1.09
2023 ANNUAL FINANCIAL
REPORT
TABLE OF CONTENTS
01 REPORT ON OPERATIONS
19 SABAF GROUP CONSOLIDATED FINANCIAL STATEMENTS at 31 December 2023
84 SABAF S.P.A. SEPARATE FINANCIAL STATEMENTS at 31 December 2023
Sabaf Group | 2023 Report on Operations
1
SABAF GROUP
REPORT ON OPERATIONS
Sabaf Group | 2023 Report on Operations
2
The Group's economic performance
This section illustrates and comments on the Group's economic results on a normalised
basis, i.e. adjusted for the effects of
▪ the application of IAS 29 - the hyperinflation accounting standard - with reference to
the financial statements of the subsidiary Sabaf Turkey;
▪ start-up costs: the results have been restated to exclude the costs incurred by the
Sabaf Group for the start-up of the Indian and Mexican plants and the entry into
induction cooking.
This representation allows a better understanding of the Group's economic performance
and a more accurate comparison with the previous period.
The reconciliation for each item in the income statement between the carrying values and
the normalised values is attached to this Report.
2023
2022
2023-2022
change
% change
Sales revenue
237,949
253,053
(15,104)
-6.0%
Hyperinflation – Turkey
1,160
(1,091)
Start-up revenue
(23)
-
Normalised revenue
239,086
251,962
(12,876)
-5.1%
EBITDA
29,612
40,092
(10,480)
-26.1%
EBTIDA %
12.4
15.8
Start-up costs
2,649
704
Hyperinflation – Turkey
786
(4,469)
Normalised EBITDA
33,047
36,327
(3,280)
-9.0%
Normalised EBITDA%
13.8
14.4
EBIT
11,062
21,887
(10,825)
-49.5%
EBIT %
4.6
8.6
Start-up costs
3,724
820
Hyperinflation – Turkey
2,710
(2,838)
Normalised EBIT
17,496
19,869
(2,373)
-11.9%
Normalised EBIT%
7.3
7.9
Group net result
3,103
15,249
(12,146)
-79.7%
Net result %
1.3
6.0
Start-up costs
3,530
756
Hyperinflation – Turkey
7,521
6,077
Normalised result of the Group
14,154
22,082
(7,928)
-35.9%
Normalised result %
5.9
8.8
The Sabaf Group ended the 2023 financial year with normalised sales revenue of €239.1
million, down 5.1% (-12.9% on a like-for-like basis) compared to €252 million in 2022. 2023
was characterised by a significant economic weakness in the household appliance sector,
most evident in European markets where demand was estimated to be more than 10%
below average volumes. Geographical diversification and the contribution of recent
acquisitions limited the decline in sales compared with 2022, which was characterised by
a dynamic first half-year and a sudden drop in demand in the second half-year.
Average sales prices in 2023 were essentially unaltered from 2022.
Sabaf Group | 2023 Report on Operations
3
In 2023, the Group continued to work on operational efficiency and cost containment,
even at reduced activity levels. The decline in sales also impacted operating profitability:
normalised EBITDA was €33 million (13.8% of turnover), down 9% from €36.3 million in
2022 (14.4% of turnover): normalised EBIT was €17.5 million (7.3% of turnover) compared
to €19.9 million in 2022 (7.9% of turnover). Normalised net profit was €14.2 million (5.9%
of sales) compared to €22.1 million (8.8% of sales) in 2022.
The breakdown of normalised sales revenues by product line is shown in the table below:
Normalised revenue
2023
2022
%
% change
Gas parts
144,010
157,983
62.7%
-8.8%
Hinges
70,410
68,604
27.2%
+2.6%
Electronic components
24,666
25,375
10.1%
-2.8%
Total
239,086
251,962
100%
-5.1%
The geographical breakdown of normalised revenues is shown below:
Normalised revenue
2023
%
2022
%
% change
Europe (excluding Turkey)
71,734
30.0%
87,142
34.6%
-17.7%
Turkey
63,419
26.5%
65,994
26.2%
-3.9%
North America
47,697
19.9%
39,749
15.8%
+20.0%
South America
27,858
11.7%
28,481
11.3%
-2.2%
Africa and Middle East
17,762
7.4%
19,078
7.6%
-6.9%
Asia and Oceania
10,616
4.4%
11,518
4.6%
-7.8%
Total
239,086
100%
251,962
100%
-5.1%
The impact of normalised labour cost on revenues increased from 19.7% in 2022 to 24.2%
in 2023. The increase was affected not only by the decline in sales, but also by the
inflationary dynamics in 2023.
Despite the increase in interest rates, the impact of normalised net financial expenses on
turnover remained low (1.4%); during the year, the Group recognised in the income
statement normalised negative forex differences of €2.2 million (€0.3 million of negative
forex differences were recognised in 2022).
In 2023, the Group recognised normalised income of €2.4 million under Income Taxes,
mainly related to tax benefits on investments made.
Sabaf Group | 2023 Report on Operations
4
Statement of financial position and cash flows
The Group’s statement of financial position, reclassified based on financial criteria, is
illustrated below
1
:
(
€
/000)
31/12/2023
31/12/2022
Non-current assets
181,167
171,276
Short-term assets
2
133,401
134,709
Short-term liabilities
3
(61,553)
(55,329)
Working capital
4
71,848
79,380
Provisions for risks and charges, post-employment
benefit, deferred taxes, other non-current payables
(9,477)
(10,128)
Net invested capital
243,538
240,528
Short-term net financial position
20,118
(6,030)
Medium/long-term net financial position
(93,268)
(78,336)
Net financial debt
(73,150)
(84,366)
Shareholders’ equity
170,388
156,162
Cash flows for the financial year are summarised in the table below:
(
€
/000)
2023
2022
Opening liquidity
20,923
43,649
Operating cash flow
39,852
24,293
Cash flow from investments
(16,942)
(20,856)
Free cash flow
22,910
3,437
Cash flow from financing activities
(14,670)
(16,886)
Share capital increase
17,312
-
Acquisitions
(9,108)
(5,045)
Foreign exchange differences
(1,014)
(4,232)
Cash flow for the period
15,430
(22,726)
Closing liquidity
36,353
20,923
1
Net financial debt and liquidity shown in the tables below are defined in compliance with the net financial
position detailed in Note 24 of the consolidated financial statements, as required by CONSOB memorandum
of 28 July 2006
2
Sum of Inventories, Trade receivables, Tax receivables and Other current receivables
3
Sum of Trade payables, Tax payables and Other liabilities
4
Difference between short-term assets and short-term liabilities
Sabaf Group | 2023 Report on Operations
5
In 2023, the Group generated operating cash flow of €39.9 million (€24.3 million in 2022).
At 31 December 2023, the impact of the net working capital on revenue was 30.2%
compared to 31.4% at 31 December 2022
5
.
In 2023, in line with the Budget, the net investments of the Group amounted to €16.9
million (€20.9 million in 2022). The main investments were aimed at:
• expanding the international production footprint; in this respect, in Mexico, the
work on the construction of the plant in San Luis de Potosi was completed;
• product innovation, including the development of components for induction
cooking;
• industrialising new products;
• optimising the efficiency and automation of production processes.
In 2023, the positive free cash flow
6
generated by the Sabaf Group was €22.9 million (€3.4
million in 2022).
The acquisition of MEC and the share capital increase
On 14 July 2023, Sabaf S.p.A. completed the acquisition of 51% of Mansfield Engineered
Components LLC ("MEC"), a US company based in Mansfield (Ohio) and the leading North
American manufacturer of hinges for household appliances (mainly ovens, washing
machines and refrigerators), designed and manufactured to meet the high-quality levels
and demanding standards required by the US market. Our direct presence in the United
States, together with Sabaf Mexico, which has recently started the production of burners,
will allow us to consolidate relations with large American players, with which the Sabaf
Group has excellent business relations and which are MEC's historical customers.
MEC integrates with the other companies of the Group, expanding the range of innovative
products of its four divisions: gas, hinges, electronics and induction. The transaction is part
of our expansion and diversification path outlined in the 2021-2023 Business Plan, aimed
at positioning Sabaf as an operator capable of offering a wide range of high-tech
components that are increasingly synergistic, thanks also to the potential offered by
electronics.
In connection with the acquisition of MEC, on 14 July 2023, Sabaf's Board of Directors
exercised the proxy granted by the Shareholders' Meeting on 4 May 2020, resolving on a
reserved capital increase for a nominal amount of €1,153,345, corresponding to 10% of
the share capital, with the exclusion of the right of option pursuant to Article 2441, fourth
paragraph, second sentence of the Italian Civil Code, through the issue of 1,153,345 new
ordinary shares with a par value of €1.00. The newly issued shares were offered as part of
a reserved placement and fully subscribed by Montinvest s.r.l., a company controlled by
Fulvio Montipò (Founder and Chairman of Interpump Group S.p.A.), whose
unquestionable entrepreneurial experience makes him the ideal partner for Sabaf.
5
At 31 December 2023, the impact of the net working capital to pro-forma revenue (i.e. including the
contribution of the acquisition of MEC for the whole of 2023) is 28.2%.
6
Free cash flow is the difference between Cash Flows from operations and Net investments.
Sabaf Group | 2023 Report on Operations
6
The issue price of the new shares, including the share premium, was determined at €15.01
per share, equal to the average stock market price of Sabaf share recorded in June,
increased by a premium of €0.52 per share (and therefore for a total value of €17,311,708).
The capital increase took place on 20 July 2023.
Total financial debt
At 31 December 2023, net financial debt, including the acquisition of MEC, was €73.2
million (€84.4 million at 31 December 2022). The change in net financial debt is
summarised in the table below:
Net financial debt at 31 December 2022
(84,366)
Free cash flow
22,910
MEC acquisition
(10,654)
MEC put option recognition
(11,721)
PGA acquisition
(783)
Share capital increase
17,312
Buy-back of shares
(462)
Financial liabilities IFRS 16 - new contracts entered into in 2023
(3,097)
Change in fair value of derivative financial instruments
(668)
Change in financial assets
(605)
Foreign exchange differences and other changes
(1,016)
Net financial debt at 31 December 2023
(73,150)
Shareholders’ equity totalled €170.4 million at 31 December 2023; the ratio between the
net financial debt and the shareholders’ equity was 0.43 versus 0.54 in 2022.
Economic and financial indicators
2023
2022
pro-forma
7
pro-forma
7
Change in turnover
-6.0%
-13.8%
-3.9%
-4.9%
ROCE (return on capital employed)
4.54%
9.10%
Net debt/EBITDA
2.47
2.10
Net debt/equity ratio
42.9%
54.0%
Market capitalisation (31/12)/equity ratio
1.40
1.23
Please refer to the introductory part of the Annual Report for a detailed examination of
other key performance indicators (KPI).
7
The change in pro-forma turnover is calculated on a like-for-like basis.
Sabaf Group | 2023 Report on Operations
7
Risk Factors
As part of its periodic risk assessment process, the Group identified and assessed the
following main risks:
Risks of external context
Risks deriving from the external context in which Sabaf operates, which could have a
negative impact on the economic and financial sustainability of the business in the
medium/long-term. The most significant risks in this category are related to general
economic conditions, trend in demand and product competition.
Strategic risks
Strategic risks that could negatively impact Sabaf's medium-term performance, including,
for example, risks related to low profitability of certain product lines, the risks arising from
the mismatch between market needs and product innovation.
Operational risks
Risks of suffering losses due to inadequate or malfunctioning processes, human resources
and information systems. This category includes financial risks (e.g. losses deriving from
the volatility of the price of raw materials and from fluctuations in exchange rates), risks
related to production processes (e.g. product liability, saturation level of production
capacity), organisational risks (e.g. loss of key staff and expertise and/or the difficulty of
replacing them) and Information Technology risks.
Legal and compliance risks
Risks related to Sabaf's contractual liabilities and compliance with the regulations
applicable to the Group, including: Legislative Decree 231/2001, Law 262/2005, HSE
regulations, regulations applicable to listed companies, tax regulations, labour regulations,
international trade regulations and intellectual property regulations.
The main risks are described in detail below as well as the relevant risk management
actions that are currently being implemented.
Performance of the sector
The Group’s financial position, results and cash flows are affected by several factors related
to the performance of the sector, including:
▪ the general macro-economic performance: the household appliance market is
affected by macro-economic factors such as gross domestic product, consumer and
business confidence, interest rate trend, the cost of raw materials, the
unemployment rate and the ease of access to credit;
▪ the concentration of the end markets: as a result of mergers and acquisitions,
customers have acquired bargaining power;
▪ the stagnation of demand in mature markets (i.e. Europe) and the growing
importance of markets in emerging Countries, characterised by different sales
conditions and a more unstable macro-economic environment;
▪ increasing competition and competition from alternative products to gas cooking.
Sabaf Group | 2023 Report on Operations
8
To cope with this situation, the Group aims to retain and reinforce its leadership position
wherever possible through:
▪ the maintenance of high quality and safety standards, which make it possible to
differentiate the product through the use of resources and implementation of
production processes that are not easily sustainable by competitors;
▪ development of new products characterised by superior performance compared
with market standards, and tailored to the needs of the customer;
▪ strengthening of business relations with the main players in the sector;
▪ diversification of commercial investments in growing and emerging markets with
local commercial and productive investments;
▪ entry into new segments / business sectors.
Risks associated with the conflicts in Ukraine and the Middle East
In relation to the conflict between Ukraine and Russia, note that the Group has an
insignificant direct exposure to the markets of Russia, Belarus and Ukraine. However,
these are markets supplied by some of the Sabaf Group's customers, who are exposed to
these markets to varying degrees. The conflict led to an increase in the cost of raw
materials and energy, which had a significant impact on the global economy and on the
recovery of inflation, which prompted Western central banks to raise interest rates.
Inflationary tensions largely receded in the second half of 2023.
In October 2023, the war that broke out between Israel and Hamas further increased global
geopolitical tensions. With regard to this conflict, the Group does not recognise any
significant risks since it does not operate in the territories involved in the war; however,
costs and intercontinental transport times have increased due to transit difficulties in the
Red Sea, which do not have a significant impact on the Group's business at present.
In general, the economic recovery that characterised the early post-pandemic period has
come to an end and the short to medium term outlook remains uncertain and difficult to
assess, with the possibility of a continuation of a weak macroeconomic situation. The
Group continuously monitors the macroeconomic environment and its impact on the
business.
Instability of Emerging countries in which the Group operates
The Group is exposed to risks related to (political, economic, tax, regulatory) instability in
some emerging countries where it produces or sells. Any embargoes or major political or
economic instability, or changes in the regulatory and/or local law systems, or new tariffs
or taxes imposed could negatively affect a portion of Group turnover and the related
profitability.
Sabaf has taken the following measures to mitigate the above risk factors:
▪ diversifying investments at international level, setting different strategic priorities
that, in addition to business opportunities, also consider the different associated
risk profiles;
▪ monitoring of the economic and social performance of the target countries, also
through a local network of agents and collaborators;
▪ timely assessment of (potential) impacts of any business interruption on the
markets of Emerging countries;
▪ adoption of contractual sales conditions that protect the Group (e.g. insuring
business loans or advance payments).
Sabaf Group | 2023 Report on Operations
9
The presence of Sabaf in Turkey, the country that represents the main production hub of
household appliances at European level, is of particular importance: over the years, local
industry attracted heavy foreign investments and favoured the growth of important
manufacturers. In this context, Sabaf built a factory in Turkey in 2012 for the production
of gas components. In 2018, the Group acquired 100% of Okida Elektronik, a leader in
Turkey in the design, manufacture and sale of electronic control boards for household
appliances. In 2021, Sabaf opened a new plant in Turkey to increase production capacity
for electronic components and, in 2022, the production of hinges for dishwashers for
customers with production sites in Turkey also started. In 2023, Turkey represented 26%
of the Group's production and of its total sales. The Turkish domestic market is estimated
to represent around 5% of the final destination of Sabaf components, with the remainder
being exported household appliances. In consideration of the strategic importance of this
Country, the management assessed, in addition to the risks connected with the
macroeconomic situation, the risks that could arise from any difficulties/impossibilities of
operating in Turkey and envisaged actions to mitigate this risk.
Financial risks
The Sabaf Group is exposed to a series of financial risks, due to:
▪ Commodity price volatility: a significant portion of the Group’s purchase costs
is represented by aluminium, steel and brass, the prices of which can be exposed
to high volatility. Based on market conditions and contractual agreements, the
Group may not be able to pass on changes in raw material prices to customers in a
timely and/or complete manner, with consequent effects on margins.
▪ Increase in energy costs: some of the Group's production processes, such as the
die-casting of aluminium parts and the enamelling of burner covers, use gas as an
energy source. Other production facilities absorb significant electricity
consumption. The Group's profitability might be impacted if it is unable to pass on
to customers any significant increases in energy costs in a timely and/or complete
manner. In order to mitigate this risk, the Group can enter into fixed-price
electricity supply contracts and is constantly evaluating possible actions to contain
energy consumption, including by improving the efficiency of the most energy-
intensive plants.
▪ Exchange rate fluctuation: the Group carries out transactions primarily in euro;
however, transactions also take place in other currencies, such as the U.S. dollar,
the Brazilian real, the Turkish lira, the Chinese renminbi, the Indian rupee. in
particular, since turnover in US dollars accounted for 25% of consolidated turnover,
the possible depreciation against the euro, the Turkish lira and the Brazilian real
could lead to a loss in competitiveness on the markets in which sales are made in
that currency (mainly South and North America). Moreover, the net value of assets
and liabilities in foreign subsidiaries constitutes an investment in foreign currency,
which generates a translation difference on consolidation of the Group, with an
impact on the comprehensive income statement and the financial position. The
sales prices of the Turkish subsidiary are exclusively denominated in euro or US
dollars; those of the Brazilian subsidiary are denominated in Brazilian real for
domestic sales and in US dollars for exports.
▪ Trade receivable: the high concentration of turnover on a small number of
customers generates a concentration of the respective trade receivables, with a
Sabaf Group | 2023 Report on Operations
10
resulting increase in the negative impact on economic and financial results in the
event of payment delays or insolvency.
For more information on financial risks and the related management methods, see Note
38 of the consolidated financial statements as regards disclosure for the purposes of
IFRS 7.
Climate change and energy transition
With regard to physical risks related to climate change, such as the increase in global
temperatures, sea level and the increase in extreme weather events, the Group has not
identified any significant risks to date.
On the other hand, transitional risks, such as the increase in energy costs, changes in
consumer choices or those related to the introduction of new technologies, which the
Group manages at a strategic level, are of significant impact and probability.
The Group is aware of the ongoing trend at European level to reduce the use of gas as part
of the general decarbonisation strategy, with consequent effects also on the market in
which it operates. In particular. the evolution of demand in Europe is linked to certain
elements regarded as rewarding by consumers: the high efficiency of induction cooking,
the speed of cooking, the ease of cleaning, and the perceived greater safety. There is also
a widespread perception that the environmental impact of induction cooking is lower than
that of gas cooking. Actually, the measurement of environmental impact cannot be
separated from the consideration of the electricity production mix. In fact, authoritative
studies show that, given the current electricity production mix, the total CO
2
emissions
over the life cycle of an induction hob are more than 50% higher than the total emissions
of a gas hob. On the other hand, in the medium to long term, energy transition policies
aimed at reducing fossil fuel production and promoting renewable energies will change the
energy mix, reducing the environmental footprint of induction cooking appliances.
Against this backdrop, the Sabaf Group has long since embarked on a policy of organic
and outward investment, aimed at:
- expanding its product range, reducing the proportion of sales revenue from gas
components from over 90% to less than 60%;
- expanding its production presence and share in non-European markets, particularly
in those regions where demand for gas cooking appliances is expected to grow in
the long term.
In addition, the Group has launched a major investment plan to enter the market for
electromagnetic induction cooking components, which will complement the other cooking
technologies already in the Sabaf range, enabling the Group to cover all cooking
technologies: gas, traditional electric and induction.
Finally, the Sabaf Group is involved in various experimental projects aimed at testing the
feasibility of using hydrogen to replace or together with natural gas (methane) in gas
appliances. Sabaf has already produced burners that can work properly on 100%
hydrogen-fuelled cookers and hobs.
Sabaf Group | 2023 Report on Operations
11
Research and Development
The most important research and development projects carried out in 2023 were as
follows:
Gas parts
▪ the feasibility study for a new square-ramp special valve for the North American
and Far Eastern markets was concluded
▪ an adapter for existing valves was developed and validated by customers to make
them usable in the Egyptian market
▪ burners were industrialised for the Mexican market
▪ the feasibility study of two new components for the HVAC sector, specifically for
domestic boilers, was concluded
▪ a feasibility study of a new automotive component was launched
Hinges
▪ a system was integrated into the standard dishwasher product to increase the door
balancing range
▪ a new low-cost hinge for oven doors was designed
▪ a new hinge model for dishwashers with an adjustment system was developed
▪ an innovative balancing system was designed
▪ a new soft close hinge design was designed for large oven doors
Electronic components
▪ a new electronic control platform for microwave ovens was developed
▪ IOT solutions for the electronic control of household appliances are being
developed
▪ a new cost-effective
solution was developed for the electronic control of
multifunctional and pyrolytic ovens
Induction
▪ product platforms offering over many combinations of inductor, coil size and user
interface are being completed and certified, with the aim of providing a modular
and customisable range based on each customer's specific requirements
The improvement in production processes continued throughout the Group, also in order
to minimise set-up times and make production more flexible. The Group also develops
and manufactures its own machinery, equipment and moulds.
Development costs to the tune of €2,249,000 were capitalised, as all the conditions set by
international accounting standards were met. In other cases, they were charged to the
income statement.
Sabaf Group | 2023 Report on Operations
12
Disclosure of non-financial information
Starting from 2017, the Sabaf Group publishes the consolidated disclosure of non-financial
information required by Legislative Decree no. 254/2016. The disclosure of non-financial
information provides all the information needed to ensure understanding of the Group's
activities, performance, results and impact, with particular reference to environmental,
social and personnel issues, respect for human rights and the fight against active and
passive corruption, which are relevant considering the Group's activities and
characteristics.
The disclosure of non-financial information is included in the same file in which the Annual
Financial Statement is published.
It should be noted that since 2005, the Sabaf Group has drawn up an Annual Report on its
economic, social and environmental sustainability performance.
Personnel
In 2023, the Sabaf Group suffered no on-the-job deaths or serious accidents that led to
serious or very serious injuries to staff for which the Group was definitively held
responsible, nor was it held responsible for occupational illnesses of employees or former
employees, or causes of mobbing.
For all other information, please refer to the Disclosure of non-financial information.
Environment
In 2023 there was no:
▪ damage caused to the environment for which the Group was held definitively
responsible;
▪ definitive fines or penalties imposed on the Group for environmental crimes or
damage.
For all other information, please refer to the Disclosure of non-financial information.
Corporate Governance
For a complete description of the corporate governance system of the Sabaf Group, see
the report on corporate governance and on the ownership structure, available in the
Investor Relations section of the company website.
Personal data protection
Sabaf S.p.A. has an Organisational Model for the management and protection of personal
data consistent with the provisions of European Regulation 2016/679 (General Data
Protection Regulation - GDPR). Specific projects are implemented or are being
implemented for all Group companies for which the GDPR is applicable.
Derivative financial instruments
For the comments on this item, please see Note 38 of the consolidated financial
statements.
Atypical or unusual transactions
Sabaf Group companies did not execute any unusual or atypical transactions in 2023.
Sabaf Group | 2023 Report on Operations
13
Management and coordination
Sabaf S.p.A. is not subject to management and coordination by other companies.
Sabaf S.p.A. exercises management and coordination activities over its Italian subsidiaries,
Faringosi Hinges s.r.l., A.R.C. s.r.l., C.M.I. s.r.l., C.G.D. S.r.l. and P.G.A. s.r.l..
Intra-group transactions and related-party transactions
The relationships between the Group companies, including those with the parent
company, are regulated under market conditions, as well as the relationships with related
parties, defined in accordance with the accounting standard IAS 24. The details of intra-
group transactions and other related-party transactions are given in Note 39 of the
consolidated financial statements and in Note 39 of the separate financial statements of
Sabaf S.p.A.
Business outlook
The beginning of 2024 is characterised by a very positive business trend. Based on the
sales to date and the order book, we expect double-digit sales growth in the first quarter
compared to the same period last year. The recovery in production volumes will help to
improve profitability.
The technical and commercial synergies with the recently acquired companies (PGA and
MEC), the product diversification initiatives (particularly in the induction cooking
components segment) and internationalisation (with the activities of the new production
plants in India and Mexico) continue according to plan and will contribute to the 2024
results and ensure the Group's sustainable growth in the medium and long term.
Sabaf Group | 2023 Report on Operations
14
Business and financial situation of Sabaf S.p.A.
(
€
/000)
2023
2022
Change
% Change
Sales revenue
99,482
119,090
(19,608)
-16.5%
EBITDA
5,518
8,518
(3,000)
-35.2%
EBIT
(1,814)
790
(2,604)
-329.6%
Pre-tax profit (EBT)
1,123
1,722
(599)
-34.8%
Net Profit
3,504
2,247
1,257
+55.9%
The financial year 2023, which was affected by significant economic weakness in the
household appliance market, ended with sales of €99.5 million, 16.5% lower than in 2022.
In 2023, Sabaf S.p.A. recognised dividend income in the amount of €6 million received
from Italian subsidiaries.
The reclassification based on financial criteria is illustrated below:
(
€
/000)
31/12/2023
31/12/2022
Non-current assets
8
179,655
170,151
Non-current financial assets
16,386
10,972
Short-term assets
9
57,971
61,496
Short-term liabilities
10
(34,229)
(30,296)
Working capital
11
23,742
31,200
Provisions for risks and charges, Post-employment benefits,
deferred taxes
(2,420)
(2,664)
Net invested capital
217,363
209,659
Short-term net financial position
(9,108)
(22,298)
Medium/long-term net financial position
(76,313)
(76,336)
Total financial debt
12
(85,421)
(98,634)
Shareholders’ equity
131,942
111,025
8
Excluding Financial assets
9
Sum of Inventories, Trade receivables, Tax receivables and Other current receivables
10
Sum of Trade payables, Tax payables and Other liabilities
11
Difference between short-term assets and short-term liabilities
12
Determined in accordance with Consob Communication of 28 July 2006 (Note 23 of the separate
financial statements)
Sabaf Group | 2023 Report on Operations
15
Cash flows for the financial year are summarised in the table below:
(
€
/000)
2023
2022
Opening liquidity
2,604
29,733
Operating cash flow
13,437
14,096
Cash flow from investments (net of divestments)
(16,890)
(33,836)
Free cash flow
(3,453)
(19,740)
Cash flow from financing activities
14,748
(7,389)
Cash flow for the period
11,295
(27,129)
Closing liquidity
13,899
2,604
At 31 December 2023, working capital stood at €23.7 million compared with €31.2 million
at the end of the previous year: its percentage impact on turnover stood at 23.9% from
26.2% at the end of 2022.
The net financial debt was €85.4 million, compared with €98.6 million at 31 December
2022.
At the end of the year, shareholders' equity amounted to €131.9 million, compared with
€111 million in 2022. The ratio between the net financial debt and the shareholders’ equity
was 65%; it was 89% at the end of 2022.
Sabaf Group | 2023 Report on Operations
16
Reconciliation between parent company and consolidated shareholders’ equity
and net profit for the period
Pursuant to the CONSOB memorandum of 28 July 2006, a reconciliation statement of the
result of the 2023 financial year and Group shareholders' equity at 31 December 2023 with
the same values of the parent company Sabaf S.p.A. is given below:
31/12/2023
31/12/2022
Description
Profit for
the year
Shareholde
rs’ equity
Profit for
the year
Shareholde
rs’ equity
Profit and shareholders’ equity of parent
company Sabaf S.p.A.
3,504
131,942
2,247
111,025
Equity and consolidated company results
13,297
124,424
19,541
132,974
Derecognition of the carrying value of
consolidated equity investments
1,000
(103,854)
722
(110,465)
Monetary revaluation - hyperinflation (IAS 29)
(7,521)
32,742
(6,077)
25,729
Put options on minorities
(855)
(11,721)
-
-
Intercompany eliminations
(5,962)
(2,975)
(1,176)
(3,013)
Other adjustments
(83)
(170)
(8)
(88)
Minority interests
(277)
(8,293)
-
-
Profit and shareholders’ equity
attributable to the Group
3,103
162,095
15,249
156,162
Use of the longer time limit for calling the shareholders' meeting
Pursuant to the second paragraph of Article 2364 of the Italian Civil Code, in consideration
of the need to consolidate the financial statements of Group companies and to prepare all
supporting documentation, the directors intend to use the longer time limits granted to
companies required to prepare the consolidated financial statements for calling the
ordinary shareholders' meeting to approve the 2023 financial statements. The
shareholders' meeting must also resolve on the election of the members of the
administration and control bodies and must therefore be convened at least 40 days in
advance pursuant to Article 125-
bis
of the TUF. The Shareholders' Meeting will be
convened (single call) on 8 May 2024.
Proposal for allocation of 2023 profit
As we thank our employees, the Board of Statutory Auditors, the Independent Auditors
and the supervisory authorities for their invaluable cooperation, we would kindly ask the
shareholders to approve the financial statements ended 31 December 2023 with a profit
for the year of € 3,503,797.
The Board of Directors proposes to distribute an ordinary dividend of € 0.54 per share to
the shareholders, with the exclusion of the treasury shares on the ex-date, by distributing
the entire profit for 2023 and, for the residual part, by distributing a portion of the
extraordinary reserve. The dividend is scheduled for payment on 29 May 2024 (ex-date 27
May and record date 28 May 2024).
Sabaf Group | 2023 Report on Operations
17
Annexes to the Report on Operations
Reconciliation of the consolidated income statement at 31 December 2023
(
€
/000)
2023
IAS29
effect
Start-up
effect
Normalised
2023
INCOME STATEMENT COMPONENTS
OPERATING REVENUE AND INCOME
Revenue
237,949
1,160
(23)
239,086
Other income
9,056
19
(39)
9,036
Total operating revenue and income
247,005
1,179
(62)
248,122
OPERATING COSTS
Materials
(112,684)
122
83
(112,479)
Change in inventories
(3,433)
(102)
6
(3,529)
Services
(44,923)
(204)
2,081
(43,046)
Personnel costs
(58,160)
(188)
539
(57,809)
Other operating costs
(1,735)
(21)
2
(1,754)
Costs for capitalised in-house work
3,542
-
-
3,542
Total operating costs
(217,393)
(393)
2,711
(215,075)
OPERATING PROFIT BEFORE
DEPRECIATION AND AMORTISATION,
CAPITAL GAINS/LOSSES, AND WRITE-
DOWNS/WRITE-BACKS OF NON-
CURRENT ASSETS
29,612
786
2,649
33,047
Depreciations and amortisation
(20,066)
1,920
1,075
(17,071)
Capital gains on disposals of non-current assets
1,516
4
-
1,520
Value adjustments of non-current assets
-
-
-
-
EBIT
11,062
2,710
3,724
17,496
Financial income
1,815
110
-
1,925
Financial expenses
(5,248)
(11)
-
(5,259)
Net income/(charges) from hyperinflation
(5,276)
5,276
-
-
Exchange rate gains and losses
(2,359)
190
-
(2,169)
Profits and losses from equity investments
-
-
-
-
PROFIT BEFORE TAXES
(6)
8,275
3,724
11,993
Income taxes
3,386
(754)
(194)
2,438
PROFIT FOR THE YEAR
3,380
7,521
3,530
14,431
of which:
Minority interests
277
-
-
277
PROFIT ATTRIBUTABLE TO THE GROUP
3,103
7,521
3,530
14,154
Sabaf Group | 2023 Report on Operations
18
Reconciliation of the consolidated income statement at 31 December 2022
(
€
/000)
2022
IAS29
effect
Start-up
effect
Normalised
2022
INCOME STATEMENT COMPONENTS
OPERATING REVENUE AND INCOME
Revenue
253,053
(1,091)
-
251,962
Other income
10,188
(58)
-
10,130
Total operating revenue and income
263,241
(1,149)
-
262,092
OPERATING COSTS
Materials
(124,331)
(2,417)
83
(126,665)
Change in inventories
(513)
(755)
-
(1,268)
Services
(50,180)
(202)
436
(49,946)
Personnel costs
(49,926)
53
89
(49,784)
Other operating costs
(1,631)
1
96
(1,534)
Costs for capitalised in-house work
3,432
-
-
3,432
Total operating costs
(223,149)
(3,320)
704
(225,765)
OPERATING PROFIT BEFORE
DEPRECIATION AND AMORTISATION,
CAPITAL GAINS/LOSSES, AND WRITE-
DOWNS/WRITE-BACKS OF NON-
CURRENT ASSETS
40,092
(4,469)
704
36,327
Depreciations and amortisation
(18,267)
1,620
116
(16,531)
Capital gains on disposals of non-current assets
251
11
-
262
Value adjustments of non-current assets
(189)
-
-
(189)
EBIT
21,887
(2,838)
820
19,869
Financial income
1,917
(2)
-
1,915
Financial expenses
(2,009)
(38)
-
(2,047)
Net income/(charges) from hyperinflation
(9,023)
9,023
-
-
Exchange rate gains and losses
(515)
216
-
(299)
Profits and losses from equity investments
(48)
-
-
(48)
PROFIT BEFORE TAXES
12,209
6,361
820
19,390
Income taxes
3,040
(284)
(64)
2,692
PROFIT FOR THE YEAR
15,249
6,077
756
22,082
of which:
Minority interests
-
-
-
-
PROFIT ATTRIBUTABLE TO THE GROUP
15,249
6,077
756
22,082
Sabaf Group | Consolidated financial statements at 31 December 2023
19
CONSOLIDATED FINANCIAL
STATEMENTS
AT 31 DECEMBER 2023
SABAF S.p.A.
