Annual Report • Apr 29, 2022
Annual Report
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ANNUAL FINANCIAL REPORT 2021
2021 CONSOLIDATED DISCLOSURE OF FINANCIAL INFORMATION IN ACCORDANCE WITH LEGISLATIVE DECREE No. 254/2016
ANNUAL FINANCIAL REPORT 2021
Aspirations that lead to concrete solutions. Controlling energy, besides materials: mastering its preservation, distribution and regeneration. Transformation always plays a central role.
The Shareholders are convened to the Ordinary Shareholders' Meeting to be held at the Company offices at Viale Europa 4 (Entry Gate 1), 24040 Stezzano (Bergamo) on 21 April 2022 at 10:30 a.m., in single call, to resolve on the following
Stezzano, 3 March 2022
On behalf of the Board of Directors The Executive Chairman Matteo Tiraboschi
In light of the extension of the emergency regime related to the Covid-19 epidemic and given the legislation enacted to contain the spread of the infection, shareholders' attendance will take place solely through a proxy to the Designated Representative pursuant to Article 135-undecies of the TUF, i.e., Computershare S.p.A. Accordingly, individual shareholders will not be allowed to attend in physical presence. The information in this notice may be updated, changed or supplemented in view of the emergency regime related to the Covid-19 epidemic and related measures adopted by the competent authorities from time to time. Any and all updates, changes or additions to the information in this notice will be promptly circulated according to the same means used to publish this notice.
| Letter from the Chairman | 8 |
|---|---|
| Brembo Purpose | 10 |
| Company Officers | 12 |
| Summary of Group Results | 14 |
| 1.Directors' Report on Operations | 18 |
| Brembo and the Market | 18 |
| Sales Breakdown by Geographical Area and Application | 24 |
| Brembo's Consolidated Results | 26 |
| Group Structure | 33 |
| Brembo Worldwide | 34 |
| Performance of Brembo Companies | 36 |
| Investments | 43 |
| Research and Development | 44 |
| Risk Management Policy | 51 |
| Human Resources and Organisation | 60 |
| Environment, Safety and Health | 62 |
| Related Party Transactions | 65 |
| Further Information | 66 |
| Significant Events After 31 December 2021 | 69 |
| Foreseeable Evolution | 69 |
| Corporate Governance and Ownership Structure Report | 70 |
| Consolidated Disclosure of Non-Financial Information (NFI) | 70 |
| Information About the Brembo S.p.A. Dividend Proposal | 71 |
| Brembo S.p.A. Stock Performance | 72 |
| 2. Palmares 2021 |
76 |
|---|---|
| 3.Consolidated Financial Statements 2021 | 88 |
| Consolidated Financial Statements at 31 December 2021 | 88 |
| Explanatory Notes to the Consolidated Financial Statements at 31 December 2021 | 96 |
| Independent Auditors' Report | 166 |
| Attestation of the Manager in Charge of the Company's Financial Reports | 171 |
| 4. Separate Financial Statements 2021 |
174 |
| Financial Statements of Brembo S.p.A. at 31 December 2021 | 174 |
| Statutory Auditors' Report | 184 |
| Attestation of the Manager in Charge of the Company's Financial Reports | 197 |
I am writing to you as Brembo's Executive Chairman for the first time. A long-planned hand-off that occurred smoothly, with continuity in terms of values and strategies. Nonetheless, it was a strong emotion and I felt a great sense of responsibility when I accepted Alberto Bombassei's invitation to take up his role.
My gratitude goes out to him. With his gaze constantly fixed on the future and his untiring dedication, he has made Brembo a model of genuine Italian excellence. For all of us, Alberto Bombassei is an example from which to draw constant inspiration. In my role at the helm of the Company, I intend to maintain the focus on our customers, people and the communities in which we operate that has always set us apart.
Brembo delivered solid results in particularly challenging circumstances in 2021. Despite a market scenario shaped by the severe adverse impact of inflation on raw materials and the semiconductor shortage, the Company generated revenues in excess not only of 2020, but also of 2019, confirming its aptitude to create value. Notwithstanding the complexity of the global scenario and current geopolitical tensions, we can look to the current year with the knowledge that we embarked on a solid strategic journey, moving in the direction of constant innovation of our solutions, digitalisation and sustainable
In 2021, net consolidated revenues amounted to €2,777.6 million, up 25.8% compared to the previous year (+26.2% on a like-for-like exchange rate basis) and 7.2% compared to 2019. Following the acquisition of the Danish SBS Friction, effective 1 January 2021, and of the Spanish J.Juan, effective 1 November 2021, the consolidation scope changed. On a like-for-like consolidation basis, the increase was 24.5%. On a like-for-like exchange rate and consolidation basis, revenues rose by 25.0% compared to the previous year.
Operating in 15 countries on three continents with 23 production sites, six commercial offices and seven research and development centres, at 31 December 2021 Brembo had a workforce of 12,225, 1,186 more than in the previous year, of whom 106 of SBS Friction and 570 of J.Juan.
At geographical level, all the markets in which we operate grew in 2021 compared to the previous year. Sales increased by 31.1% in Italy, 24.6% in Germany, 15.1% in France and 17.7% in the United Kingdom. As far as non-EU countries are concerned, India rose by 28.2% (+32.4% on a like-for-like exchange rate basis), China by 28.8% (+25.2% on a like-forlike exchange rate basis), and Japan by +12.1% (+11.1% on a like-for-like exchange rate basis). South America grew by 22.0% (+31.2% on a like-for-like exchange rate basis) and North America (USA, Canada and Mexico) rose by 25.2% (+29.1% on a like-for-like exchange rate basis).
As for the different market segments in which Brembo operates, car applications increased by 22.1%, motorbike applications by 55.2% (+42.6% on a like-for-like consolidation basis) and commercial vehicles by 26.3%, whereas the racing sector — where we continue to play a central role in the world's most important championships each weekend — grew by 22.7%.
The entire automotive industry is undergoing a process of rapid evolution and transformation. From vehicle electrification to their digitalisation, Brembo is a leader in research into artificial intelligence, advanced software and data analysis. This results in the creation of products that are increasingly less "metallic" and increasingly dense with electronics and IT content.
These are the foundations that led Brembo to develop its revolutionary intelligent braking system, Sensify: a cutting-edge solution that calibrates braking on each wheel, further increasing safety and reducing emissions. With its launch on the market planned in early 2024, Sensify is an extremely concrete application of artificial intelligence and digital technology. It is a breakthrough for brake systems, much like that of ABS in the 1990s, and will presumably become a solution of reference for the Company.
The new smart braking system Sensify, the opening of the first Brembo Inspiration Lab in California marked by an approach to innovation that looks to the future without limits and the acquisitions of SBS Friction and J.Juan, which round out the range of high-tech brake systems in the strategic two-wheel market, reflect Brembo's position of global leadership.
Thanks to an increasingly close integration between products and services, Brembo continues to pursue its mission to be a Solution Provider, in order to support its partners in rising to the challenges and grasping the opportunities presented by a rapidly transforming automotive industry. In a context in which artificial intelligence, advanced software and big data play a decisive role, we are also looking closely to the world of video games and e-sports — sectors in which to develop innovative solutions and win over new enthusiasts among the very young by positioning the Brembo brand in digital competitions. As every year, Brembo is once again
development.
publishing its Consolidated Disclosure of Non-Financial Information. The document illustrates in detail Brembo's business model, its strategies and policies, as well as the actions implemented and the results achieved, in pursuing its sustainable economic growth, while taking account of the expectations of the stakeholders involved and seeking constant improvement of the environmental and social impacts of its activities.
Brembo reiterates its commitment to the environment by setting highly concrete goals — first of all, achieving carbon neutrality by 2040. This is an ambitious challenge to which for many years the Company has been committed in various areas, particulalry in the reduction of emissions and the responsible management of natural and energy resources.
The first months of 2022 were more than positive in terms of volumes and full utilisation of production capacity. We are also paying close attention to the developments of the Russia-Ukraine crisis. The direct impact on Brembo is modest, as it has no production sites in the area and the exposure to local customers is limited, nonetheless we are closely monitoring commodity supplies and production costs.
Building on our skills and sustained by the values that have been supporting us daily for over 60 years, we are convinced that we can continue to lead the technological transformation for which the automotive industry is preparing. We can't but look with confidence to the increasingly green and connected future that awaits us.
Matteo Tiraboschi
Brembo's strategic vision
Electrification, autonomous driving, digitalisation and sustainability are macro-trends that are transforming the automotive world and are at the centre of the strategies of the market's main players.
For Brembo, the time has come to open up new horizons and grasp the challenges posed by the great changes taking place. The Group has decided to embark on a path, based on its strategic vision "Turning Energy into Inspiration" and its mission of becoming a Solution provider. "Turning Energy into Inspiration" is the result of Brembo's unique experience in braking systems, acquired during sixty years of history lived in a competitive and ever-changing context. Becoming an authoritative Solution provider is the mission that aims to a high value-added integration of products and services so as to anticipate the new mobility paradigms.
The path that Brembo has outlined for its future rests on three pillars: Digital, Global and Cool Brand.
In 2021, the Group is committed to translating its new corporate purpose into practice through these three strategic pillars, engaging around a hundred individuals of various origins and background in ambitious and challenging projects.
Digital The world has entered the era of data-centric artificial intelligence applications. The ability to analyse and manage data is a crucial skill for continuing to grow and create innovation. Brembo's new strategic vision provides for the widespread dissemination of a solid data culture within the Group, with the goal of becoming an innovative Company that develops increasingly digital solutions.
Global With 23 production sites, 6 sales offices and 7 R&D centres in 15 countries throughout the world, Brembo is an international Group that pursues an innovation-driven globalisation process. Its strategic vision's objective is twofold: creating new centres of excellence for software, data science and artificial intelligence expertise in the main countries in which it operates, and bringing the Group's innovation even closer to its customers.
Cool Brand Brembo targets the new generations in particular, who look at the automotive sector from points of view that are different from the past. The goal is to become a reference brand for them and inspire them with the same passion that has driven the Company since its beginning. Thanks to its leadership in motorsport and high-performance, reduced-emissions technological solutions, Brembo intends to increasingly become a byword for unparalleled driving experience. At the heart of its new strategic vision, there is also a commitment to sustainability: a priority that Brembo has always pursued in all its activities, products and processes and in its relationship with employees, supply chains and territories.
| Chairman Emeritus (1) | |
|---|---|
| Chairman Emeritus | Alberto Bombassei |
| Board of Directors (2) | |
| Executive Chairman | Matteo Tiraboschi |
| Chief Executive Officer | Daniele Schillaci |
| Directors | Valerio Battista (3) (8) Cristina Bombassei (4) Laura Cioli (3) Nicoletta Giadrossi (3) (5) Elisabetta Magistretti (3) Umberto Nicodano (6) Elizabeth M. Robinson (3) Gianfelice Rocca (3) Roberto Vavassori (7) |
| Board of Statutory Auditors(9) | |
| Chairwoman | Raffaella Pagani (5) |
| Acting Auditors | Mario Tagliaferri Paola Tagliavini |
| Alternate Auditors | Myriam Amato (5) Stefania Serina |
| Independent Auditors | EY S.p.A. (10) |
Audit, Risk & Sustainability Committee (12) Laura Cioli (Chairwoman) Nicoletta Giadrossi Elisabetta Magistretti Remuneration & Appointments Committee Nicoletta Giadrossi (Chairwoman) Laura Cioli Elizabeth M. Robinson Supervisory Committee Giovanni Canavotto (Chairman) (13) Elisabetta Magistretti Alessandra Ramorino (14)
Registered offices: CURNO (BG) – Via Brembo 25 Share capital: €34,727,914.00 – Bergamo Register of Companies Tax code and VAT Code No. 00222620163
| 31.12.2017 | 31.12.2018 | 31.12.2019 | 31.12.2020 | 31.12.2021 | % 2021/2020 |
|---|---|---|---|---|---|
| 2,463,620 | 2,640,011 | 2,591,670 | 2,208,639 | 2,777,556 | 25.8% |
| 479,963 | 500,885 | 515,169 | 388,685 | 502,696 | 29.3% |
| 19.5% | 19.0% | 19.9% | 17.6% | 18.1% | |
| 346,262 | 345,064 | 318,539 | 181,135 | 287,981 | 59.0% |
| 14.1% | 13.1% | 12.3% | 8.2% | 10.4% | |
| 335,537 | 325,357 | 307,691 | 156,044 | 286,791 | 83.8% |
| 13.6% | 12.3% | 11.9% | 7.1% | 10.3% | |
| 263,428 | 238,349 | 231,301 | 136,533 | 215,537 | 57.9% |
| 10.7% | 9.0% | 8.9% | 6.2% | 7.8% | |
| (euro thousand) | 31.12.2017 | 31.12.2018 | 31.12.2019 | 31.12.2020 | 31.12.2021 | % 2021/2020 |
|---|---|---|---|---|---|---|
| Net invested capital (1) | 1,310,818 | 1,392,874 | 1,758,638 | 1,891,493 | 2,231,294 | 18.0% |
| Equity | 1,064,437 | 1,228,822 | 1,388,015 | 1,481,041 | 1,796,120 | 21.3% |
| Net financial debt (1) | 218,597 | 136,911 | 346,189 | 384,677 | 411,837 | 7.1% |
| (euro thousand) | 31.12.2017 | 31.12.2018 | 31.12.2019 | 31.12.2020 | 31.12.2021 | % 2021/2020 |
|---|---|---|---|---|---|---|
| Personnel at end of year (No.) | 9,837 | 10,634 | 10,868 | 11,039 | 12,225 | 10.7% |
| Turnover per employee | 250.4 | 248.3 | 238.5 | 200.1 | 227.2 | 13.6% |
| Net investments | 356,241 | 285,575 | 247,336 | 187,815 | 236,175 | 25.7% |
| 31.12.2017 | 31.12.2018 | 31.12.2019 | 31.12.2020 | 31.12.2021 | ||
|---|---|---|---|---|---|---|
| Net operating income/Revenue from contracts with customers |
14.1% | 13.1% | 12.3% | 8.2% | 10.4% | |
| Income before taxes/Revenue from contracts with customers |
13.6% | 12.3% | 11.9% | 7.1% | 10.3% | |
| Net investments/Revenue from contracts with customers |
14.5% | 10.8% | 9.5% | 8.5% | 8.5% | |
| Net financial debt/Equity | 20.5% | 11.1% | 24.9% | 26.0% | 22.9% | |
| Adjusted net interest expense(*)/Revenue from contracts with customers |
0.4% | 0.5% | 0.6% | 0.8% | 0.3% | |
| Adjusted net interest expense (*)/Net operating income |
2.7% | 4.0% | 4.5% | 9.4% | 3.4% | |
| ROI | 26.4% | 24.8% | 18.1% | 9.6% | 12.9% | |
| ROE | 25.2% | 19.7% | 17.3% | 9.3% | 12.0% |
Notes:
ROI: Net operating income (rolling 12 months)/Net invested capital
ROE: Net income (loss) before minority interests (rolling 12 months) (net of Result from discontinued operations)/Equity.
(*) This item does not include exchange gains and losses.
(1) It bears recalling that the Group adopted the new IFRS 16 effective 1 January 2019.
Sustainable mobility is the present and future. In a changing world, evolution takes the form of surprising ideas and unexplored horizons for a revolutionary new sensibility.
To correctly assess Brembo's performance in 2021, it is essential to consider the world macroeconomic scenario, specifically for the markets in which the Group operates.
In a context dominated by uncertainty, through the WEO (World Economic Outlook), its publication of reference for evaluating the evolution of the global economy, the IMF (International Monetary Fund) revised global economy upward for both 2022 and 2023. Nonetheless, the global economy entered 2022 in a weaker position than previously expected. As the new Omicron Covid-19 variant spread, countries reimposed mobility restrictions. Rising energy prices and supply disruptions resulted in higher and more broad-based inflation than anticipated, notably in the United States and many emerging market economies. The ongoing retrenchment of China's real estate sector and slower-thanexpected recovery of private consumption also have limited growth prospects. Global growth is expected to moderate from 5.9% in 2021 to 4.4% in 2022 — lower than previously forecast in the October WEO — largely reflecting forecast markdowns in the two largest economies. In China, pandemic-induced disruptions related to the zero-tolerance Covid-19 policy and protracted financial stress among property developers have induced a 0.8 percentage-point downgrade. Global growth is expected to slow to 3.8% in 2023. Although this is 0.2 percentage point higher than in the previous forecast, the upgrade largely reflects a mechanical pickup after current drags on growth dissipate in the second half of 2022. The forecast is conditional on adverse health outcomes declining to low levels in most countries by end-2022, assuming vaccination rates improve worldwide and therapies become more effective. Elevated inflation is expected to persist for longer than envisioned in the October WEO, with ongoing supply chain disruptions and high energy prices continuing in 2022.
With regard to the Eurozone, the January update forecast a 2021 recovery at +5.2%. The IMF revised its growth estimates for 2021 in Germany, France and Spain. Germany's economy is expected to grow by 2.7% in 2021 and by 3.8% in 2022. Growth is instead expected to drop to 2.5% in 2023. France's GDP is estimated to grow by 6.7% in 2021, to then reach +3.5% in 2022 and +1.8% in 2023. According to the IMF, Spain's GDP is forecast to grow by 4.9% in 2021, 5.8% in 2022, and +3.8% in 2023. The IMF expects a recovery of the UK economy in 2021 and 2022, with a growth of +7.2% and +4.7%, respectively, followed by a decline of growth to +2.3% again in 2023. Economic indicators point to a weakening of economic prospects in the Eurozone. The economic sentiment indicator marks a further decline in confidence (from 116.6 to 114.5) for the second consecutive month, attributable to concerns relating to the continuation of the pandemic. The manufacturing PMI fell from 58.4 to 58.0 in December 2021 and that for services from 55.9 to 53.1, confirming a slowdown in activity in a context marked by energy and supply chain tensions. Worldwide, employment remains below
pre-pandemic levels, reflecting a mix of negative outputs: concerns among workers of infections in the workplace in high-contact occupations, childcare constraints, changes in the demand for labour with increased automation in some sectors, replacement income through redundancy schemes or unemployment benefits that help to amortise lost income or job-search frictions. The Federal Reserve began to end its expansionary measures and this is reflected on rates and spreads in the Eurozone, although the ECB is keeping its policy unchanged: the BTP rose to 1.22% in January (from 0.97%), albeit remaining low and without consequences for the cost of credit (1.1% for companies).
After a smaller-than-expected decline in 2020, when GDP fell by 8.9%, the Italian economy grew by 6.2% in 2021. The IMF revised downwards its growth estimates for Italy's GDP, among others, for 2022, forecasting GDP growth of +3.8%, a decrease of 0.4 percentage points on the October outlook. The forecasts for 2023 were improved to 2.2%, 0.6 percentage points higher than the previous outlook. Investments in Italy slowed already in the third quarter of 2021 (+1.6% compared to +2.4% in the second quarter). For the fourth quarter, companies' opinions of investment conditions decreased (balance from +24.4 to +6.7), whereas expectations regarding economic conditions declined in the first quarter of 2022. They are held back by both low margins, eroded by commodities, and the very uncertain environment, despite the boost provided by the NRRP and incentives, above all in the construction sector.
In the United States, the 2021 figures were moderately positive, with a 5.6% increase. The increase in US GDP is expected to amount to 4% in 2022, weighed down by the US government 's difficulties in obtaining approval of the Build Back Better plan, the early end of the Federal Reserve's accommodating monetary policy and the supply shortage. In December 2021, the Federal Reserve cut its GDP growth forecast for the 2022-2023 period (-0.5%, cumulative). On the other hand, 2021 ended with an unexpected decline in industrial production (-0.1%), confirming the slowdown after the summer peak, a trend that can also be seen from the decline in the manufacturing PMI (57.7 in January from 58.3), manufacturing ISM index (57.5 from 61.1) and other local indicators. In December, retail sales declined (-1.9%), even though unemployment returned to near pre-pandemic levels (3.9%). Consumer confidence also fell (Michigan index at 68.8, down from 70.6).
In Japan, the IMF estimates a growth of 1.6% in 2022, due in this case as well to the boost ensured by the budget measures introduced at the end of the year. In the second half of 2022, Japan's economy is expected to report its most robust recovery in decades, buoyed by the gradual easing of the pressures exerted by the Covid-19 pandemic. This is the scenario also forecast by the economists consulted by Japan's Centre for Economic Research, who estimate that the world's numberthree economy will grow by 3.3% in the next fiscal year, to then decline again to +1.8% in 2023.
During a panel to present the Global Economic Outlook at the World Economic Forum, the IMF's managing director Kristalina Georgieva said that the growth slowdown of the Chinese economy is having an impact on the world at large. Another important fact is the political tension between China and the US, a key obstacle destined to persist under the administration of President Joe Biden. Despite the pandemic that began in Wuhan two years ago, China was the only major economy that did not experience recession in 2020 with 2.3% growth according to the IMF, rising to 8.1% in 2021. However, in the two-year period 2022-2023 growth is expected to decline sharply to +4.8% in 2022, to then recover slightly to 5.2% in 2023.
Mention should be made of the IMF's revision of its growth estimates for the Indian economy, which after marking -7.3% in 2020, resumed growth, reaching +9% in 2021 and 2022, with a slight slowdown in 2023 (+7.1%). In 2021, the Russian economy also recovered from the crisis (+4.5%) compared to its 2020 levels (-2.7%). However, the IMF's experts forecast a further decline in 2022-2023, for which they estimate +2.8% and +2.1%, respectively. Brazil ended 2021 with 4.7% economic growth, although the forecasts weakened for 2022-2023 (0.3% and 1.6%, respectively).
Fossil fuel prices nearly doubled over the last year, driving up energy costs and causing higher inflation, above all in Europe (simple average of the prices of UK Brent, Dubai Fateh and West Texas Intermediate crude oil of \$69.07 a barrel in 2021, with a forecast of \$77.31 in 2022 and of \$71.29 in 2023).
In 2021, the US dollar opened the period reaching a high of 1.2338 on 6 January. Subsequently, the currency entered a phase of prolonged appreciation, falling under 1.18 at the end of March. It then depreciated back above 1.22 near the end of May. Subsequently, the currency once again reversed course to appreciate markedly to reach 1.1206 (24 November), the low for the period. At the end of 2021, the US dollar depreciated slightly, closing the year at 1.1326, below the average for the period of 1.1835.
Turning to the currencies of the other main markets in which Brembo operates at the industrial and commercial level, the pound sterling began 2021 by reaching its peak for the period at 0.9064 (6 January) to then enter a phase of very sharp appreciation that brought it to around 0.85 near the end of March. After depreciating slightly, the currency then moved within a lateral channel, to appreciate markedly near the end of September, reaching a low for the period of 0.8392 (22 November). At the end of the year, the currency had a significant volatile phase, closing at 0.8403, below the average for the period of 0.8600.
The Polish zloty opened the period at around 4.55 to then depreciate sharply in the first quarter of 2021, bringing the rate at above 4.65 near the end of March. The currency then appreciated sharply, reaching a low for the period of 4.4520 (3 June). Subsequently, the currency depreciated constantly, alternating with some brief phases of appreciation, culminating in the high for the period of 4.7119 on 23 November. In December, the Polish zloty appreciated again, closing at 4.5969, above the average for the period of 4.5640.
The Czech koruna opened the reporting period with a phase of appreciation that brought it below 25.8. The currency then depreciated sharply, reaching the high for the period of 26.4170 (8 March). The currency then appreciated markedly to below 25.4 around mid-June. Afterwards, it moved laterally within a range of 25.40-25.80, followed by further appreciation to below 25.20 in early November. At the end of the year, the currency depreciated, followed immediately by sharp appreciation, which brought it to the low for the period of 24.8580 (31 December). The average for the period was 25.6468.
The Swedish krona began the period below 10.10 and, after a brief lateral phase, appreciated slightly near the end of February. The currency then depreciated markedly, followed by a lateral phase and further depreciation, which brought it to over 10.30 around mid-August. The krona then appreciated markedly to the low for the year of 9.8973 (2 November). At the end of 2021, it underwent further sharp depreciation to the high for the year of 10.3315 (21 December), to close at 10.2503, in line with the average for the period of 10.1448.
The Danish krone opened the period at around 7.4380 to then depreciate slightly. Subsequently, it appreciated, bringing the rate below 7.4370 near mid-February. After a long lateral movement that lasted several months, the currency depreciated slightly near early July. It then immediately reversed its trend, reaching its low of the period on 20 September (7.4359). In the fourth quarter of 2021, the krone depreciated to the high for the period of 7.4413 (8 October). At the end of the year, the trend was reversed, leading it to close at 7.4364, in line with the average for the period of 7.4371.
In the East, the Japanese yen began the period by appreciating to a low for the period of 125.1800 on 18 January. The currency then reversed course, depreciating strongly and constantly to a high for the period of 134.0500 (1 June). Subsequently, the currency reversed course, appreciating constantly to under 128.00 near mid-August. The currency then depreciated again to above 133.00, followed by further appreciation around the end of the year to close at 130.3800, slightly above the average for the period of 129.8575.
The Chinese yuan/renminbi opened 2021 at its high for the period of 7.9653 on 6 January. The currency then underwent constant, prolonged appreciation — a trend that continued throughout the entire reporting period. The currency then reached a low for the period of 7.1600 (24 November) to end the year with a slight depreciation to 7.1947, below the average for the period of 7.6340.
The Indian rupee opened the reporting period at around 90.00, to then appreciate sharply, bringing the rate below 86.00 at the end of March. It then reversed course sharply and decisively, reaching a high for the period of 90.5955 (21
April). The currency then appreciated slowly but constantly throughout the remainder of the period, reaching a low for the period of 83.4390 (24 November). At year-end, the rupee depreciated slightly, closing at 84.2292, below the average for the period of 87.4861.
In the Americas, the Brazilian real opened the period at around 6.40 to then depreciate to a high of 6.9553 (9 March). The currency then sharply reversed course, with a sharp, extended appreciation, driving the rate to a low for the period of 5.8635 (25 June). Afterwards, the real depreciated to above 6.60 around the end of October, followed by further appreciation. At yearend, the currency depreciated slightly, reaching a closing rate of 6.3101, compared to an average for the period of 6.3813.
The Mexican peso opened 2021 by appreciating slightly to below 24, to then reverse direction and reach a high for the period of 25.5759 (8 March). Subsequently, the currency appreciated again to below 24 at the end of March. The currency then entered a lateral phase, followed by slight appreciation, which brought it below 23.50 around early July. The currency then moved in a lateral phase once more to end the year with depreciation, followed by sharp appreciation, leading it to close at 23.1438, below the average for the period of 23.9903.
The Russian rouble began 2021 by appreciating slightly, but then reversed direction, driving the rate to a high for the period of 92.3842 on 28 January. The rouble then appreciated sharply to below 87 near mid-March, to then reversing course to above 92 around mid-April. In the latter phases of the reporting period, the currency entered an extended period of appreciation, reaching a low of 80.6417 (26 October). Near the end of the year, the currency depreciated bringing the rate to end the year at 85.3004, with an average for the period of 87.2321.
Brembo is the world leader and acknowledged innovator of the brake disc technology for automotive vehicles. It currently operates in 15 countries on 3 continents, through its production and business sites, and employs over 12,000 people worldwide. Manufacturing plants are located in Italy, Poland (Częstochowa, Dąbrowa Górnicza, Niepołomice), the United Kingdom (Coventry), the Czech Republic (Ostrava-Hrabová), Germany (Meitingen), Denmark (Svendborg), Spain (Barcelona), Mexico (Apodaca and Escobedo), Brazil (Betim), China (Nanjing, Langfang, Jiaxing), India (Pune) and the United States (Homer). Other companies located in Spain (Zaragoza), Sweden (Göteborg), Germany (Leinfelden-Echterdingen), China (Qingdao), Japan (Tokyo) and Russia (Moscow) carry out distribution and sales activities. Brembo's reference market is represented by the most important manufacturers of cars, motorbikes, commercial vehicles and racing cars and motorbikes. Constant focus on innovation, as well as technological and process development — factors that have always been fundamental to Brembo's philosophy — have earned the Group a strong international leadership position in the research, design and production of high-performance braking systems for a wide range of road and racing vehicles. Brembo operates in both the original equipment market and the aftermarket. Brembo's range of products for car and commercial vehicle applications includes brake discs, brake calipers, the side-wheel module and, increasingly often, the complete braking system, including integrated engineering services. All of these back the development of new models produced by vehicle manufacturers. In addition to brake discs and brake calipers, motorbike manufacturers are also offered brake master cylinders, light-alloy wheels, brake hoses and complete braking systems. In the car aftermarket, Brembo offers in particular brake discs, in addition to pads, drums, brake shoes, drum-brake kits and hydraulic components: a vast and reliable range of products that allows the Company to meet the needs of nearly all European vehicles.
In 2021, Brembo's consolidated net sales amounted to €2,777,556 thousand, up 25.8% compared to €2,208,639 thousand in 2020.
Information on the performance of the individual applications and their related markets — as available to the Company — is provided under the following headings.
Passenger Cars
The global light vehicle market closed 2021 with an overall 4.6% increase in sales compared to 2020, mainly driven by the growth in the Chinese and U.S. markets.
The Western European market (EU14+EFTA+United Kingdom) reported a 1.5% decline in car registrations compared to 2020. All the main markets closed the year on a positive note, with the exception of Germany (-10.1%): +5.5% in Italy, +0.5% in France, +1.0% in Spain, and +1.0% in the UK. The trend was also positive in Eastern Europe (EU12), with car registrations up 1.5% compared to 2020. In Russia, light vehicle registrations closed 2021 with a 4.3% increase in sales compared to the previous year.
In 2021, light vehicles sales in the United Stated grew by 2.8% overall compared to 2020. Sales of light vehicles in Brazil and Argentina also grew by 2.4% overall.
With reference to Asian markets, China closed 2021 on a positive note, with sales of light vehicles at +4.3% compared to 2020, thus remaining the number-one market in the world. By contrast, Japan recorded a negative trend, ending 2021 with a 3.1% decrease in sales.
Within this scenario, Brembo's net sales of car applications in 2021 amounted to €2,022,225 thousand, accounting for 72.8% of the Group's turnover, up by 22.1% compared to 2020.
Europe, the United States and Japan are Brembo's three most important markets in the motorbike sector.
In 2021, the five main European countries witnessed a 7.8% increase in registrations compared to 2020, with Italy reporting the strongest growth at +23.6%, followed by the United Kingdom at +10.2%, France at +8.5% and Spain at +8.0%, while Germany decreased by 9.7%.
In 2021, in the United States registrations of motorbikes, scooters and ATVs (All Terrain Vehicles, quadricycles for recreation and work) declined by 0.6% overall compared to 2020. The overall decline was attributable to ATV registrations (down 18.6% compared to 2020), while motorbikes and scooters together closed the year at +9.1%.
In 2021, the Japanese market (considering displacements above 50cc overall) showed a 22.0% increase compared to the previous year, whilst the Indian market (motorbikes and scooters together) rose by 2.0%. In Brazil, registrations grew by 26.4% overall compared to 2020.
In this context, Brembo's net sales of motorbike applications amounted to €330,618 thousand in 2021, up 55.2% (42.6% on a like-for-like consolidation basis) compared to €212,983 thousand for 2020.
(+5.6%), France (+5.5%), Italy (+22.3%) and Spain (+8.1%). In Eastern European countries, sales of commercial vehicles over 3.5 tonnes declined by 32.8% compared to the previous year. In 2021, Brembo's net sales of applications in this segment amounted to €293,933 thousand, up 26.3% compared to €232,759 thousand for 2020.
In the racing sector, where Brembo has maintained undisputed supremacy for years, the Group operates through three leading brands: Brembo Racing, braking systems for race cars and motorbikes; AP Racing, braking systems and clutches for race cars; Marchesini, magnesium and aluminium wheels for racing motorbikes.
In 2021, Brembo's net sales of applications in this segment amounted to €130,750 thousand, up by 22.7% compared to €106,604 thousand for 2020.
In 2021, the European commercial vehicles market (EU+EFTA) — Brembo's reference market — showed a 9.6% increase in registrations.
In the reporting period, sales of light commercial vehicles (up to 3.5 tonnes) in Europe increased by 8.5% compared to 2020, with a different performance by sales volume in the main markets: Germany and Spain declined by 4.0% and 0.8%, respectively, while Italy and France grew by 7.5% and 14.7%, respectively.
In Europe, the segment of medium and heavy commercial vehicles (over 3.5 tonnes) increased by 16.8% in 2021 compared to the previous year. Among the first four European markets by sales volume, a positive performance was reported by Germany
| (euro thousand) | 31.12.2021 | % | 31.12.2020 | % | Change | % |
|---|---|---|---|---|---|---|
| Italy | 321,144 | 11.6% | 244,932 | 11.1% | 76,212 | 31.1% |
| Germany | 499,512 | 18.0% | 400,738 | 18.2% | 98,774 | 24.6% |
| France | 94,332 | 3.4% | 81,963 | 3.7% | 12,369 | 15.1% |
| United Kingdom | 181,732 | 6.5% | 154,396 | 7.0% | 27,336 | 17.7% |
| Other European countries | 344,050 | 12.4% | 272,193 | 12.3% | 71,857 | 26.4% |
| India | 93,401 | 3.4% | 72,880 | 3.3% | 20,521 | 28.2% |
| China | 435,755 | 15.7% | 338,447 | 15.3% | 97,308 | 28.8% |
| Japan | 26,044 | 0.9% | 23,237 | 1.1% | 2,807 | 12.1% |
| Other Asian countries | 45,346 | 1.6% | 30,723 | 1.4% | 14,623 | 47.6% |
| South America (Argentina and Brazil) | 39,033 | 1.4% | 31,983 | 1.4% | 7,050 | 22.0% |
| North America (USA, Mexico and Canada) | 679,666 | 24.5% | 542,729 | 24.5% | 136,937 | 25.2% |
| Other countries | 17,541 | 0.6% | 14,418 | 0.7% | 3,123 | 21.7% |
| Total | 2,777,556 | 100.0% | 2,208,639 | 100.0% | 568,917 | 25.8% |
| (euro thousand) | 31.12.2021 | % | 31.12.2020 | % | Change | % |
|---|---|---|---|---|---|---|
| Passenger Car | 2,022,225 | 72.8% | 1,655,696 | 75.1% | 366,529 | 22.1% |
| Motorbike | 330,618 | 11.9% | 212,983 | 9.6% | 117,635 | 55.2% |
| Commercial Vehicle | 293,933 | 10.6% | 232,759 | 10.5% | 61,174 | 26.3% |
| Racing | 130,750 | 4.7% | 106,604 | 4.8% | 24,146 | 22.7% |
| Miscellaneous | 30 | 0.0% | 597 | 0.0% | (567) | -95.0% |
| Total | 2,777,556 | 100.0% | 2,208,639 | 100.0% | 568,917 | 25.8% |
Sales Breakdown by Application
| (euro thousand) | 31.12.2021 | 31.12.2020 | Change | % |
|---|---|---|---|---|
| Revenue from contracts with customers | 2,777,556 | 2,208,639 | 568,917 | 25.8% |
| Cost of sales, operating costs and other net charges/income (*) | (1,783,561) | (1,405,317) | (378,244) | 26.9% |
| Income (expense) from non-financial investments | 15,318 | 10,392 | 4,926 | 47.4% |
| Personnel expenses | (506,617) | (425,029) | (81,588) | 19.2% |
| GROSS OPERATING INCOME | 502,696 | 388,685 | 114,011 | 29.3% |
| % on revenue from contracts with customers | 18.1% | 17.6% | ||
| Depreciation, amortisation and impairment losses | (214,715) | (207,550) | (7,165) | 3.5% |
| NET OPERATING INCOME | 287,981 | 181,135 | 106,846 | 59.0% |
| % on revenue from contracts with customers | 10.4% | 8.2% | ||
| Net interest income (expense) and interest income (expense) from investments |
(1,190) | (25,091) | 23,901 | -95.3% |
| RESULT BEFORE TAXES | 286,791 | 156,044 | 130,747 | 83.8% |
| % on revenue from contracts with customers | 10.3% | 7.1% | ||
| Taxes | (70,752) | (17,802) | (52,950) | 297.4% |
| Result from discontinued operations | (153) | (304) | 151 | -49.7% |
| RESULT BEFORE MINORITY INTERESTS | 215,886 | 137,938 | 77,948 | 56.5% |
| % on revenue from contracts with customers | 7.8% | 6.2% | ||
| Minority interests | (349) | (1,405) | 1,056 | -75.2% |
| NET RESULT | 215,537 | 136,533 | 79,004 | 57.9% |
| % on revenue from contracts with customers | 7.8% | 6.2% | ||
| BASIC AND DILUTED EARNINGS PER SHARE (euro) | 0.67 | 0.42 |
(*) The item is obtained by adding the following items of the Consolidated Statement of Income: "Other revenues and income", "Costs for capitalised internal works", "Raw materials, consumables and goods" and "Other operating costs".
In 2021, Brembo's net sales amounted to €2,777,556 thousand, marking a 25.8% increase compared to 2020, partly arising from the rebound effect compared to the previous year, which had been impacted by the Covid-19 pandemic. On a like-for-like consolidation basis — thus excluding the contribution of SBS Friction A/S and the J.Juan Group from the results for 2021 the Group's sales grew by 24.5%.
The car applications sector, which accounted for 72.8% of the Group's sales, closed 2021 with a +22.1% increase compared to the previous year. Similarly, all other applications sharply recovered compared to 2020: applications for commercial vehicles closed at +26.3%, motorbike applications at +55.2% (+42.6% on a like-for-like consolidation basis), and racing applications at +22.7%.
At geographical level, and with specific reference to Europe, Germany reported a 24.6% growth compared to 2020. The other European countries also reported positive results, with France up by 15.1%, Italy by 31.1% and the United Kingdom by 17.7%. Sales also rose by 25.2% in North America and by 22.0% in South America. In the Far East, China increased by 28.8% compared to 2020. Results grew also in India (+28.2%) and Japan (+12.1%).
In 2021, the cost of sales and other net operating costs amounted to €1,783,561 thousand, with a 64.2% ratio to sales, up compared to 63.6% for the previous year. Within this item, costs for capitalised internal works included in intangible assets amounted to €23,189 thousand compared to €22,573 thousand for 2020.
Income (expense) from non-financial investments amounted to €15,318 thousand and was attributable to the effects of valuing the investment in the BSCCB Group using the equity method (€10,392 thousand in 2020).
Personnel expenses for 2021 amounted to €506,617 thousand, with a 18.2% ratio to sales, down compared to the previous year (19.2%). At 31 December 2021, workforce numbered 12,225 (11,039 at 31 December 2020).
Gross operating income for 2021 was €502,696 thousand compared to €388,685 thousand in the previous year, with an 18.1% ratio to sales (17.6% in 2020).
Net operating income amounted to €287,981 thousand (10.4% of sales), compared to €181,135 thousand (8.2% of sales) in 2020, after depreciation, amortisation and impairment losses of property, plant and equipment and intangible assets of €214,715 thousand, compared to depreciation, amortisation and impairment losses amounting to €207,550 thousand in 2020.
Net interest expense amounted to €5,218 thousand (€25,212 thousand in 2020) and consisted of net exchange gains of €4,439 thousand (net exchange losses of €8,118 thousand in 2020) and other net interest expense of €9,657 thousand (€17,094 thousand in 2020).
Net interest income from investments, which amounted to €4,028 thousand (€121 thousand in 2020), was chiefly attributable to the effects of valuing investments in associates using the equity method and dividends received by investees not included in the consolidation area.
Result before taxes was positive at €286,791 thousand, up 83.8% compared to €156,044 thousand for the previous year. Estimated taxes amounted to €70,752 thousand, with a tax rate of 24.7% (11.4% in 2020), chiefly due to the Patent Box relief measure.
The result from discontinued operations, negative for €153 thousand, was attributable to the contribution of the company Brembo Argentina S.A. in dissolution and winding up procedure, reclassified to this item following the Group's decision, taken in June 2019, to discontinue its industrial operations at the Buenos Aires plant.
