabilities
3,030
804
50,731
23,737
CURRENT LIABILITIES Loans
14
18,435
17,288
Other financial liabilities
15
7,682
75
Trade payables
18
21,215
19,975
Tax payables
19
3,566
1,095
Other payables
20
7,600
7,491
58,498
45,924
0
0
228,575
184,716
TOTAL CURRENT LIABILITIES LIABILITIES HELD FOR SALE TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 122
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Consolidated income statement NOTES
2018
2017
Revenue
23
150,642
150,223
Other income
24
(€/000) INCOME STATEMENT COMPONENTS OPERATING REVENUE AND INCOME
Total operating revenue and income
3,369
3,361
154,011
153,584
(62,447)
(59,794)
4,603
2,380
OPERATING COSTS Materials
25
Change in inventories Services
26
(31,297)
(30,227)
Payroll costs
27
(34,840)
(35,328)
Other operating costs
28
(1,670)
(1,134)
1,599
1,474
(124,052)
(122,629)
29,959
30,955
(12,728)
(12,826)
28
(12)
(850)
0
16,409
18,117
373
214
Costs for capitalised in-house work TOTAL OPERATING COSTS
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTISATION, CAPITAL GAINS/ LOSSES, AND WRITE-DOWNS/WRITE-BACKS OF NON-CURRENT ASSETS Depreciations and amortisation
1, 2, 3
Capital gains on disposals of non-current assets Value adjustments of non-current assets
2
EBIT Financial income Financial expenses
29
(1,206)
(804)
Exchange rate gains and losses
30
5,384
274
0
3
20,960
17,804
(5,162)
(2,888)
15,798
14,916
184
81
15,614
14,835
Base
1.413 euro
1.323 euro
Diluted
1.413 euro
1.323 euro
Profits and losses from equity investments
PROFIT BEFORE TAXES Income tax
31
PROFIT FOR THE YEAR of which: Minority interests PROFIT ATTRIBUTABLE TO THE GROUP
EARNINGS PER SHARE (EPS)
32
123
SABAF . ANNUAL REPORT 2018
Consolidated statement of comprehensive income (€/000)
2018
2017
PROFIT FOR THE YEAR
15,798
14,916
Total profits/losses that will not be subsequently reclassified under profit (loss) for the year Actuarial post-employment benefit reserve evaluation
32
82
Tax effect
(8)
(20)
24
62
Forex differences due to translation of financial statements in foreign currencies
(3,940)
(4,806)
TOTAL OTHER PROFITS/(LOSSES) NET OF TAXES FOR THE YEAR
(3,916)
(4,744)
TOTAL PROFIT
11,882
10,172
184
81
11,698
10,091
Total profits/losses that will be subsequently reclassified under profit (loss) for the year
of which: Minority interests TOTAL PROFIT ATTRIBUTABLE TO THE GROUP
Statement of changes in consolidated shareholders’ equity (€/000)
Share Share premium capital reserve
At 31 December 2016*
11,533
10,002
Legal reserve
Treasury shares
Translation reserve
Post-employment benefit discounting reserve
Other reserves
Profit for the year
Total Group shareholders' equity
Minority interests
Total shareholders’ equity
2,307
(2,399)
(7,388)
(612)
88,561
8,994
110,998
1,379
112,377
(5,384)
(5,384)
(5,384)
(3,610)
0
0
(2,110)
(2,110)
Allocation of 2016 profit - dividends paid out - carried forward
3,610
Purchase of treasury shares
(2,110)
Total profit at 31 December 2017
At 31 December 2017
11,533
10,002
2,307
(4,509)
(4,806)
62
(12,194)
(550)
14,835
10,091
81
10,172
92,171
14,835
113,595
1,460
115,055
(6,071)
(6,071)
(6,071)
8,764
(8,764)
0
0
Allocation of 2017 profit - 2017 Dividends paid out - Carried forward Purchase of treasury shares
(2,359)
(2,359)
Stock grant plan
(2,359) 321
321
321
Other changes
518
518
518
Total profit at 31 December 2018 At 31 December 2018
11,533
10,002
2,307
(6,868)
(3,940)
24
(16,134)
(526)
101,774
15,614
11,698
184
11,882
15,614
117,702
1,644
119,346
* figures recalculated pursuant to IFRS 3, in order to retrospectively take into account the effects resulting from the fair value measurement of A.R.C’s assets and liabilities, at the acquisition date previously considered provisional.
124
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Consolidated cash flow statement 2018
2017
Cash and cash equivalents at beginning of year
11,533
12,143
Profit for the year
15,798
14,916
12,728
12,826
(â‚Ź/000)
Adjustments for: - Depreciation and amortisation
850
-
- Realised gains/losses
(28)
12
- Valuation of the stock grant plan
321
-
- Net financial income and expenses
833
590
- Income tax
5,162
2,888
Change in post-employment benefit reserve
(241)
(189)
Change in risk provisions
340
(49)
Change in trade receivables
(3,003)
(5,421)
Change in inventories
(4,374)
(1,445)
- Write-downs of non-current assets
556
998
Change in net working capital
(6,821)
(5,868)
Change in other receivables and payables, deferred tax
2,537
1,029
(4,860)
(3,058)
Payment of financial expenses
(1,178)
(532)
Collection of financial income
373
214
25,814
22,779
Change in trade payables
Payment of taxes
Cash flow from operations Investments in non-current assets
(589)
(860)
- tangible
(11,348)
(13,604)
- financial
(99)
0
- intangible
569
520
Cash flow absorbed by investments
(11,467)
(13,944)
Repayment of loans
(19,579)
(16,526)
Raising of loans
52,972
17,751
Short-term financial assets
(3,384)
(247)
Purchase of treasury shares
(2,359)
(2,110)
Payment of dividends
(6,071)
(5,384)
Cash flow absorbed by financing activities
21,579
(6,516)
(24,077)
0
(9,956)
(2,929)
1,893
(610)
Cash and cash equivalents at end of year (Note 10)
13,426
11,533
Current financial debt
22,606
17,363
Non-current financial debt
44,344
19,703
Net financial debt (Note 22)
53,524
25,533
Disposal of non-current assets
Acquisition of Okida Elektronik Foreign exchange differences due to translation Net financial flows for the year
125
SABAF . ANNUAL REPORT 2018
Explanatory Notes Accounting standards STATEMENT OF COMPLIANCE AND BASIS OF PRESENTATION The consolidated financial statements of the Sabaf Group for the financial year 2018 have been prepared in compliance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and endorsed by the European Union. Reference to IFRS also includes all current International Accounting Standards (IAS). The financial statements have been prepared in euro, the current currency in the economies in which the Group mainly operates, rounding amounts to the nearest thousand, and are compared with consolidated financial statements for the previous year, prepared according to the same standards. They consist of the statement of financial position, the income statement, the statement of changes in shareholders’ equity, the cash flow statement and these explanatory notes. The financial statements have been prepared on a historical cost basis except for some revaluations of property, plant and equipment undertaken in previous years, and are considered a going concern. The Group assessed that it is a going concern (as defined by paragraphs 25 and 26 of IAS 1), also due to the strong competitive position, high profitability and solidity of the financial structure.
FINANCIAL STATEMENTS The Group has adopted the following formats: • current and non-current assets and current and non-current liabilities are stated separately in the statement of the financial position; • an income statement that expresses costs using a classification based on the nature of each item; • a comprehensive income statement that expresses revenue and expense items not recognised in profit (loss) for the year as required or permitted by IFRS; • a cash flow statement that presents financial flows originating from operating activity, using the indirect method. Use of these formats permits the most meaningful representation of the Group’s operating results, financial position and cash flows.
SCOPE OF CONSOLIDATION
The only change in the scope of consolidation compared to 31 December 2017 is related to Okida Elektronik, of which the Group acquired control on 4 September 2018. Sabaf U.S. is not consolidated since it is irrelevant for the purposes of the consolidation. Handan A.R.C. Ltd, Chinese company in which the Group holds a 35.5% share, was measured at cost in that at 31 December 2018 operations are still in their embryonic stages, and therefore the company is considered irrelevant for consolidation purposes. The companies in which Sabaf S.p.A. simultaneously possess the following three elements are considered subsidiaries: (a) power over the company; (b) exposure or rights to variable returns resulting from involvement therein; (c) ability to affect the size of these returns by exercising power. If these subsidiaries exercise a significant influence, they are consolidated as from the date in which control begins until the date in which control ends so as to provide a correct representation of the Group’s operating results, financial position and cash flows.
CONSOLIDATION CRITERIA The data used for consolidation have been taken from the income statements and statements of financial position prepared by the directors of the individual subsidiary companies. These figures have been appropriately amended and restated, when necessary, to align them with international accounting standards and with uniform group-wide classification criteria. The criteria applied for consolidation are as follows: a) Assets and liabilities, income and costs in the financial statements consolidated on a 100% line-by-line basis are incorporated into the Group financial statements, regardless of the entity of the equity interest concerned. In addition, the carrying value of equity interests is eliminated against the shareholders’ equity relating to investee companies. b) Positive differences arising from elimination of equity investments against the carrying value of shareholders’ equity at the date of first-time consolidation are attributed to the higher values of assets and liabilities when pos-
The scope of consolidation at 31 December 2018 comprises the parent com-
sible and, for the remainder, to goodwill. In accordance with the provisions
pany Sabaf S.p.A. and the following companies controlled by Sabaf S.p.A.:
of IFRS 3, the Group has changed the accounting treatment of goodwill on
• Faringosi Hinges s.r.l.
a prospective basis as from the transition date. Therefore, since 1 Janu-
• Sabaf Immobiliare s.r.l.
ary 2004, the Group has not amortised goodwill and instead subjects it to
• Sabaf do Brasil Ltda.
impairment testing.
• Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki (Sabaf Turkey) • Sabaf Appliance Components Trading (Kunshan) Co., Ltd. • Sabaf Appliance Components (Kunshan) Co., Ltd. • A.R.C. s.r.l. • Okida Elektronik Sanayi ve Tickaret A.S
c) Payable/receivable and cost/revenue items between consolidated companies and profits/losses arising from intercompany transactions are eliminated. d) The portion of shareholders’ equity and net profit for the period pertaining to minority shareholders is posted in specific items of the balance sheet and income statement.
126
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
INFORMATION RELATED TO IFRS 3 Starting from these financial statements, Okida Elektronik, company active in the design and production of electronic components for household appliances, of which the Group acquired 100% control on 4 September 2018, was consolidated 1. The Report on Operations describes the purpose of the transaction and the expected synergies.In these consolidated financial statements, the temporary evaluation of Okida in accordance with IFRS 3 revised, namely recognising the fair value of assets, liabilities and contingent liabilities at the acquisition date, was carried out. The final evaluation will be carried out within 12 months from the acquisition date. The effects of this operation are shown in the following table 2: Original values at 04.09.2018
Purchase Price Allocation
Fair value of assets and liabilities acquired
ASSETS Property, plant, and equipment
146
Intangible assets
409
146 8,638
9,047
6,805
- Customer Relationship
891
- Know How
942
- Brand Inventories
1,876
1,876
Trade receivables
1,666
1,666
Other receivables
236
236
Cash and cash equivalents
4,680
4,680
Total assets
9,013
17,651
LIABILITIES Provisions for risks and charges
0
(269)
(269)
Deferred tax liabilities
0
(1,753)
(1,753)
Trade payables
(684)
(684)
Other payables
(814)
(814)
Total liabilities
(1,498)
(3,520)
7,515
14,131
Fair value of net assets acquired (a) Total cost of acquisition (b)
28,757
Goodwill deriving from acquisition (b-a)
14,626
Acquired cash and cash equivalents (c)
4,680
Total cash outlay (b-c)
24,077
The acquisition price was determined based on an Enterprise Value of 4x
As shown in the table, the Purchase Price Allocation, carried out with the
EBITDA 2017 plus 1.05x EBITDA 2018, adjusted for the net financial position
support of independent experts, led to the identification and measurement of
at the date of the transaction and for the difference between working cap-
the fair values of the following acquired intangible assets:
ital at the date of the transaction and average working capital. The parties agreed that the payment of part of the price will be postponed and in any case payable by the first quarter of 2019. At 31 December 2018, Other financial liabilities included a residual liability of € 7.622 million owed to former Okida shareholders, which represents the residual portion of the price payable to sellers (Note 15). The acquisition was entirely financed by bank loans with a duration of 72 months.
- Customer Relationship: fair value of € 6.805 million determined using the “Multi-period Excess Earnings” method, taking the following parameters as reference: • revenue relating to customers with whom there is a strong technical and commercial relationship • profitability in line with the historical average • economic useful life of 15 years • discount rate of 10.85% • growth rate g of 2% from 2019 to 2021 and of 2.5% for the following years
1 2
Financial data at 31 December 2018 and economic results for the period for which the Group held control (4 September - 31 September 2018) were consolidated Values originally expressed in Turkish lira and converted in this table at the Euro/Turkish lira exchange rate on the acquisition date (7.7188). In the consolidated balance sheet as at 31 December 2018, the values, including goodwill, are converted at the year-end exchange rate (6.0588)
127
SABAF . ANNUAL REPORT 2018
- Know How, fair value of € 0.891 million determined using the “Relief from
In order to assess the extent of the change in the scope of consolidation in the
Royalty” method, taking the following parameters as reference:
consolidated statement of financial position at 31 December 2018, the following
• total revenue at the valuation date
table summarises the balance sheet balances at the same date of Okida Elektron-
• royalty rate equal to 3%
ik, including the effects of the Purchase Price Allocation described above.
• economic useful life of 7 years
31.12.2018
• discount rate of 10.3%
ASSETS
• growth rate g of 2% from 2019 to 2021 and of 2.5% for the following years
Property, plant and equipment
- Brand, fair value of € 0.942 million determined using the “Relief from Royalty” method, taking the following parameters as reference: • total revenue at the valuation date • royalty rate equal to 2% • economic useful life of 15 years • discount rate of 10.3%
189
Intangible assets
29,901
Inventories
2,609
Trade receivables
3,399
Tax receivables
676
Other receivables
244
Cash and cash equivalents
• growth rate g of 2% from 2019 to 2021 and of 2.5% for the following years
1,214
Total assets
The related tax effect was recognised on the fair value of the intangible assets
38,232
LIABILITIES AND SHAREHOLDERS’ EQUITY
identified above (recognition of deferred taxes of € 1.753 million).
Shareholders’ equity
The Purchase Price Allocation also led to the recognition of provisions for risks
32,649
Provisions for risks and charges
and charges totalling € 0.269 million (Note 17). In the period for which the Group held control (4 September 2018 - 31 December 2018), Okida achieved sales revenue of € 4.024 million and a net profit of € 0.371 million.
273
Deferred tax liabilities
2,174
Trade payables
1,570
Tax payables
1,380
Other payables
186
Total liabilities
38,232
CONVERSION INTO EURO OF FOREIGN-CURRENCY INCOME STATEMENTS AND STATEMENTS OF FINANCIAL POSITION Separate financial statements of each company belonging to the Group are
Foreign exchange differences arising from the comparison between opening
prepared in the currency of the country in which that company operates
shareholders’ equity converted at current exchange rates and at historical ex-
(functional currency). For the purposes of the consolidated financial state-
change rates, together with the difference between the net result expressed
ments, the financial statement of each foreign entity is expressed in euro,
at average and current exchange rates, are allocated to “Other Reserves” in
which is the Group’s functional currency and the reporting currency for the
shareholders’ equity.
consolidated financial statements.
The exchange rates used for conversion into euro of the financial statements
Balance sheet items in accounts expressed in currencies other than euro are
of the foreign subsidiaries, prepared in local currency, are shown in the fol-
converted by applying current end-of-year exchange rates. Income statement
lowing table:
items are converted at average exchange rates for the year. EXCHANGE RATE IN EFFECT AT 31.12.18
AVERAGE EXCHANGE RATE 2018
Brazilian real
4.4440
Turkish lira
6.0588
Chinese renminbi
7.8751
Description of currency
EXCHANGE RATE IN EFFECT AT 31.12.17
AVERAGE EXCHANGE RATE 2017
4.3085
3.9729
3.6048
5.7145
4.5464
4.1207
7.8038
7.8044
7.6289
RECONCILIATION BETWEEN PARENT COMPANY AND CONSOLIDATED SHAREHOLDERS’ EQUITY AND NET PROFIT FOR THE YEAR 31.12.2018
31.12.2017
Profit for the year
Shareholders’ equity
Profit for the year
Shareholders’ equity
Profit and shareholders’ equity of parent company Sabaf S.p.A.
8,040
92,039
8,001
92,087
Equity and consolidated company results3
15,324
113,123
7,971
74,144
640
(83,622)
682
(48,596)
55
(1,818)
(241)
(1,763)
(8,005)
(427)
(1,497)
(817)
Description
Elimination of consolidated equity investments’ carrying value Put option on A.R.C. minorities Intercompany eliminations Other adjustments
(256)
51
0
0
Minority interests
(184)
(1,644)
(81)
(1,460)
15,614
117,702
14,835
113,595
Profit and shareholders’ equity attributable to the Group 3
Figures adjusted to allocate the consolidation difference to the equity of the acquired companies
128
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
SEGMENT REPORTING
Goodwill
The Group’s Operating segments in accordance with IFRS 8 - Operating Segment are identified in the business segments that generate revenue and costs, whose results are periodically reassessed by top management in order to assess performance and decisions regarding resource allocation. The Group operating segments are the following:
Goodwill is the difference between the purchase price and fair value of investee companies’ identifiable assets and liabilities on the date of acquisition. As regards acquisitions completed prior to the date of IFRS adoption, the Sabaf Group has used the option provided by IFRS 1 to refrain from applying IFRS 3 – concerning business combinations – to acquisitions that took place
• gas parts (household and professional)
prior to the transition date. Consequently, goodwill arising in relation to past
• hinges
acquisitions has not been recalculated and has been posted in accordance
• electronic components for household appliances.
with Italian GAAPs, net of amortisation reported up to 31 December 2003 and any losses caused by a permanent value impairment.
ACCOUNTING POLICIES
After the transition date, goodwill – as an intangible asset with an indefinite
The accounting standards and policies applied for the preparation of the consolidated financial statements at 31 December 2018, unchanged versus the previous year, with the exception of the new accounting standards adopted as from 1 January 2018 (IFRS 9 and IFRS 15), are shown below:
useful life – is not amortised but subjected annually to impairment testing to check for value loss, or more frequently if there are signs that the asset may have suffered impairment (impairment test).
Other intangible assets
Property, plant and equipment
As established by IAS 38, other intangible assets acquired or internally pro-
These are recorded at purchase or manufacturing cost. The cost includes directly chargeable ancillary costs. These costs also include revaluations undertaken in the past based on monetary revaluation rules or pursuant to company mergers. Depreciation is calculated according to rates deemed appropriate to spread the carrying value of tangible assets over their useful working life. Estimated useful working life in years, unchanged compared to previous financial years, is as follows:
duced are recognised as assets when it is probable that use of the asset will generate future economic benefits and when asset cost can be measured reliably. If it is considered that these future economic benefits will not be generated, the development costs are written down in the year in which this is ascertained. Such assets are measured at purchase or production cost and - if the assets concerned have a finite useful life - are amortised on a straight-line basis over their estimated useful life. Estimated useful working life, in years, is as follows:
Buildings
33
Light constructions
10
Customer relationship
15
10
Brand
15
Specific plant and machinery
6 – 10
Know-how
7
Equipment
4 – 10
Development costs
General plant
Furniture
8
Electronic equipment
5
Vehicles and other transport means
4–5
Software
10 3-5
Impairment
Ordinary maintenance costs are expensed in the year in which they are in-
At each end of reporting period, the Group reviews the carrying value of its tan-
curred; costs that increase the asset value or useful working life are capital-
gible and intangible assets to determine whether there are signs of impairment
ised and depreciated according to the residual possibility of utilisation of the
losses of these assets. If there is any such indication, the recoverable amount
assets to which they refer.
of said assets is estimated so as to determine the total of the write-down. If it is
Land is not depreciated.
not possible to estimate recoverable amount individually, the Group estimates the recoverable amount of the cash generating unit (CGU) to which the asset
Leased assets
belongs.
Assets acquired via finance lease contracts are accounted for using the fi-
erally coincide with the legal entity to which the capitalised assets refer) is ver-
nancial method and are reported with assets at their purchase value, less depreciation. Depreciation of such assets is reflected in the consolidated annual financial statements applying the same policy followed for Company-owned property, plant and equipment. Set against recognition of such assets, the amounts payable to the financial lessor are posted among shortand medium-/long-term payables. In addition, financial charges pertaining to the period are charged to the income statement.
In particular, the recoverable amount of the cash generating units (which genified by determining the value of use. The recoverable amount is the higher of the net selling price and value of use. In measuring the value of use, future cash flows net of taxes, estimated based on past experience, are discounted to their present value using a pre-tax rate that reflects fair market valuations of the present cost of money and specific asset risk. The main assumptions used for calculating the value of use concern the discount rate, growth rate, expected changes in selling prices and cost trends during the period used for the calculation. The growth rates adopted are based on future market expectations in the relevant sector. Changes in the sales prices are based on past experience and on the expected future changes in the market. The Group prepares oper129
SABAF . ANNUAL REPORT 2018
ating cash flow forecasts based on the most recent budgets approved by the
the basis of subsequent measurement methods, i.e. at amortised cost, at fair
Board of Directors of the consolidated companies, draws up the forecasts for
value recognised in other comprehensive income (OCI) and at fair value rec-
the coming years and determines the terminal value (current value of perpetual
ognised in the income statement.
income), which expresses the medium and long term operating flows in the
The classification of financial assets at initial recognition depends on the char-
specific sector.
acteristics of the contractual cash flows of the financial assets and on the busi-
If the recoverable amount of an asset (or CGU) is estimated to be lower than
ness model that the Group uses to manage them.
its carrying value, the asset’s carrying value is reduced to the lower recoverable
Trade receivables that do not contain a significant financing component are
amount, recognising impairment in the income statement.
valued at the transaction price determined in accordance with IFRS 15. See the
When there is no longer any reason for a write-down to be maintained, the car-
“Revenue from Contracts with Customers” paragraph.
rying value of the asset (or of the cash-generating unit) - with the exception of
Other financial assets are recorded at fair value plus, in the case of a financial
goodwill - is increased to the new value resulting from the estimate of its recov-
asset not at fair value recognised in the income statement, transaction costs.
erable amount, but not beyond the net carrying value that the asset would have
For a financial asset to be classified and measured at amortised cost or at fair
had if it had not been written down for impairment. Reversal of impairment loss
value recognised in OCI, it must generate cash flows that depend solely on the
is recognised in the income statement.
principal and interest on the amount of principal to be repaid (known as ‘solely payments of principal and interest (SPPI)’). This measurement is referred to as
Investment property
the SPPI test and is carried out at the instrument level.
As allowed by IAS 40, non-operating buildings and constructions are assessed
Subsequent measurement
at cost net of depreciation and losses due to cumulative impairment. The depreciation criterion applied is the asset’s estimated useful life, which is considered to be 33 years. If the recoverable amount of the investment property – determined based on the market value of the properties – is estimated to be lower than its carrying value, the asset’s carrying value is reduced to the lower recoverable amount, recognising impairment in the income statement. When there is no longer any reason for a write-down to be maintained, the carrying value of the asset (or CGU) is increased to the new value stemming from the estimate of its recoverable amount – but not beyond the net carrying value that the asset would have had if it had not been written down for impairment. Reversal of impairment loss is recognised in the income statement.
Equity investments and non-current receivables Equity investments not classified as held for sale are stated in the accounts at cost, reduced for impairment. The original value is written back in subsequent years if the reasons for write-down cease to exist. Non-current receivables are stated at their presumed realisable value.
The measurement of financial liabilities depends on their classification, as described below. Financial assets at amortised cost (debt instruments) This category is the most important for the Group. The Group measures the financial assets at amortised cost if both of the following requirements are met: • the financial asset is held as part of a business model whose objective is to hold financial assets for the purpose of collecting contractual cash flows and • the contractual terms of the financial asset envisage, at certain dates, cash flows represented solely by payments of principal and interest on the amount of principal to be repaid Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the income statement when the asset is derecognised, modified or revalued. Financial assets at amortised cost of the Group include trade receivables. Financial assets at fair value through profit or loss This category includes all assets held for trading, assets designated at ini-
Inventories Inventories are measured at the lower of purchase or production cost – determined using the weighted average cost method – and the corresponding fair value represented by the replacement cost for purchased materials and by the presumed realisable value for finished and semi-processed products – calculated taking into account any manufacturing costs and direct selling costs yet to be incurred. Inventory cost includes accessory costs and the portion of direct and indirect manufacturing costs that can reasonably be assigned to inventory items. Inventories subject to obsolescence and low turnover are written down in relation to their possibility of use or realisation. Inventory write-downs are eliminated in subsequent years if the reasons for such write-downs cease to exist.
Trade receivables and other financial assets Initial recognition Upon initial recognition, financial assets are classified, as the case may be, on 130
tial recognition as financial assets measured at fair value with changes recognised in the income statement, or financial assets that must be measured at fair value. Assets held for trading are all those assets acquired for sale or repurchase in the short term. Derivatives, separated or otherwise, are classified as financial instruments held for trading, unless they are designated as effective hedging instruments. Financial assets with cash flows that are not represented solely by principal and interest payments are classified and measured at fair value through profit or loss, regardless of the business model. Financial instruments at fair value with changes recognised in the income statement are recognised in the statement of financial position at fair value and net changes in fair value are recognised in the income statement. This category includes derivative instruments. The Group does not hold financial assets at fair value through profit or loss with reclassification of cumulative gains and losses or financial assets at fair value through profit or loss without reversal of cumulative gains and losses upon derecognition.
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Derecognition A financial asset (or, if applicable, part of a financial asset or part of a group of similar financial assets) is firstly written off (e.g. removed from the statement of financial position of the Group) when: • the rights to receive cash flows from the asset are extinguished, or • the Group transferred to a third party the right to receive financial flows from the asset or has taken on the contractual obligation to pay them fully and without delay and (a) transferred substantially all the risks and benefits of the ownership of the financial asset or (b) did not substantially transfer or retain all the risks and benefits of the asset, but transferred their control. If the Group has transferred the rights to receive financial flows from an asset or has signed an agreement on the basis of which it retains the contractual rights to receive the cash flows of the financial asset, but assumes a contractual obligation to pay the financial flows to one or more beneficiaries (pass-through), it considers whether or to what extent it has retained the risks and benefits concerning the ownership. If it has not substantially transferred or retained all the risks and benefits or has not lost control over it, the asset continued to be recognised in the financial statements of the Group to the extent of its residual involvement in the asset itself. In this case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured in such a way as to reflect the rights and obligations that pertain to the Group. When the residual involvement of the entity is a guarantee in the transferred asset, the involvement is measured based on the amount of the asset or the maximum amount of the consideration received that the entity could be obliged to pay, whichever lower.
Provisions for risks and charges Provisions for risks and charges are provisioned to cover losses and debts, the existence of which is certain or probable, but whose amount or date of occurrence cannot be determined at the end of the year. Provisions are stated in the statement of financial position only when a legal or implicit obligation exists that determines the use of resources with an impact on profit and loss to meet that obligation and the amount can be reliably estimated. If the effect is significant, the provisions are calculated by updating future financial flows estimated at a rate including taxes such as to reflect current market valuations of the current value of the cash and specific risks associated with the liability.
Post-employment benefit reserve
Trade payables and other financial liabilities Initial recognition All financial liabilities are initially recognised at fair value, in addition to directly attributable transaction costs in case of mortgages, loans and payables. The Company’s financial liabilities include trade payables and other payables, mortgages and loans, including current account overdrafts and derivative financial instruments. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below. Financial liabilities at fair value recognised in the income statement Financial liabilities at fair value with changes recognised in the income statement include liabilities held for trading and financial liabilities initially recognised at fair value, with changes recognised in the income statement. Liabilities held for trading are those liabilities acquired in order to discharge or transfer them in the short term. This category also includes derivative financial instruments subscribed by the Company and not designated as hedging instruments in a hedging relationship pursuant to IFRS 9. Embedded derivatives, separated from the main contract, are classified as financial instruments held for trading, unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the income statement. Financial liabilities are designated at fair value with changes recognised in the income statement from the date of initial recognition, only if the criteria of IFRS 9 are met. Loans and payables This is the most important category for the Company and includes interest-bearing payables and loans. After initial statement, loans are valued using the amortised cost approach, applying the effective interest rate method. Gains and losses are recognised in the income statement when the liability is discharged, as well as through the amortisation process. Amortised cost is calculated by recognising the discount or premium on the acquisition and the fees or costs that are an integral part of the effective interest rate. Amortisation at the effective interest rate is included in financial expenses in the income statement. Derecognition A financial liability is derecognised when the obligation underlying the liability is discharged, cancelled or fulfilled. If an existing financial liability is replaced
The post-employment benefit reserve (TFR) is provisioned to cover the entire
by another from the same lender, at substantially different conditions, or if
liability accruing vis-à-vis employees in compliance with current legislation
the conditions of an existing liability are substantially changed, this replace-
and with national and supplementary company collective labour contracts.
ment or change is treated as a derecognition of the original liability accom-
This liability is subject to revaluation via application of indices fixed by cur-
panied by the recognition of a new liability, with any differences between the
rent regulations. Up to 31 December 2006, post-employment benefits were
carrying values recognised in the income statement.
considered defined-benefit plans and accounted for in compliance with IAS 19, using the projected unit-credit method. The regulations of this fund were amended by Italian Law no. 296 of 27 December 2006 and subsequent Decrees and Regulations issued during the first months of 2007. In the light of these changes, and, in particular, for companies with at least 50 employees, post-employment benefits must now be considered a defined-benefit plan only for the portions accruing before 1 January 2007 (and not yet paid as at the end of the reporting period). Conversely, portions accruing after that date are treated as defined-contribution plans. Actuarial gains or losses are recorded immediately under “Other total profits/(losses)”.
Policy for conversion of foreign currency items Receivables and payables originally expressed in foreign currencies are converted into euro at the exchange rates in force on the date of the transactions originating them. Forex differences realised upon collection of receivables and payment of payables in foreign currency are posted in the income statement. Income and costs relating to foreign-currency transactions are converted at the rate in force on the transaction date. At year-end, assets and liabilities expressed in foreign currencies, with the ex131
SABAF . ANNUAL REPORT 2018
ception of non-current items, are posted at the spot exchange rate in force at
to 120 days from shipment; the Group believes that the price does not include
the end of the reporting period and related foreign exchange gains and losses
significant financing components.
are posted in the income statement. If conversion generates a net gain, this value constitutes a non-distributable reserve until it is effectively realised.
The guarantees provided for in the contracts with customers are of a general nature and not extended and are accounted for in accordance with IAS 37.
Derivative instruments and hedge accounting The Group’s business is exposed to financial risks relating to changes in ex-
Financial income
change rates, commodity prices and interest rates. The company uses deriva-
Finance income includes interest receivable on funds invested and income
tive instruments (mainly forward contracts on currencies and commodity op-
from financial instruments, when not offset as part of hedging transactions.
tions) to hedge risks stemming from changes in foreign currencies relating to
Interest income is recorded in the income statement at the time of vesting,
irrevocable commitments or to planned future transactions.
taking effective output into consideration.
Derivatives are initially recognised at cost and are then adjusted to fair value on subsequent closing dates. Changes in the fair value of derivatives designated and recognised as effective
Financial expenses
for hedging future cash flows relating to the Group’s contractual commitments
Financial expenses include interest payable on financial debt calculated us-
and planned transactions are recognised directly in shareholders’ equity, while the ineffective portion is immediately posted in the income statement. If the contractual commitments or planned transactions materialise in the recogni-
ing the effective interest method and bank expenses. All the other financial expenses are recognised as costs for the year in which they are incurred.
tion of assets or liabilities, when such assets or liabilities are recognised, the gains or losses on the derivative that were directly recognised in equity are factored back into the initial valuation of the cost of acquisition or carrying value of the asset or liability. For cash flow hedges that do not lead to recognition of assets or liabilities, the amounts that were directly recognised in equity are included in the income statement in the same period when the contractual commitment or planned transaction hedged impacts profit and loss – for example, when a planned sale actually takes place. For effective hedges of exposure to changes in fair value, the item hedged is adjusted for the changes in fair value attributable to the risk hedged and recognised in the income statement. Gains and losses stemming from the derivative’s valuation are also posted in the income statement. Changes in the fair value of derivatives not designated as hedging instruments are recognised in the income statement in the period when they occur. Hedge accounting is discontinued when the hedging instrument expires, is sold or is exercised, or when it no longer qualifies as a hedge. At this time, the cumulative gains or losses of the hedging instrument recognised in equity are kept in the latter until the planned transaction actually takes place. If the transaction hedged is not expected to take place, cumulative gains or losses recognised directly in equity are transferred to the year’s income statement. Embedded derivatives included in other financial instruments or contracts are treated as separate derivatives when their risks and characteristics are not strictly related to those of their host contracts and the latter are not measured
Income taxes for the year Income taxes include all taxes calculated on the Group’s taxable income. Income taxes are directly recognised in the income statement, with the exception of those concerning items directly debited or credited to shareholders’ equity, in which case the tax effect is recognised directly in shareholders’ equity. Other taxes not relating to income, such as property taxes, are included among operating expenses. Deferred taxes are provisioned in accordance with the global liability provisioning method. They are calculated on all temporary differences emerging between the taxable base of an asset and liability and its book value in the consolidated financial statements, with the exception of goodwill that is not tax-deductible and of differences stemming from investments in subsidiaries for which cancellation is not envisaged in the foreseeable future. Deferred tax assets on unused tax losses and tax credits carried forward are recognised to the extent that it is probable that future taxable income will be available against which they can be recovered. Current and deferred tax assets and liabilities are offset when income taxes are levied by the same tax authority and when there is a legal right to settle on a net basis. Deferred tax assets and liabilities are measured using the tax rates that are expected to be applicable, according to the respective regulations of the countries where the Group operates, in the years when temporary differences will be realised or settled.
at fair value with posting of related gains and losses in the income statement.
Dividends Revenue from contracts with customers The Group is engaged in the supply of components for household appliances
Dividends are posted on an accrual basis when the right to receive them materialises, i.e. when shareholders approve dividend distribution.