Via dei Carpini, 1 – OSPITALETTO (BS) Italy
Share capital €12,686,795 fully paid in
www.sabafgroup.com
Sabaf Group | Consolidated financial statements at 31 December 2023
20
GROUP STRUCTURE AND CORPORATE BODIES
Group structure
Parent company
SABAF S.p.A.
Subsidiaries and equity interest pertaining to the Group
Companies consolidated on a line-by-line basis
Faringosi Hinges s.r.l.
100%
Sabaf do Brasil Ltda. (Sabaf Brazil)
100%
Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki (Sabaf
Turkey)
100%
Sabaf Appliance Components (Kunshan) Co., Ltd. (Sabaf China)
100%
Sabaf US Corp. (Sabaf US)
100%
A.R.C. s.r.l.
100%
Sabaf India Private Limited (Sabaf India)
100%
Sabaf Mexico Appliance Components S.A. de c.v. (Sabaf Mexico)
100%
C.M.I. s.r.l.
100%
C.G.D. s.r.l.
100%
P.G.A s.r.l.
100%
Sabaf America Inc. (Sabaf America)
100%
Mansfield Engineered Components LLC (MEC)
51%
Board of Directors
Chairman
Claudio Bulgarelli
Vice Chairman (*)
Nicla Picchi
Chief Executive Officer
Pietro Iotti
Director
Gianluca Beschi
Director
Alessandro Potestà
Director
Cinzia Saleri
Director (*)
Carlo Scarpa
Director (*)
Daniela Toscani
Director (*)
Stefania Triva
(*) independent directors
Board of Statutory Auditors
Chairman
Alessandra Tronconi
Statutory Auditor
Maria Alessandra Zunino de Pignier
Statutory Auditor
Mauro Vivenzi
Independent Auditors
EY S.p.A.
Sabaf Group | Consolidated financial statements at 31 December 2023
21
Consolidated statement of financial position
Notes
31/12/2023
31/12/2022
(
€
/000)
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
1
108,741
99,605
Investment property
2
691
983
Intangible assets
4
57,231
54,168
Equity investments
5
95
97
Non-current receivables
6
1,094
2,752
Deferred tax assets
23
13,315
13,145
Total non-current assets
181,167
170,750
CURRENT ASSETS
Inventories
7
61,985
64,426
Trade receivables
8
55,826
59,159
Tax receivables
9
11,722
8,214
Other current receivables
10
3,868
2,910
Current financial assets
11
7,257
2,497
Cash and cash equivalents
12
36,353
20,923
Total current assets
177,011
158,129
ASSETS HELD FOR SALE
3
-
526
TOTAL ASSETS
358,178
329,405
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
13
12,687
11,533
Retained earnings, Other reserves
14
97,656
96,632
IAS 29 reserve
48,649
32,748
Profit for the year
3,103
15,249
Total equity interest of the Group
162,095
156,162
Minority interests
8,293
-
Total shareholders’ equity
170,388
156,162
NON-CURRENT LIABILITIES
Loans
15
81,547
78,336
Other financial liabilities
16
11,721
-
Post-employment benefit and retirement provisions
17
3,805
3,661
Provisions for risks and charges
18
353
639
Deferred tax liabilities
23
5,136
5,828
Other non-current payables
19
183
-
Total non-current liabilities
102,745
88,464
CURRENT LIABILITIES
Loans
15
23,317
28,876
Other financial liabilities
16
175
574
Trade payables
20
42,521
39,628
Tax payables
21
3,025
2,545
Other payables
22
16,007
13,156
Total current liabilities
85,045
84,779
LIABILITIES HELD FOR SALE
-
-
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
358,178
329,405
Sabaf Group | Consolidated financial statements at 31 December 2023
22
Consolidated income statement
Notes
2023
2022
(
€
/000)
INCOME STATEMENT COMPONENTS
OPERATING REVENUE AND INCOME
Revenue
25
237,949
253,053
Other income
26
9,056
10,188
Total operating revenue and income
247,005
263,241
OPERATING COSTS
Materials
27
(112,684)
(124,331)
Change in inventories
(3,433)
(513)
Services
28
(44,923)
(50,180)
Personnel costs
29
(58,160)
(49,926)
Other operating costs
30
(1,735)
(1,631)
Costs for capitalised in-house work
3,542
3,432
Total operating costs
(217,393)
(223,149)
OPERATING PROFIT BEFORE DEPRECIATION AND
AMORTISATION, CAPITAL GAINS/LOSSES, AND
WRITE-DOWNS/WRITE-BACKS OF NON-CURRENT
ASSETS
29,612
40,092
Depreciations and amortisation
1, 2, 4
(20,066)
(18,267)
Capital gains on disposals of non-current assets
1,516
251
Value adjustments of non-current assets
-
(189)
EBIT
11,062
21,887
Financial income
31
1,815
1,917
Financial expenses
32
(5,248)
(2,009)
Net income/(charges) from hyperinflation
32
(5,276)
(9,023)
Exchange rate gains and losses
33
(2,359)
(515)
Profits and losses from equity investments
-
(48)
PROFIT BEFORE TAXES
(6)
12,209
Income taxes
34
3,386
3,040
PROFIT FOR THE YEAR
3,380
15,249
of which:
Minority interests
277
-
PROFIT ATTRIBUTABLE TO THE GROUP
3,103
15,249
EARNINGS PER SHARE (EPS)
35
Base (€)
0.263
1.355
Diluted (€)
0.263
1.355
Sabaf Group | Consolidated financial statements at 31 December 2023
23
Consolidated statement of comprehensive income
2023
2022
(
€
/000)
PROFIT FOR THE YEAR
3,380
15,249
Total profits/losses that will not be subsequently
reclassified under profit (loss) for the year
Actuarial evaluation of post-employment benefit
(48)
254
Tax effect
11
(61)
(37)
193
Total profits/losses that will be subsequently
reclassified under profit (loss) for the year
Forex differences due to translation of financial statements in foreign currencies
(25,713)
(8,660)
Hedge accounting for derivative financial instruments
76
151
Total other profits/(losses) net of taxes for the year
(25,674)
(8,316)
TOTAL PROFIT
(22,294)
6,933
of which:
Net profit for the period attributable to minority interests
277
-
Total profits/losses that will be subsequently
reclassified under profit (loss) for the year
-
-
Total profit attributable to minority interests
277
-
TOTAL PROFIT ATTRIBUTABLE TO THE GROUP
(22,571)
6,933
Sabaf Group | Consolidated financial statements at 31 December 2023
24
Statement of changes in consolidated shareholders’ equity
(
€
/000)
Share
capital
Share
premium
reserve
Legal
reserve
Treasury
shares
Translation
reserve
Post-
employment
benefit
discounting
reserve
Other
reserves
Profit for the
year
Total Group
shareholders'
equity
Minority
interests
Total
shareholders’
equity
Balance at 1 January 2022 restated
11,533
10,002
2,307
(3,903)
(46,055)
(521)
135,661
23,903
132,927
911
133,838
Allocation of 2021 profit
- carried forward
17,145
(17,145)
-
-
- dividends
(6,758)
(6,758)
(6,758)
IFRS 2 measurement stock grant plan
1,134
1,134
1,134
Treasury share transactions
682
(875)
(193)
(193)
Change in the scope of consolidation
784
784
(911)
(127)
Monetary revaluation - hyperinflation (IAS 29)
21,346
21,346
21,346
Other changes
(11)
(11)
(11)
Total profit at 31 December 2022
(8,660)
193
151
15,249
6,933
6,933
Balance at 31 December 2022
11,533
10,002
2,307
(3,221)
(54,715)
(328)
175,335
15,249
156,162
-
156,162
Allocation of 2022 profit
- carried forward
15,249
(15,249)
-
-
Share capital increase
1,154
16,158
17,312
17,312
IFRS 2 measurement stock grant plan
543
543
543
Treasury share transactions
(462)
(462)
(462)
Change in the scope of consolidation
-
8,016
8,016
Put options on minorities
(10,866)
(10,866)
(10,866)
Monetary revaluation - hyperinflation (IAS 29)
21,978
21,978
21,978
Other changes
(1)
(1)
(1)
Total profit at 31 December 2023
(25,713)
(37)
76
3,103
(22,571)
277
(22,294)
Balance at 31 December 2023
12,687
26,160
2,307
(3,683)
(80,428)
(365)
202,314
3,103
162,095
8,293
170,388
Sabaf Group | Consolidated financial statements at 31 December 2023
25
Consolidated
statement of cash flows
2023
2022
Cash and cash equivalents at beginning of year
20,923
43,649
Profit for the year
3,380
15,249
Adjustments for:
- Depreciations and amortisation
20,066
18,267
- Write-downs of non-current assets
-
189
- Realised gains/losses
(1,516)
(251)
- Valuation of the stock grant plan
543
1,134
- Profits and losses from equity investments
-
48
- Monetary revaluation IAS 29
7,521
6,077
- Net financial income and expenses
2,164
(1,783)
- Income tax
(3,386)
(2,472)
Change in post-employment benefit
107
(197)
Change in risk provisions
(204)
(860)
Change in trade receivables
7,375
10,312
Change in inventories
4,079
3,890
Change in trade payables
2,438
(17,156)
Change in net working capital
13,892
(2,954)
Change in other receivables and payables, deferred taxes
2,528
1,430
Payment of taxes
(3,763)
(7,733)
Payment of financial expenses
(3,405)
(2,097)
Collection of financial income
1,925
246
Cash flows from operations
39,852
24,293
Investments in non-current assets
- intangible
(2,714)
(3,153)
- tangible
(16,802)
(19,152)
- financial
2
-
Disposal of non-current assets
2,572
1,449
Cash flow absorbed by investments
(16,942)
(20,856)
Free cash flow
22,910
3,437
Repayment of loans
(33,671)
(37,955)
Raising of loans
25,552
29,236
Short-term financial assets
(6,089)
385
Purchase/sale of treasury shares
(462)
(1,862)
Payment of dividends
-
(6,690)
Cash flow absorbed by financing activities
(14,670)
(16,886)
Mansfield (MEC) acquisition
(8,325)
-
Acquisition of P.G.A.
(783)
(4,948)
Share capital increase
17,312
-
ARC Handan Consolidation/Deconsolidation
-
(97)
Foreign exchange differences
(1,014)
(4,232)
Net cash flows for the year
15,430
(22,726)
Cash and cash equivalents at end of year (Note 12)
36,353
20,923
Sabaf Group | Consolidated financial statements at 31 December 2023
26
Explanatory Notes
ACCOUNTING STANDARDS
Statement of compliance and basis of presentation
The consolidated financial statements of the Sabaf group for the 2023 financial years
have been prepared in compliance with the International Financial Reporting Standards
(IFRS) issued by the International Accounting Standards Board (IASB) and endorsed by
the European Union. Reference to IFRS also includes all current International Accounting
Standards (IAS). The financial statements have been prepared in euro, the current
currency in the economies in which the Group mainly operates, rounding amounts to the
nearest thousand, and are compared with consolidated financial statements for the
previous year, prepared according to the same standards. They consist of the statement
of financial position, the income statement, the statement of changes in shareholders’
equity, the statement of cash flows and these explanatory notes. The financial statements
have been prepared on a historical cost basis except for some revaluations of property,
plant and equipment undertaken in previous years, and are considered a going concern
going concern basis; with reference to the latter principle. the Group assessed that it is a
going concern in accordance with paragraphs 25 and 26 of IAS 1 and Art. 2423 bis of the
Italian Civil Code, also due to the strong competitive position, positive profitability and
solidity of the financial structure.
Financial statements
The Group has adopted the following formats:
▪ current and non-current assets and current and non-current liabilities are stated
separately in the statement of the financial position;
▪ an income statement that expresses costs using a classification based on the
nature of each item;
▪ a comprehensive income statement that expresses revenue and expense items not
recognised in profit (loss) for the year as required or permitted by IFRS;
▪ a statement of cash flows that presents cash flows originating from operating
activity, using the indirect method.
Use of these formats permits the most meaningful representation of the Group’s
operating results, financial position and cash flows.
Scope of consolidation
The scope of consolidation at 31
December 2023, modified from the previous year,
comprises the parent company Sabaf S.p.A. and the following companies controlled by
Sabaf S.p.A.:
▪ Faringosi Hinges s.r.l.
▪ Sabaf do Brasil Ltda.
▪ Sabaf Beyaz Esya Parcalari Sanayi Ve Ticaret Limited Sirteki (Sabaf Turkey)
▪ Sabaf Appliance Components (Kunshan) Co., Ltd.
▪ A.R.C. s.r.l.
▪ Sabaf U.S.
▪ Sabaf India Private Limited
Sabaf Group | Consolidated financial statements at 31 December 2023
27
▪ Sabaf Mexico Appliance Components S.A. de c.v.
▪ C.M.I. s.r.l.
▪ C.G.D. s.r.l.
▪ P.G.A s.r.l.
▪ Sabaf America Inc.
▪ Mansfield Engineered Components LLC
In July 2023, Sabaf S.p.A. finalised the purchase of a 51% stake in the US company
Mansfield Engineered Components LLC (MEC) through its subsidiary Sabaf America
Inc., a company incorporated on 28 June 2023. MEC's results of operations were
consolidated for the second half of 2023 only.
In the course of 2023, the merger through incorporation of PGA2.0 s.r.l. into P.G.A. S.r.l.
and of Okida Elektronik Sanayi Ve Ticaret A.S. (Okida) into Sabaf Beyaz Esya Parcalari
Sanayi Ve Ticaret Limited Sirteki (Sabaf Turkey) took place.
The companies in which Sabaf S.p.A. simultaneously possess the following three
elements are considered subsidiaries: (a) power over the company; (b) exposure or rights
to variable returns resulting from involvement therein; (c) ability to affect the size of these
returns by exercising power. Subsidiaries are consolidated from the date on which control
begins until the date on which control ceases.
Consolidation criteria
The data used for consolidation have been taken from the income statements and
statements of financial position prepared by the directors of the individual subsidiary
companies. These figures have been appropriately amended and restated, when
necessary, to align them with international accounting standards and with uniform group-
wide classification criteria.
The criteria applied for consolidation are as follows:
a) Assets and liabilities, income and costs in financial statements consolidated on a
line-by-line basis are incorporated into the Group financial statements, regardless
of the entity of the equity interest concerned. Moreover, the carrying value of
equity interests is derecognised against the shareholders’ equity relating to
investee companies;
b) positive differences arising from elimination of equity investments against the
carrying value of shareholders’ equity at the date of first-time consolidation are
attributed to the higher values of assets and liabilities when possible and, for the
remainder, to goodwill. In accordance with the provisions of IFRS 3, since 1
January 2004, the Group has not amortised goodwill and instead subjects it to
impairment testing;
c) payable/receivable and cost/revenue items between consolidated companies and
profits/losses arising from intercompany transactions are derecognised;
d) the portion of shareholders’ equity and net profit for the period pertaining to
minority shareholders is posted in specific items of the balance sheet and income
statement.
Sabaf Group | Consolidated financial statements at 31 December 2023
28
Information related to IFRS 3
On 14 July 2023, Sabaf acquired 51% of Mansfield Engineered Components LLC
("MEC"), a US company based in Mansfield (Ohio) and the leading North American
manufacturer of hinges for household appliances (mainly ovens, washing machines and
refrigerators), designed and manufactured to meet the high-quality levels and demanding
standards required by the US market. The allocation of the price paid for the acquisition
of MEC on the net assets acquired (Purchase Price Allocation), pursuant to IFRS 3
revised, will be completed within twelve months from the date of acquisition. The
provisional effects of this operation are shown in the following table:
Original values
at 14.07.2023
Purchase Price
Allocation and
Adjustments
Fair value of
assets and
liabilities acquired
Assets
Property, plant and equipment and intangible assets
4,395
2,473
6,868
Inventories
6,580
-
6,580
Trade receivables
7,909
-
7,909
Other receivables
201
-
201
Cash and cash equivalents
800
-
800
Total Assets
19,886
2,473
22,359
Liabilities
Deferred tax liabilities
-
(692)
(692)
Financial payables
(2,330)
-
(2,330)
Trade payables
(1,446)
-
(1,446)
Other payables
(1,530)
-
(1,530)
Total liabilities
(5,306)
(692)
(5,999)
Value of net assets acquired
14,580
1,780
16,360
% relating to the Sabaf Group (51%) (a)
8,344
Total cost of acquisition (b)
(9,125)
Goodwill deriving from acquisition (c = b-a)
781
Forex differences
12
Goodwill at 31 December 2023
793
Acquired cash and cash equivalents (d)
800
Total net cash outlay (b-d)
(8,325)
Sabaf Group | Consolidated financial statements at 31 December 2023
29
The acquisition price was determined on the basis of a company appraisal (Enterprise
Value) of $21 million. As part of the acquisition, a call option in favour of Sabaf for the
remaining 49% of the share capital, exercisable in 2028, and a put option in favour of the
minority shareholders, exercisable from 2025 to 2028, were subscribed. The valuation of
the residual share will be based on an Enterprise Value equal to 8 times MEC's average
EBITDA of the two financial statements preceding the date of exercise of the relevant
option, adjusted for the net financial position at that date.
Pursuant to the provisions of IAS 32, the assignment of an option to sell (put option) in the
terms described above required the initial recognition of a liability corresponding to the
estimated redemption value, expected at the time of any exercise of the option: to this end,
a financial liability of € 11.7 million was recognised in the consolidated financial
statements. For further details, refer to Note 16.
As a result of the line-by-line consolidation of MEC, minority interests totalling € 8.293
million were recognised in the consolidated shareholders' equity, as illustrated in the
statement of changes in consolidated shareholders’ equity.
As shown in the table, the Purchase Price Allocation, carried out with the support of
independent experts, led to the identification and measurement of the fair values of the
following acquired intangible assets:
▪ Customer Relationship: fair value of €2.048 million determined using the "Multi-
period Excess Earnings" method, taking the following parameters as reference:
- revenue relating to customers with whom there is a strong technical and
commercial relationship
- profitability in line with the historical average
- economic useful life of 15 years
- discount rate of 12.1%
- g growth rate of 2.10%
▪ Know How: fair value of € 0.425 million determined using the "Relief from Royalty"
method, taking the following parameters as reference:
- revenues from products covered by patents at the valuation date
- royalty rate equal to 0.6%
- economic useful life of 7 years
- discount rate of 12.1%
- g growth rate of 2.10%
The related tax effect was recognised on the fair value of the intangible assets identified
above (recognition of deferred taxes of €0.692 million).
In the period for which the Group held control (14 July 2023 - 31 December 2023), MEC
achieved sales revenue of € 14.6 million and a net profit of €0.57 million.
Sabaf Group | Consolidated financial statements at 31 December 2023
30
Conversion into euro of foreign-currency income statements and statements of
financial position
Separate financial statements of each company belonging to the Group are prepared in the
currency of the country in which that company operates (functional currency). For the
purposes of the consolidated financial statements, the financial statement of each foreign
entity is expressed in euro, which is the Group’s functional currency and the reporting
currency for the consolidated financial statements.
Balance sheet items in accounts expressed in currencies other than euro are converted by
applying current end-of-year exchange rates.
Income statement items are converted at average exchange rates for the period, with the
exception of the financial statements of companies operating in hyperinflationary
economies whose income statements are converted by applying the end-of-year exchange
rate as required by IAS 21 paragraph 42.b.
Foreign exchange differences arising from the comparison between opening shareholders’
equity converted at current exchange rates and at historical exchange rates, together with
the difference between the net result expressed at average and current exchange rates, are
allocated to “Other Reserves” in shareholders’ equity.
The exchange rates used for conversion into euro of the financial statements of the foreign
subsidiaries, prepared in local currency, are shown in the following table:
Description of
currency
Exchange rate in
effect at
31/12/2023
Average
exchange rate
2023
Exchange rate in
effect at
31/12/2022
Average
exchange rate
2022
Brazilian real
5.36180
5.40101
5.6386
5.43990
Turkish lira
32.6531
25.75970
19.9649
17.40879
Chinese
renminbi
7.85090
7.66002
7.35820
7.07880
US Dollar
1.10500
1.08188
1.06660
1.05305
Indian Rupee
91.90450
89.30011
88.1710
82.68640
Mexican peso
18.72310
19.18301
20.8560
21.18690
With reference to the US dollar, the average exchange rate for the consolidation period of
the Group's US companies (1 July - 31 December 2023) was used.
Segment reporting
The Group’s operating segments in accordance with IFRS 8 - Operating Segment are
identified in the business segments that generate revenue and costs, whose results are
periodically reassessed by top management in order to assess performance and decisions
regarding resource allocation. The Group operating segments are the following:
▪ gas parts (household and professional);
▪ hinges;
▪ electronic components for household appliances.
Sabaf Group | Consolidated financial statements at 31 December 2023
31
Accounting policies
The accounting standards and policies applied for the preparation of the consolidated
financial statements at 31 December 2023, unchanged versus the previous year, are shown
below:
Property, plant and equipment
These are recognised at purchase or manufacturing cost. The cost includes directly
chargeable ancillary costs. These costs also include revaluations undertaken in the past
based on monetary revaluation rules or pursuant to company mergers. Depreciation is
calculated according to rates deemed appropriate to spread the carrying value of tangible
assets over their useful working life. Estimated useful working life in years, unchanged
compared to previous financial years, is as follows:
Buildings
33
Light constructions
10
General plant
10
Specific plant and machinery
6 – 10
Equipment
4 – 10
Furniture
8
Electronic equipment
5
Vehicles and other transport means
4 – 5
Ordinary maintenance costs are expensed in the year in which they are incurred; costs
that increase the asset value or useful working life are capitalised and depreciated
according to the residual possibility of utilisation of the assets to which they refer.
Land is not depreciated.
Leased assets
The Group assesses at the time of signing an agreement whether it is, or contains, a lease,
or if the contract gives the right to control the use of an identified asset for a period of time
in exchange for a consideration.
The Group adopts a single recognition and measurement model for all leases according to
which the assets acquired relating to the right of use are shown under assets at purchase
value less depreciation, any impairment losses and adjusted for any re-measurement of
lease liabilities.
Assets are depreciated on a straight-line basis from the starting date of the agreement until
the end of the useful life of the asset or the end of the lease agreement, whichever comes
first. Set against recognition of such assets, the amounts payable to the lessor, are posted
among short- and medium-/long-term payables, by measuring them at the present value
of the lease payments not yet made. Moreover, financial charges pertaining to the period
are charged to the income statement.
Adoption of the accounting standard IFRS 16 “Leases”
The Group applied IFRS 16 from 1 January 2019 by using the amended retrospective
approach.
When evaluating the lease liabilities, the Group discounted the payments due for the lease
using the incremental borrowing rate, the weighted average of which was 5.15% on 31
December 2023 and 3.29% on 31 December 2022. The rate was defined taking also
Sabaf Group | Consolidated financial statements at 31 December 2023
32
account of the currency in which the lease agreements are denominated and the country
in which the leased asset is located.
The lease term is calculated based on the non-cancellable period of the lease, including
the periods covered by the option to extend or to terminate the lease if it is reasonably
certain that those options will be exercised or not exercised, taking account of all relevant
factors that create an economic incentive relating to those decisions.
Assets held for sale
The Group classifies non-current assets as held for sale if their carrying value will be
recovered mainly through a sale transaction, rather than through continuing use. These
non-current assets classified as held for sale are measured at the lower of their carrying
value and their fair value less costs to sell. Selling costs are the additional costs directly
attributable to the sale, excluding financial expenses and taxes.
The condition for classification as held for sale is only met when the sale is highly probable
and the asset is available for immediate sale in its present condition. The actions required
to complete the sale should indicate that significant changes to the sale are unlikely or that
the sale will be cancelled. Management must be committed to the sale, which should be
completed within one year from the date of classification.
Depreciation of property, plant and equipment and amortisation of intangible assets stops
when they are classified as available for sale.
Assets and liabilities classified as held for sale are presented separately among the items
in the financial statements.
Goodwill
Goodwill is the difference between the purchase price and fair value of investee
companies’ identifiable assets and liabilities on the date of acquisition.
As regards acquisitions completed prior to the date of IFRS adoption, the Sabaf Group has
used the option provided by IFRS 1 to refrain from applying IFRS 3 – concerning business
combinations – to acquisitions that took place prior to the transition date.
Consequently, goodwill arising in relation to past acquisitions has not been recalculated
and has been posted in accordance with Italian GAAPs, net of amortisation reported up to
31 December 2003 and any losses caused by a permanent value impairment.
After the transition date, goodwill – as an intangible asset with an indefinite useful life – is
not amortised but subjected annually to impairment testing to check for value loss, or more
frequently if there are signs that the asset may have suffered impairment (impairment test).
Other intangible assets
As established by IAS 38, other intangible assets acquired or internally produced are
recognised as assets when it is probable that use of the asset will generate future economic
benefits and when asset cost can be measured reliably. If it is considered that these future
economic benefits will not be generated, the development costs are written down in the
year in which this is ascertained.
Such assets are measured at purchase or production cost and - if the assets concerned
have a finite useful life - are amortised on a straight-line basis over their finite useful life.
Estimated useful working life in years, unchanged compared to previous financial years, is
as follows:
Sabaf Group | Consolidated financial statements at 31 December 2023
33
Customer relationship
15
Brand
15
Patents
9
Know-how
7
Development costs
10
Software
3 - 5
Impairment
At each end of reporting period, the Group reviews the carrying value of its tangible and
intangible assets to determine whether there are signs of impairment losses of these assets.
If there is any such indication, the recoverable amount of said assets is estimated so as to
determine the total of the write-down. If it is not possible to estimate recoverable amount
individually, the Group estimates the recoverable amount of the cash generating unit
(CGU) to which the asset belongs.
In particular, the recoverable amount of the cash generating units (which generally
coincide with the legal entity to which the capitalised assets refer) is verified by
determining the value of use. The recoverable amount is the higher of the net selling price
and value of use. In measuring the value of use, future cash flows net of taxes, estimated
based on past experience, are discounted to their present value using a pre-tax rate that
reflects current market valuations of the present cost of money and specific asset risk. The
main assumptions used for calculating the value of use concern the discount rate, growth
rate, expected changes in selling prices and cost trends during the period used for the
calculation. The growth rates adopted are based on future market expectations in the
relevant sector. Changes in the sales prices are based on past experience and on the
expected future changes in the market. The Group prepares operating cash flow forecasts
based on the most recent budgets approved by the Board of Directors of the consolidated
companies, draws up the forecasts for the coming years and determines the terminal value
(current value of perpetual income), which expresses the medium- and long-term
operating flows in the specific sector.
If the recoverable amount of an asset (or CGU) is estimated to be lower than its carrying
value, the asset’s carrying value is reduced to the lower recoverable amount, recognising
impairment in the income statement.
When there is no longer any reason for a write-down to be maintained, the carrying value
of the asset (or of the cash-generating unit) - with the exception of goodwill - is increased
to the new value resulting from the estimate of its recoverable amount, but not beyond the
net carrying value that the asset would have had if it had not been written down for
impairment. Reversal of impairment loss is recognised in the income statement.
Sabaf Group | Consolidated financial statements at 31 December 2023
34
Investment property
As allowed by IAS 40, non-operating buildings and constructions are assessed at cost net
of depreciation and losses due to cumulative impairment. The depreciation criterion
applied is the asset’s estimated useful life, which is considered to be 33 years. If the
recoverable amount of the investment property – determined based on the market value
of the properties – is estimated to be lower than its carrying value, the asset’s carrying
value is reduced to the lower recoverable amount, recognising impairment in the income
statement.
When there is no longer any reason for a write-down to be maintained, the carrying value
of the asset (or cash generating unit) is increased to the new value stemming from the
estimate of its recoverable amount – but not beyond the net carrying value that the asset
would have had if it had not been written down for impairment. Reversal of impairment
loss is recognised in the income statement.
Equity investments and non-current receivables
Equity investments in companies other than subsidiaries, associates and joint ventures are
classified as financial assets measured at fair value, which normally corresponds to the
transaction price including directly attributable transaction costs. Subsequent changes in
fair value are recognised through profit or loss (FVPL) or, if the option is exercised in
accordance with the standard, in Other comprehensive income (FVOCI) under the heading
"Instrument reserve at FVOCI". Non-current receivables are stated at their presumed
realisable value.
Inventories
Inventories are measured at the lower of purchase or production cost – determined using
the weighted average cost method – and the corresponding fair value represented by the
replacement cost for purchased materials and by the presumed realisable value for finished
and semi-processed products – calculated taking into account any manufacturing costs
and direct selling costs yet to be incurred. Inventory cost includes accessory costs and the
portion of direct and indirect manufacturing costs that can reasonably be assigned to
inventory items. Inventories subject to obsolescence and low turnover are written down
in relation to their possibility of use or realisation. Inventory write-downs are derecognised
in subsequent years if the reasons for such write-downs cease to exist.
Trade receivables and other financial assets
Initial recognition
Upon initial recognition, financial assets are classified, as the case may be, on the basis of
subsequent measurement methods, i.e. at amortised cost, at fair value recognised in other
comprehensive income (OCI) and at fair value through profit or loss.
The classification of financial assets at initial recognition depends on the characteristics of
the contractual cash flows of the financial assets and on the business model that the Group
uses to manage them.
Trade receivables that do not contain a significant financing component are valued at the
transaction price determined in accordance with IFRS 15. See the “Revenue from
Contracts with Customers” paragraph.
Sabaf Group | Consolidated financial statements at 31 December 2023
35
Other financial assets are recognised at fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs.
For a financial asset to be classified and measured at amortised cost or at fair value
recognised in OCI, it must generate cash flows that depend solely on the principal and
interest on the amount of principal to be repaid (known as ‘solely payments of principal
and interest (SPPI)’). This measurement is referred to as the SPPI test and is carried out at
the instrument level.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below.
Financial assets at amortised cost (debt instruments)
This category is the most important for the Group. The Group measures the financial assets
at amortised cost if both of the following requirements are met:
▪
the financial asset is held as part of a business model whose objective is to hold
financial assets for the purpose of collecting contractual cash flows
and
▪ the contractual terms of the financial asset envisage, at certain dates, cash flows
represented solely by payments of principal and interest on the amount of principal
to be repaid.
Financial assets at amortised cost are subsequently measured using the effective interest
method and are subject to impairment.
Gains and losses are recognised in the income
statement when the asset is derecognised, modified or revalued.
Financial assets at amortised cost of the Group include trade receivables.
Financial assets at fair value through profit or loss
This category includes all assets held for trading, assets designated at initial recognition as
financial assets measured at fair value with changes recognised in the income statement,
or financial assets that must be measured at fair value. Assets held for trading are all those
assets acquired for sale or repurchase in the short term. Derivatives, separated or
otherwise, are classified as financial instruments held for trading, unless they are
designated as effective hedging instruments. Financial assets with cash flows that are not
represented solely by principal and interest payments are classified and measured at fair
value through profit or loss, regardless of the business model. Financial instruments at fair
value with changes recognised in the income statement are recognised in the statement of
financial position at fair value and net changes in fair value are recognised in the income
statement.
This category includes derivative instruments.
The Group does not hold financial assets at fair value recognised in other comprehensive
income with reclassification of cumulative gains and losses or financial assets recognised
in other comprehensive income without reversal of cumulative gains and losses upon
derecognition.
Sabaf Group | Consolidated financial statements at 31 December 2023
36
Cancellation
A financial asset (or, if applicable, part of a financial asset or part of a group of similar
financial assets) is firstly written off (e.g. removed from the statement of financial position
of the Group) when:
- the rights to receive cash flows from the asset are extinguished, or
- the Group transferred to a third party the right to receive financial flows from the
asset or has taken on the contractual obligation to pay them fully and without delay
and (a) transferred substantially all the risks and benefits of the ownership of the
financial asset or (b) did not substantially transfer or retain all the risks and benefits
of the asset, but transferred their control.