The Group's net result was €215,537 thousand (7.8% of sales), up 57.9% compared to €136,533 thousand for the previous year (6.2% of sales).
| (euro thousand) | 31.12.2021 | 31.12.2020 | Change |
|---|---|---|---|
| Property, plant and equipment | 1,274,733 | 1,183,280 | 91,453 |
| Intangible assets | 297,319 | 219,567 | 77,752 |
| Financial assets/liabilities | 365,352 | 261,210 | 104,142 |
| Other receivables and non-current liabilities | 92,845 | 80,082 | 12,763 |
| Fixed capital | 2,030,249 | 1,744,139 | 286,110 |
| 16.4% | |||
| Inventories | 482,924 | 354,887 | 128,037 |
| Trade receivables | 468,222 | 385,439 | 82,783 |
| Other receivables and current assets | 136,162 | 119,315 | 16,847 |
| Current liabilities | (802,011) | (640,924) | (161,087) |
| Provisions/deferred taxes | (84,144) | (71,286) | (12,858) |
| Hedging assets/liabilities | (29) | 0 | (29) |
| Net working capital | 201,124 | 147,431 | 53,693 |
| 36.4% | |||
| Net invested capital from discontinued operations | (79) | (77) | (2) |
| NET INVESTED CAPITAL | 2,231,294 | 1,891,493 | 339,801 |
| 18.0% | |||
| Equity | 1,796,120 | 1,481,041 | 315,079 |
| Employees' leaving entitlement and other personnel provisions | 23,992 | 26,567 | (2,575) |
| Medium/long-term financial debt | 721,639 | 736,588 | (14,949) |
| Short-term net financial debt | (309,802) | (351,911) | 42,109 |
| Net financial debt | 411,837 | 384,677 | 27,160 |
| 7.1% | |||
| Net financial debt from discontinued operations | (655) | (792) | 137 |
| COVERAGE | 2,231,294 | 1,891,493 | 339,801 |
| 18.0% |
The Group's Statement of Financial Position reflects reclassifications of consolidated accounting statements, as described in the following pages. In detail:
Net Invested Capital at 31 December 2021 amounted to €2,231,294 thousand, up by €339,801 thousand compared to €1,891,493 thousand at 31 December 2020.
Net financial debt for 2021 amounted to €411,837 thousand compared to €384,677 thousand at 31 December 2020. Net financial debt increased by €27,160 thousand in the year, mainly due to the combined effect of the following factors:
The Explanatory Notes to the Consolidated Financial Statements provide detailed information on the financial position and its assets and liabilities items.
(euro million)
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| NET FINANCIAL POSITION AT BEGINNING OF YEAR (*) | (384,677) | (346,189) |
| Net operating income | 287,981 | 181,135 |
| Depreciation, amortisation and impairment losses | 214,715 | 207,550 |
| Gross operating income | 502,696 | 388,685 |
| Investments in property, plant and equipment | (210,248) | (162,052) |
| of which right of use assets | (26,407) | (37,755) |
| Investments in intangible assets | (31,789) | (28,273) |
| Investments in financial assets | (168) | (182,862) |
| Disposals | 5,862 | 2,510 |
| Amounts (paid)/received for the acquisition/disposal of subsidiaries, net of the net financial position |
(116,908) | 0 |
| Net investments | (353,251) | (370,677) |
| Change in inventories | (108,167) | (23,913) |
| Change in trade receivables | (57,760) | 4,387 |
| Change in trade payables | 99,173 | 910 |
| Change in other liabilities | 19,836 | 10,028 |
| Change in receivables from others and other assets | (4,371) | (10,857) |
| Translation reserve not allocated to specific items | 22,468 | (16,379) |
| Change in working capital | (28,820) | (35,824) |
| Change in provisions for employee benefits and other provisions | 3,498 | 46,461 |
| Operating cash flows | 124,123 | 28,645 |
| Interest income and expense | (991) | (24,794) |
| Result from discontinued operations | (153) | (304) |
| Current taxes paid | (63,625) | (48,873) |
| Dividend paid in the year to minority shareholders | (640) | (640) |
| Interest (income)/expense from investments, net of dividends received | (298) | (303) |
| Dividends paid in the year | (71,132) | 0 |
| Net cash flows | (12,717) | (46,269) |
| Effect of translation differences on net financial position | (14,443) | 7,781 |
| NET FINANCIAL POSITION AT END OF YEAR (*) | (411,837) | (384,677) |
(*) See Note 13 of the Explanatory Notes to the Consolidated Financial Statements for a reconciliation with financial statements data.
Brembo's Directors have identified some alternative performance measures ("APMs") in the previous paragraphs, in order to provide a better understanding of the Brembo Group's operating and financial performance. These indicators are also tools that help the Directors to identify operating trends and take decisions about investments, allocation of resources and other operating decisions.
The following points enable a correct interpretation of the abovementioned APMs:
The APMs indicated below have been selected and represented in the Directors' Report on Operations since the Group deems that:
Brembo S.p.A.'s headquarters are located in Italy, Curno (Bergamo).
| Ap Racing Ltd. | |
|---|---|
| Brembo Deutschland GmbH Brembo SGL Carbon Ceramic Brakes GmbH |
|
| Brembo S.p.A. La.Cam S.r.l. Brembo SGL Carbon Ceramic Brakes S.p.A. Petroceramics S.p.A. Infibra Technologies S.r.l. |
|
| Brembo North America Inc. Brembo Inspiration Lab Corp. |
|
| J.Juan Group – Spain Corporación Upwards '98 S.A. |
|
| Brembo México S.A. de C.V. Brembo do Brasil Ltda. |
|
| 15 23 Countries Manufacturing in the world sites |
7 Research and Development |
centres
Production sites
Commercial sites Research & Development centres
The following figures were taken from the accounting situations and/or draft financial statements prepared by the companies in accordance with IAS/IFRS and approved by the respective Boards of Directors.
Curno (Italy)
Activities: analysis, design, development, application, production, assembly and sale of braking systems, light alloy castings for various sectors, including the car and motorbike industries.
The year 2021 closed with net sales amounting to €1,021,345 thousand, up 25.3% compared to €815,087 thousand in 2020. The item "Other revenues and income" amounted to €41,250 thousand in 2021 compared to €43,243 thousand in 2020, whereas capitalised development costs for the year totalled €18,621 thousand.
Gross operating income went from €102,293 thousand (12.5%
of sales) in 2020 to €153,089 thousand (15.0% of sales) in 2021, whereas net operating income, after depreciation, amortisation and impairment losses of property, plant, equipment and intangible assets amounting to €64,107 thousand, closed at €88,981 thousand compared to €37,980 thousand for the previous year.
Net interest expense from financing activities amounted to €1,084 thousand compared to €9,137 thousand for 2020. Income from investments amounted to €48,539 thousand and was mainly attributable to the distribution of dividends by some subsidiaries.
In the reporting year, net income amounted to €111,229 thousand, compared to €85,505 thousand in 2020.
At 31 December 2021, workforce numbered 3,101, increasing by 60 compared to 3,041 at the end of 2020.
AP Racing Ltd.
Coventry (United Kingdom)
Activities: production and sale of braking systems and clutches for road and racing vehicles.
AP Racing is the market leader in the production of brakes and clutches for racing cars and motorbikes.
The company designs, assembles and sells cutting-edge, hightech products throughout the world for the main F1, GT, Touring and Rally teams. It also produces and sells original equipment brakes and clutches for prestige car manufacturers.
Net sales amounted to GBP 43,485 thousand (€50,564 thousand) in 2021, compared to GBP 35,609 thousand (€40,046 thousand) in 2020. In the reporting year, net income amounted to GBP 3,631 thousand (€4,222 thousand), compared to GBP 1,808 thousand (€2,033 thousand) in 2020.
At 31 December 2021, workforce numbered 143, four more than at the end of 2020.
Pune (India)
Activities: development, production and sale of braking systems for motorbikes.
The company is based in Pune, India, and was originally set up in 2006 as a joint venture held in equal stakes by Brembo S.p.A. and the Indian company Bosch Chassis Systems India Ltd. Since 2008, the company has been wholly owned by Brembo S.p.A.
In 2021, net sales totalled INR 10,227,621 thousand (€116,906 thousand), with a net income of INR 1,039,048 thousand (€11,877 thousand). In 2020, net sales had amounted to INR 7,153,315 thousand (€84,575 thousand), with a net income of INR 602,703 thousand (€7,126 thousand).
At 31 December 2021, workforce numbered 963, compared to 821 in the previous year.
Ostrava-Hrabová (Czech Republic)
The company was formed in 2009 and started its production activity in 2011. It carries out the casting, processing and assembly of brake calipers and other aluminium components. In 2021, net sales amounted to CZK 5,317,719 thousand (€207,344 thousand) compared to CZK 4,629,197 thousand (€174,981 thousand) in 2020, closing the year with a net loss of CZK 241,845 thousand (€9,430 thousand) compared to a net loss of CZK 366,421 thousand (€13,851 thousand) in 2020. At 31 December 2021, workforce numbered 975, 36 fewer than the previous year.
Leinfelden – Echterdingen (Germany)
Activities: purchase and resale of vehicles, technical and sales services, as well as promotion of the sale of car brake discs.
The company, which is 100% owned by Brembo S.p.A., was formed in 2007. It specialises in buying cars for tests and encouraging and simplifying communications between Brembo and its German customers in the various phases of project planning and management. It also promotes the sale of brake discs for the car aftermarket only.
At 31 December 2021, net sales amounted to €2,418 thousand (€2,157 thousand for 2020), with a net income of €777 thousand (€707 thousand for 2020).
At 31 December 2021, workforce numbered nine, increasing by one compared to the same date of the previous year.
Activities: production and sale of brake discs for the original equipment market.
The company is headquartered in Betim, Minas Gerais, and specialises in the manufacturing and sales of car brake discs in the South American OE market.
Net sales for 2021 amounted to BRL 231,602 thousand (€36,294 thousand), with a net income of BRL 18,668 thousand (€2,925 thousand). In 2020, net sales had amounted to BRL 180,649 thousand (€30,670 thousand), with a net loss of BRL 155 thousand (€26 thousand).
At 31 December 2021, workforce numbered 203, compared to 221 at the same date of the previous year.
Langfang (China)
In 2016, Brembo S.p.A. acquired a 66% stake in Brembo Huilian (Langfang) Brake Systems Co. Ltd. (formerly Asimco Meilian Braking Systems (Langfang) Co. Ltd.), a Chinese company that owns a foundry and a plant for the manufacturing of cast-iron brake discs. This company supplies local car manufacturers, mainly including joint ventures among Chinese firms and European and U.S. top players. The remaining 34% of the share capital continued to be owned by the public company Langfang Assets Operation Co. Ltd., controlled by the Municipality of Langfang. The consideration for the transaction amounted to CNY 580,060 thousand (approximately €79.6 million).
Net sales amounted to CNY 549,155 thousand (€71,935 thousand) in 2021, compared to CNY 579,890 thousand (€73,676 thousand) in 2020. In the reporting year, net income amounted to CNY 8,277 thousand (€1,084 thousand), compared to CNY 34,332 thousand (€4,362 thousand) in 2020.
At 31 December 2021, workforce numbered 534, decreasing by 70 compared to the end of 2020.
Wilmington, Delaware (USA)
In 2021, Brembo established the company Inspiration Lab Corp. with registered office in Wilmington (Delaware, USA) and share capital of USD 300 thousand. The company is based in the Silicon Valley, California (USA), and is the first centre of excellence opened by Brembo.
At 31 December 2021, the company did not generate revenues and closed the year with a net loss of USD 66 thousand (€55 thousand). At year-end, the company had no employees.
Brembo Japan Co. Ltd. is Brembo's commercial company that handles the Japanese racing market. Through the Tokyo office, it provides primary technical support to the OEM customers in the area. It also renders services to the other Group companies operating in Japan.
Net sales amounted to JPY 774,361 thousand (€5,963 thousand) in 2021, compared to JPY 653,520 thousand (€5,367 thousand) in 2020. Net income for the reporting year was JPY 76,211 thousand (€587 thousand), compared to JPY 54,514 thousand (€448 thousand) in 2020.
At 31 December 2021, workforce numbered 21, three more than at the end of 2020.
Activities: casting, production and sale of car brake discs for original equipment and the aftermarket; casting, production and sale of braking systems for cars and commercial vehicles.
As a result of the merger with Brembo México Apodaca S.A. de C.V. in 2010, the company is now 51% owned by Brembo North America Inc. and 49% owned by Brembo S.p.A.
In 2021, net sales amounted to USD 386,330 thousand (€326,423 thousand), with a net income for the year of USD 20,289 thousand (€17,143 thousand).
In 2020, net sales had amounted to USD 279,426 thousand (€244,835 thousand), with a net income of USD 19,561 thousand (€17,140 thousand).
At 31 December 2021, workforce numbered 1,516, compared to 1,202 at the end of 2020.
Nanjing (China)
Activities: casting, production and sale of braking systems for cars and commercial vehicles.
The company, which is 60% owned by Brembo S.p.A. and 40% owned by Brembo Brake India PVT. Ltd., was set up in April 2016 and carries out casting, processing, assembly and sales of braking systems for cars and commercial vehicles.
At 31 December 2021, net sales amounted to CNY 1,374,148 thousand (€180,003 thousand), compared to CNY 906,627 thousand (€115,188 thousand) at the end of 2020.
Net income at 31 December 2021 was CNY 174,786 thousand (€22,896 thousand), compared to net income of CNY 51,902 thousand (€6,594 thousand) in 2020.
At 31 December 2021, workforce numbered 430, compared to 359 in 2020.
Nanjing (China)
Activities: development, casting, production and sale of OEM brake discs for cars.
The company, a joint venture between Brembo S.p.A. and the Chinese group Nanjing Automobile Corp., was formed in 2001. Brembo Group acquired control over the company in 2008. In 2013, Brembo Group acquired full control from the Chinese partner Donghua Automotive Industrial Co. Ltd.
On 1 July 2017, the merger of Brembo Nanjing Foundry Co. Ltd. into Brembo Nanjing Brake Systems Co. Ltd. became effective. The transaction aimed at developing an integrated industrial hub, including foundry and manufacture of brake discs for the car OEM.
At 31 December 2021, net sales amounted to CNY 1,177,783 thousand (€154,281 thousand) and net income was CNY 119,518 thousand (€15,656 thousand); in 2020, net sales had amounted to CNY 1,048,864 thousand (€133,260 thousand), with net income of CNY 115,870 thousand (€14,721 thousand). At 31 December 2021, workforce numbered 576, compared to 550 at the end of 2020.
Wilmington, Delaware (USA)
Activities: development, casting, production and sale of brake discs for car original equipment and the aftermarket, and braking systems for cars, motorbikes and the racing sector.
Brembo North America Inc. is based in Homer, Michigan. It produces and sells OEM and aftermarket brake discs, as well as high-performance car braking systems. At the facility in Plymouth (Michigan), a Research and Development Centre develops new material and design solutions and distributes them on the US market.
Net sales for 2021 amounted to USD 370,348 thousand (€312,919 thousand) compared to net sales amounting to USD 300,020 thousand (€262,880 thousand) for the previous year.
Net income was USD 14,299 thousand (€12,081 thousand) at 31 December 2021, compared to net income of USD 16,371 thousand (€14,344 thousand) for 2020.
At the end of the year, workforce numbered 645, a decrease by 29 compared to the end of 2020.
Dąbrowa-Górnicza (Poland)
Activities: development, casting, production and sale of brake discs and braking systems for cars and commercial vehicles.
The company produces OEM braking systems for cars and commercial vehicles in the Częstochowa plant. In the Dąbrowa-Górnicza plant, it has a foundry for the production of cast-iron discs destined for use in its own production plant or by other Group companies. The Niepołomice plant processes steel disc hats to be assembled onto the light discs manufactured at the Group's plants located in China, the United States, and in the Dąbrowa-Górnicza plant as well.
Net sales amounted to PLN 2,215,650 thousand (€485,458 thousand) in 2021, compared to PLN 1,744,060 thousand (€392,526 thousand) in 2020. Net income at 31 December 2021 was PLN 232,719 thousand (€50,990 thousand), compared to a net income of PLN 150,941 thousand (€33,971 thousand) for the previous year.
At the end of the year, workforce numbered 2,165, compared to 2,124 at the end of 2020.
Moscow (Russia)
Founded in July 2014, the Moscow-based company is wholly owned by Brembo S.p.A. It deals with promoting the sale of car brake discs for the aftermarket only.
Net sales for 2021 amounted to RUB 85,710 thousand (€983 thousand) compared to RUB 62,396 thousand (€755 thousand) in 2020; net income was RUB 25,435 thousand (€292 thousand) compared to RUB 19,193 thousand (€232 thousand) at 31 December 2020.
At the end of the year, workforce numbered three, unchanged compared to the end of 2020.
Göteborg (Sweden)
The company promotes the sale of brake discs for the car sector, destined exclusively for the aftermarket.
Net sales for the reporting year amounted to SEK 9,802 thousand (€966 thousand), with a net income of SEK 4,727 thousand (€466 thousand), compared to net sales of SEK 10,088 thousand (€962 thousand) and net income of SEK 5,399 thousand (€515 thousand) for 2020.
At 31 December 2021, workforce numbered two, unchanged compared to the same date of the previous year.
Activities: sale of brake discs and drums for cars, distribution of the brake shoe kits and pads.
The company carries out sales activities exclusively for the aftermarket.
Net sales for 2021 amounted to €30,262 thousand, compared to €23,318 thousand in 2020. Net income was €1,980 thousand, compared to €1,673 thousand in 2020.
At 31 December 2021, workforce numbered 65, four fewer than at the end of 2020.
J.Juan Group Barcelona (Spain)
On 28 April 2021, Brembo signed an agreement for the acquisition of a 100% stake in the J.Juan Group, a Spanish company specialising in the development and production of motorbike braking systems. Founded in 1965, J.Juan is based in Gavà (Barcelona) and has three plants in Spain and one in China, manufacturing especially brake hoses. On 4 November 2021, Brembo finalised the acquisition of J.Juan, with a total outlay for the transaction of €73 million, paid using available liquidity and subject to the usual adjustment mechanisms applicable to similar transactions that will be completed by the end of the first quarter of 2022.
In the last two months of 2021, the J.Juan Group's net sales amounted to €11,032 thousand and net income was €497 thousand.
At 31 December 2021, the J.Juan Group's workforce numbered 570.
Stezzano (Italy) PAGINA 38-39 - ICONE PAESE E SOCIETA'
Activities: precision mechanical processing, lathe work, mechanical component production and similar activities, on its own account or on behalf of third parties.
The company was incorporated by Brembo S.p.A. in 2010. In the same year, it leased from an important Group's supplier two companies specialising in processing aluminium, steel and cast-iron pistons for brake calipers intended for use in the car, motorbike and industrial vehicle sectors, and in the production of other types of components, including small high-precision metallic parts and bridges for car brake calipers, as well as aluminium caliper supports for the motorbike sector, chiefly produced for the Brembo Group. In 2012, La.Cam. acquired the business units of both companies. CINA INDIA ARGENTINA R. CECA
In 2021, net sales, which were mainly to Brembo Group companies, amounted to €41,419 thousand compared to €32,722 thousand in 2020.
Net income for 2021 was €2,791 thousand, compared to a net income of €1,251 thousand at the end of 2020. RUSSIA GIAPPONE BRASILE MESSICO
At 31 December 2021, workforce numbered 161, compared to 163 for the previous year.
Activities: logistics and marketing activities in the economic and technological development hub of Qingdao.
Formed in 2009 and fully controlled by Brembo S.p.A., the company carries out logistics and marketing activities within the Qingdao technological hub for the aftermarket only.
Net sales for 2021 amounted to CNY 355,449 thousand (€46,561 thousand), compared to CNY 278,115 thousand (€35,335 thousand) for the previous year. Net income for the year was CNY 15,786 thousand (€2,068 thousand), up compared to CNY 14,172 thousand (€1,801 thousand) for 2020. ITALIA REGNO USA
At 31 December 2021, workforce numbered 37, seven more than at the same date of 2020.
Svendborg (Denmark)
Activities: development, production and sale of brake pads for motorbikes. POLONIA SVEZIA
On 7 January 2021, Brembo acquired SBS Friction A/S, a Danish company based in Svendborg, Denmark, that develops and manufactures brake pads for motorbikes using particularly innovative and eco-friendly sintered organic materials. The investment is 60% held by Brembo S.p.A. and 40% by Brembo Brake India Pvt. Ltd. The total outlay for the transaction was DKK 226 million (€30.4 million).
In 2021, net sales amounted to DKK 159,452 thousand (€21,440 thousand) and net income was DKK 6,177 thousand (€831 thousand).
At 31 December 2021, workforce numbered 106.
Stezzano (Italy)
Activities: design, development, production and sale of carbon ceramic brake discs.
As a result of the joint venture agreements finalised in 2009 between Brembo and SGL Group, the company is 50% owned by Brembo S.p.A. and in turn controls 100% of the German company Brembo SGL Carbon Ceramic Brakes GmbH. Both companies carry out design, development, production and sale of braking systems in general, and particularly of OEM carbon ceramic brake discs for top-performance cars, as well as research and development activities concerning new materials and applications.
Net sales at 31 December 2021 were €60,787 thousand, compared to €41,696 thousand at 31 December 2020. Net income for the year was €27,007 thousand, compared to net income of €24,896 thousand for 2020.
At 31 December 2021, workforce numbered 161, ten more than at the end of 2020.
Meitingen (Germany)
Activities: design, development, production and sale of carbon ceramic brake discs.
The company was formed in 2001. In 2009, in executing the joint venture agreement between Brembo and SGL Group, Brembo SGL Carbon Ceramic Brakes S.p.A. acquired 100% of the company.
Net sales for 2021 amounted to €150,484 thousand, compared to €128,476 thousand for the previous year. At 31 December 2021, net income totalled €24,827 thousand, compared to a net income of €16,671 thousand for the previous year.
At 31 December 2021, workforce numbered 411, compared to 392 at the end of 2020.
Milan (Italy)
Activities: research and development of innovative technologies for the production of technical and advanced ceramic materials, geomaterial processing and rock mass characterisation.
Brembo S.p.A. acquired 20% of this company by subscribing a capital increase in 2006.
Net sales for 2021 amounted to €2,324 thousand, with a net income of €632 thousand, compared to net sales of €1,944 thousand and net income of €552 thousand in 2020.
Activities: development, design, industrialisation, manufacturing, installation and marketing of fibre optic sensors systems and photonic subsystems for sensing and communications.
On 5 February 2020, Brembo acquired a 20% stake in Infibra Technologies S.r.l. for a consideration of €800 thousand. The agreement with the current shareholders envisages Brembo's right to exercise a call option on the remaining 80% interest in the second half of 2024.
Net sales for 2021 amounted to €566 thousand, with a net income of €2 thousand. In 2020, net sales had been €225 thousand, with a net loss of €44 thousand.
Following the 2020 slowdown due to the lockdowns implemented in various countries to combat the effects of the Covid-19 pandemic, in 2021 Brembo's investment management policy continued in line with the guidelines followed to date, with the aim of strengthening the Group's presence not only in Italy, but also at the international level.
Group's total net investments undertaken in 2021 at all operations amounted to €236,175 thousand, of which €180,018 thousand was invested in property, plant and equipment, €29,988 thousand in intangible assets, and €26,169 thousand in leased assets. The most significant investments were concentrated in Italy (30.6%), North America (32.2%), China (14.1%) and Poland (9.8%).
In Italy, works on the new building in Curno, which houses the Carbon Factory, continued. The building has been designed in view of progressively verticalising — within a single production facility adjacent to Brembo's current hub — the entire development and production process for raw components used in carbon-fibre discs and pads for racing applications and for high-performance road vehicles. The new building occupies an area of approximately 7,000 square metres, in addition to the 10,000 square metres of green space, parking and logistics and storage areas planned as part of the project. After having installed and started up the first systems in the previous years, additional machines continued to be installed in 2021 for a gradual increase in production capacity, reaching full operation in 2022.
To meet the need for new manufacturing spaces, at the end of 2020 Brembo Czech entered into a new operating lease for a building (designated O23) of approximately 22,000 square meters in the same business park where the current production facility is located. The RoU (Right of Use) recognised, calculated over a period of 15 years, had a value of approximately €25 million. Painting, pad printing and assembly of fixed aluminium calipers will be gradually transferred to the new building, as well as storage of semi-finished and finished products, in addition to a part dedicated to office space.
The other investments in property, plant and equipment made by the Group primarily related to purchases of plant, machinery and equipment to increase the level of production automation and constantly improve the mix and quality of factories.
With regard to investments in intangible assets, development costs for 2021 amounted to €21,463 thousand (9.1% of the Group's total investments).
Innovation, sustainability and the mobility of the future. Brembo has always been committed to researching and developing cutting-edge technological solutions that not only stand out for their focus on performance, comfort and style, but are also aimed at preserving the environment.
The vehicles of the future are increasingly oriented towards the green model, electrification, overall efficiency and reduced emissions. We are focused on an integrated, complementary brake system in which caliper, disc, pad, suspension and control unit are in synergy with our new vision of mobility, where technology and the environment can coexist in constant equilibrium.
For many years, Brembo has been conducting specific research on mechatronic products, which are increasingly widespread in the automotive sector, thus developing skills that for some time have been applied to systems such as electric parking brakes systems and Sensify™, the latter presented in October 2021.
After an initial phase of pure research, Brembo is beginning to offer increasingly green products on the market, with a particular focus on carbon neutrality and improvement of the environmental impact of products in use. Since the market requires constantly shorter time to market, the Group strongly concentrates its efforts and resources on implementing cuttingedge simulation methods, in which new virtual reality and augmented reality technologies are increasingly applied, in addition to designing uniform development processes at Brembo's Technical Centres based in Italy, Poland, Denmark, Spain, North America, China and India.
In 2021, R&D activities mainly focused on the following aspects.
In the area of brake discs for cars and commercial vehicles, at the end of 2020 Brembo presented its Greentive® disc, the result of the experience it has acquired in the field of brake systems, and particularly of the know-how and expertise gained through the European LowBraSys project.
The Greentive® disc is characterised by an innovative coating applied to the cast-iron braking ring, which ensures very low wear and tear, extends disc life and, combined with the dedicated friction material, also reduces particulate emissions during braking, and hence the impact on the environment. Another distinctive quality of Greentive® is its high resistance to corrosion which, in addition to maintaining unchanged the aesthetics of the disc in different situations, is particularly appreciated for the new generations of electric vehicles, characterised by different use of the brake system.
In 2021, application development was intensified with a major German manufacturer for the supply of the Greentive® disc paired with brake pads developed specifically by Brembo Friction for high-performance applications, in particular for the premium and luxury segment vehicles. Production is set to begin in 2022, while the development phase continued in parallel with other major car manufacturers.
The Greentive® disc encompasses cutting-edge technological solutions and is merely the first step in Brembo's product roadmap for brake discs in pursuit of environmental sustainability, with increasingly green products. The release in the coming years of a European legislation that will regulate the emissions of fine particles from braking systems helps to further strengthen Brembo's activity in the research, development and testing of other solutions to be applied to cast iron discs through the study of materials, technologies and surface treatments in collaboration with European research centres and suppliers. Of fundamental importance is Brembo Friction's concurrent development of brake pads specifically designed for these new disc types and hence capable of significantly contributing to ensuring the entire brake system's performance and emissions goals are met.
Particular attention is also being devoted to the new needs of hybrid and electric vehicles, which use regenerative braking and thus introduce new requirements for brake discs, especially with regard to criticalities relating to disc resistance to corrosion.
In light of the Company's specific focus on the industrialisation phase, the in-depth study of the application processes for
these unconventional new brake disc technologies is also very important, as it ensures high quality standards even on high production volumes.
All these new solutions, which aim to reduce environmental impact and improve aesthetics and corrosion resistance, are meeting with strong interest among Brembo's main clients. In particular, the development phases with major car manufacturers will continue in 2022, while production of discs that will adopt one of these technologies is set to begin for a major electrical vehicle manufacturer in Europe.
According to precise guidelines applied throughout the automotive sector and all of Brembo's development activities, considerable attention is also paid to new solutions that are able to reduce disc weight, as a lower weight translates into lower vehicle fuel consumption, and consequently a smaller environmental impact (reduced CO2 emissions). This is an aspect that has become even more important due to the entry into force of the new European Regulation setting the new emissions limits for manufacturers.
In car applications, after having worked with a major German customer to develop the concept for the light brake disc currently installed in its entire platform of core vehicles, Brembo will also supply this product for the next generation of vehicles within the same platform, for which the application development phase was completed and the entire range of new models — some of which are fully electric — is being launched.
The light disc — which enables a reduction in weight of up to 15% compared to a conventional disc due to the combination of two different materials (cast iron for the braking ring and a thin steel laminate for the disc hat) — has also been successfully developed for other major automotive manufacturers, which are already using it in some of their models. The light disc continued to attract the interest of other customers, not only in Europe, including new players who have entered the electric vehicle market.
Work on discs for heavy commercial vehicles — an application segment which is of particular interest to Brembo — continued with a focus on improving performance and reducing weight. Activities therefore intensified with several customers, also outside Europe. The applications developments related to such customers are underway and should be finalised during the next two years. The acquisition of new businesses with major European customers will enable the Group to further increase its market share in this specific segment.
The development of street motorbike discs made with new materials and new surface treatments continued. In particular, prototypes have been launched for the "lightweight" metal disc, and the coated disc is being tested. Both products are currently in the process of concept validation.
For the new product range developed for the Indian market, the four-piston front caliper and the handlebar master cylinder were added; their design was defined and validations are underway for the first assemblies with components obtained through permanent mould casting, processed and assembled following a prototype process. In addition to its uniform design, the new product range has been conceived to be able to be customised according to the needs of motorbike manufacturers.
The process of developing motorbike by-wire technology continues. Assembly of the second demonstrator was concluded, implementing all the progress made in developing the first. Software development of the second demonstrator is ongoing and will be completed by June 2022. In the meantime, design activity on the brake unit and electric rear calliper components continued, in view of entering mass production.
Design strategy activity is taking concrete form focusing on formulating the style of all motorbike products and rationalising the current product portfolio. Definition of the product specification of the new top-of-the-line front fixed calliper is nearing conclusion, and design-to-cost activity will begin in early 2022.
Brembo's commitment to increasing its presence in the scooter market has taken concrete form with the launch of six different projects for two important customers, with design work to take place in Italy and manufacturing in India.
The search for new markets in the field of high performance two-wheelers also continued: benchmarking has been carried out with currently mass-produced products thanks to which a product specification and a potential market have been defined. The design activity is continuing in order to have the first prototypes available by May 2022.
Two innovation projects relating to simulation and methodologies are also in progress. One is aimed at developing a tool for design (thermomechanical analysis) and simulation of the quenching process for motorbike steel discs, whereas the other is intended to connect and automate the greatest possible number of design phases for the various motorbike products. The former is expected to be completed by the first quarter of 2022, whereas the latter is expected to continue until early 2023.
The content and timing of the motorbike roadmap has been revised in accordance with the Group's vision, focusing on the three following targets: low emissions, high performance and best driving experience. Updates were made taking into account the constant improvement of existing products, development of new concepts for products in the range and creation of new technologies and products not currently in the portfolio.
Regarding the racing world, the carbon/carbon brake system for racing applications project (F1, LMP – Le Mans Prototype, IRL – Indy Racing League and Super-Formula) continued to focus on three development areas:
Carbon/carbon and carbon ceramic racing brake systems continued to be tested by a Brembo's development partner in Germany, with the goal of quantifying their emissions. In the area of carbon ceramic discs destined for road applications, mass production of the Lamborghini with CCMR carbon ceramic brakes was launched. This vehicle, which offers racing-like performance, will be in production for around two years.
Moreover, the testing approval process was completed both internally and by the customer on a new CCMR braking system conceived for vehicles with extreme racing-like performance. The vehicle will enter production in the first months of 2022.
The innovative 48V electro-mechanical brake-by-wire project with hydraulic actuator and a safety concept based on F1 experience, carried out with a top team in a major World Motorsport Championship, became a well-established activity. With regard to further brake-by-wire developments, activities relating to the braking system of the upcoming FE GEN 3 vehicle have begun; in this case, Brembo will supply the entire brake system and front brake-by-wire starting with the 2023 season.
Another application of a system including brake-by-wire involves the upcoming prototypes for Le Mans designated LMH, for which Brembo has been assigned the role of supplier of the whole brake system, inclusive of carbon discs and brake by wire.
It should be noted that Brembo's supply of brake-by-wire systems in the racing world now extends to three markets: Formula 1 (since 2014), Formula E (since 2018 with one client and since 2023 with all clients) and LMH prototype categories since 2023 with at least one team (project already assigned in 2022).
Brake-by-wire systems for racing are characterised by the same safety concept that allows an extremely rapid switch to traditional pedal braking, performed by the driver if there is a fault on the brake-by-wire system.
The entire racing car design team was committed to defining and designing the 2022 F1 brake systems, which, due to the new regulations, will be completely different and for which the use of a new internally developed carbon/carbon material is planned.
In the 2022 season, an F1 team will launch a new caliper concept with embedded sensors for both axles following the positive feedback during use on the track in several testing sessions conducted in late 2020.
The new caliper with embedded sensors, combined with electronics installed on the vehicle, will allow braking torque to be continuously measured.
As regards the simulation field, testing is continuing of new calculation methodologies for the structural part and thermal properties of the disc, for the thermoelastic and fatigue calculation, as well as for integrating the calculation within the customer wheel unit — in other words, mechanical and thermal calculations with computational fluid dynamics (CFD) solutions. Continuing with an internal project of constant fine-tuning on testing benches and in simulations that began some years ago, several testing and simulation methods were refined and further enhanced. Advanced integration of testing and calculation has made it possible, for several years now, to use various sensors obtained through the calculation model and/or models obtained from the database.
In the MotoGP class of motorbike applications, new systems are fully available to all clients, including a brake caliper ensuring amplified force and an anti-drag system. In line with the F1 initiatives, new projects were confirmed with a major Italian motorbike manufacturer. The projects will be governed by a development contract with the manufacturer and will concern new brake, clutch and wheels systems.
The debut on the track of the new 2020 MotoGP caliper,
designed with the best available simulations, was a success, so that it was soon confirmed by all the teams for the 2021 season. Major disc developments will also be tested in view of the 2022 world championships.
Mid-way through the previous season a new carbon disc was introduced for Moto GP, characterised by fins enabling swifter heat dissipation.
After more than ten years, Brembo Friction confirmed its role as a strategic partner for pairing Brembo pads with callipers and discs.
Once again, the market is showing every confidence in Brembo Friction, whose excellence is confirmed by the most demanding car manufacturers, which — in constant search for increasingly flexible, personalised and environmentally friendly friction materials — choose Brembo's pads for their top-end applications.
Brake pads paired with an increasingly varied range of discs, made from cast iron and carbon-ceramic, with and without surface treatments, that offer higher performance and are designed for applications with increasingly green objectives: these are the new demands of a market that is focused on the needs of electric vehicles and constant legislative environmental requirements. Moreover, the ongoing innovative drive has made it possible to develop specific friction materials also for electric calipers.
The development of friction materials with increasingly lower emissions, combined with a focus on recyclable, lowenvironmental impact raw materials and reduced greenhouse gas production, reflects the green drive of global research. Once again, Brembo is at the forefront in anticipating new legislation and studying the different environmental impacts through preventative analysis of laws and regulations, including those in effect in the countries where the product will then be marketed. Brembo looks to a future in which the Life Cycle Assessment methodology will also be extended to all products and processes, a study that allows the potential impacts on the environment and human health to be quantified, in terms of consumption of resources and carbon dioxide emissions.
Projects such as AFFIDA and LIBRA flow from Brembo's increasingly close focus on the environment.
AFFIDA, the natural extension of the COBRA project (which was part of the European Life+ project), in collaboration with the Mario Negri Institute, seeks to bring to the OE market the innovative technology of inorganic binders, having a key role in reducing volatile organic compound (VOC) emissions, with important positive repercussions for the environment. The new materials are able to perform on a par with their traditional predecessors, while also meeting the high-performance standards required by the most challenging sporting applications and guaranteeing low fine particulate emissions and a lower consumption of resources. The innovative production technology, which is completely different from the traditional one, has already successfully completed the prototype pre-industrialisation phase, thanks to a press created with ad-hoc technology, and the specific improvement activity as regards NVH (Noise Vibration Harshness) was launched.
The LIBRA project, which has been ongoing since 2015, eliminated the steel backing plate in brake pads, replacing it with high-performance composite materials. Research of new raw materials and technologies continued in order to obtain both a lighter pad, with the resulting reduction in the overall brake system's weight, and a shorter production process. In this case as well, an innovative press fully devoted to manufacturing these pads was installed as soon as the end of 2019 to prepare for mass production of the product. A new short-term goal is to transfer the innovation and technology develop thanks to this project, and currently applied to parking brakes, to rear brake pads.
To this end, Brembo Friction also avails of statistical models capable of optimising friction material formulations and identifying the raw materials that most influence their chemical and physical properties.
Moreover, the advanced technology in the automotive field has paved the way for the development of a new brake pad concept with embedded sensors that aims to make the braking system increasingly integrated within new vehicles. Thanks to the use of specific sensors embedded in the friction material, the tests that confirmed that real-time measurement of braking torque is possible continued. At the same time, the industrialisation process of this new brake pad concept has been launched.
Technical and industrial collaboration with the Japanese partner Showa Denko (former Hitachi Chemical) both to develop new materials and manufacture Brembo products in China, Mexico and Japan, continued.
The acquisition of SBS Friction A/S — a company that develops and manufactures brake pads from sintered and organic materials — will make it possible to expand the product range and further reinforce Brembo's knowledge of and leadership in the motorbike sector.
With regard to Car and Commercial Vehicle Systems, all products are developed in accordance with the Group's vision and pursue three guidelines: having increasingly low emissions while offering high performance and the best driving experience. The main example of this focus is Sensify™, the revolutionary new brake system introduced in October of this year.
Sensify™ is a digital brake ecosystem in which artificial intelligence, software and sensors manage the braking of each wheel independently.
The application development and industrialisation phases for Sensify™ are still ongoing, whereas launch into production with the first manufacturers will take place in 2024.
In keeping with the strategic priorities that Brembo has set for itself, the promotional phase for Sensify™ is fully underway for both Group clients and new players entering the electric vehicles market.
With reference to other mechatronic developments, the promotional phase continued for electric parking brakes, in various configurations, for both cars and commercial vehicles up to 7.5 tonnes.
Mechatronics — by now an application discipline and no longer merely advanced research — is becoming increasingly important to the Group. Sensify™ and the electric parking brakes will account for a considerable share of Brembo's revenues in the second half of this decade.
With the Sensify™ ecosystem, individual components undergo important changes: the addition of sensors to the brake calliper becomes fundamental and the resulting data collection leads to evolution of the entire brake system. The latter can be calibrated to the actual use of the vehicle, with the consequent benefits in terms of weight. Within this framework, a project to equip brake calipers with sensors is in progress and approval is expected to be received by 2025.
With regard to the three guidelines identified for each product under development, the one referring to low emissions, i.e., aimed at reducing vehicle consumption and the resulting CO2 and fine particulate emissions through braking systems, is pursued by Brembo by adopting methods designed to minimise caliper mass, while maintaining performance, and reducing residual torque by formulating new characteristics of coupling between seals and pistons, in addition to optimising a pad sliding system based on a new concept.
In keeping with the low-emission guideline, approval of an alloy using completely recycled aluminium is also currently pending. Production of fixed calipers using recycled aluminium is expected to begin in 2025 with a major European manufacturer.
The product and process improvement work is constantly ongoing in the same way as the search for solutions to reduce mass, optimise performance and improve styling. Two examples of this continuous improvement aimed at providing state-of-the-art solutions for the high-performance market are the Dyadema™ caliper, designed with the goal of considerably reducing track operating temperatures, and the Flexira™ caliper, developed to meet the needs of several new market segments.