(mainly gas components, such as valves and burners, hinges and electronic components). Revenue from contracts with customers is recognised when control of the goods is transferred to the customer for an amount that reflects the consideration that the Group expects to receive in exchange for the goods. The control of the goods passes to the customer according to the terms of return defined with the customer. The usual extended payment terms range from 30
132
Treasury shares Treasury shares are booked as a reduction of shareholders’ equity. The carrying value of treasury shares and revenues from any subsequent sales are recognised in the form of changes in shareholders’ equity.
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Equity-settled transactions Some Group employees receive part of the remuneration in the form of sharebased payments, therefore employees provide services in exchange for shares (“equity-settled transactions”). The cost of equity-settled transactions is determined by the fair value at the date on which the assignment is made using an appropriate measurement method, as explained in more detail in Note 37. This cost, together with the corresponding increase in shareholders’ equity, is recorded under personnel costs (Note 27) over the period in which the conditions relating to the achievement of objectives and/or the provision of the service are met. The cumulative costs recognised for such transactions at the end of each reporting period up to the vesting date are commensurate with the expiry of the vesting period and the best estimate of the number of equity instruments that will actually vest. Service or performance conditions are not taken into account when defining the fair value of the plan at the assignment date. However, the probability of these conditions being met is taken into account when defining the best estimate of the number of equity instruments that will vest. Market conditions are reflected in the fair value at the assignment date. Any other condition related to the plan that does not involve a service obligation is not considered to be a vesting condition. Non-vesting conditions are reflected in the fair value of the plan and result in the immediate recognition of the cost of the plan, unless there are also service or performance conditions. No cost is recognised for rights that do not vest in that the performance and/ or service conditions are not met. When the rights include a market condition or a non-vesting condition, these are treated as if they had vested regardless of whether the market conditions or other non-vesting conditions to which they are subject are met or not, it being understood that all other performance and/ or service conditions must be met. If the conditions of the plan are changed, the minimum cost to be recognised is the fair value at the assignment date in the absence of the change in the plan itself, on the assumption that the original conditions of the plan are met. Moreover, a cost is recognised for each change that results in an increase in total fair value of the payment plan, or that is in any case favourable for employees; this cost is measured with reference to the date of change. When a plan is cancelled, any remaining element of the plan’s fair value is immediately expensed to the income statement.
as well as to measure provisions for bad debts, for inventory obsolescence, depreciation and amortisation, asset write-downs, employee benefits, taxes, and other provisions. Specifically: Recoverable amount of tangible and intangible assets The procedure for determining impairment of tangible and intangible assets described in “Impairment” implies – in estimating the value of use – the use of the Business Plans of investees, which are based on a series of assumptions relating to future events and actions of the investees’ management bodies, which may not necessarily come about. In estimating market value, however, assumptions are made on the expected trend in trading between third parties based on historical trends, which may not actually be repeated. Provisions for bad debts Receivables are adjusted by the related bad debt provision to take into account their recoverable amount. To determine the size of the write-downs, management must make subjective assessments based on the documentation and information available regarding, among other things, the customer’s solvency, as well as experience and historical payment trends. Provisions for inventory obsolescence Inventories subject to obsolescence and slow turnover are systematically valued, and written down if their recoverable amount is less than their carrying value. Write-downs are calculated based on management assumptions and estimates, resulting from experience and historical results. Employee benefits The current value of liabilities for employee benefits depends on a series of factors determined using actuarial techniques based on certain assumptions. Assumptions concern the discount rate, estimates of future salary increases, and mortality and resignation rates. Any change in the above-mentioned assumptions might have significant effects on liabilities for pension benefits. Share-based payments Estimating the fair value of share-based payments requires the determination of the most appropriate valuation model, which depends on the terms and conditions under which these instruments are granted. This also requires the identification of data to feed into the valuation model, including assumptions about the exercise period of the options, volatility and dividend yield. The
Earnings per share Basic EPS is calculated by dividing the profit or loss attributable to the direct parent company’s shareholders by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is calculated by dividing the profit or loss attributable to the direct parent company’s shareholders by the weighted average number of shares outstanding, adjusted to take into account the effects of all potential ordinary shares with a dilutive effect.
Group uses a binomial model for the initial measurement of the fair value of share-based payments with employees. Income tax The Group is subject to different bodies of tax legislation on income. Determining liabilities for Group taxes requires the use of management valuations in relation to transactions whose tax implications are not certain at the end of the reporting period. Furthermore, the valuation of deferred taxes is based on income expectations for future years; the valuation of expected income
Use of estimates Preparation of the financial statements and notes in accordance with IFRS requires management to make estimates and assumptions that affect the carrying values of assets and liabilities and the disclosures on contingent assets and liabilities as of the end of the reporting period. Actual results might differ from these estimates. Estimates are used to measure tangible and intangible assets subject to impairment testing, as described earlier,
depends on factors that might change over time and have a significant effect on the valuation of deferred tax assets. Other provisions and reserves When estimating the risk of potential liabilities from disputes, the Directors rely on communications regarding the status of recovery procedures and disputes from the lawyers who represent the Group in litigation. These estimates are determined taking into account the gradual development of the 133
SABAF . ANNUAL REPORT 2018
disputes, considering existing exemptions.
to the income from participating in the production of presses and equipment,
Estimates and assumptions are regularly reviewed and the effects of each
in line with previous years, the Group will continue to allocate these revenues
change immediately reflected in the income statement.
over the useful life of the projects, which is generally 10 years.
New accounting standards Accounting standards, amendments and interpretations applicable from 1 January 2018 Standard IFRS 9 – FINANCIAL INSTRUMENTS. In July 2014, the IAS issued its final IFRS 9 replacing IAS 39 and all previous versions of IFRS 9. The standard was approved by the European Union in November 2016 and is effective for financial years beginning on or after 1 January 2018. IFRS 9 brings together all aspects relating to the recognition of financial instruments: Classification and Measurement, Impairment and Hedge Accounting. The adoption of IFRS 9 did not have a significant impact on the Group’s financial statements and did not entail the need to record adjustments to the consolidated statement of financial position at the date of initial application of the standard. Classification and measurement The Group did not have a significant impact on its financial statements as a result of the application of the classification and measurement requirements envisaged by IFRS 9. Loans, like trade receivables, are held for collection at the contractual due dates and are expected to generate cash flows represented solely by collections of principal and interest. Impairment The Group has not recorded any adjustments to the consolidated statement of financial position at the date of initial application of the standard. In particular, with reference to trade receivables, the Group considered its policy of bad debt provision consistent with the Standard. Hedge accounting The Group does not use hedge accounting for hedging instruments.
Document “ANNUAL IMPROVEMENTS TO IFRSS: 2014-2016 CYCLE”. The provisions issued concern IFRS 1 First-Time Adoption of International Financial Reporting Standards - Deletion of short-term exemptions for first-time adopters, IAS 28 Investments in Associates and Joint Ventures – Measuring investees at fair value through profit or loss: an investment-by-investment choice or a consistent policy choice, IFRS 12 Disclosure of Interests in Other Entities – Clarification of the scope of the Standard. The provisions were approved by the European Union in February 2018 and are applicable in the preparation of the financial statements for financial years beginning on or after 1 January 2018, with reference to the amendments to IAS 28 and IFRS 1, as from 1 January 2017, with reference to the amendments to IFRS 12. The adoption of the provisions by the Group did not entail any changes in accounting policies or retrospective adjustments. IFRIC 22 Interpretation “FOREIGN CURRENCY TRANSACTIONS AND ADVANCE CONSIDERATION”. The interpretation was endorsed by the European Union in March 2018 and is applicable from 1 January 2018. The interpretation aims to provide guidelines for foreign currency transactions if advances or non-cash payments are recognised in the financial statements, prior to the recognition of the related asset, cost or revenue. This document provides guidance on how an entity should determine the date of a transaction, and consequently, the spot exchange rate to be used when foreign currency transactions occur in which the payment is made or received in advance. The adoption of the interpretation by the Group did not entail any changes in accounting policies or retrospective adjustments. Amendment to IAS 40 “TRANSFERS OF INVESTMENT PROPERTY”. These amendments clarify the transfers of a property to, or from, investment property. In particular, an entity must reclassify a property among, or from, investment property only when there is evidence that there was a change in the intended use of the property. This change must refer to a specific event that happened and must not be limited to a change of intention by the Man-
Standard IFRS 15 – REVENUE FROM CONTRACTS WITH CUSTOMERS.
agement of an entity. The interpretation was endorsed by the European Union
In May 2014, the IAS issued IFRS 15, a new revenue recognition standard that
in March 2018 and is applicable from 1 January 2018 The adoption of the
replaces IAS 18 and IAS 11 and was supplemented with further clarifications
amendments by the Group did not entail any changes in accounting policies
and guidance in 2016. The standard is applicable to the preparation of the
or retrospective adjustments.
financial statements for the financial years starting from 1 January 2018 and introduced a new five-stage model that applies to contracts with customers.
Amendment to IFRS 2 “CLASSIFICATION AND MEASUREMENT OF
IFRS 15 requires the recognition of revenue for an amount that reflects the
SHARE-BASED PAYMENT TRANSACTIONS”, which contains some clari-
consideration to which the entity believes it is entitled in exchange for the
fication on the recording of the effects of vesting conditions in the presence
transfer of goods or services to the customer.
of cash-settled share-based payments, on the classification of share-based
The application of the new standard and the relative interpretations has not
payments with net settlement characteristics and on the recording of amend-
had significant effects on the Group’s consolidated financial statements, ei-
ments under the terms and conditions of a share-based payment that change
ther from the point of view of classification or of determining quantities. In
their classification from cash-settled to equity-settled. The interpretation was
particular, the application of IFRS 15 had no impact on contracts with cus-
endorsed by the European Union in February 2018 and is applicable from 1
tomers, in which the sale of Sabaf products is the only obligation (“at a point
January 2018. The adoption of the amendments by the Group did not entail
in time”), since revenues are recognised at the time when control of the activi-
any changes in accounting policies or retrospective adjustments.
ty is transferred to the customer, according to the terms of return defined with the customer. The guarantees provided for in the contracts are of a general nature and not extended and, consequently, the Group believes that they will continue to be accounted for in accordance with IAS 37. Finally, with regard 134
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
IFRS and IFRIC accounting standard, amendments approved by the European Union, not yet universally applicable and not adopted early by the Group at 31 December 2018
contain any new disclosure requirement but emphasises that an entity will
Standard IFRS 16 “LEASES” (published on 13 January 2016), which will
ing in accordance with IAS 1. The new interpretation applies from 1 January
replace standard IAS 17 – Leases, as well as interpretations IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases— Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The new standard provides a new definition of lease and introduces a criterion based on the control (right of use) of an asset in order to distinguish the leasing contracts from the service contracts, identifying the discriminatory ones: the identification of the asset, the right of replacement of the same, the right to obtain substantially all of the economic benefits deriving from the use of the asset and the right to direct the use of the asset underlying the contract. The standard establishes a single model of recognition and measurement of the lease agreements for the lessee which requires the recognition of the asset to be leased (operating lease or otherwise) in assets offset by a financial debt, while also providing the opportunity not to recognise as leases the agreements whose subject matter are “low-value assets” and leases with a contract duration equal to or less than 12 months. By contrast, the Standard does not include significant changes for the lessors. The standard applies beginning on 1 January 2019 but early application is permitted, only for Companies that already applied IFRS 15 Revenue from Contracts with Customers. On the basis of the analyses carried out, the directors expect that the application of IFRS 16 may have a minor impact on the amounts and on the related disclosures in the Group’s consolidated financial statements. However, it is not possible to provide a reasonable estimate of the effects until the Group
have to determine whether it will be necessary to disclose information on management considerations and on the uncertainty relating to tax account2019, but early application is permitted. Amendment to IAS 28 “LONG-TERM INTERESTS IN ASSOCIATES AND JOINT VENTURES” (published on 12 October 2017). This document clarifies the need to apply IFRS 9, including the requirements of impairment, to other long-term interests in associate companies and joint ventures that are not accounted for under the equity method. The amendment applies from 1 January 2019, but early application is permitted. The directors do not expect a significant effect on the Group’s consolidated financial statements through the adoption of these changes. Document “ANNUAL IMPROVEMENTS TO IFRSS 2015-2017 CYCLE”, published on 12 December 2017 (including IFRS 3 Business Combinations and IFRS 11 Joint Arrangements – Remeasurement of previously held interest in a joint operation, IAS 12 Income Taxes – Income tax consequences of payments on financial instruments classified as equity, IAS 23 Borrowing costs Disclosure of Interests in Other Entities – Borrowing costs eligible for capitalisation) which implements changes to some standards as part of the annual process of improving them. The amendments apply from 1 January 2019 but early application is permitted. The directors do not expect a significant effect on the Group’s consolidated financial statements through the adoption of these changes.
has completed a detailed analysis of the related contracts.
Amendment to IAS 19 “PLAN AMENDMENT, CURTAILMENT OR SETTLE-
Amendment to IFRS 9 “PREPAYMENT FEATURES WITH NEGATIVE COM-
change occurs in a defined benefit plan. The amendments will be effective for
PENSATION”. This document specifies the instruments that envisage early repayment that could comply with the “SPPI” test even if the “reasonable additional compensation” to be paid in the event of early repayment is a “negative compensation” for the lender. The interpretation was endorsed by the European Union in March 2018 and is applicable from 1 January 2019 (early application is also permitted). The directors do not expect a significant effect on the Group’s consolidated financial statements through the adoption of these changes.
MENT”. The amendments clarify how pension costs are determined when a the preparation of the financial statements for financial years beginning on or after 1 January 2019, unless they are postponed subsequent to their approval by the European Union. Standard IFRS 17 “INSURANCE CONTRACTS”. A new accounting standard for the recognition of insurance contracts that will replace IFRS 4. The new standard will be effective for the preparation of the financial statements for financial years beginning on or after 1 January 2021, unless they are postponed subsequent to their approval by the European Union.
IFRS accounting standards, amendments and interpretations not yet approved by the European Union On the reference date of these consolidated financial statements the competent bodies of the European Union have not yet concluded the approval process necessary for the adoption of the amendments and principles described below. On 7 June 2017, IASB published the clarification document IFRIC 23 – UNCERTAINTY OVER INCOME TAX TREATMENTS. The document deals with uncertainties about the tax treatment of income taxes. The document requires that uncertainties in determining deferred tax assets and liabilities be reflected in the financial statements only when it is probable that the entity will pay or recover the amount in question. Moreover, the document does not
135
SABAF . ANNUAL REPORT 2018
Comments on significant balance sheet items 1. PROPERTY, PLANT AND EQUIPMENT PROPERTY
PLANT AND EQUIPMENT
OTHER ASSETS
ASSETS UNDER CONSTRUCTION
TOTAL
51,268
185,148
40,303
1,770
278,489
1,589
7,050
2,487
2,782
13,908
-
(1,002)
(538)
-
(1,540)
118
587
192
(1,201)
(304)
COST At 31 December 2016 Increases Disposals Reclassifications Forex differences At 31 December 2017
(914)
(1,900)
(626)
(29)
(3,469)
52,061
189,883
41,818
3,322
287,084
Increases
309
6,120
1,703
3,250
11,382
Disposals
-
(1,644)
(125)
-
(1,769)
Change in the scope of consolidation
-
189
-
-
189
Reclassifications
5
1,647
84
(1,770)
(34)
Forex differences
(868)
(1,840)
(563)
(114)
(3,385)
51,507
194,355
42,917
4,688
293,467
16,976
152,756
35,312
-
205,044
1,459
8,047
2,260
-
11,766
Eliminations for disposals
-
(800)
(479)
-
(1,279)
Reclassifications
5
41
30
-
76
Forex differences
(156)
(1,002)
(434)
-
(1,592)
18,284
159,042
36,689
-
214,015
1,466
7,781
2,125
-
11,372
Eliminations for disposals
-
(1,178)
(92)
-
(1,270)
Reclassifications
4
40
28
-
72
Forex differences
(151)
(956)
(380)
-
(1,487)
19,603
164,729
38,370
-
222,702
At 31 December 2018
31,904
29,626
4,547
4,688
70,765
At 31 December 2017
33,777
30,841
5,129
3,322
73,069
At 31 December 2018
ACCUMULATED DEPRECIATIONS At 31 December 2016 Depreciations for the year
At 31 December 2017 Depreciations for the year
At 31 December 2018
NET CARRYING VALUE
The breakdown of the net carrying value of Property was as follows:
duction of light alloy valves and interconnecting production plants with management systems (Industry 4.0). Other investments were made in the
31.12.2018
31.12.2017
Change
production of presses for new burners. Investments in maintenance and
Land
6,699
6,877
(178)
replacement, so that production equipment is kept constantly up to date
Industrial buildings
25,205
26,900
(1,695)
Total
31,904
33,777
(1,873)
and efficient, are systematic. Decreases mainly relate to the disposal of machinery no longer in use. Assets under construction include machinery under construction and advance
The net carrying value of industrial property includes an amount of
payments to suppliers of capital equipment.
â‚Ź 2,040,000 (â‚Ź 2,125,000 at 31 December 2017) relating to industrial build-
At 31 December 2018, the Group found no endogenous or exogenous indi-
ings held under finance leases.
cators of impairment of its property, plant and equipment. As a result, the
The main investments in the financial year were aimed at increasing the
value of property, plant and equipment was not submitted to impairment
production capacity of special burners, completing the automation of pro-
testing.
136
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
2. INVESTMENT PROPERTY Net carrying value
COST 13,136
At 31 December 2018
4,403
Increases
-
At 31 December 2017
5,697
Disposals
(199)
At 31 December 2016
12,937
At 31 December 2017 Increases
-
Disposals
(19) 12,918
At 31 December 2018
This item includes non-operating buildings owned by the Group: these are
Depreciations and write-downs At 31 December 2016
mainly properties for residential use, held for rental or sale.
6,866
Depreciations for the year
436
Eliminations for disposals
(62)
At 31 December 2017
At 31 December 2018, the Group recorded a write-down of â‚Ź 850,000, corresponding to the residual carrying value of a property acquired in 2013
7,240
Depreciations for the year
427
Write-downs for the year
850
Eliminations for disposals
(2)
At 31 December 2018
and for which a revocation action was initiated during the year by the bankruptcy of the selling company. At 31 December 2018, the Group found no other endogenous or exogenous indicators of impairment of its investment property. As a result, the value of investment property was not submitted
8,515
to impairment testing.
3. INTANGIBLE ASSETS GOODWILL
PATENTS AND SOFTWARE
DEVELOPMENT COSTS
OTHER INTANGIBLE ASSETS
TOTAL
10,778
6,467
4,955
791
22,991
Increases
-
420
496
23
939
Reclassifications
-
-
(79)
-
(79)
Decreases
-
(14)
-
(13)
(27)
Forex differences
-
(14)
-
(8)
(22)
Cost At 31 December 2016
At 31 December 2017
10,778
6,859
5,372
793
23,802
Increases
-
227
340
22
589
Reclassifications
-
-
-
-
-
Decreases
-
-
(59)
(19)
(78)
18,632
84
-
11,458
30,174
-
(18)
-
-
(18)
29,410
7,152
5,653
12,254
54,469
4,563
6,005
2,699
647
13,914
-
272
342
22
636
Decreases
-
(14)
-
-
(14)
Forex differences
-
(9)
-
(8)
(17)
Change in the scope of consolidation Forex differences At 31 December 2018
AMORTISATION/WRITE-DOWNS At 31 December 2016 Amortisation for the year
4,563
6,254
3,041
661
14,519
Amortisation for the year
-
261
367
288
916
Decreases
-
-
-
(12)
(12)
Forex differences
-
(8)
-
-
(8)
4,563
6,507
3,408
937
15,415
At 31 December 2018
24,847
645
2,245
11,318
39,054
At 31 December 2017
6,215
605
2,331
132
9,283
At 31 December 2017
At 31 December 2018
NET CARRYING VALUE
137
SABAF . ANNUAL REPORT 2018
Goodwill
of its CGU Hinges for impairment, determining its recoverable amount, con-
Goodwill recognised at 31 December 2018 is allocated:
cash flow in the forward plan drafted by the management. Cash flows for the
sidered to be equivalent to its usable value, by discounting expected future
- to the “Hinges” (CGU) cash generating units of € 4.445 million; - to the “Professional burners” CGU of € 1.770 million;
period from 2019 to 2023 were augmented by the so-called terminal value, which expresses the operating flows that the CGU is expected to generate
- to the “Electronic components” CGU of € 18.632 million.
from the sixth year to infinity and determined based on the perpetual income.
The Group verifies the ability to recover goodwill at least once a year or more frequently if there are indications of impairment. Recoverable amount is determined through value of use, by discounting expected cash flows. Goodwill allocated to the Hinges CGU In 2018, the Hinges CGU achieved very positive and better results - in terms of sales and profitability - both compared to the previous year and compared to the budget. The 2019-2023 forward plan envisages a further increase in sales and the maintenance of high levels of profitability. At 31 December 2018, the Group tested - with the support of independent experts - the carrying value
The value of use was calculated based on a discount rate (WACC) of 10.45% (9.18% in the impairment test carried out while preparing the consolidated financial statements at 31 December 2017) and a growth rate (g) of 1.50%, unchanged from the 2017 impairment test. The recoverable amount calculated on the basis of the above-mentioned assumptions and valuation techniques is € 12.645 million, compared with a carrying value of the assets allocated to the Hinges unit of € 7.379 million; consequently, the value recorded for goodwill at 31 December 2018 was deemed recoverable.
Sensitivity analysis
The table below shows the changes in recoverable amount depending on changes in the WACC discount rate and growth factor g: (€/000)
GROWTH RATE
DISCOUNT RATE
1.00%
1.25%
1.50%
1.75%
2.00%
9.45%
13,689
14,022
14,376
14,754
15,156
9.95%
12,859
13,150
13,459
13,786
14,134
10.45%
12,118
12,374
12,645
12,931
13,233
10.95%
11,453
11,679
11,918
12,169
12,435
11.45%
10,852
11,054
11,265
11,488
11,722
Goodwill allocated to the Professional burners CGU
pairment test carried out while preparing the consolidated financial state-
At 31 December 2018, the Group tested - with the support of independent
ments at 31 December 2017) and a growth rate (g) of 1.50%, unchanged
experts - the carrying value of its Professional burners CGU for impairment,
from the 2017 impairment test.
determining its recoverable amount, considered to be equivalent to its usable value, by discounting expected future cash flow in the forward plan
The recoverable amount calculated on the basis of the above-mentioned
drafted at the beginning of 2019. Cash flows for the period from 2019 to
assumptions and valuation techniques is € 10.482 million, compared with a
2023 were augmented by the so-called terminal value, which expresses the
carrying value of the assets allocated to the Professional burners unit of €
operating flows that the CGU is expected to generate from the sixth year to
4.247 million (including minority interests); consequently, the value record-
infinity and determined based on the perpetual income. The value of use
ed for goodwill at 31 December 2018 was deemed recoverable.
was calculated based on a discount rate (WACC) of 7.73% (6.90% in the im-
Sensitivity analysis
The table below shows the changes in recoverable amount depending on changes in the WACC discount rate and growth factor g: (€/000)
138
GROWTH RATE
DISCOUNT RATE
1.00%
1.25%
1.50%
1.75%
2.00%
6.73%
11,637
12,082
12,569
13,106
13,699
7.23%
10,666
11,034
11,434
11,871
12,349
7.73%
9,839
10,148
10,482
10,843
11,236
8.23%
9,128
9,390
9,671
9,974
10,302
8.73%
8,510
8,734
8,974
9,231
9,507
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Goodwill allocated to the Electronic components CGU
The value of use was calculated based on a discount rate (WACC) of 11.05%
At 31 December 2018, the Group tested - with the support of independent
and a growth rate (g) of 2.50%, in line with the expected growth of the sector
experts - the carrying value of its Electronic components CGU for impairment,
in the Turkish market.
determining its recoverable amount, considered to be equivalent to its value of use, by discounting expected future cash flow estimated on the basis of
The recoverable amount calculated on the basis of the above-mentioned as-
the 2019 budget and projections for the following three years. Cash flows for
sumptions and valuation techniques is € 38.452 million, compared with a
the period from 2019 to 2022 were augmented by the so-called terminal val-
carrying value of the assets allocated to the Electronic components unit of €
ue, which expresses the operating flows that the CGU is expected to generate
31.434 million; consequently, the value recorded for goodwill at 31 December
from the fifth year to infinity and determined based on the perpetual income.
2018 was deemed recoverable.
Sensitivity analysis
The table below shows the changes in recoverable amount depending on changes in the WACC discount rate and growth factor g: GROWTH RATE
(€/000) DISCOUNT RATE
1.50%
10%
38,985
2.00% 41,094
2.50% 43,484
3.00% 46,215
10.5%
36,856
38,716
40,811
43,185
11%
34,949
40,811
38,452
40,531
11.5%
33,233
43,185
36,352
38,188
The net carrying value of intangible assets is broken down as follows:
Patents and software Software investments include the application development of the Group manage-
31.12.2018 31.12.2017
ment system (SAP) and the implementation of specific IT solutions to meet the requirements of the tax regulations of the countries in which the Group operates.
Development costs
CHANGE
Customer Relationship electronic components
8,477
-
8,477
Electronic components - Brand
1,174
-
1,174
The main investments in the year relate to the development of new products, including special burners and personalised burners for some customers (research and development activities carried out during the year are set out in the Report on Operations).
Electronic components - Know-how
1,081
-
1,081
Other
586
132
454
Total
11,318
132
11,186
Other intangible assets
At 31 December 2018, the recoverability of the amount of other intangible assets allocated to the Electronic Components CGU was verified as part of the
The other intangible assets recorded in these consolidated financial statements mainly derive from the Purchase Price Allocation carried out following the acquisition of Okida Elektronik and described in the previous paragraph “Information related to IFRS 3”.
impairment test of the related goodwill described in the previous paragraph.
4. EQUITY INVESTMENTS Sabaf US ARC Handan Burners Co. Other equity investments Total
31.12.2017
CAPITAL INCREASES
DISPOSALS
31.12.2018
139 101
100
-
139 201
40
-
-
40
280
100
0
380
The subsidiary Sabaf U.S. operates as a commercial base for North America.
Handan ARC Burners Co. is a Chinese joint venture with the aim to produce and
The carrying value of the investment is deemed recoverable taking into consid-
market in China burners for professional cooking. During the year, the Group,
eration expected developments on the North American market.
through ARC s.r.l., which holds the equity investment in the joint venture, subscribed and paid up capital of € 100,000 and increased its stake from 50% to 51% (therefore, the Group’s share is now 35.5%). Handan ARC Burners is still
5. NON-CURRENT RECEIVABLES
in the start-up phase.
31.12.2018
31.12.2017
CHANGE
Tax receivables
145
153
(8)
Guarantee deposits
43
43
-
Total
188
196
(8)
Tax receivables relate to indirect taxes expected to be recovered after 31 December 2018. 139
SABAF . ANNUAL REPORT 2018
6. INVENTORIES 31.12.2018
31.12.2017
CHANGE
14,680
11,459
3,221
Raw Materials Semi-processed goods
11,727
11,180
547
Finished products
15,576
13,448
2,128
Provision for inventory write-downs
(2,804)
(3,158)
354
Total
39,179
32,929
6,250
The value of final inventories at 31 December 2018 increased compared to
hedging the obsolescence risk. At the end of the financial year, the appropri-
the end of the previous year due to the change in the scope of consolida-
ation is adjusted based on specific analyses carried out on slow-moving and
tion and to the higher value of finished products held in consignment stock
non-moving products.
by some customers. The provision for write-downs is mainly allocated for
7. TRADE RECEIVABLES 31.12.2018
31.12.2017
CHANGE
Total trade receivables
48,061
43,002
5,059
Bad debt provision
(1,129)
(739)
(390)
46,932
42,263
4,669
Net total
Trade receivables at 31 December 2018 were higher than at the end of 2017 fol-
there were no significant changes in the payment terms agreed with customers.
lowing the change in the scope of consolidation. Moreover, some customer pay-
The amount of trade receivables recognised in the financial statements includes
ments of approximately € 4 million, which were due by the end of the year, were
approximately € 26.1 million in insured receivables (€ 28.2 million at 31 Decem-
received in the early months of 2019. With the exception of this circumstance,
ber 2017).
31.12.2018
31.12.2017
CHANGE
38,980
38,282
698
Current receivables (not past due) Outstanding up to 30 days
3,972
2,802
1,170
Outstanding from 30 to 60 days
1,019
868
151
Outstanding from 60 to 90 days
3,062
594
2,468
Outstanding for more than 90 days
1,028
456
572
48,061
43,002
5,059
Total
The bad deb provision was adjusted to the better estimate of the credit risk at the end of the reporting period. Changes during the year were as follows:
Bad debt provision
31.12.2017
PROVISIONS
UTILISATION
EXCHANGE RATE DIFFERENCES
31.12.2018
739
415
(23)
(3)
1,129
8. TAX RECEIVABLES
For income tax
31.12.2018
31.12.2017
CHANGE
3,435
1,998
1,437
For VAT and other sales taxes
851
682
169
Other tax credits
180
385
(205)
4,466
3,065
1,401
Total
The income tax receivables derives for € 1,153,000 from the full deductibility
account on 2018 income, for the part exceeding the tax to be paid.
of IRAP from IRES relating to the expenses incurred for employees for the 2006-2011 period (Italian Legislative Decree 201/2011), for which an applica-
Other tax credits mainly refer to receivables in respect of indirect Brazilian
tion for a refund was presented and, for the residual part, to the payments on
and Turkish taxes.
140
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
9. OTHER CURRENT RECEIVABLES 31.12.2018
31.12.2017
Credits to be received from suppliers
385
360
25
Advances to suppliers
411
155
256
Other
738
542
196
Total
1,534
1,057
477
CHANGE
Credits to be received from suppliers mainly refer to bonuses paid to the Group for the attainment of purchasing objectives. Other current receivables include accrued income and prepaid expenses.
10. FINANCIAL ASSETS 31.12.2018
31.12.2017
Current
Non-current
Current
Non-current
3,510
120
60
180
-
-
7
-
Escrow bank accounts Derivative instruments on interest rates Currency derivatives Total
1
-
-
-
3,511
120
67
180
At 31 December 2018, the following were taken out:
- a term deposit of € 0.18 million, due on 30 June 2021, for the portion of the
- a term deposit of € 3.45 million, due on 31 March 2019, for a bank guaran-
price not yet paid to the sellers of the ARC equity investment (Note 15).
tee issued in favour of the sellers of the Okida Elektronik equity investment for the portion of the price for which payment is deferred until March 2019.
11. CASH AND CASH EQUIVALENTS Cash and cash equivalents, which amounted to € 13,426,000 at 31 December 2018 (€ 11,533,000 at 31 December 2017) consisted of bank current account balances of approximately € 7.1 million and sight deposits of approximately € 6.3 million.
12. SHARE CAPITAL The parent company’s share capital consists of 11,533,450 shares with a par value of € 1.00 each. The share capital paid in and subscribed did not change during the year. At 31 December 2018, the structure of the share capital is shown in the table below. NO. OF SHARES
% OF SHARE CAPITAL
RIGHTS AND OBLIGATIONS
Ordinary shares
11,133,450
96.532%
--
Ordinary shares with increased vote
400,000
3.468%
Two voting rights per share
11,533,450
100%
TOTAL
With the exception of the right to increased vote, there are no rights, privileges or restrictions on the shares of the Parent Company. The availability of the Parent Company’s reserves is indicated in the separate financial statements of Sabaf S.p.A.
13. TREASURY SHARES AND OTHER RESERVES During the financial year Sabaf S.p.A. acquired 132,737 treasury shares at an
Items “Retained earnings, other reserves” of € 90,236,000 included, at 31
average unit price of € 17.77; there have been no sales.
December 2018, the stock grant reserve of € 321,000, which included the
At 31 December 2018, the parent company Sabaf S.p.A. held 514,506 treasury
measurement at 31 December 2018 of fair value of rights assigned to receive
shares, equal to 4.46% of share capital (381,769 treasury shares at 31 Decem-
shares of the Parent Company. For details of the Stock Grant Plan, refer to
ber 2017), reported in the financial statements as an adjustment to sharehold-
Note 37.
ers’ equity at a unit value of € 13.35 (the market value at year-end was € 14.88). There were 11,018,944 outstanding shares at 31 December 2018 (11,151,681 at 31 December 2017). 141
SABAF . ANNUAL REPORT 2018
14. LOANS 31.12.2018 Current
31.12.2017
Non-current
Current
Non-current
Property leasing
153
1,309
149
1,462
Unsecured loans
10,741
41,097
5,982
16,298
Short-term bank loans
5,247
-
9,477
-
Advances on bank receipts or invoices
1,942
-
1,678
-
44
-
2
-
Interest payable Derivative instruments on interest rates Total
308
-
-
-
18,435
42,406
17,288
17,760
During the year, the Group took out new unsecured loans for a total of € 37
All bank loans are denominated in euro, with the exception of a short-term
million to finance the investments made, with particular reference to the ac-
loan of USD 2 million.
quisition of Okida. All loans are signed with an original maturity ranging from 5 to 6 years and are repayable in instalments.
To manage interest rate risk, unsecured loans are either fixed-rate or hedged
Some of the outstanding unsecured loans have covenants, defined with ref-
by IRS. These consolidated financial statements include the negative fair val-
erence to the consolidated financial statements at the end of the reporting
ue of the IRSs hedging rate risks of unsecured loans pending, for residual
period, as specified below:
notional amounts of approximately € 34.9 million and expiry until 31 Decem-
- commitment to maintain a ratio of net financial position to shareholders’
ber 2024. Financial expenses were recognised in the income statement with
equity of less than 1 (residual amount of the loans at 31 December 2018
a balancing entry.
equal to € 31 million) - commitment to maintain a ratio of net financial position to EBITDA of less
Note 35 provides information on financial risks, pursuant to IFRS 7.
than 2 (residual amount of the loans at 31 December 2018 equal to € 7 million) or less than 2.5 (residual amount of the loans at 31 December 2018 equal to € 24 million) widely observed at 31 December 2018.
15. OTHER FINANCIAL LIABILITIES 31.12.2018 Payables to former Okida shareholders Option on A.R.C. minorities Payables to A.R.C. shareholders Derivative instruments on interest rates Total
31.12.2017
Current
Non-current
7,622
-
Current
Non-current
60
1,818
-
1,763
120
60
180
-
-
15
-
7,682
1,938
75
1,943
As part of the acquisition of 100% of Okida Elektronik, the parties agreed that
Pursuant to the provisions of IAS 32, the assignment of an option to sell
the payment of part of the price would be subject to adjustment (depending,
(put option) in the terms described above required the recording of a liability
inter alia, on Okida’s 2018 EBITDA) and postponed compared to the effective
corresponding to the estimated redemption value, expected at the time of
date of the transaction (4 September 2018). The payables to Okida share-
any exercise of the option: to this end, a financial liability of € 1.763 million
holders at 31 December 2018 in these consolidated financial statements rep-
was recognised in the consolidated financial statements at 31 December
resent the residual portion of the price to be paid to the sellers.