If the Group has transferred the rights to receive cash flows from an asset or has signed an
agreement on the basis of which it retains the contractual rights to receive the cash flows
of the financial asset, but assumes a contractual obligation to pay the cash flows to one or
more beneficiaries (pass-through), it considers whether or to what extent it has retained
the risks and benefits concerning the ownership. If it has not substantially transferred or
retained all the risks and benefits or has not lost control over it, the asset continued to be
recognised in the financial statements of the Group to the extent of its residual involvement
in the asset itself. In this case, the Group also recognises an associated liability. The
transferred asset and the associated liability are measured in such a way as to reflect the
rights and obligations that pertain to the Group. When the residual involvement of the
entity is a guarantee in the transferred asset, the involvement is measured based on the
amount of the asset or the maximum amount of the consideration received that the entity
could be obliged to pay, whichever lower.
Provisions for risks and charges
Provisions for risks and charges are provisioned to cover losses and debts, the existence
of which is certain or probable, but whose amount or date of occurrence cannot be
determined at the end of the year. Provisions are stated in the statement of financial
position only when a legal or implicit obligation exists that determines the use of resources
with an impact on profit and loss to meet that obligation and the amount can be reliably
estimated. If the effect is significant, the provisions are calculated by updating future cash
flows estimated at a rate including taxes such as to reflect current market valuations of the
current value of the cash and specific risks associated with the liability.
Post-employment benefit
The post-employment benefit is provisioned to cover the entire liability accruing vis-à-vis
employees in compliance with current legislation and with national and supplementary
company collective labour contracts. This liability is subject to revaluation via application
of indices fixed by current regulations. Up to 31 December 2006, post-employment
benefits were considered defined-benefit plans and accounted for in compliance with IAS
19, using the projected unit-credit method. The regulations of this fund were amended by
Italian Law no. 296 of 27 December 2006 and subsequent Decrees and Regulations issued
during the first months of 2007. In the light of these changes, and, in particular, for
companies with at least 50 employees, post-employment benefits must now be considered
a defined-benefit plan only for the portions accruing before 1 January 2007 (and not yet
paid as at the end of the reporting period). Conversely, portions accruing after that date
Sabaf Group | Consolidated financial statements at 31 December 2023
37
are treated as defined-contribution plans. Actuarial gains or losses are recognised
immediately under "Other total profits/(losses)".
Trade payables and other financial liabilities
Initial recognition
All financial liabilities are initially recognised at fair value, in addition to directly
attributable transaction costs in case of mortgages, loans and payables.
The Company's financial liabilities include trade payables and other payables, mortgages
and loans, including current account overdrafts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value with changes recognised in the income statement include
liabilities held for trading and financial liabilities initially recognised at fair value, with
changes recognised in the income statement. Liabilities held for trading are those liabilities
acquired in order to discharge or transfer them in the short term. This category also
includes derivative financial instruments subscribed by the Company and not designated
as hedging instruments in a hedging relationship pursuant to IFRS 9. Embedded
derivatives, separated from the main contract, are classified as financial instruments held
for trading, unless they are designated as effective hedging instruments. Gains or losses on
liabilities held for trading are recognised in the income statement. Financial liabilities are
designated at fair value with changes recognised in the income statement from the date of
initial recognition, only if the criteria of IFRS 9 are met.
Loans and payables
This is the most important category for the Company and includes interest-bearing
payables and loans. After initial statement, loans are valued using the amortised cost
approach, applying the effective interest rate method. Gains and losses are recognised in
the income statement when the liability is discharged, as well as through the amortisation
process. Amortised cost is calculated by recognising the discount or premium on the
acquisition and the fees or costs that are an integral part of the effective interest rate.
Amortisation at the effective interest rate is included in financial expenses in the income
statement.
Cancellation
A financial liability is derecognised when the obligation underlying the liability is
discharged, cancelled or fulfilled. If an existing financial liability is replaced by another
from the same lender, at substantially different conditions, or if the conditions of an
existing liability are substantially changed, this replacement or change is treated as a
derecognition of the original liability accompanied by the recognition of a new liability,
with any differences between the carrying values recognised in the income statement.
Policy for conversion of foreign currency items
Receivables and payables originally expressed in foreign currencies are converted into
euro at the exchange rates in force on the date of the transactions originating them. Forex
differences realised upon collection of receivables and payment of payables in foreign
currency are posted in the income statement. Income and costs relating to foreign-
currency transactions are converted at the rate in force on the transaction date.
At year-end, assets and liabilities expressed in foreign currencies, with the exception of
non-current items, are posted at the spot exchange rate in force at the end of the reporting
period and related foreign exchange gains and losses are posted in the income statement.
Sabaf Group | Consolidated financial statements at 31 December 2023
38
If conversion generates a net gain, this value constitutes a non-distributable reserve until
it is effectively realised.
Derivative instruments and hedge accounting
The Group’s business is exposed to financial risks relating to changes in exchange rates,
commodity prices and interest rates. The company uses derivative instruments (mainly
forward contracts on currencies and commodity options) to hedge risks stemming from
changes in foreign currencies relating to irrevocable commitments or to planned future
transactions.
Derivatives are initially recognised at cost and are then adjusted to fair value on
subsequent closing dates.
Changes in the fair value of derivatives designated and recognised as effective for hedging
future cash flows relating to the Group’s contractual commitments and planned
transactions are recognised directly in shareholders' equity, while the ineffective portion
is immediately posted in the income statement. If the contractual commitments or planned
transactions materialise in the recognition of assets or liabilities, when such assets or
liabilities are recognised, the gains or losses on the derivative that were directly recognised
in equity are factored back into the initial valuation of the cost of acquisition or carrying
value of the asset or liability. For cash flow hedges that do not lead to recognition of assets
or liabilities, the amounts that were directly recognised in equity are included in the income
statement in the same period when the contractual commitment or planned transaction
hedged impacts profit and loss – for example, when a planned sale actually takes place.
For effective hedges of exposure to changes in fair value, the item hedged is adjusted for
the changes in fair value attributable to the risk hedged and recognised in the income
statement. Gains and losses stemming from the derivative’s valuation are also posted in
the income statement.
Changes in the fair value of derivatives not designated as hedging instruments are
recognised in the income statement in the period when they occur.
Hedge accounting is discontinued when the hedging instrument expires, is sold or is
exercised, or when it no longer qualifies as a hedge. At this time, the cumulative gains or
losses of the hedging instrument recognised in equity are kept in the latter until the planned
transaction actually takes place. If the transaction hedged is not expected to take place,
cumulative gains or losses recognised directly in equity are transferred to the year’s
income statement.
Embedded derivatives included in other financial instruments or contracts are treated as
separate derivatives when their risks and characteristics are not strictly related to those of
their host contracts and the latter are not measured at fair value with posting of related
gains and losses in the income statement.
Revenue from contracts with customers
The Group is engaged in the supply of components for household appliances (mainly gas
parts, such as valves and burners, hinges and electronic components).
Revenue from contracts with customers is recognised when control of the goods is
transferred to the customer for an amount that reflects the consideration that the Group
expects to receive in exchange for the goods. The control of the goods passes to the
customer according to the terms of return defined with the customer. The usual extended
payment terms range from 30 to 120 days from shipment; the Group believes that the price
does not include significant financing components.
Sabaf Group | Consolidated financial statements at 31 December 2023
39
The guarantees provided for in the contracts with customers are of a general nature and
not extended and are accounted for in accordance with IAS 37.
Financial income
Finance income includes interest receivable on funds invested and income from financial
instruments, when not offset as part of hedging transactions. Interest income is recognised
in the income statement at the time of vesting, taking effective output into consideration.
Financial expenses
Financial expenses include interest payable on financial debt calculated using the effective
interest method and bank expenses. All the other financial expenses are recognised as
costs for the year in which they are incurred.
Income taxes for the year
Income taxes include all taxes calculated on the Group’s taxable income. Income taxes
are directly recognised in the income statement, with the exception of those concerning
items directly debited or credited to shareholders’ equity, in which case the tax effect is
recognised directly in shareholders’ equity. Other taxes not relating to income, such as
property taxes, are included among operating expenses. Deferred taxes are provisioned in
accordance with the global liability provisioning method. They are calculated on all
temporary differences emerging between the taxable base of an asset and liability and its
carrying value in the consolidated financial statements, with the exception of goodwill that
is not tax-deductible and of differences stemming from investments in subsidiaries for
which cancellation is not envisaged in the foreseeable future. Deferred tax assets on
unused tax losses and tax credits carried forward are recognised to the extent that it is
probable that future taxable income will be available against which they can be recovered.
Current and deferred tax assets and liabilities are offset when income taxes are levied by
the same tax authority and when there is a legal right to settle on a net basis. Deferred tax
assets and liabilities are measured using the tax rates that are expected to be applicable,
according to the respective regulations of the countries where the Group operates, in the
years when temporary differences will be realised or settled.
Dividends
Dividends are posted on an accrual basis when the right to receive them materialises, i.e.
when shareholders approve dividend distribution.
Treasury shares
Treasury shares are booked as a reduction of shareholders’ equity. The carrying value of
treasury shares and revenues from any subsequent sales are recognised in the form of
changes in shareholders’ equity.
Equity-settled transactions
Some Group employees receive part of the remuneration in the form of share-based
payments, therefore employees provide services in exchange for shares ("equity-settled
transactions"). The cost of equity-settled transactions is determined by the fair value at the
date on which the assignment is made using an appropriate measurement method, as
explained in more detail in Note 40.
Sabaf Group | Consolidated financial statements at 31 December 2023
40
This cost, together with the corresponding increase in shareholders' equity, is recognised
under personnel costs (Note 29) over the period in which the conditions relating to the
achievement of objectives and/or the provision of the service are met. The cumulative
costs recognised for such transactions at the end of each reporting period up to the vesting
date are commensurate with the expiry of the vesting period and the best estimate of the
number of equity instruments that will actually vest.
Service or performance conditions are not taken into account when defining the fair value
of the plan at the assignment date. However, the probability of these conditions being met
is taken into account when defining the best estimate of the number of equity instruments
that will vest. Market conditions are reflected in the fair value at the assignment date. Any
other condition related to the plan that does not involve a service obligation is not
considered to be a vesting condition. Non-vesting conditions are reflected in the fair value
of the plan and result in the immediate recognition of the cost of the plan, unless there are
also service or performance conditions.
No cost is recognised for rights that do not vest in that the performance and/or service
conditions are not met. When the rights include a market condition or a non-vesting
condition, these are treated as if they had vested regardless of whether the market
conditions or other non-vesting conditions to which they are subject are met or not, it
being understood that all other performance and/or service conditions must be met.
If the conditions of the plan are changed, the minimum cost to be recognised is the fair
value at the assignment date in the absence of the change in the plan itself, on the
assumption that the original conditions of the plan are met. Moreover, a cost is recognised
for each change that results in an increase in total fair value of the payment plan, or that
is in any case favourable for employees; this cost is measured with reference to the date
of change. When a plan is cancelled, any remaining element of the plan's fair value is
immediately expensed to the income statement.
Earnings per share
Basic EPS is calculated by dividing the profit or loss attributable to the direct parent
company’s shareholders by the weighted average number of ordinary shares outstanding
during the year. Diluted EPS is calculated by dividing the profit or loss attributable to the
direct parent company’s shareholders by the weighted average number of shares
outstanding, adjusted to take into account the effects of all potential ordinary shares with
a dilutive effect.
Use of estimates
Preparation of the financial statements and notes in accordance with IFRS requires
management to make estimates and assumptions that affect the carrying values of assets
and liabilities and the disclosures on contingent assets and liabilities as of the end of the
reporting period. Actual results might differ from these estimates. Estimates are used to
measure tangible and intangible assets subject to impairment testing, as described earlier,
as well as to measure provisions for bad debts, for inventory obsolescence, depreciation
and amortisation, asset write-downs, employee benefits, taxes, and other provisions.
Specifically:
Recoverable amount of tangible and intangible assets
The procedure for determining impairment losses of tangible and intangible assets
described in “Impairment” implies – in estimating the value of use – the use of the Business
Plans of investees, which are based on a series of assumptions relating to future events
Sabaf Group | Consolidated financial statements at 31 December 2023
41
and actions of the investees’ management bodies, which may not necessarily come about.
In estimating market value, however, assumptions are made on the expected trend in
trading between third parties based on historical trends, which may not actually be
repeated.
Provisions for bad debts
Receivables are adjusted by the related bad debt provision to take into account their recoverable amount.
To determine the size of the write-downs, management must make subjective assessments
based on the documentation and information available regarding, among other things, the
customer’s solvency, as well as experience and historical payment trends.
Provisions for inventory obsolescence and inventory write-downs at their expected sale
value
Inventories subject to obsolescence and slow turnover are systematically measured and
written down if their recoverable value is less than their carrying value. Write-downs are
calculated based on management assumptions and estimates, resulting from experience
and historical results.
If the expected sale value is less than the purchase or production cost, inventories of
finished goods are written down to market value, estimated on the basis of current selling
prices.
Employee benefits
The current value of liabilities for employee benefits depends on a series of factors determined using actuarial
techniques based on certain assumptions. Assumptions concern the discount rate, estimates of
future salary increases, and mortality and resignation rates. Any change in the above-
mentioned assumptions might have significant effects on liabilities for pension benefits.
Share-based payments
Estimating the fair value of share-based payments requires the determination of the most
appropriate valuation model, which depends on the terms and conditions under which
these instruments are granted. This also requires the identification of data to feed into the
valuation model, including assumptions about the exercise period of the options, volatility
and dividend yield. The Group uses a binomial model for the initial measurement of the
fair value of share-based payments with employees.
Income taxes
The Group is subject to different bodies of tax legislation on income. Determining liabilities for Group
taxes requires the use of management valuations in relation to transactions whose tax
implications are not certain at the end of the reporting period. Furthermore, the valuation
of deferred taxes is based on income expectations for future years; the valuation of
expected income depends on factors that might change over time and have a significant
effect on the valuation of deferred tax assets.
Other provisions
When estimating the risk of potential liabilities from disputes, the Directors rely on
communications regarding the status of recovery procedures and disputes from the
lawyers who represent the Group in litigation. These estimates are determined taking into
account the gradual development of the disputes, considering existing exemptions.
Sabaf Group | Consolidated financial statements at 31 December 2023
42
Climate change
With reference to the potential impact of climate change on the Group's activities, the
Management carries out targeted analyses to identify and manage the main risks and
uncertainties to which the Group is exposed, adapting the corporate strategy accordingly.
To date, climate-related issues have not had a significant impact on the opinions and
estimates used in preparing these Consolidated Financial Statements. The Group
continues to closely monitor ongoing developments and changes, such as new climate-
related regulations and legislation.
Estimates and assumptions are regularly reviewed and the effects of each change
immediately reflected in the income statement.
Sabaf Group | Consolidated financial statements at 31 December 2023
43
New accounting standards
IFRS 17 “Insurance Contracts”
In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a new accounting
standard on insurance contracts regulating recognition and measurement, presentation
and disclosure. IFRS 17 applies to all types of insurance contracts regardless of the type
of entity that issues them, and to certain guarantees and financial instruments with
discretionary participation features; there are some exceptions to the scope of application.
The overall objective of IFRS 17 is to provide an accounting model for insurance contracts
that is more useful and consistent for insurers. In contrast to the requirements of IFRS 4,
which are largely based on the maintenance of previous local accounting standards, IFRS
17 provides a comprehensive model for insurance contracts, covering all relevant
accounting aspects.
IFRS 17, effective for financial years beginning on or after 1 January 2023, requires the
presentation of comparative balances. Early application is permitted, if the entity also
adopted IFRS 9 and IFRS 15 on or before the date of first-time application of IFRS 17.
These changes had no impact on the Group’s consolidated financial statements.
Amendments to IAS 8 “Definition of accounting estimates”
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition
of "accounting estimates". The amendments clarify the distinction between changes in
accounting standards and changes in accounting policies and corrections of errors. They
also clarify how entities use measurement techniques and inputs to develop accounting
estimates. The amendments are effective for financial years beginning on or after 1
January 2023 and apply to changes in accounting standards and changes in accounting
estimates that occur on or after the beginning of that period. Early application is permitted
provided that this fact is disclosed. The changes had no impact on the Group’s
consolidated financial statements.
Amendments to IAS 1 "Presentation of Financial Statements" and IFRS Practice
Statement 2
Amendments to IAS 1 and IFRS Practice Statement 2
Making Materiality Judgements
,
provide guidance to help entities apply significant judgements to the disclosure of
accounting standards. The requirement for entities to disclose their "significant"
accounting standards is replaced by a requirement to disclose their "material" accounting
standards. The changes had an impact on the Group's disclosure of accounting standards,
though not on the measurement, recognition and presentation of items in the Group's
consolidated financial statements.
Amendments to IAS 12 "Deferred Taxes on Assets and Liabilities Arising from a
Single Transaction"
The amendments to IAS 12 Income Taxes narrow the scope of the exception to initial
recognition so that it no longer applies to transactions that give rise to equal taxable and
deductible temporary differences, such as leases and decommissioning liabilities. The
changes had no impact on the Group’s consolidated financial statements.
Sabaf Group | Consolidated financial statements at 31 December 2023
44
Amendments to IAS 12 "International Tax Reform - Pillar Two Model Rules"
On 23 May 2023, the IASB published an amendment called "Amendments to IAS 12
Income taxes: International Tax Reform - Pillar Two Model Rules". The document
introduces a temporary exception from recognition and disclosure requirements for
deferred tax assets and liabilities related to Pillar Two Model Rules and provides for
specific disclosure requirements for entities affected by the related International Tax
Reform. The document provides for the immediate application of the temporary exception,
while the disclosure requirements will only apply to annual financial statements beginning
on or after 1 January 2023, but not to interim financial statements ending before 31
December 2023. Since its revenues are lower than €750 million per year, the Group is
excluded from the scope of application of the Pillar Two rules. Therefore, the amendments
to IAS 12 have no impact on the Group's consolidated financial statements.
Principles enacted but not yet in force
Amendments to IFRS 16: "
Lease Liability in a Sale and Leaseback
"
In September 2022, the IASB issued an amendment to IFRS 16 to specify the requirements
that a seller-lessor uses in measuring the lease liability arising from a sale and leaseback
transaction, to ensure that the seller-lessor does not recognise gain or loss with respect to
the right of use retained by the lessor.
The amendments are effective for financial years beginning on or after 1 January 2024 and
are to be applied retrospectively to all sale and leaseback transactions entered into after
the first-time application of IFRS 16. Early application is permitted and disclosure of this
fact is required.
These changes are not expected to have a material impact on the Group's financial
statements.
Amendments to IAS 1: "Classification of Liabilities as Current or Non-current"
In January 2020 and October 2022, the IASB issued some amendments to paragraphs 69-
76 of IAS 1 to specify the requirements for classifying liabilities as current or non-current.
The amendments clarify what is meant by the right to postpone an expiry, that the right to
postpone must exist at the end of the reporting period, that the classification is not affected
by the likelihood that the entity will exercise its right to postpone. Only if a derivative
embedded in a convertible liability is itself an equity instrument does the maturity of the
liability have no impact on classification. In addition, a requirement has been introduced
to disclose when a liability arising from a loan agreement is classified as non-current, and
the entity's right to postpone is conditional on compliance with covenants within twelve
months. The amendments will be effective for financial years beginning on or after 1
January 20234 and must be applied retrospectively. The Group is currently assessing what
impact these changes will have on the current situation.
Amendments to IAS 7 and IFRS 7 "Supplier Finance Arrangements"
In May 2023, the IASB issued amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: Disclosures, to clarify the characteristics of reverse factoring
agreements and request further disclosure of such agreements. The disclosure
requirements included in the amendments are intended to assist users of financial
statements in understanding the effects on an entity's liabilities, cash flows and exposure
to liquidity risk of reverse factoring arrangements. The amendments will be effective for
Sabaf Group | Consolidated financial statements at 31 December 2023
45
financial years beginning on or after 1 January 2024. Early application is permitted and
disclosure of this fact is required. These changes are not expected to have a material
impact on the Group's financial statements.
Sabaf Group | Consolidated financial statements at 31 December 2023
46
Hyperinflation - Turkey: application of IAS 29
As from 1 April 2022, the Turkish economy is considered and hyperinflationary economy
in accordance with the criteria set out in "IAS 29 - Financial Reporting in Hyperinflationary
Economies", i.e. following the assessment of qualitative and quantitative elements
including the presence of a cumulative inflation rate greater than 100% over the previous
three years. Therefore, starting with the consolidated financial statements as at 31
December 2022, IAS 29 was applied with reference to the parent company's subsidiaries
in Turkey, Sabaf Turkey and Okida. With respect to the consolidated financial statements
at 31 December 2023, following the merger by incorporation of Okida into Sabaf Turkey,
IAS 29 was only applied with reference to the subsidiary Sabaf Turkey.
The cumulative levels of general consumer price indices are shown below:
Consumer price index
Value at
31/12/2022
Value at
31/12/2023
Change
TURKSTAT
1,128.45
1,859.38
+64.77%
Consumer price index
Value at
31/12/2021
Value at
31/12/2022
Change
TURKSTAT
686.95
1,128.45
+64.27%
Consumer price index
Value at
01/01/2003
Value at
31/12/2021
Change
TURKSTAT
100
686.95
+586.95%
Accounting effects
The financial statements of Sabaf Turkey were redetermined before being included in the Group's
consolidated financial statements. In particular, the effect related to the re-measurement
of non-monetary assets and liabilities, equity items and income statement items, net of the
related tax effect, was recognised in a separate item in the income statement under
financial income and expenses. The related tax effect was recognised, instead, in taxes for
the period. On consolidation, as required by IAS 21, the restated financial statements were
converted using the final exchange rate in order to restore the amounts to current values.
Effects of the application of the hyperinflation on the Consolidated Statement of Financial
Position
(
€
/000)
31/12/2023
Hyperinflation
effect
31/12/2023
with Hyperinflation
effect
Total non-current assets
150,032
31,135
181,167
Total current assets
175,321
1,690
177,011
Total assets
325,353
32,825
358,178
Total shareholders’ equity
137,647
32,741
170,388
Total non-current liabilities
102,661
84
102,745
Total current liabilities
85,045
-
85,045
Total liabilities and shareholders'
equity
325,353
32,825
358,178
Sabaf Group | Consolidated financial statements at 31 December 2023
47
Effects of the application of the hyperinflation on the consolidated Income Statement
(
€
/000)
12M
2023
Hyperinflation
Effect
12m 2023
with hyperinflation
effect
Operating revenue and income
248,184
(1,179)
247,005
Operating costs
(217,786)
393
(217,393)
Operating profit before depreciation
& amortisation, capital gains/losses
and write-downs/write-backs of
non-current assets (EBITDA)
30,398
(786)
29,612
EBIT
13,772
(2,710)
11,062
Profit before taxes
8,269
(8,275)
(6)
Income taxes
2,632
754
3,386
Minority interests
277
-
277
Profit attributable to the Group
10,624
(7,521)
3,103
Sabaf Group | Consolidated financial statements at 31 December 2023
48
Comments on significant balance sheet items
1. PROPERTY, PLANT AND EQUIPMENT
Property
Plant and
equipment
Other
assets
Assets under
construction
Total
Cost
At 31 December 2021
59,430
228,297
58,829
6,636
353,192
Increases
331
3,513
3,699
12,141
19,684
Disposals
-
(2,958)
(479)
-
(3,437)
Change in the scope of
consolidation
2,337
3,732
869
-
6,938
Reclassifications
300
8,527
376
(9,432)
(229)
Monetary revaluation (IAS
29)
4,503
10,921
3,518
-
18,942
Forex differences
(225)
(422)
(154)
(116)
(917)
At 31 December 2022
66,676
251,610
66,658
9,229
394,173
Increases
5,999
7,992
3,345
3,163
20,499
Disposals
(450)
(2,273)
(563)
-
(3,286)
Change in the scope of
consolidation
2,330
6,253
586
35
9,204
Reclassifications
3,664
3,383
710
(7,906)
(149)
Monetary revaluation (IAS
29)
2,497
8,250
2,860
-
13,607
Forex differences
(2,217)
(6,739)
(2,358)
(23)
(11,337)
At 31 December 2023
78,499
268,476
71,238
4,498
422,711
Accumulated
amortisation
At 31 December 2021
26,203
194,530
50,052
-
270,785
Depreciations for the year
2,323
9,049
3,945
-
15,317
Derecognition due to
disposal
-
(2,807)
(216)
-
(3,023)
Change in the scope of
consolidation
248
2,321
657
-
3,226
Reclassifications
3
(1)
135
-
137
Monetary revaluation (IAS
29)
1,734
4,752
1,748
-
8,234
Forex differences
(81)
(58)
31
-
(108)
At 31 December 2022
30,430
207,786
56,352
-
294,568
Depreciations for the year
2,720
9,993
4,146
-
16,859
Derecognition due to
disposal
(295)
(2,087)
(360)
-
(2,742)
Change in the scope of
consolidation
-
4,351
457
-
4,808
Reclassifications
(54)
(5)
(114)
-
(173)
Monetary revaluation (IAS
29)
978
3,269
1,410
-
5,657
Forex differences
(950)
(2,843)
(1,214)
-
(5,007)
At 31 December 2023
32,829
220,464
60,677
-
313,970
Net carrying value
At 31 December 2022
36,246
43,824
10,306
9,229
99,605
At 31 December 2023
45,670
48,012
10,561
4,498
108,741
Sabaf Group | Consolidated financial statements at 31 December 2023
49
The breakdown of the net carrying value of Property was as follows:
31/12/2023
31/12/2022
Change
Land
9,560
9,465
95
Industrial buildings
36,110
26,781
9,329
Total
45,670
36,246
9,424
Changes in property, plant and equipment resulting from the application of IFRS 16 are
shown below:
Property
Plant and
equipment
Other assets
Total
At 31 December 2022
1,247
163
800
2,210
Increases
3,085
-
442
3,527
Monetary revaluation (IAS 29)
284
-
-
284
Change in the scope of consolidation
2,039
-
-
2,039
Depreciations and amortisation
(766)
(115)
(371)
(1,252)
Decreases
(376)
-
(16)
(392)
Foreign exchange differences
(236)
-
1
(235)
At 31 December 2023
5,277
48
856
6,181
The main investments of the financial year were aimed at:
▪ expanding the international production footprint; in this respect, in Mexico, the
work on the construction of the plant in San Luis de Potosi was completed.
▪ industrialising new products;
▪ optimising the efficiency and automation of production processes.
Decreases mainly relate to the disposal of machinery no longer in use.
Assets under construction include machinery under construction and advance payments
to suppliers of capital equipment.
At 31 December 2023, the Group identified no endogenous or exogenous indicators of
impairment of its property, plant and equipment. As a result, the value of property, plant
and equipment was not submitted to impairment testing, with the exception of assets
relating to cash-generating units to which assets with an indefinite useful life are allocated,
for which the entire capital employed was submitted to impairment testing. Please refer to
Note 4 for further details.
2. INVESTMENT PROPERTY
Cost
At 31 December 2021
10,177
Increases
144
Disposals
(1,381)
Reclassifications
(6,675)
At 31 December 2022
2,265
Increases
117
Disposals
(583)
Reclassifications
(28)
At 31 December 2023
1,771
Sabaf Group | Consolidated financial statements at 31 December 2023
50
Depreciations and write-downs
At 31 December 2021
7,866
Depreciations for the year
299
Derecognition due to disposal
(734)
Reclassifications
(6,149)
At 31 December 2022
1,282
Increases
105
Disposals
(307)
Reclassifications
-
At 31 December 2023
1,080
Net carrying value
At 31 December 2022
2,311
At 31 December 2023
691
Changes in investment property resulting from the application of IFRS 16 are shown
below:
Investment
property
1 January 2023
108
Increases
117
Decreases
(102)
Depreciations and amortisation
(43)
At 31 December 2023
80
The item Investment property includes non-operating buildings owned by the Group:
these are mainly properties for residential use, held for rental. Disposals during the period,
amounting to €276 thousand, resulted in capital gains totalling €78 thousand.
At 31 December 2023, the Group found no other endogenous or exogenous indicators of
impairment of its investment property. As a result, the value of investment property was
not submitted to impairment testing.
3. ASSETS HELD FOR SALE
This item at 31 December 2022 included the net carrying value of the Parent Company's
former production plant located in Lumezzane (Brescia) amounting to €529 thousand. In
July 2023, the property was sold to a third party for a consideration of €1,950 thousand,
realising a capital gain of €1,421 thousand.
Sabaf Group | Consolidated financial statements at 31 December 2023
51
4. INTANGIBLE ASSETS
Goodwill
Patents and
software
Developme
nt costs
Other
intangible
assets
Total
Cost
At 31 December 2021
22,136
9,585
8,298
18,701
58,720
Increases
-
591
2,506
56
3,153
Decreases
-
1
(16)
(7)
(22)
Change in the scope of
consolidation
1,127
263
-
4,568
5,958
Reclassifications
-
77
(554)
17
(460)
Monetary revaluation (IAS 29)
10,671
385
-
6,453
17,509
Forex differences
(1,756)
(54)
-
(1,039)
(2,849)
At 31 December 2022
32,178
10,848
10,234
28,749
82,009
Increases
-
431
2,249
33
2,713
Decreases
-
-
-
-
-
Change in the scope of
consolidation
1,564
-
-
2,473
4,037
Reclassifications
-
147
(337)
(178)
(368)
Monetary revaluation (IAS 29)
6,466
260
-
3,819
10,545
Forex differences
(6,648)
(242)
(3)
(3,687)
(10,580)
At 31 December 2023
33,560
11,444
12,143
31,209
88,356
Amortisation/Write-downs
At 31 December 2021
4,546
8,787
4,800
5,034
23,167
Depreciations for the year
-
479
376
1,797
2,652
Decreases
-
2
-
-
2
Change in the scope of
consolidation
-
226
-
10
236
Reclassifications
-
13
174
24
211
Monetary revaluation (IAS 29)
-
303
-
1,566
1,869
Forex differences
-
(38)
-
(258)
(296)
At 31 December 2022
4,546
9,772
5,350
8,173
27,841
Depreciations for the year
-
466
696
2,110
3,272
Decreases
-
-
-
-
-
Change in the scope of
consolidation
-
-
-
-
-
Reclassifications
-
-
-
-
-
Monetary revaluation (IAS 29)
-
221
-
1,167
1,388
Forex differences
-
(205)
-
(1,171)
(1,376)
At 31 December 2023
4,546
10,254
6,046
10,279
31,125
Net carrying value
At 31 December 2022
27,632
1,076
4,884
20,576
54,168
At 31 December 2023
29,014
1,190
6,097
20,930
57,231
Goodwill
Pursuant to IAS 36, goodwill is allocated to different cash-generating units ("CGUs"), which
are identified on the basis of operating segments, according to geographic logics and
corresponding to the businesses being acquired. Below are the CGUs to which the goodwill
was allocated:
Sabaf Group | Consolidated financial statements at 31 December 2023
52
CGU
31/12/2022
First
consolidation
Price
adjustments
Revaluation
IAS29
Forex
differences
31/12/2023
Professional
burners
1,770
-
-
-
-
1,770
Electronic
components
16,641
-
-
6,466
(6,660)
16,447
P.G.A. electronic
components
1,127
-
783
-
-
1,910
Hinges
4,414
-
-
-
-
4,414
C.M.I. hinges
3,680
-
-
-
-
3,680
MEC hinges
-
781
-
-
12
793
Total
27,632
781
783
6,466
(6,648)
29,014
The relative change in goodwill allocated to the P.G.A. electronic components CGU, equal to
€783 thousand, refers to price adjustments after the completion of acquisition and
determined, in accordance with the contract, on the basis of the subsidiary's final results
for 2022.
The Group verifies the ability to recover goodwill ("Impairment test") at least once a year
or more frequently if there are indications of impairment. Recoverable amount is
determined through value of use, by discounting expected cash flows.
The main assumptions used to determine the value of use of the different CGUs refer a) to
the financial flows deriving from company business plans, b) to the discount rate and c) to
the long-term growth rate.
Determining cash flows
The management defined a single plan for each CGU with respect to the 2024-2026 period,
which represents the best estimate of the expected trend in operations, based on corporate
strategies and the growth indices of the specific sector and reference markets. In particular,
the forecasts for the first year of the forecast plan (2024) were developed based on the
Group's 2024 budget, approved by the Parent Company's Board of Directors on 19
December 2023; the forecasts for the next two years (2025 and 2026) were determined
analytically while preparing the Group's 2024 - 2026 Business Plan, approved by the Parent
Company's Board of Directors on 19 March 2024. The multi-year plans of each CGU were
submitted for approval to the Boards of Directors of the Group companies to which each
CGU belongs.