In keeping with this vision, development continued for Brembo's patented Semi-Solid Metal Casting (BSSM) technology, which maintains equal performance while enabling a reduction in weight of 5 to 10% in relation to caliper geometry. Concept approval is currently underway, whereas validation of the smallseries production process is expected by the end of 2022
The development of friction materials also pursues low emissions and high performance objectives. In the case of the former, materials paired with coated discs are being developed, whereas in the case of the latter the materials under development are paired with all types of carbon ceramic discs. The ongoing evolution of simulation methodologies is focused on aspects linked to brake system comfort and caliper functionality. Brembo's objective is to develop the simulation capacity for the entire brake system, including the friction material. From this standpoint, the ability to rely on the know-how and installed capacity within the Brembo Friction project represents a strength for the Group, which can position itself as a supplier of complete brake system. On the other hand, the development of a methodology for simulating caliper functionality is aimed at establishing, during the design stage, the caliper characteristics that influence a constant performance over time and the car's pedal feel.
Digitalisation of the Brembo product life cycle is ensured by the Product Development Methods function that, with the GBUs (Global Business Units) and GCFs (Global Central Functions), provides methodological, operational and legal support for managing data and project flows.
Product Development Methods support and guide the GBUs/ GCFs in adopting PLM (Product Lifecycle Management) throughout the phases of product development, seeking to combine the data from the various departments (digital thread) unambiguously and indissolubly, ensuring that it is traceable and distributing it securely to all internal stakeholders.
PLM is used to share design documents, development phases, base technical specifications and CAD drawings used for
numerical simulations: the simultaneous sharing of information through PLM favours collaborative product development, with the consequent reduction in project development times.
The state of the art of simulation of products and physical processes is constantly monitored — through dialogue with qualified suppliers and participation in conferences and university research projects — both to update the company's technological and methodological content and to realise virtual models that are increasingly representative of the reality that they seek to reproduce (Digital Twin), thus rendering them more efficient and predictive.
To this end, particular emphasis is placed on "simulation process automation", which translates the routine manual operations performed by simulation analysts into automatic digital flows, with the goal of condensing into procedures the know-how gained in implementing simulations, reducing errors relating to manual performance of such simulations and also making them available to a broader audience.
On the basis of the know-how consolidated during the previous three years, the global Data Science and HPC (High Performance Computing) team continued its five-year upgrade process, which focused on a broadening of the resources dedicated to achieving the Company's digital transformation through the application of artificial intelligence and machine learning to big data. At present, the team can also rely on a new operating unit: the Brembo Inspiration Lab, a Centre of Excellence in Silicon Valley, California. This includes the processes of:
Acting as a competence centre for all GBUs and GCFs, the team operates within a multi-disciplinary Digital Lab that brings together the expertise of Data Scientists, Big Data Engineers, Domain Experts and Project Managers, developed and constantly renewed through an intense internal training programme to ensure the spread of "Data Culture" according to Brembo.
Advanced R&D activities constantly monitor the evolution of vehicles, in line with key general trends: electrification, advanced driver assistance systems (ADASs), autonomous driving, low environmental impact, and connectivity. The high level of integration will bring the brake system into dialogue with other vehicle systems, such as electric-drive motors and new suspension/steering concepts. Such integration will allow for increased active safety and the optimisation of functions, such as regenerative braking.
Brembo is continuing to develop and refine the Sensify™ system, whose peculiarity lies in its "decentralised" architecture, in which each wheel side has its own electromechanical actuator for generating and controlling the required braking force. This evolution will lead Sensify™ to be increasingly integrated into the vehicle system in accordance with the development of its architecture.
Mechatronics and system integration entail the development of new components for Brembo's products, including sensors, mechanisms and electric motors. Brembo therefore coordinated a group of companies based in the Lombardy region within the framework of the funded project "Inproves", with the aim of creating brushless motors based on permanent magnets offering very high levels of performance, specifically designed for the brakes of the future. The project was officially concluded in May 2021, with a view to extend the activities performed to specific future projects for Brembo.
In addition, Brembo continued to conduct R&D activities in cooperation with international universities and research centres with the aim of constantly seeking out new solutions to apply to brake discs and calipers, in terms of new materials, innovative technologies and mechanical and electronic components. The need to reduce product weight is leading the research function to evaluate the use of unconventional materials, such as technopolymers or reinforced light metal alloys, to produce structural components.
Another initiative in this area is Brembo's investment in Infibra Technologies, a spin-off of the academic institution Sant'Anna - School of Advanced Studies of Pisa, specialised in developing photonic sensors through the use of fibre-optics as the sensor element.
After the LowBraSys project funded by the European Union
as part of its Horizon 2020 programme with the aim of proving that fine particle emissions can be reduced, work continued with other projects financed at the European level, such as MODALES (MOdify Drivers' behaviour to Adapt for Lower EmissionS), involving Brembo as a development partner. The goal of the MODALES project is to promote an understanding of the variability due to user (driver) behaviour and that due to vehicular emissions from powertrain, brakes and tyres. Its aim is to modify users' behaviour also through dedicated training. Within the framework of the Horizon 2020 programme as well, Brembo is also participating in the European consortium that is developing the funded project EVC1000. The goal of this project is to demonstrate the technological feasibility of a completely electric vehicle with a range of more than 1,000 km per charge, where Brembo's contribution is to provide a further refinement of the Sensify™ system.
Effective risk management is a key factor in maintaining the Group's value over time. In this regard, within the framework of its Corporate Governance system, Brembo defined an Internal Control and Risk Management System (ICRMS) consistent and compliant with the provisions of Article 6 of the "Internal Control and Risk Management System" of the Corporate Governance Code (2020 edition), the adoption of which was approved by Brembo's Board of Directors on 17 December 2021 and, more generally, with national and international best practices.
This system represents the set of organisational structures, rules and procedures that allows the main business risks within the Group to be identified, measured, managed and monitored, while helping the Company to be run in a manner that is sound, correct and consistent with the objectives defined by the Board of Directors, and favouring the adoption of informed decisions consistent with the risk profile, as well as dissemination of a proper understanding of risks, lawfulness and corporate values.
The Board of Directors is tasked with defining the general guidelines of the ICRMS, so that the main risks pertaining to Brembo S.p.A. and Group subsidiaries are properly identified, as well as adequately measured, managed and monitored. It shall also set criteria to ensure that such risks are compatible with sound and proper management of the Company. The Board of Directors is aware that the control processes cannot provide absolute assurances that the company objectives will be achieved and the intrinsic risks of business prevented. However, it believes that the ICRMS may reduce and mitigate the likelihood and impact of risk events associated with wrong decisions, human error, fraud, violations of laws, regulations and company procedures, as well as unexpected events. The ICRMS is therefore subject to regular examination and controls, taking account of developments in the Company's operations and reference context, as well as national and international best practices.
The Board of Directors has identified the other main corporate committees/functions relevant for risk management purposes, by defining their respective duties and responsibilities within the ICRMS scope. More specifically:
Risks are monitored at meetings held on at least a monthly basis, where results, opportunities and risks are analysed for each business unit and geographical area in which Brembo operates. The meetings also focus on determining the actions required to mitigate any risks. Brembo's general risk-management policies and the bodies charged with risk evaluation and monitoring are included in the Corporate Governance Code (approved on 17 December 2021), the "Policies for the implementation of the Internal Control and Risk Management System" (in its latest edition issued at year-end 2021), the Risk Management Procedure, the Organisational, Management and Control Model
(as per Legislative Decree No. 231/2001) and in the reference layout for preparing accounting documents (as per Article 154 bis of TUF), to which the reader is referred. In particular, the new Policies for the implementation of the Internal Control and Risk Management System identify the overall design of Brembo's Internal Control and Risk Management System, taking into account the changes made to Brembo's Corporate Governance Manual, the evolution of Brembo's organisational structure with new second-tier and first-tier control roles, the new company strategy and sustainability goals, changes in the legislative and regulatory framework, as well as international best practices adopted by Brembo.
The Executive Director in charge of the Internal Control and Risk Management System fully enforces the risk management guidelines based on principles of prevention, cost effectiveness and ongoing improvement, as approved by the Board of Directors. In order to provide the organisation with the instruments for defining the risk categories to which attention should be drawn, Brembo has developed a model which identifies and classifies risk classes by type, based on the managerial level or corporate function from which they originate or that is responsible for monitoring and managing them.
The Internal Audit function evaluates the effectiveness and efficiency of the overall Internal Control and Risk Management System on a regular basis and reports the results to the Executive Chairman, the Chief Executive Officer1 , the Board of Statutory Auditors, the Audit, Risk & Sustainability Committee and the Supervisory Committee of Brembo S.p.A. with reference to specific risks connected with compliance with Legislative Decree No. 231/2001. At least on an annual basis, it also reports to the Board of Directors.
The first-tier family risks based on the risk management policy are:
Brembo's top risks for each of the above-mentioned risk families are discussed below. The order in which they are discussed does not imply classification in terms of probability of occurrence or possible impact.
Based on its international footprint, Brembo is exposed to the country risk, which is however mitigated by the adoption of a policy of business diversification by product and geographical area, so that the risk can be balanced at Group level.
In addition, Brembo constantly monitors the development of political, financial and security risks associated with the countries in which the general political and economic climate and tax system could prove unstable in the future, also in light of possible Covid-19-related economic effects, so as to take any measures suited to mitigating the potential risks.
Brembo has been following developments relating to the spread of the pandemic very closely since its outbreak, establishing a dedicated task force and promptly adopting the necessary measures to prevent, monitor and contain the virus at all of its locations worldwide, with the aim of protecting the health of employees and contractors (rearrangement of production layouts, sanitisation of the premises, personal protective equipment, temperature measurement, heat scans, blood tests, hygiene rules and social distancing, remote working, etc.).
The Safety Officers and top managers organise periodical calls to analyse and monitor the implementation, application and efficacy of the measures taken in relation with the provisions issued by the competent authorities from time to time and the pandemic evolution in the different countries where the Group's operating sites are located.
The Audit, Risk & Sustainability Committee, the Board of Statutory Auditors and the Supervisory Committee are kept promptly informed of company management and the epidemiological emergency, and all measures have always been checked and verified in order to ensure operational continuity and people protection.
1 Until the General Shareholders' Meeting on 17 December 2021, the governance structure provided for three top management positions, i.e., the Chairman, the Executive Deputy Chairman and the Chief Executive Officer.
In 2021, the automotive industry — like other sectors suffered the effects of the global microchip shortage, which forced most OEMs to slow the production of certain car models, reduce the volumes of vehicles produced and, in some cases, plan temporary plant closures. Although Brembo does not have any directly affected products, in the second half of 2021 it was indirectly impacted by these OEMs' operational difficulties, which are expected to extend in 2022 as well. Accordingly, Brembo set up an internal task force to monitor the market and predict possible future developments. In light of the market segments targeted by Brembo, the risk is to be regarded as modest with reference to the automotive industry benchmark.
Brembo is exposed to risks associated with the evolution of technology, in other words, the risk that competing products will be developed that are technically superior because they are built based on innovative technologies. In order to maintain its competitive edge, Brembo invests sizeable resources in R&D, conducting applied and basic research on both existing and newly applied technologies, such as those associated with digital innovation, in addition to mechatronics. For additional information, see the "Research and Development" section in this Directors' Report on Operations. Product and process innovations — those currently being used, as well as those that may be used for production in the future — are patented to protect the Group's technological leadership. A specific function (called IPR – Intellectual Property Rights) within the Legal and Corporate Department is responsible for managing patents and, more generally, all aspects associated with protecting the Group's intellectual property.
Brembo targets the top-end segments of the automotive sector and, in terms of geographical areas, generates most of its sales in Europe, North America and China. In order to reduce the risk of segment/market saturation in the countries where it operates, the Group has long ago implemented a strategy aimed at diversifying into other geographical areas and is gradually broadening its product range, also by focusing on the midpremium segment. In addition, the Group is also developing solutions for its customers, in line with its new corporate mission statement.
Investments in certain countries may be influenced by major modifications of the local regulatory framework, which could result in changes in the economic conditions existing at the time of the investment. For this reason, before investing in foreign countries, Brembo assesses the country risk carefully in the short, medium and long term. In general, M&A activities are accurately coordinated in all their aspects in order to mitigate any investment risks.
Brembo continues to engage in ongoing development aimed at strengthening its Sustainability Model and fulfilling its legal non-financial disclosure requirements under Legislative Decree No. 254/2016 and periodically updates its ESG risk assessment system, using measurement criteria in line with the Group's risk assessment and management methodology.
Through specially created working teams, Brembo monitors and manages the achievement of the objectives and compliance with the requirements set by the reference legislation or established on a voluntary basis in relation to the increasing orientation of civil society and end consumers towards the development of products and industrial processes with a lower environmental impact (e.g., carbon neutrality objective). The focus on the theme of the climate change risk has increased. With the support of a specialised consulting firm, Brembo has developed a project designed to assess the impacts of this type of risks. Brembo considers the risk arising from the use of resources, such as water, with reference to all production sites, particularly those located in geographical areas marked by water scarcity. It also pays equal attention to risks linked to the pollution of waterbodies due to any contamination.
Safety in the workplace is a priority where the relevant risks are assessed and managed by the competent functions.
In addition, Brembo's supply chain is becoming more and more globalised and strategic; therefore, suppliers are required to operate in accordance with the sustainability standards identified by the Group. Moreover, considering that potential risk factors exist within the supply chain, Brembo implements numerous measures aimed at all its suppliers, both in Italy
and abroad, to promote the safeguard of the environment and ensure appropriate working conditions with a view to continuous improvement.
The main operating risks inherent in the nature of the business are associated with the supply chain, the unavailability of production facilities, product marketing, IT, issues involving health, job safety and the environment and, to a lesser extent, the regulatory framework of the countries in which the Group operates.
The main risks associated with the supply chain include dependence on single suppliers, which in the event of disruption of the relevant supply relationships could jeopardise the production process and the ability to fill orders for clients in a timely manner. To mitigate this risk, the Purchasing Department identifies alternate suppliers to ensure the availability of critical materials (supplier risk management programme).
The supplier monitoring process has been reinforced, particularly as regards their financial solidity and the availability of production capacity even in the face of sudden demand fluctuations aspects that, since the beginning of the pandemic emergency, have taken on growing importance.
In 2021, the unprecedented price increases in commodities and utilities were partially neutralised by the passing such increases on to sales prices and partially mitigated through price-setting in late 2020, in addition to the solutions indicated in the section on commodities risk.
New risks relating to logistics and associated with continuity and the cost of transporting raw materials and finished products also emerged 2021. Brembo is mitigating these risks through a strategy of diversifying the methods of transport and operators of reference, in addition to constantly monitoring them.
Natural or accidental events (e.g., earthquakes or fires), malicious behaviour (e.g., acts of vandalism) or malfunctioning of systems may result in damage to assets, the unavailability of production facilities and discontinuity of operation of such facilities. Brembo therefore reinforced its risk mitigation process, through the planning of loss prevention engineering based on standards recognised at an international level. The aim of this process was to eliminate risk factors in terms of probability of occurrence and to implement protective measures aimed at limiting the impact of this risk, thereby constantly enhancing the current operating continuity levels of the Group's production facilities.
Brembo considers the risk relating to the marketing of its products, in terms of their quality, safety and traceability, to be of fundamental importance. The Group has always been committed to mitigating this risk through robust quality controls. As part of this process, it has instituted a worldwide Supplier Quality Assurance function, specifically dedicated to quality control of components that do not meet Brembo's quality standards, in addition to constantly optimising its Failure Mode & Effect Analysis (FMEA).
Brembo attaches much importance to the operating continuity of its IT systems. In this regard, it has implemented risk mitigation measures aimed at guaranteeing network connectivity and data availability and security, while also ensuring compliance with the European data protection regulation (GDPR) and the national laws applicable in each EU member country. These issues are growing in importance also in light of the start of the Group's smart factory (Industry 4.0) process and the implementation of the strategic pillars associated with the new corporate mission.
As of 2020, the Group's three Italian companies have been certified according to the ISO 27001 international standard, which sets the requirements and defines the methods for proper, secure management of information within the Company. In 2022, the standard will also be implemented at the Group's foreign subsidiaries, starting in North America, Poland, and the Czech Republic.
The Group's primary risks relating to health, job safety and the environment can be of the following types:
The occurrence of these events could result in criminal penalties or pecuniary fines against Brembo, the entity of which could be material in the case of sanctions related to Legislative Decree No. 231/01. Brembo manages this type of risk by carrying out ongoing and systematic evaluations of its exposure to specific risks and reducing or eliminating those considered unacceptable. This procedure is organised within a Management System that covers job health and safety, as well as environmental aspects, and that is compliant with the international ISO 14001 and ISO 45001 standards and certified by an independent body.
In summary, although accidents and mistakes can happen, the Group has implemented systematic rules and management procedures that allow it to minimise the number of accidents, as well as the impact they may have. A clear-cut assignment of responsibility at all levels, the presence of independent internal control bodies that report to the Company's highest officers and the application of the highest international management standards are the best way to guarantee the Company's commitment to health, job safety and the environment.
Brembo is exposed to risks arising from the failure to rapidly comply with changing laws and new regulations in the sectors and markets in which it operates. To mitigate this risk, each compliance function stays abreast of the relevant legal and regulatory developments, with the assistance of outside consultants, where necessary, through a constant process of legal and regulatory updates and research.
With reference to the risk of non-compliance with tax laws and regulations, or of operating in conflict with the principles or spirit of the systems in the jurisdictions in which the Group operates, in accordance with the guidelines laid down in the Global Tax Strategy and the Brembo S.p.A.'s Tax Strategy adopted in 2019, Brembo pursues the goal of proactively managing the tax risk by ensuring that such risk is timely recognised, properly measured, monitored and contained through the Tax Control Framework. With regard to compliance risk on issues related to workers' health and safety and environmental protection, and in light of the complexity and lack of clarity of the applicable laws and regulations, and the uncertain and often lengthy period of time needed to obtain the necessary authorisations and patents, the Group relies on specific functions, such as the Health & Safety function and the Energy & Environment Department (see section "Operating Risks – Environment, Safety and Health"), tasked with handling the related complexities.
In the area of personal data processing compliance risk, the Group is supported by the Data Protection Officer and other dedicated functions, such as the Privacy Supervisory Board and the Privacy Reference Persons identified in sensitive company areas.
Among compliance-related risks, attention should be drawn to the risk associated with breaches of national, international and industry regulations, and unethical professional behaviour in breach of the Company's ethics policy that expose it to vicarious administrative liability, in addition to undermining the Group's reputation on the market.
The mitigating measures taken by the Group are regarded as sufficient to significantly reduce its exposure to cases of risk and are aimed at ensuring the global spread of a culture of compliance through the establishment of specific principles of ethics and conduct, in addition to constant monitoring of legal changes. For further details, reference should be made to Brembo's Corporate Governance and Ownership Structure Report available on Brembo's website (www.brembo. com, section Company, Corporate Governance, Corporate Governance Reports), specifically to the paragraph relating to the 231 Model and other compliance tools.
The application of the provisions and preventive measures continued constantly and successfully, due in part to the training activity carried out and the progressive monitoring conducted within the framework of ordinary legal activities.
With reference to litigation, the Legal & Corporate Affairs Department periodically monitors the progress of existing and potential litigations and determines the strategy to be applied and the most appropriate steps to take in managing them, involving specific corporate functions, when needed. The Administration and Finance Department is responsible for the appropriate checks or write-downs related to such risks and their economic effects.
The same ERP (Enterprise Resource Planning) software has been implemented at nearly all Group companies in order to prepare accurate and reliable financial reporting for the Group, while also improving the Internal Control and Risk Management System and the quality, timeliness and comparability of the data provided by the various consolidated companies.
In conducting its business, the Brembo Group is exposed to various financial risks, including market, commodities, liquidity and credit risks. Financial risk management is the responsibility of the Parent's Treasury & Credit Department, which, together with the Group's Finance Department, evaluates the main financial transactions and related hedging policies.
Since the Group's financial debt is partly subject to variable interest rates, it is exposed to the risk of interest-rate fluctuations. To reduce this risk, the Group has entered into several medium/ long-term fixed rate loan agreements, as well as specific hedging contracts (IRS), which account — including lease liabilities — for approximately 56% of gross financial position. The objective is to eliminate the variability of the borrowing costs associated with a portion of debt and benefit from fixed rates. The Group's Central Treasury & Credit Department constantly monitors rate trends in order to evaluate in advance the need for any changes to the financial indebtedness structure.
Since Brembo operates in international markets, it is exposed to exchange rate risks. To mitigate this risk, the Group uses natural hedging (offsetting receivables and payables) and hedges only net positions in foreign currency, using mostly, and where advisable, forward contracts in order to reduce exchange rate risk exposure.
Through a dedicated task force, the Brembo Group closely analyses and monitors the course of the risk associated with fluctuations in the prices of raw materials and commodities. In the first half of 2021, Brembo Poland Spolka Zo.O. undertook a specific financial transaction to hedge against the risk of fluctuation in the price of electricity, while in the second half of 2021 La.Cam S.r.l. implemented a financial hedge aimed at mitigating fluctuation in aluminium price.
Moreover, it bears recalling that fixed prices are set in supply contracts with certain commodities suppliers for a given period of time and that the contracts in place with the main customers also provide for automatic periodic indexing on the basis of commodities prices. Both these approaches mitigate the risk of fluctuations in commodities prices.
Liquidity risk can arise from Brembo's inability to obtain the financial resources necessary to guarantee its operation. The Central Treasury & Credit Department implements the main measures indicated below in order to minimise such risk:
Credit risk is the risk that a customer or one of the parties to a financial instrument will cause a financial loss by failing to perform an obligation. Exposure to credit risk arises, in particular, in relation to trade receivables. In this sense, it should be noted that the parties with whom Brembo has commercial dealings are primarily leading car and motorbike makers with a high credit standing. The current macroeconomic context has made continuous credit monitoring increasingly important, so that situations where there is a risk of insolvency or late payment with respect to contractual terms can be anticipated.
Following on from the above mitigation measures, and in order to minimise the volatility and financial impact of any detrimental event, under its Risk Management Policy, Brembo has provided for the residual risks to be transferred to the insurance market, where insurable.
Brembo's changing needs through the years have been specifically reflected in its insurance coverage, which has been optimised to decrease the Company's exposure to intrinsic risks related to the type of activities carried out by Brembo. Thanks to international programmes, all Brembo Group companies are currently covered against the following key strategic risks: property all risks, general liability, general product liability, product recall and environmental responsibility. Additional coverage has been arranged locally based on the specific requirements of local legislation or collective labour contracts and/or corporate agreements or regulations.
Insurance analysis and transfer of the risks to which the Group is exposed are conducted in collaboration with a highstanding insurance broker, which supports this process with its international organisation and is responsible for the compliance and management of Group insurance programmes at global level.
At the company's core, a constant flow of data to continue our journey and go far. A new way of managing projects and processes. Collecting, analysing and interpreting to anticipate the future, instinctively.
In 2021, Brembo's organisational structure, HR processes and talent development continued to evolve to anticipate market needs and ensure the achievement of challenging business objective relating to the transformation of the automotive industry.
To maintain Brembo's role as a great innovator capable of winning leading positions and competitive advantage in the rapidly changing automotive industry, numerous changes were made in 2021, starting with a new configuration of several strategic organisational areas.
To ensure the development of and proper focus on two of Brembo's highly strategic areas – Digital & Innovation, on the one hand, and Research & Development, on the other – in February 2021 the GCF (Global Central Function) was divided into two separate areas of responsibility: the Digital & Innovation GCF and the Research & Development GCF, both of which report to the CEO. Whereas the Digital & Innovation GCF focuses on data science, data engineering, artificial intelligence, product development methods and centres of excellence worldwide, the Research & Development GCF manages and develops projects in the areas of product innovation, electronic and mechatronic systems, R&D laboratories and materials, product development process virtualisation systems and testing and validation.
The ICT GCF also implemented a new IT Operating Model aligned with the company strategy and supporting the Group's digital transformation journey, which translates into a new organisational structure.
In December 2021, Brembo's Shareholders' Meeting approved the role of the Chairman Emeritus, naming Matteo Tiraboschi Chairman of the Board of Directors and Alberto Bombassei Chairman Emeritus of Brembo S.p.A., while keeping the role of Daniele Schillaci as CEO unchanged. On the basis of the delegated powers granted by the Board of Directors, the Corporate Social Responsibility, Public Affairs & Institutional Relations, Communication, Internal Audit and Real Estate Development GCFs report to Executive Chairman Matteo Tiraboschi, in addition to those previously reporting to him. The GBUs, GCFs and Geographical Areas falling under the responsibility of the CEO remain unchanged.
Among the GBUs (Global Business Units), a Motorbike Operations area was created in June 2021 in response to the increasing size and complexity of industrial operations in the motorbike business due to the acquisition of the Danish company SBS Friction A/S and the Spanish Group J.Juan.
In 2021, the Group was committed to translating its corporate purpose into practice through three strategic pillars — Digital, Global and Cool Brand —, engaging over a hundred individuals of various professional origins and background in ambitious and challenging projects. Starting in March, a new talent development initiative focusing on younger generations named "Gen Z Forum" involved around twenty employees from generations Z and Y from various geographical areas in developing creative ideas to contribute to building the Brembo of tomorrow.
2021 also saw the launch of the Skill Factory global development project for various company populations with critical know-how regarding Commercial, Technical and Platform Management issues. This development path is preceded by an individual assessment focusing on the mindset aspects and the technical skills critical for the role. Over 160 Group people were assessed and many of them, after obtaining the related feedback, have already begun a development and training path. Another initiative launched at the end of the previous year was the 2021 Global Climate Survey, which involved all Group personnel, with an increase in participation compared to the previous 2017 survey.
2021 confirmed Brembo's commitment to continuing with training investment and organising various training initiatives with an increasingly inclusive and global approach in favour of transversal enrichment and greater collaboration between Group companies.
One of the global training projects directly related to the Company's mission was the cascading relating to Sensify™, the new intelligent braking system that combines Brembo's traditional product portfolio with digitalisation and artificial intelligence. This was an online training event initially dedicated
to strategic people and organisational areas and conducted by a team of staff who worked on developing the new technology. From 2022, this programme will be open to all Group staff, by self-enrolment, while staff in the technical areas will have access to the Sensify™ seminars organised on two levels of increasing difficulty, included in the R&D Academy. Other processes that tie in with Brembo's cascading purpose were designed and implemented throughout 2021 to develop a Brembo mindset in people based on four dimensions: openness, digital-ready, datadriven and solution-oriented. One example is the "Culture of Data" programme, managed by an international pool of in-house teachers trained with the support of Brembo Data Scientists, and useful for increasing the spread of the data culture to support corporate decision-making processes. Another success story was the training programme on Artificial Intelligence and Machine Learning that serves to develop innovative and strategic skills also through the use of AI and its multiple related tools. In technical training, the Knowledge Management course continued, along with certification of colleagues with critical know-how, ensuring the transfer of this knowledge within the Group through internal classes, participation in interfunctional project groups and preparation of manuals. Again in technical training, mention should also be made of the launch of the Cast Iron Foundry Seminar, open to the entire Group. The seminar is managed by teachers from the company Academy and is part of the Manufacturing Academy.
Brembo's commitment to environmental sustainability and safety continues to be an increasingly strategic and essential factor for developing the Group's business.
2021 was characterised by the constant increase in requests from all stakeholders for information on environmental impacts. These stakeholders included customers, with many of whom joint activities have been launched to identify solutions capable of reducing the environmental impact, first and foremost the impact of climate change. The areas of discussion and collaboration with customers concerned many areas including energy efficiency, renewable energy supply, circular economy and, more generally, all those aimed at achieving a reduction in the environmental impact of products from a life cycle perspective. The Brembo Group proved to be ready and prepared to respond in a concrete manner to the growing demands in the ESG (Environmental, Social and Governance) field, with particular regard to environmental issues, which have become fundamental and essential elements of the business. The roadmap aimed at pursuing "Environmental and Energy Excellence" was defined several years ago, with the ultimate goal of achieving the lowest technologically achievable environmental impact. In terms of external recognition, for the fourth consecutive year the Brembo Group was awarded a double A for the CDP (Carbon Disclosure Project) Climate Change and Water Security programmes.
The Brembo Group has confirmed its ambition of achieving carbon emission neutrality by 2040. To this end, a plan has been drawn up, laying out the lines of action and the reduction of the three emission targets, as defined in the GHG Protocol. For example, the actions cover energy efficiency, the progressive use of biofuels, increased use of renewable energy (up to 54% in 2021 compared to 44% in 2020), the use of raw materials of secondary origin and the replacement of production facilities with other next-generation, lower impact facilities.
The main areas of focus with regard to environmental issues for 2021 are set out below. For further details please refer to the Disclosure of Non-Financial Information.
Energy Management: following the connection of all the Group's facilities to the platform for monitoring energy consumption (Brembo Energy Platform), use of the platform continued to be enhanced, including monitoring of other types of consumption such as natural gas, compressed air and water. This enhancement was planned in order to allow the plants to maintain and improve their environmental and energy performances within the framework of a journey towards environmental excellence. The update plans consist of multiyear programmes also based on the priority of monitoring the vectors with the greatest impacts.
After the slowdown suffered as a result of the pandemic in 2020, the plan to extend the ISO 50001 certification regarding energy management resumed at full pace. During 2021, the plants in Sellero (Italy) and the cast iron foundries in Homer (USA) and Escobedo (Mexico) were certified.
In the reporting year, new energy generation systems were installed in the form of photovoltaic panels at the facility in Pune (India). In addition, the process of installing additional energy generation capacity at the plants Mapello and Curno (Italy) began and is set to conclude in 2022.
Life Cycle Assessment: in accordance with the plan launched in the first half of 2021, a study was begun to understand the environmental impact throughout the life cycle of three product families within the Discs GBU. The study, conducted with the support of external professionals, involved the cast iron foundries and related mechanical processing located in Italy, Poland, China, the United States and Mexico. The goal was both to identify the areas of environmental impact and compare Brembo facilities with one another so as to define an internal benchmark to which to refer to determine the necessary improvements in environmental impacts. The study is expected to be completed by the first quarter of 2022.
Circular Economy: one of the main ongoing actions in the area of the circular economy is the recovery of materials previously sent for disposal to the cast-iron melting furnaces at the Mapello plant, where the experimental phase designed to demonstrate the possible recovery of spent alkaline batteries to replace melting additives of primary origin, without worsening the environmental impact, was successfully concluded. At the reporting date, the plant had received favourable opinions from public entities; these acts definitively authorise the use of this technology on an industrial scale. Another area of work in the circular economy was assessing the possible replacement of aluminium of primary origin with that from the recovery chain for the production of brake callipers. The project — already presented to the main clients — could enable a significant decrease in the CO2 emissions currently generated by the phases of extraction and refinement of primary aluminium.
Thanks to collaboration with major universities, research entities and trade associations, the first initiatives are being pursued for the use of biofuels from the recovery of waste or scrap from other production processes, which could find application at Brembo, for example, in melting processes.
Sustainability and energy efficiency goals: in 2021, sustainability and energy efficiency goals were once again set at the beginning of the year in order to pursue the Group's mediumand long-term objectives, established in accordance with the instructions given in the 2015 Paris Agreement on climate. Both the goals have been attained: the sustainability goal, calculated as a percent reduction in CO2 emissions with respect to the 2020 emissions achieved through improvement projects, which had been set at 19%, reached a final 24% result; the energy efficiency objective, calculated as a percent reduction in energy consumption compared to 2020 achieved through improvement measures, which had been set at 2.77%, reached a final 3% result.
The year 2021 ended with the best result of all time in terms of both the frequency index and severity index for the Group's accidents, which has improved constantly since 2019, despite a 20% increase in total hours worked compared to 2020.
As in the previous year, no accidents sustained by personnel operating at Brembo facilities caused permanent injuries and 18 facilities had zero injuries.
The most complex aspect to be managed in 2021 remained the Covid-19 pandemic. The activities and initiatives aimed at preventing and containing its spread throughout the Group's facilities may be summed up in a constant focus on the evolution of the pandemic situation in each country where Brembo operates, the resulting updates to existing protocols, circulation to workers of practices to be applied in the workplace and constant audit activity. To this end, in response to the series of pandemic waves that occurred in 2021, updates were applied to the protocols containing the measures for combating and containing Covid-19, applicable to both Brembo staff and external individuals who access the facilities (delivery of FFP2 face masks and checking of Green Passes as required by law).
The monitoring and supervision plan to ensure constant verification of compliance with and application of the measures contained in the protocols also continued. This activity involved the entire company organisation, from Plant Managers to site Health & Safety Managers to the corporate HS Department. In 2021, the latter, with support from the local HS Departments, conducted 761 audits, recording a 97.1% compliance with protocols.
In 2021, alongside management of the pandemic, the Group's workplace health and safety activities continued. In detail:
The certification of all sites was confirmed for 2021 through special maintenance audits carried out by a third party, which revealed no significant non-conformities.
As part of the World Class Manufacturing programme, the Safety pillar was also launched as a priority in 2021 at five pilot plants (in Italy and Poland). The activities carried out included the project's Kick Off, the creation and initial training of teams,
identification of model areas and of the first improvement activities. The activity is due to continue with the project being gradually extended to the other Group sites with the final goal of involving 100% of Brembo sites.
The aim of the project is to anticipate the ergonomic analyses of production processes in their design phase so as to:
Numerous construction sites were started to test this methodology, in Production and in Technologies, both on existing lines and on lines in the design phase in order to be able to trial the use of the method and evaluate its effectiveness.
Since 60% of accidents within the Group are due to unsafe behaviour, a percentage that goes as high as 80% in labour intensive areas (assembly and mechanical processing), a project which aims to identify and correct behaviours that have caused recurring accidents was launched. The project's strength lies with the involvement of site prevention personnel, team leaders, department and shift heads both as observers of the behaviours themselves and as "trainers" for the correct behaviours to follow.
In 2021, Brembo completed the periodic annual audit of the application of LOTO procedures in all plants. This work gave rise to improvement plans where non-conformities had been detected.
In compliance with Consob Regulation adopted with Resolution No. 17221 of 12 March 2010, as amended, Brembo S.p.A. adopted the Related Party Transactions Procedure.
The procedure was approved for the first time by the Board of Directors of Brembo S.p.A. during the meeting held on 12 November 2010, after receiving the favourable opinion of the Audit, Risk & Sustainability Committee, which also acts as Related Party Transactions Committee since it meets the requirements set out by the above-mentioned regulations. Said procedure was constantly updated to comply with the regulatory provisions in force from time to time, as well as with the existing practices. The procedure aims to ensure the full transparency and propriety of Related Party Transactions.
On 10 May 2021, the Board of Directors — after receiving the favourable opinion of the Audit, Risk & Sustainability Committee, which also acts as Related Party Transactions Committee and passed this resolution at the presence of all its members — approved unanimously the new Related Party Transaction Procedure, aligned with the new provisions regarding related party transactions adopted by Consob with Resolution No. 21624 of 10 December 2020. The new Procedure, effective 1 July 2021, was published on the Company's website (www. brembo.com, section Company, Corporate Governance, Governance Documents).
Detailed information on the Company's Related Party Transactions is provided in the Explanatory Notes to the Consolidated Financial Statements. During the reporting period, no atypical or unusual transactions were carried out with Related Parties. Furthermore, commercial transactions with Related Parties, also other than the Group companies, were carried out at fair market conditions. The financing transactions undertaken during the year with Related Parties are also discussed in Explanatory Notes to the Consolidated Financial Statements.
Brembo constantly follows developments relating to the spread of the Covid-19 pandemic at all its sites worldwide, promptly adopting all necessary measures to prevent, monitor and contain the virus, with the aim of protecting the health of employees and contractors, such as extended remote working, rearrangement of production layouts, sanitisation of the premises, personal protective equipment, temperature measurement, heat scans, hygiene rules, social distancing, control of green passes where required.
In 2021, all the Group's plants operated at normal capacity, except for Brembo Nanjing Brake Systems Co. Ltd. due to the lockdown period in China (30 July-26 August).
On 7 January 2021, Brembo completed the acquisition of SBS Friction A/S, a Danish company based in Svendborg, Denmark, that develops and manufactures brake pads for motorbikes using particularly innovative and eco-friendly sintered organic materials. The investment is 60% held by Brembo S.p.A. and 40% by Brembo Brake India Pvt. Ltd. The total outlay for the transaction was DKK 226 million (€30.4 million), paid using available cash.
The General Shareholders' Meeting of the Parent Brembo S.p.A. held on 22 April 2021 approved the Financial Statements for the financial year ended 31 December 2020, allocating net income for the year amounting to €85,505,062.96 as follows:
On 28 April 2021, Brembo signed an agreement for the acquisition of a 100% stake in the J.Juan Group, a Spanish company specialising in the development and production of motorbike braking systems. Founded in 1965, J.Juan is based in Gavà (Barcelona) and has three plants in Spain and one in China, manufacturing especially brake hoses, a strategic component for the braking system's safety that will complement the current range of Brembo products for motorbikes. The acquisition of J.Juan enables the Group to complete its range of solutions for the motorbike braking system and to expand its brand family for the growing motorbike sector. On 4 November 2021, Brembo finalised the acquisition of J.Juan, with a total outlay for the transaction of €73 million, paid using available liquidity and subject to the usual adjustment mechanisms applicable to similar transactions that will be completed by the end of the first quarter of 2022.
Brembo established the company Inspiration Lab Corp. with registered office in Wilmington (Delaware, USA) and share capital of USD 300 thousand. The company is based in the Silicon Valley, California (USA), and is the first centre of excellence opened by Brembo.
The General Shareholders' Meeting held on 22 April 2021 passed a new plan for the buy-back and sale of own shares with the following objectives:
The maximum number of shares that may be purchased is 8,000,000 that, with the 10,035,000 own shares already held (3.005% of share capital), represents 5.401% of the Company's share capital.
Own shares can be bought back up to a maximum of €144 million:
With reference to the disposal of own shares, the Board of Directors will define, from time to time, in accordance with applicable legislation and/or allowed market practices, the criteria to set the relevant consideration and/or methods, terms and conditions to use own shares in portfolio, taking due account of the realisation methods applied, the price trend of the stock in the period before the transaction and the best interest of the Company.
The authorisation to buy back own shares is valid for a period of 18 months from the date of the resolution by the General Shareholders' Meeting.
Brembo has neither bought nor sold own shares in 2021.
The Company has adopted the opt-out system envisaged by Article 70, paragraph 8, and Article 71, paragraph 1-bis, of the Rules for Issuers (Board's Resolution dated 17 December 2012), thus opting out from the obligation to publish the required disclosure documents in the case of significant mergers, de-mergers, capital increase by way of contributions in kind, acquisitions and disposals.
In accordance with the requirements of Articles 36 and 39 of the Market Regulations (adopted with Consob Resolution No. 16191 of 29 October 2007 and amended with Resolution No. 16530 of 25 June 2008), Brembo Group identified six subsidiaries based in four countries not belonging to the European Union that are of significant importance, as defined under paragraph 2 of the same Article 36, and therefore fall within the scope of application of the Regulations.
Brembo Group believes that its current administrative, ac-
counting and reporting systems are adequate to ensure that the Parent's management and auditing firm receive any information regarding Statement of Income, Statement of Financial Position and Cash Flow figures, as necessary for preparing the consolidated financial statements.
For all companies included in the consolidation area, the Parent Brembo S.p.A. already has a copy of the By-laws and the composition and powers of the Corporate Bodies.
The reconciliation of Equity and Result for the year, as reported in the Parent's Financial Statements, and the Equity and Result for the year recognised in the Consolidated Financial Statements shows that the Group's Equity at 31 December 2021 was €909,515 thousand higher than the figure reported in the Brembo S.p.A. Financial Statements. Consolidated Net Result for the year, amounting to €215,537 thousand, was €104,308 thousand higher than that of Brembo S.p.A.
| Net income | Equity | Net income | Equity | ||
|---|---|---|---|---|---|
| (euro thousand) | 2021 | at 31.12.2021 | 2020 | at 31.12.2020 | |
| Brembo S.p.A. | 111,229 | 853,081 | 85,505 | 729,806 | |
| Consolidation adjustments: | |||||
| Equity of consolidated companies and allocation of their result | 137,488 | 1,340,112 | 90,922 | 1,042,657 | |
| Goodwill and other allocated surplus | 0 | 75,719 | 0 | 49,026 | |
| Elimination of intra-Group dividends | (30,374) | 0 | (38,807) | 0 | |
| Book value of consolidated shareholdings | 0 | (535,435) | 0 | (405,834) | |
| Valuation of shareholdings in associate companies/JVs | |||||
| measured using the equity method | 498 | 21,112 | 414 | 19,809 | |
| Elimination of intra-Group income | (1,753) | (8,298) | 220 | (5,606) | |
| Other consolidation adjustments | (1,202) | 49,829 | (316) | 51,183 | |
| Equity and result for the year attributable to minority interests | (349) | (33,524) | (1,405) | (30,982) | |
| Total consolidation adjustments | 104,308 | 909,515 | 51,028 | 720,253 | |
| Group consolidated equity and result | 215,537 | 1,762,596 | 136,533 | 1,450,059 |
Following the resignation of Laura Cioli, serving as Independent Director, Chairwoman of the Audit, Risk & Sustainability Committee and member of the Remuneration & Appointments Committee, on 3 March 2022 the Board of Directors of Brembo S.p.A., after having heard the recommendations and guidelines of the Remuneration & Appointments Committee, co-opted Manuela Soffientini as new Independent Director, member of the Audit, Risk & Sustainability Committee and of the Remuneration & Appointments Committee (the Director's resume is available on the Company's website: Governing Boards and Committees | Brembo - Official website). In addition, Independent Director Elisabetta Magistretti was appointed Chairwoman of the Audit, Risk & Sustainability Committee.