2017. At 31 December 2018, the Group revalued the outlay estimate, based on the expected results of A.R.C. at 31 December 2020 in accordance with
In June 2016, as part of the acquisition of 70% of A.R.C. S.r.l., Sabaf signed
the business plan of the subsidiary prepared at the beginning of 2019. Th
with Loris Gasparini (current minority shareholder by 30% of A.R.C.) an agree-
recalculation of the fair value, in compliance with IAS 39, led to an increase
ment that aimed to regulate Gasparini’s right to leave A.R.C. and the interest
of € 55,000 in the liability; financial expenses were recognised as a balancing
of Sabaf to acquire 100% of the shares after expiry of the term of five years
entry (Note 29).
from the signing of the purchase agreement of 24 June 2016, by signing specific option agreements. Therefore, the agreement envisaged specific
The payable to the A.R.C. shareholders of € 180,000 at 31 December 2018 is
option rights to purchase (by Sabaf) and sell (by Gasparini) exercisable as
related to the part of the price still to be paid to the sellers, which was depos-
from 24 June 2021, the remaining shares of 30% of A.R.C., with strike prices
ited on an non-interest-bearing escrow account and will be released in favour
contractually defined on the basis of final income parameters from A.R.C. at
of the sellers at constant rates in 3 years, in accordance with contractual
31 December 2020.
agreements and guarantees issued by the sellers.
142
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
16. POST-EMPLOYMENT BENEFIT AND RETIREMENT RESERVES POST-EMPLOYMENT BENEFIT RESERVE
RETIREMENT RESERVE
TOTAL
2,720
125
2,845
Provisions
154
-
154
Financial expenses
27
-
27
(226)
(125)
(351)
Tax effect
(32)
-
(32)
Forex differences
(11)
-
(11)
2,632
0
2,632
At 31 December 2017
Payments made
At 31 December 2018
Following the revision of IAS 19 - Employee benefits, from 1 January 2013 all actuarial gains or losses are recorded immediately in the comprehensive income statement (“Other comprehensive income”) under the item “Actuarial income and losses”. Post-employment benefits are calculated as follows: FINANCIAL ASSUMPTIONS
DEMOGRAPHIC THEORY
31.12.2018
31.12.2017
31.12.2018
31.12.2017
Discount rate
1.30%
1.15%
Mortality rate
ISTAT 2016 M/F
ISTAT 2016 M/F
Inflation
1.70%
1.80%
Disability rate
INPS 1998 M/F
INPS 1998 M/F
Staff turnover
3% - 6%
3% - 6%
Advance pay-outs Retirement age
5% - 7% per year
5% - 7% per year
pursuant to legislation in force on 31 December 2018
pursuant to legislation in force on 31 December 2017
17. PROVISIONS FOR RISKS AND CHARGES 31.12.2017
Provisions
Utilisation
Change in the scope of consolidation
Exchange rate differences
31.12.2018
Reserve for agents’ indemnities
210
28
(21)
-
-
217
Product guarantee fund
60
57
(57)
-
-
60
Reserve for legal risks
115
70
(3)
-
(7)
175
-
-
-
273
-
273
385
155
(81)
273
(7)
725
Other provisions for risks and charges Total
The reserve for agents’ indemnities covers amounts payable to agents if the
Other provisions for risks and charges, recognised as part of the purchase
Group terminates the agency relationship.
price allocation following the acquisition of Okida Elektronik, reflect the fair
The product guarantee fund covers the risk of returns or charges by custom-
value of the potential liabilities of the acquired entity (tax risks).
ers for products already sold. The fund was adjusted at the end of the year,
The provisions booked to the provisions for risks, which represent the esti-
on the basis of analyses conducted and past experience.
mate of future payments made based on historical experience, have not been
The reserve for legal risks, set aside for moderate disputes, was adjusted to
discounted because the effect is considered negligible.
reflect the outstanding disputes.
18. TRADE PAYABLES
Total
19. TAX PAYABLES
31.12.2018
31.12.2017
CHANGE
21,215
19,975
1,240
The increase in trade payables is related to the change in the scope of consolidation. Average payment terms did not change versus the previous year. At
31.12.2018 31.12.2017
CHANGE
2,672
240
2,432
Withholding taxes
680
656
24
Other tax payables
214
199
15
3,566
1,095
2,471
For income tax
Total
31 December 2018, there were no overdue payables of a significant amount
The income tax payables refer to the taxes for the year, for the portion ex-
and the Group did not receive any injunctions for overdue payables.
ceeding the advances paid.
143
SABAF . ANNUAL REPORT 2018
20. OTHER CURRENT PAYABLES 31.12.2018
31.12.2017
CHANGE
To employees
4,383
4,552
(169)
To social security institutions
2,148
2,304
(156)
312
195
117
To agents Advances from customers
250
94
156
Other current payables
507
346
161
7,600
7,491
109
Total
At the beginning of 2019, payables due to employees and social security institutions were paid in accordance with the scheduled expiry dates.
21. DEFERRED TAX ASSETS AND LIABILITIES 31.12.2018
31.12.2017
4,617
5,096
Deferred tax assets Deferred tax liabilities
(3,030)
(804)
1,587
4,293
Net position
The table below analyses the nature of the temporary differences that determine the recognition of deferred tax liabilities and assets and their changes during the year and the previous year. Non-current Provisions tangible and and value intangible assets adjustments At 31 December 2017
Forex differences At 31 December 2018
Good will
Tax incentives
Actuarial post-employment benefit reserve evaluation
Other temporary differences
Total
(120)
1,150
3
1,771
629
189
671
4,293
78
34
53
-
(141)
-
(333)
(309)
(1,753)
-
-
-
-
(7)
-
(1,760)
(421)
(20)
-
-
(149)
-
(47)
(637)
(2,216)
1,164
56
1,771
339
182
291
1,587
To the income statement To shareholders’ equity
Fair value of derivative instruments
As described in the paragraph “Information related to IFRS 3”, these con-
Deferred tax assets relating to goodwill, equal to € 1,771,000, refer to the ex-
solidated financial statements include deferred taxes on the fair value mea-
emption of the value of the equity investment in Faringosi Hinges s.r.l. made
surement of intangible assets recognised as a result of the Purchase Price
in 2011 pursuant to Italian law Decree 98/2011.
Allocation of Okida Elektronik.
Deferred tax assets relating to tax incentives are commensurate to investments made in Turkey.
22. NET FINANCIAL POSITION As required by the CONSOB memorandum of 28 July 2006, we disclose that the Group’s net financial position is as follows:
A. Cash (Note 11)
31.12.2018
31.12.2017
CHANGE
19
14
5
B.
Positive balances of unrestricted bank accounts (Note 11)
7,067
11,009
(3,942)
C.
Other cash equivalents
6,340
510
5,830
13,426
11,533
1,893
3,511
0
3,511
7,233
11,157
(3,924)
G. Current portion of non-current debt (Note 14)
10,741
6,131
4,610
H. Other current financial payables (Note 15)
8,143
75
8,068
26,117
17,363
8,754
D. Liquidity (A+B+C) E. Current financial receivables F.
Current bank payables (Note 14)
I.
Current financial debt (F+G+H)
J.
Net current financial debt (I-D-E)
9,180
5,830
3,350
K.
Non-current bank payables (Note 14)
41,097
16,298
24,799
L.
Other non-current financial payables (Note 14)
3,247
3,405
(158)
M. Non-current financial debt (K+L)
44,344
19,703
24,641
N. Net financial debt (J+M)
53,524
25,533
27,991
The consolidated cash flow statement, which shows the changes in cash and cash equivalents (letter D. of this statement), describes in detail the cash flows that led to the change in the net financial position. 144
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Comments on key income statement items 23. REVENUE In 2018, sales revenues totalled € 150,642,000, up by € 419,000 (+0.3%) compared with 2017. Taking into consideration the same scope of consolidation, revenue decreased by 2.4%.
Revenue by geographical area 2018
%
2017
%
% CHANGE
Italy
31,579
21.0%
36,523
24.3%
-13.5%
Western Europe
12,337
8.2%
11,678
7.8%
+5.6%
Eastern Europe
46,301
30.7%
42,824
28.5%
+8.1%
Middle East and Africa
12,303
8.2%
13,009
8.6%
-5.4%
Asia and Oceania
7,590
5.0%
10,516
7.0%
-27.8%
South America
25,461
16.9%
22,938
15.3%
+11.0%
North America and Mexico
15,071
10.0%
12,735
8.5%
+18.3%
150,642
100%
150,223
100%
+0.3%
Total
The sales analysis by geographical area shows an uneven trend in the various
recorded in European markets, thanks to the consolidation of relationships with
markets in which the Group operates. The best results were achieved on the
major customers and the contribution made by the acquisition in Turkey of Oki-
American continent: sales in North America were sustained by the good perfor-
da; only in Italy sales are down due to the sharp reduction in the production of
mance of consumption; in South America, strong growth rates were recorded
domestic appliances. North Africa and the Middle East have shown signs of
in the Andean countries, which more than offset the effects of the crisis in Ar-
weakness, while the Group’s presence on Asian markets is not yet sufficiently
gentina and a still stagnant demand in Brazil. Satisfactory growth rates were
consolidated.
Revenue by product family 2018
%
2017
%
% CHANGE
Brass valves
4,327
2.9%
5,991
4.0%
-27.8%
Light alloy valves
37,615
25.0%
39,351
26.2%
-4.4%
Thermostats
6,521
4.3%
7,376
4.9%
-11.6%
Standard burners
39,368
26.1%
41,070
27.3%
-4.1%
Special burners
27,585
18.3%
27,184
18.1%
+1.5%
Accessories
15,422
10.3%
15,267
10.2%
+1.0%
130,838
86.9%
136,239
90.7%
-4.0%
5,331
3.5%
5,079
3.4%
+5.0%
Hinges
10,436
6.9%
8,905
5.9%
+17.2%
Electronic components
4,037
2.7%
-
-
150,642
100%
150,223
100%
Household gas parts Professional gas parts
Total
+0.3%
Product innovation continues to support sales of special and professional burn-
ing the acquisition of Okida Elektronik, from September 2018 the Group is also
ers, while more mature products (brass valves and thermostats) show a marked
active in the production and sale of electronic components.
decline. Sales of hinges increased significantly, supported by the positive trend of the North American market and the launch of new supply contracts. Follow-
Average sales prices in 2018 were on average 0.2% lower compared with 2017.
145
SABAF . ANNUAL REPORT 2018
24. OTHER INCOME
Sale of trimmings
27. PAYROLL COSTS
2018
2017
2,507
2,261
246
Contingent income
88
311
(223)
Rental income
88
89
(1)
Use of provisions for risks and charges
71
36
35
Other income
615
664
(49)
3,369
3,361
8
Total
2018
2017
CHANGE
Salaries and wages
23,141
23,987
(846)
CHANGE
The increase in income from the sale of trimmings is related to the increase in the price of raw materials.
Social Security costs
7,429
7,585
(156)
Temporary agency workers
2,121
1,910
211
Post-employment benefit reserve and other costs
1,828
1,846
(18)
321
-
321
34,840
35,328
(488)
Stock grant plan Total
The average Group headcount in 2018 was 798 employees compared to 760 in 2017. The average number of temporary staff was 61 in 2018 (60 in 2017).
25. MATERIALS Commodities and outsourced components Consumables Total
In 2018, the Group made negligible use of the temporary unemployment fund. The item “Stock Grant Plan” included the measurement at 31 December 2018
2018
2017
CHANGE
56,347
54,179
2,168
attributed to Group employees. For details of the Stock Grant Plan, refer to
6,100
5,615
485
Note 37.
62,447
59,794
2,653
In 2018, the effective purchase prices of the main raw materials (aluminium alloys, steel and brass) were on average higher than in 2017, with a negative
of the fair value of rights to the assignment of shares of the Parent Company
28. OTHER OPERATING COSTS
impact of 0.7% of sales. Consumption (purchases plus change in inventories) as a percentage of sales was 38.4% in 2018, compared with 38.2% in 2017.
26. COSTS FOR SERVICES
2018
2017
CHANGE
Non-income taxes
506
539
(33)
Other operating expenses
371
331
40
Contingent liabilities
217
145
72
Losses and write-downs of trade receivables
421
93
328
Provisions for risks
127
11
116
Other provisions
28
15
13
1,670
1,134
536
2018
2017
CHANGE
Outsourced processing
10,017
9,779
238
Total
Natural gas and power
4,561
4,485
76
Non-income taxes chiefly relate to property tax.
Maintenance
4,468
4,474
(6)
Provisions refer to the allocations to the reserves described in Note 17.
Transport
2,340
2,221
119
Advisory services
2,326
2,106
220
Travel expenses and allowances
780
715
65
Commissions
736
637
99
Directors’ fees
685
1,084
(399)
Insurance
545
537
8
Canteen
393
394
(1)
Other costs
4,446
3,795
651
Total
31,297
30,227
1,070
The main outsourced processing carried out by the Group’s Italian companies include aluminium die-casting, hot moulding of brass and steel blanking, as well as some mechanical processing and assembly. Costs for advisory services related to technical (€ 770,000), sales (€ 440,000) and legal, administrative and general (€ 1,116,000) services.
29. FINANCIAL EXPENSES 2018
2017
CHANGE
Interest paid to banks
829
270
559
Interest paid on finance lease contracts
17
19
(2)
287
240
47
Adjustment to the fair value of the ARC option (Note 15)
55
241
(186)
Other financial expense
18
34
(16)
1,206
804
402
Banking expenses
Total
Other costs included expenses for the registration of patents, waste dis-
The increase in financial expenses to banks reflects the higher average net
posal, cleaning, leasing third-party assets and other minor charges.
debt for the year. Interest paid to banks includes IRS spreads payable that hedge interest rate risks (Note 35).
146
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
30. EXCHANGE RATE GAINS AND LOSSES
31. INCOME TAXES
In 2018, the Group reported net foreign exchange gains of € 5,384,000, versus net gains of € 274,000 in 2017. The main portion of 2018 foreign exchange gains, recorded by Sabaf Turkey, is related to financial payables taken out in euros and reflects the revaluation of the Turkish lira against the euro from the date on which the financial payables were taken out to the end of the reporting period.
Current taxes
2018
2017
CHANGE
5,039
3,836
1,203
Deferred tax liabilities
103
(452)
555
Taxes related to previous financial years
21
(496)
517
5,163
2,888
2,275
Total
The current income taxes include the IRES of € 2,049,000, the IRAP of € 549,000 and foreign income taxes of € 2,441,000 (€ 2,448,000, € 545,000 and € 843,000 respectively in 2017). Reconciliation between the tax burden booked in the financial statements and the theoretical tax burden calculated according to the statutory tax rates currently in force in Italy is shown in the following table: Theoretical income tax Permanent tax differences Taxes related to previous financial years
2018
2017
5,030
4,272
937
172
18
91
Tax effect from different foreign tax rates
(25)
5
Effect of non-recoverable tax losses
154
172
“Patent box” tax benefit
(323)
(1,151)
“Super ammortamento” tax benefit
(449)
(179)
Tax incentives for investments in Turkey
(710)
(950)
22
10
4,654
2,442
Other differences Income taxes booked in the accounts, excluding IRAP and withholding taxes (current and deferred) IRAP (current and deferred) Total
509
446
5,163
2,888
Theoretical taxes were calculated applying the current corporate income tax
Revenue Agency, in 2017 the benefit for the three-year period from 2015 to
(IRES) rate, i.e. 24%, to the pre-tax result. IRAP is not taken into account for
2017, for a total of € 1,324,000 was recognised;
the purpose of reconciliation because, as it is a tax with a different assess-
- the tax benefits relating to “Superammortamento” (Super amortisation) and
ment basis from pre-tax profit, it would generate distorting effects.
“Iperammortamento” (Hyper amortisation), related to the investments made
Permanent tax differences mainly relate to non-deductible provisions and
in Italy, amounting to € 449,000 (€ 179,000 in 2017);
value adjustments.
- the tax benefits deriving from the investments made in Italy amounting to €
In these consolidated financial statements, the Group recognised:
710,000 (€ 950,000 in 2017).
- the tax benefit related to the Patent Box for 2018 of € 375,000 (€ 323,000 for IRES and € 52,000 for IRAP). Following the prior agreement signed with the
No significant tax disputes were pending at 31 December 2018.
32. EARNINGS PER SHARE Basic and diluted EPS are calculated based on the following data: EARNINGS
2018
2017
(€/000)
(€/000)
Profit for the year
15,614
14,835
Number of shares
2018
2017
11,051,570
11,208,062
-
-
11,051,570
11,208,062
Earnings per share (€)
2018
2017
Basic earnings per share
1.413
1.323
Diluted earnings per share
1.413
1.323
Weighted average number of ordinary shares for determining basic earnings per share Dilutive effect from potential ordinary shares Weighted average number of ordinary shares for determining diluted earnings per share
Basic earnings per share are calculated on the average number of outstanding shares minus treasury shares, equal to 481,880 in 2018 (325,388 in 2017). Diluted earnings per share are calculated taking into account any shares approved but not yet subscribed, of which there were none in 2018 and 2017.
147
SABAF . ANNUAL REPORT 2018
33. DIVIDENDS On 31 May 2018, shareholders were paid an ordinary dividend of € 0.55 per
in the annual Shareholders’ Meeting and was not included under liabilities in
share (total dividends of € 6,071,000).
these financial statements.
The Directors have recommended payment of an unchanged dividend of €
The dividend proposed is scheduled for payment on 29 May 2019 (ex-date 27
0.55 per share this year. This dividend is subject to approval of shareholders
May and record date 28 May).
34. INFORMATION BY BUSINESS SEGMENT Below is the information by business segment for 2018 and 2017. 2018 FY Gas parts (household and professional)
Hinges
Electronic components
Total
Sales
136,211
10,407
4,024
150,642
Ebit
13,540
1,315
1,554
16,409
2017 FY Gas parts (household and professional)
Hinges
Electronic components
Total
Sales
141,280
8,943
-
150,223
Ebit
16,974
1,143
-
18,117
35. INFORMATION ON FINANCIAL RISK Categories of financial instruments In accordance with IFRS 7, a breakdown of the financial instruments is shown below, among the categories set forth in IAS 39. 31.12.2018
31.12.2017
13,426
11,533
Financial assets Amortised cost Cash and cash equivalents Escrow bank deposits Trade receivables and other receivables
3,630
240
48,654
43,516
1
7
60,533
35,048
Income statement fair value Derivative to hedge cash flows Financial liabilities Amortised cost Loans Other financial liabilities
7,802
240
Trade payables
21,215
19,975
ARC put option (Note 15)
1,818
1,763
Derivative to hedge cash flows
308
15
Income statement fair value
The Group is exposed to financial risks related to its operations, mainly:
It is part of the Sabaf Group’s policies to hedge exposure to changes in pric-
- credit risk, with special reference to normal trade relations with customers;
es and in fluctuations in exchange and interest rates via derivative financial
- market risk, relating to the volatility of prices of commodities, foreign ex-
instruments. Hedging is done using forward contracts, options or combina-
change and interest rates; - liquidity risk, which can be expressed by the inability to find financial resources necessary to ensure Group operations.
tions of these instruments. Generally speaking, the maximum duration covered by such hedging does not exceed 18 months. The Group does not enter into speculative transactions. When the derivatives used for hedging purposes meet the necessary requisites, hedge accounting rules are followed.
148
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Credit risk management
Commodity price risk management
Trade receivables involve producers of domestic appliances, multinational groups
A significant portion of the Group’s purchase costs is represented by aluminium,
and smaller manufacturers in a few or single markets. The Group assesses the
steel and brass. Sale prices of products are generally renegotiated annually; as a
creditworthiness of all its customers at the start of supply and systemically at
result, the Group is unable to pass on to customers any changes in the prices of
least on an annual basis. After this assessment, each customer is assigned a
commodities during the year. The Group protects itself from the risk of changes
credit limit.
in the price of aluminium, steel and brass with supply contracts signed with sup-
A credit insurance policy is in place, which guarantees cover for approximately
pliers for delivery up to twelve months in advance or, alternatively, with derivative
55% of trade receivables.
financial instruments. In 2018 and 2017, the Group did not use financial deriva-
Credit risk relating to customers operating in emerging economies is generally
tives on commodities. To stabilise the rising costs of commodities, Sabaf pre-
attenuated by the expectation of revenue through letters of credit.
ferred to execute transactions on the physical market, fixing prices with suppliers for immediate and deferred delivery.
Forex risk management The key currencies other than the euro to which the Group is exposed are the US dollar, the Brazilian real and the Turkish lira, in relation to sales made in dollars (chiefly on some Asian and American markets) and the production units in Brazil and Turkey. Sales in US dollars represented 16% of total turnover in 2017, while purchases in dollars represented 4% of total turnover. During the year, operations in dollars were partially hedged through forward sales contracts; at 31 December 2018, the Group had in place forward sales contracts for a total of USD 1 million, maturing on 31 December 2019. Sensitivity analysis With reference to financial assets and liabilities in US dollars at 31 December 2018, a hypothetical and immediate revaluation of 10% of the euro against the dollar would have led to a loss of € 634,000.
Liquidity risk management The Group operates with a debt ratio considered physiological (net financial debt / shareholders’ equity at 31 December 2018 of 45%, net financial debt / EBITDA of 1.79) and has unused short-term lines of credit. To minimise the risk of liquidity, the Administration and Finance Department: - maintains a correct balance of net financial debt, financing investments with capital and with medium to long-term debt. - verifies systematically that the short-term accrued cash flows (amounts received from customers and other income) are expected to accommodate the deferred cash flows (short-term financial debt, payments to suppliers and other outgoings); - regularly assesses expected financial needs in order to promptly take any corrective measures.
Interest rate risk management Owing to the current trend in interest rates, the Group favours fixed-rate indebtedness: medium to long-term loans originated at a variable rate are converted to a fixed rate by entering into interest rate swaps (IRS) when the loan is opened. At 31 December 2018, IRS totalling € 34.9 million were in place, mirrored in mortgages with the same residual debt, through which the Group transformed the floating rate of the mortgages into fixed rate. The derivative contracts were not designated as a cash flow hedge and were therefore recognised using the “income statement fair value” method. Sensitivity analysis Considering the IRS in place, at the end of 2018 almost all of the Group’s financial debt was at a fixed rate. Therefore, at 31 December 2018 no sensitivity analysis was carried out in that the exposure to interest rate risk, linked to a hypothetical increase (decrease) in interest rates, is not significant.
149
SABAF . ANNUAL REPORT 2018
An analysis by expiration date of financial payables at 31 December 2018 and 31 December 2017 is shown below:
Short-term bank loans
7,233
Contractual financial flows 8,063
Unsecured loans
51,838
53,219
1,947
9,256
39,603
2,413
Finance leases
1,462
1,630
47
142
754
687
180
180
-
60
120
-
Payables to former Okida shareholders
7,622
7,622
7,622
-
-
-
ARC option
1,818
1,818
-
-
1,818
-
Total financial payables
70,153
72,532
17,679
9,458
42,295
3,100
Trade payables
21,215
21,215
20,412
803
-
-
Total
91,368
93,747
38,091
10,261
42,295
3,100
Carrying value 11,157
Contractual financial flows 11,157
Within 3 months 11,157
From 3 months to 1 year 0
From 1 to 5 years -
More than 5 years -
22,280
22,676
1,537
4,612
16,527
-
Finance leases
1,611
1,818
47
141
754
876
Payables to ARC shareholders
240
240
-
60
180
-
AT 31 DECEMBER 2018
Carrying value
Payables to ARC shareholders
AT 31 DECEMBER 2017 Short-term bank loans Unsecured loans
ARC option Total financial payables
Within 3 months 8,063
From 3 months to 1 year 0
From 1 to 5 years -
More than 5 years -
1,763
1,763
-
-
1,763
-
37,051
37,654
12,741
4,813
19,224
876
Trade payables
19,975
19,975
19,021
954
-
-
Total
57,026
57,629
31,762
5,767
19,224
876
The various due dates are based on the period between the end of the reporting period and the contractual expiration date of the commitments, the values indicated in the table correspond to non-discounted cash flows. Cash flows include the shares of principal and interest; for floating rate liabilities, the shares of interest are determined based on the value of the reference parameter at the end of the reporting period and increased by the spread set forth in each contract.
Hierarchical levels of fair value assessment
• Level 1 – quotations found on an active market for assets or liabilities
The revised IFRS 7 requires that financial instruments reported in the state-
• Level 2 - input other than prices listed in the previous point, which can be
subject to assessment;
ment of financial position at fair value be classified based on a hierarchy
observed directly (prices) or indirectly (derived from prices) on the market;
that reflects the significance of the input used in determining the fair value.
• Level 3 – input based on observable market data
IFRS 7 makes a distinction between the following levels:
The following table shows the financial assets and liabilities valued at fair value at 31 December 2018, by hierarchical level of fair value assessment. LEVEL 1 -
LEVEL 2 1
LEVEL 3 -
TOTAL 1
Total assets
-
1
-
1
Other financial liabilities (interest rate derivatives)
-
308
-
308
Other financial liabilities (ARC put option)
-
-
1,818
1,818
Total liabilities
-
308
1,818
2,126
Other financial assets (currency derivatives)
36. RELATED-PARTY TRANSACTIONS Transactions between consolidated companies were eliminated from the consolidated financial statements and are not reported in these notes. The table below illustrates the impact of all transactions between the Group and other related parties on the balance sheet and income statement.
Impact of related-party transactions on balance sheet items TOTAL 2018
GIUSEPPE NON-CONSOLIDATED OTHER TOTAL IMPACT ON SALERI S.A.P.A. SUBSIDIARIES RELATED PARTIES RELATED PARTIES THE TOTAL 12 88 100 0.21%
Trade receivables
46,932
Tax receivables
4,466
1,158
-
-
1,158
25.93%
Trade payables
21,215
-
-
5
5
0.02%
TOTAL 2017 Trade receivables
42,263
GIUSEPPE NON-CONSOLIDATED OTHER TOTAL IMPACT ON SALERI S.A.P.A. SUBSIDIARIES RELATED PARTIES RELATED PARTIES THE TOTAL 299 299 0.71%
Tax receivables
3,065
1,158
-
-
1,158
37.78%
Trade payables
19,976
-
-
2
2
0.01%
150
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Impact of related-party transactions on income statement items TOTAL 2018
GIUSEPPE SALERI S.A.P.A.
NON-CONSOLIDATED SUBSIDIARIES
OTHER RELATED PARTIES
3,369
40
-
-
40
1.19%
(31,297)
-
(263)
(22)
(285)
0.91%
TOTAL 2017
GIUSEPPE SALERI S.A.P.A.
NON-CONSOLIDATED SUBSIDIARIES
OTHER RELATED PARTIES
3,361
10
-
-
10
0.30%
(30,227)
-
(167)
(20)
(187)
0.62%
Other income Services
Other income Services
TOTAL IMPACT ON RELATED PARTIES THE TOTAL
TOTAL IMPACT ON RELATED PARTIES THE TOTAL
Transactions with the shareholder, Giuseppe Saleri S.a.p.A., comprise: • administration services provided by Sabaf S.p.A. to Giuseppe Saleri S.a.p.A.; • transactions as part of the domestic tax consolidation scheme until 2016, which generated the receivables shown in the tables and for which liquidation by the tax authorities is pending. Transactions are regulated by specific contracts regulated at arm’s length conditions. Transactions with non-consolidated subsidiaries were solely of a commercial nature.
Fees to directors, statutory auditors and executives with strategic responsibilities Please see the 2018 Report on Remuneration for this information.
37. SHARE-BASED PAYMENTS In order to adopt a medium and long-term incentive instrument for directors and employees of the Sabaf Group, on the proposal of the Remuneration and Nomination Committee, the Board of Directors of Sabaf S.p.A. prepared a specific free allocation plan of shares (the “Plan”) with the characteristics described below. The Plan was approved by the Shareholders’ Meeting on 8 May 2018 and the related Regulations by the Board of Directors on 15 May 2018. Purpose of the plan The Plan aims to promote and pursue the involvement of the beneficiaries whose activities are considered relevant for the implementation of the contents and the achievement of the objectives set out in the Business Plan, foster loyalty development and motivation of managers, by increasing their entrepreneurial approach as well as align the interests of management with those of the Company’s shareholders more closely, with a view to encouraging the achievement of significant results in the economic and asset growth of the Company. Beneficiaries of the plan
On 15 May 2018, the Board of Directors identified the Beneficiaries of Cluster 1 of the Plan to whom a total of 185,600 rights have been assigned. Subject-matter of the plan The subject-matter of the Plan is the free allocation to the Beneficiaries of a maximum of 370,000 Rights, each of which entitles them to receive free of charge, under the terms and conditions provided for by the Regulations of the Plan, 1 Sabaf S.p.A. Share. The free allocation of Sabaf S.p.A. shares is conditional, among other things, on the achievement, in whole or in part, with progressiveness, of the business objectives related to the ROI, EBITDA and TSR indicators. Deadline of the Plan The Plan expires on 31 December 2022 (or on a different subsequent date set by the Board of Directors). Fair Value measurement methods Considering the allocation mechanism described above, it was necessary to measure at fair value the rights assigned to receive shares of the Parent Company. In line with the date of assignment of the rights and terms of the plan, the grant date was set at 15 May 2018.
The Plan is intended for persons who hold or will hold key positions in the Company and/or its Subsidiaries, with reference to the implementation of the contents and the achievement of the objectives of the 2018-2020 Business Plan. The Beneficiaries are divided into two groups: • Cluster 1: Beneficiaries already identified in the Plan or who will be identified by the Board of Directors by 30 June 2018 on the Shareholders’ Meeting authority. • Cluster 2: Beneficiaries who will be identified by the Board of Directors from 1 July 2018 to 30 June 2019 on the Shareholders’ Meeting authority. 151
SABAF . ANNUAL REPORT 2018
The main assumptions made at the beginning of the vesting period are illustrated below:
FAIR VALUE MEASUREMENT METHODS - RIGHTS RELATING O OBJECTIVES MEASURED IN ROI 2018
2019
2020
2018-2020
19.48
19.48
19.48
19.48
-0.2846%
-0.1641%
-0.0497%
-0.0497%
31%
29%
27%
29%
Dividend yield
2.30%
2.30%
2.30%
2.30%
Strike Price
19.48
19.48
19.48
19.48
Total value on ROI
6.83
Fair Value
2.28
Share price at the start of the vesting period Risk free rate Expected volatility
33.40%
Rights on ROI
FAIR VALUE MEASUREMENT METHODS - RIGHTS RELATING TO OBJECTIVES MEASURED IN EBITDA 2018
2019
2020
2018-2020
19.48
19.48
19.48
19.48
-0.2846%
-0.1641%
-0.0497%
-0.0497%
31%
29%
27%
29%
Dividend yield
2.30%
2.30%
2.30%
2.30%
Strike Price
19.48
19.48
19.48
19.48
Total value on EBITDA
8.97
Fair Value
2.99
Share price at the start of the vesting period Risk free rate Expected volatility
33.30%
Rights on EBITDA
FAIR VALUE MEASUREMENT METHODS - RIGHTS RELATING TO OBJECTIVES MEASURED IN TSR 2018
2019
2020
19.48
19.48
19.48
-0.2846%
-0.1641%
-0.0497%
31%
29%
27%
0.00%
0.00%
0.00%
Strike Price
22.61
25.32
28.34
Total value on TSR
6.00
Share price at the start of the vesting period Risk free rate Expected volatility Dividend yield
Rights on TSR
33.30%
Fair Value
Fair Value per share at initial date of the vesting period
The accounting impacts of the Plan on these consolidated financial statements are illustrated in Note 13 and Note 27.
152
2.00
7.27
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
38. CAPITAL MANAGEMENT For the purposes of managing the Group’s capital, it has been defined that
In order to achieve this objective, the management of the Group’s capital
this includes the issued share capital, the share premium reserve and all oth-
aims, among other things, to ensure that the covenants, linked to loans,
er capital reserves attributable to the shareholders of the Parent Company.
which define the capital structure requirements, are complied with. Violations
The main objective of capital management is to maximise the value for share-
of covenants would allow banks to demand immediate repayment of loans
holders. In order to maintain or correct its financial structure, the Group may
(Note 14). During the current financial year, there were no breaches of the
intervene in dividends paid to shareholders, purchase its own shares, redeem
covenants linked to interest-bearing loans.
capital to shareholders or issue new shares. The Group controls equity using
In the years ended 31 December 2018 and 2017, no changes were made to
a gearing ratio consisting of the ratio of net financial debt (as defined in Note
the objectives, policies and procedures for capital management.
22) to shareholders’ equity. The Group’s policy is to keep this ratio below 1.
39. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS The effects of the acquisition of Okida Elektronik are described in detail in the paragraph - “Information related to IFRS 3”. Pursuant to CONSOB memorandum of 28 July 2006, the following section describes and analyses on significant non-recurring events, the consequences of which are reflected in the economic, equity and financial results for the year: SHAREHOLDERS’ EQUITY ATTRIBUTABLE TO THE GROUP
PROFIT ATTRIBUTABLE TO THE GROUP
NET FINANCIAL DEBT
CASH FLOWS
117,702
15,614
53,524
1,893
(850)
(850)
-
-
118,552
16,464
53,524
1,893
Financial statement values (A) Write-down of investment property (Note 2) Financial statement notional value (A+B)
40. ATYPICAL AND/OR UNUSUAL TRANSACTIONS Pursuant to CONSOB memorandum of 28 July 2006, the Group declares that no atypical and/or unusual transactions as defined by the CONSOB memorandum were executed during 2018.
41. COMMITMENTS Guarantees issued The Sabaf Group has issued sureties to guarantee consumer and mortgage loans granted by banks to Group employees for a total of € 4,734,000 (€ 5,145,000 at 31 December 2017).
42. SCOPE OF CONSOLIDATION AND SIGNIFICANT EQUITY INVESTMENTS COMPANIES CONSOLIDATED USING THE FULL LINE-BY-LINE CONSOLIDATION METHOD REGISTERED OFFICES
SHARE CAPITAL
SHAREHOLDERS
OWNERSHIP %
Faringosi Hinges s.r.l.
