ANNUAL REPORT 2018 Contents
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ANNUAL REPORT 2018 Contents Company Officers Group Structure Directors’ Single Report on Operations LAVAZZA GROUP — CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018 Accounting Statements • Consolidated Statement of Financial Position • Consolidated Statement of Profit or Loss • Consolidated Statement of Comprehensive Income • Consolidated Statement of Cash Flows • Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements Independent Auditors’ Report LUIGI LAVAZZA S.P.A. — FINANCIAL STATEMENTS AT 31 DECEMBER 2018 Accounting Statements • Balance Sheet • Statement of Profit or Loss • Statement of Cash Flows Notes to the Financial Statements Statutory Auditors’ Report Independent Auditors’ Report ABSTRACT 2018 Company Officers - Group Structure Annual Report 2018 Company Officers Group Structure Board of Directors LUIGI LAVAZZA S.p.A. Chairman Alberto Lavazza Vice Chairmen Giuseppe Lavazza LAVAZZA LAVAZZA OTHER BRANDS OTHER SERVICE Marco Lavazza PROFESSIONAL SUBSIDIARIES SUBSIDIARIES SUBSIDIARIES COMPANIES SUBSIDIARIES Chief Executive Officer 100% 97% 80% 100% 99% Antonio Baravalle LAVAZZA PROFESSIONAL NIMS S.p.A. KICKING HORSE LAVAZZA TRADING COFINCAF S.p.A. HOLDING EUROPE S.r.l. COFFEE Co. Ltd SHENZHEN Co. Ltd Directors 100% 93% 100% 100% 100% Antonella Lavazza LAVAZZA PROFESSIONAL LAVAZZA PREMIUM CARTE NOIRE LAVAZZA SPAGNA LAVAZZA CAPITAL S.r.l. (UK) Ltd COFFEES Corp. S.a.s. S.L. Contents Francesca Lavazza Manuela Lavazza 100% 100% 100% 100% Pietro Boroli LAVAZZA PROFESSIONAL LPCC Canadian CARTE NOIRE OPERATIONS LAVAZZA MAROC IMMOBILIARE I.N.N.E.T. S.r.l. FRANCE S.a.s Branch S.a.s. S.a.r.l. Gabriele Galateri di Genola Company Officers and Group Structure Robert Kunze-Concewitz 100% 100% 100% 99.9% Antonio Marcegaglia LAVAZZA PROFESSIONAL LAVAZZA DEUTSCHLAND MERRILD KAFFE LEA Directors’ Single Report on Operations GERMANY G.m.b.H . G.m.b.H. ApS S.r.l. 100% 100% 100% 100% LAVAZZA PROFESSIONAL LAVAZZA KAFFEE MERRILD BALTICS LAVAZZA EVENTI LAVAZZA GROUP — CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018 Board of Statutory Auditors HOLDING NORTH AMERICA Inc. G.m.b.H. SIA S.r.l. 100% 100% Accounting Statements • Consolidated Statement of Financial Position LAVAZZA PROFESSIONAL LAVAZZA FRANCE NORTH AMERICA LLC S.a.s. • Consolidated Statement of Profit or Loss Chairman • Consolidated Statement of Comprehensive Income 100% • Consolidated Statement of Cash Flows Gianluca Ferrero LPNA Canadian LAVAZZA SWEDEN • Consolidated Statement of Changes in Equity Branch AB Statutory Auditors Notes to the Consolidated Financial Statements 100% 100% Angelo Gilardi LAVAZZA PROFESSIONAL LAVAZZA COFFEE Independent Auditors’ Report Lucio Pasquini JAPAN GK (UK) Ltd 97.54% LAVAZZA ARGENTINA LUIGI LAVAZZA S.P.A. — FINANCIAL STATEMENTS AT 31 DECEMBER 2018 Independent Auditors S.A. Accounting Statements 100% • Balance Sheet LAVAZZA AUSTRALIA • Statement of Profit or Loss PTY Ltd • Statement of Cash Flows EY S.p.A. 100% Notes to the Financial Statements LAVAZZA AUSTRALIA OCS PTY Ltd Statutory Auditors’ Report 99.53% Independent Auditors’ Report LAVAZZA DO BRASIL Ltda 100% ABSTRACT 2018 ALMADA 100% LAVAZZA NETHERLANDS B.V. 99.99% FRESH & HONEST LTD 4 5 Directors’ Single Report on Operations Contents Company Officers and Group Structure Directors’ Single Report on Operations LAVAZZA GROUP — CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018 Accounting Statements • Consolidated Statement of Financial Position • Consolidated Statement of Profit or Loss • Consolidated Statement of Comprehensive Income • Consolidated Statement of Cash Flows • Consolidated Statement of Changes in Equity Notes to the Consolidated Financial Statements Independent Auditors’ Report LUIGI LAVAZZA S.P.A. — FINANCIAL STATEMENTS AT 31 DECEMBER 2018 Accounting Statements • Balance Sheet • Statement of Profit or Loss • Statement of Cash Flows Notes to the Financial Statements Statutory Auditors’ Report Independent Auditors’ Report ABSTRACT 2018 Annual Report 2018 A history made of innovation Over 120 years ago, in his grocery shop in Turin Luigi Lavazza invented the concept of blending: the art of combining different coffee varieties and origins, which even today distinguishes all of Lavazza products. In the early decades of the 20th century, Lavazza was the first company to locally distribute coffee in bags bearing its logo. In 1950, the company used for the first time vacuum tins in Italy to preserve coffee and in 1971 its first flexible vacuum brick pack. The first Lavazza-branded multiple coffee packs were introduced in 1989. In the same year, Lavazza entered the portioned coffee market, thus becoming the first Italian company to produce and market capsule-based espresso systems. Thanks to ongoing