Annual Report • Aug 3, 2023
Annual Report
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FERRETTI S.P.A. (incorporated under the laws of Italy as a joint-stock company with limited liability) HKEX code: 9638 | Euronext code: YACHT.MI
| Corporate Information | 2 |
|---|---|
| Financial Summary | 4 |
| Chairman's Statement | 5 |
| Management Discussion and Analysis | 10 |
| Corporate Governance and Other Information | 22 |
| Review Report of the Independent Auditor | 29 |
| Interim Condensed Consolidated Financial Statements (English translation for the convenience of international readers) |
30 |
| Notes to the Interim Condensed Consolidated Financial Statements |
37 |
| Statement on the Interim Condensed Consolidated Financial Statements as at June 30, 2023 pursuant to Art. 154-BIS, Paragraph 5, of Legislative Decree No. 58/98 as amended and supplemented |
98 |
| Definitions | 99 |
Mr. Alberto Galassi (Chief Executive Officer) Mr. Xu Xinyu (徐新玉)
Mr. Tan Xuguang (譚旭光) (Chairman) Mr. Piero Ferrari (Honorary Chairman) Mr. Li Xinghao (李星昊) Ms. Jiang Lan (Lansi) (蔣嵐) (appointed on May 18, 2023)
Mr. Hua Fengmao (華風茂) Mr. Stefano Domenicali Mr. Patrick Sun (辛定華)
Mr. Patrick Sun (辛定華) (Chairman) Mr. Hua Fengmao (華風茂) Mr. Li Xinghao (李星昊) Mr. Stefano Domenicali
Mr. Stefano Domenicali (Chairman) Mr. Piero Ferrari Mr. Xu Xinyu (徐新玉) Mr. Hua Fengmao (華風茂) Mr. Patrick Sun (辛定華)
Mr. Tan Xuguang (譚旭光) (Chairman) Mr. Alberto Galassi Mr. Hua Fengmao (華風茂) Mr. Stefano Domenicali Mr. Patrick Sun (辛定華)
Mr. Tan Xuguang (譚旭光) (Chairman) Mr. Alberto Galassi Mr. Piero Ferrari Mr. Xu Xinyu (徐新玉) Mr. Hua Fengmao (華風茂) Ms. Jiang Lan (Lansi) (蔣嵐)
Mr. Luigi Capitani (Chairman) Mr. Luca Nicodemi Ms. Giuseppina Manzo Ms. Tiziana Vallone Ms. Federica Marone
Mr. Niccolò Pallesi Ms. Wong Hoi Ting (ACG, HKACG)
Mr. Li Xinghao (李星昊)
Mr. Alberto Galassi Ms. Wong Hoi Ting
Via Irma Bandiera 62, 47841 Cattolica (RN), Italy
31/F, Tower Two, Times Square 1 Matheson Street Causeway Bay Hong Kong
EY S.p.A.
Independent Auditor registered in the Register Held by MEF (Italian Ministry of Economy and Finance) and Recognized PIE Auditor under the Financial Reporting Council Ordinance (Cap. 588) Via Meravigli, 12 20123 Milan Italy
Mr. Marco Zammarchi
King & Wood Mallesons 13th Floor Gloucester Tower The Landmark 15 Queen's Road Central Central Hong Kong
Pedersoli Studio Legale via Monte di Pietà, 15, 20121 Milan, Italy
Gram Capital Limited Room 1209 12th Floor, Nan Fung Tower Central Hong Kong
Computershare Hong Kong Investor Services Limited Shops 1712–1716, 17th Floor Hopewell Centre 183 Queen's Road East Wanchai Hong Kong
www.ferrettigroup.com
HKEX: 9638 EXM: YACHT
| Six months ended June 30, 2023 |
Percentage increase/ |
||
|---|---|---|---|
| (in thousands Euro) | (unaudited) | (unaudited) | decrease |
| Net revenue | 580,841 | 534,948 | 8.6% |
| Profit before tax | 55,512 | 29,151 | 90.4% |
| Income tax | (14,658) | 724 | n.a. |
| Profit for the period | 40,448 | 29,608 | 36.6% |
| As at | As at | ||
|---|---|---|---|
| June 30, | December 31, | Percentage | |
| 2023 | 2022 | increase/ | |
| (in thousands Euro) | (unaudited) | (audited) | decrease |
| Total Assets | 1,484,881 | 1,407,556 | 5.5% |
| Total Liabilities | (687,471) | (629,165) | 9.3% |
| As at June 30, 2023 (unaudited) |
As at December 31, 2022 (audited) |
Percentage increase/ decrease |
|
|---|---|---|---|
| Profitability Ratios | |||
| Ratio on equity | 10.4% | 9.5% | 8.2% |
| Ratio on total assets | 5.6% | 4.9% | 16.3% |
| Liquidity Ratios | |||
| Current ratio | 1.4 | 1.3 | 8.5% |
| Quick ratio | 0.9 | 1.1 | (14.6)% |
| Capital Adequacy Ratio | |||
| Gearing ratio | 4.5% | 5.1% | (11.9)% |
The first half year of 2023 saw the Group successfully landing on Euronext Milan. This debut followed the 2022 listing on the Hong Kong Stock Exchange, making Ferretti the first Company to be listed in both the Hong Kong Stock Exchange and the Euronext Milan.
The offer price was set at €3.00 per Share and attracted broad interest among leading Italian and international institutional investors, resulting in a widened and strengthened institutional Shareholder base of the Company.
Based on the offer price, the Company's market capitalization as of the first day of trading of the Shares on the Euronext Milan was equal to approximately €1 billion.
EXM Listing will allow the Group to further consolidate its positioning as a global leader in the luxury yacht arena.
During the Relevant Period, the Group recorded an increase in net revenue, reaching approximately €581 million and representing an 8.6% increase as compared to the six months ended June 30, 2022.
As far as the Group's profitability is concerned, adjusted EBITDA amounted to approximately €83.4 million, increasing 20.9% in comparison with the figure reported for the six months ended June 30, 2022 (€69.0 million). The increase was also significant in percentage terms, with an adjusted EBITDA margin reaching 14.7% or 120 basis points higher than that of the six months ended June 30, 2022. Finally, net profit increased by 36.8% compared to the previous year to a value of approximately €40.9 million.
For the second half of 2023, we expect a sustained growth backed up by a consistent order backlog of approximately €1.4 billion.
Ferretti Group upheld an innovation-driven approach to maintain its market-leading position in its core business, placing great emphasis on research and development. Leveraging the substantial investments in research and development, Ferretti Group has been continuously renewing and broadening its product portfolio with technological and design innovation, allowing it to stay abreast of the rapidly evolving preferences and expectations of its clientele.
The launch of new models for composite and made-to-measure yachts, together with a growing interest in super yachts allowed the Group to attract new customers while also continuing to nurture the interest of Ferretti Group's loyal clients.
As a remark, the strategy of moving towards larger and more customizable yachts is paying off, with a growing total revenue across all segments:
• Net revenue from the sales of composite yachts increased by approximately 11.2% from approximately €234 million for the six months ended June 30, 2022 to approximately €260 million for the six months ended June 30, 2023.
Our ancillary businesses provide synergies with our yacht manufacturing business with a comprehensive portfolio, including: (i) yacht brokerage, chartering and management services; (ii) after-sales and refitting services; (iii) brand extension activities (including exclusive lounges all-overthe-world); (iv) manufacturing and installation of wooden furnishings and kinetics for nautical interiors; (v) manufacturing and sale of coastal patrol vessel by the FSD; and (vi) trading of preowned yachts, offering trade-in opportunities to our customers as a lever to facilitate the sales of new yachts. With such businesses, we are able to cover all customer's needs throughout the whole yachting "customer journey", from the purchase of luxury yachts to a complete offer of ancillary services to enhance customer satisfaction and loyalty, while providing us with real-time information about market trends and customer preferences.
For the first half of 2023, net revenue from ancillary businesses reached approximately €48 million, representing a year-on-year decline of 5.5% due to a decrease in revenue of pre-owned business.
By leveraging considerable investments in research and development, the Group has continuously upgraded and expanded its product portfolio with environmentally friendly, technological, and designer innovations since 2014 to keep pace with the rapidly evolving expectations of its customers.
Thanks to its innovative drive, the Group was the very first to introduce a pioneering hybrid propulsion solution to the market in 2008, and it continues to innovate in this field. In 2021, the Group launched a collaboration with Rolls-Royce Power Systems to jointly develop hybrid solutions to be installed on future yachts and in 2022, the Group extended the agreement until the end of 2027, which guarantees the supply chain's efficiency, with clear benefits for its customers. In 2022, the Group also entered the E-luxury segment with the first Riva full-electric runabout, named El-Iseo. Furthermore, the Group is committed to expanding its other "green" product offering across all key brands, launching and marketing more eco-friendly solutions, building on the proposition of the newly launched models (besides FSD N800, Riva El-Iseo, also wallytender43x, wallytender48x, In FYnito 90 and Navetta 50), and increasing its presence in the sailing yacht market through Wally.
With respect to sustainable development, hydrogen is attracting increasing attention as an energy source and has the potential to become a game-changer in the maritime sector as well. Building on Weichai Group's significant achievements on this front and having already installed hydrogen engines on land vehicles, it will be a crucial partner of the Group to provide the necessary know-how and experience to make hydrogen engines on yachts a reality.
In addition, with a view to reducing the environmental impact of its products, the Group is constantly seeking innovative solutions, which involve the use of eco-friendly and lighter materials. Moreover, the Group's ESG commitment is not limited to its outstanding product offering, but also targets its shipyards, all gradually adjusting to the ISO 14001:2015 environmental certification, introducing innovative solutions (such as trigeneration systems) and solar panels to reduce both energy consumption and emissions.
The Group firmly believes in the importance of ESG moving forward and aims to become an ESG leader in the global yacht market. As a remark, the Group has been the first in the yacht industry to publish a sustainability report in 2019 and, in 2021, also established the ESG Committee, which is responsible for helping the Board to devise ESG policies and strategies and reviewing and assessing its sustainability performance.
Looking back at the recent past, despite the short-term adverse impact of the COVID-19 lockdown restrictions in 2020 and the conflict between Russia and Ukraine that started in early 2022, the Group has delivered outstanding financial performance proving its resilience, and we expect this tailwind to keep on positively affecting our business.
Indeed, looking forward, the Group, being a leading player in the global yacht industry and undisputed leader in the inboard composite and made-to-measure yachts, is ideally positioned to benefit from a growing market with a size of approximately €24 billion in 2022 and forecasted to reach approximately €29.3 billion by 2025 (growing with a compound annual growth rate at 6.8% from 2022 to 2025). In particular, the number of potential end customers, i.e. Very-High and Ultra-High Net Worth Individuals, is expected to witness a strong growth momentum between 2022 and 2025, with a compound annual growth rate of 7.7% and 7.8%, respectively; and the penetration of luxury yachting among the growing potential end customers is still below 1%, unveiling an enormous growth potential.
Going forward, leveraging our unique and effective business model, strong heritage of iconic brands, unparalleled focus on product excellence and innovation, tailored approach for cultivating an exclusive community of luxury customers and its distinctive sales model, we will focus on:
Building on these 4 pillars, the Group believes it can grow according to the guidance for the future long term presented during its first Capital Markets Day in March 2023. In more details the Group expects to grow by 10% compound annual growth rate in terms of net revenue and reach greater than 18.5% in EBITDA margin, excluding mergers and acquisitions. Moreover, the cash conversion is estimated to be greater than 85%.
Last but not least, I would like to express my sincere appreciation to all of our proven and new Shareholders, our potential investors and our customers for their care and support, as well as to all of our staff for their hard work and dedication!
Chairman and non-executive Director
Hong Kong, August 2, 2023
The Group is an established player in the global luxury yacht market, leader in the global luxury inboard yacht market above 9 meters (approximately 30 feet) with a market share of 15% as of June 30, 2022 (source: Group calculation based on data from PD&A) and among the top players in the super yachts segment (source: Group calculation based on data from SYT iQ, issued in December 2022 by SuperYacht Times).
Since its founding, the Group has played an important role in steering the development of the global luxury yacht industry by acquiring and integrating other leading yacht brands and production facilities, and now owns a portfolio with seven brands, including some of the oldest in the industry: Riva, Wally, Ferretti Yachts, Pershing, Itama, CRN and Custom Line, each with distinctive features and identity, recognized as symbols of luxury, exclusivity, Italian design, craftsmanship, innovation and performance. The Group designs, produces and sells luxury composite, made-to-measure, and super yachts from 8 to 95 meters (approximately 27 and 312 feet) covering a broad and diversified range of types, catering for the personal tastes and specific requirements of its clientele. With its market leadership, history and iconic brand portfolio, the Group is positioned as a trend-setter of the global luxury yacht industry and an ambassador of Italian nautical craftsmanship to the world.
In addition to the sale of new luxury yachts, the Group has a comprehensive offering to satisfy the needs of its customers beyond yacht purchase, including: (a) yacht brokerage, chartering and management services; (b) after-sales and refitting services; (c) brand extension activities, such as branded lounges, lifestyle merchandise, and boat restoration services; (d) manufacturing and installation of nautical components such as wooden furnishings and kinetic systems and components; (e) trading of pre-owned yachts, offering trade-in opportunities to its customers as a lever to facilitate the sales of new yachts; and (f) the sale of coastal patrol vessels by the FSD. With these ancillary services, the Group is present along all of the phases of the yachting "customer journey", thus positioning itself as a one-stop-shop luxury yacht player.
The Group's multi-brand business model relies on separate, brand-dedicated teams that manage new model development and concept design to nurture and preserve each brand's individual identity and unlock its full potential. At the same time, the Group is able to capture synergies by centralizing high-value-added activities that support all brands (R&D, procurement and manufacturing) and corporate functions (human resources, investor relations, finance, legal and IT).
Over the years, the Group has cultivated a premium and loyal clientele of highly sophisticated very-high net worth individuals ("VHNWIs") and ultra-high net worth individuals ("UHNWIs"), thanks to its effective sales model. The Group has an established sales presence in more than 70 countries in EMEA, AMAS and APAC, with an in-house sales team in each region, enabling the Group to reach its customers globally. Moreover, the Group believes that its dedicated brand promotion activities, branded lounges in exclusive locations and sponsorship arrangements, have enhanced the high-end positioning of its brands, which, in turn, has enabled the Group to grow its high-end clientele, cultivate an exclusive community of luxury yacht owners, and nurture a strong sense of belonging.
The Group owns and operates seven shipyards, as well as two production plants for interior fittings and customized furnishings and one production plant for kinetic equipment, all located at the heart of the worldfamous Italian nautical district. This strategic choice allows the Group to continuously enhance its production process, while ensuring an uncompromised focus on product quality and technical performance, by leveraging on the proximity of its network of suppliers and contractors. The Group also owns a refitting facility in Fort Lauderdale (Florida, USA) to cover the AMAS market. As part of its ongoing efforts to meet the demand for high-end customization and further increase its competitiveness, each interior design element of the Group's luxury yachts is carefully selected, leveraging upon the Group's strategic partnerships with prestigious international designers, and is tailor-made by nautical craftsmen with techniques handed down over generations, blending tradition, modernity, and relentless dedication to customization. In addition, in order to strengthen its control over the supply chain and ensure supply of key inputs, the Group has begun work on a project to internalize a portion of its fiberglass and carbon-fiber hulls production.
The Group held its first Capital Markets Day in Milan on March 21, 2023 providing the mid-long term outlook.
The Group reached an agreement with Rosetti Marino S.p.A. for the acquisition of Cantiere San Vitale, in Ravenna of over 70,000 square meters.
In April 2023, the Group made a big step forward in respect of the project in the former Belleli Yard port area in Taranto of over 220,000 square meters, where an industrial facility will be developed for the construction of models and molds, as well as research center for advanced materials. All the public administrations involved approved the remediation and industrial development project.
On June 27, 2023, the Company successfully completed the first ever Dual Listing of the Company between the Euronext Milan and the Hong Kong Stock Exchange.
The Group's order backlog increased by 15.8% in the Relevant Period compared to the six months ended June 30, 2022. This growth was supported by investments to expand the product portfolio and in model re-stylings, with new and re-styled models launched. Furthermore, the Group's financial performance was underpinned by substantial industrial and research and development investments. The former provided the production capacity needed to sustain volumes expansion, while the latter was key to aligning the Group's product offering to emerging customer needs and market trends, representing a solid pillar upon which to build future growth. These investments, paired with favorable market momentum, contributed to an increase in revenue by 8.6% in the Relevant Period compared to the six months ended June 30, 2022.
The global luxury yacht industry has continued to grow solidly throughout 2021 and 2022, fostered by the growth of the VHNWI and UHNWI clientele in terms of both number and wealth. In this context, and as proved by its ability to outperform the underlying luxury yacht market in the past, the Group believes it is ideally positioned to continue to capture market growth, capitalizing on its unique and effective business model, strong heritage of iconic brands, unparalleled focus on product excellence and innovation, tailored approach for cultivating an exclusive community of luxury customers and its distinctive sales model. To continue building on the expected trends of the global luxury yacht industry, enhancing its value proposition and strengthening its overall resilience, the Group's future plans are based on the following strategic pillars:
The Group's results are not subject to seasonality, except for the concentration of deliveries in the northern summer season (May-August) and, to a lesser extent, in the southern summer season (November-January), especially for composite yachts.
The Group's overall net revenue increased by approximately 8.6% from approximately €534.9 million for the six months ended June 30, 2022 to approximately €580.8 million for the Relevant Period. The following table summarizes the net revenue for each of the business lines by application during the periods indicated:
| Six months ended June 30, | ||||
|---|---|---|---|---|
| 2023 | 2022 | |||
| (Unaudited) | (Unaudited) | |||
| Net | % of Total | Net | % of Total | |
| (In thousands Euro, except percentages) | Revenue | Net Revenue | Revenue | Net Revenue |
| Composite yachts | 259,790 | 44.7% | 233,710 | 43.7% |
| Made-to-measure yachts | 207,983 | 35.8% | 201,286 | 37.6% |
| Super yachts | 64,847 | 11.2% | 48,928 | 9.1% |
| Other businesses(1) | 48,221 | 8.3% | 51,024 | 9.5% |
| Total | 580,841 | 100% | 534,948 | 100% |
Note: (1) Mainly comprising revenue from ancillary businesses and the FSD.