No other significant events occurred after the end of the year and up to 3 March 2022.
The first months of 2022 reported positive results in terms of volumes and full utilisation of production capacity. Brembo is paying close attention to the developments of the Russia-Ukraine crisis. The direct impact on the Group is modest, as it has no production sites in the area and the exposure to local customers is limited, nonetheless the Group is closely monitoring commodity supplies and production costs.
Brembo S.p.A.'s Corporate Governance and Ownership Structure Report pursuant to Article 123-bis of the Consolidated Law on Finance presented in an individual report, separate from the Directors' Report on Operations, has been published at the same time as the latter and is available on Brembo's website (www.brembo.com, Company, Corporate Governance, Corporate Governance Reports section).
The Consolidated Disclosure of Non-Financial Information for 2021 pursuant to Legislative Decree No. 254/2016 presented in an individual report, separate from the Directors' Report on Operations, has been published at the same time as the latter and is available on Brembo's website (www.brembo.com, in the Sustainability, Report, Report and Presentations section).
To conclude the description of the performance of the Brembo Group for the year ended 31 December 2021, based also on the examination of our Report concerning the Consolidated Financial Statements of the Brembo Group and the separate Financial Statements of Brembo S.p.A., in which we outlined the guidelines and operations, we submit for your approval our proposal for distributing Brembo S.p.A.'s net income amounting to €111,228,545.97, as follows:
Stezzano, 3 March 2022
On behalf of the Board of Directors The Executive Chairman Matteo Tiraboschi
Brembo's stock closed 2021 at €12.53, a 16.0% increase compared to year-start, reaching its high on 23 and 30 December (€12.53) and its low on 12 May (€10.08).
The FTSE MIB index closed the year up 23.0%, whereas the BBG EMEA Automobiles Parts index declined by 4.4%. In 2021, the global economic performance continued to be impacted by the Covid-19 pandemic, although the focus was more on price dynamics and aggregate demand trend.
Following a strong recovery in global production in several sectors, general inflation peaked at the end of 2021, with significant price increases for numerous commodities, also due to widespread shortages.
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Share capital (euro) | 34,727,914 | 34,727,914 |
| No. of ordinary shares | 333,922,250 | 333,922,250 |
| Equity (excluding net income for the year) (euro) | 741,852,236 | 644,300,524 |
| Net income for the year (euro) | 111,228,546 | 85,505,063 |
| Trading price (euro) | ||
| Minimum | 10.08 | 5.91 |
| Maximum | 12.53 | 11.21 |
| Year-end | 12.53 | 10.80 |
| Market capitalisation (euro million) | ||
| Minimum | 3,366 | 1,973 |
| Maximum | 4,184 | 3,743 |
| Year-end | 4,184 | 3,606 |
| Gross dividend per share | 0.27 (*) | 0.22 |
An overview of stock performance of Brembo S.p.A. is given below, compared with that of the previous year.
(*) To be approved by the Shareholders' Meeting convened on 21 April 2022.
Further information and updates regarding stock performance and recent corporate information are provided on Brembo's website: www.brembo.com - Investors section. Investor Relations Manager: Laura Panseri
The thrill of adrenaline makes the goal seem nearer as we give it our all to overcome adversity. Supremacy of technology and ideas to continue to innovate, grow and win.
"Open wheels" Championships
| Formula 1 (calipers) | |
|---|---|
| Drivers' championship | Max Verstappen |
| Constructors' championship | Mercedes AMG Petronas team |
| Formula E | |
| Drivers' championship | Nick De Vries |
| Team championship | Mercedes EQ Formula E Team |
| Formula 2 (calipers and master cylinders) | |
| Drivers' championship | Oscar Piastri |
| Constructors' championship | Prema Racing |
| Formula 3 | |
| Drivers' championship | Dennis Hauger |
| Team championship | Trident |
| Super Formula | |
| Drivers' championship | Tomoki Nojiri - Team Mugen |
"Covered wheels" Championships
| FIA World Endurance Championship - WEC | |
|---|---|
| LMP2 (calipers) | Frijns, Von Habsburg, Milesi - Team WRT Oreca 07 Gibson |
| GT AM | Nielsen, Perrodo, Rovera - AF Corse 488 GTE Evo |
| GT PRO | Calado, Pier Guidi - AF Corse 488 GTE Evo |
| FIA GT World Challenge Europe | |
| Endurance Cup | Alessandro Pier Guidi, Come Ledogar, Nicklas Nielsen- Iron Lynx |
| Nascar Cup Series | |
| Drivers' championship | Kyle Larson |
| Constructors' championship | Chevrolet |
| Classe Dpi (calipers) | Derani, Nasr - Wheelen Engineering Racing, Cadillac DPi-VR |
|---|---|
| Classe LMP2 (calipers) | Keating, Jensen - PR1 Mathiasen Motorsports, Oreca 07 |
| Classe LMP3 | Gar Robinson - Riley Motosports, Ligier JS P320 |
| Classe GTD (discs) | Vanthoor, Robichon, Pfaff Motorsports, Porsche 911 GT3 R |
| Idemitsu Mazda MX-5 Cup Championship (discs and calipers) | |
| Gresham Wagner | |
| Fanatec GT World Challenge - GT America - Masters Class / Driver Championship (discs) | |
| Wright Motorsports - Charlie Luck | |
| Fanatec GT World Challenge (America) | |
| Wright Motorsports - Fred Poordad / Jan Heylen | |
| SCORE Off Road Series Trophy Truck Champion | |
| Rob MacCachren | |
| ARCA Menards East Series | |
| Sammy Smith - Enginelce - Toyota | |
| ARCA Menards West Series | |
| Jesse Love - NAPA Auto Parts - Toyota | |
| Nascar Camping World Truck Series | |
| Ben Rhodes - ThorSport Racing - Toyota | |
| Nascar Xfinity Series | |
| Daniel Hemric - Joe Gibbs Racing - Toyota | |
| Southern Super Series | |
| Jake Garcia | |
| Michelin Pilot Championship - TCR Drivers' Championship | |
| Bryan Herta Autosport Hyundai Veloster N TCR | |
| Taylor Hagler - Michael Lewis | |
Dakar Rally
Championships
Peterhansel, Boulanger - Mini John Cooper Works, X-Raid Rally
Motorbike Championships
| MotoGP | |
|---|---|
| Drivers' championship | Fabio Quartararo |
| Team championship | Ducati Lenovo Team |
| Constructors' championship | Ducati |
| Moto2 | |
| Drivers' championship | Remy Gardner |
| Team championship | Red Bull KTM Ajo |
| Constructors' championship | Kalex |
| Moto3 | |
| Drivers' championship | Pedro Acosta |
| Team championship | Red Bull KTM Ajo |
| Constructors' championship | KTM |
| FIM MotoE World Cup | |
| Drivers' championship | Jordi Torres |
| World Superbike - WSBK | |
| Drivers' championship | Toprak Razgatlioglu |
| Team championship | Pata Yamaha with Brixx World SBK |
| Constructors' championship | Yamaha |
| Campionato EWC | |
| Team championship | Yoshimura SERT Motul |
| Moto America Superbike | |
| Drivers' championship | Jake Gagne - Yamaha YZF-R1M |
Off-road Championships
| Motocross | |
|---|---|
| MXGP | Jeffrey Herlings - Red Bull KTM Factory Racing |
| Enduro | |
| E1 | Andrea Verona - Gas Gas |
| E2 | Josep Garcia - KTM |
| Hard Enduro | Billy Bolt- Husqvarna |
| Trial GP and X-Trial (master cylinders) | |
| Toni Bou - Montesa - Team Honda Repsol |
World SBK Championships
| Drivers' championship | Toprak Razgatlioglu |
|---|---|
| Team championship | Pata Yamaha with Brixx World SBK |
| Constructors' championship | Yamaha |
| Moto3 | |
| Drivers' championship | Pedro Acosta |
| Team championship | Red Bull KTM Ajo |
| Constructors' championship | KTM |
| FIM MotoE World Cup | |
| Drivers' championship | Jordi Torres |
"Open wheels" Championships
| Formula 1 (clutches) | |
|---|---|
| Constructors' championship | Mercedes AMG Petronas team |
| Formula 3 (clutches) | |
| Drivers' championship | Dennis Hauger |
| Team championship | Trident |
| IndyCar (clutches) | |
| Drivers' championship | Alex Palou - Chip Ganassi Racing |
| Indianapolis 500 (clutches) | |
| Drivers | Hélio Castroneves - Meyer Shank Racing |
"Covered wheels" Championships
| LMP1 (clutches) | Lopez, Conway, Kobayashi - Toyota Gazoo Racing |
|---|---|
| LMP2 (discs) | Frijns, Von Hansburg, Milesi - Team WRT - Oreca |
| IMSA WeatherTech Sportscar Championship | |
| Classe Dpi (discs and clutches) | Derani, Nasr - Wheelen Engineering Racing, Cadillac DPi-VR |
| Classe LMP2 (discs) | Keating, Jensen - PR1 Mathiasen Motorsports, Oreca 07 |
| Classe LMP3 (clutches) | Gar Robinson - Riley Motosports, Ligier JS P320 |
| Classe GTD (calipers) | Vanthoor, Robichon, Pfaff Motorsports, Porsche 911 GT3 R |
| British Touring Car Championship (calipers and clutches) | |
| Drivers' championship | Ash Sutton - Laser Tools Racing, Infiniti Q50 |
| Team championship | Laser Tools Racing |
| Australia Supercars Championship (calipers and clutches) | |
| Drivers' championship | Shane Van Gisbergen - Red Bull Ampol Racing - Holden Commodore ZB |
| Team championship | Red Bull Ampol Racing-Holden Commodore |
| WTCR (calipers and clutches) | |
| Drivers' championship | Yann Ehrlacher - Cyan Racing Lynk & Co |
| Team championship | Cyan Racing Lynk & Co |
| Japanese Super GT | |
| Classe GT500 (calipers and discs) | |
| Drivers' championship | Sekiguchi, Tsuboi - TGR Team au Tom's GR Supra |
| Classe GT300 (calipers and clutches) | |
| Drivers' championship and Team | Iguchi, Yamauchi - R&D Sport Subaru BRZ |
| WRC (clutches) | |
| Drivers' championship | Sébastien Ogier |
Rally Championships
| FIA World Cup For Cross-Country Rallies | |
|---|---|
| T4 (calipers) | |
| Drivers' championship | Austin Jones |
| Team championship | South Racing |
| FIA World Cup For Cross-Country Bajas | |
| T3 (calipers) | |
| Drivers' championship | Dania Saud Akeel |
| T4 (calipers) | |
| Drivers' championship | Alexandre Re |
| Team championship | South Racing |
| Dakar Rally | |
| SSV -T4 (calipers) | |
| Drivers | Francisco López Contardo |
| Team | South Racing |
| Lightweight vehicle (calipers) | |
| Drivers | Josef Machacek |
| Team | Buggyra Racing |
| Score Baja 1.000 California | |
| Pro UTV Forced Induction (calipers) | |
| Drivers | Phil Blurton |
| Team | CanAm |
| Best In The Desert - BITD | |
| UTV Rally (calipers) | |
| Drivers' championship | Jack Olliges |
| UTV uni (calipers) | |
| Drivers' championship | Michael Isom |
Off-road Championships
| Trial des Nations (calipers and hoses) | |
|---|---|
| Drivers' championship | Toni Bou - Montesa, Adam Raga – TRRS, Jaime Busto - Vertigo |
| Women's Trial des Nations (calipers and hoses) | |
| Drivers' championship | Laia Sanz - GASGAS, Berta Abellan - Vertigo, Sandra Gomez -TRRS |
| Trial GP (calipers and hoses) | |
| Drivers' championship | Toni Bou |
| Team championship | Montesa - Team Honda Repsol |
| Women`s Trial GP (calipers and hoses) | |
| Drivers' championship | Laia Sanz |
| Team championship | Gas Gas Racing |
| Trial 2 (calipers and hoses) | |
| Drivers' championship | Toby Martyn |
| Team championship | TRRS |
| Trial 125 (calipers and hoses) | |
| Drivers' championship | Jack Dance |
| Team championship | Gas Gas |
| X Trial GP (calipers and hoses) | |
| Drivers' championship | Toni Bou |
| Team championship | Montesa - Team Honda Repsol |
World Supersport Championships
Values and expertise, changes and connections: it is natural to foresee our partners' needs. Dominating the world of ideas: the answer anticipates the question and the solution the request.
| (euro thousand) | Notes | 31.12.2021 | of which with related parties |
31.12.2020 | of which with related parties |
Change |
|---|---|---|---|---|---|---|
| NON-CURRENT ASSETS | ||||||
| Property, plant, equipment and other equipment | 1 | 1,047,259 | 975,824 | 71,435 | ||
| Right of use assets | 1 | 227,474 | 207,456 | 20,018 | ||
| Development costs | 2 | 101,129 | 92,292 | 8,837 | ||
| Goodwill and other indefinite useful life assets | 2 | 118,775 | 79,882 | 38,893 | ||
| Other intangible assets | 2 | 77,415 | 47,393 | 30,022 | ||
| Shareholdings valued using the equity method | 3 | 45,100 | 43,947 | 1,153 | ||
| Other financial assets (including investments in other companies and derivatives) |
4 | 320,252 | 217,263 | 2,716 | 102,989 | |
| Receivables and other non-current assets | 5 | 23,218 | 18,242 | 4,976 | ||
| Deferred tax assets | 6 | 71,649 | 76,731 | (5,082) | ||
| TOTAL NON-CURRENT ASSETS | 2,032,271 | 1,759,030 | 273,241 | |||
| CURRENT ASSETS | ||||||
| Inventories | 7 | 482,924 | 13 | 354,887 | 128,037 | |
| Trade receivables | 8 | 468,222 | 1,232 | 385,439 | 1,775 | 82,783 |
| Other receivables and current assets | 9 | 136,162 | 119,315 | 16,847 | ||
| Current financial assets and derivatives | 10 | 5,592 | 1,938 | 3,654 | ||
| Cash and cash equivalents | 11 | 557,463 | 551,282 | 6,181 | ||
| TOTAL CURRENT ASSETS | 1,650,363 | 1,412,861 | 237,502 | |||
| ASSETS FROM DISCONTINUED OPERATIONS | 655 | 855 | (200) | |||
| TOTAL ASSETS | 3,683,289 | 3,172,746 | 510,543 |
| (euro thousand) | Notes | 31.12.2021 | of which with related parties |
31.12.2020 | of which with related parties |
Change |
|---|---|---|---|---|---|---|
| GROUP EQUITY | ||||||
| Share capital | 12 | 34,728 | 34,728 | 0 | ||
| Other reserves | 12 | 124,093 | 37,428 | 86,665 | ||
| Retained earnings/(losses) | 12 | 1,388,238 | 1,241,370 | 146,868 | ||
| Net result for the year | 12 | 215,537 | 136,533 | 79,004 | ||
| TOTAL GROUP EQUITY | 1,762,596 | 1,450,059 | 312,537 | |||
| TOTAL MINORITY INTERESTS | 33,524 | 30,982 | 2,542 | |||
| TOTAL EQUITY | 1,796,120 | 1,481,041 | 315,079 | |||
| NON-CURRENT LIABILITIES | ||||||
| Non-current payables to banks | 13 | 516,182 | 548,220 | (32,038) | ||
| Long-term lease liabilities | 13 | 202,340 | 187,415 | 14,925 | ||
| Other non-current financial payables and derivatives | 13 | 3,117 | 953 | 2,164 | ||
| Other non-current liabilities | 14 | 2,022 | 14,891 | 5,147 | (12,869) | |
| Non-current provisions | 15 | 44,995 | 42,990 | 2,005 | ||
| Provisions for employee benefits | 16 | 23,992 | 1,424 | 26,567 | 4,292 | (2,575) |
| Deferred tax liabilities | 6 | 38,189 | 26,421 | 11,768 | ||
| TOTAL NON-CURRENT LIABILITIES | 830,837 | 847,457 | (16,620) | |||
| CURRENT LIABILITIES | ||||||
| Current payables to banks | 13 | 225,286 | 175,998 | 49,288 | ||
| Short-term lease liabilities | 13 | 24,236 | 21,473 | 2,763 | ||
| Other current financial payables and derivatives | 13 | 3,760 | 3,838 | (78) | ||
| Trade payables | 17 | 590,830 | 11,529 | 474,906 | 9,289 | 115,924 |
| Tax payables | 18 | 12,959 | 7,405 | 5,554 | ||
| Current provisions | 15 | 960 | 1,875 | (915) | ||
| Other current liabilities | 19 | 198,222 | 14,699 | 158,613 | 2,825 | 39,609 |
| TOTAL CURRENT LIABILITIES | 1,056,253 | 844,108 | 212,145 | |||
| LIABILITIES FROM DISCONTINUED OPERATIONS | 79 | 140 | (61) | |||
| TOTAL LIABILITIES | 1,887,169 | 1,691,705 | 195,464 | |||
| TOTAL EQUITY AND LIABILITIES | 3,683,289 | 3,172,746 | 510,543 |
| (euro thousand) | Notes | 31.12.2021 | of which with related parties |
31.12.2020 | of which with related parties |
Change |
|---|---|---|---|---|---|---|
| Revenue from contracts with customers | 20 | 2,777,556 | 329 | 2,208,639 | 227 | 568,917 |
| Other revenues and income | 21 | 23,544 | 3,443 | 23,478 | 3,418 | 66 |
| Costs for capitalised internal works | 22 | 23,189 | 22,573 | 616 | ||
| Raw materials, consumables and goods | 23 | (1,310,330) | (45,196) | (1,024,961) | (30,826) | (285,369) |
| Income (expense) from non-financial investments | 24 | 15,318 | 10,392 | 4,926 | ||
| Other operating costs | 25 | (519,964) | (11,968) | (426,407) | (10,805) | (93,557) |
| Personnel expenses | 26 | (506,617) | (7,328) | (425,029) | (4,834) | (81,588) |
| GROSS OPERATING INCOME | 502,696 | 388,685 | 114,011 | |||
| Depreciation, amortisation and impairment losses | 27 | (214,715) | (207,550) | (7,165) | ||
| NET OPERATING INCOME | 287,981 | 181,135 | 106,846 | |||
| Interest income | 28 | 67,937 | 34,062 | 33,875 | ||
| Interest expense | 28 | (73,155) | (59,274) | (13,881) | ||
| Net interest income (expense) | 28 | (5,218) | (18) | (25,212) | 21 | 19,994 |
| Interest income (expense) from investments | 29 | 4,028 | 3,822 | 121 | 3,907 | |
| RESULT BEFORE TAXES | 286,791 | 156,044 | 130,747 | |||
| Taxes | 30 | (70,752) | (17,802) | (52,950) | ||
| Result from discontinued operations | 32 | (153) | (304) | 151 | ||
| RESULT BEFORE MINORITY INTERESTS | 215,886 | 137,938 | 77,948 | |||
| Minority interests | (349) | (1,405) | 1,056 | |||
| NET RESULT FOR THE YEAR | 215,537 | 136,533 | 79,004 | |||
| BASIC/DILUTED EARNINGS PER SHARE (euro) | 31 | 0.67 | 0.42 |
| (euro thousand) | 31.12.2021 | 31.12.2020 | Change |
|---|---|---|---|
| RESULT BEFORE MINORITY INTERESTS | 215,886 | 137,938 | 77,948 |
| Other comprehensive income/(losses) that will not be subsequently reclassified to income/(loss) for the year: |
|||
| Effect of actuarial income/(loss) on defined benefit plans | 2,027 | (3,260) | 5,287 |
| Tax effect | (293) | 711 | (1,004) |
| Effect of actuarial income/(loss) on defined benefit plans, for companies valued using the equity method |
668 | (415) | 1,083 |
| Fair value measurement of investments | 80,022 | 29,819 | 50,203 |
| Tax effect | (961) | (358) | (603) |
| Total other comprehensive income/(losses) that will not be subsequently reclassified to income/(loss) for the year |
81,463 | 26,497 | 55,569 |
| Other comprehensive income/(losses) that will be subsequently reclassified to income/(loss) for the year |
|||
| Effect of hedge accounting (cash flow hedge) of derivatives | 30,372 | (3,293) | 33,665 |
| Tax effect | (1,427) | 790 | (2,217) |
| Change in translation adjustment reserve | 60,692 | (68,266) | 128,958 |
| Total other comprehensive income/(losses) that will be subsequently reclassified to income/(loss) for the year |
89,637 | (70,769) | 160,406 |
| COMPREHENSIVE RESULT FOR THE YEAR | 386,986 | 93,666 | 293,923 |
| Of which attributable to: | |||
| - Minority Interests | 3,182 | 770 | 2,412 |
| - the Group | 383,804 | 92,896 | 290,908 |
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR | 445,230 | 168,559 |
| Result before taxes | 286,791 | 156,044 |
| Depreciation, amortisation/impairment losses | 214,715 | 207,550 |
| Capital gains/losses | 8 | (1,695) |
| Income/expense from investments, net of dividends received | (497) | (413) |
| Financial portion of provisions for defined benefits and payables for personnel | 398 | 407 |
| Long-term provisions for employee benefits | 2,741 | 2,423 |
| Other provisions net of utilisations | 4,981 | 48,618 |
| Result from discontinued operations | (153) | (304) |
| Cash flows generated by operating activities | 508,984 | 412,630 |
| Current taxes paid | (63,625) | (48,873) |
| Uses of long-term provisions for employee benefits | (4,224) | (4,580) |
| (Increase) reduction in current assets: | ||
| inventories | (108,167) | (23,913) |
| financial assets | (439) | 136 |
| trade receivables | (57,760) | 4,387 |
| receivables from others and other assets | 150 | (9,175) |
| Increase (reduction) in current liabilities: | ||
| trade payables | 99,173 | 910 |
| payables to others and other liabilities | 27,172 | 18,382 |
| Translation differences on current assets | 12,549 | (16,503) |
| Net cash flows from/(for) operating activities | 413,813 | 333,401 |
| (euro thousand) 31.12.2021 |
31.12.2020 |
|---|---|
| Investments in: | |
| property, plant and equipment (210,248) |
(162,052) |
| of which right of use assets (26,407) |
(37,755) |
| intangible assets (31,789) |
(28,273) |
| financial assets | (168) (182,862) |
| Price for disposal or reimbursement value of fixed assets | 5,854 4,205 |
| Amounts (paid)/received for the acquisition/disposal of subsidiaries, net of the relevant cash and cash equivalents (97,722) |
0 |
| Net cash flows from/(for) investing activities (334,073) |
(368,982) |
| Dividends paid in the year (71,132) |
0 |
| Dividend paid to minority shareholders in the year | (640) (640) |
| Change in fair value of derivatives | 1,491 648 |
| New lease agreements | 24,938 35,616 |
| Reimbursement of lease liabilities (29,021) |
(24,826) |
| Loans and financing granted by banks and other financial institutions in the year 101,226 |
425,000 |
| Repayment of long-term loans and other financing (83,161) |
(122,492) |
| Net cash flows from/(for) financing activities (56,299) |
313,306 |
| Total cash flows | 23,441 277,725 |
| Translation differences on cash and cash equivalents | 3,277 (1,054) |
| CASH AND CASH EQUIVALENTS AT END OF YEAR 471,948 |
445,230 |
| Share capital |
Other reserves |
Retained earnings (losses) |
Net result for the year |
Group equity |
Equity of Minority Interests |
Equity | |
|---|---|---|---|---|---|---|---|
| Balance at 1 January 2020 | 34,728 | 107,325 | 983,809 | 231,301 | 1,357,163 | 30,852 | 1,388,015 |
| Allocation of profit for the previous year | 1,125 | 230,176 | (231,301) | 0 | 0 | 0 | |
| Payment of dividends | 0 | (640) | (640) | ||||
| Reclassification | (888) | 888 | 0 | 0 | 0 | ||
| Components of comprehensive income: Effect of actuarial income/(loss) on defined benefit plans |
(2,549) | (2,549) | 0 | (2,549) | |||
| Effect of actuarial income/(loss) on defined benefit plans, for companies valued using the equity method |
(415) | (415) | 0 | (415) | |||
| Fair value measurement of investments | 29,461 | 29,461 | 0 | 29,461 | |||
| Effect of hedge accounting (cash flow hedge) of derivatives |
(2,503) | (2,503) | 0 | (2,503) | |||
| Change in translation adjustment reserve | (67,631) | (67,631) | (635) | (68,266) | |||
| Net result for the year | 136,533 | 136,533 | 1,405 | 137,938 | |||
| Balance at 1 January 2021 | 34,728 | 37,428 | 1,241,370 | 136,533 | 1,450,059 | 30,982 | 1,481,041 |
| Allocation of profit for the previous year | 65,278 | (65,278) | 0 | 0 | 0 | ||
| Payment of dividends | (71,255) | (71,255) | (640) | (71,895) | |||
| Other changes | (12) | (12) | 0 | (12) | |||
| Reclassification | (139) | 139 | 0 | 0 | 0 | ||
| Components of comprehensive income: Effect of actuarial income/(loss) on defined benefit plans |
1,734 | 1,734 | 0 | 1,734 | |||
| Effect of actuarial income/(loss) on defined benefit plans, for companies valued using the equity method |
668 | 668 | 0 | 668 | |||
| Fair value measurement of investments | 79,061 | 79,061 | 0 | 79,061 | |||
| Effect of hedge accounting (cash flow hedge) of derivatives |
28,945 | 28,945 | 0 | 28,945 | |||
| Change in translation adjustment reserve | 57,859 | 57,859 | 2,833 | 60,692 | |||
| Net result for the year | 215,537 | 215,537 | 349 | 215,886 |
ANNUAL FINANCIAL REPORT 2021
In the vehicle industry components sector, the Brembo Group is active in the research, design, production, assembly and sale of disc braking systems, wheels and light alloy and metal casting, in addition to mechanical processes in general.
The extensive product range consists of high-performance brake calipers, brake discs, wheel-side modules, complete braking systems and integrated engineering services, supporting the development of new models placed on the market by vehicle manufacturers. Brembo's products and services are used in the automotive industry, for light commercial and heavy industrial vehicles, motorbikes and racing competitions.
Manufacturing plants are located in Italy, Poland (Częstochowa, Dąbrowa Górnicza, Niepołomice), the United Kingdom (Coventry), the Czech Republic (Ostrava-Hrabová), Germany (Meitingen), Denmark (Svendborg), Spain (Barcelona), Mexico (Apodaca and Escobedo), Brazil (Betim), China (Nanjing, Langfang, Jiaxing), India (Pune) and the United States (Homer). Other companies located in Spain (Zaragoza), Sweden (Göteborg), Germany (Leinfelden-Echterdingen), China (Qingdao), Japan (Tokyo) and Russia (Moscow) carry out distribution and sales activities.
The Consolidated Financial Statements of the Brembo Group for the year ended 31 December 2021 have been prepared in accordance with the provisions of European Regulation No. 1606/2002 and the IFRS effective at 31 December 2021, issued by the International Accounting Standard Board (IASB) and adopted pursuant to Italian and EU regulations applicable from time to time, including Commission Delegated Regulation (EU) No. 2019/815 of 17 December 2018 (hereafter "ESEF Regulation").
IFRS means all international accounting standards and all interpretations issued by the International Financial Reporting Interpretation Committee (IFRIC).
The Consolidated Financial Statements include the Consolidated Statement of Financial Position, the Consolidated Statement of Income, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, and these Explanatory Notes, in accordance with IFRS requirements.
On 3 March 2022, the Board of Directors approved the Consolidated Financial Statements and requested that it be made available to the public and Consob, within the terms and according to the procedures provided for by applicable laws and regulations.
The Consolidated Financial Statements were prepared on the basis of draft Financial Statements for the year ended 31 December 2021, prepared by the Boards of Directors, or, when available, of Financial Statements approved at the Shareholders' Meetings of the relevant consolidated companies, appropriately adjusted to align them with Group classification criteria and accounting standards.
The Consolidated Financial Statements have been prepared in accordance with the general principle of providing a true and fair presentation of the Group's assets and liabilities, financial position, statement of income results and cash flows, based on the following general assumptions: going concern, accrual accounting, consistency of presentation, materiality and aggregation, prohibition of offsetting and comparative information.
The administrative period and the closing date for preparing the Consolidated Financial Statements correspond to the ones for the Financial Statements of the Parent and all the consolidated companies. The Consolidated Financial Statements are presented in euro, which is the functional currency of the Parent, Brembo S.p.A., and all amounts are rounded to the nearest thousand unless otherwise indicated.
The Consolidated Financial Statements provide comparison figures for the previous year. When applying an accounting standard or retroactively recognising an adjustment, or reclassifying financial statement items, the Group includes an additional column showing the Statement of Financial Position for the first comparison year.
The Group made the following choices in relation to the presentation of the Financial Statements:
The Financial Statements presented herein comply with Consob resolution No. 15519 of 27 July 2006.
Preparing financial statements in compliance with the applicable accounting standards requires management to make estimates that may have a significant effect on the items reported in the accounts. Estimates and associated assumptions are based on historical experience and other factors that are believed to be reasonable under the current circumstances and given the information available at the reporting date. Actual results may differ from these estimates. Estimates and associated assumptions are reviewed on an ongoing basis. Revisions of estimates are recognised in the period in which such estimates are revised. Management's decisions that have a significant impact on the financial statements and estimates, and have a significant risk of material adjustments to the book value of assets and liabilities in the next accounting period, are discussed in the notes to the individual financial statement entries.
The main estimates are used to recognise the capitalisation of development costs, recognition of taxes (including the estimate of any tax liabilities associated with tax litigation, underway or that is likely to occur), impairment of non-financial assets and the actuarial assumptions used in the valuation of defined benefit plans. Other estimates relate to provisions for contingencies, product warranties, inventory obsolescence, useful lives of certain assets, the designation of lease contracts and the determination of the fair value of financial instruments, including derivatives.
In particular, the following items should be noted:
The valuation and measurement criteria used are based on the IFRS in force as of 31 December 2021 and endorsed by the European Union.
Interest Rate Benchmark Reform—Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) The amendments include the temporary reduction of the requirements relating to the effects on financial statements when the interest rate offered on the interbank market (IBOR) is replaced by an alternative risk-free rate (RFR).
The amendments include the following practical expedients:
These amendments did not have any impact on the Group's Consolidated Financial Statements. The Group intends to use these practical expedients in the future periods in which they are applicable.
On 28 May 2020, the IASB issued an amendment to IFRS 16. The amendment allows a lessee not to apply the requirements of IFRS 16 relating to the accounting effects of contract modifications for rent concessions granted by lessors as a direct consequence of the Covid-19 epidemic. The amendment introduces a practical expedient according to which a lessee may choose not to account for rent concessions as if they were lease modifications. A lessee that chooses to adopt this practical expedient accounts for such concessions as if they were not contract modifications within the scope of IFRS 16. As for the previous year, the Group used this practical expedient at Brembo México S.A. de C.V. with regard to a property lease contract for a total amount of €91 thousand.
Other standards, interpretations or amendments, endorsed or not yet endorsed, and not yet entered into force at the reporting date, are listed in the following table:
| Description | Endorsed at the reporting date |
Expected date of entry into force |
|---|---|---|
| Amendments to IFRS 3 – Business Combinations; IAS 16 – Property, Plant and Equipment; IAS 37 — Provisions, Contingent Liabilities and Contingent Assets; and |
||
| Annual Improvements 2018-2020 (all issued on 14 May 2020) | YES | 1 January 2022 |
| IFRS 17 – Insurance Contracts (issued on 18 May 2017), including Amendments to IFRS 17 (issued on 25 June 2020) |
YES | 1 January 2023 |
| Amendments to IAS 1: – Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting Policies (issued on 12 February 2021) |
NO | 1 January 2023 |
| Amendments to IAS 1: – Presentation of Financial Statements: Classification of Liabilities as Current or Non-current and Classification of Liabilities as Current or Non-current – |
||
| Deferral of Effective Date (issued on 23 January 2020 and 15 July 2020, respectively) | NO | 1 January 2023 |
| Amendments to IAS 8 – Accounting Policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021) |
NO | 1 January 2023 |
| Amendments to IAS 12 – Income Taxes: Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (issued on 7 May 2021) |
NO | 1 January 2023 |
| Amendments to IFRS 17 – Insurance contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative Information (issued on 9 December 2021) |
NO | 1 January 2023 |
The Group did not opt for early adoption of new standards, interpretations or amendments that have been issued but have not entered into force yet.
The Consolidated Financial Statements include the Financial Statements of the Parent, Brembo S.p.A., at 31 December 2021, and the Financial Statements of the companies controlled by Brembo S.p.A. pursuant to IFRS 10. Control arises when the Group is exposed, or has rights, to variable returns from its involvement with the investee and at the same time has the ability to influence those returns through its power over the said investee.
Specifically, the Group controls an investee if, and only if, the Group has:
It is generally presumed that the majority of voting rights confers control. In support of this assumption, where the Group holds less than the majority of voting rights (or similar rights), the Group considers all facts and circumstances relevant to determining whether it controls the investee, including:
The Group reconsiders whether it controls an investee if the facts and circumstances indicate that there have been changes in one or more of the three factors relevant to determining control. A subsidiary begins to be consolidated when the Group obtains control of it and ceases to be consolidated when the Group loses control. The assets, liabilities, revenues and costs of a subsidiary acquired or disposed of during the year are included in the Consolidated Financial Statements from the date the Group obtains control until the date the Group no longer controls the company.
Income (loss) for the year and other comprehensive income components are allocated to the shareholders of the Parent and minority interests, even if this results in a negative balance for the minority interests. Where necessary, the appropriate adjustments are applied to the financial statements of subsidiaries, so as to ensure compliance with the Group's accounting policies. All intra-group assets and liabilities, equity, revenues, costs and cash flows relating to transactions between Group entities are completely eliminated during the consolidation process. Changes in percent interests in a subsidiary that do not entail a loss of control are recognised at equity.
If the Group loses control of a subsidiary, it eliminates the related assets (including goodwill), liabilities, minority interests and other components of equity, while any profit or loss is recognised in the Statement of Income. The residual interest, if any, is measured at fair value.
The list of consolidated subsidiaries, associates and joint ventures that are accounted for using the equity method, along with information regarding their registered offices and the percentage of capital held, is included in the paragraph "Information About the Group" of these Explanatory Notes. The following corporate transactions impacting the Group's consolidation area were performed in 2021.
• On 7 January 2021, Brembo acquired a 100% stake in SBS Friction A/S, a company based in Svendborg, Denmark. The investment is 60% held by Brembo S.p.A. and 40% by Brembo Brake India Pvt. Ltd. The total outlay for the transaction was DKK 226 million (€30.4 million), paid using available cash.
It should be recalled that on 30 June 2019 Brembo discontinued its industrial operations at the Buenos Aires plant and placed the subsidiary Brembo Argentina S.A. in liquidation. Therefore, pursuant to IFRS 5 the company's assets and liabilities have been reclassified to "Assets/Liabilities from discontinued operations", whereas its statement of income items have been reclassified to "Result from discontinued operations".
Business combinations (established after the date of transition to IFRS) are accounted for using the purchase accounting method envisaged by IFRS 3.
The value of the entity included in the business combination is the sum of the fair value of the assets acquired and liabilities assumed, including contingent liabilities.
The cost of a business combination is identified as the fair value, at the date control is obtained, of the assets acquired, liabilities assumed and equity instruments issued for the purposes of the combination. That cost is then compared with the fair value of the identifiable assets, liabilities and contingent liabilities upon acquisition. Any positive difference between the cost of the acquisition and the Group's share of the fair value of the identifiable assets, liabilities and contingent liabilities upon acquisition is recognised as goodwill. Any negative differences are charged directly to the Statement of Income. If the initial cost of a business combination can only be determined provisionally, adjustments to the initial provisional values must be made within twelve months of the acquisition date. Minority interests are recognised on the basis of the fair value of the net assets acquired. If a business combination involves more than one transaction, with successive share purchases, each transaction is treated separately using the cost of the transaction and fair value information on the assets, liabilities and contingent liabilities at the date of each transaction to determine the amount of any differences. When control of a company is obtained through a subsequent share purchase, the previously held interests are accounted for based on the fair value of identifiable assets, liabilities and contingent liabilities at the date control is acquired.
The acquiree measures contingent consideration at fair value at the acquisition date. The change in fair value of contingent consideration classified as an asset or liability, in that it is a financial instrument falling within the scope of IFRS 9, must be recognised in profit or loss or in Other Comprehensive Income. If the contingent consideration is
not within the scope of IFRS 9, it is measured in accordance with the relevant IFRS. If the contingent consideration is classified as an equity instrument, its value is not remeasured and its subsequent settlement is recognised in equity.
Goodwill is initially recognised at cost, as the difference of the aggregate of the value of the consideration transferred and the amount attributed to minority interests compared to net identifiable assets acquired and liabilities assumed by the Group. If the consideration is lower than the fair value of net assets of the acquired subsidiary, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any impairment losses. For the purposes of impairment testing, goodwill acquired in a business combination is allocated from the acquisition date to each of the Group's cash-generating units that is expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree have been assigned to those units.
If goodwill has been allocated to a cash-generating unit and the entity disposes of an operation within that unit, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal. The goodwill associated with the operation disposed of is measured on the basis of the relative value of the operation disposed of and the portion of the cash-generating unit retained.
An associate is a company over which the Group exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, without exercising control or joint control over the investee.
A joint venture is a joint arrangement whereby the parties that have joint control have rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control, which exists only when decisions about the relevant activities require the unanimous consent of all parties sharing control.
Considerations used to determine significant influence or joint control are similar to those required to determine control of subsidiaries.
The Group's equity investments in associates and joint ventures are accounted for using the equity method. Under the equity method, an equity investment in an associate or a joint venture is initially recognised at cost. The carrying amount is increased or decreased to recognise the investor's share of the investee's profit or loss realised after the acquisition date. The goodwill related to the associate or joint venture is included in the carrying amount of the equity investment and is not tested separately for impairment.
The Statement of Income reflects the Group's share of the profits or losses of the associate or joint venture. All changes in Other Comprehensive Income relating to such investees have been presented in the Group's Statement of Comprehensive Income. In addition, when an associate or a joint venture recognises a change directly in equity, the Group recognises its share of that change, where applicable, in its Statement of Changes in Equity. Unrealised gains and losses on transactions between the Group and associates or joint ventures are eliminated in proportion to the interest held in the associates or joint ventures.
The aggregate share of the net result of associates and joint ventures attributable to the Group is recognised in the Statement of Income and represents the income or loss after taxes and the amounts attributable to the other shareholders of the associate or joint venture.
The financial statements of associates and joint ventures are prepared at the same reporting date as the Group's Financial Statements. Where necessary, such financial statements are adjusted to bring them into line with the Group's accounting standards.
Once the equity method has been applied, at each reporting date the Group assesses whether there is objective evidence that the equity investments in the associates or joint ventures have become impaired. In such cases, the Group calculates the amount of the loss as the difference between the recoverable amount of the associate or joint venture and the carrying amount of the equity investment in its financial statements, and then accounts for that difference in the Statement of Income.
