10 Thursday 05:22 PM The Board of Directors approves the 2021 consolidated financial statements and the draft statutory accounts

Press Release

CASA DI MODA BRUNELLO CUCINELLI: the BoD has approved the 2021 consolidated financial statements and the 2021 draft financial statements

• Net revenues of €712.2 million, up +30.9% (+32.4% at constant exchange rates) compared to 2020, with an increase of +17.2% compared to 2019;
• EBITDA of €193.3 million (27.1% margin), compared to €89.5 million last year and €169.6 million in the previous year (27.9% margin);
• EBIT of €77.0 million (10.8% margin), compared to a loss of €14.8 million at 31 December 2020 and a profit of €83.4 million in 2019 (13.7% margin);
• Net income of €56.3 million, compared to a loss of €32.1 million at 31 December 2020 and a profit of €53.1 million in 2019.
• Significant investments in line with multi-year planning and in favour of the contemporary nature of our "Casa di Moda": €61.6 million invested in 2021, up from €51.6 million in 2020 and €52.6 million in 2019;
• Characteristic Financial Indebtedness1 of € 23.0, a marked improvement compared to €93.5 million in 2020 and €30.1 million at 31 December 2019;
• The Board of Directors will make a proposal to the Shareholders' Meeting - called for 27 April 2022 - for the distribution of a dividend of €0.42 per share;
• Approved the 2021 Consolidated Non-Financial Statement;
• Approved a Stock Grant Plan for the years 2022-2024.

Brunello Cucinelli, Executive Chairman and Creative Director of the Casa Moda, commented as follows:

"I have firm faith in the wisdom of men"

"At a dramatic time for humanity, in this winter of our struggles, a new era of responsibility is required of us, the search for a peace forged by great thoughts. I grew up in the land of Francis of Assisi, from whom I learnt the great value of dialogue as the noblest means of always achieving harmony among men".

"Great challenges demand the courage to walk together and to reaffirm that common sense of humanity that only words can guarantee, when they rest on the brotherhood and wisdom of the men who rule the world".

"The year 2021, which we called the year of rebalancing, ended with some splendid results both economically and in terms of image for our brand. Turnover grew by 30.9% and consequently net profit was equal to €56.3 million ".

"This year opens with a quarter that is now drawing to a close with some particularly interesting results, the order intake for men's and women's winter collections 2022 was really significant. All this prompts us to envisage yet another year of good, balanced growth, with an increase in turnover of around 12%".

"A growth that we hope will generate human prosperity for our people, for our mother earth and for the whole of Creation. May the heavens and the stars enlighten us at this time, when souls have lost their bearings, but are filled with great hope for the bright future that awaits us".

1 The figure for Characteristic Financial Indebtedness and Investments does not reflect the effects of the application of IFRS 16.

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Solomeo, 10 March 2022 - The Board of Directors of Brunello Cucinelli S.p.A. - a Casa di Moda operating in the luxury goods sector and listed on the Italian Stock Exchange - today examined and approved the consolidated financial statements and the draft financial statements as at 31 December 2021.

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We report the 2021 results today with two frames of mind. The first is one of great sorrow at the international tensions, which we would never have imagined in contemporary times, and we hope from the bottom of our hearts that everything will go well in the times to come; the second is one of positivity for a Fashion House that is living perhaps the best moment in its history, and with humility, courage, creativity and confidence we imagine it will have great possibilities for the decades to come.

2021 - a year of rebalancing for us - has been a splendid year, in which we feel we have been able to achieve excellent results, hand in hand with the perception of a further strengthening of our brand, both in terms of style identity and positioning in absolute luxury, and in terms of reliability and equitable behaviour towards all our stakeholders, customers, suppliers and shareholders.

From an economic point of view, we are extremely satisfied with the sales achieved, which are even higher than our expectations, and with the margins, which are in line with the plan of rebalancing to pre-pandemic levels in 2022. From a balance sheet point of view, we also consider the quality of our inventory to be excellent and the Net Financial Debt to have improved significantly, even in the presence of major investments.

In terms of image, we believe it was a memorable year for the company. A year in which we received two major international acknowledgements, which honoured us from a human point of view, and which we undoubtedly believe contributed greatly to our achievements by bringing further attention to our brand:

• the first concerning style, with the awarding of the 'Designer of the Year' prize to Brunello Cucinelli by the prestigious British men's fashion magazine GQ, presented in London at the Tate Modern Gallery in early September;
• the second was the invitation and personal participation of Brunello Cucinelli as a speaker at the G20 in Rome on 31st October, with a testimony on Humanistic Capitalism and Human Sustainability.

October also saw the presentation of the major project of the "Universal Library of Solomeo", which adds to the thousand-year projects conceived by the Brunello and Federica Cucinelli Foundation for the Borgo di Solomeo and our territory.

We believe that the entrepreneurial and philosophical principles, the foundation of our idea of Humanistic Capitalism and Human Sustainability, have proved to be a solid and effective guide in this year of rebalancing, and perhaps we can say that today we represent in the world a good image of 'total' sustainability: environmental, economic, cultural and spiritual.