Ospitaletto (BS)
€ 90,000
Sabaf S.p.A.
100%
Sabaf Immobiliare s.r.l.
Ospitaletto (BS)
€ 25,000
Sabaf S.p.A.
100%
Jundiaì (SP, Brazil)
BRL 24,000,000
Sabaf S.p.A.
100%
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki
Manisa (Turkey)
TRY 28,000,000
Sabaf S.p.A.
100%
Sabaf Appliance Components Trading Ltd.
Kunshan (China)
€ 200,000
Sabaf S.p.A.
100%
Sabaf Appliance Components Ltd.
Kunshan (China)
€ 4,400,000
Sabaf S.p.A.
100%
Campodarsego (PD) - Italy
€ 45,000
Sabaf S.p.A.
70%
Sabaf S.p.A.
30%
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki
70%
COMPANY NAME
Sabaf do Brasil Ltda
A.R.C. s.r.l.
Okida Elektronik Sanayi ve Tickaret A.S
Istanbul (Turkey)
TRY 5,000,000
153
SABAF . ANNUAL REPORT 2018
NON-CONSOLIDATED COMPANIES VALUED AT COST REGISTERED OFFICES
SHARE CAPITAL
SHAREHOLDERS
OWNERSHIP %
HOLDING %
Sabaf US Corp.
Plainfield (USA)
USD 100,000
Sabaf S.p.A.
100%
100%
Handan ARC Burners Co., Ltd.
Handan (Cina)
RMB 3,000,000
A.R.C. s.r.l.
51%
35.5%
COMPANY NAME
43. GENERAL INFORMATION ON THE PARENT COMPANY Registered and administrative office
Via dei Carpini, 1 25035 - Ospitaletto (Brescia)
Contacts
Tel: +39 030 - 6843001
Fax: +39 030 - 6848249
E-mail: info@sabaf.it
Website: www.sabaf.it
Tax information
R.E.A. Brescia 347512
Tax Code 03244470179
VAT number 01786910982
APPENDIX Information as required by Article 149-duodecies of the CONSOB Issuers’ Regulation The following table, prepared pursuant to Article 149-duodecies of the CONSOB Issuers’ Regulation, shows fees relating to 2018 for auditing and for services other than auditing provided by the Independent Auditor and its network.
(€/000)
Audit
Other services
PARTY PROVIDING THE SERVICE
RECIPIENT
FEES PERTAINING TO THE 2018 FINANCIAL YEAR
EY S.p.A.
Parent company
20
EY S.p.A.
Italian subsidiaries
10
EY network
Foreing subsidiaries
52
EY S.p.A.
Parent company
16 4
Total
4
auditing procedures agreement relating to interim management reports.
154
98
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS in accordance with Article 154 bis of Italian Legislative Decree 58/98 Pietro Iotti, the Chief Executive Officer, and Gianluca Beschi, the Financial Reporting Officer of Sabaf S.p.A., have taken into account the requirements of Article 154-bis, paragraphs 3 and 4, of Legislative Decree 58 of 24 February 1998 and can certify: • the adequacy, in relation to the business characteristics and • the actual application of the administrative and accounting procedures for the formation of the consolidated financial statements during the 2018 financial year. They also certify that: • the Consolidated financial statements: - were prepared in accordance with the international accounting policies recognised in the European Community in accordance with EC regulation 1606/2002 of the European Parliament and Council of 19 July 2002 and with the measures issued in implementation of Article 9 of Italian Legislative Decree 38/2005; - are consistent with accounting books and records; - provide a true and fair view of the operating results, financial position and cash flows of the issuer and of the companies included in the consolidation;
• the report on operations contains a reliable analysis of the performance and results of operations and the situation of the issuer and the companies included in the scope of consolidation, along with a description of the key risks and uncertainties to which they are exposed.
Ospitaletto, 26 March 2019
Chief Executive Officer
The Financial Reporting Officer
Pietro Iotti
Gianluca Beschi
155
SABAF . ANNUAL REPORT 2018
156
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
157
SABAF . ANNUAL REPORT 2018
158
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
159
SABAF . ANNUAL REPORT 2018
160
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018
161
Overcoming limits
Moving from your comfort zone always offers a combination of fear and curiosity, but it is an effective drive towards innovation and progress. At Sabaf, we do not limit ourselves when we develop innovative ideas, products and skills. 162
163
SABAF . ANNUAL REPORT 2018
Separate financial statements at 31 December 2018 Corporate bodies.................................................................................................................... 165 Statement of financial position..................................................................................166 Income statement................................................................................................................ 167 Comprehensive income statement........................................................................168 Statement of changes in shareholders’ equity..............................................168 Cash flow Statement...........................................................................................................169 Explanatory notes..................................................................................................................170 Certification of Separate financial statements .............................................199 Independent auditor’s report on the Separate financial Statements at 31 December 2018............ 200 Report of the Board of Statutory Auditors to the Shareholders’ Meeting of SABAF S.p.A................................................206
164
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Corporate bodies Board of Directors Chairman
Giuseppe Saleri
Director
Alessandro PotestĂ
Vice Chairman*
Nicla Picchi
Director*
Carlo Scarpa
Chief Executive Officer
Pietro Iotti
Director*
Daniela Toscani
Director
Gianluca Beschi
Director*
Stefania Triva
Director
Claudio Bulgarelli
Board of Statutory Auditors Chairman
Alessandra Tronconi
Statutory Auditor
Luisa Anselmi
Statutory Auditor
Mauro Vivenzi
* Independent directors
Independent Auditor EY S.p.A.
165
SABAF . ANNUAL REPORT 2018
Statement of financial position NOTES
31.12.2018
31.12.2017
Property, plant and equipment
1
30,497,881
31,610,510
Investment property
2
1,261,716
1,453,564
(in €) ASSETS NON-CURRENT ASSETS
Intangible assets
3
3,094,293
3,370,260
Equity investments
4
58,150,073
49,451,811
Non-current financial assets
5
5,366,725
1,847,639
36
5,246,725
1,667,639
19,871
19,871
3,471,716
3,455,483
101,862,275
91,209,138
- of which from related parties Non-current receivables Deferred tax assets
21
TOTAL NON-CURRENT ASSETS CURRENT ASSETS Inventories
6
26,627,854
24,768,927
Trade receivables
7
35,157,543
31,154,012
- of which from related parties
36
6,080,706
1,208,883
Tax receivables
8
2,377,224
2,229,708
- of which from related parties
36
1,083,666
1,083,666
Other current receivables
9
764,471
721,529
Current financial assets
10
5,110,000
1,067,429
- of which from related parties
36
1,600,000
1,000,000
Cash and cash equivalents
11
1,958,805
2,696,664
71,995,897
62,638,269
0
0
173,858,172
153,847,407
11,533,450
11,533,450
72,464,975
72,552,367
8,040,214
8,001,327
92,038,639
92,087,144
TOTAL CURRENT ASSETS ASSETS HELD FOR SALE TOTAL ASSETS SHAREHOLDERS’ EQUITY AND LIABILITIES SHAREHOLDERS’ EQUITY Share capital
12
Retained earnings, other reserves Profit for the year TOTAL SHAREHOLDERS’ EQUITY NON-CURRENT LIABILITIES Loans
14
33,669,253
16,297,969
Other financial liabilities
15
120,000
180,000
Post-employment benefit and retirement reserves
16
2,083,922
2,199,523
Provisions for risks and charges
17
1,088,183
369,482
Deferred tax liabilities
21
106,646
67,983
37,068,004
19,114,957
Total non-current liabilities CURRENT LIABILITIES Loans
14
17,330,136
18,927,558
- of which from related parties
36
0
2,100,000
Other financial liabilities
15
1,795,310
74,849
Trade payables
18
18,944,590
16,569,390
- of which from related parties
36
3,858,114
509,631
Tax payables
19
589,828
623,013
Other payables
20
6,091,665
6,450,496
44,751,529
42,645,306
0
0
173,858,172
153,847,407
TOTAL CURRENT LIABILITIES LIABILITIES HELD FOR SALE TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 166
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Income statement (in €)
NOTES
2018
2017
23
110,065,252
115,687,029
INCOME STATEMENT COMPONENTS OPERATING REVENUE AND INCOME Revenue - of which from related parties
36
Other income
24
Total operating revenue and income
10,238,606 2,985,254
2,647,542
113,050,506
118,334,571
(45,084,626)
(46,554,625)
1,858,927
1,276,087
OPERATING COSTS Materials
25
Change in inventories Services
26
(27,540,143)
(27,603,637)
- of which by related parties
36
(3,991,378)
(3,966,399)
Payroll costs
27
(28,388,299)
(28,734,310)
Other operating costs
28
(1,852,013)
(715,296)
1,599,795
1,474,322
(99,406,359)
(100,857,459)
13,644,147
17,477,112
(8,596,924)
(8,843,617)
495,659
97,873
Costs for capitalised in-house work TOTAL OPERATING COSTS
OPERATING PROFIT BEFORE DEPRECIATION AND AMORTISATION, CAPITAL GAINS/LOSSES, WRITE-DOWNS/ WRITE-BACKS OF NON-CURRENT ASSETS Depreciations and amortisation
1,2,3
Capital gains/(losses) on disposals of non-current assets Write-downs/write-backs of non-current assets
29
0
(681,628)
- of which by related parties
36
0
(681,628)
5,542,882
8,049,740
122,845
88,754
(918,213)
(482,136)
EBIT Financial income Financial expenses
30
Exchange rate gains and losses
31
157,102
(88,145)
Profits and losses from equity investments
32
4,322,070
1,503,354
9,226,686
9,071,567
(1,186,472)
(1,070,240)
8,040,214
8,001,327
PROFIT BEFORE TAXES Income tax
PROFIT FOR THE YEAR
33
167
SABAF . ANNUAL REPORT 2018
Comprehensive income statement (in €) PROFIT FOR THE YEAR
2018
2017
8,040,214
8,001,327
Total profits/losses that will not be subsequently reclassified under profit (loss) for the year Actuarial post-employment benefit reserve evaluation
26,538
73,372
Tax effect
(6,369)
(17,609)
TOTAL OTHER PROFITS/(LOSSES) NET OF TAXES FOR THE YEAR
20,169
55,763
8,060,383
8,057,090
TOTAL PROFIT
Statement of changes in shareholders’ equity (€/000)
Share Capital
Share premium reserve
Legal reserve
Treasury shares
Actuarial post-employment benefit reserve evaluation
Other reserves
Profit for the year
Total shareholders’ equity
Balance at 31 December 2016
11,533
10,002
2,307
(2,399)
(533)
68,154
2,460
91,524
(2,924)
(2,460)
(5,384)
2017 dividend payment Purchase of treasury shares
(2,110)
Total profit at 31 December 2017
Balance at 31 December 2017
(2,110) 56
11,533
10,002
2,307
(4,509)
(477)
2018 dividend payment Purchase of treasury shares
65,230
8,001
92,087
1,930
(8,001)
(6,071) (2,359)
322
Total profit at 31 December 2018
168
8,057
(2,359)
Stock grant plan (IFRS 2)
Balance at 31 December 2018
8,001
20 11,533
10,002
2,307
(6,868)
(457)
67,482
322 8,040
8,060
8,040
92,039
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Cash flow Statement 2018 FY
2017 FY
Cash and cash equivalents at beginning of year
2,697
1,797
Profit for the year
8,040
8,001
- Depreciation and amortisation
8,597
8,844
- Realised gains
(496)
(98)
(â‚Ź/000)
Adjustments for:
- Write-downs of non-current assets - Profits and losses from equity investments
0
622
(4,322)
(1,503)
- Valuation of the stock grant plan
321
0
- Net financial income and expenses
795
393
- Non-monetary foreign exchange differences
79
230
- Income tax
1,186
1,070
(139)
(263)
719
47
Change in trade receivables
(4,003)
(3,689)
Change in inventories
(1,859)
(1,276)
Change in post-employment benefit reserve Change in risk provisions
2,375
559
(3,487)
(4,406)
Change in other receivables and payables, deferred taxes
(407)
830
Payment of taxes
(1,319)
(847)
Payment of financial expenses
(895)
(456)
Change in trade payables Change in net working capital
Collection of financial income Cash flow from operations
123
89
8,796
12,554
Investments in non-current assets - intangible
(526)
(1,099)
- tangible
(7,836)
(8,670)
- financial
(8,698)
-
1,841
449
Cash flow absorbed by investments
(15,219)
(9,319)
Repayment of loans
(14,166)
(10,607)
Raising of loans
31,600
14,273
Disposal of non-current assets
Change in financial assets
(7,641)
(7)
Sale of treasury shares
(2,359)
(2,110)
Payment of dividends
(6,071)
(5,384)
Collection of dividends
4,322
1,500
Cash flow absorbed by financing activities
5,685
(2,335)
Total cash flows
(738)
900
Cash and cash equivalents at end of year (Note 11)
1,959
2,697
Net current financial debt
12,056
15,239
Non-current financial debt
33,789
16,478
Net financial debt (Note 22)
45,845
31,717
169
SABAF . ANNUAL REPORT 2018
Explanatory notes Accounting standards STATEMENT OF COMPLIANCE AND BASIS OF PRESENTATION
Property, plant and equipment
The separate financial statements of Sabaf S.p.A. for the financial year 2018
directly chargeable ancillary costs. These costs also include revaluations
have been prepared in compliance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Union. Reference to IFRS also includes all current International Accounting Standards (IAS). The separate financial statements are drawn up in euro, which is the currency in the economy in which the Company operates. The income statement, the comprehensive income statement and the statement of financial position
These are recorded at purchase or manufacturing cost. The cost includes undertaken in the past based on monetary revaluation rules or pursuant to company mergers. Depreciation is calculated according to rates deemed appropriate to spread the carrying value of tangible assets over their useful working life. Estimated useful working life in years, unchanged compared to previous financial years, is as follows:
schedules are prepared in euro, while the cash flow statement, the statement
Buildings
33
of changes in shareholders’ equity and the values reported in the explanatory
Light constructions
10
notes are in thousands of euro.
General plant
The financial statements have been prepared on a historical cost basis ex-
Specific plant and machinery
cept for some revaluations of property, plant and equipment undertaken in
Equipment
4
previous years, and are considered a going concern. The Company assessed
Furniture
8
that it is a going concern (as defined by paragraphs 25 and 26 of IAS 1), also
Electronic equipment
5
due to the strong competitive position, high profitability and solidity of the
Vehicles and other transport means
5
10 6 – 10
financial structure. Sabaf S.p.A., as the Parent Company, also prepared the consolidated finan-
Ordinary maintenance costs are expensed in the year in which they are in-
cial statements of the Sabaf Group at 31 December 2018.
curred; costs that increase the asset value or useful working life are capitalised and depreciated according to the residual possibility of utilisation of the assets to which they refer.
FINANCIAL STATEMENTS The Company adopted the following formats: • current and non-current assets and current and non-current liabilities are stated separately in the statement of the financial position; • an income statement that expresses costs using a classification based on the nature of each item; • a comprehensive income statement that expresses revenue and expense
Land is not depreciated.
Investment property Investment property is valued at cost, including revaluations undertaken in the past based on monetary revaluation rules or pursuant to company mergers. The depreciation is calculated based on the estimated useful life, considered to be 33 years.
items not recognised in profit for the year as required or permitted by IFRS;
If the recoverable amount of the investment property – determined based on
• a cash flow statement that presents financial flows originating from oper-
the market value of the properties – is estimated to be lower than its carrying
ating activity, using the indirect method.
value, the asset’s carrying value is reduced to the lower recoverable amount,
Use of these formats permits the most meaningful representation of the
recognising impairment in the income statement.
Company’s capital, business and financial status.
When there is no longer any reason for a write-down to be maintained, the carrying value of the asset (or cash generating unit) is increased to the new value stemming from the estimate of its recoverable amount – but not be-
ACCOUNTING POLICIES
yond the net carrying value that the asset would have had if it had not been
The accounting standards and policies applied for the preparation of the
the income statement.
separate financial statements at 31 December 2018, unchanged versus the previous year, with the exception of the new accounting standards adopted as from 1 January 2018 (IFRS 9 and IFRS 15), are shown below:
written down for impairment. Reversal of impairment loss is recognised in
Intangible assets As established by IAS 38, intangible assets acquired or internally produced are recognised as assets when it is probable that use of the asset will generate future economic benefits and when asset cost can be measured reliably.
170
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
If it is considered that these future economic benefits will not be generated, the development costs are written down in the year in which this is ascer-
Inventories
tained.
Inventories are measured at the lower of purchase or production cost – de-
Such assets are measured at purchase or production cost and - if the assets concerned have a finite useful life - are amortised on a straight-line basis over their estimated useful life. The useful life of projects for which development costs are capitalised is estimated to be 10 years. The SAP management system is amortised over five years.
termined using the weighted average cost method – and the corresponding fair value represented by the replacement cost for purchased materials and by the presumed realisable value for finished and semi-processed products – calculated taking into account any manufacturing costs and direct selling costs yet to be incurred. Inventory cost includes accessory costs and the portion of direct and indirect manufacturing costs that can reasonably be assigned to inventory items. Inventories subject to obsolescence and low
Equity investments Equity investments not classified as held for sale are booked at cost, reduced for impairment.
Impairment At each end of the reporting period, Sabaf S.p.A. reviews the carrying value of its property, plant and equipment, intangible assets and equity investments to determine whether there are signs of impairment of these assets. If there is any such indication, the recoverable amount of said assets is estimated so as to determine the total of the write-down. If it is not possible to estimate the recoverable amount individually, the Company estimates the recoverable amount of the cash generating unit (CGU) to which the asset belongs. In particular, the recoverable amount of the cash generating units (which generally coincide with the legal entity to which the capitalised assets refer) is verified by determining the value of use. The recoverable amount is the higher of the net selling price and value of use. In measuring the value of use, future cash flows net of taxes, estimated based on past experience, are discounted to their present value using a pre-tax rate that reflects current market valuations of the present cost of money and specific asset risk. The main assumptions used for calculating the value of use concern the discount rate, growth rate, expected changes in selling prices and cost trends during the period used for the calculation. The growth rates adopted are based on future market expectations in the relevant sector. Changes in the sales prices are based on past experience and on the expected future changes in the market. The Company prepares operating cash flow forecasts based on the most recent budgets approved by the Boards of Directors of the investees, draws up fouryear forecasts and determines the terminal value (current value of perpetual income), which expresses the medium and long term operating flows in the specific sector. Furthermore, the Company checks the recoverable amount of its investees at least once a year when the separate financial statements are prepared. If the recoverable amount of an asset (or CGU) is estimated to be lower than its carrying value, the asset’s carrying value is reduced to the lower recoverable amount, recognising impairment in the income statement. When there is no longer any reason for a write-down to be maintained, the carrying value of the asset (or cash generating unit) is increased to the new value stemming from the estimate of its recoverable amount – but not beyond the net carrying value that the asset would have had if it had not been written down for impairment. Reversal of impairment loss is recognised in the income statement.
turnover are written down in relation to their possibility of use or realisation. Inventory write-downs are eliminated in subsequent years if the reasons for such write-downs cease to exist.
Trade receivables and other financial assets Initial recognition Upon initial recognition, financial assets are classified, as the case may be, on the basis of subsequent measurement methods, i.e. at amortised cost, at fair value recognised in other comprehensive income (OCI) and at fair value recognised in the income statement. The classification of financial assets at initial recognition depends on the characteristics of the contractual cash flows of the financial assets and on the business model that the Company uses to manage them. Trade receivables that do not contain a significant financing component are valued at the transaction price determined in accordance with IFRS 15. See the “Revenue from Contracts with Customers” paragraph. Other financial assets are recorded at fair value plus, in the case of a financial asset not at fair value recognised in the income statement, transaction costs. For a financial asset to be classified and measured at amortised cost or at fair value recognised in OCI, it must generate cash flows that depend solely on the principal and interest on the amount of principal to be repaid (known as ‘solely payments of principal and interest (SPPI)’). This measurement is referred to as the SPPI test and is carried out at the instrument level. Subsequent measurement The measurement of financial liabilities depends on their classification, as described below. Financial assets at amortised cost (debt instruments) This category is the most important for the Company. The Company measures the financial assets at amortised cost if both of the following requirements are met: • the financial asset is held as part of a business model whose objective is to hold financial assets for the purpose of collecting contractual cash flows and • the contractual terms of the financial asset envisage, at certain dates, cash flows represented solely by payments of principal and interest on the amount of principal to be repaid Financial assets at amortised cost are subsequently measured using the effective interest method and are subject to impairment. Gains and losses are recognised in the income statement when the asset is derecognised, modified or revalued. Financial assets at amortised cost of the Group include trade receivables.
171
SABAF . ANNUAL REPORT 2018
Financial assets at fair value through profit or loss This category includes all assets held for trading, assets designated at initial recognition as financial assets measured at fair value with changes recognised in the income statement, or financial assets that must be measured at fair value. Assets held for trading are all those assets acquired for sale or
flows estimated at a rate including taxes such as to reflect current market valuations of the current value of the cash and specific risks associated with the liability.
repurchase in the short term. Derivatives, separated or otherwise, are classi-
Post-employment benefit reserve
fied as financial instruments held for trading, unless they are designated as
The post-employment benefit reserve (TFR) is provisioned to cover the entire
effective hedging instruments. Financial assets with cash flows that are not represented solely by principal and interest payments are classified and measured at fair value through profit or loss, regardless of the business model. Financial instruments at fair value with changes recognised in the income statement are recognised in the statement of financial position at fair value and net changes in fair value are recognised in the income statement. This category includes derivative instruments. The Company does not hold financial assets at fair value through profit or loss with reclassification of cumulative gains and losses or financial assets at fair value through profit or loss without reversal of cumulative gains and losses upon derecognition. Cancellation A financial asset (or, if applicable, part of a financial asset or part of a group of similar financial assets) is firstly written off (e.g. removed from the statement of financial position of the Company) when: • the rights to receive cash flows from the asset are extinguished, or • the Company transferred to a third party the right to receive financial flows from the asset or has taken on the contractual obligation to pay them fully and without delay and (a) transferred substantially all the risks and benefits of the ownership of the financial asset or (b) did not substantially transfer or retain all the risks and benefits of the asset, but transferred their control. If the Company has transferred the rights to receive financial flows from an
liability accruing vis-à-vis employees in compliance with current legislation and with national and supplementary company collective labour contracts. This liability is subject to revaluation via application of indices fixed by current regulations. Up to 31 December 2006, post-employment benefits were considered defined-benefit plans and accounted for in compliance with IAS 19, using the projected unit-credit method. The regulations of this fund were amended by Italian Law no. 296 of 27 December 2006 and subsequent Decrees and Regulations issued during the first months of 2007. In the light of these changes, and, in particular, for companies with at least 50 employees, post-employment benefits must now be considered a defined-benefit plan only for the portions accruing before 1 January 2007 (and not yet paid as at the end of the reporting period). Conversely, portions accruing after that date are treated as defined-contribution plans. Actuarial gains or losses are recorded immediately under “Other total profits/ (losses)”.
Trade payables and other financial liabilities Initial recognition All financial liabilities are initially recognised at fair value, in addition to directly attributable transaction costs in case of mortgages, loans and payables. The Company’s financial liabilities include trade payables and other payables, mortgages and loans, including current account overdrafts and derivative financial instruments.
asset or has signed an agreement on the basis of which it retains the con-
Subsequent measurement
tractual rights to receive the cash flows of the financial asset, but assumes a
The measurement of financial liabilities depends on their classification, as
contractual obligation to pay the financial flows to one or more beneficiaries
described below.
(pass-through), it considers whether or to what extent it has retained the risks and benefits concerning the ownership. If it has not substantially transferred or retained all the risks and benefits or has not lost control over it, the asset continued to be recognised in the financial statements of the Company to the extent of its residual involvement in the asset itself. In this case, the company also recognises an associated liability. The transferred asset and the associated liability are measured in such a way as to reflect the rights and obligations that pertain to the Company. When the residual involvement of the entity is a guarantee in the transferred asset, the involvement is measured based on the amount of the asset or the maximum amount of the consideration received that the entity could be obliged to pay, whichever lower.
Provisions for risks and charges Provisions for risks and charges are provisioned to cover losses and debts,
Financial liabilities at fair value recognised in the income statement Financial liabilities at fair value with changes recognised in the income statement include liabilities held for trading and financial liabilities initially recognised at fair value, with changes recognised in the income statement. Liabilities held for trading are those liabilities acquired in order to discharge or transfer them in the short term. This category also includes derivative financial instruments subscribed by the Company and not designated as hedging instruments in a hedging relationship pursuant to IFRS 9. Embedded derivatives, separated from the main contract, are classified as financial instruments held for trading, unless they are designated as effective hedging instruments. Gains or losses on liabilities held for trading are recognised in the income statement. Financial liabilities are designated at fair value with changes recognised in the income statement from the date of initial recognition, only if the criteria of IFRS 9 are met.
the existence of which is certain or probable, but whose amount or date of
Loans and payables
occurrence cannot be determined at the end of the year. Provisions are stated
This is the most important category for the Company and includes inter-
in the statement of financial position only when a legal or implicit obligation
est-bearing payables and loans. After initial statement, loans are valued us-
exists that determines the use of resources with an impact on profit and loss
ing the amortised cost approach, applying the effective interest rate method.
to meet that obligation and the amount can be reliably estimated. If the ef-
Gains and losses are recognised in the income statement when the liability
fect is significant, the provisions are calculated by updating future financial
is discharged, as well as through the amortisation process. Amortised cost
172
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
is calculated by recognising the discount or premium on the acquisition and
Hedge accounting is discontinued when the hedging instrument expires, is sold
the fees or costs that are an integral part of the effective interest rate. Amor-
or is exercised, or when it no longer qualifies as a hedge. At this time, the cumu-
tisation at the effective interest rate is included in financial expenses in the income statement. Cancellation A financial liability is derecognised when the obligation underlying the liability is discharged, cancelled or fulfilled. If an existing financial liability is replaced by another from the same lender, at substantially different conditions, or if
lative gains or losses of the hedging instrument recognised in equity are kept in the latter until the planned transaction actually takes place. If the transaction hedged is not expected to take place, cumulative gains or losses recognised directly in equity are transferred to the year’s income statement. Embedded derivatives included in other financial instruments or contracts are treated as separate derivatives when their risks and characteristics are not
the conditions of an existing liability are substantially changed, this replace-
strictly related to those of their host contracts and the latter are not measured
ment or change is treated as a derecognition of the original liability accom-
at fair value with posting of related gains and losses in the income statement.
panied by the recognition of a new liability, with any differences between the carrying values recognised in the income statement.
Policy for conversion of foreign currency items
Revenue reporting Revenue is reported net of return sales, discounts, allowances and bonuses, as well as of the taxes directly associated with sale of goods and rendering of
Receivables and payables originally expressed in foreign currencies are con-
services.
verted into euro at the exchange rates in force on the date of the transactions
Sales revenue is reported when the company has transferred the significant
originating them. Forex differences realised upon collection of receivables
risks and benefits associated with ownership of the goods and the amount of
and payment of payables in foreign currency are posted in the income state-
revenue can be reliably measured.
ment. Income and costs relating to foreign-currency transactions are con-
Revenues of a financial nature are recorded on an accrual basis.
verted at the rate in force on the transaction date. At year-end, assets and liabilities expressed in foreign currencies are posted at the spot exchange rate in force at the end of the reporting period and related foreign exchange gains and losses are posted in the income statement. If conversion generates a net gain, this value constitutes a non-distributable reserve until it is effectively realised.
Derivative instruments and hedge accounting The Company’s business is exposed to financial risks relating to changes in exchange rates, commodity prices and interest rates. The Company may decide to use derivative financial instruments to hedge these risks. Derivatives are initially recognised at cost and are then adjusted to fair value on subsequent closing dates. Changes in the fair value of derivatives designated and recognised as effective
Financial income Finance income includes interest receivable on funds invested and income from financial instruments, when not offset as part of hedging transactions. Interest income is recorded in the income statement at the time of vesting, taking effective output into consideration.
Financial expenses Financial expenses include interest payable on financial debt calculated using the effective interest method and bank expenses. All the other financial expenses are recognised as costs for the year in which they are incurred.
Income taxes for the year
for hedging future cash flows relating to the Company’s contractual commit-
Income taxes include all taxes calculated on the Company’s taxable income.
ments and planned transactions are recognised directly in shareholders’ equity,
Income taxes are directly recognised in the income statement, with the ex-
while the ineffective portion is immediately posted in the income statement. If the contractual commitments or planned transactions materialise in the recognition of assets or liabilities, when such assets or liabilities are recognised, the gains or losses on the derivative that were directly recognised in equity are factored back into the initial valuation of the cost of acquisition or carrying value of the asset or liability. For cash flow hedges that do not lead to recognition of assets or liabilities, the amounts that were directly recognised in equity are included in the income statement in the same period when the contractual commitment or planned transaction hedged impacts profit and loss – for example, when a planned sale actually takes place.
ception of those concerning items directly debited or credited to shareholders’ equity, in which case the tax effect is recognised directly in shareholders’ equity. Other taxes not relating to income, such as property taxes, are included among operating expenses. Deferred taxes are provisioned in accordance with the global liability provisioning method. They are calculated on all temporary differences that emerge from the taxable base of an asset or liability and its book value. Current and deferred tax assets and liabilities are offset when income taxes are levied by the same tax authority and when there is a legal right to settle on a net basis. Deferred tax assets and liabilities are measured using the tax rates that are expected to be applicable in the years when temporary differences will be realised or settled.
For effective hedges of exposure to changes in fair value, the item hedged is adjusted for the changes in fair value attributable to the risk hedged and recognised in the income statement. Gains and losses stemming from the derivative’s valuation are also posted in the income statement. Changes in the fair value of derivatives not designated as hedging instruments
Dividends Dividends are posted on an accrual basis when the right to receive them materialises, i.e. when shareholders approve dividend distribution.
are recognised in the income statement in the period when they occur. 173
SABAF . ANNUAL REPORT 2018
Treasury shares Treasury shares are booked in a specific reserve as a reduction of shareholders’ equity. The carrying value of treasury shares and revenues from any sub-
Recoverability of value of tangible and intangible assets and investments The procedure for determining impairment loses of tangible and intangible assets described in “Impairment” implies – in estimating the value of use – the use of the Business Plans of investees, which are based on a series of as-
sequent sales are recognised in the form of changes in shareholders’ equity.
sumptions relating to future events and actions of the investees’ management
Equity-settled transactions
however, assumptions are made on the expected trend in trading between third
Some of the Company employees receive part of the remuneration in the form of share-based payments, therefore employees provide services in exchange for shares (“equity-settled transactions”). The cost of equity-settled transactions is determined by the fair value at the date on which the assignment is made using an appropriate measurement method, as explained in more detail in Note 42. This cost, together with the corresponding increase in shareholders’ equity, is
bodies, which may not necessarily come about. In estimating market value, parties based on historical trends, which may not actually be repeated. Provisions for bad debts Receivables are adjusted by the related bad debt provision to take into account their recoverable amount. To determine the size of the write-downs, management must make subjective assessments based on the documentation and information available regarding, among other things, the customer’s solvency, as well as experience and historical payment trends.
recorded under personnel costs (Note 27) over the period in which the con-
Provisions for inventory obsolescence
ditions relating to the achievement of objectives and/or the provision of the
Inventories subject to obsolescence and slow turnover are systematically val-
service are met. The cumulative costs recognised for such transactions at the
ued and written down if their recoverable amount is less than their carrying
end of each reporting period up to the vesting date are commensurate with
value. Write-downs are calculated based on management assumptions and
the expiry of the vesting period and the best estimate of the number of equity
estimates, resulting from experience and historical results.
instruments that will actually vest. Service or performance conditions are not taken into account when defining the fair value of the plan at the assignment date. However, the probability of these conditions being met is taken into account when defining the best estimate of the number of equity instruments that will vest. Market conditions are reflected in the fair value at the assignment date. Any other condition related to the plan that does not involve a service obligation is not considered to be a vesting
Employee benefits The current value of liabilities for employee benefits depends on a series of factors determined using actuarial techniques based on certain assumptions. Assumptions concern the discount rate, estimates of future salary increases, and mortality and resignation rates. Any change in the above-mentioned assumptions might have an effect on liabilities for pension benefits.
condition. Non-vesting conditions are reflected in the fair value of the plan and
Share-based payments
result in the immediate recognition of the cost of the plan, unless there are also
Estimating the fair value of share-based payments requires the determination
service or performance conditions.
of the most appropriate valuation model, which depends on the terms and
No cost is recognised for rights that do not vest in that the performance and/
conditions under which these instruments are granted. This also requires the
or service conditions are not met. When the rights include a market condition
identification of data to feed into the valuation model, including assumptions
or a non-vesting condition, these are treated as if they had vested regardless
about the exercise period of the options, volatility and dividend yield. The
of whether the market conditions or other non-vesting conditions to which they
Company uses a binomial model for the initial measurement of the fair value
are subject are met or not, it being understood that all other performance and/
of share-based payments with employees.
or service conditions must be met. If the conditions of the plan are changed, the minimum cost to be recognised is the fair value at the assignment date in the absence of the change in the plan itself, on the assumption that the original conditions of the plan are met. Moreover, a cost is recognised for each change that results in an increase in total fair value of the payment plan, or that is in any case favourable for employees; this cost is measured with reference to the date of change. When a plan is cancelled, any remaining element of the plan’s fair value is immediately expensed
Income tax Determining liabilities for Company taxes requires the use of management valuations in relation to transactions whose tax implications are not certain at the end of the reporting period. Furthermore, the valuation of deferred taxes is based on income expectations for future years; the valuation of expected income depends on factors that might change over time and have a significant effect on the valuation of deferred tax assets.
to the income statement.
Other provisions and reserves
Use of estimates
rely on communications regarding the status of recovery procedures and
Preparation of the separate financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the carrying values of assets and liabilities and the disclosures on contingent assets and liabilities at the end of the reporting period. Actual results might differ from these estimates. Estimates are used to measure tangible and intangible assets and investments subject to impairment testing, as described earlier, as well as to measure the ability to recover prepaid tax assets, provisions for bad debts, for inventory obsolescence, depreciation and amortisation, asset write-downs, employee benefits, taxes, other provisions and reserves. Specifically: 174
When estimating the risk of potential liabilities from disputes, the Directors disputes from the lawyers who represent the Company in litigation. These estimates are determined taking into account the gradual development of the disputes, considering existing exemptions. Estimates and assumptions are regularly reviewed and the effects of each change immediately reflected in the income statement.