When significant influence over an associate or joint control of a joint venture is lost, the Group measures and recognises the residual equity investment at fair value. The difference between the carrying amount of the equity investment at the date significant influence or joint control is lost and the fair value of the residual equity investment and consideration received is recognised in profit or loss.
Shareholdings in other companies are classified and measured at fair values through other comprehensive income (OCI), as better described in the section "Financial Instruments – Financial Assets" below.
The financial statements of the Group Companies included in the Consolidated Financial Statements are denominated in the currency used in the primary market in which they operate (functional currency). The Group's Consolidated Financial Statements are denominated in euro, which is the functional currency of the Parent Brembo S.p.A.
At year end, the assets and liabilities of subsidiaries, associates and joint ventures with a functional currency other than the euro are translated into the currency used to prepare the consolidated Group accounts at the exchange rate prevailing at that date. Statement of Income items are translated at the average exchange rate for the period (as it is considered to represent the average of the exchange rates prevailing on the dates of the individual transactions). The differences arising from the translation of initial equity at end-of-period exchange rates and the differences arising as a result of the different method used for translating the result for the period are recognised under a specific heading of equity. If consolidated foreign companies are subsequently sold, accumulated conversion differences are recognised in the Statement of Income.
| Euro against other currencies | 31.12.2021 | 2021 average | 31.12.2020 | 2020 average |
|---|---|---|---|---|
| U.S. Dollar | 1.132600 | 1.183527 | 1.227100 | 1.141282 |
| Japanese Yen | 130.380000 | 129.857464 | 126.490000 | 121.775447 |
| Swedish Krona | 10.250300 | 10.144849 | 10.034300 | 10.488130 |
| Danish Krone | 7.436400 | 7.437050 | 7.440900 | 7.454393 |
| Polish Zloty | 4.596900 | 4.564036 | 4.559700 | 4.443177 |
| Czech Koruna | 24.858000 | 25.646809 | 26.242000 | 26.455446 |
| Mexican Peso | 23.143800 | 23.990296 | 24.416000 | 24.511767 |
| Pound Sterling | 0.840280 | 0.860004 | 0.899030 | 0.889215 |
| Brazilian Real | 6.310100 | 6.381339 | 6.373500 | 5.890010 |
| Indian Rupee | 84.229200 | 87.486086 | 89.660500 | 84.579539 |
| Argentine Peso | 116.362200 | 112.333438 | 103.249400 | 80.756116 |
| Chinese Renminbi | 7.194700 | 7.634023 | 8.022500 | 7.870837 |
| Russian Rouble | 85.300400 | 87.232057 | 91.467100 | 82.645446 |
The following table shows the exchange rates used in the translation of financial statements denominated in currencies other than the Group's functional currency (euro).
Transactions in currencies other than the functional currency are initially converted into the functional currency using the exchange rate prevailing at the date of the transaction. At the closing date of the accounting period, monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at the exchange rate prevailing at that date. Exchange differences arising from such translation are recognised in the Statement of Income.
Non-monetary assets and liabilities denominated in currencies other than the functional currency that are carried at cost are translated using the exchange rate prevailing at the transaction date, while those carried at fair value are translated using the exchange rate prevailing on the date the fair value is determined.
Property, plant, equipment and other equipment are recognised at cost, net of the related accumulated depreciation and any impairment loss. The cost includes the purchase or production price and direct costs incurred for bringing the asset to the location and condition necessary for it to be capable of being operated; interest expense is also included, where applicable under IAS 23.
Subsequent to initial recognition, the asset continues to be carried at cost and depreciated based on its remaining useful life net of any impairment in value, taking into account any residual value.
Land, including land linked to buildings, is recognised separately and is not depreciated since it is regarded as having an indefinite useful life.
Costs for improvements and transformations that increase the value of assets (i.e., they result in probable future economic rewards that can be reliably measured) are recognised in the assets section of the Statements of Financial Position as increases to the assets in question or as separate assets. Costs are recognised in the year in which they are incurred, where they relate to maintenance or repair and do not lead to any significant and measurable increase in productive capacity or in the useful life of the relevant asset.
Depreciation represents the economic and technical loss of value of the asset and is charged from when the asset is available for use; it is calculated using the straight-line method based on the rate considered representative of the estimated useful life of the asset.
The range of expected useful lives of property, plant and equipment used for calculating depreciation is reported below:
| Category | Useful life |
|---|---|
| Land | Indefinite |
| Buildings | 10-35 years |
| Plant and machinery | 5-20 years |
| Industrial and commercial equipment | 2.5-10 years |
| Other assets | 4-10 years |
The residual values, useful lives and depreciation methods applied to property, plant and equipment are reviewed at the end of each year and prospectively corrected, where appropriate. Useful lives are unchanged compared to the previous year.
IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. It requires lessees to recognise all lease contracts in the financial statements on the basis of a single accounting model similar to that used to recognise finance leases that were governed by IAS 17. The lessee recognises a liability for payments of rental fees specified in the lease contract and an asset representing the right to use the underlying asset for the period of the contract. Lessees must recognise separately the interest paid on the lease liability and amortisation of the right to use the asset. Lessees must also re-measure the lease liability when certain events happen (e.g., a change in lease contract conditions or a change in future lease payments caused by a change in an index or rate used to determine those payments). The lessee generally recognises the re-measured amount of the lease liability as an adjustment to the right to use the asset. The Group determines the lease term as the non-cancellable portion of the lease, together with the periods covered by the option to extend the lease, where it is reasonably certain that this option will be exercised, as well as the periods covered by the lease break option, if it is reasonably certain that this option will not be exercised.
Improvements to third-party assets that can be considered fixed assets are capitalised to the appropriate asset category and depreciated over the shorter of their useful life or the lease term.
The Group recognises intangible assets when the following conditions are met:
Intangible assets are initially measured at cost; subsequent to initial recognition, they are carried at cost less amortisation (except for goodwill and other intangible assets with indefinite useful lives), which is calculated using the straight-line method (beginning on the date the assets are available for use) over their useful lives, and net of any impairment losses, taking into account any residual value. The useful life of assets is reviewed periodically.
An intangible asset generated in the development phase of an internal project is recognised as asset if the Group can demonstrate:
Research costs are recognised in the Statement of Income. Similarly, in the case of externally acquired intangibles that qualify as research and development costs, only the costs attributable to the development phase are recognised as assets, provided that the above requirements are met.
Such costs are capitalised under "Development costs" and amortised when the development phase is concluded and the asset developed generates economic rewards. In the period in which internal development costs that can be capitalised are incurred, these costs are excluded from the Statement of Income item "Increase on internal works capitalised" and recognised in the item "Costs for capitalised internal works".
The range of expected useful lives of intangible fixed assets used for calculating amortisation is reported below:
| Category | Useful life |
|---|---|
| Development costs | 3-5 years |
| Goodwill and other fixed assets with indefinite useful lives | Indefinite |
| Industrial patents and similar rights | 5-10 years |
| Other intangible assets | 3-5 years |
The residual values, useful lives and amortisation methods applied to intangible assets are reviewed at the end of each year and prospectively corrected, where appropriate. Useful lives are unchanged compared to the previous year.
Goodwill, intangible assets with an indefinite life and development costs underway are systematically tested for impairment at least once a year, and whenever there are any indications of impairment.
Property, plant and equipment, as well as intangible assets that are subject to depreciation and amortisation are tested for impairment whenever indications of impairment arise.
Write-downs correspond to the difference between the carrying value and recoverable value of the assets in question. The recoverable value is the greater of the fair value of an asset or cash-generating unit less the costs of disposal and the value in use, determined as the present value of estimated future cash flows. The value in use is defined as the cash flows expected to arise from the use of an asset, or the sum of the cash flows in the case of more cash-generating units. The expected future cash flows are measured using the unlevered discounted cash flows method and each group of assets is discounted to the present value using the WACC method (weighted average cost of capital). If the recoverable amount is less than the carrying amount, the carrying amount is reduced to the recoverable amount, and, as a general rule, the impairment loss is recorded in the Statement of Income. When the impairment loss of an asset (except for goodwill) is subsequently reversed, the carrying value of the asset (or cash-generating unit) is increased to the new estimate of recoverable value, without exceeding the value prior to write-down.
Inventories of raw materials and finished products are stated at the lower of cost of acquisition or market value and the corresponding presumable net realisable value estimated from market trends.
The purchase cost includes costs incurred to bring each asset to the place it is stored. Manufacturing costs of finished products and semi-finished goods include direct costs and a portion of indirect costs that can be reasonably attributed to the products based on normal exploitation of the production capacity; interest expense is excluded. Work in progress is valued at production costs for the year, based on the progress report.
The cost of inventories of raw materials, finished goods, goods for resale and semi-finished products is calculated using the weighted mean cost method.
For raw materials, ancillaries and consumables, the presumable net realisable value corresponds to the replacement cost. For finished products and semi-finished goods, the presumable net realisable value corresponds to the estimated sales price in the ordinary course of business, less the estimated costs of completion and costs to sell. Inventories that are obsolete or characterised by a long turnover period are written down on the basis of their possible useful life or future realisable value, by creating a special provision for inventory adjustment.
Cash and cash equivalents include cash balances, unrestricted deposits and other treasury investments with original maturities of up to three months. A treasury investment is considered as availability, when it is instantly convertible to cash with minimal risk of any fluctuation in value and, further, it is intended to meet short-term cash requirements and is not held as an investment.
For purposes of the Statement of Cash Flows, cash balances are stated net of bank overdrafts at the end of the period.
Provisions include certain or probable costs of a specific nature, the amount or settlement date of which could not be determined at year-end. A provision is recognised when:
Provisions are recognised at the present value of the expected expenditure required to settle the obligation in question. Where the Group expects some or all of the expenditure required to settle a provision to be reimbursed, such as for the case of insured risks, the reimbursement is treated as a separate asset and is recognised when, and only when, it is virtually certain that the reimbursement will be received. In this case, the expense relating to the provision is presented in the Statement of Income net of the amount recognised for the reimbursement. Provisions are periodically updated to reflect changes in cost estimates, timing and present value, if any; revisions to estimates are recognised under the same heading of the Statement of Income under which the original provision was recognised and in the Statement of Income of the period in which the change is made. When provisions are discounted to present value, the change resulting from the passage of time or interest rate fluctuations is recognised under "Net interest income (expense)".
Any provisions for restructuring costs are recognised when the company involved has approved a formal detailed plan and communicated it to the parties concerned.
A provision for costs arising from tax liabilities is recognised when the dispute to which the contingent liability refers is ongoing or likely.
Provisions for product warranty costs are recognised when products are sold. Initial recognition is based on historical experience, excluding exceptional events, for which a precise assessment is conducted. The initial estimate of the costs of warranty work is reviewed annually.
The difference between defined contribution plans, wholly unfunded defined benefit plans, wholly or partly funded defined benefit plans and other forms of long-term benefits is reported below.
Defined contribution plans are post-employment benefit plans under which a company pays contributions to an insurance company or pension fund and has no legal or constructive obligation to pay further contributions if, when the benefit right matures, the fund does not have sufficient assets to pay all benefits relating to employee service in the current or prior periods.
These contributions, which are paid for the services rendered by employees, are recognised in the same accounting period in which the services are rendered.
Defined benefit plans are post-employment benefit plans that entail a future obligation for the company. The company assumes actuarial and investment risks in relation to the plan.
To determine the present value of its obligations relating to such plans and the related service costs, the Group uses the "Projected Unit Credit Method".
This actuarial calculation method requires the use of unbiased and mutually compatible actuarial assumptions about demographic variables (mortality rate and employee turnover rate) and financial variables (discount rates and future increases in salary and benefits). When a defined benefit plan is wholly or partly funded by contributions paid either into a fund that is legally separate from the company or to an insurance company, any plan assets are measured at fair value. The obligation is therefore stated net of the fair value of the plan assets that will be used to directly meet such obligation.
Remeasurements, which include actuarial gains and losses, any changes in the effect of the assets ceiling (excluding net interest) and return on plan assets (excluding net interest) are recognised immediately in the Statement of Financial Position, debiting or crediting retained earnings through Other Comprehensive Income in the period in which they occur. Remeasurements are not reclassified through profit or loss in the following years.
Other long-term benefits refer to employee benefits other than post-employment benefits. They are accounted for in the same manner as defined benefit plans.
Own shares bought back are recognised at cost and are deducted from equity. No gain or loss is recognised in the Statement of Income on the purchase, sale, or cancellation of the company's own shares. The difference between the carrying amount and the consideration, in case of reissue, is recognised in the share premium reserve.
Government grants are recognised at fair value, when there is reasonable assurance that all necessary conditions attached to them have been satisfied and the grants will be received.
Grants received in recognition of specific expenses are recognised as liabilities and credited to the Statement of Income on a systematic basis over the periods necessary to match the grant income with the related expenditure. Grants received for defined assets that are recognised as fixed assets are accounted for as non-current liabilities and credited to the Statement of Income in relation to the period in which depreciation or amortisation is charged for the relevant assets.
The Group measures financial instruments, such as derivatives, at fair value at the end of each financial period. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair value measurement assumes a sale of the asset or transfer of the liability taking place:
The principal or most advantageous market must be accessible to the Group.
Fair value measurement takes into account the characteristics of the asset or liability being measured that market participants would consider when pricing the asset or liability, assuming that market participants act with the aim of best satisfying their economic interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic rewards by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques appropriate to the circumstances and for which sufficient data for fair value measurement are available, thus maximising the use of significant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities, the fair value of which has been measured or recognised in the financial statements, are categorised based on the fair value hierarchy, as described below:
The fair value measurement is categorised in its entirety in the hierarchy level of the lowest level input that has been used for the measurement.
For assets and liabilities that are measured at fair value on a recurring basis, the Group determines whether shifts have occurred between hierarchy levels and revises the categorisation (based on the lowest level input that is significant to the entire fair value measurement) at the end of each financial period.
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
Financial assets are initially recognised at their fair value, plus ancillary costs. Upon initial recognition, financial assets are classified, depending on their nature, in the following categories: financial assets at fair value through profit or loss or through other comprehensive income (OCI), loans, receivables and financial assets available for sale.
Loans and receivables (the category of greatest significance for the Group) are non-derivative financial assets, with fixed or determinable payments, that are not quoted in an active market. After initial recognition, such financial assets are measured at amortised cost, using the effective interest rate method, less impairment losses. Amortised cost is calculated by including any discounts, premiums or fees and/or costs, which are an integral part of the effective interest rate. The effective interest rate is recognised as interest income in the Statement of Income. Impairment losses are recognised in the Statement of Income as interest expense. This category normally includes trade and other receivables.
When accounting for financial assets measured at amortised cost, the Group first assesses whether impairment exists for each financial asset that is individually significant, and collectively for financial assets that are not
individually significant. The carrying amount of an asset is reduced by recognising a write-down provision, and the amount of the loss is recognised in the Statement of Income. Loans and the associated write-down provisions are derecognised when there is no realistic prospect that they may be recovered in future and the guarantees have been enforced or transferred to the Group. If, in a subsequent year, the amount of an estimated impairment loss increases or decreases because of an event occurring after the impairment is recognised, the previously recognised impairment loss is increased or decreased by adjusting the provision.
Financial assets are classified and measured at fair values through OCI when they are held in a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets. Upon the initial recognition of investments in equity instruments, the Group may irrevocably elect to classify its equity investments as equity instruments measured at fair value through OCI where they meet the definition of an equity instrument pursuant to IAS 32 – Financial Instruments: Presentation and are not held for trading. The classification is determined for each instrument. Gains and losses on such financial assets are never transferred to profit or loss. Dividends are recognised as other income in profit or loss when entitlement to payment is approved, unless the Group benefits from such income as a recovery of part of the cost of the financial asset, in which case the profits are taken to OCI. Equity instruments measured at fair value through OCI are not tested for impairment.
Financial assets are derecognised from the financial statements when the right to receive cash flows ceases, the Group transfers the right to receive cash flows from the asset to a third party, or the Group assumes a contractual obligation to pay them in full and without delay, and (1) it has transferred substantially all of the risks and rewards of ownership of the financial asset, or (2) it has neither transferred nor retained substantially all of the risks and rewards of the asset, but has transferred control of the asset.
Where the Group has transferred the rights to receive the cash flows from an asset, or has entered into a contractual arrangement whereby it retains its contractual right to receive the cash flows from the asset, but assumes a contractual obligation to pay cash flows to one or more beneficiaries (pass-through arrangement), it evaluates the extent to which it has retained the risks and rewards of ownership.
Upon initial recognition, financial liabilities are classified among financial liabilities at fair value through profit or loss, loans and financing or derivatives designated as hedging instruments.
All financial liabilities are initially recognised at fair value, in addition to directly attributable transaction costs in the case of loans, financing and payables. The Group's financial liabilities extend to trade payables and other payables, loans and financing, including account overdrafts, guarantees issued and derivative financial instruments, as well as lease liabilities.
Loans and payables (the category of greatest significance for the Group) are measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the Statement of Income when the liability is extinguished, as well as through the amortisation process.
Amortised cost is calculated by including the discount or premium, as well as costs and fees, which are an integral part of the effective interest rate. Amortisation at the effective interest rate is gradually recognised to profit or loss over the life of the loan.
Financial guarantees issued are contracts that require a payment to reimburse the holder of a debt instrument for a loss incurred by the holder due to default by the debtor on payment at the contractual due date. When the Group issues financial guarantees, the financial guarantee contracts are initially recognised as liabilities at fair value, plus the transaction costs directly attributable to issuing the guarantee. The liability is then measured at the greater of the best estimate of the outlay required to meet the guaranteed obligation at the reporting date and the initially recognised amount, less cumulative amortisation.
A financial liability is derecognised when the obligation underlying the liability is extinguished, cancelled or discharged. Where one existing financial liability is replaced by another attributable to the same borrower with substantially different conditions, or the conditions of an existing liability are substantially modified, such exchange or modification is accounted for by derecognising the original liability and recognising a new liability, with any differences between carrying amounts recognised in the Statement of Income.
A financial asset and a financial liability may be set off against one another, and the net balance presented in the Statement of Financial Position, if there is a legally enforceable right to set off the recognised amounts and the entity intends either to settle on a net basis or realise the asset and settle the liability simultaneously.
Loans, payables and other financial and/or trade liabilities with a fixed or determinable maturity are initially recognised at fair value, net of the transaction costs. After initial recognition, these payables are evaluated using the criterion of amortised cost at the effective interest rate.
Long-term debts for which an interest rate is not specified are recognised by discounting future cash flows at market rate, if the increase in payables arises from the passage of time, with subsequent recognition of interest through profit or loss, in item "Net interest income (expense)".
Derivatives, including embedded derivatives separated from their host contracts, are initially recognised at fair value.
Derivatives are classified as hedging instruments when the relationship between the derivative and the object of the hedge is formally documented and the degree of coverage, which is periodically checked, is high.
When hedging derivatives hedge the risk of changes in the fair values of the hedged instruments, they are recognised at fair value through profit or loss. Accordingly, the hedged instruments are adjusted to reflect changes in fair value associated with the hedged risk.
When derivatives hedge the risk of changes in the cash flows of the hedged instruments (cash flow hedges), the hedges are designated on the basis of the exposure to changes in cash flows attributable to risks that may influence profit or loss at a later date. Such risks are generally associated with a recognised asset or liability (such as future payments of variable-rate debt).
The effective portion of the change in the fair value of the part of derivative contracts designated as hedges in accordance with the requirements of IFRS 9 is recognised in the Statement of Comprehensive Income (hedging reserve). That reserve is then released to the profit or loss when the hedged transaction is recognised in the Statement of Income.
By contrast, the ineffective portion of the change in fair value, along with the entire change in the fair value of derivatives not designated as hedges or that do not meet the requirements presented in IFRS 9, is recognised directly in profit or loss.
Revenue from contracts with customers is recognised in the Statement of Income for an amount that reflects the consideration to which the entity claims entitlement in exchange for transferring the control of the goods or services to the customer.
Revenues are recognised net of sales returns, discounts, allowances and taxes that are directly associated with the sale of the product or provision of the service.
Sales of goods and services are recognised at the fair value of the consideration received when the following conditions are met:
Revenues on the sale of equipment and study and design services to customers may be recognised as follows:
Interest income/expense is recognised after being measured on an accrual basis.
Current tax assets and liabilities are measured as the amount that is expected to be recovered from or paid to the taxation authorities. The tax rates and laws used to calculate that amount are those enacted, or substantially enacted, at the reporting date in the countries in which the Group operates and generates its taxable income. Management periodically assesses the position assumed in the income tax return, where tax laws are subject to interpretation, and recognises provisions, where appropriate.
Any differences between the calculation of taxes in the financial statements and income tax returns or amounts paid or provisioned for direct income tax disputes are presented under the item "Prior years' taxes and other tax payables".
Deferred tax assets and liabilities are recognised in order to reflect the temporary differences between the value attributed to an asset/liability for tax purposes and that attributed based on the accounting standards applied at the reporting date. They are measured using the tax rates that are expected to apply in the year when the assets will be realised or the liabilities will be settled, based on prevailing tax rates or those already enacted or substantially enacted at the reporting date.
Deferred tax assets are recognised for all deductible temporary differences, unused tax credits and unused tax losses eligible to be carried forward, to the extent it is probable that sufficient future taxable income will be available to permit the use of the deductible temporary differences, unused tax credits and unused tax losses carried forward, except for the cases of:
• the deferred tax asset related to the deductible temporary differences arises from initial recognition of an asset or liability in a transaction other than a business combination that does not affect accounting or taxable income at the time of the transaction;
• deductible temporary differences related to equity investments in subsidiaries, associates and joint ventures. In this case deferred tax assets are recognised solely to the extent it is probable that they will be reversed in the foreseeable future and there will be sufficient taxable income to permit such temporary differences to be recovered.
The carrying amounts of deferred tax assets are reviewed at each reporting date and reduced to the extent it is no longer probable that there will be sufficient future taxable income to permit all or part of the credit concerned to be used. Unrecognised deferred tax assets are reviewed at each reporting date and are recognised to the extent it has become probable that taxable income will be sufficient to permit such deferred tax assets to be recovered.
Deferred tax liabilities are recognised on all taxable temporary differences, with the following exceptions:
Tax balances (current and deferred) attributable to amounts recognised directly in equity are also recognised directly in equity.
Current and deferred tax assets and liabilities are offset only when the legal right of offset exists; such amounts are recognised as receivables or payables in the Statement of Financial Position.
Dividends are recognised when the shareholders' right to receive payment is established under local law.
The Parent recognises a liability to account for the distribution to its shareholders of cash or non-cash assets once the distribution has been appropriately authorised and is no longer at the company's discretion. Under current Italian company law, a distribution is authorised when it has been approved by the shareholders. The corresponding amount is recognised directly in equity.
The Group classifies non-current assets and disposal groups as held for sale if their carrying amount will be recovered primarily through sale rather than through continuing use. Such non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value net of costs to sell. Costs to sell are incremental costs directly attributable to disposal, excluding interest expense and taxes. The conditions for classification as held for sale are only considered to be met when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. The actions required to complete the disposal should indicate that it is unlikely that significant changes to the disposal will be made or that the disposal will be withdrawn. Management must be committed to the disposal, the completion of which must be expected to occur within one year of the classification date. Depreciation of property, plant and equipment and amortisation of intangible assets ceases when such assets are classified as available for sale. Assets and liabilities classified as held for sale are recognised separately among the current items of the financial statements. Assets held for sale are excluded from result from continuing operations and are presented through profit or loss for the year in a single item as "Income/(loss) from assets held for sale".
On 7 January 2021, Brembo completed the acquisition of SBS Friction A/S, a Danish company based in Svendborg, Denmark that develops and manufactures brake pads for motorbikes using particularly innovative and eco-friendly sintered organic materials. The investment is 60% held by Brembo S.p.A. and 40% by Brembo Brake India Pvt. Ltd. The total outlay for the transaction was DKK 226 million (€30.4 million), paid using available cash.
The transaction was accounted for using the acquisition method and the Consolidated Financial Statements include the result of SBS Friction A/S as of 1 January 2021, the day conventionally designated as the acquisition date for accounting purposes only, as there were no significant changes between this date and the actual acquisition date and accounts were available on that date.
| Acquisition date fair value | ||
|---|---|---|
| Net assets | (DKK thousand) | (€ thousand) |
| Property, plant and equipment | 53,131 | 7,142 |
| Intangible assets | 51,583 | 6,934 |
| Other receivables and non-current liabilities | 16,201 | 2,178 |
| Inventories | 26,945 | 3,622 |
| Trade receivables | 26,097 | 3,508 |
| Other receivables and current assets | 2,157 | 290 |
| Cash and cash equivalents | 0 | 0 |
| Trade payables | (12,881) | (1,732) |
| Other payables and current liabilities | (26,141) | (3,514) |
| Provisions/deferred taxes | (30) | (4) |
| Short-term financial debt | (64,104) | (8,617) |
| Total net assets measured at fair value | 72,958 | 9,807 |
| Group equity (100% of net assets) | (72,958) | (9,807) |
| Consideration agreed | 226,228 | 30,411 |
| Goodwill arising from acquisition | 153,270 | 20,604 |
| Cash flows at acquisition | ||
| Subsidiary's net cash and cash equivalents | 0 | 0 |
| Amount paid | (226,228) | (30,411) |
| Net cash flows at acquisition | (226,228) | (30,411) |
The breakdown of the acquisition date fair value of the assets and liabilities is as follows:
Trade receivables amounted to €3.5 million and correspond to their fair value, which represents the value that is expected to be received from these receivables.
Recognised goodwill is attributable to the synergies and other economic benefits generated by the integration of commercial activities and transactions of SBS Friction A/S into the Group.
With regard to intangible assets, identified using the acquisition method, fair value was measured based on the methods commonly used for this purpose by international valuation practice (such as for example the relief from royalty for technology and trademark). The useful life of technology is estimated at 15 years, while trademark has an indefinite useful life.
Sales generated by SBS Friction A/S after the acquisition date amounted to €21,440 thousand and net income to €831 thousand.
Following the agreement signed on 28 April 2021, on 4 November 2021 Brembo completed the acquisition of a 100% stake in the J.Juan Group, a Spanish company specialising in the development and production of motorbike braking systems. Founded in 1965, J.Juan is based in Gavà (Barcelona) and has three plants in Spain and one in China, manufacturing especially brake hoses, a strategic component for the braking system's safety that will
complement the current range of Brembo products for motorbikes. The acquisition of J.Juan enables the Group to complete its range of solutions for the motorbike braking system and to expand its brand family for the growing motorbike sector. The total outlay for the transaction was €73 million, paid using available liquidity and subject to the usual adjustment mechanisms applicable to similar transactions that will be completed by the end of the first quarter of 2022.
The transaction was accounted for using the acquisition method and the Consolidated Financial Statements include the result of the J.Juan Group as of 1 November 2021, the day conventionally designated as the acquisition date for accounting purposes only, as there were no significant changes between this date and the actual acquisition date and accounts were available on that date.
It should be noted that the purchase price allocation is still provisional. It will be finalised within the terms provided for in the applicable accounting standards.
The breakdown of the acquisition date fair value of the assets and liabilities is as follows:
| Acquisition date fair value | |
|---|---|
| Net assets | (€ thousand) |
| Property, plant and equipment | 16,802 |
| Intangible assets | 39,646 |
| Net financial assets | 804 |
| Other receivables and non-current liabilities | 724 |
| Inventories | 21,709 |
| Trade receivables | 20,461 |
| Other receivables and current assets | 4,018 |
| Cash and cash equivalents | 5,689 |
| Trade payables | (15,019) |
| Other payables and current liabilities | (2,679) |
| Provisions/deferred taxes | (9,341) |
| Medium/long-term financial debt | (19,274) |
| Short-term financial debt | 8,705 |
| Total net assets measured at fair value | 72,245 |
| Group equity (100% of net assets) | (72,245) |
| Consideration agreed | 73,000 |
| Goodwill arising from acquisition | 755 |
| Cash flows at acquisition | |
| Net cash flows at acquisition | (67,311) |
|---|---|
| Amount paid | (73,000) |
| Subsidiary's net cash and cash equivalents | 5,689 |
Trade receivables amounted to €20.5 million and correspond to their fair value, which represents the value that is expected to be received from these receivables.
Recognised goodwill is attributable to the synergies and other economic benefits generated by the integration of commercial activities and transactions of the J.Juan Group into the Group.
With regard to intangible assets, identified using the acquisition method, fair value was measured based on the methods commonly used for this purpose by international valuation practice (such as for example the relief from royalty for technology and trademark and the multi period excess earnings method for the customer relationship). The useful life of technology and the customer relationship is estimated at 10 years, while trademark has an indefinite useful life.
In the provisional purchase price allocation process, customer relationship was valued at €21,397 thousand, technology at €4,323 thousand and trademark at €8,585 thousand.
Sales generated by the J.Juan Group after the acquisition date amounted to €11,032 thousand and net income to €497 thousand.
Based on the IFRS 8 definition, an operating segment is a component of an entity:
In light of such definition, the Brembo Group's operating segments are five Divisions/Business Units: Discs, Systems, Motorbikes, Performance Group, After Market.
Each Division/Business Unit Director reports to the top management and periodically discusses with them operating activities, financial statements results, forecasts or plans.
The Group thus aggregated the operating segments as follows for the purposes of financial reporting:
The segments that are included in each aggregate are similar in terms of:
Transfer prices applied to transactions between segments for the exchange of goods and services are settled according to usual market conditions.
In light of the requirements of IFRS 8 in terms of revenues earned from major customers, where a single customer is defined as all companies that belong to a given Group, Brembo had two customers in 2021 who accounted
for over 10% of consolidated net revenues, although considering the individual car manufacturers that compose such groups, only one of them slightly exceeded this threshold.
The following table shows segment information on sales of goods and services and results at 31 December 2021 and 31 December 2020:
| Total | Discs/ Systems/Motorbikes |
After Market/ Performance Group |
Interdivision | Non-segment data | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 |
| Sales | 2,825,931 | 2,246,775 | 2,351,632 | 1,870,112 | 477,826 | 377,048 | (4,630) | (3,346) | 1,103 | 2,961 |
| Allowances and discounts |
(51,095) | (35,831) | (4,894) | (3,082) | (46,183) | (32,760) | 0 | 0 | (18) | 11 |
| Net sales | 2,774,836 | 2,210,944 | 2,346,738 | 1,867,030 | 431,643 | 344,288 | (4,630) | (3,346) | 1,085 | 2,972 |
| Transport costs | 23,456 | 18,647 | 15,898 | 12,992 | 7,537 | 5,641 | 0 | 0 | 21 | 14 |
| Variable production costs |
1,750,838 | 1,349,052 | 1,468,308 | 1,125,969 | 286,026 | 222,887 | (4,611) | (3,346) | 1,115 | 3,542 |
| Contribution margin | 1,000,542 | 843,245 | 862,532 | 728,069 | 138,080 | 115,760 | (19) | 0 | (51) | (584) |
| Fixed production costs | 412,982 | 400,882 | 382,401 | 375,223 | 28,325 | 23,334 | 0 | 0 | 2,256 | 2,325 |
| Production gross operating income |
587,560 | 442,363 | 480,131 | 352,846 | 109,755 | 92,426 | (19) | 0 | (2,307) | (2,909) |
| BU personnel costs | 194,463 | 166,330 | 117,648 | 104,844 | 54,584 | 43,660 | (19) | 0 | 22,250 | 17,826 |
| BU gross operating income |
393,097 | 276,033 | 362,483 | 248,002 | 55,171 | 48,766 | 0 | 0 | (24,557) | (20,735) |
| Costs for Central Functions |
119,580 | 102,831 | 82,518 | 69,456 | 12,939 | 11,438 | 0 | 0 | 24,123 | 21,937 |
| OPERATING INCOME (LOSS) |
273,517 | 173,202 | 279,965 | 178,546 | 42,232 | 37,328 | 0 | 0 | (48,680) | (42,672) |
| Extraordinary costs and revenues |
3,820 | 9,012 | 0 | 0 | 0 | 0 | 0 | 0 | 3,820 | 9,012 |
| Financial costs and revenues |
(2,522) | (26,323) | 0 | 0 | 0 | 0 | 0 | 0 | (2,522) | (26,323) |
| Income (expense) from investments |
15,518 | 10,494 | 0 | 0 | 0 | 0 | 0 | 0 | 15,518 | 10,494 |
| Non-operating costs and revenues |
(3,695) | (10,645) | 0 | 0 | 0 | 0 | 0 | 0 | (3,695) | (10,645) |
| Result before taxes | 286,638 | 155,740 | 279,965 | 178,546 | 42,232 | 37,328 | 0 | 0 | (35,559) | (60,134) |
| Taxes | (70,752) | (17,802) | 0 | 0 | 0 | 0 | 0 | 0 | (70,752) | (17,802) |
| Result before minority interests |
215,886 | 137,938 | 279,965 | 178,546 | 42,232 | 37,328 | 0 | 0 | (106,311) | (77,936) |
| Minority interests | (349) | (1,405) | 0 | 0 | 0 | 0 | 0 | 0 | (349) | (1,405) |
| NET RESULT | 215,537 | 136,533 | 279,965 | 178,546 | 42,232 | 37,328 | 0 | 0 | (106,660) | (79,341) |
A reconciliation between the annual Consolidated Financial Statements and the above information is provided below:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| REVENUE FROM CONTRACTS WITH CUSTOMERS | 2,777,556 | 2,208,639 |
| Scrap sales (in the segment report they are subtracted from "Variable production costs") |
(18,393) | (11,094) |
| Differences between internal and statutory reports relating to developments activities |
5,632 | 7,685 |
| Capital gains on sale of equipment (in the Consolidated Financial Statements they are included in "Other revenues and income") |
2,333 | 1,778 |
| Effect of adjustment of transactions among consolidated companies | (817) | (547) |
| Miscellaneous recharges (in the Consolidated Financial Statements they are included in "Other revenues and income") |
3,373 | 2,261 |
| Other | 5,152 | 2,222 |
| NET SALES | 2,774,836 | 2,210,944 |
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| NET OPERATING INCOME | 287,981 | 181,135 |
| Differences between internal and statutory reports relating to developments activities |
3,861 | 1,554 |
| Other differences between internal and statutory reports | (781) | 5,249 |
| Income (expense) from non-financial investments | (15,318) | (10,392) |
| Claim compensation and subsidies | (2,966) | (5,416) |
| Capital gains/losses on disposal of assets (in the segment report they are included in "Non-operating costs and revenues") |
(157) | (200) |
| Different classification of banking expenses (in the segment report they are included in "Financial costs and revenues") |
1,026 | 817 |
| Reclassification of Brembo Argentina | (47) | 10 |
| Other | (82) | 445 |
| OPERATING RESULT | 273,517 | 173,202 |
The breakdown of Group sales by geographic area of destination and by application is provided in the Directors' Report on Operations.
| Total | Discs/ Systems/Motorbikes |
After Market/ Performance Group |
Interdivision | Non-segment data | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 |
| Property, plant and equipment | 1,274,733 | 1,183,280 | 1,156,530 1,073,821 | 80,355 | 74,322 | 5 | 5 | 37,843 | 35,132 | |
| Intangible assets | 196,189 | 127,275 | 170,973 | 103,837 | 19,332 | 17,653 | 0 | 0 | 5,884 | 5,785 |
| Financial assets and other non current assets/liabilities |
94,815 | 83,570 | 1,871 | 369 | 0 | 0 | 0 | 0 | 92,944 | 83,201 |
| (a) Total fixed assets | 1,565,737 | 1,394,125 | 1,329,374 1,178,027 | 99,687 | 91,975 | 5 | 5 | 136,671 | 124,118 | |
| Inventories | 482,891 | 354,749 | 369,379 | 260,891 | 112,626 | 92,935 | 0 | 0 | 886 | 923 |
| Current assets | 612,428 | 523,126 | 411,471 | 345,509 | 63,078 | 47,970 | (14,415) | (16,525) | 152,294 | 146,172 |
| Current liabilities | (810,089) | (659,014) | (488,732) | (413,288) | (124,346) | (85,648) | 14,415 | 16,525 | (211,426) | (176,603) |
| Provisions for contingencies and charges and other provisions |
(78,256) | (63,800) | 0 | (514) | 0 | 0 | 0 | 0 | (78,256) | (63,286) |
| (b) Net working capital | 206,974 | 155,061 | 292,118 | 192,598 | 51,358 | 55,257 | 0 | 0 | (136,502) | (92,794) |
| NET INVESTED OPERATING CAPITAL (a+b) |
1,772,711 | 1,549,186 | 1,621,492 1,370,625 | 151,045 | 147,232 | 5 | 5 | 169 | 31,324 | |
| Extraordinary components | 458,583 | 342,307 | 0 | 0 | 0 | 0 | 0 | 0 | 458,583 | 342,307 |
| NET INVESTED CAPITAL | 2,231,294 | 1,891,493 | 1,621,492 1,370,625 | 151,045 | 147,232 | 5 | 5 | 458,752 | 373,631 | |
| Group equity | 1,762,596 | 1,450,059 | 0 | 0 | 0 | 0 | 0 | 0 | 1,762,596 1,450,059 | |
| Minority interests | 33,524 | 30,982 | 0 | 0 | 0 | 0 | 0 | 0 | 33,524 | 30,982 |
| (d) Equity | 1,796,120 | 1,481,041 | 0 | 0 | 0 | 0 | 0 | 0 | 1,796,120 1,481,041 | |
| (e) Provisions for employee benefits |
23,992 | 26,567 | 0 | 0 | 0 | 0 | 0 | 0 | 23,992 | 26,567 |
| Medium/long-term financial debt |
721,639 | 736,588 | 0 | 0 | 0 | 0 | 0 | 0 | 721,639 | 736,588 |
| Short-term financial debt | (310,457) | (352,703) | 0 | 0 | 0 | 0 | 0 | 0 | (310,457) | (352,703) |
| (f) Net financial debt | 411,182 | 383,885 | 0 | 0 | 0 | 0 | 0 | 0 | 411,182 | 383,885 |
| (g) COVERAGE (d+e+f) | 2,231,294 | 1,891,493 | 0 | 0 | 0 | 0 | 0 | 0 | 2,231,294 1,891,493 |
Statement of Financial Position data at 31 December 2021 and 31 December 2020 are provided in the tables below:
The following should be noted in regard to the non-segment data:
The Brembo Group is exposed to market, commodity, liquidity and credit risks, all of which are tied to the use of financial instruments.
Financial risk management is the responsibility of the central Treasury & Credit Department of Brembo S.p.A., which, together with the Group Finance Department, evaluates the main financial transactions and related hedging policies.
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market prices resulting from shifts in exchange rates, interest rates and equity security prices.
Interest rate risk applies to variable-rate financial instruments recognised in the Statement of Financial Position (particularly short-term bank loans, other loans, leases, bonds, etc.) that are not hedged by other financial instruments.
In order to fix the financial burden relating to a part of its debt, Brembo has mainly entered into fixed-rate financing contracts and interest rate swaps. However, the Company continues to be exposed to interest-rate risk due to the fluctuation of variable rates.
A sensitivity analysis was performed to analyse the effects of a change in interest rates of +/-50 basis points compared to the rates at 31 December 2021 and 31 December 2020, with other variables held constant. The potential impacts were calculated on the variable-rate financial liabilities at 31 December 2021. The aforementioned change in interest rates would result in a higher (or lower) annual net pre-tax expense of approximately €1,660 thousand (€1,133 thousand at 31 December 2020), gross of the tax effect.
The average weekly gross financial debt was used to provide the most reliable information possible.
Brembo deals in international markets with currencies other than the euro and is therefore exposed to exchange rate risk.
To mitigate this risk, Brembo uses natural hedging (offsetting receivables and payables) and hedges only net positions in foreign currency, using mostly short-term financing denominated in the currency to be hedged, in order to offset any unbalances; currency forward contracts are also used to hedge this risk category.
A sensitivity analysis is provided below to illustrate the effects on pre-tax result arising on a positive (negative) change in exchange rates.