Revenues were estimated on the basis of information obtained from customers and on the
basis of management's expectations regarding the trend of the reference market, which
expect a moderate recovery from the weak phase that characterised 2023. The
contribution from revenues from new products already developed, weighted by the
likelihood of their success, was also estimated. The plans were prepared under the
assumption of substantially unchanged raw material prices, in view of the proven historical
ability of CGUs to pass on changes in material costs to selling prices. Estimates of revenues
and profitability incorporate elements of caution to reflect geopolitical and
macroeconomic uncertainty. It should be noted that the CGUs to which intangible assets
with an indefinite useful life are allocated are not exposed to significant transitional
Sabaf Group | Consolidated financial statements at 31 December 2023
53
climatic risks, that energy costs have an extremely low incidence compared to the
industrial cost of products, and that the related production processes do not directly use
fossil fuels (gas) as an energy source.
The business plans consider only real growth, do not take into account expected inflation,
and have been prepared in Euro, i.e. the currency in which - with the exception of MEC -
the sales lists and main operating costs of the CGUs are denominated. The business plan
of MEC, which operates in dollars, was prepared under the assumption of a stable
euro/dollar exchange rate. Furthermore, with reference to the "Electronic Components"
CGU, the plan does not take into account the accounting effects of IAS 29 (hyperinflation).
Lastly, cash flows for the 2024-2026 period were augmented by the so-called terminal
value, which expresses the operating flows that the CGU is expected to generate from the
fourth year to infinity and determined based on the perpetual income.
Discount rate
The discount rate used to discount expected future cash flows was determined for each
CGU, just like in the previous year, and is represented by the weighted average cost of
capital (WACC), which reflects the current market valuation of the time value of money
for the period considered and the specific risks of the Group companies and their reference
sectors.
Long-term growth rate
In addition to the flows expected for the 2024-2026 period, which are explicitly forecasted,
there is also the so-called
Perpetuity, representing the Terminal Value. This was
determined, according to the same logics adopted in the previous year, using a long-term
growth rate (g-rate), specific to each CGU, reflecting the growth potential of the area in
question.
The table below shows the main basic assumptions used in performing the impairment
test.
CGU
Discount rate
(WACC) %
Long-term growth
rate (g-rate)
Cash flow
horizon
Terminal Value
calculation method
Professional burners
11.09%
2.00%
3 years old
Perpetual
instalment
Electronic components
15.69%
2.50%
3 years old
Perpetual
instalment
P.G.A. electronic components
10.94%
2.50%
3 years old
Perpetual
instalment
Hinges
11.84%
2.00%
3 years old
Perpetual
instalment
C.M.I. hinges
11.45%
2.00%
3 years old
Perpetual
instalment
MEC hinges
10.99%
2.30%
3 years old
Perpetual
instalment
Please find below the main changes in the discount rate compared to the impairment
carried out when preparing the consolidated financial statements at 31 December 2022:
Sabaf Group | Consolidated financial statements at 31 December 2023
54
▪ Professional burners: WACC is 11.09% (11.19% at 31 December 2022), the change
from the previous year is mainly due to the reduction in the risk-free rate and the
equity market risk premium;
▪ Electronic components: WACC is 15.69% (16.81% at 31 December 2022), the
change from the previous year is mainly due to the reduction in the cost of debt,
the risk-free rate and the equity market risk premium;
▪ P.G.A. electronic components: WACC is 10.94% (10.88% at 31 December 2022),
essentially unchanged from the previous year;
▪ Hinges: WACC is 11.84% (11.65% at 31 December 2022), the change from the
previous year is mainly due to the increase in the cost of debt and the risk-free rate;
▪ C.M.I. hinges: WACC is 11.45% (11.66% at 31 December 2022), the change from
the previous year is mainly due to the reduction in the risk-free rate and the equity
market risk premium;
The impairment tests carried out according to the methods described above and approved
by the Board of Directors on 20 February 2024, with the opinion of the Control, Risk and
Sustainability Committee, did not reveal any impairment losses, as the recoverable value
of the CGUs at 31 December 2023 was higher than the corresponding net invested capital
(carrying amount).
To complete the analysis, the following activities were carried out:
▪ a sensitivity analysis aimed at verifying the recoverability of goodwill against
changes in the basic assumptions used to determine discounted cash flows. In
particular, the following table shows the WACC, g-rate
and EBITDA that would
lead to an impairment loss, keeping all other basic assumptions unchanged:
Break-even values in a "steady case" situation
Sensitivity analysis
WACC
g-rate
EBITDA
Professional burners
18.2%
n/a
-38.4%
Electronic components
16.6%
1.25%
-6.9%
P.G.A. electronic components
13.2%
0%
-22.6%
Hinges
22.9%
n/a
-46.0%
C.M.I. hinges
28.0%
n/a
-52.0%
MEC hinges
12.8%
0.2%
-10.5%
▪ the verification of the recoverability of goodwill against possible upward and
downward 50 bps changes in WACC and 25 bps changes in the g-rate
;
▪ the verification of the recoverability of goodwill against possible 10% and 20%
downward changes in EBITDA.
With reference to the "Electronic components" CGU, sensitivity analyses show a delta
between recoverable value and net invested capital ranging from +€6.3 million to -€4.9
million. For the "MEC Hinges" CGU, the difference between recoverable value and net
invested capital ranges from +€ 6.4 million to -€3.4 million. With reference to the other
CGUs submitted to impairment testing,
none of the scenarios covered by the sensitivity
analysis showed a recoverable value lower than the carrying value.
Sabaf Group | Consolidated financial statements at 31 December 2023
55
Lastly, in examining possible indicators of impairment, the Group also took into
consideration the relationship between stock market capitalisation (€218.3 million) and the
carrying value of the Group's equity at 31 December 2023 (€162.1 million), which shows a
largely positive difference.
Patents and software
The main software investments are related to the extension of the application and
corporate scope of the Group management system (SAP) and to the implementation of a
management system in the HR field.
Development costs
Development costs are mainly related to the decision to extend the product range to
include induction cooking. To this end, a dedicated project team was set up to develop the
project know-how in-house, with patents, proprietary software and hardware. Sales are
scheduled to start in 2024.
Increases in development costs include projects in progress and therefore not subject to
amortisation.
With regard to patents, software and development costs, no internal and external
indicators that would necessitate an impairment test were identified.
Other intangible assets
The other intangible assets recognised in these consolidated financial statements mainly
derive from the Purchase Price Allocation carried out following the acquisition of Okida
Elektronik in September 2018, of C.M.I. S.r.l. in July 2019, of P.G.A. in October 2022 and
of MEC in July 2023.
The net carrying value of other intangible assets is broken down as follows:
31/12/2023
31/12/2022
Change
Customer Relationship
15,090
13,000
2,090
Brand
2,947
3,807
(860)
Know-how
400
577
(177)
Patents
2,306
2,835
(529)
Other
187
357
(170)
Total
20,930
20,576
354
At 31 December 2023, the recoverability of the amount of other intangible assets was
verified as part of the impairment test of the related goodwill described in the previous
paragraph.
Sabaf Group | Consolidated financial statements at 31 December 2023
56
5. EQUITY INVESTMENTS
31/12/2023
31/12/2022
Change
Other equity investments
95
97
(2)
Total
95
97
(2)
6. NON-CURRENT RECEIVABLES
31/12/2023
31/12/2022
Change
Tax receivables
287
2,057
(1,770)
Guarantee deposits
187
98
89
Receivables from former P.G.A.
shareholders
620
597
23
Total
1,094
2,752
(1,658)
Tax receivables relate to indirect taxes expected to be recovered after 31 December 2024.
Receivables from former P.G.A. Shareholders, already determined by the parties and
discounted, refer to compensation obligations envisaged upon the occurrence of certain
events (liabilities incurred by P.G.A.) regulated by the acquisition agreement.
7. INVENTORIES
31/12/2023
31/12/2022
Change
Raw Materials
29,084
31,068
(1,984)
Semi-processed goods
15,410
16,403
(993)
Finished products
22,920
23,771
(851)
Provision for inventory write-downs
(5,429)
(6,816)
1,387
Total
61,985
64,426
(2,441)
The value of final inventories at 31 December 2023 was lower than the previous year as a
result of lower average costs and a decrease in the volume of stock.
At 31 December 2023, the value of inventories was adjusted based on an improved
estimate of the idle capacity and obsolescence risk, measured by analysing slow and non-
moving inventory. The following table shows the changes in the Provision for inventory
write-downs during the current financial year:
31/12/2022
6,816
Provisions
914
Utilisation
(1,512)
Monetary revaluation (IAS 29)
48
Change in the scope of consolidation
7
Forex differences
(844)
31/12/2023
5,429
8. TRADE RECEIVABLES
31/12/2023
31/12/2022
Change
Total trade receivables
56,661
59,999
(3,338)
Bad debt provision
(835)
(840)
5
Net total
55,826
59,159
(3,333)
Sabaf Group | Consolidated financial statements at 31 December 2023
57
The amount of trade receivables at 30 December 2023 was lower than the balance at the
end of 2022 as a result of the reduction in the average collection period, which was also
achieved due to an increased assignment without recourse of receivables to factors. There
were no significant changes in the payment terms agreed with customers.
The amount of trade receivables recognised in the financial statements includes
approximately €26.8 million in insured receivables (€25.7 million at 31 December 2022).
The breakdown of trade receivables by past due period is shown below:
31/12/2023
31/12/2022
Change
Current receivables (not past
due)
42,395
45,199
(2,804)
Outstanding up to 30 days
8,356
6,947
1,409
Outstanding from 30 to 60 days
3,099
4,020
(921)
Outstanding from 60 to 90 days
911
1,416
(505)
Outstanding for more than 90
days
1,900
2,417
(517)
Total
56,661
59,999
(3,338)
The bad debt provision was adjusted to the better estimate of the credit risk and expected
loss at the end of the reporting period, also carried out by analysing each expired item.
Changes during the year were as follows:
31/12/2022
840
Provisions
34
Utilisation
(34)
Change in the scope of consolidation
-
Forex differences
(5)
31/12/2023
835
9. TAX RECEIVABLES
31/12/2023
31/12/2022
Change
For income tax
7,186
5,061
2,125
For VAT and other sales taxes
4,536
3,144
1,392
Other tax credits
0
9
(9)
Total
11,722
8,214
3,508
At 31 December 2023 income tax receivables mainly include:
▪ €3,119 thousand relating to the tax credit for investments in capital goods;
▪ €482 thousand relating to the tax credit for research and development;
▪ €635 thousand related to the "Patent Box" tax credit for the years 2020 and 2021,
following the prior agreement signed with the Tax Authorities during the year;
▪ payments on account paid during 2023: IRES for €521 thousand and IRAP for €75
thousand.
Sabaf Group | Consolidated financial statements at 31 December 2023
58
10. OTHER CURRENT RECEIVABLES
31/12/2023
31/12/2022
Change
Advances to suppliers
1,866
1,376
490
Credits to be received from suppliers
943
706
237
Accrued income and prepaid expenses
858
660
198
Other
201
168
33
Total
3,868
2,910
958
Credits to be received from suppliers mainly refer to bonuses paid to the Group for the
attainment of purchasing objectives.
11. FINANCIAL ASSETS
31/12/2023
31/12/2022
Current
Non-current
Current
Non-current
Time deposit accounts
6,254
-
786
-
Derivative instruments
1,003
-
1,711
-
Total
7,257
-
2,497
-
The change in time deposit accounts relates to the taking out of time deposits by certain
foreign subsidiaries; these are temporary investments of liquidity in excess of normal
operations at better yields than ordinary deposits.
Derivatives refer, for €126 thousand, to forward sales contracts in US dollars recognised
using hedge accounting
- the details of which are illustrated in Note 38 "Foreign exchange
risk management" - and, for €877 thousand, to six interest rate swap (IRS) contracts for
amounts and maturities coinciding with six unsecured loans that are being amortised,
whose residual value at 31 December 2023 is €17,339 thousand. The interest rate swap
contracts have not been designated as capital flow hedges and are therefore at their fair
value through profit and loss, and recognised in the items “Fair Value through profit or
loss”, with "Financial income" as a balancing entry.
12. CASH AND CASH EQUIVALENTS
The item Cash and cash equivalents, equal to €36,353 thousand at 31 December 2023
(€20,923 thousand at 31 December 2022), refers to cash and bank current account
balances. Changes in the cash and cash equivalents are analysed in the statement cash
flows.
Sabaf Group | Consolidated financial statements at 31 December 2023
59
13. SHARE CAPITAL
In connection with the acquisition of Mansfield (MEC), on 14 July 2023, Sabaf's Board of
Directors exercised the proxy granted by the Shareholders' Meeting on 4 May 2020,
resolving on a reserved capital increase, through splitting shares and against payment, for
a nominal amount of €1,153,345, corresponding to 10% of the share capital, with the
exclusion of the right of option pursuant to Article 2441, fourth paragraph, second sentence
of the Italian Civil Code, through the issue of 1,153,345 new ordinary shares with a par
value of €1.00. The newly issued shares were offered for subscription as part of a reserved
placement.
The issue price of the new shares, including the share premium, was determined at €15.01
per share, equal to the average stock market price of Sabaf share recorded in June,
increased by a premium of €0.52 per share (and therefore for a total value of
€17,311,708.45).
The capital increase took place on 20 July 2023. Following the full subscription of the new
shares, the post-capital increase share capital amounts to €12,686,795.
At 31 December 2023, the structure of the share capital is shown in the table below.
No. of shares
% of share
capital
Rights and obligations
Ordinary shares
6,559,278
51.70%
-
Ordinary shares with
increased vote
6,127,518
48.30%
Two voting rights per share
TOTAL
12,686,795
100%
With the exception of the right to increased vote, there are no rights, privileges or
restrictions on the shares of the Parent Company. The availability of the Parent Company's
reserves is indicated in the separate financial statements of Sabaf S.p.A.
14. TREASURY SHARES AND OTHER RESERVES
Treasury shares
In the course of the year, 27,100 treasury shares were acquired at an average unit price of
€17.05, while none were sold.
At 31 December 2023, Sabaf S.p.A. held 241,963 treasury shares (1.907% of the share
capital), reported in the financial statements as an adjustment to shareholders’ equity at a
weighted average unit value of €15.22 (the closing stock market price of the Share at 31
December 2023 was €17.36). There were 12,444,832 outstanding shares at 31 December
2023.
Stock grant reserve
Items "Retained earnings, other reserves" of €146,303 thousand included, at 31 December
2023, the stock grant reserve of €2,481 thousand, which included the measurement at 31
December 2023 of the fair value of rights assigned to receive shares of the Parent Company
relating to the 2021 – 2023 Stock Grant Plan, medium- and long-term incentive plan for
Sabaf Group | Consolidated financial statements at 31 December 2023
60
directors and employees of the Sabaf Group, for the details of which reference is made to
Note 40.
Cash Flow Hedge reserve
The following table shows the change in the Cash Flow Hedge reserve related to the
application of IFRS 9 on derivative contracts and referring to the recognition in net equity
of the effective part of the derivative contracts signed to hedge the foreign exchange rate
risk for which the Group applies hedge accounting.
Value at 31 December 2022
(2)
Change during the period
76
Value at 31 December 2023
74
The characteristics of the derivative financial instruments that gave rise to the Cash Flow
Hedge reserve and the accounting effects on other items in the financial statements are
broken down in Note 38, in the paragraph Foreign exchange risk management.
15. LOANS
31/12/2023
31/12/2022
Current
Non-current
Total
Current
Non-current
Total
Bond issue
-
29,720
29,720
-
29,685
29,685
Unsecured loans
21,261
46,748
68,009
21,613
46,595
68,208
Short-term bank loans
-
-
-
5,308
-
5,308
Advances on bank
receipts or invoices
155
-
155
921
-
921
Leases
1,660
5,079
6,739
1,032
2,056
3,088
Interest payable
241
-
241
2
-
2
Total
23,317
81,547
104,864
28,876
78,336
107,212
In 2021, Sabaf S.p.A. issued a €30 million bond fully subscribed by PRICOA with a
maturity of 10 years, an average life of 8 years and a fixed coupon of 1.85% per year.
The loan has some covenants, defined with reference to the consolidated financial
statements at the end of each reporting period, all complied with at 31 December 2023
and for which, according to the Group's business plan, compliance is also expected in
subsequent years:
▪ commitment to maintain a ratio of net financial debt to shareholders’ equity of
no more than 1.5;
▪ commitment to maintain a ratio of net financial debt to EBITDA of no more
than 3;
▪ commitment to maintain a ratio of EBITDA to net financial position of more
than 4.
During the year, the Group took out new unsecured loans for a total of €23 million to
finance the investments made. All loans were signed with an original maturity of 4 or 5
years and are repayable in instalments.
Some of the outstanding unsecured loans have covenants, defined with reference to the
consolidated financial statements at the end of the reporting period, as specified below:
▪ commitment to maintain a ratio of net financial debt to shareholders’ equity of no
Sabaf Group | Consolidated financial statements at 31 December 2023
61
more than 1 (residual amount of the loans at 31 December 2023 equal to €48
million);
▪ commitment to maintain a ratio of net financial debt to EBITDA of no more than
3 (residual amount of the loans at 31 December 2023 equal to €59.4 million);
▪ commitment to maintain a ratio of net financial debt to EBITDA of no more than
2.5 (residual amount of the loans at 31 December 2023 equal to €0.8 million);
complied with at 31 December 2023 and for which, according to the Group's business plan,
compliance is also expected in subsequent years.
All bank loans are denominated in euro.
To manage interest rate risk, some unsecured loans (with a total residual value of €37,737
thousand at 31 December 2023) are either fixed-rate or hedged by IRS. On the other hand,
the residual value of unsecured loans taken out at a variable rate and not covered by the
IRS was €30,272 thousand.
The following table shows the changes in lease liabilities during the year:
Lease liabilities at 31 December 2021
4,271
New agreements signed during 2022
331
Repayments during 2022
(1,409)
Forex differences
(105)
Lease liabilities at 31 December 2022
3,088
New agreements signed during 2023
5,283
Repayments during 2023
(1,462)
Forex differences
(170)
Lease liabilities at 31 December 2023
6,739
The value of lease liabilities at 31 December 2023 includes €6,033 thousand in operating leases
and €706 thousand in finance leases, all recognised in accordance with IFRS16. Note 38 provides
information on financial risks, pursuant to IFRS 7.
16. OTHER FINANCIAL LIABILITIES
31/12/2023
31/12/2022
Current
Non-current
Current
Non-current
Option on MEC minorities
-
11,721
-
-
Payables to former P.G.A.
shareholders
175
-
546
-
Currency derivatives
-
-
28
-
Total
175
11,721
574
-
As part of the acquisition of MEC, a call option in favour of Sabaf for the remaining 49% of
the share capital, exercisable from 2028, and a put option in favour of the minority
shareholders, exercisable from 2025 to 2028, were subscribed. The valuation of the residual
share will be based on an Enterprise Value equal to 8 times MEC's average EBITDA of the
two financial statements preceding the date of exercise of the relevant option, adjusted for
the net financial position at that date.
Sabaf Group | Consolidated financial statements at 31 December 2023
62
The assignment of an option to sell (put option) in the terms described above required the
recognition of a liability corresponding to the estimated redemption value, expected at the
time of any exercise of the option. To this end, a financial liability of €11,721 million was
recognised in the consolidated financial statements, of which
▪ €10,866 thousand deriving from the recognition of the financial liability at the time
of the acquisition; an equity reserve was recognised as a balancing entry;
▪ €855 thousand deriving from the updated valuation of the outlay estimate, based
on MEC's results forecast in the subsidiary's business plan drawn up at the
beginning of 2024. Financial expenses were recognised as a balancing entry.
Payables to former P.G.A. shareholders, amounting to €175 thousand, refer to price
adjustments after the completion of acquisition, linked to the achievement of certain
targets in accordance with the contract ("earn-out").
17. POST-EMPLOYMENT BENEFIT AND RETIREMENT PROVISIONS
Post-employment
benefit
At 31 December 2022
3,661
Provisions
389
Financial expenses
107
Payments made
(269)
Tax effect
48
Forex differences
(131)
At 31 December 2023
3,805
Following the revision of IAS 19 - Employee benefits, from 1 January 2013, all actuarial
gains or losses are recognised immediately in the comprehensive income statement
("Other comprehensive income") under the item "Actuarial income and losses".
Post-employment benefits are calculated as follows:
Financial assumptions
31/12/2023
31/12/2022
Discount rate
3% - 3.2%
3% - 3.7%
Inflation
2.5%
3%
Demographic theory
31/12/2023
31/12/2022
Mortality rate
IPS55 ANIA
IPS55 ANIA
Disability rate
INPS 2000
INPS 2000
Staff turnover
4% - 10%
3% - 10%
Advance payouts
1% - 3%
1% - 5%
Retirement age
Pursuant to legislation in force
at 31 December 2023
Pursuant to legislation in force
at 31 December 2022
The sensitivity analyses performed to account for any changes in actuarial assumptions
did not reveal any significant changes in the liability.
Sabaf Group | Consolidated financial statements at 31 December 2023
63
18. PROVISIONS FOR RISKS AND CHARGES
31/12/2022
Provisions
Utilisation
Forex
differences
31/12/2023
Provision for
agents’
indemnities
252
1
(57)
-
196
Product
guarantee fund
60
72
(72)
-
60
Provision for
legal risks
77
20
(3)
3
97
Other provisions
for risks and
charges
250
-
(216)
(34)
-
Total
639
93
(348)
(31)
353
The provision for agents’ indemnities covers amounts payable to agents if the Group
terminates the agency relationship.
The product guarantee fund covers the risk of returns or charges by customers for products
already sold. In 2023, a competitor filed a lawsuit against Sabaf S.p.A. for alleged patent
infringement. The litigation is at a preliminary stage, and based on an initial analysis, the
Directors believe that the competitor's claims are groundless and therefore no provisions
for risks have been recognised in these consolidated financial statements.
Utilisations of other provisions for risks refer, for €51 thousand, to the elimination of
contingent liabilities recognised as part of the Purchase Price Allocation following the
acquisition of Okida Elektronik and, for €165 thousand, to the elimination of contingent
liabilities recognised as part of the Purchase Price Allocation following the acquisition of
P.G.A., as a result of the settlement agreement.
The provisions for risks, which represent the estimate of future payments made based on
historical experience, have not been discounted because the effect is considered negligible.
19. OTHER NON-CURRENT LIABILITIES
31/12/2023
31/12/2022
Change
Total
183
-
183
Other non-current liabilities refer to payables to the tax authorities, to be paid in 2025 and
2026.
20. TRADE PAYABLES
31/12/2023
31/12/2022
Change
Total
42,521
39,628
2,893
Average payment terms did not change versus the previous year. At 31 December 2023, there
were no overdue payables of a significant amount and the Group did not receive any
injunctions for overdue payables.
Sabaf Group | Consolidated financial statements at 31 December 2023
64
21. TAX PAYABLES
31/12/2023
31/12/2022
Change
For income tax
704
235
469
Withholding taxes
968
1,059
(91)
Other tax payables
1,352
1,251
101
Total
3,025
2,545
480
22. OTHER CURRENT PAYABLES
31/12/2023
31/12/2022
Change
To employees
6,452
5,553
899
To social security institutions
3,430
2,781
649
To agents
158
164
(6)
Advances from customers
385
522
(137)
Other current payables
5,584
4,136
1,446
Total
16,007
13,156
2,851
At the beginning of 2023, payables due to employees and social security institutions were
paid in accordance with the scheduled expiry dates.
Other current payables include accrued liabilities and deferred income totalling €5,479
thousand.
23. DEFERRED TAX ASSETS AND LIABILITIES
31/12/2023
31/12/2022
Change
Deferred tax assets
13,315
13,145
170
Deferred tax liabilities
(5,136)
(5,828)
692
Net position
8,179
7,317
862
The table below analyses the nature of the temporary differences that determine the
recognition of deferred tax liabilities and assets and their changes during the year and the
previous year.
Non-
current
tangible
and
intangible
assets
Provisions,
value
adjustments
Fair value
of
derivative
instruments
Goodwill
Tax
incentives
Tax
losses
Actuarial
evaluation
of post-
employment
benefit
Hyperinflation
effects
Other
temporary
differences
Total
(188)
1,590
(382)
886
3,432
1,260
111
23
585
7,317
1,858
(200)
178
(177)
1,182
(451)
0
1,512
469
4,371
(718)
0
(18)
0
0
0
10
0
0
(726)
(1,092)
5
0
0
(1,333)
(342)
0
(2)
(19)
(2,783)
(140)
1,395
(222)
709
3,281
467
121
1,533
1,035
8,179
Sabaf Group | Consolidated financial statements at 31 December 2023
65
Deferred tax assets recognised in the income statement in respect of "Non-current tangible
and intangible assets" included €1,617 thousand in these consolidated financial statements
as a result of the revaluation for tax purposes of the tangible assets of the Group's Turkish
companies.
Deferred tax assets relating to goodwill refer to the exemption of the value of the
investment in Faringosi Hinges s.r.l. made in 2011 pursuant to Italian law Decree 98/2011,
deductible in ten instalments starting in the 2018 financial year.
Deferred tax assets relating to tax incentives are commensurate to investments made in
Turkey, for which the Group will benefit from a direct tax deduction. The reduction in
deferred tax assets related to tax losses is the result of their offsetting against tax profits
for the year.
At the end of the financial year, the taxation of the Group's Turkish companies was
adjusted to 22.5% tax rate, recognising tax income of €868 thousand in profit or loss.
24. TOTAL FINANCIAL DEBT
As required by the CONSOB memorandum of 28 July 2006, we disclose that the Group’s
net financial debt is as follows:
31/12/2023
31/12/2022
Change
A.
Cash
36,353
20,832
15,401
B.
Cash equivalents
-
91
(91)
C.
Other current financial assets
7,257
2,497
4,760
D.
Liquidity (A+B+C)
43,610
23,420
20,070
E.
Current financial payable
1,799
8,098
(6,299)
F.
Current portion of non-current financial debt
21,693
21,352
341
G.
Current financial debt (E+F)
23,492
29,450
(5,958)
H.
Net current financial debt (G-D)
(20,118)
6,030
(26,028)
I.
Non-current financial payable
63,548
48,651
14,897
J.
Debt instruments
29,720
29,685
35
K.
Trade payables and other non-current payables
-
-
-
L.
Non-current financial debt (I+J+K)
93,268
78,336
14,932
M.
Total financial debt (H+L)
73,150
84,366
(11,096)
The consolidated statement of cash flows, which shows the changes in cash and cash
equivalents (sum of letters A. and B. of this statement), describes in detail the cash flows
that led to the change in the net financial debt. In particular, as can be seen from the
Consolidated Statement of Cash Flows, the decrease in net financial debt in the period is
mainly attributable to the cash flows generated by operations, also through the reduction
in net working capital.
Sabaf Group | Consolidated financial statements at 31 December 2023
66
Comments on key income statement items
The income statement items discussed below, as already indicated in the "Scope of
Consolidation" paragraph of these Notes, include the contribution of Mansfield Engineered
Components LLC as of 1 July 2023, the accounting reference date closest to the
acquisition date (14 July 2023).
25. REVENUE
In 2023, sales revenue totalled €237,949 thousand, down by €15,104 thousand (-6%)
compared with 2022 (-13.8% on a like-for-like basis).
Revenue by geographical area
Revenue
2023
%
2022
%
% change
Europe (excluding Turkey)
71,636
30.1%
87,282
34.5%
-17.9%
Turkey
62,439
26.2%
66,845
26.4%
-6.6%
North America
47,607
20.0%
39,800
15.7%
+19.6%
South America
27,874
11.7%
28,503
11.3%
-2.2%
Africa and Middle East
17,718
7.4%
19,098
7.5%
-7.2%
Asia and Oceania
10,675
4.5%
11,525
4.6%
-7.4%
Total
237,949
100%
253,053
100%
-6.0%
Revenue by product family
Revenue
2023
2022
%
% change
Gas parts
143,224
158,340
62.6%
-9.5%
Hinges
70,418
68,627
27.1%
+2.6%
Electronic components
24,307
26,086
10.3%
-6.8%
Total
237,949
253,053
100%
-6.0%
The year 2023 was characterised by marked economic weakness in the household
appliance sector, which was most evident in European markets. Geographical
diversification and the contribution of recent acquisitions limited the decline in sales
compared with 2022, which was characterised by a dynamic first half-year and a sudden
drop in demand in the second half-year.
The average sales prices of 2023 remained essentially in line with those of 2022.
26. OTHER INCOME
2023
2022
Change
Sale of trimmings
4,921
5,711
(790)
Contingent income
971
554
417
Rental income
78
122
(44)
Use of provisions for risks and charges
130
6
124
Other income
2,956
3,795
(839)
Total
9,056
10,188
(1,132)
Sabaf Group | Consolidated financial statements at 31 December 2023
67
In 2023, other income mainly included: tax credits for investments in capital goods and
for research and development of €1,150 thousand, proceeds from the sale of moulds and
equipment of €782 thousand, Turkish government grants of €344 thousand referring to
incentives for hiring personnel, insurance compensation of €68 thousand and the
production of energy through photovoltaic plants of €33 thousand.
27. PURCHASES OF MATERIALS
2023
2022
Change
Commodities and outsourced
components
103,486
115,410
(11,924)
Consumables
9,198
8,921
277
Total
112,684
124,331
(11,647)
The reduction in purchases is related both to the decrease in business volumes and to the
reduction in the unit prices of the main raw materials (aluminium alloys, steel and brass).
28. COSTS FOR SERVICES
2023
2022
Change
Outsourced processing
9,513
13,680
(4,167)
Natural gas and power
7,762
11,359
(3,597)
Maintenance
6,879
7,040
(161)
Transport
4,328
4,433
(105)
Advisory services
4,109
3,232
877
Travel expenses and allowances
946
700
246
Commissions
1,183
994
189
Directors’ fees
1,161
861
300
Insurance
1,135
864
271
Canteen
1,000
796
204
Other costs
6,907
6,221
686
Total
44,923
50,180
(5,257)
The main outsourced processing includes hot moulding of brass and steel blanking as well
as some mechanical processing and assembly.
Energy and gas costs are posted net of tax benefits related to public contributions for
electricity and gas consumption, amounting to €675 thousand.
The increase in costs for advisory services is related to the extraordinary transactions
(acquisition of MEC and capital increase) carried out during the year.
Other costs included expenses for the registration of patents, waste disposal, cleaning,
leasing third-party assets and other minor charges.
Sabaf Group | Consolidated financial statements at 31 December 2023
68
29. PERSONNEL COSTS
2023
2022
Change
Salaries and wages
38,959
31,750
7,209
Social Security costs
11,442
9,685
1,757
Temporary agency workers
4,196
5,617
(1,421)
Post-employment benefit and other
costs
3,020
1,740
1,280
Stock grant plan
543
1,134
(591)
Total
58,160
49,926
8,234
The number of Group employees at 31.12.2023 was 1,641 (1,238 at 31.12.2022) and the
number of temporary agency workers was 117 (115 at 31.12.2022). The increase in the
number of employees compared to the previous year was 402, of which 180 following the
acquisition of MEC. The increase in personnel costs, compared to the previous year, is
mainly due to the change in the scope of consolidation, as well as the inflationary dynamics
in 2023, with particular reference to the Turkish subsidiary.
The item "Stock Grant Plan" included the measurement at 31 December 2023 of the fair
value of options to the allocation of shares of the Parent Company assigned to Group
employees. For details of the Stock Grant Plan, refer to Note 40.
30. OTHER OPERATING COSTS
2023
2022
Change
Non-income taxes
603
729
(126)
Other operating expenses
598
614
(16)
Contingent liabilities
407
238
169
Losses and write-downs of trade
receivables
34
1
33
Provisions for risks
20
21
(1)
Other provisions
73
28
45
Total
1,735
1,631
104
Non-income taxes chiefly relate to property tax.
31. FINANCIAL INCOME
2023
2022
Change
Interest from time deposit
1,225
-
1,225
Interest rate derivatives
32
1,753
(1,721)
Interest from bank current accounts
260
154
106
Other financial income
298
10
288
Total
1,815
1,917
(102)
Interest from time deposit, equal to €1,225 thousand, refers to interest income accrued on
time deposit accounts of some foreign subsidiaries; these are temporary investments of
liquidity in excess of normal operations at better yields than ordinary deposits.