collaborations with an international network of universities and scientific institutes, Lavazza now has different platforms in the portioned coffee segment. Innovation has always been closely intertwined with research, so that the company is known as an organisation with a “continuous innovation cycle”, ranging from the art of blending to vacuum-packed coffee, from portioned to instant coffee, from decaffeinated coffee to the ISSpresso machine — developed alongside the Italian aerospace engineering firm Argotec (in a public-private partnership with the Italian Space Agency) — capable of functioning in the extreme conditions of space. It was this constant passion for quality that led the company in 1979 to set up the Luigi Lavazza Centre for Coffee Studies and Research, dedicated to analysis and in-depth study of espresso and the spread of espresso culture. This then evolved into the Lavazza Training Center, an international network of over 50 coffee schools throughout the world, where 30,000 people are trained each year. Contents Constant innovation is also essential when it comes to the significant industrial investments in recent years that have made the Group more efficient, flexible and nimble in responding to a constantly evolving market. Company Officers and Group Structure Directors’ Single Report on Operations A multibrand Group LAVAZZA GROUP — CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2018 In recent years, the Lavazza Group has embarked on an international development process aimed at consolidating its independence Accounting Statements and competitiveness at the global level, with the mission of being a premium pure coffee company: concentrating solely on high- • Consolidated Statement of Financial Position quality coffee by leveraging the value of its brand. • Consolidated Statement of Profit or Loss Specifically, the company has completed some important transactions. Merrild, a leading retail coffee brand in Denmark and the • Consolidated Statement of Comprehensive Income • Consolidated Statement of Cash Flows Baltic countries, joined the Lavazza Group in 2015. In the same year, the Group also took over the distribution business for Lavazza • Consolidated Statement of Changes in Equity products from its local partner in Australia, thereby establishing a new subsidiary in Melbourne. Since 2016, Carte Noire has been part of the Lavazza Group, which has included in its industrial system also the production site in Notes to the Consolidated Financial Statements Lavérune, located in the Occitanie region. This important transaction allowed Lavazza to take a position on the strategic French Independent Auditors’ Report market, which is one of the top five coffee markets in the world and now the company’s number-two market for the Group. In addition, as part of its globalisation and premium positioning strategy, in 2017 the Group completed the acquisition of the Canadian brand Kicking Horse Coffee Co. Ltd — a leader in the organic, fair-trade coffee segment in North America — acquiring LUIGI LAVAZZA S.P.A. — FINANCIAL STATEMENTS AT 31 DECEMBER 2018 an 80% stake in the company. In 2017, to strengthen its distribution strategy, Lavazza also acquired the shares in Espresso Service Proximité S.A., a company Accounting Statements specialising in the OCS segment, and an 80% stake in Nims S.p.A., an Italian firm specialising in distribution and direct door-to- • Balance Sheet door sale of coffee capsules and coffee machines throughout Italy. • Statement of Profit or Loss • Statement of Cash Flows Dear Shareholders, At year-end 2018, following the acquisition of Mars Drinks, the company set up the Lavazza Professional Business, which includes The financial year ended 31 December 2018 the Flavia and Klix OCS and Vending systems. Notes to the Financial Statements closed with a Group’s consolidated profit Statutory Auditors’ Report of €87,932,159 based on the IFRS and Luigi Lavazza’s profit of €57,786,500 based on Italian Independent Auditors’ Report GAAP (OIC). With reference to Article 2428 of the Italian Civil Code and Article 40 of Legislative Decree ABSTRACT 2018 No. 127(2-bis) of 9 April 1991, this Report on PREMIUM PURE Operations includes both information on the financial statements of the Parent Company Luigi Lavazza S.p.A., and the Report on Operations of the Lavazza Group. COFFEE COMPANY 9 Directors’ Single Report on Operations Annual Report 2018 Operating Performance of the Lavazza Group Industry overview The following table shows the Group’s operating and financial highlights at 31 December 2018 compared with the previous year: At home business In the At Home business, with reference to the Italian context and more specifically the Food&Drug sector, sales rose by value (€ million) 2018 Ratio % 2017 Ratio % (+1.7%), split in +0.8%