Starting with the exposures at 31 December 2021 and 2020, a change calculated as the standard deviation of the exchange rate with respect to the average exchange rate was applied to the average exchange rates for 2021 and 2020 to measure exchange rate volatility.
| 31.12.2021 | 31.12.2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| (euro thousand) | Change % | Effect of exchange rate increase |
Effect of exchange rate decrease |
Change % | Effect of exchange rate increase |
Effect of exchange rate decrease |
||
| EUR/CHF | 1.80% | (0.9) | 0.9 | 0.92% | (0.2) | 0.2 | ||
| EUR/CNY | 2.79% | (1,390.3) | 1,470.2 | 2.27% | (35.7) | 37.4 | ||
| EUR/CZK | 1.24% | (0.6) | 0.6 | 2.82% | 1.0 | (1.1) | ||
| EUR/DKK | 0.02% | (1.4) | 1.4 | 0.16% | (51.4) | 51.6 | ||
| EUR/GBP | 1.49% | (0.1) | 0.1 | 2.62% | 5.9 | (6.2) | ||
| EUR/INR | 1.75% | 0.3 | (0.3) | 4.18% | 5.4 | (5.9) | ||
| EUR/JPY | 1.50% | 24.4 | (25.1) | 2.56% | (38.5) | 40.6 | ||
| EUR/PLN | 1.13% | (41.7) | 42.6 | 2.28% | (21.0) | 22.0 | ||
| EUR/RUB | 3.36% | 0.0 | 0.0 | 9.25% | 29.0 | (34.9) | ||
| EUR/SEK | 0.83% | 0.1 | (0.1) | 2.20% | 26.7 | (27.9) | ||
| EUR/USD | 2.39% | 128.7 | (135.0) | 3.90% | 72.1 | (78.0) | ||
| PLN/CNY | 3.66% | 8.2 | (8.8) | 2.96% | 4.9 | (5.2) | ||
| PLN/EUR | 1.12% | (460.2) | 470.7 | 2.31% | (577.8) | 605.1 | ||
| PLN/GBP | 2.29% | 0.0 | 0.0 | 1.98% | 2.4 | (2.5) | ||
| PLN/CZK | 1.80% | 0.3 | (0.3) | 1.08% | 0.0 | 0.0 | ||
| PLN/JPY | 2.01% | 0.0 | 0.0 | 3.50% | 0.5 | (0.5) | ||
| PLN/USD | 3.34% | (24.4) | 26.1 | 4.09% | (35.5) | 38.6 | ||
| PLN/CHF | 2.53% | 1.2 | (1.3) | 2.65% | (0.7) | 0.7 | ||
| GBP/AUD | 2.10% | (0.3) | 0.3 | 3.97% | (0.7) | 0.7 | ||
| GBP/EUR | 1.47% | 0.3 | (0.3) | 2.69% | 14.8 | (15.6) | ||
| GBP/USD | 1.69% | 1.6 | (1.6) | 3.10% | 2.6 | (2.8) | ||
| USD/CNY | 0.75% | 0.8 | (0.8) | 2.69% | (1.3) | 1.3 | ||
| USD/EUR | 2.42% | 159.2 | (167.1) | 3.88% | 108.1 | (116.8) | ||
| USD/MXN | 2.17% | 60.7 | (63.4) | 8.12% | 89.5 | (105.3) | ||
| BRL/EUR | 3.53% | 15.8 | (16.9) | 12.37% | 47.7 | (61.2) | ||
| BRL/GBP | 3.39% | 0.1 | (0.2) | 9.95% | 0.1 | (0.2) | ||
| BRL/USD | 3.90% | 4.1 | (4.5) | 10.21% | 4.7 | (5.7) | ||
| JPY/EUR | 1.50% | 5.6 | (5.7) | 2.58% | 9.0 | (9.5) | ||
| JPY/USD | 2.75% | 5.1 | (5.3) | 1.89% | 0.8 | (0.9) | ||
| CNY/EUR | 2.86% | 23.2 | (24.6) | 2.26% | 211.8 | (221.5) | ||
| CNY/CHF | 1.56% | 0.3 | (0.3) | 1.90% | 11.2 | (11.6) | ||
| CNY/JPY | 3.20% | 4.6 | (4.9) | 1.92% | 0.6 | (0.6) | ||
| CNY/USD | 0.75% | (90.7) | 92.1 | 2.75% | (36.2) | 38.2 | ||
| INR/EUR | 1.76% | (106.6) | 110.5 | 4.28% | (64.3) | 70.0 | ||
| INR/JPY | 2.09% | 45.0 | (46.9) | 3.14% | 39.4 | (41.9) | ||
| INR/USD | 1.24% | (1.3) | 1.3 | 2.08% | 11.4 | (11.9) | ||
| CZK/EUR | 1.23% | 68.9 | (70.6) | 2.87% | 143.0 | (151.5) | ||
| CZK/GBP | 1.17% | 0.0 | 0.0 | 2.16% | (0.3) | 0.3 | ||
| CZK/PLN | 1.80% | 5.1 | (5.2) | 1.08% | 1.1 | (1.1) | ||
| CZK/USD | 2.01% | (62.7) | 65.3 | 4.67% | (44.6) | 49.0 | ||
| DKK/GBP | 1.49% | (1.1) | 1.1 | 2.74% | 0.0 | 0.0 | ||
| DKK/JPY | 1.50% | (2.1) | 2.2 | 2.68% | 0.0 | 0.0 | ||
| DKK/SEK | 0.84% | (0.1) | 0.1 | 2.09% | 0.0 | 0.0 | ||
| DKK/USD | 2.39% | (10.8) | 11.4 | 4.03% | 0.0 | 0.0 |
The Group is exposed to changes in prices of main raw materials and commodities. It bears recalling that fixed prices are set in supply contracts with certain commodities suppliers for a given period of time and that the contracts in place with the main customers also provide for automatic periodic indexing on the basis of the price of commodities; both these approaches thus mitigate the risk of fluctuations in commodities prices. When it was not possible to implement these mitigating measures, derivatives were entered into to hedge the risk of commodity price fluctuations, in particular for a minor portion of aluminium purchases. Moreover, in 2021 Brembo Poland Spolka Zo.o. signed a derivative (Virtual Power Purchase Agreement) in order to mitigate the risk of fluctuation in the price of electricity.
Liquidity risk can arise from the inability to obtain the financial resources necessary to guarantee Brembo's operation.
To mitigate liquidity risk, the Treasury & Credit area:
The following table provides information on payables, other payables and derivatives broken down by maturity. The maturities are determined based on the period from the reporting date to the expiry of the contractual obligations. The amounts shown in the table reflect undiscounted cash flows and the fair value of existing derivative liabilities.
For fixed- and variable-rate financial liabilities, both principal and interest were considered for the different maturity periods; for variable-rate liabilities, the rate at 31 December 2021 plus the relevant spread was used.
| (euro thousand) | Carrying value | Contractual cash flows |
Within 1 year | From 1 to 5 years |
Beyond 5 years |
|---|---|---|---|---|---|
| Non-derivative financial liabilities | |||||
| Short-term credit lines and bank overdrafts | 85,515 | 85,515 | 85,515 | 0 | 0 |
| Payables to banks (loans and bonds) | 655,953 | 670,595 | 143,374 | 439,205 | 88,016 |
| Payables to other financial institutions | 3,927 | 4,092 | 791 | 2,703 | 598 |
| Lease liabilities | 226,576 | 226,576 | 24,236 | 73,719 | 128,621 |
| Trade and other payables | 607,606 | 607,606 | 607,606 | 0 | 0 |
| Derivative financial liabilities | |||||
| Derivatives | 2,950 | 2,950 | 2,950 | 0 | 0 |
| Total | 1,582,527 | 1,597,334 | 864,472 | 515,627 | 217,235 |
Some of the Group's loan agreements require the satisfaction of financial covenants and the obligation for the Group to meet certain financial ratio levels.
In detail, the following covenants and relevant maximum thresholds are to be complied with:
• Net financial debt/Gross operating income <3.5.
If the covenants are not met, the financial institutions can request early repayment of the relevant loan. The values of these covenants are monitored at the end of each quarter, and at 31 December 2021 the Group had complied with the covenants in question by a considerable margin.
Management believes that currently available lines of credit, apart from the cash flow generated by current operations, will allow Brembo to meet its financial requirements arising from investing activities, working capital management, and the payment of payables at their natural maturities.
In further detail, at 31 December 2021, unused bank credit facilities were 85% (a total of €582.9 million in credit facilities were available).
Credit risk is the risk that a customer or one of the parties to a financial instrument will cause a financial loss by failing to perform an obligation. Exposure to credit risk for the Group arises mainly in relation to trade receivables. Most parties with which the Group does business are leading car and motorbike manufacturers with high credit standings.
The Group evaluates the creditworthiness of all new customers using assessments from external sources and then assigns a credit limit.
To complete the disclosure of financial risks, the following information is provided:
a) the fair value hierarchy for the Group's assets and liabilities:
| 31.12.2021 | 31.12.2020 | |||||
|---|---|---|---|---|---|---|
| (euro thousand) | Level 1 | Level 2 | Level 3 | Level 1 | Level 2 | Level 3 |
| Financial assets (liabilities) measured at fair value | ||||||
| Forward contracts denominated in foreign currency | 0 | (1,121) | 0 | 0 | 186 | 0 |
| Interest rate swaps | 0 | 2,417 | 0 | 0 | (3,558) | 0 |
| Embedded derivative | 0 | 0 | 130 | 0 | 0 | 312 |
| Commodity derivatives | 0 | (29) | 24,424 | 0 | 0 | 0 |
| Total financial assets (liabilities) measured at fair value | 0 | 1,267 | 24,554 | 0 | (3,372) | 312 |
| Assets (liabilities) for which fair value is indicated | ||||||
| Current and non-current payables to banks | 0 | (551,510) | 0 | 0 | (620,611) | 0 |
| Current and non-current lease liabilities | 0 | (226,576) | 0 | 0 | (208,888) | 0 |
| Other current and non-current financial liabilities | 0 | (3,927) | 0 | 0 | (1,227) | 0 |
| Total assets (liabilities) for which fair value is indicated | 0 | (782,013) | 0 | 0 | (830,726) | 0 |
Movements for the year of Level 3 were as follows:
| (euro thousand) | 31.12.2021 |
|---|---|
| Opening value | 312 |
| Movements in Statement of Income | (182) |
| Closing value | 130 |
b) a reconciliation between the classes of financial assets and liabilities identified in the Group's Statement of Financial Position and the types of financial assets and liabilities identified based on the requirements of IFRS 7:
| Carrying value | Fair value | |||
|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 |
| Other financial assets | 293,859 | 214,669 | 293,859 | 214,669 |
| Held-to-maturity investments | 754 | 0 | 754 | 0 |
| Loans, receivables and financial liabilities valued at amortised costs: |
||||
| Current and non-current financial assets (excluding derivatives) |
2,460 | 4,028 | 2,460 | 4,028 |
| Trade receivables | 468,222 | 385,439 | 468,222 | 385,439 |
| Loans and receivables | 87,599 | 66,515 | 87,599 | 66,515 |
| Cash and cash equivalents | 557,463 | 551,282 | 557,463 | 551,282 |
| Current and non-current payables to banks | (741,468) | (724,218) | (762,372) | (750,144) |
| Current and non-current lease liabilities | (226,576) | (208,888) | (226,576) | (208,888) |
| Other current and non-current financial liabilities | (3,927) | (1,227) | (3,927) | (1,227) |
| Trade payables | (590,830) | (474,906) | (590,830) | (474,906) |
| Other current liabilities | (198,222) | (158,613) | (198,222) | (158,613) |
| Other non-current liabilities | (2,022) | (14,891) | (2,022) | (14,891) |
| Available-for-sale financial liabilities | ||||
| Derivatives | 25,821 | (3,060) | 25,821 | (3,060) |
| Total | (326,867) | (363,870) | (347,771) | (389,796) |
The approach used to calculate fair value is the present value of the future cash flows expected to derive from the instrument being measured, determined by discounting the scheduled instalments at a rate equal to the forward rate curve applicable to each account payable. In detail:
The Group carries out transactions with parents, subsidiaries, associates, joint ventures, directors, key management personnel and other related parties. The Parent Brembo S.p.A. is a subsidiary of Nuova FourB S.r.l., which holds 53.527% of its share capital. Brembo did not engage in dealings with its parent in 2021, except for the dividend distribution.
Information pertaining to the fees paid to Directors and Statutory Auditors of Brembo S.p.A. and of other Group companies and additional information required is reported below:
| 31.12.2021 | 31.12.2020 | ||||
|---|---|---|---|---|---|
| (euro thousand) | Directors | Auditors | Directors | Auditors | |
| Emoluments and other incentives for the office held | 7,200 | 196 | 6,038 | 196 | |
| Participation in committees and specific tasks | 155 | 0 | 155 | 0 | |
| Salaries and other incentives | 5,522 | 0 | 3,587 | 0 |
The item "Salaries and other incentives" includes the estimate of the cost of the 2019-2021 three-year plan reserved for the Company's top managers and accrued in 2021, remuneration paid as salaries for the employee function and provisions for bonuses still to be paid.
The following table provides a summary of related party transactions with reference to balances of the Statement of Financial Position and Statement of Income:
| (euro thousand) | 31.12.2021 | 31.12.2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Related Parties | Related Parties | |||||||||||
| a) Weight of transactions or positions with related parties on items of the Statement of Financial Position |
Carrying value |
Total | Other* | Joint | ventures Associates | % | Carrying value | Total | Other* | Joint | ventures Associates | % |
| Other financial assets (including investments in other companies and derivatives) |
320,252 | 0 | 0 | 0 | 0 | 0.0% | 217,263 | 2,716 | 0 | 0 | 2,716 | 1.3% |
| Inventories | 482,924 | 13 | 0 | 13 | 0 | 0.0% | 354,887 | 0 | 0 | 0 | 0 | 0.0% |
| Trade receivables | 468,222 | 1,232 | 7 | 1,151 | 74 | 0.3% | 385,439 | 1,775 | 5 | 1,696 | 74 | 0.5% |
| Other non-current liabilities | (2,022) | 0 | 0 | 0 | 0 | 0.0% | (14,891) | (5,147) | (5,147) | 0 | 0 | 34.6% |
| Provisions for employee benefits | (23,992) | (1,424) | (1,424) | 0 | 0 | 5.9% | (26,567) | (4,292) | (4,292) | 0 | 0 | 16.2% |
| Trade payables | (590,830) | (11,529) | (3,902) | (7,597) | (30) | 2.0% | (474,906) | (9,289) | (3,541) | (5,504) | (244) | 2.0% |
| Other current liabilities | (198,222) | (14,699) (14,572) | (127) | 0 | 7.4% | (158,613) | (2,825) | (2,698) | (127) | 0 | 1.8% |
| 31.12.2021 | 31.12.2020 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Related Parties | Related Parties | |||||||||||
| b) Weight of transactions or positions with related parties on items of the Statement of Income |
Carrying value |
Total | Other* | Joint | ventures Associates | % | Carrying value | Total | Other* | Joint | ventures Associates | % |
| Revenue from contracts with customers |
2,777,556 | 329 | 0 | 329 | 0 | 0.0% | 2,208,639 | 227 | 0 | 227 | 0 | 0.0% |
| Other revenues and income | 23,544 | 3,443 | 18 | 3,250 | 175 14.6% | 23,478 | 3,418 | 20 | 3,224 | 174 | 14.6% | |
| Raw materials, consumables and goods |
(1,310,330) | (45,196) | 0 (45,188) | (8) | 3.4% | (1,024,961) (30,826) | (3) (30,729) | (94) | 3.0% | |||
| Other operating costs | (519,964) | (11,968) | (8,972) | (2,704) | (292) | 2.3% | (426,407) (10,805) | (7,847) | (2,143) | (815) | 2.5% | |
| Personnel expenses | (506,617) | (7,328) | (7,328) | 0 | 0 | 1.4% | (425,029) | (4,834) | (4,834) | 0 | 0 | 1.1% |
| Net interest income (expense) | (5,218) | (18) | (18) | 0 | 0 | 0.3% | (25,212) | 21 | 21 | 0 | 0 | -0.1% |
| Interest income (expense) from investments |
4,028 | 3,822 | 3,822 | 0 | 0 94.9% | 121 | 0 | 0 | 0 | 0 | 0.0% |
* Other related parties include key management personnel of the entity and other related parties.
Sales of products, supply of services and the transfers of fixed assets between Group companies were carried out at prices reflecting fair market conditions. The trading volumes reflect the internationalisation process aimed at constantly improving both operating and organisational standards and optimising synergies within the Company. From a financial standpoint, the subsidiaries operate independently, although some benefit from various forms of centralised financing. Since 2008, a zero-balance cash-pooling system has been effective, with Brembo S.p.A. as the pool leader. In 2013, an additional cash pooling arrangement was put in place, denominated in CNY, with Brembo Nanjing Brake Systems Co. Ltd. as pooler and Brembo Nanjing Automotive Components Co. Ltd., Qingdao Brembo Trading Co. Ltd. and Brembo Huilian (Langfang) Brake Systems Co. Ltd. as participants. The cash pooling is entirely based in China, and Citibank China is the service provider.
The key figures of Group companies are commented upon in the sections of the Directors' Report on Operations "Group Structure" and "Performance of Brembo Companies".
| COMPANY | HEADQUARTERS | SHARE CAPITAL | STAKE HELD | BY GROUP COMPANIES | ||
|---|---|---|---|---|---|---|
| Brembo S.p.A. | Curno (Bergamo) | Italy | Eur | 34,727,914 | ||
| AP Racing Ltd. | Coventry | United Kingdom | Gbp | 135,935 | 100% Brembo S.p.A. | |
| Brembo Czech S.r.o. | Ostrava-Hrabová | Czech Republic | Czk | 605,850,000 | 100% Brembo S.p.A. | |
| Brembo Deutschland GmbH | Leinfelden Echterdingen |
Germany | Eur | 25,000 | 100% Brembo S.p.A. | |
| Brembo Inspiration Lab Corp. | Wilmington, Delaware |
USA | Usd | 300,000 | 100% Brembo S.p.A. | |
| Brembo Japan Co. Ltd. | Tokyo | Japan | Jpy | 11,000,000 | 100% Brembo S.p.A. | |
| Brembo Nanjing Brake Systems Co. Ltd. | Nanjing | China | Cny | 492,030,169 | 100% Brembo S.p.A. | |
| Brembo North America Inc. | Wilmington, Delaware |
USA | Usd | 33,798,805 | 100% Brembo S.p.A. | |
| Brembo Poland Spolka Zo.o. | Dąbrowa Górnicza | Poland | Pln | 144,879,500 | 100% Brembo S.p.A. | |
| Brembo Russia LLC | Moscow | Russia | Rub | 1,250,000 | 100% Brembo S.p.A. | |
| Brembo Scandinavia A.B. | Göteborg | Sweden | Sek | 4,500,000 | 100% Brembo S.p.A. | |
| J. Juan S.A.U. | Barcelona | Spain | Eur | 150,260 | 100% Brembo S.p.A. | |
| La.Cam (Lavorazioni Camune) S.r.l. | Stezzano (Bergamo) | Italy | Eur | 100,000 | 100% Brembo S.p.A. | |
| Qingdao Brembo Trading Co. Ltd. | Qingdao | China | Cny | 1,365,700 | 100% Brembo S.p.A. | |
| Brembo Argentina S.A. in dissolution | 98.62% Brembo S.p.A. | |||||
| and winding up procedure | Buenos Aires | Argentina | Ars | 62,802,000 | 1.38% Brembo do Brasil Ltda. | |
| Brembo (Nanjing) Automobile | 60% Brembo S.p.A. | |||||
| Components Co. Ltd. | Nanjing | China | Cny | 235,194,060 | 40% Brembo Brake India Pvt. Ltd. | |
| SBS Friction A/S | Svendborg | Denmark | Dkk | 12,001,000 | 60% Brembo S.p.A. | |
| 40% Brembo Brake India Pvt. Ltd. | ||||||
| Brembo México S.A. de C.V. | Apodaca | Mexico | Usd | 20,428,836 | 49% Brembo S.p.A. | |
| 51% Brembo North America Inc. | ||||||
| Brembo Brake India Pvt. Ltd. | Pune | India | Inr | 140,000,000 99.99% Brembo S.p.A. | ||
| Brembo do Brasil Ltda. | Betim | Brazil | Brl | 159,136,227 99.99% Brembo S.p.A. | ||
| Corporación Upwards '98 S.A. | Zaragoza | Spain | Eur | 498,043 | 68% Brembo S.p.A. | |
| Brembo Huilian (Langfang) Brake Systems Co. Ltd. |
Langfang | China | Cny | 170,549,133 | 66% | Brembo S.p.A. |
| Brembo SGL Carbon Ceramic Brakes S.p.A. |
Stezzano (Bergamo) | Italy | Eur | 4,000,000 | 50% | Brembo S.p.A. |
| Petroceramics S.p.A. | Milan | Italy | Eur | 123,750 | 20% | Brembo S.p.A. |
| Infibra Technologies S.r.l. | Pisa | Italy | Eur | 53,133 | 20% | Brembo S.p.A. |
| Brembo SGL Carbon Ceramic Brakes GmbH |
Meitingen | Germany | Eur | 25,000 | 100% | Brembo SGL Carbon Ceramic Brakes S.p.A. |
| J. Juan Brake Systems S.A.U. | Barcelona | Spain | Eur | 60,000 | 100% | J.Juan S.A.U. |
| Montajes Y Acabados S.L.U. | Barcelona | Spain | Eur | 3,005 | 100% | J.Juan S.A.U. |
| Jiaxing Ciju Control Systems Co. Ltd. | Jiaxing | China | Cny | 16,309,640 | 100% | J.Juan S.A.U. |
Details on the fees paid to the independent audit firm and other companies within its network pursuant to Article 149-duodecies of the Implementation Rules of Italian Legislative Decree No. 58 of 24 February 1998 are provided below:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Independent Auditors' fees for the provision of audit services: | ||
| to the Parent Brembo S.p.A. | 225 | 225 |
| to the subsidiaries (services provided by the network) | 438 | 422 |
| Independent Auditors' fees for the provision of auditing services for issuing attestation: |
||
| to the Parent Brembo S.p.A. | 70 | 71 |
| to the subsidiaries (services provided by the network) | 3 | 0 |
| Fees of entities belonging to the Independent Auditors' network for the provision of services: |
||
| to the Parent Brembo S.p.A. | 15 | 0 |
| other services rendered to subsidiaries | 2 | 2 |
The Group had no commitments at the closing date of the 2021 Financial Statements.
Pursuant to Consob Notice No. 6064293 dated 28 July 2006, it is hereby specified that during 2021 the Company did not carry out any atypical and/or unusual transactions, as defined by the said Notice.
In light of the interpretation provided by Assonime in its Circular No. 5 of 22 February 2019, the obligations to disclose and publish government grants established by Article 1, paragraphs 125-129, of Law No. 124/2017, as also governed by the subsequent Security Decree-Law (No. 113/2018) and Simplification Decree-Law (No. 135/2018), which introduced a series of disclosure and publication obligations for entities that engage in economic relations with the public administration, with effect from the 2018 financial statements, are not believed to apply in the following cases:
• subsidies, grants and economic advantages of all kinds the benefits of which are accessible to all undertakings that meet certain conditions on the basis of predetermined general criteria (e.g., measures provided for in ministerial decrees aimed at specific sectors of industry and intended to finance activities relating to research and development projects);
In view of the foregoing, the Group analysed its situation and decided to disclose in this paragraph only the amount received in 2021 by way of grants from the entity Finpiemonte S.p.A., subject to the management and coordination of the Piedmont Region, relating to the tender "Poli–Linea B" for industrial research and experimental development projects. This amount, totalling €11 thousand, related to the VRROBOTLINE Project, involving a virtual reality platform for training workers on a robotised line.
Following the resignation of Laura Cioli, serving as Independent Director, Chairwoman of the Audit, Risk & Sustainability Committee and member of the Remuneration & Appointments Committee, on 3 March 2022 the Board of Directors of Brembo S.p.A., having heard the recommendation and guidelines of the Remuneration & Appointments Committee, co-opted Manuela Soffientini as new Independent Director, member of the Audit, Risk & Sustainability Committee and the Remuneration & Appointments Committee (the Director's resume is available on the Company's website: Governing Boards and Committees | Brembo - Official website). In addition, Independent Director Elisabetta Magistretti was appointed Chairwoman of the Audit, Risk & Sustainability Committee.
No other significant events occurred after 31 December 2021 and up to 3 March 2022.
The product becomes a sustainable solution: when experience and knowledge lead to new technologies that respect the environment, innovation is increasingly green.
The changes in property, plant and equipment are shown in the table below and described in this section.
| (euro thousand) | Land | Buildings | Plant and machinery |
Industrial and commercial equipment |
Other assets | Assets in course of construction and payments on account |
Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 31,911 | 433,396 | 1,406,365 | 250,247 | 68,480 | 63,986 | 2,254,385 |
| Accumulated depreciation | 0 | (128,980) | (811,555) | (203,968) | (42,830) | 0 | (1,187,333) |
| Write-down provision | 0 | (13) | (2,404) | (18) | 0 | (310) | (2,745) |
| Balance at 1 January 2020 | 31,911 | 304,403 | 592,406 | 46,261 | 25,650 | 63,676 | 1,064,307 |
| Changes: | |||||||
| Translation differences | (729) | (16,646) | (26,809) | (1,274) | (562) | (3,816) | (49,836) |
| Reclassification | 268 | 3,092 | 29,382 | 6,033 | 1,549 | (43,999) | (3,675) |
| Acquisitions | 15 | 6,580 | 55,920 | 10,363 | 2,299 | 49,120 | 124,297 |
| Disposals | 0 | (1) | (791) | (680) | 0 | (343) | (1,815) |
| Depreciation | 0 | (18,504) | (113,004) | (19,743) | (5,716) | 0 | (156,967) |
| Impairment losses | 0 | (5) | (434) | (7) | (13) | (28) | (487) |
| Total changes | (446) | (25,484) | (55,736) | (5,308) | (2,443) | 934 | (88,483) |
| Historical cost | 31,465 | 420,847 | 1,417,585 | 259,155 | 71,304 | 64,734 | 2,265,090 |
| Accumulated depreciation | 0 | (141,911) | (878,236) | (218,184) | (48,084) | 0 | (1,286,415) |
| Write-down provision | 0 | (17) | (2,679) | (18) | (13) | (124) | (2,851) |
| Balance at 1 January 2021 | 31,465 | 278,919 | 536,670 | 40,953 | 23,207 | 64,610 | 975,824 |
| Changes: | |||||||
| Translation differences | 567 | 13,027 | 19,779 | 631 | 1,538 | 2,433 | 37,975 |
| Change in consolidation area | 278 | 4,685 | 6,403 | 991 | 419 | 526 | 13,302 |
| Reclassification | 0 | 1,138 | 30,613 | 3,867 | 481 | (37,910) | (1,811) |
| Acquisitions | 4,764 | 5,488 | 106,640 | 13,179 | 5,483 | 48,287 | 183,841 |
| Disposals | 0 | (18) | (3,256) | (494) | (38) | (17) | (3,823) |
| Depreciation | 0 | (18,566) | (115,059) | (17,963) | (6,335) | 0 | (157,923) |
| Impairment losses | 0 | 0 | (117) | (1) | (3) | (5) | (126) |
| Total changes | 5,609 | 5,754 | 45,003 | 210 | 1,545 | 13,314 | 71,435 |
| Historical cost | 37,074 | 450,345 | 1,625,330 | 278,172 | 83,703 | 78,047 | 2,552,671 |
| Accumulated depreciation | 0 | (165,658) | (1,042,425) | (236,991) | (58,937) | 0 | (1,504,011) |
| Write-down provision | 0 | (14) | (1,232) | (18) | (14) | (123) | (1,401) |
| Balance at 31 December 2021 | 37,074 | 284,673 | 581,673 | 41,163 | 24,752 | 77,924 | 1,047,259 |
In 2021, investments made in tangible fixed assets amounted to €183,841 thousand, including €48,287 thousand on fixed assets in course of construction.
As already noted in the Directors' Report on Operations, the Group continued its development programme. This involved significant investments in Italy, Poland, North America and China.
Net disposals amounted to €3,823 thousand and refer to the normal cycle of machinery replacement, as it becomes unusable in production processes.
Total depreciation charges for 2021 amounted to €157,923 thousand (2020: €156,967 thousand).
The following table shows the movements in item "Right of use assets":
| (euro thousand) | Land | Buildings | Plant and machinery |
Other assets | Total |
|---|---|---|---|---|---|
| Historical cost | 705 | 190,548 | 0 | 23,119 | 214,372 |
| Accumulated depreciation | 0 | (13,978) | 0 | (5,901) | (19,879) |
| Balance at 1 January 2020 | 705 | 176,570 | 0 | 17,218 | 194,493 |
| Changes: | |||||
| Translation differences | (41) | (5,118) | 0 | (464) | (5,623) |
| New contracts/leases for the year | 7 | 28,083 | 0 | 9,665 | 37,755 |
| Unwinding of lease contract | 0 | 0 | 0 | (129) | (129) |
| Other | 3,637 | (477) | 0 | (63) | 3,097 |
| Depreciation | (98) | (13,958) | 0 | (8,081) | (22,137) |
| Total changes | 3,505 | 8,530 | 0 | 928 | 12,963 |
| Historical cost | 4,530 | 212,698 | 0 | 30,524 | 247,752 |
| Accumulated depreciation | (320) | (27,598) | 0 | (12,378) | (40,296) |
| Balance at 1 January 2021 | 4,210 | 185,100 | 0 | 18,146 | 207,456 |
| Changes: | |||||
| Translation differences | 401 | 7,617 | 1 | 372 | 8,391 |
| Change in consolidation area | 0 | 10,240 | 335 | 66 | 10,641 |
| Reclassification from leased assets to property, plant and equipment |
0 | 0 | 0 | (21) | (21) |
| New contracts/leases for the year | 0 | 19,257 | 0 | 7,150 | 26,407 |
| Unwinding of lease contract | 0 | 0 | 0 | (217) | (217) |
| Depreciation | (91) | (16,793) | (23) | (8,276) | (25,183) |
| Total changes | 310 | 20,321 | 313 | (926) | 20,018 |
| Historical cost | 4,970 | 249,900 | 441 | 35,461 | 290,772 |
| Accumulated depreciation | (450) | (44,479) | (128) | (18,241) | (63,298) |
| Balance at 31 December 2021 | 4,520 | 205,421 | 313 | 17,220 | 227,474 |
Increases also included a €10,819 thousand change arising from the revision of the duration of Brembo México S.A. de C.V.'s lease contract relating to a building.
Note 13 provides other information on the Group's financial commitment with respect to leased assets.
The changes in this item are shown in the table below and described in this section.
| Development costs |
Goodwill | Intangible assets with indefinite useful lives |
Sub-total | Industrial patents and similar rights |
Other intangible assets |
Total other intangible assets |
Total | |
|---|---|---|---|---|---|---|---|---|
| (euro thousand) | A | B | A+B | C | D | C+D | ||
| Historical cost | 209,139 | 94,665 | 1,404 | 96,069 | 42,542 | 138,436 | 180,978 | 486,186 |
| Accumulated amortisation | (119,828) | 0 | 0 | 0 | (31,090) | (91,642) | (122,732) | (242,560) |
| Write-down provision | (2,070) | (12,183) | (3) | (12,186) | (1,089) | 0 | (1,089) | (15,345) |
| Balance at 1 January 2020 | 87,241 | 82,482 | 1,401 | 83,883 | 10,363 | 46,794 | 57,157 | 228,281 |
| Changes: | ||||||||
| Translation differences | (773) | (3,991) | (10) | (4,001) | (17) | (1,082) | (1,099) | (5,873) |
| Reclassification | 0 | 0 | 0 | 0 | 551 | (3,140) | (2,589) | (2,589) |
| Acquisitions | 22,266 | 0 | 0 | 0 | 1,643 | 4,364 | 6,007 | 28,273 |
| Disposals | 0 | 0 | 0 | 0 | 12 | (578) | (566) | (566) |
| Amortisation | (14,533) | 0 | 0 | 0 | (1,482) | (9,035) | (10,517) | (25,050) |
| Impairment losses | (1,909) | 0 | 0 | 0 | (1,000) | 0 | (1,000) | (2,909) |
| Total changes | 5,051 | (3,991) | (10) | (4,001) | (293) | (9,471) | (9,764) | (8,714) |
| Historical cost | 229,986 | 90,020 | 1,394 | 91,414 | 44,563 | 136,674 | 181,237 | 502,637 |
| Accumulated amortisation | (133,714) | 0 | 0 | 0 | (32,404) | (99,351) | (131,755) | (265,469) |
| Write-down provision | (3,980) | (11,529) | (3) | (11,532) | (2,089) | 0 | (2,089) | (17,601) |
| Balance at 1 January 2021 | 92,292 | 78,491 | 1,391 | 79,882 | 10,070 | 37,323 | 47,393 | 219,567 |
| Changes: | ||||||||
| Translation differences | 764 | 7,448 | 42 | 7,490 | (2) | 2,596 | 2,594 | 10,848 |
| Change in consolidation area | 6,227 | 21,497 | 9,906 | 31,403 | 0 | 30,310 | 30,310 | 67,940 |
| Reclassification | 0 | 0 | 0 | 0 | 217 | 242 | 459 | 459 |
| Acquisitions | 23,264 | 0 | 0 | 0 | 1,473 | 7,052 | 8,525 | 31,789 |
| Disposals | (1,801) | 0 | 0 | 0 | 0 | 0 | 0 | (1,801) |
| Amortisation | (18,162) | 0 | 0 | 0 | (1,638) | (9,728) | (11,366) | (29,528) |
| Impairment losses | (1,455) | 0 | 0 | 0 | (500) | 0 | (500) | (1,955) |
| Total changes | 8,837 | 28,945 | 9,948 | 38,893 | (450) | 30,472 | 30,022 | 77,752 |
| Historical cost | 262,828 | 119,771 | 11,342 | 131,113 | 46,328 | 182,200 | 228,528 | 622,469 |
| Accumulated amortisation | (156,264) | 0 | 0 | 0 | (34,119) | (114,405) | (148,524) | (304,788) |
| Write-down provision | (5,435) | (12,335) | (3) | (12,338) | (2,589) | 0 | (2,589) | (20,362) |
| Balance at 31 December 2021 | 101,129 | 107,436 | 11,339 | 118,775 | 9,620 | 67,795 | 77,415 | 297,319 |
The item "Development costs" includes costs for development, internal and external, for a gross historical cost of €262,828 thousand. During the reporting year, this item changed due to higher costs incurred in 2021 for development orders received both during the year and in previous years, for which additional development costs were incurred; amortisation amounting to €18,162 thousand was recognised for development costs associated with orders regarding products that have already entered production.
The gross amount includes development activities for projects underway totalling €51,185 thousand. The total amount of costs for capitalised internal works charged to the Statement of Income in the item "Costs for capitalised internal works" during the year amounted to €23,189 thousand (2020: €22,573 thousand).
Impairment losses totalled €1,455 thousand and are recognised in the Statement of Income under "Amortisation, depreciation and impairment losses." Impairment losses refer to development costs incurred mainly by the Parent, Brembo S.p.A., in relation to projects that, consistent with the desire of the customer or Brembo, were not completed or underwent changes in terms of their end destination.
The item "Goodwill" arose from business combinations and the ensuing allocation to the following GCUs:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Discs - Systems - Motorbikes: | ||
| Brembo North America Inc. (Hayes Lemmerz) | 15,071 | 13,910 |
| Brembo México S.A. de C.V. (Hayes Lemmerz) | 917 | 847 |
| Brembo Nanjing Brake Systems Co. Ltd. | 973 | 872 |
| Brembo Brake India Pvt. Ltd. | 7,818 | 7,344 |
| Brembo Huilian (Langfang) Brake Systems Co. Ltd. | 46,793 | 41,965 |
| SBS Friction A/S | 20,749 | 0 |
| J.JUAN Group | 755* | 0 |
| After Market – Performance Group: | ||
| Corporación Upwards '98 (Frenco S.A.) | 2,006 | 2,006 |
| Ap Racing Ltd. | 12,354 | 11,547 |
| Total | 107,436 | 78,491 |
* Provisional, pending completion of the purchase price allocation process.
The change compared to 31 December 2020 was attributable to the consideration paid for acquiring the 100% stake in SBS Friction A/S and in the J.Juan Group and recognised under goodwill, and to the change in consolidation differences.
CGUs are typically identified as the business being acquired and therefore tested for impairment. If the asset being tested for impairment refers to businesses operating in multiple business lines, it is attributed to all business lines in existence at the date of acquisition; this approach is consistent with valuations carried out at the acquisition date, which are typically based on the estimated recoverable amount of the entire investment.
The main assumptions used to determine the value in use of the cash-generating unit relate to the discount rate, the long-term growth rate and the cash flows arising on corporate business plans.
Cash flows for subsequent years were extrapolated using a prudential steady 1-1.5% medium/long-term growth rate (1-1.5% in 2020), on a case by case basis. The Group's discount rate (Group WACC) used was 6.30% (5.58% in 2020), which reflected the current market assessments of the time value of money and the risks specific to the asset in question. The Board of Directors of Brembo S.p.A. approved the company's business plans, 2022 budget forecasts and 2023-2025 plans.
The previously mentioned impairment tests did not indicate the need to recognise any impairment loss in the reporting year.
In the event of a change in the WACC from 6.30% to 7.30% and in the growth rate from 1.0% to 0.5% (or from 1.5% to 1.0%), no previously unimpaired goodwill would have become impaired.
In the event of a sales volume decrease that has been estimated in the range from -10% to -20%, no previously unimpaired goodwill would have become impaired.
The changes in the WACC, growth rate and sales volumes described above are deemed reasonable. In this respect, only changes beyond reasonable levels would have resulted in impairment.
This item includes €1,030 thousand related to the Villar trademark, owned by the subsidiary Corporación Upwards '98 S.A., €1,321 thousand for the SBS Friction trademark, €8,585 thousand for the J.Juan trademark and the value of the LF trademark of Brembo Huilian (Langfang) Brake Systems Co. Ltd. for the remainder.
For information concerning impairment-testing methods, reference should be made to the above notes on goodwill. The impairment tests did not detect any impairment losses.
Acquisitions recognised under "Other intangible assets" totalled €8,525 thousand and refer for €1,473 thousand to the filing of specific patents and trademarks, and for the remaining amount mainly to the share of the investment for the reporting year associated with the development of new features regarding the new Group ERP system and the acquisition of other IT applications.
The item "Change in consolidation area", relating to the inclusion in the consolidation scope of the SBS Friction A/B and the J.Juan Group amounted to €30,310 thousand and chiefly referred to the value assigned during the purchase price allocation process to the customer relationship (€21,397 thousand for the J.Juan Group) and technology (€4,323 thousand for the J.Juan Group and €2,093 thousand for SBS Friction A/S).
This item includes the Group's share of equity in companies that are valued using the equity method. The following table shows all relevant movements:
| Write-ups/ | Other | ||||
|---|---|---|---|---|---|
| (euro thousand) | 31.12.2020 | Write-downs | Dividends | changes | 31.12.2021 |
| Brembo Group SGL Carbon Ceramic Brakes | 42,201 | 15,318 | (15,000) | 668 | 43,187 |
| Petroceramics S.p.A. | 955 | 199 | (20) | (12) | 1,122 |
| Infibra | 791 | 0 | 0 | 0 | 791 |
| Total | 43,947 | 15,517 | (15,020) | 656 | 45,100 |
It should be noted that the impact on the Statement of Income of shareholdings valued using the equity method refers to two items: "Income (expense) from non-financial investments", attributable to the effect of the valuation using the equity method of the BSCCB Group, and "Interest income (expense) from investments", attributable to the valuation of associates using the equity method.