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
New accounting standards Accounting standards, amendments and interpretations applicable from 1 January 2018 Standard IFRS 9 – FINANCIAL INSTRUMENTS. In July 2014, the IAS issued its final IFRS 9 replacing IAS 39 and all previous versions of IFRS 9. The standard was approved by the European Union in November 2016 and is effective for financial years beginning on or after 1 January 2018. IFRS 9 brings together all aspects relating to the recognition of financial instruments: Classification and Measurement, Impairment and Hedge Accounting. The adoption of IFRS 9 did not have a significant impact on the of the Company’s financial statements and did not entail the need to record adjustments to the consolidated statement of financial position at the date of initial application of the standard.
time adopters, IAS 28 Investments in Associates and Joint Ventures – Measuring investees at fair value through profit or loss: an investment-by-investment choice or a consistent policy choice, IFRS 12 Disclosure of Interests in Other Entities – Clarification of the scope of the Standard. The provisions were approved by the European Union in February 2018 and are applicable in the preparation of the financial statements for financial years beginning on or after 1 January 2018, with reference to the amendments to IAS 28 and IFRS 1, as from 1 January 2017, with reference to the amendments to IFRS 12. The adoption of the provisions by the Company did not entail any changes in accounting policies or retrospective adjustments. IFRIC 22 Interpretation “FOREIGN CURRENCY TRANSACTIONS AND ADVANCE CONSIDERATION”. The interpretation was endorsed by the European Union in March 2018 and is applicable from 1 January 2018. The interpretation aims to provide guidelines for foreign currency transactions
Classification and measurement
if advances or non-cash payments are recognised in the financial state-
The Company did not have a significant impact on its financial statements
ments, prior to the recognition of the related asset, cost or revenue. This
as a result of the application of the classification and measurement require-
document provides guidance on how an entity should determine the date
ments envisaged by IFRS 9. Loans, like trade receivables, are held for collec-
of a transaction, and consequently, the spot exchange rate to be used when
tion at the contractual due dates and are expected to generate cash flows
foreign currency transactions occur in which the payment is made or re-
represented solely by collections of principal and interest.
ceived in advance. The adoption of the interpretation by the Company did
Impairment The Company has not recorded any adjustments to the consolidated statement of financial position at the date of initial application of the standard. In particular, with reference to trade receivables, the Company considered its policy of bad debt provision consistent with the Standard.
not entail any changes in accounting policies or retrospective adjustments. Amendment to IAS 40 “TRANSFERS OF INVESTMENT PROPERTY”. These amendments clarify the transfers of a property to, or from, investment property. In particular, an entity must reclassify a property among, or from, investment property only when there is evidence that there was a change in
Hedge accounting
the intended use of the property. This change must refer to a specific event
The Company does not use hedge accounting for hedging instruments.
that happened and must not be limited to a change of intention by the Man-
Standard IFRS 15 – REVENUE FROM CONTRACTS WITH CUSTOMERS. In May 2014, the IAS issued IFRS 15, a new revenue recognition standard that replaces IAS 18 and IAS 11 and was supplemented with further clarifications and guidance in 2016. The standard is applicable to the preparation of the financial statements for the financial years starting from 1 January 2018 and introduced a new five-stage model that applies to contracts with customers. IFRS 15 requires the recognition of revenue for an amount that reflects the consideration to which the entity believes it is entitled in exchange for the transfer of goods or services to the customer. The application of the new standard and the relative interpretations had no significant effects on the Company’s separate financial statements, either from the point of view of classification or of determining quantities. In particular, the application of IFRS 15 had no impact on contracts with customers, in which the sale of Sabaf products is the only obligation (“at a point in time”), since revenues are recognised at the time when control of the activity
agement of an entity. The interpretation was endorsed by the European Union in March 2018 and is applicable from 1 January 2018 The adoption of the amendments by the Company did not entail any changes in accounting policies or retrospective adjustments. Amendment to IFRS 2 “CLASSIFICATION AND MEASUREMENT OF SHARE-BASED PAYMENT TRANSACTIONS”, which contains some clarification on the recording of the effects of vesting conditions in the presence of cash-settled share-based payments, on the classification of share-based payments with net settlement characteristics and on the recording of amendments under the terms and conditions of a share-based payment that change their classification from cash-settled to equity-settled. The interpretation was endorsed by the European Union in February 2018 and is applicable from 1 January 2018. The adoption of the amendments by the Company did not entail any changes in accounting policies or retrospective adjustments.
is transferred to the customer, according to the terms of return defined with the customer. The guarantees provided for in the contracts are of a general nature and not extended and, consequently, the Company believes that they will continue to be accounted for in accordance with IAS 37. Finally, with regard to the income from participating in the production of presses and
IFRS and IFRIC accounting standards, amendments and interpretations approved by the European Union, not yet universally applicable and not adopted early by the Company at 31 December 2018
equipment, in line with previous years, the Company will continue to allocate
Standard IFRS 16 “ LEASES” (published on 13 January 2016), which will
these revenues over the useful life of the projects, which is generally 10 years.
replace standard IAS 17 – Leases, as well as interpretations IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases—
Document “ANNUAL IMPROVEMENTS TO IFRSS: 2014-2016 CYCLE”.
Incentives and SIC-27 Evaluating the Substance of Transactions Involving the
The provisions issued concern IFRS 1 First-Time Adoption of International
Legal Form of a Lease. The new standard provides a new definition of lease
Financial Reporting Standards - Deletion of short-term exemptions for first-
and introduces a criterion based on the control (right of use) of an asset in 175
SABAF . ANNUAL REPORT 2018
order to distinguish the leasing contracts from the service contracts, iden-
Amendment to IAS 28 “LONG-TERM INTERESTS IN ASSOCIATES AND
tifying the discriminatory ones: the identification of the asset, the right of
JOINT VENTURES” (published on 12 October 2017)”. This document clari-
replacement of the same, the right to obtain substantially all of the economic
fies the need to apply IFRS 9, including the requirements of impairment, to
benefits deriving from the use of the asset and the right to direct the use of
other long-term interests in associate companies and joint ventures that are
the asset underlying the contract. The standard establishes a single mod-
not accounted for under the equity method. The amendment applies from 1
el of recognition and measurement of the lease agreements for the lessee
January 2019, but early application is permitted. The directors do not expect
which requires the recognition of the asset to be leased (operating lease or
a significant effect on the Company’s separate financial statements through
otherwise) in assets offset by a financial debt, while also providing the oppor-
the adoption of these changes.
tunity not to recognise as leases the agreements whose subject matter are “low-value assets” and leases with a contract duration equal to or less than
Document “ANNUAL IMPROVEMENTS TO IFRSS 2015-2017 CYCLE”,
12 months. By contrast, the Standard does not include significant changes
published on 12 December 2017 (including IFRS 3 Business Combinations
for the lessors. The standard applies beginning on 1 January 2019 but early
and IFRS 11 Joint Arrangements – Remeasurement of previously held inter-
application is permitted, only for Companies that already applied IFRS 15 -
est in a joint operation, IAS 12 Income Taxes – Income tax consequences
Revenue from Contracts with Customers.
of payments on financial instruments classified as equity, IAS 23 Borrowing
The Company started an analysis to assess the impact of the application of
costs Disclosure of Interests in Other Entities – Borrowing costs eligible for
IFRS 16 on the amounts and related disclosures in the separate financial state-
capitalisation) which implements changes to some standards as part of the
ments. However, it is not possible to provide a reasonable estimate of the effects
annual process of improving them. The amendments apply from 1 January
until the Company has completed a detailed analysis of the related contracts.
2019 but early application is permitted. The directors do not expect a significant effect on the Company’s separate financial statements through the
Amendment to IFRS 9 “PREPAYMENT FEATURES WITH NEGATIVE COM-
adoption of these changes.
PENSATION. This document specifies the instruments that envisage early repayment that could comply with the “SPPI” test even if the “reasonable additional compensation” to be paid in the event of early repayment is a “negative compensation” for the lender. The interpretation was endorsed by the European Union in March 2018 and is applicable from 1 January 2019 (early application is also permitted). The directors do not expect a significant effect on the Company’s separate financial statements through the adoption of these changes.
IFRS accounting standards, amendments and interpretations not yet approved by the European Union
Amendment to IAS 19 “PLAN AMENDMENT, CURTAILMENT OR SETTLEMENT”. The amendments clarify how pension costs are determined when a change occurs in a defined benefit plan. The amendments will be effective for the preparation of the financial statements for financial years beginning on or after 1 January 2019, unless they are postponed subsequent to their approval by the European Union. Standard IFRS 17 “INSURANCE CONTRACTS”. A new accounting standard for the recognition of insurance contracts that will replace IFRS 4. The new standard will be effective for the preparation of the financial statements for
On the reference date of these separate financial statements the competent
financial years beginning on or after 1 January 2021, unless they are post-
bodies of the European Union have not yet concluded the approval process
poned subsequent to their approval by the European Union.
necessary for the adoption of the amendments and principles described below. On 7 June 2017, IASB published the clarification document IFRIC 23 – UNCERTAINTY OVER INCOME TAX TREATMENTS. The document deals with uncertainties about the tax treatment of income taxes. The document requires that uncertainties in determining deferred tax assets and liabilities be reflected in the financial statements only when it is probable that the entity will pay or recover the amount in question. Moreover, the document does not contain any new disclosure requirement but emphasises that an entity will have to determine whether it will be necessary to disclose information on management considerations and on the uncertainty relating to tax accounting in accordance with IAS 1. The new interpretation applies from 1 January 2019, but early application is permitted.
176
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Comments on the main items of the statement of financial position 1. PROPERTY, PLANT AND EQUIPMENT PROPERTY
PLANT AND EQUIPMENT
OTHER ASSETS
ASSETS UNDER CONSTRUCTION
TOTAL
COST 6,327
158,391
31,819
1,427
197,964
Increases
At 31 December 2016
56
5,347
1,770
1,785
8,958
Disposals
-
(721)
(430)
(33)
(1,184)
Reclassification
18
551
59
(883)
(255)
6,401
163,568
33,218
2,296
205,483
164
4,772
960
1,940
7,836
Disposals
-
(3,436)
(129)
-
(3,565)
Reclassification
5
1,552
19
(1,589)
(13)
6,570
166,456
34,068
2,647
209,741
At 31 December 2017 Increases
At 31 December 2018
ACCUMULATED DEPRECIATION At 31 December 2016
2,887
135,147
28,838
-
166,872
Depreciations for the year
177
6,221
1,522
-
7,920
Eliminations for disposals
-
(525)
(395)
-
(920)
3,064
140,843
29,965
-
173,872
At 31 December 2017 Depreciations for the year
180
6,049
1,433
-
7,662
Eliminations for disposals
-
(2,175)
(116)
-
(2,291)
3,244
144,717
31,282
-
179,243
At 31 December 2018
NET CARRYING VALUE At 31 December 2018
3,326
21,739
2,786
2,647
30,498
At 31 December 2017
3,337
22,725
3,253
2,296
31,611
The breakdown of the net carrying value of Property was as follows:
presses for new burners. Investments in maintenance and replacement, so that production equipment is kept constantly up to date and efficient, are
31.12.2018
31.12.2017
Change
Land
1,291
1,291
-
Industrial buildings
2,035
2,046
(11)
Total
3,326
3,337
(11)
systematic. Decreases mainly relate to the disposal of machinery no longer in use or sold to subsidiaries. Assets under construction include machinery under construction and advance payments to suppliers of capital equipment.
The main investments in the financial year were aimed at increasing the pro-
At 31 December 2018, the Company found no endogenous or exogenous indi-
duction capacity of special burners, at the further automation of production
cators of impairment of its property, plant and equipment. As a result, the val-
of light alloy valves and interconnecting production plants with management
ue of property, plant and equipment was not submitted to impairment testing.
systems (Industry 4.0). Other investments were made in the production of
177
SABAF . ANNUAL REPORT 2018
2. INVESTMENT PROPERTY COST
NET CARRYING VALUE 6,675
At 31 December 2018
1,262
Increases
-
At 31 December 2017
1,454
Disposals
-
At 31 December 2016
At 31 December 2017 Increases
-
Disposals
-
At 31 December 2018
This item includes non-operating buildings owned by the Group. During the
6,675
year, this item did not undergo any changes except for depreciations for the year.
6,675
At 31 December 2018, the Company found no endogenous or exogenous indicators of impairment of its investment property.
ACCUMULATED DEPRECIATIONS At 31 December 2016 Depreciations for the year At 31 December 2017 Depreciations for the year At 31 December 2018
As a result, the value of investment property was not submitted to impair5,030
ment testing.
191 5,221 192 5,413
3. INTANGIBLE ASSETS PATENTS, KNOW-HOW AND SOFTWARE
DEVELOPMENT COSTS
OTHER INTANGIBLE ASSETS
TOTAL
COST At 31 December 2016
6,275
4,902
2,067
13,244
Increases
243
441
161
845
Reclassifications
99
-
155
254
Decreases At 31 December 2017 Increases
(14)
(79)
(14)
(107)
6,603
5,264
2,369
14,236
153
284
89
526
Reclassifications
-
-
-
-
Decreases
-
(59)
-
(59)
6,756
5,489
2,458
14,703
5,873
2,697
1,579
10,149
242
341
148
731
At 31 December 2018 AMORTISATION AND WRITE-DOWNS At 31 December 2016 Amortisation
(14)
-
-
(14)
At 31 December 2017
6,101
3,038
1,727
10,866
Amortisation
220
362
161
743
-
-
-
-
6,321
3,400
1,888
11,609
At 31 December 2018
435
2,089
570
3,094
At 31 December 2017
502
2,226
642
3,370
Decreases
Decreases At 31 December 2018
NET CARRYING VALUE
Intangible assets have a finite useful life and, as a result, are amortised
fer, in the main, to improvements to third-party leased assets.
throughout their life. The main investments in the year relate to the devel-
At 31 December 2018, the Company found no endogenous or exogenous
opment of new products, mainly related to the expansion of the range of
indicators of impairment of its intangible assets. As a result, the value of
burners (research and development activities carried out during the finan-
property, plant and equipment was not submitted to impairment testing.
cial year are set out in the Report on Operations). Software investments include the implementation of a production scheduler and the application development of the management system (SAP). Other intangible assets re178
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
4. EQUITY INVESTMENTS 31.12.2018
31.12.2017
CHANGE
58,116
49,418
8,698
In subsidiaries Other equity investments Total
34
34
-
58,150
49,452
8,698
The change in equity investments in subsidiaries is broken down in the table below:
SABAF IMMOBILIARE
FARINGOSI HINGES
SABAF DO BRASIL
SABAF U.S.
SABAF APPLIANCE COMPONENTS (CHINA)
SABAF A.C. TRADING (CHINA)
SABAF TURKEY
A.R.C. S.R.L.
OKIDA
TOTAL
13,475
10,329
8,469
139
4,400
200
12,005
4,800
0
53,817
-
-
-
-
-
-
-
-
-
-
13,475
10,329
8,469
139
4,400
200
12,005
4,800
0
53,817
-
-
-
-
-
-
-
-
8,698
8,698
13,475
10,329
8,469
139
4,400
200
12,005
4,800
8,698
62,515
HISTORICAL COST At 31 December 2016 Purchase At 31 December 2017 Purchase At 31 December 2018
PROVISION FOR WRITE-DOWNS At 31 December 2016
0
0
0
0
3,778
0
0
0
0
3,778
Write-downs
-
-
-
-
622
-
-
-
-
622
At 31 December 2017
0
0
0
0
4,400
0
0
0
0
4,400
Write-downs
-
-
-
-
-
-
-
-
-
-
At 31 December 2018
0
0
0
0
4,400
0
0
0
0
4,400
At 31 December 2018
13,475
10,329
8,469
139
-
200
12,005
4,800
8,698
58,116
At 31 December 2017
13,475
10,329
8,469
139
-
200
12,005
4,800
0
49,418
NET CARRYING VALUE
PORTION OF SHAREHOLDERS’ EQUITY (CALCULATED IN COMPLIANCE WITH IFRS) At 31 December 2018
27,674
7,248
10,870
(28)
(697)
248
23,425
3,630
1,719
74,089
At 31 December 2017
30,061
6,248
10,409
(79)
(60)
251
16,449
3,200
0
66,479
DIFFERENCE BETWEEN SHAREHOLDERS’ EQUITY AND CARRYING VALUE At 31 December 2018
14,199
(3,081)
2,401
(167)
(697)
48
11,420
(1,170)
(6,979)
15,974
At 31 December 2017
16,586
(4,081)
1,940
(218)
(60)
51
4,444
(1,600)
0
17,062
179
SABAF . ANNUAL REPORT 2018
Faringosi Hinges s.r.l. In 2018, the Faringosi Hinges achieved very positive and better results - in
based on the perpetual income. The value of use was calculated based on
terms of sales and profitability - both compared to the previous year and com-
a discount rate (WACC) of 10.45% (9.18% in the impairment test carried out
pared to the budget. The 2019-2023 forward plan, drafted at the beginning
while preparing the separate financial statements at 31 December 2017) and
of 2019, envisages a further increase in sales. At 31 December 2018, Sabaf
a growth rate (g) of 1.50%, unchanged from 31 December 2017.
S.p.A. tested - with the support of independent experts - the carrying value of the equity investment for impairment, determining its recoverable amount,
The recoverable amount calculated on the basis of the above-mentioned as-
considered to be equivalent to its value of use plus available liquidity, by dis-
sumptions and valuation techniques is € 12.762 million, compared with a
counting expected future cash flows in the forward plan drafted by the man-
carrying value of the equity investment of € 10.329 million; consequently, the
agement. Cash flows for the period from 2019 to 2023 were augmented by
amount recorded for equity investment at 31 December 2018 was deemed
the so-called terminal value, which expresses the operating flows that the in-
recoverable.
vestee is expected to generate from the sixth year to infinity and determined Sensitivity analysis The table below shows the changes in recoverable amount depending on changes in the WACC discount rate and growth factor g: GROWTH RATE
(€/000) DISCOUNT RATE
1.00%
1.25%
1.50%
1.75%
2.00%
9.45%
13,784
14,118
14,472
14,849
15,252
9.95%
12,966
13,257
13,565
13,893
14,241
10.45%
12,236
12,492
12,762
13,048
13,351
10.95%
11,581
11,808
12,046
12,298
12,563
11.45%
10,991
11,192
10,404
11,627
11,861
Sabaf do Brasil
Sabaf Appliance Components Trading
In 2018, Sabaf do Brasil continued to obtain positive results, which im-
Sabaf Appliance Components Trading (Kunshan) Co., Ltd., was founded
proved compared with 2017. Shareholders’ equity (converted into euros at
during 2012 in order to perform the function as distributor. During 2015, this
the end-of-year exchange rate) is higher than the carrying amount of the
activity was centralised at Sabaf Appliance Components; however, the com-
investment.
pany went into liquidation; the process of liquidation should end in 2019.
Sabaf U.S. The subsidiary Sabaf U.S. operates as a commercial support for North America.
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki (Sabaf Turkey)
The difference between the carrying value and the shareholders’ equity of the
Sabaf Turkey achieved extremely satisfactory results in 2018 as well. The
investee is attributable to the non-durable losses taking into consideration
shareholders’ equity remains well above the carrying value of the equity in-
expected development on the North American market.
vestment.
Sabaf Appliance Components
A.R.C. s.r.l.
Sabaf Appliance Components (Kunshan) Co., Ltd. has been producing burn-
In June 2016, the Company acquired the controlling share (70%) of A.R.C.
ers for the Chinese market since 2015. Furthermore, the company has per-
s.r.l., leading company in the production of burners for professional cooking.
formed the function as distributor on the Chinese market of Sabaf products
The transaction allowed Sabaf to enter into a new sector, contiguous with
manufactured in Italy and Turkey. Low production volumes have enabled the
the traditional sector of components for household gas cooking appliances,
company to reach the break-even point in 2018. At 31 December 2018, a pro-
and to enhance the consolidated international presence of the Sabaf Group.
vision for risks on equity investments of € 700,000 was recognised, corresponding to the negative equity value of the investee company. For further
At 31 December 2018, the Company tested - with the support of indepen-
details, refer to Note 36.
dent experts - the carrying value of the equity investment for impairment, determining its recoverable amount, considered to be equivalent to its value of use plus available liquidity, by discounting expected future cash flows in
180
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
the forward plan drafted at the beginning of 2019. Cash flows for the period
The portion pertaining to Sabaf S.p.A. of the recoverable amount calculated
from 2019 to 2023 were augmented by the so-called terminal value, which
on the basis of the above-mentioned assumptions and valuation techniques
expresses the operating flows that the investee is expected to generate from
is € 8.421 million (70% of total recoverable amount, equal to € 12.030 million),
the fourth year to infinity and determined based on the perpetual income.
compared with a carrying value of the equity investment of € 4.8 million; con-
The value of use was calculated based on a discount rate (WACC) of 7.73%
sequently, the carrying value recorded for equity investment at 31 December
(6.90% in the impairment test carried out while drafting the separate financial
2018 was deemed recoverable.
statements at 31 December 2017) and a growth rate (g) of 1.50%, in line with last year. Sensitivity analysis The table below shows the changes in recoverable amount depending on changes in the WACC discount rate and growth factor g: GROWTH RATE
(€/000) DISCOUNT RATE
1.00%
1.25%
1.50%
1.75%
2.00%
6.73%
13,170
13,615
14,103
14,640
15,233
7.23%
12,207
12,575
12,975
13,412
13,891
7.73%
11,389
11,697
12,030
12,392
12,785
8.23%
10,685
10,947
11,228
11,531
11,858
8.73%
10,073
10,298
10,538
10,795
11,071
As part of the acquisition of 70% of A.R.C. S.r.l., Sabaf S.p.A. signed with Loris Gasparini (current minority shareholder by 30% of A.R.C.) an agreement that aimed to regulate Gasparini’s right to leave A.R.C. and the interest of Sabaf to acquire 100% of the shares after expiry of the term of five years from the signing of the purchase agreement of 24 June 2016, by signing specific option agreements. Therefore, the agreement envisaged specific option rights to purchase (by Sabaf) and sell (by Gasparini) exercisable as from 24 June 2021, the remaining shares of 30% of A.R.C., with strike prices contractually defined on the basis of final income parameters from A.R.C. at 31 December 2020. The option for the purchase of the residual 30% of A.R.C. represents a derivative instrument; since the exercise price defined by contract was considered representative of the fair value of the portion that can be potentially acquired, no value was recorded in the separate financial statements ended 31 December 2018.
Okida Elektronik Sanayi Limited Sirket In September 2018, the Company directly acquired 30% of Okida Elektronik
terminal value, which expresses the operating flows that the company is ex-
(the remaining 70% was acquired through the subsidiary Sabaf Turkey). Okida
pected to generate from the fifth year to infinity and determined based on the
is a leader in Turkey in the design and manufacture of electronic components
perpetual income. The value of use was calculated based on a discount rate
for household appliances (mainly ovens and hoods); the transaction allowed
(WACC) of 11.05% and a growth rate (g) of 2.50%, in line with the expected
Sabaf to enter into a new sector, contiguous with the traditional sector of
growth of the sector in the Turkish market.
components for household gas cooking appliances. The portion pertaining to Sabaf S.p.A. of the recoverable amount calculated At 31 December 2018, the Company tested - with the support of independent
on the basis of the above-mentioned assumptions and valuation techniques
experts - the carrying value of the equity investment, determining its recov-
is € 11.900 million (30% of total equity value, equal to € 39.665 million), com-
erable amount, by discounting expected future cash flows estimated on the
pared with a carrying value of the equity investment of € 8.698 million; con-
basis of the 2019 budget and projections for the following three years. Cash
sequently, the carrying value recorded for equity investment at 31 December
flows for the period from 2019 to 2022 were augmented by the so-called
2018 was deemed recoverable.
Sensitivity analysis The table below shows the changes in recoverable amount depending on changes in the WACC discount rate and growth factor g: GROWTH RATE
(€/000) DISCOUNT RATE
1.50%
2.00%
2.50%
3.00%
10%
40,200
42,307
44,697
47,430
10.5%
38,070
39,930
42,027
44,400
11%
36,163
37,817
39,665
41,747
11.5%
34,447
35,923
37,567
39,403 181
SABAF . ANNUAL REPORT 2018
5. NON-CURRENT FINANCIAL ASSETS 31.12.2018
31.12.2017
CHANGE
5,247
1,668
3,579
120
180
(60)
5,367
1,848
3,519
Financial receivables from subsidiaries Escrow bank account Total
At 31 December 2018, financial receivables from subsidiaries consist of:
• As part of the acquisition of 70% of A.R.C., in 2016, Sabaf S.p.A. paid to
• an interest-bearing loan of USD 2 million (€ 1.747 million at the end-of-year
a non-interest-bearing fixed bank account the total amount of € 300,000.
exchange rate), granted to the subsidiary Sabaf do Brasil with the aim of
This amount, deducted from the consideration agreed to guarantee the
optimising the Group’s exposure to foreign exchange rate risk and whose
commitments assumed by the sellers, is released in favour of the sellers at
maturity at the beginning of 2019 was postponed to March 2021:
constant rates in 5 years (Note 15). At 31 December 2018, the portion due
• an interest-bearing loan of € 3.5 million to the subsidiary Sabaf Turkey, disbursed during the year as part of the coordination of the Group’s financial
beyond 12 months amounted to € 120,000, whereas the portion due within 12 months amounted to € 60,000 (Note 10).
management, with maturity in August 2021
6. INVENTORIES 31.12.2018
31.12.2017
CHANGE
Commodities
9,358
8,795
563
Semi-processed goods
9,633
9,115
516
9,231
8,789
442
Provision for inventory write-downs
(1,594)
(1,930)
336
Total
26,628
24,769
1,857
Finished products
The provision for write-downs is allocated for hedging the obsolescence risk,
€ 435,000, semi-finished products for € 408,000 and finished products for
quantified on the basis of specific analyses carried out at the end of the year
€ 751,000.
on slow-moving and non-moving products, and refers to raw materials for
7. TRADE RECEIVABLES 31.12.2018
31.12.2017
CHANGE
Total trade receivables
36,157
31,754
4,403
Bad debt provision
(1,000)
(600)
(400)
Net total
35,157
31,154
4,003
At 31 December 2018, trade receivables included balances totalling USD
Note that some customer payments of approximately € 3.5 million, which
3,526,000, booked at the EUR/USD exchange rate in effect on 31 December
were due by the end of the year, were received at the beginning of 2019. With
2018, i.e. 1.1450. The amount of trade receivables recognised in the financial
the exception of this circumstance, there were no significant changes in the
statements includes approximately € 18 million in insured receivables (€ 22
payment terms agreed with customers.
million at 31 December 2017). 31.12.2018
31.12.2017
CHANGE
29,966
28,591
1,375
1,996
1,524
472
Outstanding from 31 to 60 days
494
754
(260)
Outstanding from 61 to 90 days
3,030
519
2,511
Current receivables (not past due) Outstanding up to 30 days
671
366
305
36,157
31,754
4,403
Outstanding for more than 90 days Total
The bad deb provision was adjusted to the better estimate of the credit risk at the end of the reporting period. Changes during the year were as follows:
Bad debt provision 182
31.12.2017
PROVISIONS
UTILISATION
31.12.2018
600
402
(2)
1,000
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
8. TAX RECEIVABLES
For income tax For VAT Total
31.12.2018
31.12.2017
CHANGE
2,002
1,644
358
375
586
(211)
2,377
2,230
147
The income tax receivables derives for € 1,084,000 from the full deductibility
tion for a refund was presented and, for the residual part, to the payments on
of IRAP from IRES relating to the expenses incurred for employees for the
account on income, for the part exceeding the tax to be paid.
2006-2011 period (Italian Legislative Decree 201/2011), for which an applica-
9. OTHER CURRENT RECEIVABLES 31.12.2018
31.12.2017
Credits to be received from suppliers
374
351
23
Advances to suppliers
112
28
84
CHANGE
10
21
(11)
Other
268
322
(54)
Total
764
722
42
Due from INAIL
At 31 December 2018, credits to be received from suppliers included
ness (known as “energy-intensive bonuses”) for the year 2017. “Energy-inten-
€ 171,000 related to the relief due to the Company as an energy-intensive busi-
sive bonuses” due for the year 2016 were regularly collected during 2018.
10. CURRENT FINANCIAL ASSETS 31.12.2018
31.12.2017
Financial receivables from subsidiaries
1,600
1,000
600
Escrow bank accounts
3,510
60
3,450
Interest rate derivatives
-
7
(7)
5,110
1,067
4,043
Total
CHANGE
Financial receivables from subsidiaries consist of an interest-bearing loan
At 31 December 2018, a term deposit of € 3.45 million was taken out, due
with a duration of 12 months to Sabaf Appliance Components Co., Ltd. to
on 31 March 2019, for a bank guarantee issued in favour of the sellers of
support the Chinese subsidiary’s working capital.
the Okida Elektronik equity investment for the portion of the price, for which payment is deferred until March 2019.
11. CASH AND CASH EQUIVALENTS The item Cash and cash equivalents, equal to € 1,959,000 at 31 December 2018 (€ 2,697,000 at 31 December 2017) refers almost exclusively to bank current account balances.
183
SABAF . ANNUAL REPORT 2018
12. SHARE CAPITAL The Company’s share capital consists of 11,533,450 shares with a par value of € 1.00 each. The share capital paid in and subscribed did not change during the year. At 31 December 2018, the structure of the share capital is shown in the table below.
NO. OF SHARES
% OF SHARE CAPITAL
Ordinary shares
11,133,450
96.532%
--
Ordinary shares with increased vote
400,000
3.468%
Two voting rights per share
11,533,450
100%
TOTAL
RIGHTS AND OBLIGATIONS
With the exception of the right to increased vote, there are no rights, privileges or restrictions on the Company. The availability of reserves is indicated in a table at the end of these Explanatory Notes.
13. TREASURY SHARES AND OTHER RESERVES During the financial year, Sabaf S.p.A. acquired 132,737 treasury shares at an
Items “Retained earnings, other reserves” of € 72,465,000 included, at 31
average unit price of € 17.77; there have been no sales.
December 2018, the stock grant reserve of € 321,000, which included the
At 31 December 2018, the Company held 514,506 treasury shares, equal to
measurement at 31 December 2018 of fair value of rights assigned to receive
4.46% of share capital (381,769 treasury shares at 31 December 2017), re-
Sabaf shares. For details of the Stock Grant Plan, refer to Note 42.
ported in the financial statements as an adjustment to shareholders’ equity at a unit value of € 13.348 (the market value at year-end was € 11.811). There were 11,018,944 outstanding shares at 31 December 2018 (11,151,681 at 31 December 2017).
14. LOANS 31.12.2018
31.12.2017
Current
Non-current
Current
Non-current
Unsecured loans
9,911
33,669
5,982
16,298
Short-term bank loans
7,188
-
10,846
-
231
-
-
-
Derivative instruments on interest rates Sabaf Turkey loan TOTAL
-
-
2,100
-
17,330
33,669
18,928
16,298
During the year, the Company took out new unsecured loans for a total of €
All bank loans are denominated in euro, with the exception of a short-term
28.7 million to finance the investments made, with particular reference to the
loan of USD 2 million.
acquisition of Okida. All loans are signed with an original maturity of ranging from 5 to 6 years and are repayable in instalments.
To manage interest rate risk, unsecured loans are either fixed-rate or hedged
Some of the outstanding unsecured loans have covenants, defined with ref-
by IRS. These separate financial statements include the negative fair value of
erence to the consolidated financial statements at the end of the reporting
the IRSs hedging rate risks of unsecured loans pending, for residual notional
period, as specified below:
amounts of approximately € 26.6 million and expiry until 31 December 2024.
• commitment to maintain a ratio of net financial position to shareholders’
Financial expenses were recognised in the income statement with a balanc-
equity of less than 1 (residual amount of the loans at 31 December 2018
ing entry.
equal to € 22.7 million) • commitment to maintain a ratio of net financial position to EBITDA of less than 2 (residual amount of the loans at 31 December 2018 equal to € 7 million) or less than 2.5 (residual amount of the loans at 31 December 2018 equal to € 15.7 million) widely complied with at 31 December 2018.
184
Note 36 provides information on financial risks, pursuant to IFRS 7.
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
15. OTHER FINANCIAL LIABILITIES 31.12.2018 Current Payables to former Okida shareholders Payables to A.R.C. shareholders Derivative instruments on interest rates TOTAL
31.12.2017
Non-current
Current
Non-current
1,735
-
60
120
60
180
-
-
15
-
1,795
120
75
180
As part of the acquisition of Okida Elektronik, the parties agreed that the
The payable to the A.R.C. shareholders of € 180,000 at 31 December 2018 is
payment of part of the price would be subject to adjustment (depending, inter
related to the part of the price still to be paid to the sellers, which was depos-
alia, on Okida’s 2018 EBITDA) and postponed compared to the effective date
ited on an fixed account (Note 5) and will be released in favour of the sellers
of the transaction (4 September 2018). The payables to Okida shareholders
at constant rates in 3 years, in accordance with contractual agreements and
at 31 December 2018 in these financial statements represents the residual
guarantees issued by the sellers.
portion of the price to be paid to the sellers by the Company.
16. POST-EMPLOYMENT BENEFIT RESERVE AT 31 DECEMBER 2017
2,200 24
Financial expenses Payments made
(113)
Tax effect
(27)
AT 31 DECEMBER 2018
Following the revision of IAS 19 - Employee benefits, from 1 January 2013 all actuarial gains or losses are recorded immediately in the comprehensive income statement (“Other comprehensive income”) under the item “Actuarial income and losses”.
2,084
Post-employment benefits are calculated as follows:
FINANCIAL ASSUMPTIONS
DEMOGRAPHIC THEORY
31.12.2018
31.12.2017
31.12.2018
31.12.2017
Discount rate
1.30%
1.15%
Mortality rate
ISTAT 2016 M/F
ISTAT 2016 M/F
Inflation
1.70%
1.80%
Disability rate
INPS 1998 M/F
INPS 1998 M/F
Staff turnover
6%
6%
Advance pay-outs Retirement age
5% per year
5% per year
pursuant to legislation in force on 31 December 2018
pursuant to legislation in force on 31 December 2017
17. PROVISIONS FOR RISKS AND CHARGES
Reserve for agents’ indemnities
31.12.2017
PROVISIONS
UTILISATION
31.12.2018
199
28
(19)
208
Product guarantee fund
60
7
(7)
60
Provision for risks on equity investments
60
640
-
700
Reserve for legal risks Total
50
70
-
120
369
745
(26)
1,088
The reserve for agents’ indemnities covers amounts payable to agents if the
The reserve for legal risks is allocated for disputes of a modest size.