Sabaf Group | Consolidated financial statements at 31 December 2023
69
32. EXPENSES FROM HYPERINFLATION/FINANCIAL EXPENSES
2023
2022
Change
Expenses from hyperinflation
5,276
9,023
(3,747)
Interest paid to banks
3,453
1,340
2,113
Interest paid on finance lease contracts
219
105
114
Banking expenses
340
222
118
MEC option valuation adjustment (Note
16)
855
-
855
Other financial expense
381
342
39
Financial expenses
5,248
2,009
3,239
As from 2022, the effect of inflation accounting on the Turkish subsidiaries, which
impacted some financial statement items and resulted in total expenses of € 5,276
thousand, was reflected in the financial statements. For an appropriate and thorough
analysis, please refer to the specific paragraph in the Explanatory Notes to these Financial
Statements. The effects of applying IAS 29 for each item in the consolidated income
statement are also shown in the annex to the Report on Operations.
33. EXCHANGE RATE GAINS AND LOSSES
In 2023, the Group reported net foreign exchange losses of €2,359 thousand, versus net
losses of €515 thousand in 2022. The main portion of 2023 foreign exchange losses reflect
the devaluation of the Turkish lira and arise from the translation into lira (the currency in
which the financial statements of the Group's Turkish companies are prepared) of trade
and financial payables denominated in euro.
34. INCOME TAXES
2023
2022
Change
Current taxes for the year
690
2,080
(1,390)
Deferred tax assets and liabilities
(4,371)
(4,932)
561
Taxes related to previous financial years
295
(188)
483
Total
(3,386)
(3,040)
(346)
Reconciliation between the tax burden booked in the financial statements and the
theoretical tax burden calculated according to the statutory tax rates currently in force in
Italy is shown in the following table:
2023
2022
Theoretical income tax
136
2,909
Permanent tax differences
(268)
18
Taxes related to previous financial years
(15)
(158)
Tax effect from different foreign tax rates
169
(112)
Effect of non-recoverable tax losses
959
324
“Energy intensive contribution” tax benefit
(165)
(515)
“Super and Iperammortamento” tax benefit
(631)
(749)
ACE tax benefit
(75)
(285)
Patent Box benefit
(635)
-
Sabaf Group | Consolidated financial statements at 31 December 2023
70
Revaluation of fixed assets in Turkey
(975)
(3,661)
Tax incentives for investments in Turkey
(1,182)
(1,839)
Other differences
(946)
479
Income taxes booked in the accounts, excluding IRAP and
withholding taxes (current and deferred)
(3,628)
(3,589)
IRAP (current and deferred)
242
480
Substitute tax on realignment of property values
-
69
Total
3,386
3,040
Theoretical taxes were calculated applying the current corporate income tax (IRES) rate,
i.e. 24% to the pre-tax result. IRAP is not taken into account for the purpose of
reconciliation because, as it is a tax with a different assessment basis from pre-tax profit,
it would generate distorting effects.
In these consolidated financial statements, the Group recognised:
▪ the tax benefits relating to "Superammortamento" (Super amortisation) and
"Iperammortamento" (Hyper amortisation), related to the investments made in
Italy, amounting to €631 thousand (€749 thousand in 2022);
▪ the tax benefits deriving from the investments made in Italy amounting to €1,182
thousand (€1,839 thousand in 2022);
▪ the tax benefits deriving from the Patent Box for the years 2020 and 2021,
amounting to €635 thousand, following the prior agreement signed with the Tax
Authorities in 2023;
▪ the tax benefits deriving from the tax exemption on government grants for
electricity and gas consumption, amounting to €165 thousand (€515 thousand in
2022).
35. EARNINGS PER SHARE
Basic and diluted EPS are calculated based on the following data:
Earnings
(
€
/000)
2023
2022
Profit for the year
3,103
15,249
Number of shares
2023
2022
Weighted average number of ordinary shares for
determining basic earnings per share
11,812,152
11,255,384
Dilutive effect from potential ordinary shares
-
-
Weighted average number of ordinary shares for
determining diluted earnings per share
11,812,152
11,255,384
Earnings per share
(in
€
)
2023
2022
Basic earnings per share
0.263
1.355
Diluted earnings per share
0.263
1.355
Basic earnings per share are calculated on the average number of outstanding shares
minus the average number of treasury shares, equal to 238,941 in 2023 (278,066 in 2022).
Diluted earnings per share are calculated taking into account any shares approved but not
yet subscribed.
Sabaf Group | Consolidated financial statements at 31 December 2023
71
36. DIVIDENDS
No dividends were paid out during 2023. With regard to the current year, the Directors
have recommended payment of a dividend of €0.54 per share, subject to approval of
shareholders in the annual Shareholders' Meeting and therefore not included under
liabilities in these financial statements. The dividend proposed is scheduled for payment
on 29 May 2024 (ex-date 27 May and record date 28 May).
37. INFORMATION BY BUSINESS SEGMENT
Information by business segment for 2023 and 2022 is provided below
2023 FY
Gas parts
(household
and
professional)
Hinges
Electronic
components
Unallocated
Revenues
and Costs
Total
Sales
144,010
70,410
24,689
(1,160)
237,949
Ebit
8,942
5,188
3,834
(6,902)
11,062
2022 FY
Gas parts
(household
and
professional)
Hinges
Electronic
components
Unallocated
Revenues
and Costs
Total
Sales
157,365
68,941
25,544
1,203
253,053
Ebit
10,588
6,677
8,723
(4,101)
21,887
Unallocated revenues and costs refer to auxiliary or common activities, such as overhead
costs, which cannot be allocated to individual business segments.
38. INFORMATION ON FINANCIAL RISK
Categories of financial instruments
In accordance with IFRS 7, a breakdown of the financial instruments is shown below,
among the categories set forth in IAS 39:
31/12/2023
31/12/2022
Financial assets
Amortised cost
Cash and cash equivalents
36,353
20,923
Term bank deposits
6,254
786
Trade receivables and other receivables
59,694
64,821
Fair value through profit or loss
Derivatives to hedge cash flows
877
1,710
Sabaf Group | Consolidated financial statements at 31 December 2023
72
Hedge accounting
Derivatives to hedge cash flows
126
-
Financial liabilities
Amortised cost
Loans
104,864
107,212
Other financial liabilities
175
546
Trade payables
42,521
39,628
Fair value through profit or loss
Derivatives to hedge cash flows
11,721
-
Hedge accounting
Derivatives to hedge cash flows
-
28
The Group is exposed to financial risks related to its operations, mainly:
▪ credit risk, with special reference to normal trade relations with customers;
▪ market risk, relating to the volatility of prices of commodities, foreign exchange
and interest rates;
▪ liquidity risk, which can be expressed by the inability to find financial resources
necessary to ensure Group operations.
It is part of the Sabaf Group’s policies to hedge exposure to changes in prices and in
fluctuations in exchange and interest rates via derivative financial instruments. Hedging is
done using forward contracts, options or combinations of these instruments. Generally
speaking, the maximum duration covered by such hedging does not exceed 18 months.
The Group does not engage in speculative transactions. When the derivatives used for
hedging purposes meet the necessary requisites, hedge accounting rules are followed.
Credit risk management
Trade receivables involve producers of domestic appliances, multinational groups and
smaller manufacturers in a few or single markets. The Group assesses the creditworthiness
of all its customers at the start of supply and systemically at least on an annual basis. The
procedure adopted for credit management includes, inter alia:
▪ the assignment of a specific credit limit for each customer;
▪ weekly verification of receivables overdue;
▪ the sending of payment reminders on a monthly basis;
▪ the definition of a time limit after credit expiry beyond which deliveries are blocked
(no deliveries and no confirmation of new orders).
The Group factors receivables with factoring companies based on without recourse
agreements, thereby transferring the related risk.
A credit insurance policy is in place, which guarantees cover for approximately 50% of
trade receivables.
Credit risk relating to customers operating in emerging economies is generally attenuated
by the expectation of revenue through letters of credit.
Forex risk management
The key currencies other than the euro to which the Group is exposed are the US dollar,
the Brazilian real and the Turkish lira, in relation to sales made in dollars (chiefly on some
Asian and American markets) and the production units in Brazil and Turkey. The sales
Sabaf Group | Consolidated financial statements at 31 December 2023
73
prices of the Turkish subsidiary are exclusively denominated in euro or US dollars; those
of the Brazilian subsidiary are denominated in Brazilian real for domestic sales and in US
dollars for exports. Sales in US dollars represented 25% of total turnover in 2023, while
purchases in dollars represented 7% of total turnover. During the year, operations in
dollars were partially hedged through forward sales contracts. At 31 December 2023, the
Group had in place forward sales contracts of USD 3.5 million, maturing in December 2024
at an average exchange rate of 1.06721. With reference to these contracts, the Group
applies hedge accounting, checking compliance with IFRS 9.
The table below shows the balance sheet and income statement effects of forward sales
contracts recognised under hedge accounting.
(amounts in
€
/000)
2023
Increase in financial assets
90
Reduction in financial liabilities
28
Adjustment to the Cash Flow Hedge reserve (equity reserve)
76
Positive impact through profit or loss
29
The following table shows the characteristics of the derivative financial instruments
described in the previous paragraph.
Exchange rate risk management: cash flow hedge in accordance with IFRS 9 on commercial
transactions
Company
Counterparty
Instrument
Maturity
Value
date
Notional
Fair value hierarchy
Faringosi
Hinges s.r.l.
BPER Banca
Forward
28/03/2024
USD
500,000
2
27/06/2024
500,000
30/09/2024
500,000
31/12/2024
500,000
C.M.I. S.r.l.
BPER Banca
Forward
03/01/2024
USD
750,000
03/04/2024
750,000
Sensitivity analysis
With reference to financial assets and liabilities in US dollars at 31 December 2023, a
hypothetical and immediate revaluation of 10% of euro against the dollar would have led
to a loss of €1,843 thousand.
Net value of assets and liabilities in foreign subsidiaries
The net value of assets and liabilities in foreign subsidiaries constitutes an investment in
foreign currency, which generates a translation difference on consolidation of the Group,
with an impact on the comprehensive income statement and the financial position. The
table below shows the impact on the Group's equity of a 10% increase or decrease in the
value of each currency against the euro at the end of 2023:
Sabaf Group | Consolidated financial statements at 31 December 2023
74
Value date
Effect on Group Shareholders' Equity
Brazilian real
+/- 1,796
Turkish lira
+/- 6,428
Mexican peso
+/- 1,094
Indian Rupee
+/- 574
Chinese renminbi
+/- 45
US Dollar
+/- 1,112
Total
+/- 11,049
Interest rate risk management
Excluding the financial liabilities related to the put option on minorities and leases, at the
end of 2023, approximately 68% of the Group's gross financial debt was at a fixed rate or
converted to a fixed rate by entering into interest rate swaps (IRS) when the loan was
opened. As 31 December 2023, IRS totalling €17.3 million were in place, mirrored in loans
with the same residual debt. The derivative contracts were not designated as a cash flow
hedge and were therefore recognised using the "fair value through profit or loss" method.
The following table shows the characteristics of the derivative financial instruments
described in the previous paragraph.
Company
Counterparty
Instrumen
t
Maturity
Value
date
Notional
Fair value
hierarchy
Sabaf S.p.A.
Intesa Sanpaolo
IRS
15/06/2024
EUR
1,200,000
2
Intesa Sanpaolo
15/06/2024
370,000
Crédit Agricole
30/06/2025
4,200,000
Mediobanca
28/04/2027
10,660,000
P.G.A. S.r.l.
Intesa Sanpaolo
29/07/2025
78,743
Sabaf Turkey
Intesa Sanpaolo
17/06/2024
830,000
Sensitivity analysis
With reference to financial liabilities at variable rate at 31 December 2023, a hypothetical
and immediate 1% increase in interest rates would have led to a loss of €374 thousand.
Commodity price risk management
A significant portion of the Group’s purchase costs is represented by aluminium, steel and
brass. Based on market conditions and contractual agreements, the Group may not be able
to pass on changes in raw material prices to customers in a timely and/or complete
manner, with consequent effects on margins. The Group protects itself from the risk of
changes in the price of aluminium, steel and brass with supply contracts signed with
suppliers for delivery up to twelve months in advance or, alternatively, with derivative
financial instruments. In 2023 and 2022, the Group did not use financial derivatives on
commodities.
Liquidity risk management
The Group operates with a debt ratio considered physiological (net financial
debt/shareholders' equity at 31 December 2023 of 42.9%, net financial debt/EBITDA of
Sabaf Group | Consolidated financial statements at 31 December 2023
75
2.47) and has unused short-term lines of credit. To minimise the risk of liquidity, the
Administration and Finance Department:
▪ maintains a correct balance of net financial debt, financing investments with
capital and with medium to long-term debt.
▪ verifies systematically that the short-term accrued cash flows (amounts received
from customers and other income) are expected to accommodate the deferred
cash flows (short-term financial debt, payments to suppliers and other
outgoings);
▪ regularly assesses expected financial needs in order to promptly take any
corrective measures.
An analysis by expiry date of financial payables at 31 December 2023 and 31 December
2022 is shown below:
At 31 December 2023
Carrying
value
Contractual
cash flows
Within 3
months
From 3
months to
1 year
From 1 to
5 years
More
than 5
years
Short-term bank loans
396
396
396
-
-
-
Unsecured loans
68,009
73,234
2,370
21,158
49,574
131
Bond issue
29,720
34,680
-
780
14,964
18,936
Finance leases
6,739
7,539
493
1,454
5,298
294
MEC option
11,721
11,721
-
-
11,721
-
Due to P.G.A. shareholders
175
175
-
-
175
-
Total financial payables
116,760
127,745
3,259
23,392
81,732
19,361
Trade payables
42,521
42,521
36,999
5,516
5
-
Total
159,281
170,266
40,258
28,908
81,737
19,361
At 31 December 2022
Carrying
value
Contractual
cash flows
Within 3
months
From 3
months to 1
year
From 1 to
5 years
More
than 5
years
Short-term bank loans
6,259
6,259
6,259
-
-
-
Unsecured loans
68,208
72,363
2,544
19,576
49,149
1,094
Bond issue
29,685
33,939
-
563
8,251
25,125
Finance leases
3,088
3,135
326
740
1,880
189
Payables to C.M.I.
shareholders
546
546
371
-
175
-
Total financial payables
107,786
116,242
9,500
20,879
59,455
26,408
Trade payables
39,628
39,628
36,092
3,536
-
-
Total
147,414
155,870
45,592
24,415
59,455
26,408
The various due dates are based on the period between the end of the reporting period
and the contractual expiry date of the commitments, the values indicated in the table
correspond to non-discounted cash flows. Cash flows include the shares of principal and
interest; for floating rate liabilities, the shares of interest are determined based on the value
of the reference parameter at the end of the reporting period and increased by the spread
set forth in each contract.
Hierarchical levels of fair value assessment
The revised IFRS 7 requires that financial instruments reported in the statement of
financial position at fair value be classified based on a hierarchy that reflects the
Sabaf Group | Consolidated financial statements at 31 December 2023
76
significance of the input used in determining the fair value. IFRS 7 makes a distinction
between the following levels:
▪ Level 1 – quotations found on an active market for assets or liabilities subject to
assessment;
▪ Level 2 - input other than prices listed in the previous point, which can be observed
directly (prices) or indirectly (derived from prices) on the market;
▪ Level 3 – input based on observable market data.
The following table shows the financial assets and liabilities valued at fair value at 31
December 2023, by hierarchical level of fair value assessment.
Level 1
Level 2
Level 3
Total
Other financial assets (derivatives on interest rates)
-
877
-
877
Total assets
-
877
-
877
Other financial liabilities (MEC put option)
-
-
11,721
11,721
Total liabilities
-
-
11,721
11,721
With reference to the financial liability related to the put option in favor of the minority
shareholders of MEC, a sensitivity analysis was carried out aimed at verifying the impacts
deriving from any changes in the discount rate and in the exchange rate. In particular,
following increases/decreases of 0.5% in the discount rate and increases/decreases of
10% in the exchange rate, the value of the put option is subject to variations of between
+€1.7 million and -€1.4 million.
39. RELATED PARTY TRANSACTIONS
Transactions between consolidated companies were derecognised from the consolidated
financial statements and are not reported in these notes. The table below illustrates the
impact of all transactions between the Group and other related parties on the balance sheet
and income statement.
Impact of related-party transactions on balance sheet items
Total
2023
Non-consolidated
subsidiaries
Other
related
parties
Total related
parties
Impact on
the total
Trade payables
42,521
-
4
4
0.00%
Total
2022
Non-consolidated
subsidiaries
Other
related
parties
Total related
parties
Impact on
the total
Trade payables
(39,628)
-
(29)
(29)
0.07%
Impact of related-party transactions on income statement items
Total
2023
Non-
consolidated
subsidiaries
Other related
parties
Total
related
parties
Impact on
the total
Services
(44,923)
-
(27)
(27)
0.05%
Total
2022
Non-
consolidated
subsidiaries
Other related
parties
Total
related
parties
Impact on
the total
Services
(50,180)
-
(27)
(27)
0.05%
Sabaf Group | Consolidated financial statements at 31 December 2023
77
Transactions are regulated by specific contracts regulated at arm’s length conditions.
Fees to Directors,
Statutory Auditors and Executives with strategic
responsibilities
Please see the 2023 Report on Remuneration for this information.
40. SHARE-BASED PAYMENTS
A free stock grant plan is in place, which was approved by the Shareholders' Meeting on 6
May 2021; the relevant Regulations were approved by the Board of Directors on 13 May
2021.
Purpose
The Plan aims to promote and pursue the involvement of the beneficiaries whose activities
are considered relevant for the implementation of the contents and the achievement of the
objectives set out in the Business Plan, foster loyalty development and motivation of
managers, by increasing their entrepreneurial approach as well as align the interests of
management with those of the Company's shareholders more closely, with a view to
encouraging the achievement of significant results in the economic and asset growth and
sustainability of the Company and of the Group.
Subject matter
The subject-matter of the Plan is the free allocation to the Beneficiaries of a maximum of
260,000 Options, each of which entitles them to receive free of charge, under the terms
and conditions provided for by the Regulations of the relevant Plan, 1 Sabaf S.p.A. Share.
The free allocation of Sabaf S.p.A. shares is conditional on the achievement, in whole or in
part, with progressiveness, of the business targets related to the ROI and EBITDA and
social and environmental targets.
Beneficiaries
The Plan is intended for persons who hold or will hold key positions in the Company
and/or its Subsidiaries, with reference to the implementation of the contents and the
achievement of the objectives of the 2021 - 2023 Business Plan. A total of 226,000 Rights
were allocated to the Beneficiaries already identified.
Deadline
The 2021 - 2023 Plan expires on 31 December 2024.
Accounting impacts and Fair Value measurement methods
In connection with this Plan, €543 (Note 29) were recognised in personnel costs during the
year, an equity reserve of the same amount (Note 14) was recognised as a balancing entry.
In line with the date on which the beneficiaries became aware of the assignment of the
rights and terms of the plan, the grant date was set at 13 May 2021.
Sabaf Group | Consolidated financial statements at 31 December 2023
78
The main assumptions made at the beginning of the vesting period and the methods for
determining the fair value at the end of the reporting period are illustrated below. The
following economic and financial parameters were taken into account in determining the
fair value per share at the start of the vesting period:
Share price on grant date adjusted for dividends
23.09
Dividend yield
2.60%
Expected volatility per year
28%
Interest rate per year
-0.40%
Based on the exercise right at the different dates established by the Plan Regulations and
on the estimate of the expected probability of achieving the objectives for each reference
period, the unitary fair value at 31 December 2023 was determined as follows:
Rights relating to objectives
measured on ROI
Total value on ROI
10.89
Fair Value
3.81
Rights on ROI
35%
Rights relating to objectives
measured on EBITDA
Total value on EBITDA
12.75
Fair Value
5.10
Rights on EBITDA
40%
Rights relating to ESG
objectives measured on
personal training
Total value on "Personal
training”
20.41
Fair Value
1.02
Rights on "Personal
training”
5%
Rights relating to ESG
objectives measured on safety
indicator
Total value on "Safety
indicator”
7.82
Fair Value
0.39
Rights on "Safety
indicator”
5%
Rights relating to ESG
objectives measured on
reduction of emissions.
Total value on
"Reduction of emissions”
20.41
Fair Value
3.06
Rights on "Reduction of
emissions”
15%
Fair Value per share
15.65
41. CAPITAL MANAGEMENT
For the purposes of managing the Group's capital, it has been defined that this includes
the issued share capital, the share premium reserve and all other capital reserves
attributable to the shareholders of the Parent Company. The main objective of capital
management is to maximise the value for shareholders. In order to maintain or correct its
financial structure, the Group may intervene in dividends paid to shareholders, purchase
its own shares, redeem capital to shareholders or issue new shares. The Group controls
Sabaf Group | Consolidated financial statements at 31 December 2023
79
equity using a gearing ratio consisting of the ratio of net financial debt (as defined in Note
24) to shareholders’ equity. The Group's policy is to keep this ratio below 1. In order to
achieve this objective, the management of the Group's capital aims, among other things,
to ensure that the covenants, linked to loans, which define the capital structure
requirements, are complied with. Violations of covenants would allow the lenders to
demand immediate repayment of loans (Note 15). During the current financial year, there
were no breaches of the covenants linked to loans.
In the years ended 31 December 2023 and 2022, no changes were made to the objectives,
policies and procedures for capital management.
42. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS
Pursuant to the Consob memorandum of 28 July 2006, the Group declares that no
significant non-recurring events or transactions, as defined by the memorandum, took
place in 2023.
43. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
There were no important events after the 2023 reporting period.
44. ATYPICAL AND/OR UNUSUAL TRANSACTIONS
Pursuant to CONSOB memorandum of 28 July 2006, the Group declares that no atypical
and/or unusual transactions as defined by the CONSOB memorandum were carried out
during 2023.
45. COMMITMENTS
Guarantees issued
The Sabaf Group has issued sureties to guarantee consumer and mortgage loans granted
by banks to Group employees for a total of €2,293 thousand (€2,855 thousand at 31 December
2022).
Sabaf Group | Consolidated financial statements at 31 December 2023
80
46. SCOPE OF CONSOLIDATION AND SIGNIFICANT EQUITY INVESTMENTS
COMPANIES CONSOLIDATED USING THE FULL LINE-BY-LINE CONSOLIDATION
METHOD
Company name
Registered
offices
Share
capital
Shareholders
%
ownership
Faringosi Hinges s.r.l.
Ospitaletto (BS)
EUR
90,000
Sabaf S.p.A.
100%
Sabaf do Brasil Ltda
Jundiaì - São
Paulo (Brazil)
BRL
53,348,061
Sabaf S.p.A.
100%
Sabaf Beyaz Esya Parcalari
Sanayi Ve Ticaret Limited
Sirteki (Sabaf Turkey)
Manisa (Turkey)
TRY
733,204,951
Sabaf S.p.A.
100%
Sabaf Appliance Components
Ltd.
Kunshan (China)
CNY
69,951,149
Sabaf S.p.A.
100%
Sabaf US Corp.
Plainfield (USA)
USD
200,000
Sabaf S.p.A.
100%
Sabaf India Private Limited
Bangalore (India)
INR
224,692,120
Sabaf S.p.A.
100%
A.R.C. s.r.l.
Campodarsego
(PD)
EUR
45,000
Sabaf S.p.A.
100%
Sabaf Mexico Appliance
Components
San Louis Potosì
(Mexico)
PESOS
141,003,832
Sabaf S.p.A.
100%
C.M.I. Cerniere Meccaniche
Industriali s.r.l.
Valsamoggia (BO)
EUR
1,000,000
Sabaf S.p.A.
100%
C.G.D. s.r.l.
Valsamoggia (BO)
EUR
26,000
C.M.I. s.r.l.
100%
P.G.A s.r.l.
Fabriano (AN)
EUR
100,000
Sabaf S.p.A.
100%
Sabaf America Inc.
Delaware (USA)
USD
4,000,000
Sabaf S.p.A.
100%
Mansfield Engineered
Components LLC (MEC)
Mansfield (USA)
USD
2,823,248
Sabaf America
51%
Sabaf Group | Consolidated financial statements at 31 December 2023
81
47.GENERAL INFORMATION ON THE PARENT COMPANY
Name of the parent company: Sabaf S.p.A.
Legal status: Joint-stock company (S.p.A.)
Domicile of entity: Italy
Registered and administrative office: Via dei Carpini, 1 – 25035 Ospitaletto ( BS) -
Italy
Main place of business: Via dei Carpini, 1 – 25035 Ospitaletto ( BS) -
Italy
Country of registration: Italy
Contacts: Tel: +39 030 - 6843001
Fax: +39 030 - 6848249
Email: info@sabaf.it
Website: www.sabafgroup.com
Tax information: REA Brescia 347512
Tax code 03244470179
VAT number 01786910982
Type of business:
The purpose of the company is the design, production and sale of gas fittings and burners,
thermostats, safety valves, other components and accessories for household appliances,
as well as sanitary and plumbing fittings in general. The purpose of the company is also
the design, construction and trade of machine tools, automation systems in general and
related equipment, tools, as well as the provision of related maintenance, repair, support
and business organisation services. The company, within the limits set by the relevant
regulations in force, may carry out any other security, property, industrial and commercial
transaction that is deemed necessary, appropriate or useful for the achievement of the
company purpose. It may acquire shareholdings in other companies whose purpose is
similar or related to its own as well as provide personal guarantees or collaterals including
mortgages also for third parties' obligations provided that such activities do not take
precedence over the company's business and are not carried out vis-à-vis the public and
therefore within the limits and in the manner provided for by Legislative Decree No.
385/93; the company can perform the management and coordination function with regard
to its subsidiaries, providing the organisational, technical, managerial and financial support
and coordination deemed appropriate. However, the activities reserved to investment
companies under Legislative Decree No. 41 5/96, and pursuant to the relevant provisions
in force, are excluded.
Sabaf Group | Consolidated financial statements at 31 December 2023
82
Appendix
Information as required by Article 149-duodecies of the CONSOB Issuers’
Regulation
The following table, prepared pursuant to Art. 149-duodecies of the CONSOB Issuers’
Regulation, shows fees relating to 2023 for auditing and for services other than auditing
provided by the Independent Auditors and their network.
(in thousands of Euro)
Party providing the
service
Recipient
Fees pertaining to the
2023 financial year
Audit
EY S.p.A.
Parent company
59
EY S.p.A.
Italian subsidiaries
33
EY network
Foreign subsidiaries
65
Other services
EY S.p.A.
Parent company
83
(1)
EY S.p.A.
Italian subsidiaries
-
Total
240
(1)
Auditing procedures agreement relating to interim management reports; limited review of Disclosure of non-
financial information, fairness opinion for capital increase of 2023.
Sabaf Group | Consolidated financial statements at 31 December 2023
83
Certification of the Consolidated Financial Statements, in accordance with
Article 154 bis of Italian Legislative Decree 58/98
Pietro Iotti, the Chief Executive Officer, and Gianluca Beschi, the Financial
Reporting Officer of Sabaf S.p.A., have taken into account the requirements of
Article 154-bis, paragraphs 3 and 4, of Legislative Decree 58 of 24 February 1998
and can certify:
• the adequacy, in relation to the business characteristics and
• the actual application
of the administrative and accounting procedures for the formation of the
consolidated financial statements during the 2023 financial year.
They also certify that:
• the Consolidated financial statements:
- were prepared in accordance with the international accounting
policies recognised in the European Community in accordance
with EC regulation 1606/2002 of the European Parliament and
Council of 19 July 2002 and with the measures issued in
implementation of Article 9 of Italian Legislative Decree 38/2005;
- are consistent with accounting books and records;
- provide a true and fair view of the operating results, financial
position and cash flows of the issuer and of the companies included
in the consolidation;
• the report on operations contains a reliable analysis of the performance
and results of operations and the situation of the issuer and the companies
included in the scope of consolidation, along with a description of the key
risks and uncertainties to which they are exposed.
Ospitaletto, 19 March 2024
Chief Executive Officer
Pietro Iotti
The Financial Reporting
Officer
Gianluca Beschi
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
84
SABAF S.p.A.
SEPARATE FINANCIAL STATEMENTS
AT 31 DECEMBER 2023
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
85
CORPORATE BODIES
Board of Directors
Chairman
Claudio Bulgarelli
Vice Chairman (*)
Nicla Picchi
Chief Executive Officer
Pietro Iotti
Director
Gianluca Beschi
Director
Cinzia Saleri
Director
Alessandro Potestà
Director (*)
Carlo Scarpa
Director (*)
Daniela Toscani
Director (*)
Stefania Triva
(*) Independent directors
Board of Statutory Auditors
Chairman
Alessandra Tronconi
Statutory Auditor
Alessandra Zunino de Pignier
Statutory Auditor
Mauro Vivenzi
Independent Auditors
EY S.p.A.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
86
Statement of financial position
(in
€
)
NOTES
31/12/2023
31/12/2022
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
1
43,641,088
47,621,810
Investment property
2
691,201
983,333
Intangible assets
4
6,584,238
5,429,576
Equity investments
5
126,074,562
112,505,434
Non-current financial assets
6
15,734,371
10,375,117
- of which from related parties
39
15,734,371
10,375,117
Non-current receivables
7
651,913
634,348
Deferred tax assets
23
2,664,226
3,047,631
Total non-current assets
196,041,599
180,597,248
CURRENT ASSETS
Inventories
8
21,836,419
26,911,220
Trade receivables
9
28,705,680
28,315,040
- of which from related parties
39
15,393,271
8,108,979
Tax receivables
10
6,030,934
5,060,805
- of which from related parties
39
241,331
1,208,542
Other current receivables
11
1,398,665
1,208,792
Current financial assets
12
859,797
2,901,373
- of which from related parties
39
0
1,300,000
Cash and cash equivalents
13
13,899,318
2,604,007
Total current assets
72,730,813
67,001,238
ASSETS HELD FOR SALE
3
0
525,660
TOTAL ASSETS
268,772,412
248,124,145
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY
Share capital
14
12,686,795
11,533,450
Retained earnings, Other reserves
115,751,085
97,244,927
Profit for the year
3,503,797
2,246,997
Total shareholders’ equity
131,941,677
111,025,374
NON-CURRENT LIABILITIES
Loans
16
76,312,511
76,336,237
Post-employment benefit and retirement provisions
18
1,574,371
1,587,836
Provisions for risks and charges
19
297,248
354,595
Deferred tax liabilities
23
549,721
721,195
Total non-current liabilities
78,733,851
78,999,863
CURRENT LIABILITIES
Loans
16
23,692,542
27,241,978
- of which from related parties
39
3,000,000
2,500,000
Other financial liabilities
17
175,000
561,117
Trade payables
20
22,605,272
21,167,682
- of which from related parties
39
1,185,573
1,056,744
Tax payables
21
1,484,669
621,929
- of which from related parties
39
132,816
24,397
Other payables
22
10,139,401
8,506,203
Total current liabilities
58,096,884
58,098,908
LIABILITIES HELD FOR SALE
0
0
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
268,772,412
248,124,145
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
87
Income statement
NOTES
2023
2022
(in
€
)
INCOME STATEMENT COMPONENTS
OPERATING REVENUE AND INCOME
Revenue
25
99,481,864
119,089,523
- of which from related parties
39
19,892,042
17,099,638
Other income
26
7,220,233
6,511,215
- of which from related parties
39
3,206,776
2,921,090
Total operating revenue and income
106,702,097
125,600,738
OPERATING COSTS
Materials
27
(45,935,312)
(52,970,888)
- of which to related parties
39
(3,095,049)
(3,249,022)
Change in inventories
(5,074,801)
(7,074,719)
Services
28
(22,123,910)
(28,629,203)
- of which to related parties
39
(447,295)
(420,521)
Personnel costs
29
(30,072,064)
(30,575,199)
Other operating costs
30
(1,102,203)
(900,987)
Costs for capitalised in-house work
3,123,763
3,068,203
Total operating costs
(101,184,527)
(117,082,793)
OPERATING PROFIT BEFORE DEPRECIATION AND
AMORTISATION,
CAPITAL GAINS/LOSSES, WRITE-DOWNS/WRITE-BACKS
OF NON-CURRENT ASSETS
5,517,571
8,517,946
Depreciations and amortisation
1,2,3,4
(8,198,888)
(8,485,132)
Capital gains/(losses) on disposal of non-current assets
1,867,189
1,565,126
- of which to related parties
39
336,097
1,362,808
Write-downs/write-backs of non-current assets
5
(1,000,000)
(808,000)
- of which to related parties
39
(1,000,000)
(808,000)
EBIT
(1,814,128)
789,939
Financial income
31
574,700
1,973,664
- of which to related parties
39
415,764
309,025
Financial expenses
32
(3,466,228)
(1,573,474)
- of which to related parties
(113,428)
(9,518)
Exchange rate gains and losses
33
(170,993)
353,659
Profits and losses from equity investments
34
6,000,000
177,833
- of which to related parties
6,000,000
177,833
PROFIT BEFORE TAXES
1,123,351
1,721,620
Income taxes
35
2,380,446
525,377
PROFIT FOR THE YEAR
3,503,797
2,246,997
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
88
Comprehensive income statement
2023
2022
(in
€
)
PROFIT FOR THE YEAR
3,503,797
2,246,997
Total profits/losses that will not be subsequently
reclassified under profit (loss) for the year
Actuarial evaluation of post-employment benefit
9,705
169,215
Tax effect
(2,329)
(40,612)
7,376
128,603
Total profits/losses that will not be subsequently
reclassified under profit (loss) for the year
Hedge accounting for derivative financial instruments
13,596
57,857
Total other profits/(losses) net of taxes for the year
20,972
186,460
TOTAL PROFIT
3,524,769
2,433,457
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
89
Statement of changes in shareholders' equity
(
€
/000)
Share
Capital
Share
premium
reserve
Legal
Reserve
Treasury
shares
Actuarial
valuation of
Post-
employment
benefit reserve
Other
reserves
Profit
for the year
Total
shareholders’
equity
Balance at 31 December 2021
11,533
10,002
2,307
(3,904)
(526)
84,953
10,044
114,409
Allocation of 2020 profit:
- Payment of dividends
(6,758)
(6,758)
- to the extraordinary
reserve
3,286
(3,286)
0
Stock grant plan (IFRS 2)
1,134
1,134
Treasury share transactions
682
(875)
(193)
Total profit at
31 December 2021
128
58
2,247
2,433
Balance at 31 December 2022
11,533
10,002
2,307
(3,222)
(399)
88,557
2,247
111,025
Allocation of 2021 profit:
- Payment of dividends
- to the extraordinary
reserve
2,247
(2,247)
0
Share capital increase
1,154
16,158
17,312
Stock grant plan (IFRS 2)
543
543
Treasury share transactions
(462)
(462)
Total profit at
31 December 2022
7
13
3,504
3,524
Balance at 31 December 2023
12,687
26,160
2,307
(3,684)
(392)
91,360
3,504
131,942
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
90
Statement of Cash Flows
(
€
/000)
2023 FY
2022 FY
Cash and cash equivalents at beginning of year
2,604
29,733
Profit for the year
3,504
2,247
Adjustments for:
- Depreciations and amortisation
8,199
8,485
- Realised gains
(1,867)
(1,565)
- Write-downs of non-current assets
1,000
808
- Profits and losses from equity investments
(6,000)
(178)
- Valuation of the stock grant plan
542
1,134
- Net financial income and expenses
2,891
(400)
- Non-monetary foreign exchange differences
(286)
(361)
- Income tax
(2,380)
(525)
Change in post-employment benefit
(6)
(63)
Change in risk provisions
(57)
(496)
Change in trade receivables
(391)
16,879
Change in inventories
5,075
7,075
Change in trade payables
1,438
(12,510)
Change in net working capital
6,122
11,444
Change in other receivables and payables, deferred taxes
3,926
(973)
Payment of taxes
0
(4,360)
Payment of financial expenses
(2,725)
(1,472)
Collection of financial income
575
372
Cash flows from operations
13,437
14,097
Investments in non-current assets
- intangible
(2,367)
(2,749)
- tangible
(6,433)
(8,435)
- financial
(14,569)
(27,284)
Disposal of non-current assets
6,479
4,632
Cash flow absorbed by investments
(16,890)
(33,836)
Free cash flow
(3,453)
(19,739)
Repayment of loans
(30,415)
(19,368)
Raising of loans
26,087
19,728
Change in financial assets
(3,774)
624
Purchase/Sale of treasury shares
(462)
(1,862)
Payment of dividends
0
(6,690)
Share capital increase
17,312
0
Collection of dividends
6,000
178
Cash flow absorbed by financing activities
(14,748)
(7,390)
Total cash flows
(11,295)
(27,129)
Cash and cash equivalents at end of year (Note 13)
13,899
2,604
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
91
EXPLANATORY NOTES
ACCOUNTING STANDARDS
Statement of compliance and basis of presentation
The separate financial statements of Sabaf S.p.A. for the financial year 2023 have been prepared
in compliance with the International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board (IASB) and adopted by the European Union.