The Group's revenue from the sales of composite yachts increased by approximately 11.2% from approximately €234 million for the six months ended June 30, 2022 to approximately €260 million for the Relevant Period. The increase in revenue was mainly due to the increase in the backlog.
The Group's revenue from the sales of made-to-measure yachts increased by approximately 3.3% from approximately €201 million for the six months ended June 30, 2022 to approximately €208 million for the Relevant Period. The increase in revenue was mainly due to the increase the backlog.
The Group's revenue from the sales of super yachts increased by approximately 32.5% from approximately €49 million for the six months ended June 30, 2022 to approximately €65 million for the Relevant Period. The increase in revenue was mainly due to the launch of alloy-hulled super yacht models.
The Group's revenue generated from other businesses are substantially in line and approximately €51 million for the six months ended June 30, 2022 and approximately €48 million for the Relevant Period.
The Group's standard sales contracts generally do not provide any specific price adjustment clause. In some instances however, the Group may agree with the customer to include a specific clause typically tied to inflation. In this case, the contract price will be increased.
The Group's order backlog from composite yachts reached €408.1 million for the Relevant Period representing approximately 28.9% of the total backlog (as at December 31, 2022: €386.7 million representing approximately 29.8% of the total backlog).
The Group's order backlog from made-to-measure yachts reached €503.2 million for the Relevant Period representing approximately 35.7% of the total backlog (as at December 31, 2022: €469.6 million representing approximately 36.2% of the total backlog).
The Group's order backlog from super yachts reached €442.3 million for the Relevant Period representing approximately 31.4% of the total backlog (as at December 31, 2022: €384.6 million representing approximately 29.7% of the total backlog).
The Group's order backlog from other business (including FSD and Wally sail) reached €56.9 million for the Relevant Period representing approximately 4.0% of the total backlog (as at December 31, 2022: €54.8 million representing approximately 4.2% of the total backlog).
The Group's raw materials and consumables used increased by approximately 21.2% from approximately €260.8 million for the six months ended June 30, 2022 to approximately €316.1 million for the Relevant Period. Such increase was mainly due to the increase in production activities following the growth in order intake.
The Group's contractors costs increased by approximately 33.0% from approximately €77.3 million for the six months ended June 30, 2022 to approximately €102.8 million for the Relevant Period. Such increase was mainly attributable to the increase in production activities to properly answer to the acceleration of the order intake.
The Group's costs for trade shows, events and advertising increased by approximately 27.7% from approximately €9.5 million for the six months ended June 30, 2022 to approximately €12.1 million for the Relevant Period mainly due to the renormalization process after the COVID-19 pandemic when many of these activities were canceled.
The Group's other service costs decreased by approximately 3.6% from approximately €61.1 million for the six months ended June 30, 2022 to approximately €58.9 million for the Relevant Period due to the combined effect of an increase in service costs for production volumes, in particular transportation, and a decrease in fees paid to members of corporate governance bodies, due to the presence as at June 30, 2022 of €3.2 million for a portion of the Management Incentive Plan.
The Group's rentals and leases increased by €0.8 million, or 20.1%, from €3.7 million for the six months ended June 30, 2022 to €4.5 million for the Reporting Period, primarily due to (i) an increase in royalties mainly attributable to the increase in new yachts delivered; and (ii) an increase in expenses relating to short-term leases, which was generally in line with the growth of the Group's business.
The Group's personnel costs decreased by €4.2 million, or 6.1%, from €69.3 million for the six months ended June 30, 2022 to €65.1 million for the Reporting Period, primarily due to the combined effect of the absence of the Management Incentive Plan cash bonus for €12.3 million as at June 30, 2022, and an increase in the average headcount to support the growth of the Group's business.
The Group's other operating expenses decreased from approximately €5.6 million for the six months ended June 30, 2022 to approximately €3.0 million for the Relevant Period mainly due to the reduction of cost underaccruals and re-billable costs.
The Group recorded income tax expenses of €14.7 million for the Relevant Period and the tax benefit of €724 thousand for the six months period ended June 30, 2022. The tax expenses increased mainly due to (i) an increase in current tax as attributable to the significant increase in the Group's profit before tax; and (ii) a decrease in deferred tax assets recognized in respect of prior tax losses.
The Group's profit for the period increased by approximately 36.8% from approximately €29.9 million for the six months ended June 30, 2022 to approximately €40.9 million for the Relevant Period mainly due to the increase in volumes and the increase in margin.
To supplement the Group's consolidated income statements which are presented in accordance with IFRS, EBITDA, adjusted EBITDA, adjusted EBITDA/net revenue without pre-owned, being non-IFRS measures, were also presented in this report. The Group is of the view that this measure facilitates comparison of operating performance from period to period by eliminating potential impacts of certain items and believes that this measure provides useful information to understand and evaluate the Group's consolidated income statements in the same manner as they help the Group's management. However, the Group's presentation of EBITDA may not be comparable to similar terms used by other companies. The use of this measure has limitations as an analytical tool, as such, it should not be considered in isolation from, or as substitute for analysis of, the Group's results of operations or financial condition as reported under IFRS.
The Company defines (i) EBITDA as profit after tax plus financial expenses (including the result of foreign exchange conversion but excluding exchange rate gains/(losses) related to financial transactions), depreciation and amortization, and income tax expense, and less financial income and income tax benefit; (ii) adjusted EBITDA as EBITDA adjusted by adding back certain special items (including listing expenses and related costs, Management Incentive Plan, and other minor non-recurring events); and (iii) net revenue without pre-owned as net revenue excluding revenue generated from the trading of pre-owned yachts.
The table below sets forth the reconciliations of the Group's non-IFRS measure to the nearest measures prepared in accordance with IFRS for the years indicated:
| (in thousands Euro) | June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|---|---|---|
| Net revenue | 580,841 | 534,948 |
| Revenue pre-owned | (13,419) | (24,328) |
| Net revenue without pre-owned | 567,422 | 510,619 |
| Operating costs | (484,005) | (441,582) |
| Adjusted EBITDA | 83,418 | 69,037 |
| Special items | (802) | (23,099) |
| Operating exchange gains/(losses) and share of loss of a joint venture | 836 | (1,176) |
| EBITDA | 83,451 | 44,762 |
| Depreciations and amortization | (30,128) | (25,518) |
| Financial income, financial expenses, financial exchange gains/(losses) | 2,189 | 9,906 |
| Profit before tax (PBT) | 55,512 | 29,151 |
| Income tax | (14,658) | 724 |
| Profit after tax (PAT) | 40,855 | 29,875 |
| Adjusted EBITDA/Net revenue without pre-owned | 14.7% | 13.5% |
| June 30, 2023 | June 30, 2022 | |
|---|---|---|
| (in thousands Euro) | (unaudited) | (unaudited) |
The table below sets forth a reconciliation of the non-IFRS measures to the nearest measures prepared in accordance with IFRS for the years indicated:
| Profit for the period | 40,855 | 29,875 |
|---|---|---|
| Income tax expense Foreign financial exchange gains/(losses) |
(14,658) 131 |
724 (12,258) |
| Financial expenses Financial income |
1,957 (4,277) |
2,356 (5) |
| Depreciation and amortization | 30,128 | 25,518 |
| EBITDA | 83,451 | 44,762 |
| Special items related to EBITDA Foreign operating exchange losses Share of loss of a joint venture |
802 (836) 0 |
23,099 1,158 18 |
| Adjusted EBITDA | 83,418 | 69,037 |
| Adjusted EBITDA/net revenue without pre-owned | 14.7% | 13.5% |
The Group's adjusted EBITDA (excluding listing expenses and related costs, Management Incentive Plan and other minor non-recurring events) for the Relevant Period amounted to approximately €83.4 million, increased by approximately 20.9% for the six months ended June 30, 2022 which amounted to approximately €69.0 million, demonstrating the increase in profitability of our operating performance.
The adjusted EBITDA/net revenue without pre-owned margin increased from 13.5% for the six months ended June 30, 2022 to 14.7% for the Reporting Period.
The table below sets forth the details of the special items which were deducted from the EBITDA:
| (in thousands Euro) | June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|---|---|---|
| Listing expenses and related costs | — | 4,534 |
| Management Incentive Plan | — | 17,178 |
| Other minor non-recurring events | 802 | 1,388 |
| Total | 802 | 23,099 |
The Group's inventories increased by €64.6 million, or 32.6%, from €198.1 million as of December 31, 2022 to €262.8 million as of June 30, 2023, primarily due to an increase in production volumes of yachts to answer to the growing demand.
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Accounts receivable from customers | 24,256 | 20,227 |
| (Less) Provision for doubtful accounts | (3,215) | (3,216) |
| Trade receivables | 21,041 | 17,011 |
| Other receivables | 28,830 | 42,421 |
| Total trade and other receivables | 49,872 | 59,432 |
The Group's trade and other receivables decreased by €9.6 million, or 16.1%, from €59.4 million as of December 31, 2022 to €49.9 million as of June 30, 2023, primarily due to (i) an increase in trade receivables related to other businesses; and (ii) a decrease in other receivables of €13.6 million mainly attributable to value added tax receivables.
The Group's contract assets represent amounts of the contract works completed in excess of payment by customers under sales contracts for new yachts as of the end of each of the relevant period.
The Group's contract assets increased by €19.7 million, or 17.1%, from €115.4 million as of December 31, 2022 to €135.1 million as of June 30, 2023, primarily due to an increase in production volumes.
The table below sets forth a breakdown of the Group's trade and other payables as of the dates indicated:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Trade payables Other payables |
336,575 47,676 |
289,653 48,717 |
| Total trade and other payables | 384,251 | 338,370 |
The Group's trade and other payables increased by €45.9 million, or 13.6%, from €338.4 million as of December 31, 2022 to €384.3 million as of June 30, 2023, primarily due to an increase in trade payables of €46.9 million, which was mainly attributable to an increase in the Group's procurement in line with the growth of the Group business.
The Group's contract liabilities represent amounts paid by its customers under sales contracts for new yachts that have not been fully executed. Such liabilities comprise advances received in excess of the contract works completed or in respect of works not yet commenced, as of the end of each of the relevant period.
The Group's contract liabilities decreased from €185.9 as of December 31, 2022 to €175.6 million as of June 30, 2023 primarily due to an increase in contract works.
During the Relevant Period, the Group financed its operations mainly by cash generated from operations.
As at June 30, 2023, the Group had cash and cash equivalents and other current assets of approximately €355 million (as at December 31, 2022: approximately €404 million).
Taking into account the cash flow generated from operations and the net proceeds from the Hong Kong Listing, the Directors are of the view that the Group has sufficient working capital to meet its current liquidity demand and the liquidity demand within at least 12 months from the date of this report.
The Group's capital expenditure as at June 30, 2023 is €84.5 million.
The net cash of the Group as at June 30, 2023 was €320 million (as at December 31, 2022: €365 million).
The total bank and other borrowings of the Group as at June 30, 2023 was approximately €35.7 million (as at December 31, 2022: €38.6 million) which was originally denominated in Euro, so it did not have any foreign exchange impact on its financial statements during the Relevant Period. The bank borrowing was interest-bearing, secured and unsecured. During the Relevant Period, the Group did not experience any difficulties in utilizing its banking facilities with its lenders.
As at June 30, 2023, the Group's gearing ratio was approximately 4.5% (as at December 31, 2022: 5.1%), calculated as the total indebtedness divided by total equity as at the end of the Relevant Period multiplied by 100%. The decrease was mainly due to the increase in share capital related to the Hong Kong Listing and the decrease in total indebtedness. The Group's gearing ratio demonstrated that the financial position of the Group was healthy as the debt level of the Group was very low as at the end of the Relevant Period.
The Group continues to adopt a prudent financial management approach towards its treasury policies and thus maintained a healthy liquidity position throughout the Relevant Period. The Board closely monitors the liquidity position to ensure that the liquidity structure of the Group's assets, liabilities and other commitments can meet its funding requirements from time to time.
As at December 31, 2022, the Group's bank borrowings were secured by certain of the Group's buildings, which amounted to €98.1 million. As at June 30, 2023, the Group did not pledge any further assets in comparison with December 31, 2022.
As at June 30, 2023 and 2022, the Group did not have any material contingent liabilities.
During the Relevant Period, the Group did not make any material disposal of subsidiaries and associates. Save for the expansion plans disclosed in the section headed "Future Plans and Use of Proceeds" in the Hong Kong Prospectus, the Company has no specific plans for significant investments or acquisitions of material capital assets.
The Company identifies risk at the activity level which can help to focus risk assessment on major business units or functions and also contribute to maintaining an acceptable level of risk across the Group. We also review periodically economic and industrial factors affecting our business and meet industry analysts and players to keep abreast of the latest development of the industry.
Factors such as increased competition, regulatory changes, personnel changes, and developments in the markets which contribute to and increase risks are always on the watch list.
For further details, please refer to the annual report of the Company for the year ended December 31, 2022.
Majority of the Group's generating activities and borrowings were denominated in Euro. The Group is exposed to foreign currency risk arising from fluctuations in exchange rates between Euro against USD. The Group uses foreign currency forward contracts to hedge its exposure to foreign currency risks in connection with forecast transactions and firm commitments. As at December 31, 2022 and June 30, 2023, there were no currency forwards in place.
As at June 30, 2023, the Group had approximately 1,921 full-time employees, of which 1,851 were based in the EMEA and 70 were based in AMAS and APAC. The total cost of staff for the six months ended June 30, 2023 was €65.1 million as compared to €69.3 million as at June 30, 2022. The decrease was mainly attributable to the combined effect of the settlement of the Management Incentive Plan cash bonus for €12.3 million as at June 30, 2022, and an increase in the average headcount to support the growth of the Group's business.
The Board does not recommend payment of an interim dividend for the Reporting Period.
There is no other material event after the Relevant Period and up to the date of approving the interim results.
Based on the current financial position and the available financing facilities, the Group has sufficient financial resources for ongoing operation in the foreseeable future. As such, the financial statements in this report were prepared on a "going concern" basis.
The Board strives to uphold the principles of corporate governance set out in the Hong Kong Corporate Governance Code contained in Appendix 14 to the Hong Kong Listing Rules, the Italian Consolidated Financial Act and the Italian Corporate Governance Code to which the Company has adhered after the Dual Listing, and adopted various measures to enhance the internal control system, the Directors' continuing professional training and other areas of practice of the Company. While the Board strives to maintain a high level of corporate governance, it also works hard to create value and achieve maximum return for its Shareholders. The Board will continue to conduct reviews and improve the quality of corporate governance practices with reference to local and international standards.
The Company has complied with the code provisions as set out in Appendix 14 to the Hong Kong Listing Rules during the Relevant Period. The Company has adhered and is compliant with Italian Corporate Governance Code starting from the EXM Listing.
The Company has adopted the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the Hong Kong Listing Rules (the "Model Code") and relevant Italian provisions as its own code governing securities transactions of the Directors.
Specific enquiries have been made to all Directors and all Directors have confirmed that they have fully complied with the required standard of dealings as set out in the Model Code during the Relevant Period.
The Company has established the Audit Committee on December 21, 2021 with written terms of reference in compliance with Rule 3.21 of the Hong Kong Listing Rules and the Hong Kong Corporate Governance Code and in compliance with the Italian Corporate Governance Code.
Pursuant to Hong Kong Listing Rules and Article 6 of the Italian Corporate Governance Code, the Audit Committee, is in charge of, and assists the Board of Directors in, inter alia: (i) defining the guidelines of the internal control and risk management system so that the main risks to the Company and its subsidiaries are properly identified, adequately managed and monitored, and establishing criteria for the compatibility of such risks with the proper Company management; (ii) assessing the suitability of periodic financial and non-financial information to correctly represent the Company's business model, strategies, the impact of its activities and the performance achieved by coordinating for the part of competence with the ESG Committee; (iii) expressing opinions on specific aspects inherent to the identification of the main corporate risks and supporting the decisions of the Board of Directors related to management of risks; (iv) reviewing periodic and particularly significant reports prepared by the internal audit function; and (v) reporting, at least at the time of the approval of the annual and half-yearly financial report, on the activities carried out as well as on the adequacy of the internal control and risk management system.
The Audit Committee has four members, Mr. Patrick Sun, Mr. Stefano Domenicali, Mr. Hua Fengmao and Mr. Li Xinghao, with Mr. Sun currently serving as the chairman. Mr. Sun has the appropriate professional qualifications as required under Rules 3.10(2) and 3.21 of the Hong Kong Listing Rules.
The Audit Committee has reviewed with the management of the Company the unaudited interim condensed consolidated financial statements and the interim report of the Company for the Relevant Period and agreed with the accounting treatments adopted by the Company, and was of the opinion that the preparation of the financial statements of the Company for the Relevant Period complies with the applicable accounting standards and the requirements under the Hong Kong Listing Rules and also with the Italian regulatory applicable provisions and adequate disclosures have been made.
The unaudited interim condensed consolidated financial statement, which was prepared in Italian and translated into English herein for the convenience of international readers, was also reviewed by EY S.p.A., the Company's independent auditor, in accordance with the criteria for a review recommended by applicable laws.
The Company has adopted certain corporate governance policies that are required for Italian listed companies and made certain changes to its by-laws in order to comply mainly with the Italian Consolidated Financial Act and other applicable Italian laws and regulations for listed companies.
The resolution in relation to the adoption of the new By-laws was considered and approved by the Shareholders at the extraordinary general meeting held on May 18, 2023 and the amended By-laws were effective from June 27, 2023 upon the first trading date on Euronext Milan.
The new By-laws are available on the websites of the Hong Kong Stock Exchange and the Company.
At the Shareholders' Meeting, it was resolved that EY S.p.A. be appointed as an independent auditor of the Company upon the expiration of its current term of office at the Shareholders' Meeting.
Upon completion and in connection with the EXM Listing, as the Company will be qualified as a "Public Interest Entity" pursuant to Article 16 of Legislative Decree No. 39/2010 as amended and as supplemented, the Company is required to appoint its independent auditor for a term of nine financial years.
The Board acknowledged the reasoned proposal of the Board of Statutory Auditors and the re-appointment of the Company's existing independent auditor, EY S.p.A., for a term of nine financial years was considered and approved by the Shareholders at the Shareholders' Meeting. The term of such appointment shall commence from the financial year ending December 31, 2023 and expire on the date of the Shareholders' general meeting to approve the financial statements for the year ending December 31, 2031.