The following is a breakdown of the assets, liabilities, costs and revenues referring to joint ventures and associates.
| Brembo Group SGL Carbon Ceramic Brakes | ||
|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 |
| Revenue from contracts with customers | 196,075 | 159,984 |
| Other revenues and income | 2,427 | 4,240 |
| Costs for capitalised internal works | 0 | 1,034 |
| Raw materials, consumables and goods | (57,143) | (49,548) |
| Other operating costs | (39,789) | (36,953) |
| Personnel expenses | (45,613) | (39,512) |
| GROSS OPERATING INCOME | 55,957 | 39,245 |
| Depreciation, amortisation and impairment losses | (13,202) | (10,650) |
| NET OPERATING INCOME | 42,755 | 28,595 |
| Net interest income (expense) | (435) | (481) |
| RESULT BEFORE TAXES | 42,320 | 28,114 |
| Taxes | (11,486) | (7,547) |
| NET RESULT FOR THE YEAR | 30,834 | 20,567 |
| % ownership | 50% | 50% |
| Other consolidation adjustments | (99) | 108 |
| GROUP NET RESULT | 15,318 | 10,392 |
| Property, plant, equipment and other equipment | 42,659 | 46,076 |
| Right of use assets | 14,282 | 15,374 |
| Development costs | 0 | 2,145 |
| Other intangible assets | 308 | 348 |
| Other financial assets (including investments in other companies and derivatives) | 131 | 131 |
| Receivables and other non-current assets | 130 | 73 |
| Deferred tax assets | 2,642 | 2,853 |
| TOTAL NON-CURRENT ASSETS | 60,152 | 67,000 |
| Inventories | 31,028 | 23,864 |
| Trade receivables | 19,835 | 16,421 |
| Other receivables and current assets | 3,694 | 3,420 |
| Cash and cash equivalents | 25,537 | 34,436 |
| TOTAL CURRENT ASSETS | 80,094 | 78,141 |
| TOTAL ASSETS | 140,246 | 145,141 |
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Share capital | 4,000 | 4,000 |
| Other reserves | 25,694 | 30,798 |
| Retained earnings/(losses) | 24,408 | 27,404 |
| Net result for the year | 30,834 | 20,567 |
| TOTAL EQUITY | 84,936 | 82,769 |
| Long-term lease liabilities | 12,820 | 13,958 |
| Other non-current liabilities | 1,360 | 1,116 |
| Non-current provisions | 3,412 | 3,180 |
| Provisions for employee benefits | 4,242 | 6,337 |
| TOTAL NON-CURRENT LIABILITIES | 21,834 | 24,591 |
| Short-term lease liabilities | 2,059 | 1,912 |
| Trade payables | 18,590 | 25,538 |
| Tax payables | 3,925 | 1,359 |
| Current provisions | 377 | 0 |
| Other current liabilities | 8,525 | 8,972 |
| TOTAL CURRENT LIABILITIES | 33,476 | 37,781 |
| TOTAL LIABILITIES | 55,310 | 62,372 |
| TOTAL EQUITY AND LIABILITIES | 140,246 | 145,141 |
| % ownership | 50% | 50% |
| Goodwill | 1,033 | 1,033 |
| Other consolidation adjustments | (314) | (217) |
| CARRYING VALUE OF GROUP SHAREHOLDING | 43,187 | 42,201 |
| Petroceramics S.p.A. | Infibra Technologies S.r.l. | |||
|---|---|---|---|---|
| 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | |
| Revenue from contracts with customers | 2,324 | 1,944 | 566 | 225 |
| NET RESULT FOR THE YEAR | 996 | 552 | 1 | (44) |
| % ownership | 20% | 20% | 20% | 20% |
| GROUP NET RESULT | 199 | 110 | 0 | (9) |
| Total current assets | 4,834 | 4,589 | 1,268 | 1,000 |
| Total non-current assets | 2,262 | 1,747 | 158 | 50 |
| Total current liabilities | 1,234 | 1,338 | 460 | 98 |
| Total non-current liabilities | 252 | 222 | 133 | 119 |
| TOTAL EQUITY | 5,610 | 4,776 | 833 | 833 |
| % ownership | 20% | 20% | 20% | 20% |
| Other consolidation adjustments | 0 | 0 | 624 | 624 |
| CARRYING VALUE OF GROUP SHAREHOLDING | 1,122 | 955 | 791 | 791 |
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Shareholdings in other companies | 293,859 | 213,669 |
| Receivables from associates | 0 | 2,716 |
| Other securities | 754 | 0 |
| Derivatives | 24,424 | 152 |
| Other | 1,215 | 726 |
| Total | 320,252 | 217,263 |
The item "Shareholdings in other companies" includes the 10% interest in International Sport Automobile S.a.r.l., the 4.78% interest in Pirelli S.p.A., the 3.27% interest in E-Novia S.p.A. and the 1.20% interest in Fuji Co. At 31 December 2021, the measurement of the interest in Pirelli S.p.A. at fair value resulted in a €80,022 thousand increase in its value and in the Group equity compared to 31 December 2020 (due to the change in the market price of the stock from €4.433 to €6.108). In accordance with IFRS 9, this change was recognised in the Consolidated Statement of Comprehensive Income. The further change of €168 thousand on 31 December 2020 was attributable to the Parent's interest in consortium funds intended for research.
The change in the item "Receivables from associates" refers to the receivable arising from the loan granted by Brembo to Innova Tecnologie S.r.l. (the liquidation process for which was concluded during the year), 30% owned
by Brembo S.p.A., of which €985 thousand was recovered, whereas the remainder was covered by a provision for risks that was used in its entirety during the year.
The item "Derivatives" refers to the fair value of derivative assets relating to a specific financial transaction hedging against the risk of fluctuation in the electricity price undertaken in 2021.
"Other" includes interest-free security deposits for utilities and car rental agreements.
This item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Receivables from others | 20,643 | 17,671 |
| Income tax receivables | 2,541 | 537 |
| Non-income tax receivables | 34 | 34 |
| Total | 23,218 | 18,242 |
The item "Receivables from others" mainly includes the amounts related to contributions towards clients for the acquisition of long-term exclusive supply arrangements, which were released to the Statement of Income in accordance with the supply schedule for the clients.
Income tax receivables mainly refer to tax credits that can be used beyond one year, granted on the purchase of new property, plant and equipment, and other tax credits for which refunds have been requested.
The net balance of deferred tax assets and liabilities is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Deferred tax assets | 71,649 | 76,731 |
| Deferred tax liabilities | (38,189) | (26,421) |
| Total | 33,460 | 50,310 |
Deferred tax assets and liabilities were generated mainly due to temporary differences for capital gains with deferred taxation, other income items subject to future deductions or taxation, prior years' tax losses and other consolidation adjustments.
Movements for the year are reported in the following table:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Balance at beginning of year | 50,310 | 26,207 |
| Change in consolidation area | (3,761) | 0 |
| Deferred tax liabilities generated | (3,291) | (3,625) |
| Deferred tax assets generated | 22,338 | 30,052 |
| Use of deferred tax assets and liabilities | (32,583) | (7,927) |
| Exchange rate fluctuations | 1,106 | (1,705) |
| Reclassification | 3,241 | 0 |
| Other movements | (3,900) | 7,308 |
| Balance at end of year | 33,460 | 50,310 |
The nature of temporary differences that generated deferred tax assets and liabilities is detailed below:
| Assets | Liabilities | Net | ||||
|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 | 31.12.2021 | 31.12.2020 |
| Property, plant, equipment and other equipment | 19,401 | 14,231 | 24,957 | 22,092 | (5,556) | (7,861) |
| Development costs | 28 | 28 | 304 | 0 | (276) | 28 |
| Goodwill and other indefinite useful life assets | 500 | 0 | 241 | 0 | 259 | 0 |
| Other intangible assets | 563 | 9,711 | 11,581 | 5,123 | (11,018) | 4,588 |
| Equity shareholdings | 33 | 32 | 1,318 | 358 | (1,285) | (326) |
| Other financial assets | 0 | 1,016 | 1,075 | 88 | (1,075) | 928 |
| Trade receivables | 3,333 | 3,145 | 0 | 0 | 3,333 | 3,145 |
| Inventories | 16,003 | 13,819 | 0 | 0 | 16,003 | 13,819 |
| Other receivables and current assets | 72 | 114 | 1,828 | 457 | (1,756) | (343) |
| Financial liabilities | 23 | 869 | 590 | 0 | (567) | 869 |
| Other financial liabilities | 5,042 | 2,483 | 51 | 0 | 4,991 | 2,483 |
| Provisions | 11,039 | 9,983 | 0 | 0 | 11,039 | 9,983 |
| Provisions for employee benefits | 11,082 | 8,192 | 1,176 | 1,176 | 9,906 | 7,016 |
| Item of deferred tax assets Short/long-term lease liabilities |
1,476 | 1,297 | 0 | 0 | 1,476 | 1,297 |
| Trade payables | 245 | 286 | 0 | 0 | 245 | 286 |
| Cash and cash equivalents | 10 | 10 | 0 | 0 | 10 | 10 |
| Other liabilities | 7,907 | 13,317 | 1,647 | 1,609 | 6,260 | 11,708 |
| Other | 1,822 | 6,874 | 5,746 | 4,729 | (3,924) | 2,145 |
| Tax losses | 5,395 | 535 | 0 | 0 | 5,395 | 535 |
| Compensation balance | (12,325) | (9,211) | (12,325) | (9,211) | 0 | 0 |
| Total | 71,649 | 76,731 | 38,189 | 26,421 | 33,460 | 50,310 |
The item "Use of deferred tax assets and liabilities" includes €9,691 thousand referring to the release of deferred tax assets recognised in 2020 in connection with the third instalment of the Patent Box relief arising from the direct exploitation of intangible assets relating to tax periods 2016, 2017, 2018 and 2019.
The recognition of deferred tax assets was made by assessing the existence of the prerequisites for their future recovery based on updated strategic plans. In particular, it should be noted that the consolidated subsidiary Brembo Poland Spolka Zo.o. is located in a "special economic zone" and is entitled to deduct a percentage from 25% to 50% of its investments from its current taxes owed through 2026. The company had used all the existing credit at 31 December 2021.
Brembo Czech S.r.o. has two tax incentive plans, one of CZK 132.7 million (expiring in 2026) and another of CZK 63.8 million (expiring in 2029), respectively, on which the company recognised deferred tax assets of CZK 25.8 million.
The item "Tax losses" refers to deferred tax assets on losses for the year or previous years recognised by Brembo Czech Sro. (€3,635 thousand), Brembo do Brasil Ltd. (€1,120 thousand), SBS Friction A/S (€610 thousand) and Brembo Huilian (Langfang) Brake Systems Co. Ltd. (€30 thousand), considering there to be a basis for the future recoverability of the tax assets in view of updated strategic plans.
It must be pointed out that:
A breakdown of net inventories, which are stated net of the inventory write-down provision, is shown below:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Raw materials | 196,685 | 144,669 |
| Work in progress | 93,916 | 66,938 |
| Finished products | 145,425 | 116,656 |
| Goods in transit | 46,898 | 26,624 |
| Total | 482,924 | 354,887 |
The change compared to 31 December 2020 was attributable both to higher volumes and the increase in the cost of raw materials, as well as, for €25,331 thousand, to the inclusion in the Group's consolidation scope of SBS Friction A/S and the J.Juan Group.
Movements in the inventory write-down provision are reported in the following table:
| Exchange | |||||||
|---|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2020 | Provisions | Use/ Release |
rate fluctuations |
Reclassification | Change in consolidation area |
31.12.2021 |
| Inventory write-down provision | 59,013 | 13,690 | (9,432) | 1,223 | (19) | 2,557 | 67,032 |
The inventory write-down provision is determined in order to align the cost of inventories to their estimated realisable value; the provision increased due to higher depreciation calculated on obsolete goods as a result of faster renewal of product ranges.
At 31 December 2021, the balance of trade receivables compared to the end of the previous year was as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Accounts receivable from customers | 466,997 | 383,669 |
| Receivables from associates and joint ventures | 1,225 | 1,770 |
| Total | 468,222 | 385,439 |
Trade receivables grew due to the increase in business volumes, in addition to the change in the consolidation area (€23,969 thousand).
The bad debt risk is not concentrated in any one area, as the Group has a client portfolio spread across the various geographical areas in which it operates.
It should be noted that the balance of accounts receivable from customers also included receivables from Russian customers for €1,478 thousand.
Accounts receivable from customers are recognised net of the provision for bad debts, which amounted to €5,805 thousand. Movements in the provision for bad debts are shown below:
| (euro thousand) | 31.12.2020 | Provisions | Use/Release | Exchange rate fluctuations |
Change in consolidation area |
31.12.2021 |
|---|---|---|---|---|---|---|
| Provision for bad debts | 6,547 | 1,152 | (2,456) | 250 | 312 | 5,805 |
The Brembo Group's maximum credit risk exposure is the book value of the gross financial assets recognised in the financial statements net of any amounts offset in accordance with IAS 32 and any impairment losses recognised in accordance with IFRS 9.
It bears noting that Brembo has no credit insurance contracts as its credit risk is modest since its main business partners are leading car and motorbike manufacturers with high credit standing.
To express the creditworthiness of financial assets the Group has elected to distinguish between clients who are listed or not listed on the stock exchange. Listed clients are those listed on a stock market, directly or indirectly controlled by a listed company or closely connected to listed companies.
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Listed clients | 353,734 | 312,908 |
| Unlisted clients | 120,293 | 79,078 |
| Total | 474,027 | 391,986 |
The following table provides details on trade receivables that have not been adjusted for impairment, broken down by maturity.
| (euro thousand) | 31.12.2021 | Write-down 2021 | 31.12.2020 | Write-down 2020 |
|---|---|---|---|---|
| Current | 325,761 | 0 | 293,981 | 0 |
| Expired up to 30 days | 5,376 | 0 | 2,900 | 20 |
| Expired by 30 to 60 days | 6,406 | 0 | 8,946 | 218 |
| Expired by over 60 days | 16,191 | 2,726 | 7,081 | 2,393 |
| Total | 353,734 | 2,726 | 312,908 | 2,631 |
| % ratio of expired receivables not written down | ||||
| to total exposure | 7.1% | 5.2% | ||
| Total expired receivables, not written down | 25,247 | 16,296 |
| (euro thousand) | 31.12.2021 | Write-down 2021 | 31.12.2020 | Write-down 2020 |
|---|---|---|---|---|
| Current | 110,305 | 3 | 70,613 | 0 |
| Expired up to 30 days | 3,570 | 0 | 1,416 | 0 |
| Expired by 30 to 60 days | 2,929 | 0 | 3,079 | 0 |
| Expired by over 60 days | 3,489 | 3,076 | 3,970 | 3,916 |
| Total | 120,293 | 3,079 | 79,078 | 3,916 |
| % ratio of expired receivables not written down to total exposure |
5.7% | 5.8% | ||
| Total expired receivables, not written down | 6,912 | 4,549 |
Expired receivables from listed clients, increased also due to the change in the consolidation area, mainly refer to leading car manufacturers; the related repayment plans were almost fully set at the beginning of 2022.
With regard to the portion of expired receivables from unlisted clients, most of this amount has already been collected in the first months of 2022.
This item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Income tax receivables | 69,240 | 70,505 |
| Non-income tax receivables | 37,595 | 30,572 |
| Other receivables | 29,327 | 18,238 |
| Total | 136,162 | 119,315 |
The item "Income tax receivables" includes the receivable recognised by the Parent Company in prior years in relation to the application of an IRES refund, concerning the non-deductibility for IRAP purposes of personnel expenses, and other applications for IRES and IRAP refund totalling €954 thousand.
The item "Non-income tax receivables" primarily includes the VAT receivables of Brembo S.p.A. and of subsidiaries located in Poland and Mexico.
"Other receivables" include receivables from insurance companies related to insurance refund claims underway at the reporting date, advances paid to suppliers for goods and services, and other accrued income.
This item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Other securities | 0 | 1,000 |
| Derivatives | 4,347 | 352 |
| Security deposits | 1,186 | 561 |
| Other receivables | 59 | 25 |
| Total | 5,592 | 1,938 |
The item "Derivatives" mainly refers to the fair value at 31 December 2021 (amounting to €2,731 thousand) of an IRS entered into directly by the Parent Brembo S.p.A., for a remaining notional amount of €200 million at 31 December 2021, hedging the change in interest rate risk associated with a specific outstanding loan. This IRS falls within the requirements set forth in the accounting standards relating to hedge accounting (cash flow hedge). The change in fair value compared to 31 December 2020 was recognised as a component of comprehensive income, net of the tax effect, given that the hedge is fully effective.
The item also includes the fair value of derivative assets embedded in commercial contracts with customers to cover the exchange rate risk.
Cash and cash equivalents include:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Bank and postal accounts | 557,336 | 551,163 |
| Cash-in-hand and cash equivalents | 127 | 119 |
| Total cash and cash equivalents | 557,463 | 551,282 |
| Payables to banks: overdrafts and foreign currency advances | (85,515) | (106,052) |
| Cash and cash equivalents from the Statement of Cash Flows | 471,948 | 445,230 |
The items listed above can be converted readily into cash and are not exposed to a significant risk that their value may change. It is deemed that the book value of cash and cash equivalents approximates their fair value at the reporting date.
In addition to the amount recognised in the Statement of Cash Flows, it should be noted that interest paid in the year totalled €12,411 thousand (€19,226 thousand in 2020).
Group consolidated equity at 31 December 2021 increased by €312,537 thousand compared to 31 December 2020. Movements are given in the relevant statement.
The Parent's subscribed and paid up share capital amounted to €34,728 thousand at 31 December 2021. It is divided into 333,922,250 ordinary shares.
The table shows the composition of the share capital and a reconciliation of the number of shares outstanding at 31 December 2021 and 31 December 2020:
| (No. of shares) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Ordinary shares issued | 333,922,250 | 333,922,250 |
| Own shares | (10,035,000) | (10,035,000) |
| Total shares outstanding | 323,887,250 | 323,887,250 |
As part of Brembo's buy-back plan, in 2021 the Company neither purchased nor sold own shares.
The General Shareholders' Meeting of the Parent Brembo S.p.A. held on 22 April 2021 approved the Financial Statements for the financial year ended 31 December 2020, allocating net income for the year amounting to €85,505,062.96 as follows:
This item changed due to dividends paid to minority shareholders, as well as to the change in consolidation differences.
This item is broken down as follows:
| 31.12.2021 | 31.12.2020 | |||||
|---|---|---|---|---|---|---|
| (euro thousand) | Due within one year |
Due after one year |
Total | Due within one year |
Due after one year |
Total |
| Payables to banks: | ||||||
| - overdrafts and advances | 85,515 | 0 | 85,515 | 106,052 | 0 | 106,052 |
| - loans | 139,771 | 516,182 | 655,953 | 69,946 | 548,220 | 618,166 |
| Total | 225,286 | 516,182 | 741,468 | 175,998 | 548,220 | 724,218 |
| Lease liabilities | 24,236 | 202,340 | 226,576 | 21,473 | 187,415 | 208,888 |
| Payables to other financial institutions | 810 | 3,117 | 3,927 | 274 | 953 | 1,227 |
| Derivatives | 2,950 | 0 | 2,950 | 3,564 | 0 | 3,564 |
| Total | 27,996 | 205,457 | 233,453 | 25,311 | 188,368 | 213,679 |
The following table provides a breakdown of "Payables to banks":
| Amount at | Amount at | Portion due | Portion due between |
Portion due | |
|---|---|---|---|---|---|
| (euro thousand) | 31.12.2020 | 31.12.2021 | within one year | 1 and 5 years | after 5 years |
| Payables to banks: | |||||
| Banca Popolare di Sondrio loan (€75 million) | 31,244 | 6,250 | 6,250 | 0 | 0 |
| BNL loan (€80 million) | 21,660 | 3,333 | 3,333 | 0 | 0 |
| Mediobanca loan (€130 million) | 4,998 | 0 | 0 | 0 | 0 |
| BNL loan (€100 million) | 99,906 | 99,939 | 15 | 99,924 | 0 |
| BNL loan (€300 million) | 299,326 | 299,555 | 99,953 | 124,633 | 74,969 |
| Banca Popolare di Sondrio loan (€125 million) | 125,057 | 125,076 | 12,632 | 99,945 | 12,499 |
| ISP loan (€100 million) | 0 | 99,403 | 0 | 99,403 | 0 |
| Intesa Sanpaolo loan (USD 35 million) | 9,503 | 0 | 0 | 0 | 0 |
| Banamex loan (USD 30 million) | 12,224 | 4,409 | 4,409 | 0 | 0 |
| EIB loan (€30 million, New Foundry Project) | 3,810 | 0 | 0 | 0 | 0 |
| Citi Nanjing loan (RMB 100 million) | 10,438 | 10,942 | 10,942 | 0 | 0 |
| BANKINTER loan (€105 thousand) | 0 | 27 | 22 | 5 | 0 |
| BANKINTER loan (€504 thousand) | 0 | 148 | 104 | 44 | 0 |
| BANKINTER loan (€2 million) | 0 | 1,796 | 499 | 1,297 | 0 |
| BANCO SABADELL loan (€500 thousand) | 0 | 418 | 123 | 295 | 0 |
| SANTANDER loan (€2 million) | 0 | 942 | 290 | 652 | 0 |
| SANTANDER loan (€600 thousand) | 0 | 296 | 121 | 175 | 0 |
| SANTANDER 2020 loan (€2 million) | 0 | 1,681 | 490 | 1,191 | 0 |
| CAIXABANK loan (€1 million) | 0 | 854 | 250 | 604 | 0 |
| BBVA loan (€2 million) | 0 | 884 | 338 | 546 | 0 |
| Total payables to banks | 618,166 | 655,953 | 139,771 | 428,714 | 87,468 |
Among the most significant transactions closed in 2021, mention should be made of a medium-term loan of €100 million issued by Intesa Sanpaolo to Brembo S.p.A.
It should be noted that several loans require compliance with certain financial covenants. At the reporting date, all of these covenants had been met. At 31 December 2021, there was no financial debt secured by collateral.
The following table shows the breakdown of "Other financial liabilities".
| (euro thousand) | Amount at 31.12.2020 |
Amount at 31.12.2021 |
Portion due within one year |
Portion due between 1 and 5 years |
Portion due after 5 years |
|---|---|---|---|---|---|
| Other financial liabilities: | |||||
| Payables to other financial institutions: | |||||
| Libra loan | 64 | 1,034 | 226 | 808 | 0 |
| Tivano loan | 0 | 110 | 55 | 55 | 0 |
| Ministerio Industria España | 1,163 | 955 | 263 | 692 | 0 |
| Ministerio de Ciencia e Innovación | 0 | 137 | 28 | 109 | 0 |
| Institut Català de Finances | 0 | 1,691 | 238 | 998 | 455 |
| Total payables to other financial institutions | 1,227 | 3,927 | 810 | 2,662 | 455 |
| Lease liabilities | 208,888 | 226,576 | 24,236 | 73,719 | 128,621 |
| Total other financial liabilities | 210,115 | 230,503 | 25,046 | 76,381 | 129,076 |
With regard to payments relating to optional lease renewal periods not included in the calculation of liabilities at 31 December 2021, €23,939 thousand of lease instalments, relating solely to properties and due beyond five years, were not subject to discounting.
The following table shows the structure of loans towards banks and other financial institutions, broken down by annual interest rate and currency:
| 31.12.2021 | 31.12.2020 | ||||||
|---|---|---|---|---|---|---|---|
| (euro thousand) | Fixed rate | Variable rate | Total | Fixed rate | Variable rate | Total | |
| Euro | 317,551 | 326,978 | 644,529 | 356,632 | 230,596 | 587,228 | |
| US Dollar | 0 | 4,409 | 4,409 | 0 | 21,727 | 21,727 | |
| Chinese Renminbi | 0 | 10,942 | 10,942 | 0 | 10,438 | 10,438 | |
| Total | 317,551 | 342,329 | 659,880 | 356,632 | 262,761 | 619,393 |
The average variable rate applicable to the Group's debt is 0.71% and the average fixed rate is 1.0%.
In addition to the fair value relating to hedging through currency and commodity forward contracts entered into by Brembo S.p.A, La.Cam S.r.l. and Corporación Upwards '98 S.A. (€2,636 thousand), the item "Derivatives" includes the fair value at 31 December 2021 (amounting to €314 thousand) of an IRS entered into directly by the Parent Brembo S.p.A., for a remaining notional amount of €100 million at 31 December 2021, hedging the change in interest rate risk associated with a specific outstanding loan. This IRS falls within the requirements set forth in the accounting standards relating to hedge accounting (cash flow hedge). The change in fair value compared to 31 December 2020 was recognised as a component of comprehensive income, net of the tax effect, given that the hedge is fully effective.
At 31 December 2021, IRS derivatives had a positive fair value of €2,460 thousand, entirely recognised in a cash flow hedge reserve, gross of tax effects
Changes in the Cash Flow Hedge Reserve are shown below, gross of tax effects, are as follows:
| (euro thousand) | 31.12.2021 |
|---|---|
| Opening value | 3,518 |
| Fair value reserve releases | (32,725) |
| Movements from reserve for payment/collection of differentials | 2,353 |
| Closing value | (26,854) |
The following table shows the reconciliation of the net financial position at 31 December 2021 (€411,837 thousand) and at 31 December 2020 (€384,677 thousand) based on the layout prescribed by ESMA32-382-1138 Guidelines of 4 March 2021 and specified in Consob Warning Notice 5/21 of 29 April 2021:
| (euro thousand) | 31.12.2020 | ||
|---|---|---|---|
| A | Cash | 557,463 | 551,282 |
| B | Cash equivalents | 0 | 0 |
| C | Other current financial assets | 5,592 | 1,938 |
| D | Liquidity (A+B+C) | 563,055 | 553,220 |
| E | Current financial debt (including debt instruments, but excluding the current portion of non-current financial debt) |
113,482 | 131,363 |
| F | Current portion of non-current financial debt | 139,771 | 69,946 |
| G | Current financial debt (E + F) | 253,253 | 201,309 |
| H | Net current financial debt (G - D) | (309,802) | (351,911) |
| I | Non-current financial debt (excluding the current portion and debt instruments) | 721,639 | 736,588 |
| J | Debt instruments | 0 | 0 |
| K | Trade payables and other non-current payables | 0 | 0 |
| L | Non-current financial debt (I + J + K) | 721,639 | 736,588 |
| M | Total financial debt (H + L) | 411,837 | 384,677 |
The various components that gave rise to the change in net financial position during the current year are presented in the Statement of Cash Flows in the Directors' Report on Operations.
This item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Social security payables | 0 | 2,236 |
| Payables to employees | 1,807 | 10,736 |
| Other payables | 215 | 1,919 |
| Total | 2,022 | 14,891 |
The changes in the items "Payables to employees", "Social security payables" and "Other payables" primarily consisted of the reclassification to "Other current liabilities" of the liability associated with the 2019-2021 threeyear incentive plan reserved for top managers, to be settled in May 2022.
This item is broken down as follows:
| (euro thousand) | 31.12.2020 | Change in consolidation area |
Provisions | Use/Release | Exchange rate fluctuations |
Other | 31.12.2021 |
|---|---|---|---|---|---|---|---|
| Provisions for contingencies and charges |
11,745 | 2,340 | 3,495 | (10,155) | 46 | 6 | 7,477 |
| Provision for product warranties |
33,120 | 0 | 10,675 | (14,528) | 566 | 8,645 | 38,478 |
| Total | 44,865 | 2,340 | 14,170 | (24,683) | 612 | 8,651 | 45,955 |
| of which short-term | 1,875 | 960 |
Provisions totalled €45,955 thousand, including a provision for product warranties, which rose by €10,675 thousand for probable future costs linked to contractual warranties, supplemental customer indemnities — in connection with the Italian agency contract — and the valuation of risks related to litigation underway, as well as an estimate of liabilities that could arise as a result of tax litigation underway.
The item "Use/Release" refers to the use of the €6,983 thousand provision for risks allocated in 2020 following the completion of the settlement procedure entered into with the revenue authorities relating to the greater values of the intangible assets in relations with the Group's international subsidiaries for the years 2016 and 2017.
The item "Other" relates to the value of obligations for risks covered by insurance policies for which a pay-out is expected. Such pay-outs are recognised among "Other receivables and current assets," whereas the amount of the obligation, net of the pay-out, is recognised among "Provisions".
Group companies provide post-employment benefits through defined contribution plans or defined benefit plans. In the case of defined contribution plans, the Group companies pay contributions to public or private insurance institutes based on legal or contractual obligations or on a voluntary basis. Once such contributions have been paid, the companies have no further payment obligations.
Defined contribution plans include a plan relating to Brembo Huilian (Langfang) Brake Systems Co. Ltd and reserved for approximately 28 early retired employees, who have guaranteed monthly payments until they reach pension age.
The employees of the UK subsidiary AP Racing Ltd. have the benefit of a corporate pension plan (AP Racing Pension Scheme), which is made up of two sections: the first is a defined contribution plan for employees hired after 1 April 2001, and the second is a defined benefit plan for those already in service at 1 April 2001 (and previously covered by the AP Group Pension Fund). The defined benefit plan is funded by employer and employee contributions made to a trustee that is legally separate from the enterprise providing benefits to its employees.
Brembo México S.A. de C.V., Brembo Japan Co. Ltd. and Brembo Brake India Pvt. Ltd. offer to their employees specific pension plans that qualify as defined benefit plans.
Unfunded defined benefit plans include also the "Employees' leaving indemnity" provided by the Group's Italian companies, in accordance with current applicable regulations.
The value of defined benefit plans is calculated on an actuarial basis using the "Projected Unit Credit Method". The item "Other personnel provisions" also refers to other employee benefits.
Liabilities at 31 December 2021 are given in the table below:
| (euro thousand) | 31.12.2020 | Provisions | Use/Release | Interest expense |
Exchange rate fluctuations |
Other | 31.12.2021 |
|---|---|---|---|---|---|---|---|
| Employees' leaving entitlement | 18,058 | 0 | (786) | 148 | 0 | 404 | 17,824 |
| Defined benefit plans and other | |||||||
| long-term benefits | 7,316 | 563 | (1,006) | 250 | 450 | (2,431) | 5,142 |
| Defined contribution plans | 1,193 | 2,178 | (2,432) | 0 | 87 | 0 | 1,026 |
| Total | 26,567 | 2,741 | (4,224) | 398 | 537 | (2,027) | 23,992 |
| Unfunded Plan (employee's | leaving entitlement) | Funded Plan (Ap Racing plan) |
Brembo México plan |
Brembo Brake India plan |
Brembo Japan plan |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 | 31.12.2020 | |||
| A. Change in defined benefit obligation |
||||||||||
| 1. Defined benefit obligation at the end of prior year |
18,058 | 18,755 | 39,407 | 36,251 | 1,873 | 1,472 | 1,531 | 1,397 | 277 | 286 |
| 2. Service cost: | ||||||||||
| Current service cost | 0 | 0 | 0 | 0 | 326 | 231 | 196 | 170 | 41 | 36 |
| Past service cost | 0 | 0 | 0 | 17 | 0 | 0 | 0 | 0 | 0 | 0 |
| 3. Interest expense | 148 | 208 | 574 | 702 | 127 | 94 | 95 | 80 | 1 | 4 |
| 4. Cash flows: | ||||||||||
| Benefit payments from plan | 0 | 0 | (835) | (1,794) | 0 | 0 | (14) | (11) | 0 | 0 |
| Benefit payments from employer |
(786) | (1,547) | 0 | 0 | (45) | (27) | (22) | (19) | 0 | (35) |
| 6. Remeasurements: | ||||||||||
| Effects of changes in demographic assumptions |
0 | 0 | 829 | (83) | 0 | 0 | 0 | 140 | 0 | 0 |
| Effects of changes in financial assumptions |
404 | 642 | (494) | 6,382 | (230) | 146 | (69) | 13 | 0 | 0 |
| Effects of experience adjustments (changes occurred since the previous measurement not in line with assumptions) |
0 | 0 | (658) | (123) | 164 | 147 | (24) | (74) | 0 | 0 |
| 7. Effect of changes in foreign exchange rates |
0 | 0 | 2,738 | (1,945) | 116 | (190) | 106 | (165) | (8) | (14) |
| 8. Defined benefit obligations at end of year |
17,824 | 18,058 | 41,561 | 39,407 | 2,331 | 1,873 | 1,799 | 1,531 | 311 | 277 |
| B. Change in fair value of plan assets |
||||||||||
| 1. Fair value of plan assets at the end of prior year |
0 | 0 | 35,365 | 33,666 | 0 | 0 | 407 | 378 | 0 | 0 |
| 2. Financial income | 0 | 0 | 518 | 658 | 0 | 0 | 29 | 23 | 0 | 0 |
| 3. Cash flows: | ||||||||||
| Total employer contributions: |
||||||||||
| - employer contributions | 0 | 0 | 810 | 742 | 0 | 0 | 63 | 61 | 0 | 0 |
| - employer direct benefit payments |
787 | 1,549 | 0 | 0 | 45 | 27 | 22 | 19 | 0 | 0 |
| Benefit payments from plan | 0 | 0 | (835) | (1,794) | 0 | 0 | (14) | (11) | 0 | 0 |
| Benefit payments from employer |
(787) | (1,549) | 0 | 0 | (45) | (27) | (22) | (19) | 0 | 0 |
| Administrative costs on plan assets |
0 | 0 | 0 | 0 | 0 | 0 | (1) | (3) | 0 | 0 |
| Taxes on plan assets | 0 | 0 | 0 | 0 | 0 | 0 | 0 | (1) | 0 | 0 |
| Unfunded Plan (employee's leaving entitlement) |
Funded Plan (Ap Racing plan) |
Brembo México plan |
Brembo Brake India plan |
Brembo Japan plan |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 | 31.12.2020 | |||||
| 5. Remeasurements: | ||||||||||||
| Return on plan assets (excluding interest income) |
0 | 0 | 1,958 | 3,899 | 0 | 0 | 1 | 4 | 0 | 0 | ||
| 6. Effect of changes in foreign exchange rates |
0 | 0 | 2,530 | (1,806) | 0 | 0 | 29 | (44) | 0 | 0 | ||
| 7. Fair value of plan assets at end of year |
0 | 0 | 40,346 | 35,365 | 0 | 0 | 514 | 407 | 0 | 0 | ||
| E. Amounts recognised in the Statement of Financial Position |
||||||||||||
| 1. Defined benefit obligation | 17,824 | 18,058 | 41,561 | 39,407 | 2,331 | 1,873 | 1,799 | 1,531 | 311 | 277 | ||
| 2. Fair value of plan assets | 0 | 0 | 40,346 | 35,365 | 0 | 0 | 514 | 407 | 0 | 0 | ||
| 3. Funded status | 17,824 | 18,058 | 1,215 | 4,042 | 2,331 | 1,873 | 1,285 | 1,124 | 311 | 277 | ||
| 5. Net liability (asset) | 17,824 | 18,058 | 1,215 | 4,042 | 2,331 | 1,873 | 1,285 | 1,124 | 311 | 277 | ||
| F. Components of defined benefit cost |
||||||||||||
| 1. Service cost: | ||||||||||||
| Current service cost | 0 | 0 | 0 | 0 | 326 | 231 | 196 | 170 | 41 | 36 | ||
| Past service cost | 0 | 0 | 0 | 17 | 0 | 0 | 0 | 0 | 0 | 0 | ||
| Total service costs | 0 | 0 | 0 | 17 | 326 | 231 | 196 | 170 | 41 | 36 | ||
| 2. Net interest expense: | ||||||||||||
| Interest expense on defined benefit plans |
148 | 208 | 574 | 702 | 127 | 94 | 95 | 80 | 1 | 4 | ||
| Interest (income) on plan assets |
0 | 0 | (518) | (658) | 0 | 0 | (29) | (23) | 0 | 0 | ||
| Total net interest expense | 148 | 208 | 56 | 44 | 127 | 94 | 66 | 57 | 1 | 4 | ||
| 3. Remeasurement on other long-term benefits |
0 | 0 | 0 | 0 | 0 | 0 | (66) | 28 | 0 | 0 | ||
| 5. Defined benefit cost included in P&L |
148 | 208 | 56 | 61 | 453 | 325 | 196 | 255 | 42 | 40 | ||
| 6. Remeasurements (recognised in Other Comprehensive Income): |
||||||||||||
| Effects of changes in demographic assumptions |
0 | 0 | 829 | (83) | 0 | 0 | 0 | 40 | 0 | 0 | ||
| Effects of changes in financial assumptions |
404 | 642 | (494) | 6,382 | (230) | 146 | (39) | 7 | 0 | 0 | ||
| Effects of experience adjustments (changes occurred since the previous measurement not in line with assumptions) |
0 | 0 | (658) | (123) | 164 | 147 | 11 | 3 | 0 | 0 | ||
| Return on plan assets (excluding interest income) |
0 | 0 | (1,958) | (3,899) | 0 | 0 | 0 | (2) | 0 | 0 | ||
| Total remeasurements included in OCI |
404 | 642 | (2,281) | 2,277 | (66) | 293 | (28) | 48 | 0 | 0 |
| Unfunded Plan (employee's | leaving entitlement) | Funded Plan (Ap Racing plan) |
Brembo México plan |
Brembo Brake India plan |
Brembo Japan plan |
|||||
|---|---|---|---|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 | 31.12.2020 | |||
| 7. Total defined benefit cost recognised in P&L and OCI |
552 | 850 | (2,225) | 2,338 | 387 | 618 | 168 | 303 | 42 | 40 |
| G. Net defined benefit liability (asset) reconciliation |
||||||||||
| 1. Net defined benefit liability (asset) |
18,058 | 18,755 | 4,042 | 2,585 | 1,873 | 1,472 | 1,124 | 1,019 | 277 | 286 |
| 2. Defined benefit cost included in P&L |
148 | 208 | 56 | 61 | 453 | 325 | 196 | 255 | 42 | 40 |
| 3. Total remeasurements included in OCI |
404 | 642 | (2,281) | 2,277 | (66) | 293 | (84) | 48 | 0 | 0 |
| 5. Cash flows: | ||||||||||
| Employer contributions | 0 | 0 | (810) | (742) | 0 | 0 | (63) | (61) | 0 | 0 |
| Employer direct benefit payments |
(786) | (1,547) | 0 | 0 | (45) | (27) | (22) | (19) | 0 | (35) |
| 7. Effect of changes in foreign exchange rates |
0 | 0 | 208 | (139) | 116 | (190) | 134 | (121) | (8) | (14) |
| 8. Net defined benefit liability (asset) at the end of year |
17,824 | 18,058 | 1,215 | 4,042 | 2,331 | 1,873 | 1,285 | 1,121 | 311 | 277 |
| H. Defined benefit obligation | ||||||||||
| 1. Defined benefit obligation by participant status |
||||||||||
| Actives | 17,824 | 18,058 | 0 | 0 | 2,331 | 1,873 | 1,799 | 1,531 | 0 | 0 |
| Vested deferred | 0 | 0 | 21,728 | 23,336 | 0 | 0 | 0 | 0 | 0 | 0 |
| Retirees | 0 | 0 | 19,833 | 16,071 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 17,824 | 18,058 | 41,561 | 39,407 | 2,331 | 1,873 | 1,799 | 1,531 | 0 | 0 |
| I. Plan assets |
||||||||||
| 1. Fair value of plan assets | ||||||||||
| Cash and cash equivalents | 0 | 0 | 21 | 52 | 0 | 0 | 0 | 0 | 0 | 0 |
| Equity instruments | 0 | 0 | 13,133 | 10,985 | 0 | 0 | 0 | 0 | 0 | 0 |
| Debt instruments | 0 | 0 | 5,942 | 5,399 | 0 | 0 | 0 | 0 | 0 | 0 |
| Derivatives | 0 | 0 | 12,377 | 11,012 | 0 | 0 | 0 | 0 | 0 | 0 |
| Investment funds | 0 | 0 | 8,873 | 7,917 | 0 | 0 | 0 | 0 | 0 | 0 |
| Assets held by insurance company |
0 | 0 | 0 | 0 | 0 | 0 | 514 | 410 | 0 | 0 |
| Total | 0 | 0 | 40,346 | 35,365 | 0 | 0 | 514 | 410 | 0 | 0 |
| 2. Fair value of assets that have quoted market prices |
||||||||||
| Cash and cash equivalents | 0 | 0 | 21 | 52 | 0 | 0 | 0 | 0 | 0 | 0 |
| Equity instruments | 0 | 0 | 13,133 | 10,985 | 0 | 0 | 0 | 0 | 0 | 0 |
| Debt instruments | 0 | 0 | 5,942 | 5,399 | 0 | 0 | 0 | 0 | 0 | 0 |
| Derivatives | 0 | 0 | 12,377 | 10,811 | 0 | 0 | 0 | 0 | 0 | 0 |
| Investment funds | 0 | 0 | 8,873 | 7,917 | 0 | 0 | 0 | 0 | 0 | 0 |
| Total | 0 | 0 | 40,346 | 35,164 | 0 | 0 | 0 | 0 | 0 | 0 |
| Unfunded Plan (employee's leaving entitlement) |
Funded Plan (Ap Racing plan) |
Brembo México plan |
Brembo Brake India plan |
Brembo Japan plan |
||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (euro thousand) | 31.12.2021 | 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 31.12.2020 | 31.12.2021 | 31.12.2020 | |||||
| J. Significant actuarial assumptions |
||||||||||||
| Weighted-average assumptions to determine benefit obligations |
||||||||||||
| 1. Discount rate | 1.15% | 0.85% | 1.80% | 1.40% | 8.00% | 6.75% | 6.90% | 6.40% | 0.50% | 0.50% | ||
| 2. Rate of salary increase | N/A | N/A | N/A | N/A | 4.50% | 4.50% | 9.00% | 9.00% | N/A | N/A | ||
| 3. Rate of price inflation | N/A | N/A | 3.30% | 3.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | ||
| 4. Rate of expected salary increases |
1.80% | 1.00% | 3.50% | 3.10% | 3.50% | 3.50% | 0.00% | 0.00% | 2.50% | 2.50% | ||
| Weighted-average assumptions to determine defined benefit cost |
||||||||||||
| 1. Discount rate | 0.85% | 1.15% | 1.40% | 2.10% | 6.75% | 7.50% | 6.40% | 6.50% | 0.50% | 0.50% | ||
| 2. Rate of salary increase | N/A | N/A | N/A | N/A | 4.50% | 4.50% | 9.00% | 9.00% | N/A | N/A | ||
| 3. Rate of price inflation | N/A | N/A | 3.00% | 2.80% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | ||
| 4. Rate of expected salary increases |
1.00% | 1.00% | 3.10% | 2.90% | 3.50% | 3.50% | 0.00% | 0.00% | 2.50% | 2.50% |
By applying a uniform change in the discount rate by ± 25 basis points, the consolidated liabilities would have been respectively lower/higher by approximately €2.54 million compared to the base liabilities value of €63.7 million.