Reference to IFRS also includes all current International Accounting Standards (IAS).
The separate financial statements are drawn up in euro, which is the currency in the economy
in which the Company operates. The income statement, the comprehensive income statement
and the statement of financial position schedules are prepared in euro, while the statement of
cash flows, the statement of changes in shareholders’ equity and the values reported in the
explanatory notes are in thousands of euro.
The financial statements have been prepared on a historical cost basis except for some
revaluations of property, plant and equipment undertaken in previous years, and are considered
a going concern. With reference to this assumption, the Company assessed that it is a going
concern (as defined by paragraphs 25 and 26 of IAS 1), also due to the strong competitive
position, high profitability of the Sabaf Group and solidity of the financial structure.
Sabaf S.p.A., as the Parent Company, also prepared the consolidated financial statements of the
Sabaf Group at 31 December 2023.
Financial statements
The Company adopted the following formats:
• current and non-current assets and current and non-current liabilities are stated
separately in the statement of the financial position;
• an income statement that expresses costs using a classification based on the nature of
each item;
• a comprehensive income statement that expresses revenue and expense items not
recognised in profit for the year as required or permitted by IFRS;
• a statement of cash flows that presents cash flows originating from operating activity,
using the indirect method.
Use of these formats permits the most meaningful representation of the Company’s capital,
business and financial status.
Accounting policies
The accounting standards and policies applied for the preparation of the separate financial
statements at 31 December 2023, unchanged versus the previous year, are shown below:
Property, plant and equipment
These are recognised at purchase or manufacturing cost. The cost includes directly chargeable
ancillary costs. These costs also include revaluations undertaken in the past based on monetary
revaluation rules or pursuant to company mergers.
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Depreciation is calculated according to rates deemed appropriate to spread the carrying value
of tangible assets over their useful working life. Estimated useful working life in years, unchanged
compared to previous financial years, is as follows:
Buildings
33
Light constructions
10
General plant
10
Specific plant and machinery
6 – 10
Equipment
4
Furniture
8
Electronic equipment
5
Vehicles and other transport means
5
Ordinary maintenance costs are expensed in the year in which they are incurred; costs that
increase the asset value or useful working life are capitalised and depreciated according to the
residual possibility of utilisation of the assets to which they refer.
Land is not depreciated.
Leased assets
The Company assesses at the time of signing an agreement whether it is, or contains, a lease,
or if the contract gives the right to control the use of an identified asset for a period of time in
exchange for a consideration.
The Company adopts a single recognition and measurement model for all leases according to
which the assets acquired relating to the right of use are shown under assets at purchase value
less depreciation, any impairment losses and adjusted for any re-measurement of lease
liabilities.
Assets are depreciated on a straight-line basis from the starting date of the agreement until the
end of the useful life of the asset or the end of the lease agreement, whichever comes first. Set
against recognition of such assets, the amounts payable to the lessor, are posted among short-
and medium-/long-term payables, by measuring them at the present value of the lease
payments not yet made. Moreover, financial charges pertaining to the period are charged to the
income statement.
Adoption of the accounting standard IFRS 16 “Leases”
The Company applied IFRS 16 from 1 January 2019 by using the amended retrospective
approach.
In adopting IFRS 16, the Company made use of the exemption granted in paragraph 5 a) in
relation to leases with a duration of less than 12 months (known as short-term leases) and the
exemption granted in paragraph 5 b) in relation to lease agreements whose underlying asset is
a low-value asset. For these agreements, lease payments are recognised in the income statement
on a straight-line basis for the duration of the respective agreements.
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When evaluating the lease liabilities, Sabaf S.p.A. discounted the payments due for the lease
using the incremental borrowing rate, the weighted average of which was 1.78% on 31
December 2023.
The lease term is calculated based on the non-cancellable period of the lease, including the
periods covered by the option to extend or to terminate the lease if it is reasonably certain that
those options will be exercised or not exercised, taking account of all relevant factors that create
an economic incentive relating to those decisions.
Assets held for sale
The Company classifies non-current assets as held for sale if their carrying value will be
recovered mainly through a sale transaction, rather than through their continued use. These
non-current assets classified as held for sale are measured at the lower of their carrying value
and their fair value less costs to sell. Selling costs are the additional costs directly attributable to
the sale, excluding financial expenses and taxes.
The condition for classification as held for sale is only met when the sale is highly probable and
the asset is available for immediate sale in its present condition. The actions required to
complete the sale should indicate that significant changes to the sale are unlikely or that the sale
will be cancelled. Management must be committed to the sale, which should be completed
within one year from the date of classification.
Depreciation of property, plant and equipment and amortisation of intangible assets stops when
they are classified as available for sale.
Assets and liabilities classified as held for sale are presented separately in the financial
statements.
Investment property
Investment property is valued at cost, including revaluations undertaken in the past based on
monetary revaluation rules or pursuant to company mergers.
The depreciation is calculated based on the estimated useful life, considered to be 33 years.
If the recoverable amount of the investment property – determined based on the market value
of the properties – is estimated to be lower than its carrying value, the asset’s carrying value is
reduced to the lower recoverable amount, recognising impairment in the income statement.
When there is no longer any reason for a write-down to be maintained, the carrying value of the
asset (or cash generating unit) is increased to the new value stemming from the estimate of its
recoverable amount – but not beyond the net carrying value that the asset would have had if it
had not been written down for impairment. Reversal of impairment loss is recognised in the
income statement.
Intangible assets
As established by IAS 38, intangible assets acquired or internally produced are recognised as
assets when it is probable that use of the asset will generate future economic benefits and when
asset cost can be measured reliably. If it is considered that these future economic benefits will
not be generated, the development costs are written down in the year in which this is
ascertained.
Such assets are measured at purchase or production cost and - if the assets concerned have a
finite useful life - are amortised on a straight-line basis over their estimated useful life.
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The useful life of projects for which development costs are capitalised is estimated to be 10
years.
The SAP management system is amortised over five years.
Equity investments
Equity investments in subsidiaries, associates and joint-ventures are stated in the accounts at
cost. In accordance with IAS 36, the value recognised in the financial statements is subject to
an impairment test if there are indications of possible impairment.
Equity investments in companies other than subsidiaries, associates and joint ventures are
classified as financial assets measured at fair value, which normally corresponds to the
transaction price including directly attributable transaction costs. Subsequent changes in fair
value are recognised in the Income statement (FVPL) or, if the option is exercised in accordance
with the standard, in the Statement of comprehensive income (FVOCI) under the heading
"Instrument reserve at FVOCI".
Impairment
At each end of the reporting period, Sabaf S.p.A. reviews the carrying value of its property, plant
and equipment, intangible assets and equity investments to determine whether there are signs
of impairment of these assets. If there is any such indication, the recoverable amount of said
assets is estimated so as to determine the total of the write-down. If it is not possible to estimate
the recoverable amount individually, the Company estimates the recoverable amount of the
cash generating unit (CGU) to which the asset belongs. In particular, the recoverable amount of
the cash generating units (which generally coincide with the legal entity to which the capitalised
assets refer) is verified by determining the value of use. The recoverable amount is the higher of
the net selling price and value of use. In measuring the value of use, future cash flows net of
taxes, estimated based on past experience, are discounted to their present value using a pre-tax
rate that reflects current market valuations of the present cost of money and specific asset risk.
The main assumptions used for calculating the value of use concern the discount rate, growth
rate, expected changes in selling prices and cost trends during the period used for the
calculation. The growth rates adopted are based on future market expectations in the relevant
sector. Changes in the sales prices are based on past experience and on the expected future
changes in the market. The Company prepares operating cash flow forecasts based on the most
recent budgets approved by the Boards of Directors of the investees, draws up four-year
forecasts and determines the terminal value (current value of perpetual income), which
expresses the medium- and long-term operating flows in the specific sector.
Furthermore, the Company checks the recoverable amount of its investees at least once a year
when the separate financial statements are prepared.
If the recoverable amount of an asset (or CGU) is estimated to be lower than its carrying value,
the asset’s carrying value is reduced to the lower recoverable amount, recognising impairment
of value in the income statement.
When there is no longer any reason for a write-down to be maintained, the carrying value of the
asset (or cash generating unit) is increased to the new value stemming from the estimate of its
recoverable amount – but not beyond the net carrying value that the asset would have had if it
had not been written down for impairment. Reversal of impairment loss is recognised in the
income statement.
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Inventories
Inventories are measured at the lower of purchase or production cost – determined using the
weighted average cost method – and the corresponding fair value represented by the
replacement cost for purchased materials and by the presumed realisable value for finished and
semi-processed products – calculated taking into account any manufacturing costs and direct
selling costs yet to be incurred. Inventory cost includes accessory costs and the portion of direct
and indirect manufacturing costs that can reasonably be assigned to inventory items. Inventories
subject to obsolescence and low turnover are written down in relation to their possibility of use
or realisation. Inventory write-downs are derecognised in subsequent years if the reasons for
such write-downs cease to exist.
Trade receivables and other financial assets
Initial recognition
Upon initial recognition, financial assets are classified, as the case may be, on the basis of
subsequent measurement methods, i.e. at amortised cost, at fair value recognised in other
comprehensive income (OCI) and at fair value recognised in the income statement.
The classification of financial assets at initial recognition depends on the characteristics of the
contractual cash flows of the financial assets and on the business model that the Company uses
to manage them.
Trade receivables that do not contain a significant financing component are valued at the
transaction price determined in accordance with IFRS 15. See the “Revenue from Contracts with
Customers” paragraph.
Other financial assets are recognised at fair value plus, in the case of a financial asset not at fair
value recognised in the income statement, transaction costs.
For a financial asset to be classified and measured at amortised cost or at fair value recognised
in OCI, it must generate cash flows that depend solely on the principal and interest on the
amount of principal to be repaid (known as ‘solely payments of principal and interest (SPPI)’).
This measurement is referred to as the SPPI test and is carried out at the instrument level.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below.
Financial assets at amortised cost (debt instruments)
This category is the most important for the Company. The Company measures the financial
assets at amortised cost if both of the following requirements are met:
• the financial asset is held as part of a business model whose objective is to hold financial
assets for the purpose of collecting contractual cash flows
and
• the contractual terms of the financial asset envisage, at certain dates, cash flows represented
solely by payments of principal and interest on the amount of principal to be repaid.
Financial assets at amortised cost are subsequently measured using the effective interest method
and are subject to impairment
.
Gains and losses are recognised in the income statement when
the asset is derecognised, modified or revalued.
Financial assets at amortised cost of the Company include trade receivables.
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Financial assets at fair value through profit or loss
This category includes all assets held for trading, assets designated at initial recognition as
financial assets measured at fair value with changes recognised in the income statement, or
financial assets that must be measured at fair value. Assets held for trading are all those assets
acquired for sale or repurchase in the short term. Derivatives, separated or otherwise, are
classified as financial instruments held for trading, unless they are designated as effective
hedging instruments. Financial assets with cash flows that are not represented solely by
principal and interest payments are classified and measured at fair value through profit or loss,
regardless of the business model. Financial instruments at fair value with changes recognised
in the income statement are recognised in the statement of financial position at fair value and
net changes in fair value are recognised in the income statement. This category includes
derivative instruments.
The Company does not hold financial assets as financial assets at fair value through profit or
loss with reclassification of cumulative gains and losses or financial assets as financial assets at
fair value through profit or loss without reversal of cumulative gains and losses upon
derecognition.
Derecognition
A financial asset (or, if applicable, part of a financial asset or part of a group of similar financial
assets) is firstly written off (e.g. removed from the statement of financial position of the
Company) when:
the rights to receive cash flows from the asset are extinguished, or
the Company transferred to a third party the right to receive financial flows from the asset or
has taken on the contractual obligation to pay them fully and without delay and (a) transferred
substantially all the risks and benefits of the ownership of the financial asset or (b) did not
substantially transfer or retain all the risks and benefits of the asset, but transferred their
control.
If the Company has transferred the rights to receive financial flows from an asset or has signed
an agreement on the basis of which it retains the contractual rights to receive the cash flows of
the financial asset, but assumes a contractual obligation to pay the financial flows to one or more
beneficiaries (pass-through), it considers whether or to what extent it has retained the risks and
benefits concerning the ownership. If it has not substantially transferred or retained all the risks
and benefits or has not lost control over it, the asset continued to be recognised in the financial
statements of the Company to the extent of its residual involvement in the asset itself. In this
case, the company also recognises an associated liability. The transferred asset and the
associated liability are measured in such a way as to reflect the rights and obligations that pertain
to the Company. When the residual involvement of the entity is a guarantee in the transferred
asset, the involvement is measured based on the amount of the asset or the maximum amount
of the consideration received that the entity could be obliged to pay, whichever lower.
Provisions for risks and charges
Provisions for risks and charges are provisioned to cover losses and debts, the existence of which
is certain or probable, but whose amount or date of occurrence cannot be determined at the end
of the year. Provisions are stated in the statement of financial position only when a legal or
implicit obligation exists that determines the use of resources with an impact on profit and loss
to meet that obligation and the amount can be reliably estimated.
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If the effect is significant, the provisions are calculated by updating future cash flows estimated
at a rate including taxes such as to reflect current market valuations of the current value of the
cash and specific risks associated with the liability.
Post-employment benefit
The post-employment benefit is provisioned to cover the entire liability accruing vis-à-vis
employees in compliance with current legislation and with national and supplementary
company collective labour contracts. This liability is subject to revaluation via application of
indices fixed by current regulations. Up to 31 December 2006, post-employment benefits were
considered defined-benefit plans and accounted for in compliance with IAS 19, using the
projected unit-credit method. The regulations of this fund were amended by Italian Law no.
296 of 27 December 2006 and subsequent Decrees and Regulations issued during the first
months of 2007. In the light of these changes, and, in particular, for companies with at least
50 employees, post-employment benefits must now be considered a defined-benefit plan only
for the portions accruing before 1 January 2007 (and not yet paid as at the end of the reporting
period). Conversely, portions accruing after that date are treated as defined-contribution plans.
Actuarial gains or losses are recognised immediately under "Other total profits/(losses)".
Trade payables and other financial liabilities
Initial recognition
All financial liabilities are initially recognised at fair value, in addition to directly attributable
transaction costs in case of mortgages, loans and payables.
The Company's financial liabilities include trade payables and other payables, mortgages and
loans, including current account overdrafts and derivative financial instruments.
Subsequent measurement
The measurement of financial liabilities depends on their classification, as described below:
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value with changes recognised in the income statement include
liabilities held for trading and financial liabilities initially recognised at fair value, with changes
recognised in the income statement. Liabilities held for trading are those liabilities acquired in
order to discharge or transfer them in the short term. This category also includes derivative
financial instruments subscribed by the Company and not designated as hedging instruments
in a hedging relationship pursuant to IFRS 9. Embedded derivatives, separated from the main
contract, are classified as financial instruments held for trading, unless they are designated as
effective hedging instruments. Gains or losses on liabilities held for trading are recognised in
the income statement. Financial liabilities are designated at fair value with changes recognised
in the income statement from the date of initial recognition, only if the criteria of IFRS 9 are
met.
Loans and payables
This is the most important category for the Company and includes interest-bearing payables
and loans. After initial statement, loans are valued using the amortised cost approach, applying
the effective interest rate method. Gains and losses are recognised in the income statement
when the liability is discharged, as well as through the amortisation process. Amortised cost is
calculated by recognising the discount or premium on the acquisition and the fees or costs that
are an integral part of the effective interest rate.
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Amortisation at the effective interest rate is included in financial expenses in the income
statement.
Derecognition
A financial liability is derecognised when the obligation underlying the liability is discharged,
cancelled or fulfilled. If an existing financial liability is replaced by another from the same lender,
at substantially different conditions, or if the conditions of an existing liability are substantially
changed, this replacement or change is treated as a derecognition of the original liability
accompanied by the recognition of a new liability, with any differences between the carrying
values recognised in the income statement.
Policy for conversion of foreign currency items
Receivables and payables originally expressed in foreign currencies are converted into euro at
the exchange rates in force on the date of the transactions originating them. Forex differences
realised upon collection of receivables and payment of payables in foreign currency are posted
in the income statement. Income and costs relating to foreign-currency transactions are
converted at the rate in force on the transaction date.
At year-end, assets and liabilities expressed in foreign currencies are posted at the spot exchange
rate in force at the end of the reporting period and related foreign exchange gains and losses are
posted in the income statement. If conversion generates a net gain, this value constitutes a non-
distributable reserve until it is effectively realised.
Derivative instruments and hedge accounting
The Company’s business is exposed to financial risks relating to changes in exchange rates,
commodity prices and interest rates. The Company may decide to use derivative financial
instruments to hedge these risks.
Derivatives are initially recognised at cost and are then adjusted to fair value on subsequent
closing dates.
Changes in the fair value of derivatives designated and recognised as effective for hedging
future cash flows relating to the Company’s contractual commitments and planned
transactions are recognised directly in shareholders' equity, while the ineffective portion is
immediately posted in the income statement. If the contractual commitments or planned
transactions materialise in the recognition of assets or liabilities, when such assets or
liabilities are recognised, the gains or losses on the derivative that were directly recognised
in equity are factored back into the initial valuation of the cost of acquisition or carrying
value of the asset or liability. For cash flow hedges that do not lead to recognition of assets
or liabilities, the amounts that were directly recognised in equity are included in the income
statement in the same period when the contractual commitment or planned transaction
hedged impacts profit and loss – for example, when a planned sale actually takes place.
For effective hedges of exposure to changes in fair value, the item hedged is adjusted for the
changes in fair value attributable to the risk hedged and recognised in the income statement.
Gains and losses stemming from the derivative’s valuation are also posted in the income
statement.
Changes in the fair value of derivatives not designated as hedging instruments are recognised
in the income statement in the period when they occur.
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Hedge accounting is discontinued when the hedging instrument expires, is sold or is
exercised, or when it no longer qualifies as a hedge. At this time, the cumulative gains or
losses of the hedging instrument recognised in equity are kept in the latter until the planned
transaction actually takes place. If the transaction hedged is not expected to take place,
cumulative gains or losses recognised directly in equity are transferred to the year’s income
statement.
Embedded derivatives included in other financial instruments or contracts are treated as
separate derivatives when their risks and characteristics are not strictly related to those of their
host contracts and the latter are not measured at fair value with posting of related gains and
losses in the income statement.
Revenue recognition
Revenue is recognised net of return sales, discounts, allowances and bonuses, as well as of the
taxes directly associated with sale of goods and rendering of services.
Sales revenue is recognised when the company has transferred the significant risks and benefits
associated with ownership of the goods and the amount of revenue can be reliably measured.
Revenues of a financial nature are recognised on an accrual basis.
Financial income
Finance income includes interest receivable on funds invested and income from financial
instruments, when not offset as part of hedging transactions. Interest income is recognised in
the income statement at the time of vesting, taking effective output into consideration.
Financial expenses
Financial expenses include interest payable on financial debt calculated using the effective
interest method and bank expenses. All the other financial expenses are recognised as costs for
the year in which they are incurred.
Income taxes for the year
Income taxes include all taxes calculated on the Company’s taxable income. Income taxes are
directly recognised in the income statement, with the exception of those concerning items
directly debited or credited to shareholders’ equity, in which case the tax effect is recognised
directly in shareholders’ equity. Other taxes not relating to income, such as property taxes, are
included among operating expenses. Deferred taxes are provisioned in accordance with the
global liability provisioning method. They are calculated on all temporary differences that
emerge from the taxable base of an asset or liability and its carrying value. Current and deferred
tax assets and liabilities are offset when income taxes are levied by the same tax authority and
when there is a legal right to settle on a net basis. Deferred tax assets and liabilities are measured
using the tax rates that are expected to be applicable in the years when temporary differences
will be realised or settled.
Dividends
Dividends are posted on an accrual basis when the right to receive them materialises, i.e. when
shareholders approve dividend distribution.
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Treasury shares
Treasury shares are booked as a reduction of shareholders’ equity. The carrying value of
treasury shares and revenues from any subsequent sales are recognised in the form of changes
in shareholders’ equity.
Equity-settled transactions
Some of the Company employees receive part of the remuneration in the form of share -
based payments, therefore employees provide services in exchange for shares ("equity-
settled transactions"). The cost of equity-settled transactions is determined by the fair value
at the date on which the assignment is made using an appropriate measurement method, as
explained in more detail in Note 46.
This cost, together with the corresponding increase in shareholders' equity, is recognised
under personnel costs (Note 29) over the period in which the conditions relating to the
achievement of objectives and/or the provision of the service are met. The cumulative costs
recognised for such transactions at the end of each reporting period up to the vesting date
are commensurate with the expiry of the vesting period and the best estimate of the number
of equity instruments that will actually vest.
Service or performance conditions are not taken into account when defining the fair value
of the plan at the assignment date. However, the probability of these conditions being met
is taken into account when defining the best estimate of the number of equity instruments
that will vest. Market conditions are reflected in the fair value at the assignment date. Any
other condition related to the plan that does not involve a service obligation is not
considered to be a vesting condition. Non-vesting conditions are reflected in the fair value
of the plan and result in the immediate recognition of the cost of the plan, unless there are
also service or performance conditions.
No cost is recognised for rights that do not vest in that the performance and/or service
conditions are not met. When the rights include a market condition or a non-vesting
condition, these are treated as if they had vested regardless of whether the market conditions
or other non-vesting conditions to which they are subject are met or not, it being understood
that all other performance and/or service conditions must be met.
If the conditions of the plan are changed, the minimum cost to be recognised is the fair value
at the assignment date in the absence of the change in the plan itself, on the assumption that
the original conditions of the plan are met. Moreover, a cost is recognised for each change
that results in an increase in total fair value of the payment plan, or that is in any case
favourable for employees; this cost is measured with reference to the date of change. When
a plan is cancelled, any remaining element of the plan's fair value is immediately expensed
to the income statement.
Use of estimates
Preparation of the separate financial statements in accordance with IFRS requires
management to make estimates and assumptions that affect the carrying values of assets
and liabilities and the disclosures on contingent assets and liabilities at the end of the
reporting period. Actual results might differ from these estimates. Estimates are used to
measure tangible and intangible assets and investments subject to impairment testing, as
described earlier, as well as to measure the ability to recover prepaid tax assets, provisions
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for bad debts, for inventory obsolescence, depreciation and amortisation, asset write-downs,
employee benefits, taxes, other provisions. Specifically:
Recoverability of value of tangible and intangible assets and investments
The procedure for determining impairment losses of tangible and intangible assets described in
“Impairment” implies – in estimating the value of use – the use of the Business Plans of investees,
which are based on a series of assumptions relating to future events and actions of the investees’
management bodies, which may not necessarily come about. In estimating market value,
however, assumptions are made on the expected trend in trading between third parties based
on historical trends, which may not actually be repeated.
Provisions for bad debts
Receivables are adjusted by the related bad debt provision to take into account their recoverable
amount. To determine the size of the write-downs, management must make subjective
assessments based on the documentation and information available regarding, among other
things, the customer’s solvency, as well as experience and historical payment trends.
Provisions for inventory obsolescence and inventory write-downs at their expected sale value
Inventories subject to obsolescence and slow turnover are systematically measured and written
down if their recoverable value is less than their carrying value. Write-downs are calculated
based on management assumptions and estimates, resulting from experience and historical
results.
If the expected sale value is less than the purchase or production cost, inventories of finished
goods are written down to market value, estimated on the basis of current selling prices.
Employee benefits
The current value of liabilities for employee benefits depends on a series of factors determined
using actuarial techniques based on certain assumptions. Assumptions concern the discount
rate, estimates of future salary increases, and mortality and resignation rates. Any change in the
above-mentioned assumptions might have an effect on liabilities for pension benefits.
Share-based payments
Estimating the fair value of share-based payments requires the determination of the most
appropriate valuation model, which depends on the terms and conditions under which these
instruments are granted. This also requires the identification of data to feed into the valuation
model, including assumptions about the exercise period of the options, volatility and dividend
yield. The Company uses a binomial model for the initial measurement of the fair value of share-
based payments with employees.
Income taxes
Determining liabilities for Company taxes requires the use of management valuations in relation
to transactions whose tax implications are not certain at the end of the reporting period.
Furthermore, the valuation of deferred taxes is based on income expectations for future years;
the valuation of expected income depends on factors that might change over time and have a
significant effect on the valuation of deferred tax assets.
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Other provisions
When estimating the risk of potential liabilities from disputes, the Directors rely on
communications regarding the status of recovery procedures and disputes from the lawyers who
represent the Company in litigation. These estimates are determined taking into account the
gradual development of the disputes, considering existing exemptions.
Climate change
With reference to the potential impact of climate change and energy transition on the
Company's activities, the Management carries out targeted analyses to identify and manage the
main risks and uncertainties to which the Company is exposed, adapting the corporate strategy
accordingly.
To date, climate-related matters have not had a significant impact on the opinions and estimates
used in preparing these Separate Financial Statements. The Company continues to closely
monitor developments and changes taking place, such as new climate-related regulations and
legislation.
Estimates and assumptions are regularly reviewed and the effects of each change immediately
reflected in the income statement.
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New accounting standards
IFRS 17 “Insurance Contracts”
In May 2017, the IASB issued IFRS 17 Insurance Contracts (IFRS 17), a new accounting
standard on insurance contracts regulating recognition and measurement, presentation and
disclosure. IFRS 17 applies to all types of insurance contracts regardless of the type of entity
that issues them, and to certain guarantees and financial instruments with discretionary
participation features; there are some exceptions to the scope of application.
The overall objective of IFRS 17 is to provide an accounting model for insurance contracts that
is more useful and consistent for insurers. In contrast to the requirements of IFRS 4, which are
largely based on the maintenance of previous local accounting standards, IFRS 17 provides a
comprehensive model for insurance contracts, covering all relevant accounting aspects.
IFRS 17, effective for financial years beginning on or after 1 January 2023, requires the
presentation of comparative balances. early application is permitted, if the entity also adopted
IFRS 9 and IFRS 15 on or before the date of first-time application of IFRS 17. The adoption of
this standard had no impact on the Company’s separate financial statements.
Amendments to IAS 8 “Definition of accounting estimates”
In February 2021, the IASB issued amendments to IAS 8, in which it introduces a definition of
"accounting estimates". The amendments clarify the distinction between changes in accounting
standards and changes in accounting policies and corrections of errors. They also clarify how
entities use measurement techniques and inputs to develop accounting estimates. The
amendments are effective for financial years beginning on or after 1 January 2023 and apply to
changes in accounting standards and changes in accounting estimates that occur on or after the
beginning of that period. Early application is permitted provided that this fact is disclosed. These
amendments had no impact on the Company's separate financial statements.
Amendments to IAS 1 "Presentation of Financial Statements" and IFRS Practice
Statement 2
Amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements provide
guidance to help entities apply significant judgements to the disclosure of accounting standards.
The requirement for entities to disclose their "significant" accounting standards is replaced by a
requirement to disclose their "material" accounting standards. The amendments affected the
disclosure of the Company's accounting standards but did not affect the measurement,
recognition and presentation of items in the Company's separate financial statements.
Amendments to IAS 12 "Deferred Taxes on Assets and Liabilities Arising from a Single
Transaction"
The amendments to IAS 12 Income Taxes narrow the scope of the exception to initial
recognition so that it no longer applies to transactions that give rise to equal taxable and
deductible temporary differences, such as leases and decommissioning liabilities. These
amendments had no impact on the Company's separate financial statements.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
104
Amendments to IAS 12 "International Tax Reform - Pillar Two Model Rules"
On 23 May 2023, the IASB published an amendment called "Amendments to IAS 12 Income
taxes: International Tax Reform - Pillar Two Model Rules”. The document introduces a
temporary exception from recognition and disclosure requirements for deferred tax assets and
liabilities related to Pillar Two Model Rules and provides for specific disclosure requirements
for entities affected by the related International Tax Reform. The document provides for the
immediate application of the temporary exception, while the disclosure requirements will only
apply to annual financial statements beginning on or after 1 January 2023, but not to interim
financial statements ending before 31 December 2023. The Company with revenues of less than
€750 million per year is excluded from the scope of the Pillar Two rules. Therefore, the
amendments to IAS 12 have no impact on the Company's separate financial statements.
Standards issued but not yet in force
Amendments to IFRS 16: “
Lease Liability in a Sale and Leaseback
”
In September 2022, the IASB issued an amendment to IFRS 16 to specify the requirements that
a selling lessor applies in measuring the lease liability arising from a sale and leaseback
transaction to ensure that the selling lessor does not recognise a gain or loss in respect of the
right of use retained by the lessor.
The amendments are effective for financial years beginning on or after 1 January 2024 and are
to be applied retrospectively to all sale and leaseback transactions entered into after the date of
first-time application of IFRS 16. Early application is permitted and disclosure of this fact is
required.
These amendments are not expected to have a material impact on the Company's separate
financial statements.