Company terminates the agency relationship.
The provisions booked to the provisions for risks, which represent the esti-
The product guarantee fund covers the risk of returns or charges by custom-
mate of future payments made based on historical experience, have not been
ers for products already sold.
discounted because the effect is considered negligible.
The provision for risks on equity investments was set aside to cover future outlays to restore the shareholders’ equity of the Chinese subsidiary Sabaf Appliance Components, which was negative at 31 December 2018. 185
SABAF . ANNUAL REPORT 2018
18. TRADE PAYABLES
19. TAX PAYABLES
31.12.2018
31.12.2017
CHANGE
18,945
16,569
2,374
Total
To inland revenue for IRPEF tax deductions
Average payment terms did not change versus the previous year. The amount of trade payables in currencies other than the euro is not significant. At 31 December 2018, there were no overdue payables of a significant amount and
Other tax payables
the Company did not receive any injunctions for overdue payables.
Total
31.12.2018
31.12.2017
CHANGE
590
569
21
-
54
(54)
590
623
(33)
Payables for IRPEF tax deductions, relating to employment and self-employment, were duly paid at maturity.
20. OTHER CURRENT PAYABLES 31.12.2018
31.12.2017
CHANGE
To employees
3,649
3,931
(282)
To social security institutions
1,901
2,063
(162)
Advances from customers To agents Other current payables Total
91
64
27
235
165
70
216
227
(11)
6,092
6,450
(358)
At the beginning of 2019, payables due to employees and social security institutions were paid in accordance with the scheduled expiry dates.
21. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets
31.12.2018
31.12.2017
3,472
3,455
Deferred tax liabilities
(107)
(68)
Net position
3,365
3,387
The table below analyses the nature of the temporary differences that determine the recognition of deferred tax liabilities and assets and their changes during the year and the previous year.
AMORTISATION AND LEASING
PROVISIONS AND VALUE ADJUSTMENTS
FAIR VALUE OF DERIVATIVE INSTRUMENTS
At 31 December 2016
393
770
To the income statement
(46)
To shareholders’ equity
-
At 31 December 2017
347 69
To shareholders’ equity
-
At 31 December 2018
416
To the income statement
GOODWILL
ACTUARIAL POST-EMPLOYMENT BENEFIT RESERVE EVALUATION
OTHER TEMPORARY DIFFERENCES
TOTAL
57
1,771
178
17
3,186
149
(55)
-
(2)
172
218
-
-
-
(17)
-
(17)
919
2
1,771
159
189
3,387
(45)
53
-
-
(93)
(16)
-
-
-
(6)
-
(6)
874
55
1,771
153
96
3,365
Deferred tax assets relating to goodwill refer to the exemption of the value of the investment in Faringosi Hinges s.r.l. made in 2011 pursuant to Italian law Decree 98/2011.
186
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
22. NET FINANCIAL POSITION As required by the CONSOB memorandum of 28 July 2006, we disclose that the Company’s net financial position is as follows: 31.12.2018
31.12.2017
CHANGE
6
5
1
1,953
2,692
(739)
-
-
-
A.
Cash (Note 11)
B.
Positive balances of unrestricted bank accounts (Note 11)
C.
Other cash equivalents
D.
Liquidity (A+B+C)
1,959
2,697
(738)
E.
Current financial receivables
5,110
1,067
4,043
F.
Current bank payables (Note 14)
7,419
12,946
(5,527)
G.
Current portion of non-current debt (Note 14)
9,911
5,982
3,929
H.
Other current financial payables (Note 15)
1,795
75
1,720
I.
Current financial debt (F+G+H)
19,125
19,003
122
J.
Net current financial debt (I-D-E)
12,056
15,239
(3,183)
K.
Non-current bank payables (Note 14)
33,669
16,298
17,371
L.
Other non-current financial payables
120
180
(60)
M. Non-current financial debt (K+L)
33,789
16,478
17,311
N.
45,845
31,717
14,128
Net financial debt (J+M)
The cash flow statement, which shows the changes in cash and cash equivalents (letter D. of this statement), describes in detail the cash flows that led to the change in the net financial position.
Comments on key income statement items 23. REVENUE In 2018, sales revenue totalled € 110,065,252, down 4.9% from €115,687,029 in 2017.
Revenue by geographical area 2018
%
2017
%
% CHANGE
Italy
24,762
22.5%
29,587
25.6%
-16.3%
Western Europe
8,925
8.1%
8,920
7.7%
+0.1%
Eastern Europe and Turkey
36,807
33.4%
35,655
30.8%
+3.2%
Asia and Oceania (excluding Middle East)
4,893
4.4%
9,570
8.3%
-48.9%
Central and South America
11,912
10.8%
11,331
9.8%
+5.1%
Middle East and Africa
13,323
12.1%
12,703
11.0%
+4.9%
North America and Mexico
9,443
8.6%
7,921
6.8%
+19.2%
110,065
100%
115,687
100%
-4.9%
Total
The sales analysis by geographical area shows an uneven trend in the various
tionships with major customers and the contribution made by the acquisition
markets in which the Company operates. The best results were achieved on
in Turkey of Okida; only in Italy sales are down due to the sharp reduction
the American continent: sales in North America were sustained by the good
in the production of domestic appliances. North Africa and the Middle East
performance of consumption; in South America, strong growth rates were
have shown signs of weakness, while the of the Company’s presence on
recorded in the Andean countries, which more than offset the effects of the
Asian markets is not yet sufficiently consolidated.
crisis in Argentina and a still stagnant demand in Brazil. Satisfactory growth rates were recorded in European markets, thanks to the consolidation of rela187
SABAF . ANNUAL REPORT 2018
Revenue by product family 2018
%
2017
%
% CHANGE
Brass valves
4,342
3.9%
5,992
5.2%
-27.5%
Light alloy valves
37,603
34.2%
39,219
33.9%
-4.1%
6,521
5.9%
7,365
6.4%
-11.5%
Total valves and thermostats
48,466
44.0%
52,576
45.5%
-7.8%
Standard burners
21,820
19.8%
25,127
21.7%
-13.2%
Special burners
24,018
21.8%
24,136
20.9%
-0.5%
Total burners
45,838
41.6%
49,263
42.6%
-7.0%
15,761
14.3%
13,848
11.9%
+13.8%
110,065
100%
115,687
100%
-4.9%
Thermostats
Accessories and other revenues Total
The sales analysis by product category shows a marked decrease in more
Average sales prices in 2018 were 0.3% lower compared to 2017.
mature products (brass valves and thermostats), while more innovative product families (light alloy valves and special burners) show an improved performance.
24. OTHER INCOME
26. COSTS FOR SERVICES 2018
2017
CHANGE
Outsourced processing
8,815
8,681
134
Property rental
4,009
3,974
35
Electricity and natural gas
3,271
3,314
(43)
Maintenance
3,081
3,296
(215)
Advisory services
1,977
1,676
301
30
Transport and export expenses
1,394
1,408
(14)
578
146
Directors’ fees
475
881
(406)
2,648
337
Insurance
468
444
24
Commissions
631
533
98
Travel expenses and allowances
550
550
0
Waste disposal
378
358
20
Canteen
291
296
(5)
Temporary agency workers
196
180
16
2018
2017
CHANGE
1,424
1,457
(33)
629
378
251
Contingent income
55
97
(42)
Rental income
87
89
(2)
Use of provisions for risks and charges
26
39
(13)
Services to parent company
40
10
Other income
724 2,985
Sale of trimmings Services to subsidiaries
Total
Services to subsidiaries refer to administrative, commercial and technical services provided within the scope of the Group.
25. MATERIALS 2018
2017
CHANGE
Commodities and outsourced components
41,286
42,973
(1,687)
Consumables
3,799
3,582
217
45,085
46,555
(1,470)
Total
Other costs Total
2,004
2,013
(9)
27,540
27,604
(64)
All-in-all, costs for services did not change significantly compared to the previous year. Costs for advisory services related to technical (€ 564,000), sales (€ 503,000)
In 2018, the effective purchase prices of the main raw materials (aluminium
and legal, administrative and general (€ 810,000) services.
alloys, steel and brass) were on average higher than in 2017, with a negative
During the year, the Board of Directors was renewed and the fees due to the
impact of 0.6% of sales. Consumption (purchases plus change in inventories)
directors were recalculated, with a reduction in expenses of around € 400,000.
as a percentage of sales was 42.6% in 2018, compared with 41.3% in 2017.
Other costs included expenses for the registration of patents, waste disposal, cleaning, leasing third-party assets and other minor charges.
188
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
27. PAYROLL COSTS
Salaries and wages
30. FINANCIAL EXPENSES
2018
2017
CHANGE
18,744
19,540
(796)
Social Security costs
6,099
6,249
(150)
Temporary agency workers
1,779
1,477
302
Post-employment benefit reserve and other costs
1,445
1,468
(23)
321
-
321
28,388
28,734
(346)
Stock grant plan Total
Average of the Company headcount in 2018 totalled 503 employees (376
2018
2017
CHANGE
Interest paid to banks
641
244
397
Banking expenses
240
209
31
Other financial expense
37
29
8
Total
918
482
436
The increase in financial expenses to banks reflects the higher average net debt for the year. Interest paid to banks includes IRS spreads payable that hedge interest rate risks.
blue-collars, 117 white-collars and supervisors, 10 managers), compared with
31. EXCHANGE RATE GAINS AND LOSSES
514 in 2017 (394 blue-collars, 110 white-collars and supervisors, 10 manag-
During the 2018 financial year, the Company reported net foreign exchange
ers). The average number of temporary staff, with supply contract, was 47 in 2018 (42 in 2017). In 2018, the Company made negligible use of the temporary unemployment fund. The item “Stock Grant Plan” included the measurement at 31 December 2018 of the fair value of rights to the assignment of Sabaf shares attributed to employ-
gains of € 157,000 (net losses of € 88,000 in 2017).
32. PROFITS AND LOSSES FROM EQUITY INVESTMENTS
ees. For details of the Stock Grant Plan, refer to Note 42.
28. OTHER OPERATING COSTS 2018
2017
CHANGE
Losses and writedowns of trade receivables
402
49
353
Non-income related taxes and duties
217
238
(21)
Contingent liabilities
192
138
54
77
-
77
Other provisions
Provisions for risks
668
26
642
Other operating expenses
296
264
32
1,852
715
1,137
Total
Non-income taxes mainly include IMU, TASI and the tax for the disposal of urban solid waste. Provisions for risks and other provisions relate to sums set aside for the risks described in Note 17.
2018
2017
CHANGE
Dividends received from Sabaf Immobiliare
3,000
1,500
1,500
Dividends received from Okida Elektronik
1,322
-
1,322
-
3
(3)
4,322
1,503
2,819
Other profits from equity investments Total
This item includes dividends received from investee companies.
33. INCOME TAX Current taxes
2017
CHANGE
967
1,791
(824)
Deferred tax assets and liabilities
16
(219)
235
Taxes related to previous financial years
21
(502)
523
182
-
182
1,186
1,070
116
Taxes on dividends received
29. WRITE-DOWNS/WRITE-BACKS OF NON-CURRENT ASSETS
2018
Total
Current taxes include IRES of € 672,000 and IRAP of € 295,000 (€ 1,436,000
2018
2017
CHANGE
Write-down Sabaf Appliance Components
-
(622)
622
Allocation to risk provisions on equity investments
-
(60)
60
Total
0
(682)
682
and € 355,000 respectively in 2017).
In 2017, this item included the write-down of the equity investment in Sabaf Appliance Components, to bring it into line with the value of shareholders’ equity at 31 December 2018. As detailed in Note 17, in these consolidated financial statements a provision of € 640,000 was made to the provision for risks on equity investments, recorded under Other operating costs, to cover future outlays expected to restore the shareholders’ equity of the Chinese subsidiary, which at 31 December 2018 was negative. 189
SABAF . ANNUAL REPORT 2018
Reconciliation between the tax burden booked in the financial statements and the theoretical tax burden calculated according to the statutory tax rates currently in force in Italy is shown in the following table: Theoretical income tax Taxes related to previous financial years
2018
2017
2,214
2,177
18
88
(803)
(342)
“Patent box” tax effect
(323)
(1,151)
“Iper e Superammortamento” tax benefit
(449)
(179)
279
209
4
9
Tax effect of dividends from investee companies
Permanent tax differences Other differences IRES (current and deferred)
940
811
IRAP (current and deferred)
246
259
Total
1,186
1,070
Theoretical taxes were calculated applying the current corporate income tax
In these separate financial statements, the Company recognised the tax ben-
(IRES) rate, i.e. 24%, to the pre-tax result. IRAP is not taken into account for
efit related to the Patent Box for 2018 of € 375,000 (€ 323,000 for IRES and
the purpose of reconciliation because, as it is a tax with a different assess-
€ 52,000 for IRAP). Following the prior agreement signed with the Revenue
ment basis from pre-tax profit, it would generate distorting effects.
Agency, in 2017 the benefit for the three-year period from 2015 to 2017, for a total of € 1,324,000 was recognised. No significant tax disputes were pending at 31 December 2018.
34. DIVIDENDS
35. SEGMENT REPORTING
On 31 May 2018, shareholders were paid an ordinary dividend of € 0.55 per
Within the Sabaf Group, the Company operates exclusively in the gas parts
share (total dividends of € 6,071,000).
segment for household cooking. The information in the consolidated finan-
The Directors have recommended payment of an unchanged dividend of €
cial statements is divided between the various segments in which the Group
0.55 per share this year. This dividend is subject to approval of shareholders
operates.
in the annual Shareholders’ Meeting and was not included under liabilities in these financial statements. The dividend proposed is scheduled for payment on 29 May 2019 (ex-date 27 May and record date 28 May).
36. INFORMATION ON FINANCIAL RISK Categories of financial instruments In accordance with IFRS 7, a breakdown of the financial instruments is shown below, among the categories set forth in IAS 39. 31.12.2018
31.12.2017
-
7
Financial assets Income statement fair value Derivative cash flow hedges (on currency) Amortised cost Cash and cash equivalents
1,959
2,697
Trade receivables and other receivables
35,922
31,876
Non-current loans
5,246
1,668
Current loans
1,600
1,000
Other financial assets
3,630
240
231
15
50,999
35,226
Financial liabilities Income statement fair value Derivative cash flow hedges (on interest rates) Amortised cost Loans Other financial liabilities Trade payables
190
1,915
240
18,945
16,569
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
The Company is exposed to financial risks related to its operations, mainly:
Sensitivity analysis
• credit risk, with special reference to normal trade relations with customers;
Considering the IRS in place, at the end of 2018 almost all of the Company’s
• market risk, relating to the volatility of prices of commodities, foreign ex-
financial debt was at a fixed rate. Therefore, at 31 December 2018 no sensitiv-
change and interest rates; • liquidity risk, which can be expressed by the inability to find financial re-
ity analysis was carried out in that the exposure to interest rate risk, linked to a hypothetical increase (decrease) in interest rates, is not significant.
sources necessary to ensure Company operations. It is part of Sabaf’s policies to hedge exposure to changes in prices and in fluctuations in exchange and interest rates via derivative financial instruments. Hedging is done using forward contracts, options or combinations of these instruments. Generally speaking, the maximum duration covered by such hedging does not exceed 18 months. The Company does not enter into speculative transactions. When the derivatives used for hedging purposes meet the necessary requisites, hedge accounting rules are followed.
Credit risk management
Commodity price risk management A significant portion of the Company’s purchase costs is represented by aluminium, steel and brass. Sales prices of products are generally renegotiated annually; as a result, the Company is unable to immediately pass on to customers any changes in the prices of commodities during the year. The Company protects itself from the risk of changes in the price of aluminium, steel and brass with supply contracts signed with suppliers for delivery up to twelve months in advance or, alternatively, with derivative financial instruments. In 2018 and 2017, the Company did not use financial derivatives on commodities. To stabilise the rising costs of commodities, Sabaf preferred to
Trade receivables involve producers of domestic appliances, multinational
execute transactions on the physical market, fixing prices with suppliers for
groups and smaller manufacturers in a few or single markets. The Company
immediate and deferred delivery.
assesses the creditworthiness of all its customers at the start of supply and systemically at least on an annual basis. After this assessment, each customer is assigned a credit limit. A credit insurance policy is in place, which guarantees cover for approximately 50% of trade receivables. Credit risk relating to customers operating in emerging economies is generally attenuated by the expectation of revenue through letters of credit.
Forex risk management
Liquidity risk management The management of liquidity and financial debt is coordinated at Group level. The Group operates with a debt ratio considered physiological (net financial debt / shareholders’ equity at 31 December 2018 of 45%, net financial debt / EBITDA of 1.79) and has unused short-term lines of credit. To minimise the risk of liquidity, the Administration and Finance Department: • maintains a correct balance of net financial debt, financing investments with capital and with medium to long-term debt.
The main exchange rate to which the Company is exposed is the euro/USD
• verifies systematically that the short-term accrued cash flows (amounts
in relation to sales made in dollars (mainly in North America) and, to a less-
received from customers and other income) are expected to accommo-
er extent, to some purchases (mainly from Asian manufacturers). Sales in US
date the deferred cash flows (short-term financial debt, payments to sup-
dollars represented 12% of total turnover in 2018, while purchases in dollars
pliers and other outgoings);
represented 5% of total turnover. During the year, operations in dollars were
• regularly assesses expected financial needs in order to promptly take any
partially hedged through forward sales contracts; no currency derivatives were
corrective measures. An analysis by expiration date of financial payables
pending at 31 December 2018.
at 31 December 2018 and 31 December 2017 is shown below
Sensitivity analysis With reference to financial assets and liabilities in US dollars at 31 December 2018, a hypothetical and immediate revaluation of 10% of the euro against the dollar would have led to a loss of € 270,000.
Interest rate risk management Owing to the current trend in interest rates, the Company favours fixed-rate indebtedness: medium to long-term loans originated at a variable rate are converted to a fixed rate by entering into interest rate swaps (IRS) at the same time as the loan is opened. At 31 December 2018, IRS totalling € 26.6 million were in place, mirrored in mortgages with the same residual debt, through which the Company transformed the floating rate of the mortgages into fixed rate. Considering the IRS in place, at the end of 2018 almost all medium to long-term financial debt was at a fixed rate. The derivative contracts were not designated as a cash flow hedge and were therefore recognised using the “income statement fair value” method.
191
SABAF . ANNUAL REPORT 2018
AT 31 DECEMBER 2018 Unsecured loans Short-term bank loans
Carrying value
Contractual financial flows
Within 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
43,580
44,414
1,795
8,422
32,621
1,576
7,419
7,419
7,419
-
-
-
Payables to ARC shareholders
180
180
-
60
120
-
Payables to former Okida shareholders
1,735
1,735
1,735
-
-
-
Total financial payables
52,914
53,748
10,949
8,482
32,741
1,576
Trade payables
18,954
18,954
18,437
517
-
-
Total
71,868
72,702
29,386
8,999
32,741
1,576
Carrying value
Contractual financial flows
Within 3 months
From 3 months to 1 year
From 1 to 5 years
More than 5 years
AT 31 DECEMBER 2017 Unsecured loans
22,280
22,676
1,537
4,612
16,527
-
Short-term bank loans
10,846
10,846
10,846
-
-
-
Short-term Sabaf Turkey loan
2,100
2,118
-
2,118
-
-
Payables to ARC shareholders
240
240
-
60
180
-
Total financial payables
35,466
35,880
12,383
6,790
16,707
0
Trade payables
16,569
16,569
15,615
954
-
-
Total
52,035
52,449
27,998
7,744
16,707
0
The various due dates are based on the period between the end of the re-
Hierarchical levels of fair value assessment
porting period and the contractual expiration date of the commitments, the
The revised IFRS 7 requires that financial instruments reported in the state-
values indicated in the table correspond to non-discounted cash flows. Cash
ment of financial position at fair value be classified based on a hierarchy that
flows include the shares of principal and interest; for floating rate liabilities,
reflects the significance of the input used in determining the fair value. IFRS
the shares of interest are determined based on the value of the reference
7 makes a distinction between the following levels:
parameter at the end of the reporting period and increased by the spread set
• Level 1 – quotations found on an active market for assets or liabilities
forth in each contract.
subject to assessment; • Level 2 - input other than prices listed in the previous point, which can be observed directly (prices) or indirectly (derived from prices) on the market; • Level 3 – input based on observable market data
The following table shows the assets and liabilities valued at fair value at 31 December 2018, by hierarchical level of fair value assessment.
192
LEVEL 1
LEVEL 2
LEVEL 3
TOTAL
Other financial liabilities (derivatives on interest rates)
-
(231)
-
(231)
Option on minorities A.R.C.
-
-
-
-
Total assets and liabilities at fair value
-
(231)
-
(231)
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
37. RELATIONS BETWEEN GROUP COMPANIES AND WITH RELATED PARTIES The table below illustrates the impact of all transactions between Sabaf S.p.A. and other related parties on the balance sheet and income statement items and related parties, with the exception of the directors’ fees, auditors and key management personnel which is stated in the Report on Remuneration.
Impact of related-party transactions or positions on statement of financial position items TOTAL 2018
SUBSIDIARIES
GIUSEPPE SALERI SAPA
OTHER RELATED PARTIES
TOTAL RELATED PARTIES
IMPACT ON THE TOTAL
Non-current financial assets
5,367
5,247
-
-
5,247
97.76%
Trade receivables
35,158
6,166
12
-
6,178
17.57%
Tax receivables
2,377
-
1,084
-
1,084
45.60%
Current financial assets
5,874
1,600
-
-
1,600
27.24%
Trade payables
18,945
3,895
-
5
3,900
20.59%
TOTAL 2017
SUBSIDIARIES
GIUSEPPE SALERI SAPA
OTHER RELATED PARTIES
TOTAL RELATED PARTIES
IMPACT ON THE TOTAL
Non-current financial assets
1,848
1,668
-
-
1,668
90.26%
Trade receivables
31,154
1,209
-
-
1,209
3.88%
Tax receivables
2,230
-
1,084
-
1,084
48.60%
Current financial assets
1,788
1,000
-
-
1,000
55.93%
Trade payables
16,573
510
-
2
512
3.09%
Current financial payables
2,100
2,100
-
-
2,100
100%
Impact of related-party transactions on income statement items
Revenue Other income
TOTAL 2018
SUBSIDIARIES
GIUSEPPE SALERI SAPA
OTHER RELATED PARTIES
TOTAL RELATED PARTIES
IMPACT ON THE TOTAL
110,065
11,520
-
-
11,520
10.46%
2,985
800
40
-
840
28.14%
Materials
45,085
1,417
-
-
1,147
3.14%
Services
27,540
3,991
-
22
4,013
14.57%
Capital gains on non-current assets
496
467
-
-
467
94.15%
Other operating costs
1,852
640
-
-
640
34.56%
Financial income
123
119
-
-
119
96.75%
TOTAL 2017
SUBSIDIARIES
GIUSEPPE SALERI SAPA
OTHER RELATED PARTIES
TOTAL RELATED PARTIES
IMPACT ON THE TOTAL
115,687
10,239
-
-
10,239
8.85%
2,648
414
10
-
424
16%
Revenue Other income Materials
46,555
1,548
-
-
1,548
3.33%
Services
27,604
3,966
-
20
3,986
14.44%
Capital gains on non-current assets
98
97
-
-
97
99.58%
Write-downs of non-current assets
682
682
-
-
682
100%
89
80
-
-
80
89.89%
482
2
-
-
2
0.46%
Financial income Financial expenses
193
SABAF . ANNUAL REPORT 2018
Relations with subsidiaries mainly consist of: • trade relations, relating to the purchase and sale of semi-processed goods or finished products with Sabaf do Brasil, Faringosi Hinges, Sabaf Turkey and Sabaf Kunshan Trading; • sales of machinery to Sabaf do Brasil and Sabaf Turkey, which generated the capital gains highlighted; • charging for the provision of intra-group technical, commercial and administrative services; • rental of property from Sabaf Immobiliare; • intra-group loans; • group VAT. Transactions with the shareholder, Giuseppe Saleri S.a.p.A., comprise: • administration services provided by Sabaf S.p.A. to Giuseppe Saleri S.a.p.A.; • transactions as part of the domestic tax consolidation scheme until 2016, which generated the receivables shown in the tables. Related-party transactions are regulated by specific contracts regulated at arm’s length conditions.
42. SHARE-BASED PAYMENTS In order to adopt a medium and long-term incentive instrument for directors and employees of the Sabaf Group, on the proposal of the Remuneration and Nomination Committee, the Board of Directors prepared a specific free allocation plan of shares (the “Plan”) with the characteristics described below. The Plan was approved by the Shareholders’ Meeting on 8 May 2018 and the related Regulations by the Board of Directors on 15 May 2018. Purpose of the plan The Plan aims to promote and pursue the involvement of the beneficiaries whose activities are considered relevant for the implementation of the contents and the achievement of the objectives set out in the Business Plan, foster loyalty development and motivation of managers, by increasing their entrepreneurial approach as well as align the interests of management with those of the Company’s shareholders more closely, with a view to encouraging the achievement of significant results in the economic and asset growth of the Company. Beneficiaries of the plan The Plan is intended for persons who hold or will hold key positions in the Com-
38. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS
pany and/or its Subsidiaries, with reference to the implementation of the con-
Pursuant to the CONSOB memorandum of 28 July 2006, note that no signif-
• Cluster 1: Beneficiaries already identified in the Plan or who will be identi-
icant non-recurring events or transactions, as defined by the memorandum,
fied by the Board of Directors by 30 June 2018 on the Shareholders’ Meet-
took place in 2018.
ing authority.
39. ATYPICAL AND/OR UNUSUAL TRANSACTIONS Pursuant to CONSOB memorandum of 28 July 2006, the Company declares that no atypical and/or unusual transactions as defined by the CONSOB memorandum were executed during 2018.
tents and the achievement of the objectives of the 2018-2020 Business Plan. The Beneficiaries are divided into two groups:
• Cluster 2: Beneficiaries who will be identified by the Board of Directors from 1 July 2018 to 30 June 2019 on the Shareholders’ Meeting authority. On 15 May 2018, the Board of Directors identified the Beneficiaries of Cluster 1 of the Plan to whom a total of 185,600 rights have been assigned. Subject-matter of the plan The subject-matter of the Plan is the free allocation to the Beneficiaries of a
40. COMMITMENTS
maximum of 370,000 Rights, each of which entitles them to receive free of
Guarantees issued
Plan, 1 Sabaf S.p.A. Share.
Sabaf S.p.A. also issued sureties to guarantee mortgage loans granted by banks
The free allocation of Sabaf S.p.A. shares is conditional, among other things,
to employees for a total of € 4,734,000 (€ 5,145,000 at 31 December 2017).
on the achievement, in whole or in part, with progressiveness, of the business
41. FEES TO DIRECTORS, STATUTORY AUDITORS AND EXECUTIVES WITH STRATEGIC RESPONSIBILITIES Fees to directors, statutory auditors and executives with strategic responsibilities are described in the Report on Remuneration that will be presented to the shareholders’ meeting called to approve these separate financial statements.
charge, under the terms and conditions provided for by the Regulations of the
objectives related to the ROI, EBITDA and TSR indicators. Deadline of the Plan The Plan expires on 31 December 2022 (or on a different subsequent date set by the Board of Directors). Fair Value measurement methods Considering the allocation mechanism described above, it was necessary to measure at fair value the rights assigned to receive shares of the company.
194
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
The main assumptions made at the beginning of the vesting period of the plan are illustrated below:
FAIR VALUE MEASUREMENT METHODS - RIGHTS RELATING O OBJECTIVES MEASURED IN ROI 2018
2019
2020
2018-2020
19.48
19.48
19.48
19.48
-0.2846%
-0.1641%
-0.0497%
-0.0497%
31%
29%
27%
29%
Dividend yield
2.30%
2.30%
2.30%
2.30%
Strike Price
19.48
19.48
19.48
19.48
Total value on ROI
6.83
Fair Value
2.28
Share price at the start of the vesting period Risk free rate Expected volatility
33.40%
Rights on ROI
FAIR VALUE MEASUREMENT METHODS - RIGHTS RELATING TO OBJECTIVES MEASURED IN EBITDA 2018
2019
2020
2018-2020
19.48
19.48
19.48
19.48
-0.2846%
-0.1641%
-0.0497%
-0.0497%
31%
29%
27%
29%
Dividend yield
2.30%
2.30%
2.30%
2.30%
Strike Price
19.48
19.48
19.48
19.48
Total value on EBITDA
8.97
Fair Value
2.99
Share price at the start of the vesting period Risk free rate Expected volatility
33.30%
Rights on EBITDA
FAIR VALUE MEASUREMENT METHODS - RIGHTS RELATING TO OBJECTIVES MEASURED IN TSR
Share price at the start of the vesting period Risk free rate
2018
2019
2020
19.48
19.48
19.48
-0.2846%
-0.1641%
-0.0497%
31%
29%
27%
0.00%
0.00%
0.00%
Strike Price
22.61
25.32
28.34
Total value on TSR
6.00
Expected volatility Dividend yield
Rights on TSR
33.30%
Fair Value
Fair Value per share at initial date of the vesting period
2.00
7.27
In line with the date on which the beneficiaries became aware of the assignment of the rights and terms of the plan, the grant date was set at 15 May 2018, the accounting impacts of the plan for the first half of 2018 are illustrated in Note 13 and Note 27 of these Financial statements.
195
SABAF . ANNUAL REPORT 2018
Summary of public grants pursuant to Article 1, paragraphs 125-129, Italian Law no. 124/2017
Patent Box:
In compliance with the requirements of transparency and publicity envisaged
23/12/2014 no.190) Articles from 37 to 45.
concerning the reduced taxation of income from intangible assets, the reference regulations of which are contained in the 2015 Stability Law (Italian Law
pursuant to Italian Law no. 124 of 4 August 2017, article 1, paragraphs 125129, which imposed on companies the obligation to indicate in the explana-
Super ammortamento (Super amortisation):
tory notes “grants, contributions, and in any case economic advantages of any
it allows an over-estimation of 130% of the newly purchased or leased instru-
kind”, the following are the details of the relative amounts, accounted for “on
mental investments, the reference regulations of which are contained in Law
a cash basis”.
no. 205 of 27 December 2017. CONTRIBUTION VALUE
DISBURSING SUBJECT
1,307
Italian State
Super ammortamento (Super amortisation)
179
Italian State
Energy-intensive contributions
509
Italian State
STATUTORY REFERENCES Patent Box
Total
Energy-intensive contributions: Accessible grants for companies that consume a lot of electricity, whose regulatory reference is the MISE Decree of 21 December 2017.
1,995
List of investments with additional information required by CONSOB (communication DEM6064293 of 28 July 2006) IN SUBSIDIARIES
1
REGISTERED OFFICES
SHARE CAPITAL AT 31 DECEMBER 2018
SHAREHOLDERS
OWNERSHIP %
SHAREHOLDERS’ EQUITY AT 31 DECEMBER 2018
2018 PROFIT (LOSS)
Faringosi Hinges s.r.l.
Ospitaletto (BS)
EUR 90,000
Sabaf S.p.A.
100%
EUR 7,248,309
EUR 996,255
Sabaf Immobiliare s.r.l.
Ospitaletto (BS)
EUR 25,000
Sabaf S.p.A.
100%
EUR 21,341,974
EUR 759,565
Sabaf do Brasil Ltda
Jundiaì (Brazil)
BRL 24,000,000
Sabaf S.p.A.
100%
BRL 48,305,068
BRL 6,954,784
Sabaf US Corp.
Plainfield (USA)
USD 100,000
Sabaf S.p.A.
100%
USD -28,342
USD 51,140
Kunshan (China)
EUR 4,400,000
Sabaf S.p.A.
100%
CNY -4,347,931
CNY -4,407,939
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki
Manisa (Turkey)
TRY 28,000,000
Sabaf S.p.A.
100%
TRY 139,948,685
TRY 67,735,385
Sabaf Appliance Components Trading (Kunshan) Co., Ltd. in liquidation
Kunshan (China)
EUR 200,000
Sabaf S.p.A.
100%
CNY 1,955,552
----
Campodarsego (PD)
EUR 45,000
Sabaf S.p.A.
70%
EUR 5,289,518
EUR 655,460
Sabaf S.p.A.
30% TRY 34,726,075
TRY 27,193,127
COMPANY NAME
Sabaf Appliance Components (Kunshan) Co., Ltd.
A.R.C. s.r.l.
Okida Elektronik Sanayi ve Tickaret A.S
Istanbul (Turkey)
TRY 5,000,000
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki
70%
Other significant equity investments None.
1
196
Values taken from the separate financial statements of subsidiaries, prepared in accordance with locally applicable accounting standards
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Origin, possibility of utilisation and availability of reserves
AMOUNT
POSSIBILITY OF UTILISATION
AVAILABLE SHARE
AMOUNT SUBJECT TO TAXATION FOR THE COMPANY IN THE CASE OF DISTRIBUTION
Share premium reserve
10,002
A, B, C
10,002
0
Revaluation reserve, Law 413/91
42
A, B, C
42
42
Revaluation reserve, Law 342/00
1,592
A, B, C
1,592
1,592
Legal reserve
2,307
B
0
0
Other retained earnings
58,657
A, B, C
58,657
0
(456)
0
0
321
0
0
72,465
70,293
1,634
DESCRIPTION
CAPITAL RESERVE:
RETAINED EARNINGS:
VALUATION RESERVE: Post-employment benefit actuarial reserve Reserve for stock grant plan TOTAL
KEY: A. for share capital increase B. to hedge losses C. for distribution to shareholders
Statement of revaluations of equity assets at 31 December 2018
Investment property
GROSS VALUE
CUMULATIVE DEPRECIATION
NET VALUE
Law 72/1983
137
(137)
0
1989 merger
516
(467)
49
Law 413/1991
47
(43)
4
1994 merger
1,483
(1,091)
392
2,870
(2,454)
416
5,053
(4,192)
861
Law 576/75
205
(205)
0
Law 72/1983
2,219
(2,219)
0
1989 merger
6,140
(6,140)
0
1994 merger
6,820
(6,820)
0
15,384
(15,384)
0
Law 342/2000
Plant and machinery
Industrial and commercial equipment
Law 72/1983
161
(161)
0
Other assets
Law 72/1983
50
(50)
0
20,648
(19,787)
861
TOTAL
197
SABAF . ANNUAL REPORT 2018
GENERAL INFORMATION
Sabaf S.p.A. is a company organised under the legal system of the Republic of Italy.
