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Share capital, reserves and retained earnings

12 Months Ended

Dec. 31, 2019

Share capital, reserves and retained earnings

18	Share capital, reserves and retained earnings

As at December 31, 2019, 2018 and 2017 the equity attributable to owners of the Company is analysed as follows:


	31/12/19		31/12/18		31/12/17
Share capital		54,853		54,853		54,853
Reserves		17,147		17,198		16,398
Retained earnings		31,126		64,496		31,244

Total		103,126		136,547		102,495

As at December 31, 2019 and 2018, the Company’s share capital, which is totally authorized and issued, is composed of 54,853,045 ordinary shares with par value of Euro 1 each, for a total of 54,853.

Ordinary shareholders have the right to receive dividends, as approved by shareholders’ meetings, and to express one vote per each share owned.

Share capital is owned, as at December 31, 2019, 2018 and 2017, as follows:


	31/12/19			31/12/18			31/12/17
Mr. Pasquale Natuzzi		56.5%			56.5%			56.5%
Mrs. Anna Maria Natuzzi		2.6%			2.6%			2.6%
Mrs. Annunziata Natuzzi		2.5%			2.5%			2.5%
Other investors		38.4%			38.4%			38.4%

Total		100.0	%		100.0	%		100.0	%

An analysis of “Reserves” is as follows:


	31/12/19		31/12/18		31/12/17
Legal reserve		10,971		10,971		10,971
Majority shareholder capital contribution		488		488		488
Foreign operations translation reserve		5,846		5,282		5,055
Remeasurement of defined benefit plan		(158)		457		(116)

Total		17,147		17,198		16,398

The “Legal reserve” is connected to the requirements of the Italian law, which provide that 5% of net income of the Parent Company is retained as a legal reserve, until such reserve is 20% of the issued share capital. The legal reserve may be utilized to offset losses; any portion which exceeds 20% of the issued share capital is distributable as dividends. The legal reserve totaled 10,971 as at December 31, 2019, 2018 and 2017.

The “Majority shareholder capital contribution” is one of the Parent Company’s reserves, which is restricted for capital grants received.

The “Foreign operations translation reserve” relates to the translation of foreign subsidiaries’ financial statements for those subsidiaries which have assessed their functional currency being different from Euro.

The “remeasurement of defined benefit plan” refers to the calculation of the present value of the employees’ leaving entitlement at each reporting date, in compliance with applicable regulations and adjusted to take into account actuarial gains or losses. In particular, such actuarial gains or losses are reported in OCI (see note 4 (q)).

The disaggregation of changes of OCI by each type of reserve in equity is shown in the tables below.

Year ended December 31, 2019


	Foreign operations translation reserve		Remeasurement of defined benefit plan			Total
Exchange difference on translation of foreign operations		475		—			475
Share of OCI of equity-method investees		111		—			111
Actuarial losses on employees’ leaving entitlement		—		(615	)		(615	)

Total		586		(615	)		(29	)

Year ended December 31, 2018


	Foreign operations translation reserve		Remeasurement of defined benefit plan		Total
Exchange difference on translation of foreign operations		497		—		497
Share of OCI of equity-method investees		(246)		—		(246)
Actuarial gains on employees’ leaving entitlement		—		573		573

Total		251		573		824

Year ended December 31, 2017


	Foreign operations translation reserve			Remeasurement of defined benefit plan		Total
Exchange difference on translation of foreign operations		(7,778)			—		(7,778)
Actuarial gains on employees’ leaving entitlement		—			116		(116)

Total		(7,778	)		116		(7,894	)

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business. Management monitors the return on capital, as well as the level of dividends to ordinary shareholders.

The Group monitors capital using a ratio of “net debt” to “equity”. Net debt is calculated as total liabilities (as shown in the consolidated statement of financial position) less cash and cash equivalents. Equity comprises all components of equity. The Group’s policy is to keep the ratio below 2.

The Group’s net debt to equity ratio as at December 31, 2019 and 2018 is as follows:


	31/12/19			31/12/18
Total liabilities		264,576			234,527
Less cash and cash equivalents		(39,799	)		(62,131	)

Net debt (a)		224,777			172,396
Total equity (b)		104,818			138,181
Net debt to equity ratio (a/b)		2.14			1.25