The term of the previous Board expired at the Shareholders' Meeting and the new Board was appoint on the same day. The new Board will remain in office until the shareholders' meeting approving the annual financial statements of the Company for the financial year ending December 31, 2025.
Changes in directors' information which is required to be disclosed pursuant to Rule 13.51B of the Hong Kong Listing Rules are set out below:
Save as disclosed above, no other information is required to be disclosed pursuant to Rule 13.51B of the Hong Kong Listing Rules.
The Company adopted a generic Share Option Scheme on May 25, 2022 for the purpose of attracting and retaining the best quality personnel for the development of the Group's businesses, to provide additional incentives to the scheme participants and to promote the long-term financial success of the Group by aligning the interests of holders of the share options to Shareholders.
On May 18, 2023, the Company's Shareholders' Meeting approved a resolution to revoke the Share Option Scheme, effective as of the first trading date on Euronext Milan. As a result, the Share Option Scheme has been terminated on June 27, 2023, first trading date on Euronext Milan.
The terms of the Board of Statutory Auditors expired at the adjourned meeting of the Shareholders' meeting held on June 13, 2023. The resolutions in relation to the election of candidates as effective statutory auditors and alternate statutory auditors were considered and approved at the adjourned meeting of the Shareholders' meeting. Mr. Luigi Capitani, Mr. Luca Nicodemi and Ms. Giuseppina Manzo were elected as the effective statutory auditors. Mr. Luigi Capitani has been appointed as Chairman of the Board of Statutory Auditors. Ms. Tiziana Vallone and Ms. Federica Marone were elected as the alternate statutory auditors and will remain in office until the approval of the annual financial statements as of December 31, 2025.
Please refer to the circular, supplemental circular and announcement of the Company dated April 26, 2023, May 29, 2023 and June 13, 2023, respectively, for further details.
On June 21, 2023, CONSOB has issued the notice for the approval of the Italian Prospectus of Ferretti S.p.A. and Borsa Italiana has admitted all of the shares of Ferretti S.p.A. to trading on Euronext Milan on June 23, 2023. The first trading date has been on June 27, 2023.
Please refer to the circular of the Company dated April 26, 2023, the announcements of the Company dated May 28, 2023, June 20, 2023, June 21, 2023 and June 23, 2023 for further details.
As far as the Company is aware, as at June 30, 2023, the interests and/or short positions of the Directors and chief executives of the Company in the Shares, underlying Shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) required to be notified (i) to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO) or which will be required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which will be required, pursuant to the Model Code, to be notified to the Company and the Hong Kong Stock Exchange; and (ii) pursuant to Italian laws, to the Company and to CONSOB in accordance with article 120 of the Italian Consolidated Financial Act are as follows:
| Name of Director | Capacity/Nature of Interest | Number of Shares(2) |
Approximate Percentage of Shareholding |
|---|---|---|---|
| Mr. Piero Ferrari | Interest in a controlled corporation(1) | 15,441,768 (L) | 4.56% (L) |
| Notes: |
Notes:
(2) The letter "L" denotes a long position or voting rights connected to the Shares.
Save as disclosed above, as at June 30, 2023, none of the Directors and the chief executives of the Company nor their associates had any interests or short positions in any Shares, underlying Shares or debentures of the Company or any of its associated corporations (as defined in Part XV of SFO) which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which were taken or deemed to have under such provisions of SFO), or which were required, pursuant to section 352 of the SFO, to be entered in the register stated herein, or which were required to be notified to the Company and the Hong Kong Stock Exchange pursuant to the Model Code.
(1) KHEOPE SA directly holds 15,441,768 Shares. KHEOPE SA is wholly-owned by Mr. Piero Ferrari. Mr. Piero Ferrari is deemed to be interested in the Shares held by KHEOPE SA for the purpose of Part XV of the SFO.
So far as the Directors are aware, as at June 30, 2023, the following persons have an interest or a short position in the Shares and the underlying Shares which would fall to be disclosed to the Company and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or be, directly or indirectly, interested in 5% or more of the nominal value of any class of Share capital carrying rights to vote in all circumstances at meetings of the Company or which were required to be entered in the register kept by the Company under section 336 of the SFO:
| Name of Shareholders |
Capacity/Nature of Interest | Number of Shares(1) |
Approximate Percentage of Shareholding |
|---|---|---|---|
| SHIG | Interest in a controlled corporation(2) | 127,314,411 (L) 8,845,482 (S) |
37.61% (L) 2.61% (S) |
| Weichai Group | Interest in a controlled corporation(2) | 127,314,411 (L) 8,845,482 (S) |
37.61% (L) 2.61% (S) |
| Weichai Holding (HK) | Interest in a controlled corporation(2) | 127,314,411 (L) 8,845,482 (S) |
37.61% (L) 2.61% (S) |
| FIH | Beneficial owner | 127,314,411 (L) 8,845,482 (S) |
37.61% (L) 2.61% (S) |
| Valea Foundation | Interest in a controlled corporation(3) | 33,872,900 (L) | 10.01% (L) |
| Komarek Karel | Beneficial owner(3) | 33,872,900 (L) | 10.01% (L) |
| Danilo Lervolino | Beneficial owner | 17,862,066 (L) | 5.27% (L) |
Notes:
(1) (L) — Long Position, (S) — Short Position.
Save as disclosed herein, the Directors are not aware of any person who, as at June 30, 2023, have an interest or a short position in the Shares or underlying Shares which would fall to be disclosed to the Company, CONSOB and the Hong Kong Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or be, directly or indirectly, interested in 5% or more of the nominal value of any class of Share capital carrying rights to vote in all circumstances at general meetings of the Company or which were required to be entered in the register kept by the Company under section 336 of the SFO.
With reference to disclosure obligations concerning shareholdings pursuant to Article 120 of the Italian Consolidated Financial Act, please find below a list of persons who hold shares with voting rights at the Ordinary Shareholders' Meeting exceeding 3% of the Company share capital, according to the information disclosed pursuant to Article 120 of the Italian Consolidated Financial Act as of June 30, 2023, and/or according to additional information available to the Company as at that date.
| Name of Declarant | Direct Shareholder | % of Share Capital |
% of voting Share Capital |
|---|---|---|---|
| Shandong SASAC(1) | FIH | 37.61%(2) | 37.61%(2) |
| Piero Ferrari | Kheope S.A. | 4.562% | 4.562% |
| Valea Foundation | Flipnation Limited | 10.007% | 10.007% |
| Danilo Lervolino | Danilo Lervolino | 5.277%(3) | 5.277%(3) |
Notes:
According to the information disclosed publicly and as far as the Directors are aware, upon the Hong Kong Listing and up to June 30, 2023, the Company maintained the amount of public float as required under the Hong Kong Listing Rules.
Save for the issue of 4,167,700 Shares pursuant to the over-allotment option granted by the Company to the sole global coordinator for the Hong Kong Global Offering in the context of the Hong Kong Listing, since the Hong Kong Listing Date up to the date of this report, neither the Company nor any of its subsidiaries had purchased, sold or redeemed any of the Company's listed securities.
The Group received net proceeds (after deduction of underwriting commissions and related costs and expenses) from the Hong Kong Global Offering and the exercise of over-allotment option of approximately HKD1,862.94 million in the context of the Hong Kong Listing. There has been no change in the intended use of net proceeds as previously disclosed in the Hong Kong Prospectus. As at June 30, 2023, the Group has been gradually utilizing the net proceeds from the Hong Kong Global Offering according to the manner and proportions disclosed in the Hong Kong Prospectus. For details, please refer to the table below:
| Net amount available upon Hong Kong Listing (HKD million) |
Net amount utilized as of June 30, 2023 (HKD million)* |
Unutilized net amount as of June 30, 2023 (HKD million) |
Expected timeline of the utilization of the unutilized net amounts |
|
|---|---|---|---|---|
| Expansion of the Group's product portfolio and further boosting our end-to-end operational excellence |
1,266.7 | 778.9 | 488.0 | March 31, 2025 |
| – Consolidating the Group's leadership positioning in the luxury yacht industry and increasing the Group's market share and coverage |
428.5 | 398.2 | 30.3 | — |
| – Development of new flagship models of super yachts under Riva, Wally, Pershing, and Custom Line brands |
465.8 | 92.4 | 373.4 | — |
| – Vertical integration of strategic and high value adding production activities to ensure the uncompromised excellence in the luxurious design, performance, quality and reliability of the Group's yachts |
372.6 | 288.2 | 84.4 | — |
| Enhancing the Group's unique portfolio of ancillary services and expanding the Group's offering in the most promising verticals such as yacht brokerage, chartering and management services and aftersales and refitting services |
447.1 | — | 447.1 | March 31, 2024 |
| – Growing the Group's yacht brokerage, chartering and management services |
130.4 | — | 130.4 | — |
| – Expanding the Group's after-sales and refitting service offering and market presence |
316.7 | — | 130.4 | — |
| Further development of the Group's brand extension activities and other general corporate matters |
149.0 | 4.7 | 144.3 | N/A |
| Total | 1,862.9 | 783.6 | 1,079.4 | — |
* using EUR/HKD exchange rate as at June 30, 2023
The unutilized net proceeds of the Hong Kong Global Offering have been deposited into interest-bearing accounts with licensed banks and financial institutions shall be utilized according to the plans described in the Hong Kong Prospectus.
EY S.p.A. Via Massimo D'Azeglio, 34 40123 Bologna
Tel: +39 051 278311 Fax: +39 051 236666 ey.com
To the Shareholders of Ferretti S.p.A.
We have reviewed the interim condensed consolidated financial statements, comprising the statement of financial position, the statements of income, the statement of comprehensive income, the statement of changes in equity and cash flows and the related explanatory notes of Ferretti S.p.A. and its subsidiaries (the "Ferretti Group") at June 30, 2023. The Directors of Ferretti S.p.A. are responsible for the preparation of the interim condensed consolidated financial statements in conformity with the International Financial Reporting Standard applicable to interim financial reporting (IAS 34) as adopted by the European Union. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.
We conducted our review in accordance with review standards recommended by Consob (the Italian Stock Exchange Regulatory Agency) in its Resolution no. 10867 of July 31, 1997. A review of interim condensed consolidated financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (ISA Italia) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion on the interim condensed consolidated financial statements.
Based on our review, nothing has come to our attention that causes us to believe that the interim condensed consolidated financial statements of Ferretti Group at June 30, 2023 are not prepared, in all material respects, in conformity with the International Financial Reporting Standard applicable to interim financial reporting (IAS 34) as adopted by the European Union.
The interim condensed consolidated financial statements for the six-month period ended June 30, 2022 have not been audited or reviewed.
Bologna, August 2, 2023
EY S.p.A. Signed by: Gianluca Focaccia, Statutory Auditor
This report has been translated into the English language solely for the convenience of international readers
EY S.p.A. Sede Legale: Via Meravigli, 12 – 20123 Milano Sede Secondaria: Via Lombardia, 31 – 00187 Roma Capitale Sociale Euro 2.575.000,00 i.v. Iscritta alla S.O. del Registro delle Imprese presso la CCIAA di Milano Monza Brianza Lodi Codice fiscale e numero di iscrizione 00434000584 - numero R.E.A. di Milano 606158 - P.IVA 00891231003 Iscritta al Registro Revisori Legali al n. 70945 Pubblicato sulla G.U. Suppl. 13 - IV Serie Speciale del 17/2/1998 Iscritta all'Albo Speciale delle società di revisione Consob al progressivo n. 2 delibera n.10831 del 16/7/1997
A member firm of Ernst & Young Global Limited
(English translation for the convenience of international readers)
For the six-month period ended June 30, 2023
| (in thousands Euro) | Notes | June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|---|---|---|---|
| Revenue | 613,346 | 555,641 | |
| Commissions and other costs related to revenue | (32,505) | (20,694) | |
| NET REVENUE | 4 | 580,841 | 534,948 |
| Change in inventories of work-in-process semi-finished and | |||
| finished goods | 5 | 65,828 | 2,826 |
| Cost capitalized | 6 | 14,832 | 14,625 |
| Other income | 7 | 8,335 | 7,716 |
| Raw materials and consumables used | 8 | (316,071) | (260,839) |
| Contractors costs | 9 | (102,808) | (77,272) |
| Costs for trade shows, events and advertising | 10 | (12,120) | (9,493) |
| Other service costs | 11 | (58,856) | (61,053) |
| Rentals and leases | 12 | (4,482) | (3,733) |
| Personnel costs | 13 | (65,088) | (69,301) |
| Other operating expenses | 14 | (2,953) | (5,626) |
| Provisions and impairment | 15 | (24,844) | (26,859) |
| Depreciation and amortization | 16 | (30,128) | (25,518) |
| Share of loss of a joint venture | – | (18) | |
| Financial income | 17 | 4,277 | 5 |
| Financial expenses | 18 | (1,957) | (2,356) |
| Foreign exchange gains | 19 | 705 | 11,100 |
| PROFIT BEFORE TAX | 55,512 | 29,151 | |
| Income tax | 20 | (14,658) | 724 |
| PROFIT FOR THE PERIOD | 40,855 | 29,875 | |
| Attributable to: | |||
| Shareholders of the Company | 40,448 | 29,608 | |
| Non-controlling interests | 407 | 266 | |
| EARNINGS PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY |
|||
| Basic and diluted (€) | 40 | 0.12 | 0.10 |
For the six-month period ended June 30, 2023
| (in thousands Euro) | Notes | June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|---|---|---|---|
| PROFIT FOR THE PERIOD Other comprehensive income/(loss) not to be reclassified to profit or loss in subsequent periods: |
40,855 | 29,875 | |
| Profit on defined benefits plan Income tax effect |
38 38 |
104 (25) |
725 (174) |
| 79 | 551 | ||
| Other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods: |
|||
| Gains/(losses) from the translation of foreign operations | 38 | (2,012) | 3,175 |
| OTHER COMPREHENSIVE INCOME/(LOSS) FOR THE PERIOD |
(1,933) | 3,726 | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 38,922 | 33,601 | |
| Attributable to: Shareholders of the Company Non-controlling interests |
38,515 407 |
33,334 266 |
As at June 30, 2023
| (in thousands Euro) Notes (unaudited) (audited) CURRENT ASSETS Cash and cash equivalents 21 309,660 317,759 Trade and other receivables 22 49,872 59,432 Contract assets 23 135,148 115,372 Inventories 24 262,765 198,120 Advances on inventories 24 40,518 39,156 Other current assets 25 45,669 86,732 Income tax recoverable 1,583 2,091 845,215 818,663 NON-CURRENT ASSETS Property, plant and equipment 26 362,209 303,394 Intangible assets 27 263,701 264,070 Other non-current assets 28 4,734 5,031 Deferred tax assets 29 9,021 16,397 639,665 588,893 TOTAL ASSETS 1,484,881 1,407,556 CURRENT LIABILITIES Minority Shareholder's loan 30 1,000 1,000 Bank and other borrowings 30 11,234 14,500 Provisions 35 63,417 42,946 Trade and other payables 31 383,345 337,364 Contract liabilities 32 175,591 185,914 Income tax payable 33 7,045 1,683 641,632 583,408 NON-CURRENT LIABILITIES Bank and other borrowings 34 23,492 24,056 Provisions 35 14,093 13,049 Non-current employee benefits 36 7,348 7,646 |
June 30, 2023 | December 31, 2022 | ||
|---|---|---|---|---|
| Trade and other payables | 31 | 905 | 1,006 | |
| 45,838 45,757 |
As at June 30, 2023
| (in thousands Euro) | Notes | June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|---|---|---|---|
| TOTAL LIABILITIES | 687,471 | 629,165 | |
| SHARE CAPITAL AND RESERVES | |||
| Share capital | 37 | 338,483 | 338,483 |
| Reserves | 38 | 458,136 | 439,525 |
| Equity attributable to shareholders of the Company | 796,619 | 778,007 | |
| Non-controlling interests | 39 | 791 | 384 |
| TOTAL EQUITY | 797,410 | 778,391 | |
| TOTAL LIABILITIES AND EQUITY | 1,484,881 | 1,407,556 |
For the six-month period ended June 30, 2023
| June 30, 2023 | June 30, 2022 | |
|---|---|---|
| (in thousands Euro) | (unaudited) | (unaudited) |
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||
| Profit before tax | 55,512 | 29,151 |
| Depreciation and amortization | 30,128 | 25,518 |
| Loss on disposal of property, plant and equipment | (62) | 5 |
| Provisions | 21,301 | 16,735 |
| Financial income | (4,277) | (5) |
| Financial expenses | 1,957 | 2,294 |
| Share of loss of joint venture | 0 | 0 |
| Impairment of trade receivables, net | 0 | 500 |
| Provision against inventories, net | 6,244 | 27 |
| Increase in inventories | (72,252) | (3,837) |
| Change in contract assets and contract liabilities Increase in trade and other receivables |
(33,184) 4,133 |
52,552 (11,842) |
| Increase in trade and other payables | 45,036 | 35,026 |
| Change in other operating liabilities and assets | 7,540 | (579) |
| Income tax paid | 0 | (1,328) |
| Cash flows from operating activities (A) | 62,076 | 144,215 |
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||
| Purchases of property, plant and equipment and intangible assets | (83,609) | (36,710) |
| Proceeds from disposal of property, plant and equipment and | ||
| intangible assets | 367 | 709 |
| Acquisition of subsidiaries | 0 | 0 |
| Other financial investments | 42,384 | (42,987) |
| Interest received | 4,228 | 5 |
| Cash flows used in investing activities (B) | (36,629) | (78,983) |
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||
| Proceeds from issue of shares | 0 | 223,320 |
| Dividends paid | (19,903) | (6,707) |
| New bank and other borrowings | 200 | 0 |
| Repayment of bank and other borrowings | (9,874) | (14,364) |
| Interest paid | (1,957) | (2,232) |
| Cash flows from/(used in) financing activities (C) | (31,533) | 200,017 |
| NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | ||
| (D=A+B+C) | (6,087) | 265,248 |
| Cash and cash equivalents at the beginning | ||
| of year/period (E) | 317,759 | 173,010 |
| Effect of foreign exchange rate changes, net (F) | (2,012) | 3,175 |
| CASH AND CASH EQUIVALENTS AT THE END OF PERIOD | ||
| (G=D+E+F) | 309,660 | 441,434 |
| Cash and cash equivalents as stated in the consolidated statement of | ||
| financial position | 309,660 | 441,434 |
For the six-month period ended June 30, 2023
| (in thousands Euro) | Share capital (Note 37) |
Share premium* (Note 38) |
Legal reserve* (Note 38) |
Translation reserve* (Note 38) |
Other reserves* (Note 38) |
Equity attributable to the shareholders of the company |
Non controlling interests (Note 39) |
Total equity |
|---|---|---|---|---|---|---|---|---|
| At January 1, 2022 (audited) | 250,735 | 281,293 | 7,110 | 4,329 | (45,189) | 498,278 | (212) | 498,066 |
| Profit for the period Other comprehensive income for the period: |
— | — | — | — | 29,608 | 29,608 | 266 | 29,875 |
| Profit on defined benefits plan, net of tax |
— | — | — | — | 551 | 551 | — | 551 |
| Exchange differences on translation of foreign operations |
— | — | — | 3,175 | — | 3,175 | — | 3,175 |
| Total comprehensive income for the period Issue of share capital Transfer to the legal reserve Dividends |
— 87,748 — — |
— 143,748 — — |
— — 1,177 — |
— — — — |
30,160 (8,175) (1,177) (6,707) |
33,334 223,321 — (6,707) |
266 — — — |
33,601 223,321 — (6,707) |
| At June 30, 2022 (unaudited) | 338,483 | 425,041 | 8,287 | 7,504 | (31,089) | 748,226 | 55 | 748,280 |
| (in thousands Euro) | Share capital (Note 37) |
Share premium* (Note 38) |
Legal reserve* (Note 38) |
Translation reserve* (Note 38) |
Other reserves* (Note 38) |
Equity attributable to the shareholders of the company |
Non controlling interests (Note 39) |
Total equity |
| At January 1, 2023 (audited) | 338,483 | 425,041 | 8,287 | 7,970 | (1,775) | 778,007 | 384 | 778,391 |
| Profit for the period Other comprehensive income for the |
— | — | — | — | 40,448 | 40,448 | 407 | 40,855 |
| period: Profit on defined benefits plan, net of tax Exchange differences on translation of |
— | — | — | — | 79 | 79 | — | 79 |
| foreign operations | — | — | — | (2,012) | — | (2,012) | — | (2,012) |
| Total comprehensive income for the period |
— | — | — | (2,012) | 40,527 | 38,515 | 407 | 38,922 |
| Transfer to the legal reserve Dividends |
— — |
— — |
2,620 — |
— — |
(2,620) (19,903) |
0 (19,903) |
0 0 |
0 (19,903) |
| At June 30, 2023 (unaudited) | 338,483 | 425,041 | 10,907 | 5,958 | 16,230 | 796,619 | 792 | 797,410 |
* These reserve accounts comprise the consolidated reserves of €458,136 thousand (2022: €409,743 thousand) in the consolidated statements of financial position.
