Share capital, reserves and retained earnings

12 Months Ended

Dec. 31, 2021

Disclosure Of Share Capital Reserves And Retained Earnings [Abstract]

Share capital, reserves and retained earnings

18 Share capital, reserves and retained earnings

As at December 31, 2021, 2020 and 2019 the equity attributable to owners of the Company is analysed as follows:


	31/12/21		31/12/20		31/12/19
Share capital		54,853		54,853		54,853
Reserves		17,449		13,043		17,147
Retained earnings		10,033		6,448		31,126
Total		82,335		74,344		103,126

As at December 31, 2021 and 2020, 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, 2021, 2020 and 2019, as follows:


	31/12/21			31/12/20			31/12/19
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:


	31/12/21			31/12/20			31/12/19
Legal reserve		10,971			10,971			10,971
Majority shareholder capital contribution		488			488			488
Reserve for gain on disposal of Non-controlling interests		1,088			—			—
Foreign operations translation reserve		5,899			1,954			5,846
Remeasurement of defined benefit plan		(997	)		(370	)		(158	)
Total		17,449			13,043			17,147

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, 2021, 2020 and 2019.

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

The “Reserve for gain on disposal of Non-controlling interests” is related to the 7% stake of Natuzzi Singapore PTE LTD to a related party, occurred in 2021. For further details on this transaction, reference should be made to note 2.

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)).

OCI accumulated in reserves, net of tax, is reported in the following tables.


	31/12/21			31/12/20			31/12/19
Foreign operation translation		5,899			1,954			5,846
Remeasurement of defined benefit plan		(997	)		(370	)		(158	)
Owners of the Company		4,902			1,584			5,688
Non-controlling interests		(27	)		(119	)		(63	)
Total OCI		4,875			1,465			5,625

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

Year ended December 31, 2021


	Foreign operations translation reserve		Remeasurement of defined benefit plan			Total
Exchange difference on translation of foreign operations		1,709		—			1,709
Share of OCI of equity-method investees		2,328		—			2,328
Actuarial losses on employees’ leaving entitlement		—		(627	)		(627	)
Total		4,037		(627	)		3,410

Year ended December 31, 2020


	Foreign operations translation reserve			Remeasurement of defined benefit plan			Total
Exchange difference on translation of foreign operations		(3,575	)		—			(3,575	)
Share of OCI of equity-method investees		(373	)		—			(373	)
Actuarial losses on employees’ leaving entitlement		—			(212	)		(212	)
Total		(3,948	)		(212	)		(4,160	)

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	)

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. As at December 31, 2021, the Group’s policy is to keep the ratio below 3.20.

The Group’s net debt to equity ratio as at December 31, 2021 and 2020 is as follows:


	31/12/21			31/12/20
Total liabilities		306,186			280,636
Less cash and cash equivalents		(53,472	)		(48,187	)
Net debt (a)		252,714			232,449
Total equity (b)		83,846			75,364
Net debt to equity ratio (a/b)		3.01			3.08