Our constant and profound focus on respect for human dignity, serenity in the workplace, human relations and the harmonious cycle of life and nature has proved to be a 'wealth' capable of showing the way to act with great dignity and unity in the choices we have faced.

In these two years, we have shared, as always, the company's strategies and choices, guaranteeing the employment and salary levels of all our employees, and we have chosen never to ask for discounts to avoid harming others. These decisions of principle have protected the integrity of the company and of the entire supply chain, helping us to fully recover the loss of 2020, so that we can resume our solid and serene path of beautiful, gentle and balanced growth.

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Net Revenues are in line with the preliminary figures released on 10 January, and confirm all the dynamics already discussed in detail.

	FY 2021	%	FY 2020	%	YoY	FY 2019	Var. %
					Change %
	Eur '000		Eur '000		FY 2021/	Eur '000	FY 2021/
					FY 2020		FY 2019
Europe	219,150	30.8%	173,078	31.8%	+26.6%	176,900	+23.9%
Italy	84,223	11.8%	68,323	12.6%	+23.3%	89,720	-6.1%
Americas	238,238	33.4%	174,242	32.0%	+36.7%	205,768	+15.8%
Asia	170,568	24.0%	128,370	23.6%	+32.9%	135,373	+26.0%
Revenues	712,179	100.0%	544,013	100.0%	+30.9%	607,761	+17.2%
YoY Change at constant exchange rates			+32.4%
	FY 2021	%	FY 2020	%	YoY	FY 2019	Var. %
					Change %
	Eur '000		Eur '000		FY 2021/	Eur '000	FY 2021/
					FY 2020		FY 2019
Retail	419,817	58.9%	268,773	49.4%	+56.2%	339,435	+23.7%
Wholesale	292,362	41.1%	275,240	50.6%	+6.2%	268,326	+9.0%
Revenues	712,179	100.0%	544,013	100.0%	+30.9%	607,761	+17.2%

Income Statement

Analysis of the income statement shows an excellent sales performance and a gradual realignment of the main cost items to pre-pandemic levels.

When comparing with 2019, which we consider to be the most significant benchmark, we have to take into account the development of the retail network, which will contribute significantly to the expected results for the coming years, but which in the short term has produced an increase in rent that is higher than the speed of the growth of sales.

In relation to network development, there were 114 boutiques as at 31 December 2021, compared to 107 boutiques as at 31 December 2020, with 4 openings and 3 conversions of wholesale monobrand boutiques, including the important space in the Dubai Mall and the exclusive resort of Gstaad.

Prestigious boutique expansions were also carried out between 2020 and 2021, including those in London, Paris, Moscow, St Petersburg, Shanghai, Tokyo and New York; the number of directly managed hard shops within Department Stores rose to 43 in 2021, compared to 31 hard shops at 31 December 2020, with the increase mainly related to the conversion to direct management of 10 spaces within Nordstrom's Luxury Department Stores. These conversions from the wholesale channel to the retail channel are in addition to the 3 conversions of wholesale monobrand boutiques already mentioned, bringing the total number of converted spaces to 13.

Analysing the details of the Income Statement, the First Margin does not show significant changes; the margin at 31 December 2021 is 67.3%, in line with 2020 margins of 67.9%.

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In 2021, our Casa di Moda confirmed, as in 2020, its decision to maintain and guarantee the employment and salary levels of all its human resources, increasing their number in relation to the strategic choices adopted.

Personnel costs therefore grow progressively in the period 2019-2020-2021, following the expansion of our human resources structure to support new commercial initiatives, the expansion of the network, and the processes of consolidation of our activities.

In 2021, personnel costs amounted to €132.9 million (€119.6 million in 2020 and €112.2 million in 2019), with 2,160 FTE (full time equivalent) resources, compared to 2,045 FTE resources in 2020 and 1,890 resources in 2019. The incidence of personnel costs is 18.7% in 2021, compared to 18.5% in 2019.

Investments in communication, amounting to €36.1 million, increased compared to €32.1 million in 2020 and €35.5 million in 2019, with the incidence that remains above 5% (5.1% in 2021).

Investments are correlated with the important and strategic digital communication activities that were developed across all 12 months of 2021, and to the boutique events that were concentrated instead in the second half of the year (limited in the first half due to the effects of the pandemic).

The trend in rental costs follows the trend in openings, reaching €30.6 million (4.3% incidence) at 31 December 2021, compared with €17.9 million in 2020 and €21.8 million in 2019 (3.6% incidence).

Rental costs net of IFRS 16 effects amounted to €115.3 million (16.2% incidence), compared to €96.4 million last year and €85.6 million in 2019 (14.1% incidence); the progressive increase is mainly related to the development of the network, the benefit of which will also contribute to the results of the coming periods.