These unaudited interim condensed consolidated financial statements of Ferretti S.p.A. and its subsidiaries (collectively, the "Group") for the six-month period ended June 30, 2023 were authorized for issue in accordance with a resolution of the directors on August 2, 2023.
Ferretti S.p.A. (the "Company" or "Ferretti") is a limited liability company incorporated in Italy. The registered office of the Company is located at Via Irma Bandiera, 62–47841 Cattolica (Rimini), Italy.
The Company and its subsidiaries are principally engaged in the design, construction and marketing of yachts and recreational boats.
The table below shows the names, registered offices and interests in capital held directly and indirectly by the Company in subsidiaries at June 30, 2023.
(consolidated line by line, with an indication of the percentage of share capital)
| Principal country of |
Share capital (in |
|||||
|---|---|---|---|---|---|---|
| Name | operation | Registered office | Currency | units) | % controlling interest Direct |
Indirect |
| Zago S.p.A. | Italy | Scorzé (Venice) | Euro | 120 | 100% | |
| Il Massello S.r.l. | Italy | Sant'Ippolito (Pesaro Urbino) |
Euro | 30 | 85% | |
| Smart Wood S.r.l. | Italy | Sant'Ippolito (Pesaro Urbino) |
Euro | 10 | 85% | |
| Parola S.r.l. | Italy | Sant'Ippolito (Pesaro Urbino) |
Euro | 10 | 85% | |
| Sea Lion S.r.l. | Italy | Forlì (Forlì-Cesena) | Euro | 10 | 75% | |
| Ram S.r.l. | Italy | Sarnico (Bergamo) | Euro | 520 | 80% | |
| Ma.ri.na. S.r.l. | Italy | Sarnico (Bergamo) | Euro | 10.4 | 80% | |
| Ferretti Tech S.r.l. | Italy | Cattolica (Rimini) | Euro | 10 | 100% | |
| Allied Marine Inc. | USA | Fort Lauderdale (USA) | US Dollar | 10 | 100% | |
| Fratelli Canalicchio S.p.A. |
Italy | Narni (Terni) | Euro | 500 | 60%* |
| Name | Principal country of operation |
Registered office | Currency | Share capital (in units) |
% controlling interest | |
|---|---|---|---|---|---|---|
| Direct | Indirect | |||||
| Ferretti Group of America Holding Company Inc. |
USA | Delaware (USA) | US Dollar | 10 | 100% | |
| BY Winddown Inc. | USA | Miami (USA) | US Dollar | 10 | 100% | |
| Ferretti Group of America Llc. |
USA | Fort Lauderdale | US Dollar | 100 | 100% | |
| Ferretti Group Asia Pacific Ltd. |
China | Hong Kong (China) | Hong Kong Dollar |
100 | 100% | |
| Ferretti Asia Pacific Zhuhai Ltd.** |
China | Hengqin (Zhuhai) | Renminbi | 1,000,000 | 100% | |
| Ferretti Group (Monaco) S.a.M. |
Monaco | Principality of Monaco | Euro | 150 | 99.4%*** | |
| Ferretti Group UK Limited |
United Kingdom | United Kingdom | Pound sterling | 1 | 100% | |
| Ferretti Gulf Marine Sole Proprietorship Llc. |
Arab Emirates | Arab Emirates | Emirati Dirham | 300 | 100% |
* The remaining 40% is subject to put and call options exercisable from September 19, 2027 to September 19, 2028. The terms of put and call options over these non-controlling interests, mean that they give to the Group a present ownership interest in the underlying securities, accordingly this business combination was accounted for on the basis that the underlying shares subject to the put and call options have been acquired. Thus, the Group does not recognize non-controlling interests and recorded liabilities for shareholders under the options.
These unaudited interim condensed consolidated financial statements as at June 30, 2023, have been prepared in condensed form in conformity with the international accounting standard applicable to the preparation of interim financial statements (IAS 34). The unaudited interim condensed consolidated financial statements at June 30, 2023, do not contain all of the information required for the annual consolidated financial statements and should therefore be read together with the consolidated financial statements at December 31, 2022.
The Group has prepared the financial statements on the basis that it will continue to operate as a going concern.
For the purposes of clarity and to make this document more readily understandable, all the amounts listed in the unaudited interim condensed consolidated financial statements — income statement, comprehensive income statement, statement of financial position, cash flow statement, statement of changes in equity, the accompanying notes — are stated in thousands of Euro, except when otherwise indicated.
The accounting policies adopted in the preparation of the unaudited interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended December 31, 2022, except for the adoption of new standards effective as of January 1, 2023. The Group has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.
Several amendments apply for the first time in 2023, but do not have an impact on the unaudited interim condensed consolidated financial statements of the Group:
In May 2017, the IASB issued IFRS 17 Insurance Contracts, a comprehensive new accounting standard for insurance contracts covering recognition and measurement, presentation and disclosure. IFRS 17 replaces IFRS 4 Insurance Contracts that was issued in 2005. IFRS 17 applies to all types of insurance contracts (i.e., life, non-life, direct insurance and re-insurance), regardless of the type of entities that issue them, as well as to certain guarantees and financial instruments with discretionary participation features; a few scope exceptions will apply. The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that is more useful and consistent for insurers. In contrast to the requirements in IFRS 4, which are largely based on grandfathering previous local accounting policies, IFRS 17 provides a comprehensive model for insurance contracts, covering all relevant accounting aspects. IFRS 17 is based on a general model, supplemented by:
The amendments had no impact on the Group's interim condensed consolidated financial statements.
The amendments to IAS 8 clarify the distinction between changes in accounting estimates, and changes in accounting policies and the correction of errors. They also clarify how entities use measurement techniques and inputs to develop accounting estimates. The amendments had no impact on the Group's interim condensed consolidated financial statements.
The amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgments provide guidance and examples to help entities apply materiality judgments to accounting policy disclosures. The amendments aim to help entities provide accounting policy disclosures that are more useful by replacing the requirement for entities to disclose their 'significant' accounting policies with a requirement to disclose their 'material' accounting policies and adding guidance on how entities apply the concept of materiality in making decisions about accounting policy disclosures.
The amendments had no impact on the Group's interim condensed consolidated financial statements.
The amendments to IAS 12 Income Tax narrow the scope of the initial recognition exception, so that it no longer applies to transactions that give rise to equal taxable and deductible temporary differences such as leases and decommissioning liabilities. The amendments had no impact on the Group's interim condensed consolidated financial statements.
The standards and interpretations that have already been issued, but are not yet effective at the date of issuance of the Group's financial statements, are disclosed below. The Group intends to adopt such standards when they enter into force and does not foresee any material impacts on its consolidated financial statements:
Standards issued but not yet effective (Continued)
For management purposes the Group has a single operating segment relevant for reporting. This segment is the design, construction and marketing of yachts and pleasure craft. Since it is the only operating segment on which the Group reports, no additional analysis of its operating segment is provided.
The following qualitative information, which is being offered to provide a better understanding of the impact of financial instruments on the Group's statement of financial position, income statement and Cash Flow Statement, is also designed to explain more clearly the Group's exposure to the different types of risks associated with financial instruments and the corresponding management policies, as required by IFRS 7.
The table below lists the assets and liabilities by category of measurement:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Life insurance with "Bipiemme Vita S.p.A." | 4,900 | 4,900 |
| Life insurance with "CNP Vita Assicurazione S.p.A." | 38,414 | 38,008 |
| Total financial assets at fair value | 43,314 | 42,908 |
| Debt instruments at amortized cost: | ||
| Trade receivables | 21,041 | 17,011 |
| Financial assets included in other receivables | 3,574 | 2,563 |
| Other current assets | 2,353 | 3,465 |
| Other non-current assets | 2,153 | 2,530 |
| Total financial assets* | 72,435 | 68,477 |
* Financial assets, other than cash and short-term deposits
There are not derivatives (designated or not as hedging instruments), financial assets at fair value through profit or loss, equity instruments and debt instruments designated at fair value through OCI.
In addition during the previous year the Company began to sign time deposit accounts agreements with primary banks, in order to benefit of increasing interest rates, with maturities ranging from one month to six months.
The details of contracts in place on June 30, 2023 follows:
| Fixed Interest Period Bank | Currency | Amount | Rate% | Expire Date | |
|---|---|---|---|---|---|
| Two months | Barclays Bank Ireland PLC | Eur | 20,000 | 3.00% | 02/07/2023 |
| Three months | Barclays Bank Ireland PLC | Eur | 10,000 | 3.40% | 20/09/2023 |
| Three months | Unicredit SpA | Eur | 10,000 | 3.40% | 22/09/2023 |
| Three months | Unicredit SpA | Eur | 10,000 | 3.50% | 29/09/2023 |
| Three months | BNL S.p.A. — BNP P Group | Eur | 30,000 | 3.65% | 02/10/2023 |
| Three months | Credit Agricole CIB Sa | Eur | 20,000 | 3.63% | 28/09/2023 |
| Three months | Credit Agricole CIB Sa | Eur | 30,000 | 3.63% | 26/09/2023 |
| Six months | China Construction Bank (Europe) S.A. |
Eur | 10,000 | 2.95% | 19/07/2023 |
| Five months | China Construction Bank (Europe) S.A. |
Eur | 20,000 | 3.05% | 19/07/2023 |
| Interest | 491 | ||||
| "Time deposit accounts" under "Cash and Cash Equivalents" | 160,491 |
The credit risk related to liquid assets is very limited because the counterparties are major national and international banking institutions; the currency of the cash and cash equivalents were mainly denominated in Euro. The time deposits accounts with a maturity of more than three months are classified as current financial assets (see Note 25).
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Interest-bearing loans and borrowings | ||
| Bank and other borrowings | 5,171 | 6,811 |
| Lease liabilities | 27,535 | 28,158 |
| Minority Shareholder Loan | 1,000 | 1,000 |
| Other | — | 1,676 |
| Total Interest-bearing loans and borrowings | 33,705 | 37,645 |
| Other financial liabilities Derivatives not designated as hedging instruments Financial liabilities at fair value through profit or loss |
||
| Liability arising on business combination | 2,021 | 1,912 |
| Total financial instruments at fair value | 2,021 | 1,912 |
| Other financial liabilities at amortized cost, other than interest-bearing loans and borrowings |
||
| Trade and other payables | 340,228 | 293,150 |
| Total other financial liabilities | 375,954 | 332,707 |
The carrying amounts and fair values of Group's financial instruments, other than those whose carrying amounts are a reasonable approximation of the fair value, are as follows:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|||
|---|---|---|---|---|
| Carrying amount |
Fair value | Carrying amount |
Fair value | |
| Financial assets | ||||
| Life insurance with "Bipiemme Vita S.p.A." | 4,900 | 4,900 | 4,900 | 4,900 |
| Life insurance with "CNP Vita Assicurazioni S.p.A." | 38,414 | 38,414 | 38,008 | 38,008 |
| Total | 43,314 | 43,314 | 42,908 | 42,908 |
| Bank and other borrowings | 5,171 | 5,171 | 6,811 | 6,811 |
| Lease liabilities | 27,535 | 27,535 | 28,158 | 28,158 |
| Minority Shareholder Loan | 1,000 | 1,000 | 1,000 | 1,000 |
| Other | — | — | 1,676 | 1,676 |
| Liability arising on business combination | 2,021 | 2,021 | 1,912 | 1,912 |
| Total | 35,726 | 35,726 | 39,557 | 39,557 |
The management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables, other current assets and other current liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.
The fair values of financial assets and liabilities are included in the amount for which an instrument could be exchanged in a current transaction between consenting parties other than a forced or liquidation sale.
The fair values of the non-current part of bank and other borrowings have been calculated by discounting expected future cash flows using the rates currently available for instruments with similar terms, credit risk and maturities.
IFRS 7 requires that the financial instruments recognized at fair value on the consolidated statement of financial position be classified based on a hierarchical ranking that reflects the reliability of the inputs used to measure fair value. The following levels are used:
The table below lists assets and liabilities for which fair values are disclosed:
| June 30, 2023 (unaudited) | December 31, 2022 (audited) | |||||||
|---|---|---|---|---|---|---|---|---|
| Financial statement line item |
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total |
| Financial Other current assets Bank and other borrowings Lease liabilities |
5,171 27,535 |
43,314 | 43,314 5,171 27,535 |
6,811 28,158 |
42,908 | 42,908 6,811 28,158 |
||
| Minority Shareholders' Loan Other Liability arising on business combination |
1,000 | 2,021 | 1,000 2,021 |
1,000 1,676 |
1,912 | 1,000 1,676 1,912 |
At June 30, 2023 the Financial Other current asset under Level 3 for €43,314 thousand refers to the value of two financial investments in the form of life insurance policies subscribed in May 2022 detailed as follows:
| Financial Other current assets — Level 3 |
|
|---|---|
| At January 1, 2022 (audited) | — |
| Life insurance with "Bipiemme Vita S.p.A." | 4,900 |
| Life insurance with "CNP Vita Assicurazioni S.p.A." | 37,999 |
| Unrealized fair value changes recognized in profit or loss | 9 |
| At December 31, 2022 (audited) | 42,908 |
| Unrealized fair value changes recognized in profit or loss | 406 |
| At June 30, 2023 (unaudited) | 43,314 |
The financial asset has been calculated on the base of the current value reported by the insurance companies as of the reporting date.
The following table presents a sensitivity analysis of the Financial Other current assets — Level 3, keeping all other variables constant, with a disinvestment occurring 12 months after the relevant subscription date.
| At June 30, 2023 (unaudited) |
|
|---|---|
| Financial Other | |
| current assets — | |
| Change % interest rate | Level 3 |
| (in thousand Euro) | |
| -0.50% | (19) |
| 0.50% | 19 |
The item Bank and other borrowings non-current under Level 3 for €2,001 thousand refers to the value of the put and call options for the acquisition of the non-controlling interest of Fratelli Canalicchio S.p.A. and Il Massello s.r.l., both exercisable from September 2027 to September 2028.
| Bank and other borrowings non-current — |
|
|---|---|
| Level 3 | |
| At December 31, 2021 and January 1, 2022 (audited) Liability arising on business combination for Fratelli |
— |
| Canalicchio S.p.A. | 436 |
| Liability arising on business combination for Il Massello Unrealized fair value changes recognized in profit or loss |
1,476 — |
| At December 31, 2022 (audited) | 1,912 |
| Change in Net Present Value | 89 |
| At June 30, 2023 (unaudited) | 2,001 |
The financial debt has been calculated on the basis of the agreements with non-controlling interests that links the price of exercise of this put/call option to the financial performance of the subsidiaries and the Net Present Value has been discounted using the rate of 9.5%. The increase from December 31, 2022 to June 30, 2023 is due to the shortening of the period of exercise of the options.
The following table presents a sensitivity analysis of the Bank and other borrowings non-current — Level 3, keeping all other variables constant.
| At June 30, 2023 | |
|---|---|
| (unaudited) | |
| Bank and other | |
| borrowings | |
| non-current — | |
| Change % interest rate | Level 3 |
| (in thousand Euro) | |
| -0.50% | (40) |
| 0.50% | 40 |
The liquidity risk is the risk that an entity may find it difficult to perform obligations arising from financial and trade liabilities in accordance with stipulated terms and due dates.
The Group continuously monitors the cash flow through the planning of the expected cash flows and the necessary financing sources on a weekly basis, over a monthly horizon, taking also into account the seasonality of the Group's business.