Amendments to IAS 1: “Classification of Liabilities as Current or Non-current”
In January 2020 and October 2022, the IASB issued amendments to paragraphs 69 to 76 of IAS
1 to specify the requirements for classifying liabilities as current or non-current. The
amendments clarify what is meant by the right to postpone an expiry, that the right to postpone
must exist at the end of the reporting period, and that the classification is not affected by the
likelihood that the entity will exercise its right to postpone. Only if a derivative embedded in a
convertible liability is itself an equity instrument does the maturity of the liability have no impact
on classification. Moreover, a requirement has been introduced to disclose when a liability
arising from a loan agreement is classified as non-current and the entity's right to postpone is
conditional on compliance with covenants within twelve months. The amendments will be
effective for financial years beginning on or after 1 January 2024 and must be applied
retrospectively. The Company is currently assessing the impact of the changes on the current
situation.
Amendments to IAS 7 and IFRS 7 "Supplier Finance Arrangements”
In May 2023, the IASB issued amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments: Additional information to clarify the characteristics of reverse factoring
arrangements and to require further disclosure of such arrangements. The disclosure
requirements included in the amendments are intended to assist users of financial statements in
understanding the effects of reverse factoring arrangements on an entity's liabilities, cash flows
and exposure to liquidity risk. The amendments will be effective for financial years beginning
on or after 1 January 2024. Early application is permitted and disclosure of this fact is required.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
105
These amendments are not expected to have a material impact on the Company's financial
statements.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
106
Comments on the main items of the statement of financial position
1. PROPERTY, PLANT AND EQUIPMENT
Property
Plant and
equipment
Other assets
Assets under
construction
Total
Cost
At 31 December 2021
44,462
178,784
39,709
3,851
266,806
Increases
51
1,501
1,593
5,906
9,051
Disposals
-
(6,345)
(755)
-
(7,100)
Reclassification
240
6,099
185
(6,664)
(140)
At 31 December 2022
44,753
180,039
40,732
3,093
268,617
Increases
97
3,443
1,408
2,196
7,144
Disposals
-
(5,903)
(1,307)
-
(7,210)
Reclassification
29
1,332
474
(1,939)
(104)
At 31 December 2023
44,879
178,911
41,307
3,350
268,447
Accumulated
depreciations
At 31 December 2021
21,001
161,203
36,008
-
218,212
Depreciations for the year
1,183
4,928
1,538
-
7,649
Derecognition due to
disposal
-
(4,558)
(308)
-
(4,866)
At 31 December 2022
22,184
161,573
37,238
-
220,995
Depreciations for the year
1,190
4,604
1,410
-
7,204
Derecognition due to
disposal
-
(2,998)
(408)
-
(3,406)
Reclassification
13
-
-
-
13
At 31 December 2023
23,387
163,179
38,240
-
224,806
Net carrying value
At 31 December 2023
21,492
15,732
3,067
3,350
43,641
At 31 December 2022
22,569
18,466
3,494
3,093
47,622
The breakdown of the net carrying value of Property was as follows:
31/12/2023
31/12/2022
Change
Land
5,404
5,404
-
Industrial buildings
16,088
17,165
(1,077)
Total
21,492
22,569
(1,077)
Changes in property, plant and equipment resulting from the application of IFRS 16 are shown
below:
Property
Plant and
equipment
Other assets
Total
1 January 2023
108
-
561
669
Increases
117
-
367
485
Decreases
(102)
-
(16)
(118)
Depreciations
(43)
-
(281)
(324)
At 31 December 2023
80
-
631
712
The main investments during the year were aimed at keeping the production equipment up to
date and fully operational.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
107
Decreases mainly relate to the disposal of machinery to other companies of the Sabaf Group.
Overall, the disposals for the year generated a net capital gain of €811 thousand. Assets under
construction include machinery under construction and advance payments to suppliers of
capital equipment.
At 31 December 2023, the Company found no endogenous or exogenous indicators of
impairment of its property, plant and equipment. As a result, the value of property, plant and
equipment was not submitted to impairment testing.
2. INVESTMENT PROPERTY
Cost
At 31 December 2021
10,176
Increases
144
Disposals
(1,380)
Reclassifications
(6,675)
At 31 December 2022
2,265
Increases
117
Disposals
(583)
Reclassifications
(28)
At 31 December 2023
1,771
Accumulated depreciations
At 31 December 2021
7,865
Depreciations for the year
299
Derecognition due to disposal
(877)
Reclassifications
(6,149)
At 31 December 2022
1,282
Depreciations for the year
105
Derecognition due to disposal
(307)
At 31 December 2023
1,080
Net carrying value
At 31 December 2023
691
At 31 December 2022
983
Changes in investment property resulting from the application of IFRS 16 are shown below:
Investment
property
1 January 2023
108
Increase
117
Decrease
(102)
Depreciations
(43)
At 31 December 2023
80
The item Investment property includes non-operating buildings owned by the Company: these
are mainly properties for residential use, held for rental. Disposals during the period of €276
thousand resulted in capital gains totalling €78 thousand.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
108
At 31 December 2023, the Company found no endogenous or exogenous indicators of
impairment of its investment property. As a result, the value of investment property was not
submitted to impairment testing.
3. ASSETS HELD FOR SALE
The item at 31 December 2022 included the net carrying value of the Company's former
production plant located in Lumezzane (Brescia) amounting to €526 thousand. In July 2023, the
property was sold to a third party for a consideration of €1,950 thousand, making a capital gain
of €1,424 thousand.
4. INTANGIBLE ASSETS
Patents,
know-how and
software
Development
costs
Other
intangible
assets
Total
Cost
At 31 December 2021
7,244
7,641
642
15,527
Increases
400
2,332
17
2,749
Decreases
79
(474)
-
(395)
Reclassifications
(142)
(22)
(1)
(165)
At 31 December 2022
7,581
9,477
658
17,716
Increases
146
2,213
9
2,368
Decreases
147
(345)
-
(198)
Reclassifications
(84)
(42)
-
(126)
At 31 December 2023
7,790
11,303
667
19,760
Amortisation and
write-downs
At 31 December 2021
6,806
4,397
546
11,749
Amortisation
221
315
1
537
Decreases
-
-
-
-
At 31 December 2022
7,027
4,712
547
12,286
Amortisation
245
643
2
890
Decreases
-
-
-
-
At 31 December 2023
7,272
5,355
549
13,176
Net carrying value
At 31 December 2023
518
5,948
118
6,584
At 31 December 2022
554
4,765
111
5,430
Intangible assets have a finite useful life and, as a result, are amortised throughout their life.
Development costs are mainly related to the decision to extend the product range to include
induction cooking. To this end, a dedicated project team was set up to develop the project know-
how in-house, with patents, proprietary software and hardware. Sales are scheduled to start in
2024.
Increases in development costs include projects in progress and therefore not subject to
amortisation.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
109
At 31 December 2023, the Company found no endogenous or exogenous indicators of
impairment of its intangible assets. As a result, the value of property, plant and equipment was
not submitted to impairment testing.
5. EQUITY INVESTMENTS
31/12/2023
31/12/2022
Change
In subsidiaries
125,991
112,422
13,569
Other equity
investments
83
83
-
Total
126,074
112,505
13,569
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
110
The change in equity investments in subsidiaries is broken down in the table below:
Historical
cost
31/12/2022
Purchases
Value
adjustments
Changes
due to
merger
Share
capital
increase
Historical
cost
31/12/2023
Provision
for write-
downs
31/12/2022
2023
changes
Provision
for write-
downs
31/12/2023
Sabaf do Brasil
13,161
-
-
-
-
13,161
0
0
Sabaf Turkey
32,107
-
-
8,782
-
40,889
-
-
0
Okida
8,782
-
-
(8,782)
-
0
-
-
0
Sabaf Appliance Components (China)
8,900
-
-
-
-
8,900
(7,408)
(1,000)
(8,408)
Sabaf India
4,770
-
-
-
3,800
8,570
-
-
0
Sabaf Mexico
6,305
-
-
0
6,484
12,789
-
-
0
Sabaf U.S.
139
-
-
-
-
139
0
0
Sabaf America
0
3,565
-
-
-
3,565
-
-
0
Faringosi Hinges
10,329
-
-
-
-
10,329
0
0
A.R.C.
6,450
-
-
-
-
6,450
-
-
0
C.M.I.
21,044
-
-
-
-
21,044
-
-
0
P.G.A.
7,843
-
720
-
-
8,563
-
-
0
Total
119,830
3,565
720
0
10,284
134,399
(7,408)
(1,000)
(8,408)
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
111
Net book
value
31/12/2022
Portion of
shareholders’
equity
31/12/2022
Difference
between
shareholders’
equity and
carrying
value
31/12/2022
Net book value
31/12/2023
Portion of
shareholders’
equity 31/12/2023
Difference
between
shareholders’
equity and
carrying value
31/12/2023
Sabaf do Brasil
13,161
17,803
4,642
13,161
19,757
6,596
Sabaf Turkey*
32,107
52,559
20,452
40,889
62,712
21,823
Okida*
8,782
11,840
3,058
0
0
0
Sabaf Appliance Components (China)
1,492
1,493
1
492
493
1
Sabaf India
4,770
4,127
(643)
8,570
6,319
(2,251)
Sabaf Mexico
6,305
6,409
104
12,789
12,037
(752)
Sabaf U.S.
139
142
3
139
167
28
Sabaf America
0
0
0
3,565
3,619
54
Faringosi Hinges
10,329
9,850
(479)
10,329
8,071
(2,258)
A.R.C.
6,450
8,548
2,098
6,450
6,389
(61)
C.M.I.
21,044
19,344
(1,700)
21,044
21,736
692
P.G.A.
7,843
3,595
(4,248)
8,563
3,756
(4,807)
Total
112,422
135,710
23,288
125,991
145,056
19,065
* values determined in accordance with IAS 29 - Financial Reporting in Hyperinflationary Economies, applied to companies in Turkey as from 1 April 2022
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
112
Sabaf do Brasil
In 2023, Sabaf do Brasil achieved positive results and a significant improvement over the
previous year. At 31 December 2023, Shareholders’ equity (converted into euros at the end-of-
year exchange rate) is significantly higher than the carrying amount of the equity investment.
Sabaf Turkey and Okida
In 2023, in order to simplify the Group's organisational structure, Okida was merged into Sabaf
Turkey, which directly held 70% of the shares (the remaining 30% were held by Sabaf S.p.A.).
Consequently, the value of Sabaf S.p.A.'s equity investment in Okida was increased by the value
of Sabaf Turkey's equity investment. At 31 December 2023, Shareholders’ equity (converted into
euros at the end-of-year exchange rate) is significantly higher than the carrying amount of the
equity investment.
Sabaf Appliance Components
Sabaf Appliance Components (Kunshan) Co., Ltd. has been producing burners for the Chinese
market since 2015. Furthermore, the company has performed the function as distributor on the
Chinese market of Sabaf products manufactured in Italy and Turkey. Low production volumes
have not allowed the company to reach the break-even point. During the financial year, the
equity investment was written down by €1,000 thousand against the loss of 2023 to bring the
value in line with shareholders' equity.
Sabaf India Private Limited
Sabaf India started production of gas components in 2023 for the local market, which is expected
to grow strongly in the coming years. The difference between the carrying value of the equity
investment and shareholders’ equity converted at the year-end exchange rate is mainly due to
the start-up costs and can be recovered in the coming years with the achievement of positive
income results.
Sabaf Mexico S.A. de C.V.
In 2023, construction work was completed on a new plant to produce components for the North
American market in San Luis Potosi (Mexico). Production is scheduled to start in the first half of
2024. The difference between the carrying value of the equity investment and shareholders’
equity converted at the year-end exchange rate is mainly due to the start-up costs and can be
recovered in the coming years with the achievement of positive income results.
Sabaf U.S.
Sabaf U.S. operates as a commercial support for North America.
Sabaf America
The company was established in 2023 as part of the acquisition of 51% of MEC, in which it
directly holds an equity investment. The acquisition of MEC is described in the Report on
Operations.
At 31 December 2023, the Company - with the support of independent experts - tested the
carrying value of the equity investments in Faringosi Hinges, A.R.C., C.M.I., P.G.A. (which
during the year incorporated P.G.A. 2.0 srl, previously a wholly-owned subsidiary) and MEC for
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
113
impairment and determined their recoverable amount, which is determined through value of
use, by discounting expected cash flows.
The main assumptions used to determine the value in use of the various equity investments are
related to a) cash flows from the company's business plans, b) the discount rate and c) the long-
term growth rate.
Determining cash flows
The management has defined a single plan for each investee, with reference to the period from
2024 to 2026, which represents the best estimate of the business outlook, based on the
company's strategies and the growth indicators of its sector and reference markets. In particular,
the forecasts for the first year of the forecast plan (2024) were developed on the basis of the
2024 budgets approved by the Board of Directors of the investees and Sabaf S.p.A. in December
2023; the forecasts for the next two years (2025 and 2026) were determined analytically as part
of the process of preparing the Group's 2024 - 2026 Business Plan, approved by the Parent
Company's Board of Directors on 19 March 2024. The multi-year plans of the individual
investees were submitted to their respective Boards of Directors for approval.
Revenues were estimated on the basis of information obtained from customers and on the basis
of management's expectations regarding the trend of the reference market, which anticipate a
moderate recovery from the weak phase that characterised 2023. The contribution of revenues
from new products already developed, weighted by their probability of success, was also
estimated. The plans were prepared on the assumption that raw material prices will remain
broadly unchanged, in consideration of the proven historical ability of the investees to pass on
changes in the cost of materials to sales prices. Estimates of revenues and profitability
incorporate elements of caution reflecting geopolitical and macroeconomic uncertainty. It
should be noted that investees are not exposed to significant transitional climate risks, that
energy costs are extremely low in relation to the industrial cost of the products and that the
related production processes do not directly use fossil fuels (gas) as an energy source.
The business plans consider only real growth, do not take into account expected inflation and
have been prepared in Euro, i.e. in the currency in which - with the exception of MEC - the sales
prices and main operating costs of the investees are expressed. The business plan of MEC, which
operates in dollars, was prepared on the assumption of a stable euro/dollar exchange rate.
Finally, cash flows for the period from 2024 to 2026 were augmented by the terminal value,
which expresses the operating flows that each investee is expected to generate from the fourth
year to infinity and determined based on the perpetual income.
Discount rate
As in the previous year, the discount rate used to discount the expected future cash flows was
determined for each investee, and is represented by the weighted average cost of capital
employed (WACC), which reflects the current market valuation of the time value of money for
the period in question and the specific risks of the investees and their sectors.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
114
Long-term growth rate
In addition to the flows expected for the period from 2024 to 2026, which are explicitly forecast,
there is the Perpetuity flow, which is representative of the Terminal Value. This was determined,
according to the same logic adopted in the previous year, using a long-term growth rate (g-rate),
specific to each investee, which reflects the growth potential of the reference area.
The table below shows the key assumptions used in the impairment test.
Discount rate
(WACC) %
Long-term growth
rate (g-rate)
Cash flow
horizon
Terminal Value
Calculation
Method
Faringosi Hinges
11.84%
2.00%
3 years
Perpetual
instalment
A.R.C.
11.09%
2.00%
3 years
Perpetual
instalment
C.M.I.
11.45%
2.00%
3 years
Perpetual
instalment
P.G.A.
10.94%
2.50%
3 years
Perpetual
instalment
MEC
10.99%
2.30%
3 years
Perpetual
instalment
We comment on the main changes in the discount rate compared to the impairment made when
preparing the separate financial statements at 31 December 2022:
▪ Faringosi Hinges: The WACC is 11.84% (11.65% at 31 December 2022), the change
compared to the previous year being mainly due to the increase in the cost of debt and
the risk-free rate;
▪ A.R.C.: The WACC is 11.09% (11.19% at 31 December 2022), the change compared to
last year being mainly due to the reduction in the risk-free rate and the equity market risk
premium;
▪ C.M.I.: The WACC is 11.45% (11.66% at 31 December 2022), the change compared to
last year being mainly due to the reduction in the risk-free rate and the equity market risk
premium;
▪ P.G.A.: The WACC is 10.94% (10.88% at 31 December 2022).
The impairment tests carried out in the manner described above and approved by the Board of
Directors on 20 February 2024, with the opinion of the Control, Risk and Sustainability
Committee, did not reveal any impairment, as the recoverable amount of the equity investments
at 31 December 2023 was higher than the corresponding net invested capital (carrying amount).
The following activities were carried out to complete the analysis:
▪ a sensitivity analysis to test the recoverability of equity investments against changes in
the basic assumptions used to determine the discounted flows. In particular, the table
below shows the WACC, g-rate and EBITDA that would result in an impairment if all
other basic assumptions remained unchanged:
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
115
Break-even values in a "steady case" situation
Sensitivity analysis
WACC
g-rate
EBITDA
Faringosi Hinges
31.1%
n/a
-57.6%
A.R.C.
25.4%
n/a
-53.1%
C.M.I.
48.0%
n/a
64.0%
P.G.A.
13.1%
0.0%
-22.5%
MEC
13.0%
0.0%
-11.4%
▪ recoverability check of equity investments against possible increases and decreases of
50 bps in the WACC and 25 bps in the g-rate;
▪ recoverability check of equity investments against possible decreases of 10% and 20% of
EBITDA.
With reference to the equity investment in MEC, sensitivity analyses show a delta between the
recoverable amount and the carrying value of the equity investment ranging from +€3.4 million
to -€1.6 million. For the other equity investments tested for impairment, none of the scenarios
included in the sensitivity analysis resulted in a recoverable amount below the carrying value.
6. NON-CURRENT FINANCIAL ASSETS
31/12/2023
31/12/2022
Change
Financial receivables from
subsidiaries
15,734
10,375
5,359
Total
15,734
10,375
5,359
At 31 December 2023, financial receivables from subsidiaries consist of:
- an interest-bearing loan of USD 1.5 million (€1.357 million at the end-of-year exchange
rate), granted to the subsidiary Sabaf do Brasil with the aim of optimising the Group's
exposure to foreign exchange rate risk with maturity September 2024:
- an interest-bearing loan of €8.5 million to the subsidiary Sabaf Turkey, of which €3.5
million disbursed during 2018 and €5 million disbursed during 2021 as part of the
coordination of the Group's financial management, with maturity in October 2024 and
May 2024, respectively;
- an interest-bearing loan of USD 6.494 million (€5.877 million at the end-of-year exchange
rate), granted to the subsidiary Sabaf America as part of the acquisition of the equity
investment in MEC, maturing in July 2033.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
116
7. NON-CURRENT RECEIVABLES
31/12/2023
31/12/2022
Change
Receivables from former P.G.A.
shareholders
620
597
23
Guarantees
32
37
(5)
Total
652
634
18
Receivables from former P.G.A. shareholders refer to compensation obligations envisaged upon
the occurrence of certain events (liabilities incurred by P.G.A.) regulated by the acquisition
agreement.
These receivables, already accrued and agreed upon between the parties, were discounted. The
effect of discounting was recorded under financial income (Note 31).
8. INVENTORIES
31/12/2023
31/12/2022
Change
Raw Materials
10,311
11,313
(1,002)
Semi-processed goods
6,077
7,941
(1,864)
Finished products
7,221
9,446
(2,225)
Provision for inventory write-
downs
(1,773)
(1,789)
16
Total
21,836
26,911
(5,075)
The value of final inventories at 31 December 2023 decreased compared to the previous year
as a result of the decrease in average costs and the decrease in the volume of products in stock.
The provision for write-downs is mainly allocated for hedging the obsolescence risk, quantified
on the basis of specific analyses carried out at the end of the year on slow-moving and non-
moving products, and refers to raw materials for €628 thousand, semi-finished products for €293
thousand and finished products for €852 thousand. The following table shows the changes in
the Provision for inventory write-downs during the current financial year:
31/12/2022
1,789
Provisions
99
Utilisation
(115)
31/12/2023
1,773
9. TRADE RECEIVABLES
31/12/2023
31/12/2022
Change
Trade receivables from third parties
13,913
20,806
(6,893)
Trade receivables from subsidiaries
15,393
8,109
7,194
Bad debt provision
(600)
(600)
0
Net total
28,706
28,315
391
At 31 December 2023, trade receivables included balances totalling USD 7,524 thousand,
booked at the EUR/USD exchange rate in effect on 31 December 2023, equal to 1.105. The
amount of trade receivables recognised in the financial statements includes approximately €12
million in insured receivables (€12 million at 31 December 2022).
The amount of trade receivables at 31 December 2023 decreased compared to the balance at
the end of 2022 as a result of the reduction in the average collection period, which was also
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
117
achieved due to an increased assignment without recourse of receivables to factors. There were
no significant changes in average payment terms agreed with customers.
The following table shows the breakdown of receivables from third parties by maturity date:
31/12/2023
31/12/2022
Change
Current receivables (not past due)
10,410
17,016
(6,606)
Outstanding up to 30 days
1,753
2,118
(365)
Outstanding from 30 to 60 days
435
769
(334)
Outstanding from 60 to 90 days
364
169
195
Outstanding for more than 90
days
951
734
217
Total
13,913
20,806
(6,895)
The bad debt provision was adjusted to the better estimate of the credit risk and of the expected
losses at the end of the reporting period, also carried out by analysing each expired item.
Changes during the year were as follows:
31/12/2022
Provisions
Utilisation
31/12/2023
Bad debt provision
600
30
(30)
600
10. TAX RECEIVABLES
31/12/2023
31/12/2022
Change
For income tax
5,568
4,515
1,053
for VAT
462
546
(84)
Total
6,030
5,061
969
In the 2020 financial year, the Company has been part of the national tax consolidation scheme
pursuant to Articles 117/129 of the Unified Income Tax Law.
At 31 December 2023, income tax receivables include:
- the receivable from the subsidiary Faringosi Hinges s.r.l amounting to €150 thousand
- the receivable from the subsidiary A.R.C. s.r.l. amounting to €91 thousand
relating to the balance of the 2023 income taxes transferred by the subsidiaries to the
consolidating company Sabaf S.p.A., in accordance with the provisions of the tax regulations
relating to the national tax consolidation and the tax consolidation contracts entered into
between the parties.
Income tax receivables also include:
- €1.832 million of receivables for investments in capital equipment referred to Decree Law
160/2019, Budget Law 178/2020 and Budget Law 234/2021;
- €635 thousand tax credit for "Patent Box" for the years 2020 and 2021, following the prior
agreement signed with the Tax Authorities during the year;
- receivables for higher payments on account paid, specifically IRES for €2.919 million and IRAP
for €256 thousand.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
118
11. OTHER CURRENT RECEIVABLES
31/12/2023
31/12/2022
Change
Credits to be received from suppliers
904
685
219
Advances to suppliers
101
113
(12)
Due from INAIL
18
-
18
Other
375
411
(36)
Total
1,398
1,209
189
Credits to be received from suppliers mainly refer to bonuses paid to the Company for the
attainment of purchasing objectives.
12. CURRENT FINANCIAL ASSETS
31/12/2023
31/12/2022
Change
Financial receivables from subsidiaries
-
1,300
(1,300)
Interest rate derivatives
860
1,601
(741)
Total
860
2,901
(2,041)
During 2023, current financial receivables from subsidiaries were collected.
At 31 December 2023, the Company has in place four interest rate swap (IRS) contracts for
amounts and maturities coinciding with six unsecured loans that are being amortised, whose
residual value at 31 December 2023 is €16,417 thousand. The contracts have not been
designated as capital flow hedges and are therefore at their fair value through profit and loss,
and recognised in the items “Fair Value through profit or loss”, with "Financial income" as a
balancing entry.
13. CASH AND CASH EQUIVALENTS
The item Cash and cash equivalents, equal to €13,899 thousand at 31 December 2023 (€2,604
thousand at 31 December 2022), refers almost exclusively to bank current account balances.
Please refer to the Statement of Cash Flows for an analysis of changes in liquidity during the
year.
14. SHARE CAPITAL
In connection with the acquisition of Mansfield (MEC), on 14 July 2023, the Board of Directors
exercised the proxy granted by the Shareholders' Meeting on 4 May 2020, resolving on a
reserved capital increase, partially subscribed and against payment, for a nominal amount of
€1,153,345, corresponding to 10% of the share capital, with the exclusion of the right of option
pursuant to Article 2441, fourth paragraph, second sentence of the Italian Civil Code, through
the issue of 1,153,345 new ordinary shares with a par value of €1.00. The newly issued shares
were offered for subscription as part of a reserved placement.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
119
The issue price of the new shares, including the share premium, was determined at €15.01 per
share, equal to the average stock market price of the Sabaf share recorded in June, increased by
a premium of €0.52 per share (and therefore for a total value of €17,311,708.45).
The capital increase took place on 20 July 2023. Following the full subscription of the new
shares, the post-Capital Increase share capital amounts to €12,686,795.
At 31 December 2023, the structure of the share capital is shown in the table below.
No. of shares
% of share
capital
Rights and
obligations
Ordinary shares
6,559,278
51.70%
--
Ordinary shares with
increased vote
6,127,518
48.30%
Two voting
rights per share
TOTAL
12,686,795
100%
With the exception of the right to increased vote, there are no rights, privileges or restrictions
on the Company. The availability of reserves is indicated in a table at the end of these
Explanatory Notes.
15. TREASURY SHARES AND OTHER RESERVES
Treasury shares
During the year, 27,100 treasury shares were acquired at an average unit price of €17.05, while
they have not been sold.
At 31 December 2023, Sabaf S.p.A. held 241,963 treasury shares (1.907% of the share capital),
reported in the financial statements as an adjustment to shareholders’ equity at a weighted
average unit value of €15.22 (the closing stock market price of the Share at 31 December 2023
was €17.36). There were 12,444,832 outstanding shares at 31 December 2023.
Stock grant reserve
Items "Retained earnings, other reserves" of €115,751 thousand included, at 31 December 2023,
the stock grant reserve of €2,481 thousand, which included the measurement at 31 December
2023 of the fair value of rights assigned to receive shares of the Company relating to the 2021 –
2023 Stock Grant Plan, medium- and long-term incentive plan for directors and employees of
the Sabaf Group, for the details of which reference is made to Note 40.
Cash Flow Hedge reserve
The following table shows the change in the Cash flow hedge reserve related to the application
of IFRS 9 on derivative contracts and referring to the recognition in net equity of the effective
part of the derivative contracts signed to hedge the foreign exchange rate risk for which the
Company applies hedge accounting.
Value at 31 December 2022
(14)
Change during the period
14
Value at 31 December 2023
0
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
120
16. LOANS
31/12/2023
31/12/2022
Current
Non-
current
Total
Current
Non-
current
Total
Bond issue
-
29,720
29,720
-
29,685
29,685
Unsecured loans
20,032
45,534
65,566
18,348
45,457
63,805
Leases
460
1,059
1,519
473
1,194
1,667
Accruals for
financial expenses
and other short-
term bank loans
200
-
200
5,921
-
5,921
Short-term loans
from subsidiaries
3,000
-
3,000
2,500
-
2,500
Total
23,692
76,313
100,005
27,242
76,336
103,578
In December 2021, Sabaf S.p.A. issued a €30 million bond fully subscribed by PRICOA with a
maturity of 10 years, an average life of 8 years and a fixed coupon of 1.85% per year. The
loan has the following covenants, defined with reference to the Group consolidated figures
widely complied with at 31 December 2023 and for which, according to the Group's business
plan, compliance is also expected in subsequent years:
▪ commitment to maintain a ratio of net financial debt to shareholders’ equity of less
than or equal to 1.5;
▪ commitment to maintain a ratio of net financial debt to EBITDA of less than or equal
to 3;
▪ commitment to maintain a ratio of EBITDA to net financial position of more than 4.
During the year, the Company took out new unsecured loans for a total of €23 million. All loans
were signed with an original maturity of ranging from 4 to 5 years and are repayable in
instalments.
Some of the outstanding unsecured loans have covenants, defined with reference to the
consolidated financial statements at the end of the reporting period, as specified below:
▪ commitment to maintain a ratio of net financial debt to shareholders’ equity of less
than or equal to 1 (residual amount of the loans at 31 December 2023 equal to €47.1
million);
▪ commitment to maintain a ratio of net financial debt to EBITDA of less than or equal
to 3 (residual amount of the loans at 31 December 2023 equal to €59.4 million);
▪ commitment to maintain a ratio of net financial debt to EBITDA of less than or equal
to 2.5 (residual amount of the loans at 31 December 2023 equal to €0.8 million);
complied with at 31 December 2023 and for which, according to the Group's business plan,
compliance is also expected in subsequent years.
All bank loans are denominated in euro.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
121
Short-term loans from subsidiaries were granted at market conditions as part of the optimisation
of the Group's liquidity management.
To manage interest rate risk, some unsecured loans (with a total residual value of €35,615
thousand at 31 December 2023) are either fixed-rate or hedged by IRS. On the other hand, the
residual value of unsecured loans taken out at a variable rate and not covered by the IRS was
€29,951 thousand.
The following table shows the changes in lease liabilities during the year:
Lease liabilities at 1 January 2022
1,893
New agreements signed during 2022
313
Repayments during 2022
(524)
Lease liabilities at 31 December 2022
1,682
New agreements signed during 2023
485
Repayments during 2023
(648)
Lease liabilities at 31 December 2023
1,519
Note 38 provides information on financial risks, pursuant to IFRS 7.
17. OTHER FINANCIAL LIABILITIES
31/12/2023
31/12/2022
Current
Non-current
Current
Non-current
Payables to former PGA
shareholders
-
175
371
175
Currency derivatives
-
-
15
-
Total
-
175
386
175
The payable to former P.G.A. shareholders of €175 thousand refers to price adjustments
following the completion of the acquisition, related to the achievement of certain targets in
accordance with contractual provisions ("earn-out").
18. POST-EMPLOYMENT BENEFIT
At 31 December 2022
1,588
Financial expenses
53
Payments made
(57)
Tax effect
(10)
At 31 December 2023
1,574
Actuarial gains or losses are recognised immediately in the comprehensive income statement
("Other comprehensive income") under the item "Actuarial income and losses".
Post-employment benefits are calculated as follows:
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
122
Financial assumptions
31/12/2023
31/12/2022
Discount rate
3.2%
3.62%
Inflation
2.5%
3%
Demographic theory
31/12/2023
31/12/2022
Mortality rate
IPS55 ANIA
IPS55 ANIA
Disability rate
INPS 2000
INPS 2000
Staff turnover
5%
6%
Advance payouts
1.00% per year
1.50% per year
Retirement age
pursuant to legislation in
force on 31 December 2023
pursuant to legislation in
force on 31 December 2022
The sensitivity analyses carried out to take into account possible changes in actuarial
assumptions did not reveal any significant changes in the liability.
19. PROVISIONS FOR RISKS AND CHARGES
31/12/2022
Provisions
Utilisation
31/12/2023
Provision for agents’
indemnities
248
-
(57)
191
Product guarantee
fund
60
72
(72)
60
Provision for legal
risks
46
-
-
46
Total
354
72
(129)
297
The provision for agents’ indemnities covers amounts payable to agents if the Company
terminates the agency relationship.
The product guarantee fund covers the risk of returns or charges by customers for products
already sold. In 2023, a competitor filed a lawsuit against Sabaf S.p.A. for alleged patent
infringement. The dispute is at a preliminary stage, and based on the initial analysis available,
the Directors believe that the competitor's claims are unfounded and therefore no provisions for
risks have been recognised in these separate financial statements.
The provisions for risks, which represent the estimate of future payments made based on
historical experience, have not been discounted because the effect is considered negligible.
20. TRADE PAYABLES
31/12/2023
31/12/2022
Change
Total
22,605
21,168
1,437
Average payment terms did not change versus the previous year.
At 31 December 2023, there were no overdue payables of a significant amount and the Company
did not receive any injunctions for overdue payables.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
123
21. TAX PAYABLES
31/12/2023
31/12/2022
Change
To inland revenue for income tax
904
6
898
To subsidiaries for income tax
133
24
109
To inland revenue for IRPEF tax
deductions
447
592
(145)
Total
1,484
622
862
In the 2020 financial year, the Company has been part of the national tax consolidation scheme
pursuant to Articles 117/129 of the Unified Income Tax Law. At 31 December 2023, payables
to subsidiaries for income taxes refer to tax advances received from the subsidiaries C.M.I. s.r.l.
and CGD s.r.l.
Payables for IRPEF tax deductions, relating to employment and self-employment, were duly
paid at maturity.
22. OTHER CURRENT PAYABLES
31/12/2023
31/12/2022
Change
To employees
4,335
3,857
478
To social security institutions
2,211
1,987
224
Advances from customers
69
273
(204)
To agents
105
140
(35)
Other current payables
3,419
2,249
1,170
Total
10,139
8,506
1,633
At the beginning of 2024, payables due to employees and social security institutions were paid
in accordance with the scheduled expiry dates.