Registered and administrative office
Via dei Carpini, 1 25035 - Ospitaletto (Brescia)
Contacts
Tel: +39 030 - 6843001
Fax: +39 030 - 6848249
E-mail: info@sabaf.it
Website: www.sabaf.it
Tax information
R.E.A. Brescia 347512
Tax Code 03244470179
VAT Number 01786910982
APPENDIX Information as required by Article 149-duodecies of the CONSOB Issuers’ Regulation The following table, prepared pursuant to Article 149-duodecies of the CONSOB Issuers’ Regulation, shows fees relating to 2018 for auditing services and for services other than auditing provided by the Independent Auditor. No services were provided by entities belonging to the network.
PARTY PROVIDING THE SERVICE
FEES PERTAINING TO THE 2018 FINANCIAL YEAR
Audit
EY S.p.A.
20
Certification services
EY S.p.A.
---
Other services
EY S.p.A.
16 2
(€/000)
Total
2
auditing procedures agreement relating to interim management reports
198
36
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
CERTIFICATION OF SEPARATE FINANCIAL STATEMENTS pursuant to Article 154-bis of Italian Legislative Decree 58/98 Pietro Iotti, the Chief Executive Officer, and Gianluca Beschi, the Financial Reporting Officer of Sabaf S.p.A., have taken into account the requirements of Article 154-bis, paragraphs 3 and 4, of Legislative Decree 58 of 24 February 1998 and can certify: • the adequacy, in relation to the business characteristics and • the actual application of the administrative and accounting procedures for the formation of the separate financial statements during the 2018 financial year. They also certify that: • the separate financial statements: - were prepared in accordance with the international accounting policies recognised in the European Community in accordance with EC regulation 1606/2002 of the European Parliament and Council of 19 July 2002 and with the measures issued in implementation of Article 9 of Italian Legislative Decree 38/2005; - are consistent with accounting books and records; - provide a true and fair view of the financial position and performance of the issuer;
• the report on operations contains a reliable analysis of the performance and results of operations and the situation at the issuer, along with a description of the key risks and uncertainties to which it is exposed.
Ospitaletto, 26 March 2019
Chief Executive Officer
The Financial Reporting Officer
Pietro Iotti
Gianluca Beschi
199
SABAF . ANNUAL REPORT 2018
200
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
201
SABAF . ANNUAL REPORT 2018
202
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
203
SABAF . ANNUAL REPORT 2018
204
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
205
SABAF . ANNUAL REPORT 2018
Report of the Board of Statutory Auditors to the Shareholders’ Meeting of SABAF S.p.A. in accordance with Art. 2429, paragraph 2 of the Italian Civil Code and Art. 153 of Italian Legislative Decree no. 58/1998
To the Shareholders’ Meeting of the Company SABAF S.p.A.
non-financial information for the year 2018. The Board of Statutory Auditors acquired the information necessary for the performance of the supervisory duties assigned to it by attending the meetings of the Board of Directors and the Board Committees, the hearings of
Introduction The Board of Statutory Auditors of SABAF S.p.A. (hereinafter also “SABAF” or “Company”), pursuant to Art. 153 of Italian Legislative Decree no. 58 of 1998
the Company’s and the Group’s management, the information acquired from the competent company structures, as well as through the additional control activities carried out.
(hereinafter also TUF) and Art. 2429, paragraph 2 of the Italian Civil Code, is called upon to report to the Shareholders’ Meeting called to approve the Financial Statements on the supervisory activity carried out during the financial year in the performance of its duties, also in the capacity of “internal control
Appointment and Independence of the Board of Statutory Auditors
and audit committee”, on any omissions and reprehensible facts found and
The Board of Statutory Auditors in office at the date of this Report was ap-
on the results of the financial year, as well as to formulate proposals regard-
pointed by the Shareholders’ Meeting of 8 May 2018 in the persons of Ales-
ing the Financial Statements, the approval thereof and matters falling within
sandra Tronconi (Chairman), Luisa Anselmi (Statutory Auditor), Mauro Giorgio
its competence.
Vivenzi (Statutory Auditor), as well as Paolo Guidetti and Stefano Massarotto (Alternate Auditors). The control body will remain in office for three financial
Note, first of all, that the Board of Directors decided to make use of the longer
years and will expire on the date of the Shareholders’ Meeting called to ap-
term envisaged in Art. 2364 of the Italian Civil Code and Art. 8 of the Articles
prove the Financial Statements for the year 2020.
of Association for the call of the Shareholders’ Meeting to approve the 2018 financial statements, owing to the existence of the relative conditions. The
The appointment was made on the basis of two lists submitted by the Share-
financial statements report is in any case made available to the public in full
holders Giuseppe Saleri S.a.p.a and Quaestio Capital SGR S.p.A. respectively,
within the terms of Art. 154-ter of the TUF (within four months from the end
in compliance with the applicable law, regulatory and statutory provisions.
of the financial year). The decision was taken by the Board, as explained in
The Chairman of the Board of Statutory Auditors and one Alternate Auditor
the Report on Operations, as SABAF is required to prepare the consolidated
were drawn from the list that obtained the lowest number of votes.
financial statements, in consideration of requirements related to the relevant obligations and fulfilments.
The composition of the Board of Statutory Auditors complies with the gender distribution criterion set forth in Art. 148 of Italian Legislative Decree no. 58 of 1998.
During the year ended 31 December 2018 and up to date, the Board of Statutory Auditors carried out its supervisory activities in compliance with Law
At the time of its appointment and subsequently on 15 May 2018, the Board of
provisions, Rules of Behaviour of the Board of Statutory Auditors of listed
Statutory Auditors checked the existence of the independence requirement as
companies issued by the Italian Board of Certified Public Accountants and
part of the broader process of self-assessment of the control body pursuant to
Bookkeepers, the CONSOB provisions on corporate controls, the Corporate
Standard Q.1.1 of the Rules of Behaviour of listed companies; the check was
Governance Code, as well as by the provisions contained in Art. 19 of Italian
carried out on the basis of the criteria envisaged by the aforesaid Standards
Legislative Decree 39/2010.
and by the Corporate Governance Code applicable to independent directors.
The financial statements of SABAF were prepared in accordance with the
The outcome of the check was communicated (pursuant to Art. 144-novies,
IAS/IFRS international accounting standards issued by the International Ac-
paragraph 1-ter of CONSOB Regulation no. 11971 of 1999, Art. 8.C.1 of the
counting Standards Board (IASB) and approved by the European Union, as
Corporate Governance Code and Standard Q.1.1 of the Rules of Behaviour of
well as in accordance with the provisions issued by CONSOB in implementa-
listed companies) to the Board of Directors, which issued the relevant press
tion of Article 9, paragraph 3, of Italian Legislative Decree 38/2005.
release on 26 June 2018.
The Company’s Financial Statements were prepared in accordance with the
This assessment was carried out again on 12 March 2019 and consequently
law and accompanied by the documents required by the Italian Civil Code and
communicated to the Board of Directors, which disclosed it in the Report
the TUF. Moreover, in accordance with law provisions, the Company prepared
prepared pursuant to Art. 123 bis of the TUF.
the Consolidated financial statements and the Consolidated disclosure of 206
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Supervision and control of the Board of Statutory Auditors Supervisory activity on compliance with the law and articles of association
in contrast with the resolutions adopted by the Shareholders’ Meeting, in potential conflict of interest or such as to compromise the integrity of the Company’s assets; • held meetings with representatives of the Independent Auditors pursuant to Art. 150, paragraph 3 of the TUF and there were no significant data and/ or information to be reported;
In carrying out its duties, the Board of Statutory Auditors carried out the su-
• had exchanges of information with corresponding control bodies (if any) of
pervisory activities required by Art. 2403 of the Italian Civil Code, Art. 149 of
the companies directly or indirectly controlled by SABAF S.p.A. pursuant to
Italian Legislative Decree No. 58 of 1998, Art. 19 of Italian Legislative Decree
Art. 151, paragraph 1 and 2 of the TUF;
No. 39/2010, CONSOB recommendations on corporate controls and the ac-
• supervised the procedures for effective implementation of the corporate
tivities of the Board of Statutory Auditors and referring to the indications con-
governance rules envisaged in the Corporate Governance Code complied
tained in the Corporate Governance Code, as well as the Rules of Behaviour
with, as adequately represented in the Report on Corporate Governance
of the Board of Statutory Auditors of listed companies.
and Ownership Structure, in compliance with Art. 124-ter of the TUF and Art. 89-bis of the Issuers’ Regulations;
Therefore, as part of its functions, the Board of Statutory Auditors:
• checked, in relation to the periodic assessment to be carried out pursuant
• attended the meetings of the Shareholders and Board of Directors, moni-
to Application Principle 3.C.5 of the Corporate Governance Code, as part
toring compliance with the statutory, legislative and regulatory provisions
of the supervision of the procedures for effective implementation of the
regulating the operation of the Company’s bodies as well as compliance
corporate governance rules, the correct application of the assessment cri-
with the principles of proper management;
teria and procedures adopted by the Board of Directors, with regard to the
• supervised, for what of direct concern, the adequacy of the Company’s
positive assessment of the independence of the Directors.
organisational structure and compliance with the principles of proper management, through direct observation, gathering information from heads of
As required by Application Principle 1.C.1, letter g) of the Corporate Gover-
the corporate functions and meetings with the Independent auditors to
nance Code, the Board of Directors expressed its assessment of the size and
exchange data and information;
composition of the Board and its operation, as well as the size, composition
• assessed and supervised the adequacy of the internal control system and
and operation of the board committees. The assessment - carried out on the
the administrative and accounting system, as well as its reliability in pro-
basis of the results of a self-assessment questionnaire - used the assess-
viding a fair presentation of operational transactions, through the informa-
ment criteria already adopted in the previous year, filled in by all the members
tion of the heads of the respective functions, the examination of company
of the Board of Directors.
documents and the analysis of the results of the work carried out by the Independent Auditors;
The Board also acknowledges that it has issued a favourable opinion:
• held 11 meetings during the year, lasting approximately 2 hours, and also attended all the meetings of the Board of Directors, as well as of the board committees (Control and Risk Committee, Remuneration and Nomination Committee); • supervised the adequacy of the reciprocal flow of information between
• on the Policy on the composition of corporate bodies prepared pursuant to Art. 123-bis, paragraph 2, letter d-bis of the TUF; • on the appointment of the manager responsible for preparing the accounting documents;
SABAF and its subsidiaries pursuant to Art. 114, paragraph 2, of Italian
• on the appointment and remuneration to be assigned to the head of the
Legislative Decree no. 58 of 1998, ensured by the instructions issued by
Internal Audit Department as required by Application Principle 7.C.1 of the
the Company’s management to Group companies;
Corporate Governance Code;
• supervised compliance with the rules of “Market abuse”, “Protection of sav-
• at the suggestion for remuneration of directors holding special positions,
ings” and “Internal Dealing”, with a special reference to the processing of
pursuant to Art. 2389 of the Italian Civil Code, also in the light of the as-
inside information and the procedure for the dissemination of statements
sessments of the Remuneration and Nomination Committee; the Board of
and information to the public. The adjustment of the procedure adopted
Statutory Auditors also certified the consistency of the 2018 - 2020 Stock
by the Company for the management of inside and relevant information,
Grant Plan in favour of directors and employees of the Company and its
drawn up in the light of CONSOB Guidelines no. 1/2017, was monitored;
subsidiaries and of the related Implementation Regulations with the Com-
• supervised the implementation by SABAF of the new regulations deriving
pany’s Remuneration Policy. The Board also expressed a favourable opin-
from the entry into force of European Regulation no. 2016/679 on the protection of personal data.
ion on the Regulations for the implementation of the Stock Grant Plan; • with regard to the annual Audit Plan prepared by the Head of the Internal Audit Department.
Moreover, the Board: • obtained from the Directors adequate information on the business carried on and major economic and financial operations carried out by the Company and its subsidiaries pursuant to Art. 150, paragraph 1 of the TUF. In this regard, the Board of Statutory Auditors paid special attention to
The Board of Statutory Auditors also gave its consent, pursuant to Art. 2426, paragraph 1, number 5, of the Italian Civil Code, to the recognition in the financial statements of development costs with a multi-year use of € 284,000.
the fact that the transactions approved and implemented complied with the law and the Articles of Association and were not imprudent or risky, 207
SABAF . ANNUAL REPORT 2018
Supervisory activity on the adequacy of the administrative and accounting system and the auditing activity Pursuant to Art. 19 of Italian Legislative Decree 39/2010 (Consolidated External Audit Act), the Board of Statutory Auditors is required to supervise: • the financial reporting process; • the effectiveness of the internal control and risk management systems; • the External audit of annual accounts and consolidated accounts; • the independence of the Independent Auditors, specifically as far as the provision of non-audit services is concerned. The Board of Statutory Auditors carried out its activities in collaboration with the Control and Risk Committee in order to coordinate their responsibilities and avoid overlapping of activities. Financial reporting process The Board of Statutory Auditors supervised the existence of rules and procedures relating to the process of formation and dissemination of financial information. In this regard, it should be noted that the Report on Corporate Governance and Ownership Structure illustrates how the Group defined its Internal Control and Risk Management System in relation to the financial reporting process at the consolidated level. The Financial Reporting Officer is Gianluca Beschi. The Financial Reporting Officer is supported by the Internal Audit Department to check the operation of the administrative and accounting procedures through control testing. The Board of Statutory Auditors acknowledges that it has received adequate information on the monitoring of business processes with an administrative and accounting impact within the Internal Control System, carried out both during the year in relation to the regular management reports, and during the closing of the accounts for the preparation of the Financial Statements, in compliance with the monitoring and certification requirements to which SABAF S.p.A. is subject pursuant to Italian Law no. 262/2005. In particular, the Board of Statutory Auditors acknowledged the Risk Assessment for 2018, as well as the periodic update on testing activities pursuant to Italian Law no. 262/2005. The adequacy of the administrative and accounting system was also assessed through the acquisition of information from the heads of the respective departments and the analysis of the results of the work carried out by the Independent Auditors. Note that during the 2018 financial year no updates were made to the administrative and accounting procedures prepared pursuant to Italian Law 262/2005 and adopted by SABAF. No particular critical issues or elements hindering the issue of the certification by the Financial Reporting Officer and by the Chief Executive Officer concerning the adequacy of the administrative and accounting procedures for the preparation of the financial statements of SABAF S.p.A. and the Consolidated Financial Statements for the year 2018 emerged. The Board of Statutory Auditors supervised compliance with the regulations related to the preparation and publication of the Half-Yearly Report and the Interim Management Reports, as well as the settings given to them and the correct application of the accounting standards, also using the information obtained from the Independent Auditors. 208
Furthermore, it is acknowledged that: • the Independent Auditors appointed to carry out the external audit currently in office, EY S.p.A., were appointed for the 2018-2026 period at the Shareholders’ Meeting held on 8 May 2018: the procedure for the appointment was carried out in compliance with the provisions of Article 16 of Regulation (EU) 2014/537. The Board of Statutory Auditors in office at that time submitted to the Board of Directors a reasoned recommendation containing the name of two Independent Auditors suitable to replace the one that is due to expire, expressing preference for one of them. This recommendation was developed at the end of a detailed selection procedure that was carried out in compliance with the provisions contained in Regulation (EU) 2014/537; • the Independent Auditors appointed to audit the company illustrated to the Board of Statutory Auditors the checks carried out and did not report any findings in the periodic meetings with the Board of Statutory Auditors; • the Board of Statutory Auditors supervised the auditing of the annual and consolidated financial statements, obtaining information and periodically discussing with the Independent Auditors, also in the light of the recent changes introduced with regard to the Independent Auditors’ report. In particular, all the main phases of the audit activity were illustrated to the Board of Statutory Auditors, including the identification of the risk areas, with a description of the related audit procedures adopted; moreover, the main accounting principles applied by SABAF have been followed. The Board also acknowledges that the Independent Auditors EY S.p.A. issued their opinions on the Consolidated Financial Statements and the Separate Financial Statements today (April 12, 2019) and also issued on the same date the Additional Report to the Internal Control and Audit Committee pursuant to Article 11 of Regulation (EU) 2014/537. The reports on the Separate financial statements and the Consolidated financial statements do not give rise to any observations or requests for information. It is also acknowledged that the Independent Auditors expressed, in the reports mentioned above, a positive opinion with regard to consistency with the financial statements and compliance with the law with reference: • to the Management report; • to the information referred to in Art. 123-bis, paragraph 4, Italian Legislative Decree 58/98 contained in the Report on corporate governance and ownership structure. In the audit work, a special attention was paid to the key aspects relating to the impairment test and Purchase Price Allocation. Moreover, the reports issued by the Independent Auditors do not reveal any significant shortcomings in the Company’s internal control system for financial information and accounting system. The Board of Statutory Auditors supervised the independence of the Independent Auditors EY S.p.A., verifying the type and extent of services other than auditing with reference to SABAF and its subsidiaries and obtaining explicit confirmation from the Independent Auditors that the independence requirement was met. The statement on independence has been included, pursuant to Art. 11, paragraph 2, letter a), of Regulation (EU) 2014/537, in the above-mentioned Additional Report.
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
The fees paid by the SABAF Group to the Independent Auditors and to the
• periodic updates on the development of the risk management process, the
companies belonging to the network of the Independent Auditors themselves
outcome of the monitoring and assessment activities carried out by Inter-
are as follows:
nal Audit and the objectives achieved.
ASSETS
AMOUNT EUR/000
Audit
82
Certification services
-
Other services
16
Total
98
The Board of Statutory Auditors then reviewed every six months the periodic reports on the activities carried out by the Supervisory Body and examined the activity plan and the budget allocated for 2018. Similarly, the Board of Statutory Auditors acknowledged the compliance with the provisions of Italian Legislative Decree no. 231/2001 and the activity plan for 2018, examining
In the light of the above, the Board of Statutory Auditors considers that the
and agreeing with the amendments made during the year to the Organisation
Independent Auditors EY S.p.A. meet the requirement of independence.
and Management Model pursuant to Italian Legislative Decree no. 231/2001.
Note that in 2018 there were changes in the scope of the audit, in relation to
Following the activities carried out during the 2018 financial year, as detailed
the inclusion in the consolidation area of the company Okida Elektronik San-
above, the Board of Statutory Auditors shared the positive assessment ex-
ayi Limited Sirket as a result of its acquisition in September by the Group. Oki-
pressed by the Control and Risk Committee with regard to the adequacy of
da was consolidated as from 4 September 2018, contributing to the Group’s
the Internal Control and Risk Management System.
total turnover of approximately € 4 million.
Supervisory activity on the adequacy of the internal control system and the organisational structure The Board of Statutory Auditors assessed and supervised the adequacy of
With reference to the internal control system, the Board of Statutory Auditors acknowledges that, after the 2018 reporting period, on 5 February 2019, Marcandalli, Head of the Internal Audit department and member of the Supervisory Body, resigned, effective as from 1 May 2019. A new department head is currently being selected.
internal control and the effectiveness of the internal control and risk management systems. The Board of Statutory Auditors acknowledges that it has verified the most significant activities carried out by the overall internal control and risk management system by attending the meetings of the Control and Risk Committee (also with functions of Committee for related-party transactions) attended by: • members of the Control and Risk Committee; • members of the Board of Statutory Auditors; • the Chief Executive Officer and director in charge of the internal control and risk management system; • the Internal Audit department and its Head; • the Financial Reporting Officer. The Board of Statutory Auditors also acknowledges that it attended the peri-
Supervisory activity on compliance the principles of proper management During 2018, in line with the 2018-2022 Business Plan, SABAF carried out an important operation aimed at achieving growth through acquisitions of the Group: as described in the Report on Operations, in September 2018 the Group purchased 100% of Okida Elektronik Sanayi Limited Sirket (30% directly from Sabaf S.p.A., the remaining 70% indirectly purchased through the Turkish subsidiary Sabaf Beyaz Esya), for a total investment of € 24.1 million. This transaction is considered strategic in that it allows the Group to implement its strategy of expanding its range of products in components for domestic appliances and acquiring expertise in the electronics sector.
odic meetings among the Company’s control bodies attended by:
In terms of ordinary operations, SABAF’s activities continued in line with pre-
• members of the Control and Risk Committee;
coordination of the Group, the search for the optimisation of the Group’s fi-
• members of the Board of Statutory Auditors;
nancial flows, as well as the search and selection of equity investments with
• the Independent Auditors;
the aim of accelerating the Group’s growth.
• the Chief Executive Officer and Director in charge of the internal control system; • the Financial Reporting Officer; • the Internal Audit department and its Head;
vious years and consisted of industrial activities, strategic and management
The Sabaf Group also carried out organic investments of € 11.5 million mainly aimed at increasing the production capacity of special burners, completing the automation of production of light alloy valves and interconnection of pro-
• the Supervisory Body.
duction plants with management systems (Industry 4.0).
In particular, as part of these activities, the Board of Statutory Auditors ac-
Moreover, following the supervision and control activities carried out during
knowledges that it has received and examined:
the year, the Board of Statutory Auditors can certify that:
• the periodic reports on the activities carried out, prepared by the Control
• during the course of the activity carried out, no omissions, irregularities
and Risks Committee and the Internal Audit department; • the reports drawn up at the end of the verification and monitoring activities by the Internal Audit department, with the relative results, the recommended actions and the controls on the implementation of the aforesaid actions;
or reprehensible or significant facts that would require reporting to the control bodies or mention in this Report emerged; • no reports were received by the Board of Statutory Auditors pursuant to Art. 2408 of the Italian Civil Code, nor has it received any complaints from third parties; 209
SABAF . ANNUAL REPORT 2018
• no transactions have been identified with third parties, intra-group and/
- for the purposes of the Consolidated Financial Statements, to make sure
or related parties such as to highlight atypical and/or unusual profiles, in
that the net capital invested in the CGUs (including goodwill and other
terms of content, nature, size and timing;
intangible assets deriving from the Okida acquisition) was lower than its
• all the transactions and management choices adopted are inspired by the principle of correct information and reasonableness and comply with the 2018-2022 Business Plan approved by the Board of Directors.
recoverable amount. In this regard, note that the Independent Auditors, in their reports, accurately described the audit procedures carried out with reference to the impairment tests, as “key aspects of the audit” and to which, therefore, the Board of Statutory Auditors refers. Therefore, the Board of Statutory Auditors supports the procedures adopted and the results obtained, which
Supervisory activity on implementation of the corporate governance rules The Board of Statutory Auditors assessed the application of the corporate governance rules set out in the Corporate Governance Code that SABAF complies with and the relative level of compliance, also by analysing the Report on Corporate Governance and ownership structure and comparing its contents with what emerged during the general supervisory activity carried out during the year. Moreover, compliance with the obligation on the part of SABAF to inform the market in its report on corporate governance of its level of compliance with the Code itself was assessed, also in accordance with the provisions of Article 123 bis of the TUF. The Board of Statutory Auditors is of the opinion that the report on corporate governance was prepared in accordance with the provisions of Art. 123-bis of the TUF and the Corporate Governance Code and following the format made available by the Corporate Governance Committee of Borsa Italiana S.p.A.
show values in use that are significantly higher than the carrying values of the equity investments and assets; • in pursuance of CONSOB Resolution 15519/2006, the effects of transactions with related parties are expressly indicated in the financial statements. In pursuance of this Resolution in the Explanatory Notes, it is specified that during the year there were no significant non-recurring events or operations and no transactions deriving from atypical and/or unusual operations were carried out; • the Financial statements are in keeping with the facts and information of which the Board of Statutory Auditors has become aware within its supervisory duties and its control and inspection powers; • as far as the Board of Statutory Auditors is aware, the Directors, when preparing the financial statements, did not depart from the law provisions pursuant to Art. 2423, paragraph 5 of the Italian Civil Code; • the Chief Executive Officer and the Financial Reporting Officer issued the certificate, pursuant to Art. 81-ter of CONSOB Regulation no. 11971/1999 as amended and Art. 154-bis of Italian Legislative Decree 58/1998 (TUF); • the Report on Operations complies with legal requirements and is consistent with the data and results of the Financial Statements; it provides
Supervisory activities in relation to the Financial Statements, the Consolidated financial statements and the Consolidated disclosure of non-financial information
the necessary information on the activities and significant transactions of
With regard to the Separate financial statements for the year ended 31 De-
the Corporate Governance Code for listed companies;
cember 2018, the Consolidated financial statements for the year ended 31 December 2018 and the related Report on operations, note the following: • the Board of Statutory Auditors ascertained, through direct audits and information obtained from the Independent Auditors, compliance with law
which the Board of Statutory Auditors was informed during the year, on the main risks of the Company and its subsidiaries, on intra-group and related-party transactions, as well as on the process of adapting the corporate organisation to the principles of corporate governance, in accordance with • pursuant to the provisions of Art. 123-ter of Italian Legislative Decree 58/1998 (TUF), the Remuneration Report is presented to the Shareholders’ Meeting: the Board of Statutory Auditors examined and agreed with the approach followed in preparing this report, at a joint meeting with the Remuneration Committee.
provisions regulating their formation, the layout of the Financial statements, the Consolidated financial statements and the Report on Opera-
In relation to the presentation of the Consolidated disclosure of non-financial
tions, and the financial statement formats adopted, certifying the correct
information, the Board of Statutory Auditors, in compliance with Italian Legis-
use of the accounting standards described in the explanatory notes and
lative Decree no. 254 of 30 December 2016, supervised compliance with the
the Report on operations. In particular, the Board of Statutory Auditors
provisions set out in the decree itself and in CONSOB resolution no. 20267
analysed the results of the impairment test carried out, in accordance with
of 18 January 2018 for the preparation of the statements in question, also
IAS 36, on the individual CGUs that coincide with the equity investments in
acquiring the certification issued by the appointed auditor EY S.p.A. on 12
Faringosi Hinges s.r.l., A.R.C. s.r.l. and Okida Elektronik (“Hinges” CGU for
April 2019. This activity did not reveal any facts that could be reported in
Faringosi Hinges s.r.l.; “Professional burners” CGU for A.R.C. s.r.l.; “elec-
this report.
tronic components” CGU for Okida Elektronik). In particular, note that the test was carried out: - for the purposes of the Separate financial statements of Sabaf S.p.A. (and, in relation to Okida Elektronik, of Sabaf Turkey), to assess the recoverability of the amount of investments and
210
SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2018
Supervisory activity on relationships with Subsidiaries and parent companies
Proposal to the Shareholders’ Meeting
The Board of Statutory Auditors supervised the adequacy of the instructions
The Board of Statutory Auditors expresses its favourable opinion for the ap-
given by the Company to the subsidiaries, in accordance with Art. 114, para-
proval of the Separate financial statements as at 31 December 2018 and
graph 2 of Italian Legislative Decree 58/1998.
has no objections to make to the draft resolution presented by the Board of
Periodic meetings with the management and the company in charge of Internal
Directors as formulated in the Directors’ Report on Operations.
Audit did not reveal any critical elements to be reported in this report. Finally, we acknowledged that to date no communications have been received from the Control Bodies of the Subsidiaries and/or parent companies containing findings to be noted in this report.
Supervisory activity on related-party transactions In relation to the provisions of Art. 2391 bis of the Italian Civil Code, the Board of Statutory Auditors acknowledges that the Board of Directors adopted a procedure for the regulation of Related-Party Transactions, whose main objective is to define the guidelines and criteria for identifying related-party transactions and setting out roles, responsibilities and operating methods so as to guarantee, for such transactions, adequate information transparency and the related procedural and substantial correctness. That procedure was prepared in compliance with what was established by the CONSOB Regulation on Related Parties (no. 17221 dated 21 March 2010) and was amended during the year by the Board of Directors on 25 September 2018. The Board of Statutory Auditors supervised the effective application of the rules by the Company and has no observations to make in this regard in this Report.
Ospitaletto, 12 April 2019
The Board of Statutory Auditors
Chairman Alessandra Tronconi Statutory Auditor Luisa Anselmi Statutory Auditor Mauro Vivenzi
211
SABAF . ANNUAL REPORT 2018
Adapting to change
Sabaf experiences small and big transformations by learning from the past and looking to the future with an open and innovative vision, developing our qualities and improving performance. This creates growth and improvement possibilities. 212
213
SABAF . ANNUAL REPORT 2018
Report on remuneration pursuant to Article 123-ter of the TUF and Article 84-quater of the Issuers’ Regulations
Section I - Remuneration policy............................................................................... 215
Section II – Remuneration of the members of the board of directors and the board of statutory auditors and other executives with strategic responsibilities in 2018.............. 219
214
REPORT ON REMUNERATION
SECTION I - REMUNERATION POLICY Sabaf S.p.A.’s General Remuneration Policy (hereinafter also “remuneration
The Board of Directors is responsible for properly implementing the remu-
policy”), approved by the Board of Directors on 22 December 2011 and up-
neration policy.
dated on 20 March 2013, 4 August 2015 and 26 September 2017, defines the criteria and guidelines for the remuneration of members of the Board
REMUNERATION AND NOMINATION COMMITTEE
of Directors, Executives with strategic responsibilities and members of the
• Makes proposals to the Board of Directors, in the absence of the persons
Board of Statutory Auditors.
directly concerned, for remuneration of the Chief Executive Officer and Directors holding specific positions
The remuneration policy was prepared: - pursuant to Article 6 of the Corporate Governance Code of listed companies, approved in March 2010 and subsequent amendments and supplements;
• Examines, with the support of the Human Resources Department, the policy for the remuneration of executives, with a special attention to Executives with strategic responsibilities
- in line with Recommendations 2004/913/EC and 2009/385, which were in-
• Makes suggestions and proposals to the Board of Directors concerning
corporated into law with Article 123-ter of the Consolidated Law on Finance
the setting of targets on which the annual variable component and long-
(TUF).
term incentives for the Chief Executive Officer and Executives with strategic responsibilities should be dependent, in order to ensure alignment with shareholders’ long-term interests and the company’s strategy
1. Corporate bodies and persons involved in preparing, approving and implementing the remuneration policy
• Assesses the level of achievement of the short- and long-term variable incentive targets of Directors and executives • Prepares the proposals to the Board of Directors of remuneration plans based on financial instruments • Assesses the adequacy, actual application and consistency of the remu-
SHAREHOLDERS’ MEETING • Determines the remuneration due to the members of the Board of Directors, including a fixed amount and attendance fees • Resolves remuneration plans based on the allocation of financial instruments with regard to directors and employees • Gives a non-binding vote on the first section of the Report on Remunera-
neration policy, also with reference to the actual company performance, making suggestions and proposals for change • Follows the development of the regulatory framework of reference and best market practices on remuneration, getting inspired by them for formulating the remuneration policy and identifying aspects for improving the Report on Remuneration
tion (Remuneration Policy) The Remuneration and Nomination Committee currently in office comprisBOARD OF DIRECTORS
es four non-executive members, the majority of them independent (Daniela
• At the suggestion of the Remuneration and Nomination Committee and
Toscani, Stefania Triva and Alessandro Potestà), with the knowledge and
subject to the opinion of the Board of Statutory Auditors, determines the
experience in accounting, finance and remuneration policies that is deemed
fee for Directors holding specific positions
adequate by the Board of Directors.
• Defines the remuneration policy of Executives with strategic responsibilities • After obtaining the opinion of the Remuneration and Nomination Committee, resolves to sign Non-competition agreements with regard to the Chief Executive Officer and to executives • At the suggestion of the Remuneration and Nomination Committee, de-
BOARD OF STATUTORY AUDITORS • The Board of Statutory Auditors expresses the opinions required by the regulations in force on proposals for remuneration of Directors holding specific positions
fines incentive plans based on short- and long-term variable remuneration
• The Board of Statutory Auditors, i.e. the Chairman of the Board of Statutory
to be assigned to the Chief Executive Officer and to the Executives with
Auditors or another Statutory Auditor designated by him/her can attend the
strategic responsibilities
meetings of the Remuneration and Nomination Committee
• At the suggestion of the Chief Executive Officer, defines the incentive plans based on short-term variable remuneration for company Management and other employees • At the suggestion of the Remuneration and Nomination Committee, re-
HUMAN RESOURCES DEPARTMENT Actually enacts what is decided upon by the Board.
solves to assign non-monetary benefits to executives • Makes proposals to the Shareholders’ Meeting on remuneration plans based on the allocation of financial instruments with regard to directors and employees • Prepares the Report on Remuneration pursuant to Article 123-ter of the Consolidated Law on Finance and Article 84-quater of the Issuers’ Regulations No independent experts or advisors contributed to the preparation of the policy, nor were the remuneration policies of other companies used for reference purposes.
215
SABAF . ANNUAL REPORT 2018
2. Purpose of the remuneration policy The Company’s intention is that the Remuneration Policy: • ensures the competitiveness of the company on the labour market and attracts, motivates and increases the loyalty of persons with appropriate
Attacts, motivates and increases the loyalty of PERSONS with appropriate professional expertise
Brings the interests of the MANAGEMENT into line with those of the SHAREHOLDERS
Favours the creation of SUSTAINABLE VALUE for shareholders in the medium to long term
Protects the principles of INTERNAL EQUITY and DIVERSITY
professional expertise; • protects the principles of internal equity and diversity; • brings the interests of the management into line with those of the shareholders; • favours the creation of sustainable value for shareholders in the medium to long term and maintains an appropriate level of competitiveness for the company in the sector in which it operates.
3. Remuneration policy guidelines and instruments The definition of a fair and sustainable remuneration package takes into ac-
Executives with strategic responsibilities are paid a fixed annual remunera-
count three main tools:
tion, determined so that it is sufficient in itself to guarantee an appropriate
• Fixed remuneration
basic salary level, even in the event that the variable components are not paid
• Variable remuneration (short- and medium- to long-term)
owing to a failure to reach the targets.
• Benefits
The members of the Board of Statutory Auditors are paid a fixed remunera-
Each remuneration component is analysed below.
tion, the amount of which is determined by the Shareholders’ Meeting, at the time of their appointment.