In most of the transactions, the sales policies adopted by the Group continue to call for payment of any contractually owed balances when the boat is delivered and the collection of security deposits and advances in accordance with contractually established schedules, particularly in accordance with the size of the boat.
The table below, which provides a quantitative analysis of the liquidity risk, shows a breakdown of future financial flows based on the financial liabilities outstanding at June 30, 2023 and at the end of the previous fiscal year, with a breakdown of the Group's financial payables by contractually stipulated due dates:
| Future financial flows | |||||||
|---|---|---|---|---|---|---|---|
| Balance at June 30, 2023 (unaudited) |
Less than 3 months |
4 to 9 months |
10 to 12 months |
1 to 5 years |
More than 5 years |
Total financial flows |
|
| Bank and other borrowings | |||||||
| (excluding lease liabilities) Minority Shareholders' Loan |
(5,171) (1,000) |
(2,287) — |
(419) — |
(210) (1,000) |
(1,629) — |
(1,268) — |
(5,813) (1,000) |
| Others | 0 | — | — | — | — | — | 0 |
| Liability arising on Business | |||||||
| combination | (2,021) | — | — | — | (2,021) | — | (2,021) |
| Lease Liabilities | (27,535) | (2,560) | (5,005) | (2,435) | (15,705) | (6,061) | (31,766) |
| Trade and other payables | (340,228) | (273,008) | (64,989) | (2,230) | 0 | 0 | (340,228) |
| Total | (375,954) | (277,856) | (70,413) | (5,875) | (19,355) | (7,329) | (380,828) |
| Future financial flows | |||||||
| Balance at | Total | ||||||
| December 31, | Less than | 4 to 9 | 10 to 12 | 1 to 5 | More than | financial | |
| 2022 (audited) | 3 months | months | months | years | 5 years | flows | |
| Bank and other borrowings | |||||||
| (excluding lease liabilities) | (6,811) | (3,570) | (414) | (208) | (1,803) | (1,343) | (7,338) |
| Minority Shareholders' Loan. | (1,000) | — | — | (1,000) | — | — | (1,000) |
| Other | (1,676) | (1,676) | — | — | — | — | (1,676) |
| Liability arising on business | |||||||
| combination | (1,912) | — | — | — | (1,912) | — | (1,912) |
| Lease liabilities | (28,158) | (2,558) | (5,035) | (2,472) | (16,885) | (5,008) | (31,957) |
| Trade and other payables | (293,150) | (245,786) | (45,758) | (1,606) | — | — | (293,150) |
| Total | (332,707) | (253,590) | (51,207) | (5,285) | (20,600) | (6,351) | (337,034) |
The tables above analyze the maximum risk entailed by the financial liabilities (including trade payables). All flows shown are nominal undiscounted future flows, determined based on the remaining contractual due dates with regard both to principal and interest.
This is the risk that the fair value and future financial flows of a financial instrument may fluctuate due to changes in market prices. The market risk includes the following subcategories:
The risk more specifically related to the Group's business is the risk of fluctuations in exchange rates. This risk relates to the possibility of changes in the Euro amount corresponding to the net foreign currency exposure for invoices issued, outstanding orders and, marginally, invoices payable and cash balances in foreign currency accounts.
The Group is primarily exposed to the exchange rate risk in relation to the US Dollar as a result of the sales made by the subsidiary Ferretti Group of America Llc.
During 2022 and first half 2023 no cash flow hedging was done in view of the exchange rate trend. In any case, as of June 30, 2023 and December 31, 2022, there were no currency forwards in place.
The following table presents a sensitivity analysis, at the end of each of the financial years, of the Group's profit before tax and equity (excluding losses carried forward) to a reasonably possible change in the exchange rate with the US dollar, keeping all other variables constant.
| At June 30, 2023 +/- Profit |
At December 31, 2022 +/- Profit |
|||
|---|---|---|---|---|
| Change % EUR/USD exchange rate | before tax +/- Equity before tax +/- Equity (in thousand Euro) |
|||
| -5% +5% |
1,522 (1,377) |
14,708 (13,307) |
522 (473) |
15,038 (13,606) |
The interest risk is the risk that the value of future financial flows could fluctuate due to changes in market interest rates. In 2019, Ferretti S.p.A. and the subsidiary CRN S.p.A. (merged in Ferretti) signed a loan agreement with a pool of financing banks for a maximum total amount of €170 million with a five-year term. The interest rate applicable to the Loan is equal to the sum of the relevant spread (290 basis points per annum for the Term Loan Facility and the Revolving Pre-Finance Facility and 300 basis points per annum for the Revolving Credit Facility) and Euribor. The spread may also decline according to the level of the leverage ratio.
The following is a sensitivity analysis determined on the basis of the exposure as at the reporting dates June 30, 2023 and December 31, 2022 of the Group's financial debt (assuming that Euribor is above zero, considering the zero-floor condition generally applied to the group's main borrowings).
| Change in 6M Euribor | At June 30, 2023 (unaudited) | At December 31, 2022 (audited) | |||
|---|---|---|---|---|---|
| (+) | (-) | (+) | (-) | (+) | (-) |
| (in thousand Euros) | |||||
| +50 BP | -50 BP | 165 | (165) | 175 | (175) |
| +100 BP | -100 BP | 329 | (329) | 350 | (350) |
| +200 BP | -200 BP | 659 | (659) | 700 | (700) |
| +300 BP | -300 BP | 988 | (988) | 1,050 | (1,050) |
The credit risk is the risk of potential losses due to the inability of counterparties to fulfill commercial or financial obligations. This risk can arise when a counterparty defaults for technical/commercial reasons (disputes about the nature/quality of a product, interpretation of contract clauses, etc.) or when one party causes the other party to incur a loss by failing to comply with an obligation.
In light of the type of customers targeted by the Group's products and services and the commercial policies it has adopted — which envisage, in most of transactions, that the balance of the contract amount, net of advances collected, is paid before or concurrently with the delivery of the boat — the Group believes that its credit risk is not material. The payment of advances is associated with both the defined contractual due dates and the achievement of production milestones.
At the procedural level, in the limited number of cases in which the sales policies mentioned above are not applicable, the Group's receivables and the accrued advances to be paid are monitored periodically to verify compliance with contractual payment terms.
The table below reports residual amounts — i.e., already net of any write-downs — which even if expired at the reporting date (June 30, 2023) are considered fully recoverable:
| Balance at June 30, 2023 |
Past due | |||||
|---|---|---|---|---|---|---|
| (unaudited) | Not due | 30 days | 30–60 days | 60–90 days | Beyond | |
| Cash and cash equivalents | 309,660 | 309,660 | ||||
| Trade receivables* | 21,041 | 10,602 | 1,907 | 2,584 | 1,080 | 4,867 |
| Other current assets Financial assets included in |
45,669 | 45,669 | ||||
| other receivables Financial assets included in |
3,574 | 3,574 | ||||
| other non-current assets | 2,153 | 2,153 | ||||
| Total at June 30, 2023 | 382,097 | 371,658 | 1,907 | 2,584 | 1,080 | 4,867 |
(*) Net of the allowance for doubtful accounts of €3,215 thousand.
| Balance at | ||||||
|---|---|---|---|---|---|---|
| December 31, | Past due | |||||
| 2022 (audited) | Not due | 30 days | 30–60 days | 60–90 days | Beyond | |
| Cash and cash equivalents | 317,759 | 317,759 | ||||
| Trade receivables* | 17,011 | 6,975 | 2,305 | 1,363 | 1,456 | 4,912 |
| Other current assets | 86,732 | 86,732 | ||||
| Financial assets included in | ||||||
| other receivables | 2,563 | 2,563 | ||||
| Financial assets included in | ||||||
| other non-current assets | 2,530 | 2,530 | ||||
| Total at December 31, 2022 | 426,595 | 416,559 | 2,305 | 1,363 | 1,456 | 4,912 |
(*) Net of the allowance for doubtful accounts of €3,216 thousand.
The table below reports the amount of trade receivables — i.e., gross of any write-downs — which even if expired at the reporting date (June 30, 2023) are considered fully recoverable:
| Balance at | Past due | |||||
|---|---|---|---|---|---|---|
| June 30, 2023 (unaudited) |
Not due | 30 days | 30–60 | 60–90 | Beyond | |
| % Trade receivables Provision for doubtful accounts |
13% 24,256 3,215 |
0% 10,602 0 |
0% 1,907 0 |
0% 2,584 0 |
0% 1,080 0 |
40% 8,082 3,215 |
| Total at June 30, 2023 | 21,041 | 10,602 | 1,907 | 2,584 | 1,080 | 4,867 |
| Balance at December 31, 2022 (audited) |
Not due | 30 days | Past due 30–60 |
60–90 | Beyond | |
| % Trade receivables Provision for doubtful accounts |
16% 20,227 3,216 |
0% 6,975 0 |
0% 2,309 3 |
1% 1,373 9 |
8% 1,586 131 |
38% 7,984 3,073 |
| Total at December 31, 2022 | 17,011 | 6,975 | 2,305 | 1,363 | 1,456 | 4,912 |
The goals of managing the Group's capital are safeguarding continuing operation and improving financial performance, as indicated by profit before tax, financial charges (Notes 17–19), depreciation and amortization (Note 16), of €82,616 thousand for the six-month period ended June 30, 2023 (December 31, 2022: €115,194 thousand), in addition to maintenance of sound capital ratios in support of its business and maximizing value for shareholders.
The Group manages its financial structure and adjusts it in response to changes in economic conditions and the risk characteristics of the underlying assets.
The Group is not subject to externally imposed capital requirements.
No changes were made to capital management objectives, policies or processes during the current or previous years.
The following notes provide a review of the individual components of the income statement for the six-month period ended June 30, 2023, compared with correspondent period of prior year.
The following table provides the breakdown of the item net revenue for the six-month period ended June 30, 2023, compared with the correspondent period of prior year:
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Total Revenue from contracts with customers Commissions and other costs related to revenue |
613,346 (32,505) |
555,641 (20,694) |
| Total net revenue | 580,841 | 534,948 |
The table below shows the breakdown of net revenue by production type:
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Composite yachts | 259,790 | 233,710 |
| Made-to-measure yachts | 207,983 | 201,286 |
| Super yachts | 64,847 | 48,928 |
| Other businesses | 48,221 | 51,024 |
| Total net revenue | 580,841 | 534,948 |
Revenue arising from other businesses is broken down below.
| June 30, 2023 | June 30, 2022 | |
|---|---|---|
| (unaudited) | (unaudited) | |
| Boat brokerage | 5,363 | 6,691 |
| Sales and provision of carpentry products and services | 9,445 | 7,562 |
| FSD | 1,446 | 459 |
| Used boats | 13,419 | 24,328 |
| Provision of services and sales of replacement parts, | ||
| merchandise and other goods | 8,845 | 7,861 |
| Wally sailboats | 9,703 | 4,124 |
| Total other businesses | 48,221 | 51,024 |
In accordance with IFRS 15, the Group identified the revenue streams, including the main ones:
Regarding the sale of yachts to order (sale of composite yachts, made-to-measure yachts and super yachts), the Group considers that the only performance obligation contained in the sales contracts is the building of the vessel, with no significant accessory services or further activities.
This performance obligation is satisfied over time of construction of boats. The payment terms are agreed with the customers on a case by case basis to match cash requirements for the production. Advance payments are agreed with each customer on the basis of the time needed to construct the boats and are paid before the completion of the construction. These contracts do not include obligations for returns, refunds and other similar obligations, however the vessels are covered by a warranty which is included in a range between 12 and 24 months.
Commissions and other costs related to revenue mainly represents the costs incurred by the Group for the intermediation activities carried out by the dealers and brokers.
"Boat brokerage" refers to the activity related to yacht brokerage and yacht charters performed by the U.S. subsidiary Allied Marine.
"Sales and provision of carpentry products and services" relate entirely to subsidiary Zago S.p.A., concerning assembly works and wooden furnishings for yachts of over 100 feet produced by third-party sites and cruise ships.
"Provision of services and sales of replacement parts, merchandise and other goods" partly refer to the refit activity that the Group carried out, and partly regard the sale of replacement parts and other assistance services rendered in Italy and worldwide on boats previously sold. In addition, in the first half of 2023 as well the Group continued to sell Riva brand luxury accessories, as part of the Riva Brand Experience project.
The breakdown of net revenue by geographical area was as follows:
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| EMEA | 250,247 | 225,641 |
| APAC | 73,857 | 38,063 |
| AMAS | 143,668 | 171,293 |
| Global* | 64,847 | 48,928 |
| Other businesses | 48,221 | 51,024 |
| Total net revenue | 580,841 | 534,948 |
* The item "Global" refers to net revenue from super-yachts not attributed to a single geographical area, inasmuch as, for example, the client's country of residence differs from that of registration of the vessel.
In accordance with IFRS 15, net revenue is shown below with a breakdown into obligations fulfilled at a point in time and those that are fulfilled over time.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| At a point in time Over time |
34,457 546,384 |
50,421 484,526 |
| Total net revenue | 580,841 | 534,948 |
The table below shows the amount of revenue from recognized contract liabilities which had been included among contract liabilities at the beginning of the period:
| June 30, 2023 | June 30, 2022 | |
|---|---|---|
| (unaudited) | (unaudited) | |
| Revenue from contract liabilities | 124,916 | 101,912 |
The following table shows the amount of transaction price for existing contracts outstanding at June 30, 2023 which will be converted into revenue from contracts with customers within one year or after one year.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Within one year After one year |
552,745 257,654 |
514,414 174,181 |
| 810,399 | 688,594 |
The amounts of transaction prices allocated to the remaining performance obligations which are expected to be recognized as revenue after one year relate to sale of new boats, of which the performance obligation is to be satisfied within 2 years. All the other amounts of transaction prices allocated to the remaining performance obligations are expected to be recognized as revenue within one year. The amounts disclosed above do not include variable consideration which is constrained, that is included in contract liabilities.
During the Relevant Period, revenue to Russian and Ukraine purchasers accounted for less than 3% of our total revenue for the same period. Therefore, Russian and Ukraine sales are deemed immaterial to our business, results of operations and financial condition as a whole. Furthermore, in the event of a customer default, we are able to freely resell the yacht to another customer.
The change in inventories of work-in-process, semi-finished and finished goods refers to inventories of boats not covered by orders.
This item, amounting to €14,832 thousand, consists mainly of costs incurred for labor, materials and manufacturing overhead that were capitalized under the item "Models and molds". These costs were incurred primarily for the internal production of models and molds used to build fiberglass-reinforced plastic forms which constitute the hull and other structural elements of the boats classified in this item as per industry practice.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Discounts from suppliers Cost over-accruals Damage settlements Rental income Rebilling of miscellaneous costs to customers and dealers Gains on sales of assets Other |
2,720 1,285 1,204 419 624 100 1,984 |
2,741 1,076 56 430 245 10 3,158 |
| Total Other income | 8,335 | 7,716 |
The item "Discounts from suppliers" regards the discounts received from suppliers which co-operate with the Group, and the Company in particular, in accordance with the sales agreements entered into in the period.
The item "Cost over-accruals" mainly refers to differences on cost forecasts recorded in the previous years for the supplies of services and raw materials, whose final account proved to be lower.
The item "Damage settlements" refers primarily to the received proceeds of insurance payouts related in particular to fire damages occurred to the Company's shipyard in Cattolica (Rimini) collected in 2023.
The item "Other" includes proceeds from sundry activities not directly connected with shipbuilding such as: income from promotional, marketing and co-branding agreements entered into with other internationally renowned firms.
This item primarily reflects purchases of raw and ancillary materials and the change for the six-month period ended June 30, 2023 in the corresponding inventories.
This item consists mainly of the costs incurred to outsource certain phases of the production process. This is because the boat building process can include the use of external companies as contractors for the construction and assembly of onboard equipment installed in Group boats.
The main components of this item are advertising and promotional expenses and expenses incurred to attend industry trade shows. This item also includes costs of communication and image consulting.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Transportation and customs clearing costs | 12,529 | 9,689 |
| Technical consulting | 7,327 | 7,163 |
| Tax, legal and administrative consulting services | 6,163 | 6,231 |
| Utilities | 4,740 | 4,450 |
| Insurance | 3,074 | 3,128 |
| Fees paid to members of corporate governance bodies | 2,851 | 3,167 |
| Travel and per diem expenses | 2,719 | 1,690 |
| Entertainment expenses | 2,499 | 1,957 |
| Maintenance | 2,103 | 2,227 |
| Recruiting and training costs | 1,631 | 1,340 |
| Management Incentive Plan | 0 | 3,213 |
| Other | 13,220 | 16,798 |
| Total other service costs | 58,856 | 61,053 |
The item "Technical consulting" amounting to €7,327 thousand refers to consultancy on production issues and services rendered by engineering firms and designers with regard to the design of boats and new models of vessels, interiors and other studies and research bearing on the shipbuilding process. It also includes the costs of certifications or services from other entities of a technical nature.
The item "Tax, legal and administrative consulting services" mainly included €2,807 thousand for legal advice and notaries' fees and €1,346 thousand relating to administrative consulting, including accounts auditing, and tax assistance. Moreover, €250 thousand referred to IT consulting.
In the six-month period ended June 30, 2023, "Fees paid to members of corporate governance bodies" included €2,732 thousand for fixed and variable remuneration paid to Directors, as well as €77 thousand in fees paid to Statutory Auditors and €43 thousand for the Supervisory Body.
The item "Recruiting and training costs" mainly refers to the costs incurred by Group companies for the company canteen and meal vouchers (as provided for contractually), as well as remuneration for project workers and the costs of training.
The item "Other" consists mainly of costs incurred for services of various types, such as security services, janitorial services, etc.