Other current payables include accrued liabilities and deferred income, of which €1,914
thousand refer to the accrual basis of accounting of tax benefits driving from investments in
capital goods referred to Decree Law 160/2019, Budget Law 178/2020 and Budget Law
234/2021.
23. DEFERRED TAX ASSETS AND LIABILITIES
31/12/2023
31/12/2022
Change
Deferred tax assets
2,664
3,048
(384)
Deferred tax liabilities
(550)
(721)
171
Net position
2,114
2,327
(213)
The table below analyses the nature of the temporary differences that determine the recognition
of deferred tax liabilities and assets and their changes during the year and the previous year.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
124
Amortisation
and leasing
Provisions and
value
adjustments
Fair
value of
derivative
instruments
Goodwill
Actuarial
evaluation
of post-
employment
benefit
Other
temporary
differences
Total
AT 31/12/2021
743
747
35
1,063
175
236
2,999
Through profit or
loss
(278)
309
(420)
(177)
-
(67)
(633)
In shareholders'
equity
-
-
2
-
(41)
-
(39)
AT 31/12/2022
465
1,056
(383)
886
134
169
2,327
Through profit or
loss
(82)
(243)
178
(177)
-
114
(210)
In shareholders'
equity
-
-
(1)
-
(2)
-
(3)
AT 31/12/2023
383
813
(206)
709
132
283
2,114
Deferred tax assets relating to goodwill refer to the exemption of the value of the investment in
Faringosi Hinges s.r.l. made in 2011 pursuant to Italian Law Decree 98/2011, deductible in ten
instalments starting in 2018.
24. TOTAL FINANCIAL DEBT
As required by the CONSOB memorandum of 28 July 2006, we disclose that the Company’s net
financial debt is as follows:
31/12/2023
31/12/2022
Change
A.
Cash
13,900
2,604
11,296
B.
Cash equivalents
-
-
-
C.
Other current financial assets
859
2,901
(2,042)
D.
Liquidity (A+B+C)
14,759
5,505
9,254
E.
Current financial payable
3,375
8,982
(5,807)
F.
Current portion of non-current financial debt
20,492
18,821
1,671
G.
Current financial debt (E+F)
23,867
27,803
(3,936)
H.
Net current financial debt (G-D)
9,108
22,298
(13,190)
I.
Non-current financial payable
46,593
46,651
(58)
J.
Debt instruments
29,720
29,685
35
K.
Trade payables and other non-current payables
-
-
-
L.
Non-current financial debt (I+J+K)
76,313
76,336
(23)
M.
Total financial debt (H+L)
85,421
98,634
(13,213)
The statement of cash flows, which shows the changes in cash and cash equivalents (sum of
letters A. and B. of this statement), describes in detail the cash flows that led to the change in
the net financial debt.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
125
Comments on key income statement items
25. REVENUE
In 2023, sales revenue amounted to €99,482 thousand, 16.5% lower than the €119,090 thousand
in 2022, due to the significant economic weakness in the household appliance market.
Revenue by geographical area
2023
%
2022
%
% change
Europe (excluding Turkey)
28,672
28.8%
39,496
33.2%
-27.4%
Turkey
31,035
31.2%
30,470
25.6%
1.9%
North America
6,649
6.7%
11,136
9.4%
-40.3%
South America
9,769
9.8%
13,600
11.4%
-28.2%
Africa and Middle East
14,431
14.5%
16,890
14.2%
-14.6%
Asia and Oceania
8,926
9.0%
7,498
6.3%
19%
Total
99,482
100%
119,090
100%
-16.5%
Revenue by product family
2023
%
2022
%
% change
Valves and thermostats
40,216
40.4%
48,917
41.1%
-17.8%
Burners
45,038
45.3%
51,992
43.7%
-13.4%
Accessories and other revenues
14,228
14.3%
18,181
15.3%
-21.7%
Total
99,482
100%
119,090
100%
-16.5%
26. OTHER INCOME
2023
2022
Change
Sale of trimmings
2,062
2,430
(368)
Services to subsidiaries
2,232
2,159
73
Royalties to subsidiaries
360
305
55
Contingent income
644
280
364
Rental income
78
122
(44)
Use of provisions for risks and charges
130
29
101
Other income
1,714
1,186
528
Total
7,220
6,511
709
Services to subsidiaries refer to administrative, commercial and technical services provided
within the scope of the Group.
In 2023, other income includes €683 thousand of benefits granted as tax credits for investments
made in 2023 and in previous years (Law 160/2019 paragraphs 184 to 196, Law 178/2020 and
Law 234/2021).
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
126
27. PURCHASES OF MATERIALS
2023
2022
Change
Commodities and outsourced components
41,568
48,071
(6,503)
Consumables
4,367
4,900
(533)
Total
45,935
52,971
(7,036)
The reduction in purchases is related both to the decrease in business volumes and to the
decrease in unit prices of the main raw materials (aluminium alloys, steel and brass).
28. COSTS FOR SERVICES
2023
2022
Change
Outsourced processing
5,577
7,660
(2,083)
Electricity and natural gas
3,879
6,889
(3,010)
Maintenance
3,212
3,789
(577)
Advisory services
2,866
2,750
116
Transport and export expenses
1,435
2,189
(754)
Directors’ fees
407
442
(35)
Insurance
607
611
(4)
Commissions
488
633
(145)
Travel expenses and allowances
607
431
176
Waste disposal
390
424
(34)
Canteen
307
279
28
Temporary agency workers
293
399
(106)
Other costs
2,056
2,133
(77)
Total
22,124
28,629
(6,505)
The main outsourced processing carried out by the Company include hot moulding of brass and
some mechanical processing and assembly.
Energy and gas costs are posted net of tax benefits related to public contributions for electricity
and gas consumption, amounting to €640 thousand in 2023.
Other costs included expenses for the registration of patents, waste disposal, cleaning, leasing
third-party assets and other minor charges.
29. PERSONNEL COSTS
2023
2022
Change
Salaries and wages
18,975
18,199
776
Social Security costs
6,091
5,779
312
Temporary agency workers
2,518
3,819
(1,301)
Post-employment benefit and
other costs
1,946
1,644
302
Stock grant plan
542
1,134
(592)
Total
30,072
30,575
(503)
Average of the Company headcount at 31 December 2023 totalled 454 employees (311 blue-
collars, 128 white-collars and supervisors, 15 managers), compared with 473 in 2022 (324 blue-
collars, 122 white-collars and supervisors, 15 managers). The number of temporary staff with
temporary work contract was 56 at 31 December 2023 (68 at the end of 2022).
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
127
The item "Stock Grant Plan" included the measurement at 31 December 2023 of the fair value
of the options to the allocation of Sabaf shares to employees. For details of the Stock Grant Plan,
refer to Note 46.
30. OTHER OPERATING COSTS
2023
2022
Change
Non-income related taxes and
duties
356
379
(23)
Losses and write-downs of trade
receivables
30
0
30
Contingent liabilities
379
173
206
Other provisions
103
32
71
Other operating expenses
234
317
(83)
Total
1,102
901
201
Non-income taxes mainly include IMU, TASI and the tax for the disposal of urban solid waste.
Other provisions refer to the allocations to provisions for risks described in Note 19.
31. FINANCIAL INCOME
2023
2022
Change
Interests receivable from banks
125
5
120
Interests receivable from loans
450
309
141
IRS spreads receivable
-
1,626
(1,626)
Other financial income
-
34
(34)
Total
575
1,974
(1,399)
32. FINANCIAL EXPENSES
2023
2022
Change
Interest paid to banks
2,952
1,157
1,795
Banking expenses
164
149
15
IRS spreads payable
80
-
80
Other financial expense
270
267
3
Total
3,466
1,573
1,893
33. EXCHANGE RATE GAINS AND LOSSES
In 2023, the Company reported net foreign exchange losses of €171 thousand, versus net gains
of €354 thousand in 2022.
34. PROFITS AND LOSSES FROM EQUITY INVESTMENTS
2023
2022
Change
Dividends received from Faringosi Hinges s.r.l.
3,000
-
3,000
Dividends received from A.R.C. s.r.l.
3,000
-
3,000
Dividends received from Okida Elektronik
-
178
(178)
Total
6,000
178
5,822
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
128
35. INCOME TAXES
2023
2022
Change
Current taxes
(1,782)
(1,015)
(767)
Deferred tax assets and liabilities
210
633
(423)
Taxes related to previous financial
years
(808)
(159)
(649)
Taxes on foreign dividends
-
16
(16)
Total
(2,380)
(525)
(1,855)
The tax income related to the tax loss for the 2023 tax year is recognised in current taxes for
2023.
Taxes related to previous years include the "Patent Box" for the years 2020 and 2021, following
the prior agreement signed with the Tax Authorities during 2023.
Reconciliation between the tax burden booked in the financial statements and the theoretical
tax burden calculated according to the statutory tax rates currently in force in Italy is shown in
the following table:
2023
2022
Theoretical income tax
270
413
Taxes related to previous financial years
(73)
(71)
Tax effect of dividends from investee companies
(1,368)
(25)
“Iper and Superammortamento” tax benefit
(558)
(603)
Permanent tax differences
194
196
Tax effect on tax credit for energy-intensive and gas-intensive companies
(153)
(505)
“Patent box” tax benefit
(635)
0
IRES (current and deferred)
(2,323)
(595)
IRAP (current and deferred)
(57)
70
Total
(2,380)
(525)
Theoretical taxes were calculated applying the current corporate income tax (IRES) rate, i.e.
24%, to the pre-tax result. IRAP is not taken into account for the purpose of reconciliation
because, as it is a tax with a different assessment basis from pre-tax profit, it would generate
distorting effects.
36. DIVIDENDS
No dividends were paid out during 2023. The Directors have recommended payment of a
dividend of €0.54 per share this year, subject to approval of shareholders in the annual
Shareholders’ Meeting and therefore not included under liabilities in these financial statements.
The dividend proposed is scheduled for payment on 29 May 2024 (ex-date 27 May and record
date 28 May).
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
129
37. SEGMENT REPORTING
Within the Sabaf Group, the Company operates exclusively in the gas parts segment for
household cooking. The information in the consolidated financial statements is divided between
the various segments in which the Group operates.
38. INFORMATION ON FINANCIAL RISK
Categories of financial instruments
In accordance with IFRS 7, a breakdown of the financial instruments is shown below, among
the categories set forth in IFRS 9.
31/12/2023
31/12/2022
Financial assets
Amortised cost
Cash and cash equivalents
13,900
2,604
Trade receivables and other receivables
30,104
29,523
Non-current loans
15,734
10,376
Other financial assets
-
1,300
Fair Value through profit or loss
Derivatives cash flow hedges (on interest rates)
860
1,601
Financial liabilities
Amortised cost
Loans
100,005
103,578
Other financial liabilities
175
547
Trade payables
22,605
21,168
Hedge accounting
Derivatives cash flow hedges (on currency)
-
14
The Company is exposed to financial risks related to its operations, mainly:
- credit risk, with special reference to normal trade relations with customers;
- market risk, relating to the volatility of prices of commodities, foreign exchange and interest
rates;
- liquidity risk, which can be expressed by the inability to find financial resources necessary
to ensure Company operations.
It is part of Sabaf's policies to hedge exposure to changes in prices and in fluctuations in
exchange and interest rates via derivative financial instruments. Hedging is done using forward
contracts, options or combinations of these instruments. Generally speaking, the maximum
duration covered by such hedging does not exceed 18 months. The Company does not enter
into speculative transactions. When the derivatives used for hedging purposes meet the
necessary requisites, hedge accounting rules are followed.
Credit risk management
Trade receivables involve producers of domestic appliances, multinational groups and smaller
manufacturers in a few or single markets. The Company assesses the creditworthiness of all its
customers at the start of supply and systemically at least on an annual basis. The credit
management procedure includes, among other things:
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
130
▪ assigning a specific credit limit to each customer;
▪ checking, on a weekly basis, receivables past due;
▪ sending payment reminders on a monthly basis;
▪ defining a time limit after which deliveries are blocked (impossibility of making deliveries
and confirming new orders).
The Company factors receivables with factoring companies based on without recourse
agreements, thereby transferring the related risk.
A credit insurance policy is in place, which guarantees cover for approximately 42% of trade
receivables.
Credit risk relating to customers operating in emerging economies is generally attenuated by
the expectation of revenue through letters of credit.
Forex risk management
The main exchange rate to which the Company is exposed is the euro/USD in relation to sales
made in dollars (mainly in North America) and, to a lesser extent, to some purchases (mainly
from Asian manufacturers). Sales in US dollars represented 15.5% of total turnover in 2023,
while purchases in dollars represented 5% of total turnover. During the year, operations in
dollars were partially hedged through forward sales contracts.
Sensitivity analysis
With reference to financial assets and liabilities in US dollars at 31 December 2023, a
hypothetical and immediate revaluation of 10% of euro against the dollar would have led to a
loss of €1,418 thousand.
Interest rate risk management
Considering the IRS in place, at the end of 2023 almost 70% of the Company's gross financial
debt was at a fixed rate. At 31 December 2023, IRS totalling €16.4 million were in place, mirrored
in mortgages with the same residual debt, through which the Company transformed the floating
rate of the mortgages into fixed rate. The derivative contracts were not designated as a cash
flow hedge and were therefore recognised using the “fair value through profit or loss” method.
The following table shows the characteristics of the derivative financial instruments described
in the previous paragraph
.
Company
Counterparty
Instrumen
t
Maturity
Value
date
Notional
Fair value
hierarchy
Intesa Sanpaolo
IRS
15/06/2024
EUR
1,200,000
2
Intesa Sanpaolo
15/06/2024
370,000
Crédit Agricole
30/06/2025
4,200,000
Mediobanca
28/04/2027
10,660,000
Sensitivity analysis
With reference to financial liabilities at variable rate at 31 December 2023, a hypothetical and
immediate increase of 1% of interest rates would have led to a loss of €300 thousand.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
131
Commodity price risk management
A significant portion of the Company’s purchase costs is represented by aluminium, steel and
brass. Based on market conditions and contractual agreements, the Company may not be able
to pass on changes in raw material prices to customers in a timely and/or complete manner,
with consequent effects on margins. The Company also protects itself from the risk of changes
in the price of aluminium, steel and brass with supply contracts signed with suppliers for delivery
up to twelve months in advance or, alternatively, with derivative financial instruments. In 2023
and 2022, the Company did not use financial derivatives on commodities.
Liquidity risk management
The management of liquidity and financial debt is coordinated at Group level. The Group
operates with a debt ratio considered physiological (net financial debt/shareholders' equity at
31 December 2023 of 42.9%, net financial debt/EBITDA of 2.47) and has unused short-term
lines of credit. To minimise the risk of liquidity, the Administration and Finance Department:
- maintains a correct balance of net financial debt, financing investments with capital and with
medium to long-term debt;
- verifies systematically that the short-term accrued cash flows (amounts received from
customers and other income) are expected to accommodate the deferred cash flows (short-
term financial debt, payments to suppliers and other outgoings);
- regularly assesses expected financial needs in order to promptly take any corrective
measures.
An analysis by expiry date of financial payables at 31 December 2023 and 31 December 2022 is
shown below:
At 31 December 2023
Carrying
value
Contractual
cash flows
Within 3
months
From 3
months to 1
year
From 1 to 5
years
More than 5
years
Unsecured loans and leases
65,566
70,780
2,270
20,019
48,490
-
Bond issue
29,720
34,680
-
780
14,964
18,936
Finance leases
1,519
1,561
128
357
1,042
34
Short-term bank loans
3,200
3,000
200
3,000
-
-
Payables to former P.G.A.
shareholders
175
175
-
-
175
-
Total financial payables
100,180
110,196
2,598
24,156
64,671
18,970
Trade payables
22,605
22,605
19,373
3,232
-
-
Total
122,785
133,001
21,971
27,388
64,671
18,970
At 31 December 2022
Carrying
value
Contractual
cash flows
Within 3
months
From 3
months to 1
year
From 1 to 5
years
More than 5
years
Unsecured loans and leases
64,643
67,622
2,207
17,536
47,879
-
Bond issue
29,685
33,939
-
563
8,251
25,125
Short-term bank loans
8,420
8,420
921
7,499
-
-
Payables to C.M.I.
shareholders
547
547
372
-
175
-
Total financial payables
103,259
110,528
3,128
25,598
56,305
25,125
Trade payables
21,168
21,168
19,329
1,839
-
-
Total
124,427
131,696
22,829
27,437
56,305
25,125
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
132
The various due dates are based on the period between the end of the reporting period and the
contractual expiry date of the commitments, the values indicated in the table correspond to non-
discounted cash flows. Cash flows include the shares of principal and interest; for floating rate
liabilities, the shares of interest are determined based on the value of the reference parameter
at the end of the reporting period and increased by the spread set forth in each contract.
Hierarchical levels of fair value assessment
The revised IFRS 7 requires that financial instruments reported in the statement of financial
position at fair value be classified based on a hierarchy that reflects the significance of the input
used in determining the fair value. IFRS 7 makes a distinction between the following levels:
• Level 1 – quotations found on an active market for assets or liabilities subject to
assessment;
• Level 2 - input other than prices listed in the previous point, which can be observed
directly (prices) or indirectly (derived from prices) on the market;
• Level 3 – input based on observable market data.
The following table shows the assets and liabilities measured at fair value at 31 December 2023,
by hierarchical level of fair value assessment.
Level 1
Level 2
Level 3
Total
Other financial assets (derivatives on interest rates)
-
860
-
860
Total assets and liabilities at fair value
-
860
-
860
39. RELATIONS BETWEEN GROUP COMPANIES AND WITH RELATED PARTIES
The table below illustrates the impact of all transactions between Sabaf S.p.A. and other related
parties on the balance sheet and income statement items and related parties, with the exception
of the directors' fees, auditors and key management personnel which is stated in the Report on
Remuneration.
Impact of related-party transactions or positions on statement of financial position items
Total
2023
Subsidiarie
s
Other
related
parties
Total
related
parties
Impact
on the total
Non-current financial assets
15,734
15,734
-
15,734
100%
Trade receivables
28,706
15,393
-
15,393
53.62%
Tax receivables
6,031
241
-
241
4.00%
Short-term financial payables
23,692
3,000
-
3,000
12.66%
Trade payables
22,605
1,186
5
1,192
5.27%
Tax payables
1,485
133
-
133
8.96%
Total
2022
Subsidiarie
s
Other
related
parties
Total
related
parties
Incidence
on the total
Non-current financial assets
10,375
10,375
-
10,375
100%
Trade receivables
28,315
8,109
-
8,109
28.64%
Tax receivables
5,061
1,209
-
1,209
23.89%
Current financial assets
2,901
1,300
-
1,300
44.81%
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
133
Short-term financial payables
27,242
2,500
-
2,500
9.18%
Trade payables
21,168
1,057
5
1,062
5.02%
Tax payables
622
24
-
24
3.86%
Impact of related-party transactions on income statement items
Total
2023
Subsidiaries
Other
related
parties
Total related
parties
Impact
on the total
Revenue
99,482
19,892
-
19,892
20.00%
Other income
7,220
3,207
-
3,207
44.42%
Materials
45,935
3,095
-
3,095
6.74%
Services
22,124
447
21
468
2.12%
Capital gains on non-current assets
1,867
336
-
336
18%
Financial income
575
416
-
416
72.35%
Financial expenses
3,466
113
-
113
3.26%
Total
2022
Subsidiaries
Other
related
parties
Total related
parties
Impact
on the total
Revenue
119,090
17,100
-
17,100
14.36%
Other income
6,511
2,921
-
2,921
44.86%
Materials
52,971
3,249
-
3,249
6.13%
Services
28,629
421
24
445
1.55%
Capital gains on non-current assets
1,565
1,362
-
1,362
87.03%
Financial income
1,973
309
-
309
15.66%
Financial expenses
1,573
10
-
10
0.64%
Relations with subsidiaries mainly consist of:
• trade relations, relating to the purchase and sale of semi-processed goods or finished
products;
• sales of machinery, which generated the capital gains highlighted;
• charging for the provision of intra-group technical, commercial and administrative
services;
• charging for intra-group royalties;
• intra-group loans;
• tax consolidation scheme.
Related-party transactions, which are of minor importance, are regulated by specific contracts
regulated at arm’s length conditions.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
134
40. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS
Pursuant to the Consob memorandum of 28 July 2006, the Company declares that no significant
non-recurring events or transactions, as defined by the memorandum, took place in 2023.
41. SIGNIFICANT EVENTS AFTER THE REPORTING PERIOD
There were no important events after the 2023 reporting period.
42. ATYPICAL AND/OR UNUSUAL TRANSACTIONS
Pursuant to CONSOB memorandum of 28 July 2006, the Company declares that no atypical
and/or unusual transactions as defined by the CONSOB memorandum were carried out during
2022.
43. SECONDARY OFFICES AND LOCAL UNITS
The Company has another active local unit in addition to the registered office in Ospitaletto
(Brescia):
- Busto Arsizio (Varese).
44. COMMITMENTS
Guarantees issued
Sabaf S.p.A. also issued sureties to guarantee mortgage loans granted by banks to employees
for a total of €2,293 thousand (€2,855 thousand at 31 December 2022).
45. FEES TO DIRECTORS, STATUTORY AUDITORS AND EXECUTIVES WITH
STRATEGIC RESPONSIBILITIES
Fees to directors, statutory auditors and executives with strategic responsibilities are described
in the Report on Remuneration that will be presented to the shareholders' meeting called to
approve these separate financial statements.
46. SHARE-BASED PAYMENTS
A plan for the free allocation of shares, approved by the Shareholders' Meeting of 6 May 2021,
is in place. The related Regulations were approved by the Board of Directors on 13 May 2021.
Purpose
The Plan aims to promote and pursue the involvement of the beneficiaries whose activities are
considered relevant for the implementation of the contents and the achievement of the
objectives set out in the Business Plan, foster loyalty development and motivation of managers,
by increasing their entrepreneurial approach as well as align the interests of management with
those of the Company's shareholders more closely, with a view to encouraging the achievement
of significant results in the economic and asset growth and sustainability of the Company and
of the Group.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
135
Subject matter
The subject-matter of the Plan is the free allocation to the Beneficiaries of a maximum of 260,000
Options, each of which entitles them to receive free of charge, under the terms and conditions
provided for by the Regulations of the relevant Plan, 1 Sabaf S.p.A. Share.
The free allocation of Sabaf S.p.A. shares is conditional on the achievement, in whole or in part,
with progressiveness, of the business targets related to the ROI and EBITDA and social and
environmental targets.
Beneficiaries
The Plan is intended for persons who hold or will hold key positions in the Company and/or its
Subsidiaries, with reference to the implementation of the contents and the achievement of the
objectives of the 2021 - 2023 Business Plan. A total of 231,000 Rights were allocated to the
Beneficiaries.
Deadline
The 2021 - 2023 Plan expires on 31 December 2024.
Accounting impacts and
Fair value measurement methods
In connection with this Plan, €543 (Note 29) were recognised in personnel costs during the year,
an equity reserve of the same amount (Note 14) was recognised as a balancing entry.
In line with the date on which the beneficiaries became aware of the assignment of the rights
and terms of the plan, the grant date was set at 13 May 2021.
The main assumptions made at the beginning of the vesting period and the methods for
determining the fair value at the end of the reporting period are illustrated below. The following
economic and financial parameters were taken into account in determining the fair value per
share at the start of the vesting period:
Share price on grant date adjusted for dividends
23.09
Dividend yield
2.60%
Expected volatility per year
28%
Interest rate per year
-0.40%
Based on the exercise right at the different dates established by the Plan Regulations and on the
estimate of the expected probability of achieving the objectives for each reference period, the
unitary fair value at 31 December 2023 was determined as follows:
Rights relating to objectives
measured on ROI
Total value on ROI
10.89
Fair Value
3.81
Rights on ROI
35%
Rights relating to objectives
measured on EBITDA
Total value on EBITDA
12.75
Fair Value
5.10
Rights on EBITDA
40%
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
136
Rights relating to ESG objectives
measured on personal training
Total value on "Personal
training”
20.41
Fair Value
1.02
Rights on "Personal
training”
5%
Rights relating to ESG objectives
measured on safety indicator
Total value on "Safety
indicator”
7.82
Fair Value
0.39
Rights on "Safety
indicator”
5%
Rights relating to ESG objectives
measured on reduction of
emissions.
Total value on "Reduction
of emissions”
20.41
Fair Value
3.06
Rights on "Reduction of
emissions”
15%
Fair Value per share
15.65
Summary of public grants pursuant to Article 1, paragraphs 125-129, Italian Law
no. 124/2017
In compliance with the requirements of transparency and publicity envisaged pursuant to Italian
Law no. 124 of 4 August 2017, article 1, paragraphs 125-129, which imposed on companies the
obligation to indicate in the explanatory notes "grants, contributions, and in any case economic
advantages of any kind", the following are the details of the relative amounts, accounted for "on
a cash basis", in addition to what has already been published in the National State Aid Register
- transparency of individual aid.
Statutory References
Contribution value
Disbursing Subject
Energy-intensive contributions
1,379
Italian State
Super/Iper ammortamento (Super/Hyper
amortisation)
720
Italian State
R&D Tax credit
34
Italian State
Total
2,133
Energy-intensive contributions: Accessible grants for companies that consume a lot of
electricity, whose regulatory reference is the MISE Decree of 21 December 2017.
Iperammortamento (Hyper amortisation): it allows an over-estimation for tax purposes of
capital equipment to which "Industry 4.0" benefits are applicable, which differs according to the
year of acquisition. The reference regulations are included in the Budget Laws from the year
2017 to the year 2020, 2021 Budget Law, Law 178/2020.
Super ammortamento (Super amortisation): it allows an over-estimation for tax purposes of
130% or 140% of investments in new capital equipment; the reference regulations are contained
in Italian Law no. 205 of 27 December 2017.
Research and development activities: Contribution accessible with reference to Article 1,
paragraphs 198-209 of Law no. 160 of 27 December 2019 and the Implementing Decree of the
Ministry of Economic Development of 26 May 2020 ("Transition 4.0" Decree).
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
137
LIST OF EQUITY INVESTMENTS IN SUBSIDIARIES
1
Company name
Registered offices
Share capital at 31
December 2023
Shareholders
% of
ownership
Shareholders’ equity
at 31 December 2023
2023 profit (loss)
Faringosi Hinges s.r.l.
Ospitaletto (BS)
EUR 90,000
Sabaf S.p.A.
100%
EUR 8,071,051
EUR 1,155,904
Sabaf do Brasil Ltda
Jundiaì (Brazil)
BRL 53,348,061
Sabaf S.p.A.
100%
BRL 105,934,466
BRL 6,464,744
Sabaf US Corp.
Plainfield (USA)
USD 200,000
Sabaf S.p.A.
100%
USD 167,270
USD 32,866
Sabaf Appliance Components
(Kunshan) Co., Ltd.
Kunshan (China)
CNY 69,951,149
Sabaf S.p.A.
100%
CNY 11,561,705
CNY 7,141,992
Sabaf Beyaz Esya Parcalari
Sanayi Ve Ticaret Limited
Sirteki
Manisa (Turkey)
TRY 733,204,951
Sabaf S.p.A.
100%
TRY 1,376,888,575
TRY 34,769,323
A.R.C. s.r.l.
Campodarsego (PD)
EUR 45,000
Sabaf S.p.A.
100%
EUR 6,469,512
EUR 755,212
Sabaf Mexico Appliance
Components
San Louis Potosì
(Mexico)
PESOS 141,003,832
Sabaf S.p.A.
100%
PESOS 225,228,516
PESOS -32,333,640
C.M.I s.r.l.
Valsamoggia (BO)
€1,000,000
Sabaf S.p.A.
100%
EUR 21,752,929
EUR 2,266,104
C.G.D. s.r.l.
Valsamoggia (BO)
EUR 26,000
C.M.I. s.r.l.
100%
EUR 1,550,011
EUR 313,080
Sabaf India Private Limited
Bangalore (India)
INR 224,692,120
Sabaf S.p.A.
100%
INR 558,405,301*
INR -49,608,051*
P.G.A s.r.l.
Fabriano (AN)
EUR 100,000
Sabaf S.p.A.
100%
EUR 3,756,072
EUR 21,918
Sabaf America Inc.
Delaware (USA)
USD 4,000,000
Sabaf S.p.A.
100%
USD 4,001,251
USD 1,251
Mansfield Engineered
Components LLC(MEC)
Mansfield (USA)
USD 2,823,248
Sabaf America
51%
USD 16,824,033
USD 2,442,986
‘* The values shown for Sabaf India Private Limited refer to 31 March 2023, the local reporting date
OTHER SIGNIFICANT EQUITY INVESTMENTS
None
1
Values taken from the separate financial statements of subsidiaries, prepared in accordance with locally applicable accounting standards
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
138
ORIGIN, POSSIBILITY OF UTILISATION AND AVAILABILITY OF RESERVES
Description
Amount
Possibility
of
utilisation
Available
share
Amount subject
to taxation
for the
company in the
case of
distribution
Capital reserves:
Share premium reserve
26,160
A, B, C
26,160
0
Revaluation reserve, Law 413/91
42
A, B, C
42
42
Revaluation reserve, Law 342/00
1,592
A, B, C
1,592
1,592
Retained earnings:
Legal reserve
2,307
B
0
0
Other retained earnings
78,686
A, B, C
76,901
0
Revaluation reserve, Law Decree
104/20
4,873
A, B
4,873
4,727
Valuation reserve:
Post-employment benefit actuarial
provision
(390)
0
0
Reserve for stock grant plan
2,481
0
0
Total
115,751
109,390
6,361
Key:
A. for share capital increase
B. to hedge losses
C. for distribution to shareholders
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
139
STATEMENT OF REVALUATIONS
OF EQUITY ASSETS AT 31 DECEMBER 2023
Gross value
Cumulative
depreciation
Net value
Non-current assets
held for sale
Law 72/1983
137
(137)
0
1989 merger
516
(516)
0
Law 413/1991
17
(16)
1
1994 merger
1,320
(1,153)
167
Law 342/2000
2,870
(2,798)
72
4,860
(4,620)
240
Plant and
equipment
Law 576/75
180
(180)
0
Law 72/1983
2,180
(2,180)
0
1989 merger
6,140
(6,140)
0
1994 merger
6,820
(6,820)
0
15,320
(15,320)
0
Industrial and
commercial
equipment
Law 72/1983
161
(161)
0
Other assets
Law 72/1983
50
(50)
0
TOTAL
20,391
(20,151)
240
GENERAL INFORMATION
Sabaf S.p.A. is a company organised under the legal system of the Republic of Italy.
Registered and administrative office: Via dei Car pini, 1
25035 Ospitaletto (Brescia)
Contacts: Tel: +39 030 - 6843001
Fax: +39 030 - 6848249
Email: info@sabaf.it
Web site: http://www.sabaf.it
Tax information: REA Brescia 347512
Tax code 03244470179
VAT NUMBER 01786910982
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
140
Appendix
Information as required by Article 149-
duodecies
of the CONSOB Issuers’
Regulation
The following table, prepared pursuant to Art. 149-
duodecies
of the CONSOB Issuers’
Regulation, shows fees relating to 2022 for auditing services and for services other than
auditing provided by the Independent Auditors. No services were provided by entities
belonging to the network.
(€/000)
Party providing
the service
Fees pertaining to the 2023
financial year
Audit
EY S.p.A.
59
Certification services
EY S.p.A
---
Other audit services
EY S.p.A
83 (1)
Total
142
(1) Auditing procedures agreement relating to interim management reports; limited review of Disclosure of non-financial
information, fairness opinion for 2023 capital increase.
Sabaf Group | Sabaf S.p.A. Separate Financial Statements at 31 December 2023
141
Certification of Separate financial statements pursuant to Article 154-bis of
Legislative Decree 58/98
Pietro Iotti, the Chief Executive Officer, and Gianluca Beschi, the Financial Reporting Officer of
Sabaf S.p.A., have taken into account the requirements of Article 154-bis, paragraphs 3 and 4,
of Legislative Decree 58 of 24 February 1998 and can certify:
• the adequacy, in relation to the business characteristics and
• the actual application
of the administrative and accounting procedures for the formation of the separate financial
statements during the 2023 financial year.
They also certify that:
• the separate financial statements:
- were prepared in accordance with the international accounting policies
recognised in the European Community in accordance with EC regulation
1606/2002 of the European Parliament and Council of 19 July 2002 and with
the measures issued in implementation of Article 9 of Legislative Decree
38/2005;
- are consistent with accounting books and records;
- provide a true and fair view of the financial position and performance of the
issuer;
• the report on operations contains a reliable analysis of the performance and results of
operations and the situation at the issuer, along with a description of the key risks and
uncertainties to which it is exposed.
Ospitaletto, 19 March 2024
Chief Executive Officer
Pietro Iotti
The Financial Reporting Officer
Gianluca Beschi
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