The average duration of the plans is 15.96 years.
At 31 December 2021, trade payables were as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Trade payables | 582,763 | 469,158 |
| Payables to associates and joint ventures | 8,067 | 5,748 |
| Total | 590,830 | 474,906 |
This item reflects the net amount due for the current taxes of the Group's companies.
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Tax payables | 12,959 | 7,405 |
Other current payables at 31 December 2021 are given in the table below:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Tax payables other than current taxes | 11,956 | 11,207 |
| Social security payables | 24,566 | 20,298 |
| Payables to employees | 80,576 | 55,909 |
| Other payables | 81,124 | 71,199 |
| Total | 198,222 | 158,613 |
The changes in the items "Payables to employees", "Social security payables" and "Other payables" primarily consisted of the reclassification to "Other non-current liabilities" of the liability associated with the 2019-2021 three-year incentive plan reserved for top managers, to be settled in May 2022.
"Other payables" also include deferred income in the form of public grants received and released to the Statement of Income in accordance with the related amortisation plans to which they refer, in addition to deferred income amounting to €48,753 thousand (€43,121 thousand at 31 December 2020) in the form of grants received by customers towards brake system development activities suspended until the conclusion of the development activity and then recognised over the useful lives of the products to which the grants refer.
ANNUAL FINANCIAL REPORT 2021
The item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Revenue from sales of brake systems | 2,726,461 | 2,169,619 |
| Revenue from equipment | 30,051 | 19,356 |
| Revenue from study and design activities | 20,245 | 18,688 |
| Revenue from royalties | 799 | 976 |
| Total | 2,777,556 | 2,208,639 |
The breakdown of Group sales by geographic area of destination and by application is provided in the Directors' Report on Operations.
These are made up of:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Miscellaneous recharges | 9,568 | 8,396 |
| Gains on disposal of assets | 2,294 | 1,725 |
| Miscellaneous grants | 3,481 | 6,932 |
| Other revenues | 8,201 | 6,425 |
| Total | 23,544 | 23,478 |
The item "Miscellaneous grants" mainly refers to grants for personnel training, research and development projects and the purchase of new capital goods.
This item refers to the capitalisation of development costs incurred during the year, amounting to €23,189 thousand (2020: €22,573 thousand).
The item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Purchase of raw materials, semi-finished and finished products | 1,177,311 | 923,992 |
| Purchase of consumables | 133,019 | 100,969 |
| Total | 1,310,330 | 1,024,961 |
Income (expense) from non-financial investments amounted to €15,318 thousand and is attributable to the effects of valuing the investment in the BSCCB Group using the equity method (2020: €10,392 thousand).
These costs are broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Transports | 80,396 | 53,353 |
| Maintenance, repairs and utilities | 162,854 | 138,867 |
| Contracted work | 102,520 | 77,032 |
| Rent | 21,422 | 20,440 |
| Other operating costs | 152,772 | 136,715 |
| Total | 519,964 | 426,407 |
The item "Other operating costs" mainly includes the costs of travels, quality-related costs and insurance costs, as well as fees for legal, technical and commercial consulting.
Breakdown of personnel expenses is as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Wages and salaries | 353,543 | 307,085 |
| Social security contributions | 80,587 | 68,452 |
| Employees' leaving entitlement and other personnel provisions | 13,249 | 12,248 |
| Other costs | 59,238 | 37,244 |
| Total | 506,617 | 425,029 |
The average number and the year-end number of Group employees by category were as follows:
| Managers | White-collar | Blue-collars | Total | |
|---|---|---|---|---|
| 2021 average | 144 | 3,223 | 8,184 | 11,551 |
| 2020 average | 142 | 3,118 | 7,602 | 10,862 |
| Change | 2 | 105 | 582 | 689 |
| Total at 31 December 2021 | 147 | 3,495 | 8,583 | 12,225 |
| Total at 31 December 2020 | 140 | 3,111 | 7,788 | 11,039 |
| Change | 7 | 384 | 795 | 1,186 |
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Amortisation of intangible assets: | ||
| Development costs | 18,162 | 14,533 |
| Industrial patents and similar rights for original work | 1,157 | 1,085 |
| Licences, trademarks and similar rights | 481 | 397 |
| Other intangible assets | 9,728 | 9,035 |
| Total | 29,528 | 25,050 |
| Depreciation of property, plant and equipment: | ||
| Buildings | 18,566 | 18,504 |
| Plant and machinery | 115,059 | 113,004 |
| Industrial and commercial equipment | 17,963 | 19,743 |
| Other property, plant and equipment | 6,335 | 5,716 |
| Right of use assets | 25,183 | 22,137 |
| Total | 183,106 | 179,104 |
| Impairment losses: | ||
| Property, plant and equipment | 126 | 487 |
| Intangible assets | 1,955 | 2,909 |
| Total | 2,081 | 3,396 |
| TOTAL AMORTISATION, DEPRECIATION AND IMPAIRMENT LOSSES | 214,715 | 207,550 |
The item is broken down as follows:
Comments on impairment losses are provided in the notes to the Statement of Financial Position items.
This item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Exchange rate gains | 64,349 | 31,948 |
| Interest income from employee's leaving entitlement and other personnel provisions | 543 | 689 |
| Interest income | 3,045 | 1,425 |
| Total interest income | 67,937 | 34,062 |
| Exchange rate losses | (59,910) | (40,066) |
| Interest expense from employees' leaving entitlement and other personnel provisions | (941) | (1,096) |
| Lease interest expense | (5,117) | (4,944) |
| Interest expense | (7,187) | (13,168) |
| Total interest expense | (73,155) | (59,274) |
| TOTAL NET INTEREST INCOME (EXPENSE) | (5,218) | (25,212) |
The items "Exchange rate gains" and "Exchange rate losses" include the effects of the management of foreign exchange hedges undertaken through forward contracts. For contracts of this type, the Company does not opt to apply hedge accounting pursuant to IFRS 9 since there is no formal designation of the hedged item and hedging instrument, in the belief that the representation of the impact of the strategy for hedging this risk on the Statement of Income and Statement of Financial Position is nonetheless assured.
Net interest income from investments, which amounted to €4,028 thousand (€121 thousand in 2020), was attributable to the effects of valuing investments in associates using the equity method and dividends received by investees not included in the consolidation area.
This item is broken down as follows:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Current taxes | 64,312 | 55,755 |
| Deferred tax (assets) and liabilities | 13,536 | (18,500) |
| Prior years' taxes and other tax payables | (7,096) | (19,453) |
| Total | 70,752 | 17,802 |
The following is a reconciliation of theoretical and actual tax burden:
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Theoretical income taxes | 65,710 | 36,457 |
| Prior years' taxes and other differences | 4,155 | 22,335 |
| Tax incentive effects | (7,765) | (41,588) |
| DTA adjustment effect | 1,510 | (281) |
| Unallocated DTA effect | 2,428 | (405) |
| Current and deferred taxes (excluding IRAP) | 66,038 | 16,518 |
| Current and deferred IRAP | 4,714 | 1,284 |
| Total | 70,752 | 17,802 |
The Group's actual tax rate is 24.7%, compared with a theoretical tax rate of 24.6% (at 31 December 2020: actual tax rate was 11.4%; theoretical tax rate was 24.2%).
Basic earnings per share were €0.67 at 31 December 2021 (€0.42 at 31 December 2020), and were calculated by dividing the net income or loss for the year attributable to holders of ordinary equity instruments of the Parent by the weighted average number of ordinary shares outstanding in 2021, amounting to 323,887,250 (2020: 323,887,250). Diluted earnings per share are identical to basic earnings per share inasmuch as no diluting transactions were undertaken.
On 30 June 2019, Brembo discontinued its industrial operations at the Buenos Aires plant. As a result, the subsidiary Brembo Argentina S.A. was placed in liquidation. Brembo took this decision as it was impossible to boost new projects because of the downtrend experienced by the Argentinian automotive sector and its quite discouraging recovery prospects, as well as because all main manufacturers decided not to proceed with industrial projects nor to launch new models.
Consequently, in accordance with IFRS 5, the Company's asset and liability items, net of intercompany payables, were reclassified to "Assets/Liabilities from discontinued operations", whereas the Statement of Income items have been reclassified to "Result from discontinued operations", as shown here below.
| (euro thousand) | 31.12.2021 |
|---|---|
| Revenue from contracts with customers | 0 |
| Other revenues and income | 38 |
| Raw materials, consumables and goods | (2) |
| Other operating costs | (83) |
| GROSS OPERATING INCOME | (47) |
| Depreciation, amortisation and impairment losses | |
| NET OPERATING INCOME | (47) |
| Net interest income (expense) | (106) |
| RESULT FROM DISCONTINUED OPERATIONS | (153) |
| Property, plant, equipment and other equipment | 0 |
| TOTAL NON-CURRENT ASSETS | 0 |
| Cash and cash equivalents | 655 |
| TOTAL CURRENT ASSETS | 655 |
| TOTAL ASSETS | 655 |
| Non-current provisions | (12) |
| TOTAL NON-CURRENT LIABILITIES | (12) |
| Trade payables | (66) |
| Other current liabilities | (1) |
| TOTAL CURRENT LIABILITIES | (67) |
| TOTAL LIABILITIES | (79) |
Stezzano, 3 March 2022
On behalf of the Board of Directors
The Executive Chairman Matteo Tiraboschi
EY S.p.A. Viale Papa Giovanni XXIII, 48 24121 Bergamo
Tel: +39 035 3592111 Fax: +39 035 3592550 ey.com
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| EY S.p.A. Sede Legale: Via Meravigli, 12 – 20123 Milano Sede Secondaria: Via Lombardia, 31 – 00187 Roma Capitale Sociale Euro 2.525.000,00 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
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3 March 2022
Matteo Tiraboschi Andrea Pazzi
Executive Chairman Manager in Charge of the Company's Financial Reports
Contemporary, sustainable design involving thought and action, intuition and inspiration. Superior aesthetics and concreteness: valuable elements for all new concepts.
| of which with | of which with | |||||
|---|---|---|---|---|---|---|
| (euro) | Notes | 31.12.2021 | related parties | 31.12.2020 | related parties | Change |
| NON-CURRENT ASSETS | ||||||
| Property, plant, equipment and other equipment | 1 | 204,687,308 | 197,939,509 | 6,747,799 | ||
| Right of use assets | 1 | 70,259,536 | 77,348,362 | (7,088,826) | ||
| Development costs | 2 | 83,472,211 | 80,356,225 | 3,115,986 | ||
| Other intangible assets | 2 | 20,748,687 | 20,896,405 | (147,718) | ||
| Shareholdings | 3 | 446,097,004 | 354,601,527 | 91,495,477 | ||
| Other financial assets (including investments in other companies and derivatives) |
4 | 293,889,090 | 216,559,608 | 2,716,246 | 77,329,482 | |
| Receivables and other non-current assets | 5 | 1,146,199 | 352,985 | 793,214 | ||
| Deferred tax assets | 6 | 22,363,474 | 31,895,648 | (9,532,174) | ||
| TOTAL NON-CURRENT ASSETS | 1,142,663,509 | 979,950,269 | 162,713,240 | |||
| CURRENT ASSETS | ||||||
| Inventories | 7 | 146,221,642 | 132,050,780 | 14,170,862 | ||
| Trade receivables | 8 | 206,008,370 | 89,661,934 | 184,118,357 | 76,209,231 | 21,890,013 |
| Other receivables and current assets | 9 | 58,322,492 | 61,226,822 | 612,550 | (2,904,330) | |
| Current financial assets and derivatives | 10 | 161,321,690 | 156,916,076 | 94,867,797 | 94,450,969 | 66,453,893 |
| Cash and cash equivalents | 11 | 335,296,668 | 413,023,943 | (77,727,275) | ||
| TOTAL CURRENT ASSETS | 907,170,862 | 885,287,699 | 21,883,163 | |||
| TOTAL ASSETS | 2,049,834,371 | 1,865,237,968 | 184,596,403 |
| (euro) | Notes | 31.12.2021 | of which with related parties |
31.12.2020 | of which with related parties |
Change |
|---|---|---|---|---|---|---|
| EQUITY | ||||||
| Share capital | 12 | 34,727,914 | 34,727,914 | 0 | ||
| Other reserves | 12 | 120,960,587 | 116,555,679 | 4,404,908 | ||
| Retained earnings/(losses) | 12 | 586,163,736 | 493,016,931 | 93,146,805 | ||
| Net result for the year | 12 | 111,228,546 | 85,505,063 | 25,723,483 | ||
| TOTAL EQUITY | 853,080,783 | 729,805,587 | 123,275,196 | |||
| NON-CURRENT LIABILITIES | ||||||
| Non-current payables to banks | 13 | 511,372,788 | 533,706,718 | (22,333,930) | ||
| Long-term lease liabilities | 13 | 65,254,105 | 71,339,009 | (6,084,904) | ||
| Other non-current financial payables and derivatives | 13 | 862,806 | 52,325 | 810,481 | ||
| Other non-current liabilities | 14 | 0 | 11,943,535 | 5,147,357 | (11,943,535) | |
| Non-current provisions | 15 | 32,037,287 | 35,328,306 | (3,291,019) | ||
| Provisions for employee benefits | 16 | 17,458,849 | 209,659 | 17,674,850 | 49,472 | (216,001) |
| TOTAL NON-CURRENT LIABILITIES | 626,985,835 | 670,044,743 | (43,058,908) | |||
| CURRENT LIABILITIES | ||||||
| Current payables to banks | 13 | 128,908,479 | 104,043,113 | 24,865,366 | ||
| Short-term lease liabilities | 13 | 7,317,355 | 7,714,745 | (397,390) | ||
| Other current financial payables and derivatives | 13 | 75,415,034 | 72,213,059 | 47,582,951 | 44,013,445 | 27,832,083 |
| Trade payables | 17 | 225,338,634 | 32,277,377 | 198,866,472 | 26,789,503 | 26,472,162 |
| Tax payables | 18 | 253,178 | 0 | 253,178 | ||
| Current provisions | 15 | 40,000 | 1,874,932 | (1,834,932) | ||
| Other current liabilities | 19 | 132,495,073 | 14,698,956 | 105,305,425 | 2,824,766 | 27,189,648 |
| TOTAL CURRENT LIABILITIES | 569,767,753 | 465,387,638 | 104,380,115 | |||
| TOTAL LIABILITIES | 1,196,753,588 | 1,135,432,381 | 61,321,207 | |||
| TOTAL EQUITY AND LIABILITIES | 2,049,834,371 | 1,865,237,968 | 184,596,403 |
| (euro) | Notes | 31.12.2021 | of which with related parties |
31.12.2020 | of which with related parties |
Change |
|---|---|---|---|---|---|---|
| Revenue from contracts with customers | 20 | 1,021,344,799 | 169,336,287 | 815,087,373 | 121,364,630 | 206,257,426 |
| Other revenues and income | 21 | 41,250,355 | 35,823,934 | 43,242,815 | 31,141,172 | (1,992,460) |
| Costs for capitalised internal works | 22 | 18,621,201 | 18,186,270 | 434,931 | ||
| Raw materials, consumables and goods | 23 | (457,979,093) | (107,020,547) | (375,288,017) | (76,760,705) | (82,691,076) |
| Other operating costs | 24 | (228,741,416) | (26,261,230) | (191,908,486) | (23,315,906) | (36,832,930) |
| Personnel expenses | 25 | (241,406,999) | (7,335,018) | (207,027,139) | (4,950,363) | (34,379,860) |
| GROSS OPERATING INCOME | 153,088,847 | 102,292,816 | 50,796,031 | |||
| Depreciation, amortisation and impairment losses | 26 | (64,107,359) | (64,312,644) | 205,285 | ||
| NET OPERATING INCOME | 88,981,488 | 37,980,172 | 51,001,316 | |||
| Interest income | 27 | 16,685,345 | 11,105,941 | 5,579,404 | ||
| Interest expense | 27 | (17,769,031) | (20,243,090) | 2,474,059 | ||
| Net interest income (expense) | 27 | (1,083,686) | 5,342,030 | (9,137,149) | 3,172,866 | 8,053,463 |
| Interest income (expense) from investments | 28 | 48,538,697 | 48,641,903 | 46,593,037 | 46,550,275 | 1,945,660 |
| RESULT BEFORE TAXES | 136,436,499 | 75,436,060 | 61,000,439 | |||
| Taxes | 29 | (25,207,953) | 10,069,003 | (35,276,956) | ||
| NET RESULT FOR THE YEAR | 111,228,546 | 85,505,063 | 25,723,483 | |||
| (euro) | 31.12.2021 | 31.12.2020 | Change |
|---|---|---|---|
| NET RESULT FOR THE YEAR | 111,228,546 | 85,505,063 | 25,723,483 |
| Other comprehensive income/(losses) that will not be subsequently reclassified to income/(loss) for the year: |
|||
| Effect of actuarial income/(loss) on defined benefit plans | (397,814) | (628,704) | 230,890 |
| Tax effect | 95,475 | 150,889 | (55,414) |
| Fair value measurement of investments | 80,021,545 | 29,818,833 | 50,202,712 |
| Tax effect | (960,259) | (357,826) | (602,433) |
| Total other comprehensive income/(losses) that will not be subsequently reclassified to income/(loss) for the year |
78,758,947 | 28,983,192 | 49,775,755 |
| Other comprehensive income/(losses) that will be subsequently reclassified to income/(loss) for the year: |
|||
| Effect of hedge accounting (cash flow hedge) of derivatives | 5,977,496 | (3,293,069) | 9,270,565 |
| Tax effect | (1,434,599) | 790,337 | (2,224,936) |
| Total other comprehensive income/(losses) that will be subsequently reclassified to income/(loss) for the year |
4,542,897 | (2,502,732) | 7,045,629 |
| COMPREHENSIVE RESULT FOR THE YEAR | 194,530,390 | 111,985,523 | 82,544,867 |
| (euro) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR (*) | 357,464,697 | 162,812,676 |
| Result before taxes | 136,436,499 | 75,436,060 |
| Depreciation, amortisation/impairment losses | 64,107,359 | 64,312,644 |
| Capital gains/losses | (544,058) | (370,808) |
| Write-ups/Write-downs of shareholdings | 105,205 | (42,162) |
| Financial portion of provisions for payables for personnel | 144,967 | 204,183 |
| Other provisions net of utilisations | 3,479,368 | 32,176,800 |
| Cash flows generated by operating activities | 203,729,340 | 171,716,717 |
| Current taxes paid | (13,744,866) | (10,162,911) |
| Uses of long-term provisions for employee benefits | (758,781) | (1,509,304) |
| (Increase) reduction in current assets: | ||
| inventories | (19,559,008) | (12,442,049) |
| financial assets | 951,553 | 29,817,827 |
| trade receivables and receivables from other Group companies | (21,222,374) | 994,600 |
| receivables from others and other assets | 8,492,783 | (11,061,553) |
| Increase (reduction) in current liabilities: | ||
| trade payables and payables to other Group companies | 26,472,162 | 2,005,919 |
| payables to others and other liabilities | 4,289,413 | 19,721,775 |
| Net cash flows from/(for) operating activities | 188,650,222 | 189,081,021 |
| (euro) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Investments in: | ||
| intangible assets | (25,530,206) | (23,212,865) |
| property, plant and equipment | (43,647,104) | (34,017,926) |
| right of use assets | (1,422,945) | (4,858,977) |
| financial assets (investments) | (91,663,912) | (212,680,461) |
| Price for disposal, or reimbursement value of fixed tangible and intangible assets | 3,974,581 | 622,832 |
| Net cash flows from/(for) investing activities | (158,289,586) | (274,147,397) |
| Dividends paid in the year | (71,255,195) | 0 |
| Loans to Group companies and amounts payable to companies participating in the centralised treasury system |
(34,265,493) | (41,264,577) |
| Change in fair value valuation of derivatives | 1,502,736 | 81,462 |
| New lease agreements | 1,585,370 | 4,095,768 |
| Reimbursement of lease liabilities | (9,568,603) | (9,658,893) |
| Loans and financing granted by banks and other financial institutions in the year | 101,226,088 | 425,000,000 |
| Repayment of long-term loans and other liabilities | (48,478,924) | (98,535,363) |
| Net cash flows from/(for) financing activities | (59,254,021) | 279,718,397 |
| Total cash flows | (28,893,385) | 194,652,021 |
| CASH AND CASH EQUIVALENTS AT END OF YEAR (*) | 328,571,312 | 357,464,697 |
(*) See Note 11 of the Explanatory Notes to the Separate Financial Statements for a reconciliation with financial statements data.
| Other reserves | ||||||
|---|---|---|---|---|---|---|
| (euro) | Share capital | Reserves | Treasury shares | Retained earnings (losses) |
Net result for the year |
Equity |
| Balance at 1 January 2020 | 34,727,914 | 143,625,695 | (24,804,426) | 285,118,001 | 179,152,880 | 617,820,064 |
| Allocation of profit for the previous year | 1,125,037 | 178,027,843 | (179,152,880) | 0 | ||
| Reclassification (*) | (887,895) | 887,895 | 0 | |||
| Components of comprehensive income: | ||||||
| Effect of actuarial income/(loss) on defined benefit plans |
(477,815) | (477,815) | ||||
| Effect of hedge accounting (cash flow hedge) of derivatives |
(2,502,732) | (2,502,732) | ||||
| Fair value measurement of investments | 29,461,007 | 29,461,007 | ||||
| Net result for the year | 85,505,063 | 85,505,063 | ||||
| Balance at 1 January 2021 | 34,727,914 | 141,360,105 | (24,804,426) | 493,016,931 | 85,505,063 | 729,805,587 |
| Allocation of profit for the previous year | 14,249,868 | (14,249,868) | 0 | |||
| Payment of dividends | (71,255,195) | (71,255,195) | ||||
| Reclassification (*) | (137,989) | 137,989 | 0 | |||
| Rounding | 1 | 1 | ||||
| Components of comprehensive income: | ||||||
| Effect of actuarial income/(loss) on defined benefit plans |
(302,339) | (302,339) | ||||
| Effect of hedge accounting (cash flow hedge) of derivatives |
4,542,897 | 4,542,897 | ||||
| Fair value measurement of investments | 79,061,286 | 79,061,286 | ||||
| Net result for the year | 111,228,546 | 111,228,546 | ||||
| Balance at 31 December 2021 | 34,727,914 | 145,765,013 | (24,804,426) | 586,163,736 | 111,228,546 | 853,080,783 |
(*) A portion of the restricted reserve Re. Article 6, paragraph 2, of Legislative Decree No. 38/2005 was reclassified under retained earnings, since it is no longer subject to non-distributability.
A constantly changing multicultural metamorphosis: ideas and visions from different worlds intertwine to generate solutions addressed to increasingly specific, complex markets.
Statutory Auditors' Report to the Shareholders' Meeting of Brembo S.p.A. called to approve the Financial Statements for the year ended 31 December 2021, pursuant to Article 153 of Legislative Decree No. 58 of 24 February 1998
In this Report, drafted pursuant to Article 153 of Legislative Decree No. 58 of 24 February 1998 (the Consolidated Law on Finance, hereinafter "TUF") and in accordance with the recommendations made by Consob in Communication No. DEM/1025564 of 6 April 2001, as further updated, the Board of Statutory Auditors relates the activity carried out during the year ended 31 December 2021 and until the date of this writing, in compliance with applicable legislation and also taking account of the Principles of Conduct for Boards of Statutory Auditors of Listed Companies recommended by the Italian National Board of Certified Accountants and Auditors (CNDCEC).
The Board of Statutory Auditors in office at the reporting date was appointed by the Shareholders' Meeting of Brembo S.p.A. (hereinafter "Brembo") held on 23 April 2020 and is made up as follows1 :
The term of the Board of Statutory Auditors is set to end with the Shareholders' Meeting called to approve the Financial Statements for the year ending 31 December 2022.
Pursuant to Article 144-quinquiesdecies of the Rules for Issuers, the list of offices held by members of the Board of Statutory Auditors at the companies set out in Book V, Title V, Chapters V, VI and VII of the Italian Civil Code, has been published by Consob on its website (www.consob.it). It bears remarking that Article 144-quaterdecies of the Rules for Issuers (Disclosure obligations to Consob) provides that those holding the office of member of the control body of just one issuer are not subject to the disclosure obligations imposed by that same Article and in this case are not included in the lists published by Consob. The Company discloses the main offices held by members of its Board of Statutory Auditors in its Corporate Governance and Ownership Structure Report. In this document, the Board of Statutory Auditors also certifies that it has verified that all of its members have complied with the aforementioned Consob regulations on the "limits to the cumulation of offices".
With regard to the applicable Principle of Conduct for Boards of Statutory Auditors of Listed Companies recommended by the Italian National Board of Certified Accountants and Auditors (CNDCEC), and specifically the provision Q.1.1 on self-assessment by the board of statutory auditors (a periodic internal assessment process regarding whether members continue to meet eligibility requirements and the propriety and efficacy of the board's
1 The appointment was based on the two lists filed respectively by the majority shareholder Nuova FourB S.r.l. and a group of Asset Management Companies and other institutional investors (holding about 2.27836 % of the share capital, overall).
functioning), it is acknowledged that the Board of Statutory Auditors delivered its specific report to the Board of Directors, which examined it in its meeting held on 3 March 2022. In accordance with applicable legislation, the Board of Statutory Auditors' analyses of this kind were focused exclusively on verifying the composition of the control body within the framework of the annual self-assessment by company bodies. The findings of the most recent verification, on the basis of the Statutory Auditors' individual declarations, are presented in the 2021 Corporate Governance and Ownership Structure Report. The requirements of independence, as provided for in Article 148, paragraph 3, of TUF and Brembo's Corporate Governance Code (updated and approved by the Board of Directors on 17 December 2021, hereafter "Brembo's CGC", which is based on the Corporate Governance Code – 2020 edition, hereafter "2020 CGC"), integrity and professionalism pursuant to Article 148, paragraph 4, of TUF and the aforementioned limits to the cumulation of offices were verified. In addition to such verification, in accordance with current best practices, the Board of Statutory Auditors also took into account the following self-assessment elements: the ongoing professional development of its members; the conduct of meetings; participation frequency, duration and methods; time committed; trust and collaboration between members; and the flow of information between the statutory auditors. Under its responsibility, the Board of Statutory Auditors concluded that it had not identified deficiencies relating to the fitness of its members or the adequate composition and functioning of the Board.
The Board of Statutory Auditors fulfilled the supervisory duties mandated by Article 2403 of the Italian Civil Code and Article 149 of TUF, in addition to performing the supervisory functions required by Article 19 of Legislative Decree No. 39/2010, as amended by Legislative Decree No. 135/2016 (in effect from 5 August 2016), in its role as Internal Control & Audit Committee, supervising compliance with the principles of proper administration and, in particular, the suitability of the organisational, administrative and accounting structures adopted by the Company and the concrete functioning thereof, in addition to the actual implementation of the corporate governance rules set forth by relevant applicable regulations. The Board of Statutory Auditors also monitored the independence of the Independent Auditors in charge of auditing the accounts.
The information necessary to fulfil the above-mentioned supervisory duties was obtained through both frequent meetings with the heads of the competent corporate entities, and in particular the control functions, and participation in meetings of the Board of Directors and in meetings of the Governance Committees formed in accordance with the 2020 CGC, fully adopted by Brembo. Reference is made to the Audit, Risk & Sustainability Committee (ARSC) — which also acts as Related Party Transactions Committee (hereafter also RPT Committee) and fulfils the duties set out in the Related Party Transactions Procedure adopted by the Company pursuant to Article 4 of Consob Regulation as per Resolution No. 17221 of 12 March 2010 and lastly amended by Resolution No. 21624 of 10 December 2020 (in implementation of Legislative Decree No. 49/2019 transposing the SHRD - Directive EU No. 2017/828) — and to the Remuneration & Appointments Committee, as well as to the Supervisory Committee set up in accordance with Legislative Decree No. 231/2001.
In 2021, the Board of Statutory Auditors:
in most cases, held its meetings on the same day as those of the Audit, Risks & Sustainability Committee and the Supervisory Committee, including a section on matters discussed jointly, in order to facilitate the exchange of information between parties with significant duties relating to internal controls, and to make the best use of the related company personnel;
participated in the sessions of the Audit, Risk & Sustainability Committee, in its capacity as Related Party Transactions Committee, and jointly examined the issues discussed;
Pursuant to Article 153 of TUF and Article 2429, paragraph 2, of the Italian Civil Code, and in accordance with Consob recommendations, as well as based on the main information obtained in the course of the Board's performance of its duties, the following information is reported:
2 www. brembo.com, section Company, Corporate Governance, Governance Documents.
With regard to the foregoing, the Board of Statutory Auditors has no particular remarks to relate.
3 On the basis of a non-binding opinion from the Board of Statutory Auditors, on 23 April 2020 the Board of Directors confirmed Chief Administration & Finance Officer Andrea Pazzi in his role as Manager in charge of the Company's financial reports. The assignment is set to expire on the date of the Shareholders' Meeting called to approve the Financial Statements for the year ending 31 December 2022.
4 With regard to the audit appointment, it should be noted that, upon reasoned proposal submitted by the Board of Statutory Auditors, the Shareholders' Meeting of 23 April 2013 appointed the audit firm EY S.p.A. as Independent Auditors for the years 2013 to 2021.
It should be noted that such reporting was already in place at Brembo and the practice in question was therefore formalised in accordance with the new Consob Resolution.
Transactions with Related Parties not subject to application of the procedural regimes provided for by Brembo's Procedure for Low Value and Highly Significant Transactions.
identified by the Company as relevant to the financial reporting control system, the Board of Statutory Auditors determined that the information flows from non-EU subsidiaries identified in accordance with the above provisions were adequate to provide the Company and Independent Auditors regularly with the statement of income, financial position and cash flow information required to prepare the Consolidated Financial Statements and permit the auditing of the annual and interim accounts. In detail, as of 31 December 2021, the companies to which such regulations apply are the subsidiaries indicated by Brembo as being significant for the control system of the financial reporting process.
mechatronic projects, for which specific additional activities relating to the development of such systems were introduced;
It bears noting that the aforementioned audit activities did not identify any omissions, censurable conduct or irregularities that would need to be reported in this document. The Internal Audit, the Legal Function, HSE, the Risk Management and the Supervisory Committee, which the Board of Statutory Auditors met regularly, have not reported any particular critical issues falling within their respective remits. The Annual Corporate Governance and Ownership Structure Report did not highlight any criticalities that need to be reported in this document.
The Board of Statutory Auditors also determined the adequacy of merit and procedural indications adopted by the Remuneration & Appointments Committee to define and implement medium/long-term remuneration policies. Furthermore, it expressed a favourable opinion on the annual and three-year monetary incentive policies for the Governing Body, Executive Directors and Top Managers for 2021. The main aspects of the short- and long-term remuneration policies for 2022, approved by the Board of Directors during the meeting held on 3 March 2022, having heard the opinion of the Remuneration & Appointments Committee and the Board of Statutory Auditors, are illustrated in the 2022 Report on Remuneration Policy and Remuneration Paid — prepared in accordance with Article 123-ter of TUF and available on Brembo's website — the first section of which will be submitted to the attention and binding vote of the General Shareholders' Meeting on 21 April 2022.
It should be noted that, as of 2017, a clawback clause has been included in both the short-term incentive system (MBO) and the new long-term incentive system as of the 2022-2024 LTIP, in accordance with the 2020 CGC; the clause allows the Company to request the partial or total refund of the variable components of remuneration (or to withhold deferred components of remuneration) that had been granted based on data and information which subsequently proved to be manifestly incorrect or resulting from cases of fraudulent behaviour or gross negligence on the part of the beneficiaries.
The Board of Statutory Auditors notes that it regularly and duly monitors the ongoing improvement of the financial reporting process and that this additional report is a summary of elements already shared over time and already submitted to the Board of Directors.
It should be recalled that the report in question also complements the Independent Auditors' statement of independence pursuant to Article 6, paragraph (2)(a), of Regulation (EU) No. 537/2014.
The Board of Statutory Auditors also acknowledged the Transparency Report drafted by the Independent Auditors and published on its website pursuant to Article 18 of Legislative Decree No. No. 39/2010.
| (euro thousand) | 31.12.2021 | 31.12.2020 |
|---|---|---|
| Independent Auditors' fees for the provision of audit services: | ||
| - to the Parent Brembo S.p.A. | 225 | 225 |
| - to the subsidiaries (services provided by the network) | 438 | 422 |
| Independent Auditors' fees for the provision of auditing services for issuing attestation: |
||
| - to the Parent Brembo S.p.A. | 70 | 71 |
| - to the subsidiaries (services provided by the network) | 3 | 0 |
| Independent Auditors' fees for the provision of other services: | ||
| Fees of entities belonging to the Independent Auditors' network for the provision of services: |
||
| - to the Parent Brembo S.p.A. | 15 | 0 |
| - other services rendered to subsidiaries | 2 | 2 |
The Board of Statutory Auditors deemed the fees for such non-auditing services (which never included those prohibited by Article 5, paragraph 1, of Regulation (EU) No. 537/2014) to be appropriate to the scope and complexity of the work carried out, and hence compatible with the auditing mandate, in the absence of any anomalies impacting on the Independent Auditors' independence criteria.
The Board of Statutory Auditors also verified that the incoming Independent Auditors, Deloitte & Touche S.p.A., appointed by the Shareholders' Meeting on 22 April 2021, did not hold any auditing assignments prohibited under Article 5.1(e), of Regulation (EU) No. 537/2014.
2021 continued to be impacted by the Covid-19 pandemic from the economic and social point of view.
Brembo has been following developments relating to the spread of the pandemic very closely since its outbreak, establishing a dedicated task force and promptly adopting necessary measures to prevent, monitor and contain the virus at all of its locations worldwide, with the aim of protecting the health of employees and contractors (rearrangement of production layouts, sanitisation of the premises, personal protective equipment, temperature measurement, heat scans, blood tests, hygiene rules and social distancing, remote working, etc.).
The Safety Officers and top managers continue to organise, still today, periodical calls to analyse and monitor the implementation, application and efficacy of the measures taken in relation with the provisions issued by the competent authorities from time to time and the pandemic evolution in the different countries where the Group's operating sites are located.
The Audit, Risk & Sustainability Committee, the Board of Statutory Auditors and Supervisory Committee have always been kept promptly informed of company management and the epidemiological emergency and all measures have always been checked and verified in order to ensure operational continuity and people protection. The Illustrative Report to the Financial Statements for the year ended 31 December 2021 provides details of the measures adopted to protect the Company's stakeholders during the Covid-19 emergency at all its sites worldwide, promptly adopting all necessary measures to prevent, monitor and contain the virus, with the aim of protecting the health of employees and contractors, such as extended remote working, rearrangement of production layouts, sanitisation of the premises, personal protective equipment, temperature measurement, heat scans, hygiene rules, social distancing, control of green passes where required.
It should be noted that in 2021 all the Group's plants operated at normal capacity, except for Brembo Nanjing Brake Systems Co. Ltd. due to the lockdown period in China (30 July-26 August).
The Board of Statutory Auditors has verified that in the 2021 Anna Report the Directors, in accordance with Consob and ESMA (European Securities and Markets Authority) recommendations, included the information set out above.
In view of the forthcoming publication of this report, the Board of Statutory Auditors discussed with the Independent Auditors regarding the fair value measurement of company assets and liabilities as at the date of
the 2021 Annual Financial Report, in accordance with IFRS 13, having regard to the aforementioned unusual situation that has emerged; the Board of Statutory Auditors did not acquire any information requiring disclosure in this report.
As for the annual Shareholders' Meeting called for 21 April 2022, the Board of Statutory Auditors reports that Decree Law No. 18 of 17 March 2020 ("Cura Italia"), amended by Law No. 27 of 24 April 2020 (as most recently extended under Decree Law No. 228 of 31 December 2021 ("Milleproroghe"), authorises the holding "behind closed doors" of ordinary and extraordinary shareholders' meetings, allowing companies to make provision in the notices of calling, also by way of derogation from the provisions of the By-laws, for the use of those tools such as voting by correspondence, electronic voting, attending meetings using telecommunication media, the designated representative — that allow attendance at meetings and expression of voting rights without the need for shareholders to be physically present in a single place.
In this regard, the Board of Statutory Auditors will act in close coordination with the Board of Directors to ensure that the Shareholders' Meeting may be held in an orderly fashion, and the rights of the shareholders be regularly exercised, in accordance with the above provisions.
Having acknowledged the Financial Statements for the year ended 31 December 2021, the Board of Statutory Auditors, taking account of the specific duties assigned to the Independent Auditors relating to the auditing of the accounts and verification that the Financial Statements are reliable, has no objections to the approval of the Financial Statements or to the Board of Directors' motion regarding the distribution of an (ordinary) gross dividend of €0.27 per (ordinary) share outstanding and the carrying forward of the residual ascertained profit for the year.
In addition, as previously reported, the approval of the Financial Statements for the year ended 31 December 2021 will mark the end of the term of the statutory auditing assignment granted to EY S.p.A. for the nine-year period 2013-2021. In line with the recommendation made by the Board of Statutory Auditors pursuant to Articles 13, paragraph 1, and 17, paragraph 1, of Legislative Decree No. 135 of 17 July 2016 and Article 16 of Regulation (EU) No. 537/2014 of the European Parliament and of the Council of 16 April 2014, the Shareholders' Meeting of Brembo S.p.A. of 22 April 2021 granted the statutory auditing assignment for the years 2022-2030 to Deloitte & Touche S.p.A.
Milan, 21 March 2022
THE BOARD OF STATUTORY AUDITORS Raffaella Pagani (Chairwoman) Mario Tagliaferri (Acting Auditor) Paola Tagliavini (Acting Auditor)
3 March 2022
Matteo Tiraboschi Andrea Pazzi
Executive Chairman Manager in Charge of the Company's Financial Reports
BREMBO S.p.A. Headquarters c/o Parco Scientifico Tecnologico Kilometro Rosso Viale Europa, 2 - 24040 Stezzano (BG) Italy Tel. +39 035 605.2111 - www.brembo.com E-mail: [email protected] - [email protected]
Editorial Consultancy: Lemon Comunicazione (Bergamo) Art work: PoliedroStudio srl (Telgate, Bergamo) Typeset: Secograf (San Giuliano Milanese, Milano) Translation: Koinè (Trieste)
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