The Group recognized the right-of-use assets and the lease liabilities, excluding short-term leases and leases related to low-value assets. The right-of-use assets of most lease contracts were recognized based on the carrying amount, discounted using the incremental borrowing rate. For some lease contracts, the right-of-use assets were recognized based to the amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to the lease previously recognized. Lease liabilities were recognized at the present value of the remaining lease payments, discounted using the incremental borrowing rate at the date of first time application.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Short-term rentals and leases Rentals and leases for low-value assets Royalties |
1,213 992 2,276 |
1,302 1,055 1,377 |
| Total rentals and leases | 4,482 | 3,733 |
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Wages and salaries Social security contributions Non-current employee benefits and other provisions |
46,733 15,463 2,891 |
52,588 14,467 2,246 |
| Total personnel costs | 65,088 | 69,301 |
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Cost under-accruals | 1,045 | 2,493 |
| Taxes and fees other than income taxes | 750 | 743 |
| Memberships in trade associations | 362 | 323 |
| Re-billable costs | 234 | 781 |
| Advertising and promotional material | 187 | 147 |
| Settlement agreements | 73 | 228 |
| Losses on asset sales | 37 | 6 |
| Sundry operating costs | 264 | 905 |
| Total other operating expenses | 2,953 | 5,626 |
"Cost under-accruals" referred mainly to the higher costs incurred during the financial year in excess of the provisions recognized in the financial year ended December 31, 2022 for supplies pertaining to the previous years.
The item "Taxes and fees other than income taxes" includes the cost of IMU (municipal property tax), stamp duty, Tari (waste tax) and other minor taxes.
The item "Settlement agreements" related to several private agreements entered into in the course of the six-month period ended June 30, 2023.
"Sundry operating costs" includes mainly gifts, fines, stamp duties, etc.
This item is shown net of utilizations and releases to income made during the six-month period ended June 30, 2023 and 2022.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Allocations to the provision for product warranties Provision for miscellaneous risks, net Allocations to the provision for doubtful accounts |
20,421 4,423 0 |
18,332 8,027 500 |
| Total provisions and impairment | 24,844 | 26,859 |
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Depreciation of property, plant and machinery Depreciation of rights-of-use assets Amortization of intangible assets |
23,253 4,319 2,556 |
19,609 3,559 2,349 |
| Total depreciation and amortization | 30,128 | 25,518 |
Reference should be made to the tables on property, plant, equipment and intangible assets for additional details.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Interest income from banks Interest and other financial income |
2,542 1,734 |
4 1 |
| Total financial income | 4,277 | 5 |
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Interests on banks and other loans Interest on lease liabilities Interest on provision for severance benefits and pensions Other financial expenses |
(657) (134) (54) (1,113) |
(1,594) (61) (28) (673) |
| Total financial expenses | (1,957) | (2,356) |
As at June 30, 2023, the Group does not have exchange rate risk hedging contracts in force; as a result, creditor and debtor balances denominated in foreign currency are subject to changes on the basis of the exchange rates in force at June 30, 2023.
As shown in the table that follows, the "Income tax" amount for the six-month period ended June 30, 2023 was a tax expenses of €14,658 thousand, as detailed below:
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Corporate income tax (IRES) | (2,614) | (41) |
| Regional tax (IRAP) | (2,982) | (1,356) |
| Federal taxes | (1,595) | (1,781) |
| Total current taxes | (7,192) | (3,178) |
| Prior-year taxes | (76) | 0 |
| Deferred taxes | (7,390) | 3,902 |
| Total income tax | (14,658) | 724 |
The IRES (Imposta sul reddito delle società) taxable base of Ferretti S.p.A. and the subsidiary Zago S.p.A. was positive, and therefore, within the framework of national tax consolidation, a provision was made for this tax based on the 24% rate currently in force in Italy. The increase is attributable to the higher taxable income for the period, although reduced due to the use of tax losses and deductible interest expenses carried forward.
Also the IRAP (Imposta regionale sulle attività produttive) taxable base of Ferretti S.p.A. and the subsidiary Zago S.p.A. was positive, and therefore a provision was made for this tax based on the rate in force in the regions in which the value of production is calculated. The increase is attributable to the higher taxable income for the period.
For companies based in the United States, federal and state taxes of €1,595 thousand are due, as a result of the taxable income during the period.
The following Notes provide a breakdown of the individual components of the consolidated statement of financial position as of June 30, 2023 compared with correspondent amount as of December 31, 2022.
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Bank and postal accounts Time deposit Cash and securities on hand |
149,142 160,491 26 |
129,615 188,127 17 |
| Total cash and cash equivalents | 309,660 | 317,759 |
The items listed above can be converted readily into cash and are not exposed to a significant risk that their value may change. There are no obligations or restrictions on use except for time deposits accounts which do not bear interests at the agreed rate, if not maintained until the maturity date. Amounts collected and held in escrow accounts are classified as current assets, under the line item "Other current assets".
The carrying amount of "Cash and cash equivalents" is deemed to be aligned with their fair value at the reporting date.
During last year, the Company has signed time deposit accounts agreements with four primary banks, in order to benefit of increasing interest rates, with maturities ranging from one month to six months.
The time deposits accounts with a maturity of more than three months are classified as current financial assets (see Note 25).
The credit risk related to liquid assets is very limited because the counterparties are major national and international banking institutions, and the currency of the cash and cash equivalents were mainly denominated in Euro (for details see Note 3).
A detailed analysis of the changes that occurred in this item is provided in the cash flow statement.
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Trade receivables | 21,041 | 17,011 |
| Other receivables | 28,830 | 42,421 |
| Total trade and other receivables | 49,872 | 59,432 |
| Trade receivables | ||
| June 30, | December 31, | |
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Accounts receivable from customers | 24,256 | 20,227 |
| (Less) Provision for doubtful accounts | (3,215) | (3,216) |
| Total trade receivables | 21,041 | 17,011 |
"Accounts receivable from customers" as at June 30, 2023 relate primarily to sales and services other than boat sales, for which the balance is generally received before delivery based on the contractual terms and conditions in force. Therefore, they refer to paid after-sales services, sales of material and spare parts, merchandising and provision of joinery works. These are considered to be receivable within 12 months.
The provision for doubtful accounts, calculated by the Group in compliance with IFRS 9, changed as follows in the two reporting periods:
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| At beginning of year | 3,216 | 5,745 |
| Impairment losses, net | — | 558 |
| Amount written off as uncollectible | (2) | (3,089) |
| At end of period | 3,215 | 3,216 |
An impairment analysis is performed at the end of each of the reporting dates to measure expected credit losses. The provision rates are based on the aging for each specific customer. The calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions.
For an analysis of the aging of trade receivables by the due date and net of the provision for doubtful accounts, refer to Note 3, Financial risks management.
In view of the fact that the Group's trade receivables relate to a large number of diversified customers, there is no significant concentration of credit risk.
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Other tax receivables Accruals, deferrals and other receivables |
13,477 15,354 |
27,206 15,215 |
| Total other receivables | 28,830 | 42,421 |
Other tax receivables refer to VAT.
The item "Accruals, deferrals and other receivables" may be broken down as follows:
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Receivables owed by social security institutions | 230 | 223 |
| Commissions advances | 5,847 | 4,890 |
| Advances, prepayments and sundry receivables from suppliers | 4,267 | 3,876 |
| Others | 361 | 305 |
| Accruals and deferrals | 4,649 | 5,922 |
| Total accruals, deferrals and other receivables | 15,354 | 15,215 |
"Receivables owed by social security institutions" at June 30, 2023 refer mainly to receivables from the Italian workman's compensation agency (INAIL) of €160 thousand, for advances and payments to employees, as well as, for the residual amount, advances against the Redundancy Fund paid to employees on behalf of the Italian social security administration (INPS), still to be refunded for €3 thousand.
The balance relating to "Advances, prepayments and sundry receivables from suppliers" at June 30, 2023 mainly refers for about €1,155 thousand to advances already paid for the main industry trade shows to be held in the next months of 2023. The balance also includes advances paid to suppliers for services that have not yet been completed or work progress payments for goods not yet delivered.
As at June 30, 2023, the loss allowance of other receivables was assessed to be minimal.
As at June 30, 2023 Income tax recoverable includes mainly tax credits recognized under Italian incentive laws ("Industria 4.0") for €859 thousand and advances for IRES and IRAP for €602 thousand paid in excess of the amount due at year end by some Group subsidiaries.
"Contract assets" consist of the amount payable by customers arising from contracts completed at the end of this accounting period, stated net of contract liabilities.
"Contract assets" are measured over time since they meet all the requirements set out in IFRS 15 and are recognized using the input method according to the percentage completed.
The following table provides the breakdown arising from "Contract assets" at June 30, 2023, compared to those at December 31, 2022.
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Gross value of contract assets Advances collected |
602,341 (467,193) |
544,483 (429,111) |
| Total contract assets | 135,148 | 115,372 |
| June 30, 2023 (unaudited) Allowance for |
December 31, 2022 (audited) Allowance for |
|||||
|---|---|---|---|---|---|---|
| Gross value | write-downs | Net amount | Gross value | write-downs | Net amount | |
| Raw materials and components inventory |
67,710 | (10,648) | 57,062 | 64,896 | (8,354) | 56,541 |
| Work in progress and semi finished goods |
137,530 | — | 137,530 | 92,783 | 0 | 92,783 |
| New boats | 50,099 | — | 50,099 | 32,263 | (230) | 32,032 |
| Used boats | 25,348 | (7,274) | 18,074 | 19,856 | (3,093) | 16,763 |
| Total inventories | 280,688 | (17,922) | 262,765 | 209,797 | (11,678) | 198,120 |
The "Raw materials and components inventory" is adjusted by an allowance for write-downs of €10,648 thousand as at June 30, 2023 (€8,354 thousand at December 31, 2022) that reflects an estimate of slowmoving and/or potentially obsolete inventory items.
The item "Work in progress and semi-finished goods" includes boats not covered by orders at the end of the year.
The item "New boats", refers to boats not covered by orders, whose production had been completed at the closing date of the financial year.
The carrying amount of the used boats was adjusted by means of an allowance for write-downs of €7,274 thousand, in order to bring the purchase cost down to its estimated realizable value.
The expected time for inventories to be recovered is as follows:
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Within one year | 253,127 | 193,002 |
| Beyond one year | 9,638 | 5,118 |
| Total inventories | 262,765 | 198,120 |
The item "Advances on inventories" refers to the advances that the Group pays to its suppliers for purchases of raw materials.
The item "Other current assets" was €45,669 thousand as at June 30, 2023 detailed as follow:
| June 30, 2023 |
December 31, 2022 |
|
|---|---|---|
| (unaudited) | (audited) | |
| Escrow accounts | 1,662 | 1,346 |
| Time deposit and other financial investments | 43,314 | 83,267 |
| Incidental borrowing costs | 655 | 641 |
| Other | 36 | 1,478 |
| Total Other Current Assets | 45,669 | 86,732 |
The escrow accounts for €1,662 thousand at June 30, 2023 refers to the deposits received by the subsidiary Allied Marine Inc. for its brokerage service (€1,346 thousand at December 31, 2022). These funds, which are provided by customers upon the signing of an order, are held in escrow until the boat is delivered to the corresponding customer.
During the previous year the Company began to sign time deposit accounts agreements with primary banks, in order to benefit of increasing interest rates. The deposits have maturities ranging from one month to six months and outstanding amounts with a maturity of more than three months are classified as "Other current assets" (see Note 3 for further details).
The residual part mainly refers to two financial investments in the form of life insurance policies subscribed in May 2022 detailed as follows:
The "Incidentals borrowing costs" refer for €655 thousands to the committed "Revolving Credit Facility" and "Revolving Pre-Finance Facility, not in use on June 30, 2023 but available until August 2024 (Note 30).
Movements in this item in the six-month period ended June 30, 2023 compared with the same correspondent period for 2022 of prior year were as follows:
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| At January 1, 2023 and January 1, 2022 (audited) | ||
| Cost Accumulated depreciation |
689,527 (386,131) |
597,435 (337,581) |
| Net carrying amount | 303,394 | 259,854 |
| At January 1, 2023 and January 1, 2022, | ||
| net of accumulated depreciation (audited) | 303,394 | 259,854 |
| Additions — owned assets | 82,294 | 35,243 |
| Additions — right of use assets | 4,572 | 1,294 |
| Disposals | (367) | (16) |
| Depreciation — owned assets | (23,253) | (19,609) |
| Depreciation — right of use assets | (4,319) | (3,559) |
| Exchange realignment | (112) | 980 |
| At June 30, 2023 (unaudited) and June 30, 2022 | ||
| (unaudited), net of accumulated depreciation | 362,209 | 274,186 |
| Cost | 767,439 | 634,936 |
| Accumulated depreciation | (405,231) | (360,749) |
| Net carrying amount | 362,209 | 274,186 |
On March 20, 2023, the Group acquired a production site of over 70,000 square meters, including a dry dock, in Italy near Ravenna. The acquisition involved an initial investment of about €40 million plus incidental acquisition costs for the advisors of the transaction. The Group will invest in the site to create new production areas and an R&D center. The operation forms part of Ferretti Group's growth strategy and the new facility, when fully operational, will increase production capacity by about 20%. The acquisition of the new Ravenna shipyard has been financed entirely with equity raised by the recent listing on the Hong Kong Stock Exchange.
The new production site in the province of Ravenna is strategically located, close to the Company's Forlì headquarter and its Cattolica shipyard. This operation consolidates the Group's investment strategy, which over the last five years has resulted in the expansion and improvement of all production facilities, and the La Spezia yard and the Ancona Superyacht Yard in particular.
As at June 30, 2023, the net carrying amounts of land and buildings, plant, machinery and equipment, and other equipment and vehicles included right-of-use assets amounting to €16,414 thousand, €218 thousand and €1,663 thousand, respectively.
As at June 30, 2022, the net carrying amounts of land and buildings, plant, machinery and equipment, and other equipment and vehicles included right-of-use assets amounting to €15,958 thousand, €387 thousand and €593 thousand, respectively.
As at June 30, 2023, the Group did not identify any impairment indicator for property, plant and equipment.
Movements in this item in the six-month period ended June 30, 2023 compared with the same correspondent period for 2022 of prior year were as follows:
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| At January 1, 2023 and January 1, 2022 (audited) | ||
| Cost | 310,195 | 299,312 |
| Accumulated depreciation | (46,125) | (41,138) |
| Net carrying amount | 264,070 | 258,174 |
| Net carrying amount | ||
| At January 1, 2023 and January 1, 2022, | ||
| net of accumulated amortization (audited) Additions |
264,070 2,189 |
258,174 1,730 |
| Disposals | 0 | 0 |
| Amortization | (2,556) | (2,349) |
| Exchange realignment | (1) | (123) |
| At June 30, 2023 (unaudited) and June 30, 2022 | ||
| (unaudited), net of accumulated amortization | 263,701 | 257,431 |
| Cost | 312,383 | 300,919 |
| Accumulated amortization | (48,681) | (43,487) |
| Net carrying amount | 263,701 | 257,431 |
Goodwill is related to the investment in the subsidiary Zago S.p.A., the subsidiary Ferretti Group (Monaco) S.a.M. and the subsidiaries acquired during the last year Il Massello S.r.l. and Fratelli Canalicchio S.p.A., as shown in the table below:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Zago S.p.A. Ferretti Group (Monaco) S.a.M. Fratelli Canalicchio S.p.A. Il Massello S.r.l. |
332 1,299 2,699 4,584 |
332 1,299 2,699 4,584 |
| Total goodwill | 8,914 | 8,914 |
A breakdown of the value of "Trademarks" at June 30, 2023 is as follows:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Ferretti Yachts | 95,318 | 95,318 |
| Crn | 46,528 | 46,528 |
| Custom Line | 36,718 | 36,718 |
| Riva | 30,848 | 30,848 |
| Wally | 25,434 | 25,434 |
| Pershing | 8,609 | 8,609 |
| Easy Boat | 9 | 9 |
| Costs for trademark protection | 1,056 | 983 |
| Total trademarks | 244,521 | 244,448 |
As required by IAS 36, "Impairment of Assets," intangible assets with indefinite useful lives are not amortized, but they are tested for impairment at least once per year.
IAS 36 also requires an entity to assess at each reporting date whether there are indications of impairment for any other assets recognized in the statement of financial position.
As of June 30, 2023, in consideration of the order intake, the revenue and the adjusted EBITDA recorded by the Group in the six-month period ended June 30, 2023 and the results of the impairment test performed at December 31, 2022 (including sensitivities), the Group did not identify any impairment indicators and therefore no impairment test has been performed.
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Concessions and other rights Intellectual property rights Software |
1,490 7,825 952 |
1,519 8,151 1,038 |
| Total other intangible assets | 10,267 | 10,709 |
This item includes:
A breakdown of this item is as follows:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Equity investments designated at fair value through income | ||
| statement | 120 | 120 |
| Investment in a joint venture | 0 | 12 |
| Deposits | 1,620 | 1,655 |
| Commissions advances | 1,912 | 1,102 |
| Other assets | 1,024 | 1,766 |
| Incidental borrowing costs | 59 | 378 |
| Total other non-current assets | 4,734 | 5,031 |
The balances mainly include equity investment in Nouveau Port Golf Juan which owns certain commercial premises currently occupied by a restaurant.
The balances mainly refer to advances on commissions paid on the basis of interim receipts from customers for boats that will be delivered after the following year.
The item "Other assets" chiefly refer to prepaid expenses due after period-end.