In 2021, Ebitda is therefore €193.3 million (27.1% margin), compared to €89.5 million last year and €169.6 million in 2019 (27.9% margin).

In 2021, Ebitda, net of IFRS 162 effects is € 110.0 million (15.4% margin). The value of Ebitda at 31 December 2021 also benefits from non-recurring revenues of € 5.2 million3.

In 2020, EBITDA net of IFRS 16 effects and the extraordinary provision of €31.7 million for the "Brunello Cucinelli for Humanity" project amounted to €41.8 million, with a margin of 7.7%, while EBITDA net of IFRS 16 effects in 2019 amounted to €106.1 million, with a margin of 17.4%.

Depreciation and amortisation, excluding rights of usage4, amounted to €40.6 million (5.7% incidence), compared to €34.8 million last year and €29.2 million in 2019 (4.8% incidence), in line with the progressive growth of capex.

Ebit at 31 December 2021 was € 77.0 million (margin of 10.8%), compared to the operating loss of € 14.8 million last year and the positive result of € 83.4 million (margin of 13.7%) in 2019.

The result of financial operations at 31 December 2021 was negative and equal to € 13.0 million, compared to € 19.0 million last year and € 14.2 million in 2019.

1. The accounting effects related to the application of IFRS 16 are equal to €84,690 thousand referring to the item "Rent payable" and equal to €1,392 thousand referring to the item "Other operating costs/(revenues)"; the EBITDA excluding IFRS 16 at 31 December 2021 is therefore equal to €110,013 thousand.
2. These items refer to non-recurring revenues (recorded in "Other operating expenses/(revenues)") related to tax credits for Research and Development activities for the years 2016, 2017 and 2018 for a total amount of €5,202 thousand.
3. Amortisation including amortisation of usage rights amounted to €116.3 million at 31/12/21, compared to €104.3 million at 31/12/2020 and €86.3 million at 31/12/2019.

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Excluding the effects related to the application of IFRS 16 related to leasing contracts, the result of financial operations was negative and equal to €3.6 million at 31 December 2021, down compared to €5.8 million last year and €5.4 million at 31 December 2019.

The Net Profit was € 56.3 million at 31 December 2021, with a tax rate of 12.1%5 (excluding non- recurring events, the normalised tax rate at 31 December 2021 was 28.5%); at 31 December 2020 the Net Profit result was a negative € 32.1 million, while 2019 reported a positive Net Profit of €53.16 million with a tax rate of 23.3%7.

Balance Sheet

Net working capital, including "Other net assets/liabilities"8 is € 142.2 million as of 31 December 2021, compared to € 186.7 million last year and € 155.1 million as of 31 December 2019.

Trade net working capital amounted to €169.4 million as of 31 December 2021, with a 23.8% incidence on sales, compared to €195.8 million as of 31 December 2020, a value strongly impacted by the pandemic and with a 36.0% incidence.

The dynamics of the trade net working capital also show an improvement compared to 2019, whose value was €174.0 million with a 28.6% incidence.

Inventory amounted to € 199.3 million at 31 December 2021 (28.0% incidence), down from € 208.3 million at 31 December 2020 and € 204.9 million at 31 December 2019.

Inventory performance shows the complete recovery of sales and shipping activities, the overcoming of the phase related to the lockdown period of 2020, and a further optimisation thanks to the important sell-outs.

This is in the presence of significant business development, new commercial initiatives, and the expansion of the digital channel activity.

Trade receivables amounted to € 72.8 million at 31 December 2021, compared to € 78.9 million last year, despite the increase in turnover.

The reduction was driven by the return to ordinary terms in the payment terms of all wholesale customers, after some extensions that had been granted in 2020 following the outbreak of the pandemic, on the basis of a relationship of extreme mutual cooperation consolidated over time.

Trade payables amounted to € 102.7 million, compared to € 91.4 million at 31 December 2020. In 2021, the timing of payments to its suppliers, collaborators and consultants remained unchanged, and purchases of raw materials were more concentrated in the second half of the year, compared to what happened in 2020.

1. Please note that the tax rate for this year mainly benefits from two phenomena of a non-recurring nature: recognition of deferred tax assets, for a total amount of approximately Euro 8.8 million, calculated on the balance sheet balance of the inventory write- down provision for the "Brunello Cucinelli for Humanity" project; tax effect relating to tax credits for Research and Development activities recognised by the Parent Company referring to the 2016, 2017 and 2018 financial years mentioned above and the recognition of which, not being subject to taxation, produces a positive tax effect of Euro 1.5 million.
2. The Net Income at 31 December 2019 included the tax benefits of the "Patent Box", which ended on 31 December 2019, with a total value for 2019 of €5.7 million.
3. Excluding the tax benefit related to the Patent Box, the normalised tax rate at 31 December 2019 is 30.9%.
4. "Other net assets/liabilities" were negative for €27.3 million at 31 December 2021, compared to €9.1 million at 31 December 2020, with dynamics essentially related to the valuation of fair values on derivative instruments hedging foreign exchange risk.

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