FIXED ANNUAL COMPONENT The fixed component of the remuneration of the Directors is such that it is
INDEMNITY AGAINST THE EARLY TERMINATION OF EMPLOYMENT
able to attract and motivate individuals with appropriate expertise for the
There is an agreement for the Chief Executive Officer regulating ex ante the eco-
roles entrusted to them within the Board and is set with reference to the re-
nomic part concerning the early termination of the employment relationship.
muneration awarded for the same positions by other listed Italian industrial
There are no agreements for other Directors or other Executives with strate-
groups of a similar size.
gic responsibilities regulating ex ante the economic part concerning the early
The Shareholders’ Meeting decides on the remuneration of the members of
termination of the employment relationship. For the end of the relationship for
the Board of Directors, including a fixed amount and attendance fees.
reasons other than just cause or justified reasons provided by the employer, it
With regard to the remuneration for Directors holding special offices, the
is the Company’s policy to pursue consensual agreements to end the employ-
Board of Directors, at the proposal of the Remuneration and Nomination
ment relationship, in accordance with legal and contractual obligations.
Committee and subject to the opinion of the Board of Statutory Auditors, de-
The Company does not provide directors with benefits subsequent to the end
termines the additional fixed remuneration.
of their mandate.
Directors who sit on committees formed within the Board (Internal Control
The Company has entered into non-competition agreements with the Chief
and Risk Committee, Remuneration and Nomination Committee) are granted
Executive Officer and with certain executives who report to him, the terms of
remuneration that includes a fixed salary and attendance fees intended to
which were approved by the Board of Directors, after obtaining the opinion of
reward the commitment required of them.
the Remuneration and Nomination Committee.
COMPONENTS OF THE REMUNERATION
FIXED COMPONENTS
INDEMNITY AGAINST THE EARLY TERMINATION OF EMPLOYMENT
216
CORPORATE OFFICES Executive Directors
Non-Executive Directors
Members of committees within the BoD
Fixed remuneration for the office of Director
Fixed remuneration for the office of Director
Fixed remuneration for Directors members of committees within the BoD
Fixed remuneration for Directors holding special positions
Attendance fee
Attendance fee
Remuneration for non-competition agreement (only for Chief Executive Officer)
N/A
N/A
Executives with strategic responsibilities
Auditors
Collective National Contract for Industrial Managers
Fixed remuneration
Remuneration for non-competition agreement
N/A
REPORT ON REMUNERATION
SHORT-TERM VARIABLE COMPONENT (ANNUAL)
LONG-TERM VARIABLE COMPONENT
The Board of Directors, at the suggestion of the Remuneration and Nomina-
In compliance with the Shareholders’ Meeting resolution, at the suggestion of
tion Committee and in accordance with the budget, defines an MBO plan, for
the Remuneration and Nomination Committee, and after obtaining the opin-
the benefit of:
ion of the Board of Statutory Auditors, the Board of Directors approves a long-
• Executives with strategic responsibilities
term incentive plan based on financial instruments (stock grants).
• other persons, identified by the Chief Executive Officer, among the managers
The Beneficiaries, if not already identified in the Plan, are identified by the
who report directly to him or who report to the aforementioned managers.
Board of Directors among the members of the Board of Directors and/or among the managers of the Company or its Subsidiary companies who hold
This plan sets a common target (Group EBIT, which is considered to be the
or will hold key positions in the implementation of the Business Plan. In the
Group’s main indicator of financial performance) and quantifiable and mea-
case of the Chief Executive Officer and/or Executives with strategic respon-
surable individual targets economic-financial, technical-productive and/or
sibilities of the Company, the identification is made on the suggestion of the
socio-environmental in nature.
Remuneration and Nomination Committee.
The targets of the Chief Executive Officer and of the Executives with strategic
The Board of Directors identifies the total number of rights to be assigned
responsibilities are decided by the Board of Directors, at the suggestion of the
to each beneficiary (within the limits set by the Shareholders’ Meeting). All
Remuneration and Nomination Committee, in accordance with the budget.
or part of the shares are allocated by the Board of Directors at the end of the
The targets of the other beneficiaries of the incentive plans are defined by the
vesting period; for the Chief Executive Officer and Executives with strategic
Chief Executive Officer, in accordance with the budget.
responsibilities, the allocation is made on the suggestion of the Remunera-
Non-executive directors are not granted any variable remuneration.
tion and Nomination Committee. The allocation of shares is related to predetermined (business and individual) performance targets measurable and linked to the creation of value for shareholders over the long term and extends over three years coinciding with the
STOCK GRANT PLAN
Related to the budget
Related to the Business Plan
• EXECUTIVE DIRECTORS (excluding the Chairman) • EXECUTIVES WITH STRATEGIC RESPONSIBILITIES
• CHIEF EXECUTIVE OFFICER • CFO
• OTHER MANAGERS PROPOSED BY THE CHIEF EXECUTIVE OFFICER
• OTHER MANAGERS IDENTIFIED BY THE BOD who hold or will hold key positions in the implementation of the Business Plan
• COMMON TARGET: GROUP EBIT
• COMMON BUSINESS TARGETS: EBIT, ROI, TSR
• INDIVIDUAL TARGETS: ECONOMIC/FINANCIAL AND TECHNICAL AND PRODUCTIVE
• INDIVIDUAL PERFORMANCE TARGETS: IDENTIFIED BY THE BOD FOR EACH BENEFICIARY
COMPONENTS OF THE REMUNERATION
TARGETS
TARGETS
ANNUAL MBO
BENEFICIARIES
BENEFICIARIES
mandate of the Board of Directors (2018-2020).
CORPORATE OFFICES
SHORT-TERM VARIABLE COMPONENT
Executive directors and Other executives with strategic responsibilities
Other persons identified by the CEO/BoD
Annual MBO plan based on achieving a common target and individual targets
Annual MBO plan based on achieving a common target and individual targets
Stock Grant Plan based on achieving business targets and individual performance targets
Stock Grant Plan based on achieving business targets and individual performance targets
VARIABLE COMPONENTS LONG-TERM VARIABLE COMPONENT
217
SABAF . ANNUAL REPORT 2018
NON-MONETARY BENEFITS
ENTRY BONUS
Third-party civil liability insurance policy: the Company has taken out a
With the aim of attracting highly professional individuals, the Board may de-
third-party civil liability insurance policy in favour of directors, statutory
cide to give entry bonuses to newly hired executives.
auditors and executives for unlawful acts committed in the carrying-out of their respective duties, in violation of obligations established by law and the
CLAW BACK CLAUSES
Articles of Association, with the sole exclusion of deliberate intent. The tak-
As from 2018, the Company established mechanisms for the ex-post ad-
ing-out of this policy is approved by the Shareholders’ Meeting.
justment of the variable remuneration component or claw back clauses to
Life insurance policy and cover for medical expenses: the Company also
demand the return of all or part of the variable components of remuneration
provides a life insurance policy and cover for medical expenses (FASI) for
paid out (or to withhold deferred sums), which were determined on the basis
executives, as established by the Collective National Contract for Industrial
of data subsequently found to be clearly incorrect.
Managers; moreover, it has taken out an additional policy to cover medical expenses not covered by FASI reimbursements.
REMUNERATION FOR OFFICES IN SUBSIDIARIES
Company cars: at the suggestion of the Remuneration and Nomination Com-
Directors and other executives with strategic responsibilities may be paid
mittee, the Board of Directors also assigns company cars to executives.
remuneration – exclusively as a fixed amount – for offices held in subsid-
Accommodation costs: at the suggestion of the Remuneration and Nomina-
iaries. In addition to the approval of the subsidiaries’ corporate bodies, this
tion Committee, the Board of Directors can provide for housing to be made
remuneration is subject to the favourable opinion of the Remuneration and
available to executives, for the possibility to reimburse the rent of the house or
Nomination Committee.
for the temporary reimbursement of the costs of accommodation in a hotel.
COMPONENTS OF THE REMUNERATION
CORPORATE OFFICES Executive Directors
Executives with strategic responsibilities
Non-Executive Directors
Auditors
Third-party liability insurance policy
NON-MONETARY BENEFITS BENEFITS AND OTHER COMPONENTS OFFICES IN SUBSIDIARIES
Third-party liability insurance policy
Third-party liability insurance policy
Life insurance policy to cover medical expenses (FASI), supplementary medical expenses
Third-party liability insurance policy
Company cars Fixed remuneration for offices in subsidiaries
N/A
Fixed remuneration for offices in subsidiaries
N/A
4. Remuneration of the Board of Directors, Chairman and Vice Chairmen of the Board of Directors, Chief Executive Officer, Executives with strategic responsibilities and Board of Statutory Auditors REMUNERATION OF THE BOARD OF DIRECTORS
Fixed remuneration for the office of Director: the Chief Executive Officer is
The Shareholders’ Meeting is responsible for determining the annual gross
the recipient of the fixed remuneration for the office of Director (pursuant to
remuneration (maximum amount) due to the Directors, including a fixed
Article 2389 paragraph I Italian Civil Code).
amount and attendance fees.
Third-party civil liability insurance policy: The Company has taken out a
The members of the Board are covered by a third-party civil liability insurance
third-party civil liability insurance policy for unlawful acts committed in the
policy for unlawful acts committed in the exercise of their respective duties,
carrying-out of their respective duties, in violation of obligations established
in violation of obligations established by law and the Articles of Association,
by law and the Articles of Association, with the sole exclusion of deliberate
with the sole exclusion of deliberate intent. The taking-out of this policy is
intent. The taking-out of this policy is approved by the Shareholders’ Meeting.
approved by the Shareholders’ Meeting.
Long-term variable component: the long-term incentive is dependent on the achievement of performance targets, proposed by the Remuneration and
REMUNERATION OF THE CHAIRMAN OF THE BOARD OF DIRECTORS AND
Nomination Committee to the Board of Directors, and extends over three
VICE CHAIRMAN
years, coinciding with the mandate of the Board of Directors.
No variable remuneration is paid to the Chairman and Vice Chairman of the
If the Chief Executive Officer is also assigned an executive management role
Board of Directors, but only remuneration in addition to those of directors for
within the Sabaf Group, the Board decides on the assignment of the following
special offices held.
additional remuneration instruments: • Fixed annual gross salary: the fixed remuneration is determined so that it
REMUNERATION OF THE CHIEF EXECUTIVE OFFICER
is sufficient in itself to guarantee an appropriate basic salary level, even in
The remuneration of the Chief Executive Officer includes the following com-
the event that the variable components are not paid owing to a failure to
ponents:
reach the targets.
218
REPORT ON REMUNERATION
• Non-competition agreement: assignment of a fixed annual remuneration
Short- and long-term variable components: Executives with strategic re-
against the signing of a Non-competition Agreement with the Company.
sponsibilities are the recipients of short- and long-term incentive plans (ref.
• Short-term variable component: annual incentive, dependent on the
paragraph 3). At the time of approval of short- and long-term incentive plans,
achievement of the targets envisaged by the MBO plan, approved by the
the Board of Directors is responsible for setting the maximum amounts of
Board of Directors at the suggestion of the Remuneration and Nomination
variable remuneration, the methods and timing for the payment of this re-
Committee. On the occasion of the annual approval, the Board of Directors
muneration.
decides on the maximum amount of the annual variable component, the
Benefits: Executives with strategic responsibilities receive the benefits en-
methods and timing for its payment.
visaged for the executives of the Company (Life insurance policy and cover
• Benefits: the benefits envisaged for the management of the Company can be assigned: Life insurance policy and cover for medical expenses, assign-
for medical expenses; assignment of company car) and are covered by an occupational risk policy.
ment of company car; reimbursement of the rent for the house. REMUNERATION OF THE BOARD OF STATUTORY AUDITORS REMUNERATION OF EXECUTIVES WITH STRATEGIC RESPONSIBILITIES
The amount of remuneration for Statutory Auditors is set by the Sharehold-
Fixed annual gross remuneration: employment relationships with Execu-
ers’ Meeting, which establishes a fixed amount for the Chairman and the oth-
tives with strategic responsibilities are regulated by the Collective National
er Statutory Auditors.
Contract for Industrial Managers. In this regard, fixed remuneration is deter-
The members of the Board are covered by a third-party civil liability insurance
mined so that it is sufficient in itself to guarantee an appropriate basic salary
policy for unlawful acts committed in the exercise of their respective duties,
level, even in the event that the variable components are not paid owing to a
in violation of obligations established by law and the Articles of Association,
failure to reach the targets.
with the sole exclusion of deliberate intent. The taking-out of this policy is approved by the Shareholders’ Meeting.
SECTION II – REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORS AND THE BOARD OF STATUTORY AUDITORS AND OTHER EXECUTIVES WITH STRATEGIC RESPONSIBILITIES IN 2018 This section, by name of Directors and Statutory Auditors:
A fixed remuneration component for employment and a fixed remuneration
- describes each of the items that make up the remuneration, showing their
for offices in subsidiaries are paid to executive directors appointed as exec-
consistency with the remuneration policy of Sabaf; - analytically illustrates the remuneration paid in the financial year under
utives. With reference to variable components, which are intended only for executive
review (2018), for any reason and in any form, by the Company or by sub-
directors (excluding the Chairman), the following is pointed out:
sidiaries or affiliates, identifying any components of this remuneration that
• In relation to the annual variable incentive plan established for 2017, remu-
relate to activities undertaken in previous years to the year under review.
neration of €66,282 accrued in the previous financial year (and disbursed in 2018).
The components of the remuneration paid to directors for 2018 The remuneration paid to directors for 2018 consisted of the following com-
• With reference to the annual incentive plan for 2018, the Chief Executive Officer Pietro Iotti accrued variable remuneration of €73,000, whereas the Director Gianluca Beschi accrued variable remuneration of €26,374, for the partial achievement of the targets of the 2018 MBO plan.
ponents: • An annual fixed remuneration, approved by the Shareholders’ meeting of
In implementation of the Policy in 2018, Sabaf introduced a stock grant plan
8 May 2018 that the Board of Directors decided to divide, in compliance
aimed at the Group’s executive directors and executives who hold or will hold
with the maximum limit of €400,000.00 established by the Shareholders’
key positions in the implementation of the Business Plan. Beneficiaries al-
Meeting, as follows:
ready identified in the Plan include the Chief Executive Officer and Director
- €20,000 assigned to each director without distinction,
Gianluca Beschi. The assignment of shares is subject to the achievement of
- €10,000 assigned to each member of the committees set up within the
company targets (based on ROI, TSR and EBITDA) and individual targets over
Board itself (Internal Control and Risk Committee and Remuneration and
the three-year period 2018 to 2020, consistent with the objectives of the Busi-
Nomination Committee);
ness Plan. For further details, please refer to the information contained in the
- additional remuneration of €160,000 divided among the Chairman of
Information Document prepared pursuant to Article 114-bis of Italian Legisla-
the Board of Directors, Vice Chairman and Chief Executive Officer as de-
tive Decree no. 58 of 24 February 1998, of Article 84-bis of Consob resolution
tailed in the table below;
no. 11971/99, submitted to the Shareholders’ Meeting on 8 May 2018.
• An attendance fee of €1,000, due to non-executive directors only, for every occasion on which they attend Board of Directors’ meetings and the meetings of committees formed within the Board. 219
SABAF . ANNUAL REPORT 2018
Remuneration of Statutory Auditors for 2018 The remuneration paid to the Statutory Auditors for 2018 consists of a fixed remuneration determined by the Shareholders’ Meeting of 8 May 2018, amounting to a total of €70,000.
- With reference to the variable incentive plan (MBO) for 2018, remuneration totalling €51,635 accrued. Its payment is deferred and dependent upon the continuation of the employment relationship. Remuneration totalling €94,500 was also disbursed by subsidiaries.
The remuneration of other executives with strategic responsibilities for 2018
The three executives with strategic responsibilities are among the Beneficia-
The remuneration of other executives with strategic responsibilities (Tech-
neration Policy. For further details, please refer to the information contained
nical Director and two Sales Managers) consists of a fixed remuneration for employment totalling €420,743 , and following variable remuneration: - With reference to the variable incentive plan (MBO) of 2017, during 2018, remuneration totalling €95,980 was paid.
For a breakdown of the remuneration paid in 2018, please refer to the tables
ries of the stock grant plan, approved in 2018, in implementation of the Remuin the Information Document prepared pursuant to Article 114-bis of Italian Legislative Decree no. 58 of 24 February 1998, of Article 84-bis of Consob resolution no. 11971/99, submitted to the Shareholders’ Meeting on 8 May 2018.
- “Total” shows the sum of the amounts provided under the previous items.
below (Table 1, Table 2 and Table 3), which contain remuneration paid to Directors and Statutory Auditors, and, at the aggregate level, to other execu-
For a breakdown of other items, see attachment 3A, statement 7-bis and 7-ter
tives with strategic responsibilities, taking into account any office held for a
of Consob Regulation 11971 of 14 May 1999.
fraction of a year. Remuneration received from subsidiaries and/or affiliates, with the exception of that waived or paid back to the Company, is also indi-
Table 2 shows the information relating to the stock grant plan approved by
cated separately.
the Shareholders’ Meeting and aimed at the Group’s executive directors and executives who hold or will hold key positions in the implementation of the Business Plan. Specifically, the column:
With particular reference to Table 1, the column: - “Financial instruments assigned in previous financial years not vested - “Fixed remuneration” shows, for the portion attributable to 2018, the fixed remuneration approved by the Shareholders’ meeting (and distributed with
during the financial year” shows the financial instruments assigned in previous years and not vested during the year, indicating the vesting period;
resolution of the Board of Directors), including the remuneration received for the carrying-out of special offices (pursuant to Article 2389, paragraph
- “Financial instruments assigned during the financial year” shows the finan-
3, Italian Civil Code. attendance fees as approved by the Board of Directors;
cial instruments assigned during the year, indicating the fair value at the
employee salaries due for the year gross of social security contributions
assignment date, the vesting period, the assignment date and the market
and income taxes owed by the employee.
price at the assignment;
- “Remuneration for attendance at Committee meetings”, shows, for the
- “Financial instruments vested during the year and not assigned” shows the
portion relating to 2018, the remuneration due to directors who attended
number and type of instruments vested during the financial year and not
the meetings of the Committees set up within the Board and the related
assigned;
attendance fees. - “Financial instruments vested during the year and attributable” contains - “Bonus and other incentives” includes the variable remuneration accrued during the year, for monetary incentive plans. This value corresponds to
information on instruments vested during the financial year of reference and attributable, indicating the value at the vesting date;
the sum of the amounts provided in Table 3 in the “Bonus for the year - payable/paid”, “Bonus of previous years - payable/paid” and “Other bonuses”
“Vesting period” means the period between the time when the right to partici-
columns.
pate in the incentive scheme is assigned and the time when the right accrues. Financial instruments vested during the financial year and not assigned are
- “Non-monetary benefits” shows, according to accrual and tax liability cri-
financial instruments for which the vesting period ended during the financial
teria, the value of outstanding insurance policies and the company cars
year and which were not assigned to the recipient for failure to meet the con-
assigned.
ditions under which the assignment of the instrument was conditional (for example, failure to meet performance targets).
- “Other remuneration” shows, for the portion attributable to 2018, any other remuneration resulting from other services provided.
220
REPORT ON REMUNERATION
The value at the vesting date is the value of the financial instruments accrued,
Lastly, the column “Other bonuses” shows the bonuses for the year not explic-
even if not yet paid (for example, due to the presence of lock up clauses), at
itly included in specific ex ante defined plans.
the end of the vesting period. Finally, pursuant to Article 84-quater, paragraph four of the Consob Issuers’ For a breakdown of other items, see attachment 3A, statement 7-bis and 7-ter
Regulations, Table 4 shows shareholdings in Sabaf S.p.A. held by directors
of Consob Regulation 11971 of 14 May 1999.
and executives with strategic responsibilities, as well as their non-separated spouses and dependent children, directly or through subsidiaries, trust com-
Table 3 contains information on monetary incentive plans for members of
panies or third parties, as shown in the shareholder register, communications
the administration body and other executives with strategic responsibilities;
received and other information acquired from the same parties. This includes
in particular, it shows:
all persons who held office during the year, even for only part of the year. The number of shares held is shown by individual director and in aggregate form for
For the section “Bonus for the year”
executives with strategic responsibilities.
- In the column “payable/paid”, the bonus accrued for the year for the targets
reached during the year and paid or payable because not subject to further conditions (known as upfront fee). - The column “Deferred” shows the bonus dependent on the targets to be reached during the year but not payable because subject to further conditions (known as deferred bonus). For the section “Bonus of previous years” - The column “No longer payable” shows the sum of bonuses deferred in previous years still to be paid at the beginning of the financial year and no longer payable for failure to meet the conditions to which they are subject. - The column “Payable/Paid” shows the sum of bonuses deferred in previous years still to be paid at the beginning of the financial year and paid during the year or payable. - The column “Still deferred” shows the sum of bonuses deferred in previous years still to be paid at the beginning of the financial year and still deferred.
221
SABAF . ANNUAL REPORT 2018
TAB. 1 - Remuneration paid to members of the Board of Directors and Board of Statutory Auditors and other executives with strategic responsibilities in 2018 (FIGURES IN EURO)
BOARD OF DIRECTORS
Name and surname
Office
Giuseppe Saleri
Chairman
Period of office
Expiry of office
1 Jan 31 Dec 2018
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total (a)
Vice Chairman
1 Jan 31 Dec 2018
(II) Remuneration from subsidiaries and affiliates (III) Total
(c)
Chief Executive 1 Jan Officer 31 Dec 2018
(II) Remuneration from subsidiaries and affiliates (III) Total
Director
1 Jan 31 Dec 2018
(II) Remuneration from subsidiaries and affiliates (III) Total
0
0
0
160,000
0
0
8,000
0
0
0
0
0
8,000
0
0
168,000
0
0
0
0
0
168,000
0
0
39,000(a)
14,000(b)
0
0
0
15,000
68,000
0
0
0
0
0
0
0
5,000
5,000
0
0
39,000
14,000
0
0
0
20,000(c)
73,000
0
0
330,000(a)
0
33,333
0
10,171
0
373,505
0
0
22,000
0
0
0
0
0
22,000
0
0
352,000
0
33,333
0
10,171
0
395,505
0
0
161,265(a)
0
32,949
0
5,466
0
199,681
0
0
41,000
0
0
0
0
0
41,000
0
0
202,265
0
32,949
0
5,466
0
240,681
0
0
30,000(a)
28,000(b)
0
0
0
0
58,000
0
0
0
0
0
0
0
0
0
0
0
30,000
28,000
0
0
0
0
58,000
0
0
of which €20,000 as director and €141,265 as Administration, Finance and Control Director
Renato Camodeca
Director
1 Jan 31 Dec 2018
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total
222
0
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A.
(b)
0
of which €20,000 as director, €10,000 as Chief Executive Officer, and €300,000 as General Manager (including €30,000 relating to Remuneration for non-competition agreement)
Gianluca Beschi
(a)
Profit sharing
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A.
(a)
Indemnity for end of office or termination of employment relationship
Bonus and other incentives
Other remuneration
of which €20,000 as director, €10,000 as Vice Chairman’ and €9,000 as board meeting attendance fees of which €10,000 as a member of the Internal Control and Risk Committee and €4,000 in Committee meeting attendance fees of which €15,000 as member of the Sabaf S.p.A. Supervisory Body and €5,000 as member of the Supervisory Body of the subsidiary Faringosi Hinges s.r.l.
Pietro Iotti
(a)
Total
Fair Value of equity remuneration
Nonmonetary benefits
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A.
(b)
160,000(a)
Variable remuneration (non equity)
of which €20,000 as Director and €140,000 as Chairman
Nicla Picchi
(a)
Fixed remuneration
Remuneration for attendance at Committee meetings
23 January 2019
of which €20,000 as director and €10,000 as BoD meeting attendance fees of which €10,000 as a member of the Internal Control and Risk Committee, €10,000 as a member of the Remuneration and Nomination Committee and €8,000 as Committee meeting attendance fees
REPORT ON REMUNERATION
(FIGURES IN EURO)
BOARD OF DIRECTORS
Name and surname
Office
Alessandro Potestà
Director
Period of office
Expiry of office
1 Jan 31 Dec 2018
Approval of 2020 financial statements
Fixed remuneration
Remuneration for attendance at Committee meetings
28,000(a)
(I) Remuneration at Sabaf S.p.A. (I) Remuneration from subsidiaries and affiliates (III) Total (a) (b)
Director
8 May 31 Dec 2018
Indemnity for end of office or termination of employment relationship
Bonus and other incentives
Profit sharing
11,000(b)
0
0
0
0
39,000
0
0
0
0
0
0
0
0
0
0
0
28,000
11,000
0
0
0
0
39,000
0
0
Other remuneration
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total (b)
Total
Fair Value of equity remuneration
Nonmonetary benefits
of which €20,000 as director and €8,000 as BoD meeting attendance fees of which €10,000 as a member of the Remuneration and Nomination Committee and €1,000 as Committee meeting attendance fees
Claudio Bulgarelli
(a)
Variable remuneration (non equity)
28,000(a)
2,667(b)
0
0
0
0
30,667
0
0
0
0
0
0
0
0
0
0
0
28,000
2,667
0
0
0
0
30,667
0
0
of which €20,000 as director and €8,000 as BoD meeting attendance fees of which €1,667 as a member of the Remuneration and Nomination Committee and €1,000 as Committee meeting attendance fees
Daniela Toscani
Director
8 May 31 Dec 2018
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total
27,000(a)
11,000(b)
0
0
0
0
38,000
0
0
0
0
0
0
0
0
0
0
0
27,000
11,000
0
0
0
0
38,000
0
0
(a)
of which €20,000 as director and €7,000 as BoD meeting attendance fees (b) of which €10,000 as a member of the Internal Control and Risk Committee and €1,000 in Committee meeting attendance fees
Stefania Triva
Director
8 May 31 Dec 2018
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total (a) (b)
25,000(a)
8,333(b)
0
0
0
0
33,333
0
0
0
0
0
0
0
0
0
0
0
25,000
8,333
0
0
0
0
33,333
0
0
of which €20,000 as director and €5,000 as BoD meeting attendance fees of which €8,333 as a member of the Remuneration and Nomination Committee
223
SABAF . ANNUAL REPORT 2018
(FIGURES IN EURO)
DIRECTORS NO LONGER IN OFFICE DURING THE YEAR UNDER REVIEW
Fixed remuneration
Remuneration for attendance at Committee meetings
(I) Remuneration at Sabaf S.p.A.
0
(II) Remuneration from subsidiaries and affiliates (III) Total
Variable remuneration (non equity)
Total
Fair Value of equity remuneration
Indemnity for end of office or termination of employment relationship
Bonus and other incentives
Profit sharing
Nonmonetary benefits
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
(I) Remuneration at Sabaf S.p.A.
0
0
0
0
0
0
0
0
0
(II) Remuneration from subsidiaries and affiliates
0
0
0
0
0
0
0
0
0
(III) Total
0
0
0
0
0
0
0
0
0
(I) Remuneration at Sabaf S.p.A.
0
0
0
0
0
0
0
0
0
(II) Remuneration from subsidiaries and affiliates
0
0
0
0
0
0
0
0
0
(III) Total
0
0
0
0
0
0
0
0
0
2,000(a)
3,000(b)
0
0
0
0
5,000
0
0
0
0
0
0
0
0
0
0
0
2,000
3,000
0
0
0
0
5,000
0
0
2,000(a)
4,000(b)
0
0
0
0
6,000
0
0
0
0
0
0
0
0
0
0
0
2,000
4,000
0
0
0
0
6,000
0
0
2,000(a)
0
0
0
0
0
2,000
0
0
0
0
0
0
0
0
0
0
0
2,000
0
0
0
0
0
2,000
0
0
Name and surname
Office
Cinzia Saleri
Vice Chairman
Roberta Forzanini
Ettore Saleri
Giuseppe Cavalli
Vice Chairman
Vice Chairman
Director
Period of office
Expiry of office
1 Jan 8 May 2018
Approval of 2017 financial statements
1 Jan 8 May 2018
1 Jan 8 May 2018
1 Jan 8 May 2018
Approval of 2017 financial statements
Approval of 2017 financial statements
Approval of 2017 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total (a) (b)
of which €2,000 as BoD meeting attendance fees of which €3,000 as Committee meeting attendance fees
Fausto Gardoni
Director
1 Jan 8 May 2018
Approval of 2017 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total (a) (b)
of which €2,000 as BoD meeting attendance fees of which €4,000 as Committee meeting attendance fees
Anna Pendoli
Director
1 Jan 8 May 2018
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total (a)
224
Other remuneration
of which €2,000 as BoD meeting attendance fees
Approval of 2017 financial statements
REPORT ON REMUNERATION
(FIGURES IN EURO)
BOARD OF STATUTORY AUDITORS
Name and surname
Office
Alessandra Tronconi
Chairman
Period of office
Expiry of office
8 May 31 Dec 2018
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total
Luisa Anselmi
Standing Auditor
1 Jan 31 Dec 2018
(II) Remuneration from subsidiaries and affiliates (III) Total
Standing Auditor
8 May 31 Dec 2018
30,000
Variable remuneration (non equity)
Total
Fair Value of equity remuneration
Indemnity for end of office or termination of employment relationship
Bonus and other incentives
Profit sharing
Nonmonetary benefits
0
0
0
0
0
30,000
0
0
0
0
0
0
0
0
0
0
0
30,000
0
0
0
0
0
30,000
0
0
20,000
0
0
0
0
0
20,000
0
0
0
0
0
0
0
0
0
0
0
20,000
0
0
0
0
0
20,000
0
0
20,000
0
0
0
0
0
20,000
0
0
0
0
0
0
0
0
0
0
0
20,000
0
0
0
0
0
20,000
0
0
Other remuneration
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A.
Mauro Vivenzi
Fixed remuneration
Remuneration for attendance at Committee meetings
Approval of 2020 financial statements
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total
AUDITORS NO LONGER IN OFFICE DURING THE YEAR UNDER REVIEW
Antonio Passantino
Chairman
1 Jan 8 May 2018
Approval of 2017 financial statements
(I) Remuneration at Sabaf S.p.A.
0
0
0
0
0
0
0
0
0
(II) Remuneration from subsidiaries and affiliates
0
0
0
0
0
0
0
0
0
(III) Total
0
0
0
0
0
0
0
0
0
(I) Remuneration at Sabaf S.p.A.
0
0
0
0
0
0
0
0
0
(II) Remuneration from subsidiaries and affiliates
0
0
0
0
0
0
0
0
0
(III) Total
0
0
0
0
0
0
0
0
0
Enrico Broli
Standing Auditor
1 Jan 8 May 2018
Approval of 2017 financial statements
OTHER EXECUTIVES WITH STRATEGIC RESPONSIBILITIES Other executives with strategic responsibilities (3)
1 Jan 31 Dec 2018
(I) Remuneration at Sabaf S.p.A. (II) Remuneration from subsidiaries and affiliates (III) Total (a)
n/a 420,743(a)
0
95,980
0
15,781
0
532,504
0
0
94,500
0
0
0
0
0
94,500
0
0
515,243
0
95,980
0
15,781
0
627,004
0
0
remuneration including â‚Ź44,613 related to Remuneration for non-competition agreement
225
SABAF . ANNUAL REPORT 2018
TAB. 2 - Incentive plans based on financial instruments, other than stock options, for members of the board of directors, general managers and other executives with strategic responsibilities (FIGURES IN EURO) FINANCIAL INSTRUMENTS
Name and surname
Pietro Iotti
Office
assigned during financial year
vested during financial year and not assigned
vested during financial year and assigned
pertaining to the financial year
Number and type Value at of financial vesting date instruments
Fair value
Number and type of financial instruments
Fair Value at the assignment date
Vesting period
Assignment date
Market price on assignment
Number and type of financial instruments
Chief Executive Officer
Remuneration at Sabaf S.p.A.
Gianluca Beschi
Plan
assigned in previous financial years not vested during the financial year Number and type Vesting of financial period instruments
2018 Stock Grant Plan (May 2018)
-
-
56,000 rights corresponding to 56,000 shares
407,120
3 years
15 May 2018
€ 19.48 / share
-
-
-
96,985
2018 Stock Grant Plan (May 2018)
-
-
33,600 rights corresponding to 33,600 shares
244,272
3 years
15 May 2018
€ 19.48 / share
-
-
-
58,191
2018 Stock Grant Plan (May 2018)
-
-
46,000 rights corresponding to 46,000 shares
334,420
3 years
15 May 2018
€ 19.48 / share
-
-
-
93,521
-
248,697
Director
Remuneration at Sabaf S.p.A.
Other executives with strategic responsibilities (3)
Remuneration at Sabaf S.p.A.
TOTAL
226
985,812
REPORT ON REMUNERATION
TAB. 3 - Monetary incentive plans for members of the board of directors and other executives with strategic responsibilities
(FIGURES IN EURO) Bonus for the year
Name and surname
Office
Pietro Iotti
Chief Executive Officer
Plan
Payable / Paid
Deferred
Remuneration at Sabaf S.p.A.
2017 MBO Plan (March 2017)
0
0
Remuneration at Sabaf S.p.A.
2018 MBO Plan (March 2018)
0
73,000
Remuneration at Sabaf S.p.A.
2017 MBO Plan (March 2017)
0
0
Remuneration at Sabaf S.p.A.
2018 MBO Plan (March 2018)
0
26,374
Remuneration at Sabaf S.p.A.
2017 MBO Plan (March 2017)
0
0
Remuneration at Sabaf S.p.A.
2018 MBO Plan (March 2018)
0
51,635
0
151,009
Gianluca Beschi
Bonus of previous years Deferment period
March 2019
No longer payable
Payable / Paid
Still deferred
Other bonuses
0
33,333
0
0
0
0
0
0
0
32,949
0
0
0
0
0
0
0
95,980
0
0
0
0
0
0
0
162,262
0
0
Executive Director
March 2019
Other executives with strategic responsibilities (3)
Total
March 2019
TAB. 4 - Shareholdings of members of the administration and control bodies and other executives with strategic responsibilities (FIGURES IN EURO) Name and surname
Office
Saleri Giuseppe
Chairman
Iotti Pietro
Chief Executive Officer
Toscani Daniela
Director
Bulgarelli Claudio Vivenzi Mauro Giorgio
Type of Ownership
Investee Company
No. shares held at 31 Dec 2017
No. shares acquired
No. shares sold
No. shares held at 31 Dec 2018
Indirect through the subsidiary Giuseppe Saleri S.a.p.A.
Sabaf S.p.A.
2,766,313
-
-
2,766,313
Direct
Sabaf S.p.A.
10,000
1,000
-
11,000
Indirect through spouse
Sabaf S.p.A.
-
2,419
-
2,419
Direct
Sabaf S.p.A.
-
498
-
498
Director
Indirect through the company Fintel Srl
Sabaf S.p.A.
850,000
-
-
850,000
Auditor
Indirect through spouse
Sabaf S.p.A.
-
600
-
600
227
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