The movements of deferred tax assets for the six-month period ended June 30, 2023 are as follows:
| Differences | ||||||||
|---|---|---|---|---|---|---|---|---|
| in | ||||||||
| depreciation | ||||||||
| and | ||||||||
| amortization | Goodwill | |||||||
| Provision | for reporting | relevant for | ||||||
| Inventory | for doubtful | rather than | income tax | Other sundry | ||||
| Provisions | write-downs | accounts | tax purposes | purposes | Tax losses | differences | Total | |
| At December 31, 2022 and | ||||||||
| January 1, 2023 (audited) | 13,773 | 2,653 | 633 | 10,484 | 1,114 | 57,683 | 904 | 87,242 |
| Credited/(charged) to: | ||||||||
| profit or loss | 5,337 | 1,451 | (6) | (435) | (122) | 3,137 | (314) | 9,048 |
| used | — | — | — | — | — | (15,870) | — | (15,870) |
| other reserves | — | — | — | — | — | — | 0 | — |
| At June 30, 2023 (unaudited) | 19,110 | 4,104 | 628 | 10,049 | 992 | 44,949 | 589 | 80,420 |
The movements of deferred tax liabilities for the six-month period ended June 30, 2023 are as follows:
| Depreciation of land and other assets valued at less than 516/k |
Trademarks | Leases | Others | Total | |
|---|---|---|---|---|---|
| At December 31, 2022 and | |||||
| January 1, 2023 (audited) | 1,315 | 60,659 | 5,420 | 3,450 | 70,845 |
| Charged/(credited) to: | |||||
| profit or loss | — | — | (64) | 631 | 567 |
| other comprehensive income | — | — | — | 25 | 25 |
| exchange differences | — | — | — | (37) | (37) |
| At June 30, 2023 (unaudited) | 1,315 | 60,659 | 5,356 | 4,069 | 71,399 |
The movements for the year ended December 31, 2022 are as follows:
| Provisions | Inventory write-downs |
Provision for doubtful accounts |
Differences in depreciation and amortization for reporting rather than tax purposes |
Goodwill relevant for income tax purposes |
Tax losses | Other sundry differences |
Total | |
|---|---|---|---|---|---|---|---|---|
| At December 31, 2021 and January 1, 2022 (audited) Credited/(charged) to: |
10,054 | 2,663 | 1,218 | 9,525 | 1,256 | 61,698 | 500 | 86,914 |
| profit or loss acquisition of subsidiaries |
3,719 — |
(10) — |
(585) — |
959 — |
(142) — |
(4,015) — |
(2,831) 71 |
(2,906) 71 |
| other reserves At December 31, 2022 (audited) |
— 13,773 |
— 2,653 |
— 633 |
— 10,484 |
— 1,114 |
— 57,683 |
3,164 904 |
3,164 87,242 |
| Depreciation of land and other assets valued at less than 516/k |
Trademarks | Leases | Others | Total | ||||
| At December 31, 2021 and January 1, 2022 (audited) Charged/(credited) to: |
1,315 | 60,659 | 5,549 | 1,731 | 69,254 | |||
| profit or loss other comprehensive income acquisition of subsidiaries exchange differences |
— 0 — — |
— 0 — — |
(129) — — — |
1,115 214 55 335 |
986 214 55 335 |
|||
| At December 31, 2022 (audited) | 1,315 | 60,659 | 5,420 | 3,450 | 70,845 |
For the purpose of their presentation in financial statements, some tax assets and liabilities have been set off each other in the statement of financial position. Below is an analysis of Group's deferred tax assets:
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Deferred tax assets Deferred tax liabilities |
9,021 — |
16,397 — |
| Total deferred tax assets | 9,021 | 16,397 |
The payment of dividends by the Company to its shareholders did not entail related tax effects.
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|||||
|---|---|---|---|---|---|---|
| Effective Interest rate |
Maturity | Amount | Effective Interest rate |
Maturity | Amount | |
| Due to banks — secured | Euribor* +1.6 |
2024 | 156 | Euribor* +1.6 |
2023 | 150 |
| Due to banks — unsecured | Euribor* +1.0–3.5 |
2024 | 2,560 | Euribor* +1.0–3.5 |
2023 | 3,878 |
| Incidental borrowing costs | 0 | 0 | ||||
| Due to banks net of incidental borrowing costs |
2,716 | 4,025 | ||||
| Due for maturity factor Lease liabilities Minority Shareholders' Loan Others |
1.7–4.7 | 2024 2024 |
0 8,519 1,000 0 |
1.7–4.7 | 2023 2023 |
0 8,799 1,000 1,676 |
| Total short-term financial payables | 12,234 | 15,500 |
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|||||
|---|---|---|---|---|---|---|
| Effective Interest | Effective Interest | |||||
| rate | Maturity | Amount | rate | Maturity | Amount | |
| Due to banks — secured | Euribor* +1.6 |
2025 | 1,523 | Euribor* +1.6 |
2024 | 1,605 |
| Due to banks — unsecured | Euribor* +1.0–3.5 |
2025 | 933 | Euribor* +1.0–3.5 |
2024 | 1,181 |
| Incidental borrowing costs | 0 | 0 | ||||
| Due to banks net of incidental borrowing costs |
2,455 | 2,786 | ||||
| Lease liabilities Liabilities arising on Business Combination |
1.7–4.7 | 2031 | 19,016 2,021 |
1.7–4.7 | 2031 | 19,359 1,912 |
| Total non-current financial payables | 23,492 | 24,056 | ||||
| Total bank and other borrowings | 35,726 | 39,556 |
(*) If Euribor is lower than zero, Euribor should be deemed equal to zero.
The Minority Shareholders' Loan refers to the loan of the company Fratelli Canalicchio S.p.A. granted by the minority shareholders.
The bank debt refers to several revolving facilities and term loan facilities related to the subsidiaries Il Massello Srl and its controlled companies, Fratelli Canalicchio S.p.A. and Ram S.p.A. and its controlled company.
On August 2, 2019, the Company and its subsidiary formerly CRN S.p.A., now merged into Ferretti S.p.A., as borrowers, and Banca Nazionale del Lavoro S.p.A., Banco BPM S.p.A., Barclays Bank Ireland PLC, BNP Paribas, Milan Branch (also acting as agent — the "Agent Bank"), BPER Banca S.p.A., Crédit Agricole Italia S.p.A., MPS Capital Services Banca per le Imprese S.p.A. and UBI Banca S.p.A., as lenders, entered into a medium-to-long-term loan agreement for a maximum total amount of €170 million, divided into three lines of credit as follows:
The Loan Agreement is subject to a financial covenant relating to the compliance with certain significant thresholds relating to the leverage ratio of total net debt (as defined in the Loan Agreement) to EBITDA (as defined in the Loan Agreement), to be calculated at the consolidated level on a half-yearly basis (June 30 and December 31, of each year on a 12-month basis).
In addition, the Loan Agreement provides for a commitment by Ferretti S.p.A., and the relevant subsidiaries to keep at 1.5x or higher the ratio of the gross order book to the amount to be repaid under the Revolving Pre-Finance Facility (a line of credit providing advances against the contracts). The parameter will be observed twice a year (December 31, and June 30). If this parameter is breached, draw-downs on the Revolving Pre-Finance Facility must be repaid to restore fulfillment of the parameter. Any repayments do not result in the cancellation of the facility for the part repaid.
At June 30, 2023 and December 31, 2022 all covenants had been fulfilled.
Finally, the Loan Agreement includes several mandatory early repayment clauses in certain circumstances.
The interest rate applicable to the Loan is equal to the sum of the EURIBOR and the applicable spread, according to the level of the leverage ratio.
As of April 2021, spreads were reduced to 275 basis points per annum for the Term Loan Facility and Revolving Pre-Finance Facility and to 285 basis points per annum for the Revolving Credit Facility. With effect from September 2021, owing to the further improvement in the leverage ratio calculated at June 30, 2021, the spreads applicable to current draw-downs have fallen further to the contractual lows of 260 basis points per annum in the cases of the Term Loan Facility and Revolving Pre-Finance Facility and of 270 basis points per annum in the case of the Revolving Credit Facility.
This Loan is not in use and the amortizing medium-to-long term line of credit was prepaid in December 2022 for the remaining value of €47 million.
The item "Liabilities arising on Business Combinations" of Bank and other borrowings refers for €2,001 thousand to the value of the put and call options for the acquisition of the non-controlling interest of Fratelli Canalicchio S.p.A. and Il Massello Srl, both exercisable from September 2027 to September 2028.
With regard to the analysis of bank and other borrowings based on maturity, please refer to Note 3 "Financial risk management".
All borrowings are denominated in Euro.
The table below sets forth a breakdown of the Group's trade and other payables as of the dates indicated:
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Trade payables | 336,575 | 289,653 |
| Other payables | 47,676 | 48,717 |
| Total trade and other payables | 384,251 | 338,370 |
| June 30, | December 31, | |
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Trade and other payables — current | 383,345 | 337,364 |
| Trade and other payables — non-current | 905 | 1,006 |
| Total trade and other payables | 384,251 | 338,370 |
A breakdown of this item is as follows:
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Accounts payable to suppliers | 336,575 | 289,653 |
| Total trade payables | 336,575 | 289,653 |
"Accounts payable to suppliers" relate to the amount due to suppliers for ordinary commercial supplies of services and materials, at arm's length.
For an analysis of future flows of trade payables, based on their maturity, please refer to Note 3 "Financial risk management".
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Payables due to pension and social security institutions | 11,933 | 12,504 |
| Amounts payable to employees | 20,219 | 23,411 |
| Amounts payable to directors | 1,602 | 2,849 |
| Other tax payable | 6,251 | 3,344 |
| Miscellaneous payables | 3,620 | 3,464 |
| Accrued expenses | 946 | 1,426 |
| Deferred income | 2,199 | 714 |
| Government authorisation fees | 193 | 229 |
| Deferred income — non-current | 712 | 776 |
| Total other payables | 47,676 | 48,717 |
The item "Payables due to pension and social security institutions" reflects the amounts owed to these institutions at June 30, 2023 by Group companies and their employees for the June payroll and for accrued and deferred remuneration.
"Amounts payable to employees" refers to the June payroll to be paid in the following month and to the liability for accrued and unused vacations and personal days, as well as to the accrued portion of the performance and production bonus.
The item "Amounts payable to directors" refers to remuneration which has accrued but was not yet paid as of June 30, 2023.
The item "Other tax payable" chiefly refers to taxes withheld accrued that will be paid in July 2023.
The items "Accrued expenses and deferred income" consists mainly of insurance premiums and other transactions recognized on an accrual basis.
The item "Government authorization fees non-current", totaling €193 thousand at June 30, 2023, relates mainly to prepayments of public grants received by the Group of €161 thousand authorized in favor of the former Riva S.p.A., now merged in the Company and €32 thousand authorized in favor of the former subsidiary CRN S.p.A., now also merged in the Company. Said deferred income was classified under "Non-current liabilities" for the portion due after the following year. These grants will be recognized in the income statement along with the amortization periods of the corresponding assets once the underlying framework agreements expire.
The Group's management believes that the carrying amount of "Total trade and other payables" is close to their fair value.
"Contract liabilities" include amounts paid by customers for orders not yet fulfilled, based on the sales conditions normally applied. More specifically, this item represents both the part of advances exceeding production already completed and the part of advances received and for which the order has not progressed as at the reporting date.
The item "Income tax payable" at June 30, 2023 refers to income taxes accrued.
For a description of this item, reference should be made to Note 30 above.
The table below shows the changes that occurred in "Provisions" during the six-months period ended June 30, 2023 and the year ended December 31, 2022:
| Provision for product warranties |
Provisions for miscellaneous risks |
Total provisions | |
|---|---|---|---|
| Balance at January 1, 2023 (audited) Additions Utilizations during the period |
26,300 20,421 (9,603) |
29,693 17,069 (6,372) |
55,995 37,490 (15,974) |
| Total at June 30, 2023 (unaudited) | 37,119 | 40,392 | 77,510 |
| Provision for product warranties |
Provisions for miscellaneous risks |
Total provisions | |
| Balance at January 1, 2022 (audited) Additions Utilizations during the period |
18,867 26,097 (18,663) |
21,572 16,302 (8,181) |
40,438 42,399 (26,843) |
| Total at December 31, 2022 (audited) | 26,300 | 29,693 | 55,995 |
The "Provision for product warranties" reflects the best possible estimate based on available information of the warranty obligations that may be incurred after the reporting date for products sold before that date.
The amount added annually to this provision, for all Group companies, is based on past experience and future expectations and takes into account new-product launches and the impact of a warranty period of 24 months, even though virtually all warranty claims are received within the first 12 months after a product is sold. A portion of the provision for product warranties is classified as noncurrent.
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Current portion | 23,026 | 13,251 |
| Non-current portion | 14,093 | 13,049 |
| Total provision for product warranties | 37,119 | 26,300 |
The item "Provisions for miscellaneous risks" can be broken down as follows:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Legal proceedings and tax and employment law litigation Dealer incentives Provisions for completion of boats Provisions for other risks |
9,306 13,312 3,900 13,873 |
9,171 10,007 2,813 7,702 |
| Total provisions for miscellaneous risks | 40,392 | 29,693 |
Provisions for "Legal proceedings and tax and employment law litigation" refer to potential liabilities arising in relation to the pending or threatened legal proceedings, including, inter alia, solidary risks on procurement, defectiveness products, personnel and supplier disputes and tax proceedings.
The Group is involved mainly in two tax litigation proceedings: (i) litigation related to VAT for the 2009 period and its appeal was granted in the first and second instance from the Company. The Italian Revenue Agency lodged an appeal in the third instance and the hearing has been scheduled for September 2023; (ii) litigation related to the so-called "splafonamento" (VAT threshold) for the 2012 tax year. The Provincial Tax Commission accepted the appeal presented by the Company, against which The Revenue Agency notified its appeal. The value of the two litigations is approximately €5 million.
The provisions in item "Dealer incentives" were established to cover the costs that the Company could incur under a system that awards bonuses to dealers who reach predetermined customer service targets.
The "Provisions for other risks" were established to cover liabilities that are likely to arise as a result of other actions and expenses, different from the legal proceedings, that Group companies could face in the normal course of business. It includes a provision for potential liabilities related to commercial transactions for €8.3 million as at June 30, 2023 (€3.2 million as at December 31, 2022). In addition, there is a provision for the expected costs in connection with the Company's development project for public land in La Spezia. The Company presented a new project entailing significant modifications from the original one approved in 2006 in relation to the reclamation of seabed. It should be noted that any changes to the project require further inquiries relating to the initiatives to be pursued to conclude the process of reclaiming the seabed since the procedure has yet to be completed pursuant to Article 242 et seq. of Legislative Decree No. 152/2006. The expected costs of this reclamation project have been estimated by the Company to amount to between €200 thousand and €400 thousand and as of the date of approval of the Financial Statements, the Group is waiting for indications from the Port Authority of La Spezia on the actions to be taken.
The breakdown of this item as at June 30, 2023 and December 31, 2022 are as follows:
| June 30, 2023 (unaudited) |
December 31, 2022 (audited) |
|
|---|---|---|
| Provision for employee benefits Provision for leaving indemnity |
6,506 842 |
6,783 863 |
| Total non-current employee benefits | 7,348 | 7,646 |
The process of determining the Group's obligations toward its employees, which was carried out by Mr. Tommaso Viola ("Mr. Viola"), being an Italian independent actuary and a member of the Italian "Ordine Nazionale degli Attuari", with the same procedure and assumptions followed for the calculation as at December 31, 2022.
As required by the new supplemental company agreement signed in July 2012 by the Company and the unions representing its employees, each year the Group sets aside a provision for seniority bonuses. These bonuses are payable to employees who, starting on September 1, 2012, have completed or will complete more than 12 years of service.
On a transitional basis, a different loyalty bonus will be paid on termination of the contracts to the employees at some sites who previously received a different bonus and had already accrued more than 12 years' service. The amount previously accruing for all workers will remain unchanged.
As was the case for the Provision for employee severance indemnities, the Group's liability toward its employees was determined by Mr. Viola, with the same procedure and assumptions followed for the calculation as at December 31, 2022.
As at June 30, 2023 the share capital and reserves were unchanged in respect to the amount as at December 31, 2022, except for the profit of the six-month period ended June 30, 2023.
Equity amounted to €797,410 thousand at June 30, 2023 (€778,391 as at December 31, 2022), as detailed below together with the main components of "Share capital and reserves".
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Issued and fully paid | 338,483 | 338,483 |
The share capital, fully subscribed and paid up, is formed of 338,483,654 ordinary shares without par value.
The share premium reserve amounted to €425,041 thousand as at June 30, 2023.
The legal reserve, set up pursuant to applicable laws, amounts to €10,907 thousand.
The translation Reserves, amounting to €5,958 thousand at June 30, 2023, reflects the foreign exchange differences that arise from the conversion of the equity opening balances and income statement of the US and UK subsidiaries of the Company, which are translated into Euro at the U.S. dollar and Great Britain Pound exchange rate in force at June 30, 2023 and at the average exchange rate for the period, respectively. During the period, the reserve changed by €(2,012) thousand, as reported in the consolidated comprehensive income statement.
The item "Other reserves", at €16,230 thousand at June 30, 2023, mainly includes:
| June 30, | December 31, | |
|---|---|---|
| 2023 | 2022 | |
| (unaudited) | (audited) | |
| Dividends | 19,903 | 6,707 |
The General Shareholders' Meeting convened on May 18, 2023, authorized a dividend payout for €19,903 thousand (equal to €5.88 cents per share), made on June 5, 2023.
The General Shareholders' Meeting convened on May 25, 2022, authorized a dividend payout for €6,707 thousand, equal to €1.98 cents per share, made on June 30, 2022.
Non-controlling interests are not material and represented by:
Earnings per share were calculated as the ratio of net profit for the period attributable to shareholders of the Company to the weighted average number of shares in issue during the year, as indicated in the table below, and coincides with the earnings per share diluted due to the absence of partially dilutive instruments.
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Profit attributable to shareholders of the company | ||
| (in thousand Euro) | 40,448 | 29,608 |
| Weighted average number of shares during the period | 338,482,654 | 294,714,294 |
| Earnings per share attributable to shareholders of the company: |
||
| basic and diluted (in Euro) | 0.12 | 0.10 |
No business combination was made in the six-month period ended June 30, 2023.
On July 29, 2022, the Group acquired a 100% interest in MA.RI.NA. s.r.l. through a cash payment of €468 thousand.
MA.RI.NA. s.r.l. is a company specialized in the sale of spare parts for Riva boats.
| Fair value recognized at acquisition date |
|
|---|---|
| Cash and cash equivalents | 99 |
| Trade and other receivables | 170 |
| Other current assets | 411 |
| Property, plant and equipment | 96 |
| Trademark | 132 |
| Current liabilities | (352) |
| Non-current employee benefits | (82) |
| Other non-current liabilities | (6) |
| Total net assets at fair value | 468 |
| Payment made | 468 |
| Below is an analysis of the cash flows relating to the acquisition of MA.RI.NA. s.r.l.: | |
| Payment of the consideration | (468) |
| Cash available at acquisition date | 99 |
| Cash outflows for the investment | (369) |
From the date of acquisition, MA.RI.NA. s.r.l. contributed €162 thousand of revenue and €0.3 thousand to profit before tax from continuing operations of the Group. If the combination had taken place at the beginning of 2022, the Group's revenue from continuing operations would have been €1,030,286 thousand and the profit before tax from continuing operations would have been €69,366 thousand.
The Company's management believes that, as allowed by IFRS 3, it is preferable to treat the allocation described above as temporary.
On September 19, 2022, the Group acquired a 60% interest in Fratelli Canalicchio S.p.A. through a cash payment of €100 thousand. The remaining 40% is subject to put and call options exercisable from September 19, 2027 to September 19, 2028. The terms of put and call options over these non-controlling interests, mean that they give to the Group a present ownership interest in the underlying securities, accordingly this business combination was accounted for on the basis that the underlying shares subject to the put and call options have been acquired. Thus, the Group does not recognize non-controlling interests and recorded liabilities for shareholders under the options.
Details and input considered to estimate the fair value of these liabilities are disclosed in Note 3.
| Fair value recognized at acquisition date |
|
|---|---|
| Cash and cash equivalents | 567 |
| Trade and other receivables | 4,256 |
| Other current assets | 2,678 |
| Property, plant and equipment | 2,468 |
| Other non-current assets | 908 |
| Deferred tax | 21 |
| Current liabilities | (6,038) |
| Non-current employee benefits | (530) |
| Other | (3,393) |
| Total net assets at fair value | 937 |
| Non-controlling interests | — |
| Goodwill | 2,699 |
| Payment made | 3,200 |
| Liability arising on business combination (Note 3) | 436 |
| Total | 3,636 |
Below is an analysis of the cash flows relating to the acquisition of Fratelli Canalicchio S.p.A.:
| Payment of the consideration | (3,200) |
|---|---|
| Cash available at acquisition date | 567 |
| Cash outflows for the investment | (2,633) |
From the date of acquisition, Fratelli Canalicchio S.p.A. contributed €976 thousand of revenue and €11 thousand to profit before tax from continuing operations of the Group. If the combination had taken place at the beginning of 2022, the Group's revenue from continuing operations would have been €1,036,770 thousand and the profit before tax from continuing operations would have been €68,952 thousand.
The goodwill of €2,606 thousand comprises the fair value of expected synergies arising from acquisition and it's not expected to be deductible for income tax purposes.
The Company's management believes that, as allowed by IFRS 3, it is preferable to treat the allocation described above as temporary.
On September 29, 2022, the Group acquired an 85% interest in Il Massello s.r.l. through a cash payment of €6,375 thousand. The Group elected to measure the non-controlling interest in the acquiree at the proportionate share of its interest in the acquiree's identifiable net assets. The terms of put and call options over these non-controlling interests, mean that they do not give to the Group a present ownership interest in the underlying securities, accordingly this business combination was accounted for on the basis that the underlying shares subject to the put and call options have not been acquired. Thus, the Group recognized both non-controlling interests and these liabilities for shareholders under the options. Details and input considered to estimate the fair value of these liabilities are disclosed in Note 3.
| Fair value recognized | |
|---|---|
| at acquisition date | |
| Cash and cash equivalents | 263 |
| Trade and other receivables | 2,199 |
| Other current assets | 2,005 |
| Property, plant and equipment | 798 |
| Other non-current assets | 96 |
| Current liabilities | (3,117) |
| Non-current employee benefits | (138) |
| Other non-current liabilities | — |
| Total net assets at fair value | 2,107 |
| Non-controlling interests (15% net assets) | (316) |
| Goodwill | 4,584 |
| Payment made | 6,375 |
| Liability arising on business combination (Note 3) | 1,476 |
| Below is an analysis of the cash flows relating to the acquisition of Il Massello s.r.l.: | |
| Cash available at acquisition date | 263 |
| Payment of the consideration | (6,375) |
| Cash outflows for the investment | (6,112) |
From the date of acquisition, Il Massello s.r.l. contributed €127 thousand of revenue and €(204) thousand to profit before tax from continuing operations of the Group. If the combination had taken place at the beginning of 2022, the Group's revenue from continuing operations would have been €1,031,136 thousand and the profit before tax from continuing operations would have been €69,862 thousand.
The goodwill of €4,584 thousand comprises the fair value of expected synergies arising from acquisition and it's not expected to be deductible for income tax purposes.
The Company's management believes that, as allowed by IFRS 3, it is preferable to treat the allocation described above as temporary.
During the six-month period ended June 30, 2023 and the year ended December 31, 2022, the Group had non-cash additions to rights-of-use assets and lease liabilities of €4,572 thousand and €6,355 thousand, respectively.
| Bank and other borrowings | June 30, 2023 | June 30, 2022 |
|---|---|---|
| (excluding lease liabilities) | (unaudited) | (unaudited) |
| At the beginning of the period Changes in financing activities: |
11,400 | 57,682 |
| Acquisition of a subsidiary | 0 | — |
| New borrowings | 200 | — |
| Repayment | (4,789) | (11,442) |
| Other | 1,381 | — |
| Total at the end of the period | 8,191 | 46,240 |
| Lease liabilities | June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|---|---|---|
| At the beginning of the period Changes in financing activities: |
28,158 | 30,801 |
| New lease | 4,572 | 1,445 |
| Interest expenses Lease payment |
134 (5,329) |
61 (4,427) |
| Total at the end of the period | 27,535 | 27,880 |
Total cash outflows for leasing included in the consolidated cash flow statements are as follows:
| June 30, 2023 (unaudited) |
June 30, 2022 (unaudited) |
|
|---|---|---|
| Operating activities | 2,205 | 2,357 |
| Financing activities | 5,329 | 6,159 |
Transactions with related parties, as defined by IAS 24, concern arrangements, not always formalized with the conclusion of standardized contracts, relating primarily to the supply of services, including advisory. These transactions form part of normal business operations and, in the Company's judgment, are in general settled under arm's length conditions.
Although the Company considers that transactions with related parties have been carried out in general under arm's length conditions, there is no guarantee that, if they had been concluded between or with third parties, the latter would have negotiated and entered into the related contracts, or carried out the transactions, under the same conditions and with the same procedures adopted by the Group.
The breakdown of the Group's balances with related parties at June 30, 2023 and December 31, 2022 is set out below:
| Trade and other receivables |
Shareholders' debt |
Trade and other payables |
|
|---|---|---|---|
| Fellow subsidiaries: | |||
| Weichai Power Co Ltd Shandong Weichai Import & Export Co., Ltd |
484 3,150 |
(645) 0 |
|
| Hydraulics Drive Technology | 0 | ||
| Ferretti International Holding S.p.A. | 3,735 | 0 | |
| Other related companies: | |||
| HPE S.r.l. | 0 | (50) | |
| WM S.A.M. (former Wally S.A.M.) | 195 | 0 | |
| Ferrari S.p.A. | 0 | (564) | |
| Other related parties | 28 | (1,000) | (353) |
| Total related parties balances as at June | |||
| 30, 2023 (unaudited) | 7,592 | (1,000) | (1,612) |
| Trade and other | Shareholders' | Trade and other | |
| receivables | debt | payables | |
| Fellow subsidiaries: | |||
| Weichai Power Co Ltd | 484 | (645) | |
| Shandong Weichai Import & Export Co., Ltd | 3,150 | 0 | |
| Ferretti International Holding S.p.A. | 891 | 0 | |
| Other related companies: | |||
| HPE S.r.l. | 0 | (50) | |
| WM S.A.M. (former Wally S.A.M.) | 360 | 0 | |
| Ferrari S.p.A. | 0 | (535) | |
| Poem S.r.l. | (8) | ||
| Other related parties | 28 | (1,000) | (139) |
| Total related parties balances as at | |||
| December 31, 2022 (audited) | 4,913 | (1,000) | (1,376) |
The balance of trade and other payables to Weichai Power Co., Ltd amounting to €645 thousand as at June 30, 2023 refers wholly to the agreements on the right to sponsor the "Riva" brand on the Ferrari single-seater helmet during the FIA Formula One championship.
The balance of trade and other receivables from Shandong Weichai Import & Export Co., Ltd amounting to €3.2 million as at June 30, 2023 refers wholly to the sale of a yacht.
The balance of trade and other receivables from Ferretti International Holding S.p.A. amounting to €3,735 thousand as at June 30, 2023 entirely refers to certain costs and expenses incurred by Ferretti S.p.A. for services carried out by several providers that shall be reimbursed by Ferretti International Holding S.p.A..
The balance of trade and other payables to HPE Srl amounting to €50 thousand as at June 30, 2023 refers wholly to the first installment in 2023, based on the agreement entered into on January 1, 2017 and relating to the supply of services such as design, simulation, calculation, development, implementation and launch on the market of new concepts and style for the Company's products.
The balance of trade and other payables to Ferrari S.p.A. amounting to €564 thousand as at June 30, 2023 refers primarily to sponsoring the "Riva" brand on the Ferrari helmets and the race cars.
The balance of trade and other payables to other related parties amounting to €353 thousand as at June 30, 2023 mostly refers to the costs incurred by the Company for legal services amounting to €18 thousand and other services provided by related parties under arm's length conditions.
A breakdown of the Group's transactions with related parties for the period of six-month period ended June 30, 2023 and the correspondent period of prior year is set out below:
| Net revenue | Other revenue | Costs for the use of raw materials, services, rentals and leases |
|
|---|---|---|---|
| Fellow subsidiaries: | |||
| Hydraulics Drive Technology | (54) | ||
| Ferretti International Holding S.p.A. | 2,844 | — | |
| Other related companies: | |||
| HPE S.r.l. | (100) | ||
| Ferrari S.p.A. | (1,035) | ||
| Other related parties | 41 | (586) | |
| Total related parties transactions | |||
| as at June 30, 2023 (unaudited) | 41 | 2,844 | (1,774) |
| Net revenue | Other revenue | Costs for the use of raw materials, services, rentals and leases |
|
|---|---|---|---|
| Fellow subsidiaries: Ferretti International Holding S.p.A. Company's Directors Other related companies: HPE S.r.l. WM S.A.M. (former Wally S.A.M.) Ferrari S.p.A. |
— (100) (465) (568) |
||
| Other related parties Total related parties transactions as at June 30, 2022 (unaudited) |
763 763 |
— | (457) (1,590) |
The costs with regard to Hydraulics Drive Technology amounting to €54 thousand as at June 30, 2023 refer to the costs incurred by the Company for technical consulting services.
The revenue with regard to Ferretti International Holding S.p.A. amounting to €2,844 thousand as at June 30, 2023 entirely refers to certain costs and expenses incurred by Ferretti S.p.A. for services carried out by several providers that shall be reimbursed by Ferretti International Holding S.p.A..
The costs with regard to HPE S.r.l. amounting to €100 thousand for the first half 2023 refer primarily to the supply of services such as design, simulation, calculation, development, implementation and launch on the market of new concepts and style for the Company's products.
The costs with regard to Ferrari S.p.A. amounting to €1,035 thousand for the first half 2023 relate to sponsoring the "Riva" brand on the Ferrari helmets and race cars.
The costs to other related parties amounting to €586 thousand as at June 30, 2023 mostly refer to the costs incurred by the Company for legal services and other consulting services, tied to the development of new boat and the Wally trademark, provided by related parties under arm's length conditions.
In addition, it is reported that during the period the Company incurred costs amounting to €355 thousand, which relate to engineering costs for the development of the Ancona shipyard that have been considered to be accessory costs to the plant construction and hence are shown in this item.
In application of IFRS 16, costs paid to three companies considered related parties, relating to the rent for offices and production facilities, have not been considered.
The Group's management believes there are no significant risk tied to the Group's core business that might give rise to liabilities not reflected in the financial statements.
As at June 30, 2023 no commitment was reported (December 31, 2022: Nil).
On July 25, 2023, it has been communicated the partial exercise of approximately 2.8% of the over-allotment option granted by FIH. The purchase price of the Shares on Euronext Milan is €3 per Share (equivalent to the offer price established in connection with the Offering) for an aggregate consideration of €732,873. Payment of the aggregate consideration has been settled on July 27, 2023.
There was no other event that had a significant impact on the Group's operation, financial and trading prospects since the end of the Reporting Period, and up to the date of these Unaudited Interim Condensed Consolidated Financial Statements which the Board is aware of.
The Unaudited Interim Condensed Consolidated Financial Statements were approved and authorized for issue by the Board on August 2, 2023.
This statement is also made pursuant to and for the purposes of Art. 154-bis, paragraph 2, of Legislative Decree 58 of February 24, 1998.
Milan, August 2, 2023
Chief Executive Officer Alberto Galassi
Executive responsible for the corporate financial documents Marco Zammarchi
| "AMAS" | North America, Central America and South America |
|---|---|
| "APAC" | Asia-Pacific |
| "associate(s)" | has the meaning ascribed to it under the Hong Kong Listing Rules |
| "Audit Committee" | the audit committee of the Board |
| "Board" | the board of Directors |
| "Borsa Italiana" | Borsa Italiana S.p.A., a joint-stock company (società per azioni) incorporated under the laws of Italy, with registered office at Piazza degli Affari 6, Milan, Italy, which is, inter alia, the market operator of Euronext Milan |
| "By-laws" | the by-laws of the Company as amended, supplemented or restated from time to time |
| "Company" | Ferretti S.p.A., a company incorporated under the laws of Italy as a joint-stock company with limited liability, the shares of which are dually listed on the Main Board of the Hong Kong Stock Exchange (Stock code: 9638) and the Euronext Milan (EXM: YACHT) |
| "CONSOB" | Italian authority for the supervision of financial markets (Commissione Nazionale per le Società e la Borsa), with its registered office in Rome, at Via Giovanni Battista Martini 3, Italy |
| "Controlling Shareholder(s)" | has the meaning ascribed to it under the Hong Kong Listing Rules and, with respect to the Company, refers to any or all of SHIG, Weichai Group, Weichai Holding (HK) and FIH |
| "COVID-19" | the Coronavirus Disease 2019 |
| "Director(s)" | the director(s) of our Company |
| "Dual Listing" | the listing of the Shares on the Hong Kong Stock Exchange and Euronext Milan |
| "EMEA" | Europe, Middle East and Africa |
| "ESG" | environmental, social and governance |
| "Euro", "EUR" or "€" | the lawful currency of the member states of the European Union participating in the third stage of the European Union's Economic and Monetary Union |
| "Euronext Milan" | the Euronext Milan, organized and managed by Borsa Italiana |
| "Executive Director(s)" | the executive director(s) of Company |
|---|---|
| "EXM Listing" | the listing of the Shares on the Euronext Milan managed and organized by Borsa italiana |
| "FIH" | Ferretti International Holding S.p.A., a joint-stock company (società per azioni) incorporated and organized under the laws of Italy and one of the Controlling Shareholders |
| "FSD" | Ferretti Security Division business, a division of the Company that designs, develops and manufactures coastal patrol vessels |
| "Group" or "Ferretti Group" | the Company and its subsidiaries |
| "HKD" or "Hong Kong Dollars" Hong Kong dollars, the lawful currency of Hong Kong | |
| "Hong Kong" | the Hong Kong Special Administrative Region of the PRC |
| "Hong Kong Corporate Governance Code(s)" |
the Corporate Governance Code set out in Appendix 14 to the Hong Kong Listing Rules |
| "Hong Kong Global Offering" | the public offering of the Shares as defined and described in the Hong Kong Prospectus |
| "Hong Kong Listing" | the listing of the Shares on the Main Board |
| "Hong Kong Listing Date" | March 31, 2022, the date on which the Shares are listed and dealings in the Shares first commence on the Main Board |
| "Hong Kong Listing Rules" | the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange, as amended, modified or supplemented from time to time |
| "Hong Kong Prospectus" | the prospectus of the Company dated March 22, 2022 in relation to the Hong Kong Global Offering and the Hong Kong Listing |
| "Hong Kong Stock Exchange" | The Stock Exchange of Hong Kong Limited |
| "Italian Consolidated Financial Act" |
Italian Legislative Decree no. 58 of February 24, 1998 as subsequently amended and supplemented |
| "Italian Corporate Governance Code" |
Italian corporate governance code enacted by the Corporate Governance Committee (Comitato di Corporate Governance) on January 2020 |
| "Italian Prospectus" | the prospectus of the Company approved by CONSOB on June 21, 2023 in relation to the EXM Listing |
| "Main Board" | the Main Board of the Hong Kong Stock Exchange |
|---|---|
| "Management Incentive Plan" | a management incentive plan approved on December 21, 2021, setting out incentives for the Group's senior management and other employees |
| "Reporting Period" or "Relevant Period" |
the six months ended June 30, 2023 |
| "SFO" | the Securities and Futures Ordinance (Chapter 571 of the laws of Hong Kong), as amended, supplemented or otherwise modified from time to time |
| "Shandong SASAC" | State-owned Assets Supervision & Administration Commission of Shandong Province |
| "Share(s)" | ordinary share(s) with no nominal value in the share capital of our Company |
| "Shareholder(s)" | holder(s) of the Share(s) |
| "Shareholders' Meeting" | the annual general meeting of the Company held on May 18, 2023 |
| "Share Option Scheme" | the share option scheme conditionally adopted by our Company on May 25, 2022 |
| "SHIG" | Shandong Heavy Industry Group Co., Ltd.*, a company with limited liability incorporated under the laws of the PRC and one of our Controlling Shareholders |
| "subsidiary(ies)" | has the meaning ascribed to it under the Hong Kong Listing Rules, unless the context otherwise requires |
| "substantial shareholder(s)" | has the meaning ascribed to it under the Hong Kong Listing Rules |
| "UHNWIs" or "ultra-high net worth individuals" |
persons who have a net worth with investable and liquid assets in excess of 50 million U.S. dollars |
| "US" | the United States of America |
| "USD" or "US dollar(s)" | United States dollars, the lawful currency of the United States |
| "VHNWIs" or "very-high net worth individuals" |
persons who have a net worth with investable and liquid assets of five million to 50 million U.S. dollars |
| "Weichai Group" | Weichai Holding Group Co., Ltd.*, a company with limited liability incorporated under the laws of the PRC and one of our Controlling Shareholders |
"%" per cent
| "Weichai Holding (HK)" | Weichai Holding Group Hongkong Investment Co., Limited, a company |
|---|---|
| incorporated under the laws of Hong Kong and one of our Controlling | |
| Shareholders | |
The English names of PRC nationals, enterprises, departments, facilities, certificates, regulations, titles and the like marked with "*" are translations of their Chinese names and are included in this interim report for identification purpose only, and should not be regarded as their official English translation. In the event of any inconsistency, the Chinese name will prevail.
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